Vision

By 2018, LANDBANK will be the top universal bank that promotes inclusive growth and improves the quality of life especially in the countryside through the delivery of innovative financial and other services in all provinces, cities and municipalities.

Mission

To Our Clients and Publics:

We will use the best technology solutions to deliver responsive financial and support services to our clients, while promoting sustainable development, and environmental protection.

To Our Employees:

We will develop and nurture talents that will exemplify the highest standards of ethics and excellence consistent with the best in the world.

About the Cover

As LANDBANK commits to institutional viability through business excellence, we are relentless in our efforts to pursue our social mandate – our reason for being. We believe that promoting sustainability and development is largely hinged on improvements in our operations, especially in areas of customer servicing, product and process development. The Bank has to be equipped and able to respond to the varied needs of our clients and mindful of the impact we make on the nation at large.

We commit to our relationship with clients, who are our partners in making things happen. As we assist their ventures, they are able to help increase livelihood and economic opportunities, and make lives better in their respective communities. LANDBANK believes in these key sectors that help advance progress. With them, we endeavor to continue growing opportunities and making possibilities, now and in the years to come. Contents

4 Financial Highlights 5 Message from the President of the Philippines 6 Chairman’s and President’s Report 10 Special Feature: Helping Others Grow 12 Operational Highlights: Pursuit of Mandate 34 Special Feature: Financing Green Initiatives 36 Operational Highlights: Customer Service 48 Special Feature: Partners for Community Development 50 Operational Highlights: Institutional Viability 100 Board of Directors

101 Management Team 102 Units Under the Board and Office of the President 103 Agricultural and Development Lending Sector 104 Branch Banking Sector 104 Corporate Services Sector 104 Operations Sector 105 Treasury and Investment Banking Sector 105 LANDBANK Foundation and Subsidiaries 106 List of Senior Officers and Department Heads 110 Independent Auditor’s Report 112 Financial Statements 4

LANDBANK 2015 Annual Report Financial Rural Banks. Participation withRecourse/Securities Lending andBorrowing Facility Debt Lines;IncludesUnsecured Subordinated Transaction, andDomestic BillsPurchased on * Excludes Interbank Term Loans Receivable (Foreign Regular/FCDU/EFCDU), Loans Receivables ofAssignment/ Agreements/Certificates Arisingfrom Repurchase Sectors PRIORITY SECTORS NET INCOME (inPMillions) Income onInvestments Interest IncomeonLoans Gross Revenues CAPITAL DEPOSIT LIABILITIES INVESTMENTS (Net) LOANS Total Resources (In PBillions) I. MandatedSector II. SUPPORT FOR AGRICULTURE AND FISHERIES III. SupportforNationalGovernmentPriority Programs (includingPPPprojects) TOTAL PRIORITY SECTOR LOANS TOTAL PRIORITY SECTOR LOANS SUM OFLOANS TO ALL SECTORS * LTNCD Time Savings Demand Other Loans andReceivables Treasury Loans Regular Loans • Smallfisherfolkandtheirassociations • Smallfarmersincludingagrarian reform beneficiariesandtheirassociations • Agri-business • • Aqua-business • and-Controlled Corporations • Local GovernmentUnitsandGovernment-Owned Agri-aqua related projects of • Micro, smallandmediumenterprises • Education • Housing(Socialized, low-costandmedium-cost) Transportation• • Communications • Health Care • Environment-related projects • Tourism• • Utilities • Others • Others • Government-Ownedand-Controlled Corporations -Others • Local GovernmentUnits-Others Subtotal Subtotal Subtotal Highlights 2015LBPGROSSLOAN PORTFOLIO (InPBillions) 13,968.6 1,045.9 1205.8 533.2 474.5 285.2 101.5 431.0 551.9 2015 13.4 23.8 44.3 88.7 11.0 27.2 19.5 GROUP (Audited) 12,643.9 1058.6 469.3 392.0 912.6 302.0 382.4 475.8 2014 12.3 19.9 39.2 85.0 46.3 19.8 73.6 5.0 11,789.9 324.0 348.1 703.7 223.1 300.0 335.6 849.3 2013 17.7 17.4 42.6 82.1 26.6 22.4 13.2 5.0 Amount (PBillions) 10,962.8 246.4 384.0 434.8 38.7 98.9 50.8 38.6 45.4 52.8 57.3 39.5 27.8 21.2 62.2 15.8 24.6 15.0 11.2 267.3 244.4 543.7 236.1 270.0 330.5 691.5 2012 0.1 0.7 4.0 8.2 7.2 3.2 12.3 16.9 38.1 84.0 31.4 24.3 36.2 0.6

9,056.2 100.0 270.1 211.2 507.2 196.0 249.6 334.0 645.8 2011 22.7 56.7 88.3 11.7 0.03 12.3 17.1 34.5 77.7 25.4 28.3 56.1 10.4 12.1 13.2 14.3 8.9 8.9 0.5 0.2 9.1 6.4 4.9 0.9 1.9 1.7 0.7 3.6 5.7 3.4 2.6 %

MESSAGE FROM THE PRESIDENT OF THE PHILIPPINES June 2016 M A NIL A BENIGNO S. AQUINO III Together, ourparticipation letusbroaden innation-building. thescopeof to fostermore dynamicrelations withourpartners andclients. tosurpassyourachievementsinthepastyear,the managementandstaff andaneffective medium I congratulate your2015 youonthepublicationAnnual Report. of Mayitserveasaninspiration to towards theprosperous future weaspire to. promote fairtrade andencourage policiesandprograms ongoodgovernance, aswework integrity,lengthen ourstridesonthepath of efficiency, andgenuineservice;mayyoufurther in thisendeavor. Mayyourorganization ournation continueto standwiththerest aswe of We thePhilippinesforbeingamongouractivestakeholders ingovernmentthanktheLandBankof the socialandfinanciallandscape. to reclaiming ourcountry’s rightfulplaceintheinternational communityasaseriouscontenderin restore integrityacross alloursectors, ourglobalallies, andwiththehelpof weare wellonourway class investorandcustomerconfidence. Duetoourefforts topursueinstitutional reform and Our impressive economic growth thesepastsixyears hasallowedourindustries togainworld- thePhilippinesasyoureleaseMy warmestgreetings totheLand Bankof your2015 Annual Report.

5 6 CHAIRMAN’S AND PRESIDENT’SREPORT LANDBANK 2015 Annual Report Sec. Cesar V.Purisima Sec. Cesar Chairman distinct, relevantdistinct, of itsown. andaclass reinforced thepillarsofourgrowth that make LANDBANK As aresponse, we recommitted vision,and totheBank’s even sharpercompetitionandmultipleconvergences. We, at LANDBANK,found ourselves at thecrossroad of President andCEO Gilda E.Pico T improvement. significant andnecessarystrides toward continual expect thatthisexercise willalsohelpustake and testedbusinessexcellenceframework.We our efforts togaugeourselvesagainstatried Philippine QualityAwards program aspartof our processes andsystems,appliedforthe people andfulfillourmandate. We reviewed recognizing itasakeytoenableushelpmore We endeavoured topursuebusinessexcellence, distinct, relevant andaclassofitsown. the pillarsofourgrowth thatmakeLANDBANK recommitted totheBank’s vision,andreinforced multiple convergences. Asaresponse, we crossroad ofevensharpercompetitionand We, atLANDBANK,found ourselvesatthe TOWARDS GREATERSOCIALIMPACT to expanditsmarketreach. enhance efficiencies, the banksmostlywere able branches andusingfinancialtechnologyto and streamlined operations. Bybuildingmore improved asset quality, strong capitalization 2015, withtheBangko Sentral ngPilipinas noting The bankingsector, asawhole,performedwellin would supportourflourishingeconomy. to the demands for our services and products that and bankingsectors,were challengedtorespond allthesecomingtogether,With we,inthefinancial government spendingandfixedinvestments. expansion waslikewisedrivenbytheincrease in from overseas,andmodest inflation.Economic increased employment, higherremittances with confidenceyear-round, stemmed from expenditure amongFilipinos. Householdsspent Niño, growth wasachieved,buoyedbyprivate country’s exportsandthereeling effects ofEl global expansion.Despitetheweakeningof a 5.8%growth forthewholeyear, amidaslower The Philippineskeptabalancedeconomy, with backdrop in2015. FROM OUR solid economicperformanceasa and theinstitution,withcountry’s another yearofgrowth foritscustomers (LANDBANK) forged aheadtoward he LandBankofthePhilippines Perspective Development (CAP-PBD),apartnership withthe Assistance Program forProgram Beneficiaries to farmersandtheirprojects through theCredit the rest oftheeconomy, weextendedloansdirectly sector thatprovides foodandvitalrawmaterialsfor financial inclusion.Steadfastinsupportingthe The Bank also sustained our efforts to expand billion. at P21.2billion,andeducationsub-sectorP4.0 sector atP27.8billion,communicationssub-sector sub-sector atP39.5billion,transportationsub- socialized, low-costandmedium-costhousing utilities sub-sectorwhichreached P62.2billion, releases. TheBankalsoextendedloanstothe (P7.2 billion,up36.2%)clinchedsignificant billion, up55%)andenvironment-related projects tourism (P3.2billion,up56.6%),healthcare (P8.2 billion. National government priority programs on Private Partnership or PPP Projects reached P246.4 Government PriorityPrograms, includingPublic- Also asofend-2015,theBank’s loanstoNational same period. and GOCCsamountedtoP98.9billionasofthe related projects oflocalgovernmentunits(LGUs) through agri-andaqua-businesses andagri-aqua- LANDBANK’s SupporttoAgriculture andFisheries totalled P38.7billionasofend-2015.Meanwhile, and theirassociations,LANDBANKloans (ARBs) andtheirassociations,smallfishers farmers, includingagrarianreform beneficiaries For theMandatedSector, madeupofsmall Programs. and 3)SupportforNationalGovernmentPriority Sector, 2)Support forAgriculture andFisheries, Bank’s prioritysectorscomprisedof:1)Mandated which 88.3%orP384billionwere directed tothe loans toallsectorsreached P434.8billionof remained LANDBANK’s priority. In2015,total drivers of the country’s growth and development Supporting andfinancingthesectorsthatserveas of theBank’s performance. and oursuccessesinthisfront serveasmeasures contribution to the society continues to define us on socialimpact.We acknowledgethatour and learninggrowth, wealsoputpremium into finances,stakeholders,internalprocesses, While mostprofit-oriented organizations look perspective notgenerallyprioritizedbyenterprises. We didthiswhileputtingemphasisonabusiness

7 8 CHAIRMAN’S AND PRESIDENT’SREPORT LANDBANK 2015 Annual Report Easy AccessFacilities(LEAFs), ourotherbanking expanded aswell.We nowhave24LANDBANK innovations andalternative paymentfacilities extension offices, and servicing units in 2015. Our expanded itsphysicalnetwork to361branches, or noaccesstobankingservices.LANDBANK to more people,includinginareas withlimited towards penetratingandbringingfinancialservices Our customerserviceinitiativesare alsogeared CUSTOMER SERVICE EXPANDINGOUR ENHANCING AND REACH higher thantheprevious year. billion for CARP landowners’ compensation, 10% of 19,778hectares. TheBankalsodisbursedP6.5 hectares. Thiswashigher thanouroutputin2014 for paymentreached P3.3 billion,covering20,963 land transferclaimsthatLANDBANKapproved Comprehensive Agrarian Reform Program (CARP), Meanwhile, asanimplementingagencyofthe billion by41.5%orP5.4billion. (RSBSA). We exceededour target amountofP13 Registry SystemonBasicSectorsinAgriculture the 20poorest provinces identifiedundertheDA’s We released P18.4 billion outstanding loans to beneficiaries to29,151from 15,367in 2014. up from 7,283; and APCPalmostdoubled its SSP has9,302cumulativenumberofbeneficiaries, increased itsbeneficiaries to6,307from 4,317; beneficiaries foreachproject. TheCAP-PBD These alsotranslatedtoincreased numberof million from P683.8millionin2014. also increased toP987.3 project withDAandDAR, Credit Program (APCP),a the AgrarianProduction P917.0 million.Loansunder (SSP), increased by4%to (DA), theSikatSakaProgram Department of Agriculture our project withthe LANDBANK’s loansunder million in2014.Moreover, P55.3 millionfrom P39.8 increased by39%to loans underthisprogram Reform (DAR).In2015,our Department of Agrarian redound toaneven we believe that our bigger opportunity bigger opportunity improvement will to helpupliftthe At LANDBANK, lives ofmore Filipinos. to promote abureaucracy that ismore responsive committed tothenationalgovernment’s efforts products andservices,LANDBANKremained Apart from comingupwithnewchannels, climate changeadaptationprojects. Adaptation FacilityfortheEcosystem)Program for commercialization; and5)ClimateSAFE(Special renewable energy development,utilizationand of thenationalgovernment’s policyonpromoting 4) RenewableEnergy LendingProgram insupport climate controlled and conventional technologies; Lending Program forpoultryproduction using stakeholders particularlycoconutfarmers;3)Poultry Financing Program forthecoconutindustry industry; 2)CoconutProduction andProcessing These are: 1)Coffee 100Program forthecoffee programs tocatersectors inneedoffinancing. LANDBANK alsodevelopedfivenewlending also covertheprivatesectorin2016. government sector, weare expandingitsscopeto the encouragingreception of thisprogram bythe billion in2015,from P598 millionin2014.With personal loansunderLMLSgrew 634%toP4.4 (LMLS) cateringto795participatingagencies.Our people, withtheLANDBANKMobileLoanSaver Our lendingserviceswere also abletobenefitmore the Bank’s otherfinancialservicestothe regions. Cagayan deOro. These investment hubsbring Davao, GeneralSantos,Pampanga,Isabelaand Bank establishedseveninvestmenthubsinIloilo, of LANDBANK-enrolled merchants. In2015,the payment offees,duesandcharges from clients internet-based payment platform for accepting Portral (ePP)System.TheLANDBANKePPisan the Electronic Payment The Bankalsodeveloped and 24LEAFs. our customersin6branches been facilitatingdepositsfor Deposit Machine(CDM)has branches; while the Cash is nowavailablein50ofour Bureau of Internal Revenue, accepts paymentstothe Machine (LEAM),which LANDBANK Express Access areas inthecountry. The unbanked andunderserved offices, spread across LANDBANK nowjoinsthePhilippine Dealingand Term Negotiable CertificatesofDeposit(LTNCD). In 2015,wealsoraisedP6.0billion worthofLong among GOCCsandGFIs. LANDBANK remained oneofthehighestremitters As theleadinggovernmentfinancialinstitution, The Bankremitted P6.6billionincashdividends. This allowedustogivebackthenationalcoffers. P80.0 billionfrom P75.2billion. Our capitalisalso6%higherthantheyear-ago at P537.0 billion from P460.3 billion, a17%uptick. The gross loanportfoliooftheBanksurged to at P1.05trillionasofend-2015. breaching the trillion-peso mark for the first time milestone, asourdepositsregistered 14%growth, P1.05 trillionin2014.We reached yetanother registering significant growth to P1.2 trillion from The Bank’s totalassetssteadilyexpanded, profit by11%. P12.1 billion in 2014, and exceeded our target net billion net income,agood10%increase from banks. We finishedthe year strong withaP13.3 its positionasamongthecountry’s topuniversal servicing ourmarkets,LANDBANKmaintained As wefurtherexpandourreach andimprove on MAINTAINING AVIABLEINSTITUTION customer satisfactionlevelof98%. The surveyresults showed thatLANDBANKhada covered closeto7,000respondents nationwide. Bank-wide customer satisfaction survey, which commissioned aresearch firmforathird party which LANDBANKcanfurtherimprove. We of theARTA-RCS, wehopedtofindareas on But beyondourcompliancewiththeprovisions least 90%or“Excellent”ratings. possible 100,with15ofourbranchesreceiving at and anoverallnationalscore of88.14%outthe are pleasedtohaveobtaineda100%passingrate ARTA provisions andoverallclientsatisfaction.We were assessedbasedontheircompliancewiththe Commission (CSC).Fifty-one(51)ofourbranches Report Card Survey(RCS)oftheCivilService participated inthe2015Anti-RedTape Act(ARTA) to theneedsoftransactingpublic.TheBank President andCEO MS. GILDAE.PICO Chairman SEC. CESARV. PURISIMA country andoureconomyflourish. improving thelivesofFilipinos, andmakingthe up toourpromise asan institution dedicatedto guided byourvision.We shallcontinueliving Throughout thisjourney, LANDBANKshallremain goals continuingtoexpandandevolve. year after year. On the other hand, we see our the challenges and deliver on our commitments hand, wehavesofarproven thatwecould rise to help upliftthelivesofmore Filipinos.Ontheone will redound to an even bigger opportunity to At LANDBANK,webelievethatourimprovement the bestinworld. performance, withthegoalofbeingatpar business excellence,workingatimproving our resolve tocontinuetreading thepathtowards locally andabroad forsomeofourefforts, we in variousfronts. Butwhilewe’re beingrecognized validation of the Bank’s outstanding performance The numerous awards wereceived in2015are a ON THERIGHTTRACK government-owned universalbank. the PDExplatform.Thismarksfirstlistingofa corporations withtheissuanceofLTNCD in Exchange Corporation(PDEx)communityoflisted

9 10 PURSUIT OFMANDATE LANDBANK 2015 Annual Report Pursuit of Mandate

11 12

LANDBANK 2015 Annual Report LOANS TO MANDATED SECTOR all sectorsatP434.8billion. record-high share of88.3%theBank’s loansto sectors reached P384.0 billion, representing a In 2015,LANDBANK’s totalloanstothepriority loans. projects, tourism,utilities andlivelihood/salary education, healthcare, environment-related communications, transportation, housing, and smallmediumenterprises(SMEs), These programs include microenterprises promoting overallcountryside development. Government (NG)astheseprograms are vitalin programs to the priority programs of the National LANDBANK likewisealigneditsfinancing clients includingthesmallfarmersandfishers. in financingthecredit needs ofitsmandated were tappedbytheBank toserveasconduits cooperative banks)andaccredited cooperatives financial institutions(ruralbanks,thriftbanksand and unservedsectorsofsociety. Countryside it further expanded its reach to the underserved As theBankaimedforamore inclusivegrowth, vital inpursuingagriculturaldevelopment. support structures includingutilitiesthatare all develop themarketandestablishcomplementary aimed toincrease agriculturalproduction, further The interventionsandfinancialsupportwere all interventions toitsmandatedandprioritysectors. by providing financialassistanceandsupport promoting economicgrowth intheruralareas LANDBANK remained attheforefront of SECTORS PROGRAMS FOR THE PRIORITY and irrigators’associations. cooperatives, countrysidefinancial institutions associations through qualifiedconduitssuchas reform beneficiaries(ARBs)andtheir to small farmers and fishers (SFFs), agrarian providing financialandtechnicalsupport commitment tothemandatedsectorsby In 2015, LANDBANK proved once again its andSmallFishers andtheir Associations Reform Beneficiariesandtheir Associations • Loans toSmallFarmers including Agrarian PURSUIT of Mandate FISHERIES LOANS INSUPPORT OFAGRICULTURE AND agri-related servicesaswell asfishing,fishand manufacturing, packaging,storageandother business projects include agri-processing, engaged inagri-andaqua-businesses.Agri- requirements ofprivateenterprisesthatare sector, LANDBANK supportedthefinancing generate jobsintheagriculturalandfishery To promote countrysidedevelopmentand • Loans for Agri-business and Aqua-business Department ofAgriculture. Basic SectorinAgriculture (RSBSA)ofthe identified undertheRegistrySystemfor outstanding to the 20 poorest provinces This is inclusive of the P18.4 billion loans and fishersstoodatP38.7billion. end-2015, outstandingloanstosmallfarmers irrigation, coldstorageandmarketing.Asof postharvest mechanizationactivitiessuchas LANDBANK likewise financed production and and livestock,fishery. Duringtheyear, farm activitiessuchascrop production, poultry small farmersandfishersfinancedvarious extended byLANDBANKbenefitted722,408 irrigators’ associations.Thecredit assistance thrift banksandfinancialinstitutions)151 institutions (ruralbanks,cooperative cooperatives, 164countrysidefinancial through 903accredited farmersandfishers billion tosmallfarmersandfisherschanneled In 2015,LANDBANKreleased atotalofP55.6 P384.0 B to priority sectors Total loans commodities. Theengagement and to engageinthemarketing ofagricultural corporations (GOCCs)with themandate to government-ownedand -controlled LANDBANK alsoextended credit support Corporations Government-Ownedand-Controlled • Loans for Agri-related Projects of P16.9 billion. LGUs forotherpriorityprojects amountedto As ofend-2015,thetotaloutstandingloans among others. water systemandsanitationdrainage, and medium-cost),education,healthcare, projects includehousing (socialized,lowcost and address thebasicsocietal needs.These development, environmental protection projects of the LGUs that promote sustainable LANDBANK alsosupportedotherpriority • Loans forOtherPriority Projects LGUs of billion. aqua-related projects ofLGUsreached P15.5 In 2015,thetotaloutstandingloansonagri- to marketandtheconsumingpublic. agriculture andfishingcommodities from farm these infrastructure help promote theflowof support extendedfortheestablishmentof public marketsandtransportterminals.The farm-to-market roads and bridges,seaports, financed includeconstructionor repair of of localgovernmentunits(LGUs).Projects infrastructure includingrelated projects financed various agricultural and aqua- in the entire foodsupply chain, LANDBANK Since agri-infrastructure isakey component Local GovernmentUnits • Loans for Agri-Aqua Related Projects of businesses amountedtoP46.1billion. In 2015,outstanding loans toagri- and aqua- create laborinthecountryside. the produce offarmersandfishers,help as themarket,andprovide valueadditionto frozen marineproducts. Theseactivitiesserve other marineprocessing, andexportingof aqua-businesses. engaged inagri-and enterprises that are ofprivaterequirements thefinancing supported sector, LANDBANK agricultural andfishery generate jobsinthe development and To promote countryside health care. societal needssuchashousing,education,and utilities (waterandpower),tourismother (transportation andcommunicationsfacilities), sector, provision andmaintenanceoflogistics of micro, smallandmediumenterprise allocated resources towards the strengthening Given the aspirations ofthe NG, theLANDBANK conservation, protection andrehabilitation. services andenvironment andnaturalresources development, accesstoimproved goodsand generation, infrastructure development,social development goalssuchasemployment assistance to help the NG achieve various Plan 2011-2016.LANDBANKextendsfinancial (NG) asembodiedinthePhilippineDevelopment priority programs ofthe NationalGovernment As apolicybank,LANDBANKsupportsthe GOVERNMENT PRIORITYPROGRAMS LOANS SUPPORTING OTHER NATIONAL loans toGOCCsamountedP37.4billion. commodities. Asofend-2015,outstanding and stabilityofpricescertainagricultural were meanttoaddress availabilityofsupply participation ofGOCCsinthevaluechain PURSUIT OFMANDATE

Pursuit of Mandate

13 14 PURSUIT OFMANDATE LANDBANK 2015 Annual Report of P300,000to amaximumofP2.0million may for theirbusinessorlivelihood activities.Loans by theOverseasWorkers Welfare Administration, financial assistancetoOFWs, whoare certified Under theprogram, LANDBANKprovides employment. other servicesasanalternativetooverseas opportunities toOFWsbyproviding credit and Employment, andismeanttoprovide business partnership withtheDepartmentofLaborand families. Theprogram isimplementedin Overseas FilipinoWorkers (OFWs)andtheir to givelivelihoodopportunitiesreturning The OFWReintegrationProgram isintroduced OFW Reintegration Program P15.8 B livelihood loansreached P15.8billion. As ofend-2015,LANDBANK’s outstanding government andprivatesector. of qualifiedfixedincomeearnersinthe for livelihoodprojects and businessendeavors LANDBANK alsoextendedfinancialassistance to microenterprises. P52.3 billionwere lentto SMEs andP5.0billion amounted toP57.3billion.Ofthisamount, In 2015,outstandingloanstoMSMEs SME loansdirectly totheborrowers. different microfinance institutionsandextends LANDBANK channelsitsmicrofinance loansto significantly in the country’s total output. the biggestemploymentandcontributes considered asMSMEs,the sectorgenerates 99% ofbusinessestablishmentsinthecountry the backboneofPhilippineeconomy. With (MSMEs) nationwideasthissectorrepresents to micro, smallandmedium enterprises LANDBANK provided strong financial support MediumEnterprises • Loans forMicroenterprises andSmall livelihood loans livelihood Outstanding (e.g., trucking,internetcafé,waterrefilling). include retail trading,leasing/rentals andservices families’ additionalcashstreams. Theseprojects but nonetheless provided the OFW and their on theotherhand,includeoff-farm activities vegetable trading,andfishery. Non-agriloans, post-harvest facilities,processing, fruitsand grains trading, piggery, poultry, agri-supply, into agriandnon-agriloans.Agri-loansinclude program are variedinnature andare classified Projects financedbyLANDBANKunderthe 6,128 jobs. which benefited 1,133 borrowers and generated loans outstandingamountedtoP663.6million reached P375.1million.Forthesameperiod, In 2015,loanreleases underthepartnership viable. be availedtofinanceprojects thatare deemed sectors. P39.5 billionor9.1%oftheBank’s loanstoall In 2015,outstandingloansto housingreached million. cost housing from more than P3 million to P4 than P400,000 to P3 million; and medium- below perunit;low-costhousingfrom more Socialized housingrangesfrom P400,000and cost andmedium-cost. housing projects classifiedassocialized,low- LANDBANK extends financial assistance for housing ataffordable cost.More specifically, the nationalgovernmentinproviding decent LANDBANK supportsthehousingprogram of costHousing • Loans forSocialized, Low-cost andMedium- loans toallsectors. P62.2 billionaccountingfor14.3%oftheBank’s In 2015,outstandingloansforutilitiesreached generation, distributionandtransmission. gas explorationandproduction, andpower projects onwatergeneration anddistribution, country. Loans totheutilitiessectorinclude and expansionofvariousindustriesinthe finance projects thatare vitalintheoperation LANDBANK lendstotheutilitiessector • Loans forUtilities loans toallsectors. amounted toP8.2billionor1.9%oftheBank’s In 2015,theoutstandingloanstohealthcare 5,878. provided through theBank’s loansreached services. For2015,additionalhospitalbeds facilities toimprove thedeliveryofhealthcare hospitals, clinics and other health-related LANDBANK financedtheconstructionof • Loans forHealth Care December 2015. loans for education stood at P4.0 billion as of 1,372 additionalclassrooms. Theoutstanding In 2015,theBankhelpedinconstructionof maintenance ofeducationalinstitutions. extended loansfortheconstructionand to achieveinclusivegrowth. LANDBANK Investment ineducationisastrategictool • Loans forEducation 4.9% oftheBank’s loanstoallsectors. communication sector reached P21.2 billion or In 2015,outstandingloanstothe telecommunication systems. projects that upgraded and modernized do efficient business. LANDBANK financed hand, facilitatetheabilitytoconnectand Efficient communication systems, ontheother sector amountedtoP27.8billion. In 2015,outstandingloanstothetransport transport systems. to improve boththeland-andsea-based and services.LANDBANKfinancedprojects logistics results to efficient delivery ofgoods Modernization oftransportfacilitatesand people andbusinessinaday-to-daybasis. economic progress becauseitaffects Transportation plays a vital role in bringing Communication • Loans forLogistics – Transportation and hectares covered. benefitting 7,699smallfarmers with19,356 used fortheDA-LANDBANK Sikat SakaProgram of P5.2billion.Oftheamount, P817.7million was In 2015,theAGFPguaranteed atotalportfolio productivity program ofthe government. institutions insupportoftheagricultural to guaranteetheloanexposure offinancial and privateinstitutionswhichfundsare used from various participating government agencies The AGFPconsistsofapoolcontributions LANDBANK servingastheinstitutionalmanager. of Agriculture (DA)andLANDBANK,with Credit PolicyCouncil(ACPC)oftheDepartment program jointlyadministered bytheAgricultural The Agricultural Guarantee FundPool (AGFP) isa AGRICULTURAL GUARANTEE FUNDPOOL AGRICULTURAL CREDIT SUPPORT PROGRAMSFOR loans toallsectors. amounted toP3.2billionor0.7%oftheBank’s In 2015, outstanding loans for tourism parks, amongothers. of hotels, resorts and amusement and theme LANDBANK provided loans fortheconstruction to attract 4.4 million tourists in the country, In supportofthedevelopmenttourism • Loans for Tourism the Bank’s loanstoallsectors. related projects reached P7.2billionor1.7%of In 2015,outstandingloansforenvironment- power plantsandproduction of biofuel. sewerage treatment plants,andhydro-electric waste management and recovery facilities, for theconstructionoffloodcontrol systems, Among theprojects theBankfinancedwere and promote climatechangeadaptation. renewable andalternativeenergy resources the environment, harnessthepotentialof warming byextendingloansthatenhance to adaptandmitigatetheeffects ofglobal LANDBANK supportsthegovernment’s thrust • Loans forEnvironment-related projects

Pursuit of Mandate

15 16 PURSUIT OFMANDATE LANDBANK 2015 Annual Report government agencies. withvarious in partnership andprioritythrusts programs government’s developmental and initiatives onthe various financingprograms the Bankanchorsits countryside development, inclusive growth and mandate ofpromoting With LANDBANK’ssocial capital forproduction orexpansionofoperations. and agri-related projects for additional working financial institutionsengaged inagriculture agribusiness enterprises and participating non-credit needsofSFFgroups, SMEs,large The program aimstosupportthecredit and fund allocationofJPY14.6billion(P7.7billion). Cooperation Agency(JICA)withatotalprogram LANDBANK fundedbytheJapanInternational is anOfficial DevelopmentAssistanceproject of The Agricultural Credit Support Project (ACSP) AGRICULTURAL CREDITSUPPORT PROJECT 47,709 farmerswithPCICinvolvingP3.3billion. For theyear2015,LANDBANKwasabletosecure infrastructures. equipment, transport facilities and other related assets includingbutnotlimitedtomachineries, against damageto/lossofnon-crop agricultural other crops. Italsoprovides insuranceprotection infestations oftheirpalayandcorncrops and from naturalcalamities,plant diseasesandpest protection tofarmers against lossesarising agricultural production. PCIC provides insurance insurance coverage to small farmers engaged in Crop InsuranceCorporation (PCIC)toprovide LANDBANK forged a tie-up withPhilippine CROP INSURANCE released mostlytoSMEs. P3.250 billion.Ofthisamount, P2.851billionwas amount approved undertheprogram reaching benefitted atotalof183borrowers withatotal As ofDecember31,2015,theprogram of buildingsandotherproperties. facilities orequipmentandforthereconstruction CFIs canavailoffundsfortherepair ofexisting like theLGUs,cooperatives,SMEs,NGOs,and billion fortheProgram where eligibleborrowers about bycalamities.TheBankhasallottedP30 after suffering from thedestructionbrought the borrowers recover andgetbacktobusiness by naturalcalamities.TheCaReSProgram help program toclientsthathave beenseverely affected 2013 aspartoftheBank’s rehabilitation assistance and RehabilitationSupport(CaReS)Program in LANDBANK launched the LANDBANK Calamity LANDBANK C assisted 6,307beneficiaries. P291.2 millionto87ARBorganizations and As ofDecember31,2015,theCAP-PBDreleased LANDBANK regular facilities. of eventuallymovingthesaidborrowers tothe are extendedcredit facilities,withtheobjective the LANDBANKregular window cannot beaccommodatedunder where borrowers and projects that PBD servesasanincubationstage non-ARCs). Specifically, theCAP- Reform Communities (ARCs and both Agrarianandnon-Agrarian Reform Beneficiaries(ARBs)in credit assistance to Agrarian Reform (DAR) which provides with theDepartmentofAgrarian (CAP-PBD) isaprogram partnership Program BeneficiariesDevelopment The Credit AssistanceProgram for DEVELOPMENT FOR PROGRAM BENEFICIARIES CREDIT ASSISTANCE PROGRAM benefitted 350borrowers. releases reached P3.70 billion which As ofDecember31,2015,totalloan aReS PROGRAM of LANDBANKaccredited cooperativesand production ofsmallfarmerswhoare notmembers DA, provides credit assistance forthepalay LANDBANK, asaprogram partnerofthe government’s FoodStaplesSufficiency Program. program withtheDAinsupporttonational The Sikat Saka Program (SSP) is a partnership SIKAT SAKAPROGRAM SFFs. tie-ups withanchorfirmsthatbenefited174,941 P48.5 billion in loans for 71 projects involving 71 in October2010,LANDBANKreleased atotalof 25,587 SFFs.SincetheProgram implementation released P10.6billioninloanswhichbenefitted agricultural valuechain.In2015,theProgram market linkagestoallkeyplayersinthe other market players to promote sustainable producers, marketprocessors, consolidatorsand financial and technical assistance to agricultural synergy program wherein LANDBANKprovides The FoodSupplyChainProgram (FSCP)isa FOOD SUPPLY CHAINPROGRAM partnership withvariousgovernmentagencies. developmental thrustsandpriorityprograms in programs andinitiatives onthegovernment’s the Bankanchorsitsvariousfinancing inclusive growth and countryside development, LANDBANK’sWith socialmandateofpromoting EXPANSION PROGRAMS AGRICULTURAL CREDIT 45 provinces: The program is currently being implemented in financial institutions. having difficulty securingloansfrom other P10.6 B Western SamarandIloilo; Occidental, Bohol,Northern Samar, Capiz, (9)–Aklan,Leyte,Antique,NegrosVisayas Masbate, Sorsogon,andOccidental Mindoro; Camarines Sur, Palawan,Laguna,Quezon, Southern Luzon(9)–Albay, OrientalMindoro, and NuevaEcija; Zambales,IlocosSur Norte, NuevaVizcaya, Pangasinan, Cagayan,LaUnion,Tarlac, Ilocos Isabela, Pampanga,Bulacan,Kalinga, Northern andCentralLuzon(14)– Cumulative FSCPreleases since October 2010 since October initiatives. various financingprograms and countryside development, through to promote inclusive growth and LANDBANK’s socialmandate is Bataan,

Pursuit of Mandate

17 18 PURSUIT OFMANDATE LANDBANK 2015 Annual Report (FBs). borrowers andbenefited161farmerbeneficiaries releases stoodatP53.9millionthrough seven As of December 31, 2015, dairy-related loan employment, andincrease householdincome. production, improve farm productivity, generate program alsoaimstoincrease domesticmilk other dairy-basedeconomicactivities.The dairy production, processing, marketing,and cooperatives, andfederationstosupporttheir provide financingtoqualifieddairysmallfarmers, LANDBANK andtheNationalDairyAuthorityto Kalusugan (MILK)program waslaunchedby The Masustansyang Inumin para sa Likas na NA KALUSUGAN MASUSTANSYANG INUMINPARA SALIKAS ARBs. P1.9 billion channeled to 513 ARBOs with 29,151 releases from program inceptionin2013reached million undertheAPCP. Total cumulativeloan In 2015, the Bank released a total of P987.3 capital. other equipmentandmachineries,working programs, for the acquisition of their farm inputs, eligible under the Bank’s existing regular lending assistance toARBs,especiallythosenotyet development program that aims to extend credit The APCP is a five-year credit and capacity LANDBANK. and isajointundertakingoftheDA,DAR was developedpursuanttotheCARPERlaw The AgrarianProduction Credit Program (APCP) PROGRAM CREDIT PRODUCTION AGRARIAN benefiting 9,302farmers. with anoutstandingbalanceofP687.4million released under the SSP reached P2.16 billion As ofDecember31,2015,totalcumulativeloans Norte andSultanKudarat. Davao delNorte,SouthCotabato,Lanao Sur, NorthCotabato,ZamboangaSibugay, Maguindanao, ZamboangadelSur, Davaodel del Sur, ZamboangadelNorte,Bukidnon, Mindanao (13) – Agusan del Sur, Lanao countryside byproviding theloanrequirements socio-economic growth especiallyinthe means togenerateemployment andpromote The program aimstoenergize barangaysasa Support Services(BRIGHTNESS)Program. Every Householdthrough NationalElectrification to implementtheBringingInclusiveGrowth in Administration (NEA),LANDBANKcontinued In partnershipwiththeNationalElectrification SUPPORT SERVICESELECTRIFICATION HOUSEHOLD THROUGH NATIONAL BRINGING INCLUSIVE GROWTH IN December 2015. balance amountedtoP491.7millionasofend- borrowers with2,226beneficiaries. Outstanding amounted to P984.0 million and assisted 50 As ofDecember31,2015,totalloanreleases competitiveness. demand-driven financing,andincreases growers’ focus andvalue-addingactivities,adopts growers. The ISDA Program promotes market- individuals, and small and medium enterprise buyers orprocessors are linkedwithsmallfishers, Aquatic Resources (BFAR) where institutional implemented withtheBureau ofFisheriesand of Aquaculture (ISDA) Program isbeing The IntegratedSupportfortheDevelopment OF AQUACULTURE INTEGRATED SUPPORT FORDEVELOPMENT farmer beneficiaries. releases reached P1.0millionandbenefited86 other calamities.AsofDecember31, 2015, total damage to agriculture caused by typhoons and by greening watershedareas, thereby minimizing and helpminimizetheeffects ofclimatechange and competitivenessofthelocalbambooindustry The program aims to improve the productivity bamboo production, processing andmarketing. Enterprises (ABEs),CFIsandLGUsengagedin cooperatives, federations,SMEs,Agri-Business to qualifiedborrowers likesmallfarmers, by LANDBANKtoprovide credit assistance Pamayanan (KAWAYAN) Program was launched The KalikasangKabuhayansaWastong PAMAYANAN KALIKASANG KABUHAYAN SAWASTONG EVERY 24/7. TheProgram aimstopositiontheBank Filipinos accessforpiped,clean andsafewater assist atleast85%ofmore than100million(est.) of theH2OPE(Water for Everyone)Program to LANDBANK acceleratedits implementation H2OPE (WATER PROGRAM FOREVERYONE) through theBank’s financing. 3,388,873 householdshadelectricalconnections P4.1 million. As of December 31, 2015, a total of P9.4 millionandcumulativeloanreleases of utility entitieswithatotalapproved loansof to finance the needs of 28 ECs and four private As ofDecember31,2015,LANDBANKwasable preparation requirements. the termsofpowersalescontracts,andproject requirements (i.e.guarantee,security)under capital expenditures, fulfillment ofprudential loan financing for working/permanentcapital, wholesale power aggregators in the form of (ECs), jointventure/consortium ofECsand program assisted qualified electriccooperatives the costofelectricityinruralareas. The to boostthepowersectorandhelpreduce cooperatives are further intensified specifically and supportfordevelopmentalprojects ofrural The useofrenewable energy are encouraged individually approved terms andconditions. of electriccooperatives(ECs)through theirown areas. electricity intherural help reduce thecostof the power and sector boost specifically to intensified are further of rural cooperatives developmental projects for and support energy are encouraged The useofrenewable Program. the government’s Public-PrivatePartnership Contractors Accreditation Board) whosupport licensed contractors(bytheDTI-Philippine Program toextendfinancial assistancetoduly Engineering Resource Support (BUILDERS) and Innovations through LANDBANK’s Diverse LANDBANK launchedtheBringingUrbanization PROGRAM RESOURCE ENGINEERING DIVERSE SUPPORT INNOVATION THROUGH LANDBANK’S BRINGING URBANIZATION AND 170,291 households. from the loans extendedbythe Bank benefitted potable waterconnectionsin2015resulting billion istheoutstandingloanbalance.New loan releases ofP2.4billion from whichP2.1 has P4.8billioninapproved loanswithcumulative As ofDecember31,2015,theH2OPEProgram and sanitationassociations. sanitation associations, and barangay waterworks utilities runbycooperatives,ruralwaterworksand utilities, andusersorcommunities-operatedwater managed water utilities, privately-owned water creditworthy Water Districts, LGU-operated and and management.Eligibleborrowers include of waterdevelopment/expansion,distribution, sanitation sectorspecificallythrough thefinancing as oneofthe“champions”inwaterand 3,388,873 households had electrical households hadelectrical connections through the connections Bank’s financingas of December 2015 December

Pursuit of Mandate

19 20 PURSUIT OFMANDATE LANDBANK 2015 Annual Report LANDBANK. among others,automatic loan paymentsto purchase agreement with assemblersstipulating, assemblers. TheSMFIentered intoasupplyand production ofcassavaandcornthrough the to allowengagementofsmallfarmersinthe Inc. (SMFI),signedaMemorandumofAgreement Miguel Corporation,through SanMiguelFoods, for the production of animal feeds. The San aims toenhancetheproduction ofrawmaterials Assemblers/Consolidators FinancingProgram The LANDBANK-SMCCornandCassava PROGRAM ASSEMBLERS/CONSOLIDATORS FINANCING LANDBANK-SMC CORNANDCASSAVA amounted toP208.2million. Outstanding balanceasofend-December2015 borrowers benefiting 3,745 farmer beneficiaries. reached P411.3 million and assisted 36 As ofDecember31,2015,totalloansreleases among thepoorest sectorinthe country. improve thelivesofcoconut farmerswhoare intercrop in coconut areas with the aim to In mostcases,cacaotrees were plantedas cacao farmersby2020. cocoa produced and engaging about 130,000 attaining itstarget of100,000 metrictonsof the cacaoindustryinPhilippinestowards Financing Program was launched to support Entities andotherOrganizations (CACAO)100 The Credit Assistancefor CacaoAgribusiness ORGANIZATIONS 100FINANCINGPROGRAM AGRI-BUSINESS ENTITIESANDOTHER CREDIT ASSISTANCE FORCACAO P7.3 billionasofend-December2015. P12.6 billion.Outstandingloansamountedto P13.3 billionwithtotalreleases amountingto As ofDecember31,2015,approved loansreached equipment/machineries, amongothers. and buildings,purchase ofconstruction renovation/expansion ofbusinessoffices regions, transportinfrastructure, construction/ development, masshousingforcalamity-stricken include housing, education, real estate Eligible projects undertheBUILDERSProgram IN 2015 NEW LENDINGPROGRAMS IMPLEMENTED 2015. amounted to P95.1 million as of end-December benefitted 1,231 beneficiaries. Outstanding loans reached P119.4millionto 1,231borrowers and As ofDecember31,2015,thetotalloansreleased are beingcovered byLANDBANK. and services.SixteenRSBSA-registered provinces projects suchasagricultural trading,processing sectors such as farmworkers, as wellother The AFFPcoversothertypesofagricultural of theAFFP. provided toLANDBANK for theimplementation and cooperativebanks.AtotalofP500millionwas through Government Financial Institutions (GFIs) farmers andwhoare registered undertheRSBSA Policy Counciltoprovide direct credit tosmall Department ofAgriculture-Agricultural Credit (AFFP) isatie-upbetweenLANDBANKandthe The AgriculturalandFisheriesFinancingProgram PROGRAM AGRICULTURAL ANDFISHERIESFINANCING of end-December2015. Outstanding loansamountedtoP33.0millionas and benefitted1,159farmerbeneficiaries. reached P54.6 million and assisted nine borrowers As ofDecember31,2015,thetotalloansreleases of end-December2015. Outstanding loansamounted toP4.1billionas P4.2 billionandbenefited29borrowers. to P12.8billionandtotalloanreleases reached LANDBANK totalapproved loansamounted biofuel andotherrenewable energy projects. geothermal, hydro power, ocean,solar, wind, energy (RE)projects suchasbiomass, Program provides credit supportforrenewable commercialization ofrenewable energy. The promote thedevelopment,utilizationand Program supportsthegovernment’s callto LANDBANK’s RenewableEnergy Lending • Renewable Energy Lending Program borrowers asofend-December2015. loans amountedtoP1.3billionandassisted49 releases reached P1.5 billion. Outstanding amounted to P1.5 billion and total loan As ofDecember31,2015,approved loans opportunities amongcoconutfarmers. rural communitiesbyoptimizingthebusiness can generate additional employment in the support tothecoconutindustry, theprogram LANDBANK’sand fertilizationneeds.With for theirplanting/replanting, rehabilitation stakeholders particularlycoconutfarmers provide credit assistance to coconut industry which waslaunchedonMay13,2015,aimsto Financing Program (Coco-Financing Program), The CoconutProduction andProcessing Financing Program • Coconut Production andProcessing 2015. amounted to P5.0 million as of end-December amounted toP6.0million.Outstandingloans reached P6.0millionand totalloanreleases As ofDecember31,2015,approved loans hectare. P6.5 billionoffinancingatP100,000costper planted withcoffee. This would require about MT, about65,000hectares are needed tobe MT. To meetthepresent demandof60,000 local production isonlyabout25,000 –30,000 year (www.damrdp.net). However, the present expected toincrease atapproximately 3%per 2016 and Philippine Coffee Board, Inc.) and is (Coffee IndustryMasterPlan/Roadmap,013- range of60,000MT–100,000green beans present localdemandwasestimatedatthe advantage ofthedemandinmarket.The to increase itsproduction inorder totakefull based coffee processors/enterprises (CBCEs) especially coffee growers and community- assistance tocoffee industrystakeholders Program waslaunchedtoprovide credit On March 13,2015,theCoffee 100Financing • Coffee 100Financing Program 2015. amounted toP30.0millionasofend-December reached P30.0million.Outstandingloans amounted toP40.0millionandloanreleases As ofDecember31,2015,approved loans environmental degradation. high vulnerabilitylinkedtopovertyand rains, risingtemperatures anddrought; and rise, flooding,landslides,stormsurges, heavy risks whichincludesupertyphoons,sealevel hazards brought aboutbyvariousclimate countries due to thehighincidence of natural is oneoftheworld’s mostdisaster-prone Plan of private sector entities. The Philippines projects/activities inthe Business Continuity Local ClimateChangeActionPlan,aswell LGU developmentorinvestmentplan under thisprogram are thoseapproved in change adaptationprojects. Projects included October 2015toprovide financingtoclimate Ecosystem (SAFE)Program waslaunchedin The ClimateSpecialAdaptationFacilityforthe EcosystemProgram • Climate Special Adaptation Facility forthe P4.5 billionasofend-December2015. borrowers. Outstanding loans amountedto amounted toP5.2billionandassisted217 reached P7.5billion and loanreleases As ofDecember31,2015,approved loans levels duetoastableeconomicenvironment. expected withthegeneralupturnofincome as increased demandforpoultry products is prospects forthepoultry industryinasmuch the localeconomy. Thegovernmentseesbright brought aboutbycontinuousimprovement of relies onthegrowth oftheincomelevels in theagriculture sector, thepoultryindustry Touted asoneoftheforemost driversofgrowth poultry asasubsidiaryormainoccupation. the proponents whoare willingtoundertake credit tostrengthen egg/meatproduction by Lending Program waslaunchedtoprovide On April24,2015,LANDBANK’s Poultry • Poultry Lending Program

Pursuit of Mandate

21 22 PURSUIT OFMANDATE LANDBANK 2015 Annual Report 1 3 1 2015 Gawad saPinakatanging Kooperatiba (Gawad PITAK) Winners development thrusts. to theruralareas; and(4)theGawadKAAGAPAY forcorporateclientswhocontributedtotheBank’s for outstandingcountrysidefinancialinstitutionswhichservedaspartnersindeliveringservices enterprises whoseprojects improved thesocio-economic conditionsofthelocality;(3)GawadCFI model agri-andnon-agricooperatives;(2)theGawadEntrepreneur forsuccessfulsmallandmedium local community especially in the countryside. These awards are asfollows:(1) the GawadPITAK for excellence intermsofoperationalandsignificantcontributionstoupliftthelivesitsmembers Outstanding developmentpartnersoftheBankare annuallyconferred withawards torecognize their CLIENT AWARDSRECOGNITION AND OUTSTANDING AGRI-BASEDCOOPERATIVES MAJOR AWARDS Bontoc Multi-Purpose Cooperative Bontoc, SouthernLeyte Fifth Place Luntian Multi-Purpose Cooperative Tiaong, Quezon Fourth Place General Natividad, NuevaEcija Talabutab Norte Primary Multi-Purpose Cooperative Third Place Buenavista DevelopmentCooperative Buenavista, Guimaras Second Place Cooperative Nagkakaisang Magsasaka Agricultural Primary Multi-Purpose First Place 3. HallofFame–Non-agri-basedCooperativeCategory 2. GinintuangGawadPITAK –Non-agri-basedCategory 1. GinintuangGawadPITAK –Agri-basedCategory 2 Iwahori Multi-Purpose Cooperative Mariveles, Bataan Barbaza Multi-Purpose Cooperative Barbaza, Antique Nueva Ecija Bagumbayan Primary Multi-Purpose Cooperative Llanera, Talavera, NuevaEcija

5. OutstandingCooperativeinEnvironmental Preservation, ConservationandManagement 4. BestCooperativeinAgri-Tourism 3. OutstandingCooperativeinMicrofinance 2. OutstandingFishersCooperative 1. OutstandingARB(AgrarianReformBeneficiary)Cooperative 1 1 1 BontocMulti-Purpose Cooperative Bontoc, SouthernLeyte ICTUS Premier Cooperative –MountainLake EcoResort Surallah, SouthCotabato Barangka Credit Cooperative Barangka, Marikina SalambaoMulti-Purpose OurLadyof Cooperative Obando, Bulacan Conwap Valley Multi-Purpose Cooperative DupaxdelNorte, Nueva Vizcaya OUTSTANDING NON-AGRI-BASED COOPERATIVES

ULIRANG MANGINGISDA

ULIRANG MAGSASAKA SPECIAL AWARDS ICTUS Premier Cooperative Surallah, SouthCotabato 2nd Runner-up –AnnieM.Bajade Nagkakaisang Magsasaka PMPCTalavera, NuevaEcija 1st Runner-up –Ricardo P. Buenaventura Baug CARP BeneficiariesMPCMagallanes, Agusan delNorte Ulirang Magsasaka–RubenM.Ragas ICTUS Premier Cooperative Surallah, SouthCotabato 1st Runner-up –RomedelA.Duco San SebastianMPCHagonoy, Bulacan Ulirang Mangingisda–PaulinoS.Carreon Makilala Multi-Purpose Cooperative Makilala, North Cotabato Fifth Place Pila, Laguna NIA Region IV EmployeesMulti-Purpose Cooperative Fourth Place Socorro, SurigaodelNorte Socorro Empowered People’s Cooperative Third Place Watchlife WorkersMPC Second Place Sacred Heart SavingsCooperative Galimuyod, IlocosSur First Place

Mariveles, Bataan

Pursuit of Mandate

23 24 PURSUIT OFMANDATE LANDBANK 2015 Annual Report 2. Large Non-Agri-basedWinner 1. Large Agri-basedWinner 4. Medium-sizedNon-Agri-basedWinner 3. Medium-sizedAgri-basedWinner 3 1 3 1 Globe Telecom,Inc. A.D. GothongManufacturingCorporation Subangdaku, MandaueCity Clinica Antipolo Hospitaland Wellness Center, Inc. AntipoloCity Global Food Solutions, Inc. Caloocan City Gawad Korporasyon naKAagapay saAtingGAnapnatagumPAY Bonifacio GlobalCity, Taguig Gawad Entrepreneur -RollofWinners2015 (Gawad KAAGAPAY) -RollofWinners2015

3. Non-agri-basedEntrepreneur Award 2. Agri-basedEntrepreneur Award 1. Entrepreneur oftheYear Award 2 4 2 San Mariano TradingSan Chezka RiceMillTanay, Rizal J.K. SalazarCorporation Poblacion Roxas, OrientalMindoro Bansalan, DavaodelSur part ofLANDBANK’s mandatedandpriority institutions andcorporations, allofwhomform medium entrepreneurs, countrysidefinancial tribute to farmers, cooperatives, small and Harvest ofHeroes standsbeyondasamere full ofsocialandeconomicpotential. industries bothstrugglingandthrivinginanation they loveandcommunitiesaround them,to difference inthelivesofothers,from thepeople realization of ambitions anddreams, of makinga with LANDBANKthrough theyearstoward the heroes —clientsandpartnerswhohaveworked offers a look at the journey of our unsung Filipino Hall ofFamerDr. JoseDalisayJr., thepublication Authored bymulti-awarded writerandPalanca country. LANDBANK clientsandpartnersacross the stories featuringadiversegroup/selection of books, “HarvestofHeroes” –acollection of LANDBANK produced the firstinaseriesof sustainable growth, and inspirationalsuccess, In celebrationofenduringpartnerships, HARVEST OFHEROES 7. SpecialAward: BestCFIIntermediaryLowestPass-OnRate 6. SpecialAward: BestCFIAvailer –Agri-agraLoans 5. Third Place:RuralBank 3 1 Gateway Rural Bank, Inc. Balagtas, Bulacan CARD Bank, Inc. SanPablo City, Laguna Cantilan Bank, Inc. Cantilan, SurigaodelSur Gawad FinancialInstitutions-RollofWinners2015 Countryside

Cagayan deOro andBaguioinNovember. in Cebu,Davao,andIloiloOctober, thenin in ManilaSeptember, itwasnextintroduced appreciation eventsacross thecountry. Starting interspersed inaseriesofLANDBANK The HarvestofHeroes Booklaunchwas and revitalizing thelocaleconomy alongtheway. journey tosuccess,andcontributecreating jobs their operations,sothattheymaycarryonwiththe development playerstoexcelandinnovatein young andupcomingfarmers,entrepreneurs, and sectors. Italsoseekstoserveasareminder to 4. SecondPlace:RuralBank 3. FirstPlace:RuralBank 2. CooperativeBankWinner 1. HallofFame 2 Mallig PlainsRural Bank, Inc. Mallig, Isabela CARD Bank, Inc. SanPablo City, Laguna Cotabato Cooperative Cotabato KidapawanCity, Bankof North Rural Goa, Bankof Inc. Goa, Camarines Sur

Pasay City. Convention Center, International of thePhilippine Reception Hall 2015, 3pmat the 22, last September launchheld Book Harvest of Heroes The LANDBANK’s

Pursuit of Mandate

25 26 PURSUIT OFMANDATE LANDBANK 2015 Annual Report Scholarship Program Federation ofFamily share experiences in gathered tointeract, learn, have fun,and a youth conference and thePhilippine program partners, LANDBANK with Gawad Patnubay (PHILFEFFARS). Scholars ofthe Institute (IRRI) Rice Research Rice Research Farm Schools International organized by LANDBANK and thoseinneed. impact ofLANDBANKonitsmandatedsectors play significant roles instrengthening thesocial action toward environmental advocacy, aswellresponsive livelihood prospects, educationalattainment, For 2015, programs focused on LEED – social responsibility (CSR) across the nation. LANDBANK isitsactivestanceoncorporate Simultaneous withthefinancialobjectivesof RESPONSIBILITY PROGRAMS CORPORATE SOCIAL typhoon survivors situated in relocation sites sites relocation in situated survivors typhoon Program aims to promote self-reliance among Kabuhayan Gawad the program, livelihood” through a“recovery as Functioning • GawadKabuhayan Program disaster management–allofwhich for scholars,studentsalsoreceive monthly informal setting.Additionaltothefulltuition related disciplines, either through formal or seeking toenroll inBS Agriculture and Program nowfocuseson collegescholars sectors, theGawadPatnubayScholarship who are dependentsof LANDBANK’s priority primary andsecondaryeducationsstudents What beganasaprogram in2003intendedfor • GawadPatnubay ScholarshipProgram Oro. de Cagayan in are of among Typhoon the survivors Sendong who families 500 - beneficiaries of batch first to its training skills livelihood offered project The Philippines. Humanity for Habitat of Family FarmSchools). (PARFED, formerlyPhilippineFederationof Rural FamiliesforEducationandDevelopment are membersofthePilipinas Associationof Business Management from farm schools that taking up a two-year ladderized course in Farm (Informal) alsoassistsandfinancesstudents The GawadPATNUBAY ScholarshipProgram LANDBANK. other exam-related fees were sponsored by and received their licenses. The licensure and Agriculturist Licensure Examination passed In June,10from thefirst batchwhotookthe graduates, sevenwere conferred withhonors. in Agriculture andAgri-Chemistry. Ofthe12 Programs finishedwith Bachelor’s degrees of the Gawad Patnubay (Formal) Scholarship On April12,2015,thefirstbatchofgraduates Institute (IRRI). program partner, InternationalRiceResearch were facilitatedbyLANDBANKtogetherwith annual workshopsandgroup activitiesthat parts ofManilaandLagunatopartakeinits at theLANDBANKPlazainMalate,other under theformaleducationlevel,convened From January25to27,theProgram scholars stipends, books allowances, and uniform costs. Christian Lacanilao Bryan Alvariño Jess CesarPabia Jr. FranciscoLutao Jr. Roda Capacao Jay Carl Cacerez Royette Santos Vergel Jungco Kristine Joy Reyes Kristine Joy Samantha Alcantara Jovel Grand Marquez Excel Ariola Name BS Agriculture BS Agriculture BS AgriBusiness BS AgriBusiness BS Agriculture BS Agri-Chem BS Agriculture BS Agriculture BS Agriculture BS Agriculture BS AgriBusiness BS AgriBusiness Degree Awards/honors magna cumlaude cum laude cum laude cum laude cum laude cum laude cum laude received none none none none none Center, andBukidnon LendingCenter. Agribusiness Corporation,PhilippineCarabao Rice Research Institute (PhilRice),Harbest were deployedforinternship atthePhilippine weeks withpartnerinstitutions.Theinterns at theLANDBANKHeadOffice, andseven internship wherein three weekswere spent scholarship, 12intotal,underwenta10-week The first batch of graduates under the formal LANDBANK unitsorpartnerinstitutions. and assistanceinsecuringemployment review andexamination, 10-weekinternship, subsidy fortheirAgriculturist Licensure Exam participating graduatesare provided withfull the scholarship.Launchedthisyear, the educational supporttothegraduatesof Scholarship Program aims toprovide holistic Program underthe Gawad Patnubay The EducationtoEmployment(E2E)Internship Program • Education toEmploymentInternship second batchofscholarsforSY2015-2017. in Paraclete,Tacloban, Leyterepresenting the three attheParacleteFarmBusinessSchool scholars attheMFIFarmBusinessSchooland in October2015.Currently, theBankhas15 Rizal completedthecourseandgraduated from MFIFarmBusinessSchoolinJala-jala, Nine scholarsfrom thefirstbatchofstudents University CLSU CLSU CLSU CLSU CMU CMU USM USM VSU VSU VSU VSU

