2014 ANNUAL REPORT 2 CORPORATE PROFILE TABLE OF CONTENTS 3 FINANCIAL HIGHLIGHTS

4 MESSAGE FROM THE CHAIRMAN EMERITUS

5 MESSAGE FROM THE CHAIRPERSON

6 MESSAGE FROM THE PRESIDENT & CEO

8 REVIEW OF OPERATIONS: ECONOMIC ENVIRONMENT

9 REVIEW OF OPERATIONS: OPERATIONAL HIGHLIGHTS

24 AWARDS AND CITATIONS

27 CORPORATE SOCIAL RESPONSIBILITY

33 CORPORATE GOVERNANCE

40 BOARD OF DIRECTORS

42 DIRECTORS’ PROFILE

48 STATEMENTS OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

49 STATEMENTS OF FINANCIAL POSITION

50 STATEMENTS OF INCOME

51 MANAGEMENT DIRECTORY

56 PRODUCTS AND SERVICES

58 BDO GROUP OF COMPANIES CORPORATE FINANCIAL MISSION HIGHLIGHTS FINANCIAL HIGHLIGHTS FINANCIAL & OPERATING HIGHLIGHTS 2014 2013 Change ACCOUNT BALANCE SHEET (in billion PhP) (IN BILLION PHP) To be the preferred bank in every market we serve. Resources 1,863.6 1,672.8 11.4% Gross Customer Loans 1,089.4 911.5 19.5% RESOURCES 1,863.6 Trading and Investment Securities 221.5 227.9 -2.8% 1,672.8 Deposits 1,492.3 1,345.3 10.9% Equity1/ 179.7 164.4 9.3% 1,241.5 1,097.3 1,000.9 INCOME STATEMENT (in billion PhP) 3 CORPORATE PROFILE CORE VALUES Net Interest Income 51.2 43.2 18.7% Non-Interest Income 29.5 31.8 -7.4% Gross Operating Income 80.7 75.0 7.6% BDO is a full- service universal bank in the COMMITMENT TO CUSTOMERS. Operating Expenses 48.5 43.3 12.2% Philippines. It has the ability to provide a Net Profit2/ 22.8 22.6 0.9% complete array of industry leading products We are committed to deliver products and 2010 2011 2012 2013 2014 FINANCIAL PERFORMANCE INDICATORS and services including Lending (corporate, services that surpass customer expectations Profitability GROSS CUSTOMER LOANS Return on Average Equity 13.4% 14.0% middle market, SME, and consumer), Deposit- in value and every aspect of customer service, 1,089.4 Return on Average Common Equity 13.7% 14.3% 911.5 taking, Foreign Exchange, Brokering, Trust and while remaining to be prudent and trustworthy Return on Average Assets 1.3% 1.6% Investments, Credit Cards, Corporate Cash stewards of their wealth. Margins and Liquidity 769.0 Net Interest Margin 3.2% 3.3% Management and Remittances in the Philippines. 670.1 Loans to Deposit Ratio 73.0% 67.8% 541.5 Through its local subsidiaries, the Bank offers COMMITMENT TO A DYNAMIC AND EFFICIENT Liquid Assets to Total Assets 38.1% 43.0% Leasing and Financing, Investment Banking, ORGANIZATION. Cost Efficiency Cost to Income Ratio 60.1% 57.7% Private Banking, Bancassurance, Insurance Cost to Assets Ratio 2.6% 2.6% Brokerage and Stock Brokerage services. We are committed to creating an organization Asset Quality that is flexible, responds to change and NPL to Gross Customer Loans 1.3% 1.6% 2010 2011 2012 2013 2014 NPL Cover 188.4% 170.7% BDO’s institutional strengths and value- encourages innovation and creativity; we Capital and Leverage Basel III Basel II DEPOSIT LIABILITIES CET 1 Ratio 12.2% n.a. added products and services hold the key are committed to the process of continuous 1,492.3 Tier 1 Ratio 12.6% 14.3% 1,345.3 to its successful business relationships with improvements in everything we do. Capital Adequacy Ratio 14.4% 15.5% customers. Its branches remain at the forefront Assets to Equity 10.4x 10.2x 931.6 of setting high standards as a sales and service- COMMITMENT TO EMPLOYEES. 858.6 DISTRIBUTION NETWORK AND MANPOWER 782.6 oriented, customer- focused force. BDO has one Branches 876 815 7.5% of the largest distribution networks, with more We are committed to our employees’ growth ATMs 2,591 2,263 14.5% Employees 24,779 23,227 6.7% than 875 operating branches and over 2,500 and development and we will nurture them in ATMs nationwide as of December 31, 2014. an environment where excellence, integrity, SHAREHOLDER INFORMATION teamwork, professionalism and performance are Market Value 2010 2011 2012 2013 2014 Share Price (in PhP) 109.80 68.60 60.1% Through strong organic growth and selective valued above all else. Market Capitalization (in billion PhP) 393.18 245.65 60.1% acquisitions, BDO has positioned itself for Valuation CAPITAL FUNDS increased balance sheet strength and continuing COMMITMENT TO SHAREHOLDERS. Basic Earnings per Share (in PhP) 6.27 6.22 0.8% 179.7 Diluted Earnings per Share (in PhP) 6.27 6.18 1.5% 164.4 expansion into new markets. As of December 31 Book Value per Share (in PhP) 48.56 44.28 9.7% 154.4 2014, BDO is the country’s largest bank in terms We are committed to provide our shareholders Price-Earnings Ratio 17.51 11.03 Price to Book Value 2.3x 1.5x of total resources, capital, customer loans, total with superior returns over the long term. 3/ 93.8 Dividends 88.7 deposits, and assets under management. Cash Dividends Paid (in billion PhP) 7.52 7.52 Cash Dividends per Common Share (in PhP) 2.10 2.10 Dividend Payout Ratio4/ 33.3% 51.9% BDO is a member of the SM Group, the country’s Dividend Yield5/ 2.3% 2.6% largest and most successful conglomerate Stock Dividends per share - -

2010 2011 2012 2013 2014 with businesses spanning between retail, mall operations, property development (residential, NET INCOME commercial, resorts/ hotel), and financial 1/ Total capital accounts, inclusive of minority interest and preferred shares 22.8 services. 2/ Net Income attributable to shareholders of the parent bank 22.6 3/ BDO paid-out regular quarterly cash dividends of P0.30 per common share in 2014 on the following dates: March 24, June 27, September 26, and December 29. The Bank also paid- out a special cash dividend of P0.90 per common share (top-up in respect of 2013 earnings) 14.5 on July 25, 2014. The Board of Directors reviewed and noted the Corporate Mission and Vision at its meeting on May 31, 2014. 10.8 In 2013, BDO paid-out a special cash dividend of P1.20 per common share (in respect of 8.8 2012 earnings) on July 5, and quarterly cash dividends of P0.30 per common share beginning the second quarter which were paid-out on July 5, September 30 and December 27, 2013. 4/ Cash dividends paid during the year divided by net profit of the prior year 5/ Cash dividends per share paid during the year divided by average daily price for the year 2010 2011 2012 2013 2014

2 www.bdo.com.ph BDO 2014 ANNUAL REPORT 3 The performance of We have been impressed BDO Unibank each year by our team members’ is consistently anchored dedication in serving our on these significant clients, but also by their pillars – wisdom and

initiative in assisting the CORPORATE PROFILE guidance of the Board communities where we of Directors; leadership operate. of the management; MESSAGES dedication and 5 innovation of the employees; and trust of our valued shareholders. MESSAGE FROM THE MESSAGE FROM CHAIRMAN EMERITUS THE CHAIRPERSON

We believe that strong corporate governance is essential to our Organization’s ability to achieve To all our To all our sustainable growth. Our management has instilled the principle of good governance into every rank in the Organization. shareholders, shareholders, We have been impressed by our team members’ dedication in serving our clients, but also by their initiative in assisting the communities where The performance of BDO Unibank each year is consistently anchored on these significant pillars BDO had another good year in 2014. We we operate. Through the BDO Foundation, they – wisdom and guidance of the Board of Directors; leadership of the management; dedication and achieved good financial targets and maintained provide assistance during disasters, help build innovation of the employees; and trust of our valued shareholders. leadership position in many business lines. community multi-purpose centers, and volunteer For 2015, our focus will still be on growth—both in financial literacy education. The Bank also As the Bank moves forward, I am certain that the abovementioned stalwarts will remain committed in organic and through acquisitions. Aside from allocates funds yearly to the Foundation to build the pursuit of making BDO the most reliable provider of banking products and services, staying at the adding new businesses to service our clients schools and shelter. forefront even amidst the enhanced competition expected from the regional economic integration. better and more efficiently, we will continue looking for new growth platforms and delivery I have confidence that the Bank’s management My heartfelt thanks to all of you for your support. channels to increase our scale especially in and its team members will continue to deliver underpenetrated business. good customer service and financial results, and will sustain our leadership position in the future. Yours truly, We see a continuing growth in business banking We thank our board, our management and the from large to small, as well as the growth in rest of our team for their commitment; and we consumer banking. We are also looking into thank our shareholders and our clients for their producing long-term profitable growth by trust and confidence. building our franchise and delivery value to our Yours truly, customers and the communities. Henry Sy, Sr. Chairman Emeritus Teresita T. Sy Chairperson

4 www.bdo.com.ph BDO 2014 ANNUAL REPORT 5 Our mindset has always been

to look past REVIEW OF OPERATIONS the prior years, gear up for the next year, and 7 never rest on our laurels.

MESSAGE FROM REVIEW OF OPERATIONS THE PRESIDENT & CEO

manageable level despite sustained business and branch To all our expansion. At the end of 2014, BDO’s capital base at PhP180 billion remains the largest in the industry with a capital ratio of more than 14% comfortably above the regulatory shareholders, minimum under the Basel III framework. While the numbers speak for themselves and while we deserve a certain sense of pride and urge to celebrate, our mindset has always been to look past the prior years, Over the last few years, we have been making gear up for the next year, and never rest on our laurels. investments in our productive capacity to take advantage of our emerging economy. From our mergers and We are soon entering a new era to be ushered in by the acquisitions (M&A) activity to our organic branch ASEAN economic integration. This development, together expansion to major upgrades in our electronic banking with the liberalized entry of foreign banks, will result to a services to our regional expansion, we have made great more competitive environment. The prevailing liquidity strides in expanding our footprint and our capacity to in the system and increased regulatory pressures such as service our markets better. These investments are now the higher capital requirements are also challenges we starting to yield dividends. have to contend with.

All these and more have allowed BDO Unibank to end the Notwithstanding, we will be prepared to rise above these year with another strong performance. Our net income challenges if we all pull together as one. reached PhP22.8 billion, matching our earnings guidance for 2014 and registering an equivalent 18% growth if we Let me end this by expressing my appreciation to all were to exclude the one-off gains booked in 2013. of you - our board of directors, our management and employees, our investors, our clients and our other We continue to post very good numbers in our core stakeholders. Thank you for your unwavering confidence businesses. Total customer loans outpaced the industry and support in the Bank. Each year is an inspiring journey with a 20% growth to hit a record PhP1.1 trillion on that I am privileged to share with all of you. broad-based expansion across key markets. The Bank’s Yours truly, total deposits also grew 11% to PhP1.5 trillion on the back of a 24% expansion in CASA deposits. Our net interest income and fee-based income posted double- Nestor V. Tan digit growth while our operating expense was kept at a President & CEO

6 www.bdo.com.ph BDO 2014 ANNUAL REPORT 7 REVIEW OF OPERATIONS OPERATIONAL HIGHLIGHTS ECONOMIC ENVIRONMENT REVIEW OF OPERATIONS

The Philippine economy staged a strong rally in the last quarter of 2014 BDO Unibank posted a record net income of to pull up full-year growth to 6.1% and log the second fastest economic PhP22.8 billion in 2014 championed by the TOTAL LOAN PORTFOLIO strong expansion of its core businesses. The 9 expansion in the region after China. The country also capped the year with amount, which matched its profit guidance upgrades from S&P and Moody’s, as both rating agencies affirmed the set for the year, represented an 18% growth in PhP1.1 trillion country’s solid growth prospects and sound macroeconomic fundamentals. terms of recurring earnings. This placed the country at one notch above investment grade. Lending to corporates grew 17%, fueled by RECORD NET INCOME acquisition finance, project finance for power generation and select PPP (Public-Private Partnership) projects. Commercial lending PhP22.8 billion likewise posted a solid growth of 26%.

