FOCUS ON LIFE, BANK EASY 2019 ANNUAL REPORT 2019 IN A SNAPSHOT CONTENTS

01 Vision, Mission and Core Values 02 Bank’s Brand Vision Core Values 03 Who We Are 04 Ownership Structure of the Bank 126.9% 0.80% 06 Consolidated Financial Highlights We are the Bank of Choice Concern increase in Net net increase in 10 Message from the Chairman and from Excellence Income Non-Performing the President & CEO driven to fulfill your Leadership Loans 20 A Salute to Mr. John changing needs 22 Operational Highlights Teamwork 48 Roadmap 2020 Integrity 52 Awards 2019 54 Corporate Social Responsibility Change 56 Sustainability Highlights 64 Corporate Governance 37.8% 96% 82 Conglomerate Map increase in increase in 86 Risk Management Framework Capital Funds Treasury Trading 118 Board of Directors Income 120 Board of Directors’ Profile 126 Senior Board Advisers 128 Key Officers 130 Organizational Structure 132 List of Officers 134 Products and Services Mission 136 Branch Directory 30% 8% 142 Legazpi Savings Bank Aiming to be better everyday. 144 Legazpi Savings Board of Directors growth in increase in Total Committed to provide to the: Consumer Loans Assets 146 Legazpi Savings Products and Services 148 Legazpi Savings Branch Network Customers – best experience 149 JG Summit Businesses Employees - winning culture 150 Financial Statements Owners - outstanding returns Community - responsive organization

At its peak, banking experience must go “unnoticed”— so effortlessly accomplished in the blink of an eye, and just unobtrusively present in people’s lives.

Robinsons Bank is continuously inching closer to this level of banking. Through digital transformation, we have enhanced customer experience and made our services easier, simpler, and more secure. This is how we show our heart for customers: we make banking take less of their effort and time, so they may focus on what really matters— living their lives.

ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 1 BANK’S BRAND WHO WE ARE

BUSINESS MODEL OF THE BANK Robinsons Bank aims to be one of the top banks in the Philippines, offering innovative and competitive financial products and services to its clients. To achieve this, the Bank has set a five-year strategic plan entitled “Roadmap 2020” in 2015 to guide all its employees and units in achieving that goal. The roadmap covers: refocusing of strategies; rebranding; structure reorganization of key support units; process improvement; expanding lending and branch network; product development; and fully explore business opportunities within its target markets. The Roadmap 2020 has three phases namely: (1) capacity building, (2) core income growth and (3) expanded business ventures.

Through the years, Robinsons Bank has played a significant role in the banking industry, offering a wide array of innovative financial services with the convenience of modern technology. It has earned a solid measure of trust and confidence, gaining wide preference as a "Aiming to be better every day.” commercial bank with over two decades of commitment to fulfill the This Mission Statement is the foundation upon community’s changing needs. Robinsons Bank continuously mounts which Robinsons Bank conducts business. More into greater heights in making banking easier for its clients in every than just a financial institution, the Bank is a possible way, providing its customers a wider boutique of product responsive organization focused on fulfilling and service offerings, flexible financial solutions, branch expansions, and digital improvements. its customers’ changing needs. Robinsons Bank delivers quality service to ensure the best customer experience, champion a winning culture and promote economic empowerment as it forges the path to become the “Bank of Choice”. True to JG Summit’s endeavor of leading the country to global competitiveness and making life better for every Filipino, the Bank continuously embarks on more sustainable efforts that foster relationships beyond banking.

2 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 3 Robinsons Bank is 60% owned by JG Summit Capital Services Corporation, a wholly-owned subsidiary OWNERSHIP STRUCTURE of JG Summit Holdings, Inc. and 40% owned by Robinsons Retail Holdings, Inc., a listed company since November 2013. JG Summit Capital Services Corporation and Robinsons Retail Holdings, Inc. are both Filipino corporations and voting stockholders of the Bank.

STRATEGIC BUSINESS PLANNING CORE INVESTMENTS EMERGING INVESTMENTS

4 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 5 CONSOLIDATED FINANCIAL HIGHLIGHTS

BALANCE SHEET

TOTAL ASSETS LOAN PORTFOLIO-NET DEPOSIT LEVELS CAPITAL FUNDS In Php millions In Php millions In Php millions In Php millions

8.0% YEAR ON YEAR 18.1% YEAR ON YEAR 2.7% YEAR ON YEAR 37.8% YEAR ON YEAR 17,060 97,602 80,806 131,087 95,006 121,351 89,980 68,411 104,913 12,378 11,989 11,968 12,093 57,654 63,295 77,612 38,897 43,668 57,659 27,569

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

CAPITAL ADEQUACY RATIO TIER 1 CAPITAL RATIO CONSO (%) CONSO (%) NETWORK 32.5% 31.7%

21.4% 168 20.7% BRANCHES 19.6% 18.7% 17.5% 16.6% 151 Robinsons Bank and 338 ATMS 15.0% 14.1% 17 Legazpi Savings Bank 320 Robinsons Bank and includes 7 Branch-lite units: RBank-3 and 18 Legazpi Savings Bank LegazpiSavings-4

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

6 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 7 CONSOLIDATED FINANCIAL HIGHLIGHTS

NET INTEREST MARGIN PROFITABILITY In %

NET INCOME NET INTEREST INCOME 4.3% In Php millions In Php millions 4,238 3.9% 719 3.5% 3.5% 3.6% 3,575 2,983 126.9% 2,421 YEAR ON YEAR 2,129

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

307 317 NON-INTEREST INCOME 757 RETURN ON EQUITY RETURN ON ASSETS In Php millions 247 In % 4.9% In % 0.6% 532 489 478 0.4% 0.3% 144 391 2.6% 2.6% 2.1% 0.3% 0.3% 1.6%

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

GROSS NON-PERFORMING LOANS ASSET QUALITY VOLUME RATIO In Php millions In % NPL COVERAGE 1,394 In % 122.5% 112.7% 1,118 1,139 100.6% 1,097 1,056 80.2% 4.0% 68.8% 2.9% 1.9% 1.5% 1.7%

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

8 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 9 MESSAGE FROM THE CHAIRMAN DEAR STAKEHOLDERS, 2019 is a year of achievements for Robinsons Bank. We concluded the year with AND THE PRESIDENT & CEO numerous recognitions from local and international award-giving bodies. Robinsons Bank was named the Best Commercial Bank in the Philippines by International Banker Banking Awards and as the Fastest Growing Commercial Bank in the Philippines by Global Business Outlook Awards in 2019. These milestones are

BEST COMMERCIAL BANK testaments to the Bank’s exceptional success in carrying out key strategies and initiatives in delivering value to our stakeholders.

Products and Services: Differentiating ouR Identity Our commitment is to provide our customers the best customer experience (CX). Anchored to this, we continue to develop new products and services to realize customer lifetime value as we embrace customer-centricity. We are honored that in 2019, the products and services we launched last year received commendations. Robinsons Bank DOS® Card, our credit card with a unique feature, was named as the DOS® MASTERCARD: “ 2019 is a year of MOST INNOVATIVE CREDIT CARD PRODUCT Most Innovative Credit Card Product for 2019 in the Philippines by Global Business achievements for Robinsons Outlook Awards. Bank. We concluded the year with numerous Another business that complements the Bank’s foray into digital payments is recognitions from local and merchant acquiring. Optimizing the synergies within the JG conglomerate, the Bank’s merchant acquiring has breached the industry of payments in the Philippines international award-giving and processed almost Php 30.0 billion in credit card transactions in the first year. bodies. Robinsons Bank was Given Cebu Pacific’s complex requirements, the Bank has proven that we are more named the Best Commercial than capable to deliver tailored solutions to big businesses in terms of payment Bank in the Philippines HIGHEST PERCENTAGE OF CONTACTLESS acceptance capabilities. Ranked number four among the acquirers in the country, TRANSACTION – AQCUIRING 2019 by International Banker Robinsons Bank was awarded the Highest Percentage of Contactless Transactions for Merchant Acquiring Business by Visa Philippines in 2019. Banking Awards and as the Fastest Growing Commercial Adding to our roster of awards, Simplé Savings® was hailed as the Most Innovative Bank in the Philippines by Banking Product by Global Business Outlook Awards 2019 and awarded as the Best Global Business Outlook Financial Inclusion Program by Bank Marketing Association of the Philippines in 2019. Awards in 2019. These This product intends to support the banking needs of the unbanked and the underserved segment of the country by providing simplified account opening milestones are testaments SIMPLÉ SAVINGS: MOST SIMPLÉ SAVINGS: INNOVATIVE BANKING BEST FINANCIAL process, requiring no maintaining balance, and only Php100.00 to open an account. PRODUCT INCLUSION to the Bank’s exceptional PROGRAM success in carrying out key In our journey towards building stronger relationship with our customers, these strategies and initiatives achievements inspired and propelled us to develop more products and services with in delivering value to our hallmark value.

stakeholders. " Putting customers at the center of all our innovations and projects, we kicked off 2019 with a new partnership with JCB International Co., Ltd. for our merchant acquiring and card issuing businesses. With the advancements in electronic payment, we Lance Y. Gokongwei geared up towards offering flexible payment solutions to complement JCB’s product Chairman offerings. Now, JCB-issued cards are accepted in our point-of-sale (POS) machines, which opened our business to millions of JCB cardholders worldwide.

10 ROBINSONS BANK 2019 ANNUAL REPORT 11 MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT & CEO

Also, in January, we piloted Simplé Savings® Virtual Card and simplified our client’s With all our efforts to deliver to our customers the best CX, our 2018 Annual Report entitled journey by rolling out the online account opening platform. Unlike traditional onboarding, “Simplifying the Customer Journey” received a Silver in the Public Relations Tools (External with this platform, clients can receive their virtual card within 24 hours and immediately Publication) category in the 55th Anvil Awards in 2019. Another first for Robinsons Bank. gain access to the bustling global and domestic e-commerce marketplace. Digital Transformation: Building ouR Future In early June, we launched IPONsurance® - a savings account with free life insurance In the recent times, as the changing demographics influence customer behavior, we coverage. It is a two-in-one product that provides the peace of mind a life insurance can observe a strong customer adaption to digital platforms across various channels, bring, while earning interest on the deposit. Within six months, the product’s momentum expecting seamless interfaces, alongside expectations of simpler, faster, and more soared generating almost Php300 million deposits. comprehensive service than ever before.

With the market disruption of easy online loans, Go! Salary Loan Online Channel was Significant steps are continuously taken to deliver customized solutions to the ever- launched in the latter part of June, where a frictionless experience for employees of changing customer needs. Other than diverse products and services launched to provide accredited companies can apply for a personal loan online, anytime, and anywhere, just digital customer experience, in 2019, the Bank identified critical initiatives to effectively by using their mobile phone. This digital facility streamlines the application process, which carry out digital transformation which can be summarized into: (1) digital marketing, (2) is completely paperless, and thereby supports the conglomerate-wide campaign on robotics, and (3) operations. sustainability. Digital Marketing drive The Bank also initiated an alternative banking channel through agency banking. This was Robinsons Bank redefined marketing efforts by strengthening our presence in the piloted in five agent locations in NCR and CALABARZON last July. With the drive towards digital space and online based digital technologies. We established relevance through customer-centricity, this initiative enabled the Bank to extend services beyond traditional Knowledge Bank, owning organic search results through Search Engine Optimization. branches and expanded our touchpoints to the local, far-reaching communities. Last January, we launched a pilot campaign for Simple Savings® Online. With the Customers can now perform cash deposit, cash withdrawal, bills payment, and funds success of the pilot campaign, an expanded campaign was relaunched which resulted to transfer through these selected agents. higher conversion rates at lower costs.

In August, new features of our credit card products were launched – the Balance Transfer Robotics (BT) and the Convert to Cash (C2C), making the cardholders’ cash flow more convenient The Bank is in expansion mode since it gained momentum five years ago. As our and easier to manage. BT allows them to transfer their balances from other credit cards client base grows, various robotics process automations were implemented to deliver to their Robinsons Bank credit card, while the C2C allows them to convert the available operational efficiency and increase our capacity to handle greater transaction volume. balance of their Robinsons Bank credit card to cash. Some of the initiatives introduced in 2019 include a robot that automates the monitoring and reporting of ATM status nationwide, a robot that helps in the processing of ATM cards Leveraging on the JG conglomerate synergy, the Bank introduced Robinsons Cashback to newly opened accounts, and a robot that automates several manual credit validations Card last October, which allows cardholders to earn rebates on any purchase at RRHI for auto loans. brands and affiliated stores. This product is in partnership with Robinsons Retail Holdings, Inc. (RRHI). Operations Continual improvement process is an ongoing effort to allow seamless operations in the By end-December, Robinsons Bank’s card product suite expanded to a wider selection, back-end systems of the Bank. In 2019, we upgraded our Treasury System and received namely, (1) Robinsons Bank UNO® Mastercard; (2) Robinsons Bank DOS® Mastercard; (3) commendation from Finastra, the third largest Financial Technology provider in the world. Robinsons Cashback Card; (4) Robinsons Bank Visa Debit Card; and (5) Robinsons Bank Headed by the Treasury Group, this project made its contribution to the award-filled year Simplé Savings® Debit Card. of Robinsons Bank. RBank’s Treasury IT Solutions Opics Project was named 2019 Project of the Year as we surpassed market average standards by completing the project three Furthermore, the Bank introduced a hybrid branch concept, called ‘24R Hub’. This months ahead – a testimony to the Bank’s speed and agility in its operations. branch format provides exceptional CX through simplified customer journey using digital banking facilities and self-service hubs. The three 24R Hub branches are in BGC – Rizal Other major systems enhancement implemented are MoneyWare Trust System, SAP GL,

Drive, Adriatico, and Cyberspace Gamma. This initiative complements the 168 operating PROJECT OF THE YEAR BSP Reporting and Data Integration System, VISA PayWave Contactless Payment, and branches and 338 ATMs strategically positioned nationwide. (TREASURY IT SOLUTIONS OPICS) Trans Union Enrollment.

12 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 13 MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT & CEO

Along all these improvements and initiatives, we are further enhancing our protection against cyber threats. This requires a proactive, continuously integrated, and automated approach to cyber security. In 2019, the Bank implemented the following cyber security solutions: (1) Web Application Firewall (WAF) which secures customer facing web applications, secure personal data and improved data privacy posture; (2) TrendMicro Vulnerability Protection, a virtual patching system and defense against cyber threats, and (3) TrendMicro Endpoint Upgrade, with enhanced security features “ 2019 was a pivotal year for and performance of Office Scan Anti-Virus. Robinsons Bank. Having built the capacity, capability, Customer-centric Culture: Living ouR DNA and network over the past Defined in our five-year strategic plan Roadmap 2020 under People Strategies are 5 years, we were able to initiatives we will take to become a customer-centric organization. We launched CX Fortified (CXF) program in 2019, a leader-led and inspired program that intends to steer the Bank to a higher deepen and intensify a customer-centric culture within RBank. All RBankers were plane amid the challenging rallied to embrace customer-centricity with the unveiling of its seven disciplines: business environment. We Innovation; Accountability; Customer Insight/Foresight; Collaboration; Empathy; are happy to report that as Sense of Urgency; and Self Development. we conclude Roadmap 2020 Relevant initiatives using multiple channels were instituted for all the employees. with so much achievements These programs resulted to engaged employees and breakthrough collaborations. and recognitions, Robinsons We captured 440 stories which featured RBankers who ‘live and breathe’ customer-

Bank will embark on our new SILVER ANVIL IN THE PUBLIC centric behaviors in their day-to-day lives. These stories were digitally shared to RELATIONS TOOLS five-year initiative, Roadmap (ANNUAL REPORT 2018) inspire RBankers to replicate the same mindset and behaviors and promote a culture 2024, with broader goals and of recognition. In the last two years, the engagement level of these programs have been consistently high at 94%. heightened targets, guided by major enablers." Economic Developments: Navigating ouR way in a Challenging Year Global economic growth remained subdued in 2019, weighed down by weak trade and investment climate. The World Bank estimated global growth at 2.4% in 2019, Elfren Antonio S. Sarte 1 President and CEO down from 3.0% in 2018. Weakening global expansion also led to lower inflation in advanced and developing economies. Oil prices fell 10% on average, as softened demand offset supply shortfalls.2

The Philippine economy likewise grew at a slower pace at 5.9% in 2019, owing to the delayed passage of the 2019 national budget. Nonetheless, sustained robust private consumption made significant contribution to growth, while a rebound in government expenditure supported the investment in infrastructure.

The first half of 2019 was characterized by slow growth, the lowest level in eight years. Domestic challenges and the external environment slowed down investment growth. Private consumption drove the economy, supported by moderating inflation which fell to 1.7% in August, the lowest in three years.

1 IMF estimate at 2.9% in 2019, declining from 3.6% in 2018. 2 World Bank estimate

14 ROBINSONS BANK 2019 ANNUAL REPORT 15 MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT & CEO

The country’s full year 2019 inflation averaged 2.5%, so much achievements and recognitions, Robinsons Bank hold the 16th spot in industry ranking, jumping eight notches book build. The Philippine Rating Services Corporation which is within the government’s target range of 3% ± 1%. will embark on our new five-year strategic plan, Roadmap from 24th with only Php22.6 billion loans in 2014. (PhilRatings) rated this bond “PRS Aa minus” with a Stable Cheaper oil, lower rice prices, and a stronger peso brought 2024, with broader goals and heightened targets, guided outlook, a notch below the highest rating. The next TOTAL LOANS (in PHP BN) CAGR +29% inflation down after accelerating to 5.2% in 2018, providing by major enablers. issuance of another Php5.0 billion in November was 4.3x a sense of economic security. 80.2 oversubscribed. PhilRatings assigned Robinsons Bank an Our achievements in 2019 were backed by growths in the issuer credit rating of “PRS Aa minus” with a Stable outlook. Amid the easing inflation environment and weakening Bank’s balance sheet, a result of the Bank’s success in This success is a fitting statement that Robinsons Bank has economic growth in 2019, the BSP adopted a more implementing designed strategic initiatives. 22.6 gained the trust and confidence of the investing public. accommodative policy stance. The Monetary Board reduced the policy rate by a total of 75 basis points and The Bank’s total assets stood at Php131.1 billion, up by '14 '15 '16 '17 '18 '19 We ended 2019 with Php97.6 billion deposits. CASA lowered the reserve requirement ratio by 400 basis points Php9.8 billion from 2018 levels. This growth led the Bank to Industry Ranking from 24th to 16th grew 13.3% to Php33.4 billion. This was supported by to 14% towards the second half of the year. Benchmark rank 18th among the Philippine universal and commercial continued onboarding and acquisition of new clients. interest rates gradually declined as the country’s liquidity banks. This is eight notches higher compared to the Bank’s NON-PERFORMING LOANS New deposit products brought in 30% of the total new condition improved. position at 26th with only Php49.2 billion assets back in 2014. accounts generated in 2019. These initiatives contributed 4.6 gross NPL ratio net NPL ratio to the Bank’s improvement in industry ranking in terms of TOTAL ASSETS (in PHP BN) CAGR +22% The Philippine Banking System (PBS) remained sound deposits, climbing six notches to rank 18th from 24th in 2014 and stable in 2019, despite the slowdown in performance 131.1 1.7 at Php41.2 billion deposit levels. exhibited by single-digit growths from historical 2.1 TOTAL DEPOSIT (in PHP BN) CAGR +19% double-digit growth records. Total PBS assets increased 0.8 49.2 '14 '15 '16 '17 '18 '19 moderately by 8.41% to Php 18.3 trillion, compared to 97.6 11.5%-12.4% annual growths in the last three years. Amid growth in loan portfolio, the Bank’s loan quality Likewise, the total PBS loan portfolio (net) amounted to '14 '15 '16 '17 '18 '19 remained satisfactory and better than industry at 1.7% 41.2 Php 10.3 trillion, with year-on-year growth slowing down th th Industry Ranking from 26 to 18 gross nonperforming loan (NPL) against industry’s 2.1%. to 9.4% from last year’s 14.5%. In terms of funding, total For 2019, the Bank set aside Php127.5 million in provisions PBS deposit level was at Php 13.68 trillion, with year-on- Likewise, the Bank’s total loans improved to Php80.2 billion, '14 '15 '16 '17 '18 '19 which improved the Bank’s NPL coverage ratio, stable at year growth likewise declining to 7.09%, from 8.84% same 17.4% higher than last year. This was supported by the th th 122.5% compared to 112.7% in 2018. Industry Ranking from 24 to 18 period last year. sustained performance of consumer loans which jumped 31.6% year-on-year to Php30.2, growing 3x faster than the NPL COVERAGE Guided by the strategic thrusts of Roadmap 2020 and Against this backdrop, Robinsons Bank sustained industry. Growth in consumer loans was anchored on the steering a higher asset base, the Bank reached a five-year 122.5% resilience and focused on prudent asset growth, while strong performance of home loans which expanded 36.0% high profitability as net income expanded by 126.9% year- expanding its profitability. Robinsons Bank posted strong to Php18.5 billion vs Php13.6 billion last year. This growth on-year to Php719.4 million compared to Php317.1 million growths in assets, loans, and deposits. is 3x faster than the industry growth of 11.2%. Consumer earned last year. 62.7% loans now take a bigger pie in the Bank’s total loan portfolio NET INCOME (in PHP MN) CAGR +37% Financial Results: Delivering ouR Solid Performance at 38% compared to 29% in 2014. Commercial loans, on the '14 '15 '16 '17 '18 '19 2019 was a pivotal year for Robinsons Bank. Having built other hand, ended 2019 with Php50.0 billion portfolio, 10.3% 719.4 the capacity, capability, and network over the past five higher than 2018’s Php45.4 billion levels. Commercial loans Furthermore, in 2019, we shifted to more stable fund years, we were able to steer the Bank to a higher plane was able to catch up with its targets toward the end of 2019 source in 2019. We successfully raised Php10.0 billion amid the challenging business environment. We are when the rates became accommodative. The continuous bond issuances in two tranches. The initial series of Php5.0 146.9 happy to report that as we conclude Roadmap 2020 with expansion in the Bank’s loan levels made Robinsons Bank billion in August 2019 resulted to 4x oversubscription of the '14 '15 '16 '17 '18 '19

16 ROBINSONS BANK 2019 ANNUAL REPORT 17 MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT & CEO

The overall profitability was buoyed by the 24.9% increase CAPITAL ADEQUACY NET STABLE FUNDING Sustainability: Transforming ouR Community This program brought together 17 CSR teams represented in interest income to Php7.2 billion and the decelerated RATIO RATIO Robinsons Bank ensures future readiness. We built by 268 RBank volunteers as we replicated the program to 20 burden of interest expense to 35.3% from 94.4% back in our sustainability measures using the ESG framework different schools nationwide and served 956 beneficiaries. 17.46% 133.00% 2018. This resulted in 18.6% expansion in net interest 15.00% 115.04% and aligned with the conglomerate-wide sustainability Through this CSR initiative, we were able to create value income to Php4.2 billion from Php3.6 billion by end-2018 initiatives. Sustainability has been incorporated in the in the lives of our community partners. This is the type of on better net interest margins. The Bank’s NIM improved way we deliver value in our operations and above all, value that will make their and our future even brighter. to 3.6% from 3.5% last year. the products and services delivered in the community we serve. Roadmap 2024: ouR Future is Bright Navigating the future is challenging. Competition, NET INTEREST INCOME NON-INTEREST INCOME 2018 2019 2018 2019 Financial Inclusion disruptions, and uncertainties surround the operating TIER 1 CAPITAL RETURN ON AVERAGE We greatly support the initiative of BSP towards financial environment. Armed with our newly crafted five-year 19% 42% RATIO EQUITY inclusion. Through our products and services designed strategic plan Roadmap 2024 and with the guide of the specifically to cater the needs of our customers, we strong and abled senior leaders of the Bank, together with 16.55% 4.89% The Treasury business robustly propelled the 41.9% 14.13% contributed to nation building through financing. We our Board of Directors, we stand that we keep our line of year-on-year growth in the Bank’s non-interest income of have supported multiple essential sectors, especially sight focused towards achieving our vision. Guided by our Php757.0 million as trading and foreign exchange gains 2.56% education where our loan size expanded ten times in seasoned Board of Directors, we remain positive and we are accelerated by 165.5%. Service fee income grew by 31.2% 2019. Significant achievements include onboarding of committed to our mission of becoming a significant bank in year-on-year to Php462.3 million, backed by the strong almost 100,000 new clients with our financial inclusion the industry. growth in lending fees and commissions. 2018 2019 2018 2019 financing, countryside development financing, and banking the unbanked programs in 2019. For the successful 2019, we would like to extend our In managing operating costs, we continue to enhance LEVERAGE RATIO RETURN ON AVERAGE sincerest appreciation to all the 2,226 employees who made the efficiency of our operations and leverage its scale as ASSETS Financial Literacy this year of achievement possible. Above all, to our clients cost-to-income ratio improved by five percentage points to Equally significant, in Robinsons Bank, we teach that and future clients, who continue to believe in us, thank you 10.79% 0.57% 81.8% in 2019 compared to 86.8% same period last year. every peso, through good money management skills, for the trust and confidence. We believe that together, the 8.29% This helped improve the Bank’s bottom line as EBIT grew has the potential to grow and create more value. future is bright! by 76.5% year-on-year to Php781.0 million. 0.26% We culminated our three-year program on financial literacy which was designed for the entire family of Maraming salamat po! Furthermore, the Php3.0 billion capital infusion of our our beneficiaries. The students of the beneficiary parent companies JGSCSC and RRHI back in 2018 gave 2018 2019 2018 2019 school were provided with education and tools to save, the Bank a capital adequacy ratio (CAR) of 17.5%, well including the promise that we will help them open their cushioned for its risk management activities and adequately LIQUIDITY COVERAGE NET INTEREST very own bank accounts back in 2017. This was achieved RATIO MARGIN positioned to seize future business growth opportunities. the following year when 494 students opened their very This CAR is well-above the regulatory minimum first savings account and as a reward, RBank added LANCE Y. GOKONGWEI 115.64% 115.78% 3.52% 3.59% Chairman requirement of 10.0% and industry average at 15.6%. Php2,000.00 to the account of those students who saved more than the others. This program has been continued The Bank’s return on equity jumped 230 percentage points given new tools. Simultaneously, their parents were to 4.9% in 2019 from 2.6% a year ago. Likewise, return on enrolled in livelihood skill trainings uniquely identified assets improved by 30 percentage points to 0.6% from to match their prospective market to assist them with ELFREN ANTONIO S. SARTE 0.3% in 2018. 2018 2019 2018 2019 possible sources of additional income. President and CEO

18 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 19 A Salute to MR. JOHN 1926 - 2019 By Lance Y. Gokongwei

My late father was a great many things. To most people, he is As with the then young John Gokongwei, newbie Robinsons remembered as an extraordinary businessman that built our Bank kicked off with a modest start. family’s conglomerate from the ground. To a good number, he is a bold dreamer who dared take his business empire, so to Like my father, I nurtured a culture of resilience and speak, to seemingly unreachable undertakings and enterprises. competitiveness in the Bank. More so, the predisposition for To a few and especially to me, his only son, he was more than hard work, integrity and humility that my father instilled in me all these; he was a family man, a dedicated mentor and a firm have led us, along with every Gokongwei company, to operate coach, fused together. with frugality, fairness and simplicity.

The legacy that is John Gokongwei was all 93 years of The support and devotedness of family have complemented stewardship, integrity and grit. He boldly blazed trails and my father’s leadership. If there’s something I visualize for the competed with business giants to be able to serve customers Bank, it is that we make a significant and meaningful impact better. He led not just the country’s pool of talents and skills to the community. I envision that openness to fresh ideas and to amazing adventures but more compellingly, me and respect for the opinions of others become not just a habit but the rest of our family to share in his passion for growing his a way of living. By focusing on our customers’ real needs, I can businesses and to see to it that customers are served the way lead in coming up with innovative products and services and they should be. making Robinsons Bank among the top banks in the country. And I promise to carry on growing the Bank for our customers, John Gokongwei earned his laurels through years of hard work the community and ultimately, the country. and commitment. To measure, I have not even reached half of what he has accomplished in his lifetime. It is not fair to pit the John Gokongwei’s legacy is very much alive in every Robinsons father’s accolades with the son’s for I am probably not worthy. and JG Summit company. By living out this legacy, we Nonetheless, the lessons the father passed on to the son as strengthen the foundation by which Robinsons Bank is built. I a cache of values and principles to be carried on, to me, is am looking forward to fulfilling our dreams for the Bank and to probably the best tribute to the late John Gokongwei. being able to serve our customers’ changing needs. By moving towards a collaborative culture, I am enabling and empowering The Gokongwei group’s entry into the banking business was my people to have a direct hand in customer service and inspired by my father. He regarded consumers’ basic needs contribute directly to the success of the enterprise. After all, paramount to all and recognized that the way for customers to customer centricity is always the top Gokongwei ideal — that have better access to their growing needs is by providing the life should be better for every Filipino. avenue for savings and investment. In such way, Robinsons Bank came to be.

From infancy to the young bank that it is, we built Robinsons Bank, keeping in mind the tough lessons that my father perpetuated. I set out to establish the Bank equipped with nearly the same desire for the new and unexplored.

20 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 21 REVIEW OF OPERATIONS BANKING MADE EASY FOR YOU

Beyond the technological upgrades, our digitalization is about creating solutions that make banking easier for you.

22 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 23 RETAIL BANKING SEGMENT Focusing on the core strategies of broadening customer base ROBINSONS BANK using new and innovative product FASTEST GROWING offerings and deepening business COMMERCIAL BANK IN THE PHILIPPINES 2019 relationships with existing clients, by Global Business Outlook 2019 the Retail Banking Segment’s (RBS) performance stood out with a 13% CASA growth, ending at Php31.8 billion in 2019. RBS’s total deposit level thus grew by a robust 10%, exceeding industry average of 7.1%., and ending the year at Php53.4 billion. Our award-winning savings account products launched in • 157 POS terminals installed for our Merchant The Bank also offers other investment options such 2018 contributed much to this increase. We progressively grew Acquiring Business with 276.4 million CASA as Bancassurance products to its branch customers 13% the number of customers and new accounts with significant contribution through its partner PruLife UK. The Bank gives CASA GROWTH inflows from Simple Savings, a low-value deposit product • 7,462 approved DOS and UNO Credit Cards access to insurance offerings to our customers by and IPONsurance, a tiered savings account bundled with life or 29% branch channel contribution holding financial wellness programs, estate planning insurance. These two products combined make up 30% of our seminars, market outlook sessions, and a series of 10% TOTAL DEPOSIT total new accounts generated in 2019. Bancassurance Day activities. The year 2019 was P6 billion extraordinary as the annual premium contribution GROWTH EXCEEDING COMMERCIAL LOAN INDUSTRY AVERAGE OF 7.1% The Bank’s strength is in being part of one of the biggest BOOKINGS doubled to P64 million. The total life insurance conglomerate in the Philippines. We used this aggregate’s base coverage provided to over 500 customers generated a of customers, suppliers, and partners to generate new accounts total fee income of P14 million. and grow our existing deposit base. We not only offered P3.5 billion TOTAL AVERAGE DAILY traditional and non-traditional sources of deposit accounts SIMPLE SAVINGS BALANCES OF CMS such as the commercial loans, CMS facilities, and credit card IMPLEMENTED DEALS P64 million MOST INNOVATIVE POS among others, but also went as far as expanding the total ANNUAL PREMIUM BANKING business relationships with existing clients by intensifying CONTRIBUTION DOUBLED PRODUCT branch cross-selling efforts. 157 FROM PREVIOUS YEAR by Global Business Outlook POS TERMINALS All these initiatives have resulted in: INSTALLED BEST FINANCIAL • P6 billion commercial loan bookings INCLUSION • P2.2 billion consumer loan bookings, in partnership with 7,462 PROGRAM the Consumer Finance Group APPROVED DOS AND by Bank Marketing Awards • P3.5 billion daily balances of CMS implemented deals UNO CREDIT CARDS

24 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 25 RETAIL BANKING SEGMENT

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Second, this new product was able to bridge the gap that hinders the common Filipino from achieving On June 3, 2019, the Bank launched IPONsurance®, a any time. They can also increase their coverage to a higher financial security and stability. The Bank lowered new innovative product designed to provide Filipinos tier by increasing deposits to their accounts. Like any the barrier and went beyond the ordinary to create a with a better choice. It offers clients more than just a Robinsons account, IPONsurance® savings account can be product that paves the way for Filipinos to be able to savings account which earns interest, but also added monitored via Personal Online Banking channel through live a life and feel more secure of the future of their a free insurance to safeguard and fulfill the customers’ the RBanK Digital where they can have immediate access loved ones. As such, this relentless commitment to growing needs. and full control of their funds. provide excellent products and services also brings out the empowerment of every Filipino to take hold of a Meanwhile, we increased the Bank’s presence in key IPONsurance® offers a number of unique value At the end of 2019, the Bank was able to generate 1,345 promising future. cities as we expanded our network in strategic locations. propositions. It covers the insurance needs of individuals, active IPONsurance® accounts which drew in P278.24 Simultaneously, the Bank utilized digital platforms so from young adults all the way up to those aged 65 years. million in fresh funds from branches nationwide. that it remains up-to-date and convenient as well as Whereas most life insurance products in the banking complementary to existing products and services. Our industry only cover those aged 60 years and below, the 151 new branches are mainly situated in Ortigas, BGC, and wider age range gives a very good alternative to newly BRANCHES South Luzon areas, closing the year with a total of 151 retired individuals who may have missed the traditional 1,345 branches and 320 ATMs. ACTIVE 70 Metro Manila age requirement cut-off offered by other life insurance IPONSURANCE 48 Luzon companies. ACCOUNTS 21 Visayas 12 Mindanao This unique product was also designed to ensure flexibility. It offers tiered coverage for the account holder: 320 the higher the average daily balance (ADB) of the account The introduction of IPONsurance® delivered two strong ATMS holder, the higher the life insurance coverage. accomplishments for the Bank. First, it strengthened the 136 Metro Manila Bank's foothold in the industry, both in regular banking 116 Luzon IPONsurance® is uncomplicated, affordable and services and in life insurance services. Since 2018, 44 Visayas convenient. Medical checkups or clearances are not the Bank has been expanding its insurance offerings 24 Mindanao required but subject to conditions. Accountholders can to include products with partner PruLife UK, a highly earn interest on the ADB and can withdraw their funds at reputable international insurance company.

26 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 27 RETAIL BANKING SEGMENT CONSUMER AND REGIONAL BANKING SEGMENT

New Gen Banking Centers We have seen how the banking industry has gone a long way to meet the fast changing needs of customers. From new products to better services, Robinsons Bank has continued to keep up with the pace of the new generation and has even utilized today’s new technologies to be able to serve its customers better. Thus, it came up with Consumer loans have been “anytime banking hubs” called 24R Hubs that fuses the 3X goals of traditional banking with the benefits of digital growing 3x faster than industry FASTER THAN INDUSTRY banking platforms. These hubs are physical branches with over-all performance of 30% PERFORMANCE designed to serve the younger and more tech-savvy generation and those who desire to simplify and speed up year-on-year growth and 5-year the customer journey through its digital banking facilities CAGR of 35.2%. The segment's such as ATMs, Cash Deposit Machines and Account exceptional performance is 30% Opening Tablets. YEAR-ON-YEAR GROWTH attributed to aggressive new There are now three newly opened 24R Hubs located in customer acquisition programs prime strategic centers: BGC Rizal Drive, Adriatico in Malate, Regional Commercial Loans and Gamma at Ortigas Center. backed up by regional expansions The Regional Commercial Loans Portfolio expanded to that brought total customers to Php 4.2 Billion in 2019, marking a 40% increase from its more than 240,000. Php 3 Billion last 2018. Its CAGR for the past four (4) years has been maintained at 167%, with its operation only

3 starting last 2015. The support from Regional Business NEWLY OPENED Banking Centers located in Cebu, Davao, Iloilo, Pampanga 24R HUBS and South Luzon, and 1 Lending Desk in Naga have greatly contributed to generating substantial deposits for the bank.

28 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 29 CONSUMER AND REGIONAL BANKING SEGMENT

LOANS

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The Consumer Finance Group continues to implement an NPL ratio of 4.7% which is lower than industry. The 11% INCREASE IN PLP channel strategies in line with the Roadmap 2020 vison sustained network expansion by, and strategic partnership LOAN PORTFOLIO. of the Bank that includes expansions of its network in with the partner dealers fueled the outstanding growth of HOME IS WHERE THE HEART IS AND National Capital Region and strategic cities in the provincial the MC Business. WHERE YOUR FAMILY’S FUTURE BEGINS. Get the key to your dream home with the help of areas. The group also set its sights on setting up digital The Go! Salary Loan continues to post a portfolio growth of our Housing Loan. touch points to simplify the on-boarding and reduced turn- Further, the other key drivers were aggressive support 11% for the last four years ending at P760M with more than around time that improves the over-all customer journey. to various activities, road shows of partner dealers with 13,600 loan clients. The focus was maintained at salary the major motorcycle manufacturers (Mall Invasion, deducted loans via partnership with corporate clients of the Bank in providing financing assistance to its employees. Tambayan, TODA Caravan, Convention etc.); increased DRIVE AWAY IN YOUR DREAM CAR when presence to the big bike market through RBank branches; you avail of Robinsons Bank' GO!Auto Loan. Enjoy the ride of your life with us! 36% INCREASE IN HOME and simplification of the various processes to facilitate a Aligned with the Roadmap 2020 where digital strategies LOAN PORTFOLIO pleasant customer experience. In line with service delivery are identified as the core enabler in transforming the Bank improvement through digitalization, the group converted into a customer-centric sales organization, the Go! Salary Home loans portfolio ended at P18.5M or a 36% growth its manual field credit investigation (CI) into more Loan online application was launched in June 2019. This from last year’s P13.9B. The growth for the last four years efficient and productive process. A mobile app (Mobile CI is a paperless 3-party loan application platform which RIDE THE EXTRA MILE on your dream showed a tremendous 48% CAGR which was faster than speeds up processing and provides real-time status from motorbike when you apply for Robinsons Bank's Application – MoCA) was created for faster turn-around with GO! Motorsiklo loan. industry by 4x. The expansion was primarily driven by increased productivity by 50%. application submission up to the release of the loan. improved performance from both developers and branch channels. 2019 also saw the expansion of both developers and project accreditations. The group also improved its sales coverage by setting up lending desks in Cebu and 12% INCREASE IN AUTO 31% GROW YOUR BUSINESS with Robinsons Bank's Davao, and launched an aggressive Broker referral program. LOAN PORTFOLIO INCREASE IN SMALL GO! Small Biz Loan that's designed to help BUSINESS LOAN small-to-medium scale entrepreneurs (SMEs) with their starting or additional capital requirements. Despite the slow-down in vehicle sales, Auto loans still PORTFOLIO performed better than industry registering 12% growth The bank’s commitment to support the small entrepreneurs and ended the year at P3.7B loan portfolio on a four- 35% INCREASE IN resulted in a 31% growth in loan portfolio to P658M as of MOTORCYCLE LOAN PORTFOLIO year CAGR of 47%. The main drivers are the tie-ups with end 2019. This translates to a hefty 98% CAGR over the last auto dealerships and support from branches. Regional four years, attributed to the expansion of coverage outside SALARY LOAN PROGRAM is a multi-purpose The Bank’s motorcycle financing continues to grow with expansion was also a key initiative that beefed up presence NCR. Branches are the major source of clients that we also personal loan facility for employees of accredited loan bookings increased by 44% and loan portfolio by in 8 major cities outside NCR. The group also launched its companies. It is collateral free loan with easy target for deposit products and other consumer loans. payment terms through salary deduction. 35% in 2019. This is the highest growth for the past 4 years. "All-in, Low-down" promo and continues to provide great The portfolio quality remained to be healthy maintaining offers like free insurance for car buyers.

30 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 31 CONSUMER AND REGIONAL BANKING SEGMENT

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ROBINSONS BANK CARD PRODUCTS:

Cards Business Group 2019 was a winning year for the Cards Business Group. It received an award from Global Business Outlook for the ROBINSONS ROBINSONS BANK SIMPLE SAVINGS ROBINSONS BANK innovative card product which the group launched the previous year. The prestigious UK-based publication named CASHBACK CARD UNO® MASTERCARD CARD VISA DEBIT CARD the Robinsons Bank DOS® Mastercard as the Most Innovative Credit Card Product for 2019 in the Philippines. Shopping just got better with & ROBINSONS BANK Getting a savings account has The world, own it! Enjoy the the new Robinsons Cashback! DOS® MASTERCARD never been this easy! Robinsons best moments in the limitless This feat clearly resonates the Group’s continuing drive to deliver products and services with hallmark value and Enjoy up to 3% rebate at Unleash the power of 2-Gives! Bank brings you the basic world of entertainment, travel convenience to its customers. It continues to promote the Bank’s credit cards and grow its credit card base through Robinsons Stores and up With Robinsons Bank DOS® deposit account that requires leisure and more! digital campaigns and promotional tie-ups. to 1% rebate on all other Mastercard, all your purchases only Php 100 as initial deposit, merchants. are automatically converted to one ID card, and simplified a 2-month installment, with no Know-Your-Client details. No added interest and no minimum maintaining balance required! With its customers’ needs continuously evolving, amount required! the Bank launched the Robinsons Cashback Card, a co-branding initiative with Robinsons Retail Holdings, Inc. (RRHI). Cardholders can earn a maximum 3% cashback on their purchases from Robinsons stores and Robinsons affiliated brands. 63% 250% 344 The partnership with RRHI not only promotes the APPROVED CREDIT GROSS REVENUE POS MERCHANTS Group’s marketing initiatives but strengthens the CARDS GROWTH RATE GROWTH RATE WITH 2165 OUTLETS synergies of the two Gokongwei entities. With this, the Bank now has the following product suite, which it aims to continually expand and improve.

2,111 104% 5960 APPROVALS BILLINGS NEW TERMINALS PER MONTH GROWTH RATE INSTALLED

32 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 33 CORPORATE BANKING SEGMENT

Account Management Group AMG’s array of loan products helps fill out the funding Account Management Group (AMG) belongs to Corporate gaps/requirements of our clients from working capital Banking Segment which provides funding and cash to expansion and other capital expenditures which fuel management services to the bank’s corporate and their growth and in turn build the Philippine economy. Robinsons Bank provides funding and Cash commercial clients. While AMG provides loan products, AMG intends to support our clients and build stronger Transaction Banking Group (TBG) complements AMG relationships by focusing on their needs and solutions Management Services for its commercial and clients by offering cash management services which and by continuing to improve our processes towards a corporate clients through its Account Management foster stickier relationships with our clients. AMG caters to better customer journey. clients within the National Capital Region which includes Group (AMG) and Transaction Banking Group the Philippine’s local conglomerates. (TBG). AMG offers loan products to clients within 66% For the past 3 years, AMG’s loan portfolio grew by GROWTH IN the National Capital Region including the country’s 66% to Php 45 Billion in 2019 whilst maintaining a COMMERCIAL LOANS FOR PAST 3 YEARS largest conglomerates. TBG offers Cash management, low net NPL ratio of 0.32%. Growth was driven by the active fulfillment of the funding requirements of local liquidity and remittance solutions to corporate and conglomerates coupled by the continued growth of its SME clients of the bank. commercial clientele. AMG continues to deep dive into the ecosystem of the bank’s parent, JG Summit Group, which provides the synergy for supply chain financing which will be a major thrust for the coming years.

34 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 35 CORPORATE BANKING SEGMENT TREASURY SEGMENT

Transaction Banking Group While TBG continues to provide traditional payment Over the past years, Robinsons Bank has continued to put options such as outsourced check writing and releasing, particular focus on providing relevant cash management the bank also strengthened its online e2Banking platform solutions not only to the conglomerate, but to its entire for corporates and SMEs by adding new electronic corporate customer base; crafting products and services payment options not only within RBank accounts, but tailored to address specific needs of companies based on bulk electronic fund transfer options as well to other local The trading environment in the bond market was very were aimed at generating funds that will allow the Bank size and industry dynamics. banks via the Pesonet. favorable, giving the Bank opportunities to increase trading to diversify funding sources, optimize funds deployment, income way beyond what it earned in the previous year. Its and sustain proper management of the liquidity ratios. Driven by its mission to be the Bank of Choice, Robinsons The electronic channels made available for Bills Payment 2019 trading income of P402 million dwarfed the previous Meanwhile, our securities brokering business in the Bank’s Transaction Banking Group (TBG) centered are constantly being enhanced; transitioning from year’s P18.3 million. The foreign exchange market, however, secondary markets increased its line-up of investors. on delivering more customer-centric digital banking simple capture of payment references to API-based presented more challenges. Nevertheless, Treasury whipped solutions that will inject cost and procedural efficiencies validation and posting, which in turn provides more up P56 million in forex gains. Combined, this amounted to The newly acquired IT Solutions OPICS which aimed to into the financial operations of its corporate clients. Apart accurate and timely reconciliation to our biller base. P458 million, higher by 7% than the P440 million targeted support the Bank’s ongoing product expansion, finally from that, community-building initiatives have been set in Apart from that, Robinsons Bank’s Bills Payment facility when Roadmap 2020 was drawn 5 years ago. went live at the start of June 2019. Because of its fast and motion through thorough analyses of the user journey of already transcended to collections through partners, seamless progression from negotiations the customers of the businesses we work with and thus, agency banking, and bank-agnostic options via account to implementation, OPICS earned making the group’s approach and product offerings more referencing; offering expanded payment options to its the “2019 Project of the Year” award. germane and replicable. customers’ payor community. 96% INCREASE IN ITS TRADING INCOME Its developer Finastra Global Limited hailed the Bank for the collaborative For 2019 alone, Robinsons Bank TBG has shown an overall Recognizing how the banking industry is shifting its focus communication, strong point contact deposit portfolio growth of 21% with a 12% increase in into digitalization of products and services, Robinsons and firm expectations that allowed it customer base versus previous year. Bank intends to stay in the game and carry on developing The Bank embarked on a fund-generating mission by to surpass standards — three months more relevant and innovative solutions to cater to the participating actively in the capital market. It successfully faster than the industry average. dynamic needs of its corporate and SME clients. set off with an initial tranche of P5 billion corporate 21% bond issue that will mature on 2021. The issue has a INCREASE quarterly coupon rate yield of 5.125%. The reception to 2019 PROJECT OF THE IN OVERALL DEPOSITS the first issue was very strong with 4x oversubcription, YEAR AWARDED BY prompting the Bank to come up with a second tranche FINASTRA” to raise another P5 billion. This issue offers a quarterly coupon yield of 4.3% maturing 2021. Both bond issuances 36 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 37 CUSTOMER EXPERIENCE GROUP CONDUCT TRAINING SESSIONS REMOTELY USING MICROSOFT TEAMS

Paperless Digital Meetings Robinsons Bank is realizing the cost benefits of maximizing the use of Microsoft Office 365 which digitalizes paper-based reports used in its board-level and executive meetings. Where voluminous reports and presentation materials used to be printed in reams of paper, manually collated and arranged in binders, and distributed to individual members and attendees, these materials are now generated in digital form, securely stored in online repositories, made accessible only by the authorized meeting attendees. Meeting attendees are also provided with secure tablets to download and view the digital reports. ANYTIME BANKING HUBS WERE BORN TO UTILIZE The Bank also rolled out Microsoft Teams, which is used by DIGITALIZATION AND the HRMG in online training. Instead of travel to the different INNOVATION IN BANKING. branches to conduct training, Teams’ video-conferencing Robinsons Bank continues to facilities allow HR to conduct training sessions remotely, count on digitalization in pushing generating huge savings in airfare and accommodations. Through the Operations and Control Segment, the Bank initiatives in different areas of introduced an alternative banking channel through Improvement in Process Efficiency with Robotic operations, keeping in mind Agency Banking, whereby customers can go directly to Process Automation (RPA) authorized third party agents who can perform banking Several robotic process automations are being utilized the best customer experience functions such as cash deposit, cash withdrawal, bills in several areas to improve operational efficiency given that it can deliver. Its successful payment and fund transfer. The Bangko Sentral ng the increasing volume of transactions that need to be Pilipinas has given Robinsons Bank the approval to pilot processed. Some of these processes include a robot digitization efforts are manifested Digital Products and Services five Premium Bikes which can serve as bank agents. More that can monitor and report the status of over 300 ATMs The Bank launched a fully digital payroll loan application in the following: of these banking agents will be launched in 2020. nationwide, a robot that helps in the processing of process for its payroll corporate customers’ employees. ATM cards for newly opened accounts and a robot that This project allows employees to skip manual form The “Anytime Banking Hubs” originally known as 24-hour automates several manual credit validations for auto loans. registration and directly fill up a web-based digital form “hybrid” branches were also born from the need to utilize accessible in their own devices. The request is reviewed digitalization and innovation in banking while focusing and processed digitally by their HR departments, thereby on customers’ changing needs. Thus, traditional banking significantly cutting the processing of payroll loans from services such as cash acceptance, account opening, 2-3 weeks to 2-3 days. personal banking and bills payment, through digital banking channels, can now provide banking services even after bank business hours.

38 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 39 TRUST AND INVESTMENTS GROUP ENTERPRISES SERVICES SEGMENT

Trust and Investments Group displayed favorable performance with its Assets Under Management (AUM) registering P17.74 The Group services investment requirements of the Bank’s billion at the end of 2019. In order to maximize returns for customers by providing fund management services. It the Bank’s clients, the Group continued to give its clients ultimately aims to protect its clients’ assets and balance the latest investment options by increasing participation in both their income and asset growth objectives while 32 new investment issuances offered in the capital markets. taking on the risks. The Bank’s mantra of Focus on Life, Remarkably, two of its Unit Investment Trust Funds (UITF) — Bank Easy removes investment worries and allows the the Tax-Exempt Retirement Balanced Fund and the Money customer to be free to do what he wants, pursue his other HUMAN RESOURCES MANAGEMENT GROUP Market Fund — finished first and tenth in their respective UITF interests and passions. categories versus the industry’s level of net returns. By 2024, we will be a hi-tech, The requirement of its corporate clients are likewise hi -touch HR. We will deliver serviced through other trust services such as corporate this through digitized processes Inspired by this vision, RBank’s Human Resource IMA, retirement fund management and escrows. Again Management Group relentlessly builds its organizational P17.74 billion living up to its mantra, these services give support to any while ensuring personalized and leadership capabilities towards an agile and customer- ASSETS UNDER company and allow it to focus on their core business. To free interactions, to enhance centric organization. By heart, HR knows that to build a MANAGEMENT its corporate client from cares, the Bank manages for the rewarding employee experience, it has to understand company’s investible funds or retirement funds or possibly employee experience. what matters most to its people. Hence, powered by act as escrow agent that will look after its interests. relevant programs and initiatives, HRMG supports talent It is probably not surprising that Tax Exempt Retirement management and development, employee well-being, Balanced UITF came in first in its category. It is a unique The Roadmap 2020 has been an amazing journey for the corporate social responsibility as well as strong employee product offering — the bespoke UITF that allows duly Bank because it provided more investment opportunities engagement. registered tax-exempt retirement funds to participate in a for retail investors with the Bank's more participative pool of similar funds investing in high-grade corporate bonds involvement in the capital markets. The road doesn’t end and dividend-paying preferred stocks. Its performance in there for the Bank embarked on a new trust system upgrade the past few years have shown very satisfactory returns for 2019 that will improve service delivery and soon, online for its institutional clients. On top of the solid returns on client records. Moreover, the Group will be launching three investments, it gives professional fund management, new UITFs that will expand its participation in the lower portfolio risk management and possibly lower retirement retail markets. It is also eyeing provident fund management contributions. for employees of the Gokongwei conglomerate.

40 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 41 ENTERPRISES SERVICES SEGMENT

CXF PROGRAM

Robinsons Bank has put customer-centricity at the core of its initiatives. To enable and fully embody the value of putting the customer’s front-and-center, RBank also underwent a culture enhancement to imbibe a responsive organization and provide customers with the best banking experience. Rooted on these realizations, RBank embarked on a journey towards deepening customer centricity in its DNA through the Customer Experience Fortified (CX Fortified) Journey— an initiative aimed towards intensifying a customer-centric culture among RBankers, resulting in:

4,991 PARTICIPANTS 398 RBANKERS FROM 14 EQUIPPED WITH THE BASICS TEAMS PARTICIPATED IN CHAT OF CUSTOMER SERVICE VIA TIME WITH HR CLASSROOM AND ONLINE LEARNING SESSIONS

440 CUSTOMER-CENTRICITY STORIES ON HOW RBANKERS 741 NEW HIRES ENGAGED ‘LIVE AND BREATHE’ CUSTOMER AND CARED FOR VIA THE CENTRICITY IN THEIR DAY-TO- KAMUSTAHAN PROGRAM. DAY LIVES

CXF RITUALS UNIQUELY In 2019, the interest in learning opportunities grew as ORGANIZATION 46 DIGITAL LEARNING 100% CREATED AND OWNED BY TEAMS a total of 15,660 RBankers attended various programs. AWARENESS ON CUSTOMER TO PROMOTE AND SUSTAIN CENTRICITY AND ITS 7 AND VIRTUAL TRAINING There were 30 new internal, external, development CUSTOMER-CENTRIC BEHAVIORS DISCIPLINES WITH AN and e-Learning programs. The People Development SUCH AS TEAM BROWN BAG ATTENDANCE OF 1,828 At RBank Academy, the People Development Department now has a repository of 221 programs. Other SESSIONS, CELEBRATIONS RBANKERS WITHIN 3 MONTHS Department (PDD) created the Training Needs Analysis than conducting training programs, there was focus on AND RECOGNITION OF AFTER LAUNCHING CX (TNA) with Ladderized Training as its framework to innovation in virtual learning. This was to support the ACCOMPLISHMENTS, PROCESS FORTIFIED identify the training necessary for each employee organization develop its digital readiness . IMPROVEMENTS, AMONG OTHERS. as they advance in their careers. Trainings were categorized as Basic, Intermediate and Advance. These TNAs / training plans are to be revisited by each group 15,660 RBANKERS 1,302 DEFINITIONS OF THE 208 TOPICS ON CUSTOMER to ensure that trainings are up-to-date and applicable. SERVICE AND PRODUCT ATTENDED VARIOUS 7 DISCIPLINES OF CUSTOMER PROGRAMS CENTRICITY, I.E., WHAT IT IS, BRIEFINGS DISCUSSED IN THE WHAT IT IS NOT BRANCH DAILY MORNING HUDDLES 30 NEW INTERNAL, EXTERNAL, DEVELOPMENT AND E-LEARNING PROGRAMS 53 ONLINE QUICK TIPS 85 SERVICE CHAMPIONS AND BROADCASTED BANKWIDE WITH 828 RBANKERS PARTICIPATING 88 VALUE CHAMPIONS WERE IN THE LEARNING CHECK COMMENDED BY EXTERNAL AND INTERNAL CUSTOMERS

42 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 43 ENTERPRISES SERVICES SEGMENT

are the 4-day CSA Series of Technical Training which includes Signature Verification and Counterfeit Detection. Meanwhile Sales and Service Managers (SSM) go through the SSM Proficiency Training. Not to mention that a newly hired SSM must go through and pass a revalida before s/he becomes a regular employee.

On the Bank’s lending side, the employees of the Consumer and Corporate Banking groups continuously attend trainings on Financial Analysis, Loan Packaging and Structuring, Problem Loan Recognition and Remedial Management among others, including the bank-wide annual training on Anti Money Laundering Act (AMLA), and other mandatory trainings.

Soft Skills Training To provide balance between professional and personal learning needs, RBank Academy addresses employee ADVANCEMENT PLANNING PERFORMANCE ASSESSMENT essential skills through workshop on Effective Business PROGRAM PROGRAM Writing, Values Alignment and RBank Best Customer Service. In 2019, to deepen a mindset on customer- Advancement Planning (AP) Review has been an effective The full-year performance and accomplishments of all centricity, the Customer Experience Fortified (CXF) program strategic approach in the Bank to ensure leadership RBankers are based on the Key Result Areas (KRAs). As the was launched. Learning and development opportunities continuity for all key positions and providing opportunities bank moves towards digitization, process simplification Leadership Training are accorded to both the male and female employees. for key talents to grow within the organization. AP review and sustainability efforts continue to be an important part RBank Academy continuously develops its leaders And through the years, with the advent of technology and is done every year with the Group Heads, Segment Heads, of the expectations from every employee. through the Officers Development Program, now on its online courses, the number of training programs have President, and the Chairman. In 2019, there were 29 12th Batch, and the Sales Officers Development Program increased by 42% from 2017 offerings. positions reviewed and 128 incumbents assessed. This led The organization’s performance management process which had its 2nd run in 2019. As of 2019, There were 34 to 14 key appointments of internal talents to bigger roles starts with the preparation of Key Result Areas (KRAs) as graduates from both programs who were promoted to the Potential successors under the bank’s AP Review were objectives are aligned with the organization’s business rank of first level officer. 85,609 TOTAL TRAINING provided with customized and targeted Individual goals. Each employee’s performance is monitored on a HOURS PROVIDED TO Development Plans (IDP) to strengthen and to ensure their regular basis. Performance appraisal enables supervisors RBank Academy likewise offers workshops on People and EMPLOYEES, 34% INCREASE purposeful and fast-tracked growth. to engage their subordinates and to discuss opportunities Performance Management and Developing Supervisory FROM PREVIOUS YEAR for his/her career growth through proper coaching and Skills. mentoring. On the other hand, Line Managers are also equipped with 46.40 AVERAGE 14 KEY APPOINTMENTS OF INTERNAL TALENTS TO knowledge, skills and attitude as HR partners. TRAINING HOURS BIGGER ROLES IN 2019 314 EMPLOYEES WERE Technical training AVERAGE TRAINING HOURS BY GENDER PROMOTED IN 2019 Being in the banking industry, technical trainings on operations are actively offered, which include policies and 47.88 43.88 laws from regulatory bodies such as but not limited to the FEMALE MALE In 2019, 314 employees were promoted, 95% of which Bangko Sentral ng Pilipinas, Philippine Deposit Insurance came from staff to junior officer level while 5% came from Company and more. Our frontliners i.e. Customers Services senior officer level. These are talents who have qualified to Associates (CSA) or bank tellers, and Sales and Service In 2019, RBank also started requiring employees to undergo take on bigger roles and responsibilities. Promoting these Managers go through rigid 3-month technical trainings at least 24 training hours to ensure their attendance in deserving employees is one of the ways we recognize, upon hiring, to ensure that that they are fully ready to take training sessions, whether internal, external, classroom value, and encourage outstanding employee performance. on branch banking operations. Other technical trainings learning, or e-learning.

44 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 45 ENTERPRISES SERVICES SEGMENT

Y2019 #OOTB RESULTS *Based on the 140 ideas implemented (combined for Quick Win Ideas and Big Ideas) as of December 31, 2019

EMPLOYEE PARTICIPATION 765 ideas lodged in #OOTB from across all Segments; 140 ideas implemented which resulted in better customer experience, operational efficiency, enhancement of controls, faster turnaround time, cost savings and additional income for the Bank.

SUSTAINABILITY More than 177,000 sheets or 410 reams of paper saved annually; equivalent to 923 kilograms of paper or around 22 trees saved through paperless initiatives.

MAN-DAYS SAVED Efficiencies brought about by the The “AHA” moment. “R” people use a set of business implemented #OOTB ideas contributed to process tools that help them strategize how pain points time saves of approximately 213 hours can be addressed, conceptualize proposed improvements per day or 26 man-days. and sustainability efforts. The program is managed by and present these to their supervisors. “I-OOTB na yan” a team made up of high potential talents in the Bank has become a buzzword during team meetings. ADDITIONAL INCOME who perform their roles in the #OOTB on top of their Around Turning Ideas into Projects. Idea proponent takes the PhP719,000.00 additional #OUTOFTHEBOX – ROBINSONS BANK’S IDEA regular functions. lead and collaborates with the different concerned units interest income and average GENERATION PROGRAM commission fees were generated as a The permanence of Change, together with the need Every RBanker is empowered and challenged to of the Bank to implement the idea and ensure that the desired results are achieved. result of Treasury Segment’s implemented to deliver fast and excellent service, has pushed the come up with ideas that can reduce or eliminate #OOTB ideas on process automation. company to develop a platform where employees can process “wastes” to promote operational efficiency Deliberations. Idea proponents present the results come up with ideas to improve internal processes just as as well as create new products and services. The of their implemented ideas to a set of panelists for COST SAVINGS quickly. Out of this urgency was born #OOTB, short for #OOTB campaign engages our RBankers also called assessment. The panel identifies the Top 3 projects based Total cost savings amounted to Out-of-the-Box, an idea generation program that uses “R” people, to be involved and become significant on impact, originality and replicability. approximately PhP9.5Mn; where several business process tools available to the Bank. contributors in innovation. Since #OOTB’s inception, PhP7.4Mn is from reduction in processing The winning idea proponents In keeping up with a culture of collaboration that the more and more R people, have come forward with Rewards and Recognition. time while the remaining PhP2.1Mn is are awarded during the Management Committee Meetings Bank’s management champions, #OOTB was created their ideas and have started turning these into from papers, toners, other supplies and and are featured in #OOTB’s bank wide correspondences. and launched in 2018 as a medium for all employees projects. Every #OOTB idea undergoes a process courier charges. regardless of ranks and roles in contributing to the where the idea developer is a participant. The best #OOTB groups and individuals in terms of Bank’s continuous improvement, process simplifications participation, implementation, presentation in the #OOTB has enabled “R” people to think deliberations, and cost savings, to name a few, are also #OutsideOfTheBox to improve their processes, become awarded at the end of the year. more accountable for their jobs, build their morale and create a productive and collaborative working environment.

46 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 47 BANK ROAD MAP 2020 2015 2016

STRATEGY: INTERNAL REORGANIZATION AND STRATEGY: GENERATING CORE INCOME ACQUIRING MORE TALENT

The first year of the 5-year Roadmap consisted of In 2016, RBank focused on generating core income. acquiring new talent, bringing in deep experience and The Bank expanded its Retail Banking network, strong capabilities that helped in implementing the increasing its presence in key cities, allowing RBank Bank’s strategy of heightening its expertise. With the to service closer to a growing clientele. With this major enhancements within the organization, RBank expansion, Current and Savings Account (CASA) reconstructed its vision and mission statements to deposit levels jumped to a whopping 57.9% increase encapsulate the goals for Roadmap 2020. and Time Deposits swung to a 9.7% increase. The total deposits of the Lending Segment also resulted As RBank shifted from a service-oriented to a to a 44.9% surge. customer-centric organization, key technological upgrades were also undertaken to support the Further, RBank adopted the global standard for Bank’s business expansion, comply with regulatory Debit cards and ATMs with the Europay Mastercard expansion, and improve customer service. The Bank Visa (EMV) chip technology, ensuring and added also began boosting its product development and security for cardholders transacting with their debit The year 2019 was the concluding year Over the years, RBank furthered the promotion to increase market presence. This resulted cards. The Robinsons Bank Visa Debit Card (VDC) growth of its capital and assets, ranking in brand recognition and portfolio growth and increase was also launched in 2016. for Robinsons Bank’s Roadmap 2020— 18th among universal and commercial in new-to-bank clients. Reorganization strategies also the game plan that aimed to drive banks in the country. It generated new took place in Legazpi Savings Bank, its subsidiary, to Digitizing and process improvement strategies also products, and made headway towards fast track its business expansion. began in 2016. These include the Bulk Account the bank from its current commercial digitalization. Taking pride in its vision Opening and Card Linking (BAO-CL), Check banking status to a universal banking and mission, the Bank also strengthened RBank ended with a sound and robust financial Imaging Clearing System (CICS), and the Document its customer-centric culture through the performance fuelled by a 6.2% growth in deposit Management System (DMS). RBank re-engineered grade. Launched in 2015, the 5-year CX Fortified program, and continued levels, 18.1% increase in assets driven by its loan these processes to improve turnaround time, Roadmap allowed RBank to embark creating positive impact in sustainable portfolio growth and treasury assets, and a 23.3% YOY increase efficiency, and minimize risk. development through its Corporate Social growth on the Bank’s gross loans. on an aggressive strategy that let Responsibility programs. the business explore new markets, stimulate new opportunities, and expand its geographic footprint.

48 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 49 BANK ROAD MAP 2020

2017 2018

STRATEGY: SUSTAINING GROWTH STRATEGY: SIMPLIFYING THE CUSTOMER MOMENTUM JOURNEY

2019From the roll out of the Roadmap in 2015, RBank was able to maintain a sound Celebrating its 20 years in the industry, RBank’s key RBank launched various products and services in 2018 theme in 2017 was “GEAR up”: Generate core income, which aimed to supplement the Bank’s core businesses. financial performance. In 2019, RBank’s revenue grew by 28% from its 2018 engineer new products, accelerate digitization, and RBank officially launched the Robinsons Bank DOS performance, registering a total of Php 8.1 billion, driven by a 17% expansion in its gross loan portfolio. Its net income also rose to Php 719.4 million, marking a 127% reach greater market coverage. Characterized by Mastercard, the unique credit card that automatically increase from last year. double-digit growths, RBank’s assets reached the splits the bill into 2-gives, providing financial flexibility 20 Php 100 Billion mark at Php 104.9 Billion, climbing up to clients. The Bank also ventured into the merchant Continuing to put the customers at the heard of its business development, RBank the 18th spot in the Industry Rankings ladder. acquiring space. This gave the Bank the capacity to rolled out a number of products such as the IPONsurance, a savings account that provide businesses with the ability to accept debit comes with a free life insurance, and the Robinsons Cashback Card, the credit card In the same year, RBank debuted into the debt capital and credit card payment through POS terminals, that lets you earn points when you spend. RBank also largely focused on innovations, beginning with the Simplé Savings® Online Account opening platform. The Bank also market, raising Php 4.18 Billion from its first long-term e-commerce, or online. began the digitalization of the GO! Salary Loan, employing a paperless process that negotiable certificates of deposit (LTNCD) issuance. cuts processing time from 1-2 weeks to 2-3 days. RBank’s peso-denominated primary issuance was The Bank’s partnership with Pru Life UK gave fruition to favorably received, evidenced by the oversubscription life insurance coverage worth Php 1.16 Billion for RBank’s RBank also issued bonds in (2) two tranches in 2019. The Bank was overwhelmed by 20 of Php 1.18 billion from the Php 3.00 billion offer size, customers. Additionally, with the goal of providing the 4x oversubscription of the book build in its maiden issuance in August. On the further supporting the Bank’s expansion. customers an easier banking experience, RBank rolled second tranche of the issuance, the bond was 4.3x oversubscribed. To date, the Bank has a total of Php16.0 billion issuances. out the Robinsons Bank Direct2Bank® PesoNet and In creating new products, RBank expanded its credit Direct2Bank® InstaPay, allowing hassle-free funds Furthermore, as a testament to the robust performance of Robinsons Bank in 2019, cards business with the Robinsons Bank UNO and transfer to any local bank. the Bank earned eight (8) awards in both the international and local landscape. Of DOS Mastercards. RBank also ventured into the the eight (8), the most notable are the highly-coveted “Fastest Growing Commercial The Bank looks with enthusiasm to bancassurance business, partnering with Pru Life UK Moreover, in 2018, RBank also launched a basic deposit Bank – Philippines 2019” from the Global Business Outlook Awards, and the “Best its future undertakings as it caps for the bancassurance products that will help deliver account, the Simplé Savings®, with the goal of tapping Commercial Bank – Philippines 2019” from the International Banker. Roadmap 2020. In 2019, President Elfren Antonio S. Sarte and the comprehensive financial protection products to the unbanked and underserved market. The Simplé senior management crafted the customers. To further strengthen the digitization of Savings® simplified account opening and lowered the INCREASE IN REVENUE Bank’s initiatives for the next five the bank, RBank upgraded its Personal Online Banking barriers in entering a formal financial institution. 28% years, encapsulated in RBank’s Web and launched its Mobile Application. Roadmap 2024. With the support of In order to stay relevant, digitalization was seen as a key 17% EXPANSION IN GROSS LOAN PORTFOLIO its almost 2,000 strong employees, While majority of its branches are still found in strategy. The Robinsons Bank Credit Card Application the guidance of the Bank’s board of directors and the commitment of Metro Manila, RBank, together with LSB have begun System (RCAS) e-forms were launched to better manage INCREASE IN NET INCOME the management team to Robinsons expanding its branch network to reach greater market applications from various channels. The Acacia Loans 127% Bank, the future is bright. coverage to other regions in Luzon, and in Visayas and Origination System (LOS) was also employed to make Mindanao, ultimately strengthening its footprint in the loan processes efficient and accessible, shortening Philippines. the turn-around-time in providing customer feedback. 8 AWARDS BAGGED IN 2019 Simplé Savings® was also made more accessible with its online account opening further bridging the gap between banking and its young target market.

50 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 51 AWARDS 2019

BEST FINANCIAL INCLUSION PROGRAM (SIMPLÉ SAVINGS®) Awarded in the 3rd Bank Marketing Awards BEST COMMERCIAL BANK – PHILIPPINES 2019 Awarded in the International Banker Awards 2019 The Simplé Savings® Deposit account bested other products and was recognized as the Best Financial Inclusion Program for making banking accessible to The International Banker Awards 2019 recognizes top-ranking the Filipino people. Catering to the unbanked and underserved, the product industry members who have attained a high-performance across lowered the barriers to entry towards a formal financial institution with its basic the global banking industry. requirements.

HIGHEST PERCENTAGE OF CONTACTLESS TRANSACTIONS – FASTEST GROWING COMMERCIAL BANK – PHILIPPINES 2019 ACQUIRING th Awarded in the 5 Global Business Outlook Awards Awarded by Visa Philippines The Global Business Outlook Awards aims to recognize the excellence shown by various Visa Philippines awarded RBank’s Merchant Acquiring business for having the companies from all around the world in both the private and public sectors, highlighting Highest Percentage of Contactless Transaction. the innovation, creativity, and exceptional performance that they have shown.

MOST INNOVATIVE BANKING PRODUCT (SIMPLÉ SAVINGS® ) PROJECT OF THE YEAR (TREASURY IT SOLUTIONS OPICS) Awarded in the 5th Global Business Outlook Awards Awarded by Finastra Putting value and convenience at the forefront of its services, RBank innovated its regular Robinsons Bank’s Treasury IT Solutions Opics project was awarded for its fast and savings account to come up with the Simplé Savings® deposit account. Simplé Savings® seamless progression from negotiations to implementation, surpassing industry has made getting a basic deposit account much easier with its simplified requirements of standards as it made project timelines three months faster than the market average. Php 100 initial deposit, a single ID, and basic Know-Your-Client (KYC) requirements. Clients can now also apply for an account online.

