May 22, 2020 SECURITIES & EXCHANGE COMMISSION Ground

May 22, 2020

SECURITIES & EXCHANGE COMMISSION Ground Floor, Philippine International Conversion Center Pasay City

Attention: Director Vicente Graciano P. Felizmenio, Jr. Markets & Securities Regulation Department

PHILIPPINE DEALING & EXCHANGE CORP. 29th Floor, BDO Equitable Tower 8751 Paseo de Roxas, Makati City

Attention: Atty. Marie Rose M. Magallen-Lirio Head - Issuer Compliance and Disclosure Department

Subject: Definitive Information Statement (SEC 20-ISA)

Gentlemen:

This refers to the forthcoming Annual Stockholders’ Meeting on June 24, 2020 of Robinsons Bank Corporation.

In compliance with existing regulations of the Securities and Exchange Commission and Philippine Dealing & Exchange Corporation, we respectfully submit the Definitive Information Statement together with the following documents:

Particulars Official Receipt dated May 22, 2020 issued by the SEC Payment Assessment Form dated May 21, 2020 issued by SEC Notice and Agenda of Annual Stockholders’ Meeting Explanation of Agenda Items for Stockholders’ Meeting – June 24, 2020 Annex Definitive Information Statement a. The date of the meeting was duly corrected in Page 1, No. 8; b. The date of stockholders’ meeting was added on Page 3; c. The words “Estimated Compensation for” 2020 was added to the Table for 2020 on Page 11 “A” Certification “B” Nominees to the Bank’s Board of Directors for 2020-2021 “C” Management Report (With Management’s Discussion and Analysis or Plan of Operation “D” Statement of Management’s Responsibility and Audited Financial Statements for the Fiscal Year Ended December 31, 2019 “E” Interim Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operation as of March 31, 2020 “F” Minutes of the Annual Stockholders’ Meeting held on June 26, 2019

Kindly acknowledge receipt hereof. Thank you.

Very truly yours,

ROBINSONS BANK CORPORATION By:

ATTY. ROEL S. COSTUNA Senior Vice-President Corporate Secretary

Encl: a/s

COVER SHEET

0 0 0 0 0 2 9 3 1 6

S.E.C. Registration Number

R O B I N S O N S B A N K C O R P O R A T I O N

(Company’s Full Name)

1 7 T H F L R G A L L E R I A C O R P O R A T E

C E N T E R E D S A C O R O R T I G A S Q C (Business Address: No. Street City/Town/Province)

RHORY F. GO 8702-9500 Contact Person Company Telephone Number

1 2 3 1 20 - IS A 0 6 Last Wednesday Month Day Form Type Month Day (Fiscal Year) (Annual Meeting)

NONE Secondary License Type, If Applicable

Corporate Finance Department Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings 15 Total No. of Stockholders Domestic Foreign

------To be accomplished by SEC Personal concerned

File Number LCU

Document I.D.

Cashier

Stamp

Remarks: Please use BLACK ink for scanning purpose

NOTICE OF ANNUAL STOCKHOLDERS’ MEETING

Dear Sir/Madam:

Notice is hereby given to all the Stockholders that in accordance with Section 2, Article III, of the Amended By-Laws, the Annual Stockholders’ Meeting of ROBINSONS BANK CORPORATION (the “Corporation”) will be held on Wednesday, 24 June 2020 at 1:00 PM. Conformably with SEC Memorandum Circular No. 6, Series of 2020, dated March 12, 20201, and as approved by the Board, the meeting shall be conducted through remote communication via Microsoft Teams. The Agenda for the meeting are as follows: I. Call to Order; II. Proof of Due Notice of Meeting; III. Proof of Presence of Quorum; IV. Confirmation of the Minutes of the Annual Stockholders’ Meeting on June 26, 2019; V. Report of the President and the Management; VI. Approval and Ratification of all Acts and Resolutions of the Board of Directors, Board-level Committees, and the Management for 2019; VII. Election of Board of Directors for the Ensuing Term (2020-2021); VIII. Appointment of External Auditor; IX. Other Matters a. Delegation to the Board of Directors of the authority to amend the Bank’s By-Laws in order to comply with government regulatory issuances and to adopt best corporate governance practices; and b. Delegation to the President and Chairman of the Board of the authority to fix the per diem of the directors and other compensation and/or fees if assigned with other duties and functions. X. Adjournment.

Stockholders who intend to participate or be represented in the meeting via Microsoft Teams or who intend to vote in absentia shall first notify the Corporate Secretary via email at [email protected] on or before June 11, 2020 to gain access to the meeting subject to validation procedure.

The requirements and procedure pertaining to nomination, attendance, participation, and voting through remote communication or in absentia are provided in Item 5 c. ii and Item 19 of the SEC 20-IS (Definitive Information Statement) attached to and distributed with this Notice which may be accessed also at the Bank’s website at https://www.robinsonsbank.com.ph/corporate-information/reports.

Given this 11th day of May 2020 in Quezon City, Philippines.

By Authority of the Board:

ATTY. ROEL S. COSTUNA Corporate Secretary

1 Guidelines on the Attendance and Participation of Directors, Trustees, Stockholders, Members, and Other Persons of Corporations in Regular and Special Meetings through Teleconferencing, Video Conferencing and Other Remote Electronic Means of Communication

EXPLANATION OF AGENDA ITEMS FOR STOCKHOLDERS’ MEETING – JUNE 24, 2020

1. Call to Order including the ratification of related party transactions, will be presented to the Mr. Lance Y. Gokongwei, the Chairman of stockholders for their approval and the Board, will be the one to call the ratification. meeting in order.

2. Proof of Due Notice of Meeting

Atty. Roel S. Costuna, the Corporate Secretary, will certify the date when the 7. Election of the Board of Directors for the written notice with the corresponding Ensuing Term (2020-2021) statement were sent to the stockholders of record as of May 28, 2020. He will further The Chairman will present the nominees certify that all the necessary disclosures for election as members of the Board of and filings such the Information Statement Directors, including the independent were complied with in accordance with the directors. The list of the nominees and Securities Regulation Code and its their profiles will be included in the implementing rules for the conduct of Information Statement to be sent to the stockholders’ meeting. stockholders before the date of the meeting. 3. Proof of Presence of Quorum 8. Appointment of External Auditor Atty. Roel S. Costuna will further certify if a quorum is present for the validity of the The stockholders will be asked to ratify the transaction of the Bank’s Annual selection by the Audit Committee and Stockholders’ Meeting. The holders of Board of the Bank’s external auditors. record of a majority of the outstanding 9. Other Matters capital stock of the Bank, entitled to vote, represented in person or by proxy, shall Delegation to the Board of Directors of the constitute a quorum for the transaction of authority to amend the Bank’s By-Laws in business. order to comply with government regulatory issuances and to adopt best 4. Confirmation of the Minutes of the Annual corporate governance practices; and Stockholders’ Meeting on June 26, 2019 Delegation to the President and Chairman Stockholders will be asked to approve the of the Board of the authority to fix the per minutes of the Annual Stockholders’ diem of the directors and other Meeting held last June 26, 2019.. compensation and/or fees if assigned with other duties and functions. 5. Report of President and Management All matters that may arise after the notice, Stockholders will be provided with agenda, and after the Bank’s information information about the Bank’s activities, statement have been sent out may be business and financial performance, and presented for the consideration of the other relevant data for the preceding year. stockholders. Other businesses as may The stockholders will be provided with properly come before the meeting may copies of the annual report and audited also be raised and discussed. financial statement before the start of the meeting. 10. Adjournment

6. Approval and Ratification of All Acts and The Chairman will adjourn the meeting Resolutions of Board of Directors, Board when the scheduled order of business is Level Committees, and the Management completed and no further business or for 2019 matter is considered or raised.

All acts of the Board of Directors, Executive Committee, other Committees and Management during the year 2019, SEC FORM 20-IS

INFORMATION STATEMENT PURSUANT TO SECTION 20 OF THE SECURITIES REGULATION CODE

1. Check the appropriate box: Preliminary Information Statement X _ Definitive Information Statement

2. Name of Registrant as specified in its Charter: ROBINSONS BANK CORPORATION Doing business under the names and styles of RBank, RBC, Robinsons Bank, RobinsonsBank, Robinsons Bank Corp., RBank Corporation, RobinsonsBankCorp, Robinsons Commercial Bank.

