2015 Annual Report

Table of Contents

CORPORATE PROFILE 5 BOARD OF DIRECTORS 58

FINANCIAL HIGHLIGHTS 6 STATEMENT OF 66 MANAGEMENT’S MESSAGE FROM THE 10 RESPONSIBILITY FOR CHAIRMAN EMERITUS CONSOLIDATED FINANCIAL STATEMENTS MESSAGE FROM THE 12 CHAIRPERSON STATEMENTS OF 67 FINANCIAL POSITION MESSAGE FROM THE 14 PRESIDENT & CEO STATEMENTS OF INCOME 68 REVIEW OF OPERATIONS 17

AWARDS AND CITATIONS 34 MANAGEMENT DIRECTORY 69

CORPORATE GOVERNANCE 38 PRODUCTS AND SERVICES 74

CORPORATE SOCIAL 50 RESPONSIBILITY BDO GROUP OF COMPANIES 75 Corporate Mission To be the preferred bank in every market we serve by consistently providing innovative products and flawless delivery of services, proactively reinventing ourselves to meet market demands, creating shareholder value through superior returns, cultivating in our people a sense of pride and ownership, and striving to be always better than what we are today… tomorrow. Corporate Profile

BDO Unibank, Inc. is a full-service balance sheet strength and universal bank in the Philippines. continuing expansion into new It provides a complete array markets. As of 31 December 2015, of industry-leading products BDO is the country’s largest bank and services including Lending in terms of resources, customer (corporate and consumer), loans, deposits, and assets under Deposit-taking, Foreign Exchange, management. Brokering, Trust and Investments, Credit Cards, Corporate Cash BDO is a member of the SM Management and Remittances in Group, one of the country’s the Philippines. Through its local largest and most successful subsidiaries, the Bank offers Leasing conglomerates with businesses and Financing, Investment Banking, spanning retail, mall operations, Private Banking, Rural Banking, property development Bancassurance, Insurance Brokerage (residential, commercial, resorts/ and Stock Brokerage services. hotels), and financial services. Although part of a conglomerate, BDO’s institutional strengths and BDO’s day-to-day operations value-added products and services are handled by a team of hold the key to its successful professional managers and bank business relationships with officers. Further, the Bank has customers. Its branches remain one of the industry’s strongest at the forefront of setting high Board of Directors composed standards as a sales- and service- of professionals with extensive oriented, customer-focused experience in various fields that force. BDO has one of the largest include banking, accounting, distribution networks, with more finance, law, bank regulations than 1,000 operating branches and risk management, strategy and over 3,000 ATMs nationwide formulation and merchandise (including One Network Bank). marketing. Through selective acquisitions and organic growth, BDO has BDO is a publicly listed company positioned itself for increased (PLC).

CORE VALUES

COMMITMENT TO CUSTOMERS We are committed to delivering products and services that surpass customer expectations in value and in every aspect of customer service, while remaining to be prudent and trustworthy stewards of their wealth.

COMMITMENT TO A DYNAMIC AND EFFICIENT ORGANIZATION We are committed to creating an organization that is flexible, responds to change, and encourages innovation and creativity. We are committed to the process of continuous improvement in everything we do.

COMMITMENT TO EMPLOYEES We are committed to our employees’ growth and development and we will nurture them in an environment where excellence, integrity, teamwork, professionalism, and performance are valued above all else.

COMMITMENT TO SHAREHOLDERS We are committed to providing our shareholders with superior returns over the long term.

The Board of Directors reviewed and noted the Corporate Mission and Vision at its meeting on September 19, 2015. Financial Highlights

6 Financial & Operating Highlights 2015 2014 Change BALANCE SHEET (in billion PhP) Resources 2,031.3 1,863.6 9.0% Gross Customer Loans 1,279.4 1,089.4 17.4% Trading and Investment Securities 225.8 221.5 1.9% Deposits 1,663.9 1,492.3 11.5% Equity1/ 199.6 179.7 11.1%

INCOME STATEMENT (in billion PhP) Net Interest Income 57.0 51.2 11.2% Non-Interest Income 31.9 29.5 8.3% Gross Operating Income 88.9 80.7 10.1% Operating Expenses 55.1 48.5 13.6% Net Profit2/ 25.0 22.8 9.7%

FINANCIAL PERFORMANCE INDICATORS Profitability Return on Average Equity 13.4% 13.4% Return on Average Common Equity 13.6% 13.6% Return on Average Assets 1.3% 1.3% Margins and Liquidity Net Interest Margin 3.2% 3.2% Gross Customer Loans to Deposit Ratio 76.9% 73.0% Liquid Assets to Total Assets 33.8% 38.1% Cost Efficiency Cost to Income Ratio 62.0% 60.1% Cost to Average Assets Ratio 2.8% 2.7% Asset Quality NPL to Gross Customer Loans 1.2% 1.3% NPL Cover 166.1% 188.4% Capital and Leverage CET 1 Ratio 11.4% 12.2% Tier 1 Ratio 11.7% 12.6% Capital Adequacy Ratio 13.3% 14.4% Assets to Equity 10.2x 10.4x

DISTRIBUTION NETWORK AND MANPOWER Branches 1,029 876 17.5% ATMs 3,195 2,591 23.3% Employees 28,217 24,779 13.9%

SHAREHOLDER INFORMATION Market Value Share Price (in PhP) 105.00 109.80 -4.4% Market Capitalization (in billion PhP) 382.76 393.18 -2.6% Valuation Basic Earnings per Share (in PhP) 6.84 6.27 9.1% Diluted Earnings per Share (in PhP) 6.84 6.27 9.1% Book Value per Share (in PhP) 53.17 48.56 9.5% Price-Earnings Ratio 15.4x 17.5x Price to Book Value 2.0x 2.3x Dividends3/ Cash Dividends Paid (in billion PhP) 7.56 7.52 Cash Dividends per Common Share (in PhP) 2.10 2.10 Dividend Payout Ratio4/ 30.2% 33.0% Dividend Yield5/ 2.0% 2.3% Stock Dividends per share - -

1/ Total capital accounts, inclusive of minority interest and preferred shares 2/ Net Income attributable to shareholders of the parent bank 3/ On January 10, 2015, the Bank declared quarterly cash dividends of P0.30 per common share or a total of P1.20 per share. On April 24, 2015, the Bank also declared special cash dividends of P0.90 per share. The cash dividends were subsequently approved by the BSP and have all been paid as of December 31, 2015. 4/ Cash dividends paid during the year divided by net profit for the year 5/ Cash dividends per share paid during the year divided by average daily price for the year

7 Historical Trends & Figures 2011-2015

8 Financial Highlights

RESOURCES GROSS CUSTOMER LOANS 2,031.3 1,279.4 1,863.6 1,089.4 1,672.8 911.5 1,241.5 769.0 1,094.2 670.1

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

DEPOSIT LIABILITIES CAPITAL FUNDS

1,663.9 199.6 1,492.3 179.7 164.4 1,345.3 154.4

931.6 858.6 93.8

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

NET INCOME* 25.0 22.6 22.8

14.5 10.8

2011 2012 2013 2014 2015

(In Billion Pesos) * attributable to shareholders of the parent bank

9 Message from the Chairman Emeritus

10 To our valued shareholders and Dear shareholders and clients, clients, my deepest thanks for your confidence and support to the BDO Unibank has performed well BDO Organization, its leadership, again in 2015. and its workforce. You are our constant inspiration. It maintained its leadership in key business segments and stayed as the number one Bank in the country. This will continue to motivate the Organization to do more in the coming year.

Sincerely,

Henry Sy, Sr. Chairman Emeritus

11 Message from the Chairperson

12 Dear shareholders and clients, Likewise, we will pursue further expansion in our digital channels BDO Unibank achieved another and branch network to build client remarkable run in 2015, further coverage and tap underserved strengthening its position as the areas. The Bank will also be leading Bank in the country. exploring international expansion to service clients who do business We delivered a record net income or are interested to do business in of P25 billion, driven by the the Philippines. solid performance of our core lending, deposit-taking, and BDO will exert utmost efforts fee-based services. We were the to continue delivering excellent first domestic bank to hit the service to its customers, sustain P2-trillion mark in total assets, good financial results, and marking another milestone in our maintain its position as the banking history. Meanwhile, our industry leader. capital base reached almost P200 billion, the largest in the industry. We thank the Board and Our strong performance allowed management for their guidance, us to maintain leading market unwavering commitment, and position across most businesses, hard work. To all our shareholders and we have been consistently and clients, thank you again recognized as the “Best Bank in for choosing BDO as your the Philippines” by various global trusted partner. financial publications. Yours truly, While the international financial markets continue to be volatile, BDO remains optimistic in 2016. We anticipate a sustained increase in our core businesses as we tap the growth opportunities Teresita T. Sy across all our market segments. Chairperson

13 Message from the President & CEO

Dear fellow shareholders, supported by the faster 19% jump in low-cost deposits. We continue BDO Unibank’s success over the to invest in branches and in our years can be attributed to a host distribution network. At the end of factors. We are constantly on of the year, BDO’s capital base the lookout for opportunities even of nearly P200 billion remains when the operating environment the largest in the industry with is challenging; our investment a capital ratio settling above the decisions are carefully studied current regulatory minimum under and never half-baked; we remain the Basel III framework. We remain attuned to what the clients need primed to take advantage of the and how to serve them; and we opportunities in the Philippine are always willing to challenge emerging market. convention in our search to do things better. Balancing our effort to sustain good financial performance are These combined have resulted key strategic moves we made to in another good year for the take us further to a higher plane. Bank, closing 2015 with a record- During the year, we concluded the high net profit of P25 billion. deal to acquire full interest in our This represents an increase of bancassurance business through 10% year-on-year, matching its Generali Pilipinas. This acquisition earnings guidance set for the is reflective of our strategy to year. Despite a difficult year, expand aggressively our basic we achieved good performance life protection products for our across all of our businesses. growing consumer market.

Our customer loan portfolio We also sealed a joint venture deal outpaced the industry with 17% with Japan’s Nomura Holdings, growth to P1.3 trillion, while total Inc. to establish online trading deposits grew 12% to P1.7 trillion services for individual investors.

14 While initially focused on trading the weaker global growth from in the local bourse, we intend economic slowdowns in China, to ultimately expand to other Europe, and the Middle East will international markets, leveraging be intimidating. Nevertheless, we off Nomura’s global presence. believe we will overcome all of these difficulties. Our completion of the One Network Bank (ONB) acquisition, Let me end this by extending meanwhile, will give the Bank my gratitude to our primary access to the underserved sector stakeholders. To the Board of of the Philippine market. Initially Directors for being our guiding focusing on ONB’s core market of light; to the entire BDO team, Mindanao and Panay Island, we which to me is the Bank’s best intend to grow this distribution competitive advantage; to our channel nationwide, leveraging off shareholders, who continue to BDO’s financial strength and wide support us through difficult and banking presence. trying times; and to our clients, for your continued patronage and We continue to make big strides support. in our performance. But we can only sustain it if we continue to Thank you all for bringing BDO to execute well and make the right where it is now. investment decisions. While we continue to move forward, we should expect our competition to do so as well. This is therefore Sincerely, no time to rest on our laurels. If anything, this is the time to guard against complacency. Challenges brought on by market uncertainty, Nestor V. Tan the upcoming elections, and President & Chief Executive Officer

15

Review of Operations: Economic Environment

The Philippines displayed projects. Investments also resilience in 2015 amid a accelerated to accommodate challenging environment marked expanding demand. by uneven global growth and market volatility. The country’s Despite the volatile capital flows that resulted in a weaker Peso, Gross Domestic Product (GDP) the country’s dollar reserves grew by 5.8%, driven by a stood at a comfortable level of vibrant consumer sector, a US$80 billion, with the sustained strong rebound in government current account surplus spending, and a healthy pace providing a sturdy buffer against in investments. potential external shocks. Noting the country’s fiscal discipline, Rising interest rates and an improving governance standards, appreciating dollar, capital and sound banking system, Fitch outflows from emerging markets, Ratings upgraded the sovereign and a China slowdown tempered rating outlook to “positive” from the global outlook. Further, the “stable” last year, while both the Philippines had to contend with S&P and Moody’s maintained their “stable” outlook. restrained Overseas Filipino Workers (OFW) remittances Against this backdrop, the particularly from the Middle East country’s growth story remains burdened by low oil prices, the intact. Macroeconomic stability, El Niño impact on agriculture, combined with favorable and uncertainty about the demographics (a growing outcome of the Philippine market base largely composed elections. of a young and working population, boosting per capita Consumer spending increased on GDP and spending power), improved purchasing power as is seen propelling economic inflation dipped to record lows expansion. The potential on plunging oil and commodity for accelerated government spending and infrastructure prices. Increasing incomes from investments, with their multiplier OFWs and Business Process effects on employment and Outsourcing (BPOs) further incomes, can further reinforce boosted consumer demand. economic growth. Meanwhile, government spending bounced back in the All these factors make the final quarter, with disbursements Philippines stand out as one of fast-tracked to implement social the fastest-growing economies programs and infrastructure in the region.

17 Operational Highlights

The sustained expansion in lending, deposit-taking, and fee-based businesses drove the Bank’s solid performance in 2015. BDO Unibank’s net profit rose 10% in 2015, setting a new record and meeting the Bank’s guidance. Total loan portfolio grew 17% to P1.3 trillion, while total deposits jumped 12% to P1.7 trillion, underpinned by the 19% jump in low-cost deposits. BDO became the first Philippine bank to reach the P2.0 trillion mark in total assets.

18 Review of Operations

Net Profit 10% Growth Total Assets P2.0 Trillion

19 In 2015, BDO made key acquisitions and forged strategic Total Loans partnerships aimed at cementing its market leadership and ensuring it meets the needs of P1.3 Trillion customers in the years to come.

The most significant of these was Total Deposits the completion of the acquisition of One Network Bank Inc. (ONB) in July 2015. The largest rural bank P1.7 Trillion in the Philippines, ONB added more than P20 billion to the 107 branches and satellite offices Bank’s total loans and deposits. located mainly in Mindanao Furthermore, the acquisition gave and Panay. the Bank a stronger presence in Mindanao, allowing it to claim Moving forward, ONB is expected the top spot in a region where to be a key contributor to the its competitors have yet to make Bank’s growth story. It will serve significant inroads. ONB has a as the primary vehicle for BDO wide distribution network of to reach out to the country’s underserved population, not just in Mindanao, but eventually in Luzon and Visayas. ONB’s expansion will cover areas where BDO is not yet present, and will target specific underserved market segments, such as public school teachers, home industries, and micro-SMEs. Today, through an arrangement with the Department of Education, ONB provides salary loans to public school teachers. ONB plans to grow this customer base as it expands its market coverage to Luzon and Visayas.

The Bank’s move to take full control of life insurance company Generali Pilipinas Life Assurance “Why do customers choose BDO? It is Company, Inc., which was formed because we have the largest foorprint in 1999 in partnership with the nationwide, the widest array of products to Generali Group of Italy, was also a milestone deal for the Bank in cater to all our clients’ needs, and the fact 2015. The move will allow BDO to that BDO is able to address the needs of the expand more quickly in response to market demands and solidify entrepreneur in the middle market segment its presence in the broad-based with services such as late banking hours and middle-income insurance market. a ʻwe find ways’ attitude towards the needs of Also significant for the Bank is our clients.” its joint venture with Nomura Holdings, Inc., a leading financial services group and preeminent Walter C. Wassmer Asia-based investment bank with Head, Institutional Banking Group global reach, inked in June 2015.

