I

Table of Contents BPI Integrated Report 2019

 Our Vision
Building a Better
Philippines

Our Mission
We nurture every
Filipino’s future with
a trusted approach to
managing money and
innovation that makes
life easier every day.

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A relationship that nurtures your future Table of Contents
BPI Credo Core Values

We believe our first responsibility is Customer Service

to our CLIENTS. If we understand and We establish lasting relationships with
address our clients’ financial needs, we clients, putting them first in our list of
will be entrusted with their most important priorities. We delight them with our
financial transactions, and we will build services and we always try to anticipate
lasting relationships. We do well when our their needs.
clients do well.
Excellence
We believe in our responsibility to our Whatever our functions are, we always
PEOPLE. We seek to hire the best people give our best and continuously upgrade
for each job, provide them with the means our knowledge, skills, habits and attitudes.
to perform at a high level and reward them This way, we meet each challenge with
fairly. We value integrity, professionalism, determination and drive, opening ourselves
and loyalty. We promote a culture of to unlimited possibilities. 
mutual respect, meritocracy, performance,
and teamwork. We strive to be the Loyalty
employer of choice among Philippine We are proud of BPI. We are true to its
financial institutions. ideals and vision, and we actively promote
and defend what BPI stands for.
We believe in our responsibility to our
SHAREHOLDERS. We treat capital as a Teamwork
most valuable asset and seek to generate We build relationships founded on mutual
superior returns while being prudent in respect. We are totally committed to
risk-taking, spending, and investment. the achievement of the objectives of our
respective teams in BPI and of the Bank.
We believe in our responsibility to We actively participate as one in any
our COUNTRY. Our prosperity is greatly undertaking and contribute our individual
dependent on the well-being of our nation. knowledge and talents for the benefit of all.
We aim to be inclusive and responsible in
nation building. Through BPI Foundation, Integrity
we are committed to the welfare and As bankers, we should be worthy of the
sustainability of the communities we serve. confidence put in us by BPI, our clients
and our shareholders. We earn the trust
of those we meet and interact with, and
always do what is morally and socially
correct contributing in our small way in
shaping the future.

Concern for People

We are fair, supportive, friendly, caring and
sincere in our relations with the people
around us.

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Table of Contents BPI Integrated Report 2019
Table of Contents
Click on the section titles to be redirected to the page

1 Vision, Mission, Credo, Core Values 144 Shareholder Rights and Engagement

4 About the Report 152 Supplementary Schedules

5 Our Business 158 Board of Directors

6 Message from The Chairman and 162 Advisory Council

President and CEO 164 Executive Management
12 Financial and Operating Highlights 166 Summary of Financial Performance
14 Cultivating an Integrated Approach 167 Statement of Management’s Responsibility
16 Business Model and Value Creation for Financial Statements

18 BPI’s Sustainability Strategy 168 Report of the Audit Committee

to the Board of Directors
20 BPI’s Contribution to the UN SDGs
A1 Independent Auditor’s Report
22 Market Outlook
A8 Financial Statements
24 Strategy and Performance
A16 Notes to Financial Statements
28 Risk and Opportunities
A125 Appendices
30 Business Review and
Client Testimonials A126 Stakeholder Engagement and
Material Topics
50 Delivering Shared Value
A130 GRI Content Index
52 Financial Inclusion and Wellness
A133
Statement of Management’s
60 Scaling-Up Enterprises
Responsibility for Non-Financial Data
64 Financing Sustainable Development
A134 Independent Assurance Statement
72 Managing Our Capitals
A137 Leaders’ Biographies
74 Economic Performance
A153 Products and Services
76 Social Performance
A156 Awards and Citation
85 Environmental Performance
A159 Membership Industry Associations
87 Senior Management
A160 Group Directory
90 Corporate Governance
A161 Corporate Information
114 BPI Conglomerate Map
A162 About the Cover
115 BPI Table of Organization

116 Operating Management

117 Internal Audit and Control

119 Risk Management

127 Compliance

137 Environmental, Social and

Governance (ESG) Matters

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A relationship that nurtures your future Table of Contents
 3
Table of Contents BPI Integrated Report 2019
About the Report

Scope and Coverage. A relationship that nurtures your footprint includes branches, head offices, and business
future is the title of BPI’s 2019 Integrated Report. It covers centers in the Philippines, excluding BPI Direct BanKo
the Bank’s performance during the period of January branches and branch-lite units (BLUs).
1 to December 31, 2019. It highlights the business
operations of BPI and its subsidiaries and affiliates in the Our previous Integrated Report published in April 2019 is
Philippines and offices abroad, unless otherwise stated in available at www.bpi.com.ph.
the data presentation. Our Integrated Report discusses
the Bank’s overall financial, economic, environmental, Additional Reference. BPI’s financial and operational
and social performance and how we create value through performance disclosures are submitted to the following
our products and services. The reporting boundary is agencies: Bangko Sentral ng Pilipinas (BSP), Securities and
aligned with the coverage of our financial reporting and Exchange Commission (SEC), Philippine Stock Exchange
includes other information that help provide context to our (PSE), Philippine Bureau of Internal Revenue (BIR),
disclosures. Philippine Dealing and Exchange Corp. (PDEx), Singapore
Exchange (SGX), and SIX Swiss Exchange. It forms part
The report has been prepared in accordance with the of the Information Statement provided to stockholders.
International Integrated Reporting Council’s (IIRC) These are available online at www.bpi.com.ph.
Integrated Reporting <IR> Framework1, and Bangko
Sentral ng Pilipinas (BSP) and Philippine Securities and Data covering the Philippine banking industry,
Exchange Commission (SEC) guidelines on the submission macroeconomic, behavioral, and demographic trends were
of annual and sustainability reports, respectively. This sourced from the reports of the BSP, Philippine Statistics
report references the Global Reporting Initiative’s (GRI) Authority (PSA), Asian Development Bank (ADB), and
Sustainability Reporting Standards (GRI Standards) to World Bank. Other data sources are found in the footnotes.
bring out BPI’s sustainability performance.
Contact Information. For questions, comments, and
Divergence from reporting boundaries are due to the suggestions, contact us through:
following factors: (1) nature of the data source; (2)
inadequate systems for capturing data; (3) insignificance BPI Investor Relations
in scale of operations; and (4) non-controllable aspects [email protected]
of operations by BPI management. Employee head count
covers all active employees of BPI and its subsidiaries and BPI Corporate Affairs and Communications
affiliates in the Philippines as of December 31, 2019. Local [email protected]
hires of BPI’s foreign offices are excluded. Environmental

1
The seven <IR> guiding principles underpin the BPI engaged DNV-GL to provide an external assurance
preparation of the content of the report and how assessment on the non-financial disclosures of the report,
information is presented. while Isla Lipana & Co. was engaged to provide external
assurance on financial disclosures.
• Materiality - BPI undertook a full materiality and
stakeholder engagement in preparation for the report. See • Connectivity - The report recognizes interrelatedness and
material topics and indicators on pages A128-A129. relationships between the factors that affect BPI’s ability
to create value.
• Conciseness - Where applicable, references to prior
published information are noted, and only material topics
that affect the value creation of the bank is presented. • Stakeholder relationships - Our key stakeholders impact
on our business, and they in turn are affected by our
• Consistency and comparability - The report references operations. A discussion on the formal platforms of
the GRI Standards for sustainability performance engagement and our responses to key concerns are
reporting, and comparison on performance of material presented on pages A126-A127.
issues from prior years is provided.
• Strategic focus and future orientation - A discussion
on how the Bank creates financial and non-financial
• Reliability and completeness - Business Units, including value to stakeholders, and how risks and opportunities
subsidiaries, regularly report their performance to are managed is presented in business model and value
management. Our Internal Audit Division also regularly creation on pages 16-17, strategy and performance on
examines business units across the BPI Group. For 2019, pages 24-27, risks and opportunities on pages 28-29.

4
A relationship that nurtures your future Table of Contents
Our Business

As the first bank in the Philippines and Southeast Asia, infrastructure for a truly digital banking experience in the
Bank of the Philippine Islands (BPI) has established a future, where clients can have delightfully better, more
history of client trust, financial strength, and innovation. convenient, and secure access to our services.
Since 1851, our business, products, and services have
created sustainable value and played a significant role A foundational component of the digital infrastructure that
in every Filipino’s daily life, as well as in the country’s we continue to build is the Bank’s extensive network of
growing economy. automated teller machines (ATMs), cash accept machines
(CAMs), BPI Express Assist (BEA) machines, point-of-
We are a member of the Ayala group of companies sale (POS) debit system, and innovations that have made
and we are one of the first institutions to be listed on banking easier for an increasingly mobile population:
the Philippine Stock Exchange (PSE). BPI has long phone banking, internet banking, and mobile banking.
recognized the primacy of corporate governance and the
culture of integrity, values, and ethics that has always As of today, our network boasts of 1,167 BPI, BPI Family
been the hallmark of BPI. Our Board of Directors and Savings and BPI Direct BanKo branches and branch-lite
Senior Management work towards a sustainable and units (BLUs) nationwide. We also have more than 2,822
more inclusive society, framed around prudent and ATMs and CAMs, and about 8.7 million clients, being
sound banking practices, quality of profits, and business served by a 21,429-strong employee workforce. Together
fundamentals leadership. with our subsidiaries and affiliates in the BPI group, we
seek to serve all client segments including corporate,
We aim to provide better access to financial services consumer, or small, medium and micro-entrepreneurs.
for every Filipino. We want everyone – from individuals,
enterprises, and institutions – to directly or indirectly Overseas, we offer diverse value added services through
benefit from the economic value generated and enabled two banking subsidiaries: BPI International Finance
by our business. We shall continue to provide products and Limited in Hong Kong, and Bank of the Philippine Islands
services efficiently, always mindful of our corporate values (Europe) Plc, which has a head office and a branch in
that have guided us through the past 168 years: Customer London. This global presence is further strengthened
Service, Excellence, Loyalty, Teamwork, Integrity, and through 138 international tie-ups, remittance centers, and
Concern for People. representative offices in Hong Kong, Tokyo, and Dubai,
which have been established to meet the financial services
A fully diversified universal bank and a recognized leader needs of overseas Filipinos.
in the banking industry, BPI, together with our subsidiaries
and affiliates, offer a diverse range of products and Our headquarters is now located in Ayala North Exchange
services in consumer and corporate banking, as well as Tower 1, Ayala Avenue corner Salcedo Street, Makati City
in asset management, payments, insurance, investment as we are currently redeveloping our original headquarters
banking, foreign exchange, leasing, and securities at the corners of Ayala Avenue and Paseo de Roxas.
and distribution. We continue to enhance our digital

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Table of Contents BPI Integrated Report 2019
 Message from
The Chairman and
President and CEO

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A relationship that nurtures your future Table of Contents
 JAIME AUGUSTO ZOBEL DE AYALA
Chairman

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Table of Contents BPI Integrated Report 2019
 Message from the Chairman
and President and CEO

Dear Fellow Shareholders, BPI registered Php 28.8 billion in net income in 2019, a
25% increase over 2018. This translated into a ROE of
The Philippine economy expanded 5.9% in 2019, the first 11% versus 10.2% in 2018, and a ROA of 1.4% versus
time it registered a growth of below 6% in the last four 1.2% in 2018. Net interest income grew 18% as a result
consecutive years. The slower economic growth largely of a Php 165.7 billion increase in average asset base and
stemmed from the late passing of the 2019 national a 24 basis-point improvement in net interest margin, the
budget. This led to a delay in government spending and most significant expansion in over 10 years. Non-interest
consequently, in private sector investments. For the first income grew by 25% as a result of a 12% increase in
time in seven years, the country registered a year-on-year fees, commissions, and other income – with almost all
decline in investment spending. businesses up—and a Php 3.3 billion increase in trading
gains. The decision to add on to trading positions, and
The reduction in capital goods imports reduced the current then take profits, was deliberate and very well timed.
account deficit, which in turn resulted in a stronger peso. Asset quality remained strong with a non-performing loan
A smaller deficit and a stronger peso would normally be (NPL) ratio of 1.66% (a 19 basis-point improvement),
seen as a positive indication. However, the opposite is almost Php 6 billion in additional provisioning and NPL loss
true when robust spending is imperative to sustain our reserves of Php 25.4 billion, bringing the NPL coverage
economy’s growth trajectory. ratio and the BSP coverage ratio to 102% and 121%,
respectively.
Lower inflation over the course of the year allowed the
Bangko Sentral to reduce bank reserve requirements BPI has always been a high quality bank, and considerable
from 18% to 14% and the key policy rate from 4.75% to effort has been made in the last few years to reinforce
4.0%. While the increased liquidity sent a positive signal, this view. We continue to get high marks from regulators
expansionary monetary policy alone was unable to offset for a strong capital position, good asset quality, prudent
the investment slowdown. management, good earnings, ample liquidity, and relatively
low sensitivity to market risk. In 2019, BPI became the
Despite a lower-than-expected economic growth, the first private domestic bank and only the second of two
Philippines remains one of the fastest growing countries in Philippine companies to be given a credit rating equivalent
the region. However, we believe that GDP has to grow at a to the Philippine government (BBB+) by Standard and
faster pace if we are to become a middle-income country Poor’s. Finally, as measured by Nielsen, BPI is among the
within this decade. strongest companies in the Philippines in terms of strength
of corporate equity, which measures how a firm is viewed
The Philippine banking industry’s performance reflected by its various stakeholders.
the macroeconomic story. Slower GDP growth translated
into slower loan growth—9.4% in 2019 from 13.7% in Perhaps more important than the headline numbers or
2018 and 16.5% in 2017. Lower interest rates allowed ratings is how BPI is changing from within. Consider the
banks with strong deposit franchises to expand their net following:
interest margins, and banks with large securities positions
to record good trading gains. As a result, industry 1. Financial inclusion in the form of microfinance and
profitability was better in 2019 than the year before. SME lending is front and center. Only three years
However, the banking industry’s long-term prospects are since its relaunch, BPI Direct BanKo is now the
primarily dependent on the country growing at a good second largest microfinance bank in the country, with
pace. Increasing profitability in a period of slowing growth a loan portfolio of Php 4.3 billion (100% growth in
is a short-term phenomenon. For 2020, we are hopeful one year), a market share of 15%, and 300 branches.
that expansionary macroeconomic policy coupled with a Asiamoney rated BPI Best Bank for Microfinance
more conducive domestic investment climate—tax reform, because of BanKo’s growth. On the SME front, the
coherent and consistent investment policy, reduction in two-year old Business Bank is attempting to replicate
the cost of doing business, better agricultural productivity, the early success of BanKo. While Business Bank’s
forward-looking energy policy—will more than offset the loan portfolio grew only 6%, the lower-end segment
slowdown in international trade and the supply chain of the portfolio – that for loans below Php 15 million—
disruptions brought about by trade wars and, more showed a 4.3x increase in approved loan applications,
recently, the corona virus. reflecting our tailor-fit solutions and dedicated
coverage of the segment.

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A relationship that nurtures your future Table of Contents
 CEZAR P. CONSING
President and Chief Executive Officer

9
Table of Contents BPI Integrated Report 2019
 Message from the Chairman
and President and CEO

MACROECONOMIC INDICATORS

GDP Growth (%) Inflation and BSP Policy Rates (%)

BSP Policy Rate Inflation

7.2%
6.8%
6.7%
6.1% 5.8% 6.2%
5.9%
5.20

4.00 4.00 4.00

3.50 4.75
3.00 3.00
3.60
2.90
2.60 2.50
1.30
0.70

2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019

Php : US$ Rate PSE Index

8,558 7,815
52.72 7,466
7,231 6,952 6,841
50.74
49.81 49.92 5,890

47.17

44.41 44.62

2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019

*Sources:
GDP Growth & Average Inflation: Philippine Statistics Office (PSA)
BSP Policy Rates & Php : US$ Rate (End of Period): Bangko Sentral ng Pilipinas (BSP)
PSE Index (End of Period): Bloomberg (PCOMP)

2. Sustainability is embedding itself in how we conduct environment, and employee engagement – all critical
our business. BPI makes a meaningful contribution to elements of sustainability. BPI Foundation’s budget
14 of the 17 United Nations Sustainable Development has grown almost four-fold in the last six years, and
Goals (“UN SDGs”). This is very evident in how we beneficiaries have grown in number from 1,700 to
have allocated our loanable funds. Outstanding loans over 270,000 over the same period.
that have an impact on these UN SDGs have increased
from Php 147 billion in 2015 to Php 390 billion in 3. Digitalization is gaining considerable traction,
2019, or a CAGR of 28%. The share of these loans to with gains that are tangible and visible. Online
our total loan portfolio has also increased from 17% transactions, which in 2019 were up by 50%, account
to 26% in the last five years. On the funding side, for practically all of the growth in BPI’s transaction
we issued two green bonds in 2019, including the count. About 40% of our customers are now enrolled
country’s first rated green bond in the international in one or more of our digital channels, and almost
capital market. BPI has been rated by Asiamoney 25% of all customers are regular digital transactors.
as the Best Philippine Bank for CSR because of Digital service fees now amount to Php 1 billion per
the work done by BPI Foundation, which has been annum, with over Php 220 million in API revenues
consistent in its focus on education, entrepreneurship, added in 2019 alone. The rate at which we are

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A relationship that nurtures your future Table of Contents
 digitalizing will create about 20% additional capacity of the corona virus on production output and consumer
in our over 850 BPI and BFB branches by 2021. demand, we also have to guard against an increase in
NPLs. The success of all of these efforts will contribute to
4. Data Science is already adding value to our retail robust growth, solid profits and, under more benign market
businesses. Coupled with thoughtful changes in conditions, recovery and growth of our share price.
polices and processes and more disciplined execution,
we are already seeing the value of having recruited The financial and operating results of 2019 are heartening,
and trained 25 data scientists in our various consumer in that they tell us that the many initiatives that we have
businesses. Overall, our SME/consumer loan book undertaken in the past few years are beginning to bear
grew by 12.5%, outpacing the 7.9% growth of our fruit. While there is much more to be done, we are well
corporate loan book. This produced a 76 basis-point positioned for the future. At this juncture, we would
shift in the corporate-SME consumer loan mix, which like to take a moment to thank our board of directors for
contributed to the increase in our overall net interest their wise counsel, our management and staff for their
margin. professionalism and dedication, and you, our shareholders,
for your continued support. We go to work every day
5. Capital markets access and expertise has become knowing that we owe you our very best efforts.
an important competitive advantage. BPI’s ability to
tap the equity and debt capital markets for our own
account is becoming increasingly important as we
seek to increase the efficiency of our balance sheet,
reduce our funding costs, diversify funding sources and
take advantage of lending and investing opportunities.
We followed up on our one equity and two debt
capital raisings in 2018 with five debt capital markets
transactions in 2019, each one noteworthy. We raised
US$ 300 million of 5-year money via a green bond,
CHF 100 million of 2-year money via a green bond that JAIME AUGUSTO ZOBEL DE AYALA
fetched a negative interest rate (a first in the region), Chairman
Php 3.1 billion in 5-1/2 year LTNCDs, Php 9.5 billion
2-1/2 year bonds for our savings bank and, at the turn
of the year, Php 15.3 billion in 2-year bonds.

The year ahead will require continued emphasis on the

SME and consumer businesses, which provide higher
lending margins and service fees, strong focus on CASA
generation, a moderating of expense growth, continued
reallocation of resources in favor of technology and
the consumer space, and a continued upgrading of the CEZAR P. CONSING
customer experience. Given the wide-reaching effects President and Chief Executive Officer

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Table of Contents BPI Integrated Report 2019
Financial and Operating Highlights

Consolidated Parent Entity

2019 2018 Change 2019 2018 Change
BALANCE SHEET (in Php million)
Assets 2,205,030 2,085,228 5.7% 1,857,838 1,753,141 6.0%
Treasury Securities 353,115 341,498 3.4% 318,014 308,426 3.1%
Net Loans 1,475,336 1,354,896 8.9% 1,231,776 1,125,956 9.4%
Deposits 1,695,343 1,585,746 6.9% 1,456,458 1,347,207 8.1%
Equity1 269,577 248,521 8.5% 216,250 199,156 8.6%
INCOME STATEMENT (in Php million)
Net Interest Income 65,945 55,843 18.1% 52,972 43,158 22.7%
Non-Interest Income 28,389 22,681 25.2% 24,597 15,227 61.5%
Net Revenues 94,334 78,524 20.1% 77,569 58,385 32.9%
Operating Expenses 50,077 43,602 14.8% 38,480 33,661 14.3%
Pre-provision Profit 44,257 34,922 26.7% 39,089 24,724 58.1%
Impairment Losses 5,822 4,923 18.3% 4,666 4,279 9.0%
Net Income1 28,803 23,078 24.8% 26,218 15,428 69.9%
FINANCIAL PERFORMANCE INDICATORS
Profitability
Return on Equity 10.97% 10.21% 0.8% 12.51% 8.50% 4.0%
Return on Assets 1.38% 1.20% 0.2% 1.50% 0.96% 0.5%
Margins and Liquidity
Net Interest Margin 3.35% 3.11% 0.2% 3.18% 2.87% 0.3%
Net Loans to Deposit Ratio 87.0% 85.4% 1.6% 84.6% 83.6% 1.0%
Cost Efficiency
Cost to Income Ratio 53.1% 55.5% -2.4% 49.6% 57.7% -8.0%
Cost to Average Assets Ratio 2.40% 2.27% 0.1% - -
Asset Quality
NPL Ratio2 1.66% 1.85% -0.2% - -
NPL Cover 102.1% 88.3% 13.8% - -

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A relationship that nurtures your future Table of Contents
 Consolidated Parent Entity
2019 2018 Change 2019 2018 Change
Capital and Leverage
CET 1 Ratio 15.17% 15.19% -0.02% 14.08% 13.97% 0.1%
Capital Adequacy Ratio 16.07% 16.09% -0.02% 14.94% 14.83% 0.1%
DISTRIBUTION NETWORK AND MANPOWER
Branches/International Offices 1,170 1,059 111 - -
ATMs 2,822 3,034 (212) - -
Employees 21,429 18,911 2,518 - -
Officers 6,941 6,661 280 - -
Staff 14,488 12,250 2,238 - -
SHAREHOLDER INFORMATION
Market Value
Share Price 87.90 94.00 -6.5% - -
Market Capitalization
396,172 423,230 -6.4% - -
(in Php million)
Valuation
EPS, Basic and Diluted 6.39 5.35 19.4% 5.82 3.57 63.0%
Book Value per Share 59.81 55.20 8.4% - -
Price-Earnings Ratio 14.1x 18.9x -4.8x - -
Price to Book Value 1.5x 1.7x -0.2x - -
Dividends
Cash Dividends Paid to Common
12,165 7,598 60.1% 12,165 7,598 60.1%
Shareholders (in Php million)
Cash Dividends per Common
1.80 1.80 - -
Share

1
Attributable to equity holders of BPI
2
Based on BSP circular 941

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Table of Contents BPI Integrated Report 2019
14
A relationship that nurtures your future Table of Contents
 Cultivating an
Integrated
Approach

15
Table of Contents BPI Integrated Report 2019
Business Model and Value Creation
2019 Performance

Our Capitals How we create value

Financial BUSINESS OPERATIONS

We maintain a strong balance sheet, and we continue to
grow and optimize our deposit franchise and loan book. Capital Raising, Advisory and Financing
We provide financial advisory, working capital loans,
Php 2.21 trillion in total assets, a 5.7% increase from 2018
capital expenditure loans, acquisition financing, supply
Php 270 billion in total capital, up 8.5% from 2018 chain and trade financing, project finance, small business
loans, and microfinance.

Growing Assets
We grow our assets through our Treasury portfolio
Manufactured and Intellectual management and participation in Philippine capital
We have a reliable, secure, and expanding network of markets. We also grow our clients’ assets through
delivery infrastructure, in both traditional and digital deposit and investment in fixed income securities, equity
platforms. securities, unit investment trust funds, and mutual funds.
1,167 branches and branch-lite units across the country
Insuring Life and Assets
2,822 ATMs and CAMs across the country
We help protect the value of our clients’ assets through our
98.68% Uptime for the new BPI Online and BPI Mobile App life and non-life products.
Established BPI Green Finance Framework
25 BPI data scientists trained Other Financial Services
We provide our clients an efficient means to make financial
transactions through our card payments, remittance
services, and cash management facilities.

Human
We are driven by energized, enabled, and engaged
employees with diverse talents.
21,429 employees Strategies
Diversify our asset base and improve risk-adjusted
67% women, 33% men
returns by prudently accelerating growth in higher-
Php 134.64 million on local and international trainings for margin SME, consumer lending, and microfinance
employees business.

Social and Relationship Enhance deposit franchise and delivery infrastructure

We are the beacon of stability and credibility upon which

Continue our digital transformation to deliver superior
trust is built and sustained among our clients and global
banking partners.
customer experience and cost efficiencies

168 years of providing quality service and trusted advice

Maintain our leading position in the corporate segment
138 international remittance partners
BPI Credo and Core Values Promote a robust Corporate Governance and
Risk Management Culture

Natural Integrate sustainability through financial inclusion,

Our environmental management systems ensure that we management of energy portfolio, empowering our
use resources efficiently to minimize our impact on the employees and society, efficient use of resources, and
environment. strengthening stakeholder trust.
167,080 gigajoules energy consumption, 7% decrease
from 2018
380,734 cubic meters water consumption, 0.2% decrease
from 2018

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A relationship that nurtures your future Table of Contents
 OUR VISION OUR MISSION
Building a better Philippines We nurture every Filipino’s future with a trusted approach to
managing money and innovation that makes life easier every day.

Our contributions
The value we create
to the SDG

Clients and communities

We foster financial inclusion and wellness, scale-up enterprises, and spur investments
that directly impact our clients and the communities we serve.

8.66 million total clients

Php 1.48 trillion customer loans (net), up 8.9% from 2018
1.9 million unique active users of new BPI Online and Mobile App

Financial Inclusion and Scaling-up Enterprises Financing Sustainable

Wellness Development
725 number of new
Php 11.13 billion business banking clients Php 242.93 billion
microfinance loans served disbursed in 2019 towards
disbursed through BanKo projects identified to
since 2016 6% Increase in Business contribute to the UN
Bank loan portfolio from Sustainable Development
7,349 financial inclusion 2018. Goals
management training
conducted. US$ 402.20 million raised
through 2 Green Bonds
issued in 2019

Employees Investors Government and

We invest in our employees, We optimize our financial Regulators
provide them a workplace performance and value We support the government
that fosters learning and creation, ensuring delivery via capital raising through
development, career of superior shareholder government securities
advancement, and returns in a manner that is distribution, payment
sustainable engagement. transparent and equitable. of taxes, facilitating
remittances, and complying
Php 17.35 billion total Php 94.33 billion in total to regulations.
payments to employees revenues, a 20% increase
from 2018 Php 22.07 billion in total
881,226 total training hours payments to government,
provided to employees Php 35.65 billion in total 19% increase from 2018
payments to providers
of capital (dividends and 29% share in remittance
interest payments), a 46% market
increase from 2018
Php 10 billion total capital
raised for government

Legend for capitals affected

Financial Human Natural

Manufactured and Intellectual Social and relationship Environment

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Table of Contents BPI Integrated Report 2019
BPI’s Sustainability Strategy

Our Sustainability Strategy Framework highlights how Scaling-Up Enterprises – We support enterprises through
our products and services create shared value for financing and capital raising across business segments to
our clients, shareholders, and society as a whole. An help them scale up their operations.
enhanced risk-managed delivery infrastructure is in place
to ensure efficient delivery of the value we create. Key to Financing Sustainable Development – We finance
the framework as well is how we manage our capitals to projects that support national development and are in line
ensure long-term sustainability. with the UN Sustainable Development Goals.

Our value creation focuses on the following: These are all aligned with the Bank’s philosophy as stated
in our Credo.
Financial Inclusion and Wellness – We widen our reach
to underserved segments and help our clients grow and
protect their assets through customized products and
services.

CREATING SHARED VALUE

Financial Inclusion and Scaling -Up Financing Sustainable
Wellness Enterprises Development

Php 242.93
725
More than
100,000 billion disbursed in
SEME’s 2019 towards projects
supported by BanKo new business indentified to contribute to the UN
banking clients Sustainable Development Goals
served
Php 11.13 billion
6%
Increase in Established BPI
microfinance loans Green Finance
Business Bank
disbursed through Framework
loan portfolio from 2018
BanKo since 2016

7,349 financial inclusion

US$ 402.20 million
management trainings conducted
1,895 through 2 Green Bonds
issued in 2019
MSME beneficiaries of BPI Show
Me Teach Me Program

5% More than
Php 88.62
billion
Increase in number
of Deposits Savings
36,000 disbursed to
BizLink users renewable energy
Accounts
projects to date

Over
Php 64.3 billion Php 24.98
2.91 million total capital raised billion
credit and prepaid for clients
cardholders disbursed to climate
resilience projects to date

Risk-Managed Delivery Infrastructure

1,167 98.68% 2,822 1.9 million

branches and ATMs and unique active users
Uptime for the new BPI
branch-lite units CAMs across of new BPI Online
Online and BPI Mobile App and Mobile App
across the country the country

18
A relationship that nurtures your future Table of Contents
 CORPORATE SUSTAINABILITY
Empowering our People and Using our Resources Efficiently Building Trust
Society

67% women employees

33% men employees
23% decrease
Php 22.07 billion
in energy and GHG in total payments to
emissions intensity2 government
from 2018

52%
20%
of senior management
positions held by women

women on the Board of

69%
Directors

881,226
of branches installed
with LED lights; 47%
of branches installed with
total training hours inverter-type airconditioning
provided to employees complaint intensity1
decreased by

39% from 2018

10,578 KG
Over 270,000 of plastic, metal, paper,
BPI Foundation carton, and electronic waste
beneficiaries turned over for recycling BPI abides by the Data
Privacy Act of 2012 (DPA)
and the various circulars
and advisories of the

8,570 12.09 million

National Privacy Comission

Unibanker volunteers pages of paper

through BPI BAYAN saved, equivalent
to 1,452 trees,
as a result of the 168 years
More than Php 3 million in grants eSOA project of providing quality
provided to Social Enterprises service and trusted
through BPI Sinag Business advice
Challenge

1
This is calculated as every one (1) complaint per 1,000 transactions
2
This is calculated as gigajoule of energy consumed and tCO2e GHG emissions produced for every Php billion in revenue

19
Table of Contents BPI Integrated Report 2019
BPI’s Contribution to the

1.4 By 2030, ensure that all men and women, 2.1 By 2030, end hunger and ensure access
in particular the poor and the vulnerable, have by all people, in particular the poor and
equal rights to economic resources, as well people in vulnerable situations, including
as access to basic services, ownership and infants, to safe, nutritious and sufficient food
control over land and other forms of property, all year round
inheritance, natural resources, appropriate new technology 2.4 By 2030, ensure sustainable food
and financial services, including microfinance production systems and implement resilient agricultural
practices that increase productivity and production, that
Php 11.13 billion Microfinance loans disbursed since help maintain ecosystems, that strengthen capacity for
2016 adaptation to climate change, extreme weather, drought,
flooding and other disasters and that progressively improve
land and soil quality

3.8 Achieve universal health coverage, Php 216.22 billion loans disbursed towards
including financial risk protection, access to agriculture in 2019
quality essential health-care services and
Php 380.6 million disbursed to Climate Controlled
access to safe, effective, quality and affordable
essential medicines and vaccines for all Systems for agriculture in 2019
3.c Substantially increase health financing and
the recruitment, development, training and retention of the
health workforce in developing countries, especially in least 4.4 By 2030, substantially increase the
developed countries and small island developing States number of youth and adults who have
relevant skills, including technical and
Launch of Hospital Confinement Income Protection vocational skills, for employment, decent
(HCIP) product of BPI/MS in 2019 jobs and entrepreneurship
BPI Century Tokyo Leasing (BPICTL) released 4.a Build and upgrade education facilities
Php 788.25 million through leasing arrangements for that are child, disability and gender sensitive and
hospitals, clinics, and health centers in 2019 provide safe, non-violent, inclusive and effective learning
environments for all

834 beneficiaries of BPI Foundation Tech Voc

program, with 80-100% employment rate since 2018
5.5 Ensure women’s full and effective Php 1.17 billion loans disbursed towards the
participation and equal opportunities for education sector in 2019
leadership at all levels of decision-making in
political, economic and public life

20% of the Board of Directors is 6.1 By 2030, achieve universal and

comprised of women equitable access to safe and affordable
52% of senior management is comprised of women drinking water for all

Php 1.99 billion loans disbursed

towards water-related projects in 2019
7.1 By 2030, ensure universal access to
affordable, reliable and modern energy
services 8.8 Protect labour rights and promote safe and
7.2 By 2030, increase substantially the share secure working environments for all workers,
of renewable energy in the global energy mix including migrant workers, in particular women
migrants, and those in precarious employment
7.3 By 2030, double the global rate of
improvement in energy efficiency 8.10 Strengthen the capacity of domestic
financial institutions to encourage and expand
access to banking, insurance and financial services for all
Php 157 billion outstanding loans to energy sector,
38% of which is towards renewable energy
82% of staff covered by Collective Bargaining
Php 27.69 billion disbursed to energy efficiency Agreement
projects to date
1,167 branches and branch-lite units, and 2,822
Php 88.62 billion disbursed to renewable energy ATMs and CAMs across the country
projects to date
More than 100,000 Self-employed Micro-
entrepreneurs supported through BPI Direct BanKo

20
A relationship that nurtures your future Table of Contents
 9.4 By 2030, upgrade infrastructure and 11.1 By 2030, ensure access for all to
retrofit industries to make them sustainable, adequate, safe and affordable housing and
with increased resource-use efficiency and basic services and upgrade slums
greater adoption of clean and environmentally 11.2 By 2030, provide access to safe,
sound technologies and industrial processes, affordable, accessible and sustainable
with all countries taking action in accordance transport systems for all, improving road
with their respective capabilities safety, notably by expanding public transport, with special
9.1 Develop quality, reliable, sustainable and resilient attention to the needs of those in vulnerable situations,
infrastructure, including regional and transborder women, children, persons with disabilities and older
infrastructure, to support economic development and human persons
well-being, with a focus on affordable and equitable access 11.b By 2020, substantially increase the number of cities
for all and human settlements adopting and implementing
integrated policies and plans towards inclusion, resource
Php 24.98 billion disbursed to climate resilience efficiency, mitigation and adaptation to climate change,
projects to date resilience to disasters, and develop and implement, in line
40% of outstanding loans in portfolio contributing to with the Sendai Framework for Disaster Risk Reduction
SDGs support goal number 9 2015–2030, holistic disaster risk management at all levels

Php 11.68 billion disbursed towards low income

housing projects in 2019
12.2 By 2030, achieve the sustainable Php 8.7 billion disbursed to public transportation
management and efficient use of natural projects in 2019
resources
Launch of the second phase of the Climate
12.5 By 2030, substantially reduce waste
Risk Assessment Program of BPI Foundation
generation through prevention, reduction,
recycling and reuse implemented by WWF Philippines in 2019
12.6 Encourage companies, especially large
and transnational companies, to adopt sustainable practices
and to integrate sustainability information into their reporting
cycle 13.1 Strengthen resilience and adaptive
12.8 By 2030, ensure that people everywhere have the capacity to climate-related hazards and
relevant information and awareness for sustainable natural disasters in all countries
development and lifestyles in harmony with nature
US$ 402.197 million from 2 green bond
23% decrease in energy and GHG emissions intensity issuances in 2019 (See pages 70-71
by revenue from 2018. Completed the installation of for the eligible projects under the Green Finance
LED lights and inverter-type air conditioning units for Framework)
69% and 47% of branches, respectively.
10,578 kg of plastic, metal, paper, carton, and
electronic waste turned over for recycling
Published Sustainabilty Report using the International
16.4 By 2030, significantly reduce illicit
Integrated Reporting Council’s Integrated Reporting
financial and arms flows, strengthen the
Framework
recovery and return of stolen assets and
combat all forms of organized crime

The Bank’s Money Laundering/

Terrorism Financing Prevention Program (MTPP)
15.1 By 2020, ensure the conservation,
restoration and sustainable use of terrestrial implements sound anti-money laundering practices
and inland freshwater ecosystems and their and combats terrorist financing and other financial
services, in particular forests, wetlands, crimes through conscientious customer due
mountains and drylands, in line with diligence and know-your-customer (KYC) processes;
obligations under international agreements sanctions screening; automated tools to identify
and detect financial transactions of a suspicious
Hineliban Reforestation of 100 hectares of denuded nature; and monitoring, testing, periodic review,
rainforests through BPI Foundation and Hineliban and timely reporting to senior management. This
Foundation in Lanao del Sur. program also includes periodic and comprehensive
AML-CFT training and awareness programs for
members of the Board of Directors and all officers
and employees.

21
Table of Contents BPI Integrated Report 2019
Market Outlook
External Environment Factors

Economic Growth. The Philippine consumption to an extent not seen since

economy expanded by 5.9% in 2019, the early 1980s.
below the 6-7% target of the government.
Despite the strength of household Investment Spending. Capital formation
consumption, delays in the implementation contracted in 2019 for the first time in
of infrastructure projects and the decline 7 years as demand for machinery and
in investment spending dragged growth equipment declined. Corporates may
below the 6% level. For 2020, the have postponed or scaled down the
COVID-19 outbreak has become the purchase of durable equipment given
greatest challenge for the global and the elevated global growth uncertainties
domestic economies. It is clear that the and expectations of lower interest rates
outbreak will have a negative impact on in the coming months. Meanwhile, public
the economy. However, quantifying the construction posted a 2.4% contraction
potential impact of COVID-19 on the as a result of government underspending.
Philippine economy is difficult given the The budget impasse and election spending
uniqueness of the event. ban in the first half of the year prevented
the government from spending on new
Household Consumption. Household infrastructure projects. Looking ahead,
consumption recovered in 2019 as capital expenditures may fall as business
inflation slowed down. Stable oil prices will most likely prioritize their liquidity to
and sufficient rice supply pulled down sustain themselves and their employees
average inflation from 5.2% in 2018 to amid the measures to prevent the spread
2.5% in 2019. Household consumption of COVID-19.
will likely continue to be the main driver of
growth in the medium term with support Growth of Major Sectors. Among the 3
from OFW remittances and record-low major sectors of the economy, services
unemployment. However, the enhanced outperformed in 2019 with 7.1% growth.
community quarantine in various parts Retail trade grew at a faster pace with
of the economy has crippled household the help of lower inflation, while financial

22
A relationship that nurtures your future Table of Contents
intermediation recorded higher growth The BSP has reduced the policy rate by
given wider interest margins and trading another 75 bps so far and may resume
gains resulting from the bond market its monetary easing in 2020 given
rally. The industry sector slowed down the economic damage that COVID-19
amid the weakness in manufacturing and could bring. The enhanced community
construction. Global trade uncertainties quarantine may squeeze liquidity amid the
weighed down manufacturing growth lack of spending and the need for savings
despite the stability shown by household in this time of crisis. As a result, the central
consumption. In 2020, the COVID-19 bank may inject liquidity into the financial
outbreak may hurt several industries system through its monetary policy
given the restrictions on movement tools such as open market operations
and economic activity. In particular, the and further reduction in the reserve
following industries may see a decline requirement on deposits.
in economic output and revenues:
tourism, airline, real estate, transport, and Meanwhile, global risk aversion due to
manufacturing. COVID-19 may fuel the demand for safe
haven like the US Dollar. Emerging market
Financial Markets. Low inflation in 2019 currencies like the Philippine Peso may
gave the BSP the opportunity to revert its weaken as investors shift their funds to
policy stance from tightening to monetary assets that could protect them from the
easing. Given the liquidity and growth impact of COVID-19. However, the possible
challenges being faced by the economy, decline in imports and remittances due
the Monetary Board reduced the policy to supply disruptions may temper the
rate by 75 bps from 4.75% to 4.00% and depreciation pressure from risk aversion.
brought down the reserve requirement
ratio (RRR) by 400 bps from 18% to 14% in
2019. Benchmark interest rates declined
as liquidity improved gradually.

Macroeconomic data presented is based on Banko Sentral ng Pilipinas and Philippine Statistics Authority data.

23
Table of Contents BPI Integrated Report 2019
Strategy and Performance

Our strategy is based on our analysis of increase their economic potential. This in
the current market outlook, competitive turn promotes progress, employment, and
environment, regulatory updates, expansion of their business.
stakeholder concerns, and other relevant
factors to help us gain from opportunities In 2019, we made a number of notable
while we manage the risks. We position gains across the business, reflecting a
ourselves as a choice investment, good growth momentum. This includes
attractive to both domestic and offshore significant improvements in operational
investors. metrics such as more than doubling
submission of complete loan applications,
Taking stock of our performance in 2019, significant reductions in total turnaround
we have made notable progress for each time due to process improvements, and a
of the key imperatives, an indicator that significant drop in delinquency rate.
we are moving in the right direction as we Our vision is to become the partner
continue to evaluate, adapt, and improve of choice of SMEs in the Philippines,
our strategies. addressing their day-to-day requirements
as well as their long term needs through
Diversify our asset base and improve fast, simple, and convenient solutions,
risk-adjusted returns by prudently complemented by trusted advice.
accelerating growth in the higher-margin
Small and Medium Enterprises (SME) and Consumer lending. As of December
consumer lending businesses 31, 2019, only 226,702 or 2.8%, of our
retail depositors have availed of our
We plan to continue to tap opportunities loan products, presenting us with a vast
in the growing market of middle-class opportunity to further deepen our client
Filipinos, thriving SME segments, and relationships. We expect strong growth
underbanked areas of microfinance. The in the consumer lending market due
potential of these segments is significant, to the stable growth of the Philippine
and we will pursue these opportunities in a economy, with household consumption as
prudent manner without compromising our the foundation, and favorable population
stringent risk management standards and demographics. In 2019, the Philippines
overall asset quality. recorded its highest GDP per capita
income of US$ 3,280, while the Philippine
Small and Medium Enterprises. We know Statistics Authority forecasted that by
SMEs are the backbone of the Philippine 2025, majority of the population will be of
economy, employing 65% of the national the working age 15-64 years old. We will
workforce and accounting for 35% of capture the long-term growth in demand
the Gross Domestic Product (GDP). We for homes, vehicles, and consumption
are cognizant of the fact that they face spending of the middle-class Filipinos.
numerous growth challenges, including
technical capacity, difficulty in accessing This year has proven to be a turn-around
outland markets and, most notably, limited year for consumer lending, as we begin
access to financial support. We responded to reap the benefits of the previous years’
to this opportunity by creating a dedicated investments in re-engineering our internal
team to focus on the needs of SMEs – BPI processes and enhancing our policies to be
Business Banking (BB). more responsive to client needs. In 2019,
we were able to show significant growth in
We support SMEs nationwide by providing our housing loans and auto loans portfolios
instruments to better manage their cash as we are seeing results in our efforts to
flows and raise capital. Through a team of re-engineer our processes (refer to page
engaged and enabled Business Bankers, 32 on Retail Clients).
we provide financial advisory services to

24
A relationship that nurtures your future Table of Contents
We help Filipinos pay for their basic services, while also empowering them
needs conveniently, affording them new with financial advice and solutions that
experiences while maintaining financial promote the growth and expansion of their
responsibility. With the BPI Credit, Debit, enterprises.
or Prepaid card, clients have the tools
to cover their needs (refer to page 32 on Our traditional in-person business model
Retail Clients). has resulted in a loan portfolio that has
doubled year-on-year, with over 100,000
Microfinance. Recognizing the need for the clients served since 2016, proving the
unbanked market to have access to credit successful implementation of necessary
facilities, we continue to make significant know-your-customer processes and
strides in microfinancing. Primarily adherence to risk standards which lead to
established to serve Self-Employed Micro- improved collection and reduction in Non-
Entrepreneurs (SEMEs), our subsidiary, BPI Performing Loans (NPLs).
Direct BanKo, Inc. (BanKo), has expanded
to 300 branches in 3 years, increasing
the SEMEs’ accessibility to affordable
and appropriate financial products and

25
Table of Contents BPI Integrated Report 2019
 Strategy and
Performance

Enhance deposit franchise and delivery which allowed for funding cost efficiencies
infrastructure while offering clients attractive investment
opportunities.
To increase deposits in the corporate, SME
business, and retail banking segments, Continue our digital transformation to
we employ a dual-pronged approach of deliver superior customer experience
capitalizing on our extensive physical and and cost efficiencies
digital distribution network, and continuing
to provide innovative deposit-based We started our digital journey in 2016 and
products to acquire new clients and attract our focus has been on transforming client
deposits. journeys across our client facing platforms.
We recognized early on that “agile at scale”
In 2019, we have developed several was key to digital transformation. Phase
depositor lending programs, as well One focused on establishing a technology
as programs for good-repeat clients, foundation for our digital aspirations,
recognizing their importance as a key primarily improving our digital platforms for
source of good business. As the main online and mobile banking. Our focus now
operating bank of our clients, we build is to make digital financial transactions
ecosystems to capture working funds. frictionless for clients through the five (5)
We aim to become a one-stop shop that pillars of our digital journey:
provides integrated products and services
to our clients, such as cash management, • Omni-channel experience. This is about
payroll, government and supplier payment harmonizing our branch operations
services, as well as bancassurance, asset with our digital services, giving our
management, securities investments, clients the choice of where to start out
credit facilities, payments and remittances, a journey or transaction and where
and foreign exchange products and to complete it. More and more of our
services. processes will blend across channels
as we move forward in our digitalization
Having the second largest branch journey.
network, we constantly rationalize our
branch operations and locations to • Customer experience. This is about
ensure their optimum performance. We “reshaping our tools as our tools shape
intend to expand our branch network in us.” Our tools, for example, our mobile
a strategic manner in Metro Manila and app and website, shape the behavior
in key provincial cities showing potential of our clients. At the same time, how
for increasing consumer spending and our clients behave using these tools
infrastructure investments. This expansion compel us to refine them further and
will be balanced and complemented by the innovate. This will translate into ever-
outlays in our digital infrastructure for more evolving set of tools and services for
efficient digitalized banking processes that our platforms.
will spur financial inclusion in the country.
• High tech, high touch. With more tools
The evolving regulatory landscape has given for self-service with high tech,
also presented alternative funding we need to ensure that the few times
opportunities. With lower reserve our clients step into our branches
requirements on bond issuances vis-à- will be of good quality. With our
vis peso deposits, we continue to explore flagship branches, we have design
issuances in the domestic and foreign elements that encourage high-value
debt markets as opportunities arise. In conversations or interactions for the
2019, we embarked on several milestone more complex financial needs of clients
issuances of green bonds and LTNCDs,

26
A relationship that nurtures your future Table of Contents
 • The Bank of every day. Through our to continuously enhance overall customer
open banking services, our clients can experience, maintain our cost advantage
transact with FinTechs such as GCash over peers, and generate new revenue
and PayMaya, and cash in with online streams from our digital channels.
merchants such as Lazada. This will
allow them to go digital for going about Maintain our leading position in the
many of their day-to-day transactions corporate segment
such as reloading their cellphones,
paying utility and credit card bills, We plan to maintain our leading position
making online purchases, etc. This in the corporate segment by continuing
initiative also allows us to expand to provide a full suite of banking products
our reach horizontally by tapping the to large corporates and multinationals.
markets of our open banking partners. We will focus on improving risk-adjusted
returns, capitalizing on strong cross-selling
• Cybersecurity and privacy. All our opportunities to offer other services such
digital initiatives will be futile if our as the investment banking products of
clients cannot transact securely or if BPI Capital for corporate clients. This
data privacy is undermined. We have improves the profitability of our traditional
invested in a cutting edge cybersecurity lending business and provides clients with
center. solutions that go beyond credit and cash
management facilities.
As one of the digital pioneers in the
banking industry, digitalization will be a
core focus in the medium-term as we aim

27
Table of Contents BPI Integrated Report 2019
Risk and Opportunities

RISK DESCRIPTION POTENTIAL IMPACT

CREDIT RISK & ASSET QUALITY - risk 1) Deterioration of the quality of our assets
of loss due to a borrower or counterparty’s non- 2) Decrease in our profitability due to an increase in loan
payment of a loan or other credit accommodations losses
(either the principal or interest, or both)

MARKET & LIQUIDITY RISKS - risk of loss 1) Decline in earnings

due to volatility of interest rates, foreign exchange 2) Deterioration of the quality of our liquid assets;
rates or equity prices, and risk that we will be unable increased funding needs
to meet a financial obligation to a customer or market 3) Consequences from non-compliance to regulatory
in any location, in any currency at any time changes

OPERATIONAL & INFORMATION 1) Increase in operational losses

TECHNOLOGY (IT) RISKS - risk of loss due to 2) Disruptions in daily operations
inadequate or failed internal processes, people, and 3) Unauthorized access to our information assets
systems and risk of adverse outcome due to the use 4) Inaccurate, incomplete, inconsistent, and/or unavailable
of or reliance on IT information
5) Damage to our physical assets
6) Damage to our brand and reputation
7) Legal liabilities and tax implications
8) Consequences from non-compliance to regulatory
changes

BUSINESS & STRATEGIC RISKS - risk to 1) Decline in earnings

earnings or capital arising from adverse business 2) Increase in operational losses
decisions or strategy, improper implementation 3) Damage to our brand and reputation
of decisions, lack of responsiveness to industry
changes, and/or incorrect assessment of changes in
business

ENVIRONMENTAL & SOCIAL RISKS 1) Increase in operational losses

- risk of adverse effects due to the impact on the 2) Damage to our physical assets
natural environment and/or communities 3) Damage to our brand, reputation, and social capital
4) Legal liabilities and tax implications
5) Consequences from non-compliance to regulatory
changes

28
A relationship that nurtures your future Table of Contents
 MANAGEMENT AND MITIGATION RISK EXPOSURE

Comprehensive set of Credit Risk Management policies and standard Moderate, but Mitigated
procedures covering:
1) Assessment of borrowing clients using credit risk rating models and credit
risk scorecards
2) Use of eligible collaterals and legally-enforceable collateral documentation
3) Prompt identification and close monitoring of deteriorating credits
4) Adequate review of loan classification and assignment of loan loss
provision
5) Strict remedial and collection measures for problem credits
6) Conduct of credit stress testing on our loan portfolio

Comprehensive set of Market and Liquidity Risk Management policies and Moderate, but Mitigated
standard procedures covering:
1) Measurement and monitoring of market risk exposures of trading and non-
trading portfolios
2) Maintenance of adequate liquidity levels at all times
3) Establishment of a contingency funding plan
4) Conduct of stress tests
5) Enhancement of risk models and systems

Comprehensive set of Operational and IT Risk Management policies and Moderate, but Mitigated
standard procedures covering :
1) Identification, assessment, control/mitigation, monitoring, and reporting of
operational and IT risks
2) Risk management processes are embedded in business activity processes
(e.g., product development and process enhancements)
3) Development and monitoring of Key Risk Indicators (KRIs)
4) Loss event management process
5) Establishment of systems and programs on business continuity
management, information security/cybersecurity management, vendor
management, and physical security management.
6) Conduct of operational and IT risk management awareness and
appreciation initiatives

1) Close monitoring of financial and operational performance, strategies, and Moderate, but Mitigated
policies
2) Development and monitoring of key risk indicators
3) Reporting to Senior Management and Board of Directors

Delivery of shared value through the following activities: Increasing, but Mitigated
1) Efficient use of resources and increased focus on digitalization viz-a-vis
sustainability and risk management
2) Financial inclusion and wellness initiatives
3) Sustainable development financing
4) Industry-Academe initiatives

29
Table of Contents BPI Integrated Report 2019
Business Review and Client Testimonials

DIGITAL CHANNELS: BUILDING AN ECOSYSTEM OF POSSIBILITIES

Digitization has served as an impetus for BPI to transform and

be the bank that Filipinos need today and in the future.

For much of BPI’s 168 years, innovation enables us to offer an API (application
has mostly been incremental and steady, programming interface) marketplace.
punctuated only by a few instances
of radical change. Today, however, The solutions range from payments,
digitalization is accelerating the pace of lending, micro investments, even digital
transformation and disruption in banking credits. We are also studying blockchain, a
and finance, promising to change the record-keeping technology that may have
course of the industry in the coming years. applications in banking and finance.

At BPI, digitalization has served as an Robust digital ecosystem. We launched

impetus for us to seize a new opportunity— our digital ecosystem with 10 new open
an opportunity to transform and be the banking partners, namely, AF Payments,
bank that Filipinos need today and in Alipay, BPI M/S, ECPay, Fortune Pay,
the future. We aim to deliver banking Magpie, Megapay, Mynt (GCash), Paymaya,
convenience in the digital space. We and Paynamics.
commit to continuously build the bank’s
digital capability to provide a secure, Through our partner apps and websites,
intuitive, digital experience across our we powered up our clients’ access and
electronic platforms, compliant with enabled them to seamlessly transact
banking standards, policies, and global within our platform. With the same log-in
best practices. credentials as BPI Online, clients were
granted access to the everyday services
Our goal — to become your bank of every that make life easier for them.
day, where a digitally enabled lifestyle
helps us bring the benefits of financial Partnerships with fintechs, or financial
inclusion to every Filipino, and deliver technology companies, such as GCash and
customer experience that meets clients’ Paymaya and online merchants such as
financial needs. Lazada also enabled the growth of open
banking transactions for the bank.
Open banking. We continue to strengthen
our open banking business model to allow Expanding digital capabilities. We have
us to expand our digital presence and be the most extensive digital capabilities
accessible to our clients through partner among local banks with 70 online banking
websites and apps. The same facility also and 40 mobile app features in 2019. We

30
A relationship that nurtures your future Table of Contents
 Transfer funds via QR code Load RFID via your mobile app

also successfully transitioned our online • Receive mobile alerts in real-time.

user base to the new digital platforms, Event-triggered alerts are sent to a
reaching a substantial 44% increase in client’s mobile device, e.g. whenever
transaction count among active users. money is transferred or a prepaid card
is loaded.
In 2019, we implemented these new digital
capabilities in our platforms that empower Enhanced digital experience for ATMs
and encourage our clients to: and CAMs. We made our ATM and Cash
Accept Machines (CAMs) network more
• Be more personalized. Self-service easily accessible to our clients through
functionalities are available such as continuous improvements in availability
the setting of branch appointments, and the expansion of our network with over
updating of mobile number, changing of 2,800 ATMs and CAMs nationwide.
one’s password, etc.
More ATM and CAM screens now have a
• Enjoy new payment options. More new design aesthetic, easier navigation,
e-wallet loading partners (beepTM, instructions in English or Taglish, time-
GCash, Paymaya, Autosweep RFID, sensitive greetings and images that provide
and Easytrip) enable opportunities to an overall fresh experience for our clients.
tap our clients’ different needs such as The screens also enable faster transactions
travel and shopping. with viewable and paperless balance
inquiry, resulting in cost savings.
• Explore more options to send money.
Transfers to other banks via InstaPay Powering up financial inclusion with
and Dollar-to-Peso transfers satisfy the Bankware. Bankware is a cloud-based
needs of clients to send money. alternative deposit and payment system.
It supports basic deposit, microfinance,
• Get full access to investment accounts. digital payments, and agency functions
Clients can complete their investment for BPI Direct BanKo, BPI’s financial
transactions services on the digital inclusion arm. With the BPI BanKo app as
platforms. its first implementation, Bankware was
able to reduce 1/3 of the cost compared to
traditional services.

31
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

RETAIL CLIENTS: Our BPI Online and BPI Mobile app have
also been revamped with a new look
NURTURING DIGITAL and loaded with new features for a more
SAVVY FILIPINOS enhanced digital experience. Security
features that include the OTP, or One-Time
From 300,000 clients using BPI Online PIN, and biometrics via fingerprint and
in 2008, we now have over 3.6 million facial recognition further strengthened
clients with digital access to our platforms, safety of online and mobile transactions.
a 12-fold increase, a 12-fold increase in
over 11 years. In the same period, digital Innovative Consumer Banking. Our
transactions soared from 35 million to 820 subsidiary BPI Family Savings Bank (BFSB)
million transactions, a 23-fold surge. continues to be the largest thrift bank
in the country. Its assets have reached
On any given day, billions of bits of data zip Php 285 billion, constituting 13% of the
through our digital network. They represent total assets of BPI as of end-2019. Its net
financial transactions that help us deliver income of Php 4 billion is 15% of the BPI
the financial services that our clients Group’s total net income.
need. The result is changing the dynamics
dynamics of traditional banking services at The year 2019 has proven to be a turn-
the branches and the digital way of banking around year for BFSB, as it started to
that delivers convenience and efficiency. reap the benefits of the previous years’
investments. In 2019, we were able to
From a banking relationship that is improve our loan portfolio, as housing
predominantly transactional, BPI is loans grew by 12%, and auto loans by 5%.
adopting a more relationship-driven While industry car sales grew by a modest
approach, aided by digitalization. It is the 3.7%, the number of auto loan releases
high tech, high touch approach, a concept increased by close to 10%.
borrowed from futurist Alvin Toffler,
where technology serves convenience and For the past two years, we have been
security, and high touch fulfills the need for making headway in simplifying loan
a more personal approach when it comes requirements, shortening our turn-
to complex or high-value financial services. around time for loan processing, and
sustaining the trajectory throughout 2019.
We aim to be the Filipinos’ Bank of Choice Our commitment to enhance customer
in the various segments that we serve — experience has started to manifest in net
Private, Preferred, Personal, and Overseas promoter scores for Auto and Housing
Filipinos (OFs). Loans that are above benchmark.

Digital highlights. In less than five years, We have also invested in developing
our online transactions have tripled, scorecard models that use internal and
requiring us to upgrade our core banking credit bureau data to support an efficient,
system. We embarked on two upgrades in yet prudent loan underwriting process.
2019. Our system must be state-of-the-art
if it is to be ready for the torrent of data Our cards business, through BPI
that digitalization will surely bring in the Credit, Debit, and Prepaid cards, has
years to come. helped clients pay for their basic needs
conveniently and affording them new
The first upgrade needed changes to experiences while maintaining financial
21,000 programs, 15,000 lines of codes responsibility. We have over 2.3 million
and 5,100 copy books, over 41,000 active debit card customers, 1.6 million
changes in all. We believe these continual credit cards, and about half a million
upgrades are necessary because our prepaid cards. Transaction volumes
clients deserve the best of what the future reached Php 263 billion, coming from 84.6
has to offer. million transactions in 2019.

32
A relationship that nurtures your future Table of Contents
 “This is something that I love and share to my friends,” he
said.

Having a facility for numbers, Hendy, a certified IT

practitioner who once worked for PricewaterhouseCoopers
HENDY WIDJAJA (PwC), is a practical man, with a predilection for
Certified Information Technology Practitioner convenience and security, especially when it comes to his
own money.

“I have automatic deduction for my investments. I don’t

want to think too much. And I love the fact that once I
AN EXPAT’S IDEAL BANK established my accounts, for example, mutual funds, I can
buy and sell continuously without any human intervention.
When Hendy Widjaja arrived here in the Philippines in 2004 And redeeming investments is not a problem,” he said.
for a job with a multilateral lending institution, he began
looking for a local bank that will make life easier for him and For Hendy, paying bills is also a breeze. Credit cards,
his family. electricity bills, water utility bills, phone bills, and a litany of
merchants he can pay for products and services rendered.
He finally found it in BPI. The digital part is just what he
needed. “Whether it’s a school, insurance company, you name it,
BPI has it in its list of merchants. Those are the things
“I really feel the ease of banking, in completing a my colleagues and I find really useful. Just one app for
transaction,” he said. “BPI is the leader in digital. That’s the payments and every receipt is sent to your email,” he said.
way I see it.”
Even Hendy’s kids—16, 15, and 11 years old—understand
Of course, there are the digital banks who have embraced the value of this digital way of banking. They have accounts
digital in their business models when they set up shop with BPI but they’re not able to invest yet on their own due
here in the country. But for the breadth of services that BPI to age requirements.
offers and the way it integrated all of them into its digital
platforms, that is, BPI Online and BPI Mobile app, BPI has “The kids nowadays are being asked by their school to
no equal, at least for Hendy. watch CNN and BBC. And they’re being introduced to, if
they are in high school, the different equity markets, bond
He has availed of a range of products from BPI—savings markets, to learn about the economy and investing,” he
account, current account, credit card, investment funds— said.
and he frequently uses features of the online facility and
mobile app such as money transfer and bills payment. He talks to them about investments and tells them which
are risky and which ones offer a good return. In time, they’ll
Something that Hendy really loves is the variety and range be looking for digital ways to invest just like their dad.
of investment funds that BPI manages. All of these are
available with a few taps on his mobile phone using the Hendy, being an advocate of efficient use of resources, sees
BPI Mobile app, from the US equity feeder fund to the peso BPI shifting more into digital transactions while training
bond fund through BPI’s subsidiaries such as BPI Asset people for more higher-value interactions with clients.
Management and Trust Corporation (BPI AMTC) or BPI
“This will further increase the trust of clients in BPI. It’s
Investment Management Inc. (BIMI).
really a win-win for the Bank and its clients,” said Hendy.

33
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

We continue to give customers wise BPI-Philam also launched three new life
spending options and the best value for insurance products for 2019: Family Care
money as we offer low foreign exchange Plus, a 10-year renewable life insurance
conversion, exclusive retail promos and plan that covers two family members under
Special Installment Plan (SIP) deals with one policy; Dollar Protect Plus, a regular-
BPI Credit Card. Part of our drive towards pay US dollar-denominated savings and life
digitalization is the electronic Statement insurance plan that allows the customer
of Account, or eSOA, which allows clients to invest in global funds; and Critical Care
to easily monitor their statements and 100, a comprehensive health and life
manage their finances, and at the same insurance plan that protects customers
time reduce their carbon footprint. from up to 100 critical illnesses until age
100.
With the EMV-enabled BPI Debit
Mastercard, clients are now able to enjoy BPI/MS launched the 365 Personal
global acceptance in-store and online on Accident (PA) product. It is a very affordable
top of local point-of-sale (POS) purchases product with premium of Php 365 only
and withdrawals here and abroad. To for a one-year coverage of PhP 1 million.
complement the wider acceptance, we This is exclusively offered to BPI debit
enhanced the card’s security features, cardholders in BPI branches. The Hospital
launching 3D Secure One-Time PIN (OTP) Confinement Income Protection (HCIP)
functionality for online transactions, product, which was exclusively offered to
and customer-initiated card control on Unibankers in 2018, was introduced to
withdrawal and spending limits. other clients starting in 2019.

BPI continues to be one of the leading Moreover, BPI/MS also sought to reach
prepaid issuers in the country despite more clients through cost-effective digital
the rapid emergence of digital wallets channels. In 2019, it added another
and QR payments in the market. With no product in its e-commerce platform, the
maintaining balance, clients can transact in Annual Travel Personal Accident insurance
usage channels comparable to a debit card. product, which enables frequent travelers
In 2019, we also migrated all clients with to purchase an insurance policy anytime
non-EMV prepaid cards to EMV-enabled through their computers or mobile phones.
prepaid cards.
Value for Overseas Filipinos. We
BPI Personal Loans is a no-collateral, continued our efforts to reach out to
multi-purpose loan with low interest. OFs to make sure that their needs are
Clients can avail of a loan up to three times met. Aside from our OF Regional Sales
their monthly income, and pay back in teams strategically located in areas
flexible monthly installments. The loan with high concentration of OFs, we
is quickly and safely available through a participated in events that helped us
client’s BPI account and payable through build relationships with them. One such
easy and convenient payment schemes event was the Philippine Consulate Caps
such as BPI’s auto debit facility. 1st Philippine Retirement Summit in the
US Midwest, together with other Ayala
Strong insurance business. BPI Philam Group companies, where we held talks
and BPI/MS—which offer clients life and on financial wellness to OFs in the area. A
non-life insurance products, respectively— similar event together with the Ayala Group
continued to remain strong in 2019. BPI was held in Dubai.
Philam was again awarded the Best Life
Insurance Company in the Philippines by Our strategic efforts to spread the benefits
World Finance, an international finance of financial inclusion included a series of
magazine. It was the third time that BPI financial education seminars, both local
Philam was lauded by the publication. and abroad, that sought to teach OFs how

34
A relationship that nurtures your future Table of Contents
DR. EDWIN MANUEL He opens his BPI Mobile app and checks his account. “Oh,
Anesthesiologist my PF was credited already,” he said. Professional fees (PF)
are easily checked with a few taps on his phone.

As the medical director of the hospital, he approves the

salaries of the hospital staff and the PF of the doctors for
IT’S ALL ABOUT CONVENIENCE AND SERVICE crediting through BizLink, another BPI app.

Dr. Edwin Manuel is one very busy anesthesiologist. As “I consider BPI the best bank in innovation. With regard to
the Medical Director of the Metro Lemery Medical Center online banking, I prefer BPI because of the ease of use and
in Lemery, Batangas, he says he’s like the “mayor” of the its features,” he said.
hospital.
It was in 2007 when Dr. Manuel and his wife, an
He goes around talking to people, asking how they are, with obstetrician-gynecologist at the same hospital, became
a ready smile and a hearty laugh that likely keeps patients at clients of BPI. Earlier in 2002, they tried to settle in Bulacan,
ease. Fellow doctors and hospital staff likewise respond to where Dr. Manuel hails from, but there were few hospitals
his good-natured levity. there at that time.

Aside from his duties at the hospital, he goes to other His wife, a Batanguena, convinced him to relocate and they
nearby hospitals such as Our Lady of Caysasay Medical never looked back. That new beginning in Batangas was
Center, Taal Polymedic Hospital, Ospital ng Calaca and also the start of a strong relationship with BPI. As their
others. careers flourished, so did their relationship with BPI.

And while he is a doctor by vocation, he is a golfer by “Now even my two kids have BPI accounts, and they have
avocation. You will find him two to three times a week regular subscription plans for UITF. I taught them how to
at the golf course, mostly practicing and competing in invest,” he said.
tournaments, which pleases his wife, especially when he
brings home another trophy. A reasonable ROI for the wife, One child is already a pilot undergoing further training, while
said Dr. Manuel. the other is a pre-med student studying in the University
of Santo Tomas. They, too, will reap the benefits of having
“I don’t have time to go to the bank anymore. It’s very a financially savvy father who has started them on their
rare that I go to the bank,” he said. His savings, checking, financial journey.
investment accounts are all easily available on his mobile
phone. He checks his statements of account and monitors “The convenience and the value that BPI provides me are
his car loans using the app, too. enough for me to tell my friends about my good experience.
BPI has everything I need,” he said.

35
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

to save, invest, and secure their families’ in the need to innovate and therefore
future. BPI strives to be the trusted partner launched the peso unit class of one of our
of OFs. Through remittance products and US dollar denominated funds, the BPI
services as well as financial education Invest US Equity Index Fund.
seminars, BPI aims to empower these
clients to have control over their finances This will make it convenient for investors
as they take on their challenging role to diversify their funds to global markets
as OFs. (Financial Inclusion: Teaching and US denominated outlets without the
Financial Management page 53-54) need to convert their local currency to US
dollars.
Wide range of investment solutions.
Through BPI Investment Management BPI Securities, our equity securities
Inc. (BIMI), BPI Asset Management and brokerage arm with over 75,000 clients, is
Trust Corporation (BPI AMTC), and BPI one of the leading brokerage houses in the
Securities, we provided clients with the country.
investment solutions they need to reach
their financial goals. In 2019, BPI Securities posted YoY volume
growth of 12.3%, outpacing that of the
In late 2019, BIMI entered into whole industry (+2.7%). This was fuelled
an agreement with PhilAm Asset by Php 36 billion of block trades executed
Management, Inc. (PAMI) to assume the in 2019 including trades in connection with
management and distribution of nine the Phinma Energy tender offer.
mutual funds previously managed by PAMI.
The deal was completed in January 2020. We also brought our Invest-In-You Trading
With the seamless transition of the funds Academy (I-TRAC) online, increasing our
to BIMI, investors in the PAMI funds can reach and accessibility to both current and
expect to benefit from the consistent track potential clients as we continue to strive
record and expertise of BIMI. to advance stock market education in the
Philippines.
The addition of the PAMI funds under
BIMI’s management, doubles its product We implemented two major updates
offerings to 18 and nearly triples its client for BPI Trade, BPI Securities’ online
base from 50,000 to 140,000. The deal trading platform, enhancing performance,
will see BIMI’s assets under management reliability, and robustness. We have also
(AUM) increase to nearly Php 165 billion. started working on an advanced platform
for our clients with more sophisticated
BPI AMTC also started working on the needs and a mobile app to cater to
upgrade of the funds distribution system in customers who are increasingly digital.
line with the commitment to employ state-
of-the-art technology in the management
of our client’s funds. The company believes

36
A relationship that nurtures your future Table of Contents
CORPORATE BANKING: As part of its continuing digitalization,
Corporate Banking also rolled out a
DELIVERING STRATEGIC new enterprise CRM solution, enabling
VALUE TO CLIENTS easier coordination between relationship
managers and product sales and servicing
BPI Corporate Banking builds and units. The application allows the RMs
strengthens relationships with to log account plans, manage client
institutional clients consisting of large appointments, record and share sales
local corporations and conglomerates, as call action points with relevant parties,
well as multinational companies in the identify and scope opportunities, push
Philippines, through its strong Relationship these opportunities to product partners,
Management network and advisory, and and make follow-ups until conversion.
comprehensive range of reliable products. Ultimately, the CRM solution improved
We aspire to be our clients’ go-to bank customer experience across customer
for growing their businesses (strategic), touch points.
managing their operations efficiently
(day-to-day), caring for their stakeholders IMPROVING BUSINESS EFFICIENCY
(employees, clients, suppliers, and other THROUGH TRANSACTION SERVICES
stakeholders), and mitigating business
risks. Cash Management. Our Cash Management
business is a fundamental component of
BPI Corporate Banking is poised to our strategic initiative to build corporate
accelerate its business growth in the new CASA (current account, savings account)
decade. We will continue to pursue our deposits and offer premier digital solutions
vision to be the trusted financial advisor to corporate customers. We cater to a
and main operating bank of the largest diverse group of business customers
Filipino companies and multinationals in covering conglomerates, large local
the country. corporations, multinational corporations,
and Micro, Small and Medium Enterprises
Bigger, better Corporate Banking (MSMEs).
organization. In 2019, the Corporate
Banking organization expanded, BPI services a cash management customer
consolidating the client coverage and base of over 37,000 companies. The
support teams with the product units composition of companies availing of
catering to corporate clients - Corporate cash management facilities is 80% SMEs
Credit Products, Transaction Services, (with asset size less than US$ 2 million)
and Remittance and Funds Transfer. and 20% large corporates and MNCs,
This new set-up resulted in better or multinational companies. In 2019,
portfolio management and service, there were over 80 million transactions
tighter collaboration, and faster decision- processed through the online banking
making and communication within the platform.
organization.
Our Corporate Cash Deposit Machine
Furthermore, Corporate Banking’s (CCDM), officially launched in 2018, was a
Relationship Management Group was first of its kind in the industry. The CCDM
divided into two sub-groups: Top is installed in the corporate customer’s
Corporates, Multinationals, and Sectors, business location or office premises. It
which recognizes the need to provide more facilitates the deposit of cash directly into
senior coverage for clients with the most the customer’s bank account, without the
sophisticated banking needs, and Large need to physically travel to the Branch or
Corporates, which responds to the need rely on costly cash pick-up services via
for a better and more efficient coverage of armored car.
clients in different geographical locations,
with homogeneous requirements. This The most notable CCDM implementation
move was done in order to sharpen the contributed to the operational efficiency
focus of the coverage team. of one of the fastest-growing start-ups

37
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

SUPPORTING COMMUNITIES THAT MATTER

TO CLIENTS

Cargill, just like BPI, has been around for more than
a century. It was founded in 1865 with a single grain
flathouse, a building for storing grain, in Conover, Iowa, in
the United States.

The vision of the founder, William W. Cargill, was clear:

“helping farmers prosper, connecting markets, and
bringing consumers the products they’re seeking.”

In 1948, the Philippines saw a glimpse of that vision when

Cargill started its copra trading business in Mindanao.
Today, Cargill is a global behemoth in food, agriculture,
financial, and industrial products and services, and its
business in the Philippines has expanded. SONNY CATACUTAN
Country Representative
That success, according to Sonny Catacutan, Country Cargill Philippines, Inc.
Representative for Cargill Philippines, Inc., is predicated
on taking care of the communities where the company
operates in. development, the company instituted another pioneering
project in the area of sustainable development — the
“Our footprint is understandably in the countryside and Sustainable Certified Coconut Oil Production (SCNO).
focused on the food and agriculture sectors,” he said. “This
means we have to work with farming communities both Aside from sustainability, Cargill shares with BPI an
as suppliers of our raw materials and customers for our appreciation of and focus on digital technology to
products. And as you know, agriculture is among the least transform its businesses.
banked sectors of the economy. Many farmers don’t even
have access to formal credit.” These include real-time scans of barns and houses for
chickens to ensure efficient temperature control and use
Sonny said support for medium-term funding, working of space, and digital tools and modeling to measure the
capital, and transaction banking is a given. The company growth of shrimp and predict the most profitable harvest.
needs something else.
And speaking of harvests, Cargill is reaping the benefits
“We need banks who can support the credit requirements of digital banking, too. It has a broad spectrum of tools to
of our agricultural suppliers and our customers to ensure manage payments and receipts, among other digital tools.
they have access to sufficient funding at reasonable cost.
We need our suppliers and customers to be successful in “We are working with our banks to explore mobile, digital,
order for our business to grow,” said Sonny. and cashless solutions that will increase visibility and
utilization of cash, and safety and security, not just for
Cargill’s businesses in the Philippines cover four areas: 1) Cargill but also for our customers and suppliers,” said
grains, coconut oil, and copra meal; 2) animal nutrition and Sonny.
health; 3) poultry production; and 4) food and beverage
ingredients. For him, however, it’s not only these shared views on
sustainability and digitalization of Cargill and BPI that
One big project is the company’s joint venture with Jollibee makes the relationship work. And it’s not only BPI’s suite
Foods Corporation--a poultry processing plant located in of products, either.
Santo Tomas, Batangas, inaugurated in December 2017.
It is the largest of its kind in the country and can process “BPI has developed the capability to support our suppliers
45 million chickens annually. BPI helped make this plant and customers. In banking, the right partner bank is not
possible. just somebody who provides reliable credit and services at
the best cost, but also a bank that mobilizes its resources
Sustainability is another byword frequently on the lips to support the counterparts and communities that matter
of Cargill’s leaders. But it’s backed up by action, too. most to Cargill. BPI does that,” he said.
Aside from its corporate responsibility programs covering
scholarships, clean-up drives, training and knowledge-
sharing, school-based feeding, and infrastructure

38
A relationship that nurtures your future Table of Contents
in the Philippines. The start-up company by 14%, logistics by 96%, and heavy
is engaged in end-to-end processing of machinery by 39%.
e-commerce transactions across five
of the top digital trading platforms in We further enhanced our Quick Assist
the Philippines. The company manages Program, a facility that secures a hold-out
the sales, order tracking and delivery of on deposits for letters of credit (LCs) and
products to consumers for these online standby letters of credit (SBLCs), to provide
merchants. a 7-banking-day turnaround time solution
to MSME distributors and suppliers. See
In 2019, collection volume from CCDMs page 61-63 for more information.
increased by 230%. The CCDM customer
base consists largely of restaurant chains, A notable win is our business with a top tier
logistics companies, construction supply local company engaged in the power and
retailers, department stores, retail stores, energy business. The win was significant
convenience stores, schools and real estate to BPI as it entailed customization of its
developers. With the increasing demand LC processing for the client, necessitating
for CCDMs among corporate customers, we internal coordination among various units
expect an overall 20% growth in corporate of the Bank, including Trade Operations,
cash collections in 2020. Treasury and Remittance Departments.
The customer’s maiden LC transaction was
We launched our self-service check successfully executed in May 2019.
printing in September 2019, addressing
the need of MSMEs for automation of Focus on economic trends was also a
their basic check printing requirements. key strategy for Supply Chain Finance.
Based on customer probing and insights, a We closed a deal for a Supplier Financing
large number of MSMEs still prepare their Program with one of the country’s leading
checks manually, consuming one business telecommunication providers in October
day for check preparation and manual 2019. BPI won the Supplier Financing
signing of these checks. With self-service mandate of the telco customer through its
check printing, the process is minimized product advantages, which addressed their
to one hour. Additionally, reconciliation of need for an alternative financing structure.
payments is automated through Bizlink.
As checks are negotiated by the payees, DRIVING GROWTH AND
the status of issued checks via Bizlink is SUSTAINABILITY THROUGH CORPORATE
automatically updated to “negotiated” LOANS
status through a simple upload of the
Client’s electronic statement of account. In 2019, the cut in interest rates and
The auto reconciliation saves up to 2 days reserve requirement by BSP enabled
of reconciliation work for the MSME. the banks to offer lower interest rates
to clients, which encouraged borrowing.
Trade and Supply Chain. One of the key By taking advantage of the opportunity,
marketing strategies that led to our strong BPI registered a loan portfolio growth of
revenue performance for our trade and 8.96%. Corporate Banking was the main
supply chain business was the focus on contributor to the growth, constituting
industries boosted by the “Build Build Build 76.6% of the total loan bookings of BPI.
Program” of the Philippine Government. Manufacturing, real estate, and financial
These industries include construction, intermediation were the top industries with
steel, logistics, and heavy machinery. Given strong loan demand.
the opportunities in these industries, we
streamlined our resources to support this Sustainable Finance. BPI started a
growth. We focused our selling efforts on program called Sustainable Energy Finance
trade solutions relevant to these industries. (SEF) with the International Finance
Corporation (IFC) 11 years ago to help
This strategy resulted in significant clients reduce electricity consumption
revenue growth in our business from these and produce clean energy. To date, BPI
industries: steel up by 145%; construction has expanded its program to include

39
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

AN IDEOLOGY BUILT ON SUSTAINABILITY

When Jose Franco B. Soberano stepped out of the

Columbia University campus in 2012 with a master’s
degree in Real Estate Development, he was brimming with
ideas.

He could hardly wait to get back to the Philippines with a

newly acquired Weltanschauung — a new set of eyes to see
the world with, so to speak — that promises to take Cebu
Landmasters, Inc. (CLI), the company his father founded in
2003, to the next stage of its growth.

“Our CEO founder brought his experience from our big

brother ALI (Ayala Land Inc.), where he worked for 23
years. But what I brought from my education abroad was
a more global way of planning for projects, a global way JOSE FRANCO B. SOBERANO GRANT L. CHENG
of designing real estate,” said Franco, who is now the Chief Operating Officer Chief Finance Officer
Executive Vice President and Chief Operating Officer of Cebu Landmasters, Inc. Cebu Landmasters, Inc.
CLI.

At Columbia University in New York City, Franco was part

anywhere between Php 1 billion to Php 2.5 billion. And you
of a five-man team that was one of the top 4 finalists
will only get a positive cash flow upon turnover,” said Grant, a
in the Gerald D. Hines Urban Design and Development
young 39-year-old overachiever like Franco.
Competition, a prestigious nationwide competition in
the US that taps the brilliance and creativity of graduate Before joining CLI, Grant was a private banker managing
students to come up with innovative development plans the wealth of high net worth individuals and institutions in
for real large-scale sites. Singapore. Then he became an investment banker handling
complex transactions involving large deals.
His experience in that competition greatly influenced him.
He became an advocate of “the ideology called the triple Grant is a numbers guy who appreciates a reliable partner
bottom line”. bank that can help with CLI’s multi-billion-peso projects.

“You want to make sure that you focus on people, planet, “BPI’s service level and understanding of our business is just
and profit,” said Franco, now only 34, and still full of unparalleled,” he said. “We understand how to be prudent in
youthful energy. “You look at a real estate project and our financial management so we want to repay the trust of our
think of what people need, how they will thrive in this bank. BPI has always been there reciprocating that trust.”
development, how secure they will feel. Then you look at
the barangays, the roads, the drainage.” Both Franco and Grant also appreciate BPI’s investment in
digitalization. For their personal banking needs and those of
“Then you consider the planet. It’s about reasonable CLI, they regard BPI’s online facility and apps as among the
planning, not about maximizing everything, but doing best.
what’s right. When you’ve considered the people and the
planet, profit comes naturally. We think about the long “They’re among the most user-friendly as far as I can tell,”
term,” he said. Franco said. “There’s the ease of managing your funds, and for
us corporate clients, there are many features now to help our
That kind of philosophy resonated with BPI, which treasury and accounting teams in getting up-to-date data.”
places a premium on sustainability in the projects and
clients it supports, and on digitalization, which enables With sustainability and digitalization firmly entrenched in the
sustainability. psyche of CLI and BPI, their relationship has been, according
to Franco, further “strengthened by success.”
Beauregard Grant L. Cheng, CLI’s Chief Finance Officer,
said CLI faces challenges that need the support of a bank “BPI is driven by values,” said Franco. “It’s even summed
like BPI. up in its tagline, ‘Ready today. Ready tomorrow’. BPI is a
bank that will be ready to help, ready to find a solution for its
“Real estate is really a very capital-intensive industry. You are clients,” he said.
essentially cash out for the majority of the project. A condo
building or a house and lot subdivision is an investment of

40
A relationship that nurtures your future Table of Contents
green building construction and climate- sustainability initiatives under the umbrella
controlled systems for livestock housing program of SDF, BPI’s direct contribution
facilities. to the UN Sustainable Development Goals
(SDGs). We have made it our goal to shift
Since we introduced SEF in 2008, BPI has sustainability from niche to norm. We hope
continued to be a market leader funding to grow our SDF portfolio at a faster rate
332 sustainable projects as of end-2019. than our traditional categories to achieve
BPI SEF’s business model aims to ensure a loan portfolio with a bias in favor of
that projects are not only meeting global sustainability initiatives.
standards for being green, but are also
designed to achieve higher business Agribusiness Solutions. BPI is one
productivity, efficiency, and profitability, of a few banks that has a dedicated
thus the tagline, “turn your business green Agribusiness division to cater to the needs
to gold”. To this end, BPI has its own of clients in the sector. The bulk of our
in-house SEF team, aided by IFC-trained clients are engaged in post harvesting
and accredited consultants, which ensures of agricultural products, comprising
projects funded are technically feasible, about 40% of our total portfolio. Piggery
financially viable, and compliant with and poultry clients, on the other hand,
environmental policies and regulations. comprise about 25%.

To BPI, this does not only mean the In line with our sustainability goals,
realization of its sustainability goals. our agribusiness solutions contribute
These achievements meant successful to modernization and shift to climate
projects that help mitigate the impact of resiliency and renewable energy by local
climate change and increase resiliency agribusinesses. We do this by funding the
to environmental risks. To date, BPI SEF, construction or conversion of agribusiness
which provides technical assistance to facilities specially constructed to increase
small to middle-sized companies, has the efficiency of production while
a total cumulative loan disbursement combatting the effects of climate change.
of Php 62.8 billion to projects that have These projects include tunnel-ventilated
helped reduce an estimated 904,336 facilities for poultry farms or piggeries that
tCO2e (tons of carbon dioxide equivalent) help decrease production mortality, biogas
per year of greenhouse gas (GHG) digesters that convert animal wastes into
emissions from energy and 133,877 tCO2e electricity, and automated processing
from embodied energy from building plants for post-harvest activities.
materials.
In July 2019, we held an awareness
BPI’s Structured Finance Division (SFD), campaign for a viral swine disease called
which in turn covers large pure play African Swine Fever (ASF), which broke
renewable energy projects, has cumulative out and spread throughout the Philippines.
disbursements of Php 78.46 billion for The disease was fatal to hogs, and costed
sustainable energy projects, which are many backyard hog farmers much of
estimated to reduce GHG emissions by their livelihood. We partnered with the
10.52 million tons of carbon dioxide Pig Improvement Company and hosted
equivalent per year. seminars for our external and internal
clients to aid in the dissemination of
In November 2019, we launched our information on appropriate security
expanded Sustainable Development measures and the prevention of
Finance (SDF) program to bolster our misinformation regarding ASF.
commitment to sustainable business
growth in the country. With SDF, we have We will continue to support the
consolidated our financing activities modernization of agricultural systems. Our
for Renewable Energy (RE), Energy goal is to help elevate the local agricultural
Efficiency (EE) and Climate Resilience industry to become more competitive with
(CR) and Sustainable Agriculture (SA). neighboring countries in terms of price,
Moving forward, BPI will be reporting its quality, safety of products, and efficiency

41
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

in production. BPI Agribusiness will acquisitions guarantees that we can deliver

also continue to encourage our clients to even the most meticulous and complex
employ the best biosecurity measures in investment banking solution.
their businesses. With the constant threat
of different diseases affecting livestock and In 2019, BPI Capital made landmark deals
poultry, we aim to help our clients protect for foreign green bond issuances:
their livelihood. • Priced the first ever Philippine issued-
Swiss franc-denominated negative
CREATING VALUE THROUGH LEASING yielding ASEAN Green bond, which was
sold in the international capital markets
Through BPI Century Tokyo Lease & • Acted as Sole Global Coordinator, Joint
Finance Corporation (BPICTL), our joint Lead Manager, and Joint Bookrunner
venture with Tokyo Century Corporation, for the first ever fixed-for-life green
one of the biggest leasing companies bond global issuance of AC Energy, Inc.,
in Japan, we closed some notable amounting to US$ 400 million.
transactions including a top-of-the-line
flight simulation machine, warehouse PROVIDING INNOVATIVE SOLUTIONS
racking systems, IT equipment for a major THROUGH REMITTANCE AND FUND
telecommunications company, software TRANSFERS
and licenses to support a local bank’s
digitalization initiative, rooftop solar In July 2019, we launched our inter-
systems, various construction equipment bank funds transfer services: Instapay
and motor vehicles, and various diagnostic, via Online/Mobile for retail clients and
hospital, and laboratory equipment. PesoNET via BizLink for corporate clients.

Despite the volatile market in 2019, we In October 2019, we became the first local
saw opportunities in truck financing as the bank to launch SWIFT GPI (Global Payment
government and business owners moved Innovation), allowing clients to enjoy faster
towards replacing old trucks and vehicles. and traceable cross-border payments
The emergence of car rental services via SWIFT. Our clients can track at any
also presented opportunities that we will point in time the status of their outward
continue to make the most of in 2020. cross-border payment. Our corporate and
personal banking clients have found this
BUILDING A STRONGER ECONOMY innovation valuable as it provides increased
THROUGH INVESTMENT BANKING transparency and timely updates.

Through BPI Capital Corporation, In closing 2019, BPI has partnered with
we are committed to creating value additional remittance tie-ups to enable
and significantly contributing to the more senders to remit funds into a BPI
development of the Philippine economy account. On the international side, this
through landmark investment banking allows the bank to expand its network
transactions. We continue to be a overseas, providing more access points
champion of nation-building through for overseas Filipinos to remit to the
our various initiatives, especially in Philippines. On the domestic end, the
the infrastructure space. We support upcoming service called ‘Remit to Account’
the country’s key economic players will allow our customers to receive
by promoting inclusive growth and by payments and remittances to their BPI
providing them with financial solutions accounts in almost real time, via over 2,400
that have stronger strategic impact and MLhuillier branches nationwide, even after
economic potential. banking hours and during weekends.

Our leadership in the debt and equity

capital markets, project finance, structured
finance, advisory, and mergers and

42
A relationship that nurtures your future Table of Contents
BUSINESS BANKING: BizLink. BizLink was enhanced to provide
clients with an improved, more intuitive
MAINTAINING GROWTH and scalable business banking portal as a
MOMENTUM means to address the basic needs of SMEs
in an efficient manner. Through BizLink,
Despite their importance to the country’s SMEs can conveniently operate their
economy and accounting for 35% of the businesses and maintain control over their
country’s Growth Domestic Product (GDP) cash flow anytime, anywhere.
and 65% of the national workforce, Small
and Medium Enterprises (SMEs) still face Automation and digitalization. Many
myriad of challenges that include limited SMEs are determined to forge ahead
technical expertise, difficulty in accessing with digital transformation strategies
markets, and, most notably, meager to gain an edge over their competition.
financial resources. SME customers have higher service
expectations. These customers expect
BPI Business Banking, which was created service to be rendered faster than ever,
to help SMEs overcome these hurdles, pushing companies to elevate their ability
aims to become the partner of choice of to deliver. Applying digital technology
SMEs in the Philippines by addressing their would help organizations achieve near
day-to-day requirements as well as their real-time fulfillment, provide contextual
long-term needs through fast, simple, and personalization, and enable increasingly
convenient solutions through a team of problem-free user experiences.
engaged, enabled and energized Business
Bankers. BPI Business Banking launched several
game-changing system enhancements
Faster turnaround time. Significant to automate processes and improve
reductions in total turnaround time customer management and engagement
were made possible through process such as ECRM, or Electronic Customer
improvements and digitalization. In 2019, Relationship Management, which enables,
two new simple and convenient products among others, the tracking of customers’
were launched to make raising capital loan applications in an efficient and timely
easier and faster: BPI Credit SMEase or manner.
Off-The-Shelf-Loan and Zero Collateral
Loan. We will continue to automate and digitalize
in order to build connectivity and efficiency.
BPI Credit SMEase, or Off-The-Shelf- These system enhancements will also
Loan, an express term loan facility, was allow us to tap and leverage an ever
designed to cater to the urgent financing growing ecosystem of partners. This will
needs of the country’s SMEs with a swift provide opportunities of co-creating new
turnaround time of approximately 10 days products, capitalizing on external expertise
and with minimal documentation, creating and collective innovation as well as
an overall client friendly experience. With pursuing new markets, sales channels and
the Zero Collateral Loan, no collateral customer touch points.
is required from preselected clients. It
offers instant processing, requiring only
one document and with an approval of two
days.

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Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

HELPING CLIENTS BECOME PART OF THE

GREEN REVOLUTION

The Villa-Abrilles are one of the first families to invest in

and develop Davao City. Their relationship with BPI started
just after the second World War, when an aunt of Atty.
Leoncio P. Villa-Abrille took out a loan with the BPI branch
across one of their properties.

The history of the Bank and their clan is deeply

intertwined, and their relationship with the Bank continued
throughout the decades, both for their personal accounts
and business needs – in particular securing loans for
their early forays into commercial realty along the prime
Magsaysay Avenue in Davao City in the early 1970s.

Leoncio, the current patriarch of the clan, said that it was ATTY. LEONCIO P. VILLA-ABRILLE
thanks to the encouragement of a friend who happened to President
be a BPI officer that they secured a Php 1-million loan – a Cesareo Villa-Abrille Development Corp.
large amount during the time – which enabled them to
build a five-door commercial building, and another one
with eight spaces for lease soon after. The arrangement suited them and proved to be highly
favorable, providing them with a reliable income and
They followed this initial success with a 16-door, all- shielding them from the ebbs and flows that come with the
concrete office building in the section of Davao City that hospitality and tourism industry.
has been named after their family – Villa Abrille. This was
considered an impressive edifice for the city at the time, In 2019, BPI is helping usher the Villa-Abrille into a more
and would later prove to be just the start of the family’s environmentally conscious future, by financing the city’s
spirit of innovation. first EDGE-certified commercial building under the Bank’s
Sustainable Development Financing (SDF) Program.
The next decade, however, saw Leoncio having to cede EDGE, which stands for Excellence in Design for Greater
the management of the family business to his siblings Efficiencies, is an innovation of the International Finance
after constant threats from the authorities, including Corp., a member of the World Bank Group.
expropriation of the family estate, during Martial Law. He
returned in the 1990s and resumed his role in heading the “We’re at the point where we could no longer ignore the
family’s business. environmental degradation around us. We want to be part
of the green revolution. It is no longer enough that we
“Thankfully, our business proved to be resilient and was comply with basic requirements – we have to do better.
quite unaffected by the economic upheavals during and We’re a relatively small real estate company, especially
after Martial Law. In fact, things proved to be favorable to when you compare us to the large conglomerates, but we
us, because many Cotabato-based businessmen ended up want to show that no matter your size, you can do your
relocating to Davao City and they became our lessees,” he part in making things better – even if it does cost us a little
recalled. more. The benefits would be worth it,” Leoncio said.

In 2012, BPI helped finance their biggest project yet – “BPI proved to be a great help to us in this undertaking.
a 200-room dormitory strategically situated near the We were initially hesitant to take out such a big loan and
region’s premier universities. The project was built with a the EDGE-certification process seemed intimidating, but
Php 200-million loan from BPI. BPI helped us every step of the way,” he said.

“We didn’t actually plan on entering the dormitory BPI’s SDF program puts sustainability front and center
business. That was supposed to be a hotel, but as we in the Bank’s operations, by expanding the Bank’s green
were nearing the end of construction, a businessman finance initiatives and bolstering the bank’s commitment
approached us, offering a lease-management agreement to enable sustainable businesses in the country and
to operate it as a dormitory,” he said. contribute to the United Nations Sustainable Development
Goals.

44
A relationship that nurtures your future Table of Contents
BANKO: ENABLING MORE “Palengke Caravans.” Since many
microentrepreneurs hold business in and
MICROENTREPRENEURS around the public market area, BanKo held
“Palengke Caravans”, or caravans in the
After three years of operations, 300
wet markets, in 53 cities and municipalities
branches, Php 7 billion in loans, and
across the country. Financial education
more than 100,000 self-employed micro-
seminars were held, and attendees
entrepreneurs served, the work of BPI
were also pampered with beauty and
Direct BanKo, Inc. (BanKo) has just begun.
wellness treatments, such as haircuts,
manicures, pedicures, and massages.
As BPI’s microfinance arm, BanKo has
There were consultation booths, too, where
made banking services more accessible to
BanKoMares and BanKoPares answered
more unbanked and underserved Filipinos
questions about BanKo’s products and
through aggressive expansion, financial
accepted loan applications.
literacy programs, and continuous service
improvements. Our main product is the
It was BanKo’s way of reaching out to
NegosyoKo loan, a microfinance loan
the underserved market, opening up
with affordable rates and flexible terms
opportunities to help microentrepreneurs
that has helped tens of thousands of
who need to manage their finances better
micro-entrepreneurs in expanding their
and use their capital more efficiently.
businesses.
Financial inclusion powered by digital. In
Expanded distribution network. From a
2019, BanKo shifted its core system to the
mere handful of branches three years ago,
Alternative Deposits and Payment System
BanKo now has a total of 300 branches
(ADPS), which supports basic loans,
nationwide, a strong and steady clip
deposits and mobile wallets, allowing the
of around a hundred branches a year.
bank to cover more clients. BanKo will also
The demand for microfinance products,
be re-launching the new PondoKo Savings
particularly in areas not reached by
Account as an app-based product, making
traditional financial institutions, remains
it easier for more Filipinos to open and
strong, and BanKo has reached out to more
access their accounts. It promises to be a
of these places in a strategic way.
fully digital banking experience.

Market vendors, barbers, operators of small

Empowered microentrepreneurs. BanKo
beauty parlors, carinderia (small eatery)
has received awards in 2019, among them
owners, and other microentrepreneurs now
the one from AsiaMoney, a leading regional
have a more accessible bank that offers the
financial publication, which recognized
financial services they need to grow their
BanKo as Best in Microfinance in the
businesses.
Philippines for its accomplishments in
bringing microfinance loans to grassroots
More BanKoMares and BanKoPares.
communities.
In 2019, BanKo hired 800 new loan
specialists called BanKoMares and
A more concrete and meaningful
BanKoPares to support the bank’s
achievement can be seen in two
expansion and community engagement
clients of BanKo who were given
programs. BanKoMares and BanKoPares
the Microentrepreneur Award in the
continue to make the application process
8th Mindanao Business Leader and
easier by visiting their clients in their
Entrepreneur Awards.
places of business where the loan officers
can explain the features of the program
and recommend terms that meet the
client’s needs and capabilities.

