Sumitomo Mitsui Trust : Explanatory Material for 1HFY2017

Table of Contents

Summary of 1HFY2017 financial results

1.

Financial results

---------

Summary 1-3

2.

Financial conditions

---------

Summary 3-5

3.

Forecast for FY2017

---------

Summary 5

Financial figures

1.

Status of profit and loss

---------

1-2

2.

Breakdown of profit by business group

---------

3

3.

Major subsidiaries

---------

4

4.

Yields and margins

---------

5

5.

Net gains on securities

---------

5

6.

Unrealized gains/ losses on investment securities

---------

6-7

7.

Maturity ladder of securities

---------

8

8.

Shareholdings

---------

8

9.

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

---------

8

10.

BIS capital adequacy ratio (Basel III, international standard)

---------

9-10

11.

Return on equity (ROE)

---------

10

12.

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

---------

11

13.

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

---------

12

14.

Problem assets based on the Financial Reconstruction Act

---------

13-14

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

15.

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

---------

14

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

16.

Allowance for loan losses

---------

15

17.

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

---------

16

18.

Retirement benefits

---------

17

19.

Deferred tax assets

---------

18

---------

19-21

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 1HFY2017 financial results

1. Financial Results

1. "Net business profit before credit costs" decreased by 19.4 billion yen from 1HFY2016 to 126.6 billion yen (1.6 billion yen above the forecast for 1HFY2017), due primarily to decrease in gross business profit of SuMi TRUST Bank.
2. "Ordinary profit" decreased by 19.7 billion yen from 1HFY2016 to 117.7 billion yen due to decrease in "Net gains on stocks" , although profit from recovery of credit cost in "Total credit costs" increased.
3. "Net income attributable to owners of the parent" decreased by 12.4 billion yen from 1HFY2016 to 75.4 billion yen (5.4 billion yen above the forecast for 1HFY2017), representing progress of 50% against the net income forecast for FY2017, 150.0 billion yen.

[Consolidated]

(Billions of Yen)

1HFY2017

1HFY2016

Change

Forecast for 1HFY2017

Net business profit before credit costs (*1)

1

126.6

146.1

(19.4)

125.0

Ordinary profit

2

117.7

137.4

(19.7)

110.0

Net income attributable to owners of the parent

3

75.4

87.9

(12.4)

70.0

Total credit costs

4

4.6

0.7

3.8

(10.0)

Net gains on stocks

5

9.1

9.9

(0.7)

Return (Net income) on shareholders' equity

6

7.32%

8.79%

(1.47)%

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

Net business profit before credit costs

7

40.6

40.0

0.6

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

8

16.1

18.0

(1.8)

Total credit costs

9

(0.7)

(1.8)

1.1

Net gains on stocks

10

(0.4)

(0.2)

(0.2)

(*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 20.1 billion yen to 85.9 billion yen from 1HFY2016 due primarily to decrease in "Net fees and commissions and related profit" and market related profit.
2. "Ordinary profit" and "Net income" decreased by 12.8 billion yen from 1HFY2016 to 88.3 billion yen and 10.6 billion yen to 59.2 billion yen respectively, whereas profit from recovery of credit cost in "Total credit costs" increased.

[Non-consolidated]

(Billions of Yen)

1HFY2017

1HFY2016

Change

Forecast for 1HFY2017

Gross business profit

11

204.9

221.5

(16.5)

Net interest income and related profit

12

88.6

90.3

(1.6)

Net fees and commissions and related profit

13

89.6

96.7

(7.1)

Net trading profit

14

3.9

6.3

(2.4)

Net other operating profit

15

22.7

28.0

(5.3)

Net gains on foreign exchange transactions

16

17.6

14.2

3.3

Net gains on bonds

17

6.9

16.9

(10.0)

Net gains from derivatives other than for trading or hedging

18

(1.8)

(3.6)

1.7

General and administrative expenses

19

(118.9)

(115.4)

(3.5)

Net business profit before credit costs

20

85.9

106.1

(20.1)

85.0

Net non-recurring profit

21

2.3

(4.8)

7.2

Total credit costs

22

5.3

2.6

2.6

(10.0)

Net gains on stocks

23

9.6

10.1

(0.5)

Others

24

(12.6)

(17.7)

5.0

Ordinary profit

25

88.3

101.2

(12.8)

80.0

Extraordinary profit/ loss

26

(6.2)

(2.4)

(3.7)

Income before income taxes

27

82.0

98.7

(16.6)

Total income taxes

28

(22.8)

(28.8)

6.0

Net income

29

59.2

69.8

(10.6)

60.0

Overhead ratio (-19 / 11)

30

58.05%

52.11%

5.94%

(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. 2017 (1HFY2017)

Mar. 2017 (FY2016)

Change from Mar. 2017

(Ending balance)

1

28,270.7

28,206.1

64.6

Loans and bills discounted

(Average balance)

2

28,104.8

27,339.9

764.9

(Ending balance)

3

32,557.6

32,911.7

(354.1)

(Average balance)

4

30,452.7

30,022.3

430.4

(*1) Deposits: Excluding NCD

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

[Non-consolidated]

(%)

1HFY2017 (A)

2HFY2016 (B) 1HFY2016

Change from 2HFY2016

(A) - (B)

Loan deposit margin

5

0.55

0.57

0.59

(0.02)

Loans and bills discounted

6

0.70

0.72

0.75

(0.02)

Deposits

7

0.15

0.15

0.16

(0.00)

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

[Non-consolidated]

(Billions of Yen)

Sep. 2017

Mar. 2017

Change from Mar. 2017

Loans to individuals

8

9,185.0

8,926.9

258.0

Residential mortgage loans

9

8,619.3

8,378.6

240.7

Loans to corporations

10

19,085.7

19,279.2

(193.4)

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

[Non-consolidated]

(Billions of Yen)

1HFY2017 (A)

2HFY2016 (B)

1HFY2016 (C)

Change fm 2HFY2016

(A) - (B)

Change fm 1HFY2016

(A) - (C)

Total

11

818.7

712.0

656.5

106.6

162.1

Investment trust

12

606.2

575.3

423.7

30.8

182.4

Fund wrap, SMA

13

113.7

53.3

62.6

60.3

51.1

Insurance

14

98.7

83.3

170.2

15.3

(71.4)

(Billions of Yen)

Sep. 2017

Mar. 2017

Change from Mar. 2017

Total

15

6,228.2

5,988.2

240.0

Investment trust

16

2,933.5

2,796.6

136.9

Fund wrap, SMA

17

815.6

765.5

50.1

Insurance

18

2,478.9

2,426.0

52.9

(2) Fees and commissions

[Non-consolidated]

(Billions of Yen)

1HFY2017

1HFY2016

Change from 1HFY2016

Total

19

27.2

30.0

(2.8)

Sales fees of investment trust/ insurance

20

12.4

15.0

(2.5)

Administration fees

21

14.7

14.9

(0.2)