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Frequently Asked QuestionsJAPANESE

Questions frequently asked by customers concerning various procedures and IR information is summarized in Q&A format.

Company Information

1. Company Information

Q.01. Please give an outline of the Sumitomo Mitsui Trust Group.

A.01. Sumitomo Mitsui Trust Holdings, Inc. ("SMTH") is a financial holding company which was launched on April 1, 2011, through the management integration of Chuo Mitsui Trust Group ("CMTH Group") and Sumitomo Trust and Banking Group ("STB Group"). Sumitomo Mitsui Trust Group ("SMTH Group") is comprised of group companies engaged in a wide range of businesses such as retail financial services, wholesale financial services, stock transfer agency services, real estate, fiduciary services, global markets, centered on Sumitomo Mitsui Trust Bank, Limited (*"SMTB").
(*) SMTB was established through the merger of Chuo Mitsui Trust and Banking Company, Limited ("CMTB"), The Chuo Mitsui Asset Trust and Banking Company, Limited ("CMAB") and The Sumitomo Trust and Banking Co., Ltd. ("STB") on April 1, 2012.
For more details, please refer to "Corporate Profile", "Outline of Business", and "Group Companies."

Q.02. Describe the officers and management structure.

A.02. Regarding our officers, please refer to "Board of Directors and Executive Officers."

Q.03. Describe the corporate governance system.

A.03. In order to enhance transparency of management and for quick decision making, SMTH has introduced an executive officer system and clarified the authority and responsibilities of each Directors and Executive Officers, as its works to develop an efficient management system. SMTH has also adopted a corporate auditor system. The Board of Corporate Auditors has six members including four external auditors, who conduct audits of Directors' execution of duties, based on audit policy and plans developed by the corporate auditors.
For more details, please refer to "Corporate Governance."

Q.04. Describe the CSR in Sumitomo Mitsui Trust Group.

A.04. Regarding our CSR activities, please refer to "CSR."

Q.05. Describe the holding company aspects of SMTH.

A.05. SMTH is a financial holding company with subsidiaries centered on SMTB. Each subsidiary has a management system that is able to complete its own business independently. SMTH focuses on the management of business operations as the holding company, and is in charge of the following functions:

  • (1)Formulating group management strategy
  • (2)Allocation of management resources
  • (3)Monitoring administration of business activities
  • (4)Supervising risk management
  • (5)Supervising compliance management
  • (6)Managing internal auditing
Q.06. Describe your history.

A.06. CMTH Group and STB Group reached a basic agreement in November 2009 to undergo a management integration, in order to establish "The Trust Bank." Both group reached the final agreement in August 2010, and after that, SMTH Group was established in April 2011.
For more details, please refer to "The Group's History."

2. Business Description

Q.07. How is a trust bank different from an ordinary commercial bank?

A.07. In addition to ordinary commercial bank business, a trust bank provides a wide range of services concerning asset management and administration, and disposal of assets, with trustee business such as pension trusts and investment trusts, and complementary businesses such as real estate brokerage and stock transfer agency services. A trust bank has strong business foundations based on high levels of expertise in the fields of asset management and administration, regardless of whether for individuals, corporations or institutional investors, which can be considered its greatest feature.

Q.08. Please describe your businesses in a little more detail.

A.08. SMTH group provides wide range of products and services to our clients, mainly by SMTB, fusing following 6 business functions.
(1) Retail financial services: Deposits, Sales of investment trust and insurance, Loans to individuals, Testamentary trust/ business succession, etc.
(2) Wholesale financial services: Corporate credit, Financial products sales, overseas business, etc.
(3) Stock transfer agency services: Stock administration services, IR / SR consulting, etc.
(4) Real estate: Real estate brokerage, Securitization, Fund management, etc.
(5) Fiduciary services: Pension trust, Asset management and administration, Overseas asset management, etc.
(6) Global markets: Securities investment, Derivatives, etc.
For details regarding each business and the scale of its operations, please refer to "Outline of Business."

