2018 ANNUAL REPORT (April 1, 2017~March 31, 2018)

2018ANNUALREPORT 2018 ANNUAL REPORT (April 1, 2017~March 31, 2018)

SMBC信託銀行2018_EN_1-4.indd 4-1 2018/08/01 9:44 Please note that this material is an English translation of the Japanese original for reference purposes only without Public Notice of Financial Results any warranty as to its accuracy or completeness. Please be advised that there may be some disparities due Public notice of financial results required under Article 20 of the Banking Act is posted on SMBC Trust’s website to such things as differences in nuance that are inherent to the difference in languages although the English from the current fiscal year. translation is prepared to mirror the Japanese original as accurately as possible. ● http://www.smbctb.co.jp/contents/aboutus ● Click “Financial Report” under “Company Profile”

Website SMBC Trust Bank top page

https://www.smbctb.co.jp https://www.smbctb.co.jp/en

About SMBC Trust Bank

https://www.smbctb.co.jp/contents/aboutus https://www.smbctb.co.jp/en/contents/aboutus

This book is a disclosure material (explanation materials for business and property) which is prepared based on Article 21 of the Banking Act and Article 19 (2) of the Ordinance for Enforcement of the Banking Act.

SMBC信託銀行2018_EN_1-4.indd 2-3 2018/08/01 9:44 Corporate Management Corporate

Philosophy Management Vision Bank Outline Business Guidance Infrastructure Financial Data Disclosure Items Based on Pillar of Basel 1 2018/08/02 14:12 2 2 4 4 5 6 6 6 6 7 8 18 18 29 30 32 32 35 36 37 38 38 38 40 42 45 46 68 78 10 11 17 17 SMBC TRUST BANK ANNUAL REPORT 2018 Ⅲ of Basel Ⅲ and Media Appearances ｓ Our Business Holding Seminar Business Overview Risk Management System Corporate Governance System Customer Protection Management System Customer-Oriented Business Operation Internal Audit System Designated Dispute Resolution Institutions Compliance System Human Resource Strategy CSR(Corporate Social Responsibility) Activities Financial Data Disclosure Items Based on Pillar Core Values of SMBC Trust Bank Core Values of SMBC Top Message Plan Medium-term Management Company Profile History Major Shareholders Officers Office information Organization Chart Trust Bank Matters concerning Bank Agent of SMBC Bank for Trust Agreements Matters concerning Agent of SMBC Trust medium and small of management improving towards attitude Our enterprises and vitalizing communities

Contents Management Philosophy Corporate Financial Information Management Vision Bank Outline Business Guidance Corporate Infrastructure Confirmation This book is a disclosure material (explanation materials for business and property) which is prepared based on Article 21 of the Banking Act This book is a disclosure material (explanation materials for business and property) which is and Article 19 (2) of the Ordinance for Enforcement of the Banking Act. Please note that this material is an English translation of the Japanese original for reference purposes only without purposes for reference original the Japanese translation of English is an material this note that Please due disparities some be may there that advised be Please completeness. or accuracy its to as warranty any English the although languages in difference the to inherent are that nuance in differences as things such to as possible. as accurately the Japanese original is prepared to mirror translation SMBC信託銀行2018_EN_P001-007.indd 1-1 We approach our work with passion and passion with work our approach We Bank. Trust SMBC of employees as pride through work our in quality high pursue We positive thinking and actions. show and encounter every appreciate We work we everyone to gratitude and respect other each help and from learn We with. grow individually. We offer a sophisticated customer experience. services and products provide that We exceed customer expectations and enhance the value of SMBC Trust Bank. across relationships supportive develop We share We synergies. pursue and teams goals. our achieve and commitment common improve and care of standards high maintain We We professionals. trusted as expertise our customers, with dealings all in integrity demonstrate and think and act in the customer’s best interests. We refine and build on our strength to ensure iconic an remains Bank Trust SMBC that brand and customers’ first choice. takeWe our for responsibility actions as ambassadors ofambassadors Trust SMBC We Bank. use empowerment to make good all in judgments situations. 2018/08/01 9:05 ccountability rust xcellence espect assion ynergy conic I E S T A P R Seven core values to follow to values core Seven based on the spirit of spirit the on based

“Corporate Management Philosophy”. aim to be a company trusted by our by trusted company a be to aim

thoroughly use individual abilities as abilities individual use thoroughly We by society the including stakeholders on sound company placing importance management legal compliance services We provide value-added unique with them to our customers and evolve we create With due respect to diversity, employees a workplace that encourages to participating fully while professionals and reliability on built teamwork in responsibility SMBC Trust performs our business with the following SMBC Trust performs our business with Corporate Management Philosophy Corporate Management

Corporate Management Philosophy Management Corporate Core Values of SMBC Trust Bank Trust of SMBC Values Core SMBC Trust Bank has established the following core values to promote the to promote core values the following established Trust Bank has SMBC uphold these in all our dealings. We will First” approach Company’s “Customer Values” of Company alongside the “Five all departments of the values across SMBC Group. SMBC TRUST BANK ANNUAL REPORT 2018 2

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P001-006.indd 2 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Infrastructure Financial Data Disclosure Items Based on Pillar of Basel 3 2018/08/01 9:05 xcellence E SMBC TB “Core Values” espect R ynergy SMBC TRUST BANK ANNUAL REPORT 2018 S and Proactive Innovative First Customer assion Speed P Team SMFG Quality With the “Five Values” of SMBC With the “Five Values” rust and productive corporate culture. T Group at their foundation, the core values of SMBC Group at their foundation, the core values Trust Bank are aimed at fostering a unique, vibrant, Trust Bank are aimed at fostering a unique, ccountability conic A I SMBC Trust Bank’s core values as an Bank’s core values as SMBC Trust “Five Values” SMBC Group extension of SMBC Group’s “Five Values” extension of We approach our work with passion and and passion with work our approach We Bank. Trust SMBC of employees as pride through work our in quality high pursue We positive thinking and actions. show and encounter every appreciate We work we everyone to gratitude and respect other each help and from learn We with. grow individually. We offer a sophisticated customer experience. that services and products provide We exceed customer expectations and enhance the value of SMBC Trust Bank. across relationships supportive develop We share We synergies. pursue and teams goals. our achieve and commitment common improve and care of standards high maintain We We professionals. trusted as expertise our customers, with dealings all in integrity demonstrate and think and act in the customer’s best interests. We refine and build on our strength to ensure iconic an remains Bank Trust SMBC that brand and customers’ first choice. as actions our for responsibility take We ambassadors of SMBC Trust Bank. We use use We Bank. Trust SMBC of ambassadors empowerment to make all good in judgments situations. The Company’s core values have been distilled into The Company’s core each beginning with one letter seven key elements, represent of our “PRESTIA” brand, that together philosophy and guiding our corporate management act on. principles that form the way we think and SMBC信託銀行2018_EN_P001-006.indd 3 2018/08/01 9:05 Fumiaki Kurahara President and CEO June 2018 We sincerely thank for your continued support and continued support thank for your We sincerely the over taken have I 2018, June 19th Since with 2013 October in started Bank Trust SMBC and products premium customers our offer We – 2017 fiscal the per as progressing now are We and support continued your to forward look We patronage. President the as bank Trust SMBC of management and CEO. Banking Private General Societe bank predecessor the SMBC Group. In November (Japan) brought into integrating by forward step further a took we 2015, and Japan in business banking retail Citibank’s in Furthermore, “PRESTIA”. brand new a launching exchange outlet April 2018, we took over the foreign exchange business for individual customers (foreign Corporation counters) from Sumitomo Mitsui Banking EXCHANGE.” and started the business as “PRESTIA from originates that essence global a with services solutions of range broad a roots, international our innovative and functions, estate real and trust using from strong products and services with quality derived information extensive an and power organizational network of the SMBC Group. 2019 Medium-Term Management Plan. In the plan, we are to deliver SMBC Trust Bank’s unique value in order our utilizing demand, customer varied to respond to three edges: trusts, foreign currency, and real estate. business for years to come. Top Message Management Vision Management SMBC TRUST BANK ANNUAL REPORT 2018 4

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P001-006.indd 4 Philosophy Infrastructure Corporate Management Corporate

Philosophy Management Vision Bank Outline Business Guidance Infrastructure Financial Data Disclosure Items Based on Pillar of Basel 5 2018/08/01 9:05 SMBC TRUST BANK ANNUAL REPORT 2018 Increase assets under management (AUM) and create a unique identity through innovative business initiatives Become a major player in foreign-currency deposit offerings both at home and abroad Establish a solid revenue base by real estate business diversification Trusts Foreign currency Real estate to the three strengths personnel expenses without sanctuary three edges trusts, foreign(strengths): currency, real estate. and (2)Strong promotion of the cost restructuring (3)Steady conversion to a new IT system (1)Strengthening of business with our three edges as the pillars (2) changing the staff structure and cutting non- Complete the ongoing cost restructuring by fundamentally (1) largest amount of resources Establish a unique trust bank as the “edge of SMBC Group” by devoting the Become a trustbank that can contribute to customersinsideboth and outside of SMBCGroupby using our In alignment with these strategies, we will take various measures to improve profitability and strengthen our In alignment with these strategies, we will take various measures to improve Our key strategies based on the vision and management goals are as follows: Our key strategies based on the vision The management goals that we aim to achieve at the end of the three-year period are as follows: The management goals that we aim to Our five-year vision is as follows: Our five-year vision SMBC Trust Bank, a member of SMBC Group, has drawn out a three-year medium-term management plan plan management medium-term three-year a out drawn has Group, SMBC of member a Bank, Trust SMBC business foundation. 3. Key strategies 2. Management Goals 1. Vision Medium-term Management Plan Management Medium-term this plan perspective, from a longer-range our business In order to strengthen 2017- 2019 period. for the fiscal conditions and in consideration of the expected business based on our five-year vision set has been developed work on during the plan describes what we environment. The medium-term management changes in operating achieve the vision. first three years to SMBC信託銀行2018_EN_P001-006.indd 5 2018/08/01 9:05 (as of June 29, 2018)

Bank, the Company’s earliest earliest Company’s the Bank,

Chemical Trust Chemical an indirect wholly- is established as predecessor, Chemical Bank. owned subsidiary of is renamed Chase Trust BankChemical Trust Bank Chemical of renaming and merger a following Bank. to Bank Trust Chase acquires Generale Societe (Japan) Ltd., an indirect,form SG Private Banking financial French the of subsidiary wholly-owned asset and banking private starting institution, in Japan in full-scale. management businesses renamed is Ltd. (Japan) Banking Private SG Ltd. Societe Generale Private Banking (Japan) Societe Generale Private Banking (Japan) becomes Mitsui Sumitomo of subsidiary wholly-owned a Trust SMBC renamed is and Corporation Banking Bank Ltd. Akasaka, from office head its relocates Company The Tokyo. Minato-ku, Tokyo to Nishi-Shimbashi, Minato-ku, businessThe Company acquires the retail banking of Citibank Japan. foreign The Company takes over the operations of banking exchange counters from Sumitomo Mitsui Corporation. A subprime mortgage crisis takes place in the United States. Lehman Brothers collapses. The European debt crisis erupts. The Dodd-Frank Act is signed into law. The Bank of Japan implements a quantitative and qualitative easing policy. The Bank of Japan adopts a negative interest rate policy. Japanese financial Big Bang starts. The Bank of Japan introduces a zero interest rate policy. The Financial Services Agency is established. is removed. The Japanese government’s unlimited guarantee on bank deposits The Bank of Japan lifts the zero interest rate policy. Number of shares Stock ownership ratio 3,418 thousand shares 100.00% Number of shares Stock ownership ratio 900 thousand shares 100.00% Name of shareholders Sumitomo Mitsui Banking Corporation Name of shareholders Sumitomo Mitsui Banking Corporation Major economic topics 2007 2008 2010 2013 2016 1996 1999 2000 2005 2006 Major Shareholders (1) Common Stock (2) Non-voting Stock 1986/2 1996/11 2002/6 2010/1 2013/10 2015/3 2015/11 2018/4 History SMBC Group (as of June 29, 2018) (as of June 29, : 87.5 billion yen System Development, Information Processing Asset Management Lease Securities Credit Card, Consumer Finance Holding Company Bank Japan Research Institute Sumitomo Mitsui Asset Management SUMITOMO MITSUI BANKING CORPORATION SMBC TRUST BANK Sumitomo Mitsui Finance and Leasing SMBC NIKKO SUMITOMO MITSUI CARD CEDYNA FINACIAL CORPORATION SMBC CONSUMER FINANCE SUMITOMO MITSUI FINANCIAL GROUP SMBC Trust is a member of SMBC Group. SMBC Group provides high-value-added financial services toits customers throughcommercial banks, trust banks, securities companies, and othergroup companies. Company Profile Company Name Company Date of Established SMBC Trust Bank Ltd. : : February 25, 1986 Capital Bank Outline Bank SMBC TRUST BANK ANNUAL REPORT 2018 6

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P001-006.indd 6 Philosophy Infrastructure Corporate Management Corporate

Philosophy Management Vision Bank OutlineOutline Business Guidance Infrastructure Financial Data Disclosure Items Based on Pillar of Basel 2018/08/01 9:22 SMBC TRUST BANK ANNUAL REPORT 2018 Head of Corporate Planning Dept. Head of Compliance Management Dept. Assistant Head of PRESTIA Sales Division, Assistant Head of PRESTIA Exchange Division, and Head of Client Service Excellence Dept. Head of Private Banking Division and Head of Private Banking Dept. Head of PRESTIA System Integration Dept. and General Manager of PRESTIA Strategy Dept. Deputy Executive Officer in charge for Deputy Executive Officer Compliance Unit in charge for Deputy Executive Officer Risk management Unit Unit) (Wholesale Business Head of Real Estate Solutions Division and Head of Real Estate Trust Administration Dept. Head of Product Planning Dept. Head of Wholesale Business Planning Dept. and Head of Real Estate Development Dept. Head of Credit Dept. Head of System Planning Dept. Head of Branch Business Promotion Dept. Executive Officer in charge for Internal Audit Unit Executive Officer in charge Head of Real Estate Consulting Business Dept. (*) Nobuyuki Deguchi Tomoyuki Hashimoto Nobuya Nagasaka Hiroyuki Hayashi Head of Real Estate Screening Dept. Takahiko Hirashima Takako Sannohe Tetsuya Shindo Ryusuke Matsui Shigetoshi Hirata (Products Unit) Tadanobu Ono Head of Business Development Dept. Koichiro Kubo Head of Operations Planning Dept. Hong Zhou Aya Tsumura Head of Operations Division Hiroshi Kuroda Noriyuki Nishigami Yoshiyuki Omi Akiyoshi IshiiNobuhiko Dept. Tokyo III Head of Business Sakuragi Akio HasegawaI Head of Business Dept. Osaka Kazuma Ohashi Masatomo Odagawa Dai SugiyamaHiroshi Manabe Head of PRESTIA Sales Division Head of Human Resource Dept. Tsutomu Kamiya Head of Real Estate Business Division I Satoshi Joichi Rikako Sekine Mitsuru Miyoshi Head of Business Compliance Dept. Fellow * A position which engages in business operation as a subject matter expert Senior Director ‘RIJI’ Executive officer Executive

Deputy Executive Officer in charge for Consumer Business Unit Head of Real Estate Business Division II and Co-Head of PRESTIA Sales Division Statutory Auditor Statutory Auditor (Outside) Chairperson President and Representative Director, Chief Executive Officer Deputy Chief Representative Director, Chief Executive Executive and Deputy Officer Executive and Director, Deputy Chief Officer Deputy Chief Executive for Executive Officer in charge Senior Managing Director and Senior Managing Executive officer Executive Officer in charge for Consumer Business Unit Senior Managing Director and Senior Managing Executive officer Executive Officer in charge for Wholesale Business Unit Managing Director and Managing Executive Officer Staff Unit (Human Resource Dept.) and Corporate Services Unit Director and Executive officer Staff Unit and Markets Unit Managing Director and Managing Executive Officer Deputy Executive Officer in charge for Products Unit and Wholesale Business Unit Deputy Executive Officer in charge for Corporate Staff Unit (Human Resource Dept.) Executive Officer in charge for Corporate Executive Officer in charge for Corporate Executive Officer in charge for Operation Executive Officer in charge for Products Unit Executive Officer in charge Compliance Unit and Risk Management Unit & System Unit Director and Executive officer (as of June 29, 2018) (as of June 29, Hideo Goto Shinji Hoshino Kazuhiro Tsuchiya Takashi Nakamura Yoshikazu Morikawa Yuji Kage Outside Statutory Auditor Laurent Depus Director (Outside) Jun OhtaHaruo Funabashi Director (Outside Director) Director (Outside) Koji Saito Atsushi Oku Fumiaki Kurahara Koichi Noda Naoya Ishida Noburu Kato Hidetoshi Furukawa Shiro Tani Katsusuke Kuwahara Hiroshi Nishiyama Managing Executive officer Auditor Officers Officers Director SMBC信託銀行2018_EN_P007-022.indd 7 2018/08/01 9:22

I Shijo Bldg., 88 Kankoboko-cho, Shijodori- ･ 1F, 2F, Midosuji Diamond Bldg., 2-1-2 Nishi-Shinsaibashi, 1F, 2F, Midosuji Diamond Bldg., 2-1-2 Nishi-Shinsaibashi, Chuo-ku, Osaka-shi, Osaka Shinjuku Eastside Square, 6-27-30 Shinjuku, Shinjuku-ku, Tokyo 2F, Osaka Dai-ichi Seimei Bldg., 1-8-17 Umeda, Kita-ku, 2F, Osaka Dai-ichi Seimei Bldg., 1-8-17 Umeda, Osaka-shi, Osaka 1F, 2F, K Muromachi-Higashiiru, Shimogyo-ku, Kyoto-shi, Kyoto 1F, Tenjin-nishidori Business Center 2-8-30 Tenjin, Chuo- ku, Fukuoka-shi, Fukuoka 7F, Aobadai Tokyu Square South-2, 1-7-1 Aobadai, Aoba- 7F, Aobadai Tokyu Square South-2, 1-7-1 ku, Yokohama-shi, Kanagawa Kita- 1F, 7F, ABC-MART Umeda Bldg., 1-27 Chayamachi, ku, Osaka-shi, Osaka 6F Ginsen Sannomiya Bldg 1-5-1 Sannomiyacho Chuo-ku Kobe-shi Hyogo 2F, 7F, 8F, Yokohama First Bldg., 1-6-1 Kita-Saiwai, Nishi- 2F, 7F, 8F, Yokohama First Bldg., 1-6-1 Kita-Saiwai, ku, Yokohama-shi, Kanagawa Urawa- 1F, 3F, 4F, Urawa Nikko Bldg., 2-1-23 Takasago, ku, Saitama-shi, Saitama 2F, Hotel Takezono Ashiya, 10-1 Ohara-cho, Ashiya-shi, Hyogo 1F, S.Yoshimatsu Bldg., 8-1-17 Gokodori, Chuo-ku, Kobe-shi, Hyogo 1F, Sakae Parkside Place, 3-16-27 Nishiki, Naka-ku, Nagoya-shi, Aichi 1F, Hokkaido Bldg., 1-banchi, Kitanijonishi 4-chome, Chuo- ku, Sapporo-shi, Hokkaido 4F, 2002. K&S Bldg.,2-8 Minami-Fujisawa, Fujisawa-shi, Kanagawa 4F, 2002. K&S Bldg.,2-8 Minami-Fujisawa, Fujisawa-shi, Chiba-shi, Chiba 1F, Sencity Tower, 1000 Shinmachi, Chuo-ku, 4F, MIDLAND SQUARE 4-7-1 Meieki, Nakamura-ku, Nagoya- shi, Aichi Ashiya Shinsaibashi Nagoya Internet Branch Fujisawa (Mini Branch) Osaka Ekimae Kyoto Fukuoka Aobadai (Mini Branch) Umeda Kobe Sannomiya Office Nagoya Ekimae Sapporo Yokohama Chiba Urawa (as of June 29, 2018) (as of June 29,

Branches Head office

1F, 8F, Iwasaki Kichijoji Bldg., 1-15-9 Kichijoji-Honcho, Musashino-shi, Tokyo 1F, 2F, Nihonbashi Kato Bldg., 2-1-14 Nihonbashi, Chuo- ku, Tokyo 1F, Kubo Bldg., 2-9-2 Yoyogi, Shibuya-ku, Tokyo 1F, 2F, Dogenzaka Kabuto Bldg., 2-25-12 Dogenzaka, Shibuya-ku, Tokyo 2F, Okuzumi Bldg., 1-26-14 Jiyugaoka, Meguro-ku, Tokyo Midosuji Diamond Bldg. 2-1-2 Nishi-Shinsaibashi, Chuo- Midosuji Diamond Bldg. 2-1-2 Nishi-Shinsaibashi, ku, Osaka-shi, Osaka 1F, 8F, 9F, Ao, 3-11-7 Kita-Aoyama, Minato-ku, Tokyo 1F, 8F, 9F, Ao, 3-11-7 Kita-Aoyama, Minato-ku, 1F, 2F, HIROO REEPLEX B's, 5-15-27 Minami-Azabu, Minato-ku, Tokyo 1F, 2F, Suzuharu Bldg., 2-7-16 Akebono-cho, Tachikawa-shi, Tokyo 1F-4F, MLJ Shinjuku Bldg., 3-19-4 Shinjuku, Shinjuku-ku, Tokyo 19F, Shinjuku Maynds Tower, 2-1-1 Yoyogi, Shibuya-ku, Tokyo 1F, 3F, Gotanda Hata Bldg., 2-2-3 Higashi-Gotanda, Shinagawa-ku, Tokyo 1F, Ote Center Bldg., 1-1-3 Ohtemachi, Chiyoda-ku, Tokyo 1F, Ote Center Bldg., 1-1-3 Ohtemachi, Chiyoda-ku, Tokyo M2F, 2F, 3F, 4F, Kurosawa Bldg., 6-9-2 Ginza, Chuo-ku, 1F, 2F, Prudential Plaza, 2-13-10 Nagata-cho, Chiyoda-ku, Tokyo 1F, 2F, Prudential Plaza, 2-13-10 Nagata-cho, Minami- 1F, 2F, G-Bldg. Minami Ikebukuro 01, 1-19-5 Ikebukuro, Toshima-ku, Tokyo Shinjuku Eastside Square 6-27-30 Shinjuku, Shinjuku-ku, Tokyo Shinjuku Eastside Square 6-27-30 Shinjuku, Shinjuku-ku, Okinawa Tomari Port Terminal Bldg. 3-25-1 Maeshima, Naha-shi, 5F, Keihanshin Midosuji Bldg. 3-6-1 Dosho-machi, Chuo-ku, Osaka-shi, Osaka 5F, Keihanshin Midosuji Bldg. 3-6-1 Dosho-machi, Chuo-ku, Kichijoji (Mini Branch) Tachikawa Nihonbashi Hiroo (Global Branch) Shinjuku Minamiguchi Shinjuku Minamiguchi Branch Consulting Center (For PRESTIA GOLD PREMIUM & PRESTIA GOLD Customers) Shibuya Jiyugaoka (Mini Branch) Shinjuku Higashiguchi Ohtemachi Ginza Gotanda Ikebukuro Higashishinjuku Office Okinawa Office Kansai Office Osaka Office Aoyama Akasaka (Global Branch) Office information information Office 19F Nishi-Shimbashi Square, 1-3-1, Nishi-Shimbashi, Minato-ku, Tokyo 105-0003 TEL : 03-4510-4300 00-17 : 00 Business Hours 9 : FAX : 03-4510-4100 SMBC TRUST BANK ANNUAL REPORT 2018

Philosophy Management Vision Bank OutlineOutline Business Guidance Infrastructure Financial Data Disclosure Items Based on Pillar of Basel 2018/08/01 9:22 Tokyo ) Hokkaido Area Hokkaido Sapporo SMBC TRUST BANK ANNUAL REPORT 2018 035 Branch Code Aoyama Akasaka (Global Branch) Ikebukuro Ohtemachi Ginza Gotanda Shibuya Shinjuku Higashiguchi Shinjuku Minamiguchi/ Consulting Center (For PRESTIA GOLD PREMIUM & PRESTIA GOLD Customers) Tachikawa Nihonbashi Hiroo (Global Branch) Kichijoji (Mini Branch) Jiyugaoka (Mini Branch) Contact Us 020 731 037 021 022 030 033 040 003 029 052 038 003 072 Branch Code open 24 hours a day, 365 days a year ( Tokai Area Nagoya Nagoya Ekimae Telephone From Overseas 81-46-401-2100 (toll-charge) Telephone 0120-50-4189 (toll-free) 0120-110-330 (toll-free) For non-account holders For account holders ▶ ▶ 732 073 Branch Code Kansai Area Kanto Area Yokohama Aobadai (Mini Branch) Fujisawa (Mini Branch) Chiba Urawa Umeda Osaka Ekimae Shinsaibashi Ashiya Kobe / Sannomiya office Kyoto 046 047 736 075 071 025 049 024 048 735 043 Branch Code Branch Code ) Online ：０３００ Kyushu Area Internet Branch Fukuoka 090 045 (Bank code PRESTIA Branches, ATMs and PRESTIA Exchange and PRESTIA ATMs Branches, PRESTIA ATM (http://www.smbctb.co.jp/en/branch) currency exchange (https://www.smbctb.co.jp/gaika_ryougae)

Branch Code Branch Code ● ●

* See SMBC Trust’s website for ATM and currency exchange locations. See SMBC Trust’s website * SMBC信託銀行2018_EN_P007-022.indd 9 2018/08/01 9:22

PRESTIA Applications Support Dept. PRESTIA System Integration Dept. IT Infrastructure Planning Dept. System Development Dept. Real Estate Trust Administration Dept.

Dept. Dept. System Planning Dept. Legal Dept. Real Estate Consulting Real Estate Trust Sales Product Operations Dept. Real Estate Solutions Div. Service Operations Dept. Branch Audit Dept. Internal Audit Dept. Head Office Audit Dept.

Ⅲ Ⅳ Trust Operations Dept. Business Compliance Dept. Compliance Promotion Dept.

Banking Operations Dept. III Compliance Management Dept. Division Anti-Money Laundering Compliance Dept.

Operations Banking Operations Dept. I Operations & System Unit

Real Estate Appraisal Dept. Office Div.II Operations Promotion Dept. Real Estate Support Dept., Osaka Business Dept., Nagoya Business Dept., Tokyo Business Dept., Tokyo Real Estate Support Dept.II Audit & Supervisory Board Wholesale Business Unit Wholesale Business Real Estate Business Real Estate Support Dept.I Operations Migration Dept. Audit & Supervisory Board Audit & Supervisory Board members/ Real Estate Screening Dept. Operations Planning Dept.

Real Estate Investment Advisory Dept. Audit Unit

Real Estate Development Dept. Compliance Unit

Div.I Wholesale Business Planning Dept. 神戸営業部東京営業第一部東京営業第二部大阪営業第一部大阪営業第二部 Business Dept., Kobe Business Dept., Tokyo I Business Dept., Osaka II Business Dept., Osaka I Business Dept., Tokyo II Real Estate Business

Client Service Excellence Dept. Decision Management Dept. Board of Directors Executive Committee Administrative Services Dept. Shareholders Meeting Corporate Services Unit Div. Each Foreign Exchange Counter Product Process Dept. Product Development Dept.

(as of June 29, 2018) (as of June 29, Digital Banking Dept. Trust Execution Dept. Risk Manageme nt Unit Exchange Promotion Dept. Banking Solutions Dept. Corporate Staff Unit Branch Business Promotion Dept. Fund Management Dept. Private Wealth Promotion Dept. Trust Solution Business Dept. Center Dept. PRESTIA Call Products Unit Internet Branch Each Branch Consumer Marketing Dept. Trust Management Dept. Loan Promotion Dept Remote Sales Dept. Consumer Business Control Dept. Portfolio Solutions Dept. Consumer Business Planning Dept. Product Planning Dept. Consumer Business Unit Consumer Business Training Dept. Credit Dept. Cost Control Dept. Investment Research Dept. Risk Management Dept. Financial Planning Dept. Human Resources Dept. Corporate Planning Dept. Public Relations & CSR Dept. Business Transformation Dept.

Investment & Loan Dept. Business Development Dept. Dept.,Osaka PRESTIA Strategy Planning Dept. Private Banking Investment & Loan Planning Dept. Corporate Employees Business Dept.

