UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE13a-16 OR15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of May 2020
Commission File Number001-34919
SUMITOMO MITSUI FINANCIAL GROUP, INC.
(Translation of registrant’s name into English)
1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form20-F or Form40-F: | Form 20-F ☒ | Form 40-F ☐ | ||
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1): | ☐ | |||
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(7): | ☐ | |||
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule12g3-2(b) under the Securities Exchange Act of 1934. | Yes ☐ | No ☒ | ||
* If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule12g3-2(b): | 82- |
THIS REPORT ON FORM6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE INTO THE PROSPECTUS FORMING A PART OF SUMITOMO MITSUI FINANCIAL GROUP, INC.’S REGISTRATION STATEMENT ON FORMF-3 (FILE NO.333-228913) AND TO BE A PART OF SUCH PROSPECTUS FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Sumitomo Mitsui Financial Group, Inc. | ||||||
By: | /s/ Masahiko Tsutsui | |||||
Name: | Masahiko Tsutsui | |||||
Title: | General Manager, Financial Accounting Dept. |
Date: May 28, 2020
This document has been translated from a Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. Sumitomo Mitsui Financial Group, Inc. assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.
Documents Attached to the Notice of Convocation of the Ordinary General Meeting of Shareholders
Business Report for the 18th Fiscal Year
April 1, 2019 to March 31, 2020
Sumitomo Mitsui Financial Group, Inc.
(Documents Attached to the Notice of Convocation of the Ordinary General Meeting of Shareholders)
Business Report for the 18th Fiscal Year
(April 1, 2019 to March 31, 2020)
1. Matters Regarding the Current Condition of the Company
(1) | Business Progress and Results of the Group |
Economic and Financial Environment
During fiscal 2019 (fiscal year ended March 31, 2020), despite signs of a slowdown in the global economy mainly in Western developed countries and China as prolonged trade friction between the U.S. and China became a major obstacle to international trade and corporate capital investment, moderate growth continued overall up until the latter half of the year. However, since the start of the year, economic activity has been severely restricted due to the worldwide spread of the 2019 novel coronavirus disease(COVID-19). On the whole, up until the end of February, the Japanese economy continued its gradual recovery as the employment environment continued to improve and personal consumption remained firm. However, by the end of the fiscal year, the economy became increasingly sluggish due to factors such as the self-restraint of sales activities aimed at preventing the spread ofCOVID-19.
In the Japanese financial and capital markets, short-term interest rates reached around minus 0.05%, led by the Bank of Japan (BOJ)’s Quantitative and Qualitative Monetary Easing with Yield Curve Control. While long-term interest rates temporarily rose to the 0.1% range in March of this year due to increased demand for funding as a result of the spread ofCOVID-19, they subsequently fell to around 0%. The exchange rate mainly moved in the range of 105 yen to 110 yen to the U.S. dollar. While the Japanese yen temporarily appreciated to the 101 yen range to the U.S. dollar in March of this year due to the spread ofCOVID-19 in the U.S. and the sharp drop in crude oil prices, by the end of the fiscal year it was around 107 yen to the U.S. dollar. The Nikkei Stock Average rose to the 24,000 yen range in January 2020 after continuing to move back and forth around the 21,000 yen range in the first half of the fiscal year. However, it remained around 19,000 yen toward the end of fiscal 2019 due to growing concerns over the deterioration of corporate business performance resulting from the lasting effects ofCOVID-19.
Regarding financial-related laws and regulations, the “Act on Partial Amendments of Payment Services Act, etc., to Address the Diversification of Financial Transactions based on Advances in Information Technology” was passed in May 2019. The act establishes regulations for transactions using crypto assets and adds the service of providing customer information to third parties as a business of financial institutions. In addition, in March 2020, the Group of Central Bank Governors and Heads of Supervision, which oversees the Basel Committee on Banking Supervision, announced that it has deferred the implementation timeline of the outstanding Basel III standards finalized in each country by one year, resulting from the impact of the spread ofCOVID-19.
Business Progress and Results
Under these economic and financial circumstances, Sumitomo Mitsui Financial Group, Inc. (hereinafter, “the Company”) and its subsidiaries (hereinafter, collectively with the Company, “the Group”), conducting mainly commercial banking and other financial services, including leasing, securities, and consumer finance, have worked to implement our Medium-Term Management Plan for the three fiscal years from fiscal 2017 to fiscal 2019, aimed at achieving the following vision: “We will become a global financial group that, by earning the highest trust of our customers, leads the growth of Japan and the Asian region.”
During fiscal 2019, the last year of the Medium-Term Management Plan, we set the basic policy as “Realize a strong finish to the final year of the current Medium-Term Management Plan and undertake initiatives that will deliver sustainable growth, with a view to the next Medium-Term Management Plan” and carried out various initiatives based on the three core policies below to become the financial group of choice for our customers.
Core Policies
(1) Disciplined business management
(2) Focus on our strengths to generate growth
(3) Integration across the Group and globally to achieve sustainable growth |
1
(1) Disciplined business management
In order to reinforce our asset management business, with high capital efficiency, we further strengthened our domestic business structure through a merger between Sumitomo Mitsui Asset Management Company, Limited and Daiwa SB Investments Ltd. Furthermore, we acquired all business operations of U.K.-based TT International. In order to optimize our group structure, we speedily reorganized Sumitomo Mitsui Card Company, Limited, Cedyna Financial Corporation, and SMBC Finance Service Co., Ltd., which lead the Group’s cashless payment strategy. We also accelerated implementation of operational automation using RPA (Robotic Process Automation) in each Group company, and in Sumitomo Mitsui Banking Corporation (hereinafter, “SMBC”), the completion of the transformation of all branches to next-generation branches.
(2) Focus on our strengths to generate growth
Based on our core competencies and growth opportunities, we have identified “Seven Core Business Areas” and carried out business accordingly.
[Seven Core Business Areas]
(1) Hold the number one retail banking franchise in Japan
(2) Build on our lead position in the Japanesemedium-sized enterprise market
(3) Increase market share in Corporate & Investment Banking in key global markets
(4) Establish atop-tier position in product lines where we are competitive globally
(5) Accelerate our “Asia-centric” strategy (Note 1)
(6) Strengthen sales and trading capability
(7) Develop asset-light businesses: trust banking and asset management |
(Note 1) | The reinforcement of business in Asia is our most important strategy and we aim to become a leading financial group in Asia by proactively investing resources into the region. |
We advanced the following initiatives in the Retail, Wholesale, International, and Global Markets Business Units.
(a) Retail Business Unit
The Retail Business Unit engages mainly in business aimed at retail customers.
SMBC improved convenience for customers through measures such as digitizing application procedures for consumer loans. In order to meet the diversifying asset management needs of customers, SMBC and SMBC Nikko Securities Inc. continued to collaborate to promote customer-focused wealth management business. As a result, the balances of assets under custody rose steadily. In the payment business segment, Sumitomo Mitsui Card Company, Limited and Cedyna Financial Corporation implemented measures to enrich the services available to customers, such as expanding the functions of smartphone apps, and as a result credit card purchase volumes increased steadily.
2
(b) Wholesale Business Unit
The Wholesale Business Unit engages in business mainly aimed at large- andmedium-sized corporate clients in Japan.
Formedium-sized corporate clients, the Group provided diverse solutions tailored to the growth stages of individual customers. Forlarge-sized corporate clients, to meet increasingly advanced and complex needs, such as cross-border M&A transactions, the Group further accelerated businesses focused on providing solutions to clients’ management issues including providing high value-added proposals through collaboration between Group companies, both in Japan and overseas. As the tide of digitalization continues throughout society, the Group created new businesses, such as SMBC’s “Biz-Create,” an online business matching service, and the launch of a cloud-based electronic contract service by SMBC CLOUDSIGN, Inc., a joint venture between the Company and Bengo4.com, Inc.
(c) International Business Unit (Note 2)
The International Business Unit engages in business aimed at Japanese andnon-Japanese companies and financial institutions operating business overseas, and foreign companies operating inside Japan.
For overseas customers, as a result of the promotion of cross-selling on a global Group basis, the Group expanded the number of bond underwritings as an active book runner (Note 3), carrying on the expansion from the previous year. The Group also continued to work to enhance its business in areas in which the Group possesses particular strengths, such as aircraft leasing. In Asia, we deepened relationships with local blue chip companies and high-growth companies. In Indonesia, our consolidated subsidiary, PT Bank BTPN Tbk expanded its business as a full-line commercial bank that handles both wholesale and retail businesses and established a system capable of providing comprehensive financial services through collaborations with Group companies which engage in securities and leasing businesses.
(Note 2) | As of April 1, 2020, the “International Business Unit” has been renamed to the “Global Business Unit.” |
(Note 3) | A securities company that plays a key underwriting role when offering and selling securities. |
(d) Global Markets Business Unit
The Global Markets Business Unit carries out ALM operations (Note 4) that comprehensively manage the liquidity risk and interest rate risk, and provides customers with services through marketable products such as foreign currency, derivatives, bonds, and stocks.
SMBC and SMBC Nikko Securities expanded their offerings of marketable products such as stocks, foreign currency, and derivatives, and enhanced collaboration between their sales and product development sections. Through this, they established a solution proposal-based business model that promptly meets customers’ diversified investment targets and needs. In order to stabilize its procurement of foreign currency, SMBC continued to issue foreign-denominated covered bonds, which are secured by products such as SMBC’s housing loan bonds.
(Note 4) | Asset Liability Management: A risk management method that optimizes future asset and liability balance and seeks to maximize revenue. |
3
(3) Integration across the Group and globally to achieve sustainable growth
(a) Governance and management structure to maximize our business potential
The Group enhanced its product and service provision capabilities and met the diverse needs of a broad range of customers on a group-wide and global basis under the business unit system. By controlling personnel and system investment amounts, such as the focused allocation of personnel and system investment in growth fields, on a group-wide and global basis, we optimized resource allocation on a group-wide basis. Based on domestic and foreign regulatory trends, we engaged in risk management and compliance system improvement measures, such as the prevention of money laundering and financing to terrorists. In order to further strengthen our corporate governance system, in June 2019, SMBC and SMBC Nikko Securities Inc. transformed to a company with an Audit and Supervisory Committee, respectively.
