Sumitomo Mitsui Bnkg
Sumitomo Mitsui Financial Group, Inc.
Notice regarding Revision of Consolidated Earnings and Dividends Forecasts for
the Fiscal Year Ending March 31, 2005
Sumitomo Mitsui Financial Group, Inc. (SMFG) announced today its revision of
consolidated earnings and dividends forecasts for the fiscal year ending March
31, 2005 (fiscal 2004).
SMFG set this fiscal year as the year for completing the intensive improvement
in asset quality and has made intensive efforts centering on reduction of
non-performing loans ('NPLs'). In order to ensure improvement in financial
results in the following fiscal years by completely settling the NPL problem and
considerably minimizing the sources of future risks, SMFG has decided to take
further financial measures with regard to NPLs and securities portfolio.
As a result, SMFG today revised its consolidated earnings forecast for fiscal
2004 as follows. Accordingly, SMFG decided to give priority to restraining
outflow of earnings from the standpoint of maintaining financial stability,
regrettably proposing to decrease the year-end cash dividend on common stock for
fiscal 2004 by 1,000 yen compared with its previous forecast, to the same level
of the previous year's result.
1. Revision of consolidated earnings forecast for fiscal 2004
(Billions of yen)
Ordinary income Ordinary Net income (loss)
profit (loss)
----------------------------------------------------------------------------------------
Previous forecast (A)
(announced in Nov. 2004) 3,450 470 180
----------------------------------------------------------------------------------------
Revised forecast (B) 3,450 (40) (240)
----------------------------------------------------------------------------------------
Change (B - A) - (510) (420)
----------------------------------------------------------------------------------------
(Note) SMFG's non-consolidated earnings forecast remains unchanged.
2. Revision of dividends forecast for fiscal 2004 (Common stock)
(Yen per share)
Year-end Annual
----------------------------------------------------------------------
Previous forecast (A)
(announced in Nov. 2004) 4,000 4,000
----------------------------------------------------------------------
Revised forecast (B) 3,000 3,000
----------------------------------------------------------------------
Change (B - A) (1,000) (1,000)
----------------------------------------------------------------------
<ReferenceSMFG's consolidated earnings forecast for fiscal 2004
(Billions of yen)
Revised Previous Change
forecast (a) forecast (b) (a) - (b)
--------------------------------------------------------------------------------------
Ordinary profit (40) 470 (510)
--------------------------------------------------------------------------------------
Net income (240) 180 (420)
--------------------------------------------------------------------------------------
----------------------------------------------------------
Total credit cost (1,200)
----------------------------------------------------------
(Points)
SMFG forecasts that it will record net loss of 240 billion yen, a decrease of
420 billion yen compared with the previous forecast, mainly because SMBC's
non-consolidated earnings are expected to decline as mentioned above. SMFG's
consolidated net loss is expected to be greater than SMBC's non-consolidated net
loss by 110 billion yen, mainly because SMFG additionally made provisions for
loan losses at the subsidiaries engaged in loan guarantees, in order to improve
SMFG's financial soundness on a consolidated basis.
II. Estimate of the balance of problem assets based on the Financial
Reconstruction Law
(SMBC, Non-consolidated)
(Billions of yen, %)
March 31, 2005(a) Sept. 30, 2004 March 31, 2004
(Estimate) (Result) (Result)
-------------------------------------------------------------------------------------------
Problem assets based on Approximately
the Financial Reconstruction Law 2,000.0 2,484.4 2,811.2
-------------------------------------------------------------------------------------------
Problem asset ratio Mid 3 % 4.4 % 5.0 %
-------------------------------------------------------------------------------------------
(a) Reductionby approx. 60% since March 2002 (8.9%)
March 31, 2003 March 31, 2002
(Result) (Result)
------------------------------------
5,261.3 5,920.3
------------------------------------
8.4 % 8.9 %
------------------------------------
(Points)
1. Problem assets as of March 31, 2005 are expected to decrease by approximately
800 billion yen from March 31, 2004, and the problem asset ratio as of March 31,
2005 is expected to decline to mid 3%.
-- The target of halving the problem asset ratio by March 31, 2005 compared
with the level in March 2002 is expected to be excessively achieved.
2. Besides problem assets based on the Financial Reconstruction Law, claims to
borrowers requiring caution excluding substandard loans, which are not
categorized into problem assets based on the Financial Reconstruction Law, are
also expected to decrease to 2.5 trillion yen, declining 5.5 trillion yen (70%
decrease in volume) since March 2002. Accordingly, credit risks of the whole
loan portfolio are expected to decrease substantially.
III. Estimate of net unrealized gains on other securities (SMBC,
Non-consolidated)
(Billions of yen)
March 31, 2005 Sept. 30, 2004 March 31, 2004
(Estimate) (Result) (Result)
-------------------------------------------------------------------------------------------
Net unrealized gains (losses) on
other securities 590 457.6 556.3
-------------------------------------------------------------------------------------------
Stocks 600 558.9 651.1
Bonds 0 (62.2) (101.9)
Others (10) (39.1) 7.1
-------------------------------------------------------------------------------------------
-- Figures for March2005 (after impairment) are estimated on the basis of the
recent market prices and hence can be changed.
