Sumitomo Mitsui Financial 6K Current report

Sumitomo Mitsui Financial (SMFG) 6-KCurrent report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of December 2021

Commission file number 001-34919

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 Form 20-F or Form 40-F:

Form 20-F ☒ or Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-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 Rule 12g3-2(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 Rule 12g3-2(b): 82-

THIS REPORT ON FORM 6-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 FORM F-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NO. 333-228913) AND TO BE A PART OF SUCH PROSPECTUS FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

TABLE OF DOCUMENT(S) SUBMITTED

1.	Unaudited interim consolidated Japanese GAAP financial statements as of and for the six months ended September 30, 2021

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/ Toru Nakashima
	Name:	Toru Nakashima
	Title:	Senior Managing Executive Officer Group Chief Financial Officer

Date: December 3, 2021

UNAUDITED INTERIM CONSOLIDATED JAPANESE GAAP FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021

On November 29, 2021, we published our unaudited interim consolidated financial statements as of and for the six months ended September 30, 2021 prepared in accordance with accounting principles generally accepted in Japan, or Japanese GAAP, as part of our quarterly securities report (shihanki hokokusho) for the quarter ended September 30, 2021 filed by us with the relevant Japanese authorities. This document is an English translation of the unaudited interim consolidated financial statements and the notes thereto included in such quarterly securities report. Japanese GAAP differs in certain respects from International Financial Reporting Standards as issued by the International Accounting Standards Board, or IFRS, and generally accepted accounting principles in the United States. For a description of certain differences between IFRS and Japanese GAAP, see “Item 5.A Operating Results—Reconciliation with Japanese GAAP” in our most recent annual report on Form 20-F filed with the SEC.

UNAUDITED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS (JAPANESE GAAP)

INTERIM CONSOLIDATED BALANCE SHEETS


	Millions of yen						Millions of U.S. dollars
	March 31, 2021			September 30, 2021			September 30, 2021
Assets:
Cash and due from banks	*8	¥	72,568,875	*8	¥	70,940,025	$	633,676
Call loans and bills bought			2,553,463			2,760,584		24,659
Receivables under resale agreements			5,565,119			4,686,909		41,866
Receivables under securities borrowing transactions			5,827,448			5,805,985		51,862
Monetary claims bought			4,665,244			4,829,709		43,142
Trading assets	2,8		6,609,195	2, 8		6,493,877		58,007
Money held in trust			309			309		3
Securities	1, 2, 8, 15		36,549,043	1, 2, 8, 15		36,278,557		324,060
Loans and bills discounted	3, 4, 5, 6, 7, 8, *9		85,132,738	3, 4, 5, 6, 7, 8, *9		85,037,573		759,603
Foreign exchanges	*7		2,173,189	*7		3,299,302		29,471
Lease receivables and investment assets			236,392			228,695		2,043
Other assets	*8		8,590,785	*8		8,476,457		75,716
Tangible fixed assets	10, 11		1,458,991	10, 11		1,478,934		13,211
Intangible fixed assets			738,759			744,165		6,647
Net defined benefit asset			565,534			584,177		5,218
Deferred tax assets			29,840			30,062		269
Customers’ liabilities for acceptances and guarantees			9,978,396			10,296,696		91,976
Reserve for possible loan losses			(659,017)			(630,194)		(5,629)

Total assets		¥	242,584,308		¥	241,341,831	$	2,155,800

—1—

(Continued)


	Millions of yen						Millions of U.S. dollars
	March 31, 2021			September 30, 2021			September 30, 2021
Liabilities and net assets:
Liabilities:
Deposits	*8	¥	142,026,156	*8	¥	141,340,182	$	1,262,530
Negotiable certificates of deposit			12,570,617			11,962,673		106,857
Call money and bills sold			1,368,515			1,723,491		15,395
Payables under repurchase agreements	*8		15,921,103	*8		14,291,544		127,660
Payables under securities lending transactions	*8		2,421,353	*8		1,813,833		16,202
Commercial paper			1,686,404			2,127,405		19,003
Trading liabilities			5,357,649			4,392,292		39,234
Borrowed money	8, 12		17,679,690	8, 12		18,104,699		161,721
Foreign exchanges			1,113,037			1,419,000		12,675
Short-term bonds			585,000			401,000		3,582
Bonds	*13		9,043,031	*13		9,461,894		84,519
Due to trust account	8, 14		2,321,223	8, 14		2,543,382		22,719
Other liabilities			7,741,638			8,192,422		73,179
Reserve for employee bonuses			89,522			59,184		529
Reserve for executive bonuses			4,408			—		—
Net defined benefit liability			35,334			35,413		316
Reserve for executive retirement benefits			1,081			965		9
Reserve for point service program			24,655			24,419		218
Reserve for reimbursement of deposits			9,982			7,714		69
Reserve for losses on interest repayment			140,758			121,960		1,089
Reserves under the special laws			3,902			4,083		36
Deferred tax liabilities			532,193			612,212		5,469
Deferred tax liabilities for land revaluation	*10		29,603	*10		29,338		262
Acceptances and guarantees	*8		9,978,396	*8		10,296,696		91,976

Total liabilities			230,685,262			228,965,814		2,045,251

Net assets:
Capital stock			2,341,274			2,341,878		20,919
Capital surplus			693,205			693,614		6,196
Retained earnings			6,492,586			6,809,834		60,829
Treasury stock			(13,698)			(13,409)		(120)

Total stockholders’ equity			9,513,367			9,831,917		87,824

Net unrealized gains (losses) on other securities			2,094,605			2,192,305		19,583
Net deferred gains (losses) on hedges			14,723			(10,828)		(97)
Land revaluation excess	*10		36,251	*10		36,345		325
Foreign currency translation adjustments			40,390			133,014		1,188
Accumulated remeasurements of defined benefit plans			127,080			117,398		1,049

Total accumulated other comprehensive income			2,313,051			2,468,234		22,048

Stock acquisition rights			1,791			1,498		13
Non-controlling interests			70,836			74,365		664

Total net assets			11,899,046			12,376,017		110,550

Total liabilities and net assets		¥	242,584,308		¥	241,341,831	$	2,155,800

—2—

INTERIM CONSOLIDATED STATEMENTS OF INCOME


	Millions of yen								Millions of U.S. dollars
Six months ended September 30	2020				2021				2021
Ordinary income			¥	1,949,441			¥	1,965,482	$	17,557
Interest income				947,734				891,702		7,965
Interest on loans and discounts				699,690				643,762		5,750
Interest and dividends on securities				136,896				165,896		1,482
Trust fees				2,253				2,630		23
Fees and commissions				598,328				668,871		5,975
Trading income				139,797				122,300		1,092
Other operating income				180,705				124,489		1,112
Other income		*1		80,622		*1		155,487		1,389
Ordinary expenses				1,603,146				1,335,454		11,929
Interest expenses				315,673				179,504		1,603
Interest on deposits				89,975				40,751		364
Fees and commissions payments				99,807				113,999		1,018
Trading losses				462				142		1
Other operating expenses				75,502				85,061		760
General and administrative expenses		*2		836,421		*2		875,934		7,824
Other expenses		*3		275,278		*3		80,810		722

Ordinary profit				346,294				630,028		5,628

Extraordinary gains		*4		407		*4		1,413		13
Extraordinary losses		5, 6		4,767		5, 6		4,681		42

Income before income taxes				341,934				626,759		5,599

Income taxes-current				87,704				112,720		1,007
Income taxes-deferred				(16,322)				54,679		488

Income taxes				71,381				167,399		1,495

Profit				270,553				459,359		4,103

Profit attributable to non-controlling interests				422				3,291		29

Profit attributable to owners of parent			¥	270,130			¥	456,068	$	4,074

—3—

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Millions of yen						Millions of U.S. dollars
Six months ended September 30	2020			2021			2021
Profit		¥	270,553		¥	459,359	$	4,103
Other comprehensive income (losses)			420,195			155,541		1,389
Net unrealized gains (losses) on other securities			358,489			97,429		870
Net deferred gains (losses) on hedges			24,261			(25,465)		(227)
Foreign currency translation adjustments			(52,920)			69,274		619
Remeasurements of defined benefit plans			91,672			(9,773)		(87)
Share of other comprehensive income of affiliates			(1,307)			24,075		215

Total comprehensive income			690,749			614,901		5,493

Comprehensive income attributable to owners of parent			688,797			611,157		5,459
Comprehensive income attributable to non-controlling interests			1,951			3,743		33

—4—

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS


	Millions of yen
	Stockholders’ equity
Six months ended September 30, 2020	Capital stock		Capital surplus			Retained earnings			Treasury stock			Total
Balance at the beginning of the period	¥	2,339,964	¥	692,003		��¥	6,336,311		¥	(13,983	)	¥	9,354,296
Cumulative effects of changes in accounting policies							(41,849	)					(41,849	)
Restated balance		2,339,964		692,003			6,294,462			(13,983	)		9,312,447
Changes in the period
Issuance of new stock		1,309		1,308									2,618
Cash dividends							(136,952	)					(136,952	)
Profit attributable to owners of parent							270,130						270,130
Purchase of treasury stock										(21	)		(21	)
Disposal of treasury stock				(50	)					311			261
Changes in shareholders’ interest due to transaction with non-controlling interests				(213	)								(213	)
Reversal of land revaluation excess							(161	)					(161	)
Transfer from retained earnings to capital surplus				50			(50	)					—
Net changes in items other than stockholders’ equity in the period

Net changes in the period		1,309		1,095			132,966			290			135,661

Balance at the end of the period	¥	2,341,274	¥	693,098		¥	6,427,428		¥	(13,693	)	¥	9,448,109


	Millions of yen
	Accumulated other comprehensive income
Six months ended September 30, 2020	Net unrealized gains (losses) on other securities		Net deferred gains (losses) on hedges			Land revaluation excess			Foreign currency translation adjustments			Accumulated remeasurements of defined benefit plans			Total
Balance at the beginning of the period	¥	1,371,407	¥	82,257		¥	36,878		¥	(32,839	)	¥	(92,030	)	¥	1,365,673
Cumulative effects of changes in accounting policies
Restated balance		1,371,407		82,257			36,878			(32,839	)		(92,030	)		1,365,673
Changes in the period
Issuance of new stock
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shareholders’ interest due to transaction with non-controlling interests
Reversal of land revaluation excess
Transfer from retained earnings to capital surplus
Net changes in items other than stockholders’ equity in the period		358,565		23,346			177			(54,706	)		91,461			418,845

Net changes in the period		358,565		23,346			177			(54,706	)		91,461			418,845

Balance at the end of the period	¥	1,729,972	¥	105,603		¥	37,056		¥	(87,545	)	¥	(568	)	¥	1,784,519

—5—


(Continued)
	Millions of yen
Six months ended September 30, 2020	Stock acquisition rights			Non-controlling interests			Total net assets
Balance at the beginning of the period	¥	2,064		¥	62,869		¥	10,784,903
Cumulative effects of changes in accounting policies								(41,849	)
Restated balance		2,064			62,869			10,743,054
Changes in the period
Issuance of new stock								2,618
Cash dividends								(136,952	)
Profit attributable to owners of parent								270,130
Purchase of treasury stock								(21	)
Disposal of treasury stock								261
Changes in shareholders’ interest due to transaction with non-controlling interests								(213	)
Reversal of land revaluation excess								(161	)
Transfer from retained earnings to capital surplus								—
Net changes in items other than stockholders’ equity in the period		(255	)		2,365			420,954

Net changes in the period		(255	)		2,365			556,616

Balance at the end of the period	¥	1,808		¥	65,234		¥	11,299,671


	Millions of yen
	Stockholders’ equity
Six months ended September 30, 2021	Capital stock			Capital surplus			Retained earnings			Treasury stock			Total
Balance at the beginning of the period	¥	2,341,274		¥	693,205		¥	6,492,586		¥	(13,698	)	¥	9,513,367
Cumulative effects of changes in accounting policies								(8,502	)					(8,502	)
Restated balance		2,341,274			693,205			6,484,083			(13,698	)		9,504,865
Changes in the period
Issuance of new stock		603			603									1,207
Cash dividends								(130,190	)					(130,190	)
Profit attributable to owners of parent								456,068						456,068
Purchase of treasury stock											(37	)		(37	)
Disposal of treasury stock					(32	)					327			295
Changes in shareholders’ interest due to transaction with non-controlling interests					(195	)								(195	)
Reversal of land revaluation excess								(94	)					(94	)
Transfer from retained earnings to capital surplus					32			(32	)					—
Net changes in items other than stockholders’ equity in the period

Net changes in the period		603			408			325,751			289			327,052

Balance at the end of the period	¥	2,341,878		¥	693,614		¥	6,809,834		¥	(13,409	)	¥	9,831,917

—6—

(Continued)


	Millions of yen
	Accumulated other comprehensive income
Six months ended September 30, 2021	Net unrealized gains (losses) on other securities			Net deferred gains (losses) on hedges			Land revaluation excess			Foreign currency translation adjustments		Accumulated remeasurements of defined benefit plans			Total
Balance at the beginning of the period	¥	2,094,605		¥	14,723		¥	36,251		¥	40,390	¥	127,080		¥	2,313,051
Cumulative effects of changes in accounting policies
Restated balance		2,094,605			14,723			36,251			40,390		127,080			2,313,051
Changes in the period
Issuance of new stock
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shareholders’ interest due to transaction with non-controlling interests
Reversal of land revaluation excess
Transfer from retained earnings to capital surplus
Net changes in items other than stockholders’ equity in the period		97,699			(25,552	)		94			92,624		(9,682	)		155,183

Net changes in the period		97,699			(25,552	)		94			92,624		(9,682	)		155,183

Balance at the end of the period	¥	2,192,305		¥	(10,828	)	¥	36,345		¥	133,014	¥	117,398		¥	2,468,234


	Millions of yen
Six months ended September 30, 2021	Stock acquisition rights			Non-controlling interests			Total net assets
Balance at the beginning of the period	¥	1,791		¥	70,836		¥	11,899,046
Cumulative effects of changes in accounting policies								(8,502	)
Restated balance		1,791			70,836			11,890,544
Changes in the period
Issuance of new stock								1,207
Cash dividends								(130,190	)
Profit attributable to owners of parent								456,068
Purchase of treasury stock								(37	)
Disposal of treasury stock								295
Changes in shareholders’ interest due to transaction with non-controlling interests								(195	)
Reversal of land revaluation excess								(94	)
Transfer from retained earnings to capital surplus								—
Net changes in items other than stockholders’ equity in the period		(292	)		3,529			158,420

Net changes in the period		(292	)		3,529			485,473

Balance at the end of the period	¥	1,498		¥	74,365		¥	12,376,017

—7—

(Continued)


	Millions of U.S. dollars
	Stockholders’ equity
Six months ended September 30, 2021	Capital stock		Capital surplus			Retained earnings			Treasury stock			Total
Balance at the beginning of the period	$	20,914	$	6,192		$	57,995		$	(122	)	$	84,979
Cumulative effects of changes in accounting policies							(76	)					(76	)
Restated balance		20,914		6,192			57,919			(122	)		84,903
Changes in the period
Issuance of new stock		5		5									11
Cash dividends							(1,163	)					(1,163	)
Profit attributable to owners of parent							4,074						4,074
Purchase of treasury stock										(0	)		(0	)
Disposal of treasury stock				(0	)					3			3
Changes in shareholders’ interest due to transaction with non-controlling interests				(2	)								(2	)
Reversal of land revaluation excess							(1	)					(1	)
Transfer from retained earnings to capital surplus				0			(0	)					—
Net changes in items other than stockholders’ equity in the period