Customer Treasury Dept. Operational Risk Management Dept. Private Banking Div.Div. PRESTIA Sales Exchange PRESTIA Private Banking Dept. Treasury Dept. Markets Unit

Organization Chart Organization SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank OutlineOutline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 10 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank OutlineOutline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 2018/08/01 9:22 (As of May 31, 2018) (As of May 31, SMBC TRUST BANK ANNUAL REPORT 2018 Planning Dept.,Retail Banking Unit Financial Consulting Dept.,Banking Unit Head Office Jimbocho Branch Kasukabe Branch Niigata Branch Nagano Branch Ueda Branch Ushiku Branch Tokyo Chuo Branch Suwa Branch Yako Branch Oyama Branch Ginza Branch Maebashi Branch Kameari Branch Kitami Branch Hikawadai Branch Ota Branch Nihonbashi-Higashi Branch Kumagaya Branch Kawaguchi Branch Urawa Branch Okegawa Branch Kamifukuoka Branch Sakado Branch Nerima Branch Chiba Branch Narashino Branch Kisarazu Branch Sakura Branch Motoyawata Branch Yotsukaido Branch Chiba Newtown Branch Nishiogikubo Branch Koenji Branch Gakugeidaigaku-Ekimae Branch Kamata-Nishi Branch Trade Name or Name of Agent Trust Bank Offices that the Bank Agent Carries Agent Bank the that Offices OutBank Agency Services for SMBC Name of the Business Office or or Office Business the of Name

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Matters concerning Bank Agent Bank Agent concerning Matters Trust Bank of SMBC Sumitomo Mitsui Banking Corporation (SMBC) Sumitomo Mitsui Banking Corporate Overview Corporate

For the reinforcement of corporate governance, governance, corporate of reinforcement the For The Board of Directors operates under the authority The Board of Directors operates under We are a company with Audit & Supervisory Board Board Supervisory & Audit with company a are We As the trust bank of SMBC Group, we operate under we operate bank of SMBC Group, As the trust the Company has also established other committees, committees, other established also has Company the “Risk the and Committee” “Compliance the as such the establishing by and, Committee,” Management Customer-Oriented of Promotion the for “Committee the reinforcing been have we Conduct,” Business framework for our customer-first approach. of the Chairman for the proper role-sharing with the the with role-sharing proper the for Chairman the of execution of charge in is who CEO, and President and members 13 of consists Board The business. of management Company’s the on decisions makes how supervises and execution, business and policy outside electing By duties. their execute directors our effectiveness the strengthens Company the directors, the established has Board The supervision. the of our of comprised (EXCO) Committee Executive President the assists EXCO The officers. executive business of execution on decisions make to CEO and executive an matters the Of control. internal on and to relevant ones the on, decides or performs officer by determined policy management Company’s the at reported or resolved, discussed, are Board the policies, plans, EXCO meetings. Those matters include delegated by the budgets, and other important matters Board. (ASB) and, as such, have elected three ASB members, (ASB) and, as such, members. two except Company the outside from all and directors our way the review members ASB Our attending by duties their out carry officers executive Directors, of Board the as such meetings important directors, our from reports business receiving and documents, approval-granting inspecting Department Audit Internal from debriefing receiving and the accounting auditor. the group-wide business units and CxO systems of of systems CxO and units business group-wide the SMBC Group. SMBC信託銀行2018_EN_P007-022.indd 11 2018/08/01 9:22 Kadoma Branch Ibaraki Branch Matsubara Branch Kishiwada Branch Konandai Branch Zushi Branch Sano Branch Kaizuka Branch Izumiotsu Branch Izumi Branch Sakai Branch Hamadera Branch Otori Branch Sennan Branch Kuzuha Branch Korigaoka Branch Minoo Branch Senbokutoga Branch Minamisenri Branch Tsukimino Branch Esaka Branch Kongo Branch Toride Branch Mitsukyo Branch Gyotoku Branch Tokyo Main Office Ningyocho Branch Shinbashi Branch Kakio Branch Kojimachi Branch Kanda Branch Kandaekimae Branch Shinjuku Branch Seijo Branch Nakano Branch Ikebukuro Branch Akabane Branch Otsuka Branch Hakusan Branch Asakusa Branch Katsushika Branch Shinkoiwa Branch Shibuya-Ekimae Branch Toritsudaigakuekimae Branch Denenchofu Branch Ebara Branch Kamata Branch Izumino Branch Tsukuba Branch Marunouchi Branch 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 Shonai Branch Kosaka Branch Tokuan Branch Kawachinagano Branch Tondabayashi Branch Fujiidera Branch Yao Branch Wakaeiwata Branch Shinishikiri Branch Hirakata Branch Neyagawa Branch Moriguchi Branch Toyonaka Branch Ikeda Branch Takatsuki Branch Higashiosaka Branch Sunamachi Branch Fukaebashi Branch Teradacho Branch Senzoku Branch Komagawacho Branch Senbayashi Branch Keihan-Kyobashi Branch Akagawacho Branch Juso Branch Joto Branch Temmabashi Branch Tenroku Branch Minamimorimachi Branch Umeda Branch Utajimabashi Branch Shikanjima Branch Taishoku Branch Itachibori Branch Semba Branch Minato Branch Nishinoda Branch Hirano Branch Kohama Branch Bishoen Branch Tennojiekimae Branch Namba Branch Tamatsukuri Branch Ikuno Branch Tsuruhashi Branch Uemachi Branch Imazato Branch Bingomachi Branch Osaka Head Office Osaka Head Hatanodai Branch 88 87 86 85 84 83 82 81 80 79 78 77 76 75 74 73 72 71 70 69 68 67 66 65 64 63 62 61 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45 44 43 42 41 40 39 SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank OutlineOutline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 12 12 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank OutlineOutline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 13 2018/08/01 9:22 SMBC TRUST BANK ANNUAL REPORT 2018 Kanazawa Branch Itayado Branch Suma Branch Nishinomiya Branch Tarumi Branch Koshienguchi Branch Shukugawa Branch Nishinomiya-Kitaguchi Branch Koto Branch Takarazuka Branch Sakasegawa Branch Ashiya Branch Ashiya-Ekimae Branch Kouhoku New Town Branch Kitasuzurandai Branch Sanda Branch Sasayama Branch Fujiwaradai Branch Nagata Branch Nagoyaekimae Branch Toyohashi Branch Gifu Branch Nagoya-Sakae Branch Sannomiya Branch Sumoto Branch Amagasaki Branch Tsukaguchi Branch Rokko Branch Sonoda Branch Mukonoso Branch Akashi Branch Okubo Branch Kakogawa Branch Higashikakogawa Branch Befu Branch Takasago Branch Miki Branch Nishiwaki Branch Midorigaoka Branch Osaka-Nishi Branch Hojo Branch Tengachaya Branch Abeno Branch Nishitanabe Branch Himeji Branch Shikama Branch Hirohata Branch Aboshi Branch Tatsuno Branch Toyooka Branch 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 Senju Branch Branch Nakamurabashi Kameido Branch Shimotakaido Branch Aoyama Branch Shinjukunishiguchi Branch Takahatafudo Branch Takashimadaira Branch Kitano Branch Azabu Branch Takadanobaba Branch Nishikasai Branch Hino Branch Hikarigaoka Branch Hiroo Branch Musashisakai Branch Ryokuentoshi Branch Sapporo Branch Nada Branch Konan Branch Sumiyoshi Branch Mikage Branch Sendai Branch Kobe-Ekimae Branch Minatogawa Branch Hyogo Branch Yokohama-Chuo Branch Shinyokohama Branch Funabashi Branch Tsunashima Branch Kanazawabunko Branch Shizuoka Branch Tama Plaza Branch Seisinchuo Branch Kobegakuentoshi Branch Rokko Island Branch Soka Branch Koshigaya Branch Tokorozawa Branch Fujisawa Branch Yamato Branch Suzurandai Branch Niizashiki Branch Musashinakahara Branch Shiki Newtown Branch Itami Branch Kawanishi Branch Shin-Yurigaoka Branch Ogikubo Branch Mitaka Branch 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 139 SMBC信託銀行2018_EN_P007-022.indd 13 2018/08/01 9:22 Aobadai Branch Koshien Branch Warabi Branch Yokohama Branch Atsugi Branch Mizonokuchi Branch Kyodo Branch Onomichi Branch Niihama Branch Hiroshima Branch Oizumi Branch Asakusabashi Branch Kinshicho Branch Roppongi Branch Mita-Dori Branch Tsukiji Branch Shimoigusa Branch Hanakoganei Branch Fuchu Branch Hibiya Branch Yukigaya Branch Kyobashi Branch Eifukucho Branch Kasumigaseki Branch Koiwa Branch Nippori Branch Machiya Branch Nishiarai Branch Okayama Branch Gotanda Branch Shibuya Branch Jiyugaoka Branch Ebisu Branch Sakurashinmachi Branch Shinjukudori Branch Musashiseki Branch Kunitachi Branch Hatagaya Branch Ikebukuro-Higashiguchi Branch Tokiwadai Branch Oji Branch Takamatsu Branch Narimasu Branch Mejiro Branch Akishima Branch Hamamatsucho Branch Kokuryo Branch Nagayama Branch Tama Branch 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 Kofu Branch Hamamatsu Branch Nagoya Branch Kamimaezu Branch Motoyama Branch Kariya Branch Toyota Branch Enmachi Branch Kyoto Branch Matsudo Branch Kashiwa Branch Kobe Main Office Toyama Branch Fukui Branch Yachiyo Branch Shinosaka Branch Kawagoe Branch Kagoshima Branch Shijo Branch Fushimi Branch Omiya Branch Kotesashi Branch Midousuji Branch Doujima Branch Okamoto Branch Takatsuki-Ekimae Branch Kuise Branch Tachibana Branch Nara Branch Wakayama Branch Heijo Branch Yamatokooriyama Branch Gakuenmae Branch Yokohama-Ekimae Branch Narita Branch Urayasu Branch Itabashi Branch Senri-Chuo Branch Nakamozu Branch Ibarakinishi Branch Yamamoto Branch Hibarigaoka Branch Hiratsuka Branch Kamiohoka Branch Kanazawahakkei Branch Futamatagawa Branch Tsurumi Branch Azamino Branch Higashikanagawa Branch 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank OutlineOutline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 14 14 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank OutlineOutline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 15 2018/08/01 9:22 SMBC TRUST BANK ANNUAL REPORT 2018

Branch

Shimomaruko Branch Shimomaruko Koishikawa Branch Branch Nakanosakaue Edogawa Branch Kasai Branch Akasaka Branch Shinagawa Branch Futakotamagawa Branch Tsutsujigaoka Branch Shimokitazawa Branch Kokubunji Branch Gotanno Branch Ikuta Branch Hachioji Branch Kichijoji Branch Machida Branch Koganei Branch Kiyose Branch Tanashi Branch Higashiyamato Branch Shintokorozawa Branch Shinkemigawa Branch Sagamiono Branch Odawara Branch Nakayama Branch Isehara Branch Ofuna Branch Iidabashi Branch Motosumiyoshi Branch Tsudanumaekimae Branch Funabashikitaguchi Branch Sagamihara Branch Senkawa Branch Kamagaya Branch Takao Branch Tama-center Branch Chofuekimae Branch Sasazuka Branch Musashikosugi Branch Hiyoshi Shonandai Branch Kamakura Branch Moriya Branch Wakabadai Izumi-Chuo Branch Shoji Center-minami Branch Musashi-Urawa Branch Komyoike Branch 386 387 388 389 390 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 ＢｒａｎｃｈＢｒａｎｃｈ

Branch

Ayase Branch Sugamo Branch Meguro Branch Nihonbashi Branch Mitsui-Bussan Building Branch Fussa Branch Ichikawa Branch Fukuoka Branch Okazaki Branch Kitakyushu Branch Fujigaoka Branch Ikeshita Branch Omuta Branch Osaka-Chuo Branch Shimonoseki Branch Issya Branch Tenjincho Branch Kurume Branch Saga Branch Kumamoto Branch Oita Branch Sekime Branch Yagoto Branch Tempaku-Ueda Branch Kitasuma Branch Nonami Akaike Branch Tachikawa Branch Higashitotsuka Branch Irinaka Kanayama Branch Suita Branch Kawasaki Branch Kori Branch Shijonawate Branch Hankyu-Sone Branch Yamatooji Branch Ikoma Branch Ueno Branch Chigasaki Branch Omori Branch Setagaya Branch Totsuka Branch Asagaya Branch Miyazakidai Branch Shimura Branch Fukagawa Branch Rokugo Branch Ｇｏｋｉｓｏ 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 337 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 SMBC信託銀行2018_EN_P007-022.indd 15 2018/08/01 9:22 Kobe Area Main Office Kobe Area Main Main Office Saitama Area Area Main Office Kawagoe-Shiki Kawagoeshiki Area Sub-Branch Niizashiki Branch Tsunashima Area Main Office Setagaya Area Main Office Nerima Area Main Office Fukuoka Area Main Office Office Nakano-Suginami Area Main Shonan Area Main Office Hiratsuka Office Sub-Branch Fujisawa Branch Shonan Area Kanda Area Main Office Ginza Area Main Office Nagoya Area Main Office Yokohama Area Main Office Hibiya Area Main Office Senju-Kasukabe Area Main Office Senju Branch Kasukabe Area Kasukabe Office Sub-Branch Gotanda Area Main Office Shinjuku higashi Area Main Office Keihin Area Main Office Ueno Area Main Office Gaien Area Main Office Musashino Area Main Office Machida Area Main Office Kinshicho Area Main Office Nishikobe Area Main Office Himeji Area Main Office Kyoto Area Main Office Kyoto Branch Kyoto Area Fushimi Office Sub-Branch Namba Area Main Office Abeno Area Main Office Umeda Area Main Office Umeda Branch Umeda Area Nishi-Noda Office Sub-Branch Higashiosaka Area Main Office Kadoma-Moriguchi Area Main Office Shinosaka Area Main Office Keihan-Kyobashi Area Main Office Ikebukuro Area Main Office Shibuya Area Main Office Tokyo Chuo Area Main Office Shinjuku Nishi Area Main Office Akabane-Kawaguchi Area Main Office Ota Area Main Office Kasai Area Main Office Mizonokuchi Area Main Office Yokohama Aoba Area Main Office Atsugi Area Main Office Funabashi Area Main Office 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 Toyosu Sub-Branch

Yachiyo-Midorigaoka Branch Yachiyo-Midorigaoka Branch Azabu-Juban Ebina Branch Park Sub-Branch Branch Osaka Business Keihan-Kyobashi Sub-Branch Minoo Branch Minooshiyakusho Sub-Branch Fujiidera Branch Habikino Machida-Yamazaki Sub-Branch Sub-Branch Toyonaka Branch Higashitoyonaka Ikeda Branch Ishibashi Sub-Branch Sub-Branch Moriguchi Branch Moriguchishiekimae Minoo Branch Sakurai Sub-Branch Sub-Branch Head Office Toyota Building Sub-Branch Sendai Branch Morioka Ofice Sendai Branch Kooriyama Office Sub-Branch Fujisawa Branch Kataseyama Sub-Branch Shin-Yurigaoka Branch Yurigaoka Sub-Branch Nishinomiya Shiyakusho Sub-Branch Flower-Town Sub-Branch Woody-Town Sub-Branch AmagasakiShiyakusho Sub-Branch Sone Sub-Branch HimejiShiyakusho Sub-Branch Minato Branch Cosmo Tower Sub-Branch Tokyo Disneyland Sub-Branch Itabashi-Nakadai Sub-Branch Takarazuka-Nakayama Sub-Branch Osaki Sub-Branch Matsudo Branch Shinmatsudo Sub-Branch Yukigaya Branch Ontakesan Sub-Branch Ginza Branch Matsui-Yamate Sub-Branch Fujimino Sub-Branch Park-Sakae Sub-Branch Mukonoso-ekimae Sub-Branch Koishikawa Area Main Office Osaka-Chuo Area Main Office Ibaraki-Takatsuki Area Main Office Toyonaka Area Main Office Hirakata Area Main Office Sakai Area Main Office Otemachi Area Main Office Koiwa-Ichikawa Area Main Office Denenchofu Area Main Office Joban Area Main Office Shin-Yurigaoka Area Main Office Ashiya Area Main Office Nishinomiya Area Main Office Akashi Area Main Office Chiba Area Main Office 435 436 437 438 439 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank OutlineOutline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 16 16 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank OutlineOutline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 17 2018/08/02 14:49 (SMBC)

SMBC TRUST BANK ANNUAL REPORT 2018 (As of May 31, 2018) (As of May 31, Trade Name, or Name of Agent

Our main focus of business is to satisfy individual individual satisfy to is business of focus main Our customers’ needs. We do not, therefore, provide provide therefore, not, do We needs. customers’ enterprises in business financing for small and medium customers asking principle. We, however, deal with the listen we words, other In sincerely. loans business for decisions our explain and seriously, requests their to understanding. on the requests thoroughly to gain their fulfill to strive we vitalization, community the For and communities local to responsibilities social our contribute to regional vitalization. Matters concerning Agent of Agent concerning Matters for Trust Trust Bank SMBC Agreements towards improving Our attitude and management of small medium enterprises and vitalizing communities Sumitomo Mitsui Banking Corporation Sumitomo Mitsui Banking Ⅳ Ⅲ Ⅱ Ⅰ Remote Marketing Dept. Remote Marketing Dept. Call Center Kobe Call Center Fukuoka Tokiwadai Area Main Office Tokiwadai Area Main Office Kamiohoka Area Main Office Sotetsu Area Office Fuchu Area Main Tachikawa Area Main Office Hachioji Area Main Office Seibu Area Main Office Tokorozawa Office Sub-Branch Oizumi Branch Seibu Area Nishitokyo Area Main Office Semba Area Main Office Nara Area Main Office Senri-Mino Area Main Office Itami Area Main Office Kishiwada Area Main Office Otori Area Main Office Higashikobe Area Main Office Sanda Area Main Office Kakogawa Area Main Office Fujiidera Area Main Office Private Banking Dept. Private Banking Dept. Osaka Tamachi Souzoku-Office Sub-Branch Umeda Souzoku-Office Sub-Branch Remote Marketing Dept. Remote Marketing Dept. 558 559 560 561 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 Kobe Area Main Office Kobe Area Main Main Office Saitama Area Area Main Office Kawagoe-Shiki Kawagoeshiki Area Sub-Branch Niizashiki Branch Tsunashima Area Main Office Setagaya Area Main Office Nerima Area Main Office Fukuoka Area Main Office Office Nakano-Suginami Area Main Shonan Area Main Office Hiratsuka Office Sub-Branch Fujisawa Branch Shonan Area Kanda Area Main Office Ginza Area Main Office Nagoya Area Main Office Yokohama Area Main Office Hibiya Area Main Office Senju-Kasukabe Area Main Office Senju Branch Kasukabe Area Kasukabe Office Sub-Branch Gotanda Area Main Office Shinjuku higashi Area Main Office Keihin Area Main Office Ueno Area Main Office Gaien Area Main Office Musashino Area Main Office Machida Area Main Office Kinshicho Area Main Office Nishikobe Area Main Office Himeji Area Main Office Kyoto Area Main Office Kyoto Branch Kyoto Area Fushimi Office Sub-Branch Namba Area Main Office Abeno Area Main Office Umeda Area Main Office Umeda Branch Umeda Area Nishi-Noda Office Sub-Branch Higashiosaka Area Main Office Kadoma-Moriguchi Area Main Office Shinosaka Area Main Office Keihan-Kyobashi Area Main Office Ikebukuro Area Main Office Shibuya Area Main Office Tokyo Chuo Area Main Office Shinjuku Nishi Area Main Office Akabane-Kawaguchi Area Main Office Ota Area Main Office Kasai Area Main Office Mizonokuchi Area Main Office Yokohama Aoba Area Main Office Atsugi Area Main Office Funabashi Area Main Office 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 Toyosu Sub-Branch

Corporate ManagementManagement Vision Bank OutlineOutline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P008-023.indd 16-17 16 Philosophy Infrastructure 2018/08/01 9:22 Over-the-counter sales of mutual funds to individual individual to funds mutual of sales Over-the-counter to qualified investors and direct sales of mutual funds institutional investors as Trustee. mutual of certificates beneficiary of Administration or through office our within securities other and funds an external depository. Following services provided by SMBC on behalf of SMBC Trust Bank: Acting as an intermediary for conclusion of contracts savings installment or deposits of acceptance on of conclusion for intermediary an as acting us; with an as acting and; funds, our of loans on contracts intermediary for contracts on exchange transactions by us. for us to services intermediary provides SMBC conclusion of trust agreements on our discretionary money trusts and business/asset succession trusts. Advisory and support services for customers in in customers for services support and Advisory acquisition of real estate. need of a sale or an on corporate real estate (CRE) Consulting services with companies for others and planning strategy real estate assets. with customers for services appraisal estate Real assessment needs. real of stages all at services advisory Investment estate asset management. securities Provision of structured bonds and other Handling of public offering or private placement of of placement private or offering public of Handling beneficiary certificates of mutual funds Sale and Purchase, etc. of Beneficial Interests in Real Interests in etc. of Beneficial Purchase, and Sale Estate Trusts interests in real estate trusts, and dealing in private private in dealing and trusts, estate real in interests etc. funds, placement Brokerage services for ofsales orpurchases beneficial (3) (4) Administration of Securities, etc. 5. Bank Agency Service (1) Bank Agency Service 6. Trust Agency (1) Trust Agency Business 3. Concurrent Business (1) Real Estate Brokerage (2) Real Estate Consulting (3) Real Estate Appraisal (4) Real Estate Asset Management Business 4. Registered Financial Institution (1) Financial instrument intermediary services (2) Business Activities Business Securities administration trusts, Securities disposal trusts, Securities acquisition trusts Composite trusts (discretionary & non-discretionary) and administration estate real trusts, Security living trusts, pension funds, mutual trusts, disposal trusts, beneficiary successive consecutive / trusts for management asset trusts, claim monetary defined contribution pension funds, art trusts Non-discretionary (Tokkin) money trusts, Clearing Clearing trusts, money (Tokkin) Non-discretionary commingled Discretionary Tokkin, Pension trusts, trusts, Discretionary money trusts (Kingaishin Trusts) Remittance, account transfer, and other domestic- other and transfer, account Remittance, exchange transactions Acceptance of deposits and installment savings deposits (Including acceptance of foreign-currency and structured deposits) Non-discretionary Kingaishin trusts, Discretionary Kingaishin trusts Remittance, account transfer, buying and selling of foreign exchange, and other foreign-exchange transactions. Lending of funds (including lending of foreign-currency funds) Lending of funds (including lending of foreign-currency

Taking advantage of are“trust”, Taking its which three edges SMBC Trust will strive Trust SMBC will to capture the needs true of individual In conducting such various business activities, SMBC SMBC activities, business various such conducting In (3) Securities Trusts (4) Composite Trusts (5) Other Trusts 2. Trusts (1) Money Trusts (2) Money in Trust Other than Money Trusts (3) Domestic exchange (4) Foreign exchange 1. Banking (1) Deposits (2) Lending Our Business Business Guidance Business todate, to a widerange of customers of the SMBCGroup. Trust will further promote interdepartmental and intergroup intergroup and Trust promotefurther interdepartmental will Activities by Financial Institutions) and other and Institutions) services. Activities by Financial further strengthening its banking and itstrust banking real furtherservices, strengthening collaboration to provide our functions, including our our including functions, our provide to collaboration estate-related services (which is a service permitted permitted service a is (which services estate-related customers and make more diversified and enhanced services services enhanced and diversified more make and customers available toits customers.For example, SMBC Trustprovide will strengthening by customers individual servicesvariety to of a by service,is the strength and which “PRESTIA”, brand of our uniqueproducts and services that have beendeveloped under the Act on Engagement in Trust Business Business Trust in Engagement on Act the under its total consulting capabilities focusing oncurrency the foreign focusing itscapabilities totalconsulting using solutions thatleverage real estate and trust functions. “foreign currency” and “real estate”, SMBC Trust is is Trust SMBC estate”, “real and currency” “foreign SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 18 18 Philosophy Infrastructure Corporate Management Corporate 財務データバーゼルⅢ 第の柱に基づく開示事項

Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items3 Based on Pillar of Basel

Infrastructure 19 2018/08/01 9:22 Expert Consulting Consultation for asset management to meet waived fee services. your need at each stage of 2. Many discounted/ consultants). your life through prompt analysis prompt your life through GOLD Executives (special assistance by PRESTIA access 1. Exclusive asset management of abundant information overseas thosewith denominated instruments. services for Settlement succession Consultation for loans to foreign Consultation for loans to foreign Support for inheritance and business products such as foreign currency- foreign as such products nationals

have asset management needs for for needs management asset have need equivalent to 10 million yen or more and Average Monthly Relationship Balance Balance Relationship Monthly Average foreign- currency currency foreign- to selected customers who maintain a Total knowing their PRESTIA GOLD is a special service available and those not SMBC TRUST BANK ANNUAL REPORT 2018 investment currency interested in foreign- interested service) to serve those instruments intermediary Total Average Monthly Relationship 50 million yen or more Balance equivalent to services Strong at Foreign Strong at Foreign Currency Services transactions through our online-banking transactions through Total Average Monthly Relationship Easy overseas remittance and other yen/foreign-currency and other yen/foreign-currency Easy overseas remittance Top level foreign-currency deposit level foreign-currency Top balance in Japan Balance equivalent to 10 million yen or more Manned Call Center available 24/365, from both at home andabroad Manned Call Center available 24/365, from An extensive foreign-currency product lineup lineup product An extensive foreign-currency (deposits, mutual funds, insurance, and financial (deposits, mutual funds, insurance, institutions are available for use institutions are Multiple Channels branches), those at allied financial Nation-Wide Branch Network at In addition to ATMs our 33 branches and mini-branches (including Kansai and Sannomiya mini- Worldwide network We have PRESTIA GOLD and PRESTIA GOLD GOLD PRESTIA and GOLD PRESTIA have We waived fee services. etc.) for GOLD customers (mutual funds, (mutual management assistance management by Relationship Manager. bonds, loans, loans, bonds, PREMIUM Banking Card value service for the customers customers the for service value Average Total a maintain who equivalent to 50 million yen or or yen million 50 to equivalent PRESTIA GOLD PREMIUM is a highPRESTIA GOLDPREMIUM Balance Relationship Monthly more 3. Exclusive3. products 2. Many 2. discounted/ 1. Exclusive asset Exclusive 1. PREMIUM programs to offer the members preferential preferential members the offer to programs PREMIUM Relationship fees based on their Total Average Monthly including asset Balance and other preferential services consultants. management consultation by our special Exclusive Services for Special Customers PRESTIA’s appealing point PRESTIA’s U.S. dollars. the U.S. to withdraw Cash card service to access over 2 Cash card in over 200 million CDs/ATMs over the all countries and regions world to withdraw local your yen from currencies savings account. Accessible to all over CDs/ATM PRESTIA Gaika Cash Card Introduction to PRESTIA

PRESTIA offers a wide range of products and and products of range wide a offers PRESTIA We offer tailor-made total solutions using trust trust using solutions total tailor-made offer We In order to enhance our services to foreign foreign to services our enhance to order In Introduction to Our Banking Business to Our Banking Introduction services to meet customers’ diversified needs. For For needs. diversified customers’ meet to services with you provide services card cash our example, 200 over in CDs/ATMs million 2 over to access foreign and world, the over all regions and countries market a are we which services, transaction exchange market financial quality high provide also We leader. telephone, counter, the over advice and information good words fromand online, etc., and we have received your transactions many customers for the services. For Transaction and Password Time One our online, and available, are services security Code Signing concerns. security without transactions make can you account and volume transaction your on Depending balance, preferential treatment in account maintenance management asset and charge, usage ATM fee, consultation by designated bankers is also available. functions, etc. for high net-worth customers and and customers net-worth high for etc. functions, from acquired business banking retail the conduct new the under 2015 1, November on Japan Citibank brand, “PRESTIA.” customers living in Japan, SMBC Trust operates the the operates Trust SMBC Japan, in living customers branches”. “global as Branches Hiroo and Akasaka SMBC Trust has made various brochures and product English in available descriptions consulting provides also and and products our for services services in English, to ensure that transact to wish who customers banking our use can English in services comfortably. Global Branch: Offering all types of banking banking of types all Offering Branch: Global foreign to manner stress-free a in services customers. SMBC信託銀行2018_EN_P007-022.indd 19 2018/08/01 9:22 Asset Stock Real Estate Loans Purchasing Trusts Brokerage Purchasing Asset Sales Asset Stock Disposal Trusts Real Estate Brokerage Discretionary Trusts Structured Deposits Management Total Solutions Asset Successive Securities administration Trusts Beneficiary Trusts Asset Succession Administration Your dedicated private banker acts as the concierge acts as the concierge private banker Your dedicated assets. of your precious the with accordance in solutions trust offer We stages of your life cycle. its business activities by capitalizing SMBC Trust conducts SMBC Group, on the network and creditworthiness of the in Japan. which is one of the leading financial groups protection of your precious assets through trust trust through assets precious your of protection functions Group SMBC other between collaboration through companies Key Features of Our Private Banking of Our Private Key Features of trust a sustaining relationship 1. Building and administration, investments, the for Support 2. solutions comprehensive and speedy Providing 3. . and needs. asset conditions Offer products and to the customer’s services that meet the by listening needs of the customer. understanding Deepen mutual Head office 19F reception discussion Proposing Solution Understanding of needs through Monitoring Implementation of solution Introduction to Private Banking to Private Introduction

Wealth Management Process and features Our philosophy of private-banking services stresses stresses services private-banking of philosophy Our Our private bankers are committed to putting putting to committed are bankers private Our Since its establishment, Private Banking has been been has Banking Private establishment, its Since We offer private banking services to provide tailor- provide to services banking private offer We customers first and providing the best financial financial best the providing and first customers services financial customizing by them for products fund-management dedicated our with cooperation in team to meet the needs of customers. offering trust-based total solutions for asset and and asset for solutions total trust-based offering services covering business succession and real estate family customers’ including generations multiple products. members, as well as tailor-made investment made solutions to diversified needs of high net worth worth net high of needs diversified to solutions made and trust our using customers, individual other and other functions. Private Banking Philosophy ▼ tailor-made solutions to provide customers with from a long- their needs term point of view by accurately understanding Confirm that the needs have been met. Use trust bank and commercial bank features to meet a wide range of needs. SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 20 20 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 21 2018/08/01 9:22 SMBC TRUST BANK ANNUAL REPORT 2018 In the Future

In response to the external environment characterized In response to the external environment provide can that bank trust a becoming at aim We Housing Loan / Investment Property Loan Housing Loan / Investment Credit (Overdraft secured by deposit) PRESTIA MultiMoney PRESTIA Visa GOLD CARD PRESTIA Visa PLATINUM CARD

Insurance Loans & Mortgages Credit Cards by prolonged low interest rates and growing needs needs growing and rates interest low prolonged by international diversified assets, foreign-currency for SMBCinvestments, and asset and business succession, of a reinforcement the on working been has Bank Trust wide- ranging product and service offering. solutions beyond the customers’ expectations by taking seriously their needs deriving from their family structure, by and etc., environments, business and assets, the with cooperation and collaboration the deepening companies of the SMBC Group. SMBC Trust offers product lines that meet a variety variety a meet that lines product offers Trust SMBC pension, supplementing for funds as such needs, of lifetime and inheritance, protection, benefit death gifting. ● ● ● ● Major financial products line up financial products Major

PRESTIA MultiMoney Yen Savings Super Teiki (Deregulated Interest Rate Time Deposit - M Type) Oguchi Teiki (Deregulated Interest Rate Time Deposit) Yen Savings Order Watch Order Watch Premium Deposit Prestia Multi Money Foreign Currency Savings Deposits Prestia Multi Money Deposit for US dollar cash card Prestia US dollar Savings Deposit Foreign Currency Time Step Up Time Deposit