20 Review of Operations

The deal will allow the Bank to roll out a retail online trading platform to take advantage of Filipinos’ increasing interest in investing. Under the deal, BDO will control 51% of the joint venture company and Nomura will own 49%. PCIB Securities, Inc., previously 100% owned by BDO, will be used as the joint venture company and will be renamed BDO Nomura Securities, Inc. “In the Philippines, consumer lending With the aim to become one of continued its double-digit growth, spurred the premier securities brokerage by an improving economy, which fueled houses in the Philippines, the joint venture will provide retail strong demand for home and auto loans. online trading services to BDO’s The business landscape in 2015 became very client base and branch network by utilizing Nomura’s expertise in competitive compared to previous years and retail stock brokerage. this caused the interest rate to remain low for auto, home, and SME loans as customers BDO also completed a joint venture deal, through BDO had more financing options.” Leasing, with Mitsubishi Motors Philippines Corp. (MMPC), trading firm Sojitz Corp., and consumer Rolando C. Tanchanco credit firm JACCS Co. Ltd. Head, Consumer Lending Group The deal, which was signed in January 2016, will allow the Bank to provide financing services to individual and corporate buyers of Mitsubishi Motors vehicles. Consumer Loan Growth The joint venture will give the Bank’s auto loan business an edge as Filipinos continue to 29% buy vehicles as their purchasing power improves. Consumer lending continued its double-digit growth due to the LENDING expanding Philippine economy, which fueled strong demand Lending continued to be a main for home and auto loans. Amid driver for the Bank in 2015. Thanks strong vehicle sales, BDO came to BDO’s expanded reach and up with more affordable financing marketing focus, BDO saw strong options that gave customers more growth in its lending business, choices and encouraged them to with consumer loans growing 29% avail of its auto loan financing. boosted by the addition of ONB. It also forged more tie-ups with Corporate lending showed strong car dealerships and came up with growth as well, with the middle incentives to encourage more market segment (medium-sized referrals. To grow its home loan companies and small-to-medium business amid continued demand enterprises) up 20% and the for residential properties, the large corporate segment up 16% Bank accredited more projects from 2014. and developers to ensure home

21 to fund its investment in various projects and for other general corporate purposes.

The Bank also signed a memorandum of understanding with Japanese regional banks for BDO to provide support for their clients locally and to develop business opportunities between our two countries. Signed with Fidea Holdings, a joint holding “We continue to leverage on BDO company between two major Unibank’s extensive market reach to gain Japanese regional banks, The access to middle-market and consumer Shonai Bank Ltd. and The Hokuto Bank, Ltd., the Bank is positioned lending accounts. This is our inherent to provide support to Fidea’s advantage over other companies.” clients with an eye toward investing in the Philippines.

Roberto E. Lapid The Bank also saw more business Vice Chairman and President, from foreign clients setting up shop in the Philippines, BDO Leasing and Finance particularly in the manufacturing and service industries. Given the Bank’s extensive international desks, BDO ably assisted such buyers have the widest possible clients and serviced their needs. options in buying their dream Additionally, BDO maximized homes, while also offering them these cross-border business flows competitive financing rates and with its overseas presence in faster loan turnaround time. countries like Japan, South Korea, Taiwan, and Singapore, providing Loans to the middle-market banking expertise and services. segment also posted double-digit growth in line with the Bank’s provincial expansion. Demand picked up as medium-sized BDO Leasing Loan Portfolio companies and SMEs across various industries secured capital to grow their businesses amid the P27 Billion strong economy.

The Bank’s leasing business Lending to large corporates continued to perform well also registered double-digit in 2015, with its leasing loan growth. Notably, BDO played a portfolio growing 16% from 2014 major role in big-ticket projects, to P27 billion. Net income from which included Monde Nissin’s leasing operations rose 10% to US$831-million acquisition of P556 million, exceeding 2014’s the UK-based meat substitute performance of P504 million. The business Quorn Foods, and Metro growth was achieved on the back Pacific Investments Corporation’s of continued provincial expansion (MPIC) 10-year, fixed-rate term and by leveraging on the Bank’s loan of P10 billion. For the latter, corporate relationships. proceeds will be used by MPIC

22 In 2015, BDO opened 46 branches, bringing its total to 921 branches. Counting ONB branches, BDO’s nationwide network now stands at 1,028 branches, making it the largest in the country.

DEPOSIT-TAKING Total Deposit Portfolio To better serve its clients, the Bank further expanded its branch network by adding 46 branches 12% Growth in 2015, bringing its total to 921 branches. Counting ONB branches, BDO’s nationwide CASA Deposits network now stands at 1,028 branches, making it the largest in the country. This 19% Growth expansion, coupled with more focused marketing, fueled the 12% hike in BDO’s deposit Total No. of Branches portfolio to P1.7 trillion. Of this total, the Bank’s Checking 1,028

23 Accounts/Savings Accounts (CASA) grew 19% over the previous year, resulting in a CASA ratio of 68%.

The growing branch and ATM network, coupled with extended and weekend banking hours, are meant to give customers utmost convenience and accessibility.

“We continue to expect the US Federal Reserve to hike interest rates in 2016 at a gradual pace. We will also take a cue from the stronger Philippine economy, anchored on resilient OFW remittances, Business Process Outsourcing (BPO) revenues, lower commodity prices, and the impact of the presidential election.”

Pedro M. Florescio III “Branch location, good customer service, Treasurer and access to products and services are key to acquiring customers. We know how to position ourselves and we are aware of

where the competition is.” NON-INTEREST INCOME SOURCES

The Bank’s non-interest income Jaime C. Yu operations — spanning the Head, Branch Banking Group payments and information businesses, insurance companies, investment banking arm and capital markets, wealth management and trust TREASURY groups — also contributed to The Bank’s treasury business faced challenges in 2015. Given overall growth in 2015. the unpredictable markets, the Bank rebalanced its risk Payments and information profile by reducing exposures to businesses non-core assets and shortening duration. With good execution The transaction banking group and correct market timing, the includes cash management Bank generated trading and for corporations, retail foreign exchange gains amounting electronic banking, and the to P7.2 billion. remittance business.

24 Review of Operations

In cash management, the Bank continued to provide a full suite of financial solutions to corporations and international clients. Total transaction volume for both collections and disbursements posted double-digit growth year-on- year. Electronic collections in 2015 registered a 27% increase in number of transactions, consistent with the overall Geneva T. Gloria increase in the use of digital Head, Remittance Distribution channels for banking services.

The use of Point-of-Sale (POS) Jonathan C. Diokno devices for collection purposes Head, Remittance Origination also increased 17% in transaction volume. These POS facilities

provided a fast, convenient, and secure way of disbursing funds through select partner institutions such as pawn shops and rural banks.

The Bank saw a 67% increase in check payment volume after introducing an Internet-based check-writing facility allowing on-site check printing and use of digitized signatures.

Total ATMs Nationwide

“The transaction banking space will continue to move the Bank forward in 3,195 terms of digitization and the creation BDO came up with ways to of the omni-channel experience for its make banking transactions more clients. This will allow the Bank to take convenient for its customers through a complete array of on the challenge of being able to meet online and mobile banking ever increasing customer demands in solutions. Over the past year, a constantly changing payments and the Bank cemented its standing as the industry leader in the information processing landscape.” rollout of automated teller machines (ATMs) by reaching a milestone of 3,195 ATMs (including Edwin R. Reyes 182 from ONB) deployed Head, Transaction Banking Group nationwide. Year on year, the Bank saw a 36% increase in total electronic transaction volume,

25 including mobile banking, and a Insurance corresponding 20% rise in terms of total peso amount transacted. BDO’s insurance brokerage business continues to see sure Several improvements were and steady growth, not just on introduced by the Bank to its auto and home insurance, but mobile banking application. also other lines such as property, For instance, it improved the construction and engineering, security feature by introducing marine cargo and marine hull, and the one-time password (OTP) bonds, among others. It remains facility that eliminates the need the number one insurance broker for SMS notification, making in the Philippines in terms of mobile transactions through commissions and the number the app more secure. Other key two in terms of premiums. In enhancements included the “Send 2015, it produced P5.9 billion Money” feature and the “Quick in premiums, representing a Balance” function, which enabled 19% growth, and P1.2 billion in customers to do more online. commissions, representing a 22% growth. The Bank also improved security for card clients when towards the To further grow the insurance end of 2015, BDO became the first brokerage business, BDO started bank in the Philippines to have to offer trade credit insurance certified and implemented EMV to SME clients in 2015. It also for debit cards. EMV — short for expanded its retail offerings Europay, MasterCard, and Visa — in terms of products and is a global standard for credit and distribution. The Bank made it debit payment cards. Such cards possible for customers to buy feature chip card technology, making them more secure. The completion of EMV certification requirements for the branded cards also allowed BDO to comply with BSP and compliance requirements.

Remittance Volume 9% Growth

The Bank’s remittance business “We want our clients to grow with us. We also delivered a strong showing want to build long-term relationships with in 2015, with a 15% increase in transaction count and 9% increase them and be their partners beyond simply in remittance volume. This executing transactions. We want them to was fueled in part by a strong distribution channel including look at us not just as a broker, but as a risk establishing partnerships with manager. Our aim, as always, is to build global players, among them DBS, a quality business by supplying quality Emirates NBD, Wells Fargo, and Xoom (now a PayPal company). service.” BDO saw its remittance transactions increase significantly in Asia, compensating for the Ma. Theresa L. Tan modest growth in the Middle General Manager, BDO Insurance Brokers East and passive growth in some European countries. 26 Review of Operations

certain insurance products at bill payment counters in select SM Stores and to purchase travel insurance online through the BDO website.

At Generali Pilipinas, the life insurance arm of BDO, meanwhile, total written premiums rose by 27% to P6.9 billion in 2015. The broad-based markets it serves provide the Bank with a natural opportunity to diversify “Generali’s 27% premium growth for our portfolio — an objective 2015 eclipsed anew the industry’s 19% the Bank was able to meet in 2015 as variable life (VL) growth. Our successful entry into sales contributed 46% of new Variable Life territory places us well business premiums, rising from 21% of total sales in 2014. Total on track with our goal of barging into VL premiums more than tripled the industry’s top five roster in terms in 2015. The steady growth of weighted New Business Premiums. of the unit’s VL business was driven by an increased demand With a team of over 800 financial for more investment-type advisers and sales managers and a few insurance protection products. With a complete range of VL hundred more branches waiting to be introduced in 2013 and 2014, and tapped, there remains much ground to supplemented by extensive sales force training efforts from 2014 cover to realize our full potential.” and onward, VL sales steadily rose throughout 2015. The Bank Renato Vergel de Dios also added new products to its portfolio of funds under the President and CEO, Generali Pilipinas VL suite: a PSE Fund, which tracks the issues comprising the PSE index; and Dragon Fund, a collection of growth stocks significantly owned by Filipino- Insurance Premiums Chinese businessmen.

Investment banking and 19% Growth capital markets

Results for the Bank’s investment Insurance Commissions banking businesses in 2015 were mixed. The Philippines saw a decline in capital-raising activities 22% Growth from large corporations in 2015 because of delays in the bidding and implementation of Public- Generali Pilipinas Premiums Private Partnership (PPP) projects and companies deferring public offerings ahead of the May 2016 27% Growth elections. The economic downturn in China and continued volatility in the U.S. and European markets created additional headwinds.

27 over the years with clients and partners. By nurturing such relationships, the Bank has been able to retain a strong pipeline over the years. Even through tough times, BDO remains visible and in touch with clients, fostering trust- driven connections.

Stock Brokerage Turnover

“We solve the client’s financial and capital requirements, and assist them with their P105 Billion other needs. BDO is the largest in terms of assets, loans, and deposits, and we The Bank’s stock brokerage have a huge distribution network. Having business held its own among domestic brokerages, ending 2015 said that, what makes us attractive to our with a full-year turnover of P105 clients is the intangible: Relationship- billion. This allowed the brokerage building. Through the years and through to retain its number two ranking the ups and downs of the economy and among domestic brokerages their industries, we have steadfastly without foreign tie-ups. offered our support to them. Of course, Investment and wealth having a strong shareholder like SM is an management advantage.” The Bank’s trust and wealth Eduardo V. Francisco management businesses President, BDO Capital & performed well in 2015. Assets held in trust of the Bank’s trust Investment Corporation and investments group grew 12% from 2014 to P669 billion, in an industry that grew a mere 3%. BDO played a key role in four Meanwhile, BDO Private Bank, notable deals in 2015: SBS the Bank’s private banking arm, Philippines Corp.’s P1.155 billion ended 2015 with assets held in initial public offering, GMR trust of P249 billion, a growth of Megawide Cebu Airport Corp.’s 13% from 2014. Taken together, P23.3 billion project finance facility, the robust growth of total assets San Buenaventura Power Ltd. held in trust increased the Bank's Co.’s P42.15 billion project finance market share from 32% in 2014 to facility, and the Citra Central 36% in 2015. Expressway Corp.’s P31 billion project finance facility.

The Bank landed these deals Assets Held in Trust because of relationships it has cultivated and maintained 12% Growth

28 Review of Operations

leadership in the trust industry is driven by the BDO trust team's competitive and consistent performance, products that are responsive to customer needs, and a well-trained and motivated team to serve them.

Local UITF Market Share 40% BDO Private Bank, meanwhile, embarked on education programs “The Trust and Investments Group’s in 2015 through its Wealth Perspectives Series, creating leadership in the trust industry awareness and deepening is driven by its competitive and clients' understanding of local consistent performance, products that and international asset classes such as universal and variable are responsive to customer needs, and life insurance, and exchange a well-trained and motivated team traded funds. Anchored on the to serve them. Through continuing investor education, we want clients to be better informed and aware of the risks and rewards of investing”

Ador A. Abrogena Head, Trust and Investments Group

On a consolidated basis, BDO accounted for a third of the country's trust business, while it maintained leadership in the unit investment trust fund “BDO will continue to position (UITF) business in the face of the prolonged low interest rate itself as the leading domestic environment and market volatility. private bank, providing thought To widen its product offering, the leadership to the Filipino high- Bank launched the BDO Equity Index Fund and a trio of feeder net-worth market; a private bank funds: BDO Developed Markets creating long-lasting relationships Property Index Feeder Fund, BDO China Equity Feeder Fund, and by providing guidance, BDO Global Equity Select Feeder investment, and structuring for Fund. With combined assets of families in this generation and P273 billion, BDO UITFs represent about 40% of the local UITF into the succeeding generations.” market, indicating that clients see added value in the trust group's Josefina N. Tan investment expertise. The Bank's President, BDO Private Bank

29 open architecture framework, The Bank’s Information the Private Bank provides access Technology team worked to these asset classes as they to ensure that critical bank are appropriate for each client's applications can cope with objectives and risk/reward profile. increased business volumes Customer lounges allow the Private and customer demands. Various Bank to expands its market reach technical contingency system and improve client accessibility; tests were conducted to ensure the newest one was opened in readiness in the event of natural Quezon City. Wealth advisors have calamities or disasters. Network been assigned to five lounges to segregation, data quarantine support the portfolio management techniques, and system security and estate planning services upgrades were also implemented, offered by the Private Bank. thus enabling the bank to provide better protection against fraud For its total assets under involving ATMs, payment cards, management (AUM) — comprising and online banking transactions. trust assets and client placements The implementation of a new with the Bank — BDO Private fraud detection system and the Bank posted a 10.50% increase, use of multi-factor authentication rising to P309 billion by yearend. similarly enabled a separate layer of fraud prevention. SUPPORT AND DELIVERY SYSTEMS The Bank also continued to develop analytic applications for BDO would not have been able big data to gain more insights to post double-digit growth about its customers. The Bank over the past year if not for its began using the insights for service- and performance-driven cross-selling leads generation, support groups. customer information enrichment, and monitoring feedback for its marketing programs.

