The Sumitomo Trust The Sumitomo Trust The Sumitomo Trust The Sumitomo Trust & Banking Co., Ltd. & Banking Co., Ltd. & Banking Co., Ltd. & Banking Co., Ltd. Daiwa Investment Conference Tokyo 2008 February 20, 2008
Meeting agenda Overview and Management policy “Trustee-ness” & “STB-ness” 3QFY2007 financial results International credit and Loan portfolio strategy Midterm financial target 1
中表紙 Overview and Management policy 2
Multiform business lines of Sumitomo Trust (“STB”) Multiform business lines range from banking to trust and real estate businesses Providing customers with high value-added services leveraging a combination of banking, trust and real estate businesses As of March 2007 Banking business Trust business Real estate business Treasury & Stock transfer Pension & Asset Securities Investment agency management processing 27.0 billion yen* 39.4 billion yen* 9.1 billion yen* 21.3 billion yen* 11.7 billion yen* - Asset - Transfer - Custody - Commercial Wholesale clients - Commercial management agency properties banking Assets under for corporations services brokerage custody (JTSB) and institutions - Investment banking - Securitization 168 trillion yen - Pension plan (Market-based loans) - J-REIT administration - Global custody - Investment Corporate accounts Number of Assets under advisory 5 thousand companies management Assets under custody (STBUSA) (JTAS) (Sumitomo Trust) 87.1 billion yen* 1.5 thousand 25.2 trillion yen 19.7 trillion yen - Deposits - Mutual funds - Mutual - Residential - Mutual funds, funds properties Retail clients (Asset management) Individual annuity brokerage (Custody) Shareholders - Mortgage loans under Assets under Assets under - Private banking administration management custody Number of retail clients (JTAS) (STAM) (Sumitomo Trust) 2 million 9 million 1.4 trillion yen 18.3 trillion yen 29.6 billion yen* * Figures are consolidated net business profit before credit JTAS: Japan TA Solution costs of each business line in FY2006, amounting to 215.4 STAM: STB Asset Management billion yen including other items (net of dividend income, cost JTSB: Japan Trustee Services Bank of capital sourcing and head office expense etc.) 3
Profitability of Trust and Real Estate Businesses CAGR for past three-year period: Fiduciary business 17.4%, Real estate 31.4% Trust and Real estate business contribution to total consolidated net business profit increased: from 25.3% in FY2003 to 32.1% in FY2006 <Consolidated net business profit> 2. Real estate business 1. Fiduciary business (Pension & Asset management, Securities processing) （ in billions of Yen ） 35 （ in billions of Yen ） 29.6 40 Pension & AM 30 27.0 Securities processing CAGR = 31.4% 33.0 35 25 CAGR = 17.4% 20 30 17.7 24.0 15 25 11.9 21.3 20.4 21.3 10 20 5 16.7 15 17.0 0 17.8 10 FY03 FY04 FY05 FY06 11.7 5 <Ratio to total consolidated net business profit> 7.3 4.3 2.6 0 Trust and real estate FY03 FY04 FY05 FY06 32.1 25.3% Other business % Trust business includes Fiduciary (Pension and FY06 FY03 asset management) and Stock transfer agency 4
Management policy Management principle: To accomplish sustainable growth leveraging our strengths in combining banking, trust and real estate businesses For each and every individual customer, “A strategic partner”, “a house bank for asset management & providing corporate and institutional investors with administration” multi-layer values Basic aspects: To achieve sustainable growth by focusing on management strategy and business development that prioritize “Trustee-ness” and “STB-ness” “Trustee-ness” “STB-ness” Spirit as a trustee Diversity Put the customer first Creativity Offer most appropriate solutions with Speed meticulous attention 5
中表紙 “Trustee-ness” & ”STB-ness” 6