SMTH Management Philosophy & Strategy

  • 1. Concepts of Management Integration

  • 2. Midterm Management Plan

  • 3. Growth Strategy, Business Strategy

  • 4. Synergy Effects of Management Integration

    1. Concepts of Management Integration

    Q.01. Please explain the ideas and background behind the Management Integration.

    A.01. Based on the recognition of an environment with increasingly advanced and complex needs for management and administration of clients' assets, CMTH and STB groups have concentrated their business resources, such as human resources and know-how, to establish "The Trust Bank," which combines significant expertise with comprehensive capabilities. We will move onto the global stage as "leading trust bank group, which boasts the largest and the highest status in Japan, combining banking, asset management and administration and real estate businesses."

    Q.02. What are your greatest differences from megabank groups?

    A.02. With an ordinary commercial bank business at their core, megabank groups develop securities business, investment banking business, asset management business and a wide range of financial businesses, including consumer finance. In contrast, SMTH Group is strong in the asset management and administration business and the real estate business, aiming at a business model which creates unique added value by fusing these strengths with its banking business.
    For details regarding the main business fields and main businesses of SMTH Group, please refer to "Outline of Business", and Presentation Material "IR Material for FY2012" (May 21, 2013), pages 13 - 23.

    Q.03. What does your symbol mark mean?

    A.03. The symbol mark features "Future Bloom" representing the vision of SMTH Group, which is "to generate new value through the combination of significant expertise and comprehensive capabilities, and to help the future of our clients and society bloom." The four clear petals show our "Mission" to each stakeholder of clients, society, shareholders and employees. The four colors of petals represent our Code of Conduct ("Value"): "Truthfulness and Loyalty" (natural green), "Dedication and Development" (golden orange), "Trust and Creativity" (blue green), and "Self-help and Self-discipline" (sky blue). The corporate color is "Future Blue," which represents the integration of the sense of value that the symbol mark implies, and evokes familiarity and the future.

    2. Midterm Management Plan

    Q.04. Describe SMTH's Midterm Management Plan announced on November 24, 2011.

    A.04. SMTH group has revised the mid-term revenue target, etc. of "The Management Integration Plan", which was disclosed in August 2010, considering the change of economic environment such as effects of The Great East Japan Earthquake as well as the trend of stock prices and interest rates, and announced them as the "Midterm Management Plan" on November 24, 2011. As to the midterm revenue and financial targets, SMTH targets the consolidated net business profit of approx. 400.0 billion yen and consolidated net income of approx. 200.0 billion yen, and also targets the consolidated ROE of approx. 10% and non-consolidated overhead ratio of approx. 40%, in FY2015 which is the final fiscal year of the "Midterm Management Plan."
    SMTH will continue its basic strategy and growth strategy ("Allocating resources to growing trust and asset administration, etc. related fee businesses to develop market and to enhance market position" and "Provide a variety of functions to our wide client base, and enhance basic profitability in the banking business through our further balanced loan portfolio"), which were announced in "The Management Integration Plan", and pursue expansion of earnings.
    For details, please refer to Presentation Material "IR Material for for 1HFY2011" (November 24, 2011), pages 28 - 35.

    3. Growth Strategy, Business Strategy

    Q.05. Describe SMTH's growth strategy.

    A.05.  In SMTH Group, fee businesses related to trust and asset administration, etc., (which includes sales of investment trusts and insurance, asset management and administration, and the real estate business, etc.) are positioned as strategic business area, into which we actively invest business resources to develop the market and to expand our market share. Meanwhile, in the banking business which constitutes a stable earnings foundation, we proceed to build a more balanced loan portfolio focused on expanding loans to individuals and loans to overseas Japanese corporations.
    For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), pages 13 - 23.

    Q.06. What are the strengths of SMTH compared to other financial groups?

    A.06. Medium- to long-term growth is expected in the asset management and administration business field. SMTH has top-class expertise and business foundations. Our greatest strength may be our ability to quickly provide total solutions by fusing our banking and real estate businesses, regardless of whether for individuals, corporations or institutional investors.

    Q.07. Describe your global business development.