Net changes in the period		5		4			2,910			3			2,921

Balance at the end of the period	$	20,919	$	6,196		$	60,829		$	(120	)	$	87,824


	Millions of U.S. dollars
	Accumulated other comprehensive income
Six months ended September 30, 2021	Net unrealized gains (losses) on other securities		Net deferred gains (losses) on hedges			Land revaluation excess			Foreign currency translation adjustments			Accumulated remeasurements of defined benefit plans			Total
Balance at the beginning of the period	$	18,710	$	132		$	324		$	361		$	1,135		$	20,661
Cumulative effects of changes in accounting policies
Restated balance		18,710		132			324			361			1,135			20,661
Changes in the period
Issuance of new stock
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in shareholders’ interest due to transaction with non-controlling interests
Reversal of land revaluation excess
Transfer from retained earnings to capital surplus
Net changes in items other than stockholders’ equity in the period		873		(228	)		1			827			(86	)		1,386

Net changes in the period		873		(228	)		1			827			(86	)		1,386

Balance at the end of the period	$	19,583	$	(97	)	$	325		$	1,188		$	1,049		$	22,048

—8—

(Continued)


	Millions of U.S. dollars
Six months ended September 30, 2021	Stock acquisition rights			Non-controlling interests		Total net assets
Balance at the beginning of the period	$	16		$	633	$	106,289
Cumulative effects of changes in accounting policies							(76	)
Restated balance		16			633		106,213
Changes in the period
Issuance of new stock							11
Cash dividends							(1,163	)
Profit attributable to owners of parent							4,074
Purchase of treasury stock							(0	)
Disposal of treasury stock							3
Changes in shareholders’ interest due to transaction with non-controlling interests							(2	)
Reversal of land revaluation excess							(1	)
Transfer from retained earnings to capital surplus							—
Net changes in items other than stockholders’ equity in the period		(3	)		32		1,415

Net changes in the period		(3	)		32		4,337

Balance at the end of the period	$	13		$	664	$	110,550

—9—

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS


	Millions of yen						Millions of U.S. dollars
Six months ended September 30	2020			2021			2021
Cash flows from operating activities:
Income before income taxes		¥	341,934		¥	626,759	$	5,599
Depreciation			103,173			107,497		960
Losses on impairment of fixed assets			3,983			3,265		29
Amortization of goodwill			9,870			8,674		77
Equity in net (gains) losses of affiliates			(10,223)			(30,726)		(274)
Net change in reserve for possible loan losses			84,705			(30,323)		(271)
Net change in reserve for employee bonuses			(19,560)			(30,961)		(277)
Net change in reserve for executive bonuses			(3,346)			(4,415)		(39)
Net change in net defined benefit asset and liability			(143,940)			(18,610)		(166)
Net change in reserve for executive retirement benefits			(350)			(115)		(1)
Net change in reserve for point service program			(193)			(236)		(2)
Net change in reserve for reimbursement of deposits			(2,590)			(2,267)		(20)
Net change in reserve for losses on interest repayment			(16,783)			(18,797)		(168)
Interest income			(947,734)			(891,702)		(7,965)
Interest expenses			315,673			179,504		1,603
Net (gains) losses on securities			(142,185)			(109,325)		(977)
Net (gains) losses from money held in trust			(0)			(0)		(0)
Net exchange (gains) losses			39,534			(4,965)		(44)
Net (gains) losses from disposal of fixed assets			54			(177)		(2)
Net change in trading assets			730,931			(162,369)		(1,450)
Net change in trading liabilities			(517,008)			(753,693)		(6,732)
Net change in loans and bills discounted			(1,984,447)			208,914		1,866
Net change in deposits			10,956,508			(840,420)		(7,507)
Net change in negotiable certificates of deposit			56,938			(613,838)		(5,483)
Net change in borrowed money (excluding subordinated borrowings)			818,525			366,293		3,272
Net change in deposits with banks			412,822			(691,672)		(6,178)
Net change in call loans and bills bought and others			3,714,580			689,713		6,161
Net change in receivables under securities borrowing transactions			(181,185)			21,462		192
Net change in call money and bills sold and others			(4,783,443)			(1,395,912)		(12,469)
Net change in commercial paper			515,443			408,052		3,645
Net change in payables under securities lending transactions			(92,358)			(607,519)		(5,427)
Net change in foreign exchanges (assets)			(41,407)			(1,123,787)		(10,038)
Net change in foreign exchanges (liabilities)			(449,246)			305,442		2,728
Net change in lease receivables and investment assets			(6,362)			11,812		106
Net change in short-term bonds (liabilities)			348,000			(184,000)		(1,644)
Issuance and redemption of bonds (excluding subordinated bonds)			(25,962)			434,573		3,882
Net change in due to trust account			155,938			222,159		1,984
Interest received			995,638			918,999		8,209
Interest paid			(344,135)			(190,486)		(1,702)
Other, net			(342,063)			592,205		5,290

Subtotal			9,549,726			(2,600,993)		(23,234)

Income taxes paid			43,550			(91,882)		(821)

Net cash provided by (used in) operating activities			9,593,276			(2,692,875)		(24,054)

—10—

(Continued)


	Millions of yen								Millions of U.S. dollars
Six months ended September 30	2020				2021				2021
Cash flows from investing activities:
Purchases of securities			¥	(20,921,515)			¥	(19,658,696)	$	(175,602)
Proceeds from sale of securities				9,348,979				11,928,341		106,551
Proceeds from redemption of securities				9,435,117				8,336,591		74,467
Purchases of money held in trust				(0)				(0)		(0)
Proceeds from sale of money held in trust				20				0		0
Purchases of tangible fixed assets				(28,894)				(37,939)		(339)
Proceeds from sale of tangible fixed assets				5,187				1,744		16
Purchases of intangible fixed assets				(74,503)				(93,076)		(831)
Purchases of stocks of subsidiaries resulting in change in scope of consolidation				(2,865)				—		—

Net cash provided by (used in) investing activities				(2,238,474)				476,965		4,261


Cash flows from financing activities:
Proceeds from issuance of subordinated bonds and bonds with stock acquisition rights				189,913				95,157		850
Redemption of subordinated bonds and bonds with stock acquisition rights				(120,000)				(174,000)		(1,554)
Dividends paid				(136,922)				(130,153)		(1,163)
Proceeds from issuance of common stock to non-controlling stockholders				100				68		1
Dividends paid to non-controlling stockholders				(386)				(726)		(6)
Purchases of treasury stock				(21)				(37)		(0)
Proceeds from disposal of treasury stock				261				295		3
Proceeds from sale of stocks of subsidiaries not resulting in change in scope of consolidation				—				44		0

Net cash provided by (used in) financing activities				(67,055)				(209,353)		(1,870)

Effect of exchange rate changes on cash and cash equivalents				(45,221)				34,563		309

Net change in cash and cash equivalents				7,242,524				(2,390,699)		(21,355)

Cash and cash equivalents at the beginning of the period				56,097,807				66,811,212		596,795

Cash and cash equivalents at the end of the period		*1	¥	63,340,332		*1	¥	64,420,512	$	575,440

—11—

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Basis of presentation)

Sumitomo Mitsui Financial Group, Inc. (“the Company”) was established on December 2, 2002 as a holding company for the SMBC Group (“the Group”) through a statutory share transfer (kabushiki iten) of all of the outstanding equity securities of Sumitomo Mitsui Banking Corporation (“SMBC”) in exchange for the Company’s newly issued securities. The Company is a joint stock corporation with limited liability (Kabushiki Kaisha) incorporated under the Companies Act of Japan. Upon formation of the Company and completion of the statutory share transfer, SMBC became a direct wholly owned subsidiary of the Company.

The Company has prepared the accompanying consolidated financial statements in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards (“IFRS”).

The accounts of overseas subsidiaries and affiliated companies are, in principle, integrated with those of the Company’s accounting policies for purposes of consolidation unless they apply different accounting principles and standards as required under U.S. GAAP or IFRS, in which case a certain limited number of items are adjusted based on their materiality.

These consolidated financial statements are translated from the consolidated financial statements contained in the interim securities report filed under the Financial Instrument and Exchange Act of Japan (“FIEA based financial statements”) except for the addition of the non-consolidated financial statements and U.S. dollar figures.

Amounts less than 1 million yen have been rounded down. As a result, the totals in Japanese yen shown in the financial statements do not necessarily agree with the sum of the individual amounts.

The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at September 30, 2021 which was ¥111.95 to US$1. These translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at that rate.

—12—

(Significant accounting policies for preparing interim consolidated financial statements)

1. Scope of consolidation

(1)	Consolidated subsidiaries


The number of consolidated subsidiaries at September 30, 2021 is 177.
Principal companies:		Sumitomo Mitsui Banking Corporation (“SMBC”)
		SMBC Trust Bank Ltd.
		SMBC Nikko Securities Inc.
		Sumitomo Mitsui Card Company, Limited
		SMBC Finance Service Co., Ltd.
		SMBC Consumer Finance Co., Ltd.
		The Japan Research Institute, Limited
		Sumitomo Mitsui DS Asset Management Company, Limited
		SMBC Bank International plc
		Sumitomo Mitsui Banking Corporation (China) Limited
		PT Bank BTPN Tbk
		SMBC Americas Holdings, Inc.
		SMBC Guarantee Co., Ltd.

Changes in the consolidated subsidiaries in the six months ended September 30, 2021 are as follows: 3 companies were newly included in the scope of consolidation as a result of the establishment. 3 companies were excluded from the scope of consolidation because of liquidation.

(2)	Unconsolidated subsidiaries


Principal company:		SBCS Co., Ltd.

5 of the unconsolidated subsidiaries are investment partnerships, and neither their assets nor profit/loss are substantially attributable to subsidiaries, and thus are excluded from the scope of consolidation pursuant to Article 5, Paragraph 1, Item 2 of Ordinance on the Terminology, Forms, and Preparation Methods of Interim Consolidated Financial Statements.
Other unconsolidated subsidiaries are excluded from the scope of consolidation because their total amounts in terms of total assets, ordinary income, net income and retained earnings are immaterial, as such, they do not hinder a rational judgment of the financial position and results of operations of the Company and its consolidated subsidiaries when excluded from the scope of consolidation.

2. Application of the equity method

(1)	Unconsolidated subsidiaries accounted for by the equity method


The number of unconsolidated subsidiaries accounted for by the equity method at September 30, 2021 is 5.

Principal company:		SBCS Co., Ltd.

—13—

(2)	Equity method affiliates

The number of equity method affiliates at September 30, 2021 is 103.


Principal companies:		Sumitomo Mitsui Finance and Leasing Company, Limited
		Sumitomo Mitsui Auto Service Company, Limited

Changes in the equity method affiliates in the six months ended September 30, 2021 are as follows:

11 companies became equity method affiliates due to establishment and for other reasons.

1 company was excluded from the scope of equity method affiliates due to sale of stocks.

(3)	Unconsolidated subsidiaries that are not accounted for by the equity method

5 unconsolidated subsidiaries that are not accounted for by the equity method are investment partnerships, and neither their assets nor profit/loss are substantially attributable to subsidiaries, and thus are excluded from the scope of equity method pursuant to Article 7, Paragraph 1, Item 2 of the Ordinance on the Terminology, Forms, and Preparation Methods of Interim Consolidated Financial Statements.

(4)	Affiliates that are not accounted for by the equity method


Principal company:		Park Square Capital / SMBC Loan Programme S.à r.l.

Affiliates that are not accounted for by the equity method are also excluded from the scope of equity method because their total amounts in terms of net income and retained earnings are immaterial, and as such, they do not hinder a rational judgment of the Company’s financial position and results of operations when excluded from the scope of equity method.

3. The interim balance sheet dates of consolidated subsidiaries

(1)	The interim balance sheet dates of the consolidated subsidiaries at September 30, 2021 are as follows:

(2)

The subsidiaries with interim balance sheets dated April 30 are consolidated using the financial statements as of July 31. Certain subsidiaries with interim balance sheets dated June 30 are consolidated using the financial statements as of September 30. Other subsidiaries are consolidated using the financial statements as of their respective interim balance sheet dates.

Appropriate adjustments were made to material transactions during the periods between their respective interim balance sheet dates and the interim consolidated closing date.

—14—

4. Accounting policies

(1)	Standards for recognition and measurement of trading assets/liabilities and trading income/losses

Transactions for trading purposes (seeking gains arising from short-term changes in interest rates, currency exchange rates, or market prices of securities and other market related indices or from variation among markets) are included in “Trading assets” or “Trading liabilities” on the interim consolidated balance sheets on a trade date basis. Profits and losses on trading-purpose transactions are recognized on a trade date basis, and recorded as “Trading income” and “Trading losses” on the interim consolidated statement of income.

Securities and monetary claims purchased for trading purposes are stated at the interim period-end market value, and financial derivatives such as swaps, futures and options are stated at amounts that would be settled if the transactions were terminated at the interim consolidated balance sheet date.

“Trading income” and “Trading losses” include interest received or paid during the interim period. The valuation differences of securities and monetary claims between the previous fiscal year-end and the interim period-end are also recorded in the above-mentioned accounts. As for the derivatives, the changes in gains or losses of the derivatives calculated by assuming they were settled at the end of the fiscal year ended March 31, 2021 and the six months ended September 30, 2021.

In terms of the evaluation of specific market risks and credit risks for derivative transactions, those fair values are calculated by group basis of the financial assets and liabilities based on net asset or liability after offsetting.

(2)	Standards for recognition and measurement of securities

Debt securities that consolidated subsidiaries have the positive intent and ability to hold to maturity are classified as held-to-maturity securities and are carried at amortized cost (based on straight-line method) using the moving-average method. Investments in affiliates that are not accounted for by the equity method are carried at cost using the moving-average method. Securities other than trading purpose securities, held-to-maturity securities and investments in affiliates are classified as “other securities” (available-for-sale securities). Other securities are carried at their interim period-end market prices (cost of securities sold is calculated using primarily the moving-average method). Stocks with no market prices are carried at cost using the moving-average method.

Net unrealized gains (losses) on other securities, net of income taxes, are included in “Net assets” except for the amount reflected on the gains or losses by applying fair value hedge accounting.

Securities included in money held in trust are carried in the same method as in (1) and (2) 1) above.

(3)	Standards for recognition and measurement of derivative transactions

Derivative transactions, excluding those classified as trading derivatives, are carried at fair value.

—15—

(4)	Depreciation

Tangible fixed assets (excluding assets for rent and lease assets)

Buildings owned by the Company and SMBC are depreciated using the straight-line method. Others are depreciated using the declining-balance method. The depreciation expense for the interim period is calculated by proportionally allocating the estimated annual expense to the interim period. The estimated useful lives of major items are as follows:


		Buildings:		7 to 50 years
		Others:		2 to 20 years

Other consolidated subsidiaries depreciate tangible fixed assets primarily using the straight-line method over the estimated useful lives of the respective assets.

Intangible fixed assets

Intangible fixed assets are depreciated using the straight-line method. Capitalized software for internal use owned by the Company and its consolidated domestic subsidiaries is depreciated over its estimated useful life (5-10 years).

Assets for rent

Assets for rent are depreciated using the straight-line method, assuming that lease terms are, in principle, their depreciation period and the salvage values are estimated disposal values when the lease period expires.

