BW20030812002038  20030812T131617Z UTC


( BW)(SUMITOMO-MITSUI-BNKG)(SBK) Statement re Progress Report on
Strengthening the Financial Base of the Bank - Part 1

    Business Editors
    UK REGULATORY NEWS

    TOKYO--(BUSINESS WIRE)--Aug. 12, 2003--

(Appendix)

Reasons for the Differences between the Plan and the Actual Results

(Table 1-1)

(#1) Securities: 7,530.4 billion yen above the plan

Due mainly to increases in TBs, FBs, and medium- and long-term JGBs
from ALM operation on interest rate trends in the Japanese and
overseas markets.

(#2) Deferred tax assets (term-end balance): 1,084.6 billion yen above
the plan

Caused by factors such as the increase in credit cost from the
accelerated disposition of non-performing assets, the large write-off
due to greater-than-expected stock impairment, and the rise in
effective tax rate due to the implementation of nation-wide external
standards taxation.

(#3) Capital stock: 766.7 billion yen below the plan

Capital reserve: 447.1 billion yen below the plan

a. Capital stock and capital reserve combined decreased, on a net
basis, 399.4 billion yen year-on-year due to factors such as the
transfer of management business to SMFG as a part of the group's
structural reform upon the establishment of the holding company.

b. Capital stock and capital reserve combined increased 450.3 billion
yen year-on-year due to the issuance of common stock by direct
allotment to SMFG.

c. Capital stock and capital reserve respectively decreased
year-on-year 578.8 billion yen and 826.7 billion yen due to the merger
accounting applied to the merger of the former SMBC and the former
Wakashio Bank. At the time of the merger, the amount of stockholders'
equity of Wakashio Bank consisted of 80.8 billion yen in capital
stock, and 60.0 billion yen in capital reserve.

(#4) Net unrealized loss on other securities: 238.1 billion yen below
the plan

Due to the write-off of unrealized losses on stocks at the time of
merger.

(#5) Gross banking profit: 260.6 billion yen above the plan

Due to factors such as higher profit of the Treasury Unit from its
effective ALM operation on trends in yen and U.S. dollar interest
rates.

(#6) Banking profit before transfer to general reserve for possible
loan losses: 263.5 billion yen above the plan

Factors such as the increase in gross banking profit (#5), and the
greater-than-expected reduction, by over 3.0 billion yen, in expenses
even after combining 8.1 billion yen in expenses of the former
Wakashio Bank, through streamlining of workforce, additional cuts in
bonuses, early completion of branch network integration, and the
promotion of operational rationalization.

(#7) Total credit cost: 574.5 billion yen above the plan

Due to the aggressive disposition of non-performing assets, such as
the acceleration of "off-balancing" and the new application of
"specific-type" reserves based on the DCF-method for large borrowers
in the substandard category, in line with the basic concept of the
Program for Financial Revival and others.

(#8) Gains (losses) on stocks:  565.7 billion yen below the plan

Against a background of greater-than-expected drop in stock prices,
SMBC recorded 108.2 billion yen in losses on stocks sold for
off-balancing purposes, and a write-off of 527.5 billion yen due to
stock impairment.

(#9) Ordinary profit (loss): 827.2 billion yen below the plan

Net income (loss): 558.3 billion yen below the plan

The higher banking profit (#6) was not enough to off set the
greater-than-expected increases in total credit cost (#7) and losses
on stocks (#8).

(#10) ROE (Banking profit before transfer to general reserve for
possible loan losses / Stockholders' equity : 14.28%
above the plan

Due to the lower shareholders' equity from (#3) and (#4), and the
higher banking profit before transfer to general reserve for possible
loan losses (#6).


(Table 2: non-consolidated)

(#1) Capital stock: 766.7 billion yen below the plan

Capital reserve: 447.1 billion yen below the plan

a. Capital stock and capital reserve combined decreased, on a net
basis, 399.4 billion yen year-on-year due to factors such as the
transfer of management business to SMFG as a part of the group's
structural reform upon the establishment of the holding company.

b. Capital stock and capital reserve combined increased 450.3 billion
yen year-on-year due to the issuance of common stock by direct
allotment to SMFG.

c. Capital stock and capital reserve respectively decreased
year-on-year 578.8 billion yen and 826.7 billion yen due to the merger
accounting applied to the merger of the former SMBC and the former
Wakashio Bank. At the time of the merger, the amount of stockholders'
equity of Wakashio Bank consisted of 80.8 billion yen in capital
stock, and 60.0 billion yen in capital

(#2) Net unrealized loss on other securities: 238.1 billion yen below
the plan

Due to the write-off of unrealized losses on stocks at the time of
merger.


(Table 2: consolidated)

(#1) Net unrealized loss on other securities: 238.6 billion yen below
the plan

Due to the write-off of unrealized losses on stocks at the time of
merger.

(#2) Foreign currency translation adjustments: 38.3 billion yen below
the plan

Due to the stronger-than-expected yen at the fiscal year-end [the
plan: 133.5 yen, actual: 120.20 yen].


(Table 10)

(#1) Loans to small- and medium-sized enterprises [adjusted basis]:
799.7 billion yen below the plan

Main factors as follows, despite SMBC's effort to achieve the target.

a. Reflecting the sluggish economy, loan demand continued to be weak.

b. Expanded actions taken by corporate customers, especially by the
subsidiaries of large corporations, to reduce their interest-bearing
liabilities as a part of their financial restructuring measures.

c. Progress made in collecting on non-performing loans aiming at an
early resolution of asset quality problem.

Progress Report on Strengthening

                    the Financial Base of the Bank

     (Selected tables excerpted from the original Japanese report)

                              August 2003

                    Sumitomo Mitsui Financial Group
                 (Sumitomo Mitsui Banking Corporation)



 (Table 1-1)Trend and Plan of Income [Sumitomo Mitsui Banking Corporation (Non-consolidated) ]


                                                                        FY00       FY01      FY02      FY02
                                                                     Actual *1  Actual *2   Plan *3  Actual *4
 ------------------------------------------------------------------------------ ---------- --------- --------- ---------
 (Scale)