SMFG changes

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View the full Nov 13, 2026 version

Price: $24.32 → $24.75(+1.8%)
Discount category: Pricey → Far above intrinsic value
Next earnings: Nov 13, 2026 → Feb 13, 2027
Next earnings is estimate: No → Yes
About: Sumitomo Mitsui Financial Group (SMFG) is one of the largest banking groups in Japan. Its main companies are Sumitomo Mitsui Banking Corporation (SMBC), SMBC Nikko Securities, Sumitomo Mitsui Card and SMBC Consumer Finance. It gives loans and takes deposits, and it sells payments, securities, credit cards, consumer finance and asset management services in Japan and in other countries. Its digital platform Olive serves retail customers in Japan. Total assets were removed: ¥327.5 added: ¥326.2 trillion at removed: June added: September 30, 2026. Its fiscal year ends on March 31. Its shares trade in Tokyo, and its ADSs trade on the New York Stock Exchange. Since October 1, 2026, each ADS represents 1.2 common shares.
Thesis: SMFG trades at a premium to the AI estimate because investors pay for higher interest rates in Japan and for a plan to raise returns. Profit attributable to owners of parent rose 34.4% to ¥1,583.0 billion in the year that ended on March 31, 2026, and ROE reached 10.4%. Higher Bank of Japan rates increase what SMFG earns on its loans and on its deposits at the central bank. Its new Medium-Term Management Plan for fiscal 2026 to 2028 targets a 13% ROTE and aims for ¥2 trillion of profit. added: In the six months to September 30, 2026, profit rose 7.5% to ¥1,003,155 million, and SMFG added: raised its forecast for the year to March 2027 to ¥1,900 billion from ¥1,700 billion. SMFG also buys back removed: shares, and it added: shares. It paid ¥180.0 billion for 28,018,600 shares from May to July removed: 2026. added: 2026, and it plans to buy back up to ¥220 billion more from November 2026 to February 2027. For the premium to be earned, three things must be true. Profit must reach the added: raised forecast of removed: ¥1,700 added: ¥1,900 billion for the year to March 2027. Returns must keep rising toward the 13% ROTE target while the common equity Tier 1 ratio stays near removed: 12%. added: 12%, after 11.99% at September 30, 2026 on a preliminary basis. Credit costs must stay low as the bank lends more. The removed: interim results on November 13, 2026 added: Q3 results, expected in February 2027, give the next test. The full-year results in mid-May 2027 test the first year of the plan. If profit growth stops or credit costs rise, the premium can shrink within one to two years.
Valuation: The intrinsic value for Sumitomo Mitsui Financial Group is an AI estimate from November removed: 9, added: 13, 2026. It is not an analyst's value. An AI research agent calculated it from SMFG's filings. The method is a justified price-to-book model. Value per share is book value per share times (ROE - g) / (r - g), where ROE is the long-term return on equity, r is the cost of equity and g is long-term growth. The results for the removed: three added: six months ended removed: June added: September 30, 2026 (6-K, removed: July 31, added: November 13, 2026) give stockholders' equity of removed: ¥16,098,760 million, 3,799,822,839 added: ¥15,831,892 million at September 30, 2026, 7,602,249,786 shares removed: outstanding before added: issued and 23,423,250 shares of treasury stock after the added: two-for-one stock removed: split, added: split of October 1, 2026, profit attributable to owners of parent of ¥1,003,155 million for the six months, and a forecast profit of removed: ¥1,700 added: ¥1,900 billion for the year to March 31, removed: 2027. added: 2027, up from ¥1,700 billion. The removed: 6-K added: supplementary information of removed: August 3, 2026 added: the same date (6-K, November 13, 2026) gives removed: 10,403,700 shares repurchased in July 2026. added: an ROE of 12.7% for the six months on the Tokyo Stock Exchange basis. The results for the year ended March 31, 2026 (6-K, May 13, 2026) give removed: profit of ¥1,582,973 million and ROE of 10.4%. removed: SMFG split each share into two on October 1, 2026 (6-K, May 13, 2026). The estimate removed: assumes 7,578,838,278 shares after added: uses 7,578,826,536 shares, the removed: split, which is the June 30 count added: shares issued less removed: the July buyback, times two. added: treasury stock at September 30, 2026. This gives book value of removed: ¥2,124.17 added: ¥2,088.96 per share. added: A correction of the statements for the year ended March 31, 2026 (6-K, November 13, 2026) lowered net assets at March 31, 2026 by ¥68,213 million. It does not change the equity at September 30, 2026. SMFG approved a buyback of