Lineup of Yen Deposit Products Financial Instruments Intermediary Service Financial Instruments Intermediary Investment Trust Foreign Exchange transaction Structured Deposit Lineup of Foreign Currency Deposit Products Foreign Currency Lineup of ● ● ● Savings Deposits ● SMBC Trust partners with SMBC Nikko Securities Securities Nikko SMBC with partners Trust SMBC foreign of trading the for intermediary an as act and addition, SMBC currency bonds and other products. In private (both accounts intermediary up sets Trust financial Securities’ Nikko SMBC for corporate) and instruments. SMBC Trust has carefully selected investment trusts trusts investment selected carefully has Trust SMBC U.S. in managed be can that world the around from dollars, Euros, and Australian dollars. ● ● ● ● Time Deposit ● ● Savings Deposits Savings ● Time Deposits SMBC信託銀行2018_EN_P007-022.indd 21 2018/08/01 9:22 Family Market Stock Bond investment 行行銀銀円円託託債債億億信信社社壱壱金金 SMBC Trust Bank Enterprise Stocks / Bonds Revenue sharing Trust money Investment policy discussionTrust agreement Investment explanation ＄ Our Products and Services Our Products Real Estate

Deposit etc We will support smooth succession of assets or or assets of succession smooth support will We We are committed to the secure administration and and administration secure the to committed are We We offer comprehensive asset management solutions to We offer comprehensive Securities Administration Trusts Discretionary/Non-Discretionary Trusts Discretionary/Non-Discretionary Trusts Structure of Discretionary Living trusts / Successive beneficiary trusts Asset Administration & Protection Asset Management Asset Succession, Business Succession Customer businesses by offering solutions that best suit customers' businesses by offering solutions that best needs that a will cannot meet. ● For Retail Customers For Retail ● ● ● long-term protection of customers’ valuable assets in in assets valuable customers’ of protection long-term The requirements. and goals their with accordance optimal the be could purposes these for trusts of use assets of range broad a have who those for option are trust our in Assets them. for care to time little but is privacy their thus, and, name our in administered separate kept are assets trust addition, In protected. and Bank, Trust SMBC of assets corporate the from and assets their of state the describing statement a account activities is sent to them regularly. meet customers' investment needs. Asset management Asset needs. investment customers' meet asset of way optimal an is functions trust utilizing of range broad a have who those for management to care for them. assets but little time

Beneficiary Monitoring and trust profits supervision function Distribution of

…etc. Manage/

Asset Dispose Trust Trustee (trust bank) Trust operations

of property Trust operations Concurrent operations Setting of trust object Trust agreement Securities trusts Real estate consulting Money trusts Real estate brokerage Living trusts Real estate appraisal Transfer and disposition

What is a Trust? What is Difference between a Trust Bank and a Bank

In addition to the "banking operations" that banks banks that operations" "banking the to addition In When a Truster transfers assets into a trust, a beneficial When a Truster transfers assets into a trust, A "trust" is an agreement that a person who has has who person a that agreement an is "trust" A Banking operations Truster Making loans …etc. …etc. Processing foreign exchange transactions Taking deposits Introduction to Our Trust Business to Our Introduction are allowed to undertake, trust banks can conduct the trusts, securities or money as such operations" "trust administration to related operations” “concurrent and and disposal of property, such as real estate brokerage. interest (right) is created and those with the interest, interest, the with those and created is (right) interest the from income the receives beneficiary the called asset the practically thus, is, beneficiary The assets. or assigned, holder. Beneficial interests can be divided if even protected be would assets trust because and affected be not would they bankrupt, went trustee the by seizure, etc. assets/property, such as financial instruments and and instruments financial as such assets/property, credible a with Truster the as concludes estate, real (trust assets the manage trustee the have to trustee and Truster the agreement, the In assets/property). and assets, the manage to how on agree trustee the agreement, the on Based pass. assets the whom to name trustee's the in assets the manages trustee the from the assets is distributed in and the income arising accordance with the agreement. SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P007-022.indd 22 22 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 23 2018/08/02 14:49 SMBC TRUST BANK ANNUAL REPORT 2018 We provide solutions for corporate financing and collateral We provide solutions for corporate financial improvement. We offer various asset disposal solutions to meet meet to solutions disposal asset various offer We A securities investment trust is a financial product product financial a is trust investment securities A meet to solutions purchase asset various offer We We administer the margin money for foreign-exchange We administer the margin Securities Disposal Trusts Securities Investment Trusts Securities Securities Acquisition Trusts

Clearing Trusts Monetary Claims Trusts, etc. Trust & Debt Assumption Asset Sales Asset Purchases management. ● ● ● ● customers' needs. For example, when selling a publicly- customers' needs. For example, when should attention extra place, market the in stock traded be paid to the risk of infringing insider trading and market manipulation regulations or of causing such doubts. As a method to mitigate such risks, we would propose to use trust and let us sell the shares at our a securities disposal own discretion. where investors' moneys are pooled together and and together pooled are moneys investors' where the by securities marketable in primarily invested trust investment an of manager fund professional payouts other and Earnings company. management are distributed to the investors. from the investments publicly-traded a when example, For needs. customers' marketplace, the in stock own its back buys company infringing of risk the to attention close pay should they regulations or of insider trading and market manipulation such risks, we causing such doubts. As a way to reduce trust and let would propose to use a securities acquisition us buy the shares at our own discretion. margin trading, etc. deposited with the settlor by its its by settlor the with deposited etc. trading, margin of protection the for assets trust the as customers, legal the for as well as customers the and money the compliance.

Securities company 発行体社証券会 Issuer

Buy/Sell order Receive dividends Delivery/Settlement Exercise voting rights ＳＭＢＣ Trust Bank

Send reports (at termination) Pay dividends Give instructions to exercise voting rights Distribute the trust property Put out the money to entrust Conclude a trust agreement, Submit a signed statement We have a wide range of asset disposal solutions that We have a wide range of asset disposal We administer in our name securities such as stocks We have a wide range of asset purchase solutions that purchase solutions wide range of asset We have a Truster Securities Disposal Trusts Securities Administration Trusts Securities Administration Trust Securities Administration Asset Administration and Protection Asset Purchases Asset Sales can assist our customers with asset administration or or administration asset with customers our assist can of their lifecycle. succession planning at various stages family owns a For example, if you or a member of your company the of shares the company, publicly-traded When assets. your of component important an are aware be should you however, shares, such selling arouse or for scrutinized be may transaction your that insider trading or suspicion about a possible violation of these risks, market manipulation regulations. To reduce trust disposal securities a use to you advise would we discretion for you. and let us sell such shares at our own For Corporate Customers ● ● ● and bonds that corporate customers own. We receive receive We own. customers corporate that bonds and and behalf their on principals/interests and dividends We customers. corresponding the to them distribute with accordance in rights voting their exercise also their instructions. can assist our customers with asset administration and and administration asset with customers our assist can lifecycle. their of stages various at planning succession a owns family your of member a or you if example, For company the of shares the company, publicly-traded When assets. your of component important an are aware be should you however, shares, such purchasing arouse or for scrutinized be may transaction your that or trading insider of violation possible a about suspicion risks, these mitigate To regulations. manipulation market trust purchase securities a use to you advise would we for you. and let us buy such shares at our own discretion Family Market Stock Bond investment 行行銀銀円円託託債債億億信信社社壱壱金金 SMBC Trust Bank Enterprise Stocks / Bonds Revenue sharing Trust money Investment policy discussionTrust agreement Investment explanation ＄ Our Products and Services Our Products Real Estate

Beneficiary Monitoring and trust profits supervision function Distribution of

…etc. Manage/

Asset Dispose Trust Trustee (trust bank) Trust operations

Difference between a Trust Bank and a Bank What is a Trust? What is

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P008-023.indd 22-23 22 Philosophy Infrastructure 2018/08/01 9:47 Real Estate Appraisal Trust Business Trust Estate Asset Management (AM) Real Our specialized real estate appraisers give high- give appraisers estate real specialized Our We provide services to the customers wishing to invest We provide services to the customers wishing We provide trust services to customers who own real customers who own trust services to We provide quality appraisals. in real estate. Our services cover investment decisions decisions investment cover services Our estate. real in acquisition, including steps, all at services advisory and and exit. management during the holding period, estate assets. Business Consulting Seller Trust Business

Needs Business Brokerage Customer’s Real Estate Trade Agreement Real Estate Broker SMBC TRUST BANK intermediate intermediate Asset Business Management Buyer Consulting Brokerage Business Support Customer’s Optimal Real Estate Strategy Support Customer’s To customers owning property, SMBC Trust provides We provide comprehensive support to meet the needs We provide comprehensive support to We provide a wide variety of services to meet customers’We provide a wide variety Introduction to our Real Estate to our Introduction Business Appraisal not only research and analysis services from the the from services analysis and research only not also but value corporate enhancing of perspective responds to a wide range of other consulting needs in consideration of customers’ financial strategies. of corporate customers and high net worth individual individual worth net high and customers corporate of customers for large real estate deals. real estate related needs, such as brokerage services, services, brokerage as such needs, related estate real and appraisal services. consulting services ▼ SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P023-036.indd 24 24 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 25 2018/08/01 9:47 Upper Picture : Narita Airport Lower Picture : Shinagawa Station SMBC TRUST BANK ANNUAL REPORT 2018 Advertisements with Mr. PRESTIA Advertisements with Mr. major appointed at the airport and stations

Mutual Funds Mutual We intend to further expand our product lineup to meet the the meet to lineup product our expand further to intend We “Mr. PRESTIA,” our marketing character, was born in March March in born was character, marketing our PRESTIA,” “Mr. We started distribution of Global Core Equity Fund in USD/JPY in We Fund of CoreEquity started Global distribution Furthermore, from May 2018, SMBC Trust has initiated a a initiated has Trust SMBC 2018, May from Furthermore, Due topopular demandunder the circumstances of geopolitical foreign currency denominated investment trust service, which which service, trust investment denominated currency foreign family predesignated the to trusts investment as assets these varying needs of clients. 2017 to promote brand awareness of PRESTIA as an expert in in expert an as PRESTIA of awareness brand promote to 2017 been has PRESTIA Mr. October, last Since currency. foreign advertising (OOH) out-of-home and transit our in featured the disseminate to stations train and airports major in placed appears also He Card. Cash International our of advantages in so increasingly and advertising, video in-flight/train in effective run to continue will We branches. our at advertising advertising campaigns to make frequent overseas travelers feel close to the brand. enables customers to manage their own assets and transfer transfer and assets own their manage to customers enables foreign currency-denominated Target Setting at Maturity Fund, Fund, Maturity at Setting Target currency-denominated foreign that has been continuing since the 2015 U.S. presidential election. continuing been has that members in members in the event of inheritance. and startedand with a along offering, re-offeringdollar- with U.S. the February and 2018. Septemberin 2017 fund denominated of our clients,given a growing investors among attitude risk-on risks that still remain, we have added the Australian dollar to a a to dollar Australian the added have we remain, still that risks in June 2017. This fund is designed tobeis designed used as This fund a core 2017. assetin June and diversified investments SMBC Nikko Securities especially for sophisticated range of product lineup and Strong offering capabilities for diverse investment needs Offer fine-grained services to customers with the need for a wide customers with sophisticated and distinctive features. customer's wide range of needs by making the best SMBC Retail Business Unit use of its group companies as a whole group supporting of Group companies. needs in foreign currency SMBC Trust Bank PRESTIA build assets SMBC Retail supports a wide range of needs of SMBC Retail supports a wide range of needs SMBC Enhance customer-oriented after-sale services evaluation performance customer-oriented a Establish system Improve consulting skills Make customer-oriented investment proposals based based proposals investment customer-oriented Make on medium to long-term diversification Provide a customer-oriented product lineup Offer services, using a “foreign currency” edge Strong offering capabilities for customers with sophisticated customers by making the best use of distinctive features customers by making the best use of distinctive Publication of “basic policy for of “basic Publication Business Customer-Orientated Conduct”

Serve more customers, Policy using its customer base On June 30, 2017, the Retail Business Unit of the the of Unit Business Retail the 2017, 30, June On need to protect their assets or Strong offering capabilities for customers particularly with the 3 4 5 1 2 Major Initiatives of Fiscal 2017 Initiatives of Major SMBC Group (“SMBC Retail”) formulated its basic basic its formulated Retail”) (“SMBC Group SMBC business conduct. policy for customer-orientated ▼ SMBC信託銀行2018_EN_P023-036.indd 25 2018/08/01 9:47 Customer Events Smart phone Account Opening System Account Smart phone

We regularly plan and hold a wide variety of events We regularly plan and hold a wide variety reception and concert a held have we 2014, Since events joint together put also have we 2017, Since areas and other sports culture, arts, the consider We We launched a smartphone-based account opening account opening a smartphone-based We launched to provide Going forward, we aim for customers. In addition to inviting them to classical classical to them inviting to addition In customers. for they occasions other and theater the concerts, music original highly offer also we in, interested be may events unique to us. we which to Night,” Wine and “Music titled series perform. to musicians young up-and-coming invite level a provides only not annually, held event, The worth net high our for appropriate entertainment of also but art, in interest strong a have who customers supports the activities of young musicians. with companies of the SMBC Group, take advantage of the unique strengths of the Group. of endeavor to represent an important point of contact with our high net worth customers, and we will continue working to offer a variety of events that fully satisfy the interests of those customers who attend. system on July 24, 2017. Now you can use a tablet and you can use a tablet July 24, 2017. Now system on an account a smartphone to open personal a to addition in us with device online only the computer, previously possible. and easier with customers our account-opening online speedier the improving by experience entire the and forms screen customers’ on based process opinions. Advertising character "Pakkun" Advertising character "Pakkun" Exchange appointed for Free Foreign Foreign Commission from Yen to Currency campaign

Foreign Currency Deposit Currency Foreign Since last November, we have been sponsoring YEN been have we November, last Since American-born personality Patrick Harlan (also known American-born personality Patrick Harlan In order to serve more customers interested in in interested customers more serve to order In Tame!, a TV program broadcast on Nikkei CNBC. The easy-to-understand an give to designed is program PRESTIA markets. exchange foreign to introduction the and benefits the advocating to committed is importance of holding assets in foreign currency. as “Pakkun”) was featured in our advertising for the “Freeas “Pakkun”) was featured in our advertising Foreign to Yen from Commission Exchange Foreign global both has who “Pakkun,” campaign. Currency” value to give, and also competence and intelligence of to qualified than more is experience, investment has in assets holding on messages educational out send Last perspective. “third-party” a from currency foreign October, he joined in one of our seminars as a panelist and won favorable recognition from participants. foreign currencies and reduce the market-timing risk by by risk market-timing the reduce and currencies foreign launched we time, over investments the out spreading July in Service” Deposit Installment Currency “Foreign where SMBC Trust bank debits the2017. This is a service account, savings Yen your from choice your of amount currency once a month. We offer converts it to a foreign is amount minimum the and to convert to currencies 10 the of launch the With conversion. per yen thousand 10 December of end the until campaign a ran we service, of foreign exchange commissions,2017, offering a refund card credit and fees, maintenance account of waiver a applying if Ltd. Co., Card Mitsui Sumitomo from points This service. deposit the with card credit affiliated an for to opportunity an customers many given has service the with line in time first the for currency foreign a hold of importance the on: placing been have we emphasis currency. having deposits or other assets in foreign SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P023-036.indd 26 26 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 27 2018/08/01 9:47 SMBC Investor & Settlor) (Service provider Private contractor SMBC TRUST BANK ANNUAL REPORT 2018 Fee receivable Entrustment Loan/ Repayment/Dividend Capital contribution Agreement for business consignment Payment of fee Fee receivable (Trustee) SMBCTB Kobe City Provide Trust Functions for Kobe for Kobe Trust Functions Provide Bond (SIB) Social Impact City’s Program

& fee payer) With the intent of Sumitomo Mitsui Financial Group to With the intent of Sumitomo receives much As the first SIB in Japan, this program by providing We will continue to contribute to society (Business Owner provide support with the development of social impact provide support with through programs social support which (SIBs), bonds provide we partnership, public-private of kind a and property management functionsbankruptcy remote we program, SIB City’s Kobe the In bank. trust a as of administering fee receivables took on essential roles paying and provider, service private the by entrusted etc. dividends to investors, trying to solve attention from other government agencies social problems. group. trust functions as a member of the financial Art Trusts SMBC Starts Trust Agency SMBC Starts Trust Agency Bank Services for SMBC Trust 3 Stars for Two Consecutive Years Consecutive Two for 3 Stars PRESTIA Phone Banking Granted

With the Agency for Cultural Affairs developing an an developing Affairs Cultural for Agency the With As part of the collaboration with SMBC to expand expand to SMBC with collaboration the of part As PRESTIA Call Center received the highest-level highest-level the received Center Call PRESTIA In addition to winning “3 Stars Quality Service” rating In addition to winning SMBC Trust Bank’s call center, “PRESTIA Phone Phone “PRESTIA center, call Bank’s Trust SMBC action plan to implement by 2020, Japan is moving moving is Japan 2020, by implement to plan action toward using its cultural assets as resources for regional revitalization and tourism promotion. SMBC and SMBC industry, art the supporting at aiming Bank, Trust business artwork-related on working started has development. The Art Trust, our first art-related product services trust optimum settlors offer to is launched, administration, inheritance, succession, concerning safekeeping, leasing, and sale of artworks. our customer base, SMBC launched a trust agency agency trust a launched SMBC base, customer our license, SMBC business in June 2017. With an agency Trust Bank, staff members can act as agent for SMBC the without products trust unique our explain and continue will we future, the In staff. our of presence large a to products trust value-added highly offer to number of customers as a member of SMBC Group. evaluation comments in the industry such as: “They “They as: such industry the in comments evaluation services provide to trying of attitude positive a have team servicing their and customer, every to tailored by marks full earned has all evaluators” and “Their clear- are explanations customer meet and cut needs in appropriate and prompt manner.” for two consecutive years, PRESTIA Phone Banking was for two consecutive Customer Service” rating this year. also granted “3 Stars Banking,” has been granted the highest rating of 3 3 of rating highest the granted been has Banking,” HDI-Japan, by hosted Benchmarking HDI in Stars membership largest world’s the of chapter Japan the service industry, HDI. organization in IT support SMBC信託銀行2018_EN_P023-036.indd 27 2018/08/01 9:47

68 Kawaramachi-Higashiiru-Shincho, Shijo-dori, Shimogyo-ku, Kyoto-shi, Kyoto 1-1 Aza-Furugome, Furugome, Narita-shi, Chiba 4-7-1 Meieki, Nakamura-ku, Nagoya-shi, Aichi 1-1-3 Shibata, Kita-ku, Osaka-shi, Osaka 5-1-60 Namba, Chuo-ku, Osaka-shi, Osaka 1-5-1 Sannomiyacho, Chuo-ku, Kobe-shi, Hyogo 2-5-1 Yurakucho, Chiyoda-ku, Tokyo 1-6-5 Kanda-Sakumacho, Chiyoda-ku, Tokyo 6-10-1 Ginza, Chuo-ku, Tokyo 6-1-21 Roppongi, Minato-ku, Tokyo 2-17-12 Kaminarimon, Taito-ku, Tokyo 2-6-5 Haneda Airport, Ota-ku, Tokyo 28-4 Udagawacho, Shibuya-ku, Tokyo 2-24-9 Futako-Tamagawa, Setagaya-ku, Tokyo 3-24-1 Shinjuku, Shinjuku-ku, Tokyo 1-7-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 2-27-9 Minami-Ikebukuro, Toshima-ku, Tokyo 6-12-1 Haramachida, Machida-shi, Tokyo 1-12-7 Minami-saiwai, Nishi-ku, Yokohama-shi, Kanagawa 1-1 Aza-Goryobokujo, Sanrizuka, Narita-shi, Chiba Kansai International Airport No.3 Foreign Exchange Counter Narita International Airport No.2 Foreign Exchange Counter Kansai International Airport No.1 Foreign Exchange Counter Kansai International Airport No.2 Foreign Exchange Counter 1 Sensyu-Kuko-Naka, Tajiri-cho, Sennan-gun, Osaka 14 Sensyu-Kuko-Naka, Tajiri-cho, Sennan-gun, Osaka 14 Sensyu-Kuko-Naka, Tajiri-cho, Sennan-gun, Osaka Foreign Exchange Counters: Exchange Foreign EXCHANGE PRESTIA

Under the Memorandum of Understanding We concluded a collaboration collaboration a concluded We We collaborate with foreign banks to to banks foreign with collaborate We We will continue to strive to meet our meet strive to continue to will We Utilizing our Trust and Asset ManagementUtilizing our Trust and enhance our services and respond to to respond and services our enhance by customers of demands diversified that services and products unique offering institutions. financial other from us differentiate agreement with Bank of Hawaii (BOH), (BOH), Hawaii of Bank with agreement in based banks largest the of one fee preferential a started and Hawaii, remittances overseas for treatment of introduction mutual and BOH to bankers from June 1, 2018. For high net joint consider will we customers, worth services and products of development that use each other’s strengths, such as support for asset succession in Hawaii. function, SMBC Trust Bank is engaged in in engaged is Bank Trust SMBC function, supporting as such vitalization, regional of management and development the aquariums. we concluded with Bank of Singapore, Singapore, of Bank with concluded we Asia in mainly operating bank private a joint on work will we East, Middle the and for services and products of development high net worth customers. customers’ various needs with “speed “speed with needs various customers’ and challenge (fighting spirit)”. Bank of Singapore Bank of Hawaii Topics SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P023-036.indd 28 28 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 29 2018/08/02 14:13 SMBC TRUST BANK ANNUAL REPORT 2018 Masahiro Yamaguchi Head of Investment Research Department Senior market analyst Media Appearances Media JIJI PRESS, Nihon Keizai Shimbun (the Nikkei Nikkei (the Shimbun Keizai Nihon PRESS, JIJI Our analysts, mainly mainly analysts, Our “Morning Satellite Satellite “Morning TV Programs Fiscal Year 2017 2017 Year Fiscal

Newspapers and Wire Services newspaper) , Nikkei QUICK, Bloomberg, Reuters, Reuters, Bloomberg, QUICK, Nikkei , newspaper) Yomiuri Shimbun, etc. senior analysts, often often analysts, senior andmedia, the in appear and currency provide other market information. Appearance ● ● Tame” (Nikkei CNBC), “Biz Street”“Biz (Tokyo CNBC), Tame” (Nikkei Broadcasting System Television (TBS)), “Hodokyoku”(Fuji Television Television “Hodokyoku”(Fuji (TBS)), Television System News” (TV Tokyo), “Keizai “Morning Frontline” BS1), (NHK “AfternoonExpress”, “Wrap Express”, Today”, “YEN and etc. MX2), “STOCKVOICE”(Tokyo Network), and Media Appearances and Media Market Reports Seminars The Investment Research Department analyzes the the analyzes Department Research Investment The a through information market latest the offer We And every business day, analysts our and seminars of variety a hold We a in offices branch our at held are seminars The global economy and financial markets, and provides provides and markets, financial and economy global them to our retail customers. unbiased views on including PRESTIA Global Research number of reports Market Daily and Report, Market Weekly Monthly, Report. Insight, PRESTIA send we a concise analyst comment financial on topic hot a for registered the to markets, our of addresses email customers. markets, financial and economic on views their share an in outlook market and environments, investment satisfy can we that so manner easy-to-understand experienced to beginners from customers many investors. home-like atmosphere or a hotel that can accommodate many more customers. We sometimes hold seminars for customers of SMBC. In addition, our analysts visit some and environments investment explain and customers market prospects face to face. Holding Seminar Holding

68 Kawaramachi-Higashiiru-Shincho, Shijo-dori, Shimogyo-ku, Kyoto-shi, Kyoto Kansai International Airport No.3 Foreign Exchange Counter Kansai International Airport No.2 Foreign Exchange Counter Narita International Airport No.2 Foreign Exchange Counter Kansai International Airport No.1 Foreign Exchange Counter Foreign Exchange Counters: Exchange Foreign EXCHANGE PRESTIA

We took over the operations of SMBC’s currency exchange counters counters exchange currency SMBC’s of operations the over took We PRESTIA EXCHANGE has 23 stores nationwide mainly at airports airports at mainly nationwide stores 23 has EXCHANGE PRESTIA for individuals, and reopened them under the brand name “PRESTIA “PRESTIA name brand the under them reopened and individuals, for PRESTIA at cash in exchange for reception from customers. favorable 23 Sannomiya Foreign Exchange Counter 1-5-1 Sannomiyacho, Chuo-ku, Kobe-shi, Hyogo 16 Exchange Counter Nagoya Midland Square Foreign 1-1 Aza-Furugome, Furugome, Narita-shi, Chiba 17 Umeda Foreign Exchange Counter 4-7-1 Meieki, Nakamura-ku, Nagoya-shi, Aichi 18 Namba Foreign Exchange Counter 1-1-3 Shibata, Kita-ku, Osaka-shi, Osaka 19 5-1-60 Namba, Chuo-ku, Osaka-shi, Osaka Currency exchange locations 1 Yurakucho Mullion Foreign Exchange Counter 2 Akihabara Foreign Exchange Counter 2-5-1 Yurakucho, Chiyoda-ku, Tokyo 3 Ginza Foreign Exchange Counter 1-6-5 Kanda-Sakumacho, Chiyoda-ku, Tokyo 4 Roppongi Foreign Exchange Counter 6-10-1 Ginza, Chuo-ku, Tokyo 5 Asakusa Foreign Exchange Counter 6-1-21 Roppongi, Minato-ku, Tokyo 6 Haneda Airport Foreign Exchange Counter 2-17-12 Kaminarimon, Taito-ku, Tokyo 7 Shibuya Foreign Exchange Counter 2-6-5 Haneda Airport, Ota-ku, Tokyo 8 Futako-Tamagawa Foreign Exchange Counter 28-4 Udagawacho, Shibuya-ku, Tokyo 9 Shinjuku Foreign Exchange Counter 2-24-9 Futako-Tamagawa, Setagaya-ku, Tokyo 10 Shinjuku Nishiguchi Foreign Exchange Counter 3-24-1 Shinjuku, Shinjuku-ku, Tokyo 11 Ikebukuro Foreign Exchange Counter 1-7-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 12 Machida Foreign Exchange Counter 2-27-9 Minami-Ikebukuro, Toshima-ku, Tokyo 13 Yokohama Foreign Exchange Counter 6-12-1 Haramachida, Machida-shi, Tokyo 14 Narita International Airport Foreign Exchange Counter 1-12-7 Minami-saiwai, Nishi-ku, Yokohama-shi, Kanagawa 15 1-1 Aza-Goryobokujo, Sanrizuka, Narita-shi, Chiba 20 1 Sensyu-Kuko-Naka, Tajiri-cho, Sennan-gun, Osaka 21 14 Sensyu-Kuko-Naka, Tajiri-cho, Sennan-gun, Osaka 22 Shijo Foreign Exchange Counter 14 Sensyu-Kuko-Naka, Tajiri-cho, Sennan-gun, Osaka EXCHANGE” on Sunday, April 1, 2018. 1, Sunday, April on EXCHANGE” are stations, and train and terminal weekdays on p.m. 3 after open Saturdays, on open also and holidays. national and Sundays, available are currencies Many a with met has which EXCHANGE, Collaboration with Foreign Banks Regional Revitalization Initiatives Regional Revitalization