45
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

A COFFEE RECIPE FOR SUCCESS

Back when she used to work for a construction company,

Teresita used to watch in envy as the engineers and foremen
would sip on steaming cups of coffee. Her hyperacidity,
however, meant she was advised against drinking coffee.

“The smell of the coffee was really so tempting, but the few
times that I gave in and drank a cup would leave me in so
much pain,” Teresita said.

A naturally resourceful and determined woman, she

was determined to find a way around her dilemma. She
remembered a relative who had a food production business
and asked if there was a way to neutralize the natural acidity
of coffee or to find substitutes that can let someone like her
enjoy the taste without compromising her health. TERESITA NEGRIDO
BanKo Client
After months of trial and error, and consultations with the
Cubao, Quezon City
production plant’s chemists and nutritionist, they were able
to develop a recipe for a coffee drink that also had weight
loss and nutrition benefits. Business was brisk, and she would often find herself
sold out by midday. She was making a tidy income, but
“It was made with a special combination of natural herbs
found that to order raw material in bulk and secure higher
and flavorings that let me enjoy the sweet and milky taste
production slots at the factory would strain her daily
of the coffee that I used to envy so much in my old office.
finances, and she did not want to borrow from informal
As a bonus, it helped me a lot in losing unwanted weight. I
lenders – colloquially known as ‘5-6’ – because she’s seen
went down from 62 kilos to just 49 kilos within one year,”
enough people get financially crippled by having to pay
she said.
usurious interest rates.
She had only intended it to be for her personal consumption,
She learned about BPI Direct BanKo through her fellow
and her coffee drink was only produced in small batches
market stall owners and made inquiries. Her BanKo
at her relative’s factory. However, as people started to
NegosyoKo Loan application for Php 90,000 was approved
notice her weight loss and asked how she did it, she started
and Teresita was able to significantly ramp up production as
sharing samples of the drink with her colleagues and
well as rent a much larger stall in the Munoz Market where
neighbors.
she now has a small café and meeting room for rent.
“People loved it! They started asking for orders for
Her product is now being sold by distributors in 17
themselves, and that was when I realized that I wasn’t
provinces. She relies on BPI’s online payment and transfer
alone in needing a product like this. There’s an entire market
system to let her focus on running her coffee shop while
that could benefit from what we developed,” Teresita said.
making payments and remittances to her distributors,
She then started to pour her own money into buying more wherever they may be.
raw materials and increasing production at the factory and
“I never imagined that I could be an entrepreneur with a
her first customers soon started spreading the word about
nationwide reach! I even have clients who sell my product
the drink, and they began ordering for their contacts.
through their OFW friends in territories like Hong Kong. BPI
Soon, she was making enough from selling her coffee to BanKo has helped me become more than I ever imagined,”
leave her job at the construction firm. She branded her she said.
coffee as “Pure Angel Coffee” and rented a small stall at the
Munoz Market in Quezon City.

46
A relationship that nurtures your future Table of Contents
DOMIN VILLABITO His first loan application was denied. Domin says that in
BanKo Client hindsight, his first feasibility study needed improvement,
General Santos City and they did not yet meet the 2-year operation requirement
of BanKo.

Undeterred, he tried again in 2018 and BanKo approved

BREAKING FREE FROM ‘5-6’ LENDERS a Php 100,000 loan which he used to purchase a mixing
machine and freezers. He was also able to hire more bakers
When Domin Villabito lost his job as a salesman for a
and bakery staff, and buy a multi-cab to deliver his baked
lightbulb company three years ago, he was at a loss on how
goods to neighboring barangays.
to support his young family.
The lighter repayment terms of the BanKo NegosyoKo loan
His wife helped augment the family income with a small
meant that Domin is able to better cycle his funds and bring
backyard business selling milk bars, homemade creamy
home more income for his family. In 2019, he was given an
ice pops using her recipes, but he knew that it would not
opportunity to take out a second loan, and his application
be able to tide them over for long, especially once the rainy
for a Php 300,000 loan was approved.
season sets in and nobody was interested in cold treats.
The bigger funding meant that Domin could invest in more
“The milk bars sold well for as long as the sun was shining,
freezers and ovens with larger capacities, allowing him and
but once it rained, our sales would be absolutely zero,” said
his team to increase their production. He bought more
Domin.
multi-cabs and second-hand trucks to expand their market
Refusing to be completely idle, he lent a hand to increase reach, selling their baked goods to neighboring towns and
their production and reach within the community. He then provinces, going as far as Saranggani Province.
used his sales training and management degree to diversify
“I hope more small business owners like me will learn about
this little undertaking and transformed it into a steadier
BPI Direct BanKo. It made a really big difference that we
source of income by providing a basic need of Filipinos - pan
didn’t have to borrow from the ‘5-6’ anymore. I used to feel
de sal and other baked goods.
like I was in business just to pay the lender off, instead of
“Desserts are a treat, but bread is a daily need for almost providing for my family. Now I’m not just able to give my
every person, and would be eaten in any weather. I’m very family a comfortable life, I am also able to give decent jobs
lucky that my wife also knows how to bake and we just had to others,” said Domin.
to come up with money to buy ingredients in bulk and ovens
BanKo has helped tens of thousands of self-employed
and other equipment to let us produce enough to make a
microentrepreneurs such as Domin achieve financial
good profit,” he said.
resilience and business growth with accessible loan
They initially took out a loan from an informal lender, products and personalized banking services through the
colloquially known as ‘5-6’, but the usurious interest BanKo Mares and Pares that bring BPI’s mission of financial
rates meant that most of their daily earnings went into inclusion to life.
repayments. Through word-of-mouth from their neighbors
who were market vendors, they learned about the
NegosyoKo loans offered by BPI Direct BanKo (BanKo) and
their easier payment terms.

47
Table of Contents BPI Integrated Report 2019
 Business Review and
Client Testimonials

GLOBAL MARKETS: strengthen its balance sheet, while also

giving clients quality investments.
AT THE FOREFRONT
Inaugural CHF ASEAN Green Bond.
BPI Global Markets is responsible for
On August 29, 2019, BPI successfully
optimizing the Bank’s resources through
priced its inaugural Swiss Franc-
multi-currency liquidity and portfolio
denominated 2-year Fixed Rate Foreign
management, position-taking and trading
Senior Unsecured ASEAN Green Bond at
in financial markets, and distribution
100.040% with a re-offer yield of -0.020%
of foreign exchange, fixed income, and
and carry an annual coupon of 0.00000%.
derivatives products. It generates revenues
mainly from the interest differential and
The offer, which raised CHF 100 million,
gapping businesses, as well as non-interest
was a landmark transaction representing
income from trading and sales activities.
the first ever public benchmark bond
out of the Philippines. It is the first ever
In 2019, Global Markets tapped the debt
green bond deal from Southeast Asia to
capital markets four times, and these fund
be launched in the CHF market, and at the
raising activities grew BPI’s assets to Php
same time the first ever negative yielding
2.12 trillion. The overwhelming success
bond to be issued out of the Philippines
of these issuances reflect investors’
and Southeast Asia.
confidence in the Bank’s credit strength.
The cost efficiency of these landmark
debt issuances also allowed BPI to further

Listing of BPI’s Php 3 billion Long-Term Negotiable Certificates of Time Deposits (LTNCTDs)

48
A relationship that nurtures your future Table of Contents
Listing of BFSB’s Php 9.5 billion 2.5-year peso bonds

The transaction marks the first ever CHF- The transaction priced tighter than BPI’s
denominated bond offering out of the existing 5-year bond and achieved a
Philippines, setting a benchmark for future negative new issue premium, which has not
issuances. It is the first ever offshore green been seen in the Philippines since January
bond offering by a Philippine bank, the first 2018.
green bond by BPI.
Php 3-billion LTNCTDs. On October 25,
US dollar ASEAN Green Bond. On 2019, BPI successfully listed its Php 3 billion
September 3, 2019, BPI successfully worth of Long-Term Negotiable Certificates
priced its landmark USD-denominated of Time Deposit (LTNCTD) Due 2025. With
5-year Fixed Rate Senior Unsecured quarterly coupons priced at 4%, the issue’s
ASEAN Green Bond via a drawdown proceeds will support the bank’s business
under its US$ 2 billion Medium-Term Note expansion.
Programme. The bonds were priced at
99.641 with a re-offer yield of 2.577%. The BFSB Php 9.5-billion Maiden Bond. On
bonds will carry a coupon of 2.500% p.a., November 25, 2019, BPI’s wholly owned
payable semiannually. thrift bank and consumer lending arm
BPI Family Savings Bank (BFSB) issued
The transaction marks the first ever USD- Php 9.5 billion in 2.5-year peso bonds,
denominated green bond by a Philippine exceeding its target of Php 2 billion. This
bank, the lowest coupon and yield ever prompted the Bank to cut its offer period
paid for a USD-denominated bond from the short by a week and a half.
Philippines, and the lowest credit spread
ever paid by a Philippine bank.

49
Table of Contents BPI Integrated Report 2019
50
A relationship that nurtures your future Table of Contents
 Delivering
Shared
Value

51
Table of Contents BPI Integrated Report 2019
Financial Inclusion and Wellness

BPI Foundation’s FinEd-in-a-Box with soldiers

BPI Direct BanKo’s Palengke Caravan

52
A relationship that nurtures your future Table of Contents
We aim to provide every Filipino with easy, daily balance, making savings easier for
convenient, and better access to financial the underbanked sector. Clients can easily
products and services, making it easier for deposit and withdraw funds through BanKo
more Filipinos to save, borrow, and invest Cash Agents nationwide. To date, 394,192
while protecting their assets. clients have opened PondoKo Savings
accounts.
Since the start of our Shared Value journey,
Financial Inclusion and Wellness has been We view digitalization as a way to make
central to how the Bank positively impacts financial inclusion truly sustainable,
the country. We are continuously working reducing the cost to serve, thus allowing
to reach out to underserved segments, us to bank a much greater proportion
ensuring their access to useful and of the population, including those who
affordable financial products and services may not have the means to leave a lot of
delivered in a sustainable way. money in their deposit accounts. BanKo
is being fitted with full digital capabilities.
BANKING THE UNDERBANKED The PondoKo Savings Account may now
Financial inclusion is at the front and center be accessed via the BanKo App. The
of the Bank’s journey into a sustainable application, while still on its soft launch, is
future. It is also BPI’s commitment to already available in both Google Play and
the Ayala Sustainability Blueprint, where Apple App Store.
we champion SDG 8: Decent Work and
Economic Growth. We are committing to TEACHING FINANCIAL TEACHING FINANCIAL
MANAGEMENT
expand access to banking and financial MANAGEMENT

7,349
services to 25% of the underbanked In order to improve financial literacy in
population of the Philippines (addressable the country, we help educate Filipinos in
C and D market). managing and making informed decisions Financial Management
about their finances. Through our business trainings conducted
A key component in our commitment units and subsidiaries, we aim to expand

102
is to grow our microfinance business our reach, not only to our clients, but also
since supporting micro-entrepreneurs to the general public.
is critical to the continued growth of the Money Talks sessions
economy. Through BPI Direct BanKo, BPI Asset Management and Trust conducted in 2019

we have extended financial services to Corporation (BPI AMTC), BPI Securities,

more than 100,000 self-employed micro
entrepreneurs (SEME), and disbursed
Php 11.13 billion to date.
BPI/MS, BPI Direct BanKo, Global Markets,
Overseas Filipino Segment share insights
on financial well-being through trainings,
9.5%
increase in savings among BPI’s OF
clients
learning sessions, and briefings. BPI

30%
BanKo’s microfinance product, the Foundation brings tailor-made programs
NegosyoKo loan is tailor fit to the needs to schools, barangays, and farming
and resources available for SEMEs. More communities to teach the unbanked about of Money Talks sessions attendees
information can be found on page 45. the basics of finance. More information became clients
In the last quarter of 2019, those who on the Foundation’s financial education
availed of the NegosyoKo loans were program can be found on page 81-82.
also offered BPI/MS BanKo Secure Assist
Microinsurance. This is an affordable As trusted financial partners of Overseas
Personal Accident and Fire Insurance Filipinos (OFs), we have continued our
bundle that provides financial assistance in Money Talks sessions that provide financial
case of accidents and catastrophic events. knowledge and advice on savings and
As of year-end 2019, case count already investment options for them and their
totaled 18,574 for the BPI/MS BanKo families. Apart from the Money Talks
Secure Assist Microinsurance. sessions, the Bank also conducts regular
product briefings for OFs at Pre-Departure
BanKo’s PondoKo is a zero-maintaining Orientation Seminar (PDOS) venues.
balance deposit product which offers
a 0.5% interest per annum to savings
accounts with at least Php 500 average

53
Table of Contents BPI Integrated Report 2019
 Financial Inclusion
and Wellness

This year, BPI Direct BanKo took its savings volume increased by 8%. More MAKING SAVINGS EASY
message of financial inclusivity to 53 information on BPI’s savings and deposits

5%
marketplaces around the Philippines products is available at www.bpi.com.ph INCREASE IN
through the BanKo Palengke Caravan. DEPOSITS PRODUCTS
ACCOUNTS
Through this initiative, BanKo aims to Our specialized products catering to OF Save-up, Save-up with Insurance,
educate SEMEs on how they can better and their families are: Pamana Padala and Jumpstart, Maxi-Saver, Pamana
Savings, Kaya Savings
manage their finances and grow their Padala Moneyger. BPI Pamana Padala
businesses. The caravans also spread offers the convenience of transferring
awareness on the requirements for SEMEs
to access easy and affordable financial
products and services. Each Palengke
money to BPI accounts of relatives in
the Philippines and a free remittance
continuation benefit through a life
85,986
new Overseas Filipino customers
for 2019
Caravan session is a full day event that insurance coverage of up to Php 300,000.
includes a financial education workshop, The Padala Moneyger offers a safe, secure,
business consultations, and an orientation
on BanKo’s NegosyoKo Loan.
and efficient way of receiving remittance
from abroad. It has no maintaining balance
1.22 million
Overseas Filipino customers
requirement as long as there are four
MAKING SAVINGS EASY remittances made to the account in a year.
To encourage the habit of saving before
spending, there are simple tools which ACCESS TO PERSONAL FINANCING
make it easier to save, start the journey As our clients learn how to save and grow
towards financial wellness, and provide their money, we enable them to achieve
deposit solutions that go beyond just their dreams and goals in their financial
savings. journey. We believe every Filipino deserves
a comfortable life. More Filipinos can now
The Jumpstart Savings product teaches afford a decent home or a convenient ride
children the value of saving and engages through BPI Family Savings Bank’s Housing
parents to help teach their children basic and Auto Loans.
money-management skills. In 2019, the
volume of accounts grew by 12% and the

54
A relationship that nurtures your future Table of Contents
 ACCESS TO PERSONAL FINANCING

Php 47.47
billion
Housing Loans released

Php 22.88
billion
Auto Loans released

In 2019, Housing Loans released based products. Our cardholders number

Php 47.47 billion, which increased by 25% over 8.3 million across BPI Credit, Debit
from 2018. For Auto Loans, a total amount and Prepaid Cards. For more information,
of Php 22.88 billion was disbursed, a 12% refer to page 32-34.
increase from 2018.
Keeping in mind the various needs of our
BPI Personal Loans have also been made clients and the growing need for flexible
more accessible to customers. In 2019, payment terms, we continue to offer
we were able to book a total of over Special Installment Plans (SIP) for credit
Php 5.66 billion in multi-purpose loans. cards, such as SIP Loans for Hospitalization
and Education with low and fixed add-on
INCREASING PURCHASING POWER rates.
We help Filipinos pay for their basic
needs conveniently, affording them new BPI Prepaid Cards ushers the underbanked
experiences through our suite of card- into the world of financial services with

55
Table of Contents BPI Integrated Report 2019
 Financial Inclusion
and Wellness

reloadable cards. To date, there are about BPI-Philam launched three new life
1.2 million Prepaid cardholders who can insurance productsfor 2019 - Family Care
now conveniently and securely purchase Plus, Dollar Protect Plus, and Critical Care
goods and services in- store or online. We 100. We have about 335,000 unique
have activated real-time loading through customers with insurance policies. By
BPI’s Cash Accept Machines (CAM), protecting the goals and aspirations of
INSURING LIFE AND ASSETS
allowing our clients to transfer funds at people and their loved ones, we have
their own convenience and immediately assured about Php 82.45 billion against
use their card. any untoward life events, with a total
amount of Php 1.14 billion in claims in
Php 3.12
INSURING LIFE AND ASSETS 2019. More information can be found on billion
Recognizing that protecting assets and page 34. sum insured from natural catastrophes

managing risks is important in ensuring

long-term financial wellness, BPI works BPI/MS offers a complete range of non-life
insurance products that provides financial
288,000
to increase client’s awareness of risks non-life insurance policies recorded

surrounding their businesses and assets protection against unexpected losses

and helps to foster resilience to risks brought about by perils such as natural
through our Bancassurance products. disasters, vehicular accidents, robbery, and
theft. An insured property can be restored
BPI-Philam continues to uphold its promise after a natural disaster and financial aid
of accessible and affordable life insurance can be provided in case of an accident.
for every Filipino. The professional and Thus, non-life insurance provides peace of
expertly-trained Bancassurance Sales mind to clients in case unexpected events
Executives (BSEs) assigned in every BPI occur.
and BPI Family Savings Bank branch
nationwide carry out financial advisory In 2019, BPI/MS launched the 356
services to address each customer’s Personal Accident product (more
financial and protection needs. information can be found on page 33), and
in the last quarter of 2019, BPI/MS started
the market distribution of the BPI/MS
BanKo Secure Assist Microinsurance.

56
A relationship that nurtures your future Table of Contents
The Hospital Confinement Income management, employee benefit plan
Protection (HCIP) product, which was management and administration, custody,
exclusively offered to Unibankers in escrow, mortgage trusts and other fiduciary
2018, rolled out to BPI clients in 2019. services, unit investment trust funds, and
HCIP positions itself as an inexpensive Personal Equity and Retirement Account
alternative to health insurance plans. It funds. Another tool that helps clients
provides cash benefit for every day of save and invest regularly is the Regular
hospital confinement to defray the cost of Subscription Plan (RSP), an investment
medical services, which are sometimes not program that allows the purchase of
covered under medical insurance, when units for an investment fund account on a
the Insured is confined in the hospital due regular and periodic basis, either monthly
to an accident or illness. or quarterly. As of December 2019, there
were about 11,000 investment accounts
GROWING ASSETS under this program.
We believe that more Filipinos should
be given access to investment outlets. BPI AMTC believes that financial
Through our accessible and affordable knowledge is especially important
investment plans, investing is no longer in an increasingly complex financial
intimidating for Filipinos who want to environment. Leveraging on its investment
benefit from our growing economy. expertise and pool of local and foreign
We have engaged more Filipinos into fund managers as resource speakers,
developing the attitude of investing BPI AMTC’s thrust is to build a financially
and leveling up their knowledge on the equipped society by simplifying the world
stock market, mutual funds, and other of finance through digestible content.
investment instruments.
Aligned to the Bank’s key growth
Through BPI Asset Management and strategies of financial inclusion and digital
Trust Corporation (BPI AMTC), the Bank transformation, BPI AMTC explored
helps clients address investment needs digital alternatives in conducting these
in terms of wealth and institutional fund investment fora. This allowed us to expand

57
Table of Contents BPI Integrated Report 2019
 Financial Inclusion
and Wellness

our reach geographically and capture Defined Contribution Benefit Roadshows

a wider audience, both internally and were conducted for BPI employees
externally, with minimal and efficient nationwide and employees of our corporate
spending. clients. These roadshows educated
employees on the basics of investing and
BPI AMTC also conducted financial the different investment options based
GROWING ASSETS
wellness programs for employees and on the investor risk profile and raised
clients. In 2019, we launched Financial awareness on investing for retirement.
Literacy for You (FLY), BPI AMTC’s flagship
9%
Total number
of AMTC Clients
financial inclusion program that aims to ADVANCING STOCK MARKET Increased by
educate the underserved and unbanked EDUCATION
market. Through FLY, we were able to tap One of the challenges in investing

12%
various non-government organizations in the stock market is knowing where and Total number of
customers from
with the mission to alleviate poverty how to begin. BPI Securities Corporation, the Overseas
and improve the lives of Filipinos by the Bank’s stock brokerage arm, has an Filipino segment
increased by
empowering them with valuable knowledge educational program called the Invest-
in managing their finances and investing. In-You Trading Academy (I-TRAC), which
offers a range of courses that develop and
BPI AMTC also partnered with universities enhance the knowledge and skills of new
such as De La Salle University, College of and existing investors to help them make
Saint Benilde, and Colegio de San Juan de sound investment decisions. In 2019, over
Letran to propagate financial education. 3,000 client accounts were opened, about
Sessions on financial wellness for students 2,600 individuals attended our training
and members of the academe discussed program, and with the I-TRAC program
the common mistakes in handling finances, brought online, reach and accessibility
the importance of investing, and more increased.
importantly, how to make investing a habit.

58
A relationship that nurtures your future Table of Contents
BPI AMTC webinars allowed us to touch base with clients who wanted to start investing for their future, but had
no idea on how or where to begin. Through the Investment 101 Session Webinars, we provided a platform for
Filipinos to air their questions and apprehensions, and clarify investment concepts that would have impeded
them from reaching their financial life goals. With expert investment insights from our resource speakers,
subscribers had access to real-time feedback and response to their investment queries. Free Estate Planning
Webinars were also conducted by legal professionals to provide clients with the basics of estate planning and
wealth transfer.

BPI AMTC went a step further by providing access to our financial wellness sessions via Spotify’s streaming
platform. Top notch investment advice and market updates are now a few clicks away, with the use of Spotify, the
largest music streaming platform in the Philippines today.

59
Table of Contents BPI Integrated Report 2019
Scaling-Up Enterprises

60
A relationship that nurtures your future Table of Contents
 725
Small and medium enterprises (SMEs) latest economic trends and impart market
play a major role in most economies, insights for decision-making and business
particularly in developing countries. SMEs planning. new corporate and SME clients
served through Business Banking
account for the majority of businesses
worldwide and are important contributors CUSTOMIZED PRODUCTS AND
to socio-economic development in terms SERVICES
of GDP growth and widespread equal SMEs form a large part of the pool of STRENGTHENING INTERNAL
distribution of income through job creation. distributors and suppliers for various
SUPPORT SYSTEMS

However, SMEs are vulnerable in cases

99.18%
industries in the local economy. BPI helps
of crises given that they have limited businesses conveniently maintain healthy
potential for flexibility because of a lack of cash flows across its supply chain through recorded BizLink uptime
business diversification and low levels of its Cash Management services, which cater

11%
capitalization. to various business requirements and
allow them to spend more of their time and
BPI is well aware that access to finance resources on other aspects to grow the increase in BizLink transaction volume
is a key constraint to SME growth and, in business.
response, offers a variety of products and
services to address the needs of SMEs. It is also common practice of suppliers to
BPI Business Banking was created in 2018 give buyers credit terms as part of trading
to provide tailor-fit solutions for SMEs terms. At times, suppliers experience a CUSTOMIZED PRODUCTS
AND SERVICES
to better manage their cash flows, raise working capital gap, preventing them from
capital, and provide financial advisory to

54
increasing production and expanding their
increase their economic potential. This in business. BPI’s Quick Assist Program
turn promotes progress, employment, and addresses the SMEs’ challenge to access SME suppliers enrolled in the
expansion of their business. credit while helping them comply with Quick Assist Program

trade requirements. This is done by

35%
In 2019, a new sales team was formed securing hold-out on deposits for the
solely to focus on acquisition of new clients Letters of Credit and Standby Letters of
in order to help more SMEs grow their Credit with a turnaround time of seven increase in throughput volume
business. Simultaneously, two new, simple, banking days.
and convenient products were launched to Financed

make raising capital easier and faster for Enhancements to the program made in Php 14
billion
them. 2019 included an increase in its limits by
50% and an adjustment in the standard worth of trade receivables
STRENGTHENING INTERNAL pricing for Quick Assist transactions, for SMEs

SUPPORT SYSTEMS making it more competitive vis-à-vis local

70%
Several game-changing system competition. During this period, the Quick SMEs form

enhancements were implemented to Assist Program increased its customer

automate processes and improve customer base by 165% and transaction value by
of Transaction Banking client base
management and engagement such as 40%.

Php 126
an Electronic Customer Relationship
Management system, which helps track The Supplier Financing Program offers a
customers’ loan applications in an efficient
and timely manner. The enhanced BizLink
low-risk financing option for a customer
and vendor’s joint requirement for funding. million
extended to SMEs through
continues to provide its over 36,000 SME The customer is given the opportunity to BPI Century Tokyo Leasing
clients a platform to remotely manage extend its credit terms with the vendor
their financials. See page 43 for more while the vendor is able to receive early
information. payment by selling their trade receivables
to BPI. This model creates a win-win
BizTalks were done in key areas to further outcome for the customer, vendor, and the
expand SME knowledge on key topics Bank, allowing companies to fulfill orders
such as Managing Risks for SMEs, Taxation and business owners to focus on their
for SMEs, and One-Person Corporation. business operations while their finances
Likewise, economic briefings were are managed.
conducted to keep SMEs updated with the

61
Table of Contents BPI Integrated Report 2019
 Scaling-Up
Enterprises

PROTECTING ENTERPRISES MAXIMIZING CAPITAL RESOURCES

MAXIMIZING CAPITAL
SMEs work within a tight budget but Through BPI Capital Corporation, the RESOURCES
foregoing preparation for events that could Bank also supports the country’s key
harm or financially decimate the business
Php 506.28
economic players by providing them
could end up costing more than the with financial solutions that have
cost of protection. Despite the country’s
geographic location making the Philippines
stronger strategic impact which help
increase economic potential. With the billion
total capital loaned from BPI
prone to flooding and earthquakes, BPI’s country’s continued economic growth,
non-life insurance products and services
allow clients to keep their businesses
businesses have developed a need for
more intricate financial solutions. Our Php 235.90
running despite the threats of such natural
calamities.
leadership in project finance, structured
finance, debt and equity products, and
billion
total capital loaned to government

advisory guarantees that we can deliver

Specifically designed for SMEs, BPI/MS
Insurance Corporation’s Business Care
even the most meticulous and complex Php 64.30
billion
investment banking needs. We continue
Advantage provides affordable fully-loaded to be a champion of nation-building
insurance packages that will protect the through our various initiatives, especially total capital raised for clients

business from possible hazards, financial

Php 9.99
in the infrastructure space. See page 42
loss, and destruction. It helps the company in the Business Review section for more
remain better positioned to recover
from any business interruption, property
information.
billion
total capital raised for government
damage, and financial impact that a natural Leveraging on its strong economics and
disaster or man-made event may cause. market research capabilities, as well as a
2
Green Bonds
issued in 2019
See page 48-49, 70-71 for more
information

62
A relationship that nurtures your future Table of Contents
highly competent team of sales personnel, landscape. By maintaining active presence
MAXIMIZING CAPITAL
the Global Markets Segment provides in liquid markets for currencies, rates, RESOURCES
timely market updates and tailor-fit credits, and derivatives, we are able

22%
financial advisory and treasury solutions to increase market share and provide
to clients. For example, SMEs that are competitive pricing to clients.
ready to expand globally can make use of increase in number of SMEs
hedging strategies by tapping BPI’s trading SUPPORT FOR SOCIAL engaged by Global Markets

experience and skills to help manage ENTERPRISES

risk exposures in foreign exchange that BPI Foundation has been supporting
is influenced by turbulence in the global SMEs and social entrepreneurs with the
political and economic environment. provision of intellectual, financial, and
SUPPORT FOR SOCIAL
ENTERPRISES
social resources to make their business

42
A clear understanding of the clients’ needs more sustainable and scalable. Read more
has enabled the bank to successfully about their programs entitled BPI Sinag
execute complex deals and introduce and Show Me Teach Me on page 82. social enterprises linked to mentors
products relevant to the changing market and investors

1,895
participants for Show Me, Teach Me

63
Table of Contents BPI Integrated Report 2019
Financing Sustainable Development

BPI acknowledges that banks are enablers of sustainable development through the mobilization of funds towards
business activities that have economic, environmental, and social impacts. There is much pressure on the finance sector
to facilitate financing of projects for sustainable development, particularly to help achieve the United Nations Sustainable
Development Goals (SDGs).

Faster than the growth of its regular loan portfolio, BPI’s SDG-related loan portfolio registered a 4-year
CAGR of 28% from 2015 to 2019. Portfolio size and percentage share based on outstanding balances rose
from Php 147 billion or 29% of our consolidated loan portfolio in 2015 to Php 390 billion or 35% by 2019.

BPI’S SDG LOANS MAJOR SDGs SUPPORTED BY BPI, 2019

(PHP BILLIONS) (PHP BILLIONS)

35% Other SDGs, 8%

35%

31% 390 30
30% 11- Sustainabile
29%
349 Cities, 9% 35

265
7-Clean Energy, 68 155 9-Industry
229 & Infrastructure,
17%
40%

147

103

2- Zero Hunger,
26%
2015 2016 2017 2018 2019

Outstanding Balances % of Corporate Portfolio

BPI has been a champion of sustainable development in the Philippines for the past 168 years. To date, the Bank has
financed Php 242.93 billion that impacts 11 out of 17 of the SDGs through our products and services which include
lending, capital-raising, and leasing arrangements, among others.

BPI’s Contributions to the SDGs (Loan Disbursements in 2019)

SUSTAINABLE DEVELOPMENT THEME PHP BILLIONS PERCENTAGE

Micro and small business 7.22 2.972%
Food and Agriculture 216.22 89.005%
Nutrition, Healthcare, and Wellness 0.79 0.325%
Education 1.17 0.482%
Water Sanitation Systems 1.99 0.819%
Sustainable Energy Generation 2.74 1.128%
Infrastructure 1.11 0.457%
Sustainable Housing 11.68 4.808%
Sustainable Mobility 0.01 0.004%
TOTAL 242.93 100.000%

64
A relationship that nurtures your future Table of Contents
LAUNCH OF CORPORATE BANKING’S SUSTAINABLE DEVELOPMENT FINANCE
As BPI finances projects aligned with the SDGs, the bank gives particular attention and provides specialized technical
support to four specific sectors with high impact innovations: Energy Efficiency, Renewable Energy, Climate Resilience,
and Sustainable Agriculture.

In November 2019, BPI Corporate Banking, the industry’s pioneer in Sustainable Energy Finance projects, expanded its
current scope of energy and climate projects to cover Sustainable Agriculture. This new and expanded program is called
Sustainable Development Finance (SDF), another first in the banking industry. All projects specifically tagged as SDF go
through rigorous technical evaluation by energy, climate, and agriculture experts before being financed by the bank and
included in the SDF portfolio.

ENERGY EFFICIENCY Switch to inverter aircons, LED lights,

PROJECTS and more efficient machinery and
equipment

RENEWABLE ENERGY Ground-mounted and rooftop solar,

PROJECTS biogas, hydro, wind, and geothermal
facilities that generate
energy using natural resources

CLIMATE RESILIENCE Primarily green building projects that

PROJECTS meet the quantitative energy, water,
and materials savings required by the
IFC-World Bank tool called EDGE,
short for Excellence in Design for
Greater Efficiencies

SUSTAINABLE AGRICULTURE Currently focused on climate-

PROJECTS controlled facilities for chicken and
pigs that can withstand extreme
weather conditions, help protect the
animals from diseases, achieve higher
efficiency, and reduce cost per animal

65
Table of Contents BPI Integrated Report 2019
 Financing Sustainable
Development

OPPORTUNITIES FOR MSMEs

Financial inclusion and microfinance

enable individuals to engage in income-
generating activities or self-employment,
which helps them become financially
independent and break the cycle of
poverty. BPI Direct BanKo disbursed
Php 7.1 billion in loans to self-employed
micro-entrepreneurs (SEMEs) in 2019.
BPICTL, our leasing subsidiary, also
financed Php 125.84 million to micro and
small businesses for shipping, professional
services, manufacturing, and others
industries.

FOOD SECURITY AND

AGRICULTURAL PRODUCTIVITY

BPI’s Agribusiness loans can finance the

set-up, expansion, or rehabilitation of
farming businesses, as well as acquisition
of fixed assets and working capital. We
engage with various agricultural industries
such as livestock, poultry, aquaculture
and fishery; fruits, vegetable, and crop
production; post-harvest processing; and
trading, among others.

Providing entrepreneurs and corporations

access to funding for modernizing their
facilities will improve efficiencies and
increase productivity, leading to higher
profits. Such upgrades are also particularly
necessary for managing the risk of losses
in today’s extremely volatile environmental
conditions.

Total Agribusiness loan disbursements

for 2019 amounted to Php 216.17 billion.
BPICTL financed Php 54.05 million for
leasing of farm equipment and trucks for
transporting agriculture produce.

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A relationship that nurtures your future Table of Contents
 DISBURSEMENTS TO AGRIBUSINESS IN 2019

2.81% 0.03%

5.03%
44.15%
6.05% Post Harvest Processing
Trading
Milling
9.52%
Growing of Crops
Poultry
Piggery
14.09% Aquaculture
Other Livestock

18.31%

HEALTHCARE AND SUPPORT FOR ACCESS TO

WELL-BEING CLEAN WATER

Access to quality and affordable healthcare Access to clean water and sanitation
and wellness products and services is requires that infrastructure for its
among the fundamental needs of the collection, processing, storage, and
community. In 2019, BPICTL released distribution is available and of good quality.
Php 788.25 million through leasing It is, likewise, essential that our water
arrangements for hospitals, clinics, and resources and related ecosystems are
health centers. protected and restored. BPI has financed
Php 1.61 billion for various water-related
projects that help provide access to
SUPPORT FOR ACCESS TO
safe water-related services through our
EDUCATION Structured Finance Division and Php 378.4
million through our Business Banking
Group.

SUSTAINABLE ENERGY AND

CLIMATE RESILIENCE
BPI supports the funding requirements of
educational institutions, particularly in the
acquisition, construction, maintenance,
and expansion of school buildings
and other educational facilities. 2019
disbursements for this sector reached As a leader in sustainability initiatives
Php 1.08 billion from the Business Banking in the banking sector, BPI maintains a
Group and Php 89.04 million from BPICTL. dedicated unit that caters to financing SME
to middle-sized projects on sustainable
energy such as improving efficiency of
energy generation, distribution, and
utilization.

67
Table of Contents BPI Integrated Report 2019
 Financing Sustainable
Development

Energy efficiency innovations aim to

reduce operating costs by at least 15%
by improving project designs or shifting to
lighting and cooling equipment and devices
that use less electricity while ensuring
reliability, reducing greenhouse gas and
other pollutant emissions, and mitigating
operating costs.

Despite the uptake in clean energy

investments, the increased frequency of
natural calamities in the Philippines has
brought about enormous recovery costs to
SMEs; thus, the need to increase business
resilience to the impacts of climate change.
As a response, BPI went beyond funding
energy projects alone and covered Climate
Resilience projects such as green buildings
and climate controlled systems (i.e. tunnel-
ventilated housing) of livestock as early as
2014.

In 2019 alone, the BPI Sustainable Energy

Finance team helped finance Php 10.14
SUSTAINABLE ENERGY FINANCE
billion worth of projects classified under
the three categories listed below, bringing
cumulative disbursements to Php 62.82
billion in 2019. The team also continued Php 608.52 million
to harness its strength in providing free disbursements in 2019
technical training and assistance in order to
adopt best global sustainability practices,
latest technologies, as well as comply
Energy Efficiency
Shift to equipment which consumes less energy
with regulatory requirements, which while achieving the same or higher output
all contribute to ensuring the projects’
technical feasibility and profitability.
Relatedly, BPICTL disbursements in 2019
for sustainable energy projects amounted Php 518.84 million
to Php 48.07 million. disbursements in 2019

Large-scale renewable projects handled Renewable Energy

by BPI’s Structured Finance Division make Production of energy from sources
up the majority of the Bank’s portfolio on that naturally replenish
clean energy. In 2019, Php 2.17 billion
were disbursed for solar and hydropower
projects, bringing cumulative disbursements
in loans to Php 78.46 billion. GHG emissions
Php 9.01 billion
disbursements in 2019
were reduced by an estimated 10.52 million (95.8% of which are for green building projects)
tCO2e per year through these projects.

Climate Resilience
Structural and operational projects aimed at
preparedness to impacts of extreme weather conditions

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A relationship that nurtures your future Table of Contents
 While the Philippines’ consolidated Power Energy Generation Mix shows that renewables account for only 21%,
BPI’s comparable generation loan portfolio mix in 2019 indicates a larger share for renewables at 38%.

BPI GENERATION MIX COUNTRY GENERATION MIX

38% 57% 21%

49% VS
22%

13%

Renewable Gas Coal/Diesel

Source: National Grid Corporation of the Philippines

INFRASTRUCTURE DEVELOPMENT working capital, and individuals, through

housing loans. Some corporate clients offer
sustainable homes that further benefit low-
income families, such that homes that are
energy efficient result in low utility bills or
expenses.
Investments in infrastructure,
manufacturing, and technology are crucial SUSTAINABLE MOBILITY
in achieving sustainable development.
The availability of infrastructure supports
growth in productivity and industrialization,
allowing communities to keep up with
globalization, which will bring progress
to the community. BPI has long been Safe, reliable, and low-carbon
supporting the government’s Build, transportation systems are vital at both the
Build, Build program through project individual and institutional levels. Rapidly
financing and leasing arrangements under increasing populations alongside depleting
Public-Private Partnerships. BPICTL resources, such as fuel and space,
released a total of Php 399.35 million for threaten the efficient movement of people
infrastructure investments in 2019 while and goods that will affect the country’s
our Structured Finance Division disbursed economic productivity. BPI provides
Php 714.41 million. funding for various transport-related
projects and business endeavours. BPICTL
AFFORDABLE HOUSING financed Php 8.7 million in point-to-point
buses in 2019.

Housing loans provided to the community

through the BPI Family Savings Bank have
amounted to Php 11.68 billion in 2019. BPI
caters to the funding requirements of both
developers, through construction loans and

69
Table of Contents BPI Integrated Report 2019
 Financing Sustainable
Development

BPI GREEN FINANCE FRAMEWORK

Green finance is a key driver for change towards a sustainable economy that encourages investments towards projects
that provide environmental benefits. The BPI Green Finance Framework, under which the Bank issued green bonds or
loans in 2019, enhances the Bank’s existing policies and processes in funding projects with environmental benefits, as
aligned with the UN Sustainable Development Goals.

The Framework is aligned with the International Capital Market Association Green Bond Principles, the ASEAN Green
Bond Standards, and the Loan Market Association Green Loan Principles. A second-party opinion was provided by
Sustainalytics, a reputable name in the green finance space, which ensures that the Framework is in line with industry
standards and best practices based on the use of proceeds, project evaluation and selection, management of proceeds,
and reporting.

CHF 100 MILLION GREEN BOND US$ 300 MILLION GREEN BOND
AUGUST 29, 2019 SEPTEMBER 3, 2019

• First ever Swiss franc-denominated negative yielding • First USD-denominated ASEAN green bond issued by a
ASEAN Green bond to be issued out of the Philippines in Philippine bank
the international capital markets
• Lowest coupon and yield ever paid for a USD-
• First ASEAN Green Bond benchmark for BPI denominated bond from the Philippines

The overwhelming success of the green bond issuances is a reflection of investors’ confidence in the Bank’s credit
strength. It speaks of their trust in the Bank’s capacity to fulfil its commitment set through the Framework, particularly in
identifying eligible and impactful projects. Net proceeds of the green bonds or loans were allocated to eligible projects in
various categories that meaningfully contribute to one or a combination of the following SDGs:

SDG’s targeted under

BPI’s Green Bond
Framework

ELIGIBLE GREEN PROJECT CATEGORIES

01 Renewable Energy 02 Energy Efficiency

Energy production and transmission, Refurbishment or renovation of properties in
distribution, and smart grid projects order to improve energy efficiency

03 Sustainable Water & 04 Pollution Prevention & Control

Wastewater Management
Wastewater treatment, integrated water management, Waste management and recycling projects
and sustainable urban drainage systems

05 Green Buildings certification, and/or (iii) an in-use Buildings as determined by a third

Development, acquisition, renovation, certification in any of the following party
or otherwise completed residential, building certification schemes at the c. Other national equivalent such as
public and commercial properties that defined threshold level or better: BERDE
have or will receive (i) a design stage a. LEED “Gold”
certification, (ii) a post-construction b. EDGE Certified or EDGE Compliant

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MANAGEMENT OF PROCEEDS
In September 2019, BPI issued US$ 300 million and CHF100 million green bonds under its US$ 2 billion Euro Medium
Term Note (EMTN) Programme. Details of the bonds are as follows:

ISIN Code Coupon Rate Tenor Issue Date Maturity Amount in Original Amount in
(in years) Date Currency US$
CH0495570944 0.00% 2 September 24, 2019 September 24, 2021 CHf 100,000,000.00 US$ 102,197,240.67
XS2050923825 2.50% 5 September 10, 2019 September 10, 2024 US$ 300,000,000.00 US$ 300,000,000.00
Total US$ 402,197,240.67

Net proceeds from their issuance have been allocated towards financing or refinancing of projects and assets in
accordance to the Bank’s Green Finance Framework Eligibility Criteria. Since its issuance, the net proceeds from the
green bonds have been 100% utilized to fund three renewable energy and three green building projects. There are no
unallocated funds as of end 2019.

OUTSTANDING BPI GREEN BONDS PROJECTS (AS OF DECEMBER 2019)

BPI Project Green/Social Original Amount funded Amount
Project Category Currency by BPI (outstanding converted to US$
balance in original currency)

BPI Project 1 Renewable Energy US$ US$ 305.9 million US$ 305.9 million
BPI Project 2 Renewable Energy Php Php 2.1 billion US$ 42.4 million
BPI Project 3 Renewable Energy Php Php 360 million US$ 7.1 million
BPI Project 4 Green Building Php Php 862 million US$ 17 million
BPI Project 5 Green Building Php Php 655 million US$ 13 million
BPI Project 6 Green Building Php Php 1 billion US$ 19.7 million
Total US$ 405.1 million

IMPACT REPORT
RENEWABLE ENERGY PROJECTS
Utilization of Proceeds in Php BPI Project Amount funded by BPI Amount Projected GHG
(as of December 2019) (outstanding balance in converted to US$ emission
original currency) reduction
(tCO2/year from
12% energy)

BPI Project 1 US$ 305.9 million US$ 305.9 million 3,254,196

88%
BPI Project 2 Php 2.1 billion US$ 42.4 million 97,326
BPI Project 3 Php 360 million US$ 7.1 million 5,197
Total US$ 355.4 Million 3,356,719

Renewable Energy Green Building

GREEN BUILDING PROJECTS

BPI Project Amount funded by BPI Amount Projected GHG Projected GHG Electricity
(outstanding balance in converted to US$ emission reduction emission reduction Savings
original currency) (tCO2/year from tCO2 from (MWh/Year)
energy) materials

BPI Project 4 Php 862 million US$ 17 million 411 2,574 854

BPI Project 5 Php 655 million US$ 13 million 546 1,569 923

BPI Project 6 Php 1 billion US$ 19.7 million 678 1,856 1,410

Total US$ 49.7 million 1,635 5,999 3,187

For more information on BPI Green Bonds issuance see pages 40 and 48-49. More information on the BPI Green Finance
Framework, Sustainalytics Second-Party Opinion, and Management of Proceeds is available on www.bpi.com.ph

71
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72
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 Managing
Our
Capitals

73
Table of Contents BPI Integrated Report 2019
Economic Performance

BPI helps drive meaningful and inclusive economic growth primarily through the generation of financial value through our
business operations and distribution to our stakeholders.

Total economic value generated increased by 20.1% from Php 78.52 billion in 2018 to Php 94.33 billion in 2019. An
aggregate of Php 92.42 billion was provided to suppliers, employees, shareholders, government, as well as community
investments.

ECONOMIC PERFORMANCE, 2018 VS 2019

(PHP BILLIONS)

20.1%
100.00
94.33
1.91
0.11
90.00
78.52 22.07
80.00
4.29
0.02 Economic value retained
70.00 Payments to Communities
18.59
Payments to Governments
60.00
Payments to Providers of Capital
35.65
Payments to Employees
50.00
24.35 Payments to Suppliers (Operating Costs)

40.00

30.00
17.35
15.16
20.00

10.00 16.11 17.24

0.0
2018 2019

Based on the 2019 Audited Financial Statements

Php 94.33 billion Php 92.42 billion Php 1.91 billion

ECONOMIC VALUE GENERATED ECONOMIC VALUE DISTRIBUTED ECONOMIC VALUE RETAINED
(REVENUE)

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A relationship that nurtures your future Table of Contents
Php 17.24 billion Php 22.07 billion
OPERATING COSTS GOVERNMENT
Payments to suppliers for materials, services procured, Tax payments for corporate revenue streams (interest
and other operating expenses income, foreign exchange, security trading, fees,
commissions, and other income), properties, operational

Php 17.35 billion transactions, and related penalties

Php 110 million

EMPLOYEES
Disbursements due to salaries, bonuses, and employee
benefits COMMUNITY INVESTMENTS
Donations and contributions to charities, including direct

Php 35.65 billion costs of BPI Foundation programs

PROVIDERS OF CAPITAL
Dividends paid to shareholders and interest payments for
deposits and borrowings

In addition, we distributed non-financial value to our stakeholders in the following ways:

CLIENTS – Offering trusted financial advice, products, and

services that are suited to the needs of our clients, in an
accessible, reliable, and efficient manner

SHAREHOLDERS — Implementing business strategies focused

on driving long-term shared value-creating growth within a
competitive landscape so as to deliver superior long-term returns

EMPLOYEES — Providing learning and development

programs, volunteer opportunities, as well as health and
other benefits to our employees

GOVERNMENT AND REGULATORY AGENCIES — Continuing

active participation in the government’s public-private
partnership initiatives and strict adherence to relevant
national laws and regulations

COMMUNITIES — Promoting financial inclusion and

wellness, supporting MSMEs and social enterprises, and
advancing countryside development and sustainable
environment

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Social Performance

ENGAGING OUR EMPLOYEES EMPLOYEE DEMOGRAPHICS 2017 2018 2019

Senior Management 198 219 211

With a history spanning 168 years, BPI draws its strength By gender
and resilience from its solid and dynamic leadership and a Female 107 109
highly competent and committed cadre of professionals. Male 98 112 102
By age
In 2019, the Bank implemented major changes in its Over 50 years old 121 132 133
organization to make it more agile and customer-oriented. 30-50 years old 77 87 78
Specifically, effective May 2019, the Bank reorganized Below 30 years old 0 0 0
itself to integrate product and channel teams for major By region2
customer segments, and consolidated control functions. NCR 205 199
The resulting structure allowed us to enhance our ability
Luzon 6 6
to execute our strategy seamlessly and effectively, ensure
Visayas 5 2
clarity of roles and foster collaboration, and allocate the
Mindanao 3 4
Bank’s human resources more optimally.
Middle Management 6,441 6,442 7,141
Understanding that our employees are crucial to our By gender
success, we emphasized the importance of sustainable Female 4,233 4,219 4,641
employee engagement. In 2019, we administered the Male 2,178 2,223 2,500
Employee Engagement Survey, which registered a 98% By age
response rate, the highest in the history of BPI. After the Over 50 years old 553 616 695
survey results were released, our Human Resources (HR) 30-50 years old 4,036 4,408 4,605
team organized a series of action planning workshops to Below 30 years old 1,822 1,418 1,841
gather inputs on institutional and local interventions to
By region
2

address specific engagement levers.

NCR 4,395 4,815
Luzon 1,092 1,262
Visayas 573 619
TOTAL HEADCOUNT 2017 2018 20193
Mindanao 382 445
Direct Hires1 17,052 18,911 21,429
Rank-and-File 10,427 12,250 14,077
By gender
By gender
Male 5,215 6,037 7,022
Female 11,837 12,874 14,407 Female 7,489 8,548 9,657
By age Male 2,938 3,702 4,420
Over 50 years old 1,058 1,162 1,286 By age
30-50 years old 7,494 8,206 8,255 Over 50 years old 384 414 458
Below 30 years old 8,500 9,543 11,888 30-50 years old 3,381 3,711 3,572
By region2 Below 30 years old 6,662 8,125 10,047
National Capital Region (NCR) 11,671 12,611 By region2
Luzon 3,897 4,807 NCR 7,071 7,597
Visayas 1,998 2,324
Luzon 2,799 3,539
Mindanao 1,345 1,687
Visayas 1,420 1,703
Indirect Hires4 2,725 2,636
Mindanao 960 1,238

All active employees of BPI and its subsidiaries in the Philippines as of December 31,2019. Local hires of BPI’s foreign offices are excluded.
1

NCR is part of Luzon, monitoring formalized 2018

2

Includes Project Hires

3

Includes outsourced personnel from security, janitorial, and messengerial agencies. Tracking started in 2019.
4

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A relationship that nurtures your future Table of Contents
 In 2019, BPI began a culture change program, branded as #OurBPI, which aims to support the digitalization
journey that the Unibank has embarked on and addresses areas of improvement identified from the Organizational
Health Index survey conducted by McKinsey in 2018. The program also supports the Bank’s new vision and
mission by aligning its objectives in the achievement of these aspirations.

Twenty-four (24) results-to-action workshops were conducted to cover various units of the Bank, which resulted
to local initiatives. Cascades of the initiatives were also done via town hall meetings to inform employees that their
feedback and concerns are being addressed by Unibank management.

NEW HIRES1 2018 2019 ATTRITION1 2018 2019

Total 3,649 4,575 Total 1,786 2,069
By gender By gender
Female 2,212 2,834 Female 1,172 1,306
Male 1,437 1,741 Male 614 763
By age By age
Over 50 years old 8 9 Over 50 years old 150 194
30-50 years old 832 785 30-50 years old 531 570
Below 30 years old 2,809 3,781 Below 30 years old 1,105 1,305
By region By region
National Capital Region (NCR) 2,018 2,408 National Capital Region (NCR)2 1,263 1,424
Luzon 876 1,237 Luzon 296 372
Visayas 432 473 Visayas 125 156
Mindanao 323 457 Mindanao 102 117
By employee category1 By employee category1
Senior Management 9 10 Senior Management 23 22
Middle Management 795 867 Middle Management 505 639
Rank and file 2,845 3,698 Rank and file 1,258 1,408

1
Tracking by employee demographic data formalized in 2018

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Table of Contents BPI Integrated Report 2019
 Social Performance

New Employee Orientation

Officership Training Program graduation

TAKING CARE OF OUR PEOPLE We aim to continuously improve MyFleXBen through the
expansion of coverage benefits available. Additionally,
We recognize our employees’ needs for wellness, security, we have increased the scope of our Defined Contribution
and empowerment. We address this through employee Retirement Plan and continue to offer stock benefits for
benefits, volunteerism opportunities, wellness programs, officers to provide them a sense of equity at work. See
and safety and security measures. pages 140-141 and our 2018 Integrated Report via
www.bpi.com.ph for more information on benefits.
Employee experience is as primordial as customer
experience. To ensure HR services are more accessible EMPLOYEE WELFARE
to employees, HR improved on the capabilities of its We strictly comply with the labor laws and regulations
information systems, and introduced a mobile app where in the Philippines and uphold the rights of freedom of
employees can view their pay slips, absences and leaves association and collective bargaining. This year, the
on the go. Bank also successfully closed the Collective Bargaining
Agreement with BPI Employees Union that affected
BENEFITS 7,000 Unibank staff employees. See page 141 for more
The Bank is always on the lookout for market trends and information.
takes into account the ever-changing demographics in
designing its compensation and benefits. Last April, we
COLLECTIVE BARGAINING 2017 2018 2019
launched MyFleXBen, BPI’s flexible benefits program,
Employees covered by CBAs 8,348 10,525 9,361
which initially covered officers and specialists. The
Total rank-and-file employees 9,738 11,506 11,294
benefits with available flex options are group term life,
Percentage Covered 86% 91% 83%
health insurance, and car facility. BPI is the first local bank
Total existing labor unions 25 25 25
to offer a flexible benefits program to its employees.

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A relationship that nurtures your future Table of Contents
 SAFETY AND
SECURITY

21,924
Training hours dedicated to health and
safety for employees

BPI Nationwide Volunteer Day

The Bank is always after the welfare of its employees. In robbery and hold-up procedures, first aid and basic life
the calamities experienced in 2019, specifically Typhoon support, basic occupational safety and health training,
Tisoy and the earthquake in Northern Luzon, we provided fire safety, and disaster awareness.
financial assistance to support affected personnel. This
ranged from Php 2,500 to Php 10,000, depending on the VOLUNTEERISM
severity of the damage to their residences. BPI held its biggest Nationwide Volunteer Day to date,
where 1,800 employee volunteers worked hand-in-
SAFETY AND SECURITY hand to build shelters in 23 communities of Gawad
Employee welfare and our clients’ banking experience are Kalinga and Habitat for Humanity, providing hope to
a priority to the Bank. Our Central Security Office (CSO) is over 8,536 individuals from 1,940 families in these
responsible for ensuring their safety and security within underserved areas.
the vicinity of our facilities. The CSO oversees security
personnel, technology upgrades to security systems, and Apart from the Nationwide Volunteer Day, BPI
employee preparedness training. Foundation, through its program BPI BAYAN, provides
an avenue for employee volunteers to organize
In 2019, the CSO enhanced its employee safety measures needs-based volunteer initiatives in the communities
via drills and training dedicated to health and safety. 606 where BPI offices and branches are located. Some of
employees underwent first aid and basic life support these projects include providing skills and livelihood
training, 139% more than the previous year. The CSO training for a deaf community, a sustainable restaurant
conducted 5 fire drills with a total of 4,125 participants, that employs indigenous peoples, and mangrove
and 9 earthquake drills with a total of 8,104 participants. reforestation and waste management training for fisher-
folk communities.
The CSO ensures that all branches and offices are
adequately manned by capable security personnel at all In 2019, the program was able to engage with 8,570
times. All security personnel undergo at least 4 hours of employee volunteers through employee-led community
training each quarter. They are trained on bank security programs, donation drives and other volunteer
enhancement, security guard customer care, gun safety activities. We are currently refining our processes of
and proficiency firing, bomb identification and detection, measuring volunteer hours.

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 Social Performance

EMPLOYEE TRAININGS

881,226
TRAINING HOURS
An average of 41 training hours for
each employee.

Executive Training Program

PROVIDING CAREER DEVELOPMENT competencies intend to enable the culture shifts that the
Bank embarked on, which focused on being more customer
OPPORTUNITIES focused, breaking existing silos, and building a heightened
sense of ownership and accountability. In addition, we
The Bank continues to empower and enable its workforce
migrated the PMS to a cloud server that improved the
by enhancing its employee development programs. More
efficiency of the performance evaluation process.
opportunities on leadership development for frontline
leaders and management trainees were given more focus
These initiatives are testaments to BPI’s dedication to both
through various classroom training from Development
the professional development and personal well-being
Dimensions International and the introduction of
of its employees. The Bank commits to work consistently
e-learning modules from Harvard Manage Mentor.
on making its people programs relevant, responsive and
competitive.
2019 was also a banner year for executive development,
where BPI provided executive coaching and strategy-
AVERAGE TIME IN 2017 2018 2019
aligned programs to all high potential and high performing RANK (YEARS)
senior officers. With management’s drive to employee
Junior Management 7 7 7
development, we further democratized learning by
Middle Management 7 8 8
investing on Degreed, a new digital learning platform, and
Coursera, an international online learning course provider. Senior Management 13.5 17 14
These significantly expanded the learning portfolio of
the Bank and widened the reach of training programs. In
PROMOTIONS (COUNT) 2017 2018 2019
the coming year, BPI will continue to target more digital
Junior Management 573 782 734
learning channels and make more programs accessible to
all employees anytime, anywhere. Middle Management 213 105 228
Senior Management 25 24 27
In 2019, employees underwent a total of 881,226 training
hours, an average of 41 training hours for each employee.

Another approach to enabling the Bank’s workforce

is managing performance. In 2019, we enhanced our
Performance Management System (PMS) with the
introduction of a new set of leadership competencies
with behavioral indicators per job level. These new

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A relationship that nurtures your future Table of Contents
 BPI FOUNDATION BENEFICIARIES
IN 2019

267,4241
FINANCIAL EDUCATION
Financial Education in a Box, Manny
and Me, BPI SHAPE, Sulong

2,394
ENTREPRENEURIAL DEVELOPMENT
BPI Sinag, Technical Vocation
Program, Show Me Teach Me

968
SUSTAINABLE ENVIRONMENT
Farm to Table Program, Hineliban
Reforestation

BPI Foundation’s financial literacy seminar for soldiers

CREATING SOCIAL VALUE FOR the underbanked sectors, such as teachers, police
and military personnel, and low-income earners. BPI
COMMUNITIES Sulong is a learning program on financial management
for overseas Filipino workers and their families in the
BPI Foundation, the social development arm of BPI, Philippines.
cultivates hope and creates change in under-served
sectors where we engage in, by fostering financial In 2019, BPI Sulong, through its partnership with
inclusion through our programs in entrepreneurial Atikha Overseas Workers and Communities Initiative,
development, financial education and sustainable Inc., expanded its reach from Hong Kong2 to Singapore.
environment. In alignment with the Bank’s thrust Singapore is one of the Philippines’ top sources of OFW
in digitalization, the Foundation has incorporated remittances and employs over 180,000 OFWs. BPI
digital learning modules in its programs to reach more Sulong advocates shared financial responsibility among
beneficiaries and magnify outcomes even in areas OFWs and their family members. The program educates
beyond the scope of our business. OFWs on how to save, grow, and invest their earnings.
The program has reached over 4,213 OFWs and 12,532
The Foundation scaled-up its programs’ positive of their family members in 2019.
social impact by expanding partnerships, deepening
interventions, and by engaging more beneficiaries. From FinEd-in-a-Box was able to reach more uniformed
the previous year in 2018, we have grown our reach by personnel through partnerships with Ayala Corporation,
51% to over 270,000 beneficiaries across the country. the Armed Forces of the Philippines, and the Philippine
National Police. To date, Fid-Ed-in-a-Box has been able
FINANCIAL EDUCATION to reach 25,756 beneficiaries. Manny and Me and BPI
BPI Foundation’s financial education programs cater SHAPE introduced e-learning materials to help guide
to various sectors of society. Manny and Me and DepEd teachers in integrating financial literacy in their
Senior High School Acceleration Program (SHAPE) lesson plans. These modules are readily available through
trains teachers on integrating value of money and the DepEd’s learning portal or Learning Resources and
saving in classroom lessons for public elementary Development System, and is in line with BPI Foundation’s
and senior high school students. FinEd-in-a-Box is a goal to help standardize and improve the quality of the
customized financial literacy module geared towards teaching aids used by public school teachers.

1
Includes indirect beneficiaries of BPI SHAPE and Manny and Me
2
The focus this year was on OFW families based in the Philippines, since the program’s implementation in Hong Kong for OFWs was impeded
by the current political developments in the area.

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Table of Contents BPI Integrated Report 2019
 Social Performance

BPI Sinag bootcamp

ENTREPRENEURIAL DEVELOPMENT SUSTAINABLE ENVIRONMENT

Show Me Teach Me (SMTM) is a capacity building program The twin challenges of fighting climate change and
for micro, small, medium entrepreneurs (MSMEs) with ensuring food security have become more daunting
the objective of enabling them with basic financial than ever, as the growing population strains the earth’s
management, product development, and marketing resources. The latest initiative under BPI Foundation’s
management capabilities. The BPI Tech-Voc Program environmental sustainability pillar is the Farm to Table
aims to capacitate community members and self- program, which aims to increase farmers’ output by using
employed micro-entrepreneurs (SEMEs) to optimize the latest climate-adaptive farming technologies.
their productivity by providing them with training
programs that combine technical-vocational skills The Farm to Table program, implemented in
with entrepreneurial and management skills. Since the partnership with Green Earth Heritage and RiceUp,
program’s inception in 2018, it has generated a 80-100% includes enhancing the capabilities of farmers
employment rate for the community members who through farmpreneurship modules on farm schools,
complete the Tech-Voc training. money management and financial wellness, basics of
costing, computer skills, community organization, and
Continuing to champion more Filipino social environmental protection. Since its launch, the program
entrepreneurs, BPI Sinag business challenge marked was able to engage with over 880 farmers in Bulacan,
its fifth year with an enhanced incubation program that Pampanga and Davao.
integrates updated modules in business and technology,
empowering social enterprises to leverage the latest 2019 also saw the launch of the second phase of the
digital tools and platforms today to further scale up BPI Climate Risk Assessment program implemented
their impact on communities. On its fifth year, BPI Sinag together with WWF-Philippines. Taking off from the
launched “Technology, Social, and Market Innovations in first study concluded in 2014, the latest study will
Social Enterprises: The BPI Sinag Accelerate Initiative”, a involve a different group of cities, namely: Tuguegarao,
book authored by the Philippines’ social entrepreneurship Cabanatuan, San Fernando, Tarlac, Lucena, Sta. Rosa,
guru Dr. Eduardo Morato, Jr. The resource book features Legazpi, Masbate, Roxas, Tagbilaran, Calbayog, Ormoc,
15 case studies on select BPI Sinag Alumni, which are Pagadian, Dipolog, Malaybalay, and Tagum. The study will
aimed at sharing tools, frameworks and best practices for look into these cities’ likely climate and environmental
other social enterprises. vulnerability, socioeconomic profile, and how livelihood
will be affected by changing weather patterns.
Social entrepreneurship modules were also digitalized
through an e-learning platform, Sinag Online, to reach For more information on the Foundation’s programs, you
more enterprises beyond the BPI Sinag community. may go to www.bpifoundation.org.

82
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DATA PRIVACY with most complaints, the root causes of said complaints
and the required action plans to address them. CXMO
BPI abides by the Data Privacy Act of 2012 (DPA) and the intensified the conduct of FCP roll-outs in the branches,
various circulars and advisories of the National Privacy including customer complaints handling with scenarios
Commission. The Bank has a Data Privacy Office (DPO) that based on actual customer complaints received.
manages the fulfillment of data privacy requirements across
the organization. The Customer Feedback Database, created in 2017, has
undergone improvements from its original design to
A Sustainable Privacy Management Framework and Program one that is more efficient and seamless with respect to
approved by the Board guides all aspects of our operations complaints handling process. Instructional guidelines
in upholding the public’s right to data privacy. Apart from were added in the notifications to assist the frontliners and
the two mandatory e-learning courses on data protection Complaints Handling Team (CHT). It has also facilitated
and data privacy, we integrated the privacy lectures in the immediate routing of customer feedback from various
New Employee Orientation Program (NEOP) and Officership touchpoints to the concerned business units, aimed
Training Program (OTP) to equip all personnel regarding at timely resolution or disposition of complaints and
proper handling of personal data. To further embed privacy feedback provided to the client.
risk management into operations, the Data Privacy Office
piloted Privacy Business Briefings with select business This further strengthens the role of the frontliners in
groups characterized by extensive use of personal data. addressing and reporting customer issues. The type of
product or channel and corresponding descriptions of
DPO also continuously reviews privacy-related documents complaints are already loaded in the database to facilitate
and forms ensuring that the principles of data privacy are ease of filing by the frontliners. Complaints filed in the
observed and embedded in the contracts, privacy notices, Customer Feedback Database are electronically routed
declarations, marketing communications and consent to the CHT of the business unit concerned, accompanied
forms. Included in DPO’s mandate as well is the assessment by an immediate email notification. Similarly, an e-mail
and review of new and existing Privacy Impact Assessments notification is also automatically sent to the frontliner
on new initiatives and updates on existing processes. (maker) once feedback for resolution is provided by the
CHT in the database.
In 2019, the DPO reviewed 93 privacy-related documents
and forms and 65 new and existing Privacy Impact The Bank monitors customer feedback concerning
Assessments. The DPO also responded to, or assisted its products and services, determines root cause of
various business units in, addressing complaints received significant issues, and implement appropriate actions
from the public. to address these issues. The table below shows the
number of customer complaints received and the number
For more information, see page 129 of customer transactions recorded for the same year.
Complaints count decreased by 39% from 2018 to 2019.
The compliance rate for complaint resolution to our
CUSTOMER EXPERIENCE internal turn-around time was 88% in 2019. As of year-
end 2019, from the complaints received for 2019, 88%
In 2017, Customer Experience Management Office (CXMO) have been resolved. The enterprise-wide complaint report
initiated the BPI Customer Assistance Program to establish is regularly reported to BPI Senior Management and BSP.
guidelines that will help ensure that the Bank’s consumer
protection policies are aligned with feedback from Percentage of Complaints vs Total Transactions or
customers across all touch points and potential customers complaint intensity decreased by 39% from 2018 to
are well handled. The designated Customer Assistance 2019. This is calculated as every one (1) complaint per
Officers underwent onsite training to equip them with skills transaction.
to address customer issues and to ensure compliance with
the Bank’s Consumer Protection Program. Continuous
information and education campaigns as part of the
2017 2018 2019
Financial Consumer Protection (FCP) Program have been a
major priority of the unit. Complaints vs Total 0.030% 0.028% 0.017%
Transactions (%)

To deepen customer engagement and address specific Complaints (in thousands) 437 424 416
customer needs, CXMO monitored customer complaints Transactions (in millions) 1.442 1.541 2.384
in each business area and identified the business units

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Table of Contents BPI Integrated Report 2019
 Social Performance

The Bank complies with product and service information SUPPLY CHAIN
and labeling regulations and voluntary codes for consumer
protection such as the Banking Code for Consumer
Protection of the Bank Marketing Association of the
Philippines (BMAP) and its Council of Advisors and product
476
accredited local and foreign suppliers

governance such as Markets in Financial Instruments

Directive II (MiFID II). In 2019, there were no confirmed
incidents of non-compliance.

SUPPLY CHAIN MANAGEMENT Our required accreditation documents include permits,

licenses, certificates, and proof of authority in order to assess
The Facilities Services Group (FSG) facilitates the supplier vendors for their suitability, as well as environmental and
accreditation application and renewal request on behalf of social compliance. Examples of these, depending on the
the proponent business units. Business units conduct vendor nature of business are: business permits; certifications from
and service provider reviews and vetting for their specific the Department of Labor and Employment; and licenses
vendors. On the other hand, FSG oversees the accreditation from the Philippine Contractors Accreditation Board and
of vendors limited to suppliers of architectural products Department of Transportation and Communications.
and services, janitorial services, and products and services
related to construction such as general and specialized Suppliers undergo a re-accreditation process every year,
contractors, design consultants, and related trades. requiring an evaluation from proponent business units and
resubmission of permits, licenses, certificates, and proof of
Our engagements with service providers, contractors, and authority.
suppliers follow our internal general policy on third-party
engagement; policies on managing the accreditation/ In 2019, our supplier pool consisted of 476 accredited local
dis-accreditation of suppliers/service providers / business and foreign suppliers. This is a 7% increase of suppliers from
partners; and accreditation criteria and document 2018. This increase is attributed to the Next Gen Branch
requirements for suppliers and other service providers. These project implemented in line with BPI’s focus on digitization.
policies serve as reference for all business units in their We paid a total of Php 17.24 billion for products and
vendor selection process prior to engagement and enables us services rendered by these contractors, suppliers, and other
to identify vendors who meet quality standards. providers.

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Environmental Performance

Recognizing our role as a responsible financial institution, of branches, respectively. This has resulted in Php
we aim to reduce negative environmental impact coming 18.7 million in cost savings for LED lights and Php 8.7
from our business operations and become more cost- million in cost savings for inverter type airconditioning
effective through mindful leadership of the organization, for the year.
leading to overall improved margins.
For 2019, electricity consumption decreased by 7%
We track the environmental impact in our business, from 2018, despite the Bank’s extension of banking
gathering data on energy and water consumption, and days to include weekends for 74 branches to serve
carbon emission for branches, head offices, and business the needs of our clients. In terms of energy intensity –
centers in the Philippines1. Data on energy and water energy consumption against annual revenue, we have
consumption of our branches and kiosks are consolidated decreased this ratio by 23% from 2018. Our 2019
per geographical business area. The Facilities and Services energy intensity level is at 1,771 gigajoules of energy
Group (FSG) monitors those of our head office and other for every Php 1 billion of revenue4 earned.
business hubs.
In previous reporting cycles, fuel consumption
BPI continually explores technological innovations that was reported for generator sets and diesel fuel for
could reduce our resource consumption and improve armored vehicles. In 2017, fuel from generator sets
our environmental tracking systems. We also encourage was determined to be insignificant in scale of our
our clients, suppliers, and partners to reduce their own operations and deemed as immaterial. In July 2018,
environmental footprints. the contract for armored vehicles changed from
leased to outsourced, resulting to the shift of fuel
ENERGY CONSUMPTION management from BPI to the armored vehicles agency,
BPI’s energy consumption comes from the electricity taking it out of the Bank’s reporting scope.
requirements of our daily branch and corporate office
operations. FSG commissioned a third-party energy WATER CONSUMPTION
audit to determine the management approach to Our water consumption comes from pantry sinks,
the installation of LED lights and inverter-type air- washrooms, and maintenance faucets in our offices
conditioning units to manage resources more efficiently and branches. The water used is sourced from water
and save on utility costs. Based on the findings of the utility companies. For 2019, water consumption
audit, FSG has completed the installation of LED lights decreased by 0.2% from 2018.
and inverter-type airconditioning units to 69% and 47%

ENVIRONMENTAL FOOTPRINT 2017 2018 2019

Electricity Consumption2 (gigajoules) 175,797 180,278 167,080

Scope 2 GHG Emissions3 (Tonnes CO2e) 28,701 35,860 33,234

Water Consumption (cubic meters) 387,087 381,443 380,734

1
Includes branches, head offices, and business centers in the Philippines, excluding BanKo branches and BLUs
2
Branch data for January and December 2019 is dependent on the different billing schedules of utility service providers.
3
GHG emissions computed based on the Department of Energy Grid Emission Factors (https://www.doe.gov.ph/electric-power/2015-2017-national- grid-emission-factor-ngef).
4
Total Revenue for 2019 is Php 94.33 billion

85
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 Environmental
Performance

PAGES OF PAPER
SAVED

12.09 MILLION PAGES

of paper saved because of the eSOA
project equivalent to

1,452
trees2

BPI unibankers at a Sustainability Recyclables Fair at BPI Buendia Center 

Exposure Visit at Daila Farms

GREENHOUSE GAS EMISSIONS OTHER EFFORTS

Our greenhouse gas (GHG) emissions fall under Scope 2 Although our core business and operations is not heavy on
of the GHG Protocol Corporate Standard. Scope 2 covers material resource consumption and waste generation, we
indirect emissions from the generation of purchased energy. are aware that our day-to-day activities still generate waste
It is computed based on the electricity consumption that fall as an externality. We encourage our employees to use and
under Scope 2 and the Department of Energy Grid Emission dispose of materials responsibly. The Bank, through FSG,
Factors. facilitates compliance to Department of Environment and
Natural Resources related regulations on clean air, water,
For 2019, our Scope 2 GHG emissions decreased by 7% and hazardous waste disposal. A pollution control officer, as
following the decrease of electricity consumption. In terms required will be assigned per geographical cluster to ensure
of GHG emissions intensity – GHG emissions against annual compliance thereof.
revenue, we have decreased this ratio by 23% from 2018.
Our 2019 GHG emissions intensity level is at 352 tonnes The Bank continued with the regular recyclable fairs and
CO2e for every Php 1 billion of revenue1 earned. special pick-ups within the Metro Manila initiated by the
Sustainability Office to ensure the responsible disposal
SHIFT TO PAPERLESS BILLINGS of paper, plastic, and electronic waste for branches and
The Centralized Operations Group (COG), has been closely corporate offices. The Recycling effort was boosted by the
working with the electronic Statement of Account (eSOA) file digitization campaign of the branch network, which
Project team to fully implement the migration of paper allowed them to turnover old folders for recycling.
heavy (Statement of Accounts, Notices, and Financial In total, 513 kilograms of plastic and metal waste, 9,951
Statements) BPI products to align with the Digitization kilograms of paper and carton waste, and 114 kilograms of
strategy and most importantly to improve customer electronic waste was turned-over to our partner recyclers.
experience while streamlining expenses.
Recognizing the need to establish a sustainability mindset
2019 saw the full implementation of the BPI Credit Cards for all, the Sustainability Office organizes Learning Sessions,
eSOA project, whereas in previous years, the eSOA was Sustainability Exposure Visits, and other information
only fully implemented for BFSB Credit Cards. This year the campaigns. To date, we have run 6 Sustainability Exposure
bank was able to save 12.09 million pages of paper, a 578% Visits and 16 Learning Sessions attended by over a
increase from 2018 when eSOAs were only available for thousand Unibankers.
BFB Credit Cards. The migration to eSOAs has allowed BPI
to save approximately 1,4522 trees from being cut for paper
in 2019.

The Bank is taking steps to maximize digital migrations and

will be testing the roll-out of eSOAs to an expanded list of
products covering investment and deposit accounts. COG
is also testing a new eSOA server to improve operating
capacity.

Total Revenue for 2019 is Php 94.33 billion

1

Based on the calculation of Conservatree.org (1 tree makes 8,333.3 sheets of copy paper)
2

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A relationship that nurtures your future Table of Contents
Senior Management

OFFICE OF THE CHAIRMAN AND PRESIDENT BUSINESS BANKING

Senior Vice Presidents Senior Vice Presidents
Asis, Ma. Cristina F. Dimayuga, Raul Marcelo D.
Cruz, Rosemarie B. Luchangco, Eric Roberto M.
Gayares, Marita Socorro D. Parungao, Joseph Philip Anthony S.
Vice Presidents Vice Presidents
Almazan, Jinky C. Ampolitud, Mary Jane L.
Amado, Frances S. Ballelos, Luisito R.
Gealogo, Noravir A. Catelo, Felices V.
Maramag, Angela Pilar B. Cruz, Katrina Joy G.
Mendiola, Nicanor A. Cruz, Socorro Jessymel T.
Paz, Jonathan John B. Lualhati, Genaro IV N.
Sumagpang, Sylvia P. Pagulayan, Rhodora Adelaida C.
Villaflores-Balatan, Melissa B. Paulino, Ma. Genalyn R.
Ramos, Erick M.
OFFICE OF THE CHIEF CREDIT OFFICER San Diego, Ma. Cristina L.
Senior Vice Presidents Sangco, Jose Martin S.
Alonso, Joseph Anthony M.
Vice Presidents CORPORATE BANKING
Baron, Michael Louie M. Executive Vice President
Jacinto, Miriam Jane M. Syquia, Juan Carlos L.
Mina, Andrea G. Senior Vice Presidents
Silva, Elisa M. Cariaso, Reginaldo Anthony B.
Tan, Ma. Elizabeth V. Cruz, Luis Geminiano E.
Go, Raymond H.
MASS RETAIL Tagaza, Manuel C.
Executive Vice President Untalan, Barbara Ann C.
Ocampo, Marie Josephine M. Veloso, Roland Gerard Jr. R.
Senior Vice Presidents Vice Presidents
Gomez, Jesus Angelo O. Basilio, Maria Cristina A.
Lacerna, Jenelyn Z. Bonoan, Francisco Javier P.
Vice Presidents Casals, Sheree N.
Aldip, Alma G. Cirujano, Raymond Anthony M.
Bejar, Mary Catherine A. Cortez, Marie Antoinette S.
Bengzon, Joaquin Augusto Angelo A. De Guzman, Ivy Maria E.
De Jesus, Ma. Cynthia Leticia S. De Jesus, Marie Joan Socorro J.
De Vera, Jose M. De Paula, Noel Isabelo S.
Feranil, Catherine Y. Dela Paz, Cecile Catherine A.
Florentino, Maria Angelica G. Dulay, Melinda V.
Gatuslao, Carlo Carmelo S. Eala, Jo Ann B.
Macatangay, Abraham Daniel J. Elefano, Ria Gloria B.
Felipe, Herman Rufino S.
CORE RETAIL Garcia, Jeanette J.
Vice Presidents Gatuslao, Dennis S.
Cutiongco, Ma. Perpetua A. Gozar, Carmencita Lilia B.
Marquez, Ma. Carmina T. Laquindanum, Mary Jane Y.
Lim, Maria Teresa Anna K.
MARKETING Lim, Steven S.
Senior Vice President Macapagal, Juan Jesus C.
Santamaria, Mary Catherine Elizabeth P. Marcos, Noelito C.
Vice Presidents Oliva, Arnold E.
Aguilar, D’Artagnan M. Pandan, Michelle Therese B.
Lamasuta, Aileen S. Ruelo, Arsenio B.
Melliza, Madeline H. Santoyo, Kristine Joy V.
Santos, Ma. Claudina C. Sison, Ana Maria C.
Tined, Edelinda R. Valenzuela, Miriam Socorro K.

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 Senior Management

SALES & SERVICE CHANNELS Go, Donna May P.

Senior Vice Presidents Neri, Emilio Jr. S.
Ang, Olga S. Picache, Ma. Josefina P.
Jereza, Jose Raul IV E. Salvan, Jose Esteban J.
King, Angelie O. Singian, Jennifer Gayle P.
Sta Ana, Ana Liza C. Sorra, Jethro Daniel S.
Vice Presidents Yulo, Lizbeth Joan P.
Altea, Bernardo R.
Badua, Arrex S. STRATEGY AND FINANCE
Braganza, Sonia S. Executive Vice President and
Catindig, Myra Liza D. Chief Finance Officer
Chua, Ma. Lea Jasmin O. Javier, Maria Theresa Marcial
Dionisio, Florisa F. Senior Vice President
Farinas, Ritche G. Lukban, Maria Consuelo A.
Galvez, Marwin L. Vice Presidents
Gasa, Jose Mari Israel V. Agdeppa, Maria Lourdes Valerie C.
Lucero, Joseph L. Campos, Lourdes Suzanne S.
Monfort, Virginia L. Chee, Fitzgerald S.
Perez, Art Gerald B. Gatmaytan, Ma. Lourdes P.
Quimbo, Joseph Sidney D. Gonzales, Glenda M.
Raterta, Francisco III G. Osalvo, Emmanuel Jesus G.
Saguindang, Isagani M. Santiago, Richard M.
Sampang, Maya B. Sevilla, Christmas G.
Santos, Mylene Riza C. Tan, Cherish Honey C.
Segui, Maribeth G. Ysmael, Paul Roderick A.
Sy, Cristina J.
Taguba, Janette B. ENTERPRISE SERVICES
Ureta, Joy L. Executive Vice President and
Chief Operating Officer
WEALTH MANAGEMENT Jocson, Ramon L.
Senior Vice President Senior Vice Presidents
Chuidian, Tomas S. Abola, Joaquin Ma. B.
Vice Presidents Calleja, Michael D.
Bustamante, Ma. Carmencita S. Marquez, Pilar Bernadette C.
Diomampo, Irene A. Mercado, Eugenio P.
Mapanao, Perlita S. Pertierra, Rafael J.
Roxas, Vilma L. Santiago, Noel A.
Ty-Gosingco, Leslie Ann N. Vice Presidents
Velez, Gemma T. Africa, Luis Lorenzo T.
Alviar, Jocelyn C.
GLOBAL MARKETS Barroquillo, Ericson H.
Senior Vice President and Treasurer Bednar, Maria Concepcion A.
Gasmen, Dino R. Bernales, Dominador Jr. R.
Senior Vice Presidents Calingasan, Reynaldo C.
Fernandez, Rinaldo H. Cariaso, Maria Theresa G.
Pineda, Donarber N. Cervantes, Miguel Jr. P.
Vice Presidents Cruz, Napoleon Jr. I.
Ang, Irene L. Cruz, Winnie G.
Arceo, Henry C. Del Fierro, Anna Christina U.
Barrameda, Ma. Lourdes D. Eala, Maria Virginia O.
Cabral, Voltaire P. Felizardo, Leah Anna T.
Cayetano, Alan C. Ferrer, Josephine B.
Crisostomo, Mari Len S. Gangoso, Jesusa Camila V.
Espiritu, Ruben Enrique A. Kho, Ailen C.
Figueroa, Susan C. Lansang, Jennie F.
Garcia, Cyril S. Lee, Eugene O.
Gingco, Rowena M.

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A relationship that nurtures your future Table of Contents
 Lim, Roseller B. Vice President
Luna, Maria Ana M. Guiang, Georgia V.
Lustre, Francisca Ann M.
Manalo, Andrae V. BPI ASSET MANAGEMENT AND TRUST CORP.
Marasigan, Rubenrico R. President
Montenegro, Jose Victor G. Tan, Sheila Marie U.
Ngo Sy, Sheryl G. Senior Vice Presidents
Paguntalan, Reygen C. Chua, Smith L.
Rocero, Anna Lyn J. De Peralta, Yvette Mari V.
Segundo, Servillano R. Garcia, Maria Paz A.
Sta Ana, Jose Antonio Rogelio P. Vice Presidents
Taguibao, Domingo Digno Jr. A. Ayson, Remarie Suzette A.
Tierro, Frederick W. Balita, Jose Erwin B.
Treyes, Anthony Y. Bello, Ronald Bernard P.
Ugsimar, Joel L. Dee, Allen Martin O.
Umayam, Editha F. Evaristo, Mario Gerardo Z.
Zoluaga, Olivia Visminda G. Jalandoni, Carlos A.
Kawpeng, Marijoy Y.
BPI FAMILY SAVINGS BANK Sarreal, Lovell A.
President Taco, Eliza May T.
Go, Ma. Cristina L. Valdez, Amalia Lourdes S.
Vice Presidents Zialcita, Luis Antonio P.
Altamirano, Ramon Noel S.
Catalan, Mari Margaret Z. BPI INVESTMENT MANAGEMENT INC.
Celestino, Aurora L. President
Dio, Amy Belen R. Enrile, Roberto Martin S.
Fronda, Dennis T.
Galura, Erwin M. BPI CENTURY TOKYO LEASE AND FINANCE CORP.
Leonen, Lionel F. President
Ocampo, Bernadette B. Tanaka, Kuniaki
Ocliasa, Dominique R. Executive Director
Ricardo, Victoria Marie G. Aniceto, Homer L.
Sampang, Jose Jr. P. Vice President
Tuason, Herbert Vincent D. Ikeda, Masahito
Velasco, Josephine Eufemia P.
BPI/MS INSURANCE CORP.
BPI DIRECT BANKO INC. President
President Takahashi, Masayuki
Minglana, Jerome B. Directors
Senior Vice President Bernabe, Anthony Lou M.
Mabiasen, Rodolfo Jr. K. Kano, Yasuhiro
Santos, Alberto C.
BPI CAPITAL CORP.
President BPI EUROPE PLC
Huang, Rhoda A. Managing Director
Vice Presidents Yulo, Lizbeth Joan P.
Collado, Marie Natalie J.
Guevara, Jenny C. BPI INTERNATIONAL FINANCE LTD.
Jardeleza, Francis L. Managing Director
Ong, Lester Lin, Archie
Uy-Tioco, George Jr. S.
BPI FOUNDATION INC.
BPI SECURITIES CORP. Executive Director
President Cammayo, Owen L.
Narvaez, Hermenegildo Z.
Senior Director
Fajardo, John Kennard T.

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Corporate Governance

In an increasingly digitalized world, corporate facilitators. The SEC Code of Corporate Governance
governance remains to be the way forward for for Publicly-Listed Companies, similarly states in
banks aiming to be a high-trust, high-performance Recommendation 6.1, that the conduct of the annual
organization. self-assessment of the Board of Directors is to be
supported by an external facilitator every three years
OVERVIEW to improve objectivity of the assessment process.

Digitalization continues to reshape the banking industry In this respect, the engagement of a Third Party
and, together with changing customer expectations, External Facilitator was approved by the Corporate
regulatory requirements, demographics and economics, Governance Committee on August 26, 2019. This
is creating an imperative for banks to forge ahead of was subsequently endorsed to the Executive
these challenges and radically transform themselves to Committee which approved the same in its meeting
win in the next era. on September 11, 2019.

Technology is altering everything: opening banking 2. The Board also approved the amendment of the
to disruptive new entrants; potently transforming company By-Laws to, among others: a) provide for
and enabling novel customer experiences; testing the right for stockholders to vote through remote
traditional banking processes, products and channels; communication or in absentia at the Bank’s Annual
and increasing speed and productivity while reducing Stockholders’ Meetings; and b) to raise the minimum
cost. But while these point to innovation as key, prudent quorum at any meeting for the transaction of
judgment, wisdom, and business savvy are vital. corporate business from the majority to two-thirds
(2/3) of the members of the Board of Directors.
In the digital age, cybersecurity risks have also given The amendments to the By-Laws are in line with
rise to enhanced board oversight protocols. Social media the regulatory requirements under the Manual of
has also heightened reputational risk and brought down, Regulations for Banks, the Revised Corporation Code
often unfairly, harsh and superficial customer judgments and the best-practice recommendations under the
on company boards and management. These and other ASEAN Corporate Governance Scorecard.
factors have made today’s board governance increasingly
more challenging. Now, boards are expected to respond, In the Bank’s 2019 Annual Stockholders’ Meeting,
often instantly and with precision, to any situation, no BPI stockholders were given the option to cast votes
matter how unfamiliar or complex. in absentia through an online electronic facility, as
also provided for under the Revised Corporation
BPI’s Board of Directors recognizes that the Bank’s Code.
continued leadership in this volatile, uncertain,
complex and ambiguous environment is anchored on 3. In compliance with the SEC Memorandum Circular No.
its constant and consistent fulfillment of client needs 10 on Rules of Material Related Party Transactions
as a trusted institution, a store of value, a source of (RPT) for publicly listed companies (PLCs), the Board
finance, and a facilitator of transactions. But more than also approved the adoption of a Material RPT Policy
that, as the Bank moves into the future, maintaining for the Bank. In contrast to other PLCs, banks have
these established roles and evolving as an agile, open long established their RPT frameworks in compliance
organization in quick response to the dramatically shifting with BSP Circular 895 which was issued in 2015.
landscape, the Board understands that only a solid The SEC Material RPT policy requires identification
corporate governance foundation will sustain its strong of related parties, coverage of the RPT policy,
and stable operations and allow it to accelerate forward. identification and prevention or management of
potential or actual conflict of interest that may arise,
In 2019, the BPI Board of Directors continued to adopt and a whistle-blowing system, all of which are already
corporate governance practices aimed at further contained in BPI’s existing Related Party Transactions
strengthening this posture as a future shaper and a bank Policy. To comply with SEC Mem. Cir. 10, the Bank
that is ready today and ready tomorrow: created additional guidelines to address the major
difference in the SEC’s policy requirement on material
1. Groundwork was laid for the engagement of a third threshold.
party facilitator for the Bank’s annual board self-
assessment covering the 2019 term. BSP Circular 4. Another milestone in 2019 was the amendment of
969 states that the annual self-assessment of the Bank’s Insider Trading Policy which shortened
the Board of Directors may be facilitated by the the blackout trading period set in the policy to
corporate governance committee or external improve market liquidity. The imposition of the

90
A relationship that nurtures your future Table of Contents
 blackout trading period, while shortened, continues companies in the group, with due consideration for
to serve a dual purpose in the Bank: a) to reduce the group’s business and reputation, the materiality of
insider trading risk; and b) to protect covered financial and other risks inherent in the business, and
persons with respect to their personal trading the relative costs and benefits of implementing specific
transactions. controls.

The shortened blackout trading period does not The Board also decides on all other important matters
impair the Bank’s ability to comply with disclosure that pertain to the entire group, in view of the strategic,
requirements and other regulations of the Philippine financial, regulatory, and reputational implications.
Stock Exchange (PSE), including obligations under
its Listing Agreement. Adoption of the shortened Chairman. In adherence to Recommendation 2.3 of the
blackout trading period also confirms that BPI, as an SEC Code of Corporate Governance for Publicly-Listed
issuer, continues to institute the relevant controls to Companies, the BPI Board of Directors is headed by a
prevent covered persons from violating provisions of competent and qualified Chairman.
securities laws and regulations, including PSE Listing
and Disclosure Rules. Vice-Chairman. The BPI Board also has a Vice-Chairman
who, in the absence of the Chairman of the Board,
Our corporate governance policies and practices are assumes and performs all the powers and duties of the
embodied in our Manual on Corporate Governance Chairman of the Board.
and disclosed in the Integrated – Annual Corporate
Governance Report, both of which are available on See Appendix for full biographies of our Chairman, Vice-
our website at www.bpi.com.ph. Chairman, and Board of Directors.

LEADERSHIP Role and Independence of the Chairman. The Chairman

and Vice-Chairman are both Non-Executive Directors. The
Advisory Council. We have an Advisory Council to the Board does not encourage CEO Duality. The Chairman,
Chairman which was organized following the Annual who has not served as CEO of the Bank within the past
Stockholders’ Meeting (ASM) in April 2016. Comprised three years, is separately appointed from the President
of senior thought leaders, captains of industry, and and CEO (Recommendation 5.4, SEC CG Code for PLCs).
luminaries in their respective fields, the Advisory The Chairman and the President and CEO positions are
Council expands the range of expertise, experience, and currently held by two individuals who are not related to
collective wisdom available to the Bank. each other and have defined roles and responsibilities that
are separate and distinct, as set in our Amended By-Laws
At the Organizational Meeting of the Board of Directors and Manual on Corporate Governance.
following the 2019 Annual Stockholders’ Meeting, the
following were re-appointed as members of the Advisory Under the leadership of the Chairman, the Board
Council: creates the framework within which the Bank’s
1. Chief Justice Artemio V. Panganiban executive team, headed by our President and CEO,
2. Oscar S. Reyes steers the business. As stated in the Bank’s Manual on
3. Delfin L. Lazaro Corporate Governance, the Chairman guides the Board
in its decision-making process and ensures that the
Board of Directors Board operates effectively as a team. The Chairman
The leadership and stewardship of the Board of also forges a very positive and constructive working
Directors is one of the most important factors relationship between the Board and management.
accounting for BPI’s long-term growth and success. With the Chairman at the helm, the Board sets the
Bank’s strategy and risk appetite, and approves capital
In discharging their oversight responsibilities as and operating plans presented by management for
guardians of the Bank’s financial prudence and strength, sustainable achievement of strategic objectives.
the Board provides challenge, oversight, and advice to
ensure that BPI continues to do the right things the right Chief Executive Officer. The CEO reports directly to,
way, assuring our long-term sustainable success. and is accountable to, the Board of Directors for the
performance of the Bank. As defined in the Manual
Considering the Bank’s role in the BPI group as parent on Corporate Governance, the CEO (1) leads the
and publicly listed company, the Board of Directors development and execution of short- and long-term
ensures that BPI maintains an effective, high-level strategies, (2) communicates on behalf of the Bank with
risk management, and oversight process across all shareholders, regulators and the public, (3) evaluates

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 Corporate Governance

the work of other executive leaders within the Bank, management, compliance and assurance processes
and (4) implements the Bank’s vision and mission. undergird our business;
(Recommendation 5.4, SEC CG Code for PLCs). • Financial performance – Monitoring management
performance and achievement of goals and targets;
Lead Independent Director. At the Organizational • Sustainability – Considering environmental, social and
Meeting of the Board of Directors, following the 2019 governance issues and including these as part of the
BPI Annual Stockholders’ Meeting, Independent Bank’s strategy.
Director Octavio Victor R. Espiritu was appointed as Lead
Independent Director.
In the Board strategy session last December 13, 2019,
Although current regulations of the BSP require the the Board and the senior management committee
appointment of a Lead Independent Director only when reviewed and approved the Bank’s mission and vision and
the positions of Chairman of the Board of Directors and strategic plans for the coming years. (Recommendation
CEO are, with prior approval of the Monetary Board, held 2.1, 2.2, 2.12, 8.7 SEC CG Code for PLCs)
by one person, the Board appointed a Lead Independent
Director in pursuit of best practice governance standards. The Board Charter is disclosed in the Manual on
Corporate Governance and on the company website at
BPI’s Manual on Corporate Governance states the www.bpi.com.ph.
duties and responsibilities for such a role and position
in the Bank, if and when one is appointed: the Lead Composition and Qualification
Independent Director shall act as the preferred point of
contact for other Independent Directors on the Board. In pursuit of class leading risk management and
governance practices for the appropriate board size,
(Recommendation 5.5, SEC CG Code for PLCs). BPI maintains a 15-member board. The size of our
Board is deemed appropriate given the complexity of
Board Charter. The charter of the Board of Directors operations of the Bank and the entire BPI group, our
articulates with specificity the governance and oversight risk appetite, the geographical spread of our business,
responsibilities exercised by the directors and their roles and the significant time demands placed on the
and functions in the Bank. It includes provisions on board Directors.
composition, Board Committees, and board governance,
subject to the Bank’s Articles of Incorporation, Amended Board Composition. The Bank adheres to
By-Laws, and applicable laws. The charter does not limit, Recommendation 1.2 of the SEC CG Code for PLCs with
enlarge, or change in any way the responsibilities of the respect to the board composition so that no director
Board. or small group of directors can dominate the decision-
making process. The only Executive Director is the Bank’s
The charter, which is in adherence to Recommendation President and CEO.
2.12 of the SEC CG Code for PLCs, is incorporated in
our Manual on Corporate Governance, both of which The 15-member Board also ensures that directors are
are reviewed annually. The Bank’s updated and revised able to carry out their responsibilities efficiently, given
Manual on Corporate Governance was approved and the number of committees that they are appointed to.
adopted by our Board of Directors in its entirety on Global best practice surveys show that complex banks
February 19, 2020. benefit from larger board sizes in the long-term, providing
better oversight and risk management.
As stated in the charter, the Board’s key areas of focus
include: Board membership was reinvigorated during the Bank’s
ASM on April 25, 2019 with majority or 14 of the newly-
• Governance – Ensuring that corporate responsibility refreshed 15-member board comprised of Non-Executive
and ethical standards underpin the conduct of BPI’s Directors, safeguarding independent oversight of
business; developing succession plans for the Board management. This is in compliance with BSP Circular
and CEO; and establishing the general framework of No. 969, “Enhanced Corporate Governance Guidelines
corporate governance for the Bank; for BSP-Supervised Institutions” and in adherence to
• Strategy - Reviewing BPI’s strategic and business Recommendation 1.2 of the SEC CG Code for PLCs.
plans; growing the business sensibly; and building
resilience into the franchise (Recommendation 2.2,
SEC CG Code for PLCs)
• Risk management – Ensuring that effective risk

92
A relationship that nurtures your future Table of Contents
 Director Qualifications. Our Board of Directors enjoys
The General Banking Law, R.A.8791 mandates the trust and respect of the local and international
that there be at least five (5) and a maximum of business community. They are established professionals
fifteen (15) members of the board of directors of who provide perspective, objectivity, practical wisdom,
a bank. The board of directors shall determine and sound judgment in their oversight, recommendations,
the appropriate number of its members to ensure and evaluation of bank operations and management.
that the number is commensurate to the size and
complexity of the bank’s operations. Universal and As a financial institution imbued with public interest,
commercial banks are deemed to operate complex qualifications for membership in our Board of Directors
business models by virtue of the scale and type of are dictated by our Amended By-Laws, Manual on
banking activities. Corporate Governance, the Revised Corporation Code,
and relevant regulations of the BSP and the SEC.
Certain factors also determine the complexity of a
bank’s operations such as: As a publicly listed company, we also take special care
to ensure that the Board composition and director
1. Size of total assets qualifications, particularly with respect to independent
2. Extent of branch network directors, also meet the pertinent governance
3. Non-traditional products and services offered regulations, requirements, and standards of the PSE.
by virtue of special authorities (e.g., trust, quasi-
banking, derivatives licenses), as well as distinctive As required by the SEC, all of the Bank’s annual reports
products like credit cards, remittance, trade related contain comprehensive profiles of the Board of Directors
services, among other financial services; which disclose, among other information, the age,
4. Use of non-conventional business model, such as qualifications, date of appointment, relevant experience
those using non-traditional delivery platforms such and directorships both in the BPI group as well as in
as electronic platforms; and other companies, listed or otherwise. In compliance
5. Business strategy that is characterized by risk with SEC Memo. Cir. No. 11, s2014, the Bank also posts
appetite that is aggressive and risk exposures which biographical details of the Board of Directors and Senior
are increasing. Management on the company website.