(b) Digitalization
With the rapid advancement of digitalization throughout society, Group companies used digital technologies to improve operational efficiency and productivity. Sumitomo Mitsui Card Company, Limited, together with GMO Payment Gateway, Inc. and Visa Worldwide (Japan) Co., Ltd., continued the building of a next-generation payment platform and began offering “stera,” a comprehensive payment platform that provides all the functions necessary for cashless payment in a single package. Sumitomo Mitsui Card Company, Limited used its cashless data to begin providing “Custella,” a data analysis support service that assists clients with their sales activities.
(c) Enhancement of Corporate Sustainability Management
Group companies collaborated to actively reduce environmental impacts through their operations, such as by providing support for renewable energy projects using wind or solar power. In order to implement the recommendations of the Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board, which is composed of financial authorities in key countries, in April 2019, SMBC became the firstG-SIFIs (Note 5) to quantitatively perform tentative calculations of the financial impact of climate change and to disclose its findings. In January 2020, it expanded its analysis scope to also include risks occurring in the process of the transition tolow-carbon society, and disclosed its findings regarding the corresponding impact. The Company became a signatory to the Principles for Responsible Banking, issued in September 2019 by the United Nations Environment Programme Finance Initiative, and declared its intent to engage in business activities that contribute to the realization of sustainable society.
(Note 5) | Financial institutions certified by the Financial Stability Board as being systematically and globally important. |
As a result of these initiatives, the Company recorded consolidated ordinary profit and consolidated profit attributable to owners of parent of 932.0 billion yen and 703.8 billion yen, respectively, in fiscal 2019.
[Summary of Performance]
Sumitomo Mitsui Financial Group
|
FY2018
|
|
|
FY2019
|
| |||||
Ordinary profit
|
|
1,135.3 billion yen
|
|
|
932.0 billion yen
|
| ||||
Profit attributable to owners of parent
|
|
726.6 billion yen
|
|
|
703.8 billion yen
|
|
(Note) | Amounts less than one hundred million yen have been rounded down. |
Sumitomo Mitsui Banking Corporation (For reference)
|
FY2018
|
|
|
FY2019
|
| |||||
Ordinary profit
|
|
649.6 billion yen
|
|
|
483.9 billion yen
|
| ||||
Net income
|
|
477.3 billion yen
|
|
|
317.3 billion yen
|
|
(Note) | Amounts less than one hundred million yen have been rounded down. |
4
Issues to be addressed
In fiscal 2020, we revised our mission and formulated a new Medium-Term Management Plan for the three years up to fiscal 2022.
As we move forward with our new mission and Medium-Term Management Plan, considering the significant impact to our customers and the economy caused byCOVID-19, we strive to fulfill our social responsibility through the financial services that our group companies provide as financial infrastructure essential for maintaining social functions and supporting local communities and society.
For consumers in Japan, in order to respond to urgent funding needs, we are extending loans with low interest rates and providing flexibility by reviewing lending procedures. We are also upgrading our online services so that our customers can complete various transactions without coming to our branches. For corporates, we are supporting business continuity by setting up special funds to strengthen their liquidity positions and providing online services at our group companies for payments and other procedures. As for the support for local communities and society, we are making donations to medical research activities as well as the promotion of culture and arts. Furthermore, we are taking measures to prevent the spread ofCOVID-19 at our branches and encouraging telework to continue our services while ensuring the safety of our customers and employees.
On that basis, we will implement various initiatives to achieve our mission and management goals of our new Medium-Term Management Plan.
We have worked to achieve sustainable growth and enhance corporate value over the medium- to long-term by following our mission focusing on “Customer”, “Shareholder” and “Employees” as a universal concept for group management. However, our business environment has undergone major changes including the worsening of environmental and social issues, the momentum to pursue a sustainable society, intensified competition with transcending barriers of industries, changes of organizational culture, and diversification of employees. As a way to pass down unchanging fundamental beliefs while accepting the changes to the environment, we revised our mission for the first time and added “We contribute to a sustainable society by addressing environmental and social issues”. At the same time, we set a new medium- to long-term vision of becoming “A trusted global solution provider committed to the growth of our customers and advancement of society” and revised ”Five values”, which are to be shared by all SMBC Group employees.
In order to realize this vision, we will take steady steps by promoting various initiatives based on the three core policies under the new Medium-Term Management Plan.
5
<Business Strategy>
(1) Transformation: Transform existing businesses
Improve profitability and efficiency by engaging in business model transformation and structural cost reform among major business areas while ensuring strategic resource allocation. Specifically, mainly in the domestic business, we will rebuild the business franchise and preform strategic reallocation of resources corresponding to the market potential and pursue the improvement of both our service quality and business productivity through digitalization and streamlining of our business administration. Furthermore, in business areas where there is growth potential, we will aim to enhance our capability of providing high-quality solutions to our customers and strengthen competitiveness of our products and services by restructuring the business model and organizational structure to maximally leverage our group capability.
(2) Growth: Seek new growth opportunities
Explore new growth opportunities includingnon-financial business fields and generate new added value by making investments for the future to increase our profit base. Specifically, we will (a) strengthen businesses with high asset efficiency such as asset management and payment business in response to the structural change in the financial market, (b) expand our business franchise in Asia where medium- to long term growth is expected, and (c) develop new businesses that provide solutions utilizing data and digital technology to expand our business base for future growth.
Under our business strategy of “Transformation” and “Growth”, we have identified “Seven Key Strategies”.
6
<Management Base>
(3) Quality: Elevate quality in all aspects
Make a consistent effort to enhance our management system and corporate infrastructure as a global financial institution to realize sustainable growth. Specifically, as a basic management policy, we continue to ensure our customer-oriented approach and at the same time, we will take further actions such as promoting green finance and financial education programs to contribute to a sustainable society. In addition, we will continue to sophisticate human resource management and development to have employees perform at their full potential, and we will develop IT infrastructure in order to achieve both convenience improvement and strong cyber security. Furthermore, we enhance our governance system in a global basis including risk management and compliance areas.
We aim to respond to shareholder expectations by showing steady results regarding the initiatives described above. We look forward to the continued understanding and support of our shareholders.
7
(2) | Changes in Financial Position and Results of Operations (Consolidated Basis andNon-Consolidated Basis) |
a. Changes in Financial Position and Results of Operations (Consolidated Basis)
Unit: billions of yen
FY2016 (Fiscal year ended
| FY2017 (Fiscal year ended
| FY2018 (Fiscal year ended
| FY2019 (Fiscal year ended
| |||||
Ordinary income
| 5,133.2
| 5,764.1
| 5,735.3
| 5,314.3
| ||||
Ordinary profit
| 1,005.8
| 1,164.1
| 1,135.3
| 932.0
| ||||
Profit attributable to owners of parent
| 706.5
| 734.3
| 726.6
| 703.8
| ||||
Comprehensive income
| 966.0
| 984.1
| 795.1
| 372.9
| ||||
�� | ||||||||
Net assets
| 11,234.2
| 11,612.8
| 11,451.6
| 10,784.9
| ||||
Total assets
| 197,791.6
| 199,049.1
| 203,659.1
| 219,863.5
|
(Notes) | 1. | Amounts less than one hundred million yen have been rounded down. | ||
2. | The Company has 174 consolidated subsidiaries and 101 unconsolidated subsidiaries and related companies accounted for by the equity method as of March 31, 2020. |
8
b. Changes in Financial Position and Results of Operations(Non-Consolidated Basis)
Unit: billions of yen
FY2016 (Fiscal year ended
| FY2017 (Fiscal year ended
| FY2018 (Fiscal year ended
| FY2019 (Fiscal year ended
| |||||||||
Operating income
|
502.4
|
366.3
|
522.5
|
833.8
| ||||||||
Dividends received
|
428.8
|
257.0
| 371.8 |
659.4
| ||||||||
Dividends received from banking subsidiaries
|
408.4
|
223.3
|
325.3
|
637.7
| ||||||||
Dividends received from other subsidiaries
|
17.5
|
31.0
|
40.2
|
10.7
| ||||||||
Net income
|
(millions of yen) 450,775
|
(millions of yen) 229,300
|
(millions of yen) 474,196
|
(millions of yen) 636,128
| ||||||||
Earnings per share
| (yen) 319.69
| (yen) 162.57
| (yen) 339.29
| (yen) 462.60
| ||||||||
Total assets
|
10,457.1
|
12,104.9
|
12,991.3
|
14,225.4
| ||||||||
Investments in banking subsidiaries
|
4,613.8
|
4,613.8
|
4,613.7
|
4,613.7
| ||||||||
Investments in other subsidiaries |
1,489.0
|
1,489.7
|
1,265.7
|
1,533.6
|
(Notes) | 1. | Amounts less than one hundred million yen have been rounded down. | ||