Consumer spending fueled economic activity supported by low interest rates and falling RECURRING INCOME “The commercial lending business which in 2014, with households benefiting from the commodity prices. includes SME will continue to work closely sustained strength in OFW remittances and with Branch Banking Group (BBG) to support BPO revenues, as well as improved purchasing Despite the increased market volatility 18% GROWTH the lending needs of new and existing clients,” power due to declining oil prices and slower stemming from “tapering” or the termination Wassmer says. inflation in the fourth quarter. Export gains of US quantitative easing and geopolitical likewise contributed to economic growth, along risks, the Philippines’ underlying resilience and The Bank’s lending and deposit-taking with the surge in public expenditures in the macroeconomic fundamentals remained intact. businesses were the lead performers as they last three months that offset prior government Last year, net inflows of foreign direct continued to display healthy and robust underspending. On the supply side, the service investments (FDIs) hit a record high while earnings despite domestic and global economic and industry sectors (specifically transport, real the PSE Index climbed 23%, signifying strong pressures, specifically the low interest rate estate, manufacturing and construction) were investor confidence in the country. environment that prevailed in the year. major beneficiaries from the rise in demand Total loan portfolio reached PhP1.1 trillion, up 20% from the previous year and in line with industry growth. Large corporate clients accounted for the biggest component, followed FACTORS TO WATCH OUT FOR IN 2015 by the middle market and consumer segments. Senior Executive Vice President and Head of the Institutional Banking Group Walter C. Wassmer observes that business activity and optimism The global economy in 2015 faces modest per capita incomes and favorable demographic were evident in 2014. There was marked growth prospects on uneven economic trends; a subdued inflation environment increase in borrowings of local clients to conditions across major economies, diverging helped by lower oil prices; and renewed public support their operations. Foreign corporations global monetary policies among central expenditure and infrastructure spending. also continued to establish or expand their “The performance was notable even banks, rekindled Greek debt problems and businesses in the Philippines. with pressure from market liquidity. its ramifications, and continuing geopolitical The Philippines, with a higher and sustainable The growth trajectory experienced tensions in the Middle East. growth trajectory, is well-placed to again “The performance was notable even with during the year will continue in 2015 assert its position as one of Asia’s standout pressure from market liquidity. The growth given the continuous expansion of the These challenges notwithstanding, the country performers. trajectory experienced during the year economy." is seen continuing with its performance and will continue in 2015 given the continuous Walter C. Wassmer posting sustained growth in 2015 driven by a expansion of the economy,” he shares. Institutional Banking Group vibrant consumer base supported by increasing

8 www.bdo.com.ph BDO 2014 ANNUAL REPORT 9 Challenges to the Bank’s performance came REVIEW OF OPERATIONS "With the GDP growth and higher income, CASA DEPOSITS GROWTH not only from within the country but from we had more opportunities. People felt more prosperous, and low interest rates made the global pressures as well. Europe and Japan, loans more attractive to them." for instance, embarked on Quantitative Easing 24% to avert a recession. The Bank, anticipating Rolando C. Tanchanco BRANCHES IN TOTAL a tightening policy from both the Bangko Consumer Lending Group Sentral ng Pilipinas (BSP) and the US Federal 875 Reserve, kept its duration moderate and its 11 positions relatively flexible. Treasury was able to capitalize on market opportunities that allow TOTAL DEPOSITS them to realize better than expected trading On the consumer lending side, there was also industries, further bolstering its loan portfolio. gains despite a more difficult environment. noticeable and solid demand for auto loans, This resulted in a 28% year-on-year growth in PhP trillion mortgages and credit cards. BDO leveraged on its portfolio. 1.5 The Bank took a cautious stance in terms of its expanded geographic reach for wider client managing its portfolio as the BSP introduced coverage and increased capacity to handle tightening measures in the second half of the greater business volumes. BDO LEASING “We will continue to plan for branch openings year in line with the US tapering. LOAN PORTFOLIO where we can maximize our market reach with As a result, consumer loan portfolio rose 18% the end view of providing superior banking "We lightened our overall portfolio including in 2014, with mortgages registering the highest services and convenience to our customers,” our exposures in emerging markets and growth, followed by auto loans and credit cards. 28% GROWTH according to Jaime C. Yu, Senior Executive Vice- shortened its duration," according to Pedro President and Head of Branch Banking Group. M. Florescio, III, Executive Vice President and Treasurer. CONSUMER LOAN The continued good performance of the PORTFOLIO BDOLF expanded the coverage of its target Philippine economy coupled with election Further, the Bank took advantage of its view market by leveraging on client relationships spending will give rise to increased activity. of a strong dollar scenario, allowing the Bank and the Bank's wide network, allowing it to While competition will be as fierce, the Bank to generate trading profits. The Bank expects 18% GROWTH expand its portfolio and diversify its funding is poised to benefit from the measures it had the US dollar to continue outperforming sources. BDOLF increased its portfolio through put in place and the reputation it had built over other currencies in 2015. Thus, its trading and competitive pricing, stronger manpower the years. BDO is confident it will continue to portfolio activities will be aligned with this "With the GDP growth and higher income, complement and improved operational see strength and growth in its core businesses, outlook. we had more opportunities. People felt more efficiencies. enough to propel it to achieve its targets and prosperous, and low interest rates made the maintain its position as the industry leader. "We expect the US Federal Reserve to hike loans more attractive to them,” said Rolando C. DEPOSIT-TAKING BUSINESS interest rates in the second half of 2015," says Tanchanco, Executive Vice President and Head TREASURY Florescio. "We will also take a cue from the of the Consumer Lending Group (CLG). BDO opened 61 new branches, bringing the stronger Philippine economy, anchored on OFW total to 875 as of year end . This is consistent Aside from the on-target performance of its remittances and Business Process Outsourcing For 2015, CLG targets continued growth in with the Bank’s objective to reach more core lending and deposit-taking businesses, revenue. Election spending, government its portfolio, increase in market share and markets. Its acquisition of Citibank Savings BDO’s other business units also registered infrastructure spending and lower commodity improved profitability. CLG is confident it can and the assets and branch network of The Real respectable performance despite the prices will support this scenario.” achieve these by sustaining its competitive Bank was aligned with this goal. Identifying challenges in the domestic and international advantage through its people, its processes and the right site is the primary challenge in branch environment. its customer focus. banking. Sites were selected according to their prospective contribution to the Bank’s BDO Leasing and Finance, Inc. (BDOLF), a expansion agenda. subsidiary of the Bank, took advantage of the “We will continue to plan for branch opportunities for growth by financing the needs Total deposits grew by 11% to PhP1.5 trillion in openings where we can maximize our of capital intensive industries: transportation 2014. However, CASA deposits grew at a much market reach with the end view of (which comprised at least 20% of its portfolio) faster pace of 24% and accounted for 64% of providing superior banking services and and logistics, construction, mining, real estate, the total deposits. This growth reflects strong convenience to our customers.” trading and service-related industries. BDOLF market intelligence and attention to the needs Jaime C. Yu also tapped into new growth markets to of the Bank’s existing and potential clients. For Branch Banking Group complement the business generated from key 2015, BDO aims to open more than 50 new branches.

10 www.bdo.com.ph BDO 2014 ANNUAL REPORT 11 Best Project Finance Deal in Southeast Asia provided by the various groups of the Bank — REVIEW OF OPERATIONS “The buoyant economy and generally bullish prospects for Philippine corporates by Alpha Southeast Asia Magazine) as Joint from branch banking, trust, corporate banking, attracted more foreign and local investment Mandated Lead Arranger treasury and even cash management. houses coming in, expanding their presence and coverage.” • GMR Megawide Cebu Airport Corp.’s BDO Securities, the Bank’s stock brokerage PhP23.3 billion Project Finance Facility as arm, held its own among domestic brokerage Eduardo V. Francisco Lead Arranger (first PPP airport project for houses. It saw a turnover of PhP125.8 billion for BDO Capital & Investment Corp. the Philippines) 2014, ranking 2nd among local brokers with no 13 foreign tie-up partner and 11th among all the • Republic of the Philippines’ PhP140.4 billion brokers. Bond Exchange Program as Joint Deal INVESTMENT BANKING robust. There was a record amount of peso Manager Large trading volumes reflected strong bonds listed in PDEX with a total volume of appetite from both local and international fund The series of investment upgrades granted by PhP191.9 billion vs. 2013’s PhP83.5 billion. • JG Summit Holdings, Inc.’s PhP30 billion managers. the various credit rating agencies made the Significant capital was raised by the Philippine Bonds as Joint Lead Manager and Joint Lead Philippines the darling both of investors and Stock Exchange through IPOs, follow-on Underwriter Given these events and the projections for investment bankers. offerings and preferred share issues with an 2015, BDO Securities intends to roll out its aggregate issue size of PhP 66 billion. Loan • Del Monte Pacific Ltd.’s USD350 million internet trading platform, increase investor "The buoyant economy and generally bullish growth was strong at 20% as more borrowers Bridge Loan as Sole Arranger awareness on the stock market and encourage prospects for Philippine corporates attracted raised capital to take advantage of low interest more individual participation in the equity more foreign and local investment houses rates and excess liquidity in the market. • Vista Land Corporation’s PhP5 billion Bonds market. coming in, expanding their presence and and USD 225 million Guaranteed Notes coverage," says Eduardo V. Francisco, President BDO Capital was at the forefront of these WEALTH MANAGEMENT of BDO Capital and Investment Corp. capital raising activities either through equities • Bloomberry Resorts & Hotel Inc.’s PhP11.4 Capital raising activities in 2014 remained or fixed income for both the government and billion Notes as Lead Arranger and Sole The Bank's wealth management and trust private companies. These firms were in a wide Bookrunner businesses performed relatively well in 2014. array of industries, such as food and beverage, real estate, fossil-based and renewable power, • Philippine Long Distance Telephone The Trust and Investments Group (TIG) posted airports, telecommunications, toll roads, Company’s PhP15 billion Bonds as Joint a year-end assets under management (AUM) banking, and hotel and entertainment. Lead Underwriter of PhP597.5 billion, representing a modest

It posted a 14.4% growth in the number of • San Miguel Brewery, Inc.’s PhP15 billion deals done in 2014 compared to the previous Bonds as Joint Lead Manager year. These notable deals include the following: • Alternergy Wind One Corporation’s IPOs: USD105 million Multi-Currency Project • Century Pacific Food, Inc.’s PhP3.2 billion Finance Facility as Mandated Lead Arranger IPO (adjudged Best Deal in the Philippines and Bookrunner for 2014 by The Asset) as Joint Lead Manager, Joint Lead Underwriter and Joint Bookrunner NUMBER OF DEALS “We expect the US Federal Reserve to hike interest rates in the second • Double Dragon Properties Corp.’s PhP1.2 half of 2015. We will also take a cue GROWTH billion IPO as Joint Lead Underwriter 14.4% from the stronger Philippine economy, “We will launch funds with the anchored on OFW remittances following themes: global equity, and Business Process Outsourcing • Phoenix Semiconductor Philippines Corp.’s For 2015, BDO Capital is gearing up for developed markets property, and revenue. Election spending, PhP1 billion IPO as Sole Issue Manager and increased advisory and capital raising needs of country-specific equity funds...we will government infrastructure spending Lead Underwriter (first Korean company its clients. It anticipates more foreign investors also offer global bonds and preferred and lower commodity prices will IPO in the Philippines) coming in for the PPP as well as private sector shares to investors who want income support this scenario.” deals. Local groups will also need funding for and capital preservation.” Debt Issues: their various projects. Ador A. Abrogena Pedro M. Florescio III • Pagbilao Energy Corporation’s PhP33.3 Treasury Group Trust and Investments Group billion Project Finance Facility (adjudged All these services would need solutions

12 www.bdo.com.ph BDO 2014 ANNUAL REPORT 13 increase of 2.6% from the 2013 level of PhP582 billion, indicating that clients see added value in subsidiary of BDO that services the high net income and capital preservation, it intends to REVIEW OF OPERATIONS billion. BDO Trust's investment expertise. worth clients through its open architecture offer global bonds and preferred shares. platform, also had to operate in an environment BDO Private Bank (BDOPB), on the other hand, TIG makes it a point to ensure that the UITFs of volatility amid mixed global developments. PAYMENT & ELECTRONIC SERVICES ended 2014 with a total AUM (composed of are sold correctly, and that clients understand trust and deposits) of PhP279 billion. their options completely. Information Despite these conditions, BDOPB increased The Bank’s remittance business, through BDO materials and financial wellness events are key investments in domestic securities and offshore Remittance, managed to perform better than On a consolidated basis, the Bank accounts for components of the education process. securities, notably the new issuances of fixed- the industry on the back of the continued 15 one-third of the country's trust business. income investments, equity and unitized funds. strength of OFW remittances, which reached "For 2015, the Bank intends to diversify its BDOPB expanded its products and services over USD26 billion at the end of 2014. A key highlight was its ability to maintain investments and move from purely Philippine and offered more investment alternatives to its its leadership in the management of unit assets into global investments. We will launch clients. BDO posted double-digit growth in the number investment trust funds (UITFs) despite the funds with the following themes: global equity, or volume of remittance transactions largely prolonged low interest rate environment and developed markets property and country- According to BDOPB President Josefina N. Tan, driven by the expanding channels being volatility due to the global political events. The specific equity funds. We will also offer global "Clients are starting to look at foreign currency- provided by the Bank to Filipino workers and all-time bestseller was the BDO Peso Money bonds and preferred shares to investors who based investments, not only from known residents abroad. These channels were a result Market Fund. Its low volatility and higher yield want income and capital preservation," says Philippine corporate names but also from of the partnerships it entered into with a offered a good opportunity to start getting into Ador A. Abrogena, Executive Vice President and similarly situated corporate names in the Asia- number of foreign banks. investment funds. This is currently the biggest Head of Trust and Investments Group. Pacific and North-American regions." UITF in the Philippines with net asset value In 2014, BDO formed alliances with DBS in (NAV) of PhP145.9 billion as of year-end. The Taking advantage of internet technology, it will In 2014, BDOPB expanded its coverage of Singapore and Emirates NBD in United Arab BDO UITFs, with combined NAV of PhP237.7 also offer online investing and online financial international investments including Exchange Emirates and with both of them having strong billion represent about 40% of the local UITF education. Finally, for the convenience of the Traded Funds, to meet the changing needs of Filipino client base, the partnerships paved business. UITF participants, BDO will extend the dealing its clientele. the way to a more secure and convenient way cut-off time from 12:00 noon to 2:30 pm for of sending remittances using their respective TIG believes that BDO's industry leadership the bond, balanced and equity funds. The Easy Moving forward, BDOPB intends to intensify its online banking platforms. is attributable to its attentiveness to clients' Investment Plan, Easy Redemption Plan and the investments and move from purely Philippine needs and preferences. It recognizes that most Switching Features will also be incorporated in assets into global equities. It will also move “Filipinos who maintain an account with these Filipinos are risk-averse, preferring short-term all BDO UITFs. into funds with themes such as global equity, banks are able to send money with security and placements. developed markets property, and country- ease to the Philippines anytime using online For its part, BDOPB, the wholly owned specific equity funds. To investors seeking banking. It can be noted also that this sending Through continuing investor education, TIG wants clients to appreciate the fact that going up the risk spectrum enables one to get higher yields, beat inflation and participate in the country's economic development. To this end, the newly launched equity fund, the BDO Sustainable Dividend Fund (SDF), is another good channel for investments – a portfolio of equities with a consistent track record of dividend payments and a high dividend yield. When the market is down, these dividends provide a good cushion for one's investments. As a result, the BDO SDF ended the year with “Filipinos who maintain an account with “Foreign banks have taken notice of assets of close to PhP2 billion while posting a “Clients are starting to look at foreign DBS and Emirates NBD are able to send the business potential generated from full year return of 26%, outperforming PSEi's currency-based investments, not only money with security and ease to the remittances. Given this, they have started from known Philippine corporate full year return of 22.8%. Philippines anytime using online banking. to offer their own retail remittance service names but also from similarly situated It can be noted also that this sending targeting migrant workers including corporate names in the Asia-Pacific and The trend towards accounts giving TIG full market prefers another convenient way of Filipinos. We also saw an increase in online North-American regions.” investment discretion continued during the remitting money.” remittance providers in the industry.” year with retirement funds, endowment, Josefina N. Tan Geneva T. Gloria insurance and pre-need funds growing by BDO Private Bank Jonathan C. Diokno PhP37.2 billion and UITFs growing by PhP10.5 Remittance Distribution Remittance Origination