In pursuit of class leading risk management and Directors comply with all fit and proper qualifications
governance practices for the appropriate board size, and requirements of the BSP, SEC, and PSE and remain
BPI maintains a 15-member board. qualified throughout the one-year term. This includes
required working knowledge, experience or expertise,
and competence relevant to the banking industry.
On February 20, 2019, the Board approved during its
regular meeting the election of Mr. Jose Teodoro K. The Board has a fiduciary duty in addressing
Limcaoco, 58, Filipino, as Non-Executive Director of the environmental, social, and governance (ESG) issues,
Board. Currently, he is the Chief Finance Officer (CFO), including changes in stakeholder expectations,
Chief Risk Officer (CRO), Chief Sustainability Officer business strategy, governance, risk assessment,
(CSO), and Finance Group Head of Ayala Corporation. and measurement and disclosure practices, which
are central to the Bank’s corporate competitiveness
At the April 2019 BPI Annual Stockholders’ Meeting, and continued ability to operate. The Board, through
Mr. Eli M. Remolona, Jr., 67, Filipino, was newly-elected its Nomination Committee, ensures the selection
as an Independent Director of the Bank. He is a Visiting of progressive and thoughtful directors who have
Professor of Economics at Williams College, MA, U.S.A., credible involvement or are actively engaged in
who has extensive policy experience in financial markets, sustainability initiatives, in order to drive the board’s
international finance and monetary policy, with 14 years integration of ESG factors into its long-term strategy.
of experience at the Federal Reserve Bank of New York
and 19 years at the Bank for International Settlements Statutory requirements on qualifications and
(BIS). disqualifications for directors are stated in our Manual
on Corporate Governance published on our website,
www.bpi.com.ph. See Appendix for full biographies of our
Board of Directors. (Recommendation 8.3 SEC CG Code
for PLCs)

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 Corporate Governance

APPOINTMENT AND YEARS OF SERVICE OF BOARD OF DIRECTORS*

Type of Date Date Manner No. of Years as

Director’s Name
Director** First Elected Last Elected of Election Director of BPI***
Jaime Augusto Zobel de Ayala NED 03/13/1990 04/25/2019 Annual Meeting 29.8
Fernando Zobel de Ayala NED 10/19/1994 04/25/2019 Annual Meeting 25.2
NED 04/19/2001 04/18/2012 Annual Meeting 1.0
Gerardo C. Ablaza, Jr.
NED 04/20/2017 04/25/2019 Annual Meeting 2.7
NED 02/1998 2001 3.0
Romeo L. Bernardo
ID 08/21/2002 04/19/2018 15.7
Annual Meeting
NED 04/25/2019 04/25/2019 0.7
Ignacio R. Bunye ID 4/14/2016 04/25/2019 Annual Meeting 3.7
NED 02/1995 01/2000 5.0
ID 08/18/2004 12/31/2006 2.3
Cezar P. Consing Annual Meeting
ID 04/15/2010 04/18/2013 3.0
ED 04/18/2013 04/25/2019 6.7
NED 04/07/2000 04/03/2003 3.0
Octavio Victor R. Espiritu Annual Meeting
ID 04/03/2003 04/25/2019 16.7
NED 10/18/1995 12/31/2007 12.2
Rebecca G. Fernando Annual Meeting
NED 03/31/2009 04/25/2019 10.8
ED 03/10/1982 12/31/2004 22.8
Xavier P. Loinaz NED 01/01/2005 03/30/2009 Annual Meeting 4.2
ID 03/31/2009 04/25/2019 10.8
ED 01/12/2004 04/17/2013 9.3
Aurelio R. Montinola III Annual Meeting
NED 04/18/2013 04/25/2019 6.7
Mercedita S. Nolledo NED 11/20/1991 04/25/2019 Annual Meeting 28.0
Antonio Jose U. Periquet ID 04/19/2012 04/25/2019 Annual Meeting 7.7
NED 04/10/2014 04/08/2015 1.7
Maria Dolores B. Yuvienco Annual Meeting
ID 04/15/2015 04/25/2019 4.7
Jose Teodoro K. Limcaoco NED 02/20/2019 04/25/2019 Annual Meeting 0.8
Eli M. Remolona, Jr. ID 04/25/2019 04/25/2019 Annual Meeting 0.7
*Cut-off date is December 31, 2019.
**Type: Executive (ED), Non-Executive (NED), Independent (ID)
***Based on Type of Director

Diversity Skills & Experience

The Bank’s Board Diversity Policy, adopted in 2015, 13%

underscores diversity at the Board level as an Regulatory/Gov’t

essential element of sound corporate governance, risk 34%

management, sustainable and balanced development, Bank CEO

and effective business strategy.

Our leadership model ensures an appropriate balance 40%

of power, accountability, and independence in decision- PLC Chair/ 13%
Director/CEO CPA/Lawyer/
making. Finance Risk

Diversity—in terms of gender, age, cultural background,

education, professional experience, engagement in The business of banking is not simply a game of numbers,
sustainability and ESG initiatives, skills, knowledge, loan and deposit volumes, and money transactions. It
length of service, and other regulatory requirements—is is the business of building trust and continually winning
duly considered in the design and selection of the Board’s that trust even as customer needs and preferences,
composition. (Recommendation 1.4 of the SEC CG Code the industry, products and services, and the regulatory
for PLCs) regime seem to evolve overnight. Only a skillfully
put together, diverse, and well-composed Board can
accomplish the challenge of marrying this underlying
sense of purpose with the passion and bias to action
needed to move towards that vision.

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Apart from the President and CEO, BPI has four former include younger directors may help a board stay more
bank CEOs on its 2019 Board who not only collectively relevant, the BPI Board also puts great value on the top
provide a wealth of technical, banking, and risk two most prevalent skills of board members between the
management experience but, more importantly, also ages of 60 and 79: finance and governance1. Eighty-seven
embody prudent judgment and integrity characterized percent of the directors on the BPI Board fall in this age
by sound decision- making and professionalism. As range.
bank CEOs, they are also hardwired to understand what
matters in the business and driven to build strategies to Gender Diversity
win that trust. (Recommendation 1.1, SEC CG Code for
PLCs)
20%
Female
Two-fifths of the Board are directors of publicly-listed
companies that include business leaders at the helm
of the country’s top companies and conglomerates.
Unchallenged in their depth of understanding and
appreciation of what the Bank needs to do to continue its 80%
168-year legacy as the principal architect of the country’s Male

financial inclusion landscape, they also safeguard its

listed status, protect shareholder rights, and strengthen
investor relations. The Bank believes that setting a target quota with
respect to gender parity, runs contrary to deeply held
Over a quarter of the Board are astute professionals meritocratic principles and will fail to rebalance the
who can best assess and evaluate the risk and control organization’s Board in a manner that reflects the up-
policies, processes, and systems of the Bank. Including to-date operating requirements of the Bank, current
the five bank CEOs and directors with regulator resource levels for director talent, and long-term
experience, about 70% of the Board are equipped interests of the shareholders.
with specialist and generalist experience, training, and
education to guide the most critical functions in the Bank. Nevertheless, the Board strives to ensure that there
is appropriate representation of women, and female
Last but not least, a healthy respect and cautious, Independent Directors. (Recommendation 1.4 of SEC CG
heedful, and constructive regulatory perspective is also Code for PLCs)
brought onboard by 13% of the directors.
In 2019, 3 out of 15 or 20% of the Board was comprised
Age Diversity of women, which included one Independent Director.
Best global practice recommends at least three female
directors in a 7-member or larger board.
13%
50-59
40% ESG Involvement
70-79

20% 20%
50+ Resilience Human Capital

47%
60-69

20%
20%
Financial
Business Ethics
Product
The Board recognizes that age diversity is an important Governance

factor to achieving diversity of thought. Its experienced 20%

Responsible Finance
directors bring to the Board the benefit of having
seen several business cycles and thus provide unique
perspective and insight. The Board also values having Based on global surveys on the environmental and
younger directors, who may be better attuned to the social profile and vulnerabilities of companies in
rapidly evolving environment, particularly when it comes financial services, the key ESG issues for the banking
to disruption and digitalization of financial services. sector include: Resilience, Business Ethics, Responsible
But while the business landscape is always changing
1 https://corpgov.law.harvard.edu/2018/04/04/how-board-skills-vary-by-director-
and fine-tuning the composition of company boards to age-groups/

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 Corporate Governance

Finance, Financial Product Governance, and Human structures of the company. The Bank understands
Capital. Composition of our 2019 Board shows that there that disclosure of such information is important in
is an equal distribution of our directors with respect to detecting and preventing tax evasion, corruption, money
their skills, work experience, background and current laundering, terrorist financing and other unlawful
involvement, knowledge and understanding of these key activities and guards against conflicts of interest in
ESG issues, and preferences of stakeholders. companies, which may have concentrated ownership
and where there may be controlling beneficial owners
Our full Board Diversity Policy may be read on our with large voting blocks. None of the members of the
website at www.bpi.com.ph. Bank’s Board of Directors and management owns 2.0%
or more of the outstanding capital stock of the Bank.
Security Ownership of Directors and Officers. Public (Recommendation 8.2 SEC CG Code for PLCs)
trust in a company and by the markets where its
securities trade in, largely depends on the existence As of December 31, 2019, the following are known to BPI
of an accurate disclosure regime that provides to be directly the record and/or beneficial owners of BPI
transparency in the beneficial ownership and control voting securities:

Dec 2018 Dec 2019 Nature of Citizenship

Title of Ownership
Name of Beneficial Owner Position No. of % of No. of % of
Class (D) Direct
Shares Holdings Shares Holdings (I) Indirect
Common Jaime Augusto Zobel de Ayala Chairman, 9,628 0.00% 9,628 0.00% D Filipino
NED
Common Fernando Zobel de Ayala Vice-Chair, 137 0.00% 89,137 0.00% D Filipino
NED
Common Cezar Peralta Consing ED, President 2,159,099 0.05% 2,659,099 0.06% D Filipino
& CEO
Common Gerardo Cinco Ablaza, Jr. NED 193 0.00% 193 0.00% D Filipino
Common Romeo Lopez Bernardo NED 12 0.00% 12 0.00% D Filipino
Common Ignacio Rivera Bunye ID 118,032 0.00% 118,032 0.00% D Filipino
Common Octavio Victor Reyes Espiritu ID 1,225,110 0.03% 1,225,110 0.03% D Filipino
Common Rebecca Guanco Fernando NED 20 0.00% 20 0.00% D Filipino
Common Delfin Carballo Gonzalez, Jr.* NED 25,935 0.00% N/A N/A D Filipino
Common Jose Teodoro Katigbak Limcaoco** NED N/A N/A 11,416 0.00% I/D Filipino
Common Xavier Pardo de Tavera Loinaz ID 3,938,203 0.09% 3,938,203 0.09% D Filipino
Common Aurelio Reyes Montinola III NED 1,794,863 0.04% 1,794,863 0.04% D Filipino
Common Mercedita Santiago Nolledo NED 59,502 0.00% 59,502 0.00% D Filipino
Common Antonio Jose Uy Periquet ID 25,221 0.00% 25,221 0.00% D Filipino
Common Eli Mendiola Remolona, Jr.*** ID N/A N/A 10 0.00% D Filipino
Common Maria Dolores Bordador Yuvienco ID 5,813 0.00% 5,813 0.00% D Filipino
SUB-TOTAL 9,361,768 0.21% 9,936,259 0.22%
*Board member until 25 April 2019.
** Elected as Board member effective 20 February 2019
***Elected as Board member effective 25 April 2019
N/A Not Applicable, not a Director as of the period

Dec. 2018 Dec 2019 Nature of Citizenship

Title of Ownership
Name of Beneficial Owner No. of % of No. of % of
Class Position (D) Direct
Shares Holdings Shares Holdings (I) Indirect
Common Antonio V. Paner EVP & 153,489 0.00% 221,564 0.00% D Filipino
Treasurer
Common Ramon L. Jocson EVP & COO 13,783 0.00% 13,783 0.00% D Filipino
Common Maria Theresa Marcial Javier EVP & CFO 20,994 0.00% 262,994 0.01% D Filipino
Common Simon R. Paterno EVP 5,675 0.00% N/A N/A D Filipino
Common Marie Josephne M. EVP N/A N/A 274,692 0.01% D Filipino
Ocampo****
Common Juan Carlos L. Syquia EVP 1,982 0.00% 1,982 0.00% D Filipino
SUB-TOTAL 195,923 0.00% 775,015 0.02%
TOTAL 9,557,691 0.21% 10,711,274 0.24%
****Ms. Marie Josephine M. Ocampo was promoted to the rank of EVP effective September 01, 2019.
N/A Not Applicable, not an Officer as of the period

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A relationship that nurtures your future Table of Contents
Independence of Directors. The powers of the Board of Directors, as
conferred by law, are original and cannot be revoked by
Independence is paramount for the BPI Board and key the stockholders. The Directors hold their office, charged
to engendering public trust. To ensure that the Board with the duty of exercising sound and objective judgment
is able to maintain fairness, integrity, and balance for the best interest of the Bank.
among all stakeholder interests, Non-Executive
Directors, which include Independent Directors, Duties and Responsibilities. The Board bears the
comprise 14 or 93% of the 15-member Board. primary responsibility for creating and enhancing the
long-term shareholder value of BPI, and generating
At the Bank’s 2019 ASM, six out of the 15–member reasonable and sustainable returns on shareholder
board elected were classified as Independent, or capital by, among others, reviewing and approving
having no interest or relationship with BPI at the time of the Bank’s mission, vision, strategies and objectives;
election, appointment, or re-election. Fourteen or 93% appointing senior executives and confirming
of the Board were Non-Executive Directors, who are organizational structures; approving enterprise- wide
not involved in the day-to-day management of banking policies and procedures; monitoring business and
operations. (Recommendation 1.2, 5.1 of SEC CG Code financial performance; overseeing risk management
for PLCs) frameworks and risk appetite; and fostering regulatory
compliance.
BPI also exceeds both the minimum BSP regulatory
and the SEC CG Code requirements for the number of Our Directors have healthy communication lines across
Independent Directors in its Board, who must make up at various levels and functions within the Bank and the
least one- third and not less than two. In 2019, with six BPI group. In particular, BPI Directors who also sit on
Independent Directors comprising 40% of membership, the boards of the Bank’s subsidiaries or affiliates have
the Board continues to operate with significant first- hand access and insight into their operations and
independence. (Recommendation 5.1 of SEC CG Code for business activities, which allows for better assessment of
PLCs) Bank strategy and performance.

The Bank also ensures compliance with the qualifications Nomination and Selection. Following the Bank’s
and requirements for Independent Directors as defined Amended By-Laws, Manual on Corporate Governance,
under the provision of SRC Rule 38 of the Securities Board Diversity Policy, Board and Committee Charters,
Regulation Code, as amended, and as mandated rules provided for by the regulators (SEC, BSP and PSE)
in the BSP Manual of Regulations for Banks. In this as well as the Corporation Code, all written nominations
regard, the Bank submits the required certifications for directors are submitted to the Nomination Committee.
of its Independent Directors annually to the BSP These may be presented not later than the date
for confirmation of the election or appointment. prescribed by law, rules and regulations or at such earlier
(Recommendation 5.2 of the SEC CG Code for PLCs) or later date before the date of the next annual meeting
of the stockholders. All recommendations shall be signed
by the nominating stockholders together with the written
acceptance and conformity of the would-be nominees.
Independence

Our shareholders, including minority shareholders,

may recommend candidates for board membership
Non-executive
for consideration by the Nominations Committee. Such
Director (8) recommendations are sent to the Committee through
the Office of the Corporate Secretary. Candidates
recommended by shareholders are evaluated in the
Independent
Director (6) same manner as Director candidates identified by any
other means. The Committee itself may identify and
Executive Director (1)
recommend qualified individuals for nomination and
election to the Board. For this purpose, the Committee
may utilize professional search firms and other external
Powers of the Board of Directors. As stated in the BSP groups to search for qualified candidates. Members of the
Manual of Regulations for Banks, the corporate powers Committee recuse themselves in case of deliberations
of a bank shall be exercised, its business conducted, on their re-nomination. (Recommendation 2.6 of SEC CG
and all its property controlled and held by its Board Code for PLCs)

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 Corporate Governance

In 2019, in accordance with the resolution of the Board that today’s data trails can produce volumes of digital
of Directors of the Bank dated December 19, 2018, information on director candidates, it has become
disclosed and reported to PSE and SEC, all nominations imperative for candidates themselves, to be forthright
for election of Directors for the term 2019-2020 were with relevant news articles, company reports, legal
required to be submitted to the Corporate Secretary not filings, as well as social media profiles, especially if
later than March 08, 2019. As of said date, there were there may be potential issues, résumé discrepancies
only 15 nominees to the Board received by the Corporate and the like.
Secretary. All the nominees confirmed their acceptance
of said nomination. Ms. Rebecca G. Fernando was Selection Criteria. The Board, through the Nomination
nominated by the Roman Catholic Archbishop of Manila Committee, ensures the Fit and Proper requirements
and the rest of the nominees were formally nominated for the position of a director of a bank and assesses
by Atty. Santiago L. Garcia, Jr., a long time stockholder of candidates in terms of integrity or probity, competence,
BPI who is not related to any of the nominees including education, diligence and experience or training. These
the nominees for independent director. The nominations are dictated by Banking Laws, BPI’s Amended By-Laws,
were subsequently processed and evaluated by the Manual on Corporate Governance, Board Diversity Policy,
Nomination Committee of the Bank in a meeting called Board and Committee Charters, the rules and regulations
for that purpose. It was determined by the Committee of the SEC, BSP and PSE as well as the Corporation Code.
that all the nominees (both regular Directors and A Skills and Expertise matrix prepared by the Corporate
Independent Directors) possess all the qualifications Governance Committee also provides recommendations
required by relevant law, rules, regulations and BPI’s for the desired competency profile of the Board, which
By-Laws and Manual on Corporate Governance and no includes the alignment of qualifications with the strategic
provision on disqualification would apply to any of them. direction of the Bank. The Board also reviews candidate
None of the nominees, directors and officers of the Bank directors with respect to their skills, engagement and
works for the government. past or present work or board experience that considers
ESG factors. (Recommendation 1.1, 2.6 of the SEC CG
Evaluation Process. In the case of incumbent directors, Code for PLCs)
the Nomination Committee reviews each director’s
overall service during his or her current term, including BPI complies with the BSP, SEC and PSE Fit and
the number of meetings attended, level of participation, Proper criteria and requirements for the position of a
quality of performance, and, if any, transactions director. The General Banking Law of 2000 (R.A. No.
between the director and the Bank. Apart from the 8791) provides the BSP with powers to prescribe,
annual accomplishment reports of all board-level pass upon, and review the qualifications and
committees, inputs to the Committee review include, disqualifications of individuals elected or appointed as
but are not limited to, the results of the regular board bank directors or officers and the power to disqualify
self-assessment, updated directors’ biographies, written those found unfit for positions of bank directors and
affirmation to the BPI Director’s Code of Conduct officers.
and Manual on Corporate Governance, and relevant
disclosures such as conflicts of interest or related party Election of Directors. The Nominations Committee
transactions, if any. pre-screens the candidates and prepares a final list
of candidates prior to the ASM. Only nominees whose
In the case of new director candidates, the Committee names appear on the final list of candidates are eligible
first determines whether the nominee must be for election to the Board. No other nomination shall be
independent under SEC and BSP rules, then identifies entertained after the final list of candidates are drawn
any special needs of the current Board. The Committee up. No nomination shall be entertained or allowed on the
then conducts a candidate assessment for a high level floor during the ASM.
of personal and professional integrity, as well as to
assess the nominee’s likely level of commitment to the The Bank’s Amended By-Laws state that elections for
organization, availability, other external commitments the Board of Directors will be held yearly during the ASM.
and possible conflicts of interest. The Committee Voting for the election of members of the Board of
also examines if there is mutual fit and gauges the Directors is considered on a poll, by shares of stock, that
candidate’s interest and conscientiousness to determine is, one share entitles the holder to one vote, two shares
if he or she is suitable for the Board. This may include to two votes. Votes may be cumulated as provided for in
face-to-face meetings and interviews. Beyond the the Corporation Code. The fifteen nominees receiving the
selection criteria, the Committee also vets candidates highest number of votes are declared elected.
based on their full and voluntary disclosure. Considering

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A relationship that nurtures your future Table of Contents
Electronic Voting in Absentia. In its meeting held on Amended By-Laws and the Corporation Code. In case any
March 20, 2019, the Board approved Management’s vacancy or vacancies should occur on the Board during
recommendations for BPI to provide the Bank’s the period between two ASMs, due to death, resignation
stockholders with the option to vote in absentia in the or other causes, except removal, the remaining members
2019 Annual Stockholders’ Meeting and to amend the of the Board, if still constituting a quorum, may fill
Bank’s By-Laws to, among others, provide for the said said vacancy or vacancies by electing from among the
right. Hence, at the April 25, 2019 Annual Stockholders’ stockholders. The stockholder or stockholders so elected
Meeting, BPI stockholders were able to effectively shall act as a member or members of said Board until the
participate and had the option to cast votes in absentia election of a new Board of Directors.
through an online electronic system, as also provided for
in the Revised Corporation Code. Policy on Directorships. With a rigorous nomination
process, close monitoring and reporting of board and
No meeting of stockholders shall be competent to committee meeting attendance, an annual performance
transact business unless a majority of the outstanding evaluation which includes affirmative determination
and subscribed capital stock entitled to vote is of time commitments and an annual review of board
represented, except to adjourn from day to day or committee chairmanships and memberships, adequate
until such time as may be deemed proper. The Rules safeguards against over boarding or over commitment are
of Conduct, voting and vote tabulation procedures are in place. In adherence to Recommendation 4.3 the SEC
explained during the ASM. The Office of the Corporate CG Code for PLCs, directors must notify the Board of their
Secretary tabulates all votes received and the Bank’s intention to accept a directorship in another company. In
external auditor validates the results. Voting results are this respect, the Board policy on directorships currently
likewise disclosed on the various exchanges where BPI’s sets twenty-five (25) directorships as an acceptable
capital market issuances are traded and the company’s upper limit for board service.
website as soon as possible after the meeting. These
are discussed in much greater detail in the section of BPI directors are bound by the Board of Director’s
the BPI Integrated Report on Shareholder Rights and Code of Conduct to take into account their individual
Engagement. circumstances and the nature, scale and complexity
of the Bank’s activities in showing full commitment.
The election and appointment of directors and officers, They should be able to devote the time, schedule
which includes the Chairperson of the Board, of banks and attention necessary to its business interests,
such as BPI, must also be confirmed by the Monetary to properly and effectively perform their duties and
Board of the BSP. Elected or appointed directors and responsibilities, to avoid conflicts of interest, and to
officers must submit required certifications and other affirm this in writing annually.
documentary proof of qualifications for the confirmation
of their election or appointment. A lower limit in the number of directorships would reduce
the pool of interested and qualified director candidates
The nomination and election processes and their and increase difficulty in finding and retaining the most
effectiveness, are reviewed annually by the Nomination effective directors. The Bank also benefits greatly from
Committee during its review of the committee charter stewardship of experienced directors who serve on
and its self-assessment, by its members, of committee other boards and provide guidance and independent
performance. (Recommendation 2.6 of SEC CG Code for perspective on multi- faceted issues, and complex,
PLCs) strategic concerns in banking.

In adherence to Recommendation 2.6 of the SEC CG The Bank also applies a limit of five on directorships of
Code for PLCs, these nomination and election policies are Non-Executive Directors and Independent Directors in
disclosed in the Bank’s Manual on Corporate Governance publicly-listed companies and within conglomerates.
as well as on the company website. (BSP Cir. 969 and Recommendation 4.2 SEC CG Code for
PLCs). Application of the policy on directorships shall not
For more information, please read further on the impinge on or violate a shareholder’s ownership rights
Nomination Committee Charter at www.bpi.com.ph. and legal right to vote and be voted upon as directors.

Term of Directors. Directors are to hold office for a term The Bank also complies with the relevant provisions
of one year immediately upon their election and until of the Manual of Regulations for Banks on interlocking
the next election when their successor shall have been directorships. The Board regularly reviews interlocking
elected and qualified in accordance with the Bank’s board memberships to determine whether any of these

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 Corporate Governance

create real or possible conflicts of interest or impair the In its own annual board effectiveness self-assessment
ability of the involved directors to exercise independent exercise, BPI directors’ time commitments are also
judgment. reviewed to ensure that these are maintained at a level
that allows legal obligations and responsibilities as
Time Commitments. A thematic review of BPI directors’ board and committee members to be met and mitigates
time commitments, including a granular analysis of the potential risk that governance standards may be
Board and Committee packs and minutes, shows that weakened. This strength was validated in the board
the total aggregate professional time commitment of all effectiveness exercise conducted for the year 2019.
directors on the BPI Board runs in excess of 630 hours (Recommendations 4.1, 4.2 and 4.3 of the SEC CG Code
a year, not including their commitments, if any, on other for PLCs)
boards or organizations. On the other hand, the base time
commitment of an individual director on the BPI Board Director Education and Training. The Board policy,
is, on average, in the order of over 45 hours a year. Both as stated in the Manual on Corporate Governance, is to
figures do not include the significant time commitments ensure that directors acquire appropriate skills upon
of the directors for preparation and review of documents appointment, and thereafter remain abreast of relevant
for Board and Committee meetings, continuing education new laws, regulations, and changing commercial risks
and training, and engagement with the executive team through in- house training and external courses.
and stakeholders as needed. Factoring these in may easily
double the estimated time spent in the performance of In adherence to Recommendation 1.3 and 1.5 of the of
their duties and responsibilities as Director. the SEC CG Code for PLCs, the Office of the Corporate
Secretary, together with the Bank’s Corporate
Governance Department, Compliance Division, ensures
that the Board of Directors, in their own capacity or
Time Commitments as sponsored by the Company, are able to attend the
requisite programs, seminars and roundtables with
45 accredited service providers during the year.
65

24 Continuing education of Board members includes

internal meetings with senior executives and operational
• Average Hours’ per Director or functional heads, dedicated briefings on specific
• Highest No. of Director Hours
• Lowest No. of Director Hours areas of responsibility within the business and
special presentations on current issues or regulatory
initiatives with respect to Data Privacy, Cyber Risk
and Cyber Security, the Anti- Money Laundering and
The total aggregate professional time commitment of Terrorism Financing Prevention Program, Foreign
all directors on the BPI Board as well as their base time Account Tax Compliance Act, Securities Regulations
commitments compares very favorably with peers and Code, Sustainability Issues and ESG Reporting, SEC
industry averages, ensuring that BPI directors are able memorandum circulars, and BSP regulations, among
to fulfill their Board roles to an appropriate standard others.
and that the BPI Board’s quality of performance as a
body, is high. In contrast, much higher levels of time The Bank brings in technical, subject matter experts
commitment and committee memberships are regarded as needed. Board members also regularly attend
as risk indicators which triggers close monitoring and governance fora, conferences, and summits. New
reassessment of directors’ commitments. Directors are briefed on BPI’s background, organizational
structure, and, in compliance with BSP Circular No. 758
Majority of our Independent Directors hold no more than on general and specific duties and responsibilities of
two board level committee memberships each. Further, the Board. They are given an overview of the industry,
on average, most of our directors on the BPI Board hold regulatory environment, business of banking, strategic
no more than two board-level committee memberships plans of the Bank, its governance framework, i.e.,
each as well. Best practice surveys dictate having no more Manual on Corporate Governance, Director’s Code of
than two committees per director as “busy” boards and Conduct, Board operations (schedules, procedures
directors tend to have worse long-term performance and and processes), including support from the Corporate
oversight. This is especially important for Independent Secretary and senior management. (Recommendation
Directors who are mandated under BSP Cir. 969 to 1.3, 2.1 of the SEC CG Code for PLCs). New directors are
chair or be members of the risk and control board-level required to certify under oath that they have received
committees. a copy of the general responsibility and specific duties

100
A relationship that nurtures your future Table of Contents
and responsibilities of the Board and of a Director. This compensation for his services as director. The Board
certification is also submitted to the BSP together with has the sole authority to determine the amount, form,
the certification on their qualifications as a director. and structure of the fees and other compensation of the
directors. In no case shall the total yearly compensation
The following table shows the training received by the of the Board exceed 1% of the Bank’s net income before
Board of Directors: income tax during the preceding year.

Director 2018 2019 Board members receive per diems for each occasion
Jaime Augusto Zobel de Ayala of attendance at meetings of the Board or of a board
Fernando Zobel de Ayala committee. All fixed or variable remuneration paid to
Gerardo C. Ablaza, Jr. directors may be given as approved by stockholders during
Maria Dolores B. Yuvienco the ASM, upon recommendation of the Personnel and
Annual CG Training
Ignacio R. Bunye
conducted by the
Compensation Committee. Other than the usual per diem
Octavio Victor R. Espiritu Institute of Corporate arrangement for Board and Committee meetings and the
Directors (ICD) on
Mercedita S. Nolledo
September 10
aforementioned compensation of Directors, there is no
Rebecca G. Fernando Advanced CG Training other standard arrangement as regards compensation
conducted by the ICD on
Xavier P. Loinaz August 09 of directors, directly or indirectly, for any other service
Aurelio R. Montinola III provided by the directors for the last completed fiscal year.
Romeo L. Bernardo
Cezar P. Consing Advanced CG Training Board members with executive responsibilities within the
conducted by the ICD on
October 5
BPI group are compensated as full-time officers of the
Jose Teodoro K. Limcaoco
company, not as Non-Executive Directors.

No director participates in discussions of the

Distinguished CG
Corporate Governance remuneration scheme for himself or herself. Historically,
Antonio Jose U. Periquet Speaker Series
conducted by ICD on
Training conducted by total compensation paid annually to all directors has
GGAPP on July 17
February 13 been significantly less than the cap stipulated by the
Eli M. Remolona, Jr. Corporate Governance Bank’s Amended By-Laws. The remuneration policy is
Orientation Program
conducted by ICD on reviewed annually to ensure that it remains competitive
November 19 and consistent with the Bank’s high-performance culture,
objectives, and long-term outlook, risk assessment and
Remuneration strategies. This relationship between remuneration and
performance, which aligns remuneration of the Board of
BPI’s remuneration decisions for the Board and Directors with the long-term interests of the Bank, is in
management are aligned with risk incentives and adherence to Recommendation 2.5 of the SEC CG Code
support sustainable, long-term value creation. for PLCs.
Apart from ensuring that Board and management
pay appropriately reflects industry conditions and In 2019, BPI’s Board of Directors, as a whole, received a
financial performance, the Bank likewise rebalances total of Php 69.63 million as fees and other compensation
returns back to shareholders through consistent for the services they rendered.
dividend declaration.
These principles of paying competitively and paying for
Under the Bank’s Amended By-Laws, as approved by the performance applies equally to our Board and senior
shareholders, the Board, as a whole, determines the level executives as it does to the rest of the Banks’ employees
of remuneration and/or benefits for directors sufficient and staff. Senior management and staff remuneration
to attract and retain directors and compensate them for must reflect the interests of the shareholders and the
their time commitments and responsibilities of their role. Bank, and is structured to encourage the long-term
(Recommendation 8.4 of SEC CG Code for PLCs) commitment of the employee as well as long-term
outlook and plans of the Bank. (Recommendation 2.5
Our Personnel and Compensation Committee of SEC CG Code for PLCs). Factors considered include
recommends to the Board the fees and other revenues, volume, earnings, earnings per share (EPS),
compensation for directors, ensuring that compensation Return on Equity (ROE), Return on Assets (ROA), capital
fairly remunerates directors for work required in a strength, risk containment, corporate governance,
company of BPI’s size and scope. As provided by our customer satisfaction, adherence to corporate values,
Amended By-Laws and pursuant to a Board resolution, contributions both to operating unit and company- wide
each director is entitled to receive fees and other achievement, including any ESG factors which may be

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 Corporate Governance

relevant to the evaluation of an employee’s performance In 2019, the level of remuneration for the most senior
in the context of the sustainability objectives of the executive officers of the Bank is as follows:*
Bank. We are also committed to making adjustments
to remuneration to reflect the challenge of attracting, Name Salary* Bonuses*
Other
Salary
retaining and competitively rewarding key staff with the
Cezar P. Consing,
ability, experience, skills, values and behaviors to deliver President & CEO**
bank goals. In this respect, salary surveys conducted Antonio V. Paner,
by external compensation consultants are also used as EVP & Treasurer

references for employee salary benchmarking purposes. Ramon L. Jocson, P160,300,573.10 P82,552,300.00 None
EVP & Chief Operating Officer
Maria Theresa Marcial Javier,
Remuneration for our most senior officers, as reflected EVP & Chief Finance Officer
in the ratio between fixed and variable components Juan Carlos L. Syquia, EVP***
of their total compensation, changes according to * In as much as corporate governance best practices recommend that remuner-
performance, rank and function. (Recommendation 8.4 ation of the top five key officers be individually disclosed, the Bank believes that
it would be disadvantageous to do so because of the competitiveness and high
of SEC CG Code for PLCs). Apart from the aforementioned demand for talent in the industry.
key performance indicators, the Bank ensures that ** The President and CEO/Executive Director receives remuneration as Officer
and not as Executive Director of the Company. There are no other Executive
senior management remuneration and incentives Directors other than the President and CEO.
reflect prudent risk-taking and effective control. Salary *** Mr. Juan Carlos L. Syquia was promoted to the rank of EVP effective January 1,
2019.
reviews (covering fixed and variable compensation) are
done annually to ensure market competitiveness of the
officer’s total remuneration. The Bank also participates in Meetings and Attendance
Executive and Total Remuneration Surveys to benchmark
on its market positioning. Other remuneration policies Our directors make significant time commitments, not
include: only in preparing for and attending Board and Board
Committee meetings, but also to initial induction,
• All salary programs are subject to the approval of the continuing education, training, and engagement with
Personnel and Compensation Committee (PerCom) the executive team and stakeholders as needed.
and the Board. (Recommendation 4.1 of the SEC CG Code for PLCs)
• An annual merit increase may be granted upon
Management discretion based on the Officers’ The Board conducts business through meetings of the
performance. Board and its committees for the effective discharge of
• Upon Management’s discretion, a performance bonus its obligations. Regular board meetings are convened
may be given in a year, based on the performance monthly, scheduled at the beginning of the year to cover
and contribution of the individual in the attainment the full term of the newly elected or re-elected members
of the over-all Company goals. This is subject to the of the Board, reckoned from the date of the current year’s
endorsement of the PerCom and approval of the ASM to that of the following year. Special meetings may
Board. be called for as needed.
• The Board, through the PerCom, has established
long- term incentive programs, the Executive Stock
Option Plan (ESOP) and Executive Stock Purchase
Plan (ESPP), which give officers the opportunity to
buy shares of stock in BPI at a discounted price.
(Recommendation 2.5 SEC CG Code for PLCs). Details
on the ESOP and ESPP can be found in Note 18 of the
Audited Financial Statements.

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Board Meetings in 2019 were held on the following dates: No. of Meetings Attended in 2019
Name Attended/Total In Percentage (%)

Date of Meeting Nature of Meeting Jaime Augusto Zobel de Ayala 16/17 94%
Re-elected
January 16 Regular
Fernando Zobel de Ayala 16/17 94%
February 20 Regular Re-elected
March 20 Regular Cezar P. Consing (ED) 17/17 100%
April 25 Regular Re-elected

April 25 Organizational Gerardo C. Ablaza. Jr. 16/17 94%

Re-elected
May 15 Regular
Romeo L. Bernardo 17/17 100%
May 29 Special Re-elected
June 19 Regular Ignacio R. Bunye (ID) 17/17 100%
July 17 Regular Re-elected

August 20 Regular Octavio Victor R. Espiritu (ID) 17/17 100%

Re-elected
August 29 Special
Rebecca G. Fernando 17/17 100%
September 18 Regular Re-elected
October 16 Regular Delfin C. Gonzalez* 4/4 100%
October 24 Special Not Re-elected

November 20 Regular Jose Teodoro K. Limcaoco** 15/16 94%

Newly-elected
December 13 Strategic Planning
Xavier P. Loinaz (ID) 17/17 100%
December 18 Regular
Re-elected
Aurelio R. Montinola III 17/17 100%
Re-elected
Items placed on the board agenda are those that have
Mercedita S. Nolledo 17/17 100%
the most fundamental importance and broad policy Re-elected
implications for the Bank. Directors are free to suggest Antonio Jose U. Periquet (ID) 17/17 100%
items for inclusion in the agenda, and are free to raise at Re-elected

any board meeting subjects that are not on the agenda Eli M. Remolona, Jr. (ID)*** 13/13 100%
Newly-elected
for that meeting. At the Chairman’s discretion, any
Maria Dolores B. Yuvienco (ID) 17/17 100%
agenda items may also be referred for discussion in the Re-elected
respective committees. *Board member until 25 April 2019.
** Elected as Board member effective 20 February 2019
***Elected as Board member effective 25 April 2019
The Chairman presides over meetings of the Board. The
Vice Chairman presides in the absence of the Chairman.
Board and committee meetings are conducted consistent Minutes of Board and committee meetings are prepared
with the Bank’s Amended By-Laws. with due regard to legal requirements. Key points and
decisions taken have been summarized. The Board
In 2019, average attendance of re-elected and newly- generally acts by consensus rather than on an adversarial
elected members at the Board’s 17 meetings was 98.5%. basis, so that abstentions and rare instances of formal
When exigencies prevent a Director from physically dissent are duly recorded. Further, members of the Board
attending a Board or Board committee meeting, facilities take the initiative to have high-level discussions outside
for telephone conferencing are made available. In the Board meetings, including separate discussions with
instances when a Director is unable to attend meetings Senior Management on its proposals. The Chairman of
even through teleconferencing due to prior commitments the Board likewise ensures that there is a fair and honest
or unavoidable events, the said Director provides input exchange of ideas and opinions by and between the
to the chairman so that his views can be known and Directors and Senior Management in board meetings.
considered.
Discussions during board meetings are open and
independent views are given due consideration. When
necessary, the Board holds executive sessions to
discuss highly sensitive matters.

Board reference materials are made available to the

directors at least five days before the scheduled meeting.
As an innovation to board governance, all materials for
Board and Board committee meetings are uploaded

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 Corporate Governance

through a secure system onto individual tablet devices meetings or obtain clarification for any relevant matters,
specifically provided to the Board members to ensure this access to the Corporate Secretary is unhampered,
immediate receipt and quick access. unlimited and direct. Directors may simply request such
information by phone, email, written communication or
Non-Executive Directors (NED) Meeting. Independent in person, from the Corporate Secretary who in turn will
and Non-Executive Directors of the Bank also meet at give them all the information and assistance they will
least once a year without the presence of the executive need to prepare for the meeting or clarification of any
director or management. relevant matters.

The Bank’s Non-Executive Directors conducted a Our management also ensures adequate flow of
separate meeting on November 20, 2019 to discuss information to the Board. This information may include
ongoing initiatives and semestral performance of the risk the background or explanatory information relating
management, internal audit and compliance units of the to matters to be brought before the Board, copies of
Bank. The meeting was chaired by the Bank’s appointed disclosure statements and related documents, budgets,
Lead Independent Director. Aside from the NEDs present, forecasts and monthly internal financial statements.
the meeting was also attended by the BPI control heads In this respect, all directors also have access to advice
– Chief Risk Officer, Chief Audit Executive and Chief from senior management including C-Suite officers such
Compliance Officer. The external auditor was also in as the Chief Operating Officer, Chief Financial Officer,
attendance. Chief Audit Executive, Chief Risk Officer, Chief Human
Resources Officer, Chief Information Officer, and Chief
Members of the Board appreciate the high level of Compliance Officer.
commitment required of a Director. As evident in the
annual board self-assessment, each of the members All directors and board committees also have
has committed sufficient time to his/her board and unrestricted access to company records and information
committee responsibilities and has contributed in addition to receipt of regular detailed financial and
meaningfully to BPI. operational reports from senior management.

Quorum. The minimum quorum requirement for board External Advice. Considering the increasing complexity
decisions is set at a two-thirds (2/3) of Board members of market transactions and rapid rate of change in
as provided by the Bank’s Amended By-Laws. In the regulatory sphere, our Board, if requested by
November 2019, the Board approved the amendment the Chairman or other directors, can call on external
of the company By-Laws to, among others, raise the specialists or consultants for advice, briefings or
minimum quorum at any meeting for the transaction of assistance on specialized areas of focus such as
corporate business from a majority to two-thirds (2/3) accounting standards, related party transactions,
of the members of the Board of Directors. Any meeting capital, tax, listing, mergers and acquisitions, valuation,
for the transaction of corporate business, and every etc. Management can arrange for the external auditor,
decision of a majority of the quorum duly assembled as a management services company or consultants to present
Board shall be valid as a corporate act, unless otherwise to the Board and the Bank.
provided in the Amended By-Laws.
Role of the Corporate Secretary. Our Corporate
Access to Information Secretary, who is a senior, strategic-level corporate
officer, not a member of the Board and a separate
The Board needs to have the right information at the individual from the Chief Compliance Officer, plays a
right time, so that it can engage deeply on how the leading role in the Bank’s corporate governance, and as
business is operating, how the executive team is such, attends corporate governance training annually.
performing and provide the proper check and balance. The Corporate Secretary’s functions, as stated in the
Bank’s Amended By-laws and Manual on Corporate
The Board has separate and independent access to Governance, include:
the Corporate Secretary, who serves as adviser to the • Serve as an adviser to the directors on their
directors on their responsibilities and obligations and responsibilities and obligations;
oversees the adequate flow of information to the Board • Keep the minutes of meetings of the stockholders,
prior to meetings (Recommendation 1.5 of the SEC the Board, the Executive Committee, and all other
CG Code for PLCs). To provide directors with all the committees in a book or books kept for that purpose,
information and assistance necessary to prepare for and shall furnish copies thereof to the Chairman,
the President and other members of the Board as
appropriate;

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• Keep in safe custody the seal of BPI and affix it to any Using a widely-advocated standard evaluation method
instrument requiring the same; of self-assessment and feedback review, performance is
• Have charge of the stock certificate book and such assessed across four levels: the Board as a body, Board
other books and papers as the Board may direct; Committees, individual Directors, and President and CEO.
• Attend to the giving and serving of notices of Board Key evaluation criteria are built on the Board’s terms of
and shareholder meetings; reference and committee charters, and framed around
• Be fully informed and be part of the scheduling broad leadership fundamentals and best practices.
process of other activities of the Board;
• Prepare an annual schedule of Board meetings, The Corporate Governance Committee processes
including the regular agenda, and put the Board on and tabulates the results of the self-assessments and
notice of such agenda at every meeting; communicates them to the Board. Areas for improvement
• Oversee the adequate flow of information to the are discussed by the Board, in order to agree on remedial
Board prior to meetings. Materials for approval or actions. The Corporate Governance Committee may
for information shall be given to the members of also develop recommendations and action plans for the
the Board in advance prior to the date of meeting to Board, whenever necessary and desirable. In adherence
give them the chance to study and ask questions if to Recommendation 6.1 SEC CG Code for PLCs the Board
necessary, even before the meeting itself; and may also consider the use of an independent, external
• Ensure the fulfilment of disclosure requirements to facilitator in the conduct of the Board self-assessment.
the SEC and PSE
In this respect, the Board conducted its 2019 annual
Our Corporate Secretary is suitably trained and performance evaluation in early 2020. Directors assessed
experienced in legal, accountancy, or company that the Board as well as its committees and individual
secretarial practices and is professionally qualified for directors had performed their duties and responsibilities
these responsibilities. The present Corporate Secretary effectively for the past year and that there were no
possesses the legal skills of a chief legal officer whose material issues with respect to membership, governance,
training is complemented by business, organizational, and operations. This also included an assessment of the
human relations and administrative work skills. Our President and CEO.
Corporate Secretary is also the Corporate Secretary of
various BPI subsidiaries and affiliates. Third Party External Facilitator. In pursuit of best
practices, the Bank also engaged a Third Party External
See Appendix for the full biography of our Corporate Facilitator to conduct a separate Board Assessment
Secretary. covering the 2019 term. This was approved by the
Corporate Governance Committee on August 26, 2019,
Performance Evaluation and Self-Assessment and was subsequently endorsed to the Executive
Committee which approved the same in its meeting on
The Board annually conducts a self-assessment to September 11, 2019.
ascertain the alignment of leadership fundamentals
and issues, validate the Board’s appreciation of
its roles and responsibilities and confirm that the
Board possesses the right mix of background and
competencies. (Recommendation 6.1 of the SEC CG
Code for PLCs)

Board of Directors. In this regard, the Board, under

the guidance of the Corporate Governance Committee,
thoroughly reviews its performance, measured on the
basis of what it delivers and how it delivers, how it meets
its responsibilities to all BPI stakeholders, and how
it addresses issues that impact the Board’s ability to
effectively fulfill its fiduciary duties.

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Board Performance Evaluation and Self-Assessment (Recommendation 6.2 SEC CG Code for PLCs)

Process Criteria
Board of Directors Self-Assessment by all directors 1. Strategy and Effectiveness
2. Structure and Committees
1. The board of directors shall be given sufficient time to 3. Meetings and Procedures
accomplish the self-assessments. 4. Board and Management Relations
5. Succession Planning and Training
a. Each individual director performs the four (4) 6. Performance Evaluation
levels of self-assessment using the prescribed 7. Value Creation
forms, applying the rating scale and predetermined
evaluation criteria for each level. General and specific leadership standards under the
above criteria are considered in evaluating the Board as
b. For the Board and Committee-level assessments, a body such as:
while the directors will be rating the board’s
or committee’s performance as a body, the Adequacy of the processes which monitor business
accomplishment of the assessment forms is meant performance; board member interaction with
to be done individually, on a per director basis. This management; adequacy of board knowledge;
is to secure an honest, unbiased, independent and appropriateness of balance and mix of skills; size of
anonymous view from each director rather than a board; contribution of individual board members;
collective assessment that may already be subject board’s effectiveness in use of time; if board allows
to filtering and pre-agreement. sufficient opportunity to adequately assess management
performance; board’s ability to keep abreast of
2. Each director shall submit the completed forms on or developments in wider environment which may affect
before the deadline set by the Corporate Governance BPI; working relationship between chairman and chief
Committee or at such earlier or later date as the Board executive officer; segregation of duties between board
of Directors may agree upon. and management; ability of directors to express views on
each other and to management in constructive manner,
The Corporate Governance Committee processes the etc.
results of the assessments and communicates this to the
board through a Summary Report.
Board Committee A. Self-Assessment by all Directors General and Specific factors relating to Committee
organization, meetings, processes and procedures and
B. Submission of Accomplishment Reports to the Board overall effectiveness.
by the different committees. In addition, the Audit
Committee submits the “Self-Assessment in the 1. Committee role
Performance of the Audit Committee” to the SEC. 2. Committee membership
3. Procedure and practice
4. Committee structure
5. Collaboration and style
6. Personal

A sampling of factors under the above criteria include:

Use of committee time; adequacy of committee papers
and frequency of meetings; ability to access resources;
ability to keep informed in relevant area; provision for
continued development; working relationship between
committee chairman and members; segregation of
duties between committee and management; ability
of directors to express views on each other and to
management in a constructive manner, etc.

Individual Director Each director is required to fill-up a Self-Assessment 1. Leadership, Vision, Mission and Values
Form annually 2. Effective Governance
3. Strategic Thinking and Decision Making
4. Teamwork
5. Fulfillment of the Bank’s Governance Attendance
CEO/President Each director fills up an evaluation form based on 1. Leadership
the relevant criteria. These are then submitted to the 2. Working with the Board
Chairman. The CEO/ President’s performance is also 3. Managing Execution
evaluated at least once a year by the Personnel and 4. Communication/External Relations
Compensation Committee and Executive Committee.

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 Skills and Expertise Matrix
Board Term: 2019-2020
Competency Area Competencies (Skills. Experience, Attributes)<?>
Core Personal Attributes History of ethical behavior (prior or current directorships in other publicly-listed companies or
confirmation from regulatory bodies such as the BSP and SEC), availability (based on number of current
directorships), relevant and distinguished professional career (as may be determined from bio-data).
Board/ Corporate Governance experience Knowledge and experience in a system for the oversight of decision-making, actions and behavior
and governance structures (as may be determined from candidate’s bio-data/professional career);
Commitment to high standards of corporate governance (prior or current directorships and if publicly-
listed companies, classification as a director).
Executive Leadership/ Management Skills Senior executive perspective of running a large organization or bank; Experience with stakeholder
management. (as may be determined from bio-data/professional career)
Specialized Skills or expertise: Qualified financial expert or education; Ability to understand financial statements, assess adequacy and
• Accounting or Internal Control integrity of financial controls and reporting.
• Risk Management Knowledge of and experience with risk management models and methods.
• Technology Experience in information technology systems, or experience in technology governance in the financial
• Organizational Development services industry
• Public and Regulatory Experience in organizational/talent development, including executive performance, change
• Banking management, remuneration frameworks, etc.
• Other Experience in public and regulatory policy or working in government, public administration (as may be
determined from bio-data/professional career, education and training)

CEO and Senior Management. As stated in the Bank’s restructure the business to remain ahead of strategic,
Amended By-Laws and Manual on Corporate Governance, market, technology, and regulatory shifts. In the same
the board-level Personnel and Compensation Committee way, the Board and senior management leadership must
oversees the performance evaluation process within also respond to and anticipate future changes.
the Bank which includes annual review and approval
of the corporate goals, strategic objectives and The Board is committed to a process of orderly
standards relevant to CEO, senior management and succession and acknowledges that a succession plan
other key officers of the Bank. Performance is generally for the Board and for its leadership positions is in the
measured on the performance of the officer, a business best interest of the Bank and its stakeholders who
unit, or the Bank as a whole, or using a combination value the continuity in leadership. Leadership changes
of all as the executive’s responsibilities may dictate. are not only carefully considered and planned, but
(Recommendation 2.8, 2.9 SEC CG Code for PLCs) are also part of a comprehensive risk management
strategy that is guided by clear and transparent
The performance management framework considers governance policies, processes and laws.
strategies and goals or actual results of a given period’s
business objectives and core competencies. It also looks Board Succession. In this regard, our Board is regularly
into the behavior, technical competencies and soft skills refreshed in a continuing cycle. The Nomination
exhibited by the officer during the period under review, Committee and the Corporate Governance Committee
as well as fitness and propriety. The performance of work within a general board succession plan framework
control function heads for audit, risk management and to ensure that: 1) appropriate governance processes
compliance are also evaluated by the Audit Committee are in place and ongoing, for identifying, assessing
and Risk Management Committee. (Recommendation and monitoring future needs of the Board; 2) there is
2.8, 2.9 SEC CG Code for PLCs) continuity and transfer of knowledge in the Board so that
it may effectively fulfill its role and responsibilities to
The framework also follows a performance management BPI, as that may evolve over time, and; 3) the Board is
cycle: Goal setting, Performance monitoring, taking a prudent and structured approach to managing
Performance appraisal, Performance reinforcement and succession risk. (BSP Cir. 969 and Recommendation 2.4
Performance improvement. SEC CG Code for PLCs)

Succession Planning and Talent Management. Financial The Corporate Governance Committee assists the
services today face many transformative factors— Nomination Committee in the annual review and
regulation, market disruption, new technologies and assessment of the structure, size and composition of
business models, competition—that affect the business the Board and Board-level committees. The committees
in major and long-term ways. Our Board understands take into consideration the Bank’s current strategy and
that the Bank must continually evolve, adapt, and even business, regulatory requirements on independence and
1 Section X142.3.a.(1) of the MORB as amended by BSP Circular 969 “Enhanced diversity, as well as comparative benchmark and peer
Corporate Governance Guidelines for BSP Supervised Financial Institutions” group analysis.

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 Corporate Governance

Both committees also determine if there is reason to Our succession planning has effectively ensured
believe that one or more director slots shall become leadership continuity in the last three decades,
vacant in the following term of the Board of Directors witnessing three President and CEO changes, marked by
or within the next 12 months after the current year’s early planning and mentoring, smooth organizational and
ASM. In addition, the Nomination Committee considers operational transitioning, and prudent but progressive
the long-term strategic goals and directions as well as institutional building at BPI and across the BPI group.
requirements of the Bank and other companies in the
BPI group, moving forward. The Corporate Governance More information on Succession Planning and Talent
Committee may also review the Board’s forecasted Management can be read on the company website at
membership requirements over the next three to five www.bpi.com.ph.
years, based on factors such as directorship limits for
PLCs, diversity policy, retirement policy for directors, Retirement Policy
and term limits for independent directors. The Corporate
Governance Committee also utilizes a Skills and The best interests of BPI are served by retention of
Expertise Matrix to proactively shape board composition, directors that make very meaningful contributions to
identify competency gaps, if any, and build the desired the Board and the organization, regardless of age. It
or required competency profile against which candidate is the Bank’s strong view that with age often comes
directors will be assessed. The Board, through the unmatched wisdom and experience, expert business
Nomination and Corporate Governance Committees, judgment, invaluable industry and community
also considers candidate directors with respect to relations and authority, and deeply ingrained
their skills, engagement and past or present work or appreciation of the principles of corporate governance.
board experience that considers ESG factors. Using a
point system, succession planning priorities are then The Bank believes that imposing uniform and fixed limits
determined to guide the Nomination Committee in the on director tenure is counter-productive as it may force
assessment of candidates and in managing current and the arbitrary retirement of valuable directors.
future requirements of the Board.
Nevertheless, the Bank, in adherence to
On February 20, 2019, the Board approved during its Recommendation 2.4 of the SEC CG Code for PLCs, has
regular meeting the election of Mr. Jose Teodoro K. set a retirement age for Directors at 80 years old. In
Limcaoco as Non-Executive Director of the Board. At the specific cases, the Board, in mutual agreement with the
April 2019 BPI Annual Stockholders’ Meeting, Mr. Eli M. director, may opt to postpone said director’s retirement
Remolona, Jr. was elected as an Independent Director. depending on the following conditions:
i. Consistent and robust application of more dynamic
Senior Management Succession. The Board, through and constructive corporate governance practices
its PerCom, manages the talent pipeline and assembles such as the annual Board’s performance evaluation,
the required personnel capable of navigating such regular succession planning, an exhaustive
changes. In consultation with the President and CEO, the nomination process, and annual Fit and Proper
PerCom reviews the Bank’s talent development process assessment for more effective board refreshment.
for proper management. Senior management provides ii. The Board also evaluates all facts and circumstances
a report to this Committee on the results of its talent when considering a director’s tenure in accordance
and performance review process for key management with good governance practices, including (without
positions and other high-potential individuals. Aside from limitation) to accommodate the transition of a new
ensuring that there is a sufficient pool of qualified internal CEO or new directors or to provide continuity to
candidates to fill senior leadership positions, this review further strategic objectives or address external
process identifies opportunities, performance gaps, and factors affecting the Bank.
proactive measures in the Bank’s executive succession
planning. As part of the same executive planning Term limits of Independent Directors are set at a
process, the Committee as a whole or a part thereof, in maximum cumulative term of nine (9) years as prescribed
consultation with the Board and the President and CEO, in the Manual of Regulations for Banks and SEC
evaluates and nominates potential successors to the Memorandum Circular No. 9, Series of 2011 and No. 4,
President and the CEO. (Recommendation 2.4, 2.8 of the Series of 2017. (Recommendation 5.3 of the SEC CG Code
SEC CG Code for PLCs) for PLCs)

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The Retirement Policy and other board governance Board Committees. The Board has established
policies may be viewed on the company website at Committees to heighten the efficiency of Board
www.bpi.com.ph. operations and assist in exercising its authority for
oversight of internal control, risk management, and
Retirement of senior management is done with the performance monitoring of the Bank.
requisite succession planning and in accordance with
the Bank’s policies and implementing guidelines of its The committees provide organized and focused means
retirement plan for all employees, the Bank’s Amended for the directors to achieve specific goals and address
By-Laws, Labor Code and the Corporation Code of the issues, including those related to governance. In
Philippines. Currently, the retirement age for employees particular, the committees enhance the objectivity and
of the Bank is set at 60 years of age. independence of the Board’s judgment, insulating it from
undue influence of management and major shareholders.
The Board of Directors of BPI, in its regular meeting held In 2019, the Bank had eight Board-level committees. The
December 18, 2019, confirmed the appointment of Mr. chairmen and members of the different committees were
Dino R. Gasmen as Treasurer of BPI effective January elected by the Board during the Organizational Board
1, 2020. He replaced Mr. Antonio V. Paner, former Meeting on April 25, 2019, after the ASM. Any subsequent
Executive Vice President and Treasurer, who retired on changes in membership of the respective committees are
December 31, 2019. In BPI, Mr. Gasmen has been at made upon approval by the Board. (Recommendations
the helm of various divisions in Global Markets, heading 3.1- 3.6 of the SEC CG Code for PLCs)
Asset & Liability Management (ALM) in 2014 where he
was responsible for ensuring multicurrency liquidity We strive to comply with the BSP regulations and the SEC
and optimizing portfolio investments and heading the Code of Corporate Governance for PLCs with respect to
Treasury Trading Division from 2015 until 2018, leading the chairmanships and memberships of the committees.
the Foreign Exchange (FX) Trading, Foreign and Local All committee chairmanships and memberships are
Fixed Income Trading, and Derivatives Trading Desks. compliant with their respective committee charters and
the Manual on Corporate Governance.
See Appendix for full biographies of our Principal
Officers. Committee chairs and vice chairs provide leadership
to their respective committees and guide members
Contact our Board. Communications to our directors, in translating the Board’s goals for the committee
including any concerns regarding BPI’s risk management, into meeting agendas and work plans for the year.
governance, accounting, internal controls, auditing They work with the corporate secretary, management
or other matters, may be addressed to our Board of and committee secretariats to prepare the agendas,
Directors through the Office of the Corporate Secretary. discussion materials and reports, and schedules of
meetings set at the beginning of the year, for guidance
Board of Directors of the members. Committee meetings are recorded and
Bank of the Philippine Islands written minutes by the corporate secretary. The work,
Office of the Corporate Secretary accomplishments and minutes of the meetings of the
14/F Ayala North Exchange Tower 1, Ayala Avenue committees are regularly reported to the full Board.
cor. Salcedo St., Legaspi Village, Policies approved at committee level are confirmed by
Makati City, Metro Manila 1229 the Executive Committee or the full Board.

Concerns may be submitted anonymously or As part of the annual Board effectiveness review,
confidentially and may also indicate whether this is from committees conducted self-assessment exercises for
a shareholder, customer, supplier or other interested 2019 in early 2020. The review found all committees
party. Communications relating to the Bank’s risk to have performed their respective duties and
management will be endorsed to the Risk Management responsibilities effectively. There were no material issues
Committee. with respect to committee memberships, governance
and operations.
Accounting, internal controls or auditing matters will be
relayed to the Audit Committee. Other matters will also Attendance of the members of our Board in their
be handled by the appropriate board committee. In the respective committee meeting in 2019 are shown on
same manner, communications will be referred to other page 113.
areas of the Bank for handling as appropriate under the
facts and circumstances outlined in the communications.

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 Corporate Governance

BPI BOARD AND BOARD-LEVEL COMMITTEES1

Board Executive Audit Risk Corporate Related Party Personnel Nomination Retirement/
Management Governance Transaction and Pension
Committee Compensation

Number/Composition of 15 7 3 3 3 3 5 5 3
Committee Members
Frequency of Meetings* Monthly Weekly Monthly Monthly Quarterly Monthly As needed At least At least twice
twice a year a year
Name of Members
Jaime Augusto Zobel de Ayala x-C x-C x
Fernando Zobel de Ayala x-VC x-VC x-C x
Cezar P. Consing x x
Gerardo C. Ablaza, Jr. x x
Romeo L. Bernardo x x x-C
Ignacio R. Bunye (ID) x x x-C
Octavio Victor R. Espiritu (ID) x x x-C
Rebecca G. Fernando x x x x
Jose Teodoro K. Limcaoco x x
Xavier P. Loinaz (ID) x x-C x
Aurelio R. Montinola III x x x x x
Mercedita S. Nolledo x x x-C
Antonio Jose U. Periquet (ID) x x x x
Eli M. Remolona, Jr. (ID) x x
Maria Dolores B. Yuvienco (ID) x x x-C x
*Based on committee charter or current practice
1 x-C stands for Member and Chairman, x-VC stands for Member and Vice-Chairman, and x stands for Member

Committee Charters. All the board-level committees in the management and direction of the affairs of the
have Committee Charters which state their respective Bank subject to the provisions of the Bank’s Amended
purposes, memberships, structures, duties and By-Laws, and the limitations of the law and other
responsibilities, operations, reporting processes, applicable regulations.
resources and other relevant information which may
serve as a basis for performance evaluation of each The Executive Committee serves as the operating arm of
committee. In 2019, all committees conducted the the Board in all matters related to corporate governance.
annual review of their charters as well as the self- It approves all major policies and oversees all major risk-
assessment exercise. (Recommendation taking activities, including the approval of material credit
3.6 of the SEC CG Code for PLCs) exposures. A majority of all the members of the Executive
Committee shall constitute a quorum.
Said Committee Charters are fully disclosed in the
Manual on Corporate Governance and on the company In 2019, the Executive Committee approved major credit
website at www.bpi.com.ph. risks and major policies and corporate actions, i.e.,
approved contracts, sale of real properties, HR Matters
Executive Committee. The Board appoints from its (such as compensation, hiring, promotions, terminations),
members an Executive Committee composed of not transfers and relocation of branches, approval of Bank
less than five (5) members and one of whom shall be policies, including all matters related to corporate
an Independent Director. There were no changes in governance, i.e., anti-bribery and anti-corruption policy
the committee chairmanship and vice-chairmanship and board governance policies.
for 2019. On the other hand, at the Organizational
Meeting held on April 25, 2019, the Board appointed Audit Committee. The Board appoints from its
Mr. Jose Teodoro K. Limcaoco as a new member on the members an Audit Committee composed of at least
committee, taking the place of Ms. Mercedita S. Nolledo. three (3) Non-Executive Directors, majority of whom are
Membership of the committee remained in compliance Independent Directors including the Chairman. Members
with its charter. of the committee must have accounting, auditing or
related financial management expertise or experience
The Executive Committee, between meetings of the commensurate with the size, complexity of operations
Board, possesses and exercises all powers of the Board and risk profile of the Bank. The Chairperson of the Audit

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A relationship that nurtures your future Table of Contents
Committee shall not be the Chairperson of the Board Governance for Publicly- listed Companies” as well as best
of Directors or of any other board-level committees. practices espoused by the ASEAN Corporate Governance
(Recommendation 3.2 of the SEC CG Code for PLCs). Scorecard (ACGS). This included the amendment of the
There were no changes in the committee chairmanship Bank’s By-Laws, policy development and oversight of the
and membership for 2019. Membership of the committee corporate governance framework and practices of Bank
remained in compliance with its charter. subsidiaries. The Committee also provided guidance with
respect to regulatory matters concerning the BSP and SEC.
For 2019, the Audit Committee monitored and evaluated
the adequacy and effectiveness of the Bank’s internal Nominations Committee. The Board appoints from its
control systems, risk management, compliance and members a Nominations Committee composed of at least
governance practices. It provided oversight on the three (3) directors, majority of whom are Independent or
integrity of the Bank’s financial statements and financial Non-Executive Directors with a Chairman who is either
reporting process, performance of the internal and an Independent or Non-Executive Director. While there
external audit functions and compliance with bank were no changes in the committee chairmanship and
policies, applicable laws, and regulatory requirements. membership for 2019, beginning the 2019-2020 term of the
The Committee also approved the external auditor’s Board, the committee chairman, Mr. Romeo L. Bernardo,
annual audit plan and scope of work, and assessed its was reclassified as a Non-Executive Director, in compliance
overall performance and effectiveness. In consultation with independence requirements specified under BSP
with management, this Committee also approved the Circular 969 “Enhanced Corporate Governance Guidelines
external auditor’s terms of engagement and audit fees. for BSP Supervised Financial Institutions”. Membership of
the committee remained in compliance with its charter.
For more details, please read the Audit Committee
Report for the year ended December 31, 2019. The During the year, the Nominations Committee convened
report is also posted on the company website at to ensure that candidates for nomination to be elected
www.bpi.com.ph. at the 2019 Annual Stockholders Meeting were made up
of individuals of proven integrity and competence, and
Corporate Governance Committee. The Board appoints that each possesses the ability and resolve to effectively
from its members a Corporate Governance Committee oversee the Bank in his capacity as board member and
composed of at least three (3) members of the Board member in the board-level committees. The Committee
of Directors, who shall all be Non-Executive Directors, also evaluated the qualifications of Mr. Jose Teodoro
majority of whom are Independent Directors including K. Limcaoco and guided the nomination and election
the Chairman. (Recommendation 3.3 of the SEC CG Code activities as part of the succession planning process.
for PLCs). In June 2018, Ms. Astrid S. Tuminez resigned
from the Board to take up her appointment as President Risk Management Committee. The Board appoints
of Utah Valley University, USA. Correspondingly, Ms. from its members a Risk Management Committee (RMC)
Tuminez also relinquished her position as a member of composed of at least three (3) members of the Board,
the Corporate Governance Committee. No director was majority of whom shall be Independent Directors,
appointed to replace her as the committee membership including the Chairperson. Committee members should
still remained in compliance with its charter. Likewise, at possess a range of knowledge and expertise on risk
the Organizational Meeting on April 25, 2019, after the management issues and best practices. The Chairperson
Bank’s Annual Stockholders’ Meeting, no director was shall not be the Chairperson of the Board of Directors or
appointed to be a new member of the committee. of any other board- level committee. (Recommendation
3.4, SEC CG Code for PLCs)
The Corporate Governance Committee charter was
amended in November 2019 to reflect alignment of On April 25, 2019, Mr. Eli M. Remolona, Jr. was elected as
duties and responsibilities with BSP Circular 969. an Independent Director of the Board and a member of
the Bank’s RMC, replacing Mr. Romeo L. Bernardo, who
In 2019, the Corporate Governance Committee relinquished his Committee membership. Membership
carried out its regular mandate as set in its charter, of the Committee remained in compliance with the RMC
to offer recommendations for the Bank’s corporate Charter.
governance framework and to address, in particular,
BPI’s conformance to BSP Circular 969 “Enhanced The RMC Charter was amended in September 2019 in
Corporate Governance Guidelines for BSP Supervised line with the Bank’s adoption of a centralized enterprise
Financial Institutions” and BSP Circular 900, “Guidelines risk management structure, and remains fully compliant
on Operational Risk Management”, SEC Memorandum with BSP Circulars 969 (Corporate Governance) and 971
Circular 19, Series of 2016, “Code of Corporate (Risk Governance).

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 Corporate Governance

The RMC is tasked with nurturing a culture of risk For 2019, the Related Party Transaction Committee
management across the enterprise. In 2019, it vetted and/or endorsed Credit and Non-Credit
supported the Board by overseeing and managing the transactions involving accounts that reached established
Bank’s exposures to financial and non-financial risks, thresholds. The Committee formulated and approved the
assessed new and emerging risk issues across the policy on Material Related Party Transactions (RPTs) in
Bank, and regularly reviewed the Bank’s risk appetite compliance with SEC Memorandum Circular No. 10 on
and limits, policies, methodologies, structures, and Rules on Material RPTs for Publicly-Listed Companies,
metrics. These were all done in support of the Bank’s to align with the SEC’s objective of further promoting
business strategies, and in compliance with regulatory good corporate governance and protection of minority
and international standards on risk management. A investors. It also noted the quarterly/post- reviews of
more detailed report on the activities can be found RPTs by the Internal Audit (for significant RPTs) and BPI
in the Risk Management section of the annual report. Compliance Office (for below significant transactions),
(Recommendation 3.4 of the SEC CG Code for PLCs). as presented by the Chief Audit Executive and Chief
Compliance Officer, respectively, both of whom are non-
Personnel and Compensation Committee (PerCom). voting members of RPTC. The Committee also noted the
The Board appoints from its members a PerCom monthly reports on credit and non-credit RPTs that were
composed of four (4) members of the Board who are below the materiality threshold on accounts vetted by
not officers of the Bank plus one (1) member who is the Management Vetting Committee (MVC). Significant
an Independent Director. In the April 2019 Annual details of RPTs are disclosed in the audited financial
Stockholders’ Meeting, Mr. Delfin C. Gonzalez, Jr., statements.
previously a member of the PerCom, was not nominated
as a member of the board for the new term. Also, Retirement and Pension Committee. The Board
beginning the 2019-2020 term, Mr. Romeo L. Bernardo, appoints from its members a Retirement and Pension
a member, as well, of the PerCom, was reclassified as a Committee composed of at least three (3) directors,
Non-Executive Director of the Board, in compliance with majority of whom are Independent or Non-Executive
independence requirements specified under BSP Circular Directors with a Chairman who is either an Independent
969 “Enhanced Corporate Governance Guidelines for or Non-Executive Director. The Human Resources Head
BSP Supervised Financial Institutions”. As a result, shall also be a non- voting member of the Committee.
at the Organizational Meeting on April 25, 2019, Mr. In the April 2019 Annual Stockholders’ Meeting, Mr.
Antonio Jose U. Periquet, an Independent Director, was Delfin C. Gonzalez, Jr., previously a member of the
appointed as a new member of the committee. Retirement and Pension Committee, was not nominated
as a member of the board for the new term. As a result,
In 2019, the PerCom directed and ensured the at the Organizational Meeting held on the same date,
implementation of various programs of the Human Mr. Antonio Jose U. Periquet was appointed as a new
Resources Management Group such as: Leadership and member of the committee.
Talent Development, Compensation and Total Rewards
Review, the 2019 Performance Level Ranking Program For 2019, the Retirement and Pension Committee
for various unibank officers, the 2019 Stock Rights convened to oversee and discuss matters relative
Offer, CBA settlements, as well as promotions and to its fiduciary, administrative, investment portfolio
organizational changes during the year. responsibilities under its charter, as well as manage the
non-investment aspects of the Bank’s retirement plan.
Related Party Transaction Committee. The Board
appoints from its members a Related Party Transaction
Committee (RPTC) composed of at least three (3) Non-
Executive Directors, majority of whom are Independent
Directors including the Chairperson. (Recommendation
3.5 of the SEC CG Code for PLCs). At the Organizational
Board Meeting on April 25, 2019 after the Annual
Stockholders’ Meeting, Ms. Maria Dolores B. Yuvienco
was elected as an Independent Director of the Board and
a member of the RPTC. Membership of the Committee
remained in compliance with the RPTC Charter.

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COMMITTEE APPOINTMENTS, ATTENDANCE AND YEARS OF SERVICE

Committee Office Name Date of Attendance/ % Years served on

Appointment** Meetings Committee
Executive Committee Chairman (NED) Jaime Augusto Zobel de Ayala April 03, 2003 30/32* 94% 16.7

Vice-Chairman (NED) Fernando Zobel de Ayala April 03, 2003 29/32* 91% 16.7

Member (ED) Cezar P. Consing April 18, 2013 30/32* 94% 6.7

Member (NED) Rebecca G. Fernando March 31, 2009 31/32* 97% 10.75

Member (NED) Aurelio R. Montinola III March 25, 2004 29/32* 91% 15.75

Member (ID) Antonio Jose U. Periquet April 18, 2013 31/32* 97% 6.7

Member (NED) Jose Teodoro K. Limcaoco*** April 25, 2019 20/23* 87% 0.7

Audit Committee Chairman (ID) Xavier P. Loinaz April 15, 2010 16/16 100% 9.7

Member (ID) Octavio Victor R. Espiritu April 15, 2010 16/16 100% 9.7

Member (ID) April 14, 2016 16/16 100% 3.7

Maria Dolores B. Yuvienco
Member (NED) April 10, 2014 13/13 100% 2

Corporate Governance Chairman (ID) April 14, 2016 4/4 100% 3.7
Committee Maria Dolores B. Yuvienco
Member (NED) April 10, 2014 2/2 100% 2

Member (ID) Ignacio R. Bunye April 14, 2016 4/4 100% 3.7

Member (NED) Mercedita S. Nolledo April 06, 2006 4/4 100% 13.7

Nomination Committee Chairman (NED) April 25, 2019 2/2 100% 0.7

Chairman (ID) Romeo L. Bernardo April 14, 2011 100% 8

1/1
Member (ID) April 07, 2005 100% 6

Member (NED) April 14, 2011 100% 8.7

Jaime Augusto Zobel de Ayala 2/2
Chairman (NED) April 03, 2003 100% 8

Member (NED) Fernando Zobel de Ayala April 10, 2014 2/2 100% 5.7

Member (ID) March 31, 2009 100% 10.75

Xavier P. Loinaz 2/2
Member (ED & NED) April 03, 2003 100% 6

Member (NED) Aurelio R. Montinola III April 20, 2017 2/2 100% 2.7

Risk Management Chairman (ID) Octavio Victor R. Espiritu April 03, 2003 12/12 100% 16.7
Committee
Member (NED) April 18, 2013 92% 6.7
Aurelio R. Montinola III 11/12
Member (ED) April 07, 2005 85% 8

Member (ID) Eli M. Remolona, Jr.*** April 25, 2019 8/8 100% 0.7

Personnel and Chairman (NED) Fernando Zobel de Ayala April 03, 2003 10/10* 100% 16.7
Compensation Committee
Member (NED) Gerardo C. Ablaza, Jr. April 20, 2017 9/10* 90% 2.7

Member (NED) April 25, 2019 10/10* 100% 0.7

Romeo L. Bernardo
Member (ID) April 03, 2003 9/7 78% 16

Member (NED) Aurelio R. Montinola III April 18, 2013 8/10* 80% 6.7

Member (ID) Antonio Jose U. Periquet*** April 25, 2019 6/6 100% 0.7

Related Party Transaction Chairman (ID) Ignacio R. Bunye April 19, 2018 12/12 100% 1.7
Committee
Member (NED) Rebecca G. Fernando April 10, 2014 11/12 92% 5.7

Member (ID) Maria Dolores B. Yuvienco*** April 25, 2019 8/8 100% 0.7

Non-Voting Member Rosemarie B. Cruz,

(Chief Audit Executive)
Non-Voting Member Noravir A. Gealogo,
(Chief Compliance Officer)

Retirement Pension Chairman (NED) Mercedita S. Nolledo April 06, 2006 5/5 100% 13.7
Committee
Member (NED) Rebecca G. Fernando March 31, 2009 5/5 100% 10.75

Member (ID) Antonio Jose U. Periquet*** April 25, 2019 4/4 100% 0.7

*Includes Joint Percom & Excom Meeting

**For the period of 01 January to 31 December 2019
***Committee member effective 25 April 2019

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BPI Conglomerate Map

As of December 31, 2019

Bank of the
Philippine Islands

BPI Family Savings BPI Direct BanKo, Inc. BPI Computer Systems BPI Forex Corp.
Bank, Inc. 100% A Savings Bank 100% Corp. 100% 100%

BPI Payments BPI Operations BPI Investment Ayala Plans

Holdings Inc. 100% Management Corp. 100% Management Inc. 100% 98.93%

AF Payments, Inc. FEB Speed FEB Stock Brokers, Inc. First Far-East
20% International 100% 100% Development Corp. 100%

BPI Express Remittance BPI Express Remittance Green Enterprises S.R.L. BPI Asset Management and
Corp. USA 100% Spain S.A. 100% in Liquadation 100% Trust Corp. 100%

BPI Capital Corp. BPI Century Tokyo Lease

100% & Finance Corp. 51%

BPI Securities Corp. BPI Century Tokyo Citytrust Securities

100% Rental Corp. 100% Corp. 100%

BPI Remittance BPI International Finance FGU Insurance Corp. BPI/MS Insurance Corp.
Centre (HK) Ltd. 100% Limited 100% 94.62% 41.40%

BPI/MS Insurance Corp. FCS Insurance Agency

9.45% 24.92%

Santiago Land Development

Corp. 100%

BPI Europe Plc Filinvest ALGO Financial

100% Corp. 100%

Citytrust Realty Corp. Beacon Property Ventures, Global Payments Asia-Pacific BPI Philam Life Assurance National Reinsurance Corp.
40% Inc. 20% Philippines Inc. 49% Corp. 47.96% of the Philippines 13.69%

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BPI Table of Organization

The following is an overview of the Bank’s principal activities and its functional
organization (as of December 31, 2019):

Board of Directors

Board of Directors
Related Party
Board of Directors
Risk Management
Executive Board of Directors
Corporate Governance
Board of Directors
Transaction Committee Committee Committee Committee
Audit Committee

Risk President Corporate

Compliance Internal Audit
Management Secretary
& CEO

Sales & Services Mass Retail Core Retail Wealth

Business Banking Corporate Banking Global Markets
Channels Products Products Management

Unsecured
Bancassurance - Remittance and Asset & Liability
Lending Deposits Private Banking
Life Funds Transfer Management
& Cards

Transaction
Sales
Services

Trading

Marketing Strategy & Finance Enterprise Services Chief Credit Officer

Corporate
Unibank Central Digital Human BPI Family
Secretary &
Accounting Channels Resources Savings Bank
Investor Relations
BPI Capital
Corporation
Financial Planning Business Information BPI Direct BanKo
Legal Services
and Control Transformation Systems Inc.
BPI Century Tokyo
Lease & Finance
Balance Sheet Strategic Asset Corp.
Facilities Centralized BPI Asset
Management and Management and Management &
Services Operations
Analytics Sales Trust Corp.
BPI Europe PLC
Customer Corporate
Experience Affairs & BPI Investment
Management Communications Management Inc.
BPI Remittance
Centre (HK) Ltd.
Sustainability
BPI Foundation

BPI MS

BPI Philam Life

Assurance Corp.

Ayala Plans

BPI International
Finance Limited

Note: The following board-level committees also exist: Nomination Committee, Personnel & Compensation Committee
and Retirement and Pension Committee.

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Operating Management

Organization. BPI’s President and CEO is responsible We place strong emphasis on prudent risk-taking and risk
for formulating the business strategy and the overall management. Specific management committees ensure
management of the Bank in fulfilling objectives to achieve that major risks are identified, measured, and controlled
the desired outcomes of its strategy. The Bank’s senior against established limits. These key management
executive officers are each responsible for an area of the committees are the Credit Committees, Assets and
Bank’s business and report directly to the President and Liabilities Committee, Operational Risk Management
CEO. Committee, Crisis Resiliency Committee, Information
Technology Steering Committee, Capital Expenditures
In 2019, the senior executive officers of the Bank Committee, Anti-Money Laundering Evaluation
included: Simon R. Paterno, Executive Vice President and Committee, Fraud and Irregularities Committee, Real
Head, Financial Products and Services; Antonio V. Paner, and other properties acquired (ROPA) Sales Committee,
Treasurer, Executive Vice President and Head, Global and Management Vetting Committee. Members of
Markets; Ramon L. Jocson, Executive Vice President, these committees are senior officers (in the case of the
Chief Operating Officer and Head, Enterprise Services Information Technology Steering Committee, includes a
Segment; Juan Carlos L. Syquia, Executive Vice President non- executive board member) who are subject matter
and Head, Corporate Client Segment; and Maria Theresa experts in areas of knowledge relevant to the respective
Marcial Javier, Executive Vice President, Chief Finance committees. They include client specialists, product
Officer, and Head, Strategy and Finance. specialists, senior officers of the Risk Management
Office, and other senior executives.
The senior executive officers are responsible for ensuring
development and expansion of BPI’s client relationships; Control, Risk Management and Compliance.
service quality and innovation in its products and The Bank’s control, risk management and compliance
services; enterprise asset-liability management and flows agenda is a key priority, and in recent years, BPI has
business; reliability, productivity, and efficiency of our devoted significant resources to adhering and adapting
operating infrastructure; financial strategy formulation to the increasing number of heightened regulatory
and execution; and sustainable investor and stakeholder expectations and reporting requirements that guide the
relations. Banking Industry as well as publicly-listed companies.

In addition, the Bank has a Management Committee, In this respect, BPI continuously enhances governance
which regularly convenes to discuss matters of company- and oversight of the control, risk management and
wide relevance. The Management Committee is compliance environment across the group and strives
appointed by the President and CEO, and its membership to simplify and appropriately de-risk operations. The
is periodically rotated, to reflect current initiatives of the Bank also continues to make substantial investments
Bank and to grant senior decision-making exposure to in financial, technology and human capital dedicated to
executives below the rank of EVP. these efforts.

Planning and Performance Management. The Bank BPI regularly partners and engages in constructive
articulates its strategy in periodic planning exercises, dialogue with our regulators, shares efforts and
realizes plans in formal budgets, and conducts periodic seeks proper clearance in the design of appropriate
performance reviews against both our budgets and adjustments and remediation plans for the Bank’s
our past performance. We act in accordance with well- control, risk management and compliance environment.
defined operating policies and procedures, and ensure
the accuracy and transparency of our operational and The Bank takes extra effort to understand all legal and
financial reporting to protect the Bank’s reputation regulatory requirements and continuously builds and
for integrity and fair dealing. We also strive to achieve strengthens the culture and infrastructure to support risk
accountability in our revenue performance, efficiency management, compliance and assurance activities.
in our expenditure of resources, and high quality in
the delivery of services and achievement of customer In 2019, the Board of Directors, through its various
satisfaction. Our management is regularly reviewed and Board-level Committees, reviewed the Bank’s overall
rewarded according to their performance relative to control, risk management and compliance systems
innovation, initiatives, assigned targets, and feedback covering operational and financial areas and determined
from customers, peers, and the Board. these to be adequate and operating effectively.
(Recommendation 12.1 SEC CG Code for PLCs)

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Internal Audit and Control

Our Internal Audit Division is an independent body ratings on both internal and external assessments,
that supports the Audit Committee in fulfilling its which indicate that its activities have continuously
oversight responsibilities by providing an objective conformed to professional standards, code of ethics,
assessment on the adequacy and effectiveness of and other internal standards.
the Bank’s risk management, internal controls, and
governance processes through well- established risk- Internal Audit Charter. The internal audit function as
based audit plans. Internal Audit also ensures that the empowered by the Internal Audit Charter includes free
Bank’s operating and business units adhere to internal access to all records, properties, and personnel. In this
processes and procedures and to regulatory and legal respect, the Audit Committee reviews the internal audit
requirements. function, including its independence and the authority
of its reporting relationships. The Internal Audit Division
The assessment of controls, systems, and processes continuously improves the capabilities of its auditors
of the Bank is covered by the annual audit work plan, through continuous education on specialized areas
which is developed using the Audit Risk Assessment of knowledge, auditing techniques, regulations, and
or scoring model, and reviewed and approved by the banking products and services. As stated in the Manual
Board through the Audit Committee. The Committee of on Corporate Governance, the Board, thru the Audit
Sponsoring Organizations of the Treadway Commission Committee, periodically reviews and approves the
(COSO)1 internal control framework includes Control Internal Audit Charter. (Recommendation 2.10, SEC CG
Environment, Risk Assessment, Control Activities, Code for PLCs).
Information and Communication, and Monitoring
Activities, and the Control Objectives for Information The Internal Audit Charter is published on the company
and Related Technology (COBIT). These frameworks are website and may be read at www.bpi.com.ph.
used in assessing the effectiveness of the internal control
system. Chief Audit Executive. The Internal Audit Division is
headed by a Chief Audit Executive (CAE) who is appointed
This unit reports directly to the Board through its Audit by the Board and reports functionally to the Board
Committee. It collaborates with other assurance providers through the Audit Committee and administratively to
such as the Risk Management Office, Compliance Office, the President and CEO. This ensures that the CAE is not
external auditors, and other oversight units. Through this dependent on any bank executive or operating officer
system for the comprehensive monitoring and review of for the security of his or her position. The CAE has
risks and compliance in the institution, the Board ensures unrestricted access to all functions, records, property,
that the Bank and all business units proactively manage and personnel. Additionally, the Audit Committee ensures
the risk and compliance exposures impacting the business. that the CAE has access to the Board, on a confidential
(Recommendation 2.10 and 12.2 of the SEC CG Code for basis, and that the Internal Audit Division is independent
PLCs) of bank management, both by intent and actual practice.
The Board, through the Audit Committee, evaluates the
The Audit Committee also ensures that the Internal performance of the CAE. (Recommendation 2.8, 9.1, 9.2,
Audit Division undergoes an external quality 12.3 SEC CG Code for PLCs)
assessment review (EQAR) to confirm that audit
activities conform to the International Standards for See Appendix for the full biography of the CAE.
the Professional Practice of Internal Auditing and Code
of Ethics. The program includes periodic internal and Independent External Auditor. The Audit Committee
external quality assessments and ongoing monitoring recommends to the Board the appointment of a BSP-
of the performance of the internal audit activity. accredited external auditor for the purpose of preparing
Periodic internal assessments are conducted annually, or issuing an audit report or other related work. The
while external quality assessments are conducted at appointment, re-appointment, and removal of the
least once every five years by a qualified independent Bank’s external auditor is subject to the approval and
validator. This unit maintains its “generally conforms” endorsement by the Audit Committee, for subsequent
1 Joint initiative in the United States by five private sector organizations [the Institute
confirmation and approval by the Board and, finally, the
of Management Accountants (IMA), the American Accounting Association (AAA), the stockholders. (Recommendation 2.8, 9.1, 9.2, SEC CG
American Institute of Certified Public Accountants (AICPA), the Institute of Internal
Auditors (IIA), and Financial Executives International (FEI)], dedicated to guide ex-
Code for PLCs) The engagement of the external auditor
ecutive management and governance entities on relevant aspects of organizational is also done pursuant to the General Requirements
governance, business ethics, internal control, enterprise risk management, fraud,
and financial reporting.
of Securities Regulation Code (SRC) Rule 68, Par. 3
(Qualifications and Reports of Independent Auditors).

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 Internal Audit and Control

The Audit Committee also assesses the external auditor’s The audit and audit- related fees cover services including
effectiveness, independence, and objectivity, ensuring other related reviews and out-of-pocket expenses by
that key partners or the handling partner is rotated the external auditor that are reasonably related to the
at appropriate intervals or changed every five years performance of the audit or review of the Bank’s and
or earlier. The Committee also reviews the external its subsidiaries’ annual or interim financial statements.
auditor’s annual plan, scope of work, and, in consultation There were no non-audit fees (services not related to the
with management, approves the external auditor’s term review of the financial statements). (Recommendation
of engagement and audit fees. They also oversee the 9.3 of the SEC CG Code for PLCs)
resolution of disagreements between management and
the external auditors in the event that these arise. The Audit Committee charter, as stated in the Bank’s
Manual on Corporate Governance, provides that the
The Audit Committee ensures suitability and Audit Committee is empowered by the Board to approve
effectiveness of the external auditor through the all audit and non-audit services, including fees, to be
following: provided by the external auditor to the Bank and its
subsidiaries. It is also tasked to review the external audit
• No external auditor can be engaged by the Bank fees and recommend for approval by the Board.
if he has any direct or material indirect financial
interest in the Bank, or if his independence is Changes in and Disagreements with Accountants on
considered impaired under circumstances specified Accounting and Financial Disclosure. There were no
in the Code of Professional Ethics for Certified disagreements with Isla Lipana & Co. on accounting and
Public Accountants. In the case of partnership, this financial disclosures.
limitation shall apply to the partners, associates, and
the auditor-in-charge of the engagement.
• The external auditor and the members of the audit
team shall not have outstanding loans or any credit
accommodation (except credit card obligations) with
the Bank throughout the engagement.
• The external auditor and the members of the audit
team adhere to the highest standards of professional
conduct, integrity, and objectivity.

The external auditor reviews and discusses the financial

statements and reports, including results of operations,
with Management and the Internal Auditor, and endorses
the same to the Board for approval. Audited Financial
Statements are signed by the Chairman of the Board, the
President and CEO, and the Chief Finance Officer (CFO).
The Audit Committee also holds executive or private
meetings with the external auditors without the presence
of Management.

Audit and Audit-Related Fees. BPI has paid the

following fees, inclusive of taxes, to its external auditors
in the past two years:

(In Million Pesos) Approved Audit Fees Audit-related Fees

2018 Php 19.415 Php 2.535
2019 Php 18.210 Php 8.000

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Risk Management

Risk Management Committee of the Board of Directors

Chief Risk Officer

BPI Business Risk Officers (BROs) &

BPI Subsidiary Risk Officers (SROs)

Credit Policy & Risk Credit Risk Modeling, Market & Liquidity Operational
Management Analytics & MIS Risk Management Risk Management

Cross-Border Risk Enterprise Risk Management

Risk Models Validation Risk Systems
Management & Risk Data Architecture

Comprehensive Framework. BPI pursues best practices overseeing risk management function (2nd line), or
in Enterprise Risk Management (ERM) across its providing independent assurance on the quality and
businesses and processes. It has an established ERM and effectiveness of risk management and internal controls
capital management framework that enables the Bank (3rd line).
to identify, measure, control, and monitor its significant
financial and non-financial risk exposures, ensure BPI’s risk culture is anchored on its vision of
adequate liquidity, and set aside sufficient amounts of transparency and integrity in the workplace, creation of
capital to cover and mitigate such risks. The framework sustainable value, and delivery of maximum returns to
reflects the Bank’s internal standards as guided by the stakeholders. In order to achieve its responsibilities to
regulatory directives issued by the Bangko Sentral ng clients, employees, stakeholders, regulators and country,
Pilipinas (BSP) in promoting effective risk management it exercises proactive and prudent risk management.
governance, implementing robust business continuity
and resiliency standards that are regularly tested, and Chief Risk Officer (CRO). The BPI Group CRO leads
performing the internal capital adequacy assessment and the formulation of risk management policies and
other risk management processes. (Recommendation methodologies in line with overall business strategy.
2.11, 12.4 SEC CG Code for PLCs) The CRO, who is primarily responsible for the overall
management of the BPI Group’s total risk, ensures
Risk management in BPI follows a top-down approach, that risks are prudently and rationally taken, within the
with risk appetite setting and overall risk strategy Bank’s risk appetite, and commensurate with returns
emanating from the Board of Directors (Board). The on capital. The Bank’s risk appetite is a careful measure
Board fulfills its risk management function through of the amount of risk it is willing to assume in order to
the Risk Management Committee (RMC). The RMC achieve business objectives. Risk appetite statements are
defines risk appetite statements at functional risk areas regularly reviewed and approved by the Board through
and on an enterprise level, reviews risk management the RMC. See Appendix for the full biography of the BPI
structures, metrics, limits, and issues across the BPI CRO.
Group of Companies (BPI Group), and directs the
Bank’s risk strategy framework anchored on sound The CRO is supported by the Risk Management Office
risk management governance, value-enhancing risk (RMO), a team of skilled risk managers dedicated to
methods and processes, and risk-intelligent data and identifying, measuring, controlling, and monitoring the
technology. It oversees and manages risks and monitors BPI Group’s risk exposures. The Bank’s risk managers
regulatory and internal capital adequacy vis-à-vis keep abreast of industry developments, emerging risks,
risk exposures. It promotes a strong risk culture and and risk management best practices through continuous
exercises oversight through the Subsidiary Board-level and adequate training. The CRO and the RMO actively
RMCs across the BPI Group. It manages risks through engage the RMC, Management, and business units
clearly-delineated functions to ensure effective risk to effectively communicate through various internal
management governance and control processes across channels the Bank’s risk culture, risk awareness
the Bank using the “three lines of defense” model. This campaigns and learning programs, and risk management
model defines the risk management responsibilities best practices. (Recommendation 12.5 of the SEC CG
of each unit owning and managing the risk (1st line), Code for PLCs).

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 Risk Management

BPI identifies risks according to three major All these efforts have been undertaken and
classifications: conscientiously practiced in recognition of BSP Circular
• Credit Risk (including concentration and cross-border 971 (Risk Governance), as well as benchmarked to the
risks) Committee of Sponsoring Organization’s (COSO) ERM
• Market (including foreign exchange, interest rate, and integrated framework.
equity price risks) and Liquidity Risks
• Operational and Information Technology (IT) Risks Credit Risk. BPI’s Credit Policy and Risk Management
(CPRM) division is responsible for the overall
Credit risk arises from its core lending and investing management of the Bank’s credit risk. CPRM is
activities; market risk due to price movements/ accountable to the RMC in assisting to establish BPI’s risk
fluctuations in trading and distribution activities of appetite and in the RMC’s oversight function on credit
credit securities, foreign exchange, and derivative risk and asset quality. In addition, CPRM supports Senior
instruments (as allowed by regulation), liquidity risk Management in ensuring the quality of the Bank’s loan
from the management of the Bank’s balance sheet; portfolio by adopting proper risk control strategies and
and operational and IT risks from inadequate or failed adequate monitoring and reporting. CPRM ensures that
internal processes, people, information technology and the Bank’s stringent underwriting standards and rating
systems, and threats from external events that pose risks parameters are complied with by the various lending
of financial losses and damage to the Bank’s reputation. units. The Bank also has a cross-border risk management
The Bank is cognizant of other emerging risks (e.g., team tasked to independently monitor and evaluate
environmental, social, and geopolitical risks) that it may country and cross-border credit risks facing the BPI
be exposed to in its day-to-day business operations Group.
and these are identified, measured, controlled, and
monitored accordingly. In 2019, BPI experienced moderate growth in loan
volumes, but managed low overall credit risk and
The Bank has established risk management processes maintained asset quality, in general compliance with
and controls and uses various methodologies, metrics, regulatory and prudential requirements relating to credit
tools, and systems to identify, measure, control, and risk management (e.g., DOSRI and RPT compliance,
monitor its risk exposures. It continuously invests in single borrower’s limits, credit concentration, and
risk technologies and business-enabling systems, and stress testing, amongst others). BPI continues to
enhances its processes to ensure completeness and maintain a diversified loan portfolio with no significant
accuracy of data, 360o risk perspective, and timely concentrations. Top borrower-group exposures remain
reporting. With the implementation of the Risk Data within the internal single borrower’s limit and operate in
Architecture project leveraging on the Bank’s Enterprise diversified industries.
Big Data platform, the availability of automated risk data
not only supports the Bank’s risk management activities, BPI regularly reviews the appropriateness of credit
but also enables risk data servicing of the various risk rating of non-default accounts and classification
business units. and impairment rates of defaulted or impaired loan
accounts. Corporate credit risk exposures are assessed
In compliance with BSP Circular 989 (Conduct of Stress individually using internal credit risk rating models
Testing Exercises), the RMO together with the Strategy that generate a probability of default per rating grade
& Finance Group have commenced preparations for and take into account credit risk mitigation. Credit risk
a formal integrated risk and capital stress testing rating models are developed internally by the Bank’s
framework, with forward-looking assessment of risks to Credit Risk Modeling, Analytics and MIS team using
facilitate the development of contingency plans and risk statistical methods on quantitative and qualitative risk
strategies, under given stressed scenarios identified or factors, including credit judgment overlays to account for
developed by the Bank’s experts. borrower-specific and such other factors that cannot be
modeled statistically. The credit risk ratings of corporate
Independent reviews are regularly conducted by the accounts are generally updated on an annual basis.
Bank’s Internal Audit, external auditors, and regulatory Each rating grade has a corresponding probability of
examiners to ensure that controls and risk mitigation default that exponentially increases as a rated account
are in place and functioning as intended. The Bank moves across the rating scale. The migration of accounts
also engages various risk management experts to between rating grades is regularly monitored and
independently assess the Bank’s risk maturity covering analyzed. Loss provisioning also takes into account the
areas such as business continuity, cyber and information rating grade of each exposure. Provisioning for non-
security, and ERM. default exposures is based on expected credit loss (ECL),
while specific reserves are set up for defaulted exposures

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and reviewed regularly. For consumer loans, the Bank reporting. Results showed that the Bank’s capital
adopted credit risk scorecards to assess borrowers’ adequacy ratio (CAR) and common equity tier 1
creditworthiness. Both financial and non-financial ratio (CET1) generally remain above or at about the
variables were considered in the scorecard development regulatory capital requirements even with assumed
process, and all scorecards were subjected to expert write-down scenarios on the Bank’s large exposures,
judgment meetings with key business lending units. The exposures by industry (including real estate), and
models are independently validated, and their predictive consumer portfolios. Any shortfall is expected to be
power and performance are regularly monitored to adequately covered by the Bank’s realizable future
ensure they are qualitatively and statistically acceptable. income.

