Fitch trims SMFG

Fitch Ratings said it downgraded Sumitomo Mitsui Financial Group, Inc. and Sumitomo Mitsui Banking Corp.'s, together referred to as SMBC group, long-term issuer default ratings to A- from A and viability ratings to a- from a. The agency also cut the ratings on SMBC group's senior unsecured euro medium-term note programs and SMFG's subordinated instrument by one notch to A- and BBB, respectively.

The long-term IDRs of SMBC group are at the same level as its VRs and government support ratings (GSR). The GSR reflects Fitch's view of a very high likelihood of support from the Japanese sovereign (A/Stable), should it be required. The VRs were downgraded mainly due to weakened capitalization. The VRs are in line with the implied VRs and factor in SMBC group's strong franchise, stable funding base, modest profitability and sound, but weakened, capitalization,” Fitch said in a press release.

The agency noted the lower VRs were driven by the group's weaker capitalization; its common equity tier 1 ratio was 13.7% at end-September 2022, down from 14.5% at end-March 2022 and 15.9% at end-September 2021.

The outlook is stable.

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