In 2015, BDO implemented an enhanced Internal Credit Risk Rating System (ICRRS) for corporate and commercial accounts after a year of parallel test, and also completed the development of a Loan Loss Methodology (LLM) in compliance with BSP Circular 855. The Bank continues to monitor its Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) using Basel III prescribed Ricardo V. Martin parameters while awaiting regulatory guidelines from the Head, Information Technology BSP, with both ratios well above minimum requirements. In the Myla R. Untalan area of operational risk, the Bank continues to conduct regular Head, Digital Infrastructure testing of its Business Continuity

30 Review of Operations

Plan (BCP) to ensure minimum various units into one location. disruption in service delivery in The Premises Management case of potential threats relative Division oversaw the construction to the Bank's operations. BCP of offices here and abroad, activation in the Bank has been among them offices in Delta, made more efficient with the Quezon City, and Cagayan de implementation of an automated Oro Limketkai, Cagayan de text blast. Oro City, and representative office and remittance centers in Taiwan, Macau, and Daly City, San Francisco.

BDO enhanced the capabilities of its Customer Contact Center to improve its ability to respond to customer concerns in a more efficient manner. The Bank standardized the way it handled consumers’ banking concerns and centralized the monitoring, reporting, and resolution of such. The Bank also adopted the technology that automated many of the critical processes

Evelyn L. Villanueva Head, Risk Management

Luis S. Reyes Head, Investor Relations and Corporate Planning

BDO’s Investor Relations and Corporate Planning continued to actively engage the investment community and apprise investors about the Bank's growth story. The Bank joined conferences and Anthony Q. Chua non-deal road shows in key global Head, Global Operations financial markets like Hong Kong, Tokyo, Singapore, New York, and London. It also hosted semestral Evelyn C. Salagubang briefings for analysts. Head, Human Resources

The BDO Corporate Center in Ortigas, a LEED-certified Dennis B. Velasquez building, was completed in Head, Central Operations Group 2015 to consolidate the Bank’s

31 in handling customer inquiries Agreement for 2015-2020 to further and requests, such as multi-site strengthen management and union call routing and outbound partnership in fostering harmony automated dialing. and productivity in the workplace.

The Bank also improved its BDO’s Marketing Communications Rewards program to better serve Group continued to stay focused customers by expanding its reward on creating and executing well redemption network to include on marketing campaigns that promotions with travel, fuel, and were aligned with the growth wellness partners, driving up objectives of the Bank in 2015. member engagement and boosting The Bank had TVC campaigns clients’ affinity with the Bank. that catered to both regional and Philippine markets, respectively, In 2015, BDO added 4,000 new hires and also expanded its efforts and 1,500 ONB personnel. BDO also locally in events targeted at concluded the Collective Bargaining reaching out to our customers in the provincial markets. These on-the-ground activities provided an engaging way for the Bank to further expand its customer base. The Bank also stepped up moves to deliver key marketing messages via our social media assets (our Facebook page garnered 1.2 million fans less than a year since going live), allowing for more interactive and timely engagements with the Bank’s customers.

LOOKING AHEAD AND STAYING AHEAD

For 2016, BDO believes its Alvin C. Go solid balance sheet, strong Head, Legal Services, and business franchise and focused Assistant Corporate Secretary growth strategy place the Bank in a solid position to take advantage of the country’s Rebecca S. Torres growth opportunities amid an Chief Compliance Officer increasingly competitive and volatile environment.

Lucy C. Dy Comptroller

32 Review of Operations

The Bank expects continued opened a new market segment for growth in the middle market and BDO, with ONB being one of the consumer segments. In the large biggest players in the salary loan corporate segment, the Bank market for public school teachers. expects improved prospects in 2016/2017, anticipating key PPP While optimistic about the growth projects finally rolling out. prospects, BDO will continue to closely monitor developments While the Bank expects in the global economy — among companies to continue deferring them oil price fluctuations, the capital raising ahead of the May US Federal Reserve’s interest rate elections, it foresees a pickup stance, and China’s economic in commercial banking activities slowdown — to prepare the Bank in the first half of the year, for possible adverse effects. anticipating that a more robust demand for goods and services Overall, the Bank intends to will push companies to require maintain its market lead in 2016, additional working capital. confident that the investments With historical data pointing it has poured into expanding to people spending more in an its branch network, its more election year, the Bank also sees aggressive forays into provincial growth in the consumer lending markets, and its purposeful segment. The Bank also expects marketing efforts will all lead to its acquisition of ONB to spur sustained growth in its deposit consumer lending as the deal and lending businesses.

33 Awards and Citations Awards and Citations

BEST BANK: PHILIPPINE DOMESTIC DEAL OF THE BDO UNIBANK PROJECT FINANCE BANK YEAR, PHILIPPINES, OF THE YEAR, FIRST FOR REPUBLIC OF BEST BANK IN THE SUCCESSFUL AIRPORT THE PHILIPPINES’ PHILIPPINES PPP PROJECT P246.6 BILLION (2010-2015) Asian Banking & Finance DOMESTIC LIABILITY Alpha Southeast Asia MANAGEMENT, IN BEST DCM (DEBT CAPITAL WHICH BDO CAPITAL BEST DOMESTIC BANK IN MARKETS) HOUSE AND INVESTMENT THE PHILIPPINES FinanceAsia CORPORATION ACTED Asiamoney AS ONE OF THE DEAL PROJECT FINANCE BANK MANAGERS BEST BANK IN OF THE YEAR, PHILIPPINES The Asset THE PHILIPPINES The Asset (2013-2015) Euromoney BEST EQUITY HOUSE IN BEST PRIVATE BANK: THE PHILIPPINES BDO PRIVATE BANK BEST BANK IN The Asset THE PHILIPPINES BEST PRIVATE WEALTH (2010-2015) BEST LOAN HOUSE, MANAGEMENT BANK FinanceAsia PHILIPPINES IN THE PHILIPPINES The Asset (2008-2015) BEST BANK IN THE Alpha Southeast Asia PHILIPPINES PROJECT FINANCE Global Finance DEAL OF THE YEAR/ BEST PRIVATE BANK FOR BEST TRANSPORT DEAL, ASSET MANAGEMENT BEST DOMESTIC PHILIPPINES, FOR IN THE PHILIPPINES BANK, PHILIPPINES METRO MANILA SKYWAY Euromoney (2013-2015) STAGE 3, P31 BILLION The Asset PROJECT FINANCE BEST PRIVATE BANK FOR SYNDICATED TERM LOAN NET-WORTH-SPECIFIC TOP BANK IN THE FACILITY (BDO CAPITAL SERVICES IN THE PHILIPPINES AS ONE OF THE ISSUE PHILIPPINES; HIGH NET The Banker's Top 500 MANAGERS AND LEAD WORTH CLIENTS Global Brands UNDERWRITERS) (US$5M-US$30M) The Asset Euromoney TOP BANK IN THE PHILIPPINES PROJECT FINANCE BEST PRIVATE BANK The Banker's Top 1000 DEAL OF THE YEAR/ IN THE PHILIPPINES World Banks BEST TRANSPORT DEAL, (2008-2015) PHILIPPINES, FOR MACTAN FinanceAsia TOP 50 ASEAN PLCs IN CEBU INTERNATIONAL CORPORATE GOVERNANCE AIRPORT P23.3 BILLION BEST PRIVATE BANK IN ASEAN Corporate FINANCING FACILITY (BDO THE PHILIPPINES Governance CAPITAL AS ONE OF THE Global Finance LEAD ARRANGERS) The Asset BEST PRIVATE BANK IN BEST INVESTMENT BANK: THE PHILIPPINES BDO CAPITAL & BEST POWER DEAL, The Asset INVESTMENT CORPORATION PHILIPPINES, FOR PAGBILAO ENERGY BEST INVESTMENT BANK CORPORATION IN THE PHILIPPINES P33.3 BILLION PROJECT (2007-2015) FINANCING FACILITY Alpha Southeast Asia (BDO CAPITAL AS ONE OF THE MANDATED BEST DOMESTIC DEBT LEAD ARRANGERS AND HOUSE IN THE PHILIPPINES BOOKRUNNERS) Asiamoney The Asset

35 CORPORATE SOCIAL MOST ASTUTE INVESTOR BEST CORPORATE RESPONSIBILITY IN ASIAN LOCAL INSTITUTIONAL BANK IN CURRENCY BONDS, THE PHILIPPINES CORPORATE SOCIAL PHILIPPINES, The Asset RESPONSIBILITY PROGRAM RANK #8: TIFFANY LIM OF THE YEAR, SILVER The Asset BEST BANK FOR REAL AWARD ESTATE SERVICES, Asian Banking & Finance HIGHLY COMMENDED-MOST OVERALL (PHILIPPINES) ASTUTE INVESTOR IN Euromoney BEST CSR ASIAN LOCAL CURRENCY Corporate Governance Asia BONDS, PHILIPPINES: BEST BANK FOR REAL RYANNA BERZA-TALAN ESTATE LOAN FINANCE, BEST ENVIRONMENTAL The Asset OVERALL (PHILIPPINES) RESPONSIBILITY Euromoney Corporate Governance Asia OTHERS ONE OF THE PHILIPPINES' MOST TRUSTED BRANDS, INDIVIDUAL AWARDS BEST CASH MANAGEMENT BANK CATEGORY BANK IN THE PHILIPPINES (2010-2015) BEST CEO, Alpha Southeast Asia Reader's Digest INVESTOR RELATIONS: TERESITA T. SY BEST CASH MANAGEMENT ONE OF THE PHILIPPINES' Corporate Governance Asia BANK IN THE PHILIPPINES MOST TRUSTED BRANDS, The Asian Banker CREDIT CARD CATEGORY ASIAN CORPORATE Reader's Digest DIRECTOR OF THE YEAR: PHILIPPINE DOMESTIC TERESITA T. SY CASH MANAGEMENT BANK ONE OF THE PHILIPPINES' Corporate Governance Asia OF THE YEAR MOST TRUSTED BRANDS, Asian Banking & Finance INVESTMENT FUND BEST EXECUTIVE IN CATEGORY THE PHILIPPINES: PHILIPPINE DOMESTIC Reader’s Digest NESTOR V. TAN TRADE FINANCE BANK OF Asiamoney THE YEAR BEST DEPOSIT PRODUCT Asian Banking & Finance IN THE PHILIPPINES BEST CFO, The Asian Banker INVESTOR RELATIONS: BEST TRADE FINANCE PEDRO M. FLORESCIO III BANK IN THE PHILIPPINES BEST FUND ADMINISTRATOR, Corporate Governance Asia The Asset RETAIL: PHILIPPINES, RISING STAR BEST IR COMPANY BEST FX BANK FOR The Asset PROFESSIONAL, CORPORATE & FIs PHILIPPINES: IN THE PHILIPPINES BEST IR COMPANY LUIS S. REYES, JR. (2011-2015) (PHILIPPINES) Corporate Governance Asia Alpha Southeast Asia Corporate Governance Asia

MOST ASTUTE INVESTOR BEST DOMESTIC PROVIDER BEST INVESTOR IN ASIAN G3 BONDS, OF FX PRODUCTS & RELATIONS (RANK #8) PHILIPPINES, RANK #1: SERVICES IN THE FinanceAsia NADINE ALAPAN PHILIPPINES The Asset Asiamoney TOP INVESTMENT HOUSE IN ASIAN G3 BONDS MOST ASTUTE INVESTOR BEST FOREIGN EXCHANGE FOR 2015, BANK (RANK #1) IN ASIAN G3 BONDS, BANK IN THE PHILIPPINES The Asset PHILIPPINES, RANK #5: FinanceAsia ANALEN R. REYES The Asset

36 Awards and Citations

TOP INVESTMENT HIGHLY COMMENDED HOUSE IN ASIAN LOCAL AWARDS FOR CURRENCY BONDS BEST COMMERCIAL FOR 2015, PHILIPPINES DEVELOPMENT (SOUTH (RANK #5) EAST ASIA): BDO The Asset CORPORATE CENTER ORTIGAS ONLINE BANKING Property Awards INITIATIVE OF THE YEAR, PHILIPPINES BEST OFFICE Asian Banking & Finance ARCHITECTURAL DESIGN (SOUTH EAST ASIA): BDO BEST INTERNET BANKING CORPORATE CENTER IN THE PHILIPPINES ORTIGAS The Asian Banker Property Awards

BEST CORPORATE BEST MANAGED PUBLIC GOVERNANCE (RANK #7) COMPANIES (RANK #7) FinanceAsia FinanceAsia

RECIPIENT OF CORPORATE OVERALL BEST MANAGED GOVERNANCE ASIA COMPANY IN THE RECOGNITION AWARDS PHILIPPINES - LARGE CAP (2004-2015) Asiamoney Corporate Governance Asia BDO UNIBANK, ONE BEST CORPORATE OF FIFTEEN GLOBAL COMMUNICATIONS TEAM COMPANIES RECOGNIZED Corporate Governance Asia BY COLLOQUY Colloquy BEST COMMERCIAL DEVELOPMENT RECIPIENT OF THE 5TH (PHILIPPINES): BDO ASIAN EXCELLENCE CORPORATE CENTER AWARD 2015: ORTIGAS BDO UNIBANK Property Awards Corporate Governance Asia

BEST OFFICE PLATINUM AWARD WINNER DEVELOPMENT: BDO (2010-2015) CORPORATE CENTER The Asset ORTIGAS Property Awards COMMERCIAL BANK THAT GENERATED THE LARGEST BEST OFFICE OVERSEAS FILIPINO ARCHITECTURAL DESIGN: REMITTANCES FOR 2014 BDO CORPORATE TOWER Bangko Sentral ng Pilipinas ORTIGAS Property Awards OUTSTANDING PHILPASS REMIT PARTICIPANT CORPORATE PARTNER OF FOR 2014 THE YEAR Bangko Sentral ng Pilipinas WWF-Philippines

37 Corporate Governance

38 As we vigorously compete to maintain our top position in the financial services industry, we are mindful of meeting the expectations of our diverse stakeholders — that of maximizing shareholder value to our investors while taking care of the legitimate interests of other stakeholders including the employees. This is our obligation. It is also our commitment. 2015 was an auspicious year in GOVERNANCE STRUCTURE BDO’s corporate governance journey towards excellence. BOARD OF DIRECTORS Building on the significant improvements implemented in The Board is at the helm of our the past years, BDO continues to corporate governance practice. evolve its corporate governance It is a mix of executive, non- policies and practices that executive and independent enable it not only to comply directors with a good balance of with the statutory and skills and experience. They are regulatory requirements, but all professionals with expertise in also to voluntarily adopt and banking, accounting, finance, law, institutionalize the best practices merchandise marketing, strategy on corporate governance, formulation, bank regulations and where appropriate. risk management.