    A.07. SMTH group has accelerated the development of global business operations by utilizing its overseas network in Asia, Europe and United States. As for the fiduciary services, we have strengthened our asset management capability through the alliance with investment and/or acquisition of the asset management companies in Asia, Europe and Oceania such as Nikko Asset Management Asia (former DBS Asset Management), NewSmith LLP and so on. In addition to the existing stable "global custody business", we promote the "fund administration business" by enhancing the services of Irish subsidiary acquired in November 2012 to provide the comprehensive global asset administration services. In the wholesale financial services, we are focusing on making loans to overseas Japanese corporations as a strategic business area. In addition, we promote loan business to non-Japanese corporations as well.
    On May 2013, we received official approval from Hong Kong Monetary Authority to establish a branch in Hong Kong, which is one of the key financial markets in Asia. The Hong Kong branch is aiming to provide high-quality financial services as the trust bank. We will be responding efficiently to the needs of its clients, including overseas Japanese corporations together with Sumitomo Mitsui Trust (Hong Kong) Limited, a wholly owned subsidiary of SMTB.

    Q.08. Describe your policy for integration and reorganization of asset management subsidiaries, especially the positioning of Nikko Asset Management within the group.

    A.08. Subsidiaries which handle asset management-related businesses have reorganized by their function, to develop an organization with direct business management by the holding company. On April 2012, Sumitomo Mitsui Trust Asset Management has established through the merger of Chuo Mitsui Asset Management and STB Asset Management. From the viewpoint of pursuing our growth strategy through further strengthening of sales channels outside of the group, Nikko Asset Management ("Nikko AM") did not merge with Sumitomo Mitsui Trust Asset Management. SMTH promotes the strategic deployment which emphasizes the independence and neutrality of Nikko AM.

    4. Synergy Effects of Management Integration

    Q.09. What kind of synergy effects do you expect from management integration?

    A.09. In FY2015, we estimate approx. 27.0 billion yen in revenue synergies to be achieved through the redeployment of our sales staff and the cross-selling of complementary products and services, and approx. 33.0 billion yen in cost synergies, through improvement of efficiencies in branch-related costs (to be achieved through consolidation), IT costs and personnel costs, etc., for a total benefit of approx. 60.0 billion yen.
    For details, please refer to Presentation Material "IR Material for for 1HFY2011" (November 24, 2011), page 32 and 35. Regarding the results of revenue synergy and cost synergy in FY2012, please refer to "IR Material for FY2012" (May 21, 2013), page 15.

    Q.10. Is there a chance that the integration might have a negative impact on business?

    A.10. Since the overlap in the client bases of former two entities was relatively low, and we utilizes our business resources efficiently such as human resources and know-how, the arising of so-called dis-synergies have been limited.
    For example, in the asset management business, unlike the previous era in which each company provided a similar product line and services, there is now an increasing management trend toward differentiation, drawing on the company's individual strengths and areas of expertise. Thus, we think that this is not a matter of simply discussing market share adjustments.

    Q.11. What is the anticipated cost of management integration?

    A.11. We estimate aggregated integration costs of approx. 63.0 billion yen from FY2010 to FY2015, centering on system integration costs and costs from consolidation of headquarters and branches. While, we estimate aggregated revenue and cost synergies of 144.0 billion yen over the same period, which far exceeded the above integration costs, thus absorb those costs.

    Q.12. Describe your initiatives for expansion and realization of synergy effects.

    A.12. SMTH has been working to expand our business foundations in each business area such as the retail, wholesale and real estate businesses and to enhance our products and services for clients by utilizing our business know-how and operations in Japan as well as overseas at early stage. After the merger of three trust banks, we have further strengthened the measures to realize synergy effects such as the reduction of branch administration costs through the integration of overlapping branches and the shifting of head counts to the sales departments by establishing efficient operations.
    For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), page 15.

Results and Finances

1. Financial Results for FY2012

Q.01. Please give an overview of financial results for FY2012.