The Bank fully implemented Philippine Financial All these efforts have been undertaken in recognition
Reporting Standards 9 (PFRS 9)-based policies, models, of BSP Circular 855 (Sound Credit Risk Management
and ECL methodologies for all of its credit portfolios, Practices).
rendering it compliant to both the BSP and accounting
standards on PFRS 9 implementation. Loss provisioning Market, Interest Rate in the Banking Book, and
for corporate and consumer exposures are based on ECL, Liquidity Risks. BPI’s Market and Liquidity Risk
which is a function of the probability of default, loss given Management (MRM) division employs various risk metrics
default, and exposure at default. commensurate to the size and sophistication of its
business operations which guide the Bank to effectively
BPI also regularly conducts credit reviews to assess manage the risks arising from position-taking strategies
that the credit process—loan origination, credit analysis, balanced by the Board’s overall risk appetite. Risk
approval, implementation, and administration—conforms limits are continuously reviewed and updated to align
to the standards set in the Bank’s internal policies and with the Bank’s objectives, strategies, and overall risk
complies with regulatory requirements. In 2019, key appetite. MRM also provides forward-looking scenario
lending units and various credit products were reviewed analysis, simulations, and stress tests to complement
and were found to exhibit generally acceptable credit the risk metrics and provide a broader and holistic risk
performance and portfolio qualities. perspective to the RMC and Management. For 2019, BPI’s
market risk, interest rate risk in the banking book, and
BPI measures its credit risk exposures in terms of liquidity risk exposures were generally within the RMC-
regulatory capital requirements using the standardized approved limits.
approach in compliance with Basel III and BSP standards
on minimum capital requirements. Using this approach, BPI closely monitors the risk exposures of both trading
its credit exposures to sovereigns, corporates, and banks and non-trading portfolios. Assets in both on- and off-
are risk-weighted to reflect the credit assessment from balance sheet trading portfolios are marked-to-market
eligible ratings agencies (Fitch, Moody’s, Standard & and the resulting gains and losses are recognized through
Poors, and PhilRatings, where applicable). This approach profit or loss. Market risk exposures from these portfolios
also allows for the use of eligible collaterals (cash, are measured using the historical simulation value-at-
financial instruments, and guarantees) to mitigate credit risk model complemented by several risk metrics such
risk. as Stop Loss and dollar duration (DV01). The Bank has
exposures in credit securities, foreign exchange, and
BPI continuously enhances its credit policies, guidelines, financial derivatives such as interest rate swaps, currency
and lending programs specifically on the credit risk swaps, and structured notes as part of its trading and
limits-setting process, alignment with regulatory changes position-taking activities. Financial derivatives are also
in the treatment of past due and non-performing loans, used to hedge exposures to mitigate price risk inherent in
project finance, large exposure monitoring, and PFRS the Bank’s portfolios.
9 implementation. Its credit risk information system
is likewise continuously improved to enable more Interest Rate Risk in the Banking Book (IRRBB) is the
robust and granular analysis of the loan portfolio while current and prospective risk to the Bank’s capital and
delivering timely and accurate reporting of the Bank’s earnings arising from adverse movements in interest
loan structures, credit concentrations, and other risk data rates that affect its banking book positions. Excessive
analytics. levels of interest rate risks in the banking book can pose
a significant threat to the Bank’s earnings and capital
BPI regularly conducts stress tests on its loan base. Therefore, it is imperative for the Bank to establish
portfolio to determine the impact of changes in adequate risk management policies and procedures,
various macroeconomic scenarios, surface any undue appropriate risk measurement models, risk limits
credit concentration risk, and comply with regulatory structure, and a robust risk management system.

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 Risk Management

Interest rate exposures from core banking activities The risk management process, including its various
are measured through (a) earnings-at-risk (EaR), or the components, is subject to regular monitoring and
potential deterioration in net interest income over the next periodic independent review (i.e., internal/regulatory
12 months due to adverse movements in interest rates, audit and model validation), and consistently calibrated
and (b) balance sheet value-at-risk (BSVaR), or the impact to ensure accuracy, propriety, and timeliness of data
on the economic value of future cash flows in the banking and assumptions employed. The assumptions and
book due to changes in interest rates. BSVaR considers parameters used in developing these metrics are properly
both principal and interest payments while EaR considers documented, and any change in the methodology and
principal payments only. Both are built on the repricing assumptions is approved by the CRO and noted by the
profile of the balance sheet accounts. IRRBB risk levels RMC.
are compared against RMC-approved limits and regularly
reported to the RMC and Senior Management. Operational and Information Technology Risks. BPI’s
Operational Risk Management (ORM) division monitors
The Bank also conducts regular price stress tests in the risks arising from inadequate or failed internal processes,
banking book and EaR stress tests for a variety of interest people, and systems or from external events such as
rate shock scenarios to identify the impact of adverse natural disasters that damage physical assets and
movements in interest rates on the Bank’s economic electrical or telecommunication failures that disrupt
value and earnings. The design of the price and EaR the Bank’s operations. Operational risk is inherent in
stress tests include steepening and flattening yield curve, all banking products and services, and may include
parallel up/down and short rate up/down scenarios. The risks that give rise to adverse legal, tax, regulatory, or
interest rate shocks applied are calibrated for all major reputational consequences. Information Technology
currencies in which the Bank has active positions. The (IT) is a significant risk factor assumed in conjunction
results of the stress test are presented to the RMC and with operational risk, given the highly automated nature
Senior Management to integrate them to the overall risk of the Bank’s processes and services. The Bank defines
management process of the Bank. IT risk as the risk of any potential adverse outcome
arising from the use of or reliance on IT (i.e., computer
BPI ensures adequate liquidity levels at all times and hardware, software, devices, systems, applications,
contingency plans are in place in the event of liquidity and networks). IT risk includes, but is not limited to,
stress. The Bank’s liquidity profile is measured and information security, service availability, reliability and
monitored through its internal metric – the Minimum availability of IT operations, completion on specification
Cumulative Liquidity Gap (MCLG), and the regulatory of IT development projects, and regulatory compliance
metrics – Liquidity Coverage Ratio (LCR) and Net Stable pursuant to the BSP’s guidelines on Information
Funding Ratio (NSFR). MCLG measures the smallest net Technology Risk Management. The ORM Committee
cumulative cash inflow (if positively gapped) or the largest provides Senior Management oversight over its ORM
net cumulative cash outflow (if negatively gapped) over division, in accordance with regulatory requirements.
the next three months. This indicates the biggest funding
requirement in the short term and the degree of liquidity One of the significant resources that the Bank employs
risk present in the current cash flow profile of the Bank. LCR are Business Risk Officers (BRO). The Bank has several
determines the short-term resilience of the Bank’s liquidity BROs coordinating with and overseeing key functional
risk profile, requiring financial institutions to hold adequate areas and business units across the organization.
level of high-quality liquid assets to cover net cash outflows The BROs are responsible for promoting a sound risk
in the next 30 days. BPI, on a solo and consolidated basis, management culture, implementing ERM best practices
maintains adequate liquidity to provide sufficient buffer as determined by the RMO, and ensuring timely
for critical liquidity situations. NSFR complements the submission of operational and other risk reports in the
LCR by limiting the overreliance on short-term wholesale first line of defense.
funding and promotes enhanced assessment of funding
risk across all on- and off-balance sheet accounts. An BPI develops and monitors Key Risk Indicators
escalation procedure is in place to immediately report to (KRIs), oversees thoroughness of Bank-wide risk and
Management and the RMC when MCLG, LCR, and NSFR control self-assessments, loss event management
levels are approaching approved floor levels and the processes, and operational risk management awareness
minimum regulatory limits, respectively. Corrective actions and appreciation programs. The Bank manages its
are identified and implemented to resolve possible and operational and IT risks by ensuring such risks are
actual breaches, if any, in order to maintain a stable liquidity thoroughly identified, assessed, monitored, reported,
environment. Scenario analyses and simulations provide and mitigated. It has defined clear responsibilities related
forward looking liquidity conditions to anticipate potential to the performance of the risk management function,
funding requirements. as well as the accountabilities, methods, and tools

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employed to identify and mitigate operational and IT To further strengthen IT risk and information security
risks in the Bank’s operating units. It requires operating awareness, the RMC is continually briefed on current
units to undertake regular self-assessments to identify cybercrime landscapes, emerging risks, and industry
risks, assess the inherent and residual risks, identify trends, as well as mitigating measures implemented by
controls, and assess the design and the performance the Bank.
effectiveness of these controls. KRIs are used to monitor
risk profiles, trigger early-warning alerts, and instigate The Bank continues to closely monitor established
mitigating action. Operational loss events data collection measurements and limits on risk indicators, and
and analysis provide meaningful information in effectively implement mitigating measures in view of increasing IT-
managing risks. The risk and control library improves the related losses (mostly from industry-wide credit card fraud
Bank’s aggregation and reporting process by providing an and card skimming incidents). It employs a real-time card
aligned taxonomy of risks and controls. With the Bank’s fraud detection system that helps the Bank significantly
drive for digitalization, ORM implemented an ORM System improve fraud detection, false positive rates, and fraud
(ORMS) that fully integrates these tools and processes. case handling. It has also implemented the One-Time
Through the ORMS, manual processes are eliminated, Password (OTP) functionality to enhance security for
and correlation with all tools is possible, thereby credit card transactions. E-mail and SMS notifications for
providing better visibility to Management. Automated Teller Machine (ATM) withdrawals exceeding
set threshold amounts are in place. The Bank has updated
BPI’s exposure to operational risks is identified, its ATM switch, upgraded its ATMs and Cash Deposit
assessed, and monitored as an integral part of the risk Machines, and migrated debit cards to become EMV-
assessment processes. The Bank currently uses the compliant. Moreover, awareness campaigns covering
Basel II regulatory basic indicator approach to quantify both clients and employees are being done through
operational risk-weighted assets, using the historical www.bpi.com.ph and social media channels.
total annual gross income as the main measure of risk.
Business Continuity Risk. BPI is able to maintain
BPI regularly performs operational risk stress tests, its business continuity capability and organizational
through scenario analysis, to support the internal resilience, by means of an effective and sustainable
capital assessment for operational and IT risks, as part Business Continuity Management (BCM) program. This
of the Bank’s initiatives to advance risk management program was self-assessed by the Bank, aligned with
methodologies. Through a series of stress scenarios, the ISO 22301 and BSP Circular 951 (Business Continuity
Bank is able to identify, analyze, and assess the impact Management). Within this program are methodology,
of unexpected and severe operational risk events. This products and services, recovery plans, and response
exercise ensures that the impact of high-severity events structure to provide adequate level of services until
is captured during risk assessment, especially those not normal operations resume. The Business Impact Analysis
yet reflected in the Bank’s existing historical loss data. (BIA) methodology identifies products, services, and
processes that should be prioritized during a disruption.
The Bank’s risk management processes are ingrained in Risk Assessment for Business Continuity (RABCon)
BPI’s new product development efforts. From inception identifies the most probable threats to the bank,
to launch, new products or programs, as well as its assesses the likelihood of their occurrences and their
related processes and systems, are subject to rigorous impact to key areas of the bank. Business Recovery Plan
risk assessments, design and testing activities aimed at (BRP) provides a suitable solution that focuses on the
safeguarding both the Bank and its clients from the risks impact of events and the timely restoration of building,
of economic loss, operational disruption, or compromise equipment and supplies, technology and vital documents,
of personal or financial data. BPI has updated its human resources, and third-party vendors.
guidelines on the assessment and approval process for
engaging in new business activities to cover not only Resiliency structure is in place and functional areas have
products and processes, but also new markets and new been identified to meet business continuity objectives and
business locations or offices. to support the agreed recovery solution. Each functional
area has a designated Functional Business Continuity
The Bank has a Board-approved IT risk governance Coordinator who handles localized risk events impacting
structure that espouses the three lines of defense. It business units in the functional areas, with the support
also has a dedicated IT Risk Committee and IT Steering and guidance of tactical teams such as the Incident
Committee that meets regularly, where IT risk issues are Management Teams and the Corporate BCM Unit. For
discussed at the management level. The Board-level RMC incidents that rise to the level of a true crisis, the Crisis
is regularly apprised of IT risks through comprehensive Resiliency Committee (CRC), composed of senior officers of
reporting and discussions during monthly meetings. the Bank, is convened to establish command and control.

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Information and Physical Security Risks. The Bank is Legal and Tax Risks. BPI has two specialized legal
vigilant about information and physical security. BPI’s services divisions composed of highly-trained legal
Enterprise Information Security Management (EISM) professionals with experience in banking and corporate
team is continuously maintaining and revalidating the law that serve as BPI Group’s main legal resource.
inventory of the Bank’s information assets to enhance
monitoring and reporting of information security risks. The Bank’s Corporate Legal Affairs unit has a critical
It addresses the evolving cyber-threat landscape and role of providing proactive legal measures to effectively
adheres to applicable laws such as the Data Privacy Act manage legal and tax risks. It has the documentation
by continuously improving its defenses, following the and research department to respectively ensure that
Bank’s Information Security Program. the Bank’s rights and obligations are protected in its
contractual relations and that the Bank is abreast with
To complement continued investments in technical the most recent legal developments and requirements.
controls and recognizing the criticality of a cyber-aware It also conducts a legal risk assessment of potential
organization in securing the Bank from attacks, the Bank claims against the Bank and recommends legal risk
has an established awareness program that includes mitigation measures. It further empowers the Bank
classroom trainings, e-learning courses that are accessible units by issuing legal and tax advisory bulletins and
anytime, anywhere, roadshows, and periodic bulletins. providing supporting training seminars that highlight
Awareness campaigns for clients to combat fraud are legal issues, new laws, and regulatory fiats that
also conducted extensively online via social media, the impact the Bank’s products and services, and promote
BPI website, press releases, and e-mail bulletins. The awareness of initiatives of various regulatory agencies.
Bank continually implements programs such as these
to make clients and employees aware of the current The Bank’s Dispute Resolution and Litigation unit plays
cybercrime landscape, emerging risks and trends, and a significant role in protecting the Bank’s rights and
mitigating measures to further strengthen operational interests and in avoiding losses when it is involved in
risk and information awareness. An established third- litigation. It handles criminal, civil, and administrative
party or vendor risk management program ensures that cases (including cybercrime cases) for and against the
the use of service providers and IT suppliers do not Bank to protect the Bank’s rights and interests. Likewise,
unnecessarily expose the Bank to operational, regulatory, it handles defensive cases filed by any party against the
and reputational risk. Bank for any reason.

BPI’s Central Security Office (CSO) is at the forefront of Reputational Risk. The Bank defines reputational risk
ensuring a safe and secured environment within which the as the risk of possible damage to the Bank’s brand
Bank’s clients and personnel can conduct business at their and reputation that can adversely affect the ability to
convenience. Being the office responsible for the physical maintain existing or establish new business relationships
security of the Bank’s facilities and the overall safety of and continued access to sources of funding.
its clients and employees, CSO implements a proactive
and integrated approach to people, infrastructure, BPI has an established reputational risk management
and information security to address the increasingly framework that provides consistent standards for
sophisticated and cross-border threats on financial the identification, assessment, and management of
products and services fulfillment. Facilities monitoring reputational risk issues. While all employees have a
and evaluation are constantly undertaken to achieve responsibility to protect the Bank’s reputation, which
more advanced, secured, and climate resilient designs forms part of the Bank’s Code of Conduct, the primary
integrating value engineering of monitoring systems responsibility for managing and reporting reputational
to stay ahead of the evolving physical and financial risk matters lies with the business and operating units
security landscape. Reinforcing this effort is capability in the first line of defense. The Corporate Affairs and
development through physical security monitoring Communications unit, on the other hand, is the risk
systems improvement and deployment of emergency control owner of reputational risk, promoting awareness
communications at strategic areas for enhanced and application of the Bank’s policies and standards
coordination. CSO also has a Disaster Response and regarding reputational risk and encouraging business
Management Plan set for emergencies and calamities. It units to take account of the Bank’s reputation in all
has deployed a combination of personnel and physical and decision-making, including dealings with customers and
technological assets to further ensure timely and efficient suppliers, and among employees.
response. Requisite personnel trainings and knowledge-
based projects are further implemented to amplify the
holistic approach to the Bank’s overall physical security
and safety of personnel and clients.

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The Bank’s policies ensure reputational risk matters Sound Capital Management. Effective capital
are managed in a consistent manner and align with management supports the Bank’s assets and absorbs
the Bank’s strategic priorities. It has established risk losses that may arise from credit, market and liquidity,
indicators for reputational risks that are regularly operational and IT, and other risk exposures. The Bank’s
monitored and reported. These include metrics related capital management framework ensures that on stand-
to traditional and social media monitoring, products and alone and group bases, there are always sufficient capital
services, channels, financial performance, and corporate buffers to support the respective risk profiles of the
social responsibility. various businesses of the Bank, as well as changes in the
regulatory and accounting standards and other future
Model Risk. BPI’s Risk Models Validation (RMV) division events.
is responsible for conducting the independent model
validation activities of the Bank’s risk and stress testing BPI submits a comprehensive internal capital adequacy
models. The independent validation of risk models assessment process, or ICAAP, document annually to the
is governed by the Bank’s model risk management Bangko Sentral, in accordance with the Pillar 2 guidelines
policy and governance framework, aimed at ensuring of the Basel framework.
an active and effective model risk management across
the enterprise. RMV conducts an annual inventory of its As of December 31, 2019, BPI’s solo (parent) and
models to ensure relevance, comprehensiveness, and consolidated CAR stood at 14.94% and 16.07%
usability across functional risk areas. Given the increased respectively, higher than the minimum regulatory
regulatory expectations on model risk management and requirement of 10.0%. The Bank’s solo and consolidated
validation in the context of PFRS 9 and enterprise stress CET1 capital ratio at 14.08 % and 15.17%, respectively,
testing, and the necessity for business-enabling and likewise compare favorably with regulatory and internal
risk-informed decision-making, RMV aims to continuously limits and buffers.
test the quality and robustness of the Bank’s risk models,
benchmarked to global best practices on model risk The table below shows the Bank’s CAR components for
management. December 2019 and 2018:

With the Bank’s comprehensive risk management Risk Regulatory Capital

framework and continuous efforts to enhance its risk (Php Million) 2019 2018
management activities, BPI was recognized as the Credit Risk 140,720 131,092
Market Risk 2,402 2,223
2019 ASEAN Risk Champion by the Enterprise Risk
Operational Risk 13,764 12,260
Management Academy (ERMA), becoming the first
Total 156,886 145,575
Philippine bank to win the said award.
Capital Adequacy
(Php Million) 2019 2018
CAPITAL ADEQUACY CET1/Net Tier 1 238,063 221,124
T2/Net Tier 2 14,079 13,116
The Bank’s Corporate Strategy and Investor Relations Total QC 252,142 234,240
(“CSIR”) oversees the management of the Bank’s capital Total CRWA 1,407,202 1,310,922
adequacy. Capital adequacy ratio, or CAR, is a measure Total MRWA 24,016 22,226
Total ORWA 137,637 122,598
of the Bank’s total qualifying capital relative to its risk-
TRWA 1,568,855 1,455,746
weighted assets, and indicates the ability of its capital
Consolidated Ratios (%)
funds to cover various business risks. CAR 16.07 16.09
CET1 15.17 15.19
CSIR also ensures compliance with regulatory capital Solo (Parent) Ratios (%)  
adequacy requirements, as well as internal capital CAR 14.94 14.83
thresholds, referred to as the Bank’s internal minimum CET1 14.08 13.97
Common Equity Tier 1 (CET1) ratio, or IMCET1, and the
CET1 management action trigger, of CET1MAT, which
incorporate the Bank’s internal capital buffers and limit
triggers, and capture risks beyond Pillar 1 (credit, market,
and operational).

Furthermore, as the central planning unit of the Bank,

this division is responsible for assessing and raising the
strategic capital needs of the Bank, as well as initiating
approvals for dividend payments to shareholders.

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 Risk Management

RELATED PARTY TRANSACTIONS

In the normal course of business, the Bank transacts

with related parties which include its directors, officers,
stockholders and related interest, subsidiaries and
affiliates (including those under the Ayala Group of
Companies), as well as other related parties defined in
the Bank’s internal policy.

The Bank maintains its registry of related parties (RPs)

which is regularly updated based on the results of RP
analyses, as part of the Know-Your-Customer process,
conducted by the business units. Updates are also
sourced from other reference materials and information
gathered from internal bank units and external sources.
In April 2019, the Bank implemented an electronic
Related Party Database to facilitate users’ access to and
improve controls in the maintenance of the RPs registry.

RPTs involve credit and non-credit exposures such as

borrowings, guarantees, agreements for the periodic
provision of leases or other services, asset purchases
and sales, derivative transactions, trust transactions,
and investments, amongst others, for which RPs are
perceived to have significant influence. Vetting is done
prior to implementation either by the Board-level Related
Party Transaction Committee (RPTC) or the Management
Vetting Committee (MVC), depending on materiality, to
ensure that transactions with RPs are normal banking
activities and are done at arm’s length (particularly
on terms and conditions comparable to those offered
to non-related parties or to similar transactions in
the market). In 2019, RPs whose individual and group
exposures, existing or potential, are considered material
were vetted by the RPTC.

The RPTC is composed of three directors, majority of

whom are independent including its Chairperson, and
two non-voting members from Management, the Chief
Audit Executive and the Chief Compliance Officer,
both of whom perform post-reviews to ensure proper
implementation of RPTs. The RPTC Secretariat, which
is part of the Risk Management Office, assists the
Committee in carrying out its responsibilities as defined
in the RPTC Charter, particularly on strengthening
corporate governance and RPT practices. The MVC is
composed of the Executive Vice Presidents of the Bank.

The Bank is committed to ensure strict compliance with

laws, regulations and reporting requirements relating
to DOSRI and related party transactions, by instituting
rigorous vetting processes, establishing adequate
controls and oversight mechanisms, and pursuing
improvements such as its related party database
to facilitate the timely and accurate related party
classification of clients and counterparties.

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Compliance

The Bank views compliance to mean not only adherence The Compliance Office routinely provides advice to
to laws, regulations, and standards but, more individual business units on applicable laws, directives,
importantly, the consistent conduct of the affairs of standards, and regulations as well as provides
the Bank within a culture of high integrity, conforming compliance support to the Group Compliance Officer.
to ethical business practice, abiding by the principles It jointly develops guidance on operations and business
of fair dealing, accountability, and transparency. This processes in order to guard against potential compliance
ensures that in all its areas of activity, the Bank and risk, and reviews and assists in interpretations of laws,
its stakeholders are protected from business risks implementing rules and regulations, standards and
as comprehensively as possible. The Bank values guidelines of the BSP, SEC, Anti- Money Laundering
its reputation most and the fact that it is trusted by Council (AMLC), PSE, Philippine Deposit Insurance
its shareholders, clients, employees, partners, and Corporation (PDIC), Insurance Commission (IC), National
members of the communities it serves. Privacy Commission (NPC), and other regulatory bodies
for compliance, communicating them and verifying
As the Bank’s second line of defense, the compliance adherence.
function has also evolved in recent years to adapt to the
shift towards more technology-heavy strategies, as it seeks The Compliance Office also helps achieve adherence to
to deliver the compliance risk management outcomes the Bank’s internal confidentiality regulations (“Chinese
required in an era of digital transformation. While remaining Walls”); provides regular training and education for
a key advisory function, it has embraced a more forward- employees on the applicable regulations, rules, and
thinking, risk-based, and stress-tested approach to internal standards; and leads the Bank’s business units
continuously monitor, evaluate, and improve its ability to in compliance risk assessment, rules-based testing and
ensure compliance in a banking landscape that is subject to reporting.
disruption and rapid change.
The Compliance Office is currently organized to cover
Chief Compliance Officer. Oversight of the management Regulatory Compliance, Corporate Governance, Anti-
of the Bank’s business risk and implementation of its Money Laundering Compliance, FATCA Compliance
compliance function is the responsibility of the Board, and the Data Privacy Office. Considering the rapid
through the Audit Committee (Recommendation 2.10 developments in the regulatory sphere, as well as the
of the SEC CG Code for PLCs). At the management level, growing complexity of the Bank’s products, services,
the compliance function is carried out by the Compliance and transactions, the Compliance Office evolves in its
Office, led by the Chief Compliance Officer (CCO). coverage of compliance practice areas to anticipate and
meet future challenges. Enhancement of our compliance
Designated by the Chairman of the Board, the CCO is function’s scope and domain is redefined for new and
not a member of the Board and has the rank of at least emerging sources of compliance risk.
a Vice President. The CCO’s qualifications are subject to
the applicable provisions of the Manual of Regulations for The Compliance Office is also empowered by 22 Group
Banks, particularly considering Fit and Proper criteria such Compliance Officers (GCOs), who are embedded in
as integrity or probity, competence, education, diligence, operational units throughout the Bank. The GCOs enforce
and experience and training. The CCO annually attends Compliance Office initiatives, as well as provide timely
training on corporate governance. (Recommendation 1.6 reports to the Compliance Office.
SEC CG Code for PLCs) See Appendix for the full biography
of the CCO. The Compliance Office applies a three-layered compliance
testing and monitoring process, which includes unit self-
The Compliance Office oversees the implementation of assessment testing conducted by GCOs and independent
the Bank’s enterprise-wide compliance programs. These random testing performed by the Compliance Office.
programs take into account the size and complexity of Independent periodic review is conducted by the Bank’s
the Bank, the relevant rules and regulations that affect Internal Audit Division. Results of compliance testing are
its operations, and the business risks that may arise reported regularly to the Audit Committee.
due to non-compliance. By using regulatory and self-
assessment compliance matrices, compliance measures Overall enforcement is through self-regulation within
are formulated to mitigate identified business risks and the business units, and independent testing and reviews
tested to ensure effectiveness. conducted by the Compliance Office and Internal Audit.

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 Compliance

Results of these reviews are elevated to the Board’s Audit Anti-Money Laundering Compliance. The prevention of
Committee and, with respect to governance issues, the financial crimes is a top priority of BPI, not only because
Corporate Governance Committee. they pose a significant threat to its reputation, but
because they weaken the integrity of the global financial
The Compliance Office promotes adherence and awareness system. Hence, the Compliance Office extends its ambit
to laws, rules, and regulations by electronically posting beyond the Bank, its policies, and its employees to
information and documents in a compliance database ensure that its clients also act within the law and do not
that is accessible to all employees. Regular meetings use the Bank for illegal activities.
are conducted by the Compliance Office with the GCOs
to discuss the impact of new regulations, decide on the The Compliance Office’s Anti-Money Laundering
required compliance measures, and amend compliance Department is responsible for monitoring customer and
matrices as necessary. Through continued liaison and counterparty transactions in compliance with the
dialogue with regulators, the Compliance Office ensures Anti-Money Laundering Law, its implementing rules
the prompt dissemination of new regulations and other and regulations, and BSP Circular 706 and all other
developments affecting bank operations. amendments thereto. Developed under the guidance of
the BSP’s Money Laundering and Terrorism Financing
Regulatory Compliance. The Regulatory Compliance Prevention Program, the Bank’s anti-money laundering
Department covers adherence to all relevant and program covers all its subsidiaries and affiliates.
applicable Philippine banking laws and regulations. They
are in charge of regulatory compliance management This program aims to implement sound anti-money
with respect to the BSP’s institutional compliance laundering practices and combat terrorist financing
rating system, which comprehensively evaluates the and other financial crimes. It consists of conscientious
effectiveness of a bank’s compliance system in mitigating customer due diligence and know-your-customer (KYC)
business risk. processes; sanctions screening; automated tools to
identify and detect financial transactions of a suspicious
Partnership-building with the regulators, external nature; and monitoring, testing, periodic review, and
auditor, and industry organizations (Association of Bank timely reporting of anti-money laundering-combating
Compliance Officers and the Bankers Institute of the the financing of terrorism (AML-CFT) events to senior
Philippines) is also essential in regulatory compliance management. This program also includes regular and
management. effective AML-CFT training and awareness programs
for all personnel; maintenance of customer data and
Corporate Governance. The Corporate Governance transaction documents within prescribed timelines; and
Department covers the compliance aspect of the Bank’s timely updates of policies and procedures in accordance
corporate governance framework and requirements with changes in regulations and AML-CFT typologies.
externally, with respect to the laws relevant and
applicable to BPI as a bank and as a PLC such as the With increasing global AML initiatives and numerous new
Corporation Code, and the rules and regulations of the regulations, the Bank recognizes that its AML processes and
BSP, SEC, PDIC, and PSE, and internally, with respect controls are changing from a stand-alone function under
to BPI’s Articles of Incorporation, Amended By-Laws, Compliance, to an increasingly complex and overarching
Manual on Corporate Governance, Code of Business function cutting across legal, risk and operations. The Bank
Conduct and Ethics, and all corporate governance-related constantly reviews its program to ensure compliance with
policies such as those on conflict of interest standards, the latest legislative and regulatory developments. The
insider trading, whistleblower, related party transactions Board and management support bank-wide efforts towards
and anti-bribery and anti-corruption. establishing strong AML assurance mechanisms and
globally consistent standards.
The Corporate Governance Department also monitors
compliance with regional corporate governance The specialized IT system captures information required
initiatives, jointly sponsored by the SEC and the ICD for covered transaction reports, and detects suspicious
such as the ASEAN Corporate Governance Scorecard. transaction patterns for reporting to the AMLC.
Working closely with the Board-level Audit and Corporate
Governance Committees, this department ensures To promote awareness, knowledge, and understanding
that the Bank’s corporate governance foundations can of AML concepts, principles, and requirements, all
withstand rigorous tests and demands of more stringent employees are required to attend training programs
supervision, regulation, disclosure, and bank governance conducted by the Bank’s AML Department or through
best practices. e-Learning courses available with the BPI University, its
in-house training academy.

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FATCA Compliance. The Bank recognizes global data protection risks for the organization, consistent with
movements to widen tax regimes across borders such as the Data Privacy Act rules and regulations, issuances by
the enactment into law by the United States government the NPC, and other applicable laws. Management has
of the Foreign Account Tax Compliance Act (FATCA). BPI also appointed Compliance Officers for Privacy (COP) for
values its ability to transact efficiently in US dollars and, major business units of the Bank to augment the Data
in support thereof, established a FATCA Compliance Privacy Office and ensure the sustained implementation
Department to ensure consistent and effective of the Data Privacy Management Program across
compliance with FATCA regulations throughout the Bank business lines. To promote transparency and to comply in
and its subsidiaries. part with the Data Privacy Act, BPI has published online
and inside its branches the Data Privacy Statement that
As required under the rules of FATCA, the Bank has discloses how BPI collects, protects, uses, and shares
appointed a responsible officer to oversee the Bank’s personal data across its operations.
compliance with regulations, establish a program to
ensure its effective implementation, and accomplish The Bank’s Data Privacy Statement may be read at
certain certifications with the IRS. The FATCA compliance www.bpi. com.ph.
program provides for additional requirements on
customer due diligence and documentation and new MANUAL ON CORPORATE GOVERNANCE
reporting guidelines to relevant tax authorities.
The Bank has a Manual on Corporate Governance which,
The Bank appears in the U.S. internal revenue service together with the board and board-level committee
official list of participating financial institutions with the charters, supplements and complements BPI’s Articles
Global Intermediary Identification Number (GIIN) of of Incorporation and Amended By-Laws. It sets forth the
CUC04I.00000.LE.608. underlying principles of good and transparent governance
through a framework of policies, rules, systems, and
Type of Financial Institution (FI): Lead of an Expanded processes for the Board and Management’s performance
Affiliated Group of their respective duties and responsibilities to
stakeholders. The manual also discusses the Bank’s
FATCA Classification and Date of Registration: sustainability initiatives which encapsulates the value
• Participating Foreign Financial Institution: April 23, created from BPI’s business model while innovating for
2014 operational efficiency, empowering people and society,
• Registered Deemed-Compliant Financial Institution/ using resources more efficiently, and strengthening
Reporting Financial Institution under a Model 1 IGA: stakeholder trust.
March 23, 2015
The Board commits itself to the principles and practices
Data Privacy Office. Republic Act No. 10173, known contained in the manual that are designed to ensure
as the Data Privacy Act of 2012, requires government independence and effective oversight. The Board also
and private sector entities to apply the principles of undertakes every effort to create awareness of these
Transparency, Legitimate Purpose, and Proportionality principles and practices within the Bank to ensure proper
in its processing of personal data so that the data is (1) internalization by every member of the organization. The
only used in relevant and specifically stated ways, (2) not manual is on the Bank’s internal electronic database and
stored for longer than necessary, (3) kept safe and secure, published in the company website for easy access and
(4) used only within the confines of the law, and (5) stored viewing.
following people’s data protection rights. Cybersecurity
and data privacy and protection have become corporate The Manual on Corporate Governance, reviewed annually,
governance and risk management concerns. was last approved for amendment in February 2020.
Upon amendment, BPI submits the updated Manual on
BPI has established a comprehensive Data Privacy Corporate Governance, bearing the signatures of the
Program utilizing a combination of policies, organizational Chairman of the Board and the Chief Compliance Officer,
structure, access controls, and technologies designed to the SEC.
for risk reduction. The Bank has a Data Privacy Office,
headed by a Board-appointed Data Protection Officer The Manual on Corporate Governance may be read on our
(DPO), a senior management officer. The key focus of the website at www.bpi.com.ph. (Recommendation 8.7 SEC
DPO is to oversee data privacy compliance and manage CG Code for PLCs)

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 Compliance

Compliance with the SEC Code of Corporate CODES OF BUSINESS CONDUCT AND ETHICS
Governance for PLCs. A certification on the Bank’s
full compliance with the BPI Manual on Corporate BPI has Codes of Business Conduct and Ethics for its
Governance, containing relevant provisions of the SEC directors, officers, and employees that provide the key
Code of Corporate Governance for PLCs, signed and practices and behaviors. The codes serve as guidance so
issued by the Chief Compliance Officer, is posted on the that the right decisions are made in the performance of
company website. their respective roles and responsibilities across various
functions in the Bank. (Recommendation 7.1 of the SEC
ASEAN CORPORATE GOVERNANCE SCORECARD CG Code for PLCs)

BPI actively measures its governance practices against Employee Code of Business Conduct and Ethics. Built
its counterparts in the region. The Bank has adopted around BPI’s Mission and Vision, Credo and Core Values,
the rigorous benchmarking framework of the ASEAN the Code lists the high-level ethical principles that guide
Corporate Governance Scorecard (ACGS), which rates the Bank’s business, how its employees must treat its
how ASEAN PLCs’ governance practices fare against clients, and the conduct expected from them. The Code
global standards. also includes guidance on care for the environment, labor
rights, customer service and protection, commitment to
Since the SEC and the Institute of Corporate Directors human rights, the right to privacy, and anti-bribery and
(ICD) jointly launched the scorecard initiative in 2012, anti-corruption. The Code of Business Conduct and Ethics
BPI has merited considerable success and continues is a declaration of principles and, more so, a vital part of
to register marked improvement in its scorecard the Bank’s risk management strategy. Annually reviewed,
performance. In 2019, BPI was one of the first awardees the Code was refreshed and approved by the PerCom in
of the inaugural Institute of Corporate Directors’ (ICD) August 2017.
Golden Arrow Awards as a Top Performing Company in
the ASEAN Corporate Governance Scorecard. Through the Code, the Bank desires to: (1) build a culture
of integrity, accountability, and ethical behavior that
The Bank’s ASEAN Corporate Governance Scorecard is encourages employees to abide by the Code and strive to
posted on the company website at www.bpi.com.ph. protect the Bank’s reputation; (2) establish a system for
detection and reporting of known or suspected ethical
INTEGRATED ANNUAL CORPORATE GOVERNANCE wrongdoing or violations of the Code, and; (3) emphasize
REPORT BPI’s commitment to compliance with regulatory
guidelines, rules, and laws. (Recommendations 7.1 and
SEC Memorandum Circular No. 15, Series of 2017 and 7.2., SEC CG Code for PLCs)
PSE Memorandum CN No. 2017-0079 mandate all
companies listed in the PSE to submit the Integrated
Annual Corporate Governance Report (I-ACGR) on or
before May 30th of every year that the company remains
listed on the PSE.

The I-ACGR covers (1) Recommendations from SEC CG

Code for Publicly-Listed Companies, (2) Supplemental
provisions from PSE CG Guidelines Disclosure Survey,
(3) Additional requirements not in SEC CG Code/PSE CG
Guidelines but expected of PLCs, and (4) Requirements
from the ASEAN CG Scorecard (optional).

BPI’s latest I-ACGR as well as that of previous years’ may

be viewed on the company website at www.bpi.com.ph.

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THE CODE OF BUSINESS CONDUCT AND ETHICS Guidance on the Code. Throughout the Code, employees
OUR CLIENTS will find information, key terms, and links to related
Values at work: Customer Service, Teamwork, Concern for People policies on BPI’s internal electronic database, to
-- Building Client Relationships guide them in making ethical decisions. However, the
-- Safeguarding Privacy and Security of Client Information Code does not contain the answers to every question
-- Promoting and Strengthening Consumer Protection
employees may encounter at work nor cover every
OUR EMPLOYEES
violation. In the absence of a specific policy, employees
Values at work: Integrity, Excellence, Teamwork, Loyalty
have a responsibility to use good judgment, comply with
-- Adhering to Company Rules and Workplace Policies
-- Creating Dignity and Unity in the Workplace the spirit of the Code, and seek help from their immediate
-- Contributing to Workplace Health & Safety superior, the Human Resources Management Group,
-- Following Limits of Authority
-- Avoiding Conflict of Interest or HR Employee Care Unit if they have any questions or
-- Protecting Property and Assets of BPI and Others concerns.
-- Recognizing Privacy of Employee Information
OUR SHAREHOLDERS
Reporting Violations. All employees must report to
Values at work: Integrity, Excellence, Teamwork, Loyalty
management any information they may have about any
-- Upholding the Bank’s Reputation, Service Quality and Trust
-- Transparency, Liaison and Coordination with Regulators
offense or Code violation which has been, is being, or
-- Maintaining Company Records and Reporting Requirements is about to be committed. Failure to do so will subject
-- Supporting Investors and the Market
-- Encouraging and Assisting Whistleblowing
the employee to the appropriate disciplinary action.
-- Handling Related Party Transactions Protection of the reporting party’s identity will be
OUR COUNTRY maintained to the extent possible, within the legitimate
Values at work: Integrity, Excellence, Teamwork, Concern for People needs of law and the fact-finding process. Where
-- Compliance with KYC, Anti-Money Laundering and FATCA appropriate, BPI may apply the protected disclosure
Regulations protocols of our Whistleblower Policy. Employees are
-- Preventing Insider Trading
-- Enforcing Anti-Corruption and Anti-Bribery also expected to cooperate with any investigation,
-- Dealing with Suppliers and Business Partners inquiry, examination, or litigation related to the offense or
-- Caring for Sustainability and Communities
Code violation.

Applicability of Code. The Code is applicable to and Director’s Code of Conduct. BPI has a Code of Conduct
mandatory for all employees at all levels of the BPI for its Board of Directors, adopted in September 2017,
group. As no code could address every situation an which applies to and is binding on all directors of
employee may encounter, all employees are required the Bank. The Director’s Code is intended to provide
to follow both the spirit and the letter of the Code, its guidance to directors, whether executive, non-executive,
policies, and procedures. Annually, all BPI employees are or independent, with policies on standards for conduct
required to read, understand, and comply with the Code of the business of the Bank, the protection of its rights
of Business Conduct and Ethics. and its stakeholders, maintaining BPI’s reputation for
integrity, and fostering compliance with applicable laws
All others who work for, or on behalf of, BPI are also and regulations. The principles outlined in the Director’s
required to demonstrate the highest standards of Code of Conduct: (1) codify a standard of conduct for
professional business conduct. In general, this includes which directors are to abide throughout their term of
consultants, agents, contract or temporary workers, and service, from the date of their appointment; (2) set out
business partners. a range of matters relating to the director’s role and
the behavior expected of them to properly undertake
Each employee’s conduct is his or her own responsibility their fiduciary duties, protect the business interests
and decision. No employee should ever commit a of BPI, and maintain its reputation for integrity, and;
violation even if directed to do so by a manager or (3) emphasize BPI’s commitment to compliance with
colleague. Any disciplinary action shall be directed regulatory guidelines, rules and laws In contrast to the
against the employee’s wrongdoing and not against his Board Charter and Manual on Corporate Governance,
person or personality. which sets out the qualifications, role, composition,
duties, and responsibilities of the Board within the
The identity of an employee, who is the subject of a Code governance structure of the Bank, the Code governs the
violation or disciplinary process, and information on such behavior and conduct of the directors.
proceedings, shall be maintained in confidence to the
extent possible, given the legitimate needs of law and the
fact-finding process.

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 Compliance

The Director’s Code, therefore, sets forth policies in the Board, through the Personnel and Compensation,
several basic areas that commonly require directors Audit, and Corporate Governance Committees, ensures
to exercise sound and informed judgment, recognize that the Bank’s Human Resources Management Group
and deal with ethical issues, report possible unethical implements and monitors compliance with the Code.
conduct, and foster a culture of openness, fair dealing,
diligence, and accountability. These basic areas include: COMPANY POLICIES AND STANDARDS
(1) leadership and stewardship; (2) diligence, care, and
skill; (3) upholding the law; (4) conflict of interest; (5) Major policies and standards are also in place to guide
competition and fair dealing; (6) confidentiality; and (7) and support BPI employees’ adherence to the Code of
corporate disclosure. The Director’s Code also discusses Business Conduct and Ethics and to internal company
directors’ time commitments, training and development, rules and regulations.
personal investments and insider trading, political
activity and involvement, gifts policy, anti-bribery and Conflict of Interest. BPI does not tolerate those who
anti-corruption, related party transactions, competition place their interest above that of the institution, its
and fair-dealing, and public communication. These are clients, or business partners. The Bank has in place
all part of the key ESG issues for the banking sector, standards on conflict-of-interest that elevate the interest
i.e., Resilience, Business Ethics, Responsible Finance, of the Bank above that of the personal interests of
Financial Product Governance and Human Capital. directors, officers, and employees. These standards
(Recommendation 2.1 SEC CG Code for PLCs) prohibit directors and employees from using their
position of authority or rank to directly or indirectly derive
Dissemination of the Codes. Among others, the Bank’s personal gain or advantage.
codes of conduct and policies on conflict-of-interest,
insider trading, whistleblower, related party transactions, Our standards on conflict of interest expect all directors
and other guidelines are embodied in the Bank’s Manual and employees to refrain from any conduct that could be
on Corporate Governance and included in the Bank’s viewed unfavorably by the Bank’s clients, co-employees,
Management and Operating Manual and Personnel Policy competitors, suppliers, investors, regulators, or the
Manual, each of which is recorded in electronic databases public. The standards also require full cooperation and
readily accessible for all Bank employees. Bank policies provision of complete and accurate information from
are also regularly announced via internal e-mail facility employees during government, regulatory or internal
to ensure constant top-of-mind awareness of employees enquiries, investigations, and audits. Directors are
of the need to comply with these policies. Directors required to disclose any conflicts of interests such as
are provided with hard copies as well as electronic cross-board memberships, cross-shareholdings with
copies of the Director’s Code. Both the Employees’ and suppliers and other stakeholders, and related party
Directors’ Codes of Conduct are disclosed in the Manual issues. See Appendix for Board biographies.
on Corporate Governance and on the company website
at www.bpi.com. ph. (Recommendation 7.1, 8.7 SEC CG The standards also cover specific conflict-of-interest
Code for PLCs) situations such as receipt of gifts from third parties,
respect for trade secrets, use of non-public information,
Training on the Codes. New employees are likewise and use of company funds, assets, and information.
given training on the Bank’s Credo and the Code of
Conduct as part of a values integration session. The Conflict of Interest standards are disclosed in the
Manual on Corporate Governance and on the company
Compliance with the Codes. All directors and website at www.bpi.com.ph. (Recommendation 7.1, 8.7
employees acknowledge annually, through a Statement SEC CG Code for PLCs).
of Affirmation, that they have read and understood
the employee Code of Conduct and/or the Director’s Anti-Bribery and Anti-Corruption. Through its Anti-
Code, respectively, as well as the Manual on Corporate Bribery and Anti-Corruption (ABC) Policy, the Bank puts
Governance, and fully comply and adhere to the the highest premium on sound, responsible, and effective
principles, standards, and policies therein. In adherence corporate governance. The Bank advocates that directors
to Recommendation 7.2 of the SEC CG Code for PLCs, and employees do not tolerate corruption or any form of
bribery nor provide or accept improper inducements in
the course of any business dealing. (Recommendation
15.2 SEC CG Code for PLCs)

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Aligned with the Bank’s commitment to act fairly and Violation of the policy shall be subject to disciplinary
with integrity in all business dealings and relationships, action as may be determined by management or
the ABC Policy complements the Bank’s financial crime the Board, without prejudice to any civil or criminal
policies and programs such as the Money Laundering proceedings which BPI or the regulators may file. Under
and Terrorism Financing Prevention Program (MTPP) and the law, insider trading may be subject to penalty for
Whistleblower Policy. damages or fine and/ or imprisonment.

Guidance on the Bank’s ABC Policy is supplemented by For the year 2019, there are no confirmed incidents of
the Standards on Conflict of Interest under Request or insider trading.
Acceptance of Fees, Commissions, Gifts. Monitoring of
and compliance with the Code of Conduct and related The Insider Trading Policy is disclosed in the Manual on
policies are undertaken by the Human Resources Corporate Governance and on the company website at
Management Group and Corporate Governance www.bpi.com.ph. (Recommendation 7.1, 8.7 SEC CG
Department of the Compliance Division. Code for PLCs)

For the year 2019, there are no confirmed incidents of Whistleblowing. The Bank supports a whistleblower
bribery or corruption. program, an important mechanism to prevent and detect
fraud or misconduct, and enable fast and coordinated
The ABC Policy is disclosed in the Manual on incident responses, remedial actions, and damage
Corporate Governance and on the company website at control procedures. (Recommendation 15.3 of the SEC
www.bpi.com. ph. (Recommendation 7.1, 8.7 SEC CG CG Code for PLCs)
Code for PLCs)
Applicability of Policy. The Whistleblower Policy is
Insider Trading. The Bank has an Insider Trading applicable to both internal and external stakeholders. All
Policy which prohibits its covered persons or directors, directors and employees, as well as clients, suppliers,
employees, and other parties who are considered to have and other stakeholders can report any violation.
knowledge of material facts that have not been disclosed These can include violations of policies, procedures,
to the public, including any information that will likely and applicable laws and regulations such as fraud,
affect the market price of BPI’s securities, from buying or sexual harassment, theft, stealing, conflict of interest,
selling these securities for their own personal account. information security breach, and any other acts which are
(Recommendation 8.2 of the SEC CG Code for PLCs) inimical to the interests of the Bank and the BPI group.

Covered persons are strictly prohibited from trading during Reporting Procedure. The whistleblower may approach
periods of structured and non-structured disclosure any of the following officers who are the designated
(trading blackout). This prohibition includes passing on contacts for the Bank and the primary reporting
material and non-public information relating to BPI or its line: Chief Human Resources Officer, Chief Audit
clients to anybody who may buy or sell securities. Executive, and Chief Risk Officer. Under extraordinary
circumstances, the whistleblower may also course
A trading blackout prohibits trading once the covered the complaint through other reporting lines, like the
person receives material information before a structured President and CEO or the Chairman of the Bank’s Audit
or unstructured disclosure. Trading can only be done Committee.
after said disclosure.
The whistleblower may report formally or anonymously to
Office bulletins are regularly issued by the Compliance the primary contacts. Reporting can be done in writing, by
Office before, during, and after trading blackout periods telephone, in person, or through [email protected].
to ensure compliance with the Insider Trading Policy.
Upon receipt of the whistleblower report, the personnel
All directors and senior management are required to to whom the report was disclosed shall immediately
comply with regular reportorial requirements of and initiate the investigation by turning over the details and
disclosure to the SEC and the PSE for the purchase and documents, if any, to the investigating unit of the Bank.
sale of BPI shares. The investigation of the whistleblower report shall
follow due process as stipulated in the Bank’s manual of
The Bank expects every director, officer, and employee, operations for handling fraud and irregularities.
including related covered persons, to comply with the
Policy, and to use honesty and good judgment at all times
when trading in the company’s securities.

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 Compliance

Non-Retaliation. The Whistleblower Policy emphasizes BPI established a Board-level Related Party Transaction
the Bank’s commitment to non-retaliation. It fosters and (RPT) Committee to assist the Board in assessing
maintains an environment of utmost confidentiality where material agreements of any kind with a related party and
all whistleblowers may act appropriately without fear of determine whether to approve, ratify, disapprove or reject
reprisal, and be treated with utmost confidentiality. An a transaction. Currently composed of independent and
individual who makes a protected disclosure shall not non-executive directors, this Committee meets regularly
suffer harassment, retaliation, or adverse employment to vet credit and non-credit related party transactions of
consequences. Any person who retaliates against any significant amounts that meet the materiality threshold
individual who makes a protected disclosure shall be per transaction type as established per Bank’s policy
subject to discipline, including termination. on RPTs. The Bank’s CAE and CCO also sit as non-
voting members of the RPT Committee. Internal Audit,
In case the whistleblower believes he has been under the CAE, performs post-reviews to ensure proper
subjected to retaliation, he may seek redress or file implementation of related party transactions approved
a formal complaint to the three primary contacts for by the RPT Committee.
whistleblowing.
The RPT Committee is guided by the following:
In 2019, BPI received a total of 14 reports through its BPI • The Committee takes into account whether the RPT
Eye Report Box, all of which have been fully resolved. The is entered into on terms no less favorable to the Bank
nature of the reports included customer issues (21.4%), than terms generally available to an unaffiliated third-
queries (14.3%), administrative matters (57.1%), and party under the same or similar circumstances.
external fraud (7.1%). • For a transaction involving a sale of bank assets, the
Committee reviews the results of the appraisal or
The Whistleblower Policy is disclosed in the Manual valuation methodology used, as well as alternative
on Corporate Governance and may also be read on our approaches to valuation.
website at www.bpi.com.ph (Recommendation 7.1, 8.7 • The Committee assesses the extent of the related
SEC CG Code for PLCs) party’s interest in the transaction:
-- Term of the transaction;
Related Party Transactions. Our Related Party -- The related party’s interest in the transaction;
Transactions Policy imposes stringent guidelines and -- Purpose and timing of the transaction;
measures to maintain arm’s length integrity in all of the -- Whether the Bank is a party to the transaction and,
Bank’s related party business transactions, operations, if not, the nature of the Bank’s participation in the
and activities. BPI vigilantly guards against improper transaction;
pricing policies, questionable manners of settlement, -- If the transaction involves the sale of an asset, a
and ambiguous or disputable terms of transactions in any description of the asset including date acquired and
related party transactions. (Recommendation 2.7 of the costs basis;
SEC CG Code for PLCs) -- Information concerning potential counterparties in
the transactions;
Parties are considered to be related if one party has -- Approximated value of the transaction and the
the ability, directly or indirectly, to control the other approximated value of the related party’s interest in
party or exercise significant influence over the latter in the transaction;
making financial and operating decisions. Parties are also -- Description of provisions or limitations imposed as a
considered to be related if they are subject to common result of entering into proposed transaction;
control or common significant influence, including -- Whether the proposed transaction includes any
affiliates. Related parties may also be individuals or potential reputational risk issues that may arise
corporate entities. as a result of or in connection with the proposed
transaction;
Because transactions with related parties can be abused, -- Purpose of transaction; and
the terms of such transactions are of vital interest to -- Potential benefits to the Bank.
shareholders. The interests of all stakeholders must
likewise be fully protected. The RPT Vetting Department, which is part of
the Risk Management Office, acts as the RPTC
Through this policy, the Bank also institutionalized a Secretariat, assisting the Committee in carrying out its
sustainable framework for identification, assessment, responsibilities as defined in the RPTC Charter.
and reporting of related party transactions, aimed at
achieving an increased degree of transparency.

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In adherence to Recommendation 5.6 of the SEC CG Companies within the BPI group are also covered by
Code for PLCs, the Bank’s Related Party Transactions this overarching Related Party Transactions Policy of the
Policy, and Code of Conduct, directors with material Bank.
interest in any transaction affecting the Bank abstain
from taking part in deliberations for the same. Related party transactions are properly disclosed in
the Bank’s audited financial statements, and other
RPTs that are classified as a material transaction must be applicable fillings in accordance with the relevant rules
approved by the Board and submitted for confirmation by and issuances of the BSP, SEC, and other regulatory
majority vote of the stockholders in the ASM. bodies. If needed, the RPT Committee may also call on
independent experts to help with valuation issues to
RPTs involving amounts below the materiality ensure that the interests of the Bank and its stakeholders
threshold must be approved by the proper authority are protected.
and submitted for confirmation by the Board, or the
subsidiary as the case may be. RPTs involving Directors, A more detailed discussion on related party transactions
Officers, Shareholders, and Related Interests (DOSRI), can be found in Note 25 of the 2019 Audited Financial
subsidiaries, and affiliates, must at all times be submitted Statements. The Related Party Transactions Policy is
to the appropriate Board for approval. disclosed in the Manual on Corporate Governance and
may also be read on our website at www.bpi.com.ph
In 2019, the RPTC Secretariat, with assistance from (Recommendation 7.1, 8.5, 8.7 SEC CG Code for PLCs)
the Corporate Governance Department, complied with
SEC Memorandum Circular 10 on Rules of Material Mergers, Acquisitions, and/or Takeovers. The Board
RPTs for publicly listed companies by submitting to the and senior management exercise appropriate due
SEC a Material RPT Policy and posting the same on the diligence and good faith in the review and consideration of
company website within five (5) days from the submission all material issues with respect to strategy, opportunities
to the Commission. To comply, the Bank created and risks, pricing or valuation, compliance and legal
additional guidelines to address the major difference obligations, including diligence on the parties involved
in the SEC’s policy requirement on material threshold, before entering into extraordinary transactions, such as
defined as related party transaction/s, either individually, mergers, acquisitions, and takeovers. The Bank engages
or in aggregate over a twelve (12)-month period with the the service of independent and qualified third- party firms
same related party, amounting to ten percent (10%) or and consultants to evaluate the fairness of the transaction
higher of the company’s total assets based on its latest price and terms and conditions. (Recommendation 8.6 SEC
audited financial statement. If the reporting PLC is a CG Code for PLCs)
parent company (e.g., BPI), the total assets shall pertain
to its total consolidated assets. The Material RPT Policy The Bank exercised such diligence and transparency in
was approved by the RPTC on October 18, 2019, and by its (1) 2016 acquisition of a minority stake in rural lender
the Executive Committee on October 23, 2019. The Policy Rizal Bank Inc. (RBI), a member institution of CARD
was also filed with the SEC and posted on PSE Edge on Mutually Reinforcing Institutions, and (2) purchase of
October 28, 2019. It was also posted on the BPI website the ownership interests of Ayala Corporation (20%) and
on October 31, 2019. Globe Telecom, Inc. (40%) in BPI Direct BanKo, Inc., A
Savings Bank, which was founded in February 2000 as
The Bank also created a Management Vetting Committee BPI Globe BanKo.
(MVC), composed of the five Executive Vice Presidents of
the Bank, to review related party transactions which are Suppliers and Contractors. BPI has established
below the materiality threshold. The Compliance Office, processes for accreditation, vendor selection, and
under the CCO, is responsible for the post-review of all suppliers audit to ensure qualified suppliers are given
MVC-approved transactions. The MVC also submits all equal opportunity when bidding for projects with the
vetted transactions to the RPTC for its information and Bank. All employees, departments, and divisions are also
confirmation. regularly advised to update and review their respective
lists of suppliers to meet accreditation requirements.
All directors, officers, and employees are also required Employees must also review the Bank’s detailed policies
to disclose conflicts and potential conflicts, as well as on outsourcing services where applicable. BPI complies
relationships with clients, prospects, suppliers, and other with outsourcing regulations mandated by the BSP which
interests. requires banks to put in place appropriate processes,
procedures, and information systems that can adequately
identify, monitor, and mitigate operational risks arising
from the outsourced activities.

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 Compliance

In this regard, BPI’s Board and senior management Data Privacy. BPI has a strong Data Privacy Policy
established policies on outsourcing to ensure that all in place. This policy describes to whom it applies to,
outsourced activities are conducted in a safe and sound what personal data the Bank collects, and how such
manner and in compliance with applicable laws, rules, data is collected, and how the Bank may use personal
and regulations. data for core business and marketing purposes. The
policy also covers how the Bank may disclose and share
From a governance standpoint, commercial transactions such personal data, how such personal data is stored
with suppliers should be economically beneficial to all and retained, and how such data can be accessed or
parties involved and relationships should be based on corrected. The Data Privacy Policy or Statement is
the principle of fair and honest dealings. Compliance posted on the company website and complies with the
with internal policies must be in place to stop fraud, requirements of the Data Privacy Act and the NPC.
money laundering, bribery, and corruption and adhere
to local or international laws and regulations. From an
ESG standpoint, the Bank’s goal is to work collaboratively
with supply chain partners on sustainability. BPI’s supply
chain management policies ensure that the Bank’s supply
chain is not only sustainable but is also geared towards
improving the lives of workers, their communities, and
the environment. The Bank also engages suppliers who
promote sustainable development and who comply with
national laws and internationally recognized standards
and conventions for ethical, environmental, and social
conditions.

Creditors. As a financial institution and an active

participant in the capital markets, BPI respects the rights
of its creditors. In 2019, the Bank continued diversifying
its funding sources and lengthening the maturity profile
of its borrowings through a series of fundraising activities,
tapping both offshore and onshore debt markets. For
details of the Bank’s issuances in 2019, please refer to
pages 48-49.

BPI attributes the success of these issuances to the

robust demand from both institutional investors as well
as high-net worth and retail clients. These issuances
support the Bank’s drive to diversify its investor base
and fund its asset expansion, particularly loan growth,
digitalization initiatives, and general corporate purposes.

The Bank complies with all covenants of its debt

and equity issuances and respects the rights of its
bondholders and stockholders. BPI also complies with
statutory requirements with respect to post-issuance
continuing disclosure, tax compliance, and other duties,
responsibilities, or actions it is obligated to perform or
is prohibited from performing, for the respective capital
market issuance. The Bank also has an Investor Relations
Program to respond to investors’ need for information.
It keeps rating agencies informed of material events and
responds to other requests for information.

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Environmental, Social,
and Governance (ESG) Matters
BPI understands that ESG issues are tied directly to a BPI believes that the proper management of these key
company’s operations or products, or indirectly through ESG issues is a vital component of strategy, essential
stakeholder actions across the entire value chain, and to the execution of its core business processes and
can, thus, impact company financial performance. to being able to deliver returns with greater certainty.
Volatility in the global business environment due to By identifying and assessing these key ESG issues in
ESG shocks - financial risks, regulatory uncertainty, terms of their materiality to its business, and responding
extreme weather, business interruption costs, and accordingly (i.e., strategic rethinking of the business,
social media, among others - demand that companies new product innovation, business model changes,
build new capabilities such as preparedness for the etc.), BPI is able to build a better, more resilient, and
unknown, and the ability to execute a business strategy more valuable bank. By adapting to changes in the
without incurring too much risk. Left unmanaged, such business environment, and not merely to operational or
ESG shocks can result in critical harm to any company’s financial risks, the Bank demonstrates recognition and
management, culture, and financial well-being. management of the key ESG issues as a long-term driver
of market value.
ESG Reporting. In reporting material, non-financial
issues, the Bank has adopted a globally recognized See Material Topics and Stakeholder Engagement section
standard and framework, International Integrated for more information.
Reporting Council’s (IIRC) Integrated Reporting <IR>
Framework, as well as references the Global Reporting Stakeholder Expectations. In the conduct of BPI’s
Initiative (GRI) Standards 2016 series. (Recommendation materiality analysis, stakeholder expectations are a
10.1 SEC CG Code for PLCs). primary driver of its ESG focus. The Bank takes into
consideration environmental issues, employee and
Materiality. ESG covers a broad range of issues. It is social matters, human rights, anti-bribery and anti-
important to note that not all ESG issues are of strategic corruption, and corporate governance when making
significance to banks, such as BPI, or companies that business decisions, whether these have to do with the
are in the financial services industry. Given the divergent provision of financing, investments, or advice. It takes
views and barriers that the ESG language can create, into consideration the impact of its own operations on
it is important to reframe the discussion in business the environment. BPI also acknowledges that having
terms relevant to a bank, particularly risk, opportunity, a diversified, competent, and satisfied workforce that
efficiency, and financial performance. acts in accordance with established ethical standards is
critical to sustainability, noting that poor labor practices
Failing to factor in ESG issues puts the Bank’s can lead to fines, penalties, lost operational time, and
operations at risk, which can include: negative high employee turnover. In the same way, the right
financial consequences (e.g., fines, penalties); negative decisions about talent and supply chain practices will
operational impacts (e.g., employee strikes or CBA lock- realize lower costs and greater productivity, and thus
outs, high staff turnover); reputational damage to the BPI positions itself well to attract the best talent and
company; and increased cost of doing business. On the to ensure that suppliers adhere to the Bank’s social
other hand, effectively addressing ESG issues reduces and environmental standards. Changes in customer
uncertainties in the Bank’s operations and that of needs and in the marketplace also call for the Bank’s
associated third parties. It also allows the Bank to avoid adjustment to the change in consumer and commercial
costs and minimize potential remedial actions related expectations. In this respect, the Bank takes such
to ESG issues and incidents. Opportunities include opportunities to highlight its investment in or lending
avoidance of penalties for non-compliance, greater to borrowers who can make positive impact to the
employee retention and productivity, lower cost of capital environment, as well as the social benefits of their
and operations, and access to premium markets and new products and services.
revenue streams. Any of these alternatives impact the
Bank’s efficiency and ability to create value. The Bank’s engagement with stakeholders takes on
various forms and is carried out through a range of
Key ESG issues for the banking sector can therefore be information, communication, and consultative activities
categorized into the following: (1) Resilience, (2) Business and disclosures. The Bank conducts dialogues about
Ethics, (3) Responsible Finance, (4) Financial Product its role in society, products and services, business
Governance, and (5) Human Capital1. performance, and other issues.

1 Based from Sustainalytics Thematic Research, “Key Issue Report Series - No. 2,
Banks & Responsible Finance”, August 2014

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 ESG Matters

This active engagement has allowed BPI to identify its Resilience. The Board has the primary role and
most significant stakeholder groups and their specific responsibility for setting and overseeing the
interests, and determine the most significant issues from environmental, social, and governance agenda of the
the economic, environmental, and social sustainability Bank. The Board’s oversight of these issues is reflected
perspective. See Material Topics and Stakeholder in the Strategies and Policies drawn up by the Board. In
Engagement section for more information. this respect, the Board ensures that its membership is
diverse and includes directors who have the skills and
KEY ESG ISSUES FOR THE BANK past or present work, board experience or engagement
Resilience -- Board leadership and internal management to understand the key ESG-related issues for the banking
processes sector and the implications or impact on the business.
-- Executive pay, audit and internal controls, and
shareholder rights
-- Integration of environmental and social issues Currently, oversight of these matters is managed at the
into strategy formulation
-- Partnerships with organizations to advance full board level, as introducing a dedicated committee
sustainable development (Philippine Business would increase the complexity of ESG risk governance.
for the Environment, International Finance
Corporation, etc.) The various ESG-related issues are discussed at sub-
-- Management of the environmental impacts and committee level and reported to the committees or the
carbon footprint of our buildings and branches
-- Positive environmental and social impact of our full Board. These committees include but are not limited
supply chain to: Audit, Corporate Governance, Risk Management,
Business Ethics -- Code of conduct, conflict of interest Related Party Transactions, PerCom, and Nomination
-- Anti-bribery and anti-corruption, financial crime
-- Anti-money laundering Committees. The relevant board- level committees
-- Related party transactions, Insider trading discuss specific issues that fall under their committee
-- Fraud prevention, Whistleblowing
charter, report and provide feedback, and recommend
Responsible -- Financing companies in sustainable
Finance development – sustainable products and approval of any policies to the full board. Decision-
services (SEF) making authority and accountability remain with the
-- Enhancing access to finance for the
underserved (BanKo) Board.
-- Strong growth of Impact Investing (CARD MRI,
Rizal Bank)
-- Responsible Investment products At management level, BPI has a Sustainability Office
Financial -- Engagement with retail customers and
which has oversight for the sustainability initiatives
Product consumer organizations of the Bank. The Sustainability Office has in place
Governance -- Fair and transparent marketing and advertising
-- Consumer protection, customer service and
a ‘fit for purpose’ ESG management system which
complaints handling monitors and tracks the Bank’s ESG performance
Human Capital -- Talent attraction, retention and development against key metrics, delivering valuable information
-- Compensation and benefits for our employees
-- Labor and working conditions
to business units to enhance and improve decision-
-- Health, welfare and safety making and practices. The Sustainability Office
-- Culture and human rights
functions under the Bank’s Strategy and Finance
Group to allow for a streamlined identification of
It has also allowed the Bank to become more responsive material environmental and social sustainability issues
in addressing a wide range of concerns, from customer and trends relevant to the Bank’s operations and
service to financial solutions, shareholder return, assessing their materiality and implications on the
operational strategies, business outlook, regulatory business. These are then incorporated into the long-
compliance, and employee compensation. term strategies, as well as capital allocation decisions
of the Bank. The Sustainability Office works with the
The outcomes of the Bank’s stakeholder engagement Corporate Governance Department of the Bank with
influence its risk-management processes, allowing it respect to Governance issues. It also communicates
to address potential risks and align the management of to shareholders and other key stakeholders the Bank’s
issues with business processes and strategies. Finally, Shared Value approach to value creation and how this
the stakeholder engagement also helps the Bank improve drives or supports the overall financial inclusion and
and innovate its products, services, systems, operational digitalization goals.
processes, and practices. (Recommendation 14.1, 14.2,
14.3, 16.1 SEC CG Code for PLCs)

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The Sustainability Office is led by the Chief Sustainability branding, as well as marketing communications and
Officer who reports directly to the President and CEO. promotions are also conducted in accordance with set
This position is held concurrently by the Bank’s Chief standards. Employees of business units that are involved
Finance Officer. The Sustainability Office ensures that in the development and delivery of the Bank’s products
it also has the right people with the right skillsets to and services undergo the requisite training to acquire and
evaluate and monitor these environmental and social enhance their skills and competencies.
issues as well as track and measure performance in this
area. Through these guidelines and activities, the Bank
ensures that customer experience is consistent across
Business Ethics. Please see the discussions on the Code all channels and the delivery of its products and services
of Business Conduct and Ethics, Company Policies and is compliant with regulations. Operating policies and
Standards elsewhere in this report, under pages 130-136. procedures supporting the delivery of products and
services are evaluated at least annually to identify areas
Responsible Finance. BPI promotes investments in for improvement and product or service gaps. Risk
businesses, industries, and projects that contribute to management, compliance, and assurance activities are
the Sustainable Development Goals (SDGs), in the form also regularly conducted to monitor and ensure integrity
of loans, capital raising, leasing arrangements, technical of these policies and processes, and financial product
support, and client education. In 2019, the Bank financed governance.
Php 242.94 billion projects identified to contribute to the
SDGs. Financial Consumer Protection Program. In 2015, the
Bank, established its Customer Experience Management
In 2016, BPI acquired a minority stake in rural lender Office (CXMO) as part of the BPI Financial Consumer
Rizal Bank Inc. (RBI), a member institution of CARD Protection Program required under BSP Circular No. 857.
Mutually Reinforcing Institutions (MRI) which is a group In compliance with the circular, BPI’s CXMO created the
with the goal of eradicating poverty in the Philippines Customer Assistance Program (CAP) to build an enabling
and uplifting the lives of Filipinos. The partnership made environment and to define safety nets for recognition
BPI the exclusive local equity partner in the CARD MRI and protection of consumer rights. The CAP promotes a
Banking Group and deepened the Bank’s reach in the culture of fair dealing and embeds responsible business
microfinance space, benefiting more unserved and practices in the Bank’s operations, in accordance
underserved Filipinos. This also reaffirmed BPI’s vision with the BSP’s consumer protection regulations and
to be the leading bank with a strong focus on financial standards of conduct. The CAP also equips Bank
inclusion and sustainable growth. RBI’s emphasis on employees with the required education and training, and
forging trust and building relationships with its clients are institutionalizes appropriate communication avenues
aligned with BPI’s own customer-centric efforts. as well as mechanisms for consumers to be able to
provide feedback, ask questions, obtain information and
In the same year, BPI also purchased the ownership clarifications, file complaints, or seek redress effectively
interests of Ayala Corporation (20%) and Globe Telecom, and efficiently.
Inc. (40%) in BPI Direct BanKo, Inc., A Savings Bank
(“BanKo”), which was founded in February 2000 as BPI The CXMO is led by the Head of Customer Care and
Globe BanKO. Following a merger with BPI Direct Savings reports, functionally, to the Board through the Executive
Bank, Inc. in December 2016, BanKo is now wholly- Committee and, administratively, to the Chief Operations
owned by the BPI group and serves its microfinance Officer, who also heads the Bank’s Enterprise Services
customers through branch, electronic, and partnership Group. The CXMO reports to the senior management and
channels. the Board every month.

Financial Product Governance. BPI is committed to The Bank complies with product and service information
ensuring that its customers have all the information they and labeling regulations and voluntary codes for
need and the right advice to make decisions about their consumer protection such as the Banking Code for
finances. Whenever the Bank develops a new product, Consumer Protection of the Bank Marketing Association
it follows a stringent process to ensure it is described of the Philippines (BMAP) and its Council of Advisors
fully and accurately and sold responsibly. The Bank has and product governance such as Markets in Financial
an overarching General Product Management Policy, Instruments Directive II (MiFID II). BPI has also
supported by a Product Approval Process, as well as continuously taken corrective and remedial action in case
procedures for Client Suitability Assessment. Product of any deficiencies or areas for improvement.

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 ESG Matters

In 2019, there were no confirmed incidents of non- training programs for supervisors, functional managers,
compliance. and senior managers to support the Bank’s investment
in leadership development. Major focus areas of these
See Customer Experience for more information. programs include:

Human Capital. As a key ESG issue, Human Capital 1. Leadership and Management Development –
impacts the Bank’s reputational and operational risks. Programs that provide opportunities for BPI leaders
It also has business impacts on employee motivation to develop their ability to lead, inspire, and motivate
and the Bank’s hiring capability. The Bank also needs their team members and organization. This covers
to strategically manage the sustainability impact of Professional Effectiveness Programs that develop
its Human Capital with respect to labor rights and Personal Leadership.
conditions, human rights and society. (Recommendation 2. Functional – Programs that develop and strengthen
15.1 SEC CG Code for PLCs) specific functional and technical competencies
required from individuals so they can perform their
Employee Welfare, Health, and Safety. Having tasks effectively.
engaged and competent employees is BPI’s goal for 3. Core and Team Effectiveness – Programs that
delivering best-in-class customer experiences and for provide foundational knowledge and competencies
achieving its vision of being the most trusted partner and for any employee. These also cover programs and
financial advisor. The Bank strives to be an employer interventions for teams in BPI.
of choice among Philippine financial institutions. With
strengths in three main employee engagement drivers The Bank requires every employee to undertake a
of career development and opportunities, goal clarity, minimum of five training days every year, ensuring
and leadership, the Bank introduced more initiatives to continuous professional improvement and keeping them
boost competency development among its officers and abreast of industry developments.
staff, worked to accelerate promotions, and identified
the right metrics to better align human resource For 2019, the Bank conducted at least 125 programs.
measures with corporate strategy. Moreover, BPI Here are only some of the highlights of the above-
strives to provide a safe, secure, and conducive working mentioned recent trainings of the Bank:
environment for its employees, to continually safeguard
their rights and provide equal opportunity for everyone. Course Name Number of Employees
(Recommendation 2.9 of the SEC CG Code for PLCs) 2018 2019
Conflict of Interest 4,224 1,932
Employee Training and Development. Employee BPI Service Plus 2,874 3,294
training and education are essential to the Bank’s Information Security Awareness 4,221 Not Offered
growth strategy. By ensuring that its staff, specialists, Program 1
and officers are trained, steeped in best practices, and Information Security Awareness 4,610 Not Offered
Program 2
exposed to an environment that nurtures continuous
Risk Management Overview/ 9,005 9,668
learning, the Bank is able to provide the highest Operational Risk Overview
quality of service to its clients. BPI has a wide array of
Values Orientation Workshop 2,466 3,092
training programs, aligned with the Bank’s business
Data Privacy 1 10,322 8,884
objectives, to hone the skills and capabilities of its
Data Privacy 2 10,071 8,884
employees and prepare them to be the next leaders
in the organization. These programs include: (1) the
new employee orientation and values orientation Employee Welfare. Consistent with the Bank’s goal
workshops for new hires; (2) officers training programs, of being the employer of choice, it has adopted a
which initiate new officers into their leadership roles; compensation policy that is competitive with industry
(3) sales officers training programs; (4) advanced standards in the Philippines. Regular employees are
leadership programs for officers; (5) courses on financial provided with a comprehensive pay and benefits
advisory; and (6) programs designed to help employees package, which is reviewed periodically and adjusted to
comply with regulatory requirements, among others. retain current employees and attract new talent.
(Recommendation 15.1 of the SEC CG Code for PLCs)
Tied to this is a performance management system
The Bank uses a blended learning approach that includes that calls for the alignment of individual key results,
workshops, coaching/mentoring, instructor-led training competencies, and development plans with the Bank’s
sessions, and web-based training courses. It also overall business targets and strategy. Officers and
designs and facilitates leadership and management employees undergo regular performance evaluations

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based on their individual accomplishments vis-a-vis their transition from being an employee to an entrepreneur.
responsibilities, as well as that of the business unit or the There are also counseling programs that help employees
Bank. This takes into consideration the Bank’s earnings face life during retirement. The Bank also strengthened
performance, asset quality, business volume, customer its off-boarding program to further equip BPI retirees in
satisfaction, corporate governance, and the long-term this transition. Processing of documents has been made
strategy, goals, and outlook. Deserving officers are granted more convenient.
an annual performance bonus, which is determined by the
Bank’s annual earnings. The performance bonuses are BPI strictly complies with labor laws and regulations and
based not only on an employee’s individual productivity implements best practices in the workplace. The Bank
and performance relative to assigned targets, but also on recognizes the existence of company unions and the rights
a relative comparison to the performance of peers within to freedom of association and collective bargaining, and
their rank. maintains harmonious relations with these unions. BPI
also does not discriminate on gender, religion, age, race,
Another testament to BPI’s commitment to offer greater color, political stand, or social background. It strictly
value to employees is its equity-linked incentive plan enforces non-employment of minors and is against
for its officers, from assistant managers and up (with forced compulsory labor. The Bank also has an open-
eligibility requirements): Executive Stock Purchase Plan door communications policy to address concerns among
(ESPP), which was launched in 2013. The ESPP program employees immediately before escalation.
offers officers the opportunity to purchase BPI shares at
a discount to the prevailing market price, and to pay for As a requirement in their certification process, the Bank
such purchase over a prescribed period of time. This also also regularly trains security personnel, who are not
promotes ownership culture within the Bank that fosters formally part of its workforce and belong to third-party
a sense of belonging among officers and develops their agencies, every two years on human rights-related topics.
direct interest in the Bank. Management believes that this This is to ensure that they uphold the rights not only of the
stronger alignment between the interests of BPI officers Bank’s employees but also of its clients, suppliers, and
and shareholders will benefit all stakeholders. This helps other stakeholders that do business with the Bank.
achieve more robust earnings and a healthier balance
sheet, reflecting a higher stock valuation. BPI also has various interest clubs to allow employees to
pursue their passions and explore talents outside of work
BPI also extends the inherent benefits of being a financial while building camaraderie and esprit de corps.
institution by offering its employees and their families the
Bank’s products and services at affordable terms. These Employee Health and Safety. The Bank believes it
include low-interest rates for auto and housing loans, must create an environment where its employees have
emergency loans, medical and group term insurance, opportunities to develop both mind and body. Hence,
and salary and emergency loans. In addition, the Bank the Bank provides a comprehensive medical program
provides financial security to employees even after their which provides for in-patient and out-patient benefits
retirement through its retirement benefit plan. BPI has a for employees and their dependents. Year-round, there
Defined Benefit Retirement Plan under which employees are also sports, recreational, and health and wellness
will receive an amount dependent on their age, years programs (i.e., running, bowling, volleyball, golf, aerobics,
of service, and compensation. The Bank also has a and dancing, etc.). The Bank runs education and training
Defined Contribution Retirement Plan, where the defined programs on serious illnesses such as cancer awareness,
benefit minimum guarantee is equivalent to a certain stroke prevention, and first aid and basic life support.
percentage of the monthly salary of the employee at Wellness fairs are also conducted regularly in the head
normal retirement age, with the required years of service offices and provincial business centers where employees
based on the provisions of Republic Act No. 7641. All and their families avail of free or discounted services
non-unionized employees hired on or after the effective such as vaccinations, bone screening, and physical
date are automatically enrolled under the new Defined examinations.
Contribution Plan. Employees hired prior to the effective
date have the option to elect into the new Defined The Bank ensures that all its premises follow proper
Contribution Plan. Funds for both retirement plans are health and safety protocols (i.e., ban on smoking, ban on
held in trusts, governed by local regulations and practice firearms, pest prevention, and more). Regular disaster
in the Philippines. preparedness activities are also conducted bank- and
group-wide (fire, earthquake, etc.) and frequent notices
The Bank also looks after its retiring employees through and reminders are broadcast regularly through the
the conduct of annual seminars on estate planning, Bank’s intranet or posted where employees can easily
investment opportunities in and outside of the Bank, and read them. BPI also has quality circles which regularly

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 ESG Matters

conduct audits and heighten awareness about best CONTINUOUS DISCLOSURE AND TRANSPARENCY
practices on workplace management.
BPI values opportunities to communicate its initiatives,
Because of its policy of strict compliance with labor laws policies, operations, financial performance, and goals to
and regulations and implementation of best practices in all of its stakeholders. The Bank believes that dialogue
the workplace, the Bank has not identified and recorded with stakeholders is essential in ensuring their active
any incidents and complaints of labor discrimination, engagement with the Bank. This provides them with
compulsory labor, child labor and employment of minors, timely, balanced, and understandable information,
forced labor, or human rights abuses. which is also integral in fulfilling the Bank’s role and
responsibilities as a global financial institution. In
While the Bank has not been a party to legal cases adherence to Recommendation 8.1 of the SEC CG Code
arising from any of these labor issues, it has a grievance for PLCs, the Policy of Disclosure and Transparency is
mechanism embedded in the Collective Bargaining disclosed in its Manual on Corporate Governance and is
Agreement to promptly dispose and amicably settle all likewise published in www.bpi.com.ph.
grievances. Steps are clearly defined until the level of
arbitration. The Bank aims to enhance disclosure and transparency
levels and works to improve the usefulness of information
Being a financial services company, the Bank’s to match the different needs of stakeholders. More
employees are less exposed to occupational health and importantly, it also carefully considers the varied and
safety issues usually associated with manufacturing and increasing degrees in granularity of disclosures required
industrial companies. There are no notable recorded by developing market practices and greater regulatory
incidents of injury, occupational diseases, serious work- focus on specific areas of the business. Consequently,
related diseases, and other fatalities in the Bank. the Banks strives to present disclosures in a way that is
more informative to its audience and to add value beyond
Employee volunteerism. BPI has a built-in volunteerism minimum standards and requirements.
program called BPI BAYAN, which encourages and
organizes employees to devote some of their personal As a long-time active capital market participant, the
time to help communities relevant to BPI and its clients. Bank has always ensured that its corporate disclosures
BPI BAYAN is self-sustaining, using a seed fund granted not only comply with regulatory requirements and meet
by the Bank in 2009 to finance community development traditional purposes such as for investor protection,
projects the employee volunteers organize. For more market efficiency and corporate governance, but
details, see page 79 or visit www.bpifoundation.org. also to authenticate its concern for other corporate
constituencies such as its customers, creditors and
Employee Awareness and Compliance with Policies. employees, as well as the broader general public. For
Policies and guidelines on employee welfare, health details on capital market issuances, please refer to pages
and safety, conflict of interest standards, anti-bribery 48-49. As a result of these capital market issuances, BPI
and anti- corruption, insider trading, related-party also makes the necessary disclosures to exchanges such
transactions, whistleblowing, data privacy, consumer as the PDEx1 and Singapore Exchange (SGX)2.
protection, and others are included in the Bank’s
employee manuals available in the internal electronic Corporate actions of the Bank are approved by the Board
database. In addition, these policies are regularly and/or Executive Committee.
communicated to ensure awareness of the need to
comply with said policies. BPI also practices regular disclosure of financial results.
Quarterly financial results are presented to the Audit
See Social Performance under Managing Capitals Committee and the Board before disclosure and are
section (Engaging our Employees) for more information immediately disclosed after the approval by the Board
on Policies, Activities and Data on Health, Welfare and to the SEC, PSE, PDEx, and SGX. Quarterly and year-
Safety of Employees. end financial statements and detailed management
discussion and analysis are filed within the mandated
45 and 105 calendar days, respectively, from the end of
financial period, if not earlier. The company’s financial
reporting disclosures are in compliance with BSP, SEC,
1 Philippine Dealing & Exchange Corp is the country’s sole and exclusive electronic
trading platform for fixed-income securities and foreign-exchange markets.
2 Singapore Exchange Limited is a multi-asset exchange operating equity, fixed in-
come and derivatives markets that also provides listing, trading, clearing, settlement,
depository and data services.

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A relationship that nurtures your future Table of Contents
PSE, PDEx, and SGX requisites. These reports are made Company Website, Social Media, and Mobile Banking
available to investors and analysts after disclosure Platforms. The Bank maintains an official company
and are posted as well on the websites of the various website in accordance with the SEC-prescribed format
exchanges where BPI capital market issuances are and template to ensure a comprehensive, cost-efficient,
traded and on www.bpi.com.ph. transparent, and timely manner of disseminating relevant
information to the public. Apart from the company
The Bank also supports the recommendations and website, the Bank maintains official company sites
guidance of BSP to broaden and deepen the disclosures that utilize social media-based platforms. BPI also has
of banks in a number of areas, including governance, risk, a mobile app which can be downloaded through IOS
and compliance. It is the Bank’s view that best-in-class and Android, where banking transactions can be done
disclosures will continue to evolve in light of ongoing safely and securely, anytime and anywhere. As with the
pursuit of greater market and stakeholder engagement company website, certain information on the Bank is also
within the banking sector. available on the mobile app.

The Bank also recognizes its continuous disclosure More information on BPI’s policies and practices on
obligations under PSE Listing Rules and to the SEC under continuous disclosure and transparency may be found on
the SRC. As a PLC, the Bank’s corporate actions are www.bpi.com.ph.
disclosed to these two bodies.

Key disclosure principles:

• BPI is committed to provide clear, timely, accurate,
and balanced disclosure of all material information
about the Bank and to provide fair and equal access to
such information. BPI, however, treats all information
pertaining to the company, business transactions and
operations, and products and services as strategic
in nature. Therefore, the Bank, in the provision of its
disclosures, safeguards its proprietary information and
competitive position.
• The Board requires that management has processes
in place to support its policy of full, comprehensive,
understandable, and timely disclosure of financial
results, significant developments, and other material
information to both its internal and external publics,
such as clients, shareholders, regulators, employees,
suppliers, rating agencies, analysts, and stock
exchanges.
• Required disclosures of market-sensitive information
are coursed through the proper regulatory agency
and also released to the public through various cost-
efficient and appropriate modes of communication.
• Disclosures should be consistent over time, unbiased,
and comparable across the industry.
• In the disclosure process, BPI is guided by internal
governance, risk, and compliance standards which
serve to ensure information disclosure conforms
with the Bank’s established rules and procedures to
identify, assess, and mitigate any possible risks or
damages to the Bank, its counterparties, or partners as
a result of any improper disclosure.
• BPI also, at all times, gives due consideration to any
matters related to the confidentiality of any information
affecting clients’ or counterparties’ interests. The Bank
respects the rights of its clients and counterparties as
related to the protection of confidential information.

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Shareholder Rights and Engagement

Shareholder Rights Right of inspection. Shareholders should be allowed,

BPI treats capital as a most valuable asset and seeks within certain reasonable limits, to inspect corporate
to generate superior returns for its stockholders, while books and records including minutes of Board meetings
being prudent in risk-taking, spending, and investment. and stock registries in accordance with the Corporation
The Bank treats all its stockholders equitably and equally, Code. They shall be provided with an annual report,
whether they have majority or minority interest. The including financial statements.
Board is committed to respect the rights of stockholders,
recognized in the Corporation Code, including, among Right to information. Upon request and for a legitimate
others: purpose, a shareholder shall be provided with periodic
reports which disclose personal and professional
Voting rights. Shareholders have the right to elect, information about the directors and officers, and certain
remove, and replace directors and vote on certain other matters such as their holdings of BPI’s shares,
corporate acts. dealings with BPI, relationships among directors and key
• Electronic Voting in Absentia. In its meeting held on officers, and the aggregate compensation of directors
March 20, 2019, the Board approved Management’s and officers. The Information Statement and Proxy
recommendations for BPI to provide the Bank’s Forms where these are stated must be distributed to
stockholders with the option to vote in absentia in the the shareholders before ASMs and in the Registration
2019 Annual Stockholders’ Meeting and to amend the Statement and Prospectus in case of registrations of
Bank’s By-Laws to, among others, provide for the said shares for public offering with the SEC.
right. Hence, at the April 25, 2019 Annual Stockholders’
Meeting, BPI stockholders were able to effectively Right to dividends. Stockholders have the right to
participate and had the option to cast votes in absentia receive dividends subject to the discretion of the Board.
through an online electronic system, as also provided for However, the SEC may direct BPI to declare dividends
in the Revised Corporation Code. when its retained earnings is in excess of 100% of its
• Cumulative voting is used in the election of directors, paid-in capital stock, except:
who may be removed with or without cause. Directors • When justified by definite corporate expansion projects
shall not be removed without cause if it would deny or programs approved by the Board;
minority shareholders representation in the Board. • When BPI is prohibited under loan agreement with
Removal of directors requires an affirmative vote of any financial institution or creditor, whether local or
two-thirds of the outstanding capital of BPI. foreign, from declaring dividends without the creditors’
• No stockholders’ meeting may conduct business consent, and such consent has not been secured; or
unless a majority of the outstanding and subscribed • When it can be clearly shown that retention of earnings
capital stock entitled to vote is represented, except to is necessary under special circumstances, such as
adjourn from day to day until such time may be deemed when there is a need for a special reserve for probable
proper. contingencies.
• The Bank also strictly complies with the rules and
regulations of the SEC and the BSP, in relation to Appraisal right. In accordance with the Corporation
sending out the notice of meeting at least two weeks Code, stockholders may exercise appraisal rights under
prior to the meeting, right to vote, and right to appoint the following circumstances:
a proxy. • In case any amendment to the Articles of Incorporation
• BPI adheres to the “One Share, One Vote” rule. Its has the effect of changing or restricting the rights of
Amended By-Laws state that stockholders are entitled any stockholders or class of shares, or of authorizing
to voting rights equivalent to the number of shares preferences in any respect superior to those of
they hold, i.e., voting is by shares of stock and not “per outstanding shares of any class, or of extending or
capita”. shortening the term of corporate existence;
• In case of sale, lease, exchange, transfer, mortgage,
Pre-emptive rights. All stockholders have pre-emptive pledge, or other disposition of all or substantially all of
rights, unless there is a specific denial of this right in the the corporate property and assets as provided in the
Articles of Incorporation or an amendment thereto. They Corporation Code; and
have the right to subscribe to the capital stock of BPI. The • In case of merger or consolidation.
Bank’s Articles of Incorporation lays down the specific
rights and powers of shareholders with respect to the
particular shares they hold, all of which are protected by
law as long as they are not in conflict with the Corporation
Code.

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Alternative Dispute Mechanism. It is the policy Apart from structured disclosures, we also disclose
of the Bank to resolve disputes or differences with information not required under the disclosure rules
stockholders, regulatory authorities and other third if, in our estimation, such matters have an impact on
parties, if and when such disputes or differences investment decisions by interested parties. Such matters
arise, through mutual consultation or negotiation, are disclosed as promptly and comprehensively as
mediation or arbitration. If the agreement between possible by appropriate methods.
the Bank and third parties has an arbitration clause,
arbitration is the ADR system being adopted. If none, Outside of the stockholders’ meetings, BPI engaged
the Bank initiates conciliation- earnest effort to arrive at and kept our investors, stockholders and stakeholders
amicable settlement. If everything fails, and the dispute informed, through various disclosures and activities
progresses into court litigation, the Bank strictly adheres led by our Investor Relations Unit. For the year, we
to and complies with Supreme Court A.M. No. 11-1-6-SC- conducted 75 one-on-one meetings and 41 conference
PHILJA dated January 11, 2011 [Consolidated and calls, attended 19 investor conferences and road shows
Revised Guidelines to Implement the Expanded Coverage with 312 participants, and posted over 150 structured
of Court-Annexed Mediation (CAM) and Judicial Dispute and unstructured disclosures.
Resolution (JDR)]. (Recommendation 13.4 SEC CG Code
for PLCs) The Investor Relations Unit also provides quarterly
investor presentations and works with the corporate
Relative to regulatory authorities, the Bank adopts and communications team for media briefings and press
complies with the alternative modes of dispute resolution releases. Such information about us is shared regularly
they are using or promoting such as, but not limited to, with the investing public, analysts, and members
mediation, conciliation and arbitration, in compliance of the media. Statements in these presentations
with Republic Act No. 9285 (Alternative Dispute describing BPI’s objectives, projections, estimates, and
Resolution Act of 2004). expectations may be forward-looking. (Recommendation
11.1 SEC CG Code for PLCs)
More information on BPI’s policies and practices to
protect and uphold shareholder rights are disclosed in the Actual results may differ from the statements made in the
Manual on Corporate Governance and disclosed on the presentations, whether expressed or implied.
company website at www.bpi.com.ph. (Recommendation
13.1 SEC CG Code for PLCs) Select regulatory disclosures, all investor presentations
and press releases distributed, including presentations of
Investor Relations. BPI believes that transparent the Chairman and the President and CEO at the ASM, may
and accurate reporting of operating and financial be viewed at www.bpi.com.ph.
results, major business decisions, and developments
gives shareholders and investors the relevant inputs Annual Stockholders’ Meeting. The Bank gives
to their investment decisions. In addition, such great importance to effective, timely, and regular
reporting provides the basis for the sound and robust communication with its shareholders and the wider
market valuation of its shares and a proper view to all investment community and sees this systematic
stakeholders of possible future losses or gains. engagement as a critical component of its governance
strategy. To this end, a number of means are used
Our Investor Relations Unit, which is part of the Corporate constructively to promote greater understanding, clarity,
Strategy & Investor Relations Division, is tasked with a and dialogue with its shareholders, one of which is the
program of proactive, uniform, appropriate, and timely ASM.
communication and reporting. Full disclosure is done
in compliance with the BSP, Securities Regulation Code The ASM allows the Bank’s shareholders to advise and
(SRC), SEC, PSE, PDEx, SGX, and SIX Swiss Exchange adopt resolutions on important matters affecting the
rules, regulations, and disclosure guidelines in light of Bank on which they have legal sovereignty, such as:
our capital market issuances. (Recommendation 13.5 the appropriation of profit; ratification of all acts and
SEC CG Code for PLCs). We also directly engage with our resolutions of the Board and Management adopted
European investors who are covered by the Markets in during the preceding year; approval of the Report of
Financial Instruments Directive II (MiFID II) regulations. the President and Bank’s Statement of Condition;
amendments to the Articles of Incorporation or By-Laws;
and election of Board of Directors and external auditor, as
well as measures to amend the shareholders’ equity.

