Sumitomo Mitsui Trust : Explanatory Material for FY2016

Table of Contents

Summary of FY2016 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

---------

3-4

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 FY2016 financial results

1. Financial Results

1. "Net business profit before credit costs" decreased by 85.9 billion yen from FY2015 to 232.3 billion yen, due primarily to decrease in market-related profit in SuMi TRUST Bank, whereas the contribution from subsidiaries increased.
2. "Ordinary profit" decreased by 81.6 billion yen from FY2015 to 196.3 billion yen due to increase of "Total credit costs" , although "Net gains on stocks" improved.
3. As a result, "Net income attributable to owners of the parent" decreased by 45.4 billion yen from FY2015 to 121.4 billion yen.

[Consolidated]

(Billions of Yen)

FY2016

FY2015

Change

Net business profit before credit costs (*1)

1

232.3

318.3

(85.9)

Ordinary profit

2

196.3

278.0

(81.6)

Net income attributable to owners of the parent

3

121.4

166.9

(45.4)

Total credit costs

4

(28.5)

(25.9)

(2.5)

Net gains on stocks

5

36.4

29.6

6.8

Return (Net income) on shareholders' equity

6

6.07%

8.72%

(2.65)%

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

Net business profit before credit costs

7

81.8

69.1

12.6

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

8

43.7

23.7

20.0

Total credit costs

9

(3.5)

(11.7)

8.2

Net gains on stocks

10

5.1

10.9

(5.7)

(*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 98.6 billion yen from FY2015 to 150.5 billion yen, due primarily to decrease in market-related profit reflecting negative impact from sales of US Treasuries.
2. "Ordinary profit" decreased by 101.5 billion yen from FY2015 to 117.3 billion yen, due to increase of "Total credit costs" , although "Net gains on stocks" improved with sales of strategic shareholdings.
3. As a result, "Net income" decreased by 65.4 billion yen from FY2015 to 77.6 billion yen.

[Non-consolidated]

FY2016

FY2015

Change

Gross business profit

11

383.3

485.3

(101.9)

Net interest income and related profit

12

216.7

223.9

(7.2)

Net fees and commissions and related profit

13

196.9

199.9

(2.9)

Net trading profit

14

17.0

15.5

1.5

Net other operating profit

15

(47.3)

45.9

(93.2)

Net gains on foreign exchange transactions

16

28.6

16.5

12.1

Net gains on bonds

17

(96.9)

51.7

(148.6)

Net gains from derivatives other than for trading or hedging

18

21.1

(22.8)

44.0

General and administrative expenses

19

(232.7)

(236.1)

3.3

Net business profit before credit costs

20

150.5

249.1

(98.6)

Net non-recurring profit

21

(33.2)

(30.3)

(2.9)

Total credit costs

22

(24.9)

(14.1)

(10.7)

Net gains on stocks

23

31.3

18.7

12.5

Others

24

(39.5)

(34.8)

(4.6)

Ordinary profit

25

117.3

218.8

(101.5)

Extraordinary profit/ losses

26

(5.9)

(3.6)

(2.3)

Income before income taxes

27

111.3

215.1

(103.8)

Total income taxes

28

(33.6)

(72.0)

38.3

Net income

29

77.6

143.1

(65.4)

Overhead ratio (-19 / 11)

30

60.73%

48.66%

12.07%

(For reference) Overview of the business operation

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

[Non-consolidated]

(Billions of Yen)

Mar. 2017 (FY2016)

Mar. 2016 (FY2015)

Change

1

28,206.1

27,100.2

1,105.8

(Average balance)

2

27,339.9

25,748.1

1,591.8

3

32,911.7

33,422.4

(510.6)

(Average balance)

4

30,022.3

27,145.9

2,876.3

(*) Deposits: Excluding NCD

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

[Non-consolidated]

(%)

FY2016

FY2015 (B)

Change

(A) - (B)

Full (A)

2H

1H

Loan deposit margin

5

0.57

0.57

0.59

0.64

(0.07)

Loans and bills discounted

6

0.73

0.72

0.75

0.84

(0.11)

Deposits and trust principal

7

0.16

0.15

0.16

0.20

(0.04)

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

[Non-consolidated]

(Billions of Yen)

Mar. 2017

Mar. 2016

Change

Loans to individuals

8

8,926.9

7,932.1

994.7

Residential mortgage loans

9

8,378.6

7,422.1

956.4

Loans to corporations

10

19,279.2

19,168.1

111.1

Overseas Japanese borrowers

11

2,651.1

3,035.7

(384.6)

Non-Japanese borrowers

12

3,305.1

3,461.4

(156.2)

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

[Non-consolidated]

(Billions of Yen)

FY2016

FY2015

Change

Total

13

1,368.6

1,783.4

(414.8)

Investment trust

14

999.1

1,078.7

(79.5)

Fund wrap, SMA

15

116.0

300.8

(184.8)

Insurance

16

253.5

403.8

(150.3)

(Billions of Yen)

Mar. 2017

Mar. 2016

Change

Total

17

5,988.2

5,803.8

184.4

Investment trust

18

2,796.6

2,649.7

146.9

Fund wrap, SMA

19

765.5

848.3

(82.8)

Insurance

20

2,426.0

2,305.7

120.2

(2) Fees and commissions

[Non-consolidated]

(Billions of Yen)

FY2016

FY2015

Change

Total

21

58.8

67.6

(8.8)

Sales fees of investment trust/ insurance

22

28.9

37.0

(8.1)

Administration fees

23

29.9

30.6

(0.7)