14 www.bdo.com.ph BDO 2014 ANNUAL REPORT 15 within the Bank by linking buyers and sellers REVIEW OF OPERATIONS OFW REMITTANCES Globally, numerous bank accounts of who have accounts with BDO, and by enabling remittance companies have been closed by real-time payments to and from each other to foreign banks in response to concerns about settle commercial transactions. USD26 billion the alleged reputational money laundering and terrorism financing risks associated with the “In addition to improving service availability, financial sector. quality, and channel security through the use of market prefers another convenient way of new technologies and processes, a big part of 17 remitting money,” says Senior Vice President Moving forward, BDO will sustain its efforts our agenda for 2015 is to engineer a significant Geneva T. Gloria. on forging strategic partnerships with foreign shift to electronic means of collecting and banks and money transfer companies. For disbursing funds in place of the traditional The Bank also strengthened its remittance the domestic side, the Bank will continue to means of checks, papers and coins,” explains network in Malaysia via a partnership expand its client base through grassroots retail Narciso. agreement with its remittance leader CIMB programs and develop sustainable activities to Islamic Bank (CIMB), and forged a tie-up with ensure customer retention. “We are constantly on watch for new INSURANCE Eurogiro, a global payments community that trends and leading paradigms, and how we can tap into advances in technology facilitates cross border payments among its for the benefit of our clients.” In the past few years, Filipinos have undergone member-companies composed of postal banks FOREIGN REMITTANCE a shift in their concept of insurance, based worldwide. TIE-UPS Emmanuel T. Narciso largely on their personal experiences or their Transaction Banking Group vicarious observations. At the local front, BDO embarked on a bank- 335 wide grassroots program to acquire new According to BDO Insurance Brokers, Inc. clients and increase deposits in areas with (BDOI) Senior Vice President and Group Head, high concentration of OFWs. Through BDO The Bank now has the largest ATM network in To further sustain clients’ confidence in Ma. Theresa L. Tan, people have become more Remittance, the Bank was able to successfully the country, while its electronic channels are electronic banking, the Bank established a conscious of the impact of calamities on their capture and convert remittance clients to open steadily gaining ground. Aggressive deployment dedicated fraud management team handling properties. the BDO Kabayan Savings Account in several of offsite ATMs, effective online banking end-to-end processing of possible fraudulent key provinces. campaigns, and an improved mobile banking transactions—from detection, reporting, “The market has somehow matured and people platform were key components. investigation, blocking and recovery. It also have realized the importance of insurance in These activities done by the Bank helped soften made investments in protecting ATM terminals. their lives, properties and businesses. There the impact of rising industry competition and Two factors drove growth in online banking in In all, these measures proved so effective is also an effort on the part of the insurance implementation of the more stringent rules 2014. First, the ergonomic design of the site that they resulted in halving fraud losses industry to educate the market,” Tan adds. and regulations in the global financial sector to provided a seamless and intuitive customer year-on-year, well ahead of overall industry address specifically the escalating problem on experience. Second, focused marketing performance. This trend has actually been observed for the money laundering. campaigns via tri-media and digital media past five years, with BDO Insurance observing complemented branch-based marketing The bank’s fraud prevention efforts will also get an average of 25% growth in premiums, and “Foreign banks have taken notice of the programs to boost enrollment and usage. a significant boost with the conversion of BDO 30% in commissions. These rates, being higher business potential generated from remittances. One challenge to customers’ adaptation of ATM Debit Cards to become EMV technology than the growth of the insurance industry, make Given this, they have started to offer their own electronic channels is concern regarding compliant, which was completed this year for BDOI the number one broker in the country. retail remittance service targeting migrant online security. Fully realizing this, the Bank ATM Debit Cards of BDO Hongkong Branch, and workers including Filipinos. We also saw an constantly pushed customer awareness of the will commence for local cards in late 2015. In 2014, BDOI hit the PhP5-billion and PhP1- increase in online remittance providers in the security risks involved in electronic banking, In 2014, there was 99% increase in demand billion premiums and commissions, respectively. industry,” states Senior Vice President and Head the countermeasures it is taking, and the ways for payments and 28% for collections through This is due to growing business referrals of of Remittance Origination Jonathan C. Diokno. users can minimize these risks. These efforts electronic channels. This demonstrates the Bank and also BDOI’s own effort to grow have helped lower resistance to usage. the momentum building in corporate accounts organically and retain existing Competition from non-bank financial clients’ preference for faster, more efficient business. institutions was also strong. The pawnshops, for “We are constantly on watch for new trends settlements. instance, remain aggressive in their expansion and leading paradigms, and how we can tap Insurance packages for the retail market were by pursuing direct remittance agreements into advances in technology for the benefit of In providing solutions to these needs, BDO improved in terms of benefits and pricing to with foreign money transfer companies instead our clients,” says Emmanuel T. Narciso, Senior has proven to be the right partner, enabling make them more competitive. of maintaining a partnership with just one Vice President and Head of Transaction Banking corporate clients to put more order and bank that maintains relationships with several Group. efficiency in their financial affairs. Ultimately, In the corporate sector, BDOI expanded its remittance tie-ups. BDO seeks to build payment communities technical expertise in specialty lines such as

16 www.bdo.com.ph BDO 2014 ANNUAL REPORT 17 that would benefit them. This means being able STRONG SUPPORT UNITS REVIEW OF OPERATIONS to swiftly address concerns especially during Finally, the Property Management Group which the claiming stage. manages the Bank's property assets available Information Technology for sale and lease, achieved its target for the The Bank’s support units, aside from core and The life insurance unit of the Bank, through year in terms of asset sales and leases. These other business, contributed significantly to the Generali Philippines, was able to grow its activities yielded modest results — respectable achievement of targets in 2014. individual life premiums by 37% in 2014. Total enough given the reduced portfolio of premiums including Group Business increased properties available for sale, and competition “Technology is an indispensable tool in 19 by 27%. from real estate developers. achieving the Bank’s goals in these dynamic times," according to Ricardo V. Martin, The unit’s strategy, focusing on recurring- The sale of commercial, industrial and Executive Vice President and Group Head of premium products, increasing the size of the residential properties remained brisk given Information Technology. sales force, using sales and marketing tools to the appetite for real estate investments as “The market has somehow matured enhance sales productivity, and intensifying occasioned by the economic upswing. The Bank continued to strengthen its existing and people have realized the product familiarization and training, was crucial operations, expanding its reach, and upgrading importance of insurance in their lives, in achieving these milestones. BDO acquired One Network Bank, Inc. (ONB) in the security, capacity, technical processes and properties and businesses. There is also late 2014 to gain access to high growth areas disaster readiness of the Bank’s infrastructure. an effort on the part of the insurance “The overarching goal is to build a robust in Mindanao and Panay, as well as in market Sixty-four new branches were opened and 348 industry to educate the market.” business model that will enable GP to segments that are currently underserved by ATMs and 47 cash acceptance machines were Ma. Theresa L. Tan penetrate the top five category in weighted commercial banks. This is also BDO's way of added to the network. BDO Insurance Brokers new business premiums within a three (3) year supporting BSP's thrust to promote inclusive period,” according to Renato A. Vergel De Dios, banking in the Philippines. Continuous enhancements to IT systems President and CEO of Generali Philippines. include the roll out of a new tellering application, an upgrade of the branch Despite low interest rates, traditional products workstation operating system, and an Product Liability, Marine Hull, Stock Throughput continued to provide good profit margins. expansion of the data center furnishing Insurance and Directors and Officers Liability. At the same time, regular pay Variable Life additional capacity to support further All these allow BDOI’s corporate clients to business, which was introduced at the end expansion. Technical upgrades were also made mitigate risks as they take advantage of the of 2013, contributed more than 20% of new to the voice network and to the operating conducive economic climate and expand the business in 2014. system of the core banking application. reach of their business. Citibank Savings Bank and The Real Bank were Three hundred twenty new financial advisors integrated into the BDO network in August and Even small to medium enterprises (SMEs) have (FAs) were hired in 2014, representing a 70% September 2014, respectively. Overseas, the changed their perception of insurance. Before, increase from the number of FAs hired the first Korean representative office was opened SMEs acquired insurance primarily to comply previous year. Moreover, Generali was able to and the infrastructure standardization of the with bank requirements. “Now they see it as an increase FA productivity by 7% per advisor per Taiwan office was made. important and integral part of risk mitigation annum even with the larger manpower base. and business continuity,” Tan continues. Individual cases sold grew 24%. Recognizing the need of the times, IT Operations also strengthened disaster Three Rs best summarize the guiding principles Generali also partnered with BDO Private Bank readiness through the opening of an additional of the Bank’s non-life insurance brokering to offer insurance-based tax-funding solutions “The overarching goal is to build a backup IT operations site in Cebu as well as the unit for 2015: Reach, Relationship and to its high net-worth clients. This was aimed to robust business model that will enable periodic execution of contingency exercises for Responsiveness. provide a needs-based, total solutions approach GP to penetrate the top five category critical systems. to those seeking to fortify their estate transfer in weighted new business premiums With Reach, BDOI will open offices in new plans. Generali sees this as a growth area in within a three (3) year period.” IT Development focused on forward- markets and reach out to more clients. In the effort to highlight life insurance as a top- looking system upgrades, leveraging on new pursuit of this, the BDOI Contact Center — a of-mind solution in crafting the client’s wealth Renato A. Vergel De Dios technologies to support business expansion, Generali Philippines multi-channel hotline where the resolution of management program. comply with regulatory requirements and customer inquiries can be tracked and audited improve customer service. — was established. With Relationship, BDOI will For 2015, Generali plans to increase its sales cultivate partnerships with its clients and grow force and become the preferred provider of with them. With Responsiveness, BDOI will put employee benefit solutions among its corporate in action what it knows about its clients in a way clients, including the SME market.

18 www.bdo.com.ph BDO 2014 ANNUAL REPORT 19 persistently low rates impact interest margins,” • Real Estate Stress Test (REST) was also Global Operations REVIEW OF OPERATIONS according to Evelyn L. Villanueva, Executive regularly conducted to comply with BSP The Bank is aggressively expanding its footprint Vice President and Head of Risk Management requirements. REST results as of End- abroad to service the remittance requirements Group. December 2014 show that BDO complies of the OFWs and to present the financial with the minimum Tier 1 ratio and CAR on capabilities of BDO to foreign investors who are In 2014, RMG established the framework for the Consolidated Basis. interested in doing business in the Philippines monitoring of Basel III Liquidity Standards using through its remittance and representative Basel-prescribed parameters in the interim. The Bank will continue to focus its efforts on offices respectively. In 2014, BDO obtained 21 This is while the banking industry is awaiting proactive risk management, ensuring that additional licenses to operate in Korea, Dubai regulatory guidelines from the Bangko Sentral all activities are consistent with the Bank’s and Canada. "The Bank continues to look for ng Pilipinas (BSP). Such standards validate that strategies and risk appetite. strategic locations where it can establish its BDO has sufficient liquidity under Basel-defined presence. Existing locations are also periodically stress scenarios, being well above the minimum Investor Relations reviewed and rationalized, as needed," requirements. Through its investor relations unit, the Bank according to Anthony Q. Chua, Executive Vice reached out to more investors through President and Head of Global Operations. RMG also completed the development of the increased participation in global and local calculation engine for probability of default conferences, non-deal roadshows, investor Central Operations under Basel’s Foundation Internal Ratings forums and one-on-one meetings with existing The Bank implemented a new phonebanking Ricardo V. Martin Myla R. Untalan Based (IRB) approach for the corporate and and prospective investors. These efforts have system and a unified platform solution for its Information Technology Digital Infrastructure commercial portfolio and Advanced IRB resulted in a broader shareholder base as Customer Contact Center to automate front- approach for the consumer portfolio. shown by the increase in the Bank’s foreign office and back-office core processes for better ownership to 32.4% in 2014 from 30% in 2013. management of customer communications. Digital Infrastructure IRB refers to a set of credit-risk measurement The solution also provided more performance There was particular attention to the techniques proposed under Basel II capital BDO is seen as a progressive universal bank monitoring tools and data analytics for better establishment of Big Data infrastructure to adequacy rules for banking institutions. These and the market leader in most business lines, customer experience management. systematically provide business units with initiatives will also enable the Bank to be in with a solid business franchise, strong capital statistical and demographic data. Foremost a position to early adopt Philippine Financial and balance sheet as well as sound business BDO also employed technology to improve among the support activities in 2014 was the Reporting Standards (PFRS) 9 should it decide strategies. Given these, BDO believes that it the BDO Rewards experience, enabling it to creation and management of infrastructure for to do so. is in a good position to take advantage of the do targeted marketing campaigns while at the a strategic and enterprise-wide consolidated country’s growth prospects. With the Bank’s same time enhancing security features. customer data platform. This would allow In the same year, RMG likewise completed the financial results and growth potential, BDO’s In terms of Premises Management, aside from the Bank to develop products and services following: share price surged 60% in 2014 to PhP109.80 multi-storey office buildings put up in Quezon that are more responsive to customer needs. • Validation of the Trans-Union Bureau Score per share, outperforming both the Philippine City and Cagayan de Oro City, there were 64 Similarly, a better fraud-detection system was which will assist the Consumer Lending Stock Exchange index and the financial index new bank branches and 10 relocated ones, implemented to enhance the Bank’s capability Group (CLG) in streamlining the credit card which rose by 23% and 19%, respectively. with 51 renovations. The Group was able to to detect, accurately and expediently, payment application and decision-making process. card fraud. Consumer Collection scorecards, in addition to Application and Behavioral scorecards, For 2015, the Bank will continue to enhance are also continually being developed to its consolidated customer information assist CLG in their collection strategy to repository. It will incorporate tools to enable further optimize the collection process. efficient consumption of data for analytics and Anthony Q. Chua electronic channels platforms. • Continued to perform Rapid Portfolio Global Operations Reviews (RAPAPAP) and industry studies Risk Management to identify any vulnerabilities in the Evelyn L. Villanueva True to its mandate, the Bank’s Risk credit portfolio. For a more proactive Risk Management Management Group (RMG) continuously management of credit and market risks, evaluates its risk management framework reverse stress testing, to complement the Luis S. Reyes to ensure that it meets the challenges and regular stress testing, was institutionalized Investor Relations requirements of the markets in which the Bank to determine the level of exposure the Bank operates, including regulatory requirements. can take to still meet regulatory capital “This is especially important as the global requirements. economy struggles to gain momentum and

