◆ Raise full-year net income forecast to JPY 1.5 tn 1 Overview of 1H FY3/2026 November 14, 2025 Copyright © 2025 Sumitomo Mitsui Financial Group. All Rights Reserved. Financial Highlights ◆ Enhance shareholder returns on the upgraded forecast 2 Financial Highlights (1) FY3/26 1H Results and Full-Year Forecasts Raised full-year net income forecast by JPY 200 bn to JPY 1.5 tn (+27% YoY). | | 1H FY3/26 | | | FY3/26 forecasts | | | --- | --- | --- | --- | --- | --- | | | Result | YoY | Revised | vs. initial | Y ...

Core Insights - SMBC Group has appointed Juan (JC) Kreutz as the Head of Structured Finance Solutions for the Americas and Deputy Head for the Americas business [1][3] - JC will manage various structured product businesses, including project finance debt & advisory, real estate finance, leveraged finance, fund finance, transportation, leasing, and global trade finance [2][3] Group 1: Leadership and Experience - JC Kreutz has over 10 years of experience at SMBC, contributing to the bank's strong position in U.S. project finance and expanding its presence in Latin America [3] - Before his current role, JC served as General Manager of Global Structured Finance for SMBC Americas, overseeing multiple industry groups [3][4] - JC has a background in Debt Capital Markets at BBVA Securities and has held positions in energy finance and investment banking at several major financial institutions [4] Group 2: Organizational Context - JC succeeds Carl Adams, who retired after 12 years of leadership at the bank [5] - SMBC Group is a leading global financial institution with a history of 400 years, offering a wide range of financial services across nearly 40 countries [6] - In the Americas, SMBC Group operates in several countries, including the U.S., Canada, Mexico, Brazil, Chile, Colombia, and Peru [7]

Core Viewpoint - Japanese financial institutions are revising their forecasts for the yen's exchange rate against the US dollar, expecting it to depreciate to a range of 149 to 156 yen by the end of the year due to fading expectations of early interest rate hikes by the Bank of Japan and concerns over Prime Minister Kishida's expansionary fiscal policies [2][4]. Summary by Relevant Sections Exchange Rate Predictions - JPMorgan has significantly lowered its forecast for the yen, predicting it will depreciate to 156 yen by the end of 2025 (previously 142 yen) and to 152 yen by the end of March 2026 (previously 139 yen) [4]. - Other banks, including Mitsubishi UFJ and Sumitomo Mitsui, have also adjusted their predictions for the yen's depreciation [4][6]. Monetary Policy and Market Reactions - The Bank of Japan maintained its policy interest rate at a recent meeting, with Governor Ueda indicating no immediate plans for rate hikes, leading to increased selling pressure on the yen [5]. - Market sentiment reflects a cautious stance on potential early rate hikes, with a 57% probability of a rate increase in December as of November 7 [6]. Fiscal Policy Concerns - There is growing caution regarding Kishida's "responsible active fiscal" policies, with expectations that the supplementary budget for 2025 will exceed that of 2024, potentially increasing yen selling pressure [7]. - Analysts note that the government appears to tolerate yen depreciation, which has led to a stronger market reaction than initially anticipated [7]. Potential for Yen Appreciation - Some analysts, like Citigroup's Takashima, predict that the yen may appreciate due to stock market adjustments and a reversal of the current depreciation trend, forecasting a rate of 147 yen per dollar by the end of 2025 [8]. Effective Exchange Rate - The nominal effective exchange rate, as measured by the Nikkei Currency Index, reached a low of 71.4 on October 31, indicating a significant depreciation since the last intervention in July 2024 [10].