145
Table of Contents BPI Integrated Report 2019
 Shareholder Rights
and Engagement

The ASM also continues to be a key communications strategy and goals of the Bank. Questions or comments
event for our Board and Management. It is a primary of stockholders, as well as responses of the Board and
opportunity for meaningful discussion of the company’s management, were duly recorded in the Minutes of the
narrative, to engage with its shareholders and Meeting.
investors on the key issues facing the Bank, review
fiscal information for the past year, and respond to any The Board ensures that the ASM is held in an easy to
questions regarding goals and directions the Bank’s reach and cost-efficient venue and location in Metro
business will take in the future. BPI’s Board, including Manila. The ASM was held on Thursday, April 25, 2019,
the Chairman, Chairman of the Audit Committee, 9:00 A.M., at Ballroom 2, Fairmont Makati, 1 Raffles
Independent Directors, and senior executive officers, Drive, Makati Avenue, Makati City 1224.
led by the President and CEO, CFO, and Heads of Risk,
Control, and Compliance, are always in attendance Notice of ASM and Definitive Information Statement.
and available for informal discussion before and after The Bank sends the Notice of the ASM to its shareholders
the formal business of the ASM. The Chairman and well before the meeting date to give them ample time to
members of the Board, chairmen and members of the review the meeting’s agenda as well as to provide them
Board-level Committees, and senior executive officers with sufficient information regarding issues to be decided
led by the President and CEO, CFO, and Heads of Risk, on during the meeting.
Control, and Compliance, including the Corporate
Secretary, and the Investor Relations Officer attended The Bank’s Notice of ASM and Definitive Information
the 2019 ASM. (Recommendation 13.3, 13.5 SEC CG Statement is written in English as this is an official
Code for PLCs) language in the Philippines. The Bank provides the
rationale and explanation for each agenda item which
For the benefit of all the stockholders, the Chairman of requires shareholders’ approval in the Notice of ASM.
the Board and the Corporate Secretary discussed the In the same way, each resolution in the ASM deals
Rules of Conduct and Procedures for the meeting after the with only one item, i.e., there is no bundling of several
requisite call to order, certification of notice of meeting, items into the same resolution. The profiles of directors
and determination of quorum. The Rules of Conduct seeking election or re- election (including information
and Procedures were also detailed in the explanations such as age, qualifications, date of first appointment,
of agenda items in the Notice of ASM. All items in the experience, and directorships in other listed companies)
agenda requiring approval by the stockholders, including are included in the Notice of ASM. The external auditor
the election of the Board, need the affirmative vote of seeking appointment or re- appointment is also clearly
stockholders representing at least a majority of the issued identified. When dividends are one of the agenda items,
and outstanding voting stock. Voting is considered on an explanation of the dividend policy is also included.
a poll, by shares of stock; that is, one share entitles the The Notice of ASM also includes proxy forms which can
holder to one vote, two shares to two votes. Cumulative be downloaded by stockholders from www.bpi.com.ph.
voting as provided for in the Corporation Code may be For the 2019 ASM, the proxy forms included instructions
applied in the election of the Board. The Office of the as well as the deadline for submission of proxies to the
Corporate Secretary tabulates all votes received and the Office of the Corporate Secretary, which was on or before
Bank’s external auditor validates the results. April 11, 2019.

The Bank proactively encourages the full participation The Definitive Information Statement (DIS), or SEC Form
of its shareholders, including institutional shareholders, 20-IS is issued in accordance with the Bank’s Amended
at the ASM. Stockholders may participate in person or By-laws and SRC Rule 20. Stockholders as of record date
through their authorized representative. For the 2019 of the annual or special stockholders meeting are sent
ASM, only stockholders of record as of March 8, 2019 the DIS or SEC Form 20-IS at least 15 business days
were entitled to the notice and to vote at the meeting. before the meeting. The Bank, as an issuer subject to the
Stockholders who could not personally attend the reporting requirements of SRC Section 17, must issue the
meeting had the option to vote in absentia through an DIS to notify stockholders of the written notice of the date,
online electronic system or designated their authorized time, place, and purpose of the meeting; the DIS provides
representative by submitting a proxy instrument to the other specific information relevant to the meeting.
Office of the Corporate Secretary not later than 5:00P.M.
of April 11, 2019. Validation of proxies was held at the The Bank is always transparent on matters of this nature
same office on April 12, 2019 at 4:00 P.M. Shareholders and encourages stockholders, including institutional
are encouraged, recognized, and given sufficient time investors, to attend the meeting by sending individual
to ask questions at the ASM to ensure accountability notices, publication in the newspaper, posting in the
and identification with the Board’s and Management’s Bank’s website, and notice to PSE and SEC.

146
A relationship that nurtures your future Table of Contents
The DIS or SEC Form 20-IS is deemed to have been given Voting Results. The results of the voting of the ASM are
at the time when delivered personally, deposited in the counted and tabulated by an independent external third-
post office, or sent via e-mail. Stockholders who prefer party auditor. For the 2019 ASM, the Bank’s independent
to receive hard copies of the DIS can request for paper external third-party auditor, Isla Lipana & Co., performed
copies. this task.

In 2019, the Notice, including the DIS, was sent out Voting results for the 2019 ASM are as follows:
to stockholders of record by March 12, 2019, 44 days
before the ASM. The SEC Form 20-IS was also sent Total Number of Votes (Present and Proxy) - 3,153,023,117
Total Issued and Outstanding Shares - 3,943,731,478
out to stockholders of record by March 12, 2019, and Percentage of Attendance - 79.95%
disclosed via PSE EDGE on the same date. No new item Resolution For Against Abstain
was included in the agenda at the 2019 ASM. Likewise, no Approval of Minutes 3,526,213,556 - 12,104
amendments were made to the SEC Form 20-IS after the of ASM held on 99.9997% 0.00% 0.0003%
April 19, 2018
aforementioned disclosure on the PSE EDGE.
Approval of Annual 3,519,658,599 362,280 6,204,781
Report and Audited 99.81% 0.01% 0.18%
The Notice of ASM for the stockholder’s meeting on April Financial Statements as of
December 31, 2018
25, 2019, included explanations for all agenda items such
Election of External 3,513,738,340 9,908,161 2,579,159
as: (1) Rules of Conduct and Procedure, (2) Approval of Auditor and Fixing of their 99.65% 0.28% 0.07%
the Minutes of the Annual Meeting of the Stockholders Remuneration

on April 19, 2018, (3) Approval of the Annual Report Election of 15 Members of the Board of Directors

and Audited Financial Statements as of December 31, Jaime Augusto 3,472,907,212 18,126,957 35,191,491
Zobel de Ayala 98.49% 0.51% 1.00%
2018, (4) Election of the Board of Directors (including the
Fernando 3,464,880,406 18,126,957 43,218,297
Independent Directors), and (5) Election of the external Zobel de Ayala 98.26% 0.51% 1.23%
auditor and fixing of remuneration. (Recommendation Gerardo C. Ablaza, Jr. 3,497,575,185 15,374,393 13,276,082
13.2 SEC CG Code for PLCs) 99.19% 0.44% 0.38%
Romeo L. Bernardo 3,480,650,434 27,898,297 17,676,929
98.71% 0.79% 0.50%
The Notice of ASM and DIS or SEC Form 20-IS for the
Ignacio R. Bunye 3,523,568,873 - 2,656,787
current and prior years may be viewed at www.bpi.com.ph. 99.92% 0.00% 0.08%
Cezar P. Consing 3,504,856,335 6,284,193 15,085,132
Minutes of the ASM. The Minutes of the ASM includes 99.39% 0.18% 0.43%

all information pertinent to the meeting: date, time, and Octavio Victor R. Espiritu 3,482,294,077 27,898,297 16,033,286
98.75% 0.79% 0.45%
location of the annual meeting; qualified participants,
Rebecca G. Fernando 3,499,126,909 15,604,393 11,494,358
attendance, and quorum present to conduct business; 99.23% 0.44% 0.33%
approval of prior minutes; general report of the President Jose Teodoro K. Limcaoco 3,485,333,888 27,615,690 13,276,082
and CEO; record of action items in the meeting including 98.84% 0.78% 0.38%

election of the Board, any pertinent discussions, and Xavier P. Loinaz 3,482,294,077 27,898,297 16,033,286
98.75% 0.79% 0.45%
actual votes; and corporate resolutions that were
Aurelio R. Montinola III 3,485,209,388 27,668,297 13,347,975
adopted. The minutes also records the dialogue between 98.84% 0.78% 0.38%
stockholders and the Board and Management, facilitating Mercedita S. Nolledo 3,499,452,382 15,278,920 11,494,358
Board and Management’s responses to stockholders’ 99.24% 0.43% 0.33%
Antonio Jose U. Periquet 3,475,278,270 27,898,297 23,049,093
questions and clarifications, as well as determining any 98.56% 0.79% 0.65%
follow up actions that need to be taken by the Board and Eli M. Remolona, Jr. 3,526,135,660 - 90,000
Management in the future. 99.998% 0.00% 0.002%
Maria Dolores B. Yuvienco 3,513,878,960 12,346,700 0
99.65% 0.35% 0.00%
Minutes of the previous year’s ASM are provided to
shareholders prior to the start of the meeting of the
current year. Minutes of the 2019 ASM were likewise Voting results are submitted to the SEC and disclosed on
posted on the company website within five calendar days the websites of the various exchanges, where BPI capital
from the date of the ASM. (Recommendation 13.3 SEC CG market issues are traded, and made publicly-available
Code for PLCs) on the company website as well by the next working day
or sooner (Recommendation 13.3 of the SEC CG Code
Minutes of the ASM for the current and prior years may be for PLCs). The voting results for the 2019 ASM, as well as
viewed at www.bpi.com.ph. that of prior years, may be viewed at www.bpi.com.ph.

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 Shareholder Rights
and Engagement

Annual and Quarterly Reports. The Bank’s Annual, SHARE INFORMATION

Quarterly, and Current Reports are its primary disclosure
mechanisms used to impart knowledge about the Bank Stock Information. BPI common shares are listed in the
to all its stakeholders in an informative, structured, PSE under the ticker symbol of BPI. At Php 396.17 billion
and cost- effective manner. The Annual and Quarterly as of December 31, 2019, its market capitalization is
accountability reports effectively detail its performance among the largest in the Philippine banking industry. BPI
during the period under review and put that performance is a member of the benchmark Philippine Stock Exchange
in context of the objectives of the Bank, its strategies, Composite Index (PSEi).
and future direction. The Current Reports similarly
provide timely updates on significant corporate actions Listing Date: October 12, 1971 Class of Shares: Common
undertaken by the Bank. shares Voting Rights: One vote per share
Authorized: 4,900,000,000 shares
The Annual, Quarterly, and Current Reports are regularly as of December 31, 2019
submitted to the SEC pursuant to SRC Section 17, which Outstanding: 4,507,071,644 shares
also prescribes format and content. as of December 31, 2019

These Reports are also disclosed on the websites of the Rights, obligations, and restrictions attaching to
various exchanges, as previously mentioned. These may shares. The rights and obligations attaching to each class
also be viewed at www.bpi.com.ph. of ordinary, common, and non-cumulative preference
shares in BPI’s share capital are set out in full in its
General Information Sheets. Under Sections 26 and Articles of Incorporation which may be amended by
141 of the Corporation Code, corporations are required to special resolution of the shareholders and can be found
submit the General Information Sheet (GIS) annually to on www.bpi.com.ph.
the SEC, within 30 days after the corporation’s annual or
special stockholders’ meeting. Containing, among other Minimum Public Ownership. As of December 31, 2019,
information, the names, nationalities, and addresses of listed securities held by the public were at 39.2% of BPI’s
the directors, trustees, and officers of the company, the issued and outstanding shares. This is well above the
GIS is accompanied by a certification under oath by the minimum required public float level of 10%.
Corporate Secretary, President or CEO.
Ownership Structure. BPI’s founding shareholders were
The Bank’s latest GIS, as well as that of prior years, may primarily charities and endowments associated with the
be viewed at www.bpi.com.ph. Roman Catholic Church, and its directors consisted of
government officials and prominent businesspersons,
including Antonio de Ayala, a partner in the predecessor
firm of today’s Ayala Corporation.

Restrictions on Ownership. Foreign ownership is subject

to a limit of 40%.

Shareholders

5.0%
7.3%
Various
RCAM1

39.2%
Public Float

48.6%
Ayala Corp. 2

1
Roman Catholic Archdiocese of Manila
2
Includes Liontide Holdings, Inc. share

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A relationship that nurtures your future Table of Contents
Sharelots Statistics as of December 31, 2019

Size of Shareholdings No. of Shareholders % No. of Shares %

1 - 100 1,554 12.54% 57,959 0.00%
101 - 500 4,221 34.05% 1,103,416 0.02%
501 - 1,000 2,076 16.75% 1,515,204 0.03%
1,001 - 5,000 3,022 24.38% 6,521,046 0.14%
5,001 - 10,000 589 4.75% 4,064,986 0.09%
10,001 - 50,000 636 5.13% 13,701,709 0.30%
50,001 - 100,000 112 0.90% 7,662,846 0.17%
100,001 - 500,000 143 1.15% 28,535,208 0.63%
500,001 - 1,000,000 13 0.10% 8,763,129 0.19%
1,000,001 - 5,000,000 17 0.14% 45,976,281 1.02%
5,000,001 - 10,000,000 3 0.02% 21,221,237 0.47%
10,000,001 - 50,000,000 2 0.02% 63,481,023 1.41%
50,000,001 - UP 8 0.06% 4,304,467,600 95.50%
Grand Total 12,396 100.00% 4,507,071,644 100.00%

Equity Ownership of Foreigners on Common Shares as of December 31, 2019

Nationality No. of Shareholders % No. of Shares %

Filipino 12,294 99.1772% 3,086,639,035 68.4843%
Non-Filipino 102 0.8228% 1,420,432,609 31.5156%
Grand Total 12,396 100.0000% 4,507,071,644 100.0000%

Shareholdings of Directors and Management as of December 31, 2019. Please see table under Corporate
Governance section which sets forth the beneficial ownership of shares of the Company’s common stock as of
December 31, 2019 by the Bank’s current directors and named executive officers and as a group.

Beneficial Ownership Reporting Compliance. Under SRC Section 23, the SEC requires a PLC’s directors and executive
officers, and persons who beneficially own: (1) qualifying but not more than 100 shares; (2) more than 100 shares but
less than 5% of the outstanding common stock; or (3) more than 5% but less than 10% of the outstanding common
stock, to file reports with the SEC regarding initial ownership and changes in ownership of the common stock.

In this respect, the PSE also requires, under Section 13.1 of the Revised Disclosure Rules on Disclosure on Transactions
of Directors and Principal Officers in the Issuer’s Securities, that the Exchange be furnished with a copy of the
respective SEC filing within five trading days.

In this respect, the PSE also requires, under Section 13.1 of the Revised Disclosure Rules on Disclosure on Transactions
of Directors and Principal Officers in the Issuer’s Securities, that the Exchange be furnished with a copy of the
respective SEC filing within five trading days.

As a practical matter, the Bank assists its directors and officers in the filing of the required SEC Form 23-A or B reports
on their behalf.

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 Shareholder Rights
and Engagement

The Table below sets forth information as to any known to the Bank to be the beneficial owner of more than five percent
(5%) of the Company’s common stock as of December 31, 2019.

Beneficial Owners Holding 5% or More of BPI

Title of Class Name/Address of Record Owner & Name of Beneficial Owner Percent of
Relationship w/ Issuer & Relationship w/ Record Citizenship No. of Shares Holdings
Owner
Common PCD Nominee Corporation1 PCD Participants acting Various 1,027,590,055 22.7995%
- Non-Filipino for themselves or for their Filipino 639,782,454 14.1951%
- Filipino customers
37/F Tower 1, The Enterprise Center
6766 Ayala Avenue corner Paseo de 1,667,372,509 36.9946%
Roxas, Makati City

Common Ayala Corporation2 Ayala Corporation3 Filipino 1,000,261,934 22.1932%

33rd Floor Ayala Tower One and
Exchange Plaza, Ayala Triangle,
Ayala Avenue, Makati City Stockholder

Common Liontide Holdings, Inc. 4 Liontide Holdings, Inc.5 Filipino 904,194,682 20.0617%
33rd Floor Ayala Tower One and
Exchange Plaza, Ayala Triangle, Ayala
Avenue, Makati City
Stockholder

Common AC International Finance Limited Ayala Corporation6 Cayman 390,269,162 8.6590%

c/o Ayala Corporation Islands
34th Floor Ayala Tower One and
Exchange Plaza, Ayala Triangle, Ayala
Avenue, Makati City
Stockholder
Common Roman Catholic Archbishop of Roman Catholic Filipino 327,904,251 7.2753%
Manila Archbishop of Manila7
121 Arsobispo St.,
Intramuros, Manila
1
PCD Nominee Corporation (PCD), now known as the Philippine Depository and Trust Corporation (PDTC), Non-Filipino and Filipino, is the registered owner of the shares
beneficially owned by participants in the PDTC. The Board of Directors of each participant generally has the power to decide on how shares are to be voted. Out of the
1,667,372,509 common shares registered in the name of PCD, 454,983,298 shares or 10.0949% and 501,477,207 shares or 11.1265% are for the accounts of Deutsche Bank
Manila and The Hongkong and Shanghai Banking Corporation, respectively.
2
Mermac, Inc. owns 47.3326% of common shares and 56.7816% of total voting shares, while Mitsubishi Corporation owns 6.0273% of common shares and 7.1716% of total
voting shares, respectively, of the outstanding shares of Ayala Corporation (AC).
3
The Board of Directors of AC has the power to decide how AC’s shares in BPI are to be voted.
4
AC owns 84.16% of the outstanding shares of Liontide Holdings, Inc. (formerly Ayala DBS Holdings, Inc.), which translates to 78.07% effective ownership.
5
The Board of Directors of Liontide Holdings, Inc. (“Liontide”) has the power to decide how Liontide’s shares in BPI are to be voted.
6
Under a Voting Trust Agreement dated October 12, 2017, the Board of Directors of AC International Finance Limited (AC International) has the power to decide how AC
International’s shares in BPI are to be voted.
7
The Archbishop of Manila has the power to decide how the Roman Catholic Archbishop of Manila’s shares in BPI are to be voted.

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Voting Trust Holders of 5% or More. AC has a Voting Historical Dividends (Cash and Stock)
Trust Agreement with AC International. Cash dividends declared and paid during the years 2017
to 2019 are as follows:
Payment of dividends. Dividend declaration is ultimately
the responsibility of the Bank and the BPI Board which Amount of Dividends
Date Date of
has the authority to declare dividends as it may deem Declared Payment Per Share Total (in M Php)
appropriate. Under BSP regulations, no bank shall June 15, 2017 July, 27, 2017 0.90 3,545
declare dividends greater than its accumulated net December 15, 2017 January 19, 2018 0.90 3,546
profits then on hand, deducting therefrom its losses and June 20, 2018 July 25, 2018 0.90 4,052
bad debts. The net amount available for dividends shall December 19, 2018 January 29, 2019 0.90 4,052
be the amount of unrestricted or free retained earnings May 15, 2019 June 19, 2019 0.90 4,056
less loss provisioning which takes into account relevant
November 20, 2019 December 27,2019 0.90 4,057
capital adjustments including losses, bad debts, and
unearned profits or income.
Credit Ratings. Availability and cost of capital market
Per BSP Circular 888, banks that meet the financing are influenced by credit ratings. Declines in
prequalification criteria including capital adequacy these ratings could have an adverse effect on the Bank’s
requirements and applicable laws and regulations of the access to liquidity sources, increase the cost of funds,
BSP can declare and pay dividends without prior BSP trigger additional collateral or funding requirements and
verification. However, banks must ensure compliance decrease the number of investors and counterparties
with the minimum capital requirements and risk-based willing to lend to the Bank.
capital ratios even after the dividend distribution.
On August 27, 2019, S&P Global Ratings assigned ‘BBB+’
As approved by the Company’s Board, the Bank declares long-term issuer credit rating (ICR) to the Bank, at par
cash dividends to its common stockholders. The dividend with the Philippine sovereign rating of ‘BBB+’. BPI is the
payout history shows a distribution of at least P1.80 per first private domestic bank in the Philippines to achieve
share in annual dividends. This is designed to provide investment-grade ratings of bbb+/BBB+ in both Stand-
shareholders the balance that they seek between current alone Credit Profile and ICR.
income and capital appreciation. The Bank’s ability to
return capital to shareholders, at the same time adhering In 2019, credit rating agencies, namely, Fitch Ratings,
to risk and capitalization standards, is a testament to Moody’s, and Capital Intelligence, affirmed their
BPI’s fiduciary prudence. respective ratings on BPI.

While the Bank does not foresee any impediments to

its ability to pay dividends on common equity in the
medium-term, it evaluates dividend payments from
time to time in accordance with business and regulatory
requirements, and cannot make explicit warranties about
the quantum of future dividend payments.

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Supplementary Schedules
ON CAPITAL AND RISK MANAGEMENT DISCLOSURES
Pursuant to the Bangko Sentral’s Memorandum M-2014-007

Capital Structure

The Bank’s qualifying capital for the years ended 2019 and 2018 were Php 252.1 billion and Php 234.2 billion,
respectively. The Bank’s total qualifying capital for 2019 and 2018 were largely composed of CET1 capital at 94.4%.

The table below shows the composition of the Bank’s capital structure and total qualifying capital.

Capital Structure (Php Million) December 31, 2019 December 31, 2018
  CET1/Tier 1 Tier 2 TOTAL CET1/Tier 1 Tier 2 TOTAL
Core Capital 262,873 14,079 276,952 244,276 13,116 257,392
Paid-up common stock 44,999   44,999 44,961   44,961
Additional paid-in capital 74,369 74,369 74,100 74,100
Retained earnings 117,642   117,642 103,249   103,249
Undivided profits 28,738 28,738 22,923 22,923
Net unrealized gains or losses on AFS securities -460   -460 -144   -144
Cumulative foreign currency translation -290 -290 -212 -212
Remeasurement of net defined benefit liability
(asset) -2,558   -2,558 -1,155   -1,155
Gains/(Losses) on Fair Value Adjustment on
Hedging Instruments -124 -124    
Minority interest 1/ 557   557 553   553

General loan loss provision 2/   14,079 14,079   13,116 13,116

Deductions 24,810 0 24,810 23,152 0 23,152

Total O/S unsecured credit accommodations 3/ 1,734 1,734 1,774 1,774

Total O/S unsecured loans 4/ 227   227 100   100

Deferred tax assets 9,570 9,570 8,363 8,363
Other intangible assets 2,793   2,793 2,792   2,792
Defined benefit pension fund assets 84 84 66 66

Investments in equity 5/ 2,846   2,846 2,379   2,379

Significant minority investments 6/ 3,603 3,603 3,805 3,805

Other equity investments 7/ 3,953   3,953 3,873   3,873

TOTAL QUALIFYING CAPITAL 238,063 14,079 252,142 221,124 13,116 234,240
% to Total 94% 6% 100% 94% 6% 100%
1
/ Minority interest in subsidiary banks, which are less than wholly-owned
2
/ General loan loss provision, limited to a maximum of 1% of credit risk-weighted assets, and any amount in excess thereof shall be deducted from the credit risk-weighted
assets in computing the denominator of the risk-based capital ratio
3
/ Total outstanding unsecured credit accommodations, both direct and indirect, to directors, officers, stockholders and their related interests (DOSRI)
4
/ Total outstanding unsecured loans, other credit accommodations and guarantees granted to subsidiaries and affiliates
5
/ Investments in equity of unconsolidated subsidiary banks and quasi-banks, and other financial allied undertakings (excluding subsidiary securities dealers/brokers and
insurance companies), after deducting related goodwill, if any (for solo basis only and as applicable) and investments in equity of unconsolidated subsidiary securities
dealers/brokers and insurance companies after deducting related goodwill, if any (for both solo and consolidated bases and as applicable)
6
/ Significant minority investments (10%-50% of voting stock) in securities dealers/brokers and insurance companies after deducting related goodwill, if any (for both solo and
consolidated bases)
7
/ Other equity investments in non-financial allied undertakings and non-allied undertakings

Credit risk-weighted assets. Using the Basel regulatory standardized approach, our total credit risk-weighted assets
as of December 31, 2019 amounted to Php 1.4 trillion, and are composed of on-book credit exposures after risk
mitigation of Php 1.4 trillion, off-balance sheet risk-weighted assets of Php 15.0 billion, counterparty risk-weighted
assets in the banking book of Php 1.5 billion, counterparty risk-weighted assets in the trading book of Php 3.5 billion,
risk-weighted credit linked notes in the banking book of Php 128 million, and risk-weighted securitization exposures of
Php 601 million.

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The table below provides a summary of the Bank’s credit risk-weighted assets for 2019 and 2018:

Credit RWAs (Php Million) Amount

  2019 2018

Total RWA (On-balance sheet) 0/ 1,387,187 1,296,645

Total RWA (Off-balance sheet) 0/ 15,036 9,587

Total counterparty RWA (banking book) / 1

1,507 878
Total counterparty RWA (trading book) 3,465 3,821
Total risk-weighted credit linked notes (banking book) 128  
Total risk-weighted securitization exposures 601 684
Total Gross RWA 1,407,924 1,311,614
Deductions: General loan loss provision 2/ -722 -692
Total Credit RWAs 1,407,202 1,310,922
/ Risk-weighted assets
0

/ For derivatives and repo-style transactions

1

/ In excess of the amount permitted to be included in upper Tier 2

2

The Bank’s credit risk exposures on both on- and off-balance sheet assets after mitigation, broken down by risk
buckets, for 2019 and 2018 are as follows:

Schedule A

December 31, 2019 Risk Weights

(Php Million) Exposure 0% 20% 50% 75% 100% 150% Total CRWA 1/
after risk
mitigation
Cash on hand 46,895 46,895           46,895
Checks and other cash items 361   361         361
Due from BSP 207,575 207,575           207,575
Due from other banks 21,635   1,993 19,134   508   21,635
Available-for-sale (AFS) 53,806 36,351 3,659 7,668 6,128   53,806
Held-to-maturity (HTM) 275,102 158,977 14,035 79,154 22,937   275,102
UDSCL 2/               0
Loans and receivables 3/ 1,420,975 22,226 133,226 65,292 54,806 1,137,391 8,033 1,420,975
Sales contract receivables               0
ROPA 4/ 2,387           2,387 2,387
Sub-total 2,028,737 472,023 153,274 171,248 54,806 1,166,964 10,420 2,028,737
Other assets 27,626         27,626   27,626
Total exposures, plus other assets 2,056,363 472,023 153,274 171,248 54,806 1,194,590 10,420 2,056,363
Total risk-weighted OBSA (no CRM) 0/ 5/   0 30,655 85,624 41,105 1,194,590 15,630 1,367,604
Total risk-weighted OBSA (with CRM) 5/   0 2,194 2 0 17,386   19,582
Total RWA (On-Balance Sheet)   0 32,849 85,627 41,105 1,211,976 15,630 1,387,187

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 Supplementary Schedule

December 31, 2018  Risk Weights

(Php Million) Exposure 0% 20% 50% 75% 100% 150% Total CRWA 1/
after risk
mitigation
Cash on hand 43,269 43,269           43,269
Checks and other cash items 267   267         267
Due from BSP 225,917 225,917           225,917
Due from other banks 10,888   866 9,543   479   10,888
Available-for-sale (AFS) 36,717 31,975 831 2,207   1,704   36,717
Held-to-maturity (HTM) 287,676 173,198 15,429 77,131   21,917   287,676
UDSCL 2               0
Loans and receivables 3 1,302,401 24,804 108,347 57,914 55,093 1,044,115 12,127 1,302,401
Sales contract receivables 360         360   360
ROPA 4 2,609           2,609 2,609
Sub-total 1,910,103 499,163 125,741 146,794 55,093 1,068,575 14,736 1,910,103
Other assets 35,335         35,335   35,335
Total exposures, plus other assets 1,945,439 499,163 125,741 146,794 55,093 1,103,911 14,736 1,945,439
Total risk-weighted OBSA (no CRM) 0 5   0 25,148 73,397 41,320 1,103,911 22,104 1,265,880
Total risk-weighted OBSA (with CRM) 5   0 2,135 16   28,614   30,764
Total RWA (On-Balance Sheet)   0 27,283 73,413 41,320 1,132,524 22,104 1,296,645
0
On-balance sheet assets
1
Credit risk-weighted assets
2
Unquoted debt securities classified as loans
3
Inclusive of loans and receivables arising from repurchase agreements, certificate of assignment/participation with recourse, and securities lending and borrowing
transactions
4
Real and other properties acquired
5
Not covered by, and covered by credit risk mitigants, respectively

Schedule B
December 31, 2019 Risk Weights
RWA (Off-Balance Sheet) CEA 0/ 0% 20% 50% 75% 100% 150% Total CRWA 1/
(Php Million)
Direct credit substitutes 2 10,326 0 1 0 671 9,425 0 10,097
Transaction-related contingencies 3 2,527 0 10 0 96 2,350 0 2,455
Trade-related contingencies 4 2,585 0 23 0 34 2,427 0 2,484
Total RWA (Off-Balance Sheet)   0 34 0 801 14,202 0 15,036

December 31, 2018 Risk Weights

RWA (Off-Balance Sheet) CEA 0/ 0% 20% 50% 75% 100% 150% Total CRWA 1/
(Php Million)
Direct credit substitutes 2 5,802 0 133 0 625 4,302 0 5,061
Transaction-related contingencies 3 2,401 0 10 0 166 2,130 0 2,306
Trade-related contingencies 4 2,383 0 33 0 94 2,094 0 2,221
Total RWA (Off-Balance Sheet)   0 176 0 885 8,526 0 9,587
0
Credit equivalent amount
1
Credit risk-weighted assets
2
Such as general guarantees of indebtedness and acceptances
3
Such as performance bonds, bid bonds, warrantees and stand-by LCs related to particular transactions
4
Arising from movement of goods, such as documentary credits collateralized by the underlying shipments, and commitments with an original maturity of up to one year

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Schedule C
December 31, 2019 Risk Weights
Counterparty Assets Banking Book (Php Million) Net Amount 0/ 0% 20% 50% 100% 150% Total CRWA 1/
Derivative exposures:              
Interest rate              
Exchange rate              
Equity contracts              
Credit derivatives              
Counterparty Exposures arising from Financial              
Assets 2
Available-for-Sale              
Held-to-Maturity 2,910     1,403 104    1,507
Total RWA (Off-Balance Sheet)3   0 0 1,403 104 0 1,507

December 31, 2018 Risk Weights

Counterparty Assets Banking Book (Php Million) Net Amount 0/ 0% 20% 50% 100% 150% Total CRWA 1/
Derivative exposures:              
Interest rate              
Exchange rate              
Equity contracts              
Credit derivatives              
Counterparty Exposures arising from Financial              
Assets 2
Available-for-Sale              
Held-to-Maturity 1,943 0 122 578 178 0 878
Total RWA (Off-Balance Sheet)3   0 122 578 178 0 878
0
Net Exposures After CRM (Uncovered Portion)
1
Credit risk-weighted assets
2
Sold/Lent under Repurchase Agreements, Certificates of Assignment/Participation with Recourse, Securities Lending and Borrowing Agreement (Repo-style Transactions)
3
Risk-weighted assets

Schedule D
December 31, 2019 Risk Weights
Counterparty Assets Trading Book (Php Million) Net Amount 0/ 0% 20% 50% 100% 150% Total CRWA 1/
Derivative exposures:              
Interest rate 2,764 0 11 1,307 95 0 1,413
Exchange rate 3,313 0 11 1,229 802 0 2,041
Equity contracts 11 0 0 0 11 0 11
Credit derivatives 0 0 0 0 0 0 0
Total counterparty RWA 2 of derivatives transactions   0 22 2,535 908 0 3,465

December 31, 2018 Risk Weights

Counterparty Assets Trading Book (Php Million) Net Amount 0/ 0% 20% 50% 100% 150% Total CRWA 1/
Derivative exposures:              
Interest rate 3,793 0 29 1,805 40 0 1,873
Exchange rate 3,358 0 37 1,265 643 0 1,945
Equity contracts 3 0 0 0 3 0 3
Credit derivatives 0 0 0 0 0 0 0
Total counterparty RWA 2 of derivatives transactions   0 66 3,069 686 0 3,821
0
Credit equivalent amount
1
Credit risk-weighted assets
2
Risk-weighted assets

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 Supplementary Schedule

Market risk-weighted assets. In terms of capital usage following the Basel standardized approach, total market risk-
weighted assets stood at Php 24.0 billion as of end-2019, of which foreign exposures accounted for more than 72%,
followed by interest rate exposures and equity exposures, respectively.

The table below presents the breakdown of the Bank’s market risk-weighted assets for 2019 and 2018:

MARKET RWA (Php Million) AMOUNT

  2019 2018
Using standardized approach:    
Interest rate exposures 6,552 3,441
Equity exposures 146 485
Foreign exchange exposures 17,318 18,300
Options
TOTAL MARKET RWA 0 24,016 22,226
0
Risk-weighted assets

Operational risk-weighted assets. BPI currently uses the Basel regulatory basic indicator approach to quantify
operational risk-weighted assets, by using the historical total annual gross income as the main measure of risk. In 2019,
the Bank’s total operational risk-weighted assets stood at Php 137.6 billion.

The table below presents the Bank’s operational risk-weighted assets for the years 2019 and 2018:

OPERATIONAL RWA (Php Million)0/ AMOUNT

  2019 2018
Gross income (a) 83,217 73,284
Capital requirement 1 12,483 10,993
Average capital requirement (b) 2
11,011 9,808
Adjusted capital charge (c) 3 13,764 12,260
TOTAL OPERATIONAL RWA 4 137,638 122,598
0
Risk-weighted assets
1
(a) multiplied by 15 percent
2
Average of 15 percent of (a) for the past 3 years
3
(b) multiplied by 125 percent
4
(c) multiplied by factor 10

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Summary of Financial Performance

In 2019, BPI realized net profits of Php 28.80 billion, Total Loans as of December 31, 2019 reached
an increase of 24.8% or Php 5.73 billion from the Php 1.48 trillion, up 8.9% on the year, on the back
Php 23.08 billion recorded in 2018. The 20.1% increase of growth in the consumer, corporate, SME, and
in Total Revenues to Php 94.33 billion drove the profit microfinance loan segments of 13.4%, 7.9%, 5.8%, and
growth, partially offset by higher operating costs, loss 100.3%, respectively. This brought Loan-to-Deposit Ratio
provisioning, and taxes which grew Php 6.47 billion, at 87.0%. In terms of asset quality, the Bank registered
Php 899 million, and Php 2.68 billion, respectively. The NPL ratio of 1.66% and NPL reserve cover of 102.1%,
Bank’s Comprehensive Income was Php 28.77 billion, an improvement of 19 and 13.8 percentage points,
up 31.5% on higher Net Income and improved marked respectively. The Bank’s total loss coverage, including
to market valuation of Fair Value through Other allowances for contingent liabilities, stood at 104.8%.
Comprehensive Income (FVOCI) of the parent, insurance
companies and associates. Treasury securities increased by Php 11.62 billion or
3.40% to Php 353.11 billion of 2018’s Php 341.50 billion.
The Bank’s continued focus on growing its high margin Of this amount, 78% was booked in Financial assets at
businesses while maintaining its corporate franchise amortized cost thus less exposed to interest rate risk.
resulted in strong revenue results for the year. Total
Revenues stood at Php 94.33 billion, an improvement of Total Deposits grew 6.9% to Php 1.70 trillion versus level
20.1% boosted by the Bank’s core businesses. recorded in 2018. Current and Savings Deposits grew
Php 31.27 billion or 2.7% while Time Deposits grew
Net Interest Income grew by 18.1% to Php 65.94 billion Php 78.33 billion or 17.6%. This growth, however, was
from 2018’s Php 55.84 billion attributed to a 24-basis partially offset by the 9.6% decline in Other Borrowed
point expansion in Net Interest Margin to 3.35% in 2019. Funds to Php 150.84 billion due to maturity of BSP
rediscounting products and reduced borrowings from
Non-Interest Income was Php 28.39 billion, an increase other banks.
of 25.2% versus 2018, primarily from higher securities
trading gains and fee-based income, higher fees from The Bank was active in the debt capital markets with a
credit cards, transaction banking, branch services, and number of capital raising activities in 2019: (1) Green
digital channels, but slightly tempered by lower income bond issuances of CHF 100 million two-year interest
from investment banking. free ASEAN Green Bond and the US$ 300 million Senior
Unsecured Fixed-Rate ASEAN Green Bond; (2) Over
Cost-to-Income Ratio at 53.1%, lower than the Php 3 billion of Long-Term Negotiable Certificates of Time
55.5% recorded in the prior year, given the strong Deposit (LTNCTDs); (3) Maiden bond issuance amounting
revenue performance. Operating Expenses totaled to Php 9.51 billion of wholly-owned thrift bank and
Php 50.08 billion, higher by 14.8% from the previous consumer lending arm, BPI Family Savings Bank (BFSB)
year. Compensation and Fringe Benefits increased
Php 2.17 billion, or 14.2%, to Php 17.49 billion on Capital Funds increased Php 21.06 billion or 8.5% to
increased headcount for both microfinance and regular Php 269.58 billion from 2018’s Php 248.52 billion.
branches. Occupancy and equipment-related expenses Regulatory ratios were both well above the BSP
grew Php 2.98 billion, or 22.6%, to Php 16.12 billion due requirements with Common Equity Tier 1 Ratio of 15.17%
to higher technology-related outsourced services costs and a Capital Adequacy Ratio of 16.07. Return on Equity
and the impact of the PFRS 16: Leases implementation. for 2019 was at 10.97%. Market capitalization still
On January 1, 2019, the BPI Group adopted PFRS 16: among the largest in the industry stood at Php 396.17
Leases, which requires recognition of both right-of-use billion at end- December 31,2019 with share price closed
assets and lease liability arising from long-term leases. at Php 87.9. This represents a 1.5x multiple to book value.
Other Operating Expenses was similarly higher at
Php 16.47 billion, up Php 1.33 billion or 8.8% on The Bank paid a total of Php 12.17 billion cash dividends
increased regulatory, marketing, volume-related or Php 1.80 per share to its shareholders in 2019.
transaction, and outsourcing costs.

Total Assets stood at Php 2.21 trillion, higher by

5.7% year-on-year, as total funding increased by
Php 93.5 billion or 5.3% to Php 1.85 trillion.

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Statement of Management’s Responsibility
For Financial Statements

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 Report of the Audit Committee
to the Board of Directors

REPORT OF THE AUDIT COMMITTEE TO THE BOARD OF DIRECTORS

BANK OF THE PHILIPPINE ISLANDS
FOR THE YEAR ENDED DECEMBER 31, 2019

The role and responsibilities of the Audit Committee are defined in the Board-approved Audit Committee charter. In
accordance with this charter, the Committee assists the Board of Directors in fulfilling its oversight responsibilities to the
shareholders with respect to:

 Systems of internal controls, risk management, and governance process of the Bank
 Integrity of the Bank’s financial statements and financial reporting process
 Performance of the internal audit function and the external auditor
 Compliance with bank policies, applicable laws, rules and regulatory requirements

The Committee is composed of three (3) qualified non-executive and independent directors, all with necessary
background, knowledge, skills, and/or experience to carry out its functions. It held 12 regular and 3 special meetings in
2019. Highlights of the Committee’s activities were as follows:

1. Financial Statements:

a) Reviewed and discussed with Management and the external auditor, Isla Lipana & Co., a member firm of Price
Waterhouse Coopers, the audited consolidated financial statements of Bank of the Philippine Islands (BPI) and
the related disclosures for the year ended December 31, 2019, including the assessment of the internal
controls relevant to the financial reporting process. The review was performed in the following context:

 that Management is responsible for the preparation and fair presentation of the financial statements in
accordance with the prescribed financial reporting framework, and

 that Isla Lipana has audited the financial statements in accordance with the Philippine Standards on
Auditing and is responsible for expressing an opinion on the fairness of the presentation, including the
results of its independent review of the Bank’s business models and valuation techniques particularly on
the recalibrated PFRS9 model and adoption of PFRS 16.

After obtaining assurance on the external auditor’s independent and thorough review of the financial
statements, the Committee endorsed the audited financial statements for approval by the Board and for
inclusion in the 2019 Annual Report to the Stockholders.

b) Discussed with Management and the internal auditors, the quarterly unaudited consolidated financial reports of
BPI Group including the results of operations and endorsed the financial statements to the Board of Directors
for approval.

2. External Audit:

a) Review the audit plan and the scope of work of the external auditors, ensuring that areas of focus were
appropriately covered and there were no significant gaps in the scope between external and internal audits to
ensure effective use of resources.

The Committee also reviewed the audit results focusing on significant items with financial impact and key
control issues through Management Letter of Comments and ensured that corrective actions are taken by
Management. The Audit Committee also held an annual executive session and special meetings with the
external auditor to discuss any issue or concerns on its financial reporting and attestation process and on the
Bank’s implementation of relevant accounting standards and its impact to the Bank.

b) Assessed the overall performance and effectiveness of the external auditor, Isla Lipana and its audit process.
The Committee ensures that lead audit partner is rotated every five (5) years and that Isla Lipana & Co. had
reaffirmed its independence from BPI and its subsidiaries and are in compliance with the relevant ethical and
professional standards. In consultation with Management, the Committee, recommended for consideration and
endorsement of the Board of Directors to the stockholders, the re-engagement of Isla Lipana & Co. for BPI and
its subsidiaries and affiliates for year 2020 and the related audit fees.

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3. Internal Audit:

a) Reviewed and approved the annual work plan of Internal Audit including its charter, risk assessment model and
audit rating framework. The Committee ensures that the internal audit function is independent, has adequate
and competent resources, and has appropriate authority to be able to effectively discharge its duties. The
members of the Audit Committee had periodic discussions with the Chief Audit Executive during the year on
significant control and/or risk issues arising from the audit reviews.

b) Reviewed and discussed the reports from internal audit and other management assurance units ensuring that
Management is taking the appropriate corrective actions in a timely manner. The Audit Committee also held
joint session meetings with the Risk Management Committee to discuss updates on information technology
including major systems implemented and cyber security threats as well as on relevant regulatory
developments. Management’s implementation plans were discussed and monitored to ensure that identified
control gaps or significant risk are adequately addressed and mitigated.

c) Reviewed the minutes of meetings of the different Audit Committees of the BPI subsidiaries, to ensure that
identified control weaknesses, operational risks and compliance issues are monitored and acted upon.

d) Evaluated the performance of Chief Audit Executive. The Committee also ensures that Internal Audit activities
continuously conform with the International Standards for the Professional Practice of Internal Auditing and
Code of Ethics through internal and external quality assessment reviews.

4. Regulatory Compliance:

a) Reviewed the effectiveness of the system for monitoring compliance with laws and regulations through the
regular reports from the Group Compliance Office on the results of its compliance reviews including
Management’s actions to address the issues.

b) Discussed the results of the post-implementation reviews of related party transactions (RPTs), ensuring that
any significant issues had been appropriately addressed.

c) Discussed the 2019 BSP Report of Examination and Management responses including action plans on the
findings, observations and recommendations to ensure that committed actions are implemented.

In compliance with the SEC requirement and the BPI Corporate Governance Manual, the Audit Committee:

 Attended the annual SEC accredited workshop on corporate governance, risk management and sustainability. The
Committee were also provided with updates on relevant laws and regulations, accounting standards and tax rules.
 Reviewed the Audit Committee Charter to ensure that it is updated and aligned with the regulatory requirements.
 Performed the annual self-assessment and reviewed its performance against its charter and other regulatory
mandates. The result was validated by the Compliance Officer and discussed in the Corporate Governance
Committee. The process confirmed a satisfactory performance of the Audit Committee.

Based on the results of the assurance activities performed by the Bank’s Internal Audit, compliance reviews and the
external auditor’s unqualified opinion on the financial statements, the Committee assessed that the Bank’s systems of
internal controls, risk management, and governance processes continue to be adequate and generally effective. This
overall assessment states, among others, that the audit scope and coverage are sufficient, comprehensive, and risk-
based, that Management is aware of its responsibility for internal control, and that there is no interference with the
accomplishment of audit activities and reporting of issues and other relevant information to Management, Audit
Committee, and the Board of Directors.

XAVIER P. LOINAZ
Chairman

OCTAVIO VICTOR R. ESPIRITU MARIA DOLORES B. YUVIENCO

Member Member

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 Bank of the
Philippine Islands
Financial Statements
As at December 31, 2019 and 2018 and for each of the three
years in the period ended December 31, 2019

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Independent Auditor’s Report

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 Notes to Financial
Independent Auditor’s
Statements
Report

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 A3
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 Notes to Financial
Independent Auditor’s
Statements
Report

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 A5
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 Notes to Financial
Independent Auditor’s
Statements
Report

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 A7
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 Financial Statements

BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CONDITION
DECEMBER 31, 2019 and 2018
(In Millions of Pesos)

Consolidated Parent
Notes 2019 2018 2019 2018

ASSETS

CASH AND OTHER CASH ITEMS 4 47,256 43,536 45,982 42,419

DUE FROM BANGKO SENTRAL NG PILIPINAS 4 207,845 225,907 181,815 202,487
DUE FROM OTHER BANKS 4 22,356 12,477 18,356 8,615
INTERBANK LOANS RECEIVABLE AND SECURITIES
PURCHASED UNDER AGREEMENTS TO RESELL 4,5 22,570 34,323 18,364 22,659
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS 6,7 24,105 16,721 17,688 10,346
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME 8 53,905 37,206 48,320 30,583
INVESTMENT SECURITIES AT AMORTIZED COST, net 9 275,105 287,571 252,006 267,497
LOANS AND ADVANCES, net 10 1,475,336 1,354,896 1,231,776 1,125,956
ASSETS HELD FOR SALE, net 3,155 3,363 342 455
BANK PREMISES, FURNITURE, FIXTURES
AND EQUIPMENT, net 11 23,748 16,252 16,595 10,146
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES, net 12 6,746 5,659 10,031 9,942
ASSETS ATTRIBUTABLE TO INSURANCE OPERATIONS 2,4 17,790 16,582 - -
DEFERRED INCOME TAX ASSETS, net 13 9,706 8,536 6,653 5,723
OTHER ASSETS, net 14 15,407 22,199 9,910 16,313
Total assets 2,205,030 2,085,228 1,857,838 1,753,141
(forward)

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 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CONDITION
DECEMBER 31, 2019 and 2018
(In Millions of Pesos)

Consolidated Parent
Notes 2019 2018 2019 2018

LIABILITIES AND CAPITAL FUNDS

DEPOSIT LIABILITIES 15 1,695,343 1,585,746 1,456,458 1,347,207

DERIVATIVE FINANCIAL LIABILITIES 7 2,877 3,891 2,877 3,888
BILLS PAYABLE AND OTHER BORROWED FUNDS 16 150,837 166,901 126,529 150,880
DUE TO BANGKO SENTRAL NG PILIPINAS AND OTHER BANKS 2,946 3,988 2,946 3,988
MANAGER’S CHECKS AND DEMAND DRAFTS OUTSTANDING 8,299 6,931 6,421 5,354
ACCRUED TAXES, INTEREST AND OTHER EXPENSES 9,865 9,057 7,418 6,875
LIABILITIES ATTRIBUTABLE TO INSURANCE OPERATIONS 2 14,061 14,056 - -
DEFERRED CREDITS AND OTHER LIABILITIES 17 47,768 43,120 38,939 35,793
Total liabilities 1,931,996 1,833,690 1,641,588 1,553,985
CAPITAL FUNDS ATTRIBUTABLE TO THE
EQUITY HOLDERS OF BPI 18
Share capital 44,999 44,961 44,999 44,961
Share premium 74,449 74,181 74,449 74,181
Reserves 5,108 4,096 4,892 3,977
Surplus 147,460 127,459 94,226 76,958
Accumulated other comprehensive loss (2,439) (2,176) (2,316) (921)
269,577 248,521 216,250 199,156
NON-CONTROLLING INTERESTS 3,457 3,017 - -
Total capital funds 273,034 251,538 216,250 199,156
Total liabilities and capital funds 2,205,030 2,085,228 1,857,838 1,753,141

(The notes on pages 1 to 109 are an integral part of these financial statements.)

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 Financial Statements

BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF INCOME
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2019
(In Millions of Pesos, Except Per Share Amounts)

Consolidated Parent
Notes 2019 2018 2017 2019 2018 2017
INTEREST INCOME
On loans and advances 87,151 69,401 54,615 67,895 51,901 38,752
On investment securities 12,709 9,616 9,185 11,776 8,942 8,403
On deposits with BSP and other banks 1,723 1,173 2,049 808 548 977
101,583 80,190 65,849 80,479 61,391 48,132
INTEREST EXPENSE
On deposits 15 28,874 21,255 16,660 21,476 15,645 11,413
On bills payable and other borrowed
funds 16 6,764 3,092 1,150 6,031 2,588 885
35,638 24,347 17,810 27,507 18,233 12,298
NET INTEREST INCOME 65,945 55,843 48,039 52,972 43,158 35,834
PROVISION FOR CREDIT AND
IMPAIRMENT LOSSES 5,9,10,14 5,822 4,923 3,795 4,666 4,279 3,519
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT AND
IMPAIRMENT LOSSES 60,123 50,920 44,244 48,306 38,879 32,315
OTHER INCOME
Fees and commissions 9,062 8,224 7,716 8,502 7,219 6,224
Income from foreign exchange trading 2,102 2,128 2,136 1,930 1,831 1,798
Income attributable to insurance
operations 2 1,223 1,223 1,413 - - -
Securities trading gain 4,010 719 923 3,678 258 754
Other operating income 19 11,992 10,387 10,793 10,487 5,919 14,171
28,389 22,681 22,981 24,597 15,227 22,947
OTHER EXPENSES
Compensation and fringe benefits 21 17,487 15,315 13,897 13,479 11,834 10,691
Occupancy and equipment-related
expenses 11,20 16,123 13,146 11,344 12,943 10,570 9,062
Other operating expenses 21 16,467 15,141 13,292 12,058 11,257 9,626
50,077 43,602 38,533 38,480 33,661 29,379
PROFIT BEFORE INCOME TAX 38,435 29,999 28,692 34,423 20,445 25,883
INCOME TAX EXPENSE 22
Current 10,037 7,404 6,418 8,788 5,793 4,248
Deferred 13 (685) (734) (462) (583) (776) (462)
9,352 6,670 5,956 8,205 5,017 3,786
NET INCOME FOR THE YEAR 29,083 23,329 22,736 26,218 15,428 22,097

Attributable to:
Equity holders of BPI 28,803 23,078 22,416 26,218 15,428 22,097
Non-controlling interests 280 251 320 - - -
29,083 23,329 22,736 26,218 15,428 22,097
Earnings per share for net income
attributable to the equity holders of BPI
during the year:
Basic and diluted 18 6.39 5.35 5.69 5.82 3.57 5.61

(The notes on pages 1 to 109 are an integral part of these financial statements.)

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 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF COMPREHENSIVE INCOME

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2019
(In Millions of Pesos)

Consolidated Parent
Note 2019 2018 2017 2019 2018 2017
NET INCOME FOR THE YEAR 29,083 23,329 22,736 26,218 15,428 22,097
OTHER COMPREHENSIVE (LOSS) INCOME 18
Items that may be subsequently reclassified
to profit or loss
Share in other comprehensive income (loss) of
associates 1,286 (1,281) (252) - - -
Net change in fair value reserve on
investments in debt instruments measured
at FVOCI, net of tax effect 262 (771) - 249 (461) -
Fair value reserve on investments of insurance
subsidiaries, net of tax effect 545 (400) 196 - - -
Currency translation differences and others (202) (26) 126 (124) - -
Net change in fair value reserve on AFS, net
of tax effect - - 713 - - 449
Items that will not be reclassified to profit or
loss
Remeasurements of defined benefit obligation (1,418) 612 (272) (1,141) 431 (338)
Share in other comprehensive (loss) income
of associates (32) 596 (528) - - -
Net change in fair value reserve on
investments in equity instruments measured
at FVOCI, net of tax effect (313) (19) - (379) 320 -
Total other comprehensive (loss) income, net
of tax effect 128 (1,289) (17) (1,395) 290 111
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR 29,211 22,040 22,719 24,823 15,718 22,208

Attributable to:
Equity holders of BPI 28,769 21,878 22,406 24,823 15,718 22,208
Non-controlling interests 442 162 313 - - -
29,211 22,040 22,719 24,823 15,718 22,208

(The notes on pages 1 to 109 are an integral part of these financial statements.)

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 Financial Statements

BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CHANGES IN EQUITY

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2019
(In Millions of Pesos)

Consolidated
Attributable to equity holders of BPI (Note 18)
Accumulated
other Non-
Share Share comprehensive controlling Total
capital premium Reserves Surplus income (loss) Total interests equity
Balance, January 1, 2017 39,308 29,591 2,711 98,602 (5,078) 165,134 2,550 167,684
Comprehensive income
Net income for the year - - - 22,416 - 22,416 320 22,736
Other comprehensive loss for the
year - - - - (10) (10) (7) (17)
Total comprehensive income
(loss) for the year - - - 22,416 (10) 22,406 313 22,719
Transactions with owners
Exercise of stock option plans 28 180 31 - - 239 - 239
Cash dividends - - - (7,091) - (7,091) - (7,091)
Total transactions with owners 28 180 31 (7,091) - (6,852) - (6,852)
Transfer from surplus to reserves - - 90 (90) - - - -
Transfer from reserves to surplus - - (2,578) 2,578 - - - -
- - (2,488) 2,488 - - - -
Balance, December 31, 2017 39,336 29,771 254 116,415 (5,088) 180,688 2,863 183,551
Impact of PFRS 9
adoption - - - (62) 4,111 4,049 (8) 4,041
Restated balance, January 1, 2018 39,336 29,771 254 116,353 (977) 184,737 2,855 187,592
Comprehensive income
Net income for the year - - - 23,078 - 23,078 251 23,329
Other comprehensive loss for the
year - - - - (1,200) (1,200) (89) (1,289)
Total comprehensive income
(loss) for the year - - - 23,078 (1,200) 21,878 162 22,040
Transactions with owners
Proceeds from stock rights offering 5,587 44,120 - - - 49,707 - 49,707
Exercise of stock option plans 38 290 (25) - - 303 - 303
Cash dividends - - - (8,104) - (8,104) - (8,104)
Total transactions with owners 5,625 44,410 (25) (8,104) - 41,906 - 41,906
Transfer from surplus to reserves - - 3,867 (3,867) - - - -
Other movements - - - (1) 1 - - -
- - 3,867 (3,868) 1 - - -
Balance, December 31, 2018 44,961 74,181 4,096 127,459 (2,176) 248,521 3,017 251,538
Comprehensive income
Net income for the year - - - 28,803 - 28,803 280 29,083
Other comprehensive loss for the
year - - - - (34) (34) 162 128
Total comprehensive income
(loss) for the year - - - 28,803 (34) 28,769 442 29,211
Transactions with owners
Exercise of stock option pans 38 268 30 - - 336 - 336
Cash dividends - - - (8,113) - (8,113) - (8,113)
Total transactions with owners 38 268 30 (8,113) - (7,777) - (7,777)
Transfer from surplus to reserves - - 2,002 (2,002) - - - -
Transfer from reserves to surplus - - (1,020) 1,020 - - - -
Other movements - - - 293 (229) 64 (2) 62
- - 982 (689) (229) 64 (2) 62
Balance, December 31, 2019 44,999 74,449 5,108 147,460 (2,439) 269,577 3,457 273,034

(The notes on pages 1 to 109 are an integral part of these financial statements.)

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 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CHANGES IN EQUITY

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2019
(In Millions of Pesos)

Parent (Note 18)

Accumulated
other
Share Share comprehensive
capital premium Reserves Surplus income (loss) Total
Balance, January 1, 2017 39,308 29,591 2,695 56,095 (4,807) 122,882
Comprehensive income
Net income for the year - - - 22,097 - 22,097
Other comprehensive income for the year - - - - 111 111
Total comprehensive income for the year - - - 22,097 111 22,208
Transactions with owners
Exercise of stock option plans 28 180 25 - - 233
Cash dividends - - - (7,091) - (7,091)
Total transactions with owners 28 180 25 (7,091) - (6,858)
Transfer from reserves to surplus - - (2,578) 2,578 - -
Balance, December 31, 2017 39,336 29,771 142 73,679 (4,696) 138,232
Impact of PFRS 9 adoption - - - (178) 3,485 3,307
Restated balance, January 1, 2018 39,336 29,771 142 73,501 (1,211) 141,539
Comprehensive income
Net income for the year - - - 15,428 - 15,428
Other comprehensive income for the year - - - - 290 290
Total comprehensive income for the year - - - 15,428 290 15,718
Transactions with owners
Proceeds from stock rights offering 5,587 44,120 - - - 49,707
Exercise of stock option plans 38 290 (32) - - 296
Cash dividends - - - (8,104) - (8,104)
Total transactions with owners 5,625 44,410 (32) (8,104) - 41,899
Transfer from surplus to reserves - - 3,867 (3,867) - -
Balance, December 31, 2018 44,961 74,181 3,977 76,958 (921) 199,156
Comprehensive income
Net income for the year - - - 26,218 - 26,218
Other comprehensive loss for the year - - - - (1,395) (1,395)
Total comprehensive income for the year - - - 26,218 (1,395) 24,823
Transactions with owners
Exercise of stock option plans 38 268 43 - - 349
Cash dividends - - - (8,113) - (8,113)
Total transactions with owners 38 268 43 (8,113) - (7,764)
Transfer from surplus to reserves - - 1,892 (1,892) - -
Transfer from reserves to surplus - - (1,020) 1,020 - -
Other movements - - - 35 - 35
- - 872 (837) - 35
Balance, December 31, 2019 44,999 74,449 4,892 94,226 (2,316) 216,250

(The notes on pages 1 to 109 are an integral part of these financial statements.)

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 Financial Statements

BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CASH FLOWS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2019
(In Millions of Pesos)

Consolidated Parent
Notes 2019 2018 2017 2019 2018 2017
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before income tax 38,435 29,999 28,692 34,423 20,445 25,883
Adjustments for:
Impairment losses 5,9,10,14 5,822 4,923 3,795 4,666 4,271 3,519
Depreciation and amortization 11,14 7,132 4,797 4,255 4,767 2,916 2,783
Share in net income of associates 12 (372) (700) (772) - - -
Dividend and other income 19 (77) (76) (68) (3,794) (904) (9,492)
Share-based compensation 18 30 (25) 31 42 (32) 25
Interest income (101,583) (80,190) (68,053) (83,279) (61,391) (49,783)
Interest received 100,293 77,715 66,816 83,294 59,960 48,753
Interest expense 35,638 24,347 17,810 27,507 18,233 12,298
Interest paid (35,300) (23,440) (17,495) (27,375) (17,494) (11,901)
(Increase) decrease in:
Interbank loans receivable and securities
purchased under agreements to resell 1,898 (821) 595 1,895 (966) (353)
Financial assets at fair value through
profit or loss (8,472) (2,257) 9,272 (8,469) (236) 6,498
Loans and advances, net (125,028) (154,077) (164,957) (109,711) (140,860) (168,485)
Assets held for sale 400 655 313 353 509 447
Assets attributable to insurance
operations 287 465 (944) - - -
Other assets 5,611 (8,096) (3,940) 5,702 (3,761) (6,745)
Increase (decrease) in:
Deposit liabilities 109,598 23,546 130,900 109,252 23,244 139,485
Due to Bangko Sentral ng Pilipinas and
other banks (1,041) 2,770 548 (1,041) 2,770 548
Manager’s checks and demand drafts
outstanding 1,368 (91) (557) 1,067 (408) (131)
Accrued taxes, interest and other
expenses 303 1,033 (51) 411 562 (252)
Liabilities attributable to insurance
operations 5 (457) 146 - - -
Derivative financial instruments (38) 52 (311) (28) 45 (306)
Deferred credits and other liabilities 7,335 2,493 7,550 6,094 2,506 6,037
Net cash from (used in) operations 42,244 (97,435) 13,575 45,776 (90,591) (1,172)
Income taxes paid (10,363) (7,115) (6,505) (9,135) (5,560) (4,395)
Net cash from (used in) operating activities 31,881 (104,550) 7,070 36,641 (96,151) (5,567)
(forward)

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 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CASH FLOWS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2019
(In Millions of Pesos)

Consolidated Parent
Notes 2019 2018 2017 2019 2018 2017
CASH FLOWS FROM INVESTING
ACTIVITIES
(Increase) decrease in:
Investment securities, net 8,9 (4,343) (25,828) (7,029) (3,574) (31,400) 727
Bank premises, furniture, fixtures and
equipment, net 11 (13,400) (5,048) (4,191) (10,285) (2,518) (2,018)
Investment properties, net 14 (57) 1 - (55) 12 -
Investment in subsidiaries and associates, net 12 933 305 745 (89) (899) (95)
Assets attributable to insurance operations (1,368) 364 58 - - -
Dividends received 18 77 76 68 3,794 904 9,492
Net cash (used in) from investing activities (18,158) (30,130) (10,349) (10,209) (33,901) 8,106
CASH FLOWS FROM FINANCING
ACTIVITIES
Cash dividends paid 17,18 (12,167) (7,598) (7,089) (12,165) (7,598) (7,089)
Proceeds from share issuance 18 306 50,035 207 306 50,035 207
(Decrease) increase in bills payable and other
borrowed funds 16 (16,064) 83,384 21,544 (24,351) 80,158 18,466
Net cash (used in) from financing activities (27,925) 125,821 14,662 (36,210) 122,595 11,584
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (14,202) (8,859) 11,383 (9,778) (7,457) 14,123
CASH AND CASH EQUIVALENTS
January 1 4,5 313,270 322,129 310,746 273,122 280,579 266,456
December 31 299,068 313,270 322,129 263,344 273,122 280,579

(The notes on pages 1 to 109 are an integral part of these financial statements.)

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 Notes to Financial Statements

BANK OF THE PHILIPPINE ISLANDS

NOTES TO FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2019 and 2018 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 2019

Note 1 - General Information

Bank of the Philippine Islands (“BPI” or the “Parent Bank”) is a domestic commercial bank with an expanded
banking license and was registered with the Securities and Exchange Commission (SEC) on January 4, 1943. The
Parent Bank’s license was extended for another 50 years on January 4, 1993.

In 2019, the Bank’s office address, which also serves as its principal place of business, was transferred to Ayala North
Exchange, Ayala Avenue corner Salcedo Street, Legaspi Village, Makati City. Prior to 2019, BPI’s registered office
address and principal place of business were both located at BPI Building, Ayala Avenue corner Paseo de Roxas,
Makati City.

BPI and its subsidiaries (collectively referred to as the “BPI Group”) offer a whole breadth of financial services that
include corporate banking, consumer banking, investment banking, asset management, corporate finance, securities
distribution, and insurance services. At December 31, 2019, the BPI Group has 21,429 employees
(2018 - 18,911 employees) and operates 1,167 branches (2018 - 1,056 branches) and 2,822 ATMs
(2018 - 3,034 ATMs) to support its delivery of services. The BPI Group also serves its customers through alternative
electronic banking channels such as telephone, mobile phone and the internet.

The Parent Bank is considered a public company under Rule 3.1 of Implementing Rules and Regulations of the
Securities Regulation Code, which, among others, defines a public company as any corporation with a class of equity
securities listed on an exchange, or with assets of at least P50 million and having 200 or more shareholders, each of
which holds at least 100 shares of its equity securities.

These financial statements have been approved and authorized for issuance by the Board of Directors (BOD) of the
Parent Bank on February 19, 2020. There are no material events that occurred subsequent to February 19, 2020
until February 26, 2020.

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The consolidated financial statements comprise the financial statements of the Parent Bank and the following
subsidiaries:

Country of % of ownership
Subsidiaries incorporation Principal activities 2019 2018
BPI Family Savings Bank, Inc. Philippines Banking 100 100
BPI Capital Corporation Philippines Investment house 100 100
BPI Direct BanKo, Inc., A Savings Bank Philippines Banking 100 100
BPI Asset Management and Trust Corporation Philippines Asset management 100 100
BPI International Finance Limited Hong Kong Financing 100 100
BPI Europe Plc. England and Wales Banking (deposit) 100 100
BPI Securities Corp. Philippines Securities dealer 100 100
BPI Payments Holdings Inc. Philippines Financing 100 100
Filinvest Algo Financial Corp. Philippines Financing 100 100
BPI Investment Management, Inc. Philippines Investment management 100 100
Santiago Land Development Corporation Philippines Land holding 100 100
BPI Operations Management Corp. Philippines Operations management 100 100
BPI Computer Systems Corp. Philippines Business systems service 100 100
BPI Forex Corp. Philippines Foreign exchange 100 100
BPI Express Remittance Corp. USA USA Remittance 100 100
BPI Remittance Centre (HK) Ltd. Hong Kong Remittance 100 100
Green Enterprises S. R. L. in Liquidation Italy Remittance 100 100
First Far - East Development Corporation Philippines Real estate 100 100
FEB Stock Brokers, Inc. Philippines Securities dealer 100 100
BPI Express Remittance Spain S.A Spain Remittance 100 100
FEB Speed International Philippines Remittance 100 100
Ayala Plans, Inc. Philippines Pre-need 98.93 98.67
FGU Insurance Corporation Philippines Non-life insurance 94.62 94.62
BPI Century Tokyo Lease and Finance
Corporation Philippines Leasing 51 51
BPI Century Tokyo Rental Corporation Philippines Rental 51 51
CityTrust Securities Corporation Philippines Securities dealer 51 51
BPI/MS Insurance Corporation Philippines Non-life insurance 50.85 50.85

Note 2 - Assets and Liabilities Attributable to Insurance Operations

Details of assets and liabilities attributable to insurance operations at December 31 are as follows:

2019 2018
(In Millions of Pesos)
Assets
Cash and cash equivalents (Note 4) 217 89
Insurance balances receivable, net 5,010 5,596
Investment securities
Financial assets at fair value through profit or loss 5,382 1,788
Financial assets at fair value through other comprehensive income (OCI) 4,344 6,522
Financial assets at amortized cost 153 202
Investment in associates 167 167
Accounts receivable and other assets, net 2,320 2,106
Land, building and equipment 197 112
17,790 16,582

(2)

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 Notes to Financial Statements

2019 2018
(In Millions of Pesos)
Liabilities
Reserves and other balances 12,544 12,909
Accounts payable, accrued expenses and other payables 1,517 1,147
14,061 14,056

Details of income attributable to insurance operations before income tax and minority interest for the years ended
December 31 are as follows:

2019 2018 2017

(In Millions of Pesos)
Premiums earned and related income 3,841 3,750 3,624
Investment and other income 712 755 864
4,553 4,505 4,488
Benefits, claims and maturities 1,942 2,049 2,006
Decrease in actuarial reserve liabilities (412) (379) (524)
Commissions 938 800 789
Management and general expenses 838 799 791
Other expenses 24 13 13
3,330 3,282 3,075
Income before income tax and minority interest 1,223 1,223 1,413

Note 3 - Business Segments

Operating segments are reported in accordance with the internal reporting provided to the Chief Executive Officer
(CEO), who is responsible for allocating resources to the reportable segments and assessing their performance. All
operating segments used by the BPI Group individually meet the definition of a reportable segment under Philippine
Financial Reporting Standards (PFRS) 8, Operating Segments.

The BPI Group has determined the operating segments based on the nature of the services provided and the different
clients/markets served representing a strategic business unit.

The BPI Group’s main operating business segments follow:

• Consumer banking - this segment serves the individual and retail markets. Services cover deposit taking and
servicing, consumer lending such as home mortgages, auto loans and credit card finance as well as the remittance
business. The segment also includes the entire transaction processing and service delivery infrastructure
consisting of network of branches and ATMs as well as phone and internet-based banking platforms.

• Corporate banking - this segment caters both high-end corporations and middle market clients. Services offered
include deposit taking and servicing, loan facilities, leasing, trade and cash management for corporate and
institutional customers.

• Investment banking - this segment includes the various business groups operating in the investment markets and
dealing in activities other than lending and deposit taking. These services cover corporate finance, securities
distribution, asset management, trust and fiduciary services as well as proprietary trading and investment
activities.

The performance of the Parent Bank is assessed as a single unit using financial information presented in the separate
or Parent only financial statements. Likewise, the CEO assesses the performance of the insurance business as a
standalone business segment separate from the banking and allied financial undertakings. Information on the assets,
liabilities and results of operations of the insurance business is fully disclosed in Note 2.

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The BPI Group and the Parent Bank mainly derive revenue (more than 90%) within the Philippines, accordingly,
no geographical segment is presented.

The segment report forms part of management’s assessment of the performance of the segment, among other
performance indicators.

There were no changes in the reportable segments during the year. Transactions between the business segments are
carried out at arm’s length. Funds are ordinarily allocated between segments, resulting in funding cost transfers
disclosed in inter-segment net interest income. Interest charged for these funds is based on the BPI Group’s cost of
capital.

Internal charges and transfer pricing adjustments have been reflected in the performance of each business. Revenue-
sharing agreements are used to allocate external customer revenues to a business segment on a reasonable basis.
Inter-segment revenues however, are deemed insignificant for financial reporting purposes, thus, not reported in
segment analysis below.

The BPI Group’s management reporting is based on a measure of operating profit comprising net interest income,
impairment charge, fees and commission income, other income and operating expenses.

Segment assets and liabilities comprise majority of operating assets and liabilities, measured in a manner consistent
with that shown in the statements of condition, but exclude items such as taxation.

The segment assets, liabilities and results of operations of the reportable segments of the BPI Group as at and for the
years ended December 31 are as follows:

2019
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 41,494 17,168 11,860 70,522
Provision for credit and impairment losses 3,489 2,328 5 5,822
Net interest income after provision for credit and
impairment losses 38,005 14,840 11,855 64,700
Fees, commissions and other income, net 14,313 4,020 8,329 26,662
Total income 52,318 18,860 20,184 91,362
Compensation and fringe benefits 14,373 2,598 1,108 18,079
Occupancy and equipment-related expenses 10,147 2,126 314 12,587
Other operating expenses 15,057 3,389 1,721 20,167
Total other expenses 39,577 8,113 3,143 50,833
Operating profit 12,741 10,747 17,041 40,529
Share in net income of associates 563
Income tax expense 9,352
Total assets 539,093 1,208,553 427,571 2,175,217
Total liabilities 1,211,212 552,549 145,398 1,909,159

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 Notes to Financial Statements

2018
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 33,973 11,019 16,148 61,140
Provision for credit and impairment losses 1,712 3,206 6 4,924
Net interest income after provision for credit and
impairment losses 32,261 7,813 16,142 56,216
Fees, commissions and other income, net 12,292 3,260 5,280 20,832
Total income 44,553 11,073 21,422 77,048
Compensation and fringe benefits 12,554 2,132 1,002 15,688
Occupancy and equipment-related expenses 8,570 1,977 231 10,778
Other operating expenses 14,484 3,006 1,716 19,206
Total other expenses 35,608 7,115 2,949 45,672
Operating profit 8,945 3,958 18,473 31,376
Share in net income of associates 700
Income tax expense 6,670
Total assets 534,234 1,113,367 409,797 2,057,398
Total liabilities 1,124,800 552,969 137,872 1,815,641

2017
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 28,083 10,195 13,384 51,662
Provision for credit and impairment losses 2,085 1,710 5 3,800
Net interest income after provision for credit and
impairment losses 25,998 8,485 13,379 47,862
Fees, commissions and other income, net 12,148 2,657 6,694 21,499
Total income 38,146 11,142 20,073 69,361
Compensation and fringe benefits 9,311 1,335 1,020 11,666
Occupancy and equipment-related expenses 4,242 1,210 125 5,577
Other operating expenses 13,512 2,706 1,652 17,870
Total other expenses 27,065 5,251 2,797 35,113
Operating profit 11,081 5,891 17,276 34,248
Share in net income of associates 772
Income tax expense 5,956
Total assets 476,749 1,007,058 389,085 1,872,892
Total liabilities 1,063,069 550,367 85,946 1,699,382

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Reconciliation of segment results to consolidated results of operations:

2019
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 70,522 (4,577) 65,945
Provision for credit and impairment losses 5,822 - 5,822
Net interest income after provision for credit and impairment
losses 64,700 (4,577) 60,123
Fees, commissions and other income, net 26,662 1,727 28,389
Total income 91,362 (2,850) 88,512
Compensation and fringe benefits 18,079 (592) 17,487
Occupancy and equipment-related expenses 12,587 3,536 16,123
Other operating expenses 20,167 (3,700) 16,467
Total other expenses 50,833 (756) 50,077
Operating profit 40,529 (2,094) 38,435
Share in net income of associates (included in Other income) 563 563
Income tax expense 9,352 9,352
Total assets 2,175,217 29,813 2,205,030
Total liabilities 1,909,159 22,837 1,931,996

2018
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 61,140 (5,297) 55,843
Impairment charge 4,924 (1) 4,923
Net interest income after impairment charge 56,216 (5,296) 50,920
Fees, commissions and other income, net 20,832 1,849 22,681
Total income 77,048 (3,447) 73,601
Compensation and fringe benefits 15,688 (373) 15,315
Occupancy and equipment - related expenses 10,778 2,368 13,146
Other operating expenses 19,206 (4,065) 15,141
Total operating expenses 45,672 (2,070) 43,602
Operating profit 31,376 (1,377) 29,999
Share in net income of associates (included in Other income) 700 - 700
Income tax expense 6,670 - 6,670
Total assets 2,057,398 27,830 2,085,228
Total liabilities 1,815,641 18,049 1,833,690

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 Notes to Financial Statements

2017
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 51,662 (3,623) 48,039
Provision for credit and impairment losses 3,800 (5) 3,795
Net interest income after provision for credit and impairment
losses 47,862 (3,618) 44,244
Fees, commissions and other income, net 21,499 1,482 22,981
Total income 69,361 (2,136) 67,225
Compensation and fringe benefits 11,666 2,231 13,897
Occupancy and equipment-related expenses 5,577 5,767 11,344
Other operating expenses 17,870 (4,578) 13,292
Total other expenses 35,113 3,420 38,533
Operating profit 34,248 (5,556) 28,692
Share in net income of associates (included in Other income) 772 - 772
Income tax expense 5,956 - 5,956
Total assets 1,872,892 31,013 1,903,905
Total liabilities 1,699,382 20,972 1,720,354

“Consolidation adjustments/Others” pertain to amounts of insurance operations, support units and inter-segment
elimination in accordance with the BPI Group’s internal reporting.

Note 4 - Cash and Cash Equivalents

The account at December 31 consists of:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Cash and other cash items 47,256 43,536 45,982 42,419
Due from Bangko Sentral ng Pilipinas (BSP) 207,845 225,907 181,815 202,487
Due from other banks 22,356 12,477 18,356 8,615
Interbank loans receivable and securities purchased under agreements
to resell (Note 5) 21,394 31,261 17,191 19,601
Cash and cash equivalents attributable to insurance operations (Note 2) 217 89 - -
299,068 313,270 263,344 273,122

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Note 5 - Interbank Loans Receivable and Securities Purchased under Agreements to Resell (SPAR)

The account at December 31 consists of transactions with:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
BSP 20,306 24,791 16,947 14,000
Other banks 2,293 9,552 1,451 8,686
22,599 34,343 18,398 22,686
Accrued interest receivable 11 30 6 23
22,610 34,373 18,404 22,709
Allowance for impairment (40) (50) (40) (50)
22,570 34,323 18,364 22,659

As at December 31, 2019, Interbank loans receivable and SPAR maturing within 90 days from the date of
acquisition amounting to P21,394 million (2018 - P31,261 million) for BPI Group and P17,191 million
(2018 - P19,601 million) for the Parent Bank are classified as cash equivalents in the statements of cash flows
(Note 4).

Government bonds are pledged by the BSP as collateral under reverse repurchase agreements. The aggregate face
value of securities pledged approximates the total balance of outstanding placements as at reporting date.

The range of average interest rates (%) of interbank loans receivable and SPAR for the years ended December 31
are as follows:

Consolidated Parent
2019 2018 2019 2018
Peso-denominated 3.49 - 5.74 2.65 - 5.40 4.33 - 10.48 3.12 - 7.37
US dollar-denominated 1.55 - 2.62 1.50 - 2.34 1.55 - 2.62 1.50 - 2.34

Note 6 - Financial Assets at Fair Value through Profit or Loss (FVTPL)

The account at December 31 consists of:

Consolidated Parent
Note 2019 2018 2019 2018
(In Millions of Pesos)
Debt securities
Government securities 17,017 8,953 14,482 5,515
Commercial papers of private companies 4,082 3,497 283 800
Listed equity securities 73 238 - -
Derivative financial assets 7 2,933 4,033 2,923 4,031
24,105 16,721 17,688 10,346

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 Notes to Financial Statements

Note 7 - Derivative Financial Instruments

Derivatives held by the BPI Group consist mainly of the following:

• Foreign exchange forwards represent commitments to purchase or sell one currency against another at an
agreed forward rate on a specified date in the future. Settlement can be made via full delivery of forward
proceeds or via payment of the difference (non-deliverable forward) between the contracted forward rate and
the prevailing market rate at maturity.

• Foreign exchange swaps refer to spot purchase or sale of one currency against another with an offsetting
agreement to sell or purchase the same currency at an agreed forward rate in the future.

• Interest rate swaps refer to agreement to exchange fixed rate versus floating interest payments (or vice versa)
on a reference notional amount over an agreed period.

• Cross currency swaps refer to an exchange of notional amounts on two currencies at a given exchange rate
where the parties on the transaction agree to pay a stated interest rate on the received notional amount and
accept a stated interest rate on the delivered notional amount, payable and receivable or net settled (non-
deliverable swaps) periodically over the term of the transaction.

The BPI Group’s credit risk represents the potential cost to replace the swap contracts if counterparties fail to fulfill
their obligation. This risk is monitored on an ongoing basis with reference to the current fair value, a proportion of
the notional amount of the contracts and the liquidity of the market. To control the level of credit risk taken, the
BPI Group assesses counterparties using the same techniques as for its lending activities.

The notional amounts and fair values of derivative financial instruments as at December 31 are set out below:

Consolidated

Fair Values
Assets Liabilities
2019 2018 2019 2018
(In Millions of Pesos)
Held for trading
Foreign exchange derivatives
Currency swaps 630 1,077 950 830
Currency forwards 436 250 450 219
Interest rate derivatives
Interest rate swap 1,856 2,702 1,414 2,839
Interest rate futures - - - 3
Warrants 2 4 - -
Equity option 9 - - -

Held for hedging

Cross currency swap - - 63 -
2,933 4,033 2,877 3,891

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Parent

Fair Values
Assets Liabilities
2019 2018 2019 2018

Held for trading

Foreign exchange derivatives
Currency swaps 630 1,077 950 827
Currency forwards 436 250 450 219
Interest rate derivatives
Interest rate swap 1,855 2,702 1,414 2,839
Interest rate futures - - - 3
Warrants 2 2 - -

Held for hedging

Cross currency swap - - 63 -
2,923 4,031 2,877 3,888

Cash flow hedge of foreign currency-denominated bond

Consistent with its established risk management framework and asset liability management strategies, the Parent
Bank decided to hedge the foreign currency exposure arising from the CHF-denominated debt (hedged item)
issued in 2019 (Note 16).

The Parent Bank aims to minimize or reduce the volatility in the overall portfolio brought about by the movement
of CHF against the US Dollar through a hedging instrument - cross currency interest rate swap (CCIRS). Under the
terms of the CCIRS, the Parent Bank agrees to receive CHF in exchange for US Dollar at settlement date which
coincides with the maturity date of the hedged item. The volatility arising from movement of US Dollar against the
functional currency (Philippine Peso), however, is managed in conjunction with the Parent Bank’s overall foreign
currency risk management. The hedge ratio of 1:1 is observed so as not to create an imbalance that would create
hedge ineffectiveness. The hedge has been assessed to be effective as of reporting date.

Critical accounting estimate - Determination of fair value of derivatives and other financial instruments
The fair values of financial instruments that are not quoted in active markets are determined by using generally
accepted valuation techniques. Where valuation techniques (for example, discounted cash flow models) are used to
determine fair values, they are validated and periodically reviewed by qualified personnel independent of the area that
created them. Inputs used in these models are from observable data and quoted market prices in respect of similar
financial instruments.

All models are approved by the BOD before they are used, and models are calibrated to ensure that outputs reflect
actual data and comparative market prices. Changes in assumptions about these factors could affect reported fair
value of financial instruments. The BPI Group considers that it is impracticable, however, to disclose with sufficient
reliability the possible effects of sensitivities surrounding the fair value of financial instruments that are not quoted in
active markets.

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 Notes to Financial Statements

Note 8 - Financial Assets at Fair Value through Other Comprehensive Income (FVOCI)

Details of the account at December 31 are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Debt securities
Government securities 39,751 32,718 36,409 27,814
Commercial papers of private companies 10,624 2,695 9,914 2,090
50,375 35,413 46,323 29,904
Accrued interest receivable 704 118 686 89
51,079 35,531 47,009 29,993
Equity securities
Listed 1,738 1,129 972 406
Unlisted 1,088 546 339 184
2,826 1,675 1,311 590
53,905 37,206 48,320 30,583

The range of average effective interest rates (%) of financial assets at FVOCI for the years ended December 31
follows:

Consolidated Parent
2019 2018 2019 2018
Peso-denominated 4.09 - 5.40 1.18 - 4.20 4.42 - 5.75 1.65 - 5.43
Foreign currency-denominated 2.14 - 2.94 2.09 - 2.85 2.14 - 2.94 2.33 - 2.85

Interest income from debt instruments recognized in the statement of income for the year ended
December 31, 2019 amounts to P1,937 million (2018 - P278 million; 2017 - P200 million) and P1,871 million
(2018 - P160 million; 2017 - P323 million) for the BPI Group and Parent Bank, respectively.

Dividend income from equity instruments recognized in the statement of income for the year ended
December 31, 2019 amounts to P76 million (2018 - P64 million; 2017 - P53 million) and P48 million
(2018 - P41 million; 2017 - P26 million) for the BPI Group and Parent Bank, respectively.

Note 9 - Investment Securities at Amortized cost, net

Details of the account at December 31 are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Government securities 190,773 196,957 170,366 180,044
Commercial papers of private companies 80,644 86,826 78,285 83,964
271,417 283,783 248,651 264,008
Accrued interest receivable 3,688 3,790 3,355 3,491
275,105 287,573 252,006 267,499
Allowance for impairment - (2) - (2)
275,105 287,571 252,006 267,497

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The range of average effective interest rates (%) for the years ended December 31 follows:

Consolidated Parent
2019 2018 2019 2018
Peso-denominated 3.62 - 4.03 3.53 - 3.90 3.64 - 4.05 3.55 - 3.93
Foreign currency-denominated 3.08 - 4.69 2.80 - 3.16 3.11 - 4.83 2.84 - 3.19

Interest income from these investment securities recognized in the statements of income for the year ended
December 31, 2019 amounts to P10,318 million (2018 - P9,035 million; 2017 - P8,631 million) and P9,675 million
(2018 - P8,514 million; 2017 - P7,912 million) for the BPI Group and the Parent Bank, respectively.

Investment securities are expected to be realized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Current (within 12 months) 15,165 30,159 10,686 28,038
Non-current (over 12 months) 259,940 257,414 241,320 239,461
275,105 287,573 252,006 267,499

Critical accounting judgment- Classification of investment securities at amortized cost

The BPI Group classifies its financial assets at initial recognition as to whether it will be subsequently measured at fair
value through other comprehensive income, at amortized cost, or at fair value through profit or loss. The BPI Group
determines the classification based on the contractual cash flow characteristics of the financial assets and on the
business model it uses to manage these financial assets. The BPI Group determines whether the contractual cash
flows associated with the financial asset are solely payments of principal and interest (the “SPPI”). If the instrument
fails the SPPI test, it will be measured at fair value through profit or loss.

Note 10 - Loans and Advances, net

Details of this account at December 31 are as follows:

Consolidated Parent
2019 2018 2019 2018
Corporate loans (In Millions of Pesos)
Large corporate customers 1,147,643 1,043,855 1,121,050 1,019,626
Small and medium enterprise 73,357 87,998 54,553 62,058
Retail loans
Credit cards 75,100 60,843 72,785 59,228
Real estate mortgages 137,380 126,088 11 12
Auto loans 53,789 51,845 - -
Others 11,421 5,145 499 14
1,498,690 1,375,774 1,248,898 1,140,938
Accrued interest receivable 9,660 8,454 6,958 5,963
Unearned discount/income (7,040) (6,430) (5,475) (4,978)
1,501,310 1,377,798 1,250,381 1,141,923
Allowance for impairment (25,974) (22,902) (18,605) (15,967)
1,475,336 1,354,896 1,231,776 1,125,956

Loans and advances aggregating P19,628 million (2017 - P31,520 million) are used as security for bills payable of
the Parent Bank (Note 16).

Loans and advances include amounts due from related parties (Note 25).

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 Notes to Financial Statements

Loans and advances are expected to be realized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Within 12 months (Current) 552,190 554,183 517,516 515,723
Over 12 months (Non-current) 949,120 823,615 732,865 626,200
1,501,310 1,377,798 1,250,381 1,141,923

Finance lease operations (the BPI Group as the lessor)

The BPI Group, through BPI Century Tokyo Lease and Finance Corporation, is engaged in the leasing out of
transportation equipment under various finance lease arrangements which typically run for a non-cancellable
period of five years. The lease contracts generally include an option for the lessee to purchase the leased asset after
the lease period at a price that approximates to about 5% to 40% of the fair value of the asset at the inception of the
lease. Likewise, the lease contract requires the lessee to put up a guarantee deposit equivalent to the residual value of
the leased asset at the end of lease term. In the event that the residual value of the leased asset exceeds the
guaranteed deposit liability at the end of the lease term, the BPI Group receives additional payment from the lessee
prior to the transfer of the leased asset.

Details of finance lease receivables (included in “Corporate loans” category above) arising from lease contracts are as
follows:

Consolidated
2019 2018
(In Millions of Pesos)
Total future minimum lease collections 12,666 11,203
Unearned finance income (1,395) (1,321)
Present value of future minimum lease collections 11,271 9,882
Allowance for credit losses (628) (304)
10,643 9,578

Details of future gross minimum lease payments receivable follow:

Consolidated
2019 2018
(In Millions of Pesos)
Not later than one year 1,532 4,299
Later than one year but not later than five years 10,373 6,270
More than five years 761 634
12,666 11,203
Unearned finance income (1,395) (1,321)
11,271 9,882

There are no contingent rents arising from lease contracts outstanding at December 31, 2019 and 2018.

The range of average interest rates (%) of loans and advances for the years ended December 31 follows:

Consolidated Parent
2019 2018 2019 2018
Commercial loans
Peso-denominated loans 5.00 - 5.95 4.11 - 5.52 5.24 - 5.88 3.98 - 5.44
Foreign currency-denominated loans 4.18 - 4.91 3.61 - 4.86 4.18 - 4.91 3.61 - 4.86
Real estate mortgages 7.30 - 7.74 6.61 - 6.97 0.10 - 4.26 7.04 - 8.00
Auto loans 8.31 - 10.69 7.46 - 10.93 - -

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Details of the loans and advances portfolio at December 31 as to collateral (amounts net of unearned discounts and
exclusive of accrued interest receivable) are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Secured loans
Real estate mortgage 278,099 220,587 138,607 97,170
Chattel mortgage 57,037 54,731 10 9
Others 148,385 172,503 146,038 168,260
483,521 447,821 284,655 265,439
Unsecured loans 1,008,129 921,523 958,768 870,521
1,491,650 1,369,344 1,243,423 1,135,960

Other collaterals include hold-out deposits, mortgage trust indentures, government and corporate securities and
bonds, quedan/warehouse receipts, standby letters of credit, trust receipts, and deposit substitutes.

Note 11 - Bank Premises, Furniture, Fixtures and Equipment, net

The details of and movements in the account are summarized below:

Consolidated

2019
Buildings and Furniture
leasehold and Equipment
Note Land improvements equipment for lease Total
(In Millions of Pesos)
Cost
January 1, 2019, as previously
reported 3,028 10,889 16,496 5,580 35,993
Impact of adoption of PFRS 16 20,29 - 9,051 - - 9,051
January 1, 2019, as restated 3,028 19,940 16,496 5,580 45,044
Additions - 2,607 1,326 1,570 5,503
Disposals (9) (224) (707) (1,019) (1,959)
Transfers - (367) (92) - (459)
December 31, 2019 3,019 21,956 17,023 6,131 48,129
Accumulated depreciation
January 1, 2019 - 5,511 13,040 1,190 19,741
Depreciation and amortization - 2,829 1,712 1,364 5,905
Disposals - (141) (383) (687) (1,211)
Transfers - (20) (12) (22) (54)
December 31, 2019 - 8,179 14,357 1,845 24,381
Net book value, December 31, 2019 3,019 13,777 2,666 4,286 23,748

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 Notes to Financial Statements

2018
Buildings and Furniture
leasehold and Equipment
Land improvements equipment for lease Total
(In Millions of Pesos)
Cost
January 1, 2018 3,023 9,591 15,278 5,502 33,394
Additions - 1,443 2,052 1,875 5,370
Disposals (1) (145) (840) (1,765) (2,751)
Transfers 6 - 6 (32) (20)
December 31, 2018 3,028 10,889 16,496 5,580 35,993
Accumulated depreciation
January 1, 2018 - 4,849 11,749 1,739 18,337
Depreciation and amortization - 755 1,831 1,269 3,855
Disposals - (93) (541) (1,800) (2,434)
Transfers - - 1 (18) (17)
December 31, 2018 - 5,511 13,040 1,190 19,741
Net book value, December 31, 2018 3,028 5,378 3,456 4,390 16,252

Parent

2019
Buildings and Furniture
leasehold and
Note Land improvements equipment Total
(In Millions of Pesos)
(In Millions of Pesos)
Cost
January 1, 2019, as previously reported 2,677 9,615 14,708 27,000
Impact of adoption of PFRS 16 20,29 - 7,900 - 7,900
January 1, 2019, as restated 2,677 17,515 14,708 34,900
Additions - 1,767 1,036 2,803
Disposals (9) (223) (567) (799)
Transfers - (103) - (103)
December 31, 2019 2,668 18,956 15,177 36,801
Accumulated depreciation
January 1, 2019 - 5,040 11,814 16,854
Depreciation and amortization - 2,352 1,484 3,836
Disposals - (141) (324) (465)
Transfers - (19) - (19)
December 31, 2019 - 7,232 12,974 20,206
Net book value, December 31, 2019 2,668 11,724 2,203 16,595

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 2018
Buildings and Furniture
leasehold and
Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2018 2,661 8,582 13,850 25,093
Additions (1) 1,178 1,590 2,767
Disposals - (145) (732) (877)
Transfers 17 - - 17
December 31, 2018 2,677 9,615 14,708 27,000
Accumulated depreciation
January 1, 2018 - 4,492 10,696 15,188
Depreciation and amortization - 642 1,634 2,276
Disposals - (94) (516) (610)
December 31, 2018 - 5,040 11,814 16,854
Net book value, December 31, 2018 2,677 4,575 2,894 10,146

Depreciation and amortization charges are included in “Occupancy and equipment-related expenses” category in
the statements of income.

In 2019, the Parent Bank realized a gain of P855 million (2018 - P969 million) (Note 19) from disposal of certain
properties.

Critical accounting estimate - Useful lives of bank premises, furniture, fixtures and equipment
The BPI Group determines the estimated useful lives of its bank premises, furniture, fixtures and equipment based
on the period over which the assets are expected to be available for use. The BPI Group annually reviews the
estimated useful lives of bank premises, furniture, fixtures and equipment based on factors that include asset
utilization, internal technical evaluation, technological changes, environmental and anticipated use of assets
tempered by related industry benchmark information. It is possible that future results of operations could be
materially affected by changes in these estimates brought about by changes in the factors mentioned.

The BPI Group considers that it is impracticable to disclose with sufficient reliability the possible effects of
sensitivities surrounding the carrying values of bank premises, furniture, fixtures and equipment.

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 Notes to Financial Statements

Note 12 - Investments in Subsidiaries and Associates, net

This account at December 31 consists of investments in shares of stock as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Carrying value (net of impairment)
Investments at equity method 6,746 5,659 - -
Investments at cost method - - 10,031 9,942
6,746 5,659 10,031 9,942

Investments in associates accounted for using the equity method in the consolidated statements of condition are as
follows:

Place of business/ Percentage of Acquisition

country of ownership interest cost
Name of entity incorporation 2019 2018 2019 2018
(In Millions of
(in %) Pesos)
BPI-Philamlife Assurance Corporation (BPLAC) Philippines 47.96 47.67 389 371
AF Payments, Inc. (AFPI) Philippines 20.00 20.00 820 750
National Reinsurance Corporation of the
Philippines* Philippines 13.69 13.69 204 204
Beacon Property Ventures, Inc. Philippines 20.00 20.00 72 72
CityTrust Realty Corporation Philippines 40.00 40.00 2 2
Global Payments Asia-Pacific Philippines,
Incorporated Philippines 49.00 49.00 1,342 1,342
2,829 2,741
*The Parent Bank has a significant influence due to its representation in the governing body of National Reinsurance Corporation of the
Philippines

The movements in investments in associates accounted for using the equity method in the consolidated financial
statements are summarized as follows:

2019 2018
(In Millions of Pesos)
Acquisition cost
At January 1 2,741 2,681
Additions during the year 88 60
At December 31 2,829 2,741
Accumulated equity in net income
At January 1 3,264 3,239
Share in net income for the year 372 700
Dividends received (629) (675)
At December 31 3,007 3,264
Accumulated share in other comprehensive income (loss)
At January 1 (206) 466
Share in other comprehensive income (loss) for the year 1,256 (672)
At December 31 1,050 (206)
Allowance for impairment (140) (140)
6,746 5,659

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No associate is deemed individually significant for financial reporting purposes. Accordingly, the relevant
unaudited financial information of associates as at and for the years ended December 31 has been aggregated as
follows:

2019 2018
(In Millions of Pesos)
Total assets 132,126 122,616
Total liabilities 113,282 105,960
Total revenues 25,911 18,618
Total net income 2,007 1,425

The details of equity investments accounted for using the cost method in the separate financial statements of the
Parent Bank follow:

Allowance for
Acquisition cost impairment Carrying value
2019 2018 2019 2018 2019 2018
(In Millions of Pesos)
Subsidiaries
BPI Europe Plc. 1,910 1,910 - - 1,910 1,910
BPI Asset Management and Trust Corporation
(BPI AMTC) 1,502 1,502 - - 1,502 1,502
BPI Direct BanKo, Inc., A Savings Bank 1,009 1,009 - - 1,009 1,009
Ayala Plans, Inc. (API) 864 863 - - 864 863
BPI Capital Corporation 623 623 - - 623 623
BPI Payments Holdings Inc. 573 503 (299) (299) 274 204
BPI Century Tokyo Lease and Finance
Corporation 329 329 - - 329 329
FGU Insurance Corporation 303 303 - - 303 303
BPI Forex Corp. 195 195 - - 195 195
BPI Express Remittance Corp. USA 191 191 - - 191 191
BPI Family Savings Bank, Inc. 150 150 - - 150 150
BPI Remittance Centre (HK) Ltd. (BERC HK) 132 132 - - 132 132
First Far-East Development Corporation 91 91 - - 91 91
Green Enterprises S.R.L. in Liquidation 54 54 - - 54 54
FEB Stock Brokers, Inc. 25 25 - - 25 25
BPI Computer Systems Corp. 23 23 - - 23 23
BPI Express Remittance Spain S.A 26 26 - - 26 26
Others 321 321 - - 321 321
Associates 2,009 1,991 - - 2,009 1,991
10,330 10,241 (299) (299) 10,031 9,942

No non-controlling interest arising from investments in subsidiaries is deemed material to the BPI Group.

In 2019, the Parent Bank made an additional capital infusion to BPHI amounting to P70 million
(2018 - P60 million). Likewise, the Parent Bank in 2018, recognized impairment loss of P299 million on its
investment in BPHI due financial losses incurred by BPHI’s associate, AFPI, as disclosed above.

On November 21, 2018, BPI International Finance Limited (included in “Others” subsidiaries in the table above)
distributed its shares in BERC HK valued at P132 million as a property dividend to the Parent Bank. BERC HK
became an immediate subsidiary of the Parent Bank following the property dividend declaration.

On October 17, 2018, the Parent Bank made additional investment to BPI AMTC via transfer of contractual
customer relationships (included in “Intangible assets” in Note 14) valued at P902 million.

