Sumitomo Mitsui Trust Group (8309) Q4 2024 earnings summary

Executive summary

• FY23 net business profit before credit costs was ¥338.6bn, ¥8.6bn above the revised forecast; net income fell to ¥79.1bn, mainly due to bear-fund losses.

• Rising stock prices, a weaker yen and higher corporate credit-related fees supported business profit, while restructuring Japan equity bear investment trusts weighed on ordinary profit.

• FY24 net income is forecast at ¥240.0bn, targeting the FY25 profit goal one year early; planned dividend is ¥145/share, including a commemorative dividend.

• Strategy focuses on growing AUF, improving profitability without materially expanding the balance sheet and progressing toward ROE of 10% or above.

Financial highlights

• FY23 substantial gross business profit rose ¥59.9bn YoY to ¥874.1bn; substantial G&A expenses increased ¥45.9bn to ¥535.4bn.

• Net fees and commissions and related profit rose ¥29.5bn to ¥478.8bn; effective interest-related earnings decreased ¥10.6bn to ¥289.9bn.

• Ordinary profit fell 64.6% to ¥101.3bn and net income attributable to owners fell 58.5% to ¥79.2bn; EPS was ¥109.16.

• Net gains on stocks were a loss of ¥188.5bn, including ¥298.1bn of realized bear-fund losses and ¥108.5bn of gains from reducing strategic shareholdings.

• Comprehensive income was ¥416.2bn versus ¥198.5bn in FY2023, reflecting higher other comprehensive income.

Outlook and guidance

• FY24 forecast: net business profit before credit costs ¥340.0bn, substantial gross business profit ¥910.0bn and net income ¥240.0bn.

• FY24 targets include AUF of ¥600trn, ROE of ~8%, CET1 around 10% and a dividend payout ratio of ~43.5%, including the commemorative dividend impact.

• FY24 dividend guidance is ¥145/share: ¥135 regular and ¥10 commemorative; progressive dividends and a payout ratio of at least 40% remain the policy.

• FY24 assumes ¥50.0bn net gains on stocks and ¥20.0bn total credit costs; G&A is forecast to rise with inflation and IT and human-capital investment.

• FY24 market assumptions include Nikkei 225 at ¥39,000 or above and USD/JPY at ¥140; longer-term ROE aspiration is 10% or above.