Lease assets

Lease assets with respect to non-transfer ownership finance leases, which are recorded in “Tangible fixed assets,” are depreciated using the straight-line method, assuming that lease terms are their expected lifetime and salvage values are zero.

(5)	Reserve for possible loan losses

The reserve for possible loan losses of major consolidated subsidiaries is provided as detailed below in accordance with the internal standards for write-offs and provisions.

For claims on borrowers that have entered into bankruptcy, special liquidation proceedings or similar legal proceedings (“Bankrupt borrowers”) or borrowers that are not legally or formally insolvent but are regarded as substantially in the same situation (“Effectively bankrupt borrowers”), a reserve is provided based on the amount of claims, after the write-off stated below, net of the expected amount of recoveries from collateral and guarantees. For claims on borrowers that are not currently bankrupt but are perceived to have a high risk of falling into bankruptcy (“Potentially bankrupt borrowers”), a reserve is provided in the amount deemed necessary based on an overall solvency assessment of the claims, net of the expected amount of recoveries from collateral and guarantees.

SMBC, which is a consolidated subsidiary of the Company, applies Discounted Cash Flows (“DCF”) method for claims of large borrowers exceeding a certain amount, of which borrowers categories are bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers and whole or part of loans are classified as “Past due loans (3 months or more)” or “Restructured loans” requiring close monitoring, and whose cash flows from collection of principals and interest can be rationally estimated. SMBC establishes a reserve for possible loan losses using the DCF method for such claims in the amount of the difference between the present value of principal and interest (calculated using the rationally estimated cash flows discounted at the initial contractual interest rate) and the book value.

For other claims, they are recorded by estimating the amount of expected loss in the next one year or three years. The estimated amount of expected loss is calculated by using average ratio of loan-loss ratio or probability of bankruptcies for certain periods in the past based on actual loan losses or bankruptcies in the past one year or three years, and by making necessary adjustments including future estimations.

—16—

In addition, in light of the latest economic situation and risk factors, for potential losses for specific portfolios that are based on the future prospects with high probability, but cannot be reflected in actual loan losses in the past and in any individual borrower’s classification, a reserve is provided in the amount deemed necessary based on an overall assessment.

For claims originated in specific overseas countries, an additional reserve is provided in the amount deemed necessary based on the assessment of political and economic conditions.

Branches and credit supervision departments assess all claims in accordance with the internal rules for self-assessment of assets, and the Credit Review Department, independent from these operating sections, audits their assessment.

The reserve for possible loan losses of other consolidated subsidiaries for general claims is provided in the amount deemed necessary based on the historical loan-loss ratios, and for doubtful claims in the amount deemed uncollectible based on assessment of each claim.

For collateralized or guaranteed claims on bankrupt borrowers and effectively bankrupt borrowers, the amount exceeding the estimated value of collateral and guarantees is deemed to be uncollectible and written off against the total outstanding amount of the claims. The amount of write-off were ¥159,159 million and ¥163,185 million at September 30 and March 31, 2021, respectively.

(6)	Reserve for employee bonuses

The reserve for employee bonuses is provided for payment of bonuses to employees, in the amount of estimated bonuses, which are attributable to the interim period.

(7)	Reserve for executive retirement benefits

The reserve for executive retirement benefits is provided for payment of retirement benefits to executives, in the amount of deemed accrued at the interim period-end based on our internal regulations.

(8)	Reserve for point service program

The reserve for point service program is provided for the potential future redemption of points awarded to customers under the “SMBC Point Pack,” credit card points programs, and other customer points award programs. The amount is calculated by converting the outstanding points into a monetary amount, and rationally estimating and recognizing the amount that will be redeemed in the future.

(9)	Reserve for reimbursement of deposits

The reserve for reimbursement of deposits which were derecognized as liabilities under certain conditions is provided for the possible losses on the future claims of withdrawal based on the historical reimbursements.

(10)	Reserve for losses on interest repayment

The reserve for losses on interest repayment is provided for the possible losses on future claims of repayment of interest based on historical interest repayment results.

(11)	Reserves under the special laws

The reserves under the special laws are reserves for contingent liabilities and provided for compensation for losses from securities related transactions or derivative transactions, pursuant to Article 46-5 of the Financial Instruments and Exchange Act.

—17—

(12)	Employee retirement benefits

In calculating the projected benefit obligation, mainly the benefit formula basis is used to attribute the expected benefit attributable to the respective interim period.

Unrecognized prior service cost is amortized on a straight-line basis, primarily over 9 years within the employees’ average remaining service period at incurrence.

Unrecognized net actuarial gain (loss) is amortized on a straight-line basis, primarily over 9 years within the employees’ average remaining service period, commencing from the next fiscal year of incurrence.

(13)	Translation of foreign currency assets and liabilities

Assets and liabilities of the Company and SMBC, which is a consolidated subsidiary of the Company, denominated in foreign currencies and accounts of SMBC overseas branches are translated into Japanese yen mainly at the exchange rate prevailing at the interim consolidated balance sheet date, with the exception of stocks of subsidiaries and affiliates translated at rates prevailing at the time of acquisition.

Other consolidated subsidiaries’ assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at their respective interim balance sheet dates.

(14)	Lease transactions

Recognition of income on finance leases

Interest income is allocated to each period.

Recognition of income on operating leases

Primarily, lease-related income is recognized on a straight-line basis over the full term of the lease, based on the contractual amount of lease fees per month.

(15)	Hedge accounting

Hedging against interest rate changes

As for the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets and liabilities, SMBC, which is a consolidated subsidiary of the Company, applies deferred hedge accounting.

SMBC applies deferred hedge accounting stipulated in “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Committee Practical Guidelines No. 24, October 8, 2020) to portfolio hedges on groups of large-volume, small-value monetary claims and debts.

As for the portfolio hedges to offset market fluctuation, SMBC assesses the effectiveness of such hedges by classifying the hedged items (such as deposits and loans) and the hedging instruments (such as interest rate swaps) by their maturity. As for the portfolio hedges to fix cash flows, SMBC assesses the effectiveness of such hedges by verifying the correlation between the hedged items and the hedging instruments.

As for the individual hedges, SMBC also assesses the effectiveness of such individual hedges.

—18—

Hedging against currency fluctuations

SMBC, which is a consolidated subsidiary of the Company, applies deferred hedge accounting stipulated in “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry” (JICPA Industry Committee Practical Guideline No. 25, October 8, 2020) to currency swap and foreign exchange swap transactions executed for the purpose of lending or borrowing funds in different currencies.

Pursuant to JICPA Industry Committee Practical Guidelines No. 25, SMBC assesses the effectiveness of currency swap and foreign exchange swap transactions executed for the purpose of offsetting the risk of changes in currency exchange rates by verifying that there are foreign-currency monetary claims and debts corresponding to the foreign-currency positions.

In order to hedge risk arising from volatility of exchange rates for stocks of subsidiaries and affiliates and other securities (excluding bonds) denominated in foreign currencies, SMBC applies deferred hedge accounting or fair value hedge accounting, on the conditions that the hedged securities are designated in advance and that sufficient on-balance (actual) or off-balance (forward) liability exposure exists to cover the cost of the hedged securities denominated in the same foreign currencies.

Hedging against share price fluctuations

SMBC, which is a consolidated subsidiary, applies fair value hedge accounting to individual hedges offsetting the price fluctuation of the shares that are classified under other securities, and accordingly evaluates the effectiveness of such individual hedges.

Transactions between consolidated subsidiaries

As for derivative transactions between consolidated subsidiaries or internal transactions between trading accounts and other accounts (or among internal sections), SMBC manages the interest rate swaps and currency swaps that are designated as hedging instruments in accordance with the non-arbitrary and strict criteria for external transactions stipulated in JICPA Industry Committee Practical Guidelines No. 24 and No. 25. Therefore, SMBC accounts for the gains or losses that arise from interest rate swaps and currency swaps in its earnings or defers them, rather than eliminating them.

Certain other consolidated subsidiaries apply the deferred hedge accounting, fair value hedge accounting or the special treatment for interest rate swaps.

(16)	Amortization of goodwill

Goodwill is amortized using the straight-line method over a period in which its benefit is expected to be realized, not to exceed 20 years. Immaterial goodwill is charged or credited to income directly when incurred.

(17)	Scope of “Cash and cash equivalents” on interim consolidated statements of cash flows

For the purposes of presenting the interim consolidated statements of cash flows, “Cash and cash equivalents” are cash on hand, non-interest earning deposits with banks and deposits with the Bank of Japan.

(18)	Adoption of the consolidated corporate-tax system

The Company and certain consolidated domestic subsidiaries apply the consolidated corporate-tax system.

—19—

(Changes in accounting policies)

Application of Accounting Standard for Revenue Recognition etc.

The Company applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020) etc. from the beginning of the period for the six months ended September 30, 2021, and has recognized revenue in an amount expected to be earned in exchange for goods or services at the time when controls of the promised goods or services are transferred to customers.

As for the application of Accounting standards for Revenue Recognition etc., in accordance with transitional treatment stipulated in the proviso of Paragraph 84 of “Accounting Standard for Revenue Recognition”, the cumulative effects by the retroactive application of the new accounting policy previous to the beginning of the period for the six months ended September 30, 2021 are adjusted to “Retained earnings” of the beginning of the period for the six months ended September 30, 2021.

As a result, “Retained earnings” decreased by ¥8,502 million at the beginning of the period for the six months ended September 30, 2021.

In accordance with the transitional measures set forth in paragraph 89-3 of the Accounting Standard for Revenue Recognition, among notes of “Revenue Recognition” comparative information for the six months ended September 30, 2020 is not disclosed.

(Additional information)

(1)	The estimates of reserve for possible loan losses related to the increasing impact of the spread of the novel coronavirus disease (COVID-19)

Considering the continuing uncertainty of the spread of COVID-19, estimation of the reserve for possible loan losses associated with COVID-19 is reflected on the consolidated financial statements in the following method.

For potential losses related to individual borrowers due to deterioration in business performance and funding, a reserve for possible loan losses is provided by reviewing, as necessary, borrower category based on the most recent available information.

In addition, for potential losses which cannot be reflected in any of individual borrower category, a reserve for possible loan losses is recorded at an amount deemed necessary based on an overall assessment. The assessment is conducted by specifying the portfolio significantly affected by COVID-19 and estimating the impact of the changes in economic trend and market condition due to the voluntary restraint on the economic activities caused by COVID-19, after consideration of the effect of the government’s financial support on bankruptcy trends.

(2)	Transition from the consolidated corporate-tax system to the group tax sharing system

Companies are required to shift from the consolidated corporate-tax system to the group tax sharing system from the fiscal year beginning on or after April 1, 2022, in accordance with the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 8, 2020) enacted on March 31, 2020. However, the Company and certain consolidated domestic subsidiaries, currently adopting the consolidated corporate-tax system, applied the accounting treatment based on the provisions of the Income Tax Act before the amendment for the six months ended September 30, 2021, in accordance with the “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ Practical Issue Task Force No. 39, March 31, 2020).

—20—

(Notes to interim consolidated balance sheets)

*1	Stocks and investments in unconsolidated subsidiaries and affiliates

Stocks and investments in unconsolidated subsidiaries and affiliates at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Stocks	¥	960,834	¥	1,007,277
Investments		847		819

*2	Unsecured loaned securities for which borrowers have the right to sell or pledge

The amount of unsecured loaned securities for which borrowers have the right to sell or pledge at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Japanese government bonds in “Securities”	¥	50,045	¥	108,625
Trading securities in “Trading assets”		2,190		68

As for the unsecured borrowed securities, securities under resale agreements and securities borrowed with cash collateral with rights to sell or pledge without restrictions, those securities pledged, those securities lent and those securities held without being disposed at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Securities pledged	¥	8,061,819	¥	7,539,198
Securities lent		394,493		594,330
Securities held without being disposed		4,090,071		3,786,669

*3	Bankrupt loans and non-accrual loans

Bankrupt loans and non-accrual loans at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Bankrupt loans	¥	69,452	¥	44,517
Non-accrual loans		422,551		420,150

“Bankrupt loans” are loans, after write-off, to legally bankrupt borrowers as defined in Article 96-1-3 and 96-1-4 of “Order for Enforcement of the Corporation Tax Act” (Cabinet Order No. 97 of 1965) and on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons.

“Non-accrual loans” are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

*4	Past due loans (3 months or more)

Past due loans (3 months or more) at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Past due loans (3 months or more)	¥	16,784	¥	16,735

“Past due loans (3 months or more)” are loans on which the principal or interest payment is past due for 3 months or more, excluding “Bankrupt loans” and “Non-accrual loans.”

—21—

*5	Restructured loans

Restructured loans at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Restructured loans	¥	430,080	¥	370,000

“Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g. reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “Bankrupt loans,” “Non-accrual loans” and “Past due loans (3 months or more).”

*6	Risk-monitored loans

The total amount of bankrupt loans, non-accrual loans, past due loans (3 months or more) and restructured loans at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Risk-monitored loans	¥	938,868	¥	851,404

The amounts of loans presented in Notes *3 to *6 above are the amounts before deduction of reserve for possible loan losses.

*7	Bills discounted

Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Committee Practical Guidelines No. 24. SMBC and its banking subsidiaries have rights to sell or pledge without restrictions bank acceptance bought, commercial bills discounted, documentary bills and foreign exchanges bought, etc. The total face value at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Bills discounted	¥	1,142,755	¥	1,132,981

*8	Assets pledged as collateral

Assets pledged as collateral at March 31, 2021 and September 30, 2021 consisted of the following:


March 31, 2021	Millions of yen		September 30, 2021	Millions of yen
Assets pledged as collateral:			Assets pledged as collateral:
Cash and due from banks	¥	15,483	Cash and due from banks	¥	2,873
Trading assets		713,410	Trading assets		671,764
Securities		14,933,325	Securities		15,135,108
Loans and bills discounted		10,152,979	Loans and bills discounted		10,643,404

Liabilities corresponding to assets pledged as collateral:			Liabilities corresponding to assets pledged as collateral:
Deposits		13,972	Deposits		2,212
Payables under repurchase agreements		7,516,287	Payables under repurchase agreements		7,465,154
Payables under securities lending transactions		1,060,066	Payables under securities lending transactions		935,617
Borrowed money		14,950,162	Borrowed money		15,766,305
Due to trust account		588,785	Due to trust account		591,017
Acceptances and guarantees		105,700	Acceptances and guarantees		106,884

—22—

In addition to the assets presented above, the following assets were pledged as collateral for cash settlements, and substitution for margins of futures transactions and certain other purposes at March 31, 2021 and September 30, 2021:


March 31, 2021	Millions of yen		September 30, 2021	Millions of yen
Cash and due from banks	¥	21	Cash and due from banks	¥	12,674
Trading assets		1,245,065	Trading assets		2,137,434
Securities		5,786,331	Securities		5,885,180
Loans and bills discounted		9,664	Loans and bills discounted		18,823

Other assets include collateral money deposited for financial instruments, surety deposits, margin of futures markets and other margins. The amounts for such assets were as follows:


March 31, 2021	Millions of yen		September 30, 2021	Millions of yen
Collateral money deposited for financial instruments	¥	2,111,770	Collateral money deposited for financial instruments	¥	1,856,059
Surety deposits		86,727	Surety deposits		84,999
Margins of futures markets		118,372	Margins of futures markets		115,395
Other margins		98,958	Other margins		109,055

*9	Commitment line contracts on overdrafts and loans

Commitment line contracts on overdrafts and loans are agreements to lend to customers, up to a prescribed amount, as long as there is no violation of any condition established in the contracts. The amounts of unused commitments at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
The amounts of unused commitments	¥	71,255,100	¥	69,588,770
The amounts of unused commitments whose original contract terms are within 1 year or unconditionally cancelable at any time		49,932,323		46,991,935

Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily represent actual future cash flow requirements. Many of these commitments include clauses under which SMBC and other consolidated subsidiaries can reject an application from customers or reduce the contract amounts in the event that economic conditions change, SMBC and other consolidated subsidiaries need to secure claims, or other events occur. In addition, SMBC and other consolidated subsidiaries may request the customers to pledge collateral such as premises and securities at the time of the contracts, and take necessary measures such as monitoring customers’ financial positions, revising contracts when such need arises and securing claims after the contracts are made.

