TEXT-S&P summary: Sumitomo Mitsui Financial Group Inc.

Fri Dec 28, 2012 2:18am EST

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(The following statement was released by the rating agency)

Dec 28 -

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Summary analysis -- Sumitomo Mitsui Financial Group Inc. ---------- 28-Dec-2012

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CREDIT RATING: A/Negative/A-1 Country: Japan

Primary SIC: Holding

companies, nec

Mult. CUSIP6: 86562M

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Credit Rating History:

Local currency Foreign currency

18-Jun-2007 A/A-1 A/A-1

13-Dec-2006 A-/A-2 A-/A-2

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Rationale

Standard & Poor's Ratings Services bases its ratings on Sumitomo Mitsui Financial Group Inc. (SMFG) on the company's "strong" business position, "moderate" capital and earnings, "adequate" risk position, "above average" funding, "strong" liquidity, and a "high" likelihood of government support. The stand-alone credit profile (SACP) on the operating bank, Sumitomo Mitsui Banking Corp. (SMBC), is 'a'.

Anchor: 'a-' for banks operating in Japan

Our bank criteria use our Banking Industry Country Assessment (BICRA) economic risk and industry risk scores to determine a bank's anchor SACP, the starting point in assigning an issuer credit rating (ICR). Our anchor SACP for a bank operating only in Japan is 'a-'. The BICRA score is informed by our evaluation of economic risk. We view Japan as a developed and diverse economy with strong net external balance, which offsets the high level of government debt, and limited fiscal flexibility. With regard to industry risk, the banking sector is underpinned by a high and stable share of core deposits in funding and prudent regulatory monitoring. On the other hand, we consider the banking sector as fragmented with overcapacity, and those factors are evidenced by generally low earnings capacity.

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