3. Province, country and other jurisdiction or incorporation or organization: Philippines

4. SEC Identification Number: 0000029316

5. BIR Tax Identification Code: 000-437-913-000

6. Address of the Principal Office: 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City Postal Code: 1110

7. Registrant’s telephone number, including area code: (632) 702-9500

8. Date, time and place of the meeting of security holders: June 24, 2020 (Wednesday), 1:00 PM to be conducted through remote communication via Microsoft Teams conformably with SEC Memorandum Circular No. 6, Series of 2020, dated March 12, 20201.

9. Approximate date of which the Information Statement is to be first sent or given to security holders: May 29, 2020

10. In case of Proxy Solicitations:

Name of the Person Filing the Statement/Solicitor: Not applicable Address and Telephone Number: Not applicable

11. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA. None.

However, on June 16, 2017, Robinsons Bank Corporation (“Bank”) issued exempt securities in the form of Long-Term Negotiable Certificates of Deposits (LTNCDs) amounting to Php4,182,320,000.00. The following year, on July 16, 2018, the Bank issued another tranche of LTNCDS in the aggregate amount of Php1,781,750,000.00. On August 13, 2019, the Bank also issued a 5.125% Peso-denominated Fixed Rate Bonds due on 2021 for the principal amount of Php5,000,000,000.00. Later, on November 14, 2019, the Bank again issued a 4.300% Peso-denominated Fixed Rate Bonds due 2021 covering the principal amount of Php5,000,000,000.00. All issues (LTNCDs and Bonds) were listed with

Philippine Dealing & Exchange Corp. (PDEx). The LTNCDs and Bonds issued by the Bank were exempt securities pursuant to Section 9 (e) of the SRC.

12. Are any or all of these securities listed on a Stock Exchange?

Yes [ ] No [ x ]

If yes, state the name of such stock exchange and the classes of securities listed therein: ______Part I.

INFORMATION REQUIRED IN INFORMATION STATEMENT

A. General Information

Item 1. Date, time and place of meeting of security holders.

a. Date: June 24, 2020 Time: 1:00 PM Place: The meeting shall be conducted through remote communication via Microsoft Teams to allow stockholders to attend online, in person or by proxy, or vote in absentia conformably with SEC Memorandum Circular No. 6, Series of 2020, dated March 12, 2020. Registrant’s Mailing Address: 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City. b. Approximate date on which the information statement is first to be sent or given to security holders: May 29, 2020.

WE ARE NOT ASKING FOR A PROXY AND YOU ARE NOT REQUESTED TO SEND US A PROXY

Item 2. Dissenters' Right of Appraisal

The agenda of the stockholders’ meeting does not include matters or corporate actions that will or may give rise to the exercise of the appraisal right of the stockholders of the Bank under Section 80 of the Revised Corporation Code of the Philippines.

Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon

a. No existing director, officer, nominee for election as a director, nor associate of any of the foregoing persons has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon other than election to office.

b. No director has informed the Bank in writing of his/her intention to oppose any action to be taken by the Bank at the meeting.

B. CONTROL AND COMPENSATION INFORMATION

Item 4. Voting Securities and Principal Holders Thereof a. Class of Voting Securities

2 Class Common Shares Number of Shares Outstanding as of 1,500,000,000 Shares March 31, 2020 Number of Votes Entitled One (1) Vote per share.

b. Record Date

Stockholders of record as of May 28, 2020 shall be entitled to vote in the Annual Stockholders’ Meeting on June 24, 2020.

c. Security Ownership of Certain Record and Beneficial Owners and Management

i. Holders

During the Special Stockholders’ Meeting held last August 23, 2018, the stockholders of the Bank ratified the proposed increase of its Authorized Capital Stock from Php15.00 billion to Php27.00 billion divided into 2,700,000,000 common shares at Php10.00 par value per share, or a net increase of Php12.00 billion divided into 1,200,000,000 common shares at Php10.00 par value per share. The proposal was previously approved by the Bank’s Board of Directors in its regular meeting held on June 27, 2018.

In compliance with Section 37 of the Revised Corporation Code (the “25% and 25%” requirement), out of the net increase of 1,200,000,000 common shares, 300,000,000 common shares had been subscribed and fully paid by the major stockholders of the Bank (JG Summit Capital Services Corp. and Robinsons Retail Holdings Inc.), equivalent to Php 3.00 billion. On July 16, 2018, JG Summit Capital Services Corp. has remitted to the Bank the amount of Php1,800,000,000.00 as deposit for the stock subscription of 180,000,000 common shares at Php10.00 par value per share. Likewise, on July 16, 2018, Robinsons Retail Holdings Inc. remitted the sum of Php1,200,000,000.00 as deposit for stock subscription of 120,000,000 common shares at Php10.00 par value per share.

The increase in Bank’s Authorized Capital Stock as well as the corresponding amendment to the Bank’s Articles of Incorporation was approved by the Banko Sentral ng Pilipinas (BSP) on December 12, 2018 and by the Commission last March 18, 2019.

The following are the stockholders of record as of the first quarter of 2020 (March 31, 2020):

Number of Shares Par Amount Stockholders Type Subscribed and Paid Up Value (In Philippine Pesos) JG Summit Capital Services Common 899,986,468 10.00 8,999,864,680.00 Corporation2 Robinsons Retail Holdings, Common 599,988,780 10.00 5,999,887,800.00 Inc.3 Ignacio Mamaril, Jr. Common 19,887 10.00 198,870.00 Vicente Pang Common 4,854 10.00 48,540.00 Lance Y. Gokongwei Common 1 10.00 10

2 Mr. Lance Y. Gokongwei shall also represent JG Summit Capital Services Corporation during the Bank’s Annual Stockholders’ meeting. 3 Ms. Robina Y. Gokongwei-Pe on the other hand shall also represent Robinsons Retail Holdings, Inc. during the Bank’s Annual Stockholders’ meeting.

3 Frederick D. Go Common 1 10.00 10 Elfren Antonio S. Sarte Common 1 10.00 10 Robina Y. Gokongwei-Pe Common 1 10.00 10 Patrick Henry C. Go Common 1 10.00 10 Omar Byron T. Mier Common 1 10.00 10 Angeles Z. Lorayes Common 1 10.00 10 Esperanza S. Osmeña Common 1 10.00 10 Hermogenes S. Roxas Common 1 10.00 10 Roberto S. Gaerlan Common 1 10.00 10 David C. Mercado Common 1 10.00 10 Total 1,500,000,000 10.00 15,000,000,000.00

ii. Directors and Management as of March 31, 2020

Title of Name, address of Name of Shares Percent Class record owner and Beneficial Citizenship Held relationship with Owner and issuer Relationship with Record Owner Common Lance Y. Gokongwei Lance Y. Gokongwei Filipino 1 0% Chairman Common Mr. Frederick D. Go Frederick D. Go Filipino 1 0% Vice Chairman Common Elfren Antonio S. Sarte Elfren Antonio S. Filipino 1 0% Director/President & CEO Sarte Common Robina Y. Gokongwei-Pe Robina Y. Filipino 1 0% Director Gokongwei-Pe Common Patrick Henry C. Go Patrick Henry C. Go Filipino 1 0% Director Common Omar Byron T. Mier Omar Byron T. Mier Filipino 1 0% Director Common Angeles Z. Lorayes Angeles Z. Lorayes Filipino 1 0% Independent Director Common Esperanza S. Osmeña Esperanza S. Filipino 1 0% Independent Director Osmeña Common Hermogenes S. Roxas Hermogenes S. Filipino 1 0% Independent Director Roxas Common Roberto S. Gaerlan Roberto S. Gaerlan Filipino 1 0% Independent Director Common David C. Mercado David C. Mercado Filipino 1 0% Independent Director

iii. Other Officers, Supervisors and Staff

Title of Name, address of Name of No. of Percent Class record owner and Beneficial Owner Citizenship Shares relationship with and Relationship Held issuer with Record Owner

4 Common Elfren Antonio S. Sarte/ Elfren Antonio S. Filipino 1 0% President & CEO Sarte

iv. Voting Trust Holder of 5% or More

Not applicable. The Bank has no existing voting trust agreements for more than 5% of its common stock with any person or persons.

d. Change in Control

There was no change in control of registrant and no change in control has occurred since the beginning of the last fiscal year.