MOST INNOVATIVE CREDIT CARD PRODUCT SILVER ANVIL IN THE PUBLIC RELATIONS TOOLS (ROBINSONS BANK DOS MASTERCARD) (ANNUAL REPORT 2018— SIMPLIFYING Awarded in the 5th Global Business Outlook Awards THE CUSTOMER JOURNEY) th Standing to be the unique credit card that automatically splits purchases into 2-gives, Awarded in the 55 Anvil Awards ultimately providing financial flexibility, the Robinsons Bank DOS Mastercard was Recognized as an exemplary external PR Tool, RBank’s AR 2019 with the theme “Simplifying awarded as the Most Innovative Credit Card Product. the Customer Journey”, outlines the Bank’s immediate goal to provide customers with an easy banking experience while highlighting its customer-centric culture.

52 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 53 CORPORATE SOCIAL RESPONSIBILITY BANK CREATES VALUE 3-YEAR CORPORATE SOCIAL RESPONSIBILITY (CSR) ROADMAP The company completed its three-phased CSR Roadmap at the end of 2019. The Roadmap was launched in 2017 with the task of teaching the fundamental and practical application of fund management to the whole family within three years from its commencement. The RBank Creates Value program was also developed to promote collaboration and encourage volunteerism among RBankers and its clients.

PHASE 1 involves the fosterage of a public/private school with pre-selected pupils as RBank Creates Value closed on a high note as it brought beneficiaries. In 2017, over 700 children learned the value of savings with 263 RBankers from different together a total of 17 CSR Teams represented by 268 RBank 956 Beneficiaries groups rolling out nationwide to narrate the fable of “The Ant and the Grasshopper.” volunteers, who connected with 17 schools nationwide (8 730 PUPILS AND 226 PARENTS in Metro Manila, 5 in Luzon, and 4 in Visayas and Mindanao) PHASE 2 would additionally engage the children’s mothers. In 2018, the RBankers, numbering 290, to serve 956 beneficiaries. set out with a bankwide representation to teach 1,065 elementary students and 224 mothers all over the country the value of savings and simple money management techniques. This program completes the sustainability circle, demonstrating the beneficial co-existence of the bank and 17 CSR teams To effectively engage the students, learning sessions were conducted in game format. Volunteers the communities it operates in. Starting from the Bank‘s REPRESENTED BY 268 also taught allowance allocation and the ‘how to’s of spending, saving and giving. A short lecture on volunteers sharing teachings on the money management RBANK VOLUNTEERS the sources and origin of money and how to maximize allowances paved the way to ensuing group skills — life skills that will help the young secure their discussions. Separate workshops were conducted for the mothers and these included a financial future, the young boys and girls who will have their own management session facilitated by RBank’s Bancassurance team and livelihood skills training in families in the future will eventually become both the bank haircutting, aquaponics, coin purse designing, Citronella Spray-making, candle-making, gardening and beneficiaries and customers who will partner with RBank 3 year road map peanut butter-making conducted by our Microfinance clients. towards making a difference in the communities. completed

PHASE 3 meanwhile would engage the pupils’ fathers. In 2019, RBank volunteers returned to their adopted schools to complete the final program of its 3-year Roadmap. A total of 614 pupils learned how to manage their allowances with some students even opening accounts with a nearby RBank branch, making them into some of RBank’s youngest bank clients. Meantime, the fathers were offered opportunities to earn additional income through the suggestions from Premium Bikes dealership.

54 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 55 SUSTAINABILITY HIGHLIGHTS

“Socially responsible initiatives are being integrated CREATING A into product designs, ensuring that it creates a SUSTAINABLE BUSINESS positive impact in the lives of customers."

The integration of sustainability in banking largely focuses on the pursuit of environmental and social responsibility, and good governance. With Robinsons Bank’s vision of fulfilling the customers’ changing needs, socially responsible initiatives are being integrated into product designs, ensuring that it creates a positive impact in the lives of customers.

Additionally, as Robinsons Bank charted its path towards digitalization, it also brought about positive environmental and social impacts such as reduced paper consumption, manpower efficiency, risk mitigation and more.

CREATING AN ENVIRONMENTALLY SUSTAINABLE BUSINESS

One of the most pressing environmental concerns nowadays is climate change. Philippines, being one of the countries that is most vulnerable to climate change, has been a witness to rapid sea level rising, extreme weather conditions, and other natural hazards. While current events (typhoons, storm surges) show that the case of climate change in the Philippines may still be at its worst, Robinsons Bank, together with the whole JG Summit conglomerate has taken adequate steps to help mitigate the risks of climate change. RBank has made efforts to manage its resources, limit the emission of greenhouse gasses in its operations, and be conscious of its energy usage.

56 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 57 SUSTAINABILITY HIGHLIGHTS

MANAGING ENERGY CONSUMPTION ENERGY CONSUMPTION Setting a benchmark in 2019, RBank began to be more GO! SALARY LOAN conscious of the environmental impacts of its operations in order to measure its current energy consumption and 16,421.45 GJ formulate strategies from thereon to make its energy-saving *total energy consumption of Head Office only initiatives more efficient and effective. RBank’s total energy consumption* recorded in 2019 is 16,414.63 Gigajoules

TRANSITIONING TO LOWER CARBON POWER TRACKING GHG EMISSIONS RBank has been using LED lights in all its rented offices and In addition to managing energy newly constructed branches. Unlike traditional lighting usage, Green House Gases (GHG) GHG EMISSIONS such as fluorescent lamps, LED lights are more efficient as emissions are also important to it lasts longer, are more durable and provide better light track and reduce as these also pose quality. 95% of the energy is converted into light while adverse effects to the environment. only 5% is emitted as heat. Furthermore, to realize energy savings, RBank carefully chooses the brand and wattage of In 2019, Robinsons Bank’s Total the LED lights to suit the office and branch space. *total recorded GHG emissions 2,394.75 tCO2 are at 2,394.75 tCO2 Robinsons Bank’s GO!Salary Loan online is the quickest and from 1 to 2 weeks down to the processing time of *Head Office only most effective way to get a much needed financial boost. 1 to 2 days as every step of the loan application RENTED OFFICES AND NEWLY Offered to employees of companies under the salary loan process was embedded into the digital landscape, CONSTRUCTED BRANCHES WASTE REDUCTION AND ENSURING program, the GO!Salary Loan is a multipurpose loan facility reinventing the GO! Salary Loan product. ALL USE LED LIGHTS RESOURCE EFFICIENCY that’s collateral-free and paid through salary deduction, Following the JGSHI’s directive towards a circular mindset, allowing financial flexibility for clients. Furthermore, the innovation reduced man-hours, Rbank has also invested on inverter-type air-conditioning RBank ensures that all resources are used efficiently and maximized productivity. It also reduced risk units. While it is at a huge expense, the Bank recognizes with minimum to zero waste that is also handled in a In its initial implementation, the GO!Salary Loan product factors and increased efficiency in the loan approval that this investment will be cost-efficient in the long run. responsible manner. required rigorous paperwork, making the application process. This also allowed for new business Moreover, inverter-type air conditioning units reduce process a pain point to the corporate clients and its opportunities for RBank, since with this new digital power consumption by 40% than traditional ones; and In RBank, paper is a primary resource as it is used for employees. The clients carry the burden of filling application, even companies with branches in far with the absence of constantly turning the unit on and numerous purposes such as account statements for clients. application forms coupled with a number of supporting areas of Luzon, Visayas, and Mindanao, may now be off, power surges and fluctuations are avoidable. The Roadmap 2020 of the Bank includes chartering the physical documents where the employee availing of the served through this digital innovation. path towards digitalization to streamline products and loan must travel from his office to the HRG Department and services. With this initiative, RBank was able to save paper then to the Bank. The GO!Salary Loan implemented a breakthrough USING INVERTER-TYPE AIR usage that is equivalent to 4,500 kg of paper for 2019. end-to-end electronic process minimizing the usage CONDITIONING REDUCES POWER CONSUMPTION BY With the digitalization of the GO!Salary Loan, RBank of paper down to zero. 40% V.S. TRADITIONAL ONES PAPER SAVED THROUGH achieved a remarkable reduction in processing time DIGITALIZATION (in Kilograms) 4,500 REDUCTION IN REDUCED USAGE OF PAPER PROCESSING TIME MAN-HOURS, DOWN TO ZERO 2019 FROM 1 TO 2 WEEKS MAXIMIZED 2018 2,387 DOWN TO THE PRODUCTIVITY PROCESSING TIME 2017 687 TO 1 TO 2 DAYS.

58 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 59 SUSTAINABILITY HIGHLIGHTS

LEADERSHIP AND PEOPLE PERMANENT AND CONTRACTUAL EMPLOYEES HIRED PER YEAR DEVELOPING OUR TALENT COMPETITIVE COMPENSATION AND BENEFITS DEVELOPMENT In the past year, RBank’s total new hires for permanency RBank employees recorded a total of 85,609 hours of ANNUAL MERIT INCREASE Robinsons Bank takes pride in its customer-centric is 447. training in 2019, a 25.38% increase from total training hours a one-time annual performance-based culture that is greatly reflected in the quality of service in 2018 salary adjustment given to qualified TOTAL NEW HIRES FOR PERMANENT EMPLOYEES employees that the employees are giving to its clients. The Bank’s 2019 TOTAL TRAINING HOURS PROVIDED Human Resource Management Group continues to be a 447 TO EMPLOYEES strategic business partner to the organization. Key training 2018 programs are designed to ensure constant growth, as well MEDICAL ALLOWANCE 448 85,609.00 used by employees in cases of health as, engagement of its people, and alignment to Robinsons concerns and emergencies. Bank’s thrust of going digital. These learning exposures included internal programs, external, e-learning, virtual In 2019, RBank has employed a total of 1,848 employees, 63,886.00 trainings, and development programs. covering regular, probationary, fixed-term employees, RBANK LOANS • About more than 48 million worth of loans were given consultants, and contractuals. to 501 employees. Loans include salary, car plan, ENCOURAGING DIVERSITY IN EMPLOYMENT motorcycle, housing and car loan. BY EMPLOYMENT CONTRACT TYPE • Uniform worth 8,265,900 provided to 1502 employees Employee Breakdown 2017 2018 2019 • Php22.72million in premium was paid for the By Region of Origin 1,629 1,780 1,845 Employee Breakdown 2019 2018 2017 25.38% employees' Health Insurance Local 1,629 1,780 1,845 INCREASE By Contract Type 1848 1781 1629 Luzon 54 469 615 Regular 1718 1619 1476 Visayas 96 124 103 Probationary 116 151 141 Mindanao 51 57 59 2018 2019 National Capital Region 1,428 1,130 1,068 Contractual 0 0 0 Consultant 3 1 2 Investing in learning and development are also provided FTE 11 10 10 Employee Count by rank 2017 2018 2019 Employees by Age Group 2017 2018 2019 to prepare employees for a higher role. In 2019, we By rank 1845 1780 1629 By Age 1,629 1780 1845 *Breakdown of Employees by age excludes consultants have seen 314 employees, 95% of whom came from Executives/Senior 104 98 87 Under 30 years old permanent 707 841 841 staff to junior officer level while 5% came from senior Management 30-50 years old permanent 826 853 853 The total turnover for permanent employees in 2019 is officer level. These are talents who have qualified to Male 53 51 47 Over 50 years old permanent 96 86 86 315, with 88% of this as voluntary turnover and 12% as take on bigger roles and responsibilities. Promoting Female 51 47 40 Middle managers and *Breakdown of Employees by age excludes consultants involuntary turnover. these deserving employees is one of the ways we 745 680 580 recognize, value, and encourage outstanding employee supervisors BY TOTAL TURNOVER FOR PERMANENT EMPLOYEES performance. Rank-and-file permanent 996 1002 962 FEMALE POPULATION HAS ALWAYS BEEN HIGHER THAN MALES 88% 315 12% NUMBER OF GBF SCHOLARS AND HOW MANY ARE Gokongwei Brothers Foundation For RBank, the female population has always been higher voluntary involuntary EMPLOYED IN RBANK Established in 1992, The Gokongwei than males for the past years. On the other hand, the 280 35 Brothers Foundation promotes Science, Technology, Engineering, population of employees ‘under 30 years old’ in 2019 has 13 Active with 1, employed and Mathematics (STEM) education by overtaken those over “30 years old” in 2019. This shows Voluntary includes early retirement, resignation while GBF College in RBank as providing scholarship grants, technical that in the last year more millennials are being employed learning facilities, and collaborations involuntary turnover includes retirement, death, AWOL, Scholars Program analyst by the Bank. Welcoming the young generation in the End-of-contract, termination, failed probation, and others. with strategic partners, with the goal Bank also welcomes more unconventional ideas and of achieving sustainable national innovations and out-of-the-box creativity. development.

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PROMOTING SOCIAL SUSTAINABILITY THROUGH PRODUCTS AND SERVICES

VISA card that may be used for online shopping, booking and defend the results of their implemented ideas to a set for travel, courier services, and others. Additionally, of panelists in the #OOTB deliberation. regular online banking transactions such as bills payment Putting customers at the heart of every business and fund transfers may be performed. Ideas submitted are solutions to their identified pain development, Robinsons Bank developed the Simplé points which aim to (i) reduce or eliminate process Savings product, a basic deposit account that offers As of December 31, 2019, RBank has welcomed on board wastes for operational efficiency and (ii) create new or democratized access to a formal bank account. thousands of new-to-bank clients from Over-the-Counter improve existing products and services of the Bank as we It caters to the unbanked and underserved market applications and online applications. thrive to provide our customers with better choices. The allowing them to build a productive relationship with #OOTB program engages the employees to champion a formal financial institution. It offers no maintaining The Simple Savings product has tapped Filipinos as far as the innovation culture within the Bank as we aspire for balance, an initial deposit of only P100, earns interest, Visayas and Mindanao, making up an estimated 8% of the continuous improvement of our processes, products and simplified KYC (Know-Your-Client) requirements, and total generated accounts. services. just one (1) ID from the client. For the Bank, this product carried 0% reserve requirements. Out of the 140 ideas implemented as of December 2019, approximately 177,000 sheets or 410 reams of paper are The Simple Savings product also aims to address the saved in a year through the paperless initiatives registered typical Filipino pain points in opening a deposit account. in #OOTB. This is equivalent to more than 923 kilograms of paper; thus saving 22 trees. Digitalizing business In 2018, the Philippine Statistics Authority (PSA) recorded In 2017, the Bangko Sentral ng Pilipinas (BSP) Financial processes and doing away with printing, through the use a total of 1,003,111 business enterprises operating in Inclusion Survey (FIS) concluded that 52.8 million Filipino of Sharepoint, various automation tools, IT developed the Philippines. Out of all registered businesses, 998,342 adults (77.4%) do not own a deposit account. Reasons platforms and work simplification initiatives, has or 99.52% are micro, small, and medium enterprises. cited include: not having enough money (60%); perceived contributed to cost savings of approximately Php2.1Mn These data occurrences show that support for MSMEs are lack of need (21%); and absence of documentary from papers, toners, other supplies and courier charges. important as it plays a large role in the development of requirements (18%). These #OOTB projects resulted in operational efficiencies the Philippine economy. and cost savings for the Bank. As an answer to the need for financial inclusivity and To expand market reach and cater to the unserved market Robinsons Bank’s GO! SmallBiz Loan is especially BSP’s thrust towards making banking more accessible, belonging to the marginal income population, Robinsons designed to provide assistance to entrepreneurs for their PAPERLESS INITIATIVES Robinsons Bank’s Simple Savings put forward this Bank partnered with accredited motorcycle dealers to additional capital requirements, empowering Filipinos to initiative to address the needs of the greater Filipino provide affordable financing packages. The Bank also achieve their goals. population. caters to the middle-class market who sees motorcycle as an efficient and cost-effective mode of transportation for #OUTOFTHEBOX – CREATING SUSTAINABLE IDEAS Furthermore, through Simplé Savings Online, account personal and business use. GO! Motorsiklo Loan clients THROUGH INNOVATION opening was made even easier. Without needing to go to belong to the sectors of TODA, sari-sari / rolling stores, 177,000 = 22 a branch, clients can open an account online and receive transport riders, food deliveries, security guards, teachers, sheets of paper Trees Saved “#OOTB” is Robinsons Bank’s Idea Generation Program. an email confirmation confirmation including a virtual OFWs, call centers and others. were saved It is a platform where RBankers can submit their #OutOfTheBox ideas addressing a pain point or problem #OOTB will continue to champion the innovation culture through the #OOTB Sharepoint site, implement these as the Bank aims for a more sustainable business process using the tools available to the Bank, and proudly present for all.

62 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 63 CORPORATE GOVERNANCE AISING THE STANDARD IN The Board and its Management believe that corporate GOVERNANCE governance is a necessary component of what constitutes sound business management and therefore undertake every effort necessary to create awareness within the Bank.

BOARD GOVERNANCE financial literacy and training, diligence and knowledge The Board of the Bank represents the owners’ interests in and expertise. They are known for their independence and the Bank’s objective to sustainably increase shareholder professionalism, and for making decisions with complete value and to ensure the long term success of the business. fidelity to the Bank while cognizant of their responsibilities The Board is actively responsible in ensuring that the under existing applicable laws, rules and regulations. Bank is properly managed in attaining this objective. In addition to fulfilling the Board’s obligations for increased The Board is composed of three (3) types of directors: shareholder value, it also has the responsibility to protect executive, non-executive and independent directors. Five the interests of other stakeholders which include, among (5) of the members are independent; two (2) are executive others, customers, employees, suppliers, financiers, and the rest are non-executive directors. Majority of the government and community in which it operates. membership of the Board is composed of independent The Board is primarily responsible for the observance and non-executive directors. of governance, including business and risk strategies, organization and financial soundness of the Bank. The five (5) independent directors (ID) are independent Corollary to setting the policies for the accomplishment of of Management are free from any business or other the corporate objectives, it shall provide an independent relationship which could or could reasonably be perceived checking and effective oversight of the Management. to materially interfere with their exercise of independent judgement in carrying out their responsibilities as a director. Composition of the Board They hold no interest or relationship with the Bank that may The Board is composed of 11 members elected by the hinder their independence from the Bank of Management stockholders. All members of the Board are Filipinos or will interfere with the exercise of independent judgment and possess all the qualifications and none of the in fulfilling their responsibilities. They are compliant with all disqualifications to hold a directorship as prescribed under the qualifications required of an independent director and the Corporation Code and existing rules and regulations none of the disqualifications as provided in the MORB. An of the Bangko Sentral ng Pilipinas (BSP) and Securities independent director only serves as such for a minimum and Exchange Commission (SEC). They all passed the fit cumulative term of nine (9) years reckoned from the time and proper test for the position of director of the Bank, of his election but or 2012, whichever is later; after which taking into account their integrity and probity, physical he shall be perpetually barred from serving as independent and mental fitness, competence, relevant education, director but may continue to serve as a regular director.

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facilities if and when a director cannot physically attend the BOARD COMMITTEES meetings by submitting written comments on the agenda to the Corporate Secretary and the Chairman prior to the In order to increase efficiency and gain deeper focus meeting pursuant to Section 132 of the MORB. in specific areas, the Board has created committees, which are relative and consistent to the size, In 2019, all members of the Board have substantially complexity of operations, long term strategies and risk complied with the attendance requirement and actively tolerance level of the Bank. The scope, authority and participated in the deliberations on matters taken up responsibility of these committees are defined in their during the regular and/or special meetings. respective board-approved charter which is subject to regular review and updated at least annually or whenever there are significant changes. BOARD MEETINGS ATTENDED The executive directors are either part of the Senior industry developments and operations of the Bank, and The Board has appointed the members of the Management (i.e., President) or have a hand in the day- advises the Board and the Chairman relevant issues as LANCE Y. GOKONGWEI Committees taking into account the optimal mix of to-day operation (being a member of a management may arise. The Bank also makes sure that the Corporate 10/15 66% skills and experience which would allow them to committee). Secretary annually attends relevant trainings on corporate fully understand, be critical and objectively evaluate governance and other related topics. FREDERICK D. GO the issues discussed in the different committees. Non-executive members of the Board are those who 14/15 93% To promote objectivity, the Board has appointed are not part of the day-to-day management of banking CHAIRMAN OF THE BOARD independent directors and non-executive directors operations. A sufficient number of qualified non- The Chairman of the Board ensures that the meetings of ELFREN ANTONIO S. SARTE to the greatest extent possible and ensure that such executive members have been elected to promote the the Board are held in accordance with the by-laws; makes 14/15 93% mix will not impair the collective skills, experience independence of the Board from views of the Senior certain that the meeting agenda focus on the strategic and effectiveness of the committees. Each of these Management. matters, including all the overall risk appetite of the bank; ROBINA Y. GOKONGWEI-PE committees maintains appropriate records (e.g. and guarantees that the Board receives accurate, timely, 15/15 100% minutes of meetings) of their deliberations and There was no change in composition of the Board of relevant, insightful, concise and clear information to decisions, subject to the notation and/or confirmation Directors for the year. enable to make sound decisions. Likewise, the Chairman PATRICK HENRY C. GO of the Board. The records document the committees’ makes sure that performance of the Board is evaluated at 14/15 93% fulfillment of their responsibilities and facilitate CORPORATE SECRETARY least once a year and discussed/followed-up on. the assessment of the effective performance of The Bank’s Corporate Secretary assists the Board in its OMAR BYRON T. MIER their functions which is regularly and periodically duties and responsibilities primarily to the corporation BOARD MEETINGS AND SUPPLY OF 14/15 93% conducted. and its shareholders. His duties and responsibilities, INFORMATION among others, include assistance to the Board and the As provided for in the Bank’s By-Laws, the Board schedules ANGELES Z. LORAYES (ID) The Board has established and delegated Board committees in the conduct of their meetings, and holds regular monthly meetings and convenes special 15/15 100% responsibilities to seven committees, namely: the including preparing an annual schedule of Board and meetings when necessary. The Corporate Secretary Executive Committee, the Corporate Governance committee meetings and the annual board calendar and provides the directors the notice, agenda and meeting HERMOGENES S. ROXAS (ID) Committee, the Risk Oversight Committee, the assisting the chairs of the Board and its committees to set materials prior to each meeting. Proceedings of the 14/15 93% Audit Committee, the Trust Committee, the Related agendas for these meetings; safekeeps and preserves the meeting are properly documented and duly minuted. Party Transactions Committee and the IT Steering integrity of the minutes of the Board and its committees, ESPERANZA S. OSMEÑA (ID) Committee. as well as other documents such as corporate seal, In accordance the rules and regulations of the SEC and 14/15 93% stock certificates, stock and transfer books, records, BSP, the members of the Board attend regular and/or documents and papers of the Bank. Prepare ballots of special meetings in person or through teleconferencing DAVID C. MERCADO (ID) annual election and keep a complete and updates list and video conferencing which allows the directors 15/15 100% of the stockholders and their addresses. Keep abreast to actively participate in the deliberations or matters with on relevant laws, all governance issuances, relevant taken. The Board ensures availability of teleconferencing ROBERTO S. GAERLAN (ID) 15/15 100%

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1. Executive Committee In particular, the Committee oversees the development The Bank’s Executive Committee has been created as the and implementation of corporate governance principles highest credit approving body of the Bank after the Board. The and policies, reviews and evaluates the qualifications Committee provides the necessary approvals for applications, of the persons nominated to the Board as well as those deviations and other loan transactions. Resolutions of the nominated for election to other positions requiring Committee may be overruled only by the Board. appointment by the Board, decides the manner by which the Board’s performance is evaluated and assists the Board The Executive Committee provides decisions regarding in the periodic performance evaluation of the Board and applications for critical loan accounts and deviations its committees and executive management, and oversees that require careful deliberation. Approvals made are in the development and implementation of professional compliance with internal policies and those required under development programs for directors and officers. existing laws, rules and regulations. Decisions made are influenced by the latest profitability and delinquency figures The Committee is composed of five members, three of of an account or loan product. whom are independent directors including the Chairperson and Vice-Chairperson. The Committee holds regular EXECUTIVE COMMITTEE meetings and may call for special meetings as deemed MEETINGS ATTENDED necessary. To properly evaluate its performance, the 3. Risk Oversight Committee them to develop appropriate strategies for preventing Committee meetings are properly and duly minuted. LANCE Y. GOKONGWEI To aid the Board in efficiently carrying out its function on more losses when they occur. The committee members

risk management, it created the Risk Oversight Committee. meet regularly and may call for special meetings 44/45 98% CORPORATE GOVERNANCE COMMITTEE This committee oversees the development and oversight whenever necessary. MEETINGS ATTENDED FREDERICK D. GO of the Bank’s risk management program including Trust Group and ensures an acceptable level of risk while 44/45 98% ROBERTO S. GAERLAN (ID) RISK OVERSIGHT COMMITTEE MEETINGS ATTENDED 6/6 100% minimizing losses. The Committee oversees the system of limits to discretionary authority that the Board delegates ELFREN ANTONIO S. SARTE (elected as member during the Organizational Meeting ESPERANZA S. OSMEÑA (ID) on June 26, 2019) to management, supervises the system and ensures its 42/45 93% effectiveness, provides and set limits and ensures that 12/12 100% ANGELES Z. LORAYES (ID) OMAR BYRON T. MIER these are properly observed and that immediate corrective 12/12 ROBERTO S. GAERLAN (ID) 100% actions are taken should breaches occur. 43/45 96% 12/12 100% ESPERANZA S. OSMEÑA (ID) 11/12 92% “This committee oversees the DAVID C. MERCADO (ID) development and oversight of the 12/12 100% 2. Corporate Governance Committee PATRICK HENRY C. GO In order to proactively assist the Board in its fulfillment 12/12 100% Bank’s risk management program ELFREN ANTONIO S. SARTE of its corporate governance responsibilities and ensure including the Trust Group and 11/12 92% OMAR BYRON T. MIER transparency in all of the Bank’s transactions, it created the ensures an acceptable level of risk Corporate Governance Committee. The Committee ensures 11/12 92% OMAR BYRON T. MIER the Board’s effectiveness and due observance of corporate while minimizing losses.” 12/12 100% HERMOGENES S. ROXAS (ID) governance principles, best practices and guidelines which are necessary components of what constitute sound 5/6 83% strategic business management. It generates awareness of (replaced as member during the Organizational Meeting The Board has appointed five members of the Committee on June 26, 2019) corporate governance within the Bank. who possess a broad-range of expertise as well as adequate knowledge of the Bank’s risk exposures which enables

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4. Audit Committee To carry-out its mandate, the Committee has explicit 5. Trust Committee managing exposures to related parties. It assists the Board in The Board has constituted an Audit Committee to provide authority to investigate any matter within its terms of The Trust Committee provides the overall direction and ensuring that transactions with related parties are handled oversight over the Bank’s financial reporting policies, reference, full access and cooperation by management and guidelines in the conduct of the Trust business, reviews in a sound and prudent manner and in compliance with practices and control, and internal and external audit full discretion to invite any director or executive officer to plans for new investments, trust products and business applicable laws, rules and regulations to protect the interest functions. In particular, the Committee aids the Board in attend its meetings, and adequate resources to enable it to development, and conducts assessment of Trust and of its depositors, creditors, and other stakeholders. monitoring and evaluating the adequacy, effectiveness, effectively discharge its functions. Investments Group’s performance and operational and efficiency of the Bank’s internal controls system. effectiveness. In particular, the Committee identifies related parties Further, the Committee assists the Board in fulfilling its As prescribed under existing rules and regulations, the and monitors their transactions, evaluates related party oversight responsibilities with regard to the integrity of the Committee is composed of, to the greatest extent possible, transactions which are classified material and endorse the TRUST COMMITTEE same to the Board for approval, ensures disclosure and Bank’s financial reporting process, the independence and sufficient number of independent and non-executive MEETINGS ATTENDED performance of the Bank’s external and internal auditors, board members. All members of the Committee, including reporting of related party transactions and oversees the the compliance to corporate governance policies and the Chairperson who is an ID, possess the required ROBINA Y. GOKONGWEI-PE implementation of a system to facilitate its functions as well guidelines, and the Bank’s compliance with regulatory qualifications and none of the disqualifications. The 11/11 100% as the development and periodic review of policies and requirements. Committee holds regular meetings and may call special procedures for related party transactions. meetings upon the request of the Chairperson or by at least PATRICK HENRY C. GO The Committee is composed of four members of the Board two of its members, which proceedings are duly minuted. 10/11 91% “The Board has constituted an who are all independent directors. In case a member has LANCE Y. GOKONGWEI a conflict of interest in a particular transaction, he should Audit Committee to provide AUDIT COMMITTEE refrain from evaluating that particular transaction. The MEETINGS ATTENDED 10/11 91% oversight over the Bank’s financial Chief Compliance Officer and Chief Audit Officer and/or reporting policies, practices and ANGELES Z. LORAYES (ID) ESPERANZA S. OSMEÑA (ID) their representatives including an executive director sit as resource persons in the said Committee. control, and internal and external 11/12 92% 10/11 91% RELATED PARTY TRANSACTIONS COMMITTEE DAVID C. MERCADO (ID) ELIZABETH T. AQUINO audit functions. In particular, MEETINGS ATTENDED the Committee aids the Board in 12/12 100% 11/11 100% ROBERTO S. GAERLAN (ID) monitoring and evaluating the ROBERTO S. GAERLAN (ID) 6/6 100% adequacy, effectiveness, and 12/12 100% (replaced as Chairman during the Organizational Meeting on June 26, 2019) efficiency of the Bank’s internal OMAR BYRON T. MIER 6. Related Party Transactions Committee Pursuant to existing rules and regulations on related ESPERANZA S. OSMEÑA (ID) 12/12 100% controls system. ” party transactions issued by the BSP, the Board created a 9/10 90% HERMOGENES S. ROXAS (ID) Related Party Transactions Committee. This stems from the recognition of management that the Bank engages in ANGELES Z. LORAYES (ID) 12/12 100% transactions between and among related parties, which 10/10 100% brings a need to exercise appropriate oversight and implement control systems for managing said exposures HERMOGENES S. ROXAS (ID) as these may potentially lead to conflict of interests if 10/10 100% not abuses that are disadvantageous to the Bank and its depositors, creditors, and other stakeholders. DAVID C. MERCADO (ID) 6/6 100% The Committee supports the Board in the exercise of (elected as member during the Organizational Meeting on June 26, 2019) appropriate oversight and implements a control system for

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The Committee is chaired by a non-executive and BOARD TRAINING where the results are discussed and approved by the independent director, assisted by the Head of IT Group as Corporate Governance Committee and confirmed by Vice-Chairperson and executive officers of the Bank. The In accordance with the Corporate Governance Manual the board. heads of Audit, Risk and Compliance are also invited in and Subsection X141.3 of the MORB, the Corporate the regular and/or special meetings of the Committee as Governance Committee is responsible for making resource persons. recommendations to the Board on the required BOARD AND COMMITTEE trainings and continuing education of the directors. PERFORMANCE EVALUATION IT STEERING COMMITTEE MEMBERS Relative thereto, members of the Board have attended the required corporate governance seminar for bank Annual performance evaluation of the Board and board DAVID C. MERCADO (ID) directors at BSP-accredited training providers, a pre- committees. Performance evaluation is through a Peer requisite for Monetary Board confirmation. These Assessment Questionnaire being accomplished by the 6/6 100% include topics on risk and governance, audit and control, Directors of their fellow Directors and, for members of the 7. IT Steering Committee (replaced as Chairman during the Organizational Meeting on June 26, 2019) and accountability. The members of the Board and different board committees to assess the performance of In compliance with BSP Circular 808, the Board has created ELFREN ANTONIO S. SARTE members of the Senior Management regularly the committee pursuant to their mandates. the Information Technology Steering Committee which 6/6 oversees a safe, sound, controlled and efficient information 100% (replaced as member during the Organizational Meeting technology operating environment that supports the Bank’s on June 26, 2019) SELECTION PROCESS FOR BOARD EDUCATION AND TRAINING goals and objectives. In particular, the Committee, among HERMOGENES S. ROXAS (ID) AND SENIOR MANAGEMENT others: reviews and monitors the performance of all IT 6/6 100% In accordance with Corporate Governance Manual and projects; reviews the Bank’s current IT infrastructure, system (elected as Chairman during the Organizational Meeting The Bank has transparent procedure for the nomination Section 132 of the MORB, the Corporate Governance performance, associated risks and other significant issues on June 26, 2019) and election of directors to the Board. Shareholders Committee is responsible for making recommendations and events and institutes appropriate actions to achieve the OMAR BYRON T. MIER regularly nominate candidates who shall be evaluated to the Board on the required trainings and continuing desired results; monitors and evaluates the performance of 6/6 100% based on qualifications provided under the MORB and education of the directors. Relative thereto, members of third party service providers on all information technology (elected as Vice-Chairman during the Organizational Meeting a pool of candidates is formed. The elven (11) board the Board are required to attend seminar on corporate initiatives subject of the service contract; and reports to on June 26, 2019) seats shall be filled through an election from the pool of governance for bank directors from a BSP-accredited the Board relevant and adequate information regarding ANGELITO V. EVANGELISTA candidates. training provider upon assumption of the position. The IT performance, status of major IT projects and significant 12/12 100% members of the Senior Management likewise regularly issues affecting the Bank’s IT operations. Candidates for Senior Management positions are attend seminars on corporate governance, Anti-Money ERIC C. MACALINTAL carefully screened based on their qualifications and are Laundering laws and regulations and risk management 12/12 100% subjected to the fit-and-proper rule test. Appointment “The Committee, among others: for updates in these areas. of Senior officers are submitted for approval of the AGNES A. SALVADOR reviews and monitors the Corporate Governance Committee and confirmation 6/6 100% of the Board of Directors. For positions that needs “Members of the Board are performance of all IT projects; (replaced as member during the Organizational Meeting on June 26, 2019) regulatory approval/confirmation, appropriate request required to attend seminar reviews the Bank’s current for approval/confirmation of the Bangko Sentral ng IRMA D. VELASCO on corporate governance for IT infrastructure, system Pilipinas is also sought. 3/6 50% bank directors from a BSP performance” (replaced as member during the Organizational Meeting on June 26, 2019) accredited training provider PRESIDENT & CEO EVALUATION RAMON EDUARDO E. ABASOLO upon assumption of the 5/6 83% The performance of the President and CEO is evaluated (replaced as member during the Organizational Meeting position.” on June 26, 2019) as a member of the Board and Senior Management

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and Key Executives. The health and well-being of Senior assistance, financial assistance programs n the form of Management and Executives are likewise given importance employee personal loan, car plan, vehicle loan, motorcycle as their Group Hospitalization Plan/HMO provides for plan and housing loan are provided to eligible employees extensive Executive Check-up Packages. aimed to assist them in their time of financial need and to improve their standard of living. The health and well-being Granting of compensation agreements/offer, of the employees are given importance in the form of Group recommendations for annual merit increases and Hospitalization Plan or HMO Card, the Group Life Insurance promotion increases, variable bonuses are approved by the and Personal Accident Insurance, Hazard Pay and Medical Chairman of the Board. Assistance.

REMUNERATION POLICY FOR RETIREMENT AND SUCCESSION EMPLOYEES POLICY

The Bank’s employees compensation structure is designed Except for independent directors who are subject to to be at par with the prevailing banking industry rates. maximum term limit to remain so, directors may remain on The compensation package is composed of guaranteed the Board for as long as he/she remains to be physically and compensation, inclusive of statutory and company-initiated mentally fit and proper for the position of director, able to The Bank is committed to continually strengthen its directors from serving in any capacity and receiving bonuses and variable monetary benefits based on the discharge his duties pursuant to regulatory requirements for compliance culture through education and training. The compensation therefor. The Board, as may be delegated performance for a particular year. It’s policy is pay for banks. For succession, replacement or vacancy, the Bank’s Compliance Group, in coordination with HRMG Training by the stockholder, shall fix the compensation and other performance or meritocracy, highlighted by a competitive by-Laws provide that vacancies in the Board may be filled Department regularly conducts briefings to employees remunerations. Pursuant to a delegated authority, the salary scale, annual merit increase and employee by appointment or election of the remaining directors, if still to raise the level of awareness and understanding of the Board may fix the compensation and other remuneration promotion which are hinged on employee performance constituting a quorum; otherwise, the stockholders shall fill principles, concepts, and elements of good corporate of any Director of any other officer of the Bank should and attainment of the Bank’s Key Indicators. On top of the such vacancy in a regular or special meeting called for this governance and compliance. All new employees of the they be designated to perform executive functions or regular compensation, certain sales personnel are provided purpose. Bank undergo basic orientation on Compliance System, any special service to the Bank. In no case shall the with the variable compensation scheme based on their Anti-Money Laundering (AML), Risk Awareness, Information total yearly compensation of directors, as such directors, achievement of the defined targets and their contributions Members of the Senior Management are covered by the Security, Data Privacy and Corporate Governance. exceed ten percent (10%) of the net income before to the Bank’s objectives. Competitive fringe benefit Bank’s Multi-Employer Retirement Plan under its parent Refresher courses on these topics are annually given to all income tax of the Bank during the preceding year. programs such as various types of leave benefits, uniform company JG Summit; it is a non-contributory defined employees. In addition, tidbits and bulletins are also sent benefit plan covering all regular and permanent employees The Bank’s Senior Management and Key Executive out to all employees as reminders of critical areas on these of the conglomerate. The Retirement Policy covers remuneration program encourages the attraction and mandatory topics. compulsory, early retirement as well as resignation payment retention of high caliber professionals possessing the “The compensation package schemes for qualified employees based on set criteria. required experience and capabilities to drive success of is composed of guaranteed COMPENSATION POLICY the business. The compensation structure is designed The Bank has a Succession Management Program for to be at par with the prevailing banking industry rates. compensation, inclusive of Senior Management whereby high potential candidates The Board of Directors compensation is a fee or per Consistent with the Bank’s principle of pay for performance statutory and company-initiated from critical functions were identified by the incumbent diem in an amount as may be determined by the Board or meritocracy and Remuneration Policy, the Board- bonuses and variable monetary officers and, in coordination with the Human Resources which shall be paid to each director for attendance approved compensation and BSP approved fringe benefit Management Group, came up with an Individual to any meeting of the Board, subject to the approval program consists of car plan, various types of leave benefits based on performance” Development Plan to prepare such candidates to take on of the stockholders; provided, however, that nothing benefits, allowances and financial assistance in the form the critical positions in case of vacancies. The development herein contained shall be construed to preclude any of employee loans, are provided to Senior Management plan is updated annually.

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RELATED PARTY TRANSACTIONS robust, dynamically responsive and distinctly appropriate Compliance Risk Management System has been put in In compliance with BSP Circular 895, as amended, the Bank place as an integral component of the Bank’s culture has created a Related Party Transactions (RPT) Committee and risk governance framework. In this respect, it is the that supports the Board in managing exposures to related responsibility and shared accountability of all personnel, parties. Under its policy, the Bank defined related parties to officers, and the board of directors. include directors, officers, stockholders, or related interests (DOSRI) of the Bank and their close family members. It also “Towards this end, a robust, includes corresponding persons in affiliated companies, subsidiaries and affiliates, any party that the Bank exerts dynamically-responsive control over the Bank, and such other entity whose interest and distinctly-appropriate may pose potential conflict with the interest of the Bank. Compliance Risk Management The Committee evaluates material RPTs to ensure that these are not undertaken on more favourable economic System has been put in place terms (e.eg., price, commissions, interest rates, fees, tenor, as an integral component of best practices, compliance with tax laws, developing new MONEY LAUNDERING AND collateral requirement) to such related parties that similar the Bank’s culture and risk products and electronic delivery channels, providing TERRORIST FINANCING transactions with non-related parties are under similar e-banking services ad may also include specific areas such PREVENTION PROGRAM circumstances and that no corporate or business resources governance framework. ” as prevention of money laundering and terrorist financing. of the Bank are misappropriated or misapplied, and to As approved by the Board and as required by BSP, determine any potential reputational risk issues that may The Bank’s Compliance Risk Management System is the Bank implements a program to combat money arise as a result of or in connection with the transactions. anchored on a program that ensures proper dissemination Part of the Compliance Risk Management System is the laundering and terrorist financing. The Program has of laws, rules and regulation, self-assessment of Bank’s strong compliance infrastructure. The Board of been issued ad is regularly updated to comply with All material RPTs are evaluated and endorsed by the compliance therewith, validation of self-assessment and Directors, through the Corporate Governance Committee, RA No. 9160, as amended, BSP Circular No. 1022 and Committee to the Board for approval. Refer to the Notes monitoring to esure that all are compliant therewith. exercises oversight implementation of compliance policy, other policies of the State. The Program is intended to to Financial Statements for the Bank’s related party The Compliance Group disseminates laws, rules and ensuring policies and procedures are followed and protect the integrity and confidentiality of the accounts transactions. regulations, including revisions or updates thereon, corrective actions are taken by the management to address of the clients, and ensure that the Bank is not used as which are affecting the different operational areas of breaches, failures and control deficiencies identified. In money laundering site for the proceeds of any unlawful the Bank. The different business units conduct periodic its effort to address compliance risk effectively, the Board activities, taking into consideration best practices to SELF-ASSESSMENT self-assessment of its compliance of their compliance established the Compliance function and appointed a Chief combat terrorist financing. FUNCTIONS: Compliance Officer who is the lead operating officer on with relevant laws, rules and regulations through the compliance Compliance Self-Assessment Checklist. Results of the The Program has been developed to disseminate self-assessment shall then be validated by an independent information which will help the employees understand COMPLIANCE SYSTEM The Senior Management sees to it that applicable law testing conducted by the Compliance Group. Any and prevent money laundering activities, detect and regulations are complied with and, through the Chief exceptions found in the self-assessment as well as the and report suspicious transactions and know better The BSP issued Circular No. 747 - Revised Compliance Compliance Officer, render periodic reporting of compliance independent testing are then properly reported to the the Bank’s customers, understand the penalties of Framework for Banks as amended by Circular No. 972, issues that the Bank is beset with. As Bank employee, Corporate Governance Committee and subject of close noncompliance; take the required AML training for in order to actively promote the safety and soundness everyone should conduct business activities in adherence monitoring to ensure they are properly addressed to responsible officers and personnel of the Bank; satisfy of the Philippine Banking System through an enabling to high standards of honesty and integrity and shall abide by be compliant with laws, rules and regulations. The legal and ethical responsibilities with a minimal policy and oversight environment. Such an environment the laws, regulations, rules, standards and codes of conduct compliance program is subject to review and revision adverse impact on the Bank’s overall daily business is governed by the high standards and accepted practices and good governance applicable to our banking activities. as maybe necessary to be updated with new issuances responsibilities and performance goals. Moreover, the of good corporate governance as collectively designed by This may cover observing market rules, managing conflict and depending on its effectiveness to achieving excellent Program has been promulgated to protect the Bank as the BSP and its supervised institutions. Towards this end, a of interest, proper accounting and recording, applying compliance and monitoring of compliance risks. well as its employee’s interests.

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independent audit mechanism to monitor the accuracy management of their respective duties and responsibilities and effectiveness of the Bank’s governance, operations and to stockholders and other stakeholders. The Manual is information systems, including the reliability and integrity periodically reviewed with the objective of continually of financial and operational information, the effectiveness aligning the Bank’s policies with the BSP and SEC circulars and efficiency of operations, the safeguarding of assets and or issuance on corporate governance including best compliance with laws, rules and regulations and contracts. practices issued by the Basel Committee on Banking Supervision. This ensures that the stockholders, directors, The Bank has an internal audit system that reasonably officers and employees are aware of their responsibilities assures the Board, Management and stockholders that and the business of the Bank is conducted in a safe and the Bank’s key organizational and operational controls sound manner. are faithfully complied with. The Board appointed an Internal Auditor to perform the function, and required the Auditor to report to the Audit Committee, a board-level CODE OF ETHICS AND POLICY ON committee, which allows the internal audit activity to CONFLICT OF INTEREST fulfill its mandate. The Internal Auditor is guided by the International Standards on Professional Practice of Internal The Bank's Code of Conduct for Employees exists to Auditing and existing laws, rules and regulations. With the develop and maintain a level of conduct that is in Board appointment, the Chief Audit Officer oversees the accordance with the Bank's standards. The Code is implementation of the internal audit system. implemented by the Human Resources and Management Group. Copies of the Code of Conduct are given to employees upon hiring, while seminars are conducted regularly to further expound on the subject. Laws governing secrecy on bank deposits have been strictly The framework embodies management oversight and OTHER GOVERNANCE complied with by the Bank when implementing procedures control culture, risk recognition and assessment, control POLICIES related to combating money laundering and terrorist activities; information and communication; and monitoring “Copies of the Code of Conduct financing. The Program provides guidance in complying activities and correcting deficiencies. with the Anti-Money Laundering Law as well as other WHISTLEBLOWING are given to employees upon applicable regulations without violating relevant laws and “The Bank put in place an hiring, while seminars are without losing legitimate business or clients in the process. Employees of the Bank are encouraged to perform the duty conducted regularly to further adequate and effective internal of disclosing to their immediate superior the existing or potential violations and wrongdoings that they are or may expound on the subject” INTERNAL CONTROL AND AUDIT control framework for the conduct of its business, taking become aware of. The Bank’s Policy on Timely Reporting of Concerns and incidents, otherwise known as the The Bank has implemented its internal control processes into account the size, risk profile Whistleblowing Policy, serves as a guide for all employees which are designed and effected by its Board of Directors, for reporting matters that breach integrity and the Bank’s DIVIDEND POLICY Senior Management and all levels of personnel to provide and complexity of operations.” Code of Conduct. reasonable assurance on the achievement of objectives Subject to the provisions of the Bank’s by-laws and the through efficient and effective operations, reliable, complete resolution of the Bank’s Board, dividends may be declared and timely financial and management information; and The control environment of the Bank consists of: (a) CORPORATE GOVERNANCE MANUAL annually. The Board, however, may only declare dividends compliance with applicable laws, regulations, supervisory the Board which ensures that the Bank is properly and effectively managed and supervised; (b) Management that out of its surplus profits or unrestricted retained earnings requirements and the Bank’s policies and procedures. The Board adopted a corporate governance framework actively manages and operates the Bank in a sound and after making due provisions for the necessary reserves or the Corporate Governance Manual (Manual) that The Bank put in place an adequate and effective internal prudent manner; (c) the organizational and procedural (lossess and bad debts) in accordance with the Corporation embodies the rules, systems and processes in the Bank. control framework for the conduct of its business, taking into controls supported by effective management information Code, Securities Regulation Code, General Banking Law, The framework governs the performance of the Board and account the size, risk profile and complexity of operations. and risk management support systems; and (d) an MORB, and all regulations and circulars issued by the BSP.

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CONSUMER PROTECTION revisions were made to include recommendations from CONSUMER PROTECTION SERVICE QUALITY DEPARTMENT the internal and external audits (BSP). OVERSIGHT FUNCTION RISK MANAGEMENT SYSTEM Consumer Assistance Management is handled by the The CPRMS Guidelines aim to identify, measure, monitor The Corporate Governance Committee (CGC) and Board Service Quality Department. Digitization has opened (CPRMS) and control consumer protection risks inherent in its of Directors are primarily responsible for approving and pathways for Robinsons Bank to build relationships to its operations. These include both risk to the financial periodically (at least annually) reviewing the Bank’s financial customers in order to serve them better. Obsessed with the consumer and the Bank. Pursuant to the BSP Circualr No. 857 entitled BSP consumer protection risk management policies, procedures, customer at the heart of service, the Bank received inquiries, Regulations on Financial Consumer Protection, The Bank also issued other consumer protection policies and/or system, as well as the oversight to ensure requests, feedbacks and complaints from customers Robinsons Bank released Consumer Protection and such as Electronic Banking Consumer Awareness Policy compliance with the said policies. They are responsible regarding it products and services through digital platforms. Risk Management System (CPRMS) Guidelines. Several and Trust and Investments Accounts. in monitoring and overseeing the Senior Management’s Various communication channels through the Customer performance in managing the consumer protection Care Center (C3) such as the hotline, email feedback forms, activities of the Bank. website, social media, etc. are made available to clients so they can easily contact the Bank regarding these concerns. The Senior Management is responsible for the

IDENTIFY implementation of the consumer protection policies Consumer Protection Standards approved by the Board. They are also in charge of of Conduct Inherent Risk managing the day-to-day consumer protection activities of MONITORS daily inquiries, • Disclosure & • Fair Treatment he Bank. requests, and complaints Transparency • Effective Recourse received from customers and Evaluate Risk Management • Protection of Client • Financial Education The Enterprise Risk Management Group provides reports these to the management CONTROL Information & Awareness foundation for ensuring that the Bank’s consumer to provide solutions on the Bank’s • Board and Senior protection policies, procedures and practices address and products and services to ensure Management Oversight prevent identified risk to the Bank and associated risk of service quality at all times. • Policies, Procedures financial loss to consumers. and Limits The Compliance Group ensures that the policies and • Risk Monitoring and MIS CPRMS procedures are consistent with the consumer protection MANAGES the issues received • Compliance Program FRAMEWORK policies approved by the Board and address compliance from customers through the • Internal Audit Function with the consumer protection laws, rules and regulations. different channels, coordinate with concerned units, and The Internal Audit Group provides the Senior Management respond to clients in efficient and and the Board with analysis, findings and corrective actions professional manner within the MEASURE or recommendations in meeting the consumer protection Identified Inherent Risk committed turn-around-time to objectives. ensure customer satisfaction. MONITOR thru CPRMS Guidelines Bank’s compliance with the consumer All business units are responsible in the complete and protection policies and procedures timely reporting of all requests, queries and complaints (ROCs) received from all contact points of the Bank. They RECORDS issues raised by ensure that all ROCs received are forwarded to the Bank’s employees regarding concerns Customer Care Center (C3) Unit. within the Bank, and suggestions for improvement. Reports are included in the concerned unit’s performance evaluation.

80 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 81 CONGLOMERATE MAP JG SUMMIT HOLDINGS, INC.

CP Air Holdings, Cebu Air, Inc. Inc. & Subsidiaries

Universal Robina 100% 67.6% iTech Global Corporation & Business Solutions, Subsidiaries Inc. JG Summit 55.25% Summit Internet 100% Capital Services Investments, Inc. Corporation (Parent) Robinsons Land 100% 100% Aspen Business Corporation & Solutions, Inc. Subsidiaries 60.97% JG Summit 100% Express Holdings, Capital Markets Inc. & Subsidiaries Corporation JG Summit 100% 100% Philippines, Ltd. & Subsidiaries JG SUMMIT 100% PLDT, Inc. HOLDINGS, JG SUMMIT HOLDINGS, INC. & INC. 11.3% SUBSIDIARIES 100% JG Summit (Cayman), Ltd. United Industrial Corporation, Ltd. 100% 100% JG Summit 60% Petrochemical 37% Corporation Batangas 100% Agro-Industrial Oriental Petroleum Dev. Com. & & Minerals Corp. Subsidiaries 100% JG Summit Olefins 19.40% Corporation

100% Merbau Global Business Corporation Power Corporation LEGEND: Unicorn 100% 30% Insurance Brokers STRATEGIC BUSINESS UNITS Corporation CORE INVESTMENTS 100% EMERGING INVESTMENTS JG Summit AND SUPPLEMENTARY Manila Electric Infrastructure BUSINESSES Company Holdings Corp. SUBSIDIARY ASSOCIATE - 29.56%

82 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 83 CONGLOMERATE MAP ROBINSONS RETAIL HOLDINGS, INC.

ROBINSONS SUPERMARKET CORPORATION 100%

ROBINSONS HANDYMAN, INC. ROBINSONS APPLIANCE CORP. ANGELES SUPERCENTER, INC. GROWSARI INC.*

80% 67% 67% 28.6%

RHI BUILDERS AND ROBINSONS TRUE SERVE WALTERMART-HANDYMAN, ROBINSONS LIFESTYLE HANDYMAN EXPRESS MART, INC. CONTRACTORS DEPOT, HARDWARE PHILIPPINES, INC. INC. STORE, INC. CORP. 66.67% 65% 65% 100% 67%

HOME PLUS TRADING DEPOT, INC. SOUTH STAR DRUG, INC. TGP PHARMA, INC. RUSTANS SUPERCENTERS, INC. 75% ROBINSONS RETAIL 100% 90% 51% HOLDINGS, INC. THE GENERICS THE GENERICS PHARMACY PHARMACY, INC. ROBINSON’S INCORPORATED FRANCHISING, CORP. 100% 100% 100%

ROBINSONS ROBINSONS ROBINSONS ROBINSONS SAVERS ELECTRONIC CHIC CENTER SUPER 50 CONVENIENCE GOURMET FOOD VENTURES CORP. TOYS, INC. WORLD, INC. CORPORATION CORPORATION STORES, INC. AND BEVERAGE, INC. 65% 100% 59.1% 100% 90% 100% 51%

ROBINSONS RRHI MANAGEMENT RRHI TRADEMARKS RHD DAISO-SAIZEN NEW DAY DATA ANALYTICS SPECIALTY STORES, AND CONSULTING, MANAGEMENT, INC. VENTURES LIMITED VENTURES, INC. INC. INC. INC. 65% 59.4% 100% 100% 100% 40%

RHMI MANAGEMENT RRG TRADEMARKS EVERYDAY G2M SOLUTIONS 40% 100% ROBINSONS DAISO TASTE CENTRAL AND CONSULTING, AND PRIVATE CONVENIENCE PHILIPPINES PTE DIVERSIFIED CORP. CURATORS, INC. INC. LABELS, INC. STORES, INC. LTD* 90% 100% 100% 100% 20% 14.9%

84 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 85 RISK MANAGEMENT UNNING THE SHOW WITH SOUND RISK MANAGEMENT “ Robinsons Bank aims to be one of the top banks in the Philippines, offering innovative and competitive financial products and services to its clients.”

Robinsons Bank aims to be one of the top banks in the Philippines, offering innovative and competitive financial products and services to its clients. The Bank’s strategic risk management is guided by the Bank’s Vision, Mission, Core Values, and planned objectives in the formulation of its business plans.

The Bank’s Risk Management is headed by the Chief Risk Officer (CRO) and is responsible for oversight of enterprise risk management, risk governance and control, framework, policies and practices. The CRO is supported by a dedicated team of risk management professionals organized to oversee risks arising from each of the Bank’s risk categories.

The Bank takes a comprehensive approach to Risk Management with a defined framework and an articulated Risk Appetite Statement, which are approved by the Risk Oversight Committee (ROC) and the Board of Directors (Board).

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EXPOSURE AND ASSESSMENT The Bank has enhanced its various operational tools such The major risks inherent to the Bank’s operations are as Business Process Mapping (BPM), Risk & Control Self- CREDIT RISK credit, market and operational. In addition — and Assessment (RCSA), Key Risk Indicators (KRI), and Loss considering the Bank’s assets and liability structure — the Event Database (LED) in compliance with BSP Circular 900. other attendant risks include credit concentration, interest rate risk in the banking book, liquidity risks, strategic risk Market, IRRBB, and Liquidity risks policies have been “The Bank’s credit risk policies and business risk. updated in compliance with issued by the BSP such as intend to maximize the return BSP Circulars 981, 1042 and 1044. New measurement The Bank’s risk management process involves risk models such as Value-at-Risk (VaR) and Pre-Settlement on the risk-adjusted capital by identification, quantification, proactive monitoring and Risk (PSR) for interest rate derivatives, as well as maintaining a credit risk exposure control through established process, policies, guidelines, behavioral cash flow model for loan repayment have also measurement models and limits, among others. been established. within defined parameters including asset quality and MAJOR ENHANCEMENTS Subsequent to the establishment and implementation of portfolio mix, among others.” RBank adopts a risk management framework that is IFRS 9 – Expected Credit Loss (ECL) models in 2018, the forward-looking and dynamic. Major steps have been taken Bank has engaged a third-party service provider to assist in response to new accounting standard, that is the IFRS in the automation of monthly ECL calculation. 9 Financial Instruments: Recognition and Measurement; The Bank’s credit risk policies intend to maximize the Rating models have been established for both loan Republic Act 10173 also known as Data Privacy Act of 2012 Finally, in response to BSP Circular 854 and to support return on the risk-adjusted capital by maintaining a credit accounts with asset size of more than P15Million and and BSP Circulars 855 – Sound Credit Risk Management the “Roadmap 2020” of the Bank, RBank increased its risk exposure within defined parameters including asset loan accounts with asset size of P15Million and below. Practices; 905 – Basel III Framework on Liquidity Standards authorized capital stock from Php15Bn to Php27Bn quality and portfolio mix, among others. These rating models have undergone both internal – Liquidity Coverage Ratio (LCR); 941 – Amendment to approved by the Securities and Exchange Commission and external independent validation. Definition of Pastdue and Non-Performing Loans; 982 in March 2019. The Php12Bn increase was composed of The Bank has several credit risk mitigation practices: • For Consumer loans, the Bank utilizes application – Information Security Management Guidelines; 1011 – 1.2 million shares of common stock with a par value of • The Bank offers a variety of loan products with credit scoring models, which were defined in the loans Adoption of PFRS 9; 1007 – Basel III Framework on Liquidity Php10 each. substantial collateral values. The latter part of this originations systems, to measure the level of credit risk Standards – Net Stable Funding Ratio (NSFR); 1019 – credit risk section discusses collateral and other credit of each loan applicant. These were developed using Technology and Cyber-risk Reporting; 1033 – Amendments Backed by the JG Summit Capital Services Corp. and enhancements. statistical modeling techniques considering historical to Regulations on Electronic Banking Services) and others Robinsons Retail Holdings Inc., at least 25%, or Php3Bn, • Limits are set on the amount of credit risk that data, credit policies, results of portfolio quality review that impact the operations of the Bank. was subscribed and paid in full amount. the Bank is willing to take for customers and and expert judgment. To ensure the adequacy of the counterparties, and exposures are monitored against scoring models, the Bank regularly conducts model such credit limits. performance tracking and reports the results to • The Bank also observes related regulatory limits such CRECOM and ROC. as industry, portfolio, single borrower’s limit (SBL) and • Further, the Bank takes into account risk acceptance directors, officers, stockholders and related interests criteria and deviation guidelines established for each (DOSRI) ceiling, among others. product in the evaluations of loan applications. • To protect against settlement risk, the Bank employs • With the implementation of IFRS 9 Expected Credit a delivery-versus-payment (DvP) settlement Loss (ECL) models, the Bank has started calculating system, wherein payment is applied only when the behavioral scores and assessing changes in credit risk corresponding asset has been delivered. of existing accounts on a monthly basis to determine • For commercial loan borrowers, there is an internal the risk profiles of all portfolios. credit risk rating system (ICRRS) in place, providing a • Past due and non-performing loan (NPL) ratios are also structured format for collating and analyzing borrower used to measure and monitor the quality of the loan data to arrive at a summary indicator of credit risk. portfolio.

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The responsibility of the credit risk management function rests upon the following bodies:

BOARD OF DIRECTORS (BOD) - advises, CREDIT EVALUATION DEPARTMENT (CED) governs, oversees policy and direction, — implements the pre-approval review of and assists with the leadership and general all loan accounts and all collection efforts promotion of the Bank so as to support the for all past due accounts. The Bank's CED organization’s mission and needs. Other submits likewise submits its reports to senior functions include: (1) Approving credit management on a periodic basis. It also strategy and policies; (2) Credit approval and acts as the independent credit risk control monitoring (large and connected or group unit which handles the review of Credit of transactions); (3) Delegation of credit Applications (CAs) for renewal and new authority; and (4) Oversight of credit risk transactions. management. FINANCIAL REPORTING DEPARTMENT RISK OVERSIGHT COMMITTEE (ROC) — (FRD) — monitors the Bank’s SBL, submits tasked to develop and provide oversight on regulatory reports on credit and also enterprise-wide and credit risk management provides information on industry exposures program of the Bank. and large exposures.

EXCOM - created as the highest credit ENTERPRISE RISK MANAGEMENT GROUP approving body of the Bank after the Board (ERMG) —in charge of the implementation of Directors. EXCOM is tasked to provide and execution of the Risk Management Plan the necessary approvals for applications, as approved by the ROC. To proactively manage risk, the ERMG conducts Portfolio being conducted to assess appropriateness of calculated deviations and other loan transactions based Quality Review (PQR) both for commercial and consumer loan loss provisioning vis-à-vis the risk profile of each on the amount delegated by the Bank’s Board The ERMG makes recommendations loan products. In 2018, ERMG has started credit review of borrower, on a sampling basis. of Directors and submits reports to the ROC on risk Investment outlets for Trust and Treasury groups. management matters affecting the Bank. The PQR for Consumer Loans provides a snapshot of the CREDIT COMMITTEE (CRECOM) — provides Bank coordinates with the various units (e.g., Credit review of Investment outlets is a detailed Bank’s portfolio per consumer loan product. It focuses the strategic framework that would govern originating units, FRD and CorPlan) of the individual review of accounts which covers financial predominantly on the performance of the accounts based the loan/credit activities of the Bank, manage Bank in monitoring the established credit risk analysis, credit ratings, bond performance, industry and on various indicators across different demographics. the risk of loans in general, assure the safety limits and performance of each product. risk analysis to assess the inherent risk associated with Result of the PQR is used by the Bank as a reference of depositors’ money, earns sufficient the account. in establishing business objectives and strategies for returns of the loan portfolio of the Bank, The ERMG is also responsible for preparing its consumer lending business. Likewise, analysis of preserves the capital/deposit of stakeholders, the Credit Risk Reporting Package to monitor PQR for Commercial Loans is a comprehensive credit accounts based on Expected Credit Loss (ECL) staging is maintains a healthy loan portfolio and enable and report the Bank’s credit risk profile. review of the Bank’s commercial loan portfolio. Individual conducted to measure and monitor the level of risk per customers/partners to prosper. This reporting package is submitted to the borrowers are reviewed in detail and portfolio analysis portfolio. Bank’s Management Committee (MANCOM) is being prepared to assess not only the quality of the CONCOM is a bank management-level and Risk Oversight Committee (ROC) on a whole portfolio but the management of the credit process The highlights of the PQRs are discussed and presented committee created to act as an approving regular basis. The report covers the following: as well. One of the measures undertaken is the rating to the loan originating units, CRECOM and the ROC. The body of the Bank. The CONCOM’s scope of Portfolio Mix; Risk Appetite and Tolerance; migration analysis wherein rating history of each account results of the deliberation are then used to improve approval includes Consumer Loans exceeding NPL Trend; Large Exposures Monitoring; SBL is being monitored to determine the account’s loan existing products, design new products, define new the delegated approving authorities for Monitoring; TOFA Exposures; Commercial performance and its probability of default. In addition to market strategies, formulate action plans on asset quality Officers; and Institutional approval (i.e. Loan Details; Consumer Loan Details, this, ECL staging analysis as well as risk rating validation is management as well as calibration of existing policies. company accreditation, fleet financing, etc.). among others.

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CREDIT CONCENTRATION RISK MARKET RISK

The Bank aims to minimize the potential adverse effect of On the other hand, industry concentration and top adjust its portfolio strategies in different market conditions credit risks that are particular to a single borrower or family borrowers’ concentration are covered in detail in in accordance with its risk philosophy and appetite. Our VaR of borrowers through adequate diversification of loan the yearly ICAAP of the Bank. The Bank uses the models have been validated by both external and internal portfolio. simplified option in computing the capital charge auditors. for credit concentration risk. This option involves The Bank monitors credit concentration by SBL (single the computation of the Sectoral Concentration The Enterprise Risk Management Group prepares a daily risk borrower limit), large exposures and individual exposures Index (SCI) and Individual Concentration Index (ICI) reporting package to provide Treasury, senior management, as well as credit concentration per industry. of the Bank’s credit portfolio and further validates ALCO and ROC with timely and relevant covering actual by using the Herfindahl-Hirschman Index (HHI). The exposures, limits compliance and facilitate regularization, In order to mitigate risk, the Bank sets its internal SBL (ISBL) rationale in using these tools lies with the need to when any breach is noted. at 20% of its qualifying capital versus the 25% BSP-imposed be commensurate with the growing complexity of SBL. The 5% is a cushion or allowance to absorb market the bank’s business and the environment in which it The Bank’s market risk policies seek to ensure that the The Bank has established structure and organization to volatility that affects the qualifying capital of the Bank. operates. market risk exposures from its traded portfolios of financial manage market risks with the involvement of the following instruments satisfy its expressed risk appetite and risk units: capacity. 20% 25% 5% TREASURY — initiates the INTERNAL BSP IMPOSED ALLOWANCE TO For initial risks taken, risk-taking personnel and business limits proposal, taking into SBL SBL ABSORB MARKET units follow the Product Approval Process for new market risk consideration strategies, target VOLATILITY exposures due to different types of financial instruments. The budgets, market volatility risk-taking personnel make proposals for evaluation and/or forecasts and opportunities. approval by different committees (ALCO, CRECOM, ROC and The following units are involved in managing credit concentration risk: BOD). The proposals are formalized by these risk sponsors into a Product Manual. ERMG — evaluates the proposed limits considering FRD — provides the CRECOM — evaluates credit Approved guidelines are being followed whether to accept or historical data, strategies, information on large exposures proposal considering issue reject an investment proposal. Some of the evaluation criteria overall risk appetite of the Bank (group and individual) single on concentration risk and include risk acceptance criteria, yield analysis, credit rating, and possible impact on the borrower’s limit (SBL) on endorses to BOD for decision. and market liquidity, among others. capital adequacy. a periodic basis and other regulatory reports. BOARD OF DIRECTORS – Risk mitigation continues even after acceptance of risks, ROC — reviews proposed limits deliberates and decides on the through the monitoring of compliance with approved limits which serve as boundaries within which the Bank can considering the risk appetite set ERMG –includes large exposure credit proposal. expose itself. by the Board of Directors and in its risk reporting package and overall direction and endorses conducts credit stress testing One of the many market risk exposures measured, monitored for confirmation. on large exposures, industry, and controlled daily by the Bank is the Value-at-Risk and economic activity. (VaR). It measures the potential loss of value resulting from unlikely, adverse event in the normal market environment BOARD OF DIRECTORS — in a specified period of time within a specified probability reviews and confirms approval of occurrence. It allows management to react quickly and of the ROC.

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The repricing gap per time band is derived by computing the difference between the rate-sensitive assets INTEREST RATE RISK (RSA) and the rate-sensitive liabilities (RLA) within the time band. To control interest rate risk arising from repricing gaps, maximum repricing gap and Earnings at Risk (EaR) IN THE BANKING BOOK limits are set for time bands up to one year. Earnings-at-Risk is a statistical measure derived from the repricing gaps, and calculates the likely impact of changes in interest rates to the net interest income (NII). Based on December 31, 2019 figures, the increase (decrease) in NII for upward and downward rate shocks of 100 basis points is as follows (in Php Millions):

Up 100 BPS Down 100 BPS Earnings at Risk Rate shock Rate shock Instruments sensitive to local interest rates (224.28) 224.28

Instruments sensitive to foreign interest rates (29.00) 29.00

Total (253.28) (253.28)

The repricing gap analysis is presently being reported on a monthly basis to ROC and ALCO.

The Bank’s lending activities, taking deposits with different The Bank utilizes a repricing gap analysis as a maturities and interest rates and investing in a portfolio of tool for measuring interest rate risk. The analysis fixed income securities expose it to interest rate risk. is created by distributing the Bank’s inflows/ The following is the management structure and the units involved in the management of interest rate risk: assets and outflows/liabilities into time bands In this case, the Bank aims to achieve the optimum level according to each instrument’s remaining term ERMG —does regular repricing MANCOM/ APPROVING of net interest income while managing its volatility and to next repricing. susceptibility to changes in interest rates. gap analysis to measure AUTHORITY — reviews and interest rate risk. The analysis approves the breach given is benchmarked on (EaR) limits the justification and proposed Specific assumptions are used to reflect the behavior of interest-sensitive assets and liabilities in the preparation of repricing gap: set by the BOD. strategy of Treasury.

TREASURY —provides ROC/BOD — reviews and explanation, justification and deliberates on the result proposed strategy to manage of repricing gap report the breach, if any. considering the repricing gap LOANS —Performing loans are bucketed DEPOSITS — Non-maturity deposits such as limits set by the BOD. according to either the maturity date (for Current Accounts and Savings Account are placed ALCO —utilizes the repricing accounts paying fixed interest rate) or next under “Non-rate sensitive” while Time Deposits gap report to manage the repricing date (for accounts paying floating and Special Savings Account are bucketed based matching of interest sensitive interest rate). No prepayment is assumed. on their contractual maturity. assets and liabilities. Non-performing loans are placed under “Non-rate sensitive”.

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LIQUIDITY RISK OPERATIONAL RISK

The objective of the Bank’s liquidity risk policies is to The Bank has a defined structure and organization to ensure that all future obligations, anticipated or not, can manage liquidity risk, as follows: be met when due with little or no impact to the Bank’s capital and earnings. ERMG — helps monitor market and regulatory developments The Bank seeks to lengthen liability maturities, diversify pertinent to interest rates and existing fund sources, and continuously develop liquidity position; prepares regular new instruments that cater to different segments of maturity gap analysis to measure the market. It also keeps credit lines with financial the maximum cumulative outflow institutions, as well as a pool of liquid or highly (MCO). The analysis is benchmarked marketable securities. Reserves management is another on the MCO limits and liquidity specialized function within the Bank, complying with ratios set by the BOD. BSP reserve requirements, which may be a buffer against unforeseen liquidity drains. TREASURY —measures the Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, people and liquidity and reserves position of the The Bank employs the liquidity or maturity gap report for systems; or from external events. Operational risk is inherent in all activities, products and services, and cuts Parent Company. It also prepares measuring liquidity risk. Although available contractual across multiple activities and business lines within the financial institution and across the different entities in a maturity dates are generally used for slotting instruments its explanation, justification and banking group or conglomerate where the financial institution belongs. into time bands, expected liquidation periods, often proposed strategy to manage the based on historical data, are used if more representative breach, if any. The Bank uses various operational risk management tools in the identification and quantification of its of the account’s behavioral cashflows. Unreserved and operational risk exposures. The levels of operational risk exposure of the various units of the Bank are captured liquid government securities under FVTPL and FVOCI are MANCOM/ APPROVING by the following operational risk management tools: placed in the earlier buckets. Deposits are bucketed based AUTHORITY —reviews and approves on their historical behavior as observed through statistical the breach given the justification and analysis of their balances. proposed strategy of Treasury.

