Sumitomo Mitsui Banking Corporation

Sumitomo Mitsui Banking Corporation (incorporated under the laws of Japan with limited liability) U.S.$1,350,000,000 Fixed to Floating Rate Perpetual Subordinated Bonds 4700,000,000 Fixed to Floating Rate Perpetual Subordinated Bonds

The Initial Purchasers are offering U.S.$1,350,000,000 aggregate principal amount of Fixed to Floating Rate Perpetual Subordinated Bonds (the ‘‘Dollar Bonds’’) and 4700,000,000 aggregate principal amount of Fixed to Floating Rate Perpetual Subordinated Bonds (the ‘‘Euro Bonds’’, and together with the Dollar Bonds, the ‘‘Bonds’’) of Sumitomo Mitsui Banking Corporation (‘‘SMBC’’ or the ‘‘Bank’’) outside the United States only to non-U.S. Persons in reliance on Regulation S (‘‘Regulation S’’) under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’). In addition, the Initial Purchasers, through their respective selling agents, are offering the Bonds inside the United States to qualified institutional buyers (‘‘QIBs’’ or ‘‘qualified institutional buyers’’) in reliance on Rule 144A (‘‘Rule 144A’’) under the Securities Act. Approval in principle has been received for listing of the Bonds on the Singapore Exchange Securities Trading Limited (the ‘‘SGX-ST’’). The listing of the Bonds on the SGX-ST is not to be taken as an indication of the merits of the Bonds or SMBC. The SGX-ST takes no responsibility for the correctness of any of the statements made or opinions or reports contained in this Offering Circular. Interest on the Dollar Bonds will accrue from their date of initial issuance and be payable semi-annually in arrears on April 15 and October 15 in each year, commencing on October 15, 2005, until October 15, 2015, and thereafter quarterly in arrears on January 15, April 15, July 15 and October 15 in each year. Interest will accrue on principal amount of the Dollar Bonds at a rate per annum of 5.625% from and including the date of the initial issuance thereof to but excluding October 15, 2015, and thereafter at a rate per annum equal to London inter-bank offered rate for three-month deposits in U.S. dollars plus 2.55%. Interest on the Euro Bonds will accrue from their date of initial issuance and be payable annually in arrears on October 15 in each year, commencing on October 15, 2005, until October 15, 2015, and thereafter semi-annually in arrears on April 15 and October 15 in each year. Interest will accrue on principal amount of the Euro Bonds at a rate per annum of 4.375% from and including the date of the initial issuance thereof to but excluding October 15, 2015, and thereafter at a rate per annum equal to the Euro-zone inter-bank offered rate for six-month deposits in Euros plus 2.60%. Payment of interest on the Bonds may be deferred at the option of SMBC under the circumstances described under ‘‘Description of the Bonds — Interest — Conditional Payment of Interest’’. The Bonds are undated and accordingly have no final maturity date and will only be redeemable or repayable in the circumstances described herein. The Bonds of each series are subject to redemption in whole, at their principal amount, together with accrued interest, at the option of SMBC on or after October 15, 2015 or in the event of certain changes affecting taxes of Japan, in each case after having obtained the prior consent of the Japanese Financial Services Agency (the ‘‘FSA’’). See ‘‘Description of the Bonds — Optional Redemption and Purchase’’. The Bonds will be issued only in registered book-entry form. The Dollar Bonds will be issued in denominations of $100,000 and integral multiples of $1,000 in excess thereof and the Euro Bonds will be issued in denominations of 450,000 and integral multiples of 41,000 in excess thereof. The Dollar Bonds will be represented by global certificates deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company (‘‘DTC’’). Except as described herein, beneficial interests in these global certificates will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants. The Euro Bonds will be represented by global certificates registered in the name of a common depositary of Euroclear Bank, S.A./N.V., as operator of Euroclear System (‘‘Euroclear’’), and Clearstream Banking, société anonyme (‘‘Clearstream’’). Except as described herein, beneficial interests in these global certificates will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream and their direct and indirect participants. See ‘‘Risk Factors’’ beginning on page 6 to read about certain factors you should consider before buying the Bonds.

Offering Price: 99.473% and accrued interest, if any, for the Dollar Bonds Offering Price: 99.002% and accrued interest, if any, for the Euro Bonds Interest on the Bonds will accrue from July 22, 2005.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND ARE BEING OFFERED AND SOLD (I) OUTSIDE THE UNITED STATES ONLY TO NON-U.S. PERSONS IN RELIANCE ON REGULATION S UNDER THE SECURITIES ACT AND (II) IN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT. PROSPECTIVE PURCHAS- ERS ARE HEREBY NOTIFIED THAT THE SELLER OF THE BONDS MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. THE BONDS ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER ‘‘NOTICE TO INVESTORS’’.

The Initial Purchasers expect to deliver the Dollar Bonds through the facilities of DTC and the Euro Bonds through the facilities of Euroclear and Clearstream, in each case on or about July 22, 2005. Joint Lead Managers and Joint Bookrunners Goldman Sachs International Morgan Stanley UBS Investment Bank Daiwa Securities SMBC Europe Deutsche Bank JPMorgan Merrill Lynch International

Offering Circular dated July 15, 2005. This Offering Circular is confidential and is being furnished by SMBC in connection with an offering exempt from registration under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the Bonds described herein. The information contained in this Offering Circular has been provided by SMBC and other sources identified herein. No representation or warranty, expressed or implied, is made by the Initial Purchasers, the Trustee or any paying agent as to the accuracy or completeness of such information, and nothing contained in this Offering Circular is, or shall be relied upon as, a promise or representation by the Initial Purchasers, the Trustee or any paying agent. Any reproduction or distribution of this Offering Circular, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than considering an investment in the Bonds is prohibited. Each offeree of Bonds, by accepting delivery of this Offering Circular, agrees to the foregoing. No person has been authorized to give any information or to make any representations other than those contained in this Offering Circular, and, if given or made, such information or representations must not be relied upon as having been authorized. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities to which it relates or an offer to sell or the solicitation of an offer to buy such securities by any person in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Offering Circular nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of SMBC or any of SMBC’s subsidiaries or affiliates since the date hereof or that the information contained herein is correct as of any time subsequent to its date. THE BONDS OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHOR- ITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT REVIEWED THIS DOCU- MENT OR CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE BONDS OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY THE FSA. FURTHERMORE, THE FSA HAS NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. The distribution of this Offering Circular and the offering and sale of Bonds in certain jurisdictions may be restricted by law. SMBC and the Initial Purchasers require persons into whose possession this Offering Circular comes to inform themselves about and to observe any such restrictions. For a further description of certain restrictions on the offering, sale and resale of the Bonds, see ‘‘Notice to Investors’’. This Offering Circular does not constitute an offer of, or an invitation to purchase, any of the Bonds in any jurisdiction in which such offer or invitation would be unlawful. NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLI- CATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEP- TION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OR THIS PARAGRAPH.

ii Notice to Australian Investors Only SMBC is not a bank authorized under the Banking Act 1959 (Cth) of Australia.

ADDITIONAL INFORMATION If at any time SMBC is neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, it will furnish, upon written request, to any holder of the Bonds, or any prospective purchaser designated by such holder, the information required to be delivered pursuant to Rule 144A(d)(4). At any time SMBC is entitled to the exemption under Rule 12g3-2(b) under the Exchange Act, it will not be required to deliver information that would otherwise be required to be delivered under Rule 144A(d)(4). This Offering Circular contains summaries believed to be accurate with respect to certain terms of certain documents and such summaries are qualified in their entirety by reference to such documents. The content of this Offering Circular is not to be construed as legal, business or tax advice. Each prospective investor should consult his own attorney, business advisor and tax advisor as to legal, business and tax advice. In making an investment decision, investors must rely on their own examination of SMBC and the terms of this offering, including the merits and risks involved. Investors should be aware that they may be required to bear the financial risks of the investment for an indefinite period of time. During the course of this offering and prior to sale, each offeree of the Bonds is invited to ask questions of SMBC concerning the terms and conditions of this offering. The Bonds have not been and will not be registered under the Securities and Exchange law of Japan (Law No. 25 of 1948, as amended) (the ‘‘Securities and Exchange Law’’) and are subject to the Special Taxation Measures Law of Japan (Law No. 26 of 1957, as amended) (the ‘‘Special Taxation Measures Law’’). The Bonds may not be offered, sold or delivered in Japan or to, or for the benefit of, residents of Japan or Japanese corporations, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan. See ‘‘Offer and Resale’’. Interest payments on the Bonds generally will be subject to Japanese withholding tax unless the holder establishes that the Bonds are held by or for the account of a holder that is not an individual resident of Japan or a Japanese corporation for Japanese tax purposes or is a Japanese designated financial institution described in Article 6 of the Special Taxation Measures Law. See ‘‘Taxation — Japanese Taxation’’. No action has been or will be taken to permit a public offer of the Bonds in any jurisdiction. This Offering Circular may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in that jurisdiction. Unless otherwise specified or the context requires, references to ‘‘days’’ are to calendar days, references to ‘‘years’’ are to calendar years and to ‘‘fiscal years’’ are to fiscal years of SMBC ending on March 31, references to ‘‘$’’, ‘‘dollars’’ and ‘‘U.S. dollars’’ are to United States dollars, references to ‘‘Euros’’ and ‘‘4’’ are to the currency of those member states of the European Union which are participating in European Economic and Monetary Union pursuant to the Treaty on European Union, and references to ‘‘yen’’ and ‘‘¥’’ are to Japanese yen. ‘‘SMBC’’ and ‘‘Bank’’ refer to Sumitomo Mitsui Banking Corporation. References to the ‘‘SMBC Group’’ are to SMBC and its subsidiaries and controlled affiliates taken as a whole, and references to the ‘‘SMFG Group’’ are to Sumitomo Mitsui Financial Group, Inc. (‘‘SMFG’’) and its subsidiaries and controlled affiliates taken as a whole. IN CONNECTION WITH THE OFFERING, GOLDMAN SACHS INTERNATIONAL AND/OR ANY OF ITS RELATED CORPORATIONS MAY PURCHASE AND SELL BONDS IN THE OPEN MARKET. THESE TRANSACTIONS MAY INCLUDE SHORT SALES, STABILIZING TRANSAC- TIONS AND PURCHASES TO COVER POSITIONS CREATED BY SHORT SALES. SHORT SALES INVOLVE THE SALE BY GOLDMAN SACHS INTERNATIONAL AND/OR ANY OF ITS RELATED CORPORATIONS OF A GREATER NUMBER OF BONDS THAN THE INITIAL PURCHASERS ARE REQUIRED TO PURCHASE IN THE OFFERING. STABILIZING TRANSACTIONS CONSIST OF CERTAIN BIDS OR PURCHASES MADE FOR THE PURPOSE OF PREVENTING OR RETARDING

iii A DECLINE IN MARKET PRICES FOR THE BONDS WHILE THE OFFERING IS IN PROGRESS. GOLDMAN SACHS INTERNATIONAL AND/OR ANY OF ITS RELATED CORPORATIONS ALSO MAY IMPOSE A PENALTY BID. THIS OCCURS WHEN A PARTICULAR INITIAL PURCHASER REPAYS TO GOLDMAN SACHS INTERNATIONAL AND/OR ANY OF ITS RELATED CORPORA- TIONS A PORTION OF THE UNDERWRITING COMMISSION RECEIVED BY SUCH INITIAL PURCHASER BECAUSE THE REPRESENTATIVES HAVE REPURCHASED BONDS SOLD BY OR FOR THE ACCOUNT OF SUCH INITIAL PURCHASER IN STABILIZING OR SHORT COVERING TRANSACTIONS. THESE ACTIVITIES BY GOLDMAN SACHS INTERNATIONAL AND/OR ANY OF ITS RELATED CORPORATIONS MAY STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICES OF THE BONDS. AS A RESULT, THE PRICES OF THE BONDS MAY BE HIGHER THAN THE PRICES THAT OTHERWISE MIGHT EXIST IN THE OPEN MARKET. IF THESE ACTIVITIES ARE COMMENCED, THEY MAY BE DISCONTINUED BY GOLDMAN SACHS INTERNATIONAL AND/OR ANY OF ITS RELATED CORPORATIONS AT ANY TIME AND MUST BE BROUGHT TO AN END AFTER A LIMITED PERIOD. SUCH STABILIZING SHALL BE IN COMPLIANCE WITH ALL APPLICABLE LAWS, REGULATIONS AND RULES.

iv NOTICE TO INVESTORS Because of the following restrictions, you are advised to consult legal counsel prior to making any reoffer, resale, pledge or other transfer of any Bond. As a purchaser of Bonds (including the beneficial owners of Bonds as they exist from time to time, in each case as of the time of purchase), by accepting delivery of this Offering Circular or acquiring an interest in the Bonds, you will be deemed to have represented and agreed as follows (terms used in this paragraph that are defined in Rule 144A and Regulation S are used herein as defined therein): (1) You (A) (i) are a QIB, (ii) are aware that the sale of Bonds to you is being made in reliance on Rule 144A and (iii) are acquiring such Bonds for your own account or the account of a QIB, as the case may be, or (B) (i) are not a U.S. Person, (ii) are located outside the United States, (iii) are not acquiring Bonds for the account or benefit of a U.S. Person, and (iv) otherwise are purchasing pursuant to Regulation S. (2) You understand that the Bonds have not been registered under the Securities Act and may not be reoffered, resold, pledged or otherwise transferred except (A) (i) to a person who you reasonably believe is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S or (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) and (B) in accordance with all applicable securities laws of the states of the United States and of any other jurisdictions. (3) On each day that you hold Bonds, either (A) you are not yourself, and are not acquiring any Bonds with ‘‘plan assets’’ of, any employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as amended (each, a ‘‘Plan’’) or an entity whose underlying assets include ‘‘plan assets’’ by reason of any Plan’s investment in the entity, or any investor subject to similar prohibited transaction rules under other laws or regulations (‘‘Similar Laws’’) or (B) the purchase and holding of any Bonds by you is exempt under U.S. Department of Labor Prohibited Transaction Class Exemption (‘‘PTCE’’) 96-23 (for certain transactions determined by in-house asset managers), 95-60 (for certain transactions involving insurance company general accounts), 91-38 (for certain transactions involving bank collective investment funds), 90-1 (for certain transactions involving insurance company separate accounts), or 84-14 (for certain transactions determined by independent qualified professional asset managers) or any Similar Law. (4) Each Bond shall include the following legend: ‘‘INTEREST PAYMENTS ON THIS BOND WILL BE SUBJECT TO JAPANESE WITHHOLD- ING TAX UNLESS THE HOLDER ESTABLISHES THAT THIS BOND IS HELD BY OR FOR THE ACCOUNT OF A HOLDER THAT IS NOT AN INDIVIDUAL RESIDENT OF JAPAN OR A JAPANESE CORPORATION FOR JAPANESE TAX PURPOSES OR IS A DESIGNATED JAPA- NESE FINANCIAL INSTITUTION DESCRIBED IN ARTICLE 6 OF THE SPECIAL TAXATION MEASURES LAW OF JAPAN. INTEREST PAYMENTS ON THIS BOND TO AN INDIVIDUAL RESIDENT OF JAPAN OR A JAPANESE CORPORATION NOT DESCRIBED IN THE PRECEDING PARAGRAPH WILL BE SUBJECT TO DEDUCTION OF JAPANESE INCOME TAX AT A RATE OF 15% OF THE AMOUNT SPECIFIED IN SUBPARAGRAPH (A) or (B) BELOW, AS APPLICABLE: (A) IF INTEREST IS PAID TO AN INDIVIDUAL RESIDENT OF JAPAN OR TO A JAPANESE CORPORATION (EXCEPT AS PROVIDED IN SUBPARAGRAPH (B) BELOW), THE AMOUNT OF SUCH INTEREST; AND (B) IF INTEREST IS PAID TO A PUBLIC CORPORATION, A FINANCIAL INSTITU- TION OR A SECURITIES COMPANY THROUGH A JAPANESE PAYMENT HANDLING AGENT AS PROVIDED IN ARTICLE 3-3, PARAGRAPH 6 OF THE SPECIAL TAXATION MEASURES LAW OF JAPAN, THE AMOUNT OF SUCH INTEREST MINUS THE AMOUNT PROVIDED IN THE CABINET ORDER RELATING TO SAID PARAGRAPH 6.’’

v (5) Global certiﬁcates representing the Bonds sold in reliance on Rule 144A (the ‘‘Rule 144A Bonds’’) will bear a legend to the following effect unless SMBC determines otherwise in compliance with applicable law:

‘‘THESE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’). THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF SUMITOMO MITSUI BANKING CORPORATION AND THE INITIAL PURCHASERS THAT THESE SECURITIES MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANS- FERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT (‘‘RULE 144A’’) TO AN INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A (A ‘‘QUALIFIED INSTITUTIONAL BUYER’’), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUN- DER (IF AVAILABLE).

(6) The global certiﬁcates representing the Bonds sold in reliance on Regulation S (the ‘‘Regulation S Bonds’’) will bear a legend to the following effect unless SMBC determines otherwise in compliance with applicable law:

‘‘THESE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE REOFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT’’.

If any purchaser is acquiring any Bonds for the account of one or more QIBs, such purchaser represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing representations and agreements on behalf of each such account. Prospective purchasers are hereby notiﬁed that sellers of the Bonds may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

SMBC and the Initial Purchasers and their respective afﬁliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.

It is anticipated that the Bonds will trade only in book-entry form, except in the circumstances described under ‘‘Description of the Bonds — Form, Book-Entry and Transfer — Global Bonds — Exchanges of Global Bonds for Deﬁnitive Bonds’’.

vi FORWARD LOOKING STATEMENTS This Offering Circular contains statements that constitute forward looking statements. These statements appear in a number of places in this Offering Circular and include statements regarding the intent, belief or current expectations of SMBC or its officers with respect to the future results of operations and financial condition of SMBC, the SMBC Group, SMFG and the SMFG Group, including without limitation future loan loss provisions and financial support to certain borrowers. In addition, in those and other portions of this document, the words ‘‘anticipate’’, ‘‘believe’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘probability’’, ‘‘risk’’, ‘‘project’’, ‘‘should’’, ‘‘seek’’, ‘‘target’’ and similar expressions, as they relate to SMBC or its management, are intended to identify forward looking statements. You can also identify forward looking statements by discussions of strategy, plans or intentions. Such statements reflect the current views of SMBC with respect to future events and are subject to certain risks, uncertainties and assumptions, including the risk factors described in this Offering Circular. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. 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. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward looking statements, which speak only as of the date of this Offering Circular. We disclaim any obligation to update, or to announce publicly any revision to, any of the forward looking statements contained in this Offering Circular to reflect any actual events or developments. The information contained in this Offering Circular, including without limitation the information under ‘‘Risk Factors’’, identifies important factors that could cause such differences, including but not limited to a change in overall economic conditions, changes in market rates of interest, further declines in the value of equity securities or real estate in Japan, further deterioration of the quality of loans to certain industry sectors in Japan and the effect of new legislation or government directives.

ENFORCEMENT OF CIVIL LIABILITIES SMBC is a joint stock company with limited liability (kabushiki kaisha) incorporated under the laws of Japan. Most or all of SMBC’s directors and executive ofﬁcers are non-residents of the United States and all or a substantial portion of the assets of such non-resident persons and of SMBC are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon SMBC or such persons or to enforce against any of them in United States courts judgments obtained in such courts predicated upon the civil liability provisions of the United States federal securities laws. SMBC has been advised by Nagashima Ohno & Tsunematsu, its Japanese counsel, that there is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated solely upon the federal securities laws of the United States. SMBC has expressly submitted to the jurisdiction of New York State and United States federal courts sitting in The City of New York for the purpose of any suit, action or proceeding arising out of the offering of the Bonds and has appointed its New York Branch, at Sumitomo Mitsui Banking Corporation, New York Branch, 277 Park Avenue, New York, New York 10172, Attention: General Manager, Planning Department, The Americas Division as its agent in The City of New York to accept service of process in any such action.

vii PRESENTATION OF FINANCIAL INFORMATION In this Offering Circular, certain yen amounts have been translated for convenience into dollars at the rate of ¥107.32 = $1.00 as at March 31, 2005. However, such translations should not be construed as representations that the yen amounts have been, could have been or could be converted into dollars at that or any other rate. The median exchange rate quotation by SMBC for buying and selling spot dollars by telegraphic transfer against yen on July 14, 2005 was ¥112.16 = $1.00. In this document, where information is presented in millions of yen or thousands or millions of dollars, amounts of less than one thousand or one million, as the case may be, have been truncated and where information is presented in billions or trillions of yen or billions of dollars, amounts of less than one billion or one trillion, as the case may be, have been rounded. Accordingly, the total of each column of figures may not be equal to the total of the individual items. All percentages have been rounded to the nearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be. SMBC’s financial statements are prepared in accordance with generally accepted accounting principles in Japan (‘‘Japanese GAAP’’), which differs in certain respects from generally accepted accounting principles in certain other countries. The material differences between Japanese GAAP and generally accepted accounting principles in the United States (‘‘U.S. GAAP’’) relevant to SMBC are described under ‘‘Summary of Selected Differences between Japanese GAAP and U.S. GAAP’’. Unless otherwise stated, all financial information relating to SMBC in this Offering Circular is presented on a consolidated basis.

viii SUMMARY The following summary is qualiﬁed in its entirety by, and is subject to, the detailed information and ﬁnancial statements contained elsewhere in this Offering Circular. The offering of the Bonds is referred to herein as the ‘‘Offering’’. For a discussion of certain matters that should be considered by prospective investors in the Bonds, see ‘‘Risk Factors’’ beginning on page 6.

Sumitomo Mitsui Banking Corporation SMBC is one of the world’s leading commercial banks, with ¥97.5 trillion in consolidated total assets as of March 31, 2005. SMBC provides an extensive range of wholesale and retail banking services in Japan and overseas to its customers. In Japan, SMBC accepts deposits, makes loans and extends guarantees to corporations, individuals, governments and governmental entities. It also offers financing solutions such as through syndicated lending, structured finance and project finance. SMBC also underwrites and deals in bonds issued by or under the guarantee of the Japanese government and local government authorities, and acts in various administrative and advisory capacities for certain types of corporate and government bonds. Internationally, SMBC operates through a network of branches, representative offices, subsidiaries and affiliates to provide syndicated lending, project finance and portfolio management services while participating in international securities markets. SMBC is a wholly-owned subsidiary of SMFG. SMFG was formed as the holding company for the SMFG Group through a statutory share transfer (kabushiki iten) under the Japanese Commercial Code (Law No. 48 of 1899, as amended) (the ‘‘Commercial Code’’) on December 2, 2002 as a joint stock corporation with limited liability under the laws of Japan. See ‘‘Formation of the SMBC Group and the SMFG Group’’.

1 The Offering Issuer ******************* Sumitomo Mitsui Banking Corporation (‘‘SMBC’’ or the ‘‘Bank’’). Securities Offered ********* U.S.$1,350,000,000 aggregate principal amount of Fixed to Floating Rate Perpetual Subordinated Bonds (the ‘‘Dollar Bonds’’) and 4700,000,000 aggregate principal amount of Fixed to Floating Rate Perpetual Subordinated Bonds (the ‘‘Euro Bonds’’, and together with the Dollar Bonds, the ‘‘Bonds’’) of SMBC. Ranking ***************** The Bonds constitute direct, unsecured obligations of SMBC and shall at all times rank pari passu without any preference among themselves and at least equally and ratably with all indebtedness of SMBC which is subordinated to the Senior Indebtedness. Upon the occurrence of a Subordination Event and (a) in the case of a Subordination Event other than civil rehabilitation proceedings, so long as such Subordination Event is continuing, or (b) in the case of civil rehabilitation proceedings, so long as (i) neither a Summary Rehabilitation Order nor Consent Rehabilitation Order shall have been issued, (ii) the civil rehabilitation proceedings shall not have been conclusively cancelled or abolished by the court and (iii) the civil rehabilitation plan shall not have been conclusively disapproved or cancelled by the court, no payment in respect of principal of, or interest (including Additional Amounts, if any) on, the Bonds or indemnification of judgment currency described under ‘‘Description of the Bonds — Indemnification of Judgment Currency’’ (except for amounts which shall have become due and payable prior to the date on which the Subordina- tion Event shall have occurred) shall be made by SMBC unless and until a Condition for Liquidation Payment shall have occurred, in which case the payments in respect of the principal of or interest (including Additional Amounts, if any) on the Bonds and indemnification of judgment currency shall not exceed the amount of the liquidation distributions which would have been paid from the assets of SMBC in respect of the amount of the principal of and interest on the Bonds (except for amounts which shall have become due and payable prior to the occurrence of such Condition for Liquidation Payment) had the Bonds and all Liquidation Parity Securities been preference shares of SMBC ranking most senior in priority of payment as to liquidation distributions. As of March 31, 2005, on a non-consolidated basis, SMBC had deposits and other liabilities, including dated subordinated indebtedness (including those in respect of bonds, notes and debentures), that, upon the occurrence of a Subordination Event and the satisfaction of any procedural requirements, would rank senior to the obligations under the Bonds, with an aggregate principal amount equivalent to ¥86,574 billion (including ¥1,975 billion in dated subordinated obligations). The Indenture and the Bonds do not contain any limitations on the amount of Senior Indebtedness that may be hereafter incurred or assumed by SMBC. As of March 31, 2005, on a non-consolidated basis, SMBC had outstanding subordinated indebtedness that, upon the occurrence of a Subordination Event, would rank pari passu to the obligations under the Bonds with an aggregate principal amount equivalent to ¥1,668 billion and other outstanding Liquidation Parity Securities with an aggregate liquidation preference equivalent to ¥1,310 billion. See ‘‘Description of the Bonds — Ranking; Subordination’’. Interest ****************** Dollar Bonds. Interest on the Dollar Bonds will accrue from their date of initial issuance and be payable (i) semi-annually in arrears on April 15 and Octo- ber 15 in each year, commencing on October 15, 2005, until October 15, 2015 (the ‘‘Reset Date’’) and (ii) thereafter quarterly in arrears on January 15,

2 April 15, July 15 and October 15 in each year, or if an interest payment date is not a Business Day, the immediately succeeding Business Day, subject to deferral of interest payment at the option of SMBC as described under ‘‘Description of the Bonds — Interest — Conditional Payment of Interest’’. Interest will accrue on the principal amount of the Dollar Bonds at a rate per annum of 5.625% from and including the date of the initial issuance thereof to but excluding the Reset Date, and thereafter at a rate per annum equal to London inter-bank offered rate for three-month deposits in U.S. dollars plus 2.55%, as more fully described under ‘‘Description of the Bonds — Interest — General — Determination of USD LIBOR’’. Prior to the Reset Date, interest on the Dollar Bonds will be calculated on the basis of a 360-day year consisting of twelve 30-day months and thereafter it will be calculated on the basis of a 360-day year and the actual number of days elapsed. Euro Bonds. Interest on the Euro Bonds will accrue from their date of initial issuance and be payable (i) annually in arrears on October 15 in each year, commencing on October 15, 2005, until the Reset Date, and (ii) thereafter semi-annually in arrears on April 15 and October 15 in each year, or if an interest payment date is not a Business Day, the immediately succeeding Business Day, subject to deferral of interest payment at the option of SMBC as described under ‘‘Description of the Bonds — Interest — Conditional Payment of Interest’’. Interest will accrue on the principal amount of the Euro Bonds at a rate per annum of 4.375% from and including the date of the initial issuance thereof to but excluding the Reset Date, and thereafter at a rate per annum equal to the Euro-zone inter-bank offered rate for six-month deposits in Euros plus 2.60%, as more fully described under ‘‘Description of the Bonds — Interest — General — Determination of EURIBOR’’. Prior to the Reset Date, interest on the Euro Bonds will be calculated on the basis of the actual number of days in the interest period in respect of which payment is being made divided by 365 (or, if any portion of that interest period falls in a leap year, the sum of (i) the actual number of days in that portion of the interest period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the interest period falling in a non-leap year divided by 365) and thereafter it will be calculated on the basis of a 360-day year and the actual number of days elapsed. Conditional Payment of Interest. In the case that any of the following conditions is met on any interest payment date for the Dollar Bonds or the Euro Bonds: ) the amount of the Distributable Profits, based on SMBC’s financial statements approved or reported at the general meeting of the shareholders of SMBC held immediately prior to such interest payment date or approved by or reported to the shareholders of SMBC by or for the purpose of a written consent in lieu of such general meeting, does not exceed zero; ) a Regulatory Event has occurred as of such interest payment date; or ) an Interest Payment Insolvency Event has occurred as of such interest payment date; the interest payment to be made on such interest payment date may, at the option of SMBC, be deferred to the earlier of (a) the first interest payment date for the Dollar Bonds or the Euro Bonds, respectively, on which none of such conditions is met or (b) the date set for any redemption, as more fully described

3 under ‘‘Description of the Bonds — Interest — Conditional Payment of Interest’’.

Optional Redemption and Purchase ***************** The Bonds are undated and accordingly have no final maturity date and will not be redeemable or repayable except that (i) each series of Bonds is subject to redemption in whole, but not in part, on any interest payment date for such series on or after October 15, 2015 at the option of SMBC subject to the prior consent of the FSA, (ii) each series of Bonds is subject to redemption in whole, but not in part, at any time at the option of SMBC subject to the prior consent of the FSA, in the event that SMBC has or will become obligated to pay Additional Amounts as a result of a change in the laws or regulations of Japan or any authority thereof or therein having power to tax, or change in the application or official interpretation of such laws or regulations, which change becomes effective on or after the date of this Offering Circular and such obligation cannot be avoided by SMBC taking reasonable measures available to it and (iii) SMBC, SMFG and any Subsidiary may, at any time but subject to the prior consent of the FSA, purchase any or all of the Bonds in the open market or otherwise at varying prices. Any redemption of the Dollar Bonds or Euro Bonds, as applicable, shall be at their principal amount together with interest accrued thereon to the date fixed for redemption, including any Additional Amounts thereon, provided that if the date fixed for redemption is an interest payment date, the interest payable shall be payable to the holders of such Bonds registered as such at the close of business on the relevant record date. Any Bonds so redeemed or purchased by SMBC, SMFG or any Subsidi- ary shall be surrendered to the Trustee for cancellation. See ‘‘Description of the Bonds — Optional Redemption and Purchase’’.

Limited Rights of Acceleration ************** The Bonds shall become immediately due and payable if a Condition for Liquidation Payment shall occur, in which case the payments in respect of the principal of and interest on the Bonds shall not exceed the amount of the liquidation distributions which would have been paid from the assets of SMBC in respect of the amount of the principal of and interest on the Bonds (except for amounts which shall become due and payable prior to the occurrence of such Condition for Liquidation Payment) had such principal and interest and all Liquidation Parity Securities been preference shares of SMBC ranking most senior in priority of payment as to liquidation distribution. Redemption shall be at the principal amount thereof together with interest accrued to the date of redemption. Non-payment of principal or interest or breach of covenants in the Indenture or the Bonds will not constitute a default under the Indenture or the Bonds or cause any Bond to become due and payable.

Use of Proceeds *********** SMBC intends to use the proceeds from the Offering for general corporate purposes.

Trustee ****************** JPMorgan Chase Bank, N.A.

Calculation Agent for the Bonds ******************* JPMorgan Chase Bank, N.A., acting through its London Ofﬁce

4 Principal Paying Agent, Transfer Agent and Registrar for the Dollar Bonds ******************* JPMorgan Chase Bank, N.A., acting through its New York Ofﬁce Principal Paying Agent, Transfer Agent and Registrar for the Euro Bonds ******************* JPMorgan Chase Bank, N.A., acting through its London Ofﬁce Form and Denomination *** The Bonds will be issued only in fully registered form, without coupons. Dollar Bonds will be initially represented by one or more global Bonds deposited with the custodian for DTC, in New York, New York, and registered in the name of DTC or its nominee. Euro Bonds will be initially represented by one or more global Bonds registered in the name of and deposited with a common depositary of Euroclear and Clearstream on behalf of Euroclear and Clear- stream. Dollar Bonds will be issued in denominations of $100,000 and integral multiples of $1,000 in excess thereof and Euro Bonds will be issued in denominations of 450,000 and integral multiples of 41,000 in excess thereof. The security numbers for the Bonds are: For the Bonds sold under Regulation S:

Dollar Bonds Euro Bonds Cusip No.: ********************** J7771KGY7 J7771KGZ4 ISIN: ************************** USJ7771KGY76 XS0224899418 Common Code: ****************** 022492632 022489941 For the Bonds sold under Rule 144A:

Dollar Bonds Euro Bonds Cusip No.:*********************** 865622AB0 865622AC8 ISIN: *************************** US865622AB01 XS0224900364 Common Code:******************* 022492560 022490036 Listing and Trading ******* Approval in principle has been received for listing of the Bonds on the Singapore Exchange Securities Trading Limited (the ‘‘SGX-ST’’). Resale Restrictions ******** The resale of Bonds by purchasers in the Offering is subject to certain restrictions described under ‘‘Notice to Investors’’ and ‘‘Description of the Bonds — Form, Book-Entry and Transfer’’. Risk Factors************** The purchase of the Bonds is subject to certain risks, including risks associated with SMBC’s ﬁnancial condition, the state of the economy and ﬁnancial system in Japan and the terms of the Bonds, including the circumstances under which SMBC may choose to defer interest payment and the absence of rights to accelerate the Bonds upon SMBC’s failure to pay interest on the Bonds. Prospective investors should carefully consider the information under ‘‘Risk Factors’’ beginning on page 6, in conjunction with the other information contained in this Offering Circular before purchasing any Bonds in the Offering.

5 RISK FACTORS Prior to making an investment decision, prospective investors should carefully consider, along with other matters set forth in this Offering Circular, the following risk factors. These risk factors are not necessarily of equal importance, likelihood of occurrence or duration. Additionally, certain of the risk factors may be related to others, and the occurrence of events described in one risk factor could increase the likelihood of occurrence of events appearing in others. Except as otherwise indicated, the information herein with respect to the Bank is presented on a consolidated basis. See ‘‘Presentation of Financial Information’’.

Risks Related to the Bank The Bank May Not Be Able to Reduce or Maintain Its Problem Asset Ratio and May Continue to Face Losses Relating to Non-Performing Loans As of March 31, 2005, the Bank had ¥448.3 billion in bankrupt and quasi-bankrupt assets, ¥924.4 billion in doubtful assets and ¥451.9 billion in substandard loans on a non-consolidated basis. For a description of the various loan categories, see ‘‘Business — Loan Losses and Non-Performing Loans — Disclosure of Problem Assets Under the Financial Reconstruction Law’’. The FSA’s ‘‘Program for Financial Revival’’ (the ‘‘FSA’s Program’’) announced on October 30, 2002 stated, as one of the goals for major Japanese banks, the reduction by March 31, 2005 of the aggregate ratio of total problem assets to the sum of total problem assets and normal assets (the ‘‘Problem Asset Ratio’’), calculated on a non-consolidated basis, by about half as compared to the ratio as of March 31, 2002. As of March 31, 2002, the Bank’s Problem Asset Ratio, calculated on a non- consolidated basis, was 8.9%. As of March 31, 2005, the Bank reduced its non-consolidated Problem Asset Ratio to 3.3%. However, for the reasons set forth below, there can be no assurance that the Bank will be able to reduce or maintain its Problem Asset Ratio. The Bank has recognized very sizeable losses relating to non-performing loans relative to its operating profits and capital levels in recent years. The Bank recognized credit costs of ¥924 billion and ¥1,167 billion for the fiscal years ended March 31, 2004 and 2005, respectively. Credit costs consist of net additions to general and specific reserves and reserves for specific overseas loan losses, write-off of loans, provision for reserves for losses on loans sold and losses on sales of delinquent loans. While the quality of the Bank’s loan portfolio has improved, there can be no assurance that the Bank’s level of non-performing loans will continue to remain at or below its current level or that credit costs for the current year and future fiscal years will decrease. Factors that might contribute to an increase in the Bank’s level of non- performing loans or continued high credit costs include: ) the protracted economic difficulties in Japan and continuing deflation (despite signs of recovery); and ) possible action by regulators to introduce more stringent rules on borrower classification. The Bank’s non-performing loans are largely comprised of loans made after the ‘‘bubble’’ era to domestic and overseas corporate customers as well as to Japanese individuals. The effects of the prolonged weak economic conditions in Japan, as well as financial difficulties faced by the Bank’s customers, have caused the Bank to recognize substantial credit costs. Recently, Japanese economic conditions have shown signs of a modest recovery, as evidenced by positive growth in gross domestic product, or GDP, general improvement in the Japanese equity markets and a decline in the number of corporate bankruptcies. Nevertheless, the number of corporate bankruptcies remains high, and the Japanese economy continues to be subject to deflationary conditions characterized, among other things, by continued declines in real estate prices in much of Japan and in consumer prices. A decline in the Japanese economy or economic problems elsewhere in the world could result in increases in non-performing loans and an increase in the Bank’s extension of financial support or debt forgiveness to troubled customers. See ‘‘— The Bank May Need To Provide Additional Support to Japanese Financial Institutions, Troubled Customers or Affiliated Companies’’. In addition, the Bank may recognize credit losses in excess of reserves or need to make additional reserves against loans if the value of the collateral securing the Bank’s loans declines or if the Bank changes its policies regarding reserves, independently or in response to new

6 regulatory guidance or requirements. See ‘‘— If the Bank’s Reserves for Possible Loan Losses Prove Insufﬁcient to Cover Loan Losses, the Bank May Have to Increase Its Reserves or Otherwise Incur Credit Losses’’.

Moreover, in recent years, high-profile bankruptcy filings and reports of past accounting irregularities, including fraud, in various companies world-wide have raised corporate credibility issues, particularly with respect to public companies. In response to these developments, regulators, auditors and corporate managers generally have begun to review financial statements more thoroughly and conservatively. As a result, additional accounting irregularities may be uncovered and cause delistings, declines in share prices or credibility, bankruptcy filings or other consequences to borrowers. Such developments could increase the Bank’s credit costs if they directly involve the Bank’s borrowers or indirectly affect the credit of the Bank’s borrowers.

Regulatory changes or action may also increase the level of the Bank’s non-performing loans and increase its credit costs. The FSA’s Program called for a tighter assessment of bank assets by implementing, among other measures, a review of the criteria used to determine the average remaining periods for loans used to calculate provisioning, a harmonized classiﬁcation method for large borrowers among banks, the valuation of debt for equity swaps at fair value and the rigorous examination of reconstruction plans and assessments of collateral. If the Bank or the FSA should apply stricter standards with respect to the assessment of loan assets including non- performing loans, or broaden the scope of the borrowers to which the methodology applies, the Bank may need to recognize further credit losses. See ‘‘Supervision and Regulation — Japan — The Financial Services Agency’’.

On November 12, 2004, the FSA announced that it had completed its special on-site inspection of the Bank together with 10 other major Japanese banks for the six month period ended September 30, 2004. The inspections involved a review of the classification of 135 large borrowers whose stock prices, external ratings and other indicators had been experiencing significant changes, and consideration of whether each such borrower was classified in the category appropriate to its most recent business condition. As a result of these special inspections, 39 borrowers were downgraded from the classifications given them by the banks as of March 31, 2004, and, of these, 31 borrowers were reclassified as ‘‘potentially bankrupt borrowers’’ or worse. Major Japanese banks, including the Bank, calculated the amount of write-offs and provisions for loan losses for the fiscal year ended March 31, 2005 in a manner consistent with the recommendations arising out of the special inspection. In addition, the FSA announced in April 2004 that it would introduce new inspections focusing on banks’ credit risk management with respect to large borrowers. See ‘‘Supervision and Regulation — Japan — The Financial Services Agency — Examination of Banks’’. If the FSA were to expand the scope of large borrowers or conduct further special inspections, the Bank’s credit costs may become higher than those recorded and may further adversely affect the financial condition and operating results of the Bank.

If the Bank’s Reserves for Possible Loan Losses Prove Insufﬁcient to Cover Loan Losses, the Bank May Have to Increase Its Reserves or Otherwise Incur Credit Losses

In accordance with FSA guidelines, the Bank maintains general or speciﬁc reserves with respect to the various categories of borrowers in proportion to the expected losses. As of March 31, 2005, the Bank’s general and speciﬁc reserves amounted, on a consolidated basis, to ¥612 billion and ¥624 billion, respectively, and, on a non-consolidated basis, to ¥418 billion and ¥568 billion, respectively. The Bank’s reserves for possible loan losses are based on past experience, evaluations, assumptions and estimates about its borrowers, the value of collateral and guarantees, general economic and business conditions and other factors. The Bank’s actual credit losses could prove to be materially different from estimates and materially exceed its reserves. In the future, the Bank may have to increase its reserves for possible loan losses or otherwise incur credit losses on existing assets in excess of reserves if:

) economic conditions lead to further deterioration of the ﬁnancial condition of the Bank’s borrowers;

) the Bank changes its standards for establishing reserves for possible loan losses independently or pursuant to regulatory changes;

) the value of collateral held by the Bank declines, particularly due to declines in real estate prices in most of Japan and limited liquidity in the real estate market, causing the Bank either to make additional

7 reserves against loans secured by collateral or to bear signiﬁcant discounts in recoveries on foreclosed assets sold through auctions or in individual or bulk sales to investors; or ) the Bank is adversely affected by other factors to an extent that is worse than anticipated.

Exposure to Japanese Real Estate, Wholesale and Retail, Service, Finance and Insurance and Construction Companies May Cause Additional Losses in the Future Japanese real estate, wholesale and retail, service, finance and insurance and construction companies have been severely and adversely affected by the prolonged economic weakness in Japan. The losses of companies in these industries can be partly traced to direct and indirect investments in real estate and to the decline of major public and private sector development projects initiated during the ‘‘bubble’’ era. The Bank has significant exposure to a number of companies in these industries. As of March 31, 2005, with respect to domestic industries, the Bank had an exposure of ¥6,937 billion to the real estate industry (13.8% of total domestic loans), ¥5,681 billion to the wholesale and retail industry (11.3% of total domestic loans), ¥6,356 billion to the service industry (12.6% of total domestic loans), ¥4,543 billion to finance and insurance companies (9.0% of total domestic loans) and ¥1,830 billion to the construction industry (3.6% of total domestic loans). See ‘‘Business — Loans — Domestic Lending’’ and ‘‘Business — Loan Losses and Non-Performing Loans — Policies with Respect to Troubled Customers’’. The Bank and its subsidiaries, affiliates and associated companies have restructured a substantial number of loans to companies in these sectors, including a substantial number of loans that are not (and are not required to be) considered non-performing or disclosed as non-performing loans. In the event that the financial condition of companies in these sectors deteriorates further, it is possible that some of the currently performing loans made by the Bank to customers in these sectors may become non-performing and the Bank may have to increase its reserves for possible loan losses or otherwise incur additional credit costs. The Bank has provided financial assistance to certain financially distressed retail and construction companies in the form of debt forgiveness and debt for equity swaps and through the acquisition of new shares. It may become necessary for the Bank to provide further financial support to these customers.

The Bank May Need to Provide Additional Support to Japanese Financial Institutions, Troubled Customers or Affiliated Companies Japanese financial institutions, including banks, non-bank lending and credit institutions, financial affiliates of securities companies and insurance companies have been experiencing economic difficulties. In some cases, asset quality problems and other financial problems have led, or may lead, to severe liquidity and solvency problems that have resulted, or may result, in the liquidation or restructuring of certain of the affected financial institutions. From time to time, the Japanese government has requested that one or more financial institutions, including the Bank, either provide financial and other assistance to support distressed financial institutions or directly or indirectly acquire some portion of the non-performing loans or other assets of such distressed financial institutions. Such financial institutions, including the Bank, have accepted certain of these requests. No assurance can be provided that the Bank’s regulators will not in the future make similar or broader requests to the Bank. Moreover, the Bank does business with, and in some instances is a shareholder of and/or main lender to, other financial institutions and, as a result, in certain circumstances may find itself exposed to the credit, or other risks, associated with the financial difficulties encountered by these institutions. See ‘‘Business — Loan Losses and Non-Performing Loans’’. Additionally, the Bank provides direct and indirect support to troubled customers, generally in cases where the Bank believes such support is economically justified. However, the Bank, like other banks in Japan, has provided support to troubled customers under circumstances, and based upon considerations, that may differ in kind or degree from those relevant in other countries, including Europe and the United States. These may include political and regulatory influences and a perceived responsibility for obligations of affiliated and associated companies due to the relationships between the various entities. A decision by the Bank or its co-lenders not to provide support, or to withdraw its or their support to large borrowers may result in substantial and immediate credit costs for the Bank. The Bank has supported in the past companies belonging to the SMFG Group, the

8 Sumitomo group of companies (the ‘‘Sumitomo group’’) and the Mitsui group of companies (the ‘‘Mitsui group’’) and other afﬁliated entities, and may support in the future companies belonging to the Sumitomo group or the Mitsui group and other afﬁliated entities. See ‘‘Business — Loan Losses and Non-Performing Loans — Policies with Respect to Troubled Customers’’.

Restructured Loans May Present Uncertainties for the Bank Over the past few years, the Bank has announced the restructuring of a number of its loans to large borrowers, such as Kanebo, Ltd. (‘‘Kanebo’’), The Daiei, Inc., Fujita Corporation (‘‘Fujita’’) and Sumitomo Mitsui Construction Co., Ltd. (‘‘Sumitomo Mitsui Construction’’). See ‘‘Business — Loan Losses and Non- Performing Loans — Policies with respect to Troubled Customers’’. Some of the restructurings include the use of debt for equity swaps. Valuation and classification of restructured loans or restructured equity positions can be difficult and may lead to additional credit costs if restructured loans are not properly classified or the restructuring plan fails. As part of the FSA’s Program, the FSA requested that equity securities received as part of a debt for equity swap be valued at fair value, regardless of the timing of the relevant swap transaction, which could present difficult valuation issues for the Bank and expose it to future losses. Additionally, securities received in such restructurings may be illiquid, making it difficult for the Bank to achieve its intended reduction of its equity portfolio.

The Bank May Be Subject to Increased Regulatory Scrutiny and an Administrative Business Improvement Order as a Result of Its Failure to Meet Its Targeted Net Income Due in Part to Increased Credit Costs The Bank’s credit costs for the fiscal year ended March 31, 2005 were, on a non-consolidated basis, ¥955 billion, approximately ¥305 billion higher than forecasted on November 22, 2004. The Bank’s consolidated credit costs for the fiscal year ended March 31, 2005 were ¥1,167 billion. The Bank’s actual credit costs exceeded the previously forecasted amount due primarily to the Bank’s efforts to reduce future credit costs by increasing its provision for possible loan losses and disposing of certain non-performing loans. Due in large part to the increased credit costs, the Bank incurred, on a non-consolidated basis, a net loss of ¥137 billion for the fiscal year ended March 31, 2005, as compared to the previously forecasted net income of ¥250 billion. The Bank’s consolidated net loss for the fiscal year ended March 31, 2005 was ¥279 billion. The Bank may therefore be subject to increased scrutiny by the FSA. For example, on August 1, 2003, the FSA issued administrative business improvement orders against 15 banks and bank holding companies, including the Bank, that had received public funds and recorded net income substantially below their planned net income for the fiscal year ended March 31, 2003. The orders included measures requiring the banks to submit and implement business improvement plans that identified concrete measures they intended to take in order to achieve their targets for the following fiscal year, as well as to submit quarterly progress reports. In view of the Bank’s material failure to meet its targeted net income in its rationalization plan for the fiscal year ended March 31, 2005, there is a possibility that the FSA may issue a similar business improvement order to the Bank and/or SMFG. See ‘‘Supervision and Regulation — Japan — Public Money Injection and Rationalization Plan’’.

Weaknesses in the Bank’s Capital Base and Potential Regulatory Changes Related to Deferred Tax Assets and Cross Investments which Would Affect the Calculation of Regulatory Capital Could Adversely Affect the Bank As permitted under current Japanese banking regulations, the Bank currently includes the full amount of its deferred tax assets, as calculated pursuant to Japanese GAAP, in calculating its regulatory capital. As of March 31, 2005, the Bank recognized ¥1,502 billion of net deferred tax assets on its non-consolidated balance sheet, which is calculated based on future projected taxable income for ﬁve years, multiplied by the effective tax rates applicable to the Bank, and constituted 48% of the Bank’s non-consolidated Tier I capital. As of the same date, consolidated net deferred tax assets of ¥1,505 billion constituted 47% of the Bank’s consolidated Tier I capital, which is a high percentage relative to other banks in Japan. The disallowance of all or any portion of the Bank’s deferred tax assets in calculating its regulatory capital for any reason could materially affect the Bank’s capital adequacy ratio. If the Bank’s capital ratio were reduced below required levels, it could be required to

9 withdraw from and/or suspend some or all of its business operations. See ‘‘Supervision and Regulation — Japan — Capital Adequacy’’ and ‘‘Business — Capital Adequacy’’. Recently proposed regulatory changes could have a material adverse effect on the Bank’s capital ratios. In June 2004, the Financial System Council of the FSA suggested in a report that certain regulations on the appropriate treatment of deferred tax assets in calculating capital adequacy ratios be introduced. While the report concludes that supervisory authorities should further examine the issue and does not set out any concrete measures for implementation, given the large percentage of the Bank’s capital comprised of deferred tax assets, any such limitation may materially and adversely affect the Bank’s capital ratio. See ‘‘Supervision and Regulation — Japan — The Financial Services Agency — Deferred Tax Assets’’. In addition, the Bank may not be able to realize benefits from its deferred tax assets. The calculation of net deferred tax assets under Japanese GAAP is based on taxable income projections. The Bank’s ability to realize benefits from its deferred tax assets would be adversely affected to the extent that the Bank’s actual taxable income is lower than the projected taxable income used to determine the amount of its deferred tax assets. Under guidelines issued by the Japan Institute of Certified Public Accountants (‘‘JICPA’’) in November 1999, a company will, in principle, lose its ability to realize benefits from deferred tax assets if it has incurred substantial amounts of negative annual taxable income for each of three consecutive years or more and is expected to have significant negative taxable income in the following fiscal year. The Bank had positive taxable income for the fiscal year ended March 31, 2005. The Bank’s disposal of non-performing loans and transfers to taxable reserves could result in an increase of its deferred tax assets. There can be no assurance that the Bank will be able to realize the tax benefits resulting from such loan disposals and transfers to taxable reserves. The capital of the Bank is also partially comprised of capital contributions from insurance and other companies in which the Bank has made capital contributions. While the Bank has substantially reduced its cross investments consisting of equity and subordinated debt securities held for strategic and business relationship purposes, its capital ratio may be negatively affected due to its further reductions in such cross investments or any change in regulation prohibiting or restricting the inclusion of such cross investments in the calculation of regulatory capital.

Capital Requirements Could Constrain the Bank’s Operations The Bank is subject to capital adequacy guidelines adopted by the FSA, (the ‘‘FSA Capital Adequacy Guidelines’’) which provide for a minimum target ratio of capital to risk-adjusted assets of 8.0% both on a consolidated basis and non-consolidated basis for an internationally operating bank, at least half of which must be maintained in the form of Tier I capital. In addition, the Bank’s consolidated subsidiaries that do not engage in international operations, such as THE MINATO BANK, LTD. (‘‘Minato Bank’’), Kansai Urban Banking Corporation (‘‘Kansai Urban’’) and The Japan Net Bank, Limited are subject to a minimum target ratio of capital to risk-adjusted assets of 4%. Failure by any of the Bank or such subsidiaries to maintain its respective ratios may result in administrative actions or sanctions against the Bank or such subsidiaries, which may indirectly affect the Bank’s ability to fulfill its contractual obligations or restrict its business. See ‘‘Supervision and Regulation — Japan — Capital Adequacy’’. The Bank’s overseas subsidiaries are also subject to local capital ratio requirements. Failure of such subsidiaries to meet such requirements may result in administrative actions or sanctions imposed by local regulatory authorities which may affect their contractual obligations or restrict their businesses and have a negative effect upon the Bank’s financial condition or results of operations. The Bank’s risk-adjusted capital ratio as of March 31, 2005 were 5.50% (in the case of consolidated Tier I capital) and 10.60% (in the case of consolidated total capital). The Bank’s risk-adjusted capital ratio as of March 31, 2005 were 5.74% (in the case of non-consolidated Tier I capital) and 11.32% (in the case of non- consolidated total capital). The Bank expects that its risk-adjusted capital ratio at each future balance sheet date will principally reflect changes in the amount of the Bank’s risk-adjusted assets, the amount of expected cash dividends to SMFG, the amount of repurchases of the Bank’s shares (See ‘‘Business — Funding — Public Funding’’), the amount of the Bank’s qualifying earnings or losses, credit costs, net deferred tax asset balances, the amount and type of additional capital raised, the balance of subordinated perpetual debt, certain unrealized losses in its securities portfolio and changes in accounting rules or guidelines relating to the calculation of bank

10 capital ratio. There can be no assurance that the Bank in the future will be able to maintain its capital at or above the 4.0% level (in the case of consolidated and non-consolidated Tier I capital) and the 8.0% level (in the case of consolidated and non-consolidated total capital). Further, the risk-adjusted capital guidelines (the ‘‘Basel Accord’’) promulgated by the Basel Committee on Banking Supervision (the ‘‘Basel Committee’’), which form the basis for the FSA Capital Adequacy Guidelines, have been revised, and implementation in Japan is generally planned, with certain exceptions, for the end of the ﬁscal year ending March 31, 2007. According to the revised guidelines, the main changes that would be effected include application of risk weighting depending on the credit status of certain customers, in the case of certain electing banks, using an ‘‘internal ratings-based’’ approach to credit risk (subject to approval of supervising authorities), allocation of risk assets in relation to operational risk and supervisory review of the process of evaluating risk measurement and capital ratios. At this time, the Bank believes, based on internal estimates, that the ratio of its capital to risk-adjusted assets calculated pursuant to the revised guidelines will generally be the same as that calculated pursuant to currently applicable guidelines, but the ratio could be negatively affected based on regulatory review, a change in internal ratings systems or other factors. If the Bank’s capital ratio declines below Japanese regulatory requirements, the FSA may subject the Bank to administrative action and sanctions, including requiring the Bank to take certain corrective actions such as the formulation and implementation of reform measures, to reduce its assets or to suspend all or part of its business operations. See ‘‘Supervision and Regulation — Japan — Capital Adequacy’’.

The Bank’s Continued Efforts to Reduce Its Holdings of Equity Securities Are Becoming Difficult and May Adversely Affect Its Relationships with Customers As of March 31, 2005, the Bank met the legal requirement applicable to banks to reduce equity holdings by September 30, 2006 to the extent that their value exceeds Tier I capital. See ‘‘Supervision and Regulation — Japan — Restriction on Shareholdings’’. During the fiscal year ended March 31, 2005, the Bank completed sales of a significant amount of cross shareholdings, shares held for strategic and business-relationship purposes. The balance of the Bank’s consolidated equity portfolio as of March 31, 2005 decreased to ¥3.3 trillion from ¥3.5 trillion as of March 31, 2004. However, continued compliance with the requirement may be affected by fluctuations in the value of the Bank’s equity portfolio and in the level of its Tier I capital. It is uncertain what actions the FSA would take in such a case and failure to remain in compliance could have an adverse effect on the Bank. The Bank’s continued efforts to reduce its cross shareholdings are becoming difficult. While the Bank generally seeks the consent of an issuer to sell its shares, due to its business relationship with such issuer, it has become difficult to obtain such consent. Consent solicitation, even when successful, may significantly delay the sale. If the Bank tries to sell relatively illiquid shares, the price of these shares may decline rapidly. Therefore, the Bank’s ability to continue to dispose of its equity holdings may be limited. The disposition of significant amounts of cross shareholdings could negatively affect client relationships and may cause a reduction in the amount of business with the affected clients.

If the Japanese Stock Market Declines, the Bank’s Losses on Its Equity Portfolio Could Impair the Bank’s Financial Condition and Results of Operations and Its Capital Ratios The reported value of the Bank’s securities portfolio depends on the market values of the securities. As of March 31, 2005, 14% of the Bank’s securities portfolio consisted of equity securities, primarily common stocks of publicly traded Japanese companies. Shares in these companies have in recent years been subject to some volatility and have substantially declined in value, although there has been some recent recovery. A decline in the value of the Bank’s securities portfolio produces losses from devaluation of securities and sales of securities. As of March 31, 2005, the Bank’s other securities (including money held in trust) with a readily ascertainable market value contained ¥679 billion in unrealized gains, of which ¥395 billion was reﬂected in its consolidated stockholders’ equity. The Nikkei 225 Index increased 1.57% from ¥11,488.76 as of December 30, 2004 to ¥11,668.95 as of March 31, 2005 and the Tokyo Stock Price Index (‘‘TOPIX’’) increased 2.83% from 1,149.63 as of December 30, 2004 to 1,182.18 as of March 31, 2005, but there is no guarantee that the recovery of the Japanese equity markets will continue or even that this recovery will not be reversed. Any substantial decline in

11 the Japanese equity markets may have negative effects on the Bank’s capital position and its distributable proﬁts. ‘‘Geopolitical risks’’, including hostilities involving North Korea, China or the Middle East, could, among other things, adversely affect equity markets and the valuation of the Bank’s equity portfolio.

The Bank’s Financial Condition and Results of Operations Are Subject to Interest Rate Risk The Bank has substantial investments in debt securities, principally fixed-rate bonds. In particular, Japanese Government Bonds (‘‘JGBs’’) represent a significant part of the Bank’s fixed income portfolio. As of March 31, 2005, on a consolidated basis, the Bank had ¥17.4 trillion of yen-denominated debt securities, of which ¥13.6 trillion were JGBs. As of March 31, 2005, on a non-consolidated basis, the Bank had ¥16.4 trillion of yen- denominated debt securities, of which ¥13.0 trillion were JGBs. The Bank also had, on a non-consolidated basis, ¥5 billion of net unrealized gains on investments in yen-denominated debt securities (classified as held-to- maturity securities and as other securities) as of March 31, 2005. The Bank also owned foreign-denominated debt securities mainly consisting of U.S. dollar-denominated and Euro-denominated securities. Most of foreign- denominated debt securities are classified in the ‘‘Others’’ item of ‘‘Other securities with market value’’ and amounted to ¥2.5 trillion as of March 31, 2005. An increase in interest rates could substantially decrease the value of the Bank’s fixed income portfolio, and any unexpected change in interest rates could adversely affect the Bank’s bond and interest rate derivative positions. The duration of the Bank’s JGB portfolio (excluding JGBs held to maturity and JGBs for which fair value hedge accounting is applied), on a non-consolidated basis, was 3.0 years as of March 31, 2005, compared with 2.9 years as of March 31, 2004. A parallel shift of the whole yield curve by 1 basis point would result, on a non-consolidated basis, in approximately ¥3.0 billion of change to the value of the Bank’s JGB portfolio (excluding JGBs held to maturity and JGBs for which fair value hedge accounting is applied). In addition, a decline in the price of JGBs would substantially decrease the value of the Bank’s securities portfolio. Downgrades of JGBs by major rating agencies, if any, may also cause declines in market prices for JGBs. Moreover, in recent years the Bank earned substantial profits from its investment in fixed income securities, including JGBs and foreign bonds. If interest rates remain stable or increase, the Bank might not be able to maintain these earnings levels. Furthermore, following a continuous decrease, the long-term interest rate sunk to its low in mid June 2003. According to information supplied by Bloomberg L.P., as of July 14, 2005, the 10-year JGB interest rate hit a yearly low of 1.174% on June 30, 2005 and hit a yearly high of 1.889% on August 2, 2004. As a result of the rise in the long-term interest rate, the market value of the Bank’s fixed income portfolio has been reduced. If the long-term interest rate increases, the value of the Bank’s fixed income portfolio will further decline. See ‘‘Business — Securities-Related Activities — Securities Portfolio’’.

Refinancing Risk Could Impair the Bank’s Financial Condition and Results of Operations Substantial amounts of the Bank’s debt obligations mature each year. The Bank depends on its ability to continue to attract deposits and to refinance its debt obligations at commercially acceptable rates, and continues to finance a certain portion of its operations with short-term funds. As these obligations become due, the Bank may need to find alternative sources of financing even if market conditions are unstable. No assurance can be provided that sufficient funds will be available at acceptable terms, and failure to refinance these debts could adversely affect the Bank’s financial condition and results of operations. Additionally, certain of the Bank’s perpetual and dated subordinated debt obligations become callable every year. The Bank may choose not to call some or all of these obligations due to the lack of refinancing opportunities or for other reasons. In such event, the Bank’s reputation in the capital markets could be undermined and its future financing activities could become more difficult.

Exposure to Subsidiaries, Affiliates, Joint Ventures and Other Business Arrangements May Adversely Affect the Bank’s Financial Condition and Results of Operations The Bank operates parts of its business such as investment banking and consumer financing through subsidiaries and affiliates and has entered into various joint venture arrangements. The Bank has entered into joint venture agreements relating to Daiwa Securities SMBC Co. Ltd. (‘‘Daiwa Securities SMBC’’), credit loss protection arrangements with Goldman Sachs Group, Inc. (‘‘Goldman Sachs’’), a strategic alliance agreement with Promise Co., Ltd. (‘‘Promise’’), strategic business alliance agreements with NTT DoCoMo, Inc.

12 (‘‘DoCoMo’’) and Sumitomo Mitsui Card Company, Limited (‘‘Sumitomo Mitsui Card’’) and other joint venture or cooperation arrangements with other financial institutions, and may enter into other such arrangements in the future. See ‘‘Business — Operations’’. It is uncertain whether the Bank will receive any benefit from its investments in these subsidiaries, affiliates and joint ventures, and the Bank may be required under contractual or other arrangements to provide additional support to these entities in the future. Further, the Bank may lose the capital it contributed to those entities and may incur credit costs resulting from its credit exposure to these entities if they fail or do not perform as expected. Certain of these entities, such as the investment banking and consumer finance entities, engage in activities that are more volatile and have a higher risk profile than the core banking business of the Bank.

The Bank Will be Exposed to Increased Risks as it Expands its Range of Services and Products and Implements New Strategies

As the Bank expands the range of its products and services beyond its traditional banking business to include other financial services, and as the sophistication of financial products, such as financial derivatives, and management systems grow, the Bank will be exposed to new and increasingly complex risks. In some cases these risks will be of a type with which the Bank has no or only limited prior experience. As a result, the Bank’s risk management system may prove to be inadequate, and may not work in all cases or to the degree required.

Consequently, the Bank remains subject to substantial market, credit and other risks in relation to these expanding products and services and trading activities, including its derivatives business, which could result in significant losses. For example, as the Bank implements its plan to expand its consumer finance lending business, together with Promise, and new types of loans to small- and medium-sized enterprises (‘‘SMEs’’), which are generally considered to be risky lines of business, it may incur losses. In addition, the Bank’s efforts to offer new services and products may not succeed if market opportunities develop more slowly than expected, or if the profitability of these opportunities is undermined by competitive pressures. The Bank began offering securities intermediary services for both retail and corporate customers in February 2005, and there can be no guarantee that this business will prove profitable. The Bank is also increasing its focus on non-Japan Asia, particularly China, where it intends, together with Daiwa Securities SMBC, to expand its investment banking business. In the European and U.S. markets, the Bank is increasing its focus on areas such as project finance, leveraged buy-out finance and shipping finance. The Bank may not be successful in its international business strategy due to potential risks such as downturns in the economies or markets on which the Bank is focusing, regional conflicts or severe competitive pressure, and the Bank may not be able to realize a return on its investments in expanding its international business.

Additionally, the implementation of revised lending practices and the adjustment of interest rates charged by the Bank to reflect risk more appropriately may prove more difficult than anticipated. The implementation of these strategies may face difficulties, including the following: customers may be unable to pay interest rates that reflect their risk profile, competitors may continue to provide loans that do not reflect risk premiums and to offer loans with less onerous terms and conditions and the Bank may face cultural or other resistance to the implementation of these strategies.

The Bank’s Trading and Investment Activities Expose It to Interest Rate, Exchange Rate and Other Risks

The Bank undertakes significant trading and investment activities involving a variety of financial instruments, including derivatives. The Bank’s income from these activities is subject to volatility caused by, among other things, changes in interest rates, exchange rates and debt prices. Increases in interest rates and downgrades of the credit ratings of certain fixed income securities may have an adverse effect on the value of the Bank’s fixed income securities portfolio, as discussed in ‘‘— The Bank’s Financial Condition and Results of Operations Are Subject to Interest Rate Risk’’. The strengthening of the yen against the U.S. dollar and other foreign currencies will reduce the value of the Bank’s portfolio of foreign currency denominated instruments. The Bank’s results of operations and financial condition are exposed to the risks associated with its trading and investment activities.

13 Adverse Regulatory Developments or Changes in Government Policies, Economic Controls or Accounting Rules Could Have a Negative Impact on the Bank’s Results of Operations The Bank conducts its business subject to ongoing regulation and associated regulatory risks, including the effects of changes in the laws, regulations, policies, voluntary codes of practice and interpretations in Japan and the other markets in which it operates. Future changes in regulation or fiscal or other policies and their effects are unpredictable and beyond the Bank’s control. Over the past few years the FSA, the Bank of Japan and other elements of the government of Japan have taken steps designed to restore confidence in the Japanese financial system, address the asset quality problems faced by many Japanese financial institutions, strengthen the capital base and improve governance of major Japanese banks, and bring greater stability to the financial system. See ‘‘— Weaknesses in the Bank’s Capital Base and Potential Regulatory Changes Related to Deferred Tax Assets and Cross Investments which Would Affect the Calculation of Regulatory Capital Could Adversely Affect the Bank’’. In December 2004, the FSA released its ‘‘Program for Further Financial Reform’’ initiative, in which it introduced proposals for a number of additional reforms to financial services industry regulations, including those to promote: ) expansion of distribution channels of financial products and services; ) new entries into the financial services industry through further deregulation; ) sound competition in the financial services industry by strengthening corporate governance of financial institutions and through further enhancement of disclosure requirements; ) the establishment and implementation of uniform transaction rules for financial products and services by, among others things, clarifying responsibility for sales of those products and services; ) research toward the enactment of legislation concerning electronic fund settlement and online financial transactions; ) research toward the establishment of a legal framework to allow the establishment of financial conglomerates and to provide for appropriate regulation and supervision of such conglomerates; and ) the establishment of rules to prevent the recurrence of non-performing loan problems at Japanese banks. Reforms arising from the FSA’s Program for Further Financial Reform, including through the enactment of new law or regulations, may lead, among other things, to an increase in the Bank’s costs of compliance and intensified competition. See ‘‘Supervision and Regulation — FSA Program for Further Financial Reform’’. In addition, the FSA and other governmental agencies conduct regular and special inspections with respect to both the Bank’s operations generally and its classification of borrowers. In recent years, the FSA has encouraged a stricter evaluation of non-performing loans by Japanese banks and its inspections have often resulted in the identification of additional non-performing loans or the downgrading of borrowers. Other changes in the regulatory environment and new regulatory initiatives, such as new regulations designed to prevent money laundering or related to environmental matters, may also adversely affect the Bank’s results of operations and financial condition. See ‘‘Supervision and Regulation’’. In addition, in recent years various changes in, and introduction of new, accounting standards have been taking place, and additional changes continue to be considered. Any such changes may affect the SMBC Group’s results of operations and financial condition. The introduction of periodic asset impairment tests, while not expected to have a direct material effect on the Bank, may significantly adversely affect the financial condition of the Bank’s clients and thereby indirectly affect the Bank’s results of operations and financial condition.

Goldman Sachs’ Ownership of Shares of SMFG’s Preferred Stock Gives Rise to Governance Considerations GSSM Holding Corp. (‘‘GSSM’’), a wholly-owned subsidiary of the Goldman Sachs, holds 50,100 shares of SMFG’s First to Twelfth Series Type 4 preferred stock. These shares of preferred stock are convertible into SMFG’s common stock during the period beginning February 2005 and ending in February 2028. If the preferred

14 stock were converted at the initial conversion price (assuming March 31, 2005 capitalization levels), GSSM would hold approximately 7.4% of SMFG’s common stock (assuming no conversion of any other outstanding preferred stock). The conversion price is subject to downward adjustment depending on the market price of SMFG’s common stock. If the preferred stock is converted at the minimum conversion price applicable during the conversion period, GSSM would own approximately 19.4% of SMFG’s common stock (excluding treasury stock and assuming March 31, 2005 capitalization levels and no conversion of any other outstanding preferred stock) and, subject to regulatory restrictions, could exercise inﬂuence over the Bank (as the wholly-owned subsidiary of SMFG). See ‘‘Business — Transactions with Goldman Sachs’’.

A Significant Downgrade of the Bank’s Credit Ratings Could Have a Negative Effect on the Bank The Bank’s long term rating by Standard and Poor’s Rating Services (‘‘S&P’’), as of July 14, 2005, is A with a stable outlook, its long term rating by Moody’s Investor Service (‘‘Moody’s’’), as of July 14, 2005, is A1 with a stable outlook and its long-term debt rating by Fitch, as of July 14, 2005, is A- with a stable outlook. These ratings are recent upgrades, and there can be no assurance that the ratings will be maintained, particularly in view of the Bank’s recent credit costs. A significant downgrade of the Bank’s credit ratings by one or more of the credit rating agencies could have a negative effect on the Bank’s treasury operations, procurement of funds and other aspects of its business. A significant downgrade of the Bank’s credit ratings may also have the following effects: ) the Bank’s treasury unit may have to accept less favorable terms in its transactions with counterparties, including capital raising activities, or may be unable to enter into certain transactions; ) foreign regulatory bodies may impose restrictions on the Bank’s overseas operations; ) existing agreements or transactions may be cancelled; and ) the Bank may be required to provide additional collateral in connection with derivatives transactions. Any of the foregoing could have a negative impact on the profitability of the Bank’s treasury and other operations and could adversely affect its results of operations and financial condition.

Declines in the Bank’s Pension Assets or Revised Actuarial Assumptions May Adversely Affect Its Results of Operations The Bank has faced in the past, and may face in the future, losses relating to its pension plans from changes in the market value of plan assets, declines in returns on the Bank’s pension plan assets and changes in the actuarial assumptions on which the calculation of projected pension beneﬁt obligations are based. Although the Bank’s pension plan assets exceeded the Bank’s projected pension beneﬁt obligation as of March 31, 2005, future changes in discount rates or actuarial assumptions may have an adverse effect on the Bank’s results of operations. For example, any future reduction of the discount rate may cause unrecognized actuarial loss, or the Bank may experience unrecognized prior service costs in the future resulting from amendments to the plans. Changes in the interest rate environment and other factors may also adversely affect the amount of the unfunded pension obligation and the resulting annual amortization expense. Additionally, no assurance can be provided that the assumptions for the computation of future pension expenses will remain constant.

Failure to Protect or Properly Control Personal Information Held by the SMFG Group May Adversely Affect the Bank’s Business The SMFG Group keeps and manages personal information obtained from customers in relation to, among others, its banking, credit card and consumer ﬁnance businesses. In recent years, there have been many cases of personal information and records in the possession of corporations and institutions being improperly accessed or disclosed. The standards relating to protection of personal information that apply to the Bank and other entities of the SMFG Group have become more stringent under the Law Concerning Protection of Personal Information (the ‘‘Personal Information Protection Law’’) and rules, regulations and guidelines relating thereto. An institution in possession of personal information like the Bank or another entity of the SMFG Group may have to provide compensation for economic loss and emotional

15 distress arising out of a failure to protect such information in accordance with this law. The provisions of this law applicable to the Bank and certain other SMFG Group companies became effective on April 1, 2005. Although the SMFG Group exercises care in protecting the conﬁdentiality of personal information and takes steps to ensure security of such information, if any material unauthorized disclosure of personal information or any other failure to protect or properly control personal information does occur, the business of the SMFG Group could be adversely affected in a number of ways. For example, the Bank could be subject to complaints and lawsuits for damages from customers if they are adversely affected as a result of the release of their personal information. In addition, the Bank may be subject to administrative actions or sanctions or could incur additional expenses associated with changing its security systems, either voluntarily or in response to administrative guidance or other regulatory initiatives, or in connection with public relations campaigns designed to prevent or mitigate damage to the corporate or brand image or reputation of the SMFG Group. Any such damage to the SMFG Group’s reputation could lead to a decline in new customers and/or a loss of existing customers, as well as to increased costs and expenses in dealing with any such problems.

The Bank Must Hire and Retain Qualified Employees to Succeed in Implementing Its Business Strategy Given the Bank’s broad areas of professional expertise, a key element in the Bank’s business strategy is to attract and retain employees with professional experience and specialized product knowledge to maintain and improve its competitiveness and customer relationships. The Bank faces competition for highly skilled business, technical and other personnel from not only other commercial banks, but also investment banks, finance companies and other financial services providers. There can be no assurance that the Bank will succeed in attracting, integrating and retaining appropriately qualified personnel, and its failure to do so may negatively affect its business and results of operations.

The Bank Relies on Its Information Technology Systems, and Their Failure Could Harm Its Relationships with Customers, Expose It to Lawsuits or Administrative Sanctions or Otherwise Adversely Affect Its Provision of Services to Customers and Its Internal Operations As part of its business, the Bank uses information systems to deliver services to and perform transactions on behalf of its customers as well as for back ofﬁce operations. The Bank therefore depends on the capacity and reliability of the electronic and information systems supporting its operations. The Bank has experienced system disruptions in the past, and the Bank would encounter disruptions of service to customers in the future due to a failure of such information systems. The Bank’s information systems are subject to damage or incapacitation by quality problems, human error, natural disasters, power loss, sabotage, computer viruses and similar events. As is the case for other Japanese institutions, the Bank’s information technology centers are subject to earthquake risk. While the Bank has taken measures to protect its information technology centers from earthquake risk, including by ensuring data recovery capability and functionality, these measures may not be sufﬁcient. In addition, the Bank’s business plans may not address all contingencies that could arise in the event of a major disruption of services.

Negative Media Coverage of Japan’s Banking Industry or the Bank May Have a Materially Adverse Effect on the Bank’s Image and Undermine Depositor Conﬁdence Japan’s banking industry continues to be covered extensively and critically by both Japanese and foreign media, including with respect to non-performing loans, capital adequacy and deferred tax assets. Negative media coverage, whether or not accurate and whether or not applicable to the Bank, may have a materially adverse effect on the Bank’s image, and consequently, may undermine depositor conﬁdence, thereby affecting the bank’s business and results of operations.

Governmental Ownership of SMFG’s Convertible Preferred Stock and New Governmental Policies Could Adversely Affect the Bank The Resolution and Collection Corporation (the ‘‘RCC’’), a Japanese governmental entity, currently owns SMFG’s Type 1, Type 2 and Type 3 preferred stocks (together, the ‘‘RCC Preferred Stock’’) that are either

16 currently convertible or will become convertible into common stock of SMFG. See ‘‘Business — Funding — Public Funding’’. The RCC would, if it converted all of the RCC Preferred Stock, own approximately 20.4% of SMFG’s common stock (excluding treasury stock and assuming March 31, 2005 capitalization levels and no conversion of any other outstanding preferred stock). However, the RCC could acquire more or less than a 20.4% interest depending on SMFG’s share price at the time of conversion and certain minimum conversion price restrictions. Additionally, the RCC Preferred Stock is mandatorily convertible in 2009 based on the prevailing market price, subject to certain minimum conversion price restrictions. If all of the RCC Preferred Stock is converted at the minimum conversion prices applicable upon mandatory conversion, the RCC would own approximately 37.4% of SMFG’s common stock (excluding treasury stock and assuming March 31, 2005 capitalization levels and no conversion of any other outstanding preferred stock). The RCC could also obtain approximately 12.0% of SMFG’s total stockholder voting rights prior to conversion if SMFG does not pay annual dividends on the RCC Preferred Stock. Consequently, failure to pay dividends on the RCC Preferred Stock or conversion of the RCC Preferred Stock into common stock could result in signiﬁcant inﬂuence over SMFG by the RCC. See ‘‘Business — Funding — Public Funding’’. In 2003, the FSA announced its decision to tighten the application of supervisory actions and clarify the criteria governing the conversion of the RCC Preferred Stock in order to improve corporate governance of banks and bank holding companies (including SMFG) that have received public funds. See ‘‘Supervision and Regulation — Japan — Public Money Injection and Rationalization Plan’’. Conversion of the RCC Preferred Stock in SMFG or an additional injection of public funds into SMFG may result in indirect control by the Japanese government over the Bank (as the wholly-owned subsidiary of SMFG) and in the Bank’s losing autonomy.

The Bank May Not Continue to Maintain the Current Level of Disclosure Upon the formation of SMFG in December 2002, the Bank became a direct wholly-owned subsidiary of SMFG. As a result, the shares of the Bank were delisted from the Tokyo Stock Exchange, Inc. (the ‘‘Tokyo Stock Exchange’’). The shares of the Bank are not listed on any stock exchanges in Japan or elsewhere and, therefore, the Bank is not subject to the listing rules of the Tokyo Stock Exchange or any other stock exchange. However, the Bank is still subject to continuing disclosure obligations under the Securities and Exchange Law of Japan, and the listing rules of the UK Listing Authority because publicly offered debt securities of the Bank are outstanding and certain debt securities of the Bank are currently listed on the Ofﬁcial List and traded on the London Stock Exchange. Although SMFG published its annual and semi-annual reports in English (including selected consolidated and non-consolidated accounts of the Bank) for the ﬁscal year ended March 31, 2004, and currently intends to continue to maintain the current level of disclosure in English, there can be no assurance that the Bank will continue to publish these disclosure materials.

Risks Related to the Industry Prolonged Weakness in the Japanese Economy and Related Instability of the Japanese Financial System May Hurt the Bank’s Financial Condition and Results of Operations Sluggish economic conditions in Japan in recent years have had significantly adverse effects on Japanese financial institutions, including commercial banks. Although the Japanese equity markets appear gradually to be recovering and the number of corporate bankruptcies is declining, Japanese financial institutions have been experiencing difficulties with non-performing loans and asset devaluations as a result of severe and prolonged declines in the market prices of Japanese real estate and the Japanese equity markets, the relatively high number of bankruptcies and continuing deflation. These difficulties have caused the failure of certain Japanese banks, insurance companies and other financial institutions. There can be no assurance that the modest recovery in the Japanese economy will continue, and any downturn may have an adverse effect on Japanese financial institutions, including the Bank. Economic problems have led, and may lead in the future, to severe liquidity and solvency problems and may result in the liquidation or restructuring of certain financial institutions.

17 The Bank Competes in the Highly Competitive Financial Services Industry Recent regulatory changes have subjected the Bank to significant competition from other Japanese banks, branches of international banks and financial institutions other than banks. Many of these banks and other institutions compete for substantially the same business as the Bank. Substantial restructuring of the Japanese banking industry has recently taken place, including deregulation, which is expected further to increase substantially competition in the Japanese financial services. As a consequence, there are now four highly competitive major banking groups in Japan, including the SMFG Group. Two of such major banking groups, Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., are preparing for the two group’s management integration and merger scheduled for October 2005, and such merger may further intensify competition. In addition, the FSA’s ‘‘Program for Further Financial Reform’’ announced in December 2004 contemplates, among other things, reforms permitting the establishment of financial conglomerates. In addition to the competition with these major banking groups, the Bank also faces competition from other banking institutions, such as Shinsei Bank, Limited, Aozora Bank, Ltd. and Citibank Japan. In addition, regulatory changes have permitted various financial and other institutions to enter into business sectors formerly reserved for Japanese banks. For example, Sony Corporation, an electronics manufacturer, and Ito-Yokado Co., Ltd., a supermarket operator, are offering specialized banking services through Sony Bank Inc. and IY Bank Co., Ltd., respectively. The Bank also faces competition from governmental lending agencies such as the Japan Finance Corporation for Small and Medium Enterprises, National Life Finance Corporation, Japan Finance Corporation for Municipal Enterprises and the Government Housing Loan Corporation (‘‘GHLC’’), although GHLC has been decreasing the amount of new origination and plans to cease new origination by March 31, 2007. In addition, the establishment in April 2003 of the Japan Post, the largest single deposit-taking institution, and any further initiatives taken towards privatization of the postal savings system could also result in an increase in competition in the financial services industry. See ‘‘The Japanese Banking System’’. Consumer finance companies such as Acom Co., Ltd., Aiful Corporation, Citi Financial Japan, GE Consumer Finance Co. Ltd. and Takefuji Corporation; consumer credit (shinpan) companies such as Nippon Shinpan Co., Ltd., Orient Corporation, Life Co., Ltd., JACCS Co., Ltd. and Central Finance Co., Ltd. as well as other non-bank finance companies such as Nissin that lend to small business owners or individuals compete with the Bank’s consumer finance business. Increased competition may have an adverse effect on the Bank’s financial condition or results of operation.

Return of the ‘‘Japan Premium’’ or New Limitations on Credit Extended to Japanese Banks Could Adversely Affect the Bank As a result of concerns regarding asset quality and the failure of several large Japanese financial institutions, a so-called ‘‘Japan premium’’ was imposed on Japanese financial institutions in the past. The ‘‘Japan premium’’ refers to the additional risk premium that Japanese financial institutions (including the Bank) and their affiliates were required to pay in order to borrow short-term, interbank funds in international markets compared with their U.S. and European counterparts. There can be no assurance that a ‘‘Japan premium’’ will not be imposed again or that international lenders will not implement other limitations on the credit that they are willing to extend to Japanese banks, including the Bank.

Risks Related to the Bonds Subordination of the Bonds Could Hinder Investors’ Ability to Receive Payment Upon the occurrence of a Subordination Event, any amounts payable under the Bonds (except for such amounts as shall have become due and payable, other than solely by way of acceleration, prior to the date on which a Subordination Event shall have occurred) will be subordinated and subject in right of payment to the prior payment of all Senior Indebtedness. The Bank expects from time to time to incur additional indebtedness and other obligations that will constitute Senior Indebtedness and neither the Indenture nor the Bonds contain any provisions restricting its ability to incur Senior Indebtedness. See ‘‘Description of the Bonds — Ranking; Subordination’’.

18 The Bank May Defer Interest Payments in Certain Circumstances

The Bank will have the option to defer any interest payment if on the relevant interest payment date (a) the amount of its Distributable Proﬁts based on its most recent audited annual ﬁnancial statements does not exceed zero, (b) its total consolidated or non-consolidated risk-adjusted capital ratio most recently reported to the FSA falls below half of the Required Capital Ratio or (c) the Bank is insolvent at the time of such payment or such payment would cause it to become insolvent. These provisions are described in detail under ‘‘Description of the Bonds — Interest — Conditional Payment of Interest’’ and historical information regarding the Bank’s capital ratios is provided under ‘‘Selected Consolidated Financial and Other Information’’.

Arrears of Interest resulting from any deferral would not become due and payable until the next interest payment date for the affected Bonds on which none of the conditions (a) through (c) above is met and would not bear interest unless the Bank fails to pay such arrears within 30 days of such date. In addition, upon the occurrence of a Subordination Event as described under ‘‘Description of the Bonds — Ranking; Subordination — Subordination’’, any claim for Arrears of Interest would be subordinated to the extent set forth therein.

On June 29, 2005, SMFG as the sole shareholder of the Bank authorized the Board of Directors of the Bank to repurchase its Type 1, Type 2 and Type 3 preferred stock held by SMFG with a maximum total repurchase price of ¥300 billion. Any repurchase of the preferred stock by the Bank would, if executed, reduce its future Distributable Proﬁts and risk-adjusted capital ratios. See ‘‘Business — Funding — Public Funding’’.

The New Company Law May Affect the Calculation of the Distributable Proﬁts of the Bank

A new Company Law (the ‘‘Company Law’’), promulgated on June 29, 2005, is expected to take effect on or after April 1, 2006 and will, among other things, change the calculation of Distributable Profits that is used in determining whether the Bank is entitled to defer any interest payment on the Bonds. Under the Company Law, the Japanese Ministry of Justice will provide the details for the calculation in an ordinance. The Bank expects that the most significant changes in the calculation of distributable profits under the Company Law will concern the treatment of certain events occurring after the end of any fiscal year, such as the repurchase of the Bank’s shares. Although the Bank believes these changes will not substantially affect the determination as to whether the Bank is entitled to defer interest payments, there can be no assurance that Distributable Profits calculated under the Company Law will not be lower than they would have been had the current law remained in effect. See ‘‘Description of the Bonds — Interest — Conditional Payment of Interest’’ for information on the Distributable Profits of the Bank for recent years as determined under the current law.

The Market for the Bonds May have Limited Liquidity and the Bonds are Subject to Resale Restrictions

Although approval in principle has been received for listing of the Bonds on the SGX-ST, there can be no assurance that any market will develop or be sustained for the Bonds or as to what price holders of Bonds will be able to resell their Bonds. While the Bank has been advised by the Initial Purchasers that they currently intend to make a market in the Bonds, they are not obligated to do so and any such market making activity will be subject to the limits imposed by applicable law and may be interrupted or discontinued at any time without notice.

There are restrictions on the resale of the Bonds. See ‘‘Notice to Investors’’ and ‘‘Description of the Bonds — Form, Book-Entry and Transfer’’.

The Bank May Redeem the Bonds prior to October 15, 2015 if it would be Required to Pay Additional Amounts

The Bank may, with the prior consent of the FSA, redeem the Bonds prior to October 15, 2015 if it would be required to pay Additional Amounts at a redemption price equal to the principal amount thereof plus accrued interest thereon. See ‘‘Description of the Bonds — Optional Redemption and Purchase’’.

19 The Ratings of the Bonds Could be Lowered The Bank’s long-term senior debt securities have been assigned a credit rating of A1 by Moody’s and A from S&P with a stable outlook. Based on these ratings, the Bonds have received a provisional rating of A2 from Moody’s and BBB+ from S&P. Currently, Moody’s ratings of the Bank with respect to bank ﬁnancial strength is E+ and subordinated debt and junior subordinated debt are both A2. The Bank’s current issuer rating is A1 by Moody’s and A by S&P with a stable outlook. Ratings are based upon information furnished by the Bank or obtained by the rating organizations from other sources and are subject to revision, suspension or withdrawal by the rating organizations at any time. A downgrade in the ratings could reduce the number of potential investors in the Bonds and adversely affect the value of the Bonds.

The Bank May Delist the Bonds from the SGX-ST In the event that the Bank’s obligations in connection with maintaining the listing of the Bonds on the SGX- ST become unduly burdensome, the Bank may be entitled to, and the Bank may decide to, delist the Bonds from the SGX-ST and seek an alternative listing for the Bonds on another stock exchange.

20 USE OF PROCEEDS The proceeds from the Offering of the Dollar Bonds and the Euro Bonds will be $1,342,885,500 and 4693,014,000, respectively. SMBC intends to use the proceeds from the Offering for general corporate purposes.

21 EXCHANGE RATES The Bank maintains its accounts in yen. The following table sets forth, for the periods indicated, the median exchange rates for buying and selling spot dollars by telegraphic transfer against yen as determined by the Bank. Fiscal year ended March 31, High Low Period End (Yen per dollar) 2001 ************************************************** ¥123.90 ¥104.30 ¥123.90 2002 ************************************************** 134.85 116.55 133.25 2003 ************************************************** 133.20 116.00 120.20 2004 ************************************************** 120.85 105.38 105.69 2005 ************************************************** 114.50 102.18 107.32 The median exchange rate quotation by SMBC for buying and selling spot dollars by telegraphic transfer against yen on July 14, 2005 was ¥112.16 = $1.00. These exchange rates are reference rates and are not necessarily the rates used to calculate ratios nor the rates used to convert yen to U.S. dollars in the ﬁnancial statements herein.

22 CONSOLIDATED CAPITALIZATION AND INDEBTEDNESS The following table, which should be read in conjunction with the consolidated ﬁnancial statements of the Bank included elsewhere in this Offering Circular, sets forth the consolidated capitalization of the Bank as of March 31, 2005 and as adjusted to give effect to the issuance of the Bonds, but not the use of proceeds thereof or the compensation of the Initial Purchasers and reimbursement for certain expenses of the Offering. As of As March 31, 2005 Adjusted (Millions of yen) (Millions of (Millions of yen) U.S. dollars) Indebtedness: Senior borrowings ************************************ ¥ 282,341 $ 2,631 ¥ 282,341 Senior bonds **************************************** 2,328,501 21,697 2,328,501 Subordinated borrowings******************************* 734,097 6,840 734,097 Dated ******************************************** 439,097 4,091 439,097 Undated ****************************************** 295,000 2,749 295,000 Subordinated bonds *********************************** 1,867,981 17,405 1,867,981 Dated ******************************************** 1,283,013 11,955 1,283,013 Undated ****************************************** 584,968 5,450 584,968 Bonds being issued ********************************* — — 242,007 Total indebtedness(1) ****************************** 5,212,922 48,573 5,454,929 Stockholders’ equity: Capital stock(2) *************************************** 664,986 6,196 664,986 Preferred stock: Authorized — 1,630,000 shares, and issued and outstanding — 900,001 fully paid shares Common stock: Authorized — 100,000,000 shares, and issued and outstanding — 55,212,947 fully paid shares Capital surplus(3) ************************************* 1,603,512 14,942 1,603,512 Retained earnings (deﬁcit) ***************************** (6,281) (58) (6,281) Land revaluation excess ******************************* 57,772 538 57,772 Net unrealized gains on other securities ****************** 394,973 3,680 394,973 Foreign currency translation adjustments ****************** (81,050) (755) (81,050) Total stockholders’ equity ************************** 2,633,912 24,543 2,633,912 Total capitalization and indebtedness ******************* ¥7,846,834 $73,116 ¥8,088,841

(1) As of March 31, 2005, the Bank had no contingent liabilities or guarantees. (2) On June 29, 2005, the shareholder of the Bank authorized the repurchase of its Type 1, Type 2 and Type 3 preferred stock held by SMFG with a maximum total repurchase price of ¥300 billion. No repurchase of the preferred stock of SMBC has been executed as of the date hereof. See ‘‘Business — Funding — Public Funding’’. (3) On June 29, 2005, the shareholder of the Bank approved the transfer of ¥344.9 billion of capital reserve to other capital surplus, subject to the creditor demurral procedures. See ‘‘Business — Funding — Public Funding’’. (4) Except as disclosed above, there has been no material change in the consolidated capitalization and indebtedness or contingent liabilities or guarantees of the Bank since March 31, 2005. (5) The translation of the Japanese yen amount for the Dollar Bonds now being issued was calculated using the rate of ¥107.32 = $1.00, the median exchange rate quotation by SMBC for buying and selling spot dollars by telegraphic transfer against yen on March 31, 2005. The translation of the Japanese yen amount for the Euro Bonds now being issued was calculated using the rate of ¥138.75 = 41.00, the median exchange rate quotation by SMBC for buying and selling spot Euros by telegraphic transfer against yen on March 31, 2005.

23 SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION The table below sets forth certain selected consolidated financial data for the Bank for the periods presented. The selected consolidated financial data set forth below as of March 31, 2003, 2004 and 2005 and for each of the three years in the period ended March 31, 2005 has been extracted without material adjustment from and should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this Offering Circular, which have been audited by KPMG AZSA & Co. and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’. The selected consolidated financial data set forth below as of and for the fiscal year ended March 31, 2002 has been extracted without material adjustment from the Bank’s audited consolidated financial statements not included in this Offering Circular. The consolidated financial statements are prepared and presented in accordance with Japanese GAAP. Japa- nese GAAP differs in certain respects from U.S. GAAP. See ‘‘Summary of Selected Differences between Japanese GAAP and U.S. GAAP’’. The selected consolidated financial data are not intended to present the Bank’s financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries or jurisdictions other than Japan. Years ended and as of March 31, 2002(1) 2003(1) 2004 2005 (Billions of yen, except ratios) Income Statement Data: Interest income ************************************* ¥ 2,177 ¥ 1,818 ¥ 1,561 ¥ 1,491 Interest expense************************************* (727) (417) (295) (338) Net interest income******************************** 1,450 1,400 1,266 1,153 Trust fees****************************************** — 003 Net fees and commissions **************************** 320 350 331 419 Net trading income ********************************** 129 206 304 144 Net other operating income *************************** 179 226 8 140 General and administrative expenses ******************** (936) (888) (776) (769) Provision for reserve for possible loan losses************* (1,204) (655) — (284) Other income*************************************** 270 167 324 237 Other expenses ************************************* (812) (1,347) (1,100) (1,219) Income (loss) before income taxes and minority interests (604) (543) 356 (177) Income taxes Current****************************************** (102) (66) (14) (16) Refund ****************************************** ———9 Deferred***************************************** 289 216 (0) (45) Minority interests *********************************** (47) (37) (40) (49) Net income (loss) ********************************* ¥ (464) ¥ (429) ¥ 302 ¥ (279) Balance Sheet Data(2): Total assets **************************************** ¥108,005 ¥102,395 ¥99,843 ¥97,478 Loans and bills discounted**************************** 63,646 61,220 55,429 55,149 Securities ****************************************** 20,695 23,959 26,864 24,019 Deposits******************************************* 71,648 67,885 68,982 71,270 Stockholders’ equity ********************************* 2,913 2,143 2,722 2,634

24 Years ended and as of March 31, 2002(1) 2003(1) 2004 2005 (Billions of yen, except ratios) Credit Quality Data: Credit costs(3) ************************************** 1,703 1,202 924 1,167 Reserve for possible loan losses(4) ********************** 2,160 2,202 1,376 1,240 Bankrupt loans ************************************* 227 200 96 68 Non-accrual loans *********************************** 3,600 2,666 1,711 1,368 Past due loans (3 months or more) ********************* 103 128 51 29 Restructured loans*********************************** 2,554 2,689 1,372 721 Risk-Adjusted Capital Data: Tier I capital *************************************** 3,719 3,066 3,112 3,207 Total qualifying capital******************************* 7,061 5,928 6,199 6,176 Total risk-adjusted assets ***************************** 67,548 57,058 56,892 58,245 Tier I risk-adjusted capital ratio************************ 5.50% 5.37% 5.46% 5.50% Total risk-adjusted capital ratio ************************ 10.45% 10.38% 10.89% 10.60%

(1) Financial information for the years ended and as of March 31, 2002 and 2003 includes the results of Sumitomo Mitsui Card, SMBC Leasing and Japan Research Institute. Since February 3, 2003, these companies are no longer consolidated subsidiaries of the Bank but those of SMFG, and as such their results were not consolidated into the Bank’s consolidated financial statements for the years ended and as of March 31, 2004 and 2005. See ‘‘Formation of the SMBC Group and the SMFG Group’’. (2) The Bank is not required to maintain records in Japan which would enable it to determine averages and related ratios on a consolidated basis and therefore such information is not included herein. Accordingly, the balance sheet data included herein has been prepared on a year-end basis only. (3) Credit costs equal the aggregate of net additions to general reserves, direct write-offs, net additions to specific reserves, net additions to reserves for specific overseas loan losses, losses on sale of loans to the Cooperative Credit Purchasing Company, Limited, provision for reserve for losses on loans sold and losses on sales of delinquent loans. (4) Reserve for possible loan losses include general reserves, specific reserves and reserves for specific overseas countries.

25 Supplemental Non-Consolidated Data

The table below sets forth certain supplemental non-consolidated financial data of the Bank: Years ended and as of March 31, 2002(1) 2003(2) 2004 2005 (Billions of yen, except ratios) Gross operating profit(3) ************************************** 1,865 1,761 1,584 1,523 Net interest income**************************************** 1,487 1,223 1,087 973 Trust fees************************************************ —003 Net fees and commissions ********************************** 166 195 227 298 Net trading income **************************************** 121 196 281 132 Net other operating income ********************************* 91 147 (11) 118 Expenses(4)************************************************* 678 647 584 582 Personnel expenses **************************************** 276 254 221 204 Non-personnel expenses ************************************ 370 358 332 342 Taxes *************************************************** 32 35 30 37 Banking profit (before provision for general reserve for possible loan losses)(5)********************************************* 1,186 1,114 1,000 940 Net income (loss) ******************************************* (323) (478) 301 (137) Efficiency ratio(6) ******************************************** 36.4% 36.7% 36.9% 38.2% Balance Sheet Data: Loans and bills discounted************************************ 60,302 57,282 50,810 50,068 Loans to small-and-medium-sized enterprises, etc.(7) ************* 39,124 36,733 35,428 35,291 Consumer loans***************************************** 13,588 13,666 13,876 14,231 Mortgage loans *************************************** 12,060 12,339 12,725 13,240 Deposits(8) ************************************************* 61,512 58,611 60,067 62,788 Other Financial Data: Interest rate earned on domestic loans and bills discounted ********* 1.84% 1.73% 1.75% 1.78% Interest rate paid on domestic deposits, etc. ********************** 0.08% 0.04% 0.02% 0.02% Interest spread(9) ******************************************** 1.76% 1.69% 1.73% 1.76% Credit Quality Data: Credit costs ************************************************ 1,546 1,075 803 955 Risk-monitored loans **************************************** 5,837 5,170 2,775 1,736 Problem assets(10) ******************************************* 5,920 5,261 2,811 1,825 Problem asset ratio(11) **************************************** 8.9% 8.4% 5.0% 3.3% Reserve ratio to unsecured assets(12) **************************** 49.9% 54.9% 59.5% 80.0%

(1) Figures for the fiscal year ended March 31, 2002 include the operating results of Wakashio Bank. (2) Figures for the fiscal year ended March 31, 2003 include the operating results of the Former-SMBC for the period from April 1, 2002 to March 16, 2003. (3) Gross operating profit (gyoumu sorieki) is the sum of net interest income, trust fees and commissions, net trading income and net other operating income. Japanese banking law requires banks to disclose gross operating profit on a non-consolidated basis. (4) Excluding non-recurring losses. (5) Banking profit (before provision for general reserve for possible loans losses) (gyoumu jun’eki), a commonly used indicator of the profitability of banking operations among Japanese banks, is calculated as follows: net interest income (adjusted to exclude expenses incurred in connection with the management of money held in trust) + net fees and commissions + net trading income + net other operating income – general and administrative expenses (adjusted to exclude certain retirement-related benefits and certain non-recurring items) on a non-consolidated basis. (6) Efficiency ratio is expenses divided by gross operating profit. The efficiency ratio for the fiscal year ended March 31, 2002 becomes 41.2% if ¥220 billion of dividend income from affiliates received in that year is excluded from gross operating profit for that year.

26 (7) Loans to small-and-medium-sized enterprises, etc. represent a portion of all loans and bills discounted, and include consumer loans. Mortgage loans are a subset of consumer loans. (8) Excluding negotiable certificates of deposit. (9) ‘‘Interest spread’’ is interest rate earned on domestic loans and bills discounted minus interest rate paid on domestic deposits, etc. For additional information, see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating Results — Net Interest Income — Net Interest Income’’. (10) In addition to loans, acceptances and guarantees, suspense payments, and other credit-type assets are included in the problem assets based on the Financial Reconstruction Law (as defined on page 30). (11) ‘‘Problem asset ratio’’ equals the aggregate amount of outstanding loans classified as problem assets under the Financial Reconstruction Law divided by the aggregate amount of all loans subject to disclosure under the Financial Reconstruction Law. For additional information, see ‘‘Business — Loan Losses and Non-Performing Loans — Accounting Principles and Self-Assessment Categories Relating to Reserves for Possible Loan Losses’’. (12) ‘‘Reserve ratio for unsecured assets’’ equals the sum of the specific reserve and the general reserve for substandard loans divided by the aggregate amount of unsecured loans classified as problem assets under the Financial Reconstruction Law. For additional information, see ‘‘Business — Loan Losses and Non-Performing Loans — Accounting Principles and Self-Assessment Categories Relating to Reserves for Possible Loan Losses’’.

27 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with ‘‘Selected Consolidated Financial and Other Information’’ and the consolidated financial statements and notes thereto included elsewhere in this Offering Circular. The Bank’s financial statements are prepared in accordance with Japanese GAAP, which differs in certain significant respects from U.S. GAAP. See ‘‘Summary of Selected Differences between Japanese GAAP and U.S. GAAP’’. In the following discussion where amounts are presented in millions of yen, amounts of less than one million have been truncated and where information is presented in billions or trillions of yen, amounts of less than one billion or trillion, as the case may be, have been rounded. Except as otherwise indicated, the information herein with respect to the Bank is presented on a consolidated basis.