There are also no arrangements known to the Bank which may result in a change of control of the registrant. e. Certain Relationships and Related Party Transactions

The registrant, in its regular course of trade and business, enters into transactions with its Directors, Officers, Stockholders, and Related Interests (DOSRI) which mainly involve loans which are duly disclosed to the BSP in accordance with the Manual of Regulations for Banks.

All transactions of the registrant, whether with DOSRI, related parties or non-related parties, are conducted and entered in the Registrant’s best interest and on “arm’s length basis”.

There are no parties that fall outside the definition of “Related Parties” under SFAS/IAS No. 24 with whom the Bank or its related parties have a relationship that enables such parties to negotiate terms and material transactions that may not be available from other more clearly independent parties on an “arm’s length basis”.

Item 5. Directors and Executive Officers a. Incumbent Directors and Advisors

In 2019, all members of the Board have substantially complied with the attendance requirement and actively participated in the deliberations on matters taken up during the regular and/or special meetings.

Name of Directors Number of Meetings Number of Percentage of Held During the Year Meetings Meetings Attended Attended % 1.) Lance Y. Gokongwei 15 10 67.67 2.) Frederick D. Go 15 14 93.33 3.) Elfren Antonio S. Sarte 15 14 93.33 4.) Robina Y. Gokongwei-Pe 15 15 100.00 5.) Patrick Henry C. Go 15 14 93.33 6.) Omar Byron T. Mier 15 14 93.33 7.) Angeles Z. Lorayes (ID) 15 15 100.00 8.) Hermogenes S. Roxas (ID) 15 14 93.33 9.) Esperanza S. Osmeña (ID) 15 14 93.33 10.) David C. Mercado (ID) 15 15 100.00 11.) Roberto S. Gaerlan (ID) 15 15 100.00

5 All of the independent directors (ID) of the registrant have met and continue to meet all the qualifications and possess none of the disqualifications of an Independent Director under the Bank’s Code of Corporate Governance, SEC issuances (especially SEC Memorandum Circular No. 4 Series of 2017 regarding Term Limit of Independent Directors), Section 38 of the Securities Regulation Code and other relevant BSP rules.

b. Board Committees

Related Corporate Risk Audit Trust Party IT Executive Name Governance Oversight Commit Comm Transactio Streering Committee Committee Committee tee ittee ns Committee Committee 1. Lance Y. C M Gokongwei 2. Frederick D. Go VC 3. Elfren Antonio S. M M Sarte 4. Robina Y. C Gokongwei-Pe 5. Patrick Henry C. M VC Go 6. Omar Byron T. M Resource M Resource Resource VC Mier (Alternate) Person Person Person 7. Angeles Z. C VC M Lorayes (ID) 8. Hermogenes S. M VC C Roxas (ID) 9. Esperanza S. M VC M C Osmeña (ID) 10. David C. M C M Mercado (ID) 11. Roberto S. VC C M Gaerlan (ID)

c. The Board of Directors and Nominees for Election at the Annual Stockholder’s Meeting and Key Officers

i. Current Board of Directors as of the date of Annual Stockholder’s Meeting

Name Age Citizenship 1. Lance Y. Gokongwei 53 Filipino 2. Frederick D. Go 50 Filipino 3. Elfren Antonio S. Sarte 60 Filipino 4. Robina Y. Gokongwei-Pe 58 Filipino 5. Patrick Henry C. Go 50 Filipino 6. Omar Byron T. Mier 73 Filipino 7. Angeles Z. Lorayes (ID) 70 Filipino 8. Hermogenes S. Roxas (ID) 68 Filipino 9. Esperanza S. Osmeña (ID) 69 Filipino 10. David C. Mercado (ID) 69 Filipino 11. Roberto S. Gaerlan (ID) 67 Filipino

ii. Nominees for Election to the Board of Directors for 2020-2021

The following have been nominated to become members of the Bank’s Board of Directors for the year 2020-2021:

6 Name Age Citizenship 1. Lance Y. Gokongwei 53 Filipino 2. Frederick D. Go 50 Filipino 3. Elfren Antonio S. Sarte 60 Filipino 4. Robina Y. Gokongwei-Pe 58 Filipino 5. Patrick Henry C. Go 50 Filipino 6. Omar Byron T. Mier 73 Filipino 7. Angeles Z. Lorayes (ID) 70 Filipino 8. Hermogenes S. Roxas (ID) 68 Filipino 9. Esperanza S. Osmeña (ID) 69 Filipino 10. David C. Mercado (ID) 69 Filipino 11. Roberto S. Gaerlan (ID) 67 Filipino

Nomination Procedure

A stockholder may submit nomination for the position of director in the Bank to the Corporate Governance Committee thru the Corporate Secretary.

The nominating stockholder must submit the nomination in writing accompanied with (a) the personal profile/biodata of the nominee; (b) acceptance of the nomination by the nominee; and (c) certification of the nominee that he/she possess all the qualifications and none of the disqualifications of a bank director.

The Corporate Governance Committee shall screen and evaluate the nominees for directors prior to the submission of the Definitive Information Statement. Only nominees whose names appear in the Definitive Information Statement shall be eligible for election as director.

iii. Advisors

Name Age Citizenship 1. James L. Go 81 Filipino 2. Johnson Robert G. Go Jr. 55 Filipino 3. Brian M. Go 46 Filipino 4. Lisa Y. Gokongwei-Cheng 51 Filipino

iv. Key Executive Officers of Robinsons Bank as of date of Annual Stockholders’ Meeting

Name Rank/Title Age4 Citizenship 1. Elfren Antonio S. Sarte President & Chief 60 Filipino Executive Officer 2. Exequiel T. Tua EVP & Chief Operating 63 Filipino Officer 3. Eric B. Santos EVP & Head of 60 Filipino Consumer & Regional Banking Segment 4. Mykel D. Abad EVP & President of the 51 Filipino Bank’s subsidiary, Legazpi Savings Bank (LSB) 5. Ma. Regina N. Lumain EVP & Treasurer 57 Filipino

4 Age as of the date of the Annual Stockholders’ Meeting, June 24, 2020.

7 6. Andro M. Yee EVP & Chief Financial 55 Filipino Officer 7. Evie B. Abraham SVP & Head of HRMG 67 Filipino 8. Juanito Andres A. SVP & Head of Account 55 Filipino Henson Management Group 1 9. Agnes Theresa A. SVP & Head of Product 59 Filipino Salvador Management Group 10. Salvador DH. Paps SVP & Head of Retail 57 Filipino Banking Segment 11. Eric C. Macalintal SVP & Chief Information 55 Filipino Technology Officer 12. Roel S. Costuna SVP/Legal Services 50 Filipino Group Head & Corporate Secretary 13. Rosario C. Marcelo SVP & Head of Account 50 Filipino Management Group 2 14. Maria Teresa Ponce- SVP & Head of Treasury- 57 Filipino Sanchez Domestic Trading Group 15. Janette C. Gonzalvo SVP & Head of 49 Filipino Motorcycle Finance Group 16. Ma. Ellen A. Victor SVP & Head of 62 Filipino Corporate Banking Segment 17. Alejandro Antonio B. SVP & Head of Treasury- 46 Filipino Gaerlan Foreign Exchange/FCDU Group 18. Cynthia C. Bautista FVP & Chief Audit Officer 53 Filipino 19. Divine Grace F. Dagoy VP & Chief Compliance 46 Filipino Officer 20. Lalaine C. Sta. Ana FVP & Head of Trust and 56 Filipino Investment Group 21. Trisha Marie Gerette B. VP & OIC-Head of 51 Filipino Gutierrez Enterprise Risk Management Group

Certification that none of the above-mentioned directors, advisors, and key officers works for the government is hereby attached as Annex “A” and made an integral part of this report.