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P024-037.indd 28-29 28 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 31 2018/08/02 14:13 SMBC TRUST BANK ANNUAL REPORT 2018 Operating Results and Financial Position Operating Results Deposits increased by ¥72.7 billion from the previous fiscal fiscal previous the from billion ¥72.7 by increased Deposits the from billion ¥20.9 by decreased equity Stockholders’ As a result of the decrease in stockholders’ equity and an increase Gross banking profit increased by ¥9.3 billion year-on-year to to year-on-year billion ¥9.3 by increased profit banking Gross ¥392.3 by increased discounted bills and loans of balance The year fiscal previous the from billion ¥13.6 by increased Securities year end to ¥2,540.5 billion as both foreign currency deposits and and deposits currency foreign both as billion ¥2,540.5 to end year Japanese yen deposits increased. previous fiscal year end to ¥128.2 billion, while risk-weighted assets to end year fiscal previous the from billion ¥212.0 by increased ¥894.6 billion primarily due to the accumulation of overseas loans. by decreased ratio adequacy capital the assets, risk-weighted in 7.52% from the previous fiscal year end to 14.32%. ¥44.2 billion primarily due to an increase in interest on loans and and loans on interest in increase an to due primarily billion ¥44.2 transactions lending overseas increased from arising discounts sales of investment trusts. mainly in the Americas as well as strong expenses (excluding On the other hand, general and administrative as billion ¥50.2 at level same the maintained losses) non-recurring of promotion by offset was growth top-line for aiming expenditure fiscal the for profit banking result, a As measures. reduction cost the from billion ¥9.3 by improved 2018 31, March ended year previous fiscal year to -¥6.0 billion. to ¥1,002.4 billion due to an billion from the previous fiscal year end foreign in denominated transactions lending overseas in increase other factors. currencies mainly in the Americas and government of billion ¥262.4 of consisting billion, ¥295.4 to end bonds, ¥10.2 billion of bonds and ¥22.8 billion of other securities. Deposits Capital adequacy ratio Profits and losses Loans and bills discounted Securities tensed situation in North Korea and other factors. In early November, however, U.S. dollar however, U.S. dollar factors. In early November, in North Korea and other tensed situation toward interest rate hikes to growing expectations the ¥114.5-114.9 level due increased to the depreciated to However, U.S. dollar temporarily of tax reforms in the U.S. and realization fiscal the current end of at the level ¥106 of the half in the first was level and ¥104.5-104.9 downscale its monetary that the BOJ would among other things, expectations year due to, a sharp drop concerns over and the U.S., in deficit fiscal over the concerns policy, easing trade friction caused by U.S. employment statistics. in stock prices and intensifying Euro 508 (※) 1282 2018 943 886 1432 2018 2018 9462 March 31, 25405 March 31, March 31, 8946 6666 (Billions of Yen) Billions of Yen , % 554 1491 Foreign currency 2017 894 Millions of local currency 2017 2017 2184 9241 March 31, 24678 March 31, March 31, 6826 6138 525 489 Capital adequacy ratio 2016 943 2016 918 2016 March 31, 9384 Risk-Weighted Asset Capital 05 U.S. dollars Australian dollar 14352 15437 15 23736 5188 March 31, March 31, Japanese yen Capital/Risk-weighted Asset/Capital adeguacy ratio (※) BIS Capital Balance of Deposits by currency 62 Balance of Deposits Balance of 2) ※ ( 102 228 60 442 024 954 005 Year ended 2018 2018 2 2624 5019 5 March 31, 2018 10 Banking profit March 31, Billions of Yen arc 31 Billions of Yen (Billions of Yen) 110 102 153 502 502 349 606 977 2017 2818 6101 2 3124 Year ended 2017 2 March 31, March 31, 2017 arc 31 1) ※ 34 ( 68 162 Before provision for general 230 Excluding non-recurring losses 607 662 2016 2641 2 1318 General and Administrative Expenses Gross banking profit 1344 2016 2 1 2 Japanese government bonds Japanese corporate bonds Others Japanese yen currency Foreign March 31, Year ended Income Analysis reserve for possible loan losses arc 31 March 31, 2016 Balance of Securities Balance of Loans and Bills Discounted Economic and Financial Environment Economic and Having reviewed the Japanese economy in the current year, the annualized quarter-on- economy in the current year, the annualized Having reviewed the Japanese CPI) in February 2018, excluding With regard to prices, the Consumer Price Index (core range the from recovered Average Stock Nikkei the market, stock domestic the to As primarily prevail, to continued rates interest ultra-low market, bond domestic the In level ¥108.0-108.4 the from appreciated dollar U.S. market, exchange foreign the In The following are an overview of SMBC Trust’s business activities business activities of SMBC Trust’s are an overview The following quarter growth rate of the real Gross Domestic Product (“GDP”) for both the period from from period the both for (“GDP”) Product Domestic Gross real the of rate growth quarter growth high a demonstrated September to July from period the and 2017 June to April growth the While recovery. economic global by supported exports strong to due 2.4% of was the eighth the period from October to December 2017, this rate was down to 1.6% for private steady by contributed 1989, to 1986 since growth positive of quarter consecutive performance improved. consumption as corporate since 2015 when the consumption tax fresh food, rose to 1% year-on-year for the first time indicators used all four 2017, to September July from period In the the prices. affected hike deflator, GDP CPI, core (i.e. deflation overcoming for indicator an as government the by first the for increase year-on-year a recorded gap) supply-demand and costs, labor unit time in 25 years. of half second the from period the during level ¥20,000 the reach to ¥18,000-18,500 of Korea North in situation the over concerns diminishing to due 2017, May early to April from the end of September to the end and the political instability in Europe. Subsequently, 16 of high record a recording ¥23,000, around to sharply rose prices stock year, the of other things, high stock prices globally consecutive rises against the backdrop of, among to year this rise to continued prices Stock earnings. corporate Japanese of growth and price in 26 years. Then, stock pricesexceed ¥24,000 in late January, which was the highest and February early in prices stock U.S. plunging to due ¥21,000 around to fell sharply other factors. Recovery of stock was sluggish because of uncertainty in the political prices U.S., combined with the appreciation administration and protectionist trade policies of the As a result, of yen to ¥105 level to U.S. dollar and other factors. the direction of stock prices was uncertain, ranging from ¥21,000 to ¥22,000. 2018 when interest rates exceeded ranging from 0.0% to 0.1%. In July 2017 and February 0.1%, the Bank of Japan (“BOJ”) executed an operation to purchase an unlimited amount of JGBs at fixed rates, thereby restraining the rise in long-term interest rates. On the other amount the in decline a with line in reduced gradually were purchases JGB as hand, was rates interest long-term on pressure downward market, the in JGBs outstanding of alleviated, and hence there was hardly any market situation where interest rates changes to negative rates. presidential French the since diminished concerns political as level ¥114.0-114.4 the to election in April 2017. Publication of weak U.S. economic indicators and other factors drove to summer from However, mid-June. in level yen ¥108.5-108.9 the to dollar U.S. down early autumn, U.S. dollar increased to around the middle of the ¥114 yen level against the backdrop of rising stock prices in major countries and strong U.S. economy. Subsequently, increasingly an by affected level, ¥107.0-107.4 the to back pushed was dollar U.S. in the fiscal year ended March 31, 2018. year ended March in the fiscal Business Overview Business SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business GuidanceGuidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P024-037.indd 30-31 30 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business GuidanceGuidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 31 2018/08/01 9:47 SMBC TRUST BANK ANNUAL REPORT 2018 Operating Results and Financial Position Operating Results The balance of loans and bills discounted increased by ¥392.3 ¥392.3 by increased discounted bills and loans of balance The year fiscal previous the from billion ¥13.6 by increased Securities fiscal previous the from billion ¥72.7 by increased Deposits the from billion ¥20.9 by decreased equity Stockholders’ As a result of the decrease in stockholders’ equity and an increase Gross banking profit increased by ¥9.3 billion year-on-year to to year-on-year billion ¥9.3 by increased profit banking Gross billion from the previous fiscal year end to ¥1,002.4 billion due to an billion from the previous fiscal year end foreign in denominated transactions lending overseas in increase other factors. currencies mainly in the Americas and government of billion ¥262.4 of consisting billion, ¥295.4 to end bonds, ¥10.2 billion of bonds and ¥22.8 billion of other securities. and deposits currency foreign both as billion ¥2,540.5 to end year Japanese yen deposits increased. previous fiscal year end to ¥128.2 billion, while risk-weighted assets to end year fiscal previous the from billion ¥212.0 by increased ¥894.6 billion primarily due to the accumulation of overseas loans. by decreased ratio adequacy capital the assets, risk-weighted in 7.52% from the previous fiscal year end to 14.32%. ¥44.2 billion primarily due to an increase in interest on loans and loans on interest in increase an to due primarily billion ¥44.2 transactions lending overseas increased from arising discounts sales of investment trusts. mainly in the Americas as well as strong expenses (excluding On the other hand, general and administrative as billion ¥50.2 at level same the maintained losses) non-recurring of promotion by offset was growth top-line for aiming expenditure fiscal the for profit banking result, a As measures. reduction cost the from billion ¥9.3 by improved 2018 31, March ended year previous fiscal year to -¥6.0 billion. Securities Deposits Capital adequacy ratio Profits and losses Loans and bills discounted tensed situation in North Korea and other factors. In early November, however, U.S. dollar however, U.S. dollar factors. In early November, in North Korea and other tensed situation toward interest rate hikes to growing expectations the ¥114.5-114.9 level due increased to the depreciated to However, U.S. dollar temporarily of tax reforms in the U.S. and realization fiscal the current end of at the level ¥106 of the half in the first was level and ¥104.5-104.9 downscale its monetary that the BOJ would among other things, expectations year due to, sharp drop a concerns over and the U.S., in deficit fiscal over the concerns policy, easing trade friction caused by U.S. employment statistics. in stock prices and intensifying Euro 508 (※) 1282 2018 943 886 1432 2018 2018 9462 March 31, 25405 March 31, March 31, 8946 6666 (Billions of Yen) Billions of Yen , % 554 1491 Foreign currency 2017 894 Millions of local currency 2017 2017 2184 9241 March 31, 24678 March 31, March 31, 6826 6138 525 489 Capital adequacy ratio 2016 943 2016 918 2016 March 31, 9384 Risk-Weighted Asset Capital 05 U.S. dollars Australian dollar 14352 15437 15 23736 5188 March 31, March 31, Japanese yen Capital/Risk-weighted Asset/Capital adeguacy ratio (※) BIS Capital Balance of Deposits by currency 62 Balance of Deposits Balance of SMBC信託銀行2018_EN_P023-036.indd 31 2018/08/01 9:47 Reputational risk Compliance Audit Division Management Dept. Audit & Supervisory Board Committee legal risk Business Operation Committee Promotion of Customer-oriented Operation and System Business Compliance Dept. tangible Administrative Services Dept. Asset risk Committee discussion and report Trust Underwriting The Risk Management Committee is tasked tasked is Committee Management Risk The risk, credit as such risks major to respect With Human human- with identifying the status of comprehensive risk risk comprehensive of status the identifying with measures, necessary discussing management, Committee. Executive the to reporting regularly and of operation the oversees Directors of Board The Audit the while Committee Management Risk the and effectiveness the verifies independently Unit the overall risk management systemappropriateness of on an ongoing basis. each risk, operational and risk, liquidity risk, market written developed has department management risk which over risks the for procedures and policies Executive The responsibility. has department the sub-committees established has Committee Credit the as such management risk to related are which Committee ALM the and Committee Risk pertaining matters important discussing with tasked presenting and risks respective of management to Management Risk the to reporting and agendas Committee and the Executive Committee. related risk Resources Dept. Operational risk Compliance Committee Tax risk Financial Board of Directors accounting/ Planning Dept. Executive Committee Shareholders Meeting Comprehensive Risk Management risk Sumitomo Mitsui Financial Group System New product etc. System Planning Dept. Judgment Committee departments responsible for managing respective types of risk risk ALM Operational guidance and supervision Committee Operational risk management dept. Dept. Credit Risk Management Committee Credit risk Committee Credit Risk Dept. Investment & Loan Planning (secretariat:Risk Management Department) committees related to risk management Risk risk Dept. risk As a trust bank of SMBC Group providing deposit deposit providing Group SMBC of bank trust a As Liquidity Market Management and loan services and a variety of financial instruments and loan services and risk that recognizes Trust SMBC services, and managerial important most the of one is management associated with business activities challenges. As risks complex, and diverse increasingly becoming are Risk Comprehensive the developed has Trust SMBC basic forth sets which Policy Basic Management to risk management and established matters pertaining the by chaired Committee, Management Risk the as Unit, Management Risk the for responsible officer order in Committee, Executive the of sub-committee a integrated risks in an and manage different capture to as serves Department Management Risk The manner. Committee. a secretariat of the Risk Management Risk Management System Risk Management System of the Risk Management Overview Corporate Infrastructure Corporate present agendas to report SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P023-036.indd 32 32 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel Infrastructure 33 2018/08/01 9:47 SMBC TRUST BANK ANNUAL REPORT 2018 Credit Risk Management prices will change the market value of financial financial of value market the change will prices leading to a loss. products, be difficulties may that there the risk is Liquidity risk for settlements, as a result in raising funds needed sources of and funds uses of of mismatching of the outflows of funds, which may funds or unexpected rates higher at funds raise to necessary it make than normal. The Investment & Loan Planning Department manages Department Planning & Loan Investment The SMBC Trust has formulated the “Credit Policy” and the SMBC Trust has formulated the “Credit been has Committee Risk Credit the Furthermore, Operational risk is the possibility of losses arising arising losses of possibility the is risk Operational processes, internal failed or inadequate from people, and systems or from external events. It It events. external from or systems and people, risk, system risk, processing includes primarily risk human-related risk, accounting/tax risk, legal assetrisk. and tangible Liquidity Risk Operational Risk credit portfolios, plans and drafts operational policies, and seeks to realize a highly effective credit risk management system, and regularly reports to the Executive Committee, the Credit Risk Committee, and other bodies on the status is Department Credit The management. risk credit of analyzing and loans individual reviewing for responsible and stage application an at originated newly loans based assets individual of status actual the assessing The basis. periodic a on standards self-assessment on of verification through ensured is assets of soundness and Department Credit the by appropriateness their auditing by the Internal Audit Department. “Credit Risk Management Rules” which set forth basic basic forth set which Rules” Management Risk “Credit of management comprehensive to pertaining principles identificationcredit risk as well as quantitative and ongoing and credits individual of risk credit of management and credit a implements and established portfolios, and credit policies. these to according system management risk risk, concentration preventing of perspective the From Exposures Large the of Management on “Rules the the to risk-taking enable to established are Framework” capital. extent permissible relative to the level of issues various consider and discuss to established relating to credit risk and oversees credit risk activities, the increase to assets, of self-assessment including involvement by management. Credit Risk Management System

Business Strategy business plan medium-term management plan ● ● taking policy reflection of risk Risk events with significant business impact are selected as top risks

Top risk Management ● Market risk is the possibility that fluctuations in in fluctuations that possibility the is risk Market stock or rates exchange foreign rates, interest SMBC Trust defines credit risk, market risk, liquidity SMBC Trust has implemented a risk capital management management capital risk a implemented has Trust SMBC The Risk Appetite Framework (“RAF”) is a business business a is (“RAF”) Framework Appetite Risk The Credit risk is the possibility of a loss arising from a credit of condition financial the in deterioration as such event, asset (including off-balance that causes an a borrower, sheet transactions) to lose value or become worthless. risk appetite statement indicator risk appetite Risks to be managed Risk Appetite Framework Market Risk Credit Risk risk, and operational risk as described below and and below described as risk operational and risk, appropriately manage these risks. system as part of its comprehensive risk management management risk comprehensive its of part as system to is management capital risk of purpose The activities. be exposure to risk quantifying adequacy by capital maintain risk the for limits upper setting capital, on based managed that within risks managing and area, risk each for exposure is to: (a) determine upper limit. SMBC Trust’s basic framework account sufficient the upper limits for risk capital by taking into capital minimum regulatory the exceed stably that buffers exposures risk capital, risk as quantify, (b) ratio; adequacy and risk, market risk, equity risk, credit with associated and risk, each of characteristics on the based risk operational to manage maximum risk capital for necessary risk areas; and (c) allocate risk capital to necessary units and departments in of limits upper the within manner effective and appropriate an risk capital in accordance with guidelines established. and risk management framework which clarifies the types which clarifies the framework and risk management on take to willing is Trust SMBC that risks of levels and in order to grow profits based or are prepared to tolerate and environment its of understanding appropriate an on its to them reflects and appetite), (risk risks inherent the started has Trust SMBC 2018, From strategy. business to operations business its conducting in RAF the use to and risk management systems. enhance its business ● Systems for Managing Major Risks ● ● Risk Capital Management Risk Appetite Framework Risk Appetite SMBC信託銀行2018_EN_P023-036.indd 33 2018/08/01 9:47 Operational Risk Management SMBC Trust has established an effective framework framework effective an established has Trust SMBC The Operational Risk Management Department has been been has Department Management Risk Operational The To appropriately manage market and liquidity risks, SMBC SMBC risks, liquidity and market manage appropriately To Toidentify the source and thedegree of effects ofrisk operational established within the Risk Management Unit as an organization organization an as Unit Management Risk the within established Furthermore, management. risk operational overall for responsible Risk the to reported is management risk operational of status the for responsible departments the from Committee Management managing respective types of risk while the status of processing and System & Operations the to reported is management risk system management. by involvement the increase to respectively, Committee, Trust sets limits relating to market and liquidity risks to ensure, ensure, to risks liquidity and market to relating limits sets Trust managed appropriately are funds that things, other among loss and limits position are limits such Specifically, funded. and liquidity for limits gap funding and risk market for guidelines capital risk aforementioned the on based addition, In risks. risk capital limit management system, SMBC Trust sets a market limit for units and for internal control purposes and a risk capital risk market the keep to order in necessary where departments and monitor the exposure to a permissible level relative to capital, basis. status of compliance with such limits on a regular for identifying, assessing, controlling and monitoring monitoring and controlling assessing, identifying, for identifies also Trust SMBC risks. operational significant the source and the degree of effects of operational risks them appropriately to manage and seeks be managed to Operational Risk Management System Methods for Managing Market and Liquidity Risks Methods for Managing to be managed and to conduct appropriate risk management by by management risk appropriate conduct to and managed be to has formulated Trust SMBC characteristics, risk account into taking Risk “Operational and Policy” Management Risk “Operational the appetite, risk management policies, and other important matters matters important other and policies, management risk appetite, Directors of Board the and risks liquidity and market to relating The ALM Committee determines to such matters. gives an approval important above-mentioned the on based policies operation ALM risks, liquidity and market to relating limits the within and matters, Management Risk The Committee. Executive the by decided departments business the of independent is which Department, monitors the status of market andthat conduct market transactions, Committee Executive the to reports periodically and risks liquidity and other bodies. and rules are systemrules for and and established processing risks are which Management Rules”. In addition, separate management policies policies management separate addition, In Rules”. Management accordance rules. in managed and with policies such credit and market risk-taking to the extent necessary for necessary extent the to risk-taking market and credit Management of Market and Liquidity Risks

The Executive Committee determines strategies, risk tolerance, With respect to management of market and liquidity risks, SMBC For non-performing loans, SMBC Trust develops a develops Trust SMBC loans, non-performing For As SMBC Trust’ capital may be materially impaired materially be may capital Trust’ SMBC As To keep the credit risk exposure to a permissible level permissible a to exposure risk credit the keep To To appropriately manage risks associated with individual individual with associated risks manage appropriately To Preventing and reducing non-performing loans Preventing and reducing non-performing Controlling concentration risk Risk-taking within the scope of capital Risk-taking within the

Trust has formulated the “Basic Policy on Management of Market Market of Management on Policy “Basic the formulated has Trust and Market of Management on “Rules and Risks” Liquidity and management system, operating an forth set that Risks” Liquidity market to pertaining matters other and methods and framework and market a implements and establishes and risks, liquidity and to: is policy basic Trust’s SMBC system. management risk liquidity (a) allow implementing its business plan but prohibit from risk-taking that aims manage and set (b) and fluctuations; market from profits earn to limits in tolerating market and liquidity risks. loans as well as the credit portfolio as a whole, credit risk by each as a whole, credit risk as the credit portfolio loans as well internal an on based assessed appropriately is loan and borrower manage and identify quantitatively to quantified and system rating through loans individual managing to addition In risk. credit monitoring, obligor and stage application the at loans analyzing activities management risk credit following conducts Trust SMBC improve the soundness and profitability in order to maintain and the medium term. of its credit portfolios in policy on addressing such loan and action plans through, through, plans action and loan such addressing on policy Credit the by reviews loan regular things, other among promptly to seek and bodies other and Committee Risk deterioration implement measures to support for preventing of loans and improving loans to be the normal status, as well as to enhance loan recovery activities and loan security. in the event that the credit concentration risk becomes becomes risk concentration credit the that event the in to limit loan certain a applies Trust SMBC apparent, so as to prevent individual obligors when issuing a loan obligors specific on concentration risk credit excessive loans are issued. and conducts periodic monitoring after relative to capital, SMBC Trust sets a credit risk capital limit relative to capital, SMBC Trust sets a credit risk capital limit for for internal control purposes and sets a and monitors the units and departments where necessary, a regular basis. status of compliance with such limits on System for Managing Market and Liquidity Risks ● ● ● Credit Risk Management Methods Management Credit Risk SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P023-036.indd 34 34 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel Infrastructure 35 2018/08/01 9:47 SMBC TRUST BANK ANNUAL REPORT 2018 Basic Approach Basic The Audit & Supervisory Board of SMBC Trust consists of three Audit & & Audit three of consists Trust SMBC of Board Supervisory & Audit The asset and taxes in engaged been have who experts are auditors Outside In line with management philosophy of SMBC Trust Bank Ltd. (“SMBC In line with management has Board, Supervisory & Audit the with company a as Trust, SMBC (one of them is The Board of Directors of SMBC Trust consists of 13 directors SMBC Trust has introduced an executive officer system and established an an established and system officer executive an introduced has Trust SMBC Supervisory Board members, and two of them are outside auditors. Supervisory Board members, and two of them are outside members of the SMBCmanagement business for many years. SMBC Trust welcomes Supervisory & Audit The members. Board Supervisory & Audit internal as Group to exchange opinions on, Board holds meetings regularly with representative directors establishing of status the Trust, SMBC by addressed be to challenges example, for environment for Audit & Supervisory Board members to perform audits, and important it if measures take to requests also Board Supervisory & Audit The issues. audit deemed necessary. Audit & Supervisory Board members perform audits on execution of duties by directors properly, fairly, and efficiently, and hence are sufficiently fulfilling its roles to supervise business operation of SMBC Trust. Trust”) and Sumitomo Mitsui Financial Group (“SMFG”), SMBC Trust Trust SMBC (“SMFG”), Group Financial Mitsui Sumitomo and Trust”) corporate its of enhancement and strengthening the considered has top management priorities, and are undertaking governance as one of its effectiveness of its corporate governance. measures to improve the system. established the following well versed in corporatean outside director). SMBC Trust appoints experts who are independent and necessary receives and directors, outside as governance appropriateness of SMBC advice and recommendations from them to ensure the Trust welcomes part- Trust’s business. As a member of the SMBC Group, SMBC of ensuring cooperation time directors from the SMBC Group from the perspective one is directors of term The purposes. management Group for group the within in the business environment and can flexibly respond to changes they year so that on an annual basis. performance of execution of their duties can be evaluated Audit & Supervisory Board members and Audit & Supervisory Board Audit & Supervisory Board members and Audit Executive Committee Board of Directors Corporate Governance System Governance Corporate executive of committee executive comprising officers those and with other similar Itdetermines achiefbusiness executive officer once aheld principle. week and in otherbudgets and matters asoperation aspolicy, plans, well based on the basic position execution, forbusiness on reporting the and ofpurpose decisions making a by convened is Committee Executive The matters. other and controls, internal by Resolutions are the determined chief managementpolicy. executive officer after the addition, by In amajority atdeliberation ofpresented meeting. the members the sub-committees These operation. business customer-oriented of promotion the Executive Committee has risk and sub-committees management, for compliance, proposals and forrespectivereporting, conductresearches, areas. the risk to incur loss in some cases, due to the breakdown, breakdown, the to due cases, some in loss incur to risk the SMBC Trust has established the department responsible for for responsible department the established has Trust SMBC Risk Processing on Policy Basic the in out set matters Important Processing risk is the possibility of losses arising from negligent negligent from arising losses of possibility the is risk Processing SMBC Trust works on the establishment and enhancement of of enhancement and establishment the on works Trust SMBC System risk is the risk to disrupt the provision of services to customers, processing by executives and employees due to failure to comply with with comply to failure to due employees and executives by processing and procedures, and the processing risk management basic policy, rules from incidents or misconducts. raise to working are and risk, processing managing appropriately by risk processing of management its of sophistication of level the SMBC by faced risk processing managing for systems establishing losses in the event of Trust, ensuring in-office inspection, and minimizing plans. processing risk materialization by drafting contingency Management Risk Operational the by drafted are Management Furthermore, Directors. of Board the by determined are and Department a system that ensuresSMBC Trust is also working on the establishment of by, customers our to services processing high-quality of provision the of status the report periodically to process a establishing example, for Committee. processing risk management to the Operations & System approaches and frameworks for appropriately identifying, assessing, assessing, identifying, appropriately for frameworks and approaches from arising risks operational various controlling and monitoring, complex financial services. The departments increasingly diversified and business activities periodically assess inherent responsible for respective in their own department to make improvements and actual risks existing to process escalation an established has and basis ongoing an on management. malfunction, or unauthorized use of computer systems. SMBC Trust seeks to establish and implement a system risk management specific and rules and policies various formulating by system system minimize to policy, security a including standards, management risk and developing contingency plans to minimize damages and losses security cyber to regard with addition, In materializes. risk system a if Trust SMBC years, recent in important increasingly become has which framework its establish to SMFG with cooperation in working been has and strengthen technological measures. System Risk Management and Processing Risk Management by taking into account characteristics of operational risk. of operational into account characteristics by taking Methods Risk Management Operational SMBC信託銀行2018_EN_P023-036.indd 35 2018/08/01 9:47 outsourcing guidance/supervision guidance/supervision Outsourcing management supervisory manager Operations Planning Dept. report report report Risk Management Committee Operations & System Committee management supervisory manager Customer information Customer information guidance/supervision Compliance Promotion Dept. System in Place at SMBC Trust in Place at System for Information Management Efforts In order to appropriately establish a system for customer protection protection customer for system a establish appropriately to order In of information management, SMBC Trust hasRecognizing the importance System and Operations monthly a holds Trust SMBC Specifically, management, the Company has developed internal written policies and and policies written internal developed has Company the management, explanations, customer support, customer procedures concerning customer interest of conflict and management, outsourcing management, information a supervisory manager as follows. management, and has assigned appropriate information management in order to established a framework for a business relationship be a trustworthy trust bank that customers can have policy a announced and developed has Trust SMBC particular, In safely. (Personal information personal of use and protection appropriate the for Ltd.) in accordance Information Protection Declaration by SMBC Trust Bank complied has and Information Personal of Protection the on Act the with Trust SMBC addition, In declaration. this in forth set provisions the with system management information our improving and reviewing been has its of information personal protect to basis ongoing an on operation its and of progress significant the to responding appropriately while customers, information technology in recent years. across participants by attended are which meeting, Committee managing of status the examine to executives, including departments, Trust in detail from information including customer information by SMBC outsourcing and operations systems, monitoring of perspectives the to information management related risks inherent Issues and contractors. Business Consumer Unit, the System & Operations at the discussed are Unit with a view to Unit, the Risk Management Unit and the Compliance developing highly comprehensive measures and solutions. management supervisory manager Customer support Customer management business departments report Dept. guidance/supervision guidance/supervision Client Service Excellence management Conflict of interest Conflict of interest supervisory manager Compliance Committee report report management supervisory manager Customer explanation Customer explanation Business Compliance Dept. “ensure appropriate and sufficient explanations to customers” “ensure appropriate handling of consultations and complaints” “ensure appropriate management of customer information” “ensure the appropriateness of outsourced operations” “ensure that customers' interests are not unduly impaired” “Customer explanation management” intends to “Customer support management” intends to “Customer information management” intends to “Outsourcing management” intends to “Conflict of interest management” intends to dept. Basic Approach Basic SMBC Trust has established the Customer Protection Management Management Protection Customer the established has Trust SMBC as responsibility social has it that recognizes strongly Trust SMBC each risk manager management supervisory Policy in order to improve the protection and convenience of its its of convenience and protection the improve to order in Policy customers. services (including services trust and banking in engaging company a services) and registered financial institution other than banking and trust to is policy basic Trust’s SMBC recognition, such on Based service. customer that ensure to initiatives undertake constantly and proactively of consist which protection, customer including activities, management management, support customer management, explanation customer and management, outsourcing management, information customer conflict of interest management. Customer Protection Management System Management Protection Customer SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P023-036.indd 36 36 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 37 2018/07/31 9:25 department SMBC TRUST BANK ANNUAL REPORT 2018 Human Resources Dept. Client Service Excellence Dept. Compliance Management Dept. Operations Planning Dept. etc ● ● ● ● Customer-oriented business operation SMFG CS Improvement Subcommittee Review of the progress of initiatives and other Thorough implementation of customer-oriented Thorough implementation of customer-oriented Promotion Committee and the Board of Directors Oriented Business Operation Promotion Departments matters by the Customer-Oriented Business Operation matters by the Customer-Oriented Business Operation business operation by each front desk and the Customer- business operation by each front desk and the o These policies are published on the website of of website the on published are policies These by chosen and trusted is that bank a be to order In ec SMFG Group, which is the holding company of the the of company holding the is which Group, SMFG the Group regularly reviews SMBC Group. In addition, the realize to efforts its of progress the assesses and discloses and operation, business customer-oriented the results. value highly provide to seeks Trust SMBC customers, services by leveraging its expertiseadded products and in a wide range of services, and consulting capabilities and management asset banking, commercial including real estate. administration and Dept. Product Planning Corporate Planning Dept. / Business Compliance Dept. Corporate Planning Dept. / Business Compliance (Customer-Oriented Business Operation Promotion Department) (Customer-Oriented Business Operation Promotion Board of Directors Planning Dept. Wholesale Business Each department and branch (within the front offices) Development of action policies and plans Consumer Marketing Dept., Digital Banking Dept. etc Additions and revision, etc. to action plans Customer-oriented business operation promotion manager Customer-Oriented Business Operation Promotion Committee Customer-Oriented Business Operation Promotion Planning Dept. Plan Action Consumer Business In addition to fulfilling its fiduciary duty in good faith duty in good to fulfilling its fiduciary In addition PDCA cycle Customer-oriented business promotion responsible department responsible promotion business Customer-oriented Customer-Oriented Business Operation System Customer-Oriented Business as a trust bank, as a trust bank of the SMBC Group, Group, SMBC the of bank trust a as bank, trust a as for "Principles the adopted has company group each announced Operations" Business Customer-Oriented 2017 30, March on Agency Services Financial the by business customer-oriented the implemented and for Policy "Basic the with accordance in operation Business Operation" established byCustomer-Oriented the "Policy for Customer-Orientedthe SMBC Group and established by the SMBC Group’s Business Operation" Retail Business Unit. Customer-Oriented Business Operation Business Customer-Oriented SMBC信託銀行2018_EN_P037-044.indd 37 2018/07/31 9:25 Compliance System Basic Policy Basic The risk management system established at the the at established system management risk The The audit department which is independent of other other of independent is which department audit The departments independently assesses the activities of the two lines of defense in accordance with an audit plan. Branches, sales representatives, and personnel personnel and representatives, sales Branches, for responsible are development product for responsible managing and controlling risks inherent in, or arising from, each operation such as sales and product development. for responsible is department management internal Each developing a basic risk management policy and establishing an of line second the addition, In system. management risk overall for necessary as supervision and guidance provides defense monitoring the activities of the first line of defense. (See the table for the responsibilities of each department.) Third line of defense (audit department) First line of defense (business departments) Second line of defense (internal management departments)

SMBC Trust aims to be a company trusted by its its by trusted company a be to aims Trust SMBC decision-making supreme the is Directors of Board The