up to 85,000,000 shares or ¥220 billion from November 16, 2026 to February 28, 2027 (6-K, November 13, 2026). The estimate leaves this buyback out, because SMFG has not bought the shares yet. Each ADS represents 1.2 shares since October 1, removed: 2026. added: 2026, because five ADSs represent six shares (form of ADR, 424B3, October 1, 2026). The estimate uses an exchange rate of removed: ¥157.50 added: ¥160.00 per U.S. removed: dollar, added: dollar as an assumption. This is the removed: market added: cross rate removed: at added: of the removed: close on added: European Central Bank reference rates for November removed: 6, added: 13, 2026, removed: as an assumption. added: ¥176.83 and $1.1052 per euro. The ROE, cost of equity and growth in each case are assumptions. The low case assumes ROE of 9%, a 10% cost of equity and 2% growth. Returns stay low in this case if rates in Japan stop rising and credit costs increase. It gives 0.875 times book, removed: ¥1,858.65 added: ¥1,827.84 per share and removed: $14.16 added: $13.71 per ADS. The base case assumes ROE of removed: 11.5%, added: 12%, a 9% cost of equity and 2% growth. added: The base ROE is now 12%, up from 11.5%, because the forecast profit of ¥1,900 billion is about 12% of the equity at September 30, 2026. It gives removed: 1.357 added: 1.429 times book, removed: ¥2,882.81 added: ¥2,984.23 per share and removed: $21.96 added: $22.38 per ADS. The high case assumes ROE of 13%, near the 13% ROTE target of the new plan, an 8.5% cost of equity and 2.5% growth. It gives 1.75 times book, removed: ¥3,717.30 added: ¥3,655.68 per share and removed: $28.32 added: $27.42 per ADS. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is removed: $21.60 added: $21.47 per ADS. added: Since the estimate of November 9, 2026, the higher profit forecast raised the base case. Lower book value per share and a weaker yen lowered all three cases. The value moves with the yen. At ¥150 per dollar, it would be about removed: 5% added: 7% higher. Efficient scale and switching costs are the main sources of the advantage. Few banks in Japan have SMFG's size, deposit base and corporate relationships, and companies keep their main bank for many years. But banks in Japan earned low returns for many years, ROE was only 8.0% in the year to March 2025, and returns depend on Bank of Japan rates. The estimate expects the advantage to last 10 years or more, but not 20 years. As of Nov removed: 9, added: 13, 2026.
Risks: Profit depends on interest rates in Japan. If the Bank of Japan stops raising rates or lowers them, net interest income can grow more slowly. Higher bond yields can also cause losses on the bond portfolio. Credit costs can rise in a slower economy in Japan or abroad. Large loans to companies and consumer finance can bring losses. SMFG invests in businesses outside Japan and in securities joint ventures, such as SMBC Nikko Jefferies Securities. These investments can give lower returns than planned. added: In November 2026, SMFG corrected its statements for the year ended March 31, 2026, because of an error in the fair value of monetary claims bought. The added: error lowered net assets by ¥68,213 million. More errors of this type can reduce trust in its reports and its capital ratios. The ADS price is in U.S. dollars, but SMFG earns mostly in yen. A weaker yen lowers the value of each ADS.
Balance sheet: SMFG is a bank, so its balance sheet is mostly loans, securities and deposits, and not corporate debt. At removed: June added: September 30, 2026, total assets were removed: ¥327.5 added: ¥326.2 trillion and net assets were removed: ¥16.24 added: ¥15.98 trillion. Stockholders' equity was removed: ¥16.10 added: ¥15.83 trillion. added: Deposits were ¥187.4 trillion, and loans and bills discounted were ¥117.0 trillion. Under Basel rules, the common equity Tier 1 capital ratio was removed: 12.63% added: 11.99% at removed: June added: September 30, removed: 2026, up added: 2026 on a preliminary basis, down from removed: 12.41% added: 12.32% at March 31, 2026. The Tier 1 capital ratio was removed: 15.04%, added: 14.50%, the total capital ratio was removed: 16.24% added: 15.66% and the leverage ratio was removed: 5.25%. added: 5.10%. Risk-weighted assets were removed: ¥102.1 added: ¥102.0 trillion. added: The non-performing loan ratio was 0.77%, down from 0.97% at March 31, 2026. SMFG plans a dividend payout ratio of 40% for the year to March 2027. It repurchased ¥180.0 billion of shares from May to July 2026 and cancelled them on August 20, 2026. added: It plans to buy back up to ¥220 billion of shares from November 2026 to February 2027 and to cancel them on March 19, 2027. As of removed: Jun added: Sep 30, 2026.