20 www.bdo.com.ph BDO 2014 ANNUAL REPORT 21 complete 98% of all repair requests received. Award from the World Trademark Review, in Comptrollership EXPECTATIONS IN 2015 REVIEW OF OPERATIONS recognition of efforts to protect the “BDO” Comptrollership, meanwhile, sustained its Outward Fund Transfer System was started brand. efforts in supervising the quality of the Bank’s The Philippines remains one of the region's in August 2014, and the target completion accounting, auditing, and financial reporting. top performers in 2015, with growth driven by to cover all branches and head office users is The thrust of the team for 2015 is to produce a resilient consumer sector, rising investment in May 2015. This is a browser-based system simplified but quality documentation and Marketing Communications flows, and revived government spending. replacing the existing Lotus Notes-based better efficiency at the least possible risk and In 2014, the Bank employed a focused local systems for a centralized framework and a more expense exposure for the Bank. marketing approach, exploring both the The country offers a lot of potential and is an 23 secure environment. retail and corporate segments as well as the attractive growth market, given its expanding Human Resources synergies that such combination of efforts domestic base, young population and rising per Compliance and Legal Among other inroads in Human Resources, might offer. Through these efforts, the Bank capita incomes. Opportunities for large-scale The Bank completed the updating of the an integrated Human Resource Information focused on provincial markets that offered infrastructure projects likewise abound given information sharing framework, independent System was implemented to replace multiple the most potential, as these are fueled by the country's requirements in the areas of compliance checking framework, and the stand-alone systems. This ensures one true remittances from foreign workers with transport, road network, energy/power, utilities implementation of the Foreign Account Tax version of employee information. Academe beneficiaries in the provinces. and health facilities, among others. Compliance Act, as well as the SAS Anti- partnerships were strengthened to provide a Money Laundering monitoring system. These steady recruitment source of targeted college The digital platform and social media were With its strong business franchise, growth accomplishments all ensure BDO’s compliance and university graduates. also used as main channels of the Bank’s strategy and solid capital base, BDO is with regulatory requirements. marketing thrust for the past year, recognizing well-placed to take advantage of market On the employee relations front, the its prevalence and popularity among existing opportunities and take an active part in the For 2015, the Compliance Unit will tap the economic provisions of the 2013-2015 and future customers. “BDO will continue country's economic expansion. support of the Information Technology Group Collective Bargaining Agreement (CBA) was to explore ways to reach out to customers in implementing automation initiatives and implemented. A series of partnership fora with using traditional and non-traditional means,” support systems. representation from Human Resources, Branch according to Rafael G. Besa, Senior Vice Management , and the Union Stewardship President and Group Head for Marketing Through its Legal Services Group, the Bank fast- were conducted in regional clusters to Communications. After careful assessment of tracked the resolution of non-loan related cases promote common understanding and standard the market’s preferred venue for additional in favor of the Bank. As a result, the number of appreciation of policies. This tripartite exercise information, BDO launched its official Facebook cases dropped more than 34% in 2014. provided an effective channel for resolutions page in November 2014. of employee issues and concerns in various The Group was also able to collect long- geographical areas. outstanding receivables from unreturned security deposits. For 2015, the Bank will continue to create new policies and revisit existing ones to ensure In terms of Intellectual Property, the Bank won relevance with changing business needs and to the 2014 Best Asia Pacific Team of the Year meet global models in business operation.

Angelita O. Cortez Office of the Corporate Rafael G. Besa Secretary Marketing Communications

Dennis B. Velasquez Evelyn C. Salagubang Central Operations Group Human Resources

Rebecca S. Torres Lucy C. Dy Compliance Comptrollership

22 www.bdo.com.ph BDO 2014 ANNUAL REPORT 23 AWARDS AND AWARDSCITATIONS AND CITATIONS

25

BEST BANK

Best Bank: BDO (5 Consecutive Years), Alpha Southeast Asia Best Domestic Bank in the Philippines: BDO Unibank, Asiamoney Best Bank in the Philippines (2 Consecutive Years, 2013-2014), Euromoney AWARDS AND Best Bank in the Philippines (5 Consecutive Years, 2010-2014), FinanceAsia Best Bank in the Philippines, Global Finance CITATIONS Best Domestic Bank: BDO (2 consecutive years), The Asset

BEST INVESTMENT BANK

Best Investment Bank: BDO Capital & Investment Corp. (8 Consecutive Years), Alpha Southeast Asia Best Investment Bank in the Philippines: BDO Capital & Investment (9 consecutive years, 2006- 2014), FinanceAsia Best Domestic Investment Bank: BDO Capital & Investment (9 consecutive years), The Asset

BEST PRIVATE BANK Best Private Banking Services Overall in the Philippines (2013-2014), Euromoney Best Private Wealth Management Bank: BDO Private Bank (7 Consecutive Years), Alpha Southeast Asia Best Private Banking Services Overall in the Philippines (2013-2014), Euromoney Best Private Bank in the Philippines (7 Consecutive Years, 2008-2014), FinanceAsia Best Private Bank - Philippines (2010-2014), The Asset

INDIVIDUAL AWARDS

Asian Corporate Director of the Year: Teresita Sy-Coson, Corporate Governance Asia Asia's Best CEO (Investor Relations): Teresita Sy-Coson, Corporate Governance Asia Asia's Best CFO (Investor Relations): Pedro M. Florescio III, Corporate Governance Asia Best Investor Relations Professional (Philippines): Luis S. Reyes, Jr., Corporate Governance Asia 2nd Asian Company Secretary of the Year Award (2 consecutive years): Edmundo L. Tan, Corporate Governance Asia One of the most Astute Investors in Philippines Peso Bonds: Ryanna Berza-Talan and Bernard Florencio, The Asset

BDO 2014 ANNUAL REPORT 25 CORPORATE PROFILE CORPORATE SOCIAL RESPONSIBILITY 27

OTHER AWARDS

Syndicated Loan House of the Year: BDO Capital & Investment, Asia Pacific Loan Market Association (APLMA) Best Trade Finance Bank , Alpha Southeast Asia Best FX Bank for Corporate & Fis, Alpha Southeast Asia Most Organised Investor Relations & Best Senior Management IR Support, Alpha Southeast Asia Best of the Best Managed Companies 2014 - Best Managed Company for the Philippines, Medium Cap (2005-2006), Asiamoney Best Local Cash Management Bank in the Philippines as voted by small-sized corporates, Asiamoney Best Local Domestic Cash Management Services in the Philippines as voted by large-sized corporates, Asiamoney Best of the Best Banks 2014 - Best Domestic Debt House in the Philippines (2006-2010): BDO Capital & Investment Corporation, Asiamoney Best Local Cross-Border Cash Management Services in the Philippines as voted by small-sized corporates, Asiamoney Philippine Domestic Project Finance Bank of the Year, Asian Banking & Finance Online Banking Initiative of the Year, Philippines, Asian Banking & Finance SME Bank of the Year, Philippines, Asian Banking & Finance Silver awardee for Corporate Social Responsibility Program of the Year, Asian Banking & Finance Top Commercial Bank in Generating Remittances from Overseas Filipinos (for the year 2013), Bangko Sentral ng Pilipinas Outstanding PhilPass Participant Servicing Customer e-Payments - Commercial Bank (for the year 2013), Bangko Sentral ng Pilipinas Recipient of Corporate Governance Asia Recognition Awards for 10 consecutive years, Corporate Governance Asia Recipient of Best CSR, Corporate Governance Asia Recipient Best Corporate Communications Team, Corporate Governance Asia Recipient Best Investor Relations by Company (Philippines), Corporate Governance Asia Best Relationship Management in the Philippines (2012 and 2014), Euromoney Best Foreign Exchange Bank in the Philippines, FinanceAsia Trade Finance Provider, Philippines, Global Finance Best Investment Bank in the Philippines: BDO Capital & Investment, Global Finance Trusted Brand Gold Award (2008-2014), Reader's Digest Strongest Balance Sheet in the Philippines for 2014, The Asian Banker Best Cash Management Bank in the Philippines, The Asian Banker One of the Top Investment Houses in the Philippines, The Asset One of the Top Investment Houses in the Philippines: BDO Private Bank, The Asset Best Deal, Philippines for Century Pacific Food PhP3.2 billion IPO: BDO Capital & Investment, The Asset Top Bank in the Philippines in the Top 1000 World Banks Ranking, The Banker 2014 Asia Excellence Brand Award, Yazhou Zhoukan

26 www.bdo.com.ph BDO 2014 ANNUAL REPORT 27 CORPORATE SOCIAL RESPONSIBILITY CORPORATE

SOCIAL That millions of Filipino communities are Relief Operations whatever the weather and however difficult the RESPONSIBILITY vulnerable to the effects of disasters, natural situation. and human-induced, and that there is need to Past disasters will not be the last to threaten help them rebuild their lives are the focus of communities. To respond to this continuing Toward this end, BDOF, again in partnership the activities of BDO Foundation — the Bank’s reality, BDOF adopted an integrated approach with SM Foundation, completed and turned corporate social responsibility arm. in its relief operations through the active over two school buildings in Capiz and Aklan engagement of BDO volunteers in over 875 in 2014. These are two-storey buildings with “Sometimes, dreams can be challenged branches and satellite offices, and a supply chain four classrooms each. Three (3) more are under 29 especially by external circumstances. We at of SM stores to pack the goods. BDO’s extensive construction in Tacloban City, Negros Occidental “More than the recognition, BDO seek to enable people to dream again. branch network has been helpful in the conduct and Iloilo, all on the Yolanda corridor. And the first step after relief operations is to of such relief activities. however, what drives BDO and rebuild and rehabilitate,” according to Maureen its foundation to carry on its C. Abelardo, BDO Foundation President. School buildings projects is the knowledge that For the year 2014, BDO, through its foundation, 2 these help improve the lives pursued its projects on education (school The shortage of classrooms in Philippine public TWO-STOREY buildings), health (rural health centers), and schools is a lingering problem. Calamities SCHOOL of individuals and families — shelter (resettlement housing) for Filipinos worsen the situation. When these occur, existing BUILDINGS IN the less privileged and the across the country, especially those who classrooms and school buildings are damaged or AKLAN AND CAPIZ had been battered by numerous typhoons destroyed altogether, while the remaining ones vulnerable, those who need and other recent disasters. It also undertook are used as evacuation centers. help the most.” capacity-building activities to enable communities to retool themselves and make Amid these realities, BDOF recognizes that them more resilient. children need the regularity of daily learning,

28 www.bdo.com.ph BDO 2014 ANNUAL REPORT 29 CORPORATE SOCIAL RESPONSIBILITY

BDOF recognizes that there is not just a need to build houses, but to establish functioning communities. These resettlement sites are not just made up of individual housing units. They come with a multi-purpose hall or community center where residents can hold workshops and other socio-civic, religious and other activities. These community centers are equipped 31 with a kitchenette, comfort rooms and other furnishings and fully funded by BDO employees and officers. 45 MOTORIZED FISHING BOATS

2015: SCHOOL BUILDINGS, RURAL HEALTH CENTERS, SHELTER SITES Livelihood

Forty-five motorized boats with fish nets were donated by BDO employees and officers to Project BANGKA (Bigay Agad NG Kabuhayan) of Regina Rica Foundation for the residents of Barangay Santikan, San Dionisio, Iloilo.

Together with the Federation of Filipino-Chinese Shelter Chambers of Commerce, Inc. (FFCCCII), BDO built ten (10) one-storey school buildings with In Mati, Davao Oriental and in Sta. Fe, Leyte, two two classrooms each in Sorsogon, Laguna, resettlement sites began construction in 2014. Sultan Kudarat, North and South Cotabato, The former, with 69 housing units, is for victims Ilocos Sur, Zamboanga, Leyte and Bohol. of typhoon Pablo. The latter is for persons with disabilities and the victims of typhoon Yolanda, With the Philippine Geothermal Production through the Foundation for These-Abled Company, Inc. (PGPC), BDOF completed and Persons, Inc (FTI). The Leyte resettlement site turned over a two-storey, four-classroom will have 100 units, all pre-fab and designed by building for Baybay Elementary School in German technology. Catarman, Samar. Similar projects are under way in Pandan, Antique (in tandem with US- Philippines Society) and San Miguel, Leyte with Injap Investments, Inc.).

2 RESETTLEMENT SITES WITH 69 HOUSING UNITS 1 TWO-STOREY, 4 CLASSROOM BUILDING

10 TWO-STOREY SCHOOL BUILDINGS WITH 2 CLASSROOMS EACH

30 www.bdo.com.ph BDO 2014 ANNUAL REPORT 31 CORPORATE GOVERNANCE Onward, with passion and commitment This is consistent with “Building dreams for others, rebuilding lives” — the theme of what In 2015, BDO through its foundation expects the Bank, through BDO Foundation, does for to see the full delivery of projects — school communities across the country. The theme also buildings, rural health centers and shelter sites serves as a road map of the Bank’s continued – which commenced the previous year. It will pursuit to make a difference. continue to align its activities in the direction of relief, rehabilitation and reconstruction True rewards 33 especially along the Yolanda corridor. There will also be an effort to help communities in other Testaments to the Bank’s passion and areas — equally devastated by disaster but which commitment are the Asia Responsible have not received ample attention and support, Entrepreneurship Awards 2014 for Social thus getting left behind in the long process of Empowerment, and the CSR Program of the year healing and rebuilding. (Silver) from the Asian Banking and Finance.