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 Notes to Financial Statements

Note 13 - Deferred Income Taxes

Details of deferred income tax assets and liabilities at December 31 are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Deferred income tax assets
Allowance for credit and impairment losses 8,345 7,833 5,644 5,329
Pension liability 1,129 661 897 454
Provisions 394 329 313 248
Others 354 225 263 195
Total deferred income tax assets 10,222 9,048 7,117 6,226
Deferred income tax liabilities
Unrealized gain on property appraisal (483) (491) (483) (491)
Others (33) (21) 19 (12)
Total deferred income tax liabilities (516) (512) (464) (503)
Deferred income tax assets, net 9,706 8,536 6,653 5,723

Movements in net deferred income tax assets are summarized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 8,536 8,091 5,723 5,180
Amounts recognized in statements of income 685 734 583 776
Amounts recognized in other comprehensive income 485 (289) 347 (233)
At December 31 9,706 8,536 6,653 5,723

Details of deferred income tax items recognized in the statements of income are as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Allowance for impairment (946) (547) (443) (718) (593) (563)
Provisions - (1) (27) - 6 (9)
Pension 18 68 174 9 9 (65)
NOLCO 83 129 (66) - - -
Others 160 (383) (100) 126 (198) 175
(685) (734) (462) (583) (776) (462)

Critical accounting judgment - Realization of deferred income tax assets

Management reviews at each reporting date the carrying amounts of deferred tax assets. The carrying amount of
deferred tax assets is reduced to the extent that the related tax assets cannot be utilized due to insufficient taxable
profit against which the deferred tax assets will be applied. Management believes that sufficient taxable profit will be
generated to allow all or part of the deferred income tax assets to be utilized.

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Note 14 - Other Assets, net

The account at December 31 consists of the following:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Intangible assets 2,797 3,070 2,435 2,416
Accounts receivable 2,358 2,761 2,218 2,509
Residual value of equipment for lease 2,781 2,601 - -
Sundry debits 1,663 3,392 1,518 3,292
Prepaid expenses 944 1,343 578 1,007
Accrued trust and other fees 747 540 338 131
Rental deposits 734 671 623 573
Creditable withholding tax 503 408 107 79
Investment properties 156 129 143 118
Miscellaneous assets 3,239 8,108 2,260 6,853
15,922 23,023 10,220 16,978
Allowance for impairment (515) (824) (310) (665)
15,407 22,199 9,910 16,313

Sundry debits are float items caused by timing differences in recording of transactions. These float items are
normally cleared within seven days.

Miscellaneous assets include prepaid expenses, postage stamps, stationery and supplies.

The allowance for impairment as at December 31, 2019 and 2018 mainly pertains to accounts receivable. The
reconciliation of the allowance for impairment at December 31 is summarized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 825 848 665 701
Provision for (reversal of) impairment losses 54 89 5 (69)
Transfer/reallocation (38) (34) (36) 110
Write-off (326) (79) (324) (77)
At December 31 515 824 310 665

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Other assets are expected to be realized as follows:

Consolidated Parent
2019 2018 2019 2018
(in millions of pesos)
Current (within 12 months) 10,089 17,143 7,632 14,434
Non-current (over 12 months) 5,833 5,880 2,588 2,544
15,922 23,023 10,220 16,978

Note 15 - Deposit Liabilities

The account at December 31 consists of:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Demand 272,020 256,279 262,149 245,620
Savings 899,181 883,650 795,936 778,246
Time 524,142 445,817 398,373 323,341
1,695,343 1,585,746 1,456,458 1,347,207

Deposit liabilities include amounts due to related parties (Note 25).

Deposit liabilities are expected to be settled as follows:

Consolidated Parent
2019 2018 2019 2018
(in millions of pesos)
Current (within 12 months) 796,447 602,031 711,910 534,119
Non-current (over 12 months) 898,896 983,715 744,548 813,088
1,695,343 1,585,746 1,456,458 1,347,207

In 2019, the Parent Bank issued the first tranche of long-term negotiable certificates of deposit (LTNCD)
amounting to P3 billion out of the established P50-billion LTNCD program approved by the BSP. The LTNCDs pay
interest on a quarterly basis at a rate 4% per annum and carry a tenor of 5.5 years maturing on April 25, 2025. The
proceeds from the LTNCD issuance are included in “Time deposits” category

Related interest expense on deposit liabilities is presented below:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Demand 628 687 616 574 630 557
Savings 6,738 7,384 6,723 5,541 6,061 5,489
Time 21,508 13,184 9,321 15,361 8,954 5,367
28,874 21,255 16,660 21,476 15,645 11,413

BSP reserve requirement

The Parent Bank and its bank and non-bank subsidiaries with quasi-banking functions should comply with a
minimum reserve requirement on deposit and deposit substitute liabilities in local currency.

In 2018, the reserve ratio decreased to 18% from 20% following the BSP’s decision to reduce the requirements. In
2019, the BSP approved further reductions in reserves which brought the requirement down to 14% effective
December 6, 2019 by virtue of BSP Circular 1063. Further, the BSP requires a 4% reserve requirement for LTNCDs.

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Reserves must be set aside in deposits with the BSP. As at December 31, 2019, the reserves (included in Due from
BSP) amounted to P178,591 million (2018 - P214,196 million) for the BPI Group and P169,303 million
(2018 - P195,883 million) for the Parent Bank. The BPI Group is in full compliance with the reserve requirement
as at December 31, 2019 and 2018.

Note 16 - Bills Payable and Other Borrowed Funds

The account at December 31 consists of:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Bills payable
Local banks 34,364 58,810 21,810 46,761
Foreign banks 31,417 51,813 29,255 47,841
Other borrowed funds 85,056 56,278 75,464 56,278
150,837 166,901 126,529 150,880

Bills payable
Bills payable include mainly funds borrowed from various banking institutions which were lent out to customers of
the BPI Group in accordance with the agreed financing programs. Loans and advances arising from these financing
programs serve as collateral for this liability (Note 10). The average payment term of these bills payable is
0.90 years (2018 - 0.39 years).

The range of average interest rates (%) of bills payable for the years ended December 31 follows:

Consolidated Parent
2019 2018 2019 2018
Private firms and local banks - Peso-denominated 2.20 - 6.67 2.75 - 7.35 2.25 - 6.25 2.75 - 5.06
Foreign banks - Foreign currency-denominated 0.63 - 4.20 1.32 - 4.20 1.45 - 3.66 1.32 - 3.26

Other borrowed funds

This represents funds raised via debt issuance programs as follows:

a) Peso Bond and Commercial Paper Program

In 2018, the Parent Bank established a Peso Bond and Commercial Paper Program in the aggregate amount of up
to P50,000 million, out of which a total of P25,000 million notes were issued with a coupon of 6.7970% per
annum, payable quarterly to mature on March 6, 2020. Last 20 November 2019, BPI's Board of Directors
approved the issuance of peso-denominated bonds and commercial papers of up to Php 100Bn, in one or more
tranches, under an updated Bank Bond Issuance Program.

Likewise, on October 31, 2019, the BOD of BPI Family Savings Bank, Inc. (BPI Family), a subsidiary, approved the
establishment of a Peso Bond Program in the aggregate amount of P35,000 million. In line with the said program,
on December 16, 2019, BPI Family issued P9,600 million with a coupon of 4.30% per annum, payable quarterly to
mature on June 16, 2022.

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b) Medium-Term Note (MTN) Program

On June 21, 2018, the BOD of the Parent Bank approved the establishment of the MTN Program in the aggregate
amount of up to US$2,000 million with drawdowns as follows:

Interest Amount
Description of instrument Date of drawdown rate Maturity (In Millions of Pesos)
US$ 600 million, 5-year senior unsecured
Bonds September 4, 2018 4.25% September 4, 2023 32,000
US$ 300 million, 5-year senior unsecured
Green Bonds September 10, 2019 2.5% September 10, 2024 15,572
CHF 100 million, 2-year senior unsecured
Green Bonds September 24, 2019 - September 24, 2021 5,250

The CH₣-denominated bonds are designated as hedged items in a cash flow hedge initiated by the Parent Bank in
2019. See Note 7 for the related disclosures.

Interest expense for the years ended December 31 is summarized as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Bills payable 3,549 2,517 1,150 2,834 2,013 885
Other borrowed funds 3,215 575 - 3,197 575 -
6,764 3,092 1,150 6,031 2,588 885

The movements in bills payable and other borrowed funds are summarized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 166,901 83,517 150,880 70,722
Additions 374,332 706,779 291,585 651,065
Maturities (387,343) (623,196) (313,027) (570,594)
Amortization of discount (17) 121 (19) 120
Exchange differences (3,036) (320) (2,890) (433)
At December 31 150,837 166,901 126,529 150,880

Bills payable and other borrowed funds are expected to be settled as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Current (within 12 months) 48,291 99,381 35,948 84,086
Non-current (over 12 months) 102,546 67,520 90,581 66,794
150,837 166,901 126,529 150,880

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Note 17 - Deferred Credits and Other Liabilities

The account at December 31 consists of the following:

Consolidated Parent
Notes 2019 2018 2019 2018
(In Millions of Pesos)
Bills purchased - contra 15,301 12,872 15,299 12,862
Lease liabilities 20,29 7,856 - 6,739 -
Accounts payable 4,738 8,096 3,078 5,635
Outstanding acceptances 3,855 2,394 3,855 2,394
Deposits on lease contracts 2,639 2,438 - -
Other deferred credits 1,576 810 323 67
Withholding tax payable 1,062 674 892 514
Due to the Treasurer of the Philippines 947 650 827 575
Vouchers payable 51 - 51 -
Dividends payable - 4,053 - 4,052
Miscellaneous liabilities 9,743 11,133 7,875 9,694
47,768 43,120 38,939 35,793

Bills purchased - contra represents liabilities arising from the outright purchases of checks due for clearing as a
means of immediate financing offered by the BPI Group to its clients.

Miscellaneous liabilities include pension liability, insurance, allowance for credit losses for undrawn committed credit
facilities and other employee-related payables.

The account is expected to be settled as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Current (within 12 months) 36,818 41,343 36,455 34,753
Non-current (over 12 months) 10,950 1,777 2,484 1,040
47,768 43,120 38,939 35,793

Note 18 - Capital Funds

a) Share capital

Details of authorized share capital of the Parent Bank follow:

2019 2018 2017

(In Millions of Pesos,
except par value per share)
Authorized capital (at P10 par value per share)
Common shares 49,000 49,000 49,000
Preferred A shares 600 600 600
49,600 49,600 49,600

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Details of outstanding common shares are as follows:

2019 2018 2017

(In Number of Shares)
Issued common shares
At January 1 4,502,449,501 3,939,412,661 3,937,043,603
Issuance of shares during the year 4,622,143 563,036,840 2,369,058
At December 31 4,507,071,644 4,502,449,501 3,939,412,661
Subscribed common shares 7,163,739 6,341,738 5,785,721

The BPI common shares are listed and traded in the PSE since October 12, 1971.

On February 10, 2014, additional 370,370,370 common shares were listed as a result of the stock rights offer.
Likewise, on April 25, 2018, BPI completed its P50 billion stock rights offer, which paved the way for the issuance
of 558,659,210 new common shares at P89.50 per share. The new shares were issued to shareholders as of record
date April 6, 2018, at a ratio of 1:7.0594, or 1 new common share for every 7 shares held, or 14.2% of BPI’s
outstanding common shares. These new shares were listed on the Philippine Stock Exchange (PSE) on
May 4, 2018.

As at December 31, 2019, 2018 and 2017, the Parent Bank has 12,396, 12,588, and 11,488 common shareholders,
respectively. There are no preferred shares issued and outstanding at December 31, 2019, 2018 and 2017.

b) Reserves

The account consists of:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
General loan loss provision 4,739 3,867 - 4,739 3,867 -
Reserve for trust business 199 90 90 - - -
Executive stock option plan amortization 136 105 130 119 76 108
Reserve for self-insurance 34 34 34 34 34 34
5,108 4,096 254 4,892 3,977 142

General loan loss provision (GLLP)

In 2018, the BSP issued Circular 1011 which mandates among others, banks to set up GLLP equal to 1% of all
outstanding “Stage 1” on-balance sheet loans, except for accounts considered as credit risk-free under existing
regulations. Under the said Circular, if the PFRS 9 “Stage 1” loan loss provision is lower than the required GLLP,
the deficiency shall be recognized as an appropriation of retained earnings or surplus. Accordingly, the BPI Group
appropriated P4,739 million at December 31, 2019 (2018 - P3,867 million) representing the excess of GLLP over
PFRS 9 loan loss provision out of surplus earnings to meet the requirement of the BSP.

Reserve for trust business

In compliance with existing BSP regulations, 10% of BPI AMTC’s income from trust business is appropriated to
surplus reserve. This yearly appropriation is required until the surplus reserve for trust business reaches 20% of
the authorized capital of BPI AMTC.

Reserve for self-insurance

Reserve for self-insurance represents the amount set aside to cover losses due to fire, defalcation by and other
unlawful acts of personnel and third parties.

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Share-based compensation plan
The BOD of the Parent Bank approved to grant the Executive Stock Option Plan (ESOP) and Executive Stock
Purchase Plan (ESPP) to qualified beneficiaries/participants up to the following number of shares for future
distribution:

Date Approved ESOP shares Approved ESPP shares

December 11, 2019 4,035,000 9,100,000
December 11, 2018 4,168,000 11,500,000
December 13, 2017 3,560,000 7,500,000
December 14, 2016 3,560,000 4,500,000
December 18, 2015 3,575,000 8,000,000

The ESOP has a three-year vesting period from grant date while the ESPP has a five-year payment period.

The exercise price for ESOP is equal to the volume weighted average of BPI share price for the 30-trading days
immediately prior to the grant date. The weighted average fair value of options granted determined using the
Black-Scholes valuation model was P6.50 and P17.41 for the years ended December 31, 2018 and 2017 respectively.

Movements in the number of share options under the ESOP are summarized as follows:

2019 2018 2017

At January 1 11,773,334 11,338,333 9,100,000
Granted 4,000,000 3,480,000 3,485,000
Exercised (1,116,666) (2,786,665) (746,667)
Cancelled (691,667) (258,334) (500,000)
At December 31 13,965,001 11,773,334 11,338,333
Exercisable 6,733,334 5,120,000 6,745,000

The impact of ESOP is not considered material to the financial statements; thus, the disclosures were limited only
to the information mentioned above.

The subscription price for ESPP is equivalent to 15% below the volume weighted average of BPI share price for the
30-trading days immediately prior to the grant date. The subscription dates for ESPP were on February 4, 2020,
January 7, 2019 and February 15, 2017.

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c) Accumulated other comprehensive loss

Details of and movements in the account are as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Fair value reserve on available-for-sale
securities
At January 1 - (3,125) (3,838) - (3,275) (3,724)
Effect of PFRS 9 adoption - 3,125 - - 3,275 -
Unrealized fair value loss before tax - - 264 - - 23
Amount recycled to profit or loss - - 447 - - 424
Deferred income tax effect - - 2 - - 2
At December 31 - - (3,125) - - (3,275)
Fair value reserve on financial assets at
FVOCI
At January 1 (33) - - 69 - -
Unrealized fair value loss before tax (424) (364) - (94) (12) -
Amount recycled to profit or loss 387 (390) - (32) (128) -
Effect of PFRS 9 adoption - 757 - - 210 -
Deferred income tax effect (14) (36) - (4) (1) -
At December 31 (84) (33) - (61) 69 -
Share in other comprehensive income (loss)
of insurance subsidiaries
At January 1 (36) 45 (158) - - -
Share in other comprehensive income
(loss) for the year, before tax 389 (316) 175 - - -
Effect of PFRS 9 adoption (229) 229 - - - -
Deferred income tax effect (6) 6 28 - - -
At December 31 118 (36) 45 - - -
Share in other comprehensive income (loss)
of associates
At January 1 (206) 479 1,259 - - -
Share in other comprehensive income
(loss) for the year 1,254 (685) (780) - - -
At December 31 1,048 (206) 479 - - -
Translation adjustment on foreign operations
At January 1 (704) (678) (804) - - -
Translation differences and others (202) (26) 126 (124) - -
At December 31 (906) (704) (678) (124) - -
Remeasurements of defined benefit
obligation, net
At January 1 (1,197) (1,809) (1,537) (990) (1,421) (1,083)
Actuarial (losses) gains for the year (1,851) 877 (387) (1,508) 616 (358)
Deferred income tax effect 433 (265) 115 367 (185) 20
At December 31 (2,615) (1,197) (1,809) (2,131) (990) (1,421)
(2,439) (2,176) (5,088) (2,316) (921) (4,696)

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d) Dividend declarations

Cash dividends declared by the BOD of the Parent Bank are as follows:

Amount of dividends
Total
Date declared Per share (In Millions of Pesos)
For the year ended December 31, 2019
May 15, 2019 0.90 4,056
November 20, 2019 0.90 4,057
8,113
For the year ended December 31, 2018
June 20, 2018 0.90 4,052
December 19, 2018 0.90 4,052
8,104
For the year ended December 31, 2017
June 15, 2017 0.90 3,545
December 15, 2017 0.90 3,546
7,091

e) Earnings per share (EPS)

EPS is calculated as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos, except earnings per share amounts)
a) Net income attributable to equity holders
of the Parent Bank 28,803 23,078 22,416 26,218 15,428 22,097
b) Weighted average number of common
shares outstanding during the year 4,507 4,316 3,939 4,507 4,316 3,939
c) Basic EPS (a/b) 6.39 5.35 5.69 5.82 3.57 5.61

The basic and diluted EPS are the same for the years presented as the impact of stock options outstanding is not
significant to the calculation of weighted average number of common shares.

Note 19 - Other Operating Income

Details of other operating income are as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Credit card income 3,525 3,197 2,953 3,423 3,126 2,894
Trust and asset management fees 2,868 2,818 3,516 4 - 190
Rental income 2,047 1,898 1,672 267 254 219
Gain on sale of assets 1,165 1,243 1,204 898 658 302
Dividend income 77 76 68 3,794 904 9,492
Miscellaneous income 2,310 1,155 1,380 2,101 977 1,074
11,992 10,387 10,793 10,487 5,919 14,171

Dividend income recognized by the Parent Bank substantially pertains to dividend distributions of subsidiaries.

Miscellaneous income includes recoveries on charged-off assets and fees arising from service arrangements with
customers and related parties.

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Note 20 - Leases

The BPI Group (as lessee) has various lease agreements which mainly pertain to branch premises and equipment that
are renewable under certain terms and conditions. Rental contracts are typically made for fixed periods of 4 to 6
years. The balances arising from these leases are presented below:

a) Right-of-use assets and lease liabilities (PFRS 16)

On January 1, 2019, the BPI Group adopted PFRS 16, Leases which requires recognition of both right-of-use assets
and lease liability arising from long-term leases. The impact of initial adoption of PFRS 16 are summarized in
Note 29.

Details of right-of-use assets and lease liabilities at December 31, 2019 are as follows:

Note Consolidated Parent

(In Millions of Pesos)
Right-of-use assets 11
Buildings and leasehold improvements 7,787 6,733
Lease liabilities (included in “Deferred credits and other liabilities”) 17
Current 1,485 1,251
Non-current 6,371 5,488
7,856 6,739

Additions to the right-of-use assets (Note 11) in 2019 aggregated P669 million and P442 million for BPI Group and
BPI Parent, respectively. Total cash outflow for leases in 2019 amounted to P1,869 million and P1,466 million for BPI
Group and BPI Parent, respectively.

Amounts recognized in the statement of income relating to leases:

Note Consolidated Parent

(In Millions of Pesos)
Depreciation expense 11
Buildings and leasehold improvements 1,933 1,609
Interest expense (included in “Interest expense”) 398 315
Expense relating to short-term leases (included in “Occupancy and
equipment-related expenses”) 228 203
Expense relating to leases of low-value assets that are not shown
above as short-term leases (included in “Occupancy and equipment-
related expenses”) 55 43
2,614 2,170

Critical accounting judgment - Determining the lease term

In determining the lease term, the BPI Group considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated).

Critical accounting judgment - Determining the incremental borrowing rate

To determine the incremental borrowing rate, each entity within the BPI Group:
• where possible, uses recent third-party financing received as a starting point, adjusted to reflect changes in
financing conditions since third party financing was received; or
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held which
do not have recent third-party financing, and
• makes adjustments specific to the lease, (e.g. term, currency and security).

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The BPI Group’s weighted average incremental borrowing rates applied to the lease liabilities ranged from 6.6% to
6.9%. The rates were determined in reference to the borrowing rates arising from the most recent debt issuances
of the Parent Bank.

b) Operating leases (PAS 17)

Prior to January 1, 2019, the BPI Group’s lease contracts were accounted for as operating leases following the
provisions of PAS 17. The rentals pertaining to branch premises (included in Occupancy and equipment-related
expenses) under these lease contracts were as follows:

Consolidated Parent
(In Millions of Pesos)
2018 1,809 1,503
2017 1,495 1,211

The future minimum lease payments under non-cancellable operating leases of the BPI Group as of
December 31, 2018 are as follows:

Amount
No later than 1 year 107
Later than 1 year but no later than 5 years 214
More than 5 years 57
378

Note 21 - Operating Expenses

Details of compensation and fringe benefits expenses are as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Salaries and wages 14,613 12,624 11,642 11,231 9,702 8,891
Retirement expense (Note 23) 631 755 720 536 608 574
Other employee benefit expenses 2,243 1,936 1,535 1,712 1,524 1,226
17,487 15,315 13,897 13,479 11,834 10,691

Details of other operating expenses are as follows:

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Insurance 4,162 4,105 3,940 2,861 2,789 2,448
Advertising 1,492 1,310 1,215 1,316 1,123 1,002
Travel and communication 1,203 1,002 902 974 825 748
Management and other
professional fees 506 606 501 388 626 419
Supervision and examination fees 653 587 542 506 441 401
Litigation expenses 558 526 598 308 255 348
Taxes and licenses 492 791 714 657 539 491
Office supplies 480 592 328 389 490 267
Amortization expense 311 293 296 30 11 289
Shared expenses - - - 39 26 16
Others 6,610 5,329 4,256 4,590 4,132 3,197
16,467 15,141 13,292 12,058 11,257 9,626

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Other expenses mainly include fees and incentives paid to agents, outsourcing fees, freight charges and other
business expense such as those incurred in staff meetings, donations, periodicals and magazines.

Note 22 - Income Taxes

The reconciliation between the income tax expense at the statutory tax rate and the effective income tax for the
years ended December 31 is shown below:

Consolidated
2019 2018 2017
Rate Rate Rate
Amount (%) Amount (%) Amount (%)
(In Millions of Pesos)
Statutory income tax 11,531 30.00 9,000 30.00 8,608 30.00
Effect of items not subject to statutory tax rate:
Income subjected to lower tax rates (1,553) (4.04) (517) (1.72) (696) (2.42)
Tax-exempt income (2,926) (7.61) (1,582) (5.27) (4,350) (15.16)
Others, net 2,300 5.98 (231) (0.77) 2,394 8.34
Effective income tax 9,352 24.33 6,670 22.24 5,956 20.76

Parent
2019 2018 2017
Rate Rate Rate
Amount (%) Amount (%) Amount (%)
(In Millions of Pesos)
Statutory income tax 10,327 30.00 6,134 30.00 7,765 30.00
Effect of items not subject to statutory tax rate:
Income subjected to lower tax rates (1,445) (4.20) (519) (2.54) (606) (2.34)
Tax-exempt income (1,637) (4.76) (495) (2.42) (2,907) (11.23)
Others, net 960 2.79 (103) (0.50) (466) (1.80)
Effective income tax 8,205 23.83 5,017 24.54 3,786 14.63

Note 23 - Retirement Plans

The BPI Group maintains both defined benefit and defined contribution retirement plans. Assets of both retirement
plans are held in trust and governed by local regulations and practices in the Philippines. The key terms of these
pension plans are discussed below.

a) Defined benefit retirement plan

BPI Group (excluding insurance operations)

BPI has a unified plan which covers all subsidiaries except insurance entities. Under this plan, the normal
retirement age is 60 years. Normal retirement benefit consists of a lump sum benefit equivalent to 200% of the
basic monthly salary of the employee at the time of his retirement for each year of service, if he has rendered at
least 10 years of service, or to 150% of his basic monthly salary, if he has rendered less than 10 years of service. For
voluntary retirement, the benefit is equivalent to 112.50% of the employee’s basic monthly salary for a minimum of
10 years of service with the rate factor progressing to a maximum of 200% of basic monthly salary for service years
of 25 or more. Death or disability benefit, on the other hand, shall be determined on the same basis as in voluntary
retirement.

The net defined benefit cost and contributions to be paid by the entities within the BPI Group are determined by
an independent actuary.

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Non-life insurance subsidiary

BPI/MS has a separate trusteed defined benefit plan. Under the plan, the normal retirement age is 60 years.
Normal retirement benefit consists of a lump sum benefit equivalent to 175% of the basic monthly salary of the
employee at the time of his retirement for each year of service, if he has rendered as least 10 years of service, or to
150% of his basic monthly salary, if he has rendered less than 10 years of service.

Death or disability benefit for all employees of the non-life insurance subsidiary shall be determined on the same
basis as in normal or voluntary retirement as the case may be.

Following are the amounts recognized based on recent actuarial valuations:

(a) Pension liability as at December 31 recognized in the statements of condition

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Present value of defined benefit obligation 14,892 10,892 12,545 9,171
Fair value of plan assets (12,172) (9,851) (10,130) (8,195)
Pension liability recognized in the statements
of condition 2,720 1,041 2,415 976
Effect of asset ceiling 46 - - -
2,766 1,041 2,415 976

Pension liability is shown as part of “Miscellaneous liabilities” within Deferred credits and other liabilities
(Note 17).

The movements in plan assets are summarized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 9,851 10,710 8,195 9,003
Contributions 861 781 715 627
Interest income 648 616 535 513
Benefit payments (1,187) (1,206) (985) (1,072)
Remeasurement - return on plan assets 1,999 (1,050) 1,665 (876)
Transfer to defined contribution plan - - 5 -
At December 31 12,172 9,851 10,130 8,195

The carrying values of the plan assets represent their fair value as at December 31, 2019 and 2018.

The plan assets are comprised of the following:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Debt securities 3,773 3,054 3,140 2,540
Equity securities 5,721 4,630 4,761 3,852
Others 2,678 2,167 2,229 1,803
12,172 9,851 10,130 8,195

The plan assets of the unified retirement plan include investment in BPI’s common shares with aggregate fair value
of P421 million at December 31, 2019 (2018 - P451 million). An officer of the Parent Bank exercises the voting
rights over the plan’s investment in BPI’s common shares.

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The movements in the present value of defined benefit obligation are summarized as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 10,892 12,718 9,171 10,508
Interest cost 944 712 795 582
Current service cost 545 659 456 539
Remeasurement - change in assumptions
and experience adjustment 3,698 (1,991) 3,096 (1,386)
Benefit payments (1,187) (1,206) (985) (1,072)
Transfers to defined contribution plan - - 12 -
At December 31 14,892 10,892 12,545 9,171

The BPI Group has no other transactions with the plan other than the regular funding contributions.

(b) Expense recognized in the statements of income

Consolidated Parent
2019 2018 2017 2019 2018 2017
(In Millions of Pesos)
Current service cost 545 659 619 456 539 507
Net interest cost 86 96 82 80 69 56
Settlement loss - - 9 - - 9
Past service cost - - (5) - - (5)
631 755 705 536 608 567

The principal assumptions used for the actuarial valuations of the unified plan are as follows:

Consolidated Parent
2019 2018 2019 2018
Discount rate 5.57% 8.66% 5.57% 8.66%
Future salary increases 5.00% 5.00% 5.00% 5.00%

Assumptions regarding future mortality and disability experience are based on published statistics generally used
for local actuarial valuation purposes.

The defined benefit plan typically exposes the BPI Group to a number of risks such as investment risk, interest rate
risk and salary risk. The most significant of which relate to investment and interest rate risk. The present value of
the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates
of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms
to maturity approximating the terms of the related pension liability. A decrease in government bond yields will
increase the defined benefit obligation although this will also be partially offset by an increase in the value of the
plan’s fixed income holdings. Hence, the present value of defined benefit obligation is directly affected by the
discount rate to be applied by the BPI Group. However, the BPI Group believes that due to the long-term nature of
the pension liability and the strength of the BPI Group itself, the mix of debt and equity securities holdings of the
plan is an appropriate element of the BPI Group’s long-term strategy to manage the plan efficiently.

The BPI Group ensures that the investment positions are managed within an asset-liability matching framework that
has been developed to achieve long-term investments that are in line with the obligations under the plan. The BPI
Group’s main objective is to match assets to the defined benefit obligation by investing primarily in long-term debt
securities with maturities that match the benefit payments as they fall due. The asset-liability matching is being
monitored on a regular basis and potential change in investment mix is being discussed with the trustor, as necessary
to better ensure the appropriate asset-liability matching.

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The BPI Group contributes to the plan depending on the suggested funding contribution as calculated by an
independent actuary engaged by management. The expected contributions for the year ending December 31, 2019
for the BPI Group and the Parent Bank amount to P1,001 million and P836 million, (2018 - P659 million and P539
million, respectively) respectively. The weighted average duration of the defined benefit obligation under the BPI
unified retirement plan as at December 31, 2019 is 9.65 years (2018 - 8 years).

The projected maturity analysis of retirement benefit payments as at December 31 are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Up to one year 1,135 1,310 873 1,076
More than 1 year to 5 years 3,967 3,632 3,470 3,036
More than 5 years to 10 years 8,200 7,437 6,923 6,388
More than 10 years to 15 years 11,617 11,116 9,765 9,310
More than 15 years to 20 years 6,825 8,014 5,853 6,869
Over 20 years 25,238 27,103 19,527 21,193

The sensitivity of the defined benefit obligation as at December 31 to changes in the weighted principal
assumptions follows:

Consolidated

2019
Impact on defined benefit obligation
Change in Increase in
assumption assumption Decrease in assumption
Discount rate 0.5% Decrease by 4.60% Increase by 5.00%
Salary growth rate 1.0% Increase by 10.40% Decrease by 9.10%

2018
Impact on defined benefit obligation
Change in Increase in
assumption assumption Decrease in assumption
Discount rate 0.5% Decrease by 3.34% Increase by 3.57%
Salary growth rate 1.0% Increase by 7.59% Decrease by 6.73%

Parent

2019
Impact on defined benefit obligation
Change in Increase in
assumption assumption Decrease in assumption
Discount rate 0.5% Decrease by 4.60% Increase by 5.00%
Salary growth rate 1.0% Increase by 10.30% Decrease by 9.00%

2018
Impact on defined benefit obligation
Change in Increase in
assumption assumption Decrease in assumption
Discount rate 0.5% Decrease by 3.90% Increase by 4.17%
Salary growth rate 1.0% Increase by 8.86% Decrease by 7.86%

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The above sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When
calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method
(present value of the defined benefit obligation calculated with the projected unit credit method at the end of the
reporting period) has been applied as when calculating the retirement liability recognized within the statements
of condition.

b) Defined contribution retirement plan

All non-unionized employees hired on or after the January 1, 2016 are automatically under the new defined
contribution plan. Employees hired prior to the effective date shall have the option to elect to become members of
the new defined contribution plan.

Under the normal or late retirement, employees are entitled to a benefit equal to the total of the following
amounts:
• The higher between (a) cumulative fund balance equivalent to 8% of the basic monthly salary and
(b) the minimum legal retirement benefit under the Labor Code
• Employee contributions fund

The defined contribution retirement plan has a defined benefit minimum guarantee equivalent to a certain
percentage of the monthly salary payable to an employee at normal retirement age with the required credited
years of service based on the provisions of Republic Act (“RA”) No. 7641.

Accordingly, the liability for the defined benefit minimum guarantee is actuarially calculated similar to the defined
benefit plan.

The funding status of the defined contribution plan is shown below:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Fair value of plan assets 1,748 1,254 1,325 930
Present value of defined benefit obligation (811) (298) (604) (219)
937 956 721 711
Effect of asset ceiling 945 956 721 711
(8) - - -

The movements in the present value of the defined benefit obligation follow:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 298 239 219 172
Interest cost 27 15 20 10
Current service cost 59 48 40 31
Benefit payments (56) (20) (41) (18)
Remeasurement - change in assumptions and
experience adjustment 483 16 366 24
At December 31 811 298 604 219

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The movements in the fair value of plan assets follow:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
At January 1 1,254 916 930 707
Contribution paid by employer 237 183 163 139
Interest income 114 62 88 48
Benefit payments (56) (20) (41) (18)
Transfer to the plan - - 2 54
Remeasurement - return on plan assets 199 113 183 -
At December 31 1,748 1,254 1,325 930

Total retirement expense for the year ended December 31, 2019 under the defined contribution plan for the BPI
Group and Parent Bank is P142 million (2018 - P43 million) and P98 million (2018 - P27 million).
The components of plan assets of the defined contributions as at December 31, 2019 are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Debt securities 663 966 506 716
Equity securities 962 213 730 214
Others 123 75 89 -
1,748 1,254 1,325 930

The weighted average duration of the defined contribution retirement plan for the BPI Group and Parent Bank is
20.83 years (2018 - 19 years).

Critical accounting estimate – Calculation of defined benefit obligation

The BPI Group estimates its pension benefit obligation and expense for defined benefit pension plans based on the
selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include, among
others, the discount rate and future salary increases. The BPI Group determines the appropriate discount rate at the
end of each year. This is the interest rate that should be used to determine the present value of estimated future cash
outflows expected to be required to settle the retirement obligations. The present value of the defined benefit
obligations of the BPI Group at December 31, 2019 and 2018 are determined using the market yields on Philippine
government bonds with terms consistent with the expected payments of employee benefits. Plan assets are invested in
either equity securities, debt securities or other forms of investments. Equity markets may experience volatility, which
could affect the value of pension plan assets. This volatility may make it difficult to estimate the long-term rate of
return on plan assets. Actual results that differ from the BPI Group’s assumptions are reflected as remeasurements in
other comprehensive income. The BPI Group’s assumptions are based on actual historical experience and external
data regarding compensation and discount rate trends.

Note 24 - Asset Management Business

At December 31, 2019, the net asset value of trust and fund assets managed by the BPI Group through BPI AMTC
amounts to P731 billion (2018 - P591 billion).

As required by the General Banking Act, BPI AMTC has deposited government securities with the BSP valued at
P377 million (2018 - P349 million).

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Note 25 - Related Party Transactions

In the normal course of business, the Parent Bank transacts with related parties consisting of its subsidiaries and
associates. Likewise, the BPI Group has transactions with Ayala Corporation (AC) and subsidiaries (Ayala Group), on
an arm's length basis. AC is a significant stockholder of BPI as at reporting date.

The Parent Bank has a Board-level Related Party Transaction Committee that vets and endorses all significant
related party transactions, including those involving directors, officers, stockholders and their related interests
(DOSRI), for which the latter shall require final Board approval. The Committee consists of three directors,
majority of whom are independent directors including the Chairman, and two non-voting members from
management, namely, the Chief Audit Executive and the Chief Compliance Officer.

Transactions with related parties have terms and conditions that are generally comparable to those offered to non-
related parties or to similar transactions in the market.

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A summary of significant related party transactions and outstanding balances as at and for the years ended
December 31 is shown below (transactions with subsidiaries have been eliminated in the consolidated financial
statements):

Consolidated

2019
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 5 58 These are loans and advances granted
Associates (38) 350 to related parties that are generally
Ayala Group 27,306 59,885 secured with interest rates ranging from
Other related parties 275 736 4.18% to 10.69% (including those
pertaining to foreign
currency-denominated loans) and with
maturity periods ranging from 5 days to
15 years. Additional information on
DOSRI loans are discussed below.
27,548 61,029
Deposits from:
Subsidiaries 1,024 9,746 These are demand, savings and time
Associates 1,486 1,903 deposits bearing the following average
Ayala Group (3,517) 13,287 interest rates:
Key management personnel 694 1,238 Demand - 0.22% to 0.27%
Savings - 0.59% to 0.62%
Time - 3.61% to 5.15%
(313) 26,174

2018
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries (81) 53 These are loans and advances granted
Associates 190 387 to related parties that are generally
Ayala Group 5,026 32,579 secured with interest rates ranging from
Other related parties 159 461 3.87% to 8.25% (including those
pertaining to foreign
currency-denominated loans) and with
maturity periods ranging from 5 days to
15 years. Additional information on
DOSRI loans are discussed below.
5,294 33,480
Deposits from:
Subsidiaries 373 8,722 These are demand, savings and time
Associates 38 417 deposits bearing the following average
Ayala Group 12,263 16,804 interest rates:
Key management personnel 162 543 Demand - 0.22% to 0.31%
Savings - 0.62% to 0.68%
Time - 2.61% to 4.37%
12,836 26,486

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2017
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 59 134 These are loans and advances granted
Associates 152 197 to related parties that are generally
Ayala Group (609) 27,553 secured with interest rates ranging
Key management personnel - - from 1.37% to 7.64% (including those
Other related parties (592) 302 pertaining to foreign
currency-denominated loans) and with
maturity periods ranging from 4 days to
14 years. Additional information on
DOSRI loans are discussed below.
(990) 28,186
Deposits from:
Subsidiaries 1,111 8,349 These are demand, savings and time
Associates (469) 379 deposits bearing the following average
Ayala Group (7,665) 4,541 interest rates:
Key management personnel (959) 381 Demand - 0.23% to 0.25%
Savings - 0.70% to 0.79%
Time - 2.15% to 2.22%
(7,982) 13,650

Parent

2019
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 5 58 These are loans and advances granted
Associates (38) 350 to related parties that are generally
Ayala Group 27,306 59,885 secured with interest rates ranging from
Other related parties 275 736 0.10% to 5.88% (including those
pertaining to foreign
currency-denominated loans) and with
maturity periods ranging from 5 days to
15 years. Additional information on
DOSRI loans are discussed below.
27,548 61,029
Deposits from:
Subsidiaries 1,083 9,715 These are demand, savings and time
Associates 1,473 1,887 deposits bearing the following average
Ayala Group (2,053) 12,921 interest rates:
Key management personnel 642 1,105 Demand - 0.21% to 0.26%
Savings - 0.55% to 0.58%
Time - 3.27% to 5.41%
1,145 25,628

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 2018
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries (81) 53 These are loans and advances granted
Associates 190 387 to related parties that are generally
Ayala Group 5,026 32,579 secured with interest rates ranging from
Key management personnel - - 3.87% to 8.25% (including those
Other related parties 159 461 pertaining to foreign
currency-denominated loans) and with
maturity periods ranging from 5 days to
15 years. Additional information on
DOSRI loans are discussed below.
5,294 33,480
Deposits from:
Subsidiaries 388 8,631 These are demand, savings and time
Associates 55 414 deposits bearing the following average
Ayala Group 10,446 14,974 interest rates:
Key management personnel 103 463 Demand - 0.21% to 0.30%
Savings - 0.58% to 0.64%
Time - 2.33 to 4.67%
10,992 24,482

2017
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 59 134 These are loans and advances granted
Associates 152 197 to related parties that are generally
Ayala Group (609) 27,553 secured with interest rates ranging from
Key management personnel - - 1.37% to 7.64% (including those
Other related parties (592) 302 pertaining to foreign
currency-denominated loans) and with
maturity periods ranging from 4 days to
14 years. Additional information on
DOSRI loans are discussed below.
(990) 28,186
Deposits from:
Subsidiaries 1,098 8,243 These are demand, savings and time
Associates (482) 359 deposits bearing the following average
Ayala Group (7,452) 4,528 interest rates:
Key management personnel (772) 360 Demand - 0.21% to 0.24%
Savings - 0.66% to 0.75%
Time - 1.68% to 1.80%
(7,608) 13,490

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The aggregate amounts included in the determination of income before income tax (prior to elimination) that
resulted from transactions with each class of related parties are as follows:

Consolidated

2019 2018 2017

(In Millions of Pesos)
Interest income
Subsidiaries 99 84 39
Associates 21 14 -
Ayala Group 2,867 1,346 966
Other related parties 44 20 15
3,031 1,464 1,020
Other income
Subsidiaries 2,260 1,801 1,485
Associates 1,511 1,222 977
Ayala Group 580 203 247
4,351 3,226 2,709
Interest expense
Subsidiaries 99 84 38
Associates 3 2 1
Ayala Group 128 119 21
Key management personnel 9 3 1
239 208 61
Other expenses
Subsidiaries 2,148 1,698 1,371
Associates 22 51 34
Ayala Group 435 501 319
2,605 2,250 1,724
Retirement benefits
Key management personnel 51 47 44
Salaries, allowances and other short-term benefits
Key management personnel 871 800 744
Directors’ remuneration 121 93 87

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Parent

2019 2018 2017

(In Millions of Pesos)
Interest income
Subsidiaries - 1 3
Associates 21 14 -
Ayala Group 2,867 1,346 966
Other related parties 44 20 15
2,932 1,381 984
Other income
Subsidiaries 2,157 1,620 1,433
Associates 1,272 1,035 977
Ayala Group 372 137 155
3,801 2,792 2,565
Interest expense
Subsidiaries 99 84 34
Associates 3 2 1
Ayala Group 123 98 20
Key management personnel 5 3 1
230 187 56
Other expenses
Subsidiaries 28 145 27
Ayala Group 435 501 319
463 646 346
Retirement benefits
Key management personnel 44 40 37
Salaries, allowances and other short-term benefits
Key management personnel 751 697 629
Directors’ remuneration 92 77 73

Other income mainly consists of rental income and revenue from service arrangements with related parties.

Other expenses mainly consist of rental expenses and management fees.

Details of DOSRI loans are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Outstanding DOSRI loans 10,026 8,248 10,024 8,248

As at December 31, 2019, allowance for credit losses amounting to P10 million (2018 - P40 million) have been
recognized against receivables from related parties.

Note 26 - Financial Risk Management

The BOD carries out its risk management function through the Risk Management Committee (RMC). The RMC is
tasked with nurturing a culture of risk management across the enterprise. The RMC sets the risk appetite; proposes
and approves risk management policies, frameworks, and guidelines; and regularly reviews risk management
structures, metrics, limits, and issues across the BPI Group, in order to meet and comply with regulatory and
international standards on risk measurement and management.

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At the management level, the Risk Management Office (RMO) is headed by the Chief Risk Officer (CRO). The CRO is
ultimately responsible in leading the formulation of risk management policies and methodologies in alignment with
the overall business strategy of BPI, ensuring that risks are prudently and rationally undertaken and within its risk
appetite, as well as commensurate and disciplined to maximize returns on shareholders' capital. Risk management is
carried out by a dedicated team of skilled risk managers and senior officers who have extensive prior operational
experience. BPI’s risk managers regularly monitor key risk indicators and report exposures against carefully
established financial and business risk metrics and limits approved by the RMC. Finally, independent reviews are
regularly conducted by the Internal Audit group and regulatory examiners to ensure that risk controls and mitigants
are in place and functioning effectively as intended.

The possibility of incurring losses is, however, compensated by the possibility of earning more than expected
income. Risk-taking is, therefore, not entirely negative to be avoided. Risk-taking actions present opportunities if
risks are fully identified and accounted, deliberately taken, and are kept within prudent and rationalized limits.

The most important financial risks that the BPI Group manages are credit risk, liquidity risk and market risk.

26.1 Credit risk

The BPI Group takes on exposure to credit risk, which is the risk that may arise if a borrower or counterparty fails to
meet its obligations in accordance with agreed terms. Credit risk is the single largest risk for the BPI Group’s
business; management therefore carefully manages its exposure to credit risk as governed by relevant regulatory
requirements and international benchmarks.

Credit risk may also arise due to substantial exposures to a particular counterparty which the BPI Group manages by
adopting proper risk controls and diversification strategies to prevent undue risk concentrations from excessive
exposures to particular counterparties, industries, countries or regions.

The most evident source of credit risk is loans and advances; however, other sources of credit risk exist throughout
the activities of the BPI Group, including in credit-related activities recorded in the banking, investment securities
in the trading books and off-balance sheet transactions.

26.1.1 Credit risk management

The Credit Policy and Risk Management (CPRM) division is responsible for the overall management of the Bank’s
credit risk. CPRM supports the senior management in coordination with various business lending and operations
units in identifying, measuring and managing credit risk.

The BPI Group employs a range of policies and practices to mitigate credit risk. The BPI Group monitors its
portfolio based on different segmentation to reflect the acceptable level of diversification and concentration.
Concentration risk in credit portfolios is inherent in banking and cannot be totally eliminated. However, said risk
may be reduced by adopting proper risk control and diversification strategies to prevent undue risk concentrations
from excessive exposures to particular counterparties, industries, countries or regions.

The BPI Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in
relation to one borrower, or group of borrowers, and to geographical and industry segments. Such risks are
monitored on a regular basis and subjected to annual or more frequent review, when deemed necessary. Limits on
large exposures and credit concentration are approved by the BOD through the RMC.

The exposure to any one borrower is further restricted by sub-limits covering on- and off-balance sheet exposures.
Actual exposures against limits are monitored regularly. Methodologies for measuring credit risk vary depending
on several factors, including type of asset, risk measurement parameters and risk management and collection
processes. Credit risk measurement is based on the probability of default of an obligor or counterparty, the loss
severity given a default event and the exposure at default.

A rigorous control framework is applied in the determination of expected credit loss (ECL) models. The BPI Group
has policies and procedures that govern the calculation of ECL. All ECL models are regularly reviewed by the Risk
Management Office to ensure that necessary controls are in place and the models are applied accordingly.

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The review and validation of ECL models are performed by groups that are independent of the team that prepares
the calculations, e.g., Risk Models Validation and Internal Auditors. Expert judgments on measurement
methodologies and assumptions are reviewed by a group of internal experts from various functions.

Credit loss estimates are based on estimates of the probability of default (PD) and loss severity given a default. The
probability of default is the likelihood that a borrower will default on its obligation; the loss given default (LGD) is
the estimated loss on the loan that would be realized upon the default and takes into consideration collateral and
structural support for each credit facility. The estimation process includes assigning risk ratings to each borrower
and credit facility to differentiate risk within the portfolio. These risk ratings are reviewed regularly by Credit Risk
Management and revised as needed to reflect the borrower’s current financial position, risk profile and related
collateral. The calculations and assumptions are based on both internal and external historical experience and
management judgment and are reviewed regularly.

Settlement risk arises in any situation where a payment in cash, securities, foreign exchange currencies, or equities
is made in the expectation of a corresponding receipt in cash, securities, foreign exchange currencies, or equities.
Daily settlement limits are established for each counterparty to cover the aggregate of all settlement risk arising
from the BPI Group’s market transactions on any single day. For certain securities, the introduction of the delivery
versus payment facility in the local market has brought down settlement risk significantly.

The BPI Group employs specific control and risk mitigation measures, some of which are outlined below:

(a) Collateral or guarantees

One of the most traditional and common practice in mitigating credit risk is requiring security particularly for
loans and advances. The BPI Group implements guidelines on the acceptability of specific classes of collateral for
credit risk mitigation. The BPI Group assesses the valuation of the collateral obtained as part of the loan
origination process. This assessment is reviewed periodically. The common collateral types for loans and advances
are:

• Mortgages over physical properties (e.g., real estate and personal);

• Mortgages over financial assets (e.g., guarantees); and
• Margin agreement for derivatives, for which the BPI Group has also entered into master netting agreements

In order to minimize credit loss, the BPI Group seeks additional collateral from the counterparty when
impairment indicators are observed for the relevant individual loans and advances.

The BPI Group’s policies regarding obtaining collateral have not significantly changed during the reporting period
and there has been no significant change in the overall quality of the collaterals held by the BPI Group since the
prior period.

(b) Market Limits

The BPI Group maintains market limits on net open derivative positions (i.e., the difference between purchase and
sale contracts). Credit risk is limited to the net current fair value of instruments, which in relation to derivatives is
only a portion of the contract, or notional values used to express the volume of instruments outstanding. This
credit risk exposure is managed as part of the overall lending limits with customers, together with potential
exposures from market movements. Collateral or other security is not usually obtained for credit risk exposures on
these instruments (except where the BPI Group requires margin deposits from counterparties).

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(c) Master netting arrangements

The BPI Group further restricts its exposure to credit losses by entering into master netting arrangements with certain
counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not
generally result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis.
However, the credit risk associated with favorable contracts (asset position) is reduced by a master netting
arrangement to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a
net basis. The BPI Group’s overall exposure to credit risk on derivative instruments subject to master netting
arrangements can change substantially within a short period, as it is affected by each transaction subject to the
arrangement.

(d) Credit-related commitments

Documentary and commercial letters of credit - which are written undertakings by the BPI Group on behalf of a
customer authorizing a third party to draw drafts on the BPI Group up to a stipulated amount under specific terms
and conditions - are collateralized by the underlying shipments of goods and therefore carry less risk than a direct
loan.

26.1.2 Credit risk rating

The BPI Group uses internal credit risk gradings that reflect its assessment of the probability of default of
individual counterparties. The BPI Group uses its internal credit risk rating system, credit models or external
ratings from reputable credit rating agencies. Specific data about the borrower and loan are collected at the time of
application (such as disposable income, and level of collateral for retail exposures; and turnover and industry type
for wholesale exposures) and are fed into the internal credit scoring models. In addition, the internal models allow
expert judgment from the Credit Risk Rating Committee and consideration of other data inputs not captured into
the model in the determination of the final internal credit score for each loan.

The BPI Group has adopted a credit classification system that aims to identify deteriorating exposures on a timely
basis. Exposures are classified into each of the following categories:

• Standard monitoring - This category includes accounts which do not have a greater-than-normal risk and do not
possess the characteristics of special monitoring and defaulted loans. The counterparty has the ability to satisfy
the obligation in full and therefore minimal loss, if any, is anticipated.

• Special monitoring - This category includes accounts which need closer and frequent monitoring to prevent any
further credit deterioration. The counterparty is assessed to be vulnerable to highly vulnerable and its capacity to
meet its financial obligations is dependent upon favorable business, financial, and economic conditions.

• Default - This category includes accounts which exhibit probable to severe weaknesses wherein probability of
non-repayment of loan obligation is ranging from high to extremely high.

i. Corporate (including cross-border loans) and SMEs loans

The BPI Group’s internal credit risk rating system comprises a 22-scale rating with eighteen (18) ‘pass’ rating levels
for large corporate accounts; 14-scale rating system with ten (10) ‘pass’ rating grades for SME; and 26-scale rating
system with thirteen (13) pass ratings for cross-border accounts mapped based on reputable external rating agency.

The BPI Group uses the following set of classifications:

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 Classifications Large corporate Cross-border SME
Standard AAA to B- or unrated Investment grade (IG) or Non-IG AAA to B- or unrated and
monitoring and based on prescribed days past due with no SICR; or based on based on prescribed dpd
(dpd) threshold prescribed dpd threshold threshold
Special monitoring CCC to C or based on prescribed dpd Non-IG with SICR but assessed to CCC to C or based on
threshold be non-impaired; based on prescribed dpd threshold
prescribed dpd threshold
Default Adversely classified accounts (ACA) or Default, with objective evidence of ACA or based on prescribed
based on prescribed dpd threshold or impairment; or based on prescribed dpd threshold or IL
Item in litigation (IL) dpd threshold

ii. Retail loans

The BPI Group uses automated scoring models to assess the level of risk for retail accounts. Behavioral indicators are
considered in conjunction with other forward-looking information (e.g., industry forecast) to assess the level of risk of
a loan. After the date of initial recognition, the payment behavior of the borrower is monitored on a periodic basis to
develop a behavioral score which is mapped to a probability of default (PD).

Classifications Credit cards Personal, auto and housing SEME*

Standard monitoring Current to 29 dpd Current to 30 dpd Current to 7 dpd
Special monitoring 30 to 89 dpd 31 to 90 dpd Not applicable
Default 90 dpd and up or IL >90, IL, Loss 8 dpd and up
*Self-employed micro-entrepreneurs

iii. Treasury and other investment debt securities

Investments in high grade securities and bills are viewed as a way to gain better credit quality mix and at the same
time, maintain a readily available source to meet funding requirements. The level of credit risk for treasury and other
investment debt securities and their associated PD are determined using reputable external ratings and/or available
and reliable qualitative and quantitative information. In the absence of credit ratings, a comparable issuer or
guarantor rating is used. Should there be a change in the credit rating of the chosen comparable, evaluation is made to
ascertain whether the rating change is applicable to the security being assessed for impairment.

Classifications Credit risk grade following S&P or its equivalent

Standard monitoring IG (AAA to BBB-)
Special monitoring Non-IG (BB+ to C)
Default Default (D)

iv. Other financial assets at amortized cost

For other financial assets (non-credit receivables), the BPI Group applies the PFRS 9 simplified approach to
measuring expected credit losses which uses a lifetime expected credit loss methodology. These financial assets are
grouped based on shared risk characteristics and aging profile. For some of these, impairment is assessed
individually at a counterparty level.

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26.1.3 Maximum exposure to credit risk

26.1.3.1 Loans and advances

Credit risk exposures relating to on-balance sheet loans and advances are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Corporate and SME loans, net 1,204,950 1,122,610 1,167,582 1,074,782
Retail loans, net 270,386 232,286 64,194 51,174
1,475,336 1,354,896 1,231,776 1,125,956

The carrying amount of loans and advances above also represents the BPI Group’s maximum exposure to credit risk.

Credit quality of loans and advances, net

The following tables contain an analysis of the credit risk exposure of each financial instrument for which an ECL
allowance is recognized.

Consolidated

Corporate and SME loans

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 1,091,916 28,701 - 1,120,617 1,034,673 23,243 - 1,057,916
Special monitoring 45,963 41,416 - 87,379 48,392 16,077 - 64,469
Default - - 13,091 13,091 - - 13,564 13,564
Gross carrying
amount 1,137,879 70,117 13,091 1,221,087 1,083,065 39,320 13,564 1,135,949
Loss allowance (6,870) (3,110) (6,157) (16,137) (5,768) (1,843) (5,728) (13,339)
Carrying amount 1,131,009 67,007 6,934 1,204,950 1,077,297 37,477 7,836 1,122,610

Retail loans

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 251,736 10,638 - 262,374 217,645 8,531 - 226,176
Special monitoring 322 6,764 - 7,086 1,002 5,727 - 6,729
Default - - 10,763 10,763 - - 8,944 8,944
Gross carrying
amount 252,058 17,402 10,763 280,223 218,647 14,258 8,944 241,849
Loss allowance (3,236) (1,780) (4,821) (9,837) (4,114) (1,405) (4,044) (9,563)
Carrying amount 248,822 15,622 5,942 270,386 214,533 12,853 4,900 232,286

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Parent

Corporate and SME loans

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 1,064,720 25,034 - 1,089,754 995,540 22,727 - 1,018,267
Special monitoring 42,297 39,478 - 81,775 43,147 14,737 - 57,884
Default - - 9,824 9,824 - - 9,772 9,772
Gross carrying
amount 1,107,017 64,512 9,824 1,181,353 1,038,687 37,464 9,772 1,085,923
Loss allowance (5,972) (2,990) (4,809) (13,771) (5,108) (1,734) (4,299) (11,141)
Carrying amount 1,101,045 61,522 5,015 1,167,582 1,033,579 35,730 5,473 1,074,782

Retail loans

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 59,732 4,277 - 64,009 51,886 338 - 52,224
Special monitoring 183 1,323 - 1,506 203 935 - 1,138
Default - - 3,513 3,513 - - 2,638 2,638
Gross carrying
amount 59,915 5,600 3,513 69,028 52,089 1,273 2,638 56,000
Loss allowance (808) (941) (3,085) (4,834) (1,839) (482) (2,505) (4,826)
Carrying amount 59,107 4,659 428 64,194 50,250 791 133 51,174

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The tables below present the gross amount of “Stage 2” loans and advances by age category.

Consolidated

2019 2018
Corporate Corporate
and SME and SME
loans Retail loans Total loans Retail loans Total
(In Millions of Pesos) (In Millions of Pesos)
Current 68,517 5,999 74,516 35,632 5,697 41,329
Past due up to 30 days 505 4,749 5,254 175 2,834 3,009
Past due 31 - 90 days 1,095 6,654 7,749 3,513 5,727 9,240
Past due 91 - 180 days - - - - - -
Over 180 days - - - - - -
70,117 17,402 87,519 39,320 14,258 53,578

Parent

2019 2018
Corporate Corporate
and SME and SME
loans Retail loans Total loans Retail loans Total
(In Millions of Pesos) (In Millions of Pesos)
Current 63,673 3,494 67,167 34,696 241 34,937
Past due up to 30 days 400 783 1,183 47 97 144
Past due 31 - 90 days 439 1,323 1,762 2,721 935 3,656
Past due 91 - 180 days - - - - - -
Over 180 days - - - - - -
64,512 5,600 70,112 37,464 1,273 38,737

26.1.3.2 Treasury and other investment securities

Credit risk exposures arising from treasury and other investment securities are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Due from BSP 207,845 225,907 181,815 202,487
Due from other banks 22,356 12,477 18,356 8,615
Interbank loans receivable and SPAR 22,570 34,323 18,364 22,659
Financial assets at FVTPL 24,032 16,483 17,688 10,346
Financial assets at FVOCI 51,079 35,531 47,009 29,993
Investment securities at amortized cost 275,105 287,571 252,006 267,497
602,987 612,292 535,238 541,597

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Credit quality of treasury and other investment securities

Consolidated

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring
Due from BSP 207,845 - - 207,845 225,907 - - 225,907
Due from other banks 22,356 - - 22,356 12,480 - - 12,480
Interbank loans
receivable and
SPAR 22,561 - - 22,561 34,306 - - 34,306
Financial assets at
FVTPL 24,032 - - 24,032 16,483 - - 16,483
Financial assets at
FVOCI 51,079 - - 51,079 35,531 - - 35,531
Investment securities
at amortized cost 275,105 - - 275,105 287,573 - - 287,573
Default
Interbank loans
receivable and SPAR - - 49 49 - - 67 67
Gross carrying
amount 602,978 - 49 603,027 612,280 - 67 612,347
Loss allowance - - (40) (40) (5) - (50) (55)
Carrying amount 602,978 - 9 602,987 612,275 - 17 612,292

Parent

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring
Due from BSP 181,815 - - 181,815 202,487 - - 202,487
Due from other banks 18,356 - - 18,356 8,615 - - 8,615
Interbank loans
receivable and
SPAR 18,355 - - 18,355 22,642 - - 22,642
Financial assets at
FVTPL 17,688 - - 17,688 10,346 - - 10,346
Financial assets at
FVOCI 47,009 - - 47,009 29,993 - - 29,993
Investment securities
at amortized cost 252,006 - - 252,006 267,499 - - 267,499
Default
Interbank loans
receivable and SPAR - - 49 49 - - 67 67
Gross carrying
amount 535,229 - 49 535,278 541,582 - 67 541,649
Loss allowance - - (40) (40) (2) - (50) (52)
Carrying amount 535,229 - 9 535,238 541,580 - 17 541,597

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26.1.3.3 Other financial assets at amortized cost

Other financial assets at amortized cost that are exposed to credit risk are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Accounts receivable, net 1,509 1,916 1,785 1,315
Other accrued interest and fees receivable 264 671 209 573
Rental deposits 734 360 623 131
Sales contracts receivable, net - 541 - 360
Others, net 84 2,179 150 2,047
2,591 5,667 2,767 4,426

The carrying amounts of the above financial assets represent the BPI Group’s maximum exposure to credit risk.

The BPI Group’s other financial assets at amortized cost (shown under Other assets, net) generally arise from
transactions with various unrated counterparties with good credit standing. The BPI Group applies the PFRS 9
simplified approach to measuring expected credit losses which uses a lifetime expected loss methodology for other
financial assets.

26.1.3.4 Loan commitments

Credit risk exposures arising from undrawn loan commitments are as follows:

Consolidated

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 389,148 3,608 - 392,756 232,257 74 - 232,331
Special monitoring 11,417 - - 11,417 3,246 264 - 3,510
Default - - 411 411 - - 63 63
Gross carrying
amount 400,565 3,608 411 404,584 235,503 338 63 235,904
Loss allowance* (506) (104) (40) (650) (710) (30) (13) (753)
Carrying amount 400,059 3,504 371 403,934 234,793 308 50 235,151
*Included in “Miscellaneous liabilities” in Note 17

Parent

2019 2018
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 382,750 3,374 - 386,124 229,849 69 - 229,918
Special monitoring 11,417 - - 11,417 3,242 258 - 3,500
Default - - 408 408 - - 63 63
Gross carrying
amount 394,167 3,374 408 397,949 233,091 327 63 233,481
Loss allowance* (488) (92) (39) (619) (682) (28) (13) (723)
Carrying amount 393,679 3,282 369 397,330 232,409 299 50 232,758
*Included in “Miscellaneous liabilities” in Note 17

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26.1.4 Credit impaired loans and advances

The BPI Group closely monitors collaterals held for financial assets considered to be credit-impaired (Stage 3), as it
becomes more likely that the BPI Group will take possession of collateral to mitigate potential credit losses. Loans
and advances that are credit-impaired and related collateral held in order to mitigate potential losses are shown
below:

Consolidated

2019 2018
Net Net
Gross Impairment carrying Gross Impairment carrying
exposure allowance amount exposure allowance amount
(In Millions of Pesos)
Credit-impaired assets
Corporate and SME loans 13,091 6,157 6,934 13,564 5,728 7,836
Retail loans 10,763 4,821 5,942 8,944 4,044 4,900
Total credit-impaired assets 23,854 10,978 12,876 22,508 9,772 12,736
Fair value of collateral 11,662 12,611

Parent

2019 2018
Gross Impairment Carrying Gross Impairment Carrying
exposure allowance amount exposure allowance amount
(In Millions of Pesos)
Credit-impaired assets
Corporate and SME loans 9,824 4,809 5,015 9,772 4,299 5,473
Retail loans 3,513 3,085 428 2,638 2,505 133
Total credit-impaired assets 13,337 7,894 5,443 12,410 6,804 5,606
Fair value of collateral 6,354 7,704

The BPI Group acquires assets by taking possession of collaterals held as security for loans and advances.
As at December 31, 2019, the BPI Group’s foreclosed collaterals have carrying amount of P3,155 million
(2018 - P3,363 million). The related foreclosed collaterals have aggregate fair value of P9,583 million
(2018 - P9,859 million). Foreclosed collaterals include real estate (land, building, and improvements), auto and
chattel. Repossessed properties are sold as soon as practicable and are classified as Assets held for sale in the
statements of condition.

26.1.5 Loss allowance

The loss allowance recognized in the period is impacted by a variety of factors, as described below:

• Transfers between Stage 1 and Stages 2 or 3 due to financial instruments experiencing significant increases (or
decreases) of credit risk or becoming credit-impaired in the period, and the consequent “step up” (or “step
down”) between 12-month and lifetime ECL;
• Additional allowances for new financial instruments recognized during the period and releases for financial
instruments de-recognized in the period;
• Write-offs of allowances related to assets that were written off during the period;
• Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period;
• Impacts on the measurement of ECL due to changes made to models and assumptions; and
• Foreign exchange translations for assets denominated in foreign currencies and other movements.

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The following tables summarize the changes in the loss allowance for loans and advances between the beginning
and the end of the annual period. No movement analysis of allowance for impairment is presented for treasury
and other investment debt securities and other financial assets subject to impairment as the related loss allowance
is deemed insignificant for financial reporting purposes.

Consolidated

Stage 1 Stage 2 Stage 3

12-month Lifetime
Corporate and SME loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2019 5,768 1,843 5,728 13,339
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (2,072) 2,707 1,691 2,326
Transfer from Stage 2 6 (680) 291 (383)
Transfer from Stage 3 10 2 (177) (165)
New financial assets originated 3,688 - - 3,688
Financial assets derecognized during the period (1,959) (295) (1,203) (3,457)
Changes in assumptions and other movements
in provision 1,521 (508) 70 1,083
1,194 1,226 672 3,092
Write-offs and other movements (92) 41 (243) (294)
Loss allowance, at December 31, 2019 6,870 3,110 6,157 16,137

Stage 1 Stage 2 Stage 3

12-month Lifetime
Retail loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2019 4,114 1,405 4,044 9,563
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,031) 1,418 2,456 2,843
Transfer from Stage 2 33 (716) 559 (124)
Transfer from Stage 3 3 33 (161) (125)
New financial assets originated 1,070 - - 1,070
Financial assets derecognized during the period (308) (115) (339) (762)
Changes in assumptions and other movements
in provision (613) (190) 882 79
(846) 430 3,397 2,981
Write-offs and other movements (32) (55) (2,620) (2,707)
Loss allowance, at December 31, 2019 3,236 1,780 4,821 9,837

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Stage 1 Stage 2 Stage 3

12-month Lifetime
Corporate and SME loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2019 5,108 1,734 4,299 11,141
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,846) 2,614 1,360 2,128
Transfer from Stage 2 3 (658) 251 (404)
Transfer from Stage 3 6 1 (88) (81)
New financial assets originated 3,450 - - 3,450
Financial assets derecognized during the period (1,844) (279) (842) (2,965)
Changes in assumptions and other movements
in provision 1,205 (469) 23 759
974 1,209 704 2,887
Write-offs and other movements (110) 47 (194) (257)
Loss allowance, at December 31, 2019 5,972 2,990 4,809 13,771

Stage 1 Stage 2 Stage 3

12-month Lifetime
Retail loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2019 1,839 482 2,505 4,826
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (558) 877 1,749 2,068
Transfer from Stage 2 11 (286) 350 75
Transfer from Stage 3 - 1 (9) (8)
New financial assets originated 217 - - 217
Financial assets derecognized during the period (36) (41) (205) (282)
Changes in assumptions and other movements
in provision (667) (41) 762 54
(1,033) 510 2,647 2,124
Write-offs and other movements 2 (51) (2,067) (2,116)
Loss allowance, at December 31, 2019 808 941 3,085 4,834

Consolidated

Stage 1 Stage 2 Stage 3

12-month Lifetime
Corporate and SME loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2018 6,905 1,136 4,372 12,413
Provision for credit losses for the year
Transfers:
Transfer in (out of) Stage 1 (1,344) 1,661 1,701 2,018
Transfer in (out of) Stage 2 161 (661) 161 (339)
Transfer in (out of) Stage 3 - - (3) (3)
New financial assets originated 3,761 - - 3,761
Financial assets derecognized during the period (1,951) (250) (515) (2,716)
Changes in assumptions and other movements
in provision (1,782) (49) 331 (1,500)
(1,155) 701 1,675 1,221
Write-offs and other movements 18 6 (319) (295)
Loss allowance, at December 31, 2018 5,768 1,843 5,728 13,339

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Stage 1 Stage 2 Stage 3

12-month Lifetime
Retail loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2018 3,148 1,188 3,925 8,261
Provision for credit losses for the year
Transfers:
Transfer in (out of) Stage 1 (686) 983 1,866 2,163
Transfer in (out of) Stage 2 36 (509) 392 (81)
Transfer in (out of) Stage 3 18 42 (337) (277)
New financial assets originated 861 - - 861
Financial assets derecognized during the period (145) (95) (661) (901)
Changes in assumptions and other movements
in provision 1,085 (210) 643 1,518
1,169 211 1,903 3,283
Write-offs and other movements (203) 6 (1,784) (1,981)
Loss allowance, at December 31, 2018 4,114 1,405 4,044 9,563

Parent

Stage 1 Stage 2 Stage 3

12-month Lifetime
Corporate and SME loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2018 6,332 1,029 3,128 10,489
Provision for credit losses for the year
Transfers:
Transfer in (out of) Stage 1 (1,053) 1,575 1,223 1,745
Transfer in (out of) Stage 2 133 (621) 104 (384)
Transfer in (out of) Stage 3 - - - -
New financial assets originated 3,286 - - 3,286
Financial assets derecognized during the period (1,824) (213) (311) (2,348)
Changes in assumptions and other movements
in provision (1,783) (42) 388 (1,437)
(1,241) 699 1,404 862
Write-offs and other movements 17 6 (233) (210)
Loss allowance, at December 31, 2018 5,108 1,734 4,299 11,141

Stage 1 Stage 2 Stage 3

12-month Lifetime
Retail loans ECL Lifetime ECL ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2018 929 205 2,290 3,424
Provision for credit losses for the year
Transfers:
Transfer in (out of) Stage 1 (309) 413 1,255 1,359
Transfer in (out of) Stage 2 16 (119) 194 91
Transfer in (out of) Stage 3 1 1 (22) (20)
New financial assets originated 137 - - 137
Financial assets derecognized during the period (41) (20) (496) (557)
Changes in assumptions and other movements 1,106 2 686 1,794
in provision
910 277 1,617 2,804
Write-offs and other movements - - (1,402) (1,402)
Loss allowance, at December 31, 2018 1,839 482 2,505 4,826

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Critical accounting estimate - Measurement of expected credit loss for loans and advances
The measurement of the expected credit loss (ECL) for loans and advances is an area that requires the use of complex
models and significant assumptions about future economic conditions and credit behavior (e.g. the likelihood of
customers defaulting and the resulting losses).

A number of significant judgments are also required in applying the accounting requirements for measuring ECL,
such as:

• Determining criteria for significant increase in credit risk;

• Choosing appropriate models and assumptions for the measurement of ECL;
• Establishing the number and relative weightings of forward-looking scenarios for each type of product and the
associated ECL; and
• Establishing groups of similar financial assets for the purposes of measuring ECL.

Forward-looking scenarios
Three distinct macroeconomic scenarios (baseline, upside and downside) are considered in the BPI Group’s
estimation of expected credit losses in Stage 1 and Stage 2. These scenarios are based on assumptions supported by
economic theories and historical experience. The downside scenario reflects a negative macroeconomic event
occurring within the first 12 months, with conditions deteriorating for up to two years, followed by a recovery for
the remainder of the period. This scenario is grounded in historical experience and assumes a monetary policy
response that returns the economy to a long-run, sustainable growth rate within the forecast period. The
probability of each scenario is determined using expert judgment and recession probability tools provided by
reputable external service providers. The baseline case incorporates the BPI Group’s outlook both for the domestic
and global economy. The best- and worst-case scenarios take into account certain adjustments that will lead to a more
positive or negative economic outcome.

Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the impact of
any regulatory, legislative or political changes is likewise considered, if material.

The most significant period-end assumptions used for the ECL estimate are set out below. The scenarios “base”,
“upside” and “downside” were used for all portfolios.

At December 31, 2019

Base Scenario Upside Scenario Downside Scenario
Next 12 2 to 5 years Next 12 2 to 5 years Next 12 2 to 5 years
Months (Average) Months (Average) Months (Average)
Real GDP growth (%) 6.3 6.6 6.6 7.2 0.0 4.2
Inflation rate (%) 3.0 3.1 2.7 2.4 11.0 5.9
BVAL 5Y (%) 4.5 4.7 4.0 4.3 11.2 10.3
US Treasury 5Y (%) 2.5 2.5 2.8 3.4 1.4 1.3
Exchange rate 52.300 54.874 51.550 52.856 56.970 62.653

At December 31, 2018

Base Scenario Upside Scenario Downside Scenario
Next 12 2 to 5 years Next 12 2 to 5 years Next 12 2 to 5 years
Months (Average) Months (Average) Months (Average)
Real GDP growth (%) 7.0 6.4 7.3 7.3 4.1 (1.2)
Inflation rate (%) 4.1 3.2 3.5 2.7 6.1 8.8
PDST-R2 5Y (%) 7.0 6.7 6.7 6.4 8.1 10.7
US Treasury 5Y (%) 3.2 2.4 2.7 2.2 6.0 3.7
Exchange rate 54.638 57.796 53.620 52.812 55.829 66.661

Sensitivity analysis
The loan portfolios have different sensitivities to movements in macroeconomic variables, so the above three
scenarios have varying impact on the expected credit losses of BPI Group’s portfolios. The allowance for impairment
is calculated as the weighted average of expected credit losses under the baseline, upside and downside scenarios. The
impact of weighting these multiple scenarios was an increase in the allowance for impairment by P554 million as at
December 31, 2019 from the baseline scenario (2018 - P1,850 million).

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Transfers between stages

Transfers from Stage 1 and Stage 2 are based on the assessment of significant increase in credit risk (‘SICR’) from
initial recognition. The impact of moving from 12 months expected credit losses to lifetime expected credit losses, or
vice versa, varies by product and is dependent on the expected remaining life at the date of the transfer. Stage
transfers may result in significant fluctuations in expected credit losses. Assuming all Stage 2 accounts are considered
as Stage 1, allowance for impairment would have decreased by P1,312 million as at December 31, 2019
(2018 - P1,436 million).

26.1.6 Concentrations of risks of financial assets with credit risk exposure

The BPI Group’s main credit exposure at their carrying amounts, as categorized by industry sectors follow:

Consolidated (December 31, 2019)

Financial Less -
institutions Consumer Manufacturing Real estate Others allowance Total
(In Millions of Pesos)
Due from BSP 207,845 - - - - - 207,845
Due from other banks 22,356 - - - - - 22,356
Interbank loans receivable
and SPAR 22,610 - - - - (40) 22,570
Financial assets at FVTPL 6,620 27 1 6 17,378 - 24,032
Financial assets at FVOCI 5,034 - - 258 45,787 - 51,079
Investment securities at
amortized cost, net 58,564 1,258 4,595 3,189 207,499 - 275,105
Loans and advances, net 162,335 124,841 229,745 365,874 618,515 (25,974) 1,475,336
Other financial assets - - - - 3,423 (832) 2,591
At December 31, 2019 485,364 126,126 234,341 369,327 892,602 (26,846) 2,080,914

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Consolidated (December 31, 2018)

Financial Less -
institutions Consumer Manufacturing Real estate Others allowance Total
(In Millions of Pesos)
Due from BSP 225,907 - - - - - 225,907
Due from other banks 12,480 - - - - (3) 12,477
Interbank loans receivable
and SPAR 34,373 - - - - (50) 34,323
Financial assets at FVTPL 4,682 99 3 3 11,696 - 16,483
Financial assets at FVOCI 2,411 - 52 - 33,068 - 35,531
Investment securities at
amortized cost, net 65,164 680 4,714 1,777 215,238 (2) 287,571
Loans and advances, net 85,441 110,627 226,604 317,595 637,531 (22,902) 1,354,896
Other financial assets - - - - 6,225 (558) 5,667
At December 31, 2018 430,458 111,406 231,373 319,375 903,758 (23,515) 1,972,855

Parent (December 31, 2019)

Financial Less -
institutions Consumer Manufacturing Real estate Others allowance Total
(In Millions of Pesos)
Due from BSP 181,815 - - - - - 181,815
Due from other banks 18,356 - - - - - 18,356
Interbank loans receivable
and SPAR 18,404 - - - - (40) 18,364
Financial assets at FVTPL 3,041 110 56 - 14,481 - 17,688
Financial assets at FVOCI 4,714 - - 258 42,037 - 47,009
Investment securities at
amortized cost, net 56,942 585 4,595 3,189 186,695 - 252,006
Loans and advances, net 161,348 68,302 226,235 222,217 572,279 (18,605) 1,231,776
Other financial assets - - - - 3,076 (309) 2,767
At December 31, 2019 444,620 68,997 230,886 225,664 818,568 (18,954) 1,769,781

Parent (December 31, 2018)

Financial Less -
institutions Consumer Manufacturing Real estate Others allowance Total
(In Millions of Pesos)
Due from BSP 202,487 - - - - - 202,487
Due from other banks 8,615 - - - - - 8,615
Interbank loans receivable
and SPAR 22,709 - - - - (50) 22,659
Financial assets at FVTPL 4,679 99 2 - 5,566 - 10,346
Financial assets at FVOCI 1,952 - 52 - 27,989 - 29,993
Investment securities at
amortized cost, net 63,541 - 4,487 1,777 197,694 (2) 267,497
Loans and advances, net 83,098 57,991 219,927 182,685 598,222 (15,967) 1,125,956
Other financial assets - - - - 4,816 (390) 4,426
At December 31, 2018 387,081 58,090 224,468 184,462 834,287 (16,409) 1,671,979

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26.2 Market risk

The BPI Group is exposed to market risk - the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices. Market risk is managed by the RMO guided by policies and
procedures approved by the RMC and confirmed by the Executive Committee/BOD.

Market risk management is incumbent on the BOD through the RMC. Market risk management in BPI covers
managing exposures to trading risk, foreign exchange risk, counterparty credit risk, interest rate risk of the banking
book and liquidity risk. At the management level, the BPI Group’s market risk exposures are managed by the RMO,
headed by the Parent Bank’s CRO who reports directly to the RMC. In addition, the Internal Audit is responsible for
the independent review of risk assessment measures and procedures and the control environment.

The BPI Group reviews and controls market risk exposures of both its trading and non-trading portfolios. Trading
portfolios include those positions arising from the BPI Group’s market-making transactions. Non-trading
portfolios primarily arise from the interest rate management of the BPI Group’s retail and commercial banking
assets and liabilities.

The BPI Group has exposures in interest rate swaps, currency swaps and structured notes as part of its trading and
position taking activities. Most derivatives while used to hedge open exposures to mitigate price risk inherent in
the BPI Group's portfolios do not qualify as accounting hedges.

Value-at-Risk (VaR) measurement is an integral part of the BPI Group’s market risk control system. This metric
estimates, at 99% confidence level, the maximum loss that a trading portfolio may incur over a trading day. This
metric indicates as well that there is 1% statistical probability that the trading portfolios’ actual loss would be
greater than the computed VaR. In order to ensure model soundness, the VaR is periodically subject to model
validation and back testing. VaR is supplemented by other risk metrics and measurements that would provide
preliminary signals to Treasury and to the management to assess the vulnerability of Bank’s positions. To control
the risk, the RMC sets risk limits for trading portfolios which are consistent with the BPI Group’s goals, objectives,
risk appetite, and strategies.

Stress tests indicate the potential losses that could arise in extreme conditions that would have detrimental effect to
the Bank’s positions. The Bank periodically performs stress testing (price risk and liquidity risk) to assess the Bank’s
condition on assumed stress scenarios. Contingency plans are frequently reviewed to ensure the Bank’s preparedness
in the event of real stress. Results of stress tests are reviewed by Senior Management and by the RMC.

The average daily VaR for the trading portfolios are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Local fixed-income 92 33 91 25
Foreign fixed-income 127 168 120 154
Foreign exchange 45 44 10 9
Derivatives 127 95 127 95
Equity securities 30 28 - -
Mutual fund 5 7 - -
426 375 348 283

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26.2.1 Foreign exchange risk

Foreign exchange risk is the risk that the fair value or future cash flows of financial instrument will fluctuate because
of changes in foreign exchange rates. It arises on financial instruments that are denominated in a foreign currency.

As at reporting date, the BPI Group is mainly exposed to movements of US Dollar (USD) against the Philippine Peso
(PhP). Volatilities caused by movement of USD against PhP are regularly monitored in line with the limits
established internally.

The table below summarizes the BPI Group’s exposure to foreign currency exchange rate risk at December 31.

Consolidated

2019 2018
USD Others* Total USD Others* Total
(In Millions of Pesos)

Financial Assets
Cash and other cash items 3,060 285 3,345 2,742 752 3,494
Due from other banks 16,126 1,583 17,709 6,749 2,620 9,369
Interbank loans receivable and
SPAR 813 132 945 6,639 146 6,785
Financial assets at FVTPL 9,149 178 9,327 8,491 119 8,610
Financial assets at FVOCI -
debt securities 16,977 - 16,977 25,385 172 25,557
Investment securities at
amortized cost 127,442 1,414 128,856 127,260 1,507 128,767
Loans and advances, net 149,012 7,621 156,633 145,995 4,970 150,965
Others financial assets 13,746 1,697 15,443 1,230 106 1,336
Total financial assets 336,325 12,910 349,235 324,491 10,392 334,883
Financial Liabilities
Deposit liabilities 228,362 6,130 234,492 241,547 6,692 248,239
Derivative financial liabilities 1,438 75 1,513 1,967 118 2,085
Bills payable 80,817 482 81,299 82,692 458 83,150
Due to BSP and other banks 942 - 942 1,250 - 1,250
Manager’s checks and demand
drafts outstanding 316 10 326 87 61 148
Other financial liabilities 17,749 1,668 19,417
Accounts payable 129 13 142 119 3 122
Total financial liabilities 329,753 8,378 338,131 327,662 7,332 334,994
Net on-balance sheet position 6,572 4,532 11,104 (3,171) 3,060 (111)
*Others category includes financial instruments denominated in JPY, EUR and GBP.

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Parent

2019 2018
USD Others* Total USD Others* Total
(In Millions of Pesos)

Financial Assets
Cash and other cash items 2,858 284 3,142 2,552 751 3,303
Due from other banks 14,556 1,553 16,109 4,874 2,269 7,143
Interbank loans receivable and
SPAR - - - 5,260 - 5,260
Financial assets at FVTPL 6,807 78 6,885 5,144 119 5,263
Financial assets at FVOCI -
debt securities 15,030 - 15,030 25,132 172 25,304
Investment securities at
amortized cost 117,006 145 117,151 117,143 220 117,363
Loans and advances, net 147,803 7,148 154,951 144,486 4,787 149,273
Others financial assets 13,445 1,566 15,011 1,220 90 1,310
Total financial assets 317,505 10,774 328,279 305,811 8,408 314,219
Financial Liabilities
Deposit liabilities 214,389 5,965 220,354 227,621 6,442 234,063
Derivative financial liabilities 1,438 75 1,513 1,967 115 2,082
Bills payable 77,749 - 77,749 79,178 - 79,178
Due to BSP and other banks 942 - 942 1,250 - 1,250
Manager’s checks and demand
drafts outstanding 314 10 324 81 61 142
Other financial liabilities 17,817 1,588 19,405 20,947 1,500 22,447
Accounts payable 121 12 133 117 2 119
Total financial liabilities 312,770 7,650 320,420 331,161 8,120 339,281
Net on-balance sheet position 4,735 3,124 7,859 (25,350) 288 (25,062)
*Others category includes financial instruments denominated in JPY, EUR and GBP.

Presented below is a sensitivity analysis demonstrating the impact on pre-tax income of reasonably possible
change in the exchange rate between US Dollar and Philippine Peso. The fluctuation rate is based on the historical
movement of US Dollar against the Philippine Peso year on year.

Effect on pre-tax income

Year Change in currency Consolidated Parent
(In millions of Pesos)
2019 +/- 1.24% -/+ 81 -/+ 59
2018 +/- 1.92% -/+ 71 -/+ 95

26.2.2 Interest rate risk

Interest rate risk is the risk that cash flows or fair value of a financial instrument will fluctuate due to movements in
market interest rates. Interest rate risk in the banking book arises from the BPI Group’s core banking activities. The
BPI Group is subject to re-pricing risk arising from financial assets and liabilities that have different maturities and
are re-priced taking into account the prevailing market interest rates.

The BPI Group employs two methods to measure the potential impact of interest rate risk: (i) one that focuses on the
economic value of the banking book, and (ii) one that focuses on net interest earnings. The RMC sets limits on the two
interest rate risk metrics which are monitored monthly by the Market Risk Division of the RMO.

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Interest rate risk in the banking book
Interest rate risk in the banking book (IRRBB) is the current and prospective risk to the Bank's capital and
earnings arising from the adverse movements in interest rates that affect its banking book positions. Excessive
levels of interest rate risks in the banking book can pose a significant threat to the Bank's earnings and capital
base. The Bank has established comprehensive risk management policies, procedures, risk limits structures and
employs risk measurement models supported by a robust risk management system.

Interest rate exposures from core banking activities are measured using the following earnings-based and
economic value-based models: (a) Earnings-at-Risk (EaR) measures the potential deterioration in net interest
income over the next 12 months due to adverse movements in interest rates, and (b) Balance Sheet Value-at-Risk
(BS VaR) measures the impact on the economic value of the future cash flows in the banking book due to changes
in interest rates.

Earnings-at-Risk (EaR)
The EaR is built on repricing profile of the Bank and considers principal payments only. The Bank projects interest
inflows from its financial assets and interest outflows from its financial liabilities in the next 12 months as earnings
are affected when interest rate moved against the Bank’s position. As of December 31, 2019, the net interest income
impact of movement in interest rates amounts to P2,424 million (2018 - P806 million) for the whole BPI Group and
P1,986 million (2018 - P715 million) for the Parent Bank.

Balance Sheet Value-at-Risk (BSVaR)

The BS VaR model is also built on repricing gap or the difference between the amount of rate-sensitive financial assets
and liabilities which considers both principal and interest payments. It is the present value of the Bank’s expected net
cash flows based on the current interest rates. As at December 31, the average BSVaR, computed on a monthly basis,
for the banking book stood at P13,754 million (2018 - P15,507 million) for the whole BPI Group and P9,530 million
(2018 - P13,483 million) for the Parent Bank.

The IRRBB levels are closely monitored against RMC-approved limits and results are reported and discussed regularly
at the Management level through the ALCO and at the Board level through the Risk Management Committee (RMC).
The BPI Group manages interest rate exposures related to its assets and liabilities through a transfer-pricing system
administered by Treasury. Investment securities and interest rate derivatives are also used to hedge interest rate risk
and manage repricing gaps in the balance sheet.

The BPI Group also conducts price stress tests in the banking book and EaR stress tests for a variety of interest rate
shock scenarios to identify the impact of adverse movements in interest rates on the Bank's economic value and
earnings. The design of the price and EaR stress tests include steepening and flattening yield curves, parallel up/down
and short rate up/down shocks. The interest rate shocks applied is calibrated for all major currencies in which the Bank
has significant positions. The results of the stress test are reported to the RMC and Senior Management and are
integrated into the overall risk management framework of the BPI Group.

The risk management process, including its various components, is subject to periodic independent review (i.e. internal
audit and model validation) and consistently calibrated to ensure accuracy, relevance, propriety and timeliness of data
and assumptions employed. The assumptions and parameters used in building these metrics are properly documented.
Any changes in the methodology and assumptions used are duly approved by the Chief Risk Officer and noted by the
RMC.

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The table below summarizes the BPI Group’s exposure to interest rate risk, categorized by the earlier of contractual
repricing or maturity dates.

Consolidated (December 31, 2019)

Repricing

Up to 1 Over 1 up to Non-
year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2019
Financial Assets
Cash and other cash items - - - 47,256 47,256
Due from BSP - - - 207,845 207,845
Due from other banks - - - 22,356 22,356
Interbank loans receivable and SPAR - - - 22,570 22,570
Financial assets at FVTPL 334 472 1,050 22,176 24,032
Financial assets at FVOCI - - - 51,079 51,079
Investment securities at amortized cost - - - 275,105 275,105
Loans and advances, net 890,934 136,779 311,924 135,699 1,475,336
Other financial assets - - - 2,591 2,591
Total financial assets 891,268 137,251 312,974 786,677 2,128,170
Financial Liabilities
Deposit liabilities 796,447 359,265 539,631 - 1,695,343
Derivative financial liabilities 81 397 936 1,463 2,877
Bills payable and other borrowed funds - 15,415 - 135,422 150,837
Due to BSP and other banks - - - 1,288 1,288
Manager’s checks and demand drafts
outstanding - - - 8,299 8,299
Other financial liabilities - - - 9,392 9,392
Total financial liabilities 796,528 375,077 540,567 155,864 1,868,036
Total interest gap 94,740 (237,826) (227,593) 630,813 260,134

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Consolidated (December 31, 2018)

Repricing

Up to 1 Over 1 up to Non-
year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2018
Financial Assets
Cash and other cash items - - - 43,536 43,536
Due from BSP - - - 225,907 225,907
Due from other banks - - - 12,477 12,477
Interbank loans receivable and SPAR - - - 34,323 34,323
Financial assets at FVTPL 70 1,172 1,125 14,116 16,483
Financial assets at FVOCI - - - 35,531 35,531
Investment securities at amortized cost - 1 - 287,570 287,571
Loans and advances, net 828,847 130,082 270,105 125,862 1,354,896
Other financial assets - - - 5,667 5,667
Total financial assets 828,917 131,255 271,230 784,989 2,016,391
Financial Liabilities
Deposit liabilities 602,032 831,505 152,209 - 1,585,746
Derivative financial liabilities 43 1,204 1,279 1,365 3,891
Bills payable and other borrowed funds 20,915 10,516 - 135,470 166,901
Due to BSP and other banks - - - 3,988 3,988
Manager’s checks and demand drafts
outstanding - - - 6,931 6,931
Other financial liabilities - - - 19,313 19,313
Total financial liabilities 622,990 843,225 153,488 167,067 1,786,770
Total interest gap 205,927 (711,970) 117,742 617,922 229,621

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Parent (December 31, 2019)

Repricing
Over 1 up to Non-
Up to 1 year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2019
Financial Assets
Cash and other cash items - - - 45,982 45,982
Due from BSP - - - 181,815 181,815
Due from other banks - - - 18,356 18,356
Interbank loans receivable and SPAR - - - 18,364 18,364
Financial assets at FVTPL 334 472 1,050 15,832 17,688
Financial assets at FVOCI - - - 47,009 47,009
Investment securities at amortized cost - - - 252,006 252,006
Loans and advances, net 824,718 90,806 257,603 58,649 1,231,776
Other financial assets - - - 2,767 2,767
Total financial assets 825,052 91,278 258,653 640,780 1,815,763
Financial Liabilities
Deposit liabilities 711,910 301,381 443,167 - 1,456,458
Derivative financial liabilities 81 397 936 1,463 2,877
Bills payable and other borrowed funds - 15,118 - 111,411 126,529
Due to BSP and other banks - - - 1,288 1,288
Manager’s checks and demand drafts
outstanding - - - 6,421 6,421
Other financial liabilities - - - 4,801 4,801
Total financial liabilities 711,991 316,896 444,103 125,384 1,598,374
Total interest gap 113,061 (225,618) (185,450) 515,396 217,389

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Parent (December 31, 2018)

Repricing
Over 1 up to Non-
Up to 1 year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2018
Financial Assets
Cash and other cash items - - - 42,419 42,419
Due from BSP - - - 202,487 202,487
Due from other banks - - - 8,615 8,615
Interbank loans receivable and SPAR - - - 22,659 22,659
Financial assets at FVTPL 70 1,172 1,125 7,979 10,346
Financial assets at FVOCI - - - 29,993 29,993
Investment securities at amortized cost - 1 - 267,496 267,497
Loans and advances, net 757,320 81,133 224,477 63,026 1,125,956
Other financial assets - - - 4,426 4,426
Total financial assets 757,390 82,306 225,602 649,100 1,714,398
Financial Liabilities
Deposit liabilities 534,119 708,636 104,452 - 1,347,207
Derivative financial liabilities 43 1,204 1,279 1,362 3,888
Bills payable and other borrowed funds 20,915 10,516 - 119,449 150,880
Due to BSP and other banks - - - 3,988 3,988
Manager’s checks and demand drafts
outstanding - - - 5,354 5,354
Other financial liabilities - - - 13,408 13,408
Total financial liabilities 555,077 720,356 105,731 143,561 1,524,725
Total interest gap 202,313 (638,050) 119,871 505,539 189,673

26.3 Liquidity risk

Liquidity risk is the risk that the BPI Group will be unable to meet its payment obligations associated with its
financial liabilities when they fall due, and to replace funds when they are withdrawn. The consequence may be the
failure to meet obligations to repay depositors and fulfill commitments to lend.

The BPI Group’s liquidity profile is observed and monitored through its metric, the Minimum Cumulative
Liquidity Gap (MCLG). The MCLG is the smallest net cumulative cash inflow (if positive) or the largest net
cumulative cash outflow (if negative) over the next three (3) months. The MCLG indicates the biggest funding
requirement in the short term and the degree of liquidity risk present in the current cash flow profile of the BPI
Group. A red flag is immediately raised and reported to management and the RMC when the MCLG level projected
over the next 3 months is about to breach the RMC-prescribed MCLG limit.

26.3.1 Liquidity risk management process

The BPI Group’s liquidity management process, as carried out within the BPI Group and monitored by the RMC
includes:

• Day-to-day funding managed by monitoring future cash flows to ensure that requirements can be met. This
includes replenishment of funds as they mature or as borrowed by customers;
• Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any
unforeseen interruption to cash flow;
• Monitoring liquidity gaps against internal and regulatory requirements;
• Managing the concentration and profile of debt maturities; and
• Performing periodic liquidity stress testing on the BPI Group’s liquidity position by assuming a faster rate of
withdrawals in its deposit base.

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Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and
month as these are key periods for liquidity management. The starting point for these projections is an analysis of
the contractual maturity of the financial liabilities and the expected collection date of the financial assets. Sources
of liquidity are regularly reviewed by the BPI Group to maintain a wide diversification by currency, geography,
counterparty, product and term.

The BPI Group also monitors unmatched medium-term assets, the level and type of undrawn lending
commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of
credit.

Liquidity Coverage Ratio (LCR)

Pursuant to BSP Circular No. 905 issued in 2016, the Parent Bank is required to hold and maintain an adequate
level of unencumbered High Quality Liquid Assets (HQLA) that are sufficient to meet its estimated total cash
outflows over a 30 calendar-day period of liquidity stress. The LCR is the ratio of HQLAs to total net cash outflows
which should be no lower than 100% on a daily basis. It is designed to promote short-term resilience of the BPI
Group’s liquidity risk profile to withstand significant liquidity shocks that may last over 30 calendar days. HQLA
represents the Parent Bank’s stock of liquid assets that qualify for inclusion in the LCR which consists mainly of
cash, regulatory reserves and unencumbered high-quality liquid securities. HQLAs therefore, serve as defense
against potential stress events.

The main drivers of the Parent Bank’s LCR comprise the changes in the total stock of HQLA as well as changes in
net cash outflows related to deposits, unsecured borrowings, commitment facilities, derivatives cash flows and
cash inflows from maturing corporate, business and retail loans, among others. Cash outflows from derivatives
contracts are effectively offset by derivatives cash inflows. These two are accorded 100% outflow and inflow factors,
respectively.

Net Stable Funding Ratio (NSFR)

On January 1, 2019, the Parent Bank adopted BSP Circular No. 1007 issued in 2018 regarding the NSFR
requirement. The NSFR is aimed at strengthening the Parent Bank’s long-term resilience by maintaining a stable
funding in relation to its assets and off-balance sheet items as well as to limit the maturity transformation risk of
the BPI Group. The NSFR is expressed as the ratio of available stable funding and the required stable funding and
complements the LCR as it takes a longer view of the BPI Group’s liquidity risk profile. The BPI Group’s capital,
retail deposits and long-term debt are considered as stable funding sources whereas the BPI Group’s assets
including, but not limited to, performing and non-performing loans and receivables, HQLA and non-HQLA
securities as well as off-balance items form part of the required stable funding. The Parent Bank’s solo and
consolidated NSFRs are well-above the regulatory minimum of 100%.

The Parent Bank maintains a well-diversified funding base and has a substantial amount of core deposits, thereby
avoiding undue concentrations by counterparty, maturity, and currency. The Parent Bank manages its liquidity
position through asset-liability management activities supported by a well-developed funds management practice
as well as a sound risk management system. As part of risk oversight, the Parent Bank monitors its liquidity risk on
a daily basis, in terms of single currency and significant currencies, to ensure it is operating within the risk appetite
set by the BOD and to assess ongoing compliance with the minimum requirement of the liquidity ratios.
Furthermore, the Parent Bank has a set of policies and escalation procedures in place that govern its day-to-day
risk monitoring and reporting processes.

