Human Resource Strategies to Support Value Creation

Even as SMBC Group's environment and the values and lifestyles of individuals undergo rapid change and diversification, the importance of people to SMBC Group never changes. Rather, in this era of drastic change, it is critical that the employees of our Group, over 120,000, exert their abilities and align their direction with a sense of unity. As a symbol to guide this action, we established the "SMBC Group Talent Policy" (hereinafter "Talent Policy").

Our Talent Policy sets out what we expect employees to be (Professional, Collaborative, Agile) and our value proposition to employees (Be Yourself, Make a Difference, Build Your Career). These items are imbued with values that SMBC Group feels are vital. These values are also present in the DNA and the business spirit that Mitsui and Sumitomo have inherited through our long histories: refining personal capabilities, uniting as a team, and contributing to the advancement of society and the businesses of our customers and ourselves.As CHRO, I will position our Talent Policy as the foundation underlying our human resources measures, and will maximize our human resource capabilities and achieve the creation of social value and pursuit of economic value set forth in our management strategy.

To achieve the human resources strategy linked to our management strategy, it is essential that we possess a human resources platform and an organizational culture by which employees holding diverse career backgrounds and values can play active roles. At the same time, it is also important that the values of the Company and of individuals overlap and resonate with each other.

To that end, we will swiftly accelerate the transformation of our frameworks for personnel evaluations, compensation, and careers, while continually providing opportunities for internal communication through dialogues in town hall meetings, seminars, and small-group sessions to ensure that the thinking and backgrounds embedded in our human resources strategy are properly communicated.

We believe that realizing employees' diverse aspirations will connect to our growth and competitiveness, increase employees' identification with the Company, and give rise to further endeavors and successes for employees. This virtuous cycle represents the human resource management and the maximization of human resource power that I aim to achieve.

As CHRO, I will continue challenging myself wholeheartedly to create a compelling environment where diverse human resources can play active roles in their own way through various initiatives that lead to transformation.

SMBC Group's 120,000 diverse employees work within a deep-rooted culture that nurtures human resources and creates value. Our Human Capital Management Model, based on our Talent Policy, promotes three main strategies aimed at maximizing human resource capabilities group and global wide, and connects these strategies to value creation. While instilling our Talent Policy through various opportunities, we are actively communicating with employees leveraging visuals and icons created in cooperation with the in-house design team. SMBC Group has created measures to achieve the items listed in our Talent Policy, and verifies progress toward these through fixed-point observation of quantitative figures. Quantitative results for our main strategies are as shown at right.

We actively hire new employees and optimize staffing through the creation of a human resources portfolio to achieve our Medium-Terms Management Plan. In FY2024, we will allocate 550 persons to our strategic areas, such as digital domain that promotes "Olive" and wholesale business area in which our customers' business activities are agile, in response to changes in the yen-denominated interest rate environment.

We have launched a new department to advance the creation of social value. Furthermore, additional 250 persons will be secured to strengthen our corporate infrastructure, including IT investment, compliance and risk management structures.

To adapt to the rapid changes in the business environment, we will place more emphasis on recruiting and developing future business leaders through new graduate recruitment and acquiring immediately effective talent through mid-career recruitment.

For new graduate recruitment, we aim for optimal hiring through "open recruitment" targeting undergraduates who are willing to gain experience in a wide range of business fields and "course-specific recruitment" targeting who are willing to cultivate high levels of expertise in a particular area. As an example, SMBC and SMBC Nikko Securities have launched Group Retail Course for group joint recruitment of human resources involved in a field of wealth management business. Through this course, we develop human resources with knowledge and experiences in both banking and securities, and meet wide-ranging needs including asset management, inheritance, and succession.

Additionally, to secure and develop digital marketing talent across the Group, certain new recruits who applies to Digitalization Course will gain experience at SMBC, Sumitomo Mitsui Card Company, and SMBC Consumer Finance, aiming to acquire advanced specialized skills. Furthermore, SMBC has launched Global Banking Course with the concept of acquiring all the essential expertise to thrive in the global business area during 20s. New recruits will gain early experience at overseas offices and are expected to become talent capable of envisioning a captivating future for our global business areas both domestically and internationally over the medium to long term. We are also promoting the recruitment of young talent at overseas offices. We have a total of 25 courses across the Group.

For mid-career recruitment, we hire human resources who possess diverse knowledge regardless of industry, with the aim of creating an organization more conductive to innovation.

We are also strengthening our organizational structure for smoothly fit mid-career recruits in the office to maximize their performance early. As an example, We provides new employees a Buddy System that supports from job offer acceptance to the end of the first year in SMBC, an Onboarding Handbook that complies feedback from mid-career recruits and highlights key points of support, as well as organizing SMBC UNITE, exchange events aimed at networking.

