March 2012 Investor Presentation Legal Disclaimer
This presentation and the presentation materials distributed herewith include forward-looking statements. All statements, other than statements of historical facts that address activities, events, or developments that BDO Unibank, Inc. (“BDO”) expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. BDO’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, market shares, competition, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, cost estimates, and other risks and factors beyond our control. In addition, BDO makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.
2 Presentation Outline
I. OVERVIEW
II. DIRECTORS AND SENIOR MANAGEMENT
III. FINANCIAL HIGHLIGHTS Background
The Philippines’ largest bank as at December 31, 2011
A full-service universal bank with one of the widest networks
Part of the SM Group with associated synergies and benefits
One of the country’s strongest Board of Directors in terms of • Banking experience • Corporate governance
4 Milestones
First and only Philippine bank with P1.0 trn in assets
Acquired GE Acquired UOB Philippines’ Money Bank P1.0 TN branch banking business
Acquired 1st e-Bank P617 BN P862 BN business incl. 60 branches P149 BN Merged with Acquired by Merged with Dao Heng Equitable PCI P234 BN SM Group Bank Philippines Bank. Acquired Est. as Acme KB license P36 BN P121 BN Amex Savings Bank Acquired Savings Bank P77 BN Banco Philippines Santander Assets U/KB license Philippines P13 BN
1968 1976 1994 1996 2001 2002 2003 2005 2007 2009 2010
Commercial Bank Expansion
Source: BDO. BDO Total Assets as at each relevant period or year-end. 5 Full Service Operations
Transaction Consumer Branch Banking Insurance Trust Banking Banking Lending
Deposit and Cash management Brokerage Investment Auto related products services Bancassurance management Mortgage Over-the-counter Electronic banking Unit investment Credit cards transactions trust funds ATMs Personal loans Cross-selling Prepaid cards Living trusts distribution platform Merchant acquiring Retirement funds Remittances Special trusts / custodianship Corporate and Investment Treasury Leasing and Institutional Private Banking Banking Banking Services Finance Corporate and Underwriting and Wealth advisory Fixed income Direct lease, sale middle market distribution of Customized portfolio dealership and leaseback lending Fixed income and management Foreign exchange arrangements Trade finance equity securities transactions Installment paper Specialized lending Financial advisory Portfolio purchases Financial Institutions Project finance management Receivable discounting Cross-border Loan syndication Liquidity and factoring financing management
6 Domestic and International Network
North Middle SE Asia, HK Philippines - Europe - 8 America - 4 East - 1 & Taiwan - 7 744
Luzon – 210
Metro Manila – 395
Visayas – 84
Mindanao – 55
• 744 Domestic Branches • 20 International Offices worldwide • 1,645 ATMs
Source: BDO. As at 31 March 2012 7 Business Franchise
#1 #1 #1 #1 #1 Loans Deposits Remittances Trust & Asset Mgt. Private Banking
Leading Trade Market-leading Major Player in 1 2 Services Provider Positions in Almost Cash Management All Business Lines
#4 #1 #2 #1 Insurance Brokerage5 Credit Cards3 Leasing & Finance Investment Banking4 (#1 Local)
Notes: 1 According to The Asian Banker, Global Finance, The Asset, & Trade Finance Magazine 2 According to The Asset 3 In terms of cardholder base & merchant acquiring gross billings 4 In terms of corporate issuances 5 Among insurance brokers in terms of premiums produced 8 Industry Rankings Total Assets Gross Customer Loans* 1,102 (in PHP billions) 669 (in PHP billions) 959 836 BDO Market Share – 16% BDO Market Share – 21% 460 445 640 238 350 341 317 269 267 263 166 149 113 113 112 96
MBT BPI LBP RCBC DBP PNB Union Citi China BPI MBT LBP RCBC China PNB DBP Citi Allied Customer Deposits Assets Under Management (in PHP billions) (in PHP billions) 711 857 670 BDO Market Share – 17% BDO Market Share – 25% 682 682
