Business Strategy

*1 Managerial accounting basis (after adjustments of the changes in exchange rates)

*2 Excluding the impact of the radical allowance on interest repayment

By continuing to evolve the retail business from a customer-centric perspective—including the further strengthening and sophistication of Olive, business model reform centered on Olive, and group integration of the wealth management (WM) business—we aim to become “the retail financial group most valued by customers for its innovation, convenience, and security.”

Under the previous Medium-Term Management Plan ending in FY2025, favorable market conditions such as rising yen interest rates and stock prices provided tailwinds, and businesses including WM, payments and finance, and deposits performed strongly, resulting in a significant increase in net business profit of ¥241.1 billion over the three years to ¥427.7 billion. Net income increased by ¥139.4 billion over the three years to ¥217.8 billion, and ROCET1 reached 15.6%, more than tripling the level over the same period.

In the new Medium-Term Management Plan starting from FY2026, our business opportunities are expected to continue expanding, driven by the ongoing shift from savings to asset formation, the growing number of wealthy customers, the acceleration of digitalization and cashless transactions, and rising yen interest rates.

Over the next three years, to steadily capture this expansion in key markets, we will work on the further sophistication of Olive, now firmly established as one of our core strengths, and its application to other businesses, as well as further group integration in the WM business, which brings together Japan’s top-tier SMBC, SMBC Nikko Securities, and SMBC Trust Bank. Furthermore, to ensure the sustainability of our business, we will also build a robust business foundation through investment in focused areas such as AI/digital and marketing.

Since its launch in March 2023, Olive, now firmly established as a major strategic pillar, has grown to 7.63 million accounts over three years. Over the next three years, by continuing bold resource allocation, we will further expand Olive’s functions and strengthen its competitiveness, aiming to acquire a cumulative total of over 15 million accounts. Through the further expansion of Olive, we will accumulate sticky deposits linked to daily transactions and achieve further growth in cashless transactions.

In the WM business, another key pillar, through enhanced group collaboration, asset management and foreign currency deposit balances increased by ¥9 trillion over the three years to ¥23 trillion. Over the next three years, with the theme of group integration, we will aim to achieve Japan’s No.1 balance of assets under management by building three models tailored to customer needs: a professional model for business owners, a universal model for affluent customers, and a hybrid model for digital affluent customers.

By maximizing the comprehensive capabilities of Japan’s premier group and accelerating customer-centric transformation, we aim to become the group most trusted and continuously chosen by customers.

*1 Managerial accounting basis (after adjustments of the changes in exchange rates)

*2 Gains on sale of equity holdings

By providing a wide range of solutions related to financing, investment, payments, etc., as a unified SMBC Group, we aim to establish the No.1 financial business for corporate clients, trusted by customers for our response to their increasingly sophisticated management issues amid changes in the business environment.

Under the previous Medium-Term Management Plan, despite a drastically changing external environment—including changes in capital markets and fragmentation of the global economy due to heightened geopolitical risks—we implemented a swift, unified SMBC Group approach to customers’ management issues, resulting in both net business profit and ROCET1 significantly surpassing initial plan targets. Under the new Medium-Term Management Plan starting from FY2026, we will focus on the following five initiatives.

(1) Maximizing Value Provision Through Advanced Group Synergy We will provide sophisticated comprehensive financial services as a unified Group in response to customers’ increasingly complex management issues. In the securities business, in addition to strengthening collaboration with Jefferies, we will further develop the collaboration framework between SMBC and SMBC Nikko Securities, and strengthen our Group-wide capabilities to handle M&A deals. In the real estate brokerage business, we will promptly develop talent, strengthen our capacity to handle highly difficult deals, mainly through SMBC and SMBC Trust Bank, and aim to improve profitability.

(2) Building a Structure to Support Customers’ Global Expansion For global corporate customers, we will strengthen our seamless domestic and international collaboration framework. Additionally, by deepening collaboration between SMBC, SMBC Nikko Securities, and Jefferies, cross-leveraging their respective knowledge and networks, we aim to capture large-scale cross-border M&A deals.

(3) Building an Efficient and Effective Structure Through Full Digitalization Trunk will enhance its convenience through functional expansion, and we will efficiently expand our profit base in the SME sector through digitalization. Furthermore, we will fundamentally streamline existing operational processes through the use of generative AI, using the time freed up to improve the quality and speed of our proposals to customers.

(4) Through Accumulating High-Quality Assets and Risk-Taking Improving ROTE Customers’ corporate actions remain active, and we will continue working to improve loan interest margins and ROTE through asset deployment based on appropriate risk-taking.

(5) Building a Resilient Organization with Pride in Professional Conduct and Skills Under a new HR system, we will create an environment where each individual can strengthen their expertise and maximize performance, and we will concentrate resources on focused areas to further improve profitability.

Through these initiatives, we aim to be a financial group that is trusted even more by customers and achieves sustainable growth together with them.