These efforts were recognized The Board is composed of during the inaugural presentation 11 members, 5 of whom are of the ASEAN Corporate independent directors and aided Governance Awards when BDO by 5 advisers. In November 2015, was named as one of the Top 50 Mr. Cheo Chai Hong resigned. ASEAN Publicly Listed Companies Subsequently, the Board approved in Corporate Governance. the nomination and election of Mr. Dioscoro I. Ramos as This affirms our deep commitment Independent Director. Mr. Cheo to a high standard of corporate Chai Hong remained as an Adviser governance practice firmly to the Board. anchored on the principles of accountability, fairness, integrity, The Board is entrusted with the transparency and performance ultimate responsibility of setting consistently applied throughout the overall direction, financial the institution. objectives and long term goals of the Bank. It reviews and approves Our corporate governance financial plans, and monitors framework has been designed performance against budgets to support and work within our and business plans, capital Group organizational structure to expenditures, acquisitions and achieve our corporate mission— divestments, annual and interim that of creating long-term value financial statements. It reviews and enhancing the sustainability enterprise risk strategy, oversees of the Bank for the benefit of management performance, its investors and various other develops succession plans for stakeholders. the Board and CEO and fulfills corporate social responsibility The following are the highlights to ensure that the Bank meets of our corporate governance stakeholders’ expectations. structure and key focus in 2015.

40 Corporate Governance

In order to discharge effectively Corporate Governance Committee. the governance responsibilities Key findings showed that the of the Bank, we believe that it Board continues to function is necessary to have an active, very well, committees operate independent and well-informed effectively, senior management Board as well as an empowered has the competence and ability senior management that has the to manage the Bank while the freedom to drive the Bank forward relationship between directors within an effective framework of and advisers in the diverse BDO full accountability for results. This Board remains strong. It also corporate governance structure welcomes the directors’ and has served the Bank well and will advisers’ feedback particularly be the model for the practice on areas where it could deepen of corporate governance into its involvement to become more the future. effective and relevant.

Significant matters taken up by During the year, 14 meetings the Board in 2015 include among were held by the Board. The high others, the approval of the annual attendance record of the directors operating plan and budget, demonstrates their strong 2015 Capital and Funding Plan, commitment to devote sufficient declaration of dividends, release time and attention to perform of the 2014 Audited Financial their duties and responsibilities. Statements within 60 days from financial year end, listing with the Attendance Philippine Dealing and Exchange System Corporation of its capital Board of Directors Meeting 2015 market offerings, strategic planning, review of operational No. of Total and financial performance, capital Meetings No. of Percentage DIRECTORS Attended Meetings Rating investments and acquisitions, issues related to regulatory 1. Teresita T. Sy 14 14 100.00% capital, risk management and 2. Jesus A. 14 14 100.00% consumer protection, director Jacinto, Jr. continuing education and the 2015 3. Nestor V. Tan 14 14 100.00% corporate governance scorecard. 4. Josefina N. Tan 14 14 100.00% 5. Antonio C. 14 14 100.00% In accordance with its oversight Pacis function, it reviews the work of 6. Jimmy T. Tang 13 14 92.86% the various committees to ensure 7. Cheo Chai 14 14 100.00% that they have complied with their Hong* respective mandates. 8. Jones M. 14 14 100.00% Castro, Jr. 9. Jose F. 13 14 92.86% The Board also recognizes the Buenaventura importance and benefits of 10. Christopher A. 14 14 100.00% conducting regular evaluation Bell-Knight to determine its effectiveness. 11. Gilbert C. 14 14 100.00% Teodoro, Jr. In 2015, the self-assessment of the performance of the Board, * Resigned from the Board and designated as Adviser to the directors, committees and senior Board effective November 28, 2015. management was led by the

41 BOARD COMMITTEES AUDIT COMMITTEE

Currently, there are 9 committees Chairperson: assisting the Board in discharging Jose F. Buenaventura its roles and functions. These (Independent Director) committees each operate under their respective defined Terms Members: of Reference which are approved Jesus A. Jacinto, Jr. by the Board, reviewed and Jones M. Castro, Jr. (Independent updated regularly to ensure that and Lead Director) these remain appropriate and in Jimmy T. Tang (Independent line with changes in governance Director) practices. The roles and composition of these committees Adviser: including meetings held and Corazon S. de la Paz-Bernardo attendance of members are provided below. The Audit Committee is responsible for assisting the Board in performing its EXECUTIVE COMMITTEE responsibilities in relation to financial reporting requirements, Chairperson: risk management and the Teresita T. Sy assessment of internal control systems to provide the Board Members: assurance on the existence of Jesus A. Jacinto, Jr. effective control environment that Nestor V. Tan ensures efficiency of operations. Josefina T. Tan The main areas of oversight of the Antonio N. Cotoco Committee include the following: Guia C. Lim Financial Reporting The Executive Committee acts as the main approving body for • Reviewing the Bank’s Bank exposures, particularly financial reporting process approval and confirmation of and ensuring the integrity credit proposals, investment and of its financial statements acquisitions, disposal of acquired and compliance with assets and other projects or regulations and financial initiatives to enhance the Bank’s reporting standards. operating and service delivery • Reviewing with management capabilities. the financial statements before submission to the In 2015, the Committee met 53 Board focusing on clarity times with Ms. Teresita Sy attending of disclosures and material 43 meetings; Mr. Jesus A. Jacinto, Jr. areas with significant 48 meetings; Mr. Nestor V. Tan changes. 43 meetings; Ms. Josefina T. Tan 51 meetings; Mr. Antonio N. Cotoco 47 meetings; and Ms. Guia C. Lim 50 meetings.

42 Corporate Governance

Internal Audit and Controls During the year, the Audit Committee reviewed and • Reviewing and evaluating recommended to the Board the effectiveness of internal for approval the quarterly controls, risk management unaudited and annual audited systems, regulatory financial statements, approved compliance and governance the yearly Internal Audit plan processes of the Bank, after a thorough review to ensure approving the scope of the adequate scope, coverage and internal audit work, analysis resource requirements to carry of the main areas of risk and out its functions, reviewed the adequacy of resources and effectiveness of the internal efficiency of the internal control systems and control audit function. issues of bank wide significance. • Reviewing and approving It reviewed the enterprise risk the management’s response management systems of the Bank, on matters related to the discussed the high and moderate report of examination by risk issues and reviewed the regulatory bodies and management actions to control reports on actions taken or or mitigate these risks. It kept status of follow-up items. track of updates on Information Technology’s action plans in External Audit Engagement further strengthening IT risk and Reports management.

• Recommending the On external audit, it reviewed and appointment, reappointment approved the external auditor’s and removal of external engagement letter and audit plan auditors, remuneration, and scope for 2015, reviewed the approval of terms of audit results of the audit and reports engagement and payment of submitted by the external auditor fees for any other services which summarized their findings rendered by the auditors. together with management’s • Approving the annual audit responses and/or action plans. It plan and reviewing their also assessed the performance reports of examination of the Internal Audit Group, including that of wholly- Chief Internal Auditor and owned subsidiaries focusing its key officers. Likewise, it on significant findings with evaluated the external auditor’s financial impact and their independence and performance resolutions. and recommended to the Board • Reviewing management’s for approval the re-appointment response to the audit of Punongbayan & Araullo as the findings and actions taken. Bank’s external auditor for the • Assessing the performance year ended December 31, 2015. of the External Auditor. On its regulatory compliance Others oversight, it reviewed the yearly plans, enhanced manuals and • Reviewing operational cases independent testing frameworks and compliance with ethical of the Compliance and Anti- rules. Money Laundering Units; • Investigating any matter or reviewed the results of the activity within its Terms of independent compliance and AML Reference. testing of the Bank including

43 its subsidiaries; monitored the CORPORATE GOVERNANCE timely submission of regulatory COMMITTEE compliance and prudential reports; reviewed new regulatory Chairperson: issuances and action plans to Jones M. Castro, Jr. (Independent identified gaps; and reviewed and Lead Director) management’s reply to the report of examination findings Members: and recommendations ensuring Jesus A. Jacinto, Jr. that committed actions are Jimmy T. Tang (Independent implemented. Director) Christopher A. Bell-Knight At the meeting held on February 24, 2015, the Audit The function of the Corporate Committee reviewed and Governance Committee is to recommended to the Board the assist the Board in fulfilling its approval of the audited financial responsibilities for corporate statements for the year ended governance across the BDO December 31, 2014 together with Group. Its role includes the related Notes to the Financial reviewing the existing corporate Statements. This was approved governance policies and practices, by the Board and disclosed to the recommending any changes to public together with the annual promote an environment wherein results for the year 2015 on effective governance is part of February 26, 2015. It believes that the culture of the Bank; reviewing the financial statements are fairly and reporting to the Board on presented in conformity with corporate governance regulatory the relevant financial reporting or compliance issues; monitoring standards in all material aspects. corporate governance new regulations and recommending It reported that it has evaluated appropriate changes; reviewing the effectiveness of the internal and recommending to the Board controls, risk management on best practices to be adopted systems and governance as applicable particularly processes of the Bank, Trust those enunciated in the ASEAN and its subsidiaries based on Corporate Governance Scorecard; information obtained from the and reviewing periodically the External Auditor, the assurance succession plan and disclosure of provided by the Internal Auditor, corporate governance policies and and additional reports and information in the Bank’s website. information requested from Senior Management. The Bank The Committee oversees the and subsidiaries’ systems are also continuing education program of assessed as generally adequate directors and conducts the annual and its operational risk is performance evaluation of the deemed moderate. Board, committees, directors and senior management. It provides The Committee held 12 meetings an assessment of the outcome in 2015 with all the members in and reports to the Board the attendance. final results of the evaluation

44 Corporate Governance

including recommendations for investors, media, analysts, improvement and areas to focus industry participants, regulators to enhance effectiveness. and the general public. It was active in giving comments During the year, it reviewed on the proposed changes in the policies and practices on corporate governance rules corporate governance and pushed by regulatory authorities. spearheaded the implementation It recommended changes in the of best practices in corporate corporate governance policies governance through its various and practices of One Network activities among others, the Bank, a newly acquired rural bank revision of policy on multiple subsidiary to ensure alignment board seats concurrently held by with the parent bank. independent and non-executive directors to 5 and change of The Committee met 6 times in membership composition of 2015 with all the members in the Related Party Transactions attendance. Committee to all independent directors. TRUST COMMITTEE The Independent Directors and Non-Executive Directors, chaired Chairperson: by Lead Director Jones M. Castro, Antonio C. Pacis Jr., conducted 3 executive sessions with the External Members: Auditor, Internal Auditor, Chief Gilberto C. Teodoro, Jr. Risk Officer and Chief Compliance (Independent Director) Officer without the presence of Cheo Chai Hong senior management to discuss Nestor V. Tan various matters/issues outside Ador A. Abrogena of the regular meetings of the Audit and Risk Management The Trust Committee reviews and Committees. The results of these approves transactions between sessions were discussed with the trust and/or fiduciary accounts, Bank’s Chairperson, President and the investment, reinvestment and CEO and Executive Directors. disposition of funds and property, offering of new products and It conducted the corporate services, establishment and governance seminar for the renewal of lines and limits with continuing education of directors, financial institutions, investment annual performance evaluation of outlets and counterparties, the Board, committees, directors accepts and closes trust/other and executive management, and fiduciary accounts. It evaluates monitored the submission of trust and other fiduciary accounts regulatory corporate governance at least once a year and reviews reports, publication and updating the Trust and Investment Group’s of corporate governance policies overall performance, profile and continuous disclosures in of funds and accountabilities the Bank’s website to promote under its management, transparency and effective industry position, and the risk communication to shareholders, management reports.

45 In 2015, the Committee approved minimizing the impact of losses the recommendation of Trust when they occur. It supports and Investment Group to apply the Board in performing its risk for license and accreditation to oversight functions and reviews act as PERA Administrator and the overall risk tolerance levels, Securities Custodian, develop oversees the implementation and and launch 7 feeder funds to review of the risk management Philippine clients and 2 new Unit plan on an integrated enterprise- Income Trust Funds (UITFs) and wide basis, system of limits of cross selling of UITFs by One management of discretionary Network Bank. In performing its authority delegated by the oversight function, the Committee Board and takes immediate reviewed the resolutions and corrective actions when actions taken on internal and breached. It is also responsible external audit issues including for reassessing the continued implementation of measures to relevance, comprehensiveness address previous examination and effectiveness of the risk findings. The Committee also management plan, and revises it noted significant improvement in when needed. The Committee also the self-assessment functions and reviews risk reports that control independent compliance testing and monitor risk exposures that led to early detection and and limits. resolution of findings. During the year, the Committee The Committee met 11 times in conducted regular discussions 2015 with all the members in of the Bank’s exposures to attendance. market and liquidity risks, credit and operational risk, including the necessary risk mitigation RISK MANAGEMENT COMMITTEE strategies, where necessary and applicable; approved the Chairperson: results of the annual review of Jones M. Castro, Jr. (Independent the Bank’s risk management and Lead Director) policies and limits; approved the newly developed or redeveloped Members: risk management models, Nestor V. Tan discussed the performance of all Josefina N. Tan implemented models and results Christopher A. Bell-Knight of the BSP-mandated stress tests for banks and approved The Risk Management Committee the implementation roadmap for is responsible for the development the Bank’s Consumer Protection of the Bank’s risk policies as Risk Management System in well as the definition of the compliance with BSP Circular 857. appropriate strategies for identifying, quantifying, managing The Committee met 12 times in and controlling risk exposures 2015 with all the members in including preventing and/or attendance.