It also recognizes that an important component “More than the recognition, however, what drives to delivering on this commitment is forging BDO and its foundation to carry on its projects is partnerships with foreign and local companies/ the knowledge that these help improve the lives agencies that share its values and objectives. of individuals and families — the less privileged For 2015 and the years ahead, BDO with and the vulnerable, those who need help the its foundation affirms its leadership and its most,” says Abelardo. commitment to initiate and support community- based programs that uplift the lives of CORPORATE marginalized sectors especially those in disaster- affected areas. GOVERNANCE

32 www.bdo.com.ph BDO 2014 ANNUAL REPORT 33 BDO Unibank Inc. is at the forefront in good corporate CORPORATE governance. The Bank upholds the highest standards of ethical behavior and responsible conduct of business: CORPORATE GOVERNANCE GOVERNANCE protecting the interests of, and creating value for its BOARD COMMITTEES shareholders. Anchored on the principles of accountability, • Recommending the appointment and fairness, integrity, transparency and performance, BDO’s To assist the Board in discharging its roles and removal of external auditors, fixing of audit governance philosophy creates a corporate culture that functions effectively, it delegates to nine (9) fee and approval of payment of fees for any promotes the institution’s sustainability. Committees specific responsibilities based on other services rendered by the auditors. clearly defined mandates as follows: • Oversight of the Bank’s financial reporting Executive Committee process and the disclosure of its financial 35 information to ensure that the financial GOVERNANCE STRUCTURE supervision and oversight of the Bank and its Chairperson: statements are correct, sufficient, credible, wholly-owned subsidiaries, and affiliates to Teresita T. Sy and compliant with regulations governing The effective governance of the Bank is a the extent possible. It sets the strategic vision, financial reporting. collective effort of the Bank’s directors, officers direction and long-term goals of the Bank, Members: and staff. approves and monitors financial plans, annual Jesus A. Jacinto, Jr., Josefina N. Tan, • Reviewing, with management, the financial budgets, capital expenditures, major acquisitions Nestor V. Tan, Antonio N. Cotoco and statements before submission to the Board. BOARD OF DIRECTORS and divestments, annual and interim financial Guia C. Lim (commencing April 25, 2014) statements, enterprise risk strategy, review • Approving the annual audit plans of the The Board is composed of 11 members, 4 of management performance, develop succession The Board has empowered the Executive internal and external auditors and reviewing whom are independent directors and aided by 3 plans for the Board and CEO and fulfills Committee to act on its behalf as the main their reports of examination, including that advisers. All are professionals from various fields corporate social responsibility to ensure that approving body for Bank exposures, particularly of wholly-owned subsidiaries focusing on of expertise with the background, qualifications, the Bank is managed in a manner that fulfills approval/confirmation of credit proposals, significant findings and their resolutions. skills and competencies to collectively discharge stakeholders’ expectations. investments, disposal of acquired assets the Board’s responsibilities effectively. These and other projects or initiatives to enhance • Reviewing and evaluating, together with the fields include banking, accounting, finance, law, The Board conducts a yearly self-assessment of the Bank’s operating and service delivery external and internal auditors, the system of merchandise marketing, strategy formulation, its performance. capabilities. internal and financial controls, governance bank regulations and risk management. processes and risk management policies In the conduct of its affairs, the Board holds The Committee met 51 times in 2014 with Ms. as designed and implemented by senior The Board is elected by the shareholders. It regular monthly meetings and special meetings Teresita T. Sy attending 42 meetings, Mr. Jesus management for adequacy, effectiveness and bears the ultimate responsibility for the Bank’s as needed. In 2014, the Board met 13 times to A. Jacinto, Jr., 47 meetings, Mr. Nestor V. Tan, 36 improvements; it has authority to investigate governance, strategy, risk management and evaluate and approve various matters related to meetings, Ms. Josefina N. Tan, 50 meetings, Mr. any matter within its Terms of Reference. financial performance. Its primary role is to the Bank’s operations. Antonio N. Cotoco, 42 meetings and Ms. Guia C. protect and enhance shareholder value through Lim, 46 of 49 meetings. In performing its oversight responsibilities, the Audit Committee provides to the Board assurance on the existence of an effective ATTENDANCE Audit Committee internal control environment that ensures Board of Directors Meetings 2014 the efficiency and effectiveness of operations, Chairperson: reliability of financial and other management Directors No. of Meetings Attended Total No. of Meetings Percentage Rating Jose F. Buenaventura (Independent Director) information, adequacy of disclosures and 1. Teresita T. Sy 13 13 100% compliance with relevant laws and regulations. 2. Jesus A. Jacinto, Jr. 13 13 100% Members: 3. Nestor V. Tan 13 13 100% Jones M. Castro, Jr. (Independent Director), For the 2014 financial year, the Audit Committee Jimmy T. Tang (Independent Director), has reviewed the audited financial statements 4. Josefina N. Tan 13 13 100% Jesus A. Jacinto, Jr. with management and external auditors. It 5. Antonio C. Pacis 13 13 100% believes that the financial statements are fairly 6. Jimmy T. Tang 12 13 92% Advisers: presented in conformity with the relevant 7. Cheo Chai Hong 11 13 85% Shirley M. Sangalang (until April 25, 2014) and financial reporting standards in all material 8. Jones M. Castro, Jr. 13 13 100% Corazon S. de la Paz-Bernardo aspects. It reported that it has evaluated the effectiveness of the internal controls, risk 9. Jose F. Buenaventura 11 13 85% The Audit Committee provides oversight management systems and governance processes 10. Christopher A. Bell-Knight 13 13 100% of the internal and external audit functions of the Bank based on information obtained 11. Gilberto C. Teodoro, Jr.* 7 8 87% and ensures both the independence from from the External Auditor, the assurance 12. Henry T. Sy, Jr.** 3 5 60% management of internal audit activities. Other provided by the Internal Auditor, and additional responsibilities include: reports and information requested from Senior * Elected as Independent Director on April 25, 2014 vice Henry T. Sy, Jr. ** Term ended April 25, 2014

34 www.bdo.com.ph BDO 2014 ANNUAL REPORT 35 CORPORATE GOVERNANCE Management. The Bank’s systems are assessed Compliance without the presence of senior over-all performance, profile of funds and when needed. The Committee also reviews risk as generally adequate and its operational risk is management to discuss various matters/issues accountabilities under its management, industry reports that control and monitor risk exposures deemed moderate. outside of the regular meetings of the Audit and position, and the risk management reports. and limits. Risk Management Committees. The results of The Committee held 12 meetings, all of which these sessions were discussed with the Bank’s In 2014, the Committee approved the In 2014, the Committee conducted regular were attended by Ms. Corazon de la Paz- Chairperson, President and other Executive introduction of new business/products discussions on the Bank’s risk exposures and Bernardo. All other members attended 11 times. Directors. to serve client requirements better and mitigation of these risks, approved the renewal enhance existing products to improve service of risk management policies and limits and 37 Corporate Governance Committee The Committee also initiated the enhancements delivery. It undertook revision of market newly-developed risk management models of corporate governance policies of the pricing methodology, product manuals and and reviewed the performance of the existing Chairperson: Bank with the approval of the Related Party reclassification of IMA/TA accounts to address risk management models. It also reviewed and Jones M. Castro, Jr. (Independent Director) Transactions Policy, establishment of the Related regulatory concerns. It also established updated the Terms of Reference in compliance Party Transactions Committee, adoption of a guidelines in the integration and consolidation with BSP Circular 749. Members: formal Dividend Policy and revisions of the Term of Deutsche Bank accounts. It performed self- Jesus A. Jacinto, Jr., Limit of Independent Directors, Whistle Blower assessment on Trust risk rating to establish The Committee met 12 times in 2014 with Jimmy T. Tang (Independent Director), Policy and Code of Conduct and Business Ethics baseline and determine areas for improvement. Messrs. Jones M. Castro, Jr. and Nestor V. Tan Christopher A. Bell-Knight and the creation of the Information Technology attending all meetings, while Ms. Josefina N. Tan Steering Committee. The Committee met 13 times with Messrs. and Mr. Christopher A. Bell-Knight were present The Corporate Governance Committee Antonio C. Pacis, Nestor V. Tan and Ador A. in 11 meetings. is primarily tasked to assist the Board in To ensure full disclosure and transparency, the Abrogena attending all meetings. Mr. Cheo Chai formulating the policies and overseeing the Committee undertook the submission of Annual Hong was present in 12 meetings. Mr. Gilberto Nominations Committee implementation of the corporate governance Corporate Governance Report to the SEC and C. Teodoro, Jr. attended all meetings since his practices of the Bank and its subsidiaries updating of the corporate website. appointment vice Mr. Henry T. Sy, Jr., and Mr. Chairperson: and relevant affiliates. Annually, it conducts Henry T. Sy, Jr. was present in three meetings Henry T. Sy, Jr. (until April 25, 2014), the performance of self-evaluation of the The Committee met six times in 2014 with held until April 2014. Josefina N. Tan (commencing April 25, 2014) Board of Directors, its committees, executive Messrs. Jones M. Castro, Jr. and Jesus A. Jacinto, management and peer evaluation of directors Jr. attending all meetings, while Messrs. Jimmy T. Risk Management Committee Members: to assess the overall effectiveness of the Board. Tang and Christopher A. Bell-Knight attended 5 Jose F. Buenaventura It also oversees the implementation of the of 6 meetings. Chairperson: (Independent Director- commencing April 25, Directors Orientation and Continuing Education Jones M. Castro, Jr. (Independent Director) 2014); and Jimmy T. Tang (Independent Director) Program. Trust Committee Members: The Nominations Committee leads the process In 2014, it undertook the updating and revisions Chairperson: Nestor V. Tan; Josefina N. Tan; of identifying and recommending candidates of the Corporate Governance Manual to align Antonio C. Pacis Christopher A. Bell-Knight for appointment as Directors and for other key with the requirements of SEC and the ASEAN positions taking into account the experience, Corporate Governance Scorecard (ACGS), Members: The Risk Management Committee is responsible expertise, knowledge and skills of the candidates, published the Bank’s compliance with OECD Gilberto C. Teodoro, Jr. for the development of the Bank’s risk policies, giving full consideration to succession planning principles on Corporate Governance and (Independent Director-commencing April 25, defines the appropriate strategies for identifying, and the leadership needs of the Bank. It conducted again the annual performance 2014); Cheo Chai Hong; Nestor V. Tan; quantifying, managing and controlling risk recommends the composition and chairmanship review of the Board, committees, directors Ador A. Abrogena and exposures including preventing and/or of the various committees. It reviews the and executive management. On continuing Henry T. Sy, Jr. (until April 25, 2014) minimizing the impact of losses when they occur. structure, size and composition of the Board, education, 3 separate sessions of the Exclusive It supports the Board in performing its risk including the balance of skills, knowledge and Corporate Governance Seminar were conducted The Trust Committee reviews and approves oversight functions and reviews the over-all risk experience and the independence of the non- by accredited training providers of the SEC transactions between trust and/or fiduciary management philosophy, risk strategy and risk executive Directors, and recommends changes with a total of 87 attendees from the Board of accounts, the investment, reinvestment and tolerance levels, oversees the implementation if necessary. It also reviews all nominations Directors and Senior Management of the Bank disposition of funds or property, offering of and review of the risk management plan on for the appointment, re-appointment, election and its subsidiaries. new products and services, establishment an integrated enterprise-wide basis, system of or re-election of Directors of the Bank and and renewal of lines and limits with financial limits of management of discretionary authority members of the various committees considering The Independent Directors and Non-Executive institutions, investment outlets and delegated by the Board and takes immediate their performance, commitment and ability Directors, chaired by lead director Jones M. counterparties, accepts and closes trust/other corrective actions when breached. It is also to contribute to the Board and makes Castro, Jr., conducted four (4) executive sessions fiduciary accounts. It evaluates trust and responsible for reassessing the continued recommendations to the Board on appointment during the year with the External Auditor and other fiduciary accounts at least once a year relevance, comprehensiveness and effectiveness of new Directors, when necessary. Heads of Internal Audit, Risk Management and and reviews the Trust and Investment Group’s of the risk management plan, and revises it

