Ratings On Sumitomo Mitsui Financial Group And Core Subsidiaries Outlooks Remain Positive

Stocks and Financial Services Press Releases Thursday August 3, 2017 17:25
TOKYO--3 Aug--S&P Global Ratings

TOKYO (S&P Global Ratings) Aug. 3, 2017--S&P Global Ratings today said it has affirmed its counterparty credit ratings on Sumitomo Mitsui Financial Group Inc. (SMFG) and its core subsidiaries, including Sumitomo Mitsui Banking Corp. (see ratings list below). The outlooks on our long-term counterparty credit ratings on SMFG and its core subsidiaries remain positive. At the same time, we have removed our counterparty credit ratings on SMFG and its core subsidiaries from under criteria observation (UCO) following our criteria review. We had placed the ratings under criteria observation on July 20, 2017, after publishing our revised criteria, "Risk-Adjusted Capital Framework Methodology."

We hold the view that SMFG will continue to improve its capital level relative to risk-weighted assets (RWAs). The group's risk-adjusted capital (RAC) ratio remained above 7% as of end-September 2016 under our revised criteria. We also expect SMFG to increase its RWAs modestly and to accumulate retained earnings steadily to meet the regulatory requirements of the Basel Committee on Banking Supervision.

We would upgrade SMFG and its core subsidiaries as a result of revising our capital and earnings assessment upward if we believe the group will maintain an RAC ratio of 7% or higher by increasing total adjusted capital and managing its RWAs over the next two years. On the other hand, we could revise our outlooks on SMFG and its core subsidiaries downward if we revise our anchor for Japan's banking industry downward, or if the group materially expands its exposure to countries and regions with higher economic risk than Japan.

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