SMBC Trust is comprised of three lines of defense: 1) the business departments, 2) the internal management departments, and 3) the internal audit. stakeholders including the society by placing importance stakeholders including of spirit the on based management company sound on forth in its management philosophy. legal compliance set 3. (1) Risk Management by Three Lines of Defense (1) Risk Management by Three Lines 1. 2. Compliance System Compliance body for important compliance-related matters. A director director A matters. compliance-related important for body the by appointed is Unit Compliance the for responsible director the of leadership the Under Directors. of Board departments, five the Unit Compliance the for responsible Department, Management Compliance the including Compliance Business Department, Promotion Compliance Anti-MoneyDepartment, Compliance Promotion Department, Legal Department,Laundering Compliance Department, and the of system the of establishment the promote and plan compliance support and coordinate and Unit, Compliance the effective matters of each department. In order to ensure a developed has Trust SMBC system, this of functioning compliance policy, compliance basic conduct, of code and officers all that ensure to plan compliance and manual compliance. legal of spirit the of aware fully are employees compliance issues, In order to promptly identify and resolve whistleblowing internal an established has Trust SMBC Trust but those for system and liaisons not only within SMBC the SMFG Group and outside SMBC Trust. Branch Audit Dept. Internal Audit Dept. Head Office Audit Dept. Audit JBA Customer Relations Center Telephone number 0570-017109 or 03-5252-3772 Trust Consultation Center Telephone number 0120-817335 or 03-6206-3988 The Japanese Bankers Association Trust Companies Association of Japan Board of Directors Executive Committee The following are the designated dispute resolution resolution dispute designated the are following The Results of internal audits are reported to audited departments, and and departments, audited to reported are audits internal of Results The Internal Audit Department develops an audit plan by taking into The Internal Audit Department The Internal Audit Department, as an independent department department independent an as Department, Audit Internal The All Segment / All Department recommendations and guidance are provided as necessary. In addition, recommendations and guidance are provided as remedial of follow-up of progress the and audits internal of results the recommendations actions by the audited departments that have received other bodies. are reported directly to the Board of Directors and from other business departments, verifies the appropriateness appropriateness the verifies departments, business other from the including system, control internal the of effectiveness and compliance activities, business of efficiency and effectiveness and the soundness of assets. and risk management, institutions with which the SMBC Trust has entered into a contract. Designated Dispute Resolution Institutions Internal Audit System Internal account the frequency and depth, depending on the type and extent extent and type the on depending depth, and frequency the account audits. internal effective performs and basis, annual an on risks, of Audit Branch the and Department Audit Office Head the Specifically, Department. Audit Internal the within established are Department performs theme audits to conduct The Head Office Audit Department themes. and activities specific on focusing verification cross-divisional department- conducts Department Audit Office Head the addition, In internal control overall of the the appropriateness verify to audits level asset and self-assessments, department, each at place in system Branch The provisioning. and write-off of result the verify to audits challenges and rules the with compliance verifies Department Audit at the branches. related to the overall internal control system in place SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P037-044.indd 38 38 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 39 2018/07/31 9:25 reporting Cooperation Sumitomo Mitsui Banking close cooperation SMBC TRUST BANK ANNUAL REPORT 2018 reporting reporting reporting Compliance Officer Compliance Division Compliance Committee reporting Supervisory Authorities Bank In principle, at least one compliance officer is assigned to officer is assigned at least one compliance In principle, Support and check process each department. A supervisory compliance officer is also also is officer compliance supervisory A department. each a of activities of nature the account into taking by assigned compliance The necessary. deemed where or department with the Compliance Unit of SMBC officer closely cooperates which may lead to violations of laws Trust to prevent any acts compliance the enhance to commits and regulations, and compliance awareness across officers system by deepening training and other activities. and employees through Recognizing that compliance is a critical element for for element critical a is compliance that Recognizing compliance the defense, of lines three the of each and managing, identifying, for are responsible officers attributable or in, inherent risks compliance mitigating Compliance The department. each of activities the to, the to sessions training provides regularly Unit high- a establish to aim an with officers compliance quality compliance system. (3) Appointment of Compliance Officers of Compliance (3) Appointment SMBC Trust Board of Directors Executive Committee assessment, and system development Various types of monitoring, measurement, reporting reporting reporting and branch managers, etc. Risk management Division Risk Management Committee Compliance managers, department Business department The second line of defense The first line of defense Customer explanation management, conflicts of Customer explanation management, screening interest management, and advertising General legal consultation informationContract, litigations, and document management Anti-money laundering measures Accout transaction monitoring Overall supervision of the Compliance Unit of the Compliance Overall supervision Board of Directors, ShareholdersOperation of the Committee Meeting, and Compliance information protection Information security and personnel of financial crimes Investigation and management related to General compliance areas products and services ● ● ● ● ● ● ● ● ● ● Audit Board Audit Division Department Department Department Department Department Department Audit & Supervisory reporting The third line of defense Legal DepartmentLegal Department Business Compliance Business Compliance Anti-Money Laundering Anti-Money Laundering Compliance Promotion Compliance Promotion Compliance Department Compliance Department Compliance Management Compliance Management Compliance Management (2) Role of the Compliance Unit of the Compliance (2) Role SMBC信託銀行2018_EN_P037-044.indd 39 2018/07/31 9:25 Human resource development aiming aiming development resource Human the business to support

In order to achieve sustainable growth, SMBC Trust In order to achieve sustainable growth, SMBC Under the new human resource program, SMBC SMBC program, resource human new the Under in April 2017 56 and 54 new graduates were recruited training provides Trust SMBC time, same the At Develop human resources with wide-ranging knowledge Develop human resources sound business management and experiences for candidates for leadership Develop senior management positions Develop trusted personnel who canprovide thebest services solutions products, and

will further vitalize its organization through human human through organization its vitalize further will exchanges, personnel and development resources and will strive to foster next-generation leaders. Trust has been enhancing its measures in line with its Trust has been enhancing policy. human resource development ● ● ● programs for management with the primary purpose of of purpose primary the with management for programs is continuously enhancing their management skills, and level each at resources human developing on working programs, training the to addition In management. of personnel various implemented has Trust SMBC job and forums job in-house programs, exchange as program) entry open job (in-house program entry and activities know to employees for opportunities has introduced a colleagues of other departments, and development. Thesystem to support autonomous career transfer to program a initiated also has Group SMBC employees of SMBC Trust to overseas offices of SMBC as trainees for human resource development purposes. and April 2018, respectively, with the aim of developing and April 2018, respectively, with the growth. Trust's SMBC drive will that resources human also has Trust SMBC training, new-hire to addition In their in employees for program training new a introduced focusing programs similar other and year fifth and third employees. in particular on the development of younger Basic Policy on Human Resource Strategy on Human Basic Policy

In 2017, SMBC Trust has introduced a new human human new a introduced has Trust SMBC 2017, In As a first step, SMBC Trust has worked on implementingAs a first step, SMBC Trust has worked on Establish a new dialogue-oriented human resource resource human dialogue-oriented new a Establish program and functions diversifying and streamlining Promote of implementation company-wide the through roles the "work style reform" term management plan and personnel assignment according to the medium- the to according assignment personnel and Implement recruitment, human resources development,

resource program that integrates multiple existing existing multiple integrates that program resource to efforts undertaking been has and programs In employees. across program new this disseminate has implemented various measures 2017, SMBC Trust three basic policies to become based on the following self- and society by trusted is which organization an various with employees and officers by respected backgrounds. ● ● ● Human Resource Strategy Resource Human personnel fair more a on based treatment personnel the for person right of assignment and evaluation the implementing of goals the are which job, right personnel of terms In program. resource human new engaged proactively has been Trust allocation, SMBC of transfer the including efforts rotation personnel in offices front the to office head the from personnel the within departments between transfer the and of functions SMBC Trust to promote the diversification also has Group SMBC The personnel. of roles and the across exchanges personnel promoting been employees of number the increasing including group, transferred from SMBC to SMBC Trust and vice versa. Going forward, SMBC Trust will continue to proactively the development, resources human hiring, promote resources, human diverse of participation active company-wide the and employees, female including implementation of work style reforms. SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P037-044.indd 40 40 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 41 2018/07/31 9:25 SMBC TRUST BANK ANNUAL REPORT 2018 Diversity & Inclusion Diversity

SMBC Trust has been certified by the Minister Minister the by certified been has Trust SMBC to women of appointment the to addition In of Health, Labour and Welfare as a “company with with “company a as Welfare and Labour Health, of Promotion on “Act the under initiatives” excellent the in Advancement and Participation Women’s of the awarded been has and “Act”), (the Workplace” the in ranking highest the is which status “Eruboshi” As Act. the under companies certified of levels three efforts, SMBC Trust strives to part of work-style reform and enhance the work-life balanceimprove productivity in organization an create to aiming employees, its of including resources, human of range diverse a which of ratio The role. active an play can mothers, working significantlywomen in managerial positions was 29.3%, 2017, October In average. industry the than higher Inclusion & Diversity the established has Trust SMBC its enhance further to order in Committee Promotion traditionally company a as competitiveness corporate Achievementshaving a strength in the area of diversity. include committee this by activities promotion the of paid a on leave care nursing the of introduction the short-term a of establishment newly the and basis male for primarily designed is which leave childcare care to designed leave care family a and employees for physical condition of family members. for systems the to changes and positions managerial Trust sendsthe purposes of promoting diversity, SMBC as programs, training to candidates management reforms work-style or diversity on research to as well and academia. organized in collaboration with industry rewarding more a realize to aims Trust SMBC support providing as such environment, workplace and work balancing for responsibilities family a establishing and remote work system, and will continue its efforts to organization an create that will enable each and human diverse every an play to resources active role. (As of March 1, 2018) (As of March

Work-style Reforms Employment of Persons with Disabilities of Persons Employment

We are certified by the Tokyo Metropolitan Government We are certified by the Tokyo Metropolitan In April 2018, SMBC Trust has established the Business In April 2018, SMBC Trust has established Since 2017, SMBC Trust has regarded work-style work-style regarded has Trust SMBC 2017, Since SMBC Trust satisfies the 2% statutory employment employment statutory 2% the satisfies Trust SMBC Goalball Association also supports the Japan SMBC Trust as a company committed to work-style reform. as a company committed to work-style reforms as one of the key measures under its medium- its under measures key the of one as reforms on improvement term management plan and is working robotics of promotion and efficiency operational of process automation. rate of persons with disabilities. rate of persons strengthening Goalball, and promoting on works which SMBC addition, In Games. Paralympic the of one to foster an environment such Trust undertakes efforts on employees all to sessions training providing as with working when know to need they considerations persons with disabilities. Transformation Department within the Corporate Corporate the within Department Transformation processes Planning Department. By reviewing business will Trust SMBC skills, employees’ improving and and resources human diverse of growth the promote SMBC Trust contribute to the growth of the organization. business streamlining of challenges on take also will promoting efficiency, improving and processes skills, improve to rotation) (job exchanges personnel encourage their and raising awareness of employees to reforms. willingness to participate in work-style SMBC信託銀行2018_EN_P037-044.indd 41 2018/07/31 9:25

Focused SDGs Community

(Promoting diversity) order to contribute to the creation of communities in safety and security to all, in Issues we should address A financial group that provides which everyone can participate Creating a corporate culture derives strength from diversity Achieve safe/secure communities Promote social inclusion Reconstruct natural disasters ● ● ● Customer satisfaction

Response to anti-social forces Rigorous information management

developed three new themes: Environment, Next Next Environment, themes: new three developed medium- its are These Community. and Generation, SMBC the of core the forming priorities long-term to CSR in engaged are We activities. CSR Group's the of companies other with collaboration in activities continue also will We themes. the pursue to Group Development Sustainable the achieve to activities the by the United Nations. Goals (SDGs) adopted Focused SDGs Focused SDGs (Work-Life balance) Creating a pleasant Next Generation Issues we should address Corporate governance workplace for all employees skills, particularly by spreading and entrenching financial literacy A financial group that contributes to the development of all people’s Support for growth industries Contribute to emerging countries Promote financial literacy education to create a more empowering future

● ● ●

Risk management

Interaction with stakeholders Fair business practices and competitions development that Human resources Focused SDGs Key issues to be addressed on a solid management base Key issues to be addressed on a solid management Environment [Priority issues (Materiality) that SMBC Group address] [Priority issues (Materiality) embodies our five values As a Financial Group, be a Bridge to the Future As a Financial Group, Issues we should address realize a sustainable society the lives of all, in order to help to the preservation of the global environment: the foundation for A financial group that contributes ● Promote environmental business ● Manage environmental risks impacts ● Reduce environmental Priority Issues that SMBC Group should address (Materiality) that SMBC Group should Priority Issues

In response to the demands of its stakeholders stakeholders its of demands the to response In As a company of the SMBC Group, we recognize recognize we Group, SMBC the of company a As and in order to contribute to settling social issues, issues, social settling to contribute to order in and and priorities its reviewed has Group SMBC the the public-facing nature of our business and consider consider and business our of nature public-facing the social sustainable to contribute to important it our of Many activities. business through development participate also members family their and employees activities of their own accord. in social contribution CSR(Corporate Social Responsibility) Activities Social Responsibility) CSR(Corporate SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P037-044.indd 42 42 Philosophy Infrastructure Corporate Management Corporate Philosophy Management Vision Bank Outline Business Guidance Financial Data Disclosure Items Based on Pillar of Basel

Infrastructure 43 2018/07/31 9:25 SMBC TRUST BANK ANNUAL REPORT 2018 through volunteer activities. For example, our new new our example, For activities. volunteer through the Tama at event in a volunteer participated graduates Zoological Park in May 2017 to cut down the bamboo to fences make and mountains the in grown grass protect plants, etc. targets by all countries and regions, not just emerging regions, not just emerging all countries and targets by ensure inequalities, reduce poverty, end to nations, etc. change, climate combat and education, quality ones from the goals the we will choose Going forward, our strength. to focus on by demonstrating

Environment The Sustainable Development Development Sustainable The (SDGs) effort Goals

We also work on global environmental conservation conservation environmental global on work also We Together with other SMBC group companies, we we companies, group SMBC other with Together The Sustainable Development Goals (SDGs) were were (SDGs) Goals Development Sustainable The take part in various volunteer activities. In the past, past, the In activities. volunteer various in part take we have undertaken clean-up initiatives at the Odaiba and (Kobe) Beach Suma the (Tokyo), Park Marine along the riverbed of the Yodo River (Osaka). adopted by the United Nations General Assembly Assembly General Nations United the by adopted 169 and goals 17 achieving of aim the with 2015, in Activities in Fiscal 2017 SMBC信託銀行2018_EN_P037-044.indd 43 2018/07/31 9:26

Community

With the aim of solving social challenges, we have have we challenges, social solving of aim the With sports encourage to commitment our of part As been working on new public-private partnership partnership public-private new on working been with collaboration in (SIB) Bond Impact Social called Corporation. In July 2017, we Sumitomo Mitsui Banking package financing SIB full-fledged first the arranged Prevention the for “Program City’s Kobe for Japan in way, this In Nephropathy.” Diabetic of Aggravation of challenges social the for support financial provide we and local communities. faced by modern societies the supporting been have we people, disabled for We 2016. August since Association" GoalBall "Japan our for events experience goalball held also have disabled the with themselves familiarize to employees dissemination the to contribute further will We sports. through volunteer and development of disabled sports activities.

Next Generation

SMBC Trust Bank exhibits art art exhibits Bank Trust SMBC SMBC Trust co-sponsors an economic education education economic an co-sponsors Trust SMBC works of students from Joshibi Joshibi from students of works our at Design and Art of University likewise and, Headquarter, Tokyo at Arts of University Osaka from SMBC year, Last Office. Osaka our official an as sponsored, Trust the by hosted programs partner, to Arts the of University Tokyo and anniversary 130th university’s the commemorate received a letter of gratitude. SMBC Trust will continue to support students who are pursuing careers to be an artist. program designed for fifth-grade elementary school school elementary fifth-grade for designed program program The City”. Student “Shinagawa called students an Japan, Achievement Junior by managed jointly is Ward. Shinagawa and organization, education economic vacant a in located town replica a is City Student The of Ward Shinagawa in school high junior a of classroom from various industries, includingTokyo, where co-sponsors a up set newspapers, and stores, convenience banks, store. Through work experience in booth replicating a real can learn about interactions with the Student City, children SMBC life. working and money, of value the society, the City on a voluntaryTrust sends its employees to the Student into them shape help and children these support to basis the leaders of the next generation. SMBC TRUST BANK ANNUAL REPORT 2018

Corporate ManagementManagement Vision Bank Outline Business Guidance Corporate Financial Data Disclosure Items Based on Pillar of Basel SMBC信託銀行2018_EN_P037-044.indd 44 44 Philosophy Infrastructure Financia nforation

Financial Data

Financial Statements 46 Indicator of Major Business 55 Indicator related to Profit and Losses 56 Indicator related to Deposits 59 Indicator related to Loans 60 Indicator related to Securities 63 Information for Derivatives transactions 64 Indicator related to Trust Business 65 Matters to be Disclosed Concerning Compensation 67

Disclosure Items Based on Pillar of Basel

Composition of Capital Disclosure 68 Qualitative Disclosures 69 Quantitative Disclosure 72

SMBC Trust acquired Citibank Japan’s retail banking business on November 1, 2015 and includes relevant increases arising from this acquisition in the year-end balances and increases from the fiscal year ended March 31, 2016.

SMBC TRUST BANK ANNUAL REPORT 2018 45

SMBC信託銀行2018_EN_P45_78.indd 45 2018/08/01 11:45 Financial Data Philosophy Corporate Management Philosophy Corporate Management Financial Statements Statement of Income (Millions of Yen)

from April 1, 2016 from April 1, 2017 SMBC Trust’s financial statements, comprising of the balance sheets, statements of income, statements of changes in net to March 31, 2017 to March 31, 2018 assets, and notes to non-consolidated financial statements, are audited by KPMG AZSA LLC pursuant to Article 436(2)(i) of the Companies Act. Ordinary income 39,954 50,688 Trust Fees 1,586 1,730

aaeetVso Bank Outline Management Vision Balance Sheet Interest Income 17,634 24,934 Bank Outline Management Vision (Millions of Yen) Interest on loans and discounts 6,422 13,626 March 31, 2017 March 31, 2018 March 31, 2017 March 31, 2018 Interest and dividends on securities 361 762 Interest on call loans 3,196 2,128 Assets Liabilities Interest on deposits with banks 6,939 8,418 Cash and due from banks 1,435,076 1,396,877 Deposits 2,467,806 2,540,534 Interest on interest rate swaps 556 − Cash 7,830 7,922 Current deposits 76,849 137,724 Other interest income 156 (1) Due from banks 1,427,246 1,388,954 Ordinary deposits 1,279,706 1,262,976 Fees and commissions 15,249 19,305 Call loans 281,879 241,891 Time deposits 119,634 122,940 Fees and commissions for remittance 412 386 Securities 281,762 295,418 Other deposits 991,615 1,016,893 Other fees and commissions 14,837 18,918 Payables under securities Japanese government bonds 260,570 262,407 − 251,469 lending transactions Other operating income 5,158 4,369 Japanese corporate bonds 10,243 10,221 Due to trust account 20,961 51,364 Gains on foreign exchange transactions 5,155 4,313 Other 10,948 22,789 Other liabilities 27,947 30,797 Other 2 55 Domestic exchange Other income 325 348 Loans and bills discounted 610,097 1,002,388 190 358

uiesGiac Corporate Business Guidance settlement accounts, credit Business Guidance Other 325 348 Loans on bills 8,489 10,324 Income taxes payable 6,842 269 Ordinary expenses 55,823 57,878 Loans on deeds 540,604 891,957 Accrued expenses 4,552 5,161 Interest expenses 2,266 3,470 Overdrafts 61,003 100,106 Unearned revenue 3 3 Interest on deposits 2,187 3,153 Other assets 20,012 36,660 Derivatives liabilities 10,297 15,962 Interest on call money 24 (20) Prepaid expenses 653 834 Lease obligations 10 7 Interest on payables under securities lending transactions − 13 Accrued income 4,026 5,537 Asset retirement obligations 1,261 1,714 Interest on borrowed money 0 0 Derivatives assets 7,262 8,112 Other 4,789 7,318 Interest on swaps − 270 Infrastructure Infrastructure Corporate Cash collateral paid for 3,471 7,750 Reserve for employee bonuses 1,180 1,282 Other interest expenses 55 53 financial instruments Fees and commissions payments 2,329 2,630 Other 4,598 14,426 Reserve for executive bonuses 48 59 Fees and commissions for remittance 150 159 Tangible fixed assets 4,722 6,170 Reserve for retirement benefits 391 57 Reserve for executive Other fees and commissions 2,179 2,471 Buildings 2,492 2,610 9 11 retirement benefits Other operating expenses 159 57 Reserve for reimbursement of Other 159 57 Lease assets 9 6 484 458 Financial Data Financial Data deposits General and administrative expenses 50,499 50,764 Construction in progress 1,311 2,819 Acceptances and guarantees − 4,005 Other expenses 569 955 Other tangible fixed assets 908 734 Total liabilities 2,518,829 2,880,041 Provision for reserve for possible loan losses 191 232 Intangible fixed assets 66,530 73,231 Net assets Other 377 722 Software 2,689 2,602 Capital stock 87,550 87,550 Ordinary loss 15,869 7,189 Software in progress 16,190 25,542 Capital surplus 128,350 128,350 Extraordinary gains − − Goodwill 13,450 12,727 Legal capital surplus 83,350 83,350 Extraordinary losses 420 448 Disclosure Items Based on Pillar Other intangible fixed assets 34,199 32,359 Other capital surplus 45,000 45,000 Disclosure Items Based on Pillar Losses on disposal of fixed assets 20 139 Prepaid pension cost − 850 Retained earnings (21,808) (27,602) Losses on impairment of fixed assets 400 309 Deferred tax assets 12,097 8,489 Legal retained earnings 80 80 Loss before income taxes 16,289 7,638 Customers' liabilities for − 4,005 Other retained earnings (21,888) (27,682) acceptances and guarantees Income taxes-current 5,408 (6,086) Reserve for possible loan Retained earnings Income taxes-deferred (17,557) 4,241 1,337 (1,570) (21,888) (27,682) losses brought forward Income taxes (12,148) (1,844) Total shareholders' equity 194,091 188,297 Net loss 4,141 5,793 Net unrealized gains (losses) 231 255 on other securities

of Basel Net deferred gains (losses) on of Basel (2,310) (4,179) hedges Total valuation and translation (2,079) (3,924) adjustments Total net assets 192,012 184,373 Total liabilities and total net Total assets 2,710,842 3,064,414 2,710,842 3,064,414 assets

46 SMBC TRUST BANK ANNUAL REPORT 2018 SMBC TRUST BANK ANNUAL REPORT 2018 47

SMBC信託銀行2018_EN_P45_78.indd 46-47 2018/08/02 15:13 Philosophy Corporate Management Statement of Income (Millions of Yen)

from April 1, 2016 from April 1, 2017 to March 31, 2017 to March 31, 2018

Ordinary income 39,954 50,688 Trust Fees 1,586 1,730

Interest Income 17,634 24,934 Bank Outline Management Vision Interest on loans and discounts 6,422 13,626 Interest and dividends on securities 361 762 Interest on call loans 3,196 2,128 Interest on deposits with banks 6,939 8,418 Interest on interest rate swaps 556 − Other interest income 156 (1) Fees and commissions 15,249 19,305 Fees and commissions for remittance 412 386 Other fees and commissions 14,837 18,918 Other operating income 5,158 4,369 Gains on foreign exchange transactions 5,155 4,313 Other 2 55 Other income 325 348

Other 325 348 Business Guidance Ordinary expenses 55,823 57,878 Interest expenses 2,266 3,470 Interest on deposits 2,187 3,153 Interest on call money 24 (20) Interest on payables under securities lending transactions − 13 Interest on borrowed money 0 0 Interest on swaps − 270 Infrastructure Corporate Other interest expenses 55 53 Fees and commissions payments 2,329 2,630 Fees and commissions for remittance 150 159 Other fees and commissions 2,179 2,471 Other operating expenses 159 57 Other 159 57 Financial Data General and administrative expenses 50,499 50,764 Other expenses 569 955 Provision for reserve for possible loan losses 191 232 Other 377 722 Ordinary loss 15,869 7,189 Extraordinary gains − − Extraordinary losses 420 448 Disclosure Items Based on Pillar Losses on disposal of fixed assets 20 139 Losses on impairment of fixed assets 400 309 Loss before income taxes 16,289 7,638 Income taxes-current 5,408 (6,086) Income taxes-deferred (17,557) 4,241 Income taxes (12,148) (1,844) Net loss 4,141 5,793 of Basel

SMBC TRUST BANK ANNUAL REPORT 2018 47

SMBC信託銀行2018_EN_P45_78.indd 47 2018/08/01 11:45 Philosophy Corporate Management Statements of Changes in Net Assets

from April 1, 2016 to March 31, 2017 (Millions of Yen) Valuation and translation Shareholders' equity adjustments Capital surplus Retained earnings aaeetVso Bank Outline Management Vision Other Net Net retained unrealized Total Total net Total deferred Capital earnings gains valuation and assets Legal Other Total Legal Total shareholders' gains stock (losses) translation capital capital capital retained Retained retained equity (losses) on on other adjustments surplus surplus surplus earnings earnings earnings hedges securities brought forward Balance at the beginning of 27,550 23,350 45,000 68,350 80 (17,747) (17,667) 78,232 16 514 530 78,763 the fiscal year Changes in the fiscal year Issuance of 60,000 60,000 − 60,000 120,000 120,000 new shares Net income (4,141) (4,141) (4,141) (4,141) (Loss) Net changes in

uiesGiac Corporate Business Guidance items other than 214 (2,824) (2,609) (2,609) shareholders' equity in the fiscal year Net changes in 60,000 60,000 − 60,000 − (4,141) (4,141) 115,858 214 (2,824) (2,609) 113,249 the fiscal year Balance at the end of the 87,550 83,350 45,000 128,350 80 (21,888) (21,808) 194,091 231 (2,310) (2,079) 192,012 fiscal year Infrastructure

from April 1, 2017 to March 31, 2018 (Millions of Yen) Valuation and translation Shareholders' equity adjustments Capital surplus Retained earnings Other Net Net retained unrealized Total Total net Total deferred assets

Financial Data Capital earnings gains valuation and Legal Other Total Legal Total shareholders' gains stock (losses) translation capital capital capital retained Retained retained equity (losses) on on other adjustments surplus surplus surplus earnings earnings earning hedges securities brought forward Balance at the beginning of 87,550 83,350 45,000 128,350 80 (21,888) (21,808) 194,091 231 (2,310) (2,079) 192,012 the fiscal year Changes in the

Disclosure Items Based on Pillar fiscal year Issuance of − − − − new shares Net income (5,793) (5,793) (5,793) (5,793) (Loss) Net changes in items other than 24 (1,869) (1,845) (1,845) shareholders' equity in the fiscal year Net changes in

of Basel − − − − − (5,793) (5,793) (5,793) 24 (1,869) (1,845) (7,638) the fiscal year Balance at the end of the 87,550 83,350 45,000 128,350 80 (27,682) (27,602) 188,297 255 (4,179) (3,924) 184,373 fiscal year

48 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 48 2018/08/01 11:45 Philosophy Corporate Management Notes to the financial statements The 33rd (From April 1, 2017 through March 31, 2018)

The amounts described herein are rounded down to the nearest (2) Reserve for employee bonuses million yen. The reserve for employee bonuses is provided for payments of bonuses to employees, and recorded at the

Significant accounting policies estimated amount of bonuses which are attributable to the Bank Outline Management Vision current period. 1 Measurement standard and method of securities (3) Reserve for executive bonuses Debt securities classified as held-to-maturity are carried The reserve for executive bonuses is provided for payments at amortized cost (based on the straight-line method) using of bonuses to directors, and recorded at the estimated the moving-average method. Other securities with readily amount of executive bonuses which are attributable to the determinable fair value are carried at prevailing market price at current period. the balance sheet date (cost of securities sold is calculated using (4) Reserve for retirement benefits the moving-average method). However, securities which are The reserve for retirement benefits is provided for payments extremely difficult to determine fair value are carried at cost using of retirement benefits to employees, and recorded at the the moving-average method. necessary amount estimated based on the projected benefit Net unrealized gains (losses) on other securities, net of income obligation and plan assets of pension funds at the end of the taxes, are included in “Net assets”. current period. In calculating the projected benefit obligation, 2. Measurement standard and method of derivatives transactions the benefit formula basis is used to attribute the expected Derivatives transactions are carried at fair value. benefit attributable to the respective fiscal year. 3. Depreciation of fixed assets Unrecognized net actuarial gain (loss) : (1) Tangible fixed assets (excluding lease assets) Amortized on a straight-line basis over a certain Tangible fixed assets are depreciated using the straight- period (mainly 15 years) within the employees’ line method. The estimated useful lives of major items are as average remaining service period commencing from

follows: Business Guidance the following fiscal year in which unrecognized net Buildings: 5 to 20 years actuarial gain (loss) occurred. Others: 3 to 20 years (5) Reserve for executive retirement benefits (2) Intangible fixed assets The reserve for executive retirement benefits is provided for Intangible fixed assets are depreciated using the payments of retirement benefits to directors, and recorded at straight-line method. Capitalized software for internal use is the amount deemed accrued at the end of the current period depreciated over its estimated useful life (5 years). based on the amount of estimated retirement benefits. (3) Lease assets (6) Reserve for reimbursement of deposits Lease assets with respect to non-transfer ownership The reserve for reimbursement of dormant deposits which finance leases, which are recorded in “Tangible fixed assets,” were derecognized from liabilities is provided for the possible are depreciated using the straight-line method, assuming that Infrastructure Corporate losses on the future claims of refunds, and recorded at the lease terms are their useful lives and residual values are the amount deemed necessary based on possible losses zero. estimated according to the future claims of refunds. 4. Treatment of deferred assets 7. Hedge accounting method Stock issuance cost is recognized as expense in full when payments Interest rate risk hedge are made. As for the hedge accounting method applied to interest rate 5. Conversion rule for foreign currency assets and liabilities into risk arising from financial assets and liabilities, SMBC Trust Bank Japanese Yen Ltd. (SMBC Trust) applies deferred hedge accounting stipulated

Foreign currency assets and liabilities are converted into Financial Data in “Treatment for Accounting and Auditing of Application of Japanese yen by the prevailing Foreign Exchange rate as of Accounting Standard for Financial Instruments in Banking balance sheet date Industry” (JICPA Industry Audit Committee Statement No. 24). 6. Basis for recording reserves In this hedging, hedged items are identified through grouping (1) Reserve for possible loan losses on a basis of interest rate indices and certain repricing periods, The reserve for possible loan losses is provided as detailed and interest rate swaps are designated as a hedging instrument. below in accordance with the internal standards for write- With respect to the assessment of hedge effectiveness, hedge is offs and provisions. For claims on borrowers that have deemed to be highly effective since it is designated in a way that entered into bankruptcy, special liquidation proceedings or the critical terms applied to the hedged items and the hedging

similar legal proceedings or borrowers that are regarded Disclosure Items Based on Pillar instruments are mostly identical. The hedge effectiveness testing, as substantially in the same situation, a reserve is provided therefore, relies on this result. With respect to the hedge for based on the amount of claims, net of the expected amount specific item, it has also been evaluated as effective. SMBC trust of recoveries from collateral and guarantees. For claims on applies special accounting treatment to interest rate swaps for a borrowers that are not currently bankrupt but are perceived to part of assets. be highly likely to fall into bankruptcy, a reserve is provided at 8. Method and period of Amortization of goodwill, etc. the amount deemed necessary based on an overall solvency Goodwill and intangible fixed assets identified as a result of assessment of the borrowers, net of the expected amount of business acquisition are amortized on a straight-line basis over recoveries from collateral and guarantees. 20 years. For other claims, a reserve is provided based on the 9. Consumption taxes historical loan-loss ratio calculated using the historical loss National and local consumption taxes are accounted for using experience over a certain period of time in the past and other the tax-excluded method. factors. 10. Application of consolidated tax payment system of Basel The primary credit assessment departments, such as SMBC Trust applies consolidated tax payment system with sales departments, assess all claims in accordance with the Sumitomo Mitsui Financial Group, Inc. for the parent company for Standards for Self-Assessment of Asset Quality. The Credit tax consolidation from this fiscal year. Department, independent from these departments, reviews the assessment results, and the Asset Audit Department audits the assessment results.