Overview Operating Environment The Bank’s results of operations and financial condition are affected by changes in various external factors, including general economic conditions, interest rates, stock and real estate prices and currency exchange rates. The Japanese economy has been experiencing a modest recovery as evidenced by positive growth in GDP, general improvement in Japanese equities and a decline in corporate bankruptcies. However, the Japanese economy is still subject to deflationary conditions characterized, among other things, by declining real estate prices in most of Japan and declining consumer prices. The general economic environment improved mildly in the fiscal years ended March 31, 2004 and 2005. The growth rate in real GDP was 2.0% in the fiscal year ended March 31, 2004. The growth in real GDP slowed to 1.9% during the fiscal year ended March 31, 2005, however, in light of uncertainty in the global economy caused by, among other things, signs of a weakening of the U.S. economy, continuing conflict in the Middle East, higher oil prices and an increase in the value of the yen against the dollar. Unemployment has fallen to 4.5% as of March 31, 2005, from a post-war high of 5.3% in calendar 2002. Exports and capital expenditures rose due to increased overseas demand in the early part of the fiscal year ended March 31, 2005. Private consumption also steadily increased due to an improvement in consumer confidence. Although the Japanese economy began to show signs of modest recovery, consumer prices continued to decline. Interest rates rose in the United States while they remained low in Japan. In the United States, the target for the federal funds rate was raised by 0.25% in each of June, August, September, November and December 2004, and by another 0.25% in each of February, March, May and June 2005 from 1.0% to 3.25%. In Japan, the Bank of Japan has continued to keep short-term interest rates at near zero percent in response to persistent deflation. On the other hand, the yield on ten-year Japanese government bonds which was approximately 1.5% in April 2004, rose temporarily to approximately 1.9% in June and July, before declining to approximately 1.4% in September 2004. As of May 31, 2005, the yield was approximately 1.3%. The Japanese stock market is experiencing a modest recovery while real estate prices have remained low in most of Japan. On March 11, 2003, the TOPIX reached a nineteen-year low of 770.62, recovering by March 18, 2005 to 1,203.26 but falling back to a recent bottom of 1,109.19 on May 18, 2005. Real estate prices declined in most of Japan in calendar year 2004 for the fourteenth straight year. In the foreign exchange markets, although the yen initially depreciated against the U.S. dollar mainly due to the rise in the U.S. federal funds rate, the exchange rate subsequently stabilized and remained within a narrow range. The noon buying rates of the Federal Reserve Bank of New York for yen were ¥104.18 per $1.00 at March 31, 2004, ¥110.20 per $1.00 at September 30, 2004 and ¥107.22 per $1.00 at March 31, 2005. The number of corporate bankruptcy filings in Japan has declined. After reaching a 17-year high in calendar year 2001, with 19,441 corporate bankruptcies involving liabilities of more than ¥10 million, corporate bankruptcies declined to 13,837 in calendar year 2004. The modest improvements in the Japanese economy and its effects on Japanese banking institutions should be assessed in view of the severe economic conditions of the 1990s that persisted as recently as 2003. Many

28 financial institutions in Japan rapidly increased their outstanding loans in the bubble economy of the 1980s, in particular increasing their exposure to the real estate and financial institution sectors. Beginning in the early 1990s, the Japanese economy performed poorly due to a number of factors, including weak consumer spending and lower capital investment by Japanese companies, causing a large number of corporate bankruptcies and the failure of several large financial institutions. Japanese stock and real estate prices declined significantly, equity prices reaching their lowest levels in 20 years at the end of calendar 2002. As recently as March 31, 2003, declining stock prices, the general effects of a continuing economic downturn, as well as increased FSA scrutiny of banks’ evaluation of loan loss reserves and regulatory capital led many of the largest Japanese banks to suffer significant credit costs. More recently, as banks have endeavored to improve the quality of their assets and strengthen their regulatory capital and as equity prices have recovered, banks have been able to reduce their equity holdings, including cross shareholdings, as well as their ratio of non-performing loans to total outstanding loans. The Japanese government and the Bank of Japan have also contributed to strengthening the ailing financial sector, establishing programs to purchase cross shareholdings from banks in order to reduce the downward pressure on the Japanese stock market. The government also established the Industrial Revitalization Corporation of Japan (‘‘IRCJ’’) to work with banks to facilitate the restructuring of troubled corporate borrowers. Despite these improvements, continuing low interest rates and slow recovery in real estate prices in Japan, as well as slower growth in the U.S. and Chinese economies continue to cause uncertainty in the Japanese banking sector.

Regulatory Environment The Bank’s recent financial results have been affected by a number of laws and regulations, including the Banking Law of Japan (the ‘‘Banking Law’’). Japanese law and regulations, both currently applicable and being contemplated, which have had, which are expected to have, or may have, a significant effect on the Bank’s financial condition and results of operations include the following: ) the FSA’s requirement that Japanese banks improve their asset quality by reducing non-performing loans by half between March 31, 2002 and March 31, 2005; ) introduction of regulatory initiatives to encourage the banks to improve their asset quality, including special inspections; ) the Law Concerning Restriction on Shareholdings by Banks requiring a reduction in banks’ equity security holdings to no more than the level of Tier I capital; ) deregulation, including relaxed regulations permitting banks to offer a variety of insurance and pension products in over-the-counter transactions and to engage in the sale of securities; ) the FSA’s December 2004 Program for Further Financial Reform and its March 2005 Work Schedule for the Implementation of the Program for Further Financial Reform, which include proposals for, among other things, further deregulation of the financial services industry, provision of a framework for establishing financial conglomerates in Japan as well as enactment of legislation governing electronic fund settlement and on-line financial transactions; and ) the FSA’s June 2004 Report of the Working Group on Regulation of Capital Adequacy Ratio, which proposes to introduce certain regulations on the treatment of deferred tax assets in calculating capital adequacy ratios and other issues related to capital adequacy of banks, the result of which may require the Bank to reduce the amount of deferred tax assets in calculating its regulatory capital. For a more detailed description of the above regulations as well as other regulations relevant to the Bank, see ‘‘Supervision and Regulation’’.

Asset Quality During recent periods, the Bank’s non-performing loans have decreased substantially, and the Bank has met the FSA’s requirement to reduce its Problem Asset Ratio by about half by March 31, 2005 as compared to such ratio as of March 31, 2002. As of March 31, 2005, the total amount of assets of the Bank on a non-consolidated

29 basis classified as ‘‘bankrupt and quasi-bankrupt assets’’, ‘‘doubtful assets’’ or ‘‘substandard loans’’ in accordance with the Law Concerning Emergency Measures for Financial Reconstruction Law (Law No. 132 of 1998) as amended (the ‘‘Financial Reconstruction Law’’) decreased by ¥987 billion, or 35.1%, from ¥2,811 billion as of March 31, 2004 to ¥1,825 billion as of March 31, 2005. This decrease was due to a ¥278 billion decrease doubtful assets and a ¥795 billion decrease in substandard loans despite a ¥87 billion increase in bankrupt and quasi-bankrupt assets. As of March 31, 2005, the total amount of problem assets of the Bank’s banking subsidiaries, Minato Bank and Kansai Urban, decreased by ¥56.8 billion from ¥241.4 billion as of March 31, 2004 to ¥184.6 billion as of March 31, 2005. Doubtful assets and substandard loans decreased due primarily to the reorganization and restructuring of borrowers, including large company borrowers, and reclassification of borrowers, as well as the Bank’s progress in making qualifying dispositions of problem assets in accordance with government guidelines. Qualifying dispositions include the abandonment or write-off of loans of borrowers involved in bankruptcy or liquidation proceedings, the abandonment or write-off of loans of borrowers involved in rehabilitative bankruptcy proceedings, loan forgiveness, sales of loans, direct write-offs, collection or repayment of loans and improvement in performance of borrowers. During the fiscal year ended March 31, 2005, the Bank made qualifying dispositions of ¥1,276 billion in problem assets. Assets that are the subject of qualifying dispositions may nevertheless continue to be reflected as assets on the Bank’s balance sheet. See ‘‘Business — Loan Losses and Non-Performing Loans’’. As a result of the Bank’s efforts to meet the regulatory requirement to reduce non-performing loans, it incurred significant credit costs in the fiscal year ended March 31, 2005. See ‘‘— Overview — Recent Developments — Earnings Revisions; Additional Credit Costs’’.

Reduction of Equity Securities Investment Portfolio The Bank has significantly reduced the book value of its equity securities, particularly listed Japanese equities, and intends to continue to reduce its Japanese equity shareholdings in the current fiscal year. As of March 31, 2005, the book value (or acquisition cost) of the Bank’s equity securities portfolio classified as other securities was 61.2% of its Tier I capital. As of such date, the Bank held equity investment securities with a book value of ¥2.0 trillion which reflects a decrease by ¥0.2 trillion from March 31, 2004, due primarily to a reduction in cross shareholdings. As of March 31, 2005, the Bank met the Japanese legal requirement, applicable beginning September 30, 2006, that the aggregate market value (excluding unrealized gains, if any) of the consolidated equity portfolio of a bank shall amount to no more than such bank’s consolidated Tier I capital. See ‘‘Business — Strategy — Strengthening of the Balance Sheet’’, ‘‘Business — Securities-Related Activities’’ and ‘‘Supervision and Regulation — Japan — Restriction on Shareholdings’’.

Expansion of Financial Product and Services Offerings Deregulation in the Japanese banking industry permitting banks to offer certain insurance and pension products and to engage in the sale of securities, as well as proposals set forth in the FSA’s December 2004 Program for Further Financial Reform are fostering an environment of increased competition among banks and creating pressure for banks to expand their offerings of ﬁnancial products and services. The Bank began offering securities intermediary services for both individual and corporate customers in December 2004. The Bank has also expanded its over-the-counter offerings to include pension-type insurance as well as investment trust and testamentary trust products. As the Bank expands its range of products and services, it will need to develop, invest in and implement systems to manage such new products and services. The potential enactment of legislation governing electronic fund settlement and on-line ﬁnancial transactions may also lead to an increase in the Bank’s costs of compliance and establishment of systems.

Potential Limitations on Inclusion of Deferred Tax Assets in Tier I Capital As permitted under current Japanese banking regulations, the Bank currently includes the full amount of its deferred tax assets in calculating its regulatory capital. As of March 31, 2005, the Bank recognized ¥1,502 billion of net deferred tax assets on its non-consolidated balance sheet, which is calculated based on future projected taxable income for ﬁve years, multiplied by the effective tax rates applicable to the Bank. As of the same date, consolidated net deferred tax assets of ¥1,505 billion constituted 47% of the Bank’s consolidated Tier I capital, which is a high percentage relative to most other major Japanese banks. The FSA recommended in its June 2004

30 report that certain regulations be introduced with respect to an appropriate treatment of deferred tax assets in calculating capital adequacy ratios, but recommended that any such modiﬁcations be deferred until after banks reduced their ratio of non-performing loans to total outstanding loans. The deadline for the reduction of non- performing loans was March 31, 2005. The disallowance of all or any portion of the Bank’s deferred tax assets in calculating its regulatory capital for any reason, including but not limited to changes in regulation, could materially affect the Bank’s capital adequacy ratio. The FSA also stated, in its December 2004 Program for Further Financial Reform and March 2005 Work Schedule for the Implementation of the Program for Further Financial Reform, its aim to study the introduction of an appropriate regulatory treatment of deferred tax assets in calculating capital adequacy ratios. See ‘‘Risk Factors — Risks Related to the Bank — Weaknesses in the Bank’s Capital Base and Potential Regulatory Changes Related to Deferred Tax Assets and Cross Investments which Would Affect the Calculation of Regulatory Capital Could Adversely Affect the Bank’’ and ‘‘Supervision and Regulation — Japan — The Financial Services Agency — Deferred Tax Assets’’.

Recent Developments Increased Credit Cost For the fiscal year ended March 31, 2005, the Bank, on a non-consolidated basis, recorded credit cost of ¥955 billion, a ¥151 billion increase from fiscal year ended March 31, 2004. This was approximately ¥305 billion higher than forecasted in November 2004. The Bank’s credit costs on a consolidated basis were ¥1,167 billion for the fiscal year ended March 31, 2005. The increase in credit costs reflected a downgrading or reclassification of borrowers under self-assessment, an increase in costs associated with dispositions of non-performing loans, and increases in provisions, particularly for claims to borrowers requiring caution. Due in large part to the increased credit costs, the Bank incurred, on a non-consolidated basis, a net loss of ¥137 billion for the fiscal year ended March 31, 2005, as compared to the previously forecasted net income of ¥250 billion. The FSA has in the past issued administrative business improvement orders to banks and bank holding companies, including the Bank, which had received public funds and recorded net income substantially below the net income targeted in their rationalization plans. In such business improvement orders, the FSA has required banks to submit and implement business improvement plans that indicate concrete measures for achieving their targets. There is a possibility that the FSA may issue a similar business improvement order to the Bank in view of the Bank’s material failure to meet its targeted net income in its rationalization plan for the fiscal year ended March 31, 2005. See ‘‘Supervision and Regulation — Japan — Public Money Injection and Rationalization Plan’’ and ‘‘— Business Improvement Administration Order’’.

Type 6 Preferred Stock Issuance On March 30, 2005, the Bank issued 70,001 shares of its first series Type 6 preferred stock through direct allotment to SMFG for an aggregate issue price of ¥210 billion. SMFG subscribed for the Bank’s first series Type 6 preferred stock using proceeds from its issuance of 70,001 shares of first series Type 6 preferred stock of SMFG for an aggregate issue price of ¥210 billion. The shares of first series Type 6 preferred stock of SMFG were allocated on March 29, 2005 by means of third party allocation to Sumitomo Life Insurance Company (‘‘Sumitomo Life’’), Nippon Life Insurance Company (‘‘Nippon Life’’), Mitsui Life Insurance Company Limited (‘‘Mitsui Life’’) and Mitsui Sumitomo Insurance Company, Limited (‘‘Mitsui Sumitomo Insurance’’). The Bank intends to use proceeds from the issuance as general working capital. See ‘‘Business — Funding — Other Sources of Funding’’.

Public Funding As part of a government-funded bank recapitalization program designed to strengthen Japan’s ﬁnancial system, on March 31, 1999, The Sumitomo Bank, Limited (‘‘Sumitomo Bank’’) issued ¥501 billion of preferred stock and on March 31, 1999, The Sakura Bank, Limited (‘‘Sakura Bank’’) issued ¥800 billion of preferred stock to the RCC, an entity established pursuant to the Law Concerning Emergency Measures for Early Strengthening of Functions of the Financial System (the ‘‘Financial Function Early Strengthening Law’’). In the process of establishing SMFG through a statutory share transfer (kabushiki iten) which took effect as of December 2, 2002, these preferred stocks were transferred from the RCC to SMFG in exchange for preferred

31 stocks of SMFG (Type 1, Type 2 and Type 3) newly issued with effectively the same terms and conditions as those of the corresponding preferred stocks of the Former-SMBC held by the RCC. On September 30, 2004, at the request of SMFG, The Deposit Insurance Corporation of Japan (the ‘‘DIC’’) approved the exercise of conversion rights by the RCC of a portion of the RCC Preferred Stock, namely, 32,000 shares of Type 1 preferred stock of SMFG, converted into 101,362.06 common shares, and 105,000 shares of Type 3 preferred stock of SMFG, converted into 300,343.25 common shares. As a result, the RCC held 401,705.31 SMFG common shares, approximately 6.5% of the aggregate number of SMFG common shares outstanding. On November 1, 2004, at the request of SMFG, the DIC approved the disposition by the RCC of a portion of SMFG common shares held by the RCC. On November 2, 2004, SMFG repurchased 400,805 common shares at a total repurchase price of ¥267.7 billion. The RCC continues to hold the remaining RCC Preferred Stock. The RCC would own approximately 20.4% of SMFG’s common stock (excluding treasury stock) at capitalization levels as of March 31, 2005, assuming full conversion of such remaining RCC Preferred Stock and no conversion of any other outstanding preferred stocks issued by SMFG. However, the governmental entity could acquire more or less than 20.4% interest depending on SMFG’s share price at the time of conversion and certain minimum conversion price restrictions. At SMFG’s annual general meeting of shareholders held on June 29, 2005, the shareholders authorized the Board of Directors of SMFG to repurchase up to 500,000 shares of common stock, 35,000 shares of Type 1 preferred stock, 100,000 shares of Type 2 preferred stock and 695,000 shares of Type 3 preferred stock with a maximum total repurchase price of ¥300 billion. The proposal was also approved by the holders of each class of SMFG’s preferred stock. In connection with the above, SMFG, the sole shareholder of SMBC’s common stock and each class of SMBC’s preferred stock, authorized the Board of Directors of SMBC to repurchase its Type 1, Type 2 and Type 3 preferred stock held by SMFG with a maximum total repurchase price of ¥300 billion. See ‘‘Business — Funding — Public Funding’’.

Factors Affecting Results of Operations Income

The Bank has three principal sources of operating income: net interest income, fees and commissions and net trading proﬁts. The Bank also earns operating income from net other operating income and net other income.

Net Interest Income. Net interest income, or the difference between interest income and interest expenses, is determined by the amount of interest-earning assets and interest-bearing liabilities, the spread, or the difference between the rate of the interest earned on average interest-earning assets and the rate of interest paid on average interest-bearing liabilities, the general level of interest rates and the proportion of interest-earning assets ﬁnanced by non-interest-bearing liabilities and equity. The Bank’s principal interest-earning assets are loans and bills discounted and, to a lesser extent, securities, including from its holdings of JGBs. The Bank’s principal interest- bearing liabilities are deposits and bonds. The Bank’s interest expenses also include interest paid on payables under securities lending transactions and interest paid on borrowings and rediscounts.

In recent periods, the Bank’s net interest income has decreased, due primarily to decreases in the Bank’s interest-earning assets, primarily outstanding loans and bills discounted, reflecting sluggish demand for corporate loans in Japan, and the Bank’s efforts to reduce the amount of its non-performing loans. The Bank’s net interest income is also affected by the general level of interest rates. The Bank seeks to control its exposure to interest rate fluctuations through market risk and asset liability management operations. In the past when interest rates had been declining in Japan as well as overseas, the Bank has made a high level of profit from domestic and foreign interest rate swaps entered into for purposes of its asset liability management operations. However, future increases in interest rates may have a negative effect on the Bank’s profit from such operations.

An increase in interest rates will have a different effect on interest spread. When interest rates rise, interest spread at commercial banks generally increases. In contrast, it is difﬁcult to earn a wide proﬁt spread when interest rates are at a low level, as they currently are in Japan. The Bank’s interest spread may momentarily decrease immediately after an increase in interest rates since it may take time for banks to increase lending rates correspondingly, in contrast to deposit rates. After an adjustment period, however, lending rates generally also increase and banks are able to secure wider spread than in a low-interest environment.

32 In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded net interest income of ¥1,400,121 million, ¥1,265,630 million and ¥1,152,664 million, respectively. Fees and Commissions. The Bank earns fees and commissions from a variety of services. The principal components, particularly in recent periods, are fees and commissions from money remittance and transfers such as electronic, telephone and Internet banking, guarantees and acceptances, deposits and loans, securities-related businesses and sales of investment trusts and pension-type insurance. The principal factors affecting fees and commissions are the demand for the services provided and fees charged by competitors for similar services. The volume of services provided also affects profitability, as a number of the Bank’s fee businesses, such as Internet banking, have significant economies of scale. In order to diversify the Bank’s sources of revenue, reduce balance sheet exposure and enhance return on assets, the Bank is actively engaged in expanding its fees and commissions businesses. In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded fees and commissions (net of expenses) of ¥349,977 million, ¥330,610 million and ¥419,155 million, respectively. Net Trading Income. The Bank records gains or losses on the fair value of its trading assets and liabilities, which are securities, derivatives and other capital market instruments held for short periods in anticipation of capital gains. The principal factors affecting net trading income are fluctuations in the value of Japanese yen against foreign currencies, principally U.S. dollar, the general level of interest rates and the level of sales of financial products, particularly, in recent periods, derivatives. In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded net trading income of ¥205,770 million, ¥304,094 million and ¥144,387 million, respectively.

Net Other Operating Income The Bank’s net other operating income includes net profit from bond-related operations, gains on foreign exchange operations and other items. Net profit from net gain on bond-related operations consists of gains on sales and redemptions of bonds including JGBs, after subtracting losses on the sale, redemption and devaluation of bonds. The Bank’s net profit from bond-related operations and gains on trading account securities fluctuate depending on a number of factors, such as fluctuations in market prices of bonds and related products, the status of the Bank’s open and hedged positions and the cost of managing any market exposures as well as, in the case of gains on trading account securities, the volume of, and margin in respect of, transactions. Gains on foreign exchange operations include net gains from foreign-currency transactions, gains on revaluation of foreign- currency positions at each fiscal period end, margins earned on trades for customers and gains on hedged positions in foreign-denominated transactions. Gains on foreign exchange operations fluctuate depending upon a number of factors such as the volume of, and margin earned in respect of, transactions initiated by customers and the status of the Bank’s open and hedged positions in the market and the costs of managing any market exposures. The major component of net other operating income is fees earned on securities lending and gains and losses on sales of performing loans. In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded net other operating income of ¥225,842 million, ¥7,552 million and ¥140,101 million, respectively.

Expenses General and administrative expenses consist primarily of salaries and related expenses, rent and lease expenses, welfare expenses, depreciation expenses and taxes other than income taxes. The Bank’s general and administrative expenses have been decreasing in recent periods due to cost reduction efforts involving a reduction in the number of offices and branches, the integration of information technology systems and a reduction in personnel. In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded general and administrative expenses of ¥888,421 million, ¥776,106 million and ¥769,239 million, respectively. General and administrative expenses accounted for 21.6%, 31.2% and 26.7% of the Bank’s total expenses for the fiscal years ended March 31, 2003, 2004 and 2005, respectively.

33 The Bank also records other operating expenses, consisting primarily of bond-related losses, lease-related expenses, installment-related and other expenses, consisting of write-off of loans, losses on devaluation of stocks, losses on sales of stock and other securities, losses on disposal of premises and equipment, and other, including amortized cost of unrecognized net obligation from initial application of the new accounting standard for employee retirement benefits and losses on disposal of software. In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded other operating expenses of ¥721,193 million, ¥223,464 million and ¥172,751 million, respectively, and other expenses of ¥1,347,022 million, ¥1,100,179 million and ¥1,218,820 million, respectively. Other operating expenses accounted for 17.6%, 9.0% and 6.0% of the Bank’s total expenses for the fiscal years ended March 31, 2003, 2004 and 2005, respectively, while other expenses accounted for 32.8%, 44.2% and 42.4% of the Bank’s total expenses for the fiscal years ended March 31, 2003, 2004 and 2005, respectively. The Bank also recorded provision for reserve for possible loan losses of ¥655,488 million and ¥284,362 million in the fiscal years ended March 31, 2003 and 2005, while the Bank recorded gains on reversal of reserve for possible loan losses of ¥24,111 million in the fiscal year ended March 31, 2004.

Credit Cost Credit costs consist primarily of write-off of loans, provision for general reserve for possible loan losses and provision for specific reserves. Credit costs are recorded in provision for reserve for possible loan losses and other expenses. The primary factors affecting credit costs are the creditworthiness of the Bank’s customers, the value of guarantees and collateral taken and the level of reserves in each asset category. In the fiscal years ended March 31, 2003, 2004 and 2005, the Bank recorded credit costs of ¥1,201,681 million, ¥924,159 million and ¥1,167,075 million, respectively. Credit costs accounted for 29.3%, 37.2% and 40.6% of the Bank’s total expenses for the fiscal years ended March 31, 2003, 2004 and 2005, respectively. The Bank’s credit costs for the fiscal year ended March 31, 2005 were adversely impacted by measures taken by the Bank to further reduce its non-performing loans. See ‘‘— Recent Developments — Earnings Revisions’’.

Critical Accounting Policies The Bank makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent liabilities as of the end of, or for each fiscal year. Actual results may differ from those estimates. The Bank has identified the following accounting policies as critical to an understanding of the Bank’s business since the application of these policies requires significant management assumptions and estimates that could result in the reporting of materially different amounts if such assumptions and estimates prove to be unwarranted.

Reserve for Possible Loan Losses The Bank maintains a reserve for possible loan losses for exposures in its portfolio that represents the estimate of probable losses in the loan portfolio. Determining the reserve for possible loan losses requires significant management judgment and the use of estimates including the ongoing risk assessment of customers’ ability to pay and/or the fair value of underlying collateral. As of March 31, 2004 and 2005, the Bank’s reserve for possible loans losses totaled ¥1,375,921 million and ¥1,239,882 million, respectively, while the Bank’s balance of loans was ¥55,428,967 million and ¥55,148,929 million, respectively. Reserves for possible loan losses are comprised of three parts: general reserves, specific reserves and reserves for specific overseas countries. The Bank uses a quarterly self-assessment process to analyze the quality of its loans and thereby calculate its reserves. General reserves are calculated based on historical credit loss ratios, except for loan loss reserves for substandard loans made to borrowers with large exposure, which are calculated by discounting the projected cash flows from such loans to present value. Specific reserves are calculated based on the Bank’s estimate of the probability of loan losses on the whole amount of each loan to bankrupt and quasi bankrupt borrowers and loans

34 to potentially bankrupt borrowers under the Bank’s self-assessment classifications. In recent periods, the Bank has transferred large amounts to the specific reserves. During the fiscal years ended March 31, 2003, 2004 and 2005, the Bank transferred ¥407,963 million, ¥307,660 million and ¥488,730 million to its specific reserves. The specific reserve ratio applicable to loans for bankrupt and quasi bankrupt borrowers and loans for potentially bankrupt borrowers as of March 31, 2005, on a non-consolidated basis, was 100% and 94.6%, respectively. Reserves for possible losses on specific overseas loans are calculated based on the amount of expected losses due to the political and economic situation of these countries. If actual events prove the estimates and assumptions used in determining the reserve for possible loan losses incorrect, the Bank may need to make additional provisions for loan losses. See ‘‘Business — Loan Losses and Non-Performing Loans’’.

Impairment of Investments

The Bank recognizes an impairment loss for its available-for-sale securities (classified as ‘‘other securities’’) that have a readily ascertainable market value if the market value of the securities suffers an unrecoverable decline that is not considered temporary. Management judgment is required in determining whether factors exist that indicate that an impairment loss has been incurred at the balance sheet date. The Bank conducts quarterly reviews to identify and evaluate available-for-sale securities that have indications of possible impairment. In determining whether a decline in fair value is not temporary for a particular security, indicators of a not temporary decline for available-for-sale securities with a readily ascertainable market value include the extent of the decline in fair value below cost. Other securities with market value are considered as impaired if the market value decreases materially below the acquisition cost and such decline is not considered as recoverable. The market value is recognized as the consolidated balance sheet amount and the amount of write-down is accounted for as valuation loss for the fiscal year. The determination of ‘‘material decline’’ is made as follows based on the classification of issuing company: (i) bankrupt issuers (issuers that are legally bankrupt or formally declared bankrupt), effectively bankrupt issuers (issuers that are not legally bankrupt but regarded as substantially bankrupt) and potentially bankrupt issuers (issuers that are not currently bankrupt but are perceived to have a high risk of falling into bankruptcy) — when market value is lower than acquisition cost; (ii) issuers requiring caution (issuers that are identified for close monitoring) — when market value is 30% or more lower than acquisition cost and (iii) normal issuers (issuers that do not fall under the four aforementioned categories) — when market value is 50% or more lower than acquisition cost. The Bank also recognizes impairments quarterly on its debt securities classified as held-to-maturity, other securities that do not have a readily ascertainable market value and investments in subsidiaries and affiliates in accordance with its internal rules for the self-assessment of assets, which consider such factors as the credit standing of issuers and the extent of decline in net assets of issuers. When a determination that the decline is not temporary, the securities are written down to the Bank’s share of the amount of the issuer’s net assets, which approximates fair value. Future impairment charges may be required if triggering events occur, such as worsening market conditions or downgrades in credit ratings and breach of covenants in the case of debt securities, suggesting the deterioration in an investment’s future economic benefit. The amount of these impairments may be a matter of significant judgment.

Deferred Tax Assets

The Bank recognizes deferred tax assets and liabilities for the estimated future tax effects of temporary differences, net operating loss carryforwards and tax credits. Deferred tax assets are recognized based on the tax planning strategy authorized by the Bank’s management. In the process of determining the amount of net deferred tax assets to be recognized on the balance sheet, the Bank makes certain estimates and assumptions, including, in particular, an estimation of taxable income for the next five years. If it is later determined not probable that such projected taxable income will be realized, the Bank will provide a valuation allowance for deferred tax assets to reflect this, and a corresponding amount of income tax expense will be recognized in the period. Due to losses in recent periods and continuing weak economic conditions, the determination of the valuation allowance involves difficult judgments relating to estimated future taxable income. In addition, because

35 the establishment of the valuation allowance is an inherently uncertain process involving estimates, the currently established valuation allowance may not be sufﬁcient. As of March 31, 2005, net deferred tax assets amounted to ¥1,505,127 million, a ¥101,995 million decrease from the amount at March 31, 2004. The decrease was due primarily to an increase in valuation allowance and deferred tax liabilities. As of March 31, 2005, the valuation allowance was ¥595,760 million. As a result of recent regulatory developments, the FSA may impose a cap on the amount of deferred tax assets which a bank may include in calculating regulatory capital and may carefully audit the bank’s determinations on the occasion of FSA special inspections. See ‘‘— Capital Adequacy — Bank Consolidated’’ and ‘‘Risk Factors — Risks Related to the Bank — Weaknesses in the Bank’s Capital Base and Potential Regulatory Changes Related to Deferred Tax Assets and Cross Investments which Would Affect the Calculation of Regulatory Capital Could Adversely Affect the Bank’’.

Fair Value Estimates Quoted market prices in active markets are the most reliable measure of fair value. However, quoted market prices for certain instruments, investments and activities, such as non-exchange traded contracts and equity investments in non-public securities, are usually not available. In these cases, the determination of fair value requires the Bank to make estimates and certain assumptions. The Bank estimates the fair value by relying on various methods, such as the discounted cash ﬂow method, to make these determinations. However, these methods themselves require the use of estimates and assumptions which may differ from actual results.

Hedge Accounting Over the entire life of an effective hedging instrument, changes in the fair value or cash flows of the hedged item can be expected to be almost fully offset by changes in the fair value or cash flows of the hedging instrument, so the net impact on profit over time is relatively small. However, if the hedged item is one that would normally not be recorded at fair value (for instance if it is held at cost less impairment), but the hedging instrument is of a sort that would normally be accounted for at fair value, there could be substantial differences in the profit and loss effect for the two items during specific accounting periods, although over the whole life of the instrument these differences would be expected to balance out. Applying hedge accounting means that changes in the fair values of designated hedging instruments affect reported net profit in a period only to the extent that each hedge is ineffective. If the Bank did not apply hedge accounting, the entire change in fair value of the designated hedging instrument in each individual reporting period would be reported in net income for that period regardless of the economic effectiveness of the hedge. For the fiscal year ended March 31, 2005, this would have resulted in a pre-tax deferred loss of ¥59.3 billion, on a non-consolidated basis, the Bank believes that not applying hedge accounting could lead to misinterpretations of its results and financial position since hedging transactions could have a material impact on reported net profit in a particular period, although over the total life of a hedge the net effect of the two treatments is identical.

Liability for Employee Retirement Benefits The Bank has significant employee retirement and severance benefit obligations which are developed from actuarial valuations. Inherent in these valuations are key assumptions, including discount rates and expected return on plan assets. Management must consider current market conditions, including changes in interest rates, in selecting these assumptions. Other assumptions include assumed rate of increase in compensation levels, mortality rate, and withdrawal rate. Changes in these assumptions inherent in the valuation are reasonably likely to occur from period to period. These changes in assumptions may lead to changes in related employee retirement and severance benefit costs or credits in the future. In preparing its financial statements for the fiscal year ended March 31, 2005, the Bank estimated a discount rate of 2.5% and an expected long-term rate of return on employee pension plan and employee retirement benefit trust of 4.0% and 0.8%, respectively. In estimating the discount rate, the Bank determines which of its JGBs have

36 a maturity period comparable to the remaining service period, and matches this period with the remaining life expectancy of the Bank’s participants. The Bank establishes the expected long-term rate of return on plan assets based on management’s expectations of the long-term return of the various plan asset categories in which it invests. Management develops expectations with respect to each plan asset category based on actual historical returns and its current expectations for future returns.

Operating Results

The following table presents certain information as to the Bank’s income, expenses and net income for each of the three fiscal years ended March 31, 2003, 2004 and 2005: Fiscal years ended March 31, 2003 2004 2005 (Millions of yen) Interest income ******************************************* ¥1,817,526 ¥ 1,560,705 ¥1,490,519 Interest expenses ****************************************** 417,405 295,075 337,855 Net interest income************************************** 1,400,121 1,265,630 1,152,664 Trust fees************************************************ 7 334 2,609 Fees and commissions (income) ***************************** 424,235 422,066 511,824 Fees and commissions (expenses) **************************** 74,257 91,455 92,669 Net fees and commissions ******************************** 349,977 330,610 419,155 Trading profits******************************************** 206,496 305,011 144,587 Trading losses ******************************************** 725 916 199 Net trading income ************************************** 205,770 304,094 144,387 Other operating income ************************************ 947,036 231,017 312,852 Other operating expenses *********************************** 721,193 223,464 172,751 Net other operating income ******************************* 225,842 7,552 140,101 General and administrative expenses ************************** 888,421 776,106 769,239 Provision for reserve for possible loan losses******************* 655,488 — 284,362 Other income********************************************* 166,541 324,367 236,808 Other expenses ******************************************* 1,347,022 1,100,179 1,218,820 Income (loss) before income taxes and minority interests ********* (542,670) 356,304 (176,695) Income tax (expense)/benefit ******************************** 150,320 (14,263) (53,054) Minority interests in net income (loss) ************************ (37,037) (40,376) (49,246) Net income (loss) ***************************************** ¥ (429,387) ¥ 301,664 ¥ (278,995)

Net Interest Income

Interest Income

The Bank’s total interest income decreased by ¥70,186 million, or 4.5%, from ¥1,560,705 million in the fiscal year ended March 31, 2004 to ¥1,490,519 million in the fiscal year ended March 31, 2005. This decrease principally reflected decreases in interest on loans and discounts and other interest income. Interest on loans and discounts decreased by ¥18,647 million, or 1.6%, to ¥1,120,390 million in the fiscal year ended March 31, 2005, primarily as a result of an overall decrease in loan balances in domestic operations and in non-performing loans. Other interest income decreased by ¥75,664 million, or 50.5%, to ¥74,076 million in the fiscal year ended March 31, 2005, primarily as a result of decrease in gains on interest rate swaps entered into for purposes of asset liability management operations. A decline in the Bank’s total interest income was partially offset by increase in interest on deposits with banks by ¥23,504 million, or 185.4%, to ¥36,183 million in the fiscal year ended March 31, 2005, due primarily to an increase in interest on foreign currency denominated deposits.

37 The Bank’s total interest income decreased by ¥256,821 million, or 14.1%, from ¥1,817,526 million in the fiscal year ended March 31, 2003 to ¥1,560,705 million in the fiscal year ended March 31, 2004. This decrease principally reflected decreases in interest on loans and discounts, interest on deposits with banks, interest, dividends on securities and other interest income. Interest on loans and discounts decreased by ¥127,282 million, or 10.1%, to ¥1,139,037 million in the fiscal year ended March 31, 2004, primarily as a result of an overall decrease in loan balances in both domestic and overseas operations and also due to declining interest income abroad. During the fiscal year ended March 31, 2004, a decline in the balance of loans to corporate borrowers was partially offset by increases in loans to SMEs and in home mortgage loans. Interest on deposits with banks declined by ¥22,080 million, or 63.5%, to ¥12,679 million in the fiscal year ended March 31, 2004, due primarily to declines in balances of and interest rates on international bank deposits. Interest and dividends on securities decreased by ¥12,239 million, or 4.6%, to ¥256,601 million in the fiscal year ended March 31, 2004 due primarily to a decrease in the balance of equity securities as the result of the Bank’s effort to reduce stockholdings. Other interest income decreased by ¥96,288 million, or 39.1%, to ¥149,740 million in the fiscal year ended March 31, 2004, primarily as a result of a decrease in gains on interest rate swaps entered into for purposes of asset liabilities management operations. The following table shows changes in interest income of the Bank on a non-consolidated basis allocated between changes in volume and changes in rate for the periods shown. Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total ‘‘Net Change’’. Volume/rate variance is prorated according to changes in volume and rate. Fiscal year ended March 31, 2004 Fiscal year ended March 31, 2005 Versus Fiscal year ended March 31, Versus Fiscal year ended March 31, 2003 Increase (Decrease) Due to 2004 Increase (Decrease) Due to Changes in Changes in Volume Rate Net Change Volume Rate Net Change (Millions of yen) Non-consolidated Interest income: Loans and bills discounted:(1) Domestic *********************** ¥(59,105) ¥ 9,680 ¥ (49,424) ¥(63,897) ¥ 10,284 ¥(53,612) International ******************** (46,445) (30,565) (77,011) 4,433 11,181 15,614 Total************************* (126,435) (37,998) Securities:(2) Domestic *********************** (1,615) (11,172) (12,787) 2,988 16,983 19,972 International ******************** 26,560 (22,017) 4,543 (16,666) 9,739 (6,926) Total************************* (8,243) 13,046 Call loans:(1) Domestic *********************** (54) (139) (193) (20) (57) (78) International ******************** 292 (727) (434) 1,695 1,147 2,843 Total************************* (627) 2,764 Receivables under resale agreements: Domestic *********************** (1) 0 (1) 0 0 0 International ******************** 230 137 367 422 714 1,136 Total************************* 366 1,136

38 Fiscal year ended March 31, 2004 Fiscal year ended March 31, 2005 Versus Fiscal year ended March 31, Versus Fiscal year ended March 31, 2003 Increase (Decrease) Due to 2004 Increase (Decrease) Due to Changes in Changes in Volume Rate Net Change Volume Rate Net Change (Millions of yen) Bills bought:(1) Domestic *********************** (7) (21) (29) 0 (2) (2) International ******************** —————— Total************************* (29) (2) Deposits with banks:(3) Domestic *********************** (109) (20) (130) (37) (40) (77) International ******************** (11,969) (11,344) (23,314) 14,688 7,872 22,560 Total************************* (23,444) 22,483 Total interest income: Domestic *********************** (67,656) (20,009) (87,666) (40,908) 2,698 (38,209) International ******************** (55,644) (110,980) (166,625) 27,174 (62,584) (35,409) Total************************* ¥(254,769) ¥(73,624)

(1) Loans and bills discounted, call loans and bills bought relate to ‘‘Interest on loans and discounts’’ in the statements of income. (2) Securities relates to ‘‘Interest and dividends on securities’’ in the statements of income. (3) Interest-earning deposits in other banks relate to ‘‘Interest on deposits with banks’’ in the statements of income. The following table sets forth information regarding the Bank’s interest income and average interest-earning assets for the periods shown: Fiscal year ended March 31, Percentage Change 2003 2004 2005 2003/2004 2004/2005 (Millions of yen, except percentages) Interest income ************ ¥ 1,817,526 ¥ 1,560,705 ¥ 1,490,519 (14.1)% (4.5)% Average interest-earning assets(1)(2) *************** 92,471,081 86,501,290 85,037,716 (6.5) (1.7) Loans and bills discounted 62,968,968 58,663,957 55,510,427 (6.8) (5.4) Securities *************** 23,416,587 24,127,804 24,152,860 3.0 0.1 Deposits with banks ****** 1,769,561 1,217,563 2,107,140 (31.2) 73.1 Other interest-earning assets 4,315,963 2,491,965 3,267,287 (42.3) 31.1 Average rate*************** 1.97% 1.80% 1.75% (0.17)% (0.05)%

(1) Interest-earning assets are shown after deduction of the average balance of non-interest-earning deposits, which were ¥836,686 million in the fiscal year ended March 31, 2003, ¥1,332,007 million in the fiscal year ended March 31, 2004 and ¥1,703,992 million in the fiscal year ended March 31, 2005, and the average balance of money held in trust, which was ¥43,769 million in the fiscal year ended March 31, 2003, ¥21,933 million in the fiscal year ended March 31, 2004 and ¥3,629 million in the fiscal year ended March 31, 2005. (2) Average balances are based on a combination of daily averages (in the case of the Bank on a non-consolidated basis and most consolidated subsidiaries) and weekly, monthly or semi-annual averages (for some consolidated subsidiaries). For more information on the Bank’s average asset balances and related interest and average interest rates, see ‘‘Business — Assets’’.

Interest Expenses The Bank’s total interest expense increased by ¥42,780 million, or 14.5%, from ¥295,075 million in the fiscal year ended March 31, 2004 to ¥337,855 million in the fiscal year ended March 31, 2005, due primarily to increases in interest expense on deposits and interest expense on bonds, as well as an increase in other interest expenses. Interest expense on deposits increased by ¥27,031 million, or 25.0%, to ¥135,317 million in the fiscal

39 year ended March 31, 2005, due primarily to an increase in interest expense on domestic deposits. Interest expense on bonds increased by ¥8,589 million, or 11.5%, to ¥83,444 million in the fiscal year ended March 31, 2005, due primarily to an increase in bonds issued by the Bank. Other interest expenses increased by ¥7,834 million, or 30.8%, to ¥33,244 million in the fiscal year ended March 31, 2005, due primarily to an increase in such expenses in foreign operations. Interest expense on borrowings and rediscounts decreased by ¥3,164 million, or 9.4%, from ¥33,687 million in fiscal year ended March 31, 2004 to ¥30,523 million in fiscal year ended March 31, 2005, reflecting lower balances of interbank borrowings, partially offset by higher rates of interest on such borrowings. The Bank’s total interest expense decreased by ¥122,330 million, or 29.3%, from ¥417,405 million in the fiscal year ended March 31, 2003 to ¥295,075 million in the fiscal year ended March 31, 2004, due primarily to decreases in other interest expenses and interest on deposits. Other interest expenses decreased by ¥52,331 million, or 67.3%, to ¥25,410 million in the fiscal year ended March 31, 2004, due primarily to a decrease in swap interests. Interest on deposits decreased by ¥51,657 million, or 32.3%, to ¥108,286 million in the fiscal year ended March 31, 2004, due primarily to a decline in interest expense on overseas deposits. Rates on ordinary domestic deposits, already close to zero in the fiscal year ended March 31, 2003, declined further during the fiscal year ended March 31, 2004, more than offsetting the impact on interest expense of a slight increase in domestic deposits during the period. Interest on borrowings and rediscounts decreased ¥22,798 million, or 40.4%, to ¥33,687 million in fiscal year ended March 31, 2004, reflecting lower balances of interbank borrowings. The following table shows changes in interest expense of the Bank on a non-consolidated basis allocated between changes in volume and changes in rate for the periods shown. Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total ‘‘Net Change’’. Volume/rate variance is prorated according to changes in volume and rate. Fiscal year ended March 31, 2004 Fiscal year ended March 31, 2005 Versus Fiscal year ended March 31, Versus Fiscal year ended March 31, 2003 Increase (Decrease) Due to 2004 Increase (Decrease) Due to Changes in Changes in Volume Rate Net Change Volume Rate Net Change (Millions of yen) Non-consolidated Interest expenses(1): Deposits: Domestic ******************** ¥ 354 ¥ (7,410) ¥ (7,055) ¥ 570 ¥ (2,925) ¥ (2,355) International****************** (21,383) (32,332) (53,715) 14,906 10,034 24,940 Total ********************** (60,771) 22,584 Negotiable certificates of deposit: Domestic ******************** (435) (801) (1,236) (115) 76 (39) International****************** (2,045) (80) (2,125) (69) 166 97 Total ********************** (3,361) 57 Call money: Domestic ******************** (37) (208) (246) (6) (8) (15) International****************** (725) (825) (1,551) 908 918 1,827 Total ********************** (1,797) 1,812 Payables under repurchase agreements: Domestic ******************** 41 (13) 28 (50) (35) (85) International****************** (8,944) (4,710) (13,654) (1,451) 1,234 (216) Total ********************** (13,626) (302)

40 Fiscal year ended March 31, 2004 Fiscal year ended March 31, 2005 Versus Fiscal year ended March 31, Versus Fiscal year ended March 31, 2003 Increase (Decrease) Due to 2004 Increase (Decrease) Due to Changes in Changes in Volume Rate Net Change Volume Rate Net Change (Millions of yen) Bills sold: Domestic ******************** (165) 694 528 (297) (472) (770) International****************** —— ———— Total ********************** 528 (770) Commercial paper: Domestic ******************** (43) (38) (82) 0 0 0 International****************** —— ———— Total ********************** (82) 0 Borrowed money: Domestic ******************** (2,574) (236) (2,811) (2,236) (3,008) (5,244) International****************** (12,151) (185) (12,337) (4,779) 3,854 (925) Total ********************** (15,148) (6,169) Bonds: Domestic ******************** 2,369 (1,579) 790 4,639 (1,040) 3,599 International****************** 7,782 (1,111) 6,670 9,757 (2,314) 7,443 Total ********************** 7,460 11,042 Total interest expenses: Domestic ******************** (2,362) (7,391) (9,754) (1,532) (3,363) (4,896) International****************** (29,673) (78,586) (108,260) 18,752 27,077 45,830 Total ********************** ¥(118,492) ¥40,929

(1) The above breakdown between domestic and international information does not exclude inter-area transfers by the Bank. The following table sets forth the Bank’s interest expenses, average interest-bearing liabilities and average non-interest-bearing current deposits for the periods shown on a consolidated basis: Fiscal year ended March 31, Percentage Change 2003 2004 2005 2003/2004 2004/2005 (Millions of yen, except percentages) Interest expenses ******************* ¥ 417,356 ¥ 295,053 ¥ 337,851 (29.3)% 14.5% Average interest-bearing liabilities(1)(2) ** 92,217,203 87,597,113 87,106,414 (5.0) (0.6) Deposits ************************ 62,286,624 63,153,721 66,973,294 1.4 6.0 Negotiable certiﬁcates of deposit **** 5,940,120 4,378,620 3,742,795 (26.3) (14.5) Other interest-bearing liabilities ***** 23,990,458 20,064,771 16,390,325 (16.4) (18.3) Average rate*********************** 0.45% 0.34% 0.39% (0.11)% 0.05%

(1) Interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust, which was ¥43,769 million in the fiscal year ended March 31, 2003, ¥21,933 million in the fiscal year ended March 31, 2004 and ¥3,629 million in the fiscal year ended March 31, 2005, and corresponding interest, which was ¥48 million in the fiscal year ended March 31, 2003, ¥21 million in the fiscal year ended March 31, 2004 and ¥3 million in the fiscal year ended March 31, 2005. (2) Average balances are based on a combination of daily averages (in the case of the Bank on a non-consolidated basis and most consolidated subsidiaries) and weekly, monthly or semi-annual averages (for some consolidated subsidiaries). For more information on the Bank’s average interest-bearing liabilities by average balances and related interest and average interest rates, see ‘‘Business — Funding’’.

Net Interest Income The Bank’s net interest income decreased by ¥112,966 million, or 8.9%, from ¥1,265,630 million in the ﬁscal year ended March 31, 2004, to ¥1,152,664 million in the ﬁscal year ended March 31, 2005 as a result of a

41 decline in total interest income and an increase in total interest expense. Net interest margin, or net interest income as a percentage of average total interest-earning assets (including loans and bills discounted, securities, deposits with other banks, call loans, bills bought, trading account securities and other interest-earning assets) was 1.36% in the ﬁscal year ended March 31, 2005.

The Bank’s net interest income decreased by ¥134,491 million, or 9.6%, from ¥1,400,121 million in the fiscal year ended March 31, 2003, to ¥1,265,630 million in the fiscal year ended March 31, 2004 as the decline in total interest income exceeded the decline in total interest expense. Net interest margin, or net interest income as a percentage of average total interest-earning assets (including loans and bills discounted, securities, deposits with other banks, call loans, bills bought, trading account securities and other interest-earning assets) was 1.46% in the fiscal year ended March 31, 2004 and 1.52% in the fiscal year ended March 31, 2003.

The following table sets forth information relating to the Bank’s interest-earning assets and interest-bearing liabilities for the periods shown. Average balances are based on daily averages. Fiscal year ended March 31, 2003 2004 2005 (Millions of yen, except percentages) Domestic operations(1) Average total interest-earning assets(2) ******************** ¥83,803,278 ¥80,116,238 ¥77,870,320 Interest income(4)************************************* 1,436,074 1,363,268 1,320,829 Average rate **************************************** 1.71% 1.70% 1.70% Average total interest-bearing liabilities(2) ***************** ¥86,428,380 ¥83,510,193 ¥82,499,517 Interest expenses(4) *********************************** 241,920 225,847 255,867 Average rate **************************************** 0.28% 0.27% 0.31% Net interest income*********************************** ¥ 1,194,153 ¥ 1,137,420 ¥ 1,064,962 Net interest margin(3) ********************************* 1.43% 1.43% 1.39% Overseas operations(1) Average total interest-earning assets(2) ******************** ¥ 9,690,916 ¥ 7,391,661 ¥ 8,043,184 Interest income(4)************************************* 421,432 238,922 219,685 Average rate **************************************** 4.35% 3.23% 2.73% Average total interest-bearing liabilities(2) ***************** ¥ 6,812,607 ¥ 5,109,984 ¥ 5,483,853 Interest expenses(4) *********************************** 209,909 100,641 111,651 Average rate **************************************** 3.08% 1.97% 2.04% Net interest income(2) ********************************* ¥ 211,522 ¥ 138,280 ¥ 108,034 Net interest margin(3) ********************************* 1.27% 1.26% 0.69% Total of domestic and overseas operations(1) Average total interest-earning assets(5) ******************** ¥ 92,471,081 ¥86,501,290 ¥85,037,716 Interest income(5)************************************* 1,817,526 1,560,705 1,490,519 Average rate **************************************** 1.97% 1.80% 1.75% Average total interest-bearing liabilities(5) ***************** ¥92,217,203 ¥87,597,113 ¥87,106,414 Interest expenses(5) *********************************** 417,356 295,053 337,851 Average rate **************************************** 0.45% 0.34% 0.39% Net interest income(5) ********************************* ¥ 1,400,170 ¥ 1,265,651 ¥ 1,152,667 Net interest margin *********************************** 1.52% 1.46% 1.36%

(1) Domestic operations consist of yen-denominated transactions at offices in Japan. Overseas operations are comprised of transactions in foreign currencies at offices in Japan and transactions at overseas offices. In addition, yen-denominated transactions with non-residents of Japan, transactions included in Tokyo offshore accounts for overseas financial transactions and certain other transactions are included in overseas operations. (2) Does not include balances/transactions between business units. (3) Net interest margin equals net interest income as a percentage of average total interest-earning assets. (4) Figures shown before eliminations between domestic and overseas operations. (5) Figures shown after eliminating interest expense derived from the average balance of money held in trust. See footnote (1) in the table setting forth the Bank’s interest expense, average interest-bearing liabilities and average non-interest-bearing current deposits on page 41.

42 Historically, interest spread, calculated by subtracting the interest rate paid on domestic deposits from the interest rate received on domestic loans and bills discounted has been regarded as one traditional measure of Japanese banks’ financial condition. The Bank’s interest spread, calculated on a non-consolidated basis, was 1.76, 1.73, 1.69 and 1.76 for the fiscal years ended March 31, 2005, 2004, 2003, and 2002, respectively. However, the significance of the interest spread as calculated above is mitigated by various factors, including that it is calculated on a non-consolidated basis, that the amount of total domestic loans and bills discounted and the amount of total domestic deposits, which historically were approximately similar, have substantially diverged in recent years, that the Bank holds a significant amount of assets other than domestic loans and bills discounted and has a significant amount of liabilities other than domestic deposits that are not reflected in the calculation of interest spread and that there can be no assurance that the Bank funds its domestic loans and bills discounted with its domestic deposits.

Market and Liquidity Risk Corporate Risk Management Department manages the Bank’s market risk and liquidity risk together, independently from the business units that conduct market transactions. Corporate Risk Management Department generates daily risk reports and sends them electronically to senior management. The methods used to measure and model market and liquidity risks include the value at risk (VaR) method, which uses Monte Carlo simulations, and the basis point value (BPV) indicator. Additionally, the corporate risk management department performs periodic stress tests to prepare for changes in the market environment. To manage the risk in the Bank’s yen-denominated banking account, it uses gap analysis, including maturity ladders and the earnings at risk (EaR) model, as well as the VaR model. If an external factor, such as interest rates, moves in an unfavorable direction, the EaR model indicates the largest estimated change in earnings (interest rate spread) for a set period at a given probability. Since strategy and budgetary planning is based on the earnings for a period, the Bank uses the EaR model to supplement the VaR model. Using Monte Carlo simulations to generate 1,000 scenarios, the Bank tests the magnitude of the effect that new deposits and loans will have on the period’s earnings. The Bank manages liquidity risk so that it is not overly dependent on market-based funding to cover short-term cash outﬂows. The Bank’s liquidity risk management is based on a framework consisting of setting limits and guidelines for funding gap, maintaining a system of highly liquid supplementary funding sources and establishing contingency plans. To attempt to prevent market crises interfering with funding, the Bank carries highly liquid assets, such as U.S. Treasury bonds, and has emergency borrowing facilities in place which also facilitates foreign currency- denominated liquidity management. See ‘‘Business — Risk Management’’.

Net Fees and Commissions The primary component of the Bank’s net fees and commissions income is fees from money remittance and transfers, and in recent periods this income has principally reﬂected the development and increasing customer use of alternative banking service delivery channels, such as electronic, telephone and Internet banking. The Bank’s fees and commissions income also includes fees and commissions related to investment trusts, certain insurance products, deposits and loans (such as loan commitment fees, loan arrangement fees, etc.), securities transactions (such as bond trustee fees and bond recording agency fees) and guarantees and acceptances.

43 The following table sets forth the Bank’s fees and commissions income and expenses for the periods shown: Fiscal year ended March 31, 2003 2004 2005 (Millions of yen) Fees and commissions (income): Deposits and loans******************************************* ¥ 29,797 ¥ 35,566 ¥ 45,116 Remittances and transfers ************************************* 113,396 119,374 125,299 Securities-related business ************************************* 30,822 43,884 51,973 Agency **************************************************** 15,325 16,247 19,305 Safe deposits *********************************************** 4,978 5,927 6,736 Guarantees ************************************************* 28,462 33,221 39,213 Credit card ************************************************* 86,145 8,820 7,078 Investment trusts ******************************************** 18,349 35,214 45,574 Other****************************************************** 96,957 123,810 171,526 Total **************************************************** 424,235 422,066 511,824 Fees and commissions (expenses): Remittances and transfers ************************************* 21,789 23,553 24,236 Other****************************************************** 52,467 67,902 68,433 Total ************************************************** 74,257 91,455 92,669 Net fees and commissions*************************************** ¥349,977 ¥330,610 ¥419,155

Net fees and commissions increased by ¥88,545 million, or 26.8%, from ¥330,610 million in the fiscal year ended March 31, 2004 to ¥419,155 million in the fiscal year ended March 31, 2005. Income from fees and commissions increased by ¥89,758 million, or 21.3%, from ¥422,066 million in the fiscal year ended March 31, 2004, to ¥511,824 million in the fiscal year ended March 31, 2005 while expenses on fees and commissions increased only slightly by ¥1,214 million to ¥92,669 million for the fiscal year ended March 31, 2005. The increase in income from fees and commissions was mainly due to fees on investment trusts, pension-type insurance, deposits and loans, and securities-related business. Net fees and commissions decreased by ¥19,367 million, or 5.5% from ¥349,977 million in the fiscal year ended March 31, 2003 to ¥330,610 million in the fiscal year ended March 31, 2004. Income from fees and commissions decreased by ¥2,169 million, or 0.5%, from ¥424,235 million in the fiscal year ended March 31, 2003, to ¥422,066 million in the fiscal year ended March 31, 2004. The decrease was due primarily to the full year impact of the deconsolidation of Sumitomo Mitsui Card from the Bank in February 2003. See ‘‘Formation of the SMBC Group and the SMFG Group’’. The effect of the decrease was almost entirely offset by increases in other components of fees and commissions income, particularly in fees for sales of investment trust and pension-type insurance and arrangement of syndicated loans. Net fees and commissions decreased by ¥19,367 million, or 5.5%, from ¥349,977 million in the fiscal year ended March 31, 2003 to ¥330,610 million in the fiscal year ended March 31, 2004.

Net Trading Income The Bank reports its trading assets and liabilities, which are securities, derivatives and other capital market instruments held for short periods in anticipation of capital gains, at fair value. Gains and loss on these items are included in trading profits or losses on the Bank’s statements of income. Net trading income decreased by ¥159,707 million, or 52.5%, from ¥304,094 million in the fiscal year ended March 31, 2004 to ¥144,387 million in the fiscal year ended March 31, 2005 as the Bank’s trading profits decreased by ¥160,424 million, or 52.6%, from ¥305,011 million in the fiscal year ended March 31, 2004 due primarily to a decrease in gains on trading- related financial derivatives. The Bank’s trading losses decreased by ¥717 million, or 78.3%, from ¥916 million in the fiscal year ended March 31, 2004 to ¥199 million in fiscal year ended March 31, 2005.

44 Net trading income increased by ¥98,324 million, or 47.8%, from ¥205,770 million in the fiscal year ended March 31, 2003 to ¥304,094 million in the fiscal year ended March 31, 2004, principally due to an increase in foreign exchange profits from financial derivatives as a result of a stronger yen.

The following table sets forth the Bank’s net trading income for the periods shown: Fiscal year ended March 31, 2003 2004 2005 (Millions of yen) Trading profits: Gains on trading securities ********************************** ¥ 9,190 ¥ 6,735(*) ¥ 7,857 Gains on securities related to trading transactions**************** —— — Gains on trading-related financial derivatives******************** 196,924 298,275 136,224 Others *************************************************** 381 — 504 Total ************************************************** ¥206,496 ¥305,011 ¥144,587 Trading losses: Losses on trading securities ********************************* ¥—¥—¥— Losses on securities related to trading transactions *************** 725 904 199 Losses on trading-related financial derivatives******************* —— — Others *************************************************** —11— Total ************************************************** ¥ 725 ¥ 916 ¥ 199 Net trading income **************************************** ¥205,770 ¥304,094 ¥144,387

(*) According to Note 19 ‘‘Trading Income’’ to the consolidated financial statements as of and for the fiscal year ended March 31, 2004 on the page F-70, trading income for the period consisted of ‘‘Gains on trading-related financial derivatives’’ and ‘‘Others’’, which were ¥298,275 million and ¥6,735 million, respectively.

Net Other Operating Income

The following table sets forth the Bank’s net other operating income for the periods shown: Fiscal year ended March 31, 2003 2004 2005 (Millions of yen) Gains on sale of bonds **************************************** ¥179,757 ¥ 132,448 ¥ 85,683 Gains on redemption of bonds ********************************** 61 62 583 Losses on sale of bonds *************************************** (39,140) (107,772) (105,828) Losses on redemption of bonds ********************************* (351) (764) (693) Losses on devaluation of bonds ********************************* (2,362) (114) (255) Net gains on bond-related operations*************************** 137,964 23,857 (20,511) Bond issuance costs ****************************************** (1,767) (1,070) (1,898) Gains (losses) on foreign exchange transactions******************** 12,868 (56,982) 118,953 Gains (losses) on ﬁnancial derivatives **************************** 10,971 11,472 (3,904) Lease related income (net) ************************************* 63,083 5,684 5,945 Other (net) ************************************************** 2,722 24,589 41,517 Net other operating income ************************************ ¥225,842 ¥ 7,552 ¥ 140,101

Net other operating income substantially increased from ¥7,552 million in the ﬁscal year ended March 31, 2004 to ¥140,101 million in the ﬁscal year ended March 31, 2005. The increase was due primarily to an increase in gains on foreign exchange transactions, partially off-set by a reduction of gains on sale of bonds.

45 Net other operating income decreased by ¥218,290 million, or 96.7%, from ¥225,842 million in the fiscal year ended March 31, 2003 to ¥7,552 million in the fiscal year ended March 31, 2004. The decrease was due to the full year impact of the deconsolidation of SMBC Leasing Company, Limited (‘‘SMBC Leasing’’) from the Bank in February 2003. See ‘‘Formation of the SMBC Group and the SMFG Group’’. The decrease in net operating income was also due to the effects of losses on foreign exchange transactions of ¥56,982 million during the year, as compared to gains on foreign exchange transactions of ¥12,868 million in the fiscal year ended March 31, 2003, due to less favorable results on hedging positions in foreign-denominated transactions. Other factors included an decrease in the net gains on sale of bonds arising from less favorable market conditions for JGBs and U.S. Treasury securities. In the fiscal year ended March 31, 2003, a substantial profit was generated from transactions in JGBs and U.S. Treasury securities under a favorable interest rate environment in Japan and a decrease in interest rates in the United States, which resulted in bond prices at relatively high levels.

General and Administrative Expenses

The principal components of the Bank’s general and administrative expenses consist of salaries and related expenses, rent and lease expenses, welfare expenses, depreciation expense and taxes other than income taxes.

The following table sets forth the Bank’s general and administrative expenses on a non-consolidated basis for the periods shown: Fiscal year ended March 31, 2003(1) 2004 2005 (Millions of yen) Non-consolidated Salaries and related expenses ************************************ ¥205,205 ¥171,026 ¥164,812 Retirement beneﬁt cost ***************************************** 45,081 62,742 37,677 Welfare expenses ********************************************** 31,892 26,019 27,222 Depreciation ************************************************** 61,549 53,490 53,038 Rent and lease expenses **************************************** 64,466 48,188 47,476 Building and maintenance expenses ******************************* 5,178 3,485 4,323 Supplies expenses ********************************************* 7,799 6,215 5,219 Water, lighting and heating expenses ****************************** 6,766 5,222 5,025 Traveling expenses********************************************* 2,797 2,370 2,422 Communication expenses *************************************** 8,591 7,245 6,855 Publicity and advertising expenses ******************************** 6,916 4,059 4,952 Taxes, other than income taxes *********************************** 35,450 34,076 36,684 Others ******************************************************* 189,946 198,956 207,766 Total ****************************************************** ¥671,639 ¥623,098 ¥603,477

(1) Figures for the ﬁscal year ended March 31, 2003 include the operating results of the Former-SMBC for the period from April 1, 2002 to March 16, 2003.

General and administrative expenses, on a non-consolidated basis, decreased slightly from ¥623,098 million in the fiscal year ended March 31, 2004 to ¥603,477 million in the fiscal year ended March 31, 2005. General and administrative expenses, on a consolidated basis, also decreased slightly from ¥776,106 million in the fiscal year ended March 31, 2004 to ¥769,239 million in the fiscal year ended March 31, 2005. These decreases reflected a decrease in personnel expenses primarily due to a reduction in retirement benefit cost of ¥25,065 million. The decreases were partially offset by an increase in non-personnel related expenses which was due to resource allocation to strategic business, such as new unsecured loans to SMEs and home loan mortgages, and an increase in taxes due to the introduction of nationwide external standard taxation during the fiscal year ended March 31, 2005.

46 General and administrative expenses, on a consolidated basis, decreased by ¥112,315 million, or 12.6%, from ¥888,421 million in the fiscal year ended March 31, 2003 to ¥776,106 million in the fiscal year ended March 31, 2004. General and administrative expenses, on a non-consolidated basis, decreased slightly from ¥671,639 million in fiscal year ended March 31, 2003 to ¥623,098 million in the fiscal year ended March 31, 2004. These decreases were due primarily to efficiencies arising from the completed integration of branches and computer systems of the former Sakura Bank and Sumitomo Bank. The decreases principally reflected cost savings from a decline in salaries and related expenses of ¥34,179 million and reduction in welfare expenses of approximately ¥5,873 million, reflecting a decline in the number of employees, on a non-consolidated basis, from 24,024 as of March 31, 2003 to 22,348 as of March 31, 2004. Depreciation and rent and lease expenses, together, also declined by ¥24,336 million, due primarily to the Bank’s efforts to maximize operating efficiencies.

Other Income and Expenses Other income is comprised of gains on sales of stocks and other securities, write-back of loan loss reserves, gains on disposal of premises and equipment, collection of written-off claims, equity in earnings of affiliates and other income, including, in recent periods, gains on return of the entrusted portion of employee pension fund. The following table sets forth below the Bank’s other income and expenses for the periods shown: Fiscal year ended March 31, 2003 2004 2005 (Millions of yen) Gains on sale of stocks and other securities********************* ¥ 75,122 ¥ 160,105 ¥ 127,033 Gains on money held in trust********************************* 540 338 0 Equity in earnings of affiliates******************************** 1,703 231 3,267 Gains on disposal of premises and equipment ******************* 5,578 1,559 3,952 Collection of written-off claims******************************* 1,833 875 759 Gains on securities contributed to employee retirement benefits trust — — 75,275 Gains on return of the entrusted portion of employee pension fund** 4,413 59,095 — Tax refund from the Tokyo Metropolitan Government************* — 38,236 — Interest on the tax refund from the Tokyo Metropolitan Government — 2,127 — Gains on reversal of reserve for possible loan losses************** — 24,111 — Gains on reversal of reserve for possible losses on loans sold ****** — 489 — Write-off of loans ****************************************** (364,605) (639,994) (736,951) Provision for reserve for possible losses on loans sold ************ (16,672) — — Losses on sale of stocks and other securities ******************** (169,144) (38,020) (6,729) Losses on devaluation of stocks and other securities ************** (509,205) (18,233) (223,789) Losses on money held in trust******************************** (4,017) (962) — Losses on sale of delinquent loans **************************** (162,494) (266,752) (145,251) Losses on disposal of premises and equipment ****************** (38,877) (30,631) (67,061) Amortization of unrecognized net transition obligation for employee retirement benefits *************************************** (23,158) (20,640) (17,168) Provision for reserve for contingent liabilities from securities transactions ********************************************* — (212) (23) Other (net)(1) ********************************************** 18,501 (47,535) 4,675 Net other income (expenses) ******************************* ¥(1,180,481) ¥(775,811) ¥(982,011)

(1) Includes losses on disposal of software of ¥15,014 million in the fiscal year ended March 31, 2003. Other income decreased by ¥87,559 million, or 27.0%, from ¥324,367 million in the fiscal year ended March 31, 2004 to ¥236,808 million in the fiscal year ended March 31, 2005, due primarily to decreases in gains on sale of stocks and other securities, as well as the positive effects in the fiscal year ended March 31, 2004 of a

47 one-time tax and interest refund from the Tokyo Metropolitan Government as a result of the resolution of tax litigation regarding a regional bank tax ordinance. Other expenses increased by ¥118,641 million, or 10.8%, from ¥1,100,179 million in the fiscal year ended March 31, 2004 to ¥1,218,820 million in the fiscal year ended March 31, 2005, due primarily to increases in write-off of loans and losses on devaluation of stocks and other securities. As a result of the foregoing, net other expenses increased by ¥206,200 million, or 26.6%, from ¥775,811 million in the fiscal year ended March 31, 2004 to ¥982,011 million in the fiscal year ended March 31, 2005. Other income increased ¥157,826 million, or 94.8%, from ¥166,541 million in the fiscal year ended March 31, 2003 to ¥324,367 million in the fiscal year ended March 31, 2004, due primarily to increases in gains on sale of stocks and other securities and gains on returns of the entrusted portion of employee pension fund, as well as the positive effects of a one-time tax and interest refund of ¥40,363 million from the Tokyo Metropolitan Government as a result of the resolution of tax litigation regarding a regional bank tax ordinance. Other expenses decreased ¥246,843 million, or 18.3%, from ¥1,347,022 million in the fiscal year ended March 31, 2003 to ¥1,100,179 million in the fiscal year ended March 31, 2004, due primarily to decreases in losses on sale and devaluation of stocks and other securities, partially offset by an increase in write-off of loans, principally reflecting the Bank’s efforts to reduce its non-performing loans. As a result of the foregoing, net other expenses decreased by ¥404,670 million or 34.3%, from ¥1,180,481 million in the fiscal year ended March 31, 2003 to ¥775,811 million in the fiscal year ended March 31, 2004.

Credit Costs Credit costs increased ¥242,916 million, or 26.3%, from ¥924,159 million in the fiscal year ended March 31, 2004 to ¥1,167,075 million in the fiscal year ended March 31, 2005. The increase was primarily due to increase in the amount of write-offs reflecting costs associated with dispositions of non-performing loans and in provisions for reserves reflecting downgrading or reclassification of borrowers under self-assessment. See ‘‘Business — Loans — Credit Costs’’. Credit costs decreased ¥277,522 million, or 23.1%, from ¥1,201,681 million in the fiscal year ended March 31, 2003 to ¥924,159 million in the fiscal year ended March 31, 2004. Although credit costs decreased in the fiscal year ended March 31, 2004 as compared to the fiscal year ended March 31, 2003, credit costs remained at a high level as a result of the Bank’s aggressive efforts to reduce its non-performing loans. The decrease was due primarily to the effects of a transfer from general reserve for possible loan losses, reflecting an improvement in the credit quality of borrowers during the period, and a decrease in provision for specific reserves. See ‘‘Business — Loan Losses and Non-Performing Loans’’.

Income (Loss) Before Income Taxes and Minority Interests; Income Taxes Loss before income taxes and minority interests in the fiscal year ended March 31, 2005 was ¥176,695 million, as compared to income before income taxes and minority interests of ¥356,304 million in the fiscal year ended March 31, 2004. Income taxes in the fiscal year ended March 31, 2005 were ¥53,054 million, compared to ¥14,263 million in the fiscal year ended March 31, 2004, reflecting deferred taxes in the amount of ¥45,261 million, as well as the positive effects of a one-time tax refund of ¥8,539 million primarily from foreign taxes. Minority interests in net loss amounted to ¥49,246 million in the fiscal year ended March 31, 2005. Income before income taxes and minority interests in the fiscal year ended March 31, 2004 was ¥356,304 million, as compared to loss before income taxes and minority interests of ¥542,670 million in the fiscal year ended March 31, 2003. Income taxes in the fiscal year ended March 31, 2004 were ¥14,263 million, compared to a net benefit from income taxes of ¥150,320 million in the fiscal year ended March 31, 2003, including a deferred tax credit of ¥216,233 million.

Net Income (Loss) Net loss was ¥278,995 million in the ﬁscal year ended March 31, 2005 as compared to net income of ¥301,664 million in the ﬁscal year ended March 31, 2004.

48 Net income was ¥301,664 million in the ﬁscal year ended March 31, 2004 as compared to net loss of ¥429,387 million in the ﬁscal year ended March 31, 2003.

Non-Consolidated Results The Bank’s consolidated financial statements include all entities that are controlled by the parent bank regardless of the percentage of the outstanding voting shares the parent bank owns. The non-consolidated financial statements provide for the parent bank’s subsidiaries and affiliates to be carried at cost on its balance sheets and the income or losses of these entities to be disregarded on its statements of income. Consolidated results will differ at times from non-consolidated results due to timing differences arising from the recognition of profits or losses in one period by a subsidiary and the recognition by the parent bank of dividends from such subsidiary in a different period. The following table sets forth selected consolidated and non-consolidated financial data for the periods shown: Fiscal year ended March 31, 2003 2004 2005 Consolidated Non-consolidated(1) Consolidated Non-consolidated Consolidated Non-consolidated (Millions of yen) Net interest income ******* ¥1,400,121 ¥1,223,288 ¥1,265,630 ¥1,087,038 ¥1,152,664 ¥ 972,502 Net fees and commissions** 349,977 194,665 330,610 226,568 419,155 298,076 Net trading income ******* 205,770 196,000 304,094 280,729 144,387 131,579 General and administrative expenses ************** 888,421 671,639 776,106 623,098 769,239 603,477 Credit costs ************* 1,201,681 1,074,517 924,159 803,403 1,167,075 954,843 Net unrealized gain (loss) on securities *********** (21,665) (34,526) 561,103 590,318 676,912 710,088 Net income (loss)********* (429,387) (478,304) 301,664 301,113 (278,995) (136,854)

(1) Non-consolidated figures for the fiscal year ended March 31, 2003 include the operating results of the Former-SMBC for the period from April 1, 2002 to March 16, 2003. Consolidated net loss exceeded non-consolidated net loss by ¥142,141 million in the fiscal year ended March 31, 2005. The difference principally reflects provision for reserve for possible loan loss in the amount of ¥166,674 million, primarily related to provision for loan losses at the subsidiaries engaged in loan guarantees.

Financial Condition Total Assets As of March 31, 2005, the Bank had total assets of ¥ 97,478,308 million, a decrease of ¥2,364,950 million, or 2.4%, as compared to total assets of ¥99,843,258 million as of March 31, 2004. The decrease was due primarily to a decrease in the Bank’s securities portfolio, especially foreign currency denominated bonds, reﬂecting the Bank’s efforts to reduce the risk of interest rate ﬂuctuation. On a non-consolidated basis, the decrease in the book value of the Bank’s foreign currency denominated bonds and JGBs was ¥2.7 trillion and ¥897 billion, respectively, in each case as of March 31, 2005 from the value as of March 31, 2004. The Bank’s total assets as of March 31, 2003 were ¥102,394,637 million.

Lending As of March 31, 2005, the Bank’s loans and bills discounted were ¥55,148,929 million, or 56.6% of total assets, representing a decrease of ¥280,038 million, or 0.5%, from March 31, 2004. The decrease was primarily due to write-offs and other dispositions of non-performing loans, partially offset by an increase in loans and bills discounted, in particular home mortgage loans. Total loans and bills discounted at March 31, 2005 consisted of ¥50,384,379 million of domestic loans and ¥4,764,549 million of foreign loans. In its domestic operations, the Bank reduced the balance of loans to corporate borrowers, particularly in the real estate industry. In its

49 international operations, the Bank increased the balance of loans by ¥783,515 million, or 19.7%, from March 31, 2004. Foreign loans consist of loans originated in foreign branches and loans from domestic offices which are denominated in currencies other than yen or which are made to individuals and entities who are not residents of Japan. The Bank’s loans and bills discounted were ¥55,428,967 million as of March 31, 2004. Under the Banking Law, the Bank is required to disclose its non-and under-performing loans as ‘‘risk- monitored loans’’. Risk-monitored loans are classified under the Banking Law into four categories: (i) bankrupt loans, (ii) non-accrual loans, (iii) past due loans (three months or more) and (iv) restructured loans. As of March 31, 2005, the total amount of the Bank’s risk-monitored loans was ¥2,186,739 million, representing a decrease of ¥1,042,480 million, or 32.3%, from March 31, 2004, reflecting the Bank’s efforts to decrease the amount of its non-performing loans. Restructured loans are defined as loans with a reduction of interest rate, extension of due date for principal and interest, forgiveness of principal, or other renegotiated terms in favor of customers with the intent of supporting or restructuring such customers, other than loans categorized as non- accrual loans or loans that are past due for three months or longer, and includes borrowers in the process of restructuring or revitalization. In addition, independent of the Banking Law disclosure regulations, the Financial Reconstruction Law requires banks to disclose their problem assets. Under the Financial Reconstruction Law, assets are classified into four categories: (i) bankrupt and quasi-bankrupt assets, (ii) doubtful assets, (iii) substandard loans and (iv) normal assets. Generally, bankrupt and quasi-bankrupt assets correspond to the total of bankrupt loans and the lower tier of the non-accrual loans (the borrowers of which are effectively bankrupt) under the Banking Law disclosure. Doubtful assets generally correspond to the higher tier portion of the non-accrual loans (the borrowers of which are not, but have the potential to become, bankrupt). The substandard loans generally correspond to the total of the restructured loans and past due loans (three months or more). Bankrupt and quasi-bankrupt assets and doubtful assets also include non-loan assets, such as securities lending, foreign exchange, accrued interest, advanced payments and customers’ liabilities for acceptances and guarantees. See ‘‘Business — Loan Losses and Non-Performing Loans — Disclosure of Problem Assets Under the Financial Reconstruction Law’’.

Securities Portfolio The Bank holds various kinds of securities in its securities portfolio besides trading assets. These securities are categorized into four categories and accounted for either under the cost method or the mark to market method. The Bank’s securities totaled ¥24,018,612 million as of March 31, 2005, a decrease of ¥2,844,889 million, or 10.6%, from March 31, 2004. The decrease principally reﬂects a decrease in foreign currency denominated securities, primarily U.S. Treasury securities. The Bank’s securities totaled ¥26,863,501 million as of March 31, 2004, reﬂecting an increase in JGBs and foreign securities. Net unrealized gains on securities were ¥676,912 million as of March 31, 2005, an increase of ¥115,809 million, or 20.6%, from net unrealized gains on securities of ¥561,103 million as of March 31, 2004. The increase was due primarily to the disposals of bonds with unrealized losses. The net unrealized gains in the Bank’s other securities are also affected by the performance of the Japanese stock markets, subject to the particular portfolio mix of the Bank’s Japanese equity securities at any given time and to other factors affecting other types of securities in the Bank’s investment portfolio. The Nikkei 225 Stock Index closed at ¥11,668.95 as of March 31, 2005, as compared to ¥7,972.71 as of March 31, 2003 and ¥11,715.39 as of March 31, 2004, while the TOPIX closed at 1,149.63 as of March 31, 2005, as compared to 788 as of March 31, 2003 and 1,179.23 as of March 31, 2004.

Cash and Due from Banks and Interbank Deposits The Bank’s cash and due from banks and deposits in other banks as of March 31, 2005 was ¥4,985,564 million, a decrease of ¥337,309 million, from March 31, 2004.

50 Funding As of March 31, 2005, the Bank’s total liabilities were ¥93,809,446 million, a decrease of ¥2,302,161 million, or 2.4%, from March 31, 2004. This decrease reflects a substantial decline in payables under securities lending transactions, as well as declines in call money and bills sold and other liabilities. The amount of year-end deposit balances (including negotiable certificates of deposit) as of March 31, 2005 increased by ¥2,288,101 million, or 3.3%, to ¥71,269,641 million, as compared to the year-end deposit balance of ¥68,981,540 million as of March 31, 2004. This was mainly due to an increase in domestic liquid deposits. Total deposits as of March 31, 2005 consisted of ¥66,745,504 million in domestic yen deposits and ¥4,524,137 million in overseas deposits. Among domestic yen deposits, the Bank maintains a stable trend as to balances of large denomination time deposits due to the historically high rollover rate of its corporate customers and individual depositors. The period- end balances of time deposits for domestic offices as of March 31, 2005 was ¥20,513,692 million, an increase of 1.0% as compared to March 31, 2004. A material part of the Bank’s overseas deposits are interbank deposits which are either short-term deposits or deposits at notice. For information about additional premiums that the Bank has been required to pay on such deposits during past periods, see ‘‘Risk Factors — Risks Related to the Industry — Return of the ‘‘Japan Premium’’ or New Limitations on Credit Extended to Japanese Banks Could Adversely Affect the Bank’’. Payables under securities lending transactions was ¥3,868,001 million as of March 31, 2005, compared to ¥5,946,346 million as of March 31, 2004.

Capital Resources The table below presents information relating to the Bank’s total stockholders’ equity as of March 31 in each of the periods shown: As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Stockholders’ equity *************************************** ¥2,142,544 ¥2,722,161 ¥2,633,912 Stockholders’ equity as a percentage of total assets************** 2.1% 2.7% 2.7% The table below presents information relating to the Bank’s net unrealized gains (losses) (before taxes) with respect to securities with a readily ascertainable market value (classified as ‘‘other securities’’) for the periods shown: As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Net unrealized gains (losses) on other securities (before taxes) ********* ¥(27,471) ¥568,407 ¥678,527 Net unrealized gains (losses) as a percentage of acquisition cost of securities *************************************************** (0.1)% 2.5% 3.5% The Bank issues a variety of fixed and floating, dated and undated, subordinated securities, and also borrows on a subordinated basis. As of March 31, 2005, the Bank had ¥1,867,981 million subordinated securities and ¥734,097 million of subordinated loans outstanding.

Capital Adequacy Japan’s capital guidelines are based on the risk-adjusted approach proposed by the Basel Committee for uniform application to all international banks in industrialized countries. The FSA’s guidelines are similar to the ﬁnal guidelines issued in 1989 by the Board of Governors of the Federal Reserve System in the United States with the differences primarily reﬂecting implementation of the Basel Committee’s approach in a manner designed

51 to suit the respective banking environments in Japan and the United States. See ‘‘Supervision and Regulation — Japan — Capital Adequacy’’. Set forth below is a schedule of risk-adjusted assets and details of qualifying capital of the Bank determined on a consolidated basis. As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Tier I capital ****************************************** ¥ 3,066,351 ¥ 3,111,804 ¥ 3,207,262 Tier II capital: Unrealized gains on other securities after 55% discount ***** — 245,500 305,401 Land revaluation excess after 55% discount *************** 71,699 68,524 67,103 Reserves for possible loan losses (excluding specific reserves) 1,149,150 815,520 612,032 Subordinated term debt (with an original maturity of over 5 years) ****************************************** 2,150,334 2,358,572 2,537,304 Total Tier II capital*********************************** 3,371,184 3,488,117 3,521,842 Tier II capital included as qualifying capital ************ 2,887,170 3,111,804 3,207,262 Deductions******************************************** (25,684) (24,634) (238,920) Total capital*************************************** ¥ 5,927,837 ¥ 6,198,974 ¥ 6,175,605 Risk-adjusted assets: On-balance sheet items******************************** ¥53,313,337 ¥52,359,312 ¥52,589,471 Off-balance sheet items ******************************* 3,523,317 4,264,272 5,303,085 Market risk items ************************************ 221,156 268,179 351,964 Total risk-adjusted assets **************************** ¥ 57,057,811 ¥ 56,891,764 ¥ 58,244,521 Tier I risk-adjusted capital ratio*************************** 5.37% 5.46% 5.50% Total risk-adjusted capital ratio *************************** 10.38% 10.89% 10.60% The Bank’s risk-adjusted capital ratios as of March 31, 2005 were 5.50% (in the case of consolidated Tier I capital) and 10.60% (in the case of consolidated total capital). The Bank’s risk-adjusted capital ratio as of March 31, 2005 were 5.74% (in the case of non-consolidated Tier I capital) and 11.32% (in the case of non- consolidated total capital). The decrease in the risk-adjusted capital ratios from March 31, 2004 principally reflected the negative impact of the Bank’s net loss for the fiscal year ended March 31, 2005. The decrease was partially offset by the amount of additional capital raised through the issuance of preferred stock, subordinated debt and the extension of subordinated loans. As of March 31, 2005, the Bank included 100% of its net deferred tax assets, as calculated pursuant to Japanese GAAP, in its Tier I capital calculations. Japanese regulations regarding the inclusion of deferred tax assets in Tier I capital differ from U.S. regulations. As of March 31, 2005, net deferred tax assets constituted 47% of the Bank’s Tier I and 24% of its total risk-based capital on a consolidated basis. On June 22, 2004, the FSA issued the Report of the Working Group on Regulation of Capital Adequacy Ratio relating to the regulatory treatment of deferred tax assets in calculating capital adequacy ratios and other issues related to capital adequacy of banks. Although the Report expressed support for the introduction of certain regulations on proper treatment of deferred tax assets in calculating capital adequacy ratios, it did not set out any concrete measures for implementation and rather called for the FSA to further examine the situation and make a decision based upon the Report. See ‘‘Supervision and Regulation — Japan — The Financial Services Agency — Deferred Tax Assets’’. Under guidelines issued by JICPA in November 1999, a company will lose its ability to realize benefits from deferred tax assets if, in principle, it has substantial amounts of negative annual taxable income for each of three consecutive years or more and is expected to have significant negative taxable income in the following fiscal year.

52 Since taxable income includes taxable transfers to reserves, it can differ signiﬁcantly from income calculated under Japanese GAAP, which was positive in the ﬁscal year ended March 31, 2005. The Bank’s capital ratio would be negatively affected if the Bank is unable to utilize its deferred tax assets or if the inclusion of deferred tax assets in capital is restricted in the future because the FSA imposes limits on the amount of deferred tax assets that can be treated as capital for regulatory purposes, or for any other reason.

The calculation of net deferred tax assets under Japanese GAAP is based on taxable income projections for approximately ﬁve years. These projections are based on the reasonable tax planning strategy as authorized by the management of the Bank, which is reviewed by the Bank’s independent auditors in the process of their audit performed in accordance with Japanese GAAP. These calculations require the Bank to make estimates and certain assumptions. The results of these calculations may also differ from corresponding calculations made under U.S. regulations. The Bank’s ability to realize beneﬁts from its deferred tax assets would be adversely affected to the extent that the Bank’s actual taxable income is lower than the projected taxable income used to determine the amount of its deferred tax assets.

The regulatory capital of the Bank is partially comprised of capital contributions from insurance and other companies in which the Bank has made capital contributions. The Bank’s capital ratio would be negatively affected if these cross-investments were restricted or prohibited in the future.

The Bank’s capital also depends in part on the fair market value of its securities portfolio since unrealized losses reduce stockholders’ equity. Of the Bank’s securities portfolio, 14% consists of equity securities, which are primarily common stocks of publicly traded Japanese companies. The common stocks of publicly traded Japanese companies are generally volatile and have experienced periods of sharp decline in past years. As of March 31, 2005, the Bank’s other securities (including money held in trust) with a readily ascertainable market value contained ¥679 billion in unrealized gains, of which ¥395 billion appeared in its stockholders’ equity. However, there can be no assurance that the Japanese equities market will not decline in future periods, and thereby reduce the Bank’s capital substantially.

If the impact of the changes in risk-adjusted assets or loan losses or other relevant factors would otherwise decrease the Bank’s capital ratios below 4.0% (in the case of Tier I capital) or 8.0% (in the case of total capital) in the future, the Bank intends to take actions to seek to maintain its risk-adjusted capital ratios above such levels. Such actions might include additional issuances of equity or debt securities and the sale of loans or other assets in order to reduce the amount of risk-adjusted assets. Sales of assets such as equity portfolio securities in substantial amounts by the Bank and other ﬁnancial institutions similarly situated might have adverse effects on the market values for assets of the types sold, which would reduce the amounts realized on such sales. Adverse conditions in the markets for securities of companies in the Japanese ﬁnancial sector may limit the Bank’s ability to improve its capital ratios through the issuance of securities on favorable terms. Consequently, there can be no assurance that the Bank will be able to maintain its Tier I and total capital ratios at or above 4% and 8%, respectively, in the future.

See ‘‘Supervision and Regulation — Japan — Capital Adequacy’’, ‘‘Risk Factors — Risks Related to the Bank — Weaknesses in the Bank’s Capital Base and Potential Regulatory Changes Related to Deferred Tax Assets and Cross Investments which Would Affect the Calculation of Regulatory Capital Could Adversely Affect the Bank’’ and ‘‘Risk Factors — Risks Related the Bank — Capital Requirements Could Constrain the Bank’s Operations’’.

53 Return on Equity and Assets The following table sets forth the return on the Bank’s equity and assets on a non-consolidated basis for the periods indicated. Fiscal year ended March 31, 2003(1) 2004 2005 (Millions of yen, except percentages) Non-consolidated Net income (loss) ************************************** ¥ (478,304) ¥ 301,113 ¥ (136,854) Average total assets ************************************ 98,922,735 94,506,566 96,029,763 Average total assets, excluding customers’ liabilities for acceptances and guarantees **************************** 93,692,061 89,174,081 90,327,898 Average stockholders’ equity ***************************** 3,526,549 2,144,181 2,184,911 Net income (loss) as a percentage of: Average total assets ********************************** (0.48)% 0.32% (0.14)% Average total assets, excluding customers’ liabilities for acceptances and guarantees ************************** (0.51) 0.34 (0.15) Average stockholders’ equity *************************** (13.56) 14.04 (6.26) Declared cash dividends ********************************* ¥ — ¥ 200,008 ¥ 33 Dividend payout ratio *********************************** —% 79.88% —% Average stockholders’ equity as a percentage of average total assets ********************************************** 3.56 2.27 2.28

(1) Figures for the ﬁscal year ended March 31, 2003 include the operating results of the Former-SMBC for the period from April 1, 2002 to March 16, 2003.

54 BUSINESS Sumitomo Mitsui Banking Corporation (Kabushiki Kaisha Mitsui Sumitomo Ginko) is a joint stock corporation with limited liability (Kabushiki Kaisha) under the laws of Japan. The registered head office of the Bank is located at 1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo, Japan. The Bank is one of the world’s leading commercial banks, with ¥97.5 trillion in consolidated total assets as of March 31, 2005. The Bank provides an extensive range of wholesale and retail banking services in Japan and overseas to its customers. In Japan, the Bank accepts deposits, makes loans and extends guarantees to corporations, individuals, governments and governmental entities. It also offers financing solutions such as through syndicated lending, structured finance and project finance. The Bank also underwrites and deals in bonds issued by or under the guarantee of the Japanese government and local government authorities, and acts in various administrative and advisory capacities for certain types of corporate and government bonds. Internation- ally, the Bank operates through a network of branches, representative offices, subsidiaries and affiliates to provide syndicated lending, project finance and portfolio management services while participating in international securities markets. Except as indicated, financial information herein with respect to the Bank is presented on a consolidated basis and operating information herein with respect to the Bank is presented on a non-consolidated basis. In addition, any references to the Bank with regard to the period prior to the merger of March 17, 2003, refer principally to the operations, aims and achievements of the Former-SMBC. See ‘‘Formation of the SMBC Group and the SMFG Group’’ and ‘‘Note Regarding Financial Information’’.

History The Bank was formed on March 17, 2003 through the merger of the Former-SMBC with Wakashio Bank. The Former-SMBC had been formed on April 1, 2001 through the merger of Sakura Bank, whose origins can be traced back to 1683, and Sumitomo Bank, established in 1895. Wakashio Bank was established in June 1996 as a subsidiary of Sakura Bank. See ‘‘Formation of the SMBC Group and the SMFG Group’’.

Strategy The Bank’s strategic objective is to strengthen its position as a leading domestic and international financial group by: ) increasing its profitability and expanding the growth potential of its new businesses in the following ways: ) in its consumer banking activities, focusing on customer segmentation, broadening its range of profitable products and services and achieving a lower cost structure, ) in its lending activities, achieving a higher return on its assets in transactions with domestic and overseas corporate borrowers, and ) in its international banking activities, engaging in a more selective regional focus, particularly in Asia, while improving the profitability of its assets in the U.S. and Europe; ) improving its risk-return profile by managing its risk capital and risk assets in order to improve its capital ratios and profitability; ) strategically engaging in alliances, such as in the consumer finance, securities intermediation, credit card, and other businesses; and ) improving its corporate governance. The Bank will seek to improve its banking profit by: ) expanding its more profitable loan businesses, such as home mortgage lending and SME loans through the broadening of marketing channels and improvement of products;

55 ) strengthening its fees and commissions business, such as the investment banking business and the distribution of investment trust products and pension-type insurance as well as the provision of financial consultancy services to retail customers; ) adjusting the terms and conditions of its financial products and services, such as the interest rates on wholesale loans, to improve its risk-return profile; and ) instituting cost-cutting measures, such as reducing personnel and other expenses while allocating resources to focused business areas. The Bank has also been replacing many of its retail branch offices with specialized distribution facilities, incorporating advanced technologies, providing improved services to retail customers, such as in Internet banking, mobile-phone banking and financial consultancy, and reorganizing its middle market corporate lending branch offices into corporate business offices. Various business environmental considerations affect the Bank’s overall strategy. Notable considerations include, but are not limited to, indications of a recovery of the domestic economy, continuing financial deregulation in Japan, increased competition from domestic and foreign competitors, consolidation in domestic and international financial sectors and the increasing interdependence of national economies and financial markets. The Bank’s strategy reflects its judgment regarding the most effective means of confronting the challenges posed and exploiting the opportunities afforded by these considerations, in light of a careful assessment of the Bank’s strengths and weaknesses. A recovery of the domestic economy is likely to affect the Bank’s loan portfolio, with an expected increase in demand for small-to mid-sized loans. Increase in domestic equity prices also increases the value of the Bank’s portfolio of equity securities which is comprised largely of domestic securities. The Bank’s earnings are affected by any rise in domestic interest rates, as well as the fluctuations of international interest rates and foreign currency rates. In particular, the Bank is currently in the stage of developing an even stronger operating and financial base for the SMBC Group. Further improving profitability, including through improvement of cost competitiveness, are action plans clearly identified in its strategy outlined further below:

Enhancing profitability Historically, banking profit (before provision for general reserve for possible loans losses)1 has been regarded as one traditional measure of Japanese banks’ core earning power. On a non-consolidated basis, the Bank recorded banking profits of ¥1,114 billion, ¥1,000 billion and ¥940 billion in the fiscal years ended March 2003, 2004, and 2005, respectively. Banking profit (before provision for general reserve for possible loan losses) in the fiscal year ended March 31, 2005 decreased in part due to the Bank’s disposal of unrealized losses on bonds, but the Bank believes its core earnings did not change significantly. In order to improve profitability, the Bank intends to expand its loan portfolio to SMEs through the broadening of marketing channels, streamlining of application procedures and the improvement of products. The Bank, in offering a new type of unsecured loan, ‘‘Business Select Loan’’ intends to manage credit risk with respect to loans to SMEs on a portfolio basis, rather than on a individual borrower basis. With respect to its traditional loans, to optimize the risk-return profile of its loan portfolio, the Bank intends to adjust the terms and conditions of its financial products and services, such as the interest rates on wholesale loans. In consumer banking, the Bank intends to continue to expand home mortgage lending and to expand its consumer finance business, such as through cooperation with Promise. The Bank intends to strengthen its fee and commissions

1 Banking profit (before provision for general reserve for possible loans losses) (gyoumu jun’eki), a commonly used indicator of the profitability of banking operations among Japanese banks, is calculated as follows: net interest income (adjusted to exclude expenses incurred in connection with the management of money held in trust) + net fees and commissions + net trading income + net other operating income – general and administrative expenses (adjusted to exclude certain retirement-related benefits and certain non-recurring items) on a non- consolidated basis. Due to adjustments made to certain line items, banking profit is not readily calculable based on the information presented in the Bank’s financial statements.

56 business, such as the investment banking business (including its loan syndication in corporate banking) and the distribution of investment trust and pension-type insurance. The Bank has been improving cost competitiveness by further streamlining its workforce and other initiatives. The Bank reduced expenses on a non-consolidated basis to ¥582 billion for the fiscal year ended March 31, 2005 from ¥584 billion for the fiscal year ended March 31, 2004. The Bank currently intends to continue to employ cost-cutting measures, while proactively allocating sufficient resources to promote businesses of strategic importance. The Bank intends to build on the advantages of the holding company structure, and benefit from a corporate structure fully utilizing the strengths of the SMFG Group, such as its group-wide corporate governance, management structure and management systems. The Bank also plans to improve strategic business lines on a group-wide basis by redefining corporate strategy, decentralizing and clarifying responsibilities, enhancing incentive systems and reallocating resources.

Strengthening of the Balance Sheet

During the fiscal year ended March 31, 2005, the Bank continued to strengthen its balance sheet by further reducing the financial risks associated with non-performing loans and stockholdings. By September 30, 2004, the Bank had succeeded in its goal of reducing its problem asset ratio, as defined based on the Financial Reconstruction Law, by half, compared to its ratio as of March 31, 2002. The Bank will continue to make qualifying dispositions of problem assets classified as doubtful assets or lower through measures such as asset sales and corporate revitalization. In addition, the Bank intends to continue to apply strict policies for corporate borrowers in relation to substandard assets and intends to accelerate its initiative for the revitalization of borrowers and work-outs, including outright sales of problem loan assets. As of April 1, 2005, the Bank has established a new department, the Credit Risk Management Department to achieve a more efficient credit portfolio (plan and develop active portfolio management), and to establish the framework for managing assets with various risk profiles. For the fiscal year ended March 31, 2005, the Bank reduced the book value of its stockholdings mainly through outright sales and currently intends to further reduce stock price fluctuation risk. For the fiscal year ended March 31, 2005, the Bank continued to maintain its equity portfolio at below the level of its consolidated Tier I capital and as part of its mid-term plan, plans to continue this disposal process.

Operations

As of April 1, 2005, the Bank conducts its primary banking business through its five Marketing Units, (i) the Consumer Banking Unit, (ii) the Middle Market Banking Unit, (iii) the Corporate Banking Unit, (iv) the International Banking Unit and (v) the Investment Banking Unit, and through its Treasury Unit. During the two fiscal years ended March 31, 2005, the Bank’s Marketing Units have, in the aggregate, increasingly contributed to the Bank’s banking profit, although total banking profit decreased over the same period. The Treasury Unit’s contribution to banking profit has decreased in relative importance as well as in its absolute amount during the two fiscal years ended March 31, 2005. For the fiscal year ended March 31, 2004, home mortgage lending contributed significantly to the Consumer Banking Unit’s results. For the fiscal year ended March 31, 2005, the Bank’s lending business to SMEs contributed significantly to the Bank’s results in the Middle Market Banking Unit and home mortgage lending contributed significantly to the Bank’s results in the Consumer Banking Unit. During the two fiscal years ended March 31, 2005, the Investment Banking Unit’s loan syndication, structured finance and securitization business and the Consumer Banking Unit’s sales of investment trusts and pension-type insurance have grown significantly. The Bank’s domestic marketing operation is managed by the Consumer Banking Unit, the Middle Market Banking Unit and the Corporate Banking Unit. The Bank has established specialized sales channels for the different types of corporate clients, such as Corporate Business Offices for its larger SME clients and Business Support Offices and Corporate Sales Desks for its smaller SME clients. For individual customers, the Bank has

57 established specialized sales channels such as Consumer Loan Promotion Offices, SMBC Consulting Plazas, Loan Plazas and the ‘‘One’s Direct’’ remote banking channel. The Bank had a domestic network consisting of 425 branch offices and 133 sub-branches as of March 31, 2005, most of which are located in the Tokyo and the Osaka regions of Japan and managed by the Consumer Banking Unit. In addition to providing full-service banking operations at many of its branches, the Bank also operates satellite offices that provide specialized services such as housing loans, which are also managed by the Consumer Banking Unit. The Bank is in the process of reorganizing its domestic branches under its ‘‘New Structure for Managing Branches’’ framework in order to improve customer service and business development. Under this new framework, the Bank plans to separate existing domestic branches into a ‘‘branch’’ and a ‘‘service office’’ by the end of the fiscal year ended March 31, 2007. Branches will specialize in promoting business with individual customers, while service offices will focus on providing high-quality back office operations to improve customer satisfaction, manage advanced compliance and operations management systems and develop more efficient back office operations. As of March 31, 2005 the Bank had 183 corporate business offices managed by the Middle Market Banking Unit. The Bank’s international network is managed by the International Banking Unit and the Investment Banking Unit and consisted of 17 branches, 3 sub-branches, 15 representative offices, 41 subsidiaries and 14 affiliates and associated companies as of March 31, 2005, creating a presence for the Bank around the world. In December 2004, the Bank opened a branch in Hangzhou City, China and a representative office in Hanoi, Vietnam. As described further below, the Bank dissolved its former Asset Restructuring Unit and its Community Banking Unit in March 2005, and allocated relevant expertise and individuals to other existing business units.