507 382
257 237 216 207 165 159 151 140 95 91 88 68 66
BPI MBT LBP RCBC PNB China Union UCPB DBP BPI MBT SChart China UCPB HSBC RCBC LBP Deutsche
Notes: 1. Data from published consolidated statements of condition (SOCs) as of 31 Dec. 2011 2. Gross customer loans are BDO estimates 9 Shareholder Structure
Top Shareholders as of 31 Dec 2011
PCD Nominee Corp. (Filipino) 27.6% PCD Nominee Corp. (Non-Filipino) 26.5% SM Investments Corp. 26.2% DBTM OT-024 SM Investments Corp. 8.0%
Sub-Total, Top Shareholders 88.3%
Source: Top 100 Shareholders as of 31 Dec 2011
10 SM Group Profile and Associated Synergies
• Largest local retail chain Retail Access to SM’s customer • 177 stores nationwide network • 14,872 tenants • Dominant domestic mall • 5,000 suppliers developer/operator • 3.5 million average daily foot Malls • 42 malls with GFA of 5.1 mn traffic sq.m. • In-house business • Home mortgage financing • Biggest domestic banking for SM property projects Financial operations New business opportunity Services • Interests in BDO and China • Goodwill from the SM Bank franchise • Joint product development • Leading residential SM expertise Property condominium developer in • Middle market knowledge Metro Manila in terms of units • Expertise in retail market sold and real estate Hotels & • Among the fastest growing Branch locations Conven- commercial, resorts and hotel • Branches, ATMs in SM malls tions developers in the Philippines
11 Presentation Outline
I. BUSINESS FRANCHISE
II. DIRECTORS AND SENIOR MANAGEMENT
III. FINANCIAL HIGHLIGHTS Board of Directors
One of the strongest Board of Directors in the industry with extensive banking and related experience.
. 5 directors out of 11 have over 100 years’ combined experience from both Experienced Bankers local and foreign banking institutions
Successful . 2 directors are successful businessmen who have made their mark in the Entrepreneurs fields of retailing, real estate, and commercial operations
. 1 director is a former Chairman and Senior Partner of Price Waterhouse Auditor Coopers, Phil. and former President of the International Social Security Association, a Geneva-based organization
Practicing . 1 director, a Harvard law graduate, is a practicing attorney who heads Lawyer a law firm
Ex-Monetary . 1 director is a former member of the BSP’s Monetary Board Board Member
. 1 director is a former Regional VP for IFC Operations in East Asia & the Ex- World Bank/IFC Pacific, South Asia, Latin America & the Caribbean, Middle East, & North Africa Senior Official and currently representing the IFC. 13 Board of Directors
Teresita T. Sy, 61, Filipino, is the Chairperson of BDO and was first elected to the Board in 1977. Concurrently, she serves as the Chairperson, Vice Chairperson, and/or Director of various subsidiaries and affiliates of BDO such as BDO Private Bank, Inc., BDO Leasing & Finance, Inc., BDO Capital & Investment Corporation, BDO Foundation, Inc., Generali Pilipinas Holding Company, Inc., Generali Pilipinas Life Assurance Company, Inc., and Generali Pilipinas Insurance Co., Inc. Ms. Sy is the Vice Chairperson of SM Investments Corporation and adviser to the Board of SM Prime Holdings, Inc. She also sits as Chairperson, Vice Chairperson and/or Teresita T. Sy Chairperson Director of such companies as Multi-Realty Development Corporation, SM Commercial Properties (formerly SM Land, Inc.), Supervalue, Inc, SM Mart, Inc., SM Retail, Inc., Super Shopping Market, Inc., Pilipinas Makro, Inc., and First Asia Realty Development Corp. A graduate of Assumption College, she brings to the Board her varied expertise in banking and finance, retail merchandising, mall and real estate development. She is the first Filipino to receive the Retail Banker of the Year Award from The Asian Banker and the only Filipino to be included among Asia’s 50 Power Businesswomen by Forbes Magazine. She is also a recipient of the Asian Corporate Director Recognition Award from Corporate Governance Asia.