The table below shows the actual liquidity metrics of the BPI Group and the Parent Bank:

Consolidated Parent
2019 2018 2019 2018
Liquidity ratio 167.06% 160.92% 168.13% 160.10%
Net stable funding ratio 130.74% 141.99% 122.65% 139.81%
Leverage ratio 10.70% 10.43% 10.06% 9.79%
Total exposure measure 2,224,550 2,120,270 1,887,364 1,795,947

The improvement in the Parent Bank’s LCR in 2019 was attained due to growing portfolio of government securities
while cash, reserves and claims on the BSP make up on average 53% of the total stock of HQLA.

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26.3.2 Maturity profile - Non-derivative financial instruments

The tables below present the maturity profile of non-derivative financial instruments based on undiscounted cash
flows (inclusive of interest) which the BPI Group uses to manage the inherent liquidity risk. The maturity analysis
is based on the remaining period from the end of the reporting period to the contractual maturity date or, if earlier,
the expected date the financial asset will be realized or the financial liability will be settled.

Consolidated (December 31, 2019)

Over 1 up to
Up to 1 year 3 years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2019
Financial Assets
Cash and other cash items 47,256 - - 47,256
Due from BSP 207,845 - - 207,845
Due from other banks 22,356 - - 22,356
Interbank loans receivable and SPAR 22,551 17 114 22,682
Financial assets at FVTPL 6,862 1,558 16,756 25,176
Financial assets at FVOCI 10,575 8,161 47,820 66,556
Investment securities at amortized cost 46,278 84,560 221,296 352,134
Loans and advances, net 656,088 267,511 581,062 1,504,661
Other financial assets 2,591 - - 2,591
Total financial assets 1,022,402 361,807 867,048 2,251,257
Financial Liabilities
Deposit liabilities 796,447 359,265 539,631 1,695,343
Bills payable and other borrowed
funds 49,564 57,590 46,207 153,361
Due to BSP and other banks 1,288 - - 1,288
Manager’s checks and demand drafts
outstanding 8,299 - - 8,299
Other financial liabilities 9,392 - - 9,392
Total financial liabilities 864,990 416,855 585,838 1,867,683
Total maturity gap 157,412 (55,048) 281,210 383,574

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Consolidated (December 31, 2018)

Over 1 up to
Up to 1 year 3 years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2018
Financial Assets
Cash and other cash items 43,536 - - 43,536
Due from BSP 225,923 - - 225,923
Due from other banks 12,477 - - 12,477
Interbank loans receivable and SPAR 35,028 12 135 35,175
Financial assets at FVTPL 8,740 1,231 4,170 14,141
Financial assets at FVOCI 29,154 1,601 7,730 38,485
Investment securities at amortized cost 42,442 59,550 251,643 353,635
Loans and advances, net 580,825 205,331 604,684 1,390,840
Other financial assets 5,667 - - 5,667
Total financial assets 983,792 267,725 868,362 2,119,879
Financial Liabilities
Deposit liabilities 923,895 878,739 195,585 1,998,219
Bills payable and other borrowed
funds 97,507 77,117 475 175,099
Due to BSP and other banks 3,988 - - 3,988
Manager’s checks and demand drafts
outstanding 6,931 - - 6,931
Other financial liabilities 19,313 - - 19,313
Total financial liabilities 1,051,634 955,856 196,060 2,203,550
Total maturity gap (67,842) (688,131) 672,302 (83,671)

Parent (December 31, 2019)

Over 1 up to
Up to 1 year 3 years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2019
Financial Assets
Cash and other cash items 45,982 - - 45,982
Due from BSP 181,815 - - 181,815
Due from other banks 18,356 - - 18,356
Interbank loans receivable and SPAR 18,245 17 114 18,376
Financial assets at FVTPL 926 1,522 15,612 18,060
Financial assets at FVOCI 5,023 8,074 45,980 59,077
Investment securities at amortized cost 25,347 76,282 209,930 311,559
Loans and advances, net 605,833 196,549 449,524 1,251,906
Other financial assets, net 2,767 - - 2,767
Total financial assets 904,294 282,444 721,160 1,907,898
Financial Liabilities
Deposit liabilities 711,910 301,381 443,167 1,456,458
Bills payable and other borrowed
funds 36,025 45,421 45,988 127,434
Due to BSP and other banks 1,288 - - 1,288
Manager’s checks and demand drafts
outstanding 6,421 - - 6,421
Other financial liabilities 4,801 - - 4,801
Total financial liabilities 760,445 346,802 489,155 1,596,402
Total maturity gap 143,849 (64,358) 232,005 311,496

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Parent (December 31, 2018)

Over 1 up to
Up to 1 year 3 years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2018
Financial Assets
Cash and other cash items 42,419 - - 42,419
Due from BSP 202,487 - - 202,487
Due from other banks 8,615 - - 8,615
Interbank loans receivable and SPAR 22,705 12 135 22,852
Financial assets at FVTPL 2,530 1,229 4,169 7,928
Financial assets at FVOCI 23,926 1,392 7,390 32,708
Investment securities at amortized cost 39,473 50,821 239,775 330,069
Loans and advances, net 520,744 145,807 479,908 1,146,459
Other financial assets, net 4,426 - - 4,426
Total financial assets 867,325 199,261 731,377 1,797,963
Financial Liabilities
Deposit liabilities 814,358 726,595 116,373 1,657,326
Bills payable and other borrowed
funds 85,037 76,747 - 161,784
Due to BSP and other banks 3,988 - - 3,988
Manager’s checks and demand drafts
outstanding 5,354 - - 5,354
Other financial liabilities 13,408 - - 13,408
Total financial liabilities 922,145 803,342 116,373 1,841,860
Total maturity gap (54,820) (604,081) 615,004 (43,897)

26.3.3 Maturity profile - Derivative instruments

(a) Derivatives settled on a net basis

The BPI Group’s derivatives that are settled on a net basis consist of interest rate swaps, non-deliverable forwards
and non-deliverable swaps. The table below presents the contractual undiscounted cash flows of interest rate
swaps based on the remaining period from December 31 to the contractual maturity dates that are subject to
offsetting, enforceable master netting arrangements and similar agreements.

Consolidated and Parent

Over 1 up to Over 3
Up to 1 year 3 years years Total
2019 (In Millions of Pesos)
Interest rate swap contracts - held for trading
- Inflow 334 472 1,050 1,856
- Outflow (81) (397) (936) (1,414)
- Net inflow 253 75 114 442
Non-deliverable forwards and swaps - held for trading
- Inflow 22 - - 22
- Outflow (107) (484) (356) (947)
- Net outflow (85) (484) (356) (925)

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Over 1 up to Over 3
Up to 1 year 3 years years Total
2018 (In Millions of Pesos)
Interest rate swap contracts - held for trading
- Inflow 99 1,285 1,317 2,701
- Outflow (59) (1,296) (1,485) (2,840)
- Net inflow 40 (11) (168) (139)
Non-deliverable forwards and swaps - held for trading
- Inflow 36,071 2,103 3,680 41,854
- Outflow (35,972) (2,120) (3,680) (41,772)
- Net inflow (outflow) 99 (17) - 82

(a) Derivatives settled on a gross basis

The BPI Group’s derivatives that are settled on a gross basis include foreign exchange derivatives mainly currency
forwards and currency swaps. The table below presents the contractual undiscounted cash flows of foreign
exchange derivatives based on the remaining period from reporting date to the contractual maturity dates.

Consolidated and Parent

Over 1 up to Over 3
Up to 1 year 3 years years Total
(In Millions of Pesos)
Foreign exchange derivatives - held for trading
2019
- Inflow 527 509 11 1,047
- Outflow (451) (66) - (517)
- Net inflow (outflow) 76 443 11 530
2018
- Inflow 127,002 4,184 - 131,186
- Outflow (127,082) (4,136) - (131,218)
- Net inflow (outflow) (80) 48 - (32)
Foreign exchange derivatives - held for hedging
- Inflow - 5,174 - 5,174
- Outflow - (5,316) - (5,316)
- Net (outflow) - (142) - (142)

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26.4 Fair value measurement

The following tables present the carrying value of assets and liabilities and the level of fair value hierarchy within
which the fair value measurements are categorized:

26.4.1 Assets and liabilities measured at fair value on a recurring or non-recurring basis

Consolidated (December 31, 2019)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 2,933 - 2,933 2,933
Trading assets
- Debt securities 21,099 17,562 3,537 21,099
- Equity securities 73 73 - 73
Financial assets at FVOCI
- Debt securities 51,079 50,995 84 51,079
- Equity securities 2,826 1,738 1,088 2,826
78,010 70,368 7,642 78,010
Financial liabilities
Derivative financial liabilities 2,877 - 2,877 2,877
Non-recurring measurements:
Assets held for sale, net 3,155 - 9,583 9,583

Consolidated (December 31, 2018)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 4,033 - 4,033 4,033
Trading assets
- Debt securities 12,450 11,656 794 12,450
- Equity securities 238 238 - 238
Financial assets at FVOCI
- Debt securities 35,531 35,089 442 35,531
- Equity securities 1,675 1,129 546 1,675
53,927 48,112 5,815 53,927
Financial liabilities
Derivative financial liabilities 3,891 - 3,891 3,891
Non-recurring measurements
Assets held for sale, net 3,363 - 9,859 9,859

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Parent Bank (December 31, 2019)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 2,923 - 2,923 2,923
Trading securities - debt securities 14,765 14,765 - 14,765
Financial assets at FVOCI
- Debt securities 47,009 47,009 - 47,009
- Equity securities 1,311 972 339 1,311
66,008 62,746 3,262 66,008
Financial liabilities
Derivative financial liabilities 2,877 - 2,877 2,877

Non-recurring measurements
Assets held for sale, net 342 - 3,296 3,296

Parent Bank (December 31, 2018)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 4,031 - 4,031 4,031
Trading securities - debt securities 6,315 5,528 787 6,315
Financial assets at FVOCI
- Debt securities 29,993 29,838 155 29,993
- Equity securities 590 406 184 590
40,929 35,772 5,157 40,929
Financial liabilities
Derivative financial liabilities 3,888 - 3,888 3,888

Non-recurring measurements
Assets held for sale, net 455 - 3,496 3,496

There are no assets and liabilities whose fair values fall under the Level 3 category as at December 31, 2019 and
2018. Likewise, there were no transfers between Level 1 and Level 2 during the years ended December 31, 2019
and 2018.

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26.4.2 Fair value disclosures of assets and liabilities not measured at fair value

Consolidated (December 31, 2019)

Carrying Fair value

Amount Level 1 Level 2 Total
Financial assets
Cash and other cash items 47,256 - 47,256 47,256
Due from BSP 207,845 - 207,845 207,845
Due from other banks 22,356 - 22,356 22,356
Interbank loans receivable and SPAR 22,570 - 22,610 22,610
Investment securities at amortized cost 275,105 276,454 - 276,454
Loans and advances, net 1,475,336 - 1,480,074 1,480,074
Other financial assets 2,591 - 2,591 2,591
Financial liabilities
Deposit liabilities 1,695,343 - 1,678,607 1,678,607
Bills payable and other borrowed funds 150,837 84,973 65,461 150,434
Due to BSP and other banks 2,946 - 2,946 2,946
Manager’s checks and demand drafts
outstanding 8,299 - 8,299 8,299
Other financial liabilities 9,392 - 9,392 9,392
Non-financial assets
Investment properties 155 638 638

Consolidated (December 31, 2018)

Carrying Fair value

Amount Level 1 Level 2 Total
Financial assets
Cash and other cash items 43,536 - 43,536 43,536
Due from BSP 225,907 - 225,907 225,907
Due from other banks 12,477 - 12,480 12,480
Interbank loans receivable and SPAR 34,323 - 34,373 34,373
Investment securities at amortized cost 287,571 254,850 3,802 258,652
Loans and advances, net 1,354,896 - 1,362,803 1,362,803
Other financial assets 5,667 - 5,667 5,667
Financial liabilities
Deposit liabilities 1,585,746 - 1,585,746 1,585,746
Bills payable and other borrowed funds 166,901 - 163,545 163,545
Due to BSP and other banks 3,988 - 3,988 3,988
Manager’s checks and demand drafts
outstanding 6,931 - 6,931 6,931
Other financial liabilities 19,313 - 19,313 19,313
Non-financial assets
Investment properties 129 - 1,786 1,786

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Parent Bank (December 31, 2019)

Carrying Fair value

Amount Level 1 Level 2 Total
Financial assets
Cash and other cash items 45,982 - 45,982 45,982
Due from BSP 181,815 - 181,815 181,815
Due from other banks 18,356 - 18,356 18,356
Interbank loans receivable and SPAR 18,346 - 18,405 18,405
Investment securities at amortized cost 252,006 252,964 - 252,964
Loans and advances, net 1,231,776 - 1,230,551 1,230,551
Other financial assets 2,767 - 2,767 2,767
Financial liabilities
Deposit liabilities 1,456,458 - 1,450,164 1,450,164
Bills payable and other borrowed funds 126,529 75,463 50,663 126,126
Due to BSP and other banks 1,288 - 1,288 1,288
Manager’s checks and demand drafts
outstanding 6,421 - 6,421 6,421
Other financial liabilities 4,801 - 4,801 4,801
Non-financial assets
Investment properties 143 638 638

Parent Bank (December 31, 2018)

Carrying Fair value

Amount Level 1 Level 2 Total
Fair values disclosed (In Millions of Pesos)
Financial assets
Cash and other cash items 42,419 - 42,419 42,419
Due from BSP 202,487 - 202,487 202,487
Due from other banks 8,615 - 8,615 8,615
Interbank loans receivable and SPAR 22,659 - 22,709 22,709
Investment securities at amortized cost 267,497 236,113 3,775 239,888
Loans and advances, net 1,125,956 - 1,144,903 1,144,903
Other financial assets 4,426 - 4,426 4,426
Financial liabilities
Deposit liabilities 1,347,207 - 1,347,207 1,347,207
Bills payable and other borrowed funds 150,880 - 150,533 150,533
Due to BSP and other banks 3,988 - 3,988 3,988
Manager’s checks and demand drafts 5,354
outstanding - 5,354 5,354
Other financial liabilities 13,408 - 13,408 13,408
Non-financial assets
Investment properties 118 - 1,786 1,786

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26.5 Insurance risk management

The non-life insurance entities decide on the retention, or the absolute amount that they are ready to assume
insurance risk from one event. The retention amount is a function of capital, experience, actuarial study and risk
appetite or aversion.

In excess of the retention, these entities arrange reinsurances either thru treaties or facultative placements. They
also accredit reinsurers based on certain criteria and set limits as to what can be reinsured. The reinsurance
treaties and the accreditation of reinsurers require BOD’s approval.

Note 27 - Capital management

Capital management is understood to be a facet of risk management. The primary objective of the BPI Group is the
generation of recurring acceptable returns to shareholders’ capital. To this end, the BPI Group’s policies, business
strategies and activities are directed towards the generation of cash flows that are in excess of its fiduciary and
contractual obligations to its depositors, and to its various funders and stakeholders.

Cognizant of its exposure to risks, the BPI Group maintains sufficient capital to absorb unexpected losses, stay in
business for the long haul, and satisfy regulatory requirements. The BPI Group further understands that its
performance, as well as the performance of its various units, should be measured in terms of returns generated vis-
à-vis allocated capital and the amount of risk borne in the conduct of business.

Effective January 1, 2014, the BSP, through its Circular 781, requires each bank and its financial affiliated
subsidiaries to adopt new capital requirements in accordance with the provisions of Basel III. The new guidelines
are meant to strengthen the composition of the bank's capital by increasing the level of core capital and regulatory
capital. The Circular sets out minimum Common Equity (CET1) ratio and Tier 1 Capital ratios of 6% and 7.5%,
respectively. A capital conservation buffer of 2.5%, comprised of CET1 capital, was likewise imposed. The
minimum required capital adequacy ratio remains at 10% which includes the capital conservation buffer.

Information on the regulatory capital is summarized below:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Tier 1 capital 262,873 244,276 262,239 243,519
Tier 2 capital 14,079 13,116 11,500 10,795
Gross qualifying capital 276,952 257,392 273,739 254,314
Less: Regulatory adjustments/required deductions 24,810 23,152 72,400 68,491
Total qualifying capital 252,142 234,240 201,339 185,823

Risk weighted assets 1,568,855 1,455,746 1,347,976 1,252,790

CAR (%) 16.07 16.09 14.94 14.83
CET1 (%) 15.17 15.19 14.08 13.97

The BPI Group has fully complied with the CAR requirement of the BSP.

Likewise, regulatory capital structures of certain subsidiaries on a standalone basis are managed to meet the
requirements of the relevant regulatory bodies (i.e. Insurance Commission, SEC, PSE etc.). These subsidiaries have
fully complied with the applicable regulatory capital requirements.

As part of the reforms of the PSE to expand capital market and improve transparency among listed firms, PSE
requires listed entities to maintain a minimum of ten percent (10%) of their issued and outstanding shares, exclusive
of any treasury shares, held by the public. The Parent Bank is likewise fully compliant with this requirement.

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 Notes to Financial Statements

Note 28 - Commitments and Contingencies

At present, there are lawsuits, claims and tax assessments pending against the BPI Group. In the opinion of
management, after reviewing all actions and proceedings and court decisions with legal counsels, the aggregate
liability or loss, if any, arising therefrom will not have a material effect on the BPI Group’s financial position or
financial performance.

BPI and some of its subsidiaries are defendants in legal actions arising from normal business activities. Management
believes that these actions are without merit or that the ultimate liability, if any, resulting from them will not
materially affect the financial statements.

In the normal course of business, the BPI Group makes various commitments that are not presented in the financial
statements. The BPI Group does not anticipate any material losses from these commitments.

Note 29 - Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.

29.1 Basis of preparation

The financial statements of the BPI Group have been prepared in accordance with Philippine Financial Reporting
Standards (PFRS). The term PFRS in general includes all applicable PFRS, Philippine Accounting Standards
(PAS), and interpretations of the Philippine Interpretations Committee (PIC), Standing Interpretations Committee
(SIC) and International Financial Reporting Interpretations Committee (IFRIC) which have been approved by the
Financial Reporting Standards Council (FRSC) and adopted by the SEC.

As allowed by the SEC, the pre-need subsidiary of the Parent Bank continues to follow the provisions of the
Pre-Need Uniform Chart of Accounts (PNUCA) prescribed by the SEC and adopted by the Insurance Commission.

The financial statements comprise the statements of condition, statements of income and statements of
comprehensive income shown as two statements, statements of changes in capital funds, statements of cash flows
and the notes.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation
of financial assets at FVTPL, financial assets at FVOCI, and plan assets of the BPI Group’s defined benefit plans.

The preparation of financial statements in conformity with PFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the BPI Group’s
accounting policies. Changes in assumptions may have a significant impact on the financial statements in the
period the assumptions changed. Management believes that the underlying assumptions are appropriate and that
the financial statements therefore fairly present the financial position and results of the BPI Group. The areas
involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to
the financial statements are shown below

Critical accounting estimates

• Fair value of derivatives and other financial instruments (Note 7)
• Calculation of defined benefit obligation (Note 23)
• Useful lives of bank premises, furniture, fixtures and equipment (Note 11)
• Impairment of investments subsidiaries and associates (Note 12)

Critical accounting judgments

• Classification of investment securities at amortized cost (Note 9)
• Realization of deferred income tax assets (Note 13)

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29.2 Changes in accounting policy and disclosures

(a) New standards adopted by the BPI Group

The BPI Group has adopted the following standards effective January 1, 2019:

PFRS 16, ‘Leases’

PFRS 16 replaces the guidance of PAS 17 that relate to the accounting by lessees and the recognition of almost all
leases in the balance sheet. PFRS 16 removes the current distinction between operating and financing leases and
requires recognition of an asset (the right-of-use asset) and a lease liability to pay rentals for virtually all lease
contracts. Under PFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.

On adoption of PFRS 16, the BPI Group recognized lease liabilities and right-of-use assets in relation to leases
which had previously been classified as ‘operating leases’ under the principles of PAS 17. These liabilities were
measured at the present value of the remaining lease payments, discounted using the lessee’s incremental
borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease
liabilities on January 1, 2019 was 6.87% and 4.25% for the Subsidiaries and BPI Parent, respectively.

The reconciliation between the operating lease commitments under PAS 17 at December 31, 2018 discounted using
the BPI Group’s incremental borrowing rate and the lease liability recognized as at January 1, 2019 is as follows:

Consolidated Parent
(In Millions of Pesos)
Operating lease commitments, December 31, 2018 11,896 10,161
Discounted amount using the incremental borrowing rate 8,926 7,696
Add: Finance lease liabilities recognized at December 31, 2018 - -
Less: Short-term leases recognized on a straight-line basis as expense 228 203
Low-value leases and contracts reassessed as service agreements 54 44
Lease liability, January 1, 2019 8,644 7,449

The associated right-of-use assets for property leases were measured at the amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the
statements of condition as at December 31, 2018. The amount of prepaid lease payments amount to P452 million
and P451 million for BPI Group and Parent Bank, respectively.

In applying PFRS 16 for the first time, the BPI Group has used the following practical expedients permitted by the
standard:
• the accounting for operating leases with a remaining lease term of less than 12 months as at
January 1, 2019 as short-term leases
• the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial
application
• the use of hindsight in determining the lease term where the contract contains options to extend or terminate
the lease
• apply the provisions of PFRS 16 to contracts that were previously identified as leases applying PAS 7,
‘Statement of cash flows’ and IFRIC 4, ‘Determining whether an arrangement contains a lease’.

Philippine Interpretation IFRIC 23, Uncertainty over Income Tax Treatments (effective for annual periods
beginning on or after January 1, 2019)
It has been clarified previously that PAS 12, not PAS 37, Provisions, Contingent Liabilities and Contingent Assets,
applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognize and measure
deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment.

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An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that
treatment will be accepted by the tax authority. For example, a decision to claim a deduction for a specific expense
or not to include a specific item of income in a tax return is an uncertain tax treatment if its acceptability is
uncertain under tax law. IFRIC 23 applies to all aspects of income tax accounting where there is an uncertainty
regarding the treatment of an item, including taxable profit or loss, the tax bases of assets and liabilities, tax losses
and credits and tax rates.

The adoption of the above interpretation did not have a material impact on the financial statements of the BPI
Group.

(b) New standards, amendments and interpretations not yet adopted by the BPI Group

The following new accounting standards and interpretations are not mandatory for December 31, 2019 reporting
period and have not been early adopted by the BPI Group:

PFRS 17, Insurance Contracts (effective for annual periods beginning on or after January 1, 2022)
PFRS 17 was issued in May 2017 as replacement for PFRS 4, Insurance Contracts. PFRS 17 represents a
fundamental change in the accounting framework for insurance contracts requiring liabilities to be measured at a
current fulfilment value and provides a more uniform measurement and presentation approach for all insurance
contracts. It requires a current measurement model where estimates are re-measured each reporting period.
Contracts are measured using the building blocks of (1) discounted probability-weighted cash flows, (2) an explicit
risk adjustment, and (3) a contractual service margin (“CSM”) representing the unearned profit of the contract
which is recognized as revenue over the coverage period. The standard allows a choice between recognizing
changes in discount rates either in the income statement or directly in other comprehensive income. The choice is
likely to reflect how insurers account for their financial assets under PFRS 9. An optional, simplified premium
allocation approach is permitted for the liability for the remaining coverage for short duration contracts, which are
often written by non-life insurers. The new rules will affect the financial statements and key performance
indicators of all entities that issue insurance contracts or investment contracts with discretionary participation
features.

The Insurance Commission, in coordination with Philippine Insurers and Reinsurers Association, is currently
reviewing the impact of PFRS 17 across the entire industry and has established a project team to manage the
implementation approach. The BPI Group is assessing the quantitative impact of PFRS 17 as of reporting date.

Likewise, the following amendments are not mandatory for December 31, 2019 reporting period and have not been
early adopted by the BPI Group:

• Amendments to PAS 1, Presentation of Financial Statements and PAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors
• Amendments to PFRS 3, Business Combinations
• Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures
• Revised Conceptual Framework for Financial Reporting

The adoption of the above amendments is not expected to have a material impact on the financial statements of the
BPI Group.

29.3 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. The BPI Group recognizes a financial instrument in the statements of
condition when, and only when, the BPI Group becomes a party to the contractual provisions of the instrument.

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29.3.1Measurement methods

Amortized cost and effective interest rate

The amortized cost is the amount at which the financial asset or financial liability is measured at initial recognition
minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of
any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss
allowance.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial asset or financial liability to the gross carrying amount of a financial asset (i.e. its
amortized cost before any impairment allowance) or to the amortized cost of a financial liability. The calculation
does not consider expected credit losses and includes transaction costs, premiums or discounts and fees and points
paid or received that are integral to the effective interest rate, such as origination fees. For purchased or originated
credit-impaired (‘POCI’) financial assets – assets that are credit-impaired (see definition on Note 29.3.2.2) at
initial recognition - the BPI Group calculates the credit-adjusted effective interest rate, which is calculated based
on the amortized cost of the financial asset instead of its gross carrying amount and incorporates the impact of
expected credit losses in estimated future cash flows.

When the BPI Group revises the estimates of future cash flows, the carrying amount of the respective financial
assets or financial liability is adjusted to reflect the new estimate discounted using the original effective interest
rate. Any changes are recognized in profit or loss.

Interest income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets,
except for:
• POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the amortized
cost of the financial asset.
• Financial assets that are not ‘POCI’ but have subsequently become credit-impaired (or ‘Stage 3’), for which
interest revenue is calculated by applying the effective interest rate to their amortized cost (i.e. net of the
expected credit loss provision).

Initial recognition and measurement

Financial assets and financial liabilities are recognized when the entity becomes a party to the contractual
provisions of the instrument. Regular way purchases and sales of financial assets are recognized on
trade-date, the date on which the BPI Group commits to purchase or sell the asset.

At initial recognition, the BPI Group measures a financial asset or financial liability at its fair value plus or minus,
in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are
incremental and directly attributable to the acquisition or issue of the financial asset or financial liability, such as
fees and commissions. Transaction costs of financial assets and financial liabilities carried at fair value through
profit or loss are expensed in profit or loss. Immediately after initial recognition, an expected credit loss allowance
(ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments measured
at FVOCI, as described in Note 29.3.2.1 below, which results in the loss provision being recognized in profit or loss
when an asset is newly originated.

When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the
BPI Group recognizes the difference as follows:

• When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a
Level 1 input) or based on a valuation technique that uses only data from observable markets, the difference is
recognized as a gain or loss.
• In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is
determined individually. It is either amortized over the life of the instrument, deferred until the instrument’s
fair value can be determined using market observable inputs, or realized through settlement.

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29.3.2 Financial assets

29.3.2.1 Classification and subsequent measurement

The BPI Group classifies its financial assets in the following measurement categories: at fair value through profit or
loss, fair value through other comprehensive income and at amortized cost. The classification requirements for
debt and equity instruments are described below:

Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s
perspective, such as loans and advances, due from BSP and other banks, government and corporate bonds and
other financial receivables.

Classification and subsequent measurement of debt instruments depend on the BPI Group’s business model for
managing the asset and the cash flow characteristics of the asset.

Based on these factors, the BPI Group classifies its debt instruments into one of the following three measurement
categories:

• Amortized cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest (‘SPPI’), and that are not designated at fair value through profit or loss, are measured
at amortized cost. The carrying amount of these assets is adjusted by any expected credit loss allowance
recognized and measured. Interest income from these financial assets is included in ‘Interest income’ using
the effective interest rate method. Amortized cost financial assets include cash and other cash items, due from
BSP, due from other banks, interbank loans receivables and SPAR, loans and advances, and other financial
assets.

• Fair value through other comprehensive income (FVOCI)

Financial assets that are held for collection of contractual cash flows and for selling the assets, where the
assets’ cash flows represent solely payments of principal and interest, and that are not designated at FVTPL,
are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount
are taken through other comprehensive income, except for the recognition of impairment gains or losses,
interest revenue and foreign exchange gains and losses on the instrument’s amortized cost which are
recognized in the statements of income. When the financial asset is derecognized, the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest
income from these financial assets is included in ‘Interest income’ using the effective interest rate method.

• Fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or
loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and
is not part of a hedging relationship is recognized in profit or loss and presented in the statements of income
within ‘Trading gain on securities’ in the period in which it arises, unless it arises from debt instruments that
were designated at fair value or which are not held for trading, in which case they are presented separately.

Business model
The business model reflects how the BPI Group manages the assets in order to generate cash flows. That is,
whether the BPI Group’s objective is solely to collect the contractual cash flows from the assets or is to collect both
the contractual cash flows and cash flows arising from the sale of assets. If neither of these is applicable, then the
financial assets are classified and measured at fair value through profit or loss. Factors considered by the BPI
Group in determining the business model for a group of assets include past experience on how the cash flows for
these assets were collected, how the asset’s performance is evaluated and reported to key management personnel,
how risks are assessed and managed and how managers are compensated.

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Solely Payment of Principal and Interest (SPPI)
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and
sell, the BPI Group assesses whether the financial instruments’ cash flows represent solely payments of principal
and interest (the ‘SPPI test’). In making this assessment, the BPI Group considers whether the contractual cash
flows are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of
money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending
arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic
lending arrangement, the related financial asset is classified and measured at fair value through profit or loss.

The BPI Group reclassifies debt investments when and only when its business model for managing those assets
changes. The reclassification takes place from the start of the first reporting period following the change. Such
changes are expected to be very infrequent and none occurred during the period.

Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is,
instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s
net assets.

The BPI Group subsequently measures all equity investments at fair value through profit or loss, except where the
BPI Group’s management has elected, at initial recognition, to irrevocably designate an equity investment at fair
value through other comprehensive income. The BPI Group’s policy is to designate equity investments as FVOCI
when those investments are held for purposes other than to generate investment returns. When this election is
used, fair value gains and losses are recognized in other comprehensive income and are not subsequently
reclassified to profit or loss, even on disposal. Impairment losses (and reversal of impairment losses) are not
reported separately from other changes in fair value. Dividends, when representing a return on such investments,
continue to be recognized in profit or loss as ‘Other income’ when the BPI Group’s right to receive payments is
established. Gains and losses on equity investments at fair value through profit or loss are included in the ‘Trading
gain on securities’ in the statements of income.

29.3.2.2 Impairment of amortized cost and FVOCI financial assets

The BPI Group assesses impairment as follows:

• individually for loans that exceed specified thresholds. Where there is objective evidence of impairment,
individually assessed provisions will be recognized; and
• collectively for loans below the specified thresholds noted above or if there is no objective evidence of
impairment. These loans are included in a group of loans with similar risk characteristics and collectively
assessed for impairment. If there is objective evidence that the group of loans is collectively impaired,
collectively assessed provisions will be recognized.

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Expected credit losses

The BPI Group assesses on a forward-looking basis the ECL associated with its debt instrument assets carried at
amortized cost and FVOCI and with the exposure arising from loan commitments. The BPI Group recognizes a loss
allowance for such losses at each reporting date. The measurement of ECL reflects:
• an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
• the time value of money; and
• reasonable and supportable information that is available without undue cost or effort at the reporting date
about past events, current conditions and forecasts of future economic conditions.

PFRS 9 outlines a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition as
summarized below:
• A financial instrument that is not credit-impaired on initial recognition is classified in “Stage 1” and has its credit
risk continuously monitored by the BPI Group.
• If a significant increase in credit risk since initial recognition is identified, the financial instrument is moved to
“Stage 2” but is not yet deemed to be credit-impaired. The BPI Group determines SICR based on prescribed
benchmarks approved by the Board of the Directors.
• If the financial instrument is credit-impaired, the financial instrument is then moved to “Stage 3”.
• Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of lifetime expected
credit losses that results from default events possible within the next 12 months. Instruments in Stages 2 or 3
have their ECL measured based on expected credit losses on a lifetime basis.
• A pervasive concept in measuring ECL in accordance with PFRS 9 is that it should consider forward-looking
information.
• POCI financial assets are those financial assets that are credit impaired on initial recognition. Their ECL is always
measured on a lifetime basis (Stage 3). The BPI Group has no POCI as at December 31, 2019 and 2018.

For expected credit loss provisions modelled on a collective basis, a grouping of exposures is performed on the
basis of shared risk characteristics, such that risk exposures within a group are homogeneous.

Determination of significant increase in credit risk (SICR)

The BPI Group compares the probabilities of default occurring over its expected life as at the reporting date with
the probability of default occurring over its expected life on the date of initial recognition to determine significant
increase in credit risk. Since comparison is made between forward-looking information at reporting date against
initial recognition, the deterioration in credit risk may be triggered by the following factors:
• substantial deterioration in credit quality as measured by the applicable internal or external ratings or credit
score or the shift from investment grade category to non-investment grade category;
• adverse changes in business, financial and/or economic conditions of the borrower;
• early warning signs of worsening credit where the ability of the counterparty to honor his obligation is
dependent upon the business or economic condition;
• the account has become past due beyond 30 days where an account is classified under special monitoring
category (refer to Note 26.1.2 for the description of special monitoring); and
• expert judgment for the other quantitative and qualitative factors which may result to SICR as defined by the
BPI Group.

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Measuring ECL -Inputs, assumptions and estimation techniques
The ECL is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit
risk has occurred since initial recognition or whether an asset is considered to be credit-impaired. Expected credit
losses are the discounted product of the PD, EAD and LGD, defined as follows:

• The PD represents the likelihood that the borrower will default (as per “Definition of default and credit-
impaired” above), either over the next 12 months (12M PD), or over the remaining life (lifetime PD) of the
asset.

• EAD is based on the amounts the BPI Group expects to be owed at the time of default, over the next 12 months
(12M EAD) or over the remaining life (lifetime EAD). For example, for a revolving commitment, the BPI
Group includes the current drawn balance plus any further amount that is expected to be drawn up to the
current contractual limit by the time of default, should it occur.

The 12-month and lifetime EADs are determined based on the expected payment profile, which varies by
product type.

- For amortizing products and bullet repayment loans, this is based on the contractual repayments owed by
the borrower over a 12-month or lifetime basis.
- For committed credit lines, the exposure at default is predicted by taking current drawn balance and
adding a “credit conversion factor” which allows for the expected drawdown of the remaining limit by the
time of default.

• LGD represents the BPI Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by type
of counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is
expressed as a percentage loss per unit of exposure at the time of default.

The LGDs are determined based on the factors which impact the recoveries made post-default.

- For secured products, this is primarily based on collateral type and projected collateral values, historical
discounts to market/book values due to forced sales, time to repossession and recovery costs observed.
- For unsecured products, LGDs are typically set at product level due to the limited differentiation in
recoveries achieved across different borrowers. These LGDs are influenced by collection strategies and
historical recoveries.

The ECL is determined by multiplying the PD, LGD and EAD together for each individual exposure or collective
segment. This effectively calculates an ECL for each future year, which is then discounted back to the reporting
date and summed. The discount rate used in the ECL calculation is the original effective interest rate or an
approximation thereof.

The lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile looks at
how defaults develop on a portfolio from the point of initial recognition throughout the life of the loans. The
maturity profile is based on historical observed data and is assumed to be the same across all assets within a
portfolio and credit grade band.

Forward-looking economic information is also included in determining the 12-month and lifetime PD. These
assumptions vary by product type.

The assumptions underlying the ECL calculation—such as how the maturity profile of the PDs and how collateral
values change—are monitored and reviewed regularly.

There have been no significant changes in estimation techniques or significant assumptions made during the
reporting period from the time of the adoption of PFRS 9 on January 1, 2018 to the reporting date.

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Forward-looking information incorporated in the ECL models

The BPI Group incorporates historical and current information, and forecasts forward-looking events and key
economic variables that are assessed to impact credit risk and expected credit losses for each portfolio.
Macroeconomic variables that affect a specific portfolio’s non-performing loan rate(s) are determined through
statistical modelling and the application of expert judgment. The BPI Group’s economics team establishes possible
global and domestic economic scenarios. With the use of economic theories and conventions, expert judgment and
external forecasts, the economics team develops assumptions to be used in forecasting variables in the next five (5)
years, subsequently reverting to long run-averages. The probability-weighted ECL is calculated by running each
scenario through the relevant ECL models and multiplying it by the appropriate scenario weighting.

The estimation and application of forward-looking information requires significant judgment. As with any
economic forecasts, the projections and likelihood of occurrences are subject to a high degree of inherent
uncertainty and therefore the actual outcomes may be significantly different to those projected. The scenarios and
their attributes are reassessed at each reporting date. Information regarding the forward-looking economic
variables and the relevant sensitivity analysis is disclosed in Note 26.

Financial assets with low credit risk

Loss allowance for financial assets at amortized cost and FVOCI that have low credit risk is limited to 12-month
expected credit losses. Management considers “low credit risk” for listed government bonds to be an investment
grade credit rating with at least one major rating agency. Other debt instruments are considered to be low credit
risk when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow
obligations in the near term.

Definition of default and credit-impaired assets

The BPI Group considers a financial instrument in default or credit-impaired, when it meets one or more of the
following criteria:

Quantitative criteria
The borrower is more than 90 days past due on its contractual payments (with the exception of credit cards and
micro-finance loans where a borrower is required to be 90 days past due and over 7 days past due, respectively, to
be considered in default).

Qualitative criteria
The counterparty is experiencing significant financial difficulty which may lead to non-payment of loan as may be
indicated by any or combination of the following events:

• The counterparty is in long-term forbearance;

• The counterparty is insolvent;
• The counterparty is in breach of major financial covenant(s) which lead(s) to event of default;
• An active market for the security has disappeared;
• Granting of concession that would not be otherwise considered due to economic or contractual reasons
relating to the counterparty’s financial difficulty;
• It is becoming probable that the counterparty will enter bankruptcy or other financial reorganization; and
• Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

The criteria above have been applied to all financial instruments held by the BPI Group and are consistent with the
definition of default used for internal credit risk management purposes. The default definition has been applied
consistently to model the probability of default, exposure at default (EAD), and loss given default (LGD)
throughout the BPI Group’s expected credit loss calculations.

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The BPI Group’s definition of default is substantially consistent with non-performing loan definition of the BSP.
For cross-border, treasury and debt securities, these are classified as defaulted based on combination of BSP and
external credit rating agency definitions.

29.3.3 Modification of loans

The BPI Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When
this happens, the BPI Group assesses whether or not the new terms are substantially different to the original terms.
The BPI Group does this by considering, among others, the following factors:

• If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to
amounts the borrower is expected to be able to pay.
• Significant extension of the loan term when the borrower is not in financial difficulty.
• Significant change in the interest rate.
• Change in the currency the loan is denominated in.
• Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated
with the loan.

If the terms are substantially different, the BPI Group derecognizes the original financial asset and recognizes a
‘new’ asset at fair value and recalculates a new effective interest rate for the asset. The date of renegotiation is
consequently considered to be the date of initial recognition for impairment calculation purposes, including for the
purpose of determining whether a significant increase in credit risk has occurred. However, the BPI Group also
assesses whether the new financial asset recognized is deemed to be credit-impaired at initial recognition,
especially in circumstances where the renegotiation was driven by the debtor being unable to make the originally
agreed payments. Differences in the carrying amount are also recognized in the statements of income as a gain or
loss on derecognition.

29.3.4 Derecognition of financial assets other than modification

Financial assets, or a portion thereof, are derecognized when the contractual rights to receive the cash
flows from the assets have expired, or when they have been transferred and either (i) the BPI Group transfers
substantially all the risks and rewards of ownership, or (ii) the BPI Group neither transfers nor retains
substantially all the risks and rewards of ownership and the BPI Group has not retained control.

The BPI Group enters into transactions where it retains the contractual rights to receive cash flows from assets
but assumes a contractual obligation to pay those cash flows to other entities and transfers substantially all of the
risks and rewards. These transactions are accounted for as ‘pass through’ transfers that result in derecognition if
the BPI Group:
• Has no obligation to make payments unless it collects equivalent amounts from the assets;
• Is prohibited from selling or pledging the assets; and
• Has an obligation to remit any cash it collects from the assets without material delay.

Collateral (shares and bonds) furnished by the BPI Group under standard repurchase agreements and securities
lending and borrowing transactions are not derecognized because the BPI Group retains substantially all the risks
and rewards on the basis of the predetermined repurchase price, and the criteria for derecognition are therefore
not met.

29.3.5 Write-off of financial assets

The BPI Group writes off financial assets when it has exhausted all practical recovery efforts and has concluded
there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery
include (i) ceasing enforcement activity and (ii) where the BPI Group’s recovery method is foreclosing on collateral
and the value of the collateral is such that there is no reasonable expectation of recovering in full.

The BPI Group may write-off financial assets that are still subject to enforcement activity. The write-off of loans is
approved by the BOD in compliance with the BSP requirements. Loans written-off are fully covered with
allowance.

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29.3.6 Financial liabilities

29.3.6.1 Classification of financial liabilities

The BPI Group classifies its financial liabilities in the following categories: financial liabilities at fair value through
profit or loss and financial liabilities at amortized cost.

(a) Financial liabilities at fair value through profit or loss

This category comprises two sub-categories: financial liabilities classified as held for trading, and financial
liabilities designated by the BPI Group as at fair value through profit or loss upon initial recognition.

A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling
or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also
categorized as held for trading unless they are designated and effective as hedging instruments. Gains and losses
arising from changes in fair value of financial liabilities classified as held for trading are included in the statements
of income and are reported as “Trading gains/losses on securities”. The BPI Group has no financial liabilities that
are designated at fair value through profit loss.

(b) Other liabilities measured at amortized cost

Financial liabilities that are not classified as at fair value through profit or loss fall into this category and are
measured at amortized cost. Financial liabilities measured at amortized cost include deposits from customers and
banks, bills payable, amounts due to BSP and other banks, manager’s checks and demand drafts outstanding,
subordinated notes and other financial liabilities under deferred credits and other liabilities.

29.3.6.2 Subsequent measurement and derecognition

Financial liabilities at fair value through profit or loss are subsequently carried at fair value. Other liabilities are
measured at amortized cost using the effective interest method.

Financial liabilities are derecognized when they have been redeemed or otherwise extinguished (i.e. when the
obligation is discharged or is cancelled or has expired). Collateral (shares and bonds) furnished by the BPI Group
under standard repurchase agreements and securities lending and borrowing transactions is not derecognized
because the BPI Group retains substantially all the risks and rewards on the basis of the predetermined repurchase
price, and the criteria for derecognition are therefore not met.

29.3.7 Loan commitments

Loan commitments are contracts in which the BPI Group is required to provide loans with pre-specified terms to
customers. These contracts, which are not issued at below-market interest rates, and are not settled net in cash or
by delivering or issuing another financial instrument, are not recorded in the statements of condition.

29.3.8 Derivative financial instruments

A derivative instrument is initially recognized at fair value on the date a derivative contract is entered into, and is
subsequently remeasured to its fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument or is held for
trading.

Changes in the fair value of any derivative instrument that does not qualify for hedge accounting (and therefore,
held for trading) are recognized immediately in profit or loss and are included in “Trading gain on securities”.

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Hedge accounting
The BPI Group designates derivatives as either:
• hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedges)
• hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly probable
forecast transactions (cash flow hedges), or
• hedges of a net investment in a foreign operation (net investment hedges).

At inception of the hedge relationship, the BPI Group documents the economic relationship between hedging
instruments and hedged items, including whether changes in the cash flows of the hedging instruments are
expected to offset changes in the cash flows of hedged items. The BPI Group documents its risk management
objective and strategy for undertaking its hedge transactions.

As disclosed in Note 7, the BPI Group has existing cash flow hedge activity. There are no fair value hedges or net
investment hedges as of reporting date.

Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in the “Cash flow hedge reserve” within equity. The gain or loss relating to the ineffective portion is
recognized immediately in profit or loss, within “Other operating income”.

When the group excludes the forward element of a forward contract and foreign currency basis spread of financial
instruments in the hedge designation, the fair value change of the forward element and currency basis spread that
relates to the hedged item (‘aligned forward element/currency basis spread’) is recognized within OCI in the costs
of hedging reserve within equity. If the group designates the full change in fair value of the derivative (including
forward points and currency basis spreads) the gains or losses relating to the effective portion of the change in fair
value of the entire derivative are recognized in the cash flow hedge reserve within equity.

Amounts accumulated in equity are reclassified to profit or loss within other operating income in the same periods
during which the hedged future cash flows affect profit or loss. However, if the amount is a loss and the BPI Group
expects that all or a portion of that loss will not be recovered in one or more future periods, the amount that is not
expected to be recovered shall immediately be reclassified to profit or loss.

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time shall be
reclassified to profit or loss in the same periods during which the future cash flows affect profit or loss. When the
future cash flows are no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that
were reported in equity are immediately reclassified to profit or loss.

29.3.8.1 Embedded derivatives

Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the
hybrid contract contains a host that is a financial asset, then the BPI Group assesses the entire contract for
classification and measurement in accordance with the policy outlined in Note 29.3.2 above. Otherwise, the
embedded derivatives are treated as separate derivatives when:

• Their economic characteristics and risks are not closely related to those of the host contract;
• A separate instrument with the same terms would meet the definition of a derivative; and
• The hybrid contract is not measured at fair value through profit or loss.

These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the
statements of income unless the BPI Group chooses to designate the hybrid contracts at fair value through profit or
loss.

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 Notes to Financial Statements

29.3.9 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.

The fair value of a non-financial asset is measured based on its highest and best use. The asset’s current use is
presumed to be its highest and best use.

The fair value of financial and non-financial liabilities takes into account non-performance risk, which is the risk
that the entity will not fulfill an obligation.

The BPI Group classifies its fair value measurements using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes
listed equity securities and debt instruments on exchanges (for example, PSE, Philippine Dealing and
Exchange Corp., etc.).
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices). This level includes the majority of
the over-the-counter (OTC) derivative contracts. The primary source of input parameters like LIBOR yield
curve or counterparty credit risk is Bloomberg.
• Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
This level includes equity investments and debt instruments with significant unobservable components. This
hierarchy requires the use of observable market data when available. The BPI Group considers relevant and
observable market prices in its valuations where possible. The BPI Group has no assets or liabilities classified
under Level 3 as at December 31, 2019 and 2018.

29.3.10 Interest income and expense

Interest income and expense are recognized in profit or loss for all interest-bearing financial instruments using the
effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability
and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument
or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.

When calculating the effective interest rate, the BPI Group estimates cash flows considering all contractual terms of
the financial instrument but does not consider future credit losses. The calculation includes all fees paid or received
between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other
premiums or discounts.

Once a financial asset or a group of similar financial assets have been written down as a result of an impairment loss,
interest income is recognized using the rate of interest used to discount the future cash flows for the purpose of
measuring impairment loss.

29.3.11 Dividend income

Dividend income is recognized in profit or loss when the BPI Group’s right to receive payment is established.

29.3.12 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statements of condition when there is
a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or
realize the asset and settle the liability simultaneously.

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As at December 31, 2019 and 2018, there are no financial assets and liabilities presented at net amounts due to
offsetting.

29.3.13 Cash and cash equivalents

Cash and cash equivalents consist of Cash and other cash items, Due from BSP, Due from other banks, and
Interbank loans receivable and securities purchased under agreements to resell with maturities of less than three
months from the date of acquisition and that are subject to insignificant risk of changes in value.

29.3.14 Repurchase and reverse repurchase agreements

Securities sold subject to repurchase agreements (‘repos’) are reclassified in the financial statements as pledged
assets when the transferee has the right by contract or custom to sell or repledge the collateral; the counterparty
liability is included in deposits from banks or deposits from customers, as appropriate. The difference between sale
and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest
method.

Securities purchased under agreements to resell (‘reverse repos’) are recorded as loans and advances to other
banks and customers and included in the statements of condition under “Interbank loans receivable and securities
purchased under agreements to resell”. Securities lent to counterparties are also retained in the financial
statements.

29.4 Consolidation

The subsidiaries financial statements are prepared for the same reporting year as the consolidated financial
statements. Refer to Note 1 for the list of the Parent Bank’s subsidiaries.

(a) Subsidiaries

Subsidiaries are all entities over which the BPI Group has control. The BPI Group controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The BPI Group also assesses existence of control where it does not have
more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto
control. De-facto control may arise in circumstances where the size of the BPI Group’s voting rights relative to the
size and dispersion of holdings of other shareholders give the BPI Group the power to govern the financial and
operating policies.

Subsidiaries are fully consolidated from the date on which control is transferred to the BPI Group. They are
de-consolidated from the date that control ceases.

The BPI Group applies the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued by the BPI Group. The consideration
transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On
an acquisition-by-acquisition basis, the BPI Group recognizes any non-controlling interest in the acquiree either at
fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the BPI Group is recognized at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognized in accordance with PFRS 9 either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is not
accounted for within equity.

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The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the
BPI Group’s share of the identifiable net assets acquired is recorded as goodwill. If the total of consideration
transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of
the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in
profit or loss.

Inter-company transactions, balances and unrealized gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the BPI Group, except for the pre-need subsidiary
which follows the provisions of the PNUCA as allowed by the SEC.

When the BPI Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the
date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the
initial carrying amount for purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in
respect of that entity are accounted for as if the BPI Group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or
loss.

(b) Transactions with non-controlling interests

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity
transactions - that is, as transactions with the owners in their capacity as owners. For purchases from non-
controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying
value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests
are also recorded in equity.

Interests in the equity of subsidiaries not attributable to the Parent Bank are reported in consolidated equity as
non-controlling interests. Profits or losses attributable to non-controlling interests are reported in the statements
of income as net income (loss) attributable to non-controlling interests.

(c) Associates

Associates are all entities over which the BPI Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates in the
consolidated financial statements are accounted for using the equity method of accounting. Under the equity
method, the investment is initially recognized at cost and the carrying amount is increased or decreased to
recognize the investor’s share of the profit or loss of the investee after the date of acquisition. The BPI Group’s
investment in associates includes goodwill identified on acquisition (net of any accumulated impairment loss).

If the ownership interest in an associate is reduced but significant influence is retained, a proportionate share of
the amounts previously recognized in other comprehensive income is reclassified to profit or loss where
appropriate.

The BPI Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its
share of post-acquisition movements in reserves is recognized in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investment. When the BPI Group’s
share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the BPI Group does not recognize further losses, unless it has incurred legal or constructive obligations
or made payments on behalf of the associate.

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The BPI Group determines at each reporting date whether there is any objective evidence that the investment in
the associate is impaired. If this is the case, the BPI Group calculates the amount of impairment as the difference
between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to
‘share of profit (loss) of an associate’ in profit or loss.

Unrealized gains on transactions between the BPI Group and its associates are eliminated to the extent of the BPI
Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to
ensure consistency with the policies adopted by the BPI Group.

29.5 Investments in subsidiaries and associates

Investments in subsidiaries and associates in the Parent Bank’s separate financial statements are accounted for
using the cost method in accordance with PAS 27. Under this method, income from investment is recognized in
profit or loss only to the extent that the investor receives distributions from accumulated profits of the investee
arising after the acquisition date. Distributions received in excess of such profits are regarded as a recovery of
investment and are recognized as reduction of the cost of the investment.

The Parent Bank recognizes a dividend from a subsidiary or associate in profit or loss in its separate financial
statements when its right to receive the dividend is established.

The Parent Bank determines at each reporting date whether there is any indicator of impairment that the
investment in the subsidiary or associate is impaired. If this is the case, the Parent Bank calculates the amount of
impairment as the difference between the recoverable amount and carrying value and the difference is recognized
in profit or loss.

Investments in subsidiaries and associates are derecognized upon disposal or when no future economic benefits
are expected to be derived from the subsidiaries and associates at which time the cost and the related accumulated
impairment loss are removed in the statements of condition. Any gains and losses on disposal is determined by
comparing the proceeds with the carrying amount of the investment and recognized in profit or loss.

29.6 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive
officer who allocates resources to, and assesses the performance of the operating segments of the BPI Group.

All transactions between business segments are conducted on an arm’s length basis, with intra-segment revenue
and costs being eliminated upon consolidation. Income and expenses directly associated with each segment are
included in determining business segment performance.

In accordance with PFRS 8, the BPI Group has the following main banking business segments: consumer banking,
corporate banking and investment banking. Its insurance business is assessed separately from these banking
business segments (Note 3).

29.7 Bank premises, furniture, fixtures and equipment

Land and buildings comprise mainly of branches and offices. All bank premises, furniture, fixtures and equipment
are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of an asset which comprises its purchase price, import duties and any directly
attributable costs of bringing the asset to its working condition and location for its intended use.

Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the BPI Group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during
the year in which they are incurred.

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 Notes to Financial Statements

Land is not depreciated. Depreciation for buildings and furniture and equipment is calculated using the straight-
line method to allocate cost or residual values over the estimated useful lives of the assets, as follows:

Building 25-50 years

Furniture and equipment 3-5 years
Equipment for lease 2-8 years

Leasehold improvements are depreciated over the shorter of the lease term (ranges from 5 to 10 years) and the
useful life of the related improvement (ranges from 5 to 10 years). Major renovations are depreciated over the
remaining useful life of the related asset.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. There are no bank premises, furniture, fixtures and equipment that are fully impaired
as at December 31, 2019 and 2018.

An item of Bank premises, furniture, fixtures and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount
of the item) is included in profit or loss in the period the item is derecognized.

29.8 Investment properties

Properties that are held either to earn rental income or for capital appreciation or both, and that are not
significantly occupied by the BPI Group are classified as investment properties. Transfers to, and from, investment
property are made when, and only when, there is a change in use, evidenced by:

(a) Commencement of owner-occupation, for a transfer from investment property to owner-occupied property;
(b) Commencement of development with a view of sale, for a transfer from investment property to real properties
held-for-sale and development;
(c) End of owner occupation, for a transfer from owner-occupied property to investment property; or
(d) Commencement of an operating lease to another party, for a transfer from real properties held-for-sale and
development to investment property.

Transfers to and from investment property do not result in gain or loss.

Investment properties comprise land and building. Investment properties are measured initially at cost, including
transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated
depreciation and impairment losses, if any. Depreciation on investment property is determined using the same
policy as applied to Bank premises, furniture, fixtures, and equipment. Impairment test is conducted when there is
an indication that the carrying amount of the asset may not be recovered. An impairment loss is recognized for the
amount by which the property’s carrying amount exceeds its recoverable amount, which is the higher of the
property’s fair value less costs to sell and value in use.

An item of investment property is derecognized upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gains and losses arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the
period the item is derecognized.

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29.9 Foreclosed assets

Assets foreclosed shown as Assets held for sale in the statements of condition are accounted for at the lower of cost
and fair value less cost to sell similar to the principles of PFRS 5. The cost of assets foreclosed includes the carrying
amount of the related loan. Impairment loss is recognized for any subsequent write-down of the asset to fair value less
cost to sell.

Foreclosed assets not classified as Assets held for sale are accounted for in any of the following classification using the
measurement basis appropriate to the asset as follows:

(a) Investment property is accounted for using the cost model under PAS 40;
(b) Bank-occupied property is accounted for using the cost model under PAS 16; and
(c) Financial assets are accounted for under PFRS 9.

29.10 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the BPI Group’s share in the net
identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included under Other assets, net in the statements of condition. Goodwill on acquisitions of associates
is included in Investments in subsidiaries and associates. Separately recognized goodwill is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of a subsidiary/associate include carrying amount of
goodwill relating to the subsidiary/associate sold.

Goodwill is an indefinite-lived intangible asset and hence not subject to amortization.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each cash-generating unit is
represented by each primary reporting segment.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances
indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the
higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense
and is not subsequently reversed.

(b) Contractual customer relationships

Contractual customer relationships acquired in a business combination are recognized at fair value at the acquisition
date. The contractual customer relationships have finite useful lives of ten years and are carried at cost less
accumulated amortization. Amortization is calculated using the straight-line method over the expected life of the
customer relationship. Contractual customer relationships are included under Other assets, net in the statements of
condition.

(c) Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortized on a straight-line basis over the expected useful lives (three to five years).
Computer software is included under Other assets, net in the statements of condition.

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 Notes to Financial Statements

Costs associated with maintaining computer software programs are recognized as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software products
controlled by the BPI Group are recognized as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;
• adequate technical, financial and other assets to complete the development and to use or sell the software
product are available; and
• the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the software product include the software development
employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognized as an expense when incurred.
Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

29.11 Impairment of non-financial assets

Assets that have indefinite useful lives - for example, goodwill or intangible assets not ready for use - are not subject to
amortization and are tested annually for impairment and more frequently if there are indicators of impairment.
Assets that have definite useful lives are subject to amortization and are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of impairment at
each reporting date.

29.12 Borrowings and borrowing costs

The BPI Group’s borrowings consist mainly of bills payable and other borrowed funds. Borrowings are recognized
initially at fair value, which is the issue proceeds, net of transaction costs incurred. Borrowings are subsequently
carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognized in profit or loss over the period of the borrowings using the effective interest method.

Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset are
capitalized as part of the cost of the asset. All other borrowing costs are expensed as incurred. The BPI Group has no
qualifying asset as at December 31, 2019 and 2018.

Borrowings derecognized when the obligation specified in the contract is discharged, cancelled, or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in the
Statements of Income as other income.

29.13 Fees and commission income

The BPI Group has applied PFRS 15 where revenue is recognized when (or as) The BPI Group satisfies a performance
obligation by transferring a promised good or service to a customer (i.e. an asset). An asset is transferred when (or as)
the customer obtains control of that asset.

The recognition of revenue can be either over time or at a point in time depending on when the performance
obligation is satisfied.

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When control of a good or service is transferred over time, that is, when the customer simultaneously receives and
consumes the benefits, the BPI Group satisfies the performance obligation and recognizes revenue over time.
Otherwise, revenue is recognized at the point in time at the point of transfer control of the good or service to the
customer.

Variable consideration is measured using either the expected value method or the most likely amount method
depending on which method the BPI Group expects to better predict the amount of consideration to which it will be
entitled. This is the estimated amount of variable consideration, or the portion, if any, of that amount for which it is
highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Where there
is a single performance obligation, the transaction price is allocated in its entirety to that performance obligation.
Where there are multiple performance obligations, the transaction price is allocated to the performance obligation to
which it relates based on stand-alone selling prices.

The BPI Group recognizes revenue based on the price specified in the contract, net of the estimated rebates/discounts
and include variable consideration, if there is any. Accumulated experience is used to estimate and provide for the
discounts and revenue is only recognized to the extent that it is highly probable that a significant reversal will not
occur.

The BPI Group does not expect to have any contracts where the period between the transfer of the promised goods
or services to the customer and payment by the customer exceeds one year. As a consequence, the BPI Group does
not adjust any of the transaction prices for the time value of money.

There are no warranties and other similar obligation and refunds agreed with customers.

Commission and fees arising from negotiating or participating in the negotiation of a transaction for a third party
(i.e. the arrangement of the acquisition of shares or other securities, or the purchase or sale of businesses) are
recognized on completion of underlying transactions. Portfolio and other management advisory and service fees
are recognized based on the applicable service contracts, usually on a time-proportionate basis. Asset management
fees related to investment funds are recognized ratably over the period in which the service is provided.

29.14 Credit card income

Credit card arrangements involve numerous contracts between various parties. The BPI Group has determined
that the more significant contracts within the scope of PFRS 15 are (1) the contract between the BPI Group and the
credit card holder (‘Cardholder Agreement’) under which the BPI Group earn miscellaneous fees (e.g., annual
membership fees, late payment fees, foreign exchange fees, etc.) and (2) an implied contract between the BPI
Group and merchants who accept the credit cards in connection with the purchase of their goods and/or services
(‘Merchant Agreement’) under which the BPI Group earn interchange fees.

The Cardholder Agreement obligates the BPI Group, as the card issuer, to perform activities such as process
redemption of loyalty points by providing goods, services, or other benefits to the cardholder; provide ancillary
services such as concierge services, travel insurance, airport lounge access and the like; process late payments;
provide foreign exchange services and others. The amount of fees stated in the contract represents the transaction
price for that performance obligation.

The implied contract between the BPI Group and the merchant results in the BPI Group receiving an interchange
fee from the merchant. The interchange fee represents the transaction price associated with the implied contract
between the BPI Group and the merchant because it represents the amount of consideration to which the BPI
Group expects to be entitled in exchange for transferring the promised service (i.e., purchase approval and
payment remittance) to the merchant. The performance obligation associated with the implied contract between
the BPI Group and the merchant is satisfied upon performance and simultaneous consumption by the customer of
the underlying service. Therefore, a portion of the interchange fee is allocated to the performance obligations based
on stand-alone transaction price and revenue is recognized when these performance obligations are satisfied.

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 Notes to Financial Statements

29.15 Foreign currency translation

(a) Functional and presentation currency

Items in the financial statements of each entity in the BPI Group are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). The financial statements are
presented in Philippine Peso, which is the Parent Bank’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognized in profit or loss. Non-monetary items measured at
historical cost denominated in a foreign currency are translated at exchange rates as at the date of initial
recognition. Non-monetary items in a foreign currency that are measured at fair value are translated using the
exchange rates at the date when the fair value is determined.

Changes in the fair value of monetary securities denominated in foreign currency classified as financial assets at
FVOCI are analyzed between translation differences resulting from changes in the amortized cost of the security,
and other changes in the carrying amount of the security. Translation differences are recognized in profit or loss,
and other changes in carrying amount are recognized in other comprehensive income.

Translation differences on non-monetary financial instruments, such as equities held at fair value through profit or
loss, are reported as part of the fair value gain or loss recognized under “Trading gain/loss on securities” in the
statements of income. Translation differences on non-monetary financial instruments, such as equities classified
as financial assets at FVOCI, are included in Accumulated other comprehensive income (loss) in the capital funds.

(c) Foreign subsidiaries

The results and financial position of BPI’s foreign subsidiaries (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are translated
into the presentation currency as follows:

• assets and liabilities are translated at the closing rate at reporting date;
• income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognized as a separate component (Currency translation differences)
of Accumulated other comprehensive income (loss) in the capital funds. When a foreign operation is sold, such
exchange differences are recognized in profit or loss as part of the gain or loss on sale.

29.16 Accrued expenses and other liabilities

Accrued expenses and other liabilities are recognized in the period in which the related money, goods or services are
received or when a legally enforceable claim against the BPI Group is established.

29.17 Provisions for legal or contractual obligations

Provisions are recognized when all of the following conditions are met: (i) the BPI Group has a present legal or
constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to
settle the obligation; and (iii) the amount has been reliably estimated. Provisions are not recognized for future
operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an
outflow with respect to any one item is included in the same class of obligations may be small.

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Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects the current market assessments of the time value of money and the risk specific to the
obligation. The increase in the provision due to the passage of time is recognized as interest expense.

29.18 Income taxes

(a) Current income tax

Income tax payable is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognized
as an expense for the year except to the extent that current tax is related to items (for example, current tax on
financial assets at FVOCI) that are charged or credited in other comprehensive income or directly to capital funds.

The BPI Group has substantial income from its investment in government securities subject to final withholding tax.
Such income is presented at its gross amount and the final tax paid or withheld is included in Provision for income
tax - Current.

(b) Deferred income tax

Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. The deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time
of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted at the reporting date and are expected to apply
when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax
losses (net operating loss carryover or NOLCO) and unused tax credits (excess minimum corporate income tax or
MCIT) to the extent that it is probable that future taxable profit will be available against which the temporary
differences, unused tax losses and unused tax credits can be utilized. Deferred income tax liabilities are recognized
in full for all taxable temporary differences except to the extent that the deferred tax liability arises from the initial
recognition of goodwill.

The BPI Group reassesses at each reporting date the need to recognize a previously unrecognized deferred income tax
asset.

Deferred income tax assets are recognized on deductible temporary differences arising from investments in
subsidiaries, and associates and joint arrangements only to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit available against which the temporary difference can be
utilized.

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in
subsidiaries, and associates and joint arrangements, except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the BPI Group and it is probable that the temporary difference
will not reverse in the foreseeable future. Generally, the BPI Group is unable to control the reversal of the temporary
difference for associates except when there is an agreement in place that gives the BPI Group the ability to control the
reversal of the temporary difference.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by
the same taxation authority on either the taxable entity or different taxable entities where there is an intention to
settle the balances on a net basis.

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29.19 Employee benefits

(a) Short-term benefits

The BPI Group recognizes a liability net of amount already paid and an expense for services rendered by employees
during the accounting period. Short-term benefits given by to its employees include salaries and wages, social
security contributions, short-term compensated absences and bonuses, and non-monetary benefits.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.

(b) Defined benefit retirement plan

The BPI Group has a defined benefit plan that shares risks among entities within the group. A defined benefit plan
is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service and compensation.

The liability recognized in the statements of condition in respect of defined benefit pension plan is the present
value of the defined benefit obligation at the reporting date less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit credit method. The present
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and
that have terms to maturity approximating the terms of the related pension liability.

Defined benefit costs comprise of service cost, net interest on the net defined benefit liability or asset and
remeasurements of net defined liability or asset.

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements
are recognized as expense in the statements of income. Past service costs are recognized when the plan amendment
or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit
liability or asset that arises from the passage of time which is determined by applying the discount rate based on
government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or
asset is recognized as interest income or expense in the statements of income.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to equity in other comprehensive income in the period in which they arise.

For individual financial reporting purposes, the unified plan assets are allocated among the BPI Group entities
based on the level of the defined benefit obligation attributable to each entity to arrive at the net liability or asset
that should be recognized in the individual financial statements.

(c) Defined contribution retirement plan

The BPI Group also maintains a defined contribution plan that covers certain full-time employees. Under its
defined contribution plan, the BPI Group pays fixed contributions based on the employees’ monthly salaries. The
BPI Group, however, is covered under RA No. 7641, otherwise known as The Philippine Retirement Pay Law,
which provides for its qualified employees a defined benefit minimum guarantee. The defined benefit minimum
guarantee is equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement
age with the required credited years of service based on the provisions of RA No. 7641. Accordingly, the BPI Group
accounts for its retirement obligation under the higher of the defined benefit obligation relating to the minimum
guarantee and the obligation arising from the defined contribution plan.

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For the defined benefit minimum guarantee plan, the liability is determined based on the present value of the
excess of the projected defined benefit obligation over the projected defined contribution obligation at the end of
the reporting period. The defined benefit obligation is calculated annually by a qualified independent actuary using
the projected unit credit method. The BPI Group and Parent Bank determine the net interest expense (income) on
the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the net defined benefit liability (asset) then, taking into
account any changes in the net defined benefit liability (asset) during the period as a result of contributions and
benefit payments. Net interest and other expenses related to the defined benefit plan are recognized in the
statements of income.

The defined contribution liability is measured at the fair value of the defined contribution assets upon which the
defined contribution benefits depend, with an adjustment for margin on asset returns, if any, where this is
reflected in the defined contribution benefits.

Actuarial gains and losses arising from the remeasurements of the net defined contribution liability are recognized
immediately in the other comprehensive income.

(d) Share-based compensation

The BPI Group engages in equity-settled share-based payment transactions in respect of services received from
certain employees.

The fair value of the services received is measured by reference to the fair value of the shares or share options
granted on the date of the grant. The cost of employee services received in respect of the shares or share options
granted is recognized in profit or loss (with a corresponding increase in reserve in capital funds) over the period
that the services are received, which is the vesting period.

The fair value of the options granted is determined using option pricing models which take into account the
exercise price of the option, the current share price, the risk-free interest rate, the expected volatility of the share
price over the life of the option and other relevant factors.

When the stock options are exercised, the proceeds received, net of any directly attributable transaction costs, are
credited to share capital (par value) and share premium for the excess of exercise price over par value.

(e) Profit sharing and bonus plans

The BPI Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes
into consideration the profit attributable to the Parent Bank’s shareholders after certain adjustments. The BPI
Group recognizes a provision where contractually obliged or where there is a past practice that has created a
constructive obligation.

29.20 Capital funds

Share capital consists of common shares which are instruments that meet the definition of “equity”.

Share premium includes any premiums or consideration received in excess of the total par value of the common
shares issued.

Incremental costs directly attributable to the issue of new shares are treated as a deduction from the share issuance
proceeds.

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29.21 Earnings per share (EPS)

Basic EPS is calculated by dividing income applicable to common shares by the weighted average number of
common shares outstanding during the year with retroactive adjustments for stock dividends. In case of a rights
issue, an adjustment factor is being considered for the weighted average number of shares outstanding for all
periods before the rights issue. Diluted EPS is computed in the same manner as basic EPS, however, net income
attributable to common shares and the weighted average number of shares outstanding are adjusted for the effects
of all dilutive potential common shares.

29.22 Dividends on common shares

Dividends on common shares are recognized as a liability in the BPI Group’s financial statements in the period in
which the dividends are approved by the BOD.

29.23 Fiduciary activities

The BPI Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of
assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income arising
thereon are excluded from these financial statements, as they are not assets of the BPI Group (Note 24).

29.24 Leases

29.24.1 BPI Group is the lessee

Until December 31, 2018, leases of bank premises, furniture and fixtures and equipment were classified as either
finance leases or operating leases. From January 1, 2019, the BPI Group recognizes leases as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for use.

From January 1, 2019 (PFRS 16)

Assets and liabilities arising from a lease are initially measured on a present value basis. The interest expense is
recognized in the statements of income over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.

Measurement of lease liabilities

Lease liabilities include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate
• amounts expected to be payable by the lessee under residual value guarantees
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option

Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the BPI Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

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To determine the incremental borrowing rate, the BPI Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third party financing was received,
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held for
entities which do not have recent third party financing, and
• makes adjustments specific to the lease (i.e. term, currency and security).

Lease payments are allocated between principal and interest expense. The interest expense is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.

Measurement of right-of-use assets

Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability,
• any lease payments made at or before the commencement date less any lease incentives received,
• any initial direct costs, and
• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-
line basis. If the BPI Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset’s useful life.

Extension and termination options

In determining the lease term, management considers all facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The
lease term is reassessed if an option is actually exercised (or not exercised) or the BPI Group becomes obliged to
exercise (or not exercise) it. The assessment of reasonable certainty is revised only if a significant event or a significant
change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

Short-term leases and leases of low-value assets

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an
expense in the statements of income. Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT-equipment and small items of office furniture.

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Accounting policies prior to January 1, 2019 (PAS 17)

Operating lease
Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the
lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of
any incentives received from the lessor) are charged to “Occupancy and equipment-related expenses” in the
statements of income on a straight-line basis over the period of the lease. When an operating lease is terminated
before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized
as an expense in the period in which the termination takes place.

Finance lease
Leases of assets, where the BPI Group has substantially all the risks and rewards of ownership, are classified as
finance leases. Finance leases are capitalized at the commencement of the lease at the lower of the fair value of the
leased property and the present value of the minimum lease payments. Each lease payment is allocated between
the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The interest
element of the finance cost is charged to profit or loss over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each period.

29.24.2 BPI Group is the lessor

PFRS 16 substantially carries forward the lessor accounting requirements in PAS 17. Accordingly, the BPI Group
(as a lessor) continues to classify its leases as operating leases or finance leases.

Operating lease
Properties (land and building) leased out under operating leases are included in “Investment properties” in the
statements of condition. Rental income under operating leases is recognized in profit or loss on a straight-line
basis over the period of the lease.

Finance lease
When assets are leased out under a finance lease, the present value of the lease payments is recognized as a
receivable. The difference between the gross receivable and the present value of the receivable is recognized as
unearned finance income.

Lease income under finance lease is recognized over the term of the lease using the net investment method before
tax, which reflects a constant periodic rate of return.

29.25 Insurance and pre-need operations

(a) Non-life insurance

The more significant accounting policies observed by the non-life insurance subsidiaries follow: (a) gross premiums
written from short-term insurance contracts are recognized at the inception date of the risks underwritten and are
earned over the period of cover in accordance with the incidence of risk using the 24th method; (b) acquisition costs
are deferred and charged to expense in proportion to the premium revenue recognized; reinsurance commissions are
deferred and deducted from the applicable deferred acquisition costs, subject to the same amortization method as the
related acquisition costs; (c) a liability adequacy test is performed which compares the subsidiaries’ reported
insurance contract liabilities against current best estimates of all contractual future cash flows and claims
handling, and policy administration expenses as well as investment income backing up such liabilities, with any
deficiency immediately charged to profit or loss; (d) amounts recoverable from reinsurers and loss adjustment
expenses are classified as assets, with an allowance for estimated uncollectible amounts; and (e) financial assets and
liabilities are measured following the classification and valuation provisions of PFRS 9.

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(b) Pre-need

The more significant provisions of the PNUCA as applied by the pre-need subsidiary follow: (a) premium income
from sale of pre-need plans is recognized as earned when collected; (b) costs of contracts issued and other direct
costs and expenses are recognized as expense when incurred; (c) pre-need reserves which represent the accrued
net liabilities of the subsidiary to its plan holders are actuarially computed based on standards and guidelines set
forth by the Insurance Commission; the increase or decrease in the account is charged or credited to other costs of
contracts issued in profit or loss; and (d) insurance premium reserves which represent the amount that must be set
aside by the subsidiary to pay for premiums for insurance coverage of fully paid plan holders, are actuarially
computed based on standards and guidelines set forth by the Insurance Commission.

29.26 Related party relationships and transactions

Related party relationship exists when one party has the ability to control, directly, or indirectly through one or more
intermediaries, the other party or exercises significant influence over the other party in making financial and
operating decisions. Such relationship also exists between and/or among entities which are under common control
with the reporting enterprise, or between and/or among the reporting enterprise and its key management personnel,
directors, or its shareholders. In considering each possible related party relationship, attention is directed to the
substance of the relationship, and not merely the legal form.

29.27 Comparatives

Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with
comparative information.

Where PAS 8 applies, comparative figures have been adjusted to conform with changes in presentation in the current
year. There were no changes to the presentation made during the year.

29.28 Subsequent events (or Events after the reporting date)

Post year-end events that provide additional information about the BPI Group’s financial position at the reporting
date (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are
disclosed in the notes to financial statements when material.

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Note 30 - Supplementary information required under BSP Circular No. 1074

Presented below are the additional information required by BSP Circular No. 1074 issued on January 8, 2020. This
information is presented for BSP reporting purposes and is not required in the basic financial statements.

(i) Basic Quantitative Indicators of Financial Performance

The key financial performance indicators follow (in %):

Consolidated Parent
2019 2018 2019 2018
Return on average equity
- Daily average1 10.97 10.21 12.51 8.50
- Simple average2 11.12 10.75 12.62 9.15
Return on average assets
- Daily average3 1.38 1.20 1.50 0.96
- Simple average4 1.34 1.16 1.45 0.92
Net interest margin
- Daily average5 3.35 3.11 3.18 2.87
- Simple average6 3.26 2.96 3.08 2.72
1
Net income divided by average total equity for the period indicated. Average equity is based on the daily average balance of equity for the years ended December 31, 2019 and 2018.
2
Net income divided by average total equity for the period indicated. Average total equity is based on the year-on-year balance of equity for the years ended December 31, 2019 and 2018.
3
Net income divided by average total assets as at period indicated. Average total assets is based on the daily average balance of total assets as at December 31, 2019 and 2018.
4
Net income divided by average total assets as at period indicated. Average total assets is based on the year-on-year balance of total assets as at December 31, 2019 and 2018.
5
Net interest income divided by average interest-earning assets. Average interest earning assets is based on the daily average balance of interest earning assets as at December 31, 2019 and 2018.
6
Net interest income divided by average interest-earning assets. Average interest earning assets is based on the year-on-year balance of interest earning assets as at December 31, 2019 and 2018.

(ii) Description of Capital Instrument Issued

The Bank considers its common shares as capital instrument for purposes of calculating its capital adequacy ratio as
at December 31, 2019 and 2018.

(iii) Significant Credit Exposures

Details of the loans and advances portfolio as to concentration as to industry/economic sector (in %)
at December 31 are as follows:

Consolidated Parent
2019 2018 2019 2018
Real estate, renting and other related activities 24.37 23.08 17.77 16.00
Manufacturing 15.30 16.28 18.09 19.26
Wholesale and retail trade 11.35 12.56 12.61 14.16
Consumer 8.32 8.16 5.46 5.08
Financial institutions 10.81 6.09 12.90 7.28
Agriculture and forestry 2.87 2.74 3.40 3.26
Others 26.98 31.09 29.77 34.96
100.00 100.00 100.00 100.00

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(iv) Breakdown of Total Loans

Details of the loans and advances portfolio at December 31 as to collateral (amounts net of unearned discounts and
exclusive of accrued interest receivable) are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Secured loans
Real estate mortgage 278,099 220,587 138,607 97,170
Chattel mortgage 57,037 54,731 10 9
Others 148,385 172,503 146,038 168,260
483,521 447,821 284,655 265,439
Unsecured loans 1,008,129 921,523 958,768 870,521
1,491,650 1,369,344 1,243,423 1,135,960

Other collaterals include hold-out deposits, mortgage trust indentures, government and corporate securities and
bonds, quedan/warehouse receipts, standby letters of credit, trust receipts, and deposit substitutes.

Breakdown of performing and non-performing loans net of allowance for credit losses are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Performing loans 1,389,937 1,301,712 1,166,932 1,090,776
Non-performing loans (NPL) 24,835 25,391 12,174 12,985
1,414,772 1,327,103 1,179,106 1,103,761

Allowance attributable to performing loans (10,106) (9,882) (6,780) (6,947)

Allowance attributable to NPL (15,304) (12,597) (11,685) (8,861)
(25,410) (22,479) (18,465) (15,808)
Net carrying amount 1,389,362 1,304,624 1,160,641 1,087,953

BSP Circular 941, Amendments to Regulations on Past Due and Non-Performing Loans, states that loans,
investments, receivables, or any financial asset shall be considered non-performing, even without any missed
contractual payments, when it is considered impaired under existing accounting standards, classified as doubtful
or loss, in litigation, and if there is an evidence that full repayment of principal and interest is unlikely without
foreclosure of collateral. All other loans, even if not considered impaired, shall be considered non-performing if
any principal and/or interest are unpaid for more than ninety (90) days from contractual due date, or accrued
interests for more than ninety (90) days have been capitalized, refinanced, or delayed by agreement.

Microfinance and other small loans with similar credit characteristics shall be considered non-performing after
contractual due date or after they have become past due.

Restructured loans shall be considered non-performing. However, if prior to restructuring, the loans were
categorized as performing, such classification shall be retained.

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(v) Information on Related Party Loans

Details of DOSRI loans are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Outstanding DOSRI loans 10,026 8,248 10,024 8,248

In percentages (%)
Consolidated Parent
2019 2018 2019 2018
% to total outstanding loans and advances 0.67 0.60 0.81 0.73
% to total outstanding DOSRI loans
Unsecured DOSRI loans 17.30 21.51 17.30 21.51
Past due DOSRI loans 0.01 - 0.01 -
Non-performing DOSRI loans - - - -

The BPI Group is in full compliance with the General Banking Act and the BSP regulations on DOSRI loans. At
December 31, 2019 and 2018.

(vi) Secured Liabilities and Assets Pledged as Security

The Bank’s Bills payable (Note 16) include mainly funds borrowed from various banking institutions which were
lent out to customers of the BPI Group in accordance with the agreed financing programs. Loans and advances
arising from these financing programs serve as collateral for this liability (Note 10).

(vii) Contingencies and commitments arising from off-balance sheet items

Credit risk exposures arising from off-balance sheet items, which are mainly composed of undrawn loan
commitments and unused letters of credit, are as follows:

Consolidated Parent
2019 2018 2019 2018
(In Millions of Pesos)
Gross carrying amount 404,584 235,904 397,949 233,481
Loss allowance* (650) (753) (619) (723)
Carrying amount 403,934 235,151 397,330 232,758
*Included in “Miscellaneous liabilities” in Note 17

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Note 31 - Supplementary information required by the Bureau of Internal Revenue

On December 28, 2010, Revenue Regulations (RR) No. 15-2010 became effective and amended certain provisions of
RR No. 21-2002 prescribing the manner of compliance with any documentary and/or procedural requirements in
connection with the preparation and submission of financial statements and income tax returns. Section 2 of
RR No. 21-2002 was further amended to include in the Notes to Financial Statements information on taxes, duties
and license fees paid or accrued during the year in addition to what is mandated by PFRS.

Below is the additional information required by RR No. 15-2010 that is relevant to the Parent Bank. This information
is presented for purposes of filing with the Bureau of Internal Revenue (BIR) and is not a required part of the basic
financial statements.

(i) Documentary stamp tax

Documentary stamp taxes paid through the Electronic Documentary Stamp Tax System for the year ended
December 31, 2019 consist of:

(In Millions of Pesos) Amount

Deposit and loan documents 7,208
Trade finance documents 584
Mortgage documents 432
Shares of stocks -
Others 6
8,230

(ii) Withholding taxes

Withholding taxes paid/accrued and/or withheld for the year ended December 31, 2019 consist of:

Amount
(In Millions of Pesos) Paid Accrued Total
Income taxes withheld on compensation 1,751 205 1,956
Withholding tax on withdrawal from decedent’s account 10 2 12
Final income taxes withheld on interest on deposits and yield on
deposit substitutes 3,435 252 3,687
Final income taxes withheld on income payment 642 374 1,016
Creditable income taxes withheld (expanded) 460 44 504
Fringe benefit tax 121 29 150
VAT withholding tax 39 5 44
6,458 911 7,369

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(iii) All other local and national taxes

All other local and national taxes paid/accrued for the year ended December 31, 2019 consist of:

Amount
(In Millions of Pesos) Paid Accrued Total
Gross receipts tax 3,711 382 4,093
Real property tax 119 - 119
Municipal taxes 209 - 209
Others 9 - 9
4,048 382 4,430

Local and national taxes imposed by the government which are incurred under the normal courses of business
are part of “Taxes and Licenses” within Other Operating Expense (Note 21).

(iv) Tax cases and assessments

As at reporting date, the Parent Bank has pending cases filed in courts, with the tax authorities contesting
certain tax assessments, and for various claims for tax refund. Management is of the opinion that the ultimate
outcome of the said cases will not have a material impact on the financial statements of the Parent Bank.

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 Appendices

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Stakeholder Engagement
AND MATERIAL TOPICS

Stakeholder Engagement

Insights from regular dialogue with our stakeholders keep our organizational goals and strategies aligned with
stakeholder needs and expectations. We identify our key stakeholders as our clients, shareholders, employees,
government and regulatory agencies, suppliers and contractors, and communities. They have significant influence
on our economic, social, and environmental performance and are similarly impacted by our conduct of business in
the context of global, regional, and local megatrends. Through this proactive engagement, we maintain beneficial
relationships within the community where we operate.

To ensure a sustained quality and frequency of engagement, the Bank has set up various engagement platforms for
each stakeholder group. The information obtained through these platforms helps us identify issues the Bank should
address as well as opportunities that will allow us to continue to build long-lasting value. We conducted an engagement
survey for the 2019 report, the results of which continue to validate the existing stakeholder concerns and material
topics.

How We Engage Them Their Concerns How We Respond

Clients
• Daily customer touch points through • Quality and availability of products and • Proactive approach to client concerns
branches, personnel, phone, e-mail, services suited to their needs (e.g. proper allocation of manpower
and social media channels • Convenient, affordable, reliable, and resources, review of outsourcing
• Annual and periodic satisfaction efficient delivery of products and services, set up of more effective
surveys services contact centers, and continuous
• Regular visits to existing clients • Accessibility and security of electronic process improvements)
including area briefings services • Constant monitoring and upgrade of
• Transparency of requirements and systems
processes • Ongoing personnel capacity building
• Competency of personnel to address through product briefings, seminars,
concerns and trainings
• Sound and customized financial advice • Timely provision of customized
• Turn-around time of applications feedback, advice, and/or solutions to
• Data privacy and security inquiries
• Economic and product briefings, as well
as financial and investment education
seminars
Investors
• Regular investor meetings and • Shareholder return • Transparent and timely disclosures
conference calls • Financial performance
• Annual stockholders’ meeting • Business growth and continuity
• Responsible financing
Employees
• Online portals, face-to-face meetings, • Capacity-building and availability of • Leadership development programs,
and learning sessions work tools across all levels Harvard management mentor (on-
• Annual performance appraisals • Opportunities for career development demand type of learning), moving
• Periodic engagement survey • Clear understanding of the Bank’s towards digital learning
• Town halls strategy and direction • Career mobility and officer’s
• Quarterly Labor Management • Pay for performance or meritocracy development program, shortened time
Conferences • Competitive compensation and benefits in rank
• HR caravans • Work-life balance • Town hall meetings
• Rewards and recognition • Promotions, performance bonuses,
and salary increases are tied to
performance, non-financial rewards
• Salary reviews to ensure
competitiveness of compensation
against market
• Semi-flexible work hours (head offices)
• Rewards and recognition programs are
anchored on reinforcing the core values
of the Bank

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How We Engage Them Their Concerns How We Respond
Suppliers and Contractors
• Accreditation • Procurement policies (e.g. • Cascade of policies
• E-mails, letters, and memos requirements and criteria for • Real-time updates
• Weekly meetings with facility evaluation)
maintenance agencies • Other procurement-related concerns
• Monthly meetings with security (e.g. cost, terms of payment, and
agencies warranties)
Government and Regulatory Agencies
• Annual bank examination • Compliance with relevant national • Transparent and timely disclosures and
• Regular audits and follow-up laws and regulations, including BSP reports
• Regular correspondence through regulations and guidelines • Compliance to regulations
letters and e-mail through authorized • Transparency and accountability • Conduct of internal and external audits
and appropriately-training personnel, • Feedback on the Bank’s operations • Formal explanations and responses to
covering all forms of communication, queries
whether formal, informal, or social
interactions in relation to the
Bank’s business through any kind of
correspondence such as in-person,
electronic media, and/or written
Communities, NGOs, and Civil Society
• Partnerships and agreements • New programs and initiatives • Organize events for beneficiaries and
• Regular correspondence through • Update and expansion of existing external partners (e.g. workshops and
e-mails, letters, memos, meetings, text projects symposiums)
message, phone calls • Takeaways from activities conducted • Accomplishment reports
• Updates through website, social media • Opportunities for capacity-building and • Attendance in meetings and real-time
pages, print, and online platforms access to financial and non-financial updates
• Assessment and feedback on resources
partnership and engagement • Responsible financing
• BPI Foundation Partners’ Night

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 Stakeholder Engagement
and Material Topics

Material Topics

Materiality assessment helps us identify topics that matter most to our business and stakeholders. It guides us
in deciding on our strategies and where to focus our resources. Our materiality matrix combines the results of our
stakeholder engagement exercises with internal analyses of current economic, social, and environmental trends and
events that impact the business.

The annual review and updating of our materiality matrix ensures that its contents still reflect the issues relevant to
all of the Bank’s stakeholders given our dynamically changing landscape. An addition to this report is an alignment
with non-financial ESG rating disclosures which were popular among our investors. Identified material topics are
consolidated into our Sustainability Strategy Framework and aligned with the overall purpose of the Bank as embodied
in our Credo.

Value to our Impacted

Material Topic Corresponding Disclosure Relevance
Capitals Stakeholders
Social and • Business • Anti-corruption • 103-2 We believe our first
Relationship operations • Marketing and • 417-2 responsibility is to our clients.
Capital: Building • Clients labelling If we understand and address
Trust • Government our clients’ financial needs, we
• Customer privacy • 103-2
and regulators will be entrusted with their most
• Customer service • Complaint intensity or % of important financial transactions,
resolved complaints and we will build lasting
• Compliance • Corporate governance relationships. We do well when
• Compliance our clients do well.
Human Capital: • Employees and • Employment • 102-8 We believe in our responsibility
Empowering Our indirect hires • 401-1 to our people. We seek to hire
People • 401-2 the best people for each job,
• Training and • 404-1 provide them with the means
education to perform at a high level, and
reward them fairly. We value
• Diversity and • 405-1
integrity, professionalism, and
equal opportunity
loyalty. We promote a culture
• Non- • 406-1 of mutual respect, meritocracy,
discrimination performance, and teamwork.
• Freedom of • 102-41 We strive to be the employer
association of choice among Philippine
and collective financial institutions.
bargaining
Financial Capital: • Business • Economic • 201-1 We believe in our responsibility
Contributing operations performance to our shareholders. We treat
to Economic • Shareholders • Supply chain • 102-9 capital as a most valuable asset
Development • Government management and seek to generate superior
and regulators returns while being prudent
• Financial inclusion • Financial products and
• Suppliers in risk- taking, spending, and
and wellness services for underbanked and
• Communities investment.
SEMEs

• Scaling up • Financial products and

enterprises services for underbanked and
SMEs
• Financing • Total amount of loans
sustainable disbursed contributing to
development sustainable development

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 Value to our Impacted
Material Topic Corresponding Disclosure Relevance
Capitals Stakeholders
Social and • Communities • Corporate social • Financial literacy programs We believe in our responsibility
Relationship • Civil society responsibility and beneficiaries to our country. Our prosperity
Capital: and NGOs • Scaling up MSMEs and social is greatly dependent on the
Empowering Our enterprises programs and well-being of our nation. We aim
Society beneficiaries to be inclusive and responsible
• Environmental sustainability in nation-building. Through BPI
programs and beneficiaries Foundation, we are committed o
• Volunteerism • Volunteer hours and the welfare and sustainability of
employee-led volunteer the communities we serve.
activities
Manufactured • Business • Branch, ATM and • Number of branches, ATMs We recognize the importance
and Intellectual operations CAM footprint and CAMs of building strong capabilities
Capital: • Clients • Digitalization • Uptime by increasing effective client
Strengthening access points in both digital and
• Security practices • 410-1
our Delivery branch distribution platforms.
Infrastructure • Physical and • 103-2 We ensure that our traditional
information and electronic channels are
security easily accessible, always
available, and tightly secured.
Natural Capital: • Business • Energy • 302-1 We track and implement
Promoting operations • 302-3 measures to become more
Efficient Resource • Clients • Emissions • 305-2 eco-efficient in our day-to-
Management • Government • 305-4 day operations. We contribute
and regulators to nation building through
• Sustainable • Sustainable energy financing
• Civil society investments and/or funding
energy financing loans disbursed
and NGOs businesses that have direct
impact to the environment.

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GRI Content Index

Disclosure Number Disclosure Title Page Omission

GRI GENERAL DISCLOSURES
Reporting Boundary: All are consolidated figures of BPI which include all local and international subsidiaries
GENERAL DISCLOSURES
Organizational Profile
102-1 Name of the organization 5
102-2 Activities, brands, products, and services A153-A155
102-3 Location of headquarters A160
102-4 Location of operations 5
102-5 Ownership and legal form 148-151
102-6 Markets served 5
102-7 Scale of the organization 5, 76, 166,
A153-A155
102-8 Information on employees and other workers 76-77
102-9 Supply chain 84
102-10 Significant changes to the organization and its supply chain 5
102-11 Precautionary Principle or approach 28-29,
119-126
102-12 External initiatives 117, 120, 130
102-13 Membership of associations A159
Strategy
102-14 Statement from senior decision-maker 6-11
102-15 Key impacts, risks, and opportunities 22-23, 28-29,
119-126
Ethics and Integrity
102-16 Values, principles, standards, and norms of behavior Inside front
cover, 1,
130-136,
140-142
102-17 Mechanisms for advice and concerns about ethics 130-136
Governance
102-18 Governance structure 90-118
102-19 Delegating authority 137-140
102-20 Executive-level responsibility for economic, environmental, and social 110-113
topics
102-22 Composition of the highest governance body and its committees 91-113
102-23 Chair of the highest governance body 113
102-24 Nominating and selecting the highest governance body 97-99
102-25 Conflicts of interest 112, 126,
132-135
102-26 Role of highest governance body in setting purpose, values, and 97
strategy
102-27 Collective knowledge of highest governance body 100-101
102-28 Evaluating the highest governance body's performance 105-107
102-30 Effectiveness of risk management processes 111-112
102-36 Process for determining remuneration 101-102
Stakeholder Engagement
102-40 List of stakeholder groups A126-A127
102-41 Collective bargaining agreements 20, 78,
141-142
102-42 Identifying and selecting stakeholders A126-A127
102-43 Approach to stakeholder engagement A126-A127
102-44 Key topics and concerns raised A126-A127

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 Disclosure Number Disclosure Title Page Omission
GRI GENERAL DISCLOSURES
Reporting Boundary: All are consolidated figures of BPI which include all local and international subsidiaries
GENERAL DISCLOSURES
Reporting Practice
102-45 Entities included in the consolidated financial statements A17
102-46 Defining report content and topic boundaries 4, A128-A132,
GRI Content
Index
102-47 List of material topics A128-A129
102-48 Restatements of information 74, 85
102-49 Changes in reporting 6-13, A126-A129
102-50 Reporting period 4
102-51 Date of most recent report 4
102-52 Reporting cycle 4
102-53 Contact point for questions regarding the report 4
102-54 Claims of reporting in accordance with the GRI Standards 4
102-55 GRI content index A130-A132
102-56 External assurance A134-A136

Disclosure Number Disclosure Title Page Omission

GRI SPECIFIC DISCLOSURES
GRI 200: ECONOMIC 2016
Reporting Boundary: All are consolidated figures of BPI which include all local and international subsidiaries
(BPI Group)
201: Economic Performance
103 Management approach 74-75,
A126-A129
201-1 Direct economic value generated and distributed 74-75
205: Anti-Corruption
103 Management approach 132-133,
A126-A129
205-3 Confirmed incidents of corruption and actions taken 132-133
GRI 300: ENVIRONMENTAL 2016
Reporting Boundary: Environmental indicators include all BPI Group branches and offices in the Philippines, excluding BanKo
branches and BLUs due to insufficient system to capture BanKo data
302: Energy
103 Management approach 85-86,
A126-A129
302-1 Energy consumption within the organization 85-86
302-3 Energy intensity 85-86
305: Emissions
103 Management approach 85-86,
A126-A129
305-2 Energy indirect (Scope 2) GHG emissions 85-86
305-4 GHG emissions intensity 85-86
308: Supplier Environmental Assessment
Scope and Boundary: All Facilities Sevices Group-managed suppliers of the BPI Group, excluding international offices
103 Management approach 84, A126-A129
308-1 New suppliers that were screened using environmental criteria 84

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 Notes
GRI Content
to Financial
IndexStatements

Disclosure Number Disclosure Title Page Omission

GRI SPECIFIC DISCLOSURES
GRI 400: SOCIAL 2016
Reporting Boundary: All are consolidated figures of active employees of the BPI Group, excluding local hires of BPI
international offices
401: Employment
103 Management approach 76-80,
A126-A129
401-1 New employee hires and employee turnover 77
401-2 Benefits provided to full-time employees that are not provided to 78, 140-141
temporary or part-time employees
404: Training and Education
103 Management approach 76-80, 140-142,
A126-A129
404-1 Average hours of training per year per employee 80
404-2 Programs for upgrading employee skills and transition assistance 80, 140-142
programs
405: Diversity and Equal Opportunity
103 Management approach 76-80, 94-95,
A126-A129
405-1 Diversity of governance bodies and employees 76-77, 94-95
406: Non-Discrimination
103 Management approach 142, A126-A129
406-1 Incidents of discrimination and corrective actions taken 142
410: Security Practices
Reporting Boundary: All local branches and offices of the BPI Group
103 Management approach 79, 140-142,
A126-A129
410-1 Security personnel trained in human rights policies or procedures 79, 140-142
414: Supplier Social Assessment
Reporting Boundary: All Facilities Sevices Group-managed suppliers of the BPI Group, excluding international offices
103 Management approach 84, A126-A129
414-1 New suppliers that were screened using social criteria 84
417: Marketing and Labeling
Reporting Boundary: All processes and parties involved in the BPI Group’s Customer Assistance Program
103 Management approach 83-84, 139-140,
A126-A129
417-2 Incidents of non-compliance concerning product and service 140
information and labeling

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Statement of Management’s Responsibility
For Non-Financial Data

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Table of Contents BPI Integrated Report 2019
 INDEPENDENT ASSURANCE STATEMENT
Introduction
DNV GL AS Philippines Branch (“DNV GL”) has been commissioned by the management of the Bank of the
Philippine Islands (“BPI” or the “Bank”, SEC Identification Number: PW-121) to undertake an independent
assurance of the sustainability/non-financial disclosures in BPI’s 2019 Integrated Report (the “Report”) in its
printed format for the year ended 31st December 2019. This Report is prepared by BPI for identified material
topics based on the Guiding Principles and Content Elements of the International <IR> Framework (“<IR>
Framework”). The intended users of this Assurance Statement are the management of the Bank.
We performed this assurance engagement using DNV GL’s assurance methodology VeriSustainTM1, which is
based on our professional experience, international assurance best practice including International Standard
on Assurance Engagements (ISAE) 3000 Revised*, along with the Global Reporting Initiative’s (“GRI’s”)
Principles for Defining Report Content and Report Quality. The verification engagement was carried out from
December 2019 to April 2020.
We understand that the reported financial data and related information are based on statutory disclosures
and Audited Financial Statements, which are subject to a separate independent statutory audit process. We
did not review financial disclosures and data as they are not within the scope of our assurance engagement.
We planned and performed our work to obtain the evidence we considered necessary to provide a basis for
our assurance opinion related to non-financial sustainability disclosures in this Report. We are providing a
‘limited level’ of assurance based on DNV GL VeriSustain and no external stakeholders were interviewed as
part of this assurance engagement.
The engagement excludes the review of the Bank’s position statements, the statements for the management
approach, and case studies and examples if any included in this Report.