Consumer Banking Unit The Consumer Banking Unit offers various retail banking products and services including private banking, asset management and long-term asset building. The Bank believes that it is currently a leader among Japanese banks in terms of investment trust sales, outstanding volume of housing loans and the number of customer accounts. The Consumer Banking Unit’s central theme is ‘‘One’s Next’’, which means that it aims to assist customers in achieving the next level of their ﬁnancial objectives according to their stage in life. This includes, for example, assisting customers in meeting their asset management and fund procurement needs such as retirement planning, home loans and education loans. The operations of the Consumer Banking Unit are largely conducted through a large and well-developed branch network. The Bank has been continuing to streamline and strengthen this network by consolidating overlapping branches and transforming them from transaction centers to marketing bases. The transformation process requires a review of each branch’s infrastructure, based on location and market size to determine the most suitable functions and physical layout. The Bank also makes use of call centers to provide customers with an additional access channel. In addition, consultancy services are currently available at 45 ‘‘SMBC Consulting Plazas’’ which provide ﬁnancial consulting services at convenient locations, with 20 new consulting plazas expected to open in late July 2005, and 113 ‘‘Loan Plazas’’ (including one ‘‘Apartment Loan Plaza’’), which are dedicated to promoting housing loans. These Plazas provide services during expanded hours, including weekday evenings, weekends and national holidays, for the convenience of customers. As a result of the December 2004 elimination of a Japanese regulatory prohibition on banks’ engagement in the securities intermediary business for individuals, the Bank has broadened its investment product offerings at SMBC Consulting Plazas to include products such as foreign currency bonds and structured bonds. The Bank also operates an extensive network of automated teller machines (ATMs) in Japan which allow its customers to conduct self-service banking transactions during extended hours. As of March 31, 2005, the Bank’s ATM network included 6,667 full-service ATMs and cash dispensers, including 1,113 24-hour ATMs that are located in ‘‘am/pm’’ convenience stores through its alliance with am/pm Japan Co., Ltd. In addition, the Bank offers its customers ready access to 18,841 ATMs and cash dispensers through arrangements with other ATM

58 providers (including convenience stores). The Bank also offers payment and settlement services for consumer customers that can be accessed through ATMs located in convenience stores as well as through the telephone and the Internet. As part of its development of convenient and expanded services offered through its ATM network, SMFG, Sumitomo Mitsui Card, the Bank and DoCoMo, jointly announced on April 27, 2005 their agreement to form a strategic business and capital alliance for the launch of a credit payment service using DoCoMo ‘‘Mobile Wallet’’ phones equipped with smart-card functions for cashless payments. DoCoMo will issue a new branded credit card that can be used in conjunction with the Sumitomo Mitsui Card. Sumitomo Mitsui Card plans to establish infrastructure for mobile credit card payments, including the installation of terminals at retail shops enabling customers to make payments with mobile wallet handsets. The Bank will develop ATMs compatible with mobile wallet handsets to offer customers convenient payment access. As part of the alliance, DoCoMo plans to acquire 34% of Sumitomo Mitsui Card’s common shares for approximately ¥98 billion, including new shares to be issued by Sumitomo Mitsui Card. The transaction was approved by the board of directors of Sumitomo Mitsui Card on June 15, 2005 and closed on July 11, 2005. The details of the alliance are currently under consideration. The Consumer Banking Unit also offers Internet banking services through ‘‘One’s Direct’’. As of March 31, 2005, ‘‘One’s Direct’’ was one of the largest online services operated by a Japanese bank with approximately 5.8 million registered users. Users of ‘‘One’s Direct’’ are able to transfer funds, perform balance inquiries and time deposits, and conduct foreign currency, deposit and investment trust transactions over the telephone, Internet or mobile phone Internet service. On September 19, 2000, the Bank established Japan Net Bank, Ltd. as the first Internet bank in Japan for retail customers. Through this continuously-available Internet outlet, the Bank offers relatively high interest rates on deposits and low service charges to its customers in comparison to other domestic providers. The Consumer Banking Unit also offers the following products and services: ) Housing loans. Housing loans are one of the primary products offered by the Consumer Banking Unit. The Bank originated ¥1,924.6 billion in housing loans (excluding bridge loans) for the fiscal year ended March 31, 2005 and had ¥9,451.3 billion in housing loans outstanding as of March 31, 2005. Beginning in June 2004, the Bank has made repayment by the customer of housing loans more convenient by permitting accounts at other banks to be debited for repayment of the Bank’s loans. ) Investment trust, pension-type insurance and testamentary trust products. The Consumer Banking Unit provides a variety of investment trust products with varying degrees and types of risk-return profiles which are developed and managed by experienced investment management companies within Japan and overseas. The Consumer Banking Unit generally focuses on the distribution, rather than the development, of investment trust products. The aggregate face amount of investment trust balances of individuals outstanding on a non-consolidated basis increased to ¥2,265 billion as of March 31, 2005 from ¥1,920 billion and ¥1,599 billion for the fiscal years ended March 31, 2004 and 2003. Fees and commission income from the sale of investment trust products increased to ¥32 billion for the fiscal year ended March 31, 2005 from ¥24 billion and ¥14 billion for the fiscal years ended March 31, 2004 and 2003. On October 1, 2002, the Bank started offering pension-type insurance, whereby customers make payments of fixed amounts until they reach a certain age, at which time set amounts will be paid to the customers at specified intervals. The balance of pension-type insurance increased to ¥1,064 billion for the fiscal year ended March 31, 2005 from ¥479.6 billion and ¥99 billion for the fiscal years ended March 31, 2004 and 2003. Fees and commission income from the sales of pension-type insurance increased to ¥26 billion in the year ended March 31, 2005 from ¥17 billion and ¥3 billion for the fiscal years ended March 31, 2004 and 2003. The Consumer Banking Unit also began offering testamentary trust products and services at domestic branches on February 1, 2005. ) Consumer finance products and services. Through Sumitomo Mitsui Card (a direct subsidiary of SMFG and a charter member of VISA International) and SAKURA CARD CO., Ltd., the Bank offers personal credit services including the issuance of various credit cards, consumer loans and guarantees. As of March 31, 2005, Sumitomo Mitsui Card had approximately 13 million cardholders (with aggregate expenditures in the fiscal year ended March 31, 2005 totalling approximately ¥36 trillion). The Bank also

59 provides small, unsecured consumer loans to individuals under the brand name ‘‘@Loan’’ through At- Loan Co., Ltd. (‘‘At-Loan’’), originally established as a joint venture with Sanyo Shinpan Finance Co., Ltd., Nippon Life and am/pm Japan Co., Ltd. Pursuant to a business and capital alliance between SMFG and Promise to promote jointly their consumer finance businesses, At-Loan became a joint venture between the Bank and Promise on January 31, 2005. Pursuant to this alliance, Promise will guarantee loans to be made by the Bank and At-Loan, as well as provide support by offering expertise in marketing, credit monitoring and loan collections. The Bank, Promise and At-Loan began offering their new loan products on April 18, 2005. The Bank has installed Promise automated contract machines at its branches and offices, and has installed 427 new automated contract machines that can process applications for consumer loans of the Bank, Promise and At-Loan. In addition, on March 25, 2005, SMFG and Promise entered into an agreement to form another business and capital alliance between QUOQ Inc. (‘‘QUOQ’’), a consumer credit company of the SMBC Group, and Plat Corporation (‘‘Plat’’), which was renamed ‘‘QUOQLOAN, Inc.’’ (‘‘QUOQLOAN’’) on June 13, 2005, a consumer finance company wholly owned by Promise. The purpose of the alliance is to provide convenient products and services meeting a wide range of customer needs by combining the Promise group’s expertise and infrastructure in consumer finance with QUOQ’s customer base and brand value in shopping credit services. On June 13, 2005, QUOQ and Plat started to offer consumer loans pursuant to their business alliance. See ‘‘— Other Business Activities Through Subsidiaries and Alliances’’. ) New-type account service. In November 2003, the Bank and Mitsui Sumitomo Card launched a new- type account service named ‘‘One’s Style’’, which is offered exclusively to customers in their 20s and 30s. Primary features of ‘‘One’s Style’’ include bankcards with loan and settlement functions, an online bank record system which customers can access via a personal computer or their cellular phone and discounts of certain transaction fees. This new service aims to offer appealing financial products to the age group that accounts for the majority of customers who open new accounts and customers who apply for credit cards and card loans. ) New-type investment product. In February 2004, the Bank launched a new-type investment product named ‘‘One’s Life’’, which is available only to customers who receive and hold their retirement payment in their bank accounts with the Bank. In the first stage of ‘‘One’s Life’’, the Bank applies a special interest rate to the time deposits which customers make with their retirement payments. In the second stage, when the newly made time deposits become due, the Bank offers three types of investment plans from which customers can choose according to their investment policy and preference. ) Securities Intermediary Services for Individuals. On December 1, 2004, the Bank started to provide securities intermediary services to individual customers with SMBC Friend Securities Co., Ltd. as the principal securities company. The Bank offers a variety of products, including foreign currency bonds and structured bonds to its individual customers to compliment its line-up of investment trusts and pension- type insurance.

Middle Market Banking Unit The Middle Market Banking Unit focuses on building a ‘‘solution business’’ capable of rapidly addressing the diversiﬁed needs of SMEs. The Middle Market Banking Unit offers customers traditional lending, cash management, settlement, leasing, factoring, management information systems consulting, collection and investment banking, some of which are offered in cooperation with Daiwa Securities SMBC. The Bank also expanded sales channels which function as service locations exclusively for SMEs and sole proprietorships throughout Japan from 164 as of March 31, 2004 to 204 as of March 31, 2005. The Middle Market Banking Unit also provides the following services to its SMEs: ) Lending. The Middle Market Banking Unit offers unsecured loans through a product called ‘‘N fund’’ in addition to the previously released ‘‘Business Select Loan’’ (‘‘BSL’’), both of which, by their terms, offer appropriate returns and greater spreads for the Bank. BSLs are unsecured loans for SMEs with annual sales of less than ¥1 billion, with a maximum amount of ¥50 million per transaction, and employ highly

60 sophisticated credit scoring models in the origination process. ‘‘N funds’’ are also unsecured loans, but are targeted to larger SMEs, with a maximum amount of ¥5 billion per transaction, and employ a simplified and standardized credit check on origination by treating the borrower as one of the borrowers in a portfolio, such as one based on the borrower’s industry. In addition, in April, 2004 the Bank introduced a new type of loan called the ‘‘V fund’’ loan to assist mid-sized companies and SMEs in venture businesses. Instead of extending credit based on the conventional system of collateral-based screening, the Bank extends ‘‘V fund’’ loans based on an evaluation of other aspects of the borrower’s business, such as the strength of the venture business’s technology, the viability of its business model, and the effectiveness of its business plan and management. The Bank originated ¥1,253 billion, ¥2,855 billion and ¥3,671 billion of new-type of unsecured loans for the fiscal years ended March 31, 2003, 2004 and 2005, including ¥455 billion, ¥734 billion and ¥1,449 billion of BSLs for the fiscal years ended March 31, 2003, 2004 and 2005, respectively, and ¥18 billion of ‘‘V fund’’ loans for the fiscal year ended March 31, 2005. Loans to SMEs generally have a higher credit cost than loans to larger corporate borrowers. At the same time, the SME loan business provides pricing opportunities. The Bank plans to continue to increase its lending to SMEs using a lending strategy that involves increasing the spread on its loans over time to achieve a more appropriate risk-adjusted return on its corporate loan portfolio. The Bank has started revising lending practices by, for example, modifying terms and conditions of its loans as well as adjusting interest rates to reflect the risk profile of borrowers more appropriately. In addition, the Bank has strengthened its practice in credit analysis, loan application procedures (including the standardization of check lists and streamlining of the application process for BSLs), cash flow analysis for loan applications and prescribing the use of loans.

) Collateralized loan obligations (‘‘CLO’’). The Bank has arranged a number of local government CLOs. For the ﬁscal year ended March 31, 2005, the Bank arranged a CLO for municipal governments in Tokyo and Osaka prefectures and a joint issuance by the cities of Yokohama, Osaka and Kobe. In addition, the Bank offers ‘‘Business Select-CLO’’, guaranteed by the Japan Finance Corporation for SMEs, particularly those with high credit ratings.

) Business promotion services. The Middle Market Banking Unit, through its Business Promotion Department, focuses on customers in growth industries such as the semiconductor, biotechnology, information technology, environmental services and health care industries. The Business Promotion Department analyzes and evaluates a customer’s technologies, marketability and growth prospects and introduces it to appropriate capital sources, such as a business support fund which is an unsecured ﬁnancing system. The Bank’s subsidiary, SMBC Capital Co., Ltd. (‘‘SMBC Capital’’) also assists start- up companies with their capital requirements. SMBC Leasing, which is now a direct subsidiary of SMFG, provides SMEs with leasing services. The Business Promotion Department also advises on initial public offerings and on the implementation of capital strategies.

) Restructuring advisory services. In October 2001, the Business Reengineering Department was formed within the Business Promotion Department to provide assistance to SMEs restructuring their business.

) Services to promote B-to-B transactions. The Middle Market Banking Unit also offers an internet-based product, ‘‘SMBC Financial Link’’, to provide various products and services of the Bank and other SMBC Group companies in a single package. These products and services include settlement services, the extension of credit, authorization services and bill collection services. Customers can also use ‘‘Value Door’’, a product that allows customers using a personal computer to access services of the Bank’s subsidiaries and afﬁliates that meet their needs. The Bank has promoted ‘‘Value Door’’ as a main product to stimulate greater demand for its ‘‘solution business’’ for SMEs. The ‘‘Value Door’’ website was inaugurated in May 2001 and had approximately 98,800 corporate users as of March 31, 2005.

In February 2005, Daiwa Securities Group Inc. (‘‘Daiwa Securities’’), SMFG and the Bank announced their basic agreement to expand their private equity investment businesses, including venture capital and buy-out businesses, both in Japan and abroad. To this end, NIF Ventures Co., Ltd. (‘‘NIF Ventures’’) of Daiwa Securities and SMBC Capital plan to merge into a new company on October 1, 2005, and Daiwa Securities and SMFG will

61 enter into a joint venture agreement in support of the merged company. Additionally, the Bank intends to subscribe for ¥10 billion of common stock of NIF Ventures immediately prior to the planned merger.

Corporate Banking Unit and Investment Banking Unit The Corporate Banking Unit’s primary mission is to function as a reliable source of sophisticated solutions for Japan’s large corporations. The Corporate Banking Unit provides a full range of banking services to these clients including syndicated loans, credit line commitments and non-recourse loans. With respect to its large corporate customers, the Bank has focused its lending activities on Japan based customers while providing other fee-based services, such as cash management services, to its Japanese customers operating overseas. The Bank intends to promote the use of the capital markets for a greater proportion of these customers’ funding and corporate restructuring needs, particularly through the involvement of Daiwa Securities SMBC. The Investment Banking Unit provides a broad range of sophisticated financial products and services in connection with capital markets financings, management buyouts, real estate and lease financing, asset securitizations and asset management and other services. The Investment Banking Unit accesses customers needs and offers its products and services through the Middle Market Banking Unit, the Corporate Banking Unit, the International Banking Unit and the newly established Securities Marketing Department. The Investment Banking Unit also offers the following products and services: ) Customized financial services and financing solutions. The Bank provides a wide range of innovative financial services and financing solutions to its corporate clients, including loan syndication, structured finance, securitization, non-recourse real estate finance and derivatives. For the fiscal year ended March 31, 2005, the Bank focused its loan syndication primarily to non-publicly traded companies. In the structured finance area, the Bank focused on real estate recourse loans. ) Asset management. The Bank’s asset management services are provided through Daiwa SB Investments Ltd. (‘‘Daiwa SB Investments’’) and Sumitomo Mitsui Asset Management Company Limited. The Bank has been cooperating with these companies to develop and offer investment trust products and manage customer funds. As of March 31, 2005, these companies together had ¥13.6 trillion in assets under management. ) Pensions. In response to the introduction of ‘‘defined contribution’’ pension plans in Japan in October 2001, the Investment Banking Unit offers consulting, plan management services and employee investment education related to this pension system through Japan Pension Navigator Co., Ltd. Established in September 2000, Japan Pension Navigator Co., Ltd. is capitalized by the Bank and six other financial services companies belonging to the Sumitomo Group or Mitsui Group. ) Corporate bond trust services. The Bank serves as a trustee or co-trustee of corporate mortgage bonds and corporate general mortgage bonds. The Bank also serves as a commissioned company for bondholders and as a registrar, paying and fiscal agent for unsecured public bond offerings by domestic and foreign customers. In this role, the Bank advises the issuer of market conditions and undertakes certain procedural matters on behalf of the issuer. ) Asset securitization trust services. The Bank has been offering other trust services to its customers since October 2002, including monetary claims trusts for asset securitizations. ) Securities intermediary services for corporate clients. The Bank began to offer securities intermediary services beginning December 2004. In addition to its existing product offerings the Bank offers newly- introduced products such as foreign currency bonds and structured bonds to corporate clients through Daiwa Securities SMBC via its newly established Securities Marketing Department.

International Banking Unit The International Banking Unit assists Japanese corporate customers to develop their businesses in overseas markets and multinational companies to develop their businesses in Japan. The International Banking Unit maintains a strong branch network in the Asian region as well as in the Americas and Europe, and leverages the

62 Bank’s strong relationships with major Japanese corporations. The International Banking Unit offers a variety of services and products, such as project finance, non-recourse syndicate financing, securitization arrangements, shipping finance, global cash management systems and yen custody services, to its global clients.

The Bank is also increasing its focus on and presence in Asia. The December 2004 opening of the Hangzhou branch marked the first time that a foreign bank opened a branch in Zhejiang Province of China. The opening of the branch further expands the Bank’s presence in China, which includes branches in Shanghai, Suzhou, Tianjin and Guangzhou and representative offices in Beijing, Shenyang, Dalian and Chongqing. The Hanoi representative office, which also opened in December 2004, is the Bank’s second representative office in Vietnam, the first having been established in Ho Chi Minh City. In Asia, the International Banking Unit has expanded its loan syndication business, primarily through the Debt Capital Markets Departments in Singapore and Hong Kong. In the United States, the International Banking Unit provides Debtor In Possession, or DIP, financing.

Treasury Unit

The Treasury Unit operates in the domestic and international money, foreign exchange, securities and derivatives markets to serve the needs of the Bank’s customers and the Bank’s own asset liability management requirements, while maintaining market and liquidity risks at appropriate levels. To expand the Bank’s customer base further and to respond to its customers’ increasingly diverse and complex needs, the Bank’s Treasury Marketing Department seeks to enhance the Treasury Unit’s sales capabilities by providing to customers a single department specializing in marketing transactions.

The Treasury Unit also offers the following services:

) Government bond underwriting. Through the Treasury Unit, the Bank acts as an underwriter in Japan for national government bonds, government-guaranteed bonds and local government bonds.

) Commercial paper placement. Through the Treasury Unit, the Bank acts as a placement agent for commercial paper programs for qualiﬁed corporate issuers.

The Treasury Unit also engages in proprietary trading in a variety of ﬁnancial products for the Bank’s own account.

Asset Restructuring Unit Dissolution

The Asset Restructuring Unit was established in December 2002 for a temporary three-year period to aid the Bank’s corporate customers in revitalizing their operations and restructuring their finances, thereby accelerating improvements in the quality of the Bank’s loan portfolio. Since the Bank was able to achieve its goal of significantly reducing its problem asset ratio by the fiscal year ended March 31, 2005, it decided to dissolve the Asset Restructuring Unit and has transferred relevant accumulated expertise to other business units. For example, fund investment expertise has been directed to a new Investment Development Department within the Bank’s Investment Banking Unit in order to expand the Bank’s activities in corporate revival funds and private equity funds. Other functions and individuals were transferred to the Middle Market Banking Unit and the Corporate Banking Unit.

Community Banking Unit Dissolution

The Community Banking Unit was responsible for the operations that, prior to the merger with the Former- SMBC, were originally undertaken by Wakashio Bank. The Community Banking Unit succeeded to the branch network established by Wakashio Bank and related business promotion and management functions, and sought to integrate and develop Wakashio Bank’s customer network and services with the Former-SMBC’s sophisticated ﬁnancial products. As the Bank believes integration of the two bank’s business models has progressed considerably, it decided to dissolve the Community Banking Unit on April 1, 2005 and transfer its various functions and individuals into its other business units, primarily the Consumer Banking Unit and the Middle Market Banking Unit.

63 Other Business Activities

In addition to the activities of the business units described above, the Bank also engages in the following business activities:

) Payment services. The Bank handles money remittances for municipalities, public and private corporations and individuals both within Japan and overseas. Domestic remittance services are signiﬁcant in Japan where checks are rarely used and money remittance is a major means of payment. The Bank also handles the presentation and collection for its customers of promissory notes, bills of exchange and checks.

) Foreign exchange. The Bank engages in a variety of foreign exchange transactions for its clients and for its own account, including foreign currency exchange, overseas transfers and trade ﬁnance for export and import activities.

Other Business Activities through Subsidiaries and Alliances

The Bank conducts some of its operations through subsidiaries and joint ventures of both the Bank and SMFG. The Bank may need to provide capital and funding to these companies in the future. Many of the Bank’s subsidiaries and joint ventures involve the contribution of signiﬁcant equity capital and, in the case of the wholesale securities joint venture, the provision by the Bank of credit support to the joint venture to the extent necessary to enable the joint venture to fully participate in the derivatives markets.

Consumer Finance Alliance with Promise

On September 27, 2004, SMFG and Promise entered into a basic agreement with respect to a strategic alliance in the consumer finance business. The goal of the business alliance and capital alliance is to bring together resources such as brand names, customer base, expertise and experience in order to establish a strong consumer finance business in Japan by meeting customers’ various finance needs and providing attractive products.

As part of the business alliance, the Bank and Promise intend jointly to develop new consumer loan models which are to target a wide range of customers in need of immediate ﬁnancing and will offer a variety of products with different interest rates linked to the credit standing of the prospective customer through the Bank’s marketing channels and a faster credit approval process. The Bank and Promise decided to make At-Loan, formerly a consolidated subsidiary of the Bank, a joint venture with Promise in order to undertake part of the new business. Accordingly, on January 31, 2005, the Bank issued At-Loan shares to Promise in a third-party allotment, whereby Promise obtained a 51% interest and the Bank retained a 49% interest in At-Loan, and At- Loan became a consolidated subsidiary of Promise. The Bank also obtained a 15% interest in Promise. Promise will guarantee loans to be made by the Bank and At-Loan, as well as provide support by offering expertise in marketing, credit monitoring and loan collections. The Bank, Promise and At-Loan began offering their new loan products on April 18, 2005. The Bank has installed Promise automated contract machines at its branches and ofﬁces, and has installed 427 new automated contract machines that can process applications for consumer loans of the Bank, Promise and At-Loan. Loan applications can be processed at the Bank’s Loan Plazas and Promise Loan Centers, as well as via the phone and the Internet.

The business alliance also contemplates that The Japan Net Bank, Limited, a SMFG subsidiary, will enter into a comprehensive strategic alliance with Promise starting with the consumer loan business, while future possible projects may include collaborations of Promise with other SMFG subsidiaries, such as Sumitomo Mitsui Card and SAKURA CARD CO., Ltd. In addition, SMFG and Promise intend to exchange personnel on different levels to increase the mutual understanding of their businesses.

As part of the capital alliance between SMFG and Promise, the Bank has purchased 16% of Promise’s outstanding shares. The Bank intends to further increase its shareholding in Promise to 20% of its outstanding shares as and when appropriate opportunities for purchase arise.

64 SMFG also obtained a seat on Promise’s Board of Directors as of June 2005. After the planned changes Promise is accounted for as an affiliate of the Bank accounted for by the equity method. In addition, on March 25, 2005, SMFG and Promise entered into an agreement to form another business and capital alliance between QUOQ, a consumer credit company of the SMBC Group, and Plat, a consumer finance company wholly owned by Promise. The purpose of the alliance is to provide convenient products and services meeting a wide range of customer needs by combining the Promise group’s expertise and infrastructure in consumer finance with QUOQ’s customer base and brand value in shopping credit services. According to the agreement, QUOQ and Plat began to offer consumer loans pursuant to their business alliance on June 13, 2005. Under the agreement, Plat was renamed QUOQLOAN, and QUOQ and the Promise group intend to exchange personnel, including directors and officers. As part of the capital alliance between QUOQLOAN and QUOQ, QUOQLOAN will issue 15% of its total outstanding shares to QUOQ in August 2005.

Insurance Alliance The Bank is party to an alliance with the Mitsui and Sumitomo group insurance companies (Mitsui Life, Sumitomo Life, and Mitsui Sumitomo Insurance) to bolster its insurance operations. The alliance includes the following specific areas of cooperation: ) mutual sharing of distribution channels among the Mitsui and Sumitomo group insurance companies; ) conducting joint research and development activities with Mitsui and Sumitomo group insurance companies relating to hybrid products that combine insurance and financial products; ) reorganizing the asset management businesses of the alliance members; ) transferring the operations of Mitsui Life’s non-life insurance subsidiary to Mitsui Sumitomo Insurance; and ) expanding the exchange of personnel among the alliance partners. On December 1, 2002, the Bank, Mitsui Life, Sumitomo Life and Mitsui Sumitomo Insurance merged their five asset management subsidiaries to form Sumitomo Mitsui Asset Management Company, Limited, in which they hold 17.5%, 30.0%, 35.0% and 17.5%, respectively. As of March 31, 2005, the company had ¥9.7 trillion in total assets under management. A committee to steer the alliance, comprised of senior managing directors, managing directors and officers of a similar rank at the alliance partners, is in place to assure that actions are taken as quickly and effectively as possible to fulfill the objectives of the alliance.

Reorganization of SMBC Group Companies in the SME and Housing Loan Businesses In order to further strengthen its SME and housing loan businesses by concentrating management resources and streamlining decision-making processes, two holding companies, SMBC Financial Business Planning Co., Ltd. (‘‘SMBC FBP’’) and SMBC Loan Business Planning Co., Ltd. (‘‘SMBC LBP’’), were established in April 2004 by the Bank by way of corporate split (shinsetsu kaisha bunkatsu) under the Commercial Code. Through this reorganization, two companies involved in the SME loan business and four companies involved in the housing loan business which had previously been direct subsidiaries of the Bank became subsidiaries of SMBC FBP and SMBC LBP, respectively. The reorganization of group companies in the SME and housing loan businesses has had no effect on the Bank’s consolidated net assets, as the transactions relating to the reorganization are actually those among companies under the Bank’s control.

Transactions with Goldman Sachs On January 15, 2003, SMFG, the Bank and Goldman Sachs jointly announced a series of related transactions, which closed on February 7, 2003. The transactions have three primary components: (i) the purchase by Goldman Sachs of convertible preferred stock of SMFG having a liquidation preference equal to ¥150.3 billion (the ‘‘GS Preferred Stock’’); (ii) the provision by the Bank to Goldman Sachs’ afﬁliates of ﬁrst loss credit protection up to an aggregate of $1 billion and additional second loss credit protection of up to $1.125 billion, to mitigate in part the credit risk to Goldman Sachs associated with certain credit extensions to its investment grade

65 clients; and (iii) the enhancement and development of certain business co-operation understandings between the Bank and Goldman Sachs.

Preferred Stock Purchase On February 8, 2003, Goldman Sachs purchased convertible preferred stock of SMFG at a purchase price, and with a liquidation preference, equal to ¥150.3 billion. Annual noncumulative cash dividends will be paid at a rate of 4.5% of the liquidation preference. The GS Preferred Stock ranks on a parity with other preferred stock of SMFG and is senior to the SMFG common stock. The GS Preferred Stock was transferred to GSSM, a wholly-owned subsidiary of Goldman Sachs, on September 11, 2003.

Credit Loss Protection In connection with these agreements with SMFG and the Bank, Goldman Sachs has established certain wholly-owned subsidiaries (the ‘‘William Street Entities’’) to be available to make credit commitments and extensions. In order to hedge in part the credit risk to its investment in the William Street Entities arising from these credit-extension activities, Goldman Sachs has entered into credit loss protection arrangements with the Bank. The Bank, through its Cayman Islands branch, will issue letters of credit in exchange for fees in an amount equal to a portion of the fees and interest to be paid by the borrowers to the William Street Entities. One letter of credit (the first letter of credit, or ‘‘FLC’’), which was issued on February 7, 2003 in a maximum available amount of $1 billion and is available over a 20-year period, subject to early termination or extension. In addition, from time to time over a 20-year period, subject to early termination or extension and subject to the satisfaction of certain conditions, upon the request of Goldman Sachs, the Bank will issue one or more additional five-year letters of credit (each a second letter of credit, or ‘‘SLC Series’’) rated BBB/Baa2 or higher in an aggregate maximum available amount of $1.125 billion. Goldman Sachs may draw on the letters of credit in the event that Goldman Sachs realises certain losses (‘‘Losses’’) with respect to loan commitments or loans extended thereunder that Goldman Sachs has entered into with specified borrowers approved by the Bank and Goldman Sachs. Under the FLC, Goldman Sachs will be entitled to draw from time to time amounts equal to approximately 95% of Losses, up to an aggregate stated amount of $1 billion. Under the SLC Series, Goldman Sachs will be entitled, subject to certain conditions, to draw from time to time amounts equal to approximately 70% of Losses above specified loss thresholds, up to an aggregate stated amount of $1.125 billion. In connection with these credit arrangements, the Bank will pay Goldman Sachs an administration fee based on the aggregate amount of commitments covered by the FLC. The credit loss protection arrangements contain a number of provisions that confer on the Bank certain controls over the determination of borrowers in respect of which it has potential exposure under the FLC and any SLC Series. First, Goldman Sachs is authorized to make credit commitments covered by the arrangements to only those borrowers approved by the Bank. Second, except as the Bank and Goldman Sachs may otherwise agree, the borrowers covered by the FLC and any SLC Series that are rated by both of the two major rating agencies must be rated investment grade by both such rating agencies, and borrowers that are rated only by one of the two major rating agencies must be rated investment grade by such rating agency. If neither of the two major rating agencies provide ratings for a borrower, such borrower shall no longer be covered by FLC or any SLC series, if such borrower has credit conditions determined by the Bank and Goldman Sachs to be lower than those rated investment grade. Third, in the event the ratings of a borrower approved by the Bank fall below investment grade in the judgment of both major rating agencies (or, if a borrower is rated investment grade by only one agency, that agency downgrades the borrower below investment grade), further extension of credit to such borrower will no longer be covered by these arrangements, unless the Bank and Goldman Sachs otherwise agree.

66 Fourth, at the fifth, tenth and fifteenth anniversaries of the transaction, the Bank will have the right to cause Goldman Sachs to suspend the extension of the new credit to borrowers deemed by the Bank to have become ‘‘unbankable’’. ‘‘Unbankable’’ borrowers are those who, notwithstanding the investment grade ratings accorded them by the two major rating agencies, are deemed by the Bank to be below BB– and below Ba3 based on the Bank’s application of rating agency methodologies and criteria. If Goldman Sachs disagrees with a suspension decision made by the Bank, the matter is to be referred to arbitration, and the suspension is effective unless and until an arbitrator rules in favor of Goldman Sachs. The Bank, through a separate bankruptcy-remote Cayman Islands subsidiary, has collateralized the obligations on the FLC and a portion of the SLC Series by purchasing $1.375 billion of Goldman Sachs demand notes and pledging those demand notes to Goldman Sachs. In the event that Goldman Sachs activates an SLC Series that is not otherwise collateralized, the Bank, through its Cayman Islands subsidiary, will be required to purchase and pledge additional Goldman Sachs demand notes in a principal amount equal to the stated amount of such SLC Series. In certain circumstances and subject to certain conditions, the Bank will have the right to substitute as collateral high quality liquid securities for the Goldman Sachs demand notes. These arrangements are designed to collateralize the Bank’s obligations in the event the Bank’s Cayman Island branch fails to perform on the FLC or any SLC Series, including as a result of the insolvency of SMFG, the Bank or the Bank’s Cayman Island branch. In the event that the credit rating of Goldman Sachs, as determined by either of the two major credit rating agencies, falls below investment grade, Goldman Sachs shall be obligated to provide collateral to the Bank to support Goldman Sachs’ obligations under the afore-mentioned Goldman Sachs demand notes. After an initial 15-year period under the letters of credit, the Bank and Goldman Sachs will negotiate in good faith to extend the terms of the letter of credit arrangements for one additional five-year term following the expiration of the initial 20-year term. In certain circumstances, the letter of credit arrangements with the Bank may be terminated by the Bank or Goldman Sachs, in which event Goldman Sachs would be required to prepay any outstanding demand notes. In certain circumstances related primarily to the creditworthiness of the Bank or a breach of its representations or covenants, Goldman Sachs may draw on the letters of credit for ‘‘early termination amounts’’ of up to the remaining undrawn or available amount on the letters of credit. In connection with such draws of early termination amounts, Goldman Sachs would be required to prepay any outstanding demand notes. Goldman Sachs also would be obligated to pay to the Bank on the originally scheduled expiration date of the letter of credit arrangements an amount equal to the early termination amounts minus the Losses that would have been reimbursed under the letters of credit had they not terminated early.

Business Cooperation As part of the agreements, the Bank and Goldman Sachs are seeking to develop their business relationship in Japan further. Specifically, they have entered into a business cooperation agreement that will afford Goldman Sachs certain rights with respect to asset sales of the Bank and its affiliates and debtors, the Bank’s Japan-related equity offerings, investment banking services for the Bank and its affiliates and customers, investments in merchant banking transactions in Japan and access to the Bank’s retail distribution network in Japan for investment trust products. The agreement will afford the Bank certain rights with respect to the provision of commercial banking services by the Bank in Japan to customers of Goldman Sachs and participation by the Bank as a syndicate lender in Goldman Sachs-led syndicated loans for Japan-related credits. Various of Goldman Sachs’ rights under this agreement are subject to priorities of affiliates of the Bank and are generally applicable only where practically possible, legally permissible and economically reasonable. The agreement will be effective for five years, with automatic one-year extensions occurring for up to an additional 15 years so long as Goldman Sachs holds at least 50% of the GS Preferred Stock initially issued (or common stock issued on conversion of the GS Preferred Stock). The agreement can be terminated by either party if Goldman Sachs does not hold at least 20% of the GS Preferred Stock initially issued (or common stock issued on conversion of the GS Preferred Stock).

67 Regulatory Capital Considerations Under the regulatory capital guidelines in place in Japan, the GS Preferred Stock is considered Tier I capital. Under current regulatory capital guidelines in place in Japan, SMFG would apply standard, i.e. 8%, capital requirements in respect of the FLC. It is possible that, under proposed international regulatory capital guidelines, SMFG would be required to hold 100% capital against the FLC. One half of this capital would be required to be held as Tier I capital, and one half as Tier II capital.

Corporate Recovery Joint Venture Company On October 8, 2003, SMFG agreed to jointly establish a joint venture company, SMFG Corporate Recovery Servicer, with Goldman Sachs Japan and Daiwa Securities SMBC Principal Investments Co. Ltd. (‘‘Daiwa Securities SMBCPI’’). The joint venture was established as a subsidiary of SMFG in which SMFG owns the majority equity interest (52%), with Goldman Sachs Japan, Daiwa Securities SMBCPI and Development Bank of Japan having an equal equity participation of 16% each. The Bank, Goldman Sachs Japan and Daiwa Securities SMBCPI have formed a loan purchase fund to purchase loans from the Bank and other ﬁnancial institutions. The loan purchase fund delegates the corporate recovery operations to SMFG Corporate Recovery Servicer to develop and execute recovery plans within the targeted period of three years from the time of purchase.

Revenues by Region The following table sets forth the percentage of consolidated total income for the Bank for each of the periods indicated based on the consolidated total income of the ofﬁces of the Bank and its subsidiaries located in the regions indicated. Year ended March 31, 2002 2003 2004 2005 Region Japan ************************************************************** 74% 84% 87% 88% Foreign************************************************************* 26 16 13 12 Americas ********************************************************* 11666 Europe *********************************************************** 8632 Asia (excluding Japan) and Oceania *********************************** 7444 Total *************************************************************** 100% 100% 100% 100%

Funding The Bank derives funding for its operations from a variety of domestic and international sources. The Bank’s domestic funding is primarily derived from retail deposits placed with the Bank by its corporate and individual customers, but also from call money (interbank), bills sold (interbank promissory notes) and negotiable certificates of deposit issued by the Bank to its domestic and international customers. The Bank’s principal international sources of funds are interbank deposits, funds raised in the international capital markets and loan financing. In addition, positive cash flows generated by the Bank’s operations provide a steady source of additional funding. The Bank closely monitors maturity gaps and foreign exchange exposure with a view towards managing its risk profile.

68 The following table illustrates the composition of the Bank’s funding (interest-bearing liabilities) by average balances and related interest and average interest rates as of March 31, 2003, 2004, and 2005. Average balances are based on a daily average. Year ended March 31, 2003 2004 2005 Average Average Average Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate (Millions of yen, except percentages) Interest-bearing liabilities: Deposits: Domestic ******* ¥58,316,729 ¥ 63,326 0.11% ¥59,917,916 ¥ 50,922 0.08% ¥62,999,470 ¥ 67,477 0.11% Overseas******** 3,994,367 89,254 2.23 3,404,225 55,119 1.62 4,105,888 66,220 1.61 Elimination ***** (24,473) (216) — (168,421) (1,301) — (132,064) (2,105) — Total ********* 62,286,624 152,364 0.24 63,153,721 104,741 0.17 66,973,294 131,591 0.20 Negotiable certiﬁcates of deposit: Domestic ******* 5,739,513 2,074 0.04 4,281,885 847 0.02 3,620,709 813 0.02 Overseas******** 200,607 5,503 2.74 96,735 2,697 2.79 122,085 2,912 2.39 Elimination ***** ——— ——— ——— Total ********* 5,940,120 7,578 0.13 4,378,620 3,545 0.08 3,742,795 3,726 0.10 Call money and bills sold: Domestic ******* 10,166,594 1,109 0.01 7,186,407 1,242 0.02 4,836,442 1,436 0.03 Overseas******** 168,107 2,614 1.56 123,925 1,355 1.09 160,044 2,480 1.55 Elimination ***** ——— ——— ——— Total ********* 10,334,702 3,724 0.04 7,310,332 2,598 0.04 4,996,487 3,917 0.08 Payables under repurchase agreements: Domestic ******* 1,036,569 74 0.01 1,711,425 105 0.01 572,714 18 0.00 Overseas******** 1,059,369 18,111 1.71 354,094 4,107 1.16 212,983 3,454 1.62 Elimination ***** ——— ——— ——— Total ********* 2,095,938 18,185 0.87 2,065,520 4,212 0.20 785,698 3,472 0.44 Payables under securities lending transactions: Domestic ******* 3,853,983 28,830 0.75 5,090,264 48,622 0.96 4,645,843 51,853 1.12 Overseas******** ——— ——— ——— Elimination ***** ——— ——— ——— Total ********* 3,853,983 28,830 0.75 5,090,264 48,622 0.96 4,645,843 51,853 1.12 Commercial paper: Domestic ******* 268,052 380 0.14 6,997 4 0.07 4,528 1 0.04 Overseas******** ——— ——— ——— Elimination ***** ——— ——— ——— Total ********* 268,052 380 0.14 6,997 4 0.07 4,528 1 0.04 Borrowed money: Domestic ******* 3,559,473 80,487 2.26 2,050,391 59,038 2.88 1,798,989 51,055 2.84 Overseas******** 212,650 6,168 2.90 113,752 2,179 1.92 100,866 3,109 3.08 Elimination ***** (997,898) (34,275) — (853,821) (30,134) — (744,722) (27,560) — Total ********* 2,774,225 52,380 1.89 1,310,322 31,084 2.37 1,155,133 26,603 2.30

69 Year ended March 31, 2003 2004 2005 Average Average Average Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate (Millions of yen, except percentages) Short-term bonds: Domestic ******* — — — — — — 136 0 0.12 Overseas******** ——— ——— ——— Elimination ***** ——— ——— ——— Total ********* — — — — — — 136 0 0.12 Bonds: Domestic ******* 2,537,030 38,045 1.50 2,781,324 43,278 1.56 3,487,399 54,426 1.56 Overseas******** 1,159,507 38,169 3.29 1,004,354 31,577 3.14 765,713 29,017 3.79 Elimination ***** (369) (11) — — — — — — — Total ********* 3,696,169 76,202 2.06 3,785,679 74,855 1.98 4,253,112 83,443 1.96 Total interest-bearing liabilities(1): Domestic ******* 86,428,380 241,920 0.28 83,510,193 225,847 0.27 82,499,517 255,867 0.31 Overseas******** 6,812,607 209,909 3.08 5,109,984 100,641 1.97 5,483,853 111,651 2.04 Elimination ***** (1,023,785) (34,473) — (1,023,064) (31,435) — (876,956) (29,666) — Total ********* ¥92,217,203 ¥417,356 0.45% ¥87,597,113 ¥295,053 0.34% ¥ 87,106,414 ¥337,851 0.39%

The Bank increased the interest rates it paid on deposits from 0.17% during the fiscal year ended March 31, 2004 to 0.20% during the fiscal year ended March 31, 2005. This was mainly due to an increase in the average interest rate on domestic deposits from 0.08% to 0.11% year on year, reflecting the rise of market rates.

Deposits

A complete range of standard banking accounts, including current deposits, ordinary deposits, savings deposits, deposits at notice, time deposits and negotiable certiﬁcates of deposit are offered through the Bank’s branches in Japan and are the principal source of funding for the Bank’s domestic operations. The Bank’s domestic deposits are principally from private individuals and corporations with the balance coming from government bodies (including municipal authorities) and ﬁnancial institutions. The Bank’s total amount of domestic yen deposits of ¥66,746 billion was one of the largest among Japanese city banks as of March 31, 2005. Domestic deposits in currencies other than yen are not material.

The Bank’s overseas branches accept deposits mainly in U.S. dollars but also in yen and other foreign currencies and are active participants in the Euro-currency market as well as the United States domestic money market. In addition, the New York, Singapore and Hong Kong branches of the Bank and Sumitomo Mitsui Banking Corporation Europe Limited, a subsidiary of the Bank, regularly issue U.S. dollar certiﬁcates of deposit. Sumitomo Mitsui Banking Corporation Europe Limited and other overseas branches of the Bank also issue certiﬁcates of deposit denominated in U.S. dollars and in other currencies. As of March 31, 2005, overseas deposits amounted to ¥4,524 billion, representing 6% of total deposits.

70 The following tables show a breakdown of domestic and overseas deposits of the Bank as of the dates indicated: As of March 31, 2003 2004 2005 (Millions of yen) Domestic Deposits Liquid deposits **************************************** ¥34,812,728 ¥36,880,645 ¥39,038,245 Time deposits ***************************************** 20,588,487 20,308,522 20,513,692 Other deposits ***************************************** 4,258,026 4,766,398 4,566,079 Subtotal ******************************************** 59,659,242 61,955,566 64,118,017 Negotiable certiﬁcates of deposit************************** 4,776,264 3,491,393 2,627,486 Total domestic deposits ********************************* ¥64,435,507 ¥65,446,960 ¥66,745,504 Overseas Deposits Liquid deposits **************************************** ¥ 2,733,493 ¥ 2,865,697 ¥ 3,736,715 Time deposits ***************************************** 593,179 564,776 645,371 Other deposits ***************************************** 10,089 8,036 8,767 Subtotal ******************************************** 3,336,761 3,438,510 4,390,853 Negotiable certiﬁcates of deposit************************** 112,753 96,070 133,283 Total overseas deposits ********************************** ¥ 3,449,515 ¥ 3,534,580 ¥ 4,524,137

For the fiscal year ended March 31, 2005, total domestic deposits increased mainly due to the increase of liquid deposits. The majority of domestic deposits with the Bank are liquid deposits in yen. Such deposits pay interest at rates established by the Bank and based principally on prevailing market rates. Most overseas deposits with the Bank are interbank deposits at notice denominated in dollars or other foreign currencies. Such deposits typically pay interest at rates determined by reference to market rates for deposits in London with major money-center banks. The following tables set forth the composition of the Bank’s time deposits by types and maturity (on a non- consolidated basis) as of the date indicated: Maturity as of March 31, 2005 Three months Six months to One year to Two years to Three Less than to less than less than one less than less than years three months six months year two years three years and over Total (Millions of yen) Non-consolidated Domestic fixed rate time deposits(1) *********** ¥5,532,337 ¥2,973,753 ¥4,923,087 ¥1,675,518 ¥1,377,490 ¥1,111,275 ¥17,593,462 Domestic floating rate time deposits(1) ******* 6,900 — 500 — 1,000 191,262 199,662 Total domestic time deposits(2) *********** 5,539,237 2,973,753 4,923,587 1,675,518 1,378,490 1,302,537 17,793,124 Total international time deposits************* 442,631 17,731 15,528 4,978 4,931 4,320 490,122

Total time deposits****** ¥5,981,869 ¥2,991,485 ¥4,939,115 ¥1,680,496 ¥1,383,422 ¥1,306,857 ¥18,283,246

(1) For purposes of this table, time deposits outstanding do not include installment time deposits, which have no stated maturity. (2) Includes off-shore account deposits.

71 Euro Medium Term Note Programs The Bank has a Euro Medium Term Note Program which permits the Bank and certain of its subsidiaries to have outstanding not more than ¥1.5 trillion aggregate nominal amount of notes at any given time. The Euro Medium Term Note Program allows for the issuance of senior and subordinated notes. The Bank also succeeded Sakura Bank to two Euro Medium Term Note Programs which permit certain of its subsidiaries to issue subordinated notes (although no new issues of notes through such subsidiaries are made under these former Sakura Bank programs). As of March 31, 2005, there were ¥1,021 billion aggregate nominal amount of notes outstanding under these three programs, of which ¥115 billion were senior notes, ¥490 billion were dated subordinated notes and ¥415 billion were perpetual subordinated notes.

Public Funding As part of a government-funded bank recapitalization program designed to strengthen Japan’s ﬁnancial system, on March 31, 1999 Sumitomo Bank issued ¥501 billion of preferred stock and on March 31, 1999, Sakura Bank issued ¥800 billion of preferred stock to the RCC, an entity established pursuant to the Financial Function Early Strengthening Law. The preferred stock issued by Sumitomo Bank were issued at a price of ¥3,000 per share (¥1,500 of which was accounted for as stated capital). The preferred stock issued by Sakura Bank were issued at a price of ¥1,000 per share (¥500 of which was accounted for as stated capital). In the process of establishing SMFG through a statutory share transfer (kabushiki iten) which took effect as of December 2, 2002, these preferred stocks were transferred from the RCC to SMFG in exchange for preferred stocks of SMFG (Type 1, Type 2 and Type 3) newly issued with effectively the same terms and conditions as those of the corresponding preferred stocks of the Former-SMBC held by the RCC. ¥201 billion of the preferred stock (Type 1) are convertible into common stock of SMFG at any time from December 2, 2002 until February 26, 2009, ¥300 billion of the preferred stock (Type 2) are convertible into common stock of SMFG at any time from August 1, 2005 until February 26, 2009, and ¥800 billion of the preferred stock (Type 3) are convertible into common stock of SMFG at any time from December 2, 2002 until September 30, 2009, in each case subject to certain adjustments to the conversion period. As a condition to the application for these public funds, Sakura Bank and Sumitomo Bank were required to submit rationalization plans to the Financial Reconstruction Commission (the ‘‘FRC’’) (integrated into the FSA as of January 2001) in March 1999. These plans are updated in semi-annual reports to the FSA, as required by Article 5.4 of the Financial Function Early Strengthening Law, which state the progress achieved toward the goals of the rationalization plans. On April 4, 2003, the FSA announced its decision to tighten the application of supervisory action and clarify the criteria governing the conversion of government-held preferred stock in order to improve corporate governance of those banks and bank holding companies (including SMFG) that have received public funds (as amended on August 7, 2003). Where a bank or bank holding company’s earning conditions worsen, the FSA will take supervisory actions which include requiring reports to be submitted by a bank or bank holding company and taking business improvement administrative orders under the Banking Law. If such bank and bank holding company becomes signiﬁcantly undercapitalized, the FSA will consider converting preferred stock. See ‘‘Supervision and Regulation — Japan — Public Money Injection and Rationalization Plan’’. On September 30, 2004, at the request of SMFG, the DIC approved the exercise of conversion rights by the RCC of 32,000 shares of Type 1 preferred stock of SMFG, converted into 101,362.06 common shares, and 105,000 shares of Type 3 preferred stock of SMFG, converted into 300,343.25 common shares. As a result, the RCC held 401,705.31 common shares of SMFG, approximately 6.5% of the aggregate number of outstanding SMFG common shares. On November 1, 2004, at the request of SMFG, the DIC approved the disposition by the RCC of a portion of SMFG common shares held by the RCC. On November 2, 2004, SMFG repurchased 400,805 common shares at a total repurchase price of ¥267.7 billion through the Tokyo Stock Exchange Trading Network System –2 (closing price orders). SMFG intends to hold the repurchased common shares as treasury stock. In addition, at SMFG’s annual general meeting of shareholders held on June 29, 2005, the shareholders authorized the Board of Directors of SMFG to repurchase up to 500,000 shares of common stock, 35,000 shares of Type 1 preferred stock, 100,000 shares of Type 2 preferred stock and 695,000 shares of Type 3 preferred stock

72 with a maximum total repurchase price of ¥300 billion. The proposal was also approved by the holders of each class of SMFG’s preferred stock. Accordingly, SMFG’s Board of Directors is authorized to apply the ¥300 billion aggregate repurchase limit towards any one class of stock or towards a combination of classes. The Board of Directors also resolved not to repurchase any stock prior to August 1, 2005, notwithstanding the authorization and approval of the repurchase. The Board of Directors has not made any definitive decision to repurchase capital stock, and any repurchases will be subject to SMFG’s consideration of its financial situation and other factors. In addition, any repurchase of these shares is subject to the approval of regulatory authorities. The DIC announced that it will consider the following criteria in determining whether to approve a bank’s or bank holding company’s repurchase of preferred stock or any other proposed repayment of public funds by a bank: (i) whether the bank’s or bank holding company’s business soundness will be adversely affected, specifically, whether the bank or bank holding company will have a capital adequacy ratio meeting regulatory requirements after the repayment or any problems complying with the rationalization plan it submitted to the regulatory authorities, or whether the market’s perceived value of the bank or bank holding company will diminish significantly; (ii) whether the repayment of public funds is possible in an amount at least equal to the initial purchase price and at a fair value so that the repayment will not add to the public burden; and (iii) whether the repayment will adversely affect the market due to the method or size of the repayment or will otherwise impair the financial system. In connection with the above, SMFG, the sole shareholder of SMBC’s common stock and each class of SMBC’s preferred stock, authorized SMBC to repurchase its Type 1, Type 2 and Type 3 preferred stock held by SMFG with a maximum total repurchase price of ¥300 billion. Accordingly, SMBC’s Board of Directors is authorized to apply the ¥300 billion aggregate repurchase limit towards any one class of stock or towards a combination of classes. In addition, SMBC intends to create greater flexibility in undertaking its financial strategy by transferring ¥344.9 billion of capital reserve to other capital surplus. Capital reserve and other capital surplus are components of capital surplus. The authorization for the repurchase by SMBC is subject to the effectiveness of the transfer of capital reserve to other capital surplus. The effective date of the transfer is expected to be in early August 2005, following the expiration of the creditor demurral period. Any repurchase by SMBC of shares of its Type 1, Type 2 and Type 3 preferred stock from SMFG will have the effect, in the absence of other changes, of reducing SMBC’s capital ratios. SMBC, in evaluating any decision to repurchase any such shares from SMFG, intends to take into consideration the effect of such repurchase on its capital. In addition, repurchases of stock by SMBC are subject to the approval of regulatory authorities. SMBC expects that regulatory authorities will take into consideration in determining whether to approve any such repurchase by SMBC or SMFG the above mentioned criteria, including the effect of such repurchase on its capital.

Other Sources of Funding On March 30, 2005, the Bank issued 70,001 shares of its first series Type 6 preferred stock through direct allotment to SMFG at a price of ¥3 million per share (¥1.5 million of which was accounted for as stated capital), for an aggregate issue price of ¥210 billion. SMFG in turn subscribed for the Bank’s first series Type 6 preferred stock using proceeds from its issuance of 70,001 shares of first series Type 6 preferred stock of SMFG at a price of ¥3 million per share (¥1.5 million of which was accounted for as stated capital), for an aggregate issue price of ¥210 billion. The shares of first series Type 6 preferred stock of SMFG were allocated on March 29, 2005 by means of third party allocation to Sumitomo Life (23,334 shares), Nippon Life (20,000 shares), Mitsui Life (16,667 shares) and Mitsui Sumitomo Insurance (10,000 shares). The Bank’s proceeds from the issuance will be used as general working capital. The Bank’s additional sources of funding include call loans and other interbank funding arrangements (other than interbank deposits), repurchase agreements using JGBs, both senior and subordinated loans from institutional investors on a worldwide basis and other sources. The Bank also has access to funding through loans by the Bank of Japan. Borrowings from the Bank of Japan require the Bank to pledge collateral consisting of JGBs and certain other qualifying collateral.

73 The Bank’s need for money market funding decreased substantially as a result of its increased deposits.

Assets The following table shows the Bank’s average asset balances and related interest and average interest rates for the ﬁscal years ended March 31, 2003, 2004, and 2005. Average asset balances are based on a daily average. Year ended March 31, 2003 2004 2005 Average Average Average Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate (Millions of yen, except percentages) Interest-earning assets:(1) Loans and bills discounted Domestic************ ¥57,714,603 ¥1,091,736 1.89% ¥54,452,750 ¥1,016,646 1.87% ¥50,866,716 ¥ 974,378 1.92% Overseas ************ 6,252,263 204,679 3.27 5,064,994 148,501 2.93 5,388,426 166,477 3.09 Elimination ********** (997,898) (34,275) — (853,787) (30,152) — (744,714) (27,560) — Total ************* 62,968,968 1,262,140 2.00 58,663,957 1,134,996 1.93 55,510,427 1,113,294 2.01 Securities Domestic************ 21,671,434 216,056 1.00 23,090,843 230,993 1.00 23,248,647 247,905 1.07 Overseas ************ 1,745,522 58,303 3.34 1,036,961 35,639 3.44 904,213 28,944 3.20 Elimination ********** (369) (5,518) — — (10,031) — — (20,329) — Total ************* 23,416,587 268,840 1.15 24,127,804 256,601 1.06 24,152,860 256,520 1.06 Call loans and bills bought Domestic************ 627,785 1,936 0.31 547,686 1,840 0.34 587,437 4,116 0.70 Overseas ************ 120,354 2,242 1.86 101,843 2,200 2.16 121,023 2,979 2.46 Elimination ********** ————————— Total ************* 748,139 4,179 0.56 649,529 4,040 0.62 708,460 7,095 1.00 Receivables under resale agreements Domestic************ 120,981 3 0.00 33,898 3 0.01 92,885 6 0.01 Overseas ************ 100,914 1,348 1.34 127,275 2,538 1.99 155,602 3,157 2.03 Elimination ********** ————————— Total ************* 221,896 1,352 0.61 161,173 2,542 1.58 248,487 3,163 1.27 Receivables under securities borrowing transactions Domestic************ 1,254,675 225 0.02 515,980 104 0.02 874,138 185 0.02 Overseas ************ ————————— Elimination ********** ————————— Total ************* 1,254,675 225 0.02 515,980 104 0.02 874,138 185 0.02 Deposits with banks Domestic************** 823,298 12,822 1.56 666,233 6,972 1.05 1,217,735 20,579 1.69 Overseas ************ 970,063 22,153 2.28 703,330 7,008 1.00 1,020,309 17,709 1.74 Elimination ********** (23,800) (216) — (151,999) (1,301) — (130,904) (2,105) — Total ************* 1,769,561 34,759 1.96 1,217,563 12,679 1.04 2,107,140 36,183 1.72 Total interest-earning assets Domestic************ 83,803,278 1,436,074 1.71 80,116,238 1,363,268 1.70 77,870,320 1,320,829 1.70 Overseas ************ 9,690,916 421,432 4.35 7,391,661 238,922 3.23 8,043,184 219,685 2.73 Elimination ********** (1,023,112) (39,980) — (1,006,609) (41,485) — (875,788) (49,996) — Total ************* ¥92,471,081 ¥1,817,526 1.97% ¥86,501,290 ¥1,560,705 1.80% ¥85,037,716 ¥1,490,519 1.75%

74 Loans General The Bank’s principal investing activity is its lending business. The Bank makes loans and extends other types of credit principally to corporate and individual customers in Japan, and to corporate and sovereign customers abroad. The following tables set forth the composition of the Bank’s loans and bills discounted by type of interest rate charged and maturity (on a non-consolidated basis) as of the dates indicated: Maturity as of March 31, 2005 More than More than More than One year one year to three years five years to Over seven Unspeciﬁed or less(1) three years to five years seven years years term Total (Millions of yen) Non-consolidated Fixed interest rate **** ¥ — ¥1,828,265 ¥1,501,490 ¥ 475,456 ¥ 748,285 ¥ — ¥ 5,849,543 Floating interest rate ** — 6,278,298 4,732,079 2,118,091 15,496,800 8,202,541 44,218,042 Total *************** ¥8,686,277 ¥8,106,563 ¥6,233,570 ¥2,593,547 ¥16,245,085 ¥8,202,541 ¥50,067,586

(1) Loans with a maturity of one year or less are not classified by floating or fixed interest rates. As of March 31, 2005, ¥32,051 billion, or 64%, of the Bank’s loan portfolio consisted of secured or guaranteed loans. The Bank usually takes real estate collateral on its domestic corporate loans. The Bank extends collateralized housing loans and unsecured consumer finance loans to its retail customers. The Bank’s housing loans are usually guaranteed by SMBC Guarantee Co., Ltd. (‘‘SMBC Guarantee’’), its guarantee subsidiary. The following table sets forth the Bank’s loans outstanding (including bills discounted) classified by class of collateral (on a non-consolidated basis) as of the dates indicated: As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Non-consolidated Class of collateral: Securities ****************** ¥ 805,685 1.41% ¥ 1,025,755 2.02% ¥ 965,238 1.93% Commercial claims ********** 1,253,179 2.19 1,311,345 2.58 1,191,558 2.38 Commodities *************** 4,579 0.00 2,595 0.01 — — Real estate ***************** 8,531,366 14.89 7,490,743 14.74 7,127,468 14.23 Other********************** 479,374 0.84 363,678 0.71 433,650 0.87 Total secured loans ************ 11,074,186 19.33 10,194,118 20.06 9,717,916 19.41 Guaranteed(1) ***************** 22,177,530 38.72 22,103,891 43.50 22,332,670 44.60 Unsecured******************** 24,030,649 41.95 18,512,134 36.44 18,016,999 35.99 Total ********************** ¥57,282,365 100.00% ¥50,810,144 100.00% ¥50,067,586 100.0%

(1) Including housing loans guaranteed by SMBC Guarantee. These are not categorized as guaranteed loans in the Bank’s consolidated ﬁnancial statements. The Bank is subject to lending limits under the Banking Law. See ‘‘Supervision and Regulation — Japan — The Financial Services Agency — Credit Limit’’.

Domestic Lending The Bank makes loans to, and discounts bills of, a broad range of industrial, commercial and individual customers in Japan. The Bank’s domestic lending business consists principally of the extension of small loans to

75 individuals and SMEs. As of March 31, 2005, 29.2% of the Bank’s domestic loans and bills discounted were to individuals, 46.4% were to SMEs which are deﬁned as companies with a capital stock of ¥300 million or less, or with less than 300 employees, subject to certain exceptions applicable to speciﬁc industries, and 24.4% were to large corporations. However, the Bank also has substantial lending relationships with larger businesses, including many of the leading companies of Japan.

The following tables show the outstanding loans (including bills discounted) of the Bank’s domestic offices, before deduction of reserves for possible loan losses, as of the dates indicated. Classification of loans by industry is based on industry segment loan classifications as defined by the Bank of Japan for regulatory reporting purposes and is not necessarily based on use of loan proceeds. As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Domestic Offices(1): Manufacturing *************** ¥ 6,321,452 11.17% ¥ 6,133,208 11.92% ¥ 5,657,329 11.23% Agriculture, forestry, fishing and mining******************** 207,514 0.37 142,574 0.28 134,289 0.27 Construction ***************** 2,630,118 4.65 1,950,119 3.79 1,829,553 3.63 Transportation, communication and other public enterprises ** 3,076,295 5.44 3,270,116 6.36 2,868,583 5.69 Wholesale and retail ********** 6,235,896 11.02 5,871,202 11.41 5,681,187 11.28 Financial and insurance ******** 4,543,927 8.03 4,035,142 7.84 4,543,387 9.02 Real estate ****************** 9,015,365 15.94 7,948,701 15.45 6,937,379 13.77 Services ******************** 6,172,685 10.91 6,177,383 12.01 6,356,210 12.61 Municipalities**************** 577,100 1.02 765,640 1.49 656,366 1.30 Other*********************** 17,789,591 31.45 15,153,844 29.45 15,720,093 31.20 Total *********************** ¥56,569,948 100.00% ¥51,447,932 100.00% ¥50,384,379 100.00%

(1) The above figures exclude Tokyo offshore accounts for international financial transactions. Loans and bills discounted, classified by industry regarding ‘‘domestic offices excluding offshore banking accounts’’ are based on the ‘‘Japan Standard Industrial Classification’’.

As part of its business operations, the Bank regularly lends funds to individuals and SMEs.

The following tables show a breakdown of the Bank’s domestic loan portfolio by type of borrower (on a non-consolidated basis) as of the dates indicated: As of March 31, 2003 2004 2005 (Billions of yen, except percentages) Non-consolidated Individuals *************************** ¥12,775.2 23.8% ¥13,130.9 27.4% ¥13,647.5 29.2% SMEs ******************************* 23,958.0 44.5 22,297.0 46.5 21,643.6 46.4 Large corporations(1) ******************* 17,062.6 31.7 12,523.7 26.1 11,382.5 24.4 Total ******************************** ¥53,795.9 100.0% ¥47,951.5 100.0% ¥46,673.6 100.0%

(1) Includes medium-sized enterprises with a capital stock of more than ¥300 million or with more than 300 employees.

The Bank is expanding its lending to individuals in Japan while simultaneously attempting to manage its risk-return proﬁle. The outstanding balance as of March 31, 2005 of the Bank’s loans to individuals (almost all of them in Japan), on a non-consolidated basis, was ¥13,647.5 billion. Most of the Bank’s outstanding loans to individuals at March 31, 2005 consisted of housing-related loans.

76 The aggregate amount of loans to SMEs reflected in the Bank’s accounts, on a non-consolidated basis, decreased for the fiscal year ended March 31, 2005. The Bank’s long-term strategy includes expansion of lending to SMEs. As a prerequisite to its receipt of public funding in 1999, the Bank submitted its rationalization plan to the Japanese government, in which the Bank stated its intention to increase its lending to small-sized companies. Housing loans to individuals are generated through the Bank’s branch network. Consumer loans to individuals are provided by the Bank and its subsidiaries and affiliates, including At-Loan, a joint venture with Promise which operates its own distribution network principally through the am/pm convenience stores. Loans to SMEs are generated through the Middle Market Banking Unit, which operates the Bank’s corporate business offices. Loans to large corporations are generated by the Corporate Banking Unit. In the Corporate Banking Unit, individual account managers work with the Bank’s corporate customers. Loans originated by corporate business offices can be approved by the general manager of the Bank’s Corporate Banking Department up to a limit which varies depending upon the amount and duration of the loan, the type and amount of collateral and other factors. Loans above this limit require approval from the Bank’s head offices either in Tokyo or Osaka, and such head office approval entails review by two departments. Industry analysts in the Corporate Research Department review the market position and the industry characteristics of corporate customers, and evaluate (among other things) the strength of management, assets, financial performance, prospects and risks of such customers. In addition, the Bank uses a sophisticated tool, the Obligor Grading Model, to evaluate credit applications. Credit analysts within the Credit Department evaluate specific extensions of credit, analysing, among other things, the adequacy of collateral or other credit support, use of proceeds, leverage and interest and cash flow coverage. Larger loans require the approval of one or more directors of the Bank. The Bank also has a Credit Review Department to oversee the credit risk management system. The majority of the Bank’s domestic loans are secured by collateral or are supported by guarantees. Most domestic secured loans consist of loans to businesses secured by first liens on real estate collateral or housing loans to individuals guaranteed by SMBC Guarantee. Such guarantees are secured by first liens on apartments or houses. Real estate collateral is generally valued based on asset values rather than cash flow. In principal, real estate collateral is valuated by an appraisal firm affiliated with the Bank. Most of the appraisal is valuated based upon participation of licensed appraisers. The Bank, like other banks in Japan, makes most domestic loans based on a short-term interest rate, the Tokyo Inter-Bank Offered Rate (‘‘TIBOR’’) and a long-term prime rate, which are generally intended to reflect the cost of funds. Most domestic short-term loans (loans with a maturity of less than one year) made by the Bank bear interest at a rate based on a short-term interest rate or TIBOR. The Bank establishes a short-term rate based principally on its cost of short-term yen funding. The Bank’s short-term prime rate is affected by changes in the Bank of Japan’s official discount rate, the rate at which the Bank of Japan extends short-term secured loans to domestic banks. Most domestic long-term loans (being loans with a maturity of one year or more) made by the Bank bear interest at a rate based on the Bank’s new basis long-term prime rate, which is based on the short-term prime rate reflecting the fact that most of the Bank’s funding is short-term. The old basis long-term prime rate is set at a rate equal to 90 basis points above the 5-year debenture rate of long-term credit banks. Currently, only a limited number of loans are based on the old basis long-term prime rate. Unsecured loans in the domestic interbank market are mostly overnight loans priced at call market rates. Call market rates are negotiated rates based on the availability of, and the need for funds by Japanese banks. Despite the relaxed monetary policy of the Bank of Japan after the ‘‘bubble’’ era, prime rates in Japan have been relatively stable since the fiscal year ended March 31, 2000. This is mainly because short-term interest rates, such as the six-month TIBOR, have declined to nearly zero and the prime rates, which will be adjusted according to the change in short-term interest rates, have little room for further decline.

77 The following table sets forth the Bank’s short-term, long-term prime rate (old basis and new basis), ﬁve- year swap rate and six-month TIBOR as of the dates indicated: As of March 31, 2003 2004 2005 Short-term prime rate *************************************************** 1.375% 1.375% 1.375% Long-term prime rate (new basis)****************************************** 1.875 1.875 1.875 Long-term prime rate (old basis) ****************************************** 1.500 1.650 1.650 Five-year swap rate ***************************************************** 0.300 0.745 0.644 Six-month TIBOR ****************************************************** 0.093 0.098 0.098

Overseas Lending The Bank’s overseas branches and representative offices originate corporate, sovereign and quasi-sovereign loans. Most of these loans are unsecured and are denominated in currencies other than Japanese yen. While most of the Bank’s international loans are to foreign credits, a significant portion of the Bank’s international loans are to overseas branches, subsidiaries and affiliates of Japanese corporations, and many of such loans to such subsidiaries and affiliates are guaranteed or otherwise supported by the Japanese parent corporations. Loans originated by a branch or representative office can be approved by the general manager up to a limit which varies depending upon the rank of the general manager and other factors. Loans above this limit require approval from regional headquarters or the Bank’s head office in Tokyo. The roles of the Corporate Research Department and the International Credit Department are credit grading and credit supervision, respectively. Larger international loans require the approval of one or more directors of the Bank. The overseas business of the Bank has been principally focused on lending to large, highly-rated corporations as well as to sovereign and quasi-sovereign credits. The following tables show the outstanding loans (including bills discounted) of the Bank’s overseas offices, before deduction of reserves for possible loan losses, as of the dates indicated, classified according to type of borrower: As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Overseas Offices(1): Public sector****************** ¥ 141,742 3.05% ¥ 81,737 2.05% ¥ 83,325 1.75% Financial institutions *********** 314,695 6.77 338,458 8.50 406,025 8.52 Commerce and industry********* 3,912,861 84.15 3,317,645 83.34 4,077,950 85.59 Other************************ 280,369 6.03 243,193 6.11 197,247 4.14 Total ********************** ¥4,649,668 100.00% ¥3,981,034 100.00% ¥4,764,549 100.00%

(1) The above figures include Tokyo offshore accounts for international finance transactions. Because most of the Bank’s overseas loans are general-purpose credits to highly rated corporate, sovereign and quasi-sovereign credits, most of them are not secured by collateral. However, the Bank makes substantial secured loans overseas, including for project finance, equipment financing and margin lending for securities and commodities. The Bank’s overseas loans are generally extended at floating rates based on the London Interbank Offered Rate (‘‘LIBOR’’). Spreads on such loans are negotiated with customers and reflect competition with other domestic and international banks as well as alternative funding sources available to customers.

Loan Losses and Non-Performing Loans General The Bank has experienced substantial loan losses in recent years. The Bank’s ﬁnancial results reﬂect actual loan losses as well as provision for reserves for possible loan losses.

78 The Bank reviews its loans in the following ways. First, the Bank conducts quarterly self-assessments to calculate appropriate write-offs and reserves by classifying borrowers according to their financial soundness. Second, the Bank categorizes the non-performing loans pursuant to, and provides disclosure under, the Financial Reconstruction Law. Third, the Bank calculates and discloses the value of risk monitored loans based on the Banking Law (which excludes non-loan assets such as foreign exchange, accrued interest and advanced payments). The Bank also discloses loans to specific overseas countries. The Japanese economy has suffered for more than a decade from stagnant or negative growth and severely limited availability of credit. As a consequence, and compounding the effect of declining real estate prices, large numbers of businesses and individuals have become insolvent and have entered bankruptcy proceedings or have obtained partial forgiveness of their debts or other relief. Consequently, the Bank and other Japanese banks have suffered significant loan losses relating to loans to such businesses and individuals or relating to loans to financial institutions that extended credit to them. As a consequence of these trends, a number of Japanese banks, including the Bank, have for an extended period been faced with serious loan portfolio quality problems, as well as with the difficult issue of determining the realizable values of their non-performing assets and the amounts that should be reserved against them. The Bank has in recent years recognized substantial loan losses as a result of these trends. In accordance with the Bank’s self-assessment policy, the reserve for possible loan losses reflects an estimate of the amount of losses that the Bank may incur in connection with its loan portfolio. The reserve does not necessarily reflect the entire amount of loan losses that may ultimately be realized in respect of existing loans. The Bank seeks, through the restructuring of loans or collection efforts, to maximize the return on non-performing loans. The Credit Departments in each banking unit and the Credit Planning Department of the Bank are dedicated to managing non-performing loans and maximizing the level of recoveries on loans which have been written-off. However, such returns are frequently limited by economic and legal impediments to restructuring and collection, including adverse domestic economic conditions in Japan that limit the operating profitability of customers, limited liquidity of the domestic market for real estate and the prevalence of second and third mortgages on real estate over which the Bank holds first liens (which can delay the disposal of such collateral and decrease the recoverable amount).

Policies with Respect to Troubled Customers In the past, the Bank has provided direct and indirect support to troubled customers for a variety of reasons. For example, the Bank has provided support to customers where operating profitability or asset values indicate the likelihood of a successful restructuring. In addition, the Bank, like other banks in Japan, has provided support in the past to troubled customers under circumstances, and based upon considerations, that may differ in kind or degree from those relevant in other countries, including the United States and Europe. These include political and regulatory influences, relationships with members of the Sumitomo group and the Mitsui group, the lead bank system and perceived responsibility for obligations of affiliated and associated companies. While the importance of some of these considerations has been declining, these considerations nevertheless have significantly affected the Bank’s actions on a number of occasions in recent years. The Bank has also been subject to political and regulatory influences that affect the Bank’s willingness to support troubled customers. In some cases, the Bank has been induced by such considerations to extend credit or forgive indebtedness under circumstances where short-term economic considerations would have suggested other action. The Bank may be influenced by its relationships with other members of the Sumitomo group and the Mitsui group to provide financial support. The Bank, like other Japanese banks, has provided financial support to affiliated or associated companies in the past. Third parties dealing with such companies frequently have an expectation, which may be implicitly or explicitly ratified by the Bank, that the Bank will provide financial assistance in the event that such affiliated or associated companies experience financial difficulties. The Bank has in the past provided substantial support to SMBC Leasing, SMBC Finance Service Co., Ltd. (formerly known as Sumigin General Finance), SMBC Mortgage Co., Ltd. (formerly known as Sakura Mortgage), SMBC Guarantee (formerly known as Sakura Guarantee) and Sumigin Guarantee. Assistance to affiliated companies could consist of the forgiveness of loans by the Bank, the extension of loans by the Bank to facilitate the repayment of other indebtedness or equity investment. The Bank has provided financial assistance to certain financially distressed

79 retail and construction companies in the form of debt forgiveness, debt for equity swaps and the acquisition of new shares. The Bank has made a strategic decision to extend financial support to distressed customers only in situations in which the Bank expects a positive return from such support. However, the Bank may face difficulties in implementing this strategy and there can be no assurance that the Bank’s decision to provide financial support will not be influenced by the factors mentioned above. Japanese real estate, wholesale and retail, service, finance and insurance and construction companies have been severely and adversely affected by the prolonged economic weakness in Japan. The losses of companies in these industries can be partly traced to direct and indirect investment in real estate and to the decline of major public and private sector development projects initiated during the ‘‘bubble’’ era. The Bank has significant exposure to a number of companies in these industries. As of March 31, 2005, with respect to the domestic industries, the Bank had an exposure of ¥6,937 billion to the real estate industry (13.8% of total domestic loans), ¥5,681 billion to the wholesale and retail industry (11.3% of total domestic loans), ¥6,356 billion to the service industry (12.6% of total domestic loans), ¥4,543 billion to finance and insurance companies (9.0% of total domestic loans) and ¥1,830 billion to the construction industry (3.6% of total domestic loans). In March 2004, the Bank and Kanebo jointly submitted an application for support pursuant to the Industrial Revitalization Corporation Law, and have subsequently received an approval notice of support from the IRCJ. In May 2004, the Bank approved financial support to Kanebo in the form of debt forgiveness of ¥41 billion and capital subscription of ¥30 billion and in September 2004, effected such financial support. On May 12, 2005, Kanebo received a notice from the Tokyo Stock Exchange, Inc. that its shares would be delisted as of June 13, 2005 because of its misstatements in its annual securities report and other documents. On the same day, the IRCJ and the Bank, respectively, announced that they would continue to support Kanebo. In December 2004, the Bank, jointly with The Daiei, Inc. and other 11 group companies (the ‘‘Daiei Group’’) , UFJ Bank Limited, and Mizuho Corporate, Ltd., submitted an application for support pursuant to the Industrial Revitalization Corporation Law, and received an approval notice of support from the IRCJ. In March 2005, the Bank effected financial support to the Daiei Group in the form of debt forgiveness of ¥85 billion and retirement of preferred shares without compensation in the amount of ¥48 billion. In March 2005, the Bank approved the new medium-term business plan of Sumitomo Mitsui Construction. In May 2005, Sumitomo Mitsui Construction amended the new medium-term business plan. The amended plan contemplates Sumitomo Mitsui Construction to receive debts forgiveness in the aggregate amount of ¥178.8 billion from its lenders, a reduction of share capital, and a third party capital injection of ¥60.0 billion. In June 2005, the Bank, together with Kansai Urban and Minato Bank decided to provide financial support to Sumitomo Mitsui Construction in the form of debt forgiveness of ¥150.3 billion and retirement of preferred shares without compensation in the amount of ¥77.5 billion. The full amount of the aforementioned debt forgiveness and retirement of preferred shares has been covered by reserves and others. In March 2005, the Bank approved the new medium-term business plan of Fujita which contemplates debt forgiveness in the aggregate amount of ¥91.0 billion from its lenders and a third party capital injection of ¥41.0 billion. In June 2005, Fujita amended the plan so as to receive debt forgiveness in the aggregate amount of ¥98.9 billion from its lenders, and the Bank decided to provide financial support to Fujita in the form of debt forgiveness of ¥65.9 billion and retirement of preferred shares without compensation in the amount of ¥30.0 billion. The full amount of the aforementioned debt forgiveness and retirement of preferred shares has been covered by reserves and others.

80 Credit Costs

The following table shows an analysis of the Bank’s credit costs for each of the periods indicated: Year ended March 31, 2003 2004 2005 (Millions of yen, except percentages) Write-off of loans ************************************** ¥ 364,605 ¥ 639,994 ¥ 736,951 Provision for speciﬁc reserves **************************** 407,963 307,660 488,730 Provision for general reserve for possible loan losses ********* 251,413 (327,964) (200,539) Transfer from loan loss reserve for speciﬁc overseas countries** (3,888) (3,807) (3,828) Provision for reserve for losses on loans sold *************** 16,672 (489) — Losses on sale of delinquent loans ************************ 162,494 266,752 145,251 Other credit costs ************************************** 2,419 42,013 510 Total************************************************* ¥ 1,201,681 ¥ 924,159 ¥ 1,167,075 Loans and bills discounted (period end) ******************** ¥61,219,617 ¥55,428,967 ¥55,148,929 Ratio of total loan losses to loans and bills discounted ******** 1.96% 1.67% 2.12%

For the fiscal year ended March 31, 2005, the Bank wrote-off loans in the amount of ¥737 billion, an increase of ¥97 billion from ¥640 billion for the fiscal year ended March 31, 2004. The large amount of write-offs for the fiscal year ended March 31, 2005 was primarily a result of direct write-offs of loans to effectively bankrupt borrowers and bankrupt borrowers.

Provisions for specific reserves increased to ¥489 billion in the fiscal year ended March 31, 2005 from ¥308 billion in the fiscal year ended March 31, 2004, as a result of the downgrade of borrowers to the categories potentially bankrupt or lower.

The Bank makes the appropriate write-offs and reserves as a result of the self-assessments which are conducted in compliance with the Financial Inspection Manual prepared by the FSA and the Practical Guidelines published by the JICPA. Total credit costs amounted to ¥1,167 billion for the fiscal year ended March 31, 2005 compared to ¥924 billion for the fiscal year ended March 31, 2004, including the amounts transferred to general reserve for possible loan losses. Credit costs are subject, among other things, to changes to the category of borrowers under self-assessment, in particular the deterioration of borrowers’ financial condition from normal or requiring caution to lower categories, costs associated with ‘‘off-balancing’’ transactions and costs relating to an increase of the reserve ratio by application of discount cash flow method.

Credit costs for the ﬁscal year ended March 31, 2005, primarily reﬂected (i) downgrading of borrowers’ categories, (ii) an increase in the reserve ratio, and (iii) cost related to the work-out or disposal of non-performing loans.

Total credit costs increased for the fiscal year ended March 31, 2005, primarily as a result of a revised self- assessment and reserve policy the Bank implemented in order to strengthen its financial condition. The increase in total credit costs included an increase in write-off of loans of ¥97 billion and an increase in provisions for specific reserves of ¥181 billion. The increases were partially offset by a decrease in losses on sale of delinquent loans. On a consolidated basis, as of March 31, 2005, total credit costs amounted to ¥1,167 billion, including amounts transferred to general reserves, specific reserves and write-offs. As of March 31, 2005, total reserves for possible loan losses were ¥1,240 billion (as compared to ¥989 billion on a non-consolidated basis) due to reserves for possible loan losses provided by subsidiaries such as bank subsidiaries and credit guarantee and other companies.

81 Accounting Principles and Self-Assessment Categories Relating to Reserves for Possible Loan Losses

The table set forth below provides an overview of the different methods of loan and asset categorization as well as applicable amounts in billions of yen and percentages on a non-consolidated basis as of March 31, 2005:

448.3(i) 4 16.1 (1) +86.7 432.2(a) 22.4 (2) (3)

924.4(ii) 348.4(b) -278.3) 576.0 545.2 94.6 (2) (3)

451.9(iii) 4 -795.0) 124.6 45.0 (3) 179.2(c) 25.5 (3) 6.7 17.9 (4)

53,452.6 417.6

(4)

55,277.2(iv) 3.9

(5) 1,824.6(v) (a)+(b)+(c)

4 959.8 864.8 -986.6)

692.2 80%

90.5

(1) Includes amount of direct reduction totalling ¥1,531.8 billion. (2) Includes reserves for assets which are not subject to disclosure under the Financial Reconstruction Law disclosure standards (bankrupt/ effectively bankrupt borrowers: ¥6.3 billion, potentially bankrupt borrowers: ¥7.5 billion). (3) Reserve ratios for claims on bankrupt borrowers, effectively bankrupt borrowers, potentially bankrupt borrowers, substandard borrowers and borrowers requiring caution including substandard borrowers are the proportion of the reserve to the respective claims of each category, excluding the portion secured by collateral or guarantees, etc. (4) Reserve ratios for claims on normal borrowers and borrowers requiring caution excluding claims to substandard borrowers are the proportion of the reserve to the respective claims of each category. A ﬁgure in square brackets indicates the proportion of the reserve to the claims to borrowers requiring caution, excluding claims to substandard borrowers, excluding the portion secured by collateral or guarantees, etc. (5) The reserve ratio, or the proportion of the reserve to the claims, excluding the portion secured by collateral or guarantees, etc., i.e., (speciﬁc reserve + general reserve for substandard loans) / (bankrupt and quasi-bankrupt assets + doubtful assets + substandard loans – portion secured by collateral or guarantees, etc.)

The Bank accounts for its non-performing loans, reserves and loan losses in accordance with the following policies and regulations.

82 Borrower Categorization Under the self-assessment process, the Bank classifies its customers into five different categories based on guidelines based on the Financial Inspection Manual of the FSA and the Practical Guideline published by JICPA. The five categories of customers are: ) ‘‘Normal Borrowers’’. This category consists of borrowers in satisfactory financial condition who meet their payment obligations, and includes all borrowers not classified as ‘‘borrowers requiring caution’’, ‘‘potentially bankrupt borrowers’’, ‘‘effectively bankrupt borrowers’’ or ‘‘bankrupt borrowers’’. ) ‘‘Borrowers Requiring Caution’’. This category consists of borrowers (i) with ‘‘restructured’’ loans (see ‘‘Restructured Loans’’); (ii) who are past-due on principal or interest payments for 3 months or more; (iii) whose business or financial condition is deteriorating or becoming unstable; or (iv) who are otherwise experiencing financial difficulties. Items listed under (i) and (ii) combined constitute ‘‘substandard loans’’ as defined under the Financial Reconstruction Law. ) ‘‘Potentially Bankrupt Borrowers’’. This category consists of currently solvent borrowers that the Bank deems to have a high probability of becoming insolvent because of continuing, serious financial difficulties or because of a lack of expected progress in implementing restructuring plans. These borrowers have low prospects of future profitability and continued solvency because, among other reasons, they are nearly insolvent, their business and financial condition has significantly deteriorated, or some or all of their loans are past-due. The Bank classifies those borrowers as ‘‘potentially bankrupt’’ with whom the Bank decides to cease providing financial support and to adopt a passive approach with respect to, or withdraw from, its current relationship with such borrower. ) ‘‘Effectively Bankrupt Borrowers’’. Even though not legally or formally insolvent, borrowers can be classified as ‘‘effectively bankrupt’’ if, among other reasons, they face extreme financial difficulties of a larger magnitude than customers classified as ‘‘potentially bankrupt’’ and there are no prospects for successful restructuring. A borrower that continues to operate its business may nevertheless be classified as ‘‘effectively bankrupt’’ because, among other reasons, there is no prospect of future profitability due to a large amount of problem assets, a large amount of debt compared to its ability to repay, or insolvency persisting for generally more than one year. A borrower may also be classified as ‘‘effectively bankrupt’’ if there are no prospects for successful restructuring because of substantial losses due to calamities, accidents, a sudden change in the economic conditions, or other similar events. In addition, the borrower is ‘‘effectively bankrupt’’ if it is practically insolvent as evidenced by its loans being past-due for six months or longer. ) ‘‘Bankrupt Borrowers’’. This category consists of borrowers who have entered into bankruptcy (hasan), civil rehabilitation proceedings (minji saisei), corporate reorganization proceedings (kaisha kosei), special liquidation proceedings (tokubetsu seisan) or similar proceedings, or whose discounted bills are subject to trading suspension at the bill clearing house.

Loan Classification After categorizing the borrower to which a loan was extended, the Bank categorizes each loan by evaluating any collateral and guarantees associated with such loan. Collateral and guarantees are classified into two broad categories, (i) ‘‘superior’’ (e.g. cash deposits and high-quality securities) and (ii) ‘‘ordinary’’ (e.g. real estate). Sub-categories of ‘‘superior’’ and ‘‘ordinary’’ collateral are specified, and each sub-category is assigned a specific percentage ranging from 40% to 100% for the purpose of determining the portion of the value of collateral that will be considered ‘‘qualified’’ collateral. The Bank then classifies its loans as follows: ) ‘‘Classification I (Unclassified) Loans’’ includes (i) all loans to ‘‘normal’’ borrowers and (ii) the ‘‘qualified’’ portion of ‘‘superior’’ collateral and guarantees for loans to all other borrowers. ) ‘‘Classification II Loans’’ includes (i) all loans (other than Classification I Loans) to ‘‘borrowers requiring caution’’, and (ii) the ‘‘qualified’’ portion of ‘‘ordinary’’ collateral and guarantees for loans to ‘‘potentially bankrupt borrowers’’, ‘‘effectively bankrupt borrowers’’ and ‘‘bankrupt borrowers’’.

83 ) ‘‘Classification III Loans’’ includes (i) all loans (other than Classification I Loans and Classification II Loans) to ‘‘potentially bankrupt borrowers’’, (ii) the non-‘‘qualified’’ portion of collateral and guarantees for loans to ‘‘effectively bankrupt borrowers’’ and ‘‘bankrupt borrowers’’ and (iii) any additional amount the Bank expects to receive in bankruptcy proceedings on loans to ‘‘effectively bankrupt borrowers’’ and ‘‘bankrupt borrowers’’. ) ‘‘Classification IV Loans’’ includes all loans (other than Classification I Loans and Classification II and III Loans) to ‘‘effectively bankrupt borrowers’’ and ‘‘bankrupt borrowers’’.

Direct Write-offs The Bank directly writes-off (and does not charge off against its reserves) the portion of loans classified as ‘‘Classification IV’’, to the extent such portion has not been previously specifically reserved. The Bank writes-off such portions of loans to ‘‘bankrupt borrowers’’, and such portions of loans to ‘‘effectively bankrupt borrowers’’ (to the extent not previously specifically reserved). The Bank then determines the appropriate amount of reserves to be established for loans in the remaining three categories according to the reserve policies described below.

Reserves Reserves for possible loan losses represent allowances for estimated future credit losses. Credit losses arise primarily from the loan portfolio, but may also be derived from other sources including commitments to extend credit, guarantees and standby letters of credit. In this Offering Circular, the term ‘‘loan losses’’ includes losses derived from these other sources. Actual loan losses, net of recoveries, are generally deducted from reserves for possible loan losses. However, under the Bank’s self-assessment process, losses on loans are shown as direct write-offs (and not charged off against reserves) when the loan or a portion thereof is or becomes unsecured, and the customer is classified as ‘‘bankrupt’’ or ‘‘effectively bankrupt’’, to the extent that specific reserves were not provided for such loans. Reserves for possible loan losses are comprised of three parts: general reserves, specific reserves and reserves for specific overseas countries. Accounting principles relating to these are discussed below. The Bank uses a self-assessment process to analyze the quality of its loans and thereby calculate its reserves. The following tables show the changes in the Bank’s reserves for possible loan losses (on a non-consolidated basis) as of the dates indicated: As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Non-consolidated Reserves for possible loan losses at beginning of period******* ¥ 4,943 ¥ 2,074,797 ¥ 1,250,751 Merger with Former-SMBC ****************************** 2,138,501 — — Charge-offs to specific reserves for possible loan losses ******* (30,501) (471,385) 93,325 Aggregate additions to reserves *************************** (38,145) (352,661) (354,954) Reserves for possible loan losses at end of period************ 2,074,797 1,250,751 989,121 General reserve ************************************** 1,113,235 769,033 417,555 Specific reserves ************************************* 949,996 473,959 567,636 Reserves for specific overseas loan losses***************** 11,566 7,758 3,930 Loans and bills discounted******************************* 57,282,365 50,810,144 50,067,586 Reserves for possible loan losses as a percentage of loans and bills discounted ************************************** 3.62% 2.46% 1.98% Specific reserve as a percentage of bankrupt loans and non- accrual loans **************************************** 37.07% 31.02% 44.21% General Reserves. General reserves are provided for the following categories of loans: (i) Classification II of substandard loans, (ii) loans to borrowers requiring caution other than substandard loans and

84 (iii) Classification I of loans to normal borrowers. The reserve ratios for those three categories are based on the historical credit loss ratios for each group. During 2003 and 2004 the Bank raised the reserve ratios for the Classification II loans to borrowers requiring caution. The reserve ratio for the unsecured portion of the Classification II loans to borrowers requiring caution excluding substandard loans was decreased to 12.8% in March 2003 and to 10.8% in March 2004. The reserve ratio for the unsecured portion of the substandard loans was increased to 45.0% in March 2005. With effect from March 31, 2003, the Bank now calculates loan loss reserves for substandard loans made to borrowers with large exposure by analysing the projected cash flows discounted to present value rather than basing reserves on historical loan loss data.

Specific Reserves. The specific reserves are based on the Bank’s estimate of the probability of loan losses on the whole amount of each loan classified as ‘‘Category III’’, which is based on historical credit loss ratios. The Bank has transferred unusually large amounts to the specific reserves in recent fiscal years. Additions to the specific reserves are generally not fully deductible for Japanese tax purposes. The Bank in recent years has provided for provisions for specific reserves in amounts that have substantially exceeded the corresponding amounts deductible for Japanese tax purposes; this difference accounts for most of the deferred income taxes reflected in the Bank’s financial statements. This ratio is based upon historical credit loss ratios. Additionally, the Bank provides for higher specific reserves with respect to certain loans. As a result, the specific reserve ratio applicable to loans for bankrupt borrowers and effectively bankrupt borrowers and loans for potentially bankrupt borrowers as of March 31, 2005 was 100% and 94.6%, respectively.

Reserves for Specific Overseas Countries. The Bank maintains reserves for possible losses on specific overseas loans originated in countries considered to be more risky. The amount of the reserves is based on the amount of expected losses due to the political and economic situation of these countries. See ‘‘— Loans to Specific Overseas Countries’’.

Disclosure of Problem Assets Under the Financial Reconstruction Law

Under the Financial Reconstruction Law, assets are assessed and classiﬁed into four categories (i) bankrupt and quasi bankrupt assets, (ii) doubtful assets, (iii) substandard loans and (iv) normal assets. The Bank is required to categorize its assets according to the Financial Reconstruction Law. The Bank is required to disclose such information semi-annually, but voluntarily discloses it quarterly. The categories are:

Bankrupt and Quasi-Bankrupt Assets. This category is defined as the sum of credits to bankrupt borrowers and effectively bankrupt borrowers as categorized by the self-assessment, minus fully written-off Classifica- tion IV credits. All Classification III credits are unsecured and fully covered by reserves. The remaining Classification I and II credits are considered to be collectible since they are secured by collateral or guarantees.

Doubtful Assets. This is the sum of credits extended to borrowers classified as potentially bankrupt under the self-assessment. Since the Classification I and II credits are secured by collateral or guarantees and are considered to be collectible, specific reserves are set aside only for the unsecured portions under Classification III.

Substandard Loans. This is the sum of the loans extended to borrowers requiring caution under the self- assessment. Loans that are 3 months or more past due and restructured loans are placed in this category.

Normal Assets. This is the sum of the credits not included in the other three categories. Normal assets thus represent the sum of credits to normal borrowers and that portion of credits identiﬁed through self-assessment as borrowers requiring caution, but not classiﬁed as substandard, and on which the risk of credit losses is deemed relatively small.

85 The following tables set forth the Bank’s disclosure as to the quality of its loan portfolio and other extensions of credit, in the disclosure categories required under the Financial Reconstruction Law and the corresponding amount of speciﬁc reserves for each category on a non-consolidated basis, as of March 31, 2003, 2004 and 2005: As of March 31, 2003 2004 2005 (Billions of yen) Non-consolidated Bankrupt and quasi-bankrupt assets (Hasan kousei saiken oyobi korerani junzuru saiken)************************************* ¥ 524.9 ¥ 361.6 ¥ 448.3 Doubtful assets (Kiken saiken)********************************** 2,129.5 1,202.7 924.4 Substandard loans (Youkanri saiken) ***************************** 2,606.9 1,246.9 451.9 Total problem assets **************************************** 5,261.3 2,811.2 1,824.6 Normal assets (Seijou saiken) ********************************** 57,313.4 52,874.4 53,452.6 Total***************************************************** ¥62,574.7 ¥55,685.6 ¥55,277.2

As of March 31, 2003 2004 2005 Non-consolidated Problem asset ratio(1) ***************************************** 8.4% 5.0% 3.3%

(1) The problem asset ratio is calculated by dividing the Bank’s non-consolidated amount of total problem assets by the sum of total problem assets and normal assets.

As of March 31, 2005 and 2004, the Bank’s banking subsidiaries, Minato Bank and Kansai Urban, recorded an aggregate of ¥184.6 billion and ¥241.4 billion of problem assets that are not included in the non-consolidated ﬁgures of the Bank presented in the table above. As of March 31, 2003 2004 2005 (Billions of yen, except percentages) Non-consolidated Bankrupt and quasi-bankrupt assets: Secured by collateral or guarantees **************************** ¥ 507.8 ¥ 349.7 ¥ 432.2 Fully reserved ********************************************* 17.1 11.9 16.1 Reserve for possible loan losses ****************************** 23.8 18.3 22.4 Reserve ratio ********************************************** 100.0% 100.0% 100.0% Doubtful assets: Secured by collateral or guarantees **************************** ¥ 959.4 ¥ 657.3 ¥ 348.4 Necessary amount to be reserved****************************** 1,170.1 545.4 576.0 Reserve for possible loan losses ****************************** 926.2 455.7 545.2 Reserve ratio ********************************************** 79.2% 83.6% 94.6%

86 The following table sets forth the loan categories and corresponding guidelines for loan loss write offs and reserves issued by the FRC in 1999. FRC Reserve Guideline Bankrupt and quasi-bankrupt assets (Hasan kousei saiken oyobi korerani junzuru saiken)******************* Direct write-off of 100% of unsecured portion not covered by specific reserves. Doubtful assets (Kiken saiken) ******** Specific reserves of 70% or ratios based on each bank’s historical credit loss experience against the unsecured portion of claims. Substandard loans (Youkanri saiken) *** 15% of general reserves against unsecured portion of claims to any ‘‘customer requiring caution’’, if any of such customer’s loans are classified as ‘‘substandard’’. Normal assets (Seijou saiken) ********* Historical credit loss ratio. The Bank has adopted reserve policies for loan loss write-offs and reserves in accordance with these guidelines and the Financial Inspection Manual prepared by the FSA. As of March 31, 2005, the Bank’s reserve ratios for problem assets exceeded the reserve ratios set forth in the guidelines for loan loss write-offs and reserves issued by the FRC in 1999, except with respect to bankrupt and quasi bankrupt assets, for which the guidelines also prescribe a 100% reserve ratio.

Disclosure of Risk-Monitored Loans Under the Banking Law Under the Banking Law, the Bank is required to disclose certain of its non-performing loans (on both a consolidated and non-consolidated basis) as ‘‘risk-monitored loans’’. The Banking Law provides for the disclosure of four categories of risk monitored loans, (i) bankrupt loans, (ii) non-accrual loans, (iii) past due loans (three months or more) and (iv) restructured loans. These loans exclude non-loan assets such as foreign exchange, accrued interest and advanced payments. The following table sets forth the Bank’s risk monitored loans, on a consolidated basis, as of March 31, 2003, 2004, and 2005: As of March 31, 2003 2004 2005 (Millions of yen) Bankrupt loans ******************************************* ¥ 199,794 ¥ 96,101 ¥ 68,238 Non-accrual loans ***************************************** 2,665,675 1,710,575 1,367,785 Past due loans (3 months or more) *************************** 128,493 51,019 29,441 Restructured loans***************************************** 2,689,172 1,371,524 721,273 Total risk-monitored loans ********************************** ¥5,683,134 ¥3,229,219 ¥2,186,739

Bankrupt loans. Bankrupt loans are loans to borrowers that have been legally and formally declared bankrupt. Non-accrual loans. Non-accrual loans are loans for which the Bank does not currently accrue interest income due to the nonpayment status of the loan or the condition of the borrower. Non-accrual loans also include all other loans to ‘‘bankrupt’’, ‘‘effectively bankrupt’’ and ‘‘potentially bankrupt’’ customers. Loans to customers (other than ‘‘bankrupt’’, ‘‘effectively bankrupt’’ and ‘‘potentially bankrupt’’ customers) are removed from non- accrual status if interest is received from the borrower, even if such interest is substantially less than the full amount due. The Bank’s non-accrual loans are virtually all domestic loans. The Bank is taking active measures to reduce the balance of its non-accrual loans, principally by writing off such loans and, in the case of domestic loans secured by real estate, disposing of such loans and collateral through sales. Past due loans. Past due loans include loans for which principal or interest is three months or more past due, but excludes bankrupt loans and non-accrual loans.

87 Restructured loans. Restructured loans are loans to customers in financial difficulty to whom banks provide financial support by changing the lending terms so as to be more favorable to the borrower (including reduction of interest rates, provision of grace periods for repayment and debt forgiveness), but excludes bankrupt loans, non-accrual loans and past due loans. Restructured loans do not include extensions of credit to the Housing Loan Administration Corporation (‘‘HLAC’’) or its successor, or investments in the jusen funds. See ‘‘— Jusen Restructuring’’. In some cases, the Bank provides support to customers whose loans are classified as ‘‘restructured’’. The Bank’s approach in these instances is to provide support to these customers in an attempt to achieve a greater level of recovery. The Bank monitors the customer’s performance carefully, in some cases by seconding staff from the Bank, while maintaining the customer relationship. As of March 31, 2005, restructured loans were ¥721 billion, a decrease of ¥650 billion from March 31, 2004.

Loans to Specific Overseas Countries As of March 31, 2005, five countries are categorized by the Bank as specific overseas countries that are considered to have an enhanced credit risk. As of March 31, 2005, the Bank had ¥40.2 billion of exposure to specific overseas countries, almost all of which represented exposure to Indonesia. The following table sets forth the Bank’s exposure to specific overseas countries at the dates indicated: As of March 31, 2003 2004 2005 (Millions of yen) Indonesia ****************************************************** ¥104,744 ¥73,826 ¥39,959 Others ********************************************************* 3,333 861 205 ¥108,077 ¥74,688 ¥40,164 Number of countries ********************************************* 965

Jusen Restructuring Japanese housing loan companies, commonly known as ‘‘jusen’’, were rendered insolvent in the early 1990s by the rapid increase in non-performing loans and a decline in the value of Japanese real estate collateral underlying their loan portfolios. In 1996, the Ministry of Finance and leading Japanese financial institutions undertook coordinated action to resolve the problems of the jusen,including the use of public funds. The HLAC was formed to administer this restructuring. As part of this government sponsored restructuring, Sakura Bank and Sumitomo Bank invested in the special jusen funds. The Bank’s investments in the two jusen funds, which totalled ¥209 billion as of March 31, 2005 on a non- consolidated basis, are non-interest-bearing investments included on the Bank’s balance sheet (classified as other assets). These investments are reported at cost. There can be no assurance that the Bank’s investments in these funds will be returned or that additional contributions from the Bank or further forgiveness of loans by the Bank will not be required in the event that HLAC’s successor requires additional financial assistance in order to meet its financial obligations. In April 1999, HLAC merged with the Resolution and Collection Bank and became the RCC.

Securities-Related Activities Securities Portfolio The book value of the Bank’s investment securities portfolio amounted to ¥24,019 billion as of March 31, 2005. The Bank’s bond portfolio had a book value amounting to ¥17,367 billion as of March 31, 2005. The Bank’s bond portfolio is principally held for asset liability management purposes with a small number of securities being held for inventory purposes for sales to customers. Most of the Bank’s bond portfolio is composed of ﬁxed-rate Japanese and local government bonds and high quality corporate bonds denominated in yen. On a non-consolidated basis, the approximate average duration of the Bank’s JGB portfolio (excluding JGBs to be held to maturity and JGBs for which fair value hedge accounting is applied) as of March 31, 2005 was

88 3.0 years, compared to 2.9 years as of March 31, 2004 and 3.5 years as of March 31, 2003 while the total balance of JGBs was ¥13.0 trillion as of March 31, 2005 compared with ¥13.9 trillion as of March 31, 2004 and ¥12.3 trillion as of March 31, 2003. Bonds are also held to ensure liquidity and, when needed, they can be used as collateral for call money or other money market funding or short-term borrowing from the Bank of Japan. Sales of such bonds are made from time to time in order to recognize discretionary gains. The Bank’s treasury department actively monitors the interest rate and maturity profile of its bond portfolio as part of the Bank’s overall risk management. The Bank’s domestic equity portfolio had a book value amounting to ¥3,317 billion as of March 31, 2005 consisting of publicly-traded Japanese equities. The Bank’s equity portfolio, like that of other Japanese banks, has historically included shares of certain of its customers who in turn hold shares of SMFG. The Bank continues to reduce its equity holdings to comply with the FSA requirement that the aggregate market value (excluding unrealized gains, if any) of the consolidated equity portfolio of a bank shall amount to no more than such bank’s consolidated Tier I capital. The Bank continued to complete sales of a significant amount of cross shareholdings during the fiscal year ended March 31, 2005. The balance of the Bank’s consolidated equity portfolio as of March 31, 2005 decreased to ¥3,317 billion from ¥3,468 billion as of March 31, 2004. As a result, as of March 31, 2005 the market value of the Bank’s consolidated equity portfolio classified as other securities with market value continued to be well below the Bank’s consolidated Tier I capital. The Bank recognizes the risks associated with its equity portfolio due to its volatility as well as its relatively poor yield. Accordingly, the Bank has been actively looking to minimize the negative effect of holding a large equity portfolio through hedging and derivative transactions and at the same time maintain existing client relationships. While the portfolio is under review, the Bank continues to look at equity investments with the potential for meaningful returns. The following table sets forth the closing values of the Nikkei 225 Index and the TOPIX at March 31, 2002, 2003, 2004 and 2005: As of March 31, 2002 2003 2004 2005 Nikkei 225 Index ****************************** ¥11,024.94 ¥7,972.71 ¥11,715.39 ¥11,668.95 TOPIX *************************************** 1,060.19 788.00 1,179.23 1,182.18 As of July 14, 2005 the Nikkei 225 Index was ¥11,764.26 and the TOPIX was 1,191.17.

89 The following tables show the total composition and maturity of the Bank’s investment securities portfolio (on a non-consolidated basis) as of the dates indicated: As of March 31, 2005 More than More than More than More than One year or one year to three years five years to seven years Over Unspeciﬁed less three years to five years seven years to ten years ten years term Total (%) (Millions of yen, except percentages) Non-consolidated Japanese government bonds*** ¥2,759,480 ¥2,520,074 ¥3,634,470 ¥1,219,564 ¥164,265 ¥2,702,545 ¥ — ¥13,000,401 54.9% Japanese local government bonds******************* 2,493 106,877 97,413 14,158 179,248 494 — 400,686 1.7 Japanese corporate bonds(1)(2)** 224,265 916,972 1,264,285 273,476 265,060 32,000 — 2,976,060 12.6 Japanese corporate stocks **** — — — — — — 3,536,869 3,536,869 14.9 Others(3)******************* 438,456 1,077,233 393,547 50,033 203,029 561,803 1,038,575 3,762,679 15.9 Foreign bonds ************ 425,671 1,029,853 322,997 37,793 150,233 494,336 38,783 2,499,669 10.6 Foreign stocks************ — — — — — — 919,303 919,303 3.9 Total ********************* ¥3,424,695 ¥4,621,157 ¥5,389,717 ¥1,557,233 ¥811,603 ¥3,296,844 ¥4,575,444 ¥23,676,696 100.0%

As of March 31, 2004 More than More than More than More than One year or one year to three years five years to seven years Over Unspeciﬁed less three years to five years seven years to ten years ten years term Total (%) (Millions of yen, except percentages) Non-consolidated Japanese government bonds*** ¥2,586,741 ¥2,349,136 ¥4,658,046 ¥2,026,179 ¥1,175,114 ¥1,101,824 ¥ — ¥13,897,044 52.2% Japanese local government bonds******************* 1,174 24,549 169,736 12,662 209,189 519 — 417,831 1.6 Japanese corporate bonds(1)(2)** 122,080 697,926 1,066,954 258,241 223,592 2,964 — 2,371,760 8.9 Japanese corporate stocks **** — — — — — — 3,660,522 3,660,522 13.8 Others(3)******************* 255,415 2,923,707 1,201,085 165,856 277,458 386,108 1,035,792 6,245,424 23.5 Foreign bonds************ 251,402 2,898,312 1,179,263 141,726 261,747 362,180 92,822 5,187,456 19.5 Foreign stocks *********** — — — — — — 928,525 928,525 3.5 Total ********************* ¥2,965,412 ¥5,995,319 ¥7,095,824 ¥2,462,940 ¥1,885,355 ¥1,491,417 ¥4,696,315 ¥26,592,584 100.0%

As of March 31, 2003 More than More than More than More than One year or one year to three years five years to seven years Over Unspeciﬁed less three years to five years seven years to ten years ten years term Total (%) (Millions of yen, except percentages) Non-consolidated Japanese government bonds **** ¥3,224,334 ¥1,802,741 ¥4,175,621 ¥1,113,572 ¥1,878,410 ¥154,383 ¥ — ¥12,349,063 52.2% Japanese local government bonds 6,119 6,910 95,742 39,278 145,642 580 — 294,274 1.3 Japanese corporate bonds(1)(2) *** 128,939 627,709 826,585 272,594 223,378 1,900 — 2,081,107 8.8 Japanese corporate stocks ****** — — — — — — 3,508,151 3,508,151 14.8 Others(3) ******************** 159,914 2,003,382 795,661 168,291 585,142 707,823 1,003,572 5,423,788 22.9 Foreign bonds ************* 129,200 1,995,829 780,435 164,803 569,753 706,385 63,429 4,409,837 18.6 Foreign stocks ************* — — — — — — 925,655 925,655 3.9 Total *********************** ¥3,519,308 ¥4,440,744 ¥5,893,611 ¥1,593,736 ¥2,832,573 ¥864,687 ¥4,511,723 ¥23,656,385 100.0%

(1) Many of the Japanese corporate bonds held by the Bank are not listed on an established market and are, therefore, recorded at cost. (2) Includes, in addition to corporate bonds, bonds guaranteed by the government of Japan and bank debentures. (3) Includes foreign securities such as non-yen denominated securities, yen denominated securities issued outside Japan and yen denominated securities of non-Japanese issuers issued in Japan.