Corazon S. de la Paz-Bernardo, 70, Filipino, is currently the Vice Chairperson of BDO. She was President of the Social Security System and Vice Chairman of the Social Security Commission from 2001 to 2008. She was also President of the International Social Security Association from 2004 to 2010. She was Chairman and Senior Partner of Joaquin Cunanan & Co. (Pricewaterhouse Coopers, Philippines) from 1981 to 2001. She was past president of the Philippine Institute of Certified Public Accountants, the Management Association of the Philippines, the Financial Executives Institute of the Philippines, Inc., and the Philippine Fulbright Scholars Association. Corazon S. de la Paz-Bernardo Vice Chairperson
14 Board of Directors
Jesus A. Jacinto, Jr., 64, Filipino, was elected Vice Chairman of BDO in May 1996, and is concurrently the Chairman and President of BDO Insurance Brokers, Inc. Formerly, he was Director and Executive Vice President of CityTrust Banking Corp.; Director of CityTrust Investments Phil. and CityTrust Finance Corp.; and Vice President and Managing Partner of Citibank N.A. He holds a Bachelor’s degree in Business Administration from Fordham University in New York City and MBA (International Business) from Columbia University, New York.
Jesus A. Jacinto, Jr. Vice Chairman
Nestor V. Tan, 54, Filipino, was elected President of BDO in July 1998. He also concurrently holds vice chairmanships and/or directorships in the following subsidiaries of BDO Unibank, Inc.: BDO Capital & Investment Corporation, BDO Insurance Brokers, Inc., BDO Leasing and Finance, Inc. BDO Private Bank, Inc.; BDO Remit (USA), Inc., Generali Pilipinas Life Assurance Company, Inc., and SM Keppel Land. He also concurrently holds chairmanship of BDO Strategic Holdings, Inc. and Megalink, Inc. He is also a Director and Treasurer of Generali Pilipinas Insurance Co., and Trustee of BDO Foundation, Inc. He is also a Director of the Bankers Association of the Philippines. Nestor V. Tan President and Director Mr. Tan had a fifteen-year banking career with the Mellon Bank (now Bank of New York – Mellon) in Pittsburgh, PA, the Bankers Trust Company (now Deutsche Bank) in New York and the Barclays Group in New York and London. Prior to joining the Bank, he was the Chief Operating Officer for the Financial Institution Services Group of BZW, the investment banking subsidiary of the 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.
Cheo Chai Hong, 59, Singaporean, was elected Director of BDO in May 2010. He currently sits as Director of United Overseas Bank Philippines (UOB Philippines), UOB Global Capital Limited, and United Overseas Bank (Thai) Public Company Limited, and Encus International Pte. Ltd. He is Managing Director and Head of Corporate Planning and International Strategy Department of UOB Singapore. He was formerly the Executive Vice President of Group Credit (Middle Market & STCF) Department of UOB Singapore. He holds an Honor’s Degree in Business Administration from the University of Singapore. Cheo Chai Hong Director Board of Directors
Farida Khambata, 63, Canadian, was elected Director of BDO in September 2010. She was formerly IFC's Regional Vice President heading IFC's operations in East Asia and the Pacific, South Asia, Latin America and the Caribbean, and the Middle East and North Africa. Previously, she served as Vice President for Portfolio and Risk Management and Director of IFC's Treasury Department. She also held positions as Director, Division Manager, and Senior Investment Officer at IFC's former Central Capital Markets Department. Mrs. Khambata also worked for the World Bank before moving to IFC in 1986. She holds post-graduate degrees in Economics and Business Farida Khambata Management from Cambridge University and the London Business School. A Certified Financial Director Analyst, she has also participated in the Executive Development Program at Wharton Business School.