Pursuit of Mandate

27 28 PURSUIT OFMANDATE LANDBANK 2015 Annual Report Affairs Rowena Head/FVPCatherine Villanueva. Department Jr., Head/EVP JulioClimaco Services Sector andCorporate Bulatao Gerardo Victor andCrispinoAguelo,Corporate Bautista. Joiningthem,from left,are: LANDBANKDirectors President andExecutiveChannel RinaLopez- Director the AgriCOOLture educational videoseriesfrom Knowledge Secretary Bro. ArminLuistro received theirofficial copiesof LANDBANK President andCEOGildaPicoEducation Aaron Villaflor. launched AgriCOOLture educational videoserieshostedby withKnowledge Channel, LANDBANK, inpartnership Royette Santos Kristine Joy Reyes Kristine Joy CesarPabia, Jr. Jovel Grand Marquez FranciscoLutao, Jr. Christian Lacanilao Vergel Jungco Roda Capacao Jay Carl Cacerez Excel Ariola Bryan Alvariño Jess Samantha Alcantara Name School CLSU CLSU CLSU CLSU CMU CMU USM USM VSU VSU VSU VSU prescribed curriculum. nationwide assupplementforthestudents’ Knowledge Channel-connectedpublicschools online. Thevideosare alsoshownoverall Channel, withthee-modulesmadeavailable “AgriCOOLture,” are aired overKnowledge The produced videos,entitled internet modules. innovative formsofmediasuchasvideosand in educationbymakinguseofmodernand program introduces new mediacomponent with theDepartmentofEducation(DepEd), Foundation, Inc.(KCFI),andincooperation in partnershipwiththeKnowledgeChannel preparing topursuecollege degrees. Done youth, in particular encourage students agriculture andrelated studiesamongthe and Fisheries, LANDBANK is able to promote and Harvest,PoultryRaising,Aquaculture videos on the following topics: Crop Production Through itsprimaryobjective ofproducing opportunities, andreliable income. a potential source of sound careers, business initiative placeshighregard foragriculture as agriculture education in the Philippines. The e-Dukasyon Program, which supports Complementing Patnubay is the Gawad • Gawade-Dukasyon Program BS Agri, MajorinPlantBreeding andGenetics BS Agri, MajorinCrop Science–Horticulture BS Agri, MajorinPlantProtection BS Agri, Majorin Animal Science BS Agri, Majorin Animal Science BS Agri, Majorin Animal Science BS Agribusiness Management BS Agribusiness BS Agribusiness Management BS Agribusiness BS Agricultural Chemistry BS Agricultural BS Agribusiness BS Agribusiness BS Agribusiness Course Program oftheGawad Patnubay ScholarshipProgram. Memoranda ofAgreement ontheGawad Program Sibol andtheEducation-to-Employment (E2E)Internship Environment Secretary RamonPaje andLANDBANKPresident andCEOGildaPico(center) show thesigned beginning 2016until2018. within the following proposed locations the plantingoftrees andshall beimplemented open anddegradedwatershedareas through environmental rehabilitation of60hectares of The newprogram is pursuingthe LANDBANK employees. seedlings withthevolunteerismofover300 accomplishing itstarget of planting50,000tree II oftheAdopt-a-Watershed Program after April 2015, LANDBANK formally closed Phase Agreement withtheDENR inJuly2015.In through thesigningofthis Memorandumof the Adopt-A-Watershed Program partnership, The Gawad Sibol Program is the third phase of • GawadSibolProgram Program, whichaims EVP Julio Climaco Jr.EVP JulioClimaco educational support educational support to thegraduates of participants ofthe participants to provide holistic the scholarship. E2E Internship welcomed the Region TOTAL IV-A IV-A VIII VII XII III VI XI IX II X V I Zamboanga Sibugay Davao delNorte Lanao delNorte South Cotabato Batangas City Location* Nueva Ecija La Union Tacloban Isabela Albay Cebu Iloilo Rizal Area 60 5 5 5 5 5 5 5 3 5 5 5 3 4

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29 30 PURSUIT OFMANDATE LANDBANK 2015 Annual Report kind donations during the Bank’s Christmas Bazaar.kind donations duringtheBank’sChristmas (Bottom) Landbankers thecausethrough cashandin- supported for 1MillionFilipinoChildren”Million Books initiative. theyGlan, Sarangani show received thebooks from CANVAS’ “1 (Top) StudentsofNicomedesC.Tolentino in ElementarySchool of 800books. Christmas Bazaar2015added tothefunding at theLANDBANKPlazaduring theGreat donations madeduringthe campaignrun the Filipino children, the employee and visitor that specializesinpromoting literacyamong CANVAS, anon-governmentorganization participation of Bank employees. Through the yearwithmore significancewiththeactive Million FilipinoChildren” campaigntohelpcap (CANVAS) forits“OneMillionBooksOne New Ventures and Sustainable Development LANDBANK partnered withtheCenterforArt, Children Initiative • OneMillionBooks forOneMillionFilipino from ManilaBay. generated a total of 112 trucks of trash hauled regular clean-upoperationsince2006already from thegovernmentandprivatesector. Its is comprisedof21institutionalmembers As ofend-2015,theSUNSETPartnership its environmental awareness campaign. deals withsolidwastemanagementaspartof and distributedanIECvideomaterialwhich same year, the SUNSETpartnersalsoproduced Countryside Development Foundation. In the Leasing Corp.,andtheLANDBANK Development Corporation, LANDBANK Sakahan Inc.,LANDBANKResources program members.These are theMasagang subsidiaries and one foundation to become In 2015,LANDBANKalsoenjoineditsfour strengthen itsefforts tohelpmaintaintheBay. institutions into joining the partnership and the environment continued toinfluencemore the flagshipCSRprogram ofLANDBANK,for The ManilaBaySUNSETPartnershipprogram, Inc. • ManilaBaySUNSET Partnership Program, book campaigndonorsduringthebazaar. CANVAS offered torender caricatures ofthe As tokenofappreciation, anartistfrom order toattendschool. who endure hoursofwalkingonadailybasisin Saranggani. Thechosenrecipients are students of SmallMargus ElementarySchoolinGlan, General SantosPioneerBranchtothepupils Responsibility Relations Unit (CSSRU) and the Department (CAD)–Corporate Social represented bytheCorporateAffairs distributed byLANDBANKemployees The produced materialswere personally activity at theManilaBay, Roxas Boulevard inAugust2015. Volunteers from theManilaBay itsannualcleanup SUNSETPartnership Program, conducted Inc.(MBSPPI)

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31 32 PURSUIT OFMANDATE LANDBANK 2015 Annual Report Gawad Katubigan project. LANDBANK, Philippine DisasterResilienceFoundation (PDRF) andWaves for for Water the (W4W)partner systems tothebeneficiaries. LANDBANK representatives, from W4WandPDRF, togetherwithpartners distribute thewater filtration systems. became theinitialrecipients ofthewater Typhoon Lando (International name: Koppu) in NuevaEcijawhowere largely affected by Foundation (PDRF)forthecause.Residents (W4W) andPhilippineDisasterResilience Government Organization Waves for Water with Philippine-basedInternationalNon- In October2015,LANDBANKpartnered socio-economic recovery intheaftermath. consequently easethepeople’s goalforbasic sustainable accesstocleandrinkingwater, and communities affected bythenaturaldisasters The program seekstoprovide residents and initiated theGawadKatubiganproject. parts ofthecountrythisyear, LANDBANK theseriesoftyphoonsthatdevastated With • GawadKatubigan system from thebranches inthenearbyareas. the typhoon victims for the proper use of the W4W, alongsidethehands-onlearningof 2015. TheeventwasfacilitatedbyPDRFand in SamarduringthelastweekofDecember place in Cabra Island, Mindoro and Allen Distribution ofwaterfiltrationsystemstook Sorsogon, Samar, andMindoro. severely damagedbythetyphoon,namelyin three identifiedsitesbythePDRFwhichwere more filtrationsystemswere provided tothe Melor) hitthePhilippineslastDecember, 60 After Typhoon Nona(internationalname: gallons ofwater. lasts from fiveto10years,canfilteronemillion Laur andPantabangan.Eachdevice,which distributed inthemunicipalitiesofGabaldon, Together, 60waterfiltrationsystemswere generated anincomeofP11.0million. involving 982landownersandbondholderswhich CARP bondssoldamountedtoP571.0million encashment oftheirCARPbonds.In2015,total and bondholdersinthemarketing/tradingor The BankalsoassistedCARP-covered landowners principal andP1.1billionforpaymentofinterest). were intheformofCARP bonds (P4.3 billion for were paidincashwhilethe remaining P5.4billion agricultural lands.OftheP6.5billion,P1.1billion compensation ofCARP-covered private paid atotalofP6.5billionin2015forlandowners’ As afinancialintermediaryofCARP, LANDBANK ASSISTANCE LANDOWNERS COMPENSATION AND The 20,963hectares wasvalued atP3.3billion. LANDBANK reached 20,963 hectares in2015. land transferclaimsapproved forpaymentby As one of the implementing agencies of CARP, CARP LANDTRANSFEROPERATIONS reform beneficiariesthrough conduits. financial credit andtechnical supporttoagrarian agrarian reform beneficiaries, andextensionof collection ofamortizationpaymentsfrom of paymentsaslandowners’compensation, as landvaluationofCARPablelands,processing LANDBANK continuestoextendkeyservicessuch (ARBs). AsthefinancialintermediaryofCARP, of landsawarded toagrarianreform beneficiaries in support of the development and productivity provision ofappropriate program interventions through landtenure improvement andthe to promote socialjusticeandindustrialization Comprehensive AgrarianReformProgram (CARP) Republic Act No. 6657 instituted the REFORM PROGRAM COMPREHENSIVE AGRARIAN SUPPORT TO THE Government. the automaticappropriation oftheNational requirements ofthe10-yearCARPbondsunder the Bureau oftheTreasury forbondservicing In 2015,LANDBANKreceived P5.9billionfrom 2015. administered ARFamounted to P5.2billionin The fundbalanceoftheLANDBANK- REFORM FUNDFORCARP LANDBANK-ADMINISTERED AGRARIAN Reform Fund(ARF)amountedtoP0.6million. farmer-beneficiaries forloansfundedbyAgrarian the total loan collections from Agrarian Reform amounted toP583.2 million. On theother hand, from AgrarianReformfarmer-beneficiaries In 2015,thetotallandamortizationcollections BENEFICIARIES FROMCOLLECTIONS CARPFARMER- LAND AMORTIZATION ANDLOAN

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33 34 CUSTOMER SERVICE LANDBANK 2015 Annual Report Customer Service

35 36

LANDBANK 2015 Annual Report 2015 twoadditionalmobileATMs, bringingthe services inallprovinces, LANDBANKacquired in growth through thedelivery ofinnovativefinancial True toitscommitmentpromote inclusive MOBILE ATM and NorthEDSA. Rosario, Batangas, Baliuag, Laoag, Muntinlupa Gingoog, SM Lucena and SM Hypermarket in Super Plaza-Dumaguete,PrinceHypermart- site ATMs incommercial centerssuchasLee cardholders, LANDBANKputupadditionaloff- banking conveniencetoits11.2million As partoftheBank’s commitmentto provide (22%) inMindanao. and329 Southern Luzon,233(16%)intheVisayas in NorthernandCentralLuzon,270(18%) (23%) intheNationalCapitalRegion,328(22%) strategically locatedacross thecountrywith343 in the Philippines. The Bank’s 1,503 ATMs are the fourthlargest bankin termsofATM network installed 165newATMs, maintainingitsrankas deployment in2015.Duringtheyear, theBank LANDBANK hasbeenmore aggressive inATM (ATMS) AUTOMATED TELLERINGMACHINES to provide additionalbanking services. tellering boothsandsixforeign exchangebooths its branchnetwork,theBankalsooperatessix and73branchesinMindanao.ApartfromVisayas the NationalCapitalRegion),57branchesin the totalbranches, 231 are in Luzon (86 are in presence inallofthecountry’s 81provinces. Of most extensivenetworkinthePhilippineswith maintains its position as the bank with the theadditionalbranches,LANDBANK With Zamboanga delNorteandJaniuay, Iloilo. City; Calumpang,GeneralSantosLiloy, Guiuan, EasternSamar;Dalaguete,Cebu;Tagum San Juan,Batangas;PaseodeSta.Rosa,Laguna; located inBonifacioGlobalCity;Pulilan,Bulacan; year-end. Thenewlyestablishedbranchesare bringing thetotalnumberofbranchesto361by LANDBANK opened10newbranchesin2015, BRANCHES BANK’S DELIVERY CHANNELS CUSTOMER s Service opened in2015. were among the10new branches that LANDBANK BranchThe Alabang andAraneta BusinessCenter EO bringing thetotalto361 new branches in2015 10 10 inMindanao. Centers, 21are and inLuzon,seventheVisayas Of thetotalnumberofprovincial Lending private corporations. enterprises, LGUs,governmentagenciesand fishers, financialinstitutions,smallandmedium of various clienteles such as small farmers and units whichservicethefinancial requirements Centers andeightHeadOffice-based lending The Bankalsohas38provincial Lending LENDING UNITS andMindanao. six eachintheVisayas established across thecountry: 12inLuzonand As of year-end 2015, a total of 24 LEAFs were conduits thatoffer bankingservices. where there are noLANDBANKBranch/EO,nor machine. TheLEAFsare establishedinareas bills paymentofclients,alldonethrough the related servicessuchasdeposit, withdrawaland Machine whichoffers non-transactional banking- equipped withanATM andCashDeposit A LEAFisan Other BankingOffice (OBO) unbanked population. LANDBANK establishedLEAFstocaterthe LANDBANK EASYACCESSFACILITY (LEAF) million. process 198,157 transactions amounting to P658 For theyear2015,mobileATMs were ableto and privatecorporations. local government units, government agencies withdrawal transactions of other depositors from (CCT) Program, and asanalternative channel for of the government’s Conditional Cash Transfer the cashgrantdistributiontobeneficiaries ATMs were deployedinMindanaotosupport total mobileATMs to10.Thetwonewmobile Mindanao. 756 are and518in inLuzon,320 the Visayas partnered with1,594cooperatives. Ofthese, the smallfarmersandfishers.In2015,Bank reach to the marginalized sector, particularly country as conduits and partners to expand its LANDBANK accredits cooperatives alloverthe NUMBER OFCOOPERATIVES banks. cooperative banks,andthrift/development partner banks are composed of rural banks, institutions toexpanditsmarketreach. The Bank partnered with214countrysidefinancial marginalized sector in the countryside, the assistance andbasicbankingservicestothe In order tofacilitatethedeliveryoffinancial NUMBER OFCONDUIT BANKS million andP11.2million,respectively. bills paymenttransactionsamountingtoP231.6 3,956 per day. These include fund transfer and the yearreached 1.4millionoranaverageof phonebanking transactionsprocessed during the totalnumberofeligibleaccounts.The enrolled accounts representing 99.95% of Access hasregistered atotalof3.3million As ofyear-end 2015,theLANDBANKPhone inquiries andconcerns. and talktoaLANDBANKPhonebankerforother the accountholderstoreport lost/stolencard check statusandbalanceinquiry. Italsoallows bank statementrequest, checkbookreorder, transactions suchasfundtransfer, billspayment, account holderstodoself-servicebanking delivery channelthatallowsATM andcurrent The LANDBANKPhoneAccessisanalternative PHONEBANKING AND FACILITIES BANKING SERVICES SYSTEMS CUSTOMER SERVICE

Customer Service

37 38 CUSTOMER SERVICE LANDBANK 2015 Annual Report check inquiryandreport oflost/stolencard. account history, checkstatusinquiry, returned financial transactionsinclude accountsummary, payment and checkbook requisition while non- through iAccessincludefundtransfer, bills The financialtransactionsthatcanbedone non-financial transactionsanytime,anywhere. depositor canconvenientlyperformfinancialand logging on to www.lbpiaccess.com, an enrolled delivery channelforindividualdepositors.By The LANDBANKiAccessisanotheralternative RETAIL INTERNETBANKING transaction valueofP271.5million. transactions, totalled67,796fortheyearwith which includefundtransferandbillspayment reached atotalof169,103. Financialtransactions For theyear2015,numberofactiveusers lost orstolen. stored are secured evenifthemobilephoneis all datasavedonthedeviceisencryptedso technology. Itrequires aPINforfundtransferand App isprotected withstate-of-the-art security and GooglePlayStore. Available 24/7,the downloaded forfree from theAppleAppStore The LANDBANKMobileBankingAppmaybe and UnitInvestmentTrust Fundrates. order checkbooks,and view foreign exchange locate LANDBANKbranchesandATM sites,re- account transactions, transfer funds, pay bills, depositor canviewaccountbalance,monitor its accountholders.Usingasmartphone,the effort toprovide the bestbankingsolutions to was offered inJanuary2015aspartoftheBank’s The LANDBANKMobileBankingApplication MOBILE BANKING LANDBANK MobileBanking 169,103 Number of active usersof ofactive Number App for 2015 167 transactionsamountingto P2.03million. reached 69 as of year-end 2015, with a total of The numberofenrollees underwePayAccess payroll, amongothers. services, fund transfer, bills payment and ATM that includeaccountinformation,current account scaled-down versionofweAccess,withfeatures avail ofbankingservicesthrough theweb.Itisa access toperformbankingtransactionsand P20,000 averagedailybalanceondeposits, and governmentinstitutionsthathaveatleast depositors, such as micro-business enterprises facility designed to provide institutional The wePayAccessisanotherinternetbanking we transaction valueamountingtoP76.4billion. 4.1 millionin2014to4.62015with weAccess online transactions grew by 12% from 49% from 13,753 in 2014 to 20,501 in 2015. The The totalweAccessenrollment increased by loan information. auto crediting, payroll, checkstatusinquiryand account sweeping,billspayment,autodebiting, balance inquiry, accountstatement,fundtransfer, logging on to www.lbpweaccess.com, including banking servicescanbeaccessedonlineby both privateandgovernment.Various corporate banking facilityavailableforinstitutionalclients, The LANDBANKweAccessistheinternet INSTITUTIONAL INTERNETBANKING merchants asofyear-end 2015. bills payments.TheiAccesshas101accredited of thesetransactionsincludefundtransfersand transactions amountingtoP3.3billion.Thebulk million in 2014 to 26.5 million in 2015 with total other hand,recorded 51%growth ratefrom 17.6 million in2014.TheiAccesstransactions,onthe million registering agrowth rateof30%from 1.4 As of2015,iAccessenrollment reached 1.82 P ay Access installed inpartner-institutions. transactions from certifiedPOSterminals This newestinnovationallowspesowithdrawal first intheindustrytolaunchPOSCashOut. In partnershipwithBancNet,LANDBANKwasthe LANDBANK POSCASHOUT P3.3 billion. processed 472,828transactionsamountingto In 2015,the244installedPOSdebit/saleterminals terminals ofaccredited establishments. convenience ofcashlesspurchase usingthePOS pay usingATM/debit card. Thisoffers the payment systemthatallowscardholders to The LANDBANKPOSDebit/Saleisacomplete SALE LANDBANK POINTOFSALE(POS)DEBIT/ million. transactions wasprocessed amountingtoP371.6 of thePhilippines(PUP).Atotal264,505 Authority (SBMA)andthePolytechnicUniversity Administration (POEA),SubicBayMetropolitan Muntinlupa, PhilippineOverseasEmployment transactions oftheCityGovernment In 2015,theBank’s ePSservicedthecollection clients through anauto-debitarrangement. between aprivateorgovernmententityandits settlement of fees, charges and other obligations accepts andprocesses e-payment. Itcoversthe LANDBANK ePS is an internet-basedsystem that ELECTRONIC PAYMENT SYSTEM( amounting toP2.1million. totaled 28.Transactions processed reached 1,001 As ofyear-end 2015,theenrolled merchants as wellsaferandfasterdeliveryoffunds. to provide convenienceandefficiency inpayment clients of enrolled merchants. This was developed accept payments of fees, dues and charges from internet-based paymentchanneldesignedto Fully implementedinJuly2015,theePPisan ELECTRONIC PAYMENT PORTAL ( ePP) ePS) BANK PRODUCTS SERVICESPRODUCTS AND CUSTOMER-CENTRIC BANK P88.028 million. transactions were processed amountingto terminals havebeeninstalled.Atotalof23,796 Since itslaunchinMay2015,47POSCashOut LGUs andprivatecorporations. finance climate change adaptation projects of the Ecosystem)wasimplementedin2015to Climate SAFE (Special Adaptation Facility for commercialization. Anotherprogram called energy development,utilizationand government’s policyonpromoting renewable program wasalsoenhancedtosupportthe industries. Therenewable energy lending promote competitiveandsustainablelocal lending programs were enhancedto In 2015,thecoffee, coconutandpoultry and innovativebankingservices. with itsmissionandvisiontodeliverresponsive countryside financialinstitutions,consistent enterprises; localgovernmentunits;and small farmersandfishers;medium operations fortheprioritysectors,suchas The Bankcontinuouslypursuesitslending • Loans amount thathe/shemaywanttosave. debited maybeincreased from P100toany the cardholder’s instruction,theamountauto- Save DepositAccounteverypayday. Upon payroll accountandauto-credited totheAuto- minimum ofP100isauto-debitedfrom the to LANDBANKpayroll account holders.A an auto-debitsavingslinkedaccountavailable savings hassle-free, theAuto-Save Accountis the Auto-SaveAccount.Intendedtomake In January2015,LANDBANKintroduced • Deposits

Customer Service

39 40 CUSTOMER SERVICE LANDBANK 2015 Annual Report been issued. total of2,212LANDBANKprepaid cards have Since itspilotimplementationinJune2015,a cash outagentsofOMNIPAY. accredited merchants andaccredited cashin/ BancNet through theATMs, POSterminals, Credit Bureau, UnionPayInternationaland access his/heraccountviathenetworkofJapan deposit account.Itenablesthecardholder to like anATM/debit card, butisnotlinkedtoany international preloaded card thatfunctions The LANDBANKPrepaid Card isan • LANDBANK Prepaid Card and retail stores worldwide. cashless purchase inover 30millionmerchants ATMs inmore than200countriesandenjoy cardholders totransactin around 2.3million DebitCardThe LANDBANKVisa enables P22.4 billion. 2015 withanequivalenttransactionvalueof up from 1.49millionin2014 to4.67millionin reached 983,185.Transaction volumealsowent in 2014,thetotalnumberofcards issuedhas DebitCards.LANDBANK Visa Sinceitslaunch In 2015,theBankissuedatotalof589,172 • LANDBANK Visa DebitCard releases amountingtoP5.3 billion. have availedoftheLMLSwithtotalloan As ofyear-end 2015,atotalof36,319borrowers consciousness. from informalmoneylenders andinstillsavings employees, the LMLS aims to wean employees every payday. Initiallyoffered togovernment have theoptiontosaveaminimumamount an auto-savecomponentwhere employees accounts withLANDBANK.TheLMLSalsohas application process foremployeeswithpayroll facility provides accessible, fast and easy loan In partnershipwithSmarte-Money, Inc.,this electronic salaryloanfacilityinthecountry. LMLS isconsidered thefirstpaperlessandfully • LANDBANK Mobile LoanSaver (LMLS) trust products andservices: In 2015,theBanklaunchedfollowingnew • Trust transactions ofPERAfunds. with PERAandreport allfinancial and dispositionofallfundsinconnection Bank shallreceive funds,maintaincustody custodian services.Ascashcustodian,the also grantedtheauthoritytoperformcash On November9,2015,LANDBANKwas 3. PERACashCustodianServices Bond FundandPERAGlobal$Fund. namely, PERAMoneyMarketFund, November 26,2015tooffer 3PERAUITFs, The Bankwasgrantedapproval byBSPon Investment Trust Funds(PERA-UITF). Product Provider byoffering PERAUnit the Trust Banking Group, actsasPERA In supportofsaidlaw, LANDBANK,through Philippines. in PERAinvestmentproducts in the for thepurposeofbeinginvestedsolely exclusive useandbenefitofthecontributor account shallbeestablishedbyandforthe of 2008,provides thatavoluntary retirement Personal EquityandRetirement (PERA)Act Republic Act9505,otherwiseknownasthe (PERA) UnitInvestmentTrust Fund(UITF) 2. PersonalEquityandRetirement Account of clients. manage thedispositionofnon-cashassets the risksoftheftorloss.TheBankshallalso deposits orinvestmentsofclientstoprevent safekeep allsecuritiesandevidencesof As securitiescustodian,LANDBANKshall securities custodyandregistry services. Bangko SentralngPilipinas(BSP)toprovide bank thatwasgrantedtheauthorityby LANDBANK wasthefirstgovernment 1. SecuritiesCustodyandRegistryServices Development Corporation. Operations Philippines,Inc.,and PanayEnergy Inc., EnergyThermas Visayas, World Power Geothermal, Inc.,GNPower Kauswaga,Ltd., for AlsonsConsolidateResources, Green Core The Bankalsoentered intosyndicatedloans Exchange platform. government-owned bank in Philippine Dealing Depositdue 2021, thefirstofa of Time billion Long-Term NegotiableCertificates In October2015,LANDBANKissuedtheP6 the MactanCebuInternationalAirportproject. lead arrangerforP23billionsyndicatedloan the P15billion NGCP Corporate Notes andco- The Bankalsoservedastheleadarrangerfor lauded asthe“DealofYear” byTheAsset. Global Coordinator and Deal Manager, was Treasury, where LANDBANKservedastheLead Management Program of theBureau ofthe the year. The P264billionDomesticLiability agencies andprivatecorporationsduring investment bankingdealsforbothgovernment LANDBANK continued to take an active role in of 10regional treasury hubsnationwide. billion from P98.4in2014with thefulloperation By theendof2015,salesvolumetotaledP248.2 market. equity andforeign exchange spot andswap also realized tradinggains from fixedincome, from neighboringAsian countries. TheBank remained resilient againstexternalshocks financial marketin2015,thedomesticeconomy Despite themarketvolatilityofPhilippine • Treasury andInvestmentBanking Welfare Administration andshipping of LaborandEmployment,Overseas Workers’ Department ofForeign Affairs, Department and campaignsincoordination withtheBSP, extends regular financialliteracyseminars its otherbankingproducts, theBankalso enhance awareness ofoverseasFilipinos To supportitsremittance businessand deployment businesses. in theremittance andoverseasmanpower 155 foreign andlocalcompaniesspecializing the Banknurtured healthypartnershipswith 25 top-tierbanksin13countries.Likewise, banks andmaintaineddepositaccountswith correspondent relationship with721foreign The Bankcontinuedtohavestrong year’s remittances. recorded a significant 41% growth overlast Middle East,USA,CanadaandEurope. This and remittance partners in the Asia Pacific, foreign correspondent and depository banks USD1.57 billionofremittances sourced from For theyear2015,LANDBANKgenerated • Remittance Products dealers inthemarket. recognized LANDBANK as one of the top 5 Dealing andExchangeCorporationalso is unequalledintheindustry. ThePhilippine Dealer bytheBureau ofthe Treasury, afeatthat Performing GovernmentSecuritiesEligible LANDBANK wasnamedastheTop Best Prime Holdings.Forthethird straightyear, for AboitizEquityVentures, Inc.andSM underwriting ofcorporatebondissuances Moreover, theBankparticipated in the universal bank. government-owned the firstlistingofa platform, marking inthePDEx Deposit of Certificates Term Negotiable ofLongworth of theP6-billion with theissuance listed corporations community of Corporation (PDEx) and Exchange Philippine Dealing joined the LANDBANK

Customer Service

41 42 CUSTOMER SERVICE LANDBANK 2015 Annual Report beneficiaries, which beneficiaries, at any LANDBANK signed aremittance Zealand, Japanand network to2,718outlets. rural banksandpawnshopsbringthepay-out paying agentscomposedofcommercial banks, to thebranches,LANDBANKhas13partner- branches orpartner-paying agents.Inaddition pickup transactionsatanyoftheLANDBANK implemented intheLBRS,allowingcash Anywhere”, anewsettlementmodewas at anyofthepilotbranches.“CashPickUp abroad and have their beneficiaries claim it remittances from anyMoneyGramagent network. OverseasFilipinosmaynowsend to takeadvantageofMoneyGram’s global services in100pilotLANDBANKbranches with MoneyGram,providing cashpickup In July2015,theBanklauncheditspartnership shipping andmanningagencies. global moneytransfercompanies,aswell by forging partnershipswithlarge localand aggressively promote its remittance services payment settlement,theBankcontinuedto various modesofdatatransmissionand system ofprocessing remittances thatsupports (LBRS), anautomated24/7andreal-time theLANDBANKRemittanceSystem With and OFWbeneficiaries. cost depositsfrom remittance partners,OFWs Average DailyBalanceof P1.8billioninlow- remittance business,the Bankgeneratedan 50% more than2014 figure. Through its opening of about 33,000 OFW ATM accounts, manning agencies.LANDBANKfacilitatedthe remit cash totheir International, Inc. could be collected collected could be allowed overseas Canada, Europe, Canada, The partnership The partnership agreement with parts of Asiato parts Australia, New Filipinos inthe United States, branch inthe LANDBANK MoneyGram Middle East, partnership partnership Philippines. BANK SERVICES email were handledbytheCCC. and reported incidentsmadeviaphoneand In 2015,atotalof179,234 inquiries, requests Twitter. social networking sites on Facebook and responding toqueriesfrom theBank’s official implementing theCallQueuingSystemand single hotline,02-405-7000.CCCalsostarted phone system,andcreated LANDBANK’s which upgraded the Phonebankers’ (PBs) LANDBANK PhoneAccessPhaseIProject, The Bank,through theCCC,implemented enhance CCC’s servicedelivery. Management Unitswere also created tofurther Management andtheQualityComplaint Affairs Department (CAD). The Services and E-BankingGroup (CeBG) totheCorporate In January, CCC was transferred from the Card CCC underwentmajorrestructuring in2015. and services. and complaintsrelated to theBank’s products Philippines, andattendstoinquiries,concerns email sentbyclientsinandoutsidethe App and weAccess. CCC receives calls and banking channels: iAccess, Mobile Banking including supportfortheBank’s electronic provides 24/7 customer service assistance, The LANDBANKCustomerCare Center(CCC) • CustomerCare Center for paymentoftheiremployees’ salariesand seven governmentagenciesand instrumentalities LANDBANK handles24accounts maintainedby CONTINUOUS FORMCHECKS salaries/benefits ofgovernmentpersonnel. developmental projects, operating expenses and and fundreleases ofthegovernmentfor These disbursementsincludedpayments P1.3 trillioninvolving3.04milliontransactions. disbursements of39governmentagenciesworth In 2015,theBankprocessed 84.44%ofthetotal schedule ofpayments. cash programming concerns through specific volume ofoutstandingchecks;andinaddressing demandable accountspayableandminimizing has supportedagenciesinreducing dueand creditors. Through the MDS, LANDBANK settlement ofaccountspayablesduetotheir payments ofgovernmentagenciestofacilitate government banksare authorized toprocess MDS isthepaymentprocedure whereby the Treasury. Budget andManagementtheBureau ofthe (MDS), incoordination withthe Departmentof through the Modified Disbursement System disbursement systemofgovernmentfunds government, LANDBANKservicesthe As the primary depository bank of the national MODIFIED DISBURSEMENTSYSTEM GOVERNMENT SERVICES FOR THE NATIONAL CASH MANAGEMENT processed amountingtoP25.9million. In 2015,atotalof27,261POStransactionswere the airportcounters. passengers whoneednotwaitandqueueat innovation isaimedtoprovide convenienceto passengers using ATM/debit cards. This of terminalfeesbydomesticandinternational (NAIA) toexpeditetheprocessing ofpayment Bank attheNinoyAquinoInternationalAirport Several POSdeviceswere installedbythe Terminal Fees • Point Sale(POS)Payment of NAIA of of P72.96billion. processed for the yearwith an equivalentamount to 2,112.Atotalof89,444 transactionswere agencies, bringingthetotalnumber ofenrollees In 2015,there were additional857newlyenrolled and requisition ofcheckbook. allocation, processing of payment to creditors Issued andCancelled(ACIC),transferoffund information, transmissionofAdviceChecks transactions. Itsfunctionalitiesincludeaccount through the automation of government it alsopromotes efficiency andtransparency banking convenience to government entities, and instrumentalities.Asidefrom providing Internet facilityfornationalgovernmentagencies LANDBANK developed the eMDS as a secure SCHEME (EMDS) ELECTRONIC MODIFIEDDISBURSEMENT 2015. Bank fortheseinstitutionsreached P5.2billionin StateUniversity).TotalVisayas collectionsbythe Philippines, SouthernLuzonStateUniversity, state universities(PolytechnicUniversityofthe District, LeyteMetropolitan Water District)and City Water District,DagupanCityWater units (CityGovernmentofMuntinlupa,Davao Window, POEA-AgencyHires), localgovernment Housing Finance Corporation, National Single Home MortgageandFinanceCorporation,Social Home DevelopmentMutualFund,National Insurance Corporation,SocialSecuritySystem, various governmentinstitutions(PhilippineHealth LANDBANK alsoservesasthecollectionarmof involving 39,877transactions. of tariffs anddutiesforthe Bureau ofCustoms transactions, whileP7.8billionwere collections Bureau ofInternalRevenueinvolving5.6million amount, P126.1billionwere taxcollectionsofthe billion taxes for the national government. Of this taxes. In 2015, the Bank collected a total of P241.9 of thegovernmentincollectiondutiesand country, LANDBANKbecomesastrategicconduit itsnetworkofbranchesspread alloverthe With OTHER SERVICES SERVICESREVENUE COLLECTION AND checks amountingtoP2.8billion. encashment ofatotal of 344,000continuous form other benefits.In2015,theBankprocessed the

Customer Service

43 44 CUSTOMER SERVICE LANDBANK 2015 Annual Report Program. Cash Transfer Conditional (MCCT) oftheModified beneficiaries Development (DSWD) to distribute LANDBANK Prepaid Cards ofSocialWelfare and LANDBANK andtheDepartment over thecountry. billion to4.38millionhouseholdbeneficiariesall In 2015,LANDBANKdisbursedatotalofP45.33 distribution. deployed in various areas to facilitate the cash cash disbursements.MobileATMs were likewise cooperatives and NGOs to serve as conduits in has alsopartnered withaccredited ruralbanks, Bank where cashgrantsare credited. TheBank given cashcards andprepaid cards bythe Program, theidentifiedbeneficiarieswere Transfer (CCT) Program. To support the CCT (DSWD) forthegovernment’s ConditionalCash Department ofSocialWelfare andDevelopment LANDBANK servesasthedistributionarmof CONDITIONAL CASHTRANSFER enhanced products andservices totheclients. in anticipatingtheneedsandproviding new/ with theperformanceagreement oftheBank Commission onGOCCs(GCG),incompliance submitted theratingtoGovernance selected client-respondents. LANDBANK satisfaction ratingof95%bytherandomly The result of the survey showed an overall branch clientsandLendingCenterclients. a surveyquestionnaire was usedforinstitutional clients. Ontheotherhand,onlineinterviewsusing for face-to-faceinterviewswithindividualbranch personal interviewingwasthemethodologyused 263 Lending Center clients). Computer-assisted 5,954 respondents (5,691 Branch clients and 43 LendingCentersnationwidewithatotalof September 9,2015covering351Branchesand The survey was conducted from July 23 to benchmark forsubsequentstudies. Also, itisintendedtoestablishabaselineand the Bank delivers its products and services. measure thesatisfactionlevelofclientsonhow for three years.Thisundertakingwasaimedto and nationwide customer satisfaction survey (Philippines), Inc.,toconductacomprehensive a third partyresearch firm-TheNielsenCompany In 2015,LANDBANKcommissionedtheservicesof SURVEY CUSTOMER SATISFACTION recognition –thehighestlevelofnational applying foraPhilippineQuality Award (PQA) LANDBANK, in2015, took theboldmoveof As partofitsquesttopromote excellence, fronts. landscape both in the international and local take LANDBANKthrough thechangingbanking comparable frameworkforexcellence.Thiswill to fosteraculture istoadoptaninternationally reinforcing aculture ofexcellence.Onemajorstep Alignment” withtheendviewoffurther Business Excellencethrough Operational In 2015,theBankadoptedtheme“Pursuing FRAMEWORK THE BUSINESSEXCELLENCE OPERATIONS THROUGH DEVELOPING WORLD-CLASS processes. of criticalfactorsanddocumentation ofits branch andlendingoperations foreasyreference matrices were, likewise,establishedforthe System (QMS)bestpractices. QMSprocess excellence andshare QualityManagement an extensiveeffort tocascadethebusiness the StrategicPlanningGroup alsospearheaded In 2015,theQualityManagementOffice under organizational strengths andbestpractices. at thesametime,furtherbuiltonidentified improvement citedinthefeedbackreport and, to address thegapsandopportunitiesfor Moreover, LANDBANKhasdrawnactionplans attuned withinternationallyacceptedstandards. goals ofcreating acustomer-centric culture strategically drivetheorganization tofulfillits management systemroadmap. Thiswill productivity programs embodiedinitsquality continues toimplementbasicqualityand In order tosustainthis status,LANDBANK application. to achieveLevel2recognition onthefirst the secondamongallgovernmentapplicants LEVEL 2recognition. This made LANDBANKonly practice ofqualitymanagement,earninga The Bankwascitedasproficient initsexisting enhance thequalityofBank’s service. also presented opportunities forimprovement to strengths andweaknesses oftheorganization and The feedbackreport received reflected the undertakings oftheBankfor2015. was extensiveandproved tobeoneofthemajor results. The preparation for the assessment visit resource focus, (vi) operations focus, and (vii) analysis andknowledgemanagement,(v)human planning, (iii) customer focus, (iv) measurement, major areas, namely:(i)leadership,(ii)strategic In thePQA,LANDBANKwasassessedonseven as Japan,Singapore, AustraliaandinEurope. Quality Awards Program of other countries such of theUnitedStatesAmericaandNational Malcolm BaldrigeNationalQualityAward criteria organizational performance adopted from the comparable frameworkandcriteriaforassessing excellence. ThePQAprovides aninternationally a triedandtestedframeworkforbusiness to enabletheBankgaugeitselfagainst performance. ThePQAapplicationwasmade recognition forexemplaryorganizational AUTOMATION AND BANK PROCESSES INFORMATION TECHNOLOGY Agrarian System(PARCS) Reform Collection Laguna. inSta.Cruz, Secretary Virgilio delosReyes lead thelaunchofPortable LANDBANK President andCEOGildaPicoAgrarian Reform over-the-counter transactions. reduces timespentonsignature verificationof withdrawal atanyLANDBANK branch.OSVS deposit accountsandfacilitatesencashmentor access ofclient’s informationofthe Bank’s OSVS isaweb-basedsystemthatallowsonline (OSVS) ONLINE SIGNATUREVERIFICATION SYSTEM non-remittance. rate andaddressing issuesofdelayedunder/ processes, thus increasing the Bank’s collection agrarian reform collection and remittance translate tothestreamlining oftheBank’s Point-of-Sale (POS)facility. Thiswilleffectively to an automated system through the use of a of AgrarianReformReceivablesfrom manual shifts thecollectionandremittance processes for theAgrarianReformBeneficiarieswhich PARCS isacustom-designedbusinesssolution SYSTEM(PARCS)COLLECTION PORTABLE AGRARIANREFORM relationship management. and layingtheground formore improved client national policiesorregulations, riskmitigation operational efficiency, compliancewith relevant IT projects directed towards enhancementof throughout thecountry, theBankcompleted innovative financial and other banking services Building upontheBank’s visiontodeliver

Customer Service

45 46 CUSTOMER SERVICE LANDBANK 2015 Annual Report Government initscashandfund management. government transactionsand helpstheNational eMDS isalsoatoolthatpromotes transparency in the ModifiedDisbursement Scheme (MDS).The LANDBANK toautomatecertainprocesses of (eMDS) isaweb-basedITsystemdevelopedby The Electronic ModifiedDisbursementSystem SYSTEM ( ELECTRONIC MODIFIEDDISBURSEMENT reporting of all financial transactions of agencies. the NationalGovernmentAgenciestofacilitate Unified Accounts Code Structure requirement of MDS enabledtheBanktocomplywith Government ServicingBanks. (Departments and Bureaus) through the Government disbursesfundstoitslineagencies MDS enablestheprocess whereby thePhilippine MODIFIED DISBURSEMENTSYSTEM(MDS) sources. across variouschannels, products anddata ultimately provide asingle viewofthecustomers from generatingtrustedinformation. DQMSshall data quality problems that might inhibit the Bank significantly reduce, if not eliminate,potential DQMS isadatacleansingtoolthatwill (DQMS) DATA QUALITY MANAGEMENTSYSTEM to CMS. collateral documentinventoryofalllendingunits Phase Iofthisproject migrates theexisting owners ofthecollateral. Bank, andcantracethelocation,typeasset the documentinventoryofcollateralsacross the CMS is a system that can track themovement of COLLATERAL MANAGEMENTSYSTEM(CMS) No. 781of2013underBaselIII. with theBangkoSentralngPilipinas(BSP)Circular based capitaladequacyframeworkincompliance improve theimplementationofrevised risk- provide theBank a solution that willfurther of thethree CARreporting systems.CARC will Package Systemwhichwillreplace theprocesses CARC istheextensionofFinancialReporting (CARC) CAPITALADEQUACY CONSOLIDATORRATIO eMDS) boosting theBank’s assetandprofitability. servicing, andreduce administrativecosts,thus to furtherimprove itsproduct offerings, client The Trust BankingGroup alsousestheTBS Fund andothertrustproducts. implementation coverstheUnitInvestmentTrust TBS Phase 2 - Sub Phase II and Phase III modules. Relationship ManagerandClientOnboarding covers theMoneyWare Custody, Client Management Guidelines).Theimplementation and No.766(Trust GovernanceandRisk Trust, OtherFiduciaryandInvestmentAccounts), No. 618(BasicStandards intheAdministrationof TBS Phase1isincompliancewithBSPCirculars of reports fortrusttransactions. investment, trading,monitoringandgeneration TBS isaweb-basedapplicationforprocessing of TRUST BANKINGSYSTEM(TBS) features oftheapplication: enables the customers to use the following and Android’s Googleplay. Phase2ofMBA available forfree download inApple’s Appstore The LANDBANK Mobile Banking App was made any location. devices (IOSandAndroid) atanytimeandfrom manage theirbankingneedsfrom theirmobile This allowstheLANDBANKclientstosecurely is aninternet-basedmobilebankingsolution. The LANDBANKMobileApplicationSystem MOBILE BANKINGAPPLICATION (MBA) field unitsoftheBank. Software of the HRIS was rolled out to the 173 In 2015,BiometricDeviceandManagement deployment. management, workforce process andworkforce three keyhumanresource processes –talent human capitaloftheBank.Itautomates HRIS isanintegratedsolutionformanaging (HRIS) HUMAN RESOURCE INFORMATION SYSTEM to disablenegotiationofpost-datedchecks. verification oftheMDScheckissuedateinorder Enhancement wasmadetoeMDSinclude • • • Credit Card Module Bills Payment(BancNetBillers) Fund Transfer (Inter-Bank fundtransfer) a landlineormobile phone. transactions ofenrolled clientsthrough theuseof LPA allowshandling ofvariousnon-cashbanking LANDBANK PHONE ACCESS(LPA) UPGRADE following: (ePS) maynowbeusedtotransactwiththe The LANDBANK’s Electronic PaymentSystem transactions are thefollowing: Additional partner-agencies forbillspayment performing arangeofbankingtransactions24/7. individual depositorstheadvantageandeaseof The Bank’s retail internet banking oriAccessoffers AND UNIVERSITIES. UPS WITHMOREBUSINESSES,AGENCIES PAYMENT SYSTEM(EPS)BYFORGING TIE- INTERNET BANKINGANDELECTRONIC EXPANDED USEOFTHEBANK’SRETAIL the newswitch. Replacement coversthemigrationofATMs to card technology. PhaseIoftheATM System and debitpaymentcards basedonchip EMV istheinternationalstandard forcredit system byJanuary1,2017. MasterCard (EMV)-compliantATM andVisa with theBSPmandatetohaveaEuropay, The ATM SystemReplacementisincompliance ATM SYSTEMREPLACEMENT • • • • • • • • • • • • • • • • • • and graduationfees system fortheonlinepaymentoftuition AMA University’s paymentgateway payment ofapplicationfees iApply ePaymentsystemforonline Polytechnic UniversityofthePhilippines’ Electronic BillingandPaymentSystem Subic BayMetropolitan Agency’s Loan Sterling BankPersonalLoanandSalary MERALCO PLDT China BankCredit Card MARANATHA Christian Academy of Imus Inc. Place Makati Alphaland at Club City The Alphaland BalesinIslandClubInc. Food andDrugAdministration Citibank Card Services Asia UnitedBankCredit Cards Philamlife Insurance PayPilipinas Toyota Financial Standard Insurance Dagupan CityWater District have beenstartedinprevious years. Theseare: projects simultaneouswith ongoingprojects that Also in2015,LANDBANKembarkedonnewIT performance monitoringsystem. appliances andsolutions,powerfuldatabase backup solution, tougher network and security additional robust disk storage,consolidated IT environment. These initiativesinclude operation andmanagementofanenterprise resources and services required for the existence, the compositehardware, software, network LANDBANK alsohadinitiativestofurtherimprove that canbegeneratedfrom the DWH. about seventimesfasterprocessing ofreports enhancements. TheDWHupgraderesulted to access to technical support and future product and functionalities;ensure continuous the Banktotapsystem’s advancefeatures was completed. The upgrade is essential for end andback-endcomponentsoftheDWH In 2015,upgradingofthedatabase,front- management’s decisionmakingprocess. and non-volatile collection of data in support of is asubject-oriented,integrated,time-variant and informational processing or reporting. It or external,structured andoptimizedforanalytical information from different datasources, internal A data warehouse is a repository of integrated DATA WAREHOUSE (DWH) UPGRADE increase capacityofexistingphonebankers. software tomitigateriskofobsolescenceand covers theupgradeofexistinghardware and The implementation of LPA Upgrade Phase 1 • • • • • • • • • • • • • Servers. Upgrade ofUnix-based Midrange Upgrade; and Mainframe OperationSystem – Sub Phase2and3; Trust BankingSystem(TBS)-Phase2– (NAMLS); New Anti-MoneyLaundering System Upgrade; Integrated Treasury System(ITS)– Internet BankingSystem–Upgrade; (EFMS); Enterprise FraudManagementSystem and BillsPayable); Data Warehouse -Module3(Treasury System (CRMS)–ConsultancyServices; Customer RelationshipManagement Phase 2; Collateral ManagementSystem(CMS)– Check Truncation System(CTS); ATM SystemReplacement-Phase2; System (ALRMS); Asset-Liability andRiskManagement

Customer Service

47 48 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Institutional Viability

49 50

LANDBANK 2015 Annual Report Program ManagementOffice Branch BankingSector(BBS) Conditional CashConditional Transfer Systems Implementation Branch BankingSupport OFW Remittance Group Department (BBSD) Card andeBanking Governance Committee Department (SID) Branches Groups Corporate Group (CeBG) (CCT-PMO) (ORG) L Group, Risk Management Group, Internal Audit independent Bankunits—theTrust Banking These sixcommitteesare ablysupportedby (6) theAgri-AgraSocialConcernsCommittee. (5) theInvestmentandLoanCommittee, Oversight Committee,(4)theTrust Committee, Audit and Compliance Committee, (3) the Risk (1) theCorporateGovernanceCommittee,(2) through thesix(6)Board-level Committeesnamely, Strategic PlanningGroup INSTITUTIONAL Internal Audit GroupInternal Audit (SPG) Management Group its delegateddutiesandresponsibilities from topbytheBoard ofDirectors and that definesagovernancehierarchy led reflected inits organizational structure ANDBANK’s corporate governance is Compliance Committee Compliance Audit and Management Group (ALMG) Investment BankingGroup Distribution Department Financial Markets Group Treasury andInvestment (CMG) (IAG) Banking Sector(TIBS) Investment Salesand Department (TSD) Asset andLiability Treasury Support (ISDD) (FMG) (IBG) Agrarian Services Group Risk ManagementGroup Risk Oversight Committee (ASG) (RMG) Quality ManagementOffice Banking Operations Group Controllership Group (CG) Technology Management President andCEO Board of DirectorsBoard of Banking ServicesGroup Information Technology Operations Sector(OS) Group (TMG) (IT-QMO) (BOG) (BSG) Legal ServicesGroup (LSG) Trust BankingGroup Committee distinct individualswithclearlydelineatedduties the Board andthePresident andCEOare two from managementsuchthattheChairmanof practices, itmaintainstheBoard’s independence accepted governanceprinciplesandbest As LANDBANKcontinuallyadheres toglobally- support totheLANDBANKBoard. of theCorporateSecretary provides logistics supervised bythe President andCEO.TheOffice directly totheBoard butare administratively Committees. Theseindependentunitsreport which performspecificfunctionsforthesaid Group and Compliance Management Group— (TBG) Trust Management Group (HRMG) Provident Fund Office (PFO) Facilities andProcurement Corporate ServicesSector Services Group (FPSG) Department (CAD) Human Resources Corporate Affairs Viabililty (CSS) Loans Committee Investment and Physical SecurityOffice Security Officer/ Lending Support Department Development Lending Sector Management Group (LPMG) Loan Recovery Department Special Assets Department Special Assets Lending Group (RMLG) Retail andMid-Market Concerns Committee Corporate Banking Lending Programs Agricultural and Lending Groups Agri-Agra Social Group (CBG) (SPAD) (ADLS) (LRD) (LSD) of thefollowing: The LANDBANKBODiscomposed governance. (BOD) iscriticallycentraltocorporate In LANDBANK,theBoard ofDirectors sustain economicgrowth. corporate successandviabilityto essential componenttoachieve Good corporategovernanceisan CORPORATE GOVERNANCE of theCodeCorporateGovernance. LANDBANK isfullycompliantwiththeprovisions the President andCEO. Directors are alsoadministrativelysupervisedby The Bankunitsreporting directly totheBoard of and 5)Treasury andInvestmentBankingSector. Corporate ServicesSector;4)Operations Lending Sector;2)BranchBanking3) five sectors:(1)AgriculturalandDevelopment Specifically, thePresident andCEOsupervises of itsinstitutionalgoalsandobjectives. and strategiesapproved bytheBoard inpursuit operations oftheBankandexecutespolicies on the other hand, directly manages the daily performance oftheBank,President andCEO, good governancepoliciesaswelltheoverall leadership, monitorstheBank’s adherence to and responsibilities. WhiletheChairmanassumes 4. 3. 2. 1. Agrarian Reform Secretary, Departmentof Ex-Officio Member Hon. Virgilio R. delos Reyes Agriculture Secretary, Departmentof Ex-Officio Member Hon.Proceso J. Alcala Chief ExecutiveOfficer LANDBANK President and Chairperson Vice Ms. GildaE. Pico Department ofFinance Ex-Officio Chairman,Secretary, Hon. Cesar V. Purisima Director Victor Gerardo J. Bulatao Crispino T.Director Aguelo Director Tomas T.Leon,De Jr. Director DomingoI. Diaz Name as theguideofmanagementandoperating and strategicdirections of theBank,whichserve The LANDBANKBODsetstheoverallpolicies 9. 8. 7. 6. 5. Beneficiaries Representative, Agrarian Reform Director Victor Gerardo J. Bulatao Beneficiaries Representative, Agrarian Reform Crispino T.Director Aguelo Representative, PrivateSector Director Tomas T.Leon,De Jr. Representative, PrivateSector Director DomingoI. Diaz Employment Secretary, DepartmentofLabor& Ex-Officio Member Hon. Rosalinda D. Baldoz Training/Seminar attended LANDBANK Plaza, Malate, Manila, Philippines, October28, 2015 Laundering Act on Anti-Money Updating San Jose, California, USA, September08-09, 2015 Conducted by Trends & Technologies, Inc. 2015 CiscoExecutive Briefing Conference LANDBANK Plaza, Malate, Manila, Philippines, June 20, 2015 Conducted bythe Trust InstituteFoundation thePhilippines of Basic Trust BankingSeminar forBankOfficers andDirectors LANDBANK Plaza, Malate, Manila, Philippines, October28, 2015 Laundering Act on Anti-Money Updating LANDBANK Plaza, Malate, Manila, Philippines, June 20, 2015 Conducted bythe Trust InstituteFoundation thePhilippines of Basic Trust BankingSeminar forBankOfficers andDirectors LANDBANK Plaza, Malate, Manila, Philippines, October28, 2015 Laundering Act on Anti-Money Updating San Jose, California, USA, September08-09, 2015 Conducted by Trends & Technologies, Inc. 2015 CiscoExecutive Briefing Conference LANDBANK Plaza, Malate, Manila, Philippines, June 20, 2015 Conducted bythe Trust InstituteFoundation thePhilippines of Basic Trust BankingSeminarforBankOfficers andDirectors LANDBANK Plaza, Malate, Manila, Philippines, October28, 2015 Laundering Act on Anti-Money Updating INSTITUTIONAL VIABILITY