90 The following tables show the book value and market value of, and the unrealized gain or loss on, the Bank’s investment securities portfolio as of the dates indicated. Unlisted securities without market values are not reﬂected in these tables.

(1) Securities classiﬁed as trading purposes: As of March 31, 2003 2004 2005 (Millions of yen) Balance sheet amount************************************** ¥1,434,190 ¥1,170,727 ¥1,325,972 Valuation losses included in the earnings for the year ************ 1,096 1,707 3,717

(2) Bonds classiﬁed as held-to-maturity with market value: As of March 31, 2003 2004 2005 (Millions of yen) Balance sheet amount ************************************** ¥375,719 ¥525,688 ¥536,201 Market value ********************************************* 381,569 518,262 534,382 Net unrealized gains (losses)********************************* 5,850 (7,425) (1,818) Unrealized gains***************************************** 5,956 2,840 2,114 Unrealized losses **************************************** 105 10,266 3,933

(3) Other securities with market value: As of March 31, 2005 Acquisition Balance sheet Net unrealized Unrealized Unrealized cost amount gains (losses) gains losses (Millions of yen) Stocks ********************************* ¥ 1,964,153 ¥ 2,651,395 ¥687,241 ¥730,989 ¥ 43,747 Bonds ********************************* 14,734,261 14,749,222 14,961 34,971 20,010 Japanese government bonds ************** 13,116,068 13,129,235 13,167 27,115 13,948 Japanese local government bonds ********* 488,423 486,884 (1,538) 2,061 3,600 Japanese corporate bonds**************** 1,129,770 1,133,102 3,332 5,794 2,462 Other ********************************** 2,779,971 2,756,295 (23,675) 15,903 39,579 Total*********************************** ¥19,478,387 ¥20,156,914 ¥678,527 ¥781,864 ¥103,337

As of March 31, 2004 Acquisition Balance sheet Net unrealized Unrealized Unrealized cost amount gains (losses) gains losses (Millions of yen) Stocks ********************************* ¥ 2,207,264 ¥ 2,869,841 ¥662,576 ¥726,236 ¥ 63,660 Bonds ********************************* 15,604,771 15,501,515 (103,256) 18,590 121,847 Japanese government bonds ************** 14,028,689 13,939,482 (89,207) 14,225 103,432 Japanese local government bonds ********* 515,362 506,263 (9,098) 1,075 10,173 Japanese corporate bonds**************** 1,060,720 1,055,769 (4,950) 3,289 8,240 Other ********************************** 5,354,259 5,363,346 9,086 32,049 22,962 Total*********************************** ¥23,166,296 ¥23,734,703 ¥568,407 ¥776,877 ¥208,470

91 As of March 31, 2003 Acquisition Balance sheet Net unrealized Unrealized Unrealized cost amount gains (losses) gains losses (Millions of yen) Stocks ********************************* ¥ 3,140,569 ¥ 2,978,296 ¥(162,273) ¥110,464 ¥272,737 Bonds ********************************* 14,024,014 14,135,179 111,164 117,093 5,928 Japanese government bonds ************** 12,516,061 12,590,255 74,193 79,479 5,286 Japanese local government bonds ********* 342,798 352,112 9,314 9,415 101 Japanese corporate bonds**************** 1,165,153 1,192,811 27,657 28,197 540 Other ********************************** 4,476,699 4,500,337 23,637 42,900 19,262 Total*********************************** ¥21,641,283 ¥21,613,812 ¥ (27,471) ¥270,458 ¥297,929 The net unrealized losses as of March 31, 2003 are primarily attributable to the unrealized loss of stocks. The large amount of unrealized gains at March 31, 2004 and 2005 are primarily attributable to the improvements in the values of Japanese equities.

Trading Portfolio The Bank uses mark-to-market accounting for its trading portfolio pursuant to the Banking Law. The Bank’s trading portfolio includes securities, derivatives and other trading assets and liabilities. Net trading income for the ﬁscal years ended March 31, 2005, March 31, 2004 and March 31, 2003 were ¥144,387 million, ¥304,094 million and ¥205,770 million, respectively principally consisting of gains on trading-related ﬁnancial derivatives transactions.

Risk Management SMFG manages risk on a ‘‘group-wide’’ basis by establishing basic policies for risk management applicable to the entire group, monitoring its subsidiaries’ compliance with such basic policies and organizing relevant subsidiaries and departments in anticipation of the introduction of new rules with respect to minimum capital requirements announced by the Basel Committee on Banking Supervision and scheduled to take effect in December 2006. In addition to the role of SMFG, the Bank manages risks resulting from its and its subsidiaries operations. Risks are classified into the following categories for control purposes: (i) market risk, (ii) credit risk, (iii) liquidity risk, (iv) operational risk (including processing risk and system risk) and (v) other risks (settlement risk, legal risk, reputational risk and others). Each department is charged with control of risks at an appropriate level within its own business line. To manage the risks included in the items (i)-(iv) above as well as settlement risk, the Bank has designated certain departments as Risk Management Departments to oversee specific risk control measures within each risk category. In addition, the Bank has established the Corporate Risk Management Department completely independent of the business units to manage these risks on a bank-wide basis. The Corporate Risk Management Department works with the Corporate Planning Department to comprehensively and systematically manage risk. The system works as follows: Each Risk Management Department supervising a particular risk category drafts ‘‘basic principles for risk management’’ for that category, which are then presented for approval at the Management Committee and considered by the Board’s Risk Management Committee before being finalized by the Board. According to the basic principles for risk management, the Management Committee, board members and Risk Management Department heads perform risk management and this process is coordinated by the Risk Management Departments concerned. The Risk Management Departments revise the basic risk management principles for each risk category on a regular basis, and whenever necessary, to ensure timely and appropriate risk management. Furthermore, in order to maintain a balance between risk and return as well as ensure the soundness of the Bank from an overall perspective, the Bank uses the ‘‘risk capital-based management’’ method which allocates capital to each department according to its role in the Bank’s business strategies in order to keep the total exposure to credit, market, processing and systems risk within the scope of its management resources, i.e., capital. In the credit and

92 market risk categories in particular, the maximum risk capital that can be allocated during a period is predetermined and risk capital guidelines are set within this limit to manage these risks. Liquidity risk is managed within a framework that includes plans for money gap and treasury funding. The other risk categories are managed with procedures closely attuned to the nature of the risk as described below. The Bank has devoted signiﬁcant resources to developing its risk management policies and procedures and expects to continue to do so in the future. Despite this, the Bank’s policies and procedures to identify, monitor and manage risks may not be fully effective. Some of the Bank’s methods of managing risk are based upon its use of observed historical market behavior. As a result, these methods may not accurately predict future risk exposures, which could be signiﬁcantly greater than historical measures indicate. Management of operations, legal and regulatory risk requires among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective.

Market Risk Market risk is the chance that fluctuations in interest rates, foreign exchange rates or stock prices will change the value of financial products, leading to a loss. Market risk can be divided into various factors: foreign exchange rate, interest rate, equity price and option risk. The Bank uses both the value at risk (VaR) method and other indicators actually used in daily operations, such as the basis point value (BPV) indicator (to measure the change in earnings for every 0.01% change in interest rates), to manage risk in each risk category. The VaR method predicts the maximum potential loss for a given probability. The Bank strives to set the total VaR guidelines to conservative levels relative to capital in line with its business strategies. Market risk attributable to the Bank’s strategic holding of equity when held by units not in charge of market- related activities and the market risk taken by its major subsidiaries are included in the integrated risk management performed by the Corporate Risk Management Department. The VaR is regularly calculated and reported to the Board of Directors and Management Committee. The market occasionally undergoes extreme fluctuations that exceed expectations. To manage market risk, therefore, it is important to run simulations (stress tests) of situations that may occur only once in many years. The Bank runs periodic stress tests to prepare for unforeseeable swings in market conditions. The Bank also establishes loss cut guidelines and limits for its operations, depending on its financial situation and business strategy, in order to manage its market risk. The internal model used by the Bank (SMBC VaR) has been evaluated by an independent audit firm and certified to be appropriate. To further verify the reliability of the model, the Bank performs back testing on the relationship between the VaR calculated with the model and the actual profit and loss data. The Bank calculates VaR based on a one-day holding period and a 99.0% confidence level. To manage the Bank’s risk in the yen-denominated banking account, it uses gap analysis employing maturity ladders and the earnings at risk (EaR) model in addition to the VaR model. If an external factor, such as interest rates, moves in an unfavorable direction, the EaR model can indicate the largest estimated change in earnings (interest rate spread) for a set period at a given probability. Since strategy and budgetary planning is based on the earnings for a period, the Bank uses the EaR model to supplement the VaR model. Using Monte Carlo simulations to generate 1,000 scenarios, the Bank tests the magnitude of the effect that new deposits and loans will have on the period’s earnings. In the interests of bolstering asset soundness, the Bank recognizes that maintaining strategic equity holdings at the levels appropriate to its fiscal strength and managing the price risk of these stocks is an important issue for the Bank’s management. Therefore, the Bank actively manages these risks by treating the entire holding of strategic equity as a portfolio and keeping the maximum potential loss amount derived from the VaR model and the earnings for the period within the risk capital allocations, and maintaining them at an appropriate level vis-à- vis capital. As of March 31, 2005, the market risk exposure of the Bank was ¥28.0 billion for banking accounts and ¥2.1 billion for trading accounts based on the VaR method for a one-day holding period with a one sided confidence interval of 99.0%. The greater portion of the exposure arises from assets in the banking account

93 intended for long-term holding. The exposure related to short-term trading account holdings is relatively small compared to the total. Moreover, the primary component of the exposure is interest rate risk arising from ﬂuctuations in market rates, rather than ‘‘non-linear’’ risk arising from derivative products.

Credit Risk Credit risk is the chance of a loss arising from a credit event, such as deterioration in the financial condition of a borrower, that causes an asset (including off-balance sheet transactions) to lose value or become worthless. Overseas credits also include an element of country risk, which is closely related to credit risk. This is the risk that changes in currency values or political or economic situations result in a loss. The purpose of credit risk management is to avoid these credit events, to keep credit risk exposure within the Bank’s capital, maintain the soundness of the Bank’s assets and ensure returns commensurate with risk. The Bank’s current credit policy clarifies the universal and basic operating concepts, code of conduct and standards for credit operations. By giving the Bank’s employees extensive credit training, it aims to achieve the global standards of credit risk management contemplated by the Bank for International Settlements (BIS) in its January 2001 consultative papers and by the FSA in its inspection manuals, and create a better credit management culture within the Bank. The Bank assesses the credit risk posed by each borrower and loan with the Bank’s internal rating system and quantifies that risk for control purposes. The internal rating system consists of two indicators: (i) the obligor’s grading which indicates the creditworthiness of a borrower, and (ii) the facility grading which shows the probability of collecting for each facility. Facility gradings are assigned based on the borrower’s obligor’s grading in consideration of transaction terms such as guarantee, tenor and collateral. Overseas credits are further subjected to analysis with the country ranking, an indicator derived from analysis of the political and economic situations, international balance of payments and the external debt burden of each country. In order to maintain the consistency of the grading system as a whole, self-assessment is the prerequisite step to the obligor’s grading process. Quantifying credit risk reflects the concentrating of risk toward a specific customer or industry and fluctuations in the values of real estate, securities and other types of collateral. This range of data must be analyzed to quantify the risk of an entire portfolio or an individual loan. To calculate credit risk, historical data for the obligor and facility is entered into a database, the parameters are set — such as the probability of a ratings change, loss given default, and correlation of credit ratings among borrowers — and then the probability distribution of losses for the entire portfolio (amount of loss for what probability) is computed to determine the maximum potential loss in the future. The quantified credit risk results are then used to formulate business plans and provide a standard against which individual credit applications are assessed. Credit assessments involve a variety of financial analyses, including cash flow analysis, to predict an enterprise’s ability to repay the loan and its growth prospects. These quantitative measures are then combined with qualitative analyses of industry trends, research and development capabilities, the competitiveness of the company and its products or services, and its management capabilities. The loan application is also analyzed in terms of the intended uses of the funds, the repayment schedule and the state of its collateral. As part of the Bank’s measures to enhance efficiency and speed up approvals, it has digitized and standardized the loan evaluation and approval processes to run on the Bank’s information technology network as the Credit Application System. In addition to analysing loans at the application stage, a Credit Monitoring System is implemented in order to reassess the obligor’s grading and review self-assessment so that problems can be detected at an early stage and quick and adequate action can be taken. The system includes periodic monitoring each time an obligor discloses financial results in its annual report, as well as continuous monitoring performed when credit conditions change. In addition to managing individual loans, the Bank applies the following basic policies to the management of its entire portfolio to maintain and improve the Bank’s soundness and profitability over the medium to long-term: ) Risk-Taking within the Scope of Capital. To control credit risk within the scope of its capital, the Bank calculates the required credit risk capital through regular quantification of credit risk, and then sets credit

94 risk capital limits and manages risk-taking activities within these limits under a regular monitoring system. ) Controlling Concentration Risk. Since the concentration of credit in an industry or corporate group has the potential to affect a bank’s capital significantly, the Bank implements credit control on industries with concentration risk and loan reviews of large borrowers and their corporate groups. The Bank also sets credit limits for each country based on its creditworthiness to manage country risk. ) Balancing Risk and Return. The Bank operates on the basic principle of seeking returns commensurate with the credit risk. Loan pricing, therefore, uses its credit risk quantification calculations and its own indicator of value added to ensure that adequate profit is generated after deducting credit cost, cost of capital and expenses. ) Reduction of Non-Performing Loans. In order to counter concerns of increasing losses from the deterioration of existing problem loans or the appearance of new problem loans, the Bank has significantly reduced, and is continuing to reduce, non-performing loans, by conducting loan reviews to set new responses and clarify action plans, and by strengthening its recovery and asset value maintenance strategies. ) Toward Active Portfolio Management. In addition to controlling the individual loan approval process, the Bank also actively manages its loan portfolio on an aggregate basis. The Bank’s Credit Risk Management Department manages the Bank’s use of credit derivatives and loan securitization in the markets to manage its portfolio proactively. The Credit Planning Department within the Corporate Staff Unit is responsible for the comprehensive management of credit risk. This department determines the credit policies, establishes the internal rating system, manages credit risks, sets credit limits and approval limits, and manages non-performing loans and other aspects of the loan portfolio administration. The Bank established the Credit Risk Management Department within the Credit Planning Department in April 2005, to achieve a more efficient credit portfolio. The department is responsible for planning and developing active portfolio management as well as establishing the framework for managing assets with various risk portfolios. The Corporate Research Department within the Corporate Staff Unit performs the basic research on industries and subsectors, and investigates individual companies to monitor early signs of problems or growth potential. The credit departments within each business unit conduct the credit judgment for the loans handled by their business units and manage the business units’ portfolios. The credit limits the Bank uses are based on the baseline amounts established for each rating category and the Bank pays particular attention to evaluating and managing customers or loans perceived to have particularly high credit risk. Bankrupt or virtually bankrupt companies are generally handled by the Credit Administration Department, which works to recover non-performing loans as quickly as possible. The Credit Review Department, the Audit Department for the Americas, and the Audit Department for Europe operate independently of the business units, the Corporate Staff Unit and the Corporate Services Unit. These departments principally audit the soundness of assets, accuracy of gradings, self-assessments and the state of credit operations, and report audit results directly to the Board of Directors and the Management Committee.

Liquidity Risk Liquidity risk is the chance of encountering an obstacle to raising the funds required for settlement due either to a mismatch between the use and procurement of funds or to an unexpected outﬂow of funds, or being forced to borrow at higher interest rates than usual. The Bank considers liquidity risk to be one of its major risks. The Bank manages liquidity risk so that it is not overly dependent on market-based funding to cover short-term cash outﬂows. The Bank’s liquidity risk management is based on a framework consisting of setting limits and

95 guidelines for the funding gap, maintaining a system of highly liquid supplementary funding sources and establishing contingency plans. In daily risk management operations, the Bank avoids a gradual increase in liquidity risk by adjusting the funding gap limits and guidelines. For an emergency situation, the Bank has contingency plans in place to reduce the funding gap limits and guidelines and take other measures. To prevent the chance of market crises interfering with funding, the Bank carries highly liquid assets, such as U.S. treasury bonds, and has emergency borrowing facilities in place, which also facilitates foreign currency-denominated liquidity management.

Processing Risk Processing risk is the chance of losses arising from negligent administration by employees, accidents or unauthorized activities. In the Bank’s administrative regulations, the basic administrative policies are summarized as ‘‘comprehending the risks and costs of administration and transaction processing, and managing them accordingly’’ and ‘‘seeking to raise the quality of administration to deliver high-quality service to customers’’. The Bank aims to organize its systems to achieve these goals. In its operating regulations, the Bank has also defined specific rules for processing risk management. The rules divide processing risk management tasks among six types of departments: (i) Operations Planning Departments, (ii) compliance departments, (iii) operations departments, (iv) transaction execution departments (primarily the front office departments and branches), (v) the Internal Audit Department and (vi) the Customer Relations Department. The Board of Directors also reviews administrative conditions annually and sets new management policies as required. In addition, the Bank has set up a specialized group within the Operations Planning Department to strengthen administrative procedures throughout the SMBC Group. In recent years, the Japanese banking industry, including the Bank, has experienced an increase in the fraudulent use of counterfeit cash cards. The Bank is addressing this trend through a variety of measures, including the utilization of advanced security technology for newly issued cash cards. The Bank includes processing risk in its calculation of risk capital requirements and has allocated a certain percentage of risk capital to cover it, based on the quantification of the risk for a financial year.

Settlement Risk Settlement risk is the chance of a loss arising from a transaction that cannot be settled as planned. Since this risk comprises elements of several types of risk — such as credit risk, liquidity risk, processing risk and systems risk — it requires interdisciplinary management. The Operations Planning Department is charged with coordinat- ing the management of this risk with the Credit Risk Management Department, which oversees credit risk, and the Corporate Risk Management Department, which oversees liquidity risk.

Systems Risk Systems risk is the chance of a loss arising from the failure, malfunction or unauthorized use of a computer system. The Bank has instituted a number of basic policies to manage systems risk, including a security policy, usage regulations and speciﬁc management procedures. The Bank is further strengthening safety measures based on a needs assessment drawing on such references as the Financial Inspection Manual, approved by the FSA, and the Security Guidelines published by the Center for Financial Information Systems. Since computer-related trouble at ﬁnancial institutions has increasingly greater potential impact on the public, and systems risk has increased with the information technology revolution and the concomitant use of networks and personal computers, the Bank has taken necessary steps to ensure smooth and secure operation of its information systems. The Bank placed its main system and infrastructure in Tokyo and its back-up system in the Osaka area. To maintain the privacy of customer information and prevent information leaks, the Bank is encrypting sensitive information, blocking unauthorized external access and implementing all known countermeasures to secure its data. The Bank has also established contingency plans and conducted training as required to ensure it is fully prepared in the event of an emergency. The Bank will continue to revise its countermeasures as new technologies and usage patterns emerge to maintain its security.

96 The Bank includes systems risk in its calculation of risk capital requirements and has allocated a certain percentage of risk capital to cover it, based on the risk quantiﬁcation results for a ﬁnancial year.

Derivatives The main risks associated with derivative transactions are market risk (change in market prices), credit risk (non-fulfillment of obligations), and liquidity risk (lack of marketability at prices in line with recent sales). The Bank uses VaR to manage its exposure to a variety of market risks (for example, interest rate risk and foreign exchange risk) and mark to market its exposure to credit risk periodically. To mitigate liquidity risk, the Bank establishes ‘‘dealing’’ restrictions on amount, currency, instrument and term and sets limits on outstanding contracts of futures transactions. The Treasury Unit, which conducts derivative transactions, is divided into the front office and the middle/back office (administration) to strictly control the entering into and execution of transactions, exposure and profitability.

Information of Derivative Transactions to Which Mark-to-Market Accounting is Applied Mark-to-market accounting is applied mainly to dealing transactions using derivatives to obtain gains from short-term changes in interest rates, currency rates and other factors. Departments in Tokyo, New York, London, Singapore and other markets proactively deal in derivatives within proscribed limits. The transactions set forth in the tables below are valued at market value and the resulting gains (losses) are accounted for in the statement of income. Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts below.

(1) Interest Rate Derivatives Market value of interest rate derivatives transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial Futures Exchange and others. Market value of Over-the- Counter (OTC) transactions is calculated mainly using discounted present value and option pricing models. The following table shows calculations for the Bank’s interest rate derivative transactions listed on exchange and for OTC transactions for the dates indicated: As of March 31, 2004 As of March 31, 2005 Contract amountMarket Valuation Contract amount Market Valuation Total Over 1 year value gains (losses) Total Over 1 year value gains (losses) (Millions of yen) Transactions Listed on Exchange: Interest rate futures **** ¥179,274,093 ¥ 6,287,161 ¥ (1,512) ¥ (1,512) ¥ 82,058,063 ¥ 2,781,897 ¥ (7,207) ¥ (7,207) Interest rate options **** 1,539,546 534,666 22 22 250,080 250,080 21 21 Over-the-Counter Transactions: Forward rate agreements 16,604,447 2,070,000 (1,048) (1,048) 10,395,935 513,007 (64) (64) Interest rate swaps ***** 385,010,824 290,122,316 235,969 235,969 391,811,677 291,895,257 156,432 156,432 Others *************** 14,658,317 8,460,984 6,671 6,671 19,854,945 12,142,758 10,606 10,606 Total ****************** ¥240,101 ¥240,101 ¥159,789 ¥159,789

(2) Currency Derivatives Market value of currency derivative transactions is calculated mainly using the discounted present value method.

97 The following table shows calculations for the Bank’s currency derivative OTC transactions for the dates indicated: As of March 31, 2004 As of March 31, 2005 Contract amountMarket Valuation Contract amount Market Valuation Total Over 1 year value gains (losses) Total Over 1 year value gains (losses) (Millions of yen) Over-the-Counter Transactions: Currency swaps ********* ¥16,317,980 ¥10,396,658 ¥82,675 ¥131,136 ¥18,581,388 ¥12,017,760 ¥188,219 ¥122,850 Others **************** 41,334,020 4,911,810 2,385 2,385 49,166,824 6,912,387 47,173 47,173 Total******************** ¥85,060 ¥133,521 ¥235,392 ¥170,023

(3) Equity Derivatives

Market value of equity derivative transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models. The following table shows calculations for the Bank’s equity derivative transactions listed on exchange and for OTC transactions for the dates indicated: As of March 31, 2004 As of March 31, 2005 Contract amountMarket Valuation Contract amount Market Valuation Total Over 1 year value gains (losses) Total Over 1 year value gains (losses) (Millions of yen) Transactions Listed on Exchange: Stock price index futures*** ¥ 3,349 ¥ — ¥ 63 ¥ 63 ¥ 827 ¥ — ¥ (0) ¥ (0) Over-the-Counter Transactions: Equity options *********** — — — — 34,500 34,500 (5) (5) Equity price index swaps*** ———— — ——— Others ****************** 12,127 3,005 79 79 89,112 8,583 3,741 3,741 Total ********************* ¥143 ¥143 ¥3,735 ¥3,735

(4) Bond Derivatives

Market value of bond derivative transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange. Market value of OTC transactions is calculated mainly using option pricing models. The following table shows calculations for the Bank’s bond derivative transactions listed on exchange and for OTC transactions for the dates indicated:

As of March 31, 2004 As of March 31, 2005 Contract amountMarket Valuation Contract amount Market Valuation Total Over 1 year value gains (losses) Total Over 1 year value gains (losses) (Millions of yen) Transactions Listed on Exchange: Bond futures ****** ¥4,958,852 ¥ — ¥(11,705) ¥(11,705) ¥1,422,365 ¥ — ¥ 4,924 ¥ 4,924 Bond options ****** 338,500 — (703) (703) 32,500 — (29) (29) Over-the-Counter Transactions: Forward bond agreements****** 296,334 273,251 1,746 1,746 263,054 243,588 1,485 1,485 Bond options ****** 5,242,766 17,086 12,196 12,196 1,393,848 11,851 (2,997) (2,997) Total*************** ¥ 1,533 ¥ 1,533 ¥ 3,383 ¥ 3,383

98 (5) Commodity Derivatives Market value of commodity derivative transactions is calculated based on factors such as price of the relevant commodity and contract term. The following table shows calculations for the Bank’s commodity derivative OTC transactions for the dates indicated: As of March 31, 2004 As of March 31, 2005 Contract amountMarket Valuation Contract amount Market Valuation Total Over 1 year value gains (losses) Total Over 1 year value gains (losses) (Millions of yen) Transactions Listed on Exchange: Commodity futures****** ¥ — ¥ — ¥ — ¥ — ¥ 310 ¥ — ¥ (16) ¥ (16) Over-the-Counter Transactions: Commodity Swaps ****** 173,166 169,256 4,190 4,190 282,375 276,597 10,201 10,201 Commodity options ***** 8,906 8,627 21 21 12,957 12,780 183 183 Total ******************* ¥4,211 ¥4,211 ¥10,367 ¥10,367

(6) Credit Derivatives Market value of credit derivative transactions is calculated based on factors such as price of reference assets and contract terms. The following table shows calculations for the Bank’s credit derivative OTC transactions for the dates indicated: As of March 31, 2004 As of March 31, 2005 Contract amountMarket Valuation Contract amount Market Valuation Total Over 1 year value gains (losses) Total Over 1 year value gains (losses) (Millions of yen) Over-the-Counter Transactions: Credit default options ¥96,200 ¥88,840 ¥753 ¥753 ¥121,873 ¥99,690 ¥772 ¥772 Other ************* 2,894 — 3 3 2,404 — 31 31 Total *************** ¥757 ¥757 ¥803 ¥803

Information on derivative transactions to which deferred hedge accounting is applied The Bank applies individual deferred hedge or fair value hedge accounting based on the Practical Guidelines for Accounting Standard for Financial Instruments as well as deferred hedge accounting for the banking industry based on JICPA Industry Audit Committee Report No. 24 and No. 25. The following table shows the derivative transactions to which deferred hedge accounting is applied as of the date indicated: As of March 31, 2004 As of March 31, 2005 Deferred Deferred gains gains Assets Liabilities Net assets (losses) Assets Liabilities Net assets (losses) (Billions of yen) Non-consolidated Interest rate swaps*********************** ¥ 99.0 ¥106.5 ¥ (7.5) ¥(59.1) ¥57.7 ¥52.9 ¥ 4.8 ¥(74.2) Currency swaps ************************* 1.5 3.9 (2.4) 4.7 1.1 9.7 (8.6) 2.8 Other ********************************* 2.3 7.3 (5.0) 1.6 7.5 5.7 1.8 12.1 Total******************************** ¥102.8 ¥117.7 ¥(14.9) ¥(52.8) ¥66.3 ¥68.3 ¥(2.0) ¥(59.3)

(1) Derivative transactions are carried at fair value in the balance sheet (including hedging purpose derivatives appearing in the above table), except those to which the short-cut method is applied.

99 (2) Gains and losses on derivative transactions are treated as follows: — Deferred hedge accounting defers gains and losses (as determined based on fair value accounting) on hedging purpose derivatives that do not match the gains and losses realized on the hedged items (as determined based on accrual accounting). — Hedging purpose swap transactions that meet certain requirements regarding contract amount, receivable/payable condition, contract term and other conditions are recorded on a cost basis using the short-cut method for interest rate swaps, in accordance with the accounting standard for financial instruments. The following table sets forth (on a non-consolidated basis) the contract amount of interest rate swaps to which deferred hedge accounting is applied, classified by maturity. As of March 31, 2004 As of March 31, 2005 More than More than 1 year 1 year to Over 1 year 1 year to Over or less 5 years 5 years Total or less 5 years 5 years Total (Billions of yen) Non-consolidated Receivable fixed rate/payable floating rate *************************** ¥3,768.9 ¥20,168.0 ¥4,307.6 ¥28,244.5 ¥7,304.7 ¥16,947.2 ¥3,170.8 ¥27,422.7 Receivable floating rate/payable fixed rate *************************** 865.0 3,089.9 4,460.4 8,415.3 949.8 5,995.4 3,270.3 10,215.5 Receivable floating rate/payable floating rate ******************** 1.0 613.0 50.8 664.8 155.0 452.0 50.8 657.8 Total contract amount ************ ¥4,634.9 ¥23,870.9 ¥8,818.8 ¥37,324.6 ¥8,409.5 ¥23,394.6 ¥6,491.9 ¥38,296.0

100 Capital Adequacy Japan’s capital guidelines are based on the risk-adjusted approach proposed by the Basel Committee for uniform application to all international banks in industrialized countries. Set forth below is a schedule of risk-adjusted assets and details of qualifying capital of the Bank determined on a consolidated basis: As of March 31, 2003 2004 2005 (Millions of yen, except percentages) Tier I capital ****************************************** ¥ 3,066,351 ¥ 3,111,804 ¥ 3,207,262 Tier II capital: Unrealized gains on other securities after 55% discount ***** — 245,500 305,401 Land revaluation excess after 55% discount *************** 71,699 68,524 67,103 Reserves for possible loan losses (excluding specific reserves) 1,149,150 815,520 612,032 Subordinated debt ************************************ 2,150,334 2,358,572 2,537,304 Total Tier II capital*********************************** 3,371,184 3,488,117 3,521,842 Tier II capital included as qualifying capital ************** 2,887,170 3,111,804 3,207,262 Deduction ******************************************** (25,684) (24,634) (238,920) Total capital*************************************** ¥ 5,927,837 ¥ 6,198,974 ¥ 6,175,605 Risk-adjusted assets: On-balance sheet items******************************** ¥53,313,337 ¥52,359,312 ¥52,589,471 Off-balance sheet items ******************************* 3,523,317 4,264,272 5,303,085 Market risk items ************************************ 221,156 268,179 351,964 Total risk-adjusted assets **************************** ¥57,057,811 ¥56,891,764 ¥58,244,521 Tier I risk-adjusted capital ratio*************************** 5.37% 5.46% 5.50% Total risk-adjusted capital ratio *************************** 10.38% 10.89% 10.60% The Bank’s risk-adjusted capital ratios as of March 31, 2005 were 5.50% (in the case of consolidated Tier I capital) and 10.60% (in the case of consolidated total capital). The Bank’s risk-adjusted capital ratio as of March 31, 2005 were 5.74% (in the case of non-consolidated Tier I capital) and 11.32% (in the case of non- consolidated total capital). The decrease in the risk-adjusted capital ratios from March 31, 2004 principally reflected the negative impact of the Bank’s net loss for the fiscal year ended March 31, 2005. The decrease was partially offset by the amount of additional capital raised through the issuance of preferred stock, subordinated debt and the extension of subordinated loans. As of March 31, 2005, net deferred tax assets constituted 47% of the Bank’s consolidated Tier I capital.

101 Significant components of deferred tax assets and liabilities as of March 31, 2003, 2004 and 2005 were as follows: As of March 31, 2003 2004 2005 (Millions of yen) Deferred tax assets: Net operating loss carryforwards *************************** ¥ 442,212 ¥1,022,543 ¥ 922,303 Write-off of loans *************************************** 324,328 286,808 545,008 Reserve for possible loan losses *************************** 922,031 526,076 453,760 Write-off of securities************************************ 568,077 348,619 399,073 Reserve for employee retirement benefits ******************** 109,851 91,426 87,818 Depreciation ******************************************* 9,425 8,122 6,948 Net unrealized losses on other securities********************* 10,713 — — Reserve for possible losses on loans sold ******************** 8,335 — — Other ************************************************* 91,906 87,687 80,350 Subtotal *********************************************** 2,486,882 2,371,284 2,495,261 Valuation allowance ************************************* (537,897) (437,924) (595,760) Total deferred tax assets ********************************** ¥1,948,985 ¥1,933,359 ¥1,899,501 Deferred tax liabilities: Net unrealized gains on other securities ********************* ¥ — ¥ (222,213) ¥ (274,717) Gains on securities contributed to employee retirement benefits trust ************************************************ (25,328) (26,205) (52,398) Leveraged lease***************************************** (48,754) (50,522) (49,651) Undistributed earnings of subsidiaries*********************** (10,614) (11,818) (9,108) Other ************************************************* (22,706) (15,477) (8,498) Total deferred tax liabilities ******************************* ¥ (107,403) ¥ (326,236) ¥ (394,374) Net deferred tax assets ************************************* ¥1,841,581 ¥1,607,122 ¥1,505,127

The calculation of net deferred tax assets by the Bank is based on taxable income projections for five years multiplied by the effective tax rates applicable to the Bank. These projections are based on the reasonable tax planning strategy as authorized by the management of the Bank, which is reviewed by the Bank’s independent auditors in the process of their audit performed in accordance with generally accepted auditing standards in Japan. These calculations require the Bank to make estimates and certain assumptions and the results of these calculations may also differ from corresponding calculations made under U.S. or European regulations. Although the Bank had operating loss carryforwards of ¥2,008.8 billion, on a non-consolidated basis, as of March 31, 2005 for tax purposes, it recorded deferred tax assets based on the fact that such losses are caused by virtue of measures taken to strengthen its balance sheets (such as disposals of non-performing loans and equity securities with unrealized losses). The Bank’s ability to realize benefits from its deferred tax assets would be adversely affected to the extent that the Bank’s actual taxable income is lower than the projected taxable income used to determine the amount of its deferred tax asset, even though the projected taxable income is conservatively estimated reflecting the uncertainty of the projected amount. The capital of the Bank is also partially comprised of capital contributions from insurance and other companies in which the Bank has made capital contributions. The Bank’s capital ratio would be negatively affected if these cross-capitalizations were restricted or prohibited in the future.

102 The Bank’s capital also depends in part on the fair market value of its securities portfolio since unrealized gains and losses are components of stockholders’ equity. As of March 31, 2005, 14% of the Bank’s securities portfolio consisted of equity securities, which are primarily common stocks of publicly traded Japanese companies. The common stocks of publicly traded Japanese companies are generally volatile and have declined substantially over the last few years although some recovery has been seen recently. As of March 31, 2005, the Bank’s other securities (including money held in trust) with a readily ascertainable market value contained ¥679 billion in unrealized gains, of which ¥395 billion appeared in its stockholders’ equity. Although it would depend on the particular securities involved, a substantial decline in the Tokyo stock market would likely reduce the Bank’s capital substantially. If the impact of the changes in risk-adjusted assets or loan losses or other relevant factors would otherwise decrease the Bank’s capital ratios below 4% (in the case of Tier I capital) or 8% (in the case of total capital) in the future, the Bank intends to take actions to seek to maintain its risk-adjusted capital ratios above such levels. Such actions might include additional sales of equity or debt securities and the sale of loans or other assets in order to reduce the amount of risk-adjusted assets. Sales of assets such as equity securities in substantial amounts by the Bank and other ﬁnancial institutions similarly situated might have adverse effects on the market values for assets of the types sold, which would reduce the amounts realized on such sales. Consequently, there can be no assurance that the Bank will be able to maintain its Tier I and total capital ratios at or above 4% and 8%, respectively, in the future.

Competition In Japan, weak demand for loan financing has intensified competition for the Bank, primarily from the other city banks (a group of six banks that are considered to be the largest and most influential group of banks in Japan). At the same time, large Japanese corporations have increasingly raised funds through the capital markets and, as a consequence, have relied to a lesser extent on city banks, such as the Bank, as sources of finance. Internationally, the Bank faces intense competition from major commercial banks. Additionally, the deregulation of banking activities in Japan, and more generally the Japanese financial system, has accelerated over the past several years. This deregulation is altering two structural features of Japan’s financial system: (i) the separation of banking and securities businesses and (ii) distinctions among the permissible activities of Japan’s three principal types of private banking institutions: ordinary banks (including both city banks, of which the Bank is one, and regional banks), trust banks and long-term credit banks. Additionally, the Bank faces competition from certain government entities, including Japan Post, the Japan Finance Corporation for Small Businesses and GHLC, although GHLC has been decreasing the amount of new origination and plans to cease origination by March 31, 2007. Article 65 of the Securities and Exchange Law separates banking business and securities businesses. However, banks in Japan (including the Bank), like their counterparts in the United States, have been seeking authorization to combine traditional commercial and investment banking activities in order to offer customers a wider range of services. Conversely, securities firms are seeking the authority to engage in activities that have been considered banking activities and have been prohibited. The present policy of the Japanese government is to reduce the barriers between banking and securities businesses in Japan, and the Bank expects increased competition among financial institutions in new areas of permissible activities. The Financial System Reform Law (Law No. 87 of 1992) and the subsequent amendment to the Banking Law now permit banks to establish, or otherwise own domestic and overseas subsidiary securities companies (with the approval of the FSA) to engage in securities business. Also, the amendment to the Securities and Exchange Law enacted as of June 2, 2004 has lifted the ban on banks engaging in securities intermediation. Due to the amendment, as of December 1, 2004, banks have been allowed to solicit customers for securities trades and intermediate the resulting trades for securities companies. As a result of the deregulation of the banking sector, companies without prior banking operations have formed new banks. For example, in 2001 the banking subsidiaries of Sony Corporation (an electronics manufacturer) and Ito-Yokado Co., Ltd. (a supermarket operator) commenced operations to offer banking services to consumers. Sony Bank Inc. is an Internet based bank focusing on fund-management services. IY Bank

103 uses automated teller machines installed in convenience stores operated by Seven-Eleven Japan Co., Ltd. as its main service access point. Within the Japanese consumer banking sector, the continuing deregulation of interest rates on yen deposits has enabled banks to offer customers an increasingly attractive and diversified range of new products. The Bank faces competition in this sector from the other city and regional banks as well as from Japan Post, a Japanese public corporation (formerly the Postal Saving Bank, a Japanese government entity) (and the world’s largest holder of deposits), that traditionally has had significant competitive advantages over Japanese banks due in large part to its ability to offer fixed interest rates on deposits for terms of up to ten years while allowing depositors to withdraw their funds after only six months. Recently, Japanese banks have started competing with one another by developing innovative proprietary computer technologies that allow them to deliver basic banking services in a more efficient manner and to create sophisticated new products in response to customer demand. In connection with a significant restructuring of its domestic network, the Bank is implementing a plan to replace many of its retail branch offices with specialized distribution facilities and to incorporate advanced technologies to offer new services to its retail customers, such as telephone banking and Internet banking. Competition in the Japanese banking industry has been heightened by the integration and restructuring of Japanese financial institutions that resulted in larger and more integrated financial institutions. The currently pending merger of the Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc. to form Mitsubishi UFJ Financial Group, Inc. may result in a further increase in competition. In international markets, the Bank faces competition from other commercial banks and similar financial institutions, particularly major international banks and the leading domestic banks in those financial markets outside Japan in which the Bank conducts business.

Property The Bank owns or leases the land and buildings in which it conducts its business. Most of the property in which the Bank operates in Japan is owned by the Bank. In contrast, the Bank’s international operations are conducted out of leased premises. As of March 31, 2005, the property owned by the Bank was as follows: Land (Square meters) Branch network***************************************************************** 252,740 Other facilities ***************************************************************** 664,537 Total************************************************************************ 937,277

Legal Matters The Bank is party to routine litigation incidental to its business, none of which is currently expected to have a material adverse effect on the Bank’s ﬁnancial condition or results of operations.

104 FORMATION OF THE SMBC GROUP AND THE SMFG GROUP On April 1, 2001, Sakura Bank and Sumitomo Bank merged to create Sumitomo Mitsui Banking Corporation (referred to herein as the ‘‘Former-SMBC’’ in respect of dates prior to March 17, 2003 when it merged with Wakashio Bank, as described below). Sumitomo Bank was established in 1895 and incorporated as a joint stock corporation with limited liability in 1912. Sumitomo Bank later merged with the Osaka-based Hannan and Ikeda Jitsugyo Banks in 1945, the Kawachi Bank in 1965 and with the Heiwa Sogo Bank in 1986. In 1998, Sumitomo Bank formed an alliance with Daiwa Securities Co. Ltd. through which Sumitomo Bank established Daiwa Securities SMBC, formerly Daiwa Securities SB Capital Markets Co. Ltd., as a securities and derivatives joint venture, and an asset management joint venture, Daiwa SB Investments. Sakura Bank was a joint stock corporation with limited liability that was formed in 1990 through the merger of The Mitsui Bank, Limited (‘‘Mitsui Bank’’) and The Taiyo Kobe Bank, Limited. The Mitsui Bank traced its origins to the Mitsui Exchange House that was founded in Edo (now Tokyo) in 1683. Prior to the April 2001 merger, Sakura Bank operated in Japan as a commercial bank under the Banking Law and provided a range of wholesale and retail banking services to customers in Japan and overseas. In order to build upon the benefits realized from the creation of the Former-SMBC, it was determined that a new corporate structure should be adopted utilizing a holding company structure. This objective had two aims: ) the creation of a corporate structure that was able to exploit fully the strengths of the group; and ) substantial reinforcement of strategic business lines on a group-wide basis. Sumitomo Mitsui Financial Group, Inc. was established on December 2, 2002 as the holding company for the SMFG Group through a statutory share transfer (kabushiki iten) of all of the outstanding equity securities of the Former-SMBC in exchange for SMFG’s newly issued securities. SMFG is a joint stock corporation with limited liability (Kabushiki Kaisha) incorporated under the Commercial Code. SMFG’s head office is located at 1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo, Japan. Upon formation of SMFG and completion of the statutory share transfer, the Former-SMBC became a direct wholly-owned subsidiary of SMFG. As part of the strategy for adopting a holding company structure, following establishment, SMFG also acquired direct ownership of several additional subsidiaries and investments previously owned by the Former- SMBC: ) Sumitomo Mitsui Card and SMBC Leasing. Two non-bank subsidiaries of the Former-SMBC — Sumitomo Mitsui Card and SMBC Leasing Company, Limited (‘‘SMBC Leasing’’) — were ‘‘spun off’’ to SMFG on February 3, 2003. Each of these transactions was structured as a corporate split under Japanese law, whereby the Former-SMBC transferred its shares in these two companies to SMFG at book value. SMFG also purchased the remaining issued and outstanding shares of these two companies from other group companies and unaffiliated shareholders at fair market value on February 3, 2003. As a result of these transactions, Sumitomo Mitsui Card and SMBC Leasing became direct wholly-owned subsidiaries of SMFG. Sumitomo Mitsui Card offers credit card settlement and financing services, and enjoys the widespread brand recognition of Sumitomo Mitsui VISA Card. SMFG, Sumitomo Mitsui Card, the Bank and DoCoMo, jointly announced on April 27, 2005 their agreement to form a strategic business and capital alliance for the launch of a credit payment service using DoCoMo ‘‘Mobile Wallet’’ phones equipped with smart-card functions for cashless payments. SMBC Leasing specializes in corporate leasing and rentals for customers’ large-scale capital investment needs, providing custom-made solutions and a broad spectrum of products such as equipment and information technology leasing. ) Japan Research Institute. On February 3, 2003, SMFG merged with Japan Research Institute Holdings in a statutory merger under Japanese law. In connection with the merger, SMFG issued 0.021 shares of its common stock for each share of common stock of Japan Research Institute Holdings, with SMFG as the entity surviving the merger. As a result of these transactions, Japan Research Institute, Limited (‘‘Japan Research Institute’’) became a direct wholly-owned subsidiary of SMFG on February 3, 2003. Japan Research Institute is a system integrator, consultant and think-tank that offers comprehensive information services.

105 ) Daiwa Securities SMBC and Daiwa SB Investments. Equity stakes in two joint ventures with Daiwa Securities, previously held by the Former-SMBC — Daiwa Securities SMBC and Daiwa SB Invest- ments — were transferred to SMFG through a corporate split under Japanese law which became effective on February 3, 2003. Concurrently with the corporate split, SMFG purchased 13.6% of Daiwa SB Investments’ common stock that was previously held by subsidiaries of the Former-SMBC. As a result of these transactions, SMFG now holds a 40% equity stake in Daiwa Securities SMBC and a 44% equity stake in Daiwa SB Investments.

Following the establishment of SMFG, on March 17, 2003 the Former-SMBC merged with Wakashio Bank, its wholly-owned subsidiary. Wakashio Bank was the surviving legal entity in the merger and was renamed as ‘‘Sumitomo Mitsui Banking Corporation’’.

In November 2003, SMFG Corporate Recovery Servicer Co., LTD. (‘‘SMFG Corporate Recovery Servicer’’) was established by SMFG in conjunction with Goldman Sachs (Japan) Ltd. (‘‘Goldman Sachs Japan’’) and Daiwa Securities SMBCPI and Development Bank of Japan, to perform the corporate recovery operations of the loan purchase fund which was set up by the Bank, Goldman Sachs Japan and Daiwa Securities SMBCPI. See ‘‘Business — Transactions with Goldman Sachs — Corporate Recovery Joint Venture Company’’. On April 27, 2005, SMFG, Sumitomo Mitsui Card, the Bank and DoCoMo, jointly announced their basic agreement that DoCoMo plans to acquire 34% of Sumitomo Mitsui Card’s common stock as part of a strategic, business and capital alliance. On June 15, 2005, the board of directors of Sumitomo Mitsui Card approved the transaction by transferring a potion of the shares held by SMFG and the issuance of new shares (expected July 11, 2005) in accordance with the basic agreement. See ‘‘Business — Operations — Consumer Banking Unit’’.

As the ultimate holding company of the SMFG Group, SMFG is now responsible for group strategy and management, group resource allocation, group ﬁnancial accounting, investor relations, group IT strategy, HR management for group executives, group risk management and compliance, compensation schemes and, more generally, in harmonizing the operations of SMFG on a group-wide basis in the most efﬁcient way possible.

SMFG has established three sub-committees, namely, the Risk Management Committee, the Compensation Committee and the Nomination Committee, to ensure that adequate corporate governance is exercised.

The business of the SMFG Group is carried on through the following directly held subsidiaries and afﬁliates and their respective subsidiaries:

) The Bank

) Sumitomo Mitsui Card

) SMBC Leasing

) Japan Research Institute

In addition, SMFG holds direct investments in:

) Daiwa Securities SMBC

) Daiwa SB Investments

) SMFG Corporate Recovery Servicer

106 The following diagrams detail the structure of the Former-SMBC (prior to the formation of SMFG as the holding company for the Bank) and current structure of the SMFG Group:

Structure Prior to Formation of SMFG and Merger of the Former-SMBC and Wakashio Bank

Daiwa Former-SMBC Securities

100% 46.9% 37.5% 4.9% 40% 30.4% Japan Wakashio Sumitomo Daiwa Securities Daiwa SB SMBC Leasing Research Mitsui Card SMBC Investments Bank Institute

60% 44%

Note: The percentages shown in this diagram indicate the voting rights the Former-SMBC directly held in the companies prior to the formation of SMFG. The Former-SMBC’s consolidated subsidiaries and afﬁliates held the following additional voting rights: 53.1% in Sumitomo Mitsui Card; 47.7% in SMBC Leasing; and 49.3% in Japan Research Institute.

SMFG Group Structure (as of the end of March 2005)

Daiwa SMFG Securities

100% 100%(1) 100%100% 52% 40% 44% Japan Sumitomo SMFG Corporate Daiwa Securities Daiwa SB SMBC SMBC Leasing Research Mitsui Card Recovery SMBC Investments Institute Servicer 16% 60% 44%

Promise

(1) On April 27, 2005, SMFG, Sumitomo Mitsui Card, the Bank and DoCoMo, jointly announced that DoCoMo plans to acquire 34% of Sumitomo Mitsui Card’s common stock as part of a strategic, business and capital alliance. On June 15, 2005, the board of directors of Sumitomo Mitsui Card approved the transaction by transferring a potion of the shares held by SMFG and the issuance of new shares in accordance with the basic agreement. The transaction closed on July 11, 2005. See ‘‘Business — Operations — Consumer Banking Unit’’. The Bank, on a consolidated basis, contributed 119%, 91% and 92% to the consolidated net income (loss) of SMFG for the ﬁscal years ended March 31, 2005, 2004 and 2003, respectively. Of the consolidated total assets of SMFG, 98%, 98% and 98% were comprised of assets of the Bank as of March 31, 2005, 2004 and 2003, respectively.

107 PRINCIPAL COMMON STOCKHOLDERS OF SMFG The Bank is a wholly-owned subsidiary of SMFG. The ten largest stockholders of SMFG (other than SMFG), as appearing on its register of common stockholders and register of beneﬁcial common stockholders as of March 31, 2005, were as follows: Number of Percentage Shares of Shares Name Held Outstanding(1) Japan Trustee Services Bank, Ltd. (Trust Account) ************************** 438,816 6.99% The Master Trust Bank of Japan, Ltd. (Trust Account) *********************** 431,664 6.88 Nippon Life Insurance Company ***************************************** 154,388 2.46 Sumitomo Life Insurance Company*************************************** 108,241 1.72 Matsushita Electric Industrial Co., Ltd. *********************************** 103,570 1.65 Hero & Company ***************************************************** 91,529 1.45 The Chase Manhattan Bank N.A., London ********************************* 89,864 1.43 Japan Trustee Services Bank, Limited (The Sumitomo Trust and Banking Company Retrust Portion, Sumitomo Life Insurance Company Pension Trust) ** 58,000 0.92 TOYOTA MOTOR CORPORATION************************************** 53,753 0.85 Trust & Custody Services Bank, Ltd. (Trust Account B)********************** 51,729 0.82 Total **************************************************************** 1,581,555 25.20%

(1) Percentages are calculated based on the total number of common shares then outstanding.

The RCC currently owns Type 1, Type 2 and Type 3 preferred stocks that are either currently convertible or will become convertible into common stock of SMFG. Based on SMFG’s stock price as of March 31, 2005, the governmental entity would hold approximately 20.4% of SMFG’s common stock (excluding treasury stock and assuming March 31, 2005 capitalization levels and no conversion of any other outstanding preferred stock). See ‘‘Risk Factors — Governmental Ownership of SMFG’s Convertible Preferred Stock and New Governmental Policies Could Adversely Affect the Bank’’. GSSM currently owns 50,100 shares of SMFG’s First to Twelfth Series Type 4 preferred stocks that are convertible into common stock of SMFG during February 2005 though February 2028. If converted at their initial conversion price as adjusted (excluding treasury stock and assuming March 31, 2005 capitalization levels and no conversion of any other outstanding preferred stock), GSSM would hold approximately 7.4% of SMFG’s common stock. See ‘‘Risk Factors — Goldman Sachs’ Ownership of Shares of SMFG’s Preferred Stock Gives Rise to Governance Considerations’’.

108 MANAGEMENT AND EMPLOYEES

SMFG’s Management Under SMFG’s corporate governance system, its Board of Directors is in charge of supervising the business operations of the SMFG Group as a whole, and has established three board committees to assist SMFG’s Board of Directors in exercising its management responsibilities. Those committees are the risk management committee, the compensation committee and the nominating committee. SMFG’s Board of Directors is comprised of eight Directors, two of whom are outside directors as defined under the Commercial Code, and its Board of Corporate Auditors is comprised of five Corporate Auditors, three of whom are outside corporate auditors as defined under current Japanese law. The following persons occupied the indicated positions at SMFG as of July 1, 2005: Name Title Masayuki Oku(1) ******************************************** Chairman of the Board Teisuke Kitayama(1)****************************************** President Morio Kusunoki(2) ******************************************* Deputy President Masahide Hirasawa(1) **************************************** Director Shigeru Nishiyama(1)***************************************** Director Junji Tanehashi(1)******************************************** Director Yoshiaki Yamauchi(2)(3) *************************************** Director Yoichiro Yamakawa(2)(3) ************************************** Director Koichi Tsukihara(1) ****************************************** Deputy President Yasuyuki Kimoto(1) ****************************************** Senior Managing Director Koji Ishida(1) *********************************************** Corporate Auditor Sadao Kobayashi(1) ****************************************** Corporate Auditor Katsuya Onishi(1)(4) ****************************************** Corporate Auditor Hiroshi Araki(2)(4) ******************************************* Corporate Auditor Ikuo Uno(2)(4) *********************************************** Corporate Auditor

(1) Holds positions both at SMFG and at the Bank. (2) Holds a position at SMFG only. (3) Outside director as defined under the Commercial Code. (4) Outside corporate auditor as defined under the Law for Special Exceptions to the Commercial Code Concerning Audit, etc. of Kabushiki Kaisha. SMFG’s Board of Directors has ultimate responsibility for the administration of SMFG’s affairs. The Corporate Auditors (who are not required to be and are not certified public accountants) have the statutory duty to examine the financial statements and business reports submitted by the Board of Directors to the shareholders and also to supervise the administration by the Directors of SMFG’s affairs in accordance with the auditing policy and rules relating to the execution of Corporate Auditors’ duties as prescribed by resolutions of the Board of Corporate Auditors. All Directors and Corporate Auditors are elected by the shareholders of SMFG at general meetings. The normal term of office for Directors is two years and the normal term of office for Corporate Auditors is four years but Directors and Corporate Auditors may serve any number of consecutive terms. The committees of SMFG’s Board of Directors were created to enhance the ability of the Board of Directors to oversee the operations of SMFG. The risk management committee supervises and reports to SMFG’s Board of Directors on overall risk management policies, market and liquidity risk management policies, credit risk management policies, related risk management systems and other issues with a potential material impact on operations. The compensation committee supervises and reports to SMFG’s Board of Directors on the remuneration of the members of the Board of Directors and other key personnel of both SMFG and its subsidiaries, and other issues related to remuneration, salaries and incentive plans. The nominating committee supervises and reports to SMFG’s Board of Directors on the selection of directors, the selection of representative

109 directors, and issues related to the appointment of the President and other key personnel of both SMFG and its subsidiaries. At the operational level, SMFG has created a Management Committee chaired by the President of SMFG and supervised by the Board of Directors, to act as the highest decision-making body with respect to the business administration and management supervision of the SMFG Group as a whole. The President has the authority to make the ﬁnal decision after considering the Management Committee’s recommendations. In addition, SMFG has a Group Strategy Committee which serves as a forum for top management of all SMFG Group companies to exchange ideas on their respective business plans.

The Bank’s Management The Bank’s Board of Directors has ultimate responsibility for the administration of the Bank’s affairs and provides effective oversight of operations. In order to distinguish between operational management and oversight functions, the Bank operates a Management Committee that is the highest decision-making body responsible for operational matters and is under the direct supervision of the Board of Directors. The President chairs the Management Committee and appoints executive officers to it, and has the authority to make the final decision after considering the Management Committee’s recommendations. The President designates members of the Management Committee to oversee the operations of certain head office departments and business units. The Chairman of the Board of Directors is prohibited from assuming direct responsibility for operational duties and his primary duty is to oversee and control the performance of operations. In addition, the Bank operates an Internal Audit Unit that has responsibility for conducting internal audits on an objective basis in a process that is separate from the oversight provided by the Board of Directors. The Internal Audit Unit also acts independently from the business units. The Corporate Auditors (who are not required to be and are not certified public accountants) have the statutory duty to examine the financial statements and business reports submitted by the Board of Directors to the shareholders. They also have the duty to supervise the administration by the Directors of the Bank’s affairs in accordance with the auditing policy and rules prescribed by resolutions of the Board of Corporate Auditors. All Directors and Corporate Auditors are elected by the shareholders of the Bank at general meetings. The normal term of office for Directors is two years and the normal term of office for Corporate Auditors is four years, but Directors and Corporate Auditors may serve any number of consecutive terms. The Bank is required to appoint independent certified public accountants, who are elected at a general meeting of shareholders. The independent certified public accountants have the statutory duty to examine the financial statements prepared in accordance with the Commercial Code and approved by the Board of Directors, and report their opinion thereon to the Board of Corporate Auditors and to the Representative Directors for notification to the shareholders. Examination by independent certified public accountants of the financial statements of the Bank is also required for the purpose of the securities report filed through the Kanto Local Finance Bureau to the Prime Minister for public inspection in accordance with the Securities and Exchange Law. The Bank’s independent certified public accountants for such purposes are KPMG AZSA & Co.

110 The names and titles of the Directors and Corporate Auditors of the Bank as of July 1, 2005 are as follows: Name Title Teisuke Kitayama ******************************************* Chairman of the Board Masayuki Oku(1) ******************************************** President Koichi Tsukihara(1) ****************************************** Deputy President Masahide Hirasawa(1) **************************************** Deputy President Mitsuaki Yahagi(1) ******************************************* Deputy President Yasuyuki Kimoto(1) ****************************************** Senior Managing Director Kenjiro Nakano(1) ******************************************* Senior Managing Director Shigeru Nishiyama(1)***************************************** Senior Managing Director Hitoshi Yoshimatsu(1) **************************************** Senior Managing Director Shigenobu Aikyo(1) ****************************************** Managing Director Osamu Endo(1)********************************************** Managing Director Yoshiaki Yamauchi(2) **************************************** Director Yoichiro Yamakawa(2) **************************************** Director Yoshiyuki Nagahara ***************************************** Corporate Auditor Tatsumasa Matsumoto *************************************** Corporate Auditor Katsuya Onishi(3)******************************************** Corporate Auditor Koji Ishida************************************************* Corporate Auditor Sadao Kobayashi******************************************** Corporate Auditor

(1) Also acting as an Executive Officer. (2) Outside director as defined under the Commercial Code. (3) Outside corporate auditor as defined under the Law for Special Exceptions to the Commercial Code Concerning Audit, etc. of Kabushiki Kaisha.

All of the above Directors are engaged in the business of the Bank on a full-time basis. The business address of the Directors of the Bank is 1-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006.

SMFG has issued to various Directors and members of senior management of both SMFG and the Bank stock options, representing the right to purchase an aggregate 1,620 shares of SMFG’s common stock as of July 1, 2005.

Employees

As of March 31, 2005, the Bank had 21,020 employees (including employees temporarily transferred to other companies but excluding directors, executive ofﬁcers, contract employees, temporary, part-time and overseas local staff).

Most of the employees of the Bank are members of the Sumitomo Mitsui Banking Corporation Workers’ Union, which negotiates with the Bank concerning remuneration and working conditions. The union is afﬁliated with the Federation of City Bank Workers’ Unions. The Bank considers its labor relations to be excellent.

The Bank considers its level of remuneration, fringe beneﬁts (including an employee share ownership program), working conditions and other allowances, which include lump-sum payments and annuities to employees upon retirement, to be generally competitive with those offered in Japan by other large enterprises.

111 SUBSIDIARIES, AFFILIATES AND ASSOCIATED COMPANIES

The Bank offers many of its banking and related services through subsidiaries and affiliates. At March 31, 2005, the Bank had 86 subsidiaries and 11 affiliates in Japan and 41 subsidiaries and 14 affiliates outside of Japan. In total, the accounts of 121 of the Bank’s subsidiaries were consolidated with those of the Bank and 4 subsidiaries and 16 affiliates were accounted for by the equity method. The consolidated accounts of the Bank do not include the accounts of other subsidiaries or affiliates which would not have a material impact on such consolidated accounts.

The following table sets forth certain information with respect to certain of the Bank’s subsidiaries, afﬁliates and associated companies as of March 31, 2005:

Domestic Issued Capital Percentage (Millions of Voting Company Name of yen) Rights(1) Established Main Business Principal Subsidiaries SAKURA CARD CO., Ltd ********** 7,438 95.74 (17.95) February 23, 1983 Credit card services The Japan Net Bank, Limited ******** 20,000 57 September 19, 2000 Commercial banking via Internet SMBC Loan Business Planning Co., Ltd ************************ 100,010 100 April 1, 2004 Management of subsidiaries SMBC Finance Business Planning Co. Ltd ************************ 10 100 April 1, 2004 Management of subsidiaries SMBC Loan Adviser Co., Ltd******** 10 100 (100) April 1, 1998 Consulting and agency services for consumer loans SMBC Guarantee Co., Ltd*********** 187,720 100 (100) July 14, 1976 Credit guarantee Sansei Guarantee Co., Ltd *********** 48 100 (100) April 1, 1974 Credit guarantee SMBC Loan Servicer Co., Ltd ******* 500 60 (60) July 28, 1999 Servicer SMBC Finance Service Co., Ltd ****** 71,705 100 (100) December 5, 1972 Factoring, loans and collecting agent SMBC Capital Co., Ltd(2)************ 2,500 59.8 (20) August 1, 1995 Venture capital SMBC Consulting Co., Ltd ********** 1,100 75 (25) May 1, 1981 Information service Financial Link Company, Limited***** 160 100 (100) September 29, 2000 Information processing service and management consulting SMBC Support & Solution Co., Ltd *** 10 100 April 1, 1996 Advertisement, information processing service SMBC Mortgage Co., Ltd(3)********** 18,182 51.85 (3.09) October 14, 1983 Mortgage securities SMBC Business Servicing Co., Ltd *** 500 100 March 11, 1999 Servicer SMBC Friend Securities Co., Ltd. **** 27,270 44.78 (2.60) March 2, 1948 Securities Sakura Information Systems Co., Ltd ** 600 69 (31.51) November 29, 1972 System engineering and data processing SAKURA KCS Corporation ********* 2,054 35.21 (9.46) March 29, 1969 System engineering and data [17.67] processing THE MINATO BANK, LTD ********* 24,908 50.00 (1.58) September 6, 1949 Commercial banking Kansai Urban Banking Corporation**** 32,500 44.60 (0.48) July 1, 1922 Commercial banking [5.96] SMBC Staff Service Co., Ltd ******** 90 100 July 15, 1982 Temporary manpower service SMBC Learning Support Co., Ltd***** 10 100 May 27, 1998 Seminar organiser SMBC PERSONNEL SUPPORT CO., LTD *************************** 10 100 April 15, 2002 Banking clerical work SMBC Center Service Co., Ltd. ****** 100 100 October 16, 1995 Banking clerical work SMBC Delivery Service Co., Ltd. **** 30 100 January 31, 1996 Banking clerical work SMBC Green Service Co., Ltd ******* 30 100 March 15, 1990 Banking clerical work SMBC International Business Co., Ltd 20 100 September 28, 1983 Banking clerical work SMBC International Operations Co., Ltd **************************** 40 100 December 21, 1994 Banking clerical work SMBC Loan Business Service Co., Ltd 70 100 September 24, 1976 Banking clerical work SMBC Market Service Co., Ltd ****** 10 100 February 3, 2003 Banking clerical work

112 Issued Capital Percentage (Millions of Voting Company Name of yen) Rights(1) Established Main Business SMBC Loan Administration and Operations Service Co., Ltd******** 10 100 February 3, 2003 Banking clerical work SMBC Property Research Service Co., Ltd **************************** 30 100 February 1, 1984 Banking clerical work SMBC Total Maintenance Co., Ltd**** 450 100 October 7, 1994 Disposal of real estate collateral

Principal Affiliates Promise Co. Ltd ******************* 80,737 16.04 March 20, 1962 Consumer finance At-Loan Co. Ltd ******************* 10,912 49 June 8, 2000 Consumer loan Sumitomo Mitsui Asset Management Company, Limited *************** 2,000 17.5 December 1, 2002 Investment advisory and investment trust management Japan Pension Navigator Co., Ltd ***** 4,000 30 September 21, 2000 Operation and administration of defined contribution pension plans QUOQ Inc************************ 1,000 23.15 (9.26) April 5, 1978 Purchase of monetary assets and credit guarantee

Overseas Percentage of Voting Company Name Issued Capital Rights(1) Established Main Business Principal Subsidiaries Sumitomo Mitsui Banking Corporation Europe Limited*** $1.7 billion 100 March 5, 2003 Commercial banking Manufacturers Bank *********** $80.8 million 100 June 26, 1962 Commercial banking Sumitomo Mitsui Banking Corporation of Canada ******* C$121.87 million 100 April 1, 2001 Commercial banking Banco Sumitomo Mitsui Brasileiro S.A ************** R$309.4 million 100 October 6, 1958 Commercial banking PT Bank Sumitomo Mitsui Indonesia ****************** Rp1,502.4 billion 98.28 August 22, 1989 Commercial banking SMBC Leasing and Finance, Inc $1,620 97.38 (7.69) November 9, 1990 Leasing and investments SMBC Capital Markets, Inc ***** $100 100 (10) December 4, 1986 Investments and derivatives SMBC Securities, Inc ********** $100 100 (10) August 8, 1990 Securities SMBC Financial Services, Inc *** $300 100 August 8, 1990 Investments and investment advisory SMBC Cayman LC Limited***** $1,375 million 100 February 7, 2003 Guarantee Sumitomo Finance (Asia) Limited $35 million 100 September 26, 1973 Investments, commercial banking, securities and investment advisory SBTC, Inc ******************* $1 100 January 26, 1998 Investments SB Treasury Company L.L.C**** $470 million 100 (100) January 26, 1998 Loans SB Equity Securities (Cayman), Limited ******************* ¥1 million 100 December 15, 1998 Finance SFVI Limited **************** $300 100 July 30, 1997 Finance Sakura Finance (Cayman) Limited ******************* $100 thousand 100 February 11, 1991 Finance Sakura Capital Funding (Cayman) Limited ******************* $100 thousand 100 July 15, 1992 Finance Sakura Preferred Capital (Cayman) Limited *********** ¥10 million 100 November 12, 1998 Finance SMBC International Finance N.V. ********************* $200 thousand 100 June 25, 1990 Finance SMBC Capital Markets Limited** $297 million 100 April 18, 1995 Derivatives SMBC Derivative Products Limited ******************* $300 million 100 (100) April 18, 1995 Derivatives Sumitomo Finance International plc *********************** £200 million 100 July 1, 1991 Finance

113 Percentage of Voting Company Name Issued Capital Rights(1) Established Main Business Sumitomo Mitsui Finance Dublin Limited ******************* $18 million 100 September 19, 1989 Finance Sakura Finance Asia Limited **** $65.5 million 100 October 17, 1977 Finance Sumitomo Mitsui Finance Australia Limited *********** A$156.5 million 100 June 29, 1984 Finance Sakura Merchant Bank (Singapore) Limited(4) ******** S$4 million 100 April 18, 1990 Finance SMBC MVI SPC ************* $30 million 100 September 9, 2004 Finance SMBC DIP Limited *********** $10,000 100 March 16, 2005 Finance

(1) Figures in ( ) indicate percentages of voting rights held by the Bank’s subsidiaries. Figures in [ ] indicate percentages of voting rights held by companies in close relationship with the Bank and companies consent to vote. (2) SMBC Capital Co., Ltd is scheduled to merge with NIF Ventures Co., Ltd. in October 2005. (3) SMBC Mortgage Co., Ltd has dissolved in June 2005. (4) Sakura Merchant Bank (Singapore) Limited is scheduled to be dissolved in March 2006.

114 THE JAPANESE BANKING SYSTEM The Japanese banking system is broadly divided into three groups: a central bank, public financial institutions, and private-sector banking institutions. The Bank of Japan is the Japanese central bank and has responsibility for the regulation of currency, the control and facilitation of credit and finance and the maintenance and development of the credit system. See ‘‘Supervision and Regulation — Japan — The Bank of Japan’’. There are a number of public financial institutions, such as the Development Bank of Japan and the Japan Bank for International Cooperation, which have been organized in order to provide funding for specific matters, and to supplement the activities of the private-sector banking institutions. Their funds are provided mainly from government sources. According to the classifications by the FSA and the latest figures available as of April 15, 2005 (except with respect to the regional bank figure as of October 1, 2004), private-sector banking institutions in Japan consist of (i) 197 ordinary banks, of which there are 6 city banks, 113 regional banks, 69 foreign banks, 8 ‘‘new-type’’ banks and 1 bank, which had hitherto been a long-term credit bank and became an ordinary bank on April 1, 2004, (ii) 25 trust banks, and (iii) 1 long-term credit bank. In general, the operations of ordinary banks correspond to commercial banking operations in the United States or Europe. Their main sources of funds are deposits from the public. City banks and regional banks are distinguished on the basis of head office location as well as the size and scope of their operations. The city banks are generally considered to be the largest and most influential group of banks in Japan. These banks are based in either Tokyo, Osaka or Nagoya, and operate domestically on a nationwide scale through networks of branch offices. City banks, unlike regional banks, have strong links with large corporate clients, including the major industrial companies in Japan; however, in light of deregulation and other competitive factors, many of these banks (including the Bank) have placed increasing emphasis on other markets, including SMEs, retail banking, international operations and, more recently, investment banking and related services. In recent years, almost all of the city banks have consolidated or merged with other city banks and also, in some cases, with trust banks or long-term credit banks. Integration among these banks was achieved, in some cases, through the use of bank holding companies. See ‘‘Supervision and Regulation — Japan—Bank Holding Company’’. With some exceptions, the regional banks tend to be much smaller in terms of total assets than the city banks. Generally, each of the regional banks is based in one of the Japanese prefectures and may extend its operations into neighbouring prefectures. Their clients are mostly regional enterprises and local public utilities, although the regional banks also lend to large corporations. As of April 15, 2005, there are 69 foreign banks operating banking businesses in Japan. They are subject to a statutory framework similar to the regulation of Japanese domestic banks. Their principal sources of funds come from their overseas head offices or other branches. The ‘‘new-type’’ banks include Internet banks, such as Japan Net Bank, Limited and Sony Bank Inc., and specialized banks, such as IY Bank Co., Ltd., operated by Ito-Yokado Co., Ltd., a supermarket operator. Japan’s long-term credit banks and trust banks have been engaged primarily in providing long-term loans to the Japanese industry, principally with funds obtained from the issue of debentures in the case of the long-term credit banks and beneficiary certificates in the case of the trust banks. Other banks also make long-term loans. Certain other private-sector financial institutions in Japan, including agricultural and marine cooperative financial institutions, credit associations and credit unions, are mainly engaged in making loans to small businesses and individuals. Another distinctive element of the Japanese banking system is the role of the postal savings system. Postal savings deposits are gathered through the network of post offices throughout Japan. The Japan Post Law and three other related laws were promulgated on July 31, 2002, and as a result, Japan Post took over postal services, including postal savings, as of April 1, 2003. The postal savings system offers a variety of types of deposits, at interest rates that are set by Japan Post in accordance with the policy of determination of interest rates approved by the Minister of Internal Affairs and Communications with some reference to the market-based interest rates of

115 the private-sector banks. The funds are used to finance various government activities and investments in the public sector. As of April 30, 2005, the balance of deposits with the postal savings system was approximately ¥213.5 trillion, representing approximately one-third of all household deposits in Japan. Since October 2003, issues relating to the privatization of postal services have been discussed at the Council on Economic and Fiscal Policy (the ‘‘Council’’), an organization set up by the Cabinet Office in January 2001 with the aim of strengthening prime minister’s political leadership in relation to economic and fiscal policies. The Council published a progress report on April 26, 2004, which set forth major issues under discussion by the Council regarding the privatization of postal services (the ‘‘Postal Services Report’’). In connection with postal savings, the Postal Services Report suggests, among other things, that the substantial amount of money held by Japan Post should be treated the same as the money held in the private-sector financial institutions and that public support to the postal savings newly made after privatization should be on a parity with public support to the deposits held by private-sector financial institutions. The basic policy for the privatization of postal services was adopted by the Cabinet on September 10, 2004 and the related bills were approved by the Cabinet on April 27, 2005 and forthwith submitted to the ordinary session of the Diet convening in January 2005. According to the bill that has been submitted by the Cabinet, the privatization of postal services is expected to take place in 2007. The present banking system evolved from measures adopted as part of the reconstruction of the Japanese economy after World War II. Such reconstruction, as it applied to financial markets, was initially guided by such principles as the separation between long-term and short-term financing, the separation of trust banking from other types of banking, and the separation of banking from the securities business. However, in 1992, the Financial System Reform Law was passed and removed many of the legal barriers between various segments of the financial services industry. As a result of this legislation and the subsequent modifications to the relevant laws and regulations (including those which enabled city banks themselves to engage in the trust business, effective February 2002), ordinary banks, trust banks and long-term credit banks, directly or through subsidiaries, may now engage in securities activities, and ordinary banks and long-term credit banks may engage in certain trust banking business without restrictions. In turn, securities companies may perform a full range of banking and certain trust banking functions through subsidiaries. In addition, the prohibition on bank holding companies was lifted in March 1998, and the prohibition on corporate bond issuances by ordinary banks was completely lifted in October 1999. Commencing December 1998, the barrier between banking and insurance businesses has also been gradually lifted, and now banks and insurance companies can engage in the other business through subsidiaries. Also, since April 2001, banks themselves have been permitted to sell certain insurance products, and the scope of such insurance products permitted to be sold by banks was expanded in October 2002. Further deregulation in this area (for example, a complete or partial lifting of the ban on over-the-counter sales of insurance) is now being discussed within the FSA. In addition, the injection of significant public funding into many Japanese banks during recent years has substantially increased the overall level of the national government’s ownership in the banking sector, which may produce unforeseen effects on competitive conditions, economic conditions and further deregulation in the industry.

116 SUPERVISION AND REGULATION

Japan Pursuant to the Banking Law, the FSA has the authority to supervise banks, bank holding companies and banks’ principal shareholders (being shareholders of a bank having 20% (or 15% in certain cases) or more of the voting rights of a bank) in Japan. The Bank of Japan also has supervisory authority over banks in Japan based primarily on its contractual agreements and transactions with Japanese banks. Only companies licensed by the Prime Minister are deﬁned as banks under the Banking Law, and only a kabushiki kaisha (a joint-stock corporation) with paid-up capital of ¥2 billion or more may be licensed as such.

The Financial Services Agency Scope of Supervision. The FSA has had supervisory control over the banks and bank holding companies in Japan since July 1, 2000. The FSA was established on July 1, 2000 through the integration of the Financial Supervisory Agency (which had supervisory control over banks and exercised the power of control delegated from the FRC) and the Financial System Planning Bureau of the Ministry of Finance (which had the function of planning and drafting related bills) pursuant to the Central Government Reform Fundamental Law which was enacted in June 1998. The FRC, which had controlled the Financial Supervisory Agency, was abolished in January 2001 and the authority of the FRC was transferred to the Prime Minister, who, under the Banking Law, transferred such authority to the FSA. As a result, all the functions of supervision of financial institutions were unified in the FSA, except that in cases in which systemic risk is anticipated, the Prime Minister retains the authority to take necessary measures after consulting with the Conference for Financial Crisis Countermeasures. Under the Banking Law, the FSA’s supervisory control over banks, bank holding companies and bank’s principal shareholders in Japan extends to various areas, including approval of applications for licences to operate a bank or bank holding company, approval of becoming a principal shareholder, approval of reductions in capital, approval of changes of corporate name, approval of the establishment or closure of overseas offices, approval of establishment or acquisition of certain subsidiaries and acquisition of more than 5% of the voting rights in Japanese companies other than subsidiaries, approval of mergers, corporate splits or business transfers, and approval of dissolutions or discontinuations of business by existing banks. The FSA also has the authority to revoke banking licences or to instruct Japanese banks to suspend their business or to remove directors if such banks violate laws, other regulations or their articles of incorporation or commit acts contrary to public policy and, in the case of Japanese banks which are in financial difficulty, to direct such banks to hold certain property in Japan for the protection of depositors and to issue such other orders as it may deem necessary. Under the ‘‘prompt corrective action’’ (‘‘PCA’’) system, the FSA may take certain corrective actions in the case of capital deterioration of financial institutions. These actions include (i) requiring a financial institution to formulate and implement reform measures, (ii) requiring it to reduce its assets or take other specific actions and (iii) issuing an order suspending all or part of its business operations. The Ministry of Finance and the FSA have, in the past several years, introduced a number of deregulatory measures into the banking sector in Japan, as well as measures to increase the transparency of the regulatory process, including the following: Credit Limit. The Banking Law restricts the aggregate amount of loans, guarantees and capital investments to any single customer for the purposes of avoiding excessive concentration of credit risks and promoting a fair and extensive utilization of bank credit. The limit applicable to an ordinary bank in respect of aggregate exposure by such bank to any single customer is established by a cabinet order and by the Banking Law, and is currently 40% (or 25% if such customer is a principal shareholder of the bank) of such bank’s total qualifying capital in respect to aggregate exposure to any single customer including certain of such customer’s affiliates or 25% (or 15% if such customer is a principal shareholder of the bank) of such bank’s total qualifying capital in respect to aggregate exposures to any single customer not including such customer’s affiliates. The same restriction applies to a bank group on a consolidated basis. The aggregate exposure by a bank group (the bank, its subsidiaries and certain affiliates) to a single customer and a customer including certain of such customer’s affiliates is 25% and 40%, respectively (or 15% or 25%, respectively, if such customer is a principal shareholder of the bank), of the total qualifying capital of such group companies.

117 Disclosure. Under the Banking Law, banks and bank holding companies are required to disclose their non- and under-performing loans (consolidated and non-consolidated) as ‘‘risk-monitored loans’’. Risk-monitored loans are classified under the Banking Law into four categories: (i) bankrupt loans, (ii) non-accrual loans, (iii) past due loans (three months or more) and (iv) restructured loans. Banks and bank holding companies are required to submit annual reports to the FSA on their business including the amount of such loans. Also, as to the corporate disclosure as a whole, banks and bank holding companies are required to disclose on an annual basis their financial statements consisting of the balance sheet and income statement, and the explanatory documents regarding their business and asset conditions, each prepared under the Banking Law both on a non-consolidated and consolidated basis. In addition, independent of the Banking Law disclosure regulations, the Financial Reconstruction Law requires banks to disclose not only their loans but also their other problem assets. Under the Financial Reconstruction Law, assets are classified into four categories: (i) bankrupt and quasi-bankrupt assets, (ii) doubtful assets, (iii) substandard loans and (iv) normal assets. Generally, bankrupt and quasi-bankrupt assets correspond to the total of bankrupt loans and the lower tier of the non-accrual loans (the borrowers of which are effectively bankrupt) under the Banking Law disclosure. Doubtful assets generally correspond to the higher tier portion of the non-accrual loans (the borrowers of which are not, but have the potential to become, bankrupt). The substandard loans generally correspond to the total of the restructured loans and past due loans (three months or more). Bankrupt and quasi-bankrupt assets and doubtful assets also include non-loan assets, such as securities lending, foreign exchange, accrued interest, advanced payments and customers’ liabilities for acceptances and guarantees. In addition, the FSA has announced that it will provide for more rigorous assessment of assets, as follows. ) Japanese GAAP previously allowed for the calculation of reserves to be based upon estimated discounted cash flows of loans to ‘‘borrowers requiring caution’’ and ‘‘potentially bankrupt borrowers’’. However, in October 2002, the FSA required the calculation of reserves on loans to large borrowers classified as ‘‘substandard loans’’ to be based upon projected future recoveries discounted at the loan’s original interest rate. Many major Japanese banks previously recorded loan loss reserves for such loans based on historical loan loss experience and the change may affect their loan loss reserve level. The Bank elected to calculate loan loss reserves for certain large substandard borrowers based on their estimated discounted cash flows; ) in January 2003, the FSA began to implement a mechanism to harmonize the major banks’ classification of troubled large borrowers; ) debt for equity swaps are valued based upon the fair value of stock received in the swap regardless of the timing or structure of the swap transaction; ) the FSA requires the use of independent real estate appraisers to appraise real estate held by banks as collateral in certain cases; and ) Furthermore, in October 2003 the FSA requested major banks to enhance their disclosure of information on deferred tax assets, which form an important part of capital, in respect of the basis for inclusion as deferred tax assets of taxable income over the past five years, projected amount of actual net business profit assumed in the estimation, projected amount of net income before taxes assumed in the estimation and estimated amount of taxable income before adjustments. Deferred Tax Assets. On June 22, 2004, the FSA issued a Report of the Working Group on Regulation of Capital Adequacy Ratio, which is one of the subcommittees of the Financial System Council. The Report relates to issues regarding the regulatory treatment of deferred tax assets in calculating capital adequacy ratios and other issues related to capital adequacy of banks. The Report expresses a broad support for the introduction of certain regulations on proper treatment of deferred tax assets in calculating capital adequacy ratios, while emphasizing the necessity to consider matters such as the effect of such modification on the Japanese financial system, and consistency with the governmental macro-economic policy and relationship with the tax system. The Report also draws attention to the fact that the major banks are currently aiming to reduce their ratio of non-performing loans to total outstanding loans by half by the end of March 2005 as compared to March 2002 under the FSA’s Program, and recommends that any modification of regulations relating to deferred tax assets should occur after the banks achieve such aims; the Report also recommends that any such modifications should be gradual and with

118 transitional measures. However, the Report does not set out any concrete measures for implementation, rather it calls for the FSA to further examine the situation and make a decision based upon the Report. In December 2004, the FSA announced the ‘‘Program for Further Financial Reform’’. In this Program, the FSA stated its aim to study the introduction of an appropriate regulatory treatment of deferred tax assets in calculating banks’ capital adequacy ratios. In March 2005, the FSA announced the Work Schedule for the Implementation of the Program for Further Financial Reform. In this schedule, the FSA stated that the rules on capital adequacy ratios, including the contents of regulations and the timing for implementation were aimed to be revised during the first half of the financial year 2005. See ‘‘Supervision and Regulation — FSA Program for Further Financial Reform’’. Reserves. Based on the Accounting Standards for Banks issued by the Japanese Bankers Association, the Bank, for statutory purposes, establishes three categories of reserves: (i) general reserves, (ii) specific reserves and (iii) reserves for specific overseas loan losses. The general reserves are established to account for an amount at a certain rate of the aggregate amount of certain outstanding loans of the Bank at each balance-sheet date. For Japanese taxation purposes, the amount credited to such reserve account by recognizing it as an expense will generally be treated as a tax-deductive reserve, provided it is not more than the amount computed on the basis of the Bank’s average loan loss ratio for the previous three fiscal years. Specific reserves are established for specific loans, the repayment of which is considered materially doubtful, in the same amounts as the amount of the expected losses on such loans. Reserves for specific overseas loan losses are maintained to provide for possible losses on loans to certain countries which are classified as restructuring countries. Due to the introduction of the new self-assessment rule of the credit quality of the assets of financial institutions, including the Bank, as well as the PCA system, the Bank may establish such amount of any reserves for its loan portfolio as may be considered adequate by the Bank at a balance sheet date. In January 1999, the FRC announced its guidelines concerning write-offs and reserves in respect of problem loans required of the large banks, which applied for capital injection pursuant to the Financial Function Early Strengthening Law and Financial Reconstruction Law. Thereafter, the FSA issued operating guidelines, the Financial Inspection Manual, on inspection of financial institutions including credit-risk management and the standards concerning write-offs and reserves. Although the Financial Inspection Manual itself does not have the force of law, the FSA inspection of banks is based on the Manual. As a result of such inspection, the FSA may exercise its authority over banks under the Banking Law to suspend or terminate their banking business. The FSA also issued non-binding guidelines to clarify their interpretation and enforcement policies of the Banking Law and related regulations. It also discloses the results of its investigations of banks and other financial companies. Examination of Banks. The Banking Law authorizes the FSA to inspect banks and bank holding companies in Japan at any time with any frequency but in practice inspections occur once a year, conducted by officials from the Inspection Department of the FSA. By evaluating banks’ systems of self-assessment, auditing their accounts and reviewing their compliance with laws and regulations, the FSA monitors the financial soundness of banks, including the status and performance of their control systems for business activities. The inspection of banks is performed pursuant to a Financial Inspection Manual published by the FSA which emphasizes the need for: (i) each bank’s self-assessment rather than assessment based on the advice of the government authority; and (ii) risk management made by each bank instead of a mere assessment of its assets. The FSA also conducts special inspections in addition to the regular inspections described above in order to supplement the general inspections. In October 2001, the FSA conducted its first special inspection. The FSA subsequently conducted special inspections of all major banks, including the Bank, during the fiscal years ended March 31, 2003 through March 31, 2005, together with follow-up sessions thereon. The special inspections are intended to ensure that banks properly classify their major borrowers to reflect credit risk accurately through ‘‘real-time’’ inspections conducted by the banks as close in time as practicable prior to the classification of the relevant borrowers.

119 From January through March of 2003, the FSA conducted a special inspection of the major 11 banks, including the Bank, as to how banks should properly classify their borrowers according to the credit risks. The inspection covered 167 borrowers of which 27 were downgraded as against the classifications given by the banks as of September 2002, and reclassified a total of 7 borrowers as ‘‘potentially bankrupt’’ or worse. The FSA conducted a further round of special inspections for the fiscal year ended March 31, 2004 focusing again on 11 major Japanese banks, including the Bank. The inspection this time covered 133 borrowers across the 11 banks. As a result of the further special round of inspections, the FSA downgraded a total of 26 borrowers (compared to the classifications given by such banks as of September 2003) and reclassified a total of 22 borrowers as ‘‘potentially bankrupt’’ or worse. In the six months ended September 30, 2004, the FSA conducted further special inspections covering 135 borrowers. As a result of these special inspections, 39 borrowers were downgraded from the classification given to them by the banks as of March 2004 and 31 borrowers were reclassified as ‘‘potentially bankrupt’’ or worse. In April 2004, the FSA announced that it would introduce new, additional inspections intended to focus on banks’ credit risk management in relation to large borrowers. These new inspections will target major banks whose credit risk management for large borrowers is considered to be insufficient, based on the results of the FSA’s examinations of banks’ reconstruction plans during special inspections and FSA follow- up interviews conducted in response to reports submitted by the banks under the Banking Law. In addition, the Ministry of Finance conducts examinations of banks in relation to foreign exchange transactions under the Foreign Exchange and Foreign Trade Law. Such examinations are conducted normally once every few years. Furthermore, the Bank of Japan conducts examinations of banks similar to those undertaken by the FSA. See ‘‘Supervision and Regulation — Japan — The Bank of Japan’’.

Deposit Insurance System In 1971, the Deposit Insurance Law was enacted in order to protect depositors in cases where ﬁnancial institutions fail to meet their obligations. The DIC was established to implement the law. The DIC was reformed, as part of the Japanese government’s plan to liquidate the jusen in accordance with legislation enacted in June 1996, by the creation of a special fund amounting to ¥1 trillion and the increase of its paid-up capital of ¥455 million to ¥5.45 billion. Currently the DIC is supervised by the FSA. As from April 2005, the DIC receives annual insurance premiums from ensured banks equivalent to 0.115% of the deposits held in current, savings and sundry accounts and 0.083% of other deposits. Premiums held by the DIC may be either deposited at ﬁnancial institutions or used to purchase marketable securities. The insurance money may be paid out in case of a suspension of repayments of deposits, banking licence revocation, dissolution or bankruptcy of a bank. Pay outs are generally limited to a maximum of ¥10 million of principal amount together with any interest accrued with respect to each depositor. Until March 31, 2005, however, the full amount of deposit exceeding the maximum of ¥10 million was repaid with respect to the current, savings and sundry accounts. After April 1, 2005, only non-interest bearing deposits that are redeemable upon demand and used by depositors primarily for payment and settlement functions are protected in full. City banks (including the Bank), regional banks including member banks of the second association of regional banks, long-term credit banks, trust banks, credit associations, credit cooperatives and labor banks participate in the deposit insurance system on a compulsory basis.

The Bank of Japan The Bank of Japan is the central bank of Japan and serves as the principal instrument for the execution of Japan’s monetary policy. The principal measures by which the Bank of Japan implements monetary policy are the adjustment of its discount rate, its operations in the open market and the imposition of deposit reserve requirements. All ordinary banks in Japan maintain deposits with the Bank of Japan and rely substantially upon obtaining borrowings from, and rediscounting bills with, the Bank of Japan. Moreover, all banks in Japan maintain current accounts under agreements with the Bank of Japan pursuant to which the Bank of Japan is entitled to supervise, examine and audit the banks. The supervisory functions of the Bank of Japan enable it to seek to execute monetary policy effectively, while the FSA’s supervisory practices have the purpose of

120 maintaining the sound operations of banks in Japan and of promoting the security of depositors. The Bank of Japan examinations are normally conducted once every few years, and involve such matters as examining asset quality, risk management and reliability of operations. Through these examinations, the Bank of Japan seeks to identify problems at an early stage and give corrective guidance where necessary. In June 1997, the law establishing the Bank of Japan was amended with the intention of granting greater independence to the Bank of Japan with respect to, inter alia, the setting of interest rates and giving additional power to aid ﬁnancial institutions with liquidity problems. The amendment came into effect on April 1, 1998. Under the amended law, the Bank of Japan’s examination of banks is given a more transparent statutory basis.

The Securities and Exchange Law Article 65 of the Securities and Exchange Law was intended to clearly separate the commercial banking and securities business, which is defined to include dealing, brokerage, underwriting and distribution of securities, in Japan. Under this law, banks, including the Bank, could not engage in any securities business except for certain approved activities. The Securities and Exchange Law now allows banks to underwrite and deal in JGBs, Japanese local government bonds, Japanese government guaranteed bonds, commercial paper and certain bonds issued by special purpose companies; to sell beneficiary certificates of security investment trusts and investment securities in a security investment company; and to engage in listed or over-the-counter securities derivatives transactions as well as to engage in the securities intermediary business, which has been permitted since December 1, 2004, each subject to the registration with or the approval of the FSA as, the case may be. The Financial System Reform Law (which came into effect in April 1993) permits financial institutions and securities firms to compete through subsidiaries. Banks and other depository institutions are now allowed to set up securities subsidiaries and, within limits, compete in the securities industry. The Financial System Reform Act (the ‘‘Reform Act’’) which came into effect in October 1999, made further substantial amendments to the Securities and Exchange Law, the Banking Law and related laws and abolished the provision in the Financial System Reform Law which had prohibited bank-owned securities subsidiaries from engaging in the securities business involving equity securities. In addition, some of the restrictions on the activities of a bank-owned securities subsidiary and its parent bank, so-called ‘‘fire wall restrictions’’ which were aimed at preventing such subsidiary’s unfair use of its parent bank’s business relationship with, and information of, its customers, were lifted or relaxed. The newly enacted fire wall restrictions include (i) a restriction preventing a bank-owned securities subsidiary from becoming a lead manager for the offering of corporate bonds where its parent bank is involved, (ii) prohibitions against joint visits to customers without disclosing the fact that a bank-owned securities company is an entity separate from its parent bank and (iii) the prohibition against the joint use of computer information processing systems by a bank-owned securities company and its parent bank. The Bank, as well as SMFG which is a listed company, is required to file an annual ‘‘Securities Report’’ for each fiscal period with the Kanto Local Finance Bureau (authorized by the FSA). Such annual ‘‘Securities Reports’’ are supplemented by semi-annual and extraordinary reports, which must be prepared on a consolidated basis, pursuant to the Securities and Exchange Law.

Protection of Personal Information In May 2003, the Personal Information Protection Law was promulgated. The Personal Information Protection Law imposes various requirements on businesses that use databases containing personal information, such as appropriate custody of such information and restrictions of information sharing with third parties. The Bank is subject to the Personal Information Protection Law since it uses databases that contain the personal information of its customers. The above requirements became effective on April 1, 2005 upon which date the Personal Information Protection Law became fully effective.

Other Deregulation In connection with the so-called Japanese ‘‘Big Bang’’ proposals announced in November 1996 by the then current prime minister of Japan, various proposals have been made by the government and other bodies for the

121 further deregulation of the Japanese financial market and the improvement of the soundness of Japanese financial institutions. Recent deregulations include: (i) Effective October 1999, city banks were permitted to issue straight senior bonds following the abolishment of the Ministry of Finance’s operational regulations, which had prohibited city banks from issuing such bonds. Also, effective as of June 30, 1997, ordinary banks are able to issue subordinated bonds. (ii) Effective as of April 1, 1998, the restrictions were lifted on the maximum maturities of floating rate time deposits and on maturities of negotiable certificates of deposit. (iii) Beginning in February 2002, the restrictions on the business of trust banking subsidiaries and the trust business of banks were relaxed so that banks and trust banking subsidiaries could engage in almost all aspects of the trust business except for brokerage/agency of sales/lease of real estate, certain other real estate-related businesses, estate administration and certain investment advisory businesses. (iv) The amendment of the Insurance Business Law in April 2001, permitted banks to offer a variety of insurance products, such as insurance products related to housing loans, in over-the-counter transactions. The scope of permitted over-the-counter transactions was further expanded in October 2002 to include private pensions. (v) From September 2002, banks and their securities subsidiaries were permitted to jointly use the same premises. (vi) From December 2004, banks will be permitted to solicit customers for securities trades and intermediate the resulting trades for securities companies.

Bank Holding Company Although bank holding companies generally are subject to the shareholding restrictions established under the Anti-Monopoly Law, the Anti-Monopoly Law provision which prohibits banks from holding more than 5% of voting rights of other companies does not apply to bank holding companies. However, the Banking Law prohibits a bank holding company and its subsidiary, on aggregated basis, from holding more than 15% of the voting rights of certain types of companies which are not permitted to become subsidiaries of bank holding companies.

Prompt Corrective Action and Self-Assessment Pursuant to amendments to the banking laws enacted in June 1996, the PCA system has been effective as from April 1, 1998. Under such banking laws, as so amended, and regulations thereunder, the FSA may, depending upon the extent of the capital deterioration of a financial institution, take certain corrective actions such as requiring a financial institution to formulate and implement reform measures, or requiring it to reduce assets or take other specific actions or suspend all or part of its business operations. The PCA system also requires financial institutions to establish ‘‘self-assessment’’ programs. Financial institutions, including the Bank, are required to analyze their assets giving due consideration to accounting principles and other applicable rules and to classify their assets into various categories taking into account the likelihood of repayment and the risk of impairment to the value of the assets. These classifications will determine whether an addition to or reduction in reserves or write-offs is necessary. Based on the amendments to the banking laws referred to above, JICPA issued new guidelines for the accounting practices for Japanese banks in April 1997. Pursuant to such guidelines based on the outcome of each financial institution’s self-assessment, substantially all of a bank’s loans and other claims on customers are to be analyzed by classifying obligors into five categories: (i) normal borrowers, (ii) borrowers requiring caution, (iii) potentially bankrupt borrowers, (iv) effectively bankrupt borrowers and (v) bankrupt borrowers. The reserves for possible loan losses are then calculated based on such obligor categories. Also in 1997, in connection with the PCA system, the Ministry of Finance issued guidelines on the Ministry of Finance’s examination of bank assets. Such guidelines require banks to classify their assets not only by the five categories of obligor described above but also by four categories of quality. The Bank has adopted its own internal guidelines for self-assessment which conform to such guidelines currently in effect and comply with the requirements of the PCA system.

122 Under the PCA system, if the capital ratio of a bank or a bank holding company with international operations becomes less than 8% but not less than 4%, the FSA may require such bank or a bank holding company to submit and implement a capital reform plan. If the capital ratio of a bank with international operations declines to less than 4% but not less than 2%, the FSA may order such bank to (i) submit and implement a plan for improving its capital; (ii) prohibit or restrict the payment of dividends to shareholders or bonuses to officers; (iii) reduce its assets or restrict the increase of its assets; (iv) prohibit or restrict the acceptance of deposits under terms less advantageous than ordinary terms; (v) reduce the business of some offices; (vi) eliminate some offices other than the head office or (vii) take certain other actions. If the capital ratio of a bank with international operations declines to less than 2% but not less than 0% the FSA may order such bank to conduct any one of the following: (i) an increase of its capital; (ii) a substantial reduction in its business; (iii) a merger; or (iv) abolishment of its banking business. If the capital ratio of a bank with international operations declines to less than 0%, the FSA may order such bank to suspend all or part of its business. If the capital ratio of a bank holding company that holds a bank with international operations declines to less than 4%, the FSA may take actions similar to the foregoing.

Prompt Warning System A prompt warning system was introduced on December 10, 2002 to enable the FSA to take precautionary measures to maintain and promote the sound operations of financial institutions even before those financial institutions become subject to the PCA system. These measures require a financial institution to reform: (i) profitability, if deemed necessary to improve profitability based upon a fundamental profit index; (ii) credit risk management, if deemed necessary to reform management of credit risk based upon the degree of large credits’ concentration and other situations, (iii) stability, if deemed necessary to reform management of market and other risks based upon, in particular, the effect of securities price fluctuations; and (iv) cash flow management, if deemed necessary to reform management of liquidity risks based upon deposits trends and level of reserve for liquidity.

Resolutions of Failed Financial Institutions The Deposit Insurance Law was amended, effective April 2001, to create a permanent system for resolving failed financial institutions. This system superceded the framework for injecting public funds into financial institutions provided under the Financial Reconstruction Law, except for banks that applied for funds before March 31, 2001, as well as the framework for treating failed financial institutions set forth in the Financial Reconstruction Law.

(i) General Framework of Resolution Procedure. The basic method of resolution for a failed financial institution under the Deposit Insurance Law is cessation of the business by paying insurance money to the depositors up to the principal amount of ¥10 million plus accrued interest per depositor (‘‘pay-off’’) or transfer of the business to another financial institution with financial ‘‘aid provided within the cost of pay-off’’. Under the Deposit Insurance Law, transfer of business is regarded as the primary method. In order to effect a prompt transfer of business, the following framework has been established: (1) A Financial Reorganization Administrator will be appointed by the Commissioner of the FSA and will take control of the management and assets of the failed financial institution. Such administrator is expected to efficiently search for a financial institution which will succeed the business of such failed institution. (2) In the case where no such successor financial institution can be immediately found, a ‘‘bridge bank’’ will be established by the DIC for the purpose of temporarily maintaining the operations of the failed financial institution, and the bridge bank will seek to transfer the failed financial institution’s assets to another financial institution or dissolve the failed financial institution.

123 (3) In order to facilitate or encourage a financial institution to succeed a failed business, financial aid may be provided by the DIC to any successor financial institution to enhance its capital after succession or to indemnify the loss incurred by such succession.

(ii) Addressing Potential Financial Crisis. Where it is anticipated that the failure of a financial institution may cause an extremely grave problem in maintaining the financial order in Japan or the region where such financial institution is operating, the following exceptional measures may be taken after consulting with the Conference for Financial Crisis Countermeasures: (1) The DIC may subscribe for shares or other instruments issued by the relevant financial institution and require such institution to submit a plan to regain soundness in its management to the DIC. (2) Once such financial institution fails, financial aid exceeding the cost for pay-off may be available to such institution. (3) In the case where the failed institution is a bank and the problem cannot be avoided by the measure mentioned in (2) above, the DIC may acquire all of the shares of such bank. In order to fund the above-mentioned activities, the DIC may make borrowings from financial institutions or issue bonds which may be guaranteed by the government. As an example, in May 2003, Resona Holdings Inc., the bank holding company for Resona Bank, Limited, a bank only with Japanese domestic operations, received orders from the FSA to submit and implement a plan for improving its capital based on the reason that the capital ratio of Resona Bank declined to less than 4% which is the minimum capital ratio standard for a bank with only Japanese domestic operations. On June 10, 2003, the FSA announced that Resona Bank had made an application for recapitalization and submitted a plan to regain soundness in its management under the amended Deposit Insurance Law and that the FSA had decided to subscribe for the shares of Resona Bank (subsequently to be converted into shares of Resona Holdings) in an aggregated amount of ¥1.96 trillion. See ‘‘— Deposit Insurance System’’. In November 2003, the Japanese government announced its decision to take control of The Ashikaga Bank, Ltd., one of Japan’s regional banks, under the Deposit Insurance Law in response to a report submitted by Ashikaga Bank stating that the bank would potentially become insolvent. The semi-annual financial statements of Ashikaga Bank as of September 30, 2003 indicated that Ashikaga Bank was effectively insolvent, as its liabilities exceeded its assets due to, among other reasons, the recognition of no deferred tax assets. Accordingly, the DIC acquired all of Ashikaga Bank’s stock on December 1, 2003. Ashikaga Bank, now being temporarily nationalized, continues its business. The Japanese government is expected to search for a financial institution that will succeed the business of Ashikaga Bank under the Deposit Insurance Law.

Resolution and Collection Corporation The RCC was established in April 1999 as a wholly-owned subsidiary of the DIC through the margin of the HLAC, which had engaged in the management of mortgages assigned from the jusen corporations, and the Resolution and Collection Bank, which had engaged in the collection of loan receivables assigned from failed financial institutions. The RCC is permitted to purchase under-performing loan receivables from not only the failed financial institutions but also from healthy financial institutions in order to increase the credibility of the Japanese financial system. The RCC is also specialized in the purchase and collection of under-performing loan receivables. The DIC provides guarantees to the RCC to finance the RCC’s business and to compensate RCC for losses it incurs.