SMBC TRUST BANK ANNUAL REPORT 2018 49

SMBC信託銀行2018_EN_P45_78.indd 49 2018/08/01 11:45 Philosophy Corporate Management Notes 9. Total amount of monetary claim against directors through deals 132 million yen (Notes to the balance sheet) 10. Total amount of monetary claim against affiliates 1 Bankrupt loans and non-accrual loans at March 31, 2018 were 443,743 million yen nil and 1,016 million yen, respectively. 11. Total amount of monetary liabilities from affiliates “Bankrupt loans” are loans, after write-off, to legally bankrupt 119,580 million yen borrowers to which the events defined in Article 96-1-3 (a) 12. SMBC Trust is restricted to pay dividend from retained earnings to (d) or 96-1-4 of “Order for Enforcement of the Corporation due to article 18 of the Banking Act.

aaeetVso Bank Outline Management Vision Tax Act” (Cabinet Order No. 97 of 1965) have occurred and on which accrued interest income is not recognized as (Notes to Income Statement) there is substantial doubt about the ultimate collectability of 1. Earnings from the transaction with affiliates either principal or interest because they are past due for a Total earnings from investment transactions 7,939 million yen considerable period of time or for other reasons. Total earnings from fee and commission 479 million yen “Non-accrual loans” are loans on which accrued interest Total earnings from other transactions 0 million yen income is not recognized, excluding “Bankrupt loans” and Expenses from the transaction with affiliates loans on which interest payments are deferred in order to Total expenses from funding transactions 324 million yen support the borrowers’ recovery from financial difficulties. Total expenses from fee and commission 1,209 million yen 2 Past due loans (3 months or more) at March 31, 2018 were nil. Total expense from other transactions 611 million yen “Past due loans (3 months or more)” are loans on which the 2. In this fiscal year, losses on impairment of fixed assets are principal or interest payment is past due for 3 months or more, realized as extraordinary losses for following assets with the excluding “Bankrupt loans” and “Non-accrual loans.” difference between recoverable value and book value. 3. Restructured loans at March 31, 2018 were 5 million yen. “Restructured loans” are loans on which terms and conditions place usage Items Realized loss amount have been amended in favor of the borrowers (e.g. reduction Metropolitan Building and other branch 191 million yen of the original interest rate, deferral of interest payments, area fixed assets extension of principal repayments or debt forgiveness) in order Building and other Kinki area branch 96 million yen to support the borrowers’ recovery from financial difficulties, fixed assets uiesGiac Corporate Business Guidance excluding “Bankrupt loans,” “Non-accrual loans” and “Past due Building and other Others branch 21 million yen loans (3 months or more).” fixed assets 4. The total amount of bankrupt loans, non-accrual loans, past due loans (3 months or more) and restructured loans at March SMBC Trust applies to each branch (basement who shares 31, 2018 were 1,022 million yen. common assets physically) as minimum unit for grouping which The amounts of loans presented in Notes 1 to 4 above are the is controlled and monitored profitability continuously. Buildings amounts before deduction of reserve for possible loan losses. where corporate sector, operation and system segments 5. The amount of principal in loan participation accounted for as are located, are treated, in general, as shared asset of the loans to the original borrowers based on “Accounting Treatment company. Unemployed capitals are grouped by objects. This fiscal year, the values of buildings for branches

Infrastructure and Presentation of Loan Participation (JICPA Accounting Practice Committee Statement No. 3)” recorded on the balance have been reduced until recoverable value and realized an sheet were 398,319 million yen at March 31, 2018. extraordinary loss with respect to the reduction amount when 6. Assets offered for collateral are as follows; SMBC Trust is not able to recover the investment amount Assets offered for collateral (including the decision of branch relocation). Securities 250,391 million The recoverable value is derived from the utility value. Liabilities secured by the collateral Payables under securities lending transactions (Notes to the statement of changes in shareholders’ equity) 251,469 million Type and the number of shares issued Financial Data Securities and Cash and due from banks pledged as collateral (Shares in thousands) for the settlement of foreign exchange transactions were 5,007 Number of shares At the million yen and 10 million yen respectively at March 31, 2018. Type of shares At the end of the Note beginning of Increase Decrease Other in Other assets includes security deposits of 3,530 million period the period yen. 7. Commitment line contracts on overdrafts and loans are agreements Common stock 3,418 − − 3,418 to lend to customers when requested to extend a loan, up to Non-voting stock 900 − − 900 a prescribed amount, as long as there is no violation of any Total 4,318 − − 4,318 condition established in the contracts. The amount of unused Disclosure Items Based on Pillar commitments related to these agreements was 112,750 million (Notes to financial product) yen at March 31, 2018. The outstanding of 104,614 million yen is 1. Status of financial instruments for remaining contract term of such commitments within one year. (1) Policies on financial instruments Since many of these commitments are expected to expire SMBC Trust engages in the financial services such as without being drawn down, the total amount of unused deposit taking and lending services, general trust services, commitments does not necessarily affect future cash flow and real estate brokerage. Its banking services primarily requirements. Many of these commitments include clauses include deposit taking, lending, domestic exchange services under which SMBC Trust can reject an application from and foreign exchange service, and its trust services include customers or reduce the contract amounts in the event that money trust, pension trust, investment trust, trust of money economic conditions change, SMBC Trust needs to secure other than money trust, trust of securities, and other trust claims, or other probable events occur. In addition, SMBC services including comprehensive trust. SMBC Trust also Trust may request its customers to pledge collateral such

of Basel undertakes real estate brokerage, real estate consulting, real as premises and securities at the time of the contracts as estate appraisal, real estate asset management, as registered necessary, and take necessary measures such as monitoring financial institution business, financial instruments brokerage, customers’ financial positions, revising contracts when such offering of trust funds beneficiary rights and handling of need arises and securing claims after the contracts are entered private placement, management of securities. into. 8. Accumulated depreciation on tangible fixed assets 1,582 million yen.

50 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 50 2018/08/01 11:45 Philosophy Corporate Management SMBC Trust holds financial assets such as deposits with (a) Organization of credit risk control banks, loans, and bonds, and raises funds through deposits, In SMBC Trust, Investment and Loan planning dept. is etc. Furthermore, it carries out derivatives transactions for the organization to control credit portfolios, planning of purposes of responding to customers’ hedging needs, and policy for operation and making efforts to establish highly also for purpose of controlling market risk related to deposit effective credit risk control, and organized to report the and lending operations. credit risk control status to executive committee and credit (2) Nature of financial instruments and associated risk risk committee periodically. Credit dept. takes role of Financial assets assessment of specific credit items and the Internal audit aaeetVso Bank Outline Management Vision The main financial assets held by SMBC Trust include department audits the accuracy of borrows’ credit ratings deposits with foreign and domestic financial institutions, call and assessment results of borrowers, the appropriateness loans, loans and securities. These assets expose SMBC Trust of credit risk controls etc. to credit risk, market risk and liquidity risk. Credit risk is the (b) Method of credit risk control possibility of a reduction or loss in the value of assets due SMBC Trust, for the purpose of controlling specific credit to factors such as deterioration in the financial conditions of items or overall credit portfolio adequately, comprehends deposit-taking institutions, issuers or borrowers. Market risk and controls credit risks quantitatively to execute the is the possibility of incurring losses arising from fluctuations quantification of credit risks as well as evaluating credit risk in interest rates and exchange rates, etc. Liquidity risk is the of borrowers or credit related transactions appropriately possibilities of arising from difficulty in executing transactions by internal credit ratings. And, in addition to credit in necessary quantities at appropriate prices due to liquidity assessment and the control of specific credit items by reduce than normal. As stated in "(3) Risk Management monitoring of borrowers, following adequate credit risk System for Financial Instruments" below, we control and controls are performed for the purpose of soundness and manage these risks appropriately. profitableness of credit portfolios for maintenance and Financial liabilities improvement of midterm. Financial liabilities of SMBC Trust are primarily deposits. ● Adequate control within the capital Deposits mainly comprise of deposits of domestic individuals SMBC Trust sets maximum limit of credit exposure and domestic companies. Alike financial assets, financial against capital for maximum frame of internal control of

liabilities also expose SMBC Trust to not only market risk but credit risk, and set maximum number of risk capital by Business Guidance also funding liquidity risk which is the risk of SMBC Trust not sections, and organize to monitor the status periodically being able to raise funds due to market turmoil, deterioration for the purpose to maintain credit risks within the allowable in its creditworthiness or other factors. As stated in "(3) Risk range against capital. Management System for Financial Instruments" below, we ● Control not to concentrate credit risk control and manage these risks appropriately. As the concentration of credit risk is possible to damage Derivative transactions significantly of banking capital when it becomes revealed, Derivatives transactions carried out by SMBC Trust include for the purpose of avoiding concentration of credit risk to interest rate swaps, foreign currency swaps, foreign currency specific counterparty, SMBC Trust maintains certain credit options and structured deposits, structured bonds embedded outstanding limitation to each borrower, and organize to with derivatives. Structured deposits are designed to hedge monitor them after the loan execution periodically. Infrastructure Corporate for avoiding direct effects of fluctuations in interest rates and ● Reduction and restriction of problematic loans occurrence exchange rates in the market by (cover) transactions such as With regard of problematic loans, SMBC Trust clarifies deposits and bonds with other financial institutions embedded the guideline and the action plan through periodic review with derivatives. Furthermore, SMBC Trust applies hedge by credit risk committee, then, makes effort to take speedy accounting in which interest rate risk associated with deposits action to protect from the degradation and to support with banks and loans are designated as a hedged item and normalization of them and execution of loan collection and interest rate swap transactions as a hedging instrument. The enrichment of collaterals etc.

hedge effectiveness of these transactions is assessed on a Control of market risk and liquidity risk Financial Data periodic basis. SMBC Trust defines market risk as “the risk of loss by Major risks related to derivative transactions are credit financial product market value fluctuation due to interest risks, market liquidity risks, etc. As stated in "(3) Risk rate, foreign exchange rate and stock price movement”, and Management System for Financial Instruments" below, SMBC control by loss amount limitation from the position due to such Trust controls and manages these risks appropriately. fluctuation, and defines liquidity risk as “the risk of difficulties (3) Risk management for financial products of funding money for transaction cash settlement or being SMBC Trust established “comprehensive risk management enforced SMBC Trust to make funding with unreasonably basic guideline” to cover risk management basic matters, higher rate than usual due to the situation of investment

and, have organized operational system for risk monitoring and funding tenor mismatch or unexpected large fund Disclosure Items Based on Pillar based on it. The board of directors manages to run and withdrawal”, and SMBC Trust controls it by defining gap of monitor comprehensive risk control organization by executive funding and investment. SMBC Trust allows market risk and committee, and the executive committee organizes the liquidity risk within the range of necessity for the execution of Risk management committee as committee to manage the company business plan, however, does not aim to make profit comprehensive risk control. Furthermore, there is the Risk from market fluctuations, and has a basic guideline to set and management committee for the purpose of discussion and maintain limitation of market risk and liquidity risk allowance. decision of material issues related to credit risk, and also (a) Organization of market risk and liquidity risk there is ALM committee to decide the direction with respect SMBC Trust, risk management dept., independent from to assets and liabilities control. market transaction execution, monitors market risk and Credit risk management liquidity risk, and also report to the board of directors and SMBC Trust defines credit risk as “bank’s risk to decrease executive committee etc. periodically.

or lose the value of Asset (including off balance sheet asset) (b) Control method of market risk and liquidity risk of Basel due to the credit event (matter of credit) of borrower’s worse financial situation etc.”, and in accordance with the credit policy and related various control guidelines, organizes to control credit portfolios of loans to make effort to control appropriate level of credit risks.

SMBC TRUST BANK ANNUAL REPORT 2018 51

SMBC信託銀行2018_EN_P45_78.indd 51 2018/08/01 11:45 Philosophy Corporate Management ● Control of market risk (Millions of yen) SMBC Trust controls quantitatively to set up with position Net balance sheet unrealized limit and loss limit guideline for market risk monitoring and Fair value amount gains also with funding gap limit for liquidity risk. It is organized, (losses) for the purpose of controlling market risk within the (1) Cash and due from banks 1,396,847 1,397,439 592 allowable range against capital, to set up maximum usage of market risk capital for internal control and allocate it with (2) Call loans 241,891 241,891 − the maximum usage to each section or department who (3) Securities aaeetVso Bank Outline Management Vision needs to utilize it to be monitored periodically. Bonds classified as held-to-maturity 262,407 263,404 996 ● Quantitative information with respect to market risk Other securities 32,510 32,510 − In SMBC Trust, main financial, products affected by interest rate fluctuation as a material risk parameter, (4) Loans and bills discounted 1,002,388 − − are placements, loans, securities, deposits and interest Reserve for possible loan losses (*1) (1,492) − − rate swaps among financial derivatives. In SMBC Trust, 1,000,896 1,000,222 – 674 as a quantitative indicator for interest rate risk control, Total assets 2,934,553 2,935,468 915 interest rate revenue or loss impact is utilized assuming from 1 basis point (1bp) interest rate fluctuation. For (1) Deposits 2,540,534 2,540,062 – 471 (2) Payables under securities the purpose of estimation of such impact against PL, 251,469 251,469 − the scope of assets and liabilities separated by each lending transactions interest rate tenors, are analyzed to apply certain interest (3) Due to trust accounts 51,364 51,364 − rate fluctuation by tenors under the assumption that all Total liabilities 2,843,367 2,842,895 – 471 risk parameter is constant other than interest rate. The Derivatives transactions (*2) affected amount of current whole portfolio under the above mentioned assumption is 6 million yen as of March 31, Hedge accounting not applied (2,246) (2,246) − 2018. This affected amount is based on the case where Hedge accounting applied (5,602) (5,602) − risk parameters are constant except for interest rate, and Total (7,849) (7,849) −

uiesGiac Corporate Business Guidance not considered the correlation between interest rate and (*1) The amounts do not include general reserve for possible loan losses and specific other risk parameters. And, there is possibility of having reserve for possible loan losses. The reserve against cash and due from banks impact beyond estimation when interest rate is fluctuated are deducted directly from the balance sheet amount due to insignificancy. more than 1 basis point (1bp). (*2) The amounts collectively represent the derivative transactions which are recorded in “Other assets” and “Other liabilities.” Receivables and payables ● Control of liquidity risk arising from derivatives transactions are presented on a net basis, and net In SMBC Trust, liquidity risk is controlled in the framework payable is shown as ( ). of “control of funding gap range”, “establishment of contingency plan” etc. (Note 1) Fair value calculation methodology for financial instruments Funding gap is required amount of funding occurred Assets from the mismatch between investment period and funding (1) Cash and due from banks Infrastructure period, hence, the purpose is to avoid overreliance of short For cash and due from banks with no maturity, the carrying term funding, Risk Management Department monitors amount is used as fair value as it is considered to approximate it as the control function for liquidity risk, and report their fair value. For due from banks with maturity, the present the status to executive committee and ALM committee value discounted by market rates based on maturity is calculated periodically. Also, the action plan for emergency, assuming to determine fair value. With respect to some due from banks huge deposit amount is withdrawn , is also arranged as a embedded with derivatives, when it shall designate the entire contingency plan, due to deterioration of market condition, hybrid contract as fair value, the fair value is calculated based lower credibility of financial institutions, system trouble, on the amount of fair value measured and provided by financial

Financial Data reputation risk and other internal and external reasons. institutions to which such deposits are made. Other than the above mentioned control by monitoring, for (2) Call loans complimentary method, SMBC Trust Bank has funding limit For call loans, the carrying amount is used as fair value as from Sumitomo Mitsui Banking Corporation, Ltd as a parent their transaction period is short and their carrying amount is company. considered to approximate their fair value. (4) Supplementary explanation with respect to financial product (3) Securities evaluation by market price For securities, the value calculated based on prevailing market The evaluation of financial product contains the revaluation prices as at the balance sheet date is used as their fair value. amount based on the market price, and also reasonably With respect to the securities unavailable market price, the fair Disclosure Items Based on Pillar calculated amount when the market price is not available. value is calculated based on the present value of estimated Because the certain condition is applied for the calculation of future cash flow to discount by the non-risk rate associated with the revaluation amount, the value might be different when it is credit risk etc . calculated based on the different preconditions.

2. Fair value of financial instruments The balance sheet amount, fair value and net unrealized gains (losses) of financial instruments as of March 31, 2018 are as follows. This sheet does not contain preferred subscription certificates as it is considered extremely difficult to determine their fair value. (cf. note 2) of Basel

52 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 52 2018/08/01 11:45 Philosophy Corporate Management (4) Loans and bills discounted (Note 4) Deposits scheduled payment amount after balance sheet For loans and bills discounted based on the floating rate, date the carrying amount is used as fair value as it is considered (Millions of yen) to approximate their fair value. For loans and bills discounted More than 1 yr More than 3yr More than 5yr More than Within 1 yr based on the fixed rate, the present value is used as the fair Less than 3yr Less than 5yr Less than 10yr 10yr value, discounted by the rate applied for such new loans and Deposits (*) 2,487,282 8,319 12,130 26,630 6,172 bills discounted. For claims on bankrupt borrowers, effectively Payables bankrupt borrowers and potentially bankrupt borrowers, under aaeetVso Bank Outline Management Vision expected losses on such claims are calculated based on either securities 251,469 − − − − the expected recoverable amount from disposal of collateral or lending transactions guarantees. Since the balance sheet amounts of these claims Due from minus the reserve for possible loan losses approximate are their 51,364 − − − − Trust account fair value, such amounts are considered to be their fair value. As to the loan hedged by interest rate swap for special accounting, Total 2,790,115 8,319 12,130 26,630 6,172 it is treated as a unit with the interest rate swap and the fair (*) Among deposits, demand deposits are included in “within 1yr”. value is calculated according to the fair value calculation method of loans. (Notes to securities) Liabilities 1. Bonds classified as held-to-maturity (as of March 31, 2018) (1) Deposits (Millions of yen) Net For demand deposits, given characteristics of this type of balance unrealized transaction, the amount of payment (i.e. the carrying amount) Type sheet Fair value gains amount demanded on the balance sheet date is deemed as the fair value. (losses) With respect to time deposits, the present value discounted Japanese by market rates, etc. based on the maturity is calculated to Bonds with unrealized government 260,407 261,404 996 determine fair value. For some deposits which are structured gains bonds deposits embedded with derivatives, when it shall designate the Subtotal 260,407 261,404 996

entire hybrid contract as fair value, their fair value is calculated Business Guidance Japanese based on the amount of fair value measured and provided by Bonds with unrealized government 2,000 2,000 (0) financial institutions which are the counterparty to the covered losses bonds transaction of the structured deposit. Subtotal 2,000 2,000 (0) (2) Payables under securities lending transactions Total 262,407 263,404 996 The carrying amount is used as fair value as the contract tenor is short and fair value is considered to approximate carrying amount. 2. Other securities (as of March 31, 2018) (3) Due from trust accounts (Millions of yen) acquisition cost For due from trust accounts, the amount of payment (i.e. balance sheet Net unrealized Type or depreciable Infrastructure Corporate the carrying amount) demanded on the balance sheet date is amount gains (losses) cost deemed as their fair value. Derivatives transactions Bonds 10,221 10,000 221 Government Derivatives transactions are comprised of interest rate − − − derivatives (interest rate swaps) and currency derivatives bond The carrying (forward foreign exchange, foreign exchange swaps, and Corporate amount is 10,221 10,000 221 currency options) and their fair value is based on the value beyond the bond calculated using the discounted present value and option acquisition cost or Others 11,085 10,792 293 depreciable cost valuation models, etc. Foreign Financial Data 11,085 10,792 293 bonds (Note 2) The balance sheet amount of financial products where it is Subtotal 21,306 20,792 514 extremely difficult to determine the fair value is as follows, Bonds − − − and those amounts are not included in the fair value of Government financial instruments “(3) other securities”. − − − (unit : Millions of yen) bond The carrying Corporate Classification Balance sheet amount amount is − − − Securities below the bond

Preferred subscription certificate 500 acquisition cost or Others 11,204 11,350 (145) Disclosure Items Based on Pillar depreciable cost Total 500 Foreign 11,204 11,350 (145) bonds (Note 3) Expected redemption amount from monetary assets and Subtotal 11,204 11,350 (145) securities with maturity date after balance sheet date Total 32,510 32,142 368 (Millions of yen) More than 1 yr More than 3yr More than 5yr More than Within 1 yr Less than 3yr Less than 5yr Less than 10yr 10yr (Note) other securities recognized that it is extremely difficult to Due from 1,364,537 853 7,222 15,210 1,130 determine the fair value banks (unit : Millions of yen) Call loans 241,891 − − − − Classification Balance sheet amount Securities 2,498 260,588 8,834 16,919 5,301 Other Securities 500 Bonds

classified as 2,000 260,000 − − − Total 500 of Basel held-to-maturity Other securities 498 588 8,834 16,919 5,301 These are preferred subscription certificates which are Loans and bills considered extremely difficult to determine the fair value, 107,190 169,162 405,277 72,390 147,700 discounted (*) hence they are not included in the other bonds in the above Total 1,716,117 430,604 421,334 104,520 154,132 list. (*) Among loans and bills discounts, 1,016 million yen for financial claims to the bankrupt borrower or effectively bankrupt borrower and 99,955 million yen with no maturity date specified are not included.

SMBC TRUST BANK ANNUAL REPORT 2018 53

SMBC信託銀行2018_EN_P45_78.indd 53 2018/08/01 11:45 Philosophy Corporate Management (Notes to deferred tax assets and liabilities) (The subsequent events) Significant components of deferred tax assets and liabilities are Business combination between entities under common control as follows: SMBC Trust combined foreign currency exchange business for Deferred tax assets individual customer operated at the foreign currency exchange corner by Sumitomo Mitsui Banking Cooperation and foreign Fair value earnings from 14,096 million yen consolidated tax payment currency exchange business for individual customer operated at the foreign currency exchange corner by SMBC International Business Asset adjustment account 4,982 Cooperation to receive consignment from Sumitomo Mitsui Banking aaeetVso Bank Outline Management Vision Fair value hedge profit loss 1,715 Cooperation, with the effective date of April 1, 2018 by absorption- Loss brought forward from the type split with our company as succeeding company 1,574 previous term Other 3,263 1. Outline of transaction Subtotal 25,632 (1) Name of the company related to business combination and Valuation allowance (6,588) contents of the business concerned Total deferred tax assets 19,043 Name of the company related to business combination : Deferred tax liabilities Sumitomo Mitsui Banking Cooperation The contents of the business concerned : Intangible fixed assets (9,908) Foreign currency exchange business for individual Other (645) customer operated at the foreign currency exchange corner Total deferred tax liabilities (10,554) Name of the company related to business combination : Net deferred tax asset 8,489 SMBC International Business Cooperation The contents of the business concerned : Foreign currency exchange business for individual (Per share data) customer operated at the foreign currency exchange corner Net assets per share 42,698.82 yen to receive consignment from Sumitomo Mitsui Banking Net loss per share 1,341.75 yen uiesGiac Corporate Business Guidance Cooperation (2) Date of business combination : (Transactions with affiliates) April 1, 2018 Parent company and major shareholder companies (3) Legal structure of business combination : Name Possession Transaction Balance Relationship absorption-type split with our company as succeeding company type of the ratio voting transaction amount account (million of affiliates company right (%) (million yen) yen) (4) The name of the combined company : SMBC Trust Bank Ltd. Parent Sumitomo (possessed) Due Due company Mitsui Direct 100% Loans from 267,759 from 183,756 Banking banks banks 2. Outline of applied accounting principal Corporation Interest Accounting Standard for Business Combinations (Accounting Infrastructure Interest earned Standards Board of Japan (“ASBJ”) Statement No.21, September Directors receivable 5,815 928 not from due 13, 2013) and the revised Guidance on Accounting Standard for collected Business Combinations and Accounting Standard for Business Divestures (Accounting Standards Board of Japan (“ASBJ”) Call Call Secondment 257,247 241,891 loans loans Guidance No.10, September 13, 2013)

Interest Interest receivable earned 2,125 49 Financial Data from call not loan collected

Deposits 79,169 Deposits 110,430

Interest Reserve payable 39 for 8 for Interest deposit Disclosure Items Based on Pillar Purchase of 382,811 − − financial claims

Loans 69,327 Loans 101,330 SMBC Subsidiaries Interest Aviation Not Interest of Parent Loans earned Capital applicable receivable 2,875 342 company not Limited from Loan collected Note 1. Transaction amount shows the average balance during the period for Due from Banks, Call Loans, Deposits and Loans. Conditions of transactions are reasonably decided by market interest rate, etc. of Basel

54 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 54 2018/08/01 11:45 Philosophy Corporate Management Indicator of Major Business

(Millions of Yen) "Year ended "Year ended "Year ended "Year ended "Year ended March 31, 2014" March 31, 2015" March 31, 2016" March 31, 2017" March 31, 2018" Ordinary income 5,678 7,379 20,590 39,954 50,688

Ordinary loss 911 1,187 9,547 15,869 7,189 Bank Outline Management Vision Net loss 993 1,343 10,892 4,141 5,793 Capital stock 7,550 27,550 27,550 87,550 87,550 Total number of shares issued Common stock(in thousands) 218 1,018 1,018 3,418 3,418 Non-voting stock(in thousands) − − 900 900 900 Total net assets 5,471 44,125 78,763 192,012 184,373 Total assets 187,484 224,288 2,517,267 2,710,842 3,064,414 Deposits 123,903 114,762 2,373,585 2,467,806 2,540,534 Loans and bills discounted 52,185 55,372 266,214 610,097 1,002,388 Securities 356 − 264,128 281,762 295,418 Capital adequacy ratio (Domestic standard)(%) 14.78 69.40 9.43 21.84 14.32 Dividend payout ratio − − − − − Number of employees 150 248 1,733 2,064 1,988

Trust fees 789 922 998 1,586 1,730 Business Guidance

Loans and bills discounted in the trust 7,159 − − − − assets and liabilities (7,159) (−) (−) (−) (−) 73,405 77,758 118,353 122,285 457,949 Securities in the trust assets and liabilities (73,405) (77,758) (118,353) (122,285) (457,949) 138,644 190,518 412,836 6,013,203 9,047,485 Trust assets and liabilities (138,644) (190,518) (412,836) (6,018,485) (9,065,002) Notes: 1. “Number of employees” has been reported on the basis of full-time workers and includes accepted transfer employees. Infrastructure Corporate 2. Figures in brackets ( ) indicate the amount of "Loans and bills discounted in the trust assets and liabilities", "Securities in the trust assets and liabilities" and "Trust assets and liabilities" including "Trust Assets under the Service-Shared Co-Trustee" . Financial Data Disclosure Items Based on Pillar of Basel

SMBC TRUST BANK ANNUAL REPORT 2018 55

SMBC信託銀行2018_EN_P45_78.indd 55 2018/08/01 11:45 Philosophy Corporate Management Indicator related to Profit and Losses

Gross Banking Profit, Classified by Domestic and International Operations

(Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 aaeetVso Bank Outline Management Vision Classification Domestic International Domestic International Total Total operations operations operations operations Net interest income 1,744 13,623 15,368 1,278 20,185 21,463 (163) (177) Interest income 2,787 15,010 17,634 3,040 22,071 24,934 (163) (177) Interest expenses 1,043 1,386 2,266 1,761 1,886 3,470 Trust fees 1,307 278 1,586 1,480 250 1,730 Net fees and commissions 10,380 2,539 12,919 13,950 2,724 16,674 Fees and commissions 12,343 2,905 15,249 15,364 3,941 19,305 Fees and commissions payments 1,963 365 2,329 1,413 1,216 2,630 Net other operating income − 156 5,155 4,999 0 4,310 4,311 Other operating income 2 5,155 5,158 53 4,315 4,369 Other operating expenses 159 − 159 52 5 57 uiesGiac Corporate Business Guidance Gross banking profit 13,275 21,598 34,873 16,709 27,470 44,180 Gross banking profit ratio (%) 0.85 2.22 1.39 0.91 2.77 1.58 Banking profit − 36,834 21,204 − 15,629 − 33,396 27,166 − 6,230 Banking profit (before provision for general reserve − 36,842 21,465 − 15,376 − 33,320 27,346 − 5,973 for possible loan losses) Notes: 1. Domestic operations include yen-denominated transactions, while international operations include foreign-currency-denominated transactions. Yen- denominated nonresident transactions are included in international operations. 2. Figures in brackets ( ) indicate interest payments between domestic and international operations. Infrastructure 3. There are no corresponding transactions for Net trading income. 4. Gross banking profit ratio = Gross banking profit / Average balance of interest-earning assets × 100.