Institutional Viability

51 52 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report directors forCY2014. which covered theperformanceevaluationfor Governing Board. Thiswasimplementedin2015 performance ofindividualmembers oftheGOCC for Directors in the GOCC Sector, appraises the the componentsofPerformance Evaluation GCG through theiPEDSystem.TheDPR,oneof (DPR) Formsonlineandsubmitsdirectly tothe accomplishes the Director Performance Review being givenbythedirectors. Eachdirector confidentiality andsecurityintheinformation System was made toincrease the levelof Performance EvaluationforDirectors (iPED) assessment oftheBOD.Theinternet-based developed asecondmeasure forperformance The GovernanceCommissionforGOCCs(GCG) meeting. Governance Committeeinadulyconstituted deliberated upon annually by the Corporate the performanceassessmentsare evaluatedand and theBoard-level Committees. Theresults of yearly toevaluatetheperformanceofBoard Institute ofCorporateDirectors are disseminated Performance ratingsheetsdevelopedbythe performance evaluationoftheBOD. Central tocorporategovernanceisthe PERFORMANCE EVALUATION OFTHEBOARD’S No. 24datedFebruary10,2011. as areference, amongothers,ExecutiveOrder Owned or-Controlled Corporations(GCG)using Governance CommissionforGovernment- the LANDBANK BOD are determined by the Allowances andincentivesofthemembers COMPENSATIONDIRECTORS LANDBANK OF Independent Board ofDirectors in2015: The followingwere thetrainingsattendedby stakeholders. that theBankremains accountabletoitsvarious regulatory requirements. TheBODalsoensures and compliancewithlegal,institutional by strong adherence toethicalstandards and champions good corporate governance functions intheoverallBankperformance, the LANDBANKBODprovides theoversight units intheday-to-dayoperations.Moreover, UNITS UNDERTHEBOARD In 2015,24regular Board meetingswere held. every secondandfourthMondayofeachmonth. The LANDBANKBODmeetingsare regularly held MEETINGS BOARD MEMBERS’ATTENDANCE TO Committee Meetings Board andBoard-level Board Meetings among others,asfollows: undertook othermajorprograms andprojects, On topofitsauditengagements,italso implementation review). (including applicationauditandpost- engagements totalling 311 auditable units For CY2015,theIAGcompletedaudit processes oftheBank. systems, riskmanagementandgovernance add valueandimprove the internalcontrol assurance andsupportservicesdesignedto function istoprovide independent, objective Office ofthePresident oftheBank.Itsmain Committee, andadministrativelyunderthe Compliance Committee,aboard-level under thesupervisionofAuditand The InternalAuditGroup (IAG)isfunctionally • Internal Audit Group • • • • • • • • of InformationandITSecurity Plan Outsourced theconductofreview Language Manual Development of the Audit Command Management Plan Review of the Business Continuity Assessment ofEurogiro System classified aslarge exposures Review ofthequalityloanaccounts Models Validation ofTreasury RiskMeasurement Rating Systems Validation ofExpert-BasedCredit Validation ofthe2015ICAAPDocument Percentage Attendanceof by theMembers 85.95% 80.56% and isresponsible fortheinstitutionalization as theoversightonriskmanagement policies The RiskManagementGroup (RMG)serves • RiskManagementGroup Bank Products andServices. contained onpage42underCustomer-Centric new trustproducts andservicesin2015are financial outlookandpriorities.Detailsofthe awareness andinstillchangeintheindividuals’ seminars locallyandabroad, tocreate activities suchasinvestmentforumsand literacy through various campaigns and continues tospread andadvocatefinancial for Growth andGoodGovernance”,TBG Living uptoitscommitmentas“Stewards place among25trustentitiesinthecountry. a totalofP69.30billion,placingTBGinthe9th Group’s (TBG) 40th year in the industry, posting The year 2015 marked the Trust Banking • Trust BankingGroup and post-graduatestudies. to auditorsinobtainingglobalcertifications Bank alsoencouragedandprovided support to enhance their technical and soft skills. The all auditorsattendedseminarsandtrainings As partofitscompetency-building program, its operationalefficiency andinternal controls. Internal Audit’s abilitytohelptheBankimprove COSO. Theproject aims tofurtherimprove its risk-basedauditframeworktothelatest end auditprocess methodology andupdate a consultanttoassistindevelopinganend-to- new units.Likewise,ithasstartedthehiringof and establishedtheauditratingsystemsfor systems, enhancedtheauditdataanalytics, Procedures forvariousbankunitsandIT revised theRiskScoring/RiskAssessment the AuditCommandLanguage(ACL)Manual, processes andmethodologies,IAGdeveloped In itscontinuingefforts toimprove itsaudit • • Environmental ManagementSystem internal auditofLANDBANK’s Acted asLeadAuditorduringthe Management System Business CasefortheEnterpriseFraud Acted aslead in thepreparation ofthe and services solutions to both private andgovernmentand servicessolutionstoboth sectors. forums aimedtoextend efficient products andcompetenttrust anniversary in2015.TBGheldvariousevents andinvestment BankingGroup (TBG)celebratedThe LANDBANKTrust its40th Management Office was reorganized into a the Compliance Program, the Compliance effectively andcomprehensively execute To manage thecompliancefunctionmore through theAuditandComplianceCommittee. functionally reports totheBoard ofDirectors the ChiefComplianceOfficer (CCO)who of good practice. The CMG is headed by Conduct andthesoundpoliciesstandards accordance withlawsandregulations, Codeof that businessoperationsare conductedin identify and mitigate business risks and ensure Compliance Systemwhichisdesignedto oversees theimplementationofBank’s The ComplianceManagementGroup (CMG) • Compliance ManagementGroup Initiatives forEffective Governance) Measures andControls andPursuingNew section onC.2(Reinforcing Risk Management RMG’s accomplishmentsare containedinthe of riskculture across theBank.Highlightsof

Institutional Viability

53 54 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report provided bytheLendingSupportDepartment. while administrativesupport for theSectoris Lending Programs ManagementGroup foreign anddomesticfundsare ledbythe development, monitoringand sourcing of and Mindanao Lending Groups. Program and CentralLuzon,SouthernVisayas major islandgroupings. Theseare theNorth control, theseLendingUnitsare clustered by accounts. Forefficient managementand retail andmortgagebanking,corporate Lending UnitsattheHeadOffice cateringto Centers basedinkeyprovinces andeight As ofend2015,there were 38Lending programs ofthenationalgovernment. to agriculture andfisheriestotheother fishers, andinproviding loanssupportive sectors oftheBankincludingfarmersand extending financialassistancetothemandated C. Borromeo. TheADLS takestheleadin Sector (ADLS),whichisheadedbyEVPCecilia by theAgriculturalandDevelopmentLending The lendingoperationsoftheBankare handled Sector • Agricultural andDevelopmentLending Security Office. Group, and(4)Security Officer/Physical (2) AgrarianServicesGroup, (3)LegalServices the following:(1)StrategicPlanningGroup, directly supervisesfourbank units.Theseare The LANDBANKPresident andtheCEO the • Office of President andCEO Systems andotherinitiatives”. Management MonitoringandReporting contained inthesectionon“Compliance Highlights ofCMG’s accomplishmentsare effectively carryoutthecompliancefunctions. broader skills and experiences necessary to progressively buildthecompetenciesandhave were senttovarioustrainingprograms to compliance functions.AllCMGpersonnel three unitsto clearly definethespecific AML (AML) Departmentwasrestructured into complement. TheAnti-MoneyLaundering resources with 12 additional manpower 2015. The reorganization provided adequate Compliance ManagementGroup onAugust27, and 3)InvestmentBankingGroup (IBG). (ALMG); 2)FinancialMarkets Group (FMG); wit: 1)AssetandLiabilityManagement Group TIBS which is comprised of three groups, to EVP RabboniFrancisB.Arjonillo headedthe Treasury andInvestmentBankingSector(TIBS). and investmentbankingistakenonbythe operations, financial resource management The overallsupervisionovertreasury • Treasury andInvestmentBankingSector beneficiaries. and distributionofcashgrantstoeligible CCT conduits,ensures theefficient delivery Bank units,andLANDBANK-accredited of SocialWelfare andDevelopment,concerned CCT PMO,incoordination withtheDepartment Conditional CashTransfer (CCT)Program. The requirements of the National Government’s (CCT-PMO) overseestheimplementation The CCTProgram Management Office users intheBranches. the other hand, provides support to all system The SystemsImplementationDepartment,on by theBranchBankingSupportDepartment. to thevariousunitsofSectorishandled e-banking operations.Administrativesupport of theBank,andBank’s Card and of OFWs,particularlytheremittance business lead insupportingthebankingrequirements Branches Groups. The Sector also takes the West andEastWest Visayas, Mindanao Southeast andSouthwestLuzon,East and SouthNCR,NorthLuzon,Central management andcontrol, asfollows –North grouped bygeographical locationsforbranch (LEAF) and one servicing unit. These units are offices, 24LANDBANK Easy AccessFacilities had atotalof314branches,46extension Cabreza. Asofend-December 2015,theBank (BBS). The BBS is headed by EVP Jocelyn dG. the Bank are led by the Branch Banking Sector banking requirements ofthevariousclients Deposit-taking and in servicing branch • Branch Banking Sector respectively. and ROPAs acquired byallLendingUnits, loan recovery forHeadOffice LendingUnits, Assets Departmenthandlemattersrelated to The LoanRecoveryDepartmentandtheSpecial corresponding functions: comprised offourGroups withthefollowing system-related infrastructure. The OS is implementation ofinformationtechnology accounting services and the development and of Bank-wide operational support including Andres C.Sarmiento.Itundertakes theprovision The OperationsSector(OS)isheadedbyEVP • Operations Sector instruments. Bank’s investments in equity and other financial as monitoringtheperformanceofall services forproject finance transactionsaswell transactions. Italsohandlesinvestmentbanking and advisoryservicesforcorporatefinance and structured transactions,fund arrangement equity capital market transactions, specialized services andfinancialadvisoryfordebt The IBG handles the provision of underwriting the monitoringoffinancialmarkets. fundamental andtechnicalanalysisaswell and theformulationoftradingstrategiesusing Foreign Currency-denominated instruments the Bank’s tradingunitsforbothPesoand The FMGundertakesthemanagementof sheet andliquidityreserve positions. The ALMG manages LANDBANK’s balance • • collection functionspertinentto lending. subsidiary ledgers,andbilling and transactions, maintenance of loans non-trade transactions,foreign currency oversees theinternational trade and The BankingOperationsGroup Scheme (MDS). Government’s ModifiedDisbursement and reimbursementNational ofthe branches. Italsohandlestheallocation of collectionsandremittances from sorting andclearing,theprocessing reconciliation, check monitoring, ATM monitoringandtransactions in theNCRandnearbyprovinces, deliveries totheBank’s cashcenters Bangko SentralngPilipinas(BSP),cash such ascashwithdrawalsfrom the of thecentralcashvaultservicing The BankingServicesGroup isincharge Circulars). TheBankincentivestoemployees Administrative Orders, DBMCirculars, GCG from theNationalGovernment(Malacañang 3844 asamendedbyRA7907) andissuances structure basedonvariousRepublicActs(RA LANDBANK continuestoimplementanincentive THE LANDBANKINCENTIVESTRUCTURE Corporate Affairs Department). and externalrelations programs (through the and administrationofLANDBANK’s media Fund Office). It also covers the management Bank’s Provident Fund(through theProvident Services Group), andthemanagementof (through theFacilitiesandProcurement of theBank’s facilities,properties andsupplies Resources ManagementGroup), administration resource supportservices(through theHuman the overallsupervisionofdeliveryhuman EVP JulioD.Climaco,Jr.. Thesectorhandles The CorporateServicesSectorisheadedby • Corporate ServicesSector • • hardware. selection ofapplicationsoftware and evaluation oradviceforend-user applications. Italsoprovides technical enhancement ofITinfrastructure and project teams,management and in coordination with the designated on theimplementationofITprograms designing ofITarchitecture, oversight coordination ontheBank’s ITplans, management functions,particularlythe oversees informationtechnology(IT) The Technology ManagementGroup Bank operations. preparation ofprocedural guidelineson documentation ofoperationsand of theBank’s taxpositionand preparation andcontrol, management regulatory bodies,Bank-widebudget statements andreports forexternal preparation oftheBank’s financial inter-office floatsmanagement, the performanceofgeneralaccounting, The Controllership Group supervises inward andoutward remittances. It also process foreign and domestic

Institutional Viability

55 56 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Members Vice Chairperson Chairperson following Committeesconstitutedasfollows: corporate governance,theBoard created the To aid in complying with the principles of HELD IN2015 ON MEETINGSANDNUMBEROF THEIRCHARTER PROVISIONSFUNCTIONS, BOARD-LEVEL COMMITTEES, THEIR quality andcompetentemployees. enables thebanktoattractandretain itspoolof equitable andexternallycompetitive.Thispolicy that rewards goodperformanceandisinternally LANDBANK maintainsaremuneration policy REMUNERATION POLICY employees whoare required toworkovernight. likewise, provides nightshiftdifferential to children allowance,longevitypay).TheBank, and travellingallowanceorRATA, mealand disability) andallowances(e.g.representation benefits (e.g.,medicalbenefit,deathand contribution totheProvident Fund,andother and staff include,amongothers,basicpay, and accountability. transparency andoperationalresponsibility individual members’performance), and matters andBoard performance(including organizational structure, manpower-related (CG Com)involveoversight intheBank’s The CorporateGovernanceCommittee corporate governance. continuously adhere tothespiritofgood that theLANDBANKBoard andManagement principles andguidelines.Itsthrustistoensure and dueobservanceofcorporategovernance the guaranteeofboard’s effectiveness Governance Committee(CGCom)include The primarydutiesoftheCorporate • Corporate GovernanceCommittee Director DomingoI. Diaz President andCEOGildaE. Pico (Alternate Member:Undersecretary NiconF. Fameronag) DOLE Secretary Rosalinda D. Baldoz (Alternate Member:Undersecretary Jeremias N. Paul, Jr.) DOF Secretary Cesar V. Purisima Director Victor Gerardo J. Bulatao Director Tomas T.Leon,de Jr. Members Vice Chairperson Chairperson Methodology. Program, andtheRisk-BasedCompliance Laundering andTerrorist FinancingProtection System, theComplianceManual, theMoney procedures on Risk Assessment of Application of the revisions in IAG’s risk scoring system and Compliance Testing Program; andtheapproval programs ofIAGandCMGaswelltheAML in 2015includetheapproval oftheplansand Highlights oftheaccomplishmentsACC results ofitsevaluation,forBODconsideration. policies, systemsandprocedures arisingfrom the formulationofamendmentstoexisting Compliance ManagementGroup (CMG);and the InternalAuditGroup (IAG)andthe of reference; functionalsupervisionover the investigationofmatterswithinitsterms The ACC’s authoritycovers,amongothers, and compliancefunction. control, internalandexternal auditfunctions, the Bank’s reporting policies,practicesand in fulfillingitsoversight responsibilities over to provide assistancetothe LANDBANKBOD is aBoard-level committee whosepurposeis The Audit and Compliance Committee (ACC) • Audit andCompliance Committee attendance bytheCGCommembers. Committee heldeightmeetingswith85.4% During theyear, theCorporateGovernance and Employees. Bank’s IndemnityPlanforDirectors, Officers Collective NegotiationAgreement; andthe Towers Watson GlobalGradingSystem;5th and adjustmentinpositionlevelsusingthe qualification standards; Bank-widejobleveling changes, positionlevelingandBank-wide including thoserelated toorganizational initiatives from the different units of the Bank recommended totheBODmajor In 2015,theCGComdeliberatedand Director DomingoI. Diaz Crispino T.Director Aguelo (Alternate Member:Undersecretary Allan Q. Umali) DA Secretary Proceso J. Alcala Director Tomas T.Leon,de Jr. Director Victor Gerardo J. Bulatao Vice Chairperson Chairperson Members GCG Sectorfor2015.The Committee also are partoftheBank’s commitmentsto the Securities ClassifiedasLoans (UDSCL),which Securities (INMES)andUnquoted Debt models forInvestmentsin Non-Marketable The Committeealsoapproved thevaluation Practices). Guidelines onSoundCredit RiskManagement of BSPCircular #855dated29October2014(re: Bank’s actionplantocomplywiththeprovisions guidelines, theLegalRiskManualand 11 majorinitiativesaswell17new/enhanced The Committeedeliberatedonandapproved on theBank’s loanandinvestmentexposures. were discussed,includingstress testingreports operational andenterprise-wideriskreports 310 regular andspecial credit, treasury, an average attendance of 83 percent wherein For 2015,theRiskComheld18meetingswith actions are takenwhenever there are breaches. remain effective and immediate corrective tolerances are observed, systemoflimits management systemsare inplace,limitsand program oftheBank ensuring thatrisk The RiskComoverseestheriskmanagement business strategiesandperformancegoals. management objectiveswiththeBank’s overall guidelines andensures the alignmentofrisk management framework,policiesand is primarilyresponsible for theBank’s risk The RiskOversightCommittee(RiskCom) • RiskOversightCommittee average attendanceof98.67%. The ACCheld15meetingsinCY2015withan thus, improve internalcontrol. how toaddress thenotedweaknessesand, that failedtheaudittopresent initiativeson As ageneralpractice,theACCinvitedallunits Director Tomas T.Leon,de Jr. (Alternate Member:Undersecretary Jeremias N. Paul, Jr.) DOF Secretary Cesar V. Purisima Director DomingoI. Diaz Crispino T.Director Aguelo (Alternate Member:Undersecretary Allan Q. Umali) DA Secretary Proceso J. Alcala Members Vice Chairperson Chairperson optimizing itstrustandfiduciary business. Group’s strategicdirection towards thegoalof TrustCom is responsible in formulating the the day-to-dayfiduciaryactivities. Also,the with the function and responsibility of managing performance oftheTrust Officer whoisvested Particularly, theTrustCom overseesthe comprehensive andeffective. standards andshouldalwaysberelevant, and risktoleranceintoprudentoperating procedures translatetheBoard’s objectives and prudentpractices.Thesepolicies with theapplicablelaws,rulesandregulations management are inplaceandare inconformity and procedures pertinenttotrustaccount The TrustCom ensures thatallpolicies the Bankinaccordance withits authority. Directors tooverseethe fiduciary activitiesof constituted andauthorizedbytheBoard of The Trust Committee (TrustCom) isduly • TrustCommittee rated “Superior”/”Exemplary.” the RiskCommembers,Committeewas In thePerformance Evaluation conductedby was distributedtoallBUs. was thecompletionofERM-AVP which with SGVconsultants.Anothermajorinitiative DBP merger wasconductedandcompleted mitigating) andtheimpactofLANDBANK- management strategies(preventive and Phase IIIwhichanalyzedtheriskdrivers, Under thedirection oftheRiskCom,ERM Advanced Approach inCalculatingRWA.” as expressed inthedocument“Journeyto approved themediumtermplanofRMG SVP Josephine G. Cervero, Trust Officer President andCEOGildaE. Pico (Alternate Member:Undersecretary NiconF. Fameronag) DOLE Secretary Rosalinda D. Baldoz (Alternate Member:Undersecretary Jeremias N. Paul, Jr.) DOF Secretary Cesar V. Purisima Pañgulayan) (Alternate Member:Undersecretary Luis Meinrado C. DAR Secretary Virgilio R. delosReyes

Institutional Viability

57 58 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report LANDBANK Board. which were endorsedforapproval of It likewiseevaluated53investment accounts deliberated andapproved forimplementation. 36 credit-related policiesandprograms were Board forapproval orconfirmation.Atotalof endorsed 235accountstotheLANDBANK The ILCapproved 378loanaccountsand an averageattendanceof83%. held atotalof47weeklymeetingsin2015with and Tomas T. De Leon, Jr.. TheCommittee Crispino T. Gerardo Aguelo,Victor J.Bulatao The three members of the ILC include Directors Director Chairman. DomingoI.DiazastheVice and CEOGilda E. Pico as Chairmanwith The ILCiscomposedofLANDBANKPresident and managementofinvestmentportfolios. that definethestructure, eligible investments approval ofinvestmentpolicies andguidelines and recommends tothe LANDBANKBOD settlement options.Inaddition,theILCreviews d) foreclosures, dacionenpagoandother remedial measures suchasrestructuring; and for eachtypeofcredit accommodation;c) industries/sectors; b)termsandconditions Bank’s totallendingexposures todifferent limited tothefollowing:a)limitson policies andguidelinesincluding,butnot The ILCalsoevaluatesandapproves credit (CASA). Bank’s CodifiedApproving/Signing Authority investment proposals, in accordance withthe in theevaluationandapproval ofloanand provides supporttothe LANDBANKBoard The InvestmentandLoanCommittee(ILC) • InvestmentandLoan Committee an averageattendanceof80%. The TrustCom held eight meetings in 2015 with and (iii)RevisedInvestmentPhilosophy. Guidelines ontheSelectionofPooledFunds; (UITF) forLANDBANKMarketingUnits;(ii) Implementation ofUnitInvestmentTrust Fund specifically, the – (i) Revised Guidelines on the of proper administrationoftrustbusiness, guidelines andpoliciestoaidintheconduct For 2015, the Trust Committee approved various Members Vice Chairperson Chairperson average attendancerateof80%. The AASCC held six meetings in 2015 with an Bank. agri-agra andsocialconcernsprograms ofthe of implementationthevariousnon-credit of LANDBANK,and(3)monitoringthestatus house for CARP-related non-credit programs CARP andotheragri-agramatters,(2)clearing policies toimprove thedelivery ofserviceson include: (1)theformulationofnon-credit Agra Social Concerns Committee(AASCC) The dutiesandresponsibilities oftheAgri- • Agri-Agra SocialConcerns Committee “Exemplary.” and Tasks. The overall rating of the ILC was with parametersonComposition,Processes submitted PerformanceRatingScorecards All Board-level Committees, including the ILC, GCG for2015. among the commitments of the Bank to the Loan Availers. Thesefivescorecards were Enterprises, LivelihoodLoanandEasyHome Corporate Accounts, Small and Medium credit scorecards forLocalGovernmentUnits, Risk ManagementDepartmentwhichincludes scorecards developedbytheCredit Policyand The ILCapproved fiveautomatedcredit (Alternate Member:Undersecretary Allan Q. Umali) DA Secretary Proceso J. Alcala Pañgulayan) (Alternate Member:Undersecretary Luis Meinrado C. DAR Secretary Virgilio R. delosReyes Crispino T.Director Aguelo President andCEOGildaE. Pico Director Victor Gerardo J. Bulatao strategic, 2)portfolioand3)transactional. ERM isimplementedinthree levelsnamely:1) operations oftheBankisbeyond compliance. system withdefinedpro-active RMacross various objectives. TheBank’s implementationofERM (ERM) anchored onitsmission,visionandstrategic Board-approved EnterpriseRiskManagement The Bank’s RM approach is governed by the effective RMframework. role ofcorporategovernanceinimplementingan create asynergy thatprovides credence to the compliance complement each other’s role to At LANDBANK,RM,internalauditand commensurate withitsriskappetite. the Bankanditascertainsthatrisk-takingis is embeddedinallthebusinessprocesses of and minimizinglossesbeyonditsappetite.RM opportunities, operatingwithintheriskthreshold balance riskandreward bymaximizingbusiness The core RMphilosophy oftheBankisto manage risks. internal controls, RMsystemsand procedures to ensures the adequacy of framework, policies, Committee (RISKCOM)andSeniorManagement LANDBANK Board, through theRiskOversight component ofgoodgovernancewherein the the Bank’s businessstrategy. Itisanintegrative Risk Management (RM) is strongly embedded in CULTURE RISK Bank’s mandateandotherbusinessactivities. prioritized criticalrisksthatare inherent inthe through theRiskSelf-Assessment Process which the EnterpriseRiskManagementapproach that enhancedtheBank’s implementationof Bank. Italsocontinuedtopursuenewinitiatives and monitoringofthevariousrisksfacedby strengthen riskassessment,measurement, control adopting betterstatisticalmodelsandtoolsto risk managementmeasures andcontrols by During theyear, LANDBANKreinforced existing GOVERNANCE INITIATIVES FOREFFECTIVE CONTROLS AND PURSUINGNEW MANAGEMENTMEASURES AND REINFORCING RISK MANAGEMENT PHILOSOPHY AND the RMGfacilitatedpreparation oftheBank’s the Bank-wide implementation of ERM. Also, Presentation (AVP) were completed aspartof risks andthedisseminationof ERMAudioVisual bow-tie analysisfortheLANDBANK-DBP merger Commission forGOCCs.The completionof of theBank’s commitmentstotheGovernance models and five credit scoring models as part include the development of two treasury valuation In 2015,thenotableaccomplishmentsofRMG Executive Officer (CEO)oftheBank. and administrativelytothePresident andChief Bank. RMGreports functionallytotheRiskCom liquidity, operational,amongothers)ofthe function forallmajorriskareas (credit, market, as anindependentunit,performstheoversight inherent inallactivitiesoftheBank.TheRMG, control, monitoringand reporting ofrisks risk identification,assessment,measurement, RM involvestheoversightfunctioncovering level. solved attheirleveltotheDepartmentorGroup escalate theriskoccurrences thatcannotbe management of risk events and immediately At LANDBANK,theARTs embracethecontinuous implementation of risk policies and procedures. Risk Takers (ARTs) are involvedintheactual At theTransactional Level,theAuthorized BUs. cannot besolvedatthelevelofrisk-taking Units (BUs)toaddress risk occurrences that reports submittedbythe risk-takingBusiness policies, processes andrevisions basedonrisk Risk ManagementGroup (RMG)recommends processes andmonitorpossible breaches. The oversee theimplementationofpoliciesand At thePortfolioLevel,Groups orDepartments and riskmanagementsystem. (operational, financial andcompliance control) of the Bank’s controls/mitigating measures is used as basis for decision-making and review in an organizational-wide risk monitoring which Board andSeniorManagementare alsoinvolved well as the annual review thereof. The LANDBANK internal controls, andriskmanagementsystemas approval ofRMpolicies,framework/structure, RM oversight which involves development and are activelyinvolvedinanorganizational-wide through theRiskComandSeniorManagement At theStrategicLevel,LANDBANKBoard

Institutional Viability

59 60 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report credit riskexistthroughout theactivitiesof source ofcredit risk. However, othersources of The Bankconsidersitsloanportfolio asthemajor the balancesheet. agreements, whetherornotreflected onoroff exposed through actualorimpliedcontractual extended, committed, invested, or otherwise performance. It arises any time Bank funds are depends oncounterparty, issuer, orborrower and isfoundinallBankactivitieswhere success Credit riskisnotlimitedtotheloanportfolio going basiswhichcouldleadtoeconomiclosses. determine the probability of default on an on- to serveasbasisforloanapproval andto credit quality of potential and existing borrowers loans astheinabilitytoreview andanalyzethe The Bankdefinescounterpartycredit riskon CREDIT RISKMANAGEMENT regulatory andinternalrisk control measures. the Bank’s processes toensure compliance with that appropriate RMtools are embeddedin presented totheRISKCOM whichsubstantiate and operationalriskreports were prepared and Moreover, regular andspecialmarket,credit, conduct ofcredit andtreasury riskstress testing. the Bankwere ascertained through theregular practices. Theshockabsorptioncapabilitiesof with regulators’ policies andindustrybest and manualswere conducted inaccordance Regular review andrevision ofriskguidelines wide ITandsecurityriskprogram. responsible andaccountable fortheorganization- Risk ManagementOffice (ISTRMO) thatwillbe of theInformationSecurityandTechnology and securityriskswasintensifiedwiththecreation The managementofInformation Technology (IT) Continuity Questionnaire (BCQ)andICAAP. BusinessImpactAnalysis(BIA), (RTR), Register (RAR)andRiskTreatment Register Self-Assessment (RCSA),RiskAssessment walkthroughs to Bank’s BUs on Risk and Control RM toolswasstrengthened asRMGconducted The Bank-wideimplementationofoperational the deadline. to theBangkoSentralngPilipinas(BSP)before Process (ICAAP)documentwhichwassubmitted 2015 InternalCapitalAdequacyAssessment Commitments credit enhancements. after consideringeligiblecollateralheldorother maximum exposure tocredit risk,before and The tableonthefollowingpageshowsBank’s MAXIMUM CREDITRISKEXPOSURE and bothOn-Off-Balance Sheet. Bank, includingthebankingandtradingbook, million in2014toP458,292 in2015. by P39,821millionor9.52%, from P418,471 (net ofgeneralloanlossprovision) increased million. However, theBank’s Total Credit RWA of theBank’s aggregate RWA ofP513,059 Approach in credit RM. This represents 69.49% P356,549 millionfollowingtheStandardized a Credit Risk Weighted Assets (RWA) of The Bank’s LoansandReceivablesreflected option contracts. over-the-counter Foreign exchange(Fx) Outstanding derivative exposures are mainly movement ofGoodsandTrust transactions. transactions, and contingencies arising from bonds andwarrantiesrelated toparticular of credit –domesticandforeign), performance of indebtedness(e.g.,financialstandbyletters are composedmainlyof general guarantees Conversion Factors(CCFs).Theseaccounts computed consideringtheirrespective Credit million, thecredit equivalent amountsare Net Off-Balance Sheetexposures ofP45,070 agreements aggregating P83,736million.For substantial receivables arising from repurchase P30,749 million (8.13%). The Bank also holds million (8.99%),andgovernmententitiesat million (12.03%), interbank loans at P34,004 and MediumEnterprises(MSMEs)atP45,474 million (63.59%),followedbyMicro, Small Receivables wenttoCorporatesatP240,421 guarantees. ThebulkofNetLoansand government securities,andsovereign primary collateralssuchasdepositholdout, Risk Mitigationwhichconsistsmainlyof amounted toP378,094million,NetofCredit On-Balance SheetLoans&Receivables As ofDecember31,2015,theBank’s regular 1. Credit Exposures andCredit-Related 2 1 Transactions Arising from Repurchase Agreements, Certificates ofAssignment/Participationwith Recourse,andSecurities Agreements, andBorrowingLending Arisingfrom Certificates Repurchase Total Credit RiskWeightedAssets(RWA) inclusive ofgeneral loanlossprovision ofP929million Other Loans andReceivables Total Exposures Derivative Exposures The TradingBook Counterparty RWA In A. Direct credit substitutes Off-Balance SheetItems Loans &Receivables as Loans Unquoted DebtSecuritiesClassified Held-to-Maturity (HTM)Financial Assets Available-for-Sale (AFS)Financial Assets Due from OtherBanks Due from Bangko Sentral ngPilipinas Checks &OtherCash Items Cash onHand On BalanceSheetItems Total Off-Balance SheetExposures D. Othercommitments C. Trade-relatedcontingencies B. Transaction-relatedcontingencies Total On-BalanceSheetExposures Other Assets Total Exposures Excluding Other Assets Real &OtherProperties Acquired Sales Contract Receivable (SCR) 3. DefaultedExposures 2. Loans &Receivables -Others 1. InterbankLoans Receivables e. Loans toIndividuals d. Micro/Small &MediumEnterprise c. Corporates b. GovernmentCorporation a. LGUs &Public SectorEntities 1 Equivalent Equivalent Exposures 1,140,215 1,094,869 1,082,211 Amount Amount 45,070 Credit Credit 240,421 378,094 123,351 131,219 314,890 Net 25,081 45,474 29,979 34,004 12,972 26,568 38,575 12,658 83,736 2,365 4,000 5,801 2,495 4,431 770 276 311 838 - 645,498 645,498 645,434 114,223 105,394 314,890 0% 0% 0% 26,568 83,736 - 623 64

- - - - 20% 20% 20% 1,874 1,782 1,782 - 1,399 1,081 200 103 311 15 92 72

- 2015 (InPMillions) 1,376 50% 50% 50% 52,340 50,892 50,892 20,321 19,916 16,719 3,602 1,046 3,964 5,645 1,375 72 1

- - 75% 75% 75% 45,371 45,371 45,371 45,371 45,371 - - - 43,694 388,102 344,296 331,702 100% 100% 100% 240,406 308,848 21,279 29,979 16,199 11,303 38,575 12,594 5,909 5,164 3,999 1,120 215 770 112 394 84

- 150% 150% 150% 7,030 7,030 7,030 - 2,150 2,155 4,431 444 5

- - 459,221 44,383 Credit Credit Credit 414,672 402,078 240,409 356,549 RWA RWA RWA 34,049 23,120 29,979 15,867 11,826 24,782 38,575 12,594 3,440 7,146 2,921 4,000 1,808 6,647 1,060 770 166 62 2 - - - -

Institutional Viability

61 62 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report exposures, andindustryconcentration. its single borrower, real estate loans, large In addition,theBanksetsapplicable limitson ICRRS) are ratedbelowtheAcceptablelevel. under itsInternalCredit RiskRatingSystemor accounts (i.e.,corporatetype ofborrower) only P2,210millionor1.32%ofthetotalloan (NPL) stoodatP790millionor0.15%andthat 2015, theBank’s netNon-Performing Loan up of valuation reserves. As of December 31, assure proper loanclassificationandsetting- annual qualitativeandimpairmentreview to quality ofitsloanportfolio,theBankconducts To effectively monitorandmaintainthe and riskratingofBankborrowers. oversight, policyissuance,riskmeasurement Department (CPRMD)handlescredit risk Bank’s Credit PolicyandRiskManagement (CBs). Asthemiddleoffice forcredit risk,the Policy Issuances(CPIs)andCredit Bulletins through theissuanceofCredit Manual,Credit in placecomprehensive set ofcredit policies regain normaloperations. TheBankhasput actions aimedathelpingproblem accounts process alsocovers proposed remedial Board, wheneverapplicable. Theapproval level Committee,anduptotheLANDBANK and LoanCommittee(ILC)whichisaBoard- to theCredit Committee, theInvestment or amountofloanapplied,couldbeelevated levels which,dependingonthetransaction goes through prescribed loanapproving risk. Accordingly, approval ofcredit application measurement, control, andmonitoringofcredit and procedures covering the identification, LANDBANK Board that setsoutpolicies structured frameworkduly approved bythe The Bank manages credit risk through a term successoftheBank. approach toRMandessential tothelong- is acriticalcomponentofcomprehensive risks. Theeffective managementofcredit risk relationships between credit risk and other credits or transactions. It also considers the portfolio as welltheriskinindividual manage thecredit riskinherent intheentire approved parameters.TheBankneedsto maintaining credit riskexposures within the Bank’s risk-adjustedrateofreturn by The goalofcredit RMistomaximize 2. ManagementofCredit Risk action orresolution. credit issuesorconcernsthatneedpriority the LANDBANKBoard, tokeeptabofmajor the Bankthrough theILC,RISKCOMand via aformalreporting system.Thisenables and underlyingriskeventsisbeing undertaken Periodic escalationofcredit riskexposures 4. Credit RiskMonitoring Framework.” the RevisedRisk-BasedCapitalAdequacy BSP guidelinesonthe“Implementationof use ofexternalcredit ratingsadheres tothe Fitch, Standard & Poor’s and PhilRatings. The credit assessmentinstitutionssuchasMoody’s, ratings ofcounterpartiesgivenbyexternal Assessment ofcredit qualityconsiderscredit following automatedcredit scoring models: recently approved the implementation of the borrowers. Inlinewith this, theBankhas to determinethecredit worthinessofits Facility (CSF)toenhanceitscapability its Credit RiskEngineSystem (CRES)Scoring automated credit riskrating modelsthrough development andimplementationof Moreover, theBankundertakescontinuing credit riskratingonitsother loanstreams. Bank hasalsosetupsimilarexpert-based with regulatory provisioning guidelines.The falling underclassifiedaccountsinaccordance unclassified accounts,withthe remaining four consists oftengrades,sixwhichfallunder credit decision.TheICRRSratingscale information asoneofthebasesinmaking possible, andthereafter usestherisk in aconsistentmanner, asaccurately measuring credit risk for corporate borrowers Bank establishes its ICRRS for the purpose of In compliancewithBSPrequirements, the 3. Credit RiskRating • • • • • Corporates Behavioral ScoringModelfor Medium Enterprises(SMEs) Behavioral ScoringModelforSmalland Government Units(LGUs) Behavioral ScoringModelforLocal Loan Availers Application ScoringModelforSalary Individual HomeBuyers Application ScoringModelfor MARKET RISKMANAGEMENT their valuesfrom price,pricefluctuations derivatives orfinancialinstruments thatderive equity, Fxandothersecurities,aswell as, in Securities (GS)andotherdebt instruments, making andpositiontaking in Government The Bankassumesmarketriskin its tradingandnon-tradingbankingactivities. LANDBANK isexposedtomarketrisksinboth 1. MarketRiskManagementFramework stress testandreal estatestress test. prescribed regulatory testssuchasuniform Ratio (CAR). The stress testing also includes RWA, andfinallyontheCapitalAdequacy on theBank’s loanportfolio,ontheCredit determine themagnitudeoftheirimpact Utilizing suchscenarios,testsare doneto events withhighprobability of occurrence. of itsloanportfoliotakingintoaccountrisk The Bankregularly conducts stress testing 6. Credit Stress Testing mechanisms toshieldthemfrom these risks. insurance guaranteesandother borrowers are encouragedtoavailofcrop effects of climate and weather disturbances, related loansthatare vulnerabletothe In thecaseofagriculturalandagriculture- corporations andothereligibleguarantees. guarantees, cross suretyship from The Bankalsoacceptsgovernment accepted bytheBank: The following are the primary collaterals valuation foreachtypeofcollateral. acceptability ofloancollateralandmaximum issuances provide theguidelineson The Bank’s Credit Manualandcredit policy assessment ofthecredit riskoftheborrower. collateral dependonborrower typeand The required amountandtypeofloan 5. CollateralandOtherCredit Enhancements • • • • Chattel Mortgage Real EstateMortgage Government Securities Holdout onDeposits system andprocesses inplace. maintaining theirrespective riskmanagement their respective marketriskexposures by Bank independentlyquantify andmanage In thesameway, certainsubsidiariesofthe risk inthebankingbook. Equity (EVE)are usedtomeasure interest rate Earnings-at-Risk (EaR) and Economic Value of various toolssuchasRe-pricingGap, of the Bond Portfolio of the Bank. Moreover, are usedtoidentifytheinterest ratesensitivity VaR limits.MacaulayandModifiedDuration Position limitsare subordinated toMATs and established positionlimitstocontrol losses. to ensure that these are maintained within Positions are monitored onadailybasis Triggers (MATs). through theVaR andManagementAction that maybeincurred indaily tradingactivities The Bankcontrols andminimizes thelosses exceed specifiedmanagementalertlevel. losses duringaspecifiedperiodequalor A managementalertisactivatedwhenever Management forappropriate action. ensures thatbreaches are escalatedtoSenior taking activitieswithinlimitsatalltimesand liquidity andreserve positions, conductsrisk- Group (ALMG)whichmanages theBank’s units and the Assetand Liability Management (FMG) whichmanagestheBank’s trading particularly theFinancialMarketsGroup and InvestmentBankingSector(TIBS), limit foreachtradingportfolio.TheTreasury level) defineandsetthevariousmarketrisks Committee (ALCO - Senior Management Board, risks andestablishlimits.TheLANDBANK CAR andcapitalmetricstomanagemarket sensitivities, Value-at-Risk (VaR), stress testing, The Bank uses a combination of risk these are relatively insignificantinvolume. are embeddedinsomefinancialcontracts, the Bankisalsoexposedtoderivativesthat forwards tomanageFxexposure. Although limited tocurrency swapsandcurrency The Bank’s exposure onderivativesiscurrently instrument (e.g.,share, bond,Fxorindex). and priceexpectationsofanunderlying RISKCOM andtheAsset&Liability

Institutional Viability

63 64 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report MANAGING MARKETRISKCOMPONENTS Particulars Total Market RWA Options Fx Exposure Equity Exposure Interest Rate Exposure • Interest Rate RiskManagement mitigation techniques: market riskcomponentsusingitsinternal LANDBANK managesthefollowingkey portfolios. risk arises in tradingaswell as non-trading and intheirimpliedvolatilities.Market from changesininterest rate, Fx rates,equity Market Riskisassociatedtoearningsarising Bank’s aggregate RWA ofP513,059million. The Total Market RWA represents 1.1% of the down asfollows: Market RWA stood atP5,496million,broken As ofDecember31,2015,theBank’s Total 2. MarketRiskWeighted Assets methodology andstress testing. effective andindependentlyvalidatedVaR through factorsensitivitiesandtheuseofan manage interest rateriskintradingactivities in syndications. The Bank continues to management solutionsandparticipation result ofmarketmaking,applicationrisk Market riskintradingarisesprimarilyasa a. Traded Market Risk In PMillions Amount P1,627 5,496 3,028 841 - Rate RiskintheBankingBookare asfollows: adopted bytheBankinmeasuringInterest The twointerest rate risk perspectives EVE-at-Risk reports. standards suchasRe-pricing Gap,EaRand rate riskmeasurement models andreporting interest raterisklimits,application ofinterest established limitsettingprocedures and on approved policies and guidelines, The Bankmanagesinterest riskbased reference toprevailing marketrates. and timedepositaccountratesare setby 30 to90days.Fordeposits,regular savings on floatingrateloansare typically reset every beginning ofeverytwoweeks.Interest rates cost offundsthatisgenerallyreset atthe base ratewhichreflects the Bank’s average its loansbasedonaspread overitsinternal The Bankestablishesthelendingratesfor liabilities. interest-earning assetsandinterest-bearing maturity orre-pricing characteristicsof rates andnetinterest incomeduetothe the relationship betweenmarketinterest rate sensitivity. Interest rate sensitivity is liability policyisthemanagementofinterest a keycomponentofthe Bank’s assetand For interest rateriskinthebankingbook, b. Interest RateRiskintheBankingBook b. EconomicValue Perspective:TheBank shocks inthebankingbook: for upward anddownward interest rate 2015 andtheincrease/decline inearnings pricing GappositionasofDecember31, The followingtablesetstheBank’s Re- of ratescenariosovera12 month horizon. Net Interest Income(NII)underavariety the EaR Model to estimate changes in a. EarningsPerspective:TheBankuses FINANCIAL LIABILITIES Re-pricing Gap Total Off-Balance Sheet OFF-BALANCE SHEET Total Financial Liabilities TotalFinancial Assets FINANCIAL ASSETS Particulars Deposits Commitments Derivatives Others Bills Payable EaR EVE-at-Risk Sales Contract Receivables Total Investments Total Loans Due from BSP rate riskinthebankingbook. EVE-at-Risk Modeltomeasure interest and downward rateshocksusingthe (decline) ineconomicvalueforupward The tablebelowshowstheincrease changes ininterest rates. economic valueofequityforspecified also measures thechange intheBank’s life oftheBank’s holdings.Thismodel in interest ratesover the remaining potential long-termeffects ofchanges uses theEVE-at-RiskModeltoassess -300/-15 14,212 8,477 -300 -200/-10 1 to30days 9,474 5,607 -200 (474,539) P125,000 (18,824) 717,774 262,059 (18,824) 717,774 134,841 2,171 Change inInterest Rates (inbasispoints) Change inInterest Rates (inPMillions) 47 0 0 0 -100/-5 4,737 2,781 -100 to 3months > 1month -50/-2.5 2,369 1,385 (92,180) 165,266 164,562 73,086 -50 72,539 2015 (InPMillions) 704 532 15 P0 0 0 0 0 +50/+2.5 at-Risk Model. economic valueperspectiveusingEVE- through EaRModel,andquarterlyforthe basis under the earnings perspective ALCO andRISKCOMatleastonamonthly Bank are measured andreported tothe The interest rateriskexposures ofthe in relation withotherriskexposures. results from modelsusedare interpreted general riskmeasurement systemandthe systems are integratedintotheBank’s in isolation. Interest risk measurement interest riskintheBankis notmanaged interest rateriskexposure. Moreover, determine thefullscopeofBank’s Both viewpointsare assessed to (2,369) (1,375) +50 to 6months > 3months +100/+5 24,533 27,702 (4,737) (2,739) 52,235 16,426 51,552 +100 8,107 682 P0 0 0 0 0 1 +200/+10 (9,474) (5,435) +200 to 12months > 6months (34,973) (14,436) (34,973) +300/+15 10,393 30,930 10,393 25,106 5,807 (14,212) (8,091) +300 17 P0 0 0 0

Institutional Viability

65 66 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Particulars Equity Particulars ASSETS Gross FxLiabilities LIABILITIES Fx AssetsGross limits suchasposition,VaR andMATs. mark-to-market andcontrolled through risk loss oftheBank.Equitiesare subjecttodaily of equitysecuritiesandimpactsonprofit and of equityprices,whichinturnaffect thevalue resulting from changesinthelevelsofvolatility The Bank is exposed to equity price risk • EquityPrice RiskManagement as ofDecember31,2015: exposures denominated in foreign currencies LANDBANK hadthefollowingsignificant Other Assets Due from Banks FCNCH/COCI Others Bills Payable Deposit Liabilities Investment inSubsidiaries Loans &Receivables Interbank Loans Receivable IBODI Investment Available For Sale for TradingHeld Position P1,000 Limit (In PMillions) 1,416,380 1,861,794 1,122,096 101,352 $17,219 185,892 108,392 237,888 376,500 513,002 598,378 USD 15,591 Management Alert 1,864 YTD GainErosion Income Target 0 Trigger 2015 (In$ Thousand) 307,432 306,906 JPY 74,749 68,216 5,340 $267 (93) 926 619 0 0 0 0 0 EUR Particulars FS Fx Trading 21,200 15,140 (2,237) 13,138 23,437 related transactions: The followinglimitsare setforforeign-currency ensure thattheseare withinestablishedlimits. monitored dailythecurrency positionsto as theBank’s functionalcurrency, theBank changes inFxrates.UsingthePhilippinePeso financial instrument will fluctuate due to Currency riskisthethatvalueofa • Foreign Exchange RiskManagement 1,738 $263 0 0 1 0 0 0 0 AUD ($547) (547) Position $581 581 Limit $0 (In $Millions) 20 50 0 0 0 0 0 0 0 0 0 Others 28,758 28,974 1,994 1,066 (223) Management Alert 923 $5 YTD GainErosion 0 0 0 0 0 0 7 Income Target Trigger 1,773,223 1,954,258 1,146,159 TOTAL $17,754 444,272 306,104 378,238 513,002 598,378 121,477 182,792 16,517 1,864 924 VALIDATION MODELS MARKET RISKMEASUREMENTAND Fx PURCHASES Particulars Gross FxPurchases Fx SALES Gross FxSales risk measures. actual tradingresults withmodel-generated measures used by the Bank by comparing basic techniqueinverifyingthe qualityofrisk LANDBANK adoptstheback-testingas • Back-Testing was setatP321millionthroughout 2015. limit fortheBank’s Treasury tradingactivities tolerable bymanagement.Theover-all VaR VaR limits, the monetary amount of risk deemed Daily VaR calculationsare compared against both atportfolioandacross portfoliolevel. regulatory purposes. The Bank monitors VaR intended forexternaldisclosure andfor for capitalcharging. The VaR disclosure is migration towards anInternal ModelApproach improve processes inpreparation fortheBank’s The Bankcontinuouslypursuesinitiativesto and Foreign Securities(FS) tradingportfolios. VaR of Equities, Fx Net Open Position, GS, Historical Simulation Model in computing LANDBANK usesinternallydeveloped portfolio. the 99.0%confidencelevel,assumingastatic the tradingportfolio,overaone-dayperiod,at potential rangeoflossinthemarketvalue book undernormalconditions,estimatingthe is usedtomeasure market riskinthetrading the potentialvariabilityoftradingrevenue. It VaR is a statistical approach for measuring • VaR Analysis Spot FxPurchases Forward FxPurchases Spot FxSales Forward FxSales (10,644) (10,644) 64,393 64,393 USD 0 0 400,000 400,000 2015 (In$ Thousand) JPY 0 0 0 0 (2,172) (2,172) problematic/red zone non-conclusive/yellow zone safe/green zone Zone classification EUR 2,172 2,172 movements considered “extreme”, i.e., determine theimpactonearnings ofmarket Stress Test isariskmanagementtoolused to measure thispotentialrisk. process is complemented by Stress Testing to very unusualmarketevents.Thus,theVaR not incorporate the potential loss caused by known limitations,andatthesametime,do (while relatively sophisticated) have several and controlling riskbecausethesemodels do notprovide reliable methodofmonitoring Bank opinedthatthestatisticalmodelsalone fair valueoffinancialinstruments.However, the banking activitiesare exposedtochangesin of RM efforts in the banking industry where models hasrecently becomethemainfocus Measuring marketriskusingstatisticalRM Stress Testing• enhance theriskestimationprocess ingeneral. measures toassessmodel accuracyandto actual performanceofportfoliosagainstVaR ALCO andtheRISKCOMwhichexamine Back-testing results are presented tothe three zonesasfollows: and themodelisclassifiedintooneof measure. Thenumberof exceptionsisnoted exceeds theresult ofthemodel-generated risk occurs ifmark-to-marketandtradingloss Under the back-testing process, exception 0 0 (1,460) (1,460) AUD 1,460 1,460 0 0 Others Number of exceptionsNumber of 10 ormore exceptions 0 0 5-9 exceptions 0-4 exceptions 0 0 0 0 (14,276) 468,025 (14,276) 400,000 TOTAL 68,025 0

Institutional Viability

67 68 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report LIQUIDITY RISKMANAGEMENT or withstructured orcomplexinvestments on marketpricesthatlack sufficient depth, large transactionshavingsignificanteffect in themarket.Thismaybe associatedwith position becauseofinadequate liquidity cannot easily eliminate or offset a particular to temporaryorpermanentfactors.TheBank market, exchangesandcounterpartiesdue inability tounwindpositionscreated from Trading or Market liquidity risk refers to the Market andFundingLiquidityRiskperspectives. The Bankconsidersliquidityriskbasedon obligations, inthenormalcourseofbusiness. hence, tobeinapositionmeetallofits to maintainfundavailabilityatalltimesand and and approved onaregular basisbyALCO govern liquidityriskmanagementare reviewed monitoring and control. The policies that risk identification, measurement and analysis, management framework of the Bank covering process isconsistentwith thegeneralrisk LANDBANK’s liquidityriskmanagement • LiquidityRiskManagementFramework conservation buffers. CET 1 ratio of at least 8.5% set by the BSP with on theCARcompliancesetat10.0%and computation tobeableassessitsimpact Results ofPSAare alsosimulated intheCAR particular tailevent. simulate theeventsthatcanleadBanktoa conducts reverse Stress Testing toidentifyand risk andeventually, liquidity risk. TheBank also shocks suchaspricerisk,interest raterisk,Fx its vulnerabilitiesandcapabilitytodealwith significant impacttotheBank andtoassess to explore theeventsthatcouldcausea the Bank can absorb certain levels of stress, portfolios. Thisseekstoestablishhowfar related toTreasury’s tradingandinvestment adverse andprobable riskeventsonactivities out ofthedifferent scenarios,considering analyzes the impact of major risks that emerge The Bank’s PortfolioScenarioAnalysis(PSA) possible losseswhichtheVaR doesnotcapture. are theBank’s measures ofriskstoestimate beyond “normal” occurrence. Stress Tests RISKCOM. The Bank’s liquidity policy is bank-wide balancesheet.Risk modelsused as tool the Consolidated LGR covering the liquidity riskmeasurement andcontrol using LANDBANK performsa comprehensive of itsliabilities. maturity ofitsfinancialassetsexceedingthat policy whichwillgenerallyleadtotheaverage Bank’s policytoseekhigheryieldingassets, a In part,thiscomesaboutasaresult ofthe exists betweentheBank’s assetsandliabilities. risk, amaturitygapdoes,from timetotime, to beaprudentpolicyinmanagingliquidity Although theBankpursueswhatitbelieves to ALCOandRISKCOMinatimelymanner. Bank’s current riskare prepared andprovided risk positionsandensures thatreports onthe oversight monitoringoftheBank’s liquidity Department (TRMD),isresponsible forthe RMG, through theTreasury RiskManagement as required byprevailing situations.The ALCO meets twice a month or more frequently from concentrationinfunding sources. The currency to minimize liquidity risks resulting liabilities according tosource, instrumentand measures to promote diversification of its coordination with the TIBS, recommends liabilities positiononaregular basisand,in The ALCO reviews the Bank’s assets and variables affecting theBank’s liquidityposition. implementation andmonitoringofrelevant and theTIBSare responsible forthedaily liquidity oftheBanktoALCO.TheALCO responsibility ofmanaging theoverall through The LANDBANKBoard exercises oversight reflected intheLiquidity Gap Report(LGR). bands andacross functional currencies as maturities ofassetsandliabilitiesovertime and controlled through theclassificationof Funding liquidityriskisbeingmonitored and contingentcommitmentmaturities. mismatch ofasset,liability, exchangecontract incurring unacceptablelosses.Itoccursfrom the arising from cash flow mismatches without meet investmentandfundingrequirements prospective riskarisingfrom theinabilityto Funding liquidity risk refers to current and or scenarioanalysis. perspective iscaptured through stress testing having smallpotentialbuyers.Thisliquidityrisk RISKCOM anddelegatedthe Cash &OtherCash Items ASSETS Particulars Due from BSP Due from OtherBanks Interbank Loan Receivable Resell Security Purchased Under Agreement to Loans &Receivables Investments Other Assets Total Assets Deposits LIABILITIES LTNCD Bills Payable Unsecure Subordinated Debt Due toBTr, BSP, &MCs/PCIC Due toLocal Banks Other Liabilities&Payable Total Liabilities following tools: The Bankmanagestheliquidityriskusing • LiquidityRiskMeasurement Models Audit Group (IAG). model validationasconductedbytheInternal in liquidityRMare subjectedtoindependent Demand Savings Time future fundingneeds. It breaks down position to determine the ability to meet tool usedinidentifyingthecurrent liquidity using theLGRwhichisariskmeasurement The Bankperformsliquiditygapanalysis a. LiquidityGapReport 1,039,260,482 637,221,521 Due within 314,934,580 155,403,886 474,739,429 533,308,804 one year 17,799,877 83,654,000 30,652,845 26,735,535 26,889,156 5,781,050 2,106,127 1,882,262 2,240,728 336,966 16,758 0 0

Due more than 565,846,695 293,642,674 254,175,401 77,563,777 one year 18,026,935 11,000,000 19,467,669 10,500,000 35,988,549 2015 444,090 163,469 1,685 0 0 0 0 0 0 0

settlement andexpectedrecovery dates: liabilities basedonthecontractualmaturity, The tablebelowpresents theassetsand Consolidated LGRonamonthlybasis. preparing Peso,FxRegular, FCDUand TRMD, assistsALCOinitsfunctionby than long term liabilities. The RMG, through such aslong–termassetsgrowing faster determine anyfuture structuralimbalances maturities ofassetsandliabilitiesinorder to balance sheetitemsaccording toestimated 1,116,824,259 1,203,068,216 314,934,580 449,046,560 284,828,246 474,739,429 533,308,804 26,889,156 83,654,000 20,133,062 27,179,625 11,000,000 21,349,931 10,500,000 36,325,515 17,799,877 TOTAL 2,404,197 5,782,735 16,758 (In P Thousand) (In PARENT

Due within 504,666,696 920,203,009 132,153,291 392,226,721 469,423,769 229,351,507 one year 17,243,602 56,390,000 36,225,870 46,276,487 24,247,689 6,284,410 2,770,327 2,182,814 1,755,387 8,329,210 8,621 0 0

Due more than 551,940,191 269,111,938 265,439,491 53,722,720 one year 17,387,787 18,058,314 10,500,000 20,022,669 5,000,000 2014 117,078 24,619 975 40 0 0 0 0 0 0

1,056,606,887 973,925,729 229,351,507 401,265,229 301,665,361 392,226,721 469,423,809 17,243,602 56,390,000 20,058,114 46,301,106 20,241,128 10,500,000 24,247,689 TOTAL 28,351,879 6,285,385 5,000,000 1,872,465 8,621

Institutional Viability

69 70 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Cash &Duefrom Banks FINANCIAL ASSETS Particulars Total Loans Total Investments Other Assets Total Assets Deposits FINANCIAL LIABILITIES Borrowings Debt Unsecured Subordinated Other Liabilities& Total Capital Total Liabilities&Capital Gap Position Assets &Liabilities Plus) anddemanddepositsare non-maturity Yield SavingsAccountsandEasy Regular Savings(Total SavingslessHigh c. Non-maturingDeposits Core Deposits. comprising ofVolatile andnon-Volatile or involves determining the Deposit Mix operating conditions.Thecomputation is expectedtoberetained undernormal to determinethelowestdepositlevelthat rate risks.Core Depositleveliscomputed Bank’s assets which are subject to interest Pattern. Itservesasabuffer thatprotects the is calculatedbasedonNetWithdrawal The BankdeterminesCore Depositwhich b. Core Deposit Due within 3 months 483,238 444,760 300,140 171,752 38,478 35,779 9,954 1,392 2,257 442 0 to 6months > 3months Due more 62,507 60,789 61,919 1,718 1,237 588 481 0 0 0 0 Due more than 6 months to 1year 91,477 88,041 47,465 23,187 20,111 3,436 (In PMillions) 2,140 959 337 714 retention history. maturities asindicatedbytheBank’s deposit which takeintoaccounttheeffective on contractualrepayment arrangements million pesosasofDecember31,2015based period fortheParent atcarrying amountsin liability gappositionoverthedetailedtime The followingtablesetsforththeasset- different tenors. the non-maturitydepositamountunder percentages are usedasbasisforslotting is determinedforeachtenorbucket.The The highestwithdrawalpercentage change a five-yearhistoricaldemanddepositdata. data fordemanddepositaccountbasedon of depositdecaysthetotalendof-day pattern. Thisisdonebyobservingpattern scenario istosimulatebehavioralwithdrawal deposits. Ananalysismadetoproximate 0 Due more than to 5years 1 year 166,374 159,208 96,116 70,258 7,166 6,515 651 0 0 0 0 than 5years Due more 1,152,270 1,006,421 (752,798) 399,472 197,526 183,917 18,027 12,953 46,652 86,244 2 TOTAL 1,203,068 1,203,068 1,046,228 347,607 550,500 284,828 20,133 21,350 49,246 86,244