Restriction on Shareholdings The Law Concerning Restriction on Shareholdings by Banks, which became effective on January 4, 2002, requires Japanese banks (including bank holding companies) and their qualiﬁed subsidiaries to limit the aggregate market value (excluding unrealized gains, if any) of their holdings in equity securities to an amount equal to 100% of their consolidated Tier I capital, with certain adjustments, from September 30, 2006 in order to reduce

124 exposure to stock price fluctuations. Treasury shares, shares issued by subsidiaries, shares not listed on any stock exchange or not registered with any over-the-counter market, shares held as trust assets, and shares acquired through debt-for-equity swaps in restructuring transactions are excluded from this limitation. For the purposes of the above requirement, a bank’s ‘‘holdings in equity securities’’ is defined as the sum of (i) the amount of equity securities owned the bank and its consolidated subsidiaries and (ii) with regard to the equity securities owned by non-consolidated subsidiaries, the product of (x) the amount of equity securities owned by the bank’s non-consolidated subsidiaries, multiplied by the product of (y) such bank’s minority interests in the non-consolidated subsidiaries’ profits and losses calculated according to the equity method, divided by (z) the total amount of such profits and losses. Because of these restrictions, banks will have to dispose of a considerable portion of their equity holdings, including cross holdings, by the end of September 2006. The Banks’ Shareholding Purchase Corporation has been established as a vehicle to purchase equity securities from banks. The Bank of Japan also purchased stock from commercial banks required to dispose of equity holdings. Banks’ Shareholdings Purchase Corporation. In order to prevent a widespread decline in stock prices due to such sales, the Banks’ Shareholdings Purchase Corporation was established through the contribution of more than ¥10 billion by 128 financial institutions. The Banks’ Shareholdings Purchase Corporation, which commenced operations in February 2002, will purchase stocks from banks at market prices until September 30, 2006. Purchases are made through either the ‘‘general account’’ or the ‘‘special account.’’ Purchase through the general account are made only when the Banks’ Shareholdings Purchase Corporation will resell the purchased stocks immediately. The Banks’ Shareholdings Purchase Corporation solicits a bank to sell its shares in response to a request from those that wish to purchase stocks from the Banks’ Shareholdings Purchase Corporation, such as securities firms creating an exchange-traded fund or business enterprises desiring to buy back their own shares. There is no limit on the maximum amount of shares to be purchased through the general account overall or from each bank. Purchases through the special account are made upon application from banks, to which the following rules apply. The Banks’ Shareholdings Purchase Corporation’s special account operations are funded through loans from private banks or the issuance of bonds up to ¥2 trillion. The Banks’ Shareholdings Purchase Corporation may only purchase stocks of issuers listed on a stock exchange or registered with an over-the-counter market and with a credit rating of BBB- or higher. The Banks’ Shareholdings Purchase Corporation places stocks purchased through the special account into trust and such stocks will be resold within ten years. The maximum aggregate amount of funds to be used to purchase shares through the special account is ¥2 trillion. Also, each bank may sell to the special account no more than the total number of shares it held on March 31, 2001. The Banks’ Shareholdings Purchase Corporation will be dissolved on April 1, 2017 or on the earliest date after April 1, 2007 when all of the shares purchased by it have been resold. As of May 31, 2005, the Banks’ Shareholdings Purchase Corporation had purchased an aggregate amount of ¥1,564 billion worth of shares through special accounts. The Japanese government may indemnify the losses, if any, of the Banks’ Sharehold- ings Purchase Corporation at the time of its dissolution. In addition, in order to further facilitate the disposition of shares by banks and other financial institutions, the Bank of Japan purchased shares, subject to certain conditions, in accordance with its policy adopted on October 11, 2002. Under such policy, the Bank of Japan announced that it had purchased ¥2,018 billion of stock during the period from November 29, 2002 through September 30, 2004, on which date the BOJ announced that it had ceased purchasing shares under such policy and that it would not resell the shares so purchased until the end of September 2007.

Capital Adequacy In 1988, the Basel Committee, comprised of representatives of the Group of Ten (‘‘G-10’’) countries (including Japan) and Luxembourg, issued the Basel Accord. The Basel Accord, which was endorsed by the G-10 Central Bank Governors, established a risk-adjusted asset ratio as the principal measure of capital adequacy. This ratio compares a bank’s capital base, which is divided into two tiers, to its assets and off-balance sheet exposures

125 adjusted according to broad categories of relative credit risk. The Basel Accord sets minimum international risk-adjusted asset ratios, but national banking regulators are permitted to set additional ratios.

The FSA Capital Adequacy Guidelines closely follow the risk-adjusted approach proposed by the Basel Committee and are intended to further strengthen the soundness and stability of Japanese banks. Under the risk-based capital framework of the FSA Capital Adequacy Guidelines, balance sheet assets and off-balance sheet exposures are assessed according to broad categories of relative risk, based primarily on the credit risk of the counterparty, country transfer risk and the risk regarding the category of transactions. Five categories of risk weights (0%, 10%, 20%, 50% and 100%) are applied to the different types of balance sheet assets. Off-balance sheet exposures are taken into account by applying different categories of ‘‘credit conversion factors’’ to arrive at credit-equivalent amounts, which are then adjusted in the same manner as balance sheet assets involving similar counterparties (except that the maximum risk weight is 50% for exposures relating to derivatives, such as foreign exchange and interest rate swap or option contracts). In June 2004, the Basel Committee announced amended rules with respect to minimum capital requirements, including the amended risk weight calculations, the inclusion of operational risk, and the introduction of the internal rating systems, the supervisory review and the market discipline through effective disclosure. The amendments adopt variable risk weights according to the credit rating given to the obligor of the risk assets. The better the credit rating of an obligor, the less the risk weight applicable to the risk assets owed by it would be. Also, the new rules require financial institutions to establish an internal risk management system, to make thorough disclosure of relevant information and to set an appropriate reserve against the operational risk based upon fair evaluation thereof. These amendments do not change the minimum capital adequacy ratio of 8% applicable to banks with international operations (including the Bank). Currently, these new rules are scheduled to take effect in Japan from the end of the fiscal year ending March 31, 2007, except for the introduction of alternative variable risk weights, which is scheduled to take effect from the end of the fiscal year ending March 31, 2008.

With regard to capital, the FSA Capital Adequacy Guidelines are in accord with the standards of the Basel Accord for a target minimum standard risk-adjusted capital ratio of 8% (at least half of which must consist of core capital (Tier I), or a risk adjusted core capital ratio of 4%) on both a consolidated and non-consolidated basis. The FSA Capital Adequacy Guidelines place considerable emphasis on tangible common stockholders’ equity as the core element of the capital base, with appropriate recognition of other components of capital.

Capital is classified into three tiers, referred to as core capital (Tier I), supplementary capital (Tier II) and junior supplementary capital (Tier III). Core capital generally consists of stockholders’ equity less any recorded goodwill and amortization of consolidation difference. Supplementary capital generally consists of (i) general reserves for possible loan losses (subject to a limit of 1.25% of total risk-adjusted assets and off-balance sheet exposures), (ii) 45% of (a) the unrealized gains on investments in ‘‘other securities’’ (i.e., securities that are not those held for trading purpose, held-to-maturity bonds or shares in subsidiaries or certain affiliates) and (b) the unrealized appreciation on land, (iii) the balance of subordinated perpetual debt and (iv) the balance of subordinated term debt with original maturity of over five years and limited life preferred equity (up to a maximum of 50% of core capital). Junior supplementary capital consists of the balance of subordinated term debt with original maturity of at least two years. Junior supplementary capital may be counted, subject to certain conditions, according to the amount of market risk or the amount of core capital.

Supplementary capital may be counted up to the amount equivalent to core capital (less junior supplementary in case market risk is counted in the capital ratio calculation).

If a Japanese ﬁnancial institution, including a bank and a bank holding company, fails to maintain the required capital ratios, under the PCA system, the FSA may, depending upon the extent of capital deterioration of such institution, take certain corrective action such as requiring it to formulate and implement reform measures, or requiring it to reduce assets or take other speciﬁc actions or suspend all or part of its business operations.

From and after March 31, 1998, banks and bank holding companies are required to measure and apply capital charges in respect of their market risks in addition to their credit risks. Market risk is deﬁned as the risk of

126 losses in on- and off-balance-sheet positions arising from movements in market prices. The risks subject to this requirement are: ) The risks pertaining to interest rate related instruments and equities in the trading book; and ) Foreign exchange risk and commodities risk throughout the bank. Additionally, following the FSA’s Program announced in October 2002, the FSA introduced in April 2003 a requirement, applicable to ﬁscal years ending on and after March 31, 2003, that all major Japanese banks and bank holding companies have internal controls relating to the calculation of capital adequacy ratios reviewed by external auditors for the purpose of the yearly business report required under the Banking Law.

Public Money Injection and Rationalization Plan The Law Concerning Emergency Measures for Stabilization of Financial Functions (Law No. 5 of 1998) and its successor, the Law Concerning Emergency Measures for Early Rehabilitation of Financial Functions (Law No. 143 of 1998, as amended) were enacted in February and October of 1998, respectively. The purpose of the laws was to prevent the failure of financial institutions by promoting prompt dispositions of bad debts and to provide measures for strengthening the capital structure of financial institutions. To achieve those targets, both laws provided that, in additional to its normal operations, the Resolution and Collection Bank (which has since been merged into the RCC) could purchase preferred stock or subordinated debts issued by, or extend a subordinated loan to, financial institutions. Such actions are subject to governmental approval of a rationalization plan submitted by each financial institution applying for this type of injection of a public funds. In the rationalization plan, the financial institution must set forth specific remedial measures it will take to restructure its management. A report verifying the result of the undertakings pursuant to the rationalization plan must be submitted to the supervisory authority semi-annually until such securities or loans have been fully redeemed or repaid. If there is considerable discrepancy between the rationalization plan and actual performance, the FSA may take administrative action, including the issuance of a business improvement order requiring the subject bank to submit and implement a business improvement plan that indicates concrete measures for achieving the targets. To date, injection of public funds into financial institutions, including the former Sakura Bank and Sumitomo Bank, have occurred twice, in March of 1998 and 1999. On September 30, 1999, the FRC announced their policies (which were clarified by the announcements made by the FSA on June 11, 2001 and July 30, 2004) concerning the administrative actions to be taken to ensure the fulfillment of the rationalization plan. Among other administrative actions stated in such policies, the FSA states that it will consider issuing a business improvement order requiring the subject bank to submit and implement a business improvement plan that indicates concrete measures for achieving the targets and implementing those measures when (i) the targeted ratio of banking profit to stockholders’ equity or the targeted net income of the bank in the rationalization plan and the actual result differs for 30% or more and the creditability of the bank in the market is deteriorating or (ii) the targeted ratio of banking profit to stockholders’ equity or the targeted net income of the bank in the rationalization plan and the actual result differs for 70% or more. On August 1, 2003, the FSA issued administrative orders against 15 banks and bank holding companies including SMFG, that have received public funds and recorded net income substantially below their planned net income for the fiscal year ended March 31, 2003. The orders included measures requiring the submission, implementation and reporting on business improvement plans and were designed to ensure that these banks would attain their targeted net income in their rationalization plans for the fiscal year ended March 31, 2004. In August 2003, SMFG, submitted such a business improvement plan and has been reporting any progress on a quarterly basis since. On April 4, 2003, the FSA issued guidelines (which were amended on August 7, 2003) concerning the governance of banks to which the public injection was made. In such guideline, the FSA referred to the policies concerning the administrative actions to be taken to ensure the fulfillment of the rationalization plan stated above and also stated that it will consider issuing a business improvement plan requiring the subject bank to submit and implement a plan that includes measures such as the retirement of the representative director, revision of the

127 compensation system and cessation of payment of bonuses to the ofﬁcers. Such guideline also states the conditions under which the Japanese government may convert preferred stock of banks or bank holding companies that it owns into common stock for the purposes of enhancing corporate governance of such banks or bank holding companies. Among the considerations under which it may do so under those guidelines is the nonpayment of dividends on those preferred stocks for two consecutive years, or non-payment for one year only if followed by a partial payment of preferred dividends for the second year.

On June 14, 2004, the Strengthening Financial Functions Law was enacted in order to establish a new scheme of public money injection into financial institutions and thereby enhance soundness of such financial institutions and revitalize economic activities in the regions where they do business. The Strengthening Financial Functions Law broadens the range of financial institutions to which public money is available and facilitates preventive injection of public money into troubled financial institutions or financial institutions that are not yet troubled in order to avert the possibility of a financial crisis. The Strengthening Financial Functions Law is also different from the Special Measures Law Concerning Facilitation of Reorganization by Financial Institutions, Etc. in that, under the Strengthening Financial Functions Law, financial institutions which are not planning corporate restructuring can apply for public funds and, in case of corporate restructuring, application can be made even if certain of the entities involved in the restructuring are in financial trouble. An application for public money injection under the Strengthening Financial Functions Law needs to be made by March 31, 2008.

Law Concerning Sales, Etc. of Financial Products

As a result of a number of recent deregulatory measures in the banking and finance industry, including those described above, more financial products, including highly structured and complicated products, may now be marketed to various types of customers. In response to this, the Law Concerning Sales Etc. of Financial Products (Law No. 101 of 2000) took effect in April 2001. The Law is intended to better protect customers from incurring unexpected losses as a result of purchasing such financial products. Under this law, sellers of financial products have a duty to their potential customers to explain certain ‘‘important matters’’ (i.e., the nature and magnitude of risk involved) regarding the financial products that they sell. If a seller fails to comply with such duty, the loss in value of the purchased investment product is refutably presumed to be the amount of the customer’s loss.

Special Measures Law Concerning Facilitation of Reorganization by Financial Institutions, Etc.

The Special Measures Law Concerning Facilitation of Reorganization by Financial Institutions, Etc. came into force, in part on January 1, 2003, and in full on April 1, 2003. Under the law: (i) if a financial institution (e.g., a bank or bank holding company) prepares and submits to the relevant authority a plan to enhance the basis of its management by means of (a) certain forms of reorganization such as a statutory merger, statutory share transfer, statutory share exchange, statutory corporate split, business transfer, stock sale and purchase, or (b) certain business measures such as commencement of profitable business and abandonment of unprofitable business, and if such plan is accredited by the relevant authority, the RCC may make a capital contribution to the financial institution; (ii) in the case of a merger or transfer of the entire business of a financial institution, for one year after such merger or business transfer, the maximum amount to be covered by the deposit insurance (see ‘‘— Deposit Insurance System’’) will be ¥10 million multiplied by the number of parties to the merger or business transfer; and (iii) a financial institution will be entitled to enjoy the benefit of certain simplified procedures for the forms of reorganization described above. In June 2004, however, Article 2 of the Supplementary Provision to the Strengthening Financial Functions Law repealed the provisions on capital contributions described above in (i).

Industrial Revitalization Corp. As of April 10, 2003 the ‘‘Industrial Revitalization Corporation Law’’ came into effect. The Industrial Revitalization Corporation Law established an organization named the IRCJ that purchases from ﬁnancial institutions loans to borrowers that owe substantial debts where it is believed that such borrowers have viable business plans. Such purchases of loans were made only for a limited period until the end of March 2005. The IRCJ determined to assist 41 borrowers in reorganizing their business and operations until the end of March 2005.

128 Law Concerning Identification, Etc. by Financial Institutions To address money laundering and terrorism concerns, the Law Concerning Identification, Etc. by Financial Institutions, Etc. of their Customers, Etc. came into force on January 6, 2003. Under the law, when a financial institution enters into a transaction with a customer, such financial institution is required to identify the customer and prepare and keep records of the identity of the customer and details of the transaction as prescribed by ministerial order.

Examination and Reporting Applicable to Shareholders If necessary in order to secure the sound and appropriate operation of the business of a bank, the FSA may request the submission of reports or other materials from the bank and/or its bank holding company, or inspect the bank and/or the bank holding company, if relevant. Amendments to the Banking Law, which include new rules concerning entry into the banking business, became effective as of April 1, 2002. Under these amendments, a person who desires to hold 20% (in certain exceptional cases, 15%) or more of the voting rights of a bank is required to obtain advance approval of the Commissioner of the FSA. In addition, the FSA may request the submission of reports or materials from, or may conduct an inspection of, any principal shareholder who holds 20% (in certain exceptional cases, 15%) or more of the voting rights of a bank if the FSA deems such action necessary in order to secure the sound and appropriate operation of the business of the bank. Under limited circumstances, the FSA may order such principal shareholder to take such measures as the FSA deems necessary. Furthermore, any person who becomes a holder of more than 5% of the voting rights of a bank holding company or a bank must report its ownership of voting rights to the Director of the relevant local finance bureau within five business days. This requirement is separate from the significant shareholdings report that is required under the Securities and Exchange Law. In addition, a similar report must be made in respect of any subsequent change of 1% or more in any previously reported holding or in respect of any change in material matters set out in reports previously filed, with some exceptions. If the description contained in such report is inappropriate in any material respect, the FSA may request the submission of a report or other materials from, or may conduct on inspection of, the holder of the voting rights.

FSA Program for Further Financial Reform In December 2004, the FSA announced its ‘‘Program for Further Financial Reform’’, a series of proposals intended to establish a more vigorous financial system for the future of Japan which was followed by a work schedule announced in March 2005. The Program for Further Financial Reform intends a shift from the focus of previous regulatory initiatives on the problem of non-performing loans with the stated goals as follows: ) to emphasize the needs of the consumers of financial system services and to implement a comprehensive system of rules to protect these consumers’ rights; ) to promote the strategic use of information technology in order to strengthen the competitiveness of financial institutions and to further develop Japan’s financial infrastructure; ) to promote the development of a financial system and establish financial supervision with an international perspective; ) to contribute to regional economies; and ) to establish more reliable financial supervision through greater transparency and the promotion of more efficient practices. Although the Program for Further Financial Reform is still only in the early stages of discussion and the details of the measures to be implemented and the detailed schedule are not clear, the FSA has stated that, among other specific measures, it intends to use the Program for Further Financial Reform to promote: ) expansion of distribution channels of financial products and services; ) new entries into the financial services industry through further deregulation;

129 ) sound competition in the financial services industry by strengthening corporate governance of financial institutions and through further enhancement of disclosure requirements; ) the establishment and implementation of uniform transaction rules for financial products and services by, among others things, clarifying responsibility for sales of those products and services; ) research toward the enactment of legislation concerning electronic fund settlement and online financial transactions; ) research toward the establishment of a legal framework to allow the establishment of financial conglomerates and to provide for appropriate regulation and supervision of such conglomerates; and ) the establishment of rules to prevent the recurrence of non-performing loan problems at Japanese banks.

Other Elsewhere in the world, the Bank’s operations are subject to regulation and control by local central banks and monetary authorities.

130 DESCRIPTION OF THE BONDS The Bonds will be issued pursuant to an indenture, to be dated as of July 22, 2005 (the ‘‘Indenture’’), between SMBC and JPMorgan Chase Bank, N.A., as Trustee (the ‘‘Trustee’’). The following is only a summary of certain provisions of the Indenture and is qualiﬁed in its entirety by reference to all the provisions of the Indenture. Capitalized terms used in this section of the Offering Circular and not otherwise deﬁned have the meanings assigned to them in the Indenture. You can obtain a copy of the Indenture, which includes the forms of the Bonds, from the Trustee.

General The Bonds will be direct, unsecured obligations of SMBC and will be subordinated to all Senior Indebtedness as described below under ‘‘— Ranking; Subordination’’. The Dollar Bonds will be limited to $1,350,000,000 aggregate principal amount and the Euro Bonds will be limited to 4700,000,000 aggregate principal amount unless SMBC chooses to issue additional Bonds in the future, as described below under ‘‘— Further Issuances’’. The Bonds are undated and accordingly will have no final maturity date and will only be redeemable or repayable as described under ‘‘— Optional Redemption and Purchase’’ and ‘‘— Limited Rights of Acceleration’’. The Bonds will bear interest at the rates set forth under ‘‘— Interest — General’’ until the principal amount thereof is paid or made available for payment, subject to the deferral of interest payment at the option of SMBC, as described below under ‘‘— Interest — Conditional Payment of Interest’’. The Bonds have not been registered with the U.S. Securities and Exchange Commission and are being offered and sold outside the United States only to non-U.S. Persons in reliance on Regulation S (‘‘Regulation S Bonds’’) and inside the United States to qualified institutional buyers in reliance on Rule 144A (‘‘Rule 144A Bonds’’) under the Securities Act. Accordingly, the Indenture is not required to be, and has not been, qualified under the U.S. Trust Indenture Act of 1939, as amended (the ‘‘Trust Indenture Act’’). The Bonds are not deposits and are not insured by the U.S. Federal Deposit Insurance Corporation or any other governmental agency. As described in more detail below under ‘‘— Form, Book-Entry and Transfer’’, the Bonds will initially be represented by global certificates in registered form.

Further Issuances To the extent permitted by law, SMBC may from time to time, without the consent of the holders of the Bonds, create and issue additional Bonds pursuant to the Indenture having substantially the same terms and conditions under the Indenture as the Dollar Bonds or the Euro Bonds in all respects (except for the issue date and the amount and the date of the ﬁrst payment of interest thereon) so that the additional Bonds shall be consolidated and form a single series with the previously outstanding Dollar Bonds or Euro Bonds, as the case may be. Additional Bonds, if any, will be issued under a separate offering document or a supplement to this Offering Circular.

Interest General Interest on the Dollar Bonds will accrue from their date of initial issuance and be payable semi-annually in arrears on April 15 and October 15 in each year, commencing on October 15, 2005, until October 15, 2015 (the ‘‘Reset Date’’), and thereafter quarterly in arrears on January 15, April 15, July 15 and October 15 in each year (each, a ‘‘Dollar Interest Payment Date’’), subject to the deferral of interest payment at the option of SMBC as described under ‘‘— Conditional Payment of Interest’’ below. After the Reset Date, if a Dollar Interest Payment Date would otherwise fall on a day that is not a Business Day (as deﬁned below), then such Dollar Interest Payment Date will be the next day that is a Business Day. Interest will accrue on the principal amount of the Dollar Bonds at a rate per annum of 5.625% from and including the date of the initial issuance thereof to but excluding the Reset Date, and thereafter at a rate per annum equal to three-month USD LIBOR determined as set forth below plus 2.55%. The period beginning on (and including) the date of the initial issuance of the Dollar Bonds and ending on (but excluding) the ﬁrst Dollar Interest Payment Date and each successive period beginning on (and including) a Dollar Interest Payment Date and ending on (but excluding) the next succeeding Dollar

131 Interest Payment Date is referred to as a ‘‘Dollar Interest Period’’. Prior to the Reset Date, interest on the Dollar Bonds will be calculated on the basis of a 360-day year consisting of twelve 30-day months and thereafter it will be calculated on the basis of a 360-day year and the actual number of days elapsed. The principal of and interest on the Dollar Bonds will be payable in U.S. dollars or in such other coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Interest on the Euro Bonds will accrue from their date of initial issuance and be payable annually in arrears on October 15 in each year, commencing on October 15, 2005, until the Reset Date, and thereafter semi-annually in arrears on April 15 and October 15 in each year (each, a ‘‘Euro Interest Payment Date’’), subject to the deferral of interest payment at the option of SMBC as described under ‘‘— Conditional Payment of Interest’’ below. After the Reset Date, if a Euro Interest Payment Date would otherwise fall on a day that is not a Business Day (as defined below), then such Euro Interest Payment Date will be the next day that is a Business Day. Interest will accrue on the principal amount of the Euro Bonds at a rate per annum of 4.375% from and including the date of the initial issuance thereof to but excluding the Reset Date, and thereafter at a rate per annum equal to six- month EURIBOR determined as set forth below plus 2.60%. The period beginning on (and including) the date of the initial issuance of the Euro Bonds and ending on (but excluding) the first Euro Interest Payment Date and each successive period beginning on (and including) a Euro Interest Payment Date and ending on (but excluding) the next succeeding Euro Interest Payment Date is referred to as a ‘‘Euro Interest Period’’. Prior to the Reset Date, interest on the Euro Bonds will be calculated on the basis of the actual number of days in the interest period in respect of which payment is being made divided by 365 (or, if any portion of that interest period falls in a leap year, the sum of (i) the actual number of days in that portion of the interest period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the interest period falling in a non-leap year divided by 365) and thereafter it will be calculated on the basis of a 360-day year and the actual number of days elapsed. The principal of and interest on the Euro Bonds will be payable in Euros or in such other coin or currency of the region comprising from time to time Member States of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union (the ‘‘Euro-zone’’), as at the time of payment is legal tender for the payment of public and private debts. Interest on the Bonds will be payable to the persons in whose names the Bonds (or one or more predecessor Bonds) are registered on the close of business of the first day of the month (whether or not a Business Day) in which a Dollar Interest Payment Date or Euro Interest Payment Date (each, an ‘‘Interest Payment Date’’) shall fall, as the case may be. If any Interest Payment Date is not a Business Day, the holder shall not be entitled to payment of interest or any other amount due on such date until the next succeeding Business Day, and provided payment is made on such succeeding Business Day, shall not be entitled to any further interest or other payment in respect of any such delay. ‘‘Business Day’’ means any day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets are open for business in New York, London and Tokyo and that is also a TARGET Settlement Day. ‘‘TARGET Settlement Day’’ means a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer System (including any successor thereto) is operating. Interest shall cease to accrue on each Bond on the date fixed for any redemption unless, upon due presentation, payment is improperly withheld or refused, in which event interest shall continue to accrue at such rate (both before and after judgment) in the manner described above to the Relevant Date. ‘‘Relevant Date’’ means, with respect to any payment by SMBC to the holders of the Bonds, the date on which such payment first becomes due or, if the full amount of the moneys payable has not been duly received by the principal paying agent or the Trustee on or prior to such due date, the date on which the full amount of such moneys has been so received. Determination of USD LIBOR. ‘‘USD LIBOR’’ with respect to any relevant Dollar Interest Period will be a rate or an arithmetic mean determined as follows: (a) USD LIBOR will equal the London inter-bank offered rate for three-month deposits in U.S. dollars which appears on the display page designated 3750 on the Moneyline Telerate Service (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying comparable rates) as determined by JPMorgan Chase Bank, N.A., acting through its London Office, as calculation agent (together with any successor calculation agent, the

132 ‘‘Calculation Agent’’), as at 11:00 A.M. (London time) on the second London Banking Day preceding the first day of such Dollar Interest Period (the ‘‘USD LIBOR Determination Date’’), where ‘‘London Banking Day’’ means a day in which commercial banks are open for dealing in foreign currency and exchange in London and New York; (b) if USD LIBOR cannot be determined in this manner, the Calculation Agent will (i) request the principal London office of each of four major banks engaged in transactions in Eurodollar deposits in the international Eurocurrency market with an established place of business in London selected by the Calculation Agent to provide its offered quotation to prime banks in the London interbank market for three- month deposits in U.S. dollars as at or about 11:00 A.M. (London time) on the relevant USD LIBOR Determination Date and in an amount that is representative for a single transaction in that market at that time and (ii) determine USD LIBOR as the arithmetic mean of the quotations provided in response to such requests; (c) if fewer than two such quotations are provided as requested, the Calculation Agent will determine USD LIBOR as the arithmetic mean of the rates quoted by at least two major banks in New York selected by the Calculation Agent, at approximately 11:00 A.M. (New York time) on the first day of such Dollar Interest Period for three-month Eurodollar loans in an amount that is representative for a single transaction in that market at that time; and (d) if the Calculation Agent is unable to determine USD LIBOR as described above in relation to any Dollar Interest Period, USD LIBOR will be the rate or (as the case may be) arithmetic mean determined by the Calculation Agent in relation to the Dollar Bonds in respect of the preceding Dollar Interest Period, or, in the case of the Dollar Interest Period beginning on the Reset Date as determined by the Calculation Agent after consultation with SMBC. Determination of EURIBOR. ‘‘EURIBOR’’ with respect to any relevant Euro Interest Period will be a rate or an arithmetic mean determined as follows: (a) EURIBOR will equal the Euro-zone inter-bank offered rate for six-month deposits in Euros which appears on the display page designated 248 on the Moneyline Telerate Service (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying comparable rates) as determined by the Calculation Agent, as at 11:00 A.M. (Brussels time) on the second TARGET Settlement Day preceding the first day of such Euro Interest Period (the ‘‘EURIBOR Determination Date’’); (b) if EURIBOR cannot be determined in this manner, the Calculation Agent will (i) request the principal Euro-zone office of each of four major banks engaged in the Euro-zone interbank market selected by the Calculation Agent to provide its offered quotation to prime banks in the Euro-zone interbank market for six-month deposits in Euros as at or about 11:00 A.M. (Brussels time) on the relevant EURIBOR Determination Date and in an amount that is representative for a single transaction in that market at that time and (ii) determine EURIBOR as the arithmetic mean of the quotations provided in response to such requests; (c) if fewer than two such quotations are provided as requested, the Calculation Agent will determine EURIBOR as the arithmetic mean of the rates quoted by at least two major banks in the Euro-zone interbank market selected by the Calculation Agent, at approximately 11:00 A.M. (Brussels time) on the first day of the relevant Euro Interest Period for six-month loans in Euros to leading European banks in an amount that is representative for a single transaction in that market at that time; and (d) if the Calculation Agent is unable to determine EURIBOR as described above in relation to any Euro Interest Period, EURIBOR will be the rate or (as the case may be) arithmetic mean determined by the Calculation Agent in relation to the Euro Bonds in respect of the preceding Euro Interest Period, or, in the case of the Euro Interest Period beginning on the Reset Date as determined by the Calculation Agent after consultation with SMBC. In determining USD LIBOR and EURIBOR, any arithmetic mean determined in accordance with the foregoing shall be rounded, if necessary, to the nearest one-thousandth of a percentage point, 0.0005 being

133 rounded upward. The Calculation Agent’s determination of any interest rate and its calculation of interest for any interest period will be ﬁnal and binding in the absence of manifest error. Reference banks to be selected by the Calculation Agent as described above may include one or more of the Calculation Agent, the Initial Purchasers and their afﬁliates. The amount of interest payable on any Interest Payment Date with respect to each $1,000 principal amount (in the case of the Dollar Bonds) or each 41,000 principal amount (in the case of the Euro Bonds), if not a whole multiple of $0.01 or 40.01, as the case may be, shall be rounded down to the next such whole multiple.

Conditional Payment of Interest In the case that any of the following conditions is met on any Interest Payment Date for either the Dollar Bonds or Euro Bonds, respectively: ) the amount of the Distributable Profits, based on SMBC’s financial statements approved or reported at the general meeting of the shareholders of SMBC held immediately prior to such Interest Payment Date or approved by or reported to the shareholders of SMBC by or for the purpose of a written consent in lieu of such general meeting, does not exceed zero; ) a Regulatory Event has occurred as of such Interest Payment Date; or ) an Interest Payment Insolvency Event has occurred as of such Interest Payment Date; the interest payment to be made on such Interest Payment Date may at the option of SMBC be deferred to the earlier of (a) the first Interest Payment Date for the Dollar Bonds or the Euro Bonds, as applicable, on which none of such conditions is met or (b) the date set for any redemption of the Dollar Bonds or the Euro Bonds, as applicable. Such deferral shall be made by giving written notice of such deferral to the Trustee and the holders of such Bonds. If such notice is not given to the Trustee and the holders of such Bonds on or prior to such Interest Payment Date, such interest payment to be made on such Interest Payment Date shall be deemed not so deferred and shall become due on such Interest Payment Date. If such notice is given to the Trustee and the holders of such Bonds on or prior to such Interest Payment Date, SMBC shall not have any obligation to make such payment on such Interest Payment Date and any failure to pay on such Interest Payment Date shall not constitute a default by SMBC for any purpose. Any interest on the Bonds accrued but not becoming due on an Interest Payment Date by operation of this paragraph shall, so long as the same remains unpaid, constitute ‘‘Arrears of Interest’’. Arrears of Interest shall not bear interest. However, where default is made in the payment of any interest due and payable on an Interest Payment Date for either the Dollar Bonds or the Euro Bonds or other date upon which the same becomes due and payable and such default continues for a period of 30 days or more, interest shall accrue on any such amount in respect of which default has been made (before as well as after any judgment) from and including the due date for payment thereof at the interest rate applicable to such Bonds until either (i) such amount together with accrued interest payable pursuant to this paragraph is paid to the holders of such Bonds or (ii) the date on which notice has been given to the holders of such Bonds to the effect that the funds for the payment thereof have been received by the principal paying agent, whichever is the earlier. For purposes of this Offering Circular, the term ‘‘interest’’ includes, unless the context requires otherwise, Arrears of Interest. Any interest not punctually paid or duly provided for (other than any Arrears of Interest, which shall be payable in accordance with the second preceding paragraph) may be paid by SMBC in whole or in part at any time to the persons in whose name the Bonds are registered at the close of business on a special record date for the payment of such defaulted interest (‘‘Special Record Date’’). SMBC shall notify the Trustee of the amount of defaulted interest proposed to be paid and the date of the proposed payment, and shall deposit with the Trustee an amount equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements reasonably satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such defaulted interest. Thereupon SMBC shall fix a Special Record Date which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of such notice. SMBC shall promptly notify the Trustee of such Special Record Date and shall cause notice of the proposed payment of such defaulted interest and the Special Record Date to be mailed to each Holder not less than 10 days prior to such Special Record Date.

134 As used in this section: ) ‘‘Distributable Profits’’ means, with respect to any fiscal year of SMBC, the amount (including retained earnings from prior years) permitted to be distributed by SMBC to its shareholders pursuant to Article 290 of the Commercial Code and the Banking Law and related regulations and guidelines (or its successor concept under the laws and regulations then applicable). SMBC’s Distributable Profits were ¥442.4 billion as of March 31, 2005, ¥593.0 billion as of March 31, 2004 and ¥629.5 billion as of March 31, 2003. A new Company Law, promulgated on June 29, 2005, is expected to take effect on or after April 1, 2006 and will, among other things, change the calculation of the Distributable Profits. See ‘‘Risk Factors — Risks Related to the Bonds — The New Company Law May Affect the Calculation of the Distributable Profits of the Bank’’; ) ‘‘Interest Payment Insolvency Event’’ means either of the following events: (i) SMBC is insolvent at the time of payment of the interest on the Bonds; or (ii) payment of the interest on the Bonds would cause SMBC to become insolvent. For the purpose of this definition, SMBC shall be insolvent if SMBC’s Liabilities exceed its Assets, where (i) ‘‘Assets’’ means the total assets of SMBC and (ii) ‘‘Liabilities’’ means the total liabilities of SMBC (calculated on a non-consolidated basis), each as shown by the latest audited non-consolidated balance sheet of SMBC but adjusted for subsequent events, all valued in such manner as a Representative Director or the liquidator (as the case may be) of SMBC may determine; and ) A ‘‘Regulatory Event’’ shall be deemed to occur if SMBC’s total risk-adjusted capital ratio calculated either on a consolidated or non-consolidated basis entered in the Latest Operation Report falls below half of the Required Capital Ratio, where: ) ‘‘Latest Operation Report’’ means, in relation to a day, an operation report submitted to the Commissioner of the FSA pursuant to the Banking Law immediately prior to such day. Currently, under the Enforcement Rule of the Banking Law, the operation report in respect of the conditions of the bank’s assets and business for the period from the commencement of the bank’s fiscal year (i.e., April 1) to September 30 is required to be submitted to the Commissioner of the FSA within three months from the end of such period and the operation report in respect of the bank’s fiscal year is required to be submitted within three months from the end of such fiscal year (i.e., March 31). ) ‘‘Required Capital Ratio’’ means the minimum total risk-adjusted capital ratio calculated either on a consolidated or non-consolidated basis which SMBC is required under the Banking Law to have as of the last day of the business period in relation to the Latest Operation Report. Currently, SMBC is required to have a total risk-adjusted capital ratio calculated either on a consolidated basis or non- consolidated basis of 8% or more under the Notice Concerning Determination of the Criteria of Capital Ratio under the Banking Law (Ministry of Finance ordinance No. 55 of 1993, as amended). See ‘‘Selected Consolidated Financial and Other Information’’ for historic information regarding capital ratios of SMBC.

Payment of Additional Amounts All payments in respect of the Bonds shall be made without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Japan, or any authority therein or thereof having power to tax (‘‘Taxes’’), unless such withholding or deduction of such Taxes is required by law. In that event, SMBC shall pay such additional amounts (‘‘Additional Amounts’’) as will result in receipt by the holders of the Bonds of such amounts as would have been received by them had no such withholding or deduction been required, except that no Additional Amounts shall be payable in respect of any payment: ) received by or on behalf of a holder (i) who is for Japanese tax purposes treated as an individual resident of Japan or a Japanese corporation (other than a Designated Financial Institution (as deﬁned below) which does not fall under item (ii) below) or (ii) who fails to comply with the Japanese tax law requirements in respect of the exemption from such withholding or deduction or (iii) who is otherwise subject to such Taxes by reason of his having some connection with Japan other than the mere holding of the Bond (for

135 this purpose, a ‘‘Designated Financial Institution’’ means a Japanese bank, a Japanese insurance company, a Japanese securities company or other Japanese financial institution falling under certain categories prescribed by the relevant Cabinet Order under Article 6, paragraph 8 of the Special Taxation Measures Law); or ) for any estate, inheritance, gift, sale, transfer, stamp, personal property or similar assessment or other governmental change; or ) where such Bond is presented for payment (where presentation is required) more than 30 days after the Relevant Date, except to the extent that the holder of it would have been entitled to such Additional Amounts on presenting the same for payment on such thirtieth day; or ) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to any European Union Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directives; or ) received by or on behalf of a holder of the Bonds who would have been able to avoid such withholding or deduction by presenting the relevant Bond (where presentation is required) to another paying agent in a Member State of the European Union. Nor will Additional Amounts be paid with respect to a Bond to a holder who is a fiduciary, a partnership, a limited liability company or other than the sole beneficial owner of that payment, to the extent that payment would be required by the laws of Japan (or any political subdivision therein or thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a member of that partnership, an interest holder in that limited liability company or a beneficial owner who would not have been entitled to the Additional Amounts had it been the holder of the Bond. Any reference in this Offering Circular to principal or interest shall be deemed also to refer to any Additional Amounts which may be payable or any undertakings or covenants given in addition to or substitution for it under the Indenture.

Ranking; Subordination Ranking The Bonds constitute direct unsecured obligations of SMBC and shall at all times rank pari passu without any preference among themselves and at least equally and ratably with all indebtedness of SMBC which is subordinated to Senior Indebtedness. ‘‘Senior Indebtedness’’ means all deposits and other liabilities, including dated subordinated obligations (including those in respect of bonds, notes and debentures), of SMBC other than (i) liabilities under the Bonds and (ii) any other liabilities of SMBC with terms and conditions substantially equivalent or subordinate in priority of payment as to liquidation distributions to the liabilities of SMBC under the Bonds. For purposes of (ii) above, such liabilities shall include any liabilities with terms and conditions substantially equivalent or subordinate in priority of payment as to liquidation distributions to such liabilities except for the absence of item (iii) of the deﬁnition of the ‘‘Subordination Event’’ and item (iii) of the deﬁnition of the ‘‘Condition for Liquidation Payment’’.

Subordination A ‘‘Subordination Event’’ shall be deemed to occur if: (i) a court of competent jurisdiction shall have commenced bankruptcy proceedings with respect to SMBC pursuant to the Bankruptcy Law; or (ii) a court of competent jurisdiction shall have commenced corporate reorganization proceedings with respect to SMBC pursuant to the Reorganization Law; or (iii) a court of competent jurisdiction shall have commenced civil rehabilitation proceedings with respect to SMBC pursuant to the Civil Rehabilitation Law; or (iv) SMBC shall become subject to bankruptcy, corporate reorganization, civil rehabilitation or other equivalent proceedings pursuant to any applicable law of any jurisdiction other than Japan, which proceedings have an equivalent effect to those set out in (i), (ii) or (iii) of this deﬁnition.

136 Upon the occurrence of a Subordination Event and (a) in the case of a Subordination Event other than civil rehabilitation proceedings, so long as such Subordination Event is continuing, or (b) in the case of civil rehabilitation proceedings, so long as (i) neither a Summary Rehabilitation Order nor Consent Rehabilitation Order shall have been issued, (ii) the civil rehabilitation proceedings shall not have been conclusively cancelled or abolished by the court and (iii) the civil rehabilitation plan shall not have been conclusively disapproved or cancelled by the court, no payment in respect of principal of, or interest (including Additional Amounts, if any) on, the Bonds or indemnification of judgment currency described under ‘‘— Indemnification of Judgment Currency’’ (except for amounts which shall have become due and payable prior to the date on which the Subordination Event shall have occurred) shall be made by SMBC unless and until a Condition for Liquidation Payment shall have occurred, in which case the payments in respect of the principal of and interest (including Additional Amounts, if any) on the Bonds and indemnification of judgment currency shall not exceed the amount of the liquidation distributions which would have been paid from the assets of SMBC in respect of the amount of the principal of and interest on the Bonds (except for amounts which shall have become due and payable prior to the occurrence of such Condition for Liquidation Payment) had the Bonds and all Liquidation Parity Securities been preference shares of SMBC ranking most senior in priority of payment as to liquidation distributions. The Indenture provides that no amendment or modification may be made to the subordination provisions unless such an amendment or modification is not prejudicial to any present or future creditor in respect of any Senior Indebtedness as described under ‘‘— Modification’’. No such amendment or modification prejudicial to any present or future creditor in respect of any Senior Indebtedness shall in any event be effective. As used in this section: ) ‘‘Bankruptcy Law’’ means the Japanese Bankruptcy Law (Law No. 75 of 2004), as amended or replaced from time to time; ) ‘‘Civil Rehabilitation Law’’ means the Japanese Civil Rehabilitation Law (Law No. 225 of 1999), as amended or replaced from time to time; ) ‘‘Condition for Liquidation Payment’’ means any of the following conditions: (i) in the case of liquidation of SMBC, all Senior Indebtedness held by creditors of SMBC entitled to payment or satisfaction prior to commencement of distribution of residual assets to shareholders is paid or otherwise satisfied in full pursuant to the provisions of the Commercial Code (or its successors); (ii) in the case of reorganization of SMBC where a decree of approbation of a corporate reorganization plan for abolishment of all business (jigyo no zenbu no haishi wo naiyotosuru kousei keikaku) which provides for liquidation of SMBC becomes final and conclusive, all Senior Indebted- ness appearing in such plan at the date such decree has become final and conclusive is paid or otherwise satisfied in full without giving effect to any modification or reduction stipulated in such plan; or (iii) in the case of civil rehabilitation of SMBC where a decree of approbation of a civil rehabilitation plan for liquidation of SMBC becomes final and conclusive, all Senior Indebtedness appearing in such plan at the date such decree has become final and conclusive is paid or otherwise satisfied in full without giving effect to any modification or reduction stipulated in such plan; ) ‘‘Consent Rehabilitation Order’’ means a decision of a court of competent jurisdiction under Article 217, paragraph 1 of the Civil Rehabilitation Law to the effect that the procedures for the investigation and confirmation of civil rehabilitation claims as prescribed in Articles 99 through 113 of the Civil Rehabilitation Law and the resolution of a civil rehabilitation plan shall be omitted; ) ‘‘Liquidation Parity Securities’’ means (i) any preference shares of SMBC ranking most senior in priority of payment as to liquidation distributions; (ii) any other preferred or preference shares of any affiliate of SMBC which shall be entitled to the benefits of a guarantee of SMBC ranking pari passu in priority of payment as to liquidation distributions with the Bonds; and (iii) any other liabilities of SMBC with terms and conditions substantially equivalent or subordinate in priority of payment as to liquidation distributions to the liabilities of SMBC stipulated in the subordination provisions described above. For the

137 purpose of (iii) above, such liabilities shall include any liabilities with terms and conditions substantially equivalent or subordinate in priority of payment as to liquidation distributions to such liabilities except for the absence of item (iii) of the definition of the ‘‘Subordination Event’’ above and item (iii) of the definition of the ‘‘Condition for Liquidation Payment’’ above; ) ‘‘Reorganization Law’’ means the Japanese Corporate Reorganization Law (Law No. 154 of 2002), as amended or replaced from time to time; and ) ‘‘Summary Rehabilitation Order’’ means a decision of a court of competent jurisdiction under Article 211 paragraph 1 of the Civil Rehabilitation Law to the effect that the procedures for the investigation and confirmation of the civil rehabilitation claims as prescribed in Articles 99 through 113 of the Civil Rehabilitation Law shall be omitted. A holder of a Bond shall by its acceptance of such Bond agree that (i) if any payment on such Bond is made to the holder after the occurrence of a Subordination Event and the amount of such payment shall exceed the amount, if any, that should have been paid to such holder in accordance with the subordination provisions described above, the payment of such excess amount shall be deemed null and void and such holder shall be obliged to return the amount of the excess payment within ten days after receiving notice of the excess payment and (ii) so long as a Subordination Event shall have occurred and be continuing (in the case of civil rehabilitation proceedings so long as neither a Summary Rehabilitation Order nor Consent Rehabilitation Order shall have been issued nor the civil rehabilitation proceedings shall have been conclusively cancelled nor abolished by the court nor the civil rehabilitation plan shall have been conclusively disapproved or cancelled by the court), such holder shall not be entitled to exercise any right to set off any liabilities of SMBC (except for amounts which have become due and payable prior to the date on which the Subordination Event shall have occurred) against any liabilities of such holder owed to SMBC. As a consequence of the subordination provisions, in the event of the occurrence of a Subordination Event, the holders of the Bonds may recover less ratably than the holders of deposit liabilities and other unsubordinated liabilities of SMBC. Holders of the Bonds may be required to pursue their claims with respect to the Bonds in Japan. To the extent that holders of the Bonds are entitled to any recovery with respect to the Bonds in any Japanese action or proceeding, such holders might not be entitled in such an action or proceeding to a recovery in U.S. dollars or Euros, as the case may be, and might be entitled in such an action or proceeding only to a recovery in Japanese yen. SMBC will agree pursuant to the terms of the Bonds to indemnify the holders of the Bonds against certain losses incurred as a result of any judgment or order being given or made for any amount due under the Bonds and such judgment or order being expressed and paid in a currency other than U.S. dollars or Euros, as the case may be. See ‘‘— Indemnification of Judgment Currency’’. Any amounts due under this indemnification and any additional amounts due in respect of Japanese or United States withholding taxes as provided by the terms of the Bonds will be subordinated in right of payment in any such proceeding. See ‘‘— Interest — Payment of Additional Amounts’’. Pursuant to the provisions of the Bankruptcy Law, Reorganization Law or Civil Rehabilitation Law, the holders of liabilities (both subordinated and unsubordinated) of SMBC will be required to file a notice of claim in Japan upon the occurrence of a Subordination Event. Upon the expiration of the period for filing such notices, based on the notices filed and the records of SMBC, an official list of liabilities that will be entitled to receive distribution in a bankruptcy, reorganization proceeding or rehabilitation proceeding will be determined pursuant to the provisions of the Bankruptcy Law, the Reorganization Law or the Civil Rehabilitation Law. To the extent that any liabilities senior to the Bonds are not included on the final official list in Japan or are not accorded equivalent status pursuant to any applicable bankruptcy, corporate reorganization, civil rehabilitation or other equivalent law of any jurisdiction other than Japan, such liabilities will no longer rank senior to any amounts payable under the Bonds. As of March 31, 2005, on a non-consolidated basis, SMBC had deposits and other liabilities, including dated subordinated indebtedness (including those in respect of bonds, notes and debentures), that, upon the occurrence of a Subordination Event and the satisfaction of any procedural requirements, would rank senior to the obligations under the Bonds, with an aggregate principal amount equivalent to ¥86,574 billion (including ¥1,975 billion in dated subordinated obligations). The Indenture and the Bonds do not contain any limitations on

138 the amount of Senior Indebtedness or deposits or other liabilities that may be hereafter incurred or assumed by SMBC. As of March 31, 2005, on a non-consolidated basis, SMBC had outstanding subordinated indebtedness that, upon the occurrence of a Subordination Event, would rank pari passu to the obligations under the Bonds with an aggregate principal amount equivalent to ¥1,668 billion and other outstanding Liquidation Parity Securities with an aggregate liquidation preference equivalent to ¥1,310 billion.

Optional Redemption and Purchase SMBC may, with the prior consent of the FSA, on giving not less than 30 nor more than 60 days’ notice to the holders of the Bonds of the relevant series and the Trustee (which notice shall be irrevocable) redeem all, but not in part, of the Dollar Bonds or the Euro Bonds on any Interest Payment Date for such series on or after October 15, 2015. The Dollar Bonds or the Euro Bonds may also be redeemed at the option of SMBC in whole, but not in part, with the prior consent of the FSA, at any time, on not less than 30 nor more than 60 days’ notice to the holders of such Bonds and the Trustee (which notice shall be irrevocable) if: (i) SMBC has or will become obligated to pay Additional Amounts thereon as described under ‘‘— Interest — Payment of Additional Amounts’’ as a result of any change in, or amendment to, the laws or regulations of Japan or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date of this Offering Circular; and (ii) such obligation cannot be avoided by SMBC taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which SMBC would be obligated to pay such Additional Amounts were a payment in respect of such Bonds then due. Prior to giving any notice of redemption to the holders of the Bonds pursuant to this paragraph, SMBC shall deliver to the Trustee an opinion of independent tax advisors of recognized standing to the effect that SMBC has or will become obligated to pay such Additional Amounts as a result of such change or amendment. Any redemption of the Dollar Bonds or Euro Bonds, as applicable, shall be at their principal amount together with interest accrued thereon to the date fixed for redemption, including any Additional Amounts thereon, provided that if the date fixed for redemption is an Interest Payment Date, the interest payable on such date fixed for redemption shall be payable to the holders of such Bonds registered as such at the close of business on the relevant record date. All Bonds in respect of which any notice of redemption is given shall be redeemed on the date specified in such notice. SMBC, SMFG or any Subsidiary may, at any time but subject to the prior consent of the FSA, purchase any or all of the Bonds in the open market or otherwise at varying prices. ‘‘Subsidiary’’ means a company more than 50% of the shareholders’ voting rights of which is owned by SMBC, by one or more other Subsidiaries or by SMBC and one or more other Subsidiaries, or otherwise a company controlled by SMBC in accordance with generally accepted accounting principles in Japan (and, for this purpose, ‘‘voting rights’’ means the voting power attached to stock or shares for the election of directors, managers or trustees of such company, other than voting powers attached to stocks or share outstanding having such power by reason of the happening of a contingency). Any Bonds so redeemed or purchased by SMBC, SMFG or any Subsidiary shall be surrendered to the Trustee for cancellation.

Prescription Claims against SMBC for the payment of interest or any Additional Amounts on, or the redemption price of, the Bonds will become void unless presentation for payment is made as required in the Indenture within a period of six years.

Limited Rights of Acceleration The Bonds shall become immediately due and payable if a Condition for Liquidation Payment shall occur, in which case the payments in respect of the principal of and interest on the Bonds shall not exceed the amount of the liquidation distributions which would have been paid from the assets of SMBC in respect of the amount of the

139 principal of and interest on the Bonds (except for amounts which shall become due and payable prior to the occurrence of such Condition for Liquidation Payment) had such principal and interest and all Liquidation Parity Securities been preference shares of SMBC ranking most senior in priority of payment as to liquidation distribution. Redemption shall be at the principal amount thereof together with interest accrued to the date of redemption.

Non-payment of principal or interest or breach of covenants in the Indenture or the Bonds will not constitute a default under the Indenture or the Bonds or cause any Bond to become due and payable.

Merger, Consolidation, Sale, Conveyance or Assumption

The Indenture provides that SMBC may consolidate with or merge into any other corporation or entity or sell or dispose of its properties and assets substantially as an entirety, whether as a single transaction or a number of transactions, related or not, to any person provided that such other corporation or entity formed by such consolidation or into which SMBC is merged or such person who acquires SMBC’s properties and assets substantially as an entirety is an entity organized and validly existing under the laws of Japan and assumes the obligations of SMBC under the Bonds and the Indenture.

Modiﬁcation

Except as provided below, modifications of the Bonds and the Indenture may be made by SMBC with the written consent of the holders of at least two-thirds in aggregate principal amount of the outstanding Bonds of each series affected; provided, however, that (a) if any such modification would change the date on which the principal of or interest on any Bond becomes due and payable, or reduce the principal amount thereof or the rate of interest thereon, or affect the rights of holders of less than all the Bonds outstanding at the time, or change the place of payment where, or the coin or currency in which, any Bond is payable, or impair the right to institute suit for the enforcement of any such payment on or after the date when due, the consent of the holders of each outstanding Bond affected thereby is required, and (b) if any such modification would alter the respective percentages of outstanding Bonds necessary, pursuant to the Indenture, to modify the terms of the Bonds or the Indenture, the consent of the holders of all Bonds outstanding at the time is required.

Without the consent of any holders of the Bonds, SMBC, when authorized by a resolution of its Board of Directors, and the Trustee, at any time and from time to time, may modify the Bonds or the Indenture for any of the following purposes: (a) to evidence a succession of another person to SMBC and the assumption by any such successor of the covenants of SMBC in the Indenture and in the Bonds, (b) to add to the covenants of SMBC for the beneﬁt of the holders of the Bonds, or to surrender any right or power conferred upon SMBC in the Indenture, (c) to secure the Bonds, (d) to cure any ambiguity, to correct or supplement any provision in the Indenture which may be inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the Indenture, provided that such action in this clause (d) shall not adversely affect the interests of the holders of the Bonds, or (e) to comply with any requirements of DTC and/or Euroclear and Clearstream, as applicable, with respect to the issuance of additional Bonds.

No amendment or modiﬁcation to the subordination provisions contained in the Indenture or the Bonds that is prejudicial to any present or future creditor in respect of Senior Indebtedness of SMBC shall be made by SMBC. No such amendment or modiﬁcation shall in any event be effective against any such creditor.

Form, Book-Entry and Transfer

The Bonds will be issued only in fully registered form, without coupons. The Dollar Bonds will be issued in denominations of $100,000 and integral multiples of $1,000 in excess thereof and the Euro Bonds will be issued in denominations of 450,000 and integral multiples 41,000 in excess thereof. No service charge will be made for any registration of transfer or exchange of Bonds, but SMBC may require payment of a sum sufﬁcient to cover any tax or government charge payable in connection therewith.

140 SMBC will cause to be maintained offices or agencies where the Bonds may be presented for registration of transfer or for exchange (each, a ‘‘transfer agent’’). SMBC will initially appoint JPMorgan Chase Bank, N.A., New York Office as transfer agent for the Dollar Bonds and JPMorgan Chase Bank, N.A., London Office as transfer agent for the Euro Bonds. SMBC will cause to be kept for each series of Bonds, a register in which, subject to such reasonable regulations as it may prescribe, SMBC will provide for the registration of such Bonds and registration of transfers of such Bonds. SMBC, the Trustee and any agent of SMBC or the Trustee may treat the person in whose name any Bond is registered as the absolute owner of such Bond for all purposes and none of them shall be affected by any notice to the contrary. At the option of the registered holder of a Bond, subject to the restrictions contained in the Bonds and in the Indenture, such Bond may be transferred or exchanged for a like aggregate principal amount of Bonds of the same series of different authorized denominations, upon surrender for exchange or registration of transfer, at the Trustee’s office. Any Bond surrendered for exchange or presented for registration of transfer shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Trustee, duly executed by the holder thereof or its attorney duly authorized in writing. Bonds issued upon any such transfer will be executed by SMBC and authenticated by or on behalf of the Trustee, registered in the name of the designated transferee or transferees and delivered at the Trustee’s office or mailed, at the request, risk and expense of, and to the address requested by, the designated transferee or transferees. SMBC may vary or terminate the appointment of any transfer agent, or appoint additional or other transfer agents or approve any change in the office through which any transfer agent acts, provided that there shall at all times be (i) for the Dollar Bonds, a transfer agent in the City of New York and (ii) for the Euro Bonds, a transfer agent in London. SMBC will cause notice of any resignation, termination or appointment of the Trustee or any transfer agent, and of any change in the office through which any transfer agent will act, to be provided to holders of the Bonds.

Global Bonds Dollar Bonds will be initially represented by one or more global Bonds in definitive, fully registered form without interest coupons (the ‘‘Global Dollar Bonds’’). The Global Dollar Bonds will be deposited upon issuance with the custodian for DTC, in New York, New York, and registered in the name of DTC or its nominee. Beneficial interests in the Global Dollar Bonds may be held only through DTC (or any successor clearing system that holds Global Dollar Bonds) and its participants, including Euroclear and Clearstream. Euro Bonds will be initially represented by one or more global Bonds in definitive, fully registered form without interest coupons (the ‘‘Global Euro Bonds’’ and together with the Global Dollar Bonds, the ‘‘Global Bonds’’ or each individually a ‘‘Global Bond’’). The Global Euro Bonds will be registered in the name of and deposited upon issuance with a common depositary of Euroclear and Clearstream (the ‘‘Common Depositary’’) on behalf of Euroclear and Clearstream. Beneficial interests in the Global Euro Bonds may be held only through Euroclear or Clearstream (or any successor clearing system that holds Global Euro Bonds) and their participants. Each of DTC, Euroclear and Clearstream is referred to as a ‘‘Depositary’’. The Rule 144A Bonds of each series will initially be issued as Global Bonds (collectively, the ‘‘Rule 144A Global Bonds’’). Any Bonds issued in exchange for Rule 144A Global Bonds or beneficial interests therein will be subject to certain restrictions on transfer set forth therein and in the Indenture and will bear the legend regarding such restrictions set forth under ‘‘Notice to Investors’’. The Regulation S Bonds of each series will initially be issued as Global Bonds (collectively, the ‘‘Regulation S Global Bonds’’). On or prior to the 40th day after the later of the commencement of the Offering or the date the Bonds were originally issued, interests in any Regulation S Global Bonds may be held only through Euroclear and Clearstream, as participants in DTC. On or prior to such 40th day, a beneficial interest in Regulation S Global Bonds may be transferred to a person who wishes to take delivery of such beneficial interest as evidenced by a Rule 144A Global Bond only upon receipt by or on behalf of the Common Depositary of a written certification from the transferor (in the form set out in the Indenture), to the effect that such transfer is being made to a person whom the transferor reasonably believes is a QIB within the meaning of Rule 144A, in a transaction meeting the requirement of Rule 144A and in accordance with any applicable securities laws of any

141 state of the United States or any other jurisdiction. After such 40th day, such certification requirements will no longer apply to such transfers, but such transfers will continue to be subject to the transfer restrictions contained in the legend appearing on the face of the Regulation S Global Bond. Beneficial interests in the Global Bonds will be shown on, and transfers thereof will be effected only through, records maintained by the Depositaries and their participants. Except as set forth below, Global Dollar Bonds may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee and Global Euro Bonds may be transferred, in whole and not in part, only to a successor of the Common Depositary. Accordingly, the sole holder of the Bonds represented by Global Bonds will at all times be (i) DTC or its nominee (or a successor of DTC or its nominee), in the case of the Global Dollar Bonds and (ii) the Common Depositary or its successor, in the case of the Global Euro Bonds, and voting and other consensual rights of holders of the Bonds will be exercisable by beneficial owners of the Bonds only indirectly through the rules and procedures of the Depositaries from time to time in effect. Beneficial interests in the Global Bonds may not be exchanged for definitive Bonds except in the limited circumstances described below under ‘‘— Exchanges of Global Bonds for Definitive Bonds’’. In addition, beneficial interests in Rule 144A Global Bonds may not be exchanged for beneficial interests in the Regulation S Global Bonds of the same series or vice versa except in accordance with the transfer and certification requirements described below under ‘‘— Exchanges between the Rule 144A Global Bonds and the Regulation S Global Bonds’’. Exchanges between the Rule 144A Global Bonds and the Regulation S Global Bonds. Beneficial interests in the Rule 144A Global Bonds of either series may be exchanged for beneficial interests in the Regulation S Global Bonds of the same series and vice versa only in connection with a transfer of such interest. Such transfers are subject to compliance with the certification requirements described below. Beneficial interests in the Rule 144A Global Bonds may be transferred to a person who takes delivery in the form of an interest in a Regulation S Global Bond of the same series, only upon receipt by the Trustee of a written certification from the transferor (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or, if available, Rule 144. Transfers involving an exchange of a beneficial interest in the Dollar Bonds evidenced by the Regulation S Global Bond for a beneficial interest in the Dollar Bonds evidenced by the Rule 144A Global Bond or vice versa will be effected in DTC by means of an instruction originated by the registrar through the DTC Deposit/Withdraw at Custodian (‘‘DWAC’’) system. Any beneficial interest in one of the Global Bonds of either series that is transferred to a person who takes delivery in the form of an interest in the other Global Bond of the same series will, upon transfer, cease to be an interest in such Global Bond and will become an interest in the other Global Bond and accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Bond for as long as it remains such an interest. In connection with any such exchange, appropriate adjustments will be made in the records of the Bond register to reflect the relevant increase and decrease in the principal amounts of the affected Global Bonds. Exchanges of Global Bonds for Definitive Bonds. A beneficial interest in a Global Bond may not be exchanged for a definitive Bond unless (1)(i) in the case of Dollar Bonds, DTC (x) notifies SMBC that it is unwilling or unable to continue as Depository for such Global Bond or (y) has ceased to be a clearing agency registered under the Exchange Act, or (ii) in the case of Euro Bonds, Euroclear or Clearstream, as the case maybe, (x) is closed for business for continuous period of 14 days (other than by reason of statutory or other holidays) or (y) announces an intention permanently to cease business or does in fact do so and (2) SMBC does not appoint a successor depositary within 90 days. Upon the occurrence of such event, DTC or the Common Depositary shall instruct SMBC to transfer the Dollar Bonds or the Euro Bonds, as the case may be, to such persons as notified to it by the applicable Depositary or any successor clearance and settlement system as the holders of beneficial interests therein. In all cases, definitive Bonds delivered in exchange for any Global Bond or beneficial interests therein will be registered in the names, and issued in approved denominations, requested by or on behalf of the applicable Depositary (in accordance with its customary procedures). Any definitive Bonds issued in exchange for an interest in a Global Bond will bear the legend restricting transfers that is borne by such Global Bond.

142 Depositary Procedures As long as DTC, its nominee or the Common Depositary is the registered holder of Global Bonds, DTC, its nominee or the Common Depositary, as the case may be, will be considered the sole owner and holder of the Bonds represented by such Global Bonds for all purposes under the Indenture and the Bonds, and accordingly, SMBC’s obligations under the Bonds represented by such Global Bonds are to DTC, its nominee or the Common Depositary, as the case may be, as the registered holder of such Bonds, and not to the holders of beneficial interests in such Bonds. Bonds will be subject to certain restrictions on transfer and will bear a restrictive legend as described under ‘‘Notice to Investors’’. In addition, transfer of beneficial interests in the Global Bonds will be subject to the applicable rules and procedures of the Depositaries and their respective direct or indirect participants, which may change from time to time. DTC. DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, ‘‘DTC Participants’’) and to facilitate the clearance and settlement of transactions in those securities between DTC Participants through electronic book-entry changes in accounts of DTC Participants. DTC Participants include securities brokers and dealers (including the Initial Purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (collectively, ‘‘Indirect DTC Participants’’). Persons who are not DTC Participants may beneficially own securities held by or on behalf of DTC only through DTC Participants or Indirect DTC Participants. The ownerships interest and transfer of ownership interest of each actual purchaser of each security held by or on behalf of DTC are recorded on the records of DTC Participants and Indirect DTC Participants. DTC has also advised that, pursuant to procedures established by it, (i) upon deposit of the Global Dollar Bonds, DTC will credit the accounts of DTC Participants designated by the Initial Purchasers with portions of the principal amount of such Global Bonds and (ii) ownership of such interests in the Global Dollar Bonds will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to DTC Participants) or by DTC Participants and Indirect DTC Participants (with respect to other owners of beneficial interests in the Global Dollar Bonds). Investors in the Dollar Bonds may hold their interests therein directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. All interests in a Global Dollar Bond may be subject to the procedures and requirements of DTC. The laws of some states require that certain persons take physical delivery in certificated form of securities that they own. Consequently, the ability to transfer beneficial interests in Global Dollar Bonds to such persons will be limited to that extent. Because DTC can act only on behalf of DTC Participants, which in turn act on behalf of Indirect DTC Participants and certain banks, the ability of a person having beneficial interests in Global Dollar Bonds to pledge such interests to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. For certain other restrictions on the transferability of beneficial interests in the Bonds, see ‘‘— Exchanges of Global Bonds for Definitive Bonds’’ and ‘‘— Exchanges between the Rule 144A Global Bonds and the Regulation S Global Bonds’’. Except as described above under ‘‘— Exchanges of Global Bonds for Definitive Bonds’’, owners of interests in Global Dollar Bonds will not have Dollar Bonds registered in their name, will not receive physical delivery of Dollar Bonds and will not be considered the registered owners or holders thereof for any purpose. Payments in respect of Global Dollar Bonds registered in the name of DTC or its nominee will be payable by JPMorgan Chase Bank, N.A., New York Office to DTC or to the order of its nominee as the registered owner of the Global Dollar Bonds. JPMorgan Chase Bank, N.A., New York Office will treat the persons in whose names the Global Dollar Bonds are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither SMBC nor any agent thereof has or will have any responsibility or liability for (i) any aspect of DTC’s records or any DTC Participant’s or Indirect DTC Participant’s records relating to or payments made on account of beneficial ownership interests in the Global Dollar Bonds, or for maintaining, supervising or reviewing any of DTC’s records or any DTC Participant’s or

143 Indirect DTC Participant’s records relating to the beneficial ownership interests in Global Dollar Bonds or (ii) any other matter relating to the actions and practices of DTC or any of DTC Participants or Indirect DTC Participants. DTC has advised SMBC that its current practice, upon receipt of any payment in respect of securities such as the Dollar Bonds, is to credit the accounts of the relevant DTC Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Payments by the Participants and the Indirect Participants to the beneficial owners of Bonds will be governed by standing instructions and customary practices, will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC or SMBC. SMBC and JPMorgan Chase Bank, N.A., New York Office may conclusively rely on and will be protected in relying on instruction from DTC or its nominee for all purposes. Interests in the Global Dollar Bonds will trade in DTC’s Settlement System and secondary market trading activity in such interests will therefore settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its Participants. Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds. DTC has advised that it will take any action permitted to be taken by a holder of Dollar Bonds only at the direction of one or more DTC Participants to whose account with DTC interests in the Dollar Bonds are credited. However, DTC reserves the right to exchange the Global Dollar Bonds for legended definitive Dollar Bonds and to distribute such legended bonds to DTC Participants. The information in this section concerning DTC and its book-entry systems has been obtained from sources that SMBC believes to be reliable, but SMBC takes no responsibility for the accuracy thereof. Although DTC has agreed to the foregoing procedures to facilitate transfers of interest in the Global Dollar Bonds among participants in DTC, it is under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. SMBC will not have any responsibility for the performance by DTC, or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Euroclear. Euroclear was created in 1968 to hold securities for its participants and to clear and settle transaction between Euroclear participants through simultaneous electronic book-entry delivery against payment, thus eliminating the need for physical movement of certificates and risk from lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V., under contract with Euroclear Clearance Systems, S.C., a Belgian cooperative corporation. All operations are conducted by Euroclear Bank, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with Euroclear Bank, not with Euroclear Clearance Systems. Euroclear Clearance Systems establishes policies for Euroclear on behalf of Euroclear participants. Euroclear participants include banks, including central banks, securities brokers and dealers and other professional financial intermediaries and may include the Initial Purchasers. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly. Euroclear is licensed, regulated and examined by the Belgian Banking and Finance Commission. Securities clearance accounts and cash accounts with Euroclear are governed by the terms and conditions governing use of, and the related operating procedures of, Euroclear and applicable Belgian law, which are referred to collectively as the ‘‘terms and conditions’’. The terms and conditions govern transfers of securities and cash within Euroclear, withdraws of securities and cash from Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. Euroclear acts under the terms and conditions only on behalf of Euroclear participants and has no record of, or relationship with, persons holding through Euroclear participants.

Clearstream. Clearstream is incorporated as a bank under Luxembourg law. Clearstream holds securities for its participants and facilitates the clearance and settlement of securities transactions between Clearstream participants through electronic book-entry changes in accounts of Clearstream participants, thus eliminating the need for physical movement of certificates. Clearstream provides to its participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and

144 borrowing. Clearstream interfaces with domestic markets in a number of countries. Clearstream has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream and Euroclear. As a registered bank in Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for Supervision of the Financial Sector. Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. In the United States, Clearstream participants are limited to securities brokers and dealers. Clearstream participants may include the Initial Purchasers. Other institutions that maintain a custodial relationship with a Clearstream participant may obtain indirect access to Clearstream. Transfers Among DTC, Clearstream and Euroclear. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the Bonds, cross-market transfers between persons holding, directly or indirectly through DTC, on the one hand, and directly or indirectly through Euroclear or Clearstream participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by the relevant European depositary; however, those cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to the relevant European depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear and Clearstream participants may not deliver instructions directly to the European depositaries. Because of time zone differences, credits of securities received in Euroclear or Clearstream as a result of a transaction with a person that does not hold the Bonds through Euroclear or Clearstream will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Those credits or any transactions in those securities settled during that processing will be reported to the relevant Euroclear or Clearstream participants on that business day. Cash received in Euroclear or Clearstream as a result of sales of securities by or through a Euroclear participant or a Clearstream participant to a DTC participant will be received with value on the DTC settlement date, but will be available in the relevant Euroclear or Clearstream cash account only as of the business day following settlement in DTC. Limitation on Responsibilities. Although the foregoing sets out the procedures of the Depositaries established in order to facilitate the transfer of interests in the Global Bonds among their participants, none of the Depositaries is under any obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. DTC, Euroclear and Clearstream have no knowledge of the actual beneficial owners of interests in a Global Bond. DTC’s records reflect only the identity of the DTC participants to whose accounts those Global Bonds are credited, which may or may not be the beneficial owners of interests in a Global Bond. Similarly, the records of Euroclear and Clearstream reflect only the identity of the Euroclear or Clearstream participants to whose accounts those Global Bonds are credited, which also may or may not be the beneficial owners of interests in a Global Bond. DTC, Euroclear and Clearstream participants and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers. None of SMBC or the Initial Purchasers nor any of their respective agents will have any responsibility for the performance by any Depositary or their respective participants of their respective obligations under the rules and procedures governing their operations.

Payments and Paying Agents The Trustee will make payments of principal of, and interest on, (i) Global Dollar Bonds to DTC or to the order of its nominee, as the registered owner, in immediately available funds in U.S. Dollars and (ii) Global Euro

145 Bonds to the Common Depositary, in immediately available funds in Euros. Payments in respect of the principal of Bonds in definitive form, if any exist, will be made at the office of the Trustee or any paying agent. Payment of the interest on Bonds in definitive form will be paid by check mailed to the registered holder. At the request of a registered holder of more than $1,000,000 principal amount of Dollar Bonds in definitive form or 41,000,000 principal amount of Euro Bonds in definitive form, payments of principal or interest may be made to that holder by wire transfer. SMBC will cause to be maintained offices or agencies where the Bonds may be presented for payment (each, a ‘‘paying agent’’). SMBC will initially appoint JPMorgan Chase Bank, N.A., New York Office as principal paying agent for the Dollar Bonds and JPMorgan Chase Bank, N.A., London Office as principal paying agent for the Euro Bonds. Each of the paying agents shall be permitted to resign as paying agent upon 30 days’ written notice to SMBC. SMBC may vary or terminate the appointment of any paying agent or appoint additional or other paying agents or approve any change in the office through which a paying agent acts, provided that SMBC will at all times cause to be maintained (i) for the Dollar Bonds, a paying agent in The City of New York and (ii) for the Euro Bonds, a paying agent in at least one major city in a European Union member state that will not be obligated to withhold or deduct tax pursuant to any European Union Directive on the taxation of savings implementing the conclusions of the ECOFIN Council meeting of 26th-27th November, 2000 or any law implementing or complying with, or introduced in order to conform to such Directive. In addition, for so long as the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require, SMBC will appoint and maintain a paying agent in Singapore where the Bonds may be presented or surrendered for payment or redemption, in the event that the Global Bonds are exchanged for definitive Bonds. SMBC will cause notice of any resignation, termination or appointment of any paying agent, and of any change in the office through which any paying agent will act, to be provided to holders of the Bonds. In the event that the Global Bonds are exchanged for definitive Bonds, an announcement of such exchange shall be made by or on behalf of SMBC through the SGX-ST and such announcement will include all material information with respect to the delivery of the definitive Bonds, including details of the paying agent in Singapore. Holders of book-entry interests in the Global Dollar Bonds, whether held through DTC, Euroclear or Clearstream will receive all interest payments and other cash distributions with respect to such book-entry interests in U.S. dollars. Holders of book-entry interests in the Global Euro Bonds held through Euroclear and Clearstream will receive all interest and other cash distributions with respect to such book-entry interests in Euros. Payments with respect to book-entry interests in the Global Euro Bonds held through Euroclear and Clearstream will be credited, to the extent received by the paying agent, to the accounts of Euroclear and Clearstream participants in accordance with the relevant clearing systems’ rules and procedures.

Indemniﬁcation of Judgment Currency Subject to the subordination provisions described under ‘‘— Ranking; Subordination’’, SMBC will indemnify each holder of the Bonds to the full extent permitted by applicable law against any loss incurred by such holder as a result of any judgment or order being given or made for any amount due under such Bonds and such judgment or order being expressed and paid in a judgment currency other than U.S. dollars (in the case of Dollar Bonds) or Euros (in the case of Euro Bonds) and as a result of any variation as between (a) the rate of exchange at which the U.S. dollars or Euros, as the case may be, is converted into the judgment currency for the purpose of such judgment or order and (b) the spot rate of exchange in The City of New York at which the holder on the date that payment is made pursuant to such judgment or order is able to purchase U.S. dollars or Euros, as the case may be, with the amount of the judgment currency actually received by the holder.

Notice Notice to holders of the Bonds shall be validly given if mailed or otherwise delivered to the address of registered holders.

146 The Trustee The Trustee is a national banking association with offices located at 4 New York Plaza, 15th Floor, New York, New York 10004. The Indenture provides that the Trustee need only perform the duties specifically set forth in the Indenture. The Indenture does not contain limitations on the rights of the Trustee thereunder, should it be or become a creditor of SMBC, to obtain payment of claims. The Trustee is not precluded from engaging in other transactions and if it has or acquires any conflicting interest (as defined in Section 310(b) of the Trust Indenture Act), it is not required to eliminate such conflict or resign.

Successor Trustee The Indenture provides that the Trustee may resign or be removed by SMBC at any time, effective upon the acceptance by a successor trustee of its appointment. The Indenture provides that any successor trustee shall have a combined capital and surplus of not less than $50,000,000 and shall be a bank or trust company organized and doing business under the laws of the United States or of the State of New York, in good standing and having an ofﬁce in The City of New York.

Repayment of Funds All monies paid by SMBC to the Trustee or a paying agent for payment of principal of or interest and any Additional Amounts on any Bond which remain unclaimed at the end of two years after such payment has been made will be repaid to SMBC and all liability of the Trustee with respect thereto will cease, and to the extent permitted by law, the holder of such Bond shall thereafter look only to SMBC for payment as a general unsecured creditor thereof.

Governing Law; Consent to Jurisdiction and Service of Process; Communications The Indenture and the Bonds will be governed by, and construed in accordance with, the laws of the State of New York. SMBC has irrevocably consented to the jurisdiction of the courts of the State of New York and the United States courts located in The City of New York with respect to any action that may be brought in connection with the Indenture or the Bonds. SMBC has irrevocably appointed its New York Branch, at Sumitomo Mitsui Banking Corporation, New York Branch, 277 Park Avenue, New York, New York 10172, Attention: General Manager, Planning Department, The Americas Division as its authorized agent upon whom process may be served in any action arising out of or based on the Indenture or the Bonds that may be instituted in any court of the State of New York or the United States located in The City of New York, and SMBC expressly accepts the jurisdiction of any such court in respect of any such action. The Indenture provides that if any holder of a Bond applies in writing to the Trustee for access to the list of names and addresses of the holders of the Bonds (which list is required to be preserved by the Trustee) for the purpose of communicating with other holders of the Bonds with respect to their rights under the Indenture or the Bonds, the Trustee must, upon satisfaction of certain conditions by such applicant, either afford such applicant access to such information or mail copies of the communication speciﬁed by such applicant to the listed holders of the Bonds, at the expense of such applicant.

Undertaking for Costs The Indenture provides that SMBC and the Trustee agree, and each holder of a Bond by its acceptance thereof shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under the Indenture or against the Trustee for action taken, suffered or omitted by it as trustee (other than a suit instituted by SMBC, the Trustee or a holder or group of holders holding more than 10% in aggregate principal amount of the Bonds), a court may in its discretion require the ﬁling by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant.

147 TAXATION

Japanese Taxation

The information in this section entitled ‘‘Taxation — Japanese Taxation’’ is provided for the convenience only of investors, who are advised to consult their own legal, tax, accountancy or other professional advisers in order to ascertain their particular circumstances regarding taxation. The statements below are general in nature and are based on certain aspects of current tax laws in Japan. Neither such statements nor any other statements in this Offering Circular are to be regarded as advice on the tax position of any holder of the Bonds, or any person purchasing, selling or otherwise dealing in the Bonds or any tax implications arising from the purchase, sale or other dealings in respect of the Bonds.

The following description of Japanese taxation (limited to national taxes) applies to interest and the difference between, if any, the issue price of the Bonds and the amount which the holder receives upon the redemption of such Bonds (the ‘‘Issue Differential’’) with respect to the Bonds issued by SMBC outside Japan and payable outside Japan as well as certain aspects of capital gains, inheritance and gift taxes. It is not intended to be exhaustive and Bondholders and prospective investors should consult their tax advisers as to their exact tax position and any tax implication.

Interest and issue differential

If the recipient of interest on the Bonds is a non-resident of Japan or a non-Japanese corporation with no permanent establishment within Japan or with a permanent establishment within Japan but where the receipt of the interest under the Bonds is not attributable to the business carried on within Japan by the recipient through such permanent establishment, no Japanese income tax or corporate tax is payable with respect to such interest whether by way of withholding or otherwise, provided that such recipient complies with certain requirements, including:

) if the relevant Bonds are held through certain participants in an international clearing organization such as The Depository Trust Company, or DTC, Euroclear and Clearstream, or certain ﬁnancial intermediaries prescribed by the Special Taxation Measures Law of Japan (Law No 26 of 1957) (as amended) (the ‘‘Special Taxation Measures Law’’) and the relevant cabinet order thereunder (together with the ministerial ordinance and other regulation thereunder, the ‘‘Law’’) (each, a ‘‘Participant’’), the requirement to provide certain information prescribed by the Law to enable the Participant to establish that the recipient is exempt from the requirement for Japanese income tax to be withheld or deducted (the ‘‘Exemption Information’’); and

) if the relevant Bonds are not held by a Participant, the requirement to submit to the relevant paying agent a claim for exemption from withholding tax (Hikazei Tekiyo Shinkokusho) (the ‘‘Claim for Exemption’’), together with certain documentary evidence.

Failure to comply with the requirements described above will result in the withholding by SMBC of income tax at the rate of 15%, unless a lower rate or exemption is applicable under the relevant tax treaty between Japan and the Bondholder’s country of residence. Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is reduced, generally to 10%, with countries including, Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. An exemption from the aforementioned withholding tax may be available under the tax treaty with the United States to certain limited categories of qualiﬁed U.S. residents subject to compliance with certain procedural requirements under Japanese law. In order to avail themselves of such reduced rate of, or exemption from, Japanese withholding tax under an applicable tax treaty, non-residents of Japan or non-Japanese corporations who are entitled, under the applicable tax treaty, to a reduced rate of, or exemption from, Japanese withholding tax on payment of interest by SMBC are required to submit an Application Form for Income Tax Convention regarding Relief from Japanese Income Tax on Interest through SMBC to the relevant tax authority in advance of payment of interest.

148 If the recipient of interest on the Bonds is a Designated Financial Institution and such recipient complies with the requirements, among other things, to provide the Exemption Information or to submit the Claim for Exemption, as the case may be, no income tax will be imposed, either by way of withholding or otherwise, but the recipient will be subject to normal corporate tax with respect to such interest. If the recipient of interest on the Bonds is a non-resident of Japan or a non-Japanese corporation with a permanent establishment within Japan and the receipt of interest is attributable to the business of such non- resident or non-Japanese corporation carried on within Japan through such permanent establishment, such interest will not be subject to a 15% withholding tax by SMBC; provided, however, that the recipient may be required to provide the Exemption Information or submit the Claim for Exemption as described above. Failure to do so may result in the withholding by SMBC of income tax at the rate of 15%. The amount of such interest will be aggregated with the recipient’s other Japanese source income which is subject to Japanese taxation and will be subject to normal income tax or corporate tax, as appropriate. If any recipient of interest on the Bonds who is a resident of Japan or a Japanese corporation (other than Japanese banks, Japanese insurance companies, Japanese securities companies or other Japanese financial institutions falling under certain categories prescribed by the relevant Cabinet Order under Article 3-3, Paragraph 6 of the Special Taxation Measures Law (each a ‘‘Specified Financial Institution’’) or Japanese public corporations (a ‘‘Public Corporation’’) designated by the relevant law which comply with the requirement as referred to in the next paragraph) receives payment of interest through certain Japanese payment handling agents (each, a ‘‘Japanese Payment Handling Agent’’), income tax at the rate of 15% will be withheld by the Japanese Payment Handling Agent rather than SMBC. As SMBC is not in a position to know in advance the recipient’s status, the recipient of interest falling within this category should inform SMBC through a paying agent of its status in a timely manner. Failure to so inform SMBC may result in double withholding. Individual Bondholders being residents of Japan who receive interest under the Bonds through a Japanese Payment Handing Agent will be taxed in Japan on such interest separately from their other income and only by way of withholding of the foregoing withholding tax, as far as the national level income taxes are concerned. In case of other recipients who are individual residents of Japan (other than those referred to in the immediately preceding sentence) or Japanese corporations referred to in the beginning of this paragraph, the amount of interest received by any such recipient will be included in such recipient’s gross income and subject to normal income tax or corporate tax, as appropriate. If a recipient of interest on the Bonds is a Public Corporation or a Specified Financial Institution that keeps its Bonds deposited with, and receives interest through, a Japanese Payment Handling Agent with custody of the Bonds (the ‘‘Japanese Custodian’’) and such recipient submits through the Japanese Custodian to the competent tax authority, the report prescribed by the Law, no income tax will be levied, by way of withholding or otherwise, on such portion of interest as is prescribed by the relevant Cabinet Order as that which is corresponding to the period the Bonds were held by such recipient. However, if the recipient is a Specified Financial Institution, the recipient will be subject to normal corporate tax with respect to such interest. As SMBC is not in a position to know in advance the recipient’s withholding tax exemption status, the recipient of interest falling within this category should inform SMBC through a paying agent of its status in a timely manner. Failure to so notify SMBC may result in the withholding by SMBC of income tax at the rate of 15%. Any amount of interest received by such Public Corporation or Specified Financial Institution in excess of the non-taxable portion described above is subject to a 15% income tax to be withheld by the Japanese Custodian. If the recipient of interest who is a resident of Japan or a Japanese corporation (except for a Designated Financial Institution which complies with the requirements described in fourth preceding paragraph above) receives interest other than through a Japanese Payment Handling Agent, income tax at the rate of 15% will be withheld by SMBC. If the recipient of any Issue Differential with respect to the Bonds is a non-resident of Japan or a non- Japanese corporation having no permanent establishment within Japan or having a permanent establishment within Japan but the receipt of such Issue Differential is not attributable to the business carried on within Japan by such non-resident or non-Japanese corporation through such permanent establishment, no income tax or corporate tax is payable with respect to such Issue Differential. If the receipt of such Issue Differential is

149 attributable to the business of any such non-resident or non-Japanese corporation carried on within Japan through a permanent establishment maintained by it within Japan, such Issue Differential will not be subject to any withholding tax but will be aggregated with the recipient’s other Japanese source income which is subject to Japanese taxation and subject to normal income tax or corporate tax, as appropriate. If the recipient of the Issue Differential with respect to the Bonds is a resident of Japan or a Japanese corporation, such Issue Differential will not be subject to any withholding tax but will be aggregated with the recipient’s gross income and subject to normal income tax or corporate tax, as appropriate.

Capital gains, inheritance, gift, stamp and certain other taxes Gains derived from the sale of the Bonds outside of Japan by a non-resident of Japan or a non Japanese corporation not having a permanent establishment in Japan are generally not subject to Japanese income or corporate tax. Japanese inheritance or gift tax at progressive rates may be imposed on an individual, wherever resident, who has acquired the Bonds as legatee, heir or donee. No stamp, issue, registration or similar taxes or duties will, under present Japanese law, be payable by Bondholders in connection with the issue of the Bonds, nor will such taxes be payable by the Bondholders in connection with their transfer.

United States Federal Income Tax Considerations This disclosure is limited to the U.S. federal income tax issues addressed below. Additional issues may exist that are not addressed in this disclosure and that could affect the U.S. federal income tax treatment of the Bonds. This tax disclosure was written in connection with the promotion and marketing of the Bonds by SMBC and the Initial Purchasers, and it cannot be used by any holder for the purpose of avoiding penalties that may be asserted against the holder under the Internal Revenue Code. Holders should seek their own advice based on their particular circumstances from an independent tax advisor. The following is a discussion of certain U.S. federal income tax consequences of purchasing, owning and disposing of Bonds by U.S. Holders (as defined below), but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person’s decision to acquire such securities. This discussion does not address U.S. state, local and non-U.S. tax consequences. The discussion applies only to U.S. Holders who hold Bonds as capital assets for U.S. federal income tax purposes and it does not address special classes of holders, such as: ) certain financial institutions; ) insurance companies; ) dealers and traders in securities or foreign currencies; ) persons holding Bonds as part of a hedge, straddle, conversion or other integrated transaction; ) persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; ) partnerships or other entities classified as partnerships for U.S. federal income tax purposes; ) persons liable for the alternative minimum tax; ) tax-exempt organizations; or ) persons holding Bonds that own or are deemed to own 10% or more of SMBC’s voting stock. This discussion is based on the Internal Revenue Code of 1986, as amended, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. Prospective investors should consult their own tax advisors concerning the U.S. federal, state, local and non-U.S. tax consequences of purchasing, owning and disposing of Bonds in their particular circumstances.

150 As used herein, a ‘‘U.S. Holder’’ is a beneﬁcial owner of Bonds that is, for U.S. federal income tax purposes: (i) a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. This discussion assumes that SMBC is not, and will not become, a passive foreign investment company, as described below.

Characterization of the Bonds Because the Bonds do not have a stated maturity, the Bonds are deeply subordinated in certain circumstances and certain restrictions apply to the payment of interest on the Bonds, the Bonds will be treated as equity for U.S. federal income tax purposes.

Taxation of Interest Payments of interest, including any amount withheld in respect of Japanese taxes, will be treated as foreign source dividend income to the extent paid out of SMBC’s current or accumulated earnings and proﬁts (as determined under U.S. federal income tax principles). Such dividends will not be eligible for the dividends- received deduction generally allowed to U.S. corporations. U.S. Holders should consult their own tax advisors regarding the availability of the preferential rate applicable to certain dividends paid to non-corporate U.S. Holders in taxable years beginning before January 1, 2009. Payments on the Euro Bonds will be included in income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of the U.S. Holder’s receipt of the payment, regardless of whether the payment is in fact converted into U.S. dollars at such time. If the payment is converted into U.S. dollars on the date of receipt, the U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the payment. A U.S. Holder may have foreign currency gain or loss if it does not convert the amount of the payment into U.S. dollars on the date of its receipt. Interest payments will be income from sources outside the United States for foreign tax credit limitation purposes. The limitation on foreign taxes, if any, eligible for the U.S. foreign tax credit is calculated separately with respect to speciﬁc classes of income. The rules relating to foreign tax credits are complex. Therefore, U.S. Holders are urged to consult their own tax advisors regarding the availability of foreign tax credits in their particular situations.

Sale and Other Disposition of the Bonds For U.S. federal income tax purposes, gain or loss realized by a U.S. Holder on the sale or other disposition of Bonds will be capital gain or loss (assuming, in the case of a redemption, that such U.S. Holder does not own, and is not deemed to own, any of the SMBC’s ordinary shares), and will be long-term capital gain or loss if the holder has held the Bonds for more than one year. The amount of the U.S. Holder’s gain or loss will be equal to the difference between the amount realized on the sale or other disposition and the holder’s tax basis in the Bonds, as determined in U.S. dollars. Such gain or loss will generally be U.S. source gain or loss for foreign tax credit purposes.

Passive Foreign Investment Company Rules Based upon certain proposed Treasury regulations which are not yet in effect but are proposed to become effective for taxable years beginning after December 31, 1994 or, for electing taxpayers, for taxable years beginning after December 31, 1986 (the ‘‘Proposed Regulations’’), SMBC believes that is was not a passive foreign investment company (a ‘‘PFIC’’) for U.S. federal income tax purposes for its most recent taxable year and does not expect to be considered a PFIC in the foreseeable future. However, since there can be no assurance that the Proposed Regulations will be ﬁnalized in their current form and since PFIC status depends upon the

151 composition of SMBC’s income and assets and the market value of its assets from time to time, there can be no assurance that SMBC will not be considered a PFIC for any taxable year. If SMBC were treated as a PFIC for any taxable year during which a U.S. Holder held the Bonds, certain adverse U.S. federal income tax consequences could apply to such holder.

Information Reporting and Backup Withholding Payments of interest and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries may be subject to information reporting and to backup withholding unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is furnished to the Internal Revenue Service.

152 CERTAIN ERISA CONSIDERATIONS The fiduciary standards of the U.S. Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’), should be considered by the fiduciary of a pension, profit-sharing or other employee benefit plan subject to Title I of ERISA (an ‘‘ERISA Plan’’) in the context of the ERISA Plan’s particular circumstances before authorizing an investment in the Bonds. Among other factors, the fiduciary should consider whether such an investment is in accordance with the documents governing the ERISA Plan and whether an investment is appropriate for the ERISA Plan in view of its overall investment policy and the composition and diversification of its portfolio. Section 406 of ERISA and Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the ‘‘Code’’), prohibit ERISA Plans, as well as individual retirement accounts, self-employment retirement plans and other pension and profit sharing plans subject to Section 4975 of the Code (together with ERISA Plans, ‘‘Plans’’) from engaging in certain transactions involving ‘‘plan assets’’ with persons who are ‘‘parties in interest’’ under ERISA or ‘‘disqualified persons’’ under the Code with respect to the Plan. Therefore, a Plan fiduciary considering purchasing the Bonds should consider whether the purchase or holding of the Bonds might constitute a ‘‘prohibited transaction’’. Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the prohibited transaction rules of ERISA or the Code (collectively, ‘‘Non-ERISA Plans’’), but may be subject to similar rules under other laws or regulations (‘‘Similar Laws’’). SMBC and certain of their affiliates may be considered a ‘‘party in interest’’ or a ‘‘disqualified person’’ with respect to certain Plans by reason of, for example, SMBC providing services to such Plans. Prohibited transactions within the meaning of ERISA or the Code may arise, for example, if the Bonds are acquired by or with the assets of a Plan with respect to which SMBC or any of its affiliates is a ‘‘party in interest’’ or a ‘‘disqualified person’’, unless the Bonds are acquired under one of the prohibited transaction class exemptions (‘‘PTCEs’’) issued by the U.S. Department of Labor for transactions effected on behalf of that Plan by a ‘‘qualified professional asset manager’’ (PTCE 84-14) or an ‘‘in-house asset manager’’, (PTCE 96-23) for transactions involving insurance company general accounts (PTCE 95-60), for transactions involving insurance company pooled separate accounts (PTCE 90-1) or for transactions involving bank collective investment funds (PTCE 91-38). By purchasing and holding the Bonds or exercising any rights related thereto, the person making the decision on behalf of a Plan or a Non-ERISA Plan shall be deemed to represent, on behalf of itself and the Plan, that such purchase, holding and exercise is eligible for exemptive relief under one of the foregoing PTCEs or, with respect to a Non-ERISA Plan, will not otherwise result in a non-exempt prohibited transaction under any Similar Laws. Due to the complexity of the rules and the penalties that may be imposed upon persons involved in non- exempt prohibited transactions, it is particularly important that fiduciaries or other persons considering the purchase of Bonds on behalf of a Plan or Non-ERISA Plan consult with their counsel regarding the applicable provisions of ERISA and the Code and the availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14, or any Similar Laws.

153 OFFER AND RESALE SMBC and the Initial Purchasers named below (‘‘Initial Purchasers’’) have entered into a purchase agreement, dated July 15, 2005 (the ‘‘Purchase Agreement’’), with respect to the Bonds. Subject to certain conditions, each Initial Purchaser has severally agreed to purchase the principal amount of Bonds indicated in the following table. Goldman Sachs International, Morgan Stanley & Co. International Limited, UBS Limited and Daiwa Securities SMBC Europe Limited are the representatives of the Initial Purchasers. Principal Amount of Principal Amount of Initial Purchasers Dollar Bonds Euro Bonds

Goldman Sachs International ************************* 432,000,000 224,000,000 Morgan Stanley & Co. International Limited ************ 337,500,000 175,000,000 UBS Limited ************************************** 337,500,000 175,000,000 Daiwa Securities SMBC Europe Limited *************** 162,000,000 84,000,000 Deutsche Bank AG, London Branch ******************* 27,000,000 14,000,000 J.P. Morgan Securities Ltd. ************************** 27,000,000 14,000,000 Merrill Lynch International*************************** 27,000,000 14,000,000 The Initial Purchasers are committed to take and pay for all of the Bonds, if any are taken. Bonds sold by the Initial Purchasers outside the United States to non-U.S. persons in reliance on Regulation S and Bonds sold by the Initial Purchasers through their respective selling agents inside the United States to qualified institutional buyers in reliance on Rule 144A will initially be offered at the initial offering prices set forth on the cover page of this Offering Circular (the ‘‘Offering Prices’’). The Initial Purchasers propose to offer the Bonds at the Offering Prices. If all the Bonds are not sold at the initial offering price, the representatives may change the Offering Prices and other selling terms. The Purchase Agreement provides that SMBC will pay as compensation for the Initial Purchasers’ arranging the Offering an amount of $10,125,000 for the Dollar Bonds and 45,250,000 for the Euro Bonds and will reimburse the Initial Purchasers for certain expenses of the Offering. The Initial Purchasers propose to offer the Bonds in part to purchasers at the offering prices set forth on the first page of this Offering Circular and in part to certain securities dealers at such prices less a concession not to exceed 0.50% of the principal amount of the Bonds. The Initial Purchasers may allow, and such dealers may reallow, a concession not to exceed 0.25% of the principal amount of the Bonds to certain brokers and dealers. After the Bonds are released for sale to the public, the offering prices and other selling terms may from time to time be varied by the Initial Purchasers. SMBC has been advised by the Initial Purchasers that they propose (a) to resell the Rule 144A Bonds, through their respective selling agents, only to QIBs in the United States in reliance on Rule 144A and (b) to resell the Regulation S Bonds only to non-U.S. persons outside the United States in offshore transactions in reliance on Regulation S and, in each case, in accordance with applicable law. The offering price for Bonds of each series and the underwriting compensation are the same for the Rule 144A Bonds and the Regulation S Bonds of such series. Any offer or sale of Bonds in reliance on Rule 144A will be made by broker-dealers who are registered as such under the Exchange Act. Terms used above have the meanings given to them by Regulation S and Rule 144A. Each Initial Purchaser has acknowledged and agreed that, except as permitted by the Purchase Agreement, it will not offer or sell the Bonds (i) as part of its distribution at any time or (ii) otherwise until 40 days after the latest of the date the Bonds are first offered to persons other than distributors in reliance on Regulation S, the commencement of the Offering and the original issue date of the Bonds, within the United States or to, or for the account or benefit of U.S. persons, and that it will send to each dealer to which it sells Bonds during the foregoing period a confirmation or other notice setting forth the restrictions on offers and sales of the Bonds in the United States or to, or for the account or benefit of, U.S. persons. In addition, until the expiration of the 40-day period referred to above, an offer or sale of such Bonds within the United States by a dealer that is not participating in the offering may violate the registration requirements of

154 the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the Securities Act or pursuant to another exemption from registration under the Securities Act.

In connection with the Offering, Goldman Sachs International and/or any of its related corporations may purchase and sell Bonds in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by Goldman Sachs International and/or any of its related corporations of a greater number of Bonds than the Initial Purchasers are required to purchase in the Offering. Stabilizing transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in market prices for the Bonds while the Offering is in progress.

Goldman Sachs International and/or any of its related corporations also may impose a penalty bid. This occurs when a particular Initial Purchaser repays to Goldman Sachs International and/or any of its related corporations a portion of the underwriting commission received by such Initial Purchaser because the representatives have repurchased Bonds sold by or for the account of such Initial Purchaser in stabilizing or short covering transactions.

These activities by Goldman Sachs International and/or any of its related corporations may stabilize, maintain or otherwise affect the market prices of the Bonds. As a result, the prices of the Bonds may be higher than the prices that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by Goldman Sachs International and/or any of its related corporations at any time and must be brought to an end after a limited period. Such stabilizing shall be in compliance with all applicable laws, regulations and rules.

Each Initial Purchaser has also represented and agreed that: (a)(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell the Bonds other than to persons whose ordinary activities involved them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Bonds would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (‘‘FSMA’’) by SMBC; (b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMA does not apply to SMBC; and (c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

The Bonds have not been and will not be registered under the Securities and Exchange Law and will be subject to the Special Taxation Measures Law. Accordingly, each of the Initial Purchasers has represented and agreed that (i) it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Bonds in Japan or to, or for the benefit of, any resident of Japan (which term as used in this item (i) means any person resident of Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and governmental guidelines of Japan; and (ii) it has not, directly or indirectly, offered or sold and will not, (a) as part of its distribution at any time and (b) otherwise until 40 days after the date of issue of the Bonds, directly or indirectly offer or sell the Bonds in Japan or to, or for the benefit of, any resident of Japan (which terms as used in this item (ii) means any person resident in Japan, including any corporation or other entity organized under the laws of Japan but excluding certain financial institutions defined in Article 6, paragraph 8 of the Special Taxation Measures Law and any other excluded category of persons, corporations or other entities under the Special Taxation Measures Law) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, so as to satisfy the requirements of the tax exemption as provided for in Article 6 of the Special Taxation Measures Law and any other applicable laws, regulations and governmental guidelines of Japan.

155 This Offering Circular has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds may not be circulated or distributed, and the Bonds may not be offered or sold, or be made the subject of any invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified in Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the ‘‘Securities and Futures Act’’) (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act. Each Initial Purchaser has acknowledged and agreed that this Offering Circular has not, and no other prospectus, disclosure document, offering material or advertisement in relation to the Program or the Bonds has, been lodged with the Australian Securities and Investments Commission or the Australian Stock Exchange Limited or any other Governmental Agency. Each Initial Purchaser has represented and agreed that it: (a) has not offered or invited applications, and will not offer or invite applications, for the issue, sale or purchase of the Bonds within, to or from Australia (including an offer or invitation which is received by a person in Australia), unless: (i) the minimum aggregate consideration payable by each offeree is at least A$500,000 (disregarding moneys lent by the offerer or its associates) or the offer or invitation otherwise does not require disclosure to investors in accordance with Part 6D.2 of the Corporations Act 2001 of Australia; and (ii) such action complies with all applicable laws and regulations; (b) has not distributed or published, and will not distribute or publish, this Offering Circular or any other prospectus, disclosure document, offering material or advertisement relating to the Bonds in Australia, unless: the minimum aggregate consideration payable by each offeree is at least A$500,000 (disregarding moneys lent by the offerer or its associates) or the offer or invitation otherwise does not require disclosure to investors in accordance with Part 6D.2 of the Corporations Act 2001 of Australia. Each Initial Purchaser has represented and agreed that: (a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Bonds other than (i) to ‘‘professional investors’’ as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the ‘‘Securities and Futures Ordinance’’) and any rules made under that Ordinance; or (ii) in other circumstances which do not result in the document being a ‘‘prospectus’’ as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (b) it has not issued and will not issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Bonds, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Bonds which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ as defined in the Securities and Futures Ordinance and any rules made under that Ordinance. The Bonds are a new issue of securities with no established trading market. Approval in principle has been received for listing of the Bonds on the SGX-ST. For so long as the Bonds are listed on the SGX-ST, under the rules of the SGX-ST, the minimum board lot size in which the Dollar Bonds are required to be traded on the SGX-ST is U.S.$200,000 and the minimum board lot size in which the Euro Bonds are required to be traded on the SGX-ST is 4200,000.

156 SMBC has been advised by the Initial Purchasers that they currently intend to make a market in the Bonds. However, the Initial Purchasers are not obligated to do so and any such market making activity will be subject to the limits imposed by applicable law and may be interrupted or discontinued at any time without notice. See ‘‘Risk Factors — Risks Related to the Bonds — The Market for the Bonds May have Limited Liquidity and the Bonds are Subject to Resale Restrictions’’. SMBC has agreed during the period beginning from the date hereof and continuing until the date 30 days after the date hereof, not to offer, sell, contract to sell or otherwise dispose of, in any market outside of Japan, any perpetual subordinated debt securities of SMBC which are denominated in U.S. dollars or Euro and, in the case of perpetual subordinated debt securities of subsidiaries of SMBC, that are supported or guaranteed on a perpetual subordinated basis upon the occurrence of an event similar to a Subordination Event by a letter of credit or otherwise of SMBC, without the prior written consent of the Initial Purchasers; provided that the foregoing shall not apply to the Euro Medium Term Note Program described under ‘‘Business — Funding — Euro Medium Term Note Programs’’. SMBC has agreed to indemnify the Initial Purchasers against certain liabilities including liabilities under the Securities Act. The Initial Purchasers or their affiliates may in the past have provided, are presently providing and may in the future provide, investment banking and other services to and otherwise have commercial dealings with or have officers who serve as directors of SMBC and its affiliates, for which such Initial Purchasers or their affiliates have received or will receive customary fees and commissions. SMFG owns 40% equity interests in Daiwa Securities SMBC which is an affiliate of Daiwa Securities SMBC Europe Limited, one of the Initial Purchasers. An affiliate of Goldman Sachs International owns a substantial amount of convertible preferred stock of SMFG.