36 www.bdo.com.ph BDO 2014 ANNUAL REPORT 37 CORPORATE GOVERNANCE confirmation by majority vote on the Annual management. In 2014, the Committee approved the Information Technology Steering Stockholders’ meeting the Bank’s significant 5. Creation of the Related Party Transactions nominations of the regular directors of the Bank, Committee transactions with related parties. Committee - to ensure that RPTs are conducted a search for an independent director conducted in manner that prevents the and nominated Mr. Gilberto C. Teodoro, Jr.. It Chairperson: The Committee was constituted on December 6, occurrence of improper conflict of interest. evaluated and recommended the appointment Gilberto C. Teodoro, Jr. (Independent Director) 2014. No meeting was held in 2014. Prior to the 6. Adoption of an expanded Code of Conduct of two (2) Executive Vice Presidents and two establishment of the Committee, the review and and Business Ethics - that is applicable to (2) Senior Vice Presidents. It also revised its Members: approval of Related Party Transactions (RPTs) Directors, Officers and employees of the 39 Terms of Reference specifically the process Nestor V. Tan; Ricardo V. Martin were done by the full Board of Directors with Bank. It covers the Bank’s commitment to of identifying candidates for appointment as the Director who is a related party abstaining a gender friendly workplace, concern for Directors. The Information Technology Steering from the deliberation and voting. In performing occupational health, safety and environment, Committee provides oversight and governance their oversight functions, the Related Party transparency, integrity and accountability, The Committee met 5 times in 2014 with Ms. over the Bank’s IT functions, including approvals Transactions Committee (RPTC) will review compliance with laws and regulations, Josefina N. Tan and Mr. Jimmy T. Tang attending of information technology-related policies and all material RPTs and endorse to the Board of standards of behavior and personal conduct all meetings, while Mr. Henry T. Sy, Jr. in 2 practices of the Bank and applicable guidelines. Directors for approval, with the Director who is and ethics of doing business. meetings and Mr. Jose F. Buenaventura in 3 It informs the Board of both internal and a related party abstaining from the deliberation 7. Adoption of a formal Dividend Policy - as meetings. external IT-related developments and activities, and voting. a way of recognizing the importance of potential challenges and risks, progress versus providing a stable and sustainable dividend Compensation Committee strategic objectives and major IT projects. It BEYOND COMPLIANCE stream consistent with its commitment to approves and endorses to the Board IT-related shareholders. The Dividend Policy Statement Chairperson: Jimmy T. Tang (Independent best practices, strategic plans, policies and After putting in place the necessary governance is published in our corporate website at Director) procedures. mechanisms to promote good governance www.bdo.com.ph/corporate governance across the institution, the Bank has continued to under Company Policies. Members: Jesus A. Jacinto, Jr.; Josefina N. Tan; After it was constituted by the Board of reinforce and strengthen its structure, processes 8. Release of audited financial statements and Teresita T. Sy Directors on August 30, 2014, the Committee and practices of governance through adoption not later than 60 days - after the close of held two (2) meetings to approve the Bank’s of best practices focused on the following key the financial year to promote transparency The Compensation Committee provides Information Technology Model, the IT Table of elements: and full disclosure of the results of oversight on directors’ compensation and Organization, IT Group Job Descriptions and the operations of the Bank to various remuneration of senior management consistent Enterprise Technical Contingency Plan of the 1. Composition of the Board – the number stakeholders and the general public. with the Bank’s culture, corporate values and Bank and endorse these for the approval of the of Independent Directors was increased 9. Improvements in stakeholder engagement strategic objectives, effectively aligned with Board of Directors. from 3 to 4. Independent Directors and - through the implementation of various prudent risk taking and commensurate with Non-Executive Directors would constitute initiatives to recognize their roles, promote corporate and individual performance. It also Members of the Committee attended all 63.63% (7 of 11 members) of the Board equitable treatment and protection of ensures consistency of the compensation meetings. who are independent of management and their rights. Additional information could policies and practices as applied across could exercise unfettered and independent be found in the Definitive Information the Group with the objective of attracting, Related Party Transactions Committee judgment, free from any business or other Statement. motivating, rewarding and retaining quality relationship that could materially interfere personnel and creating incentives for delivering Chairperson: with the exercise of their ability to act in AWARDS AND RECOGNITION long-term performance within established risk Jose F. Buenaventura (Independent Director) the best interest of the Bank and other limits. stakeholders. These awards reflect our deep commitment Members: 2. Term Limit of Independent Directors – to the practice of corporate governance to In 2014, it reviewed the increase in Fringe Christopher A. Bell-Knight; Jimmy T. Tang reduced to a total of 9 years of service which meet stakeholders’ expectations, fulfill our Benefits Program of officers and staff (Independent Director) and Jones M. Castro, Jr. is the threshold of foreign jurisdictions fiduciary role, and ensure the sustainability implemented thru the SM E-card. (Independent Director-Alternate Member) in determining that directors are still of BDO as an institution. Adviser: Jesus A. Jacinto, Jr. independent. The Committee held one (1) meeting in 2014 3. Selection of Board Members - using an • Corporate Governance Asia with all the members in attendance. The Related Party Transactions Committee external database to the extent possible and • Philippine Stock Exchange assists the Board in its oversight of the conduct identifying the qualifications of directors • Institute of Corporate Directors of all Related Party Transactions (RPTs) to aligned with the Bank’s strategic directions Top 50 Publicly-Listed Companies in the protect the interests of the Bank and its and promoting diversity of the Board. ASEAN Corporate Governance Scorecard stakeholders. It ensures proper disclosure of all 4. Executive Sessions of Independent and • Asian Company Secretary of the approved RPTs in accordance with applicable Non-Executive Directors - chaired by a Lead Years 2013 and 2014 legal and regulatory requirements and Director without the presence of senior

38 www.bdo.com.ph BDO 2014 ANNUAL REPORT 39 BOARD OF DIRECTORS BOARD OF DIRECTORS L-R (standing): Atty. Edmundo L. Tan, Cheo Chai Hong, Jimmy T. Tang, Jones M. Castro, Corazon S. De la Paz-Bernardo, Josefina N. Tan, Gilberto C. Teodoro, Jr., Jose F. Buenavantura, Antonio C. Pacis, Jose T. Sio; L-R (seated): Nestor V. Tan, Teresita T. Sy, Christopher A. Bell-Knight, Jesus A. Jacinto, Jr., Washington Z. SyCip 41

40 www.bdo.com.ph BDO 2014 ANNUAL REPORT 41 DIRECTORS' NESTOR V. TAN PROFILE President & CEO TERESITA T. SY 57, Filipino, is the President and CEO of BDO. He Chairperson also concurrently holds vice chairmanships and/ or directorships in the following subsidiaries of BDO Unibank, Inc.: BDO Capital & Investment BOARD OF DIRECTORS

Corporation, BDO Insurance Brokers, Inc., BDO DIRECTORS' PROFILE Leasing and Finance, Inc. (PLC), BDO Private 64, Filipino, is the Chairperson of BDO Unibank, Bank, Inc., and BDO Remit (USA), Inc. He is also Inc. and was first elected to the Board in 1997. a Director in Generali Pilipinas Life Assurance Concurrently, she serves as the Chairperson, Vice Company, Inc., Generali Pilipinas Insurance Co., Chairperson, and/or Director of various subsidiaries SM Keppel Land, Inc., Asian School of Business and affiliates of BDO such as BDO Private Bank, & Technology as well as directorship in the Inc., BDO Leasing & Finance, Inc., BDO Capital & Advisory Board of Mastercard Worldwide. He Investment Corporation, BDO Foundation, Inc., 43 also concurrently holds chairmanship of BDO Generali Pilipinas Holding Company, Inc., Generali Strategic Holdings, Inc. and Megalink, Inc. He Pilipinas Life Assurance Company, Inc., and is a Trustee of the following: BDO Foundation, Generali Pilipinas Insurance Co., Inc. She is the Vice Inc., Pinoy Me Foundation, De La Salle Chairperson of SM Investments Corporation and University Board of Advisors, Asian Institute of Adviser to the Board of SM Prime Holdings, Inc. She Management and National Industry Academe also sits as Chairperson, Vice Chairperson and/or Council. Mr. Tan’s banking career includes Director of Multi Realty Development Corporation, 15 years of international experience with the Belleshare Holdings, Inc. (formerly SM Commercial Mellon Bank (now Bank of New York-Mellon) in Properties, Inc.), SM Mart, Inc., SM Retail, Inc., Pittsburgh, PA, the Bankers Trust Company (now Prime Metroestate Inc. (formerly Pilipinas Makro, Deutsche Bank) in New York, and the Barclays Inc.), and First Asia Realty Development Corp. A Group in New York and London. Prior to joining graduate of Assumption College, she brings to the Bank, he was Chief Operating Officer for the board her varied expertise in banking and the Financial Institutions Services Group of finance, retail merchandising, mall and real estate BZW, the investment banking subsidiary of the development. Barclays Group. He holds a Bachelor’s Degree in Commerce from De La Salle University and received his MBA from Wharton School, University of Pennsylvania.

CHRISTOPHER A. BELL-KNIGHT Director JESUS A. JACINTO, JR. Vice Chairman 70, Canadian, was elected Director of BDO Unibank, Inc. on July 27, 2013. Until his election as Director, Mr. Bell-Knight was acting as Adviser to the Board of BDO Unibank for more than two years. He also previously 67, Filipino, has been elected Vice Chairman served as Director of BDO Unibank from of BDO since May 1996, and is concurrently May 2005 until September 2010. He was the Chairman and President of BDO Insurance an Independent Director of Dumaguete Brokers, Inc. He also heads Jaces Corp. as City Development Bank Philippines from Chairman and President; and Janil Realty, March 2007 to March 2013. He is currently a Inc. and JAJ Holdings, Inc. as President. consultant to the Board of Dumaguete City He is likewise Director of Bayer Phil., Inc. Development Bank of the Philippines. He was Formerly, he was Director and Executive Vice formerly a Director of Solidbank Corp. and President of CityTrust Banking Corp.; Director Vice President and Country Head of The Bank of CityTrust Investments Phil. and CityTrust of Nova Scotia. He has had over forty years of Finance Corp.; and Vice President and banking experience in England, Canada, and Managing Partner of Citibank N.A. He holds a Asia of which thirty-five years were spent in Bachelor’s degree in Business Administration credit and marketing. He is an Associate of from Fordham University in New York City the Chartered Institute of Bankers – British, an and MBA (International Business) from Associate of the Institute of Canadian Bankers, Columbia University, New York City. and a Fellow of the Institute of Corporate Directors. He studied at Frome Grammar School, Somerset, England and universities both in England and Canada.

42 www.bdo.com.ph BDO 2014 ANNUAL REPORT 43 GILBERTO C. TEODORO, JR. Independent Director CHEO CHAI HONG Director 50, Filipino, was elected Independent Director of the Bank on April 25, 2014. He was formerly Chairman of Suricon Resources

62, Singaporean, was elected Director of BDO Corporation and PNP Foundation, Inc. He is DIRECTORS' PROFILE in May 2010. He currently sits as Director of also a member of the Board of Directors of UOB Global Capital Private Limited, United Philippine Geothermal Production Company, Overseas Bank (Thai) Public Company Limited, Incorporated, Canlubang Sugar Estate and UOB International Investment Pte Ltd., UOB member of the Board or Advisors of Seawood Asset Management Ltd. and the Anglo-Chinese Resources, Incorporated. He served as Schools Foundation Ltd. He is Managing Secretary of National Defense from 2007 to Director of Group Credit and Head of 2009 and was a Member of the Philippine 45 Corporate Planning and Strategy Department House of Representatives from 1998-2007. He of UOB Singapore. He holds an Honour’s trained under former Solicitor General Estelito Degree in Business Administration from the P. Mendoza Esq. and was involved in a wide University of Singapore. range of issues — constitutional, corporate, criminal, civil, and administrative and in pro- bono work to assist various indigent litigants from 1990 to 1997. He holds a Bachelor of Science in Commerce degree majoring in Management of Financial Institutions from the De La Salle University; Bachelor’s degree in Law (LLB) from the University of the Philippines; and Masters in Law degree (LLM) from the Harvard Law School, USA. He placed first in the Philippine Bar Examinations of 1989 and was admitted to the State Bar of New York.

JOSEFINA N. TAN Director ANTONIO C. PACIS Director 69, Filipino, was elected Director of BDO in July 2007. Concurrently, she serves as President/ Director of BDO Private Bank, Inc. She is also 74, Filipino, was elected Director of BDO in Chairman of the Board of Miriam College June 2004. He currently serves both BDO and and a Trustee of Development Center for BDO Capital & Investment Corporation as Finance, Laura Vicuña Foundation and Finex a director. He has been in law practice since Foundation. She was a Director of Banco de 1967, counseling bank and corporate clients Oro Universal Bank from 2001 to August 2005. in the areas of regulatory, business, corporate She was also Executive Vice President of the and trust law, and individuals in the areas of former Far East Bank & Trust Co.; Director family law and estate plans. In the course of his and President of FEB Leasing & Finance practice, he has served in various capacities in Corp.; Executive Director and Trustee of FEB companies upon invitation of clients. He holds Foundation, Inc.; and Executive Vice President degrees from the Ateneo de Manila University of FEB Investments, Inc. until 2000. She was (AB), from the Ateneo School of Law (LLB) and a Director of Equitable PCI Bank, Inc. from from the Harvard Law School (LLM). September 2005 until its merger with BDO in May 2007.

44 www.bdo.com.ph BDO 2014 ANNUAL REPORT 45 JONES M. CASTRO, JR. Independent Director JOSE F. BUENAVENTURA Independent Director 66, Filipino and American, was elected Independent Director of the Bank on April 20, 2012. He has forty-two years of banking expertise, with thirty-two years of international 80, Filipino, was elected Independent banking experience. From 2009 to 2011, Mr. Director of BDO Unibank on April 19, Castro was the Area Head for South and DIRECTORS' PROFILE 2013. He is a Senior Partner of the Southeast Asia of the Wells Fargo Bank, San Romulo Mabanta Sayoc & De Los Angeles Francisco. As Area Head, he managed twelve Law Offices since 1976. He is President countries, eleven overseas offices, one hundred and Director of Consolidated Coconut two team members and US 3 Billion dollars Corporation. He is likewise Director and in loans. From 2006 to 2009, Mr. Castro was Corporate Secretary of 2B3C Foundation, Regional Head for Latin America 1, including Inc. and Peter Paul Philippines Corporation. the Caribbean, of the Wachovia Bank, Miami, He is also a Member of the Board of BDO 47 and managed twenty-five countries, three Securities Corporation, Capital Managers & overseas offices, thirty team members and Advisors, Inc., Cebu Air, Inc. (PLC), GROW, US 1.8 Billion dollars in loans. From 2005 to Inc., GROW Holdings, Inc., Hicap Properties 2006, he was Executive Vice President and Corporation, Himap Properties Corporation, International Banking Group Head of the Union La Concha Land Investment Corp., Melco Bank of California, San Francisco. From 1990 to Crown (Philippines) Resorts Corp. (PLC), 1994, he was Senior Vice President – Controller Philippine First Insurance Co., Inc., Philplans of Bank of California, San Francisco, and from First, Inc., Techzone Philippines, Inc., The 1994 to 1997, he was its Senior Vice President Country Club, Inc., Total Consolidated of Strategic Planning in Office of the President. Asset Management, Inc., and Turner He is currently Executive Vice Chairman and Entertainment Manila, Inc. He holds the Trustee of the PhilDev USA and PhilDev S & degrees of Bachelor of Arts and Bachelor of T. Mr. Castro obtained his Bachelor’s Degree Laws from the Ateneo de Manila University, in Applied Mathematics in Economics, Cum and Master of Laws from Georgetown Laude, from Harvard University. He received his University Law Center in Washington, D.C. Masters in Business Administration, Accounting & Finance, from Stanford University.