46 Corporate Governance

NOMINATIONS COMMITTEE Stockholders’ Meeting and the nominees to various Chairperson: Board committees. It also Josefina N. Tan recommended the nomination of Mr. Jones M. Castro, Jr. as Lead Members: Independent Director and the Jose F. Buenaventura appointment of the corporate (Independent Director) officers of the Bank. During Jimmy T. Tang (Independent the last quarter of the year, Director) the Committee deliberated and recommended the appointment The Nominations Committee of 3 new Senior Vice Presidents leads the process of identifying for approval by the Board. and recommending candidates It conducted a search for a for appointment as Directors and new director in line with the for other key positions, taking strategic direction to bring in into account the experience, fresh talent, financial expertise, expertise, knowledge and skills and new perspective to the of candidates and giving full Board. After due deliberation, consideration to succession it approved the nomination planning and the leadership needs of Mr. Dioscoro I. Ramos as of the Bank. It recommends the Independent Director effective composition and chairmanship January 9, 2016. of the various committees. It reviews the structure, size The Committee held 5 meetings and composition of the Board, in 2015 with all the members in including the balance of skills, attendance. knowledge and experience and the independence of the non-executive Directors, COMPENSATION COMMITTEE and recommends changes if necessary. It also reviews the Chairperson: appointment of new executive Jimmy T. Tang (Independent officers (SVP and up) and all Director) nominations for the appointment, re-appointment, election or re- Members: election of Directors of the Bank Jesus A. Jacinto, Jr. and members of the various Josefina N. Tan committees, considering their Teresita T. Sy performance, commitment and ability to contribute to the Board, The Compensation Committee and makes recommendations to provides oversight on directors’ the Board on appointment of new compensation and remuneration Directors when necessary. of senior management consistent with the Bank’s culture, corporate In April 2015, having reviewed values and strategic objectives, the composition of the Board effectively aligned with prudent and committees, it approved risk taking and commensurate the nominations of the regular with corporate and individual directors to stand for re-election performance. It also ensures by shareholders at the Annual consistency of the compensation

47 policies and practices as applied versus strategic objectives and across the Group with the objective major IT projects. It approves and of attracting, motivating, rewarding endorses to the Board IT-related and retaining quality personnel and best practices, strategic plans, creating incentives for delivering policies, and procedures. long-term performance within established risk limits. In 2015, the Committee approved the Bank’s IT Strategic Plan, During the year, the Committee Information Security Program, IT reviewed the Department of projects related to compliance Labor and Employment Order requirements, EMV Road 147-15 governing the application Map and Migration Plan, and of just and authorized causes of Systems Availability Criteria termination of employment and for Transaction Banking and directed the Human Resources Consumer Lending Group. It also Group to fully implement the reviewed and noted the External amended rules and regulations. In and Internal Auditor’s report on December 2015, it reviewed and their audit of the Information approved the economic provisions Systems as well the replies of of Collective Bargaining management. Agreement for the period 2015- 2020 between BDO and BDO The Committee held 5 meetings Employees Union. in 2015 with all the members in attendance. The Committee held 2 meetings in 2015 with all the members in attendance. RELATED PARTY TRANSACTIONS COMMITTEE

INFORMATION TECHNOLOGY Chairperson: STEERING COMMITTEE Jose F. Buenaventura (Independent Director) Chairperson: Gilberto C. Teodoro, Jr. Members: (Independent Director) Jimmy T. Tang (Independent Director) Members: Jones M. Castro, Jr. (Independent Nestor V. Tan and Lead Director) Ricardo V. Martin Adviser: The Information Technology Jesus A. Jacinto, Jr. Steering Committee provides oversight and governance The Related Party Transactions over the Bank’s IT functions, Committee assists the Board in including approvals of information its oversight of the conduct of technology-related policies all Related Party Transactions and practices of the Bank and (RPTs) to protect the interest of applicable guidelines. It informs the Bank and its stakeholders. It the Board of both internal and ensures proper disclosure of all external IT-related developments approved RPTs in accordance with and activities, potential applicable legal and regulatory challenges and risks, progress requirements and confirmation

48 Corporate Governance

by majority vote on the Annual The Bank’s Corporate Governance Stockholders’ meeting the Bank’s Manual approved by the Board significant transactions with of Directors incorporates the related parties. established governance policies and practices in accordance In 2015, the Committee reviewed with the Code. It is our guide to and endorsed for approval of the principled actions and responsible Board of Directors the significant conduct in fulfilling our duties and Related Party Transactions of responsibilities to stockholders DOSRI and other related parties. and other stakeholders which The Committee also reviewed and include, among others, customers, revised its Terms of Reference employees, suppliers, service for approval of the Board. It providers, creditors, government recommended the revision of the and community in which the RPT policy for approval by the Bank operates. The Manual, in Board to expand the definition conjunction with the Bank’s of the related parties of the Bank Articles of Incorporation, By- and specify the handling and Laws and the charters of the approval process of Related Party Board Committees, constitute Transactions. the governance framework of the Bank. The Committee met 10 times in 2015 with Mr. Jose F. Buenaventura attending all GOING FORWARD meetings, Mr. Jimmy T. Tang Good corporate governance is was present in 8 meetings, the bedrock of a healthy, safe Mr. Christopher A. Bell-Knight and sound financial institution. was present in all 7 meetings Stepping up to the next level on held until his term ended on corporate governance entails the April 23, 2015 and Mr. Jones M. adoption and implementation of Castro, Jr. attended all meetings best practices to ensure the high since his appointment as member standards of governance in every on April 24, 2015. aspect of our business and at all levels of the organization. As we vigorously compete to maintain COMPLIANCE WITH SEC our top position in the financial CODE OF CORPORATE services industry, we are mindful GOVERNANCE of meeting the expectations of our diverse stakeholders, which The Bank has fully complied is that of maximizing shareholder with the principles of good value to our investors while taking corporate governance enunciated care of the legitimate interests of by the Securities and Exchange other stakeholders including the Commission in the Revised Code employees. This is our obligation. of Corporate Governance of 2009. It is also our commitment.

49 Corporate Social Responsibility

2015 was an active and effective year for BDO Foundation. With numerous projects launched and completed, the foundation professed an ever-deepening commitment to its disaster response advocacy.

RURAL HEALTH CENTERS

BDO Foundation completed the rehabilitation of eight health centers in provinces affected by natural or man-made disasters. These centers serve the healthcare needs of nearby barangays and municipalities in their respective areas. The rehabilitation projects were completed with the support of partners and local health and government officials.

Covered in the rehabilitation and reconstruction of the health centers are its facilities for children and the elderly, consultation rooms, minor surgery and treatment rooms, pharmacy, dental clinic, labor room, breastfeeding area and birthing clinic, among others. The rehabilitation of birthing facilities is supportive of the United Nations Millennium Development Goal for the improvement of maternal health.

50 To fulfill its disaster response advocacy, BDO Foundation reached out to beneficiaries affected by natural or man-made disasters through three main interventions: relief, rehabilitation and reconstruction. SCHOOL BUILDINGS

In fulfillment of its disaster response and educational Rehabilitated rural Population covered health centers by the health centers advocacies, BDO Foundation, in partnership with donors, responded to the need for more Bogo City Main Health Center in Northern Cebu 69,991 school buildings and classrooms in parts of the country devastated Carigara Municipal Health Center 47,444 by calamities. Its ultimate in Leyte goal is to contribute to youth development, especially in La Trinidad Main Health Center in Benguet 107,188 disadvantaged areas. The school building projects also support the Cabatuan Main Health Center government’s Adopt-A-School in Iloilo 54,950 Program.

New Washington Main Health Center in Aklan 42,112 HOUSING RESETTLEMENT

Roxas City Main Health Center PROJECTS AND MULTI-PURPOSE in Capiz 156,197 HALLS

Alangalang Municipal Health Center As part of its long-term in Leyte 48,660 commitment to its disaster

Doña Isabel C. Climaco Main Health Center response advocacy, BDO in Zamboanga City 21,432 Foundation constructed housing resettlements and multi-purpose halls for communities affected by disasters.

52 Corporate Social Responsibility

The multi-purpose halls are fully funded by donations from BDO volunteers and officers. These structures serve various functions: as evacuation center, Total student No. of Schools population classrooms as distribution center for relief goods, as venue for community meetings and as recreational area. Tacloban City National High School in Tacloban City, Leyte 1,557 4 The housing projects funded by BDO, on the other hand, provide Pandan Central School shelter for families displaced by in Pandan, Antique 872 4 calamities. These infrastructure projects contribute to community Lilo-An National High School development and help residents in Ormoc City, Leyte 2,177 2 rebuild their lives. Calape Central Elementary School 836 To support community in Calape, Bohol 2 development efforts — particularly for the Yolanda-hit San Miguel National High School in San Miguel, Leyte 1,077 4 residents of Barangay Pawa in Pan-ay, Capiz — BDO Foundation Dr. Vicente F. Gustilo Memorial National helped capacitate the community High School in Cadiz, Negros Occidental 3,502 4 through financial literacy initiatives. The foundation helped Tiwi Community College officers of the homeowners in Tiwi, Albay 1,589 4 association learn financial skills through trainings conducted Pis-anan National High School under the auspices of BDO in Sibalom, Antique 875 4 Unibank. Efraim Santibañez National High School in Passi City, Iloilo 495 4

53 As a result, the bank enabled the transfer of funds to beneficiaries by making it possible for residents otherwise Livelihood No. of projects beneficiaries FTI cooperatives unfamiliar with banking services to open accounts and manage Workshop and livelihood transactions. These efforts training for Typhoon 200 NA Yolanda victims families with are part of the foundation’s disabled members participation in UN-Habitat’s Production of Leyte These-Abled Post-Yolanda Support for Safer Producers Cooperative school furniture 40 Homes and Settlements project. members (LEYTAPCO) The community-driven approach, Production of San Francisco Agusan Di­erently also called the People’s Process, Abled Persons Multi-Purpose school furniture 60 Cooperative (SAFRA ADAP) is an alternative method of members implementing housing programs. Production of Association of Di­erently It enables the community to lead school furniture 60 Abled Persons Multi-Purpose members Cooperative (ADPI MPC) the building process.

Production of New Hope school furniture 50 Multi-Purpose Cooperative members

Housing resettlement and No. of TEACHING AIDS multi-purpose hall projects families BDO Foundation facilitated the Resettlement houses for Typhoon Sendong housing units/ donation of instructional materials victims in SM-BDO-GK Village, 300 families Barangay Canitoan, Cagayan de Oro to kindergarten and grade one pupils in elementary schools built housing units/ Resettlement houses for Typhoon Pablo 69 by the foundation in areas affected victims in Mati, Davao Oriental families by Typhoon Yolanda. The project BDO Foundation Multi-Purpose Hall 96 families is in line with the foundation’s in Barangay Pawa, Pan-ay, Capiz rehabilitation efforts for provinces devastated by the supertyphoon. The teaching materials, which were donated by C&E Foundation LIVELIHOOD PROJECTS through Kusog Tacloban, will help children develop their BDO Foundation provided reading ability. sources of livelihood and income for disabled persons and BDO Foundation facilitated the individuals affected by calamities. donation of teaching aids to These livelihood opportunities the following: empowered beneficiaries. Specifically, BDO Foundation • Baybay Elementary School supported the Foundation for in Catarman, Samar These-Abled Persons Inc. (FTI) by • Lantangan Elementary continuously purchasing products School in Pontevedra, Capiz made by disabled persons • Pandan Central School in affiliated with FTI for its many Pandan, Antique school building projects in various • San Jose Central School in parts of the country. Tacloban City, Leyte BDO Foundation also helped promote the products of the different FTI cooperatives by endorsing them to partners and affiliates.

54 Corporate Social Responsibility

RELIEF OPERATIONS

BDO Foundation mounted Livelihood No. of multiple relief operations in projects beneficiaries FTI cooperatives 2015, mobilizing BDO volunteers from branches near barangays Workshop and livelihood training for Typhoon 200 NA and municipalities severely No. of No. of Yolanda victims families with Disaster Province families volunteers disabled members affected by tropical storms and monsoon rains. Typhoon Seniang Cebu (Carcar) 607 25 Production of Leyte These-Abled Producers Cooperative school furniture 40 members (LEYTAPCO) Aimed at helping rebuild the Bohol (Calape, Loboc and Cortes) 1,789 18 lives of calamity-stricken Misamis Oriental (Gingoog) Production of San Francisco Agusan Di­erently 1,530 22 Abled Persons Multi-Purpose families, these relief efforts school furniture 60 members Cooperative (SAFRA ADAP) were conducted in partnership Fire Capiz (Roxas City) 187 with local government units, 4 Production of Association of Di­erently Abled Persons Multi-Purpose government agencies, non- Mt. Bulusan school furniture 60 Sorsogon 400 members Cooperative (ADPI MPC) government organizations, volcanic activity 14 humanitarian organizations, local La Union (San Fernando, San Juan, Production of New Hope Typhoon Egay parishes and SM stores which Bacnotan and Luna) 3,300 56 school furniture 50 Multi-Purpose Cooperative members prepared the relief goods. Other partners also provided support. Habagat/Southwest Pangasinan (Mayombo and Monsoon Caranglaan, Dagupan City) 2,767 24

Typhoon Ineng Ilocos Norte TREE PLANTING 2,000 29

Ilocos Sur 3,990 33 Consistent with its advocacy to address the needs of marginalized Typhoon Lando Nueva Ecija (Bongabon, Laur 4,100 63 members of society, BDO and Cabanatuan City)

Foundation participated in Grow Bulacan (San Ildefonso and San Miguel), a Million Trees, an environmental Nueva Ecija (San Antonio) and 9,500 123 Isabela (Ilagan City) campaign of the SM Group of Nueva Ecija (San Leonardo, Gapan Companies. The three-year and Jaen), Isabela (Tumauini), campaign is spearheaded by SM Tarlac (Camiling and La Paz), Benguet (Baguio and La Trinidad), Pangasinan 18,000 279 Foundation in partnership with (Dagupan, Mangatarem, Mangaldan the Department of Environment and Mabini) and Natural Resources. It supports La Union (Caba and Agoo) 3,600 45 the National Greening Program of and Pampanga (Masantol) the government. Cagayan (Tuguegarao City) 2,600 34

Volunteers from BDO branches and Typhoon Nona Sorsogon (Bulan, Irosin, Barcelona, various departments joined a Grow Magallanes, Matnog and Bulusan) 4,300 47 a Million Trees planting activity Northern Samar (Catarman in Antipolo City, which benefits and Mondragon) 2,500 9 the underprivileged community of Barangay San Jose. Total 61,170 825 OVERCOMING CHALLENGES TO REACH MORE BENEFICIARIES

BDO Foundation implemented its projects with the full support of

BDO Unibank and in partnership No. of with companies, organizations saplings No. of donated volunteers and donors that believe in its Tree planting Site advocacy of serving marginalized Grow a Million Trees Sitio San Ysiro, Barangay San Jose, Antipolo City 10,000 121 members of Philippine society especially those affected by natural or man-made disasters.

55 True to the bank’s mantra, the foundation found ways to overcome challenges that came along the way with the help of Resettlement Partners its wide network of branches, homes its procurement construction SM-BDO-GK Village SM Prime Holdings and Gawad Kalinga team for the construction requirements, and its legal and BDO Foundation-CFC ANCOP CFC ANCOP-Tekton Foundation Davao Oriental Community subsidiaries-accounting teams for the documentation and effective management of funds, partners and donors.