Teodoro B. Montecillo, 77, Filipino, was first appointed Independent Director of BDO in August 2004.He is also currently an Independent Director of Citibank Savings, Inc. He was a member of the Monetary Board of the BSP from 1996 to 2002, and Chairman of the Central Bank Board of Liquidators from 1999 to 2002. In addition, he held various positions in areas of operations, credit and external debt management in Citibank, N.A. (Manila) and Citibank Head Office (New York) from 1965 to 1996. He holds a Bachelor of Science in Education degree from the University of the East, Bachelor of Science degree in Business Administration from the University Teodoro B. Montecillo of the Philippines, and received his MBA from Northwestern University, Chicago, USA. Independent Director
Antonio C. Pacis, 70, Filipino, currently serves both BDO and BDO Capital & Investment Corporation as a Director. He has been in law practice since 1967, counseling bank and corporate clients in the areas of regulatory, business, corporate and trust law, and individuals in the areas of family law and estate plans. In the course of his practice, he has served in various capacities in companies upon invitation of clients. He holds degrees from the Ateneo de Manila University (AB), from the Ateneo School of Law (LLB) and from the Harvard Law School (LLM).
Antonio C. Pacis Director Board of Directors
Henry T. Sy, Jr., 57, Filipino, is presently Director of BDO. He is also the Vice Chairman of the Board of Directors of SM Investments Corporation (SMIC), SM Development Corporation (SMDC); and Vice Chairman & President of Highlands Prime, Inc., SM Commercial Properties (formerly SM Land, Inc.); and Director of SM Prime Holdings, Inc. (SMPHI). He is likewise the President of National Grid Corporation of the Philippines (NGCP). He graduated with a management degree from De La Salle University. He also holds board positions in several companies within the SM Group. Henry T. Sy, Jr. Director
Josefina N. Tan, 66, Filipino, is presently Director of BDO and President of BDO Private Bank, Inc. She is also Chairman of the Board of Miriam College and a Trustee in both DevelopmentCenter for Finance and Laura Vicuña Foundation. She was a Director of Banco de Oro Universal Bank from 2001 to August 2005. She was also Executive Vice President of the former Far East Bank & Trust Co.; Director and President of FEB Leasing & Finance Corp.; Executive Director and Trustee of FEB Foundation, Inc.; and Executive Vice President of FEB
Josefina N. Tan Investments, Inc. until 2000. She was a director of Equitable PCI Bank, Inc. from September 2005 Director until its merger with the Bank in May 2007.
Jimmy T. Tang, 76, Filipino, has been an Independent Director of BDO since July 27, 2002. He served as a regular Director of BDO from 1984 until his election as Independent Director. He is the President and Chairman of the Board of the Avesco Group of Companies. He currently serves as Honorary Adviser of the Federation of Electrical and Electronics Suppliers and Manufacturers of the Philippines, Inc. (PESA) & PESA Foundation; and Honorary President of the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII). Mr. Tang was a former President of PESA and Chairman of the PESA Foundation. He holds a Jimmy T. Tang Independent Director Bachelor’s Degree in Electrical Engineering from the Mapua Institute of Technology and was awarded the “Top Outstanding Mapuan for Entrepreneurship” in 1987. Key Officers
Pedro M. Florescio Edmundo L. Tan Edel Mary D. Vegamora Victor C. Arboleda Executive Vice-President Corporate Secretary Senior Vice-President Senior Vice-President Treasurer Internal Auditor Chief Compliance Officer
Pedro M. Florescio, 56, is Edmundo L. Tan, 65, is Edel Mary D. Vegamora, Victor S. Arboleda, 58, is Senior Vice President and Executive Vice President Corporate Secretary and 50, is Senior Vice President and Bank Treasurer. He is a director of BDO and Head of Internal Audit Chief Compliance Officer of holds a Bachelor’s Degree Leasing and Finance, Inc. Division (Chief Internal the Bank. Mr. Arboleda, a in Business Administration Atty. Tan concurrently Auditor) of the Bank. She Certified Public Accountant, from the University of the holds directorships in graduated Magna Cum has had more than 30 East and had attended various corporations. Atty. Laude from the University years of extensive numerous treasury Tan is the Managing of the East with a Bachelor experience in internal audit programs and trainings in Partner of Tan Acut Lopez of Science In Business and bank operations. He major financial centers. He and Pison Law Offices Administration, major in holds a Bachelor of has extensive years of Accountancy. She is a Science degree in experience in treasury Certified Public Accountant Commerce - Accounting functions within and outside and has earned the global from the University of Sto. the country. designation of Certified Tomas and completed the Internal Auditor. Executive Development Program at the Asian Institute of Management.