Brief background of the above directors, nominees, advisors, officers are hereto attached as Annex “B” and made an integral part of this report.

d. Involvement in Legal Proceedings

To the knowledge and information of the Bank, none of the above-named directors, nominees, and executive officers have been involved in any of the following events during the past five (5) years:

i. Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

8 ii. Any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;

iii. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and

iv. Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation and the judgment has not been reversed, suspended, or vacated.

For the past five (5) years, the Bank, its affiliates, subsidiaries, directors and officers, have not been involved in any legal proceedings that would affect their ability, competence or integrity, and/or would involve a material or substantial portion of their property before any court of law, quasi-judicial body or administrative body in the Philippines or elsewhere, except in the usual routine cases directed against the Bank, arising from the ordinary conduct of its business.

All legal proceedings involving the Bank are efficiently and competently attended to and managed by a group of seven (7) in-house lawyers who are graduates of reputable law schools in the country. For its external counsels, the Bank retains the services of the following respected law firms:

• Romulo Mabanta Buenaventura Sayoc & Delos Reyes • Valerio & Associates Law Office • Atty. Filmore C. Gomos Law Office • Atty. Rodrigo Talledo Law Office • Balgos Gumaru & Jalandoni Law Office • Guzman & San Gabriel Law Office

e. Significant Employees

The Bank highly values its human resources. It expects each employee to do his share in achieving the Bank‘s set goals; in return, the Bank has in placed policies and programs for the protection and growth of its employees.

f. Family Relationship

1.) Mr. Lance Y. Gokongwei, Ms. Robina Y. Gokongwei-Pe, and Ms. Lisa Y. Gokongwei- Cheng are siblings.

2.) Mr. James L. Go is the uncle of Mr. Lance Y. Gokongwei, Ms. Robina Y. Gokongwei- Pe, and Ms. Lisa Y. Gokongwei-Cheng.

3.) Mr. Frederick D. Go, Mr. Patrick Henry C. Go, Mr. Brian M. Go, are cousins of Mr. Lance Y. Gokongwei, Ms. Robina Y. Gokongwei-Pe, and Ms. Lisa Y. Gokongwei-Cheng.

g. Resignation of Directors

No director/s has resigned or declined to stand for re-election to the board of directors since the date of the last annual meeting of security holders because of any disagreement with the registrant on any matter relating to the registrant's operations, policies or practices.

Item 6. Compensation of Directors and Executive Officers a. Compensation of Directors:

The independent directors are entitled to a per diem of Php30,000.00 for their attendance at each of the Board meeting, and Php10,000.00 for their attendance at each of any committee meeting. The directors who belong to the controlling family receive Php500.00 per diem for attendance at each meeting in the Board or any committee. The President and Chief Executive Officer does not receive per diem for his attendance at the Board or any committee meetings.

The aggregate amount paid by the Bank to its Directors, excluding the above executives and other officers, amounted to approximately Php2,470,000.00 in 2017, Php2,525,500.00 in 2018, and Php3,908,000.00 in 2019. For the year 2020, it is estimated that approximately Php5,497,500.00 will be paid to the Directors. b. Executive Compensation Table Summary:

2017 Names arranged by Rank/by Surname Position Salary Bonuses Fees and Other Compensation Elfren Antonio S. Sarte President& CEO Mykel D. Abad EVP Angelito V. Evangelista EVP and COO Ma Regina N. Lumain EVP &Treasurer Eric B. Santos EVP All above-named Officers as a group Php30,774,692.87 Php12,866,681.8 All other unnamed Officers as a group Php40,762,509.45 Php15,241,017.82 All Directors Php2,470,000.00

2018 Names arranged by Rank/by Surname Position Salary Bonuses Fees and Other Compensation Elfren Antonio S. Sarte President& CEO Mykel D. Abad EVP Angelito V. Evangelista EVP and COO Ma Regina N. Lumain EVP &Treasurer Eric B. Santos EVP All above-named Officers as a group Php33,329,642.76 Php13,971,849.99 All other unnamed Officers as a group Php35,493,289.36 Php14,741,899.49

All Directors Php2,525,500.00

2019 Names arranged by Rank/by Surname Position Salary Bonuses Fees and Other Compensation Elfren Antonio S. Sarte President& CEO Mykel D. Abad EVP Angelito V. Evangelista EVP and COO Ma Regina N. Lumain EVP &Treasurer Eric B. Santos EVP All above-named Officers as a group Php35,911,606.16 PHp13,337,455.44 All other unnamed Php45,092,550.26 PHp14,610,535.85 Officers as a group All Directors Php3,908,000.00

Estimated Compensation for 2020 Names arranged by Rank/by Surname Position Salary Bonuses Fees and Other Compensation Elfren Antonio S. Sarte President& CEO Mykel D. Abad EVP Angelito V. Evangelista EVP and COO Ma Regina N. Lumain EVP &Treasurer Eric B. Santos EVP All above-named Officers as a group Php37,412,311.95 Php14,271,077.32 All other unnamed Php48,699,954.28 Php15,779,378.72 Officers as a group All Directors Php5,497,500.00 c. Warrants and Options Outstanding

No outstanding warrants or options are held by the Bank’s Directors, President, and executive officers. d. Standard Arrangement

Other than the usual per diem arrangement for Board and Board Committee meetings and other abovementioned fees and compensation of Directors, there are no Standard Arrangements with regard to compensation of directors, directly or indirectly for any other services provided by said directors, for the last completed fiscal year. e. Other Arrangements

There are no other arrangements in which any director, nominee for election as a director, or executive officer of the registrant will participate.

11 f. Employment Contracts and Termination of Employment and Change-in-Control Arrangement.

Not applicable.

g. Compensatory Plan or Arrangement

Not applicable.

Item 7. Independent Public Accountants

1. Information on Independent Accountant

SyCip Gorres Velayo & Co. (SGV & Co.) / Ernst & Young has been the Bank's independent accountant for more than 15 years and is again recommended for appointment at the scheduled annual stockholders' meeting. In compliance with SEC Memorandum Circular No. 8, Series of 2003, and Amendments to SRC Rule 68 on the rotation of external auditors or signing partners of a firm every after five (5) years of engagement. Mr. Juan Carlo B. Maminta. is the audit partner of SGV & Co. / Ernst & Young assigned to the Bank commencing the audit of financial statements for the year 2017.

Representatives of SGV & Co. / Ernst & Young are expected to be present at the annual stockholders meeting to respond to any matter that may be pertinently raised during the meeting. Their representative will be given the opportunity to make a statement if they so desire.

2. Audit and Audit-Related Fees

The Bank paid the following audit fees to Sycip Gorres Velayo & Co. (SGV) for the fiscal year indicated:

Payment (Php) Fiscal Year Audit Fee Same Fiscal Subsequent Unpaid (Php) Year Year 2014 1,986,608.00 - 1,986,608.00 - 2015 2,435,673.00 492,800.00 1,942,873.00 - 2016 2,269,162.00 518,856.00 1,750,306.00 - 2017 2,596,360.88 1,309,758.00 1,286,602.88 - 2018 2,915,146.00 1,249,987.20 684,764.33 - 2019 3,080,000.00 656,243.28 656,243.28 1,767,513.44

3. Tax & Other Fees

For the fiscal year 2019, the Bank paid total amount of Php181,440.00 to Isla Lipana & Co. in connection with (a) outsourcing of IT audit activities; and (b) vulnerability assessment and penetration testing of the Bank’s systems.

4. Audit Committee’s Approval Policies and Procedures for the above services

The engagement of the services of the Bank’s external auditor is evaluated by its Audit Committee. Consistent with the provisions of the Code of Corporate Governance, the appointment of the external auditor nominated by the Board through the Audit Committee is subject to the approval by the shareholders.

12 5. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

The Bank has no disagreements with its external auditors in any matter regarding accounting principles, practices, or financial disclosures.

Item 8. Compensation Plans

Not applicable.

Item 9. Recent Sales of Unregistered or Exempt Securities, Including Recent Issuance of Securities Constituting an Exempt Transaction.

There were no unregistered securities sold by the Bank in the past three (3) years.