Checkpoints: Nov 13, 2026: First-half fiscal 2026 results. removed: Pending. added: Passed. Watch: Profit of about half of the ¥1,700 billion full-year forecast or more and a kept or higher forecast pass; a lower forecast or a jump in credit costs fails. added: Outcome: First half profit was ¥1,003,155 million, and SMFG raised its full-year forecast to ¥1,900 billion, although total credit cost rose to ¥133,527 million from ¥90,168 million. Feb 13, 2027 (estimate): Q3 fiscal 2026 results. Pending. Watch: Nine-month profit of about three quarters of the ¥1,900 billion forecast or more and a kept or higher forecast pass; a lower forecast or a sharp rise in credit costs fails. May 2027 (estimate): Full-year results: first year of the new plan. Pending. Watch: Profit of removed: ¥1,700 added: ¥1,900 billion or more with ROE rising toward the plan's path to a 13% ROTE passes; lower profit or flat returns fail.
Recent events: added: Nov 13, 2026: SMFG reported results for the six months ended September 30, 2026. Profit attributable to owners of parent rose 7.5% to ¥1,003,155 million, and ordinary profit rose 9.2% to ¥1,395,603 million. Net interest income rose to ¥1,619,966 million from ¥1,282,937 million, and total credit cost rose to ¥133,527 million from ¥90,168 million. ROE was 12.7% on the Tokyo Stock Exchange basis. SMFG raised its profit forecast for the year to March 31, 2027 to ¥1,900 billion from ¥1,700 billion. It raised the interim dividend to ¥100 per share before the stock split, and the year-end dividend forecast to ¥50 per share after the split. The annual dividend forecast is now ¥100 per share after the split, from ¥90. Nov 13, 2026: SMFG approved a buyback of up to 85,000,000 shares or ¥220 billion, from November 16, 2026 to February 28, 2027. It plans to cancel the repurchased shares on March 19, 2027. Nov 13, 2026: SMFG corrected its financial statements for the year ended March 31, 2026, because it found an error in the fair value measurement of monetary claims bought. At March 31, 2026, monetary claims bought fell by ¥99,611 million and net assets fell by ¥68,213 million. Profit did not change. SMFG filed an amendment report for its Annual Securities Report, and it corrected the common equity Tier 1 capital ratio at March 31, 2026 to 12.32%, from 12.41%. Oct 1, 2026: SMBC completed the sale of the commercial banking unit of SMBC MANUBANK, its U.S. bank subsidiary, to Bank of Hope. SMBC announced the sale on March 31, 2026. SMBC said that the sale does not change its consolidated earnings plan for the year to March 31, 2027. Oct 1, 2026: SMFG split each common share into two shares. On the same day, the ADS ratio changed from 0.6 to 1.2 common shares per ADS, so the split did not change the price level of the ADSs. Sep 29, 2026: SMFG decided to make SMBC Nikko Securities a subsidiary of a new intermediate holding company, SMBC Nikko Securities Holdings, from October 1, 2026. The holding company also oversees SMBC Nikko Jefferies Securities, a Japanese equities joint venture with Jefferies Financial Group. Aug 14, 2026: SMFG reported a common equity Tier 1 capital ratio of 12.63% at June 30, added: 2026. After a correction in November 2026, removed: up from 12.41% added: the ratio at March 31, removed: 2026. added: 2026 was 12.32%. Aug 3, 2026: SMFG completed its buyback of 28,018,600 shares for ¥180.0 billion. It cancelled these shares on August 20, 2026. Jul 31, 2026: SMFG reported results for the three months ended June 30, 2026. Profit attributable to owners of parent rose 33.0% to ¥501.4 billion. SMFG kept its forecast of ¥1,700 billion for the year to March 31, 2027. May 13, 2026: SMFG reported results for the year ended March 31, 2026. Profit attributable to owners of parent rose 34.4% to ¥1,583.0 billion, and ROE was 10.4%. The annual dividend was ¥157 per share. For the year to March 2027, it forecast profit of ¥1,700 billion and a dividend of ¥180 per share before the stock split, a payout ratio of 40%. It also announced a buyback of up to ¥180 billion and a two-for-one stock split.