3. Accounting Policy on Securitization Transactions 4. Qualifying External Ratings Agencies 5. Portfolio Capital Ratio Information SMFG Accounting treatment of securitization of financial assets is as follows. Extinguishment of financial assets is recognized when the contractual  rights over the financial assets are exercised, forfeited or control over the rights is transferred to a third-party, and the difference between the  book value of the financial assets and the amount received/paid is recorded as the term’s gain/loss. When the control over the contractual  rights is not deemed to have been transferred, the securitization transaction is treated as a financial transaction such as a mortgage loan. When a portion of financial assets satisfies the extinguishment condition, the extinguishment of the said portion is recognized and the  difference between the book value of the extinguished portion and the amount received/paid is recorded as the term’s gain/loss. The book  value of the extinguished portion is calculated by allocating the book value of the financial assets based on the proportion of the financial  assets’ fair value that the extinguished portion represents.  Further, the remaining portion whose fair value is available is measured at fair value, and the related valuation differences are reported as  a component of “net assets.” The impairments are measured and recorded as necessary. When computing credit risk-weighted asset amounts for securitization exposures using the rating-based approach under the IRB approach  or standardized approach, the risk weights are determined by mapping the ratings of qualifying rating agencies to the risk weights  stipulated in the Notification. The qualifying rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating  Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), Standard & Poor’s Ratings Services (S&P), and Fitch Ratings Ltd. (Fitch).  When more than one rating is available for an exposure, the second smallest risk weight is used, in accordance with the Notification. (1) Securitization Transactions as Originator A. As Originator (excluding as Sponsor) (B) Securitization Exposures Billions of yen 2011 2010 March 31 Term-end balance To be  deducted  from capital  Increase in capital  equivalent Term-end balance To be  deducted  from capital  Increase in capital  equivalent Claims on corporates .............................. ¥ 31.3  ¥ 1.2  ¥ — ¥ 48.9 ¥ 3.6 ¥ — Mortgage loans ....................................... 203.0 34.4 36.0 191.2 36.6 37.5 Retail loans (excluding mortgage loans) ... 68.1 58.4 0.4 21.3 7.1 — Other claims ............................................ 158.4 5.7 — 140.0 7.7 — Total ......................................................... ¥460.7 ¥99.7 ¥36.3 ¥401.4 ¥55.0 ¥37.5 Billions of yen March 31, 2010 Fiscal 2009 Underlying asset amount  Total Asset transfer type Synthetic type Securitized  amount  Default amount Loss  amount Gains/losses  on sales Claims on corporates  ................ ¥ 96.6 ¥ 96.6 ¥ 0.1 ¥ — ¥ 7.6 ¥ 2.6 ¥ — Mortgage loans ......................... 1,609.6 1,609.6 — 43.0 1.9 0.4 2.5 Retail loans (excluding mortgage loans) ..... 68.4 0.2 68.2 — 14.1 17.8 — Other claims .............................. 244.0 54.4 189.7 — 0.1 0.4 — Total ........................................... ¥2,018.7 ¥1,760.8 ¥258.0 ¥43.0 ¥23.7 ¥21.2 ¥2.5 Billions of yen March 31, 2011 Fiscal 2010 Underlying asset amount  Total Asset transfer type Synthetic type Securitized  amount  Default amount Loss  amount Gains/losses  on sales Claims on corporates ................ ¥ 44.6  ¥ 44.6  ¥ 0.0  ¥ — ¥ 5.2  ¥ 3.0  ¥ — Mortgage loans ......................... 1,486.3 1,486.3 — 51.4 1.6 0.5 4.1 Retail loans (excluding mortgage loans) ..... 228.7 194.3 34.4 — 7.6 18.2 — Other claims .............................. 244.4 36.6 207.8 31.2 0.0 0.1 — Total ........................................... ¥2,004.1 ¥1,761.9 ¥242.2 ¥82.6 ¥14.4 ¥21.8 ¥4.1 (A) Underlying Assets a. Underlying Assets by Asset Type Notes: 1. The above amounts include the amount of underlying assets securitized during the term without entailing “securitization exposures.” 2. “Default amount” is the total of underlying assets which are past due three months or more and defaulted underlying assets. 3. “Other claims” includes claims on Private Finance Initiative (PFI) businesses and lease fees. 4. Following Articles 230 and 248 of the Notification, there are no amounts that represent “exposure to products subject to early amortization provisions” to  investors. SMFG  2011 193