157 VALIDITY OF THE BONDS The validity of the Bonds offered hereby will be passed upon for SMBC by Davis Polk & Wardwell, New York, New York and for the Initial Purchasers by Sullivan & Cromwell LLP, New York, New York. Sullivan & Cromwell LLP will rely, as to matters governed by the laws of Japan, upon the opinion of Nagashima Ohno & Tsunematsu.

CERTIFIED PUBLIC ACCOUNTANTS The consolidated and non-consolidated financial statements of the Bank as of and for the years end March 31, 2004 and 2005 appearing in this Offering Circular have been examined by KPMG AZSA & Co., independent certified public accountants in Japan, as set forth in their reports appearing elsewhere herein. The consolidated and non-consolidated financial statements of the Bank as of and for the year end March 31, 2003 appearing in this Offering Circular have been examined by Asahi & Co., independent certified public accountants in Japan, as set forth in their reports appearing elsewhere herein. Asahi & Co. changed its name to KPMG AZSA & Co. due to a merger with AZSA & Co. as of January 1, 2004.

158 NOTE REGARDING FINANCIAL INFORMATION On February 3, 2003, Japan Research Institute, Sumitomo Mitsui Card and SMBC Leasing became wholly- owned subsidiaries of SMFG. At the same time, Daiwa Securities SMBC and Daiwa SB Investments became directly invested companies of SMFG. The financial results of these entities were consolidated with the financial results of the Former-SMBC for the fiscal year ended March 31, 2002. Operating results and cash flows of these entities for the fiscal year ended March 31, 2003 were consolidated with the consolidated statement of operations and consolidated statement of cash flows of the Bank for the fiscal year ended March 31, 2003. The financial position of these entities as of March 31, 2003 were not consolidated with the consolidated balance sheet of the Bank as of March 31, 2003 but were consolidated with the consolidated balance sheet of SMFG as of March 31, 2003. Japanese GAAP does not require a restatement of prior years’ financial statements in these circumstances and no such restatement is presented in this Offering Circular. On March 17, 2003 the Former-SMBC merged with Wakashio Bank. Wakashio Bank was the surviving entity. On January 17, 2003, Wakashio Bank became a subsidiary of SMFG in preparation for the merger. Prior to that date, Wakashio Bank had been a subsidiary of the Former-SMBC. In this Offering Circular, financial information presented for the fiscal year ended March 31, 2002 represents that of the Former-SMBC (which, at the time, included Wakashio Bank as a subsidiary of the Former-SMBC), while the financial information presented for the fiscal year ended March 31, 2003 represents that of the Bank. Unless otherwise stated, all information in this Offering Circular is presented on a consolidated basis. The non- consolidated statement of income for the fiscal year ended March 31, 2003 does not include the profits and losses for the Former-SMBC from April 1, 2002 to March 16, 2003.

159 SUMMARY OF SELECTED DIFFERENCES BETWEEN JAPANESE GAAP AND U.S. GAAP The consolidated financial statements of the Bank and its subsidiaries presented in this Offering Circular are prepared and presented in accordance with Japanese GAAP. Certain selected differences between Japanese GAAP and U.S. GAAP that may affect the Bank’s financial statements included in this Offering Circular are summarized below. Such differences involve methods for recognizing and measuring the amounts shown in financial statements, as well as differing financial statement presentation and disclosure requirements. Such summary should not be construed to be exhaustive, nor should it be expected to reveal all differences between Japanese GAAP and U.S. GAAP that are relevant to the Bank. No attempt has been made to identify all significant differences between Japanese GAAP and U.S. GAAP that may affect the Bank’s financial statements included in this Offering Circular. Additionally, no attempt has been made to identify disclosure, presentation or classification differences that would affect the manner in which transactions and events are presented in the Bank’s financial statements or notes thereto, or to identify future differences between Japanese GAAP and U.S. GAAP as the result of prescribed changes in accounting standards. Regulatory bodies that promulgate Japanese GAAP and U.S. GAAP have significant projects ongoing that could affect future comparisons such as this one. Finally, no attempt has been made to identify all future differences between Japanese GAAP and U.S. GAAP that may affect the Bank’s financial statements as a result of transactions or events that may occur in the future. In making an investment decision, investors must rely upon their own examination of the Bank, the terms of the Offering and the Bank’s financial information. Potential investors should consult their own professional advisors for an understanding of the differences between Japanese GAAP and U.S. GAAP, and how these differences might affect the financial information herein. Japanese GAAP U.S. GAAP

Consolidated Subsidiaries Consolidated Subsidiaries The consolidated financial statements include all Statement of Financial Accounting Standards enterprises that are controlled by the parent, (‘‘SFAS’’) No. 94 requires a parent company to irrespective of the percentage of the voting shares consolidate all of its majority-owned subsidiaries in owned. Control is defined as the power to govern the which it holds more than 50% of the outstanding decision making body of an enterprise. voting shares, subject to certain exceptions related to temporary control or the parent company’s inability to exercise control over the subsidiary. SFAS 140 defines the criteria of a qualifying special purpose entity (‘‘QSPE’’), a trust or other legal vehicle that may be the recipient of a transfer of financial assets from an enterprise and that is not to be consolidated in the financial statements of a transferor or its affiliates. An SPE is qualifying only if it is demonstrably distinct from the transferor and its activities are strictly limited. A QSPE generally may hold only passive financial assets and may be permitted to dispose of them only in automatic response to certain objectively-defined events. Generally, for non-consolidation of non-qualifying SPEs to be appropriate, the majority owners of the SPE must be independent third parties who have made a substantive capital investment in the SPE, have control of the SPE, and have substantive risks and rewards of ownership of the assets of the SPE.

160 FASB Interpretation No. 46R (‘‘FIN 46R’’) addresses consolidation of what are termed variable interest entities, where the voting interest approach is not effective in identifying controlling financial interests in entities that are not controllable through voting interests or in which the equity investors do not bear the residual economic risks. An entity is considered a variable interest entity that shall be subject to consolidation if (i) the entity’s total equity at risk is insufficient to permit the entity to finance its activities without additional subordinated support, or (ii) as a group, the holders of the equity investment at risk lack any of three characteristics of a controlling financial interest. An enterprise shall consolidate a variable interest entity if that enterprise has a variable interest, that will absorb a majority of the entity’s expected losses, receive a majority of the entity’s residual returns, or both, where variable interests are defined as contractual, ownership or other pecuniary interests in an entity that change with changes in the fair value of the entity’s net assets exclusive of variable interests.

Equity Method of Accounting Equity Method of Accounting Affiliates are enterprises over which the Bank has Investments representing ownership of 20% to 50% material influence with respect to their financial and of the outstanding voting shares are accounted for by operating policies. Investments in non-consolidated the equity method. In addition, investments subsidiaries or affiliates are accounted for by the representing ownership of less than 20% are equity method in the consolidated financial accounted for by the equity method if the investor has statements. the ability to exercise significant influence over the entity in which it invests.

Business Combinations Business Combinations Accounting treatment that is similar to the pooling- SFAS No. 141, Accounting for Business of-interest method is normally used for business Combinations, prescribes the purchase method for all combinations in accordance with the Commercial business combinations. The purchase method requires Code of Japan. Under the accounting treatment, the the valuation of the acquired assets and liabilities balance sheet items of the acquired company are based on fair market values at the time of combined with those of the acquiring company at combination. The difference between the fair market their carrying amount or fair value. The Accounting values of the net assets and the consideration given Standards Board of Japan published ‘‘Opinion represents goodwill. Concerning Establishment of Accounting Standard for Business Combination’’ in October 2003. According to the opinion, from the ﬁscal year starting April 1, 2006, new accounting standard is required to be applied. Under the new accounting standard, the purchase method is the basic method. The pooling- of-interests-method is applied only to exceptionally limited circumstances when strict criteria are met.

161 Securities Securities Debt securities that the Bank has the intent and Investments in marketable equity and all debt ability to hold to maturity (held-to-maturity securities are classiﬁed at acquisition according to securities) are carried at amortized cost. Trading management’s intent, into one of the following securities are carried at market value with gains or categories: trading, available-for-sale, or held-to- losses included in the current period income. Other maturity. Trading securities are marked to fair value, securities (available-for-sale securities) are carried at with the resulting unrealized gain or loss recognized fair value with unrealized gains or losses recorded in income. Available-for-sale securities should be directly to equity, net of taxes. marked to fair value, with the resulting unrealized gain or loss recorded in other comprehensive income. Held-to-maturity securities are carried at amortized cost. Other than temporary declines in value are charged to earnings when incurred.

162 Accounting for Derivatives and Hedging Activities Accounting for Derivatives and Hedging Activities Derivative instruments are carried at fair value with SFAS 133, Accounting for Derivative Instruments changes included in the current period income unless and Hedging Activities requires the recognition of all certain hedge accounting criteria are met. In general, derivatives as assets or liabilities in the balance sheet if derivative instruments are used as hedges and meet measured at fair value. Changes in the fair values of certain hedging criteria, a company defers derivatives are included in earnings unless the recognition of gains or losses resulting from changes derivative qualifies for hedge accounting criteria. As in fair value of derivative instruments as either an a result of assessing and measuring effectiveness of asset or liability until the related losses or gains on hedges, changes in fair values of ineffective portion the hedged items are recognized. As a result of of derivatives are included in earnings and to be assessing and measuring effectiveness of hedges, disclosed. The changes in the fair value of derivatives changes in fair values of ineffective portion of qualifying for hedge accounting criteria depends on derivatives can be deferred if only the total portion is the intended use. recognized as effective. ) For derivatives designated as hedging the exposure As for fair value hedge accounting to hedging to changes in the fair value of an asset or liability transactions for reducing the exposure to market or a firm commitment, the gain or loss is volatility of bonds classified as other securities, a recognized in earnings in the period of change company can select either of following treatment. together with the offsetting fair value loss or gain on the hedged item. 1) A company defers recognition of gains or losses resulting from changes in fair value of derivative ) For derivatives designated as hedging the exposure instruments as either an asset or liability until the to variable cash flows of a forecasted transaction, related losses or gains on the hedged items are the effective portion of the derivative’s gain or loss recognized. is initially reported as a component of other comprehensive income. Gains and losses of cash 2) A company recognizes gains or losses resulting flow hedges included in other comprehensive from changes in fair value of derivative instruments income are reclassified into earnings in the same in earnings in the period of change together with the period or periods during which the hedged cash offsetting fair value loss or gain on the hedged item. flows affect earnings. A bank was permitted to adopt ‘‘Macro Hedge ) For derivatives designated as hedging the foreign Accounting’’ as hedge accounting method, under currency exposure of a net investment in a foreign which the bank manages the total interest rate risk operation, the gain or loss is reported in other arising from various financial assets and liabilities as comprehensive income as part of the cumulative a whole by using financial derivative transactions. translation adjustment. SFAS 133 was partially The treatment was temporarily permitted until fiscal amended by SFAS 138 and SFAS 149. year starting April 1, 2002. From the fiscal year starting April 1, 2003, Japanese banks are required to apply the basic provision of JICPA Industry Audit Committee Report No. 24 to hedges on groups of large-volume, small-value monetary and debts with similar risk characteristics.

163 Accounting for Sales of Loans with Recourse Accounting for Sales of Loans with Recourse Certain loan participations which meet specified Under U.S. GAAP, pursuant to SFAS 140, financial criteria are allowed to be accounted for as sales, even assets are generally recorded as sold and removed though the loans are not legally isolated from the from the balance sheet only when the following transferor. conditions have been met: legal title has passed; the financial assets are beyond the reach of the transferor’s creditors, even in bankruptcy or receivership; the purchaser obtains the asset free of conditions that constrain it from taking advantage of the right to pledge or sell the asset; and the transferor does not maintain effective control over the assets as defined. Sales that are not free of such constraints are recorded as a financing. A transfer of assets qualifying as a sale under U.S. GAAP but in connection with which the seller has assumed a limited recourse obligation would result in the recording of a liability for the estimated recourse.

Restructured Loans Restructured Loans Discounted present value had not been historically SFAS No. 114 requires that impairment of a loan, used to measure impairment of a loan. Reserves for including a troubled debt restructuring, be measured restructured loans were computed based on historical based on the present value of expected future cash loss experience. flows discounted at the loan’s effective interest rate or, as practicably expedient, at the loan’s observable From the fiscal year ended at March 31, 2003, market price or the fair value of the collateral if the pursuant to ‘‘Audit considerations with respect to the loan is collateral-dependent. discounted cash flow method used to determine allowance for credit losses by banks and other financial institutions’’ (issued by JICPA on February 24, 2003), major banks are required to provide reserves for possible loan losses using the Discounted Cash Flows method as follows for loans to large borrowers classified as ‘‘Past due loans (3 months or more)’’ or ‘‘Restructured loans’’: (a) A bank rationally estimates the cash flows of principal and interest, and measures their present values by discounting the cash flows using the initial contractual interest rate. (b) A bank recognizes the difference between the present value and its book value as estimated losses and provides reserve for possible loan losses.

Accrued Interest on Non-Performing Loans Accrued Interest on Non-Performing Loans The Bank places into the non-accrual loans which Loans are placed on non-accrual status when they are management assesses as ‘‘Bankrupt’’, ‘‘Effectively deemed uncollectible based on management’s Bankrupt’’ or ‘‘Potentially Bankrupt’’. Accrued assessment. Accrued interest related to such loans is interest related to such loans is written-off. reversed against interest income. Income is generally recognized on such loans using either a cost-recovery method, cash-basis method or some combination of those methods.

164 Impairment of Long-Lived Assets Impairment of Long-Lived Assets In August 2002, the Business Accounting SFAS No. 144 requires that an impairment loss be Deliberation Council issued ‘‘Opinion Concerning recognized only if the carrying amount of a long- Establishment of Accounting Standard for lived asset is not recoverable from its undiscounted Impairment of Fixed Assets.’’ The opinion requires future cash flows and that it be measured as the that an impairment loss be recognized only if there difference between the carrying amount and fair are indications of impairment loss and the carrying value of the long-lived assets. The impairment loss amount of a fixed asset is lower than its aggregate shall be included in the current period income. undiscounted future cash flows. The amount of impairment loss to be recognized is the difference between the carrying amount of fixed asset and the greater of: (i) the aggregate discounted future cash flows, and (ii) the expected resale price of the fixed assets. The impairment loss shall be included in the current period income. This new accounting standard becomes effective for fiscal years beginning after March 31, 2005. Earlier adoption is permitted for the fiscal year ended March 31, 2004.

Goodwill Goodwill Goodwill that is the excess of investment cost over Under SFAS No. 142, goodwill is not amortized but the parent’s share of the underlying equity in net tested at least annually for impairment. assets of the subsidiary at the date of acquisition and that is created in consolidation procedures shall be amortized within 20 years. According to the ‘‘Opinion Concerning Establishment of Accounting Standard for Business Combination’’ issued in October 2003, goodwill is strictly amortized within 20 years using a systematic method, with impairment test in addition.

Employee Pension and Post-Retirement Benefits Employee Pension and Post-Retirement Benefits Reserve for employee retirement benefit is recorded U.S. GAAP generally requires the use of actuarial based on an actuarial computation, which uses the methods for measuring annual employee benefit costs present value of the projected benefit obligation and including the use of assumptions as to the rate of pension assets, based on an employee’s credited years salary progression and discount rate, the amortization of services at the balance sheet date. Contributions of prior service costs over the remaining service are charged to the income statement as a decrease in period of active employees and the immediate pension costs when paid. recognition of a liability when the accumulated benefit obligation exceeds the fair market value of All unrecognized actuarial gains/losses are strictly plan assets. subject to amortization. Unrecognized actuarial gains/losses that are equal to There is no requirement of additional minimum the greater of 10% of the present value of benefit liability under Japanese GAAP. obligation (PBO) and 10% of the fair value (market related value) of plan assets, do not need to be amortized (corridor amortization). Liability that is at least equal to unfunded accumulated benefit obligation is recognized as additional minimum liability.

165 Accounting for the transfer of the Substitutional Accounting for the transfer of the Substitutional Portion of Employee Pension Fund Liabilities Portion of Employee Pension Fund Liabilities In general, accounting for any gain on transfer to the In accordance with Emerging Issues Task Force Issue Japanese Government of the Substitutional Portion of No. 03-02 ‘‘Accounting for the Transfer to the Employee Pension Fund Liabilities is recognized Japanese Government of the Substitutional Portion of when the obligation is settled and actually Employee Pension Fund Liabilities’’, the entire transferred. As an alternative, the gain on the return separation process and transfer will be accounted for of the entrusted portion of the employee pension fund at the time the transfer of the benefit obligation and is allowed if the transfer is resolved by board of related plan assets is completed. The ultimate delegates and there are plan assets equivalent to the determination of any gain or loss will be made as of amount that should be transferred to the Japanese the date the transfer has been completed in Government. This treatment is allowed from June 15, accordance with Statement of Financial Accounting 2001 to March 31, 2004. Standards No. 88 ‘‘Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits’’.

Earned Surplus Reserve Earned Surplus Reserve Under the Banking Law of Japan, an amount Such earned surplus reserve is not provided for under equivalent to at least 20% of cash disbursements paid U.S. GAAP. was appropriated and was set aside as earned surplus reserve in the retained earnings. Effective October 1, 2001, such earned surplus reserve is recorded until total of both earned surplus reserve and capital surplus equals the amount of common stock. The excess of the total amount over the amount of common stock may be transferred to retained earnings by resolution of stockholders.

Land Revaluation Excess Land Revaluation Excess Land which had been recorded at acquired cost was Such land revaluation excess is not permissible. allowed to be revalued at fair value at one time during a ﬁscal year from March 31, 1998 to March 31, 2002. The resulting gains were recorded in land revaluation excess as a separate component in the stockholders’ equity, net of tax. The land shall not be revalued after the initial revaluation even if the fair value declined. From the ﬁscal year commencing after March 31, 2005, Accounting Standard for Impairment of Fixed Assets will become effective. This new accounting standard stipulates that when the impairment loss is recognized on revalued land under certain conditions, corresponding land revaluation excess should be transferred to retained earnings.

Guarantees Guarantees Notional amounts of guarantees, including standby In November 2002, the Financial Accounting Board letters of credit and the related reimbursement (FASB) issued interpretation No. 45, ‘‘Guarantor’s obligations of customers, are presented on the Accounting and Disclosure Requirements for balance sheet with assets of equal amounts. Guarantees, Including Indirect Guarantees of Indebtedness of Others’’, which, among other

166 provisions, applies to guarantees issued or modiﬁed after December 31, 2002. The issuer of a guarantee is required to recognize, at the inception of the guarantee, an initial liability for fair value of its obligations under the guarantee basically. The above- mentioned treatment is required for letters, such as ﬁnancial standby letters of credit and contracts that contingently require the guarantor to make payments to the guaranteed party.

Loan Fees Loan Fees Loan origination fees and costs are recognized when Loan origination fees are deferred and recognized income is received and costs are incurred. over the life of the related loan as an adjustment of yield based on the effective interest method. Certain direct loan origination costs are also deferred and recognized over the life of the related loan as a reduction of the loan’s yield based on the effective interest method.

Directors’ Bonuses Directors’ Bonuses Directors’ bonuses are charged directly to retained Directors’ compensation is expensed on an accrual earnings by resolution of shareholders. basis as earned.

Leases Leases Unless transfer of ownership occurs, financing leases Leases are classified as either capital lease or may be accounted for as operating leases operating lease, based on specified criteria. A lease accompanied with sufficient footnote disclosure. which transfers substantially all of the benefits and risks of ownership to the lessee is reported as a capital lease. Other leases are accounted for as operating leases.

Comprehensive Income Comprehensive Income There are no specific accounting principles for U.S. GAAP requires that all items that are required to reporting comprehensive income. be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income includes all changes in shareholders’ equity during an accounting period except those resulting from investments by or distributions to owners, including certain items not included in the current results of operations.

167 THIS PAGE IS INTENTIONALLY LEFT BLANK INDEX TO THE FINANCIAL STATEMENTS Page Independent Auditors’ Report on the Consolidated Financial Statements of the Bank as of and for the year ended March 31, 2005 *********************************************************** F-2 Consolidated Financial Statements of the Bank as of and for the year ended March 31, 2005 ******* F-3 Independent Auditors’ Report on the Consolidated Financial Statements of the Bank as of and for the year ended March 31, 2004 *********************************************************** F-47 Consolidated Financial Statements of the Bank as of and for the year ended March 31, 2004 ******* F-48 Independent Auditors’ Report on the Consolidated Financial Statements of the Bank as of and for the year ended March 31, 2003 *********************************************************** F-96 Consolidated Financial Statements of the Bank as of and for the year ended March 31, 2003 ******* F-97

F-1 INDEPENDENT AUDITORS’ REPORT To the Board of Directors of Sumitomo Mitsui Banking Corporation We have audited the accompanying consolidated balance sheet of Sumitomo Mitsui Banking Corporation (‘‘SMBC’’) and subsidiaries as of March 31, 2005, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended, expressed in Japanese yen. These consolidated financial statements are the responsibility of SMBC’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of SMBC and subsidiaries as of March 31, 2005, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in Japan. The consolidated financial statements as of and for the year ended March 31, 2005 have been translated into United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our opinion, the consolidated financial statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 1 to the consolidated financial statements.

KPMG AZSA & Co. Tokyo, Japan June 29, 2005

F-2 CONSOLIDATED FINANCIAL STATEMENTS OF SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 2005

Millions of Millions of yen U.S. dollars (Note 1) Assets Cash and due from banks (Note 9)*************************************** ¥ 2,926,227 $ 27,266 Deposits with banks (Notes 9, 28) *************************************** 2,059,337 19,189 Call loans and bills bought ********************************************* 1,004,512 9,360 Receivables under resale agreements ************************************* 124,856 1,163 Receivables under securities borrowing transactions ************************* 568,340 5,296 Commercial paper and other debt purchased (Note 28) ********************** 606,032 5,647 Trading assets (Notes 3, 9, 28) ****************************************** 3,769,073 35,120 Money held in trust (Note 28) ****************************************** 3,832 36 Securities (Notes 4, 9, 28)********************************************** 24,018,612 223,803 Loans and bills discounted (Notes 5, 9, 27)******************************** 55,148,929 513,874 Foreign exchanges **************************************************** 895,586 8,345 Other assets (Notes 6, 9) *********************************************** 1,801,341 16,785 Premises and equipment (Notes 7, 9, 15)********************************** 753,295 7,019 Lease assets (Note 8)************************************************** 26,736 249 Deferred tax assets (Note 24) ******************************************* 1,550,213 14,445 Customers’ liabilities for acceptances and guarantees ************************ 3,461,263 32,252 Reserve for possible loan losses ***************************************** (1,239,882) (11,553) Total assets ********************************************************* ¥97,478,308 $908,296 Liabilities, minority interests and stockholders’ equity Liabilities Deposits (Notes 9, 10)************************************************* ¥71,269,641 $664,085 Call money and bills sold (Note 9)*************************************** 4,971,462 46,324 Payables under repurchase agreements (Note 9) **************************** 405,671 3,780 Payables under securities lending transactions (Note 9) ********************** 3,868,001 36,042 Commercial paper **************************************************** 4,500 42 Trading liabilities (Notes 9, 11) ***************************************** 2,110,473 19,665 Borrowed money (Notes 9, 12)****************************************** 1,016,438 9,471 Foreign exchanges **************************************************** 478,482 4,458 Bonds (Note 13)****************************************************** 4,196,483 39,103 Due to trust account*************************************************** 50,457 470 Other liabilities (Notes 9, 14) ******************************************* 1,798,047 16,754 Reserve for employee bonuses ****************************************** 17,879 167 Reserve for employee retirement beneﬁts (Note 25) ************************* 23,235 217 Reserves for expenses related to EXPO 2005 Japan ************************* 231 2 Other reserves******************************************************** 1,093 10 Deferred tax liabilities (Note 24) **************************************** 45,086 420 Deferred tax liabilities for land revaluation (Notes 15, 24)******************** 90,994 848 Acceptances and guarantees (Note 9) ************************************* 3,461,263 32,252 Total liabilities ****************************************************** 93,809,446 874,110 Minority interests (Note 16) ******************************************* 1,034,950 9,643 Stockholders’ equity (Note 17) Capital stock (Note 17) ************************************************ 664,986 6,196 Capital surplus ******************************************************* 1,603,512 14,942 Retained earnings (deﬁcit)********************************************** (6,281) (58) Land revaluation excess (Note 15) *************************************** 57,772 538 Net unrealized gains on other securities (Notes 24, 28) ********************** 394,973 3,680 Foreign currency translation adjustments ********************************** (81,050) (755) Total stockholders’ equity ********************************************* 2,633,912 24,543 Total liabilities, minority interests and stockholders’ equity **************** ¥97,478,308 $908,296

See accompanying notes to consolidated ﬁnancial statements.

F-3 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2005

Millions of Millions of yen U.S. dollars (Note 1) Income Interest income: Interest on loans and discounts******************************* ¥1,120,390 $10,440 Interest and dividends on securities *************************** 256,520 2,390 Interest on receivables under resale agreements ***************** 3,163 30 Interest on receivables under securities borrowing transactions ***** 185 2 Interest on deposits with banks ****************************** 36,183 337 Other interest income ************************************** 74,076 690 Trust fees ************************************************** 2,609 24 Fees and commissions (Note 18) ******************************* 511,824 4,769 Trading proﬁts (Note 19) ************************************* 144,587 1,347 Other operating income (Note 20) ****************************** 312,852 2,915 Other income (Note 21) ************************************** 236,808 2,207 Total income *********************************************** 2,699,202 25,151 Expenses Interest expenses: Interest on deposits **************************************** 135,317 1,261 Interest on borrowings and rediscounts ************************ 30,523 284 Interest on payables under repurchase agreements *************** 3,472 32 Interest on payables under securities lending transactions ********* 51,853 483 Interest on bonds ****************************************** 83,444 777 Other interest expenses ************************************* 33,244 310 Fees and commissions (Note 18) ******************************* 92,669 863 Trading losses (Note 19)************************************** 199 2 Other operating expenses (Note 22)***************************** 172,751 1,610 General and administrative expenses **************************** 769,239 7,168 Provision for reserve for possible loan losses ********************* 284,362 2,650 Other expenses (Note 23) ************************************* 1,218,820 11,357 Total expenses ********************************************* 2,875,897 26,797 Loss before income taxes and minority interests **************** 176,695 1,646 Income taxes (Note 24): Current ************************************************** 16,331 152 Refund ************************************************** 8,539 79 Deferred ************************************************* 45,261 422 Minority interests in net loss ********************************** 49,246 459 Net loss *************************************************** ¥ 278,995 $ 2,600

Yen U.S. dollars (Note 1) Per share data: Net loss ************************************************* ¥5,300.46 $ 49.39 Declared dividends on common stock ************************* 683 6.36 Declared dividends on preferred stock (Type 1) ***************** 10,500 97.84 Declared dividends on preferred stock (Type 2) ***************** 28,500 265.56 Declared dividends on preferred stock (Type 3) ***************** 13,700 127.66 Declared dividends on preferred stock (First series Type 6) ******* 485 4.52

See accompanying notes to consolidated ﬁnancial statements.

F-4 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY YEAR ENDED MARCH 31, 2005

Millions of yen Net unrealized Foreign Capital Retained Land gains on currency stock Capital earnings revaluation other translation (Note 17) surplus (deﬁcit) excess securities adjustments Total Balance at March 31, 2004************* ¥559,985 ¥1,298,511 ¥ 519,354 ¥ 96,393 ¥319,780 ¥(71,861) ¥2,722,161 Issuance of preferred stock ************** 105,001 105,001 210,003 Issuance of stocks of a consolidated subsidiary ************************** 200,000 200,000 Change due to decrease of afﬁliates ******* 1,730 1,730 Transfer of land revaluation excess******** 2,087 (2,087) — Transfer to deferred tax liabilities for land revaluation and others **************** (36,533) (36,533) Cash dividends paid******************** (250,457) (250,457) Net loss****************************** (278,995) (278,995) Change in net unrealized gains on other securities*************************** 75,193 75,193 Change in foreign currency translation adjustments************************* (9,189) (9,189) Balance at March 31, 2005************* ¥664,986 ¥1,603,512 ¥ (6,281) ¥ 57,772 ¥394,973 ¥(81,050) ¥2,633,912

Millions of U.S. dollars (Note 1) Net unrealized Foreign Capital Retained Land gains on currency stock Capital earnings revaluation other translation (Note 17) surplus (deﬁcit) excess securities adjustments Total Balance at March 31, 2004************* $ 5,218 $ 12,100 $ 4,839 $ 898 $ 2,980 $ (670) $ 25,365 Issuance of preferred stock ************** 978 978 1,956 Issuance of stocks of a consolidated subsidiary ************************** 1,864 1,864 Change due to decrease of afﬁliates ******* 16 16 Transfer of land revaluation excess******** 20 (20) — Transfer to deferred tax liabilities for land revaluation and others **************** (340) (340) Cash dividends paid******************** (2,333) (2,333) Net loss****************************** (2,600) (2,600) Change in net unrealized gains on other securities*************************** 700 700 Change in foreign currency translation adjustments************************* (85) (85) Balance at March 31, 2005************* $ 6,196 $ 14,942 $ (58) $ 538 $ 3,680 $ (755) $ 24,543

See accompanying notes to consolidated ﬁnancial statements.

F-5 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED MARCH 31, 2005

Millions of Millions of yen U.S. dollars (Note 1) 1. Cash flows from operating activities: Loss before income taxes and minority interests ************** ¥ (176,695) $ (1,646) Depreciation of premises, equipment and others*************** 64,154 598 Depreciation of lease assets ******************************* 7,650 71 Amortization of goodwill ********************************* 1,700 16 Equity in earnings of affiliates ***************************** (3,267) (30) Net change in reserve for possible loan losses **************** (127,218) (1,185) Net change in reserve for employee bonuses ***************** 1,634 15 Net change in reserve for employee retirement benefits********* 133,186 1,241 Net change in reserve for expenses related to EXPO 2005 Japan *** 114 1 Interest income ***************************************** (1,490,519) (13,889) Interest expenses **************************************** 337,855 3,148 Net (gains) losses on securities **************************** 104,430 973 Net (gains) losses from money held in trust ****************** (0) (0) Net exchange (gains) losses ******************************* (105,518) (983) Net (gains) losses from disposal of premises and equipment***** 63,108 588 Net (gains) losses from disposal of lease assets *************** 15 0 Net change in trading assets******************************* (468,577) (4,366) Net change in trading liabilities **************************** 246,434 2,296 Net change in loans and bills discounted ******************** 165,383 1,541 Net change in deposits *********************************** 3,111,151 28,990 Net change in negotiable certificates of deposit *************** (826,692) (7,703) Net change in borrowed money (excluding subordinated debt) *** (170,730) (1,591) Net change in deposits with banks************************** (247,548) (2,307) Net change in call loans, bills bought and receivables under resale agreements ************************************* (742,518) (6,919) Net change in receivables under securities borrowing transactions 440,987 4,109 Net change in call money, bills sold and payables under repurchase agreements ********************************* (2,013,905) (18,765) Net change in commercial paper *************************** 1,500 14 Net change in payables under securities lending transactions **** (2,078,345) (19,366) Net change in foreign exchanges (assets) ******************** (151,254) (1,409) Net change in foreign exchanges (liabilities)****************** (94,405) (880) Issuance and redemption of bonds (excluding subordinated bonds)*********************************************** 127,105 1,184 Net change in due to trust account ************************* 14,424 134 Interest received***************************************** 1,522,772 14,189 Interest paid ******************************************** (323,118) (3,011) Net change in payable on trading and securities contracts******* (1,020,879) (9,512) Other, net ********************************************** (172,334) (1,606) Subtotal*********************************************** (3,869,918) (36,060) Income taxes paid *************************************** (8,790) (82) Net cash used in operating activities ********************** (3,878,709) (36,142)

See accompanying notes to consolidated ﬁnancial statements.

F-6 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS — (Continued) YEAR ENDED MARCH 31, 2005

Millions of Millions of yen U.S. dollars (Note 1) 2. Cash flows from investing activities: Purchases of securities *********************************** ¥(46,300,708) $(431,427) Proceeds from sale of securities**************************** 36,119,599 336,560 Proceeds from maturity of securities ************************ 13,115,042 122,205 Proceeds from sale of money held in trust ******************* 00 Purchases of premises and equipment *********************** (46,016) (429) Proceeds from sale of premises and equipment *************** 91,201 850 Purchases of lease assets ********************************* (11,072) (103) Proceeds from sale of lease assets************************** 1,380 13 Purchases of stock of subsidiaries ************************** (2,970) (28) Net cash provided by investing activities******************* 2,966,457 27,641 3. Cash flows from financing activities: Proceeds from issuance of subordinated debt ***************** 36,000 335 Repayment of subordinated debt *************************** (72,212) (673) Proceeds from issuance of subordinated bonds and bonds with stock acquisition rights ********************************* 440,237 4,102 Repayment of subordinated bonds and bonds with stock acquisition rights************************************** (234,983) (2,190) Proceeds from issuance of stocks ************************** 210,003 1,957 Proceeds from issuance of stocks of a consolidated subsidiary*** 200,000 1,864 Dividends paid ***************************************** (250,500) (2,334) Proceeds from minority stockholders************************ 21,024 196 Dividends paid to minority stockholders ********************* (39,708) (370) Net cash provided by financing activities ****************** 309,860 2,887 4. Effect of exchange rate changes on cash and due from banks ** (379) (3) 5. Net change in cash and due from banks ******************* (602,770) (5,617) 6. Cash and due from banks at beginning of year************* 3,525,056 32,846 7. Net change in cash and due from banks due to merger of a consolidated subsidiary ******************************* 3,941 37 8. Cash and due from banks at end of year ****************** ¥ 2,926,227 $ 27,266

See accompanying notes to consolidated ﬁnancial statements.

F-7 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005

1. Basis of Presentation Sumitomo Mitsui Banking Corporation (‘‘SMBC’’) has prepared the accompanying consolidated financial statements in accordance with the provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (‘‘Japanese GAAP’’), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statement of stockholders’ equity) from the consolidated financial statements of SMBC prepared in accordance with Japanese GAAP. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements. Amounts less than one million yen have been omitted. As a result, the totals in Japanese yen shown in the financial statements do not necessarily agree with the sum of the individual amounts. The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2005, which was ¥107.32 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at that rate.

2. Significant Accounting Policies (1) Consolidation and equity method (a) Scope of consolidation Japanese accounting standards on consolidated financial statements require a company to consolidate any subsidiaries of which the company substantially controls the operations, even if it is not a majority owned subsidiary. Control is defined as the power to govern the decision making body of an enterprise. (i) Consolidated subsidiaries SMBC has 121 consolidated subsidiaries and principal subsidiaries are as follows: SMBC Finance Service Co., Ltd. SMBC Capital Co., Ltd. THE MINATO BANK, LTD. Kansai Urban Banking Corporation Sumitomo Mitsui Banking Corporation Europe Limited SMBC Capital Markets, Inc. Changes in consolidated subsidiaries in the fiscal year ended March 31, 2005 are as follows: From this fiscal year, eleven companies including SMBC Finance Business Planning Co., Ltd. were newly consolidated due to establishment. At-loan Co., Ltd. was excluded from the scope of consolidation and treated as an affiliated company accounted for by the equity method because it became a consolidated subsidiary of Promise Co., Ltd.

F-8 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

Three companies including Minato Card Co., Ltd. were excluded from the scope of consolidation because they were no longer a subsidiary due to merger. (ii) Unconsolidated subsidiaries Principal company SBCS Co., Ltd. Total assets, ordinary income, net income and retained earnings of unconsolidated subsidiaries have no material impact on the consolidated ﬁnancial statements.

(b) Application of the equity method Japanese accounting standards also require any unconsolidated subsidiaries and affiliates on which SMBC is able to exercise material influence over their financial and operating policies to be accounted for by the equity method. (i) Unconsolidated subsidiaries accounted for by the equity method — 4 companies Principal company SBCS Co., Ltd. (ii) Affiliates accounted for by the equity method — 16 companies Principal companies Sumitomo Mitsui Asset Management Company, Limited Promise Co., Ltd. QUOQ Inc. Six companies including Promise Co., Ltd. newly became affiliated companies accounted for by the equity method due to acquisition of shares. Sony Bank Incorporated was excluded from the scope of affiliated companies due to decrease in ratio of voting share ownership. (iii) Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method Principal companies SIS Techno-Service Co., Ltd. Sumitomo Mitsui Asset Management (New York) Inc. Net income and retained earnings of unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have no material impact on the consolidated financial statements.

(c) The balance sheet dates of consolidated subsidiaries (i) The balance sheet dates of consolidated subsidiaries are as follows: September 30 ************ 5 companies October 31 ************** 1 company December 31************* 52 companies January 31*************** 1 company March 31**************** 62 companies (ii) As for the companies whose balance sheet dates are September 30 and October 31, the accounts are provisionally closed as of March 31 and January 31 for the purpose of consolidation, respectively. The other companies are consolidated on the basis of their respective balance sheet dates.

F-9 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

Appropriate adjustments were made for material transactions during the periods from their respective balance sheet dates to the consolidated closing dates.

(d) Valuation of consolidated subsidiaries’ assets and liabilities Assets and liabilities of consolidated subsidiaries including the portion attributable to minority shareholders are valuated for consolidation at fair value when SMBC acquires their control.

(e) Amortization of goodwill Goodwill is charged or credited to income directly when incurred.

(2) Statement of cash ﬂows For the purposes of the consolidated statement of cash ﬂows, cash and cash equivalents represent cash and due from banks.

(3) Trading assets/liabilities and trading profits/losses Transactions for trading purposes (seeking gains arising from short-term changes in interest rates, currency exchange rates, or market prices of securities and other market related indices or from variation among markets) are included in ‘‘Trading assets’’ or ‘‘Trading liabilities’’ on the consolidated balance sheet on a trade date basis. Profits and losses on trading-purpose transactions are recognized on a trade date basis, and recorded as ‘‘Trading profits’’ and ‘‘Trading losses.’’ Securities and monetary claims purchased for trading purposes are stated at the fiscal year-end market value, and financial derivatives such as swaps, futures and options are stated at amounts that would be settled if the transactions were terminated at the consolidated balance sheet date. Trading profits and losses include interest received or paid during the fiscal year. The valuation differences of securities and monetary claims between the previous fiscal year-end and this fiscal year-end are recorded in the above-mentioned accounts. As for the derivatives, assuming that the settlement will be made in cash, the valuation differences between the previous fiscal year-end and this fiscal year-end are recorded in the above- mentioned accounts.

(4) Securities As for securities other than trading purposes, debt securities that SMBC and consolidated subsidiaries have the positive intent and ability to hold to maturity are classified as held-to-maturity securities and are carried at amortized cost (straight-line method) using the moving-average method. Investments in unconsolidated subsidiaries and affiliates that are not accounted for by the equity method are carried at cost using the moving-average method. Securities other than trading-purpose securities, held-to-maturity securities and investments in unconsolidated subsidiaries and affiliates are classified as ‘‘other securities’’ (available-for-sale securities). Stocks in other securities that have market prices are carried at their average market prices during the final month of the fiscal year, and bonds and others that have market prices are carried at their fiscal year-end market prices (cost of securities sold is calculated using primarily the moving-average method). Other securities with no available market prices are carried at cost or amortized cost using the moving-average method. Net unrealized gains (losses) on other securities, net of income taxes, are included in ‘‘Stockholders’ equity,’’ after deducting the amount that is reflected in the fiscal year’s earnings because of application of fair value hedge accounting.

F-10 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

Securities included in money held in trust account are carried in the same method as for securities mentioned above.

(5) Derivative transactions

Derivative transactions, excluding those classiﬁed as trading derivatives, are carried at fair value, though some consolidated overseas subsidiaries account for derivative transactions in accordance with their local accounting standards.

(6) Hedge accounting

(a) Hedging against interest rate changes

As for the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets and liabilities, SMBC applies deferred hedge accounting or fair value hedge accounting. SMBC applies deferred hedge accounting stipulated in ‘‘Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’’ (JICPA Industry Audit Committee Report No. 24) to portfolio hedges of large-volume, small-value monetary claims and debts. As for the portfolio hedges to offset market fluctuation, SMBC assesses the effectiveness of such hedges by classifying the hedged items (such as deposits and loans) and the hedging instruments (such as interest rate swaps) by their maturity. As for the portfolio hedges to fix cash flows, SMBC assesses the effectiveness of such hedges by verifying the correlation between the hedged items and the hedging instruments. As for the individual hedges, SMBC also basically applies deferred hedge accounting. But SMBC applies fair value hedge accounting to hedging transactions for reducing the market volatility of bonds classified as other securities that are held for the purpose of Asset and Liability Management. As a result of the application of JICPA Industry Audit Committee Report No. 24, SMBC discontinued the application of hedge accounting or applied fair value hedge accounting to a portion of the hedging instruments using ‘‘macro hedge,’’ which had been applied in order to manage interest rate risk arising from large-volume transactions in loans, deposits and other interest-earning assets and interest-bearing liabilities as a whole using derivatives pursuant to ‘‘Temporary Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’’ (JICPA Industry Audit Committee Report No. 15). The deferred hedge losses and gains related to such a portion of hedging instruments are charged to ‘‘Interest income’’ or ‘‘Interest expenses’’ over a 12-year period (maximum) from the fiscal year ended March 31, 2004 according to their maturity. At this fiscal year-end, gross amounts of deferred hedge losses and gains on ‘‘macro hedge’’ were ¥197,872 million ($1,844 million) and ¥167,948 million ($1,564 million), respectively.

(b) Hedging against currency ﬂuctuations

SMBC applies deferred hedge accounting stipulated in ‘‘Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry’’ (JICPA Industry Audit Committee Report No. 25) to currency swap and foreign exchange swap transactions executed for the purpose of lending or borrowing funds in different currencies. Pursuant to JICPA Industry Audit Committee Report No. 25, SMBC assesses the effectiveness of currency swap and foreign exchange swap transactions executed for the purpose of offsetting the risk of changes in currency exchange rates by verifying that there are foreign-currency monetary claims and debts corresponding to the foreign-currency positions.

F-11 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

In order to hedge risk arising from volatility of exchange rates for stocks of subsidiaries and afﬁliates and other securities (excluding bonds) denominated in foreign currencies, SMBC applies deferred hedge accounting or fair value hedge accounting, on the conditions that the hedged securities are designated in advance and that sufﬁcient on-balance (actual) or off-balance (forward) liability exposure exists to cover the cost of the hedged securities denominated in the same foreign currencies.

(c) Transactions between consolidated subsidiaries As for derivative transactions between consolidated subsidiaries or internal transactions between trading accounts and other accounts (or among internal sections), SMBC manages the interest rate swaps and currency swaps that are designated as hedging instruments in accordance with the strict criteria for external transactions stipulated in JICPA Industry Audit Committee Report No. 24 and No. 25. Therefore, SMBC accounts for the gains or losses that arise from interest rate swaps and currency swaps in its earnings or defers them, rather than eliminating them. Some of consolidated subsidiaries apply the deferred hedge accounting or the short-cut method (exceptional treatment for interest rate swaps).

(7) Non-accrual loans Loans are generally placed on non-accrual status when their borrowers are classiﬁed as Bankrupt, Effectively Bankrupt or Potentially Bankrupt under the self-assessment rule (see (11) Reserve for possible loan losses).

(8) Bills discounted Bills discounted are accounted for as ﬁnancial transactions in accordance with JICPA Industry Audit Committee Report No. 24. SMBC and its banking subsidiaries have rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and foreign exchanges bought without restrictions. The total face value was ¥966,552 million ($9,006 million) at March 31, 2005.

(9) Premises and equipment Premises and equipment are generally stated at cost less accumulated depreciation. Depreciation of premises is computed using the straight-line method over the estimated useful lives of the respective assets. The depreciation of equipment is computed using the declining-balance method over the estimated useful lives of the respective assets. The estimated useful lives of major items are as follows: Buildings: 7 to 50 years Equipment: 2 to 20 years Depreciation of premises and equipment owned by consolidated subsidiaries is mainly computed using the straight-line method over the estimated useful lives of respective assets.

(10) Software costs Capitalized software for internal use is depreciated using the straight-line method over its estimated useful life (mainly ﬁve years) at SMBC and consolidated domestic subsidiaries, and is included in Other assets.

(11) Reserve for possible loan losses Reserve for possible loan losses of SMBC and major consolidated subsidiaries is provided as detailed below in accordance with the internal standards for write-offs and reserves.

F-12 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

For claims on borrowers that have entered into bankruptcy, special liquidation proceedings or similar legal proceedings (‘‘bankrupt borrowers’’) or borrowers that are not legally or formally insolvent but are regarded as substantially in the same situation (‘‘effectively bankrupt borrowers’’), a reserve is provided based on the amount of claims, after the write-off stated below, net of the expected amount of recoveries from collateral and guarantees. For claims on borrowers that are not currently bankrupt but are perceived to have a high risk of falling into bankruptcy (‘‘potentially bankrupt borrowers’’), a reserve is provided in the amount deemed necessary based on an overall solvency assessment of the claims, net of the expected amount of recoveries from collateral and guarantees. Discounted Cash Flows (DCF) method is used for claims on borrowers whose cash flows from collection of principals and interest can be rationally estimated and SMBC applies it to claims on large potentially bankrupt borrowers and claims on large borrowers requiring close monitoring that have been classified as ‘‘Past due loans (3 months or more)’’ or ‘‘Restructured loans,’’ whose total loans from SMBC exceed a certain amount. SMBC establishes a reserve for possible loan losses using the DCF method for such claims in the amount of the difference between the present value of principal and interest (calculated using the rationally estimated cash flows discounted at the initial contractual interest rate) and the book value. For other claims, a reserve is provided based on the historical loan-loss ratio. For claims originated in specific overseas countries, an additional reserve is provided in the amount deemed necessary based on the assessment of political and economic conditions. Branches and credit supervision departments assess all claims in accordance with the internal rules for self- assessment of assets, and the Credit Review Department, independent from these operating sections, audits their assessment. The reserves are provided based on the results of these assessments. Reserve for possible loan losses of other consolidated subsidiaries for general claims is provided in the amount deemed necessary based on the historical loan-loss ratios, and for doubtful claims in the amount deemed uncollectible based on assessment of each claim. For collateralized or guaranteed claims on bankrupt borrowers and effectively bankrupt borrowers, the amount exceeding the estimated value of collateral and guarantees is deemed to be uncollectible and written off against the total outstanding amount of the claims. The amount of write-off was ¥1,743,188 million ($16,243 million).

(12) Reserve for expenses related to EXPO 2005 Japan SMBC accounts for the exhibition expenses related to ‘‘The 2005 World Exposition, Aichi, Japan’’ as ‘‘Reserve for expenses related to EXPO 2005 Japan’’, which includes the reserve that is stipulated in Article 57-2 of the Speciﬁc Taxation Measures Law.

(13) Reserve for employee bonuses Reserve for employee bonuses is provided for payment of bonuses to employees, in the amount of estimated bonuses, which are attributable to the respective ﬁscal year.

(14) Reserve for employee retirement benefits Reserve for employee retirement benefits is provided for payment of retirement benefits to employees, in the amount deemed accrued at the fiscal year-end, based on the projected retirement benefit obligation and the fair value of plan assets at the fiscal year-end. Unrecognized prior service cost is amortized using the straight-line

F-13 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued) method over certain years (mainly 10 years) within the employees’ average remaining service period at incurrence. Unrecognized net actuarial gain or loss is amortized from the next fiscal year using the straight-line method over certain years (mainly 10 years) within the average remaining service period of active employees. Unrecognized net transition obligation from initial application of the new accounting standard for employee retirement benefits is amortized primarily using the straight-line method over five years.

A part of ‘‘Accounting Standards for Retirement Benefits’’ (issued by the Business Accounting Deliberation Council on June 16, 1998) was revised on March 16, 2005. As a result, the amount by which the plan assets exceed the projected benefit obligation (‘‘unrecognized plan assets’’) due to excess of the actual return on the plan assets over the expected return on the plan assets, or occurrence of prior service costs due to lowering of pension benefit levels was permitted to be recognized as assets and gains. SMBC implemented an early adoption of the revised standards from this fiscal year and treated the unrecognized plan assets as actuarial differences. This accounting change had no impact on profit and loss accounts.

(15) Other reserves

Reserves required by special laws are provided as follows:

(a) Reserve for contingent liabilities from ﬁnancial futures transactions, totaling ¥18 million ($0 million) at March 31, 2005, is provided in accordance with Article 82 of the Financial Futures Transaction Law, in order to cover losses arising from ﬁnancial futures transactions.

(b) Reserve for contingent liabilities from securities transactions, totaling ¥1,075 million ($10 million) at March 31, 2005, is provided in accordance with Article 51 of the Securities and Exchange Law in provision for losses arising from securities transactions.

(16) Translation of foreign currency assets and liabilities

SMBC’s assets and liabilities denominated in foreign currencies and overseas branches’ accounts are translated into Japanese yen mainly at the exchange rate prevailing at the consolidated balance sheet date, with the exception of stocks of subsidiaries and afﬁliates translated at rates prevailing at the time of acquisition.

Consolidated subsidiaries’ assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at their respective balance sheet dates.

(17) Lease transactions

Financing leases of SMBC and its consolidated domestic subsidiaries, excluding those in which the ownership of the property is transferred to the lessee, are accounted for in the same method as operating leases.

(a) Standards for recognizing lease-related income on lease transactions

Primarily, lease-related income is recognized on a straight-line basis over the full term of the lease, based on the contractual amount of lease fees per month.

(b) Recognition of income and expenses on installment sales

Primarily, installment-sales-related income and installment-sales-related expenses are recognized on a due- date basis over the full term of the installment sales.

F-14 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(18) Appropriation of retained earnings

The consolidated statement of stockholders’ equity reﬂects the appropriation of retained earnings approved by the board of directors and/or the general meeting of shareholders.

(19) Amounts per share

Net loss per share is calculated by deducting dividends for preferred stock from net loss, divided by the weighted average number of shares of common stock during the ﬁscal year.

Declared dividends represent the cash dividends declared applicable to the ﬁscal year, including dividends to be paid after the end of the year.

3. Trading Assets

Trading assets at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Trading securities ******************************************** ¥ 269,678 $ 2,513 Derivatives on trading securities ******************************** 812 8 Derivatives on securities related to trading transactions************** 2,033 19 Trading-related ﬁnancial derivatives ***************************** 2,440,254 22,738 Other trading assets ****************************************** 1,056,293 9,842 ¥3,769,073 $35,120

4. Securities

Securities at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Japanese government bonds*1 ********************************** ¥13,636,577 $127,064 Japanese local government bonds ******************************* 486,884 4,537 Japanese corporate bonds ************************************** 3,243,443 30,222 Japanese stocks*2 ******************************************** 3,316,551 30,903 Other*2 **************************************************** 3,335,155 31,077 ¥24,018,612 $223,803

*1 Includes ¥8,774 million ($82 million) of unsecured loaned securities for which borrowers have the rights to sell or pledge. As for the unsecured borrowed securities for which SMBC has the rights to sell or pledge and the securities which SMBC purchased under resale agreements, that are permitted to sell or pledge without restrictions, ¥467,647 million ($4,358 million) of securities are pledged, ¥192,791 million ($1,796 million) of securities are held in hand as of the consolidated balance sheet date. SMBC may pledge the borrowed securities as well. *2 Japanese stocks and other include investments in unconsolidated subsidiaries and afﬁliates of ¥190,154 million ($1,772 million).

F-15 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

5. Loans and Bills Discounted Loans and bills discounted at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Bills discounted********************************************** ¥ 525,763 $ 4,899 Loans on notes ********************************************** 4,849,215 45,185 Loans on deeds ********************************************** 41,976,411 391,133 Overdrafts ************************************************** 7,797,538 72,657 ¥55,148,929 $513,874

Loans and bills discounted included the following ‘‘Risk-monitored loans’’ stipulated in the Banking Law: Millions of March 31, 2005 Millions of yen U.S. dollars Bankrupt loans*1 ********************************************* ¥ 68,238 $ 636 Non-accrual loans*2 ****************************************** 1,367,785 12,745 Past due loans (3 months and more)*3 *************************** 29,441 274 Restructured loans*4 ****************************************** 721,273 6,721 ¥2,186,739 $20,376

*1 ‘‘Bankrupt loans’’ are loans, after write-off, to legally bankrupt borrowers as defined in Article 96-1-3 and 96-1-4 of the Enforcement Ordinance No. 97 of the Japanese Corporate Tax Law (issued in 1965) and on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons. *2 ‘‘Non-accrual loans’’ are loans on which accrued interest income is not recognized, excluding ‘‘Bankrupt loans’’ and loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties. *3 ‘‘Past due loans (3 months or more)’’ are loans on which the principal or interest is past due for three months or more, excluding ‘‘Bankrupt loans’’ and ‘‘Non-accrual loans.’’ *4 ‘‘Restructured loans’’ are loans on which terms and conditions have been amended in favour of the borrowers (e.g. reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding ‘‘Bankrupt loans’’, ‘‘Non-accrual loans’’ and ‘‘Past due loans (3 months or more)’’. The amounts above include the trusted amount with the Resolution and Collection Corporation of ¥41 million ($0 million), which is treated as off-balancing.

F-16 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

6. Other Assets Other assets at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Prepaid expenses ********************************************* ¥ 16,196 $ 151 Accrued income********************************************** 229,809 2,141 Deferred assets ********************************************** 9,520 89 Financial derivatives* ***************************************** 788,648 7,349 Other ****************************************************** 757,167 7,055 ¥1,801,341 $16,785

* Net amount of deferred unrealized losses on hedging instruments to which deferred hedge accounting is applied is reported as deferred loss on hedge and is included in ‘‘Financial derivatives.’’ Gross deferred unrealized losses and gains on hedging instruments before netting were ¥523,829 million ($4,881 million) and ¥429,357 million ($4,001 million), respectively.

7. Premises and Equipment Premises and equipment at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Land* ****************************************************** ¥ 377,030 $ 3,513 Buildings *************************************************** 460,471 4,291 Equipment and others ***************************************** 380,641 3,547 Total ***************************************************** ¥1,218,143 $11,351 Accumulated depreciation************************************** (464,848) (4,332) ¥ 753,295 $ 7,019

* Includes land revaluation excess for land referred to in Note 15.

8. Lease Assets Lease assets at March 31, 2005 were as follows: Millions of March 31, 2005 Millions of yen U.S. dollars Equipment and others ***************************************** ¥ 55,248 $515 Accumulated depreciation************************************** (28,511) (266) ¥ 26,736 $249

F-17 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

9. Assets Pledged as Collateral Assets pledged as collateral at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Assets pledged as collateral Cash and due from banks and Deposits with banks *************** ¥ 75,769 $ 706 Trading assets ********************************************* 630,553 5,875 Securities ************************************************* 6,492,047 60,492 Loans and bills discounted *********************************** 1,524,286 14,203 Other assets *********************************************** 1,080 10 Liabilities corresponding to assets pledged as collateral Deposits ************************************************** 12,745 119 Call money and bills sold************************************ 3,976,469 37,052 Payables under repurchase agreements ************************* 393,895 3,670 Payables under securities lending transactions ******************* 3,283,601 30,596 Trading liabilities******************************************* 143,819 1,340 Borrowed money ******************************************* 7,566 70 Other liabilities ******************************************** 14,072 131 Acceptances and guarantees ********************************** 144,023 1,342 In addition to the assets presented above, the following assets were pledged as collateral for exchange settlements, initial margins of futures markets and certain other purposes at March 31, 2005: Millions of March 31, 2005 Millions of yen U.S. dollars Cash and due from banks and Deposits with banks ***************** ¥ 5,613 $ 52 Trading assets *********************************************** 126,821 1,182 Securities *************************************************** 6,657,172 62,031 Loans and bills discounted ************************************* 27,500 256 Premises and equipment included surety deposits and intangibles of ¥94,168 million ($877 million) at March 31, 2005. Other assets included initial margins of futures markets of ¥9,582 million ($89 million) at March 31, 2005.

F-18 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

10. Deposits Deposits at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Current deposits ********************************************* ¥ 6,187,216 $ 57,652 Ordinary deposits ******************************************** 31,175,697 290,493 Savings deposits ********************************************* 1,090,677 10,163 Deposits at notice ******************************************** 4,321,368 40,266 Time deposits *********************************************** 21,159,064 197,158 Negotiable certiﬁcates of deposit******************************** 2,760,770 25,725 Other deposits *********************************************** 4,574,846 42,628 ¥71,269,641 $664,085

11. Trading Liabilities Trading liabilities at March 31, 2005 consisted of the following: Millions of March 31, 2005 Millions of yen U.S. dollars Trading securities sold for short sales *************************** ¥ 69,419 $ 647 Derivatives on trading securities ******************************** 524 5 Derivatives on securities related to trading transactions ************* 2,061 19 Trading-related ﬁnancial derivatives ***************************** 2,038,468 18,994 ¥2,110,473 $19,665

12. Borrowed Money Borrowed money at March 31, 2005 consisted of the following: Average Millions of interest March 31, 2005 Millions of yen U.S. dollars rate*1 Bills rediscounted ********************************** ¥ 11,576 $ 108 2.97% Other borrowings*2 ********************************* 1,004,862 9,363 2.27 ¥1,016,438 $ 9,471 2.28%

*1 Average interest rate represents the weighted average rate based on the balances and rates at respective year-end of SMBC and consolidated subsidiaries. *2 Includes subordinated debt obligation of ¥734,097 million ($6,840 million).

F-19 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

The repayment schedule within ﬁve years on borrowed money at March 31, 2005 is shown as follows:

Millions of March 31, 2005 Millions of yen U.S. dollars Within 1 year********************************************* ¥109,817 $1,023 After 1 year through 2 years ******************************** 12,632 118 After 2 years through 3 years******************************** 40,298 375 After 3 years through 4 years******************************** 24,253 226 After 4 years through 5 years******************************** 33,165 309

13. Bonds Bonds at March 31, 2005 consisted of the following:

March 31, 2005 Millions of Millions of Interest rate Issuer Description yen* U.S. dollars (%) Due

SMBC *************** Straight bonds, payable in Yen ¥ 2,198,996 20,490 0.51-2.60 Apr. 2005-Sep. 2024 [491,666]

Straight bonds, payable in Euro Yen 9,500 89 2.50-3.00 Mar. 2012-Sep. 2024

Straight bonds, payable in U.S. dollars 75,124 700 4.32-6.02 May 2005-Sep. 2005 ($700,000 thousand) [75,124]

Subordinated bonds, payable in Yen 400,000 3,727 1.71-2.62 Jun. 2010-Oct. 2014

Subordinated bonds, payable in Euro 664,900 6,195 0.4175-2.685 May 2011-Perpetual Yen

Subordinated bonds, payable in U.S. 174,287 1,624 5.93-8.15 Nov. 2011-Perpetual dollars ($1,624,000 thousand)

Subordinated bonds, payable in British 2,422 23 6.98 Perpetual pound sterling (£12,000 thousand)

Subordinated bonds, payable in Euro 173,437 1,616 4.375 Oct. 2014 (41,250,000 thousand)

F-20 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

March 31, 2005 Millions of Millions of Interest rate Issuer Description yen* U.S. dollars (%) Due Consolidated subsidiaries Straight bonds, payable in Yen 37,923 353 0.04-3.65 Feb. 2005-Oct. 2024 [12,065]

Straight bonds, payable in U.S. dollars 3,950 38 1.55-7.35 Jun. 2005-May 2009 ($38,000 thousand) [521]

Straight bonds, payable in other foreign 3,007 28 3.90-4.35 Oct. 2005-Jun. 2018 currency [1,596]

Subordinated bonds, payable in Yen 345,613 3,220 0.00-6.00 Apr. 2005-Perpetual [36,649]

Subordinated bonds, payable in U.S. 107,320 1,000 8.50 Jun. 2009 dollars ($1,000,000 thousand)

¥ 4,196,483 $39,103

* Figures in ( ) are the balances in the original currency of the foreign currency denominated bonds, and ﬁgures in [ ] are the amounts to be redeemed within one year.

The redemption schedule within ﬁve years on bonds at March 31, 2005 is shown as follows:

Millions of March 31, 2005 Millions of yen U.S. dollars Within 1 year *********************************************** ¥617,623 $5,755 After 1 year through 2 years*********************************** 394,186 3,673 After 2 years through 3 years ********************************** 407,060 3,793 After 3 years through 4 years ********************************** 400,035 3,727 After 4 years through 5 years ********************************** 536,263 4,997

14. Other Liabilities

Other liabilities at March 31, 2005 consisted of the following:

Millions of March 31, 2005 Millions of yen U.S. dollars Accrued expenses ******************************************* ¥ 119,092 $ 1,110 Unearned income ******************************************** 173,787 1,619 Income taxes payable **************************************** 20,294 189 Financial derivatives* **************************************** 685,794 6,390 Other****************************************************** 799,078 7,446 ¥1,798,047 $16,754

F-21 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

15. Land Revaluation Excess

SMBC revalued its own land for business activities in accordance with the ‘‘Law Concerning Land Revaluation’’ (the ‘‘Law’’) effective March 31, 1998 and the law concerning amendment of the Law effective March 31, 2001. The income taxes corresponding to the net unrealized gains are deferred and reported in ‘‘Liabilities’’ as ‘‘Deferred tax liabilities for land revaluation,’’ and the net unrealized gains, net of deferred taxes, are reported as ‘‘Land revaluation excess’’ in ‘‘Stockholders’ equity’’.

Certain consolidated subsidiaries revaluated their own land for business activities in accordance with the Law. The income taxes corresponding to the net unrealized gains (losses) are deferred and reported in ‘‘Liabilities’’ or ‘‘Assets’’ as ‘‘Deferred tax liabilities for land revaluation’’ or ‘‘Deferred tax assets for land revaluation’’ and the net unrealized gains (losses), net of deferred taxes, are reported as ‘‘Land revaluation excess’’ in ‘‘Stockholders’ equity’’.

Date of the revaluation

SMBC: March 31, 1998 and March 31, 2002

Certain consolidated subsidiaries: March 31, 1999 and March 31, 2002

Method of revaluation (stipulated in Article 3-3 of the Law)

SMBC: Fair values were determined by applying appropriate adjustments for land shape and timing of appraisal to the values stipulated in Article 2-3, 2-4 or 2-5 of the Enforcement Ordinance of the Law concerning Land Revaluation (the Enforcement Ordinance No. 119) effective March 31, 1998.

Certain consolidated subsidiaries: Fair values were determined based on the values stipulated in Article 2-3 and 2-5 of the Enforcement Ordinance No. 119.

The total fair value of land used for business activities at the ﬁscal year-end, whose book value had been revalued pursuant to Article 10 of the Law, was ¥21,022 million ($196 million) lower than the book value.

16. Minority Interests

SB Treasury Company L.L.C., a subsidiary of SMBC, issued noncumulative preferred securities, totalling $1,800 million in February 1998. SB Equity Securities (Cayman), Limited, a subsidiary of SMBC, issued noncumulative preferred securities, totalling ¥340,000 million in February and March 1999. Sakura Preferred Capital (Cayman) Limited, a subsidiary of SMBC, issued noncumulative preferred securities, totalling ¥283,750 million in December 1998 and March 1999. These subsidiaries are consolidated and the preferred securities are accounted for as minority interests.

F-22 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

17. Stockholders’ Equity Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2005 are as follows:

Issued and Number of shares Authorized outstanding Common stock ********************************************* 100,000,000 55,212,947 Preferred stock (Type 1)************************************** 35,000 35,000 Preferred stock (Type 2)************************************** 100,000 100,000 Preferred stock (Type 3)************************************** 695,000 695,000 Preferred stock (Type 4)************************************** 250,000 — Preferred stock (Type 5)************************************** 250,000 — Preferred stock (Type 6)************************************** 300,000 70,001 Total**************************************************** 101,630,000 56,112,948

All of the preferred stock is noncumulative and nonparticipating for dividend payments, and shareholders of the preferred stock are not entitled to vote at a general meeting of shareholders except when the bill to pay the prescribed dividends to shareholders is not submitted to the general meeting of shareholders or the bill to pay the prescribed dividends to shareholders is rejected at the general meeting of shareholders. Annual dividends per share of preferred stock (Type 1, 2, 3 and First Series Type 6) are paid to shareholders by ¥10,500, ¥28,500, ¥13,700 and ¥88,500, respectively. As for liquidation distribution, shareholders of preferred stock (Type 1, 2, 3 and First Series Type 6) receive ¥3,000,000, ¥3,000,000, ¥1,000,000 and ¥3,000,000 per share, respectively, and do not have the right to participate in any further liquidation distribution. SMBC may, at any time, purchase and retire them out of earnings available for distribution to the shareholders. Shareholders of preferred stock (Type 1, 2, 3) may convert the preferred stock into common stock at any time excluding certain periods, from the issuance date to February 26, 2009, from August 1, 2005 to February 26, 2009 and from the issuance date to September 30, 2009, respectively, in each case subject to certain adjustments. The preferred stock (Type 1, 2) outstanding on February 26, 2009 will be mandatorily converted into common stock at the conversion ratio of ¥3,000,000 divided by the higher of ¥500,000 and the average market price of common stock of Sumitomo Mitsui Financial Group, Inc. (‘‘SMFG’’) for a certain period preceding February 26, 2009. The preferred stock (Type 3) outstanding on September 30, 2009 will be mandatorily converted into common stock at the conversion ratio of ¥1,000,000 divided by the higher of ¥258,330 and the average market price of common stock of SMFG for a certain period preceding September 30, 2009.

F-23 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

18. Fees and Commissions Fees and commissions for the year ended March 31, 2005 consisted of the following:

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Fees and commissions (income): Deposits and loans***************************************** ¥ 45,116 $ 420 Remittances and transfers *********************************** 125,299 1,168 Securities-related business*********************************** 51,973 484 Agency ************************************************** 19,305 180 Safe deposits ********************************************* 6,736 63 Guarantees *********************************************** 39,213 365 Credit card business**************************************** 7,078 66 Investment trusts ****************************************** 45,574 425 Other**************************************************** 171,526 1,598 ¥511,824 $4,769 Fees and commissions (expenses): Remittances and transfers *********************************** ¥ 24,236 $ 226 Other**************************************************** 68,433 637 ¥ 92,669 $ 863

19. Trading Income Trading income for the year ended March 31, 2005 consisted of the following:

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Trading proﬁts: Gains on trading securities ********************************** ¥ 7,857 $ 73 Gains on trading-related ﬁnancial derivatives ******************* 136,224 1,269 Other**************************************************** 504 5 ¥144,587 $1,347 Trading losses: Losses on securities related to trading transactions*************** ¥ 199 $ 2

20. Other Operating Income Other operating income for the year ended March 31, 2005 consisted of the following:

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Gains on foreign exchange transactions ************************** ¥118,953 $1,108 Gains on sale of bonds *************************************** 85,683 798 Gains on redemption of bonds ********************************* 583 6 Lease-related income ***************************************** 16,338 152 Other****************************************************** 91,294 851 ¥312,852 $2,915

F-24 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

21. Other Income

Other income for the year ended March 31, 2005 consisted of the following:

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Gains on sale of stocks and other securities ********************** ¥127,033 $1,184 Gains on money held in trust ********************************** 00 Equity in earnings of afﬁliates ********************************* 3,267 30 Gains on disposal of premises and equipment********************* 3,952 37 Collection of written-off claims ******************************** 759 7 Gains on securities contributed to employee retirement beneﬁt trust*** 75,275 702 Other****************************************************** 26,520 247 ¥236,808 $2,207

22. Other Operating Expenses

Other operating expenses for the year ended March 31, 2005 consisted of the following:

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Losses on sale of bonds ************************************** ¥105,828 $ 986 Losses on redemption of bonds ******************************** 693 7 Losses on devaluation of bonds ******************************** 255 2 Losses on ﬁnancial derivatives ********************************* 3,904 36 Bond issuance costs****************************************** 1,898 18 Lease-related expenses *************************************** 10,392 97 Other****************************************************** 49,776 464 ¥172,751 $1,610

23. Other Expenses

Other expenses for the year ended March 31, 2005 consisted of the following:

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Write-off of loans ******************************************* ¥ 736,951 $ 6,867 Losses on sale of stocks and other securities ********************* 6,729 63 Losses on devaluation of stocks and other securities *************** 223,789 2,085 Losses on sale of delinquent loans ****************************** 145,251 1,353 Losses on disposal of premises and equipment ******************** 67,061 625 Amortization of unrecognized net transition obligation for employee retirement beneﬁts ***************************************** 17,168 160 Transfer to reserve for contingent liabilities from securities transactions*********************************************** 23 0 Other****************************************************** 21,844 204 ¥1,218,820 $11,357

F-25 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

24. Income Taxes (1) Signiﬁcant components of deferred tax assets and liabilities at March 31, 2005 were as follows:

Millions of March 31, 2005 Millions of yen U.S. dollars Deferred tax assets: Net operating loss carryforwards ***************************** ¥ 922,303 $ 8,594 Write-off of loans ***************************************** 545,008 5,078 Reserve for possible loan losses ****************************** 453,760 4,228 Write-off of securities ************************************** 399,073 3,719 Reserve for employee retirement beneﬁts ********************** 87,818 818 Depreciation ********************************************** 6,948 65 Other**************************************************** 80,350 749 Subtotal ************************************************* 2,495,261 23,251 Valuation allowance**************************************** (595,760) (5,551) Total deferred tax assets ************************************ 1,899,501 17,700 Deferred tax liabilities: Net unrealized gains on other securities************************ (274,717) (2,560) Leveraged lease ******************************************* (49,651) (463) Gains on securities contributed to employee retirement beneﬁts trust (52,398) (488) Undistributed earnings of subsidiaries ************************* (9,108) (85) Other**************************************************** (8,498) (79) Total deferred tax liabilities ********************************* (394,374) (3,675) Net deferred tax assets *************************************** ¥1,505,127 $14,025

(2) A reconciliation of the effective income tax rate reﬂected in the accompanying consolidated statement of operations to the statutory tax rate for the year ended March 31, 2005 was as follows:

Statutory tax rate *********************************************************** 40.63% Valuation allowance ******************************************************* (86.18) Effect of tax rates of overseas subsidiaries************************************* 10.40 Dividends exempted for income tax purposes ********************************** 2.95 Other ******************************************************************* 2.18 Effective income tax rate ***************************************************** (30.03)% (3) With the implementation of the ‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) on March 31, 2003, a part of the tax basis of enterprise taxes comprises ‘‘amount of added value’’ and ‘‘amount of capital’’ from the ﬁscal year commenced April 1, 2004. As a result, enterprise taxes that are calculated based on ‘‘amount of added value’’ and ‘‘amount of capital’’ are included in ‘‘General and administrative expenses’’ from this ﬁscal year pursuant to ‘‘Practical Treatment for Presentation of External Based-Corporate Enterprise Taxes in the Statement of Income’’ (Accounting Standards Board, Practical Solution Report No. 12).

F-26 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

25. Employee Retirement Beneﬁts

(1) Outline of employee retirement beneﬁts

SMBC and consolidated subsidiaries in Japan have contributory funded defined benefit pension plans such as employee pension plans, qualified pension plans and lump-sum severance indemnity plans. They may grant additional benefits in cases where certain requirements are met when employees retire.

SMBC and some consolidated subsidiaries in Japan contributed certain marketable equity securities to an employee retirement beneﬁt trust.

(2) Projected beneﬁt obligation

Millions of March 31, 2005 Millions of yen U.S. dollars Projected benefit obligation(A) ********************************* ¥(871,676) $(8,122) Plan assets(B)*********************************************** 900,496 8,391 Unfunded projected benefit obligation(C)=(A)+(B)***************** 28,820 269 Unrecognized net transition obligation from initial application of the new accounting standard(D) ********************************* —— Unrecognized net actuarial gain or loss(E) *********************** 174,164 1,623 Unrecognized prior service cost(F)****************************** (68,756) (641) Net amount recorded on the consolidated balance sheet(G)=(C)+(D)+(E)+(F) ********************************** 134,228 1,251 Prepaid pension cost (other assets)(H) *************************** 157,463 1,468 Reserve for employee retirement benefits(G)—(H) ***************** ¥ (23,235) $ (217)

Plan assets related to the general type of welfare pension plan amounted to ¥4,720 million ($44 million) and were not included in the ‘‘Plan assets’’ shown above.

(3) Pension expenses

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Service cost ************************************************ ¥ 20,509 $ 191 Interest cost on projected beneﬁt obligation ********************** 21,609 201 Expected return on plan assets ********************************* (20,982) (195) Amortization of unrecognized net obligation from initial application of the new accounting standard ********************************* 17,168 160 Amortization of unrecognized net actuarial gain or loss************* 26,478 247 Amortization of unrecognized prior service cost ******************* (9,301) (87) Other (non-recurring additional retirement allowance paid and other)** 7,977 74 Pension expenses ******************************************** ¥ 63,460 $ 591

F-27 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(4) Assumptions The principal assumptions used in determining beneﬁt obligation and pension expenses at or for the year ended March 31, 2005 were as follows: (a) Discount rate: 1.5% to 2.5% (b) Expected rate of return on plan assets: 0% to 4.0% (c) Allocation of estimated amount of retirement beneﬁts: Allocated to each period by the straight-line method (d) Term to amortize unrecognized prior service costs: Mainly 10 years (e) Term to amortize unrecognized net actuarial gain or loss: Mainly 10 years (f) Term to amortize unrecognized net obligation from initial application of new accounting standard: Mainly 5 years

26. Lease Transactions (1) Financing leases (a) Lessee side A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value for ﬁnancing leases without transfer of ownership at March 31, 2005 was as follows:

Millions of yen March 31, 2005 Equipment Other Total Acquisition cost *************************************** ¥ 16,802 ¥ 835 ¥ 17,637 Accumulated depreciation ******************************* (11,263) (392) (11,655) Net book value**************************************** ¥ 5,539 ¥ 442 ¥ 5,982

Millions of U.S. dollars March 31, 2005 Equipment Other Total Acquisition cost *************************************** $ 157 $ 7 $ 164 Accumulated depreciation ******************************* (105) (3) (108) Net book value**************************************** $52 $4 $56

Future minimum lease payments excluding interests at March 31, 2005 were as follows:

Millions of March 31, 2005 Millions of yen U.S. dollars Due within one year *********************************** ¥2,963 $28 Due after one year ************************************* 3,363 31 ¥6,327 $59

Total lease expenses for the year ended March 31, 2005 were ¥4,010 million ($37 million). Assumed depreciation charges for the year ended March 31, 2005 amounted to ¥3,654 million ($34 million). Assumed depreciation charges is calculated using the straight-line method over the lease term of the respective assets without salvage values. The difference between the minimum lease payments and the acquisition costs of the

F-28 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued) lease assets represents interest expenses. The allocation of such interest expenses over the lease term is computed using the effective interest method. Interest expenses for the year ended March 31, 2005 amounted to ¥328 million ($3 million).

(b) Lessor side Millions of yen March 31, 2005 Equipment Other Total Acquisition cost ************************************** ¥ 42,245 ¥ 2,283 ¥ 44,528 Accumulated depreciation ****************************** (24,131) (1,078) (25,210) Net book value *************************************** ¥ 18,113 ¥ 1,205 ¥ 19,318

Millions of U.S. dollars March 31, 2005 Equipment Other Total Acquisition cost ************************************** $394 $21 $415 Accumulated depreciation ****************************** (225) (10) (235) Net book value *************************************** $169 $11 $180

Future lease payments receivable excluding interests at March 31, 2005 were as follows: Millions of March 31, 2005 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 6,635 $ 62 Due after one year******************************************* 13,783 128 ¥20,419 $190

Total lease income for the year ended March 31, 2005 was ¥7,815 million ($73 million). Depreciation charges for the year ended March 31, 2005 amounted to ¥6,632 million ($62 million). Interest income represents the difference between the additional amount of the lease payments receivable and estimated salvage values, and the acquisition costs of the lease assets. The allocation of such interest income over the lease term is computed using the effective interest method. Interest income for the year ended March 31, 2005 amounted to ¥978 million ($9 million).

(2) Operating leases

(a) Lessee side

Future minimum lease payments at March 31, 2005 were as follows: Millions of March 31, 2005 Millions of yen U.S. dollars Due within one year ***************************************** ¥15,149 $141 Due after one year******************************************* 73,324 683 ¥88,474 $824

F-29 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(b) Lessor side

Future lease payments receivable at March 31, 2005 were as follows: Millions of March 31, 2005 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 332 $ 3 Due after one year******************************************* 776 7 ¥1,108 $10

Future lease payments receivable of ¥3,176 million ($30 million) on the lessor side referred to in (1) and (2) above were pledged as collateral for borrowings at March 31, 2005.

27. Loan Commitments

Commitment line contracts on overdrafts and loans are agreements to lend to customers, up to a prescribed amount, as long as there is no violation of any condition established in the contracts. The amount of unused commitments was ¥35,061,157 million ($326,697 million), and the amount of unused commitments whose original contract terms are within one year or unconditionally cancelable at any time was ¥30,825,405 million ($287,229 million) at March 31, 2005.

Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily represent actual future cash ﬂow requirements. Many of these commitments include clauses under which SMBC and consolidated subsidiaries can reject an application from customers or reduce the contract amounts in the event that economic conditions change, SMBC and other consolidated subsidiaries need to secure claims, or other events occur. In addition, SMBC and other consolidated subsidiaries may request the customers to pledge collateral such as premises and securities at the time of the contracts, and take necessary measures such as monitoring the customers’ ﬁnancial positions, revising contracts when need arises and securing claims after the contracts are made.

28. Market Value of Marketable Securities and Money Held in Trust

The amounts shown in the following tables include trading securities, commercial paper and short-term corporate bonds classified as ‘‘Trading assets,’’ negotiable certificates of deposit bought classified as ‘‘Deposits with banks,’’ and beneficiary claims on loan trusts classified as ‘‘Commercial paper and other debt purchased,’’ in addition to ‘‘Securities’’ stated in the consolidated balance sheet.

(1) Securities

(i) Securities classiﬁed as trading purposes Millions of March 31, 2005 Millions of yen U.S. dollars Consolidated balance sheet amount ****************************** ¥1,325,972 $12,355 Valuation losses included in the earnings for the year *************** 3,717 35

F-30 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(ii) Bonds classiﬁed as held-to-maturity with market value Millions of yen Consolidated Net balance sheet Market unrealized Unrealized Unrealized March 31, 2005 amount Value gains (losses) gains losses Japanese government bonds ******* ¥507,342 ¥505,002 ¥(2,339) ¥1,582 ¥3,922 Japanese local government bonds*** ————— Japanese corporate bonds ********* ————— Other************************** 28,859 29,380 520 531 11 Total ************************** ¥536,201 ¥534,382 ¥(1,818) ¥2,114 ¥3,933

Millions of U.S. dollars Consolidated Net balance sheet Market unrealized Unrealized Unrealized March 31, 2005 amount value gains (losses) gains losses Japanese government bonds ********* $4,727 $4,705 $(22) $15 $37 Japanese local government bonds***** ————— Japanese corporate bonds *********** ————— Other**************************** 269 274 5 5 0 Total **************************** $4,996 $4,979 $(17) $20 $37

Note: Market value is calculated by using market prices at the ﬁscal year-end.

(iii) Other securities with market value

Millions of yen Consolidated Net Acquisition balance sheet unrealized Unrealized Unrealized March 31, 2005 cost amount gains (losses) gains losses Stocks ********************* ¥ 1,964,153 ¥ 2,651,395 ¥687,241 ¥730,989 ¥ 43,747 Bonds********************** 14,734,261 14,749,222 14,961 34,971 20,010 Japanese government bonds ** 13,116,068 13,129,235 13,167 27,115 13,948 Japanese local government bonds ****************** 488,423 486,884 (1,538) 2,061 3,600 Japanese corporate bonds **** 1,129,770 1,133,102 3,332 5,794 2,462 Other ********************** 2,779,971 2,756,295 (23,675) 15,903 39,579 Total*********************** ¥19,478,387 ¥20,156,914 ¥678,527 ¥781,864 ¥103,337

F-31 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

Millions of U.S. dollars Consolidated Net Acquisition balance sheet unrealized Unrealized Unrealized March 31, 2005 cost amount gains (losses) gains losses Stocks *********************** $ 18,302 $ 24,706 $6,404 $6,811 $407 Bonds************************ 137,293 137,432 139 326 187 Japanese government bonds **** 122,215 122,338 123 253 130 Japanese local government bonds ******************** 4,551 4,536 (15) 19 34 Japanese corporate bonds ****** 10,527 10,558 31 54 23 Other ************************ 25,903 25,682 (221) 148 369 Total************************* $181,498 $187,820 $6,322 $7,285 $963

Notes: 1. Net unrealized gains shown above include gains of ¥469 million ($4 million) that is recognized in this fiscal year’s earnings because of the application of fair value hedge accounting and gains of ¥82 million ($1 million) on embedded financial instruments in their entirety that are recognized in the earnings because their embedded derivatives are not measured separately. 2. Market value is calculated as follows: Stocks Average market prices during one month before the fiscal year-end Bonds and other Market prices at the fiscal year-end 3. Other securities with market value are considered as impaired if the market value decreases materially below the acquisition cost and such decline is not considered as recoverable. The market value is recognized as the consolidated balance sheet amount and the amount of write-down is accounted for as valuation loss for this fiscal year. Valuation loss for this fiscal year was ¥81 million ($1 million). The rule for determining ‘‘material decline’’ is as follows and is based on the classification of issuing company under self-assessment of assets. Bankrupt/Effectively bankrupt/Potentially bankrupt issuers : Market value is lower than acquisition cost. Issuers requiring caution : Market value is 30% or more lower than acquisition cost. Normal issuers : Market value is 50% or more lower than acquisition cost. Bankrupt issuers: Issuers that are legally bankrupt or formally declared bankrupt. Effectively bankrupt issuers: Issuers that are not legally bankrupt but regarded as substantially bankrupt. Potentially bankrupt issuers: Issuers that are not currently bankrupt but are perceived to have a high risk of falling into bankruptcy. Issuers requiring caution: Issuers that are identified for close monitoring. Normal issuers: Issuers other than the above four categories of issuers.

(iv) Held-to-maturity bonds sold during the year ended March 31, 2005 There are no corresponding transactions.

(v) Other securities sold during the year ended March 31, 2005

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Sales amount ************************************************ ¥36,119,411 $336,558 Gains on sales *********************************************** 211,718 1,973 Losses on sales ********************************************** 90,149 840

F-32 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(vi) Securities with no available market value

Millions of Millions of yen U.S. dollars Consolidated Consolidated balance sheet balance sheet March 31, 2005 amount amount Bonds classiﬁed as held-to-maturity Unlisted foreign securities ********************************* ¥ 221 $ 2 Other ************************************************** 8,566 80 Other securities Unlisted stocks (excluding OTC stocks) ********************** 481,782 4,489 Unlisted bonds******************************************* 2,110,338 19,664 Unlisted foreign securities ********************************* 410,103 3,821 Other ************************************************** 211,161 1,968

(vii) Change of classiﬁcation of securities There are no corresponding transactions.

(viii) Redemption schedule of other securities with maturities and held-to-maturity bonds

Millions of yen After 1 year After 5 years through through March 31, 2005 Within 1 year 5 years 10 years After 10 years Bonds************************* ¥3,110,902 ¥ 9,065,255 ¥2,237,616 ¥2,953,130 Japanese government bonds ***** 2,818,917 6,414,993 1,482,528 2,920,138 Japanese local government bonds 20,003 264,369 202,016 494 Japanese corporate bonds ******* 271,981 2,385,892 553,071 32,497 Other ************************* 597,893 1,625,673 258,965 725,965 Total ************************** ¥3,708,796 ¥10,690,929 ¥2,496,581 ¥3,679,096

Millions of U.S. dollars After 1 year After 5 years through through March 31, 2005 Within 1 year 5 years 10 years After 10 years Bonds************************* $ 28,987 $ 84,469 $ 20,850 $ 27,517 Japanese government bonds ***** 26,267 59,774 13,814 27,210 Japanese local government bonds 186 2,463 1,882 4 Japanese corporate bonds ******* 2,534 22,232 5,154 303 Other ************************* 5,571 15,148 2,413 6,765 Total ************************** $ 34,558 $ 99,617 $ 23,263 $ 34,282

F-33 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(2) Money held in trust

(i) Money held in trust classiﬁed as trading purposes

There are no corresponding transactions.

(ii) Money held in trust classiﬁed as held-to-maturity

There are no corresponding transactions.

(iii) Other money held in trust Millions of yen Consolidated Acquisition balance sheet Net unrealized Unrealized Unrealized March 31, 2005 cost amount gains gains losses Other money held in trust ***** ¥3,628 ¥3,832 ¥204 ¥300 ¥95 Millions of U.S. dollars Consolidated Acquisition balance sheet Net unrealized Unrealized Unrealized March 31, 2005 cost amount gains gains losses Other money held in trust ***** $34 $36 $2 $3 $1

(3) Net unrealized gains on other securities and other money held in trust Millions of Millions of March 31, 2005 yen U.S. dollars Net unrealized gains ********************************************* ¥678,138 $6,319 Other securities *********************************************** 677,933 6,317 Other money held in trust *************************************** 204 2 (–) Deferred tax liabilities***************************************** 274,983 2,562 Net unrealized gains on other securities (before following adjustment) **** 403,155 3,757 (–) Minority interests********************************************* 8,459 79 (+) Parent company’s interest in net unrealized gains on valuation of other securities held by afﬁliates accounted for by the equity method ******** 278 2 Net unrealized gains on other securities****************************** ¥394,973 $3,680

F-34 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

29. Derivative Transactions (1) Interest rate derivatives Millions of yen Contract amount Valuation gains March 31, 2005 Total Over 1 year Market value (losses) Transactions listed on exchange Interest rate futures: Sold*************************** ¥ 39,978,468 ¥ 866,455 ¥ 45,530 ¥ 45,530 Bought ************************ 42,079,595 1,915,442 (52,737) (52,737) Interest rate options: Sold*************************** ———— Bought ************************ 250,080 250,080 21 21 Over-the-counter transactions Forward rate agreements: Sold*************************** 613,308 456,503 (60) (60) Bought ************************ 9,782,626 56,503 (4) (4) Interest rate swaps: **************** 391,811,677 291,895,257 156,432 156,432 Receivable fixed rate/payable floating rate ************************* 186,359,947 140,866,355 2,048,207 2,048,207 Receivable floating rate/payable fixed rate ************************* 185,522,906 136,402,214 (1,885,274) (1,885,274) Receivable floating rate/payable floating rate******************* 19,847,624 14,605,046 (3,515) (3,515) Interest rate swaptions: Sold*************************** 2,720,750 1,358,410 (31,840) (31,840) Bought ************************ 2,807,739 1,970,731 39,263 39,263 Caps: Sold*************************** 7,957,445 5,140,360 (8,601) (8,601) Bought ************************ 5,131,777 3,276,916 6,496 6,496 Floors: Sold*************************** 287,377 123,982 (3,373) (3,373) Bought ************************ 310,056 167,044 3,673 3,673 Other: Sold*************************** ———— Bought ************************ 639,798 105,311 4,989 4,989 Total **************************** ¥ 159,789 ¥ 159,789

F-35 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

Millions of U.S. dollars Contract amount Valuation gains March 31, 2005 Total Over 1 year Market value (losses) Transactions listed on exchange Interest rate futures: Sold ******************************* $ 372,516 $ 8,074 $ 424 $ 424 Bought***************************** 392,095 17,848 (491) (491) Interest rate options: Sold ******************************* ——— — Bought***************************** 2,330 2,330 0 0 Over-the-counter transactions Forward rate agreements: Sold ******************************* 5,715 4,254 (1) (1) Bought***************************** 91,154 526 (0) (0) Interest rate swaps: ********************* 3,650,873 2,719,859 1,458 1,458 Receivable fixed rate/payable floating rate 1,736,489 1,312,583 19,085 19,085 Receivable floating rate/payable fixed rate 1,728,689 1,270,986 (17,567) (17,567) Receivable floating rate/payable floating rate****************************** 184,939 136,089 (33) (33) Interest rate swaptions: Sold ******************************* 25,352 12,658 (297) (297) Bought***************************** 26,162 18,363 366 366 Caps: Sold ******************************* 74,147 47,898 (80) (80) Bought***************************** 47,818 30,534 61 61 Floors: Sold ******************************* 2,678 1,155 (31) (31) Bought***************************** 2,889 1,557 34 34 Other: Sold ******************************* ——— — Bought***************************** 5,962 981 46 46 Total********************************* $ 1,489 $ 1,489

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of operations. Derivative transactions to which deferred hedge accounting method is applied are not included in the amounts above. Some consolidated overseas subsidiaries account for interest rate derivatives in accordance with local accounting standards. Such transactions are not included in the amounts above, of which their net unrealized losses amount to ¥2,347 million ($22 million). 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial Futures Exchange and others. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models.

F-36 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(2) Currency derivatives

Millions of yen Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Over-the-counter transactions Currency swaps******************* ¥18,581,388 ¥12,017,760 ¥188,219 ¥122,850 Currency swaptions Sold ************************** 985,339 979,291 (22,071) (22,071) Bought************************ 1,218,665 1,208,413 42,475 42,475 Forward foreign exchange ********** 41,706,257 2,301,053 6,194 6,194 Currency options Sold ************************** 2,620,171 1,229,664 (83,225) (83,225) Bought************************ 2,633,024 1,193,964 103,782 103,782 Other Sold ************************** 3,176 — 17 17 Bought************************ 188 — 0 0 Total**************************** ¥235,392 ¥170,023

Millions of U.S. dollars Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Over-the-counter transactions Currency swaps ************************* $173,140 $111,981 $1,754 $1,145 Currency swaptions Sold********************************* 9,181 9,125 (206) (206) Bought ****************************** 11,355 11,260 396 396 Forward foreign exchange ***************** 388,616 21,441 58 58 Currency options Sold********************************* 24,415 11,458 (776) (776) Bought ****************************** 24,534 11,125 967 967 Other Sold********************************* 30 — 0 0 Bought ****************************** 2—00 Total ********************************** $2,193 $1,584

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of operations. The amounts above do not include the following: (a) Derivative transactions to which deferred hedge accounting method is applied; (b) Those that are allotted to financial assets/liabilities denominated in foreign currency and whose market values are already reflected to the consolidated balance sheet; and (c) Those that are allotted to financial assets/liabilities denominated in foreign currency and the financial assets/liabilities are eliminated in the process of consolidation. Some consolidated overseas subsidiaries account for currency derivatives in accordance with local accounting standards. Such transactions are not included in the amounts above, of which their net unrealized gains amount to ¥592 million ($6 million). 2. Market value is calculated mainly using discounted present value.

F-37 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(3) Equity derivatives Millions of yen Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Transactions listed on exchange Equity price index futures: Sold ********************************* ¥233¥ — ¥— ¥— Bought ******************************* 594 — (0) (0) Equity price index options: Sold ********************************* ———— Bought ******************************* ———— Over-the-counter transactions Equity options: Sold ********************************* 17,500 17,500 (277) (277) Bought ******************************* 17,000 17,000 271 271 Equity price index swaps: Receivable equity index/payable ﬂoating rate — — — — Receivable ﬂoating rate/payable equity index — — — — Other: Sold ********************************* 22,834 — (1,146) (1,146) Bought ******************************* 66,278 8,583 4,887 4,887 Total*********************************** ¥ 3,735 ¥ 3,735

Millions of U.S. dollars Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Transactions listed on exchange Equity price index futures: Sold************************************* $ 2 $— $— $— Bought ********************************** 6— (0)(0) Equity price index options: Sold************************************* —— — — Bought ********************************** —— — — Over-the-counter transactions Equity options: Sold************************************* 163 163 (3) (3) Bought ********************************** 158 158 3 3 Equity price index swaps: Receivable equity index/payable ﬂoating rate *** —— — — Receivable ﬂoating rate/payable equity index *** —— — — Other: Sold************************************* 213 — (11) (11) Bought ********************************** 618 80 46 46 Total ************************************** $35 $35

F-38 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(4) Bond derivatives

Millions of yen Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Transactions listed on exchange Bond futures: Sold *********************************** ¥598,657 ¥ — ¥(1,720) ¥(1,720) Bought ********************************* 823,707 — 6,645 6,645 Bond futures options: Sold *********************************** 17,500 — (50) (50) Bought ********************************* 15,000 — 21 21 Over-the-counter transactions Forward bond agreements: Sold *********************************** ———— Bought ********************************* 263,054 243,588 1,485 1,485 Bond options: Sold *********************************** 702,330 11,851 (4,141) (4,141) Bought ********************************* 691,518 — 1,144 1,144 Total************************************* ¥ 3,383 ¥ 3,383

Millions of U.S. dollars Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Transactions listed on exchange Bond futures: Sold ************************************** $5,578 $ — $(16) $(16) Bought ************************************ 7,675 — 62 62 Bond futures options: Sold ************************************** 163 — (0) (0) Bought ************************************ 140 — 0 0 Over-the-counter transactions Forward bond agreements: Sold ************************************** ———— Bought ************************************ 2,451 2,270 14 14 Bond options: Sold ************************************** 6,544 110 (39) (39) Bought ************************************ 6,444 — 11 11 Total**************************************** $32 $32

F-39 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(5) Commodity derivatives

Millions of yen Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Transactions listed on exchange Commodity futures: Sold ********************************** ¥ —¥ —¥ — ¥ — Bought ******************************** 310 — (16) (16) Over-the-counter transactions Commodity swaps: Receivable fixed price/payable floating price 142,921 140,114 (57,396) (57,396) Receivable floating price/payable fixed price 139,453 136,482 67,597 67,597 Commodity options: Sold ********************************** 6,861 6,854 (4,873) (4,873) Bought ******************************** 6,095 5,925 5,056 5,056 Total************************************ ¥ 10,367 ¥ 10,367

Millions of U.S. dollars Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Transactions listed on exchange Commodity futures: Sold ************************************** $— $— $— $— Bought ************************************ 3—(0)(0) Over-the-counter transactions Commodity swaps: Receivable fixed price/payable floating price ***** 1,332 1,306 (535) (535) Receivable floating price/payable fixed price ***** 1,299 1,272 630 630 Commodity options: Sold ************************************** 64 64 (45) (45) Bought ************************************ 57 55 47 47 Total**************************************** $97 $97

F-40 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(6) Credit derivative transactions

Millions of yen Contract amount Market Valuation March 31, 2005 Total Over 1 year value gains (losses) Over-the-counter transactions Credit default options: Sold ************************************ ¥45,468 ¥37,132 ¥ (779) ¥ (779) Bought ********************************** 76,405 62,558 1,552 1,552 Other: Sold ************************************ 923 — (84) (84) Bought ********************************** 1,481 — 115 115 Total************************************** ¥ 803 ¥ 803

Millions of U.S. dollars Contract amount Valuation March 31, 2005 Total Over 1 year Market value gains (losses) Over-the-counter transactions Credit default options: Sold *********************************** $424 $346 $ (7) $ (7) Bought ********************************* 712 583 14 14 Other: Sold *********************************** 9— (1)(1) Bought ********************************* 14 — 1 1 Total ************************************* $7 $7

F-41 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

30. Segment Information (1) Business segment information

Millions of yen Elimination Banking and unallocated Year ended March 31, 2005 business Other Total corporate assets Consolidated I. Ordinary income (1) External customers *** ¥ 2,454,396 ¥ 236,961 ¥ 2,691,357 ¥ — ¥ 2,691,357 (2) Intersegment ******** 33,622 144,960 178,582 (178,582) — Total****************** 2,488,018 381,921 2,869,940 (178,582) 2,691,357 Ordinary expenses ******** 2,640,298 308,831 2,949,130 (158,019) 2,791,110 Ordinary proﬁt (loss) ****** ¥ (152,279) ¥ 73,089 ¥ (79,190) ¥ (20,562) ¥ (99,752) II. Assets, depreciation and capital expenditure Assets ****************** ¥96,311,150 ¥4,513,358 ¥100,824,509 ¥(3,346,200) ¥97,478,308 Depreciation ************* 59,231 13,356 72,587 — 72,587 Capital expenditure******** 65,398 21,810 87,208 — 87,208

Millions of U.S. dollars Elimination Banking and unallocated Year ended March 31, 2005 business Other Total corporate assets Consolidated I. Ordinary income (1) External customers ************ $ 22,870 $ 2,208 $ 25,078 $ — $ 25,078 (2) Intersegment****************** 313 1,351 1,664 (1,664) — Total *************************** 23,183 3,559 26,742 (1,664) 25,078 Ordinary expenses ****************** 24,602 2,878 27,480 (1,473) 26,007 Ordinary proﬁt (loss)**************** $ (1,419) $ 681 $ (738) $ (191) $ (929) II. Assets, depreciation and capital expenditure Assets **************************** $897,420 $42,055 $939,475 $(31,179) $908,296 Depreciation *********************** 552 124 676 — 676 Capital expenditure ***************** 610 203 813 — 813

F-42 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(2) Geographic segment information Millions of yen Elimination Asia and and unallocated Year ended March 31, 2005 Japan The Americas Europe Oceania Total corporate assets Consolidated I. Ordinary income (1) External customers ****** ¥ 2,441,237 ¥ 109,733 ¥ 62,984 ¥ 77,402 ¥ 2,691,357 ¥ — ¥ 2,691,357 (2) Intersegment *********** 58,859 46,749 6,164 25,559 137,332 (137,332) — Total********************* 2,500,096 156,483 69,148 102,962 2,828,690 (137,332) 2,691,357 Ordinary expenses************ 2,677,193 107,027 63,254 60,639 2,908,114 (117,003) 2,791,110 Ordinary proﬁt (loss) ********* ¥ (177,096) ¥ 49,456 ¥ 5,894 ¥ 42,322 ¥ (79,423) ¥ (20,329) ¥ (99,752) II. Assets********************* ¥89,473,929 ¥4,704,649 ¥2,462,873 ¥3,256,830 ¥99,898,282 ¥(2,419,973) ¥97,478,308

Millions of U.S. dollars Elimination and unallocated Year ended March 31, 2005 Japan The Americas Europe Asia and Oceania Total corporate assets Consolidated I. Ordinary income (1) External customers ********* $ 22,747 $ 1,023 $ 587 $ 721 $ 25,078 $ — $ 25,078 (2) Intersegment ************** 549 436 57 238 1,280 (1,280) — Total ************************ 23,296 1,459 644 959 26,358 (1,280) 25,078 Ordinary expenses *************** 24,946 998 589 565 27,098 (1,091) 26,007 Ordinary proﬁt (loss)************* $ (1,650) $ 461 $ 55 $ 394 $ (740) $ (189) $ (929) II. Assets ************************ $833,712 $43,838 $22,949 $30,347 $930,845 $(22,549) $908,296

Notes: 1. The geographic segmentation is classiﬁed based on the degrees of following factors: geographic proximity, similarity of economic activities and relationship of business activities among regions. 2. The Americas includes the United States, Brazil, Canada and others; Europe includes the United Kingdom, Germany, France and others; Asia and Oceania includes Hong Kong, Singapore, Australia and others except Japan. 3. Ordinary income represents total income excluding gains on disposal of premises and equipment, collection of written-off claims and other extraordinary gains. Ordinary expenses represent total expenses excluding losses on disposal of premises and equipment, amortization of unrecognized net transition obligation for employee retirement beneﬁts and other extraordinary expenses.

(3) Ordinary income from overseas operations

Millions of Year ended March 31, 2005 Millions of yen U.S. dollars Consolidated ordinary income from overseas operations(A)********* ¥ 250,120 $ 2,331 Consolidated ordinary income(B) ****************************** 2,691,357 25,078 (A)/(B) *************************************************** 9.3% 9.3%

Notes: 1. Consolidated ordinary income from overseas operations are presented as counterparts of overseas sales of companies in other industries. 2. The above table shows ordinary income from transactions of overseas branches of SMBC and transactions of overseas consolidated subsidiaries, excluding internal income. These extensive transactions are not categorized by transaction party and the geographic segment information is not presented because such information is not available.