2. | “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) has been adopted from the fiscal year ended March 31, 2019, whereby deferred tax assets are presented under investments and other assets, while deferred tax liabilities are presented under fixed liabilities. This change has been reflected in fiscal years ended March 31, 2018 and before as well. |
9
(3) | Employees of the Group |
March 31, 2020 | ||||||||||
Wholesale Business Unit | Retail Business Unit | International Business Unit | Global Markets Business Unit | Head Office Account | ||||||
Number of employees
| 7,463
| 32,926
| 29,333
| 1,299
| 15,422
| |||||
March 31, 2019 | ||||||||||
Wholesale Business Unit | Retail Business Unit | International Business Unit | Global Markets Business Unit | Head Office Account | ||||||
Number of employees
| 7,396
| 34,055
| 28,989
| 1,282
| 14,937
|
(Notes) | 1. | The number of employees is the number of persons engaged in the Group, including local staff overseas, but not including employees on short-term contracts and temporary employees (14,134 persons as of March 31, 2020; 15,089 persons as of March 31, 2019). | ||||
2. | The number of employees is the number of persons engaged in the Company and consolidated subsidiaries. | |||||
3. | The businesses handled by each business unit are the following. | |||||
Wholesale Business Unit: | Businesses dealing with domesticmedium-to-large-sized enterprises | |||||
Retail Business Unit: | Businesses dealing with domestic individual andsmall-to-medium-sized enterprises | |||||
International Business Unit: | Businesses dealing with international (including Japanese) corporate customers | |||||
Global Markets Business Unit: | Businesses dealing with financial markets | |||||
Head Office account: | Businesses other than those above |
10
(4) | Principal Offices of the Group |
Company name | Reportable segment | Principal office | Number of branches | |||||||
As of March 31, 2020 | As of March 31, 2019 | |||||||||
Sumitomo Mitsui Banking Corporation | Wholesale Business Unit Retail Business Unit International Business Unit Global Markets Business Unit | Domestic | Head Office
Tokyo Main Office
Osaka Head Office
Kobe Main Office, etc. | 865 | 893 | |||||
Head Office Account | Overseas | New York Branch, etc. | 41 | 42 | ||||||
SMBC Trust Bank Ltd. | Wholesale Business Unit Retail Business Unit International Business Unit | Head Office, etc. | 35 | 35 | ||||||
SMBC Nikko Securities Inc. | Wholesale Business Unit Retail Business Unit International Business Unit Global Markets Business Unit Head Office Account | Head Office, etc. | ||||||||
Sumitomo Mitsui Card Company, Limited | Retail Business Unit | Tokyo Head Office Osaka Head Office, etc. | ||||||||
Cedyna Financial Corporation | Retail Business Unit | Head Office Tokyo Head Office, etc. | ||||||||
SMBC Consumer Finance Co., Ltd. | Retail Business Unit | Head Office, etc. | ||||||||
The Japan Research Institute, Limited | Head Office Account | Tokyo Head Office Osaka Head Office, etc. | ||||||||
Sumitomo Mitsui DS Asset Management Company, Limited | Head Office Account | Head Office, etc. |
(Note) | The businesses handled by each business unit are the following. | |||
Wholesale Business Unit: | Businesses dealing with domesticmedium-to-large-sized enterprises | |||
Retail Business Unit: | Businesses dealing with domestic individual andsmall-to-medium-sized enterprises | |||
International Business Unit: | Businesses dealing with international (including Japanese) corporate customers | |||
Global Markets Business Unit: | Businesses dealing with financial markets | |||
Head Office account: | Businesses other than those above |
11
(5) | Capital Investment of the Group |
a. Total Amount of Capital Investment
Unit: millions of yen
Company name |
Reportable segment
|
|
Amount
|
| ||
Sumitomo Mitsui Financial Group, Inc. | Head Office Account | 15,844 | ||||
Sumitomo Mitsui Banking Corporation | Wholesale Business Unit Retail Business Unit International Business Unit Global Markets Business Unit Head Office Account | 105,833 | ||||
SMBC Trust Bank Ltd. | Wholesale Business Unit Retail Business Unit International Business Unit | 5,279 | ||||
SMBC Nikko Securities Inc. | Wholesale Business Unit Retail Business Unit International Business Unit Global Markets Business Unit Head Office Account | 29,405 | ||||
Sumitomo Mitsui Card Company, Limited
| Retail Business Unit | 23,015 | ||||
Cedyna Financial Corporation
| Retail Business Unit | 8,204 | ||||
SMBC Consumer Finance Co., Ltd.
| Retail Business Unit | 8,334 | ||||
The Japan Research Institute, Limited
| Head Office Account | 7,728 | ||||
Sumitomo Mitsui DS Asset Management Company, Limited
| Head Office Account | 2,304 | ||||
Others
| - | 26,106 | ||||
Total
| 232,055 |
(Notes) | 1. | Amounts less than one million yen have been rounded down. | ||||
2. | The businesses handled by each business unit are the following. | |||||
Wholesale Business Unit: | Businesses dealing with domesticmedium-to-large-sized enterprises | |||||
Retail Business Unit: | Businesses dealing with domestic individual andsmall-to-medium-sized enterprises | |||||
International Business Unit: | Businesses dealing with international (including Japanese) corporate customers | |||||
Global Markets Business Unit: | Businesses dealing with financial markets | |||||
Head Office account: | Businesses other than those above |
b. Establishment of Principal Facilities, etc.
Unit: millions of yen
Company name
|
Reportable segment
|
Description
|
|
Amount
|
| |||
Sumitomo Mitsui Financial Group, Inc. | Head Office Account | Branch facilities, etc. | 15,745 | |||||
Sumitomo Mitsui Banking Corporation | Wholesale Business Unit Retail Business Unit International Business Unit Global Markets Business Unit Head Office Account | Branch facilities, etc. | 19,402 | |||||
Software | 59,000 |
(Notes) | 1. | Amounts less than one million yen have been rounded down. | ||||
2. | The businesses handled by each business unit are the following. | |||||
Wholesale Business Unit: | Businesses dealing with domesticmedium-to-large-sized enterprises | |||||
Retail Business Unit: | Businesses dealing with domestic individual andsmall-to-medium-sized enterprises | |||||
International Business Unit: | Businesses dealing with international (including Japanese) corporate customers | |||||
Global Markets Business Unit: | Businesses dealing with financial markets | |||||
Head Office account: | Businesses other than those above |
12
(6) | Parent Company and Principal Subsidiaries, etc. |
a. | Parent Company |
Not applicable.
b. | Principal Subsidiaries, etc. |
Company name | Location | Main business | Date of establishment | Capital (millions of yen) | Percentage of the Company’s voting rights (%) | Other | ||||||
Sumitomo Mitsui Banking Corporation
| Chiyoda-ku, Tokyo | Commercial banking | June 6, 1996 | 1,770,996 | 100.00 | - | ||||||
SMBC Trust Bank Ltd.
| Minato-ku, Tokyo | Commercial banking and trust services | February 25, 1986 | 87,550 | 100.00 (100.00) | - | ||||||
Sumitomo Mitsui Finance and Leasing Company, Limited
| Chiyoda-ku, Tokyo | Leasing | February 4, 1963 | 15,000 | 50.00 | - | ||||||
SMBC Nikko Securities Inc.
| Chiyoda-ku, Tokyo | Securities | June 15, 2009 | 10,000 | 100.00 | - | ||||||
Sumitomo Mitsui Card Company, Limited
| Chuo-ku, Osaka | Credit card | December 26, 1967 | 34,000 | 100.00 | - | ||||||
Cedyna Financial Corporation
| Naka-ku, Nagoya | Credit card and Installment | September 11, 1950 | 82,843 | 100.00 (100.00) | - | ||||||
SMBC Consumer Finance Co., Ltd.
| Chuo-ku, Tokyo | Consumer lending | March 20, 1962 | 140,737 | 100.00 | - | ||||||
The Japan Research Institute, Limited
| Shinagawa-ku, Tokyo | System development, data processing, management consulting, and economic research | November 1, 2002 | 10,000 | 100.00 | - | ||||||
Sumitomo Mitsui DS Asset Management Company, Limited
| Minato-ku, Tokyo | Investment advisory and investment trust management | July 15, 1985 | 2,000 | 50.12 | - | ||||||
Sumitomo Mitsui Banking Corporation Europe Limited
| London, U.K. | Commercial banking | March 5, 2003 | 348,192 [USD 3.2 billion] | 100.00 (100.00) | - | ||||||
Sumitomo Mitsui Banking Corporation (China) Limited
| Shanghai, People’s Republic of China | Commercial banking | April 27, 2009 | 153,100 [RMB 10 billion] | 100.00 (100.00) | - | ||||||
PT Bank BTPN Tbk
| Jakarta, Republic of Indonesia | Commercial banking | February 5, 1958 | 1,075 [IDR 162.9 billion] | 93.52 (93.52) | - | ||||||
SMBC Americas Holdings, Inc.
| Wilmington, Delaware, U.S.A. | Bank Holding Company | August 8, 1990 | 0 [USD 2,100] | 100.00 (100.00) | - | ||||||
SMBC Guarantee Co., Ltd.
| Minato-ku, Tokyo | Credit guarantee | July 14, 1976 | 187,720 | 100.00 (100.00) | - | ||||||
Sumitomo Mitsui Auto Service Company, Limited
| Shinjuku-ku, Tokyo | Leasing | February 21, 1981 | 13,636 | 21.99 | - |
(Notes) | 1. | The capital has been rounded down to the nearest unit and the percentage of the Company’s voting rights in subsidiaries has been rounded down to the nearest second decimal place. | ||||
2. | The capital denominated in foreign currency has been translated into Japanese yen at the exchange rate as of the account closing date. | |||||
3. | Figures in parentheses ( ) in the voting rights column indicate voting rights held indirectly. | |||||
4. | Daiwa SB Investments Ltd., which was previously stated, has been excluded from the Company’s equity method affiliates because this company ceased to exist due to the merger with Sumitomo Mitsui Asset Management Company, Limited on April 1, 2019. In addition, Sumitomo Mitsui Asset Management Company, Limited has changed its name to Sumitomo Mitsui DS Asset Management Company, Limited. |
13
(7) | Major Borrowings |
Creditor | Balance of borrowings (millions of yen) | Investment in the Company | ||||
Number of shares held (100 shares) | Percentage of voting rights (%) | |||||
Sumitomo Mitsui Banking Corporation | 1,228,030 | - | - |
(Note) Amounts less than one million yen have been rounded down.