Some areas where we pursue Schools Partners

projects are far from the main Tacloban City National High School SM Prime Holdings and SM Foundation cities, but despite the distance we Pandan Central School US-Philippines Society found ways. Lilo-An National High School Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. BDO Foundation reached out to Calape Central Elementary School Federation of Filipino-Chinese Chambers more beneficiaries and expanded of Commerce and Industry, Inc. its areas by forging ties with its San Miguel National High School Injap Investments Inc. partners. Dr. Vicente F. Gustilo Memorial SM Prime Holdings and SM Foundation National High School

Tiwi Community College Philippine Geothermal Production Company

Pis-anan National High School PLDT-Smart Foundation and Redknee Solutions

Efraim Santibañez SM Prime Holdings and SM Foundation Health centers Partners National High School

Bogo City Main Health Center Carigara Municipal Health Center THE YEAR AHEAD Cabatuan Main Health Center Beiersdorf Philippines New Washington Main Health Center Roxas City Main Health Center BDO Foundation intends to finish Alangalang Municipal Health Center the following projects within La Trinidad Main Health Center SM Foundation the first half of 2016, in addition to building more multi-purpose halls, rural health centers and resettlement communities in other areas recently affected by natural or man-made disasters. Multi-purpose hall Partner BDO Foundation Multi-Purpose United Nations Human Except for community- Hall in Barangay Pawa, Pan-ay, Capiz Settlements Programme (UN-Habitat) based projects, most of the infrastructure projects are 56 Corporate Social Responsibility

implemented with the support • Sibug Memorial Elementary of the bank’s procurement School in Sudapin, construction team. Community- Kidapawan City (turned based projects, on the other over in February 2016) hand, are implemented with the support of local and international agencies, local Ongoing resettlement home and government units and non- multi-purpose hall projects government organizations that act as groundhandlers, organizing • Resettlement houses for the community and providing Typhoon Yolanda victims community members skills training with workshop for the in construction. Foundation for These- Abled Persons Inc. in Sta. Fe, Leyte Ongoing health center projects • Participation in UN-Habitat’s from 2015 People’s Process in shelter recovery to help capacitate • Catbalogan Main Health a Typhoon Yolanda-stricken Center in Western Samar community in Tacloban • Sta. Barbara Municipal through financial literacy Health Center in Pangasinan trainings and construct 100 • Polomolok Municipal Health permanent shelters for the Center in South Cotabato community • Milagros Municipal Health • Multi-purpose hall for FTI Center in Masbate community in Sta. Fe, Leyte • Pastrana Municipal Health (turned over in March 2016) Center in Leyte • Multi-purpose hall for BDO • Gapan Municipal Health Foundation-CFC ANCOP Center in Nueva Ecija Davao Oriental Community • Tuguegarao City Main in Mati, Davao Oriental Health Center in Cagayan • Multi-purpose hall for Dumarag Farmers Association (DUMAFA) in Ongoing school building projects Pastrana, Leyte from 2015 In fulfillment of its disaster • San Jose Central School in response advocacy, BDO Tacloban City, Leyte Foundation will sustain the • Streetlight Study and momentum it has built in the Development Center in past to implement more projects Tacloban City, Leyte in the future. The foundation • Pis-anan National High will continue to construct health School in Sibalom, Antique centers and multi-purpose halls, (turned over in January 2016) and develop housing projects • Efraim Santibañez National to contribute to community High School in Passi, Iloilo development and address the (turned over in January 2016) needs of families distraught • Panalaron Central School in by disasters. Ultimately, the Tacloban City, Leyte foundation will respond to the • Giporlos National Trade plight of marginalized members of School in Giporlos, Eastern society in 2016. Samar • Ampayon Central Strengthened by partnerships, the Elementary School in volunteerism of employees and Butuan, Agusan del Norte the support of BDO Unibank, BDO • Koronadal Southern Foundation will continue to find Elementary School in ways to improve the condition of Koronadal City, South disadvantaged Filipinos especially Cotabato in their time of need.

57 Board of Directors

58 Board of Directors

From left, standing: Jose T. Sio, Edmundo L. Tan, Gilberto C. Teodoro, Jr., Jose F. Buenaventura, Cheo Chai Hong*, Dioscoro I. Ramos**, Jimmy T. Tang, Jones M. Castro, Jr. From left, seated: Jesus A. Jacinto, Jr., Corazon S. de la Paz-Bernardo, Nestor V. Tan, Christopher A. Bell-Knight, Teresita T. Sy, Antonio C. Pacis, Washington Z. SyCip, Alex V. Buenaventura, Josefina N. Tan.

*Mr. Cheo Chai Hong resigned from the Board and was designated as Adviser to the Board effective November 28, 2015. **Mr. Dioscoro I. Ramos began serving as Independent Director effective January 9, 2016.

59 NESTOR V. TAN President and CEO

57, Filipino, is the President and CEO of BDO Unibank, Inc. and was first elected to the Board on June 27, 1998. He also concurrently holds vice chairmanships TERESITA T. SY and/or directorships in the following Chairperson subsidiaries of BDO Unibank, Inc.: BDO JESUS A. JACINTO, JR. Capital & Investment Corporation, BDO 65, Filipino, was first elected to Insurance Brokers, Inc., BDO Leasing the board of BDO Unibank, Inc. Vice Chairman and Finance, Inc. (PLC), BDO Private (PLC) in 1997 where she now sits 68, Filipino, has been elected Bank, Inc., and BDO Remit (USA), as Chairperson. Concurrently, she Vice Chairman of BDO Unibank, Inc. He is also a Director in Generali serves as the Chairperson, Vice Inc. since May 25, 1996, and is Pilipinas Life Assurance Company, Chairperson, and/or Director of concurrently the Chairman and Inc., Generali Pilipinas Insurance Co., various subsidiaries and affiliates President of BDO Insurance SM Keppel Land, Inc., Asian School of BDO, such as BDO Private Bank, Brokers, Inc. He also heads Jaces of Business & Technology as well as Inc., BDO Leasing & Finance, Inc. Corp. as Chairman and President; directorship in the Advisory Board (PLC), BDO Capital & Investment and Janil Realty, Inc. and JAJ of Mastercard Worldwide. He also Corporation, BDO Foundation, Holdings, Inc. as President. He is concurrently holds chairmanship of Inc., Generali Pilipinas Holding likewise Director of Bayer Phils., BDO Strategic Holdings, Inc., Megalink, Company, Inc., Generali Pilipinas Inc. Formerly, he was Director Inc., and One Network Bank, Inc. (a Life Assurance Company, Inc., and Executive Vice President of Rural Bank). He is a Trustee of the and Generali Pilipinas Insurance CityTrust Banking Corp.; Director following: BDO Foundation, Inc., De Co., Inc. She is also an Adviser of CityTrust Investments Phils. La Salle University Board of Advisors, to the Board of One Network and CityTrust Finance Corp.; and and Asian Institute of Management. In Bank, Inc. (A Rural Bank). Ms. Sy Vice President and Managing March 2016, he was elected President is the Vice Chairperson of SM Partner of Citibank N.A. He holds of the Bankers Association of the Investments Corporation (PLC) and a bachelor’s degree in Business Philippines (BAP). Mr. Tan’s banking Adviser to the Board of SM Prime Administration from Fordham career includes 15 years of international Holdings, Inc. (PLC). She also sits University in New York City and experience with the Mellon Bank as Chairperson, Vice Chairperson an MBA in International Business (now Bank of New York-Mellon) in and/or Director of such companies from Columbia University, Pittsburgh, PA; the Bankers Trust as Multi Realty Development New York City. Company (now Deutsche Bank) in New Corporation, Belleshare Holdings, York; and the Barclays Group in New Inc. (formerly SM Commercial York and London. Prior to joining the Properties, Inc.), SM Mart, Inc., SM Bank, he was Chief Operating Officer Retail, Inc., and First Asia Realty for the Financial Institutions Services Development Corp. A graduate of Group of BZW, the investment banking Assumption College, she brings subsidiary of the Barclays Group. He to the board her varied expertise holds a bachelor’s degree in Commerce in banking and finance, retail from De La Salle University and merchandising, mall and real received his MBA from Wharton School, estate development. University of Pennsylvania.

60 Board of Directors

JOSEFINA N. TAN Director CHRISTOPHER A. BELL-KNIGHT 70, Filipino, was elected Director Director of BDO Unibank, Inc. on July 27, 2007. Concurrently, she serves as 71, Canadian, was elected Director President/Director of BDO Private of BDO Unibank, Inc. on July 27, Bank, Inc. She is also Chairman of 2013. Until his election as Director, the Board of Miriam College and Mr. Bell-Knight had been acting ANTONIO C. PACIS a Trustee of Development Center as Adviser to the Board of BDO Director for Finance and Laura Vicuña Unibank for more than two years. Foundation. She was a Director of He had also previously served as 75, Filipino, was elected Director Banco de Oro Universal Bank from Director of BDO Unibank from of BDO Unibank, Inc. on June 25, 2001 to August 2005. She was May 2005 until September 2010. 2004. He concurrently serves also Executive Vice President of He was an Independent Director as Director of BDO Capital & the former Far East Bank & Trust of Dumaguete City Development Investment Corporation. He has Co.; Director and President of FEB Bank of the Philippines from been in law practice since 1967, Leasing & Finance Corp.; Executive March 2007 to March 2013. He is counseling bank and corporate Director and Trustee of FEB currently an Advisor to the Board clients in the areas of regulatory, Foundation, Inc.; and Executive of Dumaguete City Development business, corporate and trust law, Vice President of FEB Investments, Bank of the Philippines. He was and individuals in the areas of Inc. until 2000. She was a Director formerly a Director of Solidbank family law and estate planning. of Equitable PCI Bank, Inc. from Corp. and Vice President and In the course of his practice, he September 2005 until its merger Country Head of The Bank of Nova has served in various capacities with BDO in May 2007. Ms. Tan Scotia. He has had over 40 years in companies upon invitation of holds a Bachelor of Arts degree, of banking experience in England, clients. He holds degrees from the major in Communication Arts, from Canada, and Asia, 35 of which were Ateneo de Manila University (AB), Maryknoll College, and a master’s spent in credit and marketing. the Ateneo School of Law (LLB), degree in Business Administration Mr. Bell-Knight is an Associate and Harvard Law School (LLM). from the Ateneo Graduate School of the Chartered Institute of of Business. Bankers – British, an Associate of the Institute of Canadian Bankers, and a Fellow of the Institute of Corporate Directors. He studied at Frome Grammar School in Somerset, England and attended universities in both England and Canada.

61 JIMMY T. TANG Independent Director

80, Filipino, has been an Independent Director of BDO Unibank, Inc. since July 27, 2002. He served as a regular director of BDO from 1984 until his election JOSE F. BUENAVENTURA as independent director. He is Independent Director JONES M. CASTRO, JR. the President and Chairman of Independent Director the Board of the Avesco Group 81, Filipino, was elected of Companies. He currently Independent Director of BDO 66, Filipino and American, was serves as Honorary President Unibank, Inc. on April 19, 2013. elected Independent Director of of the Federation of Filipino- He is a Senior Partner of the BDO Unibank, Inc. on April 20, Chinese Chambers of Commerce Romulo Mabanta Sayoc & de los 2012. Mr. Castro has 42 years of and Industry, Inc. (FFCCCII); and Angeles Law Offices since 1976. banking expertise, with 32 years of Honorary Adviser of the Federation He is President and Director of international banking experience. of Electrical and Electronics Consolidated Coconut Corporation. From 2009 to 2011, Mr. Castro Suppliers and Manufacturers of the He is likewise Director and was the Area Head for South and Philippines, Inc. (PESA) & Chairman Corporate Secretary of 2B3C Southeast Asia of the Wells Fargo Emeritus of PESA Foundation. He Foundation, Inc. and Peter Paul Bank, San Francisco. As Area Head, also served two terms as the 11th Philippines Corporation. He is also Mr. Castro managed 12 countries, President of FFCCCII. Mr. Tang was a Member of the Board of BDO 11 overseas offices, 102 team the 9th President of PESA and Securities Corporation, Capital members and US$3 Billion in loans. the first Chairman of the PESA Managers & Advisors, Inc., Cebu From 2006 to 2009, Mr. Castro was Foundation, where he served for Air, Inc. (PLC), GROW, Inc., GROW Regional Head for Latin America 1, seven years. He holds a bachelor’s Holdings, Inc., Hicap Properties including the Caribbean, of the degree in Electrical Engineering Corporation, Himap Properties Wachovia Bank, Miami, and managed from the Mapua Institute of Corporation, La Concha Land 25 countries, three overseas offices, Technology and was awarded Investment Corp., Melco Crown 30 team members, and US$1.8 Billion Top Outstanding Mapuan for (Philippines) Resorts Corp. (PLC), in loans. From 2005 to 2006, he Entrepreneurship in 1987. Philippine First Insurance Co., was Executive Vice President and Inc., Philplans First, Inc., Techzone International Banking Group Head Philippines, Inc., The Country of the Union Bank of California, San Club, Inc., Total Consolidated Francisco. From 1990 to 1994, he was Asset Management, Inc., and Senior Vice President – Controller of Turner Entertainment Manila, Bank of California, San Francisco, and Inc. Atty. Buenaventura holds from 1994 to 1997, he was its Senior the degrees of Bachelor of Arts Vice President of Strategic Planning and Bachelor of Laws from the in Office of the President. Mr. Castro Ateneo de Manila University, is currently Executive Vice Chairman and a Master of Laws from and Trustee of the PhilDev USA and Georgetown University Law PhilDev S & T, and is a Fellow at the Center in Washington, D.C. Institute of Corporate Directors. Mr. Castro obtained his bachelor’s degree in Applied Mathematics in Economics from Harvard University, graduating cum laude. He received his master’s degree in Business Administration, Accounting & Finance from Stanford University. 62 Board of Directors

GILBERTO C. TEODORO, JR. Independent Director

50, Filipino, was elected Independent Director of BDO EDMUNDO L. TAN Unibank, Inc. on April 25, 2014. Corporate Secretary He is the Chairman of Sagittarius Mines, Inc. He was formerly 70, Filipino, serves as Corporate Chairman of Suricon Resources Secretary of BDO Unibank, Inc. Corporation and PNP Foundation, from July 27, 2007, up to the Inc. He is also a member of the present and BDO Private Bank Board of Directors of Philippine from February 2012 up to the Geothermal Production Company, present. He was formerly a Director Incorporated, Canlubang Sugar of BDO Leasing & Finance, Inc. Estate and member of the Board of and now serves as Adviser of the Advisors of Seawood Resources, Board. Atty. Tan is a Director and Incorporated. He served as the Corporate Secretary of APC Secretary of National Defense Group, Inc. from 2000 up to the from 2007 to 2009 and was a present. He served as Director and Member of the Philippine House of Corporate Secretary of Philippine Representatives from 1998 to 2007. Global Communications, Inc. He trained under former Solicitor from 2000 until his resignation General Estelito P. Mendoza Esq. as Corporate Secretary in 2010 and was involved in a wide range of and Aragorn Power and Energy issues — constitutional, corporate, Corporation from 2005 until his criminal, civil, and administrative resignation as Corporate Secretary — and in pro-bono work to assist in 2012. He is currently Director of various indigent litigants from PRC MAGMA Resources, Inc. (2010 1990 to 1997. Mr. Teodoro holds a up to the present). He was elected Bachelor of Science in Commerce director of OCP Holdings, Inc. in degree majoring in Management July 2012 and likewise elected of Financial Institutions from the as Trustee of Philippine Dispute De La Salle University; a bachelor’s Resolution Center, Inc. (PDRCI) degree in Law (LLB) from the from 2011 up to the present. University of the Philippines; and Atty. Tan is the Managing Partner a master’s degree in Law (LLM) of Tan Acut Lopez & Pison Law from Harvard Law School, USA. Offices (1993 up to present). He He placed first in the Philippine was formerly Senior Partner in Bar Examinations of 1989 and Ponce Enrile Cayetano Reyes & was admitted to the State Bar Manalastas Law Offices, a Partner of New York. in Angara Abello Concepcion Regala & Cruz Law Offices, and an Associate in Cruz Villarin Ongkiko Academia & Durian Law Offices.

63 ADVISORY BOARD

CORAZON S. DE LA CHEO CHAI HONG PAZ-BERNARDO ALEX V. BUENAVENTURA

JOSE T. SIO WASHINGTON Z. SYCIP

64 Financial Statements Statement of Management’s Responsibility for Consolidated Financial Statements

The management of BDO Unibank, Inc. (the Bank) is responsible for the preparation and fair presentation of the financial statements for the years ended December 31, 2015, 2014 and 2013 in accordance with Philippine Financial Reporting Standards, including the following additional supplemental information filed separately from the basic financial statements:

a. Supplementary Schedules required under Annex 68-E of the Securities Regulation Code Rule 68; b. Reconciliation of Retained Earnings Available for Dividend Declaration; 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, 2015; and, d. Map Showing the Relationship Between and Among the Bank and its Related Entities.

