Strengths and Challenges

Strengths (3) Limited downside risks
(Case3)Stock holdings and securitized products

We have substantially reduced SMBC’s stock holdings*1 to approximately JPY 1,900 billion in March 31, 2009, from JPY 5,900 billion as of April 2001. The ratio of stock holdings to Tier I capital remained less than 50% as of March 31, 2009. Should the Nikkei Stock Average decline to around JPY 6,500 at the end of FY3/2010, impairment losses on listed stocks would be limited to about JPY 35 billion*2.

Meanwhile, we had sold most of the securitized products related to subprime loans in early FY3/2008, just before the market prices went down rapidly. As a result of such early and decisive actions, our group’s exposure to securitized products is small and, therefore, associated risks are limited.

*1	Based on the acquisition cost of domestic stocks which has market value and is included in other securities.

*2	Estimate based on the stock holdings as of March 31, 2009. Actual impairment losses will depend on stock prices of specific stocks held by SMBC.