The Senior Management and the Board are kept well- ALCO — utilizes the maturity gap informed for them to be able to make decisions on the report to manage the matching of sufficiency and diversity of their funding sources. Likewise, assets and liabilities. The Parent breaches in limits are properly identified, reported to Company’s ALCO is composed Senior Management and ROC/BOD on a timely basis, and of some members of the Senior Risk & Control Key Risk Loss Events Business Impact Results of internal/ preventive measures and/or corrective actions are taken Management including the Lending Self-Assessment Indicators Database Analysis (BIA) external audit and via breach regularization memorandum. Banks and Treasury Bank Heads. (RCSA) (KRI) (LED) supervisory issues ALCO conducts weekly meetings. raised in BSP Report on Examination ROC/BOD — reviews and deliberates on the result of maturity gap report considering the MCO limit and liquidity ratios set by the BOD.

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The following are the structure and the major units involved in operational risk management:

THE BOARD OF DIRECTORS, THROUGH THE RISK OVERSIGHT COMMITTEE (ROC), defines the risk culture and exercises oversight.

BUSINESS AND SERVICE UNITS, as first line of defense, take ownership of the risk by identifying, assessing and managing the risks from the new activities, processes, products and systems they do and use. Management, Operations and IT Steering Committees are venues to communicate the risk environment.

Part of the Bank’s action plans for 2020 is to digitize the notification, accomplishment and collection of the Bank-wide rollout of the aforementioned risk management tools and activities thru the implementation of a web-based system. The digitization shall increase productivity by reducing the man hours taken to perform repetitive and manual tasks including sending emails, monitoring, follow-ups and escalations; and achieve consistency and reduce manual errors ERMG, second line of defense, oversees Fraud Risk, Information Technology Risk, during accomplishment and consolidation. Business Continuity Management, and the implementation of ORM framework by designing risk assessment methodology and tools, coordinating risk Based on the results of 2019 RCSA-KRI exercise, it has been noted that the Economic Capital set aside for operational risk management activities across the organization, and consolidating and reporting using BIA is adequate to cover estimated operational risks using the Bank’s RCSA-KRI methodology. risk information/reports to the Board, thru the Risk Oversight Committee, and Senior Management. Operational Risk Management has different types or levels of control measures to properly address the organization’s operational risks on different phases. These controls are classified based on function as follows:

DIRECTIVE – provides a degree DETECTIVE – designed to COMPLIANCE GROUP complements the Bank’s second line of defense by of direction or guidance to the monitor, identify, detect conducting an independent assessment of the Bank’s compliance with relevant organization – typically policies, the risk or event which has laws, rules and regulations, as well as internal policies to determine areas that procedures and/or manuals; occurred; and may potentially result in losses due to non-compliance.

PREVENTIVE – acts to prevent CORRECTIVE – designed to the risk the from happening mitigate the loss or effect of or deter its likelihood and/or the event that has occurred INTERNAL AUDIT, the third line of defense, provides independent assessments impact; thru remedial actions. of the adequacy and effectiveness of the overall risk management framework and governance structures. ORMD liaises with Internal Audit, through former’s reports, to perform validation and development of accurate assessment and Identified risks which require monitoring of their risk level status and control adequacy are made through risk reporting analysis of events, incidents and indicators. facilities such as risk reporting package and with the aid of the operational risk management tools such as Key Risk Indicators, Risk and Control Self-Assessment and Loss Events Reporting.

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Tools are also employed to aid in identifying and Controls are defined in the policies, procedures, INFORMATION TECHNOLOGY RISK assessing IT risk exposures. The following are sample IT systems and organizational structures which are risk management tools of the Bank: designed to provide reasonable assurance that business and security objectives are achieved • RISK CONTROL SELF-ASSESSMENT (RCSA) and the undesired events are detected, managed, • KEY RISK INDICATORS (KRIS) mitigated and/or controlled. Furthermore, • BUSINESS IMPACT ANALYSIS (BIA) independent reviews are regularly conducted by the • BUSINESS CONTINUITY PLANS (BCP) Bank’s Internal Audit group, regulatory examiners, and external auditors to ensure that risk controls and The Bank has put in place different types and levels of mitigants are in place and functioning effectively as control measures to match these with identified risks. intended.

The following are the structure and the major units involved in IT risk management:

THE BOARD OF DIRECTORS, through the Risk Oversight Committee (ROC), defines the risk culture and exercises oversight.

BUSINESS AND SERVICE UNITS, as first line of defense, take ownership of the risk by identifying, assessing and managing the risks from the activities, processes, products and systems they perform and utilize. Management, Operations and IT Steering Committees are venues to communicate the risk environment and ensure that the IT strategy is aligned to the With increasing technological advances, Information employed, and the risk management cycle to address IT Bank’s strategic business plans and objectives. Technology (IT) plays a large role in helping the Bank risks, providing confidence that IT can deliver business to achieve operational efficiency and deliver innovative value efficiently and securely, while delivering assurance ENTERPRISE RISK MANAGEMENT GROUP (ERMG), second line of defense, provides the products and services. As processes related to IT around data integrity, availability and confidentiality. tools and the consistency in risk management language. Guided by the Bank’s Policies and continuously evolve and become increasingly complex, the Procedure, Rules and Regulations and with the aid of Technology and Systems as well as IT Risk Management Framework (ITRMF) supports the Bank To further strengthen the Bank’s IT Risk management in making appropriate risk-aware decisions to effectively and to reinforce the organization’s check-and-balance promotion of Risk awareness and establishment of culture and ethics, ERMG assists business manage and address risks that are inherent in this space. system, the Bank expanded the IT Risk Organization and units in defining the target risk exposure and reporting adequate risk-related information hired additional personnel who have extensive Bank throughout the organization. IT Risk is defined as any potential adverse outcome, operational experience and with relevant technical damage, loss, violation, failure or disruption associated expertise. The Bank also promotes regular training COMPLIANCE GROUP, second line of defense, identifies the relevant Philippine laws and with the use of or reliance on computer hardware, and seminars to keep IT risk officers adept with the regulation applicable to IT operations, conducting periodic compliance testing, and reporting software, devices, systems, applications, and networks. emerging trends in Information Technology. The Bank’s Managing this entails building a risk management IT Risk managers regularly monitor key risk indicators to the Corporate & Governance Committee. culture and awareness among all Bank employees. The and report exposures against carefully-established framework also defines the responsibilities related to the IT risk metrics and limits approved by the IT Steering INTERNAL AUDIT, the third line of defense, provides comprehensive assurance based on risk management function, the reporting line, the tools Committee (ITSC) and Risk Oversight Committee (ROC). the highest level of independence and objectivity within the organization. ERMG liaises with Internal Audit, through former’s reports, to perform validation and development of accurate assessment and analysis of events, incidents and indicators.

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Risk management, business continuity, awareness, and the enterprise risk management function. The Bank’s well-functioning security services are all important building risk officers regularly monitor key risk indicators blocks for establishing cybersecurity resilience. The Bank’s and report exposures against carefully-established Senior Management and Board of Directors (BOD) are risk metrics and limits approved by the IT Steering engaged in the discussions about cybersecurity risks, Committee (ITSC) and Risk Oversight Committee and ensure that resources are appropriately allocated to (ROC). The overall information security and data manage these risks. The enterprise-level responsibility for privacy posture of the Bank are periodically reported security and data privacy activities are managed by the to the Bank’s Management Committee, the Board Chief Information Security Officer (CISO)/Data Protection of Directors’ IT Steering Committee (ITSC), and Risk Office (DPO) and Chief Risk Officer (CRO). The CRO heads Oversight Committee (ROC).

The following stakeholders have relevant roles in the implementation of the information security and data privacy programs:

THE BOARD OF DIRECTORS, THROUGH THE RISK OVERSIGHT COMMITTEE (ROC), defines the risk culture and exercises oversight.

INFORMATION SECURITY AND DATA PRIVACY RISKS department constantly reviews and update processes to BUSINESS AND SERVICE UNITS, take ownership of the risk by identifying, assessing and As the Bank embraces digitization to match its offerings ensure the effectiveness and adequacy of the framework, managing the risks from the new activities, processes, products and systems they conduct with customer needs, protecting corporate and personal and more importantly, maintains an information security and use. information across digital assets becomes a fundamental and data privacy awareness program across the Bank. need. It is vital in maintaining customers’ trust and confidence with the Bank. To further strengthen the Bank’s Information Security ENTERPRISE RISK MANAGEMENT GROUP (ERMG), provides the tools and the and Data Privacy risk management practice and to consistency in risk management language. Guided by the Bank’s Policies and Procedure, The Bank takes information security seriously, and in line reinforce the organization’s check-and-balance system, Rules and Regulations and with the aid of Technology and Systems as well as promotion with this, its existing Risk Management practice has evolved the Bank has put in place different types and levels of of Risk awareness and establishment of culture and ethics, ERMG assists business units to specifically consider privacy and security requirements, control measures. These are defined in the policies, in defining the target risk exposure and reporting adequate risk-related information especially when undertaking initiatives related to digital procedures, systems and organizational structures, which throughout the organization. business. are designed to provide reasonable assurance that the business and security objectives are achieved and the The mandate of Information Security Department is undesired events are appropriately detected, managed, COMPLIANCE GROUP, identifies the relevant laws and regulation applicable to Information to cultivate a culture of information security and data mitigated and/or controlled. Independent reviews are also Technology operations, conducting periodic compliance testing, and reporting to the privacy across the Bank. It provides and drives the regularly conducted by different groups to ensure that Corporate & Governance Committee. framework needed to effectively manage and address these controls are in place and functioning effectively as risks associated with emerging trends in technology intended. and growing concerns on cyber-security to meet both INTERNAL AUDIT, provides comprehensive assurance based on the highest level of business and security requirements, as well as protect All corporate and personal information is appropriately independence and objectivity within the organization. ERMG liaises with Internal Audit, the personal data of data subjects and their rights. The handled by the Bank, to ensure that they are adequately through former’s reports, to perform validation and development of accurate assessment framework defines the responsibilities related to the protected from the time they are collected up to their and analysis of events, incidents and indicators. risk management function, the reporting line, the tools disposal. The Bank is fully aware that any data breach employed, and the risk management cycle designed to could result in litigation and loss of customer confidence, With this framework in place, the Bank assures its stakeholders and customers that there is a balance between the demand address Information Security and Data Privacy risks. The leading to a loss of business. for stronger security and ease of use and control of data and systems.

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CAPITAL ADEQUACY AND CAPITAL MANAGEMENT BUSINESS RISK The primary objectives of the Bank’s capital management are to ensure that the Bank complies with externally imposed capital requirements, as mandated by the BSP, and the Bank maintains healthy capital ratios in order to support its business and to maximize shareholder’s value.

Presented below are the risk-based capital components, including regulatory deductions, on solo and consolidated bases:

Qualifying Capital Consolidated Parent Company (In Php Million) 2019 2018 2019 2018 Tier 1 Capital Paid-up common stock 15,000.00 12,000.00 15,000.00 12,000.00 Additional paid-in-capital - - - - Deposit for Common Stock Subscription - - - -

Retained Earnings 710.39 768.10 792.45 869.19 Undivided profits 702.26 327.74 661.03 313.70 Net unrealized gains or losses on AFS securities (25.24) (1,055.96) (25.24) (1,055.96) Cumulative Foreign Currency Translation (111.52) (119.99) (111.52) (119.99) Others 9.30 (13.02) (0.36) (14.17) The assessment of Business Risk is covered in the Bank’s Compliance Program, approved by the Board of Directors. Minority Interest - - - - Less: Regulatory adjustments In assessing the Bank’s loss exposure under Business Risk, capital charge was used as a metric to cover for the potential DOSRI (44.43) (0.21) (44.14) - losses that may arise from the three specific risks included in the computation of Business Risk namely, Compliance, Deferred income tax (495.34) (385.67) (451.53) (341.27) Reputational and Legal Risk. Goodwill (244.33) (244.33) - - Other Intangible Assets (1,001.26) (1,002.34) (379.33) (379.28) The Bank based the loss exposure for Legal Risk on the potential losses from cases filed by the Bank. The Bank assumes Investments in subsidiary - - (1,236.74) (1,233.07) a yearly capital charge growth rate of 20%. The Bank’s Loss Exposure to Business Risk as of December 2019 is shown in Total Common Equity Tier 1 Capital 14,499.83 10,274.33 14,204.63 10,039.15 the table below: Additional Tier 1 Capital Instruments issued by the bank that are eligible as AT1 - - - - Capital Charge Capital Type of Risk (in Php Millions) Total Tier 1 Capital 14,499.83 10,274.33 14,204.63 10,039.15 Consolidated Parent Less: Investment in Subsidiary - 50% Net Tier 1 Capital 14,499.83 10,274.33 14,204.63 10,039.15 Compliance Risk 16.158 15.425 Tier 2 Capital Redeemable preferred stock - - - - Reputational Risk 0.433 0.218 General Loan Loss Provision (GLLP) 802.78 631.74 783.33 618.67 Unrealized Gain AFS Equity Securities - - - - Legal Risk 9.160 9.110 Total Tier 2 Capital 802.78 631.74 783.33 618.67 Less: Investment in Subsidiary - 50% - - - - Total Business Risk 25.751 24.753 Net Tier 2 Capital 802.78 631.74 783.33 618.67 Total Gross Qualifying Capital 15,302.60 10,906.06 14,987.96 10,657.82 Less: Total Investment in Subsidiary - - - - Total Qualifying Capital 15,302.60 10,906.06 14,987.96 10,657.82

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The Bank manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the CREDIT RISK risk characteristics of its activities. In order to maintain or adjust the capital structure, the Bank may adjust the amount of The Bank uses the Standardized Approach in computing its exposure for credit risk. Credit Risk-Weighted Asset (CRWA) dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes were made in the is an important risk measure of the Bank, primarily because it is used to determine the Bank’s minimum capital objectives, policies and processes from the previous years. requirement. The Bank’s minimum capital requirement for credit risk is defined as 10% of the CRWA.

Risk-based Capital Ratios are as follows: The following table summarizes the result of the risk quantification and capital assessment of the Bank’s credit risk using the standardized approach. Qualifying Capital Consolidated Parent Company (In Php Million) 2019 2018 2019 2018 Credit Risk-Weighted Assets Consolidated Parent Company Tier 1 Capital 14,499.83 10,274.33 14,204.63 10,039.15 (In Php Million) 2019 2018 2019 2018 Common Equity Tier 1 14,499.83 10,274.33 14,204.63 10,039.15 Credit Risk-Weighted Assets Additional Tier 1 Capital - - - - Tier 2 Capital 802.78 631.74 783.33 618.67 Total Risk Weighted On-Balance Sheet Assets 76,679.18 64,693.52 74,734.70 63,295.28 Gross Qualifying Capital 15,302.60 10,906.06 14,987.96 10,657.82 Less: Required deductions - - - - Total Risk-Weighted Off-Balance Sheet Assets 3,595.12 2,268.03 3,595.12 2,268.03 Total Qualifying Capital 15,302.60 10,906.06 14,987.96 10,657.82 Total Counterparty Risk-Weighted Assets in Risk Weighted Assets 87,628.78 72,707.62 85,303.48 70,981.15 the Trading Book (Derivatives and Repo-style 3.29 .284 3.29 .284 Common Equity Tier 1 Ratio 16.55% 14.13% 16.65% 14.14% Transactions) Capital Conservation Buffer 10.55% 8.13% 10.65% 8.14% Total Gross Risk-Weighted Assets 80,277.58 66,961.83 78,333.11 65,566.59 Tier 1 Capital Ratio 16.55% 14.13% 16.65% 14.14% Deductions: Capital Adequacy Ratio 17.46% 15.00% 17.57% 15.02%

General loan loss provision [in excess of the The regulatory qualifying capital of the Bank consists of Tier 1 (core) capital, which comprises of paid-up common stock, .013 - -.017 - additional paid-in capital, deposit for common stock subscription, retained earnings, surplus including current year profit, amount permitted to be included in Upper Tier 2 minority interest less required deductions such as unsecured accommodations to DOSRI, deferred income tax and goodwill. The other component of regulatory capital is Tier 2 (supplementary) capital, which includes net unrealized gains and losses Unbooked valuation reserves and other capital adjustments affecting asset accounts based on on FVOCI equity securities and general loan loss provision. A capital conservation buffer of 2.5% comprised of CET 1 capital - - - - the latest report of examination as approved by is likewise imposed in the Basel III capital ratios. the Monetary Board

The capital requirements for Credit, Market and Operational Risks are provided below, on solo and consolidated bases: TOTAL CREDIT RISK-WEIGHTED ASSETS 80,264.24 66,961.83 78,315.76 65,566.59

Capital Requirement Consolidated Parent Company The Bank’s total CRWA as of December 31, 2019 stood at Php78,315.76 Million and Php80,264.24Million, on solo and in Php Million 2019 2018 2019 2018 consolidated basis, respectively. Credit Risk 80,264.24 66,961.83 78,315.76 65,566.59

Market Risk 887.35 346.72 887.35 346.72

Operational Risk 6,477.19 5,399.07 6,100.37 5,067.84

Total Capital Requirements 87,628.78 72,707.62 85,303.48 70,981.15

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Presented below is the total credit exposure, on a solo and consolidated basis, broken down by type of exposures and risk buckets:

RISK-WEIGHTED ON-BALANCE SHEET ASSETS - CONSOLIDATED 2019 Exposures Risk Weights Covered by Exposures, 10/, 12/ CRM, Gross Exposures not Net of Specific of Materiality Covered by CRM Nature of Item Provisions 2/ Threshold 0% 20% 50% 75% 100% 150% TOTAL (Part III.1a) 1 2 3=1-2 4 5 6 7 8 9 [Sum of 4 to 9]

Cash on Hand 3,258.33 3,258.33 3,258.33 3,258.33 Checks and Other Cash Items 00.00 00.00 Due from Bangko Sentral ng Pilipinas (BSP) 12,216.07 00.00 12,216.07 12,216.07 00.00 00.00 12,216.07 Due from Other Banks 2,249.63 2,249.63 82.93 2,059.02 107.67 2,249.63 Financial Assets Designated at Fair Value through Profit or Loss [Sum of E.1 and E.2] 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 Available-for-Sale (AFS) Financial Assets 14,160.52 00.00 14,160.52 6,673.64 2,954.72 2,936.62 1,595.54 00.00 14,160.52 Held-to-Maturity (HTM) Financial Assets 11,437.21 00.00 11,437.21 9,016.65 2,014.68 405.88 00.00 00.00 11,437.21 Unquoted Debt Securities Classified as Loans 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 Loans and Receivables 81,232.98 3,391.71 77,841.27 00.00 6,178.79 7,923.62 8,716.85 54,110.17 911.83 77,841.27 1. Interbank Loans Receivable 1,537.08 00.00 1,537.08 1,536.77 00.00 00.30 00.00 1,537.08 a. Interbank Call Loans Receivable 8/ 1,536.77 1,536.77 1,536.77 1,536.77 b. Interbank Term Loans Receivable 00.30 00.30 00.30 00.30 2. Loans and Receivables -Others 79,695.90 3,391.71 76,304.20 00.00 4,642.02 7,923.62 8,716.85 54,109.86 911.83 76,304.20 a. Non-defaulted exposures 78,547.61 3,345.04 75,202.57 00.00 4,642.02 7,923.62 8,716.85 53,920.07 00.00 75,202.57 a.1. Sovereign Exposures 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 a.2. LGUs and Public Sector Entities 49.34 49.34 49.34 49.34 a.3. Government Corporation 00.00 00.00 a.4. Corporates 40,709.39 1,080.69 39,628.69 4,592.69 790.29 34,245.72 00.00 39,628.69 a.5. Microfinance/Small and Medium Enterprises 9,343.84 626.98 8,716.85 00.00 00.00 8,716.85 00.00 00.00 8,716.85 a.6. Loans to individuals for Housing Purposes (includes similar items under DIL) 18,163.73 1,289.43 16,874.30 7,133.33 9,740.97 16,874.30 a.7 Loans to Individuals 10,281.31 347.93 9,933.38 9,933.38 9,933.38 b. Defaulted exposures 7/ 1,148.30 46.67 1,101.63 189.80 911.83 1,101.63 b.1. Housing Loans 236.46 46.67 189.80 189.80 189.80 b.2. Other than Housing Loans 911.83 911.83 911.83 911.83 Loans and Receivables Arising from Repurchase Agreements, Certificates of Assignment/ 872.20 00.00 872.20 00.00 00.00 872.20 00.00 00.00 872.20 Participation with Recourse, and Securities Lending and Borrowing Transactions Sales Contract Receivable (SCR) 79.60 00.00 79.60 00.00 00.00 57.12 22.48 79.60 Real and Other Properties Acquired 452.80 452.80 452.80 452.80 Total Exposures Excluding Other Assets 125,959.35 3,391.71 122,567.64 31,164.69 11,231.13 14,197.35 8,716.85 55,870.50 1,387.11 122,567.64 Other Assets 2,845.47 2,845.47 2,845.47 2,845.47 Total Exposures, Including Other Assets 128,804.81 3,391.71 125,413.11 31,164.69 11,231.13 14,197.35 8,716.85 58,715.97 1,387.11 125,413.11 Total Risk-weighted On-Balance Sheet Assets not covered by CRM 00.00 2,246.23 7,098.68 6,537.64 58,715.97 2,080.67 76,679.18 Total risk-weighted On-Balance Sheet Assets covered by CRM 00.00 00.00 00.00 00.00 00.00 TOTAL RISK-WEIGHTED ON-BALANCE SHEET ASSETS 00.00 2,246.23 7,098.68 6,537.64 58,715.97 2,080.67 76,679.18

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RISK-WEIGHTED ON-BALANCE SHEET ASSETS - PARENT 2019 Exposures Risk Weights Covered by Exposures, 10/, 12/ CRM, Gross Exposures not Net of Specific of Materiality Covered by CRM Nature of Item Provisions 2/ Threshold 0% 20% 50% 75% 100% 150% TOTAL (Part III.1a) 1 2 3=1-2 4 5 6 7 8 9 [Sum of 4 to 9]

Cash on Hand 3,175.85 3,175.85 3,175.85 3,175.85 Checks and Other Cash Items 0.00 00.00 Due from Bangko Sentral ng Pilipinas (BSP) 11,824.06 00.00 11,824.06 11,824.06 00.00 00.00 11,824.06 Due from Other Banks 2,160.01 2,160.01 82.93 2,059.02 18.06 2,160.01 Financial Assets Designated at Fair Value through Profit or Loss 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 Available-for-Sale (AFS) Financial Assets 14,190.72 00.00 14,190.72 6,703.84 2,954.72 2,936.62 1,595.54 00.00 14,190.72 Held-to-Maturity (HTM) Financial Assets 11,234.89 00.00 11,234.89 9,016.65 1,812.36 405.88 00.00 00.00 11,234.89 Unquoted Debt Securities Classified as Loans 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 Loans and Receivables 79,740.75 3,391.19 76,349.55 00.00 6,178.79 7,877.01 8,424.85 53,038.99 829.90 76,349.55 1. Interbank Loans Receivable 1,537.08 00.00 1,537.08 1,536.77 00.00 00.30 00.00 1,537.08 a. Interbank Call Loans Receivable 8/ 1,536.77 1,536.77 1,536.77 1,536.77 b. Interbank Term Loans Receivable 00.30 00.30 00.30 00.30 2. Loans and Receivables -Others 78,203.67 3,391.19 74,812.48 00.00 4,642.02 7,877.01 8,424.85 53,038.69 829.90 74,812.48 a. Non-defaulted exposures 77,137.64 3,344.53 73,793.12 00.00 4,642.02 7,877.01 8,424.85 52,849.23 00.00 73,793.12 a.1. Sovereign Exposures 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 a.2. LGUs and Public Sector Entities 49.34 49.34 49.34 49.34 a.3. Government Corporation 00.00 00.00 a.4. Corporates 40,709.39 1,080.69 39,628.69 4,592.69 790.29 34,245.72 00.00 39,628.69 a.5. Microfinance/Small and Medium Enterprises 9,051.84 626.98 8,424.85 00.00 00.00 8,424.85 00.00 00.00 8,424.85 a.6. Loans to individuals for Housing Purposes (includes similar items under DIL) 18,117.12 1,289.43 16,827.69 7,086.72 9,740.97 16,827.69 a.7. Loans to Individuals 9,209.96 347.42 8,862.54 8,862.54 8,862.54 b. Defaulted exposures 7/ 1,066.03 46.67 1,019.36 189.46 829.90 1,019.36 b.1. Housing Loans 236.13 46.67 189.46 189.46 189.46 b.2. Other than Housing Loans 829.90 829.90 829.90 829.90 Loans and Receivables Arising from Repurchase Agreements, Certificates of Assignment/ 805.62 00.00 805.62 00.00 00.00 805.62 00.00 00.00 805.62 Participation with Recourse, and Securities Lending and Borrowing Transactions Sales Contract Receivable (SCR) 52.65 00.00 52.65 00.00 00.00 31.76 20.89 52.65 Real and Other Properties Acquired 334.86 334.86 334.86 334.86 Total Exposures Excluding Other Assets 123,519.41 3,391.19 120,128.22 30,720.39 11,028.81 14,084.16 8,424.85 54,684.34 1,185.66 120,128.22 Other Assets 2,705.39 2,705.39 2,705.39 2,705.39 Total Exposures, Including Other Assets 126,224.80 3,391.19 122,833.61 30,720.39 11,028.81 14,084.16 8,424.85 57,389.73 1,185.66 122,833.61 Total Risk-weighted On-Balance Sheet Assets not covered by CRM 00.00 2,205.76 7,042.08 6,318.64 57,389.73 1,778.49 74,734.70 Total risk-weighted On-Balance Sheet Assets covered by CRM 00.00 00.00 00.00 00.00 00.00 TOTAL RISK-WEIGHTED ON-BALANCE SHEET ASSETS 00.00 2,205.76 7,042.08 6,318.64 57,389.73 1,778.49 74,734.70

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Credit equivalent amount for off-balance sheet items, broken down by type of exposures (in Php million): Pursuant to the Bank’s policy, the credit ratings given by foreign and local rating agencies were used to determine the credit risk weights of On-balance sheet, Off-balance sheet and counter party exposures. Consolidated Parent Off-Balance Sheet 2019 2018 2019 2018 For all rated credit exposures, regardless of currency, the Bank used the ICRRS and the ratings of Standard & Poor’s (S&P); Assets Notional Credit Notional Credit Notional Credit Notional Credit Moody’s and Fitch Ratings. On the other hand, the credit rating given by Phil Ratings was used for Unquoted Debt Securities, (In Php Million) Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent certain Corporate Bonds, Peso-denominated exposures and loans to rated domestic private entities.

Direct Credit Substitutes 3,388.06 3,388.06 2,143.80 2,143.80 3,388.06 3,388.06 2,143.80 2,143.80 The Bank neither uses credit derivatives as credit risk mitigants nor provides credit protection through credit derivatives. The Bank has no outstanding exposure to securitization structures and other types of structured products issued or Transaction-related ------purchased by the Bank contingencies

Trade-related MARKET RISK-WEIGHTED ASSETS contingencies arising The Standardized Approach is utilized by the Bank in determining it market risk-weighted assets. At the end of December 5,176.48 207.06 3,105.62 124.22 5,176.48 207.06 3,105.62 124.22 from movement of 2019, computed total market risk-weighted assets on consolidated basis stood at Php887.35 Million. This consisted of goods Php2.64 million interest rate risk exposure and Php884.72 Million foreign exchange exposures.

Other commitments (which can be done Market Risk Weighted Assets Consolidated Parent unconditionally (in Php million) 2019 2018 2019 2018 24,985.96 - 25,292.31 - 24,985.34 - 25,291.13 - cancelled at any time by Interest Rate Exposures the bank without prior notice) Specific Risk .063 .131 .063 .131 General Market Risk Total Notional Principal and Credit 33,550.50 3,595.12 30,541.73 2,268.03 33,549.88 3,595.12 30,540.55 2,268.03 PHP .000 .000 .000 .000 Equivalent Amount USD .148 .492 .148 .492 Total Capital Charge .148 .492 .148 .492 Credit equivalent amount for counterparty risk-weighted items, broken down by type of exposures (in Php million) Adjusted Capital Charge .264 .624 .264 .624 Total Risk Weighted Interest Rate Exposures 2.637 7.796 2.637 7.796 COUNTERPARTY RISK- Consolidated Parent WEIGHTED ASSETS IN 2019 2018 2019 2018 Total Risk Weighted Equity Exposures .000 .000 .000 .000 THE TRADING BOOK Notional Credit Notional Credit Notional Credit Notional Credit Foreign Exchange Exposures (In Php Million) Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent Total Capital Charge 70.777 27.114 70.777 27.114 Adjusted Capital Charge 88.472 33.892 88.472 33.892 Derivatives Exposures 558.04 3.29 28.42 .284 558.04 3.29 28.42 .284 Exchange Rate Contracts Total Risk Weighted Foreign Exchange Exposures 884.716 338.922 884.716 338.922 Total Risk Weighted Exposures on Options .000 .000 .000 .000 Total Market Risk-Weighted Assets 887.353 346.718 887.353 346.718 Total Notional Amount 558.04 3.29 28.42 .284 558.04 3.29 28.42 .284 OPERATIONAL RISK-WEIGHTED ASSETS The Bank uses the Basic Indicator approach in computing its operational risk-weighted assets. Operational risk-weighted Total Counterparty Risk- assets as of December 2019 were Php6.100 billion and Php6.477 billion, on solo and consolidated basis, respectively. In Weighted Assets of 3.29 .284 3.29 .284 2018, they were Php5.067 billion and Php5.399 billion, on solo and consolidated basis, respectively. Derivative Transaction

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The Bank‘s Risk Assessment process is covered in its Compliance Program, approved by the Board of Directors. The MANAGEMENT OF OTHER main procedures performed are summarized as follows: IDENTIFICATION. The Bank identified all historical risk events from all of the Bank’s RISK AREAS business units. In addition, it identified other business risks and their sources.

MEASUREMENT. The Bank analyzed the level of risk associated for each risk event. The level of risk has been determined using both quantitative and qualitative measures. Quantitative measures refer to loss amounts determined to be the consequence of non- compliance. In cases where data is inadequate, qualitative measures had been used.

MITIGATION AND CONTROL. Based on the identified risks, Senior Management takes corrective actions in order to maintain the level risk exposures within the tolerance level. Mitigants are in place in order to control the risk exposures.

MONITORING. Senior Management with the assistance of Compliance Group monitors the Bank’s exposure to business risks and determines whether the said exposure is still within the level of risk that management is willing to take.

AUTHORITY AND RESPONSIBILITY

BOARD OF DIRECTORS/CORPORATE GOVERNANCE COMMITTEE – The Board is ultimately responsible and accountable for overseeing the management of the Bank‘s compliance with the applicable regulations and managing the risk of failure to comply with these standards. RBank als0 recognizes other risks that can impact its operations such as business risk (compliance, legal and reputational) and strategic risks. CHIEF COMPLIANCE OFFICER - On a day to day basis, the Chief Compliance Officer (CCO) is responsible for assisting the senior management in ensuring the implementation of the Bank‘s BSP Circular No. 972 provides that the Bank should establish a dynamic and responsive Compliance Policy. compliance risk management system which is designed to specifically identify and mitigate risks that may erode the franchise value of the Bank such as risks of legal or regulatory sanctions, ALL BUSINESS UNITS – The responsibilities of various business units will help ensure that material financial loss or loss to reputation, the Bank may suffer as a result of its failure to the Bank is able to observe proper standards and avoid unnecessary supervisory sanctions. comply with laws, rules and related self-regulatory organization standards, and codes of conduct Compliance should form part of the Bank‘s culture in such a way that each employee must be applicable to its activities. Compliance risk may also arise from failure to manage conflict of interest, treat customers fairly, or effectively manage risks arising from money laundering and aware and perform his compliance responsibilities. Business Units of the Bank must adhere terrorist financing activities. Compliance risk management should be an integral part of the with applicable regulations, policies and procedures governing their respective activities. culture and risk governance framework of the Bank. In this respect, it shall be the responsibility and shared accountability of all personnel, officers, and the board of directors. INTERNAL AUDIT – The Compliance Unit shall be subjected to periodic examination of the Bank‘s Internal Audit Group and the established audit program must cover the adequacy and effectiveness of the Bank‘s compliance function. The Compliance Officer must be informed of the results of the independent review

114 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 115 RISK MANAGEMENT

REPUTATIONAL RISK BUSINESS RISK QUANTIFICATION & ASSESSMENT The Bank evaluates the business strategies and strategic objectives it carries out against the impact of economic, Reputational risk is defined as the current and prospective In assessing for the Bank’s loss exposure under Business competitive, regulatory, and environmental challenges. Advanced quantitative and qualitative techniques are impact on earnings or capital arising from negative public Risk, capital charge was used as a metric to cover for the considered to materialize the Bank’s strategies given its available resources. Strategic risk management is a continual opinion. It affects a financial institution’s ability to establish potential losses that may arise from the three specific process, an integral part in strategy setting, strategy execution, and strategic management, in order for the Bank to new relationships or services or continue servicing existing risks included in the computation of Business Risk achieve its objectives. relationships. This exposure may also expose a financial namely, Compliance, Reputational and Legal Risk. institution to litigation, financial loss, or a decline in its customer base (BSP Circular No. 510). The Bank based the loss exposure for Legal Risk on the AUTHORITY AND RESPONSIBILITY potential losses from cases filed by the Bank. The Bank By the nature of its business which is banking, the Bank’s assumes a yearly capital charge growth rate of 20%. The existence depends on the trust and confidence of the Bank’s Loss Exposure to Business Risk as of December BOARD OF DIRECTORS is responsible for reviewing and guiding corporate depositing public. Any event or series of events that tend to 2019 is shown in the table below: strategy, major plans of action, risk policies, annual budgets and business tarnish the Bank’s reputation can affect such confidence and plans; monitoring of corporate performance; overseeing major capital create an impact on the business. It is therefore of extreme Capital Charge (in Php Millions) allocations such as acquisitions and major expenditures; while still retaining Type of Risk importance that the Bank maintains its health and create Consolidated Parent full and effective control over the Bank. in the mind of the public a stature of strength, profitability, Compliance Risk 16.158 15.425 trustworthiness. Reputational 0.433 0.218 Risk SENIOR MANAGEMENT, together with the CEO, collectively owns the COMPLIANCE & LEGAL RISK Legal Risk 9.160 9.110 Bank’s strategic risk management. They assist the Board of Directors in Compliance Risk is the current and prospective risk Total Business formulating and articulating strategies to meet the Bank’s objectives. During to earnings or capital arising from violations of, or 25.751 24.753 Risk nonconformance with law, rules, regulations, prescribed the annual business planning, these proposals are discussed, drafted and practices, internal policies and procedures, or ethical then presented to the Board for approval. Senior management likewise is standards. Compliance risk also arises in situations responsible for the overall execution of the plans approved by the Board. STRATEGIC RISK where the laws or rules governing certain bank products The Bank evaluates the business strategies and strategic or activities of the bank’s clients may be ambiguous or objectives it carries out against the impact of economic, untested. This risk exposes the bank to fines, payment competitive, regulatory, and environmental challenges. INTERNAL AUDIT performs a comprehensive process of systems and of damages and the voiding of contracts. Compliance Advanced quantitative and qualitative techniques are business audits across the spectrum of business entities. They assist risk can lead to diminished reputation, reduced considered to materialize the Bank’s strategies given management to identify shortcomings in processes that augment the franchise value, limited business opportunities, reduced its available resources. Strategic risk management is a effectiveness of the Bank’s strategic risk management process. expansion potential, and lack of contract enforceability continual process, an integral part in strategy setting, (BSP Circular 510). strategy execution, and strategic management, in order for the Bank to achieve its objectives. Legal risk is the extent that changes in the interpretation or provisions of regulations directly affect a bank’s business model (BSP Circular 747). Legal risk also covers the Bank’s current and potential losses from lawsuits.

116 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 117 BOARD OF DIRECTORS

(On this page from left to right) (On this page from left to right) FREDERICK D. GO - Vice Chairman, ANGELES Z. LORAYES - Independent Director, ROBERTO S. GAERLAN - Independent Director, HERMOGENES S. ROXAS - Independent Director, LANCE Y. GOKONGWEI - Chairman, OMAR BYRON T. MIER - Director, ROBINA Y. GOKONGWEI-PE - Director, DAVID C. MERCARDO - Independent Director, and ELFREN ANTONIO S. SARTE - President and CEO ESPERENZA S. OSMEÑA - Independent Director, and PATRICK HENRY C. GO - Director All directors have nominal share of one (1) unit of the Bank's stockholdings 118 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 119 BOARD OF DIRECTORS' PROFILE

ELFREN ANTONIO S. SARTE President and CEO/Director, 60 years old.

No. of years served as director: 6 FREDERICK D. GO He is the President and Chief Executive Officer of the Vice-Chairman, 50 years old. Bank and is a member of its Executive Committee, Risk No. of years served as director: 10 Management Committee and IT Steering Committee. He is He is the Vice Chairman of the Board and also serves as also the Vice-Chairman of the Board of Directors of Legazpi Savings Bank and the Chairman of its Executive Committee. LANCE Y. GOKONGWEI the Vice Chairman of the Executive Committee of the Bank. He is a director of Bankers Association of the Philippines and Chairman of the Board, 53 years old. Presently he is the President and Chief Executive Officer of RLC. He has been a director of the Company since May 6, the Chairman of its Operations Committee. He is also the No. of years served as director: 10 1999 and was elected President effective August 28, 2006. Chairman of the Board of Directors of Philippine Clearing He is also the President and Chief Executive Officer of JG Summit Holdings Inc. He is also the President and Chief Operating Officer of House Corporation. Prior to joining the Bank in November (JGSHI). He likewise sits as the Chairman of Robinsons Retail Holdings, Inc., Universal Robinsons Recreation Corporation. He is the Group General 2014, he was the President, Director and CEO of Allied Robina Corporation, Robinsons Land Corporation, JG Summit Petrochemical Manager of Shanghai Ding Feng Real Estate Development Savings Bank (2013 to 2014); Consumer Finance Group Corporation, and JG Summit Olefins Corporation. He is the President and Chief Company Limited, Xiamen Pacific Estate Investment Head (2013) and Head of Consumer Credit and Collection Executive Officer of Cebu Air, Inc. He is a director and Vice Chairman of Manila Electric Company Limited, Chengdu Ding Feng Real Estate Division (2010 to 2013) of Philippine National Bank; and Company and is a Director of Oriental Petroleum and Minerals Corporation and Development Company Limited and Taicang Ding Feng Head of Consumer Credit Risk Management Division (2006 United Industrial Corporation Limited. He is a trustee and secretary of the Gokongwei Real Estate Development Company Limited. He also serves to 2010), Credit Services Division (1996 to 2006) and Credit Brothers Foundation, Inc. He received a Bachelor of Science degree in Finance and a as a director of Cebu Air, Inc., JG Summit Petrochemical Investigation and Appraisal Division (1995 to 1996) of Union Bachelor of Science degree in Applied Science from the University of Pennsylvania. Corporation, and Cebu Light Industrial Park. He is also the Bank of the Philippines. He was also a Manager at the Credit Vice Chairman of the Philippine Retailers Association. He Information Bureau (1983 to 1985). He has a Bachelor of received a Bachelor of Science degree in Management Science degree in Industrial Management Engineering minor Engineering from the Ateneo de Manila University. in Mechanical Engineering from the De La Salle University.

120 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 121 BOARD OF DIRECTORS' PROFILE

ROBINA Y. GOKONGWEI-PE Director, 58 years old.

No. of years served as director: 10 She is the Chairman of the Bank’s Trust Committee. She is presently the President and CEO of Robinsons Retail Holdings, Inc. (RRHI) which operates six business segments; namely supermarkets, department stores, do-it-yourself stores, convenience stores, drugstores, and specialty stores. RRHI also has 40% minority stake in Robinsons Bank. Ms. Pe is also a Director of JG Summit Holdings, Inc., Robinsons Land Corporation, and Cebu Air, Inc. She is a Trustee of the Gokongwei Brothers Foundation Inc. and Immaculate OMAR BYRON T. MIER Conception Academy Scholarship Fund. She is a member of the Board of Trustees of Xavier School. She attended the Director, 73 years old. University of the Philippines-Diliman from 1978 to 1981 and No. of years served as director: 5 obtained a Bachelor of Arts degree (Journalism) from New He was appointed as a Director of the Bank in 2015. Apart York University in 1984. from sitting as a Director of the Bank, he also serves as a member of its IT Steering Committee, a member of ROBERTO S. GAERLAN Risk Oversight Committee and an alternate member Independent Director, 67 years old. of its Executive Committee. Mr. Mier likewise sits as the No. of years served as director: 7 Chairman of Legazpi Savings Bank Inc.. He also serves as an independent director of RCBC Leasing and Finance He is the Chairman of the Bank’s Risk Oversight Committee and Vice-Chairman of the Corporate Governance PATRICK HENRY C. GO Corporation (since 2018) and Paymaya Corp. where he also Committee. His career in banking spans over three Director, 50 years old sits as the chairman and member of its Audit Committee and of its Risk and Compliance Committee, respectively, decades, working with First United Bank (1973 to 1979) and No. of years served as director: 10 since 2016. Before joining the Bank, he holds around four with United Coconut Planters Bank (1979 to 2003) where he He is the Vice Chairman of the Bank’s Trust Committee and decades of experience in the banking industry, including was the Vice President for Branch Banking (2001 to 2003). a member of its Corporate Governance Committee. He is Citibank N.A., where he served as Country Risk Manager in He graduated with a Bachelor of Arts degree in Economics also the President and Chief Executive Officer of JG Summit Manila (1983 to 1985), Public Sector Group Head (1985 to from the University of Santo Tomas and Advanced Bank Petrochemical Corp., JG Summit Olefins Corp. and the 1987), Country Risk Officer in Malaysia (1992 to 1995), Head Management from the Asian Institute of Management. Vice President and Managing the URC Packaging Division of Risk Management Group and World Corporate Group and URC Flexible Packaging Division. He is a Director of JG Head (1992 to 1995); Deutsche Bank, as Deputy General Summit Holdings Inc., Robinsons Land Corp and Universal Manager and Corporate Banking Head (1995 to 2002); and Robina Corp. He has a Bachelor of Science degree in Philippine National Bank (2005-2014), where he held various Management from the Ateneo de Manila University and senior positions the last of which as President and CEO. He took The General Manager Program from the Harvard has a Bachelor of Science degree in Business Administration Business School. Major in Accounting, Bachelor of Arts degree in Economics, and Master of Arts in Economics from the University of the Philippines. He is also a Certified Public Accountant.

122 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 123 BOARD OF DIRECTORS' PROFILE

HERMOGENES S. ROXAS Independent Director, 68 years old.

No. of years served as director: 7 He is the Chairman of the Bank’s IT Steering Committee and a Vice-Chairman of its RPT Committee. Mr. Roxas is also a Director of LSB where he chairs its Audit Committee, sat as the vice-chair of its Corporate Governance Committee, and a member of its Risk Oversight Committee. He has more than three decades of experience in banking and has held various senior positions at Commercial Banking & Trust Company and United Coconut Planters Bank and its subsidiaries. He was also the President of UCPB Savings Bank; a Director at UCPB Leasing & Finance Corp., UCPB Foreign Exchange Corp., UCPB Capital Corp., UCPB Rural Bank, and UCPB Securities Inc. He has a Bachelor of Science degree in Business Administration from the University of the Philippines.

DAVID C. MERCADO Independent Director, 69 years old.

No. of years served as director: 6 ESPERANZA S. OSMEÑA He is the Chairman of the Bank’s Audit Committee Independent Director, 69 years old. and member of the Risk Oversight Committee and ANGELES Z. LORAYES No. of years served as director: 10 RPT Committee. He has more than three decades of Independent Director, 70 years old. She is the Chairman of the Bank’s RPT Committee, Vice- experience in banking and has held various senior No. of years served as director: 8 Chairman of Risk Oversight Committee and a member positions in Allied Banking Corporation and United She is the Chairman of the Bank’s Corporate Governance of the Corporate Governance Committee and Trust Coconut Planters Bank. At UPCB, he became their Committee, Vice Chairman of the Audit, and a member Committee. She has held various senior positions at Asian Assistant Vice President- Account Management Division of the RPT Committee. She honed her skills in banking by Savings Bank (1984-1987) and Equitable PCI bank and (1986 to 1987), Assistant Vice President - Deposit Services spending her career in Citibank as Head of its Financial its subsidiaries (1988-2000). She was an Executive Vice Department (1987 to 1993), Vice President and Regional Analysis and Engineering Department (1971 to 1978). She President at Equitable PCI Bank (1998-2000), and was Branch Head (1993 to 2004), Vice President and Head of also headed the Credit Policy and Supervision of Equitable Director at PCI Capital Inc., PCI Leasing Inc., PCI Insurance Branch Banking Group (2004 to 2006) and lastly, as First PCI Bank (1978 to 2000) and Philippine National Bank (2005 Brokers Inc., and Bankard Inc (1988-1999). She graduated Vice President of Consumer Banking Group (2006 to 2011). to 2010). She has a degree in Business Administration from with a Bachelor of Arts degree in Commerce from the He earned his Business Administration degree from the the University of the Philippines and earned MBA units at Colegio de Santa Anna in Zaragoza, Spain. Philippine School of Business Administration. He is also a the Ateneo Graduate School of Business. Certified Public Accountant.

124 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 125 SENIOR BOARD ADVISERS JAMES L. GO, MEMBER, and as Vice President of Robinsons of JG Summit Holdings in Corporate FILIPINO, 80 YEARS OLD. Daiso Diversified Corp. (2010). He Planning, and eventually becoming He is the Chairman of JGSHI and Cebu is also a trustee of the Gokongwei Managing Director of the datacom Air, Inc. He is also the Chairman and Brothers Foundation, Inc.. His banking business. He moved to China in 2003, Chief Executive Officer of Oriental experience spans around 17 years, initially serving as Finance Director fo Petroleum and Minerals Corporation. when he was elected as a Director the food and real estate operations He is the Chairman Emeritus of of the Bank. He has Bachelor of Arts of the family business in China. In Universal Robina Corporation, degree in Interdisciplinary Studies from late 2007, he assumed the General Robinsons Land Corporation, JG the Ateneo de Manila University. Manager Role for the food business Summit Petrochemical Corporation (URC China), while concurrently taking and JG Summit Olefins Corporation. BRIAN M. GO, MEMBER, on the CFO role for the real estate He is the Vice Chairman of Robinsons FILIPINO, 46 YEARS OLD. business (Ding Feng Real Estate). Retail Holdings, Inc. and a director He is currently the Vice President After relocating to Singapore, he of Marina Center Holdings Private & General Manager of URC Global took on the role of General Manager Limited, United Industrial Corporation Exports and Managing Director for the URC Malaysia and Singapore Limited and Hotel Marina City Private of JG Digital Capital Pte Ltd of JG subsidiaries of URC from 2015-2018. Limited. He is also the President and Digital Equity Ventures. He joined He is also a director for JG Summit Trustee of the Gokongwei Brothers URC in January of 2003, and again Petrochemical Corporation, and a Foundation, Inc. He has been a in February of 2015. He started with member of the Senior Advisory Board director of the PLDT Inc. (PLDT) since JGDEV in early 2019. Universal Robina of Robinsons Bank. Brian Graduated November 3, 2011. He is a member Corporation is a major branded from Harvard College in 1996. He of the Technology Strategy and Risk consumer foods company in South completed the Executive MBA Committees and Advisor of the Audit East Asia, and Oceania, and one program at Kellogg-HKUST in Hong Committee of the Board of Directors of the leading companies listed Kong in 2007 and passed te CFA Level of PLDT. He was elected a director of on the Philippine Stock Exchange. III Exam in 2013. Manila Electric Company on December Brian has led the creation of global 16, 2013. Mr. James L. Go received export organization for URC kicking LISA Y. GOKONGWEI-CHENG, his Bachelor of Science Degree and off in February 2019. JGDEV is the MEMBER, FILIPINO, Master of Science Degree in Chemical corporate Venture Capital entity of JG 51 YEARS OLD. Engineering from Massachusetts Summit Holdings and its subsidiaries She is the President and Director Institute of Technology, USA. and affiliates. Brian was part of the of Summit Media (2011 to present). establishment of this team in early General Manager of Gokongwei JOHNSON ROBERT G. GO, JR., 20149, including the setup of the Brothers Foundation Inc. (2011) and MEMBER, FILIPINO, Singapore arm, known as JG Digital President of i-Tech Global Business 55 YEARS OLD. Capital, as well as being a member Solutions, Inc. She is also the head of He presently serves as Director of of the Investment Committee. Brian the Digital Transformation Office for JG Summit Holdings, Inc., Universal Started his carreer in New York City JG Summit Holdings, Inc. She has a Robina Corporation and Robinsons with Booz Allen Hamilton in 1996. Bachelor of Arts degree from Ateneo Land Corporation, among others. He He returned to Manila in 1998, de Manila University, and obtained has served as President of Robinsons starting at Digitel/Sun Cellular, a her Master’s degree in Journalism at Convenience Stores, Inc. (2002) telecom company, and subsidiary Columbia University in 1993.

(From left to right) JOHNSON ROBERT G. GO, JR. - Member, LISA Y. GOKONGWEI-CHENG - Member, JAMES L. GO - Member, and BRIAN M. GO - Member.

126 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 127 KEY OFFICERS

(From left to right) (From left to right) ANDRO M. YEE - Executive Vice President and Chief Financial Officer; MYKEL ABAD - Eexecutive Vice President MA. ELLEN A. VICTOR – Senior Vice President and Corporate Banking Segment Head, ERIC B. SANTOS – Executive Legazpi Savings Bank President; ELFREN ANTONIO S. SARTE – President and CEO; Vice President and Consumer and Regional Banking Segment Head, MA. REGINA N. LUMAIN – Executive Vice and SALVADOR D. PAPS – Senior Vice President and Retail Banking Segment Head. President and Treasurer, and EXEQUIEL T. TUA – Senior Vice President and Chief Operating Officer.

128 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 129 ROBINSONS BANK CONSUMER AND REGIONAL BANKING SEGMENT ERIC B. SANTOS ORGANIZATION STRUCTURE Consumer Finance Group Cards Business Group Regional Lending Group Motorcycle Finance Group ERIC B. SANTOS MARIE KARABEL D. VIOLA REY NOEL V. ALMARIO JANETTE C. GONZALVO RELATED PARTY TRANSACTION COMMITTEE CORPORATE BANKING SEGMENT MA. ELLEN A. VICTOR ESPERANZA S. OSMEÑA

Account Mgmt. Group 1 Account Mgmt. Group 4 Compliance Group Account Mgmt. Group 2 Account Mgmt. Group 3 Transaction Banking Group CORPORATE JUANITO ANDRES A. MARIA ENCARNACION T. DIVINE GRACE ROSARIO C. MARCELO ROSARIO C. MARCELO REYNALDO S. CRUZ, JR. GOVERNANCE HENSON GABRIEL F. DAGOY ANGELES Z. LORAYES

TREASURY SEGMENT MA. REGINA N. LUMAIN RISK OVERSIGHT Enterprise Risk COMMITTEE Management Group Various Management TRISHA MARIE GERETTE B. Committees* ROBERTO S. GAERLAN GUTIERREZ Domestic Trading Group FX Trading Group MARIA TERESA P. SANCHEZ ALEJANDRO B. GAERLAN *MANCOM, ALCO, CRECOM, AML, PERCOM, CEC, CCC, Bid Committee, Acquired Assets IT STEERING Disposal, ICAAP Committee, COMMITTEE Operations Committee HERMOGENES S. ROXAS RETAIL BANKING SEGMENT SALVADOR D. PAPS

Region Sales Group Retail Banking Operations Group Alternative Delivery Channel Department EDWARD ELI B. TAN ROBERT B. IMAM MARJORIE L.A. E. ESTOR JANE K. GOCUAN BOARD OF CHAIRMAN PRESIDENT /CEO DIRECTORS LANCE Y. GOKONGWEI ELFREN ANTONIO S. SARTE

FINANCIAL MANAGEMENT SEGMENT ANDRO M. YEE

EXECUTIVE Legazpi Savings Bank** Controllership Group Loans and Discounts Group Corporate Planning Department Trade Services Department COMMITTEE IRMA D. VELASCO DOMINIC R. MILAN RHORY F. GO MARITES P. ONG LANCE Y. GOKONGWEI **-Chief Compliance Officer and Chief IT Officer have oversight functions in Legazpi Savings Bank -Human Resource CORPORATE Management Group Head, Chief OPERATIONS AND CONTROL SEGMENT EXEQUIEL T. TUA SECRETARY Auditor, Legal Services Head, Chief Security Officer, and Chief ATTY. ROEL S. COSTUNA Risk Officer are functioning Business Process Management in concurrent capacity in the Information Technology Credit Management Administration and and Operations Group Security Department subsidiary Group Group Purchasing Department PAUL DONATO V. RODOLFO T. QUINTO ERIC C. MACALINTAL GLENN H. FRANCISCO MELANIE E. DAWE VILLANUEVA TRUST COMMITTEE Trust and ROBINA Y. GOKONGWEI Investments Group LALAINE C. STA ANA ENTERPRISE SERVICES SEGMENT ELFREN ANTONIO S. SARTE (as of March 2020)

Product Management Channel and Merchant Human Resources Marketing Group Digital Banking Group AUDIT COMMITTEE Legal Services Group Group Acquiring Group Management Group JANETTE Y. RAMON EDUARDO E. DAVID C. MERCADO Internal Audit Group ROEL S. COSTUNA AGNES THERESA A. ALBERT RAYMUND EVIE B. ABRAHAM ABAD SANTOS ABASALO CYNTHIA C. BAUTISTA SALVADOR O. TINIO (as of July 1, 2020)

130 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 131 LIST OF OFFICERS

CHAIRMAN GOKONGWEI, LANCE Y. FIRST VICE PRESIDENTS AQUINO, MA. ELIZABETH P. OROZCO, EDUARDO E. BARREDO, MANUEL JOSEPH B. SANTOS, PIA MARIE M. BAUTISTA, CYNTHIA C. SY, LYNN L. PRESIDENT AND FRANCISCO, GLENN H. TAN, EDWARD ELI B. CHIEF EXECUTIVE SARTE, ELFREN ANTONIO S. IMAM, ROBERT B. VELASCO, IRMA D. OFFICER MENIADO, ROMEL D. VIOLA, MAIRE KARABEL D. ONA, LAARNI V.

EXECUTIVE ABAD, MYKEL D. VICE PRESIDENTS LUMAIN, MA. REGINA N. VICE PRESIDENTS SANTOS, ERIC B. ABAD SANTOS, JANETTE Y. GUTIERREZ, TRISHA MARIE GERETTE B. ACEBUCHE, RENE B. INFANTE, REYNANTE R. YEE, ANDRO M. ALMARIO, REY NOEL V. LIM, JEREMY JAY V.

CASAUL, ALLAN H. MILAN, DOMINIC R.

CHING, ENGELBERT C. MIRANDA, BESSIE D. SENIOR VICE CRUZ, DONNA JANE O. MONJE, MARTHA MELODY D. PRESIDENTS CRUZ, REYNALDO JR. S. QUINTO, RODOLFO T. DAGOY, DIVINE GRACE F. SANTOS, EDWARD B. ABASOLO, RAMON EDUARDO E. MACALINTAL, ERIC C. DELA CRUZ, VICTOR JR C. TENGCO, SAREENA R. ABRAHAM, EVIE B. MARCELO, ROSARIO C. DURANO, NERISSA S. VERGARA, JOHN ROGER NINO S. (as of June, 2020) COSTUNA, ROEL S. PAPS, SALVADOR DE H. ESTRELLADO, CHERRE SAH. VILLAREAL, KAREEN R. GAERLAN, ALEJANDRO B. SALVADOR, AGNES THERESA A. FERNANDO, EUGENIO JR. G. YABUT, GALO P. GOCUAN, JANE K. SANCHEZ, MARIA TERESA P. GONZALVO, JANETTE C. TUA, EXEQUIEL T. GARCIA, MANUEL ANTONIO S. YAP, JEAN J. HENSON, JUANITO ANDRES A. VICTOR, MA. ELLEN A. GO, RHORY F. YU, TOMMY Y.

132 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 133 PRODUCTS AND SERVICES

DEPOSIT PRODUCTS COMMERCIAL LOANS TRUST PRODUCTS TRANSACTION BANKING SAVINGS ACCOUNT • REVOLVING PROMISSORY NOTE • UNIT INVESTMENT TRUST PRODUCTS PAYABLES • PASSBOOK SAVINGS ACCOUNT LINE FUND PAYABLES • ATM SAVINGS ACCOUNT • TRADE CHECK DISCOUNTING LINE • PERSONAL INVESTMENT • PAYROLL PAYOUT SERVICES • TYKECOON SAVINGS ACCOUNT • SHORT AND LONG TERM LOANS MANAGEMENT • ELECTRONIC CREDITING (PHP/USD) • US DOLLAR SAVINGS ACCOUNT • SYNDICATED LOANS • CORPORATE INVESTMENT • eGOV • THIRD CURRENCY ACCOUNT • LETTERS OF CREDIT/OPEN MANAGEMENT • OUTSOURCED MANAGER’S CHECK (EUR, JPY) ACCOUNT LINES • ESCROWS PRINTING • SPECIAL SAVINGS ACCOUNT • EXPORT ADVANCE/TRUST • RETIREMENT FUND • OUTSOURCED CORPORATE CHECK • SIMPLE SAVINGS ACCOUNT RECEIPT LINES MANAGEMENT PRINTING • IPONSURANCE • STANDBY LETTERS OF CREDIT • SAFEKEEPING TRADE SERVICES • SME BUILDER CHECK PRO • DOMESTIC BILLS PURCHASE LINE • IMPORT/ EXPORT LINES • SME BUILDER HRIS CHECKING ACCOUNT • FOREIGN CURRENCY LINES • BANK GUARANTEE • MERALCO ADA • REGULAR CHECKING ACCOUNT • EXPORT ADVANCES FACILITY • CORPORATE CHECKING TREASURY PRODUCTS COLLECTIONS ACCOUNT • PESO SOVEREIGN BONDS ATM SERVICES • BILLS PAYMENT (TBills, FXTNs, RTBs) • CASH WITHDRAWAL • POST DATED CHECK WAREHOUSING TIME DEPOSIT • PESO CORPORATE BONDS • BILLS PAYMENT • REFERENCE ACCOUNT • PESO TIME DEPOSIT • US$ SOVEREIGN BONDS (ROPs • FUND TRANSFER • STORE CODES • US DOLLAR TIME DEPOSIT AND OTHER SOVEREIGN BONDS) • ATM GUARD • THIRD CURRENCY TIME DEPOSIT • US$ CORPORATE BONDS • CASH DEPOSIT PAYMENTS • PESO AND US$ TIME DEPOSIT • DIRECT2BANK PESONET CONSUMER LOANS BANCASSURANCE • DIRECT2BANK INSTAPAY • GO!HOUSING LOAN FOREIGN CURRENCIES PERSONAL ONLINE BANKING • REAL- TIME GROSS SETTLEMENT • GO!AUTO LOAN • US DOLLAR (USD) • MOBILE BANKING • PHILIPPINE DOMESTIC DOLLAR • GO!PERSONAL LOAN • ENGLISH POUND (GBP) • INTERNET BANKING TRANSFER SYSTEM (PDDTS) • GO!MOTORSIKLO LOAN • AUSTRALIAN DOLLAR (AUD) • E2BANKING SWIFT • GO!mSME LOAN • JAPANESE YEN (JPY) CARD PRODUCTS • GO!SMALL BIZ LOAN • HONG KONG DOLLAR (HKD) • UNO® MASTERCARD REMITTANCE • GO!SALARY LOAN • SINGAPORE DOLLAR (SGD) • UNO® PLATINUM MASTERCARD • WESTERN UNION REMITTANCE • CANADIAN DOLLAR (CAD) • DOS® MASTERCARD FACILITY • NEW ZEALAND DOLLAR (NZD) • DOS® PLATINUM MASTERCARD • ARAB EMIRATES DIRHAM (AED) • VISA DEBIT CARD OTHER SERVICES • EURO (EUR) • ROBINSONS CASHBACK CARD • MANAGER’S CHECK/ DEMAND • SWISS FRANC (CHF) DRAFT • THAI BAHT (THB) • TELEGRAPHIC TRANSFER • CHINESE YUAN (CNY) • KOREAN WON (KRW) • BRUNEI DOLLAR (BND) • BAHRAIN DINAR (BHD) • SAUDI RIYAL (SAR)

134 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 135 BRANCH DIRECTORY

CALOOCAN FILINVEST-ALABANG MAGNOLIA TOWN CENTER G/F Dona Lolita Bldg., 363 Rizal Avenue Unit 104, Civic Place Condominium, LGF - LG026 Robinsons Magnolia Town HYBRID BRANCHES Extension, Caloocan City 2301 Civic Drive, Filinvest Corporate City, Center, Aurora Blvd. cor Dona Hemady and Tel. No.: 02 8363-4654 / 02 8363-3758 Alabang, Muntinlupa City N. Domingo Streets, New Manila, Quezon City 24R HUB 02 8363-3449 Tel. No.: 02 8659-0492 / 02 8659-0494 Tel. No.: 02 8961-6040 / 02 8961-6042 Withdraw and deposit cash through RBank's anytime banking facility. 02 8659-5014 02 8961-6041 CHINO ROCES AVENUE EXTENSION GAMMA MAIN OFFICE BRANCH DIGITAL SELF-SERVICE HUB G/F 2308 Natividad Building, G/F Cyberscape Gamma, Ruby Street, G/F Galleria Corporate Center, EDSA corner Apply for Simple Savings and credit card products, and access your Personal Chino Roces Avenue Extension, Makati City Ortigas Center, Brgy. San Antonio, Pasig City Ortigas Avenue, Quezon City Online Banking account for bills payment, fund transfers, and more. Tel. No.: 02 8403-7057 / 02 8519- 8063 Tel. No.: 02 8362-4854 / 02 8362-4855 Tel. No.: 02 8702-9500 loc. 421-426 02 8519-7809 02 8287-3894 MAKATI - EVANGELISTA COLLABORATIVE HUB CUBAO-P. TUAZON JP RIZAL ST. - MAKATI G/F #1861 Evangelista Street, Meet with bank representatives to discuss future G/F & Mezzanine, Genato Building, G/F Mendoza Building, 834 J. P. Rizal Street Brgy. Pio Del Pilar, Makati City plans, businesses and partnerships. 250 P. Tuazon Cor. 15th Avenue, Cubao, corner E. Zobel Street, Makati City Tel. No.: 02 8815-7433 / 02 8815-1430 Quezon City Tel. No.: 02 8807-1240 / 02 8807-1236 02 8815-7946 ONLINE ASSISTANCE PLATFORM Tel. No.: 02 8912-0053 / 02 8912-0046 02 8815-1279 Know more about what RBank has to offer as you browse 02 8355-3715 MALABON through our wide array of products and services. KATIPUNAN Level 1 – 01127, Robinsons Town Mall Malabon, D. GUEVARA MANDALUYONG G/F Torres Building, 321 Katipunan Avenue, #5 Governor Pascual Avenue corner G/F RL Building, 50 D. Guevara Street, Loyola Heights, Quezon City Crispin Street, Tinajeros, Malabon City Mandaluyong City Tel. No.: 02 8920-4018 / 02 8426-5604 Tel. No.: 02 8287-3635 / 02 8287-7758 Tel. No.: 02 8531-1478 / 02 8531-0855 02 8426-2594 02 8287-7997 METRO MANILA AYALA BGC - BURGOS CIRCLE 02 8531-1604 BRANCHES 6780 G/F JAKA 1 Building, G/F Unit B, The Cresent Park Residences, LAS PIÑAS MARIKINA Ayala Avenue, Makati City 30th Street corner 2nd Avenue, DEL MONTE G86-G87 Robinsons Place Las Piñas, VC Chan Bldg. No. 8 Bayan-Bayanan Avenue, G/F EWELL Square Bldg., Del Monte Ave 345 Alabang-Zapote Road, Barangay Talon, Concepcion Uno, Marikina City A. ARNAIZ AVENUE Tel. No.: 02 8822-7980 / 02 8822-7964 Bonifacio Global City, Taguig City 02 8822-7965 Tel. No.: 02 8553-7205 / 02 8553-7204 corner Biak-na-Bato, Quezon City Las Piñas City Tel. No.: 02 8997-3004 / 02 8948-6890 Unit 7A Commercial Space, 02 8553-7206 Tel. No.: 02 8354-8583 / 02 8354-8582 Tel. No.: 02 8875-6872 / 02 8875-6875 02 8948-7121 / 02 8721-9080 The Beacon Makati, A. Arnaiz Avenue corner 02 8354-8584 02 8872-0936 Chino Roces Ave, Makati City BANAWE Store No. 2, Ll Commercial Building, Lot 5 MCKINLEY WEST Tel. No.: 02 8894-1667 / 02 8894-1758 BGC - RIZAL DRIVE Block 240, Banawe Street, Brgy. Tatalon, G/F UDENNA tower, Rizal Drive corner DOMESTIC ROAD LAS PIÑAS - DAANG HARI Lower G/F Cyber Sigma, Lawton Avenue, 02 8894-1671 Quezon City 4th Avenue, Bonifacio South District, G/F Cebu Pacific Airline Operations Center Southbend Building, Versailles Subdivision, Bonifacio South, Taguig City Building, Domestic Road, Pasay City Daang Hari, Brgy. Almanza Dos, Las Piñas City Tel. No.: 02 8845-2286 / 02 8845-2287 ACACIA LANE - SHAW BOULEVARD Tel. No.: 02 8516-8644 / 02 8516-8674 Bonifacio Global City, Taguig City 02 3411-1834 Tel. No.: 02 8352-4710 / 02 8352-4708 / Tel. No.: 02 8893-5968 / 02 8893-5971 Tel. No.: 02 5310-2072 / 02 5310-2073 02 8845-2294 G/F Padilla Bldg. 333 Shaw Boulevard, 02 8332-34-66 02 8893-5972 02 5310 2074 Brgy. Bagong Silang, Mandaluyong City MERALCO AVENUE Tel. No.: 02 8668-2510 / 02 8668-2534 BETTER LIVING G/F Triple M Commercial Building, E. RODRIGUEZ SR. AVE LAS PIÑAS - PAMPLONA G01 & G02, Robins Design Center, 02 8997-2757 BINONDO Doña Soledad Avenue corner Australia Street, GF01 MZ01 Pacific Centre Building, G/F JCA Building, No. 1166 E. Rodriguez Sr. G/F South Park Highs, 262 Alabang-Zapote 31 Meralco Avenue, Ortigas, Pasig City Avenue, New Manila, Quezon City Road, Pamplona, Las Piñas City Tel. No.: 02 8706-0454 / 02 8942-1853 ADRIATICO Better Living Subd, Parañaque City 460 Quintin Paredes corner Tel. No.: 02 8823-2503 / 02 8823-2572 Sabino Padilla Street, Binondo, Manila Tel. No.: 02 8571-5745 / 02 8571-6754 Tel. No.: 02 8872-3016 / 02 8872-6944 02 8663-0788 G/F Robinsons Place Manila, Adriatico Street, 02 8823-2510 Tel. No.: 02 8242-4445 / 02 8242-4430 02 8478-2031 Ermita, Manila City 02 8242-4443 / 02 8242-4413 EASTWOOD CITY MOA COMPLEX Tel. No.: 02 8243-8971 / 02 8243-8969 02 8524-9924 / 02 8251-3635 G/F IBM Plaza Building, Eastwood City, LEGAZPI STREET, MAKATI Unit 101, Tower 1 Oceanaire Residences, 02 5310-2210 / 46135 BGC 7TH AVENUE Unit GF 7, Trade and Financial Tower Building, E. Rodriguez Jr. Avenue, Bagumbayan, G/F, Office 1, Man Tower Legazpi Building, Sunshine Drive corner Road 23, Coral Way, Quezon City 153 Legazpi Street, Legazpi Village, Makati City MOA Complex, Pasay City ALABANG 7th Avenue corner Lane Q Road, Bonifacio BONIFACIO GLOBAL CITY Global City, Taguig City Ground Level, Market Market Mall, Tel. No.: 02 8395-1336 / 02 8395-1337 Tel. No.: 02 8893-9395 / 02 8818-4263 Tel. No.: 02 8801-0243 / 02 8801-0245 G/F Unit 4, El Molito Commercial Complex, Tel. No.: 02 8887-5648 / 02 8887-5649 Bonifacio Global City, Taguig City 02 8913-1517 02 8892-6801 / 02 8812-7043 02 8815-1456 Madrigal Avenue cor Alabang-Zapote Road, 02 8887-5654 Tel. No.: 02 8856-0693 / 02 8856-0694 02 8822-6556 Alabang, Muntinlupa City 02 8856-0695 EDSA CALOOCAN MUNTINLUPA BAYAN Tel. No.: 02 8850-9529 / 02 8807-2508 G/F Insular Life Building, 462 EDSA near MAGINHAWA ST. G/F Joval 1 Bldg. #52 National Highway 02 8850-7665 / 02 8822-0940 BGC 34TH STREET Shop 1 Panorama Tower, 34th Street corner corner Boni Serrano Street, Caloocan City Stalls A & B #143 Maginhawa Street, Putatan, Muntinlupa City 02 8772-1565 BRIDGETOWNE - C5 Lane A, Bonifacio Global City, Taguig City G/F Tera Tower, Ortigas Avenue Extension Tel. No.: 02 8931-9430 / 02 8990-1799 Barangay Teachers Village, Quezon City Tel. No.: 02 5310-0826 / 02 5310-0827 02 8932-0959 Tel. No.: 02 8283-7276 / 02 8285-5420 02 5310-0830 ASUNCION - BINONDO Tel. No.: 02 8869-6407 / 02 8869-6406 corner C5, Quezon City 02 5310-1339 Tel. No.: 02 8650-4440 / 02 8650-4386 02 8285-5419 G/F Don Norberto & Doña Salustiana Ty 02 8281-3564 ERMITA Building, #403 Asuncion Street corner San Level 1 Padre Faura Wing, Robinsons Place Nicolas Street, Binondo, Manila Ermita, Ermita, Manila Tel. No.: 02 8241-3044 / 02 8241-2061 Tel. No.: 02 8397-7027 / 02 8397-7028 02 8241-2610 02 8536-1138