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 estimates that are reasonable in the circumstances.

The Board of Directors reviews the consolidated statements, and the additional supplemental information, and submits the same to the stockholders.

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 Directors and stockholders, has expressed its opinion on the fairness of presentation upon completion of such examination.

Teresita T. Sy Nestor V. Tan Pedro M. Florescio III Chairman of the Board President Treasurer

Signed this 27th day of February 2016.

66 Financial Statements Statements of Financial Position

BDO UNIBANK, INC. AND SUBSIDIARIES

DECEMBER 31, 2015 AND 2014 (Amounts in Millions of Philippine Pesos)

BDO Unibank Group Parent Bank

Notes 2015 2014 2015 2014

RESOURCES

CASH AND OTHER CASH ITEMS 7 P 42,729 P 41,342 P 41,767 P 41,237

DUE FROM BANGKO SENTRAL NG PILIPINAS 7 271,808 269,542 260,841 258,416

DUE FROM OTHER BANKS 8 24,837 45,621 20,944 43,165

TRADING AND INVESTMENT SECURITIES 9 225,759 221,510 196,500 195,449

LOANS AND OTHER RECEIVABLES - Net 10 1,382,752 1,212,930 1,323,311 1,182,184

PREMISES, FURNITURE, FIXTURES AND EQUIPMENT - Net 11 24,995 21,093 21,152 18,917

INVESTMENT PROPERTIES - Net 12 14,633 13,861 11,403 10,858

OTHER RESOURCES - Net 13 43,741 37,750 54,085 42,847

TOTAL RESOURCES P 2,031,254 P 1,863,649 P 1,930,003 P 1,793,073

LIABILITIES AND EQUITY

DEPOSIT LIABILITIES 15 P 1,663,853 P 1,492,282 P 1,603,047 P 1,464,089

BILLS PAYABLE 16 97,543 100,361 76,867 85,069

SUBORDINATED NOTES PAYABLE 17 10,030 10,030 10,030 10,030

OTHER LIABILITIES 18 60,215 81,307 49,370 65,358

Total Liabilities 1,831,641 1,683,980 1,739,314 1,624,546

EQUITY 19

Attributable to:

Shareholders of the Parent Bank 198,990 179,036 190,689 168,527

Non-controlling Interests 623 633 - -

199,613 179,669 190,689 168,527

TOTAL LIABILITIES AND EQUITY P 2,031,254 P 1,863,649 P 1,930,003 P 1,793,073

See Notes to Financial Statements.

67 Statements of Income

BDO UNIBANK, INC. AND SUBSIDIARIES

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013 (Amounts in Millions of Philippine Pesos Except Per Share Data)

BDO Unibank Group Parent Bank

Notes 2015 2014 2013 2015 2014 2013

INTEREST INCOME 20 P 72,127 P 63,583 P 56,606 P 68,519 P 60,871 P 54,431

INTEREST EXPENSE 21 15,166 12,358 13,440 14,238 11,728 13,014

NET INTEREST INCOME 56,961 51,225 43,166 54,281 49,143 41,417

IMPAIRMENT LOSSES - Net 13, 14 3,000 5,114 7,001 2,709 5,014 6,216

NET INTEREST INCOME AFTER IMPAIRMENT LOSSES 53,961 46,111 36,165 51,572 44,129 35,201

OTHER OPERATING INCOME 22 31,939 29,487 31,844 30,170 27,026 27,080

OTHER OPERATING EXPENSES 22 55,144 48,530 43,259 50,394 44,836 40,364

PROFIT BEFORE TAX 30,756 27,068 24,750 31,348 26,319 21,917

TAX EXPENSE 27 5,701 4,240 2,104 4,829 3,522 1,418

NET PROFIT P 25,055 P 22,828 P 22,646 P 26,519 P 22,797 P 20,499

Attributable to:

Shareholders of the Parent Bank P 25,016 P 22,805 P 22,608

Non-controlling Interests 39 23 38

P 25,055 P 22,828 P 22,646

Earnings Per Share: 28

Basic P 6.84 P 6.27 P 6.22 P 7.25 P 6.27 P 5.63

Diluted P 6.84 P 6.27 P 6.18 P 7.25 P 6.27 P 5.61

See Notes to Financial Statements.

68 Management Directory

69 BOARD OF DIRECTORS PRINCIPAL OFFICERS Noel D. Dizon Ismael G. Estela Jr. Chairman Emeritus President & CEO Belinda C. Fernandez Henry Sy, Sr. Nestor V. Tan Geneva T. Gloria Alvin C. Go Chairperson Senior Executive Jonathan Cua Bian T. Go II Teresita T. Sy Vice Presidents Marilyn K. Go Antonio N. Cotoco Sonia Maribel D. Go Vice Chairman Walter C. Wassmer Richard Emil R. Grau Jesus A. Jacinto, Jr. Jaime C. Yu Lazaro Jerome C. Guevarra Enrico R. Hernandez Directors Executive Vice Presidents Eleanor M. Hilado Christopher A. Bell-Knight Ador A. Abrogena Antonio N. Jacinto Jose F. Buenaventura Stella L. Cabalatungan Jeanette S. Javellana Jones M. Castro, Jr. Anthony Q. Chua Roberto E. Lapid Antonio C. Pacis Julie Y. Chua Gabriel U. Lim Dioscoro I. Ramos Gerard Lee B. Co Donald Benjamin G. Limcaco Josefina N. Tan Lucy C. Dy Manuel Z. Locsin Jr. Nestor V. Tan Pedro M. Florescio III Manuel Patricio C. Malabanan Jimmy T. Tang Eduardo V. Francisco Ma. Corazon A. Mallillin Gilberto C. Teodoro, Jr. Guia C. Lim Angelita C. Manulat Ricardo V. Martin Dalmacio D. Martin Advisers Edwin Romualdo G. Reyes Jose Noel M. Mendoza Alex V. Buenaventura Edmundo S. Soriano Ramon T. Militar Cheo Chai Hong Cecilia Luz L. Tan Aurea Imelda S. Montejo Corazon S. de la Paz-Bernardo Rolando C. Tanchanco Jaime M. Nasol Jose T. Sio Dennis B. Velasquez Annie H. Ngo Washington Z. SyCip Evelyn L. Villanueva Cristina G. Ngo Frederico Rafael D. Ocampo Corporate Secretary Senior Vice Presidents Estrellita V. Ong Edmundo L. Tan Ursula A. Alano* Martin B. Ordoñez Noel L. Andrada Maria Rhoda B. Orsolino Maria Carina S. Antonio Jose Alfredo G. Pascual Rafael G. Ayuste Jr. Antonio O. Peña Melanie S. Belen Rogel A. Raya Gamalielh Ariel O. Benavides Maria Nannette R. Regala Rafael G. Besa* Luis S. Reyes Jr. Ma. Ophelia L. Camiña Susan Audrey P. Rivera Arthur Vincent D. Chung Evelyn C. Salagubang Jonathan T. Cua Shirley M. Sangalang Ramon S. David Gregorio C. Severino Ma. Lourdes T. De Vera Ma. Theresa S. Simbul Montiel H. Delos Santos Noel B. Sugay Geronimo D. Diaz Robert W. Sy Jonathan C. Diokno Edwin R. Tajanlangit

70 Management Directory

Arthur L. Tan Cesario C. Dayego Tomas Victor A. Mendoza Lorna A. Tan Iris Suzanne F. De Guzman Anthony R. Milan Maria Theresa L. Tan Priscilla R. De Villa Edelwina Victoria E. Millan Federico P. Tancongco Lamberto B. Del Fonso Jr. Merceditas P. Montesclaros Reynaldo A. Tanjangco Jr. Ma. Victoria F. Dela Cruz Maria Anna Clarissa D. Mortel Ma. Mercedes P. Tioseco Rolando L. Dillague Francis Jay F. Nacino Rebecca S. Torres Pollyanna B. Diokno Ma. Concepcion Q. Narciso Rosola A. Vivas Maria Fe H. Dy Sarah Jessica M. Navarro Edward G. Wenceslao Rolando A. Embrador Felicitas C. Nonato Ma. Teresita Susana L. Yap Armina C. Empeño Larry G. Ong Gwyneth M. Entao Sophia O. Ong First Vice Presidents Elizabeth G. Estrada Emily T. Oquias Donabel R. Aala Marirose A. Fernando Ma Bella C. Paguiligan Jeffrey R. Abacan Bernard M. Florencio Grace C. Palomar Jocelyn D. Agas Cheryll B. Gaviño Aurora Zita G. Panopio Sandra C. Agdamag Marcelita I. Geollegue Yolanda A. Pilapil Gerard M. Aguirre Judy L. Go Rita Y. Poa Dulce Amor E. Alimbuyuguen Yolanda M. Go Maria Teresa (Marisa) M. Quiogue Milagros R. Alindogan Renato S. Gongora Eduardo C. Ramos Jose Virgilio O. Alvarez Myrianne Joan D. Gonzales Jonathan L. Ravelas Stanley A. Ang Lily C. Huang Antonio D. Rona Felina M. Arellano Lilian T. Khu Lily T. Roxas Susan Marie J. Atienza Ma. Cecilia G. Lantin Luisito S. Salazar Onofre D. Avellanosa Ma. Remedios B. Lapuz Udela C. Salvo* Maria Cecilia M. Avila Benjamin A. Larin Jr. Emily D. Samoy Ferdinand C. Bacungan Grace G. Lastimosa Bennett Clarence D. Santiago Janet B. Bagnes Geraldine C. Liggayu Cerwina Elenore A. Santos Jose Luis F. Bautista John Emmanuel M. Lizares Ma. Cecilia S. Santos Pedro C. Bautista Jr. Juan Sabino P. Lizares Joel Jovencio E. Sarreal Wilma N. Berioso Joseph Rhoderick B. Lledo Salvador R. Serrano* Manuel Patricio J. Bondad Peter S. Lo Jr. Teresita C. Siy Maria Eleanor B. Briones Gertrudes J. Lumain Mary Lou D. Son Keng Po Rolino C. Bucao Jr. Maria Pia L. Maceda Virginia N. Sy Amelia Caridad C. Castelo Francis Jay T. Magboo Angelita C. Tad-Y Aurora M. Castro Jose Paolo Enrique A. Magpale Antonio U. Tan Regina G. Caynap Maria Dolores P. Magsalin Divina N. Tan Susie S. Cham Roy Allan V. Magturo Judy C. Tan Edmund S. Chan Ronald M. Manalastas Marites L. Tan Joseph C. Chua Jesus A. Mañego Jr. Richard R. Tan Ruby A. Chua Edgardo R. Marcelo Jr. Edna R. Tarroza Salva Fe S. Cirilos Rosano B. Marpuri Alice O. Teh Luisa J. Co Thelma D. Mazo Aniana A. Timbre Ma. Cristina Barbara V. Concepcion Ma. Clotilde G. Medalla Ma Rosita J. Tinio Edna Christine P. Cruz Abigail P. Melicor Frederick N. Tiu Lolita L. Damasco Proceso Z. Mendoza Jr. Agnes C. Tuason

71 Wendeline Therese M. Tumolva Barbara May M. Billano Jerry S. Cureg Myla R. Untalan Maria Venus F. Bohn Loretto C. De Austria Arlene Marie H. Uson Mary Jean T. Borbe Anthony Emmanuel C. De Dios Maria Dolores C. Uyliapco Ernesto F. Borlado Jr. Melinda M. De Jesus Agerico Melecio S. Verzola Lelisa R. Bouazzi Ma. Rita K. De La Vega Sharon Mae S. Vicente Adelo C. Brabante Ronald Allan E. De Leon Noemi T. Villanueva Marc Dominique M. Brion Vicente A. De Ocampo III Francisco B. Vista Jr. Ma. Eloisa S. Britanico Ma. Cecilia B. De Paz Dandy T. Yap Conrado T. Buenaventura VI Mary Ann G. Dela Cruz Joy T. Yap Julius O. Buendia Ma. Dina B. Desembrana Margaret L. Yu Benilda G. Cabardo Jorge E. Dioneda Barbara P. Cabo Albert Dizon Vice Presidents Mary Grace R. Caguioa Ma. Eliza Cristina G. Dolina Virginia N. Abad Michael R. Cahigas Cezar G. Domingo Ma. Cecilia T. Abola Gerardo O. Calvelo Angela Veronica M. Dulalia Kara Q. Abrogar Emmanuel A. Camua Leila D. Dumlao Irma I. Acayan Jose Rene C. Carlos Charlotte U. Dy Fitzgerald L. Aclan Rodolfo M. Carlos Jr. Rolando C. Eriga Edna C. Agajan Salvador Federico J. Carlota Jr. Joel M. Escala Peter Blair S. Agustin Ma. Fatima C. Catambacan Maria Socorro Y. Escario Nadine Anne R. Alapan Lucila R. Celestino Florencia Ma. Carina P. Esguerra Melissa A. Alcantara Vanessa Joan C. Chan Marilou M. Espiritu Edgardo L. Alcaraz Robic S. Chavez Concepcion Y. Fabros Carlos S. Alindogan Beauregard Grant L. Cheng Florencio Aquillo V. Florendo Susan G. Almendral Jeanne K. Ching Perlita S. Flores Maria Angela D. Almojuela* Ronell C. Chiong Patricia L. Forbes Patricia Lei D. Alvarillo Abigail Kathryn L. Chiw Zenaida A. Gambol Jose Joel S. Andres Catherine S. Choa Angeline Grace T. Go Jeffrey O. Ang Aileen R. Chua Katherine L. Go Leticia L. Ang Ley Edwin L. Chua Grace M. Granatin Ma. Ophelia R. Angeles* Eugenio D. Chua* Maria Carmela M. Guerrero Apolinario E. Aquino Helen T. Chua* Charles Bryan S. Ho Maria Agnes R. Aragon Kimberly K. Chua Marietta M. Jamilla Lydia S. Arrieta Peter T. Chua* Zerlita Esperanza Z. Jandoc Jeanette Jean L. Avendaño Johanna N. Chung Johanna G. Janeo Emiliano P. Balignasa Jr. Sue Anne N. Chuongco Jasper M. Jimenez Olivia A. Barcarse Sonia C. Co Anabelle F. Kabigting Edgar C. Basconcillo Maria Cristina P. Cordero Ma. Karla F. Kallos Lilli Ann D. Bautista Rita V. Coronel Rosalisa B. Kapuno Ma. Judith V. Bautista Rosario C. Crisostomo Wilfred Kong Chi Man Marites A. Bautista Antonio M. Cruz Emma M. Lacsamana Rodora V. Bautista Magdalena D. Cruz Ernesto L. Ladrido IV Joel Z. Belardo Prescilla J. Cruz Cirila S. Lao Jimmy A. Belarmino Ruby A. Cruz Michele Y. Lao