However, in 2015, additional common shares were issued by the Bank to its controlling stockholders as a result of increase of its capital stock. Similarly, on March 2019, the Bank issued additional common shares to the controlling stockholders as a result of the approval by SEC of the increase in authorized capital stock from Php15 Billion to Php27 Billion. The Bank being the issuer, the additional common shares were exempt securities under Section 9 (e) of the Securities Regulation Code.

Also, on June 16, 2017, the Bank issued exempt securities in the form of Long-Term Negotiable Certificates of Deposits (LTNCDs) amounting to Php4,182,320.000. The following year, on July 16, 2018, the Bank issued another tranche of LTNCDs in the aggregate amount of Php1,781,750,000.

Likewise, on August 13, 2019, the Bank also issued a 5.125% Peso-denominated Fixed Rate Bonds due on 2021 for the principal amount of Php5,000,000,000. Later, on November 14, 2019, the Bank again issued a 4.300% Peso-denominated Fixed Rate Bonds due 2021 covering the principal amount of Php5,000,000,000.

All of the Bank’s LTCNDs and corporate bond issues were listed with Philippine Dealing & Exchange Corp. (PDEx). As a banking institution, the Bank’s LTNCDs and corporate bonds issues are exempt securities under Section 9 (e) of the Securities Regulation Code.

Item 10. Modification or Exchange of Securities

Not applicable.

Item 11. Financial and Other Information

The management’s discussion and analysis, market price of shares and dividends and other data related to the Bank’s financial information and the Statement of Management Responsibility for Financial Statements including the audited financial statement as of December 31, 2019, are discussed in Annex “C” and “D”, respectively, and are hereby made an integral part of this report.

Item 12. Mergers, Consolidations, Acquisitions and Similar Matters

There are no matters or actions to be taken up in the meeting with respect to mergers, consolidations, acquisitions and other similar matters.

Item 13. Acquisition or Disposition of Property

13 There are no matters or actions to be taken with respect to the acquisition or disposition of any property of the Bank.

Item 14. Restatement of Accounts

There are no matters or actions to be taken with respect to the restatement of any asset, capital, or surplus account of the Bank.

C. OTHER MATTERS

Item 15. Action with Respect to Reports

The following items are to be submitted for approval during the stockholders’ meeting: a.) Approval of the Minutes of the Annual Stockholders’ Meeting last June 26, 2019 (see Annex “F”) b.) Annual Report and Bank’s Audited Financial Statements as of December 31, 2019 which contains the Bank’s financial performance and condition.

c.) Election of the Board of Directors for the Ensuing Term (2020-2021)

The Members of the Bank’s Board of Directors (regular and independent) are to be elected during the Bank’s Annual Stockholders’ Meeting. The duly elected Members of the Board of Directors will hold office until the next annual meeting and/or their successors have been duly elected and qualified. d.) Appointment of External Auditor

The accounting firm of SyCip Gorres Velayo & Co. (SGV & Co.) / Ernst & Young has been the Bank's independent accountant for more than 15 years and is again recommended for appointment at the scheduled annual stockholders' meeting.

Item 16. Matters not Required to be Submitted

All matters or corporate actions that require the vote or written assent or ratification by the stockholders are to be submitted in the meeting.

Item 17. Amendment of Charter, Bylaws or Other Documents

Any proposals to amend the Bank’s Articles of Incorporation and/or By-Laws will be submitted to the stockholders for their ratification or approval. However, in the subject scheduled meeting, there is no proposal to amend any portion of the Bank’s Articles of Incorporation and/or By-Laws.

Item 18. Other Proposed Action

There are no proposed actions other than those indicated in the Notice for this Annual Stockholders’ Meeting and the following:

a. Delegation to the Board of Directors of the authority to amend the Bank’s By-Laws in order to comply with government regulatory issuances and to adopt best corporate governance practices; and

14 b. Delegation to the President and Chairman of the Board of the authority to fix the per diem of the directors and other compensation and/or fees if assigned with other duties and functions.

Item 19. Voting Procedures a. Quorum (Article III Section 5 of the Bank’s Amended By-Laws)

Other than in the particular instance where the law requires a greater number, majority of the subscribed capital stocks, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders; less than a quorum may adjourn any meeting; no business may be transacted therein. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting except when the law provides otherwise.

Conformably with SEC Memorandum Circular No. 6, Series of 2020, dated March 12, 2020, a stockholder who participates through remote communication or voting in absentia shall be deemed present for purposes of quorum. b. Voting (Section 23 of the Revised Corporation Code)

Section 23 of the Revised Corporation Code provides that in stock corporations, stockholders entitled to vote shall have the right to vote the number of shares of stock standing in their own names in the stock books of the corporation at the time fixed in the bylaws or where the bylaws are silent, at the time of the election. The said stockholder may: (a) vote such number of shares for as many persons as there are directors to be elected; (b) cumulate said shares and give one (1) candidate as many votes as the number of directors to be elected multiplied by the number of the shares owned; or (c) distribute them on the same principle among as many candidates as may be seen fit: Provided, That the total number of votes cast shall not exceed the number of shares owned by the stockholders as shown in the books of the corporation multiplied by the whole number of directors to be elected: Provided, however, That no delinquent stock shall be voted. Nominees for directors or trustees receiving the highest number of votes shall be declared elected.

Being an entity vested with public interest, the Bank’s stockholders may exercise their right to vote through remote communication or in absentia during the annual stockholders’ meeting on June 24, 2020. c. Voting of directors (Article IV Section 3 of the Bank’s Amended By-Laws)

The Directors shall be elected at the annual meeting of stockholders, each to hold office for a term of one year and until his successor shall have been duly elected and qualified. The eleven nominees for Directors receiving highest number of votes shall be declared elected. The present members of the Board of Directors named in the articles of incorporation shall hold office until their successors shall have been elected in the next annual meeting of the stockholders and shall qualified. The qualification of directors shall all be subject to existing Bangko Sentral ng Pilipinas’ rules and regulations.

As previously stated, conformably with SEC Memorandum Circular No. 6, Series of 2020, dated March 12, 2020, the stockholders of the Bank, an entity vested with public interest, may vote through remote communication or in absentia during the annual stockholders’ meeting on June 24, 2020 in the election of stockholders.

15 If for any reason, the annual meeting of the stockholders for the election of the Directors shall not be held at the time appointed of these By-Laws, or shall be adjourned, the Directors then in the office shall continue in office until such election shall have been held and their successors duly elected and qualified.

Any amendment on any provisions of the Bank’s Articles of Incorporation requires the majority vote of the Board of Directors and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock in accordance with Section 15 and Section 37 of the Revised Corporation Code of the Philippines. d. Requirements and Procedure for Participation Via Remote Communication, Voting In Absentia and Thru Proxy

1. Stockholders intending to participate through remote communication or voting in absentia must notify in advance on or before June 11, 2020 the Corporate Secretary, Atty. Roel S. Costuna, via email at [email protected] together with the following details or documents for validation purposes:

a. Complete registered name; b. Complete mailing address; c. Active electronic mail (e-mail) address; d. Active mobile or landline number; e. Scanned copy of valid government-issued ID with photo and signature (front and dorsal side); f. Scanned copy of the stock certificate; g. Scanned copy of Board resolution/Secretary’s Certificate (for corporate stockholder)

2. If case a stockholder cannot attend the meeting and wishes to be represented, he/she must designate a representative (“proxy”) and submit a duly executed proxy form in addition to the documents listed above. For validation purposes, the proxy must also submit a valid government-issued ID with photo and signature together with an active electronic mail (e-mail) address and active mobile or landline number. Duly accomplished Proxy Forms must be submitted to the Corporate Secretary on or before June 11, 2020. Last day for validation of Proxy shall be on June 18, 2020. If the Proxy Form fails to designate a representative, the Presiding Officer of the meeting shall act as proxy of the stockholder.

3. The Corporate Secretary shall validate/verify the documents submitted by the stockholder and/or by proxy. The Office of the Corporate Secretary shall inform the stockholder/proxy via email if the documents were validated or not.