136 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 137 BRANCH DIRECTORY

N.S. AMORANTO SR. AVENUE PIONEER CYBERGATE SHAW BOULEVARD PROVINCIAL BRANCHES BALAGTAS CALAMBA G/F Unit 102 “R” Place Building, Upper G/F, Robinsons Pioneer Cybergate G/F Pelbel Building I, G/F 103-1 Balagtas Town Center, G/F FP Perez Building, National Highway, #255 N.S. Amoranto Sr. Avenue, Quezon City Center 1, Pioneer Street, Mandaluyong City #2019 Shaw Boulevard, Pasig City ANGELES McArthur Highway, Borol 1st, Balagtas, Bulacan Parian, Calamba City, Laguna Tel. No.: 02 8521-0997 / 02 8521-0936 Tel. No.: 02 8395-2756 / 02 8395-2749 Tel. No.: 02 8631-2210 / 02 8570-1920 Level 1 Robinsons Place Angeles, McArthur Tel. No.: 044 693-2079 / 044 693-3741 Tel. No.: 049 536-0398 / 049 536-0390 02 8522-5182 02 8395-2732 02 8570-2391 Highway, Balibago, Angeles City, Pampanga 044 769-0251 049 536-0365 Tel. No.: 045 892-8052 / 045 892-8053 NINOY AQUINO AVENUE QUEZON AVENUE SOLER BALANGA CALAPAN G/F, Rooms 2 & 3, Sky Freight Building, G/F Q.C Avenue Mall, Quezon Avenue cor. G/F Filamco Building, #1220-1222, Soler ANTIPOLO G/F, R & R Building, Don Manuel Banzon G/F Neo Calapan Mall, LS 008, Roxas Drive, Sky Freight Center, Ninoy Aquino Avenue, Scout Borromeo St., South Triangle, corner Masangkay Streets, Binondo, Manila Unit 169-A, Robinsons Place Antipolo, Avenue, Doña Francisca, Balanga City, Bataan Barangay Sto. Niño, Calapan, Oriental Mindoro Parañaque City Quezon City Tel. No.: 02 8243-2099 / 02 8243-0972 Sumulong Highway/Circumference Avenue, Tel. No.: 047 237-1097 / 047 237-1099 Tel. No.: 043 441-0027 / 043 441-0028 Tel. No.: 02 8851-1066 / 02 8851-1025 Tel. No.: 02 5310-1056 / 02 5310-1057 02 8243-2086 Dela Paz, Antipolo City 047 237-1100 043 441-0030 02 8851-0981 02 5310-1058 Tel. No.: 02 8630-4241 / 02 8630-4249 SUCAT 02 8630-4246 BALAYAN CALASIAO NOVALICHES REGALADO Units B13 & B17, JAKA Plaza Mall, G/F Stalls Numbers 2, 3 & 4 Balayan Public Level 1 - 01134, Robinsons Place Pangasinan, Level 1 - ERS1-016, Robinsons Novaliches, RS137-05 Robinsons Townville Dr. A. Santos Avenue, Parañaque City ANTIQUE Market, Plaza Mabini Street, Balayan Batangas Mac Arthur Highway, Brgy. San Miguel, Barangay Pasong Putik, Quirino Highway, Regalado Fairview, Quezon City Tel. No.: 02 8478-7170 / 02 8808-3279 Level 1-116, 117 & 118 Robinsons Place Antique, Tel. No.: 043 774-7660 / 043 744-7662 Calasiao, Pangasinan Novaliches, Quezon City Tel. No.: 02 8376-6359 / 02 8376-6091 02 8808-2966 Brgy. Maybato, San Jose de Buenavista, Antique 043 774-7664 Tel. No.: 075 632-0578 / 075 517-3202 Tel. No.: 02 8935-3414 / 02 8935-3409 02 8376-6063 Tel. No.: 036 641-0021 / 036 641-0022 02 8935-3412 / 02 8372-6919 TOMAS MORATO 036 641-0023 BATANGAS CITY CDO-DIVISORIA ROOSEVELT AVENUE JSB Building, Tomas Morato Avenue corner G/F Odeste Building, P. Burgos St., Brgy. 15, G/F Pelaez Commercial Arcade 1 corner ORTIGAS GREENHILLS G/F MCCM Bldg. 311 Roosevelt Avenue, Scout Delgado Street, Quezon City BACOLOD Batangas City Tiano Bros. and Cruz Taal Streets, Divisoria, G/F Limketkai Building, Ortigas Avenue corner Quezon City Tel. No.: 02 8374-8422 / 02 8376-4510 Level 1 C2002, The Central Citywalk, Tel. No.: 043 723-9972 / 043 723-5113 Cagayan De Oro City, Misamis Oriental Roosevelt Street, Brgy. Greenhills, Tel. No.: 02 8709-8213 / 02 8709-8429 02 8376-4511 / 02 3412-7981 Robinsons Place Bacolod, Lacson Street, 043 300-0293 Tel. No.: 088 323-4261 / 088 323-4262 San Juan City 02 8376-5672 02 3412-7980 Mandalagan, Bacolod City, Negros Occidental 088 323-4263 Tel. No.: 02 8726-3360 / 02 8725-6390 Tel. No.: 034 441-2372 / 034 441-2494 BAYAWAN 02 8721-2336 SAMSON ROAD VALENZUELA Shop 3, Bollos Street corner National Highway, CEBU - BANILAD G/F Units 3, 4 & 5 Samson Square Bldg, Unit A South Supermarket, McArthur Highway, BACOLOD - CAPITOL Brgy. Poblacion, Bayawan City, South Arcade 102, Banilad Town Centre, PASAY - LIBERTAD Samson Road corner Dagohoy Street, Karuhatan, Valenzuela City SHOPPING CENTER Negros Oriental Gov. M. Cuenco Avenue, Banilad, Cebu City G/F Cementina Corporation Building, Caloocan City Tel. No.: 02 8294-0562 / 02 8293-9629 R. PERFORMANCE Building A 62-64 Narra Tel. No.: 035 522-8415 / 035 522-8416 Tel. No.: 032 239-1029 / 032 239-1039 160 A. Arnaiz Avenue corner Cuenca Street, Tel. No.: 02 8287-3596 / 02 8287-3597 02 8293-0557 Avenue, Capitol Shopping Center, Bacolod City 035 522-8417 032 239-1037 Pasay City 02 8287-3598 Tel. No.: 034 435-5207 / 034 441-1824 Tel. No.: 02 8833-7718 / 02 8834-7836 VISAYAS AVENUE BUTUAN CEBU MANDAUE 02 8865-6628 SAN MIGUEL G/F M & L Building, BACOOR Level 1 - 01160, Robinsons Place Butuan, G/F Cotiaoking Bldg, North Road, Tabok, G/F Octagon Building, San Miguel Avenue, Visayas Avenue corner Road 1, Quezon City Units 1 & 2, Apollo Mart Building, Km. 3 J.C Aquino Avenue, Brgy Libertad, Mandaue City, Cebu PASEO DE ROXAS Ortigas Center, Pasig City Tel. No.: 02 8374-0113 / 02 8374-0112 #369 Gen. Aguinaldo Highway, Talaba 4, Butuan City, Agusan del Norte Tel. No.: 032 346-6452 / 032 346-6970 G/F 111 Paseo de Roxas Building, Legazpi Street Tel. No.: 02 8637-6165 / 02 8636-3074 Bacoor, Cavite Tel. No.: 085 342-5415 / 085 342-6858 corner Paseo de Roxas, Makati 02 8636-3048 WEST AVENUE Tel. No.: 046 416-1478 / 046 416-6145 085 815-0878 CEBU OSMENA Tel. No.: 02 8804-2621 / 02 8804-2629 G/F Prosperity West Center Building, 046 416-1549 2nd Level Robinsons Place Cebu, 02 8804-2624 / 02 8801-4030 SANTOLAN - PASIG 92 A West Avenue, Quezon City CABANATUAN Fuente Osmeña Avenue, Cebu City G/F AD Center Square, Amang Rodriguez Tel. No.: 02 8332-3998 / 02 8332-7954 BACOOR - MOLINO BLVD. G/F Franklin de Guzman Building, Tel. No.: 032 253-1370 / 032 253-8857 PASIG corner Evangelista Street, Santolan, Pasig City 02 8332-2942 G/F Main Square Bacoor, Molino Boulevard, Km. 114 Maharlika Highway, Barangay Zulueta, L/G Robinsons Metro East, Marcos Highway, Tel. No.: 02 8632-7394 / 02 8632-7396 Bacoor City, Cavite Cabanatuan City, Nueva Ecija CEBU, GARCIA - LLORENTE Barangay De la Paz, Pasig City WHITE PLAINS Tel. No.: 046 416-3047 / 046 461-3054 Tel. No.: 044 464-7628 / 044 464-7877 G/F Robinsons Cybergate, Tel. No.: 02 8532-3353 / 02 8249-1173 SEDEÑO SALCEDO VILLAGE Francisco Santos Building, 138 Katipunan 046 416-3064 044 600-2050 / 044 600-2430 Don Gil Garcia corner J. Llorente Street, 02 8646-8835 G/F, Unit G-104, 88 Corporate Center, Avenue, Barangay Saint Ignatius, Quezon City Capitol Site, Cebu City #141 Sedeño corner Valero Street, Tel. No.: 02 3439-7260 / 02 3439-2497 BAGUIO CAGAYAN DE ORO Tel. No.: 032 236-0271 / 032 238-6304 PASIG - C. RAYMUNDO Salcedo Village, Makati City 02 3439-4633 G/F, ECCO/EDGARDOMCO REALTY Level 1 Robinsons Supercenter, G/F Marius Arcadia Building, C. Raymundo Tel. No.: 02 8551-4194 / 02 8551-3125 CORP. Bldg., #43 Assumption Road, Rosario Street, Lim Ket Kai Drive, Lapasan, CEBU-GALLERIA Avenue corner Pag-Asa Street, Pasig City 02 8550-2262 WILSON ST. - GREENHILLS Baguio City Cagayan De Oro City B101 Robinsons Galleria Cebu, Tel. No.: 02 8477-5947 / 02 8477-5949 G/F, Wilson Corporate Center, Wilson Street, Tel. No.: 074 443-8312 / 074 443-8313 Tel. No.: 088 745-5134 / 088 857-4168 Maxilom-Osmeña Boulevard, 13th Avenue & 02 8477-5948 / 02 8477-5950 SEN. GIL PUYAT AVE. Greenhills, San Juan City 074 443-8314 / 074 443-8315 Benedicto Street, North Reclamation Area, 02 8477-5951 G/F New Solid Realty Inc. Building, Tel. No.: 02 7239-0803 / 02 7358-4843 CAINTA Cebu City 357 Sen. Gil Puyat Avenue, Makati City 02 7358-6202 / 02 7310-0001 BAIS G/F Gusali 888 Building, Tel. No.: 032 231-4942 / 032 231-4944 PASO DE BLAS Tel. No.: 02 8897-1189 / 02 8897-9440 Corner Quezon and Burgos Streets, Bais City, Ortigas Avenue Extension, Cainta, Rizal 032 231-4946 491 ESA Building, Paso De Blas Road, 02 8897-9443 / 02 8897-8963 Negros Oriental Tel. No.: 02 8631-9856 / 02 8655-4727 Brgy. Paso De Blas, Valenzuela City Tel. No.: 035 402-3026 / 035 402-3028 Tel. No.: 02 5310-1159 / 02 5310-1160 035 402 -3029 02 5310-1162

138 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 139 BRANCH DIRECTORY

DAGUPAN GENERAL SANTOS LIPA ORMOC SAN JOSE CITY TAGAYTAY Guanzon Building, Perez Blvd, Robinsons Place General Santos, G/F Robinsons Place Lipa, Expansion Wing, Robinsons Place Ormoc, Palo Carigara, Belena Building, San Jose-Carmen Road Space 2-00210, Robinsons Tagaytay, Dagupan City, Pangasinan cor. J. Catolico Ave. and Bula-Lagao Rd., J.P. Laurel Highway, Mataas na Lupa, Ormoc City Road, Brgy. Cogon, (Romano St. corner Bonifacio St.), National Road, Barrio Maharlika, Tagaytay City Tel. No.: 075 522-7444 / 075 515-2252 General Santos City Lipa City, Batangas Ormoc City, Leyte Brgy. Rafael Rueda, San Jose City, Nueva Ecija Tel. No.: 046 860-2916 / 046 860-2917 Tel. No.: 083 301-3579 / 083 301-8623 Tel. No.: 043 756-2240 / 043 312-2057 Tel. No.: 053 832-3699 / 053 832-3700 Tel. No.: 044 958-7258 / 044 958-7253 DASMARIÑAS 083 553-1494 / 083 553-1487 053 832-3697 044 958-7254 TAGBILARAN Level 1 01302 Robinsons Place Dasmariñas, LIPA - J.P. LAUREL G/F Castelcelo Building 1, C. Gallares Street E. Aguinaldo Hi-way corner Governor’s Drive, GENERAL TRIAS G/F Mhikai Building 1, J.P. Laurel Highway, PALAWAN SAN JOSE DEL MONTE corner J. S. Torralba Street, Poblacion II, Pala-Pala, Dasmariñas, Cavite Level 1 - 155 & 156 Robinsons Place Marawoy, Lipa City Batangas Unit 220-222, 2/F, Quirino Highway, Tungkong Mangga, Tagbilaran City, Bohol Tel. No.: 046 852-2216 / 046 852-2217 General Trias Mall, Antero Soriano, Tel. No.: 043 756-0020 / 043 756-0007 Robinsons Place Palawan Mall, San Jose Del Monte City, Bulacan Tel. No.: 038 411-1267 / 038 411-1268 046 436-3253 EPZA-Bacao Diversion Road, 043 756-0004 Puerto Princesa City, Palawan Tel. No.: 044 764-2598 / 044 816-7314 038 411-1269 Brgy. Tejero, General Trias, Cavite Tel. No.: 048 433-0054 / 048 433-0055 DAVAO Tel. No.: 046 437-2592 / 046 437-2593 LOS BAÑOS SAN PABLO TAGUM Door 1 & 2, Edward V. A. Lim Building, 046 437-2594 G/F LBDHMC Medical Arts III Building, PASSI G/F Estrellado Building, Paulino Street, Level 1 – Unit 167 Robinsons Place Tagum, Sta. Ana Avenue, Davao City Lopez Avenue, Batong Malake, Units G5-G6, Ground Floor, San Pablo City, Laguna National Highway, Brgy. Visayan Village, Tel. No.: 082 227-8054 / 082 226-3565 ILIGAN Los Baños, Laguna Gaisano Capital - Passi, Simeon Aguilar Street, Tel. No.: 049 562-1043 / 049 562-0711 Tagum, Davao del Norte 082 226-3567 Level 1 L1 136 & 137 Robinsons Place Iligan, Tel. No.: 049 557-7624 / 049 557-7626 Passi City, Iloilo Tel. No.: 084 218-8028 / 084 218-8030 Barangay Tubod, Iligan City, Lanao Del Norte 049 557-7629 Tel. No.: 033 536-7041 / 033 536-7042 SAN PEDRO 084 218-8031 DAVAO - BUHANGIN Tel. No.: 063 224-6738, 063 224-6737, 033 311-6339 G/F Space 102, ETG Business Center, G/F Gaisano Grand City Gate Davao, 063 224-6740 LUCENA A. Mabini Street, Barangay Poblacion, TAYTAY Tigatto Road corner Cabantian Road, G/F AZDEMARK Building, PAVIA San Pedro City, Laguna Red Ribbon Uptown Building, Manila East Road, Brgy. Buhangin, Davao City ILOCOS NORTE 11 Quezon Avenue, Lucena City G/F Robinsons Place Pavia, Vice President Tel. No.: 02 8520-1869 / 02 8520-1991 Barangay San Juan, Taytay, Rizal Tel. No.: 082 221-0230 / 082 285-3423 Level 2, Robinsons Place San Nicolas, Tel. No.: 042 322-0082 / 042 322-0083 Fernando Lopez Ave., Pavia, Iloilo City 02 8520-2337 Tel. No.: 02 8661-5673 / 02 8661-5676 082 285-3431 Barangay 1, San Nicolas, Ilocos Norte 042 322-0084 Tel. No.: 033 328-1511/ 033 328-1509 02 8661-5678 Tel. No.: 077 781-2595 / 077 781-2794 033 328-1510 SANTIAGO DAVAO CYBERGATE 077 781-2970 LUISITA TARLAC Level 1-01103, Robinsons Place Santiago, TUGUEGARAO Level 1, Unit 109, Robinsons Cybergate Davao, Unit 102 Robinsons Luisita, McArthur Highway, ROBINSONS NORTH TACLOBAN Barangay Mabini, Santiago City, Isabela G/F, Lui Building, Bonifacio Street, Centro 04, J.P Laurel Ave, Davao City ILOILO San Miguel, Tarlac City G/F Robinsons North Tacloban, Tel. No.: 078 323-0243 / 078 323-0890 Tuguegarao City, Cagayan Valley Tel. No.: 082 305-4990 / 082 305-3875 Unit 189-190, G/F Robinsons Place Iloilo, Tel. No.: 045 985-2001 / 045 985-2003 Brgy. Abucay, Tacloban City Tel. No.: 078 375-0722 / 078 375-0721 082 305-4775 Corner Mabini-Del Leon Streets, Tel. No.: 053 832-3487 / 053 832-3488 STA ROSA 078 396-0896 Iloilo City, Iloilo MALOLOS 053 832-3489 Level 1 Robinsons Sta. Rosa Market, DAVAO-MONTEVERDE Tel. No.: 033 336-9625 / 033 336-9637 Level 1 – 01123 Robinsons Place Malolos, Old National Highway, Bo. Tagapo, URDANETA HAW Building, T. Monteverde Avenue, Mc Arthur Highway, Barangay Mabolo, ROBINSONS PLACE NAGA Sta. Rosa City, Laguna G/F S-Plaza Building, McArthur Highway, Davao City IMUS Malolos, Bulacan Level 1 Unit 101 Robinsons Place Naga, Tel. No.: 049 8837-1693 / 049 8837-1825 Urdaneta, Pangasinan Tel. No.: 082 225-0553 / 082 297-6137 G/F Robinsons Place Imus, Emilio Aguinaldo Tel. No.: 044 796-1635 / 044 796-1636 Roxas Avenue corner Almeda Highway, 02 8520-8527 Tel. No.: 075 568-1290 / 075 568-1292 082 225-0538 Highway, Imus, Cavite City 044 796-1637 Brgy. Triangulo, Naga City, Camarines Sur 075 568-1291 Tel. No.: 046 875-2331 / 046 875-2333 Tel. No.: 054 881-1282 / 054 881-1535 STA. ROSA ESTATES 2 DOLORES - SFDO MEYCAUAYAN 054 881-0040 Sta. Rosa-Tagaytay Road, VALENCIA CITY Franda Building, McArthur Highway, Barrio JARO G/F Sterling Square, Sterling Industrial Park, Sta. Rosa City, Laguna G/F Robinsons Place Valencia, Dolores, City of San Fernando, Pampanga Level 1 – Unit G-17 B, Robinsons Place Jaro, Brgy. Iba, Meycauayan City, Bulacan ROBINSONS PLACE TUGUEGARAO Tel. No.: 049 544-4482 / 049 544-4039 Valencia City, Bukidnon Tel. No.: 045 435-8652 / 045 435-8675 E. Lopez Street, Brgy. San Vicente, Jaro, Iloilo Tel. No.: 044 721-2712 / 044 721-2713 G/F Robinsons Place Tuguegarao, 049 544-6193 Tel. No.: 088 828-2131 045 435-9130 / 045 435-9378 Tel. No.: 033 320-2701 / 033 320-2704 044 762-4045 / 044 721-2714 Brgy. Tanza, Tuguegarao City, Cagayan 320-2705 Tel. No.: 078 377-4964 / 078 377-4965 STO. TOMAS VIGAN DUMAGUETE NAGA 078 377-4966 GF Unit 3, Sierra Makiling LS1-08-2, Xentro Mall Vigan, Quezon Avenue, Stall AF 25-27 Robinsons Dumaguete, KABANKALAN G/F Crown Hotel Building, Peña Francia Commercial Complex, Maharlika Highway, Brgy. III, Vigan City, Ilocos Sur Dumaguete South Road corner Perdices Street, G/F NZ Business Center (NZBC) Building, Avenue, Naga City ROXAS Brgy. San Antonio, Sto. Tomas, Batangas Tel. No.: 077 679-9937 / 077 679-9938 Dumaguete City, Negros Oriental JY Perez Highway, Kabankalan City, Tel. No.: 054 881-0786 / 054 472-4556 Level 1-1133B, Robinsons Place Roxas, Tel. No.: 043 406-4273 / 043 406-4275 077 679-9939 Tel. No.: 035 421-1748 / 035 421-0740 Negros Occidental Pueblo de Panay, Barangay Lawa-an, 035 532-0013 Tel. No.: 034 471-0030 / 034 471-0053 OLONGAPO Roxas City, Capiz TACLOBAN ZAMBOANGA CITY G/F 1370 Rizal Avenue Extension, Tel. No.: 036 651-0023 / 036 651-0144 Robinsons Place Tacloban, Level 1-00103, G/F The Grand Astoria Hotel, GALLERIA SOUTH LEGAZPI CITY East Tapinac, Olongapo City, Zambales 036 651-0188 National Highway, Tabuan, Marasbaras, Mayor Jaldon Street, Zamboanga City L2, Robinsons Galleria South, Manila South G/F, Yuzon Commercial Building, Quezon Tel. No.: 047 222-7521 / 047 222-7522 Tacloban City Tel. No.: 062 993-6684/ 062 993-7539 Road, Nueva, San Pedro, Laguna Avenue, Legazpi City, Albay 047 222-7281 SAN FERNANDO Tel. No.: 053 327-5880 / 053 327-5881 Tel. No.: 02 256-2797 / 02 256-2790 Tel. No.: 052 481-3585 / 052 481-0802 Level I Robinsons Starmills, Candaba Gate, 053 327-5884 02 256-2787 052 481-3235 Olongapo-Gapan Road, San Jose, San Fernando City, Pampanga Tel. No.: 045 636-3660 / 045 636-3587 045 875-2934

140 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 141 LEGAZPI SAVINGS BANK LSB OMAR BYRON T. MIER – CHAIRMAN BOARD OF ELFREN ANTONIO S. SARTE – VICE CHAIRMAN DIRECTORS MYKEL D. ABAD – DIRECTOR ANGELITO V. EVANGELISTA – DIRECTOR

ERIC B. SANTOS – DIRECTOR

ANDRO M. YEE – DIRECTOR

ROBERTO S. GAERLAN – INDEPENDENT DIRECTOR

VICTOR V. LAYNES – INDEPENDENT DIRECTOR

HERMOGENES S. ROXAS – INDEPENDENT DIRECTOR

LSB, a wholly owned subsidiary of the Bank, is a thrift bank primarily engaged in deposit-taking and lending activities. LSB was acquired in 2012 by the LSB KEY OFFICERS Bank under the BSP strengthening program for thrift and rural banks. LSB implemented various key expansion initiatives. In its nearly five decades of MYKEL D. ABAD – PRESIDENT* MA. SOCORRO S. LIGANOR – RETAIL BANKING GROUP HEAD operating in the Bicol region, LSB took the opportunity to span its countryside ROMEL D. MENIADO – CHIEF OPERATING reach in another fastest growing region in the country - CALABARZON. LSB OFFICER* ERLINDA O. DEL VILLAR – OPERATIONS HEAD had already expanded its reach in Calauag, Quezon and recently expanded its ROEL S. COSTUNA – CORPORATE SECRETARY VICTOR C. DELA CRUZ JR. – LENDING HEAD* scope to Iriga City, San Fernando City, Pampanga, and Dasmariñas City making AND LEGAL UNIT HEAD its total network consisting of 13 branches and 4 Branch-Lite Units. ABUNDIO B. BLANQUISCO, JR. – BRANCH AND 1172.84% AILEEN MARY C. EJERCITO – ASST. CORPORATE ADMINISTRATION OPERATIONS DEPARTMENT INCREASE IN INCOME SECRETARY HEAD COMAPARED FROM As LSB continues to focus on ramping up its high-yielding loan portfolio, it PREVIOUS YEAR already acquired accreditation for providing teacher’s salary loans under the ELEANOR LENI M. ANTE – TREASURER JASON-DENNIS R. SAMBITAN – INFORMATION TECHNOLOGY DEPARTMENT HEAD Department of Education’s Automatic Payroll Deduction System (APDS) and TRISHA MARIE GERETTE B. GUTTIERREZ – had implemented the said system in 2018. OFFICER-IN-CHARGE FOR RISK MANAGEMENT ADRIAN T. LLANA – CREDIT CYCLE & UNIT HEAD OPERATIONS HEAD

LSB also recognizes the important role of MSMEs in elevating the lives in the KAREEN R. VILLAREAL – CHIEF COMPLIANCE CARMELA MONICA C. BORROMEO – community as it aggressively rolled out its microfinance business. OFFICER* CONTROLLERSHIP HEAD

CYNTHIA C. BAUTISTA – CHIEF AUDIT OFFICER RODOLFO T. QUINTO – CHIEF SECURITY In 2019, aligned with the parent bank’s core income thrusts, LSB was able OFFICER to contribute Php125,666,513.00 in income versus 2018’s Php9,872,906.00 EVIE B. ABRAHAM – HUMAN RESOURCE MANAGEMENT GROUP HEAD (highlight 1172.84% increase). LSB also added one branch in Iriga City, Camarines Sur, bringing its total branch network to 17. LSB also has 18 ATMs as *seconded of December 31, 2019.

142 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 143 LSB BOARD OF DIRECTORS

(On this page from left to right) (On this page from left to right) MYKEL D. ABAD – Director, ELFREN ANTONIO S. SARTE – Vice Chairman, OMAR BYRON T. MIER – Chairman, HERMOGENES S. ROXAS – Independent Director, ROBERTO S. GAERLAN – Independent Director, and ANGELITO V. EVANGELISTA – Director. ERIC B. SANTOS – Director, ANDRO M. YEE – Director, and VICTOR V. LAYNES – Independent Director

144 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 145 Auto Loan PRODUCTS AND SERVICES LOAN A peso loan available to individuals or entrepreneurs PRODUCTS to finance the purchase of brand-new or second-hand vehicles. Re-financing of units already owned by the DEPOSIT applicant is also covered by the product. PRODUCTS CONSUMER LOANS Microfinance Loan (Go Micro Regular, Go Micro Plus, Jewelry Loan A multi-purpose loan facility offered to individuals and NOW ACCOUNT Friendly Savings Go Micro SME, Power Up) secured by jewelry or gold items. The loan is payable The NOW account is a 2-in-1 checking account that allows A Savings Account that allows clients to earn higher A loan product managed by the Retail Banking Group via advance monthly interest payments with the loan you to settle your day-to-day payables through its check than regular savings rates by maintaining high deposit that is targeted to microenterprises. It is created to principal payable monthly or upon maturity. book and conveniently allows you to monitor your check balances. The earnings potential is largely influenced by provide an affordable credit facility that will help micro issuances through passbook. the amount of deposit maintained and the prevailing entrepreneurs expand their present business activities COMMERCIAL LOAN Market Interest Rates. that will eventually increase their income. It offers Small and Medium Enterprise Loan SAVINGS ACCOUNT better interest rates and easier payment schemes as A loan program that helps build business by providing Regular Savings SPECIAL SAVINGS ACCOUNT compared to the informal money lenders that micro- short and long term facilities to Small and Medium An interest bearing savings account that allows the A Peso Term Deposit account that allows clients to earn entrepreneurs currently deal with. Enterprise to support liquidity or capital build-up, customer the flexibility of accessing funds anytime higher than regular savings rates by maintaining their expansion and acquisitions or buyouts, among and other through over-the-counter (OTC) for both savings and deposit balances for a specified period of time. The APDS Loans for teachers business needs. transactional purposes. earnings potential is largely influenced by the amount A multi-purpose loan product managed by the Retail of deposit maintained, the tenor of deposit, and the Banking Group (RBG) that is targeted to DepEd’s Small Business Loan Bulilit Savings prevailing Market Interest Rates. teaching and non-teaching personnel. Repayment A loan product that is a fully-secured credit facility (either An interest bearing savings account designed specifically for APDS obligation is drawn against DepEd teaching by real estate or deposits) targeted to Small and Medium for minors aging from seven (7) to twelve (12) years old. TIME DEPOSIT ACCOUNT personnel’s salaries thru automatic payroll education. Enterprises (SMEs). In the current market, SMEs have Like the Regular Savings Account, it allows the customer A Peso Term Deposit account that is evidenced by a limited access to credit. the flexibility of accessing funds anytime through over-the- certificate of Time Deposit CTD). It allows clients to earn Professional Salary Loan counter (OTC) for savings and transactional purposes. higher than regular savings rates by maintaining their A multi-purpose loan program managed by the Retail The SBL product aims to address this need by providing deposit balances for a specified period of time. The Banking Group (RBG) that is targeted to employed SMEs the cash they need to grow their business. Extending earnings potential is largely influenced by the amount individuals. The loan is granted based on the paying loans to this target market will also help the Bank in of deposit maintained, the tenor of deposit, and the capacity of the borrower. Repayment are drawn increasing its deposits, given that SMEs represent a huge prevailing Market Interest Rates. against the borrower’s salaries and other payroll credits. CA/SA market.

Housing Loan An amortizing term loan facility secured by real estate properties under the borrower’s name.

146 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 147 BRANCH NETWORK JG SUMMIT BUSINESSES

ALBAY GOA SORSOGON Regular Branch Branch-Lite Regular Branch FOOD, AGRO-INDUSTRIAL 738 Building, Rizal, Street J. Quinzon Building G/F Altarejos Building CORE INVESTMENTS AFFILIATES AND COMMODITIES Old Albay District 4500 Bagumbayan Pequeño Jamoralin Street Robinsons Retail Universal Robina Corporation Legazpi City Rizal Street, Goa, Camarines Sur Brgy. Burabod, Sorsogon City TELECOMMUNICATIONS Holdings, Inc. 8th Floor, Tera Tower, Bridgetowne 0917-5841678 0999-2291130 0917-5841692 PLDT Inc. 43rd Floor, Robinsons E. Rodriguez Jr. Avenue (C5 Road) 0998-8653411 (052) 732-3000 local 80012 0998-8653692 Ramon Cojuangco Building Equitable Tower Ugong Norte, Quezon City (052) 732-3000 local 80006 (052) 732-3000 local 80005 Makati Avenue corner ADB Avenue corner Poveda Street Tel. Nos.: (632) 633-7631 to 40 / GUINOBATAN Dela Rosa Street, Makati City Ortigas Center, Pasig City (632) 240-8801 MASBATE Regular Branch TABACO Tel. No.: (02) 816-8024 Tel. No.: (632) 635-0751 to 64 Fax Nos.: (632) 633-9207 / Regular Branch T. Paulate Street Regular Branch (632) 240-9106 Units 8&9, S&T Building Guinobatan, Albay G/F, N.N. Building REAL ESTATE AND Summit Publishing Hotline: 559-8URC (872) Cagba Street 0917-5841682 AA Berces Street, Basud PROPERTY DEVELOPMENT Company Inc. Toll Free: 1800-10URCCARE Brgy. Tugbo, Masbate City 0998-8653689 Tabaco City United Industrial Corporation 6th & 7th Floor (8722273) 0917-5841690 (052) 732-3000 local 80007 0917-5841693 Limited Robinsons Cybergate Center 0998-8653380 0998-8653691 24 Raffles Place, #22-01/ 06 Tower 3, Robinsons AIR TRANSPORTATION (052) 732-3000 local 80010 LUCENA (052) 732-3000 local 80003 Clifford Center Pioneer Complex Cebu Air, Inc. Regular Branch Singapore 048621 Pioneer Street, Mandaluyong City Cebu Pacific Building POLANGUI A.M. Lubi Building CALAUAG Tel. No.: (65) 622-0135-2 Tel. No.: (632) 451-8888 Domestic Road, Barangay 191 Regular Branch corner Tagarao & Elias Streets Branch-Lite Zone 20 Pasay City National Road, Basud Brgy. 5, Lucena City Agravante Building POWER i-Tech Global Business Tel. No.: (02) 802-7000 Polangui, Albay 0999-2291134 Rizal Street, Brgy. Sta. Maria Manila Electric Company Solutions Inc. 0917-5841687 (052) 732-3000 local 80014 Calauag, Quezon (Meralco) 3rd Floor, Robinsons Otis REAL ESTATE AND HOTELS 0998-8653410 0999-2291132 Ortigas Avenue, Barangay Ugong 1536 P. Guazon Street Robinsons Land Corporation (052) 732-3000 local 80004 MASBATE (042)717-6763 Pasig City 1605 Paco, Manila Level 2, Galleria Corporate Center Regular Branch (052) 732-3000 local 80013 Tel. Nos.: (632) 631-2222 / Tel. No.: (632) 249-4305 EDSA corner Ortigas Avenue DAET Units 8&9, S&T Building (632) 16220 Quezon City Regular Branch Cagba Street IRIGA ADVOCACY Tel. No.: (632) 397-1888 Global Business Power SUBIA Building J Lukban Street Brgy. Tugbo, Masbate City Branch-Lite Gokongwei Brothers Daet, Camarines Norte 0917-5841690 DLS Building, 121-Zone 6 Corporation BANKING & FINANCIAL Foundation 0917-5841680 0998-8653380 Hi-Way 1, San Isidro 22nd Floor, GT Tower International SERVICES 7th Floor, Robinsons 0998-5407485 (052) 732-3000 local 80010 Iriga City 6813 Ayala Avenue corner Robinsons Bank Corporation Cybergate Tower 3 (052) 732-3000 local 80008 0927-3720075 H.V. Dela Costa Street 17th Floor, Galleria Corporate Center Pioneer Street, Mandaluyong City NAGA (052) 732-3000 local 80017 1227 Makati City, Philippines EDSA corner Ortigas Avenue Tel. No.: (632) 451-8888 ext. 1118 DARAGA Regular Branch Tel. No.: (632) 464-1600 Quezon City Regular Branch NEA Building, Triangulo VIRAC Tel. Nos.: (632) 702-9500 / GBF Technical Training Center Perete Building Naga City Regular Branch (632) 637-2273 SUPPLEMENTARY Litton Mills Compound Sta. Maria Street 0917-5841691 G/F D&L Building Amang Rodriguez Avenue San Roque, Daraga, Albay 0998-8653408 corner Surtida & Rizal StreetsSan Jose, BUSINESS PETROCHEMICALS Rosario, Pasig City 0917-5841681 (052) 732-3000 local 80011 Virac, Catanduanes Tel. No.: (632) 640-1820 JG Summit Petrochemical INSURANCE BROKERAGE 0998-8653406 0917-5841696;0908-8113423 Corporation SERVICES (052) 732-3000 local 80002 SAN FERNANDO, PAMPANGA (052) 732-3000 local 80009 Ground Floor, Cybergate Tower 1 Unicon Insurance Brokers Regular Branch SUBIA Building J Lukban Street EDSA corner Pioneer Street Corporation DASMARIÑAS 4 AND 2 Building Daet, Camarines Norte Mandaluyong City 34th Floor, Robinsons Equitable Tower Branch-Lite Mc Arthur Highway Sindalan 0917-5841680 Tel. No.: (632) 230-5000 ADB Avenue corner Poveda Street WINCORP Building 0926-9593956 0998-5407485 Ortigas Center, Pasig City Molino-Paliparan Road Salawag, (052) 732-3000 local 80015 (052) 732-3000 local 80008 JG Summit Olefins Corporation Tel. Nos.: (632) 633-7631 Dasmariñas City, Cavite Ground Floor, Cybergate Tower 1 0917-5635932 EDSA corner Pioneer Street 0947-7073730 Mandaluyong City 052) 732-3000 local 80016 Tel. No.: (632) 397-3200

148 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 149 CONTENTS

152 Statement of Management's Responsibility

153 Independent Auditor's Report

157 Statements of Financial Position

158 Statements of Income

159 Statements of Comprehensive Income FINANCIAL 160 Statements of Changes in Equity 162 Statements of Cash Flows STATEMENTS 164 Notes to Financial Statements

150 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 151 STATEMENT OF INDEPENDENT MANAGEMENT’S RESPONSIBILITY AUDITOR’S REPORT

The management of Robinsons Bank Corporation (the Bank) is responsible for the preparation and fair presentation of the financial Robinsons Bank Corporation statements including the schedules attached therein, as at December 31, 2019 and 2018 and for the years ended December 31, 17th floor, Galleria Corporate Center EDSA corner Ortigas Avenue 2019, 2018 and 2017, in accordance with the prescribed financial reporting framework indicated therein, and for such internal Quezon City control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Report on the Consolidated and Parent Company Financial Statements

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, Opinion disclosing, as applicable matters related to going concern and using the going concern basis of accounting unless management We have audited the consolidated financial statements of Robinsons Bank Corporation and its subsidiary (the Group) and the parent company financial statements of either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. Robinsons Bank Corporation (the Parent Company), which comprise the consolidated and parent company statements of financial position as at December 31, 2019 and 2018, and the consolidated and parent company statements of income, consolidated and parent company statements of comprehensive income, consolidated The Board of Directors (BOD) is responsible for overseeing the Company’s financial reporting process. and parent company statements of changes in equity and consolidated and parent company statements of cash flows for each of the three years in the period ended December 31, 2019, and notes to the consolidated and parent company financial statements, including a summary of significant accounting policies.

The BOD reviews and approves the financial statements including the schedules attached therein, and submits the same to the In our opinion, the accompanying consolidated and parent company financial statements present fairly, in all material respects, the financial position of the Group and stockholders. the Parent Company as at December 31, 2019 and 2018, and their financial performance and its cash flows for each of the three years in the period ended December 31, 2019 in accordance with Philippine Financial Reporting Standards (PFRSs).

SyCip Gorres Velayo & Co., the independent auditor appointed by the shareholders, has audited the financial statements of the Basis for Opinion Bank in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor’s fairness of presentation upon completion of such audit. Responsibilities for the Audit of the Consolidated and Parent Company Financial Statements section of our report. We are independent of the Group and the Parent Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audit of the consolidated and parent company financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters Lance Y. Gokongwei Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and parent company financial statements of the current period. Chairman of the Board These matters were addressed in the context of our audit of the consolidated and parent company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and parent company financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our Elfren Antonio S. Sarte audit opinion on the accompanying consolidated and parent company financial statements. President and Chief Executive Officer Applicable to the audit of the Consolidated and Parent Company Financial Statements

Allowance for Credit Losses on Loans and Receivables The Group’s and the Parent Company’s application of the ECL model is significant to our audit as it involves the exercise of significant management judgment. Key areas of judgment include: segmenting the Group’s and the Parent Company’s credit risk exposures; determining the method to estimate ECL; defining default; identifying Andro M. Yee exposures with significant deterioration in credit quality ; determining assumptions to be used in the ECL model such as the counterparty credit risk rating, the expected Executive Vice President life of the financial asset and expected recoveries from defaulted accounts; and incorporating forward-looking information (called overlays) in calculating ECL. and Chief Financial Officer Allowance for credit losses on loans and receivables as of December 31, 2019 for the Group and the Parent Company amounted to ₱1.17 billion and ₱1.06 billion, respectively. Provision for credit losses on loans and receivables of the Group and the Parent Company in 2019 amounted to ₱129.20 million and ₱128.61 million, respectively.

The disclosures in relation to the allowance for credit losses on loans and receivables are included in Note 14 to the financial statements. Irma D. Velasco First Vice President and Controller Audit Response We obtained an understanding of the methodologies and models used for the Group’s and the Parent Company’s different credit exposures and assessed whether these considered the requirements of PFRS 9 to reflect an unbiased and probability-weighted outcome, and to consider time value of money and the best available forward- looking information.

152 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 153 INDEPENDENT AUDITOR’S REPORT

We (a) assessed the Group’s and the Parent Company’s segmentation of its credit risk exposures based on homogeneity of credit risk characteristics; (b) tested the For selected lease contracts with renewal and/or termination option, we reviewed the management’s assessment of whether it is reasonably certain that the Group will definition of default and significant increase in credit risk criteria against historical analysis of accounts and credit risk management policies and practices in place, exercise the option to renew or not exercise the option to terminate. (c) tested the Group’s and the Parent Company’s application of internal credit risk rating system by reviewing the ratings of sample credit exposures; (d) assessed whether expected life is different from the contractual life by testing the maturity dates reflected in the Group’s and the Parent Company’s records and considering We tested the parameters used in the determination of the incremental borrowing rate by reference to market data. We test computed the lease calculation prepared by management’s assumptions regarding future collections, advances, extensions, renewals and modifications; (e) reviewed loss given default by inspecting historical management on a sample basis, including the transition adjustments. recoveries and related costs, write-offs and collateral valuations; (f) tested exposure at default considering outstanding commitments and repayment scheme; (g) checked the reasonableness of forward-looking information used for overlay through statistical test and corroboration using publicly available information and our We reviewed the disclosures related to the transition adjustments based on the requirements of PFRS 16 and PAS 8, Accounting Policies, Changes in Accounting Estimates understanding of the Group’s and the Parent Company’s lending portfolios and broader industry knowledge; and (h) tested the model through backtesting of prior year and Errors. loss rates versus actual observed default rates. Other Information Further, we checked the data used in the ECL models by reconciling data from source system reports to the data warehouse and from the data warehouse to the loss allowance analysis/models and financial reporting systems. To the extent that the loss allowance analysis is based on credit exposures that have been disaggregated Management is responsible for the other information. The other information comprises the information included in the SEC Form 17-A for the year ended December into subsets of debt financial assets with similar risk characteristics, we traced or re-performed the disaggregation from source systems to the loss allowance analysis. 31, 2019, but does not include the consolidated and parent company financial statements and our auditor’s report thereon, which we obtained prior to the date of We also assessed the assumptions used where there are missing or insufficient data. the auditor’s report, and the Annual Report for the year ended December 31, 2019 which is expected to be made available to us after the date of this auditor’s report.

We recalculated impairment provisions on a sample basis. We reviewed the completeness of the disclosures made in the consolidated and parent company financial Our opinion on the consolidated and parent company financial statements does not cover the other information and we do not express any form of assurance conclusion statements. We involved our internal specialists in the performance of the above procedures. thereon.

Accounting for Disposal of Invesment Securities under a Hold-to-Collect (HTC) Business Model In connection with our audits of the consolidated and parent company financial statements, our responsibility is to read the other information identified above when it During 2019, the Parent Company disposed certain USD-denominated government securities classified as HTC securities with carrying amount of USD21.36 million becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and parent company financial statements (₱1.11 billion), resulting in a gain of USD 1.21 million (₱62.88 million). The debt securities held under a hold-to-collect business model, which are classified as ‘Investment or our knowledge obtained in the audit, or otherwise appears to be materially misstated. securities at amortized cost’, are managed with the objective of holding them in order to collect contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The accounting for the disposals is significant to our audit because the amounts of securities sold from the HTC portfolio and the Responsibilities of Management and Those Charged with Governance for the Consolidated and Parent Company Financial Statements gains from the sale are material to the consolidated and parent bank financial statements. Moreover, it involves exercise of significant judgement by management in Management is responsible for the preparation and fair presentation of the consolidated and parent company financial statements in accordance with PFRSs, and for assessing that the disposal of the HTC Securities would not impact the measurement of the remaining securities in the affected ortfolio.p such internal control as management determines is necessary to enable the preparation of consolidated and parent company financial statements that are free from material misstatement, whether due to fraud or error. The Parent Company’s disclosures relating to the disposals from its HTC portfolio are included in Note 3 to the consolidated and parent bank financial statements. In preparing the consolidated and parent company financial statements, management is responsible for assessing the Group’s and the Parent Company’s ability to Audit Response continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either We obtained an understanding of the Parent Company’s reasons for the disposals of HTC securities through inquiries with management and inspection of approved intends to liquidate the Group and the Parent Company or to cease operations, or has no realistic alternative but to do so. internal documentations, including evidence of governance over the disposals of HTC securities. We evaluated management’s assessment of the impact of the disposal of the HTC securities in reference to the Parent Bank’s existing business model documentation, the provisions of PFRS 9 and regulatory issuances. We recalculated the Those charged with governance are responsible for overseeing the Group’s and Parent Company’s financial reporting process. gains from the disposals. Auditor’s Responsibilities for the Audit of the Consolidated and Parent Company Financial Statements With regard to the outstanding securities of the affected portfolio, we assessed whether the nature and reasons for the disposals did not trigger a change in business model of the remaining portfolio and that all relevant available information were considered in determining that the HTC business model remains appropriate. We Our objectives are to obtain reasonable assurance about whether the consolidated and parent company financial statements as a whole are free from material reviewed the measurement of the remaining securities in the affected portfolio. misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and Adoption of PFRS 16, Leases are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Effective January 1, 2019, the Group adopted Philippine Financial Reporting Standard (PFRS) 16, Leases, under the modified retrospective approach which resulted consolidated and parent company financial statements. in significant changes in the Group’s accounting policy for leases. The Group’s adoption of PFRS 16 is significant to our audit because the Group has high volume of lease agreements; the recorded amounts are material to the consolidated and parent company’s financial statements; and adoption involves application of significant As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: judgment and estimation in determining the lease term, including evaluating whether the Group is reasonably certain to exercise options to extend or terminate the • Identify and assess the risks of material misstatement of the consolidated and parent company financial statements, whether due to fraud or error, design and lease, and in determining the incremental borrowing rate. This resulted in the recognition of right of use assets amounting ₱635.20 million and ₱587.52 million for the perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not Group and the Parent Company, respectively, and lease liability amounting to ₱655.55 million and ₱611.03 million, for the Group and the Parent Company, respectively, detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, as of January 1, 2019, and the recognition of depreciation expense of ₱248.85 million and ₱239.51, for the Group and the Parent Company, respectively, and interest misrepresentations, or the override of internal control. expense of ₱51.63 million and ₱47.29 million, for the Group and the Parent Company, respectively, for the year ended December 31, 2019. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the The disclosures related to the adoption of PFRS 16 are included in Notes 2 and 23 to the consolidated and parent company’s financial statements. purpose of expressing an opinion on the effectiveness of the Group’s and Parent Company’s internal control.

Audit response • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. We obtained an understanding of the Group’s and the Parent Company’s process in implementing the new standard on leases, including the determination of the population of the lease contracts covered by PFRS 16, the application of the short-term and low value assets exemption, the selection of the transition approach and any • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material election of available practical expedients. uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and parent We tested the population of lease agreements in the lease calculation prepared by management by comparing the number of leases against lease contract database. company financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the On a test basis, we inspected lease agreements (i.e., lease agreements existing prior to the adoption of PFRS 16 and new lease agreements), identified their contractual date of our auditor’s report. However, future events or conditions may cause the Group and the Parent Company to cease to continue as a going concern. terms and conditions, and traced these contractual terms and conditions to the lease calculation prepared by management, which covers the calculation of financial impact of PFRS 16, including the transition adjustments.

154 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 155 INDEPENDENT STATEMENTS OF AUDITOR’S REPORT FINANCIAL POSITION

• Evaluate the overall presentation, structure and content of the consolidated and parent company financial statements, including the disclosures, and whether the Consolidated Parent Company consolidated and parent company financial statements represent the underlying transactions and events in a manner that achieves fair presentation. December 31 2019 2018 2019 2018 • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on ASSETS the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit Cash and Other Cash Items ₱3,249,359,133 ₱2,370,171,189 ₱3,176,490,713 ₱2,300,112,472 opinion. Due from Bangko Sentral ng Pilipinas (Note 15) 12,216,191,774 16,108,207,737 11,824,524,807 15,586,846,184 We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, Due from Other Banks (Note 6) 2,463,991,767 3,010,162,780 2,374,076,786 2,944,176,334 including any significant deficiencies in internal control that we identify during our audit. Interbank Loans Receivable and Securities Purchased Under Resale Agreements (Notes 6 and 31) 2,408,705,460 2,188,410,000 2,342,127,432 2,100,410,000 We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate Financial Assets at Fair Value Through Profit or Loss (Note 7) 4,935,882 8,206,143 4,935,882 8,206,143 with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Financial Assets at Fair Value Through Other Comprehensive Income (Notes 7 and 27) 13,973,461,843 13,116,787,076 14,003,661,843 13,146,987,076 From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and Investment Securities at Amortized Cost (Notes 7 and 27) 11,357,261,241 12,597,089,717 11,156,952,059 12,396,700,654 parent company financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or Loans and Receivables (Note 8) 80,805,805,712 68,411,062,216 79,240,326,174 67,396,585,901 regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report Investment in a Subsidiary (Note 9) − −1,357,178,340 1,236,740,437 because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Property and Equipment (Note 10) 1,308,628,049 623,189,601 1,165,797,623 546,878,908 Investment Properties (Note 11) 382,355,004 341,073,550 266,464,925 212,181,540 Report on the Supplementary Information Required Under Bangko Sentral ng Pilipinas (BSP) Circular No. 1074 and Revenue Regulations 152010 Branch Licenses (Note 12) 999,928,369 999,881,780 379,328,369 379,281,780 Goodwill (Note 9) 244,327,006 244,327,006 − − Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Deferred Tax Asset - net (Note 25) 458,920,202 263,829,946 511,814,656 405,775,383 BSP Circular No. 1074 in Note 34 and Revenue Regulations 152010 in Note 33 to the financial statements is presented for purposes of filing with the BSP and Bureau of Other Assets (Note 13) 1,212,839,592 1,068,239,168 1,198,608,191 1,051,368,409 Internal Revenue, respectively, and is not a required part of the basic financial statements. Such information is the responsibility of the management of Robinsons Bank 131,086,711,034 121,350,637,909 129,002,287,800 119,712,251,221 Corporation. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. LIABILITIES AND EQUITY The engagement partner on the audit resulting in this independent auditor’s report is Juan Carlo B. Maminta. Liabilities Deposit Liabilities (Notes 15 and 26) Demand 17,054,484,841 16,050,910,830 16,880,570,300 15,876,375,795 SYCIP GORRES VELAYO & CO. Savings 58,931,747,324 59,709,184,942 57,516,406,672 58,456,351,809 Time 15,687,802,834 13,328,372,113 15,306,981,464 13,148,295,392 Long-term negotiable certificates of deposit 5,927,592,846 5,917,925,850 5,927,592,846 5,917,925,850 97,601,627,845 95,006,393,735 95,631,551,282 93,398,948,846 Bonds Payable (Note 17) 9,889,835,356 −9,889,835,356 − Juan Carlo B. Maminta Bills Payable (Note 18) 2,040,505,751 7,436,904,315 2,040,505,751 7,436,904,315 Partner Manager’s Checks 1,074,514,545 719,901,336 1,074,514,545 719,901,336 CPA Certificate No. 115260 Accrued Expenses (Note 19) 733,106,591 654,816,395 706,156,177 640,011,869 SEC Accreditation No. 1699-A (Group A), Deposit for Future Stock Subscription (Note 21) −3,000,000,000 −3,000,000,000 August 16, 2018, valid until August 15, 2021 Other Liabilities (Note 19) 2,686,646,578 2,155,068,336 2,599,250,321 2,138,931,063 Tax Identification No. 210-320-399 114,026,236,666 108,973,084,117 111,941,813,432 107,334,697,429 BIR Accreditation No. 08-001998-132-2018, Equity February 9, 2018, valid until February 8, 2021 Common stock (Note 21) 15,000,000,000 12,000,000,000 15,000,000,000 12,000,000,000 PTR No. 8125258, January 7, 2020, Makati City Surplus 1,672,850,201 1,427,893,601 1,672,850,201 1,427,893,601 April 22, 2020 Surplus reserves (Notes 21 and 27) 549,796,552 105,326,644 549,796,552 105,326,644 Remeasurement gains (loss) on retirement plan (Note 22) (39,171,510) 357,997 (35,205,102) 1,620,199 Remeasurement gains (loss) on subsidiary’s retirement plan (Note 22) − −(3,966,408) (1,262,202) Net unrealized losses on financial assets at FVOCI (Note 7) (12,124,355) (1,036,006,819) (12,124,355) (1,036,006,819) Cumulative translation adjustments (110,876,520) (120,017,631) (110,876,520) (120,017,631) 17,060,474,368 12,377,553,792 17,060,474,368 12,377,553,792 ₱131,086,711,034 ₱121,350,637,909 ₱129,002,287,800 ₱119,712,251,221

See accompanying Notes to Financial Statements

156 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 157 STATEMENTS STATEMENTS OF OF INCOME COMPREHENSIVE INCOME

Consolidated Parent Company Consolidated Parent Company Years Ended December 31 Years Ended December 31 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 INTEREST INCOME ON NET INCOME ₱719,426,508 ₱317,113,802 ₱307,387,382 ₱719,426,508 ₱317,113,801 ₱307,387,382 Loans and receivables (Note 8) ₱6,060,079,146 ₱4,566,977,784 ₱3,192,169,144 ₱5,729,777,274 ₱4,370,912,893 ₱2,996,687,701 Investment securities (Note 7) 1,041,551,648 1,071,783,404 721,960,970 1,033,201,341 1,063,545,546 715,419,616 OTHER COMPREHENSIVE INCOME (LOSS) Due from Bangko Sentral ng Pilipinas and other banks FOR THE YEAR, NET OF TAX (Note 6) 32,594,850 40,306,233 60,018,293 22,261,229 22,294,497 41,018,763 Item that may not be reclassified to profit Interbank loans receivable/Securities purchased under or loss resale agreements (Note 6) 64,535,367 82,553,113 135,331,909 58,732,167 77,478,252 130,855,296 Change in remeasurement gains (losses) on 7,198,761,011 5,761,620,534 4,109,480,316 6,843,972,011 5,534,231,188 3,883,981,376 retirement plan net of tax (Note 22) (39,529,507) 13,825,054 (3,108,448) (34,300,897) 13,344,985 (3,809,040) INTEREST EXPENSE ON Change in remeasurement gains (losses) on Deposit liabilities (Notes 15 and 26) 2,482,399,046 2,071,202,108 1,125,520,351 2,455,641,962 2,052,180,171 1,097,317,673 subsidiary’s retirement plan net of Bills payable (Note 18) 285,373,713 115,700,011 1,307,247 285,373,713 115,700,011 1,307,247 tax (Note 22) − −−(5,228,610) 480,069 700,592 Bonds payable (Note 17) 141,116,925 ‒ ‒ 141,116,925 ‒ ‒ Change in net unrealized gains (losses) on Lease liability (Note 2) 51,627,485 ‒ ‒ 47,292,619 ‒ ‒ equity financial assets at fair value through other comprehensive 2,960,517,169 2,186,902,119 1,126,827,598 2,929,425,219 2,167,880,182 1,098,624,920 income (Note 7) 11,007,376 (6,642,436) ‒ 11,007,376 (6,642,436) ‒ NET INTEREST INCOME 4,238,243,842 3,574,718,415 2,982,652,718 3,914,546,792 3,366,351,006 2,785,356,456 Items that may be reclassified to profit or loss Service fees and commission income (Note 24) 462,302,868 352,463,888 181,649,418 460,630,646 351,037,512 179,402,682 Change in allowance (losses) on debt Service fees and commission expense (Note 24) 192,232,154 89,323,918 56,886,421 183,879,745 84,897,404 52,595,251 financial assets at fair value through NET SERVICE FEE AND COMMISSION INCOME 270,070,714 263,139,970 124,762,997 276,750,901 266,140,108 126,807,431 other comprehensive income Trading and securities gains-net (Note 7) 397,719,878 18,298,145 184,893,310 397,719,878 18,298,145 184,893,310 (Note 7) 2,070,586 ‒‒2,070,586 ‒ ‒ Gains on sale of investment securities at amortized cost Change in net unrealized gains (losses) on (Note 7) 62,879,198 ‒ ‒ 62,879,198 ‒ ‒ debt financial assets at fair value Foreign exchange gains – net 50,966,589 174,406,811 93,514,194 50,966,589 174,406,811 93,494,651 through other comprehensive Miscellaneous (Note 24) (24,592,824) 75,992,748 75,192,739 (64,392,723) 61,279,486 43,891,579 income (Note 7) 1,010,804,502 (942,796,440) ‒ 1,010,804,502 (942,796,440) ‒ Change in net unrealized gains (losses) on TOTAL OPERATING INCOME 4,995,287,397 4,106,556,089 3,461,015,958 4,638,470,635 3,886,475,556 3,234,443,427 AFS investments (Note 7) − ‒ (188,401,724) − ‒ (188,401,724) OPERATING EXPENSES Translation adjustments 9,141,111 (17,420,981) 9,239,981 9,141,111 (17,420,981) 9,239,981 Compensation and fringe benefits (Notes 22 and 26) 1,301,011,664 1,101,098,121 929,940,096 1,182,876,007 1,025,213,290 863,103,600 993,494,068 (953,034,803) (182,270,191) 993,494,068 (953,034,803) (182,270,191) Depreciation and amortization (Note 10) 635,540,354 355,087,357 326,136,774 598,557,494 331,409,645 299,726,034 Taxes and licenses (Note 25) 580,554,943 512,286,383 279,175,060 554,997,936 497,083,053 259,222,457 TOTAL COMPREHENSIVE INCOME (LOSS) ₱1,712,920,576 (₱635,921,001) ₱125,117,191 ₱1,712,920,576 (₱635,921,002) ₱125,117,191 Security, messengerial and janitorial 285,094,136 244,807,942 261,293,265 238,237,964 226,662,876 246,836,400 Occupancy and equipment-related costs (Notes 23 and 26) 250,544,929 475,362,477 436,541,543 228,051,360 453,623,377 418,103,184 See accompanying Notes to Financial Statements. Information technology 169,702,015 153,748,905 100,170,763 159,445,700 146,018,436 94,254,647 Communication 118,926,128 104,888,217 79,940,307 114,073,623 102,830,377 77,950,824 Insurance 173,895,313 235,188,313 194,111,901 167,358,089 229,448,403 187,223,024 Entertainment, amusement, and recreation (Note 25) 96,414,705 90,280,647 84,527,148 94,335,734 88,101,616 82,887,548 Management and professional fees 29,872,898 38,575,286 15,119,283 27,875,761 36,713,777 13,066,287 Provision for credit and impairment losses (Note 14) 127,472,603 100,133,645 241,076,252 126,876,761 99,094,504 234,917,540 Miscellaneous (Note 24) 445,231,229 252,502,146 171,939,745 413,498,437 226,579,076 151,923,269 TOTAL OPERATING EXPENSES 4,214,260,917 3,663,959,439 3,119,972,137 3,906,184,866 3,462,778,430 2,929,214,814 INCOME BEFORE SHARE IN NET INCOME OF A SUBSIDIARY 781,026,480 442,596,650 341,043,821 732,285,769 423,697,126 305,228,613 SHARE IN NET INCOME OF A SUBSIDIARY ‒ ‒ ‒ 125,666,513 9,872,906 28,183,574 INCOME BEFORE INCOME TAX 781,026,480 442,596,650 341,043,821 857,952,282 433,570,032 333,412,187 PROVISION FOR INCOME TAX (Note 25) 61,599,972 125,482,848 33,656,439 138,525,774 116,456,231 26,024,805 NET INCOME ₱719,426,508 ₱317,113,802 ₱307,387,382 ₱719,426,508 ₱317,113,801 ₱307,387,382

See accompanying Notes to Financial Statements.

158 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 159 STATEMENTS OF STATEMENTS OF CHANGES IN EQUITY CHANGES IN EQUITY 0 8 793 ,189 553,792 ,553,792 3,333,380 60,474,368 Translation Cumulative Adjustments Total Cumulative Translation Adjustments Total Losses on Unrealized Net Losses Assets Financial Other Through Value Fair At Comprehensive Income Losses on Unrealized Net Losses Assets Financial Other Through Value Fair At Comprehensive Income − − 2,970,000,000 − 1,023,882,464 9,141,111 1,712,920,576 (Note 7) (Note (Note 9) (Note Losses on Losses Net Unrealized Net Available-for-Sale Available-for-Sale Investments Losses on Unrealized Net Losses Available-for-Sale Investments − Consolidated Parent Company Parent (Note 22) (Note (Note 22) (Note (5,228,610) Subsidiary’s Subsidiary’s Retirement Plan Retirement Remeasurement Gains (Losses) on Gains (Losses) −− −− − −− −− − − − − 2,970,000,000 Remeasurement on Gains (Losses) Plan Retirement (Note 22) (Note Retirement Plan Retirement Remeasurement on Gains (Losses) (Note 21 and 27) (Note Surplus Reserves (Note 21) (Note (Note 21 and 27) (Note Surplus Reserves Surplus (Note 21) (Note (Note 21) (Note Surplus (Deficit) 3,000,000,000 (30,000,000) − − − 719,426,508 − (39,529,507) − 1,023,882,464 9,141,111 1,712,920,576 Common Stock Common − (444,469,908) 444,469,908 − − − − − Stock

(Note 21) (Note 3,000,000,000 (30,000,000) − − Common − 719,426,508− (34,300,897) − (444,469,908) 444,469,908 − subscription to equity (Note 21) equity (Note subscription to the year the year21)27)the 21) (Note yearand − (Note − − 317,113,802 −27) − (98,721,038)the 106,952,397 13,825,054 − insurance (106,952,397) 98,721,038 − − − (616,894) − − −and − (949,438,876) − − − − (17,420,981) 616,894 307,387,382 − − − − − − (635,921,001) − (3,108,448) (637,972) (188,401,724) − 637,972 9,239,981 − − − − − 125,117,191 (Note 21) (Note Conversion of deposit for future stock future of deposit for Conversion Balance at January 1, 2019Balance (loss) for income comprehensive Total ₱12,000,000,000 ₱1,427,893,601 ₱105,326,644 ₱357,997 ₱− (₱1,036,006,819) (₱120,017,631) ₱12,377,553,792 Balance at January 1, 2018Balance (loss) for income comprehensive Total losses credit expected for Appropriation 21 trust reserves (Notes for Appropriation ₱12,000,000,000 31, 2018 at December Balance ₱1,210,117,731 at January 1, 2017Balance (loss) for income comprehensive Total ₱5,988,712 ₱12,000,000,000 self- for of appropriation Reversal (₱13,467,057) ₱1,427,893,601 21 trust reserves (Notes for Appropriation ₱12,000,000,000 ₱105,326,644 31, 2017 at December Balance ₱816,363,435 Financial Statements to Notes See accompanying ₱− ₱357,997 ₱112,303,137 (₱86,567,943) ₱12,000,000,000 (₱10,358,609) (₱102,596,650) ₱1,230,065,242 ₱13,013,474,793 (₱838,255,143) ₱− ₱5,988,712 (₱1,036,006,819) (₱13,467,057) (₱120,017,631) ₱− ₱12,377,553,792 (₱1,026,656,867) (₱111,836,631) ₱11,968,216,189 ₱− (₱102,596,650) ₱12,093,333,38 Balance at December 31, 2019 at December Balance ₱15,000,000,000 ₱1,672,850,201 ₱549,796,552 (₱39,171,510) ₱− (₱12,124,355) (₱110,876,520) ₱17,060,474,36 Appropriations for expected credit losses credit expected for Appropriations the year equity subscription to stock 21) (Note 21) losses (Note credit the year(loss) for 21) 21) losses (Note credit − 21 and 27)(Notes 106,952,397 (Note (106,952,397) the period −(loss) for − self-insurance 317,113,802 (98,721,038) − − 21 and 27)(Notes − 98,721,038 (616,894) − − − 13,344,985 − 616,894 − 307,387,382 − 480,069 − − − − (637,972) − (3,809,040) − 637,972 (949,438,876) − − 700,592 (17,420,981) (188,401,724) − (635,921,001) − − − − 9,239,981 − − 125,117,191 − − − − − − − Balance at December 31, 2019 at December Balance ₱15,000,000,000 ₱1,672,850,201 ₱549,796,552 (₱35,205,102) (3,966,408) ₱− (₱12,124,355) (₱110,876,520) ₱17,0 Balance at January 1, 2019Balance for income comprehensive Total ₱12,000,000,000 ₱1,427,893,601 future of deposit for Conversion ₱105,326,644 expected for Appropriations (₱904,205) ₱1,262,202 at January 1, 2018Balance income comprehensive Total ₱12,000,000,000 expected for Appropriation ₱1,210,117,731 ₱− (₱1,036,006,819) Appropriation for trust reserves (₱120,017,631) ₱12,377, ₱5,988,712 31, 2018 at December Balance (₱14,249,190) ₱12,000,000,000 at January 1, 2017Balance ₱1,427,893,601 income comprehensive Total ₱782,133 ₱105,326,644 ₱12,000,000,000 for of appropriation Reversal ₱816,363,435 Appropriation for trust reserves (₱904,205) ₱112,303,137 31, 2017 at December Balance ₱− ₱1,262,202 (₱10,440,150) ₱12,000,000,000 Financial Statements. to Notes See accompanying (₱86,567,943) ₱1,230,065,242 (₱102,596,650) ₱81,541 ₱13,013,474, ₱5,988,712 ₱− (₱838,255,143) (₱1,036,006,819) (₱14,249,190) (₱120,017,631) 12,377 ₱782,133 ₱− (₱1,026,656,867) (₱111,836,631) ₱11,968,216 ₱− (₱102,596,650) ₱12,09

160 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 161 STATEMENTS OF CASH FLOWS

Consolidated Parent Company Consolidated Parent Company Years Ended December 31 Years Ended December 31 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 Property and equipment (Notes 10 and 30) (₱215,147,471) (₱257,860,347) (₱229,685,485) (₱181,834,691) (₱207,556,987) (₱215,767,541) CASH FLOWS FROM OPERATING ACTIVITIES Branch license (Note 12) (46,589) (817,441) (1,814,157) (46,589) (617,441) (1,814,157) Income before income tax ₱781,026,480 ₱442,596,650 ₱341,043,821 ₱857,952,282 ₱433,570,033 ₱333,412,187 Proceeds from sale of: Adjustments for: Financial assets at FVOCI 20,454,895,615 2,474,454,411 − 20,454,895,615 2,474,454,411 − Depreciation and amortization (Note 10) 635,540,354 355,087,357 326,136,774 598,557,494 331,409,645 299,726,034 Investment securities at amortized cost 1,174,374,755 − − 1,174,374,755 − − Provision for (recovery from) credit and Available-for-sale investments − − 11,740,094,107 − − 11,940,557,816 impairment losses (Notes 7 and 14) 127,472,603 100,133,645 241,076,252 126,876,761 99,094,504 234,917,540 Held-to-maturity investments (Note 7) − − 308,928,275 − − 308,928,275 Amortization of premium or discount on Property and equipment 16,078,471 23,135,259 34,541,117 13,987,306 21,153,844 6,068,287 financial assets and liabilities 19,131,555 9,174,586 − 19,131,555 9,174,586 − Investment properties 52,526,662 19,175,113 198,073,740 19,038,051 7,055,893 166,855,071 Gain on sale of financial assets at FVOCI Repossessed Chattels 261,277,560 199,594,978 260,850,561 199,465,034 (Note 7) (331,145,509) (15,217,295) − (331,145,509) (15,217,295) − Proceeds from maturity of: Gain on sale of investment securities at Financial assets at FVOCI − − − − − − amortized cost (Note 7) (62,879,198) −−(62,879,198) −− Available-for-sale investments − − 132,363,500 − − 132,363,500 Gain on sale of available-for-sale investments (Note 7) − − (147,619,819) − − (147,619,819) Held-to-maturity investments (Note 7) − − 225,372,553 − − 10,000,000 Gain on disposal of held-to-maturity Investment securities at amortized cost investment (Note 7) − − (8,928,275) − − (8,928,275) (Note 7) 257,010,000 171,000,000 − 257,010,000 171,000,000 − (Gain)/ loss on sale of investment properties Net cash provided by (used in) investing activities 1,867,570,934 (6,561,616,665) (3,985,782,234) 1,865,905,951 (6,553,381,820) (4,046,264,633) (Note 24) (17,356,519) 29,285,940 (5,351,114) (5,144,094) 30,677,975 (178,689) CASH FLOWS FROM FINANCING ACTIVITIES Loss on sale of repossessed chattels (Note 24) 102,709,347 8,116,298 28,274,026 102,752,315 8,116,298 28,301,193 Proceeds from deposit for future stock Gain on sale of property and equipment subscription (Note 21) −3,000,000,000 − −3,000,000,000 − (Notes 10 and 24) (7,251,188) (2,442,750) (16,475,650) (6,490,889) (2,434,254) (1,756,476) Proceeds from bonds payable (Note 17) 9,874,305,237 − − 9,874,305,237 − − Gain on initial recognition of investment properties (Note 24) (33,889,780) (4,152,421) (33,889,035) (21,471,508) (47,181) (31,526,513) Proceeds from bills payable (Note 18) 400,000,000 7,435,000,000 − 400,000,000 7,435,000,000 − Loss on initial recognition of repossessed Proceeds from issuance of LTNCD (Note 15) −1,758,415,048 − −1,758,415,048 − chattels (Note 24) 81,969,450 − 18,896,886 81,969,450 − 18,786,884 Payments of bills payable (Note 18) (5,800,000,000) − − (5,800,000,000) − − Retirement expense (Note 22) 67,805,248 34,909,418 27,452,904 63,397,367 32,929,041 25,448,232 Payments of lease liability (Note 23) (279,375,984) (271,088,889) Interest on lease liability (Note 23) 51,627,485 − − 47,292,619 − − Payments for issuance of common stock (30,000,000) − − (30,000,000) − − Net unrealized (gain)/loss on fair value of Net cash provided by financing activities 4,164,929,253 12,193,415,048 − 4,173,216,348 12,193,415,048 − financial assets at fair value through profit or loss and derivative assets (Note 7) (1,196,873) 137,387 5,904,377 (1,196,873) 137,387 1,190,954 EFFECTS OF FOREIGN EXCHANGE RATE Net unrealized (gain)/loss on fair value of CHANGES 9,141,111 (17,420,981) 9,239,981 9,141,111 (17,420,981) 9,239,981 financial assets at fair value through profit NET INCREASE (DECREASE) IN CASH AND CASH or loss and derivative liability (Note 7) 462,908 336,698 1,190,954 462,908 336,698 5,904,377 EQUIVALENTS (3,315,203,572) (1,127,219,946) 5,008,554,124 (3,190,825,252) (905,029,271) 4,948,737,766 Share in net income (loss) of a subsidiary − − − (125,666,513) (9,872,906) (28,183,574) Changes in operating assets and liabilities: CASH AND CASH EQUIVALENTS AT BEGINNING Decrease (increase) in: OF YEAR Financial assets at fair value through Cash and other cash items 2,370,171,189 1,639,300,590 1,684,403,861 2,300,112,472 1,597,057,290 1,653,720,370 profit or loss 4,467,134 (38,436,809) (46,770,100) 4,467,134 (8,310,660) (46,770,100) Due from Bangko Sentral ng Pilipinas 16,108,207,737 16,017,675,837 13,415,517,416 15,586,846,184 15,621,432,509 12,722,258,187 Interbank Loans Receivable/ Due from other banks 3,010,162,780 3,820,050,486 4,090,364,784 2,944,176,334 3,749,409,945 3,995,280,423 Securities Purchased under Resale Interbank loans receivable and Securities Agreements 23,500,000 250,000 72,250,000 23,500,000 250,000 72,250,000 purchased under resale agreements (Note 6) 2,164,910,000 3,303,644,739 581,831,467 2,076,910,000 2,845,174,517 493,077,515 Loans and receivables (13,162,413,820) (11,260,911,630) (19,035,339,274) (12,602,106,707) (11,227,713,859) (19,214,461,754) 23,653,451,706 24,780,671,652 19,772,117,528 22,908,044,990 23,813,074,261 18,864,336,495 Other assets (135,146,899) (121,009,935) 236,081,554 (135,577,310) (123,351,633) 501,159,458 Increase (decrease) in: CASH AND CASH EQUIVALENTS AT END OF YEAR Deposit liabilities 2,595,234,110 3,261,120,617 26,684,487,773 2,232,602,436 3,450,246,809 26,639,369,587 Cash and other cash items 3,249,359,133 2,370,171,189 1,639,300,590 3,176,490,713 2,300,112,472 1,597,057,290 Manager’s checks 354,613,209 (4,145,822) 319,866,850 354,613,209 (4,145,822) 319,866,850 Due from Bangko Sentral ng Pilipinas 12,216,191,774 16,108,207,737 16,017,675,837 11,824,524,807 15,586,846,184 15,621,432,509 Accrued expenses and other liabilities (194,812,825) 676,223,831 135,201,841 (216,585,038) 670,713,669 135,933,546 Due from other banks 2,463,991,767 3,010,162,780 3,820,050,486 2,374,076,786 2,944,176,334 3,749,409,945 Net cash provided by (used in) operations (9,100,532,728) (6,528,944,235) 9,143,490,745 (8,994,688,109) (6,324,436,965) 9,136,841,642 Interbank loans receivable and Securities Income taxes paid (256,312,142) (210,492,705) (158,394,368) (244,400,553) (203,204,553) (151,079,224) purchased under resale agreements Contributions paid on retirement plan −(2,160,408) − − − − (Note 6) 2,408,705,460 2,164,910,000 3,303,644,739 2,342,127,432 2,076,910,000 2,845,174,517 Net cash provided by (used in) operating activities (9,356,844,870) (6,741,597,348) 8,985,096,377 (9,239,088,662) (6,527,641,518) 8,985,762,418 ₱20,338,248,134 ₱23,653,451,706 ₱24,780,671,652 ₱19,717,219,738 ₱22,908,044,990 ₱23,813,074,261 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Financial assets at FVOCI (19,958,612,995) (8,282,281,155) − (19,958,612,995) (8,312,481,155) − OPERATIONAL CASH FLOWS FROM INTEREST Investment securities at amortized cost Interest received ₱7,071,263,588 ₱5,601,755,743 ₱3,991,914,367 ₱6,715,151,747 ₱5,372,979,425 ₱3,706,854,801 (Note 7) (129,009,307) (796,741,357) − (129,089,188) (796,741,357) − Interest paid 2,941,451,067 2,133,193,817 1,073,142,567 2,914,000,598 2,114,253,601 1,044,999,479 Available-for-sale investments − − (16,324,976,921) − − (16,324,976,921) Held-to-maturity investments (Note 7) − − (14,828,885) − − (14,828,885) See accompanying Notes to Financial Statements Software costs (Note 13) (45,775,767) (111,276,126) (53,850,078) (44,666,874) (109,114,062) (53,650,078) (Forward)