*Note: LiquidAssetsincludethefollowing: Liquid Assets (*) Liquid Assets Particulars Liquid Assets to TotalLiquid Assets Assets FINANCIAL RATIOS: Liquid Assets to Total Deposits 4. 3. 2. 1. liquidity ratiosasofthedatesindicated: The followingtablesetsouttheBank’s leverage limits. financial statementsagainstsetliquidity/ derived from information ontheBank’s compares liquidityand leverageratios risk measurement toolthat calculatesand Financial Ratio Analysis is another liquidity d. FinancialRatioAnalysis gaps inthe‘1dayto1year’timebuckets. put acaponthetotalamountofnegative maturing assetsandliabilities.MCOlimits It isameasure oftheliquidity gapbetween liquidity riskinthegapreport oftheBank. the tools used tomanageandcontrol the limit setbytheLANDBANKBoard isoneof The MaximumCumulativeOutflow(MCO) overall levelofrisk,anditsriskappetite. and complexityofitsbusinessactivities, liquidity risk, consistent with the nature properly andprudentlymanage andcontrol for liquidityrisklimitsettingtoenableit LANDBANK hasestablishedguidelines horizon. the entire timebucketwithintheoneyear bucket. MCOlimitwasnotbreached in buckets except in the ‘more than 5 years’ after contingent accounts is positive in all have longtermmaturities.Cumulativegap assets (particularlyloansandinvestments) may ariseintheearlier tenor buckets.Most liquid assets to coverforliquidity risk that its possessionacomfortablelevelofhighly As ofDecember31,2015,theBankhasin Tradable paper non-Government securities and commercial Government Securities Interbank Loans Items andotherCash Cash (Audited) 722,850 60.08% 69.09% 2015 (In PMillionexcept whenexpressed inpercentage) (Audited) 625,897 50.23% 68.55% 2014 calendar dayliquiditystress scenario. (HQLA) tomeetliquidityneedsfora30 unencumbered High Quality Liquid Assets ensure thatitmaintainsan adequatelevelof Coverage Ratio(LCR)everyquarterto The Bank determines the Liquidity f. LiquidityCoverageRatio for theMCOandvariousfinancialratios. guide fortheBankinlimitsettingprocess meet different situations.Thisalsoservesas reasonably builtwithina specified periodto focus onthelevelofliquiditythatcouldbe Result ofstress-test analysis helpstheBank models usinghypotheticalevents. events, casestudiesofliquiditycrisisand events. Thescenariosare basedonhistoric the Bankwillbeabletowithstandsuch up withmitigatingmeasures toensure that liquidity managementdecisionsandcome could serveasinputformakingappropriate Bank forpotentialliquidityproblems. This analysis withthesinglegoalofpreparing the but plausiblesituationsthrough scenario Model asitmakesprovisions forvaried risk isdonetosupplementtheLGR/MCO scenario analysis.Stress Testing forliquidity through the use of stress testing and management andcontingencyplanning The Bankcomplementsliquidity e. LiquidityStress Test (Audited) 502,535 59.33% 71.38% 2013 (Audited) 313,078 48.67% 61.70% 2012

Institutional Viability

71 72 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report LCR = Committee (CMC). elevated to the Crisis Management and executionoftheplan,unlessotherwise overall responsibility for the management recommendation oftheALCOwhichhas activates thecontingencyplanbasedon In theeventofaliquiditycrisis,Bank situations. making upcashflowshortfallsinadverse during acrisisandincludesprocedures for strategy forcoordinating managerialaction contingency planfocusesontheBank’s to withstandtheextreme scenarios.The times. TheLCPevaluatestheBank’s ability that theBankhassufficient liquidityatall scenarios ofadverseconditionstoensure Contingency Plan(LCP)usingextreme The BankformulatedtheLiquidity g. LiquidityContingencyPlan(LCP) for CY2019. maximum LCRtriggeralertof100%targeted 90% minimumrequirement forCY2018and of 2016resulted intheLCR higherthanthe as indicatedintheBSPCircular 905Series simulation usingtheBSP’s LCRtemplate As of December 31, 2015, the Bank’s subsequent 30calendardays. inflows inthespecifiedstress scenarioforthe cash outflowsminusthetotalexpected Total NetCashOutflows-thetotalexpected scenario; and could encounterunderaliquiditystress markets tooffset thenet cashoutflowsit cash atlittleornolossofvalueinprivate cash or assets that can be converted into High QualityLiquidAssets-comprisedof Where: prescribed formula: The BankcomputestheLCRusingBSP T otal Net Outflow Cash overthe next 30 Stock of HQLA of Stock calendar days estimated losses. Committee (ManCom)theactual lossesversus escalates toRISKCOMandtheManagement operational risk.RMGregularly monitorsand serve astheirdailydashboard inmonitoring to quantify potential operational losses which BIA,BCQ,heatmaps,andhazardRTR, maps using variousRMtoolssuchasRCSA,RARand soon astheyoccur. BUsconductself-assessment managing theserisks,andescalatingbreaches as confronted with,takingaproactive stancein aware ofthespecificoperationalriskstheyare becoming awayoflife,withtheBUs RM at theBU level. ORM across the institution is (ORM) istheimplementationandembeddingof in thearea ofOperationalRiskManagement A significantachievementoftheBankin2015 class operations. improve businessprocesses anddevelopworld (PQA) Program aspartof itsthrusttocontinually by applyingforthePhilippineQualityAward Moreover, theBank takes onamajor challenge [EMS] andQualityManagementSystem[QMS]). [ISO] (i.e.,Environmental ManagementSystem on InternationalOrganization forStandardization business processes andcontinued itsinitiatives Similarly, theBankfocused onenhancinginternal financial gainsandoperationalexcellence. that oforganizational goals translatestosolid of Bank’s goal.Thealignmentofoperationswith individual performanceistiedtotheattainment employees are madeto understand howeach alignment where allBUs, supportunitsand overall strategicobjectivesthrough operational alignment duringtheyear. TheBankattainsits theme for2015,theBankpursuesoperational referencetarget. With tothebusinessexcellence operational performance to attain its financial In 2015,LANDBANKcontinuedtostrengthen its OPERATIONAL RISKMANAGEMENT conducting theliquiditytesting. was enhancedtoincludetheprocedures in day tosixmonths.In2015,theBank’s LCP among otherswhichare availablewithinone sources, andvariouscredit linesfrom Banks, assets, governmentandretail deposit cash from operations,stockofmarketable the different alternativefundingsources like major source of fund, the Bank identifies Although depositliabilitiesremain tobethe from systemrisk: in placetoavoid/mitigatetheestimatedlosses risk assessmentandputthefollowingcontrols LANDBANK hasconductedaforward-looking risk ashighamongtheoperationalrisk, While the banking industry perceives system Approach. Operational RWA undertheBasicIndicator the totalestimatedlossiswaybelowTotal Self-risk assessmentofoperationsshowsthat Approach model. determine thevariancefrom theBasicIndicator estimated probability ofoccurrence in2016to using actual historical losses of the Bank and the computation of the 2015 estimated losses calculation, the Bank conducts a simulation of risks intheBasicIndicatorApproach data) isbutashadowindicatorofoperational Cognizant thatGross Revenues (BSPproxy Bank’s aggregate RWA of P513,059 million. Approach wasP49,271million or9.6%ofthe for OperationalRiskusingtheBasicIndicator As of December 31, 2015, the Bank’s Total RWA and legalrisks. Operational Riskisexpandedtoincludeevent dated January18,2016,thescopeof RWA. In compliance with BSP Circular #900 last three yearstocalculatetheOperational average Gross RevenuesoftheBankfor risk underPillar1.TheBankhasbeenusingthe for calculatingthecapitalcharge foroperations LANDBANK usestheBasicIndicatorApproach • Operational RiskExposure • • • • • • • • Implementation ofITgovernance Conduct offullcycletesting infrastructure Continued upgradingofIT VISA (EMV) Compliance withEuropay Mastercard Machines (ATMs) Upgrading ofAutomatedTeller ISTRMO undertheRMG Strengthening thefunctionof Office Creation oftheIT-Quality Management the Bank’s ITRiskManagementSystem Enhancement andimplementationof ENTERPRISE RISKMANAGEMENT selected, asfollows: from whichthetopfiverisksofBankwere resulted intheprioritizationof26criticalrisks, impact andeffectiveness ofRMpractices.This prioritized criticalrisksintermsofinherent process undertheERM,SeniorManagement Through theRiskSelf-Assessment(RSA) Dictionary developedundertheERMinitiative. and givensubstanceintheLANDBANKRisk above eightcategoriesare defined,customized the Bank’s RiskUniverseandfallingunder the and 8)strategicrisks.The52risksthatcomprise rate risks,6)operations7)reputation risks compliance risks,4)liquidity5)interest by Risk):1)credit risks, 2)marketrisks,3) February 3,2006(re: Guidelines onSupervision categorized underBSPCircular No.510dated (ERM) approach tocapture allriskevents embarks onanEnterprise Risk Management mandate anditsvariousbusinessactivities,it As theBankrecognizes all risksinherent toits • RiskCategories banking. delivery channelssuchasinternetandphone of SecurityandNetworkInfrastructure and Fraud RiskManagementSystem,upgrading risk suchasimplementationoftheEnterprise embark onotherinitiativestomitigatesystem Equally important,theBankhasstartedto 1. • • • • • • economic losses of theBank’s investments; couldleadto and managefluctuationsin thevalues Market Risk:Thefailure toanticipate Management, ITComandRISKCOM Monitoring andoversightoftheSenior electronic crimes Insurance coverageforfixedassetsand policies Full compliancetoinformationsecurity performance ofserviceproviders process andmonitoringofthe Observance ofstrictprocurement Enhancement ofITstandards (DRP) forIT Plan (BCP)andDisasterRecovery Enhancement ofBusinessContinuity

Institutional Viability

73 74 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report that neededtobeimmediately addressed: following sevenrisks(partofthe26criticalrisks) to regular review and theRSAyielded The riskprofile oftheBankissubjected 5. 4. 3. 2. and relationship withcustomers negatively affect theBank’s reputation and address thecustomers’needswill The inabilitytoeffectively identify Client RelationshipManagementRisk: leadership andbusinesscontinuity affect thestabilityoforganizational and employeesmightadversely continuance planforkeybankpositions to create andimplement a feasible Succession PlanningRisk:Thefailure dysfunction andlowmorale might leadtoorganizational and developcompetentemployees inability oftheBanktoattract,retain Recruiting andRetentionRisk:The desired performanceand conduct adversely impacttheachievementof employee motivationandmay management systemmayreduce a soundemployeeperformance enhance employeeskillsandprovide Risk: Theinabilitytodevelopand People DevelopmentandPerformance People Risks: the Bank’s goalsandobjectives business andhindertheachievementof administer ITresources mayleadtolost effectively prioritize IT initiatives and IT ManagementRisk:Thefailure to basis); couldleadtoeconomiclosses probability ofdefault(onanongoing (at application)andtodeterminethe to serveasbasisforloanapproval quality ofpotential/existingborrowers inability toreview andanalyzethecredit Counterparty Credit Risk-Loans:The 7. 6. 5. 4. 3. 2. 1. others Act (AMLA)andamendments, among like BaselIII,Anti-MoneyLaundering capital withregulatory requirements in order tostrategicallyaligneconomic the stageforhighercapitalrequirement reputations. Itisalsothefailure toset criminal penalties/sanctions and loss to in lossofbusiness,administrative/ the bankingindustry, mayresult regulatory bodies as applicable to advisories and other issuances of comply with the circulars, memoranda, Banking RegulationsRisk:Thefailure to as theyfalldue the Bank’s abilitytomeetitsobligation sources atreasonable costcouldaffect sufficient availablealternative fund manage theBank’s cashflowsandhave Liquidity Risk:Thefailure toproperly Bank loss ofbusinessopportunitiesforthe maximize loanablefundsmightleadto Lending CapacityRisk:Thefailure to performance the achievementofdesired outputand objectives andtargets may prevent standards tomonitor attainment of appropriate performance metricsand Initiatives Risk:Thefailure toidentify Measuring &MonitoringofMajor compromise product orservicedelivery and workinefficiencies, andmay initiatives mayleadtocostlyinvestments support businessprocesses ormajor appropriate systemand technology to failure toidentifyand prioritize the Technology IdentificationRisk:The overall operations developments willaffect theBank’s political mandatesandsocial&cultural understand, address andanticipate Socio-Political Risk: The failure to growth prospects threaten theBank’s overallviabilityand institutional strategiesanddirection will to develop, implement and monitor Strategic Planning Risk: The failure identified in2015: was conductedandsixemerging riskswere a re-assessment oftheBank’s riskprofile Development BankofthePhilippines(DBP), consolidation ofLANDBANKandthe In light of the impending merger and 6. 5. 4. 3. 2. 1. environment andlackofintegrityin may result inanunfavorableworking professionalism andcompetency a culture ofaccountability, integrity, and Senior Management to establish Inability of the LANDBANK Board Tone at the Top and Direction: and Vision execution ofthemerger Order, willaffect theBank’s planinits as defined in thelaw and Executive address andanticipatepolicymandates, Socio-Political: Failure tounderstand, insolvency lead toregulatory sanctionsandbank to supportplannedexpansionmay losses arisingfrom the merger and serve asareserve from unforeseen minimum regulatory requirements) to capital surplus(ontopoftheincreased Capital Reserve:Failure tomaintain losses and liabilities,mightcausefinancial contingencies onunrecorded assets the Bank,includingcommitmentsand subsidiaries thatwillbeabsorbedby assets andliabilitiesoftheDBPits establish theappropriate valuationof Asset QualityandValuation: Failure to product orservicedelivery inefficiencies, andmay compromise lead tocostlyinvestmentsandwork initiatives ofthemerged bankmay support businessprocesses ormajor appropriate systemand technology to Failure toidentifyandimplement the IT IdentificationandImplementation: and lowmorale will leadtoorganizational dysfunction changes brought aboutbythemerger motivate keypersonnelduetothe People Risk:Failure toretain and mitigating factors. capital is necessary having considered other significant risks, and how much additional future risk profile, howtheBankintendstomitigate of theongoingself-assessmentBank’s LANDBANK Board andSeniorManagement ICAAP’s primarypurposeistoinform the and strengthen thecapitalpositionofBank. provided directions toenhancetheRMprocess performed collaborativegovernanceand LANDBANK Board andthe SeniorManagement and expansionoftheproduct portfolio.The as future risksarisingfrom growth, newmarkets capital, given the existing risks exposure as well determine the quality andadequacy of theBank’s Assessment Process (ICAAP) process to comprehensive Internal CapitalAdequacy For 2015,theBankconductedathorough and ASSESSMENT PROCESS INTERNAL CAPITAL ADEQUACY and includedintheBank’s RiskDictionary. increased to62risksand thesewere defined and from atotalof52risks, theRiskUniverse The Bank’s RiskUniversewasalsorevisited the risksrelated tothemerger. and mitigatingcontrols and consequencesof between thepotentialcauses,preventative Analysismapclearlydisplaysthelinks Bow-Tie Analysis.The taking BUsusingtheBow-Tie performed byriskteamsfrom variousrisk- to mitigatetheriskanditsroot causeswas Formulation of risk management strategies objectives andstrategies may hampertheachievementofits services, products andprograms, customers, includingitsmajorinitiatives, and direction totheemployeesand communicate the merged Bank’s vision business. Failure toestablish,alignand the way the merged Bank will conduct

Institutional Viability

75 76 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report the mostprobable scenario,LANDBANK cover theriskinherent initsoperations.Under capital todeliveritsmandated servicesandto In 2015,theBankhadsufficient andstrong • Strengthening Capital Planning reports. and thorough monitoringprocess viaregular capital, theBankadoptsarigorous escalation organization inthearea ofRMandutilization efficient performanceoftheBUsacross the generate andimplement.Inmonitoringthe single transactionorbusinesstheywill the corresponding capitalcharge forevery to-day operationswithanawareness of All BUsoftheBankuseICAAPinitsday- inherent inthedailyactivities oftheBUs. assess, onacontinuingbasis,therisksthatare its Board and Senior Management Team to of theBank’s RMprocess. This process enables down totheBUslevel,forminganintegralpart operating philosophyandhasbeencascaded The ICAAPisembeddedintheBank’s • ICAAPCulture the followingmajorrevisions: enhanced itsICAAPdevelopmentprocess with practices, theBankhasstrengthened and To alignwiththelocalandglobalbest Risk Assessment • Enhancementof • • • • • • secondary riskowners Defining theprimaryriskownersand Quarterly MonitoringReport” Implementation ofthe“ICAAP Communication Process Institutionalizing theICAAP losses determining riskdriversandpotential Linking theRCSAprocess in across theinstitution and managementofemerging risk risk, cross riskanalysis&identification Adopting theenterprise-wideviewof corresponding strategies the RiskDriverMapscontaining forward-looking riskassessmentwith with ICAAPModelbyrelating the Linking theBank’s ERMFramework additional equity infusion in the 2016 General the NationalGovernment for P20billion permanent basis,theBank requested To address capitalconcernson a more earnings) intheforeseeable future. profitability (andconsequently, high retained capital planning activities was maximizing its accumulation process, theprimarythrustof as the principal source of the Bank’s capital capital generationthrough earningsremains requirements oftheBSP. Given that theinternal with theevolvingcapitalandratio plans andensure continuedcompliance will adequatelysupporttheBank’s business was enhancedtoestablishcapitallevelsthat The Bank’s GeneralPolicyonCapitalPlanning commercial bankingindustry. of atleastequaltotheaverageRoE maintaining acceptableReturnonEquity(RoE) pursuit andserviceitsmandatedclientswhile preserve real capitaltosustaindevelopmental The Banklikewisecontinuestovigorously well ascapitaladequacyandleverageratios. regulatory requirements oncapitalstructure as and rulesmore specifically, complieswith the Bankcontinuestoadhere toBSP’s policies sustain long-termgrowth and viability. Assuch, enhance competitiveness,ensure stability, and base atalltimestoboostcustomerconfidence, As a policy, the Bankmaintains a strong capital and appropriately. ICAAP process hasbeen conducted diligently ratios atend-December2015indicatethatthe 1 beingveryneartheactualvaluesofthese The projected ICAAPratios ofCARandCET requirements. ratio whichwere bothcompliantwithBaselIII requirements of10%CARand8.5%CET1 the Bankwere more thantheBSP’s minimum 1 ratio. The actualCAR and CET1 ratios of was nottoofarfrom the9.7%projected CET (CET 1)ratioof9.9%asDecember31,2015 Similarly, 1 theactualCommonEquityTier objective risk assessment and capital planning. December 31, 2015 was 12.9% implying a very required CAR.TheactualCARrecorded asof Ratio (CAR)at12.8%vis-a-vis10%percent estimated the2015year-end CapitalAdequacy organization. compliance managementculture across the regulatory requirements andpromote astronger and control mechanismsto efficiently respond to compliance monitoringandreporting processes activities were focusedon enhancingtheBank’s global standards ofgood governance.These laws, rulesandregulations, codeofconductand risks arisingfrom compliance withPhilippine through theeffective mitigationofbusiness Bank’s ComplianceManagementProgram various initiativesaimedatstrengthening the LANDBANK in2015continuedtoimplement AND CONTROLS COMPLIANCE MANAGEMENTSYSTEMS GOVERNANCE THROUGH ENHANCED STRENGTHENING CORPORATE and optimizeinvestigationactivity. were issuedtominimizefalsepositivealerts guidelines ontheAMLWhitelisting ofalerts resolution oftheAMLalerts.Moreover, policy turnaround timeonthedisposition and such asthestrictobservanceofprescribed alerts, theBankinstitutedcontrol measures transactions. To ensure timely resolution of effectively identifyandmonitorsuspicious and non-productive oneswere disabledto certain threshold settingswere adjusted AMLS’ alertscenariosandparameterswherein exercise whichreviewed andassessedthe These included the conduct of an alert-tuning (CTRs) andsuspicioustransactions(STRs). or accountsqualifiedascovered transactions for providing alertsanddetecting transactions system equipped with analytics capabilities during theyear. TheAMLSisaweb-based Laundering System(AMLS)were implemented enhancements in the Bank’s Anti-Money Format 1.0(effective January 2015),several and suspicioustransactionsundertheReport Anti-Money LaunderingCounciloncovered To meetthenewreporting requirements ofthe • AML System Enhancements loans tothemandatedandprioritysectors. national development programs and expand Bank enoughcapitalbuffer tosupportthe Appropriations Act(GAA).Thiswillgivethe and enforcement actions. evaluation and test-validation of responses samples andareas, reporting offindings,and as theidentificationandselection oftesting was expandedtocoveradditional areas such Also, theAMLCompliance Testing Program improve alertinvestigationactivity. AML alertstoreduce false positivealerts and negative mediareports andwhitelistingof incorporated new guidelines in handling to terrorism andsimilaractivities,theMLPP processes offundsespeciallythosediverted To further strengthen detection and monitoring the LANDBANKBoard onMarch 9,2015. risk classification.TheMLPPwasapproved by stratified toenablemonitoringaccording to of Due Diligence” wherein the customers are Risk Assessment,IdentificationandApplication on CustomerAcceptance,RiskClassification, Executive Order 17(series of2015)“Guidelines Act FurtherStrengthening theAMLA”and as theprovisions ofR.A.10365 of2013“An AML-related policies and guidelines such and updated to include new and revised Prevention Program (MLPP)wasalsoreviewed The MoneyLaunderingandTerrorist matters. Bank personnelonregulations andcompliance compliance testing;reporting; andeducating and procedures; regulatory riskassessment; and implementationofregulations, policies which includeamongothers,thereview the compliance function’s planned activities the Bank’s ComplianceProgram thatsetsout year. TheBoard-approved Manualdocuments Compliance Program was revisited duringthe Manual whichembodiestheBank’s risk-based and externalconditions,theCompliance To continuouslyrespond toevolvinginternal Program (MLPP)Manual Launderingand Terrorist Prevention Compliance Manual andtheMoney • the Annual Review andUpdating of effectiveness oftheAMLS. possible suspicioustransactionsandoverall processes, monitoringandreporting of further improve regulatory filing,detection the acquisitionofanewAMLSwhichaimsto The Bankalsoapproved onMarch 18,2015

Institutional Viability

77 78 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report general compliancestatus. corrective measures undertaken andtheBank’s vulnerabilities, emerging regulatory risks, testing results, areas withcompliance on newregulations andguidelines,compliance Board-level AuditandComplianceCommittee regularly apprisestheManagementand Compliance Officer (alsotheHeadofCMG) As partofthereporting process, theChief appropriate action. unit anynotedbreaches ordeviationsfor immediately referred totheconcernedBank with regulatory requirements, theCMG strict adherence andcomplianceoftheBank also undertaken during the year. To ensure Exchange Commission,amongothers,was Insurance CommissionandSecurities Money LaunderingCouncil,PhilippineDeposit the Bangko Sentral ng Pilipinas (BSP), Anti- of otherregulatory reports submittedto Further, athorough review andassessment are highlyvulnerable to regulatory risks. testing onspecificareas oractivitiesthat Bank alsoconductedindependentcompliance testing doneonnewly-issuedregulations, the In additiontothepre-testing andperiodic the identifiedandassessed regulatory risks. conducting compliancetestingsuitedto The Bankadopteddifferent approaches in compliance testingandvalidation. Compliance ActionPlanreport forperiodic submit totheCMGtheirBusinessUnit required theBankunitstoaccomplishand the Compliance Management Group (CMG) actions takenbytheconcernedBankunits, and compliance.To effectively monitorthe to the concernedBank units for information applicable regulations were disseminated as applicabletotheBank’s operations.These issuances in2015were identifiedandassessed The Bankensured thatnewregulatory Reporting Activities Risks, MonitoringCompliance and • Identification andRegulatory Assessmentof 16, 2015. Money LaunderingCommitteeonDecember The updatedMLPPwasapproved by the Anti- discussions oncomplianceissues. TheCMG Coordinators through periodic meetings and interfaces withdesignated Compliance culture atthebusinessunitlevel,CMG Bank unitsandstrengthen thecompliance To establish a good working relationship with was alsoupdated. during theyearforeasyaccessofemployees or repository ofvariousregulations issued Function Databasewhichisthecentralrecord Newsgram publication.TheCompliance posted regularly intheLotusNotes and Bank’s AML mattersthatare easy-to-read andis tidbits of information on compliance and “Compliance Nuggets”whichcontains The CMGcontinuedtheissuanceof training duringtheyear. Management were updated ontheAML at thetop,LANDBANKBoard andSenior nationwide. Likewise,tostrengthen thetone 99% participationrateoftheBank’s employees (LEAP), aweb-basedfacilitywhichgenerated LANDBANK e-Learning Access Portal Program was successfullyimplementedthrough the Program. Further, anAMLrefresher session of the BranchOperations Development Program fornewhires andparticipants (15) undertheLANDBANKinPerspective issues through theconduct ofaserieslectures awareness campaignoncompliance andAML requirements, theCMGspearheadedan in enhancing knowledge on regulatory from complianceregulations specifically employees onthevariousrisksemanating As partofthecontinuingeducation Bank. compliance culture across all sectors of the of complianceandembeddingastrong aimed atfosteringawareness andownership The Bank continuously pursued initiatives Activities • AML Training andCompliance-Related other adhocrequirements. updates totheBSPReportofExaminationand concerned unitsprovided theirresponses and conducted bytheBSPwhere theBank’s visitation/examination andexitconference Also, duringtheyear, theCMGmanaged improve its worksite clinic services, the Medical In linewith the Bank’s continuing efforts to HEALTHCARE SERVICES reproduced inacrylictabletopflipchartformat. and revision in2015.Therevised versionwas Banking Products andServicesunderwentreview LANDBANK’s Citizen’s Charter forBranch ARTA ImplementingRules andRegulations, In compliancewithSection4,RuleIVofthe and 2were “Acceptable”. “Outstanding”; 33received aratingof“Good”; two-phase validationprocess; onewasrated Excellence Award conferred bytheCSCaftera them totheCitizen’s SatisfactionCenter Sealof “Excellent” rating, which automatically qualified rate. Among the surveyed Branches, 15 got an May to September 2015 with 100% passing Branches/Extension Offices nationwidefrom ARTA-RCS was conducted in 51 LANDBANK and customersatisfaction.Theself-funded agency performanceintermsofARTA compliance 2015. ARTA-RCS isaneffective toolinmonitoring funded ARTA-Report Card Survey(RCS)inApril agreement withtheCSCfor theconductofaself- customer service,LANDBANKentered intoan (ARTA) andconsistentwiththethrusttoenhance the implementationofAnti-RedTape Act (CSC) goaltomakeagenciesself-reliant in In supportofCivilServiceCommission’s ANTI-RED TAPE OF2007 ACT CONTINUING COMPLIANCE WITHTHE MANAGEMENT HUMAN RESOURCE regulatory concerns. dialogues andconsultationstoclarifyspecific transparent communicationandholdingof regulatory agenciesbyfosteringopenand constructive workingrelationship withvarious The Bank,through theCMG,alwaysmaintains matters. services andguidanceinmanaging compliance and variouscommitteestoprovide advisory also participatesintechnicalworkinggroups were issued. medical evaluationfor557proposed newhires screening were conducted. Pre-employment primary case screening and 35 PTB close contact evaluated. FivePulmonary Tuberculosis (PTB) for SeparationIncentivePackagewere also evaluated. Recommendationsfor128proposals sick leavewithpay(fordreaded diseases)were Rehabilitation privilege;and29extensionof 69 specialleave(MagnaCartaofWomen); one 160 financialassistance(fordreaded disease); Requests formedical-related benefitssuchas information materials) through the Lotus Notes. Twenty-four HealthNoteswere released (health health statusbasedonaresponse rateof89%. new info/insights, and application to improve awareness onpersonalhealthstatus,learning with positivefeedbackintermsofcreating Fora were organized with a total of 611 attendees which isavailable24/7.FifteenmonthlyWellness cases transportedviatheLANDBANKAmbulance provided for 7,902 patients with 28 emergency provided in2015.Worksite medicalserviceswere total of 56 sessions of nutritional counselling were pm attheLANDBANKGymandFitnessCenter. A LANDBANK MedicalClinic,andfrom 5:30to9:00 of themonth,from 1:00 to5:00pmatthe scheduled everysecondandfourthThursdays available tointerested Bank employees.Itis by aregistered nutritionist/dietician were made done. Thefree nutritional counsellingservices go to hospitals and clinics to have their tests Employees referred forbloodtestsneednot arranged fortheconvenienceofemployees. first andthird Wednesday ofthemonthwas following day. A worksite blood extraction every employees’ orders and deliver the sameon Plaza everyMondayandWednesday totake a pharmacist is available at the LANDBANK Health Community Pharmacist Program” wherein discounted medicinesthrough “MyAccessto arrangements withRITEMEDforaccessto healthcare servicesmore accessiblebyproviding The LANDBANKMedicalClinicalsomade related benefitsamongothers. inventory report, report generationofhealth of employees’medicaldatabase,medicine paperless clinic consultations, electronic storage electronic medicalrecords systemthatprovides The LANDBANKMedicalCAREsystemisan Charts and Records of Employees (CARE) system. Clinic hasfullyutilizedtheLANDBANKMedical

Institutional Viability

79 80 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report 10th anniversary10th Day Care Center Day Center Care on August27, celebrated its LANDBANK 2015. the diseaseprevention initiative oftheBank. free FluVaccination Program whichispartof A totalof5,172employeesbenefittedfrom the ECU and650results were evaluated. increased to44.In2015,832 officers underwent ECU. Thus,themedicalfacilities nationwide provinces where officers canhavetheir facilities inMetro Manila andsixinvarious partnership withthree additional medical The LANDBANKMedicalClinicestablished to medical specialists have been included. additional diagnostictestsandconsultations package wasapproved in2015,wherein The enhancedExecutiveCheck-Up(ECU) LANDBANK Plazawith1,404availers. worksite Annual Physical Examination at the illness. TheBankorganized theconductof promote earlydetectionandprevention of consciousness amongBankemployeesand strategy was implemented to instill health mandatory in2014.Thisriskmanagement LANDBANK officers and employees became workplace, the Annual Medical Examination for As partofpromoting healthandwellnessinthe • Annual MedicalExamination served. it startedoperation,2,590children were already being andloyaltytoLANDBANK.To date,since on workproductivity, stress management,well- on qualityoffacility/service,impactchildand feedback from availers (95-100% response rate) 89 employee-parents and receiving positive the Centerhasatotalof68enrollees benefiting years 2014-2015,2015-2016andSummer2015, Development Center-Based Programs. For school implementation of EarlyChildhoodCare and Level 3)compliancewiththestandard setinthe Development forLBDCC’s outstanding(5Stars/ from theDepartmentof SocialWelfare and event wastherecognition received bytheBank on August27,2015.Highlightingthesaid The LBDCCcelebratedits10thyearanniversary its employees. being andensure sustainedproductivity among employee morale,enhancepsychologicalwell- aims topromote work-lifebalance,improve the Bank’s total Wellness Program, the LBDCC children ages3-12yearsold.Asacomponentof was establishedinAugust2005foremployees’ The LANDBANKDAY CARECENTER(LBDCC) LANDBANK DAY CARECENTER (LBDCC) Gym andFitnessCenter. attendees were implemented attheLANDBANK 10,188 gym useand1,794Group Exercise Class In 2015, physical fitness programs for a total of and speed-agilityworkout. include rope training, smart core circuit training Other activitiesdoneonascheduledbasis monitor theprogress ofeachenrolled employee. Composition Analysisisdonequarterlyto for employeesdependingontheirneed.Body Instructor designsindividualizedfitnessprogram to Friday, from 5:30to6:30pm.TheFitness Aero andYogalates are availablefrom Monday exercise activities(e.g.,Yoga, Zumba,Dance to 8:00amandresumes at5:00to9:00pm.Group continues to operate on a daily basis, from 6:00 The LANDBANKGymandFitnessCenter LANDBANK GYMANDFITNESSCENTER Programs. Childhood Care and Development Center-Based Performance intheimplementationofEarly Accreditation ofTeachers forHighlyCompetent The LBDCCalsoreceived thecertificateof session onbreastfeeding with 50attendees. Bank alsoorganized the conductofalearning Workplace” from theDepartmentofHealth.The of its certification as a“Mother-Baby Friendly 21, 2015,theLANDBANKreceived arenewal availers from 10in2012 to 20in2015.OnMay cubicles. This is to serve the growing number of stations hasincreased from theoriginaltwotosix As ofDecember2015,thenumberlactation education andmotivationcampaigns. learning sessionswere conductedforinformation, forum. Continuingparenting seminarsand participation in wellness and breastfeeding opportunities foremployeevolunteerismand of theseprograms, theBankalsoprovides of Women andMilkCode.To create awareness Gender andDevelopment(GAD),MagnaCarta and supportvariousgovernmentissuanceson August 2012topromote exclusivebreastfeeding The Bank’s LactationStationwasestablishedin LACTATION STATION Development. the Family Health representatives from Division and Field Operations Siapno, Head- by Dr. Ruben DOH represented from Certificate Friendly Workplace Mother-Baby receives the LANDBANK

Institutional Viability

81 82 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report workers alsotookpartinthe Bank’s Corporate LANDBANK employeesand servicecompany from thePhilippineRedCross onJuly23,2015. with this,theBankreceived aPlatinumAward mL of blood for the Philippine Red Cross. In line blood donors(74%successrate)yielding159,750 was abloodlettingactivitywith355successful Among the employee volunteerism initiatives events with890participants. Employee Clubs for eight recreational/sports organized. LANDBANKalsopartnered withfour A Christmaspartyforkidswith244attendeeswas showing of“HeneralLuna”with550attendees. attendees; Papal visit with 397 attendees; and film These are Pacquaio-Mayweather Matchwith652 Three FamilyDayevents were conducted. volleyball andbilliards). basketball, bowling,chess,darts,tabletennis, eight competitivesportsevents(badminton, 11 ballroom dancingsessions with959attendees, attendees and 97 participating service providers, These includeHealthandWellness Fairwith465 fellowship with colleagues were organized. opportunity torelease stress andfoster Various activitiesproviding employees the Canteen. serving ofbrown rice/mixed riceatLANDBANK RICEponsible Campaignimplementingthe LANDBANK alsoparticipatedintheBe one forbadminton). players (twofortabletennis,onebowling,and Service ASEANGamesthrough GCAAwithfour Employees Association (bowling) and 1st Civil Philippine ClearingHouseCorporation Athletic Association(badmintonandbowling), badminton, volleyball,basketball),Bankers’ Association (golf,shootfest,bowling,chess, such as Government Corporations Athletic the employeesinexternalsportstournaments were conducted.TheBankalsosupported Learning Sessionswithatotalof105attendees total of242attendeesandthree BigGroup nine SmallGroup LearningSessionswitha To furtherpromote wellnessandvolunteerism, PROGRAMS EMPLOYEEVOLUNTEERISMAND WELLNESS concerned employees. the reconstructed/repaired housingunitsofthe result ofthePMS’fieldvalidation/inspectionon second tranchewillbereleased uponfavorable depending onthedamagetotheirhouses.The beneficiary receiving P50,000orP15,000 LANDBANK onMay29,2015,witheach to 50%ofthetotaldonation,wasgiven amounting toP3.99million,whichisequivalent The firsttrancheofthePSFfinancialassistance Presidential ManagementStaff (PMS). by the Office of the President through the from thePresident’s SocialFund(PSF)released 2013 received atotalofP7.89milliondonation earthquake inBoholandTyphoon “Yolanda” in Bank whowere victims of the7.2magnitude company workers(SCWs)deployedinthe In 2015, 174 LANDBANK employees and service PROGRAM RELIEF ANDDISASTERASSISTANCE museum exhibit,handwrittenUnityBible). of 67 attendees and special projects (e.g., Bible There were twolearningsessionswithatotal in coordination withthe Catholiccommunity. spiritual counselingattheLANDBANKChapel worship services,specialthanksgivingmassesand implemented through the conductofregular Spiritual Wellness in the Workplace was advocacy. Women (VAW)/Orange youriconfor18days Against in the18-day campaign toEndViolence Commission onWomen. It includesparticipation Month celebration organized by the Philippine LANDBANK alsoparticipatedintheWomen’s reproductive health)were conducted. topics (parenting, breastfeeding, women’s group. FourlearningsessionsonGAD-related through thepartnershipwithemployeesupport Gender andDevelopment(GAD)waspromoted Mandate. been discussedearlierunderthePursuitof Program. Detailsoftheseprograms havealready cleanups oftheManilaBaySUNSETPartnership the Gawad Sibol and the annual and quarterly Social Responsibility(CSR)activitiesspecifically Governance CommissionforGOCCs (GCG). Development asoneofourcommitment tothe crafted the3-Year CompetencyFramework retain, and competitively compensate talents, Management Group (HRMG),taskedtoattract, an agileorganization, theHumanResources In line with the Bank’s mandate of developing COMPETENCY FRAMEWORK DEVELOPMENT OFTHEBANK’S Employees (DOEs). Indemnity PlanforDirectors, Officers and LANDBANK’s Litigation Expenses and Liability An amendmentwasmadeontheGuidelines Loss ofLifeandDisabilityBenefitPlan(LLDBP). (SNS) Accounts;andRevisedGuidelinesonthe of Official andPersonal Social NetworkingSite Actions and Guidelines on Access and Usage Employees; RulesonProhibited ConcertedMass Past DueFinancialObligationsofLANDBANK and accountabilitysuchasGuidelinesinHandling policies in2015toensure employeediscipline LANDBANK formulatedandimplemented Cognizant of the responsibilities as civil servants, ACCOUNTABILITY EMPLOYEE DISCIPLINEAND Program. of theReliefandDisasterAssistance(RDA) formulated theGuidelinesonImplementation implementation oftheprogram, theBank To ensure uniformityandconsistencyinthe by proper authorities. areas strickenbydisaster or calamityasdeclared who suffered lossesordamagestoproperties in or alleviatestheconditionofeligiblebeneficiaries serving theBank.Thisassistanceprogram helps concern foritsemployeesandotherworkers assistance isamanifestationofManagement’s in theformofemergency relief orfinancial The Bank’s relief and disaster assistance program “Lando” in2015. Bank who were victims of Typhoons “Ruby” and and servicecompanyworkersdeployedinthe Disaster AssistanceFundfor221Bankemployees financial assistancethrough itsReliefand LANDBANK likewisegrantedatotalofP808,000 job-specific competencies thatdriveproven Meanwhile, FunctionalCompetencies are staff from eachofthe Bank’s Sectors. through focusgroup discussions withofficers and LANDBANK personnelwere likewiseconsidered The perspectives of of its Vision/Mission. Bank’s culture andwhatittakesfortherealization Pico were interviewedtosolicittheirviewsonthe officers includingthePresident andCEOGildaE. Medium Term Plan. Inaddition, the Bank’s senior out from acareful and studyofitsVision/Mission LANDBANK’s core competencies were fleshed organization. that are alignedtoculture andvaluesofthe are behaviors expected from all employees processes of its various units. Core competencies Competencies required to perform critical Competencies aswelltheFunctional the BankwasabletoidentifyBank’s Core Towers thepartnershipwithWillis With Watson, succession management. and planning,learningdevelopment, for performance management, career pathing competency frameworkprovides thefoundation demonstration ofobservablebehaviors.A These are typically evaluated basedon abilities required forsuccessfulperformance. Competencies clarifytheknowledge,skillsand Competency Framework. first milestoneasitwrapsupthecraftingofits competency-based HRprocesses hasreached its the developmentandimplementationof LANDBANK’s continuingefforts towards LANDBANK’S CORE Social Responsibility COMPETENCIES Customer Focus Accountability Collaboration Innovation Excellence

Institutional Viability

83 84 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report of theyear, thenumberofscholarsreached 94. 2015, 38 scholars already graduated. At the end slots were already filled-up. AsofNovember National ScholarshipforDevelopment), all125 For theGraduateEducation Program (formerly participants. Batch 8 commenced in November 2015 with 30 graduated in July 2015 with 30 participants while Development Program (LDP),ontheotherhand, with 25participants.Batch7oftheLeadership (BODP), Batch1graduatedinSeptember2015 for theBranchOfficers DevelopmentProgram completed on June2015with32 graduates. As the ManagementTraining Program (MTP)was Development Programs (MLDP),Batch4of For theManagementandLeadership per year. employees should attend at least one training Association (LBPEA)whichrequires thatallBank with theLandBank of thePhilippines Employee 2015 CollectiveNegotiationAgreement (CNA) population. This accomplishment fulfilled the employees or99.35%oftheentire bank-wide was abletofacilitatetheattendanceof7,614 the learninganddevelopmentarmofBank, the Organization Development Department,as Services Sector’s (CSS)annualperformance, As an integral contributor to the Corporate INITIATIVES LEARNING ANDDEVELOPMENT strategic deliverableswiththeGCG. enabled theBanktocomplywithoneofits2015 addressing skillsgap,among others.Thisalso performance expectations,identifyingand identifying highpotentials,communicating management decisionsi.e.,recruiting and help theBanktowards more soundtalent An establishedCompetencyFrameworkwill departments. Profile foreachpositionintheir respective have alsobeenabletodrafttheCompetency conducted ontopoftheirregular workload.They of aseriesworkshopsandreview sessions TowersWillis Watson. Their output is the result and CompetencyWriters, asfacilitatedby identified bydesignated Work ContentExperts for the Bank’s operations were systematically position. Competencies that are required high-performance, qualityresults foragiven balance. bank havinglessthanP500 billion outstanding than P1.0trillionindeposits,with thenextlargest LANDBANK isoneofonlyfour bankswithmore P912.6 billionin2014. trillion levelforthefirsttimeatP1.045from funded bydepositliabilitiesthatexceededthe sale. Theloanandinvestmentportfoliosare fully reduction ingovernmentsecuritiesavailablefor against P302.0billionin2014attributed mainly to other hand,declinedtoP285.2billionorby6% in theprevious year. Investmentportfolioonthe to P435.6billionor by 13%overthe P386.6 billion from P1.06trillionin2014.Regularloansincreased in termsofassetsreaching P1.21trillionin2015 LANDBANK remains to be the fourth largest bank FINANCIAL CONDITION 2014. P2.35 billionor13%higherthanP18.76in operating expenseamountedtoP21.11billion, loss on revaluation of foreign borrowings. Other 7% loweragainstP7.81billionin2014duetoFX amounted toP7.23billionin2015,P574millionor Other operating income, on the other hand, billion improvement indeposit level. which increased by P2.44 billion due to P133.28 expense wasmainly due tointerest on deposits, due tohigherloanportfolio,whileinterest income camefrom loans and investmentsmainly to reach P8.81billionin 2015.Higherinterest while interest expenseincreased byP2.21billion by P5.66billiontoreach P37.06billionin2015, interest expense.Interest incomeincreased higher increase ininterest incomeagainst the P24.80billionin2014duetosignificantly billion in2015,P3.45or14%higherthan The netinterest incomeincreased toP28.25 2014. P12.64 billionnetincometheBankgeneratedin 2015, P1.33billionor10%higherthantherecord its consolidatednetincometoP13.97billionin LANDBANK sustainedtheascendingtrend of RESULT OFOPERATION FINANCIAL HIGHLIGHTS these securities,withthemost recent extension several extensionoftheauthority tohold-on LANDBANK and DBP have requested the MB for by theNG.Sinceitsacquisition in2009however, LANDBANK andDBPthatshall beundertaken NG’s interest andthebuyoutarrangementof the MonetaryBoard (MB)inconsideration of the The said equity investments were approved by 2015 and2014. Bank’s comparativecapitalandratiosfor below are thedetailsand compositionofthe requirements, containedinthefollowingtable issued in2013.ConsistentwithBaselIIIandBSP January 2014pursuanttoBSPCircular No.781 computing forthecapitalratiosbeginning31 LANDBANK adopted the Basel III standards in Similar tootheruniversalandcommercial banks, P12.0 billionpaid-upcapital. by theNationalGovernment(NG)including stocks. Thecommonstocksare fullysubscribed billion common stocks and P5.0 billion preferred billion authorizedcapitalcomposedofP20.0 As of December 31, 2015, LANDBANK has P25.0 CAPITAL ANDCAPITAL RATIOS TIER 1(goingconcern)Capital TOTAL Tier Capital 1 TIER 2(goneconcern)Capital TOTAL QualifyingCapital Common Equity Tier (CET)1Capital Regulatory Adjustments toCET 1Capital Total CET 1Capital Additional Tier 1Capital Paid-up Common Stock Retained Earnings Undivided Profits Net Unrealized Gain/(Loss) on AFS Securities Instrument issued eligibleas Tier 2Capital General loanloss provision (Except fortheratios, allfigures inPMillion) Dec. 2015 80,003.57 28,940.07 51,063.49 51,063.49 15,092.21 10,500.00 66,155.70 11,971.00 43,757.04 13,323,40 10,952.12 4,592.21 GROUP their corresponding ratiosincludingCAR. adversely affected the Bank’s 1 and CET1, Tier CET 1 capital as shown in thetable below, and equity investmentswere deductedfrom its the MBextension,LANDBANK’s P6.78 billion having expired on31December2014.Without CET 1capital. in the regulatory adjustments or deduction to the majorrevisions were theinclusionofINMES implemented beginningJanuary2014,among undertaking. WhenBaselIIIstandards were categorized asinvestmentinnon-financialallied Non-Marketable EquitySecurities(INMES)and The investmentwasclassifiedasInvestmentin and unsecuritizedequityrental payments(ERPs). (P6.78 billion) representing preference shares amountingtoUS$143million investment inMRTC Since March 2009,theBankhasanoutstanding to significantlyhigher regulatory adjustments. CET 1capitalhowever, islowerin2015mainlydue by lower unrealized gains on AFS securities. Total to record income,evenifitwaspartiallynegated The Bank’s CET1capitalincreased in2015due - Dec. 2014 75,216.66 20,368.39 54,848.27 54,848.27 14,703.45 10,500.00 69,551.72 11,971.00 37,670.14 12,070.19 13,505.33 4,203.45 - Dec. 2015 80,003.57 30,403.06 49,600.51 49,600.51 15,069.97 10,500.00 64,670.47 11,971.00 43,757.04 13,323,40 10,952.12 4,569.97 PARENT - Dec. 2014 75,216.66 22,282.81 52,933.85 52,933.85 14,681.89 10,500.00 67,615.74 11,971.00 37,670.14 12,070.19 13,505.33 4,181.89 -

Institutional Viability

85 86 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report statements follows: Full reconciliation ofallregulatory capitalelementsbacktothebalancesheetinauditedfinancial REGULATORY ADJUSTMENTS TO CET 1CAPITAL Paid-up commonstock Retained earnings Undivided profits Net unrealized gainsorlosses on AFS securities TOTAL QualifyingCapital/Total equity Deductions Paid-up commonstock Retained earnings Undivided profits Revaluation Increment TOTAL QualifyingCapital/Total equity Net unrealized gainsorlosses on AFS securities Deductions and non-alliedundertakings Other equityinvestmentsinnon-financialalliedundertakings quasi banks, andotherfinancialalliedundertaking votingstocks) inbanks and Minority investment(below10%of banks andquasibanks, andotherfinancialalliedundertaking votingstocks) in Significant minorityinvestment(10%-50%of dealers/brokers andinsurance companies unconsolidatedsubsidiarysecurities Investment inequityof quasi banks, andotherfinancialalliedundertakings unconsolidatedsubsidiarybanks and Investment inequityof Other tangibleassets Defered taxassets secured andunsecured toDOSRI Total outstandingunsecured credit accommodations, both Tier 1(CET 1)Capital/Total equity Tier 2Capital Tier 1(CET 1)Capital/Total equity Tier 2Capital Regulatory 15, 069.97 64,670.47 49,600.50 66,155.70 15,092.21 51,063.49 (30,403.06) (28,940.07) 11,971.00 43,757.04 13,323.40 10,952.12 11,971.00 43,757.04 13,323.40 10,952.12 Capital

Reconciling (15,069.97) (15,092.21) 21,573.49 36,643.46 22,592.61 37,684.82 28,940.07 Dec. 2015 30,403.06 Items 5,900.21 8,043.35 2015 2015 28,940.07 340.19 645.23 22,433.44 61.20 3,402.54 (5.03) 492.57 910.79 899.90 709.27 91.58

GROUP Statements - Financial 86,243.96 86,243.96 88,748.31 88,748.31 Audited 11,971.00 49,657.25 13,663.59 10,952.12 11,971.00 51,800.39 13,968.63 10,947.09 Dec. 2014 61.20 20,368.39 PARENT GROUP 14,037.53 3,614.82 - - - - 473.00 877.01 533.39 743.60 89.04 Regulatory 67,615.74 14,681.89 52,933.85 69,551.72 14,703.45 54,848.27 (22,282.81) (20,368.39) 11,971.00 37,670.14 12,070.19 13,505.33 11,971.00 37,670.14 12,070.19 13,505.33 Capital - Dec. 2015

30,403.06 22,447.42 3,700.30 1,409.59 Reconciling (14,681.89) (14,703.45) 15,065.42 29,747.31 15,433.66 30,137.11 360.00 910.79 899.20 645.19 20,368.39 30.58 22,282.81 Items 7,145.30 9,139.76 2014 2014 319.20 572.19 PARENT 61.20 (4.43)

Dec. 2014 Statements Financial 22,282.81 82,681.16 82,681.16 84,985.38 84,985.38 Audited 14,014.25 11,971.00 44,815.44 12,389.39 13,505.33 11,971.00 46,809.90 12,642.38 13,500.90 4,435.33 1,351.90 360.00 877.01 532.01 681.69 30.63 61.20 0.00 - - - series of2013.Infact,theBank exercised itscall per BSPCircular Nos.768seriesof2012and781 eligible astier2capitaluntilthe endof2015only 2016 astheP10.5billionsubordinated notesare is expectedtofurtherdecline inthebeginningof 14.81% CARintheprevious year. TheBank’s CAR showed asubstantialdeclinecompared tothe adequacy ratio(CAR)stoodat12.89%,which LANDBANK’s December 2015 total or capital above thanthe7.5%BSPrequirement. likewise stood at 9.95%, which is comfortably no outstanding AT1 1 capital ratio capital, Tier higher risk-weighted assets. Since the Bank has 2015 duetolowerCET1capitalcombinedwith buffer. TheCET1ratiodeclinedto9.95%in requirement includingthecapitalconservation the 6%minimumBSPrequirement and8.5% at 11.68%,whichisconsiderablyaheadof implementation, theBank’s CET1Ratiostood In 2014,whichistheinitialyearofBaselIII if thebankfallsshortofcapitalrequirement. Capital distributionconstraintswillbeimposed that canbedrawnuponaslossesare incurred. banks buildupcapitalbuffer duringnormaltimes 1 capital.Thebuffer isdesigned toensure that capital consevationbuffer comprisedofCET Basel IIIrequires theestablishmentofa2.5% securities. inclusion ofaccumulatedmarketgainsondebt RWA duetotheexpansionofbalancesheetand weighted assets(RWA), particularlyoncredit There isasignificant increase intotalrisk- TOTAL Risk-Weighted Assets RISK-WEIGHTED ASSETS Market risk-weighted Assets TOTAL Credit Risk-Weighted Assets Deduction: Genloanloss provision permitted in-excess of Credit Risk-Weighted Assets TOTAL Operational Risk-Weighted Assets TOTAL Market Risk-Weighted Assets Foreign Exchange Exposure Equity Exposure Interest Rate Exposure Counterparty RW Assets inthe Trading Books RW Off-balance Sheet Assets RW On-balanceSheet Assets Options Dec. 2015 458,291.80 513,058.54 414,672.49 49,271.32 44,382.12 5,495.42 1,626.63 3,028.19 capitalization inthemedium-term. LANDBANK looksforward tofurtherincreases in as DomesticSystemicallyImportantBank(DSIB), government programs andthebankingsector better appreciation oftheBank’s role invarious NG’s2016 General Appropriations Act. With as capitalinfusionunderR.A.10717ortheFY 2015, theBankwasallocatedaboutP9billion agencies toraisecapital.ByDecember10, various stakeholdersinconcernedgovernment Beginning 2015,LANDBANKhaddiscussionswith Bank’s limitationinraisingcapital. recent regulatory challengescombinedwiththe serious declineforthelastthree yearsgiventhe improve. Moreover, theBank’s capitalratiosare in capital, whichisprecisely what Basel IIIwantsto true totheCET1capital–highestqualityof e.g., assets,depositsandloans.Thisisespecially slower compared tothe othermajoraccounts, The growth rateoftheBank’s capitalisnoticeably the abovecircumstances. option onthesaidnotesinJanuary2016given (928.77) 840.61 165.96 TOTAL Capital Ratio Tier 1Capital Ratio CET 1RATIO Capital Conservation Buffer Minimum CET 1Ratio GROUP - Dec. 2014 418,471.39 469,533.43 382,934.71 45,018.68 (1,873.62) 37,223.88 6,043.37 1,778.54 3,534.36 647.17 186.41 83.30 Dec. 2015 Dec. 2015 456,066.73 510,174.41 412,448.68 12.89% 48,612.27 44,382.12 9.95% 9.95% 3.95% 6.00% 5,495.42 1,626.63 3,028.19 (930.03) 840.61 165.96 GROUP PARENT Dec. 2014 - 14.81% 11.68% 11.68% 5.68% 6.00% Dec. 2014 416,315.90 466,591.15 380,778.93 44,231.88 (1,873.33) 37,223.88 6,043.37 1,778.54 3,534.36 Dec. 2015 647.17 186.41 83.30 12.68% 9.72% 9.72% 3.72% 6.00% PARENT Dec. 2014 14.49% 11.34% 11.34% 5.34% 6.00%

Institutional Viability

87 88 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report GOCCs. Governance for board of directors/trustees of Orientation-Seminar on Public Corporate LCDFI Board wasabletocompletetherequired Before the year ended,each member ofthe of Trustees asLCDFI’s governingboard in2015. The Office ofthePresident appointedanewset ensure proper compliance. Government Procurement PolicyBoard (GPPB)to (PCW), Civil Service Commission (CSC) and the Audit (COA),PhilippineCommissiononWomen courses conductedbytheGCG,Commissionon LCDFI personnelattendedtherequired training liabilities. concerning disclosure requirements andstatutory relevant lawsandregulations, particularly those its systems and processes are compliant with organization intoaGOCC byensuringthat successfully transitionedfrom anon-government GOCCs andgovernmententities.By2015,LCDFI all pertinentrulesandregulations governing and as such, LCDFI endeavors to comply with owned andcontrolled corporation (GOCC), Commission forGOCCs(GCG)asagovernment- In 2013,itwasclassifiedbytheGovernance and CFIs. such asthesmallfarmersandfisherfolk,ARBs, countryside particularlyamongitsprioritysectors commitment tospurdevelopmentinthe The FoundationembodiesLANDBANK’s of thePhilippinesestablishedinMarch 1983. profit corporatefoundation oftheLandBank Foundation, Inc. (LCDFI) is a non-stock, non- The LANDBANKCountrysideDevelopment Development Foundation, Inc. LANDBANK Countryside SUBSIDIARIES FOUNDATIONLANDBANK AND LCDFIProductivity Tool. Cooperatives. participants from 403LANDBANK Borrowing guidelines. LCDFIwasabletotrain1,267training compliance withthenewimplementing monitored 16 batches of training to ensure requested; updated12 training modules;and conducted 79outofthebatchestrainings Capacity BuildingProgram. In2015,LCDFI in theprogram’s systemsandprocesses. Program. Thisresulted toincreased enhancement (DAD) toimplementtheCapacityBuilding and theDevelopmentAssistanceDepartment Lending Program Management Group (LPMG) A closercoordination was donebyLCDFIwiththe million, respectively. and Equityimproved byP0.6million andP0.02 to 178batchesin2014.LCDFI’s Total Resources requested decreased to79batchesascompared P7.1 millionbecausethenumberoftrainings of donations.Total Expensesalsodecreased by accounting treatment particularly inrecognition by P7.41millionmainlyduetothechangein In 2015,theTotal RevenueofLCDFIdecreased based inLeyteandothernearby areas affected was developedtoprovide assistancetofarmers Mini-Farms Program inCY2015.Thisprogram continued itsimplementation oftheBangon Bangon Mini-Farms Program. LCDFIalso errors. test runsthathelpedaddress sometechnical of data started by September 2015 after several over toLCDFIin July 2015.However, population activities. TheLCDFIProductivity Tool wasturned management forimproved monitoringoftraining the LCDFIProductivity Tool aspartofdatabase Department (SID)initiatedthedevelopmentof (LPMG), LCDFIandSystemsImplementation of LendingPrograms ManagementGroup Total Equity Total Liabilities Total Resources Comprehensive Income Net Income After other AfterIncome TaxNet Total Expenses Gross Revenues FINANCIAL HIGHLIGHTS (In PMillion)