4. For those stockholders with duly validated documents/proxy, the Office of the Corporate Secretary shall send an invite to participate in the meeting thru Microsoft Teams. It shall coordinate with the stockholder/proxy for the minimum requirements (e.g. PC, Laptop, iPad, Tablet, or Smartphone) and set-up to participate in the meeting via Microsoft Teams.

5. Only those stockholders who indicated to participate in the meeting and who were validated by the Corporate Secretary shall be allowed to participate in the meeting thru remote communication via Microsoft Teams in person or by proxy or vote in absentia. Only those who actually participated in the meeting in person or by proxy or voted in absentia shall be included in the determination of quorum.

6. Specific items of the agenda shall be discussed and voted upon during the meeting. Those voting in absentia on the items in the agenda must send their votes to the Corporate

16 Secretary via email at [email protected] on or before the conclusion of the stockholders’ meeting on June 24, 2020. Result of the voting shall be reported by the Corporate Secretary during the meeting.

7. Minutes of the meeting shall be prepared by the Corporate Secretary. The proceedings shall also be audio and video recorded to be safekept by Office of the Corporate Secretary and shall be made available to stockholders upon proper request.

Item 20. Management Report – Attached and made an integral part hereof as Annex “C”.

Item 21. Statement of Management’s Responsibility and Audited Financial Statements for the Fiscal Year Ended December 31, 2019 – Attached and made an integral part hereof as Annex “D”.

Item 22. Interim Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operation as of March 31, 2020. Attached and made an integral part hereof as Annex “E”.

Part II.

UNDERTAKING TO PROVIDE ANNUAL REPORT

The Bank shall, on written request and without any charge, provide the stockholders a copy of its Annual Report on SEC Form 17-A. All requests should be addressed to: The Office of the Corporate Secretary located at the 28th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City. The said Annual Report on SEC Form 17-A may also be accessed at https://www.robinsonsbank.com.ph/corporate-information/reports.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this report is true, complete and correct. This report is signed in Quezon City on May 20, 2020.

By:

Atty. Roel S. Costuna Corporate Secretary

17 ANNEX “A”

CERTIFICATION

I, ATTY. ROEL S. COSTUNA, of legal age, Filipino, and with office address located at the 28th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City, after having been sworn to in accordance with law, hereby depose and state that:

1. I am the duly elected and incumbent Corporate Secretary of ROBINSONS BANK CORPORATION (the “Corporation”), a Corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines;

2. That none of the following directors, advisors, and key officers of the Corporation are currently work/employed/affiliated with the Government of the Republic of the Philippines, its agencies, instrumentalities, and any of its Government Owned and Controlled Corporations (GOCCs):

Name Rank/Title Age1 Citizenship

1. Lance Y. Gokongwei Director/Chairman 53 Filipino

2. Frederick D. Go Director/Vice-Chairman 50 Filipino

3. Elfren Antonio S. Sarte Director/President & Chief 60 Filipino Executive Officer

4. Robina Y. Gokongwei-Pe Director 58 Filipino

5. Patrick Henry C. Go Director 50 Filipino

6. Omar Byron T. Mier Director 73 Filipino

7. Angeles Z. Lorayes Independent Director 70 Filipino

8. Hermogenes S. Roxas Independent Director 68 Filipino

9. Esperanza S. Osmeña Independent Director 69 Filipino

10. David C. Mercado Independent Director 69 Filipino

11. Roberto S. Gaerlan Independent Director 67 Filipino

12. James L. Go Advisor 81 Filipino

13. Johnson Robert G. Go, Advisor 55 Filipino Jr.

1 Age as of the date of the Annual Stockholders’ Meeting, June 24, 2020.

1 14. Brian M. Go Advisor 46 Filipino

15. Lisa Y. Gokongwei- Advisor 51 Filipino Cheng

16. Exequiel T. Tua EVP & Chief Operating 63 Filipino Officer

17. Eric B. Santos EVP & Head of Consumer 60 Filipino & Regional Banking Segment

18. Mykel D. Abad EVP & President of the 51 Filipino Bank’s subsidiary, Legazpi Savings Bank (LSB)

19. Ma. Regina N. Lumain EVP & Treasurer 57 Filipino

20. Andro M. Yee EVP & Chief Financial 55 Filipino Officer

21. Evie B. Abraham SVP & Head of HRMG 67 Filipino

22. Juanito Andres A. SVP & Head of Account 55 Filipino Henson Management Group 1

23. Agnes Theresa A. SVP & Head of Product 59 Filipino Salvador Management Group

24. Salvador DH. Paps SVP & Head of Retail 57 Filipino Banking Segment

25. Eric C. Macalintal SVP & Chief Information 55 Filipino Technology Officer

26. Roel S. Costuna SVP/Legal Services 50 Filipino Group Head & Corporate Secretary

27. Rosario C. Marcelo SVP & Head of Account 50 Filipino Management Group 2

28. Maria Teresa Ponce- SVP & Head of Treasury- 57 Filipino Sanchez Domestic Trading Group

29. Janette C. Gonzalvo SVP & Head of Motorcycle 49 Filipino Finance Group

30. Ma. Ellen A. Victor SVP & Head of Corporate 62 Filipino Banking Segment

31 Alejandro Antonio B. SVP & Head of Treasury- 46 Filipino Gaerlan Foreign Exchange/FCDU Group

32. Cynthia C. Bautista FVP & Chief Audit Officer 53 Filipino

33. Divine Grace F. Dagoy VP & Chief Compliance 47 Filipino Officer

34. Lalaine C. Sta. Ana FVP & Head of Trust and 56 Filipino Investment Group

35. Trisha Marie Gerette B. VP & OI-Head of 51 Filipino Gutierrez Enterprise Risk Management Group

3. The foregoing is in accordance with the records of the Corporation in my possession.

IN WITNESS WEREOF, I have hereunto set my hands this May 11, 2020 at the City of Quezon, Philippines.

ATTY. ROEL S. COSTUNA Corporate Secretary

REPUBLIC OF THE PHILIPPINES ) QUEZON CITY ) s.s

SUBSCRIBED AND SWORN to before me on this day of May 11, 2020 at Quezon City, affiant exhibiting to me his Driver’s License No. N02-98-384579.

3 ANNEX “B”

NOMINEES TO THE ROBINSONS BANK BOARD OF DIRECTORS FOR 2020-2021

1. LANCE Y. GOKONGWEI, Chairman of the Board, Filipino, 53 years old. He is also the President and Chief Executive Officer of JG Summit Holdings Inc. (JGSHI). He likewise sits as the Chairman of Robinsons Retail Holdings, Inc., Universal Robina Corporation, Robinsons Land Corporation, JG Summit Petrochemical Corporation, and JG Summit Olefins Corporation. He is the President and Chief Executive Officer of Cebu Air, Inc. He is a director and Vice Chairman of Manila Electric Company and is a Director of Oriental Petroleum and Minerals Corporation and United Industrial Corporation Limited. He is a trustee and secretary of the Gokongwei Brothers Foundation, Inc. He received a Bachelor of Science degree in Finance and a Bachelor of Science degree in Applied Science from the University of Pennsylvania.

2. FREDERICK D. GO, Vice-Chairman, Filipino, 50 years old. He is the Vice Chairman of the Board and also serves as the Vice Chairman of the Executive Committee of the Bank. Presently he is the President and Chief Executive Officer of RLC. He has been a director of the Company since May 6, 1999 and was elected President effective August 28, 2006. He is also the President and Chief Operating Officer of Robinsons Recreation Corporation. He is the Group General Manager of Shanghai Ding Feng Real Estate Development Company Limited, Xiamen Pacific Estate Investment Company Limited, Chengdu Ding Feng Real Estate Development Company Limited and Taicang Ding Feng Real Estate Development Company Limited. He also serves as a director of Cebu Air, Inc., JG Summit Petrochemical Corporation, and Cebu Light Industrial Park. He is also the Vice Chairman of the Philippine Retailers Association. He received a Bachelor of Science degree in Management Engineering from the Ateneo de Manila University.