162 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 163 NOTES TO FINANCIAL STATEMENTS

1. CORPORATE INFORMATION A change in the Parent Company’s ownership interest in a subsidiary, without a loss of control, is accounted for as an equity transaction. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and Robinsons Bank Corporation (the Parent Company or the Bank) was domiciled and incorporated in the Philippines and registered with the Philippine Securities attributed to the owners of the Parent Company. and Exchange Commission (SEC) on April 28, 1966 and acquired its license from Bangko Sentral ng Pilipinas (BSP) to operate as a commercial bank on March 1, 2002. On March 21, 2013, the SEC granted the license extending the Bank’s corporate life for another fifty (50) years. When a change in ownership interest of a subsidiary occurs which results in a loss of control over the subsidiary, the Parent Company: • derecognizes the related assets (including goodwill) and liabilities of the subsidiary; The registered address and principal place of business of the Parent Company is at 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City. • derecognizes the carrying amount of any non-controlling interests; • derecognizes the related other comprehensive income (OCI) recorded in equity and recycles the same to statement of income or surplus; The Parent Company is 60.00% and 40.00% owned by JG Summit Capital Services Corp. (JGSCSC) and Robinsons Retail Holdings, Inc. (RRHI), respectively. The • recognizes the fair value of the consideration received; ultimate parent company of the Bank is JG Summit Holdings, Inc. On June 16, 2017, the Parent Company issued ₱4.18 billion long-term negotiable certificate of • recognizes the fair value of any investment retained; and deposits (LTNCD) carried at a tenor of 5.5 years with a coupon of 4.125%. The issuance of LTNCD represents the Parent Company’s initial entry into the debt capital • recognizes any surplus or deficit in statement of income. market. On July 6, 2018, the Parent Company issued additional LTNCD amounting to ₱1.78 billion with nominal interest rate of 4.875% and effective interest rate (EIR) of 5.15% payable every quarter which will mature on January 6, 2024. On August 13, 2019, the Parent Company issued ₱5.00 billion worth of Peso Corporate Changes in Accounting Policies and Disclosures Bond carried at a tenor of 2.0 years with a coupon of 5.125%. Also, on November 14, 2019, the Parent Company issued ₱5.00 billion worth of Corporate Bonds carried at a tenor of 2.0 years tenor with a coupon rate of 4.300%. The issuances were listed in the Philippine Dealing and Exchange Corporation (PDEx). The accounting policies adopted are consistent with those of the previous financial year, except that the Group has adopted the following new accounting pronouncements starting January 1, 2019. Except as otherwise indicated, these changes in the accounting policies did not have any significant impact on the In December 2012, the Parent Company acquired 99.65% controlling interest in Legazpi Savings Bank, Inc. (LSB). financial position or performance of the Group:

LSB was incorporated and registered with the SEC on May 8, 1976 and acquired license from the BSP to operate as a thrift bank. LSB’s registered address and • Amendments to PAS 19, Plan Amendment, Curtailment or Settlement principal place of business is at 738 Building, Rizal Street, Barangay Sagpon, Old Albay, Legazpi City. LSB operates and provides its services through a network of • Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures eighteen (18) banking units including head office and a main branch in the area of Albay. • Amendments to PFRS 9, Prepayment Features with Negative Compensation Annual Improvements 2015-2017 Cycle (issued in December 2017) The Parent Company and its subsidiary (the Group) is engaged in commercial and thrift banking, respectively, whose principal activities include deposit-taking, ¾ Amendments to PFRS 3 and PFRS 11 - Previously held interest in a joint operation lending, treasury, foreign exchange dealing and fund transfers or remittance servicing. ¾ Amendments to PAS 12, Income tax consequences of payments on financial instruments classified as equity ¾ Amendments to PAS 23, Borrowing costs eligible for capitalization

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Standard that has been adopted and that is deemed to have significant impact on the financial statements or performance of the Group is described below:

Basis of Preparation PFRS 16, Leases The accompanying financial statements of the Group and of the Parent Company have been prepared on a historical cost basis except for financial assets at fair PFRS 16 supersedes PAS 17, Leases, Philippine Interpretation IFRIC 4, Determining whether an Arrangement contains a Lease, Philippine Interpretation SIC-15, value through profit or loss (FVTPL) and financial assets at fair value through other comprehensive income (FVOCI) which are measured at fair value. Operating Leases Incentive and Philippine Interpretation SIC-27, Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases balance sheet. The financial statements of the Parent Company reflect the accounts of the Regular Banking Unit (RBU) and the Foreign Currency Deposit Unit (FCDU). The functional currency of RBU and FCDU is Philippine Peso (PHP) and United States Dollar (USD), respectively. For financial reporting purposes, FCDU accounts and Lessor accounting under PFRS 16 is substantially unchanged from PAS 17. Lessors will continue to classify leases as either operating or finance leases using similar foreign currency-denominated accounts in the RBU are translated into their equivalents in PHP (see accounting policy on Foreign Currency Translation). The principles as in PAS 17. Therefore, PFRS 16 has no material impact for leases where the Group is the lessor. financial statements individually prepared for these units are combined and inter-unit accounts and transactions are eliminated. The Group adopted PFRS 16 using the modified retrospective approach with the date of initial application at January 1, 2019. Under this method, the standard The financial statements are presented in PHP, and all amounts are rounded to the nearest peso (₱), except when otherwise indicated. is applied retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Group did not restate comparative figures and recognized a lease liability and right-of-use assets at the date of initial application for lease previously classified as an operating lease Statement of Compliance applying PAS 17. The Group measured the lease liability at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing The financial statements of the Group and of the Parent Company have been prepared in compliance with Philippine Financial Reporting Standards (PFRSs). rate at the date of initial application. The Group measured the right-of-use assets at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statement of financial position immediately before the date of initial application. Presentation of Financial Statements The Group and the Parent Company present its statements of financial position broadly in the order of liquidity. An analysis regarding recovery or settlement Accordingly, the adoption of PFRS 16 has no impact to the Group’s ‘Surplus’ as of January 1, 2019 and the 2018 comparative financial statements are not within twelve (12) months after the statement of financial position date (current) and more than twelve (12) months after the statement of financial position date comparable to the information presented for 2019. (non-current) is presented in Note 20. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not The Bank assesses that it has a currently enforceable right of offset if the right is not contingent on a future event, and is egallyl enforceable in the normal course contain a purchase option (‘short-term leases’) and lease contracts for which the underlying asset is of low value (‘low-value assets’), except for office/building, of business, event of default, and event of insolvency or bankruptcy of the Bank and all of the counterparties. Income and expense are not offset in the statement parking and ATM spaces). of income unless required or permitted by any accounting standard or interpretation, and as specifically disclosed in the accounting policies of the Group and of the Parent Company. This is not generally the case with master-netting agreements, where the related assets and liabilities are presented gross in the statement The effects of adopting PFRS 16 on the consolidated and parent company statements of financial position as at January 1, 2019 follow: of financial position. Increase/(Decrease) Basis of Consolidation Consolidated Parent Company The consolidated financial statements of the Group are prepared for the same reporting period as the subsidiary, using consistent accounting policies. ASSETS Right-of-use (ROU) of assets* ₱635,203,495 ₱587,515,373 All intra-group balances, transactions, income and expenses and profit and losses resulting from intra-group transactions are eliminated in full in the consolidation. Prepaid expenses - rent** (20,095,831) (14,038,343) 615,107,664 573,477,030 A subsidiary is fully consolidated from the date on which control is transferred to the Parent Company. Control is achieved where the Parent Company is exposed, or has the rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. LIABILITIES Consolidation of a subsidiary ceases when control is transferred out of the Parent Company. The results of a subsidiary acquired or disposed of during the year are Lease liability**** 655,550,471 611,029,813 included in the consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate. Accrued expenses - rent*** (40,442,807) (37,552,783) ₱615,107,664 ₱573,477,030 * Presented under Property and equipment ** Included in Prepaid expenses under other assets *** Included in Accrued expenses **** Presented under Other liabilities 164 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 165 The lease liability as at January 1, 2019 can be reconciled to the operating lease commitments as of December 31, 2018, as follows: The amendments also clarify that an entity first determines any past service cost, or a gain or loss on settlement, without considering the effect of the asset ceiling. This amount is recognized in profit or loss. An entity then determines the effect of the asset ceiling after the plan amendment, curtailment or settlement. Any Consolidated Parent Company change in that effect, excluding amounts included in the net interest, is recognized in other comprehensive income. In 2019, the retirement plan of the Group was Operating lease commitments as at December 31, 2018 ₱776,379,785 ₱714,032,495 amended thereby increasing the plan benefit of employees for every year of credited service based on the final daily basic salary as disclosed in Note 22. The Group considered the amendments to PAS 19 in the determination of current service cost, past service cost and interest cost for the year ended 2019. Add: Payments in optional extension periods not recognized at December 31, 2018 487,560 Less: Commitments relating to short term leases (29,073,056) (27,351,195) Significant Accounting Policies Total gross lease payables as of January 1, 2019 747,794,289 686,681,300 Weighted average incremental borrowing rate at January 1, 2019 7.27% 7.19% Fair Value Measurement Lease liabilities recognized at January 1, 2019 ₱655,550,471 ₱611,029,813 For measurement and disclosure purposes, the Group determines the fair value of an asset or a liability at initial measurement date or at each statement of financial position date. Fair value is the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between Amounts recognized in the consolidated statement of financial position and statement of income market participants at the measurement date. Set out below, are the carrying amounts of the Group’s and Parent Company’s right-of-use assets and lease liabilities and the movements during the period: The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: Right-of-use assets Lease Liability under • In the principal market for the asset or liability; or under ‘Property and ‘Other liabilities’ • In the absence of a principal market, in the most advantageous market for the asset or liability. Consolidated equipment’ (Note 10) (Note 19) As at January 1, 2019 ₱635,203,495 ₱655,550,471 The principal or the most advantageous market must be accessible to by the Group. The fair value of an asset or a liability is measured using the assumptions that Additions 292,205,132 288,537,011 market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. Depreciation (248,849,807) − Interest expense − 51,627,485 If the asset or liability measured at fair value has a bid and ask price, the price within the bid-ask spread that is the most representative of fair value in the Payments − (275,707,863) circumstances shall be used to measure fair value, regardless of where the input is categorized within the fair value hierarchy. As at December 31, 2019 ₱678,558,820 ₱720,007,104 A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest Right-of-use assets Lease Liability under and best use or by selling it to another market participant that would use the asset in its highest and best use. under ‘Property and ‘Other liabilities’ Parent Company equipment’ (Note 10) (Note 19) The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the As at January 1, 2019 587,515,373 ₱611,029,813 use of relevant observable inputs and minimizing the use of unobservable inputs. Additions 280,341,794 276,816,221 Depreciation (239,507,076) − All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as Interest expense − 47,292,619 follows, based on the lowest level of input that is significant to the fair value measurement as a whole: Payments − (267,563,316) As at December 31, 2019 ₱628,350,091 ₱667,575,337 • Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities; • Level 2 – Valuation techniques for which the lowest level of input that is significant to the fair value measurement is directly or indirectly observable Set out below are the amounts recognized in the consolidated and parent company statement of income: • Level 3 – Valuation techniques for which the lowest level input that is significant to the measurement is unobservable.

December 31, 2019 External appraisers are involved for valuation of significant non-financial assets such as investment properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. Consolidated Parent Company Depreciation expense on right-of use assets ₱248,849,807 ₱239,507,076 For purposes of the fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset Interest expense on lease liabilities 51,627,485 47,292,619 or liability and the level of fair value hierarchy (see Note 5). Rent expense - short-term leases 41,195,803 39,372,841 Rent expense - low value assets 8,556,067 44,698 For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Rent expense - others 60,240,393 60,240,393 levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole at the end of each Total amounts recognized in statement of income ₱410,469,555 ₱386,457,627 statement of financial position).

Philippine Interpretation IFRIC 23, Uncertainty over Income Tax Treatment Foreign Currency Translation The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of PAS 12, Income Taxes. It does The consolidated financial statements are presented in Philippine peso (PHP), which is the Parent Company’s functional currency. not apply to taxes or levies outside the scope of PAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following: Transactions and balances • Whether an entity considers uncertain tax treatments separately The books of accounts of the RBU are maintained in PHP, while those of the FCDU are maintained in USD. For financial reporting purposes, FCDU accounts and • The assumptions an entity makes about the examination of tax treatments by taxation authorities the foreign currency-denominated monetary assets and liabilities in the RBU are translated into their PHP equivalents based on the Bankers Association of the • How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates Philippines (BAP) closing rate prevailing at the statement of financial position date and for, foreign currency-denominated income and expenses based on the spot • How an entity considers changes in facts and circumstances exchange rate at the date of the transaction. Foreign exchange differences arising from restatements of foreign currency-denominated assets and liabilities in the RBU are credited to or charged against the statement of income under ‘Foreign exchange gain (loss) - net’ in the year in which the rates change. Foreign exchange The Group has to determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The differences arising on translation of FCDU accounts to peso are taken to other comprehensive income (OCI) under ‘Translation adjustments’. approach that better predicts the resolution of the uncertainty needs to be followed. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of the initial Upon adoption of the Interpretation, the Group considered whether it has any uncertain tax positions. The Group determined that, based on its tax compliance, transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates as at the date when the fair value is it is probable that its tax treatments (including those for the subsidiaries) will be accepted by the taxation authorities. The Interpretation did not have an impact determined. on the financial statements of the Group. Cash and Cash Equivalents Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement For purposes of reporting cash flows, cash and cash equivalents include cash and other cash items, amounts due from BSP and other banks, interbank loans The amendments to PAS 19 address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments receivable and Securities Purchased Under Resale Agreements (SPURA) with original maturities of three (3) months or less from dates of placements and that are specify that when a plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to: subject to insignificant risk of changes in value. Due from BSP includes the statutory reserves required by the BSP which the Group considers as cash equivalents • Determine current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using theactuarial assumptions used wherein withdrawals can be made to meet the Group’s cash requirements as allowed by the BSP. to remeasure the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets afterhat t event Repurchase and Reverse Repurchase Agreements Determine net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined benefit liability (asset) Securities sold under agreements to repurchase at a specified future date (‘repos’) are not derecognized from the statement of financial position. The corresponding reflecting the benefits offered under the plan and the plan assets after that event; and the discount rate used to remeasure that net defined benefit liability cash received, including accrued interest, is recognized in the statement of financial position as ‘Securities sold under repurchase agreements (SSURA)’, reflecting (asset). the economic substance of such transaction.

166 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 167 Conversely, securities purchased under agreements to resell at a specified future date (‘reverse repos’) are not recognized in the statement of financial position. Financial Assets at FVTPL The corresponding cash paid, including accrued interest, is recognized in the statement of financial position as SPURA, and is considered a loan to the counterparty. Debt instruments that neither meet the amortized cost nor the FVOCI criteria, or that meet the criteria but the Group has chosen to designate as at FVTPL at initial recognition, are classified as financial assets at FVTPL. The difference between the purchase price and resale price is treated as interest income and is accrued over the life of the agreement using the effective interest rate (EIR) method. Equity investments are classified as financial assets at FVTPL, unless the Group designates an equity investment that is not held for trading as at FVOCI at initial recognition. The Group’s financial assets at FVTPL include government securities, corporate bonds and equity securities which are held for trading purposes. Financial Instruments - Initial Recognition and Subsequent Measurement Date of recognition A financial asset is considered as held for trading if: Purchases or sales of financial instruments that require delivery of assets within the time frame established by regulation or convention in the market are • it has been acquired principally for the purpose of selling it in the near term; recognized on the settlement date. Settlement date accounting refers to (a) recognition of an asset on the day it is received by the Group, and (b) the derecognition • on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of an asset and recognition of any gain or loss on disposal on the day that it is delivered by the Group. Deposits, amounts due from banks and customers and loans of short-term profit-taking; or, are recognized when cash is received by the Group or advanced to the borrowers. Derivatives are recognized on a trade date - the date that the Group becomes • it is a derivative that is not designated and effective as a hedging instrument or financial guarantee. a party to the contractual provisions of the instrument. Trade date accounting refers to (a) the recognition of an asset to be received and the liability to pay for it on the trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for Financial assets at FVTPL are measured at fair value. Related transaction costs are recognized directly as expense in profit or loss. Gains and losses arising from payment on the trade date. changes (mark-to-market) in the fair value of the financial assets at FVTPL and gains or losses arising from disposals of these instruments are included in ‘Trading and securities gains - net’ account in the statements of income. Initial recognition of financial instruments All financial instruments are initially recognized at fair value. Except for financial assets and financial liabilities at FVTPL, the initial measurement of financial Interest recognized based on the modified effective interest rate of these investments is reported in statements of income under ‘Interest income’ account while instruments includes transaction costs. dividend income is reported in statements of income under ‘Miscellaneous income’ account when the right of payment has been established.

‘Day 1’ difference Financial Assets at FVOCI - Equity Investments Where the transaction price in a non-active market is different from the fair value from other observable current market transactions in the same instrument or At initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate equity investments as at FVOCI, however, computed based on valuation technique whose variables include only data from observable markets, the Group recognizes the difference between the transaction such designation is not permitted if the equity investment is held by the Group for trading. The Group has designated certain equity instruments as at FVOCI on price and the fair value (a ‘Day 1’ difference) in the statement of income unless it qualifies for recognition as some other type of asset or liability. In cases where fair initial application of PFRS 9. value is determined using data which are not observable from the market, the difference between the transaction price and the model value is only recognized in the statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate Financial assets at FVOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value, with no deduction for any method of recognizing the amount of ‘Day 1’ difference. disposal costs. Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in ‘Net unrealized gains (losses) on financial assets at FVOCI’ in the statements of financial position. When the asset is disposed of, the cumulative gain or loss previously recognized in the Net Classification and Measurement of Financial Assets unrealized fair value gains (losses) on financial assets at FVOCI account is not reclassified to profit or loss, but is reclassified directly to Surplus free account. Any dividends earned on holding these equity instruments are recognized in profit or loss under ‘Miscellaneous Income’ account. Classification and measurement The classification and measurement of financial assets is driven by the entity’s contractual cash flow characteristics of the financial assets and business model for Financial Assets at FVOCI - Debt Investments managing the financial assets. The Group applies the new category under PFRS 9 of debt instruments measured at FVOCI when both of the following conditions are met: • the instrument is held within a business model, the objective of which is achieved by both collecting contractual cash flows and selling financial assets, and As part of its classification process, the Group assesses the contractual terms of financial assets to identify whether they meet the ‘solely payments of principal and • the contractual terms of the financial asset meet the SPPI test. interest’ (SPPI) test. ‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (e.g. if there are repayments of principal or amortization of the premium or discount). FVOCI debt instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value being recognized in OCI. Interest income and foreign exchange gains and losses are recognized in profit or loss in the same manner as for financial assets measured at amortized cost. The ECL calculation Business model assessment for financial assets at FVOCI is explained in the ‘Impairment of Financial Assets’ section. The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Group’s business model is not assessed on an instrument-by-instrument basis, but a higher level of aggregated portfolios and is based on observable factors such as: On derecognition, cumulative gains or losses previously recognized in OCI are reclassified from OCI to profit or loss.

• How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity’s key The Group can only reclassify financial assets if the objective of its business model for managing those financial assets changes. Accordingly, the Group is required management personnel to reclassify financial assets: (i) from amortized cost to FVTPL, if the objective of the business model changes so that the amortized cost criteria are no longer met; • The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks and, (ii) from FVTPL to amortized cost, if the objective of the business model changes so that the amortized cost criteria start to be met and the characteristic of are managed the instrument’s contractual cash flows meet the amortized cost criteria. • The expected frequency, value and timing of sales are also important aspects of the Group’s assessment A change in the objective of the Group’s business model will be effected only at the beginning of the next reporting period following the change in the business The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stresscase’ scenarios into account. If cash flows after model. initial recognition are realized in a way that is different from the Group’s original expectations, the Group does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going Derivatives recorded at FVTPL forward. The Parent Company is a counterparty to derivative contracts, such as currency forwards and currency swaps. These derivatives are entered into as a service to customers and as a means of reducing or managing their respective foreign exchange exposures, as well as for trading purposes. Such derivative financial The Group’s measurement categories are described below: instruments are initially recorded at fair value on the date at which the derivative contract is entered into and are subsequently remeasured at fair value. Any gains or losses arising from changes in fair values of derivatives are taken directly to the statement of income and are included in ‘Trading and securities gains - net’. Investment Securities at Amortized Cost Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Financial assets are measured at amortized cost if both of the following conditions are met: • the asset is held within the Group’s business model whose objective is to hold financial assets in order to collect contractual cash flows; and, Reclassification of financial assets • the contractual terms of the instrument give rise, on specified dates, to cash flows that are SPPI on the principal amount outstanding. The Group can only reclassify financial assets if the objective of its business model for managing those financial assets changes. Accordingly, the Group is required to reclassify financial assets: (i) from amortized cost to FVTPL, if the objective of the business model changes so that the amortized cost criteria are no longer met; Financial assets meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortized cost using the and, (ii) from FVTPL to amortized cost, if the objective of the business model changes so that the amortized cost criteria start to be met and the characteristic of effective interest method, less any impairment in value. the instrument’s contractual cash flows meet the amortized cost criteria.

As of December 31, 2019, the Group’s investment securities at amortized cost are presented in the statement of financial position as ‘Due from BSP’, ‘Due from A change in the objective of the Group’s business model will be effected only at the beginning of the next reporting period following the change in the business other banks’, ‘Interbank loans receivable and SPURA’, ‘Investment securities at amortized cost’, ‘Loans and receivables’, ‘Accrued interest receivables’ and certain model. accounts under ‘Other assets’. Offsetting Financial Instruments The Group may irrevocably elect at initial recognition to classify a financial asset that meets the amortized cost criteria above as at FVTPL if that designation Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable eliminates or significantly reduces an accounting mismatch had the financial asset been measured at amortized cost. legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. The Group and the Parent Company assess that they have currently enforceable right of offset if the right is not contingent on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Group, the Parent Company and all of the counterparties.

168 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 169 Income and expenses are not offset in the statement of income unless required or permitted by any Significant increase in credit risk accounting standard or interpretation, and as specifically disclosed in the accounting policies of the The assessment of whether there has been a significant increase in credit risk is based on an increase in the probability of a default occurring since initial Group and the Parent Company. recognition. The SICR criteria vary by portfolio and include quantitative changes in probabilities of default and qualitative factors, including a backstop based on delinquency. The credit risk of a particular exposure is deemed to have increased significantly since initial recognition if, based on the Group’s internal credit Derecognition of Financial Assets and Liabilities assessment, the borrower or counterparty is determined to require close monitoring or with well-defined credit weaknesses. For exposures without internal credit Financial asset grades, if contractual payments are more than a specified days past due threshold, the credit risk is deemed to have increased significantly since initial recognition. A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when: Days past due are determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received. Due • the rights to receive cash flows from the asset have expired; or dates are determined without considering any grace period that might be available to the borrower. In subsequent reporting periods, if the credit risk of the • the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material financial instrument improves such that there is no longer a SICR since initial recognition, the Group shall revert to recognizing a 12-month ECL. delay to a third party under a ‘pass-through’ arrangement; or • the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or ECL parameters and methodologies (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control over the asset. ECL is a function of the probability of default (PD), loss given default (LGD) and exposure at default (EAD), with the timing of the loss also considered, and is estimated by incorporating forward-looking economic information and through the use of experienced credit judgment. Where the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred The PD is an estimate of the likelihood of default over a 12-month horizon for Stage 1 or lifetime horizon for Stage 2. The PD for each individual instrument control over the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also is modelled based on historic data and is estimated based on current market conditions and reasonable and supportable information about future economic recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group conditions. The Group segmented its credit exposures based on homogenous risk characteristics and developed a corresponding PD methodology for each has retained. portfolio. The PD methodology for each relevant portfolio is determined based on the underlying nature or characteristic of the portfolio, behavior of the accounts and Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the materiality of the segment as compared to the total portfolio. maximum amount of consideration that the Group could be required to repay. LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect Financial liability to receive, including from any collateral. It makes use of defaulted accounts that have either been identified as cured, restructured, or liquidated. The Group A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired. Where an existing financial liability is replaced segmented its LGD based on homogenous risk characteristics and calculated the corresponding averages based on security. by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in EAD is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of statement of income. principal and interest, and expected drawdowns on committed facilities.

Impairment of Financial Assets on or after January 1, 2018 Forward-looking information The Group and the Parent Company record the allowance for expected credit losses for all loans and receivables and other debt financial assets not held at FVTPL, The Group incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since its all referred to as ‘financial instruments’. Equity instruments are not subject to impairment under PFRS 9. initial recognition and its measurement of ECL. A broad range of forward-looking information are considered as economic inputs, such as GDP growth, exchange rate, interest rate, inflation rate and other economic indicators. The inputs and models used for calculating ECL may not always capture all characteristics of the ECL represents credit losses that reflect an unbiased and probability-weighted amount which is determined by evaluating a range of possible outcomes, the time market at the date of the financial statements. To reflect this, qualitative adjustments or overlays are occasionally made as temporary adjustments when such value of money and reasonable and supportable information about past events, current conditions and forecasts of future economic conditions. ECL allowances differences are significantly material. will be measured at amounts equal to either (i) 12-month ECL or (ii) lifetime ECL for those financial instruments which have experienced a significant increase in credit risk (SICR) since initial recognition (General Approach). The 12-month ECL is the portion of lifetime ECL that results from default events on a financial The Group applied the general approach for its receivable from customer. The Group used sophisticated method on its large-scale and medium-scale businesses instrument that are possible within the 12 months after the reporting date. Lifetime ECL are credit losses that results from all possible default events over the and motorcycle loans. While simplified models using vintage loss rate approach was used for the remaining portfolios (i.e., home, auto, personal loans (secured expected life of a financial instrument. and unsecured), microfinance and small-scale business).

Staging assessment Debt instruments measured at fair value through OCI A three-stage approach for impairment of financial assets is used, based on whether there has been a significant deterioration in the credit risk of a financial asset. The ECLs for debt instruments measured at FVTOCI do not reduce the carrying amount of these financial assets in the statement of financial position, which remains These three stages then determine the amount of impairment to be recognized. at fair value. Instead, an amount equal to the allowance that would arise if the assets are measured at amortized cost is recognized in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognized in OCI is recycled to the profit and loss upon derecognition For non-credit-impaired financial instruments: of the assets. • Stage 1 is comprised of all financial instruments which have not experienced a SICR since initial recognition or is considered of low credit risk as of the reporting date. The criteria for determining whether an account should be assessed under Stage 1 are as follows: (i) past due up to 30 days except for Consumer loans and credit card receivables microfinance loans wherein days past due for Stage 1 accounts is 0 - 6 days; (ii) accounts tagged as ‘Current’ are tagged as Stage 1 accounts; (iii) no significant The Group does not limit its exposure to credit losses to the contractual notice period, but, instead calculates ECL over a period that reflects the Group’s increase in the probability of default. The Group recognizes a 12-month ECL for Stage 1 financial instruments. expectations of the customer behavior, its likelihood of default and the Group’s future risk mitigation procedures, which could include reducing or cancelling the • Stage 2 is comprised of all financial instruments which have experienced a SICR since initial recognition. A SICR is generally deemed present in accounts facilities. Based on past experience and the Group’s expectations, the period over which the Group calculates ECLs for these products, is up to five years. with: (i) more than 30 days up to 90 days past due, except for microfinance loans; (ii) loan especially mentioned or substandard; or (iii) with significant increase in PD. For the consumer loans, stage 2 criteria (i), (ii), and (iii) are considered; The Group recognizes a lifetime ECL for Stage 2 financial instruments. Restructured loans The Group recognizes a lifetime ECL for Stage 2 financial instruments. Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, the loan is no longer considered as past due. Management continuously reviews For credit-impaired financial instruments: restructured loans to ensure that all criteria are met and that future payments are likely to occur. • Stage 3 is comprised of all financial assets that have objective evidence of impairment as a result of one or more loss events that have occurred after initial recognition with a negative impact on the estimated future cash flows of a loan or a portfolio of loans. The Group recognizes a lifetime ECL for Stage 3 financial instruments. Write-offs The Group’s accounting policy for write-offs remains the same as it was under previous version of PFRS 9. Definition of “default” and “restored” The Group classifies a financial instrument as in default when it is credit impaired, or becomes past due on its contractual payments for more than 90 days. As part Impairment of Financial Assets before January 1, 2018 of a qualitative assessment of whether a customer is in default, the Group considers a variety of instances that may indicate unlikeliness to pay. When such events The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. occur, the Group carefully considers whether the event should result in treating the customer as defaulted. An instrument is considered to be no longer in default A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (i.e. restored) if there is sufficient evidence to support that full collection is probable and payments are received for at least six months. that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group Credit risk at initial recognition of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy The Group uses internal credit assessment and approvals at various levels to determine the credit risk of exposures at initial recognition. Assessment can be or other financial reorganization and where observable data indicate that there is measurable decrease in the estimated future cash flows of the financial asset or quantitative or qualitative and depends on the materiality of the facility or the complexity of the portfolio to be assessed. group of financial assets, such as changes in arrears or economic conditions that correlate with defaults.

170 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 171 Financial assets carried at amortized cost (other than AFS and HTM) Investment in a Subsidiary The Group first assesses at each statement of financial position date whether objective evidence of impairment exists individually for financial assets that are Subsidiary pertains to entity over which the Parent Company has control. When the Parent Company has less than a majority of the voting or similar rights of an individually significant. If there is objective evidence that an impairment loss has been incurred, the amount of loss is measured as the difference between the investee, the Parent Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including: asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred), discounted using the • the contra arrangement with the other vote holders of the investee; financial asset’s original EIR. If a financial asset carried at amortized cost has a variable interest rate, the discount rate for measuring any impairment loss is the • rights arising from other contractual arrangements; and current EIR, adjusted for the original credit risk premium. The calculation of the present value of the estimated future cash flows of collateralized financial assets • the Parent Company’s voting rights and potential voting rights. reflects the cash flows that may result from foreclosure, less cost for obtaining and selling the collateral, whether or not foreclosure is probable. Investment in a subsidiary in the separate financial statements is accounted for using the equity method. Under the equity method, the investment in a subsidiary The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is charged to the statement of income as ‘Provision is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group and the Parent Company’s share of net assets for credit and impairment losses’. Interest income continues to be recognized based on the original EIR of the asset. Financial assets, together with the associated of the subsidiary since the acquisition date. Goodwill relating to the subsidiary is included in the carrying amount of the investment and is neither amortized nor allowance accounts, are written off when there is no realistic prospect of future recovery and all collateral has been realized. If subsequently, the amount of the individually tested for impairment. estimated impairment loss decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is reduced by adjusting the allowance account. If a future write-off is later recovered, any amounts formerly charged are credited to ‘Provision for credit and impairment losses’ The statement of income reflects the Parent Company’s share of the results of operations of the subsidiary. Any change in OCI of the investee is presented as part in the profit or loss. If the Group determines that no objective evidence of impairment exists for individually assessed loans and receivables, whether significant of the Group and the Parent Company’s OCI. In addition, when there has been a change recognized directly in the equity of the subsidiary, the Parent Company or not, it includes the asset in a group of assets with similar credit risk characteristics and collectively assesses for impairment in order to capture losses which recognizes its share of any changes, when applicable, in the statement of changes in equity. the Group believes has been incurred during the reporting period, but has not yet been identified to specific financial assets. Financial assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment for impairment. The aggregate of the Parent Company’s share of profit or loss of a subsidiary is shown on the face of the statement of income under ‘Share in net income (loss) of a subsidiary’ and represents profit or loss after tax in the subsidiary. For the purpose of a collective evaluation of impairment, loans and receivables are grouped on the basis of asset type, industry, collateral type, past-due status and other relevant factors. Those groupings reflect credit risk characteristics relevant to the estimation of future cash flows and indicative of the debtors’ ability The financial statements of the subsidiary are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting to pay all amounts due according to the contractual terms of the loans and receivables being evaluated. policies in line with those of the Group.

Future cash flows in a group of loans and receivables that are collectively evaluated for impairment are estimated on the basis of historical loss experience After application of the equity method, the Parent Company determines whether it is necessary to recognize an impairment loss on its investment in a subsidiary. for assets within the same credit risk groupings. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current At each statement of financial position date, the Parent Company determines whether there is objective evidence that the investment in a subsidiary is impaired. conditions. Estimates of changes in future cash flows reflect changes in related observable data from year to year (such as changes in unemployment rates, If there is such evidence, the Parent Company calculates the amount of impairment as the difference between the recoverable amount of the subsidiary and its property prices, payment status, or other factors that are indicative of incurred losses in the Bank and their magnitude). The methodology and assumptions used carrying value, then recognizes the loss in the statement of income. for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience. Upon loss of control over the subsidiary, the Parent Company measures and recognizes any retained investment at its fair value. The Group also uses the Net Flow Rate method to determine the credit loss rate of a particular delinquency age bucket based on historical data of flow-through and flow-back of loans across specific delinquency age buckets. As of December 31, 2019 and 2018, the sole and wholly owned subsidiary of the Parent Company is LSB (see Note 9).

The allowance for credit losses is determined based on the results of the net flow to write-off methodology. Net flow tables are derived from monitoring of monthly Property and Equipment peso movements between different stage buckets, from 1-day past due to 180-day past due. The net flow to write-off methodologyelies r on the last 36 months Land is stated at cost less any impairment in value. Depreciable property and equipment are carried at cost less accumulated depreciation and amortization, and of net flow tables to establish a percentage (‘net flow rate’) of receivables from customers that are current or in any state of delinquency (i.e., 30, 60, 90, 120, 150 any impairment in value. and 180 day past due) as of reporting date that will eventually result in write-off. The gross provision is then computed based on the outstanding balances of the receivables as of statement of financial position date and the net flow rates determined for the current and each delinquency bucket. This gross provision is The initial cost of property and equipment consists of its purchase price and any directly attributable costs of bringing the asset to its working condition and reduced by the estimated recoveries, which are also based on historical data, to arrive at the required allowance for credit losses. location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are normally charged against operations in the year the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment increase in the future economic benefits expected to be obtained from the use of property and equipment beyond its originally assessed standard of performance, was recognized, the previously recognized impairment loss is reversed. the expenditures are capitalized as an additional cost of property and equipment.

Any subsequent reversal of an impairment loss is recognized in the statement of income, to the extent that the carrying value of the asset does not exceed its Depreciation and amortization is calculated using the straight-line method over the estimated useful life of the depreciable assets. Leasehold improvements are amortized cost at the reversal date. amortized over the shorter of the terms of the covering leases and the estimated useful lives of the improvements.

Restructured loans The estimated useful lives of property and equipment follow: Where possible, the Group seeks to restructure past due loans rather than take possession of the related collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, any impairment is measured using the original EIR as calculated Building 25 years before the modification of terms and the loan is no longer considered past due. Transportation equipment 5 years Leasehold improvements 5 years Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be Furniture, fixtures and equipment 3 to 5 years subject to an individual or collective impairment assessment, calculated using the loan’s original EIR. The useful lives and the depreciation and amortization method are reviewed periodically to ensure that the period and the method of depreciation and AFS investments amortization are consistent with the expected pattern of economic benefits from the items of property and equipment. For equity securities classified as AFS investments, this would include a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss-measured as the difference between the acquisition cost and the current fair value, less any impairment loss The carrying values of the property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying values may not on that financial asset previously recognized in OCI is removed from OCI and recognized in the statement of income. Impairment losses on equity securities are be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, an impairment loss is recognized in the not reversed through the statement of income. Increases in fair value after impairment are recognized directly in OCI. statement of income (see accounting policy on Impairment of Non-financial Assets).

For debt securities classified as AFS investments, impairment is assessed based on the same criteria as financial assets carried at amortized cost. Future interest An item of property and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected income from impaired AFS debt securities is based on the reduced carrying amount and is accrued based on the original EIR used to discount future cash flows for from its use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying the purpose of measuring impairment loss. Such accrual is recorded as part of ‘Interest income’ in the statement of income. If subsequently, the fair value of a amount of the asset) is included in the statement of income in the year the asset is derecognized. debt security increased and the increase can be objectively related to an event occurring after the impairment loss was recognized in the statement of income, the impairment loss is reversed through the statement of income. Effecitve January 1, 2019, the Group classifies ROU assets as part of property and equipment. Prior to that date, all of the Group’s leases are accounted for as operating leases in accordance with PAS 17, hence, not recorded on the sstatement of financial position. The Group recognizes ROU assets at the commencement HTM investments date of the lease (i.e., the date the underlying asset is available for use). ROU assets are initially measured at cost, less any accumulated depreciation and The Group assesses at each statement of financial position date whether objective evidence of impairment exists individually for financial assets that are impairment losses, and adjusted for any remeasurement of lease liabilities. The initial cost of ROU assets includes the amount of lease liabilities recognized, initial individually significant. If there is objective evidence that an impairment loss has been incurred, the amount of loss is measured as the difference between the direct costs incurred, lease payments made at or before the commencement date less any less any lease incentives received and estimate of costs to be incurred asset’s carrying amount and the present value of the estimated future cash flows, discounted using the financial asset’s original EIR. If a financial asset carried at by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required amortized cost has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR, adjusted for the original credit risk premium. by the terms and conditions of the lease, unless those costs are incurred to produce inventories. Impairment loss is recognized in statement of income.

172 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 173 Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and a straight-line basis over the shorter of their estimated useful life and lease term. Right-of-use assets are subject to impairment. assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each statement of financial position date. Changes in the expected useful life or the expected Investment Properties pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and Investment properties are measured initially at cost, including transaction costs. Transaction costs represent nonrefundable taxes such as capital gains tax and treated as change in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of income consistent documentary stamp tax that are for the account of the Group. An investment property acquired through an exchange transaction is measured at fair value of the with the function of the intangible asset. asset acquired unless the fair value of such an asset cannot be measured in which case the investment property acquired is measured at the carrying amount of asset given up. Foreclosed properties are classified as ‘Investment properties’ upon: a) entry of judgment in case of judicial foreclosure; b) execution of the Sheriff’s Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the CGU level. Such intangibles are not amortized. The Certificate of Sale in case of extra-judicial foreclosure; or c) notarization of the Deed of Dacion in case of dation in payment (dacion en pago). useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. The difference between the fair value of the asset acquired and the carrying amount of the asset given up is recognized as ‘Gain (loss) on initial recognition of investment properties’ under ‘Miscellaneous income’ in the statement of income. Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of income when the asset is derecognized. Subsequent to initial recognition, depreciable investment properties are carried at cost less accumulated depreciation and any impairment in value. Branch licenses Investment properties are derecognized when they have either been disposed of or when they are permanently withdrawn from use and no future benefit is Branch licenses arise from the acquisition of branches and lincenses of a local bank by the Parent Company. The Parent Company’s branch licenses have indefinite expected from their disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the statement of income under useful lives and are subject to annual individual impairment testing. These are tested for impairment annually either individually or at the CGU level. Such ‘Miscellaneous income’ in the year of retirement or disposal. intangibles are not amortized. The useful life is reviewed annually to determine whether indefinite useful life assessment continues to be supportable. If not, the change in the useful life from indefinite to finite is made on a prospective basis. Expenditures incurred after the investment properties have been put into operations, such as repairs and maintenance costs, are normally charged against income in the year in which the costs are incurred. Software costs Software costs are carried at cost less accumulated amortization and any impairment loss. Depreciation is calculated on a straight-line basis using the remaining useful lives from the time of acquisition of the investment properties but not to exceed ten Software costs are amortized on a straight-line basis over the estimated useful life which ranges from three (3) to seven (7) years. (10) years for buildings and condominium units. Impairment of Non-financial Assets Transfers are made to investment properties when, and only when, there is a change in use evidenced by ending of owner occupation, commencement of an Property and equipment, investment in a subsidiary, investment properties and repossessed chattels operating lease to another party or ending of construction or development. Transfers are made from investment properties when, and only when, there is a At each statement of financial position date, the Group assesses whether there is any indication that its non-financial assets may be impaired. When an indicator change in use evidenced by commencement of owner occupation or commencement of development with a view to sale. of impairment exists or when an annual impairment testing for an asset is required, the Group makes a formal estimate of recoverable amount.

For a transfer from investment property to owner-occupied property, the deemed cost of the property for subsequent accounting is its carrying value at the date Recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset of change in use. If the property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is assessed as compliance with the policy stated under property and equipment up to the date of change in use. part of the CGU to which it belongs. Where the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount Other Assets - Repossessed Chattels rate that reflects current market assessments of the time value of money and the risks specific to the asset (or CGU). Repossessed chattels represent other properties acquired in settlement of loan receivables comprising mainly of repossessed vehicles. Repossessed chattels are stated at cost less accumulated depreciation and impairment in value. Depreciation is calculated on a straight-line basis using the remaining useful lives of the An impairment loss is charged to operations in the year in which it arises. An assessment is made at each statement of financial position date as to whether there vehicles from the time of acquisition. The useful lives of repossessed chattels are estimated to be three (3) to five (5) years. is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount Business Combinations and Goodwill since the last impairment loss was recognized. If that is the case, the carrying amount of the asset (or CGU) is increased to its recoverable amount. That increased Business combinations are accounted for using the purchase method of accounting. This involves recognizing identifiable assets (including previously amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized unrecognized intangible assets) and liabilities (including contingent liabilities but excluding future restructuring) of the acquired business at fair value. Any excess for the asset in prior years. Such reversal is recognized in the statement of income. After such a reversal, the depreciation nda amortization expense is adjusted in of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. If the cost of acquisition is less than the fair values of future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining life. the identifiable net assets acquired, the discount on acquisition is recognized directly in the statement of income in the year of acquisition. Intangible assets Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Parent Company’s Intangible assets with indefinite useful lives are tested for impairment annually at the statement of financial position date either individually or at the CGU level, as interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired. appropriate. Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more Revenue Recognition frequently, if event or changes in circumstances indicate that the carrying value may be impaired. Revenue is recognized to the extent that it is probable that future economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated at each of the Parent Company’s cash- The Group concluded that it is acting as a principal in all of its revenue arrangements except for commission income arrangements. generating units (CGUs) or group of CGUs, which are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is PFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. The five-step model is as follows: monitored for internal management purposes, and is not larger that an operating segment in accordance with PFRS 8, Operating Segments. a. Identify the contract(s) with a customer b. Identify the performance obligations in the contract Where goodwill has been allocated to a CGU and part of the operation within the unit is disposed of, the goodwill associated with the operation is included in the c. Determine the transaction price carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in these circumstances is measured based on the relative d. Allocate the transaction price to the performance obligation in the contract values of the disposed operation and the portion of the CGU retained. e. Recognize revenue when (or as) the entity satisfies a performance obligation

When subsidiaries are sold, the difference between the selling price and net assets plus cumulative translation differences andoodwill g is recognized in the Under PFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or statement of income. services to a customer. The standard requires the Group to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of income in the year in which the expenditure is incurred.

174 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 175 The following specific recognition criteria must also be met before revenue is recognized: Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the Revenues within the scope of PFRS 15 fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: Service fees and commission income Fees earned for the provision of services over a period of time are accrued over that period. These fees include investment fund fees, custodian fees, fiduciary a. there is a change in contractual terms, other than a renewal or extension of the arrangement; fees, portfolio fees, commission income, credit-related fees and other service and management fees. Fees on deposit-related accounts are recognized only upon b. a renewal option is exercised or extension granted, unless that term of the renewal or extension was initially included in the lease term; collection or accrued when there is reasonable degree of certainty as to its collection. c. there is a change in the determination of whether fulfillment is dependent on a specified asset; or d. there is a substantial change to the asset. Income from sale of property and equipment, investment property and repossessed chattels Income from sale of property and equipment, investment property and repossessed chattels is recognized at point-in-time upon completion of the earning process Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for and the collectability of the sales price is reasonably assured. scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b).

Other income Group as lessor Other income is recognized when earned at a point in time and is recorded under ‘Miscellaneous income’ in the statement of income. Finance leases, where the Group transfers substantially all the risks and benefits incidental to ownership of the leased item to the lessee, are included in the statement of financial position under ‘Loans and receivables’ account. A lease receivable is recognized at an amount equal to the net investment in the lease. All Revenues outside the scope of PFRS 15 income resulting from the receivables is included in ‘Interest income on loans and receivables’ in the statement of income.

Interest income Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are classified as operating leases. Initial direct costs For all financial instruments measured at amortized cost and interest-bearing financial instruments, interest income is recorded at the EIR, which is the rate that incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as the rental exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the income. Contingent rents are recognized as revenue in the year in which they are earned. net carrying amount of the financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options), includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future Group as lessee credit losses. Applicable beginning January 1, 2019 The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes The carrying amount of the financial asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. The adjusted carrying amount lease liabilities to make lease payments and ROU assets representing the right to use the underlying assets. is calculated based on the original EIR and the change in carrying amount is recorded as ‘Interest income’. Right-of-use assets Once the recorded value of a financial asset or group of similar financial assets has been reduced due to an impairment loss, interest income continues to be The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are recognized using the original EIR applied to the new carrying amount. measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any Interest income - finance lease lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use The excess of aggregate lease rentals plus the estimated residual value over the cost of the leased investment property constitutes the unearned lease income. assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are presented under ‘Property Residual values represent estimated proceeds from the disposal of investment property at the time lease is estimated. The unearned lease income is amortized and equipment’ in the consolidated statement of financial position and are subject to impairment. over the term of the lease, commencing on the month the lease is executed using the EIR method. Lease liabilities Unearned lease income ceases to be amortized when the lease contract receivables become past due for more than three months. At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend Dividend income on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option Dividend income, included in ‘Miscellaneous income’, is recognized when the Group’s right to receive payment is established. reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that Trading and securities gains - net triggers the payment occurs. Trading and securities gains - net represents results arising from disposal of AFS and HTM investments and trading activities including all gains and losses from changes in fair value of financial assets at FVTPL. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for Gains on sale of investment securities at amortized cost the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the Gains on sale of investment securities at amortized cost is recognized when the risk and rewards of the amortized cost securities are transferred to the buyer at an in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Lease liabilities are presented under ‘Other liabilities’ in the amount equal to the difference of the selling price and the carrying amount of the securities. consolidated statement of financial position.

Rental income Short-term leases and leases of low-value assets Rental income arising from leased properties is accounted for on a straight-line basis over the lease terms on ongoing leases and is recorded in the statement of The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term of 12 months or less income under ‘Miscellaneous income’. from the commencement date and do not contain a purchase option), except for office/building, parking and ATM spaces. It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below 250,000). Lease payments on short-term leases and leases Expense Recognition of low-value assets are recognized as expense on a straight-line basis over the lease term. Expenses are recognized when it is probable that decrease in future economic benefits related to the decrease in asset or an increase in liability has occurred and that the decrease in economic benefits can be measured reliably. Expenses that may arise in the course of ordinary regular activities of the Group include, among Applicable as at and for the year ended December 31, 208 and prior years others, the operating expenses on the Group’s operation. Group as lessee Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Any rental payments are Operating expenses accounted for on a straight-line basis over the lease term and included in ‘Occupancy and equipment-related costs’ in the statement of income. Operating expenses constitute costs which arise in the normal business operation and are recognized when incurred. Group as lessor Taxes and licenses Finance leases, where the Group transfers substantially all the risks and benefits incidental to ownership of the leased item to the lessee, are included in the This includes all other taxes, local and national, including gross receipts taxes (GRT), documentary stamp taxes, real estate taxes, licenses and permit fees and are statement of financial position under ‘Loans and receivables’ account. A lease receivable is recognized at an amount equal to the net investment in the lease. All recognized when incurred. income resulting from the receivables is included in ‘Interest income on loans and receivables’ in the statement of income.

Retirement Cost The Group has a noncontributory defined benefit retirement plan. The retirement cost of the Group is actuarially determined using the projected unit credit method. Under this method, the current service cost is the present value of retirement benefits payable in the future with respect to services rendered in the current period.

The net defined benefit liability or asset is the aggregate of the present value of the defined benefit obligation at the end of the reporting period reduced by the fair value of plan assets (if any), adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

176 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 177 The cost of providing benefits under the defined benefit plans is actuarially determined using the projected unit credit method. The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient future taxable income will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at Defined benefit costs comprise the following: each statement of financial position date and are recognized to the extent that it has become probable that future taxable income will allow the deferred tax asset • Service cost to be recovered. • Net interest on the net defined benefit liability or asset • Remeasurements of net defined benefit liability or asset Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settles, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as expense in the statement of income. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent qualified Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying actuaries. transactions either in OCI or directly in equity.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to current tax assets againstcurrent tax liabilities and the deferred taxes time which is determined by applying the discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the net defined relate to the same taxable entity and same taxation authority. benefit liability or asset is recognized as expense or income in the statement of income. Tax benefits acquired as part of a business combination, but not satisfying criteria for separate recognition at that date, are recognized subsequently if new Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was benefit liability) are recognized immediately in OCI in the period in which they arise. Remeasurements are not reclassified to profit or loss in subsequent periods. incurred during the measurement period or recognized in profit or loss.

Plan assets are assets that are held by a long-term employee benefit fund. Plan assets are not available to the creditors of the Group, nor can they be paid directly Segment Reporting to the Group. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by The Group’s operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date representing a strategic business unit that offers different products and serves different markets. If the Group changes the structure of its internal organization in of those assets (or, if they have no maturity, the expected period until the settlement of the related obligations). If the fair value of the plan assets is higher than a manner that causes the composition of its reportable segment to change, the corresponding information for earlier periods, including interim periods, shall be the present value of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the present value of economic benefits restated unless the information is not available and the cost to develop it would be excessive. Financial information on business segments is presented in Note 27. available in the form of refunds from the plan or reductions in future contributions to the plan. Events after the Reporting Period The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognized as a separate asset at fair value Post year-end events that provide additional information about the Group’s position at the statement of financial position date (adjusting events) are reflected when and only when reimbursement is virtually certain. in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of assets Standards Issued but not yet Effective embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the Group does not expect that the future adoption of the said expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset but only when pronouncements will have a significant impact on its consolidated financial statements. The Group intends to adopt the following pronouncements when they the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of income, net of any reimbursement. If the effect of the become effective: time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of Effective beginning on or after January 1, 2020 time is recognized as ‘Interest expense’ in the statement of income. • Amendments to PFRS 3, Definition of a Business

Contingent Liabilities and Contingent Assets The amendments to PFRS 3 clarify the minimum requirements to be a business, remove the assessment of a market participant’s ability to replace missing Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of assets embodying economic benefits is elements, and narrow the definition of outputs. The amendments also add guidance to assess whether an acquired process is substantive and add remote. Contingent assets are not recognized but are disclosed in the financial statements when an inflow of economic benefits is probable. illustrative examples. An optional fair value concentration test is introduced which permits a simplified assessment of whether an acquired set of activities and assets is not a business. Income Taxes Current tax An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted. Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the statement of financial position date. These amendments will apply on future business combinations of the Group.

Effective January 1, 2019, management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material subject to interpretations and establishes provisions where appropriate. The amendments refine the definition of material in PAS 1 and align the definitions used across PFRSs and other pronouncements. They are intended to Deferred tax improve the understanding of the existing requirements rather than to significantly impact an entity’s materiality judgements. Deferred tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted.

Deferred tax liabilities are recognized for all taxable temporary differences, except: Effective beginning on or after January 1, 2021 • PFRS 17, Insurance Contracts • When the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting income nor taxable income; and PFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once • In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of reversal of the emporaryt differences can be effective, PFRS 17 will replace PFRS 4,Insurance Contracts. This new standard on insurance contracts applies to all types of insurance contracts (i.e., life, controlled and it is probable that the temporary differences will not reverse in the foreseeable future. non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply. The overall objective of PFRS 17 is to provide an accounting model for Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused net operating loss carryover (NOLCO) and carryforward of insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are largely based on grandfathering unsed tax benefits from excess of the minimum corporate income tax (MCIT) over regular corporate income tax (RCIT). previous local accounting policies, PFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of PFRS 17 is the general model, supplemented by: Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the • A specific adaptation for contracts with direct participation features (the variable fee approach) carry forward of unused tax credits and unused tax losses can be utilized, except: • A simplified approach (the premium allocation approach) mainly for short-duration contracts

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with comparative figures required. Early application is permitted. at the time of the transaction, affects neither the accounting income nor taxable income; and • In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

178 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 179 Deferred effectivity It is probable, however, that future results of operations could be materially affected by changes in the estimates or in the effectiveness of the strategies • Amendments to PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint Ventures - Sale or Contribution of Assets relating to these proceedings (see Note 28). between an Investor and its Associate or Joint Venture c) Evaluation of business model in managing financial instruments (PFRS 9) The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an The Group manages its financial assets based on business models that maintain an adequate level of financial assets to match its expected cash outflows, associate or joint venture. largely arising from customers’ withdrawals and continuing loan disbursements to borrowers, while maintaining a strategic portfolio of financial assets for investment and trading activities consistent with its risk appetite. The amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint venture involves a business as defined in PFRS 3, Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does not constitute a business, however, is recognized only The Group developed business models which reflect how it manages its portfolio of financial instruments. The Group’s business models need not be assessed to the extent of unrelated investors’ interests in the associate or joint venture. On January 13, 2016, the FRSC postponed the original effective date of at entity level or as a whole but applied at the level of a portfolio of financial instruments (i.e., group of financial instruments that are managed together by January 1, 2016 of the said amendments until the IASB has completed its broader review of the research project on equity accounting that may result in the the Group) and not on an instrument-by-instrument basis (i.e., not based on intention or specific characteristics of individual financial instrument). simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures. In determining the classification of a financial instrument under PFRS 9, the Group evaluates in which business model a financial instrument or a portfolio of financial instruments belong to taking into consideration the objectives of each business model established by the Group, various risks and key performance 3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES indicators being reviewed and monitored by responsible officers, as well as the manner of compensation for them.

The preparation of the Group’s consolidated financial statements requires the management of the Group and the Parent Company to make judgments, estimates The Parent Company’s BOD approved its documentation of business models which contains broad categories of business models. The business model and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosures of contingent ssetsa and contingent liabilities at includes the Parent Bank’s lending activities as well as treasury business activities broken down into liquidity and investment portfolios. the statement of financial position date. Future events may occur which can cause the assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in the financial statements as they become reasonably determinable. In addition, PFRS 9 emphasizes that if more than an infrequent and more than an insignificant sale is made out of a portfolio of financial assets carried at amortized cost, an entity should assess whether and how such sales are consistent with the objective of collecting contractual cash flows. In making this Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are judgment, the Group considers certain circumstances documented in its business model manual to assess that an increase in the frequency or value of sales believed to be reasonable under the circumstances. of financial instruments in a particular period is not necessarily inconsistent with a held-to-collect business model if the Group can explain the reasons for those sales and why those sales do not reflect a change in the Group’s objective for the business model. The following are the critical judgments and key assumptions that have a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year: In 2019, the Parent Company sold various foreign-currency denominated securities under its HTC portfolio. The sale was driven by the change in investment policy with respect to additional Risk Aceptance Criteria (RAC) for bonds booked under HTC. This is in anticipation of new regulations in country risk and Judgments Interest Rate Risk in the Banking Books (IRRBB) to be issued that push for a more robust risk management for investments. The Parent Company disposed a) Leases all of its foreign-currency denominated HTC securities with tenor of more than fifteen (15) years. Effectively, the Parent Company abandoned its foreign Applicable beginning January 1, 2019 currency denominated HTC portfolio with a tenor of more than 15 years. The remaining securities in the HTC portfolio will continue to be measured at amortized cost. Details of the disposal of HTC are included in Note 7. Determination of the lease term for lease contracts with renewal and termination options - Group as lessee The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is d) Uncertainties over income tax treatments reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group applies significant judgement in identifying uncertainties over income tax treatments. Since the Group operates in a highly regulated environment, it assessed whether the Interpretation had an impact on its consolidated financial statements. The Group has several lease contracts that include extension and termination options. Upon the adoption of PFRS 16, The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factos The Group applies significant judgment whether it is probable that a particular uncertain income tax treatment will be acceptable to the taxation authority. that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term The Group considers the following: if there is a significant event or change in circumstances that is whitin its control that affects its ability to exercise or not to exercise the option to renew or • Past experience related to similar tax treatments the terminate. • Legal advice or case law related to other entities • Practice guidelines published by the taxation authority that are applicable to the case Estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (‘IBR’) to measure lease liabilities. The Group reassesses the judgement if the facts and circumstances on which the judgement was based change or as a result of new information that affects The IBR is the rate of interest that the Bank would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an the judgement. asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Bank ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be Estimates adjusted to reflect the terms and conditions of the lease. a) Expected credit losses on financial assets (PFRS 9) The Group reviews its financial assets and commitments at each reporting date to determine the The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific amount of expected credit losses to be recognized in the balance sheet and any changes thereto in the statement of income. In particular, judgments and adjjustments (such as the credit spread for a stand-alone credit rating, or to reflect the terms and conditions of the lease). estimates by management are required in determining the following: • whether a financial asset has had a significant increase in credit risk since initial recognition; whether default has taken place and what comprises a Applicable as at and for the year ended December 31, 2018 and prior years default; • macro-economic factors that are relevant in measuring a financial asset’s probability of Operating lease • default as well as the Group’s forecast of these macro-economic factors; Group as lessee • probability weights applied over a range of possible outcomes; The Group has entered into commercial property leases for its head office and branch premises. The Group has determined, basedon the evaluation of the • sufficiency and appropriateness of data used and relationships assumed in building the terms and conditions of the lease agreement (i.e., the lease does not transfer ownership of the asset to the lessee by the end of the lease term and lease • components of the Group’s expected credit loss models; term is not for the major part of the asset’s economic life), that the lessor retains all the significant risks and rewards of ownership of the properties which • measuring the exposure at default for unused commitments on which an expected credit loss are leased out on operating leases. • should be recognized and the applicable loss rate

Finance lease The details of the expected credit losses on financial assets are presented in Notes 7, 8, and 14 Group as lessor The Group has determined based on an evaluation of terms and conditions of the lease arrangements (i.e., present value of minimum lease payments b) Impairment of non-financial assets amounts to at least substantially all of the fair value of leased asset, lease term is for the major part of the economic useful life of the asset, and lessor’s losses Investment properties and repossessed chattels associated with the cancellation are borne by the lessee) that it has transferred all significant risks and rewards of ownership of the properties it leases out The Group assesses impairment on investment properties and repossessed chattels whenever events or changes in circumstances indicate that the carrying on finance leases. amount of an asset may not be recoverable. The factors that the Group considers important which could trigger an impairment review include the following: a. significant underperformance relative to expected historical or projected future operating results; b) Contingencies b. significant changes in the manner of use of the acquired assets or the strategy for overall business; and The Group is currently involved in legal proceedings. The estimate of the probable cost for the resolution of claims has been developed in consultation with c. significant negative industry or economic trends. the aid of the outside legal counsel handling the Group’s defense in this matter and is based upon an analysis of potential results. Management does not believe that the outcome of this matter will affect the results of operations.

180 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 181 An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is computed using the These units submit various risk reports to the Management Committee, the RMC and the BOD, among others. fair value less costs to sell for investment properties and repossessed chattels. Recoverable amounts are estimated for individual assets. Further specific risk management disclosures, including mitigation, measurement and control, are in the succeeding sections. The carrying values of and the allowance for impairment losses, if any, on investment properties and repossessed chattels of the Group and of the Parent Company are disclosed in Notes 11, 13 and 14. Credit Risk Credit risk may be defined as the possibility of loss due to the failure of a customer/borrower or counterparty to perform its obligation to the Group. Branch licenses Branch License is considered an intangible asset with an indefinite useful life and it is required to be tested for impairment annually by comparing its carrying The Group has several credit risk mitigation practices: amount with its recoverable amount, irrespective of whether there is any indication that it may be impaired. The recoverable amount of the CGU has been • The Group offers a variety of loan products with substantial collateral values. The latter part of this credit risk section discusses collateral and other credit determined based on a value in use calculations using cash flow projections from financial budgets approve by senior management covering a five-year enhancements. period. The Group used the cost of equity as discount rate. Key assumptions used in the value in use calculation are pre-tax discount rate and growth rate, • Limits are set on the amount of credit risk that the Group is willing to take for customers and counterparties, and exposures are monitored against such which are at 10.54% and 5.00%, respectively in 2019. Management believes that no reasonably possible change in any of the key assumptions used would credit limits. cause the carrying value of the CGUs to exceed their recoverable amount. The carrying values of and allowance for impairment losses on branch licenses of • The Group also observes related regulatory limits such as the single borrower’s limit (SBL) and directors, officers, stockholders and related interests (DOSRI) the Group are disclosed in Note 12. ceiling. • To protect against settlement risk, the Group employs a delivery-versus-payment (DvP) settlement system, wherein payment is effected only when the Goodwill corresponding asset has been delivered. Goodwill is reviewed for impairment, annually or more frequently if events of changes in circumstances indicate that the carrying value may be impaired. • There is an internal credit risk rating system (ICRRS) in place, providing a structured format for collating and analyzing borrower data to arrive at a summary Impairment is determined for goodwill by assessing the recoverable amount of the CGU (or group of CGUs) to which the goodwill relates. Where the indicator of credit risk. recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or group of CGUs) to which goodwill has been allocated, an • Past due and non-performing loan (NPL) ratios are also used to measure and monitor the quality of the loan portfolio. impairment loss is recognized immediately in the statement of income. The Group estimated the discount rate used for the computation of the net present value be referenced to industry cost of capital. The recoverable amount of the CGU has been determined based on a value in use calculations using cash flow Maximum exposure to credit risk projections from financial budgets approve by senior management covering a five-year period. Average growth rate was derived from the average increase The table below shows the Group’s net credit risk exposure for financial assets with maximum exposure to credit risk different from its carrying amounts after in annual income during the last five (5) years. Key assumptions used in the value in use calculation are pre-tax discount rate and growth rate, which are at considering the financial effect of collateral and other credit enhancements: 10.13% and 5.00%, respectively in 2019 and 12.80% and 5.70%, respectively, in 2018. Management believes that no reasonably possible change in any of the key assumptions used would cause the carrying value of the CGUs to exceed their recoverable amount. Consolidated December 31, 2019 The carrying values of goodwill of the Group are disclosed in Note 9. Financial Maximum Carrying Fair Value Effect of Exposure to c) Recoverability of deferred taxes Amount of Collateral Collateral Credit Risk Deferred tax assets are recognized for temporary differences, unused tax losses and excess of MCIT over RCIT to the extent thatit is probable that future Interbank loans receivables and SPURA ₱2,408,705,460 ₱1,603,350,278 ₱1,603,350,278 ₱805,355,182 taxable profit will be available against which the temporary differences can be utilized. Significant management judgment is required to determine the Loans and receivables: amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits available which is primarily derived Receivables from customers: from interest income on loans and receivables and affected by expected future market or economic conditions and the expected performance of the Group Commercial 57,341,200,915 13,987,243,724 12,243,098,112 45,098,102,803 and the Parent Company together with future tax planning strategies. Real estate 19,067,998,568 20,073,949,576 10,462,536,023 8,605,462,545 The estimates of future taxable income indicate that certain temporary differences will be realized in the future. The primarysource of the income of the Consumption 12,391,266,516 9,693,487,573 5,702,215,994 6,689,050,522 Group and Parent Company is coming from interest income from loans and receivables, Management uses historical information and future economic Domestic bills purchased 495,192,826 − − 495,192,826 conditions as basis of growth in projecting future taxable income. Growth rate applied to the projections in 2019 and 2018 are 48.59% and 25.00% for 2018 Other receivables: and 2017, respectively. Details of recognized and unrecognized deferred tax on temporary differences are disclosed in Note 25. Accrued interest receivable 850,258,038 − − 850,258,038 Accounts receivable 1,050,173,005 − − 1,050,173,005 d) Present value of retirement liability Sales contract receivable 73,433,537 190,577,389 73,433,537 − The cost of defined benefit retirement plan and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves ₱93,678,228,865 ₱45,548,608,540 ₱30,084,633,944 ₱63,593,594,921 making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. The assumed discount rates were determined using market yields on Philippine government bonds Parent Company with terms consistent with the expected employee benefit payouts as of the statement of financial position date. December 31, 2019 Maximum The present values of the Group and the Parent Company’s defined benefit obligation as of December 31, 2019 and 2018 are disclosed in Note 22. Carrying Fair Value Financial Effect Exposure to Amount of Collateral of Collateral Credit Risk Interbank loans receivables and SPURA ₱2,342,127,432 ₱1,536,772,250 ₱1,536,772,250 ₱805,355,182 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES Loans and receivables: The main risks arising from the Group’s financial instruments are credit, market and liquidity risks. In general, the Group’s risk management objective is to ensure Receivables from customers: that risks taken are within the Group’s risk appetite, which is assessed based on the Group’s capital adequacy framework. The risk management process involves Commercial 57,160,149,323 13,916,347,785 12,221,076,818 44,939,072,505 risk identification, measurement, monitoring and control. Real estate 19,021,295,006 20,070,091,876 10,461,836,172 8,559,458,834 Consumption 11,116,495,285 9,507,255,241 5,696,782,843 5,419,712,442 The Group recognizes that risk management is the responsibility of the entire organization. Accordingly, all employees are expected to manage risks relating to Domestic bills purchased 495,192,826 − − 495,192,826 their own responsibilities. Other receivables: Accrued interest receivable 838,769,184 − − 838,769,184 The Board of Directors (BOD) ultimately oversees and approves significant matters related to risk management throughout the Parent Company, upon the review Accounts receivable 1,028,012,253 − − 1,028,012,253 and recommendation of various committees composed of members of the BOD and Senior Management. Among the Parent Company’s committees are: Sales contract receivable 46,365,590 125,754,429 46,365,590 − • Corporate Governance Committee, which ensures the BOD’s effectiveness and due observance of the corporate governance principles and guidelines; ₱92,048,406,899 ₱45,156,221,581 ₱29,962,833,673 ₱62,085,573,226 • Risk Management Committee (RMC), which is responsible for the development and oversight of the Parent Company’s risk management program; • Audit Committee, which examines the Parent Company’s framework of risk management, control and governance process to ensure that these are adequate and functional; and • Credit Committee, which recommends credit policies and evaluates credit applications.

The following units within the Parent Company jointly perform risk management functions on a daily basis: • Compliance for regulatory risk; • Treasury for funding and liquidity risk; • Credit Cycle Operations for credit risk; • Enterprise Risk Management Unit (ERMU) for various risks, including market risk, credit and operational risks; and • Internal Audit for the evaluation of the adequacy of internal control systems, covering operational risk.