72 Management Directory

Rafael Martin C. Lara Carla Sherrylyn C. Papa Philip L. So Rhoda D. Lazaro Ma. Alma Ruth M. Paraiso Ma. Corazon H. Socorro Avelino F. Lazona Jr. Rommel L. Parong Changsoo Sohn Michelette S. Legaspi Eva M. Paz Ma. Theresa M. Soriano Felicitas S. Leonor Juvencio L. Pereche Jr. Geraldine I. Suarez Ma. Jeanette H. Leonor Maria Natividad A. Pobre Evelyn K. Sy Lilian Leslie T. Lim Cyrus M. Polloso Richard S. Sy Roderick L. Lim Jose Eduardo A. Quimpo II Maria Ryanna B. Talan Normita D. Lising Edlyn L. Quiroz Jaime A. Talingdan Alberto V. Lizares Amaneci Grace V. Ramos Carmelita Teresa D. Tan Margarita Y. Locsin Gilbert P. Ramos Catherine C. Tan Mary Grace O. Lojo Charisse B. Recto Grace C. Tan Hannah Regina H. Lopez Paul Richard P. Regondola Dennis M. Tangonan Ma. Mona Lisa R. Lopez Raoul L. Reniedo Amy T. Te Lawrence Lou Concepcion G. Reyes Steven C. Te Maripaz A. Luague Leo Nathaniel M. Reyes Diosdado R. Teh Sheryll O. Luy Ma. Ana Elena R. Reyes Ken Arthur J. Tiambeng Jerry S. Macalinao Myra A. Reyes Marilyn G. Tin Prima R. Madrelejos Pamela Ann S. Reyes Eric Noel D. Tiongquico Peter Louie D. Magdame Ray R. Reyes Margarita M. Tobias Jesus Carlo M. Manalo Ma. Elena I. Rigor Robert John R. Tolentino Romeo Rafael O. Mangubat Albert Henry G. Rios Marissa F. Tomas Maria Lourdes S. Maraingan Anthony B. Rivera Melissa F. Tong Elena D. Mariano Joseph Rey M. Rivera Evelyn F. Torres Jose Alexis B. Marquez Edna T. Rogando Ma. Ramona T. Torres Martin Paolo L. Marty Juancho M. Sabban Cosme S. Trinidad. Jr. Ariel T. Melo Cynthia Sadang Zenaida A. Triunfante Maria Paz D. Mendoza Rolando S. San Diego Bernhard Aloysius G. Tsai Juan Nemesio V. Miraflor III Leopoldo T. San Juan Jeffrey S. Uy Jose Marlo Jude A. Moises Maria Carolina T. Santana Blandina Uvyhilda B. Vicente Dalisay S. Molas Arsenia S. Santos Mary Lou B. Villarba Liza M. Montajes Bernard Q. Santos Ma. Rebecca S. Villegas Lucila R. Nabong Erlinda C. Santos Jaime Claro L. Weber Christina T. Nakanishi Gerard R. Santos Eleanor D. Wee Raul N. Natividad Jennifer B. Santos Richard O. Wenceslao Maria Aleli P. Nievera Marie Anne C. Santos Adora A. Yanga Cynthia T. Nopia Roberto P. Sarile Joel T. Yee Glenn Birch G. Ong Elaine G. See Shakira C. Yu Herman L. Ong Khristine M. Siayngco Beatriz Y. Zalazar Rosalina G. Ong Rafael O. Simpao III William P. Zulueta Josefa P. Ortiz Marirose G. Sioson Arnaldo Emerito E. Palad Jennifer F. So *No longer with the Bank as of March 31, 2016

73 Products and Services

PERSONAL BANKING CORPORATE LOANS AND SERVICES OTHER SERVICES BRANCH BANKING Revolving Credit Line INSURANCE Peso Deposits Term Loan Discounting Facility BDO Insurance Brokers, Inc. Peso Checking Account Trade Finance Property Insurance Peso Savings Account Documentary Collection Motor Insurance Peso Time Deposit Engineering Insurance Foreign Currency TRADE SERVICES Marine Hull Insurance US$ Savings Account Import and Domestic Aviation Insurance US$ Time Deposit Letters of Credit Marine Cargo Insurance Third Currency Standby Letters of Credit Time Deposit Liability Insurance Trust Receipts Other Services Bonds Export Financing Telegraphic Transfer Specialty Insurance Safe Deposit Box Employee Benefits WEALTH MANAGEMENT Night Depository Risk Assessment/Management

TRUST AND INVESTMENTS CONSUMER LOANS General Pilipinas Unit Investment Trust Funds Life Assurance Company, Inc. Auto Loan Customized Portfolio Life Insurance Home Loan Management Protection SME Loan Corporate Trusts and Agencies Education Personal Loan Securities Services and Savings and Retirement Credit Cards Custodianship Estate Planning Merchant Acquiring Investment Management Advisory Services

BUSINESS BANKING Easy Investment Plan PROPERTY MANAGEMENT Easy Redemption Plan Property Leasing

BDO LEASING AND Online Investment Facility Property Sales FINANCE, INC. Finance Leases BDO PRIVATE BANK TRANSACTION BANKING Operating Leases Investment Advisory and Cash Management Services Portfolio Management Factoring of Receivables Electronic Banking Wealth Advisory Amortized Commercial Loan Remittances Installment Paper Purchase Estate and Succession Planning Trust, Agency and Specialized Floor Stock Financing TREASURY DEALERSHIP AND Trust Services BROKERING SERVICES PROJECT FINANCE INVESTMENT BANKING Fixed Income Brokering Services Equity and Quasi-Equity Financing Foreign Exchange Debt Financing Derivatives Financial Advisory Services Stock Brokerage

74 BDO Group of Companies

BDO LEASING AND BANCO DE ORO SAVINGS PHILIPPINE FINANCE, INC. BANK, INC. SUBSIDIARIES BDO Leasing Centre (formerly Citibank AND AFFILIATES Corinthian Gardens Savings, Inc.) Ortigas Avenue 16th Floor, North Tower ARMSTRONG SECURITIES, INC. Quezon City BDO Corporate Center 20th Floor, South Tower +63 (2) 635-6416, 840-7000 7899 Makati Avenue BDO Corporate Center Makati City 7899 Makati Avenue BDO PRIVATE BANK, INC. +63 (2) 840-7000 Makati City BDO Equitable Tower +63 (2) 840-7000, 878-4043 8751 Paseo de Roxas Avenue EQUIMARK-NFC Barangay Bel-Air DEVELOPMENT CORP. AVERON HOLDINGS Makati City Room 603, EBC Building CORPORATION +63 (2) 848-6300, 840-7000 262 Juan Luna Street 6780 Ayala Avenue Binondo, Manila San Lorenzo Village BDO RENTAL, INC. +63 (2) 840-7000 Makati City 2nd Floor, BDO Leasing Centre +63 (2) 625-0726 Corinthian Gardens GENERALI PILIPINAS LIFE Ortigas Avenue ASSURANCE COMPANY, INC. BDO CAPITAL & INVESTMENT Quezon City 7901 Makati Avenue CORPORATION +63 (2) 635-6416, 840-7000 Makati City 20th Floor, South Tower +63 (2) 885-4100, 885-4200 BDO Corporate Center BDO SECURITIES Customer Care Hotline: 7899 Makati Avenue CORPORATION +63 (2) 885-4110 Makati City 20th Floor, South Tower +63 (2) 840-7000, 878-4155, BDO Corporate Center MANILA NORTH 878-4125 7899 Makati Avenue TOLLWAYS CORP. Makati City NLEX Compound BDO ELITE SAVINGS +63 (2) 840-7000 (locals 6386, Balintawak, Caloocan City BANK, INC. 2104, 6392), 878-4070 +63 (2) 479-3000 (formerly GE Money Bank, Inc.) 14th Floor, Net Cube Center BDO STRATEGIC NORTHPINE LAND, INC 30th Street corner 3rd Avenue HOLDINGS INC. Units 1505-1508, 15th Floor Crescent Park (formerly EBC Investments, Inc.) The Taipan Place West Bonifacio Global City BDO Building F. Ortigas Jr. Road Taguig City Paseo de Roxas Avenue Ortigas Center +63 (2) 840-7000 corner Sen. Gil Puyat Avenue Pasig City Makati City +63 (2) 637-1531 BDO INSURANCE +63 (2) 840-7000 BROKERS, INC. ONE NETWORK BANK, INC. 43rd, 44th, and 45th Floors (A RURAL BANK) BDO Corporate Center Ortigas ONB Center, Km. 9 12 ADB Avenue Sasa, Davao City Mandaluyong City +63 (82) 233-7727 +63 (2) 846-7008, 702-6000

75 PCI INSURANCE REMITTANCE Avenida de D. Joao IV BROKERS, INC. No.2 6A Edificio China Plaza SUBSIDIARIES BDO Corporate Center R/C (V)Macau, SAR 7899 Makati Avenue ASIA +853 2871-4039 Makati City BDO REMIT LIMITED +63 (2) 840-7000 Shops 231-234 & 237 Nos. 432 Avenida Dr. Sun Yat Worldwide House Sen Edificio Wa Fong Kok, PCIB SECURITIES, INC. #19 Des Voeux Road Unit E R/C Taipa, Macau 20th Floor, South Tower Central, Hong Kong +853 2885-5389, 2885-5392 BDO Corporate Center +852 253-77148, 2525-5629, Philippines: +63 (2) 840-7000 7899 Makati Avenue 2234-9588 local 31032 Makati City Philippines: +63 (2) 840-7000 +63 (2) 840-7000, 878-4560 local 31030 BDO REMIT (JAPAN) LTD. Zenken Plaza II, 1F & 2F 3-13, SM KEPPEL LAND, INC. Shop 159, G/F Lik Sang Plaza Nishi-Shinjuku 1-chome, 12 ADB Avenue 269 Castle Peak Road Shinjuku-ku, Tokyo Ortigas Center Tsuen Wan, New Territories, Japan 160-0023 Mandaluyong City Hong Kong +81 (3) 5909-0601 (temporarily at Units 2203- +852 2412-0399 Philippines: +63 (2) 840-7000 2204 Raffles Corporate Center, local 33391 and 33392 F. Ortigas Road, Ortigas Center, EXPRESS PADALA HK LTD. Pasig City) EUROPE Shops 231-234 & 237 +63 (2) 570-9832 CBN GREECE S.A. Worldwide House 52 Kifissias Avenue Ambelokipi TAAL LAND, INC. #19 Des Voeux Road Athens, Greece 115 23 Central, Hong Kong 12th Floor, PSBank Center +30 (21) 0779-8155 +852 253-77148, 2525-5629, 777 Paseo de Roxas Avenue 2234-9588 Makati City CBN IRELAND REMITTANCE Philippines: +63 (2) 840-7000 +63 (2) 898-8890 CENTRE LTD. local 31030 First Floor 16 Suffolk Street Dublin 2, Ireland FOREIGN Shop 159, G/F Lik Sang Plaza (across Molly Malone's Statue, SUBSIDIARY 269 Castle Peak Road beside Active Group) Tsuen Wan, New Territories, BDORO EUROPE LTD. +353 (1) 672-9216 Hong Kong 5th Floor, 6 St. Andrew Street +852 2412-0399 London, EC4A 3AE CBN LONDON LTD. United Kingdom BDO REMIT (MACAU) LTD. London +44 (20) 7495-2434 Avenida de D. Joao IV Ground Floor No.2 6B Edificio China Plaza 50 Margaret Street R/C (U)Macau, SAR London W1W 8SF +853 2837-4385, 2837-3324, +44 (20) 7462-3000 2871-4039 Philippines: +63 (2) 840-7000 Belfast local 31031 3rd Floor Middleton Bldg. 10 High Street Belfast BT1 2BA 76 +44 (28) 9043-6580 BDO Group of Companies

Austria USA BDO UNIBANK, INC. Wallnerstrasse 2/5A Stiege 1, BDO REMIT (USA), INC. SEOUL REPRESENTATIVE 1010 Wein, Austria Daly City OFFICE +43 (1) 336-6065 350 Gellert Boulevard 23/F Seoul Finance Center, Daly City, California 94015 Sejongdaero, Jung-Gu Milan +1 (650) 994-1625, Seoul, South Korea 100-768 Corso Vittorio Emanuelle II 22/1 +1 (800) 472-3252 +82 (2) 3783-0800, 3783-0801 20122 Milano, Italy Philippines: +63 (2) 840-7000 Philippines: +63 (2) 840-7000 +39 (02) 3944-0029 local 31033 local 31900

Rome-Ottaviano Los Angeles BDO UNIBANK, INC. Via Germanico 50 215 South Vermont Avenue BEIJING REPRESENTATIVE Rome, Italy 00192 Los Angeles, California 90004 OFFICE +39 (06) 9357-0123 +1 (213) 386-5069 Units 09-10, Level 24 China World Office 1 Rome-Termini CANADA No.1 Jian Guo Men Wai Avenue Via Dei Mille 30 BDO REMIT (CANADA) LTD. Beijing, China 100004 Rome, Italy 00185 (Not yet operational) +39 (06) 4470-2878 +86 (10) 6505-7083, 333 Bay Street, 3400 6505-2713, 6505-3793 Firenze Toronto, Ontario M5H2S7 EUROPE Via Della Spada 36 R, Canadas BDO UNIBANK, INC. 50123 Firenze, Italy +39 (055) 239-9622 REPRESENTATIVE PARIS REPRESENTATIVE OFFICES OFFICE Paris 76/78 Avenue des 76/78 Avenue des ASIA Champs-Elysees Champs-Elysees BDO UNIBANK, INC. Paris, France 75008 Paris, France 75008 (SINGAPORE REPRESENTATIVE +33 (1) 5375-1142, +33 (1) 5659-7650 OFFICE) 5659-7650 27-63 One Raffles Place Hamburg Office Tower 2, MIDDLE EAST Gerhofstrasse 40, Singapore 04816, BDO UNIBANK, INC. 20354 Hamburg +65 6493-6236 (DIFC REPRESENTATIVE +49 (40) 55444-7300 Philippines: +63 (2) 840-7000 OFFICE) local 31021 Unit 1303-B Level 13, CBN REMITTANCE CENTER S.A. North Tower Barcelona BDO UNIBANK, INC. Emirates Financial Towers, Calle Pelayo 56 4-1 08001 TAIPEI REPRESENTATIVE DIFC, PO Box 644347, Barcelona, Spain OFFICE Dubai +34 (93) 412-3653 Unit D, 3/F No. 132/134, +971 (4) 279-0733 Sec 03, Minsheng East Road Madrid Songhan District Sor Angela de la Cruz, Taipei, Taiwan 36 Planta Baja, +886 (2) 2545-6887 Madrid, Spain 28020 Philippines: +63 (2) 840-7000 +34 (91) 567-1533 local 31020

77 Company Headquarters

BDO UNIBANK, INC. BDO Corporate Center 7899 Makati Avenue Makati City 0726 Philippines Branches and ATMs

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

BDO Unibank, Inc.’s common stock is listed and traded in the Philippine Stock Exchange under the symbol “BDO”.

Inquiries regarding the dividend payments, account status, address changes, stock certificates, and 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 Avenue, Makati City 1200, Philippines Tel. +63 (2) 403-2410 to 12 Fax +63 (2) 403-2414

The Bank will provide, without charge, a copy of the 2015 Annual Report Financial Statements to its stockholders upon receipt of a written request addressed to the Corporate Secretary.

BDO 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.

BDO INVESTOR RELATIONS & CORPORATE PLANNING 4th Floor, South Tower, BDO Corporate Center 7899 Makati Avenue, Makati City 0726, Philippines Tel. +63 (2) 840-7000 local 6069, 4809 or 3581 Email: [email protected]

78

BDO Corporate Center 7899 Makati Avenue Makati City 0726, Philippines +63 (2) 840-7000 www.bdo.com.ph