Responsibilities of the Management of the Bank of the Philippine Islands and of the
Assurance Provider
The Board of BPI has sole responsibility for the preparation of the Report and is responsible for all information
provided as well as the processes for collecting, analysing and reporting the information presented in the
Report. BPI has stated that this Report was based on the <IR> framework and has adopted general
disclosures and selected performance indicators for disclosures related to identified material topics from the
GRI Standards 2016.
DNV GL’s assurance engagements are based on the assumption that the data and information provided by
the Bank to us as part of our review have been provided in good faith, true, and free from material
misstatements. Because of the selected nature (sampling) and other inherent limitation of both procedures
and systems of internal control, there remains the unavoidable risk that errors or irregularities, possibly
significant, may not have been detected. DNV GL was not involved in the preparation of any statement or
datum included in the Report except for this Assurance Statement. DNV GL expressly disclaims any liability
or co-responsibility for any decision a person or an entity may make based on this Assurance Statement.
Our verification engagement included limited level of verification of sustainability performance disclosures
for the identified material topics of BPI in the section “Stakeholder Engagement and Materiality”. Our
verification applies a ±5% uncertainty threshold towards errors and omissions for the performance data
brought out in the Report.

Basis of our Opinion and Limitations

A multi-disciplinary team of sustainability and assurance specialists performed assurance at the Head Office
at Makati City, and selected sites (BPI Buendia Center Branch, Makati) of BPI. We undertook the following
activities:
• Review of the non–financial sustainability disclosures in this Report;
• Review of approaches to materiality determination and stakeholder engagement; DNV GL did not have
any direct engagement with external stakeholders;
• Review of information provided to us by the Bank on its reporting and management processes related to
sustainability performance for the reporting year based on the reporting framework adopted by BPI
• Interviews with selected members of leadership team, and senior managers responsible for management
of sustainability issues and review of selected evidence to support issues discussed. We were free to
choose interviewees and interviewed those with overall responsibility for the programmes to deliver the
targets for medium- and long-term vision, mission and milestones;
• Performed desk review of selected sustainability parameters for sampled entities, and findings were
discussed with Corporate Sustainability Team;

1
The VeriSustain protocol is available on dnvgl.com.
* Assurance Engagements other than Audits or Reviews of Historical Financial Information.

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• Planned site visits to review the processes and systems for preparing site level sustainability data and
implementation of sustainability strategy. We were free to choose the sites that we visited as part of
verification;
• Review of supporting evidence for key claims and data disclosed in the Report. Our verification processes
were prioritised based on our risk-based approach, i.e. relevance of identified material topics and
sustainability context of the business;
• Review of the processes for gathering and consolidating the performance data and, for a sample,
checking the data consolidation at site and corporate levels.
The procedures performed in a limited assurance engagement vary in nature and are shorter in extent than
for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would have been obtained if a reasonable
assurance engagement had been performed. During the assurance process, we did not come across
limitations to the scope of the agreed assurance engagement.

Opinion and Observations

On the basis of the assurance engagement undertaken, nothing has come to our attention to suggest that
BPI’s 2019 Integrated Report does not properly describe the non-financial performance of identified material
topics based on the International <IR> Framework.
Without affecting our assurance opinion, we also provide the following observations:
Stakeholder Inclusiveness
The participation of stakeholders in developing and achieving an accountable and strategic response to
Sustainability.
Nothing has come to our attention to suggest that the Report does not meet the requirements
related to the Principle of Stakeholder Inclusiveness.
The Report has brought out key stakeholders identified (clients, shareholders, employees, government and
regulatory agencies, suppliers and contractors, and communities), based on significant influence on BPI’s
economic, social, and environmental performance and impacted by the Bank’s conduct of business in the
context of global, regional, and local megatrends. Further the Report details out methods of engagement
including frequency and their concerns in the section “Stakeholder Engagement and Materiality” of this
Report and how these engagements help BPI in formulating the organizational goals and strategies and helps
the Bank align with stakeholder needs and expectations.

Materiality
The process of determining the issues that are most relevant to an organization and its stakeholders.
Nothing has come to our attention to suggest that the Report does not meet the requirements
related to the Principle of Materiality.
The Report describes that BPI Has carried out an annual review and update of its materiality matrix to ensure
that its material topics reflect the issues relevant to the Bank’s stakeholders considering external
environment and dynamically changing landscape. Further BPI has also stated that they have considered
non-financial ESG rating disclosures due to emerging needs of financial capital providers – Investors. The
identified material topics are linked to six Capitals of <IR> framework.

Responsiveness
The extent to which an organization responds to stakeholder issues.
Nothing has come to our attention to suggest that the Report does not meet the requirements
related to the Principle of Responsiveness.
The Report brings out the Bank’s responses to identified material topics and significant issues which have
arisen during the reporting period through disclosures on Corporate Governance, Compliance, Risk, Business
Model, Sustainability Strategy Framework and delivering shared values. Further the Report also brings out
its non-financial performance related to its material topics through selected GRI Topic Specific Standards,
including the Bank’s ability to create value on the six capitals of <IR> framework.

Reliability
The accuracy and comparability of information presented in the report, as well as the quality of underlying
data management systems.
Nothing has come to our attention to suggest that the Report does not meet the requirements
related to the Principle of Reliability.
The majority of the performance disclosures verified through onsite and offsite verification, i.e. at the Head
Office and sampled sites, and through desk reviews, were found to be fairly accurate, reliable, identifiable
and traceable to the source. Considering the limited sampling, we did not detect any major errors related to
data collection or aggregation. We also reviewed the calculations and related assumptions used for its

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Table of Contents BPI Integrated Report 2019
 suitability, taking into account the principle of Reliability. Some of the data inaccuracies identified during the
verification process were found to be attributable to interpretation and aggregation errors. These identified
errors were communicated, and the responses and corrections made to the reported data and information
were reviewed.
Completeness
How much of all the information that has been identified as material to the organization and its stakeholders
is reported.
Nothing has come to our attention to suggest that the Report does not meet the requirements
related to the Principle of Completeness.
The Report discloses the Bank’s non-financial disclosures based on <IR> framework and performance during
the reporting period 2019 related to its material issues using appropriate GRI Topic Specific Standards, for
the identified boundary of operations and covering the Bank’s approaches to value creation and responses
to key challenges faced.
Neutrality
The extent to which a report provides a balanced account of an organization’s performance, delivered in a
neutral tone.
Nothing has come to our attention to suggest that the Report does not meet the requirements
related to the Principle of Neutrality.
The Report presents disclosures related to the Bank’s performance, challenges and concerns of stakeholders
during the reporting period in a neutral, consistent and balanced manner, applying adequate consideration
to not unduly influence stakeholders’ opinion made based on the reported data and information.

Statement of Competence and Independence

DNV GL applies its own management standards and compliance policies for quality control, in accordance
with ISO/IEC 17021:2015- Conformity Assessment Requirements for bodies providing audit and certification
of management systems, and accordingly maintains a comprehensive system of quality control including
documented policies and procedures regarding compliance with ethical requirements, professional standards,
and applicable legal and regulatory requirements. We have complied with the DNV GL Code of Conduct 2
during the assurance engagement and maintain independence wherever required by relevant ethical
requirements.
This engagement work was carried out by an independent team of sustainability assurance professionals.
DNV GL was not involved in the preparation of any statement or datum included in the Report except for this
Assurance Statement. DNV GL maintains complete impartiality toward internal stakeholders interviewed
during the assurance process.
DNV GL has provided assurance to Ayala Corporation, Ayala Land Inc. Manila Water Company Inc., AC Energy
and Globe Telecom, Inc. In our opinion, there is no conflict of interest in the assurance engagement provided
to the business units of Ayala Group. DNV GL did not provide any services to BPI in 2019 that could
compromise the independence or impartiality of our work.

For and on behalf of DNV GL AS Philippines Branch

Vadakepatth Nandkumar, Heng Chwin Mak Prasun Kundu,

Assurance Reviewer, Operations Manager – Assurance Reviewer,
Head - Sustainability South East Asia DNV GL – Business Assurance
Operations, DNV GL Technology Centre. India Private Limited.
DNV GL – Business Assurance Singapore 118227
India Private Limited.
11th April 2020, Manila, Philippines
-----------------------------------------------------------------------------------------------------------------------------------
DNV GL AS Philippines Branch is part of DNV GL – Business Assurance, a global provider of certification, verification, assessment and
training services, helping customers to build sustainable business performance. www.dnvgl.com

2
The DNV GL Code of Conduct is available from the DNV GL website (www.dnvgl.com)

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Leaders’ Biographies

BOARD OF DIRECTORS developing and maintaining a strong dialogue with investors

and other key stakeholders and has ensured that their views
JAIME AUGUSTO ZOBEL DE AYALA are considered during Board discussions and decision-
Position: Chairman making. He has also demonstrated a strong commitment
to ensuring that the highest standards of corporate
Tenure governance, ethics and compliance are maintained. Mr.
• Appointed Chairman March 2004 to Present Zobel has a strong commitment to national development,
• Appointed Vice-Chairman 1995 to March 2004 which is reflected in the thrust of the Ayala Group towards
• Appointed a Non-Executive Director March 1990 new capacity-building efforts in strategic sectors such as
power and transport infrastructure. In 2007, he received
Board Committee membership the Harvard Business School Alumni Achievement Award,
• Chairman of the Executive Committee the school’s highest recognition. He is also a recipient of
• Member of the Nomination Committee the Order of Mabini, rank of Commander (2015), Philippine
Legion of Honor, rank of Grand Commander (2010), and
Age Presidential Medal of Merit (2009).
60, Born 1959
Outside Interests/Commitments
Nationality He is a member of various international and local business
Filipino and socio-civic organizations, including the JP Morgan
International Council, Mitsubishi Corporation International
Career Advisory Committee, Global Board of Advisors of the
He has been a director of Ayala Corporation since May Council on Foreign Relations, Harvard Global Advisory
1987 and its Chairman and CEO since April 2006. Mr. Zobel Council, University of Tokyo Global Advisory Board, and
also serves on the Board of the following Philippine Stock Singapore Management University Board of Trustees.
Exchange (PSE) – listed companies, namely: Chairman He is also Chairman of Harvard Business School’s Asia-
of Globe Telecom, Inc. and Integrated Microelectronics, Pacific Advisory Board and Endeavor Philippines, and
Inc., and Vice-Chairman of Ayala Land, Inc., Manila Water former Chairman of the Asia Business council, and the
Company, Inc. and AC Energy Philippines, Inc. He is also Ramon Magsaysay Foundation. He was also the Philippine
the Chairman of Ayala Retirement Fund Holdings, Inc., Representative to the Asia Pacific Economic Cooperation
AC Industrial Technology Holdings, Inc., AC Ventures (APEC) Business Advisory Council from 2010-2015.
Holdings Corp., AC Infrastructure Holdings Corporation He is also the Chairman Emeritus of the Asia Business
and Asiacom Philippines, Inc.; Co-Chairman of Ayala Council, Co-Vice Chairman of the Makati Business Club,
Foundation, Inc. and Ayala Group Club, Inc.; Director of Chairman of Endeavor Philippines, and a board member of
Alabang Commercial Corporation, Ayala International Pte. Eisenhower Fellowships.
Ltd., AC Energy, Inc., Ayala Healthcare Holdings, Inc., Light
Rail Manila Holdings, Inc. and AG Holdings Limited. Environmental, Social and Governance
In 2017, the UN Global Compact named him a
Relevant Skills and Experience Sustainable Development Goals Pioneer for integrating
Chairman Jaime Zobel de Ayala has a distinguished track sustainability into business strategy and operations.
record as an international businessman. Having been the He was formerly a chairman of the World Wildlife Fund
CEO of Ayala Corporation, a holding company established in Philippine Advisory Council.
1834, with diverse business interests, a legacy of pioneering
the future and aspirations for sustainable national Education
development, Mr. Zobel has received may honors including: He received his B.A. in Economics (with honors) from
World Economic Forum Global Leader for Tomorrow Harvard University in 1981 and completed his MBA at
in 1995; Emerging Markets CEO of the year in 1998 Harvard Business School in 1987.
(sponsored by ING); Philippine TOYM (Ten Outstanding
Young Men) Award in 1999 and Management Association Other Philippine Stock Exchange-Listed Companies
of the Philippines Management Man of the Year Award Ayala Corporation - Chairman and Chief Executive Officer
in 2006. He has a deep understanding of international Globe Telecom, Inc. – Chairman of the Board
strategic, commercial and environmental issues, and Integrated Micro-Electronics, Inc. – Chairman of the
gained extensive experience as a member of the board of Board
directors of the companies in the Ayala Group in the areas Ayala Land, Inc. – Vice-Chairman of the Board
of banking, telecommunications, property development, Manila Water Company, Inc. – Vice-Chairman of the
water distribution, health and education, renewable Board
energy. During his time as Chair, he has been committed to AC Energy Philippines, Inc. – Vice-Chairman

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 Notes to Financial
Leaders’ Biographies
Statements

FERNANDO ZOBEL DE AYALA Education

Position: Vice-Chairman He holds a liberal arts degree from Harvard College and a
CIM from INSEAD, France.
Tenure
• Appointed Vice-Chairman April 2013 to Present Other Philippine Stock Exchange-Listed Companies
• Appointed a Non-Executive Director October 1994. Ayala Corporation – Director and President and Chief
Operating Officer
Board Committee membership Globe Telecom, Inc. – Co-Vice Chairman of the Board
• Vice-Chairman of the Executive Committee Integrated Micro-Electronics, Inc. – Director
• Chairman of the Personnel and Compensation Ayala Land, Inc. – Chairman of the Board
Committee Manila Water Company, Inc. – Chairman of the Board
• Member of the Nomination Committee AC Energy Philippines, Inc. – Chairman
Pilipinas Shell Petroleum Corp. – Independent Director
He is also a member of the Board of BPI Asset
Management and Trust Corporation and Chairman of the
Board of Trustees of BPI Foundation, Inc. CEZAR P. CONSING
Position: Executive Director
Age
59, Born 1960 Tenure
• Appointed Executive Director April 2013 to Present
Nationality • Appointed a Non-Executive Director February 1995
Filipino to January 2000
• Appointed Independent Director from August 2004
Career to January 2007 and from April 2010 to April 2013
Mr. Zobel has been a director of Ayala Corporation since
May 1994 and President and Chief Operating Officer He has served on BPI’s board of directors for more than
since April 2006. 15 years, including 5 years representing J.P. Morgan
& Co., which for some time was BPI’s second largest
Relevant Skills and Experience shareholder, and more than 5 years as an independent
Vice-Chairman Fernando Zobel de Ayala also has a director.
distinguished track record as an international businessman
as the President and COO of Ayala Corporation. He is Board Committee membership
Chairman of Ayala Land, Inc. and Manila Water Company, • Member of the Executive Committee
Inc., and AC Energy Philippines, Inc.; Director of Globe
Telecom, Inc. and Integrated Micro-Electronics, Inc.; Management Committee membership
and an Independent Director of Pilipinas Shell Petroleum • Chairman of the Credit Committee
Corp, all PSE-listed companies. He is Chairman of AC • Chairman of the Management Committee
International Finance Ltd. and AC Energy Holdings, Inc.;
Co-Chairman of Ayala Foundation, Inc.; Director of LiveIt Mr. Consing serves as chairman of BPI’s thrift bank,
Investments, Ltd., Ayala International Holdings Limited, investment bank, UK bank, property and casualty
and Honda Cars Philippines, Inc. insurance, leasing, and rental subsidiaries, and vice
chairman of its foundation; and is also a board director
Outside Interests/Commitments of BPI’s life insurance, asset management and micro
He is a member of the Board of Georgetown University finance subsidiaries. Mr. Consing served as Chairman
and INSEAD. He is a member of the World Presidents’ of the publicly listed National Reinsurance Corporation,
Organization and the Chief Executives Organization. He President and board director of Bancnet, Inc., and
also serves on the board of the Asia Society and is a board director of LGU Guarantee Corporation, three
member of the Asia Philanthropy Circle, a board member industry consortium institutions where BPI is a minority
of the Philippine National Museum and Pilipinas Shell shareholder.
Foundation.
In March 2019, Mr. Consing was elected as President of
Environmental, Social and Governance Bankers Association of the Philippines (BAP).
He is a Board member of the Habitat for Humanity
International and Chairman of Habitat for Humanity’s Age
Asia-Pacific Capital Campaign Steering Committee. He is 60, Born 1959
a member of the Board of Trustees of Caritas Manila.

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Nationality GERARDO C. ABLAZA, JR.
Filipino Position: Non-Executive Director

Career Tenure
Since 2013, he has been the President and Chief • Appointed Non-Executive Director April 2017 to
Executive Officer of Bank of the Philippine Islands (BPI) Present
and a Senior Managing Director of Ayala Corporation,
BPI’s controlling shareholder. Board Committee membership
• Member of the Personnel & Compensation
Relevant Skills and Experience Committee
Mr. Consing first worked for BPI, in corporate planning
and corporate banking, from 1981-1985. He worked for He is a member of the board of directors of BPI Family
J.P. Morgan & Co., based in Hong Kong and Singapore, Savings Bank, Inc. and BPI Capital Corporation.
from 1985-2004, rising to co-head the firm’s investment
banking business in Asia Pacific from 1997 - 2004, the Age
last five years as President of J.P. Morgan Securities (Asia 66, Born 1953
Pacific) Ltd. As a senior Managing Director of J.P. Morgan,
Mr. Consing was a member of the firm’s global investment Nationality
banking management committee and its Asia Pacific Filipino
management committee. Mr. Consing was a partner at
The Rohatyn Group from 2004 - 2013, headed its Hong Career
Kong office and its private investing business in Asia, and Mr. Ablaza is currently a Management Consultant at
was a board director of its real estate, and energy and the Ayala Corporation and a member of the Board of
infrastructure private equity investing subsidiaries. Directors in a number of Ayala’s subsidiaries including
PSE-listed Manila Water Company, Inc. (Non-Executive
Outside Interests/Commitments Director), AC Energy Philippines, Inc., AC Health, AC
Outside his association with BPI, Mr. Consing serves on Infrastructures and Ayala Foundation.
the boards of four private companies: The Rohatyn
Group, Sqreem Technologies, FILGIFTS.com and Relevant Skills and Experience
Endeavor Philippines. He has also served as an From 1998 to April 2009, he was President and CEO
independent board director of three public companies: of Globe Telecom, Inc. During this period, he took the
Jollibee Foods Corporation (2010 - present), CIMB Group company from being the fourth-ranked mobile services
Holdings (2006 - 2013) and First Gen Corporation (2005 provider to the second-largest full-service telecom
- 2013). He is also a board director of the US-Philippines operator with a subscriber base of 25 million in 2008.
Society and a trustee of the Manila Golf Club Foundation. From 2010 to 2017, he was the President and CEO
Mr. Consing has been a member of the Trilateral of Manila Water Company and was responsible for
Commission since 2014. overseeing the financial and operational growth within
Manila Water’s service areas in the Metro Manila East
Environmental, Social and Governance Zone and in its expansion areas. In 2004, Mr. Ablaza
In recent years, he has served on the advisory was recognized by CNBC as the Asia Business Leader
committees of De La Salle University, Manila, and its of the Year, making him the first Filipino CEO to win the
school of economics. award. He was also awarded by Telecom Asia as the Best
Asian Telecom CEO. In 2013, he was recognized for his
Education consistent leadership and innovation across the banking,
Mr. Consing received an A.B. Economics degree investment, telecommunications and utility service
(Accelerated Program), magna cum laude, from De La industries through the Citi Distinguished Alumni Award
Salle University, Manila, in 1979. Mr. Consing obtained for Leadership and Ingenuity. He was the first Filipino to
an M.A. in Applied Economics from the University of be awarded with such an honor.
Michigan, Ann Arbor, in 1980.

Other Philippine Stock Exchange-Listed Companies

National Reinsurance Corporation of the Philippines –
Chairman of the Board (until June of 2019)
Jollibee Foods Corporation – Independent Director

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 Notes to Financial
Leaders’ Biographies
Statements

Outside Interests/Commitments Relevant Skills and Experience

In June 2015, he became a member of the International Mr. Bernardo is a former undersecretary of the Department
Advisory Panel of the Institute for Water Policy under of Finance and founded his consultancy practice, Lazaro
the Lee Kuan Yew School of Public Policy in Singapore. Bernardo Tiu & Associates in 1997. He has been advisor
In 2017, he became a member of the Board of Directors to various multilateral institutions such as the World Bank,
and Executive Committee of Advance Info Services, PLC International Finance Corporation, Asian Development
based in Thailand. Bank, and Japan International Cooperation Agency. He has
also worked with government institutions and the National
Environmental, Social and Governance Economic Development Authority (NEDA) in policy matters
As one of the most accomplished graduates of his alma involving pension reform, capital markets reform, and
mater, he sits as a member of the Board of Trustees in fiscal and debt management.
various De La Salle schools in the country.
Outside Interests/Commitments
Education He also serves as Vice Chairman of The Foundation
Mr. Ablaza graduated summa cum laude from the De La for Economic Freedom and is a Board Director of Finex
Salle University in 1974 with a degree in Liberal Arts, Foundation.
major in Mathematics (Honors Program).
Environmental, Social and Governance
Other Philippine Stock Exchange-Listed Companies Mr. Bernardo is a public advocate of good corporate and
Manila Water Company, Inc. – Non-Executive Director national governance and frequently writes on the subject
AC Energy Philippines, Inc. – Non-Executive Director in his capacity as Vice-Chairman and Co-Founder of the
Foundation for Economic Freedom.

ROMEO L. BERNARDO Education

Position: Non-Executive Director Mr. Bernardo graduated with a B.S. Business Economics
degree (magna cum laude), from the University of the
Tenure Philippines in 1974. He obtained his M.A. Development
• Appointed Non-Executive Director February 1998 Economics (Valedictorian) at Williams College,
• Appointed Independent Director from August 2002 Williamstown, Massachusetts in 1977.
to April 2019
• Appointed Non-Executive Director April 2019 to Other Philippine Stock Exchange-Listed Companies
Present Aboitiz Power Corporation – Independent Director
National Reinsurance Corporation of the Philippines –
Board Committee membership Independent Director
• Chairman of the Nominations Committee RFM Corporation – Independent Director
• Member of the Personnel & Compensation Globe Telecom, Inc. – Non-Executive Director
Committee

Until 2019, he also served as Independent Director of IGNACIO R. BUNYE*

BPI Capital Corporation, BPI/MS Insurance Corporation, Position: Independent Director
BPI-Philam Life Assurance Corporation and BPI Asset
Management and Trust Corporation. Tenure
• Appointed Independent Director April 2016 to
Age Present
64, Born 1954
Board Committee membership
Nationality • Chairman of the Related Party Transaction
Filipino Committee
• Member of the Corporate Governance Committee
Career
He is the Chairman of the Board of Directors He serves as an Independent Director of BPI Asset
(Independent) of ALFM Funds (Peso, Dollar, Euro, Management and Trust Corporation and BPI Direct
Growth, Money Market Bond Funds) and the Philippine BanKo, Inc., A Savings Bank.
Partner of GlobalSource Partners, Inc., a worldwide
association of country-based experts providing insights Age
on global emerging markets. 74, Born 1945

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A relationship that nurtures your future Table of Contents
Nationality OCTAVIO VICTOR R. ESPIRITU*
Filipino Position: Independent Director

Career Tenure
Mr. Bunye was a member of the Monetary Board of the • Appointed Non-Executive Director April 2000
Bangko Sentral ng Pilipinas from 2008 to 2014. He • Appointed Independent Director April 2003 to
previously held the positions of Presidential Political Present
Adviser in 2008, Presidential Spokesperson in 2003,
and Press Secretary in 2002. He began his government Board Committee membership
service in the City of Muntinlupa (then a municipality) as • Chairman of the Risk Management Committee
officer-in-charge and mayor between 1986 and 1998. • Member of the Audit Committee
In a concurrent capacity, he also served as Chairman
of the Metropolitan Manila Authority (now Metropolitan Age
Manila Development Authority) between 1991 and 1992, 76, Born 1943
and was a member of the House of Representatives
representing Muntinlupa between 1998 and 2001. Nationality
Filipino
Relevant Skills and Experience
In earlier years, he worked at the Filipinas Foundation Career
Inc. as Assistant Corporate Secretary from 1970 to 1975, Mr. Espiritu was the former President and Chief Executive
Assistant Vice President of BPI Investment Corporation Officer of Far East Bank & Trust Company (FEBTC), a
from 1976 to 1983 and Assistant Vice President for commercial bank established in 1960 which became a
Corporate Banking and Treasury at the Bank of the publicly-listed company in 1991. In 2000, BPI acquired
Philippine Islands from 1983 to 1985. He also held various FEBTC.
executive positions at the Ayala Group of Companies,
including Assistant Vice President of the Ayala Investment Outside Interests/Commitments
and Development Corporation. Significant awards and He is a member of the Board of Directors of Philippine
recognition received by Mr. Bunye include the Asian Dealing System Holdings Corporation and Subsidiaries;
Institute of Management Honor and Prestige Award, the Philippine Stratbase Consultancy, Inc., Pueblo de Oro
Bangko Sentral Service Excellence Medal, the Gran Oden Golf & Country Club, and The Country Club, Inc.
de Isabela Catolica, and the Order of Lakandula.
Environmental, Social and Governance
Outside Interests/Commitments He became the President of the Bankers Association
A former print and broadcast journalist, he now writes of the Philippines for three consecutive terms. He was
a regular weekly column for Manila Bulletin, Tempo, also the Chairman of the Board of Trustees of Ateneo de
People’s Tonight, Sun Star, BusinessWeek Mindanao, Manila University for 14 years).
Panay News and Filipino Reporter (in New York).
Education
Environmental, Social and Governance Mr. Espiritu graduated with an A.B. Economics degree
During his twelve-year stewardship in Muntinlupa, Mr. from the Ateneo de Manila University in 1963 and
Bunye founded the Muntinlupa Polytechnic College obtained his M.A. Economics degree from Georgetown
(now Pamantasan ng Lungsod ng Muntinlupa) and laid University, U.S.A in 1966.
the foundation for the establishment of the Ospital ng
Muntinlupa (hospital). Other Philippine Stock Exchange-Listed Companies
International Container Terminal Services, Inc. –
Education Independent Director
Mr. Bunye is a member of the Philippine Integrated Bar.
He obtained his Bachelor of Arts degree and Bachelor
of Laws degree from the Ateneo de Manila University in
1964 and 1969 respectively. He passed the Philippine
Bar Examination in 1969.

Other Philippine Stock Exchange-Listed Companies

None

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 Notes to Financial
Leaders’ Biographies
Statements

REBECCA G. FERNANDO Age

Position: Non-Executive Director 58, Born 1961

Tenure Nationality
• Appointed Non-Executive Director from October Filipino
1995 to 2007
• Appointed Non-Executive Director from March 2009 Career
to present He is currently the Chief Finance Officer, Chief Risk
Officer, Chief Sustainability Officer of Ayala Corporation,
Board Committee membership a PSE-listed company and Finance Group Head of the
• Member of the Executive Committee Ayala Group. He is a Director of Ayala Hotels, Inc.,
• Member of the Related Party Transaction Committee AC Energy, Inc., Ayala Healthcare Holdings, Inc., AC
• Member of the Retirement/Pension Committee Infrastructure Holdings Corporation, Ayala Aviation
Corporation. AC Education, Inc., Asiacom Philippines,
She is also a member of the Board of Directors of BPI Inc., AG Counselors Corporation, Michigan Holdings, Inc.,
Capital Corporation, BPI Family Savings Bank, Inc., and AC Industrial Technology Holdings, Inc. (formerly Ayala
BPI Asset Management and Trust Corporation. Automotive Holdings Corporation), A.C.S.T. Business
Holdings, Inc. He is the Treasurer of Ayala Retirement
Age Fund Holdings, Inc. President and CEO of AC Ventures
71, Born 1948 Holdings, Inc., (formerly Water Capital Works, Inc.),
AYC Finance Limited, Bestfull Holdings Limited, and
Nationality Purefoods International Limited. He is the Vice Chairman
Filipino of Lagdigan Land Corporation, President of Liontide
Holdings, Inc. and of Philwater Holdings Company, Inc.
Career
Ms. Fernando is the Financial Consultant and Member of Relevant Skills and Experience
the Finance Boards of The Roman Catholic Archbishop Previously, he served as President of BPI Family Savings
of Manila and of The Roman Catholic Archbishop of Bank from 2010-2015 and President of BPI Capital
Antipolo. Corporation from 2007-2010. He served as the President
of the Chamber of Thrift Banks from 2013-2015. He was
Relevant Skills and Experience also Officer-in-Charge for Ayala Life Assurance, Inc. in
She is a Certified Public Accountant. 2009 and Director and Chairman of Ayala Plans, Inc. in
2010-2011.
Education
She graduated with a BSBA degree major in accounting Mr. Limcaoco joined Ayala Corporation as a Managing
from the University of the Philippines in 1970. She Director in 1998. Prior to his appointment as CFO in
took further studies for an MBA at the University of April 2015, he held various responsibilities including
the Philippines and attended an Executive Program on Trustee and Treasurer of Ayala Foundation, Inc.,
Transnational Business at the Pacific Asian Management President of myAyala.com, and CFO of Azalea Technology
Institute at the University of Hawaii. Investments, Inc. He was named as the ING-Finex CFO
of the Year in 2018. He has held prior positions with JP
Other Philippine Stock Exchange-Listed Companies Morgan & Co. and with BZW Asia.
None
Outside Interests/Commitments
He is an Independent Director of SSI Group, Inc.,
JOSE TEODORO K. LIMCAOCO Chairman of Darong Agricultural and Development
Position: Non-Executive Director Corporation and Zapfam Inc. He is a director of LICA
Management Inc. and Just For Kids, Inc.
Tenure
• Appointed Non-Executive Director February 2019 to Education
Present He graduated from Stanford University with a BS
Mathematical Sciences (Honors Program) in 1984
Board Committee membership and from the Wharton School of the University of
• Member of the Executive Committee Pennsylvania with an MBA (Finance and Investment
Management) in 1988.

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Other Philippine Stock Exchange-Listed Companies Outside Interests/Commitments
Globe Telecom, Inc. – Non-Executive Director He is the Chairman and President of XPL Manitou
Integrated Micro-Electronics, Inc. – Non-Executive Properties, Inc. and Vice-Chairman of XPL MTJL
Director Properties Inc. He is a member of the Board of Directors/
SSI Group, Inc. - Independent Director Trustees of DAOI Condominium Corporation and E. Zobel
Foundation

XAVIER P. LOINAZ* Environmental, Social and Governance

Position: Independent Director Chairman of the Board of Alay Kapwa Kilusan
Pangkalusugan.
Tenure
• Appointed Executive Director from March 1982 to Education
March 2004 He graduated with an A.B. Economics degree from the
• Appointed Non-Executive Director from January Ateneo de Manila University in 1963, and obtained his
2005 to March 2009 MBA Finance at the Wharton School of Pennsylvania in
• Appointed Independent Director from March 2009 to 1965.
Present
Other Philippine Stock Exchange-Listed Companies
Board Committee membership Ayala Corporation – Independent Director
• Chairman of the Audit Committee
• Member of the Nomination Committee
AURELIO R. MONTINOLA III
He is also an Independent Director of BPI Family Savings Position: Non-Executive Director
Bank, Inc. and BPI/MS Insurance Corporation.
Tenure
Age • Appointed Non-Executive Director from January
76, Born 1943 2004 to December 2004
• Appointed Executive Director from January 2005 to
Nationality April 2013
Filipino • Appointed Non-Executive Director from April 2013
to Present
Career
He held the position of President and Chief Executive Board Committee membership
Officer of the Bank for 22 years from 1982 to 2004. • Member of the Executive Committee
• Member of the Risk Management Committee
Relevant Skills and Experience • Member of the Nomination Committee
Under his presidency of the Bank, BPI obtained its • Member of the Personnel and Compensation
universal banking license. It was also during his tenure Committee
that BPI consummated the biggest merger in the banking
industry when it acquired the former Far East Bank & Among the several BPI subsidiaries and affiliates, Mr.
Trust Company (FEBTC). This merger strengthened its Montinola serves as member of the Board of Directors
foothold in the asset management & trust services, of the following: BPI Capital Corporation, BPI Direct
enhanced its penetration of the middle market, as well BanKo, Inc., BPI Family Savings Bank, Inc., and BPI/MS
as further reinforced its dominance in branch banking. Insurance Corporation.
In 2000, it also formalized its acquisition of three
major insurance companies in the life, non-life and Age
reinsurance fields. This move integrated the insurance 68, Born 1951
product line into the bank’s basket of financial products
for its customers. During his presidency, the Bank also Nationality
established in February 2000 BPI Direct Savings Bank, Filipino
a savings bank focused on providing internet and mobile
banking services to its customers, which was to become Career
the forerunner of BPI Direct BanKo. He was President of Mr. Montinola served as President and Chief Executive
the Bankers Association of the Philippines for two terms Officer of BPI for eight years from 2005 to 2013, and BPI
from 1989 to 1991. Family Savings Bank, Inc. for twelve years from 1992 to
2004.

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 Notes to Financial
Leaders’ Biographies
Statements

Relevant Skills and Experience Relevant Skills and Experience

Significant awards received by Mr. Montinola include She was a member of the Board of Directors of Ayala
Management Man of the Year 2012 (Management Corporation from 2004 until September 2010. She is a
Association of the Philippines), Asian Banker Leadership CPA-Lawyer.
Award (twice), and Legion d’Honneur (Chevalier) from the
French Government. Outside Interests/Commitments
She serves as Director of the following companies: Ayala
Outside Interests/Commitments Land Commercial REIT, Inc., Michigan Holdings, Inc., and
Mr. Montinola is the Chairman of East Asia Computer Anvaya Cove Beach and Nature Club, Inc. She is Vice-
Center Inc., and Amon Trading Corporation. President of Sonoma Properties, Inc.

Environmental, Social and Governance Environmental, Social and Governance

Mr. Montinola is a member of the Board of Trustees She is a member of the Board of Trustees of Ayala
of BPI Foundation Inc. and the Kabang Kalikasan ng Foundation, Inc. and BPI Foundation, Inc.
Pilipinas Foundation, Inc. He also sits as Vice-chairman
of Philippine Business for Education Inc. Education
Ms. Nolledo graduated with the degree of Bachelor of
Education Science in Business Administration major in Accounting
He obtained his Bachelor of Science in Management (magna cum laude) from the University of the Philippines
Engineering degree at the Ateneo de Manila University in in 1960 and placed second at the Certified Public
1973 and his MBA from the Harvard Business School in Accountant Licensure Board Examination administered
1977. in the same year. In 1965, she obtained her Bachelor
of Laws degree (cum laude) also from the University of
Other Philippine Stock Exchange-Listed Companies the Philippines where she also placed second at the Bar
Far Eastern University, Incorporated – Chairman of the Examination held in the same year.
Board
Roxas and Company, Inc. – Independent Director Other Philippine Stock Exchange-Listed Companies
Xurpas, Inc. – Non-Executive Director
D&L Industries, Inc. – Independent Director
MERCEDITA S. NOLLEDO
Position: Non-Executive Director
ANTONIO JOSE U. PERIQUET*
Tenure Position: Independent Director
• Appointed Non-Executive Director November 1991
to Present Tenure
• Appointed Independent Director April 2012 to
Board Committee membership Present
• Chairman of the Retirement/Pension Committee
• Member of the Corporate Governance Committee Board Committee membership
• Member of the Executive Committee
Ms. Nolledo is also a Director in the following BPI • Member of the Personnel and Compensation
subsidiaries and affiliates: BPI Investment Management, Committee
Inc., where she sits as Chairman; BPI Family Savings • Member of the Retirement/Pension Committee
Bank, Inc., BPI Capital Corporation and BPI Asset
Management and Trust Corporation. Mr. Periquet is the Chairman/Independent Director of BPI
Asset Management and Trust Corporation. He serves as
Age an Independent Director of BPI Capital Corporation and
78, Born 1941 BPI Family Savings Bank, Inc.

Nationality Age
Filipino 58, Born 1961

Career Nationality
Ms. Nolledo was a Senior Managing Director and also Filipino
served as Corporate Secretary of Ayala Corporation and
Senior Counsel of the Ayala Group of Companies.

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A relationship that nurtures your future Table of Contents
Career Nationality
Mr. Periquet spent the early part of his career doing equity Filipino
research, sales and trading for several firms in London,
eventually joining Deutsche Bank as head of the Asian Career
Equities desk. In 2000, he established Deutsche Regis While currently a Visiting Professor of Economics at
Partners, Inc., a joint-venture with Deutsche Bank, which Williams College, MA, USA, Mr. Remolona previously
became the largest stockbroker in the Philippines were he worked for 14 years at the Federal Reserve Bank of
as Chairman, Managing Director & Head-Research. New York and 19 years at the Bank for International
Settlements (BIS). He served as the Chief Representative
Relevant Skills and Experience for Asia and the Pacific of the BIS. He also served as
He also, at one time, served on three government boards: Secretary of the Asian Consultative Council, which
the Development Bank of the Philippines, the DBP consists of the governors of the 12 leading central
Leasing Corp., and the Metro Rail Transit Corp. banks in the region. He was an Associate Editor of the
International Journal of Central Banking. Until 2008,
Outside Interests/Commitments he was Head of Economics for Asia and the Pacific of
He is also an Independent Director of Albizia ASEAN the BIS. Mr. Remolona joined the BIS in 1999 and for 6
Tenggara Fund, Chairman of the Campden Hill Group, Inc. years served as Head of Financial Markets in Basel and
and Pacific Main Holdings. Editor of the BIS Quarterly Review. Before that, he was
Research Officer of the Federal Reserve Bank of New
Environmental, Social and Governance York.
He is a trustee of Lyceum University of the Philippines,
a member of the finance committees of the Ateneo de Relevant Skills and Experience
Manila University and the Philippine Jesuit Provincial and He has extensive policy experience in financial markets,
a member of the Dean’s Global Advisory Council at the sovereign risk, international finance, central banking and
University of Virginia’s Darden School of Business. monetary policy. He also taught at Columbia University,
New York University and the University of the Philippines.
Education
Mr. Periquet graduated from the Ateneo de Manila Outside Interests/Commitments
University with an AB Economics degree in 1982. He He is also currently Associate Editor of the International
also holds a Master of Science degree in Economics from Journal of Central Banking.
Oxford University and an MBA from the University of
Virginia. Environmental, Social and Governance
He is an Advisor to the Academy of finance in Hong Kong.
Other Philippine Stock Exchange-Listed Companies
ABS-CBN Corporation – Independent Director Education
ABS-CBN Holdings Corporation – Independent Director Mr. Remolona obtained his Bachelor’s Degree in
Ayala Corporation – Independent Director Economics from Ateneo de Manila University and has a
DMCI Holdings, Inc. – Independent Director Ph.D. in Economics from Stanford University.
Semirara Mining Corporation – Independent Director
Max’s Group of Companies – Independent Director Other Philippine Stock Exchange-Listed Companies
Philippine Seven Corporation – Independent Director None

ELI M. REMOLONA, JR.* MARIA DOLORES B. YUVIENCO*

Position: Independent Director Position: Independent Director

Tenure Tenure
• Appointed Independent Director April 2019 to • Appointed Independent Director April 2016 to
Present Present
• Appointed Non-Executive Director April 2014
Board Committee membership
• Member of the Risk Management Committee Board Committee membership
• Chairman of the Corporate Governance Committee
Age • Member of the Audit Committee
67, Born 1952 • Member of the Related Party Transaction Committee

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 Notes to Financial
Leaders’ Biographies
Statements

Ms. Yuvienco is an Independent Director of BPI Asset nominee shall qualify to be elected as Director unless
Management and Trust Corporation. this requirement is complied with. In accordance with
this, the nominations are subsequently processed and
Age evaluated by the Nomination Committee of the Bank in a
72, Born 1947 meeting called for that purpose in compliance with SRC
Rule 38.
Nationality
Filipino
ANGELA PILAR B. MARAMAG
Career Corporate Secretary
Ms. Yuvienco worked for 41 years with the Bangko
Sentral ng Pilipinas (formerly known as Central Bank Filipino, 50 years old, was appointed Corporate Secretary
of the Philippines) under various capacities until her on April 8, 2015. She is also the Corporate Secretary or
compulsory retirement in March 2013. She held the post Deputy Corporate Secretary of various BPI subsidiaries
of Assistant Governor in the Supervision and Examination and affiliates, including BPI Family Savings Bank, BPI
Sector when she retired. Capital, BPI Forex, BPI/MS Insurance Corp., and BPI
Century Tokyo Lease and Finance Corp.
Relevant Skills and Experience
Her exposure at the BSP was largely in bank supervision Prior to joining BPI, Ms. Maramag was Senior Counsel
where her responsibilities ranged from the crafting at the Bank for International Settlements (BIS) in Basel,
of policies/regulations on banking supervision to Switzerland, from 2001 to 2008, and Head of Finance
onsite examination and off-site monitoring of BSP- and Administration at the BIS Representative Office in
supervised entities. As a ranking official in the BSP, she Hong Kong from 2008 to 2011. She was a Legal Officer at
had opportunities to meet and share ideas with her the United Nations Compensation Commission in Geneva,
counterparts in other central banks in the region. Owing to Switzerland, from 1998 to 2001.
her experience, she was tapped as a resource speaker in
various training programs of the Southeast Asian Center Ms. Maramag was admitted to the Philippine Bar (1995)
for Banking in Kuala Lumpur. She is a Certified Public and New York State Bar (1998). She received her Master
Accountant and a Career Executive Service Professional. in Laws (LL.M) from the University of Chicago in 1997,
Juris Doctor (J.D) in 1994 from Ateneo de Manila School
Outside Interests/Commitments of Law, and AB Honors Program in Economics in 1990
In April 2018, Ms. Yuvienco was elected as Independent from Ateneo de Manila University.
Director of First Consolidated Bank (Thrift Bank), and was
chosen to chair the Nomination and Governance Committee.
SENIOR MANAGEMENT
Education
Ms. Yuvienco graduated from St. Theresa’s College, RAMON L. JOCSON
Quezon City in 1967, with a degree of Bachelor of Science Executive Vice President & Chief Operating Officer
in Commerce, major in Accounting. She took up post
graduate studies at the University of the Philippines Filipino, 60 years old, Mr. Jocson is currently an EVP
Diliman. and the COO of BPI. He is the Head of BPI’s Enterprise
Services Segment (ESS), which serves as the enterprise
Other Philippine Stock Exchange-Listed Companies backbone of the organization that includes Human
None Resources, Centralized Operations, Information
Systems, Digital Channels, Business Transformation,
*Independent Director as defined in Sec. 38 of the Data Science, Facilities Services, Corporate Affairs and
Securities Regulation Code and BSP Circular Nos. 296 Communications, and Customer Experience Management
and 749. Office. He chairs the Bank’s IT Steering Committee and
is a member of the Bank’s Management Committee.
Per Article V of the Amended By-Laws of the Bank, all He is currently the Vice-Chairman of the CyberSecurity
nominations for election of Directors by the stockholders Committee of the Bankers Association of the Philippines.
shall be submitted in writing to the Board of Directors
through the Corporate Secretary, together with the Mr. Jocson began his career as a Systems Analyst
written acceptance of the nominee, not later than the with IBM Manila in 1982, subsequently taking on more
date prescribed by law, rules and regulations or at such responsibility as he assumed different positions,
earlier or later date as the Board of Directors may fix. No including Information Systems Manager, Systems

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A relationship that nurtures your future Table of Contents
Engineering Manager and Manager of Quality. In 1995, She joined BPI in 1995 through the Bank Officers
he was assigned in Singapore where he led IBM’s Development Program. She has 25 years of banking
Applications/Systems Integration business in ASEAN experience with expertise in strategic planning and
and South Asia. In 1996, he was appointed as Managing finance, corporate banking, debt and equity capital
Director for IBM Philippines. In 2000, he took on a new markets, portfolio management, trust, and wealth
assignment as Vice President and GM of IBM Global management. She previously served on the BPI
Services, ASEAN and South Asia. He was then appointed Trust Committee and the board of BPI Investment
as Vice President and GM of IBM Global Services for Management, Inc. Prior to her banking career, she
Industrial Sector for Asia Pacific in 2005. In 2007, he worked for the National Economic and Development
took on the role of Vice President and GM of Application Authority, and the Agricultural Policy Credit Council.
Services for the Growth Market Unit, where he led IBM’s
Applications Management and Application Integration She previously served as president of the Fund Managers
Services in Asia Pacific, Central and Eastern Europe, Latin Association of the Philippines, president of the Trust
America and Middle East/Africa. He was then appointed Officers Association of the Philippines, vice-chairman
as VP & GM of Integrated Technology Services for Asia of Capital Markets Development Committee of FINEX,
Pacific in 2010. In 2013, he was appointed as VP & GM alternate governor of the Market Governance Board
of IBM Global Services for Central and Eastern Europe of Philippine Dealing and Exchange Corporation, and
based in Prague, Czech Republic. In this capacity, he was member of the National Advisory Council of WWF
responsible for IBM’s services portfolio in Russia/CIS, Philippines.
Turkey, Poland & Baltics, Central Europe and South East
Europe. From January 2015 he was in Singapore as IBM Ms. Marcial obtained her Master’s Degree in Economics
Asia Pacific VP & GM for Strategic Outsourcing, until he in 1995 from the University of the Philippines Diliman
joined BPI in September 2015. and BS Economics, Cum Laude, from the University of
the Philippines Los Baños in 1990. She completed the
He was also a member of IBM’s Growth & Transformation Advanced Management Program at Harvard Business
Team, which is composed of the top senior leaders in IBM School in 2010 and the CFA Institute Investment
which worked directly with the Chairman on key/strategic Management Workshop also at Harvard Business School
initiatives. He has served on several external boards, in 2006.
including the Economic Development Board of Singapore,
Philamlife and iPeople.
ANTONIO V. PANER
Mr. Jocson obtained his B.S. Industrial Engineering Executive Vice President & Treasurer
degree from the University of the Philippines in 1982.
He also has an MBA from the Ateneo Graduate School of Filipino, 61 years old, Mr. Paner serves as Treasurer and
Business. head of the Bank’s Global Markets Segment. As such, he
is responsible for managing the Bank’s interest rate and
liquidity gaps, as well as its fixed income and currency
MARIA THERESA MARCIAL JAVIER market-making, trading, and distribution activities– in
Executive Vice President & Chief Finance Officer the Philippines and abroad. Mr. Paner is Chairman of the
Bank’s Asset & Liability Committee and is a member of
Filipino, 49 years old, is the Chief Finance Officer and the Management Committee and Asset Management
Head of Strategy and Finance of BPI. She is responsible Investment Council. He also serves on the board of BPI
for strategic planning, accounting, financial control, Europe Plc.
capital management, balance sheet management and
analytics, corporate legal affairs, management and sales Mr. Paner joined BPI in 1985, when the Bank acquired
of bank assets, and investor relations. Family Savings Bank and performed various Treasury and
Trust positions until 1989. Between 1989 and 1996, he
She is a member of BPI’s Management Committee, Asset worked at Citytrust, then the consumer banking arm of
and Liability Committee, Credit Committee, and chairs Citibank in the Philippines, which BPI acquired in 1996.
the Finance Committee. She is a board director of BPI/ At BPI, he has been responsible for various businesses
MS Insurance Corporation, BPI Europe Plc, and Global of the bank, including Risk Taking, Portfolio Management,
Payments Asia-Pacific Philippines, Inc. She is a fellow of Money Management, Asset Management, Remittance
Foundation for Economic Freedom, trustee and treasurer and Private Banking. Mr. Paner served as President of the
of World Wide Fund for Nature (WWF) Philippines, Money Market Association of the Philippines (MART) in
treasurer of BPI Foundation, and board director of the 1998 and remains an active member up to present. He is
Philippine Inter-Island Sailing Federation. currently the Vice Chairman of the Bankers Association

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Leaders’ Biographies
Statements

of the Philippines’ (BAP) Open Market Committee. He is Mr. Paterno received his MBA from Stanford University
also a member of the Makati Business Club, Management in 1984 and his AB Honors Program in Economics (Cum
Association of the Philippines, British Chamber of Laude) from the Ateneo de Manila University in 1980.
Commerce, and the Philippine British Business Council.
Mr. Paterno retired as of June 30, 2019. He is the Founder
He obtained an A.B. Economics degree from Ateneo and CEO of 2QR Corporation, a financial Technology
de Manila University in 1979 and completed various start-up.
courses in Business and Finance, including Strategic
Financial Management in 2006. In 2009, he completed
the Advanced Management Program at Harvard Business MARIE JOSEPHINE M. OCAMPO
School. Executive Vice President

Mr. Paner retired as of December 31, 2019. Filipino, 58 years old, Ms. Ocampo is the Head of the
Mass Retail Segment of the Bank. She is responsible for
BPI’s Unsecured Lending and Cards Group in which she
SIMON R. PATERNO oversees BPI’s credit, debit and prepaid card businesses
Executive Vice President as well as personal and micro finance loans. Ms. Ocampo
is currently the Chairman of BPI Direct BanKo. She is a
Filipino, 61 years old, Mr. Paterno serves as head of BPI’s member of the Board of TAFE Corporation, BPI Payments
Financial Products & Alternative Channels. As such, he Holdings Inc., Global Payments Asia-Pacific Philippines,
is responsible for building and managing BPI’s service Inc., AF Payments Inc., Zalora Philippines and CARD MRI
capabilities across all asset, liability, payments, and Rizal Bank Inc.
bancassurance platforms. He also serves on the Bank’s
Management, Asset & Liability, Credit Committees, as Ms. Ocampo started her career in BPI as Vice-President
well as on the Boards of AF Payments, Zalora Philippines, for Marketing and Sales of BPI Credit Cards in 1996.
BPI Century Tokyo Lease and Finance Corporation, BPI She soon took the position of President for BPI Card
Century Tokyo Rental Corporation, BPI/MS Insurance Corporation, the bank’s credit card subsidiary where
Corporation and BPI Direct BanKo where he is the she won the prestigious Agora Award-2000 Marketing
Chairman. Company of the Year. In 2005, Ms. Ocampo was then
cross-posted to BPI’s Consumer Banking Group as Head
Prior to joining BPI, Mr. Paterno represented CIMB in its of Kiosk Banking and Head of Personal Banking. She
search for a Philippine bank investment, having joined also became the Chief Marketing Officer of BPI from
the group in late 2012 as CEO-designate of Bank of 2008 until 2014 where she was responsible for retooling
Commerce, which was targeted for acquisition by CIMB. the bank’s data warehouse and customer analytics
Between 2004 and 2012, he was Managing Director and capabilities into its distinct competitive advantage. Ms.
Country Manager of Credit Suisse, where he also founded Ocampo also developed the bank’s CRM initiatives on
and served as Chairman of Credit Suisse Securities top of driving the bank’s advertising and digital initiatives
Philippines, Inc., the firm’s securities broker/dealer across the breadth of products, channels and services. In
subsidiary. Between 2002 and 2004, Mr. Paterno was 2015, she became the Payments and Remittance group
President & CEO of Development Bank of the Philippines head, and was tasked to grow fee revenue via expanding
and concurrently Chairman of the LGU Guarantee Corp. existing businesses and developing new payment
and other DBP subsidiaries. Prior to DBP, Mr. Paterno was platforms.
a Managing Director at J.P. Morgan, where he spent 18
years in various capacities, rising from Head of Philippine Prior to joining BPI, Ms. Ocampo gained her extensive
banking to Head for sovereign clients in all of Asia. marketing experience as Assistant Product Manager at
During the Asian Financial Crisis, he led the project teams Johnson & Johnson Australia in 1985 and as Associate
that advised the Indonesian Bank Restructuring Agency Marketing Manager in Johnson & Johnson Philippines
(IBRA) and its Malaysian counterpart, Danaharta. in 1987. She led the expansion of Johnson & Johnson’s
Health Care, Baby Care and Sanitary Protection business.
In his career, Mr. Paterno worked on some of the most
significant sovereign financing transactions in the Ms. Ocampo graduated Magna Cum Laude and received
Philippines: restructuring of its foreign debt (1991), debut her Bachelor of Science in Business Management,
eurobond (1992), Brady exchanges (1994), Domestic Honors Program at Ateneo de Manila University. She also
Bond Exchanges (2006), and Debt Exchange Warrants completed the Advanced Management Program at the
(2008). Harvard Business School in 2007

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JUAN CARLOS L. SYQUIA Mr. Alonso was involved with Corporate Relationship
Executive Vice President Management for most of his 22 year career in BPI,
having started as a Market Head in the Asian Division
Filipino, 53 years old, is Head of Corporate Banking. Prior and eventually becoming Division Head of the Asian
to taking on this role in 2018, he was the President of BPI Corporates/PEZA Division. The Division also included the
Capital Corporation and Co-Head for Investment Banking Special Projects Team under the Financial Institutions
for the Bank. He has over 28 years of work experience in Group and BPI Leasing Corporation and BPI Rental
the financial services industry. Corporation prior the its merger with Tokyo Century
Corporation of Japan.
Prior to joining BPI Capital Corporation in June 2016, Mr.
Syquia was the Country Head of Corporate Clients for Mr. Alonso started his banking career with The Mitsubishi
Standard Chartered Bank in the Philippines serving in Bank, Ltd. in Tokyo in 1990 as a management trainee,
that role from late 2011. In that role, he was principally holding positions in branch, treasury and international
responsible for wholesale banking coverage strategy of operations and SME and multinational relationship
the bank in the Philippines. management. Prior to joining BPI in January 1997, Mr.
Alonso headed the Japan Desk in the World Corporation
Mr. Syquia spent 17 years with the ING Group where he Group of Citibank, N.A. Manila Branch from 1994. Mr.
started with the Baring Brothers & Co. in 1994. Within Alonso obtained his BS Business Administration degree
the banking group of ING, he took on various roles in at the Faculty of Economics of Oita University in Japan in
relationship management, corporate finance origination, 1990 under a scholarship grant from the Japan Ministry
and investment banking execution. His last role in ING of Education. He was also a scholar of the National
Bank was as the Head of Corporate Finance at ING Bank Science and Technology Authority while attending the
Manila. In 2007, he moved to a regional role as Head of College of Engineering at the University of the Philippines.
Strategy and Business Development at ING Asia Pacific
Ltd., the regional hub of ING Group’s life insurance and
asset management practice. ANGELIE O. KING
Senior Vice President, Head of Sales and Service
Mr. Syquia is a product of the Bank’s Officer Training Channels
Program which he completed in 1990 during his first stint
at the Bank of the Philippine Islands. In 1991, he was Filipino, 58 years old, Ms King is the Head of Sales
assigned to Cebu where he formed part of a two-man and Service Channels of BPI. She is responsible for
team that established the Corporate Banking Division the Unibank’s Branch Network nationwide, Direct
desk in Cebu. He carries an MBA Degree (Honors) with Sales, Retail Enterprise Services, Branch Network and
a concentration in Finance and International Business Administration and Strategic Planning. She joined the
from Fordham University, NY as well as an AB degree bank through the Citytrust merger in 1996.
in Management Economics from the Ateneo de Manila
University. Ms. King has 35 solid years of sales and branch service
management experience. She began her career in
Citytrust as a contractual specialist hire Field Sales
JOSEPH ANTHONY M. ALONSO Account Manager. Successfully introducing innovation
Senior Vice President & Chief Credit Officer and exceeding performance benchmarks, she was
promoted through the ranks holding different positions
Filipino, 53 years old, Mr. Alonso is currently the Chief to lead and take on bigger areas of responsibility. After
Credit Officer of BPI since January 2017. As Chief Credit the merger in 1996, Ms. King continued to take on
Officer, he is responsible for managing the aggregate expanded areas of responsibility and more senior roles
risk in the BPI Group’s loan portfolio - ensuring in the organization. She currently leads close to 10,000
that portfolio quality and profitability is maintained employees across the Unibank.
across the lending units within the BPI Group through
establishment of procedures and guidelines that facilitate Over the years, she chaired the Unibank WOW Committee
effective decision making based on overall risk appetite responsible for improving the experience of customers
and compliance with internal policies and regulatory in the branches and the Unibank Excellence Retail
requirements. He also serves as Vice Chairman of the Awards Committee. She is a member of the Management
Bank’s Credit Committee and a member of the Fraud Committee and is an advocate of social responsibility by
Committee. He was a Board member of BPI Century spearheading fund raising programs to support public
Tokyo Lease & Finance Corporation and BPI Century school and orphanage, cleft palate surgery for children,
Tokyo Rental Corporation until July 2019. rehabilitation programs for the Typhoon Yolanda, Marawi

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 Notes to Financial
Leaders’ Biographies
Statements

siege and Taal volcano eruption victims. She served Ms. Santamaria obtained her Bachelor of Science in
as BFSB Director (2015-2017) and Chairman of BPI Business Administration (Cum Laude) from the University
Remittance Centre (HK) Ltd (2016-2018). of the Philippines in 1988. She also has a Certificate
of Strategic Business Economics (with Distinction) and
Ms. King obtained her BS Commerce major in Master Business Economics from the University of Asia
Management of Financial Institutions from De La Salle and the Pacific (Philippines) in 2001. She also took a
University in 1983. She also completed the Ayala course from the Chicago Business School (Feb 2006,
Leadership Acceleration Program (2011). Chicago)and completed a Telecoms Marketing Mini MBA
from Informa Telecoms and Media (April 2006, London).
MARY CATHERINE ELIZABETH P. SANTAMARIA
Senior Vice President & Chief Marketing Officer
ERIC ROBERTO M. LUCHANGCO
Filipino, 53 years old, Ms. Santamaria is the Chief Senior Vice President, Head of Business Banking
Marketing Officer of BPI. She is responsible for Retail
Customer Segments, CRM and Loyalty, Branch Channels Filipino, 49 years old, Mr. Luchangco was appointed to his
Marketing & Support, Institutional Brand Marketing and current position as Head of Business Banking for BPI in
Digital, Customer Data & Insighting, Enterprise Data June 2019. He is overseeing the expansion of the BPI’s
Management, Enterprise Data Policies, Procedures & presence within the SME space, which has been identified
Controls and Marketing Project Management & Systems as a growth area for the Bank, with a vision of becoming
Support. She joined the Bank in 2011 and is currently a the partner of choice for SMEs in the Philippines.
member of the Management Committee.
He joined the BPI Group in 2013, starting with BPI Capital,
With over 30 years of marketing experience, Ms. BPI’s investment banking unit, as Head of Debt Capital
Santamaria began her career in the advertising industry Markets. During his stint there, he oversaw over two-thirds
with Adformatix, where she was awarded as rookie of of all corporate bond issues in the Philippine market,
the year. Throughout her career she has worked with and executed a number of other innovative transactions.
leading companies such as Philippine Airlines, Monterey He later expanded his responsibilities to concurrently
and Wyeth-Suaco. Most notable among these was her become Head of Execution and Treasurer of BPI Capital.
stint at Kraft Foods Philippines where she held different In June 2017, he moved into BPI as the Head of Corporate
marketing positions and was appointed Marketing Director Credit Products of BPI, where his team managed the
with added responsibility for Southeast Asia’s consumer credit reviews and renewals of all the accounts under the
insighting projects with major interfaces across Sales, Corporate Bank.
Operations, Research & Development, Finance, Supply
Chain and the region office. While here, she received Prior to joining BPI, he worked at Daiwa Capital Markets,
the prestigious Asia Pacific’s President Award and Kraft spending time in their Manila, Hong Kong and Singapore
Foods International’s President Award, Best Asia Pacific offices, originating and executing a wide variety of
Advertising in Cheese, and achieved “Super Ads” across investment banking transactions.
campaigns developed. She was then appointed to Kraft
Foods International headquarters as Director, Business Mr. Luchangco graduated Management Economics from
Development where she identified business opportunities Ateneo de Manila University, and received his MBA
for specific market categories across Central Eastern degree from the Ross School of Business at the University
Europe, Brazil, Australia, China and Saudi Arabia. She was of Michigan.
also subsequently appointed as General Manager for Kraft
Foods Jaya, leading Singapore, Malaysia and Brunei. Prior
to joining BPI, Ms. Santamaria was Head of Touch Mobile MARIA CRISTINA L. GO
at Globe Telecom which she successfully repositioned. President, BPI Family Savings Bank
She was also appointed as Segment Head for the Mobile
Business and led the Globe rebranding. She also defined Filipino, 50 years old, Ms. Go has been the President of
a more effective spending, put together a Marketing BPI Family Savings Bank since June 1, 2017. Prior to that,
Leadership Academy and reformed marketing processes she served as Group Head of Retail Loans at BPI Family
for the telecom leader. Savings Bank.

She served as Vice President for the Bank Marketing For 11 years, she was the Head of BPI’s Payments
Association of the Philippines (BMAP) in 2018. and Unsecured Lending Group. She led initiatives and
innovations that have differentiated BPI in the industry,
such as leading the launch of the first EMV-compliant

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credit cards and Real Thrills, the first instant rewards Ms. Cruz joined BPI in 2000, when the Bank acquired Far
program. Before joining BPI, Ms. Go was Vice President East Bank and Trust Company, where she was previously
at Citibank Philippines managing the bank’s Retail Bank in charge of the audit of the retail banking, lending
Marketing then at Citibank Credit Cards Cross Sell Division operations and other backroom support operations. She
in New York. She also worked in Ayala Land, Inc. as Head also headed the special examination unit in charge of
of its Market Planning and Development Division. She investigation of fraud and irregularities.
started her career in Procter & Gamble as Brand Assistant
then promoted to Assistant Brand Manager, managing Ms. Cruz is a Certified Public Accountant and obtained
brands such as Mr. Clean, Perla, Star and Dari Crème. her BSBA Accounting degree from Philippine School of
Business Administration. She completed her Advanced
She graduated magna cum laude with a degree in BS Bank Management program at Asian Institute of
Business Administration and Accountancy from the Management in 1996. Ms. Cruz currently also serves as a
University of the Philippines Diliman, was awarded one of member of the Audit Committee of Ayala Multi-Purpose
the Ten Outstanding Students of the Philippines, placed Cooperative.
first in the CPA licensure exam in 1991, and earned a
Master’s degree from the Harvard Business School with
honors in 1996. She was also awarded as one of UP MARITA SOCORRO D. GAYARES
College of Business Distinguished Alumni in 2012 and Senior Vice President & Chief Risk Officer
one of the Most Influential Filipina Women by the Global
Filipina Women’s Network in 2016. Filipino, 58 years old, Ms. Gayares is the Chief Risk
Officer of the BPI Group of Companies and Head of its
She currently serves as the Secretary and Trustee of the Risk Management Office since January 2018. As Chief
Chamber of Thrift Banks, Chairman of the BPI Payments Risk Officer, she is primarily responsible for the overall
Holdings, Inc. and a Director of the Board of TransUnion management of the BPI Group’s enterprise risks –
Philippines. She is part of the Ayala Group’s Innovation ensuring that all relevant financial and non-financial risks
Advisory Council since it was organized in 2013. are appropriately identified, measured, controlled, and
monitored within the Bank’s approved risk appetite and
commensurate to returns on capital. She provides executive
CONTROL, RISK MANAGEMENT AND COMPLIANCE and strategic risk support to the Bank’s Board of Directors,
through the Risk Management Committee (RMC), in fulfilling
ROSEMARIE B. CRUZ its risk management function and ensuring that the Bank
Senior Vice President & Chief Audit Executive has an established, sound, and robust enterprise risk
management (ERM) framework. She works closely with
Filipino, 57 years old, Ms. Cruz is the Chief Audit the Chief Audit Executive and Chief Compliance Officer
Executive of BPI since January 2012 and leads the for effective risk management governance, compliance,
Bank’s Internal Audit Division. She also serves as the and control processes across the Bank. She serves as
Chief Audit Executive for BPI subsidiaries including member of the Bank’s Fraud and Irregularities Committee
BPI Family Savings Bank, BPI Capital Corporation, BPI (Chairperson), Data Steering Committee (co-Chairperson),
Securities Corporation, BPI Century Tokyo Lease and Crisis Resiliency Committee (Deputy Commander),
Finance, BPI Century Rental Corp, BPI Direct BanKO, Enterprise and Information Technology Steering Committee
BPI Asset Management and Trust Corporation, BPI (advisory capacity), Management Committee, Finance
Investment Management Inc., BPI International Finance Committee (non-voting member), and Operational Risk
Ltd., BPI MS Insurance and BPI Ayala Plans. As such, Management Committee. She likewise serves as a director
she oversees the audit of the different units, systems for BPI Europe Plc.’s Board.
and processes of BPI and these subsidiaries and
provides assessment on the adequacy and effectiveness With career stints in the areas of Corporate Banking,
of their internal control systems, risk management Credit and Transaction Banking, Loans Operations,
and governance processes. She supports the Audit Project Management, Systems, and Financial Control,
Committee in the discharge of its oversight function and having previously served as the Bank’s Chief
and also works closely with the Chief Risk Officer, Chief Compliance Officer, Ms. Gayares’s extensive and diverse
Compliance Officer, external auditor and other assurance 34-year banking experience has been instrumental
units for a comprehensive review of risks and compliance in transforming the Bank’s compliance, anti-money
systems in the Bank. She also sits as non-voting member laundering, corporate governance, and data privacy
in the board level Related Party Transaction Committee frameworks, methods, and processes, and helping the
and the management level Fraud and Irregularities Bank become one of the leading financial institutions
Committee. in the Philippine banking industry in the areas of
governance, risk management, and compliance (GRC).

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 Notes to Financial
Leaders’ Biographies
Statements

Ms. Gayares is a graduate of the University of the Atty. Gealogo obtained her Bachelor of Laws from the
Philippines with a Bachelor’s degree in Business University of the Philippines Diliman in 1988 and AB
Economics. She completed her Master’s degree History from the University of the Philippines Diliman
in Business Administration (major in Finance and in 1984. She completed the Development Lawyers
Investments) at George Washington University in Course at the International Development Law Institute
Washington, D.C. She has successfully completed the in Rome, Italy in 1994 and the Certificate Course in
Strategic Compliance in the Banking Industry certificate Strategic Compliance for the Banking Industry at the
course by the Association of Bank Compliance Officers Center for Professional Development in Business of
(ABCOMP) and De La Salle University (DLSU) Manila, the De La Salle University in 2017. She has regularly
as well as completed corporate governance modules undergone corporate governance courses and training
facilitated by the Institute of Corporate Directors (ICD). provided by the Institute of Corporate Directors (ICD),
She has previously served as Director and Treasurer Bankers Institute of the Philippines (BAIPHIL) and
of the ABCOMP, and Voting Member of the Bankers Good Governance Advocates and Practitioners of the
Institute of the Philippines, Inc. (BAIPHIL). She currently Philippines (GGAPP).
serves as Member of the Risk Management Committee
of the Bankers’ Association of the Philippines (BAP), and She is currently also the Treasurer and a Member of the
Board of Advisors/Executive Committee Member of the Board of Directors of the Association of Bank Compliance
Enterprise Risk Management (ERM) Council of the Ayala Officers of the Philippines (ABCOMP).
Group of Companies.

NORAVIR A. GEALOGO
Vice President & Chief Compliance Officer

Filipino, 56 years old, Atty. Gealogo is the Chief

Compliance Officer of BPI and Head of the Bank’s
Compliance Division which oversees the implementation
of the Bank’s enterprise-wide compliance programs and
is composed of the following departments: Regulatory
Compliance, AML Compliance, AML Systems and Special
Projects, FATCA Compliance, Corporate Governance and
the Data Privacy Office. The Compliance Division is also
empowered by 22 Group Compliance Officers (GCOs),
who are embedded in operational units throughout the
Bank.

Having been with Far East Bank and Trust Company

(FEBTC) since 1991, which then merged with BPI
in 2000, she has 29 years of banking experience.
Previously a legal officer of FEBTC, the Head of the
Legal Advisory Department of BPI and Legal Officer and
Head of Compliance of BPI Capital Corporation, she has
extensive business, legal and/ or compliance exposure
in the areas of corporate and retail banking, corporate
finance, project finance, securities distribution, mergers
and acquisition, correspondent banking, remittance and
trade finance. She is currently a non-voting member of
BPI’s board-level Related Party Transaction Committee
and chairs the management level MSB (Money Service
Business) Governance Committee and MLEC (Money
Laundering Evaluation Committee).

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Products and Services

DEPOSITS MICROFINANCE
Peso BanKo NegosyoKo Loan
Checking Microdeposits
Savings Tricycle Financing Program
Time
Foreign Currency CONSUMER
Savings Auto Loans (BFSB)
Time Housing Loans (BFSB)
Deposit Substitutes
FINANCIAL SERVICES
LOANS (HONG KONG)
COMMERCIAL Global Securities
Agribusiness Foreign Fixed Income
Agricultural Production Bonds/Credits
Post-Harvest Facilities Collective Investment Schemes/Funds
Trade and Supply Chain Finance Equities
Trade Investment Management Account
Non-Letter of Credit Multi-Currency Time Deposits
Letter of Credit Short Term Loans
Standby Letter of Credit Foreign Exchange Spot
Trust Receipt Loans
Export Advance Loans PAYMENTS AND SETTLEMENTS
Export Bills Purchase Electronic Channels
BOC Customs Duties BPI Online Banking
Supply BPI Mobile Banking
Supplier Finance BPI Phone Banking
Receivable Finance BPI Automated Teller Machine (ATM)
Structured Finance BPI Cash Accept Machine (CAM)
Project Finance Unsecured Lending and Cards
Cross Border Credit Cards
Other Structured Credits Debit Cards
Sustainable Development Finance Prepaid Cards
Sustainable Energy Finance Personal Loans
Renewable Energy Remittance
Energy Efficiency Funds Transfer
Climate Resilience Inward Remittance
Sustainable Agriculture Credit to Account
Specialized Lending Cash Pick-Up
Guarantee Facilities Outward Remittance
Funding Facilities Domestic Remittance
Leasing Funds Transfer to other banks (InstaPay, PESONet)
Finance Lease Cash Management
Operating Lease Account and Liquidity Management
Full Service Operating Lease Account Inquiry and Transaction History
Term Loan Special Bank Statements (MT940 PH Standard,
Receivables Financing Multicash, BAI)
Loan Inquiry
SMALL MEDIUM ENTERPRISES Trade Inquiry
Zero Collateral for Depositors Intra-company Funds Transfers
Small Business Credit Account Sweeping
Business Franchise Financing (BFF)
Commercial Asset Purchase (CAP) Loans
Supplier Circle
Dealer Circle

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 Notes to Financial
Products and Services
Statements

Collections Equity Index Fund

Bills Collection BPI Fixed Income Portfolio
Cash and Check Pick-Up Fund-of-Funds
Motorized Check Collection BPI Invest Catholic Values Global
Corporate Cash Deposit Machine (CCDM) Equity Feeder Fund
Automatic Debit Arrangement (ADA) BPI Invest Bayanihan Balanced Fund
Electronic Invoice Presentment and Payment (EIPP) Foreign Currency
Payments BPI Invest US Dollar Short Term
Payroll Fund
Outsourced Check Disbursements BPI Invest Global Bond
Self-Serve Check Disbursements Fund-of-Funds
Pay BPI BPI Invest Philippine Dollar Bond
Pay Non BPI Index Fund
Outward Remittance BPI Invest Global Equity
Government Payments Fund-of-Funds
FI Depository Services BPI Invest US Equity Index
Feeder Fund
ASSET MANAGEMENT & TRUST BPI Invest European Equity
INSTITUTIONAL FUND MANAGEMENT Feeder Fund
Fund Management Solutions BPI Invest US Dollar Income
Corporate and Institutional Funds Feeder Fund
Pension and Provident Funds Odyssey Funds
Other Fiduciary Solutions Peso
Bond Trusteeship Odyssey Peso Medium Term Bond
Loan Agency Fund
Escrow Agency Odyssey Peso Bond Fund
Mortgage Trust Indenture Odyssey Diversified Capital Fund
Wealth Management Odyssey Diversified Balanced Fund
Regular Subscription Plan Odyssey Philippine Equity Fund
Personal Management Trust Odyssey Philippine High Conviction
Investment Management Account Equity Fund
Securities Custody Account Foreign Currency
Personal Equity & Retirement Account (PERA) Odyssey Philippine Dollar Bond
BPI PERA Money Market Fund Fund
BPI PERA Equity Fund Odyssey Asia Pacific High Dividend
BPI PERA Government Bond Fund Equity Fund
BPI PERA Corporate Income Fund
BPI INVESTMENT MANAGEMENT INC.
INVESTMENT FUNDS Mutual Funds
BPI Investment Funds ALFM Peso Bond Fund
Peso ALFM Dollar Bond Fund
BPI Invest Short Term Fund Philippine Stock Index Fund
BPI Invest Money Market Fund ALFM Euro Bond Fund
BPI Invest Premium Bond Fund ALFM Growth Fund
BPI Invest Balanced Fund ALFM Money Market Fund
ABF Philippines Bond Index Fund ALFM Global Mutli-Asset Income Fund
BPI Invest Philippine High Dividend Ekklesia Mutual Fund
Equity Fund Solidaritas Fund
BPI Invest Equity Value Fund BPI Indices
BPI Invest Philippine Equity Index BPI Philippine Government Bond Index
Fund BPI Philippine Government Bond 1-3
BPI Invest Philippine Infrastructure Year Index
Equity Index Fund BPI Philippine Government Bond 1-5
BPI Invest Philippine Consumer Year Index Constituents

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A relationship that nurtures your future Table of Contents
 BPI Philippine Government Bond 5+ Treasury Solutions
Year Index Foreign Exchange
BPI Philippine Government Liquid Bond Fixed Income Securities
Index Constituents Derivatives & Hedging Solutions
BPI Philippine Government Money Forward Contracts (Deliverable
Market Index Constituents Forwards and Non-Deliverable
BPI Philippine Corporate Bond Index Forwards)
Constituents Swap Contracts (Foreign Exchange Swaps, Interest
BPI Philippine Equity Total Return Index Rate Swaps, Cross Currency Swaps, Non-Deliverable
BPI Philippine Infrastructure Equity Swaps)
Index Constituents
BPI Philippine High Dividend INSURANCE
Equity Total Return Index Constituents Individual Account / In-Branch
BPI Philippine Consumer Equity Index Family Care Plus
Constituents Build Estate Plus
Life Ready Plus
INVESTMENT BANKING Life Protect
Capital Raising Accident Guard 24/7
Debt Underwriting Life Extreme Protect
Equity Underwriting Critical Care Max
Private Placements Critical Care Plus
Loan Syndication Build Life Plus (10-pay)
Project Finance Invest Peso Max
Acquisition Financing Invest Dollar Max
Securitization Preferred Life Plus
Structured Debt Dollar Protect Plus
Financial Advisory Critical Care 100
Mergers and Acquisitions BPI-Philam Direct
Corporate Restructuring Smart Shield
Asset and Liability Management Life Protect Health Direct
Business Divestment Smart Health Shield Series
Strategic Advisory Corporate Solutions
Private Securities Corporate Essentials
Bank Issues Health Essentials
Commercial Paper Corporate Personal Accident
Corporate Promissory Notes and Bonds Credit Life
Equities Voluntary Solutions (Group Term Life,
Securities Distribution and Trading Group Accident, Group Credit Life,
Philippine Sovereign Debt Group Critical Illness)
Treasury Bills and Notes Non-Life
Retail Treasury Bonds Fire
Corporate Bonds Motor
Proprietary Investments Personal Accident
Merchant Banking Casualty
Broker/Dealer of the Philippine Equities Marine and Aviation
Online Trading Engineering
Broker-Assisted Advisory Surety Bond
Settlement and Custody Microinsurance
Market and Equity Research
Corporate Actions
Financial Education and Client Support

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Awards and Citations

BPI Institutional
• Best Bank in the Philippines (Cash Management, Trade, Risk Management – Corp. FX and Treasury Hedging),
Corporate Treasurer
• Silver trophy, BPI OF Segment’s Overseas Filipino Financial Wellness Program, 2019 Anvil Awards
• Silver trophy, 2017 Annual Report: Enriching Relationships, 2019 Anvil Awards
• Optimal Creative Champion Awards, Facebook Solutions Awards
• Award of Merit, Customer Relations - Pursuing Financial Inclusion with BPI BanKo, 2019 Quill Awards
• Award of Merit, Publications - 2017 Integrated Report: Enriching Relationships, 2019 Quill Awards
• Award of Merit, Safety Communication- Championing Cybersecurity Awareness, 2019 Quill Awards

Global Markets
• Best FX House, Corporate Treasurer
• Philippines Domestic Foreign Exchange Bank of the Year, ABF Wholesale Banking Awards 2019
• Best FX Bank for Corporates & FIs in the Philippines, Alpha Southeast Asia 2019
• Best FX Bank for Retail Clients in the Philippines, Alpha Southeast Asia 2019
• Philippines’ Domestic Foreign Exchange Bank of the Year, Asian Banking & Finance Awards 2019
• Top 5 Corporate Securities Market Maker (Rank #3), PDS Awards 2018
• Top 5 PDDTS/PvP Participant (Rank #3), PDS Awards 2018
• Best New Bond ($600 million) - Philippines, The Asset Asian Awards 2018
• Best Equities Economist (Emilio Neri, Jr.), 1st place, FMAP’s 19th Awards Night
• Best Fixed Income Economist (Emilio Neri, Jr.), 2nd place, FMAP’s 19th Awards Night
• Philippines’ Best Local Currency Bond Individual in Research for 2019 (Emilio Neri, Jr.), Rank 1, The Asset
Benchmark Research Awards

Corporate Banking
• Best Trade and Supply Chain House, Corporate Treasurer
• Best Domestic Project Finance Bank of the Year for the Cavite-Laguna Expressway

Trade and Finance

• Domestic Trade Finance Bank of the Year, ABF Wholesale Banking Awards 2019
• Best Trade Finance Bank in the Philippines, Alpha Southeast Asia Awards
• Corporate Cash Deposit Machine as Top Innovator for 2019, Global Finance Magazine

Compliance
• RegTech for Regulators Accelerator (R2A) Project, Bangko Sentral ng Pilipinas (BSP) 16th Awards Ceremony
• Scoring in the range of 90 to 99.99 points for the Philippine results of the 2018 ASEAN CG Scorecard, Institute of
Corporate Directors (ICD), Golden Arrow Awards

Risk Management
• ASEAN Risk Champion Winner, ASEAN Risk Awards 2019
• Risk Educator Runner-Up, ASEAN Risk Awards 2019
• Risk Leader of the Year Finalist, ASEAN Risk Awards 2019

Unsecured Lending and Cards

• Highest Consumer Credit Payment Volume Growth 2019, Visa Awards

BPI Capital Corporation

• Best Investment Bank in the Philippines, Global Banking and Finance Review 2019
• Best Bond House in the Philippines, Global Banking and Finance Review 2019
• Best Equity House in the Philippines, Global Banking and Finance Review 2019
• Best Green Bond - Financial Institution, BPI CHF100Million Green Bond, FinanceAsia Achievement Awards 2019
• Best Green Bond - Corporate, AC Energy Finance International US$410Million Green Bond, FinanceAsia
Achievement Awards 2019

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A relationship that nurtures your future Table of Contents
• Best Follow-on Offering - San Miguel Food & Beverage Follow-on Public Offering,
FinanceAsia Achievement Awards 2019
• Best Investment Bank in the Philippines, Alpha Southeast Asia Awards
• Mergers and Acquisitions Deal of the Year, Philippines - Merger of iPeople, Inc. and AC Education, Inc., ABF
Corporate & Investment Banking Awards 2019
• Equity Deal of the Year, Philippines - San Miguel Food & Beverage Follow-on Public Offering, ABF Corporate &
Investment Banking Awards 2019
• Green Deal of the Year, Philippines - IFC’s maiden US$90M Green Bonds, ABF Corporate & Investment Banking
Awards 2019
• Domestic Project Finance Bank of the Year, Philippines - MPCALA Holdings 24.2 billion pesos omnibus loan and
security facility, ABF Wholesale Banking Awards 2019
• Best Investment Bank in the Philippines, FinanceAsia Country Awards 2019
• Best ECM House in the Philippines, FinanceAsia Country Awards 2019
• Petrochemical Deal of the Year, Philippines - Philippine Tank Storage International Holdings US$150 million
financing, The Asset Triple A Asia Infrastructure Awards 2019
• PPP Deal of the Year, Philippines - MPCALA Holdings 24.2 billion pesos omnibus loan and security facility, The Asset
Triple A Asia Infrastructure Awards 2019
• Transport Deal of the Year, Philippines - Cebu Cordova Link Expressway Corporation 9.0 billion pesos financing, The
Asset Triple A Asia Infrastructure Awards 2019
• Utility Project of the Year, Philippines - Apo Agua Infrastructure 10 billion pesos financing, The Asset Triple A Asia
Infrastructure Awards 2019
• Best Equity House, IHAP Awards 2019
• Best Fixed Income House, IHAP Awards 2019
• Best Deal of the Year - Cebu Cordova Link Expressway Corporation (CCLEC), IHAP Awards 2019
• Best Equity Deal - San Miguel Food & Beverage, Inc., IHAP Awards 2019
• Best Project Finance Deal - MPCALA Holdings, Inc, IHAP Awards 2019
• Best Fixed Income Deal - Bureau of the Treasury, IHAP Awards 2019

BPI Family Savings Bank, Inc.

• Outstanding Partner for Children’s Savings Mobilization, 2019 BSP Stakeholders Awards

BPI Direct BanKo, Inc., A Savings Bank

• BanKo NegosyoKo Loan, Ayala Innovations Excellence Award
• Best for Microfinance in the Philippines, Asiamoney 2019

BPI Foundation, Inc.

• Best Bank for Corporate Social Responsibility (CSR), Asiamoney Banking Awards 2019
• World Wildlife Fund (WWF) Philippines, WWF Sustainability Trailblazer Award, Agriclima program

BPI Investment Management, Inc.

Philippine Investment Funds Association (PIFA) Annual Awards 2019
• 2nd place, ALFM Money Market Fund’s 1-Year Return, Money Market Fund Category
• 2nd place, ALFM Money Market Fund’s 3-Year Return, Money Market Fund Category
• 2nd place, ALFM Money Market Fund’s 5-Year Return, Money Market Fund Category
• 1st place, ALFM’s Dollar Bond Fund Inc.’s 1-Year Return, Bond Fund Category – Foreign Currency Denominated
• 1st place, ALFM’s Dollar Bond Fund Inc.’s 3-Year Return, Bond Fund Category – Foreign Currency Denominated
• 1st place, ALFM’s Dollar Bond Fund Inc.’s 5-Year Return, Bond Fund Category – Foreign Currency Denominated
• 2nd place, ALFM’s Peso Bond Fund Inc.’s 1-Year Return, Bond Fund Category – Peso Denominated
• 2nd place, ALFM’s Peso Bond Fund Inc.’s 3-Year Return, Bond Fund Category – Peso Denominated
• 2nd place, ALFM’s Peso Bond Fund Inc.’s 5-Year Return, Bond Fund Category – Peso Denominated
• 3rd place, Ekklesia Mutual Fund, Inc.’s 1-Year Return, Bond Fund Category – Peso Denominated
• 3rd place, Ekklesia Mutual Fund, Inc.’s 3-Year Return, Bond Fund Category – Peso Denominated
• 3rd place, Ekklesia Mutual Fund, Inc.’s 5-Year Return, Bond Fund Category – Peso Denominated
• 3rd place, Ekklesia Mutual Fund, Inc.’s 10-Year Return, Bond Fund Category – Peso Denominated

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 Notes toand
Awards Financial
Citations
Statements

• 2nd place, Solidaritas Fund Inc.’s 1-Year Return, Balanced Fund Category
• 1st place, Solidaritas Fund Inc.’s 3-Year Return, Balanced Fund Category
• 1st place, Solidaritas Fund Inc.’s 5-Year Return, Balanced Fund Category
• 3rd place, ALFM’s Growth Bond Fund Inc.’s 10-Year Return, Equity Fund Category – Peso Denominated
• 2nd place, Philippine Stock Index Fund Corp, 1-year Lowest Tracking Error, Equity Index Fund Category - Peso
Denominated
• 1st place, Philippine Stock Index Fund Corp, 3-year Lowest Tracking Error, Equity Index Fund Category - Peso
Denominated
• 1st place, Philippine Stock Index Fund Corp, 5-year Lowest Tracking Error, Equity Index Fund Category - Peso
Denominated
• 1st place, Philippine Stock Index Fund Corp, 10-year Lowest Tracking Error, Equity Index Fund Category - Peso
Denominated

Asset Management and Trust Corporation

• Highly Commended, Asset Management Company of the Year, The Asset Triple A Asset Servicing, Institutional
Investor and Insurance Awards 2019
• Best Asset Manager - Philippines 2019, International Finance Awards 2019
• Best Asset Manager (Money Market and Balanced Funds), Alpha Southeast Asia’s Fund Management Awards 2019
• Best Fund with the optimal information ratio, Alpha Southeast Asia’s Fund Management Awards 2019
• Best Managed Funds of the Year for Balanced Peso and Equity Dollar category (BPI Balanced Fund and BPI Global
Equity Fund-of-Funds), Chartered Financial Analyst Society of the Philippines
• Best Fund Product (BPI Invest Global Equity Fund-of-Funds) Philippines 2019

BPI-Philam Life Assurance Corporation

• Best Life Insurance Company in the Philippines, World Finance Awards 2019

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Membership Industry Associations

Association of Bank Compliance Officers

Association of Bank Remittance Officers
Association of Foundations, Phils. Inc.
Association of Fraud Examiners
Association of Philippine Correspondent Banking Officers Inc.
Bank Marketing Association of the Philippines
Bankers Association of the Philippines
Bankers Institute of the Philippines
British Chamber of Commerce Philippines
Business Continuity Managers Association of the Philippines
Chamber of Thrift Banks, Inc.
Credit Card Association of the Philippines
Credit Management Association of the Philippines
Financial Executive Institute of the Philippines
Fund Managers Association of the Philippines
Good Governance Advocates and Practitioners of the Philippines
Institute of Internal Auditors
Integrated Bar of the Philippines
International Association of Business Communicators
Investment House Association of the Philippines
IT Interaction Philippines
League of Corporate Foundations
Management Association of the Philippines
Money Market Association of the Philippines
Philippine Association of National Advertisers, Inc.
Philippine Association of Stock Transfer
Philippine Business for the Environment
Philippine Council for NGO Certification
Philippine Disaster Resilience Foundation
Philippine Finance Association
Philippine Payments Management, Inc.
Philippine Stock Exchange, Inc.
Public Relations Society of the Philippines
Rural Bankers Association of the Philippines
The American Chamber of Commerce of the Philippines
The Japanese Chamber of Commerce & Industry in the Philippines
Trust Officers Association of the Philippines
Various Local Business Clubs

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Group Directory

PHILIPPINES BPI Investment Management Inc. FOREIGN OFFICES

19/F BPI Buendia Center,
Bank of the Philippine Islands Sen. Gil J. Puyat Ave., BPI (Europe) Plc
Ayala North Exchange, Tower One Makati City 1209 26A-27A Earl’s Court Gardens,
6796 Ayala Avenue corner Salcedo (632) 8580 0900 London SW5 0SZ,
St., Legaspi Village, Makati City 1229 www.alfmmutualfunds.com United Kingdom
(632) 889 10000 [email protected] (44) 207 8350088
[email protected]
www.bpi.com.ph BPI Century Tokyo Lease 4F, 28-29 Threadneedle St.
& Finance Corporation London EC2R 8AY,
BPI Family Savings Bank 15/F BPI Buendia Center 372 United Kingdom
109 Paseo de Roxas Sen. Gil Puyat Avenue, Brgy. Bel-Air, (44) 207 6389100
cor. Dela Rosa St., Makati City 1226 Makati City 1209
(632) 889 10000 or [email protected] BPI International Finance Limited
+63917 8910000 5F LHT Tower
https://www.bpiloans.com/ BPI Century Tokyo Rental 31 Queen’s Road Central, Hong Kong
Corporation (852) 2521 1155
BPI Direct BanKo Inc. 15/F BPI Buendia Center 372
220 Ortigas Avenue, BanKo Center, Sen. Gil Puyat Avenue, Brgy. Bel-Air, BPI Remittance Centre
North Greenhills, San Juan City 1500 Makati City 1209 Hong Kong Ltd.
(632) 7754 9980 [email protected] Worldwide Branch
Shop 114, 1st Floor, Worldwide
BPI Capital Corporation BPI/MS Insurance Corporation House 19 Des Voeux Road, Central HK
11/F Ayala North Exchange Tower 11th, 14th, 16th and 18th Floors, Tel. No.: (852) 2522 7105
One 6796 Ayala Avenue 6811 BPI-Philam Life Makati, (852) 2521 5366
cor. Salcedo Street, Legaspi Village, Ayala Ave., Salcedo Village Bel-Air, Fax No. (852) 2866 2476
Makati City 1229 City of Makati NCR Fourth District, [email protected]
(632) 8246 5101, (632) 8246 5103 Philippines 1209
[email protected] (632) 8840 9000 Tsuen Wan Branch Shop
www.bpims.com Shop 258, 2/F, Lik Sang Plaza 269
BPI Securities Corporation Castle Peak Road, Tsuen Wan, New
11/F Ayala North Exchange BPI Philam Life Assurance Territories, Hong Kong
Tower One 6796 Ayala Avenue Corporation Tel. No. : (852) 2684 9088
cor. Salcedo Street, Legaspi Village, 15/F BPI Philam Tower 6811 Fax No. : (852) 2692 4088
Makati City 1229 Ayala Avenue, Makati City 1226 [email protected]
(632) 8246 5555 (632) 8528 5501
[email protected] www.bpi-philam.com Yuen Long Branch Shop
www.bpitrade.com Shop 18 B2 2/F Tung Yik Building Yu
Ayala Plans Inc. King Square, Yuen Long
BPI Asset Management BPI Buendia Center 360 Tel. No. : (852) 2443 5377
and Trust Corporation Sen. Gil Puyat Avenue Brgy. Bel-Air, Fax No. : (852) 2443 5477
6th and 7th Floors BPI Buendia Center Makati City 1209 [email protected]
Sen. Gil J. Puyat Avenue, (632) 889 10000
Makati City 1209 [email protected] Representative Offices
Clients Segment Division: Shop No. 1 Al Diyafah Building
(632) 8580 3061 BPI Foundation, Inc. Al Mankhool Road Al Hudaiba
Product-related inquiries: 2/F BPI Buendia Center, 372 Dubai, UAE
(632) 8580 2682 Sen. Gil Puyat Avenue Brgy. Bel-Air, (9714) 354 2977
www.bpiassetmanagement.com Makati City 1209
[email protected] (632) 8580 0309 Kohinata Sunny Heights Rm 404
[email protected] 4-5-10 Kohinata, Bunkyo-ku,
www.bpifoundation.org Tokyo 112 0006 Japan
(+81) 90 8805 1274

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Corporate Information

BANK OF THE PHILIPPINE ISLANDS BPI Corporate Affairs

Ayala North Exchange, Tower One 16/F Tower One, Ayala North Exchange
6796 Ayala Avenue corner Salcedo St., 6796 Ayala Avenue cor. Salcedo St.,
Legaspi Village, Makati City 1229 Legaspi Village, Makati City 1229
(632) 889 10000 [email protected]
[email protected]
www.bpi.com.ph Careers
(632) 8548 8933
BPI Stock Transfer Office [email protected]
3/F Senator Gil Puyat Avenue, Makati City
[email protected] Whistleblower Reports
(632) 8580 4693 to 95 [email protected]
(632) 8580 4759
External Assurance
BPI Investor Relations Office Isla Lipana & Co.
14/F Tower One, Ayala North Exchange 29/F Philamlife Tower, Paseo De Roxas,
6796 Ayala Avenue corner Salcedo St., 1226 Makati City, Philippines
Legaspi Village, Makati City 1229 (632) 8845 2728
(632) 8246 5860
[email protected] Partner-in-charge
Zaldy D. Aguirre
Office of the Corporate Secretary Accrediation number: 1176-AR-2
14/F Tower One, Ayala North Exchange (Category A)
6796 Ayala Avenue corner Salcedo St., Date Accredited: June 21, 2018
Legaspi Village, Makati City 1229 Expiry date of accreditation: June 20, 2021

BPI Sustainability Office DNV-GL Business Assurance

14/F Tower One Ayala North Exchange DNV GL AS Philippine Branch
6796 Ayala Avenue corner Salcedo St., 4/F One E-com Center
Legaspi Village, Makati City 1229 Harbor Drive corner Sunset Avenue
[email protected] Mall of Asia Complex, Pasay City,
Philippines 1300
Customer Inquiries (632) 8836 7214
(02) 889 10000
[email protected]

Supplier, Creditor Inquiries

(02) 889 10000
[email protected]

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A relationship that nurtures your future Table of Contents
 About the Cover
BPI understands the importance of strong
relationships. It looks to a future where
digitalization will make inclusivity a reality
for every Filipino, wherever they are.
“A relationship that nurtures your future”
is BPI’s commitment to provide products
and services that will make every
Filipino’s life easier every day, and the
promise to help build a better nation that
is ready today, ready tomorrow.

This report is printed on recycled paper,

Tocatta Extra White 100, and is certified by
Forest Stewardship Council.

III
Table of Contents BPI Integrated Report 2019
Ayala North Exchange, Tower One
6796 Ayala Avenue corner Salcedo St.,
Legaspi Village, Makati City 1229
(632) 889 10000
[email protected]
www.bpi.com.ph