In 2015,attherequest 2015 102.93 106.10 17.57 17.95 3.17 0.38 N/A 2014 102.91 105.55 24.75 25.36 2.64 0.61 N/A Growth -29.01% -29.22% -37.70% 20.08% 0.02% 0.52% N/A on November18-19,2015. by theCostalesNature FarmsinMajayjay, Laguna Systems andEMTechnology trainingconducted enrolled them in the Integrated Organic Farming the organic agriculture technology, LCDFI Program are updatedondevelopmentsabout To ensure thatLRPsassignedintheLikasSaka organic agriculture technology. farmer clustersaswellprovide updatesonthe Quezon todetermineneedsofparticipating monitoring meetingswasconductedinNarciso, Peninsula, QuezonProvince. Two batchesof the two(2)farmclustersinTarlac andthe Bondoc “camoteng bagin”andotherfarmmaterialsto For theyear, LCDFIwasabletodistribute based LocalResource Persons(LRPs). implemented by farmer clusters through locally- advocates theorganic agriculture technology Peninsula, QuezonProvince. Theprogram also for farmer clusters in Tarlac and the Bondoc to implement the Likas Saka Program in 2015 Likas Saka Program. LCDFIalsocontinued at Kananga,LeyteonSeptember25,2015. Agricultural PracticesOrientationSeminar”held (DA) for70BASAIfarmer-members isthe“Good in partnershipwiththeDepartmentofAgriculture Another training, conducted by LCDFI this time, Center forLeadershipandChange,Inc.. 2015, was implemented in coordination with the the BASAI.Thesaidtraining,heldonMarch 5-6, the 55participantswhoare farmer-members of Highly Effective People:Mindset Resilience”for LCDFI alsoconductedatrainingon“7Habitsfor Sector Association,Inc.(BASAI). of thefarmer-members oftheBangonAlpha technology aswelladdress emerging concerns implementation oftheorganic mini-farms in variousareas inLeytetoensure proper Iloilo. Two (2)farmauditswere alsoconducted Ormoc, Tacloban andotherareas inLeyteand batches ofmonitoringmeetingsinCapoocan, In 2015,LCDFIwasabletoconductfive(5) family atatime. a meanstoendhungerandpovertyonefarmer farmers tothenaturalmini-farmstechnologyas Bangon Mini-Farms Program is to introduce by theTyphoon Yolanda. Theobjectiveofthe LANDBANK inAugust2015. in theAnnualManilaBayClean-Uporganized by and conservation.LCDFIemployeesparticipated promote environmental awarenes, protection Manila Bayandnearbycoastalareas butalso LANDBANK whichaimsnotonlytoclean-up Inc. (MBSPPI), the flagship CSR program of of theManilaBaySUNSETPartnershipProgram, other LANDBANKSubsidiaries,agreed tobepart responsibility (CSR)initiatives, LCDFI,alongwith CSR Program. Aspartofitscorporatesocial (CMU). (MOSCAT) andtheCentralMindanaoUniversity State CollegeofAgriculture andTechnology agri-related courses at the Misamis Oriental of thisscholarshipprogram are enrolled in Association, Inc.(MMOAI).The20beneficiaries and theMiddleManagementOfficers Philippines EmployeesAssociation(LBPEA) Program supportedbytheLandBank of the Aklan. LCDFIalsoimplementedtheScholarship in Bukidnon,OrientalMindoro, Batangasand the academicperformanceofsixscholarsbased PATNUBAY ScholarshipProgram bymonitoring the administrationofLANDBANK’s GAWAD Scholarships. LCDFIcontinuedtoassistin

Institutional Viability

89 90 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Total Equity Total Liabilities Total Assets AfterIncome TaxNet Total Expenses Gross Profit last year’s volume of dollars traded of USD87.36 USD75.93 millionor86.92per centcompared to USD163.29 million.Thisrepresents anincrease of Forex Division,ontheotherhand,amountedto P9.99 million. Volume of dollars traded by LIBI- higher against last year’s Trading income of P12.92 millionis29.33percentorP2.93 April 01,2015.Trading Incomefortheyearof commission rateonsalaryloanby5%effective The minimal increase was due to reduction of than last year’s P93.64 million net service fees. million isP2.35or2.36percenthigher from insurancebrokering fortheyearofP95.99 million netpremium volume.Netservicefees 0.73 percent compared tolastyear’s P567.90 P572.04 million,anincrease ofP4.13millionor generated netpremium volumeamountingto As atDecember31,2015,LIBI’s Insurance Division of foreign currencies. is toengageinthebusinessofbuyingandselling need lines,amongothers.Itssecondarypurpose engineering, aviation,credit card, floater, pre- and othermiscellaneousinsurancebusinessfrom product lines include fire insurance, life insurance services oninsurance-related activities.Insurance brokerage andmanagement andconsultancy It isengagedinthebusinessofgeneralinsurance insurance requirements of the Bank and its clients. was establishedbyLANDBANKtoservicethe The LANDBANKInsuranceBrokerage, Inc.(LIBI) Inc. LANDBANK Insurance Brokerage, FINANCIAL HIGHLIGHTS (In PMillion) 1,223.8 2015 910.2 313.3 138.1 72.2 46.9 1,115.7 2014 877.9 237.7 133.2 75.7 37.2 Growth (5%) 32% 26% 10% 4% 4% margin of74percent. lower by6percentcompared to CY2014EBITDA of P2.10million.CY2015EBITDAis68percent, million compared tolastyear’s percapita income P1.95 million, lower by 7.27 per cent or P0.153 and ROAof6.79percent.Percapitaincomeis compared tolastyear’s ROEof8.64percent 8.17 percentand13.09respectively, Asset (ROA)is5.90percent,bothwere lowerby on Equity(ROE)is7.93percentwhileReturn CY2014 toP10.6 million inCY2015 million. Return per centorP3.87million,from P6.71millionin increase inprovision forprobable lossesby56.6 of P78.58million.Thisisprimarilyduetothe per centorP7.37millionbelowthe2015target NIAT ofP75.76million.CY2015NIAT was9.27 P3.55 millionor5percentcompared toCY2014 after tax(NIAT) ofP72.2million,adecrease of million. ForCY2015,LIBIrealized anetincome targets fortheyear. teamwork andespritdecorps,MSIattainedits together withthemanagement’s andworkforce’s Through MSI’s Board’s directions and guidance, in MSIoperationsandfinancialperformance. Year 2015 markedcontinuous improvement Masaganang Sakahan, Inc. and 16 corporate accounts with a combined For CY2015,MSIserved35 primary accounts selling. either forconsumptionor for purposesof activity involvesthepurchase ofmilledrice refers tobusinesseswhosecore business market” ofmilledrice.Thisprimarymarket and expanded niche market called the “primary corporate accountsformilledrice,developed policy changes,MSIwithoutforegoing its Through persistentmarketingefforts andsome • Focus on Stakeholders and provided essentialtrainingtoemployees MSI havedevelopedacompetency framework enhancing operationalstructure andpolicies. MSI also focused in 2015 on reviewing and In MSI’s efforts toimprove businessefficiency, 134,778 cavansofpalay. its warehouse capacityandhousedatotalof plant operationwasabletofullymaximize with goodforecasting andinventoryturn-over, percent averagemillingrecovery. More so, with theindustrystandard andstoodat63.43 MSI’s tollmillingprocess remained comparable 2.42 daysfrom theprevious 12days. response toclientsinCY2015anaverageof CY 2014,MSIwasabletoshortenitsdelivery procurement ofadditionalcargo trucksin thestrengthening oflogisticsthroughWith • EnhancingInternalProcesses andLearning assistance tothem. and organization inorder toexpandour holdings thatwillcatertofarmers-cooperatives developed asaLearningFarmforsmallland Sta. Rosa, Nueva Ecija. This property will be purchase ofatwo-hectare property locatedin through theBoard’s stewardship, initiatedthe It wasalsoin2015thatMSImanagement, things right. encouraging andaffirmed thatMSIare doing the highestand1beingpoor, are very mean surveyresults of 4.52, with5being satisfaction tothequalityofitsservices.The ever surveytoassessthelevelofcustomer It isalsoin2015thatMSIconducteditsfirst Program. and contributioninthesuccessofPIK recognition in December 2015 for their support These cooperatives-partners were given due amounting toP141.47million. for LANDBANKloanpaymentofcooperatives Program forPalayandMilledRicecollected cooperatives for its Payment-In-Kind (PIK) Also inthesameyear, MSIassisted25 traded volumeof14,560bags. higher by23percent compared toCY2014 traded volumeof17,941bagsmilledrice, respectively. million, P203.2millionandP131.9 and Equitycorrespondingly increased toP25.6 2015. NetIncomeAfterTax, Total Resources from P262.5millionin2014toP291.6 MSI’s Gross Revenueincreased byP29.2million P114.29 milliontoP131.88in2015. by P17.59millionor15percent from lastyear’s P71.29 million.Stockholder’s equityimproved from lastyear’s P34.65milliontothisyear’s increased by 106 percent or P36.64 million year 2014 of P148.94 million. Total liabilities by 36percent orP54.23 million compared to Total Resources reached P203.16 million,higher P12.52 millionin2014. million or105percent to P25.63millionfrom Net IncomeAfterTax increased byP13.11 P14.40 millionin2014toP35.912015. net operating income rose 149 percent from year’s gross profit of P33.55 million. Asa result, P56.31 million,68percent higherthanlast This enabledMSItoattainagross profit of compared toyear2014ofP262.47million. increased by11percent orP29.18million MSI realized gross revenues ofP291.65million • Financial Highlights capabilities. in order tostrengthen ourhumanresource Total Equity Total Liabilities Total Resources AfterIncome TaxNet Total Expenses Gross Revenues FINANCIAL HIGHLIGHTS (In PMillion) 131.878 203.164 291.646 2015 71.286 25.632 20.400 114.292 148.939 262.467 2014 34.647 12.520 19.147 105.75% 104.73% Growth 15.39% 36.41% 11.12% 6.54%

Institutional Viability

91 92 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report net incomegenerated in2015. also increased by9percent orP43milliondueto from clientsbyP8.0million.Stockholders’Equity government entitiesbyP1.0million andadvances million, accrued expenses by P14.0 million, due to million duetothedecrease inpayablesbyP2.0 liabilities decreased by21percent orP18.42 and increase inreceivables byP43.0million.Total increase inshort-terminvestmentbyP12.0million percent orP24.18millionprimarilyduetothe The company’s total resources increased by 4 P26.34 millionof2014netincomeaftertax. target ofP45.04millionandoverby81percent or million in2015,131percent oftheyear-end LBRDC posted a net income after tax of P58.88 maintenance servicesandrentals ofbuilding. management, air-conditioning unit(ACU) other businessactivitieslikebrokering, property manpower servicesandP37.73millionfrom also generatedP130.39millionrevenue from million inconstructionrevenues. LBRDC accomplishments, LBRDCgeneratedP189.37 of branchoffices and LEAF.With these constructions and forty-six (46) renovations In 2015, LBRDC complted three building maintenance services. sanitation, manpowerandair-conditioning LBRDC alsoprovides housekeeping,janitorial, development oftheBank’s foreclosed assets. brokering services,real estatemanagementand disposal ofnon-performingassetsbyproviding In addition,LBRDChelpstheBankin and LANDBANKEasyAccessFacility(LEAF). automated teller machine booth construction branch construction,relocation andrenovation, construction facilityrequirements particularly Corporation (LBRDC)handlestheBank’s The LANDBANKResources andDevelopment Development Corporation LANDBANK Resources and West Luzonareas. Branches inNorth,Central,SoutheastandSouth South area andatpresent includeLANDBANK cover LANDBANKBranchesinNCRNorthand expanded itsACUmaintenanceserviceswhich also provided manpowerservicestoLIBI.LBRDC subsidiary, Excelconcrete Logistics,Inc.LBRDC (Calumpit andNorzagarayPlants)its and janitorialservicestoHOLCIMPhil.,Inc. LBRDC alsocontinuedproviding manpower well as for LANDBANK Field Units nationwide. Plaza HeadquartersandSatelliteOffices as janitorial and sanitation services for LANDBANK trainings, LBRDCcontinueditshousekeeping, capabilities through various seminars and In thesameyear, LBRDCdevelopedskillsand • Financial Highlights Total Equity Total Liabilities Total Resources applicable) Comprehensive Income(if Net Income After Other AfterIncome TaxNet Total Expenses Gross Revenues (In PMillion) 2015 499.13 568.45 293.20 370.53 69.32 58.88 - 2014 456.52 544.27 320.74 360.02 87.74 32.54 - (20.99)% Growth (8.59%) 80.95% 9.33% 4.44% 2.92% - fifty-two (52)publictransport operatorsfortheir The Corporationwasable to grantcredit to which havebeenusedformore than13years. for thereplacement oftheirexistingvehicles operators and other public transport operators (LTO) to provide financing for UV Express Board (LTFRB) andLandTransportation Office Transportation andFranchisingRegulatory re-fleeting program, atie-upwithLand LLFC hasbeenimplementingatransport for othersectorsasofDecember31,2015. million forlarge corporationsandP171.2million government agencies including GOCCs, P1,112.8 loans facilitiesforSMEs,P1,1407.9million the totalportfolio,P1,009.5millionare lease/ year-ending 2015amountedtoP3.7billion.Of resources intheprevious year. Total Portfoliofor stood atP3.97billionslightlylowerthanthetotal Total resources oftheCorporation atyear-end 2014 netincomeofP139.6million. NIAT for2015wasP5.4millionhigherthanthe to a Net Incomeafter Tax (NIAT) of P145.0 million. against P342.2millionintotalexpensesresulting realized gross revenue ofP536.1millionas For theyear-ending December31,2015,LLFC and agri-businesscompanies. government agencies,corporations by theCorporationare SMEs,ruralbanks, operations. Amongtheprioritysectorsserviced allows themtoexpand,upgradeormodernize provides workingcapital requirements which equipment andothercapitalassets.LLFCalso that supportprioritysectorsintheacquisitionof available various leasing and financial facilities (LLFC) complements LANDBANK by making LANDBANK LeasingandFinanceCorporation Corporation LANDBANK Leasing andFinance million asofDecember31,2015. public transportre-fleeting portfolioofP116.8 transport operators which translated to a total started, theCorporationwasabletoassist134 vehicle requirement in2015.Sincetheprogram Total Equity Total Liabilities Total Resources AfterIncome TaxNet Total Expenses Gross Revenues FINANCIAL HIGHLIGHTS (In PMillion) 1,409.6 2,561.7 3,971.3 2015 145.0 342.2 536.1 1,337.0 2,668.6 4,005.6 2014 139.6 329.5 515.5 Growth (4.01%) (0.86%) 5.43% 3.87% 3.85% 4.00%

Institutional Viability

93 94 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Outstanding CEO– ADFIAP 2015 Awards Global CSRExcellence andLeadership Award since 2006”. performance inleadingandsustainablymanagingtheBank 2015 ADFIAPOutstandingCEOAward forher“sterling LANDBANK President andCEOGildaE.Picowonthe exemplary businessesinvariousaspectsofCorporateSocialResponsibility. recognizes outstandingachievements ineconomic,environmental andsocialdimensionsbyidentifyingrewarding LANDBANK wontheGlobalCSRExcellenceandLeadershipAward from theWorld CSRCongress inIndia.Theaward Awards received by LANDBANKin2015 ADFIAP 2015 AwardsADFIAP Outstanding DevelopmentProjects – Responsive Approaches forInstitutionalNurturing(iTRAIN). Development categoryforitsInnovativeTraining and Development Project” award undertheHumanCapital LANDBANK alsobaggedtheADFIAP“Outstanding GreenLeadership Award Asia TrailblazerAwards2015 Award conferred duringtheAsiaResponsibleEntrepreneurship Awards. LANDBANK’s Environmental Due Diligence(EDD)Program wonforLANDBANKtheGreen Leadership and Awards 2015heldinSingapore. Excellence inLoanOriginationCategoryatthe6thRetailBankerInternationalAsiaTrailblazer Summit LANDBANK wasHighlyCommendedforitsMobileLoanSaver(LMLS)undertheProcess Awards received by LANDBANKin2015

Institutional Viability

95 96 INSTITUTIONAL VIABILITY LANDBANK 2015 Annual Report Asian BankingandFinance Karlsruhe SustainableFinance Award Banking andFinancemagazine. LMLS wasrecognized asMobileBankingInitiativeoftheYear andCore BankingSystemInitiativeoftheYear bytheAsian bagged twoawards from AsianBanking&FinanceRetailAwards 2015. The LANDBANKMobileLoanSaver(LMLS), thefirstpaperlessandfullyelectronic loanapplicationserviceinthePhilippines, finance. LANDBANK wasrecognized bytheGlobalSustainableFinanceNetwork(GSFN)foritscontributionstofieldofsustainable Awards received by LANDBANKin2015 2015 Banking Awards byInternational Banker Bangko Sentral ngPilipinas LANDBANK baggedthree majorawards atthe2015InternationalBankerBankingAwards inLondonincluding: Respondent inSurveyofInflationForecasts.” LANDBANK wasalsorecognized as“Outstanding Stakeholders heldinJuly2015. 2015 Awards Ceremony andAppreciation LunchforBSP Bank undertheCredit Surety Fund(CSF)categoryatthe LANDBANK wasrecognized as“OutstandingCSFLending • • • Best BankingCEOoftheyearAsia2015forLANDBANKPresident andCEOGildaPico Best InnovationinRetailBankingPhilippines2015 Best Commercial BankPhilippines 2015 Awards received by LANDBANKin2015 Philippine Quill AwardPhilippine Communication SkillsDivision,PublicationsCategory. Business Communicators.Newsgramwonunderthe 2014 conferred bytheInternationalAssociationof an Award ofMeritatthePhilippineQuillAwards Newsgram, LANDBANK’s official newsletter received

Institutional Viability

97 98

LANDBANK 2015 Annual Report BOARD Representative, Agrarian Reform Beneficiaries Secretary, Finance Department of Crispino T. Aguelo Cesar V.Purisima Cesar of DIRECTORS Director Chairman Representative, Agrarian Reform Beneficiaries Victor Gerardo J. Gerardo Victor Bulatao Vice Chairman Gilda E.Pico Director End–December 2015 End–December Secretary, DepartmentAgrarian of Reform Virgilio R. Delos ReyesVirgilio R.Delos Director Representative, Private Sector Tomas T. Leon, De Jr. Director Secretary, LaborandEmployment Department of Rosalinda D. Baldoz Director Representative, Private Sector Domingo I.Diaz Director Secretary, DepartmentAgriculture of Proceso J. Alcala Director

99 100

LANDBANK 2015 Annual Report Management Team Agricultural andDevelopmentLending Sector Executive VicePresident Cecilia C.Borromeo Cecilia Corporate ServicesSector Executive VicePresident Julio D. Jr. Climaco, President andCEO Gilda E.Pico Executive VicePresident Andres C. Sarmiento Operations Sector Executive VicePresident Jocelyn D.G. Cabreza Branch BankingSector End–December 2015 End–December Units UndertheBoard andOffice the of President From left: From left: VP Rosemarie M. Osoteo, SVP Liduvino S. Geron, SVPReynauld Villafuerte R. VPRosemarieM.Osoteo,SVP LiduvinoS.Geron, FVP AmeliaS.Amparado, FVPNoemiP. Paz, Dela VPEfren S.Tedor VP Felix Manlangit,FVPTeresita M.Quintana, L. VPVirgilio E.Cheng, SVP Alex A.Lorayes, B.Marquez, VPNoel SVPJosephineG.Cervero, End–December 2015 End–December VPs andup

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LANDBANK 2015 Annual Report Agricultural andDevelopmentLending Sector From left: From left: VP Cielito H. Lunaria, FVP Ma. Celeste A. Burgos,VPVilmaV.Calderon H.Lunaria,FVPMa.Celeste VP Cielito SVP Edward JohnT. Reyes, VPLucilaE.Tesorero, I.Conde VPCharlotte VP ElsieFe NB.Tagupa, FVPLolita T. Silva,SVPJoselito P. Gutierrez, FVP FilipinaB.Monje,SVPDaisy M.Macalino, FVPLeila C.Martin, End–December 2015 End–December VPs andup Branch BankingSector From left: FVP RamonR.Monteloyola, SVPJennifer A.Tantan, S.Concha, VPAna Montesa, L. FVPRandolph FVP Manuel Jose Mari S. Infante, VP Marilou L. Villafranca, A.Juatchon VPNomerlito FVP ManuelJoseMariS.Infante, VPMarilouL. From left: VP MauricioC.Feliciano, VPAlthonC.Ferolino, FVPAnaniasO. Lugo,Jr. VP Khurshid U. Kalabud, C.Leyba, FVPRenato G.Eje,FVPCamilo End–December 2015 End–December VPs andup

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LANDBANK 2015 Annual Report Operations Sector Corporate ServicesSector From left: From left: FVP Conrado B.Roxas,FVP Conrado SVPYolandaD. Jr., V. Hugo, Velasco,FVPAntonio C.Dayrit, VPMa.Eloisa VP Annalene M. Bautista, FVP Catherine RowenaVP AnnaleneM.Bautista,FVPCatherine B.Villanueva, VPVoltaire Pablo P. Pablo III SVP Alan V. Bornas, VP Minda D. Rubio, VP Winston Rochel L. Galang SVP AlanV.Bornas,VPMinda D. Rubio,VPWinstonRochelL. End–December 2015 End–December End–December 2015 End–December VPs andup VPs andup LANDBANK Foundation and Subsidiaries Treasury andInvestmentBankingSector LBRDC Pres. SimeonaS.Guevarra, MSIPres. &CEORoy LLFC Pres. C.Oscillada, ManuelH.Lopez &CEO From left: From left: LCDFI Exec. Dir. Peter Andrew R.Francisco, S. Gutierrez, LIBIGMGeorge SVP Carel D.SVP Carel G.Mota,FVPJamesA.Aldana Halog, VPChristine SVP Christopher Ma. Carmelo Y.Salazar, Ma.Carmelo SVP Christopher VPLolitaAlmazar, M. End–December 2015 End–December End–December 2015 End–December VPs andup

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LANDBANK 2015 Annual Report Agrarian ServicesGroup GroupInternal Audit Gilda E.Pico PRESIDENT &CEO UNITS UNDER THE BOARD AND OFFICEOF THE PRESIDENT Noe SENIOR VICEPRESIDENT Alex A.Lorayes FIRST VICEPRESIDENT Land Transfer Processing Department Bond ServicingDepartment Department Landowners Assistance &Policy Credit Review Department Field Operations Audit Department Audit Department Head Office & Systems Technology Physical SecurityOffice Corporate Secretary DEPARTMENT MANAGER Berbaño Rafael L. DEPARTMENT MANAGER Porfirio A.ReyRicarte ASSISTANT VICEPRESIDENT Vicente RamonA.Castro ASSISTANT DEPARTMENT MANAGER Rene I.Silva DEPARTMENT MANAGER Viemerey E.Mercado ASSISTANT VICEPRESIDENT V.Manuel Constance VICE PRESIDENT Efren S.Tedor SENIOR VICEPRESIDENT Reynauld R.Villafuerte mi P. Paz Dela and DEPARTMENT HEADS List of SENIOROFFICERS Risk ManagementGroup Legal ServicesGroup Compliance ManagementGroup Amelia S.Amparado SENIOR VICEPRESIDENT Reynauld R.Villafuerte FIRST VICEPRESIDENT FIRST VICEPRESIDENT Teresita E.Cheng Banking Legal Services Department Field Legal ServicesDepartment Litigation Department CARP Legal ServicesDepartment Administrative Legal Department Regulatory Compliance Department Anti-Money LaunderingDepartment Department Credit Policy &RiskManagement Department Treasury RiskManagement Department Business RiskManagement LEGAL MANAGER S.Cabañes Cesar VICE PRESIDENT VP Felix Manlangit L. VICE PRESIDENT Rosemarie M.Osoteo VICE PRESIDENT Noel B.Marquez VICE PRESIDENT Virgilio M.Quintana INFORMATION TECHNOLOGY OFFICER Reynaldo MichaelR.Bien COMPLIANCE MANAGEMENTOFFICER Ditas T. Pangilinan DEPARTMENT MANAGER Audie A.Cabusao ASSISTANT VICEPRESIDENT Rosemarie E.Sotelo ASSISTANT VICEPRESIDENT Sofia C.Ladores Strategic PlanningGroup Trust BankingGroup Josephine G.Cervero SENIOR VICEPRESIDENT SVP LiduvinoS.Geron SENIOR VICEPRESIDENT Central MISDepartment Policy Studies Department Corporate Planning&Economics Department Trust BusinessDevelopment Department TrustManagement Account Department Trust Portfolio Management Trust Operations Department Department Third Party Custodianship&Registry Quality ManagementOffice Development Department Customer Service&Product Samuel E.Acuña ASSISTANT VICEPRESIDENT Sheila MarieM.Encabo DEPARTMENT MANAGER Madonna M.Cinco DEPARTMENT MANAGER G.Sanchez Camilo ASSISTANT VICEPRESIDENT Josefino Cerin P. ASSISTANT VICEPRESIDENT Lamelita G.Aquino ASSISTANT VICEPRESIDENT Analiza M.Vasco DEPARTMENT MANAGER Sandra May C.Daraman DEPARTMENT MANAGER Cressida M.Alday-Mendoza DEPARTMENT MANAGER As of 31 December 2015 of 31December As Lending Programs ManagementGroup Corporate BankingGroup EXECUTIVE VICEPRESIDENT C.Borromeo Cecilia LENDING SECTOR AGRICULTURAL &DEVELOPMENT FIRST VICEPRESIDENT Leila C.Martin SENIOR VICEPRESIDENT Edward JohnT. Reyes Fund Sourcing Department Management Department Environmental Program & Department Development Assistance Public SectorDepartment Financial InstitutionsDepartment Corporate BankingDepartment II Corporate BankingDepartment I Department Special Assets Loan Recovery Department Lending Support Department SENIOR MANAGEMENTASSOCIATE Ronnie H.Encarnacion DEPARTMENT MANAGER III E.Calado Prudencio DEPARTMENT MANAGER Melinda C.Cruz ASSISTANT VICEPRESIDENT Emma M.Brosas VICE PRESIDENT H.Lunaria Cielito VICE PRESIDENT Vilma V.Calderon VICE PRESIDENT Lucila E.Tesorero ASSISTANT VICEPRESIDENT Ma. CristinaC.Malab ASSISTANT VICEPRESIDENT Emellie V.Tamayo ASSISTANT VICEPRESIDENT I.Olfindo Carolyn Visayas Lending Group Southern Luzon Lending Group Group Northern &Central Luzon Lending Retail &Mid-Market Lending Group Mindanao Lending Group FIRST VICEPRESIDENT Lolita T. Silva Market Lending Department 2 Small &MediumEnterprises-Mid- Market Lending Department 1 Small &MediumEnterprises-Mid- Program ManagementDepartment II Program ManagementDepartment I Mortgage BankingDepartment II Mortgage BankingDepartment I SENIOR VICEPRESIDENT Daisy M. Macalino FIRST VICEPRESIDENT Filipina B.Monje FIRST VICEPRESIDENT A.Burgos Ma. Celeste SENIOR VICEPRESIDENT Joselito P. Gutierrez DEPARTMENT MANAGER Luz D. Abalos ASSISTANT VICEPRESIDENT Marietta B.Cajuguiran DEPARTMENT MANAGER S.DavidGeneroso DEPARTMENT MANAGER Edgardo S.Luzano VICE PRESIDENT I.Conde Charlotte Davao Lending Center VICE PRESIDENT Elsie Fe NB.Tagupa Cebu Lending Center DEPARTMENT MANAGER Edgardo C.Ramirez DEPARTMENT MANAGER E.Madarang Abel Card &Electronic BankingGroup EXECUTIVE VICEPRESIDENT Jocelyn DG.Cabreza BRANCH BANKINGSECTOR OFW Remittance Group Randolph L. Montesa Randolph L. FIRST VICEPRESIDENT FIRST VICEPRESIDENT Renato G.Eje CCT Program ManagementOffice Branch BankingSupport Department Systems Implementation Department eBanking Support Unit Department Debit Cards & ATM Management Department Cash ManagementSolutions Electronic Products Department Department CreditCard Administration Support Department Overseas Remittance Marketing & Department Domestic Remittance Marketing CCT PROGRAM MANAGER CCT G.Galsim Domingo Conrado ASSISTANT VICEPRESIDENT Dina MelanieR.Madrid VICE PRESIDENT Ana S.Concha ASSISTANT DEPARTMENT MANAGER Noemi T. Pestaño DEPARTMENT MANAGER Marissa B.Pineda DEPARTMENT MANAGER Ninna RichelleH.Veran ASSISTANT VICEPRESIDENT PacificoDe C. Paz, Jr. ASSISTANT VICEPRESIDENT Vivian C.Bedrijo ASSISTANT VICEPRESIDENT Reo S.Andarino ASSISTANT VICEPRESIDENT Jose JamesT. Figueras

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LANDBANK 2015 Annual Report West Visayas Branches Group East Visayas Branches Group Southwest Luzon Branches Group Southeast Luzon Branches Group Central Luzon Branches Group North Luzon Branches Group South NCRBranches Group North NCRBranches Group FIRST VICEPRESIDENT Ramon R.Monteloyola SENIOR VICEPRESIDENT Jennifer A.Tantan South NCRBGClusterC South NCRBGClusterB South NCRBGCluster A North NCRBGClusterC North NCRBGClusterB North NCRBGCluster A VICE PRESIDENT Mauricio C.Feliciano FIRST VICEPRESIDENT Manuel JoseMariS.Infante FIRST VICEPRESIDENT Ananias O. Lugo,Jr. VICE PRESIDENT Villafranca Marilou L. VICE PRESIDENT Althon C.Ferolino VICE PRESIDENT Nomerlito A.Juatchon ASSISTANT VICEPRESIDENT D.Ma. Cielito Valdivia DEPARTMENT MANAGER Mylene B.Macapagal ASSISTANT VICEPRESIDENT Rossana S.Coronel DEPARTMENT MANAGER Myrgie O. Mendoza ASSISTANT VICEPRESIDENT O.Delma Bandiola ASSISTANT VICEPRESIDENT Ma. BelmaT. Turla West MindanaoBranches Group East MindanaoBranches Group Human Resource ManagementGroup Facilities &Procurement ServicesGroup EXECUTIVE VICEPRESIDENT Julio D. Jr. Climaco, CORPORATE SERVICES SECTOR Voltaire Pablo P. Pablo III VICE PRESIDENT Annalene M.Bautista Employee Relations Department VICE PRESIDENT/OIC Department Project Management&Engineering Facilities ManagementDepartment Procurement Department Provident Fund Office Corporate AffairsDepartment Personnel AdministrationDepartment Department Organization Development VICE PRESIDENT Khurshid U. Kalabud FIRST VICEPRESIDENT C.LeybaCamilo ASSISTANT VICEPRESIDENT Joselito B.Vallada ASSISTANT VICEPRESIDENT Emmanuel G.Hio,Jr. VICE PRESIDENT Voltaire Pablo P. Pablo III ASSISTANT DEPARTMENT MANAGER Alexander S.Lazaro ASSISTANT DEPARTMENT MANAGER Hermie C.Villa ASSISTANT VICEPRESIDENT Alwin I.Reyes PROVIDENT FUNDOFFICER Belina A.Llamanzares FIRST VICEPRESIDENT RowenaCatherine B.Villanueva Banking Operations Group EXECUTIVE VICEPRESIDENT Andres C.Sarmiento OPERATIONS SECTOR Banking ServicesGroup FIRST VICEPRESIDENT B.RoxasConrado FIRST VICEPRESIDENT Antonio V.Hugo,Jr. International TradeDepartment Information Department Property Valuation &Credit Department MDS &Collections Management Department ATM &Cash Management Central Clearing Department Department Foreign &DomesticRemittance Loans Implementation Department ASSISTANT VICEPRESIDENT Susan I.Mariano VICE PRESIDENT Galang Winston RochelL. ASSISTANT DEPARTMENT MANAGER Irish D. Tan ASSISTANT DEPARTMENT MANAGER Arnold JoseG.Adolfo ASSISTANT VICEPRESIDENT Reynaldo C.Capa DEPARTMENT MANAGER A.GatdulaCorazon ASSISTANT VICEPRESIDENT Maria EdelwinaD. Carreon Technology ManagementGroup Controllership Group SENIOR VICEPRESIDENT Alan V.Bornas SENIOR VICEPRESIDENT Yolanda D. Velasco Network Operations Department Department Electronic BankingSystems Department Data Center Management IT-Project ManagementOffice Systems &MethodsDepartment OfficeAgrarian Accounting Treasury Operations Department Department Administrative Accounting FinancialDepartment Accounting ASSISTANT VICEPRESIDENT Sazon,Jr.Enrique L. ASSISTANT VICEPRESIDENT E.Dalampan Arthur ASSISTANT VICEPRESIDENT Alden F. Abitona VICE PRESIDENT Minda D. Rubio ASSISTANT DEPARTMENT MANAGER Benjamin P. Villanueva, Jr. DEPARTMENT MANAGER Cruz Jaime G.Dela ASSISTANT VICEPRESIDENT N.Oliva Merceditas ASSISTANT VICEPRESIDENT G.Barretto Celia VICE PRESIDENT Ma. EloisaC.Dayrit Asset &LiabilityManagementGroup SECTOR TREASURY &INVESTMENT BANKING SENIOR VICEPRESIDENT Y.Salazar Ma.Carmelo Christopher Department Liquidity &Reserve Management Department Balance SheetManagement Treasury Support Department Department Investment Sales&Distribution Services Production Control & Administrative IT SecurityOffice Enterprise Systems Department Retail BankingSystems Department ASSISTANT VICEPRESIDENT Ivy C.Sacramento MANAGER Nida S.Pagdanganan VICE PRESIDENT Lolita M.Almazar INFORMATION TECHNOLOGY OFFICER ManabatAlona L. INFORMATION TECHNOLOGY OFFICER SumayloLolita L. INFORMATION TECHNOLOGY MANAGER Marites D. Laserna ASSISTANT VICEPRESIDENT Grace Ofelia Lovely V.Dayo ASSISTANT VICEPRESIDENT Gener Ma. Elizabeth L. Financial Markets Group Investment BankingGroup SENIOR VICEPRESIDENT D.Carel Halog FIRST VICEPRESIDENT James A.Aldana Rates &FX Trading Department Department FX Sales&HedgingSolutions Capital Markets Trading Department Investment BankingDepartment 2 VICE PRESIDENT G.Mota Christine ASSISTANT VICEPRESIDENT Adelfa R.Masacupan ASSISTANT VICEPRESIDENT Ma. Francia O. Titar SENIOR MANAGEMENTASSOCIATE Florence RosalindR.Claveria

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LANDBANK 2015 Annual Report 17 June2016 Supervising Auditor CORA D.MARQUEZ ON AUDITCOMMISSION Our opinionisnotmodifiedin respect oftheabovematter. the CommentofMERALCO. Respondents inIndirect Contemptbefore theSupreme CourtonApril14,2015.OnMay30,2016,LBPfiledits reply to To compel MERALCO to comply with the Supreme Court decision, LBP filed the Petition to Cite MERALCO and other 9,488,394 shares ofstockinRockwellLandCorporation,respectively, were stillunpaidtoLBP. and property dividendsearnedamountingtoP212.647millionandP169.448 in 2015and2014,respectively, and fair value of P1,077.376 million and P861.901 million in 2015 and 2014, respectively. Likewise, the corresponding cash LBP’s Available-for-sale –Domestic-Privateinvestmentsaccountincludeunrestored 3,366,800MERALCOshares with We drawattentiontoNote No.10tothe2015and2014FinancialStatementswhichdisclosed,amongothers,that EMPHASIS OFMATTER with PhilippineFinancialReportingStandards. December 31,2015and2014,itsfinancialperformancecashflowsfortheyearsthenendedinaccordance In ouropinionthefinancialstatementspresent fairly, inallmaterial respects, thefinancialpositionof Group asat OPINION opinion. We believethattheaudit evidencewehaveobtainedissufficient andappropriate toprovide abasisforouraudit the overallpresentation ofthefinancial statements. accounting policiesusedandthereasonableness ofaccountingestimatesmadebymanagement,aswellevaluating an opinionontheeffectiveness oftheentity’s internalcontrol. Anauditalsoincludesevaluatingtheappropriateness of order todesigntheaudit procedures thatare appropriate inthecircumstances, butnotforthepurposeofexpressing auditor considersinternalcontrol relevant totheentity’s preparation andfairpresentation ofthefinancialstatementsin material misstatementofthefinancialstatements,whetherduetofraudorerror. Inmakingthoseriskassessments,the statements. Theprocedures selecteddependontheauditor’s judgement,includingtheassessmentofrisks An auditinvolvesperformingprocedures toobtainauditevidenceabouttheamountsanddisclosures inthefinancial are free formmaterialmisstatement. requirements andplanperformanaudittoobtainreasonable assurance aboutwhetherthefinancialstatements in accordance withPhilippine Public SectorStandards onAuditing.Thosestandards require thatwecomplywithethical Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits AUDITOR’S RESPONSIBILITY enable thepreparation offinancialstatementsthatare free from materialmisstatement,whetherduetofraudorerror. Philippine FinancialReportingStandards, andforsuchinternalcontrol asmanagementdeterminesisnecessaryto Management isresponsible forthepreparation and fairpresentation ofthesefinancialstatementsinaccordance with MANAGEMENT’S RESPONSIBILITY FORTHEFINANCIALSTATEMENTS years thenended,andasummaryofsignificantaccountingpoliciesotherexplanatoryinformation. the statementsofcomprehensive income,statementsofchangesincapitalfundsandcashflowsforthe (referred toasthe“Group”) whichcomprisethestatementsoffinancialpositionasatDecember31,2015and2014, We haveauditedtheaccompanyingfinancialstatementsofLandBankPhilippines(LBP),anditssubsidiaries Manila Land BankofthePhilippines T AUDITOR’S REPORT Independent Land BankofthePhilippines he Board of Directorshe Board of

CORPORATE GOVERNMENT SECTOR Commonwealth Avenue, QuezonCity Cluster 1-BankingAndCredit COMMISSION ON AUDITCOMMISSION Republic ofthePhilippines of Directors. opinion on the fairness of presentation upon completion of such audit in its report to the Board ofthe and the Group of expressed on has Standards and Auditing Philippine the with accordance in Company Parent statements financial the examined has Audit on Commission The are issuedtotheregulators,creditorsandotherusers. The Board of Directors reviews and approves the financial statements before such statements are that estimates accounting making and reasonable inthecircumstances. policies accounting appropriate applying and selecting error, or fraud to financial due whether misstatement, of material from free presentation are that fair statements and preparation the and to designing relevant includes controls internal Thisresponsibility implementing therein. indicated framework reporting financial prescribed the with accordance in therein attached components additional the including 2014, presentation of the financial statements as at and for the years ended December 31, 2015 and the The management of the Land BankofthePhilippines (the Parent) Signed this FVP, ControllershipGroup ANTONIO V. HUGO,JR. STATEMENT OFMANAGEMENT’SRESPONSIBILITY 17th dayofJune2016. Land Bank of the Philippines and Subsidiaries (the Group) FOR FINANCIAL STATEMENTS President andCEO GILDA E.PICO is responsible for the preparation and fair and for thepreparation is responsible ANDRES C.SARMIENTO EVP, Operations Sector and

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LANDBANK 2015 Annual Report ASSETS December 31, 2015and2014(InPhilippinePesos) FINANCIAL POSITION Statements of Land BankofthePhilippines Cash andothercashitems Due from BangkoSentralngPilipinas Due from otherbanks Interbank loansreceivable Securities purchased underagreements toresell Held fortrading Available forsaleinvestments Held tomaturityinvestments Loans andreceivables -net Investments insubsidiaries Investment property -net Property andequipment-net Other resources -net Non-current assetsheldforsale Deferred incometax

Deposit liabilities Liabilities LIABILITIES AND CAPITAL FUNDS Bills payable Unsecured subordinated debt Treasurer’s, Manager’s andCashier’s checks Deposits from otherbanks Derivative liabilities Payment order payable Cash lettersofcredit Marginal deposits Other liabilities

Capital funds Common stock Paid-in surplus Retained earningsfree Retained earningsreserve Undivided profits Revaluation increment Net unrealized gainsonsecurities availableforsale The Notesonpages117to150formpartofthesefinancialstatements. 12 &17 16 &17 NOTE 10 11 13 14 15 22 18 19 20 21 30 4 5 6 7 8 9

1,205,759,870,642 1,117,011,556,749 1,205,759,870,642 1,045,860,316,022 314,934,579,624 122,601,782,887 450,481,755,326 154,131,204,263 88,748,313,893 26,890,158,158 17,799,876,515 83,654,000,000 21,749,930,995 10,500,000,000 22,865,695,463 11,971,000,000 24,508,784,600 27,190,507,032 13,968,627,299 10,947,096,742 5,890,459,969 8,474,023,572 6,406,027,644 6,779,753,581 7,272,783,211 1,937,582,485 65,26,470,264 7,463,598,413 2015 101,098,220 371,034,571 16,757,519 72,431,321 91,205,588 61,200,000 GROUP 0 0

1,058,636,043,863 1,058,636,034,863 973,650,652,171 229,351,506,667 191,341,108,669 402,186,672,410 912,579,675,350 84,985,382,692 24,249,017,453 17,243,602,502 56,390,000,000 14,812,839,661 95,814,859,572 20,241,127,845 19,862,931,058 11,971,000,000 19,673,039,494 27,035,769,169 12,642,378,560 13,500,897,249 10500,000,000 6,385,038,678 6,808,621,138 5,943,264,176 7,798,319,866 1,496,752,187 8,502,862,025 2014 247,326,754 314,270,814 101,098,220 63,857,317 45,033,435 99,378,030 61,200,000 8,621,427 0

1,203,068,216,127 1,116,824,258,538 1,203,068,216,127 1,046,227,858,264 314,934,579,624 154,131,204,263 121,784,243,661 449,046,560,011 86,243,957,589 22,710,855,010 26,889,156,228 17,799,876,515 83,654,000,000 21,349,930,995 10,500,000,000 11,971,000,000 23,273,646,428 26,282,507,032 13,663,584,070 10,952,121,839 5,782,735,575 8,474,023,572 6,290,389,090 6,243,994,847 7,251,396,648 1,937,582,485 6,526,470,264 7,463,598,413 2015 438,775,006 347,281,087 101,098,220 16,757,519 91,205,588 PARENT 0 0 0

1,056,606,887,314 1,056,606,887,314 973,925,728,771 229,351,506,667 191,341,108,669 401,265,228,544 912,951,636,151 82,681,158,543 24,247,688,757 17,243,602,502 56,390,000,000 14,812,839,661 95,025,587,221 20,241,127,845 10,500,000,000 19,766,046,856 11,971,000,000 17,876,609,603 26,837,732,453 12,389,392,660 13,505,325,607 6,285,385,480 6,689,559,753 5,478,999,412 7,765,981,310 1,496,752,187 8,502,862,026 2014 485,826,068 223,573,270 314,270,814 101,098,220 45,033,435 99,378,030 8,621,427 0 0

For theyears endedDecember31, 2015and2014(InPhilippinePesos) COMPREHENSIVE INCOME Statements of Land BankofthePhilippines INTEREST INCOME Loans Investments Due from BangkoSentralngPilipinas Deposit inbanks Others INTEREST EXPENSE Deposit liabilities Unsecured subordinated debt Borrowed funds Others NET INTEREST INCOME PROVISION FOR CREDIT LOSSES NET INTEREST INCOME AFTER PROVISION OTHER OPERATING INCOME Gain from sale/redemption/reclass ofnon-trading ofFA andLiab Foreign exchangegainsfrom revaluation Dividends Fees andcommission Gain from dealingsinforeign currency Miscellaneous -net

OTHER OPERATING EXPENSES Compensation andfringebenefits Loss onfinancialassetsandliabilities-heldfortrading Taxes andlicenses Depreciation andamortization Rent Miscellaneous expenses INCOME BEFOREINCOME TAX PROVISION FORINCOME TAX NET INCOME OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME The Notesonpages117to150formpartofthesefinancialstatements.

FOR CREDIT LOSSES Net unrealized lossesonsecurities available forsale NOTE 17 22

11,414,826,792 23,799,609,005 10,829,494,262 28,248,803,916 (2,553,800,507) 28,115,284,947 37,065,747,827 21,109,422,880 14,240,472,097 13,968,627,299 2,424,170,012 7,335,408,475 1,831,786,246 1,549,824,362 1,718,117,526 7,234,610,030 8,304,826,220 2,562,892,267 7,833,729,859 8,816,943,911 1,552,119,872 816,547,054 616,875,000 133,518,969 565,106,953 772,171,362 806,350,955 829,452,217 271,844,798 11,530,149 48,113,382 17,655,071 2015 944,399 GROUP

19,909,873,384 31,407,134,537 24,802,254,498 24,736,462,866 (2,832,655,029) 18,758,192,212 13,787,367,356 12,642,378,560 9,809,723,531 9,673,579,409 1,810,161,431 4,896,023,103 6,604,880,039 1,429,733,490 1,753,070,671 1,671,014,712 1,300,013,395 1,053,121,588 7,809,096,702 7,586,397,122 2,129,445,971 7,054,348,801 1,144,988,796 868,767,451 838,907,458 602,142,846 429,139,853 740,509,476 818,350,989 11,672,397 65,791,632 2014 1,847,916 1,182,027

11,110,380,302 23,559,487,460 10,802,059,058 36,797,859,796 27,961,774,368 27,856,860,441 (2,553,203,768) 21,085,415,674 13,835,444,024 13,663,584,070 1,656,665,105 2,424,170,012 7,342,236,329 8,836,085,428 1,831,786,246 1,552,119,872 1,453,857,264 7,063,999,257 8,250,565,505 2,532,522,963 7,827,861,561 828,378,360 616,875,000 104,913,927 551,915,699 772,171,362 784,062,577 918,231,706 171,859,954 11,198,867 48,595,739 17,655,071 2015 944,399 PARENT

19,677,443,351 31,146,311,928 24,536,321,605 24,491,258,200 (2,832,200,348) 18,712,072,625 13,443,703,591 12,389,392,660 9,557,192,312 9,645,497,490 1,810,161,431 4,903,215,076 6,609,990,323 1,429,733,490 1,753,070,671 1,671,014,712 1,206,370,245 1,012,501,313 7,664,518,016 7,538,570,875 2,098,969,755 7,054,266,437 1,054,310,931 866,642,756 838,907,458 591,827,585 429,139,853 719,774,222 871,351,483 11,361,740 45,063,405 2014 1,847,916 1,225,033

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LANDBANK 2015 Annual Report

Land Bank of the Philippines Statements of Changes in CAPITAL FUNDS - GROUP For the years ended December 31, 2015 and 2014 (In Philippine Pesos)

Retained Retained Net Unrealized Common Stock Paid-in Earnings Earnings Undivided Revaluation Gain/(Loss) Shares Amount Surplus Free Reserve Profits Increment on Securities T O T A L

Balance, December 31, 2013 1,197,100,000 11,971,000,000 101,098,220 17,401,514,252 24,481,710,645 11,780,443,475 61,200,000 16,333,552,278 82,130,518,870 Net income during the year 12,642,378,560 12,642,378,560 Net unrealized loss on securities (2,832,655,029) (2,832,655,029) Declaration of cash dividends (6,123,822,037) (6,123,822,037) Transfer to retained earnings free 11,780,443,475 (11,780,443,475) -00 Transfer to retained earnings reserve (2,893,000,000) 2,893,000,000 -00 Payment of Trust Operations Business’ judgement Obligation and BSP Penalty (338,941,476) (338,941,476) PFRS/prior period adjustment (491,898,483) (491,898,483) Currency translation difference (197,713) (197,713) Balance, December 31, 2014 1,197,100,000 11,971,000,000 101,098,220 19,673,039,494 27,035,769,169 12,642,378,560 61,200,000 13,500,897,249 84,985,382,692 Net income during the year 13,968,627,299 13,968,627,299 Net unrealized loss on securities (2,553,800,507) (2,553,800,507) Declaration of cash dividends (6,136,074,048) (6,136,074,048) Transfer to retained earnings free 12,642,378,560 (12,642,378,560) 0 Transfer to retained earnings reserve (710,000,000) 710,000,000 0 PFRS/prior period adjustment (991,417,779) (555,225,421) (1,546,643,200) Closure of excess book value over cost of investment in subsidiaries 1,555,035 1,555,035 Closure/Dissolution of LBP Finance Services, Italy 30,718,778 (36,716) 30,682,062 Currency translation difference (1,415,440) (1,546,643,200) Balance, December 31, 2015 1,197,100,000 11,971,000,000 101,098,220 24,508,784,600 27,190,507,032 13,968,627,299 61,200,000 10,947,096,742 88,748,313,893

The Notes on pages 117 to 150 form part of these financial statements. Land Bank of the Philippines Statements of Changes in CAPITAL FUNDS - PARENT For the years ended December 31, 2015 and 2014 (In Philippine Pesos)

Retained Retained Net Unrealized Common Stock Paid-in Earnings Earnings Undivided Gain/(Loss) Shares Amount Surplus Free Reserve Profits on Securities T O T A L

Balance, December 31, 2013 1,197,100,000 11,971,000,000 101,098,220 15,839,741,407 24,176,673,929 11,530,110,968 16,337,525,955 79,956,150,479 Net income during the year 12,389,392,660 12,389,392,660 Net unrealized loss on securities (2,832,200,348) (2,832,200,348) Declaration of cash dividends (6,000,000,000) (6,000,000,000) Transfer to retained earnings free 11,530,110,968 (11,530,110,968) 0 Transfer to retained earnings reserve (3,000,000,000) 3,000,000,000 0 Payment of Trust Operations Business’ judgement Obligation and BSP Penalty (338,941,476) (338,941,476) PFRS/prior period adjustment (493,045,059) (493,045,059) Currency translation difference (197,713) (197,713) Balance, December 31, 2014 1,197,100,000 11,971,000,000 101,098,220 17,876,609,603 26,837,732,453 12,389,392,660 13,505,325,607 82,681,158,543 Net income during the year 13,663,584,070 13,663,584,070 Net unrealized loss on securities (2,553,203,768) (2,553,203,768) Declaration of cash dividends (6,000,000,000) (6,000,000,000) Transfer to retained earnings free 12,389,392,660 (12,389,392,660) 0 PFRS/prior period adjustment (990,940,395) (555,225,421) (1,546,165,816) Currency translation difference (1,415,440) (1,415,440) Balance, December 31, 2015 1,197,100,000 11,971,000,000 101,098,220 23,273,646,428 26,282,507,032 13,663,584,070 10,952,121,839 86,243,957,589

The Notes on pages 117 to 150 form part of these financial statements.