(8) | Material Matters regarding Business Transfer, etc. |
Date of business transfer, etc.
|
Status of business transfer, etc.
| |
April 1, 2019 | Sumitomo Mitsui Asset Management Company, Limited and Daiwa SB Investments Ltd. merged on April 1, 2019 and the merged company has changed its name to Sumitomo Mitsui DS Asset Management Company, Limited. |
14
2. Matters regarding Directors and Corporate Executive Officers
(1) | Directors and Corporate Executive Officers |
a. | Directors |
(As of March 31, 2020)
Name | Position and responsibility | Significant concurrent positions | Other | |||
Takeshi Kunibe | Chairman of the Board Member of the Nominating Committee Member of the Compensation Committee | Director of TAISHO PHARMACEUTICAL HOLDINGS Co., Ltd. Director of NEC Corporation | - | |||
Jun Ohta* | Director Member of the Compensation Committee | - | - | |||
Makoto Takashima | Director | President of Sumitomo Mitsui Banking Corporation (Representative Director) | - | |||
Haruyuki Nagata* | Director | Director of Sumitomo Mitsui Banking Corporation | - | |||
Toru Nakashima* | Director | Director of Sumitomo Mitsui Banking Corporation | - | |||
Atsuhiko Inoue | Director Member of the Audit Committee | Director of Sumitomo Mitsui Banking Corporation | - | |||
Toru Mikami | Director Member of the Audit Committee | - | - | |||
Tetsuya Kubo | Director | Representative Director, Chairman of the Board of SMBC Nikko Securities Inc. | - | |||
Masayuki Matsumoto | Director (outside) Member of the Nominating Committee Member of the Audit Committee (Chairman) | Special Advisor of Central Japan Railway Company | - | |||
Arthur M. Mitchell | Director (outside) Member of the Nominating Committee Member of the Compensation Committee | Attorney at Law, admitted in New York Registered Foreign Attorney in Japan | - | |||
Shozo Yamazaki | Director (outside) Member of the Audit Committee | Certified Public Accountant Status of other concurrent positions shall be as described in “Concurrent Positions and Other Details on Outside Directors” below. | He has considerable expertise in finance and accounting. |
15
Name | Position and responsibility | Significant concurrent positions | Other | |||
Masaharu Kohno | Director (outside) Member of the Nominating Committee | Status of concurrent positions shall be as described in “Concurrent Positions and Other Details on Outside Directors” below. | - | |||
Yoshinobu Tsutsui | Director (outside) Member of the Nominating Committee (Chairman) Member of the Compensation Committee | Chairman of NIPPON LIFE INSURANCE COMPANY Status of other concurrent positions shall be as described in “Concurrent Positions and Other Details on Outside Directors” below. | - | |||
Katsuyoshi Shinbo | Director (outside) Member of the Audit Committee Member of the Compensation Committee (Chairman) | Attorney at Law Status of other concurrent positions shall be as described in “Concurrent Positions and Other Details on Outside Directors” below. | - | |||
Eriko Sakurai | Director (outside) Member of the Nominating Committee Member of the Compensation Committee | Chairman and CEO of Dow Toray Co., Ltd. Status of other concurrent positions shall be as described in “Concurrent Positions and Other Details on Outside Directors” below. | - |
(Notes) | 1. | Directors Messrs. Masayuki Matsumoto, Arthur M. Mitchell, Shozo Yamazaki, Masaharu Kohno, Yoshinobu Tsutsui, Katsuyoshi Shinbo and Ms. Eriko Sakurai are Outside Directors as provided for in Article 2, Item 15 of the Companies Act. | ||
2. | To ensure audit effectiveness, the Company has elected twonon-executive Directors Messrs. Atsuhiko Inoue and Toru Mikami as full-time members of the Audit Committee. | |||
3. | Directors with an asterisk (*) concurrently serve as Corporate Executive Officers. | |||
4. | The Company has designated Directors Messrs. Masayuki Matsumoto, Arthur M. Mitchell, Shozo Yamazaki, Masaharu Kohno, Yoshinobu Tsutsui, Katsuyoshi Shinbo and Ms. Eriko Sakurai as Independent Directors in accordance with the requirements of the financial instruments exchanges in Japan, such as Tokyo Stock Exchange, Inc. | |||
5. | Change in significant concurrent position as of April 1, 2020: |
Director | Tetsuya Kubo | Advisor of SMBC Nikko Securities Inc. |
Directors who resigned during the Fiscal Year
Name | Position and responsibility | Significant concurrent positions | Other | |||
Koichi Miyata | Chairman of the Board Member of the Nominating Committee Member of the Compensation Committee | Chairman of the Board of Sumitomo Mitsui Banking Corporation Director of SONY CORPORATION Corporate Auditor of Isetan Mitsukoshi Holdings Ltd. | Resigned on April 1, 2019 | |||
Kozo Ogino* | Director | Director of Sumitomo Mitsui Banking Corporation (Representative Director) | Resigned on April 1, 2019 |
(Notes) | 1. | Position and responsibility and significant concurrent positions are reported as of the date of resignation. | ||
2. | The director with an asterisk (*) concurrently served as Corporate Executive Officer. |
16
b. | Corporate Executive Officers |
(As of March 31, 2020)
Name | Position and responsibility | Significant concurrent positions | Other | |||
Jun Ohta* | President (Representative Corporate Executive Officer) Group CEO | - | - | |||
Gotaro Michihiro | Deputy President and Corporate Executive Officer (Representative Corporate Executive Officer) Co-Head of Wholesale Business Unit | Director of Sumitomo Mitsui Banking Corporation (Representative Director) | - | |||
Masahiko Oshima | Deputy President and Corporate Executive Officer (Representative Corporate Executive Officer) Head of International Business Unit | Director of Sumitomo Mitsui Banking Corporation (Representative Director) | - | |||
Toshikazu Yaku | Deputy President and Corporate Executive Officer (Representative Corporate Executive Officer) Group CCO and Group CHRO Responsible for General Affairs Dept., Human Resources Dept., Quality Management Dept. and Administrative Services Dept. | Director of Sumitomo Mitsui Banking Corporation (Representative Director) | - | |||
Katsunori Tanizaki | Senior Managing Corporate Executive Officer Group CDIO Responsible for IT Innovation Dept. | Senior Managing Executive Officer of Sumitomo Mitsui Banking Corporation Representative Director, President and CEO of The Japan Research Institute, Limited | - | |||
Naoki Tamura | Senior Managing Corporate Executive Officer Head of Retail Business Unit | Senior Managing Executive Officer of Sumitomo Mitsui Banking Corporation | - | |||
Hiroshi Munemasa | Senior Managing Corporate Executive Officer Head of Global Markets Business Unit | Senior Managing Executive Officer of Sumitomo Mitsui Banking Corporation | - | |||
Kimio Matsuura | Senior Managing Corporate Executive Officer Co-Head of Wholesale Business Unit | Senior Managing Executive Officer of Sumitomo Mitsui Banking Corporation | - | |||
Haruyuki Nagata* | Senior Managing Corporate Executive Officer Group CRO Responsible for Corporate Risk Management Dept. and Credit & Investment Planning Dept. | Director of Sumitomo Mitsui Banking Corporation | - |
17
Name | Position and responsibility | Significant concurrent positions | Other | |||
Toru Nakashima* | Senior Managing Corporate Executive Officer Group CFO and Group CSO Responsible for Public Relations Dept., Corporate Planning Dept., Financial Accounting Dept. and Subsidiaries & Affiliates Dept. | Director of Sumitomo Mitsui Banking Corporation | - | |||
Shoji Masuda | Managing Corporate Executive Officer Group CIO Responsible for IT Planning Dept., Data Management Dept. and Operations Planning Dept. | Director of Sumitomo Mitsui Banking Corporation Director of The Japan Research Institute, Limited | - |
(Notes) | 1. | Corporate Executive Officers with an asterisk (*) concurrently serve as Directors. | ||||||||
2. | CEO: | Chief Executive Officer | ||||||||
CCO: | Chief Compliance Officer | |||||||||
CHRO: | Chief Human Resources Officer | |||||||||
CDIO: | Chief Digital Innovation Officer | |||||||||
CRO: | Chief Risk Officer | |||||||||
CFO: | Chief Financial Officer | |||||||||
CSO: | Chief Strategy Officer | |||||||||
CIO: | Chief Information Officer | |||||||||
3. | Changes in positions and responsibilities and in significant concurrent positions as of April 1, 2020: | |||||||||
Deputy President and Corporate Executive Officer (Representative Corporate Executive Officer) | Masahiko Oshima | Head of Global Business Unit (On April 1, the International Business Unit was renamed to the Global Business Unit) | ||||||||
Deputy President and Corporate Executive Officer (Representative Corporate Executive Officer) | Toshikazu Yaku | Group CCO and Group CHRO Responsible for General Affairs Dept., Human Resources Dept., Quality Management Dept., Compliance Dept. and Administrative Services Dept. | ||||||||
Senior Managing Corporate Executive Officer | Katsunori Tanizaki | No longer responsible for IT Innovation Dept. Group CDIO Responsible for Digital Solution Division and Digital Strategy Dept. | ||||||||
Senior Managing Corporate Executive Officer | Hiroshi Munemasa | Resigned from Senior Managing Corporate Executive Officer Resigned from Senior Managing Executive Officer of Sumitomo Mitsui Banking Corporation | ||||||||
Senior Managing Corporate Executive Officer | Haruyuki Nagata | Group CRO Responsible for Corporate Risk Management Dept., Risk Management Dept., Americas Division and Credit & Investment Planning Dept. | ||||||||
Senior Managing Corporate Executive Officer | Toru Nakashima | No longer responsible for Subsidiaries & Affiliates Dept. Group CFO and Group CSO Responsible for Public Relations Dept., Corporate Planning Dept., Business Development Dept. and Financial Accounting Dept. | ||||||||
Managing Corporate Executive Officer | Shoji Masuda | Senior Managing Corporate Executive Officer Group CIO Responsible for IT Planning Dept., System Security Planning Dept., Data Management Dept. and Operations Planning Dept. | ||||||||
Assumption of Corporate Executive Officers as of April 1, 2020: | ||||||||||
Fumiharu Kozuka | Senior Managing Corporate Executive Officer Group CAE (Chief Audit Executive) Responsible for Audit Dept. | |||||||||
Masamichi Koike | Senior Managing Corporate Executive Officer Head of Global Markets Business Unit Senior Managing Executive Officer of Sumitomo Mitsui Banking Corporation |
18
Changes in responsibilities as of May 1, 2020: | ||||||||||
Deputy President and Corporate Executive Officer (Representative Corporate Executive Officer) | Toshikazu Yaku | Discharged from Group CCO No longer responsible for Compliance Dept. | ||||||||
Assumption of Corporate Executive Officers as of May 1, 2020: | ||||||||||
Tetsuro Imaeda | Senior Managing Corporate Executive Officer Group CCO Responsible for Compliance Dept. Director of Sumitomo Mitsui Banking Corporation |
Corporate Executive Officers who resigned during the Fiscal Year
Name | Position and responsibility | Significant concurrent positions | Other | |||
Takeshi Kunibe* | President (Representative Corporate Executive Officer) Group CEO | Director of NEC Corporation | Resigned on April 1, 2019 | |||
Kozo Ogino* | Deputy President and Corporate Executive Officer Group CRO Responsible for Corporate Risk Management Dept. and Credit & Investment Planning Dept. | Director of Sumitomo Mitsui Banking Corporation (Representative Director) | Resigned on April 1, 2019 | |||
Manabu Narita | Deputy President and Corporate Executive Officer Head of Wholesale Business Unit | Director of Sumitomo Mitsui Banking Corporation (Representative Director) | Resigned on April 1, 2019 |
(Notes) | 1. | Position and responsibility and significant concurrent positions are reported as of the date of resignation. | ||
2. | Corporate Executive Officers with an asterisk (*) concurrently served as Directors. |
19
(2) Compensation, etc. for Directors and Corporate Executive Officers
Unit: millions of yen
Classification
|
Persons paid
|
Compensation, etc.