182 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 183 Consolidated Parent Company December 31,2018 Gross amounts Financial Maximum set-off in Net amount Effect of remaining rights of Carrying Fair Value Effect of Exposure to Gross amounts of accordance with presented in set-off that do not meet Amount of Collateral Collateral Credit Risk recognized the PAS 32 statements of PAS 32 offsetting criteria Interbank loans receivables and SPURA ₱2,188,410,000 ₱2,188,410,000 ₱2,188,410,000 ₱− financial offsetting financial Financial Financial Loans and receivables: instruments criteria position instruments collateral Net exposure Receivables from customers: 2019 Commercial 46,963,115,555 23,871,607,869 14,075,190,106 32,887,925,449 Financial Assets Real estate 14,012,497,129 19,992,307,212 13,799,034,388 213,462,741 SPURA (Note 6) ₱805,355,182 ₱− ₱805,355,182 ₱− ₱805,355,182 ₱− Consumption 8,033,865,678 8,122,768,600 5,114,230,502 2,919,635,176 Derivative assets (Note 7) 992,618 992,618 − − 992,618 Domestic bills purchased 834,447,716 − − 834,447,716 ₱806,347,800 ₱− ₱806,347,800 ₱− ₱805,355,182 ₱992,618 Other receivables: Financial Liabilities Accrued interest receivable 719,091,672 − − 719,091,672 Derivative liabilities (Note 7) ₱462,908 ₱− ₱462,908 ₱− ₱− ₱462,908 Accounts receivable 729,515,033 − − 729,515,033 2018 Sales contract receivable 18,191,403 29,811,636 10,406,402 7,785,001 Financial Liabilities Lease receivable 9,660,132 − − 9,660,132 Derivative liabilities (Note 7) ₱336,698 ₱− ₱336,698 ₱− ₱− ₱336,698 ₱70,599,472,216 ₱54,204,905,317 ₱35,187,271,398 ₱38,321,522,920 Collateral and other credit enhancement The amount and type of collateral required depends on an assessment of credit risk. Guidelines are implemented regarding the acceptability of types of collateral Parent Company and valuation parameters. December 31, 2018 Maximum The main types of collateral obtained are as follows: Carrying Fair Value Financial Effect Exposure to • Mortgages over real estate and vehicle for consumer lending Amount of Collateral of Collateral Credit Risk • Chattels over inventory and receivable for commercial lending Interbank loans receivables and SPURA ₱2,100,410,000 ₱2,123,675,000 ₱2,100,410,000 ₱− • Government securities for interbank lending Loans and receivables: Receivables from customers: It is the Group’s policy to dispose repossessed properties in an orderly fashion. In general, the proceeds are used to reduce or repay the outstanding claim, and Commercial 48,766,498,353 23,739,687,904 14,026,909,000 34,739,589,353 are not occupied for business use. Real estate 14,000,598,525 19,968,769,662 13,794,037,287 206,561,238 Consumption 8,175,548,313 8,106,443,370 5,108,244,559 3,067,303,754 Concentration of credit Domestic bills purchased 834,447,716 − − 834,447,716 Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar Other receivables: economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Accrued interest receivable 707,881,692 − − 707,881,692 Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry. Accounts receivable 717,144,173 − − 717,144,173 Sales contract receivable 10,781,280 8,005,314 2,996,279 7,785,001 The tables below show the distribution of maximum exposure to credit risk by industry sector of the Group before taking into account collateral held and other credit enhancements (in millions): ₱76,041,235,505 ₱53,946,581,250 ₱35,032,597,125 ₱40,280,712,927

Offsetting of financial assets and financial liabilities Consolidated The Parent Company has derivative financial instruments with various counterparties transacted under the International Swaps and Derivatives Association (ISDA) 2019 which are subject to enforceable master netting agreements. Under the agreements, the Parent Company has the right to settle its derivative financial instruments Loans and Investment either: (1) upon election of the parties; or (2) in the case of default and insolvency or bankruptcy. The Parent Company, however, has no intention to net settle or Receivables* Securities** Total to gross settle the accounts simultaneously. Real estate, renting and business services 27,077 3,176 30,253 Financial intermediaries 21,519 389 21,908 The following table shows the effect of rights of set-off associated with the recognized financial assets and financial liabilities of the Parent Company: Wholesale and retail 12,257 − 12,257 Personal consumption 11,671 447 12,118 Consolidated Electricity, gas and water 9,361 2,866 12,227 Gross amounts Transport, storage and communication 7,939 660 8,599 set-off in Net amount Effect of remaining rights of Manufacturing 6,096 − 6,096 Gross amounts of accordance with presented in set-off that do not meet Construction 2,946 − 2,946 recognized the PAS 32 statements of PAS 32 offsetting criteria Agriculture, hunting and forestry 873 − 873 financial offsetting financial Financial Financial Government institutions 282 17,782 18,064 instruments criteria position instruments collateral Net exposure Others 9,569 16 9,585 2019 109,590 25,336 134,926 Financial Assets Less allowance for credit losses 1,167 − 1,167 SPURA (Note 6) ₱871,933,210 ₱− ₱871,933,210 ₱− ₱871,933,210 ₱− 108,423 25,336 133,759 Derivative assets (Note 7) 992,618 − 992,618 − − 992,618 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines Total ₱872,925,828 ₱− ₱872,925,828 ₱− ₱871,933,210 ₱992,618 **Financial assets at FVTPL, FVOCI and amortized cost Financial Liabilities Derivative liabilities (Note 7) ₱462,908 ₱− ₱462,908 ₱− ₱− ₱462,908 2018 Financial Assets SPURA (Note 6) ₱88,000,000 ₱− ₱88,000,000 ₱− ₱88,000,000 ₱− Financial Liabilities Derivative liabilities (Note 7) ₱336,698 ₱− ₱336,698 ₱− ₱− ₱336,698

184 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 185 Parent Company Grades Categories Description 2019 High grade Loans and Investment Risk rating 1 Excellent Lowest probability of default; exceptionally strong capacity for financial commitments; highly Receivables* Securities** Total unlikely to be adversely affected by foreseeable events. Real estate, renting and business services ₱27,000 ₱3,161 ₱30,161 Risk rating 2 Super Prime Very low probability of default; very strong capacity for payment of financial commitments; less Financial intermediaries 20,960 239 21,199 vulnerable to foreseeable events. Wholesale and retail 11,983 − 11,983 Risk rating 3 Prime Low probability of default; strong capacity for payment of financial commitments; may be more Personal consumption 11,033 447 11,480 vulnerable to adverse business/economic conditions. Electricity, gas and water 9,361 2,866 12,227 Risk rating 4 Very Good Moderately low probability of default; more than adequate capacity for payment of financial commitments; but adverse business/economic conditions are more likely to impair this capacity. Transport, storage and communication 7,936 660 8,596 Risk rating 5 Good More pronounced probability of default; business or financial flexibility exists which supports the Manufacturing 6,088 − 6,088 servicing of financial commitments; vulnerable to adverse business/economic changes. Construction 2,923 − 2,923 Standard Agriculture, hunting and forestry 766 − 766 Risk rating 6 Satisfactory Material probability of default is present, but a margin of safety remains; financial commitments Government institutions 282 17,782 18,064 are currently being met although the capacity for continued payment is vulnerable to Others 9,036 11 9,047 deterioration in the business/economic condition. 107,368 25,166 132,534 Risk rating 7 Average Greater probability of default which is reflected in the volatility of earnings and overall Less allowance for credit losses 1,059 − 1,059 performance; repayment source is presently adequate; however, prolonged unfavorable ₱106,309 ₱25,166 ₱131,475 economic period would create deterioration beyond acceptable levels. *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines Risk rating 8 Fair Sufficiently pronounced probability of default, although borrowers should still be able to **Financial assets at FVTPL, FVOCI and amortized cost withstand normal business cycles; any prolonged unfavorable economic/market conditions would create an immediate deterioration of cash flow beyond acceptable levels. Consolidated Sub-standard grade 2018 Risk rating 9 Marginal Elevated level of probability of default, with limited margin; Repayment source is adequate to Loans and Investment marginal. Receivables* Securities** Total Risk rating 10 Watchlist Unfavorable industry or company specific risk factors represent a concern, financial strength may Government institutions ₱16,541 ₱17,800 ₱34,341 be marginal; will find it difficult to cope with significant downturn. Financial intermediaries 18,439 49 18,488 Risk rating 11 Special mention Loans have potential weaknesses that deserve close attention; borrower has reached a point where there is a real risk that the borrower’s ability to pay the interest and repay the principal Real estate, renting and business services 11,181 3,403 14,386 timely could be jeopardize due to evidence of weakness in the borrower’s financial condition. Electricity, gas and water 10,003 2,332 12,335 Risk rating 12 Substandard Substantial and unreasonable degree of risk to the institution because of unfavorable record or Wholesale and retail 10,192 − 10,192 unsatisfactory characteristics; with well-defined weakness(es) that jeopardize their liquidation. Personal consumption 8,661 435 9,096 e.g. negative cash flow, in case of fraud. Transport, storage and communication 7,205 1,449 8,654 Past due and impaired Manufacturing 4,708 − 4,708 Risk rating 13 Doubtful Weaknesses similar to “Substandard”, but with added characteristics that make liquidation Construction 1,145 181 1,326 highly improbable. Agriculture, hunting and forestry 1,214 73 1,287 Risk rating 14 Loss Uncollectible or worthless. Others 7,400 − 7,400 96,689 25,722 122,213 The Parent Company’s ICRR system intends to provide a structure to define the credit portfolio, and consists of an initial rating for the borrower risk adjusted for the Less allowance for credit losses 1,095 − 1,095 facility risk. Inputs include an assessment of management, credit experience, financial condition, industry outlook, documentation, security and term. ₱95,594 ₱25,722 ₱121,118 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines Below is the staging parameters adopted by the Parent Company effective January 1, 2018 in relation to its PFRS 9 adoption. **Financial assets at FVTPL, FVOCI and amortized cost Staging Parameter Stage Description Parent Company Staging by Days Past Due Applicable to all loan products. 2018 1 Accounts with 0 – 30 days past due (applicable for all loan products except for microfinancing Loans and Investment loans wherein days past due for Stage 1 accounts is 0 – 6 days). Receivables* Securities** Total 2 Accounts with 31 – 90 days past due (applicable for all loan products except for microfinancing Government institutions ₱15,641 ₱17,800 ₱33,441 loans wherein days past due for Stage 2 accounts is 7 – 10 days). Financial intermediaries 18,392 − 18,392 3 Accounts with days past due of 91 days and above (applicable for all loan products except for Real estate, renting and business services 10,506 3,282 13,560 microfinancing loans wherein days past due for Stage 3 accounts is 11 days and above). Electricity, gas and water 9,996 2,332 12,328 Wholesale and retail 10,065 − 10,065 Staging by Status Applicable to all loan products except for Microfinance. Personal consumption 8,658 435 9,093 1 Accounts tagged as Current in its Status are classified under Stage 1. Transport, storage and communication 7,205 1,449 8,654 2 Accounts tagged as Past due performing in its Status are classified under Stage 2. Manufacturing 4,705 − 4,705 3 Accounts tagged as ITL and NPL in its Status are classified under Stage 3. Agriculture, hunting and forestry 1,183 73 1,256 Construction 974 181 1,155 Staging by Origination Rating vs Current Rating Applicable to Commercial Loans (Large Scale and Medium Scale) only. Others 7,544 − 7,544 1 If no movement in the ratings from origination rating against the latest rating, the staging will 94,869 25,324 120,193 be based on the current ICRRS rating. If the account’s current rating is either Excellent, Super Less allowance for credit losses 966 − 966 Prime, Prime, Very Good, Good, Satisfactory, Average, Fair, the account will be tagged under Stage 1. ₱93,903 ₱25,324 ₱119,227 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines 2 If the account’s current rating/equivalent Risk Level deteriorates by 2 notches from its **Financial assets at FVTPL, FVOCI and amortized cost origination rating/equivalent Risk Level, the account is tagged under Stage 2. If no movement in the ratings from origination rating against the latest rating, the staging will be based on Credit quality the latest ICRRS rating. If the account’s latest Rating is either Marginal, Watchlist or Especially Parent Company Mentioned, account will be tagged under Stage 2. Enhancement was made in 2017 for the ICRRS covering corporate credit exposures as defined by BSP Circular 439, initially for those borrowers with asset size of more than ₱15.00 million. In compliance with BSP Circular 855, the Parent Company also developed another ICRRS in 2016 for those borrowers with asset size of ₱15.00 million and below which was also enhanced in 2017.

186 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 187 Staging Parameter Stage Description Parent Company 1 If maturity date of the account is after the cut-off date of the ECL Calculation, and if the days December 31, 2019 leading up to the cut-off date from the maturity date is less than 30 days, the account is tagged Stage 1 Stage 2 Stage 3 Total under Stage 1 (For Microfinance loans, if maturity date of the account is after the cut-off date of Receivable from customers: the ECL Calculation, and if the days leading up to the cut-off date from the maturity date is less Commercial than 10 days, the account is tagged under Stage 1). Neither Past Due nor Individually Impaired 3 If maturity date of the account is prior to the cut-off date of the ECL Calculation, and if the days High grade ₱18,717 ₱7 ₱− ₱18,724 leading up to the cut-off date from the maturity date is more than 30 days, the account is tagged Standard 25,641 2,585 − 28,226 under Stage 3 (For Microfinance loans, if Maturity Date of the account is prior the cut-off date of Substandard 775 1,240 − 2,015 the ECL Calculation, and if the days leading up to the cut-off date from the maturity date is more Unrated 21 − − 21 than 10 days, the account is tagged under Stage 3). Past due but not individually impaired 15 16 155 186 The following tables show the credit quality per class of loans and receivables, gross of allowance for credit losses and unearned interest and discount of the Group Individually impaired − − 235 235 and Parent Company (in millions): ₱45,169 ₱3,848 ₱390 ₱49,407 Real estate Consolidated Neither Past Due nor Individually Impaired December 31, 2019 High grade 21 − − 21 Stage 1 Stage 2 Stage 3 Total Standard 89 − − 89 Receivable from customers: Substandard 7 − − 7 Commercial Unrated 17,874 − − 17,874 Neither Past Due nor Individually Impaired Past due but not individually impaired − 1,035 242 1,277 High grade ₱18,717 ₱7 ₱− ₱18,724 Individually impaired − − 8 8 Standard 25,695 2,585 − 28,280 ₱17,991 ₱1,035 ₱250 ₱19,276 Substandard 711 1,240 − 1,951 Consumption Unrated 21−−21 Neither Past Due nor Individually Impaired Past due but not individually impaired 15 29 155 199 High grade 92 − − 92 Individually impaired − − 340 340 Standard 66 − − 66 ₱45,159 ₱3,861 ₱495 ₱49,515 Substandard 22 − − 22 Real estate Unrated 8,070 − − 8,070 Neither Past Due nor Individually Impaired Past due but not individually impaired − 575 484 1,059 High grade 21−−21 Individually impaired −−11 Standard 132 − − 132 ₱8,250 ₱575 ₱485 ₱9,310 Substandard 10−−10 Domestic bills purchased Unrated 17,874 − − 17,874 Neither Past Due nor Individually Impaired Past due but not individually impaired − 1,035 242 1,277 High grade ₱491 ₱– ₱– ₱491 Individually impaired − − 14 14 Standard –––– ₱18,037 ₱1,035 ₱256 ₱19,328 Substandard –––– Consumption Unrated 4––4 Neither Past Due nor Individually Impaired Past due but not individually impaired –––– High grade 92−−92 Individually impaired –––– Standard 1,405 − − 1,405 495 – – 495 Substandard 48−−48 Total receivable from customers ₱71,905 ₱5,458 ₱1,125 ₱78,488 Unrated 7,993 − − 7,993 Other receivables: Past due but not individually impaired − 598 484 1,082 Neither Past Due nor Individually Impaired Individually impaired − − 207 207 High grade ₱1,190 ₱− ₱– ₱1,190 ₱9,538 ₱598 ₱691 ₱10,827 Standard 398 − – 398 Domestic bills purchased Substandard 7−–7 Neither Past Due nor Individually Impaired Unrated 95 − − 94 High grade 491 − − 491 Past due but not individually impaired 73 103 123 300 Standard −−−− Individually impaired – – 62 62 Substandard −−−− 1,763 103 185 2,051 Unrated 4−−4 ₱73,668 ₱5,561 ₱1,310 ₱80,539 Past due but not individually impaired −−−− Individually impaired −−−− 495 − − 495 Total receivable from customers ₱73,229 ₱5,494 ₱1,442 ₱80,165 Other receivables: Neither Past Due nor Individually Impaired High grade ₱1,193 ₱− ₱− ₱1,193 Standard 426 − − 426 Substandard 31−−31 Unrated 95−−95 Past due but not individually impaired 68 110 123 301 Individually impaired − − 89 89 1,813 110 212 2,135 ₱75,042 ₱5,604 ₱1,654 ₱82,300

188 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 189 Consolidated Parent Company December 31, 2018 December 31, 2018 Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Receivable from customers: Real estate Commercial Neither Past Due nor Individually Impaired Neither Past Due nor Individually Impaired High grade ₱20 ₱− ₱− ₱20 High grade ₱22,168 ₱− ₱− ₱22,168 Standard 52 − − 52 Standard 17,826 − − 17,826 Substandard − 1 − 1 Substandard − 4,018 − 4,018 Unrated − − 13,744 13,744 Unrated − − 18 18 Past due but not individually impaired 1 455 85 541 Past due but not individually impaired 14 39 17 70 Individually impaired − − − − Individually impaired − − 423 423 ₱73 ₱456 ₱13,829 ₱14,358 ₱40,008 ₱4,057 ₱458 ₱44,523 Consumption Real estate Neither Past Due nor Individually Impaired Neither Past Due nor Individually Impaired High grade ₱20 ₱− ₱− ₱20 High grade 20 − − 20 Standard 233 − − 233 Standard 13,735 − − 13,735 Substandard − 23 − 23 Substandard −6−6 Unrated − − 6,779 6,779 Unrated − 52 2 54 Past due but not individually impaired 2 236 329 567 Past due but not individually impaired 1 455 85 541 Individually impaired −−−− Individually impaired 20 − − 20 ₱255 ₱259 ₱7,108 ₱7,622 ₱13,776 ₱513 ₱87 ₱14,376 Domestic bills purchased Consumption Neither Past Due nor Individually Impaired Neither Past Due nor Individually Impaired High grade ₱738 ₱– ₱– ₱738 High grade 20 − − 20 Standard –––– Standard 963 − − 963 Substandard –––– Substandard − 32 − 32 Unrated 96 – – 96 Unrated − − 6,779 6,779 Past due but not individually impaired –––– Past due but not individually impaired 2 255 329 586 Individually impaired –––– Individually impaired − − 165 165 834 – – 834 ₱985 ₱287 ₱7,273 ₱8,545 Total receivable from customers ₱41,130 ₱4,747 ₱21,256 ₱67,133 Domestic bills purchased Other receivables: Neither Past Due nor Individually Impaired Neither Past Due nor Individually Impaired High grade ₱738 ₱− ₱− ₱738 High grade ₱56 ₱− ₱– ₱56 Standard −−−− Standard 1,085 4 – 1,089 Substandard −−−− Substandard 46 30 – 76 Unrated 96 − − 96 Unrated 90 4 − 94 Past due but not individually impaired −−−− Past due but not individually impaired − 63 110 173 Individually impaired −−−− Individually impaired – – 84 84 834 − − 834 1,277 101 194 1,573 Total receivable from customers ₱55,603 ₱4,857 7,818 68,278 ₱42,407 ₱4,848 ₱21,450 ₱68,705 Other receivables: Neither Past Due nor Individually Impaired External ratings High grade ₱59 ₱− ₱− ₱59 In ensuring a quality investment portfolio, the Parent Company monitors credit risk from investments using credit ratings based on Standard and Poor (S&P). Standard 1,125 − − 1,125 Credit quality of due from BSP and other banks and interbank loans receivable are based on available accredited international and local credit raters using Fitch Substandard − 77 − 77 as standard of rating. Unrated − − 94 94 Past due but not individually impaired − 67 110 177 The Parent Company assigns the following credit quality groupings based on ratings prior to PFRS 9 adoption as follows: Individually impaired − − 107 107 1,184 144 311 1,639 Credit Quality Fitch Moody’s S&P Stage ₱56,787 ₱5,001 ₱8,129 ₱69,917 High Grade AAA to A- Aaa to A3 AAA to A- 1 Standard Grade BBB+ to BB- Baa1 to Ba3 BBB+ to BB- 1 Parent Company Substandard Grade B+ to C- B1 to Ca B+ to C 2 December 31, 2018 Past due and impaired D C D 3 Stage 1 Stage 2 Stage 3 Total Receivable from customers: The following tables show the credit quality per class of financial assets other than receivables from customers and other receivables of the Group and Parent Commercial Company (in millions): Neither Past Due nor Individually Impaired High grade ₱22,168 ₱− ₱− ₱22,168 Consolidated Standard 17,786 − − 17,786 December 31, 2019 Substandard − 4,016 − 4,016 Stage 1 Stage 2 Stage 3 Total Unrated − − 17 17 Financial assets at FVTPL Past due but not individually impaired 14 16 17 47 Standard ₱5 ₱− ₱− ₱5 Individually impaired − − 285 285 Financial assets at FVOCI ₱39,968 ₱4,032 ₱319 ₱44,319 Government securities (Forward) High 111 − − 111 Standard 8,100 210 − 8,310 (Forward)

190 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 191 Consolidated Consolidated December 31, 2019 December 31, 2018 Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Private bonds Investment securities at amortized cost High ₱2,896 ₱− ₱− 2,896 Government securities Standard 2,373 75 − 2,448 Standard ₱10,674 ₱− ₱− ₱10,674 Investment securities at amortized cost Private bonds Government securities High 773 − − 773 Standard 9,507 − − 9,507 Standard 1,150 − − 1,150 Private bonds Loans and receivables: High 1,335 − − 1,335 Due from BSP Standard 515 − − 515 Standard 16,108 − − 16,108 Loans and receivables: Due from other banks Due from BSP Standard 3,010 − − 3,010 Standard 12,216 − − 12,216 Interbank loans receivable and SPURA Due from other banks Standard 2,188 − − 2,188 Standard 2,464 − − 2,464 Other assets: Interbank loans receivable and SPURA Refundable deposits Standard 2,409 − − 2,409 Standard 63 − − 63 Other assets: Unrated 1−−1 Refundable deposits ₱46,895 ₱− ₱− ₱46,895 Standard 61−−61 Unrated 1−−1 Parent Company ₱41,993 ₱285 ₱− ₱42,278 December 31, 2018 Stage 1 Stage 2 Stage 3 Total Parent Company Financial assets at FVTPL December 31, 2019 Standard grade ₱8 ₱− ₱− ₱8 Stage 1 Stage 2 Stage 3 Total Financial assets at FVOCI Financial assets at FVTPL Government securities Standard ₱5 ₱− ₱− ₱5 High 386 − − 386 Financial assets at FVOCI Standard 6,883 − − 6,883 Government securities Private bonds High 111 − − 111 High 2,735 − − 2,735 Standard 8,100 210 − 8,310 Standard 2,916 − − 2,916 Private bonds Investment securities at amortized cost High 2,896 − − 2,896 Government securities Standard 2,373 75 − 2,448 Standard 10,523 − − 10,523 Investment securities at amortized cost Private bonds Government securities High 773 − − 773 Standard 9,357 − − 9,357 Standard 1,100 − − 1,100 Private bonds Loans and receivables: High 1,300 −−1,300 Due from BSP Standard 500 −−500 Standard 15,587 − − 15,587 Loans and receivables: Due from other banks Due from BSP Standard 2,944 − − 2,944 Standard 11,825 − − 11,825 Interbank loans receivable and SPURA Due from other banks Standard 2,100 − − 2,100 Standard 2,374 − − 2,374 Other assets: Interbank loans receivable and SPURA Refundable deposits Standard 2,342 − − 2,342 Standard 63 − − 63 Other assets: ₱46,018 ₱− ₱− ₱46,018 Refundable deposits Standard 61−−61 As of December 31, 2019, the Group’s and Parent Company’s commitments amounting to ₱2.87 billion, ₱3.99 billion and ₱3.61 billion have a risk rating class of High ₱41,244 ₱285 ₱− ₱41,529 Grade, Standard Grade and Unrated, respectively.

As of December 31, 2018, the Group’s and Parent Company’s commitments amounting to ₱3.29 million and ₱1.08 billion, have a risk rating class of Standard Grade Consolidated and Unrated, respectively (see Note 28). December 31, 2018 Stage 1 Stage 2 Stage 3 Total Liquidity Risk Financial assets at FVTPL Liquidity risk may be defined as the possibility of loss due to the Group’s inability to meet its financial obligations when they become due. Liquidity risk is Standard ₱8 ₱− ₱− ₱8 considered in the Group’s assets and liabilities management. The Group seeks to lengthen liability maturities, diversify existing fund sources, and continuously Financial assets at FVOCI develop new instruments that cater to different segments of the market. Government securities High 386 − − 386 The Parent Company’s Assets and Liabilities Committee (ALCO) is composed of some members of the Senior Management including the Lending Groups and Standard 6,883 − − 6,883 Treasury Group Heads. ALCO conducts weekly meetings. The Parent Company also has specialized units that help monitor market and regulatory developments Private bonds pertinent to interest rates and liquidity position, as well as prepare cash position reports as needed to measure the liquidity and reserves position of the Parent High 2,735 − − 2,735 Company. Standard 2,916 − − 2,916 (Forward)

192 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 193 The Parent Company also keeps credit lines with financial institutions, as well as a pool of liquid or highly marketable securities. Reserves management is another Consolidated specialized function within the Bank, complying with BSP reserve requirements, which may be a buffer against unforeseen liquidity drains. 2018 Up to Over 3 up Over 1 to The liquidity or maturity gap report is another tool for measuring liquidity risk. Although available contractual maturity dates are generally used for putting On demand 3 months to 12 months 5 Years Over 5 years Total instruments into time bands, expected liquidation periods, often based on historical data, are used if contractual maturity dates are unavailable. The liquidity gap Financial Assets per time band is computed by getting the difference between the inflows and outflows within the time band. A positive liquidity gap is an estimate of the Group’s Cash and other cash items ₱2,370 ₱– ₱– ₱– ₱– ₱2,370 net excess funds for the time band. A negative liquidity gap is an estimate of a future funding requirement of the Group. Although such gaps are a normal part of Due from BSP 15,743 365 − − − 16,108 the business, a significant negative amount may bring significant liquidity risk. Due from other banks 688 2,322 − − − 3,010 To help control liquidity risk arising from negative liquidity gaps, maximum cumulative outflow (MCO) targets are set for time bands up to one (1) year., Interbank loans receivable and SPURA − 2,188 24 − − 2,212 Financial assets at FVTPL 8 − − − − 8 Analysis of financial instruments by remaining maturities Financial assets at FVOCI − − − 4,172 12,606 16,778 The table below summarized the maturity profile of the Group’s financial instruments based on contractual undiscounted cash flows except for financial assets at Investment securities at amortized cost 2 2 255 5,177 9,670 15,106 FVTPL which and based on expected disposal (in millions): Loans and receivables 6,054 5,585 6,986 17,488 32,335 68,448 Other assets − − − 31 33 64 Consolidated 24,865 10,462 7,265 26,868 54,644 124,104 2019 Financial Liabilities Over 3 up Over 1 to Deposit liabilities ₱31,022 ₱51,503 ₱2,963 ₱9,254 ₱1,820 ₱96,562 On demand to 12 months 5 Years Over 5 years Total Bills payable − 5,604 293 1,420 467 7,784 Financial Assets Manager’s checks 720 – – – – 720 Cash and other cash items ₱3,249 –– –3,249 Accrued expenses 110 358 187 – – 655 Due from BSP 11,901 − − − 12,216 Other liabilities 1,740 – – – – 1,740 Due from other banks 2,464 − − − 2,464 33,592 57,465 3,443 10,674 2,287 107,461 Interbank loans receivable and SPURA − − − − 3,215 Commitments 949 – – – – 949 Financial assets at FVTPL − − − 1 5 34,541 57,465 3,443 10,674 2,287 108,410 Financial assets at FVOCI − 282 4,500 6,501 17,959 (₱9,676) (₱46,972) ₱3,831 ₱16,194 ₱52,358 ₱15,735 Investment securities at amortized cost − 445 7,452 6,272 14,401 Loans and receivables 63 13,006 33,024 25,239 91,028 Parent Company Other assets − 2 16 44 63 2018 17,677 13,735 44,992 38,057 144,600 Up to Over 3 up Over 1 to Financial Liabilities On demand 3 months to 12 months 5 Years Over 5 years Total Deposit liabilities 39,641 5,794 11,799 3 99,327 Financial Assets Bills payable − 281 1,500 − 2,280 Cash and other cash items ₱2,300 ₱– ₱– ₱– ₱– ₱2,300 Bonds payable − 368 10,345 − 10,791 Due from BSP 15,587 − – – – 15,587 Manager’s checks 1,075 – – – 1,075 Due from other banks 852 2,092 – – – 2,944 Lease liabilies − 182 515 28 798 Interbank loans receivable and SPURA – 2,077 23 − – 2,100 Accrued expenses and other liabilities 677 1,563 – – 3,192 Financial assets at FVTPL 8 – – – – 8 41,393 8,188 24,159 31 117,463 Financial assets at FVOCI − − − 4,172 12,606 16,778 Commitments 7,260 – – – 7,260 Investment securities at amortized cost − − 250 5,144 9,498 14,892 48,653 8,188 24,159 31 124,723 Loans and receivables 5,122 5,584 6,955 17,488 32,573 67,722 (₱30,976) ₱5,547 ₱20,833 ₱38,026 ₱19,877 Other assets – – – 30 33 63 23,869 9,753 7,228 26,834 122,396 122,394 Parent Company 2019 Financial Liabilities Over 3 up Over 1 to Deposit liabilities 29,826 51,314 2,870 9,107 1,817 94,934 On demand to 12 months 5 Years Over 5 years Total Bills payable − 5,604 293 1,420 467 7,784 Financial Assets Manager’s checks 720 – – – – 720 Cash and other cash items ₱3,176 ₱– ₱– ₱– ₱3,176 Accrued expenses 110 343 157 – – 610 Due from BSP 11,825 – – – 11,825 Other liabilities 1,730 – – – – 1,730 Due from other banks 2,374 – – – 2,374 32,386 57,261 3,320 10,527 2,284 105,778 Interbank loans receivable and SPURA – – − – 3,148 Commitments 949 – – – – 949 Financial assets at FVTPL – – – 1 5 33,335 57,261 3,320 10,527 2,284 106,727 Financial assets at FVOCI − 282 4,500 6,501 17,959 (9,466) (47,508) 3,909 16,308 52,426 15,669 Investment securities at amortized cost – 445 7,320 6,170 14,167 Loans and receivables – 12,720 31,417 25,059 88,820 Market Risk Market risk may be defined as the possibility of loss due to adverse movements in market factors such as rates and prices. Market risk is present in both trading Other assets – 2 15 44 62 and non-trading activities. These are the risk to earnings or capital arising from changes in the value of traded portfolios of financial instruments. The risk arises 17,375 13,449 43,252 37,775 141,536 from market-making, dealing and position-taking in quoted debt securities and foreign exchange. Financial Liabilities Deposit liabilities 38,285 5,656 11,486 – 97,354 The Parent Company observes market risk limits, which are approved by the BOD and reviewed at least annually. Limits are set in such a way as to ensure that risks Bills payable − 281 1,500 – 2,280 taken are based on the Parent Company’s existing capital adequacy framework, and corresponding monitoring reports are prepared regularly by an independent Bonds payable – 368 10,345 – 10,791 risk management unit. Manager’s checks 1,075 – – – 1,075 Lease liabilies − 178 486 9 745 When limits are breached, approval is sought from successive levels of authority depending on the amount of the excess. Limit breaches are periodically presented Accrued expenses and other liabilities 556 1,563 – – 3,044 to the BOD. 39,916 8,046 23,817 9 115,289 Commitments 7,259 – – – 7,259 Value-at-Risk (VaR) is computed to estimate potential losses arising from market movements. The Parent Company calculates and monitors VaR and profit or loss 47,175 8,046 23,817 9 122,548 on a daily basis. (₱29,800) ₱5,403 ₱19,435 ₱37,766 ₱18,988

194 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 195 VaR objectives and methodology A positive repricing gap implies that the Parent Company’s NII could decline if interest rates decrease upon repricing. A negative repricing gap implies that the VaR is used by the Parent Company to measure market risk exposure from its trading and investment activities. VaR is an estimate of the maximum decline in Parent Company’s NII could decline if interest rates increase upon repricing. Although such gaps are a normal part of the business, a significant change may bring value on a given position over a specified holding period in a normal market environment, with a given probability of occurrence. The Parent Company uses the significant interest rate risk. historical simulation method in estimating VaR. The historical simulation method is a non-parametric approach to VaR calculation, in which asset returns are not subject to any functional distribution assumption. VaR is estimated directly from historical data without deriving parameters or making assumptions about the To help control interest rate risk arising from repricing gaps, maximum repricing gap and EaR/NII targets are set for time bands up to one year. EaR is prepared entire data distribution. and reported to the ROC monthly.

In employing the historical simulation method, the Parent Company assumes a 500 historical data (approximately 2 years). The Parent Company updates its Economic value of equity or EVE, a complement of EaR, will soon be utilized by the Bank in measurement of IRRBB in compliance with new regulations. EVE, as a dataset on a daily basis per Parent Company policy, VaR is based on a 1-day holding period and a confidence level of 99%. measure, compute a change in the net present value of the bank’s assets, liabilities, and off-balance sheet items subject to specific interest rate shock and stress scenarios throughout their remaining life. To measure EVE, the Bank will establish behavioral and modelling assumptions, shock scenarios, and develop policies VaR methodology limitations and assumptions pertaining to them. Discussed below are the limitations and assumptions applied by the Parent Company on its VaR methodology: a. VaR is a statistical estimate; thus, it does not give the precise amount of loss the Parent Company may incur in the future; The Parent Company’s EaR figures are as follows (in millions): b. VaR is not designed to give the probability of bank failure, but only attempts to quantify losses that may arise from a Parent Company’s exposure to market risk; 2019 c. Since VaR is computed from end-of-day positions and market factors, VaR does not capture intraday market risk. Average Highest Lowest December 31 d. VaR systems depend on historical data. It attempts to forecast likely future losses using past data. As such, this assumes that past relationships will continue Instruments sensitive to local interest rates ₱292.65 ₱361.38 ₱195.18 ₱302.75 to hold in the future. Therefore, market shifts (i.e., an unexpected collapse of the market) will not be captured and may inflict losses larger than VaR; and Instruments sensitive to foreign interest rates $0.18 $0.25 $0.11 $0.18 e. The limitation relating to the pattern of historical returns being indicative of future returns is addressed by supplementing VaR with daily stress testing reported to the ROC, ALCO and the concerned risk-takers. 2018 Average Highest Lowest December 31 VaR back testing is the process by which financial institutions periodically compare ex-post profit or loss with the ex-ante VaR figures to gauge the robustness of the VaR model. The Parent Company performs quarterly back testing. Instruments sensitive to local interest rates ₱322.01 ₱392.20 ₱271.40 ₱392.20 Instruments sensitive to foreign interest rates $0.14 $0.18 $0.11 $0.13 The Parent Company’s VaR figures are as follows (in millions): Foreign currency risk Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. 2019 Average Daily Lowest Highest December 31 The BOD has set limits on positions by currency. In accordance with the Parent Company’s policy, positions are monitored on a daily basis and are used to ensure Local interest rates ₱0.0092 ₱1.8670 ₱0.0382 ₱− positions are maintained within established limits. Foreign interest rate $0.0005 $0.0022 $0.0001 $0.0004 Statement of 2018 December 31, 2019 Income Average Daily Lowest Highest December 31 +10% USD appreciation USD (₱64,889,289) Local interest rates ₱0.1622 ₱1.8121 ₱0.0005 ₱− Other Foreign Currencies* (813,063) Foreign interest rate $0.0018 $0.0034 $0.0005 $0.0020 -10% USD depreciation USD 64,889,289 Other Foreign Currencies* 813,063 Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values fo financial instruments. Statement of December 31, 2018 Income The sensitivity analysis below shows the impact of movement in interest rates on FVOCI investments of the Parent Company as of December 31, 2019 and 2018 +10% USD appreciation USD ₱4,692,232 (in millions). Other Foreign Currencies* (31,755,352) -10% USD depreciation USD (4,692,232) Net Carrying +100 bps parallel shift -100 bps parallel shift Other Foreign Currencies* 31,755,352 December 31, 2019 Value in yield curve in yield curve *Significant position held in EUR, GBP and AUD Peso Denominated FVOCI ₱9,774 (₱558) ₱558 Dollar Denominated FVOCI (in PHP) 3,995 (466) 466 5. FAIR VALUE MEASUREMENT Net Carrying +100 bps parallel shift -100 bps parallel shift December 31, 2018 Value in yield curve in yield curve The methods and assumptions used by the Group in estimating the Group’s assets and liabilities are: Peso Denominated AFS ₱7,202 (₱372) ₱372 Cash and other cash items, due from BSP, due from other banks, interbank loans receivable/securities purchased under resale agreements, accrued interest receivables Dollar Denominated AFS (in PHP) 5,726 (643) 643 and accounts receivable The effects of the movement in interest rates on AFS investments are recorded under ‘other comprehensive income’. Carrying value approximates fair value given the short-term nature of these financial assets and insignificant risk of changes in value.

The Parent Company’s ALCO surveys the interest rate environment, adjusts the interest rates for the Parent Company’s loans and deposits, assesses investment Trading and investment securities opportunities and reviews the structure of assets and liabilities. The Parent Company uses Earnings-at-Risk (EaR) as a tool for measuring and managing interest Fair values of debt securities and equity investments are generally based on quoted market prices. If the fair value of financial assets cannot be derived from active rate risk in the banking book. markets, these are determined using internal valuation techniques using generally accepted market valuation models using inputs from observable markets subject to a degree of judgment. Equity price risk Equity price risk is the risk that the fair values of the equities will decrease as a result of changes in the levels of equity indices and the value of the individual stocks. For equity investments that are not quoted, the fair value are derived using the net asset value method. As of December 31, 2019 and 2018, the Group’s FVOCI equity investments amounted to ₱175.88 million and ₱157.50 million, respectively. Management assessed that the equity price risk on these equity securities to be insignificant. Derivative instruments Fair values of quoted warrants are based on quoted market prices. Other derivative products are valued using valuation techniques using market observable Earnings-at-Risk objectives and methodology inputs including foreign exchange rates and interest rate curves prevailing at the statements of financial position date. For interest rate swaps, cross-currency EaR is a statistical measure of the likely impact of changes in interest rates to the Bank’s net interest income (NII). To do this, repricing gaps (difference between swaps and foreign exchange contracts, discounted cash flow model is applied. This valuation model discounts each cash flow of the derivatives at a rate that is interest rate-sensitive assets and liabilities) are classified according to time to repricing and multiplied with applicable historical interest rate volatility, although dependent on the tenor of the cash flow. available contractual repricing dates are generally used for putting instruments into time bands, contractual maturity dates (e.g., for fixed rate instruments) or expected liquidation periods often based on historical data are used alternatively. The repricing gap per time band is computed by getting the difference between Receivables from customers the inflows and outflows within the time band. Fair values are estimated using the discounted cash flow methodology, using the Group’s current incremental lending rates for similar types of receivables at current market rates ranging from 7.58% to 42%. Where the instruments reprice on a short-term basis or have a relatively short maturity, the carrying amounts approximate fair values.

196 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 197 Other receivables - Accounts receivable and accrued interest receivable Consolidated Carrying amounts approximate fair values given their short-term nature. 2019 Total Fair Investment properties Carrying Value Level 1 Level 2 Level 3 Value Fair value of investment properties are based on market data (or direct sales comparison) approach. This approach relies on the comparison of recent sale Liabilities for which Fair Values are Disclosed transactions or offerings of similar properties which have occurred and/or offered with close proximity to the subject property. Financial Liabilities Derivative liabilities ₱462,908 ₱– ₱462,908 ₱– ₱462,908 The fair values of the Group’s investment properties have been determined by appraisers, including independent external appraisers, in the basis of the recent Deposit liabilities: sales of similar properties in the same areas as the investment properties and taking into account the economic conditions prevailing at the time of the valuations are made. Demand 17,054,484,841 – – 17,054,203,891 17,054,203,891 Savings 58,931,747,324 – – 58,852,787,140 58,852,787,140 The Group has determined that the highest and best use of the property used for the land and building is its current use. Time 15,687,802,834 – – 15,670,406,621 15,670,406,621 Long-term negotiable certificates of deposits 5,927,592,846 – 5,859,723,907 – 5,859,723,907 Refundable deposits Bonds payable 9,889,835,356 – 10,054,821,503 – 10,054,821,503 Fair values are estimated using the discounted cash flow methodology, using the average market price for similar types of receivables with maturities consistent to Bills payable 2,040,505,751 – – 2,040,505,751 2,040,505,751 the receivable being valued. Where the instruments reprice on a short-term basis or have a relatively short maturity, the carrying amounts approximate fair values. ₱109,532,431,860 ₱– ₱15,915,008,318 ₱93,617,903,403 ₱109,532,911,721

Time deposits Parent Company Fair values are estimated using the discounted cash flow methodology using the Group’s current incremental borrowing rates for similar borrowings with maturities 2019 consistent with those remaining for the liability being valued. Total Fair Carrying Value Level 1 Level 2 Level 3 Value Long-term negotiable certificates of deposit (LTNCD) Assets Measured at Fair Value Fair values of LTNCD are estimated using quoted price for identical assets or liabilities in markets that are not active. Financial Assets At FVTPL ₱4,935,882 ₱3,943,264 ₱992,618 ₱– ₱4,935,882 Bonds payable At FVOCI: Fair Values of the Bonds Payable are estimated using quoted price for identical assets or liabilities in markets that are not active. Government securities 8,421,114,497 8,367,728,123 53,386,374 – 8,421,114,497 Other financial liabilities Private bonds 5,344,204,206 4,910,995,793 433,208,413 – 5,344,204,206 Carrying amounts approximate fair values due to either the demand nature or the relatively short-term maturities of these liabilities. Quoted equity securities 175,875,000 175,875,000 – – 175,875,000 Unquoted equity securities 62,468,140 – – 62,468,140 62,468,140 The following tables show the Group’s assets and liabilities carried at fair value and those whose fair value are required to be disclosed, analyzed among those ₱14,008,597,725 ₱13,458,542,180 ₱487,587,405 ₱62,468,140 ₱14,008,597,725 whose fair value is based on: Assets for which Fair Values are Disclosed • Quoted market prices in active markets for identical assets or liabilities (Level 1); and Financial Assets • Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly Investment securities at amortized cost ₱11,156,952,059 ₱3,857,949,366 ₱7,026,215,188 ₱– ₱10,884,164,554 (derived from prices) (Level 2); and those with inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Loans and receivables: Receivables from customers: Consolidated Commercial 48,993,283,191 – – 42,405,026,261 42,405,026,261 2019 Real estate 19,022,113,324 – – 18,480,454,224 18,480,454,224 Total Fair Consumption 8,860,045,099 – – 8,171,271,748 8,171,271,748 Carrying Value Level 1 Level 2 Level 3 Value Domestic bills purchased 444,884,387 – – 444,884,387 444,884,387 Assets Measured at Fair Value Other receivables: Financial Assets Sales contract receivable 55,699,215 – – 55,699,215 55,699,215 At FVTPL ₱4,935,882 ₱3,943,264 ₱992,618 ₱– ₱4,935,882 Refundable deposits 61,066,765 – – 61,066,765 61,066,765 At FVOCI: Non-Financial Assets Government securities 8,421,114,497 8,367,728,123 53,386,374 – 8,421,114,497 Investment properties 266,464,925 ––489,821,931 489,821,931 Private bonds 5,344,204,206 4,910,995,793 433,208,413 – 5,344,204,206 ₱88,860,508,965 ₱3,857,949,366 ₱7,026,215,188 ₱70,108,224,531 ₱80,992,389,085 Quoted equity securities 175,875,000 175,875,000 – – 175,875,000 Liabilities for which Fair Values are Disclosed Unquoted equity securities 32,268,140 – – 32,268,140 32,268,140 Financial Liabilities ₱13,978,397,725 ₱13,458,542,180 ₱487,587,405 ₱32,268,140 ₱13,978,397,725 Derivative liabilities ₱462,908 ₱– ₱462,908 ₱– ₱462,908 Assets for which Fair Values are Disclosed Deposit liabilities: Financial Assets Demand 16,880,570,300 – – 16,878,334,700 16,878,334,700 Investment securities at amortized cost ₱11,357,261,241 ₱3,954,282,864 ₱7,126,636,855 ₱– ₱11,080,919,719 Savings 57,516,406,672 – – 57,438,382,008 57,438,382,008 Time 15,306,981,464 – – 15,306,981,382 15,306,981,382 Loans and receivables: Long-term negotiable certificates of deposits 5,927,592,846 – 5,859,723,907 – 5,859,723,907 Receivables from customers: Bonds payable 9,889,835,356 – 10,054,821,503 – 10,054,821,503 Commercial 49,174,334,783 – – 42,588,556,509 42,588,556,509 Bills payable 2,040,505,751 – – 2,207,219,540 2,207,219,540 Real estate 19,068,816,886 – – 18,556,376,219 18,556,376,219 ₱107,562,355,297 ₱– ₱15,915,008,318 ₱91,830,917,630 ₱107,745,925,948 Consumption 10,165,626,272 – – 9,955,355,261 9,955,355,261 Domestic bills purchased 444,884,387 – – 444,884,387 444,884,387 Other receivables: Sales contract receivable 82,767,162 – – 75,667,608 75,667,608 Refundable deposits 62,313,746 – – 62,236,208 62,236,208 Non-Financial Assets Investment properties 382,355,004 ––671,273,189 671,273,189 ₱90,738,359,481 ₱3,954,282,864 ₱7,126,636,855 ₱72,354,349,381 ₱83,435,269,100 (Forward)

198 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 199 Consolidated Parent Company 2018 2018 Total Fair Total Fair Carrying Value Level 1 Level 2 Level 3 Value Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Other receivables: Financial Assets Accrued interest receivables 707,881,692 − − 707,881,692 707,881,692 Financial assets at FVTPL ₱8,206,143 ₱− ₱8,206,143 ₱− ₱8,206,143 Accounts receivable 717,144,173 − − 717,144,173 717,144,173 Financial assets at FVOCI Sales contract receivable 10,781,280 − − 10,781,280 10,781,280 Government securities 7,268,522,839 2,867,172,896 4,401,349,943 − 7,268,522,839 Lease receivable − − − − − Private bonds 5,651,128,473 − 5,651,128,473 − 5,651,128,473 Refundable deposits 63,369,966 − − 63,570,466 63,570,466 Quoted equity securities 157,500,000 157,500,000 − − 157,500,000 Non-Financial Assets Unquoted equity securities 39,635,764 − − 39,635,764 39,635,764 Investment properties 212,181,540 − − 320,901,491 320,901,491 ₱13,124,993,219 ₱3,024,672,896 ₱10,060,684,559 ₱39,635,764 ₱13,124,993,219 ₱82,169,248,061 ₱7,467,052,657 ₱3,181,633,642 ₱76,300,122,030 ₱86,948,808,329 Assets for which Fair Values are Disclosed Financial Liabilities Financial Assets Derivative liabilities 336,698 − 336,698 − 336,698 Interbank loans receivable and SPURA ₱2,188,410,000 ₱− ₱− ₱2,188,410,932 ₱2,188,410,932 Deposit liabilities: Investment securities at amortized cost 12,597,089,717 7,553,114,222 3,270,414,468 − 10,823,528,690 Demand 15,876,375,795 − − 15,876,375,795 15,876,375,795 Loans and receivables: Savings 58,456,351,809 − − 58,456,351,809 58,456,351,809 Receivables from customers: Time 13,148,295,392 − − 12,651,587,964 12,651,587,964 Commercial 44,053,793,453 − − 47,136,797,181 47,136,797,181 Long-term negotiable certificates of deposits 5,917,925,850 − 5,964,070,000 − 5,964,070,000 Real estate 14,012,497,129 − − 17,242,929,073 17,242,929,073 Bills payable 7,436,904,315 − − 7,436,904,315 7,436,904,315 Consumption 8,033,865,678 − − 8,562,533,172 8,562,533,172 ₱100,836,189,859 ₱− ₱5,964,406,698 ₱94,421,219,883 ₱100,385,626,581 Domestic bills purchased 834,447,716 − − 834,447,716 834,447,716 Other receivables: For assets and liabilities that are recognized at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the Accrued interest receivables 719,091,672 − − 719,091,672 719,091,672 hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole at the end of each statement Accounts receivable 729,515,033 − − 729,515,033 729,515,033 of financial position). Sales contract receivable 18,191,403 − − 18,493,297 18,493,297 In 2019 and 2018, government securities classified as financial assets at FVTPL are moved from Level 2 to Level 1. Lease receivable 9,660,132 − − 1,017,802 1,017,802 Refundable deposits 64,481,147 − − 64,786,802 64,786,802 Description of significant unobservable inputs to valuation: Non-Financial Assets Investment properties 341,073,550 − − 517,300,140 517,300,140 Consolidated ₱83,602,116,630 ₱7,553,114,222 ₱3,270,414,468 ₱78,015,322,820 ₱88,838,851,510 Financial Liabilities Accounts Valuation Technique Significant Unobservable Inputs Loans and receivables Discounted cash flow method 4.00% - 42.00% risk premium rate Derivative liabilities ₱336,698 ₱− ₱336,698 ₱− ₱336,698 Investment properties Deposit liabilities: Land Market data approach Price per square meter, size, shape, location, time element and discount Demand 16,050,910,830 − − 16,050,910,830 16,050,910,830 Building Cost approach Cost per square meter, size, shape, location, condition and time element Savings 59,709,184,942 − − 59,685,940,558 59,685,940,558 Refundable deposits Discounted cash flow method 0.25% - 11.00% risk premium rate Time 13,328,372,113 − − 12,884,740,145 12,884,740,145 Time deposits Discounted cash flow method 0.25% - 3.90% risk premium rate Long-term negotiable certificates of deposits 5,917,925,850 − 5,964,070,000 − 5,964,070,000 Unquoted equity instruments Adjusted net asset value method 30% degree of lack of marketability Bills payable 7,436,904,315 − − 7,436,904,315 7,436,904,315 ₱102,443,634,748 ₱− ₱5,964,406,698 ₱96,058,495,848 ₱102,022,902,546 Parent Company Parent Company Accounts Valuation Technique Significant Unobservable Inputs 2018 Loans and receivables Discounted cash flow method 4.00% - 42% risk premium rate Total Fair Investment properties Carrying Value Level 1 Level 2 Level 3 Value Land Market data approach Price per square meter, size, shape, location, time element and discount Assets Measured at Fair Value Building Cost approach Cost per square meter, size, shape, location, condition and time element Financial Assets Refundable deposits Discounted cash flow method 0.25% - 3.00% risk premium rate Financial assets at FVTPL ₱8,206,143 ₱− ₱8,206,143 ₱− ₱8,206,143 DBP Bills Payable Discounted cash flow method 4.28% risk premium rate Financial assets at FVOCI Unquoted equity instruments Adjusted net asset value method 30% degree of lack of marketability Government securities 7,268,522,839 2,867,172,896 4,401,349,943 − 7,268,522,839 Private bonds 5,651,128,473 − 5,651,128,473 − 5,651,128,473 Significant increases (decreases) in price per square meter and size of investment properties would result in a significantly higher (lower) fair value of the properties. Quoted equity securities 157,500,000 157,500,000 − − 157,500,000 Significant increases (decreases) in discount would result in a significantly lower (higher) fair value of the properties. Significant increase (decrease) in degree of Unquoted equity securities 69,635,764 − − 69,635,764 69,635,764 lack of marketability would result in lower (higher) fair value of unquoted equity securities. ₱13,154,993,219 ₱3,024,672,896 ₱10,060,684,559 ₱69,635,764 ₱13,154,993,219 Significant Unobservable Inputs Assets for which Fair Values are Disclosed Financial Assets Size Size of lot in terms of area. Evaluate if the lot size of property or comparable conforms to the average cut of the lots in the area and Interbank loans receivable and SPURA ₱2,100,410,000 ₱− ₱− ₱2,100,410,932 ₱2,100,410,932 estimate the impact of the lot size differences on land value. Investment securities at amortized cost 12,396,700,654 7,467,052,657 3,181,633,642 − 10,648,686,299 Shape Particular form or configuration of the lot. A highly irregular shape limits the usable area whereas an ideal lot configuration maximizes the Loans and receivables: usable area of the lot which is associated in designing an improvement which conforms with the highest and best use of the property. Receivables from customers: Location Location of comparative properties whether on a main road, or secondary road. Road width could also be a consideration if data is Commercial 43,899,258,477 − − 46,872,042,755 46,872,042,755 available. As a rule, properties located along a main road are superior to properties located along a secondary road. Real estate 14,000,598,525 − − 17,221,764,561 17,221,764,561 Time element An adjustment for market conditions is made if general property values have appreciated or depreciated since the transaction dates due Consumption 7,226,474,038 − − 7,451,176,964 7,451,176,964 to inflation or deflation or a change in investor’s perceptions of the market over time. In which case, the current data is superior to historic Domestic bills purchased 834,447,716 − − 834,447,716 834,447,716 data. Discount Generally, asking prices in ads posted for sale are negotiable. Discount is the amount the seller or developer is willing to deduct from the (Forward) posted selling price if the transaction will be in cash or equivalent. Degree of Marketability is the degree to which ownership interest can be converted to cash lack of quickly without unreasonable experience and with certainty of the amount of marketability proceeds.

200 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 201 6. DUE FROM OTHER BANKS, INTERBANK LOANS RECEIVABLE AND SECURITIES PURCHASED UNDER RESALE AGREEMENT The table below shows the fair values of derivative financial instruments entered into by the Parent Company, recorded as derivative assets/liabilities, together with the notional amounts. The notional amount is the amount of a derivative’s underlying asset, reference rate or index and is the basis upon which changes Due from Other Banks in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding as of December 31, 2019 and 2018 and are not This account consists of: indicative of either market risk or credit risk.

Consolidated Parent Company 2019 2019 2018 2019 2018 Average Foreign banks ₱1,462,853,252 ₱1,772,754,799 ₱1,462,853,252 ₱1,772,754,799 Liabilities Forward Notional Local banks 1,001,138,515 1,237,407,981 911,223,534 1,171,421,535 Assets (Note 17) Rate Amount Maturity Date ₱2,463,991,767 ₱3,010,162,780 ₱2,374,076,786 ₱2,944,176,334 Freestanding Derivatives Currency Swaps For the years ended December 31, 2019, 2018 and 2017, peso-denominated due from other banks bear nominal interest rates ranging from 0.10% to 1.00% while Sold: foreign currency-denominated due from other banks bear nominal interest rates ranging from 0.10% to 0.25%. AUD/USD ₱− ₱382,636 0.69 $687,243 January 3, 2020 EUR/USD − 80,272 1.11 $1,108,915 January 2, 2020 Total interest income on ‘Due from other banks’ earned by the Group amounted to ₱20.59 million, ₱13.05 million and ₱6.87 million for the years ended December USD/JPY 992,618 − 109.38 ¥9,142,606 January 21, 2020 31, 2019, 2018 and 2017, respectively, while total interest income earned by the Parent Company amounted to ₱20.47 million, ₱12.99 million and ₱6.84 million for ₱992,618 ₱462,908 the years ended December 31, 2019, 2018 and 2017, respectively, presented in ‘Interest income on deposits with banks and others’ in the statements of income. 2018 Total interest income on ‘Due from BSP’ earned by the Group amounted to ₱12.00 million, ₱27.25 million and ₱53.14 million for the years ended December 31, Average 2019, 2018 and 2017, respectively, while total interest income earned by Parent Company earned ₱1.79 million, ₱9.30 million and ₱34.18 million for the years ended Liabilities Forward Notional December 31, 2019, 2018 and 2017, respectively, presented in ‘Interest income on deposits with banks and others’ in the statements of income. Assets (Note 17) Rate Amount Maturity Date Freestanding Derivatives Interbank Loans and Receivable and Securities Purchased Under Resale Agreement Currency Swaps This account consists of: Sold: USD/JPY ₱− ₱336,698 110.99 ¥540,580 January 4, 2019 Consolidated Parent Company 2019 2018 2019 2018 Movements in the Group’s and Parent Company’s derivative financial instruments follow: Interbank loans receivable ₱2,342,127,432 ₱2,100,410,000 ₱2,342,127,432 ₱2,100,410,000 SPURA 66,578,028 88,000,000 − − 2019 2018 ₱2,408,705,460 ₱2,188,410,000 ₱2,342,127,432 ₱2,100,410,000 Balance at beginning of the year (₱336,698) (₱5,871,507) Fair value changes during the year 45,381,998 4,355,889 Interbank loans receivable of the Parent Company from a local savings bank has a remaining maturity of two (2) days to six (6) days in 2019 and four (4) days to four Settled transactions (44,515,590) 1,178,920 (4) months in 2018. As of December 31, 2019 and 2018, placement on SPURA with the BSP had a remaining maturity of six (6) days and two (2) days, respectively. Balance at end of the year ₱529,710 (₱336,698) The fair value of the related collateral of SPURA is disclosed in Note 5. The Bank’s subsidiary has nil financial assets at FVTPL as of December 31, 2019 and 2018. The interest income of the Group in 2019, 2018 and 2017 from interbank loan receivable and SPURA amounted to ₱64.54 million, ₱82.55 million and ₱135.33 million, respectively. Financial Assets at Fair Value through Other Comprehensive Income The financial assets at fair value through other comprehensive income of the Group and Parent Company consist of the following as of: The interest income of Parent Company in 2019, 2018, and 2017 from interbank loan receivable and SPURA amounted to ₱58.73 million, ₱77.48 million and ₱130.86 million, respectively. Consolidated Parent Company 2019 2018 2019 2018 7. INVESTMENT SECURITIES Government securities ₱8,421,114,497 ₱7,268,522,839 ₱8,421,114,497 ₱7,268,522,839 Private bonds 5,344,204,206 5,651,128,473 5,344,204,206 5651,128,473 Financial Assets at FVTPL Quoted equity securities 175,875,000 157,500,000 175,875,000 157,500,000 This account consists of investments by the Parent Company in: Unquoted equity securities 32,268,140 39,635,764 62,468,140 69,835,764 ₱13,973,461,843 ₱13,116,787,076 ₱14,003,661,843 ₱13,146,987,076 2019 2018 As of December 31, 2019 and 2018, the quoted equity securities of the Group consist of shares of stocks in a private corporation. Government securities ₱3,943,264 ₱8,206,143 Derivatives assets 992,618 − Investments in unquoted equity securities include investment in shares of stock of Philippine Clearing House Corporation (PCHC), BancNet, and LGU Guarantee ₱4,935,882 ₱8,206,143 Corporation. These investments are required to be held by the Parent Company as part of its operations. The Parent Company does not have any plans to sell these shares in the future. Fair values of these securities are derived based on the adjusted net asset value method. Derivative assets are composed of foreign currency swaps. currency swaps represent commitments to purchase/sell foreign currency on a future date at an agreed exchange rate. As of December 31, 2019 and 2018, the unquoted equity securities of the Parent Company include redeemable preferred shares of LSB amounting to 30.20 million equivalent to 30,200 shares. The nominal annual interest rates of peso-denominated government securities range from 3.25% to 8.00% in 2019, 2.13% to 8.00% in 2018 and from 3.25% to 7.25% in 2017. The nominal annual interest rates of foreign currency-denominated government securities is 3.00% to 8.38% in 2019, and range from 3.00% to The range of the Group’s effective interest rate on government securities are as follows: 3.70% in 2018 and from 3.70% to 3.95% in 2017.

2019 2018 2017 Peso-denominated securities 3.29%-8.00% 3.62%-7.20% 1.38%-5.19% Foreign currency-denominated securities 3.83%-7.75% 3.16%-6.47% 2.75%-5.18%

The range of the Group’s effective interest rate on the private bonds are as follows:

2019 2018 2017 Peso-denominated securities 4.20%-6.49% 4.20%-7.82% 3.90%-6.63% Foreign currency-denominated securities 4.38%-7.38% 4.01%-6.02% 3.86%-5.90%

202 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 203 In 2019, 2018 and 2017, dividend income from equity securities presented under ‘Miscellaneous income - others’ of the Group amounted to ₱10.18 million, 8. LOANS AND RECEIVABLES ₱11.21 million and ₱13.40 million, respectively (see Note 24). This account consists of: Movements in net unrealized losses of the Group and the Parent Company included in the carrying value of ‘FVOCI investments’ follow: Consolidated Parent Company 2019 2018 2019 2018 2019 2018 Balance at beginning of year (₱1,036,006,819) (₱1,026,656,867) Receivables from customers: Changes due to reclassification to HTC –940,088,924 Commercial (Note 26) ₱49,514,835,477 ₱44,523,131,006 ₱49,406,873,364 ₱44,319,486,548 Balance at beginning of year, as restated (1,036,006,819) (86,567,943) Real estate 19,328,435,011 14,376,289,959 19,276,101,474 14,357,642,678 Changes in fair value 1,352,957,387 (934,221,581) Consumption 10,827,271,508 8,545,058,560 9,309,822,493 7,621,965,636 Realized gains taken to profit or loss (331,145,509) (15,217,295) Domestic bills purchased (Notes 19 and 26) 495,192,826 834,447,716 495,192,826 834,447,716 Change in unrealized losses on FVOCI investments 1,021,811,878 (949,438,876) 80,165,734,822 68,278,927,241 78,487,990,157 67,133,542,578 Provision for impairment loss 2,070,586 – Less: unearned interest and discount 328,181,769 416,063,873 240,737,163 346,925,553 Balance at end of year (₱12,124,355) (₱1,036,006,819) 79,837,553,053 67,862,863,368 78,247,252,994 66,786,617,025 Other receivables: The Bank’s subsidiary has nil financial assets at FVOCI as of December 31, 2019 and 2018. Accrued interest receivable 950,249,772 822,752,349 921,953,322 793,133,058 Accounts receivable 1,101,982,028 777,941,081 1,074,175,868 760,767,610 Investment Securities at Amortized Cost Sales contract receivable 82,942,164 28,501,001 55,699,215 18,319,215 The investment securities at amortized cost of the Group and Parent Company consist of the following as of: Lease receivables (Note 23) − 9,660,132 − − 81,972,727,017 69,501,717,931 80,299,081,399 68,358,836,908 Consolidated Parent Company Less: Allowance for credit losses (Note 14) 1,166,921,305 1,090,655,715 1,058,755,225 962,251,007 2019 2018 2019 2018 ₱80,805,805,712 ₱68,411,062,216 ₱79,240,326,174 ₱67,396,585,901 Government securities ₱9,507,201,849 ₱10,673,679,979 ₱9,356,915,213 ₱10,523,326,784 Private bonds 1,850,398,340 1,923,410,533 1,800,369,072 1,873,373,870 On May 26, 2017, the Parent Company entered into a purchase of receivables agreement with Robinsons Land Corporation (RLC) whereby, the Parent Company 11,357,600,189 12,597,090,512 11,157,284,285 12,396,700,654 will purchase, on a without recourse basis, certain finance lease receivables of RLC up to an aggregate amount of ₱2.00 billion. In 2017, total lease receivables Less:Allowance for impairment losses (Note 14) 338,948 795 332,226– purchased by the Parent Company amounted to ₱1.08 billion. On June 29, 2018, the Bank entered into an agreement with RLC thereby increasing the aggregate ₱11,357,261,241 ₱12,597,089,717 ₱11,156,952,059 ₱12,396,700,654 amount of lease receivables to be purchased to ₱3.00 billion. In 2019 and 2018, total lease receivable purchased by the Parent Company amounted ₱33.0 million to and ₱1.3 billion, respectively. In 2019 and 2018, investment securities at amortized cost were carried at Stage 1 and there were no transfers into and out of Stage 1. The Parent Company’s acquisition cost of the lease receivables approximate the fair value at the acquisition date. As of December 31, 2019 and 2018, the carrying As of December 31, 2019, the Bank’s bills payable was secured by government securities classified as investment securities at amortized cost with carrying of amount of these receivables amounting to ₱1.76 billion and ₱2.12 billion, respectively, is included under ‘Real Estate’ loans of the Parent Company. ₱800.00 million (see Note 18). Interest income on loans and receivables consists of: The effective interest rates for peso-denominated investment securities at amortized cost of the Group range from 3.25% to 8.13% in 2019 and from 2.08% to 6.00% in 2018. The effective interest rates for foreign currency-denominated investment securities at amortized cost of the Group is 2.75% in 2019 and range from 2.76% Consolidated Parent Company to 5.31% in 2018. Interest income on investment securities of the Group and the Parent Company consists of: 2019 2018 2017 2019 2018 2017 Receivables from customers: Consolidated Parent Company Commercial ₱3,173,161,721 ₱2,488,181,208 ₱1,692,098,388 ₱3,162,141,109 ₱2,435,437,049 ₱1,646,008,628 2019 2018 2017 2019 2018 2017 1,806,095,578 1,334,075,467 Financial assets at FVOCI ₱550,579,895 ₱706,749,553 ₱− ₱550,579,895 ₱706,749,553 ₱− Consumption 1,016,984,816 1,491,361,934 1,193,095,355 870,261,156 Investment securities at amortized Real estate 1,076,020,078 741,540,449 480,287,737 1,073,851,062 741,044,086 479,910,163 cost 486,140,405 364,317,419 − 477,790,098 356,079,561 − Domestic bills purchased 459,690 278,928 304,453 459,690 278,928 304,453 Financial assets at FVTPL 4,831,348 716,432 3,164,288 4,831,348 716,432 3,164,288 Others 4,342,079 2,901,732 2,493,750 1,963,479 1,057,475 203,301 AFS investments − − 695,049,519 − − 688,508,165 ₱6,060,079,146 ₱4,566,977,784 ₱3,192,169,144 ₱5,729,777,274 ₱4,370,912,893 ₱2,996,687,701 HTM investments − − 23,747,163 − − 23,747,163 ₱1,041,551,648 ₱1,071,783,404 ₱721,960,970 ₱1,033,201,341 ₱1,063,545,546 ₱715,419,616 Receivables from customers earns annual effective interest rates, as follow:

‘Trading and securities gains - net’ of the Group and Parent Company consist of: Consolidated Parent Company 2019 2018 2017 2019 2018 2017 2019 2018 2017 Effective interest rate 2.00- 60.95 2.00- 54.06 2.00-52.10 2.00- 60.95 2.00- 54.06 2.00-52.10 Net realized gains on financial assets at FVOCI taken to profit or loss ₱331,145,509 ₱15,217,295 − Realized gain (losses) on derivatives 44,515,590 (1,178,920) ₱21,215,876 Others consist of sales contract receivables and lease receivables. Net realized gains (losses) on sale of financial assets at FVTPL 21,324,814 4,596,322 14,224,671 Unrealized mark-to-market gains (losses) on financial assets at FVTPL 204,255 146 (1,223,824) The range of effective interest rates of the Group’s sales contract receivables are as follows: Net unrealized gains (losses) on derivatives 529,710 (336,698) (5,871,507) Net realized gains on AFS taken to profit or loss − − 147,619,819 Year Interest Rate Gain on disposal of HTM investments − − 8,928,275 2019 6.50% to 54.18% ₱397,719,878 ₱18,298,145 ₱184,893,310 2018 7.00% to 12.00% 2017 6.50% to 16.73% In 2019, the Parent Company disposed ‘Investment Securities at Amortized Cost’ with carrying value of ₱1.11 billion resulting in a gain on disposal amounting to ₱62.88 million. As a result of the Parent Company’s change in investment policy to prepare for the implementation of IRRBB measured using EVE in accordance with the provisions under BSP Circular No. 1044, Guidelindes on the Management of Interest Rate Risk in the Banking Book and amendment of the Guidelines on Market Risk Management, it abandoned the HTC business model for its foreign currency denominated HTC securities with tenor of more than fifteen (15) ears.y The remaining HTC securities of the Parent Company amounting to USD8 million will remain to be under a HTC business model.