Fiduciary business (Pension, Investment management) Sumitomo Trust group ranks as one of the largest asset managers in Japan, with 27.5 trillion yen in assets under management Volume change in pension trusts due to share change among trustees has been positive for over 60 consecutive months since August 2002 <Market share by categories in corporate pension market> <Assets under STB group management> 60% (in trillions of Yen) Mutual fund (by STB Asset Management) 30 Pension trust 40% 27.5 Investment advisory (inc. crossborder) 26.6 Public pension 1.7 20% 1.4 Trust banks 25 Life insurance Investment advisory 21.6 0% 7.0 96 97 98 99 00 01 02 03 04 05 06 07 6.7 0.9 From the data of Trust Companies Association of Japan, The 17.8 20 17.7 Life Insurance Association of Japan and Japan Securities Investment Advisers Association 0.2 0.4 6.2 2.3 2.3 <Factors of volume change in pension trusts> <Market share of pension trusts (*) estimate> 15 5.3 6.6 0.6 (in billions of Yen) 500 18.0% 17.8% 0.5 404.6 16.3 16.0 400 10 13.8 11.4 347.8 10.9 272.1 17.2% 300 16.9% 5 200 17.0% 04/3 05/3 06/3 07/3 07/9 16.7% 121.2 221.0 100 Mark-to-market (Left) * Mark-to-market basis 132.3 109.7 109.2 Others (Left) 0 Share change (Left) Dissolution (Left) Net change (Left) -100 16.0% Market share (Right) 2006/3 2006/9 2007/3 2007/9 7
Advantageous functions of “Trustee-ness” in pension business Provide one-stop solutions to cover all aspects of pension management from plan advisory to investment management Provide advanced solutions for customer’s ALM needs to qualify as a strategic partner Customer needs Plan Payment Actuary ALM Investment Mgmt Consulting Function Pinpointing problems Best Solution Customer satisfaction for customer Suggesting Solution LDI [Pension Plan Advisory] Distribution Function Multi-Plan Strategy [Investment Management] Please see p. 9 Tax-Qualified Employee's Multi-Product Strategy Pension Pension Funds Funds Defined Benefit Corporate Pension Plan Defined Ma nuf acturing Function Due Diligence Function Lump-Sum Contribution Pension Plan Retirement Payment Analyst Group Cash Balance Plan In-house Products Outsourced Products Securities Processing Services Pension Plan Administration System/ Services I nformation Processing Function Please see p. 10 8
Due diligence function as “STB-ness” in pension business Comprehensive due diligence function by amalgamating diversified expertise within the bank Top class volume of entrusted assets in alternative products <Ratio of active management (corporate pension)> <Concentration of resources in alternative investment> <Volume of entrusted assets in alternative investments> Customer Best Volume in alternative investment (Left) *Mark-to-market basis needs Total solution Ratio of active investment (Right) support (in billions of Yen) Suggesting solution Consulting function 1,000 55% 966.5 914.8 53.0% Gatekeeper of Asset-type 52.8% alternative investment 724.3 700 50% 50.2% 568.3 Distribution function 48.3% Comprehensive due diligence function Banking business 400 45% Real estate Trust business 2005/3 2006/3 2007/3 2007/9 business Credit investment International CLO Private REIT Hedge funds equity Managed Commodity futures Real estate funds Case 1: Consulting and Structured products comprehensive due diligence functions of Sumitomo Trust were highly evaluated by one of the largest plans that gave us its mandate as the Multi-sourcing gatekeeper of its alternative investment. 9
Information processing as key to “STB-ness” in pension business Clear vision of trust business and customer-centered business model enabled Sumitomo Trust to amalgamate related business functions Providing high-value added reporting, enhanced with viewpoint as investors, in response to needs of advanced customers <Strength as independent trust bank – information processing function> Sumitomo Trust's Fiduciary Business Asset management Investment consulting Asset administration <investor> <client relation> <operation> fund manager viewpoint customer viewpoint custodian viewpoint Least consciousness of ranking among business sectors to respect business vision of each sector >>> no barrier of ranking Customer centered fiduciary business model focusing on consulting and multi-platform Customer centered trust business model focusing on consulting and multi-product >>> no barrier within business sector High value-added customer reporting to help Accurate and cost efficient FM customer evaluate customer's investment strategy data providing viewpoint viewpoint Creative and strategic data enhancement Case 2: The proficiency of Sumitomo Trust’s comprehensive risk management, focusing on its information processing function, was highly evaluated by one of the large scale advanced plans that gave us a new mandate. 10
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