18 Key Officers
Walter C. Wassmer Jaime C. Yu Rolando C. Tanchancor Ador A. Abrogenra Senior Executive Vice-President Senior Executive Vice-President Executive Vice-President Executive Vice-President Institutional Banking Head Branch Banking Head Consumer Banking Trust and Investments Group
Walter C. Wassmer, 54, Jaime C. Yu, 53, is Senior Rolando C. Tanchanco, Ador A. Abrogena, 57, is is Senior Executive Vice Executive Vice President 49, is Executive Vice Executive Vice President President and Head of and Head of Branch President and Head for and Head of Trust and Institutional Banking Banking Group. He holds a Consumer Lending. He Investments Group. He Group. He holds a Bachelor of Arts degree in holds a Bachelor’s Degree holds a Bachelor’s Degree Bachelor’s degree in Economics from De La in Business Economics in Chemical Engineering Commerce from De La Salle University and is an from the University of the from De La Salle University Salle University. He is MBA graduate from the Philippines and acquired and a Masters Degree in also a Director of BDO Ateneo de Manila his MBM at the Asian Business Economics from Leasing and Finance, Inc. University. He has Institute of Management. the University of Asia and and other firms. extensive experience in He is currently a Director the Pacific. commercial, corporate, and of Equitable Card investment banking from Network, Inc. various banks.
19 Presentation Outline
I. BUSINESS FRANCHISE
II. DIRECTORS AND SENIOR MANAGEMENT
III. FINANCIAL HIGHLIGHTS 2011 P & L
(P bn) 2011 2010 YoY % Interest Income 50.5 49.9 1% Interest Expense 16.7 15.8 6% Net Interest Income 33.8 34.2 -1% Non-Interest Income 20.9 17.8 17% Fee Income 12.3 10.4 18% Trading & FX 5.6 5.8 -4% Others 3.0 1.6 90% Gross Operating Income 54.7 52.0 5% Operating Expenses 36.3 34.8 4% Pre-Provision Op. Profit 18.4 17.2 7% Provisions 6.1 6.7 -8% Taxes 1.6 1.6 -0% Net Income 10.5 8.8 19%
21 Key Growth Indicators
Gross Customer Loans Investment Securities
(P bn) (P bn) 15% 900 45% 32% 210 10% 15% 24% 20% 30% 750 15% 15% 200 -4% 5% 15% -5% -8% 190 197 -5% 600 670 0% 180 -15% 450 542 -15% 188 473 170 -25% -30% 300 393 172 160 -35% -45% 297 165 150 -60% 150 -45% 156 0 -75% 140 -55% 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Investment Securities % Growth Gross Loans % Growth
Deposits Fee-based Income
(P bn) (P bn) 43% 10% 900 45% 15 22% 30% 18% 14 12% 20% 13% 859 25% 800 9% 9% 12 10% 12 -5% 5% 11 700 0% 9 -11% 10 -15% 670 10 10 -10% 600 8 602 -35% -20% 6 9 500 -30% 502 -55% 5 3 -40% 400 443 -75% 2 -50%
300 -95% 0 -60% 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Total Deposits % Growth Fee-Based Income % Growth
22 Net Income, 2007- 2011
(P bn)
10
10.5 8
8.8 6 Global 6.5 Financial 6.0 4 Crisis
2 2.2
0 2007 2008 2009 2010 2011
Integration Reengineering/ Re-scaling of Operations 23 Capital Adequacy Ratio
16% 115.6% Total CAR 14.5% 114.0% 113.5% 14% 0 112.4% 5.6% Tier 2 12% 4.6% 4.0% 4.5% 10% 4.1% Tier 1
8%
6% 9.9% 10.0% 10.0% 9.0% 4% 8.3%
2%
0% 2007 2008 2009 2010 2011
Note: CAR per Bangko Sentral ng Pilipinas series 24 Thank you. www.bdo.com.ph