Sumitomo Mitsui Trust : Explanatory Material for 1HFY2016

Table of Contents

Summary of 1HFY2016 financial results

1.

Financial results

---------

Summary 1-3

2.

Financial conditions

---------

Summary 3-5

3.

Forecast for FY2016

---------

Summary 5

Financial figures

1.

Status of profit and loss

---------

1-2

2.

Breakdown of profit by business group

---------

3-4

3.

Major subsidiaries

---------

5

4.

Yields and margins

---------

6

5.

Net gains on securities

---------

6

6.

Unrealized gains/ losses on investment securities

---------

7-8

7.

Maturity ladder of securities

---------

9

8.

Shareholdings

---------

9

9.

Deferred unrealized gains/ losses of derivative transactions qualified for hedge accounting

---------

9

10.

BIS capital adequacy ratio (Basel III, international standard)

---------

10-11

11.

Return on equity (ROE)

---------

11

12.

Loans and Deposits (Banking a/c and principal guaranteed trust a/c combined)

---------

12

13.

Loans (Banking a/c and principal guaranteed trust a/c combined)

---------

13

14.

Problem assets based on the Financial Reconstruction Act

---------

14-15

(Banking a/c and principal guaranteed trust a/c combined)

15.

Self-Assessment and problem assets based on the Financial Reconstruction Act

---------

15

(Banking a/c and principal guaranteed trust a/c combined)

16.

Allowance for loan losses

---------

16

17.

Final disposal of non-performing loans (Banking a/c and principal guaranteed trust a/c combined)

---------

17

18.

Retirement benefits

---------

18

19.

Deferred tax assets

---------

19

---------

20-22

Sumitomo MitsuiTrust Holdings (Consolidated): "SuMi TRUST Holdings"or"Consolidated" Sumitomo Mitsui Trust Bank (Non-consolidated): "SuMi TRUST Bank" or "Non-Consolidated"

Legal Disclaimer

Regarding forward-looking Statements contained in this material

This presentation material contains information that constitutes forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors including but not limited to changes in managerial circumstances. By virtue of the aforementioned reasons, Sumitomo Mitsui Trust Holdings, Inc. hereby cautions against sole reliance on such forward-looking statements in making investment decisions.

Summary of 1HFY2016 financial results

1. Financial Results

1. "Net business profit before credit costs" decreased by 10.6 billion yen from 1HFY2015 to 146.1 billion yen due mainly to decrease in "Net interest income and related profit" in SuMi TRUST Bank, while contribution from subsidiaries engaging in financial services increased.
2. "Ordinary profit" remained at 137.4 billion yen kept at the same level as 1HFY2015 due to improvement of "Net gains on stocks" .
3. "Net income attributable to owners of the parent" increased by 1.9 billion yen from 1HFY2015 to 87.9 billion yen, which represents 51% of the net income forecast for FY2016, 170.0 billion yen.

[Consolidated]

(Billions of Yen)

1HFY2016

1HFY2015

Change

Forecast for 1HFY2016

Net business profit before credit costs (*1)

1

146.1

156.7

(10.6)

145.0

Ordinary profit

2

137.4

137.2

0.1

120.0

Net income attributable to owners of the parent

3

87.9

86.0

1.9

80.0

Total credit costs

4

0.7

0.0

0.7

(15.0)

Net gains on stocks

5

9.9

(1.5)

11.4

Return (Net income) on shareholders' equity

6

8.79%

9.09%

(0.30)%

(Difference from non-consolidated financial results) (*2)

Net business profit before credit costs

7

40.0

35.9

4.0

Net income attributable to owners of the parent (*3)

8

18.0

16.9

1.0

Total credit costs

9

(1.8)

0.1

(2.0)

Net gains on stocks

10

(0.2)

(0.0)

(0.1)

(*1) Consolidated net business profit before credit costs = Non-consolidated net business profit before credit costs + Ordinary profits of other subsidiary companies

(non-recurring effect adjusted) + Ordinary profits of affiliates (non-recurring effect adjusted) x Ratio of equity holdings - Intra-group transaction (dividends, etc.)

(*2) Differences between "Consolidated (SuMi TRUST Holdings)" and "Non-consolidated (SuMi TRUST Bank)"

1. "Net business profit before credit costs" decreased by 14.7 billion yen from 1HFY2015 to 106.1 billion yen due primarily to decrease in "Net interest income and related profit" mainly from decrease in interest on foreign bond and increase in foreign currencies funding costs, whereas "General and administrative expenses" decreased.
2. "Ordinary profit" decreased by 0.4 billion yen from 1HFY2015 to 101.2 billion yen, while "Net gains on stocks" improved.
3. "Net income" increased by 0.8 billion yen from 1HFY2015 to 69.8 billion yen, which represents 51% of the net income forecast for FY2016, 135.0 billion yen.