115 116

LANDBANK 2015 Annual Report The Notesonpages 117to150formpartofthesefinancial statements. Securities purchased underagreements toresell Due from otherbanks Due from BangkoSentralngPilipinas Cash andothercashitems CASH AND CASH EQUIVALENTS AT ENDOF YEAR Securities purchased underagreements toresell Due from otherbanks Due from BangkoSentralngPilipinas Cash andothercashitems CASH AND CASH EQUIVALENTS AT BEGINNINGOF YEAR NET INCREASEINCASH AND EFFECTS OFEXCHANGE RATE CHANGESON Increase/(decrease) in: Net cashusedinfinancingactivities Other charges tocapital Cash dividendspaid Net cashprovided by/used ininvestingactivities Decrease/(increase) in: Gain from investmentsecurities Dividends received CASH FLOWS FROMFINANCING ACTIVITIES Additions toNon-current assetsheldforsale Disposals ofinvestmentproperty Additions toproperty andequipment CASH FLOWS FROMINVESTING ACTIVITIES Net cashgeneratedfrom operatingactivities Income taxespaid Net cashgeneratedfrom operations Changes inoperatingassetsandliabilities Operating incomebefore changesinoperating General andadministrativeexpenses Miscellaneous income Gain from dealingsinforeign currency Loss onfinancialassetsandliabilitiesheldfortrading Fees andcommission Interest paid Interest received CASH FLOWS FROMOPERATING ACTIVITIES For theyears endedDecember31, 2015and2014(InPhilippinePesos) CASH FLOWS Statements of Land BankofthePhilippines CASH EQUIVALENTS CASH AND CASH EQUIVALENTS (Increase)/Decrease inoperatingassets assets andliabilities Increase/(Decrease) inoperatingliabilities Bills payable Unsecured subordinated debt Available forsaleinvestments Investment insubsidiaries Held tomaturityinvestments Other liabilities Derivative liabilities Marginal deposits Held forTrading Interbank loansreceivable Treasurer’s, Manager’s andCashier’s Checks Deposit liabilities Other resources Loans andreceivable 413,369,197,751 316,375,562,798 114,993,634,953 110,870,678,045 110,915,500,770 314,934,579,624 229,351,506,667 133,280,640,672 11,940,963,127 (26,786,923,315) (48,109,451,983) (19,363,604,311) (5,850,296,621) 83,654,000,000 26,890,158,158 56,390,000,000 24,249,017,453 34,656,103,899 37,066,536,210 (1,507,240,030) (6,136,074,048) (1,421,478,370) (8,822,846,251) 9,955,598,458 5,890,459,969 6,385,038,678 1,793,017,457 1,831,786,246 1,552,119,872 1,282,252,638 6,212,199,450 6,338,816,089 1,718,117,526 1,549,824,362 (123,707,817) (556,274,013) (772,171,362) 247,697,943 440,830,298 130,557,927 565,106,953 2015 (44,822,725) (45,033,435) 17,655,071 GROUP 0 -

316,375,562,798 279,254,341,872 120,450,123,090 120,645,041,286 (17,663,981,345) (67,417,991,490) 229,351,506,667 249,580,207,968 208,820,521,473 37,121,220,926 (14,336,266,571) (54,910,274,250) (10,206,995,002) (12,465,762,515) (79,418,326,566) (17,300,898,156) 56,390,000,000 24,249,017,453 20,355,853,798 30,288,470,007 9,351,480,322 (3,621,452,274) (6,934,000,000) (6,123,822,037) (1,389,734,583) (2,096,010,252) (6,162,229,505) 6,385,038,678 6,122,000,000 3,196,280,106 1,753,070,671 1,429,733,490 1,671,014,712 6,773,185,124 1,053,121,588 1,300,013,395 (984,707,034) (211,802,830) (194,918,196) (257,359,582) (237,722,901) (429,139,853) 329,338,542 382,031,185 602,142,846 2014 0

431,260,471,427 316,274,580,904 114,985,890,523 111,002,277,828 111,002,277,828 314,934,579,624 229,351,506,667 133,276,222,113 10,120,521,423 11,434,396,882 (26,758,656,440) (47,566,902,160) (19,412,286,155) (6,154,563,799) 83,654,000,000 26,889,156,228 56,390,000,000 24,247,688,757 34,656,700,638 36,798,454,847 (1,547,581,256) (6,000,000,000) (1,332,470,081) (8,842,038,516) 1,338,491,438 5,782,735,575 6,285,385,480 1,393,017,457 1,831,786,246 1,552,119,872 6,212,199,450 6,338,816,089 1,656,665,105 1,453,857,264 (123,707,817) (556,274,013) (772,171,362) 440,830,298 247,697,943 551,915,699 2015 129,531,166 (45,033,435) 47,051,062 17,655,071 PARENT 0 0

316,274,580,904 279,114,453,741 119,704,312,989 119,849,308,263 (17,244,407,064) (67,052,849,433) 229,351,506,667 249,497,117,699 208,893,497,289 37,160,127,163 (54,924,404,512) (14,337,154,360) (10,206,995,002) (79,882,999,597) (12,465,762,515) (17,294,406,868) 56,390,000,000 24,247,688,757 20,354,849,364 30,025,853,449 8,946,241,874 (3,337,452,273) (6,934,000,000) (6,000,000,000) (2,130,873,982) (6,166,763,997) 6,285,385,480 6,122,000,000 3,140,486,678 1,753,070,671 1,429,733,490 1,671,014,712 6,809,251,494 1,012,501,313 1,206,370,245 (972,954,791) (214,756,850) (998,082,551) (144,995,274) (257,359,582) (237,722,901) (429,139,853) 320,800,638 382,031,185 591,827,585 2014 0

instruments. Cash and cash equivalents and short-term investments – Carrying amounts approximate fair values due to the relatively short-term maturity of these The methodsandassumptionsusedby theGroup inestimatingthefairvalueof financialinstrumentsincludethefollowing: Fair Value Measurement was determined. transactions. Non-monetaryitemsmeasured atfairvalueinaforeign currency are translated usingtheexchangeratesatdatewhenfairvalue Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial currency denominatedassetsandliabilitiesare credited toorcharged againstoperationsinthe yearinwhichtherateschange. (PDS) closingrateprevailing atthestatementoffinancialpositiondate. Foreign exchangedifferences arisingfrom revaluation andtranslationofforeign- the foreign currency-denominated monetaryassetsandliabilitiesintheRBUare translatedinPhilippinePesobasedonthe Philippine DealingSystem The booksofaccountstheRBUare maintainedinPhilippinePeso,whilethoseoftheFCDUare maintainedinUSD.Forfinancial reporting purposes, Transactions andbalances Foreign currency translation Significant Accounting Policies All significantinter-company balancesandtransactionshavebeeneliminatedinconsolidation. The consolidatedfinancial statementswere prepared usingconsistentaccounting policiesforliketransactionsandothereventsinsimilarcircumstances. The consolidatedfinancialstatementsincludetheofParent andthefollowingwholly-ownedsubsidiaries: 2.3 BasisofConsolidation Standards (PFRS). The consolidatedfinancialstatementsoftheGroup andoftheParent havebeenprepared incompliancewiththePhilippineFinancialReporting 2.2 StatementofCompliance The consolidated financial statements are presented inPhilippine peso, andall valuesare rounded tothe nearest pesoexceptwhen otherwiseindicated. rate prevailing atendofthe year. accounts andforeign currency-denominated accountsintheRBU are translatedinPhilippinePesobasedontheDealingSystem(PDS)closing The functional currency of RBU and FCDU is Philippine Peso and United States Dollar (USD), respectively. For financial reporting purposes, FCDU financial statementsindividuallyprepared fortheseunitsare combinedaftereliminatinginter-unit accounts. The financialstatementsoftheParent includetheaccountsmaintainedinRegularBankingUnit(RBU)andForeign Currency DepositUnit(FCDU).The through profit orloss(FVPL),available-for- sale(AFS)investments,andderivativefinancialinstruments thathavebeenmeasured atfairvalue. The accompanying financial statements have been prepared on ahistorical cost basis exceptforfinancial assets andfinancial liabilities at fairvalue 2.1 BasisofFinancialStatementsPreparation 2. Significant Accounting Summaryof Policies those ofthesubsidiarieswere approved forissuebytheirrespective Board ofDirectors onvariousdates. The accompanyingcomparativefinancialstatementsoftheParent were authorizedforissuebytheParent’s Board ofDirectors onFebruary19,2016while The Parent’s principaloffice ofbusinessislocatedattheLandBankPlaza,1598M.H.DelPilarcornerDr. J.QuintosStreets, Malate,Manila. services, treasury andcapitalmarketoperations,tradeservices,paymentscashmanagement,trustservices. services topersonal,commercial, corporateandinstitutionalclients.TheGroup’s products andservicesincludedeposit-taking,lendingrelated The Parent anditssubsidiaries(Group) are engagedinthebusinessofbanking,financing,leasing, real estate,insurancebrokering andother related the governmentwhilerest camefrom privatedepositors. local governmentunitsandgovernment-ownedcontrolled corporations.AsofDecember31,2015,67percent ofthedepositportfoliocamefrom The Parent isadepositorybankofthegovernmentanditsvariousinstrumentalities.TheParent servicestherequirements ofthenationalgovernment, banking powerstosustainitssocialmissionofspurringcountrysidedevelopment. financial intermediaryoftheLandReformProgram ofthegovernment.Later, itbecamethefirstuniversalbankbycharterwithexpandedcommercial The LandBankofthePhilippines(Parent) isafinancialinstitutionwholly-ownedbytheNationalGovernment.TheParent wasestablishedin1963asthe 1. Corporate Information (All amountsinPhilippinePeso unlessotherwisestated) FINANCIAL STATEMENTS Notes to Land BankofthePhilippines Masaganang Sakahan, Inc. LBP Resources andDevelopmentCorporation LBP Insurance Brokerage, Inc. LBP Leasing andFinance Corporation Name Incorporation Philippines Philippines Philippines Philippines Country of Country of Trading Insurance brokerage Real estate Leasing Principal Activity Philippine peso Philippine peso Philippine peso Philippine peso Functional Currency

117 118

LANDBANK 2015 Annual Report with theintentionofimmediateorshort-term resale and are notclassifiedasother financialassetsheldfortrading,designatedasAFSinvestments. These are financialassetswithfixedordeterminablepayments andfixedmaturitiesthat arenotquotedinanactivemarket.They arenot entered into (b) Loansandreceivables, amounts duefrom BSPandotherbanks,interbankloansreceivable andsecuritiespurchased underresale agreements classification are debtandequitysecuritieswhichhavebeenacquired principallyforthepurposeofsellingor repurchasing inthenearterm. expense’, respectively, whiledividendincomeisrecorded in‘Dividends’whentherighttoreceive paymenthasbeenestablished.Includedinthis to theheldfortradingpositionsare recognized in‘GainonFinancialAssetsHFT’.Interest earnedorincurred isrecorded in‘Interest income’or‘Interest Financial assetsheldfortradingare debtandequitysecuritiesrecorded inthestatementoffinancialpositionatfairvalue.Changesvalue relating a) Heldfortrading The Parent didnotapplyhedgeaccountingtreatment foritsderivative transactions. (loss) account. valuation ispositiveandundertheliabilityaccount“Derivativeswithnegative fairvalue”ifthemarketvaluationisnegativecontraforeign exchangegain/ methods. Anygains/(losses)arisingfrom themarketvaluationare bookedunderassetaccount“Derivativeswithpositive fairvalue“ifthemarket Derivative instruments are booked at its notional amount under contingent account on trade date and subsequently measured using the mark to forward the statementofcomprehensive income.Derivativesare carriedasassetswhenthefairvalueispositiveandliabilities thefairvalueisnegative. fair value.Anygainsorlossesarisingfrom changesinfairvaluesofderivatives(exceptthoseaccountedforasaccountinghedges)are takendirectly to financial instrumentsare initially recorded atfairvalueonthedatewhich thederivativecontractisentered intoandare subsequently remeasured at The Parent enters into derivative contracts such as currency forwards andcurrency swaps to manageitsforeign exchangeexposure. Thesederivative Derivative Instruments and otherrelevant valuation models. techniques includenetpresent valuetechniques,comparisontosimilarinstrumentsforwhichmarketobservablepricesexist,optionspricingmodels, For allotherfinancialinstrumentsnotlistedinanactivemarket,thefairvalueisdeterminedbyusingappropriate valuationtechniques. Valuation not beenasignificantchangeineconomiccircumstances sincethetimeoftransaction. current bidandaskingprices, the price of themost recent transaction is used becauseit provides evidenceofthecurrent fair value aslong there has price quotations(bidforlongpositionsandaskshortpositions),withoutanydeductiontransactioncosts.Intheabsenceofanavailable The fair value for financial instruments traded in active markets at the statement of financial position date is based on their quoted market price or dealer Determination offairvalue recognition and,where allowedandappropriate, re-evaluates suchdesignationateveryreporting date. investments were acquired and whether they are quoted in an active market. Management determines the classification of its investments at initial are classified as financial liabilities at FVPL and financial liabilities carried at amortized cost. The classification depends on the purpose for which the assets inthefollowingcategories:financialatFVPL,HTMinvestments,AFSandloans receivables whilefinancialliabilities assets andfinancialliabilitiesvaluedatFVPL,theinitialmeasurement offinancialinstrumentsincludestransactioncosts.The Group classifiesitsfinancial All financialinstruments,includingtradingandinvestmentsecuritiesloans receivables, are initiallymeasured atfairvalue.Exceptforfinancial Initial recognition offinancial instruments by theGroup oradvanced totheborrowers. basis. Derivatives are recognized on trade date basis. Deposits, amounts due to banksand customers and loans are recognized when cash is received recognized onthesettlement date-thethatanassetisdelivered toorbytheGroup. Securitiestransactionsare alsorecognized onsettlementdate Purchases orsalesoffinancial assetsthat require deliveryofassetswithinthe timeframeestablishedby regulation orconventioninthemarketplaceare Date ofrecognition Financial Instruments liabilities orfrequency oftherepricing. rate liabilitieswithrepricing periodsbeyondthree months, thecarryingvaluesapproximate fairvaluesduetotherelatively shorttermmaturitiesofthe borrowings withmaturitiesconsistentthoseremaining fortheliabilitybeingvalued.Exceptlong-termfixedratesliabilitiesandfloating Liabilities –Fairvaluesare estimatedusingthediscountedcashflowmethodologyParent’s current incremental borrowing ratesforsimilar Obligations torepurchase securitiesare recorded atcostwhichapproximates fairvalue. Group’s totalportfolioofsecurities. Others –Quotedmarketpricesare notreadily availablefortheseassets.Theyare notreported atfairvalueandare notsignifican FINANCIAL STATEMENTS the current marketrateofreturn forasimilarfinancialasset. amount ofthelossismeasured asthedifference betweentheasset’s carryingamountandthepresent valueofestimatedfuture cashflowsdiscountedat reliably measured, oronaderivativeassetthatislinkedtoandmustbesettledbydelivery ofsuchunquotedequityinstrumenthasbeenincurred, the If there isobjectiveevidencethatanimpairmentlossonunquoted equityinstrumentsthatare notcarriedatfairvaluebecauseitscannotbe Assets CarriedatCost credit losses’inthestatementofcomprehensive income. of theoriginalloanandpresent valueoftherestructured cashflows,discountedattheoriginaleffective interest rate,is recognized in‘Provision for an individualorcollectiveimpairmentassessment,calculatedusingtheloan’s originaleffective interest rate.Thedifference betweentherecorded value continuously reviews restructured loanstoensure thatallcriteriaare metandthatfuture paymentsare likelytooccur. Theloanscontinuetobesubject and theagreement ofnewloanconditions.Oncethetermshavebeenrenegotiated, theloanisnolongerconsidered pastdue.Management Where possible,theGroup seekstorestructure loansratherthantotakepossessionofcollateral.Thismayinvolveextendingthepaymentarrangements Restructured loans have beencompletedandtheamountoflosshasdetermined.Subsequent recoveries ofamounts previously written off are charged toincome. When aloanisuncollectible,itwrittenoff againsttherelated allowanceforloanimpairment.Such loansare writtenoff after allthenecessaryprocedures to reduce anydifferences betweenlossestimatesandactualexperience. of lossesinthegroup andtheirmagnitude).Themethodologyassumptionsusedforestimatingfuture cashflowsare reviewed regularly bytheGroup from periodto(such aschangesinunemploymentrates,property prices,paymentstatus,orotherfactorsindicativeofchangesintheprobability Estimates ofchangesinfuture cashflowsforgroups ofassetsare madeto reflect andbedirectionally consistentwithchanges in relatedobservabledata the effects ofconditionsin thehistoricalperiodthatdonotexistcurrently. observable datatoreflect theeffects ofcurrent conditionsthatdidnotaffect theperiodonwhichhistoricallossexperienceisbasedandto remove the assetsandhistoricallossexperienceforwithsimilarcredit riskcharacteristics.Historicallossexperienceisadjustedonthebasisofcurrent Future cashflowsinagroup offinancialassetsthat are collectivelyevaluated forimpairment are estimatedonthebasisofcontractualcashflows foreclosure lesscostsforobtainingandsellingthecollateral,whetherornotforeclosure isprobable. The calculationofthepresent valueoftheestimatedfuture cashflowsofacollateralizedfinancialasset reflectsthecashflowsthatmay result from recovery andallcollateral hasbeenrealized. account, reduced. TheHTM investments,togetherwiththeassociatedallowanceaccounts,are writtenoff whenthere isnorealistic prospect offuture any amountsformerlycharged are credited to‘Provision forcredit andimpairmentlosses’inthestatementofcomprehensive incomeandtheallowance If, in a subsequent year, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was recognized, impairment lossisthecurrent effective interest ratedeterminedunderthecontract. The amountoflossischarged tocurrent operations.IfaloanorHTMinvestmenthasvariableinterest rate,thediscountrateformeasuringany of anallowanceaccount. that havenotbeenincurred) discountedatthefinancialasset’s originaleffective interest rate.Thecarryingamountoftheassetis reduced through use measured asthedifference betweentheasset’s carryingamountandthepresent valueoftheestimatedfuture cashflows(excludingfuture credit losses If there isobjectiveevidence thatanimpairmentlossonloansandreceivables carriedatamortizedcosthasbeenincurred, theamountoflossis is orcontinuestoberecognized are notincludedinacollectiveassessmentforimpairment. according to the contractual terms of the assets being evaluated. Assets that are individually assessed forimpairmentandwhich an impairmentloss characteristics are relevant totheestimationoffuture cashflowsforgroup ofsuchassetsbybeingindicativethedebtors’abilitytopayallamountsdue the Group’s scoringprocess thatconsidersassetterm,industryandcollateral)group ofassetsiscollectivelyassessedforimpairment.Those financial asset,whethersignificant ornot,theassetisincludedina group offinancialassetswithsimilar creditriskcharacteristics(i.e.,onthebasisof or collectivelyforassetsthatare notindividually significant. Ifitisdetermined thatnoobjectiveevidenceofimpairmentexistsforindividuallyassessed The Group firstassesseswhetherobjectiveevidenceofimpairmentexistsindividuallyforfinancialassetsthat are individuallysignificant,and future cashflowsofthefinancialassetor group offinancialassetsthatcanbe reliablyestimated. a result ofoneormore eventsthatoccurred aftertheinitialrecognition oftheasset(a‘lossevent’)andthatlosseventhasanimpactonestimated A financialasseto

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LANDBANK 2015 Annual Report Transportation equipment Leasehold rights Furniture, fixtures andequipment Buildings *EUL shalldepend on thelengthoflease.Itshallbe the periodofleaseorEUL assets,asgiven,whicheverisshorter. Depreciation andamortizationiscalculatedonastraight-linebasis overtheestimated usefullife(EUL)oftheproperty andequipmentasfollows: normally charged toprofit andlossintheperiodwhichcostsare incurred. and locationforitsintendeduse.Expenditures incurred afterthefixedassetshavebeenputintooperation,suchas repairs andmaintenancecosts,are The initialcostofproperty andequipmentcomprisesitspurchase priceandanydirectly attributablecostofbringingtheassettoitsworkingcondition included inthestatementofcomprehensive income. retired, theircostandaccumulateddepreciation andamortizationare eliminatedfrom theaccountsandanygainorlossresulting from theirdisposalis Property andequipmentare carriedatcostlessaccumulateddepreciation andamortizationanyimpairmentinvalue.When theassetsare soldor Property andEquipment separate financialstatements.Theseare carried inthestatementoffinancialpositionatcostlessanyimpairmentvalue. The Parent’s investmentsinsubsidiaries andentitiesinwhichtheParent hascontrol are accountedforunder the costmethodofaccountingin Investments inSubsidiaries inflows thatare largely independentofthosefrom otherassetsorgroup ofassets. cash-generating unit’s fairvaluelesscoststosellanditsinuseisdetermined foranindividualasset,unlesstheassetdoesnotgeneratecash recoverable amount,theasset isconsidered impaired andiswrittendowntoitsrecoverable amount.Recoverableamountisthehigherofanasset’s or Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amountofan asset exceeds its At eachreporting date,the Group assesseswhetherthere isanyindicationthat theproperty andequipmentinvestmentproperties maybeimpaired. Impairment ofProperty andEquipment,InvestmentProperty andOtherResources when material. reflected inthefinancial statements.Post-year-end eventsthat are nonadjustingevents,ifany, are disclosedintheNotestofinancialstatements, Any post-year-end eventthatprovides additionalinformationabouttheGroup’s position atthestatementoffinancialpositiondate(adjustingevent)is Subsequent Events statements where theGroup actsinafiduciarycapacitysuchasnominee,trusteeoragent. Assets andincomearisingfrom fiduciaryactivitiestogetherwith related undertakingsto return suchassetstocustomersare excludedfrom thefinancial Fiduciary Activities simultaneously. a legallyenforceable righttooffset therecognized amountsandtheGroup intendstoeithersettleonanetbasis,orrealize theassetandliability Offsetting offinancialassets andfinancialliabilities are onlymadeandthenetamount are reportedinthestatementoffinancialpositionwhenthere is Offsetting financialinstruments in therespective carrying amounts isrecognized inprofit orloss. modified, such anexchange or modification is treated as aderecognition of the original liability and the recognition of a newliability, andthe difference existing financialliabilityis replaced byanotherfrom thesamelenderonsubstantiallydifferent terms,orthetermsofanexistingliabilityare substantially Financial Liabilities.Derecognition ofafinancialliabilityhappenswhentheobligationunderisdischarged orcancelledexpired. Whenan and themaximumamountofconsiderationthatGroup couldberequired torepay. Continuing involvementthattakestheformofaguaranteeovertransferred assetismeasured attheloweroforiginalcarryingamountasset rewards oftheassetnortransferred control oftheasset,assetisrecognized totheextentofGroup’s continuinginvolvementintheasset. Where theGroup hastransferred itsrightstoreceive cashflowsfrom anassetandhasneithertransferred nor retained substantiallyalltherisksand • • • Financial Assets.Afinancialasset(or, where applicable,apartoffinancialassetor group ofsimilarfinancialassets)is derecognized when: Derecognition ofFinancialAssetsandLiabilities through thestatementofcomprehensive income. increase canbeobjectivelyrelated toaneventoccurring aftertheimpairmentlosswasrecognized inprofit orloss,theimpairmentlossis reversed the statementofcomprehensive income.If,inasubsequentperiod,thefairvalueofdebtinstrumentclassifiedasAFSinvestmentincreases andthe of comprehensive income.Impairmentlossesonequityinstrumentsrecognized inthestatementofcomprehensive incomeare notreversed through fair value,lessanyimpairmentlossonthatsecuritypreviously recognized inprofit orloss–is removed from equityand recognized inthestatement If anAFSinvestmentisimpaired, anamountcomprisingthedifference betweenitscost(netofanyprincipalpaymentandamortization)current AFS Investments FINANCIAL STATEMENTS asset, or(b)hasneithertransferred norretained substantiallyalltherisksandrewards oftheasset,buthastransferred control oftheasset. the Group hastransferred itsrightstoreceive cashflowsfrom theassetand either(a)hastransferred substantiallyalltherisksand rewards ofthe party undera‘pass-through’ arrangement;or the Group retains theright to receive cash flows from the asset,buthas assumedan obligationtopaythem infull withoutmaterialdelayto athird the rightstoreceive cashflowsfrom theassethaveexpired;

Number of Yearsof Number 10-30* 10 -30 7 -10 5 -10 Interest isrecognized onimpaired loansandotherfinancial assetsbasedontherateusedtodiscountfuture cashflowstotheirnet present value. unless collectibilityisindoubt. Interest incomeandfeeswhichare considered anintegralpartoftheeffective yieldofafinancialassetare recognized usingtheeffective interest method, Revenue Recognition rate ofreturn. Lease incomeunderfinanceleaseis recognized overthetermofleaseusingnetinvestment method before tax,which reflects aconstantperiodic (b) LBPGroup isthelessor (a) LBPGroup isthelessee Leases employees. The Group maintainsadefined contributionplanwhichprovides forestimatedpensionbenefitsonitscontributory retirement plancoveringall regular Employee Benefits realized. Thecarryingamount ofthedeferred taxassetisreviewed ateachreporting dateandreduced, ifappropriate. against whichtheassetcanbeutilized.Deferred taxassetsare reduced to theextentthatitisnolongerprobable thattherelated taxbenefitwillbe enacted asofthereporting date.Adeferred taxassetisrecognized only totheextentthatitisprobable thatfuture taxable profits willbeavailable expected mannerofrealization orsettlementofthecarryingamountsassetsandliabilities,usingtaxratesthathavebeenenactedsubstantially (NOLCO) andtheminimumcorporateincometax(MCIT)overregular corporateincometax.Theamountofdeferred taxprovided isbasedonthe liabilities forfinancial reporting purposesandtheamountusedfortaxationcarryforward benefitsofthenetoperatinglosscarryover Deferred taxassetsare recognized forthefuture taxconsequencesattributabletotemporarydifferences betweenthecarryingamountsofassetsand enacted orsubstantiallyasofthereporting date,andanyadjustmenttotaxpayableinrespect toprevious years. that itrelates toitemsrecognized directly inequity. Current incometaxistheexpectedpayableontaxableforyearusingrates Income taxontheprofit for theyearcomprises current taxonly. Incometax is recognized inthestatementofcomprehensive incomeexcepttotheextent Income Taxes Costs associatedwithdevelopingormaintainingcomputersoftware programs are recognized asanexpenseincurred. amortized onthebasisofexpectedusefullives(three tofiveyears). Acquired computersoftware licensesare capitalizedonthebasisofcostsincurred toacquire andbringtousethespecificsoftware. Thesecostsare Computer software Intangible Assets Depreciation iscalculatedonastraight-linebasisover10to30years,whichtheestimated usefullifeoftheinvestmentproperties. to incomeintheperiodwhichcostsare incurred. Expenditures incurred afterthefixedinvestmentproperties havebeenputintooperation,suchas repairs andmaintenancecosts,are normallycharged gains orlossesonderecognition ofaninvestmentproperty are recognized intheprofit andlossintheyearofderecognition. either beendisposedoforwhentheinvestmentproperty ispermanentlywithdrawnfrom useandnofuture benefitisexpectedfrom itsdisposal.Any investment properties are stated at cost less accumulated depreciation and impairment loss. Investment properties are derecognized when they have Investment properties are measured attheirfairvalueasthedeemedcostallowedunderPFRS1andPAS 40.Subsequenttoinitialrecognition, classified asinvestmentproperty. Investmentproperty compriseslandandbuilding. Property acquired bytheGroup insettlementofloansthrough foreclosure ordationinpayment,andthatisnotsignificantlyoccupiedbytheGroup, is Investment properties amortization are consistentwiththeexpectedpatternofeconomicbenefitsfrom itemsofproperty andequipment. The usefullifeanddepreciation andamortizationmethodsare reviewed periodicallytoensure thattheperiodandmethodofdepreciation and difference betweenthegross receivable andthepresent valueofthereceivable isrecognized asunearnedincome. (ii) Financelease-whenassetsare leasedoutunderafinancelease,thepresent valueofthelease paymentsis recognized asa receivable. The Rental incomeunderoperatingleasesisrecognized inthestatementofcomprehensive incomeonastraight-linebasisovertheperiodoflease. (i) Operating lease - properties leased out under operating leases are included in investment property in the statement of financial position. periodic rateofinterest ontheremaining balanceoftheliabilityforeach period. The interest elementofthefinancecostischarged tothestatementofcomprehensive incomeovertheleaseperiodsoas to produce aconstant finance balanceoutstanding.Thecorresponding rental obligations,netoffinancecharges, are includedindeferred credits andotherliabilities. minimum lease payments. Each lease payment is allocated between the liability and the finance charges so as to achieve a constant rate on the Finance leasesare capitalized atthelease’s commencementattheloweroffairvalueleasedproperty andthepresent valueofthe (ii) Financiallease-leasesofassetswhere theLBPGroup hassubstantiallyalltherisksandrewards ofownershipare classified asfinanceleases. the statementofcomprehensive incomeonastraight-linebasisovertheperiodoflease. operating leases. Payments, including prepayments, madeunder operating leases(netofanyincentivesreceived from the lessor) are charged to (i) Operatinglease- leases inwhichsubstantially all risksandrewards of ownershipare retained byanotherparty, thelessor, are classifiedas

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LANDBANK 2015 Annual Report standard isissuedbytheInternationalAccountingStandards Board (IASB)andanevaluationoftherequirements ofthefinalRevenuestandard against subcontractors. TheSecuritiesandExchange Commission(SEC)andtheFRSChavedeferred theeffectivity ofthisinterpretation untilthefinal Revenue This Interpretation coversaccountingforrevenue andassociatedexpensesbyentitiesthat undertaketheconstructionofreal estatedirectly orthrough Philippine Interpretation IFRIC15,Agreements fortheConstructionofRealEstate by theBoard ofAccountancy(BOA). when thefinalversionofPFRS9wasadoptedbyPhilippineFinancialReporting Standards Council (FRSC).Suchadoption,however, isstillforapproval PFRS 9(2010version)iseffective forannualperiodbeginningonorafterJanuary1,2015.Thismandatory adoptiondatewasmovedtoJanuary1,2018 Group’s financialassets,but will potentiallyhavenoimpactontheclassificationandmeasurement offinancialliabilities. separation rulesandthecriteriaforusingFVO.Theadoptionoffirstphase ofPFRS9willhaveaneffect ontheclassificationandmeasurement ofthe PAS 39classificationandmeasurement requirements forfinancialliabilitieshavebeencarriedforward intoPFRS9,includingtheembeddedderivative presentation ofthefairvaluechangeinrespect oftheliability’s credit riskinOCIwouldcreate orenlarge an accountingmismatchinprofit orloss.Allother liability thatisattributabletochangesincredit riskmustbepresented inOCI.Theremainder ofthechangeinfairvalueispresented inprofit orloss,unless Equity financialassetsheldfortradingmustbemeasured atfairvaluethrough profit orloss.ForFVOliabilities,theamountofchangeinfairvalue ofa fair valuethrough profit orloss.Allequityfinancialassets are measured atfairvalueeitherthrough othercomprehensive income(OCI)or profit orloss. to cashflowsthatare solelypaymentsofprincipalandinterest ontheprincipaloutstanding.Allotherdebtinstrumentsare subsequentlymeasured at a business model that has the objective to hold the assets to collect the contractual cash flows andits contractualterms give rise,on specified dates, initial recognition. Adebtfinancialassetmay, ifthefairvalueoption(FVO)isnotinvoked,besubsequentlymeasured atamortizedcostifitisheldwithin liabilities asdefinedin PAS 39,FinancialInstruments:RecognitionandMeasurement. PFRS9 requires allfinancialassetstobe measured atfairvalue PFRS 9(2010version)reflects thefirstphaseon replacementof PAS39andappliestotheclassificationmeasurement offinancialassetsand PFRS 9,FinancialInstruments–ClassificationandMeasurement (2010version)– New Standards of thesenewandamendedstandards tohavesignificantimpactonitsfinancialstatements. The Group intendstoadopt thefollowingstandards whentheybecomeeffective. Exceptasotherwiseindicated,theGroup doesnotexpecttheadoption New Standards, Amendments andInterpretations notyetadopted performance. can bemeasured atinvoice amountswhentheeffect ofdiscountingisimmaterial.ThisamendmenthasnoimpactontheGroup’s financialpositionor Measurement. Theamendment toPFRS13iseffective immediatelyanditclarifiesthatshort-term receivables andpayableswithnostatedinterest rates In the2010-2012annualimprovement cycle,sevenamendmentstosixstandards were issued,whichincludedanamendmenttoPFRS13,FairValue Annual Improvements toPFRS/PAS (2010-2012cycle) to theGroup sincenoneof theentitiesinGroup qualifiesasaninvestmententityunderPFRS10. The exceptiontoconsolidationrequires investmententitiestoaccountforsubsidiariesatfairvaluethrough profit orloss.Thisamendmentisnot relevant These amendmentsprovide anexceptiontotheconsolidationrequirement forentitiesthatmeetthedefinitionofaninvestmententityunderPFRS10. Investment Entities(AmendmentstoPFRS10,12andPAS 27) provided PFRS13isalsoapplied. TheamendmentshavenoimpactontheGroup’s financialpositionorperformance. the period.Theseamendmentsare effective retrospectively forannualperiodsbeginningonorafterJanuary1,2014withearlierapplicationpermitted, disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed during These amendmentsremove theunintendedconsequencesofPFRS13ondisclosures required underPAS 36.Inaddition,theseamendments require PAS 36,ImpairmentofAssets–RecoverableAmountDisclosures (Amendments) forNon-FinancialAssets have noimpactontheGroup’s financialpositionorperformance. to settlementsystems(suchascentralclearinghousesystems)whichapplygross settlementmechanismsthatare notsimultaneous.Theamendments The amendmentsclarifythemeaningof“currently hasalegallyenforceable righttoset-off” andalsoclarifytheapplicationofPAS 32offsetting criteria PAS 32,FinancialInstruments:Presentation –Offsetting (Amendments) FinancialAssetsandLiabilities adopted are consistentwiththoseoftheprevious financialyear. standards havenoimpacttotheGroup. Exceptfor these standards andamendedPFRSwhichwere adoptedasofJanuary1,2014,theaccountingpolicies The Group appliedthefollowingapplicablenewandrevised accountingsta FINANCIAL STATEMENTS provides keymanagementpersonnelservicestothereporting entityortotheparent companyofthereporting entity. Theamendmentsalsoclarifythat The amendmentsclarifythatanentity isarelated partyofthe reporting entityifthesaid entity, oranymemberof agroup forwhichitisapart of, PAS 24,RelatedPartyDisclosures –KeyManagementPersonnel in theimmediatelypreceding annual period. The amendmentshallapplytoallrevaluations recognized inannualperiodsbeginningon orafterthedateofinitialapplicationthisamendmentand carrying amountaccountedforinaccordance with thestandard. The amendments also clarify that the amount of the adjustment of the accumulated amortization should form part of the increase or decrease in the b. the assetaftertakingintoaccountanyaccumulatedimpairmentlosses. depreciation oramortizationatthedateofrevaluation isadjustedtoequalthedifference betweenthegross carryingamountandtheof a. be adjustedtotherevalued amount,andtheassetshallbetreated inoneofthefollowingways: The amendmentclarifiesthat,upon revaluation ofanitemproperty, plantandequipment,intangibleassets,thecarryingamountofassetshall Revaluation Method(AmendmentstoPAS 16andPAS 38–Proportionate RestatementofAccumulatedDepreciation andAmortization) date isonorafterJanuary1,2015.TheGroup shallconsiderthisamendmentforfuture businesscombinations. of PFRS9(orPAS 39,ifPFRS9isnotyetadopted).Theamendmentshallbeprospectively appliedtobusinesscombinationsforwhichtheacquisition Contingent considerationthatisnotclassifiedasequitysubsequentlymeasured atfairvaluethrough profit orlosswhethernotitfallswithinthescope as equityinaccordance withPAS 32. The amendment clarifies that a contingent consideration that meets the definition of a financial instrument should be classified as afinancial liability or PFRS 3,BusinessCombinations–AccountingforContingentConsiderationinaCombination after January1,2015.ThisamendmentdoesnotapplytotheGroup asithasnoshare-based payments. condition toclarifyvariousissues.Thisamendmentshallbeprospectively appliedtoshare-based paymenttransactionsforwhichthegrantdateisonor The amendmentrevised the definitionsofvestingconditionandmarketaddedperformanceservice PFRS 2,Share-based Payment–Definition of Vesting Condition but necessaryamendmentstothefollowingstandards: The AnnualImprovements toPFRSs(2010-2012cycle)whichwilltakeeffect forannualperiodsbeginningonorafterJanuary1,2015,containnon-urgent Annual Improvements toPFRSs(2010-2012cycle) January 1,2016. do notconstituteabusiness,eveniftheseassetsare housedinasubsidiary. Theseamendmentsare effective from annualperiodsbeginningonorafter transaction involvesabusiness(whetheritishousedinsubsidiaryornot).Apartialgainlossrecognized whenatransactioninvolvesassetsthat or contribution of assets between an investor and its associate or joint venture. The amendments require that a full gain or loss is recognized when a These amendments address an acknowledged inconsistency between the requirements in PFRS 10 and those in PAS 28 (2011) in dealing with the sale Investor anditsAssociateorJointVenture PFRS 10,ConsolidatedFinancialStatementsandPAS 28,InvestmentsinAssociatesandJointVentures –SaleorContributionofAssetsbetweenan adoption permitted.TheseamendmentswillnothaveanyimpactontheGroup’s consolidatedfinancialstatements. apply thismethodfrom the dateoftransitiontoPFRS.Theamendmentsare effective forannualperiodsbeginningonorafterJanuary1,2016,withearly that changeretrospectively. Forfirst-timeadoptersofPFRSelectingtousethe equity methodinitsseparatefinancialstatements,theywillbe required to financial statements.Entitiesalready applyingPFRSandelectingtochangetheequitymethodinitsseparatefinancialstatementswillhaveapply The amendmentswillallowentitiestousetheequitymethodaccountforinvestmentsinsubsidiaries,jointventures andassociatesintheirseparate PAS 27,SeparateFinancialStatements–EquityMethodin application permitted.Theamendmentsare notapplicabletotheGroup. plants willremain withinthescopeofPAS 41.Theamendedstandards are effective forannualperiodsbeginningonorafterJanuary1,2016,withearlier because theiroperationissimilartothatofmanufacturing,bringingthemwithinthescopePAS 16,insteadofPAS 41.Theproduce growing onbearer The amendmentsrequire entitiestoaccountforbearer plantsinthesamewayasproperty, plantandequipment inPAS 16,Property, PlantandEquipment, PAS 16,Property, PlantandEquipmentPAS 41,Agriculture –ChangeinFinancialReportingforBearer Plants The revised standards are effective forperiodsbeginningJanuary1,2016, withearlierapplicationpermitted. the samereason thatthere are multiplefactorsthatinfluence revenue andthatnotallthesefactorsare related tothewayassetisusedorconsumed. while theamendmentstoPAS 38introduce arebuttable presumption thatarevenue-based amortizationmethodforintangibleassetsisinappropriate for of thefuture economicbenefitsofanasset.Theamendmentsto PAS 16explicitly prohibits revenue-based depreciation ofpr The accumulateddepreciation oramortizationiseliminatedagainstthegross carryingamountofthe asset. The gross carryingamountisadjustedinamannerthatconsistentwiththerevaluation ofthecarrying amountoftheasset.Theaccumulated

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LANDBANK 2015 Annual Report and measurement oftheGroup’s financialliabilities. Theadoptionwillalsohavean effect ontheGroup’s applicationofhedgeaccounting. The adoptionofPFRS9willhaveaneffect ontheclassificationand measurement oftheGroup’s financialassetsbutwillhavenoimpactontheclassification 9 wasadoptedbytheFRSC.Theadoption ofthefinalversionPFRS9,however, isstillforapproval byBOA. PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of January 1, 2018 was eventually set when the final version of PFRS hedging instrumentandaccountedfor ascostsofhedging.PFRS9alsorequires more extensivedisclosures forhedgeaccounting. the forward elementofaforward contractandanyforeign currency basisspread tobeexcludedfrom thedesignationofaderivativeinstrumentas also fornon-financialitems,provided thattheriskcomponentis separatelyidentifiableand reliablymeasurable;andallowingthetimevalueofanoption, the effect ofcredit riskonthateconomicrelationship; allowingriskcomponentstobedesignatedasthehedgeditem,notonlyforfinancialitemsbut effectiveness testwithanobjectives-basedthatfocusesontheeconomicrelationship betweenthehedgeditemand hedginginstrument,and replaces therules-basedhedgeaccountingmodelofPAS 39withamore principles-basedapproach. Changesincludereplacing therulesbasedhedge PFRS 9(2013version)already includesthethird phaseoftheproject toreplace PAS 39whichpertainstohedgeaccounting.ThisversionofPFRS9 PFRS 9,FinancialInstruments–HedgeAccountingandAmendmentsto 7andPAS 39(2013version) Effective January 1, 2018 in themanagementcommentaryorriskreport). incorporated bycross-reference betweentheinterimfinancialstatementsandwherever theyare includedwithinthegreater interimfinancial report(e.g., This amendmentisappliedretrospectively andclarifiesthatthe required interimdisclosures musteitherbeintheinterimfinancialstatementsor PAS 34,InterimFinancialReporting–Disclosures ofInformation‘Elsewhere intheInterimFinancialReport’ that currency, government bond ratesmustbeused. obligation isdenominated,ratherthanthecountrywhere theobligationislocated.Whenthere isnodeepmarketforhighqualitycorporatebondsin This amendmentisappliedprospectively andclarifiesthatmarketdepthofhighqualitycorporatebondsisassessedbasedonthecurrency inwhichthe PAS 19,EmployeeBenefits–RegionalMarketIssue regarding DiscountRate condensed interimfinancial report unlesstheyprovide asignificantupdatetotheinformation reportedinthemost recentannual report. This amendmentisappliedretrospectively andclarifiesthatthedisclosures onoffsetting offinancialassetsandliabilities arenot required in the PFRS 7–ApplicabilityoftheAmendmentstoCondensedInterimFinancial Statements not required tobeprovided foranyperiodbeginning before theannualperiodinwhichentityfirstappliesamendments. assessment ofwhichservicingcontractsconstitutecontinuinginvolvementwillneedtobedoneretrospectively. However, comparativedisclosures are and arrangementagainsttheguidanceinPFRS7order toassesswhetherthedisclosures are required. Theamendmentisto beappliedsuchthatthe clarifies thataservicingcontractincludesfeecanconstitutecontinuinginvolvementinfinancialasset.Anentitymustassessthenature ofthefee PFRS 7requires anentitytoprovide disclosures foranycontinuinginvolvementinatransferred assetthatisderecognized initsentirety. Theamendment PFRS 7,FinancialInstruments:Disclosures –ServicingContracts application oftherequirements inPFRS5.Theamendmentalsoclarifiesthatchangingthedisposalmethoddoesnotchangedateofclassification. versa shouldnotbeconsidered tobeanewplanofdisposal,ratheritiscontinuationtheoriginalplan.There is,therefore, nointerruptionofthe The amendment is applied prospectively and clarifies that changing from a disposal through sale to a disposal through distribution to owners and vice- PFRS 5,Non-current AssetsHeldfor SaleandDiscontinuedOperations–ChangesinMethodsofDisposal have amaterialimpactontheGroup. Theyinclude: The AnnualImprovements toPFRSs(2012-2014cycle)are effective forannual periodsbeginningonorafterJanuary1,2016andare notexpectedto Annual Improvements toPFRSs(2012-2014cycle) position orperformance. for annualperiodsbeginningonorafterJuly1,2014andisappliedprospectively. TheamendmenthasnosignificantimpactontheGroup’s financial group ofassetsorabusinesscombinationwithinthescopePFRS3.Thisjudgmentisbasedonguidanceamendmenteffective The amendmentstatedthatjudgmentisneededwhendeterminingwhethertheacquisitionofinvestmentproperty istheacquisitionofanassetora The amendmentclarifiestheinterrelationship betweenPFRS3and PAS 40whenclassifyingproperty asinvestmentproperty orowner-occupied property. PAS 40,InvestmentProperty is effective forannualperiodsbeginningonorafterJuly1,2014andisappliedprospectively. The amendmentclarifiesthattheportfolioexceptioninPFRS13canbeappliedtofinancialassets,liabilitiesandothercontracts. PFRS 13,FairValue Measurement –PortfolioException amendment isnotapplicabletotheGroup asitisnotafirst-timeadopte FINANCIAL STATEMENTS material adjustmenttothecarryingamounts ofassetsandliabilitieswithinthenext financial yearare discussedbelow. The keyassumptionsconcerningthefuture andotherkeysources ofestimationuncertainty atthereporting date, thathaveasignificantriskofcausing Estimation uncertainty is already inapositivetaxposition,theManagementwillreview thelevelofdeferred taxassetsthatitwillrecognize inthebooks. The Group cannotyetestablishwhenitwillrealize itsdeductibletemporarydifferences andcarryforward benefitsofNOLCOandMCIT. WhentheGroup e. Recognitionofdeferred taxasset P95,814,859,572 andP95,025,587,221asofDecember31,2014,respectively. The carryingvaluesofheld-to-maturityinvestmentstheGroup andtheParent are P122,601,782,887andP121,784,243,661asofDecember31,2015 reclassify theentire held-to-maturityportfolioasavailable-for-sale. Theinvestmentswouldtherefore bemeasured atfairvalueinsteadofamortizedcost. investments tomaturityotherthanforspecificcircumstances –forexample,sellinganinsignificant amountorclosetomaturity–itwillbe required to whether theinvestmentsare quotedornot;unquoteddebtinvestmentsare classifiedunderLoans and receivables. Ifthe Group failstokeepthese judgment. In making this judgment, the Group evaluates its intention and ability to hold such investmentsto maturity. Further, the Group determines The classificationofnon-derivativefinancialassetswithfixedordeterminable paymentsandfixedmaturityasheld-to-maturity requires significant d. ClassificationunderHTMinvestments 2014, respectively. and theParent are P154,131,204,263 and P154,131,204,263 as ofDecember31,2015andP191,341,108,669 industry andsectorperformance,changesintechnology, andoperationalfinancingcashflows.ThecarryingvaluesofAFSinvestmentsthe Group the normalvolatilityinprice.Inaddition, impairment maybeappropriate whenthere isevidenceofdeteriorationinthefinancialhealthinvestee, its cost.Thisdeterminationofwhatissignificantorprolonged requires judgment. Inmakingthisjudgment,theGroup evaluatesamongotherfactors, The Group determinesthat available-for-sale investmentsare impaired whenthere hasbeenasignificantorprolonged declineinthefairvaluebelow c. ImpairmentofAFSinvestments 2015 andP498,001,531,982P496,290,815,765asofDecember31,2014,respectively. values of receivables from customers and HTM investments of the Group and the Parent are P573,083,538,213 and P570,830,803,672 as of December 31, amount andtimingoffuture cashflowsare reviewed regularly to reduce anydifferences betweenlossestimatesandactualexperience.Thecarrying of impairmentsimilartothoseintheportfoliowhenschedulingitsfuture cashflows.Themethodologyandassumptionsusedforestimatingboththe on assetsin the group. Management uses estimates based onhistorical loss experience forassetswithcredit risk characteristics and objectiveevidence there hasbeenanadverse changeinthepaymentstatusofborrowers inagroup, ornationallocaleconomicconditionsthatcorrelate withdefaults financial assetbefore the decrease canbeidentifiedwithanindividualassetinthatportfolio.Thisevidencemayincludeobservabledataindicating judgments astowhetherthere isanyobservabledataindicatingthatthere isameasurabledecrease intheestimatedfuture cashflowsfrom aportfolioof impairment exists.Indeterminingwhetheranlossshouldberecorded inthestatementofcomprehensive income,theGroup makes The Group reviews itsloansandreceivables andHTMinvestmentstoassess impairmentatleastonanannualbasisorearlierwhenindicatorof b. Impairmentlossesonloansandreceivables andHTMinvestments risks andrewards ofownershiptheseproperties whichare leasedoutonoperatingleases. The entityhasentered into commercial property leasesonitsinvestmentproperty portfolio.Theentityhasdeterminedthatitretains allthesignificant a. Operatingleasecommitments which havethemostsignificanteffect ontheamounts recognized inthefinancialstatements: In theprocess ofapplying theGroup’s accountingpolicies,Managementhasmadethefollowingjudgments,apartfrom thoseinvolvingestimations, Judgments are believedtobereasonable underthecircumstances. Estimates andjudgmentsare continuallyevaluatedandare basedonhistoricalexperienceandotherfactors,includingexpectationsoffuture eventsthat they becomereasonably determinable. will causetheassumptionsusedinarrivingatestimatestochange.Theeffects ofanychangeinestimatesare reflected inthefinancialstatementsas amounts ofresources, liabilities,incomeandexpenses anddisclosure ofcontingentresources andcontingentliabilities.Future eventsmayoccurwhich The preparation ofthefinancialstatementsincompliancewithPFRS requires theGroup tomakeestimatesandassumptionsthataffect the reported 3. Significant Accounting JudgmentsandEstimates and decidednottoearlyadoptPFRS9inits2014financial reporting. The Group conductedanevaluationofthefinancialimpactadoptionPFRS9basedonauditedstatementsasDecember31,2013 Group’s applicationofhedgeaccounting.TheGroup iscurrently assessingtheimp

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LANDBANK 2015 Annual Report Payroll fund Revolving fund Petty cashfund Returned checksandothercashitems Deposit withforeign banks Deposit withlocalbanks FX Currency notes&coinsonhand Checks andothercashitems Cash onhand

Domestic as follows: This accountconsistsoftheParent’s loansreceivable from domesticandforeign banks.Interbankloansreceivable carryinterest rates atDecember31, 7. InterbankLoans Receivables which isrestricted fordisbursementsonspeciallendingprojects. Deposits withforeign banksasofDecember31,2015includespecialdepositaccountwithStandard Chartered Bank-Tokyo amountingtoJPY393,219,878 most significantofwhichare asfollows: The Group maintainsnostro accountsonglobalbasiswith23foreign depository bankstotaling30and28accountsin20152014,respectively, the This accountconsistsof: 6. Duefrom OtherBanks clearing accountforinterbankclaimsconsistentwithBSPguidelines. This accountrepresents theParent’s demandandspecialdepositsinlocalcurrency maintainedwithBSPtomeetreserve requirements andtoserveas 5. Duefrom Bangko Sentral ngPilipinas This accountconsistsof: 4. Cash andOtherCash Items as ofDecember31,2015andP5,943,264,176P5,478,999,412 2014,respectively. that havebeenabandonedorsold.Thecarryingvaluesofproperty andequipmentoftheGroup andtheParent are P6,779,753,581andP6,243,994,847 the depreciation charge where useful lives are less than previously estimated, or it will write-off orwrite-down technically obsolete ornon-strategicassets The Group’s Management determines the estimated useful lives and related depreciation charges for its property and equipment. The Bank will increase b. Usefullivesofproperty andequipment make estimates.Changesinassumptionsaboutthesefactorscouldaffect reported fairvaluesoffinancialinstruments. models useonly observable data,however, areas suchascredit risk (both ownandcounterparty),volatilitiescorrelations require Managementto Group. Allmodels are reviewed before theyare usedtoensure that outputs reflect actualdataandcomparativemarketprices. To theextentpracticable, valuation techniques(forexample,models)are usedtodeterminefairvalues,theyare validatedandperiodicallyreviewed bytheRiskManagement The fairvalueoffinancialinstrumentsthatare notquotedinactivemarketsare determinedbyusinggenerallyacceptedvaluationtechniques.Where a. Fairvalueoffinancialinstruments(includingderivatives) Foreign FINANCIAL STATEMENTS 5. Standard Chartered Bank, Frankfurt 4. New The Bankof York 3. LandesBankBaden-Wurttemberg 2. Standard Chartered Bank, N.Y. 1. Wells Fargo Bank, N.A. 2015 26,890,158,158 26,568,204,651 5,890,459,969 5,677,606,050

212,853,919 306,472,027 2015 2015 5. MizuhoCorporate Bank 4. Standard Chartered Bank, Frankfurt 3. New The Bankof York 2. Standard Chartered Bank, N.Y. 1. Wells Fargo Bank, N.A. 1,108,173 5,115,441 8,461,631 762,534 0.015% to0.61% 2.53% to2.56% 33,701 Group Group 2015

24,249,017,453 23,991,771,539 6,385,038,678 6,168,739,924 216,298,754 242,995,996 2014 2014 1,388,282 4,137,167 8,151,384 573,085 0

2014 26,889,156,228 26,568,204,651 5,782,735,575 5,677,606,050 105,129,525 306,472,027 2015 2015 4,963,441 8,461,631 762,534 258,243 2.31% to3.22% 0.05% to0.18% 33,701 Parent Parent 2014

24,247,688,757 23,991,753,730 6,285,385,480 6,162,883,566 122,501,914 242,995,996 2014 2014 3,981,500 8,151,384 573,085 233,062 0

Derivative withpositivefairvalue Private Securities–Domestic Government Securities–Foreign Government Securities–Domestic

Domestic

Available-for-sale investmentsoftheGroup carryinterest rates atDecember31asfollows: This accountconsistsof: 10. Available forSaleInvestments ng Pilipinasduringtheconductoftheiron-sitevalidationin2009. The Garman-Kohlhagen valuation model used in pricing the derivative Foreign Exchange Risk Cover (FXRC) was found acceptable by the Bangko Sentral The derivativewithpositivefairvaluecompriseofthefollowing: which resulted inadecrease inthederivativeassetamountingtoP41,729,383andP763,160,38020152014,respectively. 2007, in accordance with Monetary Board Resolution No. 1063 dated August 14, 2008, the Bank applied the standard option valuation model approach Prior to 2007, the valueof the FX risk cover as anoption derivative varies on the movement of theforeign exchange rates ofthe Bills Payable.Beginning of December31,2015,theoutstandingnotionalamountFXriskcoveramounted toJPY7,548,631,599. which are relent inlocalcurrencies. ThefairvaluechangesontheFXriskcover are reported immediatelyinthestatementofcomprehensive income.As assume theFXriskrelating toforeign currency denominatedborrowings from multilateralagencies(i.e.World Bank,AsianDevelopmentJICA,etc.) Under aMemorandumofAgreement betweentheNationalGovernment(thruDepartmentofFinance)andParent, theformershallguaranteeand P1,185,748,949 in2014whichistreated asaderivativefinancialinstrumentperBSPMonetaryBoard ResolutionNo.1063 datedAugust14,2008. HFT includes the foreign exchange (FX) risk cover of the Parent’s borrowings from multilateral agencies amounting to P1,144,019,566 in 2015 and The HeldforTrading (HFT)financialassetsoftheGroup carryinterest ratesatDecember31asfollows: This consistsof: 9. Heldfor Trading Securities Purchased underAgreements toReselloftheParent carryinterest rateat4.00percentasofDecember31,2015and2014. This accountconsistsoftheParent’s GovernmentSecuritiesPurchased underReverseRepurchase Agreement withtheBangkoSentralngPilipinas. 8. SecuritiesPurchased under Agreements toResell Foreign Investment innon-marketablesecurities,netofallowancefor

Foreign Domestic Foreign Domestic Forward Contracts Debt Warrants Foreign ExchangeRiskCover

Private Government Private securities Government probable lossesofP1,408,592,444in2015andP1,395,864,2522014 8,474,023,572 1,347,819,917 7,121,502,080 102,246,734,504 154,131,204,263 16,447,378,034 25,651,369,845 2015 2,508,304,235 7,277,417,645 4,701,575 1.62% to10.50% 2.75% to10.63% 1.62% to12.88% 2.00% to9.50% 2015 Group 2015 2015 0

Group

14,812,839,661 13,059,317,753 1,306,915,859 141,401,875,363 191,341,108,669 15,375,784,241 24,730,075,720 399,971,813 2,543,227,518 7,290,145,827 2014 46,634,236 2014

102,246,734,504 154,131,204,263 8,474,023,572 1,347,819,917 7,121,502,080 16,447,378,034 25,651,369,845 2,508,304,235 7,277,417,645 2015 1,347,819,917 1,144,019,566 4,701,575 2015 116,102,300 87,698,051 2.75% to10.63% 1.62% to10.50% 1.62% to4.17% 7.25% to7.39% 2015 Parent 2014 2014 0 Parent

141,401,875,363 191,341,108,669 14,812,839,661 13,059,317,753 15,375,784,241 24,730,075,720 1,306,915,859 1,306,915,859 2,543,227,518 1,185,748,949 7,290,145,827 399,971,813 2014 46,634,236 37,829,535 83,337,375 2014 2014

127 128

LANDBANK 2015 Annual Report cent economicinterest inMRTC. together with DBP completed its acquisition in May 2009, collectively owning around interests. 80 per cent of MRTC LBP owns approximately 37.77 per Bonds (SeeNotestotheFinancialStatementsNo.12)andPreferenceRental Payment(ERP),MRT Shares IIIFunding Corporation.LBP issuedbyMRT III project.MRT In the same year, the LBP Board of Directors approved the purchase interests of MRTC in the form of unsecuritized portion of the Equity the Philippines(DBP)toacquire majorityinterest asaresult inMRTC oftherecommendation madebytheinter-agency Committeetaskedtoreview the In 2008,theNationalGovernment,as confirmed through Executive Order No.855dated January18,2010,instructedLBPandtheDevelopmentBankof Transit Corporation’s preference (MRTC) shares and UnsecuritizedEquityRentalPayments. Total Investment inNon-MarketableEquitySecurities(INMES)accountoftheParent includesinvestmentofUS$143,146,324(P6,781,381,460)inMetro Rail continuously amortizedtoprofit orlossover the remaining lifeoftheHeld-to-maturitysecurities. directly inequitywhentheAvailable-for-sale securities hasbeenreclassified toHeldmaturitysecuritiesonvariousdates.Thesaidamountshallbe 31, 2015intheamountofP2,270,181,968represents theremaining unamortizedportionofthenetunrealized gainorloss,thathasbeenrecognized The difference intheamountoutstandingoflocalcurrency accumulatedmarketgains/lossesandnetunrealized gains/lossesonAFSasofDecember unrealized gains/lossesonAFSwasP10,952,121,838. Parent’s Accumulatedmarketgains/losses onAFSgovernmentandprivateissuesasofDecember31,2015amountedtoP13,222,303,806.Parent’s Net On December4,2015,MERALCOfiledtheirCommenttothePetitionand thereafter, LBPfileditsReplytosaidCommentonMay30,2016. Court. filing ofthepetitionbefore theSupreme Court.OnApril14,2015,thePetitiontoCiteRespondentsinIndirect Contemptwasfiledbefore theSupreme On March 10, 2015, the petition was sent to the Office of the Government Corporate Counsel (OGCC)for review and signature. OGCC approved the dividends duefrom the1,402,750 MERALCOshares delivered toLBP, andtocompelfullcompliancewiththeDecember14,2011Supreme CourtDecision. contempt againstMERALCOanditsrepresentatives forfailingtodelivertheremaining 3,366,800shares ofstocksplusaccrueddividendsandtheunpaid On accountoftheJanuary24,2014Sheriff’s ReportandMERALCO’s failure torespond toLBP’s February11,2015Letter, LBPprepared apetitionfor delivery oftheremaining 3,366,800shares ofstocksplusunpaiddividends.MERALCOfailedtorespond toLBP’s demand. Since RARAD no longer issued a writ of execution or demand to comply, LBP sent the February11, 2015 Letter addressed to MERALCO to demand the Letter were notactedupon bytheRARAD,andnofurtherwritofexecutionordemandtocomplywere issued. MERALCO’s partialcomplianceoftheDecember14,2011Supreme CourtDecisioninG.R.No.188376.LBP’s June18,2014LetterandAugust15, On February 6, 2015, LBP received the January 24, 2014 Sheriff’s Report from the Sheriff of the Regional Adjudicator Region IV-B (MIMAROPA) regarding request toexpeditethefull implementationoftheSupreme Court’s rulinginG.R.No.188376andtoprevent furtherdamagetoLBP. limited to,theissuanceofanotherDemandtoComplybeserveduponMERALCO.LBPagainsentAugust15,2014LetterRARADreiterating its requesting theoffice todirect theSheriff toperformallnecessaryactsforthefullimplementationofApril1,2013 Writ ofExecutionsuchas,butnot To recover fullytheMERALCOshares anddividends,LBPsentitsJune18,2014LettertotheOffice oftheRegionalAdjudicatorRegionIV–B(MIMAROPA) Court decisionwaspartiallyimplemented. P8,145,010. These1,402,750shares are partofthe38,635,950shares restored toLBP, butcertificatedinthenameofotherpartybefore the Supreme shares ofstockinRockwell LandCorporationasproperty dividends,andtheunpaiddividendsduefrom the1,402,750MERALCOshares amountingto Still undelivered are 3,366,800shares, plusaccrued cashdividendsthereon, amountingtoP212,647,0888asofDecember31,2015,plus9,488,394 consisting of108,884,212shares ofstockinRockwellLandCorporation. partial compliance,MERALCOdelivered toLBP38,635,950shares includingcashdividendsinthetotalamountofP1,206,955,618;andproperty dividends Supreme Courtdecision. Thiswas,however, vigorously opposedbytheotherparty. OnApril1,2013,theRARADfinallyissued Writ ofExecution.As LBP immediatelyfiledamotionbefore theRegionalAgrarianReformAdjudicator(RARAD)forissuanceofawritexecutiontoimplement September 11,2012(EntryofJudgment). taken tosatisfythepaymentofjustcompensationthatshouldhavebeenappropriated onlyfrom theARF. Thisrulinghasbecomefinalandexecutoryon 42,002,750 MERALCOshares ofstock.TheSupreme Courtfurtherdeclared thattheMERALCOshares ofstocksare corporateassetsofLBPillegally In itsDecember14,2011DecisioninG.R.No.188376,theSupreme Courtdirected MERALCOtoreturn totheLandBankofPhilippines(LBP) Law), assetsofthebankcannotbeusedtopayforlandacquisitionasthisshallonly FINANCIAL STATEMENTS Government Private This accountconsistsof: 12. Loans andReceivables Held tomaturityinvestmentsoftheGroup carryinterest ratesatDecember31asfollows: This accountconsistsof: 11. HeldtoMaturity Investments economic interest Anotherrefund inMRTC. ofUS$1,381,747wasreceived bytheBankandDBPinearly2011representing AccruedERPs. from athird partyin2010.Therefund represents cashthatwasalready intheaccountofthird party, hencethisdidnotaffect LBP’s percentage of The decrease inthe investment inunsecuritized ERP wasbrought about by therefund ofUS$1,433,535(equallyshared bytheBankandDBP)received The acquisitioncost,bookvalueandpercentage ofeconomicinterest are inMRTC asfollows: • MRT IIIBonds • MRT Unsecuritized ERPs Securitized ERPs IIIPreferred• MRT Shares Foreign Domestic

