Sumitomo Mitsui Trust : Explanatory material for 1QFY2017

Explanatory Material‌‌‌‌‌‌‌‌‌

1st Quarter of Fiscal Year 2017 ended on June 30, 2017

1. Financial results --------- Summary 1-3

2. Financial conditions --------- Summary 3-4

   Financial figures

   1. Status of profit and loss	---------	1-2
   2. Breakdown of profit by business group	---------	3

3. Gross business profit

4. Net business profit before credit costs

5. 3. Yields and margins	---------	4
   4. Unrealized gains/ losses on investment securities	---------	4-5

6. Securities with fair value

7. Securities with no available fair value

5. Deferred unrealized gains/ losses of derivative transactions qualified for hedge accounting	---------	6
6. Loans and Deposits (Banking a/c and principal guaranteed trust a/c combined)	---------	6

1. Balance of loans and deposits

2. Loans by industry

1. Problem assets based on the Financial Reconstruction Act 7

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

2. Problem assets based on the Financial Reconstruction Act (After partial direct written-off)

3. Coverage ratio and allowance ratio of Problem assets based on the Financial Reconstruction Act

4. Other referential financial figures of SuMi TRUST Bank

5. Balance Sheets

6. Statements of Income

7. Statement of trust account

8. Breakdown of principal guaranteed trust a/c

--------- 8-10

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 1QFY2017 financial results

1. Financial Results

1. Net business profit before credit costs increased by 10.6 billion yen from 1QFY2016 to 60.4 billion yen due primarily to improvement of market related profit in SuMi TRUST Bank.
2. Ordinary profit and net income attributable to owners of the parent increased by 12.5 billion yen from 1QFY2016 to 61.4 billion yen and 7.8 billion yen to 40.1 billion yen respectively, with restrained total credit costs .
1QFY2017 1QFY2016 Change

Forecast for FY2017

1HFY2017

[Consolidated] (Billions of Yen)

Net business profit before credit costs (*1)	1	60.4	49.8	10.6	125.0	260.0
Ordinary profit	2	61.4	48.8	12.5	110.0	235.0
Net income attributable to owners of the parent	3	40.1	32.2	7.8	70.0	150.0
Total credit costs	4	2.1	1.6	0.4	(10.0)	(20.0)
Net gains/ losses on stocks	5	4.5	7.8	(3.2)
(Difference from non-consolidated financial results) (*2)
Net business profit before credit costs	6	20.1	18.5	1.5
Net income attributable to owners of the parent (*3)	7	6.3	7.8	(1.4)
Total credit costs	8	(0.0)	(0.7)	0.7
Net gains/ losses on stocks	9	(0.9)	(1.2)	0.3

(*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)".

(*3) Differences between "Net income attributable to owners of the parent" in "" and "Net income" in "".
1. Net business profit before credit costs increased by 9.0 billion yen to 40.3 billion yen from 1QFY2016 due primarily to improvement of market related profit, while net interest income and related profit and fees and commissions and related profit remained the same level as 1QFY2016.
2. Ordinary profit and net income increased by 12.4 billion yen from 1QFY2016 to 45.3 billion yen and 9.3 billion yen to 33.7 billion yen respectively, with restrained total credit costs .

[Non-consolidated] (Billions of Yen)

1QFY2017

1QFY2016

1HFY2017
Gross business profit		10	98.8	87.5	11.3
Net interest income and related profit		11	42.0	40.1	1.9
Net fees and commissions and related profit		12	41.4	42.9	(1.4)
Net trading profit		13	0.2	(0.0)	0.2
Net other operating profit		14	15.0	4.5	10.5
Net gains on bonds		15	6.3	9.8	(3.4)
Net gains from derivatives other than for trading or hedging		16	2.4	(14.0)	16.4
General and administrative expenses	17	(58.5)	(56.2)	(2.2)
Net business profit before credit costs	18	40.3	31.2	9.0	85.0	180.0
Net non-recurring profit	19	4.9	1.5	3.3
Total credit costs	20	2.1	2.3	(0.2)	(10.0)	(20.0)
Net gains/ losses on stocks	21	5.4	9.0	(3.6)
Others	22	(2.6)	(9.8)	7.2
Ordinary profit	23	45.3	32.8	12.4	80.0	170.0
Extraordinary profit	24	(0.0)	(0.4)	0.3
Income before income taxes	25	45.2	32.3	12.8
Total income taxes	26	(11.4)	(7.9)	(3.5)
Net income	27	33.7	24.4	9.3	60.0	125.0

Change Forecast for FY2017

(For reference) Overview of the business operation
(1) Ending balance of major accounts (Banking a/c and principal guaranteed trust a/c combined)
[Non-consolidated]	(Billions of Yen)
June 2017	Mar. 2017		Change from Mar. 2017
Loans and bills discounted	1	28,408.0	28,206.1	201.8
Deposits, Trust principal (*)	2	31,043.4	32,911.7	(1,868.3)
(*) Deposits: Excluding NCDs.
(2) Yields and margins (Domestic banking a/c)
[Non-consolidated]	(%)
1QFY2017 (A) 2HFY2016 (B)		1HFY2016	Change (A) - (B)
Loan deposit margin	3	0.55	0.57	0.59	(0.02)
Loans and bills discounted	4	0.70	0.72	0.75	(0.02)
Deposits and trust principal	5	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)
June 2017	Mar. 2017		Change from Mar. 2017
Loans to individuals	6	9,045.0	8,926.9	118.1
Residential mortgage loans	7	8,495.9	8,378.6	117.3
Loans to corporations	8	19,362.9	19,279.2	83.7
(1) Sales volume and sales balance of investment trust/ insurance
[Non-consolidated]
	(Billions of Yen)
1QFY2017	1QFY2016		Change from 1QFY2016
Total sales volume	9	348.4	336.8	11.5
Investment trust	10	269.2	229.1	40.1
Fund wrap, SMA	11	44.5	30.0	14.4
Insurance	12	34.6	77.6	(43.0)
	(Billions of Yen)
June 2017	Mar. 2017		Change from Mar. 2017
Total sales balance	13	6,061.4	5,988.2	73.2
Investment trust	14	2,842.8	2,796.6	46.1
Fund wrap, SMA	15	773.8	765.5	8.3
Insurance	16	2,444.8	2,426.0	18.7
(2) Fees and commissions
[Non-consolidated]	(Billions of Yen)
1QFY2017	1QFY2016		Change from 1QFY2016
Total fees and commissions	17	12.1	14.0	(1.9)
Sales fees of investment trust/ insurance	18	5.0	6.7	(1.6)
Administration Fees	19	7.0	7.3	(0.2)