Sumitomo Mitsui Financial Group releases full-year results for FY3/2024

Key Financial Highlights

• Record Profitability: FY3/24 saw the highest consolidated gross profit, consolidated net business profit, and bottom-line profit in the company’s history.
• Strong Earnings Growth: SMFG achieved a bottom-line profit of JPY 962.9 billion, up by JPY 157.1 billion YoY, driven by a favorable business environment and growth across all business units.
• Ambitious Target for FY3/25: The company aims to achieve a bottom-line profit exceeding JPY 1 trillion in FY3/25, fueled by further strengthening core earnings and capturing a favorable business environment.
• Record Dividend Increase: SMFG announced a record dividend increase of JPY 60 per share, bringing the DPS to JPY 330 (a 40% dividend payout ratio).
• Share Buybacks: The company resolved to conduct share buybacks up to JPY 100 billion and will consider additional purchases flexibly during FY3/25.
• Long-Term Financial Goals: By FY3/29, the final year of the next Medium-Term Management Plan, SMFG aims to achieve a ROE of 9% and bottom-line profits significantly exceeding JPY 1 trillion.

Breakdown of Financial Performance

Consolidated Net Business Profit (JPY bn):

• FY3/23: 1,276.4
• FY3/24: 1,560.2 (increase of JPY 283.8 bn YoY)

Bottom-Line Profit (JPY bn):

• FY3/23: 805.8
• FY3/24: 962.9 (increase of JPY 157.1 bn YoY)

ROE (incl. OCI):

• FY3/23: 6.5%
• FY3/24: 7.0%

ROE (excl. unrealized gains):

• FY3/23: 9.4%
• FY3/24: 9.2%

Key Drivers of Financial Performance

• Favorable Business Environment: SMFG benefited from a supportive macroeconomic environment, including favorable foreign exchange rates (FX) and low interest rates.
• Growth Strategy Execution: Strong performance across all business units, including retail, wholesale, global, and global markets, contributed significantly to the earnings growth.
• Proactive Risk Management: SMFG prepared for potential risks by booking forward-looking provisions and recording impairments for specific business segments.

Detailed Analysis of Business Units

Retail Business Unit (RT):

• Gross profit and net business profit increased due to strong performance in all areas.
• Net income decreased due to increased credit costs in consumer finance in the first half of the fiscal year.
• Loan income improved due to enhancements in both loan balance and spread, while fee income also saw an increase.

Wholesale Business Unit (WS):

• Net income increased significantly, driven by gains on sales of equity holdings and an increase in net business profit.
• Credit costs rose despite strong performance in other areas.

Global Business Unit (GB):

• Net business profit improved due to increased income on loans and deposits and gains from equity in affiliates, including insurance settlement for aircraft leasing.
• Net income increased, despite recording losses from the sale of the U.S. freight car leasing business.

Global Markets Business Unit (GM):

• Banking profit increased steadily through nimble operations adapting to the changing market environment.
• Sales and trading business showed strong performance due to increased customer flow, fueled by global expansion and collaboration efforts.

Strategic Initiatives and Future Plans

• Shareholder Returns: SMFG is committed to enhancing shareholder returns by increasing dividends and conducting share buybacks.
• Equity Holdings Reduction: The company has made progress in reducing its equity holdings, with plans to continue reducing them significantly in FY3/25 and potentially implement a new reduction plan.
• Medium-Term Management Plan: SMFG’s next Medium-Term Management Plan focuses on achieving a ROE of 9% and bottom-line profits exceeding JPY 1 trillion by FY3/29.
• Balance Sheet Management: SMFG is managing its balance sheet effectively, with a focus on increasing loans and deposits while maintaining strong capital ratios.
• Risk Management: SMFG is proactively managing risks by booking provisions, conducting stress tests, and implementing various risk mitigation measures.

Conclusion

SMFG delivered record financial performance in FY3/24, driven by a favorable business environment and growth across all business units. The company is committed to maintaining its strong financial position, enhancing shareholder returns, and executing its strategic initiatives to achieve its long-term financial goals. SMFG’s future prospects appear positive, with a focus on capturing growth opportunities while managing risks effectively.

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