204 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 205 9. INVESTMENT IN A SUBSIDIARY 10. PROPERTY AND EQUIPMENT

On December 26, 2012, the MB of the BSP approved the share purchase agreement (SPA) covering the Parent Company’s acquisition of the 100.00% common The composition of and the movements in this account follow: shares of LSB. The deeds of sale to implement the SPA were executed afterwards. Consolidated In addition to the approval of the acquisition, the MB of the BSP approved the following merger incentives: 2019 Furniture, Right-of-Use 1. Grant of several branch licenses to the Parent Company in restricted areas and waiver of corresponding ₱20.00 million special branch licensing fee for Transportation Leasehold Fixtures and of Asset each restricted branch license, subject to the following conditions: (a) the establishment of the awarded branches in restricted areas shall be subject to Land Building Equipment Improvements Equipment (Note 2) Total compliance with all other applicable provisions on branch establishment prescribed under Section X151 of the Manual of Regulations for Banks (MORB); and Cost (b) branches shall be opened within three (3) years from BSP final approval of the Parent Company’s acquisition of LSB. Balance at beginning of year ₱35,605,323 ₱75,895,770 ₱186,519,745 ₱813,355,101 ₱964,265,910 ₱635,203,495 ₱2,710,845,344 Additions − 765,777 20,729,436 92,900,208 100,752,050 292,205,132 507,352,603 2. Waiver of (a) the monetary penalties aggregating 6.40 million as of November 30, 2012 for violation of laws assessed by BSP on LSB, except penalties accruing Disposals − − (23,042,137) (1,099,324) (7,731,931) − (31,873,392) to other parties, e.g., Micro, Small and Medium Enterprises Development Council Fund. Such waiver shall not preclude BSP from pursuing watchlisting and imposition of non-monetary and administrative sanctions (e.g., fines, disqualifications, suspensions and/or removal from office) against the directors and Reclassification (Notes 11 and 13) 8,340,000 150,000 4,749,187 − − − 13,239,187 officers of LSB in accordance with applicable banking laws and regulations, without prejudice to the filing of criminal cases against liable persons under Balance at end of year 43,945,323 76,811,547 188,956,231 905,155,985 1,057,286,029 927,408,627 3,199,563,742 Section 34, 35 and 36 of Republic Act No. 7653 (the New Central Bank Act); (b) the applicable restrictions/ceilings on transactions between the Parent Accumulated depreciation and Company and LSB, for a period of three months, with respect to the Parent Company’s liquidity support to LSB (through deposits to and/or purchase of amortization receivables from LSB). Balance at beginning of year − 31,483,112 135,174,522 525,851,294 747,228,193 − 1,439,737,121 Depreciation and amortization − 4,565,656 23,989,615 93,235,517 90,745,167 248,849,807 461,385,762 3. Staggered booking, up to five (5) years from final BSP approval of the Parent Company’s acquisition of LSB, of the ₱274.10 million required allowance for Disposals − − (15,738,868) (810,232) (6,497,009) −(23,046,109) probable losses on LSB’s risk assets. The periodic amortization shall be charged against current operations, in accordance with the regulatory accounting Balance at end of year − 36,048,768 143,425,269 618,276,579 831,476,351 248,849,807 1,878,076,774 guidelines for deferred loss recognition under Appendix 56a (to Subsection X394.10) of the MORB. The unamortized losses shall be deducted from qualifying Allowance for impairment losses capital for purposes of capital adequacy ratio computation and from computation of LSB’s unimpaired capital under Subsection X116.1 of the MORB. (Note 14) Balance at beginning of year 11,385,054 1,050,745 − − 279,328 − 12,715,127 4. Retention of the thrift branch license of LSB on its existing eleven (11) branches, for its operations as a wholly-owned subsidiary of the Parent Company to Provision − − − − − − − pursue microfinance and country-side banking. Reclassification (Notes 11 and 13) − 143,792 − − − − 143,792 Balance at end of year 11,385,054 1,194,537 − − 279,328 − 12,858,919 5. Approval of the following interlocking positions: Net Book Value at End of the Year ₱32,560,269 ₱39,568,242 ₱45,530,962 ₱286,879,406 ₱225,530,350 ₱678,558,820 ₱1,308,628,049 a. concurrent assignment of the Parent Company’s Head of Legal Services as Corporate Secretary of LSB; b. secondment of the officers of the Parent Company to LSB to assume the position of President and Chief Compliance Officer subject to the condition Parent Company that these officers shall (i) relinquish all their duties, responsibilities, and signing authorities in the Parent Company and ii)( receive compensation/ 2019 salaries and other emoluments from LSB; and Furniture, Right-of Use c. notation of the interlocking directorships and officership-directorships of the Parent Company. Transportation Leasehold Fixtures and of Asset Land Building Equipment Improvements Equipment (Note 2) Total Based on the foregoing events, the Parent Company acquired effective control and management of LSB as of December 26, 2012. Accordingly, in accordance Cost with PFRS 3, Business Combinations, the Parent Company’s date of acquisition of LSB is December 26, 2012. However, for convenience purposes, the Group used Balance at beginning of year ₱23,590,796 ₱57,709,845 ₱169,879,756 ₱753,581,127 ₱865,528,419 ₱587,515,373 ₱2,457,805,316 December 31, 2012 as the cut-off in determining the fair value of the net assets of LSB. Therefore, only the fair values of the identifiable assets and liabilities of LSB as December 31, 2012 were consolidated and the profit and loss of LSB for the year ended December 31, 2012 were excluded from the Group’s consolidated Additions − − 15,617,157 80,289,17285,529,553 280,341,794 461,777,676 financial statements as of December 31, 2012. Disposals − − (19,110,936) (1,057,504) (6,369,690) − (26,538,130) Matured Leases − − − − − − − The acquisition resulted in recognition of goodwill amounting to ₱244.33 million. There were no adjustments resulting from the final purchase price allocation Reclassification (Notes 11 and 13) − − 4,749,187 − − − 4,749,187 from LSB. As of December 31, 2019 and 2018, goodwill amounted ₱to 244.33 million. Balance at end of year 23,590,796 57,709,845 171,135,164 832,812,795 944,688,282 867,857,167 2,897,794,049 Accumulated depreciation and As of December 31, 2019 and 2018, the Parent Company‘s investment in LSB consists of: amortization Balance at beginning of year − 24,047,267 123,672,820 505,254,643 670,156,977 − 1,323,131,707 December 31, December 31, Depreciation and amortization − 3,374,202 22,055,980 84,467,659 78,222,187 239,507,076 427,627,104 2019 2018 Disposals − − (12,393,150) (807,909) (5,840,654) − (19,041,713) Cost Balance at end of year − 27,421,469 133,335,650 588,914,393 742,538,510 239,507,076 1,731,717,098 Balance at beginning and end of year ₱1,131,000,000 ₱1,131,000,000 Allowance for impairment losses Accumulated equity in net income (Note 14) Balance at beginning of year 104,478,235 101,986,043 Balance at beginning of year − − − − 279,328 − 279,328 PFRS 9 transition adjustment for ECL −(7,380,714) Provision − − − − − − − Share in net income of a subsidiary 125,666,513 9,872,906 Balance at end of year − − − − 279,328 − 279,328 Balance at end of year 230,144,748 104,478,235 Net Book Value at End of the Year ₱23,590,796 ₱30,288,376 ₱37,799,514 ₱243,898,402 ₱201,870,444 ₱628,350,091 ₱1,165,797,623 Accumulated equity in OCI Balance at beginning of year 1,262,202 (17,272,868) Consolidated PFRS 9 transition adjustment for reclassification of unrealized gain (loss) on available-for-sale 2018 investments −18,055,001 Furniture, Remeasurement gain on retirement liability (5,228,610) 480,069 Transportation Leasehold Fixtures and Balance at end of year (3,966,408) 1,262,202 Land Building Equipment Improvements Equipment Total ₱1,357,178,340 ₱1,236,740,437 Cost Balance at beginning of year ₱35,605,323 ₱75,895,770 ₱179,163,323 ₱680,851,683 ₱872,284,181 ₱1,843,800,280 Additions − − 29,816,294 132,597,756 95,446,297 257,860,347 Disposals − − (27,495,112) (94,338) (3,464,568) (31,054,018) Reclassification (Notes 11 and 13) − − 5,035,240 − − 5,035,240 Balance at end of year 35,605,323 75,895,770 186,519,745 813,355,101 964,265,910 2,075,641,849 (Forward)

206 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 207 INVESTMENT PROPERTIES Consolidated 11. 2018 Furniture, The movements in this account follow: Transportation Leasehold Fixtures and Land Building Equipment Improvements Equipment Total Consolidated Accumulated depreciation and amortization 2019 Balance at beginning of year ₱− ₱27,175,002 ₱120,860,892 ₱437,350,492 ₱659,221,848 ₱1,244,608,234 Land Building Total Depreciation and amortization − 4,308,110 24,596,734 88,500,802 88,084,749 205,490,395 Cost Disposals − − (10,283,104) − (78,404) (10,361,508) Balances at beginning of year ₱192,258,950 ₱249,313,337 ₱441,572,287 Balance at end of year − 31,483,112 135,174,522 525,851,294 747,228,193 1,439,737,121 Additions (Note 29) 15,891,065 88,822,365 104,713,430 Allowance for impairment losses (Note 14) Disposals (19,858,904) (28,909,615) (48,768,519) Balance at beginning of year 7,742,527 4,574,411 − − 279,328 12,596,266 Reclassifications (Note 10) (8,340,000) (150,000) (8,490,000) Provision − 54,276 − − − 54,276 Balances at end of year 179,951,111 309,076,087 489,027,198 Reclassification (Notes 11 and 13) 3,642,527 (3,577,942) − − − 64,585 Accumulated depreciation Balance at end of year 11,385,054 1,050,745 − − 279,328 12,715,127 Balances at beginning of year − 65,839,241 65,839,241 Net Book Value at End of the Year ₱24,220,269 ₱43,361,913 ₱51,345,223 ₱287,503,807 ₱216,758,389 ₱623,189,601 Depreciation (Note 10) − 24,138,059 24,138,059 Disposals − (10,635,522) (10,635,522) Parent Company Balances at end of year − 79,341,778 79,341,778 2018 Allowance for impairment losses (Note 14) Furniture, Balances at beginning of year 29,086,118 5,573,378 34,659,496 Transportation Leasehold Fixtures and Recoveries (470,209) (3,353,416) (3,823,625) Land Building Equipment Improvements Equipment Total Disposals (2,195,305) (767,549) (2,962,854) Cost Reclassifications (Note 10) (490,411) (52,190) (542,601) Balance at beginning of year ₱23,590,796 ₱57,709,845 ₱163,688,842 ₱653,135,660 ₱787,837,377 ₱1,685,962,520 Balances at end of year 25,930,193 1,400,223 27,330,416 Additions − − 27,806,136 100,445,46779,305,384 207,556,987 Net Book Value at End of the Year ₱154,020,918 ₱228,334,086 ₱382,355,004 Disposals − − (26,650,461) − (1,614,342) (28,264,803) Reclassification (Notes 11 and 13) − − 5,035,239 − − 5,035,239 Parent Company Balance at end of year 23,590,796 57,709,845 169,879,756 753,581,127 865,528,419 1,870,289,943 2019 Accumulated depreciation and amortization Land Building Total Balance at beginning of year − 20,673,065 110,208,715 421,793,860 592,218,236 1,144,893,876 Cost Depreciation and amortization − 3,374,202 22,907,811 83,460,783 78,040,248 187,783,044 Balances at beginning of year ₱48,449,646 ₱214,601,881 ₱263,051,527 Disposals − − (9,443,706) − (101,507) (9,545,213) Additions (Note 29) 2,363,165 84,507,365 86,870,530 Balance at end of year − 24,047,267 123,672,820 505,254,643 670,156,977 1,323,131,707 Disposals (1,137,562) (18,804,879) (19,942,441) Allowance for impairment losses (Note 14) Balances at end of year 49,675,249 280,304,367 329,979,616 Balance at beginning of year − − − − 279,328 279,328 Accumulated depreciation Provision − − − − − − Balances at beginning of year − 43,478,857 43,478,857 Balance at end of year − − − − 279,328 279,328 Depreciation (Note 10) − 22,915,622 22,915,622 Net Book Value at End of the Year ₱23,590,796 ₱33,662,578 ₱46,206,936 ₱248,326,484 ₱195,092,114 ₱546,878,908 Disposals − (6,048,484) (6,048,484) Balances at end of year − 60,345,995 60,345,995 Gain on sale of property and equipment included in ‘Miscellaneous income’ amounted to ₱7.25 million, ₱2.44 million and ₱16.48 million in 2019, 2018 and 2017, Allowance for impairment losses (Note 14) respectively, for the Group, and 6.49 million, ₱2.43 million and ₱1.76 million in 2019, 2018 and 2017, respectively, for the Parent Company (see Note 24). Balances at beginning of year 2,916,600 4,474,530 7,391,130 Recoveries (470,209) (3,353,416) (3,823,625) The details of depreciation and amortization follow: Reclassification (Note 10) (398,809) − (398,809) Balances at end of year 2,047,582 1,121,114 3,168,696 Consolidated Parent Company Net Book Value at End of the Year ₱47,627,667 ₱218,837,258 ₱266,464,925 2019 2018 2017 2019 2018 2017 Property and equipment (Note 10) ₱212,535,955 ₱205,490,395 ₱189,022,965 ₱188,120,028 ₱187,783,044 ₱168,941,922 Consolidated Right-of-use of asset (Note 10) 248,849,807 – – 239,507,076 – – 2018 Software costs (Note 13) 93,616,013 91,165,641 80,336,227 91,886,690 88,132,100 76,990,421 Land Building Total Repossessed chattels (Note 13) 56,400,520 36,744,920 40,901,818 56,128,078 36,602,627 40,784,202 Cost Investment properties (Note 11) 24,138,059 21,686,401 15,875,764 22,915,622 18,891,874 13,009,489 Balances at beginning of year ₱191,277,293 ₱186,551,932 ₱377,829,225 ₱635,540,354 ₱355,087,357 ₱326,136,774 ₱598,557,494 ₱331,409,645 ₱299,726,034 Additions (Note 29) 17,862,416 98,984,584 116,847,000 As of December 31, 2019 and 2018, the cost of fully depreciated items of property and equipment still in use by the Group amounted to ₱1.10 billion and Disposals (16,880,759) (36,223,179) (53,103,938) ₱0.95 billion, respectively. Balances at end of year 192,258,950 249,313,337 441,572,287 Accumulated depreciation As of December 31, 2019 and 2018, the cost of fully depreciated items of property and equipment still in use by the Parent Company amounted to ₱1.02 billion and Balances at beginning of year − 48,289,885 48,289,885 ₱0.88 billion, respectively. Depreciation (Note 10) − 21,686,401 21,686,401 Disposals − (4,137,045) (4,137,045) Balances at end of year − 65,839,241 65,839,241 Allowance for impairment losses (Note 14) Balances at beginning of year 33,581,998 11,444,696 45,026,694 Provisions (3,690,741) (6,079,473) (9,770,214) Disposals (155,967) (349,873) (505,840) Reclassifications (Note 10) (649,172) 558,028 (91,144) Balances at end of year 29,086,118 5,573,378 34,659,496 Net Book Value at End of the Year ₱163,172,832 ₱177,900,718 ₱341,073,550

208 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 209 Parent Company Consolidated Parent Company 2018 2019 2018 2019 2018 Land Building Total Advance payment to suppliers ₱26,089,718 ₱25,675,033 ₱26,089,718 ₱25,675,033 Cost Bills payment - contra 16,064,097 5,622,641 16,064,097 5,622,641 Balances at beginning of year ₱45,368,950 ₱151,656,720 ₱197,025,670 Documentary stamp tax on hand 6,360,875 8,546,975 5,572,536 8,186,850 Additions (Note 29) 11,699,109 95,877,809 107,576,918 Others 100,649,753 89,497,576 95,114,589 84,554,144 Disposals (8,618,413) (32,932,648) (41,551,061) 1,225,903,797 1,082,256,191 1,209,148,562 1,062,861,598 Balances at end of year 48,449,646 214,601,881 263,051,527 Allowance for impairment losses (Note 14) (13,064,205) (14,017,023) (10,540,371) (11,493,189) Accumulated depreciation ₱1,212,839,592 ₱1,068,239,168 ₱1,198,608,191 ₱1,051,368,409 Balances at beginning of year − 28,224,684 28,224,684 Depreciation (Note 10) − 18,891,874 18,891,874 Software costs - net represent the carrying amount of software purchased by the Group for use in operations, net of amortization. Disposals − (3,637,701) (3,637,701) Balances at end of year − 43,478,857 43,478,857 Advance payment to suppliers consists of various down payments made to various suppliers and contractors in connection with the Group’s and the Parent Company’s operation and other projects such as branch expansions. Allowance for impairment losses (Note 14) Balances at beginning of year 6,607,341 10,733,495 17,340,836 Bills payment-contra is the contra account of bills payment under ‘Accrued expenses and other liabilities’ (see Note 19). Provision (3,690,741) (6,079,473) (9,770,214) Disposals − (179,492) (179,492) The Group’s ‘Others’ include stationeries and office supplies amounting to ₱19.98 million in 2019 and ₱8.44 million in 2018, margin calls amounting to Balances at end of year 2,916,600 4,474,530 7,391,130 ₱60.61 million in 2019 and ₱62.94 million in 2018, and other miscellaneous assets amounting to ₱20.06 million in 2019 and ₱18.12 million in 2018. Net Book Value at End of the Year ₱45,533,046 ₱166,648,494 ₱212,181,540 The Parent Company’s ‘Others’ include stationeries and office supplies amounting to ₱17.88 million in 2019 and ₱7.84 million in2018, margin calls amounting to Investment properties include real estate properties acquired in settlement of loans and receivables. The difference between the fair value of the asset upon ₱60.61 million in 2019 and ₱62.94 million in 2018, and other miscellaneous assets amounting to ₱16.62 million in ₱2019 and ₱13.77 million in 2018. foreclosure and the carrying value of the loan is recognized as gain or loss on initial recognition recorded included under ‘Miscellaneous Income’. The composition of and the movements in ‘Repossessed chattels - net’ of the Group and the Parent Company follow: The fair values of investment properties are disclosed in Note 5.

Consolidated Direct operating expenses on investment properties (recorded in ‘Litigation expense’ under ‘Miscellaneous expense’) amounted to ₱18.62 million, ₱12.07 million 2019 and ₱14.01 million in 2019, 2018 and 2017, respectively, for the Group, and ₱14.51 million, ₱11.07 million and ₱10.21 million in 2019, 2018 and 2017, respectively, Cars Others Total for the Parent Company (see Note 24). Cost Balances at beginning of year ₱20,880,000 ₱120,439,129 ₱141,319,129 Gain on initial recognition of investment properties included in ‘Miscellaneous income’ of the Group amounted to ₱33.89 million, ₱4.15 million and ₱33.89 million Additions (Note 31) 67,370,000 417,904,889 485,274,889 in 2019, 2018 and 2017, respectively, for the Group, and ₱21.47 million, ₱0.05 million and ₱31.53 million in 2019, 2018 and 2017, respectively, for the Parent Disposals (35,910,000) (368,958,752) (404,868,752) Company (see Note 24). Reclassifications (Note 10) (5,645,000) (165,395) (5,810,395) Balances at end of year 46,695,000 169,219,871 215,914,871 Gain (loss) on sale of investment properties included in ‘Miscellaneous income’ amounted to ₱17.36 million, (₱29.29) million and ₱5.35 million in 2019, 2018 and Accumulated depreciation 2017, respectively for the Group and ₱5.14 million, (₱30.68) million and ₱0.18 million in 2019, 2018 and 2017, respectively, for the Parent Company (see Note 24). Balances at beginning of year 3,207,855 35,712,317 38,920,172 Depreciation (Note 10) 11,488,950 44,911,570 56,400,520 Disposals (6,582,586) (34,146,844) (40,729,430) BRANCH LICENSES 12. Reclassifications (Note 10) (995,620) (23,304) (1,018,924) Balances at end of year 7,118,599 46,453,739 53,572,338 The movements in this account follow: Allowance for impairment losses (Note 14) Consolidated Parent Company Balances at beginning of year 36,588 1,365,844 1,402,432 2019 2018 2019 2018 Recoveries (12,258) (123,228) (135,486) Cost Disposals (98,746) (53,669) (152,415) Balance at beginning of year ₱1,232,408,709 ₱1,231,591,268 ₱611,808,709 ₱611,191,268 Reclassifications (Note 10) 97,887 (136,776) (38,889) Additions 246,589 617,441 246,589 617,441 Balances at end of year 23,471 1,052,171 1,075,642 Reclassifications −200,000 − − Net Book Value at End of the Year ₱39,552,930 ₱121,713,961 ₱161,266,891 Balance at end of year 1,232,655,298 1,232,408,709 612,055,298 611,808,709 Parent Company Allowance for impairment losses (Note 14) 2019 Balance at beginning and end of year 232,726,929 232,526,929 232,726,929 232,526,929 Cars Others Total ₱999,928,369 ₱999,881,780 ₱379,328,369 ₱379,281,780 Cost Balances at beginning of year ₱20,880,000 ₱120,179,532 ₱141,059,532 The allowance for impairment losses amounting to ₱232.53 million relates to branches that the Parent Company ceased to operate in 2010. Additions (Note 31) 67,370,000 415,013,000 482,383,000 Disposals (35,910,000) (368,543,151) (404,453,151) Reclassifications (Note 10) (5,645,000) (162,000) (5,807,000) 13. OTHER ASSETS Balances at end of year 46,695,000 166,487,381 213,182,381 Accumulated depreciation This account consists of: Balances at beginning of year 3,207,855 35,519,552 38,727,407 Depreciation (Note 10) 11,488,950 44,639,128 56,128,078 Consolidated Parent Company Disposals (6,582,586) (34,123,928) (40,706,514) 2019 2018 2019 2018 Reclassifications (Note 10) (995,620) (23,304) (1,018,924) Creditable withholding tax ₱435,473,067 ₱342,880,003 ₱435,473,067 ₱342,880,003 Balances at end of year 7,118,599 46,011,448 53,130,047 Software costs - net 299,873,508 347,713,754 298,423,442 345,643,258 Allowance for impairment losses (Note 14) Repossessed chattels - net 161,266,891 100,996,525 158,980,575 100,938,347 Balances at beginning of year 36,588 1,357,190 1,393,778 Prepaid expenses 72,543,068 86,803,471 67,094,699 75,952,290 Recoveries (12,258) (127,111) (139,369) Disposals (98,746) (45,015) (143,761) Refundable deposits 62,313,746 64,481,147 61,066,765 63,369,966 Reclassifications (Note 10) 97,887 (136,776) (38,889) Sundry debits 45,269,074 10,039,066 45,269,074 10,039,066 Balances at end of year 23,471 1,048,288 1,071,759 (Forward) Net Book Value at End of the Year ₱39,552,930 ₱119,427,645 ₱158,980,575

210 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 211 Consolidated 14. ALLOWANCE FOR CREDIT AND IMPAIRMENT LOSSES 2018 Cars Others Total Movements in the allowance for credit and impairment losses follow: Cost Balances at beginning of year ₱14,950,947 ₱117,093,000 ₱132,043,947 Consolidated Parent Company Additions (Note 29) 34,415,000 219,722,176 254,137,176 2019 2018 2019 2018 Disposals (22,870,947) (215,706,742) (238,577,689) Balances at beginning of year Reclassifications (Note 10) (5,615,000) (669,305) (6,284,305) FA at amortized cost (Note 7) ₱795 ₱− ₱– ₱− Balances at end of year 20,880,000 120,439,129 141,319,129 Loans and receivables (Note 8) 1,090,655,715 1,103,022,464 962,251,007 989,801,606 Accumulated depreciation Property and equipment (Note 10) 12,715,127 12,596,266 279,328 279,328 Balances at beginning of year 514,323 29,147,183 29,661,506 Investment properties (Note 11) 34,659,496 45,026,694 7,391,130 17,340,836 Depreciation (Note 10) 5,472,418 31,272,502 36,744,920 Branch licenses (Note 12) 232,526,929 232,526,929 232,526,929 232,526,929 Disposals (2,016,497) (24,506,871) (26,523,368) Repossessed chattels (Note 13) 1,402,432 12,400,860 1,393,778 12,392,206 Reclassifications (Note 10) (762,389) (200,497) (962,886) Other assets (Note 13) 14,017,023 10,201,994 11,493,189 7,678,160 Balances at end of year 3,207,855 35,712,317 38,920,172 1,385,977,517 1,415,775,207 1,215,335,361 1,260,019,065 Allowance for impairment losses (Note 14) PFRS 9 transition adjustments – 21,163,184 – 13,782,470 Balances at beginning of year 649,317 11,751,543 12,400,860 Provision for the year 125,402,017 100,133,645 124,806,175 99,094,504 Provisions 170,169 (6,562,534) (6,392,365) Disposals (52,934,656) (150,478,595) (32,109,997) (157,271,103) Disposals (494,318) (3,848,727) (4,343,045) Reversals/others (4,128,514) (615,924) (1,157,005) (289,575) Reclassifications (Note 10) (288,580) 25,562 (263,018) 68,338,847 (29,797,690) 91,539,173 (44,683,704) Balances at end of year 36,588 1,365,844 1,402,432 Balances at end of year Net Book Value at End of the Year ₱17,635,557 ₱83,360,968 ₱100,996,525 FA at amortized cost (Note 7) 338,948 795 332,226 − Loans and receivables (Note 8) 1,166,921,305 1,090,655,715 1,058,755,225 962,251,007 Parent Company Property and equipment (Note 10) 12,858,919 12,715,127 279,328 279,328 2018 Investment properties (Note 11) 27,330,416 34,659,496 3,168,696 7,391,130 Cars Others Total Branch licenses (Note 12) 232,726,929 232,526,929 232,726,929 232,526,929 Cost Repossessed chattels (Note 13) 1,075,642 1,402,432 1,071,759 1,393,778 Balances at beginning of year ₱14,950,947 ₱116,569,798 ₱131,520,745 Other assets (Note 13) 13,064,205 14,017,023 10,540,371 11,493,189 Additions (Note 29) 34,415,000 219,722,176 254,137,176 ₱1,454,316,364 ₱1,385,977,517 ₱1,306,874,534 ₱1,215,335,361 Disposals (22,870,947) (215,439,742) (238,310,689) Reclassifications (Note 10) (5,615,000) (672,700) (6,287,700) Provision for financial assets at Fair Value through Other Comprehensive Income amounting to ₱2.07 million is presented in movements in net unrealized losses Balances at end of year 20,880,000 120,179,532 141,059,532 of the Group and the Parent Company (Note 7). Accumulated depreciation Balances at beginning of year 514,323 28,959,655 29,473,978 An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to commercial loans follow: Depreciation (Note 10) 5,472,418 31,130,209 36,602,627 Disposals (2,016,497) (24,369,815) (26,386,312) Consolidated Reclassifications (Note 10) (762,389) (200,497) (962,886) 2019 Balances at end of year 3,207,855 35,519,552 38,727,407 Stage 1 Stage 2 Stage 3 Total Allowance for impairment losses (Note 14) Gross carrying amount as at January 1, 2019 ₱42,149,016,419 ₱1,967,149,606 ₱406,964,981 ₱44,523,131,006 Balances at beginning of year 649,317 11,742,889 12,392,206 Provision 170,169 (6,535,978) (6,365,809) New assets originated or purchased 49,489,572,259 − − 49,489,572,259 Disposals (494,318) (3,848,726) (4,343,044) Assets derecognized or repaid (excluding write offs) (43,809,440,560) (670,285,867) (9,653,851) (44,489,380,278) Reclassifications (Note 10) (288,580) (995) (289,575) Transfers to Stage 1 19,042,241 (18,262,028) (780,213) − Balances at end of year 36,588 1,357,190 1,393,778 Transfers to Stage 2 (2,606,146,389) 2,606,146,389 − − Net Book Value at End of the Year ₱17,635,557 ₱83,302,790 ₱100,938,347 Transfers to Stage 3 (82,754,966) (23,879,279) 106,634,245 − Amounts written off − − (8,487,510) (8,487,510) In 2019, loss on initial recognition of repossessed chattels included in ‘Miscellaneous income’ amounted to ₱81.97 million for the Group and the Parent Company. ₱45,159,289,004 3,860,868,821 494,677,652 ₱49,514,835,477 In 2018 and 2017, loss on initial recognition of repossessed chattels included in ‘Miscellaneous income’ amounted to nil and ₱18.90 million, respectively, for the ECL allowance as at January 1, 2019 under PFRS 9 83,537,302 100,794,487 166,440,628 350,772,417 Group and nil and ₱18.79 million, respectively, for the Parent Company (Note 24). Provisions for (recovery of) credit losses 117,899,120 (55,321,666) (19,441,269) 43,136,185 Transfers to Stage 1 563,644 (555,842) (7,802) − In 2019, loss on sale of repossessed chattels included in ‘Miscellaneous income’ amounted to ₱102.71 million and ₱102.75 million, respectively, for the Group and Transfers to Stage 2 (41,030,960) 41,030,960 − − the Parent Company. In 2018 and 2017, loss on sale of repossessed chattels included in ‘Miscellaneous income’ amounted to ₱8.12 million and ₱28.27 million, Transfers to Stage 3 (25,948,619) (12,810,656) 38,759,275 − respectively, for the Group and ₱8.12 million and ₱28.30 million, respectively for the Parent Company (see Note 24). Amounts written off/reversals/others − − 10,056,463 10,056,463 Movements in ‘Software costs - net’ follow: ₱135,020,487 ₱73,137,283 ₱195,807,295 ₱403,965,065

Parent Company Consolidated Parent Company 2019 2019 2018 2019 2018 Stage 1 Stage 2 Stage 3 Total Cost Gross carrying amount as at January 1, 2019 ₱42,074,366,564 ₱1,943,193,988 ₱301,925,996 ₱44,319,486,548 Balance at beginning of year ₱764,937,509 ₱653,896,383 746,802,127 ₱637,688,065 New assets originated or purchased 49,407,533,259 − − 49,407,533,259 Additions 45,775,767 111,276,126 44,666,874 109,114,062 Assets derecognized or repaid (excluding write offs) (43,649,242,716) (667,583,641) (3,320,086) (44,320,146,443) Reclassifications −(235,000) − − Transfers to Stage 1 16,710,557 (16,710,557) − − 810,713,276 764,937,509 791,469,001 746,802,127 Transfers to Stage 2 (2,598,748,766) 2,598,748,766 − − Accumulated amortization Transfers to Stage 3 (81,358,519) (10,114,725) 91,473,244 − Balance at beginning of year 417,223,755 326,075,614 401,158,869 313,026,769 ₱45,169,260,379 ₱3,847,533,831 ₱390,079,154 ₱49,406,873,364 Amortization (Note 10) 93,616,013 91,165,641 91,886,690 88,132,100 ECL allowance as at January 1, 2019 under PFRS 9 116,451,662 97,537,072 201,825,421 415,814,155 Reclassifications −(17,500) − − Provisions for (recovery of) credit losses 118,056,289 (55,174,073) (14,537,232) 48,344,984 Balance at end of year 510,839,768 417,223,755 493,045,559 401,158,869 Transfers to Stage 1 540,327 (540,327) − − Net Book Value at the End of the Year ₱299,873,508 ₱347,713,754 298,423,442 ₱345,643,258 Transfers to Stage 2 (40,971,079) 40,971,079 − − Transfers to Stage 3 (25,925,046) (4,083,027) 30,008,073 − Amounts written off/reversals/others − − 18,543,973 18,543,973 ₱168,152,153 ₱78,710,724 ₱235,840,235 ₱482,703,112

212 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 213 Consolidated Parent Company 2018 2019 Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 ₱39,464,292,540 ₱1,174,867,003 ₱404,745,990 ₱41,043,905,533 Gross carrying amount as at January 1, 2019 ₱13,741,340,565 ₱523,087,026 ₱93,215,087 ₱14,357,642,678 New assets originated or purchased 23,746,112,952 − − 23,746,112,952 New assets originated or purchased 6,935,403,126 − − 6,935,403,126 Assets derecognized or repaid (excluding write offs) (19,772,421,689) (457,351,529) (28,524,321) (20,258,297,539) Assets derecognized or repaid (excluding write offs) (1,863,230,834) (131,890,961) (21,822,535) (2,016,944,330) Transfers to Stage 1 307,476,095 (307,441,613) (34,482) − Transfers to Stage 1 153,185,241 (145,123,078) (8,062,163) − Transfers to Stage 2 (1,559,983,696) 1,560,048,995 (65,299) − Transfers to Stage 2 (868,916,903) 870,362,871 (1,445,968) − Transfers to Stage 3 (36,459,783) (2,973,250) 39,433,033 − Transfers to Stage 3 (107,115,914) (81,285,519) 188,401,433 − Amounts written off − − (8,589,940) (8,589,940) Amounts written off/reversals/others −−−− ₱42,149,016,419 ₱1,967,149,606 ₱406,964,981 ₱44,523,131,006 ₱17,990,665,281 ₱1,035,150,339 ₱250,285,854 ₱19,276,101,474 ECL allowance as at January 1, 2018 under PFRS 9 118,551,456 43,048,715 167,968,553 329,568,724 ECL allowance as at January 1, 2019 under PFRS 9 3,050,680 77,690 15,966,982 19,095,352 Provisions for (recovery of) credit losses 84,771 (5,581,679) 100,012,287 94,515,379 Provisions for (recovery of) credit losses 10,376,992 178,556 (15,024,227) (4,468,679) Transfers to Stage 1 22,394,829 (22,386,173) (8,656) − Transfers to Stage 1 65,712 (62,917) (2,795) − Transfers to Stage 2 (2,305,027) 2,335,326 (30,299) − Transfers to Stage 2 (1,258,639) 1,259,253 (614) − Transfers to Stage 3 (327,588) (62,753) 390,341 − Transfers to Stage 3 (295,489) (70,408) 365,897 − Amounts written off/reversals/others (54,861,139) 83,441,051 (101,891,598) (73,311,686) Amounts written off/reversals/others − − (238,903) (238,903) ₱83,537,302 ₱100,794,487 ₱166,440,628 ₱350,772,417 ₱11,939,256 ₱1,382,174 ₱1,066,340 ₱14,387,770

Parent Company Consolidated 2018 2018 Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 ₱39,400,227,665 ₱1,159,076,326 ₱296,107,936 ₱40,855,411,927 Gross carrying amount as at January 1, 2018 ₱8,904,302,261 ₱454,990,766 ₱71,095,894 ₱9,430,388,921 New assets originated or purchased 23,678,069,440 − − 23,678,069,440 New assets originated or purchased 6,121,050,263 − − 6,121,050,263 Assets derecognized or repaid (excluding write offs) (19,727,858,974) (456,676,198) (20,869,706) (20,205,404,878) Assets derecognized or repaid (excluding write offs) (1,079,174,629) (62,701,256) (33,273,340) (1,175,149,225) Transfers to Stage 1 307,441,613 (307,441,613) − − Transfers to Stage 1 251,522,723 (248,679,679) (2,843,044) − Transfers to Stage 2 (1,551,137,539) 1,551,137,539 − − Transfers to Stage 2 (405,610,226) 407,985,730 (2,375,504) − Transfers to Stage 3 (32,375,641) (2,902,066) 35,277,707 − Transfers to Stage 3 (37,848,696) (28,508,535) 66,357,231 − Amounts written off − − (8,589,941) (8,589,941) Amounts written off −−−− 42,074,366,564 1,943,193,988 301,925,996 44,319,486,548 ₱13,754,241,696 ₱523,087,026 ₱98,961,237 ₱14,376,289,959 ECL allowance as at January 1, 2018 under PFRS 9 152,570,441 34,266,421 208,709,651 395,546,513 ECL allowance as at January 1, 2018 under PFRS 9 2,943,318 146,529 14,309,948 17,399,795 Provisions for (recovery of) credit losses − − 100,371,837 100,371,837 Provisions for (recovery of) credit losses 101,264 − 4,490,635 4,591,899 Transfers to Stage 1 22,386,173 (22,386,173) − − Transfers to Stage 1 318,455 (90,538) (227,917) − Transfers to Stage 2 (2,248,087) 2,248,087 − − Transfers to Stage 2 (94,116) 284,552 (190,436) − Transfers to Stage 3 (37,225) (32,314) 69,539 − Transfers to Stage 3 (6,061) (13,465) 19,526 − Amounts written off/reversals/others (56,219,640) 83,441,051 (107,325,606) (80,104,195) Amounts written off/reversals/others (70,708) (249,388) 2,853,803 2,533,707 ₱116,451,662 ₱97,537,072 ₱201,825,421 ₱415,814,155 ₱3,192,152 ₱77,690 ₱21,255,559 ₱24,525,401

An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to real estate loans follow: Parent Company 2018 Consolidated Stage 1 Stage 2 Stage 3 Total 2019 Gross carrying amount as at January 1, 2018 ₱8,900,654,163 ₱454,614,612 ₱65,309,777 ₱9,420,578,552 Stage 1 Stage 2 Stage 3 Total New assets originated or purchased 6,107,091,263 − − 6,107,091,263 Gross carrying amount as at January 1, 2019 ₱13,754,241,696 ₱523,087,026 ₱98,961,237 ₱14,376,289,959 Assets derecognized or repaid (excluding write offs) (1,074,293,242) (62,500,522) (33,233,373) (1,170,027,137) New assets originated or purchased 6,971,027,197 − − 6,971,027,197 Transfers to Stage 1 251,347,303 (248,504,259) (2,843,044) − Assets derecognized or repaid (excluding write offs) (1,864,917,020) (131,983,754) (21,981,371) (2,018,882,145) Transfers to Stage 2 (405,610,226) 407,985,730 (2,375,504) − Transfers to Stage 1 153,185,241 (145,123,078) (8,062,163) − Transfers to Stage 3 (37,848,696) (28,508,535) 66,357,231 − Transfers to Stage 2 (869,062,811) 870,508,779 (1,445,968) − ₱13,741,340,565 ₱523,087,026 ₱93,215,087 ₱14,357,642,678 Transfers to Stage 3 (107,115,914) (81,285,519) 188,401,433 − ECL allowance as at January 1, 2018 under PFRS 9 2,916,036 133,603 8,635,022 11,684,661 ₱18,037,358,389 ₱1,035,203,454 ₱255,873,168 ₱19,328,435,011 Provisions for (recovery of) credit losses − − 4,876,984 4,876,984 ECL allowance as at January 1, 2019 under PFRS 9 3,192,152 77,690 21,255,559 24,525,401 Transfers to Stage 1 305,529 (77,612) (227,917) − Provisions for (recovery of) credit losses 10,278,182 178,556 (15,024,227) (4,567,489) Transfers to Stage 2 (94,116) 284,552 (190,436) − Transfers to Stage 1 65,712 (62,917) (2,795) − Transfers to Stage 3 (6,061) (13,465) 19,526 − Transfers to Stage 2 (1,258,639) 1,259,253 (614) − Amounts written off/reversals/others (70,708) (249,388) 2,853,803 2,533,707 Transfers to Stage 3 (295,489) (70,408) 365,897 − ₱3,050,680 ₱77,690 ₱15,966,982 ₱19,095,352 Amounts written off/reversals/others − − (238,903) (238,903) ₱11,981,918 ₱1,382,174 ₱6,354,917 ₱19,719,009

214 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 215 An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to consumer loans follow: Parent Company 2018 Consolidated Stage 1 Stage 2 Stage 3 Total 2019 ECL allowance as at January 1, 2018 under PFRS 9 ₱50,619,418 ₱15,878,438 ₱343,570,043 ₱410,067,899 Stage 1 Stage 2 Stage 3 Total Provisions for (recovery of) credit losses (45,868,678) 45,014,476 10,832,107 9,977,905 Gross carrying amount as at January 1, 2019 ₱7,576,153,808 ₱424,836,811 ₱544,067,941 ₱8,545,058,560 Transfers to Stage 1 48,062,329 (46,427,318) (1,635,011) − New assets originated or purchased 13,901,492,269 − − 13,901,492,269 Transfers to Stage 2 (7,846,945) 9,522,407 (1,675,462) − Assets derecognized or repaid (excluding write offs) (11,130,225,581) (290,567,974) (113,801,863) (11,534,595,418) Transfers to Stage 3 (1,824,610) (3,580,952) 5,405,562 − Transfers to Stage 1 37,818,753 (33,334,187) (4,484,566) − Amounts written off/reversals/others 34,724,621 6,696,921 (70,538,584) (29,117,042) Transfers to Stage 2 (555,784,021) 560,260,790 (4,476,769) − ₱77,866,135 ₱27,103,972 ₱285,958,655 ₱390,928,762 Transfers to Stage 3 (229,800,248) (53,131,558) 282,931,806 − Amounts written off/reversals/others (61,469,155) (9,962,381) (13,252,367) (84,683,903) An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to other receivables follow: ₱9,538,185,825 ₱598,101,501 ₱690,984,182 ₱10,827,271,508 ECL allowance as at January 1, 2019 under PFRS 9 94,119,653 29,016,475 429,825,444 552,961,572 Consolidated Provisions for (recovery of) credit losses 81,102,019 (6,372,457) 7,066,879 81,796,441 2019 Transfers to Stage 1 714,750 (591,394) (123,356) − Stage 1 Stage 2 Stage 3 Total Transfers to Stage 2 (6,887,238) 7,005,271 (118,033) − Gross carrying amount as at January 1, 2019 ₱1,376,553,881 ₱72,111,102 ₱190,189,580 ₱1,638,854,563 Transfers to Stage 3 (67,296,152) (21,425,387) 88,721,539 − New assets originated or purchased 2,341,390,051 − − 2,341,390,051 Amounts written off/reversals/others − − (50,594,568) (50,594,568) Assets derecognized or repaid (excluding write offs) (1,841,300,583) (39,236,252) (36,880,570) (1,917,417,405) ₱101,753,032 ₱7,632,508 ₱474,777,905 ₱584,163,445 Transfers to Stage 1 2,472,781 (2,381,126) (91,655) − Transfers to Stage 2 (82,169,378) 82,424,142 (254,764) − Parent Company Transfers to Stage 3 (45,115,816) (12,775,852) 57,891,668 − 2019 Amounts written off/reversals/others 61,469,155 9,962,381 915,219 72,346,755 Stage 1 Stage 2 Stage 3 Total ₱1,813,300,091 ₱110,104,395 ₱211,769,478 ₱2,135,173,964 Gross carrying amount as at January 1, 2019 ₱6,868,579,903 ₱406,155,574 ₱347,230,159 ₱7,621,965,636 ECL allowance as at January 1, 2019 under PFRS 9 3,174,997 4,519,229 154,702,099 162,396,325 New assets originated or purchased 11,763,809,217 − − 11,763,809,217 Provisions for (recovery of) credit losses 21,233,009 (724,723) (11,672,428) 8,835,858 Assets derecognized or repaid (excluding write offs) (9,650,548,236) (275,380,706) (69,933,548) (9,995,862,490) Transfers to Stage 1 14,951 (13,637) (1,314) − Transfers to Stage 1 37,133,815 (33,071,561) (4,062,254) − Transfers to Stage 2 (2,287,719) 2,293,955 (6,236) − Transfers to Stage 2 (531,718,368) 536,079,632 (4,361,264) − Transfers to Stage 3 (17,090,651) (3,517,260) 20,607,911 − Transfers to Stage 3 (175,967,348) (48,642,858) 224,610,206 − Amounts written off/reversals/others − − (12,158,397) (12,158,397) Amounts written off/reversals/others (61,469,155) (9,962,381) (8,658,334) (80,089,870) ₱5,044,587 ₱2,557,564 ₱151,471,635 ₱159,073,786 ₱8,249,819,828 ₱575,177,700 ₱484,824,965 ₱9,309,822,493 ECL allowance as at January 1, 2019 under PFRS 9 77,866,135 27,103,972 285,958,655 390,928,762 Parent Company Provisions for (recovery of) credit losses 79,138,684 (5,835,873) 4,751,924 78,054,735 2019 Transfers to Stage 1 637,162 (588,768) (48,394) − Stage 1 Stage 2 Stage 3 Total Transfers to Stage 2 (6,805,703) 6,850,070 (44,367) − Gross carrying amount as at January 1, 2019 ₱1,344,785,704 ₱68,258,285 ₱159,175,894 ₱1,572,219,883 Transfers to Stage 3 (66,561,603) (20,181,105) 86,742,708 − New assets originated or purchased 2,285,236,499 − − 2,285,236,499 Amounts written off/reversals/others − − (46,000,533) (46,000,533) Assets derecognized or repaid (excluding write offs) (1,811,802,560) (39,117,106) (34,798,181) (1,885,717,847) ₱84,274,675 ₱7,348,296 ₱331,359,993 ₱422,982,964 Transfers to Stage 1 1,539,027 (1,449,484) (89,543) − Transfers to Stage 2 (75,322,577) 75,573,632 (251,055) − Consolidated Transfers to Stage 3 (42,349,985) (9,978,245) 52,328,230 − 2018 Amounts written off 61,469,155 9,962,381 8,658,334 80,089,870 Stage 1 Stage 2 Stage 3 Total ₱1,763,555,263 ₱103,249,463 ₱185,023,679 ₱2,051,828,405 Gross carrying amount as at January 1, 2018 ₱5,982,202,651 ₱261,421,486 ₱603,641,275 ₱6,847,265,412 ECL allowance as at January 1, 2019 under PFRS 9 3,050,257 4,338,166 129,024,315 136,412,738 Provisions for (recovery of) credit losses 19,555,395 (1,000,396) (11,871,077) 6,683,922 New assets originated or purchased 5,044,475,854 − − 5,044,475,854 Transfers to Stage 1 14,455 (13,550) (905) − Assets derecognized or repaid (excluding write offs) (2,851,270,552) (278,325,013) (133,397,071) (3,262,992,636) Transfers to Stage 2 (1,663,527) 1,666,054 (2,527) − Transfers to Stage 1 50,749,426 (48,133,361) (2,616,065) − Transfers to Stage 3 (16,585,788) (3,041,700) 19,627,488 − Transfers to Stage 2 (532,081,829) 536,346,098 (4,264,269) − Amounts written off/reversals/others − − (4,415,281) (4,415,281) Transfers to Stage 3 (117,921,742) (46,472,399) 164,394,141 − ₱4,370,792 ₱1,948,574 ₱132,362,013 ₱138,681,379 Amounts written off − − (83,690,070) (83,690,070) ₱7,576,153,808 ₱424,836,811 ₱544,067,941 ₱8,545,058,560 Consolidated ECL allowance as at January 1, 2018 under PFRS 9 61,091,031 18,228,660 483,060,785 562,380,476 2018 Provisions for (recovery of) credit losses 6,527,664 1,164,467 12,006,007 19,698,138 Stage 1 Stage 2 Stage 3 Total Transfers to Stage 1 2,504,082 (1,527,203) (976,879) − Gross carrying amount as at January 1, 2018 ₱995,152,892 ₱51,781,820 ₱125,282,339 ₱1,172,217,051 Transfers to Stage 2 (7,964,592) 9,714,157 (1,749,565) − − − Transfers to Stage 3 (2,763,153) (5,260,527) 8,023,680 − New assets originated or purchased 831,507,573 831,507,573 Amounts written off/reversals/others 34,724,621 6,696,921 (70,538,584) (29,117,042) Assets derecognized or repaid (excluding write offs) (302,679,855) (8,009,086) (5,431,362) (316,120,303) ₱94,119,653 ₱29,016,475 ₱429,825,444 ₱552,961,572 Transfers to Stage 1 9,675,781 (9,393,356) (282,425) − Transfers to Stage 2 (44,772,247) 45,679,124 (906,877) − Transfers to Stage 3 (112,330,263) (7,947,400) 120,277,663 − Parent Company Amounts written off − − (48,749,758) (48,749,758) 2018 ₱1,376,553,881 ₱72,111,102 ₱190,189,580 ₱1,638,854,563 Stage 1 Stage 2 Stage 3 Total ECL allowance as at January 1, 2018 under PFRS 9 2,408,635 4,347,681 207,462,102 214,218,418 Gross carrying amount as at January 1, 2018 5,294,770,310 252,808,259 411,441,999 5,959,020,568 Provisions for (recovery of) credit losses 816,865 648,556 (4,028,889) (2,563,468) New assets originated or purchased 4,065,954,951 − − 4,065,954,951 Transfers to Stage 1 403,536 (306,784) (96,752) − Assets derecognized or repaid (excluding write offs) (1,945,289,085) (269,132,703) (104,898,025) (2,319,319,813) Transfers to Stage 2 (190,299) 478,719 (288,420) − Transfers to Stage 1 48,062,329 (46,427,318) (1,635,011) − Transfers to Stage 3 (42,690) (361,126) 403,816 − Transfers to Stage 2 (503,310,242) 507,162,708 (3,852,466) − Amounts written off/reversals/others (221,050) (287,817) (48,749,758) (49,258,625) Transfers to Stage 3 (91,608,360) (38,255,372) 129,863,732 − ₱3,174,997 ₱4,519,229 ₱154,702,099 ₱162,396,325 Amounts written off − − (83,690,070) (83,690,070) 6,868,579,903 406,155,574 347,230,159 7,621,965,636 (Forward)

216 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 217 Parent Company 2018 16. REDEEMABLE PREFERRED SHARES Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 ₱947,527,987 ₱41,985,610 ₱96,321,942 ₱1,085,835,539 In 2013, the Parent Company acquired 29,000 redeemable preferred shares at ₱1,000 par value from LSB (see Note 7). In 2016, the Parent Company acquired New assets originated or purchased 813,911,161 − − 813,911,161 additional 1,200 redeemable preferred shares amounting to ₱1.20 million. Details of LSB’s redeemable preferred shares as of Assets derecognized or repaid (excluding write offs) (272,708,867) (2,007,053) (4,061,139) (278,777,059) December 31, 2019 and 2018 follow: Transfers to Stage 1 8,561,601 (8,279,176) (282,425) − Transfers to Stage 2 (43,666,565) 44,333,162 (666,597) − Shares Amount Transfers to Stage 3 (108,839,613) (7,774,658) 116,613,871 − Preferred shares – ₱1,000 par value Amounts written off − − (48,749,758) (48,749,758) Authorized 50,000 ₱50,000,000 ₱1,344,785,704 ₱68,258,285 ₱159,175,894 ₱1,572,219,883 Issued and outstanding ECL allowance as at January 1, 2018 under PFRS 9 2,399,598 3,124,355 180,143,612 185,667,565 Balances at beginning and end of year 30,200 ₱30,200,000 Provisions for (recovery of) credit losses 701,164 1,714,847 (2,412,211) 3,800 Transfers to Stage 1 403,536 (306,784) (96,752) − The preferred shares has the following features: Transfers to Stage 2 (190,299) 454,691 (264,392) − a. The minimum subscription is 100 shares and payable in cash; Transfers to Stage 3 (42,690) (361,126) 403,816 − b. The shares shall earn monthly interest at a rate to be fixed by the BOD, but such interest shall not be less than the prevailing market interest rates and said Amounts written off/reversals/others (221,052) (287,817) (48,749,758) (49,258,627) shares shall not be treated as time deposit, deposit substitute or as other form of borrowings; ₱3,050,257 ₱4,338,166 ₱129,024,315 ₱136,412,738 c. The interest shall be paid in the form of dividends cumulatively, which may be declared annually or as often as the BOD may etermine;d Below is the breakdown of provision for (reversal of) credit and impairment losses: d. The shares shall have preference in the distribution of dividends and in the distribution of assets in case of liquidation or dissolution, provided, however that no dividend shall be declared or paid on redeemable shares in the absence of sufficient undivided profits, free surplus and approval of the BSP; e. The shares are non-voting on matters provided for in the last paragraph of Section 6 of the Corporation Code; Consolidated Parent Company f. Pre-emptive rights are not available on preferred shares nor shall they be subject to one and the shares shall be held for five (5) years with a right of 2019 2018 2017 2019 2018 2017 alienation or encumbrance of the same to any third person within the period of five years from the original date of subscription, provided, however, that on Loans and receivables ₱129,200,995 ₱116,241,948 ₱227,033,785 ₱128,614,962 ₱115,230,526 ₱225,309,770 the 5th year the holder shall be obliged to surrender the same to the corporation and upon prior approval of the BSP and in compliance with the provisions Investment properties (3,823,625) (9,770,214) 1,885,207 (3,823,625) (9,770,214) 1,885,206 of the MORB and the BSP’s circulars regarding this matter, the corporation shall be obliged to take up the subscription at the price when the preferred shares HTC Securities 160,133 −−154,207 −− of stock were originally subscribed. Provided that shares redeemed are replaced with at least an equivalent amount of newly paid-in shares so that the total Repossessed chattels (135,486) (6,392,365) 7,443,236 (139,369) (6,365,808) 7,443,236 paid-in capital stock is maintained at the same level immediately prior to redemption and provided further, that the corporation is not insolvent or if such Property and equipment – 54,276 4,714,024 – – 279,328 redemption will not cause insolvency, impairment of capital or inability of the corporation to meet its debts as they mature; and Other assets – ––– –– g. As of December 31, 2013, LSB has not yet created a sinking fund pending request from BSP to redeem and retire the preferred shares. The fund that will be ₱125,402,017 ₱100,133,645 ₱241,076,252 ₱124,806,175 ₱99,094,504 ₱234,917,540 used to redeem the preferred shares will be taken from the equity infused by the Parent Company. In 2019, provision for impairment losses is recognized from FVOCI securities amounting to ₱2.07 million. As discussed in Note 9, the SEC’s approved LSB’s application for increase in authorized capital stock on January 13, 2016.

The shares may again be disposed of by LSB for a price fixed by the BOD. Based on the BOD resolution on March 6, 2013, the entire redeemable preferred 15. DEPOSIT LIABILITIES shares of LSB will be retired after its redemption subject to BSP’s approval. As of December 31, 2019 and 2018, the entire redeemable preferred shares of LSB are still subject to BSP’s approval. Outstanding deposit liabilities bear annual fixed interest rates ranging from nil to 6.75% in 2019 and from nil to 6.90% in 2018, respectively. BONDS PAYABLE The BSP approved the decrease in reserve requirements on non-FCDU deposit liabilities through the following circulars: 17.

• Circular 1041 dated May 23, 2019 to 17.00% effective May 31, 2019; 16.50% effective June 28, 2019; 16.00% effective July 26,19 20 for the Parent Company On August 13, 2019, the Parent Company issued 5.00 billion fixed rate bonds due on August 13, 2021. The bond, which are listed in Philippine Dealing and Exchange and from 7.00% to 6.50% and 6.00% respectively for LSB. Corporation, were priced at par with a coupon rate of 5.125% fixed rate (EIR of 5.82%) payable on a quarterly basis. • Circular 1056 dated October 3, 2019 to 15.00% for the Parent Company and 5.00% for LSB effective November 1, 2019. • Circular No. 1063 to 14.00% for the Parent Company and 4.00% for LSB effective December 06, 2019. On November 14, 2019, the Parent Company issued another ₱5.00 billion fixed rate bonds due on November 14, 2021. The bond, which are listed in Philippine Dealing and Exchange Corporation, were priced at par with a coupon rate of 4.3% fixed rate (EIR of 4.94%) payable on a quarterly basis. The Group’s liquidity and statutory reserves as reported to the BSP follow: Interest expense on bonds payable amounted to 141.12 million for 2019.

Consolidated Parent Company 2019 2018 2019 2018 18. BILLS PAYABLE Due from BSP ₱11,900,726,219 ₱16,108,207,737 ₱11,824,059,252 ₱15,586,846,184 As of December 31, 2019, bills payable consist of long-term peso denominated borrowing with Development Bank of the Philippines (DBP) wholesale lending As of December 31, 2019 and 2018, the Group is in compliance with the regulations. facility amounting to ₱1.64 billion with interest rate of 5.00% and BSP rediscounting amounting to ₱400 million with interest rate of 4.88%. Details of interest expense on deposit liabilities follow: DBP wholesale lending facility is unsecured while BSP rediscounting is secured by government securities. Carrying value and fair value of the government securities classified as HTC amounted to ₱800.00 million and ₱769.45 million, respectively, as of 2019 (see Note 7). Consolidated Parent Company 2019 2018 2017 2019 2018 2017 As of December 31, 2018, short-term peso denominated borrowings with various local banks amounted to ₱0.50 billion with interest rates ranging from 5.06% to Demand ₱4,334,999 ₱3,062,044 ₱2,456,744 ₱4,334,999 ₱3,062,044 ₱2,456,744 5.38%, long-term peso denominated borrowing with DBP wholesale lending facility amounted to ₱1.95 billion with interest rate of 5.00% and overnight lending Savings 1,717,487,944 1,521,200,688 707,442,240 1,703,702,694 1,510,869,332 697,253,892 availments from the BSP amounted to ₱5.00 billion with interest rate of 5.25%. Time 492,682,489 327,337,429 318,812,552 479,710,655 318,646,848 300,798,222 LTNCD 267,893,614 219,601,947 96,808,815 267,893,614 219,601,947 96,808,815 The interest expense of the Group and Parent Company in 2019, 2018 and 2017 for bills payable amounted to ₱285.37 million, ₱115.70 million and ₱1.31 million, ₱2,482,399,046 ₱2,071,202,108 ₱1,125,520,351 ₱2,455,641,962 ₱2,052,180,171 ₱1,097,317,673 respectively. Long-Term Negotiable Certificates of Deposit (LTNCD) On May 4, 2017, the BSP approved the Parent Company’s issuance of the ₱3.00 billion LTNCD, with a right to increase the aggregate issue up to ₱5.00 billion in the event of over subscription.

On June 16, 2017, the Parent Company listed its LTNCD issuance amounting to ₱4.18 billion through the PDEx. The minimum investment was 50,000 with increments of 10,000 thereafter. The peso-denominated issue will mature on December 16, 2022 with nominal interest rate of 4.16% and EIR of 4.29%, payable every quarter. On July 6, 2018, the Parent Company issued additional LTNCD amounting to 1.78 billion with nominal interest rate of 4.88% and EIR of 5.15% payable every quarter which will mature on January 6, 2024. The proceeds was used to diversify the Parent Company’s maturity profile and funding sources and general corporate purposes.

218 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 219 Consolidated 19. ACCRUED EXPENSES AND OTHER LIABILITIES 2019 2018 Due Within Due Beyond Due Within Due Beyond Accrued expenses account consist of: One Year One Year Total One Year One Year Total Consolidated Parent Company Less: 2019 2018 2019 2018 Unearned interest and discounts (loans) 328,181,769 416,063,873 Accrued expenses ₱508,538,965 ₱449,314,871 ₱485,744,317 ₱435,024,630 Allowance for credit and impairment losses – loans and receivables 1,166,921,305 1,090,655,715 Accrued interest payable 224,567,626 205,501,524 220,411,860 204,987,239 131,086,711,033 121,354,452,938 ₱733,106,591 ₱654,816,395 ₱706,156,177 ₱640,011,869 Financial Liabilities Deposit liabilities 87,092,747,246 10,508,880,599 97,601,627,845 84,517,612,415 10,488,781,320 95,006,393,735 Accrued expenses consist of accruals and provisions for general expenses, bonuses and insurance on deposits, fees and advertisements. Bonds payable − 9,889,835,356 9,889,835,356 −−− Bills payable 400,000,000 1,640,505,751 2,040,505,751 5,500,000,000 1,936,904,315 7,436,904,315 Other liabilities include: Manager’s checks 1,074,514,545 − 1,074,514,545 719,901,336 − 719,901,336 Consolidated Parent Company Accrued expenses 733,106,591 − 733,106,591 654,816,395 − 654,816,395 2019 2018 2019 2018 Lease liability 5,051,558 714,955,546 720,007,104 −−− Accounts payable ₱1,043,336,941 ₱854,798,024 ₱1,028,377,292 ₱844,466,242 Other liabilities 1,576,214,591 − 1,576,214,591 1,739,647,777 − 1,739,647,777 Lease liability 720,007,104 − 667,575,337 − Deposit for future stock Subscription −− −3,000,000,000 − 3,000,000,000 Bills purchased - contra (Note 8) 495,192,826 834,447,716 495,192,826 834,447,716 90,881,634,531 22,754,177,252 113,635,811,783 96,131,977,923 12,425,685,635 108,557,663,558 Retirement liability (Note 20) 218,899,798 94,623,826 202,336,341 89,937,693 Non-financial Liabilities Withholding taxes payable 67,753,938 61,891,312 66,855,874 60,805,834 Other liabilities 172,293,471 218,131,412 390,424,883 320,796,733 94,623,826 415,420,559 Other taxes payable 56,678,357 55,888,417 56,678,358 55,888,417 ₱91,053,928,002 ₱22,972,308,664 ₱114,026,236,666 ₱96,452,774,656 ₱12,520,309,461 ₱108,973,084,117 Dormant manager’s checks 36,502,279 49,884,459 36,502,279 49,884,459 Acceptances payable 3,198,400 116,846,747 3,198,400 116,846,747 Parent Income tax payable 2,700,053 2,321,967 1,125,723 961,229 2019 2018 Redeemable preferred shares (Note 16) 500,000 500,000 − − Due Within Due Beyond Due Within Due Beyond Derivative liabilities (Note 7) 462,908 336,698 462,908 336,698 One Year One Year Total One Year One Year Total Others 41,413,974 83,529,170 40,944,983 85,356,028 ₱2,686,646,578 ₱2,155,068,336 ₱2,599,250,321 ₱2,138,931,063 Financial Assets Cash and other cash items ₱3,176,490,713 ₱− ₱3,176,490,713 ₱2,300,112,472 ₱− ₱2,300,112,472 Accounts payable consists of payables to service providers, advance payments from customers and unreleased checks. Due from BSP 11,824,524,807 − 11,824,524,807 15,586,846,184 − 15,586,846,184 Due from other banks 2,374,076,786 − 2,374,076,786 2,944,176,334 − 2,944,176,334 Bills purchased-contra is the contra account of bills purchased under loans. Bills purchased are receivables from customers from converting checks and bank drafts Interbank loans receivable/SPURA 2,342,127,432 − 2,342,127,432 2,100,410,000 − 2,100,410,000 to cash. As of December 31, 2019 and 2018, bills purchased-contra consists mainly of DOSRI accounts. Financial assets at FVTPL 3,943,264 992,618 4,935,882 8,206,143 − 8,206,143 Financial assets at FVOCI 6,595,199,030 7,408,462,813 14,003,661,843 − 13,146,987,076 13,146,987,076 The Group’s ‘Others’ consist mainly of sundry credits amounting to ₱0.32 million in 2019 and ₱58.93 million in 2018, escheat accounts amounting to ₱12.90 million Investment securities at amortized cost 193,400,238 10,963,551,821 11,156,952,059 − 12,396,700,654 12,396,700,654 in 2019 and ₱7.07 million in 2018, unearned income amounting to ₱11.26 million in 2019 and ₱10.60 million in 2018, payables to agencies servicing employee Loans and receivables – gross 24,946,249,836 55,593,568,726 80,539,818,562 29,532,217,509 39,173,544,952 68,705,762,461 welfare such as Social Security System, Home Development Mutual Fund and Medicare amounting to ₱8.09 million in 2019 and ₱6.26 million in 2018, and other Other assets 16,817,554 44,249,211 61,066,765 − 63,369,966 63,369,966 miscellaneous liabilities amounting to ₱8.48 million in 2019 and ₱0.67 million in 2018. 51,472,829,660 74,010,825,189 125,483,654,849 52,471,968,642 64,780,602,648 117,252,571,290 Non-financial Assets The Parent Company’s ‘Others’ consist mainly of sundry credits amounting to ₱0.32 million in 2019 and ₱58.93 million in 2018, escheat accounts amounting to Property and equipment – net − 1,165,797,623 1,165,797,623 − 546,878,908 546,878,908 ₱12.90 million in 2019 and ₱7.07 million in 2018, unearned income amounting to ₱11.26 million in 2019 and ₱10.60 million in 2018, payables to agencies servicing Investment properties – net − 266,464,925 266,464,925 − 212,181,540 212,181,540 employee welfare such as Social Security System, Home Development Mutual Fund and Medicare amounting to 6.89 million in 2019 and ₱5.47 million in 2018, and other miscellaneous liabilities amounting to ₱9.57 million in 2019 and ₱3.29 million in 2018. Branch licenses – net − 379,328,369 379,328,369 − 379,281,780 379,281,780 Deferred tax asset − 511,814,656 511,814,656 − 405,775,383 405,775,383 Investment in a subsidiary − 1,357,178,340 1,357,178,340 − 1,236,740,437 1,236,740,437 20. MATURITY ANALYSIS OF ASSETS AND LIABILITIES Other assets 690,677,780 446,863,646 1,137,541,426 552,910,028 438,903,445 991,813,473 ₱52,163,507,440 ₱78,138,272,748 ₱130,301,780,188 ₱53,024,878,670 ₱68,000,364,141 ₱121,025,242,811 The following table shows an analysis of assets and liabilities analyzed according to whether they are expected to be recovered or settled within one year and Less: beyond one year from statements of financial position date: Unearned interest and discounts (loans) 240,737,163 346,925,553 Allowance for credit and impairment Consolidated losses – loans and receivables 1,058,755,225 962,251,007 2019 2018 ₱129,002,287,800 ₱119,716,066,251 Due Within Due Beyond Due Within Due Beyond Financial Liabilities One Year One Year Total One Year One Year Total Deposit liabilities ₱85,436,199,761 ₱10,195,351,521 ₱95,631,551,282 ₱85,423,213,158 ₱7,975,735,688 ₱93,398,948,846 Financial Assets Bonds payable − 9,889,835,356 9,889,835,356 − − − Cash and other cash items ₱3,249,359,133 ₱− ₱3,249,359,133 ₱2,370,171,189 ₱− ₱2,370,171,189 Due from BSP 12,216,191,774 − 12,216,191,774 16,108,207,737 − 16,108,207,737 Bills payable 400,000,000 1,640,505,751 2,040,505,751 5,500,000,000 1,936,904,315 7,436,904,315 Due from other banks 2,463,991,767 − 2,463,991,767 3,010,162,780 − 3,010,162,780 Manager’s checks 1,074,514,545 − 1,074,514,545 719,901,336 − 719,901,336 Interbank loans receivable/SPURA 2,408,705,460 − 2,408,705,460 2,188,410,000 − 2,188,410,000 Accrued expenses 638,367,322 67,788,855 706,156,177 640,011,869 − 640,011,869 Financial assets at FVTPL 3,943,264 992,618 4,935,882 8,206,143 − 8,206,143 Lease liability − 667,575,337 667,575,337 − − − Financial assets at FVOCI 6,595,199,030 7,378,262,813 13,973,461,843 − 13,116,787,076 13,116,787,076 Other liabilities 1,560,535,305 − 1,560,535,305 1,730,096,344 − 1,730,096,344 Investment securities at amortized cost 193,400,238 11,163,861,003 11,357,261,241 − 12,597,089,717 12,597,089,717 Deposit for future stock subscription − − − 3,000,000,000 − 3,000,000,000 Loans and receivables – gross 25,569,306,917 56,731,601,869 82,300,908,786 29,965,195,825 39,952,585,979 69,917,781,804 89,109,616,933 22,461,056,820 111,570,673,753 97,013,222,707 9,912,640,003 106,925,862,710 Other assets 16,817,554 45,496,193 62,313,747 − 64,481,147 64,481,147 ₱52,716,915,137 ₱75,320,214,496 ₱128,037,129,633 ₱53,650,353,674 ₱65,730,943,919 ₱119,381,297,593 Non-financial Liabilities Non-financial Assets Other liabilities 168,803,338 202,336,341 371,139,679 318,897,026 89,937,693 408,834,719 Property and equipment – net − 1,308,628,049 1,308,628,049 − 623,189,601 623,189,601 ₱89,278,420,271 ₱22,663,393,161 ₱111,941,813,432 ₱97,332,119,733 ₱10,002,577,696 ₱107,334,697,429 Investment properties – net − 382,355,004 382,355,004 − 341,073,550 341,073,550 Branch licenses – net − 999,928,369 999,928,369 − 999,881,780 999,881,780 Deferred tax asset − 458,920,202 458,920,202 − 263,829,946 263,829,946 Goodwill − 244,327,006 244,327,006 − 244,327,006 244,327,006 Other assets 699,925,818 450,600,026 1,150,525,844 569,064,766 438,508,284 1,007,573,050 ₱53,416,840,955 ₱79,164,973,152 ₱132,581,814,107 ₱54,219,418,440 ₱68,641,754,086 ₱122,861,172,526 (Forward)

220 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 221 21. EQUITY Following is a summary of risk weights and selected exposure types:

As of December 31, 2019 and 2018, the Parent Company’s capital stock consists of: Risk weight Exposure/Asset type* 0% Cash on hand; claims collateralized by securities issued by the non-government, BSP; loans covered by the Trade Shares Amount and Investment Development Corporation of the Philippines; real estate mortgages covered by the Home Guarantee 2019 2018 2019 2018 Corporation Common shares - ₱10 par value 20% COCI, claims guaranteed by Philippine incorporated banks/quasi-banks with the highest credit quality; claims guaranteed Authorized 2,700,000,000 1,500,000,000 ₱27,000,000,000 ₱15,000,000,000 by foreign incorporated banks with the highest credit quality; loans to exporters to the extent guaranteed by Small Issued and outstanding Business Guarantee and Finance Corporation Issued and outstanding 1,500,000,000 1,200,000,000 ₱15,000,000,000 12,000,000,000 50% Housing loans fully secured by first mortgage on residential property; Local Government Unit (LGU) bonds which are covered by Deed of Assignment of Internal Revenue allotment of the LGU and guaranteed by the LGU Guarantee Issued during the year − − − − Corporation Balances at end of year 1,500,000,000 1,200,000,000 ₱15,000,000,000 ₱12,000,000,000 75% Direct loans of defined Small Medium Enterprise and microfinance loans portfolio; nonperforming housing loans fully secured by first mortgage Surplus Reserves 100% All other assets (e.g., real estate assets) excluding those deducted from capital (e.g., deferred tax) In compliance with existing BSP regulations, 10.00% of the net profits realized by the Parent Company from its trust business is appropriated to surplus reserve. The yearly appropriation is required until the surplus reserve for trust business equals 20.00% of the Parent Company’s regulatory capital. 150% All NPLs (except nonperforming housing loans fully secured by first mortgage) and all nonperforming debt securities * Not all inclusive In 2019 and 2018, the Parent Company’s BOD approved to appropriate reserves for trust reserves amounting to nil and ₱0.62 million, respectively. With respect to off-balance sheet exposures, the exposure amount is multiplied by a credit conversion factor (CCF), ranging from 0.00% to 100.00%, to arrive at the In 2019 and 2018, the Parent Company’s BOD approved to appropriate reserves for expected credit losses amounting to ₱444.5 million and ₱98.7 million, credit equivalent amount, before the risk weight factor is multiplied to arrive at the risk-weighted exposure. Direct credit substitutes (e.g., guarantees) have a CCF respectively, in compliance with the requirements of the BSP Circular No. 1011. Under this BSP Circular, the Bank shall treat Stage 1 provisions for loan accounts of 100.00%, while items not involving credit risk has a CCF of 0.00%. as General Provisions (GP) while Stage 2 and 3 provisions shall be treated as Specific Provisions (SP). The Bank shall set up GLLP equivalent to 1% of all outstanding on-balance sheet loan accounts, except for accounts considered as credit risk-free under existing regulations. In cases when the computed allowance for credit On January 15, 2013, the BSP issued Circular No. 781, Basel III Implementing Guidelines on Minimum Capital Requirements, which provides the implementing losses on Stage 1 accounts is less than the 1% required GP, the deficiency shall be recognized by appropriating the ‘Surplus’ account. GP recognized in profit or guidelines on the revised risk-based capital adequacy framework particularly on the minimum capital and disclosure requirements for universal banks and loss as allowance for credit losses for Stage 1 accounts and the amount appropriated in surplus shall be considered as Tier 2 capital subject to the limit provided commercial banks, as well as their subsidiary banks and quasi-banks, in accordance with the Basel III standards. The circular is effective on January 1, 2014. under the CAR framework. The Circular sets out a minimum Common Equity Tier 1 (CET1) ratio of 6.00% and Tier 1 capital ratio of 7.50%. It also introduces a capital conservation buffer of Capital Management 2.50% comprised of CET1 capital. The BSP’s existing requirement for Total CAR remains unchanged at 10.00% and these ratios shall be maintained at all times. The Group considers the equity attributable to the equity holders of the Parent Company as the capital base of the Group. The primary objectives of the Group’s capital management are to ensure that it complies with externally imposed capital requirements and that it maintains strong credit ratings and healthy capital Further, existing capital instruments as of December 31, 2010 which do not meet the eligibility criteria for capital instruments under the revised capital framework ratios in order to support its business and to maximize shareholders value. shall no longer be recognized as capital upon the effectivity of Basel III. Capital instruments issued under BSP Circular Nos.709 and 716 (the circulars amending the definition of qualifying capital particularly on Hybrid Tier 1 and Lower Tier 2 capitals), starting January 1, 2011 and before the effectivity of BSP Circular No. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities and 781, shall be recognized as qualifying capital until December 31, 2016. In addition to changes in minimum capital requirements, this Circular also requires various assessment of prospective business requirements or directions. In order to maintain or adjust the capital structure, the Group may adjust the amount and mode of regulatory adjustments in the calculation of qualifying capital. dividend payment to shareholders, issue capital securities or undertake a share buy-back. The processes and policies guiding the determination of the sufficiency of capital for the Group relative to its business risks are the very same methodology that have been incorporated into the Group’s Internal Capital Adequacy On June 27, 2014, the BSP issued Circular No. 839, REST Limit for Real Estate Exposures which provides the implementing guidelines on the prudential REST limit Assessment Process (ICAAP) in compliance with the requirements of BSP Circular No. 639 for its adoption. Under this framework, the assessment of risks extends for universal, commercial, and thrift banks on their aggregate real estate exposures. The Circular sets out a minimum REST limit of 6.00% CET1 capital ratio and beyond the Pillar 1 set of credit, market and operational risks and onto other risks deemed material by the Group. The level and structure of capital are assessed 10.00% risk-based capital adequacy ratio, on a solo and consolidated basis, under a prescribed write-off rate of 25.00% on the roup’sG real estate exposure. These and determined in light of the Group’s business environment, plans, performance, risks and budget, as well as regulatory edicts. BSP requires submission of an limits shall be complied with at all times. ICAAP document every March 31. On June 9, 2016, the BSP issued Circular No. 881, Implementing Guidelines on the Basel III Leverage Ratio Framework, which provides implementing guidelines for The Group had complied with all externally imposed capital requirements throughout the year. universal, commercial, and their subsidiary banks/quasi banks. The circular sets out a minimum leverage ratio of 5.00% on a solo and consolidated basis and shall be complied with at all times. Regulatory Qualifying Capital In 2013, the determination of the Parent Company’s compliance with regulatory requirements and ratios is based on the amount of the Parent Company’s The CAR of the Group and of the Parent Company as reported to the BSP as of December 31, 2019 and 2018 follows: ‘unimpaired capital’ (regulatory net worth) reported to the BSP, which is determined on the basis of regulatory policies. In addition, the risk-based capital ratio of a bank, expressed as a percentage of qualifying capital to risk-weighted assets, should not be less than 10.00% for both solo basis (head office and branches) and consolidated basis (parent company and subsidiaries engaged in financial allied undertakings). Qualifying capital and risk-weighted assets are computed based Consolidated Parent Company on BSP regulations. 2019 2018 2019 2018 Common Equity Tier 1 Capital ₱14,500 ₱10,274 ₱14,205 ₱10,039 The regulatory Gross Qualifying Capital of the Parent Company consists of Tier 1 (core) and Tier 2 (supplementary) capital. Tier 1 capital comprises share capital, Additional Tier 1 Capital − − − − retained earnings (including current year profit) and non-controlling interest less required deductions such as deferred tax and unsecured credit accommodations Tier 1 capital 14,500 10,274 14,205 10,039 to DOSRI. Tier 2 capital includes unsecured subordinated note, revaluation reserves and general loan loss provision. Certain items are deducted from the Tier 2 capital 803 632 783 619 regulatory Gross Qualifying Capital, such as but not limited to equity investments in unconsolidated subsidiary banks and other financial allied undertakings, but Total qualifying capital ₱15,303 ₱10,906 ₱14,988 ₱10,658 excluding investments in debt capital instruments of unconsolidated subsidiary banks (for solo basis) and equity investments in subsidiary non-financial allied Credit RWA ₱80,264 66,962 ₱78,316 65,567 undertakings. Market RWA 887 347 887 347 Operational RWA 6,477 5,399 6,100 5,068 Risk-weighted assets are determined by assigning defined risk weights to statement of financial position exposures and to the credit equivalent amounts of off- Total RWA ₱87,628 ₱72,708 ₱85,303 ₱70,982 balance sheet exposures. Certain items are deducted from risk-weighted assets, such as the excess of general loan loss provision over the amount permitted to be Common Equity Tier 1 Ratio 1 16.55% 14.13% 16.65% 14.14% included in Tier 2 capital. The risk weights vary from 0.00% to 125.00% depending on the type of exposure, with the risk weights of off-balance sheet exposures Additional Tier 1 Ratio 0.00% 0.00% 0.00% 0.00% being subjected further to credit conversion factors. Tier 1 capital ratio 16.55% 14.13% 16.65% 14.14% Tier 2 capital ratio 0.92% 0.87% 0.92% 0.87% Risk-based capital adequacy ratio 17.46% 15.00% 17.57% 15.01%

As of December 31, 2019 and 2018, the Group was in compliance with the required CAR.