| ||
Directors
|
13
|
353
| ||
Corporate Executive Officers
|
11
|
542
| ||
Total
|
24
|
896
|
(Notes) | 1. | Amounts less than one million yen have been rounded down. | ||
2. | Corporate Executive Officers do not receive an employee salary nor do they receive consideration for the performance of other duties. | |||
3. | Compensation, etc. paid to Directors concurrently serving as Corporate Executive Officers is included in the amount for Corporate Executive Officers. | |||
4. | The above-written amounts of compensation, etc. include expenses of 174 million yen (35 million yen for Directors and 138 million yen for Corporate Executive Officers) related to the payment of bonuses to Directors and Corporate Executive Officers. | |||
5. | The above-written amounts include “Compensation, etc. for Outside Directors” as mentioned below. |
Policy for Individual Compensation for Directors and Corporate Executive Officers
The Company hereby establishes the Executive Compensation Policy (the “Policy”) in order to provide guiding principles to determine individual remuneration for its directors, corporate executive officers and executive officers (the “Executives”).
The Policy’s aim is that executive compensation pursuant to it shall provide the appropriate incentives for the Executives to pursue the Group’s Mission and medium- to long-term vision.
Sumitomo Mitsui Banking Corporation, one of the Company’s main subsidiaries, shall determine its executive compensations in accordance with this Policy.
1. | Core Principles |
Our executive compensation shall be determined in accordance with the core principles below:
1) | The executive compensation aims at providing appropriate incentives toward the realization of the Group’s Mission and Vision. |
2) | The Company’s executive compensation shall reflect the changing business environment and the short-, medium- and long-term performance of the SMBC Group, and shall account for contributions to shareholder value and customer satisfaction as well as the realization of a sustainable society. |
3) | Individual remuneration shall reflect the assigned roles and responsibilities as well as the performance of the each Executive. |
4) | The Company shall research and review market practices, including the use of third-party surveys, in order to provide its Executives with a competitive remuneration package. |
5) | The Company’s executive compensation shall discourage excessive risk-taking and foster a prudent risk culture expected of a financial institution. |
6) | Both external and internal regulations/guidelines on executive compensation shall be observed and respected. |
7) | The Company shall establish appropriate governance and controls of the compensation process, and shall regularly review to update its executive compensation practices according to changing market practices and/or business environment. |
2. | Compensation Programme |
1) | The Company’s executive compensation programme (the “Programme”) shall have three components: base salary, cash bonus, and stock compensation. |
However, compensation for Outside Directors and Members of the Audit Committee is composed of base salary only, in light of their roles to oversee the execution of duties of executive officers, etc. |
2) | In order to hold the Executives accountable and provide them with appropriate incentives for the performance of the Group, the Programme targets the variable compensation component of total remuneration at 40%, if paid at standard levels. Corresponding with performance and the business environment, the variable component could range from 0% to 150% of the standard levels, which shall be determined by performance of the Executives. |
20
3) | In order to enhance shareholding of the Executives and align their interests with shareholders, the Programme targets its stock-based compensation components at 25% of total remuneration, if paid at standard levels. |
4) | The above target levels shall be appropriately set in accordance with the roles, responsibilities, etc. of each Executive. |
5) | Base salary shall be paid in cash and shall be, in principle, determined by the corporate titles of each Executive, reflecting the roles, responsibilities, etc. |
6) | Annual incentives shall be determined based on the annual performance of the Group, the group company and the business unit each Executive is accountable for, as well as on the performance of the each Executive reviewed both from short-term and medium-/long-term perspectives. 70% of the determined amount shall be paid as cash bonus and the remaining 30% shall be paid under Stock Compensation Plan II (annual performance share plan). |
7) | Stock compensation plans consist of Stock Compensation Plan I (the “Plan I”), under which the remuneration of the Executives shall be determined based on the Group’s medium-term performance, etc., Stock Compensation Plan II (the “Plan II”), determined based on the Group’s annual performance, etc. and Stock Compensation Plan III (the “Plan III”), determined based on corporate titles, etc. |
a. | Under the stock compensation plans, the Executives shall receive remuneration via shares of the Company common stock. The transfer of such stock shall be restricted for appropriately defined periods. |
b. | Remuneration under Plan I shall be determined based on the Group’s performance against the Medium-term Management Plan, performance of the Company shares, and the results of customer satisfaction surveys, etc. |
c. | Remunerations under Plan II shall be determined based on the annual performance of the Group, the group company, and the business unit each Executive is accountable for, as well as on the performance of each Executive reviewed both from a short-term and medium-/long-term perspectives. Remuneration paid by restricted shares, they shall effectively act as deferred compensation. |
d. | Remuneration under Plan III shall be determined based on corporate titles, roles, and responsibilities, etc. |
8) | In the event of material amendments to the financial statements or material reputational damages caused by the Executives, remunerations under the Plans could be reduced or fully forfeit. |
9) | Notwithstanding the above, executive compensation for the Executives hired locally overseas and the Executives domiciled outside Japan shall be individually designed and determined not only in accordance with the above Core Principles, but also with consideration to local regulations and taxes, guidelines, and other local market practices, whilst ensuring the compensation should not incentivize excessive risk-taking. |
3. | Governance and Control of the Compensation Processes |
1) | The Company, as a Company with Three Committees, has established a Compensation Committee to resolve the following: |
✓ | The Policy, the Programme, and relevant regulations. |
✓ | Individual remunerations for the Company’s directors and corporate executive officers. |
2) | In addition to the above, the Company Compensation Committee shall review and discuss the below: |
✓ | The individual remuneration for the Company’s other executive officers. |
✓ | Executive compensation programmes/practices of group companies of the Company, etc. |
4. | Amendments to and Abolition of the Policy |
Amendments | to and abolition of the Policy shall be resolved at the Compensation Committee. |
21
(3) Liability Limitation Agreement
Name | Summary of Liability Limitation Agreement
| |
Masayuki Matsumoto | In accordance with the provisions provided for in Article 427, Paragraph 1 of the Companies Act (the “Act”), the Company has entered into agreements with the Outside Directors stated in the left column to limit the liability provided for in Article 423, Paragraph 1 of the Act to the higher of either (i) 10 million yen or (ii) the minimum amount provided for in Article 427, Paragraph 1 of the Act. | |
Arthur M. Mitchell | ||
Shozo Yamazaki | ||
Masaharu Kohno | ||
Yoshinobu Tsutsui | ||
Katsuyoshi Shinbo | ||
Eriko Sakurai |
22
3. Matters regarding Outside Directors
(1) Concurrent Positions and Other Details on Outside Directors
(As of March 31, 2020)
| ||
Name
| Concurrent positions and other details
| |
Masayuki Matsumoto
| Special Advisor of Central Japan Railway Company
| |
Shozo Yamazaki
| Director of EBARA CORPORATION (outside)
| |
Masaharu Kohno
| Director of DOUTOR • NICHIRES Holdings Co., Ltd. (outside)
| |
Yoshinobu Tsutsui
| Chairman of NIPPON LIFE INSURANCE COMPANY Director of Imperial Hotel, Ltd. (outside) Director of Panasonic Corporation (outside) Audit & Supervisory Board Member of West Japan Railway Company (outside)
| |
Katsuyoshi Shinbo
| Corporate Auditor of Mitsui Chemicals, Inc. (outside)
| |
Eriko Sakurai
| Chairman and CEO of Dow Toray Co., Ltd. Executor, Dow Switzerland Holding GmbH, which is a Representative Partner of Dow Silicones Holding Japan G.K. Director of SONY CORPORATION (outside) |
(Note) | There is no other relationship to be disclosed between the Company and the companies or entities in which the Outside Directors of the Company concurrently serve. |
23
(2) Major Activities of Outside Directors
Name | Term of Office |
Attendance of the Board of Directors meeting, etc.
| Opinions issued at the Board of Directors meeting, etc. and other activities | |||||
Masayuki Matsumoto | 2 years and 9 months | Board of Directors meetings Nominating Committee meetings Audit Committee meetings | 12/12 4/5 15/15 | He mainly provides suggestions and comments based on his considerable experience as a chief executive and high level of insight. | ||||
Arthur M. Mitchell | 4 years and 9 months | Board of Directors meetings Nominating Committee meetings Compensation Committee meetings | 12/12 5/5 6/6 | He mainly provides suggestions and comments based on his considerable experience as an attorney at law and high level of insight. | ||||
Shozo Yamazaki | 2 years and 9 months | Board of Directors meetings Audit Committee meetings | 12/12 15/15 | He mainly provides suggestions and comments based on his considerable experience as a Certified Public Accountant and high level of insight. | ||||
Masaharu Kohno | 4 years and 9 months | Board of Directors meetings Nominating Committee meetings | 12/12 5/5 | He mainly provides suggestions and comments based on his considerable experience as a diplomat and high level of insight. | ||||
Yoshinobu Tsutsui | 2 years and 9 months | Board of Directors meetings Nominating Committee meetings Compensation Committee meetings | 12/12 5/5 5/6 | He mainly provides suggestions and comments based on his considerable experience as a chief executive and high level of insight. | ||||
Katsuyoshi Shinbo | 2 years and 9 months | Board of Directors meetings Audit Committee meetings Compensation Committee meetings | 12/12 15/15 6/6 | He mainly provides suggestions and comments based on his considerable experience as an attorney at law and high level of insight. | ||||
Eriko Sakurai | 4 years and 9 months | Board of Directors meetings Nominating Committee meetings Compensation Committee meetings | 12/12 5/5 6/6 | She mainly provides suggestions and comments based on her considerable experience as a chief executive and high level of insight. |
(Note) Periods of service of the Directors above of less than one month have been rounded down.