Income Ratio

(%) Classification Year ended March 31, 2017 Year ended March 31, 2018

Financial Data Ordinary profit to total assets − 0.61 − 0.24 Ordinary profit to stockholders’ equity − 11.72 − 3.82 Net income to total assets − 0.15 − 0.19 Net income to stockholders’ equity − 3.05 − 3.07 Notes: 1. Ordinary profit to total assets = Ordinary profit / Average balance of total assets excluding customers’ liabilities for acceptances and guarantees × 100 2. Ordinary profit to stockholders’ equity = Ordinary profit / (Net assets at the beginning of the fiscal year + Net assets at the end of the fiscal year) divided by 2 × 100 3. Net income to total assets = Net income / Average balance of total assets excluding customers’ liabilities for acceptances and guarantees × 100 Disclosure Items Based on Pillar 4. Net income to stockholders’ equity = Net income / (Net assets at the beginning of the fiscal year + Net assets at the end of the fiscal year) divided by 2 × 100 of Basel

56 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 56 2018/08/01 11:45 Philosophy Corporate Management Average Balance, Interest and Average Rate of Interest-Earning Assets and Interest- Bearing Liabilities

(Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 Domestic International Domestic International Total Total operations operations operations operations aaeetVso Bank Outline Management Vision Interest-earning (25,075) (33,565) Average balance assets 1,551,603 970,013 2,496,540 1,827,449 988,579 2,782,463 (163) (177) Interest 2,787 15,010 17,634 3,040 22,071 24,934 Average rate (%) 0.17 1.54 0.70 0.16 2.23 0.89 Average balance 198,698 225,273 423,972 379,956 386,552 766,508 Loans and bills Interest 1,464 4,958 6,422 1,670 11,956 13,626 discounted Average rate (%) 0.73 2.20 1.51 0.43 3.09 1.77 Average balance 262,413 8,406 270,820 271,327 16,451 287,778 Securities Interest 101 260 361 300 461 762 Average rate (%) 0.03 3.09 0.13 0.11 2.80 0.26 Average balance 7 380,952 380,960 − 257,459 257,459 Call loans Interest 0 3,196 3,196 − 2,128 2,128 Average rate (%) 0.09 0.83 0.83 − 0.82 0.82 Business Guidance Average balance 1,089,138 330,304 1,419,443 1,173,269 294,286 1,467,556 Deposits with banks (Exclude noninterest- Interest 1,064 5,874 6,939 1,070 7,348 8,418 earning deposits) Average rate (%) 0.09 1.77 0.48 0.09 2.49 0.57 Interest-bearing (25,075) (33,565) liabilities Average balance 1,458,835 978,555 2,412,315 1,738,121 994,361 2,698,918 (163) (177) Interest 1,043 1,386 2,266 1,761 1,886 3,470

Average rate (%) 0.07 0.14 0.09 0.10 0.18 0.12 Infrastructure Corporate Average balance 1,385,620 974,430 2,360,051 1,525,126 994,314 2,519,440 Deposits Interest 853 1,333 2,187 1,539 1,614 3,153 Average rate (%) 0.06 0.13 0.09 0.10 0.16 0.12 Average balance 14,699 4,125 18,824 26,079 23 26,103 Call money Interest − 11 36 24 − 20 0 − 20

Average rate (%) − 0.07 0.87 0.12 − 0.07 1.93 − 0.07 Financial Data Average balance − − − 131,745 − 131,745 Payables under securities lending Interest − − − 13 − 13 transactions Average rate (%) − − − 0.00 − 0.00 Average balance 6,767 − 6,767 4 24 29 Borrowed money Interest 0 − 0 − 0 0 Average rate (%) 0.00 − 0.00 − 0.40 0.34 Disclosure Items Based on Pillar Note: Figures in brackets ( ) indicate the average balances of interdepartmental lending and borrowing activities between domestic and international operations and related interest expenses.

Net yield/Interest Rate

(%) Year ended March 31, 2017 Year ended March 31, 2018 Domestic International Domestic International Total Total operations operations operations operations Yield on interest-earning assets 0.17 1.54 0.70 0.16 2.23 0.89 Yield on interest-bearing liabilities of Basel 3.50 0.15 2.17 2.97 0.20 1.98 including general expenses Net yield / Interest rate − 3.33 1.39 − 1.47 − 2.81 2.03 − 1.09 Note: 1. Yield on interest-earning assets = Interest income / Average balance of Interest-earning assets × 100 2. Yield on interest-bearing liabilities including general expenses = Interest expenses + General and Administrative Expenses (Excludes non-recurring expenses) / Average balance of Interest-bearing liabilities × 100 3. Net yield / Interest rate = Yield on interest-earning assets - Yield on interest-bearing liabilities including general expenses

SMBC TRUST BANK ANNUAL REPORT 2018 57

SMBC信託銀行2018_EN_P45_78.indd 57 2018/08/01 11:45 Philosophy Corporate Management Breakdown of Interest Income and Interest Expenses (Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 Domestic International Domestic International Total Total operations operations operations operations Interest income Volume-related increase (decrease) 1,539 7,854 9,545 458 292 2,181 Rate-related increase (decrease) − 320 1,224 607 − 206 6,769 5,118 aaeetVso Bank Outline Management Vision Net increase (decrease) 1,219 9,079 10,153 252 7,061 7,299 Volume-related increase (decrease) 868 4,372 4,760 796 4,468 5,930 Loans and bills Rate-related increase (decrease) − 288 137 330 − 591 2,530 1,273 discounted Net increase (decrease) 580 4,510 5,090 205 6,998 7,203 Volume-related increase (decrease) 62 48 119 3 225 23 Securities Rate-related increase (decrease) 5 210 206 195 − 24 376 Net increase (decrease) 67 259 326 198 201 400 Volume-related increase (decrease) − 4 718 661 − 0 − 1,021 − 1,021 Call loans Rate-related increase (decrease) 0 949 1,001 − 0 − 47 − 47 Net increase (decrease) − 4 1,667 1,663 − 0 − 1,068 − 1,068 Volume-related increase (decrease) 576 3,196 3,760 76 − 640 241 Deposits with banks (Exclude noninterest- Rate-related increase (decrease) − 94 − 780 − 863 − 70 2,114 1,237 earning deposits) Net increase (decrease) 481 2,415 2,897 5 1,473 1,479 Interest expenses Volume-related increase (decrease) 568 734 1,217 226 22 293

uiesGiac Corporate Business Guidance Rate-related increase (decrease) − 1,017 − 540 − 1,617 492 478 910 Net increase (decrease) − 448 193 − 400 718 500 1,203 Volume-related increase (decrease) 471 717 1,194 93 27 155 Deposits Rate-related increase (decrease) − 1,054 − 547 − 1,608 592 252 810 Net increase (decrease) − 583 170 − 413 685 280 966 Volume-related increase (decrease) − 17 3 − 25 − 9 − 35 − 5 Call money Rate-related increase (decrease) − 46 22 − 11 − 0 0 − 39

Infrastructure Net increase (decrease) − 63 26 − 37 − 9 − 35 − 44 Volume-related increase (decrease) − − − 13 − 13 Payables under securities lending Rate-related increase (decrease) − − − − − − transactions Net increase (decrease) − − − 13 − 13 Volume-related increase (decrease) − 0 − 0 − 0 − 0 0 − 0 Borrowed money Rate-related increase (decrease) − − − − 0 − 0

Financial Data Net increase (decrease) − 0 − 0 − 0 − 0 0 0 Note: Volume/rate variance is prorated according to changes in volume and rate. General and Administrative Expenses (Millions of Yen) Classification Year ended March 31, 2017 Year ended March 31, 2018 Salaries and related expenses 20,043 20,102 Retirement benefit cost 1,370 2,172

Disclosure Items Based on Pillar Welfare expenses 2,823 2,903 Depreciation 1,254 1,525 Rent and lease expenses 4,626 4,910 Building and maintenance expenses 3 44 Supplies expenses 183 262 Water, lighting, and heating expenses 147 162 Traveling expenses 221 211 Communication expenses 728 921 Publicity and advertising expenses 2,216 1,629 Membership fees, Contribution and Entertainment expenses 170 173 of Basel Taxes, other than income taxes 3,204 1,487 Business consignment expenses 8,531 9,227 Deposit insurance 264 517 Others 4,707 4,510 Total 50,499 50,764 Note: Includes non-recurring expenses.

58 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 58 2018/08/01 11:45 Philosophy Corporate Management Indicator related to Deposits

Balance of Deposits by Type (Millions of Yen) March 31, 2017 March 31, 2018

Domestic International Domestic International Bank Outline Management Vision Total Total operations operations operations operations Liquid deposits 1,356,556 − 1,356,556 1,400,700 − 1,400,700 Fixed-term deposits 119,634 − 119,634 122,940 − 122,940 Negotiable certificates of deposit − − − − − − Others 12,982 978,632 991,615 8,149 1,008,744 1,016,893 Total 1,489,173 978,632 2,467,806 1,531,790 1,008,744 2,540,534 Notes: 1. Liquid deposits = Current deposits + Ordinary deposits 2. Fixed-term deposits = Time deposits

Average Balance of Deposits by Type (Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 Domestic International Domestic International Total Total operations operations operations operations Liquid deposits 1,266,440 − 1,266,440 1,389,975 − 1,389,975 Business Guidance Fixed-term deposits 113,219 − 113,219 129,272 − 129,272 Negotiable certificates of deposit − − − − − − Others 5,961 974,430 980,391 5,877 994,314 1,000,191 Total 1,385,620 974,430 2,360,051 1,525,126 994,314 2,519,440 Notes: 1. Liquid deposits = Current deposits + Ordinary deposits 2. Fixed-term deposits = Time deposits

Balance of Time deposits, Classified by Maturity Infrastructure Corporate (Millions of Yen) March 31, 2017 More than three More than six More than one More than three Three months or More than five months through six months through year through three years through five Total less years months one year years years Fixed interest rate time 67,000 11,553 10,321 2,742 1,598 26,417 119,634 deposits Financial Data Floating interest rate time − − − − − − − deposits Other time − − − − − − − deposits Total 67,000 11,553 10,321 2,742 1,598 26,417 119,634

(Millions of Yen)

March 31, 2018 Disclosure Items Based on Pillar More than three More than six More than one More than three Three months or More than five months through six months through year through three years through five Total less years months one year years years Fixed interest rate time 62,823 11,826 14,525 2,511 6,508 24,744 122,940 deposits Floating interest rate time − − − − − − − deposits Other time − − − − − − − deposits Total 62,823 11,826 14,525 2,511 6,508 24,744 122,940 of Basel

SMBC TRUST BANK ANNUAL REPORT 2018 59

SMBC信託銀行2018_EN_P45_78.indd 59 2018/08/01 11:45 Philosophy Corporate Management Indicator related to Loans

Balance of Loans and Bills Discounted by Type (Millions of Yen) March 31, 2017 March 31, 2018 Domestic International Domestic International

aaeetVso Bank Outline Management Vision Total Total operations operations operations operations Loans on bills 8,489 − 8,489 10,324 − 10,324 Loans on deeds 236,436 304,167 540,604 397,138 494,818 891,957 Overdrafts 52,295 8,707 61,003 93,244 6,861 100,106 Bills discounted − − − − − − Total 297,221 312,875 610,097 500,708 501,680 1,002,388 Average Balance of Loans and Bills Discounted by Type (Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 Domestic International Domestic International Total Total operations operations operations operations Loans on bills 7,715 − 7,715 9,119 − 9,119 Loans on deeds 142,031 217,717 359,749 299,861 378,343 678,205 Overdrafts 48,951 7,556 56,507 70,975 8,208 79,183

uiesGiac Corporate Business Guidance Bills discounted − − − − − − Total 198,698 225,273 423,972 379,956 386,552 766,508 Balance of Loans and Bills Discounted, Classified by Maturity (Millions of Yen) March 31, 2017 More than three months More than six months More than one year More than three years Three months or less More than five years Total through six months through one year through three years through five years

Loans and bills 27,971 23,611 33,224 104,246 266,905 154,138 610,097

Infrastructure discounted

Fixed interest 30 163,443 3,282 166,757 rates

Floating 104,215 103,461 150,855 358,532 interest rates

(Millions of Yen) March 31, 2018 Financial Data More than three months More than six months More than one year More than three years Three months or less More than five years Total through six months through one year through three years through five years

Loans and bills discounted 119,841 28,241 54,662 159,750 396,347 243,546 1,002,388

Fixed interest 6,074 240,238 6,738 253,051 rates

Floating 153,675 156,109 236,807 546,592 interest rates

Disclosure Items Based on Pillar Notes: 1. Loans with a maturity of one year or less are not classified by floating or fixed interest rates. 2. Loans with no fixed maturity are classified in Three months or less. Balance of Loans and Bills Discounted, Classified by Collateral (Millions of Yen) March 31, 2017 March 31, 2018 Deposits 80,858 150,411 Securities 29,010 51,483 Commercial claims 22,380 50,583 Commercial goods − 112 Real estate 104,111 134,467 of Basel Others 53,813 92,928 Subtotal 290,173 479,985 Guaranteed 7,311 76,684 Unsecured 312,611 445,718 Total 610,097 1,002,388

60 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 60 2018/08/01 11:45 Philosophy Corporate Management Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees

(Millions of Yen) March 31, 2017 March 31, 2018 Deposits − − Securities − − aaeetVso Bank Outline Management Vision Commercial claims − − Commercial goods − − Real estate − 4,000 Others − − Subtotal − 4,000 Guaranteed − 5 Unsecured − − Total − 4,005

Balance of Loans and Bills Discounted, Classified by Purpose (Millions of Yen) March 31, 2017 March 31, 2018 Funds for capital investment 198,694 305,583

Funds for working capital 411,402 696,805 Business Guidance Total 610,097 1,002,388 Notes: 1. Funds for capital investment include Housing Loan and Second house Loan. 2. Funds for working capital include investment capital.

Balance of Loan Portfolio, Classified by Industry (Millions of Yen) March 31, 2017 March 31, 2018 Amount Component Ratio Amount Component Ratio Infrastructure Corporate Domestic % % Manufacturing − − − − Agriculture, forestry, fisheries and − − − − mining Construction − − − − Transportation, communications and 17,150 2.81 25,119 2.50

public enterprises Financial Data Wholesale and retail 325 0.05 312 0.03 Finance and insurance − − 4,300 0.42 Real estate, goods rental and leasing 600 0.09 5,600 0.55 Services 33,835 5.54 43,535 4.34 Municipalities − − − − Others 141,906 23.26 262,114 26.14

Individuals 111,448 18.26 166,585 16.61 Disclosure Items Based on Pillar Subtotal 305,266 50.03 507,566 50.63 Overseas 304,830 49.96 494,822 49.36 Total 610,097 100.00 1,002,388 100.00 Notes: 1. Other are loans to Public sector. 2. Overseas include loan extended overseas.

Loans to Small and Medium-Sized Enterprises (Millions of Yen) March 31, 2017 March 31, 2018

Total domestic loans(A) 305,266 507,566 of Basel Loans to small and medium-sized 146,209 232,837 enterprises(B) Ratio (B)/(A) 47.89% 45.87% Notes: 1. The figures above exclude the loans extended overseas. 2. Small and medium-sized enterprises are individuals or companies with capital stock of ¥300 million or less, or an operating staff of 300 or fewer employees.(Exceptions to these capital stock and staff restrictions include wholesalers: ¥100 million, 100 employees; retailers: ¥50 million, 50 employees; and service industry companies: ¥50 million, 100 employees.)

SMBC TRUST BANK ANNUAL REPORT 2018 61

SMBC信託銀行2018_EN_P45_78.indd 61 2018/08/01 11:45 Philosophy Corporate Management Specific Overseas Loans Not applicable

Loan-Deposit Ratio (%) Year ended March 31, 2017 Year ended March 31, 2018 aaeetVso Bank Outline Management Vision Domestic International Domestic International Total Total operations operations operations operations Year-End Balance 19.95 31.97 24.72 32.68 49.73 39.45 Average Balance 14.34 23.11 17.96 24.91 38.87 30.42

Breakdown of Reserve for Possible Loan Losses (Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 Balance at Increase Decrease Balance at Balance at Increase Decrease Balance at beginning of the during the during the end of the beginning of the during the during the end of the fiscal year fiscal year fiscal year fiscal year fiscal year fiscal year fiscal year fiscal year General reserve for possible loan losses 494 747 494 747 747 1,005 747 1,005 Specific reserve for possible loan losses 651 589 651 589 589 564 589 564 Loan loss reserve for specific overseas − − − − − − − − countries Total 1,145 1,337 1,145 1,337 1,337 1,570 1,337 1,570 uiesGiac Corporate Business Guidance

Write-Off of Loans Not applicable

Risk-Monitored Loans(Bankrupt loans, Non-accrual loans, Past due loans

(3 months or more), Restructured loans) (Millions of Yen)

Infrastructure March 31, 2017 March 31, 2018 Bankrupt loans − − Non-accrual loans 949 1,016 Past due loans (3 months or more) − − Restructured loans 7 5 Total 957 1,022

Financial Data Notes: 1.Bankrupt loans : loans, after write-off, to legally bankrupt borrowers to which the events defined in "Order for Enforcement of the Corporation Tax Act” have occurred 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 : 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) : loans on which the principal or interest payment is past due for 3 months or more, excluding “Bankrupt loans” and “Non-accrual loans.” 4. Restructured loans : loans on which terms and conditions have been amended in favor 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).” Disclosure Items Based on Pillar

Problem Assets Based on the Financial Reconstruction Act (Millions of Yen) March 31, 2017 March 31, 2018 Bankrupt and quasi-bankrupt assets 690 783 Doubtful assets 259 234 Substandard loans 7 5 Subtotal(A) 957 1,023 Normal assets 609,620 1,006,472 Total(B) 610,578 1,007,496 Disclosure loan ratio (A)/(B) 0.15% 0.10% of Basel Notes: 1. Bankrupt and quasi-bankrupt assets: Credits to borrowers undergoing bankruptcy, corporate reorganization, and rehabilitation proceedings, as well as claims of a similar nature. 2. Doubtful assets: Credits for which final collection of principal and interest in line with original agreements is highly improbable due to deterioration of financial position and business performance, but not insolvency of the borrower. 3. Substandard loans: Past due loans (3 months or more) and restructured loans. 4. Normal assets: Credits to borrowers with good business performance and in financial standing without identified problems and not classified into the 3 categories above.

62 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 62 2018/08/01 11:45 Philosophy Corporate Management Indicator related to Securities

Year-End Balance and Average Balance of Trading account securities

Not applicable. aaeetVso Bank Outline Management Vision Balance of Securities by Type (Millions of Yen) March 31, 2017 March 31, 2018 Domestic operations International operations Total Domestic operations International operations Total Japanese government bonds 260,570 − 260,570 262,407 − 262,407 Japanese local government bonds − − − − − − Japanese short-term corporate bonds − − − − − − Japanese corporate bonds 10,243 − 10,243 10,221 − 10,221 Japanese stocks − − − − − − Others − 10,948 10,948 500 22,289 22,789 Foreign bonds − 10,948 10,948 − 22,289 22,289 Foreign stocks − − − − − − Total 270,814 10,948 281,762 273,128 22,289 295,418 Business Guidance Average Balance of Securities by Type (Millions of Yen) Year ended March 31, 2017 Year ended March 31, 2018 Domestic operations International operations Total Domestic operations International operations Total Japanese government bonds 260,659 − 260,659 260,999 − 260,999 Japanese local government bonds − − − − − − Japanese short-term corporate bonds − − − − − − Infrastructure Corporate Japanese corporate bonds 1,754 − 1,754 10,242 − 10,242 Japanese stocks − − − − − − Others − 8,406 8,406 84 16,451 16,536 Foreign bonds − 8,406 8,406 − 16,451 16,451 Foreign stocks − − − − − − Total 262,413 8,406 270,820 271,327 16,451 287,778 Financial Data

Securities-Deposit Ratio (%) Year ended March 31, 2017 Year ended March 31, 2018 Domestic operations International operations Total Domestic operations International operations Total Year-End Balance 18.18 1.11 11.41 17.83 2.20 11.62 Average Balance 18.93 0.86 11.47 17.79 1.65 11.42 Disclosure Items Based on Pillar

Balance of Securities Held, Classified by Maturity (Millions of Yen) March 31, 2017 More than one year More than five years One year or less More than ten years No designated term Total through five years through ten years Japanese government bonds − 260,570 − − − 260,570 Japanese local government bonds − − − − − − Japanese short-term corporate bonds − − − − − −

Japanese corporate bonds − 5,021 5,222 − − 10,243 of Basel Japanese stocks − − − − − − Others − − 5,611 5,336 − 10,948 Foreign bonds − − 5,611 5,336 − 10,948 Foreign stocks − − − − − − Total − 265,592 10,834 5,336 − 281,762

SMBC TRUST BANK ANNUAL REPORT 2018 63

SMBC信託銀行2018_EN_P45_78.indd 63 2018/08/01 11:45 Philosophy Corporate Management (Millions of Yen) March 31, 2018 More than one year More than five years One year or less More than ten years No designated term Total through five years through ten years Japanese government bonds 2,000 260,407 − − − 262,407 Japanese local government bonds − − − − − − Japanese short-term corporate bonds − − − − − − aaeetVso Bank Outline Management Vision Japanese corporate bonds − 5,018 5,202 − − 10,221 Japanese stocks − − − − − − Others 998 4,395 11,998 5,397 − 22,789 Foreign bonds 498 4,395 11,998 5,397 − 22,289 Foreign stocks − − − − − − Total 2,998 269,820 17,201 5,397 − 295,418

Information for Derivatives transactions

Derivative transactions to which the hedge accounting method is not uiesGiac Corporate Business Guidance applied

Currency derivatives (Millions of Yen) March 31, 2017 March 31, 2018 Contract amount Contract amount Classification Type of derivative Valuation Valuation Over Fair value gains Over Fair value gains one year (losses) one year (losses)

Forward rate Sold 8,739 − 60 60 118,277 − 122 122

Infrastructure agreements Over-the- Bought 8,766 − − 33 − 33 116,058 − − 2,365 − 2,365 counter Currency Sold 38,938 − − 60 63 45,352 − − 288 − 74 options Bought 38,938 − 86 − 37 45,352 − 284 142 Total 53 53 − 2,246 − 2,174

Derivative transactions to which the hedge accounting method is applied Financial Data Interest rate derivatives (Millions of Yen) March 31, 2017 March 31, 2018 Hedge accounting Contract amount Contract amount Type of derivative Principal Principal Method items Over Fair value items Over Fair value hedged one year hedged one year Interest-earning/ Interest-earning/

Disclosure Items Based on Pillar bearing financial bearing financial Receive assets such as assets such as Fixed/Pay 264,341 213,874 − 3,078 263,056 206,372 − 5,575 time deposits time deposits Floating Deferral hedge Interest from banks and from banks and method rate swaps loans loans Receive Other Other Float/Pay 5,000 5,000 − 10 5,000 5,000 − 26 securities securities Fixed Receive Special treatment for Interest Float/Pay − − − − Loan 4,220 4,220 Note.2 interest rate swaps rate swaps Fixed Total − 3,088 − 5,602

of Basel Note: 1.SMBC Trust Bank mainly 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 February 13,2002). 2. Interest rate swap amounts measured by the special treatment for interest rate swaps are treated with the loan that are subject to the hedge. Therefore, such fair value is included in the fair value of the relevant hedged items such as loans disclosed in "Notes to financial statements, Financial instruments, 2.Fair value of financial instruments.”

64 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 64 2018/08/01 11:45 Philosophy Corporate Management Indicator related to Trust Business

Statement of Trust Assets and Statement of Trust Assets and Liabilities Liabilities (Millions of Yen) (Trust Assets and Liabilities aaeetVso Bank Outline Management Vision Assets March 31, 2017 March 31, 2018 including the balance of Service- Securities 122,285 457,949 Shared Co-Trustee) Japanese government bonds 32,058 36,545 (Millions of Yen) Japanese corporate bonds 1,917 1,917 Assets March 31, 2017 March 31, 2018 Japanese stocks 17,360 300,820 Securities 122,285 457,949 Foreign securities 67,651 114,978 Japanese government bonds 32,058 36,545 Other 3,297 3,687 Japanese corporate bonds 1,917 1,917 Trust beneficiary right 407,092 799,883 Japanese stocks 17,360 300,820 Entrusted securities 70,017 248,019 Foreign securities 67,651 114,978 Monetary claims 5,239,995 7,139,596 Other 3,297 3,687 Monetary claims for housing loans 5,238,595 7,138,165 Trust beneficiary right 412,371 817,406 Other monetary claims 1,400 1,431 Entrusted securities 70,017 248,019 Tangible fixed assets 112,024 317,830 Monetary claims 5,239,995 7,139,596 Intangible fixed assets 0 100 Monetary claims for housing loans 5,238,595 7,138,165 Business Guidance Other claims 5 403 Other monetary claims 1,400 1,431 Due from banking account 20,961 51,364 Tangible fixed assets 112,024 317,830 Cash and due from banks 40,821 32,338 Intangible fixed assets 0 100 Deposits with banks 40,821 32,338 Other claims 5 403 Total 6,013,203 9,047,485 Due from banking account 20,961 51,364

(Millions of Yen) Cash and due from banks 40,821 32,338 Liabilities March 31, 2017 March 31, 2018 Deposits with banks 40,821 32,338

Money trusts 63,073 57,141 Other 2 − 6 Infrastructure Corporate Investment trusts 407,092 799,883 Total 6,018,485 9,065,002 Money in trusts other than money trusts 89,177 138,963 (Millions of Yen) Securities in trusts 70,188 248,764 Liabilities March 31, 2017 March 31, 2018 Monetary claims trusts 5,238,595 7,138,196 Money trusts 68,355 74,657 Composite trusts 145,029 664,467 Investment trusts 407,092 799,883 Other trusts 46 70 Money in trusts other than money trusts 89,177 138,963 Financial Data Total 6,013,203 9,047,485 Securities in trusts 70,188 248,764 Notes: Monetary claims trusts 5,238,595 7,138,196 1. Trust assets under the co-operative trusts under other trust bank’s administration are as described below: Composite trusts 145,029 664,467 as of March 31, 2017 5,281million yen Other trusts 46 70 as of March 31, 2018 17,516million yen 2. There are no corresponding transactions in the principal guaranteed trust account. Total 6,018,485 9,065,002

(Reference) Disclosure Items Based on Pillar The amount of "the co-operative trusts under other trust Principal guaranteed trust account bank’s administration" referred to in the above Note 1 Not applicable. include those trust assets entrusted to SMBC Trust Bank and Sumitomo Mitsui Trust Bank, Limited under the service- shared co-trustee ("Trust Assets under the Service-Shared Co-Trustee") at the amount of 5,281 million yen for March 31, 2017 and 17,516 million yen for March 31, 2018, respectively. An aggregate of the balance of trust assets and liabilities under the Service-Shared Co-Trustee is as shown in the table below.

of Basel

SMBC TRUST BANK ANNUAL REPORT 2018 65

SMBC信託銀行2018_EN_P45_78.indd 65 2018/08/01 11:45 Philosophy Corporate Management Balance of Money Trusts (Millions of Yen) March 31, 2017 March 31, 2018 Money trusts 63,073 57,141 Designated money trusts 860 644 Specified money trusts 62,213 56,496 aaeetVso Bank Outline Management Vision Total 63,073 57,141 Notes: 1. There are no corresponding transactions for Pension trusts, Property formation benefit trusts and Loan trusts. 2. An aggregate of the balance of trust assets under the Service-Shared Co-Trustee is as shown in the table below.

(Millions of Yen) March 31, 2017 March 31, 2018 Money trusts 68,355 74,657 Designated money trusts 860 644 Specified money trusts 67,494 74,013 Total 68,355 74,657

Balance of Principal of Money Trusts by Trust Period (Millions of Yen) Designated money trusts Specified money trusts uiesGiac Corporate Business Guidance Jointly Operated Individually operated March 31, 2017 March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 March 31, 2018 less than one year − − − − − − One year or more less than − − − − − 52 two years Two years or more less − − 416 393 38,322 36,283 than five years Five years or more − − − − 23,783 20,072

Infrastructure Others − − − − − − Total − − 416 393 62,106 56,409 Note: There are no corresponding transactions for Loan trusts.

Balance of Money Trusts by Type (Millions of Yen) Designated money trusts Specified money trusts Financial Data March 31, 2017 March 31, 2018 March 31, 2017 March 31, 2018 Securities 619 572 31,091 35,728 Notes: 1. There are no corresponding transactions for Pension trusts, Property formation benefit trusts and Loan trusts. 2. There are no corresponding transactions for Loans and bills discounted. 3. An aggregate of the balance of trust assets under the Service-Shared Co-Trustee is the same as above.

Balance of Securities held in Money Trusts by Type

Disclosure Items Based on Pillar (Millions of Yen) Designated money trusts Specified money trusts March 31, 2017 March 31, 2018 March 31, 2017 March 31, 2018 Japanese government bonds − − 31,022 35,642 Japanese local government bonds − − − − Japanese short-term corporate bonds − − − − Japanese corporate bonds − − − − Japanese stocks 619 572 − − Other − − 68 86 Total 619 572 31,091 35,728 of Basel Notes: 1. There are no corresponding transactions for Pension trusts, Property formation benefit trusts and Loan trusts. 2. An aggregate of the balance of trust assets under the Service-Shared Co-Trustee is the same as above.