A.01. As for the consolidated financial results for 1HFY2012, "Net business profit before credit costs" decreased by 57.5 billion yen from FY2011 to 284.6 billion yen. This is due to the disappearance of one-time effect on consolidated accounting method resulting from the management integration, in addition to the decrease in "Net interest income and related profit" and the decrease in "Net gains on bonds" which recorded significant profit in FY2011, while "Net fees and commissions and related profit" increased.
"Total credit costs" stood at the reversal of 6.1 billion yen due to the posting of the reversal of allowance for loan looses. "Net loses on stocks" stood at 4.2 billion yen mainly due to the devaluation losses of stocks.
As a result, "Ordinary profit" decreased by 17.0 billion yen from FY2011 to 255.0 billion yen. "Net income (excl. 43.4 billion yen of gain on amortization of negative goodwill caused by the share exchange)" increased by 12.5 billion yen from FY2011 to 133.7 billion yen mainly due to the disappearance of the decrease in deferred tax assets resulting from the reduction in a corporate tax rate in FY2011.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), page 4.

Q.02. What are the past results of your main businesses?

A.02. Please refer to Presentation Material "IR Material for FY2012" (May 21, 2012), page 16-23.

Q.03. Describe the situation of your non-performing loans.

A.03. <Non-Consolidated (SMTB)>
The total balance of Non-performing loans (“NPL”) (*) as of the end of March 2013 increased by 71.6 billion yen from the end of previous fiscal year to 305.9 billion yen. The NPL ratio continued to remain at low level of 1.3%.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), page 25.
(*) Problem assets based on the Financial Reconstruction Act.

Q.04. Describe the situation of your capital.

A.04. <Consolidated (SMTH) (Basel III, international standard)>
From the end of March 2013, the new Basel III regulation was introduced. Based on the Basel III regulation, "Common equity Tier 1 capital ratio", "Tier 1 capital ratio" and "Total capital ratio" as of the end of March 2013 stood at 8.30%, 9.95% and 14.10%, respectively, all of which exceeded the minimum requirement of 3.50%, 4.50% and 8.00%.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), pages 29 - 30.
 Please refer to "Financial status" for the capital ratio in the past.

Q.05. Describe the impact of European sovereign debt crisis.

A.05. SMTH group's credit exposure to Europe (Excl. inter-bank transaction) stood at 1,104.7 billion yen as of the end of March 2013, mostly constituted by those to Germany, U.K., France, and Switzerland. Since there is no sovereign exposure to GIIPS countries (Greece, Italy, Ireland, Portugal and Spain), we consider that the impact of European sovereign debt crisis is limited.
For details, please refer to Presentation Material "IR Material for FY2012" (November 20, 2012), page 27.

Q.06. What kind of accounting methods did you adopt for the Management Integration?

A.06. With April 1, 2011 as the integration record date, we have consolidated CMTH's balance sheets to STB's balance sheets by the purchase method, according to accounting standards concerning corporate combinations.

Q.07. How was your balance sheet as of the effective date of the Management Integration?

A.07. As to the simulation of the balance sheet as of the effective date of the share exchange, please refer to "IR Material for for FY2011" (May 24, 2012), page 47.

Q.08. How was SMTB's balance sheet as of the date of the establishment?

A.08. As to the simulation of the SMTB's balance sheet as of the date of the establishment, please refer to IR Material "IR Material for 1QFY2012" (August 10, 2012), page 12.

2. Financial forecast for FY2013

Q.09. What is your financial forecast for FY2013?

A.09. As for the forecast for FY2013, "Net business profit before credit costs" is forecasted to be 270.0 billion yen (consolidated) and 205.0 billion yen (non-consolidated) taking into account the increase in fees from sales of investment trust and real estate brokerage in addition to the standardization of net gains on bonds from the Global markets. "Net income" is forecasted to be 130.0 billion yen (consolidated) and 105.0 billion yen (non-consolidated), almost flat from previous fiscal year.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), page 12.

Q.10. What is your dividend forecast for FY2013?

A.10. As for the annual dividend forecast for FY2013, dividend per share on common share is forecasted to increase by 1.00 yen from previous fiscal year to 10.00 yen based on the forecasted consolidated net income of 130.0 billion yen in accordance with our dividend policy which targets a consolidated dividend payout ratio at the 30% level. The interim dividend is forecasted to be 5.00 yen per share, which is equal to one-half of the annual dividend forecast.