F-43 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

31. Subsequent Event Appropriations of retained earnings The following appropriation of retained earnings of SMBC at March 31, 2005 was approved by the general meeting of shareholders held on June 29, 2005: Millions of Millions of yen U.S. dollars Cash dividends, ¥485 per share on preferred stock (ﬁrst series Type 6) ************************************************ ¥33 $0

F-44 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

32. Parent Company (1) Nonconsolidated Balance Sheet Millions of U.S. dollars March 31, 2005 Millions of yen (Note 1) Assets Cash and due from banks ********************************************* ¥ 2,689,806 $ 25,063 Deposits with banks************************************************** 1,835,023 17,099 Call loans and bills bought ******************************************** 946,397 8,819 Receivables under resale agreements ************************************ 88,021 820 Receivables under securities borrowing transactions ************************ 568,340 5,296 Commercial paper and other debt purchased ****************************** 126,682 1,180 Trading assets******************************************************* 3,363,376 31,340 Money held in trust ************************************************** 3,832 36 Securities ********************************************************** 23,676,696 220,618 Loans and bills discounted ******************************************** 50,067,586 466,526 Foreign exchanges *************************************************** 840,923 7,836 Other assets ******************************************************** 1,446,439 13,478 Premises and equipment ********************************************** 660,469 6,154 Deferred tax assets*************************************************** 1,502,153 13,997 Customers’ liabilities for acceptances and guarantees*********************** 4,303,148 40,096 Reserve for possible loan losses **************************************** (989,121) (9,217) Total assets ******************************************************** ¥91,129,776 $849,141 Liabilities Deposits *********************************************************** ¥65,591,627 $611,178 Call money and bills sold ********************************************* 4,811,207 44,831 Payables under repurchase agreements*********************************** 365,127 3,402 Payables under securities lending transactions***************************** 3,838,031 35,763 Trading liabilities**************************************************** 1,711,030 15,943 Borrowed money **************************************************** 2,267,602 21,129 Foreign exchanges *************************************************** 477,845 4,453 Bonds ************************************************************* 3,718,372 34,648 Due to trust account ************************************************* 50,457 470 Other liabilities ***************************************************** 1,143,206 10,652 Reserve for employee bonuses ***************************************** 9,092 85 Reserve for expenses related to EXPO 2005 Japan************************* 231 2 Other reserves ****************************************************** 18 0 Deferred tax liabilities for land revaluation ******************************* 90,043 839 Acceptances and guarantees ******************************************* 4,303,148 40,096 Total liabilities ***************************************************** 88,377,041 823,491 Stockholders’ equity Capital stock ******************************************************* 664,986 6,196 Capital surplus ****************************************************** 1,367,548 12,743 Retained earnings**************************************************** 291,311 2,714 Land revaluation excess*********************************************** 42,345 395 Net unrealized gains on other securities********************************** 386,543 3,602 Total stockholders’ equity******************************************** 2,752,735 25,650 Total liabilities and stockholders’ equity ******************************* ¥91,129,776 $849,141

F-45 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2005 — (Continued)

(2) Nonconsolidated Statement of Operations

Millions of U.S. dollars Year ended March 31, 2005 Millions of yen (Note 1) Income Interest income: Interest on loans and discounts ********************************************** ¥ 939,895 $ 8,758 Interest and dividends on securities ******************************************* 262,640 2,447 Interest on receivables under resale agreements ********************************* 1,955 18 Interest on receivables under securities borrowing transactions ********************* 181 2 Interest on deposits with banks ********************************************** 33,651 314 Other interest income ****************************************************** 80,375 749 Trust fees ****************************************************************** 2,609 24 Fees and commissions******************************************************** 399,434 3,722 Trading proﬁts ************************************************************** 131,779 1,228 Other operating income******************************************************* 228,005 2,124 Other income *************************************************************** 210,408 1,961 Total income*************************************************************** 2,290,935 21,347 Expenses Interest expenses: Interest on deposits ******************************************************** 110,763 1,032 Interest on borrowings and rediscounts **************************************** 89,059 830 Interest on payables under repurchase agreements ******************************* 2,786 26 Interest on payables under securities lending transactions ************************* 51,818 483 Interest on bonds********************************************************** 60,483 564 Other interest expenses ***************************************************** 31,283 291 Fees and commissions******************************************************** 101,358 944 Trading losses ************************************************************** 199 2 Other operating expenses ***************************************************** 109,916 1,024 General and administrative expenses ******************************************** 603,477 5,623 Provision for reserve for possible loan losses ************************************* 117,688 1,097 Other expenses ************************************************************* 1,112,179 10,363 Total expenses ************************************************************* 2,391,014 22,280 Loss before income taxes **************************************************** 100,079 933 Income taxes: Current ****************************************************************** 6,379 59 Refund ****************************************************************** 8,184 76 Deferred ***************************************************************** 38,579 359 Net loss ******************************************************************* ¥ 136,854 $ 1,275

U.S. dollars Yen (Note 1) Per share data: Net loss ********************************************************************* ¥2,718.23 $25.33

F-46 INDEPENDENT AUDITORS’ REPORT To the Board of Directors of Sumitomo Mitsui Banking Corporation We have audited the accompanying consolidated balance sheet of Sumitomo Mitsui Banking Corporation (‘‘SMBC’’) and subsidiaries as of March 31, 2004, and the related consolidated statement of income, stockholders’ equity and cash flows for the year then ended, expressed in Japanese yen. These consolidated financial statements are the responsibility of SMBC’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of SMBC and subsidiaries as of March 31, 2004, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in Japan. The consolidated financial statements as of and for the year ended March 31, 2004 have been translated into United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our opinion, the consolidated financial statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 1 to the consolidated financial statements.

KPMG AZSA & Co. Tokyo, Japan June 29, 2004

F-47 CONSOLIDATED FINANCIAL STATEMENTS OF SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 2004

Millions of U.S. dollars Millions of yen (Note 1) Assets Cash and due from banks (Note 9) ********************************************* ¥ 3,525,056 $ 33,353 Deposits with banks (Notes 9, 28) ********************************************** 1,797,817 17,010 Call loans and bills bought **************************************************** 360,509 3,411 Receivables under resale agreements ******************************************** 152,070 1,439 Receivables under securities borrowing transactions ******************************** 1,009,328 9,550 Commercial paper and other debt purchased (Note 28) ***************************** 481,547 4,556 Trading assets (Notes 3, 9, 28) ************************************************* 3,306,780 31,287 Money held in trust (Note 28) ************************************************* 3,749 35 Securities (Notes 4, 9, 28)***************************************************** 26,863,501 254,173 Loans and bills discounted (Notes 5, 9, 27) ************************************** 55,428,967 524,449 Foreign exchanges *********************************************************** 743,957 7,039 Other assets (Notes 6, 9)****************************************************** 1,892,274 17,904 Premises and equipment (Notes 7, 9, 15) **************************************** 896,614 8,483 Lease assets (Note 8)********************************************************* 24,835 235 Deferred tax assets (Note 24) ************************************************** 1,646,920 15,583 Deferred tax assets for land revaluation (Notes 15, 24) ***************************** 706 7 Customers’ liabilities for acceptances and guarantees******************************* 3,084,542 29,185 Reserve for possible loan losses ************************************************ (1,375,921) (13,019) Total assets **************************************************************** ¥99,843,258 $944,680 Liabilities, minority interests and stockholders’ equity Liabilities Deposits (Notes 9, 10)******************************************************** ¥68,981,540 $652,678 Call money and bills sold (Note 9) ********************************************* 6,292,495 59,537 Payables under repurchase agreements (Note 9) *********************************** 1,098,449 10,393 Payables under securities lending transactions (Note 9) ***************************** 5,946,346 56,262 Commercial paper *********************************************************** 3,000 28 Trading liabilities (Notes 9, 11) ************************************************ 1,873,245 17,724 Borrowed money (Notes 9, 12)************************************************* 1,223,881 11,580 Foreign exchanges *********************************************************** 572,755 5,419 Bonds (Note 13) ************************************************************ 3,863,343 36,553 Due to trust account ********************************************************* 36,032 341 Other liabilities (Notes 9, 14) ************************************************** 2,991,734 28,307 Reserve for employee bonuses ************************************************* 16,152 153 Reserve for employee retirement beneﬁts (Note 25) ******************************** 30,918 293 Reserves for expenses related to EXPO 2005 Japan ******************************** 116 1 Other reserves ************************************************************** 862 8 Deferred tax liabilities (Note 24) *********************************************** 39,797 377 Deferred tax liabilities for land revaluation (Notes 15, 24) ************************** 56,391 534 Acceptances and guarantees (Note 9)******************************************** 3,084,542 29,185 Total liabilities ************************************************************* ¥96,111,607 $909,373 Minority interests (Note 16) ************************************************** ¥ 1,009,489 $ 9,551 Stockholders’ equity (Note 17) Capital stock (Note 17) ******************************************************* ¥ 559,985 $ 5,298 Capital surplus ************************************************************** 1,298,511 12,286 Retained earnings************************************************************ 519,354 4,914 Land revaluation excess (Notes 15, 24) ****************************************** 96,393 912 Net unrealized gains on other securities (Notes 24, 28) ***************************** 319,780 3,026 Foreign currency translation adjustments ***************************************** (71,861) (680) Total stockholders’ equity**************************************************** ¥ 2,722,161 $ 25,756 Total liabilities, minority interests and stockholders’ equity*********************** ¥99,843,258 $944,680

See accompanying notes to consolidated ﬁnancial statements.

F-48 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME YEAR ENDED MARCH 31, 2004

Millions of Millions of yen U.S. dollars (Note 1) Income Interest income: Interest on loans and discounts********************************** ¥1,139,037 $10,777 Interest and dividends on securities ****************************** 256,601 2,428 Interest on receivables under resale agreements ******************** 2,542 24 Interest on receivables under securities borrowing transactions ******** 104 1 Interest on deposits with banks ********************************* 12,679 120 Other interest income ***************************************** 149,740 1,417 Trust fees ***************************************************** 334 3 Fees and commissions (Note 18) ********************************** 422,066 3,993 Trading proﬁts (Note 19) **************************************** 305,011 2,886 Other operating income (Note 20) ********************************* 231,017 2,186 Other income (Note 21) ***************************************** 324,367 3,069 Total income ************************************************** ¥2,843,502 $26,904 Expenses Interest expenses: Interest on deposits ******************************************* ¥ 108,286 $ 1,025 Interest on borrowings and rediscounts *************************** 33,687 319 Interest on payables under repurchase agreements ****************** 4,212 40 Interest on payables under securities lending transactions ************ 48,622 460 Interest on bonds ********************************************* 74,855 708 Other interest expenses **************************************** 25,410 240 Fees and commissions (Note 18) ********************************** 91,455 865 Trading losses (Note 19)***************************************** 916 9 Other operating expenses (Note 22)******************************** 223,464 2,114 General and administrative expenses ******************************* 776,106 7,343 Other expenses (Note 23) **************************************** 1,100,179 10,410 Total expenses ************************************************ ¥2,487,197 $23,533 Income before income taxes and minority interests ***************** ¥ 356,304 $ 3,371 Income taxes (Note 24): Current ***************************************************** ¥ 13,970 $ 132 Deferred **************************************************** 293 3 Minority interests in net income*********************************** ¥ 40,376 $ 382 Net income *************************************************** ¥ 301,664 $ 2,854

F-49 Yen U.S. dollars (Note 1) Per share data: Net income **************************************************** ¥5,238.85 $ 49.57 Net income — diluted ******************************************* 5,231.31 49.50 Declared dividends on common stock ****************************** 4,177 39.52 Declared dividends on preferred stock (Type 1) ********************** 10,500 99.35 Declared dividends on preferred stock (Type 2) ********************** 28,500 269.66 Declared dividends on preferred stock (Type 3) ********************** 13,700 129.62

See accompanying notes to consolidated ﬁnancial statements.

F-50 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY YEAR ENDED MARCH 31, 2004

Millions of yen Net unrealized Foreign Capital Land gains (losses) currency stock Capital Retained revaluation on other translation (Note 17) surplus earnings excess securities adjustments Total Balance at March 31, 2003 *********** ¥559,985 ¥1,298,511 ¥258,690 ¥101,336 ¥ (21,559) ¥(54,419) ¥2,142,544 Merger of consolidated subsidiaries ***** (2,028) (2,028) Change due to decrease of afﬁliates ***** 53 53 Transfer of land revaluation excess ****** 4,428 (4,428) — Change in tax rate and others ********** (514) (514) Cash dividends paid ****************** (43,454) (43,454) Net income ************************* 301,664 301,664 Change in net unrealized gains on other securities ************************* 341,339 341,339 Change in foreign currency translation adjustments *********************** (17,442) (17,442) Balance at March 31, 2004 *********** ¥559,985 ¥1,298,511 ¥519,354 ¥ 96,393 ¥319,780 ¥(71,861) ¥2,722,161

Millions of U.S. dollars (Note 1) Net unrealized Foreign Capital Land gains (losses) currency stock Capital Retained revaluation on other translation (Note 17) surplus earnings excess securities adjustments Total Balance at March 31, 2003 **************** $5,298 $12,286 $2,448 $959 $ (204) $(515) $20,272 Merger of consolidated subsidiaries ********** (19) (19) Change due to decrease of afﬁliates ********** 00 Transfer of land revaluation excess *********** 42 (42) — Change in tax rate and others *************** (5) (5) Cash dividends paid *********************** (411) (411) Net income ****************************** 2,854 2,854 Change in net unrealized gains on other securities ****************************** 3,230 3,230 Change in foreign currency translation adjustments **************************** (165) (165) Balance at March 31, 2004 **************** $5,298 $12,286 $4,914 $912 $3,026 $(680) $25,756

See accompanying notes to consolidated ﬁnancial statements.

F-51 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED MARCH 31, 2004

Millions of Millions of yen U.S. dollars (Note 1) 1. Cash flows from operating activities: Income before income taxes and minority interests*********************** ¥ 356,304 $ 3,371 Depreciation of premises, equipment and others ************************* 64,539 611 Depreciation of lease assets****************************************** 7,496 71 Amortization of goodwill******************************************** (10,215) (97) Equity in earnings of affiliates *************************************** (231) (2) Net change in reserve for possible loan losses*************************** (829,769) (7,851) Net change in reserve for possible losses on loans sold ******************* (20,665) (196) Net change in reserve for employee bonuses **************************** 116 1 Net change in reserve for employee retirement benefits ******************* (42,829) (405) Net change in reserve for expenses related to EXPO 2005 Japan *********** 116 1 Interest income **************************************************** (1,560,705) (14,767) Interest expenses ************************************************** 295,075 2,792 Net (gains) losses on securities *************************************** (70,282) (665) Net (gains) losses from money held in trust **************************** (121) (1) Net exchange (gains) losses****************************************** 406,335 3,845 Net (gains) losses from disposal of premises and equipment *************** 29,072 275 Net (gains) losses from disposal of lease assets ************************* 299 3 Net change in trading assets ***************************************** 1,131,864 10,709 Net change in trading liabilities ************************************** (929,787) (8,797) Net change in loans and bills discounted ******************************* 6,288,742 59,502 Net change in deposits********************************************** 1,825,558 17,273 Net change in negotiable certificates of deposit************************** (1,306,888) (12,365) Net change in borrowed money (excluding subordinated debt) ************* (95,669) (905) Net change in deposits with banks ************************************ (1,297,907) (12,280) Net change in call loans, bills bought and receivables under resale agreements (319,216) (3,020) Net change in receivables under securities borrowing transactions*********** 971,914 9,196 Net change in call money, bills sold and payables under repurchase agreements ***************************************************** (5,704,903) (53,978) Net change in commercial paper************************************** (47,500) (450) Net change in payables under securities lending transactions*************** 1,139,101 10,778 Net change in foreign exchanges (assets)******************************* 5,016 47 Net change in foreign exchanges (liabilities) **************************** 175,444 1,660 Issuance and redemption of bonds (excluding subordinated bonds) ********** 155,510 1,471 Net change in due to trust account ************************************ 30,078 284 Interest received *************************************************** 1,606,598 15,201 Interest paid ****************************************************** (320,724) (3,035) Net change in payable on trading and securities contracts ***************** 1,188,672 11,247 Other, net ******************************************************** 138,669 1,312 Subtotal ********************************************************* ¥ 3,259,107 $ 30,836 Income taxes paid ************************************************* (31,749) (300) Net cash provided by operating activities***************************** ¥ 3,227,358 $ 30,536

See accompanying notes to consolidated ﬁnancial statements.

F-52 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS — (Continued) YEAR ENDED MARCH 31, 2004

Millions of Millions of yen U.S. dollars (Note 1) 2. Cash flows from investing activities: Purchases of securities ************************************** ¥(47,305,006) $(447,583) Proceeds from sale of securities******************************* 30,680,917 290,292 Proceeds from maturity of securities *************************** 13,965,385 132,135 Purchases of money held in trust****************************** (21,225) (201) Proceeds from sale of money held in trust ********************** 42,259 400 Purchases of premises and equipment ************************** (65,474) (619) Proceeds from sale of premises and equipment ****************** 19,901 188 Purchases of lease assets ************************************ (9,107) (86) Proceeds from sale of lease assets***************************** 1,990 19 Purchases of stock of subsidiaries ***************************** (8,978) (85) Net cash used in investing activities ************************** ¥ (2,699,338) $ (25,540) 3. Cash flows from financing activities: Proceeds from issuance of subordinated debt ******************** ¥ 89,500 $ 847 Repayment of subordinated debt ****************************** (195,000) (1,845) Proceeds from issuance of subordinated bonds******************* 436,453 4,130 Repayment of subordinated bonds***************************** (150,713) (1,426) Dividends paid ******************************************** (43,507) (412) Proceeds from minority stockholders*************************** 25 0 Dividends paid to minority stockholders ************************ (33,279) (315) Net cash provided by financing activities ********************* ¥ 103,479 $ 979 4. Effect of exchange rate changes on cash and due from banks *** ¥ (2,412) $ (23) 5. Net change in cash and due from banks ********************** ¥ 629,087 $ 5,952 6. Cash and due from banks at beginning of year**************** ¥ 2,895,968 $ 27,401 7. Cash and due from banks at end of year ********************* ¥ 3,525,056 $ 33,353

See accompanying notes to consolidated ﬁnancial statements.

F-53 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004

1. Basis of Presentation Sumitomo Mitsui Banking Corporation (‘‘SMBC’’) has prepared the accompanying consolidated financial statements in accordance with the provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statement of stockholders’ equity) from the consolidated financial statements of SMBC prepared in accordance with Japanese GAAP. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements. Amounts less than one million yen have been omitted. As a result, the totals in Japanese yen shown in the financial statements do not necessarily agree with the sum of the individual amounts. The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2004, which was ¥105.69 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at that rate.

2. Significant Accounting Policies (1) Consolidation and Equity Method (a) Scope of consolidation Japanese accounting standards on consolidated financial statements require a company to consolidate any subsidiaries of which the company substantially controls the operations, even if it is not a majority owned subsidiary. Control is defined as the power to govern the decision making body of an enterprise.

(i) Consolidated subsidiaries SMBC has 114 consolidated subsidiaries and principal subsidiaries are as follows: THE MINATO BANK, LTD. Kansai Urban Banking Corporation Sumitomo Mitsui Banking Corporation Europe Limited Manufacturers Bank SMBC Capital Co., Ltd. SMBC Finance Service Co., Ltd. SMBC Friend Securities Co., Ltd. SMBC Capital Markets, Inc. From this fiscal year, eight companies including FRESCO Card Inc. were additionally consolidated due to acquirement of shares. Former The Kansai Sawayaka Bank, Limited (‘‘Sawayaka’’) was consolidated due to acquirement of shares in this fiscal year. However, Sawayaka was merged with former The Bank of Kansai, Ltd. and excluded from the scope of consolidation during this fiscal year. (The Bank of Kansai, Ltd. changed its name to Kansai Urban Banking Corporation at the time of the merger).

F-54 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

From this ﬁscal year, four companies including Sakura Friend Securities Co., Ltd. and four companies including Sakura Global Capital Asia Limited were excluded from the scope of consolidation due to merger and liquidation, respectively.

(ii) Nonconsolidated subsidiaries Principal company SBCS Co., Ltd.

Nonconsolidated subsidiaries’ total assets, ordinary income, net income and retained earnings have no material impact on the consolidated ﬁnancial statements.

(b) Application of the equity method

(i) Nonconsolidated subsidiaries accounted for by the equity method — 4 companies Principal company SBCS Co., Ltd.

(ii) Afﬁliates accounted for by the equity method — 11 companies Principal companies Sumitomo Mitsui Asset Management Company, Limited QUOQ Inc.

From this ﬁscal year, DLJ direct SFG Securities Inc. was excluded from afﬁliated companies due to sale of stocks.

(iii) Nonconsolidated subsidiaries and afﬁliates that are not accounted for by the equity method Principal companies SIS Techno-Service Co., Ltd. Sumitomo Mitsui Asset Management (New York) Inc.

Net income and retained earnings of nonconsolidated subsidiaries and afﬁliates that are not accounted for by the equity method have no material impact on the consolidated ﬁnancial statements.

(c) The balance sheet dates of consolidated subsidiaries (i) The dates of year-end account closing of consolidated subsidiaries are as follows: September 30 ************ 5 companies October 31 ************** 1 company December 31************* 47 companies January 31*************** 1 company March 31**************** 60 companies

A consolidated domestic subsidiary changed its balance sheet date from December 31 to March 31 from this fiscal year. Therefore, SMBC’s consolidated financial statements include the subsidiary’s profit or loss for the period from January 1, 2003 to March 31, 2004. However, this change had no material impact on the consolidated financial statements.

F-55 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(ii) As for the companies whose balance sheet dates are September 30 and October 31, the accounts were provisionally closed as of March 31 and January 31 for the purpose of consolidation, respectively. The other companies are consolidated on the basis of their respective balance sheet dates. Appropriate adjustments were made for material transactions during the periods from their respective balance sheet dates to the consolidated closing dates.

(d) Valuation of consolidated subsidiaries’ assets and liabilities Assets and liabilities of consolidated subsidiaries including the portion attributable to minority stockholders are valuated for consolidation at fair value when SMBC acquires their control.

(e) Amortization of goodwill Goodwill is charged or credited to income directly when incurred.

(2) Statement of cash ﬂows For the purposes of the consolidated statement of cash ﬂows, cash and cash equivalents represent cash and due from banks. Reconciliation of the opening balance and the expense (net) for acquisition with respect to acquisition of three companies including former The Kansai Sawayaka Bank, Limited is as follows: Millions of Millions of yen U.S. dollars Assets ************************************************************** ¥ 800,140 $ 7,571 Loans and bills discounted ******************************************* 593,042 5,611 Liabilities *********************************************************** ¥(724,780) $(6,858) Deposits ********************************************************** (682,795) (6,460) Minority interests***************************************************** (23,450) (222) Goodwill************************************************************ (13,136) (124) Acquisition costs for the three companies’ stocks (a)************************ 38,773 367 Cash and due from banks of the three companies (b)************************ (29,794) (282) (a) – (b) Cash expenditure for acquisition of the three companies ************** ¥ 8,978 $ 85

(3) Trading assets/liabilities and trading profits/losses Transactions for trading purposes (seeking gains arising from short-term changes in interest rates, currency exchange rates, or market prices of securities and other market related indices or from variation among markets) are included in ‘‘Trading assets’’ or ‘‘Trading liabilities’’ on the consolidated balance sheet on a contract date basis. Profits and losses on trading transactions are also recognized on a contract date basis, and recorded as ‘‘Trading profits’’ and ‘‘Trading losses.’’ Securities and monetary claims purchased for trading purposes are stated at the fiscal year-end market value, and financial derivatives such as swaps, futures and options are stated at amounts that would be settled if the transactions were terminated at the consolidated balance sheet date. Trading profits and losses include interest received or paid during the fiscal year. The valuation differences of securities and money claims between the previous fiscal year-end and this fiscal year-end are recorded in the above-mentioned accounts. As for the derivatives, assuming that the settlement will be made in cash, the

F-56 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued) valuation differences between the previous fiscal year-end and this fiscal year-end are recorded in the above- mentioned accounts. SMBC formerly accounted for foreign currency translation differences arising from currency swaps for trading purposes as ‘‘Other assets’’ or ‘‘Other liabilities’’ on the balance sheet on a net basis. From this fiscal year, SMBC accounts for such foreign currency differences as ‘‘Trading assets’’ and ‘‘Trading liabilities’’ on a gross basis, pursuant to the ‘‘Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry’’ (JICPA Industry Audit Committee Report No. 25). Consequently, ‘‘Other liabilities’’ decreased by ¥61,077 million ($578 million), and ‘‘Trading assets’’ and ‘‘Trading liabilities’’ increased by ¥19,741 million ($187 million) and ¥80,818 million ($765 million), respectively.

(4) Securities As for securities other than trading purposes, debt securities that SMBC and consolidated subsidiaries have the intent and ability to hold to maturity (held-to-maturity securities) are carried at amortized cost (straight-line method) using the moving-average method. Investments in nonconsolidated subsidiaries and affiliates that are not accounted for by the equity method are carried at cost using the moving-average method. Securities other than trading purpose securities, held-to-maturity debt securities and investments in subsidiaries and affiliates are classified as ‘‘other securities’’ (available-for-sale securities). Stocks in other securities that have market value are carried at the average market prices during the final month of the fiscal year, and bonds and others that have market prices are carried at their fiscal year-end market prices (cost of securities sold is calculated using primarily the moving-average method). Other securities with no market prices are carried at cost or amortized cost using the moving-average method. Net unrealized gains (losses) on other securities, net of income taxes, are included in ‘‘Stockholders’ equity,’’ after deducting the amount that is reflected in the fiscal year’s earnings because of application of fair value hedge accounting. Securities included in money held in trust account are carried in the same manner as for securities mentioned above.

(5) Derivative transactions Derivative transactions, excluding those classiﬁed as trading derivatives, are carried at fair value, though some consolidated overseas subsidiaries account for derivative transactions in accordance with local accounting standards.

(6) Hedge accounting (a) Hedging against interest rate changes As for the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets and liabilities, SMBC applies deferred hedge accounting or fair value hedge accounting. In the previous fiscal year, SMBC applied the temporary treatment stipulated in the ‘‘Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’’ (JICPA Industry Audit Committee Report No. 24) to the ‘‘macro hedge,’’ which is the management of interest rate risk arising from large-volume transactions in loans, deposits and other interest-earning assets and interest- bearing liabilities as a whole using derivatives. From this fiscal year, SMBC applies the basic provisions of JICPA Industry Audit Committee Report No. 24 to hedges on groups of large-volume, small-value monetary claims and debts with similar risk characteristics. SMBC assesses the effectiveness of such hedges in offsetting movement of the fair value by the changes in interest rates, by classifying the hedged items (such as deposits and loans) and the

F-57 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued) hedging instruments (such as interest rate swaps) by their maturity. As to the cash flow hedges, SMBC assesses the effectiveness of such hedges in fixing cash flows by verifying the correlation between the hedged items and the hedging instruments. As to the individual hedges, SMBC also assesses the effectiveness of such hedges.

As a result of changing the designation of hedge relationship pursuant to JICPA Industry Audit Committee Report No. 24, SMBC applies fair value hedge accounting to hedging transactions for reducing the exposure to market volatility of bonds classified as other securities that are held for the purpose of Asset and Liability Management in order to more properly reflect the effectiveness of hedging transactions in the financial statements. Consequently, ‘‘Other assets’’ and ‘‘Net unrealized gains on other securities’’ decreased by ¥28,948 million ($274 million) and ¥13,923 million ($132 million), respectively and ‘‘Deferred tax assets’’ increased by ¥9,528 million ($90 million).

A portion of deferred hedge losses and gains, which was previously under the macro hedge, is no longer subject to hedge accounting. The deferred hedge losses and gains related to hedging instruments to which SMBC discontinued the application of hedge accounting or applied fair value hedge accounting as a result of the change mentioned above are charged to ‘‘Interest income’’ or ‘‘Interest expenses’’ over a 12-year period (maximum) from this ﬁscal year according to their maturity. At this ﬁscal year-end, gross amounts of deferred hedge losses and gains on ‘‘macro hedge’’ were ¥320,513 million ($3,033 million) and ¥293,837 million ($2,780 million), respectively.

(b) Hedging against currency ﬂuctuations

SMBC applies deferred hedge accounting stipulated in the basic provisions of JICPA Industry Audit Committee Report No. 25 to currency swap and foreign exchange swap transactions executed for the purpose of lending or borrowing funds in different currencies.

Pursuant to JICPA Industry Audit Committee Report No. 25, SMBC assesses the effectiveness of currency swap and foreign exchange swap transactions executed for the purpose of offsetting the risk of changes in currency exchange rates by verifying that there are foreign-currency monetary claims and debts corresponding to the foreign-currency positions.

As for derivative transactions between consolidated subsidiaries or internal transactions between trading accounts and other accounts (or among internal sections), SMBC manages the interest rate swaps and currency swaps that are designated as hedging instruments in accordance with the strict criteria for external transactions stipulated in JICPA Industry Audit Committee Report No. 24 and No. 25. Therefore, SMBC accounts for the gains or losses that arise from interest rate swaps and currency swaps in its earnings or defers them, rather than eliminating them.

(7) Non-accrual loans

Loans are generally placed on non-accrual status when such loans are classiﬁed as Bankrupt, Effectively Bankrupt or Potentially Bankrupt by the self-assessment rule (see (11) Reserve for possible loan losses).

F-58 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(8) Bills discounted

Bills discounted are accounted for as ﬁnancial transactions in accordance with JICPA Industry Audit Committee Report No. 24. SMBC and banking subsidiaries have rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and foreign exchanges bought without restrictions. The total face value was ¥1,023,057 million ($9,680 million) at March 31, 2004.

(9) Premises and equipment

Premises and equipment are generally stated at cost less accumulated depreciation. SMBC computes depreciation for premises using the straight-line method over the estimated useful lives of the respective assets. The depreciation for equipment is computed using the declining-balance method over the estimated useful lives of the respective assets. The estimated useful lives of major items are as follows:

Buildings: 7 to 50 years Equipment: 2 to 20 years

Depreciation of premises and equipment owned by consolidated subsidiaries is mainly computed using the straight-line method over the estimated useful lives of respective assets.

(10) Software costs

Capitalized software for internal use is depreciated using the straight-line method over its estimated useful life (mainly ﬁve years) at SMBC and consolidated domestic subsidiaries, and is included in Other assets.

(11) Reserve for possible loan losses

Reserve for possible loan losses of SMBC and major consolidated subsidiaries is provided as detailed below in accordance with the internal standards for write-offs and reserves.

For claims on borrowers that are not currently bankrupt but are likely to become bankrupt in the future, a reserve is provided in the amount deemed necessary based on an overall solvency assessment of the claims, net of the expected amount of recoveries from collateral and guarantees.

Of the claims on borrowers requiring close monitoring, SMBC applies the Discounted Cash Flows method (‘‘DCF method’’) to the claims on borrowers, all or some of whose loans are classiﬁed as ‘‘Past due loans (3 months or more)’’ or ‘‘Restructured loans’’ and whose total loans exceed a certain amount. SMBC establishes a reserve for possible loan losses using the DCF method for such claims in the amount of the difference between the present value of principal and interest (calculated using the rationally estimated cash ﬂows discounted at the initial contractual interest rate) and the book value.

For other claims, a reserve is provided based on the historical loan-loss ratio.

For claims originated in speciﬁc countries, an additional reserve is provided for by the amount deemed necessary based on the assessment of political and economic conditions.

F-59 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Branches and credit supervision departments assess all claims in accordance with the internal rule for self- assessment of assets, and the Credit Review Department, independent from these operating sections, audits their assessment. The reserves are provided based on the results of these assessments. Reserve for possible loan losses of other consolidated subsidiaries for general claims is provided in the amount deemed necessary based on the historical loan-loss ratio, and for doubtful claims in the amount deemed uncollectible based on assessment of each claim. For collateralized or guaranteed claims on bankrupt borrowers and effectively bankrupt borrowers, the amount exceeding the estimated value of collateral and guarantees is deemed to be uncollectible and charged off against the total outstanding amount of the claims. The amount of charge-off was ¥1,190,953 million ($11,268 million).

(12) Reserve for expenses related to EXPO 2005 Japan SMBC accounts for the exhibition expenses related to ‘‘The 2005 World Exposition, Aichi, Japan’’ that will be held in Aichi Prefecture in 2005 as ‘‘Reserve for expenses related to EXPO 2005 Japan’’, which includes the reserve that is stipulated in Article 57-2 of the Speciﬁc Taxation Measures Law.

(13) Reserve for employee bonuses Reserve for employee bonuses is provided, in provision for payment of bonuses to employees, in the amount of estimated bonuses, which are attributable to the respective ﬁscal year.

(14) Reserve for employee retirement benefits Reserve for employee retirement benefits is provided, in provision for payment of retirement benefits to employees, in the amount deemed accrued at the fiscal year-end, based on the projected retirement benefit obligation and the fair value of plan assets at the fiscal year-end. Unrecognized prior service cost is amortized using the straight-line method over certain years (mainly 10 years) within the average remaining service period of active employees. Unrecognized net actuarial gain or loss is amortized from the next fiscal year using the straight- line method over certain years (mainly 10 years) within the average remaining service period of active employees. Unrecognized net obligation from initial application of the new accounting standard for employee retirement benefits is amortized using the straight-line method over five years.

(15) Other reserves Other reserves required by special laws are reserve for contingent liabilities from ﬁnancial futures transaction of ¥18 million ($0 million) in accordance with Article 82 of the Financial Futures Transaction Law, and reserve for contingent liabilities from securities transaction of ¥843 million ($8 million) in accordance with Article 51 of the Securities and Exchange Law.

(16) Translation of foreign currencies SMBC’s assets and liabilities denominated in foreign currencies and overseas branches’ accounts are translated into Japanese yen mainly at the exchange rate prevailing at the consolidated balance sheet date, with the exception of stocks of subsidiaries and afﬁliates translated at rates prevailing at the time of acquisition. Consolidated subsidiaries’ assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at their respective balance sheet dates. As for the accounting method of foreign currency transactions, in the previous ﬁscal year, SMBC and domestic consolidated banking subsidiaries applied the temporary treatment stipulated in JICPA Industry Audit

F-60 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Committee Report No. 25 to currency swaps and foreign exchange swaps for the purpose of lending or borrowing funds in different currencies. From this ﬁscal year, they apply the hedge accounting pursuant to the basic provisions of JICPA Industry Audit Committee Report No. 25.

Consequently, for this fiscal year, the domestic consolidated banking subsidiaries have valuated such foreign exchange swaps at fair value and included their fair-valued assets and liabilities in the consolidated balance sheet. Previously, profits or losses on the foreign exchange swaps were charged to income by periodical allocation. As a result, ‘‘Other assets’’ and ‘‘Other liabilities’’ each increased by ¥1,035 million ($10 million). However, this accounting change had no impact on profit or loss.

Foreign currency translation differences arising from currency swaps and forward foreign exchange transactions were formerly accounted for as ‘‘Other assets’’ or ‘‘Other liabilities’’ on a net basis, but from this ﬁscal year they are accounted for as ‘‘Other assets’’ or ‘‘Other liabilities’’ on a gross basis pursuant to JICPA Industry Audit Committee Report No. 25. Consequently, ‘‘Other assets’’ and ‘‘Other liabilities’’ increased by ¥450,929 million ($4,267 million) each.

Other consolidated subsidiaries’ assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at their respective balance sheet dates.

(17) Lease transactions

Financing leases where the ownership of the property is deemed to be transferred to the lessee are capitalized, while other ﬁnancing leases are allowed to be accounted for in the same manner as operating leases.

Lease assets are depreciated using the straight-line method over the lease term with estimated salvage value.

Lease-related income is recognized on a straight-line basis over the full term of the lease, based on the contractual amount of lease fees per month.

(18) Appropriation of retained earnings

The consolidated statement of stockholders’ equity reﬂects the appropriation of retained earnings approved by the board of directors and/or the general meeting of shareholders.

(19) Amounts per share

Net income per share is computed by deducting dividends for preferred stock from net income, divided by the weighted average number of shares of common stock during the ﬁscal year.

Declared dividends represent the cash dividends declared applicable to respective years, including dividends to be paid after the end of the year.

(20) Change in presentation of ﬁnancial statements

Effective April 1, 2003, amortization of bond discount, which was formerly included in ‘‘Other interest expenses,’’ is included in ‘‘Interest on bonds’’ pursuant to the revision of the Ordinance of the Banking Law.

F-61 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

3. Trading Assets Trading assets at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Trading securities********************************************* ¥ 80,766 $ 764 Derivatives on trading securities ********************************* 139 1 Derivatives on securities related to trading transactions ************** 595 5 Trading-related ﬁnancial derivatives ****************************** 2,135,318 20,204 Other trading assets ******************************************* 1,089,960 10,313 ¥3,306,780 $31,287

4. Securities Securities at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Japanese government bonds* *********************************** ¥14,448,940 $136,711 Japanese local government bonds ******************************** 506,263 4,790 Japanese corporate bonds ************************************** 2,652,075 25,093 Japanese stocks** ******************************************** 3,475,039 32,880 Other******************************************************* 5,781,181 54,699 ¥26,863,501 $254,173

* Includes ¥15,849 million ($150 million) of unsecured loaned securities for which borrowers have the rights to sell or pledge and loaned securities of ¥99 million ($1 million) for which borrowers only have the rights to pledge and not to sell. As for the unsecured borrowed securities for which SMBC has the rights to sell or pledge and the securities which SMBC purchased under resale agreements, that are permitted to sell or pledge without restrictions, ¥1,022,170 million ($9,671 million) of securities are pledged, ¥165,047 million ($1,562 million) of securities are held in hand as of the consolidated balance sheet date. SMBC may pledge the borrowed securities as well. ** Japanese stocks and other include investments in nonconsolidated subsidiaries and afﬁliates of ¥21,766 million ($206 million).

5. Loans and Bills Discounted Loans and bills discounted at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Bills discounted ********************************************** ¥ 644,002 $ 6,093 Loans on notes*********************************************** 6,298,595 59,595 Loans on deeds ********************************************** 40,641,767 384,538 Overdrafts*************************************************** 7,844,602 74,223 ¥55,428,967 $524,449

F-62 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Loans and bills discounted included the following ‘‘Risk-monitored loans’’ stipulated in the Banking Law: Millions of March 31, 2004 Millions of yen U.S. dollars Bankrupt loans*1 ********************************************* ¥ 96,101 $ 909 Non-accrual loans*2 ******************************************* 1,710,575 16,185 Past due loans (3 months and more)*3 **************************** 51,019 483 Restructured loans*4 ****************************************** 1,371,524 12,977 ¥3,229,219 $30,554

*1 ‘‘Bankrupt loans’’ are loans, after write-offs, to legally bankrupt borrowers as defined in Article 96-1-3 and 96-1-4 of the Enforcement Ordinance No. 97 of the Japanese Corporate Tax Law (issued in 1965) and on which accrued interest income is not recognized as there is substantial doubt about the ultimate collectability of either principal or interest because they are past due for a considerable period of time or for other reasons. *2 ‘‘Non-accrual loans’’ are loans on which accrued interest income is not recognized, excluding ‘‘Bankrupt loans’’ and loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties. *3 ‘‘Past due loans (3 months or more)’’ are loans on which the principal or interest is past due for three months or more, excluding ‘‘Bankrupt loans’’ and ‘‘Non-accrual loans.’’ *4 ‘‘Restructured loans’’ are loans on which terms and conditions have been amended in favour of the borrowers (e.g. reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding ‘‘Bankrupt loans’’, ‘‘Non-accrual loans’’ and ‘‘Past due loans (3 months or more)’’. The amounts above include the trusted amount with the Resolution and Collection Corporation of ¥7,522 million ($71 million), which is treated as off-balancing.

6. Other Assets Other assets at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Accrued income ********************************************** ¥ 204,989 $ 1,940 Deferred assets*********************************************** 8,053 76 Financial derivatives* ***************************************** 1,006,475 9,523 Other******************************************************* 672,756 6,365 ¥1,892,274 $17,904

* Net amount of deferred unrealized gains (losses) on hedging instruments to which deferred hedge accounting is applied is reported as deferred loss on hedge and is included in ‘‘Financial derivatives.’’ Gross deferred unrealized losses and gains on hedging instruments before netting were ¥659,048 million ($6,236 million) and ¥563,049 million ($5,327 million), respectively.

F-63 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

7. Premises and Equipment Premises and equipment at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Land* ****************************************************** ¥ 479,306 $ 4,535 Buildings *************************************************** 508,134 4,808 Equipment and others ***************************************** 434,349 4,109 Total ***************************************************** ¥1,421,791 $13,452 Accumulated depreciation ************************************** 525,176 4,969 ¥ 896,614 $ 8,483

* Includes land revaluation excess for land referred to in Note 15.

8. Lease Assets Lease assets at March 31, 2004 were as follows: Millions of March 31, 2004 Millions of yen U.S. dollars Equipment and others ***************************************** ¥53,696 $508 Accumulated depreciation ************************************** 28,861 273 ¥24,835 $235

9. Assets Pledged as Collateral Assets pledged as collateral at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Assets pledged as collateral Cash and due from banks and Deposits with banks *************** ¥ 112,778 $ 1,067 Trading assets********************************************** 540,579 5,115 Securities ************************************************* 10,723,663 101,463 Loans and bills discounted *********************************** 1,375,426 13,014 Other assets *********************************************** 1,056 10 Premises and equipment ************************************* 524 5 Liabilities corresponding to assets pledged as collateral Deposits ************************************************** ¥ 15,276 $ 145 Call money and bills sold ************************************ 5,175,669 48,970 Payables under repurchase agreements************************** 1,055,508 9,987 Payables under securities lending transactions******************** 5,700,206 53,933 Trading liabilities******************************************* 203,599 1,926 Borrowed money ******************************************* 4,451 42 Other liabilities ******************************************** 1,122 11 Acceptances and guarantees ********************************** 141,835 1,342

F-64 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

In addition to the assets presented above, the following assets were pledged as collateral for exchange settlements, initial margins of futures markets and certain other purposes at March 31, 2004: Millions of March 31, 2004 Millions of yen U.S. dollars Cash and due from banks and Deposits with banks ***************** ¥ 42,537 $ 402 Trading assets************************************************ 3,908 37 Securities *************************************************** 6,799,796 64,337 Loans and bills discounted ************************************* 55,000 520

Premises and equipment included surety deposits and intangibles of ¥105,846 million ($1,001 million) at March 31, 2004. Other assets included initial margins of futures markets of ¥8,130 million ($77 million) at March 31, 2004.

10. Deposits

Deposits at March 31, 2004 consisted of the following:

Millions of March 31, 2004 Millions of yen U.S. dollars Current deposits ********************************************** ¥ 5,425,549 $ 51,335 Ordinary deposits********************************************* 29,312,185 277,341 Savings deposits********************************************** 1,206,013 11,411 Deposits at notice ******************************************** 3,802,594 35,979 Time deposits************************************************ 20,873,298 197,495 Negotiable certiﬁcates of deposit ******************************** 3,587,464 33,943 Other deposits *********************************************** 4,774,435 45,174 ¥68,981,540 $652,678

11. Trading Liabilities

Trading liabilities at March 31, 2004 consisted of the following: Millions of March 31, 2004 Millions of yen U.S. dollars Trading securities********************************************* ¥ 32,658 $ 309 Derivatives on trading securities ********************************* 242 2 Derivatives of securities related to trading transactions*************** 940 9 Trading-related ﬁnancial derivatives ****************************** 1,839,404 17,404 ¥1,873,245 $17,724

F-65 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

12. Borrowed Money

Borrowed money at March 31, 2004 consisted of the following: Millions of Average March 31, 2004 Millions of yen U.S. dollars rate* Bills rediscounted ************************************ ¥—$—— Other borrowings** ********************************** 1,223,881 11,580 2.46% ¥1,223,881 $11,580 2.46%

The repayment schedule within ﬁve years on borrowed money at March 31, 2004 is shown as follows:

Millions of yen More than More than More than More than 1 year or less 1 year to 2 years 2 years to 3 years 3 years to 4 years 4 years to 5 years ¥323,623 ¥76,654 ¥9,389 ¥64,859 ¥23,332

Millions of U.S. dollars More than More than More than More than 1 year or less 1 year to 2 years 2 years to 3 years 3 years to 4 years 4 years to 5 years $3,062 $725 $89 $614 $221

13. Bonds

Bonds at March 31, 2004 consisted of the following: March 31, 2004 Millions of Millions of Rate Issuer Description yen* U.S. dollars (%) Due SMBC ***************** Straight bonds, payable in Yen ¥ 2,070,089 $19,586 0.51-1.982 Oct. 2004-Mar. 2013 [366,976] Straight bonds, payable in Euro Yen 5,000 47 3.00 Mar. 2012 Straight bonds, payable in U.S. dollars 73,983 700 4.32-6.02 May 2005-Sep. 2005 ($700,000 thousand) Subordinated bonds, payable in Yen 350,000 3,312 1.71-2.62 Jun. 2010-Feb. 2014 Subordinated bonds, payable in Euro Yen 483,100 4,571 0.6015-2.72 Sept. 2009-Perpetual Subordinated bonds, payable in U.S. dollars 171,640 1,624 5.93-8.15 Nov. 2011-Perpetual ($1,624,000 thousand) Subordinated bonds, payable in British pound sterling 2,317 22 6.98 Perpetual (£12,000 thousand)

F-66 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

March 31, 2004 Millions of Millions of Rate Issuer Description yen* U.S. dollars (%) Due Consolidated subsidiaries:** Straight bonds, payable in Yen 43,455 411 0.04-3.50 Mar. 2004-Aug. 2022 [19,905] Straight bonds, payable in U.S. dollars 4,061 38 1.67-7.66 Jun. 2005-May 2009 ($38,000 thousand) Straight bonds, payable in other foreign currency 4,872 46 3.90-5.61 May 2004-Jun. 2018 [1,990] Subordinated bonds, payable in Yen 546,491 5,171 0.00-5.98 Mar. 2005-Perpetual [12,000] Subordinated bonds, payable in U.S. dollars 108,332 1,025 2.29-8.50 Jun. 2009-Perpetual ($1,025,000 thousand) ¥ 3,863,343 $36,553

* Figures in ( ) are the balances in the original currency of the foreign currency denominated bonds, and ﬁgures in [ ] are the amounts to be redeemed within one year. The redemption schedule within ﬁve years on bonds at March 31, 2004 is shown as follows:

Millions of yen More than More than More than More than 1 year or less 1 year to 2 years 2 years to 3 years 3 years to 4 years 4 years to 5 years ¥400,872 ¥603,015 ¥393,787 ¥407,748 ¥399,737 Millions of U.S. dollars More than More than More than More than 1 year or less 1 year to 2 years 2 years to 3 years 3 years to 4 years 4 years to 5 years $3,793 $5,706 $3,726 $3,858 $3,782

14. Other Liabilities Other liabilities at March 31, 2004 consisted of the following:

Millions of March 31, 2004 Millions of yen U.S. dollars Accrued expenses ******************************************* ¥ 102,358 $ 968 Unearned income ******************************************** 166,256 1,573 Income taxes payable **************************************** 22,888 217 Financial derivatives ***************************************** 893,289 8,452 Other****************************************************** 1,806,942 17,097 ¥2,991,734 $28,307

15. Land Revaluation Excess SMBC revaluated its own land for business activities in accordance with the ‘‘Law Concerning Land Revaluation’’ (the ‘‘Law’’) effective March 31, 1998 and the law concerning amendment of the Law effective

F-67 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

March 31, 2001. The income taxes corresponding to the net unrealized gains are deferred and reported in ‘‘Liabilities’’ as ‘‘Deferred tax liabilities for land revaluation,’’ and the net unrealized gains, net of deferred taxes, are reported as ‘‘Land revaluation excess’’ in ‘‘Stockholders’ equity’’. Certain consolidated subsidiaries revaluated their own land for business activities in accordance with the Law. The income taxes corresponding to the net unrealized gains (losses) are deferred and reported in ‘‘Liabilities’’ or ‘‘Assets’’ as ‘‘Deferred tax liabilities for land revaluation’’ or ‘‘Deferred tax assets for land revaluation’’ and the net unrealized gains (losses), net of deferred taxes, are reported as ‘‘Land revaluation excess’’ in ‘‘Stockholders’ equity’’. Date of the revaluation SMBC: March 31, 1998 and March 31, 2002 Certain consolidated subsidiaries: March 31, 1999 and March 31, 2002 Method of revaluation (provided in Article 3-3 of the Law) SMBC: Fair values were determined by applying appropriate adjustments for land shape and timing of appraisal to the values specified in Article 2-3, 2-4 or 2-5 of the Enforcement Ordinance of the Law concerning Land Revaluation (the Enforcement Ordinance No. 119) effective March 31, 1998. Certain consolidated subsidiaries: Fair values were determined based on the values specified in Article 2-3 and 2-5 of the Enforcement Ordinance No. 119. The total fair value of land for business activities revaluated pursuant to Article 10 of the Law at the fiscal year-end is ¥16,497 million ($156 million) lower than their total revaluated book value.

16. Minority Interests SB Treasury Company, L.L.C., a subsidiary of SMBC, issued ﬂoating noncumulative preferred securities, totalling $1,800 million in February 1998. SB Equity Securities (Cayman), Limited, a subsidiary of SMBC, issued ﬂoating noncumulative preferred securities, totalling ¥340,000 million in February and March 1999. Sakura Preferred Capital (Cayman) Limited, a subsidiary of SMBC, issued noncumulative preferred securities, totalling ¥283,750 million in December 1998 and March 1999. These subsidiaries are consolidated and the preferred securities are accounted for as minority interests.

17. Stockholders’ Equity Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2004 are as follows: Issued and Number of shares Authorized outstanding Common stock ********************************************** 100,000,000 54,811,805 Preferred stock (Type 1)*************************************** 67,000 67,000 Preferred stock (Type 2)*************************************** 100,000 100,000 Preferred stock (Type 3)*************************************** 800,000 800,000 Preferred stock (Type 4)*************************************** 250,000 — Preferred stock (Type 5)*************************************** 250,000 — Preferred stock (Type 6)*************************************** 300,000 — Total***************************************************** 101,767,000 55,778,805

F-68 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

All of the preferred stock is noncumulative and nonparticipating for dividend payments, and shareholders of the preferred stock are not entitled to vote at a general meeting of shareholders except when the bill to pay the prescribed dividends to shareholders is not submitted to the general meeting of shareholders or the bill to pay the prescribed dividends to shareholders is rejected at the general meeting of shareholders. Annual dividends per share of preferred stock (Type 1, 2, 3) are paid to shareholders by ¥10,500, ¥28,500 and ¥13,700, respectively. As for liquidation distribution, shareholders of preferred stock (Type 1, 2, 3) receive ¥3,000,000, ¥3,000,000 and ¥1,000,000 per share, respectively, and do not have the right to participate in any further liquidation distribution. SMBC may, at any time, purchase and retire them out of earnings available for distribution to the shareholders. Shareholders of preferred stock (Type 1, 2, 3) may convert the preferred stock into common stock at any time excluding certain periods, from the issuance date to February 26, 2009, from August 1, 2005 to February 26, 2009 and from the issuance date to September 30, 2009, respectively, in each case subject to certain adjustments. The preferred stock (Type 1, 2) outstanding on February 26, 2009 will be mandatorily converted into common stock at the conversion ratio of ¥3,000,000 divided by the higher of ¥500,000 and the average market price of common stock of Sumitomo Mitsui Financial Group, Inc. (‘‘SMFG’’) for a certain period preceding February 26, 2009. The preferred stock (Type 3) outstanding on September 30, 2009 will be mandatorily converted into common stock at the conversion ratio of ¥1,000,000 divided by the higher of ¥258,330 and the average market price of common stock of SMFG for a certain period preceding September 30, 2009.

18. Fees and Commissions Fees and commissions for the year ended March 31, 2004 consisted of the following: Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Fees and commissions (income): Deposits and loans****************************************** ¥ 35,566 $ 337 Remittances and transfers ************************************ 119,374 1,130 Securities-related business************************************ 43,884 415 Agency *************************************************** 16,247 154 Safe deposits ********************************************** 5,927 56 Guarantees ************************************************ 33,221 314 Credit card business***************************************** 8,820 83 Investment trusts ******************************************* 35,214 333 Other***************************************************** 123,810 1,171 ¥422,066 $3,993 Fees and commissions (expenses): Remittances and transfers ************************************ ¥ 23,553 $ 223 Other***************************************************** 67,902 642 ¥ 91,455 $ 865

F-69 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

19. Trading Income Trading income for the year ended March 31, 2004 consisted of the following: Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Trading proﬁts: Gains on trading-related ﬁnancial derivatives ******************** ¥298,275 $2,822 Other***************************************************** 6,735 64 ¥305,011 $2,886 Trading losses: Losses on securities related to trading transactions**************** ¥ 904 $ 9 Other***************************************************** 11 0 ¥ 916 $ 9

20. Other Operating Income Other operating income for the year ended March 31, 2004 consisted of the following: Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Gains on ﬁnancial derivatives *********************************** ¥ 11,472 $ 109 Gains on sale of bonds **************************************** 132,448 1,253 Gains on redemption of bonds ********************************** 62 1 Lease-related income ****************************************** 15,050 142 Other******************************************************* 71,983 681 ¥231,017 $2,186

F-70 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

21. Other Income Other income for the year ended March 31, 2004 consisted of the following: Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Gains on sale of stocks and other securities *********************** ¥160,105 $1,515 Gains on money held in trust *********************************** 338 3 Equity in earnings of afﬁliates ********************************** 231 2 Gains on disposal of premises and equipment********************** 1,559 15 Collection of written-off claims ********************************* 875 8 Gains on return of the entrusted portion of employee pension fund **** 59,095 559 Tax refund from the Tokyo Metropolitan Government *************** 38,236 362 Interest on the tax refund from the Tokyo Metropolitan Government *** 2,127 20 Gains on reversal of reserve for possible loan losses **************** 24,111 228 Gains on reversal of reserve for possible losses on loans sold********* 489 5 Other******************************************************* 37,196 352 ¥324,367 $3,069

22. Other Operating Expenses Other operating expenses for the year ended March 31, 2004 consisted of the following: Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Losses on sale of bonds *************************************** ¥107,772 $1,020 Losses on redemption of bonds ********************************* 764 7 Losses on devaluation of bonds ********************************* 114 1 Bond issuance costs******************************************* 1,070 10 Lease-related expenses **************************************** 9,366 89 Losses on foreign exchange transactions ************************** 56,982 539 Other******************************************************* 47,393 448 ¥223,464 $2,114

F-71 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

23. Other Expenses Other expenses for the year ended March 31, 2004 consisted of the following: Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Write-off of loans ******************************************** ¥ 639,994 $ 6,056 Losses on sale of stocks and other securities ********************** 38,020 360 Losses on devaluation of stocks and other securities **************** 18,233 172 Losses on money held in trust ********************************** 962 9 Losses on sale of delinquent loans ******************************* 266,752 2,524 Losses on disposal of premises and equipment ********************* 30,631 290 Amortization of unrecognized net transition obligation for employee retirement beneﬁts ****************************************** 20,640 195 Transfer to reserve for contingent liabilities from securities transactions 212 2 Other******************************************************* 84,731 802 ¥1,100,179 $10,410

24. Income Taxes (1) Signiﬁcant components of deferred tax assets and liabilities at March 31, 2004 were as follows:

Millions of March 31, 2004 Millions of yen U.S. dollars Deferred tax assets: Net operating loss carryforwards ***************************** ¥1,022,543 $ 9,675 Reserve for possible loan losses ****************************** 526,076 4,977 Write-off of securities ************************************** 348,619 3,298 Write-off of loans ***************************************** 286,808 2,714 Reserve for employee retirement beneﬁts ********************** 91,426 865 Depreciation ********************************************** 8,122 77 Other**************************************************** 87,687 830 Subtotal ************************************************* 2,371,284 22,436 Valuation allowance**************************************** (437,924) (4,143) Total deferred tax assets ************************************ ¥1,933,359 $18,293 Deferred tax liabilities: Net unrealized gains on other securities************************ ¥ (222,213) $ (2,103) Leveraged lease ******************************************* (50,522) (478) Gains on securities contributed to employee retirement beneﬁts trust (26,205) (248) Undistributed earnings of subsidiaries ************************* (11,818) (112) Other**************************************************** (15,477) (146) Total deferred tax liabilities ********************************* (326,236) (3,087) Net deferred tax assets *************************************** ¥1,607,122 $15,206

F-72 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(2) A reconciliation of the effective income tax rate reﬂected in the accompanying consolidated statement of income to the statutory tax rate for the year ended March 31, 2004 was as follows:

Statutory tax rate *********************************************************** 38.62% Valuation allowance ******************************************************* (23.05) Change of the effective statutory tax rate due to the revision of the local tax law ***** (5.83) Dividends exempted for income tax purposes ********************************** (1.74) Other ******************************************************************* (3.99) Effective income tax rate ***************************************************** 4.00%

(3) Amendment of deferred tax assets and deferred tax liabilities due to change in income tax rate was as follows:

‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) was implemented on March 31, 2003. Because some local governments decided to apply a higher tax rate than the standard rate to the enterprise taxes during the ﬁscal year ended March 31, 2004, the statutory tax rate used in calculation of deferred tax assets and liabilities changed. As a result, ‘‘Deferred tax assets’’ and ‘‘Deferred tax liabilities’’ increased by ¥7,020 million ($66 million) and ¥0 million ($0 million), respectively and ‘‘Income taxes, deferred’’ for the year ended March 31, 2004 decreased by ¥7,889 million ($75 million). ‘‘Deferred tax assets for land revaluation’’ and ‘‘Deferred tax liabilities for land revaluation’’ increased by ¥3 million ($0 million) and ¥232 million ($2 million), respectively, and ‘‘Land revaluation excess’’ and ‘‘Net unrealized gains on other securities’’ decreased by ¥230 million ($2 million) and ¥906 million ($9 million), respectively. On a non-consolidated basis, SMBC’s effective tax rate that SMBC uses for calculation of deferred tax assets and liabilities changed from 40.46% (used in the previous ﬁscal year) to 40.63%. Consequently, ‘‘Deferred tax assets’’ increased by ¥6,654 million ($63 million) and ‘‘Income taxes, deferred’’ decreased by ¥7,560 million ($72 million). In addition, ‘‘Deferred tax liabilities for land revaluation’’ increased by ¥232 million ($2 million) and ‘‘Land revaluation excess’’ decreased by the same amount and ‘‘Net unrealized gains on other securities’’ decreased by ¥905 million ($9 million).

25. Employee Retirement Beneﬁts

(1) Outline of employee retirement beneﬁts

SMBC and consolidated subsidiaries in Japan have contributory funded defined benefit pension plans such as contributory pension plans, qualified pension plans and lump-sum severance indemnity plans. They may grant additional benefits in cases where certain requirements are met when employees retire. SMBC received an approval from Minister of Health, Labor and Welfare for exemption from future retirement benefit obligations with respect to the entrusted portion of employee pension fund in the fiscal year ended March 31, 2004.

SMBC and some consolidated subsidiaries in Japan contributed certain marketable equity securities to an employee retirement beneﬁt trust.

F-73 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(2) Projected beneﬁt obligation

Millions of March 31, 2004 Millions of yen U.S. dollars Projected benefit obligation(A) ********************************* ¥(873,416) $(8,264) Plan assets(B)*********************************************** 702,569 6,648 Unfunded projected benefit obligation(C)=(A)+(B)***************** (170,847) (1,616) Unrecognized net obligation from initial application of the new accounting standard(D) ************************************* 17,168 162 Unrecognized net actuarial gain or loss(E) *********************** 212,714 2,013 Unrecognized prior service cost(F)****************************** (77,559) (734) Net amount recorded on the consolidated balance sheet(G)=(C)+(D)+(E)+(F) ********************************** (18,524) (175) Prepaid pension cost (other assets)(H) *************************** 12,394 118 Reserve for employee retirement benefits(G)–(H) ****************** ¥ (30,918) $ (293)

SMBC received the approval from the Minister of Health, Labor and Welfare for exemption from future retirement benefit obligations with respect to the entrusted portion of the employee pension fund, in accordance with the implementation of the ‘‘Defined benefit enterprise pension plan law’’ on January 26, 2004. As a result, SMBC applied the temporary treatment stipulated in Article 47-2 of ‘‘Practical Guidelines of Accounting for Retirement Benefits (Interim Report)’’ (JICPA’s Accounting Committee Report No. 13), and derecognized retirement benefit liabilities on the entrusted portion and plan assets equivalent to the amount to be returned on the day of approval. The amount of expected return of plan assets (minimum legal reserves) was ¥184,014 million ($1,741 million) in the fiscal year ended March 31, 2004. Plan assets related to the general type of welfare pension plan amounted to ¥24,754 million ($234 million) and were not included in the ‘‘Plan assets’’ shown above.

(3) Pension expenses

Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Service cost ************************************************ ¥ 24,350 $ 230 Interest cost on projected beneﬁt obligation ********************** 32,291 306 Expected return on plan assets ********************************* (22,973) (217) Amortization of unrecognized net obligation from initial application of the new accounting standard ********************************* 20,640 195 Amortization of unrecognized net actuarial gain or loss************* 35,446 335 Amortization of unrecognized prior service cost ******************* (6,422) (61) Other (non-recurring additional retirement allowance paid and other)** 6,747 64 Pension expenses ******************************************** ¥ 90,079 $ 852 Gains on return of the entrusted portion of employee pension fund *** (59,095) (559) Total ****************************************************** ¥ 30,983 $ 293

F-74 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(4) Assumptions The principal assumptions used in determining beneﬁt obligation and pension expenses at or for the year ended March 31, 2004 were as follows: (a) Discount rate: 1.5% to 2.5% (b) Expected rate of return on plan assets: 0% to 4.0% (c) Allocation of estimated amount of retirement beneﬁts: Allocated to each period by the straight-line method (d) Term to amortize unrecognized prior service costs: Mainly 10 years (e) Term to amortize unrecognized net actuarial gain or loss: Mainly 10 years (f) Term to amortize unrecognized net obligation from initial application of new accounting standard: Mainly 5 years

Millions of yen March 31, 2004 Equipment Other Total Acquisition cost **************************************** ¥23,447 ¥1,071 ¥24,518 Accumulated depreciation ******************************** 14,071 645 14,716 Net book value **************************************** ¥ 9,375 ¥ 425 ¥ 9,801

Millions of U.S. dollars March 31, 2004 Equipment Other Total Acquisition cost **************************************** $222 $10 $232 Accumulated depreciation ******************************** 133 6 139 Net book value **************************************** $89 $4 $93

Future minimum lease payments excluding interests at March 31, 2004 were as follows:

Millions of March 31, 2004 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 4,312 $41 Due after one year******************************************* 6,074 57 ¥10,387 $98

Total lease expenses for the year ended March 31, 2004 were ¥5,651 million ($53 million). Assumed depreciation charges for the year ended March 31, 2004 amounted to ¥5,166 million ($49 million). Assumed depreciation charges is calculated using the straight-line method over the lease term of the respective assets without salvage values. The difference between the minimum lease payments and the acquisition costs of the lease assets represents interest expenses. The allocation of such interest expenses over the lease term is computed

F-75 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued) using the effective interest method. Interest expenses for the year ended March 31, 2004 amounted to ¥419 million ($4 million).

(b) Lessor side

Millions of yen March 31, 2004 Equipment Other Total Acquisition cost **************************************** ¥39,609 ¥2,096 ¥41,706 Accumulated depreciation ******************************** 23,054 1,043 24,097 Net book value **************************************** ¥16,554 ¥1,053 ¥17,608

Millions of U.S. dollars March 31, 2004 Equipment Other Total Acquisition cost **************************************** $375 $20 $395 Accumulated depreciation ******************************** 218 10 228 Net book value **************************************** $157 $10 $167

Future lease payments receivable excluding interests at March 31, 2004 were as follows:

Millions of March 31, 2004 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 6,180 $ 58 Due after one year******************************************* 12,448 118 ¥18,628 $176

Total lease income for the year ended March 31, 2004 was ¥7,641 million ($72 million). Depreciation charges for the year ended March 31, 2004 amounted to ¥6,385 million ($60 million). Interest income represents the difference between the additional amount of the lease payments receivable and estimated salvage values, and the acquisition costs of the lease assets. The allocation of such interest income over the lease term is computed using the effective interest method. Interest income for the year ended March 31, 2004 amounted to ¥1,024 million ($10 million).

(2) Operating leases

(a) Lessee side

Future minimum lease payments at March 31, 2004 were as follows:

Millions of March 31, 2004 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 14,718 $139 Due after one year******************************************* 74,020 701 ¥ 88,739 $840

F-76 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(b) Lessor side

Future lease payments receivable at March 31, 2004 were as follows:

Millions of March 31, 2004 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 323 $ 3 Due after one year******************************************* 1,109 11 ¥1,433 $14

Future lease payments receivable of ¥3,132 million ($30 million) on the lessor side referred to in (1) and (2) above were pledged as collateral for borrowings at March 31, 2004.

27. Loan Commitments

Commitment line contracts on overdrafts and loans are agreements to lend to customers, up to a prescribed amount, as long as there is no violation of any condition established in the contracts. The amount of unused commitments was ¥30,246,177 million ($286,178 million), and the amount of unused commitments whose original contract terms are within one year or unconditionally cancelable at any time was ¥27,417,815 million ($259,417 million) at March 31, 2004.

28. Market Value of Marketable Securities

In addition to ‘‘Securities’’ in the consolidated balance sheet, trading securities, commercial paper and short- term corporate bonds classified as ‘‘Trading assets,’’ negotiable certificates of deposit bought classified as ‘‘Deposits with banks,’’ and commercial paper and beneficiary claim on loan trust classified as ‘‘Commercial paper and other debt purchased’’ are also included in the amounts of following tables.

(1) Securities

(i) Securities classiﬁed as trading purposes

Millions of As of and for the year ended March 31, 2004 Millions of yen U.S. dollars Consolidated balance sheet amount ***************************** ¥1,170,727 $11,077 Valuation losses included in proﬁt/loss during the year ************* 1,707 16

F-77 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(ii) Bonds classiﬁed as held-to-maturity

Millions of yen Consolidated Net balance sheet Market unrealized Unrealized Unrealized March 31, 2004 amount Value gains (losses) gains losses Japanese government bonds ¥509,458 ¥500,930 ¥(8,527) ¥1,739 ¥10,266 Japanese local government bonds ***************** ————— Japanese corporate bonds *** ————— Other******************** 16,230 17,331 1,101 1,101 — Total ******************** ¥525,688 ¥518,262 ¥(7,425) ¥2,840 ¥10,266

Millions of U.S. dollars Consolidated Net balance sheet Market unrealized Unrealized Unrealized March 31, 2004 amount value gains (losses) gains losses Japanese government bonds********** $4,820 $4,740 $(80) $17 $97 Japanese local government bonds ***** ———— — Japanese corporate bonds************ ———— — Other **************************** 154 164 10 10 — Total **************************** $4,974 $4,904 $(70) $27 $97

Note: Market value is calculated by using market prices at the ﬁscal year-end.

(iii) Other securities with market value Millions of yen Consolidated Acquisition balance sheet Net unrealized Unrealized Unrealized March 31, 2004 cost amount gains (losses) gains losses Stocks ************************** ¥ 2,207,264 ¥ 2,869,841 ¥ 662,576 ¥726,236 ¥ 63,660 Bonds ************************** ¥15,604,771 ¥15,501,515 ¥(103,256) ¥ 18,590 ¥121,847 Japanese government bonds ****** 14,028,689 13,939,482 (89,207) 14,225 103,432 Japanese local government bonds ** 515,362 506,263 (9,098) 1,075 10,173 Japanese corporate bonds ******** 1,060,720 1,055,769 (4,950) 3,289 8,240 Other*************************** ¥ 5,354,259 ¥ 5,363,346 ¥ 9,086 ¥ 32,049 ¥ 22,962 Total *************************** ¥23,166,296 ¥23,734,703 ¥ 568,407 ¥776,877 ¥208,470

F-78 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Millions of U.S. dollars Consolidated Acquisition balance sheet Net unrealized Unrealized March 31, 2004 cost amount gains (losses) Unrealized gains losses Stocks************************ $ 20,884 $ 27,153 $6,269 $6,871 $ 602 Bonds ************************ $147,647 $146,670 $ (977) $ 176 $1,153 Japanese government bonds **** 132,735 131,891 (844) 135 979 Japanese local government bonds 4,876 4,790 (86) 10 96 Japanese corporate bonds ****** 10,036 9,989 (47) 31 78 Other ************************ $ 50,660 $ 50,746 $ 86 $ 303 $ 217 Total ************************* $219,191 $224,569 $5,378 $7,350 $1,972

Notes: 1. Market value is calculated as follows: Stocks Average market price during one month before the fiscal year-end Bonds and other Market price at the fiscal year-end 2. Of the total net unrealized gains shown above, ¥23,452 million ($222 million) is included in this fiscal year’s profit because of the application of fair value hedge accounting. 3. Other securities with market value are considered as impaired if the market value decreases materially below the acquisition cost and such decline is not considered as recoverable. The market value is recognized as the consolidated balance sheet amount and the amount of write-down is accounted for as valuation loss (impaired) for this fiscal year. Valuation loss for this fiscal year was ¥5,609 million ($53 million). The rule for determining ‘‘material decline’’ is as follows and is based on the classification of issuing company under self-assessment of assets. Bankrupt/Effectively bankrupt/Potentially bankrupt issuers : Market value is lower than acquisition cost. Issuers requiring caution : Market value is 30% or more lower than acquisition cost. Normal issuers : Market value is 50% or more lower than acquisition cost. Bankrupt issuers: Issuers that are legally bankrupt or formally declared bankrupt. Effectively bankrupt issuers: Issuers that are not legally bankrupt but regarded as substantially bankrupt. Potentially bankrupt issuers: Issuers that are perceived to have a high risk of falling into bankruptcy. Issuers requiring caution: Issuers that are identified for close monitoring. Normal issuers: Issuers other than the above four categories of issuers.

(iv) Held-to-maturity bonds sold during the year ended March 31, 2004 Millions of Millions of yen U.S. dollars Acquisition Sales Gains on Acquisition Sales Gains on Year ended March 31, 2004 cost amount sales cost amount sales Japanese government bonds *********** ¥21,063 ¥21,709 ¥ 645 $199 $205 $ 6 Japanese local government bonds******* 23,060 23,796 736 218 225 7 Total ****************************** ¥44,123 ¥45,506 ¥1,382 $417 $430 $13

Reason for sales:

A consolidated subsidiary, THE MINATO BANK, LTD. (‘‘Minato’’) changed its investment policy.

(v) Other securities sold during the year ended March 31, 2004 Millions of Year ended March 31, 2004 Millions of yen U.S. dollars Sales amount **************************************************** ¥30,635,387 $289,861 Gains on sales *************************************************** 282,272 2,671 Losses on sales ************************************************** 153,848 1,456

F-79 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(vi) Securities with no available market value Millions of Millions of yen U.S. dollars Consolidated Consolidated balance sheet balance sheet March 31, 2004 amount amount Bonds classiﬁed as held-to-maturity Unlisted foreign securities ************************************** ¥ 218 $ 2 Other ******************************************************* 10,413 99 Other securities Unlisted stocks except for OTC stocks **************************** ¥ 583,431 $ 5,520 Unlisted bonds************************************************ 1,596,199 15,103 Unlisted foreign securities ************************************** 314,127 2,972 Other ******************************************************* 134,350 1,271

(vii) Change of classiﬁcation of securities

During this fiscal year, Minato changed its investment policy and sold some of the held-to-maturity bonds before their maturities. As a result, Minato changed the classification of the remaining bonds that Minato holds, ¥28,281 million ($268 million), from ‘‘held-to-maturity’’ to ‘‘other securities’’ pursuant to Article 83 of the ‘‘Practical Guidelines for Accounting for Financial Instruments’’ (JICPA Accounting Committee Report No. 14). In addition, ¥12,063 million ($114 million) in reclassified bonds were sold during this fiscal year and net gains on sale of ¥18 million ($0 million) were recorded.

As a result of this change of classiﬁcation, ‘‘Securities’’ increased by ¥35 million ($0 million) and ‘‘Deferred tax assets’’ decreased by ¥14 million ($0 million), and ‘‘Minority interests’’ and ‘‘Net unrealized gains on other securities’’ increased by ¥19 million ($0 million) and ¥1 million ($0 million), respectively, compared with the former classiﬁcation of bonds.

(viii) Redemption schedule of other securities with maturities and held-to-maturity bonds Millions of yen More than More than March 31, 2004 1 year or less 1 year to 5 years 5 years to 10 years Over 10 years Bonds******************************* ¥2,879,079 ¥ 9,470,889 ¥3,999,979 ¥1,257,227 Japanese government bonds *********** 2,706,787 7,223,369 3,266,491 1,252,292 Japanese local government bonds ****** 7,759 263,194 234,789 519 Japanese corporate bonds ************* 164,531 1,984,324 498,698 4,415 Other ******************************* ¥ 439,992 ¥ 4,210,623 ¥ 457,429 ¥ 538,094 Total******************************** ¥3,319,072 ¥13,681,513 ¥4,457,409 ¥1,795,322

F-80 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Millions of U.S. dollars More than More than March 31, 2004 1 year or less 1 year to 5 years 5 years to 10 years Over 10 years Bonds ************************* $27,241 $ 89,610 $37,846 $11,896 Japanese government bonds****** 25,611 68,345 30,906 11,849 Japanese local government bonds 73 2,490 2,221 5 Japanese corporate bonds******** 1,557 18,775 4,719 42 Other ************************** $ 4,163 $ 39,839 $ 4,328 $ 5,091 Total ************************** $31,404 $129,449 $42,174 $16,987

(2) Money held in trust

(i) Money held in trust classiﬁed as trading purposes

There are no corresponding transactions.

(ii) Money held in trust classiﬁed as held-to-maturity

There are no corresponding transactions.

(iii) Other money held in trust

Millions of yen Consolidated Acquisition balance sheet Net unrealized Unrealized Unrealized March 31, 2004 cost amount gains gains losses Other money held in trust ***** ¥3,628 ¥3,749 ¥121 ¥222 ¥100

Millions of yen Consolidated Acquisition balance sheet Net unrealized Unrealized Unrealized March 31, 2004 cost amount gains gains losses Other money held in trust ***** $34 $35 $1 $2 $1

(3) Net unrealized gains on other securities and other money held in trust Millions of March 31, 2004 Millions of yen U.S. dollars Net unrealized gains ***************************************** ¥545,075 $5,157 Other securities ******************************************* 544,953 5,156 Other money held in trust *********************************** 121 1 (–) Deferred tax liabilities************************************* 222,115 2,101 Net unrealized gains on other securities (before following adjustment) ¥322,959 $3,056 (–) Minority interests***************************************** ¥ 3,467 $ 33 (+) Parent company’s interest in net unrealized gains on valuation of other securities held by afﬁliates accounted for by the equity method ************************************************** 287 3 Net unrealized gains on other securities************************** ¥319,780 $3,026

F-81 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Notes: 1. Of the total net unrealized gains shown above, ¥23,452 million ($222 million) is included in this ﬁscal year’s proﬁt because of the application of fair value hedge accounting. 2. Net unrealized gains included foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

29. Derivative Transactions (1) Interest rate derivatives

Millions of yen Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Transactions listed on exchange Interest rate futures: Sold********************** ¥ 87,393,679 ¥ 2,662,913 ¥ (111,937) ¥ (111,937) Bought ******************* 91,880,414 3,624,247 110,424 110,424 Interest rate options: Sold********************** ¥ 554,768 ¥ 267,333 ¥ (218) ¥ (218) Bought ******************* 984,778 267,333 241 241 Over-the-counter transactions Forward rate agreements: Sold********************** ¥ 3,576,364 ¥ 430,000 ¥ 952 ¥ 952 Bought ******************* 13,028,083 1,640,000 (2,001) (2,001) Interest rate swaps:************ ¥385,010,824 ¥290,122,316 ¥ 235,969 ¥ 235,969 Receivable fixed rate/payable floating rate************** 184,435,337 138,971,508 1,624,354 1,624,354 Receivable floating rate/payable fixed rate ***** 178,700,873 135,278,747 (1,380,548) (1,380,548) Receivable floating rate/payable floating rate *** 21,727,688 15,792,166 518 518 Swaptions: Sold********************** ¥ 2,224,743 ¥ 968,959 ¥ (37,880) ¥ (37,880) Bought ******************* 2,589,152 1,173,273 41,346 41,346 Caps: Sold********************** ¥ 5,408,280 ¥ 3,469,422 ¥ (6,543) ¥ (6,543) Bought ******************* 3,602,677 2,345,784 5,628 5,628 Floors: Sold********************** ¥ 224,688 ¥ 190,319 ¥ (5,321) ¥ (5,321) Bought ******************* 302,366 240,371 5,040 5,040 Other: Sold********************** ¥—¥—¥—¥— Bought ******************* 306,408 72,854 4,402 4,402 Total *********************** ¥ 240,101 ¥ 240,101

F-82 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Millions of U.S. dollars Contract amount March 31, 2004 Total Over 1 year Market value Valuation gains (losses) Transactions listed on exchange Interest rate futures: Sold*********************** $ 826,887 $ 25,196 $ (1,059) $ (1,059) Bought ******************** 869,339 34,291 1,045 1,045 Interest rate options: Sold*********************** $ 5,249 $ 2,529 $ (2) $ (2) Bought ******************** 9,318 2,529 2 2 Over-the-counter transactions Forward rate agreements: Sold*********************** $ 33,838 $ 4,069 $ 9 $ 9 Bought ******************** 123,267 15,517 (19) (19) Interest rate swaps: ************ $3,642,831 $2,745,031 $ 2,233 $ 2,233 Receivable fixed rate/payable floating rate ************** 1,745,059 1,314,897 15,369 15,369 Receivable floating rate/payable fixed rate***************** 1,690,802 1,279,958 (13,062) (13,062) Receivable floating rate/payable floating rate ************** 205,579 149,420 5 5 Swaptions: Sold*********************** $ 21,050 $ 9,168 $ (358) $ (358) Bought ******************** 24,498 11,101 391 391 Caps: Sold*********************** $ 51,171 $ 32,826 $ (62) $ (62) Bought ******************** 34,087 22,195 53 53 Floors: Sold*********************** $ 2,126 $ 1,801 $ (50) $ (50) Bought ******************** 2,861 2,274 48 48 Other: Sold*********************** $—$—$— $— Bought ******************** 2,899 689 41 41 Total ************************ $ 2,272 $ 2,272

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of income. Derivative transactions to which deferred hedge accounting method is applied are not included in the amounts above. Some consolidated overseas subsidiaries account for interest rate derivatives in accordance with local accounting standards. Such transactions are not included in the amounts above, of which their net unrealized gains amount to ¥17 million ($0 million). 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial Futures Exchange and others.

F-83 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Market value of OTC transactions is calculated mainly using discounted present value and option pricing models.

(2) Currency derivatives

Millions of yen Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Over-the-counter transactions Currency swaps****************** ¥16,317,980 ¥10,396,658 ¥ 82,675 ¥131,136 Currency swaptions Sold ************************* 646,230 623,671 (16,259) (16,259) Bought*********************** 1,135,123 1,112,563 40,495 40,495 Forward foreign exchange ********* ¥33,748,772 ¥ 1,368,595 ¥(38,814) ¥(38,814) Currency options Sold ************************* ¥ 2,911,936 ¥ 898,824 ¥(90,113) ¥(90,113) Bought*********************** 2,883,999 907,272 107,026 107,026 Other Sold ************************* ¥ 7,957 ¥ 882 ¥ 51 ¥ 51 Bought*********************** ———— Total ************************** ¥ 85,060 ¥133,521

Millions of U.S. dollars Contract amount Valuation March 31, 2004 Total Over 1 year Market value gains (losses) Over-the-counter transactions Currency swaps************************* $154,395 $98,369 $ 782 $1,240 Currency swaptions Sold ******************************** 6,114 5,901 (154) (154) Bought****************************** 10,740 10,527 383 383 Forward foreign exchange **************** $319,318 $12,949 $(367) $ (367) Currency options Sold ******************************** $ 27,552 $ 8,504 $(852) $ (852) Bought****************************** 27,287 8,584 1,013 1,013 Other Sold ******************************** $75$8 $0 $0 Bought****************************** —— — — Total ********************************* $ 805 $1,263

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of income. The amounts above do not include the following: (a) Derivative transactions to which the deferred hedge accounting method is applied; (b) Those that are allotted to financial assets/liabilities denominated in foreign currency and whose market values are already reflected to the consolidated balance sheet; and (c) Those that are allotted to financial assets/liabilities denominated in foreign currency and the financial assets/liabilities are eliminated in the process of consolidation.

F-84 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Some consolidated overseas subsidiaries account for currency derivatives in accordance with local accounting standards. Such transactions are not included in the amounts above, of which their net unrealized losses amount to ¥530 million ($5 million). 2. Market value is calculated mainly using discounted present value. 3. Forward foreign exchange and currency options that were formerly revaluated at the ﬁscal year-end are included in the table above from the ﬁscal year ended March 31, 2004.

(3) Equity derivatives

Millions of yen Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Transactions listed on exchange Stock price index futures: Sold ************************************** ¥— ¥— ¥— ¥— Bought ************************************ 3,349 — 63 63 Stock price index options: Sold ************************************** ¥— ¥— ¥— ¥— Bought ************************************ ———— Over-the-counter transactions Equity options: Sold ************************************** ¥— ¥— ¥— ¥— Bought ************************************ ———— Stock price index swaps: Receivable equity index/payable ﬂoating rate ***** ¥— ¥— ¥— ¥— Receivable ﬂoating rate/payable equity index ***** ———— Other: Sold ************************************** ¥4,791 ¥ — ¥(231) ¥(231) Bought ************************************ 7,336 3,005 311 311 Total**************************************** ¥ 143 ¥ 143

F-85 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

Millions of U.S. dollars Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Transactions listed on exchange Stock price index futures: Sold**************************************** $— $— $— $— Bought ************************************* 32 — 0 0 Stock price index options: Sold**************************************** $— $— $— $— Bought ************************************* —— — — Over-the-counter transactions Equity options: Sold**************************************** $— $— $— $— Bought ************************************* —— — — Stock price index swaps: Receivable equity index/payable ﬂoating rate ****** $— $— $— $— Receivable ﬂoating rate/payable equity index ****** —— — — Other: Sold**************************************** $ 45 $ — $ (2) $ (2) Bought ************************************* 69 28 3 3 Total ***************************************** $1 $1

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of income. Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above. 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models.

F-86 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(4) Bond derivatives Millions of yen Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Transactions listed on exchange Bond futures: Sold ******************************** ¥1,485,848 ¥ — ¥ 5,213 ¥ 5,213 Bought ****************************** 3,473,003 — (16,918) (16,918) Bond futures options: Sold ******************************** ¥ 333,500 ¥ — ¥ (769) ¥ (769) Bought ****************************** 5,000 — 66 66 Over-the-counter transactions Forward bond agreements: Sold ******************************** ¥ 296,334 ¥273,251 ¥ 1,746 ¥ 1,746 Bought ****************************** ———— Bond options: Sold ******************************** ¥2,821,954 ¥ 14,114 ¥ (6,020) ¥ (6,020) Bought ****************************** 2,420,812 2,972 18,216 18,216 Total ********************************** ¥ 1,533 ¥ 1,533

Millions of U.S. dollars Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Transactions listed on exchange Bond futures: Sold ************************************* $14,059 $ — $ 49 $ 49 Bought *********************************** 32,860 — (160) (160) Bond futures options: Sold ************************************* $ 3,155 $ — $ (7) $ (7) Bought *********************************** 47 — 1 1 Over-the-counter transactions Forward bond agreements: Sold ************************************* $ 2,804 $2,585 $ 17 $ 17 Bought *********************************** ———— Bond options: Sold ************************************* $26,700 $ 134 $ (57) $ (57) Bought *********************************** 22,905 28 172 172 Total*************************************** $15 $15

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of income. Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above. 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange. Market value of OTC transactions is calculated mainly using option pricing models.

F-87 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(5) Commodity derivatives

Millions of yen Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Over-the-counter transactions Commodity swaps: Receivable fixed price/payable floating price *** ¥86,127 ¥84,270 ¥(5,742) ¥(5,742) Receivable floating price/payable fixed price *** 87,038 84,985 9,932 9,932 Commodity options: Sold ************************************ ¥ 4,457 ¥ 4,318 ¥(1,645) ¥(1,645) Bought ********************************** 4,448 4,309 1,667 1,667 Total************************************** ¥ 4,211 ¥ 4,211

Millions of U.S. dollars Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Over-the-counter transactions Commodity swaps: Receivable fixed price/payable floating price ******* $815 $797 $(54) $(54) Receivable floating price/payable fixed price ******* 824 804 94 94 Commodity options: Sold**************************************** $ 42 $ 41 $(16) $(16) Bought ************************************* 42 41 16 16 Total ***************************************** $40 $40

F-88 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(6) Credit derivative transactions

Millions of yen Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Over-the-counter transactions Credit default options: Sold************************************* ¥38,891 ¥36,213 ¥ (826) ¥ (826) Bought ********************************** 57,308 52,627 1,580 1,580 Other: Sold************************************* ¥ 1,504 ¥ — ¥ (23) ¥ (23) Bought ********************************** 1,389 — 27 27 Total ************************************** ¥ 757 ¥ 757

Millions of U.S. dollars Contract amount Market Valuation March 31, 2004 Total Over 1 year value gains (losses) Over-the-counter transactions Credit default options: Sold**************************************** $368 $343 $(8) $(8) Bought ************************************* 542 498 15 15 Other: Sold**************************************** $ 14 $ — $(0) $(0) Bought ************************************* 13 — 0 0

Total ***************************************** $7 $7

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of income. Derivative transactions to which the deferred hedge accounting method is applied are not included in the amounts above. 2. Market value is calculated based on factors such as the price of the reference assets and contract term. 3. ‘‘Sold’’ represents transactions in which the credit risk is accepted; ‘‘Bought’’ represents transactions in which the credit risk is transferred.

F-89 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

30. Segment Information (1) Business segment information Millions of yen Elimination and unallocated Year ended March 31, 2004 Banking business Other Total corporate assets Consolidated I. Ordinary income (1) External customers ************ ¥ 2,501,868 ¥ 215,136 ¥ 2,717,005 ¥ — ¥ 2,717,005 (2) Intersegment ***************** 20,178 138,173 158,352 (158,352) — Total *************************** ¥ 2,522,047 ¥ 353,310 ¥ 2,875,357 ¥ (158,352) ¥ 2,717,005 Ordinary expenses ****************** 2,293,056 291,978 2,585,035 (150,189) 2,434,845 Ordinary proﬁt ********************* ¥ 228,990 ¥ 61,332 ¥ 290,322 ¥ (8,162) ¥ 282,159 II. Assets, depreciation and capital expenditure Assets **************************** ¥98,935,965 ¥4,958,057 ¥103,894,022 ¥(4,050,764) ¥99,843,258 Depreciation *********************** 59,938 12,989 72,927 — 72,927 Capital expenditure ***************** 86,480 19,693 106,174 — 106,174 Millions of U.S. dollars Elimination and unallocated Year ended March 31, 2004 Banking business Other Total corporate assets Consolidated I. Ordinary income (1) External customers ******************** $ 23,672 $ 2,036 $ 25,708 $ — $ 25,708 (2) Intersegment ************************* 191 1,307 1,498 (1,498) — Total *********************************** $ 23,863 $ 3,343 $ 27,206 $ (1,498) $ 25,708 Ordinary expenses ************************ 21,696 2,763 24,459 (1,421) 23,038 Ordinary proﬁt*************************** $ 2,167 $ 580 $ 2,747 $ (77) $ 2,670

II. Assets, depreciation and capital expenditure Assets ********************************** $936,096 $46,911 $983,007 $(38,327) $944,680 Depreciation ***************************** 567 123 690 — 690 Capital expenditure *********************** 818 187 1,005 — 1,005

Notes: 1. The business segmentation is classified based on SMBC’s internal administrative purpose. 2. ‘‘Other’’ includes leasing, securities, credit card, investment banking, loans, venture capital, system development and information processing. 3. Ordinary income represents total income excluding gains on disposal of premises and equipment, collection of written-off claims, gain on sale of business operation and reversals of other reserves. Ordinary expenses represent total expenses excluding losses on disposal of premises and equipment, amortized cost of unrecognized net transition obligation for employee retirement benefits and other extraordinary expenses. 4. As mentioned in ‘‘2. Significant Accounting Policies (3) Trading assets/liabilities and trading profits/losses,’’ SMBC formerly accounted for foreign currency translation differences arising from currency swaps for trading purposes as ‘‘Other assets’’ or ‘‘Other liabilities’’ on the balance sheet on a net basis. From this fiscal year, SMBC accounts for such foreign currency translation differences as ‘‘Trading assets’’ and ‘‘Trading liabilities’’ on a gross basis, pursuant to the ‘‘Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry’’ (JICPA Industry Audit Committee Report No. 25). Consequently, Assets of ‘‘Banking business’’ increased by ¥19,741 million ($187 million) as compared with the former manner. 5. As mentioned in ‘‘2. Significant Accounting Policies (16) Translation of foreign currencies,’’ as for the accounting method of foreign currency transactions, in the previous fiscal year, SMBC and domestic consolidated banking subsidiaries applied the

F-90 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

temporary treatment stipulated in JICPA Industry Audit Committee Report No. 25 to currency swaps and foreign exchange swaps for the purpose of lending or borrowing funds in different currencies. From this fiscal year, they apply the hedge accounting pursuant to the basic provisions of JICPA Industry Audit Committee Report No. 25. Consequently, for this fiscal year, SMBC and domestic consolidated banking subsidiaries have valuated such foreign exchange swaps at fair value and included their fair-valued assets and liabilities in the consolidated balance sheet. Previously, profits or losses on the foreign exchange swaps were charged to income by periodical allocation. As a result, Assets of ‘‘Banking business’’ increased by ¥1,035 million ($10 million) as compared with the former manner. Foreign currency translation differences arising from currency swaps and forward foreign exchange transactions were formerly accounted for as ‘‘Other assets’’ or ‘‘Other liabilities’’ on a net basis, but from this fiscal year they are accounted for as ‘‘Other assets’’ or ‘‘Other liabilities’’ on a gross basis pursuant to JICPA Industry Audit Committee Report No. 25. Consequently, Assets of ‘‘Banking business’’ ¥450,929 million ($4,267 million) as compared with the former manner. 6. As mentioned in ‘‘2. Significant Accounting Policies (6) Hedge accounting,’’ as for the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets and liabilities, SMBC formerly applied deferred hedge accounting. From this fiscal year, SMBC applies fair value hedge accounting to hedging transactions for reducing the exposure to market volatility of bonds classified as other securities that are held for the purpose of Asset and Liability Management in order to more properly reflect the effectiveness of hedging transactions in the financial statements. Consequently, Assets of ‘‘Banking business’’ decreased by ¥19,420 million ($184 million). 7. As mentioned in Note 24 ‘‘Income Taxes’’, the effective tax rate used in calculating deferred tax assets and liabilities was changed with the implementation of the ‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) on March 31, 2003. As a result, Assets of ‘‘Banking business’’ and Assets of ‘‘Other’’ increased by ¥6,657 million ($63 million) and ¥365 million ($3 million), respectively, as compared with the assets that were calculated using the former effective tax rate. 8. ‘‘Leasing’’ that was formerly reported separately is included in ‘‘Other’’ from this fiscal year because leasing business has become less material. Business segmentation information under which the former classification is applied is as follows:

Millions of yen Elimination Banking and unallocated Year ended March 31, 2004 business Leasing Other Total corporate assets Consolidated I. Ordinary income (1) External customers *********** ¥ 2,501,868 ¥ 14,773 ¥ 200,363 ¥ 2,717,005 ¥ — ¥ 2,717,005 (2) Intersegment **************** 20,178 3,326 137,995 161,499 (161,499) — Total ************************** ¥ 2,522,047 ¥ 18,099 ¥ 338,358 ¥ 2,878,505 ¥ (161,499) ¥ 2,717,005 Ordinary expenses ***************** 2,293,056 14,968 277,013 2,585,038 (150,192) 2,434,845 Ordinary proﬁt (loss) ************** ¥ 228,990 ¥ 3,131 ¥ 61,345 ¥ 293,467 ¥ (11,307) ¥ 282,159 II. Assets, depreciation and capital expenditure Assets*************************** ¥98,935,965 ¥126,264 ¥4,831,808 ¥103,894,039 ¥(4,050,780) ¥99,843,258 Depreciation********************** 59,938 6,754 6,234 72,927 — 72,927 Capital expenditure **************** 86,480 10,877 8,816 106,174 — 106,174

Millions of U.S. dollars Elimination Banking and unallocated Year ended March 31, 2004 business Leasing Other Total corporate assets Consolidated I. Ordinary income (1) External customers ******************** $ 23,672 $ 140 $ 1,895 $ 25,708 $ — $ 25,708 (2) Intersegment ************************* 191 31 1,306 1,528 (1,528) — Total *********************************** $ 23,863 $ 171 $ 3,201 $ 27,236 $ (1,528) $ 25,708 Ordinary expenses ************************** 21,696 141 2,621 24,458 (1,420) 23,038 Ordinary proﬁt (loss) ************************ $ 2,167 $ 30 $ 580 $ 2,778 $ (108) $ 2,670 II. Assets, depreciation and capital expenditure Assets ************************************ $936,096 $1,195 $45,716 $983,007 $(38,327) $944,680 Depreciation ******************************* 567 64 59 690 — 690 Capital expenditure ************************* 818 103 84 1,005 — 1,005

F-91 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(2) Geographic segment information Millions of yen Elimination The Asia and and unallocated Year ended March 31, 2004 Japan Americas Europe Oceania Total corporate assets Consolidated I. Ordinary income (1) External customers **** ¥ 2,414,609 ¥ 135,858 ¥ 75,563 ¥ 90,973 ¥ 2,717,005 ¥ — ¥ 2,717,005 (2) Intersegment ********* 49,587 39,179 6,116 10,968 105,851 (105,851) — Total ****************** ¥ 2,464,196 ¥ 175,038 ¥ 81,680 ¥ 101,942 ¥ 2,822,857 ¥ (105,851) ¥ 2,717,005 Ordinary expenses ********* 2,295,260 110,012 65,586 59,397 2,530,256 (95,410) 2,434,845 Ordinary proﬁt ************ ¥ 168,936 ¥ 65,025 ¥ 16,093 ¥ 42,545 ¥ 292,600 ¥ (10,440) ¥ 282,159 II. Assets ****************** ¥92,812,738 ¥5,117,029 ¥2,177,644 ¥2,734,684 ¥102,842,096 ¥(2,998,838) ¥99,843,258 Millions of U.S. dollars Elimination The Asia and and unallocated Year ended March 31, 2004 Japan Americas Europe Oceania Total corporate assets Consolidated I. Ordinary income (1) External customers ******** $ 22,846 $ 1,285 $ 715 $ 861 $ 25,708 $ — $ 25,708 (2) Intersegment ************* 469 371 58 104 1,002 (1,002) — Total *********************** $ 23,315 $ 1,656 $ 773 $ 965 $ 26,710 $ (1,002) $ 25,708 Ordinary expenses ************** 21,717 1,041 621 562 23,941 (903) 23,038 Ordinary proﬁt ***************** $ 1,598 $ 615 $ 152 $ 403 $ 2,769 $ (99) $ 2,670 II. Assets*********************** $878,160 $48,415 $20,604 $25,875 $973,054 $(28,374) $944,680

Notes: 1. The geographic segmentation is classified based on the degrees of following factors: geographic proximity, similarity of economic activities and relationship of business activities among regions. Ordinary income and ordinary profit are presented as counterparts of sales and operating profit of companies in other industries. 2. The Americas includes the United States, Brazil, Canada and others; Europe includes the United Kingdom, Germany, France and others; Asia and Oceania includes Hong Kong, Singapore, Australia and others except Japan. 3. Ordinary income represents total income excluding gains on disposal of premises and equipment, collection of written-off claims, gain on sale of business operation and reversals of other reserves. Ordinary expenses represent total expenses excluding losses on disposal of premises and equipment, amortized cost of unrecognized net transition obligation for employee retirement benefits and other extraordinary expenses. 4. As mentioned in ‘‘2. Significant Accounting Policies (3) Trading assets/liabilities and trading profits/losses,’’ SMBC formerly accounted for foreign currency translation differences arising from currency swaps for trading purposes as ‘‘Other assets’’ or ‘‘Other liabilities’’ on the balance sheet on a net basis. From this fiscal year, SMBC accounts for such foreign currency translation differences as ‘‘Trading assets’’ and ‘‘Trading liabilities’’ on a gross basis, pursuant to the ‘‘Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in Banking Industry’’ (JICPA Industry Audit Committee Report No. 25). Consequently, Assets of ‘‘Japan’’ increased by ¥19,939 million ($189 million) and Assets of ‘‘Asia and Oceania’’ decreased by ¥198 million ($2 million) as compared with the former manner. 5. As mentioned in ‘‘2. Significant Accounting Policies (16) Translation of foreign currencies,’’ as for the accounting method of foreign currency transactions, in the previous fiscal year, SMBC and domestic consolidated banking subsidiaries applied the temporary treatment stipulated in JICPA Industry Audit Committee Report No. 25 to currency swaps and foreign exchange swaps for the purpose of lending or borrowing funds in different currencies. From this fiscal year, they apply the hedge accounting pursuant to the basic provisions of JICPA Industry Audit Committee Report No. 25. Consequently, for this fiscal year, SMBC and domestic consolidated banking subsidiaries have valuated such foreign exchange swaps at fair value and included their fair-valued assets and liabilities in the consolidated balance sheet. Previously, profits or losses on the foreign exchange swaps were charged to income by periodical allocation. As a result, Assets of ‘‘Japan’’ and ‘‘Asia and Oceania’’ increased by ¥4 million ($0 million) and ¥1,030 million ($10 million), respectively, as compared with the former manner. Foreign currency translation differences arising from currency swaps and forward foreign exchange transactions were formerly accounted for as ‘‘Other assets’’ or ‘‘Other liabilities’’ on a net basis, but from this fiscal year they are accounted for as ‘‘Other assets’’ or ‘‘Other liabilities’’ on a gross basis pursuant to JICPA Industry Audit Committee Report No. 25. Consequently, Assets

F-92 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

of ‘‘Japan,’’ ‘‘The Americas,’’ ‘‘Europe’’ and ‘‘Asia and Oceania’’ increased by ¥279,156 million ($2,641 million), ¥114,960 million ($1,088 million), ¥1,554 million ($15 million) and ¥55,257 million ($523 million), respectively, as compared with the former manner. 6. As mentioned in ‘‘2. Significant Accounting Policies (6) Hedge accounting,’’ as for the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets and liabilities, SMBC formerly applied deferred hedge accounting. From this fiscal year, SMBC applies fair value hedge accounting to hedging transactions for reducing the exposure to market volatility of bonds classified as other securities that are held for the purpose of Asset and Liability Management in order to more properly reflect the effectiveness of hedging transactions in the financial statements. Consequently, Assets of ‘‘Japan’’ decreased by ¥19,420 million ($184 million). 7. As mentioned in Note 24 ‘‘Income Taxes’’, the effective tax rate used in calculating deferred tax assets and liabilities was changed with the implementation of the ‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) on March 31, 2003. As a result, Assets of ‘‘Japan’’ increased by ¥7,023 million ($66 million) as compared with assets that were calculated using the former effective tax rate.

(3) Ordinary income from overseas operations

Millions of Year ended March 31, 2004 Millions of yen U.S. dollars

Ordinary income from overseas operations(A) ********************* ¥ 302,396 $ 2,861 Consolidated ordinary income(B) ******************************** 2,717,005 25,707 (A)/(B) ***************************************************** 11.1% 11.1%

Note: The above table shows ordinary income from transactions of SMBC’s overseas branches and overseas consolidated subsidiaries, excluding internal income.

31. Subsequent Event

Appropriations of retained earnings

The following appropriation of retained earnings of SMBC at March 31, 2004 was approved by all of the shareholders on June 29, 2004: Millions of Millions of yen U.S. dollars Cash dividends, ¥3,649 per share on common stock***************** ¥200,008 $1,892

F-93 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

32. Parent Company (1) Nonconsolidated Balance Sheet Sumitomo Mitsui Banking Corporation

Millions of U.S. dollars March 31, 2004 Millions of yen (Note 1) Assets Cash and due from banks ****************************************************** ¥ 3,355,519 $ 31,749 Deposits with banks*********************************************************** 1,511,401 14,300 Call loans and bills bought ***************************************************** 287,262 2,718 Receivables under resale agreements ********************************************* 130,337 1,233 Receivables under securities borrowing transactions ********************************* 1,009,328 9,550 Commercial paper and other debt purchased *************************************** 133,081 1,259 Trading assets**************************************************************** 2,958,990 27,997 Money held in trust *********************************************************** 3,749 36 Securities ******************************************************************* 26,592,584 251,609 Loans and bills discounted ***************************************************** 50,810,144 480,747 Foreign exchanges ************************************************************ 720,840 6,820 Other assets ***************************************************************** 1,480,776 14,011 Premises and equipment ******************************************************* 688,325 6,513 Deferred tax assets************************************************************ 1,590,518 15,049 Customers’ liabilities for acceptances and guarantees******************************** 4,086,964 38,669 Reserve for possible loan losses ************************************************* (1,250,751) (11,834) Total assets ***************************************************************** ¥94,109,074 $890,426 Liabilities Deposits ******************************************************************** ¥63,656,771 $602,297 Call money and bills sold ****************************************************** 6,204,833 58,708 Payables under repurchase agreements******************************************** 1,071,114 10,134 Payables under securities lending transactions************************************** 5,946,346 56,262 Trading liabilities ************************************************************* 1,504,465 14,235 Borrowed money ************************************************************* 2,531,973 23,957 Foreign exchanges ************************************************************ 576,958 5,459 Bonds ********************************************************************** 3,177,741 30,067 Due to trust account ********************************************************** 36,032 341 Other liabilities*************************************************************** 2,368,824 22,413 Reserve for employee bonuses ************************************************** 8,752 83 Reserve for employee retirement beneﬁts ***************************************** 11,748 111 Reserve for expenses related to EXPO 2005 Japan********************************** 116 1 Other reserves *************************************************************** 18 0 Deferred tax liabilities for land revaluation **************************************** 55,541 526 Acceptances and guarantees **************************************************** 4,086,964 38,669 Total liabilities ************************************************************** ¥91,238,204 $863,263 Stockholders’ equity Capital stock***************************************************************** ¥ 559,985 $ 5,298 Capital surplus *************************************************************** 1,237,307 11,707 Retained earnings************************************************************* 676,064 6,397 Land revaluation excess******************************************************** 81,158 768 Net unrealized gains on other securities******************************************* 316,354 2,993 Total stockholders’ equity***************************************************** ¥ 2,870,870 $ 27,163 Total liabilities and stockholders’ equity **************************************** ¥94,109,074 $890,426

F-94 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2004 — (Continued)

(2) Nonconsolidated Statement of Income Sumitomo Mitsui Banking Corporation Year ended March 31, 2004 Millions of U.S. dollars Millions of yen (Note 1) Income Interest income: Interest on loans and discounts ************************************* ¥ 975,130 $ 9,226 Interest and dividends on securities ********************************* 249,594 2,362 Interest on receivables under resale agreements************************ 818 8 Interest on receivables under securities borrowing transactions *********** 104 1 Interest on deposits with banks ************************************* 11,167 106 Other interest income********************************************* 155,507 1,471 Trust fees ******************************************************** 334 3 Fees and commissions ********************************************** 322,075 3,047 Trading proﬁts **************************************************** 283,611 2,684 Other operating income ********************************************* 149,209 1,412 Other income ***************************************************** 341,633 3,232 Total income ***************************************************** ¥2,489,187 $23,552 Expenses Interest expenses: Interest on deposits ********************************************** ¥ 88,122 $ 834 Interest on borrowings and rediscounts******************************* 94,186 891 Interest on payables under repurchase agreements********************** 3,089 29 Interest on payables under securities lending transactions**************** 48,621 460 Interest on bonds ************************************************ 49,441 468 Other interest expenses ******************************************* 21,822 206 Fees and commissions ********************************************** 95,506 904 Trading losses***************************************************** 2,881 27 Other operating expenses******************************************** 159,774 1,512 General and administrative expenses*********************************** 623,098 5,896 Other expenses **************************************************** 983,795 9,308 Total expenses **************************************************** ¥2,170,341 $20,535 Income before income taxes **************************************** ¥ 318,846 $ 3,017 Income taxes: Current ******************************************************** ¥ 12,752 $ 121 Deferred ******************************************************* 4,980 47 Net income******************************************************* ¥ 301,113 $ 2,849

U.S. dollars Yen (Note 1) Per share data: Net income ***************************************************** ¥ 5,228.80 $ 49.47 Net income — diluted ******************************************** 5,221.53 49.40 Declared dividends on common stock ******************************* 4,177 39.52 Declared dividends on preferred stock (Type 1) *********************** 10,500 99.35 Declared dividends on preferred stock (Type 2) *********************** 28,500 269.66 Declared dividends on preferred stock (Type 3) *********************** 13,700 129.62

F-95 INDEPENDENT AUDITORS’ REPORT To The Board of Directors of Sumitomo Mitsui Banking Corporation We have audited the accompanying consolidated balance sheet of Sumitomo Mitsui Banking Corporation (‘‘SMBC’’) and subsidiaries as of March 31, 2003, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended, expressed in Japanese yen. These consolidated financial statements are the responsibility of SMBC’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of SMBC and subsidiaries as of March 31, 2003, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in Japan as described in Note 1 to the consolidated financial statements. The consolidated financial statements as of and for the year ended March 31, 2003 have been translated into United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our opinion, the consolidated financial statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 1 to the consolidated financial statements.