EDMUNDO L. TAN Corporate Secretary JIMMY T. TANG Independent Director 68, Filipino, serves as Corporate Secretary of BDO Unibank, Inc. from July 2007 up to the present and BDO Private Bank from February 78, Filipino, has been an Independent Director 2012 up to the present. He was formerly a of BDO since July 27, 2002. He served as a Director of BDO Leasing & Finance, Inc. and regular director of BDO from 1984 until his now serves as Adviser of the Board. Atty. Tan election as independent director. He is the is a Director and the Corporate Secretary of President and Chairman of the Board of the APC Group, Inc. from 2000 up to the present. Avesco Group of Companies. He currently He serves as Director and Corporate Secretary serves as Honorary Adviser of the Federation of Philippine Global Communications, Inc. of Electrical and Electronics Suppliers and from 2000 until his resignation as Corporate Manufacturers of the Philippines, Inc. (PESA) & Secretary in 2010 and Aragorn Power and PESA Foundation; and Honorary President of Energy Corporation from 2005 until his the Federation of Filipino-Chinese Chambers resignation as Corporate Secretary in 2012. of Commerce and Industry, Inc. (FFCCCII). He He is currently Director of PRC MAGMA was the 9th President of PESA and the first Resources, Inc. (2010 up to the present). He Chairman of the PESA Foundation, which was elected director of OCP Holdings, Inc. he served for seven years. He also served in July 2012 and likewise elected as Trustee two terms as the 11th President of FFCCCII. of Philippine Dispute Resolution Center, Inc. He holds a Bachelor’s Degree in Electrical (PDRCI) from 2011 up to the present. Atty. Tan Engineering from the Mapua Institute of is the Managing Partner of Tan, Acut Lopez Technology and was awarded the “Top & Pison Law Offices (1993 up to present). He Outstanding Mapuan for Entrepreneurship” in was formerly Senior Partner in Ponce Enrile 1987. Cayetano Reyes & Manalastas Law Offices, a Partner in Angara Abello Concepcion, Regala & Cruz Law Offices, and an Associate in Cruz Villarin Ongkiko Academia & Durian Law Offices.

46 www.bdo.com.ph BDO 2014 ANNUAL REPORT 47 STATEMENT OF MANAGEMENT’S RESPONSIBILITY STATEMENTS OF FOR FINANCIAL STATEMENTS FINANCIAL POSITION

BDO UNIBANK, INC. AND SUBSIDIARIES The management of BDO Unibank, Inc. (the Bank) is responsible for the preparation and fair presentation of the DECEMBER 31, 2014 AND 2013 STATEMENTS financial statements for the years ended December 31, 2014, 2013 and 2012 in accordance with Philippine Financial (Amounts in Millions of Philippine Pesos) Reporting Standards, including the following additional supplemental information filed separately from the basic financial statements: 49 a. Supplementary Schedules required under Annex 68-E of the Securities Regulation Code Rule 68; b. Reconciliation of Retained Earnings Available for Dividend Declaration; BDO Unibank Group Parent Bank c. Schedule of Philippine Financial Reporting Standards and Interpretations adopted by the Securities and Exchange Commission and the Financial Reporting Standards Council as of December 31, 2014; and, Notes 2014 2013 2014 2013 d. Map Showing the Relationship Between and Among the Bank and its Related Entities.

R E S O U R C E S Management responsibility on the financial statements includes designing and implementing internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting CASH AND OTHER CASH ITEMS 7 P 41,342 P 27,824 P 41,237 P 27,736 estimates that are reasonable in the circumstances. DUE FROM BANGKO SENTRAL NG PILIPINAS 7 269,542 408,383 258,416 384,361

The Board of Directors reviews the consolidated statements, and the additional supplemental information, and DUE FROM OTHER BANKS 8 45,621 26,939 43,165 24,655 submits the same to the stockholders. TRADING AND INVESTMENT SECURITIES 9 221,510 227,910 195,449 207,747

LOANS AND OTHER RECEIVABLES - Net 10 1,212,930 922,553 1,182,184 907,393 Punongbayan & Araullo, the independent auditors appointed by the stockholders, has examined the financial statements of the Bank in accordance with Philippine Standards on Auditing and, in its report to the Board of PREMISES, FURNITURE, FIXTURES AND EQUIPMENT - Net 11 21,093 17,908 18,917 16,325 Directors and stockholders, has expressed its opinion on the fairness of presentation upon completion of such INVESTMENT PROPERTIES - Net 12 13,861 10,381 10,858 7,518 examination. OTHER RESOURCES - Net 13 37,750 30,880 42,847 39,046

TOTAL RESOURCES P 1,863,649 P 1,672,778 P 1,793,073 P 1,614,781

Teresita T. Sy Chairman of the Board LIABILITIES AND EQUITY WITNESS BY HAND AND SEAL on the day first above-mentioned at Makati City. DEPOSIT LIABILITIES 15 P 1,492,282 P 1,345,333 P 1,464,089 P 1,317,132

th Nestor V. Tan Signed this 26 day of February 2015 BILLS PAYABLE 16 100,361 94,243 85,069 82,827 President SUBSCRIBED and SWORN to me before this SUBORDINATED NOTES PAYABLE 17 10,030 3,007 10,030 3,007 th 26 day of February, 2015 affiants exhibiting OTHER LIABILITIES 18 81,307 65,841 65,358 58,107 to me their Competent Evidence of Identity (CEI), as follows: Total Liabilities 1,683,980 1,508,424 1,624,546 1,461,073 Pedro M. Florescio III Treasurer Doc. No. 424 EQUITY 19 Page No. 86 Book No. II Attributable to: Name CEI Number Date & Place Issued Series of 2015 Shareholders of the Parent Bank 179,036 163,711 168,527 153,708

1. Teresita T. Sy Passport No. – EB0826424 08.25.2010/Manila (Sgd.) Atty. EARL CHARLES N. VILLARIN Non-controlling Interests 633 643 - - Notary Public for Makati City, Philippines CTC No. – 00352716 02.23.2015/Manila until 31 December 2015 179,669 164,354 168,527 153,708 2. Nestor V. Tan Passport No. – EB7352142 02.11.2013/Manila Appointment No. M-326 14/F North Tower, BDO Corporate Center TOTAL LIABILITIES AND EQUITY P 1,863,649 P 1,672,778 P 1,793,073 P 1,614,781 CTC No. – 02254577 02.10.2014/Makati 7899 Makati Avenue, Makati City 3. Pedro M. Florescio III Passport No. – EB1502366 12.03.2010/Manila IBP Lifetime Member No. 07478, PPLM PTR No. 4751246, 1/05/2015, Makati City CTC No. – 04932863 02.16.2015/Makati MCLE Compliance No. IV-0017178, 4/16/2013

See Notes to Financial Statements.

48 www.bdo.com.ph BDO 2014 ANNUAL REPORT 49 STATEMENTS OF MANAGEMENT INCOME DIRECTORY MANAGEMENT DIRECTORY BOARD OF DIRECTORS Guia C. Lim Ricardo V. Martin BDO UNIBANK, INC. AND SUBSIDIARIES Chairman Emeritus Edmundo S. Soriano FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 Mr. Henry Sy, Sr. Cecilia Luz L. Tan (Amounts in Millions of Philippine Pesos Except Per Share Data) Rolando C. Tanchanco Chairperson Dennis B. Velasquez Teresita T. Sy Evelyn L. Villanueva 51

Vice Chairman Senior Vice President BDO Unibank Group Parent Bank Jesus A. Jacinto, Jr. Ursula A. Alano Notes 2014 2013 2012 2014 2013 2012 Noel L.Andrada Directors Maria Carina S. Antonio INTEREST INCOME 20 P 63,583 P 56,606 P 54,014 P 60,871 P 54,431 P 51,657 Christopher A. Bell-Knight Rafael G. Ayuste, Jr. INTEREST EXPENSE 21 12,358 13,440 17,893 11,728 13,014 17,245 Atty. Jose F. Buenaventura Melanie S. Belen NET INTEREST INCOME 51,225 43,166 36,121 49,143 41,417 34,412 Jones M. Castro, Jr. Gamalielh Ariel O. Benavides IMPAIRMENT LOSSES - Net 14 5,114 7,001 4,941 5,014 6,216 4,850 Cheo Chai Hong Rafael G. Besa NET INTEREST INCOME Atty. Antonio C. Pacis Ma. Ophelia L. Camiña AFTER IMPAIRMENT LOSSES 46,111 36,165 31,180 44,129 35,201 29,562 Josefina N. Tan Marilou L. Cesario Nestor V. Tan Arthur Vincent D. Chung Jimmy T. Tang Angelita O. Cortez OTHER OPERATING INCOME 22 29,487 31,844 24,427 27,026 27,080 21,703 Atty. Gilberto C. Teodoro, Jr. Jonathan T. Cua OTHER OPERATING EXPENSES 22 48,530 43,259 39,494 44,836 40,364 37,104 Ramon S. David PROFIT BEFORE TAX 27,068 24,750 16,113 26,319 21,917 14,161 Advisers Ma. Lourdes T. De Vera TAX EXPENSE 27 4,240 2,104 1,571 3,522 1,418 1,117 Corazon S. de la Paz - Bernardo Montiel H. Delos Santos NET PROFIT P 22,828 P 22,646 P 14,542 P 22,797 P 20,499 P 13,044 Jose T. Sio Geronimo D. Diaz Washington Z. SyCip Jonathan C. Diokno Attributable To: Noel D. Dizon Shareholders of the P 22,805 P 22,608 P 14,483 Corporate Secretary Ismael G. Estela,Jr. Parent Bank Edmundo L. Tan Belinda C. Fernandez Non-controlling Interests 23 38 59 Geneva T. Gloria P 22,828 P 22,646 P 14,542 PRINCIPAL OFFICERS Alvin C. Go Jonathan C. Bian Go Earnings Per Share: 28 President & CEO Marilyn K. Go Basic P 6.27 P 6.22 P 4.52 P 6.27 P 5.63 P 4.06 Nestor V. Tan Sonia Maribel D. Go Diluted P 6.27 P 6.18 P 4.52 P 6.27 P 5.61 P 4.06 Lazaro Jerome C. Guevarra Senior Executive Vice President Enrico R. Hernandez Antonio N. Cotoco Eleanor M. Hilado See Notes to Financial Statements. Walter C. Wassmer Antonio N. Jacinto Jaime C. Yu Jeanette S. Javellana Roberto E. Lapid Executive Vice President Gabriel U. Lim Ador A. Abrogena Mercedes M. Limson Stella L. Cabalatungan Manuel Z. Locsin, Jr. Anthony Q. Chua Manuel Patricio C. Malabanan Julie Y. Chua Ma. Corazon A. Mallillin Gerard Lee B. Co Angelita C. Manulat Lucy C. Dy Dalmacio D. Martin Eduardo V. Francisco Jose Noel M. Mendoza Pedro M. Florescio III Ramon T. Militar

50 www.bdo.com.ph BDO 2014 ANNUAL REPORT 51 Aurea Imelda S. Montejo Amelia Caridad C. Castelo Anthony R. Milan Dandy T. Yap MANAGEMENT DIRECTORY Emmanuel T. Narciso Aurora M. Castro Edelwina Victoria E. Millan Joy T. Yap Jaime M. Nasol Regina G. Caynap Merceditas P. Montesclaros Margaret L. Yu Annie H. Ngo Susie S. Cham Francis Jay F. Nacino Frederico Rafael D. Ocampo Joseph C. Chua Ma. Concepcion Q. Narciso Vice President Estrellita V. Ong Ruby A. Chua Armando T. Navarrete Virginia N. Abad Martin B. Ordoñez Salva Fe S. Cirilos Sarah Jessica M. Navarro Ma. Cecilia T. Abola Maria Rhoda B. Orsolino Luisa J. Co Cristina G. Ngo Irma I. Acayan 53 Jose Alfredo G. Pascual Edna Christine P. Cruz Felicitas C. Nonato Fitzgerald L. Aclan Antonio O. Peña Lolita L. Damasco Larry G. Ong Edna C. Agajan Rogel A. Raya Cesario C. Dayego Alvin Victor D. Ortiz Sandra C. Agdamag Maria Nannette R. Regala Lamberto B. Del Fonso, Jr. Emily T. Oquias Peter Blair S. Agustin Luis S. Reyes, Jr. Ma. Victoria F. Dela Cruz Ma Bella C. Paguiligan Nadine Anne R. Alapan Susan Audrey P. Rivera Rolando L. Dillague Aurora Zita G. Panopio Melissa A. Alcantara Evelyn C. Salagubang Pollyanna B. Diokno Clarissa M. Peñalosa Edgardo L. Alcaraz Shirley M. Sangalang Ma. Fe H. Dy Yolanda A. Pilapil Carlos S. Alindogan Gregorio C. Severino Rolando A. Embrador Rita Y. Poa Susan G. Almendral Ma. Theresa S. Simbul Gwyneth M. Entao Maria Teresa (Marisa) M. Quiogue Maria Angela D. Almojuela Evylene C. Sison Bernard M. Florencio Eduardo C. Ramos Jose Virgilio O. Alvarez Noel B. Sugay Expedito G. Garcia, Jr. Jonathan L. Ravelas Patricia Lei D. Alvarillo Robert W. Sy Cheryll B. Gaviño Lily T. Roxas Jose Joel S. Andres Edwin R. Tajanlangit Marcelita I. Geollegue Luisito S. Salazar Leticia L. Ang Ley Arthur L. Tan Florish M. Gianan Emily D. Samoy Jeffrey O. Ang Lorna A. Tan Judy L. Go Bennett Clarence D. Santiago Ma. Ophelia R. Angeles Maria Theresa L. Tan Yolanda M. Go Cerwina Elenore A. Santos Apolinario E. Aquino Federico P. Tancongco Renato S. Gongora Ma. Cecilia S. Santos Maria Agnes R. Aragon Reynaldo A. Tanjangco, Jr. Myrianne Joan D. Gonzales Joel Jovencio E. Sarreal Lydia S. Arrieta Ma. Mercedes P. Tioseco Lily C. Huang Salvador R. Serrano Susan Marie J. Atienza Rebecca S. Torres Lilian T. Khu Teresita C. Siy Manuel E. Aviles Rosola A. Vivas Ma. Cecilia G. Lantin Mary Lou D. Son Keng Po Ferdinand C. Bacungan Edward G. Wenceslao Benjamin A. Larin Jr. Virginia N. Sy Olivia A. Barcarse Ma. Teresita Susana L. Yap Ma. Remedios B. Lapuz Angelita C. Tad-Y Lilli Ann D. Bautista Grace G. Lastimosa Antonio U. Tan Marites A. Bautista First Vice President Geraldine C. Liggayu Divina N. Tan Rodora V. Bautista Donabel R. Aala Juan Sabino P. Lizares Judy C. Tan Joel Z. Belardo Jeffrey R. Abacan Joseph Rhoderick B. Lledo Marites L. Tan Jimmy A. Belarmino Jocelyn D. Agas Peter S. Lo, Jr. Richard R. Tan Barbara May M. Billano Gerard M. Aguirre Gertrudes J. Lumain Edna R. Tarroza Mary Jean T. Borbe Dulce Amor E. Alimbuyuguen Maria Pia L. Maceda Alice O. Teh Ernesto F. Borlado, Jr. Milagros R. Alindogan Francis Jay T. Magboo Aniana A. Timbre Lelisa R. Bouazzi Felina M. Arellano Jose Paolo Enrique A. Magpale Ma Rosita J. Tinio Adelo C. Brabante Onofre D. Avellanosa Maria Dolores P. Magsalin Frederick N. Tiu Marie Therese D. Brillantes Maria Cecilia M. Avila Roy Allan V. Magturo Agnes C. Tuason Marc Dominique M. Brion Janet B. Bagnes Ronald M. Manalastas Wendeline Therese M. Tumolva Ma. Eloisa S. Britanico Pedro C. Bautista, Jr. Jesus A. Mañego, Jr. Myla R. Untalan Conrado T. Buenaventura VI Jose Luis F. Bautista Edgardo R. Marcelo, Jr. Arlene Marie H. Uson Benilda G. Cabardo Wilma N. Berioso Thelma D. Mazo Maria Dolores C. Uyliapco Barbara P. Cabo Manuel Patricio J. Bondad Abigail P. Melicor Agerico Melecio S. Verzola Mary Grace R. Caguioa Maria Eleanor B. Briones Proceso Z. Mendoza, Jr. Noemi T. Villanueva Michael R. Cahigas Rolino C. Bucao, Jr. Tomas Victor A. Mendoza Francisco B. Vista, Jr. Gerardo O. Calvelo