3. Rating information

Q.11. Describe the rating for each company of Sumitomo Mitsui Trust Group.

A.11. Regarding our rating, please refer to "Rating Information."

Financial & Capital Policy

Q.01. Describe your financial targets: capital adequacy ratio, ROE, etc.

A.01. SMTH targets the "ROE of approx. 10%" as a medium-term financial target. Looking towards Basel III, "Common equity Tier I ratio" will be approx. 8 to 9% (after deducting all deduction items) in the final fiscal year ending Mar. 2016.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), page 32.

Q.02. For capital adequacy ratio regulations, is SMTH under international standards or domestic standards?

A.02. We are under international standards.

Q.03. Describe your policy for responses to the new capital adequacy regulations (Basel III).

A.03. We think it will be possible to sufficiently achieve the levels required under Basel III, by the accumulation of earnings through steady effort to achieve Midterm Management Plan and the efficient risk weighted asset control.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), pages 29 - 31.

Q.04. Describe your thinking on reduction of cross shareholdings.

A.04. As for the cross shareholdings, we set the three-year reduction policy in FY2011 (reduce approx. 190 billion yen), and it has progressed steadily. We sold 55.7 billion yen of stocks in FY2011 and 55.6 billion yen in FY2012.
For details, please refer to Presentation Material "IR Material for FY2012" (May 21, 2013), pages 26 and 32.

Q.05. Describe your basic policy on returns for shareholders, such as dividend policy, etc.

A.05. Our basic policy is to share profits with shareholders in accordance with profit level of each fiscal year, and we target the consolidated dividend payout ratio of approx. 30%.

Q.06. Please provide an outline and repayment of public funds.

A.06. As to the 500,875,000 of SMTH’s common shares held by the government as the injection of public funds (equivalent to approx. 12% of issued shares), it is fully repaid through the completion of settlement of the closing price trading as described in the news releases titled "Announcement regarding Results of Repurchase of Own Shares through Closing Price Trading (ToSTNeT-2), Repayment of Public Funds and Change of Major and Largest Shareholder" (March 11, 2013) and "Announcement regarding Full Repayment of Public Funds" (March 14, 2013). We really appreciate the public support to SMTH at our management difficulties in the past, and in the future we aim to boost our share value by working on achievement and building up of synergy effects from the integration.

Q.07. Describe the disposal of treasury shares announced on May 29, 2013.

A.07. In March 2013, we repurchased 467,292,000 shares of its common stock in connection with the repayment of public funds and concurrently cancelled 250,000,000 shares of those repurchased shares, and decided to formulate a plan with respect to the remaining repurchased shares by taking into consideration various factors including the status of its equity capital, evaluation of the market conditions and opportunities for strategic investments. Taking into consideration the current economic circumstances and market conditions, we disposed of 217,000,000 shares of its treasury share by an international offering, in order to reinforce its financial soundness and to further improve profitability while facing intensifying competition in Japanese and overseas markets as a financial institution operating globally.
For details, please refer to news releases titled "Notice regarding Disposal of Treasury Shares by an International Offering" (May 29, 2013) and "Notice regarding Determination of Offer Price for Disposal (Price to be Paid) of Treasury Shares by an International Offering" (May 30, 2013).

Stock Related

Q.01. On which securities exchanges are you listed? Are you listed on overseas exchanges?

A.01. We are listed on the 1st section of TSE and NSE, and are not listed on any overseas stock exchanges.

Q.02. What is your securities code?

A.02. Our security code is 8309.

Q.03. How many shares in one unit?

A.03.  1,000 shares per unit. Also, for stock related information, refer to "Basic Stock Information."

Q.04. Is it possible to trade American Depository Receipts (ADR)?

A.04. SMTH has set up the sponsored ADR program (level 1).
For details, refer to "ADR (American Depositary Receipt) Information."

Q.05. Where and when will you hold the next Ordinary General Meeting of Shareholders?

A.05. It plans to be held in Tokyo on June 27, 2014.

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