*10	Land revaluation excess

SMBC, a consolidated subsidiary of the Company, revalued their own land for business activities in accordance with “Act on Revaluation of Land” (the “Act”) (Act No. 34, effective March 31, 1998) and “Act for Partial Revision of Act on Revaluation of Land” (Act No. 19, effective March 31, 2001). The income taxes corresponding to the net unrealized gains are reported in “Liabilities” as “Deferred tax liabilities for land revaluation excess,” and the Company’s share of the net unrealized gains, net of deferred taxes, are reported as “Land revaluation excess” in “Net assets.”

Date of the revaluation

March 31, 1998 and March 31, 2002

Method of revaluation (stipulated in Article 3-3 of the Act)

Fair values were determined by applying appropriate adjustments for land shape and timing of appraisal to the values stipulated in Article 2-3, 2-4 or 2-5 of “Order for Enforcement of Act on Revaluation of Land” (Cabinet Order No. 119 effective March 31, 1998).

—23—

*11	Accumulated depreciation on tangible fixed assets

Accumulated depreciation on tangible fixed assets at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Accumulated depreciation	¥	834,990	¥	867,103

*12	Subordinated borrowings

The balance of subordinated borrowings included in “Borrowed money” at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Subordinated borrowings	¥	249,000	¥	249,000

*13	Subordinated bonds

The balance of subordinated bonds included in “Bonds” at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Subordinated bonds	¥	1,922,165	¥	1,851,483

*14	Borrowings from trust account in relation to covered bonds issued by trust account

The amount of borrowings from trust account in relation to covered bonds issued by trust account included in “Due to trust account” at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
The amount of borrowings from trust account in relation to covered bonds issued by trust account	¥	588,785	¥	591,017

*15	Guaranteed amount to privately-placed bonds

The amount guaranteed by SMBC and its banking subsidiaries to privately-placed bonds (stipulated by Article 2-3 of the Financial Instruments and Exchange Act) in “Securities” at March 31, 2021 and September 30, 2021 were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Guaranteed amount to privately-placed bonds	¥	1,431,071	¥	1,404,409

—24—

(Notes to interim consolidated statements of income)

*1	Other income

“Other income” for the six months ended September 30, 2020 and 2021 included the following:


Six months ended September 30, 2020	Millions of yen		Six months ended September 30, 2021	Millions of yen
Gains on sales of stocks	¥	57,370	Gains on sales of stocks	¥	91,998
			Equity in gains of affiliates		30,726

*2	General and administrative expenses

“General and administrative expenses” for the six months ended September 30, 2020 and 2021 included the following:


Six months ended September 30, 2020	Millions of yen		Six months ended September 30, 2021	Millions of yen
Salaries and related expenses	¥	310,260	Salaries and related expenses	¥	328,336
Depreciation		90,104	Depreciation		94,276

*3	Other expenses

“Other expenses” for the six months ended September 30, 2020 and 2021 included the following:


Six months ended September 30, 2020	Millions of yen		Six months ended September 30, 2021	Millions of yen
Provision for reserve for possible loan losses	¥	140,724	Write-off of loans	¥	48,312
Write-off of loans		54,347
Expenses related to equity derivatives		40,025

*4	Extraordinary gains

“Extraordinary gains” for the six months ended September 30, 2020 and 2021 were as follows:


Six months ended September 30, 2020	Millions of yen		Six months ended September 30, 2021	Millions of yen
Gains on disposal of fixed assets	¥	407	Gains on disposal of fixed assets	¥	1,413

*5	Extraordinary losses

“Extraordinary losses” for the six months ended September 30, 2020 and 2021 included the following:


Six months ended September 30, 2020	Millions of yen		Six months ended September 30, 2021	Millions of yen
Losses on impairment of fixed assets	¥	3,983	Losses on impairment of fixed assets	¥	3,265
			Losses on disposal of fixed assets		1,236

*6	Losses on impairment of fixed assets

The differences between the recoverable amounts and the book value of the following assets are recognized as “Losses on impairment of fixed assets,” and included in “Extraordinary losses” for the six months ended September 30, 2020 and 2021.


Six months ended September 30, 2020			Millions of yen
Area	Purpose of use	Type	Impairment loss
Tokyo metropolitan area	Branches (4 items)	Land and buildings, etc.	¥	811
	Idle assets (30 items)			2,536
Kinki area	Idle assets (12 items)	Land and buildings, etc.		582
Other	Idle assets (5 items)	Land and buildings, etc.		53

Six months ended September 30, 2021			Millions of yen
Area	Purpose of use	Type	Impairment loss
Tokyo metropolitan area	Idle assets (48 items)	Land and buildings, etc.	¥	855
Kinki area	Idle assets (39 items)	Land and buildings, etc.		1,463
Other	Idle assets (24 items)	Land and buildings, etc.		945

—25—

As for land and buildings, etc., at SMBC, a consolidated subsidiary of the Company, a branch, which continuously manages and determines its income and expenses, is the smallest unit of asset group for recognition and measurement of impairment loss of fixed assets. Assets such as corporate headquarters facilities, training facilities, data and system centers, and health and recreational facilities which do not produce cash flows that can be attributed to individual assets are treated as corporate assets. As for idle assets, impairment loss is measured individually. At other consolidated subsidiaries, a branch or other group is the smallest asset grouping unit as well.

The carrying amounts of idle assets at SMBC are reduced to their recoverable amounts, and the decreased amounts are included in “Extraordinary losses” as “Losses on impairment of fixed assets,” if there are indicators that the invested amounts may not be recoverable.

The recoverable amount is calculated using net realizable value which is basically determined by subtracting the expected disposal cost from the appraisal value based on the Real Estate Appraisal Standard.

—26—

(Notes to interim consolidated statements of changes in net assets)

Six months ended September 30, 2020

1. Type and number of shares issued and treasury stock


	Number of shares								Notes
	At the beginning of the period		Increase		Decrease		At the end of the period		Notes
Shares issued
Common stock		1,373,171,556		868,505		—		1,374,040,061		1

Total		1,373,171,556		868,505		—		1,374,040,061

Treasury stock
Common stock		3,645,043		45,986		81,280		3,609,749		2, 3

Total		3,645,043		45,986		81,280		3,609,749


Notes:	1.	The increase of 868,505 shares in the total number of shares issued was due to issuance of new stock as stock-based compensation.
	2.	The increase of 45,986 shares in the number of treasury common stock comprises the increase due to purchases of fractional shares and acquisition of restricted stocks without compensation under the Stock Compensation Plans.
	3.	The decrease of 81,280 shares in the number of treasury common stock comprises the decrease due to sales of fractional shares as well as exercise of stock options.

2. Information on stock acquisition rights


			Number of shares				Millions of yen
	Details of stock acquisition rights	Type of shares	At the beginning of the period	Increase	Decrease	At the end of the period	At the end of the period		Notes
The Company	Stock acquisition rights as stock options	—	—	—	—	—	¥	1,808

Total							¥	1,808

3. Information on dividends

(1) Dividends paid in the period

Millions of yen, except per share amount

Date of resolution

Type of shares

Cash dividends

Cash dividends
per share

Record date

Effective date

Ordinary General Meeting of Shareholders
held on June 26, 2020

Common stock

¥ 136,952

¥ 100

March 31, 2020

June 29, 2020

(2) Dividends to be paid after the period

Millions of yen, except per share amount

Date of resolution

Type of shares

Cash
dividends

Source of
dividends

Cash dividends
per share

Record date

Effective date

Meeting of the Board of Directors
held on November 13, 2020

Common stock

¥ 130,190

Retained
earnings

¥ 95

September 30, 2020

December 3, 2020

—27—

Six months ended September 30, 2021

1. Type and number of shares issued and treasury stock


	Number of shares
	At the beginning of the period		Increase		Decrease		At the end of the period		Notes
Shares issued
Common stock		1,374,040,061		322,041		—		1,374,362,102		1

Total		1,374,040,061		322,041		—		1,374,362,102

Treasury stock
Common stock		3,612,302		9,743		86,239		3,535,806		2, 3

Total		3,612,302		9,743		86,239		3,535,806


Notes:	1.	The increase of 322,041 shares in the total number of shares issued was due to issuance of new stock as stock-based compensation.
	2.	The increase of 9,743 shares in the number of treasury common stock comprises the increase due to purchases of fractional shares.
	3.	The decrease of 86,239 shares in the number of treasury common stock comprises the decrease due to sales of fractional shares as well as exercise of stock options.

2. Information on stock acquisition rights


			Number of shares				Millions of yen
	Details of stock acquisition rights	Type of shares	At the beginning of the period	Increase	Decrease	At the end of the period	At the end of the period		Notes
The Company	Stock acquisition rights as stock options	—	—	—	—	—	¥	1,498

Total							¥	1,498

3. Information on dividends

(1) Dividends paid in the period

Millions of yen, except per share amount

Date of resolution

Type of shares

Cash dividends

Cash dividends
per share

Record date

Effective date

Ordinary General Meeting of Shareholders
held on June 29, 2021

Common stock

¥ 130,190

¥ 95

March 31, 2021

June 30, 2021

(2) Dividends to be paid after the period

Millions of yen, except per share amount

Date of resolution

Type of shares

Cash
dividends

Source of
dividends

Cash dividends
per share

Record date

Effective date

Meeting of the Board of Directors
held on November 12, 2021

Common stock

¥ 143,936

Retained
earnings

¥ 105

September 30, 2021

December 3, 2021

—28—

(Notes to interim consolidated statements of cash flows)

*1	The reconciliation of balance of “Cash and cash equivalents” at the end of the period and the amounts listed on the interim consolidated balance sheets


	Millions of yen
Six months ended September 30	2020		2021
Cash and due from banks	¥	68,474,446	¥	70,940,025
Interest earning deposits with banks (excluding the deposit with the Bank of Japan)		(5,134,114)		(6,519,512)

Cash and cash equivalents	¥	63,340,332	¥	64,420,512

(Notes to lease transactions)

1. Finance leases

(1)	Lessee side

Lease assets

(a)

Tangible fixed assets

Tangible fixed assets mainly consisted of branches and equipment.

(b)

Intangible fixed assets

Intangible fixed assets are software.

Depreciation method of lease assets

Depreciation method of lease assets is reported in “(Significant accounting policies for preparing interim consolidated financial statements) 4. Accounting policies (4) Depreciation.”

(2)	Lessor side

Breakdown of lease investment assets


	Millions of yen
	March 31, 2021		September 30, 2021
Lease receivables	¥	288,189	¥	276,342
Residual value		46,328		47,135
Unearned interest income		(98,125)		(94,782)

Total	¥	236,392	¥	228,695

The scheduled collections of lease payments receivable related to lease investment assets are as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Within 1 year	¥	29,790	¥	33,321
More than 1 year to 2 years		28,124		22,108
More than 2 years to 3 years		19,846		16,625
More than 3 years to 4 years		15,304		16,379
More than 4 years to 5 years		16,973		14,541
More than 5 years		178,149		173,367

Total	¥	288,189	¥	276,342

—29—

2. Operating leases

(1)	Lessee side

Future minimum lease payments on operating leases which were not cancelable were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Due within 1 year	¥	39,033	¥	38,773
Due after 1 year		223,555		211,300

Total	¥	262,589	¥	250,074

(2)	Lessor side

Future minimum lease payments on operating leases which were not cancelable were as follows:


	Millions of yen
	March 31, 2021		September 30, 2021
Due within 1 year	¥	26,601	¥	27,598
Due after 1 year		58,759		57,864

Total	¥	85,361	¥	85,463

—30—

(Notes to financial instruments)

Matters concerning fair value of financial instruments and breakdown by input level

The amounts on the interim consolidated balance sheet (the amounts on the consolidated balance sheet) and the fair value of financial instruments as well as the difference between them are as follows.

The amounts shown in the following tables do not include stocks with no market price, etc., and investments in partnerships (refer to Note 3).

The fair values of financial instruments are classified into the following three levels depending on the observability and significance of the input used in the fair value measurement.

Level 1: Fair value determined based on the (unadjusted) quoted price in an active market for the same asset or liability

Level 2: Fair value determined based on directly or indirectly observable inputs other than Level 1 inputs

Level 3: Fair value determined based on significant unobservable inputs

If multiple inputs with a significant impact are used for the fair value measurement of a financial instrument, the financial instrument is classified to the lowest priority level of fair value measurement in which each input belongs.

(1)

Financial assets and liabilities at fair value on the interim consolidated balance sheets (consolidated balance sheet)


	Millions of yen
	Consolidated balance sheet amount
March 31, 2021	Level 1			Level 2			Level 3		Total
Monetary claims bought	¥	—		¥	276,989		¥	454,827	¥	731,817
Trading assets
Securities classified as trading purposes *¹		2,473,813			591,976			270		3,066,060
Money held in trust		—			309			—		309
Securities
Other securities *¹		25,055,919			8,840,677			52,193		33,948,790

Total assets	¥	27,529,732		¥	9,709,953		¥	507,291	¥	37,746,977

Trading liabilities
Trading securities sold for short sales *¹	¥	1,997,985		¥	77,072		¥	—	¥	2,075,058

Total liabilities	¥	1,997,985		¥	77,072		¥	—	¥	2,075,058

Derivative transactions *^{2, 3}
Interest rate derivatives	¥	24,638		¥	416,233		¥	1,013	¥	441,886
Currency derivatives		(560	)		91,268			4,807		95,514
Equity derivatives		(29,846	)		106			21,696		(8,043	)
Bond derivatives		484			19			—		503
Commodity derivatives		532			1,486			—		2,019
Credit derivative transactions		—			(6,512	)		796		(5,716	)

Total derivative transactions	¥	(4,751	)	¥	502,601		¥	28,314	¥	526,164

The amount of investment trusts for which transitional measures are applied in accordance with Paragraph 26 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.31, July 4, 2019, hereinafter, “Guidance for Application of Fair Value Measurement”) are not included in the table above. The amount of such investment trusts on the consolidated balance sheet includes financial assets of ¥1,200,314 million and financial liabilities of ¥1,510 million.

The amounts collectively represent the derivative transactions which are recorded in “Trading assets,” “Trading liabilities,” “Other assets” and “Other liabilities.” Debts and credits arising from derivative transactions are presented on a net basis, with a net debt presented in round brackets.

As for derivative transactions applying hedge accounting, ¥207,017 million is recorded on the consolidated balance sheet.

These are interest rate swap and other derivative transactions designated as hedging instruments for stabilizing cash flows of loans and bills discounted, etc., that are hedged items. The Company has mainly applied deferred hedge accounting for those derivative transactions. For these hedging relationships, the Company has applied “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (PITF No.40, September 29, 2020).