24
(3) Compensation, etc. for Outside Directors
Unit: millions of yen
Persons paid | Compensation, etc. paid by the Company | Compensation, etc. paid by parent company, etc. of the Company | ||||
Total amount of compensation, etc. | 7 | 114 | - |
(Notes) | 1. | Amounts less than one million yen have been rounded down. | ||
2. | No expenses have been incurred in connection with the payment of bonuses to Outside Directors. |
25
4. Matters regarding Shares of the Company
(1) Number of Shares
(Number of shares) | ||||||||
Total number of shares authorized to be issued
| ||||||||
Common stock
| 3,000,000,000 | |||||||
Preferred stock (Type 5)
| 167,000 | |||||||
Preferred stock (Type 7)
| 167,000 | |||||||
Preferred stock (Type 8)
| 115,000 | |||||||
Preferred stock (Type 9)
| 115,000 | |||||||
Total number of shares issued
| ||||||||
Common stock | 1,373,171,556 | |||||||
(2) Number of Shareholders as of March 31, 2019 |
| |||||||
(Number of shareholders) | ||||||||
Common stock | 327,658 |
(3) Major Shareholders
Common Stock
Name of shareholder |
Number of shares held and percentage of shares held
| |||||||
Number of shares held (100 shares) | Percentage of shares held (%) | |||||||
The Master Trust Bank of Japan, Ltd. (Trust Account)
| 971,566 | 7.09 | ||||||
Japan Trustee Services Bank, Ltd. (Trust Account)
| 783,326 | 5.71 | ||||||
Japan Trustee Services Bank, Ltd. (Trust Account 9)
| 403,326 | 2.94 | ||||||
Japan Trustee Services Bank, Ltd. (Trust Account 7)
| 293,202 | 2.14 | ||||||
NATSCUMCO
| 281,213 | 2.05 | ||||||
Japan Trustee Services Bank, Ltd. (Trust Account 5)
| 277,859 | 2.02 | ||||||
JP MORGAN CHASE BANK 385151
| 263,874 | 1.92 | ||||||
SSBTC CLIENT OMNIBUS ACCOUNT
| 254,092 | 1.85 | ||||||
STATE STREET BANK WEST CLIENT – TREATY 505234
| 193,533 | 1.41 | ||||||
Barclays Securities Japan Limited
| 184,841 | 1.34 |
(Notes) | 1. | Listed here are the top ten shareholders in terms of their respective ratio of stock holding against the total number of outstanding shares (excluding treasury shares). | ||
2. | Numbers of shares less than one hundred have been rounded down and the percentage of shares held has been rounded down to the nearest second decimal place. |
26
5. Matters regarding the Accounting Auditor
(1) | Accounting Auditor |
Name
|
Compensation, etc. for the fiscal year
| Other
| ||||
KPMG AZSA LLC
Toshihiro Otsuka Designated Limited Liability Partner
Noriaki Habuto Designated Limited Liability Partner
Kazuhide Niki Designated Limited Liability Partner |
Compensation, etc. pertaining to the activities specified in Article 2, Paragraph 1 of the Certified Public Accountants Act: 1,810 million yen | 1. The Audit Committee confirmed and discussed the details of the audit plan, the status of performance of duties, and the basis for calculation of the estimate of compensation of the Accounting Auditor. As a result, the Audit Committee gave approval set forth in Article 399, Paragraphs 1 and 4 of the Companies Act for the compensation, etc. of the Accounting Auditor. 2. The Company paid the Accounting Auditor for general training for employees of internal audit departments, etc., which fell outside the scope of the activities specified in Article 2, Paragraph 1 of the Certified Public Accountants Act. | ||||
Of the above, compensation, etc. as Accounting Auditor: 282 million yen
|
(Notes) | 1. Amounts less than one million yen have been rounded down. | |
2. The audit agreement between the Company and the Accounting Auditor does not and cannot practically distinguish between compensation, etc. for audits stipulated by the Companies Act and those stipulated by the Financial Instruments and Exchange Act. For this reason, “Of the above, compensation, etc. as Accounting Auditor” above includes the compensation, etc. amount for audits based on the Financial Instruments and Exchange Act. | ||
3. Total amount of moneys and other financial benefits payable by the Company and subsidiaries (excluding unconsolidated subsidiaries) to the Accounting Auditor is 3,951 million yen. This total includes fund auditing compensation. |
(2) | Liability Limitation Agreement |
Not applicable.
(3) | Other Matters regarding the Accounting Auditor |
a. | Policy for Decisions on Dismissal or Nonreappointment of Accounting Auditor |
The Audit Committee discusses whether to dismiss the Accounting Auditor where they fall under any of the grounds set forth in each item of Paragraph 1 of Article 340 of the Companies Act. In addition to that, when it is determined to be difficult for the Accounting Auditor to appropriately execute his or her duty, the Audit Committee discusses whether to forward a proposal for the dismissal or nonreappointment of the Accounting Auditor to the general meeting of shareholders in accordance with Article 404, Paragraph 2, Item 2 of the Companies Act.
b. | From among the Company’s significant subsidiaries, Sumitomo Mitsui Banking Corporation Europe Limited, Sumitomo Mitsui Banking Corporation (China) Limited, PT Bank BTPN Tbk and SMBC Americas Holdings, Inc. were audited by an Accounting Auditor other than the Company’s (or by person(s) with equivalent qualifications in foreign countries). |
27
6. | Matters regarding Specified Wholly Owned Subsidiary |
Company Name | Address | Total book value
(millions of yen)
| Total assets of the
Company
(millions of yen) | |||
Sumitomo Mitsui
Banking Corporation
| 1-2, Marunouchi
1-chome,Chiyoda-ku,
Tokyo, Japan | 4,613,790 | 14,225,470 |
(Note) Amounts less than one million yen have been rounded down.
7. | Others |
Policy Regarding the Exercise of Authority Given to the Board of Directors under the Articles of Incorporation pursuant to paragraph 1, Article 459 of the Companies Act
The Company stipulated in Article 8 of its Articles of Incorporation that except as otherwise provided by applicable law, the Company may, by resolution of its Board of Directors, acquire for value its own shares with agreement of shareholders pursuant to Item 1, paragraph 1 of Article 459 of the Companies Act. For acquisition of its own shares, the Company will appropriately act after comprehensively assessing the status of its capital, investment opportunities for future growth and other factors.
28
Consolidated Balance Sheet
(As of March 31, 2020)
Unit: millions of yen
Account | Amount | Account | Amount | |||||||
(Assets) | (Liabilities) | |||||||||
Cash and due from banks | 61,768,573 | Deposits | 127,042,217 | |||||||
Call loans and bills bought | 896,739 | Negotiable certificates of deposit | 10,180,435 | |||||||
Receivables under resale agreements | 8,753,816 | Call money and bills sold | 3,740,539 | |||||||
Receivables under securities borrowing transactions | 5,005,103 | Payables under repurchase agreements | 13,237,913 | |||||||
Monetary claims bought | 4,559,429 | Payables under securities lending transactions | 2,385,607 | |||||||
Trading assets | 7,361,253 | Commercial paper | 1,409,249 | |||||||
Money held in trust | 353 | Trading liabilities | 6,084,528 | |||||||
Securities | 27,128,751 | Borrowed money | 15,210,894 | |||||||
Loans and bills discounted | 82,517,609 | Foreign exchanges | 1,461,308 | |||||||
Foreign exchanges | 2,063,284 | Short-term bonds | 379,000 | |||||||
Lease receivables and investment assets | 219,733 | Bonds | 9,235,639 | |||||||
Other assets | 8,298,393 | Due to trust account | 1,811,355 | |||||||
Tangible fixed assets | 1,450,323 | Other liabilities | 7,011,967 | |||||||
Assets for rent | 506,755 | Reserve for employee bonuses | 73,868 | |||||||
Buildings | 341,505 | Reserve for executive bonuses | 3,362 | |||||||
Land | 423,346 | Net defined benefit liability | 35,777 | |||||||
Lease assets | 28,933 | Reserve for executive retirement benefits | 1,270 | |||||||
Construction in progress | 46,138 | Reserve for point service program | 26,576 | |||||||
Other tangible fixed assets | 103,645 | Reserve for reimbursement of deposits | 4,687 | |||||||
Intangible fixed assets | 753,579 | Reserve for losses on interest repayment | 142,890 | |||||||
Software | 440,407 | Reserves under the special laws | 3,145 | |||||||
Goodwill | 194,289 | Deferred tax liabilities | 257,384 | |||||||
Lease assets | 986 | Deferred tax liabilities for land revaluation | 30,111 | |||||||
Other intangible fixed assets | 117,896 | Acceptances and guarantees | 9,308,882 | |||||||
Net defined benefit asset | 230,573 | Total liabilities | 209,078,615 | |||||||
Deferred tax assets | 26,314 | (Net assets) | ||||||||
Customers’ liabilities for acceptances and guarantees | 9,308,882 | Capital stock | 2,339,964 | |||||||
Reserve for possible loan losses | (479,197 | ) | Capital surplus | 692,003 | ||||||
Retained earnings | 6,336,311 | |||||||||
Treasury stock | (13,983 | ) | ||||||||
Total stockholders’ equity | 9,354,296 | |||||||||
Net unrealized gains (losses) on other securities | 1,371,407 | |||||||||
Net deferred gains (losses) on hedges | 82,257 | |||||||||
Land revaluation excess | 36,878 | |||||||||
Foreign currency translation adjustments | (32,839 | ) | ||||||||
Accumulated remeasurements of defined benefit plans | (92,030 | ) | ||||||||
Total accumulated other comprehensive income | 1,365,673 | |||||||||
Stock acquisition rights | 2,064 | |||||||||
Non-controlling interests | 62,869 | |||||||||
Total net assets | 10,784,903 | |||||||||
Total assets | 219,863,518 | Total liabilities and net assets | 219,863,518 |
29
Consolidated Statement of Income
(From April 1, 2019 to March 31, 2020)
Unit: millions of yen
Account | Amount | |||||||
Ordinary income | 5,314,313 | |||||||
Interest income | 2,456,364 | |||||||
Interest on loans and discounts | 1,693,016 | |||||||
Interest and dividends on securities | 346,822 | |||||||
Interest on call loans and bills bought | 15,890 | |||||||
Interest on receivables under resale agreements | 31,449 | |||||||
Interest on receivables under securities borrowing transactions | 21,247 | |||||||
Interest on deposits with banks | 80,924 | |||||||
Interest on lease transactions | 7,307 | |||||||
Other interest income | 259,705 | |||||||
Trust fees | 4,701 | |||||||
Fees and commissions | 1,287,538 | |||||||
Trading income | 262,826 | |||||||
Other operating income | 1,050,065 | |||||||
Lease-related income | 39,123 | |||||||
Installment-related income | 752,775 | |||||||