Asahi & Co. Tokyo, Japan June 27, 2003

F-96 CONSOLIDATED FINANCIAL STATEMENTS OF SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 2003

Millions of U.S. dollars Millions of yen (Note 1) Assets Cash and due from banks (Note 9) ********************************************* ¥ 2,895,968 $ 24,093 Deposits with banks (Notes 9, 28) ********************************************** 541,275 4,503 Call loans and bills bought **************************************************** 187,563 1,560 Receivables under resale agreements ******************************************** 109,710 913 Receivables under securities borrowing transactions ******************************** 1,981,243 16,483 Commercial paper and other debt purchased (Note 28) ***************************** 363,981 3,028 Trading assets (Notes 3, 9, 28) ************************************************* 4,495,396 37,399 Money held in trust (Note 28) ************************************************* 24,629 205 Securities (Notes 4, 9, 28)***************************************************** 23,958,521 199,322 Loans and bills discounted (Notes 5, 9, 27) ************************************** 61,219,617 509,315 Foreign exchanges *********************************************************** 749,974 6,239 Other assets (Notes 6, 9)****************************************************** 2,157,885 17,953 Premises and equipment (Notes 7, 9, 15) **************************************** 920,076 7,655 Lease assets (Note 8)********************************************************* 26,130 217 Deferred tax assets (Note 24) ************************************************** 1,885,307 15,685 Deferred tax assets for land revaluation (Note 15) ********************************* 724 6 Customers’ liabilities for acceptances and guarantees******************************* 3,078,461 25,611 Reserve for possible loan losses ************************************************ (2,201,830) (18,318) Total assets **************************************************************** ¥102,394,637 $851,869 Liabilities, minority interests and stockholders’ equity Liabilities Deposits (Notes 9, 10)******************************************************** ¥ 67,885,022 $564,767 Call money and bills sold (Note 9) ********************************************* 8,953,084 74,485 Payables under repurchase agreements (Note 9) *********************************** 4,144,735 34,482 Payables under securities lending transactions (Note 9) ***************************** 4,807,245 39,994 Commercial paper *********************************************************** 50,500 420 Trading liabilities (Notes 9, 11) ************************************************ 2,851,391 23,722 Borrowed money (Notes 9, 12)************************************************* 1,427,000 11,872 Foreign exchanges *********************************************************** 397,666 3,308 Bonds (Note 13) ************************************************************ 3,441,137 28,628 Due to trust account ********************************************************* 5,953 50 Other liabilities (Notes 9, 14) ************************************************** 1,952,000 16,240 Reserve for employee bonuses ************************************************* 16,111 134 Reserve for employee retirement beneﬁts (Note 25) ******************************** 92,802 772 Reserve for possible losses on loans sold **************************************** 20,665 172 Other reserves ************************************************************** 649 5 Deferred tax liabilities (Note 24) *********************************************** 43,726 364 Deferred tax liabilities for land revaluation (Notes 15, 24) ************************** 58,788 489 Acceptances and guarantees (Note 9)******************************************** 3,078,461 25,611 Total liabilities ************************************************************* ¥ 99,226,942 $825,515 Minority interests (Note 16) ************************************************** ¥ 1,025,150 $ 8,529 Stockholders’ equity (Note 17) Capital stock (Note 17) ****************************************************** 559,985 4,659 Capital surplus ************************************************************** 1,298,511 10,803 Retained earnings************************************************************ 258,690 2,152 Land revaluation excess (Notes 15, 24) ****************************************** 101,336 843 Net unrealized losses on other securities (Note 28) ******************************** (21,559) (179) Foreign currency translation adjustments ***************************************** (54,419) (453) Total stockholders’ equity**************************************************** ¥ 2,142,544 $ 17,825 Total liabilities, minority interests and stockholders’ equity*********************** ¥102,394,637 $851,869 See accompanying notes to consolidated ﬁnancial statements.

F-97 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 2003

Millions of U.S. dollars Millions of yen (Note 1) Income Interest income: Interest on loans and discounts***************************************** ¥1,266,319 $10,535 Interest and dividends on securities ************************************* 268,840 2,237 Interest on receivables under resale agreements *************************** 1,352 11 Interest on receivables under securities borrowing transactions *************** 225 2 Interest on deposits with banks **************************************** 34,759 289 Other interest income ************************************************ 246,028 2,047 Trust Fees *********************************************************** 70 Fees and commissions (Note 18) ***************************************** 424,235 3,529 Trading proﬁts (Note 19) *********************************************** 206,496 1,718 Other operating income (Note 20) **************************************** 947,036 7,879 Other income (Note 21) ************************************************ 166,541 1,386 Total income ********************************************************* ¥3,561,843 $29,633 Expenses Interest expenses: Interest on deposits ************************************************** ¥ 159,943 $ 1,331 Interest on borrowings and rediscounts ********************************** 56,485 470 Interest on payables under repurchase agreements ************************* 18,185 151 Interest on payables under securities lending transactions ******************* 28,830 240 Interest on bonds and bonds with subscription rights for shares ************** 76,219 634 Other interest expenses *********************************************** 77,741 647 Fees and commissions (Note 18) ***************************************** 74,257 618 Trading losses (Note 19)************************************************ 725 6 Other operating expenses (Note 22)*************************************** 721,193 6,000 General and administrative expenses ************************************** 888,421 7,391 Transfer to reserve for possible loan losses********************************* 655,488 5,453 Other expenses (Notes 23, 24) ******************************************* 1,347,022 11,207 Total expenses ******************************************************* ¥4,104,514 $34,148 Loss before income taxes and minority interests ************************** ¥ 542,670 $ 4,515 Income taxes (Note 24): Current ************************************************************ ¥ 65,912 $ 548 Deferred *********************************************************** (216,233) (1,799) Minority interests in net income****************************************** ¥ 37,037 $ 308 Net loss ************************************************************* ¥ 429,387 $ 3,572

U.S. dollars Yen (Note 1) Per share data: Net loss *********************************************************** ¥10,429.29 $ 86.77 Net income—diluted ************************************************* —— Declared dividends on common stock *********************************** —— Declared dividends on preferred stock (Type 1) *************************** —— Declared dividends on preferred stock (Type 2) *************************** —— Declared dividends on preferred stock (Type 3) *************************** ——

See accompanying notes to consolidated ﬁnancial statements.

F-98 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY YEAR ENDED MARCH 31, 2003

Millions of yen Net unrealized Foreign Capital Land losses on currency stock Capital Retained revaluation other translation Treasury (Note 17) surplus earnings excess securities adjustments stock Total Balance at March 31, 2002 ****** ¥1,326,746 ¥1,326,758 ¥ 475,357 ¥121,244 ¥(304,837) ¥(15,174) ¥(17,475) ¥2,912,619 Establishment of the holding company ******************** 17,475 17,475 Corporate split ***************** (494,100) (494,100) Exchange of stocks ************* 160,220 160,220 Issuance of stocks ************** 285,362 284,907 570,269 Merger with Wakashio Bank ****** (558,023) (826,653) 658,440 672,810 (53,425) Change of regulations *********** 357,614 (357,614) — Change due to increase/decrease of subsidiaries and afﬁliates ******* 56,078 56,078 Losses on disposition of treasury stock *********************** (4,336) (4,336) Transfer of land revaluation excess 17,125 (17,125) — Change of tax rate and others ***** (2,783) (2,783) Cash dividends paid ************* (161,312) (161,312) Net loss*********************** (429,387) (429,387) Change of net unrealized losses on other securities *************** (389,532) (389,532) Change of foreign currency translation adjustments********* (39,244) (39,244) Balance at March 31, 2003 ****** ¥ 559,985 ¥1,298,511 ¥ 258,690 ¥101,336 ¥ (21,559) ¥(54,419) ¥ — ¥2,142,544

F-99 Millions of U.S. dollars (Note 1) Net unrealized Foreign Capital Land losses on currency stock Capital Retained revaluation other translation Treasury (Note 17) surplus earnings excess securities adjustments stock Total Balance at March 31, 2002 *************** $11,038 $11,038 $ 3,955 $1,008 $(2,536) $(126) $(146) $24,231 Establishment of the holding company ******* 146 146 Corporate split ************************** (4,111) (4,111) Exchange of stocks*********************** 1,333 1,333 Issuance of stocks************************ 2,374 2,370 4,744 Merger with Wakashio Bank *************** (4,642) (6,877) 5,478 5,597 (444) Change of regulations********************* 2,975 (2,975) — Change due to increase/decrease of subsidiaries and afﬁliates **************** 466 466 Losses on disposition of treasury stock******* (36) (36) Transfer of land revaluation excess ********** 142 (142) — Change of tax rate and others ************** (23) (23) Cash dividends paid ********************** (1,342) (1,342) Net loss ******************************** (3,572) (3,572) Change of net unrealized losses on other securities ***************************** (3,240) (3,240) Change of foreign currency translation adjustments *************************** (327) (327) Balance at March 31, 2003 *************** $ 4,659 $10,803 $ 2,152 $ 843 $ (179) $(453) $ — $17,825

See accompanying notes to consolidated ﬁnancial statements.

F-100 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED MARCH 31, 2003

Millions of Millions of yen U.S. dollars (Note 1) 1. Cash flows from operating activities: Loss before income taxes and minority interests ***************** ¥ (542,670) $ (4,515) Depreciation of premises, equipment and others ***************** 89,412 744 Depreciation of lease assets********************************** 312,562 2,600 Amortization of goodwill************************************ 10,399 86 Equity in earnings of affiliates******************************** (1,703) (14) Net change in reserve for possible loan losses******************* 82,688 688 Net change in reserve for possible losses on loans sold *********** (65,706) (547) Net change in reserve for employee bonuses ******************** (224) (2) Net change in reserve for employee retirement benefits *********** (47,563) (396) Interest income ******************************************** (1,817,526) (15,121) Interest expenses******************************************* 417,405 3,473 Net losses on securities ************************************* 453,229 3,771 Net loss from money held in trust **************************** 4,003 33 Net exchange losses **************************************** 170,155 1,416 Net losses from disposition of premises and equipment *********** 33,298 277 Net losses from disposition of lease assets********************** 1,505 12 Net change in trading assets ********************************* (1,253,569) (10,429) Net change in trading liabilities ****************************** 569,881 4,741 Net change in loans and bills discounted *********************** 2,215,660 18,433 Net change in deposits************************************** (3,767,125) (31,340) Net change in borrowed money (excluding subordinated debt)****** (261,965) (2,179) Net change in deposits with banks **************************** 2,947,784 24,524 Net change in call loans, bills bought and receivables under resale agreements ********************************************* 1,280,173 10,650 Net change in receivables under securities borrowing transactions*** 1,039,276 8,646 Net change in call money, bills sold and payables under repurchase agreements ********************************************* 902,660 7,510 Net change in commercial paper****************************** (979,700) (8,151) Net change in payables under securities lending transactions ******* 1,632,445 13,581 Net change in foreign exchanges (assets) *********************** 42,144 351 Net change in foreign exchanges (liabilities) ******************** 99,013 824 Issuance and redemption of bonds (excluding subordinated bonds) ** 457,319 3,805 Net change in due to trust account **************************** 5,953 50 Interest received ******************************************* 1,957,564 16,286 Interest paid ********************************************** (464,800) (3,867) Other, net ************************************************ 67,366 560 Subtotal ************************************************* ¥ 5,589,349 $ 46,500 Income taxes paid****************************************** (99,188) (825) Net cash provided by operating activities********************* ¥ 5,490,161 $ 45,675

See accompanying notes to consolidated ﬁnancial statements.

F-101 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS — (Continued) YEAR ENDED MARCH 31, 2003

Millions of Millions of yen U.S. dollars (Note 1) 2. Cash flows from investing activities: Purchases of securities ************************************** ¥(49,937,936) $(415,457) Proceeds from sale of securities******************************* 37,713,543 313,757 Proceeds from maturity of securities *************************** 7,907,363 65,785 Purchases of money held in trust****************************** (14,622) (122) Proceeds from sale of money held in trust ********************** 23,624 197 Purchases of premises and equipment ************************** (69,883) (581) Proceeds from sale of premises and equipment ****************** 73,677 613 Purchases of lease assets ************************************ (336,512) (2,800) Proceeds from sale of lease assets***************************** 33,900 282 Purchases of stock of subsidiaries ***************************** (15,444) (128) Proceeds from sale of stock of subsidiaries ********************* 53 0 Net cash used in investing activities ************************** ¥ (4,622,236) $ (38,454) 3. Cash flows from financing activities: Proceeds from issuance of subordinated debt ******************** ¥ 165,000 $ 1,373 Repayment of subordinated debt ****************************** (286,500) (2,383) Proceeds from issuance of subordinated bonds, bonds with subscription rights for shares ******************************* 223,950 1,863 Repayment of subordinated bonds, bonds with subscription rights for shares************************************************** (565,522) (4,705) Proceeds from issuance of stocks ***************************** 570,269 4,744 Dividends paid ******************************************** (161,312) (1,342) Proceeds from minority stockholders*************************** 220 2 Dividends paid to minority stockholders ************************ (39,621) (330) Purchases of treasury stock ********************************** (7,524) (63) Proceeds from sale of treasury stock*************************** 8,479 71 Net cash used in financing activities ************************* ¥ (92,561) $ (770) 4. Effect of exchange rate changes on cash and due from banks *** (2,629) (22) 5. Net change in cash and due from banks ********************** ¥ 772,734 $ 6,429 6. Cash and due from banks at beginning of year**************** ¥ 2,128,742 $ 17,710 7. Change in cash and due from banks due to merger of consolidated subsidiaries *********************************** 00 8. Change in cash and due from banks due to decrease of consolidated subsidiaries *********************************** (5,509) (46) 9. Cash and due from banks at end of year ********************* ¥ 2,895,968 $ 24,093

See accompanying notes to consolidated ﬁnancial statements.

F-102 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003

1. Basis of Financial Statements

On March 17, 2003, Sumitomo Mitsui Banking Corporation (the ‘‘Bank’’) was merged with its subsidiary, THE WAKASHIO BANK, LTD. (‘‘Wakashio’’). Wakashio succeeded the Bank’s assets, liabilities, all the claims, obligations and employees, and changed its corporate name to Sumitomo Mitsui Banking Corporation (‘‘SMBC’’).

SMBC and its consolidated domestic subsidiaries maintain their ofﬁcial accounting records in Japanese yen, and in accordance with the provisions set forth in the Japanese Commercial Code and accounting principles and practices generally accepted in Japan (‘‘Japanese GAAP’’).

The accounts of overseas consolidated subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles and practices prevailing in the respective countries of domicile.

Certain accounting principles and practices generally accepted in Japan are different from International Accounting Standards and standards in other countries in certain respects as to application and disclosure requirements. Accordingly, the accompanying consolidated ﬁnancial statements are intended for use by those who are informed about Japanese accounting principles and practices.

The accompanying consolidated ﬁnancial statements have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statements of stockholders’ equity) from the consolidated ﬁnancial statements of SMBC prepared in accordance with Japanese GAAP.

Some supplementary information included in the statutory Japanese language consolidated ﬁnancial statements, but not required for fair presentation, is not presented in the accompanying consolidated ﬁnancial statements.

Amounts less than one million yen have been omitted. As a result, the totals in Japanese yen shown in the ﬁnancial statements do not necessarily agree with the sum of the individual amounts.

For the convenience of the readers, the accompanying U.S. dollar ﬁnancial statements have been translated from Japanese yen, as a matter of arithmetical computation only, at the rate of ¥120.20 to US$1, the exchange rate prevailing at March 31, 2003. The translations should not be construed as a representation that Japanese yen have been, could have been, or could in the future be, converted into U.S. dollars at that rate.

2. Signiﬁcant Accounting Policies

(1) Consolidation and Equity Method

(a) Scope of consolidation

Japanese accounting standards on consolidated ﬁnancial statements require a company to consolidate any subsidiaries of which the company substantially controls the operations, even if it is not a majority owned subsidiary. Control is deﬁned as the power to govern the decision making body of an enterprise.

F-103 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(i) Consolidated subsidiaries SMBC has 114 consolidated subsidiaries and principal subsidiaries are as follows: THE MINATO BANK, LTD. The Bank of Kansai, Ltd. Sumitomo Mitsui Banking Corporation Europe Limited Manufacturers Bank SMBC Capital Co., Ltd. SMBC Finance Co., Ltd. Sakura Friend Securities Co., Ltd. Meiko National Securities Co., Ltd. SMBC Capital Markets, Inc. Three companies including Meiko National Securities Co., Ltd. and eight companies including Sumitomo Mitsui Banking Corporation Europe Limited are consolidated from this fiscal year due to acquisition of shares and establishment, respectively. Twenty-nine companies including SMBC Leasing Company, Limited, Sumitomo Mitsui Card Company, Limited and The Japan Research Institute, Limited are excluded from consolidation from this fiscal year mainly due to corporate split. Also, five companies including SAKURA INVESTMENT MANAGEMENT CO., LTD. and seven companies including Sumitomo Mitsui Finance Australia (Securities) Limited are excluded from consolidation from this fiscal year due to merger and liquidation, respectively. (ii) Nonconsolidated subsidiaries Principal company SBCS Co., Ltd. Nonconsolidated subsidiaries’ total assets, ordinary income, net income and retained earnings have no significant impact on the consolidated financial statements.

(b) Application of the equity method

Japanese accounting standards also require any nonconsolidated subsidiaries and affiliates on which SMBC is able to exercise material influence over their financial and operating policies are to be accounted for by the equity method. (i) Nonconsolidated subsidiaries accounted for by the equity method — 4 companies Principal company SBCS Co., Ltd. Bangkok SMBC Systems Ltd. was excluded from nonconsolidated subsidiaries accounted for by the equity method due to liquidation. (ii) Affiliates accounted for by the equity method — 12 companies Principal companies Sumitomo Mitsui Asset Management (New York) Inc. QUOQ Inc. Sumitomo Mitsui Asset Management Company, Limited became an affiliated company accounted for by the equity method from this fiscal year because of the acquisition of shares due to merger with SAKURA INVESTMENT MANAGEMENT CO., LTD.

F-104 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Twenty companies including Daiwa Securities SMBC Co. Ltd. and Daiwa SB Investments Ltd. are excluded from affiliated companies accounted for by the equity method from this fiscal year due to corporate split. China United International Leasing Co., Ltd. was excluded from affiliated companies because it was sold. Also, Meiko National Securities Co., Ltd. was excluded from affiliated companies accounted for by the equity method because it became SMBC’s consolidated subsidiary due to acquisition of shares.

(iii) Nonconsolidated subsidiaries and afﬁliates that are not accounted for by the equity method Principal company Sumitomo Mitsui Asset Management Company (New York) Inc.

Net income and retained earnings of nonconsolidated subsidiaries and affiliates that are not accounted for by the equity method have no significant impact on the consolidated financial statements.

(i) The dates of year-end account closing of consolidated subsidiaries are as follows: September 30 ************ 5 Companies October 31 ************** 1 Company December 31************* 44 Companies January 31*************** 1 Company March 31**************** 63 Companies

As for the consolidated overseas subsidiary that was established in February 2003 and whose balance sheet date is December 31, the accounts were provisionally closed as of March 31 for the purpose of consolidation.

Appropriate adjustments were made for signiﬁcant transactions during the periods from their respective balance sheet dates to the consolidated closing dates.

(d) Valuation of consolidated subsidiaries’ assets and liabilities

In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to the minority stockholders, are evaluated using the fair value at the time SMBC acquired control of the respective subsidiaries.

(e) Amortization of goodwill

Goodwill on Sumitomo Mitsui Card Company, Limited is amortized using the straight-line method over ﬁve years and goodwill on other companies is charged or credited to income directly when incurred.

(2) Statement of cash ﬂows

For the purposes of the consolidated statement of cash ﬂows, cash and cash equivalents represent cash and due from banks.

F-105 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Reconciliation of the opening balance at the time of consolidation with respect to acquisition of the five companies including Meiko National Securities Co., Ltd. and MITSUI AUTO LEASING, LTD were as follows: Millions of Millions of yen U.S. dollars Assets ************************************************************** ¥ 191,318 $ 1,592 Lease assets ******************************************************* 82,346 685 Liabilities *********************************************************** ¥(150,698) $(1,254) Borrowed money *************************************************** (96,817) (805) Minority interests***************************************************** (26,881) (224) Goodwill************************************************************ 5,013 42 Acquisition costs for the five companies’ stocks(a) ************************* 18,751 156 Cash and due from banks of the five companies(b) ************************* (3,306) (28) (a) – (b) Cash expenditure for acquisition of the five companies *************** ¥ 15,444 $ 128

Signiﬁcant non-cash transactions (twenty-nine companies’ assets and liabilities that were excluded from consolidation due mainly to corporate split) were as follows: Millions of Millions of yen U.S. dollars

Assets ************************************************************** ¥2,865,787 $23,842 Lease assets ******************************************************* 996,596 8,291 Liabilities *********************************************************** ¥2,596,322 $21,600 Borrowed money *************************************************** 1,433,305 11,924

(3) Trading assets and liabilities

Financial instruments, such as derivatives and trading securities, which are held for the short-term in anticipation of market gains, are recorded at fair value. Such gains and losses are included in trading proﬁts or losses on the consolidated statement of operations. Trading assets and liabilities are recorded at trade date.

(4) Securities

As for securities other than trading purposes, debt securities that SMBC and consolidated subsidiaries have the intent and ability to hold to maturity (held-to-maturity securities) are carried at amortized cost (straight-line method) using the moving-average method.

Investments in nonconsolidated subsidiaries and afﬁliates that are not accounted for by the equity method are carried at cost using the moving-average method.

Securities other than trading purpose securities, held-to-maturity debt securities and investments in subsidiaries and affiliates are classified as ‘‘other securities’’ (available-for-sale securities). Stocks in other securities that have market value are carried at the average market prices during the final month of the fiscal year, and bonds and others that have market prices are carried at their fiscal year-end market prices (cost of securities sold is calculated using primarily the moving-average method). Other securities with no market prices are carried at cost or amortized cost using the moving-average method. Net unrealized gains (losses) on other securities, net of income taxes, are included in ‘‘Stockholders’ equity.’’

Securities included in money held in trust account are carried in the same manner as for securities mentioned above.

F-106 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(6) Hedge accounting Pursuant to the temporary treatment regulated by ‘‘Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’’ (JICPA Industry Audit Committee Report No. 24), SMBC applies ‘‘the risk adjustment approach’’ to hedging (Macro hedge) in accordance with the Industry Audit Committee Report No. 15 ‘‘Temporary Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry’’ issued by JICPA, abiding by the following requirements: (a) Loans, deposits and other interest-earning assets and interest-bearing liabilities as a whole shall be recognized as the hedged portfolio. (b) Derivatives as the hedging instruments shall effectively reduce the interest rate exposure of the hedged portfolio. (c) Effectiveness of hedging activities shall be evaluated on a quarterly basis. SMBC applies deferred hedge accounting. In order to hedge risk arising from volatility of exchange rates for stocks of subsidiaries and affiliates, and other securities (excluding bonds) denominated in foreign currency, SMBC applies deferred hedge accounting or fair value hedge accounting, on the conditions that the hedged security is specified in advance and that enough on-balance (actual) or off-balance (forward) liability exposure exists to cover the cost of the hedged security in foreign currency base. Certain interest swaps for the purpose of hedging are recorded on an accrual basis using the short-cut method (exceptional treatment for interest rate swaps) in view of consistency with the risk management policy. Certain consolidated subsidiaries use the deferred hedge accounting or the short-cut method. A consolidated domestic subsidiary (a leasing company) applies the accounting method that is permitted by the Industry Audit Committee Report No. 19 ‘‘Temporary Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Leasing Industry’’ issued by JICPA. Net amount of deferred unrealized gains on hedging instruments to which hedge accounting is applied is recognized as deferred profit on hedge and is included in Other liabilities. Gross deferred unrealized losses and gross deferred unrealized gains on hedging instruments at March 31, 2003, were ¥944,797 million ($7,860 million) and ¥1,094,799 million ($9,108 million), respectively.

(7) Non-accrual loans Loans are generally placed on non-accrual status when such loans are classiﬁed as Bankrupt, Effectively Bankrupt or Potentially Bankrupt by the self-assessment rule (see (10) Reserve for possible loan losses).

(8) Premises and equipment Premises and equipment are generally stated at cost less accumulated depreciation. SMBC computes depreciation for premises using the straight-line method over the estimated useful lives of the respective assets.

F-107 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

The depreciation for equipment is computed using the declining-balance method over the estimated useful lives of the respective assets. The estimated useful lives of major items are as follows: Buildings: 7 to 50 years Equipment: 2 to 20 years Depreciation of premises and equipment owned by consolidated subsidiaries is mainly computed using the straight-line method over the estimated useful lives of respective assets.

(9) Software costs Capitalized software for internal use is depreciated using the straight-line method over its estimated useful life (mainly ﬁve years) at SMBC and consolidated domestic subsidiaries, and is included in Other assets.

(10) Reserve for possible loan losses Reserve for possible loan losses of SMBC and major consolidated subsidiaries is provided as detailed below in accordance with the internal standards for write-offs and reserves. For claims on borrowers who have entered into bankruptcy, special liquidation proceedings or similar legal proceedings (‘‘bankrupt borrowers’’) or borrowers that are not legally or formally insolvent but are regarded as substantially in the same situation (‘‘effectively bankrupt borrowers’’), a reserve is provided based on the amount of claims, after the charge-off stated below, net of the expected amount of recoveries from collateral and guarantees. For claims on borrowers that are not currently bankrupt but are likely to become bankrupt in the future, a reserve is provided in the amount deemed necessary based on an overall solvency assessment of the claims, net of the expected amount of recoveries from collateral and guarantees. Pursuant to ‘‘Audit considerations with respect to the discounted cash flow method used to determine allowance for credit losses by banks and other financial institutions’’ (issued by JICPA on February 24, 2003), SMBC provides reserve for possible loan losses using the Discounted Cash Flows method as follows for claims to large borrowers of ‘‘Past due loans (3 months or more)’’ or ‘‘Restructured loans’’: (a) SMBC rationally estimates the cash flows of principal and interest, and measures their present values by discounting the cash flows using the initial contractual interest rate. (b) SMBC recognizes the difference between the present value and its book value as estimated losses and provides reserve for possible loan losses. For other claims, a reserve is provided based on the historical loan-loss ratio. For claims originated in specific countries, an additional reserve is provided for by the amount deemed necessary based on the assessment of political and economic conditions. Branches and credit supervision departments assess all claims in accordance with the internal rule for self- assessment of assets, and the Credit Review Department, independent from these operating sections, audits their assessment. The reserves are provided based on the results of these assessments. Reserve for possible loan losses of other consolidated subsidiaries for general claims is provided in the amount deemed necessary based on the historical loan-loss ratio, and for doubtful claims in the amount deemed uncollectible based on assessment of each claim. For collateralized or guaranteed claims on bankrupt borrowers and effectively bankrupt borrowers, the amount exceeding the estimated value of collateral and guarantees is deemed to be uncollectible and charged off

F-108 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued) against the total outstanding amount of the claims. The amount of charge-off was ¥1,251,553 million ($10,412 million).

(11) Reserve for possible losses on loans sold Reserve for possible losses on loans sold is provided for contingent losses arising from decline of market value of underlying collateral for loans sold to the Cooperative Credit Purchasing Company, Limited.

(12) Reserve for employee bonuses Reserve for employee bonuses is provided, in provision for payment of bonuses to employees, by the amount of estimated bonuses, which are attributable to the respective ﬁscal year.

(13) Reserve for employee retirement benefits Under the terms of SMBC’s retirement plan, substantially all employees are entitled to a lump sum payment at the time of retirement. The amount of the lump-sum payment is, in general, calculated based on length of service, basic salary at the time of retirement and reason for retirement. In addition, SMBC has defined benefit pension plans which cover substantially all employees. Reserve for employee retirement benefits is recorded based on an actuarial computation, which uses the present value of the projected benefit obligation and pension assets, due to employee’s credited years of services at the balance sheet date. Prior service costs are amortized using the straight-line method over certain years (mainly 10 years) within the average remaining service period of active employees. Unrecognized net actuarial gain or loss is amortized from the next fiscal year using the straight-line method over certain years (mainly 10 years) within the average remaining service period of active employees. Unrecognized net obligation from initial application of the new accounting standard for employee retirement benefits is amortized using the straight-line method over five years. Some domestic consolidated subsidiaries received an approval from Minister of Health, Labor and Welfare for exemption from future retirement benefit obligations with respect to the entrusted portion of the employee pension fund, in accordance with the implementation of the ‘‘Defined benefit enterprise pension plan law.’’ They apply the temporary treatment that is regulated by Article 47-2 of ‘‘Practical Guidelines of Accounting for Retirement Benefits (Interim Report)’’ (JICPA’s Accounting Committee Report No. 13), and derecognize retirement benefit liabilities on the entrusted portion and plan assets equivalent to the amount to be returned. The equivalent amount of return of plan assets was ¥23,906 million ($199 million) as of the fiscal year-end.

(14) Other reserves Other reserves required by special laws are reserve for contingent liabilities from ﬁnancial futures transaction of ¥18 million ($0 million) in accordance with Article 82 of the Financial Futures Transaction Law, and reserve for contingent liabilities from securities transaction of ¥631 million ($5 million) in accordance with Article 51 of the Securities Exchange Law.

(15) Translation of foreign currencies SMBC’s assets and liabilities denominated in foreign currencies and overseas branches’ accounts are translated into Japanese yen mainly at the exchange rate prevailing at the consolidated balance sheet date, with the exception of stocks of subsidiaries and afﬁliates translated at rates prevailing at the time of acquisition. Consolidated subsidiaries’ assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at their respective balance sheet dates.

F-109 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(16) Lease transactions Financing leases where the ownership of the property is deemed to be transferred to the lessee are capitalized, while other ﬁnancing leases are allowed to be accounted for in the same manner as operating leases. Lease assets are depreciated using the straight-line method over the lease term with estimated salvage value. Lease-related income is recognized on a straight-line basis over the full term of the lease, based on the contractual amount of lease fees per month.

(17) Appropriation of retained earnings The consolidated statement of stockholders’ equity reﬂects the appropriation of retained earnings approved by the board of directors and/or the general meeting of shareholders.

(18) Amounts per share Net income (loss) per share is computed by deducting dividends for preferred stock from net income (loss), divided by the weighted average number of shares of common stock, excluding treasury stock outstanding during each ﬁscal year. Declared dividends represent the cash dividends declared applicable to respective years, including dividends to be paid after the end of the year. From this ﬁscal year, SMBC applies ‘‘Accounting Standard for Earnings Per Share’’ (Financial Accounting Standards No. 2) and ‘‘Implementation Guidance for Accounting Standard for Earnings Per Share’’ (Financial Accounting Standards Implementation Guidance No. 4). Net loss per share calculated using the former manner is ¥10,433.31 ($86.80).

(19) Adoption of new accounting standards (a) In accordance with the amendment of the consolidated financial statements regulation and the Ordinance of Banking Law, presentation of financial statements was changed as follows: (i) Consolidated balance sheet Before March 31, 2002, ‘‘Pledged money for securities borrowing transactions’’ was included in ‘‘Other assets.’’ From this fiscal year, it is separately reported as ‘‘Receivables under securities borrowing transactions.’’ Consequently, ‘‘Other assets’’ decreased by ¥1,981,243 million ($16,483 million) and ‘‘Receivables under securities borrowing transactions’’ increased by the same amount as compared with the former manner. Also, from this fiscal year, ‘‘Pledged money for securities lending transactions’’ that was formerly reported as ‘‘Other liabilities’’ on the consolidated balance sheet is reported as ‘‘Payables under securities lending transactions.’’ (ii) Consolidated Statement of operations Before March 31, 2002, interest related to securities borrowing or lending transactions guaranteed by cash were included in ‘‘Other interest income’’ or ‘‘Other interest expenses’’. From this fiscal year, they are reported as ‘‘Interest on receivables under securities borrowing transactions’’ and ‘‘Interest on payables under securities lending transactions,’’ respectively. From this fiscal year, ‘‘Interest on bonds and convertible bonds’’ are reported as ‘‘Interest on bonds and bonds with subscription rights for shares’’.

F-110 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(iii) Consolidated statement of cash flows From this fiscal year, ‘‘Net change in pledged money for securities borrowing transactions’’ and ‘‘Net change in pledged money for securities lending transactions’’ are reported as ‘‘Net change in receivables under securities borrowing transactions’’ and ‘‘Net change in payables under securities lending transactions,’’ respectively. From this fiscal year, ‘‘Proceeds from issuance of subordinated bonds, convertible bonds and notes’’ and ‘‘Repayment of subordinated bonds, convertible bonds and notes’’ are reported as ‘‘Proceeds from issuance of subordinated bonds, bonds with subscription rights for shares’’ and ‘‘Repayment of subordinated bonds, bonds with subscription rights for shares’’ respectively. (b) From this fiscal year, SMBC applies ‘‘Accounting Standard for Treasury Stock and Reversal of Legal Reserves’’ (Financial Accounting Standards No 1). This new accounting standard does not have a material impact on the consolidated financial statements. Also, other capital surplus that was formerly included in ‘‘Retained earnings’’ is reported in ‘‘Capital surplus’’ from this fiscal year. As for the consolidated statement of cash flows, ‘‘Proceeds from the sale of parent bank stock held by subsidiaries’’ of ¥8,479 million ($71 million) that was separately reported is included in ‘‘Proceeds from sale of treasury stock’’ from this fiscal year.

3. Trading Assets Trading assets at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Trading securities******************************************** ¥ 225,610 $ 1,877 Derivatives on trading securities ******************************** 81 1 Derivatives on securities related to trading transactions ************* 121 1 Trading-related ﬁnancial derivatives ***************************** 3,060,803 25,464 Other trading assets ****************************************** 1,208,779 10,056 ¥4,495,396 $37,399

F-111 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

4. Securities

Securities at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Japanese government bonds* *********************************** ¥12,901,636 $107,335 Japanese local government bonds ******************************** 375,204 3,121 Japanese corporate bonds ************************************** 2,370,553 19,722 Japanese stocks** ******************************************** 3,326,510 27,675 Other******************************************************* 4,984,616 41,469 ¥23,958,521 $199,322

* Includes ¥999 million ($8 million) of unsecured loaned securities for which borrowers have the rights to sell or pledge and loaned securities of ¥140 million ($1 million) for which borrowers only have the rights to pledge and not to sell. As for the unsecured borrowed securities for which SMBC has the rights to sell or pledge and the securities which SMBC purchased under resale agreements, that are permitted to sell or pledge without restrictions, ¥2,084,632 million ($17,343 million) of securities are pledged, ¥99,624 million ($829 million) of securities are held in hand as of the consolidated balance sheet date. SMBC may pledge the borrowed securities as well. ** Japanese stocks and other include investments in nonconsolidated subsidiaries and afﬁliates of ¥23,010 million ($191 million).

5. Loans and Bills Discounted

Loans and bills discounted at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Bills discounted ********************************************** ¥ 735,614 $ 6,120 Loans on notes*********************************************** 7,709,991 64,143 Loans on deeds ********************************************** 44,777,340 372,524 Overdrafts*************************************************** 7,996,669 66,528 ¥61,219,617 $509,315

The following summarizes the non-accrual loans at March 31, 2003: Millions of March 31, 2003 Millions of yen U.S. dollars Bankrupt loans *********************************************** ¥ 199,794 $ 1,662 Non-accrual loans ******************************************** 2,665,675 22,177 Total non-accrual loans ************************************** ¥2,865,469 $23,839

The amounts above include the trusted amount with the Resolution and Collection Corporation of ¥40,811 million ($340 million), which will be treated as off-balancing.

In addition to the non-accrual loans, SMBC also classiﬁes past due loans (3 months or more) as substandard loans, and such loan balances at March 31, 2003 were ¥128,493 million ($1,069 million).

Restructured loans are loans for which SMBC has adjusted the terms of the loans in favour of borrowers as a means of ﬁnancial assistance. These restructured loans are also classiﬁed as substandard and amounted to ¥2,689,172 million ($22,372 million) at March 31, 2003.

F-112 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

6. Other Assets Other assets at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Accrued income ********************************************** ¥ 180,332 $ 1,500 Deferred assets*********************************************** 7,336 61 Financial derivatives ****************************************** 996,130 8,288 Other******************************************************* 974,086 8,104 ¥2,157,885 $17,953

7. Premises and Equipment Premises and equipment at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Land(*)***************************************************** ¥ 480,749 $ 4,000 Buildings *************************************************** 512,632 4,265 Equipment and others ***************************************** 499,227 4,153 Total ***************************************************** ¥1,492,609 $12,418 Accumulated depreciation ************************************** (572,532) (4,763) ¥ 920,076 $ 7,655

(*) Includes land revaluation excess for land referred to in Note 15.

8. Lease Assets Lease assets at March 31, 2003 were as follows: Millions of March 31, 2003 Millions of yen U.S. dollars Equipment and others ***************************************** ¥ 54,688 $ 455 Accumulated depreciation ************************************** (28,558) (238) ¥ 26,130 $ 217

9. Assets Pledged as Collateral Assets pledged as collateral at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Assets pledged as collateral Cash and due from banks and Deposits with banks *************** ¥ 75,268 $ 626 Trading assets********************************************** 990,965 8,244 Securities ************************************************* 11,457,673 95,322 Loans and bills discounted *********************************** 4,738,320 39,420 Other assets *********************************************** 1,140 9 Premises and equipment ************************************* 535 4

F-113 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of March 31, 2003 Millions of yen U.S. dollars Liabilities corresponding to assets pledged as collateral Deposits ************************************************** 21,038 175 Call money and bills sold ************************************ 7,952,599 66,161 Payables under repurchase agreements************************** 4,107,615 34,173 Payables under securities lending transactions******************** 4,189,794 34,857 Trading liabilities******************************************* 136,975 1,140 Borrowed money ******************************************* 2,847 24 Other liabilities ******************************************** 18,548 154 Acceptances and guarantees ********************************** 41,108 342

In addition to the assets presented above, the following assets were pledged as collateral for exchange settlements, initial margins of futures markets and certain other purposes at March 31, 2003: Millions of March 31, 2003 Millions of yen U.S. dollars Cash and due from banks and Deposits with banks ***************** ¥ 54,370 $ 452 Trading assets************************************************ 13,937 116 Securities *************************************************** 4,621,947 38,452 Loans and bills discounted ************************************* 781,138 6,499

Premises and equipment included surety deposits and intangibles of ¥114,961 million ($956 million) at March 31, 2003. Other assets included initial margins of futures markets of ¥14,814 million ($123 million).

10. Deposits

Deposits at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Current deposits ********************************************** ¥ 5,112,819 $ 42,536 Ordinary deposits********************************************* 27,478,086 228,603 Savings deposits********************************************** 1,336,725 11,121 Deposits at notice ******************************************** 3,618,589 30,105 Time deposits************************************************ 21,181,667 176,220 Negotiable certiﬁcates of deposit ******************************** 4,889,017 40,674 Other deposits *********************************************** 4,268,116 35,508 ¥67,885,022 $564,767

F-114 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

11. Trading Liabilities Trading liabilities at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Trading securities********************************************* ¥ 9,806 $ 82 Derivatives on trading securities ********************************* 78 1 Derivatives of securities related to trading transactions*************** 423 3 Trading-related ﬁnancial derivatives ****************************** 2,840,629 23,632 Other******************************************************* 454 4 ¥2,851,391 $23,722

12. Borrowed Money Borrowed money at March 31, 2003 consisted of the following: Millions of Average March 31, 2003 Millions of yen U.S. dollars rate* Bills rediscounted ************************************ ¥—$—— Other borrowings** ********************************** 1,427,000 11,872 2.39% ¥1,427,000 $11,872 2.39%

* Average rate represents the weighted average rate based on the balances and rates at respective year-end of SMBC and consolidated subsidiaries. ** Includes subordinated debt obligation of ¥877,609 million ($7,301 million). The repayment schedule within ﬁve years on borrowed money at March 31, 2003 is shown as follows:

Millions of yen 1 year or less 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years ¥270,322 ¥212,018 ¥79,709 ¥7,990 ¥69,539

Millions of yen 1 year or less 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years $2,249 $1,764 $663 $66 $579

F-115 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

13. Bonds

Bonds at March 31, 2003 consisted of the following:

March 31, 2003 Millions of Millions of Rate Issuer Description yen* U.S. dollars % Due

SMBC ***************** Straight bonds, payable in Yen ¥ 1,827,733 $15,206 0.51-1.74 May 2003-Mar. 2013 [30,000] Straight bonds, payable in Euro Yen 5,000 41 3.00 Mar. 2012 Straight bonds, payable in U.S. dollars 144,240 1,200 4.32-6.10 Nov. 2003-Sep. 2005 ($1,200,000 thousand) [60,100] Subordinated bonds, payable in Yen 240,000 1,997 1.95-2.62 Jun. 2010-Jun. 2012 Subordinated bonds, payable in Euro Yen 286,800 2,386 0.6125-2.72 Sep. 2008-Perpetual Subordinated bonds, payable in U.S. dollars 108,059 899 5.93-8.10 Mar. 2009-Jun. 2012 ($899,000 thousand) Consolidated subsidiaries:** Straight bonds, payable in Yen 48,504 403 0.08-10.00 Jan. 2003-Aug. 2022 [18,585] Straight bonds, payable in U.S. dollars 8,145 68 2.05-7.35 Jun. 2005-Jun. 2011 ($68,000 thousand) Straight bonds, payable in other foreign currency 4,484 37 4.35-5.61 May 2004-Jul. 2013 Subordinated bonds, payable in Yen 636,660 5,297 0-5.98 Mar. 2005-Perpetual Subordinated bonds, payable in U.S. dollars 129,215 1,075 2.86-8.50 Jun. 2009-Perpetual ($1,075,000 thousand) Subordinated bonds, payable in other foreign currency 2,293 19 5.49-7.50 Perpetual ¥ 3,441,137 $28,628

* Figures in ( ) are the balances in the original currency of the foreign currency denominated bonds, and ﬁgures in [ ] are the amounts to be redeemed within one year.

F-116 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

The redemption schedule within ﬁve years on bonds at March 31, 2003 is shown as follows:

Millions of yen 1 year or less 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years ¥108,685 ¥381,518 ¥617,635 ¥401,124 ¥420,788 Millions of U.S. dollars 1 year or less 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years $904 $3,174 $5,138 $3,337 $3,501

14. Other Liabilities

Other liabilities at March 31, 2003 consisted of the following: Millions of March 31, 2003 Millions of yen U.S. dollars Accrued expenses ******************************************* ¥ 119,257 $ 992 Unearned income ******************************************** 163,312 1,359 Income taxes payable **************************************** 32,518 271 Financial derivatives ***************************************** 729,487 6,069 Other****************************************************** 907,424 7,549 ¥1,952,000 $16,240

15. Land Revaluation Excess

SMBC revaluated its own land for business activities in accordance with the ‘‘Law Concerning Land Revaluation’’ (the ‘‘Law’’) effective March 31, 1998 and the law concerning amendment of the Law effective March 31, 2001. The income taxes corresponding to the net unrealized gains are deferred and reported in ‘‘Liabilities’’ as ‘‘Deferred tax liabilities for land revaluation,’’ and the net unrealized gains, net of deferred taxes, are reported as ‘‘Land revaluation excess’’ in ‘‘Stockholders’ equity’’.

Date of the revaluation

SMBC: March 31, 1998 and March 31, 2002

Certain consolidated subsidiaries: March 31, 1999 and March 31, 2002.

Method of revaluation (provided in Article 3-3 of the Law)

SMBC: Fair values were determined by applying appropriate adjustments for land shape and timing of appraisal to the values speciﬁed in Article 2-3, 2-4 or 2-5 of the Enforcement Ordinance of the Law concerning Land Revaluation (the Enforcement Ordinance No. 119) effective March 31, 1998.

Certain consolidated subsidiaries: Fair values were determined based on the values speciﬁed in Article 2-3 and 2-5 of the Enforcement Ordinance No. 119.

F-117 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

17. Stockholders’ Equity Capital stock consists of common stock and preferred stock. Common stock and preferred stock at March 31, 2003 are as follows:

Issued and Number of shares Authorized outstanding Common stock ********************************************* 100,000,000 54,811,805 Preferred stock (Type 1)************************************** 67,000 67,000 Preferred stock (Type 2)************************************** 100,000 100,000 Preferred stock (Type 3)************************************** 800,000 800,000 Preferred stock (Type 4)************************************** 250,000 — Preferred stock (Type 5)************************************** 250,000 — Preferred stock (Type 6)************************************** 300,000 — Total**************************************************** 101,767,000 55,778,805

At the merger on March 31, 2003, SMBC issued 67,000 shares of Preferred stock (Type 1), 100,000 shares of Preferred stock (Type 2), 800,000 shares of Preferred stock (Type 3) and 52,070,185 shares of Common stock. All of the preferred stock is noncumulative and nonparticipating for dividend payments, and shareholders of the preferred stock are not entitled to vote at a general meeting of shareholders except when the bill to pay the prescribed dividends to shareholders is not submitted to the general meeting of shareholders or the bill to pay the prescribed dividends to shareholders is rejected at the general meeting of shareholders. Annual dividends per share of preferred stock (Type 1, 2, 3) are paid to shareholders by ¥10,500, ¥28,500 and ¥13,700, respectively. As for liquidation distribution, shareholders of preferred stock (Type 1, 2, 3) receive ¥3,000 thousand, ¥3,000 thousand and ¥1,000 thousand per share, respectively, and do not have the right to participate in any further liquidation distribution. SMBC may, at any time, purchase and retire them out of earnings available for distribution to the shareholders. Shareholders of preferred stock (Type 1, 2, 3) may convert the preferred stock into common stock at any time excluding certain periods, from the issuance date to February 26, 2009, from August 1, 2005 to February 26, 2009 and from the issuance date to September 30, 2009, respectively, in each case subject to certain adjustments. The preferred stock (Type 1, 2) outstanding on February 26, 2009 will be mandatorily converted into common stock at the conversion ratio of ¥3,000 thousand divided by the higher of ¥500 thousand and the average market price of Sumitomo Mitsui Financial Group, Inc.’s common stock for a certain period preceding February 26, 2009. The preferred stock (Type 3) outstanding on September 30, 2009 will be mandatorily converted into common stock at the conversion ratio of ¥1,000 thousand divided by the higher of ¥258,330 and the average market price of Sumitomo Mitsui Financial Group, Inc.’s common stock for a certain period preceding September 30, 2009.

F-118 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

18. Fees and Commissions Fees and commissions for the year ended March 31, 2003 consisted of the following: Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Fees and commissions (income): Deposits and loans***************************************** ¥ 29,797 $ 248 Remittances and transfers *********************************** 113,396 943 Securities-related business*********************************** 30,822 256 Agency ************************************************** 15,325 127 Safe deposits ********************************************* 4,978 41 Guarantees *********************************************** 28,462 237 Credit card business**************************************** 86,145 717 Investment trusts ****************************************** 18,349 153 Other**************************************************** 96,957 807 ¥424,235 $3,529 Fees and commissions (expenses): Remittances and transfers *********************************** ¥ 21,789 $ 181 Other**************************************************** 52,467 437 ¥ 74,257 $ 618

19. Trading Income Trading income for the year ended March 31, 2003 consisted of the following: Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Trading proﬁts: Gains on trading securities ********************************** ¥ 9,190 $ 77 Gains on trading-related ﬁnancial derivatives ******************* 196,924 1,638 Other**************************************************** 381 3 ¥206,496 $1,718 Trading losses: Losses on securities related to trading transactions*************** ¥ 725 $ 6

F-119 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

20. Other Operating Income

Other operating income for the year ended March 31, 2003 consisted of the following: Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Gains on foreign exchange transactions *************************** ¥ 12,868 $ 107 Gains on ﬁnancial derivatives *********************************** 10,971 91 Gains on sale of bonds **************************************** 179,757 1,496 Gains on redemption of bonds ********************************** 61 1 Lease-related income ****************************************** 606,529 5,046 Other******************************************************* 136,847 1,138 ¥947,036 $7,879

21. Other Income

Other income for the year ended March 31, 2003 consisted of the following: Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Gains on sale of stocks and other securities *********************** ¥ 75,122 $ 625 Gains on money held in trust *********************************** 540 5 Equity in earnings of afﬁliates ********************************** 1,703 14 Gains on disposition of premises and equipment ******************* 5,578 46 Collection of written-off claims ********************************* 1,833 15 Gains on return of the entrusted portion of employee pension fund **** 4,413 37 Other******************************************************* 77,348 644 ¥166,541 $1,386

22. Other Operating Expenses

Other operating expenses for the year ended March 31, 2003 consisted of the following: Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Losses on sale of bonds *************************************** ¥ 39,140 $ 325 Losses on redemption of bonds ********************************* 351 3 Losses on devaluation of bonds ********************************* 2,362 20 Bond issuance costs******************************************* 1,767 15 Lease-related expenses **************************************** 543,446 4,521 Other******************************************************* 134,125 1,116 ¥721,193 $6,000

F-120 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

23. Other Expenses Other expenses for the year ended March 31, 2003 consisted of the following: Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Write-off of loans ******************************************** ¥364,605 $ 3,033 Losses on sale of stocks and other securities ********************** 169,144 1,407 Losses on devaluation of stocks and other securities **************** 509,205 4,236 Losses on money held in trust ********************************** 4,017 33 Transfer to reserve for possible losses on loans sold **************** 16,672 139 Losses on delinquent loans sold ********************************* 162,494 1,352 Losses on disposition of premises and equipment******************* 38,877 324 Amortization of unrecognized net transition obligation for employee retirement beneﬁts ****************************************** 23,158 193 Losses on disposal of software ********************************** 15,014 125 Other******************************************************* 43,832 365 ¥1,347,022 $11,207

24. Income Taxes (1) Signiﬁcant components of deferred tax assets and liabilities at March 31, 2003 were as follows:

Millions of March 31, 2003 Millions of yen U.S. dollars Deferred tax assets: Reserve for possible loan losses ****************************** ¥ 922,031 $ 7,671 Write-off of securities ************************************** 568,077 4,726 Net operation loss carryforwards ***************************** 442,212 3,679 Write-off of loans ***************************************** 324,328 2,698 Reserve for employee retirement beneﬁts ********************** 109,851 914 Net unrealized losses on other securities *********************** 10,713 89 Depreciation ********************************************** 9,425 79 Reserve for possible losses on loans sold ********************** 8,335 69 Other**************************************************** 91,906 765 Subtotal ************************************************* 2,486,882 20,690 Valuation allowance**************************************** (537,897) (4,475) Total deferred tax assets ************************************ ¥1,948,985 $16,215 Deferred tax liabilities: Leveraged lease ******************************************* ¥ (48,754) $ (406) Gains on securities contributed to employee retirement beneﬁts trust (25,328) (211) Undistributed earnings of subsidiaries ************************* (10,614) (88) Other**************************************************** (22,706) (189) Total deferred tax liabilities ********************************* (107,403) (894) Net deferred tax assets *************************************** ¥1,841,581 $15,321

F-121 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(2) A reconciliation of the effective income tax rate reﬂected in the accompanying consolidated statement of operations to the statutory tax rate for the year ended March 31, 2003 was as follows:

Statutory tax rate *********************************************************** 38.62% Valuation allowance ********************************************************* (24.23)% Change of the effective statutory tax rate due to the revision of the local tax law ******* 11.51% Other ********************************************************************* 1.79% Effective income tax rate ***************************************************** 27.70%

(3) With the implementation of the ‘‘Metropolitan ordinance regarding the imposition of enterprise taxes through external standards taxation on banks in Tokyo’’ (Tokyo Metropolitan Ordinance No. 145, April 1, 2000) (‘‘the metropolitan ordinance’’), enterprise taxes that were hitherto levied on taxable income are now levied on gross banking proﬁt.

On October 18, 2000, Sakura Bank and Sumitomo Bank filed a lawsuit with the Tokyo District Court against the Tokyo metropolitan government and the Governor of Tokyo seeking to void the metropolitan ordinance. They won the case eventually entirely on March 26, 2002 with a decision of the Tokyo District Court in the Bank’s favour, on the grounds that the metropolitan ordinance was illegal. The District Court ordered the metropolitan government to return to the Banks advance tax payments of ¥16,633 million ($138 million) and also awarded to the Banks damages of ¥200 million ($2 million). On March 29, 2002, the metropolitan government lodged an appeal with the Tokyo High Court against the decision, and on April 9, 2002, the plaintiff banks at the first trial including the Bank also lodged an appeal. The Bank won the second-trial case eventually on January 30, 2003 with a decision of the Tokyo High Court in SMBC’s favour, on the grounds that the metropolitan ordinance was illegal. The High Court ordered the metropolitan government to return to SMBC advance tax payments of ¥36,175 million ($301 million). On February 10, 2003, the metropolitan government lodged a final appeal with the Supreme Court against the decision, and on February 13, 2003, the plaintiff banks at the first trial including SMBC also lodged a final appeal.

It is the opinion of SMBC that the metropolitan ordinance is both unconstitutional and illegal. SMBC has asserted this opinion in the courts and the matter is still in litigation. The fact that during this ﬁscal year SMBC has applied the same treatment as in the previous year, accounting for enterprise taxes through external standards taxation on banks in Tokyo in accordance with the metropolitan ordinance, is because SMBC has deemed it appropriate at this stage to continue with the same accounting treatment as before. This accounting treatment does not constitute in any way an admission on the part of SMBC either of the constitutionality or of the legality of the metropolitan ordinance.

With the implementation of the metropolitan ordinance, enterprise taxes relating to banks in Tokyo were recorded in ‘‘Other expenses’’ in the amounts of ¥16,833 million ($140 million) for the year ended March 31, 2001 (sum of Sakura Bank and Sumitomo Bank), ¥19,862 million ($165 million) for the year ended March 31, 2002 and ¥18,269 million ($152 million) for the year ended March 31, 2003. As a result, ‘‘Income (loss) before income taxes’’ for the each ﬁscal year decreased (increased) by the corresponding amount as compared with the previous standards under which enterprise taxes were levied on taxable income. There is no impact on ‘‘Income taxes, current’’ as compared with the previous standards under which enterprise taxes were levied on taxable income. Consequently, stockholders’ equity decreased by ¥32,495 million ($270 million). Since the enterprise taxes in question are not included in the calculations for accounting for tax effects, there was a decrease in ‘‘Deferred tax assets’’ of ¥98,703 million ($821 million) as compared with the amount that would have been included if the enterprise taxes had been levied on taxable income instead of gross proﬁts. There was also a decrease in ‘‘Deferred tax liabilities for land revaluation’’ of ¥3,236 million ($27 million), and consequently stockholders’ equity decreased by ¥95,467 million ($794 million).

F-122 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

With the implementation of the ‘‘Municipal Ordinance regarding the imposition of enterprise taxes through external standards taxation on banks in Osaka’’ (Osaka Municipal Ordinance No. 131, June 9, 2000) (‘‘the municipal ordinance’’), enterprise taxes which were hitherto levied on taxable income are now levied on gross banking profit. On April 4, 2002, the Bank filed a lawsuit with the Osaka District Court against the Osaka municipal government and the Governor of Osaka seeking to void the municipal ordinance. With the implementation of the ‘‘Revision of Municipal Ordinance regarding the imposition of enterprise taxes through external standards taxation on banks in Osaka’’ (Osaka Municipal Ordinance No. 77, 2002) (‘‘the revised municipal ordinance 2002’’) on May 30, 2002, and the implementation of the ‘‘Revision of Municipal Ordinance regarding the imposition of enterprise taxes through external standards taxation on banks in Osaka’’ (Osaka Municipal Ordinance No. 14, 2003) (‘‘the revised municipal ordinance 2003’’) on April 1, 2003, the special treatment regarding the tax basis is to be applicable from the fiscal year starting on April 1, 2003. The enterprise taxes which the banks should pay to Osaka municipal government this term are subject to the supplementary provision 2 of the revised municipal ordinance 2003, which provides the banks shall pay the enterprise taxes based on the lesser of gross banking profit or taxable income. SMBC, therefore, is planning to file and pay the enterprise taxes based on taxable income. The fact that SMBC is planning to file and pay the enterprise taxes according to the revised municipal ordinance does not constitute in any way an admission on the part of SMBC either of the constitutionality or of the legality of the revised municipal ordinance 2002 and 2003 as well as the municipal ordinance. Since the enterprise taxes in question are not included in the calculations for accounting for tax effects, there was a decrease in ‘‘Deferred tax assets’’ of ¥48,699 million ($405 million) as compared with the amount that would have been included if the enterprise taxes had been levied on taxable income instead of gross profits. There was also a decrease in ‘‘Deferred tax liabilities for land revaluation’’ of ¥1,575 million ($13 million), and consequently stockholders’ equity decreased by ¥47,124 million ($392 million). (4) With the implementation of the ‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) on March 31, 2003, the tax basis of enterprise taxes, which was stipulated as ‘‘taxable income and liquidation income’’ by the 12th paragraph of Article 72 of the Local Tax Law before the revision, is to be a combination of ‘‘amount of added value,’’ ‘‘amount of capital’’ and ‘‘taxable income and liquidation income’’ from the fiscal year starting April 1, 2004. The enterprise taxes that have tax bases of the ‘‘amount of added value’’ and the ‘‘amount of capital’’ are not pertinent to the enterprise taxes that have tax bases of income-related amounts. The ‘‘Revision of the Local Tax Law’’ also stipulates that the metropolitan ordinance and the municipal ordinance are to be abolished from the fiscal year starting April 1, 2004. In connection with the ‘‘Revision of the Local Tax Law,’’ the effective statutory tax rate that SMBC and its domestic consolidated subsidiaries use in the calculations of deferred tax assets and liabilities from the fiscal year starting April 1, 2004 was changed, and thus, there was an increase in ‘‘Deferred tax assets’’ of ¥65,124 million ($542 million) and a decrease in ‘‘Income taxes, deferred’’ of ¥65,278 million ($543 million). There was also an increase in ‘‘Deferred tax liabilities for land revaluation’’ of ¥2,609 million ($22 million) and a decrease in ‘‘Land revaluation excess’’ of ¥2,621 million ($22 million). As for SMBC, the effective statutory tax rate used in the calculations of deferred tax assets and liabilities was changed from 38.62% to 40.46%. As a result, there was an increase in ‘‘Deferred tax assets’’ of ¥67,657 million ($563 million) and a decrease in ‘‘Income taxes, deferred’’ of the same amount. There was also an increase in ‘‘Deferred tax liabilities for land revaluation’’ of ¥2,634 million ($22 million) and a decrease in ‘‘Land revaluation excess’’ of the same amount.

F-123 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

25. Employee Retirement Benefits (1) Outline of employee retirement benefits SMBC and consolidated subsidiaries in Japan have contributory funded defined benefit pension plans such as contributory pension plans, qualified pension plans and lump-sum severance indemnity plans. They may grant additional benefits in cases where certain requirements are met when employees retire. SMBC and some consolidated subsidiaries in Japan contributed certain marketable equity securities to an employee retirement benefit trust. Some domestic consolidated subsidiaries received an approval from Minister of Health, Labor and Welfare for exemption from future retirement benefit obligations with respect to the entrusted portion of employee pension fund.

(2) Projected benefit obligation Millions of March 31, 2003 Millions of yen U.S. dollars Projected benefit obligation(A) ********************************** ¥(1,147,793) $(9,549) Pension assets(B) ********************************************* 718,888 5,981 Unfunded projected benefit obligation(C)=(A)+(B)****************** (428,904) (3,568) Unrecognized net obligation from initial application of the new accounting standard(D) ************************************** 42,668 355 Unrecognized net actuarial gain or loss(E) ************************ 346,134 2,880 Unrecognized prior service costs(F) ****************************** (52,701) (439) Net amount recorded on the consolidated balance sheet(G)=(C)+(D)+(E)+(F) *********************************** (92,802) (772) Prepaid pension cost (other assets)(H) **************************** —— Reserve for employee retirement benefits(G)–(H) ******************* ¥ (92,802) $ (772)

(3) Pension expenses Millions of March 31, 2003 Millions of yen U.S. dollars Service cost ************************************************* ¥ 26,163 $ 218 Interest cost on projected beneﬁt obligation *********************** ¥ 34,772 $ 289 Expected return on plan assets ********************************** (32,219) (268) Amortization of net obligation from initial application of the new accounting standard ***************************************** 23,158 193 Amortization of unrecognized net actuarial gain or loss************** 24,547 204 Amortization of prior service costs ****************************** (6,583) (55) Other (non-recurring additional retirement allowance paid and other)*** 9,811 82 Pension expenses ********************************************* ¥ 79,650 $ 663 Gains on return of the entrusted portion of employee pension fund **** (4,413) (37) Total ******************************************************* ¥ 75,237 $ 626

F-124 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(4) Assumptions The principal assumptions used in determining beneﬁt obligation and pension expenses at or for the year ended March 31, 2003 were as follows: (a) Discount rate: 1.7% to 3.0% (b) Expected rate of return on plan assets: 0.0% to 5.0% (c) Allocation of estimated amount of retirement beneﬁts: Allocated to each period by the straight-line method (d) Term to amortize prior service costs: Mainly 10 years (e) Term to amortize unrecognized net actuarial gain or loss: Mainly 10 years (f) Term to amortize unrecognized net obligation from initial application of new accounting standard: Mainly 5 years

Millions of yen March 31, 2003 Equipment Other Total Acquisition cost ***************************************** ¥55,751 ¥9,420 ¥65,171 Accumulated depreciation ********************************* 27,163 4,413 31,577 Net book value ***************************************** ¥28,587 ¥5,007 ¥33,594

Millions of U.S. dollars March 31, 2003 Equipment Other Total Acquisition cost **************************************** $464 $78 $542 Accumulated depreciation ******************************** 226 37 263 Net book value **************************************** $238 $41 $279

Future minimum lease payments excluding interests at March 31, 2003 were as follows:

Millions of March 31, 2003 Millions of yen U.S. dollars Due within one year ***************************************** ¥10,536 $ 88 Due after one year******************************************* 24,178 201 ¥34,714 $289

Total lease expenses for the year ended March 31, 2003 were ¥3,738 million ($31 million). Assumed depreciation charges for the year ended March 31, 2003 amounted to ¥3,440 million ($29 million). Assumed depreciation charges is calculated using the straight-line method over the lease term of the respective assets without salvage values. The difference between the minimum lease payments and the acquisition costs of the

F-125 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued) lease assets represents interest expenses. The allocation of such interest expenses over the lease term is computed using the effective interest method. Interest expenses for the year ended March 31, 2003 amounted to ¥279 million ($2 million).

(b) Lessor side

Millions of yen March 31, 2003 Equipment Other Total Acquisition cost **************************************** ¥38,239 ¥1,869 ¥40,109 Accumulated depreciation ******************************** 22,365 965 23,331 Net book value **************************************** ¥15,873 ¥ 903 ¥16,777

Millions of U.S. dollars March 31, 2003 Equipment Other Total Acquisition cost **************************************** $318 $16 $334 Accumulated depreciation ******************************** 186 8 194 Net book value **************************************** $132 $ 8 $140

Future lease payments receivable excluding interests at March 31, 2003 were as follows:

Millions of March 31, 2003 Millions of yen U.S. dollars Due within one year ***************************************** ¥ 6,043 $ 50 Due after one year******************************************* 11,550 96 ¥17,594 $146

Total lease income for the year ended March 31, 2003 was ¥374,816 million ($3,118 million). Depreciation charges for the year ended March 31, 2003 amounted to ¥306,999 million ($2,554 million). Interest income represents the difference between the additional amount of the lease payments receivable and estimated salvage values, and the acquisition costs of the lease assets. The allocation of such interest income over the lease term is computed using the effective interest method. Interest income for the year ended March 31, 2003 amounted to ¥70,330 million ($585 million).

(2) Operating leases (a) Lessee side Future minimum lease payments at March 31, 2003 were as follows:

Millions of March 31, 2003 Millions of yen U.S. dollars Due within one year ****************************************** ¥16,530 $137 Due after one year******************************************** 93,241 776 ¥109,772 $913

F-126 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(b) Lessor side

Future lease payments receivable at March 31, 2003 were as follows: Millions of March 31, 2003 Millions of yen U.S. dollars Due within one year ****************************************** ¥172 $ 1 Due after one year******************************************** 436 4 ¥609 $ 5

Future lease payments receivable of ¥3,162 million ($26 million) on the lessor side referred to in (1) and (2) above were pledged as collateral for borrowings at March 31, 2003.

27. Loan Commitments

Commitment line contracts on overdrafts and loans are agreements to lend to customers when they apply for borrowing, to a prescribed amount, as long as there is no violation of any condition established in the contracts. The amount of unused commitments was ¥28,977,879 million ($241,081 million), and the amount of unused commitments whose original contract terms are within one year or unconditionally cancelable at any time was ¥26,272,078 million ($218,570 million) at March 31, 2003.

Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily represent actual future cash ﬂow requirements. Many of these commitments have clauses that SMBC and consolidated subsidiaries can reject an application from customers or reduce the contract amounts in case economic conditions are changed, SMBC and consolidated subsidiaries need to secure claims or other events occur. In addition, SMBC and consolidated subsidiaries request the customers to pledge collateral such as premises and securities at the conclusion of the contracts, and take necessary measures such as grasping customers’ ﬁnancial positions, revising contracts when need arises and securing claims after the conclusion of the contracts.

28. Market Value of Marketable Securities

(1) Securities

The market value of marketable securities at March 31, 2003 was as follows:

In addition to ‘‘Securities’’ in the consolidated balance sheet, trading securities, negotiable certiﬁcates of deposit and commercial paper in ‘‘Trading assets’’, negotiable certiﬁcates of deposit in ‘‘Deposits with banks’’, and commercial papers and claims on loan trust in ‘‘Commercial paper and other debt purchased’’ are included in the amounts of following tables.

(i) Securities classiﬁed as trading purposes

Millions of March 31, 2003 Millions of yen U.S. dollars Consolidated balance sheet amount ****************************** ¥1,434,190 $ 11,932 Losses included in proﬁt/loss during the year ********************** 1,096 9

F-127 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(ii) Bonds classiﬁed as held-to-maturity with market value

Millions of yen Consolidated Net balance sheet Market unrealized March 31, 2003 amount value gains (losses) Gains Losses Japanese government bonds ****** ¥311,381 ¥315,404 ¥4,023 ¥4,023 ¥ — Japanese local government bonds** 23,091 23,920 828 828 — Corporate bonds**************** — ———— Other ************************ 41,246 42,244 998 1,104 105 Total ************************* ¥375,719 ¥381,569 ¥5,850 ¥5,956 ¥105

Millions of U.S. dollars Consolidated Net balance sheet Market unrealized March 31, 2003 amount value gains (losses) Gains Losses Japanese government bonds ****** $2,591 $2,624 $34 $34 $— Japanese local government bonds** 192 199 7 7 — Corporate bonds**************** — ———— Other ************************ 343 351 8 9 1 Total ************************* $3,126 $3,174 $49 $50 $1

Note: Market value is calculated by using market prices at the ﬁscal year-end.

(iii) Other securities with market value

Millions of yen Net Consolidated unrealized Acquisition balance sheet gains March 31, 2003 cost amount (losses) Gains Losses Stocks ************************* ¥ 3,140,569 ¥ 2,978,296 ¥(162,273) ¥110,464 ¥272,737 Bonds ************************* ¥14,024,014 ¥14,135,179 ¥ 111,164 ¥117,093 ¥ 5,928 Japanese government bonds ****** 12,516,061 12,590,255 74,193 79,479 5,286 Japanese local government bonds *** 342,798 352,112 9,314 9,415 101 Corporate bonds *************** 1,165,153 1,192,811 27,657 28,197 540 Other ************************** ¥ 4,476,699 ¥ 4,500,337 ¥ 23,637 ¥ 42,900 ¥ 19,262 Total ************************** ¥21,641,283 ¥21,613,812 ¥ (27,471) ¥270,458 ¥297,929

F-128 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of U.S. dollars Consolidated Net balance unrealized Acquisition sheet gains March 31, 2003 cost amount (losses) Gains Losses Stocks ******************************* $ 26,128 $ 24,778 $(1,350) $ 919 $2,269 Bonds******************************** $116,672 $117,597 $ 924 $ 974 $ 50 Japanese government bonds ************* 104,127 104,744 617 661 44 Japanese local government bonds ******* 2,852 2,929 77 78 1 Corporate bonds ********************* 9,693 9,924 230 235 5 Other ******************************** $ 37,244 $ 37,440 $ 197 $ 357 $ 160 Total********************************* $180,044 $179,815 $ (229) $2,250 $2,479

Notes: 1. Market value is calculated as follows: Stocks: Average market price during one month before the fiscal year-end Bonds and other: Market price at the fiscal year-end 2. Other securities with market value are considered as impaired if the market value decreases significantly below the acquisition cost and such decline is not considered as recoverable. The market value is recognized as the consolidated balance sheet amount and the amount of write-down is accounted for as valuation loss (impaired) for the current fiscal year. Valuation loss for this fiscal year was ¥496,396 million ($4,130 million). The rule for determining ‘‘significant decline’’ is as follows and is based on the classification of issuing company under self-assessment of assets. Bankrupt/Effectively bankrupt/Potentially bankrupt issuers : Market value is lower than acquisition cost. Issuers requiring caution : Market value is 30% or more lower than acquisition cost. Normal issuers : Market value is 50% or more lower than acquisition cost. Bankrupt issuers: Issuers that are legally bankrupt or formally declared bankrupt. Effectively bankrupt issuers: Issuers that are not legally bankrupt but regarded as substantially bankrupt. Potentially bankrupt issuers: Issuers that are perceived to have a high risk of falling into bankruptcy. Issuers requiring caution: Issuers that are identified for close monitoring. Normal issuers: Issuers other than the above four categories of issuers.

(iv) Bonds sold during the year ended March 31, 2003 that are classiﬁed as held-to-maturity There are no corresponding items.

(v) Other securities sold during the year ended March 31, 2003

Millions of yen Millions of U.S. dollars Sales Gains on Losses Sales Gains Losses Year ended March 31, 2003 amount sales on sales amount on sales on sales Other securities ********* ¥37,709,925 ¥232,122 ¥190,364 $313,726 $1,931 $1,584

F-129 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(vi) Securities with no available market value

Consolidated balance sheet amount Millions of March 31, 2003 Millions of yen U.S. dollars Bonds classiﬁed as held-to-maturity Nonlisted foreign securities ********************************** ¥ 652 $ 5 Other**************************************************** 7,463 62 Other securities Nonlisted foreign securities ********************************** ¥ 358,590 $2,983 Nonlisted bonds ******************************************* 1,176,885 9,791 Nonlisted stocks (excluding OTC stocks)*********************** 331,173 2,755 Other**************************************************** 137,045 1,140

(vii) Change of classiﬁcation of securities There are no corresponding items.

(viii) Redemption schedule of other securities with maturities and bonds classiﬁed as held-to-maturity

Millions of yen March 31, 2003 1 year or less 1 to 5 years 5 to 10 years Over 10 years Bonds **************************** ¥3,482,933 ¥ 8,134,230 ¥3,769,404 ¥ 260,826 Japanese government bonds********* 3,303,625 6,306,161 3,034,984 256,865 Japanese local government bonds **** 11,935 138,933 223,723 612 Japanese corporate bonds*********** 167,372 1,689,135 510,695 3,349 Other ***************************** ¥ 354,501 ¥ 2,879,026 ¥ 765,527 ¥ 880,974 Total ***************************** ¥3,837,434 ¥11,013,257 ¥4,534,931 ¥1,141,800

Millions of U.S. dollars March 31, 2003 1 year or less 1 to 5 years 5 to 10 years Over 10 years Bonds **************************** $ 28,976 $ 67,672 $ 31,359 $ 2,170 Japanese government bonds********* 27,484 52,464 25,249 2,137 Japanese local government bonds **** 99 1,156 1,861 5 Japanese corporate bonds*********** 1,393 14,052 4,249 28 Other ***************************** $ 2,949 $ 23,952 $ 6,369 $ 7,329 Total ***************************** $ 31,925 $ 91,624 $ 37,728 $ 9,499

(2) Money held in trust (i) Money held in trust classiﬁed as trading purposes

Millions of March 31, 2003 Millions of yen U.S. dollars Consolidated balance sheet amount ***************************** ¥1,629 $14 Gains included in proﬁt/loss during the year********************** 12 0

F-130 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(ii) Money held in trust classiﬁed as held-to-maturity There are no corresponding items.

(iii) Other money held in trust

Millions of yen Consolidated Net Acquisition balance sheet unrealized March 31, 2003 cost amount gains (losses) Gains Losses Other money held in trust ******** ¥23,044 ¥23,000 ¥(44) ¥510 ¥ 555 Millions of U.S. dollars Consolidated balance sheet Net unrealized March 31, 2003 Acquisition cost amount gains (losses) Gains Losses Other money held in trust********* $192 $191 $(0) $4 $4

(3) Net unrealized gains (losses) on other securities and other money held in trust

Millions of March 31, 2003 Millions of yen U.S. dollars Net unrealized gains (losses)************************************ ¥(27,585) $(229) Other securities ******************************************** (27,540) (229) Other money held in trust ************************************ (44) (0) (+) Deferred tax assets **************************************** 994 8 Net unrealized gains (losses) on other securities (before following adjustment)************************************************ ¥(26,590) $(221) (–) Minority interests****************************************** ¥ (5,003) $ (42) (+) Parent company’s interest in net unrealized gains (losses) on valuation of other securities held by afﬁliates accounted for by the equity method ********************************************* 27 (0) Net unrealized gains (losses) on other securities******************** ¥(21,559) $(179)

Note: Net unrealized gains (losses) included foreign currency translation adjustments on nonmarketable securities denominated in foreign currency.

F-131 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

29. Derivative Transactions (1) Interest rate derivatives

Millions of yen Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Transactions listed on exchange Interest rate futures: Sold************************* ¥ 59,749,099 ¥ 4,547,691 ¥ (103,623) ¥ (103,623) Bought ********************** 57,633,988 5,676,922 109,474 109,474 Interest rate options: Sold************************* ¥ 1,230,739 ¥ — ¥ 76 ¥ 76 Bought ********************** 600,964 205,802 (99) (99) Over-the-counter transactions Forward rate agreements: Sold************************* ¥ 13,389,231 ¥ 590,000 ¥ 1,076 ¥ 1,076 Bought ********************** 3,469,855 455,000 (500) (500) Interest rate swaps:*************** ¥305,031,482 ¥214,079,553 ¥ 250,498 ¥ 250,498 Receivable fixed rate/payable floating rate***************** 146,600,794 101,347,568 3,300,127 3,300,127 Receivable floating rate/payable fixed rate******************* 139,298,388 98,710,883 (3,040,142) (3,040,142) Receivable floating rate/payable floating rate***************** 18,990,156 13,890,272 850 850 Swaptions: Sold************************* ¥ 1,720,503 ¥ 798,669 ¥ (35,707) ¥ (35,707) Bought ********************** 1,523,512 1,106,731 26,355 26,355 Caps: Sold************************* ¥ 5,352,002 ¥ 3,331,808 ¥ (4,194) ¥ (4,194) Bought ********************** 3,616,992 2,536,627 6,682 6,682 Floors: Sold************************* ¥ 317,281 ¥ 207,279 ¥ (7,673) ¥ (7,673) Bought ********************** 351,199 195,322 9,027 9,027 Other: Sold************************* ¥ 42,316 ¥ 36,551 ¥ (6,526) ¥ (6,526) Bought ********************** 250,660 92,669 6,603 6,603 Total ************************** ¥ 251,467 ¥ 251,467

F-132 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of U.S. dollars Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Transactions listed on exchange Interest rate futures: Sold ***************************** $ 497,081 $ 37,834 $ (862) $ (862) Bought*************************** 479,484 47,229 911 911 Interest rate options: Sold ***************************** $ 10,239 $ — $ 1 $ 1 Bought*************************** 5,000 1,712 (1) (1) Over-the-counter transactions Forward rate agreements: Sold ***************************** $ 111,391 $ 4,908 $ 9 $ 9 Bought*************************** 28,867 3,785 (4) (4) Interest rate swaps:******************* $2,537,700 $1,781,028 $ 2,084 $ 2,084 Receivable fixed rate/payable floating rate**************************** 1,219,641 843,158 27,455 27,455 Receivable floating rate/payable fixed rate**************************** 1,158,888 821,222 (25,292) (25,292) Receivable floating rate/payable floating rate**************************** 157,988 115,560 7 7 Swaptions: Sold ***************************** $ 14,314 $ 6,645 $ (297) $ (297) Bought*************************** 12,675 9,207 219 219 Caps: Sold ***************************** $ 44,526 $ 27,719 $ (35) $ (35) Bought*************************** 30,091 21,103 56 56 Floors: Sold ***************************** $ 2,640 $ 1,724 $ (64) $ (64) Bought*************************** 2,922 1,625 75 75 Other: Sold ***************************** $ 352 $ 304 $ (54) $ (54) Bought*************************** 2,085 771 55 55 Total ****************************** $ 2,092 $ 2,092

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of operations. Derivative transactions to which hedge accounting method is applied are not included in the amounts above. Some consolidated overseas subsidiaries account for interest rate derivatives in accordance with local accounting standards. Such transactions are not included in the amounts above, of which their net unrealized gains amount to ¥827 million ($7 million). 2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial Futures Exchange and others. Market value of OTC transactions is calculated mainly using discounted present value and option pricing models.

F-133 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(2) Currency derivatives

Millions of yen Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Over-the-counter transactions Currency swaps******************* ¥16,433,656 ¥8,831,238 ¥(39,389) ¥(39,389) Currency swaptions Sold ************************** 330,238 330,238 (3,173) (3,173) Bought************************ 865,005 865,005 13,724 13,724 Forward foreign exchange ********** ¥ 2,935,846 ¥ 547,699 ¥ 1,518 ¥ 1,518 Currency options Sold ************************** ¥ 56,586 ¥ 13,166 ¥ (1,375) ¥ (1,375) Bought************************ 60,441 21,575 1,585 1,585 Other Sold ************************** ¥ 15,310 ¥ 2,855 ¥ 153 ¥ 153 Bought************************ ———— Total *************************** ¥(26,956) ¥(26,956)

Millions of U.S. dollars Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Over-the-counter transactions Currency swaps******************* $ 136,719 $ 73,471 $ (328) $ (328) Currency swaptions Sold ************************** 2,747 2,747 (26) (26) Bought************************ 7,196 7,196 114 114 Forward foreign exchange ********** $ 24,425 $ 4,557 $ 13 $ 13 Currency options Sold ************************** $ 471 $ 110 $ (11) $ (11) Bought************************ 503 179 13 13 Other Sold ************************** $ 127 $ 24 $ 1 $ 1 Bought************************ ———— Total *************************** $ (224) $ (224)

Notes: 1. The above transactions are valuated at market value and the valuation gains (losses) are accounted for in the consolidated statement of operations. The derivative transactions to which the hedge accounting method is applied and the transaction shown in Note 3 below, are not included in the amounts above. Some consolidated overseas subsidiaries account for currency derivatives in accordance with local accounting standards. Such transactions are not included in the amounts above, of which their net unrealized losses amount to ¥293 million ($2 million). 2. Market value is calculated mainly using discounted present value. 3. Forward foreign exchange and currency options which are of the following types are not included in the amounts above: (a) Those that are revaluated at fiscal year-end and the revaluation gains (losses) are accounted for in the consolidated statement of operations. (b) Those that are allotted to financial assets/liabilities denominated in foreign currency and whose market values are already reflected in the amount of the financial assets/liabilities on the consolidated balance sheet. (c) Those that are allotted to financial assets/liabilities denominated in foreign currency and the financial assets/liabilities are eliminated in the process of consolidation.

F-134 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

The contract amount of currency derivatives which are revaluated at the consolidated balance sheet date are as follows:

Millions of yen Millions of U.S. dollars March 31, 2003 Contract amount Contract amount Transactions listed on exchange Currency futures: Sold ******************************************* ¥— $— Bought***************************************** —— Currency options: Sold ******************************************* ¥— $— Bought***************************************** —— Over-the-counter transactions Forward foreign exchange *************************** ¥37,271,679 $310,081 Currency options: Sold ******************************************* ¥ 3,001,518 $ 24,971 Bought***************************************** 3,195,840 26,588

(3) Equity derivatives

Millions of yen Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Transactions listed on exchange Stock price index futures: Sold**************************************** ¥— ¥— ¥— ¥— Bought ************************************* —— — — Stock price index options: Sold**************************************** ¥— ¥— ¥— ¥— Bought ************************************* —— — — Over-the-counter transactions Equity options: Sold**************************************** ¥0 ¥— ¥0 ¥0 Bought ************************************* 0— (0)(0) Stock price index swaps: Receivable equity index/payable ﬂoating rate ****** ¥— ¥— ¥— ¥— Receivable ﬂoating rate/payable equity index ****** —— — — Other: Sold**************************************** ¥477 ¥ — ¥ 0 ¥ 0 Bought ************************************* 477 — 0 0 Total ***************************************** ¥0 ¥0

F-135 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of U.S. dollars Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Transactions listed on exchange Stock price index futures: Sold**************************************** $— $— $— $— Bought ************************************* —— — — Stock price index options: Sold**************************************** $— $— $— $— Bought ************************************* —— — — Over-the-counter transactions Equity options: Sold**************************************** $0 $— $0 $0 Bought ************************************* 0— (0)(0) Stock price index swaps: Receivable equity index/payable ﬂoating rate ****** $— $— $— $— Receivable ﬂoating rate/payable equity index ****** —— — — Other: Sold**************************************** $4 $— $0 $0 Bought ************************************* 4— 0 0 Total ***************************************** $0 $0

F-136 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(4) Bond derivatives Millions of yen Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Transactions listed on exchange Bond futures: Sold ************************************ ¥119,032 ¥ — ¥(388) ¥(388) Bought ********************************** 129,712 — (67) (67) Bond futures options: Sold ************************************ ¥ 4,000 ¥ — ¥ (8) ¥ (8) Bought ********************************** ———— Over-the-counter transactions Bond options: Sold ************************************ ¥ 16,010 ¥15,617 ¥ 0 ¥ 0 Bought ********************************** 4,719 3,125 0 0 Total************************************** ¥(463) ¥(463)

Millions of U.S. dollars Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Transactions listed on exchange Bond futures: Sold ********************************** $ 990 $ — $ (3) $ (3) Bought ******************************** 1,079 — (1) (1) Bond futures options: Sold ********************************** $ 33 $ — $ (0) $ (0) Bought ******************************** —— — — Over-the-counter transactions Bond options: Sold ********************************** $ 133 $130 $ 0 $ 0 Bought ******************************** 39 26 0 0 Total************************************ $ (4) $ (4)

F-137 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

(5) Commodity derivatives

Millions of yen Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Over-the-counter transactions Commodity swaps: Receivable fixed price/payable floating price *** ¥31,049 ¥27,358 ¥(1,607) ¥(1,607) Receivable floating price/payable fixed price *** 31,049 27,358 2,376 2,376 Commodity options: Sold ************************************ ¥ 6,369 ¥ 4,063 ¥(1,493) ¥(1,493) Bought ********************************** 6,369 4,063 1,521 1,521 Total************************************** ¥797 ¥797

Millions of U.S. dollars Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Over-the-counter transactions Commodity swaps: Receivable fixed price/payable floating price *** $258 $228 $ (13) $ (13) Receivable floating price/payable fixed price *** 258 228 20 20 Commodity options: Sold ************************************ $53 $34 $ (13) $ (13) Bought ********************************** 53 34 13 13 Total************************************** $7$7

(6) Credit derivative transactions Millions of yen Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Over-the-counter transactions Credit default options: Sold ************************************ ¥39,823 ¥22,790 ¥(1,767) ¥(1,767) Bought ********************************** 35,625 18,592 3,153 3,153 Other: Sold ************************************ ¥ 5,722 ¥ 1,099 ¥ 4,915 ¥ 4,915 Bought ********************************** 86,567 79,546 276 276 Total************************************** ¥ 6,578 ¥ 6,578

F-138 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of U.S. dollars Contract amount Market Valuation March 31, 2003 Total Over 1 year value gains (losses) Over-the-counter transactions Credit default options: Sold**************************************** $331 $190 $(14) $(14) Bought ************************************* 296 155 26 26 Other: Sold**************************************** $ 48 $ 9 $ 41 $ 41 Bought ************************************* 720 662 2 2 Total ***************************************** $55 $55

30. Segment Information (1) Business segment information

Millions of yen Banking Year ended March 31, 2003 business Leasing Other Total Elimination Consolidated I. Ordinary income (1) External customers ****** ¥ 2,537,431 ¥ 645,468 ¥ 367,037 ¥ 3,549,937 ¥ — ¥ 3,549,937 (2) Intersegment *********** 30,809 5,563 163,790 200,163 (200,163) — Total ********************* ¥ 2,568,240 ¥ 651,032 ¥ 530,827 ¥ 3,750,100 ¥ (200,163) ¥ 3,549,937 Ordinary expenses ************ 3,131,709 629,952 450,299 4,211,961 (194,514) 4,017,446 Ordinary proﬁt (loss) ********** ¥ (563,468) ¥ 21,080 ¥ 80,527 ¥ (461,860) ¥ (5,649) ¥ (467,509) II. Assets, depreciation and capital expenditure Assets ********************** ¥102,081,025 ¥ 114,096 ¥5,032,131 ¥107,227,253 ¥(4,832,616) ¥102,394,637 Depreciation ***************** 73,505 329,478 18,906 421,890 — 421,890 Capital expenditure *********** 85,829 319,716 30,115 435,660 — 435,660

F-139 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of U.S. dollars Banking Year ended March 31, 2003 business Leasing Other Total Elimination Consolidated I. Ordinary income (1) External customers ******* $ 21,110 $5,370 $ 3,054 $ 29,534 $ — $ 29,534 (2) Intersegment ************ 256 46 1,363 1,665 (1,665) — Total ********************** $ 21,366 $5,416 $ 4,417 $ 31,199 $ (1,665) $ 29,534 Ordinary expenses ************* 26,054 5,241 3,746 35,041 (1,618) 33,423 Ordinary proﬁt (loss) *********** $ (4,688) $ 175 $ 671 $ (3,842) $ (47) $ (3,889) II. Assets, depreciation and capital expenditure Assets *********************** $849,260 $ 949 $41,865 $892,074 $(40,205) $851,869 Depreciation ****************** 612 2,741 157 3,510 — 3,510 Capital expenditure ************ 714 2,660 250 3,624 — 3,624

Notes: 1. The business segmentation is classiﬁed based on SMBC’s internal administrative purpose. 2. ‘‘Other’’ includes securities, credit card, investment banking, loans, factoring, mortgage securities, venture capital, system development and information processing. 3. Ordinary income represents total income excluding gains on disposition of premises and equipment, collection of written-off claims, gain on sale of business operation and reversals of other reserves. Ordinary expenses represent total expenses excluding losses on disposition of premises and equipment, amortized cost of unrecognized net transition obligation for employee retirement beneﬁts and other extraordinary expenses. 4. As mentioned in Note 24 ‘‘Income Taxes’’, the effective tax rate was changed with the implementation of the ‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) on March 31, 2003. As a result, Assets of ‘‘Banking business’’ increased by ¥65,768 million ($547 million) and Assets of ‘‘Other’’ decreased by ¥643 million ($5 million) as compared with the assets that were calculated using the former effective tax rate.

(2) Geographic segment information Millions of yen The Asia and Year ended March 31, 2003 Japan Americas Europe Oceania Total Elimination Consolidated I. Ordinary income (1) External customers ¥ 3,077,413 ¥ 173,224 ¥ 174,353 ¥ 124,945 ¥ 3,549,937 ¥ — ¥ 3,549,937 (2) Intersegment ****** 66,249 48,741 32,144 26,912 174,048 (174,048) — Total **************** ¥ 3,143,663 ¥ 221,966 ¥ 206,498 ¥ 151,858 ¥ 3,723,986 ¥ (174,048) ¥ 3,549,937 Ordinary expenses ******* 3,818,706 149,894 134,985 82,652 4,186,238 (168,791) 4,017,446 Ordinary proﬁt (loss)***** ¥ (675,042) ¥ 72,071 ¥ 71,512 ¥ 69,205 ¥ (462,251) ¥ (5,257) ¥ (467,509) II. Assets**************** ¥94,867,563 ¥6,138,645 ¥2,167,625 ¥2,647,962 ¥105,821,796 ¥(3,427,159) ¥102,394,637

Millions of U.S. dollars The Asia and Year ended March 31, 2003 Japan Americas Europe Oceania Total Elimination Consolidated I. Ordinary income (1) External customers ** $ 25,602 $ 1,442 $ 1,451 $ 1,039 $ 29,534 $ — $ 29,534 (2) Intersegment ******* 552 405 267 224 1,448 (1,448) — Total***************** $ 26,154 $ 1,847 $ 1,718 $ 1,263 $ 30,982 $ (1,448) $ 29,534 Ordinary expenses******** 31,770 1,247 1,123 688 34,828 (1,405) 33,423 Ordinary proﬁt (loss) ***** $ (5,616) $ 600 $ 595 $ 575 $ (3,846) $ (43) $ (3,889) II. Assets **************** $ 789,248 $ 51,070 $ 18,033 $ 22,030 $ 880,381 $ (28,512) $ 851,869

F-140 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Notes: 1. The geographic segmentation is decided based on the degrees of following factors: geographic proximity, similarity of economic activities and relationship of business activities among regions. 2. The Americas includes the United States, Brazil and others; Europe includes the United Kingdom, France and others; Asia and Oceania includes Hong Kong, Singapore and others except Japan. 3. Ordinary income represents total income excluding gains on disposition of premises and equipment, recoveries of written-off claims, gain on sale of business operation and reversals of other reserves. Ordinary expenses represent total expenses excluding losses on disposition of premises and equipment, amortized cost of unrecognized net transition obligation for employee retirement beneﬁts and other extraordinary expenses. 4. As mentioned in Note 24 ‘‘Income Taxes’’, the effective tax rate was changed with the implementation of the ‘‘Revision of the Local Tax Law’’ (Legislation No. 9, 2003) on March 31, 2003. As a result, Assets of ‘‘Japan’’ increased by ¥65,124 million ($542 million) as compared with assets that were calculated using the former effective tax rate.

(3) Ordinary income from overseas operations

Millions of Year ended March 31, 2003 Millions of yen U.S. dollars Ordinary income from overseas operations(A) ******************* ¥ 472,523 $ 3,931 Consolidated ordinary income(B) ***************************** 3,549,937 29,534 (A)/(B)*************************************************** 13.3% 13.3%

Note: The above table shows ordinary income from transactions of SMBC’s overseas branches and overseas consolidated subsidiaries, excluding internal income.

31. Subsequent Event Appropriations of retained earnings The Board of Directors did not propose to pay cash dividends for the year ended March 31, 2003 and the shareholder did not express any objection to it.

F-141 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

32. Parent Company

(1) Nonconsolidated Balance Sheet

Sumitomo Mitsui Banking Corporation

Millions of March 31, 2003 Millions of yen U.S. dollars Assets Cash and due from banks ********************************** ¥ 2,775,176 $ 23,088 Deposits with banks*************************************** 513,417 4,271 Call loans and bills bought ********************************* 99,774 830 Receivables under resale agreements ************************* 78,679 655 Receivables under securities borrowing transactions ************* 1,981,243 16,483 Commercial paper and other debt purchased ******************* 92,436 769 Trading assets******************************************** 3,950,372 32,865 Money held in trust *************************************** 24,628 205 Securities *********************************************** 23,656,385 196,808 Loans and bills discounted ********************************* 57,282,365 476,559 Foreign exchanges **************************************** 724,771 6,030 Other assets ********************************************* 1,848,486 15,378 Premises and equipment *********************************** 707,303 5,884 Deferred tax assets**************************************** 1,814,625 15,097 Customers’ liabilities for acceptances and guarantees ************ 4,416,292 36,741 Reserve for possible loan losses ***************************** (2,074,797) (17,261) Total assets ********************************************* ¥97,891,161 $814,402 Liabilities Deposits ************************************************ ¥63,524,258 $528,488 Call money and bills sold ********************************** 8,889,756 73,958 Payables under repurchase agreements ************************ 4,124,094 34,310 Payables under securities lending transactions ****************** 4,777,187 39,744 Commercial paper **************************************** 50,500 420 Trading liabilities ***************************************** 2,425,632 20,180 Borrowed money ***************************************** 2,795,160 23,254 Foreign exchanges **************************************** 392,727 3,267 Bonds ************************************************** 2,624,099 21,831 Due to trust account*************************************** 5,953 50 Other liabilities******************************************* 1,428,432 11,884 Reserve for employee bonuses ****************************** 9,898 82 Reserve for employee retirement beneﬁts********************** 72,816 606 Reserve for possible losses on loans sold********************** 17,169 143 Other reserves******************************************** 18 0 Deferred tax liabilities for land revaluation ******************** 57,937 482 Acceptances and guarantees ******************************** 4,416,292 36,741 Total liabilities******************************************* ¥95,611,937 $795,440

F-142 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Millions of March 31, 2003 Millions of yen U.S. dollars Stockholders’ equity Capital stock********************************************* 559,985 4,659 Capital surplus ******************************************* 1,237,307 10,294 Retained earnings ***************************************** 414,536 3,449 Land revaluation excess ************************************ 85,259 709 Net unrealized losses on other securities ********************** (17,864) (149) Total stockholders’ equity ********************************* ¥ 2,279,223 $ 18,962 Total liabilities and stockholders’ equity ******************** ¥97,891,161 $814,402

(2) Nonconsolidated Statement of Income Sumitomo Mitsui Banking Corporation

Year ended March 31, 2003 Millions of Millions of yen U.S. Dollars Income Interest income: Interest on loans and discounts ************************************ ¥ 34,258 $ 285 Interest and dividends on securities ********************************* 40,074 334 Interest on receivables under resale agreements *********************** 28 0 Interest on receivables under securities borrowing transactions *********** 28 0 Interest on deposits with banks ************************************ 458 4 Other interest income ******************************************** 8,066 67 Trust fees ******************************************************** 50 Fees and commissions ********************************************* 31,783 265 Trading proﬁts **************************************************** 11,704 97 Other operating income ******************************************** 14,702 122 Other income***************************************************** 45,156 376 Total income***************************************************** ¥ 186,267 $ 1,550

F-143 SUMITOMO MITSUI BANKING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2003 — (Continued)

Year ended March 31, 2003 Millions of Millions of yen U.S. Dollars Expenses Interest expenses: Interest on deposits ********************************************** ¥ 6,277 $ 52 Interest on borrowings and rediscounts ****************************** 4,160 35 Interest on payables under repurchase agreements ********************* 454 4 Interest on payables under securities lending transactions *************** 1,828 15 Interest on bonds and convertible bonds ***************************** 1,266 10 Other interest expenses ******************************************* 2,136 18 Fees and commissions ********************************************* 8,338 69 Trading losses **************************************************** 103 1 Other operating expenses ******************************************* 5,120 43 General and administrative expenses ********************************** 36,549 304 Other expenses *************************************************** 13,923 116 Total expenses *************************************************** ¥ 80,157 $ 667 Income before income taxes**************************************** ¥ 106,109 $ 883 Income taxes: Current ******************************************************** ¥ 905 $ 8 Deferred ******************************************************* (77,836) (648) Net income ****************************************************** ¥ 183,040 $ 1,523 Per share data: Net income **************************************************** ¥68,437.74 $569.37 Net income — diluted ******************************************** 66,527.24 553.47 Declared dividends on common stock ******************************* —— Declared dividends on preferred stock (Type 1) *********************** —— Declared dividends on preferred stock (Type 2) *********************** —— Declared dividends on preferred stock (Type 3) *********************** ——

Note: Nonconsolidated statement of income for the year ended March 31, 2003 does not include the Bank’s proﬁt/loss from April 1, 2002 to March 16, 2003.

F-144 THIS PAGE IS INTENTIONALLY LEFT BLANK THIS PAGE IS INTENTIONALLY LEFT BLANK THE BANK

Sumitomo Mitsui Banking Corporation 1-2, Yurakucho 1-chome Chiyoda-ku, Tokyo 100-0006, Japan

TRUSTEE

JPMorgan Chase Bank, N.A. 4 New York Plaza, 15th Floor New York, New York 10004 United States

PRINCIPAL PAYING AGENT, PRINCIPAL PAYING AGENT, TRANSFER AGENT AND TRANSFER AGENT AND REGISTRAR FOR THE EURO BONDS REGISTRAR FOR THE DOLLAR BONDS AND CALCULATION AGENT FOR THE BONDS

JPMorgan Chase Bank, N.A., JPMorgan Chase Bank, N.A., acting through its New York Ofﬁce acting through its London Ofﬁce 4 New York Plaza, 15th Floor Trinity Tower, 9 Thomas More Street New York, New York 10004 London E1W 1YT United States United Kingdom

LEGAL ADVISERS

As to Japanese Law Nagashima Ohno & Tsunematsu (Counsel to the Bank) Kioicho Building 3-12 Kioicho Chiyoda-ku, Tokyo 102-0094, Japan

As to U.S. Law Davis Polk & Wardwell Sullivan & Cromwell LLP (Counsel to the Bank) (Counsel to the Initial Purchasers) Izumi Garden Tower, 33rd Floor Otemachi First Square 6-1, Roppongi 1-chome 5-1, Otemachi, 1-chome Minato-ku, Tokyo 106-6033, Japan Chiyoda-ku, Tokyo 100-0004, Japan

INDEPENDENT AUDITORS TO THE BANK

KPMG AZSA & Co. 1-2, Tsukudo-cho Shinjuku-ku, Tokyo 162-8551, Japan No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this Offering Circular. You must not rely on any unauthorized information or representations. This Offering Circular is an offer to sell only the Bonds offered hereby, but only under Sumitomo Mitsui circumstances and in jurisdictions where it is lawful to do so. The information contained in this Offering Banking Corporation Circular is current only as of its date.

U.S.$1,350,000,000 TABLE OF CONTENTS Fixed to Floating Rate Page Perpetual Subordinated Bonds Additional Information ******************* iii 4 Notice to Investors ********************** v 700,000,000 Forward Looking Statements ************** vii Fixed to Floating Rate Enforcement of Civil Liabilities************ vii Presentation of Financial Information ******* viii Perpetual Subordinated Bonds Summary ****************************** 1 Risk Factors**************************** 6 Use of Proceeds************************* 21 Exchange Rates ************************* 22 Consolidated Capitalization and Indebtedness ********************** 23 Selected Consolidated Financial and Other Information ************************** 24 Management’s Discussion and Analysis of Financial Condition and Results of Operations *************************** 28 Business ******************************* 55 Formation of the SMBC Group and the SMFG Group************************* 105 Principal Common Stockholders of SMFG *** 108 Management and Employees ************** 109 Goldman Sachs International Subsidiaries, Afﬁliates and Associated Companies *************************** 112 Morgan Stanley The Japanese Banking System ************* 115 Supervision and Regulation *************** 117 UBS Investment Bank Description of the Bonds ***************** 131 Taxation ******************************* 148 Daiwa Securities SMBC Europe Certain ERISA Considerations ************* 153 Offer and Resale ************************ 154 Deutsche Bank Validity of the Bonds ******************** 158 Certiﬁed Public Accountants ************** 158 JPMorgan Note Regarding Financial Information******* 159 Summary of Selected Differences Between Japanese GAAP and U.S. GAAP********* 160 Merrill Lynch International Index to the Financial Statements ********** F-1