52 www.bdo.com.ph BDO 2014 ANNUAL REPORT 53 Emmanuel A. Camua Florencio Aquillo V. Florendo Josefa P. Ortiz Ken Arthur J. Tiambeng MANAGEMENT DIRECTORY Judy Grace D. Capili Perlita S. Flores Arnaldo Emerito E. Palad Marilyn G. Tin Jose Rene C. Carlos Patricia L. Forbes Carla Sherrylyn C. Papa Eric Noel D. Tiongquico Rodolfo M. Carlos Jr. Michael J. Francisco Rommel L. Parong Robert John R. Tolentino Abigail Marie D. Casanova Zenaida A. Gambol Eva M. Paz Marissa F. Tomas Ma. Fatima C. Catambacan Jose Ramon C. Garcia Juvencio L. Pereche, Jr. Ma. Ramona T. Torres Lucila R. Celestino Angeline Grace T. Go Maria Natividad A. Pobre Cosme S. Trinidad, Jr. Edmund S. Chan Genevieve Wan Jun Go Cyrus M. Polloso Zenaida A. Triunfante 55 Robic S. Chavez Katherine L. Go Jose Eduardo A. Quimpo II Bernhard Aloysius G. Tsai Ronell C. Chiong Maria Carmela M. Guerrero Edlyn L. Quiroz Rosa Maria G. Tumangday Abigail Kathryn L. Chiw Charles Bryan S. Ho Amaneci Grace V. Ramos Blandina Uvyhilda B. Vicente Aileen R. Chua Mary Jean A. Ibuna Gilbert P. Ramos Sharon Mae S. Vicente Edwin L. Chua Marietta M. Jamilla Charisse B. Recto Mary Lou B. Villarba Eugenio D. Chua Zerlita Esperanza Z. Jandoc Paul Richard P. Regondola Jaime Claro L. Weber Helen T. Chua Anabelle F. Kabigting Ma Elena I. Rigor Eleanor D. Wee Kimberly K. Chua Ma. Karla F. Kallos Raoul L. Reniedo Richard O. Wenceslao Sue Anne N. Chuongco Rosalisa B. Kapuno Concepcion G. Reyes Adora A. Yanga Sonia C. Co Wilfred Kong Chi Man Ma. Ana Elena R. Reyes Joel T. Yee Ma. Cristina Barbara V. Concepcion Emma M. Lacsamana Myra A. Reyes Beatriz Y. Zalazar Maria Cristina P. Cordero Ernesto L. Ladrido IV Pamela Ann S. Reyes William P. Zulueta Rita V. Coronel Charlie Ka Ki Lam Ray R. Reyes Rosario C. Crisostomo Cirila S. Lao Albert Henry G. Rios Antonio M. Cruz Rafael Martin C. Lara Anthony B. Rivera Prescilla J. Cruz Rhoda D. Lazaro Joseph Rey M. Rivera Ruby A. Cruz Avelino F. Lazona, Jr. Edna T. Rogando Jerry S. Cureg Michelette S. Legaspi Antonio D. Rona Loretto C. De Austria Ma. Jeanette H. Leonor Cynthia Sadang Anthony Emmanuel C. De Dios Lilian Leslie T. Lim Rolando S. San Diego Iris Suzanne F. De Guzman Roderick L. Lim Arsenia S. Santos Ma. Rita K. De La Vega Normita D. Lising Bernard Q. Santos Vicente A. De Ocampo III Alberto V. Lizares Gerard R. Santos Priscilla R. De Villa John Emmanuel M. Lizares Jennifer B. Santos Mary Ann G. Dela Cruz Margarita Y. Locsin Marie Anne C. Santos Ma. Cecilia B. De Paz Mary Grace O. Lojo Roberto P. Sarile Ma. Dina B. Desembrana Hannah Regina H. Lopez Elaine G. See Jorge E. Dioneda Ma. Mona Lisa R. Lopez Rafael O. Simpao III Albert Dizon Peter Louie D. Magdame Jennifer F. So Ma. Eliza Cristina G. Dolina Maria Lourdes S. Maraingan Philip L. So Cezar G. Domingo Elena D. Mariano Ma. Corazon H. Socorro George R. Dosado Rosano B. Marpuri Changsoo Sohn Angela Veronica M. Dulalia Martin Paolo L. Marty Ma. Theresa M. Soriano Leila D. Dumlao Ma. Clotilde G. Medalla Geraldine I. Suarez Charlotte U. Dy Ariel T. Melo Evelyn K. Sy Armina C. Empeño Maria Paz D. Mendoza Richard S. Sy Rolando C. Eriga Juan Nemesio V. Miraflor III Carmelita Teresa D. Tan Joel M. Escala Dalisay S. Molas Catherine C. Tan Maria Socorro Y. Escario Christina T. Nakanishi Grace C. Tan Florencia Ma. Carina P. Esguerra Cynthia T. Nopia Dennis M. Tangonan Elizabeth G. Estrada Herman L. Ong Steven C. Te Marirose A. Fernando Sophia O. Ong Diosdado R. Teh

54 www.bdo.com.ph BDO 2014 ANNUAL REPORT 55 PRODUCTS AND SERVICES PRODUCTS AND SERVICESPRODUCTS AND

PERSONAL BANKING WEALTH MANAGEMENT SERVICES

BRANCH BANKING TRUST AND INVESTMENTS INSURANCE Peso Deposits Unit Investment Trust Funds - Peso/Dollar BDO Insurance Brokers Inc. Peso Checking Account Customized Portfolio Management Property and Casualty 57 Peso Savings Account Special Trust Agency and Custody Services Peso Time Deposit Investment Management Advisory Services Generali Philippines Foreign Currency Easy Investment Plan Life Insurance US$ Savings Account US$ Time Deposit BDO PRIVATE BANK BDO REMIT Third Currency Time Deposit Wealth Advisory OFW Remittances Safe Deposit Box Estate Planning Trust Agency and Special Trust PROPERTY MANAGEMENT CONSUMER LOANS Property Leasing Auto Loans Property Sales Home Loans INVESTMENT BANKING Small Business Loans TRANSACTION BANKING Personal Loans Equity and Quasi-Equity Financing Cash Management Services Credit Cards Fixed Income Financing Electronic Banking Contract-to-Sell Financial Advisory Services Debit Cards Merchant Acquiring Stock Brokerage TREASURY DEALERSHIP AND BROKERING SERVICES BUSINESS BANKING Fixed Income Brokering Services Foreign Exchange BDO LEASING AND FINANCE, INC. Finance Leases Operating Leases Floor Stock Financing

CORPORATE LOANS AND OTHER SERVICES Revolving Credit Line Term Loan Discounting Facility Trade Finance Documentary Collection

TRADE SERVICES LC Opening Trust Receipts Imports/Exports Collection of Final Tax and Duties Shipping Guarantees

56 www.bdo.com.ph BDO 2014 ANNUAL REPORT 57 BDO GROUP OF COMPANIES

SUBSIDIARIES AND AFFILIATES GROUPBDO OF COMPANIES

PHILIPPINE SUBSIDIARIES AND AFFILIATES

ARMSTRONG SECURITIES, INC. BDO PRIVATE BANK, INC. GENERALI PILIPINAS HOLDINGS PCI TRAVEL CORPORATION 20th Floor, South Tower Mezzanine & 2nd Floor COMPANY, INC. BDO Corporate Center BDO Corporate Center BDO Equitable Tower 5th Floor, Gercon Plaza Building 7899 Makati Avenue, Makati City 7899 Makati Avenue 8751 Paseo De Roxas 7901 Makati Avenue, Makati City 840-7000 Makati City Makati City 1226 Philippines 1227 59 840-7000 / 878-4043 848-6300 885-4100 SM KEPPEL LAND INC. Penthouse, Benguet Centre Bldg. AVERON HOLDINGS CORPORATION BDO RENTAL, INC. MDB LAND, INC. 12 ADB Ave. Ortigas Center 6780 Ayala Avenue 2nd Floor, BDO Leasing Centre Units 903 & 904 Mandaluyong City San Lorenzo Village Corinthian Gardens 139 Corporate Center (temporarily moved to Units 2203-2204 Makati City Ortigas Ave., Quezon City 139 Valero Street Raffles Corporate Center 625-0726 635-6416 / 840-7000 Salcedo Village, Makati City F. Ortigas Road, Ortigas Center 840-7000 loc. 31111 Pasig City) BDO CAPITAL & INVESTMENT BDO SECURITIES CORPORATION 570-9832 CORPORATION 20th Floor, South Tower MANILA NORTH TOLLWAYS CORP. 20th Floor, South Tower BDO Corporate Center NLEX Compound, Balintawak TAAL LAND, INC. BDO Corporate Center 7899 Makati Avenue, Makati City Caloocan City 12th Floor, PSBank Center 7899 Makati Avenue 840-7000 loc. 6386, 2104, 6392 / 878-4070 479-3000 777 Paseo De Roxas Avenue Makati City Makati City 840-7000 / 878-4155 / 878-4125 BDO STRATEGIC HOLDINGS INC. NORTHPINE LAND, INC. 898-8890 (formerly EBC Investments, Inc. Units 1505-1508, 15th Floor BDO ELITE SAVINGS BANK, INC. or EBCII) The Taipan Place, F. Ortigas Jr. Road (formerly GE Money Bank, Inc.) BDO Building, Paseo De Roxas Ortigas Center, Pasig City FOREIGN SUBSIDIARY / AFFILIATES 14th Floor, Net Cube Center corner Sen. Gil Puyat Avenues 637-1531 30th Street corner 3rd Avenue Makati City BDORO EUROPE LTD. Crescent Park 840-7000 PCI INSURANCE BROKERS, INC. 5th Floor, 6 St. Andrew Street West Bonifacio Global City BDO Corporate Center London, EC4A 3AE 840-7000 BANCO DE ORO 7899 Makati Avenue, Makati City United Kingdom SAVINGS BANK, INC. 840-7000 (0207) 495-2434 BDO INSURANCE BROKERS, INC. (formerly Citibank Savings, Inc.) 22nd Floor, Pacific Star Building 16th Floor, North Tower PCI REALTY CORPORATION Senator Gil Puyat Ave. Corner BDO Corporate Center 14th Floor, North Tower REMITTANCE SUBSIDIARY / AFFILIATE Makati Ave. 7899 Makati Avenue, Makati City BDO Corporate Center Makati City 840-7000 7899 Makati Avenue, Makati City CBN GRUPO INTERNATIONAL HOLDINGS 846-7008 / 702-6000 840-7000 B.V. EQUIMARK-NFC Kruisdonk 66 NL-6222PH BDO LEASING AND FINANCE, INC. DEVELOPMENT CORP. PCIB SECURITIES, INC. Maastricht, The Netherlands BDO Leasing Centre Rm. 603, EBC Bldg. 20th Floor, South Tower, Corinthian Gardens 262 Juan Luna St. BDOCorporate Center Ortigas Ave. Binondo, Manila 7899 Makati Avenue, Makati City Quezon City 840-7000 840-7000 / 878-4560 635-6416 / 840-7000

58 www.bdo.com.ph BDO 2014 ANNUAL REPORT 59 COMPANY STOCKHOLDER HEADQUARTERS INQUIRIES

BDO Unibank, Inc.’s common stock is listed and traded in the Philippine Stock Exchange under the BDO UNIBANK, INC. symbol “BDO“. BDO Corporate Center 7899 Makati Avenue Inquiries regarding the dividend payments, account Makati City 0726 status, address changes, stock certificates, and Philippines other pertinent matters should be addressed to the company’s transfer agent:

Stock Transfer Service, Inc. 34th Floor, Unit D, Rufino Pacific Tower 6784 Ayala Ave., Makati City, 1200 Philippines Tel. (+632) 403-2410 to 12 Fax (+632) 403-2414

The Bank will provide without a charge a copy of the 2014 Annual Report Financial Statements to its stockholders upon receipt of a written request addressed to the Corporate Secretary.

14th Floor, North Tower, BDO Corporate Center 7899 Makati Avenue, Makati City 0726, Philippines

INVESTOR INQUIRIES

BDO Unibank, Inc. welcomes inquiries from analysts, investors and the financial community.

Please visit www.bdo.com.ph or contact BDO Investor Relations & Corporate Planning 4th Floor, South Tower, BDO Corporate Center 7899 Makati Avenue, Makati City 0726, Philippines Tel. (+632) 840-7000 local 6069, 4809 or 4700 Email: [email protected]

For the complete listing of BDO branches and ATM locations, please refer to the Bank’s official website, www.bdo.com.ph

60 www.bdo.com.ph BDO Corporate Center 7899 Makati Ave. Makati City 0726, Philippines +632 840-7000 www.bdo.com.ph