[Non-consolidated]

(Billions of Yen)

1HFY2016

1HFY2015

Change

Forecast for 1HFY2016

Gross business profit

11

221.5

239.7

(18.1)

Net interest income and related profit

12

90.3

115.6

(25.2)

Net fees and commissions and related profit

13

96.7

98.7

(1.9)

Net trading profit

14

6.3

8.4

(2.0)

Net other operating profit

15

28.0

16.8

11.1

Net gains on foreign exchange transactions

16

14.2

5.0

9.2

Net gains on bonds

17

16.9

13.5

3.4

Net gains from derivatives other than for trading or hedging

18

(3.6)

(2.0)

(1.6)

General and administrative expenses

19

(115.4)

(118.8)

3.4

Net business profit before credit costs

20

106.1

120.8

(14.7)

110.0

Net non-recurring profit

21

(4.8)

(19.1)

14.2

Banking a/c credit costs

22

(0.3)

(2.3)

2.0

Reversal of allowance for loan losses, etc.

23

2.9

2.2

0.7

Net gains on stocks

24

10.1

(1.4)

11.6

Others

25

(17.7)

(17.5)

(0.1)

Ordinary profit

26

101.2

101.6

(0.4)

85.0

Extraordinary profit/ loss

27

(2.4)

(0.6)

(1.7)

Income before income taxes

28

98.7

100.9

(2.1)

Total income taxes

29

(28.8)

(31.9)

3.0

Net income

30

69.8

69.0

0.8

65.0

Total credit costs

31

2.6

(0.1)

2.7

(15.0)

Overhead ratio (-19 / 11)

32

52.11%

49.60%

2.51%

(For reference) Overview of business operation

(1) Balance of major accounts (Banking a/c and Principal guaranteed trust a/c combined)

[Non-consolidated]

(Billions of Yen)

Sep. 2016 (1HFY2016)

Mar. 2016 (FY2015)

Change from Mar. 2016

(Ending balance)

1

27,227.0

27,100.2

126.7

Loans and bills discounted

(Average balance)

2

26,526.7

25,748.1

778.6

(Ending balance)

3

30,883.0

33,422.4

(2,539.3)

(Average balance)

4

29,739.6

27,145.9

2,593.7

(*1) Deposits: Excluding NCD

(2) Yields and margins (Domestic Banking a/c)

[Non-consolidated]

(%)

1HFY2016 (A)

2HFY2015 (B) 1HFY2015

Change from 2HFY2015

(A) - (B)

Loan deposit margin

5

0.59

0.63

0.65

(0.04)

Loans and bills discounted

6

0.75

0.82

0.86

(0.07)

Deposits

7

0.16

0.19

0.21

(0.03)

(3) Status of loans (Banking a/c and Principal guaranteed trust a/c combined)

[Non-consolidated]

(Billions of Yen)

Sep. 2016

Mar. 2016

Change from Mar. 2016

Loans to individuals

8

8,393.1

7,932.1

461.0

Residential mortgage loans

9

7,861.4

7,422.1

439.3

Loans to corporations

10

18,833.8

19,168.1

(334.2)

Overseas Japanese borrowers

11

2,660.8

3,035.7

(374.8)

Non-Japanese borrowers

12

3,199.9

3,461.4

(261.5)

(1) Sales volume and sales balance of investment trust/ insurance

[Non-consolidated]

(Billions of Yen)

1HFY2016 (A)

2HFY2015 (B)

1HFY2015 (C)

Change fm Change fm

2HFY2015 1HFY2015

(A) - (B) (A) - (C)

Total

13

656.5

775.7

1,007.7

(119.1)

(351.1)

Investment trust

14

423.7

458.8

619.9

(35.0)

(196.1)

Fund wrap, SMA

15

62.6

92.9

207.9

(30.3)

(145.2)

Insurance

16

170.2

223.9

179.9

(53.7)

(9.7)

(Billions of Yen)

Sep. 2016

Mar. 2016

Change from Mar. 2016

Total

17

5,754.9

5,803.8

(48.8)

Investment trust

18

2,610.2

2,649.7

(39.4)

Fund wrap, SMA

19

808.4

848.3

(39.9)

Insurance

20

2,336.2

2,305.7

30.5

(2) Fees and commissions

[Non-consolidated]

(Billions of Yen)

1HFY2016

1HFY2015

Change from 1HFY2015

Total

21

30.0

33.7

(3.7)

Sales fees of investment trust/ insurance

22

15.0

18.3

(3.3)

Administration fees

23

14.9

15.3

(0.3)