Allowance forcredit losses Contract toSell Allowance forcredit losses Loans toGovernment Allowance forcredit losses Interbank loansreceivable Allowance forcredit losses Loans toIndividualsforHousingPurposes Allowance forcredit losses Loans toPrivateCorporation Allowance forcredit losses SME/MSE Loans Allowance forcredit losses Microfinance Loans Allowance forcredit losses Agrarian ReformandotherAgriculture Loans Allowance forcredit losses Loans toIndividualforConsumption Foreign Domestic Foreign Domestic As of December31,As of 2015 Acquisition Cost (In USDollars) 124,761,720 269,341,579 178,761,720 90,579,859 54,000,000 111,168,854,442 122,601,782,887 194,637,753,474 195,860,324,146 39,505,525,049 77,116,862,729 16,337,406,379 16,709,831,946 40,914,536,276 71,661,380,106 72,463,771,389 77,070,250,619 15,409,806,322 15,701,598,988 (1,222,570,672) (1,409,011,227) 6,312,833,190 4,525,369,411 1,220,138,412 3,888,373,652 1,160,013,546 9,031,667,958 9,312,152,807 3,810,418,857 (372,425,567) (280,484,849) (802,391,283) (291,792,666) 594,725,844 (60,124,866) (46,612,110) (77,954,795) 5.12% to11.63% 2.12% to18.25% 2015 2015 2015

Group Group

As of December31,As of 2014 164,586,170,759 165,321,960,307 84,435,913,445 95,814,859,572 29,766,325,957 80,506,194,217 25,627,951,030 25,995,346,298 30,877,551,710 55,071,314,635 55,795,542,442 80,455,066,548 14,313,586,623 14,541,031,539 (1,111,225,753) 6,417,637,520 4,390,829,795 1,282,224,885 3,101,040,445 1,208,910,807 6,814,800,155 6,971,020,476 3,064,320,125 (In USDollars) (367,395,268) (735,789,548) (156,220,321) (724,227,807) (227,444,916) 570,478,812 255,074,114 201,074,114 344,220,438 (73,314,078) (51,127,669) (36,720,320) 89,146,324 Book Value 54,000,000 2014 2014

110,351,315,216 121,784,243,661 193,106,030,641 194,168,885,913 39,505,525,049 78,912,843,115 16,337,406,379 16,709,831,946 40,914,536,276 71,632,796,376 72,435,187,659 78,868,009,914 15,409,806,322 15,701,598,988 (1,409,011,227) (1,062,855,272) 6,312,833,190 4,525,369,411 1,220,138,412 3,888,373,652 1,160,013,546 9,031,667,958 9,312,152,807 3,810,418,857 (372,425,567) (280,484,849) (802,391,283) (291,792,666) 594,725,844 (60,124,866) (44,833,201) (77,954,795)

2015 2015 6.38% to11.63% 4.12% to18.25% Percentage inMRTC 2014 Parent Parent

11.12% 26.65% 37.77% 163,233,015,321 163,804,142,986 83,646,641,094 95,025,587,221 29,766,325,956 82,824,858,809 25,627,951,030 25,995,346,298 30,877,551,709 55,030,008,076 55,754,235,883 82,773,731,140 14,249,831,775 14,477,276,691 (1,111,225,753) 6,417,637,520 4,390,829,795 1,282,224,885 3,101,040,445 1,208,910,807 6,814,800,155 6,971,020,476 3,064,320,125 (367,395,268) (571,127,665) (156,220,321) (724,227,807) (227,444,916) 570,478,812 (73,314,078) (51,127,669) (36,720,320)

2014 2014

129 130

LANDBANK 2015 Annual Report FCDU FX Regular Balance, December31 Transfers andotheradjustments compliance withBSPCircular No.772, whichamendsregulations governingnon-performing loans. Non-performing loans(NPLs)included inthetotalloanportfolioofParent are presented belowasnetof specific allowanceforcredit lossesin As ofDecember31,2015and2014,thebreakdown ofGross Loansastosecured andunsecured follows: The detailsofallowanceforcredit lossesonloansoftheParent are: Allowance forcredit losses Securities ClassifiedasLoansaccountandfrom theBillsPayableaccount, respectively, provided thattheseaccountshavealready beenwritten-off byBSP. Outstanding equityinvestmentsonclosedruralbanksanditscorresponding borrowings accountfrom BSPhavebeenexcludedfrom UnquotedDebt BSP andallexpensesorlosses,ifany, whichLBPmaysuffer undertheconversionscheme,shallbeforaccountofBSP. banks toBSPwere converted intoLBPequitycontributiontosaidruralbanks.Accordingly, thesebecamenon-interest bearingobligationsofLBPwith Covered byMemorandum ofAgreement (MOA)signedonAugust22,1988betweenLBPandBangkoSentralngPilipinas,theunpaidobligationsofrural accordance withtheapproval oftheBank’s Board ofDirectors inNovember2008andbroken downasfollows: Transit Corporation’s Bondswith book value of $201,074,114 (P9,462,547,804) whichform part ofLBP’s (MRTC) interests in the said companypurchased in respectively, asofDecember 31,2015andP2,195,003,049P10,772,182,288,respectively, asofDecember31,2014.TheaccountincludesMetro Rail Unquoted debtsecuritiesoftheParent classifiedasloansconsistofgovernmentandprivatesecuritiesamountingtoP882,198,165P12,307,724,278, foreign currency denominatedloans. Interest ratesonloansin 2015 rangefrom 0.3175percentto39.00forpesodenominatedloansandfrom 1.650percentto30.00for Write-offs Provision Balance, January1 Allowance forcredit losses Loans toIndividualforOtherPurposes Allowance forcredit losses Sales contractreceivable Allowance forcredit losses Accounts receivable Allowance forcredit losses Accrued interest receivable Allowance forcredit losses Allowance forcredit losses Sales contractreceivable Lease contractreceivable Allowance forcredit losses Unquoted debtsecurities Due from ARF Secured loans: Unsecured loans Gross loanatamortizedcost FINANCIAL STATEMENTS Various mortgages Various guarantees Guarantee oftheRepublicPhilippines 379,437,457 108,325,146 271,112,311 Face Value USD 431,017,372,713 450,481,755,326 12,910,083,187 13,608,063,739 2,426,139,439 1,728,392,031 3,144,175,241 3,412,268,550 2,393,150,403 1,475,231,344 1,516,217,992 (820,507,950) (268,093,309) (697,980,552) 881,212,093 907,884,081 881,212,093 836,586,534 190,422,226 836,586,534 (32,989,036) (44,625,559) (40,986,648) (44,625,559) 129,522,139,940 126,857,104,169 322,115,493,054 113,455,361,805 435,570,854,859 65,736,248,945 Amount 382,415,631,590 402,186,672,410 12,967,185,337 13,738,151,839 1,528,750,385 1,019,347,210 1,659,864,301 2,906,477,398 3,160,858,597 1,507,184,951 1,709,391,371 1,019,347,210 1,008,925,130 1,730,336,312 1,008,925,130 (796,956,839) (254,381,199) (770,966,502) 2015 862,907,462 316,154,122 201,074,114 145,870,414 (21,565,434) (10,422,080) (20,944,941) (10,422,080) 55,203,700 USD 4,434,160,030 1,235,357,277 3,340,369,232 2015 100.00

(178,740,457) % 29.74 29.12 15.09 73.95 26.05 37,173,978 431,136,694,829 449,046,560,011 Parent Book Value 12,910,083,187 13,608,063,739 2,307,306,091 1,599,142,055 3,139,826,463 3,407,919,772 2,275,019,787 (767,859,383) (268,093,309) (697,980,552) 882,876,193 831,282,672 882,876,193 838,250,634 190,422,226 838,250,634 (32,286,304) (44,625,559) (44,625,559) 125,785,577,548 284,847,674,710 101,768,781,685 386,616,456,395 94,176,988,746 64,885,108,416

Amount 2,597,886,122 9,462,547,804 6,864,661,682 0 0 0 2014 383,276,087,164 401,265,228,544 PHP 12,967,185,337 13,738,151,839 3,340,369,232 3,248,889,188 1,528,758,213 1,019,105,578 1,550,519,583 2,901,954,147 3,156,316,487 1,507,192,779 1,019,105,578 1,008,683,498 1,008,683,498 2014

(560,158,832) (755,355,307) (254,362,340) (770,966,502) 651,638,876 795,164,276 316,154,122 (21,565,434) (10,422,080) (10,422,080) 100.00 % 24.36 32.54 16.78 73.68 26.32 0 0 0 0

Net bookvalue At December31 Impairment and impairment Accumulated depreciation At December31 Additions (Disposals) At January1 At Cost Net bookvalue At December31 Impairment Depreciation At January1 Transfers/Adjustment government’s agrarianreform program. going courtcaseamountedtoP151,302,095 and P1,760,483,789, respectively. Properties amountingtoP66,840,080are agriculturallandscovered bythe Investment properties acquired through foreclosure asofDecember31,2015whichare stillwithintheredemption periodbytheborrowers andwithon- in 2015and2014,respectively, are includedindepreciation andamortizationexpenseinthestatement ofcomprehensive income. Depreciation andamortizationoftheGroup amountingtoP129,798,857andP118,201,174oftheParent amountingtoP126,376,026andP114,958,392 This accountconsistsof: 14. InvestmentProperty This accountconsistsofthefollowinginvestmentsinsubsidiarieswhichare 100percentownedbytheParent andare accountedforatcost: 13. InvestmentinSubsidiaries and impairment Accumulated depreciation At December31 Additions (Disposals) At January1 At Cost Depreciation At January1 Transfers/Adjustment Net NPLs Allowance forcredit losses Total NPLs Masaganang Sakahan, Inc. LBP Resources andDevelopmentCorporation LBP Insurance Brokerage, Inc. LBP Leasing andFinance Corporation (formerlyLBPLeasing Corporation) Name 4,683,569,016 5,061,545,050 5,635,438,217 4,759,132,777 5,140,496,096 5,714,389,263 (573,893,167) (223,181,682) (573,893,167) (223,181,682) 377,976,034 381,363,319 597,617,301 597,617,301 Land Land 3,540,415 6,927,700 0 0

1,606,820,074 1,107,592,295 2,714,412,369 2,670,131,928 1,646,894,867 1,151,415,498 1,018,393,091 2,798,310,365 2,754,029,924 1,058,793,463 126,376,026 129,798,857 Building Building (74,605,628) (74,605,628) 37,428,806 44,280,441 37,428,806 44,280,441 2015 2015

(4,434,160,030) 6,290,389,090 1,485,568,329 7,775,957,419 8,305,570,145 6,406,027,644 1,532,778,817 1,616,010,392 7,938,806,461 8,468,419,187 1,656,410,764 1,960,289,755 6,394,449,785 (297,787,310) (529,612,726) (297,787,310) (529,612,726) 126,376,026 129,798,857 40,969,221 44,356,506 Total Total 2015

Parent Group

5,037,820,916 5,635,438,217 6,082,981,873 5,115,795,779 5,717,103,951 6,163,649,291 (447,543,656) (446,545,340) 597,617,301 601,308,172 694,307,485 697,369,181 (96,690,184) (96,690,184) Land Land 325,589 303,586 0 0

1,018,393,091 1,651,738,837 1,058,489,877 2,670,131,928 2,774,037,338 1,692,825,359 1,006,727,168 2,751,315,236 2,855,220,646 1,043,884,757 (111,975,699) (103,905,410) (111,975,698) (103,905,410) 114,958,392 117,897,588 Building Building 2014 2014 8,683,230 8,683,230 (3,340,369,232) 3,480,935,275 6,821,304,507 2014

1,616,010,392 6,689,559,753 1,659,798,049 8,305,570,145 8,857,019,211 6,808,621,138 1,701,034,653 8,468,419,187 9,018,869,937 1,741,253,938 (208,665,883) (551,449,066) (208,665,882) (550,450,750) 438,775,006 310,252,630 114,958,392 118,201,174 Amount 24,554,940 51,467,436 52,500,000 Total Total 8,683,230 9,008,819

131 132

LANDBANK 2015 Annual Report FINANCIAL STATEMENTS

15. Property and Equipment

This account consists of:

Group Building Leasehold Transportation Furniture Transportation Total Land Under Buildings Rights and and and Office Equipment Construction Improvements Equipment Equipment Under Lease Others 2015 2014 At Cost At January 1 574,855,611 140,371,508 4,469,793,359 560,643,168 81,427,277 5,782,471,582 719,442,031 75,764,688 12,404,769,224 11,230,337,806 Additions 35,493,817 57,356,848 138,752,205 152,989,683 7,620,048 1,229,140,721 69,055,388 907,487 1,691,316,197 1,651,033,661 Disposals 0 0 0 (9,294,086) (8,340,335) (182,884,845) (5,613,543) 0 (206,132,809) (200,288,131) Transfers 2,635,208 (83,319,238) 4,404,598 (33,992,696) 1,382,229 (109,842,712) 0 0 (218,732,611) (271,743,937) At December 31 612,984,636 114,409,118 4,612,950,162 670,346,069 82,089,219 6,718,884,746 782,883,876 76,672,175 13,671,220,001 12,409,339,398 Accumulated Depreciation, Amortization & Impairment loss At January 1 0 0 1,959,857,694 242,172,522 57,049,746 3,819,474,199 300,280,945 59,164,697 6,437,999,803 6,137,669,173 Depreciation & amortization 0 0 48,197,291 48,418,445 1,350,737 470,368,730 9,825,966 3,612,832 581,774,001 511,978,930 Disposals 0 0 0 (3,930,218) (5,616,648) (158,255,255) (4,897,337) 0 (172,699,458) (185,752,772) Transfers/Adjustments 0 0 (8,642,267) 842,309 11,833,657 14,373,829 0 4,521,905 22,929,433 (22,006,529) At December 31 0 0 1,999,412,718 287,503,058 64,617,492 4,145,961,503 305,209,574 67,299,434 6,870,003,779 6,441,888,802 Allow for Losses 0 0 7,213,932 530,222 2,825,144 10,632,286 0 261,057 21,462,641 24,186,421 Net book value 612,984,636 114,409,118 2,606,323,512 382,312,789 14,646,583 2,562,290,957 477,674,302 9,111,684 6,779,753,581 5,943,264,176

Parent Building Leasehold Transportation Furniture Transportation Total Land Under Buildings Rights and and and Office Equipment Construction Improvements Equipment Equipment Under Lease Others 2015 2014 At Cost At January 1 574,855,611 140,371,508 4,380,355,828 560,516,493 64,033,468 5,756,042,074 285,738,416 57,598,516 11,819,511,914 11,020,983,938 Additions 24,711,817 57,356,848 130,634,766 152,955,343 7,620,048 1,227,389,513 0 0 1,600,668,335 1,268,265,467 Disposals 0 0 0 (9,294,086) (7,116,466) (181,311,140) 0 0 (197,721,692) (199,537,166) Transfers 2,635,208 (83,319,238) 4,404,598 (33,992,696) 1,382,229 (109,842,712) 0 0 (218,732,611) (270,200,326) At December 31 602,202,636 114,409,118 4,515,395,192 670,185,054 65,919,279 6,692,277,735 285,738,416 57,598,516 13,003,725,946 11,819,511,913 Accumulated Depreciation &

Amortization At January 1 0 0 1,926,560,841 242,064,440 46,823,251 3,799,686,519 250,186,643 51,004,387 6,316,326,081 6,025,535,568 Depreciation & amortization 0 0 44,752,909 48,377,118 159,497 468,775,110 2,195,049 0 564,259,683 496,283,830 Disposals 0 0 0 (3,930,218) (5,077,497) (157,061,801) 0 0 (166,069,516) (185,289,591) Transfers/Adjustments 0 0 (8,642,267) 856,277 12,381,336 14,634,959 0 4,521,905 23,752,210 (20,203,727) At December 31 0 0 1,962,671,483 287,367,617 54,286,587 4,126,034,787 252,381,692 55,526,292 6,738,268,458 6,316,326,080 Allow for Losses 0 0 7,213,932 530,222 2,825,144 10,632,286 0 261,057 21,462,641 24,186,421 Net book value 602,202,636 114,409,118 2,545,509,777 382,287,215 8,807,548 2,555,610,662 33,356,724 1,811,167 6,243,994,847 5,478,999,412

Foreign

Domestic Others Inter-office floatitems Accounts receivable Stationery &suppliesonhand Documentary stamps Other intangibleassets Prepaid expenses Sundry debits Accrued interest receivable This accountconsistsof: 18. DepositLiabilities The accountincludesprovision forcredit losses/impairmentlossesoftheParent asfollows: may incurfrom thenon-collectionornon-realization ofitsloansandreceivables andotherriskassets. theforegoing levelofallowanceforcreditWith losses,ManagementbelievesthattheParent hassufficient allowancetocoveranylossesthattheParent Changes intheallowanceforcredit lossesoftheParent are asfollows: 17. Allowance forCredit Losses This accountconsistsof: 16. OtherResources carrying amountsofproperties whichare heldfordisposalare P11,898,469andP76,198,267in20152014,respectively. Office equipment,furniture andvehicleswithcarrying amountofP379,684,742andP192,191,198in20152014, respectively, are temporarilyidle.The in 2015and2014,respectively, are includedindepreciation andamortizationexpenseinthestatementofcomprehensive income. Depreciation andamortizationoftheGroup amounting toP581,774,001andP511,978,930oftheParent amountingtoP564,259,683andP496,283,830 Others Property andequipment Other loansandreceivables Loans andreceivables Balance atbeginningofyear: Transfer/adjustments Accounts charged off andothers Provisions charged tooperations Receivables from customersandotherassets Loan portfolio(Note12) Balance atendofyear: Balance December31

Time certificateofdeposit–FCDU/EFCDU Time Savings deposit–FCDU/EFCDU Demand deposits–FCDU/EFCDU Long Term Negotiable Time certificateofdeposits Time Savings deposits Demand deposits Receivables from customersandOtherassets Loan portfolio

Certificate ofDeposits 1,045,860,316,022 991,909,866,271 505,527,477,627 474,530,109,127 53,950,449,751 26,327,345,634 27,623,085,394 11,000,000,000 852,279,517 2015 7,272,783,211 1,322,080,003 1,391,962,556 2,971,701,785 18,723 134,723,706 124,464,570 900,274,550 393,040,775 27,628,975 2015 6,906,291 Group

912,579,675,350 856,784,902,502 458,518,375,865 392,016,125,763 Group 55,794,772,848 45,050,704,770 10,744,068,078 5,000,000,000 1,250,400,874 2014 7,798,319,866 1,186,571,410 2,187,835,099 3,223,900,121 126,381,868 123,295,435 534,415,596 364,683,800 49,214,974 2014 2,021,563 0

1,046,227,858,264 992,276,880,824 505,685,191,060 474,739,410,247 53,950,977,440 26,327,345,634 27,623,613,083 11,000,000,000 852,279,517 2015 7,251,396,648 1,263,211,530 1,391,962,556 2,971,701,785 7,340,033,478 3,999,664,246 3,340,369,232 1,214,757,224 1,139,796,892 8,479,830,370 4,045,670,340 4,434,160,030 8,479,830,370 (179,874,259) 131,162,894 123,029,011 899,195,138 436,598,468 104,913,927 104,913,927 27,628,975 61,290,179 37,173,978 2015 6,906,291 2015 2015 3,214,963 3,234,807 18,723

Parent

Parent

912,951,636,151 857,150,908,961 458,673,787,117 392,226,720,970 55,800,727,190 45,050,704,770 10,750,022,420 5,000,000,000 1,250,400,874 7,765,981,310 1,128,725,978 2,187,835,099 3,223,900,121 7,365,084,857 4,116,195,669 3,248,889,188 7,340,033,478 3,999,664,246 3,340,369,232 7,340,033,478 (560,854,824) 120,886,384 120,964,758 532,006,525 400,425,908 490,740,040 2014 (25,051,379) 30,665,775 45,063,405 10,073,219 49,214,974 45,063,405 2014 2014 2014 4,324,411 2,021,563

0 0

133 134

LANDBANK 2015 Annual Report Others Miscellaneous liabilities taxpayable Withholding Unearned income Sundry credits Due toAgrarianReformFund Accounts payable Accrued interest, fringebenefits,taxesandotherexpensepayable or corporationondepositswithother FCDUs andOffshore BankingUnits(OBU)are subjectto7.5percentfinaltax. Deposit System,includinginterest incomefrom foreign currency loans,issubjectto 10percentfinaltax.Interest incomederivedby resident individual income tax while gross onshore income (income from residents) from other FCDUs and other depository banks under the Expanded Foreign Currency FCDU offshore income(incomefrom non-residents) derivedby depository banksundertheexpandedforeign currency depositsystemisexemptfrom equivalent to33percentoftheinterest incomesubjectedtofinaltax. the normalcorporateincometaxrateis30percenteffective January1,2009.Theinterest allowedasdeductibleexpenseisreduced byanamount Based onRepublicActNo.9337,whichwaspassedintolawinMay2005and amendedcertainprovisions oftheNationalInternalRevenueCode1997, for or(Benefitfrom) Income Tax. and otherdepositsubstitutes.Theseincometaxesdeferred taxbenefits are presented inthestatementofcomprehensive incomeeitherProvision stamp taxes.Incometaxesincludethecorporateincometaxandfinalwithholding taxongross interest incomefrom governmentsecurities,deposits statement of comprehensive income) as well as income taxes. Percentage and other taxes paid consist principally of gross receipts tax and documentary Under Philippine tax laws, theRegular Banking Unit of theParent is subject topercentage andothertaxes(presented asTaxes andLicensesin the 22. IncomeandOther Taxes This accountconsistsof: 21. OtherLiabilities This accountconsistsof: 20. Unsecured Subordinated Debt range from 0.62to2.70per centand0.75to4.75percent,forforeign anddomesticborrowings, respectively. Interest ratesonforeign anddomesticborrowings in2015rangefrom 0.71to2.70percentand0.754.75cent,respectively, whilefor2014,therates Bank’s foreign borrowings from multilateralandbilateralagencieshavematuritiesrangingfrom 15to40years. P14,616,998,330 are provided withforeign exchangeriskcover(FXRC)bythe NationalGovernment.ThishashistoricalvalueofP15,885,781,869.The The totalforeign borrowings ofP20,907,457,753isguaranteedbytheNationalGovernment.Foreign borrowings relent inlocal currency amountingto The breakdown ofBillspayable(foreign borrowings) isasfollows: This accountconsistsof: 19. BillsPayable rates rangefrom 0.31to1.12percentandfrom 0.15to2.50percentin2015and2014,respectively. Domestic deposit liabilities earn annual fixed interest rates rangingfrom 0.25 to3.75percentin2015and0.25 3.50percentin2014.Foreign deposit Kreditanstalt fur Wiederaufbau (KfW) Kreditanstalt furWiederaufbau Japan InternationalCooperationAgency(JICA) Asian DevelopmentBank(ADB) World Bank/IBRD Creditor/Funder Foreign borrowings Domestic borrowings Bangko SentralngPilipinas Domestic FINANCIAL STATEMENTS

January 27, 2012 Issue Date

22,865,695,463 12,722,905,667 21,749,930,995 20,907,457,753 1,290,258,554 3,651,652,110 4,101,260,604 318,482,447 500,707,725 242,406,604 771,973,888 38,021,752 70,499,354 2015 2015 January 27, 2022 Group Group Maturity Date 19,862,931,058 20,241,127,845 19,685,241,876 1,427,376,060 3,624,919,239 3,070,892,212 3,939,866,691 7,317,610,347

233,037,663 204,032,161 458,025,983 45,196,685 97,859,986 2014 2014 10,500,000,000 10,500,000,000 22,710,855,010 12,788,784,896 21,349,930,995 20,907,457,753 20,907,457,753 10,733,047,997 1,026,237,016 3,820,253,049 3,977,173,119 1,363,516,386 8,225,523,429 317,161,940 500,707,725 242,406,604 371,973,888 585,369,941 2015 38,130,661 70,499,354 2015 2015 2015 Parent Parent 10,500,000,000 10,500,000,000 19,766,046,856 19,685,241,876 10,707,812,782 20,241,127,845 19,685,241,876 3,070,892,212 1,241,855,933 3,722,610,515 3,866,230,626 7,384,086,816 1,431,945,278 6,932,091,743 231,032,999 204,032,161 613,392,073 458,025,983 45,305,594 97,859,986 2014 2014 2014 2014 Expenses Revenues December 31,2015,theParent Companyreported thefollowingrevenues andexpensesforincometaxpurposes: year 2011.Specifically, companiesare required to disclosecertaintaxinformationintheir respective notestofinancialstatements.Forthetaxableyear amended byRRNo.2-2014datedJanuary24,2014)whichprescribes thenewannualincometaxformsthatwillbeusedforfilingeffective taxable In additiontotherequired supplementaryinformationunderRRNo.15-2010,onDecember9,2011,theBIRissued19-2011(andasfurther Supplementary informationUnderRRNo.19-2011 Supplementary Information Required UnderRevenue Regulations (RR)No. 19-2011and15-2010 future taxableprofits willbeavailableagainstwhichtheassetcanutilized: Below are thetemporary differences forwhichnodeferred taxassetisrecognized bytheParent sinceManagementbelievesthatitisnotprobable that CY 2015andCY2014,respectively. There was no deferred tax asset recognized by the Parent for CY 2015. Subsidiaries recognized deferred tax assets of P72,431,321 and P63,857,317 for The reconciliation oftheprovision forincometaxcomputedatthestatutoryrateandactualprovision isasfollows: The provision for/(benefitfrom) incometaxconsistsof: Itemized deductions:

Allowance forcredit losses Deferred Current: Tax effects of: Statutory incometax

Others Minimum corporateincometax(MCIT) Normal incometax(NIT) Deferred taxasset Non-deductible interest expense Other deductible/Non-deductibleexpense Tax exempt&taxpaidincome FCDU income Cost ofservices: Non-operating andtaxableotherincome: Services/operations Others Compensation andfringebenefits Others Income from trustoperations Profit from assetssold Service charges, feesand commissions Trading andsecuritiesgain Others Representation andentertainment Rent Management andprofessional fees Transportation andtravel Repairs andmaintenance Bad debts Depreciation andamortization Information technologyexpenses Communications, lightandwater Security, messengerialandjanitorial Taxes andlicenses Compensation andfringebenefits (4,276,356,986) 1,570,353,764 4,276,866,528 (698,179,545) (810,012,347) 271,844,798 271,844,798 271,844,798 271,844,798 217,734,897 (8,581,513) 2015 2015 Group Group 0 0

(4,014,557,198) 1,144,988,796 1,144,988,796 1,001,384,612 1,001,384,612 1,323,536,693 3,980,895,263 (577,675,854) 288,071,556 143,604,184 143,604,184 2014 2014 1,114,152 0

12,837,793,754 12,837,793,754 (4,266,023,647) 1,570,353,764 4,155,378,106 (695,570,819) (810,012,347) 171,859,954 171,859,954 171,859,954 171,859,954 217,734,897 2015 2015 2015

Parent Parent 0 0 0

21,675,475,757 14,202,403,871 12,999,720,404 12,999,720,404 (4,004,024,467) 4,265,405,554 7,533,806,046 6,668,597,825 1,434,544,912 1,419,709,815 9,087,205,568 3,024,271,876 2,468,137,845 1,252,856,746 1,054,310,931 1,054,310,931 1,323,536,693 3,877,796,134 (577,675,854) 845,372,101 158,022,442 407,756,284 110,371,296 196,106,345 168,246,146 179,877,259 251,749,720 340,343,072 374,702,977 568,241,785 292,793,730 140,770,543 140,770,543 913,540,388 913,540,388 98,128,893 54,171,608 2014 2014 2014 1,114,152

0

135 136

LANDBANK 2015 Annual Report Future minimumrentals receivable undernon-cancellableoperatingleasesasatDecember 31are asfollows: Operating leasecommitments–aslessor Future minimumrentals payableundernon-cancellableoperatingleasesasatDecember31are asfollows: Operating leasecommitments–aslessee 24. Lease Contracts against operationsin2015and2014amountedtoP575,487,426P560,965,408,respectively. plans, allconcernedofficers andemployeesare entitledtocashbenefitaftersatisfyingcertainageandservice requirements. Totalexpensescharged The Parent has separate funded contributory defined contribution retirement plans covering all its officers and regular employees. Under the retirement 23. Retirement Cost IV. Taxes withheldbyclientontheirincomepaymentstotheBankwere claimedastaxcredits: III. Theamountofwithholdingtaxespaid/accruedfortheyearamountedto: II. Allothertaxes,localandnational,paidfor2015: I. Thedocumentarystamptax(DST)onloaninstrumentsandothertransactionssubject thereto forthetaxperiod2015are asfollows: financial statementsshallincludeinformationontaxes,dutiesandlicensefeespaidoraccruedduringthetaxableyear. On November25,2010,theBIRissuedRRNo.15-2010toamendcertainprovisions ofRRNo.21-2002whichprovides thatstarting2010thenotesto Supplementary informationUnderRRNo.15-2010 Bank, checks,draftsandtelegraphictransfer/others Acceptance ofbillsexchangepayableinthePhilippines Foreign billsofexchange,letterscredit Mortgages, pledges,deedofassignments/trust Debt instruments,bonds,certificateoftimedeposits Documents /transactions Tax Credits againstGross ReceiptsTax Tax Credits againstIncomeTax Final withholdingtaxes Creditable withholdingtaxes Tax onCompensationandbenefits Local National More than fiveyears After oneyearbut not more thanfiveyears oneyear Within More thanfiveyears After oneyearbutnotmore thanfiveyears oneyear Within FINANCIAL STATEMENTS Other localtaxes Mayor’s Permit/MunicipalLicense/OtherRegulatoryFees/LicensePermit Local businesstax Real estatetax National taxes Fringe benefitstax Percentage taxes(GRT)

1,810,576,185 515,070,759 904,041,335 391,464,091 40,066,615 12,779,915 15,995,898 11,290,802 2015 2015

Parent Parent

2,850,056,409 2,675,303,777 2,136,626,227 1,856,866,695 2,502,015,848 1,477,637,207 2,377,374,874 2,235,123,724 2,530,970,369 1,329,667,937 DST Paid 279,759,532 153,560,044 870,818,597 153,595,495 133,802,633 261,817,629 704,097,836 363,752,472 20,856,784 79,070,040 67,082,230 16,390,493 61,034,197 28,687,866 47,482,939 36,198,018 11,953,710 17,552,383 2014 2014 7,743,578 8,448,517 6,691,925

Other liabilities Deposit liabilities Other long-termbenefits Post-employment benefits Short-term employeebenefits Summary ofAssetsunderManagementisasfollows: Management oftheParent underitstrustoperationsamountedtoP69,250,111,454andP80,771,451,804 asatDecember31,2015and2014,respectively. entrusted byclientsandundertakesastrusteetoinvestsuchfundsinacceptable securitiesorotherinvestmentoutlets.Trust fundsorassetsunder The Parent isauthorizedunderitsChartertooffer trustservicesandadministerfundsthrough itsTrust BankingGroup. TheParent acceptsfunds 26. Trust Operations the financialpositionof related partyand themarketinwhich related partyoperates. provision for doubtful accounts relating to amounts owed by related parties. This assessment is undertaken each financial year through examination of provided orreceived foranyrelated partyreceivables orpayables.FortheyearsendedDecember31,2015and2014,Group hasnotmadeany The sales to and purchases from related parties are made at normal market prices andsettlementis made incash. There have been no guarantees Terms andconditionsoftransactionswithrelated parties: Compensation ofkeymanagementpersonnel: Transactions withotherrelated parties: The followingare thesignificanttransactionswithsubsidiaries: The followingare thesignificanttransactionsofParent with related parties: covered byBSPCircular No.547. Total outstandingDOSRIloansoftheParent asofDecember31,2015amountedtoP71,963,439,324whichP71,680,183,703are governmentborrowings own atleast20percentofthesubscribedcapitalstocks. Government-Owned andControlled Corporations(GOCCs);and(b)where theROP, itsagencies/departments/bureaus, and/orGOCCs Said circular considered asindirect borrowings oftheRepublicPhilippines(ROP),loans,othercredit accommodationsandguaranteesto:(a) BSP Circular No.547datedSeptember21,2006prescribed theDOSRIrulesforgovernmentborrowings ingovernment-ownedorcontrolled banks. cent oftotalloanportfolio,whicheverislower, oftheParent. their respective investments in the Parent. Inthe aggregate, loans to DOSRI generallyshould not exceedthe respective totalunimpaired capital or 15per banking regulations limittheamountofindividualloanstoDOSRI,70percentwhichmustbesecured bytheirrespective depositsandbookvalueof In the ordinary course of business, the Parent has loan transactions with certain directors, officers, stockholders and related interests (DOSRI). Existing 25. Related Party Transactions Receivables from

Trust Agency Other FiduciaryAccounts Special PurposeTrust Other expenses Other income Lease expense Interest expense Interest income Sales/(Purchases) customers Management 29,366,825 29,366,825 Personnel Key 0 0

2,854,548,032 1,920,835,558 Subsidiaries 566,170,232 367,542,242

2015 and Rural Banks) 71,934,072,499 71,934,072,499 Provident Fund (GOCCs, Others 0 0

74,817,987,356 73,884,274,882 566,170,232 367,542,242 Total 237,996,611 149,466,121 53,320,367 35,210,123 2015

Management 30,033,183 30,033,183 Personnel Group Key

0 0

211,677,290 133,613,680 45,242,606 32,821,004 3,334,847,418 2,411,293,748 2014 Subsidiaries 551,592,869 371,960,801

69,250,111,454 27,299,485,830 25,585,916,746 14,761,771,770 2014 and Rural Banks) 1,602,937,108 71,673,465,185 71,673,465,185 Provident Fund (495,756,148) (344,944,265) (156,760,579) 214,827,054 129,662,548 (45,236,905) (27,996,821) 53,320,367 31,844,139 77,714,114 2015 (GOCCs, 2015 2015 Others 1,468,308

Parent

0 0

75,038,345,786 74,114,792,116 80,771,451,804 40,420,809,135 22,235,255,282 15,691,150,806 2,424,236,581 (502,271,126) (336,572,587) (166,795,234) 551,592,869 371,960,801 188,805,659 115,809,359 (44,553,018) (26,242,391) 45,242,606 27,753,694 70,488,378 2014 2014 2014 Total 1,403,726

137 138

LANDBANK 2015 Annual Report Others Liability IndemnityFund Outward billsforcollection Late depositsreceived Spot exchangecontracts Outstanding guarantees Derivatives Standby/commercial lettersofcredit Commitments Trust Departmentaccounts The followingbasicratiosmeasure thefinancialperformanceofParent: 29. Financial Performance which theParent hascontracted: The followingisasummaryofvariouscommitmentsandcontingenciesattheirequivalentpesorevalued amountsarisingfrom off-balance sheetitems if any, willnothaveamaterialeffect ontheGroup’s financialstatements. outcome ofwhichisnotpresently determinable.IntheopinionofManagementanditslegalcounsel,eventualliabilityundertheselawsuitsorclaims, The Group iscontingently liableforlawsuitsorclaimsfiledbythird partieswhichare eitherpendingdecisionbythecourtsorundernegotiation, statements. TheGroup doesnotanticipatemateriallossesfrom thesecommitmentsandcontingentliabilities. In thenormalcourseofbusiness,Group makesvariouscommitmentsandincurscertaincontingentliabilitieswhichare notpresented inthefinancial 28. Commitments andContingent Liabilities The Group hascurrency derivativesembeddedinhostnon-financialcontractssuchasleaseagreements andpurchase orders. Embedded Currency Derivatives deemed tobecloselyrelated totheirhostcontracts,whiletheputoptionembeddedinadebtinvestmentisnotdeemedbesignificant. This includescall,put,extension,andconversionoptionsindebtsecuritiesloanreceivables. Theembeddedcall,putandextensionoptionsare Embedded OptionalitiesinDebtInvestments This includescredit defaultswapsembeddedinhostdebtinstrumentsandwithcredit linkages toreference entities. Embedded Credit Derivatives Embedded Derivatives the FXriskcoveramountedtoJPY7,548,631,599. 2008 and its fair valuechanges are reported in thestatement of comprehensive income. Asof December 31,2015, the outstanding notional amountof The foreign exchangeriskcoveronforeign borrowings isaderivativefinancialinstrumentperBSPMonetaryBoard ResolutionNo.1063datedAugust14, Foreign Exchange(FX)RiskCover market valueofP87,698,051. As ofDecember31,2015,theoutstandingnotionalamountdebtwarrantsboughttomature onNovember29,2032amountedtoP72,519,542with Over theCounterInterest RateOptionContractBought to P18,952,035,000withmarketvalueofP18,835,932,700. As ofDecember31,2015,theoutstandingnotionalamountcurrency sellforward/swap agreements withmaturityoflessthansixmonthsamounted Currency Forwards Freestanding Derivatives accepted valuationmodelswithobservableinputs. For Derivativeinstruments,fairvaluesare estimatedbasedonquotedmarketprices,pricesprovided byindependentpartiesorvaluesdeterminedusing 27. Derivative Financial Instruments in 2014are depositedwithBSPassecurityfortheParent’s faithfulperformanceofitsfiduciaryobligation. In compliance with the requirements of theGeneral Banking Law, government securities with total face value of P850,000,000 in 2015 and P950,000,000 Return onaverage equity Return onaverageassets Net interest margin ratio FINANCIAL STATEMENTS

196,400,334,476 21,849,619,710 23,186,750,555 76,136,294,550 69,250,111,454 3,873,156,496 406,550,184 108,308,511 732,085,717 824,682,129 32,775,170 2015 2015 17.71% 1.24% 3.26% Parent 186,183,945,353 23,208,712,497 15,850,626,079 63,655,671,653 80,771,451,804 1,207,440,000 759,704,112 563,481,720 25,000,000 53,336,546 88,520,942 2014 2014 17.20% 1.35% 3.44% three levelsnamely1.strategic,2.portfolioand3.transactional. Bank’s implementation of ERM system with defined pro-active RM across various operations of the Bank is beyond compliance. ERM isimplemented in LBP’s RMapproach isgovernedbytheboard-approved EnterpriseRiskManagement(ERM)anchored onitsmission,visionandstrategicobjectives. The framework. compliance, thesynergy ofthethree functionsprovides credence totherole oftheBank’s corporate governanceinimplementinganeffective RM RM atLBPcompletesthetriumvirate of auditandcompliancefunctionswhichfocusattheriskcontrols oftheBank.Together withinternalaudit and appetite. losses beyonditsappetite.RMisembeddedinallthebusinessprocesses oftheBankanditascertains thatrisk-takingiscommensuratewithitsrisk The core RMphilosophyoftheBankistobalanceriskandreward bymaximizingbusinessopportunities,operatingwithintheriskthreshold andminimizing controls, RMsystemsandprocedures tomanagerisks. the Board ofDirectors (BoD)through theRiskOversightCommittee(RiskCom) and SeniorManagementensure adequacyofframework,policies,internal Risk Management(RM)goeshand-in-handonco-equalfootingwithLBP’s businessstrategy. Itisanintegrativecomponentofgoodgovernancewhich LBP RISK MANAGEMENT PHILOSOPHY AND CULTURE 31. Financial RiskManagement LBP Group hasfullycompliedwiththeCARrequirement oftheBSP. subordinated debtandgeneral loanlossprovision. and 2 investment (supplementary) in capital, non-marketable which securities. includes The other unsecuredcomponent of regulatory capital is Tier profit less required deductionssuchasunsecured credit accommodationstoDOSRI,deferred incometax,otherintangibleassets,equityinvestments The regulatory 1(core) qualifying capitaloftheParent capital,whichcomprisespaid-upcommonstock,retained consistsofTier earnings,current year 1capital. regulatory adjustments/deduction toTier The BankadoptedBASEL3CARcomputationpursuanttoBSPCircular No.781effective January31,2014.INMESandAFSEquitywere includedas extent covered bymargin depositsandothernon-riskitemsdeterminedbytheMonetaryBoard (MB)oftheBSP. total assetslesscashonhand,duefrom BSP, loanscovered byhold-outonorassignmentofdeposits,loansacceptancesunderletterscredit tothe excluding insurancecompanies).Qualifyingcapitalandrisk-weightedassetsare computedbasedonBSPregulations. Risk-weightedassetsconsistof cent forbothstand-alonebasis(headoffice andbranches)consolidatedbasis(Parent andsubsidiariesengagedinfinancialalliedundertakingsbut In addition,therisk-basedcapitalratioofabank,expressed asapercentage ofqualifyingcapitaltorisk-weightedassets,shouldnotbelessthan10per unimpaired capital(regulatory networth)asreported totheBSP. Under existing BSP regulations, the Parent’s compliance with regulatory requirements and ratiosis determined based on the amount of the Parent’s Regulatory QualifyingCapital years. or adjustthecapitalstructure, theGroup mayissue capitalsecurities.Nochangeswere madeintheobjectives,policiesandprocesses from theprevious to theGroup’s capitalstructure are madeinthelightofchangeseconomicconditionsandriskcharacteristicsitsactivities.Inorder tomaintain The Group managesitscapitalbymaintainingstrong credit ratingsandhealthycapitalratiostosupportitsbusinesssustainmandate.Adjustments capital requirements. The overallcapital management objectiveof the Group is to create a more efficient capital structure whileensuringcompliancewithexternally imposed Capital Management For CY2015netincome,theParent remitted P6.6billioncashdividendonApril6,2016. On March 31,2015,theParent remitted cashdividendstotheNationalGovernmentinamountofP6.0billioncoveringitsCY2014netincome. agreements betweentheWorld Bank,theParent andtheDepartmentofFinance(DOF). The Parent complieswiththeprovision ofRANo. 7656ondividenddeclarationtotheNationalGovernment(NG)andwithloanguarantee billion oftheParent’s authorizedcapitalhadbeenissuedintheformof1.2billion fullypaid-upcommonshares. aggregate parvalueofP20billionand500millionpreferred shares withparvalueofP10pershare, andanaggregate parvalueofP5.0billionandP12.0 As ofDecember31,2015,theParent’s authorizedcapitalwasP25.0billioncomprised of2billioncommonshares withparvalueofP10.0pershare andan 30. Capital Funds Total CapitalAdequacyRatio(CAR) 1Capitalratio Adjusted Tier Risk Weighted Assets Total QualifyingCapital Less: Required Deductions Gross QualifyingCapital 2Capital Tier 1Capital Tier 2015 513,059 12.89% 66,156 28,940 95,096 15,092 80,004 9.95% Group

2014 (Amounts inMillions) 469,533 14.81% 11.68% 69,552 20,368 89,920 14,703 75,217

2015 510,174 12.68% 64,671 30,403 95,074 15,070 80,004 9.72% Parent

2014 466,591 14.49% 11.35% 67,616 22,283 89,899 14,682 75,217

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LANDBANK 2015 Annual Report 1

The tablebelowshowstheBank’s maximumexposure tocredit risk,before andafterconsideringeligiblecollateralheldorothercredit enhancements. Maximum Credit RiskExposure including thebankingandtradingbook,bothOn-Off-Balance Sheet. The Bankconsidersitsloanportfolioasthemajorsource ofcredit risk;however, othersources ofcredit riskexistthroughout theactivitiesofBank, balance sheet. funds are extended,committed, invested,orotherwiseexposedthrough actualorimpliedcontractualagreements, whetherreflected onoroff the to theloanportfolioandisfoundinallBankactivitieswhere successdependsoncounterparty, issuer, orborrower performance.ItarisesanytimeBank basis forloanapproval and todeterminetheprobability ofdefaultonanon-goingbasiswhichcouldleadtoeconomiclosses.Credit riskisnotlimited The Bankdefinescounterpartycredit riskonloansastheinabilityto review andanalyzethecredit qualityofpotentialandexistingborrowers toserveas CREDIT RISK MANAGEMENT the Bank’s processes toensure compliancewithregulatory andinternalriskcontrol measures. market, credit andoperational riskreports were prepared andpresented totheRiskComwhichsubstantiatethatappropriate RMtoolsare embeddedin absorption capabilitiesoftheBankwere ascertainedthrough theregular conduct ofcredit andtreasury riskstress testing.Moreover, regular andspecial Regular review and revision ofrisk guidelines andmanuals were conductedinaccordance withregulators’ policiesandindustrybestpractices.Theshock was created toberesponsible andaccountablefortheorganization-wide ITandsecurityriskprogram. Management ofInformationTechnology (IT)andsecurityriskswasintensifiedas the InformationSecurity& Technology RiskManagementOffice (ISTRMO) (BCQ) andICAAP. Assessment (RCSA),RiskRegister(RAR)&Treatment BusinessImpactAnalysis(BIA),ContinuityQuestionnaire Register(RTR), The bank-wideimplementationofoperationalRMtoolswasstrengthened asRMGconductedwalkthroughs toBank’s BUsonRisk&Control Self- (BSP) before thedeadline. preparation of theBank’s 2015Internal Capital Adequacy Assessment Process (ICAAP) documentwhichwas submitted toBangkoSentral ng Pilipinas Presentationdissemination ofERMAudioVisual (AVP) were completedaspartofthebank-wideimplementationERM.Also,RMGfacilitated the Bank’s commitmentstoGovernanceCommissionforGOCCs(GCG)Sector. Thecompletionofbow-tieanalysisforLBP-DBPmerger risksandthe In 2015,thenotableaccomplishmentsofRMGincludedevelopmenttwotreasury valuationmodelsandfivecredit scoringmodelsaspartof among others)oftheBank.RMGreports functionallytotheRiskComandadministrativelyPresident &ChiefExecutiveOfficer (CEO)oftheBank. activities of the Bank. The RMG as an independent unit performs the oversight function for all majorriskareas (credit, market, and liquidity, operational, RM involvestheoversightfunctioncoveringriskidentification,assessment,measurement, control, monitoringand reporting ofrisksinherent inall or Group level. embrace thecontinuousmanagementofriskeventsandimmediatelyescalateoccurrences thatcannotbesolvedattheirleveltotheDepartment At the address riskoccurrences thatcannotbesolvedatthelevelofrisktakingBUs. Management Group (RMG) recommends policies, processes and changes based on risk reports submitted by the risk taking Business Units (BUs) to At thePortfolioLevel,Groups orDepartmentsoverseetheimplementationofpoliciesandprocesses andmonitorpossiblebreaches. Risk BoD andSeniorManagementare alsoinvolvedinanorganizational-wide riskmonitoringandreporting whichare usedasbasisfordecision-making. development andapproval ofRMpolicies,framework/structure, internalcontrols, andriskmanagementsystemaswelltheannualreview thereof. The At the

On BalanceSheetItems Sales ContractReceivable(SCR) Cash onHand Real andOtherProperties Acquired Checks andOtherCashItems Total Exposures ExcludingOtherAssets Due from BangkoSentralngPilipinas Other Assets Due from OtherBanks Total On-BalanceSheet Exposures Available-for-Sale (AFS)Financial Assets Held-to-Maturity (HTM)FinancialAssets Unquoted DebtSecuritiesClassifiedasLoans Loans andReceivables Other LoansandReceivables FINANCIAL STATEMENTS Arising from Repurchase Agreements, CertificatesofAssignment/Participation withRecourse,andSecurities LendingandBorrowing Transactions 1. InterbankLoansReceivables 2. Loans&Receivables-Others 3. DefaultedExposures a. LGUs&PublicSectorEntities b. GovernmentCorporation c. Corporates d. Micro/Small &MediumEnterprise e. Loanstoindividuals Strategic Level, the BoD through the RiskCom and Senior Management are actively involved in an organizational-wide RM oversight which involves Transactional Level,the Authorized Risk Takers (ARTs) are involvedin the actualimplementationofriskpoliciesandprocedures. AtLBP, theARTs 1 Exposures 1,094,869 1,082,211 314,890 131,219 123,351 378,094 240,421 Net 83,736 26,568 12,658 12,972 34,004 29,979 45,474 25,081 4,431 5,801 2,365 838 311 770 0

645,498 645,434 314,890 105,394 114,223 0% 83,736 26,568 623 64 0 0 0 0 0 0 0 0 0 0 0 0 0

20% 1,782 1,782 1,399 1,081 311 103 200 72 15 0 0 0 0 0 0 0 0 0 0 0 0 0

2015 (InMillions) 50% 50,892 50,892 19,916 20,321 16,719 5,645 3,964 1,046 3,602 0 0 0 0 0 0 0 0 0 0 0 0 0

75% 45,371 45,371 45,371 45,371 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

344,296 100% 331,702 308,848 240,406 12,594 11,303 16,199 29,979 21,279 5,909 5,164 394 770 215 84 0 0 0 0 0 0 0

150% 7,030 4,431 7,030 2,155 2,150 444 0 0 0 0 0 0 0 0 0 5 0 0 0 0 0 0

Credit 414,672 402,078 356,549 240,409 RWA 12,594 15,867 11,826 24,782 29,979 34,049 23,120 1,060 6,647 2,921 7,146 3,440 770 62 0 0 0 0

Off-Balance SheetItems A. Direct credit substitutes B. Transaction-related contingencies C. Trade-related contingencies Total Off-Balance SheetExposures Counterparty RWA In The Trading Book the ILC,RiskComandLBPBoard tokeeptabofmajorcredit issuesorconcerns thatneedpriorityactionorresolution. Periodic escalation of credit risk exposures and underlying risk events is being undertaken via a formal reporting system.Thisenables the Bank through Credit RiskMonitoring • • • • • implementation ofthefollowingautomatedcredit scoringmodels: (CRES) Scoring Facility (CSF) to enhance its capability to determine the credit worthiness of its borrowers. In line with this, it has recently approved the Moreover, itundertakescontinuingdevelopmentandimplementationofautomatedcredit riskratingmodelsthrough itsCredit RiskEngineSystem provisioning guidelines.TheBankhasalsosetsupsimilarexpert-basedcredit riskratingonitsotherloanstreams. of tengrades,sixwhichfallunderunclassifiedaccounts,withthe remaining fourfallingunderclassifiedaccountsinaccordance with regulatory manner, asaccuratelypossible,andthereafter usestheriskinformationasoneofbasesinmakingcredit decision.TheICRRSratingscaleconsists In compliancewithBSPrequirements, theBankestablishesitsICRRSforpurposeofmeasuringcredit riskforcorporateborrowers inaconsistent Credit RiskRating borrower limit. rated belowtheAcceptablelevel.Inaddition,Banksetsapplicablelimitsonitsreal estateloans,large exposures, industryconcentrationandsingle and that only P2,210 million or 1.32 percent of loan accounts (i.e., corporate type of borrower) under its Internal Credit Risk Rating System (ICRRS) are classification andsetting-upofvaluation reserves. AsofDecember2015,theBank’s netNon-PerformingLoan(NPL)stoodatP790millionor0.15percent: To effectively monitorandmaintainthequalityofitsloanportfolio,Bankconductsannualqualitativeimpairmentreview toassure proper loan measurement andriskrating ofBankborrowers. As themiddle office for credit risk, theBank’s Credit Policy &Risk ManagementDepartment(CPRMD)handlescredit riskoversight,policyissuance, Issuances (CPIs)andCredit Bulletins(CBs). accounts regain normaloperations. TheBankhasputinplacecomprehensive setofcredit policiesthrough theissuanceofCredit Manual,Credit Policy level Committee)anduptotheLBPBoard, wheneverapplicable.Theapproval process alsocoversproposed remedial actions aimed athelpingproblem depending onthetransactionoramountofloanapplied,couldbeelevatedtoCredit Committee,theInvestment&LoanCommittee[ILC](aBoard- measurement, control, andmonitoringofcredit risk. Accordingly, approval ofcredit applicationgoesthrough prescribed loanapproving levelswhich, The Bank manages credit risk through a structured framework duly approved by the Board that sets out policies and procedures covering the identification, the long-termsuccessofBank. between credit riskandother risks.Theeffective managementofcredit risk isacriticalcomponentofcomprehensive approach toRMandessential needs tomanagethecredit riskinherent intheentire portfolioaswellthe riskinindividualcredits ortransactions.Italsoconsiderstherelationships The goal of credit RM is to maximize the Bank’s risk-adjusted rate of return by maintaining credit risk exposures within approved parameters. The Bank Credit Risk Management of 9.52 percent,from P418,471millionin2014toP458,2922015. This represents 69.49percent oftheBank’s aggregate RWA ofP513,059million.However, theBank’s totalCredit RWA increased byP39,821millionor The Bank’s Loans&Receivablesreflected aCredit Risk Weighted Assets(RWA) ofP356,549millionfollowingtheStandardized Approach incredit RM. Goods andTrust transactions.Outstandingderivativeexposures are mainlyover-the-counter Foreign exchange(Fx)optioncontracts. of credit –domesticandforeign), performancebondsandwarrantiesrelated toparticulartransactions,andcontingenciesarisingfrom movementof respective Credit ConversionFactors(CCFs).Theseaccountsare composed mainlyofgeneralguaranteesindebtedness(e.g.,financialstandbyletters aggregating P83,736million.ForNetOff-Balance Sheetexposures ofP45,070million,thecredit equivalentamountsare computedconsideringtheir million (8.99%),andgovernmententitiesatP30,749(8.13%).TheBankalsoholdssubstantialreceivables arisingfrom repurchase agreements Corporates atP240,421million(63.59%),followedbyMicro, Small&MediumEnterprises(MSMEs)atP45,474million(12.03%),interbankloansP34,004 mainly ofprimarycollateralssuchasdepositholdout,governmentsecurities,andsovereign guarantees.ThebulkofNetLoans&Receivableswentto As ofDecember2015,theBank’s regular On-BalanceSheetLoans&ReceivablesamountedtoP378,094million,NetofCredit RiskMitigationwhichconsists Credit Exposures andCredit-Related Commitments Derivative Exposures 2 Total Credit RiskWeighted Assets(CRWA) inclusiveofgeneralloanlossprovision ofP929million Total Exposures Behavioral ScoringModelforCorporates Behavioral ScoringModelforSmallMediumEntrepreneurs (SMEs) Behavioral ScoringModelforLocalGovernmentUnits(LGUs) Application ScoringModelforSalaryLoanAvailers Application ScoringModelforIndividualHomeBuyers Equivalent 1,140,215 Amount Credit 45,070 38,575 4,000 2,495 276