222 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 223 On October 29, 2014, the BSP issued amendments to Circular No. 854 which required a new minimum capitalization for Banks. The Parent Company, as a Capital stock commercial bank with more than 100 branches, was required to increase its capitalization to ₱15.00 billion. On June 27, 2018, the Parent Company’s BOD approved the increase in authorized capital stock from ₱15.00 billion to ₱27.00 billion or an increase of ₱12.00 billion composed of 1.2 billion common shares at ₱10.00 par value per share. On July 16, 2018, the Bank received the subscription from its stockholders amounting to On January 28, 2016 and February 25, 2016, the BOD of the Parent Company and the stockholders representing at least two-thirds (2/3) of the outstanding capital ₱3.00 billion and recorded it as ‘Deposit for Future Subscription’ in the liability section of the statement of financial position. On August 23, 2018, the said increase stock, respectively, approved the issuance of the remaining 46,070,226 unissued preferred shares (A and B) at ₱10.00 par value in favor of JGSCSC and RRHI as in authorized capital stock was approved by the stockholders of Parent Company in a special meeting held for that purpose. Out of the ₱12.00 billion increase, follows: ₱3.00 billion was subscribed and paid-up as follows:

Types of No. of Shares No. of Shares Stockholder Shares Subscribed Par Value Amount Stockholder Subscribed Amount JGSCSC Preferred A 27,404,962 ₱10 ₱274,049,620 JGSCSC 180,000,000 ₱1,800,000,000 Preferred B 237,174 10 2,371,740 RRHI 120,000,000 1,200,000,000 RRHI Preferred A 18,269,974 10 182,699,740 Total 300,000,000 ₱3,000,000,000 Preferred B 158,116 10 1,581,160 Total 46,070,226 ₱460,702,260 On August 29, 2018, the Parent Company filed with the BSP the request for authority and endorsement to SEC of the proposed increase in authorized capital stock.

Furthermore, the BOD also approved the following resolutions: On December 12, 2018, BSP approved the proposed increase and issued to the corresponding Certificate of Authority. • Conversion of all preferred shares of the Parent Company, whether issued or unissued, particularly the ₱356.32 million preferred shares A and the ₱210.00 million preferred shares B, into common shares, and removal of all the other class of shares of the Parent Company, except common shares. On February 4, 2019, the Parent Company filed with the SEC the request for approval of the aforementioned proposed increase in authorized capital stock as • Increase in the Parent Company’s authorized capital stock from ₱6.10 billion divided into ₱610.00 million common shares with par value of ₱10.00 each. approved by the BOD, stockholders, and BSP. • The total authorized stock of the Parent Company is ₱15.00 billion divided into ₱1.50 billion common shares with a par value of ₱10.00 each. On March 18, 2019, the SEC approved the increase in authorized capital stock of the Parent Company from ₱15.00 billion to ₱27.00 billion. On March 15, 2016, JGSCSC acquired additional preferred shares A and B of 27,404,962 shares and 237,174 shares, respectively. On March 22, 2019, the Parent Company converted the ₱3.00 billion ‘Deposit for Future Stock Subscription’ to ‘Common Stock’. The transaction cost amounting to In 2016, RRHI acquired additional preferred shares A and B of 18,269,974 shares and 158,116 shares, respectively. ₱30.00 million related to the issuance of common stock is treated as a deduction to ‘Surplus’ account.

On June 17, 2016, RRHI subscribed to an additional 297,094,118 common shares at ₱10.00 per share. 22. RETIREMENT PLAN On July 8, 2016, JGSCSC subscribed to an additional 292,905,882 common shares at ₱10.00 per share. The Parent Company has a noncontributory defined benefit retirement covering substantially all its officers and regular employees. Under this retirement plan, all On July 9, 2016, the Parent Company BOD approved the increase in authorized capital stock amounting to ₱8.90 billion composed of ₱890.00 million common covered officers and employees are entitled to cash benefits after satisfying certain age and service requirements. In 2008, theParent Company established a plan shares at ₱10.00 per share. Out of the ₱8.90 billion increase, ₱5.90 billion was paid-up and subscribed as follows: asset for its defined benefit retirement plan. On April 1, 2019, the retirement plan was amended to increase the previous benefit pay of 22.5 days to 26.08 days for every year of credited service based on the final daily basic salary for all service years until separation. The effect of the change in retirement plan amounting to 16.78 million is reflected as ‘Past service cost’ and recognized as ‘Retirement expense’ in 2019. No. of Shares Stockholder Subscribed Amount LSB has funded noncontributory retirement plan covering all its regular permanent employees. Under the retirement plan, all employees are entitled to cash JGSCSC 292,905,882 ₱2,929,058,820 benefits after satisfying certain age and service requirements. RRHI 297,094,118 2,970,941,180 Total 590,000,000 ₱5,900,000,000 The latest actuarial valuation of the retirement plan of the Group was made as of December 31, 2019. The principal actuarial assumptions used in determining retirement liability of the Group as of January 1 follow: On November 15, 2016, the BSP approved the Parent Company’s capital build-up program with the following milestones: 1. Capital infusion from unissued shares up to the existing authorized capital stock of ₱6.10 billion. 2. Capital infusion from the increase in authorized capital stock from ₱6.10 billion to ₱15.00 billion of which ₱12.00 billion is paid up. Parent Company LSB 3. Internally generated capital based on the Parent Company’s financial projections for the period 2016 to 2019. 2019 2018 2019 2018 Average remaining working life in years 9 7 8 8 The approval of BSP to the capital build-up program further provides that the Parent Company shall: Discount rate 4.95% 7.30% 4.99% 7.36% 1. Refrain from declaring and distributing cash dividends until the 15.00 billion minimum capital requirement is attained; Salary rate increase 5.70% 5.70% 5.70% 5.70% 2. Call on its stockholders to infuse additional capital in case of shortfall in internally-generated income to meet the target capital levels; and 3. Submit progress reports with supporting documents, duly noted by its BOD, to the Central Point of Contact Department II, within 20 banking days from end The amounts recognized in the statements of financial position follow: of December of each tear until the Bank is deemed by the BSP to have fully complied with its capital build-up program. Consolidated Parent Company On December 15, 2016, the Parent Company filed its application for the increase in its authorized capital stock as approved by the BOD and the BSP with the SEC. 2019 2018 2019 2018 Present value of defined benefit obligation ₱288,376,525 ₱172,506,477 ₱270,554,168 ₱165,800,184 On January 29, 2017, the SEC approved the Parent Company’s application for the increase in authorized capital stock from ₱6.10 billion divided into 43.68 million Fair value of plan assets (69,476,727) (77,882,651) (68,217,827) (75,862,491) common shares, 356.32 million preferred shares A and 210.00 million preferred shares B of ₱10.00 par value each, to ₱12.00 billion divided into 633.64 million Retirement liability ₱218,899,798 ₱94,623,826 ₱202,336,341 ₱89,937,693 common shares, 356.32 million preferred shares A and 210.00 million preferred shares B of ₱10.00 par value each. The amounts of ‘Retirement expense’ included in ‘Compensation and other benefits’ in the statements of income follow: In 2017, the Parent Company issued 590.00 million common shares amounting to ₱5.90 billion in exchange for the deposits for future subscriptions.

Consolidated Parent Company In 2017, the Parent Company removed all the other classes of shares, except common shares, and converted its 356.32 million preferred shares A and 210.00 million preferred shares B to 566.32 million common shares with ₱10.00 par value. 2019 2018 2017 2019 2018 2017 Current service cost ₱42,307,642 ₱30,227,421 ₱24,820,397 ₱39,653,004 ₱28,562,456 ₱23,067,077 Past service cost/(credit) 16,784,998 −−15,622,294 − − Net interest cost 8,712,608 4,681,997 2,632,507 8,122,069 4,366,585 2,381,155 ₱67,805,248 ₱34,909,418 ₱27,452,904 ₱63,397,367 ₱32,929,041 ₱25,448,232

224 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 225 Changes in net defined benefit obligation (DBO) of funded funds follow: The Parent Company’s major categories of plan assets as a percentage of the fair value of total plan assets follow:

Present Value Fair Value of Net Retirement 2019 2018 Consolidated of DBO Plan Assets Liability Deposits in banks 2.72% 8.62% January 1, 2019 ₱172,506,477 ₱77,882,651 ₱94,623,826 Debt securities: Net Benefit Cost in Consolidated Government securities 5.57% 82.58% Statement of Income Private securities 32.02% 8.39% Current service cost 42,307,642 − 42,307,642 37.59% 90.97% Past service cost/(credit) 16,784,998 − 16,784,998 Equity securities 0.43% 0.00% Net interest cost 13,012,006 4,299,398 8,712,608 Investment in UITF 58.95% 0.00% Sub-total 72,104,646 4,299,398 67,805,248 Benefits paid (22,675,901) (22,675,901) − Other assets 0.31% 0.41% Remeasurement in OCI 100.00% 100.00% Return on plan assets (excluding amount included in net interest) − 9,970,579 (9,970,579) Actuarial changes arising from experience adjustments 2,819,436 − 2,819,436 Movements in “Remeasurement gains (losses) on retirement plan” in OCI follow: Actuarial changes arising from changes in financial/ demographic assumptions 63,621,867 − 63,621,867 Consolidated Sub-total 66,441,303 9,970,579 56,470,724 2019 2018 Contributions – – – Balance at beginning of year ₱357,997 (₱13,467,057) December 31, 2019 ₱288,376,525 ₱69,476,727 ₱218,899,798 Remeasurement gains (losses) on retirement plan in OCI Return on plan assets (excluding amount included in net interest) 9,970,579 (1,593,253) Present Value Fair Value of Net Retirement Due to experience adjustments (2,819,436) 206,853 Consolidated of DBO Plan Assets Liability Due to changes in financial/demographic assumptions (63,621,867) 21,136,477 January 1, 2018 ₱159,432,652 ₱77,807,757 ₱81,624,895 Remeasurement gains (losses) during the year (56,470,724) 19,750,077 Net Benefit Cost in Consolidated Statement of Income Tax effect 16,941,217 (5,925,023) Current service cost 30,227,421 − 30,227,421 Remeasurement gains (losses) during the year, net of tax (39,529,507) 13,825,054 Net interest cost 8,865,543 4,183,546 4,681,997 Balance at end of year, net of tax (₱39,171,510) ₱357,997 Sub-total 39,092,964 4,183,546 34,909,418 Benefits paid (4,740,476) (4,740,476) − Parent Company Remeasurement in OCI 2019 2018 Return on plan assets (excluding amount included in net interest) − (1,528,584) 1,528,584 Balance at beginning of year ₱357,997 (₱13,467,057) Actuarial changes arising from experience adjustments (142,183) − (142,183) Remeasurement gains (losses) on retirement plan in OCI Actuarial changes arising from changes in financial/ demographic Return on plan assets (excluding amount included in net interest) 10,291,638 (1,593,253) assumptions (21,136,480) − (21,136,480) Due to experience adjustments 394,091 875,736 Sub-total (21,278,663) (1,528,584) (19,750,079) Due to changes in financial/demographic assumptions (59,687,010) 19,781,782 Contributions – 2,160,408 (2,160,408) December 31, 2018 ₱172,506,477 77,882,651 94,623,826 Remeasurement gains (losses) during the year (49,001,281) 19,064,265 Tax effect 14,700,384 (5,719,280) Present Value Fair Value of Net Retirement Remeasurement gains (losses) during the year, net of tax (34,300,897) 13,344,985 Parent Company of DBO Plan Assets Liability Share in OCI of the subsidiary (5,228,610) 480,069 January 1, 2019 ₱165,800,184 ₱75,862,491 ₱89,937,693 (39,529,507) 13,825,054 Net Benefit Cost Statement of Income Balance at end of year, net of tax (₱39,171,510) ₱357,997 Current service cost 39,653,004 − 39,653,004 Past service cost 15,622,294 − 15,622,294 The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the DBO as of December 31, 2018 and Net interest cost 12,325,361 4,203,292 8,122,069 2017, assuming if all other assumptions were held constant: Sub-total 67,600,659 4,203,292 63,397,367 Benefits paid (22,139,594) (22,139,594) − 2019 Remeasurement in OCI Consolidated Parent Company Return on plan assets (excluding amount included in net interest) − 10,291,638 (10,291,638) +/- basis points (bps) Impact to DBO Impact to DBO Actuarial changes arising from experience adjustments (394,091) − (394,091) Discount rate +100 bps ₱261,288,030 ₱245,447,174 Actuarial changes arising from changes in financial/ demographic assumptions 59,687,010 − 59,687,010 -100 bps 320,214,555 300,031,373 Sub-total 59,292,919 10,291,638 49,001,281 Salary increase rate +100 bps 321,050,513 300,819,158 December 31, 2019 ₱270,554,168 ₱68,217,827 ₱202,336,341 -100 bps 260,078,434 244,313,861

Present Value Fair Value of Net Retirement 2018 Parent Company of DBO Plan Assets Liability Consolidated Parent Company January 1, 2018 ₱153,880,674 ₱77,807,757 ₱76,072,917 +/- basis points (bps) Impact to DBO Impact to DBO Net Benefit Cost Statement of Income Discount rate +100 bps ₱160,396,746 ₱154,331,259 Current service cost 28,562,456 − 28,562,456 -100 bps186,293,544 178,837,861 Net interest cost 8,550,131 4,183,546 4,366,585 Salary increase rate +100 bps 187,539,581 180,030,852 Sub-total 37,112,587 4,183,546 32,929,041 -100 bps159,108,876 153,097,334 Benefits paid (4,535,559) (4,535,559) − Remeasurement in OCI Return on plan assets (excluding amount included in net interest) − (1,593,253) 1,593,253 Actuarial changes arising from experience adjustments (875,736) − (875,736) Actuarial changes arising from changes in financial assumptions (₱19,781,782) ₱− (₱19,781,782) Sub-total (20,657,518) (1,593,253) (19,064,265) December 31, 2018 ₱165,800,184 ₱75,862,491 ₱89,937,693

226 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 227 Shown below is the maturity analysis of the undiscounted benefit payments: Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Consolidated Parent Company Service charges and commission 2019 2018 2019 2018 expense: Less than 1 year ₱12,407,174 ₱18,924,763 ₱12,159,143 ₱18,029,614 Banking fees ₱28,144,406 ₱38,052,033 ₱42,765,040 ₱28,144,406 ₱38,052,033 ₱42,765,040 More than 1 year to 5 years 112,659,428 77,402,111 107,771,274 76,258,488 Brokerage and commissions 22,631,672 16,937,626 14,121,381 14,279,263 12,511,112 9,830,211 More than 5 years to 10 years 240,208,802 172,870,529 223,574,970 164,696,042 Cards fees and commissions 141,456,076 34,334,259 – 141,456,076 34,334,259 – More than 10 years to 15 years 439,557,653 302,801,447 414,717,153 286,339,487 192,232,154 89,323,918 56,886,421 183,879,745 84,897,404 52,595,251 More than 15 years to 20 years 365,889,941 244,427,264 332,226,569 227,938,556 ₱270,070,714 ₱263,139,970 ₱124,762,997 ₱276,750,901 ₱266,140,108 ₱126,807,431 More than 20 years ₱1,270,761,917 ₱527,512,499 ₱1,171,584,436 ₱471,656,677 Miscellaneous income consists of: The Parent Company’s weighted average duration of the defined benefit obligation is equivalent to 19.49 years and 16.75 years in 2019 and 2018, respectively. Consolidated Parent Company 2019 2018 2017 2019 2018 2017 23. LEASES Gain (loss) on sale of repossessed chattels (Note 13) (₱102,709,347) (₱8,116,298) (₱28,274,026) (₱102,752,315) (₱8,116,298) (₱28,301,193) The Group’s leases mostly pertain to building and parking spaces and generally have terms ranging from 2 to 10 years. The lease contracts are cancellable upon Gain (loss) on initial recognition of mutual agreement of the parties or renewable at the Group’s option under certain terms and conditions. Various lease contracts include escalation clauses. As of repossessed chattels (Note 11) (81,969,450) − (18,896,886) (81,969,450) − (18,786,884) December 31, 2019 and 2018, the Group has neither a contingent rent payable nor an asset restoration obligation in relation with these lease agreements. Penalties 39,330,748 39,059,762 18,534,384 39,330,748 39,059,762 18,534,384 Gain (loss) on initial recognition of investment Shown below is the maturity analysis of the undiscounted lease payments as of December 31, 2019: properties (Note 11) 33,889,780 4,152,421 33,889,035 21,471,508 47,181 31,526,513 Gain (loss) on sale of investment properties Consolidated Parent (Note 11) 17,356,519 (29,285,940) 5,351,114 5,144,094 (30,677,975) 178,689 1 year or less ₱258,948,338 ₱249,759,051 Gain on sale of property and equipment More than 1 year to 5 years 525,022,763 485,590,096 (Note 10) 7,251,188 2,442,750 16,475,650 6,490,889 2,434,254 1,756,476 More than 5 years to 10 years 29,891,105 9,363,149 Recovery on charged-off assets 2,680,358 1,823,272 318,879 2,607,521 1,448,223 48,970 More than 10 years to 15 years −− Others 59,577,380 65,916,779 47,794,589 45,284,282 57,084,339 38,934,624 More than 15 years to 20 years −− (₱24,592,824) ₱75,992,746 ₱75,192,739 (₱64,392,723) ₱61,279,486 ₱43,891,579 More than 20 years −− ₱813,862,206 ₱744,712,296 Others include other bank charges amounting ₱27.64 million in 2019 and ₱19.03 million in 2018, dividend income amounting to ₱10.18 million in 2019 and ₱11.21 million in 2018, rental income from safety deposit box and night depository amounting to ₱2.99 million in 2019 and ₱3.27 million in 2018, and other As of December 31, 2018, the estimated minimum future annual rentals payable under miscellaneous income amounting to ₱18.77 million in 2019 and ₱32.41 million in 2018. non-cancellable oprating leases follows: Miscellaneous expenses consist of: Consolidated Parent Within one year ₱257,354,868 ₱249,496,696 Consolidated Parent Company Beyond one year but within five years 487,410,319 455,033,741 2019 2018 2017 2019 2018 2017 Beyond five years 31,614,598 9,502,058 Fines, penalties and other charges ₱95,128,532 ₱406,495 ₱17,991,040 ₱94,645,408 ₱25,347,577 ₱17,584,545 ₱776,379,785 ₱714,032,495 Advertising 76,128,492 41,080,496 24,971,786 75,087,172 40,206,385 23,632,177 The Group also has certain leases of building and parking spaces with lease terms of 12 months or less and leases with low value. The Group applies the recognition Transportation and travel 68,002,449 56,301,105 47,966,358 50,751,471 45,338,283 39,176,801 exemptions for these type of leases. Stationery and supplies 47,803,913 39,761,779 41,780,709 44,152,095 36,703,926 39,556,205 BSP Supervisory Fees 41,429,429 32,792,069 – 40,897,575 32,220,716 – Right-of-use Assets Filing Fees 24,861,154 25,347,577 – 24,861,154 – Details of the carrying amounts of ROU assets recognized and the movements during the year ended December 31, 2019 are disclosed in Note 10. Litigation expense (Note 11) 18,622,491 12,068,320 14,012,833 14,509,141 11,067,770 10,208,486 Appraisal fees 17,650,770 8,641,816 6,063,676 17,650,770 8,641,816 6,063,676 Lease Liabilities Membership dues 9,307,987 9,012,731 5,651,017 8,791,614 8,624,770 5,537,984 Details of the rollforward analysis of the Group’s and Parent Company’s lease liabilities as at December 31, 2019 are disclosed in Note 2. Others 46,296,012 27,089,758 13,502,326 42,152,037 18,427,833 10,163,395 ₱445,231,229 ₱252,502,146 ₱171,939,745 ₱413,498,437 ₱226,579,076 ₱151,923,269 Total cash payments in 2019 for the Group’s leases amounted to ₱275.43 million. The Group also had non-cash additions to ROU assets and lease liabilities of ₱291.44 million and ₱286.90 million, respectively in 2019. The Group’s ‘Others’ include POS rental amounting to ₱18.31 million in 2019 and nil in 2018, freight charges amounting to ₱10.75 million in 2019 and ₱9.46 million in 2018, and other miscellaneous expenses such as documentary stamps used, periodicals and magazines, donations, and others amounting to ₱17.24 million in Summarized in Note 2 are the amounts recognized in the 2019 consolidated statement of comprehensive income in relation to the Group’s leases. 2019 and ₱17.05 million in 2018.

The Parent’s ‘Others’ include POS rental amounting to ₱18.31 million in 2019 and nil in 2018, freight charges amounting to ₱10.75 million in 2019 and ₱9.46 million 24. INCOME AND EXPENSES in 2018, and other miscellaneous expenses such as documentary stamps used, periodicals and magazines, donations, and others amounting to ₱13.09 million in 2019 and ₱8.97 million in 2018. Net service fees and commission income consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Service fees and commission income: Credit-related ₱288,490,349 ₱216,219,087 ₱52,709,375 ₱288,490,349 ₱216,219,087 ₱52,709,375 Commissions 70,688,636 48,259,738 33,275,605 70,627,661 48,208,008 32,569,202 Deposit-related 65,563,650 54,533,131 65,967,676 63,952,403 53,158,485 64,427,343 Utility and store payment charges 21,456,252 18,898,411 15,233,502 21,456,252 18,898,411 15,233,502 Trust and other fiduciary 16,103,981 14,553,521 14,463,260 16,103,981 14,553,521 14,463,260 ₱462,302,868 ₱352,463,888 ₱181,649,418 ₱460,630,646 ₱351,037,512 ₱179,402,682 (Forward)

228 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 229 25. INCOME AND OTHER TAXES Net deferred tax assets (liabilities) of the Group and the Parent Company consist of the following:

Under Philippine tax laws, the Parent Company is subject to percentage and other taxes (presented as ‘Taxes and licenses’ in the statement of income) as well as Consolidated Parent Company income taxes. Percentage and other taxes paid consist principally of gross receipts tax (GRT) and documentary stamp taxes. 2019 2018 2019 2018 Deferred tax assets on: Breakdown of taxes and licenses of the Group and Parent Company consists of: Allowance for credit and impairment losses ₱523,526,016 ₱416,122,000 ₱391,970,270 ₱364,600,608 Provision for employee benefits 21,263,333 27,799,416 21,263,333 27,799,416 Consolidated Parent Company Retirement liability 63,429,107 26,981,308 60,700,902 26,981,308 2019 2018 2017 2019 2018 2017 Accumulated depreciation on investment properties and Gross receipts tax ₱243,253,507 ₱162,200,977 ₱91,113,845 ₱222,552,358 ₱150,771,107 ₱76,670,482 repossessed chattels 39,874,235 24,661,879 34,042,813 24,661,879 Documentary stamps used 310,836,158 329,747,775 171,022,069 310,836,158 329,747,775 171,022,069 Accrued rent 91,529 9,523,740 − 9,523,740 Permits 26,465,278 20,337,631 17,039,146 21,609,420 16,564,171 11,529,906 Lease liability, net 12,434,485 − 11,767,574 − ₱580,554,943 ₱512,286,383 ₱279,175,060 ₱554,997,936 ₱497,083,053 ₱259,222,457 Accrued SL VL 22,033,160 13,534,895 22,033,160 13,534,895 Impairment loss on FVOCI 621,176 − 621,176 − Income taxes consist of final withholding taxes on gross interest income from government securities, deposits and other deposit substitutes, tax on the FCDU Unrealized loss on foreign exchange 5,909,577 − 5,909,577 − income and RCIT, as discussed below, on net taxable income. These income taxes, as well as the deferred tax benefit, are presented in the statement of income as 689,182,618 518,623,238 548,308,805 467,101,846 ‘Provision for income tax’.

Deferred tax liabilities on: Current tax regulations provide that the RCIT rate shall be 30.00%. Interest allowed as deductible expense shall be 33.00% of interest income subjected to final tax. Branch licenses 186,000,000 186,000,000 − − The optional standard deduction (OSD) equivalent to 40.00% of gross income may be claimed as an alternative deduction in computing for the RCIT. In 2018 and Unrealized gain on initial recognition of investment 2017, the Parent Company elected to claim itemized expense deductions instead of the OSD in the RCIT computation. properties and repossessed chattels 44,201,096 35,371,641 36,432,829 31,140,491 Unrealized foreign exchange gain − 30,144,756 − 30,144,756 The regulations also provide for MCIT of 2.00% of modified gross income and allow a NOLCO benefit. Both the excess of over the RCIT and NOLCO may be applied Unrealized income on finance lease receivable − 2,694,735 − − against the regular tax liability and taxable income, respectively, over three (3) years from the year of inception. Retirement liability − 540,944 − − Unrealized gain on financial assets at FVTPL 61,320 41,216 61,320 41,216 Current tax regulations also provide for the ceiling on the amount of entertainment and representation (EAR) expense that can be claimed as a deduction against 230,262,416 254,793,292 36,494,149 61,326,463 taxable income. Under the regulation, EAR expense allowed as a deductible expense for a service company like the Parent Company is limited to the actual EAR ₱458,920,202 ₱263,829,946 ₱511,814,656 ₱405,775,383 paid or incurred but not to exceed 1.00% of net revenue. EAR expenses of the Parent Company amounted to ₱94.34 million, ₱88.10 million and ₱82.89 million in 2019, 2018 and 2017, respectively. The Group did not set up deferred tax assets on the following temporary differences since management believes that it is not highly probable that these differences will be realized in the future: FCDU offshore income (income from non-residents) is tax-exempt while gross onshore income (income from residents) is generally ubjects to 10.00% income tax. In addition, interest income on deposit placement with other FCDUs and offshore banking units (OBUs) is taxed at 7.50%. Consolidated Parent Company 2019 2018 2019 2018 Current tax regulations provide that the income derived by the FCDU from foreign currency-denominated transactions with non-residents, OBUs, local commercial Allowance for credit and impairment losses ₱201,557,853 ₱412,012,623 ₱− ₱− banks including branches of foreign banks is tax-exempt while interest income on foreign currency-denominated loans from residents other than OBUs or other Unrealized loss on AFS investments −56,772,717 −56,772,717 depository banks under the expanded system is subject to 10.00% income tax. FCDUs’ all other income is subject to 30.00% income tax. Excess of MCIT over RCIT 57,498,747 34,848,610 57,498,747 28,826,111 Accumulated depreciation on investment properties and Provision for income tax of the Group and Parent Company consists of: repossessed chattels −22,360,384 − − NOLCO −15,568,878 − − Consolidated Parent Company Accrued rent −5,763,248 − − 2019 2018 2017 2019 2018 2017 Unfunded retirement liability −4,686,133 − − Current: ₱259,056,600 ₱552,012,593 ₱57,498,747 ₱85,598,828 Final ₱178,961,223 ₱176,665,322 ₱151,415,187 ₱174,143,850 ₱170,810,970 ₱147,025,406 MCIT 52,851,638 40,325,963 3,241,853 52,851,638 37,545,317 – Details of NOLCO follow: RCIT 11,195,136 1,595,059 47,595,411 2,869,176 1,595,059 47,595,411 243,007,997 218,586,344 202,252,451 229,864,664 209,951,346 194,620,817 Subsidiary (181,408,025) (93,103,496) (91,338,890) (93,495,115) Deferred (168,596,012) (168,596,012) Inception Year Amount Used Balance Expiry Year ₱61,599,972 ₱125,482,848 ₱33,656,439 ₱138,525,774 ₱116,456,231 ₱26,024,805 2017 ₱49,280,590 ₱49,280,590 ₱– 2020

The provision for deferred taxes charged to other comprehensive income of the Group as of 2019, 2018 and 2017 amounted to nil, ₱5.93 million, and nil, Details of the excess of MCIT over RCIT follow: respectively. The benefit for deferred taxes charged to other comprehensive income for the year 2019, 2018 and 2017 amounted to ₱16.94 million, nil and 4.44 million, respectively. Consolidated The provision for deferred taxes charged to other comprehensive income of the Parent Company as of 2019, 2018 and 2017 amounted to nil, ₱5.72 million, and Inception Year Amount Used/Expired Balance Expiry Year ₱4.44 million, respectively. The benefit for deferred taxes charged to other comprehensive income as of 2019, 2018 and 2017 amounted to ₱14.70 million, nil and 2019 ₱28,672,636 ₱– ₱28,672,636 2022 ₱1.63 million, respectively. 2018 28,843,243 17,132 28,826,111 2021 2017 3,241,853 3,241,853 – 2020 ₱60,757,732 ₱3,258,985 ₱57,498,747

Parent Company Inception Year Amount Used Balance Expiry Year 2019 ₱28,672,636 ₱– ₱28,672,636 2022 2018 28,826,111 – 28,826,111 2021 ₱57,498,747 ₱– ₱57,498,747

230 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 231 A reconciliation of statutory income tax rate to the effective income tax rate of the Group and the Parent Company follows: Details on significant related party transactions of the Subsidiary with its other related parties follow:

Consolidated Parent Company Subsidiary 2019 2018 2017 2019 2018 2017 2019 2018 Statutory income tax rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% Amount/ Outstanding Amount/ Outstanding Tax effect of: Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature Tax paid and tax-exempt income (18.66) (28.51) (34.06) (16.70) (28.58) (33.58) Non-deductible expenses 17.02 45.08 44.19 15.05 43.59 41.02 Key employees Unrecognized deferred tax assets (11.03) (15.60) (30.65) 0.79 (14.80) (22.07) Receivables from customers (₱20,555,447) ₱4,353,251 ₱11,115,550 ₱24,908,698 Loans of directors, officers and stockholders FCDU income (9.44) (2.62) (4.90) (8.60) (2.67) (5.01) Interest income 101,045 − 91,617 − Interest earned from loans of directors, officers and Others – net 0.00 0.00 5.29 (4.39) (0.68) (2.55) stockholders Effective income tax rate 7.89% 28.35% 9.87% 16.15% 26.86% 7.81% Deposit liabilities (8,617,646) 288,369 8,132,265 8,906,015 Deposits of directors, officers and stockholders Interest expense 2,783 − 6,540 − Interest expense on deposit liabilities Compensation and fringe 14,537,909 − 7,837,461 − Remuneration and benefits to directors and key 26. RELATED PARTY TRANSACTIONS benefits management personnel Post-employment benefits 772,446 − 506,902 − Post-employment benefits Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions or if they are subjected to common control of common significant influence such as subsidiaries and associates of The retirement fund of the Parent Company’s employees amounted to ₱68.22 million and ₱75.86 million as of December 31, 2019 and 2018, respectively subsidiaries or other related parties. Related parties may be individuals or corporate entities. (see Note 22). The fund is being managed by JG Summit Multi-Employer Retirement Plan (MERP), a corporation created for the purpose of managing the funds of the Group, with Robinsons Bank Corporation (RBC)-Trust and Investment Group (TIG) as the trustee. Income earned by the Parent Company through its TIG The Parent Company has several business relationships with related parties. Transactions with such parties are made in the ordinary course of business and on from managing these funds amounted to ₱3.00 milion ₱3.47 million and ₱4.49 million in 2019, 2018 and 2017, respectively. substantially same terms, including interest and collateral, as those prevailing at the time of comparable transactions with other parties. These transactions also did not involve more than the normal risk of collectability or present other unfavorable conditions. Details of the transactions of the Parent Company with its retirement plan follow:

The significant transactions and outstanding balances of the Parent Company and the Subsidiary with its related parties follow: 2019 Amount/ Outstanding Parent Company Related Party Nature of Transaction Volume Balance Terms and Conditions/Nature 2019 2018 Retirement plan Contribution, benefits paid and (₱7,644,664) ₱68,217,827 Contributions to the Fund plus interest Amount/ Outstanding Amount/ Outstanding interest earned earned during the year Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature Subsidiary 2018 Advances from a subsidiary ₱362,900 ₱2,235,600 ₱798,049 ₱1,872,700 Transportation expenses and down payment for Amount/ Outstanding software cost Related Party Nature of Transaction Volume Balance Terms and Conditions/Nature Accounts receivable 2,708,634 5,194,096 (256,069) 2,485,462 Unsecured, noninterest-bearing, payable on demand Retirement plan Contribution , benefits paid and (₱1,945,266) ₱75,862,491 Contributions to the Fund plus interest interest earned earned during the year Deposit liabilities 4,006,119 29,025,194 12,862,013 25,019,075 Regular checking account, non-interest bearing Affiliates The retirement plan under the MERP has an Executive Retirement Committee, which is mandated to approve the plan, trust agreement, investment plan, including Receivable from customers - (848,280,812) 3,020,682,938 (874,585,000) 3,868,963,750 Secured loans with annual interest of 2.50% any amendments or modifications thereto, and other activities of the plan. Certain members of the BOD of the Parent Company are represented in the Executive commercial loans Retirement Committee. RBC Trust and Investment Group manages the plan based on the mandate as defined in the trust agreement. Receivable from customers - (308,995,424) 495,192,826 302,813,353 804,188,250 Non-interest bearing domestic bills purchased bills purchased Details of remuneration of directors and other key management personnel of the Group and the Parent Company follow: Deposit liabilities 14,014,806,786 36,449,205,960 1,357,093,379 22,434,399,174 Various terms and with annual interest rates ranging from nil to 2.55% Consolidated Parent Company Interest expense 37,664,071 42,671,212 Interest expense on deposit liabilities 2019 2018 2019 2018 Interest income 171,478,041 204,828,013 Interest income from secured commercial loans Short-term benefits ₱192,148,981 ₱105,817,874 ₱112,402,307 ₱97,980,413 Service fee income 188,673 91,757 Income from non-interest bearing domestic bills Post-employment benefits 14,352,430 7,564,343 13,540,331 7,057,441 purchased ₱206,501,411 ₱113,382,217 ₱125,942,638 ₱105,037,854 Rent expense 25,860,861 125,269,576 Office rental paid to affiliates and JG Summit Holdings Inc. 27. TRUST OPERATIONS ROU assets 287,222,361 287,222,361 Lease renewed every 5 years with 5% escalation rate Depreciation expense on ROU Lease renewed every 5 years with 5% escalation rate Properties held by the Parent Company in fiduciary or agency capacity for their customers are not included in the accompanying statement of financial position assets 103,671,794 since these are not assets of the Parent Company (see Note 28). Lease liability 304,426,696 304,426,696 Lease renewed every 5 years with 5% escalation rate Interest expense on lease Lease renewed every 5 years with 5% escalation rate In compliance with the requirements of the General Banking Law relative to the Parent Company’s trust functions, treasury bills with a total face value liability 21,471,425 of P195.00 million included under Financial Assets at Fair Value through OCI as of December 31, 2019 and P181.00 million as of December 31, 2018, were deposited with the BSP (see Note 7). Shareholders Deposit liabilities (196,066) 4,250,767 (56,629,686) 4,446,833 Various terms and with annual interest rates ranging An appropriation of 10.00% of the Parent Company’s income from trust operations is set aside as surplus reserve to absorb any losses that may arise from its trust from nil to 2.55% functions. Interest expense 10,214 103,612 Interest expense on deposit liabilities Board of Directors Deposit liabilities 12,009,889,059 12,565,904,113 (4,037,165,813) 556,015,054 Various terms and with annual interest rates ranging 28. COMMITMENTS AND CONTINGENCIES from nil to 2.25% Interest expense 34,753,005 19,642,021 Interest expense on deposit liabilities a. The Group is also involved in a number of legal proceedings. The estimate of the probable costs for the resolutions of these claims has been developed in consultation with outside counsel handling the Group’s defense and is based on an analysis of potential results. The Group does not believe that these Key Officers proceedings will have a material adverse effect on the financial statements. Deposit liabilities 26,791,849 33,449,698 (12,357,825) 6,657,849 Various terms and with annual interest rates ranging from nil to 1.88% b. In the normal course of the Group’s operations, there are various outstanding commitments, contingent liabilities and bank guarantees which are not Interest expense 171,254 Interest expense on deposit liabilities reflected in the accompanying financial statements. The Group does not anticipate material unreserved losses as a result of these transactions.

232 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 233 Following is a summary of the Group’s commitments and contingent liabilities at their equivalent peso contractual amounts: December 31, 2019 Consumer Corporate Branch Consolidated Parent Company Banking Banking Treasury Banking Others Total 2019 2018 2019 2018 Statement of Financial Position Trust and investment group accounts (Note 25) ₱17,739,157,589 ₱17,500,291,971 ₱17,739,157,589 ₱17,500,291,971 Total assets 40,363 38,040 41,521 4,561 6,656 131,141 Contingent - foreign currency swap 1,284,358,910 290,189,057 1,284,358,910 290,189,057 Total liabilities 1,555 2,691 52,203 54,225 3,405 114,079 Inward bills for collection 984,396,933 1,144,692,773 984,396,933 1,144,692,773 Other Segment Information Spot exchange - foreign currency 2,654,047,816 4,857,697,000 2,654,047,816 4,857,697,000 Capital expenditures 13 12 15 131 89 260 Outward bills for collection – 529,964,368 – 529,964,368 Depreciation and amortization 51 41 3 115 426 636 Letters of credit 328,561,049 382,180,629 328,561,049 382,180,629 Provision for (recovery of) credit and impairment Committed credit lines 7,258,540,906 3,858,396,377 7,258,540,906 3,858,396,377 losses ₱44 16 − − 67 127 Guarantees issued 3,207,412,389 1,957,917,773 3,207,412,389 1,957,917,773 Late deposit/payment received 93,764,025 77,016,740 93,165,552 76,269,738 December 31, 2018 Items held for safekeeping 79,472 54,874 63,338 37,940 Consumer Corporate Branch Other contingent account 183,907 181,357 178,686 178,686 Banking Banking Treasury Banking Others Total Statement of Income Net interest income: 29. SEGMENT INFORMATION Third party ₱1,772 ₱2,436 (₱504) (₱382) ₱252 ₱3,574 1,772 2,436 (504) (382) 252 3,574 The Group’s operating businesses are recognized and managed separately according to the nature of services provided and the different markets served with Noninterest income 126 − 162 71 262 621 segment representing a strategic business unit. The Group’s business segments follow: Revenue - net of interest expense 1,898 2,436 (342) (311) 514 4,195 • Consumer Banking - principally providing consumer type loans and support for effective sourcing and generation of consumer business; Noninterest expense 443 156 411 1,284 1,459 3,753 • Corporate Banking - principally handling loans and other credit facilities and deposit and current accounts for corporate and institutional customers; Income (loss) before income tax ₱1,455 ₱2,280 (₱753) (₱1,595) (₱945) 442 • Treasury - principally providing money market, trading and treasury services, as well as the management of the Group’s funding operations by use of Provision for income tax 125 treasury bills, government securities and placements and acceptances with other banks, through treasury and corporate banking; • Branch Banking - principally handling branch deposits and providing loans and other loan related businesses for domestic middle market clients; and Net income ₱317 • Others - principally handling other services including but not limited to trust operations, remittances, leasing, account financing, and other support services. Statement of Financial Position Other operations of the Group comprise the operations and financial control groups. Total assets ₱18,664 ₱45,233 ₱47,003 ₱3,507 ₱6,944 ₱121,351 Total liabilities ₱829 ₱287 51,847 ₱51,378 ₱4,632 108,973 Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The General Ledger system of the Bank captures the transactions on a segment level, and segment performance is evaluated based on net income Other Segment Information before taxes. Capital expenditures 20 ₱2 ₱4 ₱215 ₱128 ₱369 Depreciation and amortization 68 ₱2 ₱1 ₱101 ₱183 ₱355 In 2019, the Parent Company incorporated the use of Transfer Pool Rate (TPR) in monitoring the performance of the business units where the fund generating Provision for credit and impairment losses ₱15 ₱100 ₱− ₱− (₱15) ₱100 segments such as Treasury and Branch Banking charge the net fund users such as Consumer Banking and Corporate Banking for the excess funds provided.

TPR is reviewed and set by the Bank’s Asset and Liabilities Committee. It is the blended cost of interest bearing funds including all funding-related costs such as December 31, 2017 reserves, document stamp taxes, and other intermediary costs. Consumer Corporate Branch Banking Banking Treasury Banking Others Total This segment performance review is regularly provided to the Bank’s Chief Operating Decision maker who is the Parent Company’s President and Chief Executive Statement of Income Officer. Net interest income: Third party ₱1,418 ₱1,600 ₱221 (₱418) ₱162 ₱2,983 Segment assets are those operating assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can 1,418 1,600 221 (418) 162 2,983 be allocated to the segment on a reasonable basis. Segment liabilities are those operating liabilities that result from the operating activities of a segment and that Noninterest income 35 2 258 98 142 535 either are directly attributable to the segment or can be allocated to the segment on a reasonable basis. Interest income is reported net, as management primarily Revenue - net of interest expense 1,453 1,602 479 (320) 304 3,518 relies on the net interest income as performance measure, not the gross income and expense. Noninterest expense 520 290 187 968 1,211 3,176 Income (loss) before income tax ₱933 ₱1,312 ₱292 (₱1,288) (₱907) 342 The Group’s revenue-producing assets are located in the Philippines (i.e., one geographical location), therefore, geographical segment information is no longer Provision for income tax 34 presented. Net income ₱308 The Group has no significant customers which contributes 10.00% or more of the consolidated revenue net of interest expense. Transactions between segments are conducted at estimated market rates on an arm’s length basis. Interest is charged/credited to business segments based on a pool rate which approximates Statement of Financial Position the cost of funds. Total assets ₱16,332 ₱39,584 ₱41,133 ₱3,069 ₱4,795 ₱104,913 Total liabilities ₱716 ₱248 ₱44,763 ₱44,358 ₱2,735 ₱92,820 The following table presents revenue and income information of operating segments presented in accordance with PFRS and segment assets and liabilities: (amounts in millions): Other Segment Information Capital expenditures ₱18 ₱12 ₱1 ₱120 ₱133 ₱284 December 31, 2019 Depreciation and amortization ₱50 ₱7 ₱1 ₱38 ₱230 ₱326 Consumer Corporate Branch Provision for credit and impairment losses ₱51 ₱160 − ₱− ₱30 ₱241 Banking Banking Treasury Banking Others Total Statement of Income Non-interest income consists of service charges, fees and commissions, profit from assets sold, trading and securities gains - net, foreign exchange gain - net, Net interest income: income from trust operations, leasing, dividends and miscellaneous income. Non-interest expense consists of compensation and fringe benefits, taxes and Third party ₱2,902 ₱2,723 (₱943) (₱662) ₱218 ₱4,238 licenses, provision for credit and impairment losses, depreciation and amortization, occupancy and equipment-related cost, amortization of software costs, Intersegment (1,490) (2,548) 882 2,164 992 − income (loss) attributable to non-equity non-controlling interest and miscellaneous expense. 1,412 175 (61) 1,502 1,210 4,238 Noninterest income 177 (19) 492 142 (35) 757 Revenue - net of interest expense 1,589 156 431 1,644 1,175 4,995 Noninterest expense 904 222 314 1,222 1,552 4,214 Income (loss) before income tax ₱685 (₱66) ₱117 ₱422 (₱377) 781 Provision for income tax 62 Net income ₱719

234 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 235 30. NOTES TO STATEMENTS OF CASH FLOWS Presented below is the supplemental information on the Group’s and the Parent Company’s liabilities arising from financing activities:

As of December 31, 2018, interbank loans receivables of the Group and Parent Company to local savings bank amounting to nil and ₱23.5 million, which has an Consolidated original maturity of more than three (3) months is not considered cash and cash equivalents. Deposit for Stock LTNCD Bills Payable Bonds Payable Lease Liabilities Subscription Total Details of non-cash investing activities follow: Balances at January 1, 2019 ₱5,917,925,850 ₱7,436,904,315 ₱− ₱− ₱3,000,000,000 ₱16,354,830,165 Cashflows from financing activities: Consolidated Parent Company Additions − 400,000,000 9,874,305,237 292,205,132 − 10,566,510,369 2019 2018 2017 2019 2018 2017 Repayment of borrowings − (5,800,000,000) − (279,375,984) − (6,079,375,984) Increase in capital stock due to conversion of Non-cash financing activities: deposit for future stock subscription ₱3,000,000,000 ₱− ₱− ₱3,000,000,000 ₱− ₱− Adoption of PFRS 16 655,550,471 − 655,550,471 Increase in NUGL due to MTM loss (gain) on AFS −−170,346,723 − − 170,346,723 Amortization of debt issue costs and accretion of interest 9,666,996 3,601,436 15,530,119 51,627,485 − 80,426,036 Increase in NUGL due to MTM loss (gain) on financial assets at FVOCI 1,021,811,878 949,438,876 − 1,021,811,878 949,438,876 − Conversion of deposit for future Decrease in investment securities at amortized stock subscription − − − − (3,000,000,000) (3,000,000,000) cost due to reclassification of allowance for Balances at December 31, 2019 ₱5,927,592,846 ₱2,040,505,751 ₱9,889,835,356 ₱720,007,104 ₱− ₱18,577,941,057 losses from other assets (178,019) − − (178,019) −− Additions to investment properties due to Parent Company foreclosure 70,823,650 111,825,388 85,503,774 65,399,022 107,529,737 78,438,983 Deposit for Stock Disposal of investment properties and LTNCD Bills Payable Bonds Payable Lease Liabilities Subscription Total repossessed chattels through sales contract Balances at January 1, 2019 ₱5,917,925,850 ₱7,436,904,315 ₱− ₱− ₱3,000,000,000 ₱16,354,830,165 receivable 395,414 13,560,422 − − −− Cashflows from financing activities: Increase in property and equipment due to Additions − 400,000,000 9,874,305,237 280,341,794 − 10,554,647,031 reclassifications 13,095,395 2,997,740 2,435,778 4,749,187 5,035,239 46,497,771 Increase in repossessed chattels Repayment of borrowings − (5,800,000,000) − (271,088,889) − (6,071,088,889) due to foreclosure 567,244,339 254,137,176 234,419,527 564,352,450 254,137,176 233,867,525 Non-cash financing activities: Increase in Investment in subsidiary from share Adoption of PFRS 16 611,029,813 − 611,029,813 on remeasurement gain (loss) on retirement Amortization of debt issue costs plan −−− (5,228,610) 480,069 − and accretion of interest 9,666,996 3,601,436 15,530,119 47,292,619 − 76,091,170 Effect of PFRS 9 Adoption Conversion of deposit for future Increase in FA@FVOCI due to stock subscription − − − − (3,000,000,000) (3,000,000,000) reclassification due to reclassification Balances at December 31, 2019 ₱5,927,592,846 ₱2,040,505,751 ₱9,889,835,356 ₱667,575,337 ₱− ₱18,525,509,290 from AFS − 8,243,181,913 − − 8,243,181,913 − Increase in investment securities at Consolidated and Parent Company amortized cost due to reclassification Deposit for Stock from AFS − 10,951,842,651 − − 10,799,633,943 − LTNCD Bills Payable Bonds Payable Lease Liabilities Subscription Total Increase in investment securities at Balances at January 1, 2018 ₱4,152,240,531 ₱− ₱− ₱− ₱− ₱4,152,240,531 amortized cost due to reclassification Cashflows from financing activities: − − − − − − from HFT − 78,227,610 − − 48,101,461 − Additions 1,758,415,048 7,435,000,000 − − 3,000,000,000 12,193,415,048 Increase in investment securities at amortized cost due to C&M transition Repayment of borrowings − − − − − − adjustment of HFT transfers − 1,215,673 − − 1,215,673 − Non-cash financing activities: Decrease in FA@FVOCI due to ECL Adoption of PFRS 16 − − − − − − transition adjustment − (591,735) − − (591,735) − Amortization of debt issue costs Decrease in investment securities at and accretion of interest 7,270,271 1,904,315 − − − 9,174,586 amortized cost due to ECL transition Conversion of deposit for future adjustment − (26,498) − − (25,703) − stock subscription − − − − − − Decrease in Loans and receivables due to Balances at December 31, 2018 ₱5,917,925,850 ₱7,436,904,315 ₱− ₱− ₱3,000,000,000 ₱16,354,830,165 ECL transition adjustment − (20,544,951) − − (13,165,032) − Decrease in Investment in subsidiary due to ECL transition adjustment −−− − (7,380,714) − 31. APPROVAL OF THE RELEASE OF THE FINANCIAL STATEMENTS Increase in Investment in subsidiary due to reversal of NUGL of AFS −−− − 18,055,001 − The accompanying financial statements of the Group and of the Parent Company were approved and authorized for issue by the BOD on April 30, 2020. Increase in investment securities at amortized cost due to reversal of NUGL from transfer of AFS − 940,088,924 − − 922,033,923 − 32. SUBSEQUENT EVENTS - COVID-19 OUTBREAK Increase in NUGL on FA@FVOCI due to reclassification from NUGL on AFS − 1,026,656,867 − − 1,026,656,867 − Key actions were implemented to prevent and control the Coronavirus Disease 2019 (COVID-19) outbreak in the country. On March 13, 2020, a Memorandum on Effect of PFRS 16 Adoption Stringent Social Distancing Measures and Further Guidelines for the Management of the COVID-19 Situation issued by the Executive Secretary of the Philippines Increase in property and equipment 635,203,495 − − 587,515,373 −− placed National Capital Region (NCR) under these measures for 30 days starting March 15. On March 16, 2020, Presidential Proclamation No. 929 was issued Decrease in other assets (20,095,831) − − (14,038,343) −− declaring a state of calamity throughout the Philippines for a period of six (6) months and imposed an Enhanced Community Quarantine (ECQ) throughout the Decrease in accrued expenses (40,442,807) − − (37,552,783) −− island of Luzon until April 30, 2020, unless earlier lifted or extended. These measures have caused disruptions to businesses and economic activities, and its Increase in lease liability 655,550,471 − − 611,029,813 −− impact on businesses continue to evolve. On March 24, Republic Act No. 11469 was enacted declaring the existence of a national emergency arising from COVID-19 Recognition of new ROU of asset and lease situation and a national policy in connection therewith, and authorizing the President of the Republic of the Philippines for a limited period and subject to liability 292,205,132 − − 280,341,794 −− restrictions, to exercise powers necessary and proper to carry out the declared national policy and for other purposes. On April 1, the Implementing Rules and Regulations (IRR) of Section 4(aa) of Republic Act No. 11469, Otherwise Known as the “Bayanihan to Heal As One Act” was released.

236 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 237 Under the ECQ guidelines, the government identified banks as one of the essential business establishments that needs to be operational. The Bank ensures 34. SUPPLEMENTARY INFORMATION REQUIRED UNDER BSP CIRCULAR NO. 1074 continued operations and uninterrupted services and triggered business continuity plan. RBank is committed to provide the financial requirements of our clients, as well as to support the entire financial system given the limitations of the ECQ. The head office implemented measures and operated under business continuity On February 7, 2020, the BSP issued Circular No. 1074 to amend certain provisions of the MORB and Manual of Regulations for Foreign Exchange Transactions plan. The Bank carried out skeletal crew and rotation schedules for highly critical functions, opened as much feasible branches, and ensured cash availability in our (MORFXT). The Circular provides for new and amended disclosure requirements to the audited financial statements, which are to be presented either (i) on specific ATMs. Various digital and online products are available. To ease the burden of our clients, the Bank offered 30-day grace period for loan payments. For the safety notes to the financial statements, or (ii) in a separate note containing supplementary information as required by the BSP. This supplementary information is not and well-being of our Bank personnel and customers, the Bank provided personal protective equipment, transportation, accommodation, meals, and allowances. a required disclosure under PFRS. As protective measures, the Bank regularly disinfects and deep cleans offices and branches, deployed thermal scanners, and set pu provision for teller stations. In compliance with the requirements set forth by Circular No. 1074, hereunder are the supplementary information: The Bank considers the events surrounding the outbreak as non-adjusting subsequent events, which do not impact its financial position and performance as of and for the year ended December 31, 2019. However, the outbreak could have a material impact on its 2020 financial results and even periods thereafter. Financial performance indicators Considering the evolving nature of this outbreak, the Bank cannot determine at this time the impact to its financial position, performance and cash flows. The Bank will continue to monitor the situation. The Bank ensures that measures are put in place to mitigate future risks and uncertainties that this outbreak may bring. The following basic ratios measure the financial performance of the Group and the Parent Company:

Consolidated Parent Company SUPPLEMENTARY INFORMATION REQUIRED UNDER REVENUE REGULATIONS (RR) 15-2010 33. 2019 2018 2019 2018 Return on average equity 4.89% 2.56% 4.22% 2.56% The BIR issued RR No. 15-2010 prescribing the manner of compliance in connection with the preparation and submission of financial statements accompanying Return on average assets 0.57% 0.26% 0.56% 0.26% the tax returns. This RR include provisions for additional disclosure requirements in the notes to the financial statements, particularly on composition of taxes, Net interest margin on average earnings assets 3.59% 3.52% 3.36% 3.87% duties, licenses paid or accrued during the year. The following formulas were used to compute the indicators: Supplementary Information Required Under RR No. 15-2010 The Parent Company reported and/or paid the following types of taxes for the year: Performance Indicator BSP Prescribed Formula Gross Receipts Tax (GRT) Return on Average Equity Net Income (or Loss) after Income Tax x 100 Average Total Capital Accounts* The National Internal Revenue Code (NIRC) of 1997 provides for the imposition of GRT on gross receipts derived by banks from sources within the Philippines. Accordingly, the Parent Company’s gross receipts are subject to GRT as re-imposed in RA No. 9238 beginning January 1, 2004. Return on Average Assets Net Income (or Loss) after Income Tax x 100 Average Total Assets* Details of the Parent Company’s gross receipts and GRT due declared and paid for taxable year 2019 follow: Net Interest Margin Net Income Income x 100 Gross Receipts GRT Due Average Interest Earning Assets* Interest income ₱6,553,002,879 ₱208,240,641 Other income 204,453,105 14,311,717 *Average amount is calculated based on current year-end and previous year-end balances ₱6,757,455,984 ₱222,552,358 Leverage ratio, Total Exposure Measure and liquidity position Documentary Stamp Tax: The following ratios, measure the financial health and liquidity position of the Group and of the Parent Company as of December 31, 2019 and 2018: The Documentary stamp tax (DST) paid or accrued on the following transactions are: Consolidated Parent Company Transaction Amount DST thereon (₱ in millions, except for %) Deposits ₱849,610,294,037 ₱261,526,767 2019 2018 2019 2018 Loan instruments 38,000,000,000 285,000,000 Total exposure measure ₱134,332 ₱123,927 ₱131,686 ₱121,813 ₱887,610,294,037 ₱546,526,767 Leverage ratio 10.79% 8.29% 10.79% 8.24% Liquidity coverage ratio 115.78% 115.64% 108.87% 111.60% Part of the DST remitted to the BIR are shouldered/ charged to clients/borrowers. Net stable funding ratio 133% 115.04% 134% 116.08%

Other Taxes and Licenses Capital instruments This includes all other taxes, local and national, including documentary stamp tax, local business tax, licenses and permit fees lodged under the ‘Taxes and During 2019, the Parent Company converted the 3.00 billion ‘Deposit for Future Stock Subscription’ to ‘Common Stock’. Licenses’ account in the statement of income and expenses. As of December 31, 2019 and 2018, the Parent Company has outstanding capital stock shown below: Permits ₱20,066,753 Real property taxes 1,542,667 Shares Amount ₱21,609,420 2019 2018 2019 2018 Common shares - ₱10 par value Withholding Taxes Authorized 2,700,000,000 1,500,000,000 ₱27,000,000,000 ₱15,000,000,000 The following table shows the breakdown of taxes withheld and remitted in 2019: Issued and outstanding Issued and outstanding 1,500,000,000 1,200,000,000 ₱15,000,000,000 ₱12,000,000,000 Total Withheld Total Remitted Issued during the year − − − − Withholding tax on deposits ₱378,661,939 ₱349,141,580 Balances at end of year 1,500,000,000 1,200,000,000 ₱15,000,000,000 ₱12,000,000,000 Withholding taxes on compensation and benefits 133,010,935 110,988,751 Expanded withholding taxes 125,750,205 110,436,874 Final withholding taxes - others 4,092,351 4,092,351 ₱641,515,430 ₱574,659,556

As of December 31, 2019, there are no outstanding tax cases under investigation, litigation or prosecution in courts or bodies outside BIR.

238 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 239 Breakdown of total loans as to security and status As of December 31, 2019 and 2018, details of gross NPLs follow: The following table shows the breakdown of receivable from customers as to secured and secured and the breakdown of secured receivables from customers as to the type of security as of Consolidated Parent Company December 31, 2019 and 2018: 2019 2018 2019 2018 Secured ₱394,830,210 ₱230,071,101 ₱341,449,668 ₱168,314,608 Consolidated Unsecured 998,760,297 825,737,675 749,290,704 561,744,247 2019 2018 ₱1,393,590,507 ₱1,055,808,776 ₱1,090,740,372 ₱730,058,855 Amount % Amount % Secured by: As of December 31, 2019, 2018 and 2017, 40.91%, 45.51% and 41.07%, respectively, of the Group’s total receivables from customers are subject to periodic interest Real estate ₱17,942,714,917 22.38 ₱14,226,259,780 20.84 repricing. Chattel 4,783,022,909 5.95 4,356,482,289 6.38 Deposit hold-outs 3,822,824,753 4.77 4,444,952,668 6.51 As of December 31, 2019, 2018 and 2017, 41.72%, 46.40% and 41.98%, respectively of the Parent Company’s total receivables from customers are subject to Others 9,555,083,218 11.92 8,897,834,363 13.03 periodic interest repricing. 36,103,645,797 45.02 31,925,529,100 46.76 As of December 31, 2019 and 2018, net NPLs of the Group and of the Parent Company as reported to the BSP follow: Unsecured 44,062,089,025 54.98 36,353,398,141 53.24 ₱80,165,734,822 100.00 ₱68,278,927,241 100.00 Consolidated Parent Company Parent Company 2019 2018 2019 2018 2019 2018 Total NPLs ₱1,393,590,507 ₱1,055,808,776 ₱1,090,740,372 ₱730,058,855 Amount % Amount % Deductions as required by the BSP* 741,102,342 431,860,200 656,882,379 349,554,694 Secured by: ₱652,488,165 ₱623,948,576 ₱433,857,993 ₱380,504,161 Real estate ₱17,782,237,003 22.66 ₱14,113,012,720 21.02 *Allowance for credit losses per BSP Chattel 4,629,495,300 5.90 4,444,444,856 6.62 Deposit hold-outs 3,822,311,941 4.87 4,306,244,201 6.41 Restructured receivables which do not meet the requirements to be treated as performing receivables shall also be considered as NPLs. Others 9,539,857,698 12.15 8,897,834,363 13.25 35,773,901,942 45.58 31,761,536,140 47.31 Significant credit exposures as to industry/economic sector Unsecured 42,714,088,215 54.42 35,372,006,438 52.69 As of December 31, 2019 and 2018, information on the concentration of credit as to industry follows (in millions): ₱78,487,990,157 100.00 ₱67,133,542,578 100.00 Consolidated Parent Company Others include jewelry, mortgage trust indenture, company guarantees, deed of assignments of receivables and deed of suretyships. 2019 2018 2019 2018 Amount % Amount % Amount % Amount % Real estate activities 23,531 29.47 18,415 26.97 23,470 29.99 18,053 27.03 As of December 31, 2019 and 2018, details of status of loans follow: Wholesale and retail trade, repair of motor vehicles, motorcycles 12,190 15.27 10,190 14.92 11,916 15.23 10,065 15.07 Consolidated Activities of households as employers and Performing Non-Performing undiffirentiated goods-and-services- 2019 2018 2019 2018 producing activities of households for Commercial loan ₱49,020,083,658 ₱44,080,453,462 ₱494,677,651 ₱439,389,163 own use 8,739 10.95 6,679 9.78 8,099 10.35 7,205 10.79 Consumption 10,076,813,061 7,947,952,180 662,769,544 523,415,184 Manufacturing 8,679 10.87 7,095 10.39 8,671 11.08 6,750 10.11 Domestic bills purchased 495,192,826 834,447,716 – – Electricity, gas, steam and air conditioning supply 6,043 7.57 7,205 10.55 6,043 7.72 7,087 10.61 Real estate 18,851,873,001 13,944,201,234 236,143,312 93,004,429 Transportation and storage 5,198 6.51 4,708 6.90 5,195 6.64 4,705 7.04 ₱78,443,962,546 ₱66,807,054,592 ₱1,393,590,507 ₱1,055,808,776 Financial and insurance activities 3,441 4.31 3,563 5.22 3,433 4.39 3,472 5.20 Parent Arts, entertainment and recreation 3,368 4.22 3,472 5.09 3,368 4.30 3,631 5.44 Performing Non-Performing Accommodation and food service activities 2,039 2.55 935 1.37 2,033 2.60 1,183 1.77 2019 2018 2019 2018 Agriculture, forestry and fishing 1,539 1.93 1,018 1.49 1,435 1.83 929 1.39 Commercial loan ₱49,016,794,211 ₱43,997,213,639 ₱390,079,153 ₱319,056,960 Information and communication 1,188 1.49 948 1.39 1,188 1.52 989 1.48 Consumption 8,839,398,807 7,293,659,182 470,105,222 323,743,617 Construction 778 0.97 1,212 1.78 745 0.95 845 1.27 Domestic bills purchased 495,192,826 834,447,716 – – Administrative and support service activities 514 0.64 292 0.43 514 0.66 948 1.42 Real estate 18,805,126,778 13,931,237,633 230,555,997 87,258,278 Water supply, sewerage, waste management ₱77,156,512,622 ₱66,056,558,170 ₱1,090,740,372 ₱730,058,855 and remediation services 321 0.40 989 1.45 321 0.41 291 0.44 Other service activities 2,271 2.85 1,558 2.30 1,816 2.32 634 0.95 Under banking regulations, loans, investments, receivables, or any financial asset shall be considered non-performing, even without any missed contractual ₱79,839 100.00 ₱68,279 100.00 ₱78,247 100.00 ₱66,787 100.00 payments, when it is considered impaired under existing accounting standards, classified as doubtful or loss, in litigation, and/or there is evidence that full repayment of principal and interest is unlikely without foreclosure of collateral, if any. All other loans, even if not considered impaired, shall be considered Other service activities include public administration and defense, compulsory social security, education, human health, social work, professional, scientific, nonperforming if any principal and/or interest are unpaid for more than ninety (90) days from contractual due date, or accrued interests for more than ninety (90) technical, mining and quarrying activities. days have been capitalized, refinanced, or delayed by agreement. Restructured loans shall be considered non-performing. However, if prior to restructuring, the loans were categorized as performing, such classification shall be retained. The BSP considers that concentration risk exists when the total loan exposure to a particular industry or economic sector exceeds 30.00% of the total loan portfolio.

The Group classifies its loans and receivables as NPL in compliance with BSP regulations, or when, in the opinion of management, collection of interest or principal is doubtful. Loans and receivables are not reclassified as performing until interest and principal payments are brought current or the loans are restructured in accordance with existing BSP regulations and future payments appear assured.

240 ROBINSONS BANK 2019 ANNUAL REPORT ROBINSONS BANK 2019 ANNUAL REPORT 241 Real Estate Activities accounted for bulk of industry / economic sector credit exposures. However, 78% of this exposure is comprised of Housing Loans which per BSP Circular 600 Limit on Real Estate Loans of Universal Banks (UB) / Commercial Banks (KB), is excluded from the computation of real estate loans for UBs and KBs. The Bank’s Real Estate exposure is compliant with BSP Circular 600 which stipulates that loans extended to individual households for purposes of financing the acquisition of any associated land that is or will be occupied by the borrower and those extended to developers/construction companies for acquisition/ development of land, construction/ sale of buildings and/or residential properties including housing units should not exceed 20% of total loan portfolio net of interbank loans.

Restructured receivables of the Parent Company as of December 31, 2019 and 2018 amounted to ₱247.77 million and ₱247.61 million, respectively.

Information on related party loans In the ordinary course of business, the Parent Company has loan transactions with affiliates and with certain DOSRI. Existing ankingb regulations limit the amount of individual loans to DOSRI, 70.00% of which must be secured, to the total of their respective deposits and book value of their respective investments in the Parent Company. In the aggregate, loans to DOSRI generally should not exceed the Bank’s total regulatory capital or 15.00% of total loan portfolio, whichever is lower.

On January 31, 2007, BSP Circular No. 560 was issued providing the rules and regulations that govern loans, other credit accommodations and guarantees granted to subsidiaries and affiliates of banks and quasi-banks. Under the said circular, the total outstanding exposures to each of the bank’s subsidiaries and affiliates shall not exceed 10.00% of bank’s net worth, the unsecured portion of which shall not exceed 5.00% of such net worth. Further, the total outstanding exposures to subsidiaries and affiliates shall not exceed 20.00% of the net worth of the lending bank. BSP Circular No. 560 is effective onebruary F 15, 2007.

The following table shows information relating to DOSRI accounts of the Parent Company:

Consolidated Parent Company 2019 2018 2019 2018 Total outstanding DOSRI accounts ₱3,572,664,382 ₱4,727,361,725 ₱3,572,376,013 ₱4,727,312,686 Percent of DOSRI accounts to total loans 4.48% 6.98% 4.57% 7.09% Percent of past due DOSRI loans to total DOSRI loans 0.02% − 0.02% − Percent of nonperforming DOSRI loans to total DOSRI loans 0.02% − 0.02% − Percent of unsecured DOSRI loans to total DOSRI loans 1.24% 0.06% 1.24% 0.06% The Parent Company has no assets pledged as collaterals on its liabilities.

Commitments and contingent liabilities Following is a summary of the Group’s commitments and contingent liabilities at their equivalent peso contractual amounts:

Consolidated Parent Company 2019 2018 2019 2018 Trust and investment group accounts (Note 25) ₱17,739,157,589 ₱17,500,291,971 ₱17,739,157,589 ₱17,500,291,971 Committed credit lines 7,258,540,906 3,858,396,377 7,258,540,906 3,858,396,377 Guarantees issued 3,207,412,389 1,957,917,773 3,207,412,389 1,957,917,773 Spot exchange - foreign currency 2,654,047,816 4,857,697,000 2,654,047,816 4,857,697,000 Contingent - foreign currency swap 1,284,358,910 290,189,057 1,284,358,910 290,189,057 Inward bills for collection 984,396,933 1,144,692,773 984,396,933 1,144,692,773 Letters of credit 328,561,049 382,180,629 328,561,049 382,180,629 Late deposit/payment received 93,764,025 77,016,740 93,165,552 76,269,738 Items held for safekeeping 79,472 54,874 63,338 37,940 Outward bills for collection – 529,964,368 – 529,964,368 Other contingent account 183,907 181,357 178,686 178,686

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