—31—


	Millions of yen
	Interim consolidated balance sheet amount
September 30, 2021	Level 1			Level 2			Level 3		Total
Monetary claims bought	¥	—		¥	287,949		¥	455,491	¥	743,441
Trading assets
Securities classified as trading purposes *¹		3,404,102			707,951			585		4,112,638
Money held in trust		—			309			—		309
Securities
Other securities *¹		25,060,117			8,488,998			47,437		33,596,553

Total assets	¥	28,464,219		¥	9,485,209		¥	503,514	¥	38,452,943

Trading liabilities
Trading securities sold for short sales *¹	¥	2,439,431		¥	69,076		¥	—	¥	2,508,508

Total liabilities	¥	2,439,431		¥	69,076		¥	—	¥	2,508,508

Derivative transactions *^{2, 3}
Interest rate derivatives	¥	27,227		¥	379,712		¥	213	¥	407,152
Currency derivatives		1,147			28,285			3,222		32,655
Equity derivatives		(27,827	)		2,994			27,278		2,445
Bond derivatives		219			5			6		230
Commodity derivatives		613			1,104			—		1,718
Credit derivative transactions		—			(5,381	)		1,249		(4,132	)

Total derivative transactions	¥	1,380		¥	406,720		¥	31,969	¥	440,070

The amount of investment trusts for which transitional measures are applied in accordance with Paragraph 26 of the Guidance for Application of Fair Value Measurement are not included in the table above. The amount of such investment trusts on the interim consolidated balance sheet includes financial assets of ¥1,183,173 million and financial liabilities of ¥1,115 million.

As for derivative transactions applying hedge accounting, ¥1,612 million is recorded on the interim consolidated balance sheet.

—32—

(2)

Financial assets and liabilities which are not stated at fair value on the interim consolidated balance sheet (consolidated balance sheet)

Cash and due from banks, Call loans and bills bought, Receivables under resale agreements, Receivables under securities borrowing transactions, Foreign exchanges, Call money and bills sold, Payable under repurchase agreements, Payable under securities lending transactions, Commercial papers, and Short-term bonds payable are not included in the following tables since they are mostly short-term, and their fair values approximate their carrying amounts.


March 31, 2021	Millions of yen
	Fair Value								Consolidated balance sheet amount		Net unrealized gains (losses)
	Level 1		Level 2		Level 3		Total		Consolidated balance sheet amount		Net unrealized gains (losses)
Monetary claims bought ^*	¥	—	¥	—	¥	3,971,664	¥	3,971,664	¥	3,930,431	¥	41,233
Securities
Bonds classified as held-to-maturity		22,239		—		—		22,239		22,300		(60)
Loans and bills discounted										85,132,738
Reserve for possible loan losses ^*										(456,861)

		—		—		86,450,361		86,450,361		84,675,876		1,774,484

Lease receivables and investment assets ^*		—		—		239,867		239,867		235,723		4,144

Total assets	¥	22,239	¥	—	¥	90,661,893	¥	90,684,133	¥	88,864,331	¥	1,819,802


Deposits	¥	—	¥	142,023,649	¥	—	¥	142,023,649	¥	142,026,156	¥	(2,507)
Negotiable certificates of deposit		—		12,579,851		—		12,579,851		12,570,617		9,233
Borrowed money		—		17,773,586		—		17,773,586		17,679,690		93,895
Bonds		—		8,621,373		702,346		9,323,720		9,043,031		280,688
Due to trust account		—		2,335,221		—		2,335,221		2,321,223		13,998

Total liabilities	¥	—	¥	183,333,682	¥	702,346	¥	184,036,029	¥	183,640,720	¥	395,308

General reserves and special reserves corresponding to loans are deducted. The reserve for possible loan losses on “Monetary claims bought” and “Lease receivables and investment assets” are deducted directly from consolidated balance sheet amount since they are immaterial.

—33—


September 30, 2021	Millions of yen
	Fair Value								Interim consolidated balance sheet amount		Net unrealized gains (losses)
	Level 1		Level 2		Level 3		Total		Interim consolidated balance sheet amount		Net unrealized gains (losses)
Monetary claims bought ^*	¥	—	¥	—	¥	4,120,023	¥	4,120,023	¥	4,083,357	¥	36,666
Securities
Bonds classified as held-to-maturity		22,290		—		—		22,290		22,300		(9)
Loans and bills discounted										85,037,573
Reserve for possible loan losses ^*										(431,498)

		—		—		86,415,055		86,415,055		84,606,074		1,808,980

Lease receivables and investment assets ^*		—		—		231,147		231,147		227,993		3,154

Total assets	¥	22,290	¥	—	¥	90,766,227	¥	90,788,518	¥	88,939,725	¥	1,848,792


Deposits	¥	—	¥	141,338,372	¥	—	¥	141,338,372	¥	141,340,182	¥	(1,809)
Negotiable certificates of deposit		—		11,969,090		—		11,969,090		11,962,673		6,416
Borrowed money		—		15,717,127		2,444,575		18,161,703		18,104,699		57,003
Bonds		—		9,036,759		701,818		9,738,578		9,461,894		276,683
Due to trust account		—		2,553,947		—		2,553,947		2,543,382		10,565

Total liabilities	¥	—	¥	180,615,297	¥	3,146,394	¥	183,761,692	¥	183,412,833	¥	348,859

General reserves and special reserves corresponding to loans are deducted. The reserve for possible loan losses on “Monetary claims bought” and “Lease receivables and investment assets” are deducted directly from interim consolidated balance sheet amount since they are immaterial.

—34—

(Note 1) Description of the valuation techniques and inputs used to measure fair value

Assets

Monetary claims bought

The fair values of subordinated trust beneficiary interests related to securitized housing loans among monetary claims bought are determined by estimating future cash flows using the probability of default, loss given default and prepayment rate, and assessing the value by deducting the value of senior beneficial interests, etc. from the value of underlying housing loans. The fair values of other transactions are, in principle, based on methods similar to the methods applied to Loans and bills discounted.

These transactions are classified into Level 3.

Trading assets

The fair values of bonds and other securities held for trading purposes are, in principle, based on their market prices at the end of the period.

The fair values of such bonds and other securities are mainly classified into Level 1 depending on the level of market activity. When fair value is determined based on either the prices quoted by the financial institutions, or future cash flows discounted using observable inputs such as interests, spreads, and others, they are classified into Level 2.

Money held in trust

The fair values of money held in trust are, in principle, fair values of securities in trust property calculated by the same method as for securities that the Company owns. They are classified into Level 2.

Securities

In principle, the fair values of stocks (including foreign stocks) are based on the market price as of the end of the period. They are mainly classified into Level 1 depending on the level of market activity. The fair values of securities with market prices other than stocks are based on the market price as of the end of the period. Japanese Government bonds are classified into Level 1 and other bonds are classified into Level 2.

The fair values of privately-placed bonds with no market prices are based on the present value of estimated future cash flows, taking into account the borrower’s probability of default, loss given default, etc. Those present values are discounted by a rate comprising a risk-free interest rate with certain adjustment. However, the fair values of bonds, such as privately-placed bonds issued by bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers are based on the bond’s book value after the deduction of the expected amount of a loss on the bond computed by using the same method applied to the estimation of a loan loss.

These transactions are classified into Level 2.

Loans and bills discounted, and Lease receivables and investment assets

Of these transactions, considering the characteristics of these transaction, the fair values of overdrafts with no specified repayment dates are their book values as they are considered to approximate their fair values.

For short-term transactions, the fair values are also their book values as they are considered to approximate their fair values.

The fair values of long-term transactions are, in principle, based on the present value of estimated future cash flows taking into account the borrower’s probability of default, loss given default, etc. Those present values are discounted by a rate comprising a risk-free interest rate with certain adjustment. At certain consolidated subsidiaries of the Company, the fair values are calculated based on the present values of estimated future cash flows, which are computed based on the contractual interest rate. Those present values are discounted by a rate comprising a risk-free rate and a credit risk premium.

Regarding claims on bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers, expected losses on such claims are calculated based on either the expected recoverable amount from disposal of collateral or guarantees, or the present value of expected future cash flows. Since the claims’ interim consolidated balance sheet amounts (consolidated balance sheet amounts) minus the expected amount of loan losses approximate their fair values, such amounts are considered to be their fair values.

These transactions are classified into Level 3.

—35—

Liabilities

Trading liabilities

The fair values of bonds sold for short sales and other securities for trading purposes are, in principle, based on their market prices as of the end of the period. They are classified into Level 1.

Deposits, Negotiable certificates of deposit, and Due to trust account

Out of these transactions, the fair values of demand deposits and deposits without maturity are their book values. The fair values of transactions with a short-term remaining maturity are also their book values, as their book values are regarded to approximate their fair values. The fair values of transactions with a long-term remaining maturity are, in principle, based on the present value of estimated future cash flows discounted by the interest rate assuming that the same type of deposit is newly accepted until the end of the remaining maturity.

The fair values of borrowings from the trust account related to covered bond issued by the trust account are based on the amount calculated in accordance with the price quoted by industry associations, etc.

These transactions are classified into Level 2.

Borrowed money and Bonds

The fair values of short-term transactions are their book values, as their book values are considered to approximate their fair values. For long-term transactions, their fair values are based on the present value of estimated future cash flows discounted using the refinancing rate applied to the same type of instruments for the remaining maturity.

For transactions with the price quoted by industry associations, etc., fair value is based on the amount calculated by using the published price data, yield data, etc.

These transactions are classified into Level 2.

Derivative transactions

The fair values of listed derivatives are based on their closing prices. The fair values of over-the-counter derivative transactions are based on the present value of the future cash flows, option valuation models, etc., using inputs such as interest rate, foreign exchange rate, stock price, commodity price, etc.

Over-the-counter derivative transactions takes into account the counterparty’s and the Company’s credit risks, and the liquidity risks of the unsecured lending funds. Listed derivative transactions are mainly classified into Level 1. Over-the-counter derivative transactions are classified into Level 2 if observable inputs are available or impact of unobservable inputs to the fair values is not significant. If impact of unobservable inputs to the fair values is significant, they are classified into Level 3.

—36—

(Note 2)

Quantitative information about financial assets and liabilities measured and stated on the interim consolidated balance sheet (consolidated balance sheet) at fair value and classified in Level 3

Quantitative information on significant unobservable inputs


March 31, 2021	Valuation technique	Significant unobservable inputs	Range

Monetary claims bought	Discounted cash flow	Probability of default	0.1% — 100.0%
		Loss given default	0.0% — 51.4%
		Prepayment rate	2.0% — 7.5%
Trading assets:
Securities classified as trading purposes	Option valuation model	Equity volatility	24.6% — 57.6%
Securities:
Other securities	Discounted cash flow	Probability of default	7.9% — 100.0%
		Loss given default	0.0% — 80.2%

Derivative transactions:
Interest rate derivatives	Option valuation model	Correlation between interest rates	14.9% — 98.0%
Currency derivatives	Option valuation model	Correlation between interest rates	26.7% — 98.0%
		Correlation between interest rate and foreign exchange rate	13.9% — 47.6%
		Foreign exchange rate volatility	8.9% — 14.8%
Equity derivatives	Option valuation model	Correlation between equities	47.1% — 93.1%
		Correlation between foreign exchange rate and equity	(26.0)% — (2.6)%
		Equity volatility	16.6% — 55.9%
Credit derivatives	Credit default model	Correlation between foreign exchange rate and CDS* spread	15.0% — 90.0%

Credit Default Swap

—37—


September 30, 2021	Valuation technique	Significant unobservable inputs	Range

Monetary claims bought	Discounted cash flow	Probability of default	0.1% — 100.0%
		Loss given default	0.0% — 51.4%
		Prepayment rate	2.0% — 7.5%
Trading assets:
Securities classified as trading purposes	Option valuation model	Equity volatility	16.4% — 70.6%
Securities:
Other securities	Discounted cash flow	Probability of default	7.9% — 100.0%
		Loss given default	0.0% — 78.5%

Derivative transactions:
Interest rate derivatives	Option valuation model	Correlation between interest rates	15.3%
		Correlation between interest rate and foreign exchange rate	10.5% — 33.3%
Currency derivatives	Option valuation model	Correlation between interest rates	28.0% — 97.9%
		Correlation between interest rate and foreign exchange rate	12.3% — 46.7%
		Foreign exchange rate volatility	7.5% — 13.8%
Equity derivatives	Option valuation model	Correlation between equities	31.5% — 93.3%
		Correlation between foreign exchange rate and equity	(14.9)% — 27.7%
		Equity volatility	15.9% — 59.3%
Bond derivatives	Option valuation model	Bond options volatility	3.4% — 3.8%
Credit derivatives	Credit default model	Correlation between foreign exchange rate and CDS* spread	15.0% — 90.0%

Credit Default Swap

—38—

Reconciliation between the beginning and ending balance, and net unrealized gains (losses) recognized in the earnings of the period


	Millions of yen
March 31, 2021	Beginning balance		Earnings of the *period^1**			Other comprehensive *income^2**			Net amount of purchase, sale, issuance and settlement			Transfer to Level *3^3**		Transfer from Level *3^4**			Ending balance		Net unrealized gains (losses) on financial assets and liabilities held at consolidated balance sheet date among the amount recognized in the earnings of the period
Monetary claims bought	¥	451,033	¥	—		¥	4,789		¥	(994	)	¥	—	¥	—		¥	454,827	¥	—
Trading assets		152		3,499			—			(3,383	)		1		—			270		184
Securities		33,251		539			(1,515	)		(28,217	)		48,305		(170	)		52,193		(4,585	)
Derivative transactions
Interest rate		4,280		(3,316	)		—			50			—		—			1,013		366
Currency		1,721		3,038			—			—			—		47			4,807		3,297
Equity		32,865		(13,462	)		—			2,293			—		—			21,696		10,855
Credit derivative		2,240		(1,444	)		—			—			—		—			796		(709	)

Total	¥	525,544	¥	(11,145	)	¥	3,274		¥	(30,251	)	¥	48,306	¥	(122	)	¥	535,605	¥	9,408


*1		The amounts shown in the table above are included in consolidated statements of income.
*2		The amounts shown in the table above are included in “Net unrealized gains (losses) on other securities” under “Other comprehensive income (losses).”
*3		Transfer from Level 2 to Level 3 due to an increase in the impact on the fair value of unobservable inputs for privately-placed bonds etc. The transfer was made at the beginning of the fiscal year ended March 31, 2021.
*4		Transfer from Level 3 to Level 2 due to a decrease in the impact on the fair value of unobservable inputs for privately-placed bonds etc. The transfer was made at the beginning of the fiscal year ended March 31, 2021.

—39—


	Millions of yen
September 30, 2021	Beginning balance		Earnings of the *period^1**			Other comprehensive *income^2**			Net amount of purchase, sale, issuance and settlement			Transfer to Level *3^3**		Transfer from Level *3^4**			Ending balance		Net unrealized gains (losses) on financial assets and liabilities held at interim consolidated balance sheet date among the amount recognized in the earnings of the period
Monetary claims bought	¥	454,827	¥	—		¥	912		¥	(248	)	¥	—	¥	—		¥	455,491	¥	—
Trading assets		270		966			—			(751	)		100		—			585		213
Securities		52,193		2,813			(328	)		(10,735	)		4,001		(507	)		47,437		(877	)
Derivative transactions
Interest rate		1,013		(21	)		—			172			—		(951	)		213		(10	)
Currency		4,807		(1,584	)		—			—			—		—			3,222		(1,583	)
Equity		21,696		3,326			—			2,255			—		—			27,278		15,143
Bond		—		(95	)		—			101			—		—			6		(2	)
Credit derivative		796		452			—			—			—		—			1,249		421

Total	¥	535,605	¥	5,858		¥	584		¥	(9,206	)	¥	4,101	¥	(1,459	)	¥	535,483	¥	13,305


*1		The amounts shown in the table above are included in interim consolidated statements of income.
*2		The amounts shown in the table above are included in “Net unrealized gains (losses) on other securities” under “Other comprehensive income (losses).”
*3		Transfer from Level 2 to Level 3 due to an increase in the impact on the fair value of unobservable inputs for privately-placed bonds etc. The transfer was made at the beginning of the six months ended September 30, 2021.
*4		Transfer from Level 3 to Level 2 due to a decrease in the impact on the fair value of unobservable inputs for privately-placed bonds etc. The transfer was made at the beginning of the six months ended September 30, 2021.