645,498 0% 0 0 0 0 0

20% 1,874 92 0 0 0 0

50% 52,340 1,376 1,375 72 1 0

75% 45,371 0 0 0 0 0

388,102 100% 43,694 38,575 3,999 1,120 112

150% 7,030 0 0 0 0 0

459,221 Credit RWA 44,383 38,575 4,000 1,808 166

2

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LANDBANK 2015 Annual Report 1. Interest Rate RiskManagement LBP managesthefollowingkeymarketriskcomponentsusingitsinternal mitigation techniques: well asnon-tradingportfolios. Market Riskisassociatedtoearningsarisingfrom changesininterest rate,Fxrates,equityandintheir impliedvolatilities.Marketriskarisesintradingas Managing Market RiskComponents The Total MarketRWA represents 1.1percent oftheBank’s aggregate RWA ofP513,059million. As of31December2015,theBank’s totalMarketRiskWeighted Assets(RWA) stoodatP5,496million,broken downasfollows: WeightedMarketRisk Assets risk managementsystemandprocesses inplace. In thesameway, certainsubsidiariesoftheBankindependentlyquantifyandmanagetheirrespective marketriskexposures bymaintainingtheirrespective banking book. Moreover, varioustoolssuchasRe-pricingGap,Earnings-at-Risk (EaR)andEconomicValue ofEquity(EVE)are usedtomeasure interest rateriskinthe subordinated toMATs andVaR limits.MacaulayandModifiedDurationare usedtoidentifytheinterest ratesensitivityoftheBondPortfolioBank. Positions are monitored on a daily basis to ensure that these are maintained within established position limits to control losses.Positionlimitsare the lossesthatmaybeincurred indailytradingactivitiesthrough theVaR andManagementActionTriggers (MATs). A managementalertisactivatedwheneverlossesduringaspecifiedperiodequalorexceedlevel.LBPcontrols andminimizes within limitsatalltimesandensures thatbreaches are escalatedtoSeniorManagementforappropriate action. units aswelltheAsset&LiabilityManagementGroup (ALMG)whichmanagestheBank’s liquidityandreserve positions,conducts risk-takingactivities trading portfolio.TheTreasury &InvestmentBanking Sector(TIBS),particularlytheFinancialMarketsGroup (FMG)whichmanagestheBank’s trading The LBP’s BoD, RiskCom and the Asset & Liability Committee (ALCO - Senior Management level) define and set the various market risks limit for each The Bankusesacombinationofrisksensitivities,Value-at-Risk (VaR), stress testing,CARandcapitalmetricstomanagemarketrisksestablishlimits. derivatives thatare embeddedinsomefinancialcontracts,theseare relatively insignificantinvolume. LBP’s exposure onderivativesiscurrently limitedtocurrency swapsandcurrency forwards tomanageFxexposure. AlthoughtheBankisalsoexposedto values from price,pricefluctuations andpriceexpectationsofanunderlyinginstrument (e.g.,share, bond,Fxorindex). in GovernmentSecurities (GS) and other debt instruments, equity, Fx and other securities, as well as, in derivatives or financial instruments thatderivetheir LBP isexposedtomarketrisksinbothitstradingandnon-tradingbankingactivities.TheBankassumesriskmakingpositiontaking Market RiskManagementFramework MARKET RISK MANAGEMENT (CAR). Thestress testingalsoincludesprescribed regulatory testssuchasuniformstress testandreal estatestress test. tests are done to determine the magnitude of their impact on the Bank’s loan portfolio, on the Credit RWA, and finally on the Capital Adequacy Ratio The Bankregularly conductsstress testingofitsloan portfoliotakingintoaccountriskeventswithhighprobability ofoccurrence. Utilizingsuchscenarios, StressCredit Testing guarantees andotherinsurancemechanismstoshieldthemfrom theserisks. agriculture-related loans that are vulnerable to the effects of climate and weather disturbances, borrowers are encouraged to avail of crop insurance The Bankalsoacceptsgovernmentguarantees,cross suretyship from corporationsandsuchothereligibleguarantees.Inthecaseofagricultural • • • • The followingare theprimarycollateralsacceptedbyBank: and credit policyissuancesprovide theguidelinesonacceptabilityofloancollateralandmaximumvaluationforeachtypecollateral. The required amount and type of loan collateral depend on borrower type and assessment of the credit risk of the borrower. The Bank’s Credit Manual Collateral andOtherCredit Enhancements Particulars Interest RateExposure Fx Exposure Equity Exposure Options Total Market RWA FINANCIAL STATEMENTS VaR methodologyandstress testing. Bank continuestomanageinterest rateriskintradingactivities through factorsensitivities andtheuseofaneffective andindependentlyvalidated Market riskintradingarisesprimarilyas aresult ofmarketmaking, applicationofriskmanagementsolutionsandparticipationinsyndications. The a. Traded MarketRisk Chattel Mortgage Real EstateMortgage Government Securities Holdout onDeposits

(In Millions) Amount 5,496 1,627 3,028 841 0 and impactsonprofit andlossoftheBank.Equitiesare subjecttodailymark-to-market and controlled through risklimitssuchasposition, VaR andMATs. The Bankisexposedtoequitypricerisk resulting from changesinthelevelsofvolatilityequityprices,whichturn affect thevalueofequity securities 2. EquityPrice RiskManagement Re-pricing Gap Commitments Derivatives Off-Balance Sheet Others Bills Payable Deposits Financial Liabilities Sales ContractReceivables Total Investments Total Loans Due from BSP Financial Assets

Particulars EVE-at-Risk EaR perspective through EaRModelandquarterlyfortheeconomicvalueperspective usingEVE-at-RiskModel. The interest rateriskexposures oftheBankare measured andreported totheALCOandRiskComatleastonamonthlybasisunderearnings are interpreted inrelation withotherriskexposures. in isolation.Interest riskmeasurement systemsare integratedintotheBank’s general riskmeasurement system andtheresults from modelsused Both viewpointsare assessedtodeterminethefullscopeofBank’s interest rateriskexposure. Moreover, interest riskintheBankisnotmanaged interest rateriskinthebanking book. The tablebelowshowstheincrease (decline)ineconomicvalueforupward anddownward rateshocks usingtheEVE-at-RiskModeltomeasure interest rates. the remaining lifeofthe Bank’s holdings.Thismodelalsomeasures thechangeinBank’s economicvalueofequityforspecifiedchangesin b. Economic Value Perspective: TheBankusestheEVE-at-RiskModeltoassesspotentiallong-termeffects ofchangesininterest ratesover downward interest rateshocksinthebankingbook: The followingtablesetstheRe-pricingGappositionofLBPas31December2015andincrease/decline inearningsforupward and 12 monthhorizon. a. EarningsPerspective: TheBankusestheEaRModeltoestimatechangesinNetInterest Income(NII)underavarietyofratescenariosover The twointerest rateriskperspectivesadoptedbyLBPinmeasuringInterest RateRiskintheBankingBookare asfollows: application ofinterest rateriskmeasurement modelsandreporting standards suchasRe-pricingGap,EaRandEVE-at-Riskreports. The Bankmanagesinterest riskbasedonapproved policiesandguidelines,establishedlimitsettingprocedures andinterest raterisklimits, regular savingsandtimedepositaccountratesare setbyreference toprevailing marketrates. which isgenerallyreset atthebeginningofeverytwoweeks.Interest ratesonfloatingrateloansare typically reset every30to90days.Fordeposits, The Bankestablishesthelendingratesforitsloansbasedonaspread overitsinternalbaserate,whichreflects theBank’s averagecostoffunds interest-earning assetsandinterest-bearing liabilities. Interest ratesensitivityistherelationship between market interest ratesandnetinterest incomeduetothematurityorre-pricing characteristicsof For interest rateriskinthebankingbook,akeycomponentofBank’s assetandliabilitypolicyisthemanagementofinterest ratesensitivity. b. Interest RateRiskintheBankingBook -300/-15 14,212 8,477 -300 -200/-10 5,607 9,474 -200 Change inInterest Rates (inbasispoints) Change inInterest Rates (inbasispoints) -100/-5 2,781 4,737 -100 -50/-2.5 1,385 2,369 -50 1 to30days (In millions) (In millions) (474,539) 717,774 262,059 717,774 134,841 125,000 (18,824) (18,824) 2,171 +50/+2.5 (1,375) (2,369) 47 +50 0 0 0

to 3months > 1month 165,266 164,562 (92,180) 73,086 +100/+5 72,539 (2,739) (4,737) +100 (In millions) 704 532 15 0 0 0 0 0

to 6months > 3months +200/+10 (5,435) (9,474) +200 27,702 24,533 52,235 16,426 51,552 8,107 682 0 0 0 0 1 0

to 12months > 6months +300/+15 (14,212) (8,091) +300 (34,973) (14,436) (34,973) 10,393 30,930 10,393 25,106 5,807 17 0 0 0 0

143 144

LANDBANK 2015 Annual Report Total Liabilities Others Bills payable Deposit liabilities Liabilities Total Assets Other assets Investment insubsidiaries Loans andreceivables model accuracyandtoenhancetherisk estimationprocess ingeneral. Back-testing results are presented to the ALCO and theRiskCom which examine theactualperformanceofportfolios against VaR measures to assess number ofexceptionsisnotedandthemodelclassifiedintoonethree zonesasfollows: Under theback-testingprocess, exceptionoccursifmark-to-marketandtradinglossexceedsthe result ofthemodel-generated riskmeasure. The with model-generatedriskmeasures. LANDBANK adoptstheback-testingasbasictechniqueinverifying quality ofriskmeasures used bytheBankcomparingactualtradingresults 2. Back-Testing LANDBANK Treasury’s tradingactivitieswassetatP321million throughout 2015. Daily VaR calculations are compared against VaR limits, the monetary amount of risk deemedtolerableby management. Theover-all VaR limitforthe VaR bothatportfolioandacross portfoliolevel. an InternalModelApproach forcapitalcharging. TheVaR disclosure isintendedforexternaldisclosure andforregulatory purposes.TheBankmonitors Foreign Securities (FS) trading portfolios. The Bank continuously pursues initiatives toimprove processes inpreparation for theBank’s migrationtowards LANDBANK usesinternallydevelopedHistoricalSimulationModelincomputingVaR ofEquities,FxNet OpenPosition,GovernmentSecurities(GS)and assuming astaticportfolio. conditions, estimatingthepotentialrangeoflossinmarketvaluetradingportfolio,overaone-dayperiod,at99.0percentconfidencelevel, VaR isastatisticalapproach formeasuringthepotentialvariabilityoftradingrevenue. Itisusedtomeasure marketriskinthetradingbookundernormal 1. VaR Analysis Market RiskMeasurement and Validation Models LBP hadthefollowingsignificantexposures denominatedinforeign currencies asof31December2015: The followinglimitsare setforforeign currency-related transactions: currency, theBankmonitored dailythecurrency positionstoensure thattheseare withinestablishedlimits. Currency riskisthethatvalueofafinancialinstrumentwillfluctuateduetochangesinFxrates.UsingPhilippinePesoasBank’s functional 3. Foreign Exchange RiskManagement Interbank loansreceivable Held tomaturity Available forsaleinvestments Held fortrading Due from banks Foreign Currency &CoinsonHand/Cashothercash items FINANCIAL STATEMENTS Foreign Securities ForeignCurrency Trading Particular Particular Equity non-conclusive/yellow zone ZONE CLASSIFICATION problematic/red zone safe/green zone Position Limit Position Limit (In Millions) (In Millions) 1,000 $20 $50 66,402,023,922 86,222,633,811 52,804,726,959 11,774,563,231 24,213,512,908 26,849,371,175 10,517,092,139 17,718,090,000 4,769,604,731 3,080,204,824 809,779,691 NUMBER OFEXCEPTIONS 87,698,051 US$ 10 ormore exceptions 14,024 5-9 exceptions 0-4 exceptions 0

(In PhilippinePesos) 17,002,748,325 15,870,306,966 4,909,722,549 3,279,580,068 1,132,441,359 YTD GainErosion YTD GainErosion 509,714,285 947,048,243 Income Target Income Target Management Management Others 66,425,983 81,786,515 25,167,455 Alert Trigger Alert Trigger 0 0 0 0

83,404,772,247 91,132,356,360 27,359,085,460 26,387,399,105 53,937,168,318 15,054,143,299 17,799,876,515 24,213,512,908 3,080,204,824 5,716,652,974 834,947,146 66,425,983 87,698,051 Total 14,024

by preparing Peso,FxRegular, FCDUandConsolidatedLGRonamonthly basis. any future structural imbalances suchaslong-term assets growing faster than longtermliabilities.TheRMG,through TRMD assistsALCOinitsfunction ability tomeetfuture fundingneeds.Itbreaks downbalancesheetitemsaccording toestimatedmaturitiesofassetsandliabilities inorder todetermine The BankperformsliquiditygapanalysisusingtheLGRwhichisariskmeasurement toolusedinidentifying thecurrent liquidity positiontodeterminethe 1. LiquidityGapReport LBP managestheliquidityriskusingfollowingtools: Liquidity RiskMeasurement Models balance sheet.RiskmodelsusedinliquidityRMare subjectedtoindependentmodelvalidationasconductedbytheInternalAuditGroup (IAG). LBP performsacomprehensive liquidityriskmeasurement andcontrol usingastooltheConsolidatedLiquidityGapReport(LGR)coveringbank-wide average maturityofitsfinancialassetsexceedingthatliabilities. Bank’s assets and liabilities. In part, thiscomesaboutas a result of the Bank’s policy to seek higher yieldingassets,apolicywhich willgenerally lead tothe Although theBankpursueswhatit believes tobeaprudentpolicyinmanaging liquidity risk,amaturitygapdoes,from timetotime,existsbetweenthe and provided toALCOand RiskCominatimelymanner. (TRMD) isresponsible for theoversightmonitoringofBank’s liquidityriskpositionsandensures thatreports ontheBank’s current riskare prepared a month or more frequently as required by prevailing situations. The Risk Management Group (RMG), through the Treasury RiskManagement Department liabilities according tosource, instrumentandcurrency tominimizeliquidityrisksresulting from concentration infundingsources. TheALCOmeetstwice the Bank’s assetsandliabilitiespositiononaregular basisand,incoordination withtheTIBS,recommends measures topromote diversificationofits ALCO andtheTIBSare responsible forthedailyimplementationandmonitoringofrelevant variablesaffecting LBP’s liquidityposition.TheALCOreviews The LBP’s BoDexercises oversightthrough RiskComanddelegatedtheresponsibility ofmanagingtheoverallliquidityBanktoALCO.The across functionalcurrencies asreflected intheLiquidityGapReport(LGR). maturities. Fundingliquidityriskisbeingmonitored andcontrolled through theclassificationofmaturitiesassetsandliabilitiesovertimebands flow mismatches without incurringunacceptable losses. Itoccursfrom themismatchofasset,liability, exchangecontractand contingentcommitment Funding liquidityriskrefers tocurrent andprospective riskarisingfrom theinabilitytomeetinvestmentandfundingrequirements arisingfrom cash stress testingorscenario analysis. that lacksufficient depth, orwithstructured orcomplexinvestmentshavingsmallpotentialbuyers.Thisliquidityriskperspectiveiscaptured through particular positionbecauseofinadequateliquidityinthemarket.Thismaybeassociatedwithlarge transactionshavingsignificanteffect onmarketprices positions created from market,exchangesandcounterpartiesduetotemporaryorpermanentfactors.TheBankcannoteasilyeliminateoffset a The BankconsidersliquidityriskbasedonMarketandFundingLiquidityRiskperspectives.Trading orMarketliquidityriskrefers toinabilityunwind normal courseofbusiness. ALCO andRiskCom.TheBank’s liquiditypolicyistomaintainfundavailabilityatalltimesandhence,beinapositionmeetofitsobligations, measurement andanalysis,monitoringcontrol. Thepoliciesthatgovernliquidityriskmanagementare reviewed andapproved onaregular basisby LANDBANK’s liquidityriskmanagementprocess is consistentwiththegeneral risk managementframeworkoftheBankcovering identification, Liquidity RiskManagementFramework LIQUIDITY RISK MANAGEMENT of atleast8.5percent setbyBSPwithconservationbuffers. Results ofPSAare alsosimulatedintheCARcomputationtobeableassessitsimpactoncompliancesetat10.0percent andtheCET1ratio events thatcanleadtheBanktoaparticulartailevent. price risk,interest raterisk,foreign exchangeriskandeventually, liquidityrisk.TheBankalsoconductsreverse stress-testing toidentifyandsimulatethe of stress, toexplore theeventsthatcouldcauseasignificantimpacttoBankandassessitsvulnerabilitiescapabilitydealwithshockssuchas probable riskevents,onactivitiesrelated toTreasury’s tradingandinvestmentportfolios.ThisseekstoestablishhowfartheBankcanabsorbcertainlevels The Bank’s PortfolioScenarioAnalysis(PSA)analyzestheimpactofmajorrisksthatemerge outofthedifferent scenarios,consideringadverseand occurrence. Stress-tests are LBP’s measures ofriskstoestimatepossiblelosseswhichtheVaR doesnotcapture. Stress-test isariskmanagementtoolusedtodeterminetheimpactonearningsofmarketmovementsconsidered “extreme”, i.e.,beyond“normal” the potentiallosscausedbyveryunusualmarketevents.Thus,VaR process iscomplementedbyStress-testing tomeasure thispotentialrisk. monitoring andcontrolling riskbecausethesemodels(whilerelatively sophisticated)haveseveralknownlimit

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LANDBANK 2015 Annual Report cap onthetotalamountofnegativegaps inthe‘1dayto1year’timebuckets. and control theliquidityriskingap report oftheBank.It isameasure oftheliquidity gapbetweenmaturingassetsandliabilities.MCOlimitsputa nature andcomplexityofitsbusinessactivities,overalllevelrisk anditsriskappetite.TheMCOlimitsetbytheBoDisoneoftoolsused tomanage LBP hasestablishedguidelinesforliquidity risklimitsettingtoenableitproperly andprudentlymanagecontrol liquidityrisk,consistentwiththe year horizon. buckets exceptinthe‘more than5 years’ bucket.MaximumCumulativeOutflow(MCO)limitwasnotbreached intheentire timebucket withintheone tenor buckets.Mostassets(particularly loansandinvestments)havelongtermmaturities.Cumulativegapafter contingentaccountsispositiveinall As of31December2015,theBankhasinitspossessionacomfortablelevel ofhighlyliquidassetstocoverforliquidityriskthatmayariseintheearlier history. December 2015basedoncontractualrepayment arrangementswhichtakeintoaccounttheeffective maturitiesasindicatedbyLBP’s depositretention The followingtablesetsforththeasset-liabilitygappositionoverdetailedtimeperiodforParent atcarryingamountsinmillionpesosasof31 tenor bucket.Thepercentages are usedasbasisforslottingthenon-maturitydepositamountunderdifferent tenors. for demanddepositaccountbasedonafive-yearhistoricaldata.Thehighestwithdrawalpercentage changeisdeterminedforeach made toproximate scenario istosimulatebehavioralwithdrawalpattern.Thisdonebyobservingpatternofdepositdecaysthetotalendof-daydata Regular Savings(Total SavingslessHighYield SavingsAccountsandEasyPlus)demanddepositsare non-maturitydeposits.An analysis • operating conditions.ThecomputationinvolvesdeterminingtheDepositMixcomprising ofVolatile andnon-Volatile orCore Deposits. are subjecttointerest raterisks.Core Depositleveliscomputedtodetermine thelowestdepositlevelthatisexpectedtoberetained undernormal Pattern.ItservesasabufferThe BankdeterminesCore thatprotects DepositwhichiscalculatedbasedonNetWithdrawal theBank’s assets,which • Particulars Assets Financial Assets Particulars Due from OtherBanks Due from BSP Cash &OtherItems Cash &Duefrom Banks Total Loans Loans &Receivables Resell Security Purchased UnderAgreement to Interbank LoanReceivable Total Investments Other Assets Investments Total Assets Financial Liabilities Other Assets Deposits Total Assets Borrowings Subordinated Debt Other Liabilities&Unsecured Liabilities Total Capital Total Liabilities&Capital Deposits Asset &LiabilitiesGapPosition LTNCD Bills Payable Unsecure Subordinated Debt Due toBTr, BSP, &MCs/PCIC Due toLocalBanks Other Liabilities&Payable Total Liabilities FINANCIAL STATEMENTS Non-maturing deposits Core Deposit Demand Savings Time 1,039,260,482 637,221,521 314,934,580 155,403,886 474,739,429 533,308,804 Due within Due within 26,889,156 83,654,000 17,799,877 30,652,845 26,735,535 3 months one year 5,781,050 2,106,127 1,882,262 2,240,728 483,238 444,760 300,140 171,752 336,966 38,478 16,758 35,779 9,954 1,392 2,257 442 0 0 0

Due more than Due more than to 6months 565,846,695 293,642,674 254,175,401 77,563,777 3 months 18,026,935 11,000,000 19,467,669 10,500,000 35,988,549 one year 2015 163,469 444,090 62,507 60,789 61,919 1,718 1,685 1,237 588 481 0 0 0 0 0 0 0 0 0 0 0

1,116,824,259 1,203,068,216 Due more than 314,934,580 449,046,560 474,739,429 533,308,804 284,828,246 6 months 26,889,156 83,654,000 17,799,877 27,179,625 11,000,000 21,349,931 10,500,000 36,325,515 to 1year 20,133,062 2,404,197 5,782,735 Total 91,477 88,041 47,465 23,187 20,111 16,758 3,436 2,140 In Thousands 959 In Millions 714 337 PARENT 0

Due more than 504,666,696 229,351,507 392,226,721 920,203,009 469,423,769 132,153,291 Due within to 5years 56,390,000 17,243,602 36,225,870 46,276,487 one year 24,247,689 6,284,410 2,770,327 2,182,814 1,755,387 8,329,210 1 year 166,374 159,208 96,116 70,258 7,166 6,515 8,621 651 0 0 0 0 0 0

Due more than than 5years 551,940,191 269,111,938 265,439,491 53,722,720 Due more 17,387,787 18,058,314 10,500,000 20,022,669 one year 5,000,000 2014 1,152,270 1,006,421 (752,798) 399,472 197,526 183,917 117,078 18,027 12,953 86,244 24,619 46,652 975 40 0 0 0 0 2 0 0

1,056,606,887 229,351,507 401,265,229 301,665,361 973,925,729 392,226,721 469,423,809 56,390,000 17,243,602 20,158,114 46,301,106 20,241,128 10,500,000 24,247,689 28,351,879 6,285,385 1,046,228 5,000,000 1,872,465 1,203,068 1,203,068 Total Total 347,607 550,500 284,828 20,133 21,350 86,244 49,246 8,621

Philippine QualityAward (PQA)Program aspartofitsthrust tocontinuallyimprove businessprocesses anddevelopworldclassoperations. Environmental ManagementSystem[EMS]andQuality System[QMS]).Moreover, theBanktookonamajor challengebyapplyingforthe Similarly, LBPfocusedonenhancinginternal businessprocesses and continueditsinitiativesonInternationalOrganization forStandardization [ISO](i.e., operations withthatoforganizational goalstranslatedtosolidfinancialgainsandoperationalexcellence. BUs, support units and employees were made to understand how each individual performance is tied to the attainment of Bank’s goal. The alignment of the Bank pursued operational alignment during the year. The Bank attained its overallstrategic objectives through operationalalignment where all In 2015,LBPcontinuedtostrengthenWith itsoperationalperformancetoattainfinancialtarget.reference tothebusinessexcellencetheme for2015, OPERATIONAL RISK MANAGEMENT 6 months.In2015,theBank’s LCPwasenhancedtoincludetheprocedures inconductingtheliquiditytesting. stock ofmarketableassets,governmentandretail depositsources, andvariouscredit linesfrom Banks,amongotherswhichare availablewithin1dayto Although depositliabilitiesremain tobethemajorsource offund,theBankidentifiesdifferent alternativefundingsources likecashfrom operations, for themanagementandexecutionofplan,unlessotherwiseelevatedto theCrisisManagementCommittee(CMC). In theeventofaliquiditycrisis,Bankactivatescontingencyplanbased ontherecommendation oftheALCOwhichhas over-all responsibility crisis andincludesprocedures formakingupcashflowshortfallsinadversesituations. the Bank’s ability to withstand the extreme scenarios. The contingency plan focuses on the Bank’s strategy for coordinating managerial action during a The Bank formulated the LCP using extreme scenarios of adverse conditions to ensure that the Bank has sufficient liquidity at all times. The LCP evaluates 5. LiquidityContingency Plan (LCP) than the90percent minimumrequirement fortheCY2018andmaximumLCRtriggeralertof100percent targeted fortheCY2019. As of 31 December 2015, the Bank’s simulation using the BSP’s LCR template as indicated in the BSPCircular 905 Series of 2016resulted to LCR higher calendar days Total NetCash Outflows-thetotalexpectedcashoutflowsminusinflows,inspecified stress scenarioforthesubsequent30 cash outflowsitcouldencounterunderaliquiditystress scenario High QualityLiquid Assets -Comprisedofcashorassetsthatcanbeconvertedintoatlittlenolossvalueinprivatemarkets,tooffset thenet Where: The BankcomputestheLCRusingBSPprescribed formula: Assets (HQLA)tomeetliquidityneedsfora30calendardaystress scenario. LBP determinestheLiquidityCoverageRatio(LCR)everyquartertoensure thatitmaintainsanadequatelevelofunencumbered HighQualityLiquid 4. LiquidityCoverage Ratio situations. ThisalsoservesasguidefortheBankinlimitsettingprocess fortheMCOandvariousfinancialratios. Result ofstress-test analysis helpstheBankfocusonlevelofliquiditythatcouldbereasonably builtwithinaspecifiedperiodtomeetdifferent of liquiditycrisisandmodelsusinghypotheticalevents. come upwithmitigatingmeasures toensure thattheBankwillbeabletowithstandsuchevents.Thescenariosare basedonhistoricevents,casestudies single goal of preparing the Bank for potential liquidity problems. This could serve as input for making appropriate liquidity management decisions and liquidity riskisdonetosupplementtheLGR/MCOModelasitmakesprovisions forvariedbutplausiblesituationsthrough scenarioanalysiswiththe The Bankcomplementsliquiditymanagementandcontingencyplanningthrough theuseofstress testingandscenarioanalysis.Stress testingfor 3. LiquidityStress Test The followingtablesetsouttheBank’s liquidityratiosasofthedatesindicated: the Bank’s financialstatementsagainstsetliquidity/leveragelimits. Financial RatioAnalysisisanotherliquidityriskmeasurement toolthatcalculatesandcompares liquidityandleverageratiosderivedfrom informationon 2. Financial Ratio Analysis Financial Ratios: Liquid Assets(*) Particulars

*Note: LiquidAssetsincludethefollowing: Liquid AssetstoTotal Deposits Liquid AssetstoTotal Assets 4. Tradable non-Governmentsecuritiesandcommercial paper 3. GovernmentSecurities 2. InterbankLoans 1. CashandotherItems LCR = Total NetCashOutflowOvertheNext30CalendarDays Stock ofHQLA (Unaudited) 722,850 69.09% 60.08% 2015

In Millionsexceptwhenexpressed inpercentage (Audited) 625,897 68.55% 50.23% 2014

31 December

(Audited) 502,535 71.38% 59.33% 2013

(Audited) 313,078 61.70% 48.67% 2012

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LANDBANK 2015 Annual Report 1. immediately addressed. The riskprofile oftheBankissubjectedto regular review andtheRSAyieldedfollowingsevenrisks(partof the 26criticalrisks)thatneededtobe 5. 4. 3. 2. 1. of RMpractices.Thisresulted intheprioritizationof26criticalrisks,from whichthetopfiverisksofBankwere selected,asfollows: Through theRiskSelf-Assessment (RSA)process undertheERM,SeniorManagementprioritizedcriticalrisksintermsofinherent impactandeffectiveness under theERMinitiative. Bank’s Risk Universe and falling under the above eight categories are defined, customized and givensubstance in theLBPRisk Dictionary developed risks, 3.compliance4.liquidity5.interest raterisks,6.operations7.reputation risksand8.strategicrisks.The52thatcomprisethe to capture allriskeventscategorized underBSPCircular No.510dated03February2006(re: GuidelinesonSupervisionbyRisk):1.credit risks,2.market As theBankrecognizes all risksinherent toitsmandate and itsvariousbusinessactivities,itembarksonanEnterpriseRiskManagement(ERM)approach Risk Categories ENTERPRISE RISK MANAGEMENT System, upgradingofSecurity&NetworkInfrastructure anddeliverychannelssuchasinternetphonebanking. Equally important,LBPhasstartedtoembarkonotherinitiativesmitigatesystemrisksuchasimplementationoftheEnterpriseFraudRiskManagement • • • • • • • • • • • • • • the followingcontrols inplacetoavoid/mitigatetheestimatedlossesfrom systemrisk. While thebankingindustryperceives systemriskashighrisksamongtheoperationalrisk,LBPhasconductedaforward-looking riskassessmentandput Self-risk assessmentofoperationsshowedthatthetotalestimatedlosswaswaybelowOperationalRWA undertheBasicIndicatorApproach. estimated probability ofoccurrence in2016todeterminethevariancefrom theBasicIndicatorApproach model. Approach calculation, LBP conducted a simulation of the computation of the 2015 estimated losses using actual historical losses of the Bank and aggregate RWA ofP513,059million.CognizantthatGross Revenues(BSPproxy data)isbutashadowindicatorofoperationalrisksintheBasicIndicator As of31December2015,theBank’s RWA forOperationalRiskusingtheBasicIndicatorApproach wasP49,271millionor 9.6 percent oftheBank’s Operational Riskwasexpandedtoincludeeventandlegalrisks. of theBankforlastthree yearstocalculatetheOperationalRWA. IncompliancewithBSPCircular #900dated18January2016,thescopeof LBP usestheBasicIndicatorApproach forcalculatingthecapitalcharge foroperationsriskunderPillar1.TheBankusedtheaverageGross Revenues Operational RiskExposure risk. RMGregularly monitorsandescalatetoRiskComManagementCommittee(ManCom)theactuallossesversusestimatedlosses. BIA,BCQ,heatmaps,andhazardRAR &RTR, mapstoquantifypotentialoperationallosseswhichserveastheirdailydashboard inmonitoringoperational proactive stanceinmanagingtheseandescalatingbreaches assoontheyoccur. BUsconductself-assessmentusingvariousRMtoolssuchasRCSA, BU level.ORMacross theinstitutionwasbecomingawayoflife,withBUsaware ofthespecificoperationalriskstheyconfronted, takinga A significantachievementoftheBankin2015area ofOperationalRiskManagement(ORM)wastheimplementationandembeddingRMat FINANCIAL STATEMENTS and growth prospects. Strategic PlanningRisk:Thefailure todevelop,implement and monitorinstitutionalstrategiesdirection willthreaten theBank’s overallviability reputation andrelationship withcustomers. Client RelationshipManagementRisk: Theinabilitytoeffectively identifyandaddress thecustomers’needswillnegatively affect theBank’s • • • People Risks: achievement oftheBank’s goalsandobjectives. IT ManagementRisk:Thefailure toeffectively prioritizeITinitiativesandadministerresources mayleadtolostbusinessandhinderthe approval (atapplication)andtodeterminetheprobability ofdefault(onanongoingbasis);couldleadtoeconomiclosses. Counterparty Credit Risk-Loans: The inability to review and analyze the credit quality ofpotential/existing borrowers to serve asbasis for loan Market Risk:Thefailure toanticipate and managefluctuationsinthevaluesofBank’s investments;couldleadtoeconomiclosses. Monitoring andoversightoftheSeniorManagement,ITComRiskCom. Insurance coverageforfixedassetsandelectronic crimes,and Full compliancetoinformationsecuritypolicies Observance ofstrictprocurement process andmonitoringoftheperformanceserviceproviders Enhancement ofITstandards Enhancement ofBusinessContinuityPlan(BCP)andDisasterRecovery(DRP)forIT Implementation ofITgovernance Conduct offullcycletesting Continued upgradingofITinfrastructure Compliance withEuropay Mastercard VISA(EMV) Upgrading ofAutomatedTeller Machines(ATMs) Strengthen thefunctionofISTRMOunderRMG Creation oftheIT-Quality ManagementOffice Enhancement andimplementationoftheBank’s ITRiskManagementSystem adversely affect thestabilityoforganizational leadershipandbusinesscontinuity. Succession PlanningRisk:Thefailure tocreate andimplementafeasiblecontinuanceplanfor key bankpositionsandemployeesmight dysfunction andlowmorale. Recruiting andRetentionRisk:TheinabilityoftheBanktoattract,retain anddevelopcompetentemployees mightleadtoorganizational management systemmayreduce employeemotivationandmayadversely impacttheachievementofdesired performanceandconduct. People DevelopmentandPerformanceRisk:Theinabilitytodevelopenhance employeeskillsandprovide asoundemployeeperformance of capital,theBank adoptsarigorous escalationandthorough monitoringprocess viaregular reports. business theywillgenerate andimplement.Inmonitoring theefficient performance oftheBUsacross the organization inthearea ofRMandutilization All BUsoftheBankuseICAAPin day-to-dayoperationsandtheyare aware ofthe corresponding capital charge foreverysingletransaction or This process enablesitsBoDandSeniorManagementTeam toassess,onacontinuingbasis, therisksthatare inherent inthedailyactivities oftheBUs. The ICAAPisembeddedintheBank’s operating philosophyandhasbeencascadeddowntotheBUslevel,formingan integralpartofLBP’s RMprocess. ICAAP Culture • • • • • • revisions: To align withthelocalandglobalbestpractices,Bankhasstrengthened andenhanceditsICAAPdevelopmentprocess withthefollowingmajor Risk Assessment Enhancement of mitigate significantrisksandhowmuchadditionalfuture capitalisnecessaryhavingconsidered othermitigatingfactors. ICAAP’s primarypurposeistoinformtheBoDandSeniorManagementofongoingself-assessmentbank’s riskprofile, howtheBankintendsto strengthen thecapitalposition oftheBank. product portfolio.TheBoD andtheSeniorManagementperformedcollaborativegovernanceprovided directions toenhancetheRMprocess and and adequacyoftheBank’s capital,giventheexistingrisksexposure aswellfuture risksarisingfrom growth, newmarketsandexpansionofthe For 2015,theBank’s conductedathorough andcomprehensive InternalCapitalAdequacyAssessment Process (ICAAP)process todeterminethequality INTERNALCAPITAL ADEQUACY ASSESSMENTPROCESS Bank’s RiskDictionary. The Bank’s Risk Universe also was revisited and from a total of 52 risks, the Risk Universe increased to 62 risks and these were defined and includedin the of therisksrelated tomerger. Analysismapclearlydisplaysthelinksbetweenpotential causes,preventative andmitigatingcontrols Analysis.TheBow-Tie andconsequences Tie Formulation ofriskmanagementstrategiestomitigatetheanditsroot causeswere performedbyriskteamsfrom variousrisk-takingBUsusingBow- 6. 5. 4. 3. 2. 1. identified in2015: In lightoftheimpendingmerger andconsolidationofLBPDBP, are-assessment oftheBank’s riskprofile wasconductedandsixemerging riskswere 7. 6. 5. 4. 3. 2. Defining theprimaryriskownersand secondary riskowners Implementation ofthe“ICAAPQuarterlyMonitoringReport” Institutionalizing theICAAPCommunicationProcess Linking theRCSAprocess indeterminingriskdriversandpotentiallosses Adopting theenterprise-wideviewofrisk,cross riskanalysis&identificationandmanagementofemerging riskacross theinstitution. corresponding strategies Linking theBank’s ERMFrameworkwithICAAPModelbyrelating theforward-looking riskassessmentwiththeRiskDriverMapscontaining products andprograms, mayhampertheachievementofitsobjectivesandstrategies. establish, alignandcommunicatethemerged Bank’s visionanddirection totheemployeesandcustomers, includingitsmajorinitiatives,services, and competencymayresult inanunfavorableworkingenvironment andlackofintegrityinthewaymerged Bankwillconductbusiness.Failure to Tone at the Top & Direction: and Vision Inability of the BoD and Senior Management to establish a culture of accountability, integrity, professionalism in itsexecutionofthemerger. Socio-Political: Failure tounderstand,address andanticipatepolicymandates,asdefinedinthelawExecutiveOrder, willaffect theBank’s plan losses arisingfrom themerger andtosupportplannedexpansionmayleadregulatory sanctionsandbankinsolvency. Capital Reserve:Failure tomaintaincapital surplus(ontopoftheincreased minimumregulatory requirements) toserveasareserve from unforeseen the Bank,includingcommitmentsandcontingenciesonunrecorded assetsandliabilities,mightcausefinanciallosses. Asset Quality&Valuation: Failure toestablishtheappropriate valuationofassetsandliabilitiesDBPitssubsidiariesthatwillbeabsorbedby major initiativesofthemerged bankmayleadtocostlyinvestmentsandworkinefficiencies, andmaycompromise product orservicedelivery. IT Identification&Implementation:Failure toidentifyandimplement theappropriate systemandtechnologytosupportbusinessprocesses or and lowmorale. People Risk:Failure toretain andmotivatekeypersonneldue to thechangesbrought aboutbythemerger willleadtoorganizational dysfunction Laundering Act(AMLA)amendments,etc. set thestageforhighercapitalrequirement inorder tostrategicallyaligneconomiccapitalwithregulatory requirements likeBaselIII,Anti-Money to thebankingindustry, mayresult inlossofbusiness,administrative/criminalpenalties/sanctionsandtoreputations. Itisalsothefailure to Banking RegulationsRisk:Thefailure tocomplywiththecirculars, memoranda,advisoriesandotherissuancesofregulatory bodiesasapplicable affect theBank’s abilitytomeetitsobligationastheyfalldue. Liquidity Risk:Thefailure toproperly managetheBank’s cashflowsandhavesufficient availablealternativefundsources at reasonablecostcould Lending CapacityRisk:Thefailure tomaximizeloanablefundsmightleadlossofbusinessopportunitiesfortheBank. objectives andtargets mayprevent theachievementofdesired outputandperformance. Measuring &MonitoringofMajorInitiativesRisk:Thefailure toidentifyappropriate performancemetrics andstandards tomonitorattainmentof initiatives mayleadtocostlyinvestmentsandworkinefficiencies andmaycompromise product orservicedelivery. Technology IdentificationRisk:Thefailure toidentifyandprioritizetheappropriate systemandtechnologytosupportbusinessprocesses ormajor overall operations. Socio-Political Risk:Thefailure tounderstand,address andanticipate politicalmandatesandsocial&culturaldevelopmentswillaffect theBank’s

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LANDBANK 2015 Annual Report overall ratingoftheILCwasExemplary. All Board levelCommittees,includingtheILC,submittedPerformance RatingScorecards withparametersonComposition, Processes andTasks. The Loan (EHL)Availers. Thesefivescorecards were partofthecommitmentsBank totheGCGSector. scorecards for 1.LocalGovernmentUnits(LGUs),2.CorporateAccounts,3.Small&Medium Enterprises(SMEs),4.LivelihoodLoanand5.EasyHome The ILCapproved fiveautomatedcredit scorecards developedbytheCredit Policy&RiskManagementDepartment(CPRMD)whichincludes credit Board. programs were deliberated and approved for implementation. It likewise evaluated 53 investment accounts which were endorsed for approval of LBP The ILCapproved 378loanaccountsandendorsed235totheLBPBoard forapproval orconfirmation.Atotalof36credit-related policiesand 2015 withanaverageattendanceof83percent. Crispino T. Gerardo Aguelo,Victor J.BulataoandTomas T. DeLeon,Jr. asmembers.TheCommitteemeetsweeklyandheldatotalof47meetingsin The ILCiscomposedofLBPPresident &CEOGildaE.PicoasChairpersonwithDirector Chairperson,andDirectors DomingoI.DiazservedastheVice define thestructure, eligibleinvestmentsandmanagementofinvestment portfolios. pago andothersettlementoptions.Inaddition,theILCreviews andrecommends totheLBPBoard approval ofinvestmentpoliciesandguidelinesthat industries/sectors, termsandconditionsforeachtypeofcredit accommodation,remedial measures suchasrestructuring andforeclosures, dacionen The ILCalsoevaluatesandapproves credit policiesandguidelinesincluding, but notlimitedtolimitsontheBank’s totallendingexposures todifferent with theBank’s CodifiedApproving/Signing Authority(CASA). The Investment&LoanCommittee(ILC)provides supporttotheLBPBoDinevaluationandapproval ofloanandinvestmentproposals, inaccordance INVESTMENT AND LOAN COMMITTEE In thePerformanceEvaluationconductedbyRiskCommembers,Committeewasrated“Superior”/”Exemplary.” was distributedtoallBUs. impact oftheLBP-DBPmerger wasconductedandcompletedwithSGVconsultants.AnothermajorinitiativethecompletionofERM-AVP which Under thedirection ofthe RiskCom,theERMPhaseIIIwhichanalyzedriskdrivers,managementstrategies(preventive andmitigating)the as expressed inthedocument “JourneytoAdvancedApproach inCalculatingRiskWeighted Assets.” Loans (UDSCL),whichare partoftheBank’s commitmentstotheGCGSectorfor2015.TheCommitteealsoapproved themediumterm planoftheRMG The Committeealsoapproved thevaluationmodelsforInvestmentsinNon-MarketableSecurities(INMES)andUnquotedDebtClassifiedas of BSPCircular No.855dated29October2014(re: GuidelinesonSoundCredit RiskManagementPractices). and approved 11majorinitiatives aswell17new/enhancedguidelines,theLegalRiskManualandBank’s actionplantocomplywiththeprovisions enterprise-wide riskreports were discussed,includingstress testingreports ontheBank’s loanandinvestmentexposures. TheCommitteedeliberatedon For 2015,theRiskComheld18meetingswithanaverageattendanceof83percent wherein 310regular andspecialcredit, treasury, operationaland complete theCommitteemembers. Domingo I.DiazandCrispinoT. Aguelo,andtheAgriculture Secretary represented byUsecAntonioA.Fleta(laterreplaced byUsecAllanQ.Umali) The RiskCom is chaired byDirector Tomas T. de Leon, Jr. withthe Finance Secretary represented byUsecJeremias N. Paul, Jr. Directors as Vice-Chairman. system oflimitsremain effective andimmediatecorrective actionsare takenwheneverthere are breaches. The RiskCom oversees the risk management program of the Bank ensuring that risk management systems are in place, limits and tolerances are observed, alignment ofriskmanagementobjectiveswiththeBank’s overallbusinessstrategiesandperformancegoals. The RiskOversightCommittee(RiskCom)isprimarilyresponsible fortheBank’s riskmanagementframework,policiesandguidelinesensures the RISK OVERSIGHT COMMITTEE loans tothemandatedandprioritysectors. in the 2016 General Appropriations Act (GAA). This will give the Bank enough capital buffer to support the national development programs and expand To address capitalconcernsonamore permanentbasis,theBankrequested theNationalGovernmentforP20billionadditionalequityinfusionsLBP consequently, highretained earnings)intheforeseeable future. remains theprincipalsource ofLBP’s capitalaccumulation,theprimarythrustofBank’s capitalplanningactivitieswasmaximizingitsprofitability (and continued compliance with theevolving capital and capital ratio requirements of the BSP. Giventhefactthatinternal capital generation through earnings The Bank’s General Policy on Capital Planning was enhanced to establish capital levels that will adequatelysupportthe Bank’s business plans; and ensure acceptable ReturnonEquity(RoE)ofatleastequaltotheaverageRoEcommercial bankingindustry. The Bankshalllikewisecontinuetovigorously preserve real capitaltosustaindevelopmentalpursuitandserviceitsmandatedclientswhilemaintaining on capitalstructure, aswellcapitaladequacyandleverageratios. long-term growth andvi

LANDBANK Plaza 1598 M.H. del Pilar corner Dr. J. Quintos Streets, Malate, Manila, Philippines Tel. Nos.: (02) 405-7000; 1-800-10-405-7000 (PLDT Domestic Toll-Free) www.landbank.com Regulated by the Bangko Sentral ng Pilipinas Land Bank of the Philippines BOARD OF DIRECTORS

Birthday September 21, 1946 Date of 1st Appointment November 16, 2006 Educational Attainment Post Graduate Masters in Business Administration University of the East College BSC-CPA (Magna Cum Laude) College of the Holy Spirit Graduated: 1966 Work Experience LAND BANK OF THE PHILIPPINES (Present) Land Bank of the Philippines Position: President and CEO Date Assumed: November 16, 2006 GOVERNMENT (Present) LANDBANK Leasing Corporation Position: Chairman Date Assumed: August 2005 LANDBANK Insurance Brokerage, Inc. GILDA E. PICO Position: Chairman LANDBANK Board Date Assumed: September 2005 Vice-Chairperson LANDBANK Realty Development Corporation Position: Chairman Date Assumed: September 2005 Masagang Sakahan, Inc. Position: Chairman Date Assumed: October 2005 LANDBANK Countryside Development Foundation, Inc. Position: Trustee Date Assumed: October 2005 People’s Credit and Finance Corporation Position: Chairman Date Assumed: October 2005 Philippine Crop Insurance Corporation Position: Director Date Assumed: November 2006 National Livelihood Development Corporation Position: Chairman Date Assumed: February 2008 OTHER PRIVATE INSTITUTIONS (Present) Marinor Development Corporation Position: Director/Treasurer Date Assumed: 1980 Gilart Holding Corporation Position: President Date Assumed: June 2006 AFC Merchant Bank Position: Director Date Assumed: July 2008 Small Business Corporation Position: Director Date Assumed: January 2009 GOVERNMENT (Past) Land Bank of the Philippines Positions: Acting President and CEO (July 15, 2005 - November 14, 2006); Senior Executive Vice President (March 1, 2005 - July 14, 2005); Executive Vice President (June 2, 1997 - February 28, 2005); Vice President (November 3, 1986 - November 22, 1989); Assistant Vice President (March 13, 1981 - November 2, 1986) Land Bank of the Philippines BOARD OF DIRECTORS Sector Representatives

National Livelihood Support Fund Position: Chairman Duration: July 2005 - January 2008 LBP Leasing Corporation Position: Director Duration: February 1998 - August 2005 LBP Remittance Co. - USA Position: Chairman Duration: August 2005 - May 2011 LBP Financial Services Spa Position: Chairperson Duration: August 2005 - April 2011 OTHER PRIVATE INSTITUTIONS (Past) Asiatrust Position: Director Duration: May 1985 - Februart 2005 Bangko San Juan Position: Director Duration: October 1997 - July 2004 Producer’s Rural Banking Corporation Position: Director Duration: October 2002 - April 2009 Pampanga Development Bank Position: Director Duration: July 2004 - April 2009 Iloilo City Development Corporation Position: Director Duration: December 2008 - April 2009 Banker’s Association of the Philippines Position: Director Duration: 2007 - 2008 TRAININGS Updating on Anti-Money Laundering Act Date: October 28, 2015 Venue: Board Room, LANDBANK Plaza, Manila International Banker Award 2015 Date: September 30, 2015 Venue: London ABF Retail Banking Awards Date: July 8, 2015 Venue: Shangri-La Hotel, Singapore International CSR Summit and Entrepreneurship Awards 2015 Date: June 19, 2015 Venue: Banyan Tree Hotel, Macau 38th ADFIAP Annual Meeting Date: May 13 - 15, 2015 Venue: Nha Trang, Vietnam 6th Retail Banker International Asia Trailblazers Date: March 26, 2015 Venue: The Carlton Hotel, Singapore 11th Annual Asian Financial Services Congress Date: March 5 - 6, 2015 Venue: Marina Bay Sands, Singapore World CSR Congress Date: February 17 -19, 2015 Venue: Mumbai, India Land Bank of the Philippines BOARD OF DIRECTORS Sector Representatives

Birthday April 5, 1949 Date of 1st Appointment September 23, 2010 Educational Attainment Post Graduate Masters in Business Administration Ateneo Graduate School of Business Graduated: 1976 College AB Economics Ateneo de Manila University Graduated: 1972 Others Special Courses in Management / Leadership Ateneo Center for Continuing Education WORK EXPERIENCE LAND BANK OF THE PHILIPPINES (Present) LBP Insurance Brokerage, Inc. Position: Chairman Date Assumed: December 13, 2012 TOMAS T. DE LEON, JR. Metro Rail Transit Corporation (MRTC) Private Sector Position: Chairman Representative Date Assumed: December 6, 2011 Land Bank of the Philippines Position: Director Date Assumed: September 23, 2010 OTHER PRIVATE INSTITUTIONS (Present) Data Trail Corporation Position: Director/Stockholder Date Assumed: 2004 Italianni’s Greenbelt 2 Position: Stockholder Date Assumed: 2006 Italianni’s Bonifacio High Street Position: Director/Stockholder Date Assumed: 2007 Krazy Garlik Restaurant Position: Director/Stockholder Date Assumed: 2010 Ateneo Graduate School of Business Center for Continuing Education Position: Program Director/Part-time Faculty OTHER PRIVATE INSTITUTIONS (Past) Insular Life - FGU Group of Companies Position: Management Trainee Duration: 1972-1974 Family Bank & Trust Company Position: Training Manager Duration: 1978-1980 Louis A. Allen Associates Position: Senior Associate Duration: 1981-1989 Land Bank of the Philippines BOARD OF DIRECTORS Sector Representatives

Birthday January 12, 1949 Date of 1st Appointment September 23, 2010 Educational Attainment Post Graduate Masters in Business Administration Amos Tuck School Dartmouth College, USA Graduated: 1972 College AB Economics Ateneo de Manila University Graduated: 1970 WORK EXPERIENCE LAND BANK OF THE PHILIPPINES (Present) Land Bank of the Philippines Position: Director Date Assumed: September 23, 2010 LANDBANK Leasing Corporation Position: Member, Board of Director DOMINGO I. DIAZ Date Assumed: September 2010 Private Sector Investment and Loan Committee Representative Position: Vice-Chairman Date Assumed: October 2010 Risk Management Committee Position: Member Date Assumed: October 2010 Audit Committee Position: Member Date Assumed: October 2010 LANDBANK Leasing Corporation Position: Member, Executive Committee Date Assumed: 2011 GOVERNMENT (Present) Department of Budget and Management Position: Consultant Date Assumed: August 1, 2010 OTHER PRIVATE INSTITUTIONS (Past) Diaz & Company (USA) Position: Principal/President Duration: 1984-2007 American Consumer Lab. Corp (USA) Position: President Duration: 2004-2006 Ayala International, Ltd. (Singapore) Position: Managing Director Duration: 1980-1984 Ayala Corporation (Philippines) Position: Progressive positions to Vice President Duration: 1974-1983 Island Development Bank (Brunei) Position: Founding Director Duration: 1979-1984 Sealion Hotels Ltd. (Singapore) Position: Managing Director Duration: 1982-1984 Land Bank of the Philippines BOARD OF DIRECTORS Sector Representatives

Various Ayala Int’l Subsidiaries Position: Director Duration: 1979-1984 Mobil Oil Philippines Inc. / Mobil New York Position: Assistant to VP Finance / Trainee Duration: 1972-1974

Birthday September 9, 1946 Date of 1st Appointment September 23, 2010 Educational Attainment College Bachelor of Science in Commerce Aklan College (Undergraduate) Work Experience LAND BANK OF THE PHILIPPINES (Present) Land Bank of the Philippines Position: Director Date Assumed: September 23, 2010 OTHER PRIVATE INSTITUTION (Present) Pambansang Kilusan ng mga Samahang Magsasaka Position: National Council - Ex Officio Member Date Assumed: 2013 Pambansang Kilusan ng mga Samahang Magsasaka Position: Head Adjudicator - Pakisama Supreme Court CRISPINO T. AGUELO Date Assumed: 2013 Agrarian Reform Beneficiaries GOVERNMENT (Past) Sector Representative Department of Agrarian Reform Position: Member, Presidential Agrarian Reform Council Duration: 1992-1998 Local Government Unit Position: Municipal Councilor Duration: 1986-1989 Local Government Unit Position: Barangay Councilor Duration: 1984-1986 OTHER PRIVATE INSTITUTIONS (Past) Pambansang Kilusan ng mga Samahang Magsasaka Position: National President Duration: 2007-FEB 2013 Tangalan Integrated Service Association Position: Vice President Duration: 2002-2006 Pambansang Kilusan ng mga Samahang Magsasaka Position: National Council Duration: 1989-1992 Aklan Traders & Agency Co. Position: Branch Head Duration: 1979-1981 Filipinas Life Assurance Company Position: Debit Agent Duration: 1973-1979 Land Bank of the Philippines BOARD OF DIRECTORS Sector Representatives

Birthday April 17, 1948 Date of 1st Appointment December 13, 2010 Educational Attainment Post Graduate Master in Public Administration Harvard Kennedy School Graduated: 1997 College AB Philosophy Ateneo de Manila University Graduated: 1970 Work Experience LAND BANK OF THE PHILIPPINES (Present) Land Bank of the Philippines Position: Director Date Assumed: December 2010 Investment and Loan Committee Position: Member Date Assumed: December 2010 VICTOR GERARDO J. BULATAO Audit and Compliance Committee Agrarian Reform Beneficiaries Position: Chair Sector Representative Date Assumed: 2011 Agri-Agra Special Concerns Committee Position: Chair Date Assumed: 2011 Corporate Governance Committee Position: Vice Chair Date Assumed: 2011 LANDBANK Countryside Development Foundation, Inc. Position: Chair, Board of Trustees Date Assumed: 2015 OTHER PRIVATE INSTITUTIONS (Present) Kaisahan Tungo sa Kaunlaran ng Kanayunan at Repormang Pansakahan (NGO) Position: Chair, Board of Trustees Date Assumed: 1990 Quindan-Kaisahan (NGO) Position: Chair, Board of Trustees Date Assumed: 1998 Balay Mindanaw Foundation, Inc. (NGO) Position: Member, Board of Trustees Date Assumed: 1996 OTHER PRIVATE INSTITUTIONS (Past) Kaisahan Tungo sa Kaunlaran ng Kanayunan at Repormang Pansakahan (NGO) Positions: Board Chair (2015); Founding Trustee (1990-2015); Director for Education and Information (1990-1992); Executive Director (1992-1996); Board Vice Chairman (1998-2015) Consortium for Advancing People’s Participation through Sustainable Integrated Area Development (NGO) Positions: Founding Board Chair (1999-2010); Board Vice Chair (2010-2014); Managing Trustee (2007-2014) Land Bank of the Philippines BOARD OF DIRECTORS Sector Representatives

Team Aquino Roxas 2010 Position: Regional Political Officer for Regions 6, 8 and 10 Duration: 2009-2010 Empowering Civic Participation in Governance Position: Founding Trustee; Executive Director Duration: 2001-2007 Institute of Politics and Governance Position: Senior Consultant; Treasurer Duration: 1998-2001 Association of Major Religious Superiors of Men in the Philippines Position: Asst. Exec. Secretary; Managing Editor of Signs Duration: 1974-1976 Development of Human Resources in Rural Asia Workshop Position: Administrative Assistant Duration: 1973-1974 Federation of Free Farmers Position: Local Affairs Assistant Head; National Secretary Duration: 1970-1973 GOVERNMENT (Past) Ministry/Department of Agrarian Reform Positions: Consultant; Minister’s Management Staff (May 1986 - July 1986) Senior Executive Assistant II (August 1986 - October 1986) Planning Service Chief (October 1986 - August 1987) Bureau of Agrarian Reform Information and Education Director (August 1987 - August 1988) Assistant Secretary for Support Services for ARBs (August 1988 - May 1990) Undersectary for Field Operations and Support Services (July 1997 - June 1998) Presidential Commission on Government Reorganization Position: Head, Survey Team for Ministry of Agrarian Reform Duration: March 1986 - May 1986