Sumitomo Mitsui Financial Group, Inc.

 

 

Notice Regarding the Filing of an Annual Report on Form 20-F

with the U.S. Securities and Exchange Commission

 

 

TOKYO, July 25, 2014 --- Sumitomo Mitsui Financial Group, Inc. (“SMFG”, President: Koichi Miyata) hereby announces that, on July 24, 2014 (Eastern Daylight Time), SMFG filed an annual report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”).

 

A copy of the annual report on Form 20-F can be viewed and obtained at SMFG’s website at http://www.smfg.co.jp/english/investor/financial/annual.html or on EDGAR, the SEC’s Electronic Data Gathering, Analysis, and Retrieval system. Holders of SMFG’s American Depositary Receipts may request a hard copy of SMFG’s complete audited financial statements free of charge through SMFG’s website.

 

 

Attachment:

(Reference 1) Consolidated Financial Statements (IFRS)

(Reference 2) Reconciliation with Japanese GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (Reference 1) Consolidated Financial Statements (IFRS)

 

Consolidated Statement of Financial Position

(In millions)

	At March 31,　2013	At March 31,　2014
Assets:
Cash and deposits with banks	\      11,804,786	\      33,208,724
Call loans and bills bought	1,353,866	1,248,235
Reverse repurchase agreements and cash collateral on securities borrowed	3,927,126	4,303,121
Trading assets	3,481,619	3,557,545
Derivative financial instruments	6,851,729	4,891,382
Financial assets at fair value through profit or loss	2,045,046	1,840,255
Investment securities	36,252,599	22,052,998
Loans and advances	75,987,057	81,244,982
Investments in associates and joint ventures	260,495	383,590
Property, plant and equipment	1,757,994	2,078,927
Intangible assets	903,264	955,746
Other assets	2,596,555	2,641,740
Current tax assets	51,449	62,783
Deferred tax assets	481,028	145,627
Total assets	\     147,754,613	\     158,615,655
Liabilities:
Deposits	\     101,021,413	\     108,370,494
Call money and bills sold	2,954,052	4,112,429
Repurchase agreements and cash collateral on securities lent	6,510,627	7,041,075
Trading liabilities	1,910,886	1,865,243
Derivative financial instruments	6,936,356	4,980,991
Borrowings	6,475,543	8,463,363
Debt securities in issue	7,950,020	8,769,094
Provisions	279,131	225,473
Other liabilities	4,839,628	5,125,490
Current tax liabilities	206,977	94,585
Deferred tax liabilities	107,262	149,251
Total liabilities	139,191,895	149,197,488
Equity:
Capital stock	2,337,896	2,337,896
Capital surplus	862,305	862,518
Retained earnings	2,518,121	3,114,716
Other reserves	971,170	1,546,826
Treasury stock	(227,373)	(175,115)
Equity attributable to shareholders of Sumitomo Mitsui Financial Group, Inc.	6,462,119	7,686,841
Non-controlling interests	2,100,599	1,731,326
Total equity	8,562,718	9,418,167
Total equity and liabilities	\     147,754,613	\     158,615,655

Consolidated Income Statement

(In millions, except per share data)

	For the fiscal year ended March 31,
	2013	2014
Interest income	\      1,725,723	\      1,714,044
Interest expense	321,570	320,511
Net interest income	1,404,153	1,393,533
Fee and commission income	948,685	1,003,169
Fee and commission expense	127,054	127,959
Net fee and commission income	821,631	875,210
Net trading income	105,302	135,218
Net income from financial assets at fair value through profit or loss	15,794	58,586
Net investment income	223,404	332,265
Other income	324,403	429,541
Total operating income	2,894,687	3,224,353
Impairment charges (reversals) on financial assets	270,145	(14,275)
Net operating income	2,624,542	3,238,628
General and administrative expenses	1,447,171	1,523,008
Other expenses	288,247	428,893
Operating expenses	1,735,418	1,951,901
Share of post-tax profit of associates and joint ventures	19,593	19,454
Profit before tax	908,717	1,306,181
Income tax expense	255,157	413,997
Net profit	\        653,560	\        892,184
Profit attributable to:
Shareholders of Sumitomo Mitsui Financial Group, Inc.	\        535,809	\        766,367
Non-controlling interests	117,751	125,817
Earnings per share:
Basic	\          395.74	\          560.95
Diluted	395.20	560.67