Description of the fair value valuation process

At the Company, the middle division establishes policies and procedures for the calculation of fair value, and the front division develops valuation models in accordance with such policies and procedures. The middle division verifies the reasonableness of the fair value valuation models, the inputs used, and the appropriateness of the classified fair value level of the calculated fair value.

Observable data is utilized as much as possible for the valuation model. If quoted prices obtained from third parties are used, those values are verified by comparison with results recalculated by the Company using the inputs for the valuation.

—40—

Description of the sensitivity of the fair value to changes in significant unobservable inputs

Probability of default

Probability of default represents the likelihood that the default will occur, and is calculated based on actual defaults in the past. A significant increase (decrease) in the default rate would result in a significant decrease (increase) in a fair value.

Loss given default

Loss given default is the proportion of estimated losses in the event that default occurs to the total balance of bonds or loans and bills discounted, and is calculated based on actual defaults in the past. A significant increase (decrease) in loss given default would result in a significant decrease (increase) in a fair value.

Prepayment rate

Prepayment rate is the proportion of estimated principals assuming that prepayment is made in each period. In general, a significant change in prepayment rate would result in a significant decrease (increase) in a fair value according to the contractual terms and conditions.

Volatility

Volatility is an indicator that represents the estimation of severity of change over a certain period in values of inputs and market values. Volatility is estimated based on actual results in the past, information derived from third parties and other analysis approach. Volatility is mainly used in valuation of derivatives that refer to potential changes of interest rate, foreign exchange rate, stock price, etc. A significant increase (decrease) in volatility would generally result in a significant increase (decrease) in a fair value.

Correlation

Correlation is an indicator of the relation of variables such as interest rate, foreign exchange rate, Credit Default Swap (CDS) spread and stock price. Correlation is estimated based on actual results in the past, and is mainly used in valuation technique of complex derivatives, etc. A significant change in correlation would generally result in a significant increase or decrease in a fair value according to the contractual terms and conditions of the financial instrument.

(Note 3)

Interim Consolidated balance sheet amounts (Consolidated balance sheet amounts) of stocks with no market prices, etc. and investments in partnership, etc. are as follows. In accordance with Paragraph 5 of ASBJ Guidance No.19, “Implementation Guidance on Disclosures about Fair Value of Financial Instruments,” these amounts are not included in “Trading assets” and “Securities” stated on the tables disclosed in “Matters concerning fair value of financial instruments and breakdown by input level:


	Millions of yen
	March 31, 2021		September 30, 2021
Stocks with no market prices, etc.^*^{1, 2}	¥	187,204	¥	250,266
Investments in partnership, etc.^*²		278,072		292,684

Total	¥	465,276	¥	542,951


*1		Unlisted stocks are included in stocks with no market prices, etc.
*2		Unlisted stocks and investments in partnership totaling ¥20,644 million and ¥5,158 million were written-off in the fiscal year ended March 31, 2021 and in the six months ended September 30, 2021, respectively.

—41—

(Notes to securities)

The amounts shown in the following tables include negotiable certificates of deposit classified as “Cash and due from banks,” and beneficiary claims on loan trust classified as “Monetary claims bought,” in addition to “Securities” stated in the interim consolidated balance sheet (consolidated balance sheet).

1. Bonds classified as held-to-maturity


		Millions of yen
March 31, 2021		Consolidated balance sheet amount		Fair value		Net unrealized gains (losses)
Bonds with unrealized gains:	Japanese government bonds	¥	—	¥	—	¥	—
	Japanese local government bonds		3,700		3,701		1
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		3,700		3,701		1

Bonds with unrealized losses:	Japanese government bonds		—		—		—
	Japanese local government bonds		18,600		18,538		(61)
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		18,600		18,538		(61)

Total		¥	22,300	¥	22,239	¥	(60)


		Millions of yen
September 30, 2021		Interim consolidated balance sheet amount		Fair value		Net unrealized gains (losses)
Bonds with unrealized gains:	Japanese government bonds	¥	—	¥	—	¥	—
	Japanese local government bonds		6,000		6,013		13
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		6,000		6,013		13

Bonds with unrealized losses:	Japanese government bonds		—		—		—
	Japanese local government bonds		16,300		16,277		(22)
	Japanese corporate bonds		—		—		—
	Other		—		—		—

	Subtotal		16,300		16,277		(22)

Total		¥	22,300	¥	22,290	¥	(9)

—42—

2. Other securities


		Millions of yen
March 31, 2021		Consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other securities with unrealized gains:	Stocks	¥	3,443,816	¥	1,161,142	¥	2,282,673
	Bonds		6,148,728		6,119,071		29,657
	Japanese government bonds		3,980,113		3,977,980		2,132
	Japanese local government bonds		215,060		214,647		413
	Japanese corporate bonds		1,953,555		1,926,443		27,111
	Other		8,133,879		7,336,137		797,741

	Subtotal		17,726,424		14,616,350		3,110,073

Other securities with unrealized losses:	Stocks		106,431		133,466		(27,035)
	Bonds		11,506,509		11,528,134		(21,624)
	Japanese government bonds		10,313,497		10,329,703		(16,206)
	Japanese local government bonds		517,561		518,629		(1,067)
	Japanese corporate bonds		675,450		679,800		(4,350)
	Other		6,613,717		6,743,300		(129,582)

	Subtotal		18,226,657		18,404,900		(178,243)

Total		¥	35,953,082	¥	33,021,251	¥	2,931,830


Note:				Net unrealized gains (losses) on other securities shown above include gains of ¥399 million for the fiscal year ended March 31, 2021 that are recognized in the earnings by applying fair value hedge accounting.


		Millions of yen
September 30, 2021		Interim consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other securities with unrealized gains:	Stocks	¥	3,506,394	¥	1,114,906	¥	2,391,488
	Bonds		4,639,715		4,611,515		28,200
	Japanese government bonds		2,085,197		2,084,764		433
	Japanese local government bonds		473,535		472,283		1,251
	Japanese corporate bonds		2,080,982		2,054,467		26,514
	Other		7,948,726		7,129,067		819,658

	Subtotal		16,094,836		12,855,489		3,239,347

Other securities with unrealized losses:	Stocks		107,646		134,674		(27,028)
	Bonds		12,402,399		12,418,886		(16,486)
	Japanese government bonds		11,360,850		11,373,063		(12,213)
	Japanese local government bonds		457,398		458,162		(763)
	Japanese corporate bonds		584,151		587,661		(3,509)
	Other		6,941,781		7,065,378		(123,597)

	Subtotal		19,451,827		19,618,940		(167,112)

Total		¥	35,546,664	¥	32,474,429	¥	3,072,234


Note:				Net unrealized gains (losses) on other securities shown above include losses of ¥1,106 million for the six months ended September 30, 2021 that are recognized in the earnings by applying fair value hedge accounting.

—43—

3. Write-down of securities

Bonds classified as held-to-maturity and other securities (excluding other securities whose interim consolidated balance sheet amounts are not measured at fair value) are considered as impaired if the fair value decreases materially below the acquisition cost and such decline is not considered as recoverable. The fair value is recognized as the interim consolidated balance sheet amount (consolidated balance sheet amount) and the amount of write-down is accounted for as valuation loss for the period. Valuation losses for the fiscal year ended March 31, 2021 and for the six months ended September 30, 2021 were ¥8,480 million and ¥3,904 million, respectively. The rule for determining “material decline” is as follows and is based on the classification of issuers under the rules of self-assessment of assets.


Bankrupt/Effectively bankrupt/Potentially bankrupt issuers:		Fair value is lower than acquisition cost.
Issuers requiring caution:		Fair value is 30% or lower than acquisition cost.
Normal issuers:		Fair value is 50% or lower than acquisition cost.


Bankrupt issuers: Issuers that are legally bankrupt or formally declared bankrupt.
Effectively bankrupt issuers: Issuers that are not legally bankrupt but regarded as substantially bankrupt.
Potentially bankrupt issuers: Issuers that are not bankrupt now, but are perceived to have a high risk of falling into bankruptcy.
Issuers requiring caution: Issuers that are identified for close monitoring.
Normal issuers: Issuers other than the above 4 categories of issuers.

—44—

(Notes to money held in trust)

1. Money held in trust classified as held-to-maturity

Fiscal year ended March 31, 2021

There are no corresponding transactions.

Six months ended September 30, 2021

There are no corresponding transactions.

2. Other money held in trust (other than trading purpose and held to maturity)


	Millions of yen
March 31, 2021	Consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other money held in trust	¥	309	¥	309		—

	Millions of yen
September 30, 2021	Interim consolidated balance sheet amount		Acquisition cost		Net unrealized gains (losses)
Other money held in trust	¥	309	¥	309		—

—45—

(Notes to net unrealized gains (losses) on other securities)

The breakdown of “Net unrealized gains (losses) on other securities” reported on the interim consolidated balance sheet (consolidated balance sheet) is as shown below:


March 31, 2021	Millions of yen
Net unrealized gains (losses)	¥	2,931,364
Other securities		2,931,364
Other money held in trust		—
(-) Deferred tax liabilities		747,355

Net unrealized gains (losses) on other securities (before following adjustments)		2,184,009

(-) Non-controlling interests		105,206
(+) The Company’s interest in net unrealized gains (losses) on valuation of other securities held by equity method affiliates		15,802

Net unrealized gains (losses) on other securities	¥	2,094,605


September 30, 2021	Millions of yen
Net unrealized gains (losses)	¥	3,075,175
Other securities		3,075,175
Other money held in trust		—
(-) Deferred tax liabilities		793,733

Net unrealized gains (losses) on other securities (before following adjustments)		2,281,441

(-) Non-controlling interests		106,547
(+) The Company’s interest in net unrealized gains (losses) on valuation of other securities held by equity method affiliates		17,410

Net unrealized gains (losses) on other securities	¥	2,192,305

—46—

(Notes to derivative transactions)

1. Derivative transactions to which the hedge accounting method is not applied

The following tables set forth the contract amount or the amount equivalent to the notional amount, fair value, valuation gains (losses) and fair value calculation methodologies by type of derivative with respect to derivative transactions to which the hedge accounting method is not applied at March 31, 2021 and September 30, 2021. Contract amount does not indicate the market risk relating to derivative transactions.

(1)	Interest rate derivatives


	Millions of yen
	Contract amount						Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Interest rate futures:
Sold	¥	17,270,061	¥	6,611,011	¥	(1,126)	¥	(1,126)
Bought		8,617,990		5,912,395		726		726
Interest rate options:
Sold		5,924,592		3,182,912		(6,862)		(6,862)
Bought		180,429,787		69,190,643		30,995		30,995
Over-the-counter
Forward rate agreements:
Sold		55,761,372		5,980		12,420		12,420
Bought		54,471,354		1,560		(12,423)		(12,423)
Interest rate swaps:		468,245,252		356,060,418		236,177		236,177
Receivable fixed rate/payable floating rate		208,413,122		158,339,724		4,627,453		4,627,453
Receivable floating rate/payable fixed rate		204,100,529		153,091,311		(4,402,436)		(4,402,436)
Receivable floating rate/payable floating rate		55,641,657		44,546,438		(1,218)		(1,218)
Interest rate swaptions:
Sold		6,757,427		4,764,343		(84,446)		(84,446)
Bought		6,166,275		4,403,008		78,877		78,877
Caps:
Sold		64,606,743		36,017,193		(41,891)		(41,891)
Bought		13,510,015		11,219,847		11,642		11,642
Floors:
Sold		4,130,223		3,590,129		(19,012)		(19,012)
Bought		2,257,383		2,034,274		20,450		20,450
Other:
Sold		1,855,047		1,322,008		(6,649)		(6,649)
Bought		6,082,064		4,112,358		56,462		56,462

Total		/		/	¥	275,340	¥	275,340


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.

—47—


	Millions of yen
	Contract amount							Valuation gains (losses)
September 30, 2021	Total		Over 1 year		Fair value			Valuation gains (losses)
Listed
Interest rate futures:
Sold	¥	15,658,278	¥	7,268,383	¥	(1,516)		¥	(1,516)
Bought		4,490,642		2,094,946		1,080			1,080
Interest rate options:
Sold		9,433,838		5,239,260		(7,697)			(7,697)
Bought		203,744,091		89,006,581		34,144			34,144
Over-the-counter
Forward rate agreements:
Sold		18,274,976		—		1,212			1,212
Bought		18,506,667		—		(1,166)			(1,166)
Interest rate swaps:		472,091,687		337,637,311		252,948			252,948
Receivable fixed rate/payable floating rate		210,377,396		148,731,212		4,296,010	��		4,296,010
Receivable floating rate/payable fixed rate		208,564,655		145,117,199		(4,057,142)			(4,057,142)
Receivable floating rate/payable floating rate		53,045,576		43,686,540		3,148			3,148
Interest rate swaptions:
Sold		8,010,722		6,046,481		(21,193)			(21,193)
Bought		7,225,743		5,748,026		10,985			10,985
Caps:
Sold		73,591,968		44,650,464		(49,505)			(49,505)
Bought		14,171,452		10,968,143		13,052			13,052
Floors:
Sold		4,489,181		3,706,100		(16,999)			(16,999)
Bought		2,305,542		2,028,416		19,789			19,789
Other:
Sold		1,902,518		1,202,005		(6,468)			(6,468)
Bought		6,048,380		4,586,791		48,666			48,666

Total		/		/	¥	277,334		¥	277,334


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the interim consolidated statements of income.

—48—

(2)	Currency derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Currency futures:
Sold	¥	1,812	¥	—	¥	93	¥	93
Bought		6,256		—		0		0
Over-the-counter
Currency swaps		76,626,201		59,390,711		(78,194)		161,586
Currency swaptions:
Sold		70,002		70,002		117		117
Bought		520,389		501,768		(493)		(493)
Forward foreign exchange		77,285,120		13,081,964		134,477		134,477
Currency options:
Sold		2,842,651		1,350,141		(85,577)		(85,577)
Bought		2,507,220		1,123,003		82,620		82,620

Total		/		/	¥	53,043	¥	292,824


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
September 30, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Currency futures:
Sold	¥	963	¥	—	¥	(30)	¥	(30)
Bought		9,275		—		0		0
Over-the-counter
Currency swaps		78,441,544		62,465,504		140,580		154,758
Currency swaptions:
Sold		51,514		51,514		19		19
Bought		514,835		469,441		(185)		(185)
Forward foreign exchange		82,582,492		14,913,686		28,115		28,115
Currency options:
Sold		2,795,764		1,273,937		(81,393)		(81,393)
Bought		2,506,032		1,053,283		74,052		74,052

Total		/		/	¥	161,158	¥	175,336


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the interim consolidated statements of income.