3. ELFREN ANTONIO S. SARTE, President and CEO/Director, Filipino 60 years old. He is the President and Chief Executive Officer of the Bank and is a member of its Executive Committee, Risk Management Committee and IT Steering Committee. He is also the Vice-Chairman of the Board of Directors of Legazpi Savings Bank and the Chairman of its Executive Committee. He is a director of Bankers Association of the Philippines and the Chairman of its Operations Committee. He is also the Chairman of the Board of Directors of Philippine Clearing House Corporation. Prior to joining the Bank in November 2014, he was the President, Director and CEO of Allied Savings Bank (2013 to 2014); Consumer Finance Group Head (2013) and Head of Consumer Credit and Collection Division (2010 to 2013) of Philippine National Bank; and Head of Consumer Credit Risk Management Division (2006 to 2010), Credit Services Division (1996 to 2006) and Credit Investigation and Appraisal Division (1995 to 1996) of Union Bank of the Philippines. He was also a Manager at the Credit Information Bureau (1983 to 1985). He has a Bachelor of Science degree in Industrial Management Engineering minor in Mechanical Engineering from the De La Salle University.

1 4. ROBINA Y. GOKONGWEI-PE, Director, Filipino, 58 years old. She is the Chairman of the Bank’s Trust Committee. She is presently the President and CEO of Robinsons Retail Holdings, Inc. (RRHI) which operates six business segments; namely supermarkets, department stores, do-it-yourself stores, convenience stores, drugstores, and specialty stores. RRHI also has 40% minority stake in Robinsons Bank. Ms. Pe is also a Director of JG Summit Holdings, Inc., Robinsons Land Corporation, and Cebu Air, Inc. She is a Trustee of the Gokongwei Brothers Foundation Inc. and Immaculate Conception Academy Scholarship Fund. She is member of the Board of Trustees of Xavier School. She attended the University of the Philippines-Diliman from 1978 to 1981 and obtained a Bachelor of Arts degree (Journalism) from New York University in 1984.

5. PATRICK HENRY C. GO, Director, Filipino, 50 years old. He is the Vice Chairman of the Bank’s Trust Committee and a member of its Corporate Governance Committee. He is also the President and Chief Executive Officer of JG Summit Petrochemical Corp., JG Summit Olefins Corp. and the Vice President and Managing the URC Packaging Division and URC Flexible Packaging Division. He is a Director of JG Summit Holdings Inc., Robinsons Land Corp and Universal Robina Corp. He has a Bachelor of Science degree in Management from the Ateneo de Manila University and took The General Manager Program from the Harvard Business School.

6. OMAR BYRON T. MIER, Director, Filipino, 73 years old. He was appointed as a Director of the Bank in 2015. Apart from sitting as a Director of the Bank, he also serves as a member of its IT Steering Committee, a member of Risk Oversight Committee and an alternate member of its Executive Committee. Mr. Mier likewise sits as the Chairman of Legazpi Savings Bank Inc.. He also serves as an independent director of RCBC Leasing and Finance Corporation (since 2018) and Paymaya Corp. where he also sits as the chairman and member of its Audit Committee and of its Risk and Compliance Committee, respectively, since 2016. Before joining the Bank, he holds around four decades of experience in the banking industry, including Citibank N.A., where he served as Country Risk Manager in Manila (1983 to 1985), Public Sector Group Head (1985 to 1987), Country Risk Officer in Malaysia (1992 to 1995), Head of Risk Management Group and World Corporate Group Head (1992 to 1995); Deutsche Bank, as Deputy General Manager and Corporate Banking Head (1995 to 2002); and Philippine National Bank (2005- 2014), where he held various senior positions the last of which as President and CEO. He has a Bachelor of Science degree in Business Administration Major in Accounting, Bachelor of Arts degree in Economics, and Master of Arts in Economics from the University of the Philippines. He is also a Certified Public Accountant.

7. ROBERTO S. GAERLAN, Independent Director, Filipino, 67 years old. He is the Chairman of the Bank’s Risk Oversight Committee and Vice-Chairman of the Corporate Governance Committee. His career in banking spans over three decades, working with First United Bank (1973 to 1979) and with United Coconut Planters Bank (1979 to 2003) where he was the Vice President for Branch Banking (2001 to 2003). He graduated with a Bachelor of Arts degree in Economics from the

2 University of Santo Tomas and Advanced Bank Management from the Asian Institute of Management.

8. HERMOGENES S. ROXAS, Independent Director, Filipino, 68 years old. He is the Chairman of the Bank’s IT Steering Committee and a Vice-Chairman of its RPT Committee. Mr. Roxas is also a Director of LSB where he chairs its Audit Committee, sat as the vice-chair of its Corporate Governance Committee, and a member of its Risk Oversight Committee. He has more than three decades of experience in banking and has held various senior positions at Commercial Banking & Trust Company and United Coconut Planters Bank and its subsidiaries. He was also the President of UCPB Savings Bank; a Director at UCPB Leasing & Finance Corp., UCPB Foreign Exchange Corp., UCPB Capital Corp., UCPB Rural Bank, and UCPB Securities Inc. He has a Bachelor of Science degree in Business Administration from the University of the Philippines.

9. ANGELES Z. LORAYES, Independent Director, Filipino, 70 years old. She is the Chairman of the Bank’s Corporate Governance Committee, Vice Chairman of the Audit, and a member of the RPT Committee. She honed her skills in banking by spending her career in Citibank as Head of its Financial Analysis and Engineering Department (1971 to 1978). She also headed the Credit Policy and Supervision of Equitable PCI Bank (1978 to 2000) and Philippine National Bank (2005 to 2010). She has a degree in Business Administration from the University of the Philippines and earned MBA units at the Ateneo Graduate School of Business.

10. ESPERANZA S. OSMEÑA, Independent Director, Filipino, 69 years old. She is the Chairman of the Bank’s RPT Committee, Vice-Chairman of Risk Oversight Committee and a member of the Corporate Governance Committee and Trust Committee. She has held various senior positions at Asian Savings Bank (1984- 1987) and Equitable PCI bank and its subsidiaries (1988-2000). She was an Executive Vice President at Equitable PCI Bank (1998-2000), and was Director at PCI Capital Inc., PCI Leasing Inc., PCI Insurance Brokers Inc., and Bankard Inc (1988-1999). She graduated with a Bachelor of Arts degree in Commerce from the Colegio de Santa Anna in Zaragoza, Spain.

11. DAVID C. MERCADO, Independent Director, Filipino, 69 years old. He is the Chairman of the Bank’s Audit Committee and member of the Risk Oversight Committee and RPT Committee. He has more than three decades of experience in banking and has held various senior positions in Allied Banking Corporation and United Coconut Planters Bank. At UPCB, he became their Assistant Vice President- Account Management Division (1986 to 1987), Assistant Vice President - Deposit Services Department (1987 to 1993), Vice President and Regional Branch Head (1993 to 2004), Vice President and Head of Branch Banking Group (2004 to 2006) and lastly, as First Vice President of Consumer Banking Group (2006 to 2011). He earned his Business Administration degree from the Philippine School of Business Administration. He is also a Certified Public Accountant.

The independent directors have met and continue to meet all the qualifications and possess none of the disqualifications of an Independent Director under the Bank’s Code of Corporate

Governance, SEC issuances (SEC Memorandum Circular No. 4 Series of 2017 regarding Term Limit of Independent Directors), Section 38 of the Securities Regulation Code and relevant BSP rules.

ADVISORS AS OF MARCH 31, 2020

1. JAMES L. GO, Member, Filipino, 80, years old. He is the Chairman of JGSHI and Cebu Air, Inc. He is also the Chairman and Chief Executive Officer of Oriental Petroleum and Minerals Corporation. He is the Chairman Emeritus of Universal Robina Corporation, Robinsons Land Corporation, JG Summit Petrochemical Corporation and JG Summit Olefins Corporation. He is the Vice Chairman of Robinsons Retail Holdings, Inc. and a director of Marina Center Holdings Private Limited, United Industrial Corporation Limited and Hotel Marina City Private Limited. He is also the President and Trustee of the Gokongwei Brothers Foundation, Inc. He has been a director of the PLDT Inc. (PLDT) since November 3, 2011. He is a member of the Technology Strategy and Risk Committees and Advisor of the Audit Committee of the Board of Directors of PLDT. He was elected a director of Manila Electric Company on December 16, 2013. Mr. James L. Go received his Bachelor of Science Degree and Master of Science Degree in Chemical Engineering from Massachusetts Institute of Technology, USA.