We secure and develop professionals in specific domains by evaluating and rewarding their expertise in focus areas. As an example, SMBC has established an Expert Certification System covering 31 areas, the Japan Research Institute has introduced an IT Professional Certification System, and Sumitomo Mitsui Card Company has introduced a Digital & Marketing Skill Certification System. SMBC Nikko Securities offers reward systems and career paths specific to the investment banking and markets divisions for employees who demonstrate high expertise.

As our business outside Japan is leading our growth, we are fostering a culture that both Japan hired employees ("JH") and locally hired employees ("LH"), employees who are hired and work outside Japan, can experience and understand diversity of SMBC Group and transform this culture into our competitiveness. For example, we are providing over 60 LHs with mid/long -term work experience at Tokyo head office for mid/long term or offering joint training opportunities with JHs. These employees build relationships with colleagues across departments and regions to share their knowledge and practices from each region, as well as to gain a better understanding of the headquarters' strategy.These opportunities/programs also promote globalization at the offices located in Japan, and creating an environment where business can be conducted more effectively in collaboration even after the end of the placement.

We also continue to conduct varied forms of joint training aimed at enhancing business skills and top management skills at the global level.

We formulate succession plans for vital Business Units and for key CxO positions. Through transfers and human resource exchanges within the Group, we provide employees who are named in such succession plan with opportunities to overcome personal challenges, broaden their management perspectives, and form cross-Group networks. We incorporate candidates who demonstrate particularly high performance into succession planning in anticipation of their future role in management.

We actively invest in education at every level employees, from mid-level to the officer level, and provide various opportunities including training, secondment, or talent exchange to candidates for our future management so that they gain experiences not only within but also outside the Group. Our management, including CEO and outside directors, also participate in these opportunities and communicate with the participants to encourage them to develop their mindsets as future leaders.

SMBC Group uses the SMBC Group eCampus shared online learning platform to promote self-motivated learning by employees. Containing about 1,700 content items, the platform offers learning materials in wide-ranging fields including business, work knowledge, compliance, and messages from top management. Along with learning content, SMBC Group eCampus offers features including training sign-up, tests, and questionnaires. It supports and deepens employees' self-motivated learning activities through linkage with personnel data. Logins to the system averaged over 3,000 per day in FY2023, and have reached as high as 1.1 million in a year as use of the platform spreads among employees.

In particular, content provided by our Digital University in-house digital IT education organization has greatly contributed to enhancing employees' digital literacy. To improve the environment for achieving self-directed career development, we will further make use of the platform's features to build personalized UI and strengthen content.

We support employees' initiatives to support self-directed career development through our internal job posting system for applying to positions across the Group.

We also make efforts toward career education by which companies conduct career training according to age group, with career consulting available across the Group. For example, SMBC emphasizes communication between employees and the human resources department, engaging in about 7,000 hours per year for touch-points with employees, including interviews.

In addition, we regularly holds "job forum" explanatory sessions to communicate the appeal of departments and creates job maps to deepen employees' understanding of the content and the appeal of work at other departments, along with required skills and qualifications.

Sumitomo Mitsui Finance and Leasing also has a unique initiative called Job Shadow, by which employees experience the work of another department for a day.

Sumitomo Mitsui Card Company supports independent career development through "career meetings" in which superiors formulate and share career plans based on employees' career prospects, and a "career challenge (FA system)" program by which employees can apply for desired posts and work.

Through these diverse initiatives, we support the career formation of all employees and promote individual growth.

We promote the acquisition of diverse work skills and experiences through an external dispatch entry system for the accumulation of experience for a period outside of SMBC Group, and through in-house side jobs that allocate a portion of work hours to work in the side job department.

Mitsui Sumitomo Card Company and SMBC Nikko Securities also approve external side jobs aimed at supporting independent endeavors and creating innovation through personal network formation and the spreading of values.

We allocate budget and personnel to employees who have unique business ideas that can support SMBC Group's growth, creating an environment allowing these employees to demonstrate their abilities to the fullest.

For some business ideas, we may even launch a new in-house venture beyond the framework of the company, selecting an employee as "president." In FY2023, we turned out 11 "presidents" of new businesses selected through pitch contests and open recruitment. We continue supporting employees of any age and experience level who tackle challenges with "Make a breakthrough" to see them through.

SMBC Group carries out a variety of measures offering opportunities for co-creation by Group companies.
We have established a Group commendation system that recognizes outstanding initiatives enabled by collaboration within the Group.
There are also numerous cases of project teams that cross the boundaries of Group companies, formed with the aim of enhancing speed and customer response capabilities. We adopt the "Squad" method of flexible member assignment to undertake creation of value, as in the case of Olive.