—49—

(3)	Equity derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Equity price index futures:
Sold	¥	1,080,737	¥	23,420	¥	(9,528)	¥	(9,528)
Bought		528,050		42,460		13,942		13,942
Equity price index options:
Sold		589,781		184,932		(69,039)		(69,039)
Bought		360,975		118,530		34,014		34,014
Over-the-counter
Equity options:
Sold		50,915		4,266		(5,977)		(5,977)
Bought		107,824		25,680		18,974		18,974
Equity index forward contracts:
Sold		—		—		—		—
Bought		3,574		—		98		98
Equity price index swaps:
Receivable equity index/payable short-term floating rate		7,520		1,550		(1,153)		(1,153)
Receivable short-term floating rate/payable equity index		272,916		136,390		12,625		12,625

Total		/		/	¥	(6,043)	¥	(6,043)


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
September 30, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Equity price index futures:
Sold	¥	823,366	¥	38,228	¥	12,065	¥	12,065
Bought		445,949		3,175		(6,266)		(6,266)
Equity price index options:
Sold		777,398		261,687		(71,599)		(71,599)
Bought		496,849		186,433		38,135		38,135
Over-the-counter
Equity options:
Sold		68,613		11,143		(6,055)		(6,055)
Bought		160,506		58,396		22,013		22,013
Equity index forward contracts:
Sold		—		—		—		—
Bought		730		—		(14)		(14)
Equity price index swaps:
Receivable equity index/payable short-term floating rate		5,425		1,570		(397)		(397)
Receivable short-term floating rate/payable equity index		291,972		158,296		14,266		14,266

Total		/		/	¥	2,147	¥	2,147


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the interim consolidated statements of income.

—50—

(4)	Bond derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Bond futures:
Sold	¥	1,340,302	¥	—	¥	12,083	¥	12,083
Bought		1,604,432		—		(11,546)		(11,546)
Bond futures options:
Sold		58,891		—		(44)		(44)
Bought		12,000		—		(7)		(7)
Over-the-counter
Bond forward contract:
Sold		103		—		3		3
Bought		—		—		—		—
Bond options:
Sold		78,088		—		(745)		(745)
Bought		148,258		10,521		760		760

Total		/		/	¥	503	¥	503


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
September 30, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Bond futures:
Sold	¥	2,699,191	¥	—	¥	38,514	¥	38,514
Bought		2,826,882		—		(38,294)		(38,294)
Bond futures options:
Sold		88,010		—		(197)		(197)
Bought		59,759		—		196		196
Over-the-counter
Bond options:
Sold		88,453		—		(388)		(388)
Bought		158,888		—		399		399

Total		/		/	¥	230	¥	230


Note:		The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the interim consolidated statements of income.

—51—

(5)	Commodity derivatives


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Commodity futures:
Sold	¥	14,624	¥	—	¥	405	¥	405
Bought		16,291		—		127		127
Over-the-counter
Commodity swaps:
Receivable fixed price/payable floating price		39,320		27,601		(3,463)		(3,463)
Receivable floating price/payable fixed price		36,039		25,820		5,466		5,466
Receivable floating price/payable floating price		904		882		(30)		(30)
Commodity options:
Sold		2,048		1,645		(546)		(546)
Bought		436		63		60		60

Total		/		/	¥	2,019	¥	2,019


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
	2.	Underlying assets of commodity derivatives are fuels and metals.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
September 30, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Listed
Commodity futures:
Sold	¥	14,619	¥	—	¥	204	¥	204
Bought		15,035		—		409		409
Over-the-counter
Commodity swaps:
Receivable fixed price/payable floating price		35,501		25,056		(8,664)		(8,664)
Receivable floating price/payable fixed price		31,433		23,963		10,267		10,267
Receivable floating price/payable floating price		677		669		(35)		(35)
Commodity options:
Sold		2,805		1,704		(472)		(472)
Bought		1,152		51		9		9

Total		/		/	¥	1,718	¥	1,718


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the interim consolidated statements of income.
	2.	Underlying assets of commodity derivatives are fuels and metals.

—52—

(6)	Credit derivative transactions


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
March 31, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Over-the-counter
Credit default options:
Sold	¥	1,213,365	¥	1,093,942	¥	21,929	¥	21,929
Bought		1,561,193		1,414,334		(27,645)		(27,645)

Total		/		/	¥	(5,716)	¥	(5,716)


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the consolidated statements of income.
	2.	“Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred.


	Millions of yen
	Contract amount				Fair value		Valuation gains (losses)
September 30, 2021	Total		Over 1 year		Fair value		Valuation gains (losses)
Over-the-counter
Credit default options:
Sold	¥	1,251,903	¥	1,146,196	¥	20,445	¥	20,445
Bought		1,578,560		1,450,247		(24,577)		(24,577)

Total		/		/	¥	(4,132)	¥	(4,132)


Notes:	1.	The above transactions are valued at fair value and the valuation gains (losses) are accounted for in the interim consolidated statements of income.
	2.	“Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk is transferred.

—53—

2. Derivative transactions to which the hedge accounting method is applied

The following tables set forth the contract amount or the amount equivalent to the notional amount, fair value and fair value calculation methodologies by type of derivative and hedge accounting method with respect to derivative transactions to which the hedge accounting method is applied at March 31, 2021 and September 30, 2021. Contract amount does not indicate the market risk relating to derivative transactions.

(1) Interest rate derivatives




March 31, 2021			Millions of yen
Hedge accounting method	Type of derivative	Principal items hedged	Contract amount
Hedge accounting method	Type of derivative	Principal items hedged	Total		Over 1 year		Fair value
Deferral hedge method	Interest futures:	Interest-earning/bearing financial assets/liabilities such as loans and bills discounted, other securities, deposits and negotiable certificates of deposit
Deferral hedge method	Sold		¥	7,580,404	¥	4,439,058	¥	1,403
	Bought			4,048,886		4,048,886		(498	)
	Interest rate swaps:
	Receivable fixed rate/payable floating rate			31,981,533		25,876,121		298,464
	Receivable floating rate/payable fixed rate			11,869,419		10,877,836		(132,770	)
	Interest rate swaptions:
	Sold			153,886		153,886		11,270
	Bought			—		—		—

Recognition of gain or loss on the hedged items	Interest rate swaps:	Loans and bills discounted
Recognition of gain or loss on the hedged items	Receivable floating rate/payable fixed rate			567,041		511,375		(11,324	)

Special treatment for interest rate swaps	Interest rate swaps:	Borrowed money
Special treatment for interest rate swaps	Receivable floating rate/payable fixed rate			62,100		51,380		(Note 2	)

	Total			/		/	¥	166,545


Notes:	1.	The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 24.
	2.	Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money that is subject to the hedge. Therefore such fair value is included in the fair value of the relevant transaction subject to the hedge in the (Notes to financial instruments).

—54—



September 30, 2021			Millions of yen
Hedge accounting method	Type of derivative	Principal items hedged	Contract amount
Hedge accounting method	Type of derivative	Principal items hedged	Total		Over 1 year		Fair value
Deferral hedge method	Interest futures:	Interest-earning/bearing financial assets/liabilities such as loans and bills discounted, other securities, deposits and negotiable certificates of deposit
Deferral hedge method	Sold		¥	2,937,132	¥	2,924,932	¥	1,336
	Bought			559,750		—		6
	Interest rate swaps:
	Receivable fixed rate/payable floating rate			31,479,690		24,989,368		274,105
	Receivable floating rate/payable fixed rate			14,307,470		13,177,988		(149,408	)
	Interest rate swaptions:
	Sold			155,610		155,610		13,318
	Bought			—		—		—

Recognition of gain or loss on the hedged items	Interest rate swaps:	Loans and bills discounted
Recognition of gain or loss on the hedged items	Receivable floating rate/payable fixed rate			597,307		528,663		(9,540	)

Special treatment for interest rate swaps	Interest rate swaps:	Borrowed money
Special treatment for interest rate swaps	Receivable floating rate/payable fixed rate	Borrowed money		59,110		59,110		(Note 2	)

	Total			/		/	¥	129,818


Notes:	1.	The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 24.
	2.	Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the borrowed money that is subject to the hedge. Therefore such fair value is included in the fair value of the relevant transaction subject to the hedge in the (Notes to financial instruments).

—55—

(2) Currency derivatives




March 31, 2021			Millions of yen
Hedge accounting method	Type of derivative	Principal items hedged	Contract amount
Hedge accounting method	Type of derivative	Principal items hedged	Total		Over 1 year		Fair value
Deferral hedge method	Currency swaps	Foreign currency denominated loans and bills discounted, other securities, deposits, foreign currency exchange, etc.	¥	10,896,132	¥	6,051,444	¥	39,920
Deferral hedge method	Forward foreign exchange			39,074		3,859		334

Recognition of gain or loss on the hedged items	Currency swaps	Loans and bills discounted, other securities		219,977		205,644		2,214
Recognition of gain or loss on the hedged items	Forward foreign exchange			304		—		1

	Total			/		/	¥	42,471


Note:		The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 25.



September 30, 2021			Millions of yen
Hedge accounting method	Type of derivative	Principal items hedged	Contract amount
Hedge accounting method	Type of derivative	Principal items hedged	Total		Over 1 year		Fair value
Deferral hedge method	Currency swaps	Foreign currency denominated loans and bills discounted, other securities, deposits, foreign currency exchange, etc.	¥	10,403,103	¥	6,187,140	¥	(130,745	)
Deferral hedge method	Forward foreign exchange			29,195		4,348		(801	)

Recognition of gain or loss on the hedged items	Currency swaps	Loans and bills discounted, other securities		281,838		260,074		3,044
Recognition of gain or loss on the hedged items	Forward foreign exchange			1,248		—		(1	)

	Total			/		/	¥	(128,503	)


Note:		The Company applies deferred hedge accounting stipulated in JICPA Industry Committee Practical Guidelines No. 25.

—56—

(3) Equity derivatives

March 31, 2021

Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Contract amount

Total

Over 1 year

Fair value

Deferral hedge method

Equity price index swaps:

Other securities

Receivable floating rate/payable equity index

21,077

—

690

Recognition of gain or loss on the hedged items

Equity price index swaps:

Other securities

Receivable floating rate/payable equity index

33,674

(2,689

)

Total

(1,999

)

September 30, 2021

Millions of yen

Hedge accounting method

Type of derivative

Principal items hedged

Contract amount

Total

Over 1 year

Fair value

Recognition of gain or loss on the hedged items

Equity price index swaps:

Other securities

Receivable floating rate/payable equity index

5,681

297

Total

297

(Notes to asset retirement obligations)

Fiscal year ended March 31, 2021

There is no significant information to be disclosed.

Six months ended September 30, 2021

There is no significant information to be disclosed.

(Notes to real estate for rent)

Fiscal year ended March 31, 2021

There is no significant information to be disclosed.

Six months ended September 30, 2021

There is no significant information to be disclosed.

—57—

(Revenue Recognition)

Information on breakdown of revenues from contracts with customers.


Six months ended September 30	Millions of yen
Six months ended September 30	2021
Ordinary income	¥	1,965,482
Fees and commissions		668,871
Deposits and loans		85,426
Remittances and transfers		72,224
Securities-related business		86,060
Agency		4,582
Safe deposits		2,020
Guarantees		39,605
Credit card business		159,753
Investment trusts		93,796
Others		125,401


Note:		Fees and commissions obtained through Deposits and loans principally arise in the Wholesale Business Unit and the Global Business Unit, Remittances and transfers principally arise in the Wholesale Business Unit, the Retail Business Unit, and the Global Business Unit, Securities-related business principally arise in the Wholesale Business Unit, the Retail Business Unit, and the Global Business Unit, Credit card business principally arise in the Retail Business Unit, and Investment trusts principally arise in the Retail Business Unit and Head office account and others. Income based on “Accounting Standard for Financial Instrument” (ASBJ Statement No. 10) is also included in the table above.

—58—

(Notes to segment and other related information)

[Segment information]

1. Summary of reportable segment

The Group’s reportable segment is defined as an operating segment for which discrete financial information is available and reviewed by the Board of Directors and the Company’s Management Committee regularly in order to make decisions about resources to be allocated to the segment and assess its performance.

The businesses operated by each business unit are as follows:


Wholesale Business Unit:		Business to deal with domestic medium-to-large-sized and small-to-medium-sized corporate customers

Retail Business Unit:		Business to deal with mainly domestic individual customers

Global Business Unit:		Business to deal with international (including Japanese) corporate customers

Global Markets Business Unit:		Business to deal with financial market

Head office account:		Business other than businesses above

2. Method of calculating profit and loss amount by reportable segment

Accounting methods applied to the reported business segments are the same as those described in “(Significant accounting policies for preparing interim consolidated financial statements).” In case several business units cooperate for transactions, profit and loss and expenses related to the transactions are recognized in the business units cooperating for the transactions and those amounts are calculated in accordance with internal managerial accounting policy.

The Company does not assess assets by business segments.

—59—

3. Information on profit and loss amount by reportable segment


Six months ended September 30, 2020	Millions of yen
Six months ended September 30, 2020	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Consolidated gross profit	¥	282,500	¥	548,700	¥	343,400	¥	257,900	¥	(55,129)	¥	1,377,371
Expenses		(146,600)		(443,300)		(177,700)		(40,200)		(28,621)		(836,421)
Others		24,500		1,200		8,900		17,100		(41,477)		10,223

Consolidated net business profit	¥	160,400	¥	106,600	¥	174,600	¥	234,800	¥	(125,226)	¥	551,174


Notes:	1.	Figures shown in the parenthesis represent the loss.
	2.	“Others” includes equity in profit and loss of affiliates and cooperated profit and loss based on internal managerial accounting.
	3.	“Head office account and others” includes profit or loss to be eliminated as inter-segment transactions.


Six months ended September 30, 2021	Millions of yen
Six months ended September 30, 2021	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Consolidated gross profit	¥	329,500	¥	568,100	¥	394,500	¥	250,900	¥	(111,715)	¥	1,431,285
Expenses		(148,900)		(464,900)		(213,900)		(43,000)		(5,234)		(875,934)
Others		30,300		800		25,100		17,600		(43,074)		30,726

Consolidated net business profit	¥	210,900	¥	104,000	¥	205,700	¥	225,500	¥	(160,023)	¥	586,077


Notes:	1.	Figures shown in the parenthesis represent the loss.
	2.	“Others” includes equity in profit and loss of affiliates and cooperated profit and loss based on internal managerial accounting.
	3.	“Head office account and others” includes profit or loss to be eliminated as inter-segment transactions.

—60—

4. Difference between total amount of consolidated net business profit by reportable segment and ordinary profit on interim consolidated statements of income (adjustment of difference)


Six months ended September 30, 2020	Millions of yen
Consolidated net business profit	¥	551,174
Other ordinary income (excluding equity in gains of affiliates)		70,399
Other ordinary expenses		(275,278)

Ordinary profit on interim consolidated statements of income	¥	346,294


Note: Figures shown in the parenthesis represent the loss.


Six months ended September 30, 2021	Millions of yen
Consolidated net business profit	¥	586,077
Other ordinary income (excluding equity in gains of affiliates)		124,760
Other ordinary expenses		(80,810)

Ordinary profit on interim consolidated statements of income	¥	630,028


Note: Figures shown in the parenthesis represent the loss.

—61—

[Related information]

Six months ended September 30, 2020

1. Information on each service

There is no information to be disclosed since information on each service is similar to the segment information.