 

Consolidated Statement of Comprehensive Income

(In millions)

	For the fiscal year ended March 31,
	2013	2014
Net profit	\        653,560	\        892,184
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans:
Gains (losses) arising during the period, before tax	31,086	214,242
Share of other comprehensive income (loss) of associates and joint ventures	-	(581)
Income tax relating to items that will not be reclassified	(12,613)	(76,596)
Total items that will not be reclassified to profit or loss, net of tax	18,473	137,065
Items that may be reclassified subsequently to profit or loss:
Available-for-sale financial assets:
Gains (losses) arising during the period, before tax	816,721	589,766
Reclassification adjustments for (gains) losses included in net profit, before tax	(3,633)	(212,001)
Exchange differences on translating the foreign operations:
Gains (losses) arising during the period, before tax	230,764	271,619
Reclassification adjustments for (gains) losses included in net profit, before tax	4,579	(1,311)
Share of other comprehensive income (loss) of associates and joint ventures	3,354	(4,710)
Income tax relating to items that may be reclassified	(310,928)	(151,443)
Total items that may be reclassified subsequently to profit or loss, net of tax	740,857	491,920
Other comprehensive income, net of tax	759,330	628,985
Total comprehensive income	\      1,412,890	\      1,521,169
Total comprehensive income attributable to:
Shareholders of Sumitomo Mitsui Financial Group, Inc.	\      1,221,057	\      1,342,023
Non-controlling interests	191,833	179,146

 

Note: Comparative information in the Consolidated Statement of Financial Position, Consolidated Income Statement and Consolidated Statement of Comprehensive Income presented above has been restated following the implementation of IFRS 10 “Consolidated Financial Statements” and revised IAS 19 “Employee Benefits.” For a more detailed explanation, please refer to “Note 2 Summary of Significant Accounting Policies−New and Amended Accounting Standards Adopted by the SMFG Group” in the annual report on Form 20-F filed on July 24, 2014 (Eastern Daylight Time).

(Reference 2) Reconciliation with Japanese GAAP

 

		(In billions)
		At and for the fiscal year ended March 31, 2014
		Total equity	Net profit
	IFRS	\        9,418.2	\         892.2
	Differences arising from different accounting for:
	1. Scope of consolidation	78.2	10.8
	2. Derivative financial instruments	82.0	70.8
	3. Investment securities	(286.1)	(6.2)
	4. Loans and advances	(124.0)	36.7
	5. Investments in associates and joint ventures	(8.3)	(4.9)
	6. Property, plant and equipment	(8.9)	(3.1)
	7. Lease accounting	(4.2)	3.1
	8. Defined benefit plans	(58.4)	(19.8)
	9. Deferred tax assets	(91.0)	0.2
	10. Foreign currency translation	-	45.9
	Others	(118.7)	(16.8)
	Tax effect of the above	126.2	(45.0)
	Japanese GAAP	\        9,005.0	\        *963.9

(*)Includes a net profit of 128.5 billion yen attributable to non-controlling interests.

 

A brief explanation of adjustments with significant impacts arising from differences in equity and/or net profit between Japanese GAAP and IFRS is provided below. For a more detailed explanation, please refer to “Item 5. Operating and Financial Review and Prospects−Reconciliation with Japanese GAAP” in the annual report on Form 20-F filed on July 24, 2014 (Eastern Daylight Time).

 

Scope of Consolidation (Item 1)

·    Under IFRS, the SMFG Group consolidates an entity when it “controls” the entity. In general, the SMFG Group considers that it controls an entity when it has the existing rights that give it the current ability to direct the operating and financing policies by owning more than half of the voting power, or by legal or contractual arrangements.

