5. Final resolution of the non-performing loan issue

SMBC pressed hard to intensively dispose of non-performing loans as it posted large amounts of credit costs. As a result, the non-performing loan ratio dropped to 3.30% on March 31, 2005, from 8.86% on March 31, 2002. The bank finally achieved the goal that it would cut the rate of non-performing loans in half by fiscal year 2004 from the fiscal year 2001 level, as stated in the Program for Financial Revival released by the government in October 2002.
As for the early repayment of public funds, SMFG converted preferred stock worth 201 billion yen based on the value at the time of injection to common stock and purchased as treasury stock. The resulting funds were used for a partial repayment of the debt in November 2004.

At SMBC, the Financial Strategy Unit that was formed in December 2002 to engage in the disposal of non-performing loans was dissolved on April 1, 2005. This organizational change was a milestone marking the end of the bank’s non-performing loan problem.