66 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 66 2018/08/01 11:45 Philosophy Corporate Management Matters to be Disclosed Concerning Compensation

1. Compensation Framework of SMBC Trust the current fiscal year and has confirmed that it does not (1) Scope of Officers and Employees have a material impact on the capital adequacy ratio. The scope of officers, employees and others whose (3) Compensation Policy for Employees and Others compensation is subject to disclosure under the revised Core principles are documented in policies and aaeetVso Bank Outline Management Vision Cabinet Office on Disclosure of Corporate Affairs, etc. procedures, determined by the Board of Directors of and other ordinances are as described below. SMBC Trust, and reported to the Human Resources Scope of Officers Department of Sumitomo Mitsui Financial Group, Inc. Officers subject to compensation disclosure are directors and Audit & Supervisory Board members of SMBC Trust 3. Consistency between Compensation (excluding outside directors and auditors). Structure and Risk Management and Scope of Employees and Others Of employees of SMBC Trust other than officers, those Link between Compensation and employees and others who are highly compensated and Performance have a material influence on the business management In determining the compensation for officers, the total or the assets of SMBC Trust are subject to compensation amount of compensation for all officers is resolved and disclosure. determined at a general meeting of shareholders. On the (a) Scope of major consolidated subsidiaries other hand, in determining the compensation for employees Not applicable. and others, related in consideration of SMBC Trust’s (b) Scope of highly compensated persons financial conditions and other factors. A highly compensated person is an individual whose compensation is higher than the average amount of

4. Type, Total Amount Paid, and Payment Business Guidance compensation paid to the officers (excluding officers Method of Compensation for Officers, appointed or retired during the fiscal year in question) which is derived by dividing the total amount of Employees and Others of SMBC Trust compensation paid to the officers during the fiscal year (1) Compensation Allocated to the Current Fiscal Year by the number of officers during the same period. (From April 1, 2017 to March 31, 2018) (c) Material influence on the business management or assets of In number of people, millions of yen SMBC Trust Subject Subject A person has a material influence on the business officers employees Number of subject officers management or assets of SMBC Trust if his/her 10 7 regular transactions or regular matters managed by and employees Infrastructure Corporate him/her have a substantial impact on the business Fixed Fixed compensation total 218 169 Compensation management of SMBC Trust, or losses incurred through Cash compensation 218 169 such actions have a significant impact on the financial Deferment − − situation of SMBC Trust. Number of subject officers 8 7 (2) Determination of Compensation and employees For Officers Variable Variable compensation total 42 50

The (maximum) total amount of compensation for Compensation Financial Data Cash compensation 42 50 directors and Audit & Supervisory Board members Deferment − − is respectively determined at a general meeting of Number of subject officers shareholders as executive compensation. The Board − − and employees of Directors has the sole discretion to determine the Retirement allocation of compensation to individual directors while allowance Retirement allowance total − − the Audit & Supervisory Board determines the allocation Deferment − − of compensation to individual Audit & Supervisory Board Number of subject officers 9 7 members. and employees Disclosure Items Based on Pillar Other For Employees and Others compensation Other compensation total 2 1 The Human Resources Department designs the system Deferment − − and pays compensation to employees in accordance with the basic policy. Compensation total 263 221 (note) Other compensation is commutation allowance. 2. Assessment of Design and Operation of (2) Special compensation etc. Compensation Structure Not applicable (1) Compensation Policy for Officers The compensation of officers consists of base (3) Deferred compensation etc. salary and is determined by taking into account their Not applicable

job responsibilities, character evaluation, business of Basel performance, and other factors. 5. Other Information Regarding (2) Impact of Overall Level of Compensation for Officers on Shareholders’ Compensation Structure of SMBC Trust Equity Not applicable The Board of Directors has compared the total amount of executive compensation paid during the current fiscal year with the level of income and internal reserves for

SMBC TRUST BANK ANNUAL REPORT 2018 67

SMBC信託銀行2018_EN_P45_78.indd 67 2018/08/01 11:45 Disclosure Items Based on Pillar III of Basel III Philosophy Corporate Management Disclosure items based on the “items separately stipulated by the Commissioner of the Japanese Financial Services Agency concerning capital adequacy pursuant to Article 19-2, Paragraph 1, item 5, Subsection 2, of the Ordinance for Enforcement of the Banking Act” (Notification No.7 issued by the Japanese Financial Services Agency in 2014).

Composition of Capital Disclosure aaeetVso Bank Outline Management Vision (Millions of Yen) As of March 31, 2017 As of March 31, 2018 Amounts Amounts Items excluded under excluded under transitional transitional arrangements arrangements Core Capital Basic Componets (1) Directly issued qualifying common share or mandatory convertible preference share plus related capital surplus and retained 194,091 188,297 earnings of which : capital and capital surplus 215,900 215,900 of which : retained earnings 21,808 27,602 of which : treasury stock (-) − − of which : cash dividends to be paid (-) − − of which : other than the above − − Stock acquisition rights to common shares or mandatory − − convertible preference shares Total of general reserve for possible loan losses and eligible 747 1,005 uiesGiac Corporate Business Guidance provisions included in Core Capital Basic Components of which : general reserve for possible loan losses 747 1,005 of which : eligible provisions − − Qualifying non-cumulative perpetual preferred stock subject to phase-out arrangements included in Core Capital Basic − − Components Eligible capital instruments subject to phase-out arrangements − − included in Core Capital Basic Components Capital instruments issued by public agency under capital − − enhancement action included in Core Capital Basic Components

Infrastructure 45% equivalent of the difference between the revaluated amount of the land and the book value immediately prior to revaluation − − included in Core Capital Basic Components Amount of Core Capital Basic Components (A) 194,839 189,303 Core Capital Adjustments (2) Total intangible assets (excluding those relating to mortgage 39,101 17,100 49,462 9,183 servicing rights) of which : goodwill (including those equivalent) 13,450 − 12,727 −

Financial Data of which : other intangible assets other than goodwill and 25,650 17,100 36,735 9,183 mortgage servicing rights (net of related tax liability) Deferred tax assets that rely on future profitability excluding those − − − − arising from temporary differences (net of related tax liability) Shortfall of eligible provisions to expected losses − − − − Gain on sale on securitization transactions − − − − Gains and losses due to changes in own credit risk on fair valued − − − − liabilities Prepaid pension cost − − 471 117

Disclosure Items Based on Pillar Investments in own shares (excluding those reported in the Net − − − − assets section) Reciprocal cross-holdings in common equity − − − − Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net − − − − of eligible short positions, where the bank does not own more than 10% of the issued share capital (amount above the 10% threshold) Amount exceeding the 10% threshold on specified items 6,652 4,435 11,193 2,798 of which : significant investments in the common stock of − − − − financials of which : mortgage servicing rights − − − − of which : deferred tax assets arising from temporary 6,652 4,435 11,193 2,798 differences (net of related tax liability) of Basel Amount exceeding the 15% threshold on specified items − − − − of which : significant investments in the common stock of − − − − financials of which : mortgage servicing rights − − − − of which : deferred tax assets arising from temporary − − − − differences (net of related tax liability)

(to be continued on Page 69)

6 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 68 2018/08/01 11:45 Philosophy Corporate Management As of March 31, 2017 As of March 31, 2018 Amounts Amounts Items excluded under excluded under transitional transitional arrangements arrangements Amount of Core Capital Adjustments (B) 45,754 61,127 Capital Capital amount ( (A) - (B) ) (C) 149,084 128,175 aaeetVso Bank Outline Management Vision Risk weighted assets (3) Credit risk weighted assets 615,471 823,806 of which : total of items in risk weighted assets subject to 21,535 12,100 transitional arrangements of which : intangible assets (excluding those relating to 17,100 9,183 mortgage servicing rights) of which : deferred tax assets − − of which : prepaid pension cost − 117 of which : investments in the capital of banking, financial − − and insurance entities of which : other than the above 4,435 2,798 Total amount of Market Risk equivalent divided by 8% − − Total amount of Operational Risk equivalent divided by 8% 67,150 70,813 Credit risk weighted assets adjustments − − Operational risk weighted assets adjustments − − Total amount of Risk weighted assets (D) 682,622 894,620 Capital Adequacy Ratio Business Guidance Total Capital Adequacy Ratio ( (C) / (D) ) 21.84% 14.32%

Qualitative Disclosures

1. Overview of Capital Instruments 3. Matters Relating to Credit Risk Financial Data Infrastructure Corporate SMBC Trust’s capital consists of capital, capital surplus, (1) Outline of Risk Management Policy and Procedures and retained earnings. The following table summarizes its SMBC Trust manages credit risk based on the written capital instruments. “Credit Policy”. (Millions of yen) With respect to its retail loan services, SMBC Trust Amount included in basic items of core capital collects a sufficient level of collateral from customers, Types As of March As of March in principle, and conducts credit operations focusing 31, 2017 31, 2018 primarily on mortgage loans and short-term loans with Common stock 170,900 170,900 maturity of less than one year. On the other hand, SMBC Non-voting Trust’s corporate loan operations focus primarily on loans 45,000 45,000 stock denominated in foreign currencies and also include loans in Japanese yen and private placement bonds. The Investment & Loan Planning Department manages 2. Outline of the SMBC Trust’s Capital credit portfolios and plans and drafts operational Adequacy Assessment Method policies, and seeks to realize a highly effective credit

With respect to capital adequacy, SMBC Trust risk management system, and regularly reports to the Disclosure Items Based on Pillar periodically reports to management the capital adequacy Executive Committee, the Credit Risk Committee and ratio calculated based on risk-weighted assets and capital other bodies on the status of credit risk management. as prescribed by the FSA’s “Notification on Criteria for The Credit Department is responsible for reviewing Determining Whether the Level of Capital Adequacy is individual loans and analyzing loans newly originated at Appropriate in Light of Assets, etc. Held by Banks Based an application stage and assessing the actual status of on Article 14-2 of the Banking Act (FSA Notification No. individual assets based on self-assessment standards 19 of 2006; the “FSA Notification”). In addition, in order to on a periodic basis. The soundness of assets is ensured assess its capital adequacy reflecting those risks that are through verification of their appropriateness by the not covered by the regulations, SMBC Trust periodically Credit Department and auditing by the Internal Audit ensure that its capital exceeds risk exposures constantly Department.

and sufficiently regardless of the regulatory minimum capital SMBC Trust applies the standardized approach to of Basel adequacy ratio by conducting risk capital management. calculate the amount of risk-weighted assets for credit Going forward, SMBC Trust intends to maintain an risk under Basel III. appropriate level of capital adequacy ratio based on the capital plan formulated based on the management plan.

SMBC TRUST BANK ANNUAL REPORT 2018 6

SMBC信託銀行2018_EN_P45_78.indd 69 2018/08/01 11:45 Philosophy Corporate Management (2) Matters Relating to Portfolios to Which the Standardized 5. Outline of Risk Management Policies and Approach is Applied Procedures for Derivatives Transactions Qualifying external rating agencies, etc. used for purposes of risk weight determination and Long Settlement Transactions SMBC Trust references ratings assigned by Standard (1) Counterparty Risk & Poor’s Ratings Services (“S&P”), Moody’s Investors The amount of counterparty credit risk associated Service, Inc. (“Moody’s”), Fitch Ratings (“Fitch”), with derivatives transactions is determined by the current exposure method in accordance with the FSA aaeetVso Bank Outline Management Vision Organization for Economic Co- operation and Development, Rating and Investment Information, Inc. Notification. (“R&I”), and Japan Credit Rating Agency, Ltd. (“JCR”). (2) Management of Lines of Credit Since some obligors were assigned a rating only by The line of credit offered to counterparties in Fitch from the fiscal year ended December 31, 2017, connection with derivatives transactions, etc. is managed SMBC Trust references the rating assigned by Fitch for based on the total amount of lines of credit, aggregating those foreign obligors who are not assigned ratings by it with the lines of credit for all on-balance transactions S&P and Moody’s. and other items. Qualifying external rating agencies used for purposes of risk SMBC Trust does not engage in any transaction that weight determination by exposure type SMBC Trust uses the same credit rating agencies as falls under the category of a long settlement transaction. those described in above. 6. Matters Relating to Securitization Exposures 4. Outline of Risk Management Policies and (1) Outline of Risk Management Policy and Risk Characteristics Procedures for Credit Risk Risk management policy The definition of securitization exposures is clarified in (1) Policy on Credit Risk Mitigation order to ensure that risks associated with securitization As a bank applying the standardized approach, SMBC

uiesGiac Corporate Business Guidance products are identified, measured, evaluated, and Trust uses a simplified method for credit risk mitigation reported, and the risk management department purposes. Under this method, SMBC Trust calculates independent of sales departments centrally manages exposures in accordance with the FSA Notification and risks, from recognizing securitization exposures to applies risk weights prescribed therein when calculating measuring, evaluating, and reporting risks. the amount of credit risk-weighted assets to determine Outline of risk characteristics the capital adequacy ratio. SMBC Trust is exposed to credit risk and interest rate (2) Management of Overall Credit Risk Mitigation risk associated with securitization exposures held as SMBC Trust reviews the line of credit at least on an an investor. These risks are basically the same as those

Infrastructure annual basis and re-evaluates collateral value and other arising from transactions such as loans and securities. items on a periodic basis for credit protection purposes. Liquidity risk associated with underlying assets of securitization exposures held (i.e. liquidity risk assumed (3) Types of Credit Risk Mitigation until normal operations can be resumed in the event of Eligible financial collateral (simplified method) the originator’s default) and other risks are inherent. Assets that satisfy conditions set forth in Article 89 of the FSA Notification (2) Outline of Establishment and Implementation of a System Netting loans and own bank deposits Stipulated in Articles 249(4)(iii) to (vi) of the FSA’s Notification Concerning the Capital Adequacy Ratio Financial Data SMBC Trust offsets loans and own bank deposits which meet conditions set forth in Article 117 of the FSA In order to assess the status of risk and performance of Notification and uses the resulting amount as the amount securitization products that are deemed as securitization of exposures to calculate the capital adequacy ratio. exposures, SMBC Trust has established a system Guarantees and credit derivatives whereby information on the conditions of underlying Guarantees satisfying conditions set forth in Articles assets and other relevant matters are continuously 118, 119, and 122 of the FSA Notification. SMBC Trust monitored and monitoring results are compiled by, and currently does not use credit derivatives as a credit risk reported to, the risk management department on a periodic basis.

Disclosure Items Based on Pillar mitigation in calculating the capital adequacy ratio.

(3) Policy Applied When Using Securitization Transactions as a Credit Risk Mitigation There is no applicable information to be disclosed.

(4) Approach Used to Calculate the Amount of Credit Risk-Weighted Assets Relating to Securitization Exposures SMBC Trust uses the standardized approach to calculate the amount of credit risk-weighted assets relating to securitization exposures.

(5) Approach Used to Calculate Capital Requirements for Market

of Basel Risk Related to Securitization Exposures There is no applicable information to be disclosed.

SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 70 2018/08/01 11:45 Philosophy Corporate Management (6) Type of Securitization Conduit Used in Securitization Transactions (2) Method Used to Calculate Capital Requirements for Operational Associated with Third Party Assets, if a Bank Engages in Such Risk Transactions, and Status of the Bank’s Holdings of Securitization SMBC Trust uses the basic indicator approach. Exposures Related to Such Transactions There is no applicable information to be disclosed. 9. Policies and Procedures for Managing (7) Names of a Bank’s Subsidiaries and Affiliated Companies Investments and Other Similar Exposures Holding Securitization Exposures Related to Securitization in Banking Book Prescribed in Article Transactions Conducted by the Bank 4(6)(iii) of the Order for Enforcement of Bank Outline Management Vision There is no applicable information to be disclosed. the Banking Act (Cabinet Order No. 40 of (8) Accounting Policy on Securitization Transactions 1982) (Collectively, “Investments, etc.”) SMBC Trust is engaged in securitization transactions and Equity Exposures as an investor and accounts for such transactions in There is no applicable information to be described accordance with the “Accounting Standard for Financial Instruments”. 10. Matters Relating to Interest Rate Risk in Banking Book (9) Qualifying External Rating Agencies Used for Purposes of Risk (1) Outline of Risk Management Policies and Procedures Weight Determination by Exposure Type Based on the “Basic Policy on Managing Market and SMBC Trust references ratings assigned by Standard Liquidity Risks”, the Risk Management Department, & Poor’s Ratings Services (“S&P”), Moody’s Investors independent of market departments, manages interest Service, Inc. (“Moody’s”), Fitch Ratings (“Fitch”), rate risk in the banking book. It also reports its activities, Organization for Economic Co- operation and and provides recommendations based on risk analysis, Development, Rating and Investment Information, Inc. to the ALM Committee on a periodic and ad-hoc basis. (“R&I”), and Japan Credit Rating Agency, Ltd. (“JCR”).

Since some obligors were assigned a rating only by (2) Outline of the Approach to Measure Interest Rate Risk in Banking Business Guidance Fitch from the fiscal year ended December 31, 2017, Book Used by a Bank for Internal Management Purposes SMBC Trust references the rating assigned by Fitch for SMBC Trust uses the repricing ladder approach those foreign obligors who are not assigned ratings by and allocates assets and liabilities held to the ladders S&P and Moody’s. according to the period up to the repricing date and measures interest rate risk in the banking book on a daily (10) Outline of the Internal Assessment Approach, if Used basis. Furthermore, SMBC Trust classifies its assets and There is no applicable information to be disclosed. liabilities into Japanese yen and foreign currencies and (11) Significant Changes to Quantitative Information, if Any calculates on a daily basis the amount of changes in There is no applicable information to be disclosed. the present value when interest rate changes one basis Financial Data Infrastructure Corporate point. The results are used as a management indicator 7. Matters Relating to Market Risk for internal management purposes. There is no applicable information to be disclosed because SMBC Trust applies the special treatment to exclude market risk from the calculation of capital requirements.

8. Matters Relating to Operational Risk (1) Outline of Risk Management Policies and Procedures SMBC Trust has formulated the “Operational Risk Management Policy” as a comprehensive management policy for operational risk, and works on the establishment and enhancement of approaches and frameworks for appropriately identifying, assessing, monitoring, and controlling various operational risks Disclosure Items Based on Pillar arising from increasingly diversified and complex financial services, seeking to enhance the effectiveness of risk management. Furthermore, SMBC Trust periodically assesses and continuously improves risks inherent in each department responsible for business activities as well as existing controls, and regularly reports and provides recommendations to the Risk Management Committee and the Operations & System Committee. of Basel

SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 71 2018/08/01 11:45 Philosophy Corporate Management Quantitative Disclosure

1. Capital Adequacy (1) Required Capital for Credit Risk (Millions of Yen) As of March 31, 2017 As of March 31, 2018

aaeetVso Bank Outline Management Vision Credit Risk Credit Risk Required Capital Required Capital Assets Assets On balance sheet assets Cash − − − − Japanese government and central bank − − − − Foreign government and central bank − − − − Bank for International Settlements − − − − Japanese local public entities − − − − Overseas public sectors other than central government − − − − Multilateral Development Banks (MDBs) − − − − Japan Finance Organization for Municipalities (JFM) − − − − Japan Government-affiliated organizations 2,100 84 2,950 118 Land Development Public Corporations, Local Housing Public − − − − Corporations, Local Road Public Corporations Financial institutions and Regulated securities companies 129,092 5,163 99,254 3,970 uiesGiac Corporate Business Guidance Corporates 342,839 13,713 461,202 18,448 SMEs and individuals − − − − Residential mortgage loans 21,892 875 29,983 1,199 Projects including acquisition of real estate properties − − 53,009 2,120 Past due exposures for three months or more 67 2 202 8 Bills before collection − − − − Exposures secured by the Japan Federation of Credit Guarantee − − − − Corporation Infrastructure Exposures secured by the Regional Economy Vitalization − − − − Corporation of Japan Investments in Equity Instruments − − − − Securitization (as an originator) − − − − Securitization (not as an originator) 23,596 943 57,792 2,311 Exposures comprised of more than two underlying assets (so- − − − −

Financial Data called “funds”), each component of which is difficult to be known Others 92,083 3,683 88,343 3,533 On balance sheet assets total 611,671 24,466 792,739 31,709 Off balance sheet assets Derivative transactions 1,504 60 1,883 75 Others 38 1 26,357 1,054 Off balance sheet assets total 1,543 61 28,241 1,129

Disclosure Items Based on Pillar CVA risk 2,256 90 2,825 113 Total 615,471 24,618 823,806 32,952

(2) Required Capital for Operational Risk (Millions of Yen) As of March 31, 2017 As of March 31, 2018 Operational Risk Operational Risk equivalent divided Required Capital equivalent divided Required Capital by 8% by 8% Basic Indicator Approach 67,150 2,686 70,813 2,832 of Basel

2 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 72 2018/08/01 11:45 Philosophy Corporate Management (3)Non-consolidated Total Required Capital (Millions of Yen) As of March 31, 2017 As of March 31, 2018 Risk Weighted Assets Credit risk weighted assets 615,471 823,806 Total amount of Market risk equivalent divided by 8% − −

Total amount of Operational risk equivalent divided by 8% 67,150 70,813 Bank Outline Management Vision Total (A) 682,622 894,620 Non-consolidated Total Required Capital (Total (A) × 4%) 27,304 35,784

2. Credit Risk (1) Exposure Balance (by Geographic Region, Industry and Counterparty) (Millions of yen) As of March 31, 2017 Loans etc. Bonds Derivatives Others Total Domestic Manufacturing − − − − − Agriculture, Forestry, Fishery and Mining − − − − − Construction − − − − − Transportation, Information, and Public utilities 17,150 − − 2 17,153

Wholesale and Retail 325 − − 0 325 Business Guidance Finance and Insurance 1,427,246 9,958 4,738 291,867 1,733,810 Real estate, Goods rental and leasing 600 10,000 − 5 10,605 Services 33,835 − − 6 33,842 National and local governments 141,906 260,570 − 8 402,484 Other industries − 900 − 56,711 57,611 Individuals 111,448 − 556 624 112,630

Subtotal 1,732,513 281,429 5,294 349,226 2,368,464 Financial Data Infrastructure Corporate Overseas 304,830 − − 503 305,333 Total 2,037,343 281,429 5,294 349,729 2,673,797

(Millions of yen) As of March 31, 2018 Loans etc. Bonds Derivatives Others Total Domestic Manufacturing − − − − − Agriculture, Forestry, Fishery and Mining − − − − − Construction − − − − − Transportation, Information, and Public utilities 25,119 − − 4 25,123 Wholesale and Retail 312 − − 0 312 Finance and Insurance 1,393,254 17,493 5,797 515,015 1,931,560 Disclosure Items Based on Pillar Real estate, Goods rental and leasing 5,600 10,000 − 4,052 19,652 Services 43,535 − − 10 43,546 National and local governments 262,114 262,407 − 8 524,530 Other industries − 4,649 − 52,432 57,081 Individuals 166,585 − 724 767 168,076 Subtotal 1,896,521 294,550 6,521 572,290 2,769,883 Overseas 494,822 − − 11,292 506,114 Total 2,391,343 294,550 6,521 583,583 3,275,998 of Basel

SMBC TRUST BANK ANNUAL REPORT 2018 3

SMBC信託銀行2018_EN_P45_78.indd 73 2018/08/01 11:45 Philosophy Corporate Management (by Residual Term) (Millions of yen) As of March 31, 2017 Loans etc. Bonds Derivatives Others Total Up to 1 year 1,237,281 − 1,104 293,149 1,531,535 Over 1 to 3 years 292,536 − 706 706 293,949

aaeetVso Bank Outline Management Vision Over 3 to 5 years 269,669 265,570 758 758 536,757 Over 5 to 10 years 67,572 10,520 2,239 2,239 82,573 Over 10 years 109,280 5,338 485 485 115,589 No fixed maturity 61,003 − − 52,390 113,393 Total 2,037,343 281,429 5,294 349,729 2,673,797

(Millions of yen) As of March 31, 2018 Loans etc. Bonds Derivatives Others Total Up to 1 year 1,472,313 2,498 2,062 512,347 1,989,222 Over 1 to 3 years 169,890 260,995 644 4,712 436,243 Over 3 to 5 years 412,092 8,834 1,134 1,134 423,195 Over 5 to 10 years 86,546 16,919 2,134 6,134 111,735 Over 10 years 150,394 5,301 545 545 156,786 No fixed maturity 100,106 − − 58,708 158,814

uiesGiac Corporate Business Guidance Total 2,391,343 294,550 6,521 583,583 3,275,998

(2) Term-End Balance of Exposures Past Due 3 Months or More or Defaulted and Their Breakdown (Millions of Yen)

As of March 31, 2017 As of March 31, 2018 Domestic Corporate − − Individual 232 341 Infrastructure Subtotal 232 341 Overseas − − Total 232 341

(3) Reserve for Loan Losses and their Changes during the Fiscal Year (Millions of Yen) As of March 31, 2017 As of March 31, 2018 Financial Data Balance Change Balance Change Specific reserve for possible loan losses 589 61 564 24 Corporate 222 1 208 14 Individual 366 60 356 10 Others − − − − General reserve for possible loan losses 747 253 1,005 257

Disclosure Items Based on Pillar Loan loss reserve for specific overseas countries − − − −

(4) Amount of write-off of loans Not applicable. of Basel

4 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 74 2018/08/01 11:45 Philosophy Corporate Management (5) Balances of Exposures by Risk Weight Segment, to which Standardized Approach is applied, after taking into account the effect of Credit Risk Mitigation Techniques (Millions of yen) As of March 31, 2017 As of March 31, 2018 Risk Weight With external Without external With external Without external rating rating rating rating 0% 1,481,357 22,996 1,692,571 282,594

10% − 3,000 − 11,512 Bank Outline Management Vision 20% 701,523 11,780 617,156 27,115 30% − 6,002 − 5,996 35% − 62,549 − 85,667 40% − − 8,177 − 50% 8,150 10,078 15,005 72 70% 3,169 − − − 75% − − − − 100% − 89,091 − 112,007 120% 133,903 96,098 154,030 194,588 150% − 34 − 58 170% 1,073 − 9,180 201 250% − 15,208 − 14,279 350% 600 − 4,646 −

1250% − − − 500 Business Guidance Others − 23,276 − 37,095 Total 2,329,777 340,118 2,500,768 771,689 ote 1 ter incde aance of ecritiation epore itot eterna ratin in te eited aerae ri eit of indiida nderin aet 2 e eited aerae ri eit of aet incded in ter i 1231

3. Credit Risk Mitigation Techniques (Millions of Yen) nrsrcueFinancial Data Infrastructure Corporate As of March 31, 2017 As of March 31, 2018 Eligible financial collateral Cash and deposits 26,884 41,482 Bonds − − Stocks − − Others − − Subtotal 26,884 41,482 Offset loans with deposits 3,901 3,540 Guarantees and Credit Derivatives Guarantees 53,077 110,626 Credit Derivatives − − Subtotal 53,077 110,626

Total 83,862 155,649 Disclosure Items Based on Pillar of Basel

SMBC TRUST BANK ANNUAL REPORT 2018 5

SMBC信託銀行2018_EN_P45_78.indd 75 2018/08/01 11:45 Philosophy Corporate Management 4. Counterparty Risk in Derivative Transactions and Long Settlement Transactions (1) Derivative Transactions Method used to calculate Credit Equivalent Amount Credit equivalent amounts are calculated by applying the Current Exposure Method. Gross Replacement Cost and Credit Equivalent Amount (Millions of yen)

As of March 31, 2017 As of March 31, 2018 aaeetVso Bank Outline Management Vision Gross replacement cost 745 598 Gross add-on amount 4,549 5,923 Credit equivalent amount (before taking into account the credit risk mitigation effect of 5,294 6,521 collateral) Foreign exchange related transactions 4,148 5,351 Interest rate related transactions 1,146 1,170 Collateral amount − − Credit equivalent amount (after taking into account the credit risk mitigation effect of 5,294 6,521 collateral)

Amount of Collateral by Type Not applicable. Credit Equivalent Amount after the Application of Credit Risk Mitigation Technique by Collateral Since the application of credit risk mitigation technique by collateral is not applicable, the credit equivalent amount is the

uiesGiac Corporate Business Guidance same before and after considering collateral. Amount of Notional Principal of Credit Derivatives used for the Credit Equivalent Calculation, classified by Type of Credit Derivatives and by Protection Purchased or Provided Not applicable. Notional Principal of Credit Derivatives applied for Credit Risk Mitigation Technique Not applicable.

(2) Long Settlement Transactions Not applicable. Infrastructure 5. Securitization Exposures (1) Securitization Exposures subject to the Calculation of Credit Risk Weighted Assets as an Originator Not applicable.

(2) Securitization Exposures subject to the Calculation of Credit Risk Weighted Assets as an Investor Securitization Exposures by Type of Underlying Assets (Millions of Yen) Financial Data As of March 31, 2017 As of March 31, 2018

Type of Underlying Assets Total On-balance Off-balance Total On-balance Off-balance sheet assets sheet assets sheet assets sheet assets Real estate, Real estate trust 600 600 − 5,146 1,146 4,000 beneficiary rights Claims for corporates 16,813 16,813 − 45,474 45,474 − Others − − − − − − Disclosure Items Based on Pillar Total 17,413 17,413 − 50,620 46,620 4,000 ote o reecritiation epore a of arc 31 2017 and 2018 of Basel

6 SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 76 2018/08/01 11:45 Philosophy Corporate Management Securitization Exposures by Risk Weight and Required Capital (Millions of Yen) As of March 31, 2017 As of March 31, 2018

Risk Weight Required Required Total On-balance Off-balance Total On-balance Off-balance sheet assets sheet assets Capital sheet assets sheet assets Capital To 20% − − − − − − − −

Over 20% to 50% − − − − 8,177 8,177 − 130 Bank Outline Management Vision Over 50% to 100% − − − − − − − − Over 100% to 250% 16,813 16,813 − 859 37,296 37,296 − 1,840 Over 250% to 350% 600 600 − 84 4,646 646 4,000 650 Over 350% to 1250% − − − − 500 500 − 250 Total 17,413 17,413 − 943 50,620 46,620 4,000 2,871 ote o reecritiation epore a of arc 31 2017 and 2018

Securitization Exposures by Type of Underlying Assets to which 1250% Risk Weight should be applied in accordance with Paragraph 1, Article 247 of FSA Notice No.19 (Millions of Yen)

As of March 31, 2017 As of March 31, 2018

Type of Underlying Assets Total On-balance Off-balance Total On-balance Off-balance sheet assets sheet assets sheet assets sheet assets Real estate, Real estate trust − − − 500 500 − beneficiary rights Business Guidance Claims for corporates − − − − − − Others − − − − − − Total − − − 500 500 − ote o reecritiation epore a of arc 31 2017 and 2018

Application of Credit Risk Mitigation Techniques to Re-securitization Exposures and their Breakdown by Guarantor or Risk Weight applied to Guarantor Not applicable. nrsrcueFinancial Data Infrastructure Corporate (3) Securitization Exposures as an Originator subject to the Calculation of Market Risk Equivalent Amount Not applicable.

(4) Securitization Exposures as an Investor subject to the Calculation of Market Risk Equivalent Amount Not applicable.

6. Market Risk Not applicable.

7. Exposures relating to Investments in Equity Instruments or Equity Exposures in Banking Book Not applicable.

8. Exposures to calculate the Amount of Credit Risk Weighted Assets as stipulated in

Article 167 of FSA Notice No.19 Disclosure Items Based on Pillar Not applicable.

9. Gains and Losses or Changes in Economic Values due to Interest Rate Shocks used under the Internal Management regarding Interest Rate Risk in Banking Book Gains and Losses on Shocks of 1 Basis Point Interest Rate Fluctuations (Millions of Yen)

As of March 31, 2017 As of March 31, 2018 Yen Currency (9) (4) Foreign Currency (9) (1)

Total (18) (6) of Basel

SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 77 2018/08/01 11:45 Confirmation

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SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 78 2018/08/01 11:45 Confirmation

Website SMBC Trust Bank top page onfiration

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About SMBC Trust Bank

http://www.smbctb.co.jp/contents/aboutus http://www.smbctb.co.jp/en/contents/aboutus

SMBC TRUST BANK ANNUAL REPORT 2018

SMBC信託銀行2018_EN_P45_78.indd 78-79 2018/08/02 15:13 2018ANNUALREPORT 2018 ANNUAL REPORT (April 1, 2017~March 31, 2018)

SMBC信託銀行2018_EN_1-4.indd 4-1 2018/08/01 9:44