VI. Estimate of Capital ratio (SMFG, Consolidated)
March 31, 2005 Sept. 30, 2004 March 31, 2004
(Estimate) (Result) (Result)
-------------------------------------------------------------------------------------------
Consolidated capital ratio More than 9%(a) 10.93 % 11.37 %
-------------------------------------------------------------------------------------------
(a) SMFG forecasts that it will record net loss for fiscal 2004 and its
consolidated capital ratio as of March 31, 2005 is expected to temporarily
decline to the level more than 9%. However, the sources of future risks will
considerably decrease owing to the financial treatments mentioned above, and
SMFG forecasts that its financial results in the following years will surely
recover. Consequently, consolidated capital ratio will soon recover to more than
10% level.
This press release contains certain forward-looking statements. Such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and actual resultsmay materially differ from those
contained in the forward-looking statements as a result of various factors.
The following items are among the factors that could cause actual results to
differ materially from the forward-looking statements in this material: business
conditions in the banking industry, the regulatory environment, new legislation,
competition with other financial services companies, changing technology and
evolving banking industry standards and similar matters.SMFG's consolidated earnings forecast for fiscal 2004
(Billions of yen)
Revised Previous Change
forecast (a) forecast (b) (a) - (b)
--------------------------------------------------------------------------------------
Ordinary profit (40) 470 (510)
--------------------------------------------------------------------------------------
Net income (240) 180 (420)
--------------------------------------------------------------------------------------
----------------------------------------------------------
Total credit cost (1,200)
----------------------------------------------------------
(Points)
SMFG forecasts that it will record net loss of 240 billion yen, a decrease of
420 billion yen compared with the previous forecast, mainly because SMBC's
non-consolidated earnings are expected todecline as mentioned above. SMFG's
consolidated net loss is expected to be greater than SMBC's non-consolidated net
loss by 110 billion yen, mainly because SMFG additionally made provisions for
loan losses at the subsidiaries engaged in loan guarantees, in order to improve
SMFG's financial soundness on a consolidated basis.
II. Estimate of the balance of problem assets based on the Financial
Reconstruction Law
(SMBC, Non-consolidated)
(Billions of yen, %)
March31, 2005(a) Sept. 30, 2004 March 31, 2004
(Estimate) (Result) (Result)
-------------------------------------------------------------------------------------------
Problem assets based on Approximately
the Financial Reconstruction Law 2,000.0 2,484.4 2,811.2
-------------------------------------------------------------------------------------------
Problem asset ratio Mid 3 % 4.4 % 5.0 %
-------------------------------------------------------------------------------------------
(a) Reduction by approx. 60% since March 2002 (8.9%)
March 31, 2003 March 31, 2002
(Result) (Result)
------------------------------------
5,261.3 5,920.3
------------------------------------
8.4 % 8.9 %
------------------------------------
(Points)
1. Problem assets as of March 31, 2005 are expected to decrease by approximately
800 billion yen from March 31, 2004, and the problem asset ratio as of March 31,
2005 is expected to decline to mid 3%.
-- The target of halving the problem asset ratio by March 31, 2005 compared
with the level in March 2002 is expected to be excessively achieved.
2. Besides problem assets based on the Financial Reconstruction Law, claims to
borrowers requiring caution excluding substandard loans, which are not
categorized into problem assets based on the Financial Reconstruction Law, are
also expected to decrease to 2.5 trillion yen, declining 5.5 trillion yen (70%
decrease in volume) since March 2002. Accordingly, credit risks of the whole
loan portfolio are expected to decrease substantially.
III. Estimate of net unrealized gains on other securities (SMBC,
Non-consolidated)
(Billions of yen)
March 31, 2005 Sept. 30, 2004 March 31, 2004
(Estimate) (Result) (Result)
-------------------------------------------------------------------------------------------
Net unrealized gains (losses) on
other securities 590 457.6 556.3
-------------------------------------------------------------------------------------------
Stocks 600 558.9 651.1
Bonds 0 (62.2) (101.9)
Others (10) (39.1) 7.1
-------------------------------------------------------------------------------------------
-- Figures for March 2005 (after impairment) are estimated on the basis of the
recent market prices and hence can be changed.
VI. Estimate of Capital ratio (SMFG, Consolidated)
March 31, 2005 Sept. 30, 2004 March 31, 2004
(Estimate) (Result) (Result)
-------------------------------------------------------------------------------------------
Consolidated capital ratio More than 9%(a) 10.93 % 11.37 %
-------------------------------------------------------------------------------------------
(a) SMFG forecasts that it will record net loss for fiscal 2004 and its
consolidated capital ratio as of March 31, 2005 is expected to temporarily
decline to the level more than 9%. However, the sources of future risks will
considerably decrease owing to the financial treatments mentioned above, and
SMFG forecasts that its financial results in the following years will surely
recover. Consequently, consolidated capital ratio will soon recover to more than
10% level.
This press release contains certain forward-looking statements. Such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and actual results may materially differ from those
contained in the forward-looking statements as a result of various factors.
The following items are among the factors that could cause actual results to
differ materially from the forward-looking statements in this material: business
conditions in the banking industry, the regulatory environment, new legislation,
competition with otherfinancial services companies, changing technology and
evolving banking industry standards and similar matters.
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