Core Viewpoint - Japanese financial institutions are revising their forecasts for the yen's exchange rate against the US dollar, expecting it to depreciate to a range of 149 to 156 yen by the end of the year due to fading expectations of early interest rate hikes by the Bank of Japan and concerns over Prime Minister Kishida's expansionary fiscal policies [2][6]. Group 1: Exchange Rate Predictions - Morgan Stanley has significantly lowered its forecast for the yen, predicting it will depreciate to 156 yen by the end of 2025, down from a previous estimate of 142 yen [6][7]. - Other banks, including Mitsubishi UFJ and Sumitomo Mitsui, have also adjusted their predictions, indicating a general consensus on the yen's depreciation [7]. - The yen depreciated over 4% in October, with a notable drop of more than 7 yen, reaching around 154.5 yen per dollar in early November, marking its lowest point since February [4][6]. Group 2: Monetary Policy and Market Reactions - The Bank of Japan maintained its policy interest rate during the monetary policy meeting on October 30, with Governor Ueda expressing caution regarding future rate hikes [6][8]. - Market sentiment reflects a growing awareness of potential currency intervention by the Japanese government and the Bank of Japan, as the nominal effective exchange rate index for the yen hit a low of 71.4 on October 31 [11]. - Analysts express skepticism about the immediate prospects for yen appreciation, citing a lack of clear support for early rate hikes and the potential for further yen selling pressure due to the government's fiscal policies [8][9]. Group 3: Economic and Fiscal Concerns - Concerns over Prime Minister Kishida's "responsible active fiscal" policies are prevalent, with plans for a supplementary budget expected to exceed the previous year's budget, raising fears of increased yen selling pressure [8][9]. - The market is reacting to the government's perceived tolerance for yen depreciation, with some analysts predicting a reversal in the yen's trend as stock market adjustments occur [9][10].

Core Insights - The article compares Sumitomo Mitsui (SMFG) and Canadian Imperial Bank (CM) to determine which stock presents a better value opportunity for investors [1] Valuation Metrics - SMFG has a forward P/E ratio of 10.97, while CM has a forward P/E of 12.97 [5] - SMFG's PEG ratio is 0.79, indicating a more favorable valuation compared to CM's PEG ratio of 1.68 [5] - SMFG's P/B ratio stands at 1.05, compared to CM's P/B ratio of 1.9, suggesting SMFG is undervalued relative to its book value [6] Zacks Rank and Earnings Outlook - SMFG currently holds a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while CM has a Zacks Rank of 3 (Hold) [3] - The improving earnings outlook for SMFG enhances its attractiveness as a value investment [7] Value Grades - Based on various valuation metrics, SMFG has a Value grade of B, whereas CM has a Value grade of C, further supporting the conclusion that SMFG is the superior value option [6]

Market Performance - The Japanese stock market experienced a significant surge, with the Nikkei 225 index rising over 1600 points, marking a historic high by surpassing 49000 points, with a daily increase of over 3% [1][3] - As of the afternoon close, the Nikkei 225 index stood at 49185.5 points, reflecting a 3.37% increase from the previous trading day [3] Political Developments - The Liberal Democratic Party (LDP) and the Japan Innovation Party are set to sign a coalition agreement, indicating that Fumio Kishida is likely to win the prime ministerial election on October 21 [1][6] - Analysts suggest that the reduction of political uncertainty has positively impacted the Japanese stock market, with expectations that Kishida will implement low-interest rates and increased government spending [1][6] Sector Performance - The semiconductor sector saw collective gains, with Kioxia Holdings rising nearly 9%, LASERTEC up over 5%, and Tokyo Electron increasing by over 4% [5] - Financial stocks also performed well, with Mizuho Financial Group rising over 6%, and Chiba Bank and Sumitomo Mitsui Financial Group both up over 4% [5] - Electrical machinery stocks showed strength, with Yaskawa Electric up over 7%, Fanuc increasing by over 6%, and Fuji Electric rising nearly 4% [5] Economic Policy Outlook - Kishida is viewed as a proponent of "Abenomics," advocating for expansionary fiscal policies aimed at doubling Japan's economic scale within ten years, which includes tax cuts, economic stimulus, and government investment [6] - Kishida emphasized the need for collaboration between the government and the central bank to ensure demand-driven growth supported by rising wages and corporate profits [6] Monetary Policy Implications - Market participants believe Kishida's victory may introduce uncertainty regarding monetary policy, potentially delaying interest rate hikes by the Bank of Japan until new government policies are clearer [7] - The Bank of Japan Governor has indicated that various data will be considered before deciding on interest rate changes, emphasizing the importance of global economic conditions [9][10]