2. Geographic information

(1)	Ordinary income


Millions of yen
Japan		The Americas		Europe and Middle East		Asia and Oceania		Total
¥	1,269,688	¥	273,108	¥	151,043	¥	255,601	¥	1,949,441


Notes:	1.	Consolidated ordinary income is presented as a counterpart of sales of companies in other industries.
	2.	Ordinary income from transactions of the Company and its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated subsidiaries is classified as “Japan.” Ordinary income from transactions of overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries is classified as “The Americas,” “Europe and Middle East” and “Asia and Oceania,” based on their locations and in consideration of their geographic proximity and other factors.
	3.	The Americas includes the United States, Brazil, Canada and others; Europe and Middle East includes the United Kingdom, Germany and others; Asia and Oceania include China, Singapore, Indonesia and others except Japan.

(2)	Tangible fixed assets


Millions of yen
Japan		The Americas		Europe and Middle East		Asia and Oceania		Total
¥	875,014	¥	498,787	¥	21,554	¥	31,172	¥	1,426,529

3. Information on major customers

There are no major customers individually accounting for 10% or more of ordinary income reported on the interim consolidated statements of income.

—62—

Six months ended September 30, 2021

1. Information on each service

There is no information to be disclosed since information on each service is similar to the segment information.

2. Geographic information

(1)	Ordinary income


Millions of yen
Japan		The Americas		Europe and Middle East		Asia and Oceania		Total
¥	1,313,516	¥	243,078	¥	136,207	¥	272,679	¥	1,965,482


Notes:	1.	Consolidated ordinary income is presented as a counterpart of sales of companies in other industries.
	2.	Ordinary income from transactions of the Company and its domestic consolidated banking subsidiaries (excluding overseas branches) and other domestic consolidated subsidiaries is classified as “Japan.” Ordinary income from transactions of overseas branches of domestic consolidated banking subsidiaries and overseas consolidated subsidiaries is classified as “The Americas,” “Europe and Middle East” and “Asia and Oceania,” based on their locations and in consideration of their geographic proximity and other factors.
	3.	The Americas includes the United States, Brazil, Canada and others; Europe and Middle East includes the United Kingdom, Germany and others; Asia and Oceania include China, Singapore, Indonesia and others except Japan.

(2)	Tangible fixed assets


Millions of yen
Japan		The Americas		Europe and Middle East		Asia and Oceania		Total
¥	898,858	¥	500,314	¥	42,198	¥	37,563	¥	1,478,934

3. Information on major customers

There are no major customers individually accounting for 10% or more of ordinary income reported on the interim consolidated statements of income.

—63—

[Information on impairment loss for fixed assets by reportable segment]

The Company does not allocate impairment loss for fixed assets to the reportable segment.

Impairment loss for the six months ended September 30, 2020 is ¥3,983 million.

Impairment loss for the six months ended September 30, 2021 is ¥3,265 million.

[Information on amortization of goodwill and unamortized balance by reportable segment]



	Millions of yen
Six months ended September 30, 2020	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Amortization of goodwill	¥	—	¥	2,009	¥	—	¥	—	¥	7,860	¥	9,870
Unamortized balance		—		44,070		—		—		141,691		185,762

	Millions of yen
Six months ended September 30, 2021	Wholesale Business Unit		Retail Business Unit		Global Business Unit		Global Markets Business Unit		Head office account and others		Total
Amortization of goodwill	¥	316	¥	2,009	¥	—	¥	—	¥	6,347	¥	8,674
Unamortized balance		5,070		40,050		—		—		94,547		139,668

[Information on gains on negative goodwill by reportable segment]

Six months ended September 30, 2020

There are no corresponding transactions.

Six months ended September 30, 2021

There are no corresponding transactions.

—64—

(Business Combinations)

There is no significant business combination to be disclosed.

(Per Share Data)

1. Net assets per share and the calculation method


	Millions of yen, except per share data and number of shares
	March 31, 2021		September 30, 2021
Net assets per share	¥	8,629.73	¥	8,972.80
[The calculation method]
Net assets		11,899,046		12,376,017
Amounts excluded from Net assets		72,627		75,864
Stock acquisition rights		1,791		1,498
Non-controlling interests		70,836		74,365

Net assets attributable to common stock at the end of the period	¥	11,826,418	¥	12,300,152

Number of common stock at the end of the period used for the calculation of Net assets per share (in thousands)		1,370,427		1,370,826

2. Earnings per share and Earnings per share (diluted) and each calculation method


	Millions of yen, except per share data and number of shares
Six months ended September 30	2020		2021
(i) Earnings per share	¥	197.18	¥	332.74
[The calculation method]
Profit attributable to owners of parent		270,130		456,068
Amount not attributable to common stockholders		—		—
Profit attributable to owners of parent concerning common stock		270,130		456,068
Average number of common stock during the period (in thousands)		1,369,997		1,370,657
(ii) Earnings per share (diluted)	¥	197.08	¥	332.59
[The calculation method]
Adjustment for profit attributable to owners of parent		(0)		—
Adjustment of dilutive shares issued by consolidated subsidiaries and equity method affiliates		(0)		—
Increase in the number of common stock (in thousands)		676		602
Stock acquisition rights (in thousands)		676		602
Outline of dilutive shares which were not included in the calculation of “Earnings Per Share (diluted)” because they do not have dilutive effect:		—		—

—65—

(Significant Subsequent Events)

Six months ended September 30, 2021

Repurchase and cancellation of own shares

On November 12, 2021, the board of directors of the Company resolved to repurchase its own shares under Article 8 of its Articles of Incorporation pursuant to Paragraph 1 of Article 459 of the Companies Act and cancel the repurchased shares pursuant to Article 178 of the Companies Act.

(1)

Reason for the Repurchase of Own Shares

The Company will proceed with a flexible repurchase of its own shares in order to enhance shareholder returns and improve capital efficiency.

(2)

Outline of the Repurchase

Type of shares to be repurchased: Common stock

Aggregate number of shares to be repurchased:

Up to 33,000,000 shares (Equivalent to 2.4% of the number of shares issued (excluding treasury stock))

Aggregate amount to be repurchased: Up to JPY 100,000,000,000

Repurchase period: From November 15, 2021 to November 11, 2022

Repurchase method:

Market purchases based on a discretionary dealing contract regarding repurchase of its own shares

(3)

Outline of the Cancellation

Type of shares to be cancelled: Common stock

Number of shares to be cancelled: All of the shares repurchased as stated in 2 above

Scheduled cancellation date: December 20, 2022

(Others)

Not applicable.

—66—

(Non-consolidated financial statements)

1. Non-consolidated balance sheets


	Millions of yen				Millions of U.S. dollars
	March 31, 2021		September 30, 2021		September 30, 2021
Assets:
Current assets
Cash and due from banks	¥	221,992	¥	185,130	$	1,654
Current portion of long-term loans receivables from subsidiaries and affiliates		741,493		869,755		7,769
Other current assets		139,243		93,390		834

Total current assets		1,102,729		1,148,276		10,257

Fixed assets
Tangible fixed assets		70,815		71,727		641
Intangible fixed assets		474		2,378		21
Investments and other assets		13,851,362		14,115,198		126,085
Investments in subsidiaries and affiliates		6,393,634		6,395,009		57,124
Long-term loans receivable from subsidiaries and affiliates		7,454,394		7,716,314		68,926
Other investments and other assets		3,333		3,874		35

Total fixed assets		13,922,653		14,189,305		126,747

Total assets	¥	15,025,382	¥	15,337,581	$	137,004

Liabilities:
Current liabilities
Short-term borrowings	¥	1,278,030	¥	1,278,030	$	11,416
Income taxes payable		12		20,666		185
Reserve for employee bonuses		747		744		7
Reserve for executive bonuses		569		—		—
Current portion of bonds		730,422		858,560		7,669
Current portion of long-term borrowings		11,071		11,195		100
Other current liabilities		64,703		53,951		482

Total current liabilities		2,085,555		2,223,147		19,858

Fixed liabilities
Bonds		6,718,181		6,963,337		62,200
Long-term borrowings		237,989		254,571		2,274

Total fixed liabilities		6,956,170		7,217,909		64,474

Total liabilities		9,041,726		9,441,057		84,333

Net assets:
Stockholders’ equity
Capital stock		2,341,274		2,341,878		20,919
Capital surplus
Capital reserve		1,562,751		1,563,355		13,965

Total capital surplus		1,562,751		1,563,355		13,965

Retained earnings
Other retained earnings
Voluntary reserve		30,420		30,420		272
Retained earnings brought forward		2,061,118		1,972,781		17,622

Total retained earnings		2,091,538		2,003,201		17,894

Treasury stock		(13,698)		(13,409)		(120)

Total stockholders’ equity		5,981,865		5,895,025		52,658

Stock acquisition rights		1,791		1,498		13

Total net assets		5,983,656		5,896,524		52,671

Total liabilities and net assets	¥	15,025,382	¥	15,337,581	$	137,004

—67—

2. Non-consolidated statements of income


	Millions of yen				Millions of U.S. dollars
Six months ended September 30	2020		2021		2021
Operating income:
Dividends on investments in subsidiaries and affiliates	¥	76,326	¥	51,633	$	461
Fees and commissions received from subsidiaries and affiliates		4,541		4,952		44
Interests on loans receivable from subsidiaries and affiliates		84,253		87,131		778

Total operating income		165,121		143,717		1,284

Operating expenses:
General and administrative expenses		14,028		15,715		140
Interest on bonds		78,681		81,816		731
Interest on long-term borrowings		2,387		2,302		21

Total operating expenses		95,096		99,834		892

Operating profit		70,024		43,883		392

Non-operating income		345		68		1
Non-operating expenses		4,970		5,642		50

Ordinary profit		65,399		38,309		342

Income before income taxes		65,399		38,309		342

Income taxes-current		(2,110)		(3,628)		(32)
Income taxes-deferred		166		51		0

Income taxes		(1,944)		(3,576)		(32)

Net income	¥	67,343	¥	41,886	$	374

—68—

3. Non-consolidated statements of changes in net assets


	Millions of yen
	Stockholders’ equity
			Capital surplus						Retained earnings
	Capital stock		Capital reserve		Other capital surplus		Total capital surplus		Other retained earnings				Total
Six months ended September 30, 2020	Capital stock		Capital reserve		Other capital surplus		Total capital surplus		Voluntary reserve		Retained earnings brought forward		Total
Balance at the beginning of the period	¥	2,339,964	¥	1,561,442	¥	—	¥	1,561,442	¥	30,420	¥	2,046,360	¥	2,076,780
Changes in the period:
Issuance of new stock		1,309		1,308				1,308
Cash dividends												(136,952)		(136,952)
Net income												67,343		67,343
Purchase of treasury stock
Disposal of treasury stock						(50)		(50)
Transfer from retained earnings to capital surplus						50		50				(50)		(50)
Net changes in items other than stockholders’ equity in the period

Net changes in the period		1,309		1,308		—		1,308		—		(69,658)		(69,658)

Balance at the end of the period	¥	2,341,274	¥	1,562,751	¥	—	¥	1,562,751	¥	30,420	¥	1,976,701	¥	2,007,121


	Millions of yen
	Stockholders’ equity				Stock acquisition rights		Total net assets
Six months ended September 30, 2020	Treasury stock		Total		Stock acquisition rights		Total net assets
Balance at the beginning of the period	¥	(13,983)	¥	5,964,203	¥	2,064	¥	5,966,267
Changes in the period:
Issuance of new stock				2,618				2,618
Cash dividends				(136,952)				(136,952)
Net income				67,343				67,343
Purchase of treasury stock		(21)		(21)				(21)
Disposal of treasury stock		311		261				261
Transfer from retained earnings to capital surplus				—				—
Net changes in items other than stockholders’ equity in the period						(255)		(255)

Net changes in the period		290		(66,749)		(255)		(67,005)

Balance at the end of the period	¥	(13,693)	¥	5,897,453	¥	1,808	¥	5,899,262

—69—

(Continued)


	Millions of yen
	Stockholders’ equity
			Capital surplus						Retained earnings
	Capital stock		Capital reserve		Other capital surplus		Total capital surplus		Other retained earnings				Total
Six months ended September 30, 2021	Capital stock		Capital reserve		Other capital surplus		Total capital surplus		Voluntary reserve		Retained earnings brought forward		Total
Balance at the beginning of the period	¥	2,341,274	¥	1,562,751	¥	—	¥	1,562,751	¥	30,420	¥	2,061,118	¥	2,091,538
Changes in the period:
Issuance of new stock		603		603				603
Cash dividends												(130,190)		(130,190)
Net income												41,886		41,886
Purchase of treasury stock
Disposal of treasury stock						(32)		(32)
Transfer from retained earnings to capital surplus						32		32				(32)		(32)
Net changes in items other than stockholders’ equity in the period

Net changes in the period		603		603		—		603		—		(88,336)		(88,336)

Balance at the end of the period	¥	2,341,878	¥	1,563,355	¥	—	¥	1,563,355	¥	30,420	¥	1,972,781	¥	2,003,201


	Millions of yen
	Stockholders’ equity				Stock acquisition rights		Total net assets
Six months ended September 30, 2021	Treasury stock		Total		Stock acquisition rights		Total net assets
Balance at the beginning of the period	¥	(13,698)	¥	5,981,865	¥	1,791	¥	5,983,656
Changes in the period:
Issuance of new stock				1,207				1,207
Cash dividends				(130,190)				(130,190)
Net income				41,886				41,886
Purchase of treasury stock		(37)		(37)				(37)
Disposal of treasury stock		327		295				295
Transfer from retained earnings to capital surplus				—				—
Net changes in items other than stockholders’ equity in the period						(292)		(292)

Net changes in the period		289		(86,839)		(292)		(87,132)

Balance at the end of the period	¥	(13,409)	¥	5,895,025	¥	1,498	¥	5,896,524

—70—

(Continued)


	Millions of U. S. dollars
	Stockholders’ equity
			Capital surplus						Retained earnings
	Capital stock		Capital reserve		Other capital surplus		Total capital surplus		Other retained earnings				Total
Six months ended September 30, 2021	Capital stock		Capital reserve		Other capital surplus		Total capital surplus		Voluntary reserve		Retained earnings brought forward		Total
Balance at the beginning of the period	$	20,914	$	13,959	$	—	$	13,959	$	272	$	18,411	$	18,683
Changes in the period:
Issuance of new stock		5		5				5
Cash dividends												(1,163)		(1,163)
Net income												374		374
Purchase of treasury stock
Disposal of treasury stock						(0)		(0)
Transfer from retained earnings to capital surplus						0		0				(0)		(0)
Net changes in items other than stockholders’ equity in the period

Net changes in the period		5		5		—		5		—		(789)		(789)

Balance at the end of the period	$	20,919	$	13,965	$	—	$	13,965	$	272	$	17,622	$	17,894


	Millions of U. S. dollars
	Stockholders’ equity				Stock acquisition rights		Total net assets
Six months ended September 30, 2021	Treasury stock		Total		Stock acquisition rights		Total net assets
Balance at the beginning of the period	$	(122)	$	53,433	$	16	$	53,449
Changes in the period:
Issuance of new stock				11				11
Cash dividends				(1,163)				(1,163)
Net income				374				374
Purchase of treasury stock		(0)		(0)				(0)
Disposal of treasury stock		3		3				3
Transfer from retained earnings to capital surplus				—				—
Net changes in items other than stockholders’ equity in the period						(3)		(3)

Net changes in the period		3		(776)		(3)		(778)

Balance at the end of the period	$	(120)	$	52,658	$	13	$	52,671

—71—

September 30