Sumitomo Mitsui Financial (SMFG) - 2024 Q2 - Quarterly Report

Economic Indicators - The Japanese economy showed signs of recovery with a GDP increase of 0.9% in Q1 FY2024, driven by rising exports due to easing supply chain constraints[15]. - The unemployment rate in Japan decreased to 2.6% in September 2023, down 0.2 percentage points from March 2023[18]. - The Japanese GDP is projected to grow by 6.2% for the fiscal year ending March 31, 2024, and 2.6% for the fiscal year ending March 31, 2025[115]. Corporate Bankruptcies - There were approximately 4,200 corporate bankruptcies in Japan for the six months ended September 30, 2023, an increase of 34.7% year-over-year, involving total liabilities of approximately ¥1.6 trillion, a decrease of 10.1% from the previous year[19]. Currency and Interest Rates - The yen depreciated against the U.S. dollar from ¥133.13 at March 31, 2023, to ¥148.77 at September 29, 2023[21]. - The yield on newly issued 10-year Japanese government bonds was around 0.7% as of September 29, 2023[20]. - The Bank of Japan maintained a negative interest rate of minus 0.1% on certain excess reserves, continuing its monetary easing policy[20]. Financial Performance - Total operating income decreased by ¥15,091 million, or 1%, from ¥2,162,634 million for the six months ended September 30, 2022, to ¥2,147,543 million for the six months ended September 30, 2023[35]. - Net profit decreased by ¥114,607 million from ¥777,394 million for the six months ended September 30, 2022, to ¥662,787 million for the six months ended September 30, 2023[43]. - Net interest income for the six months ended September 30, 2023, was ¥888,942 million, compared to ¥850,177 million for the same period in 2022, reflecting an increase[41]. - Fee and commission income increased to ¥690,715 million for the six months ended September 30, 2023, from ¥607,546 million for the same period in 2022[41]. - Impairment charges on financial assets increased to ¥130,253 million for the six months ended September 30, 2023, from ¥88,025 million for the same period in 2022[41]. Assets and Liabilities - Total assets increased by ¥23,953,609 million from ¥257,687,038 million at March 31, 2023, to ¥281,640,647 million at September 30, 2023[36]. - Total liabilities increased by ¥22,425,939 million from ¥244,150,073 million at March 31, 2023, to ¥266,576,012 million at September 30, 2023[37]. - Total equity increased by ¥1,527,670 million from ¥13,536,965 million at March 31, 2023, to ¥15,064,635 million at September 30, 2023[38]. Stock and Capital Management - The company issued ¥211 billion in perpetual subordinated bonds in September 2023, classified as Additional Tier 1 capital instruments[29]. - The board of directors authorized the repurchase of up to ¥150 billion of common stock between November 15, 2023, and March 31, 2024[30]. Business Strategy and Challenges - The Company anticipates continued challenges due to potential economic deterioration and credit-related costs[11]. - The Company is focused on implementing its business strategy through its subsidiaries and affiliates to navigate the evolving economic landscape[11]. Sector Performance - Consolidated gross profit for the Wholesale Business Unit increased by ¥43.5 billion, reaching ¥396.9 billion for the six months ended September 30, 2023[88]. - Consolidated net business profit for the Wholesale Business Unit increased by ¥39.7 billion, totaling ¥298.6 billion for the six months ended September 30, 2023[90]. - Consolidated gross profit for the Retail Business Unit for the six months ended September 30, 2023, was ¥621.8 billion, an increase of ¥53.9 billion (9.5%) compared to the same period in 2022[91]. - Consolidated net business profit for the Global Business Unit for the six months ended September 30, 2023, was ¥311.3 billion, an increase of ¥4.9 billion (1.6%) compared to the same period in 2022[98]. - Consolidated gross profit for the Global Markets Business Unit for the six months ended September 30, 2023, was ¥286.6 billion, an increase of ¥19.9 billion (7.5%) compared to the same period in 2022[99]. Loan and Deposit Metrics - Loans and advances increased by ¥4,394,250 million (4%) from ¥111,891,134 million at March 31, 2023, to ¥116,285,384 million at September 30, 2023[108]. - The loan-to-deposit ratio was 65% at September 30, 2023, indicating a stable deposit base and reduced liquidity risk[165]. - Total deposits increased to ¥178,121,198 million at September 30, 2023, reflecting a rise of ¥5,193,388 million from ¥172,927,810 million at March 31, 2023[152]. Capital Ratios - SMBC's consolidated total risk-weighted capital ratio increased to 15.48% at September 30, 2023, from 15.34% at March 31, 2023[199]. - SMBC's consolidated Common Equity Tier 1 risk-weighted capital ratio decreased to 12.20% at September 30, 2023, from 12.43% at March 31, 2023[199]. - The leverage ratio for SMFG at September 30, 2023, is 4.93%, slightly down from 5.03% at March 31, 2023[191]. - SMBC Nikko Securities' capital adequacy ratio is 347.1% at September 30, 2023, well above the 140% threshold[200].