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Sumitomo Mitsui Financial Group Inc - Stock Quote 8316

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Morningstar's Sumitomo Mitsui Financial Group Inc Stock Analysis

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Sumitomo Mitsui Financial Group Remains Our Top Pick Among Japan's Three Mega-Banks

Michael Makdad Senior Equity Analyst

Business Strategy and Outlook

| Michael Makdad |

Sumitomo Mitsui Financial Group, with a 7.0% share of domestic loans and 8.7% of deposits as of March 2021, is one of Japan’s big three banking groups. The environment for banks has been tough in Japan for years and we expect it to remain so. The long-running deflationary environment has led to persistently low demand for loans, with the loan/deposit ratio having declined from 74% in 2000 to around 55% at present. The liabilities/net assets ratio for Japan’s approximately 1 million business corporations declined from a highly leveraged 4 times in the mid-1990s to a reasonably healthy 126% in 2019 as borrowers prioritized paying down existing debt rather than taking out new loans for investment, but we are concerned that credit costs may increase in the early 2020s after many corporations increased their borrowing in 2020 and as the aftermath of the pandemic affects some firms' business models.

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Sumitomo Mitsui Financial Group Inc's Company Profile

Business Description

Sumitomo Mitsui Financial Group is roughly tied with Mizuho Financial Group for the status of Japan's second- largest bank after Mitsubishi UFJ Financial Group. As of March 2021, its market share of domestic loans was 7.0%, compared with 8.5% for MUFG. It has a larger consumer finance business than the other two megabanks, owning 100% of the Promise business and SMBC Card. It also controls one of Japan's largest leasing companies and SMBC Aviation Capital, one of the top five aircraft lessors globally. In securities, its SMBC Nikko unit is Japan's third- largest retail broker, although SMFG has lagged somewhat in institutional securities business and asset management, areas that it is working on strengthening.

1-2, Marunouchi 1-chome, Chiyoda-ku
Tokyo, 100-0005, Japan
T +81 332828111
Industry Banks - Diversified
Most Recent Earnings Mar 31, 2022
Fiscal Year End Mar 31, 2023
Stock Type
Employees 98,100