Core Insights - A surge of billion-dollar investments in Indian banks has attracted global attention, particularly amid concerns over US credit losses and trade tensions [1][3] Investment Activity - Emirates NBD Bank plans to invest $3 billion in RBL Bank, marking the largest foreign investment in India's banking sector [2] - Abu Dhabi's International Holding Co. is set to invest approximately $1 billion in Sammaan Capital, while Sumitomo Mitsui Financial Group's banking unit agreed to pay $1.6 billion for a 20% stake in Yes Bank [2] - Total deals in India's financial services sector have reached about $15 billion this year, as global investors seek opportunities in one of the fastest-growing economies [2] Market Dynamics - Despite the influx of foreign investment, historical challenges exist, including a lack of successful foreign acquisitions and a previous shadow bank crisis [3][4] - The Indian banking sector is perceived as relatively insulated, benefiting from rapid digital adoption and a large under-banked population [6] Regulatory Environment - The Reserve Bank of India has implemented measures to strengthen the financial sector, including boosting credit flow and regulating excessive risk-taking [8] - Policymakers are exploring ways to attract more foreign investment, such as easing regulations for overseas investors in state-run banks [9] Performance Indicators - Recent earnings reports from major banks like HDFC Bank and ICICI Bank showed better-than-expected results, contributing to a rally in the Nifty Bank Index, which has increased over 13% this year [10] - RBL Bank's shares rose by as much as 8.4%, reaching their highest level since February 2020 [7] Future Outlook - Anticipation of more large-scale deals, including a government stake sale in IDBI Bank, is expected to generate significant capital [11] - Geopolitical risks are prompting foreign investors to seek opportunities in India, which is viewed as a stable entry point due to its domestic focus and low correlation with the global economy [12]

Investment Trends - Emirates NBD Bank PJSC plans to invest $3 billion in RBL Bank Ltd, marking the largest foreign investment in India's banking sector [11] - Approximately $15 billion in deals involving financial services targets in India have been completed this year, indicating strong interest from global investors [12] Market Dynamics - Indian lenders are perceived as relatively insulated from global financial issues, benefiting from rapid digital adoption and a large under-banked population [5][12] - The Nifty Bank Index has increased by over 13% this year, reaching a record high, driven by better-than-expected earnings from major banks like HDFC Bank Ltd. and ICICI Bank Ltd [9][12] Regulatory Environment - The Reserve Bank of India has implemented measures to strengthen the financial sector, including boosting credit flow and regulating excessive risk-taking [7][8] - Policymakers are exploring options to attract more foreign investment, such as easing regulations for overseas investors in state-run banks [8] Foreign Investment Sentiment - Despite limited success stories of foreign banks acquiring Indian banks, there is a notable intent from foreign investors to enter the Indian market [3][4][12] - Japan's megabanks and firms from the Middle East and Europe are particularly interested in India's expanding middle class [5][12] Future Prospects - Potential for more significant deals is anticipated, with a planned government stake sale in IDBI Bank Ltd expected to generate billions [10][12] - Geopolitical risks are prompting foreign investors to seek opportunities in countries like India, which has a low correlation with the global economy [11]

Group 1 - Japanese banking giants Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group are planning to jointly issue a stablecoin [2]

Group 1 - The three major Japanese banks, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group, will jointly issue a stablecoin pegged to the Japanese yen, marking Japan's shift from regulatory caution to active participation in the digital currency market [1][2] - The banks aim to build infrastructure for corporate clients, allowing stablecoins to be transferred between clients according to a unified standard, with initial plans for a yen-pegged stablecoin and potential future expansion to a dollar-pegged stablecoin [1][2] - JPYC, a fintech startup, has received regulatory approval to issue Japan's first yen-pegged stablecoin, planning to launch in the fall with a target issuance scale of 1 trillion yen (approximately 68.1 billion USD) within three years [2] Group 2 - Monex Group is considering launching a yen-pegged stablecoin, which could enhance international remittances and corporate settlements denominated in yen [3] - The chairman of Monex Group emphasized the need for substantial infrastructure and capital to issue stablecoins, indicating that failure to engage in this market could lead to being left behind [3] - Japan is recognized as the first country to establish a regulatory framework for stablecoins, and the recent developments indicate a readiness to transition from regulatory caution to active involvement in digital finance [3]