Other | 258,166 | |||||||
Other income | 252,816 | |||||||
Recoveries ofwritten-off claims | 12,414 | |||||||
Other | 240,401 | |||||||
Ordinary expenses | 4,382,249 | |||||||
Interest expenses | 1,179,770 | |||||||
Interest on deposits | 441,477 | |||||||
Interest on negotiable certificates of deposit | 131,849 | |||||||
Interest on call money and bills sold | 10,284 | |||||||
Interest on payables under repurchase agreements | 131,320 | |||||||
Interest on payables under securities lending transactions | 1,111 | |||||||
Interest on commercial paper | 31,525 | |||||||
Interest on borrowed money | 57,632 | |||||||
Interest on short-term bonds | 29 | |||||||
Interest on bonds | 220,874 | |||||||
Other interest expenses | 153,666 | |||||||
Fees and commissions payments | 204,188 | |||||||
Other operating expenses | 908,951 | |||||||
Lease-related expenses | 26,514 | |||||||
Installment-related expenses | 722,440 | |||||||
Other | 159,997 | |||||||
General and administrative expenses | 1,739,603 | |||||||
Other expenses | 349,734 | |||||||
Provision for reserve for possible loan losses | 70,571 | |||||||
Other | 279,163 | |||||||
Ordinary profit | 932,064 | |||||||
Extraordinary gains | 23,896 | |||||||
Gains on disposal of fixed assets | 1,855 | |||||||
Other extraordinary gains | 22,040 | |||||||
Extraordinary losses | 67,314 | |||||||
Losses on disposal of fixed assets | 1,910 | |||||||
Losses on impairment of fixed assets | 65,106 | |||||||
Provision for reserve for eventual future operating losses from financial instruments transactions | 297 | |||||||
Income before income taxes | 888,646 | |||||||
Income taxes-current | 213,526 | |||||||
Income taxes-deferred | (45,842 | ) | ||||||
Income taxes | 167,684 | |||||||
Profit | 720,962 | |||||||
Profit attributable tonon-controlling interests | 17,078 | |||||||
Profit attributable to owners of parent | 703,883 |
30
Consolidated Statement of Changes in Net Assets
(From April 1, 2019 to March 31, 2020)
Unit: millions of yen
Stockholders’ equity | ||||||||||
Capital stock | Capital surplus | Retained earnings | Treasury stock | Total stockholders’ equity | ||||||
Balance at April 1, 2019 | 2,339,443 | 739,047 | 5,992,247 | (16,302) | 9,054,436 | |||||
Changes in the year | ||||||||||
Issuance of new stock | 521 | 521 | 1,043 | |||||||
Cash dividends | (255,834) | (255,834) | ||||||||
Profit attributable to owners of parent | 703,883 | 703,883 | ||||||||
Purchase of treasury stock | (100,088) | (100,088) | ||||||||
Disposal of treasury stock | (250) | 733 | 483 | |||||||
Cancellation of treasury stock | (101,673) | 101,673 | – | |||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | (47,565) | (47,565) | ||||||||
Decrease due to decrease in subsidiaries | (945) | (945) | ||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (679) | (679) | ||||||||
Reversal of land revaluation excess | (435) | (435) | ||||||||
Transfer from retained earnings to capital surplus | 101,923 | (101,923) | – | |||||||
Net changes in items other than stockholders’ equity in the year | ||||||||||
Net changes in the year | 521 | (47,044) | 344,064 | 2,318 | 299,860 | |||||
Balance at March 31, 2020 | 2,339,964 | 692,003 | 6,336,311 | (13,983) | 9,354,296 |
Accumulated other comprehensive income
| ||||||||||||||||||
Net
| Net deferred gains (losses) on hedges | Land revaluation excess | Foreign currency translation adjustments |
Accumulated ments of
|
Total sive income
| Stock acquisition rights | Non- controlling interests | Total net assets | ||||||||||
Balance at April 1, 2019 | 1,688,852 | (54,650) | 36,547 | 50,379 | (7,244) | 1,713,884 | 4,750 | 678,540 | 11,451,611 | |||||||||
Changes in the year | ||||||||||||||||||
Issuance of new stock | 1,043 | |||||||||||||||||
Cash dividends | (255,834) | |||||||||||||||||
Profit attributable to owners of parent | 703,883 | |||||||||||||||||
Purchase of treasury stock | (100,088) | |||||||||||||||||
Disposal of treasury stock | 483 | |||||||||||||||||
Cancellation of treasury stock | – | |||||||||||||||||
Changes in shareholders’ interest due to transaction withnon-controlling interests | (47,565) | |||||||||||||||||
Decrease due to decrease in subsidiaries | (945) | |||||||||||||||||
Decrease due to decrease in affiliates accounted for by the equity method | (679) | |||||||||||||||||
Reversal of land revaluation excess | (435) | |||||||||||||||||
Transfer from retained earnings to capital surplus | – | |||||||||||||||||
Net changes in items other than stockholders’ equity in the year | (317,445) | 136,907 | 331 | (83,219) | (84,785) | (348,211) | (2,685) | (615,671) | (966,568) | |||||||||
Net changes in the year | (317,445) | 136,907 | 331 | (83,219) | (84,785) | (348,211) | (2,685) | (615,671) | (666,708) | |||||||||
Balance at March 31, 2020 | 1,371,407 | 82,257 | 36,878 | (32,839) | (92,030) | 1,365,673 | 2,064 | 62,869 | 10,784,903 |
31
Non-Consolidated Balance Sheet
(As of March 31, 2020)
Unit: millions of yen
Account
| Amount
|
Account
|
Amount
| |||||||
(Assets) | (Liabilities) | |||||||||
Current assets | 680,051 | Current liabilities | 1,586,051 | |||||||
Cash and due from banks | 174,641 | Short-term borrowings | 1,228,030 | |||||||
Prepaid expenses | 413 | Accounts payable | 39,682 | |||||||
Accrued income | 45,660 | Accrued expenses | 44,409 | |||||||
Accrued income tax refunds | 127,541 | Income taxes payable | 12 | |||||||
Current portion of long-term loans receivable from subsidiaries and affiliates | 272,025 | Business office taxes payable | 39 | |||||||
Other current assets | 59,769 | Reserve for employee bonuses | 769 | |||||||
Reserve for executive bonuses | 410 | |||||||||
Current portion of bonds payable | 272,025 | |||||||||
Other current liabilities | 673 | |||||||||
Fixed assets | 13,545,418 | Fixed liabilities | 6,673,150 | |||||||
Tangible fixed assets | 29,557 | Bonds | 6,441,874 | |||||||
Buildings | 80 | Long-term borrowings | 231,275 | |||||||
Equipment | 12 | Total liabilities | 8,259,202 | |||||||
Construction in progress | 29,464 | (Net assets) | ||||||||
Intangible fixed assets | 270 | Stockholders’ equity | 5,964,203 | |||||||
Software | 270 | Capital stock | 2,339,964 | |||||||
Investments and other assets | 13,515,590 | Capital surplus | 1,561,442 | |||||||
Investment securities | 645 | Capital reserve | 1,561,442 | |||||||
Investments in subsidiaries and affiliates | 6,341,210 | Retained earnings | 2,076,780 | |||||||
Long-term loans receivable from subsidiaries and affiliates | 7,173,150 | Other retained earnings | 2,076,780 | |||||||
Long-term prepaid expenses | 104 | Voluntary reserve | 30,420 | |||||||
Deferred tax assets | 476 | Retained earnings brought forward | 2,046,360 | |||||||
Other | 3 | Treasury stock | (13,983 | ) | ||||||
Stock acquisition rights | 2,064 | |||||||||
Total net assets | 5,966,267 | |||||||||
Total assets | 14,225,470 | Total liabilities and net assets | 14,225,470 |
32
Non-Consolidated Statement of Income
(From April 1, 2019 to March 31, 2020)
Unit: millions of yen
Account
|
Amount
| |||
Operating income | 833,835 | |||
Dividends on investments in subsidiaries and affiliates | 659,428 | |||
Fees and commissions received from subsidiaries and affiliates | 9,087 | |||
Interest on loans receivable from subsidiaries and affiliates | 165,319 | |||
Operating expenses | 194,525 | |||
General and administrative expenses | 26,146 | |||
Interest on bonds | 161,535 | |||
Interest on long-term borrowings | 6,843 | |||
Operating profit | 639,310 | |||
Non-operating income | 202 | |||
Interest income on deposits | 70 | |||
Fees and commissions income | 1 | |||
Othernon-operating income | 130 | |||
Non-operating expenses |
| 10,249 | ||
Interest on short-term borrowings | 4,312 | |||
Fees and commissions payments | 120 | |||
Amortization of bond issuance cost | 5,816 | |||
Ordinary profit | 629,263 | |||
Income before income taxes | 629,263 | |||
Income taxes-current | (6,803) | |||
Income taxes-deferred | (62) | |||
Total income taxes | (6,865) | |||
Net income | 636,128 |
33
Non-Consolidated Statement of Changes in Net Assets
(From April 1, 2019 to March 31, 2020)
Unit: millions of yen
Stockholders’ equity
| ||||||||
Capital stock |
Capital surplus
| |||||||
Capital reserve |
Other capital surplus |
Total capital surplus | ||||||
Balance at April 1, 2019 | 2,339,443 | 1,560,921 | – | 1,560,921 | ||||
Changes in the year | ||||||||
Issuance of new stock | 521 | 521 | 521 | |||||
Cash dividends | ||||||||
Net income | ||||||||
Purchase of treasury stock | ||||||||
Disposal of treasury stock | (250) | (250) | ||||||
Cancellation of treasury stock | (101,673) | (101,673) | ||||||
Transfer from retained earnings to capital surplus | 101,923 | 101,923 | ||||||
Net changes in items other than stockholders’ equity in the year | ||||||||
Net changes in the year | 521 | 521 | – | 521 | ||||
Balance at March 31, 2020 | 2,339,964 | 1,561,442 | – | 1,561,442 |
Stockholders’ equity
| Stock acquisition rights | Total net assets | ||||||||||||
Retained earnings
| Treasury stock | Total stockholders’ equity | ||||||||||||
Other retained earnings
|
Total retained
| |||||||||||||
Voluntary reserve | Retained earnings
| |||||||||||||
Balance at April 1, 2019 | 30,420 | 1,767,989 | 1,798,409 | (16,302) | 5,682,471 | 2,539 | 5,685,011 | |||||||
Changes in the year | ||||||||||||||
Issuance of new stock | 1,043 | 1,043 | ||||||||||||
Cash dividends | (255,834) | (255,834) | (255,834) | (255,834) | ||||||||||
Net income | 636,128 | 636,128 | 636,128 | 636,128 | ||||||||||
Purchase of treasury stock | (100,088) | (100,088) | (100,088) | |||||||||||
Disposal of treasury stock | 733 | 483 | 483 | |||||||||||
Cancellation of treasury stock | 101,673 | – | – | |||||||||||
Transfer from retained earnings to capital surplus | (101,923) | (101,923) | – | – | ||||||||||
Net changes in items other than stockholders’ equity in the year | (475) | (475) | ||||||||||||
Net changes in the year | – | 278,370 | 278,370 | 2,318 | 281,732 | (475) | 281,256 | |||||||
Balance at March 31, 2020 | 30,420 | 2,046,360 | 2,076,780 | (13,983) | 5,964,203 | 2,064 | 5,966,267 |
34
[The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report (issued in the Japanese language) as required by the Companies Act.]
