Strengths and Challenges

(Case 2) SMBC Nikko Securities

We made Nikko Cordial Securities (current SMBC Nikko Securities) a wholly-owned subsidiary of SMBC in October 2009.

SMBC Nikko Securities has been performing well in both retail and wholesale businesses as seen in the financial results of 2nd Half, FY3/2010, realizing JPY 100.5 billion of Net operating revenue and JPY 24.0 billion of Ordinary profit. Also, referral and intermediary service for corporate customers from SMBC to SMBC Nikko Securities is steadily expanding centered on investment management of bonds and underwriting of equities and bonds.

In March 2010, SMBC Nikko Securities annouced its medium-term management plan, spanning the three years until FY3/2013, with the view to "becoming the No.1 general securities company in Japan which is excellent both in quality and in quantity and globally competitive." Maintaining low-cost operations based on IT, etc., SMBC Nikko Securities will take such measures as promoting sustainable expansion of existing businesses centering on retail business, creating new businesses centering on the wholesale business, actively employing personnel and enhancing personnel development programs, increasing system investment, and improving the organizational structure of the head office in response to full-line business operations. Through these measures, SMBC Nikko Securities targets to earn JPY 300 billion in Net operating income and JPY 100 billion in Ordinary profit in FY3/2013.

<Reference 1> Number of referral service from SMBC to SMBC Nikko Securities*