·    All types of entities, irrespective of their purpose or legal form, are consolidated under IFRS when the substance of the relationship between the entities and the SMFG Group indicates that the entities are controlled by the SMFG Group. Therefore certain entities such as securitization vehicles which are not consolidated under Japanese GAAP are consolidated under IFRS.

 

 

 

Derivative financial instruments (Item 2)

(Hedge accounting)

·    The SMFG Group applies hedge accounting under Japanese GAAP. However, the conditions for hedge accounting under IFRS are not fully the same as those under Japanese GAAP. The SMFG Group does not apply hedge accounting under IFRS and reversed the effects of hedge accounting under Japanese GAAP.  

(Fair value measurement of derivative financial instruments)

·    Japanese GAAP and IFRS require Over-the-Counter (“OTC”) derivatives (non-exchange traded derivatives) to be measured at fair value. In principle, there is no significant difference in the definitions of fair value, but in practice there is diversity in the application of valuation techniques used for fair value under Japanese GAAP and IFRS. Therefore, to meet the requirements of fair value under IFRS, adjustments have been made to the fair values under Japanese GAAP to reflect credit risk adjustments for OTC derivatives.

 

Investment securities (Item 3)

(Fair value measurement of investment securities)

·    Under IFRS, available-for-sale financial assets (and financial assets at fair value through profit or loss) should be measured at fair value. The fair value of financial instruments where there is no quoted price in an active market is determined by using valuation techniques.

·    In addition, the fair values of certain financial instruments under Japanese GAAP have been adjusted in order to meet the requirements of fair value under IFRS. For example, the SMFG Group uses the last 1-month average of the closing transaction prices for the fair value measurement of available-for-sale financial assets (listed stocks) under Japanese GAAP, whereas closing spot prices are used under IFRS.

(Impairment of available-for-sale financial assets)

·    Under IFRS, the SMFG Group assesses whether there is objective evidence that available-for-sale financial assets are impaired. For available-for-sale equity instruments, objective evidence of impairment includes a significant or prolonged decline in the fair value below cost. Additionally, under Japanese GAAP, the SMFG Group reverses impairment losses recognized in a previous interim period, whereas the reversal of the impairment losses on equity instruments is not allowed under IFRS.

 

Loans and advances (Item 4)

(Impairment of loans and advances)

·    Under Japanese GAAP, the reserve for possible loan losses for specifically identified significant loans is calculated by using the discounted cash flow (“DCF”) method, which is based on the present value of reasonably estimated cash flows discounted at the original contractual interest rate of the loan. Under IFRS, the allowance for loan losses for individually significant impaired loans is calculated by using the DCF method based on the best estimate of cash flows discounted at the original effective interest rate. In addition, the scope of the loans that are subject to the DCF method under IFRS is wider than that under Japanese GAAP.

·    Under IFRS, the allowance for loan losses for the remaining loans is collectively calculated by homogeneous group using statistical methods based on the historical loss experience and incorporating the effect of the time value of money. A qualitative analysis based on related economic factors is then performed to reflect the current conditions at the end of the reporting period. Under IFRS, the allowance for the non-impaired loan losses is calculated as incurred but not yet identified losses for the period between the impairment occurring and the loss being identified, although the allowance under Japanese GAAP is calculated based on the expected losses.

 

 

(Loan origination fees and costs)

·    Under IFRS, loan origination fees and costs that are incremental and directly attributable to the origination of a loan are deferred and thus, included in the calculation of the effective interest rate.

 

Deferred tax assets (Item 9)

·    Under IFRS, deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. For example, deferred tax assets for deductible temporary differences relating to impairment of financial instruments of which the timing of the reversal is difficult to estimate cannot be recognized under Japanese GAAP, whereas they can be recognized under IFRS to the extent that it is probable that future taxable profit will be available.