Our subsidiaries have issued a " Health and Productivity Management Declaration" and are committed to health and productivity management with the aim of invigorating their organizations by enhancing employees' vitality and productivity. Under the leadership of the Chief Health Officer, the companies, health insurance associations, and occupational health staff work collaboratively to implement measures including improvements of office environments and the development of support systems and work systems appropriate for the stages of primary to tertiary prevention.

In FY2023, we designated November as "Wellness Month" to intensively focus on health management. The Group as a whole organized running and walking events around the Imperial Palace, aiming to foster exercise habits and enhance communication through interactions between Group companies' employees and disabled athletes. In recognition of these efforts, our company was certified as one of the Health and Productivity Management Outstanding Organizations "White 500" (Large Enterprise Category).

SMBC Group positions Diversity, Equity & Inclusion ("DE&I") as an important strategy for growth. We aim to enhance our organizational performance and maximize value creation by fully leveraging the capabilities of our diverse human resources. In FY2023, we revised our "DE&I Statement" to further clarify the commitment of our top management.

DE&I Committee and Group Management Committee discuss KPI settings and measures, and we also hold study sessions for managers, incorporating the latest external insights.

To cultivate qualities required for executive officers and aid career development, we conduct training for mid-career female employees. In this training, officers of the Group, including the CEO, conduct reviews and provide opportunities for dialogue to elevate the perspectives of candidates.

We also conduct external lectures and round-table discussions with female managers to help overcome challenges faced at every stage, from young employees to top management. Through such initiatives, we support female employees in actively tackling roles after being promoted and in aiming for higher positions.

KPIs related to ensuring diversity at Decision Making Levels have been set on a Group wide basis. In FY2024, in addition the previously set KPIs on Gender, Mid-career recruitment and foreign nationals, we have introduced a new KPI on Female in the Senior Management Position on an entire global basis including locally hired employees at overseas offices.

We are committed to realize workplace where our employees can effectively balance their work and family, according to their lifestyles, and find fulfillment in their work. In FY2023, we have set goals: achieving Childcare leave usage by male employees: 100%, as well as Number of days of childcare leave by male employees: an average of 30 days or more (until the child turns two years old). We will continue to encourage greater utilization of paternity leave benefits, as means to promote the Paternal participation in Childcare.

Through several event including seminars, lunch meetings, and training, we provide opportunities for employees to interact and dialogue with top management. In FY2023, we launched a channel to stream interviews with Group company presidents and show the daily life of the Group CEO on our in-house social networking service "Midoriba." We will continue to provide opportunities for communication through varied approaches and to reform our organizational culture through internal invigoration.

SMBC Group has introduced an employee stock ownership plan. This plan promotes medium- to long-term asset formation by employees, supports financial well-being, and, as a component of our human capital investment, leads to opportunities to enhance employees' awareness of their participation in management.

At SMBC, boosting incentives increased participation in the plan by 38% and amount of contribution by about 20% in FY2023. We will continue creating mechanisms to enhance this awareness on the part of employees.

In FY2024, SMBC established a stock plan for employees to strengthen the commitment of employees and top management in working as one to enhance our corporate value. By linking compensation to the company's stock price over the medium to long term, the plan functions as incentive for employees to enhance the corporate value of SMBC Group overall. We plan to gradually expand it beyond Sumitomo Mitsui Banking Corporation to other Group companies.

SMBC Group uses Wevox, a tool for fixed-point observation of the state of organizational and employee engagement to support improvement actions by headquarters and management. After introducing Wevox at SMBC in FY2019, we moved ahead with rollout at other Group companies.

As of April 2024, nearly all major companies in our Group have adopted Wevox. Results obtained through measurement of engagement are shared within organizations and are reflected in our business operation.

In Japan, we have also used Wevox since FY2023 to measure degree of achievement of our Talent Policy. We reference this measure as an indicator of the effectiveness of the value provided by our Company and use it as an aid in improving measures.
We also work to enhance employee engagement and performance by setting up regular dialogues and 1-on-1 opportunities.

Sumitomo Mitsui Banking Corporation has formulated a "Human Resources Vision" in its Medium-term Management Plan to serve as a long-term strategy for every aspect of personnel development. Guided by this vision, we are transitioning from Human Resources Department-driven development models to more business-oriented, self-driven development models to better support the ambitions of all employees. Also, we are increasing the transparency of human resource evaluations to cultivate an atmosphere in which employees are evaluated based on their contributions.

For junior employees, SMBC Group provides frameworks through which new employees receive guidance from more experienced employees ("anchor" system) and is introducing development systems for fostering rigorous self-understanding, gaining insight on basic actions and basic knowledge, and cultivating an appropriately competitive mindset.
In addition, the wevox engagement survey system is utilized on an individual-workplace basis and one-on-one feedback meetings are held at all banks as part of our efforts to accelerate an experimental learning cycle based on on-the-job training.

The following set of evaluation processes are operated on an annual basis in a cycle.