Independent Auditor’s Report
May 11, 2020
The Board of Directors | ||||
Sumitomo Mitsui Financial Group, Inc. | ||||
KPMG AZSA LLC | ||||
Tokyo Office | ||||
Toshihiro Otsuka (Seal) | ||||
Designated Limited Liability Partner | ||||
Engagement Partner | ||||
Certified Public Accountant | ||||
Noriaki Habuto (Seal) | ||||
Designated Limited Liability Partner | ||||
Engagement Partner | ||||
Certified Public Accountant | ||||
Kazuhide Niki (Seal) | ||||
Designated Limited Liability Partner | ||||
Engagement Partner | ||||
Certified Public Accountant |
Opinion
We have audited the consolidated financial statements, which comprise the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets, basis of presentation, significant accounting policies and the related notes, of Sumitomo Mitsui Financial Group, Inc., (“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), as at March 31, 2020 and for the year from April 1, 2019 to March 31, 2020 in accordance with Article444-4 of the Companies Act.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position and the results of operations of the Group for the period, for which the consolidated financial statements were prepared, in accordance with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
The audit committee are responsible for overseeing the directors’ performance of their duties including the design, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
35
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The selection and application of audit procedures depends on the auditor’s judgment. |
• | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control. |
• | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
• | Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
• | Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
• | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. |
We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
36
[The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report (issued in the Japanese language) as required by the Companies Act.]
Independent Auditor’s Report
May 11, 2020
The Board of Directors | ||||
Sumitomo Mitsui Financial Group, Inc. | ||||
KPMG AZSA LLC | ||||
Tokyo Office | ||||
Toshihiro Otsuka (Seal) | ||||
Designated Limited Liability Partner | ||||
Engagement Partner | ||||
Certified Public Accountant | ||||
Noriaki Habuto (Seal) | ||||
Designated Limited Liability Partner | ||||
Engagement Partner | ||||
Certified Public Accountant | ||||
Kazuhide Niki (Seal) | ||||
Designated Limited Liability Partner | ||||
Engagement Partner | ||||
Certified Public Accountant |
Opinion
We have audited the financial statements, which comprise the balance sheet, the statement of income, the statement of changes in net assets, basis of presentation, significant accounting policies and the related notes, and the supplementary schedules of Sumitomo Mitsui Financial Group, Inc. (“the Company”) as at March 31, 2020 and for the year from April 1, 2019 to March 31, 2020 in accordance with Article436-2-1 of the Companies Act.
In our opinion, the financial statements and the supplementary schedules referred to above present fairly, in all material respects, the financial position and the results of operations of the Company for the period, for which the financial statements and the supplementary schedules were prepared, in accordance with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements and Others section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and The audit committee for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of the financial statements and the supplementary schedules in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of financial statements and the supplementary schedules that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and the supplementary schedules, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
The audit committee are responsible for overseeing the directors’ performance of their duties including the design, implementation and maintenance of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements and Others
Our objectives are to obtain reasonable assurance about whether the financial statements and the supplementary schedules as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements and the supplementary schedules.
37
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• | Identify and assess the risks of material misstatement of the financial statements and the supplementary schedules, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The selection and application of audit procedures depends on the auditor’s judgment |
• | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Company’s internal control. |
• | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
• | Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements and the supplementary schedules or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
• | Evaluate whether the presentation and disclosures in the financial statements and the supplementary schedules are in accordance with accounting standards generally accepted in Japan, the overall presentation, structure and content of the financial statements and the supplementary schedules, including the disclosures, and whether the financial statements and the supplementary schedules represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
38
[English Translation of the Audit Committee’s report Originally Issued in the Japanese Language]
Audit Report
The Audit Committee has audited the execution of duties by Directors and Corporate Executive Officers of the Company for the 18th fiscal year from April 1, 2019 to March 31, 2020, and hereby reports the method and the results of the audit as follows:
1. | Auditing Method and Details Thereof |
The Audit Committee periodically received reports from the Directors, Corporate Executive Officers and other relevant personnel with respect to the content of resolutions made by the Board of Directors regarding matters prescribed by Article 416, Paragraph 1, Item 1 (b) and (e) of the Companies Act of Japan, and with respect to the status of establishment and operations of the systems that have been developed in compliance with such resolutions (internal control systems), sought their explanations as necessary, and expressed an opinion. In addition, the Audit Committee conducted audits based on the following methods.
1) | In accordance with the auditing policies, including allocation of duties established by the Audit Committee, the Audit Committee attended important meetings, received reports from the Directors, Corporate Executive Officers and other relevant personnel on matters regarding the execution of their duties, sought explanations as necessary, inspected important internal-approval documents, and examined the operations and financial position of the Company, by deploying the department in charge of internal audits and in cooperation with the internal control departments of the Company. As for the subsidiaries of the Company, the Audit Committee shared information with the Directors and the Corporate Auditors and other related persons of the subsidiaries and, when necessary, received reports from the subsidiaries regarding their businesses. In regard to the Company’s internal control over financial reporting, the Audit Committee received reports on the assessment of such internal control from the Directors, Corporate Executive Officers and other relevant personnel and reports on the status of audit thereof from KPMG AZSA LLC, and also sought their explanations as necessary. |
2) | The Audit Committee monitored and examined whether the Accounting Auditor maintained its independence and implemented appropriate audits, as well as received reports from the Accounting Auditor regarding the execution of its duties and sought explanations as necessary. The Audit Committee also received notification from the Accounting Auditor that the “System for ensuring appropriate execution of the duties of the Accounting Auditor” (as enumerated in each Item of Article 131 of the Company Accounting Regulation Ordinance) has been prepared in accordance with the “Quality Control Standards for Auditing” (issued by the Business Accounting Council on October 28, 2005) and other relevant standards, and sought explanations as necessary. |
Based on the foregoing method, the Audit Committee reviewed the business report and the supplementary schedules, the consolidated financial statements for this fiscal year (consolidated balance sheet, consolidated statement of income, and consolidated statement of changes in net assets) as well as thenon-consolidated financial statements for this fiscal year(non-consolidated balance sheet,non-consolidated statement of income, andnon-consolidated statement of changes in net assets) and supplementary schedules thereto.
39
2. | Audit Results |
(1) | Audit Results on the Business Report, etc. |
1) | In our opinion, the business report and the supplementary schedules fairly represent the Company’s condition in conformity with the applicable laws and regulations as well as the Articles of Incorporation of the Company. |
2) | We have found no evidence of misconduct or material facts in violation of the applicable laws and regulations, nor of any violation with respect to the Articles of Incorporation of the Company, related to performance of duties by the Directors and Corporate Executive Officers. |
3) | In our opinion, the content of the resolutions of the Board of Directors regarding the internal control systems is appropriate. In addition, we have found no matters on which to remark in regard to the content of the Business Report and the execution of duties by the Directors and Corporate Executive Officers regarding the internal control systems including the internal control over financial reporting. |
(2) | Results of Audit of the Consolidated Financial statements |
In our opinion, the method and the results of the audit used and conducted by KPMG AZSA LLC, the Accounting Auditor, are appropriate.
(3) | Results of Audit of theNon-Consolidated Financial statements and Supplementary Schedules |
In our opinion, the method and the results of the audit used and conducted by KPMG AZSA LLC, the Accounting Auditor, are appropriate.
May 12, 2020
The Audit Committee of Sumitomo Mitsui Financial Group, Inc.
Audit Committee Member | Masayuki Matsumoto (Seal) | |||
Audit Committee Member | Shozo Yamazaki (Seal) | |||
Audit Committee Member | Katsuyoshi Shinbo (Seal) | |||
Audit Committee Member | Atsuhiko Inoue (Seal) | |||
Audit Committee Member | Toru Mikami (Seal) |
(Note) | Messrs. Masayuki Matsumoto, Shozo Yamazaki and Katsuyoshi Shinbo are Outside Directors pursuant to Article 2, Item 15 and Article 400, Paragraph 3 of the Companies Act of Japan. |
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