* Managerial accounting basis (after adjustments of the changes in exchange rates)

We will maximize the use of our broad business portfolio, including global CIB/S&T and the Multi-Franchise Strategy, to provide unified Group support for the international business expansion of domestic and overseas customers.

During the previous Medium-Term Management Plan period, amidst rising uncertainty in the business environment, including the manifestation of geopolitical risk in the Middle East, we steadily advanced initiatives for growth, such as accelerating resource shifts to improve portfolio profitability, strengthening CIB/S&T including integrated primary-secondary operations, and investment in India’s YES BANK under the Multi-Franchise Strategy.

As a result, while the top line grew significantly while suppressing Risk-Weighted Assets, expenses also increased due to strategic investments in growth areas and foundation strengthening. Furthermore, recognizing the increase in credit costs in certain emerging markets, we believe further strengthening risk control is important.

Under the new Medium-Term Management Plan, while continuing to monitor the highly uncertain business environment, we will focus on the following four priority strategic areas to drive the Group’s Growth with Quality over the medium to long term, centered on improving profitability.

(1) Strengthening Global CIB/S&T While continuing resource shifts to high-profitability areas and business portfolio replacement, we will expand our investor network in parallel with strengthening S&T, promoting a shift to an asset-recycling business model including OtoD (Origination to Distribution). We will also further expand non-asset revenues, such as investment banking business leveraging the Jefferies alliance, and transaction banking business under the new “SMBC Connect” brand, which also supports deposit growth.

(2) Realizing Growth Under the Multi-Franchise Strategy We will focus on improving the profitability of existing investees, including creating synergies through collaboration with the SMBC Group, steadily capturing the fruits of high economic growth in countries such as India. Additionally, while appropriately responding to changes in each country’s business environment, we aim for stable and continuous profit growth through improvements in asset quality and other means.

(3) Strengthening the Global Management Foundation Alongside strengthening risk management in line with the increasingly complex business environment, we will build an optimal and resilient global operational framework. For IT and AI, we will strategically execute investments necessary for model transformation from a global, integrated perspective, efficiently advancing infrastructure development. We will also promote operational efficiency, leverage the offshoring base established in India, improving our expense structure and transforming our operating model.

(4) Expanding New Growth Areas For the alternative Asset Management strategy, which supports future growth, we will expand our investor network while utilizing the unified brand SMBC PRIVATE MARKETS launched in 2025, aiming for unified group expansion of the management fee business.

*1 Excluding impact of bond portfolio rebalancing

*2 Managerial accounting basis (after adjustments of the changes in exchange rates)

*3 Including impact from the interest-rate risk associated to the banking account

As market risk professionals, we aim to connect global trends and market changes to the creation of new value while sustainably providing high-value-added solutions to our customers.

The Global Markets Business Unit is responsible for trading in foreign exchange, derivatives, bonds, equities, and other products, providing solutions through market products, and managing balance sheet liquidity risk and market risk comprehensively through Asset and Liability Management (ALM) operations. As market risk professionals, we aim to refine our own risk-taking while sustainably providing high added value to our customers. What we value most is the ability to deeply analyze various events occurring globally with the “Four I’s”—Insight, Imagination, Intelligence, and Integrity—and to discern the true nature of the markets. Leveraging this strength, we have navigated the markets even in an uncertain environment, managing risk through dynamic portfolio management.

Under the new Medium-Term Management Plan, our vision is “to connect global trends and market changes to the creation of new value.” In addition to the sophistication of the ALM framework, we will diligently build a profit base robust enough to withstand volatile market conditions, with a particular focus on placing yen products at the core of Sales & Trading (S&T) to boost the growth trajectory of our overseas business.

(1) Strategic Portfolio Management and Building a Resilient Funding Base In an era of normalized interest rates and AI, our mission is to continue making efforts to accurately capture the shifts in the tides that will occur going forward. We will carefully assess global economic trends and the market environment, steadily capturing profit opportunities centered on the opportunity to build a JGB portfolio. Furthermore, to sustainably support our customers through stable funding in yen and foreign currencies, we will diversify our funding methods and actively promote the use of technology to advance enhancements in our ALM operations.

(2) Promoting S&T and Strengthening our Solution Delivery Capabilities In the S&T business, we will drive momentum through three pillars: “Regional Strategy,” “Customer Strategy,” and “Product Strategy.” By expanding our customer base, we will generate stable profits in any environment, while advancing a transition to a business model that can further increase profits during periods of rising volatility. Furthermore, through the use of electronic trading, including eFX, we will globally provide optimal solutions tailored to diversifying needs.

(3) Utilizing AI for Advanced Value Creation We will promote the use of AI in these priority areas. In trading, we will go beyond operational efficiency, pursuing a “human in the loop” approach that enhances human judgment value and creativity. Simultaneously, we will develop the integrated data infrastructure that serves as the foundation for AI utilization, connecting it to the creation of high-value-added services.