Strengths and Challenges

Strengths - (3) Limited downside risks
(Case 1) Total credit cost

SMBC’s Total credit cost increased year over year to approximately JPY 550 billion. This was led mainly by an unexpected increase in credit costs due to bankruptcies and worsened business performance of corporate clients resulting from the rapid economic slowdown which was caused by the turmoil of global financial markets and also led by additional provisions of approximately JPY 110 billion made in preparation for the continuation of such economic situation.

Although the balance of non-performing loans as of March 31, 2009 increased year over year, its ratio to total claims remained at low level of 1.78%.