2. JOHNSON ROBERT G. GO, JR., Member, Filipino, 55 years old. He presently serves as Director of JG Summit Holdings, Inc., Universal Robina Corporation and Robinsons Land Corporation, among others. He has served as President of Robinsons Convenience Stores, Inc. (2002) and as Vice President of Robinsons Daiso Diversified Corp. (2010). He is also a trustee of the Gokongwei Brothers Foundation, Inc. His banking experience spans around 17 years, when he was elected as a Director of the Bank. He has Bachelor of Arts degree in Interdisciplinary Studies from the Ateneo de Manila University.

3. BRIAN M. GO, Member, Filipino, 46 years old. He is currently the Vice President & General Manager of URC Global Exports and Managing Director of JG Digital Capital Pte Ltd of JG Digital Equity Ventures. He joined URC in January of 2003, and again in February of 2015. He started with JGDEV in early 2019. Universal Robina Corporation is a major branded consumer foods company in South East Asia, and Oceania, and one of the leading companies listed on the Philippine Stock Exchange. Brian has led the creation of global export organization for URC kicking off in February 2019. JGDEV is the corporate Venture Capital entity of JG Summit Holdings and its subsidiaries and affiliates. Brian was part of the establishment of this team in early 20149, including the setup of the Singapore arm, known as JG Digital Capital, as well as being a member of the Investment Committee. Brian Started his career in New York City with Booz Allen Hamilton in 1996. He returned to Manila in 1998, starting at Digitel/Sun Cellular, a telecom company, and subsidiary of JG Summit Holdings in Corporate Planning, and eventually becoming Managing Director of the datacom business. He moved to China in 2003, initially serving as Finance Director fo the food and real estate operations of the family business in China. In late 2007, he assumed the General Manager Role for the food business (URC China), while concurrently taking on the

4 CFO role for the real estate business (Ding Feng Real Estate). After relocating to Singapore, he took on the role of General Manager for the URC Malaysia and Singapore subsidiaries of URC from 2015-2018. He is also a director for JG Summit Petrochemical Corporation, and a member of the Senior Advisory Board of Robinsons Bank. Brian Graduated from Harvard College in 1996. He completed the Executive MBA program at Kellogg-HKUST in Hong Kong in 2007 and passed te CFA Level III Exam in 2013.

4. LISA Y. GOKONGWEI-CHENG, Member, Filipino, 51 years old. She is the President and Director of Summit Media (2011 to present). General Manager of Gokongwei Brothers Foundation Inc. (2011) and President of i-Tech Global Business Solutions, Inc. She is also the head of the Digital Transformation Office for JG Summit Holdings, Inc. She has a Bachelor of Arts degree from Ateneo de Manila University, and obtained her Master’s degree in Journalism at Columbia University in 1993.

ROBINSONS BANK’S KEY EXECUTIVE OFFICERS

1. Elfren Antonio S. Sarte, 60, Filipino, President and CEO/Director, he is the President and Chief Executive Officer of the Bank and is a member of its Executive Committee, Risk Management Committee and IT Steering Committee. He is also the Vice-Chairman of the Board of Directors of Legazpi Savings Bank and the Chairman of its Executive Committee. He is a director of Bankers Association of the Philippines and the Chairman of its Operations Committee. He is also the Chairman of the Board of Directors of Philippine Clearing House Corporation. Prior to joining the Bank in November 2014, he was the President, Director and CEO of Allied Savings Bank (2013 to 2014); Consumer Finance Group Head (2013) and Head of Consumer Credit and Collection Division (2010 to 2013) of Philippine National Bank; and Head of Consumer Credit Risk Management Division (2006 to 2010), Credit Services Division (1996 to 2006) and Credit Investigation and Appraisal Division (1995 to 1996) of Union Bank of the Philippines. He was also a Manager at the Credit Information Bureau (1983 to 1985). He has a Bachelor of Science degree in Industrial Management Engineering minor in Mechanical Engineering from the De La Salle University.

2. Exequiel T. Tua, 63, Filipino, Senior Vice President, and the Bank’s Chief Risk Officer and the concurrent Chief Risk Officer of LSB until 1 October 2019. He has been designated as the Bank’s Chief Operating Officer since 1 October 2019. He has been in the banking industry for more than 30 years. Prior to joining the Bank in 2006, he has worked with several financial institutions such as Banco Filipino, PAIC Bank, Small Business Guarantee Corp., National Commercial Bank (KSA), Philippine National Bank, and Citibank Savings, Inc. He also had extensive trainings on anti- money laundering, information security, risks and compliance trainings, Basel regulations, and has completed the Asian Institute of Management’s (AIM) Enterprise Risk Management program in 2011. He obtained his Bachelor of Science degree in Economics from University of Sto. Tomas (UST), MBA from DLSU Graduate School and completed his core subjects in PhD Commerce at UST.

5 3. Eric B. Santos, 60, Filipino, Executive Vice President, the head of the Bank’s Consumer and Regional Banking Segment. He has been with the banking industry for over 40 years and has held senior management positions in various banks such as United Coconut Planters Bank (UCPB), UCPB Savings Bank, Planters Development Bank and Premiere Development Bank prior to joining the Bank in 2012 as Chief Credit Officer. He was also elected as a Director of LSB in 2012 to 2013 and was re-elected in 2016 to present. He graduated from the Polytechnic University of the Philippines (PUP) with a degree of Bachelors of Science in Accountancy. He has attended extensive trainings on corporate governance, risk management, anti-money laundering, leadership, credit, and equity and debt financing.

4. Mykel D. Abad, 51, Filipino, Executive Vice President of the Bank and also the President of LSB. Prior to becoming the President of LSB, he has held senior management positions in UCPB, International Bank Exchange, and Robinsons Savings Bank. He finished his Bachelor of Science degree in Statistics from the University of the Philippines and he has a Masters degree in Applied Business Economics from the University of Asia and the Pacific. He has attended numerous trainings abroad such as the Youth Marketing Seminar conducted in Kuala Lumpur Malaysia and ICAAP Master Class and Asset Liability Management seminars, both of which were conducted in Singapore. He also underwent extensive trainings on anti- money laundering, corporate governance, treasury operations, and risk management. He has also completed the Executive Development Program of JG Summit, conducted by visiting professors from Harvard and INSEAD among others.

5. Ma. Regina N. Lumain, 57, Filipino, Executive Vice President, Treasurer of Robinsons Bank. Prior to joining the Bank in 2000, she held senior management positions in PCI Bank and PCIB Savings Bank. She graduated cum laude from the University of the East with a Bachelor of Arts degree in Economics. She also brings with her an extensive experience in Treasury and Investments. Over the years, she had attended trainings on corporate governance, anti-money laundering, BSP issuances, Camels Rating, risk management, market reading, data privacy, asset and liability management and other Treasury related seminars. She is also an SEC licensed for Fixed Income Salesman.

6. Andro M. Yee, 55, Filipino, Executive Vice President, and is the Bank’s Chief Financial Officer. He joined the Bank in 1997 and became the Bank’s Compliance Officer (concurrent Chief Audit Executive) (1997-2009), Chief Audit Executive (2009- 2010), and Controller (2010-2013). He also sat as a Director of Bancnet, Inc. (2009- 2011) and currently sits as one of the Directors of LSB. He was also the head of the Bank’s Community Banking Group (2013-2018) that spearheaded the Bank’s effort to offer financially inclusive products (i.e., Microfinance and Motorcycle Loans) to the unbanked and underbanked sector of the society in the country. Over the years, he has had numerous trainings and seminars on anti-money laundering, compliance, corporate governance, internal auditing, trust operations and investment management, IT security, corporate fraud control, and risk based audit. He earned his Bachelors of Science degree in Business Administration, Major in Accounting,

6 from the University of the Philippines in the Visayas. He is also a Certified Public Accountant.

7. Evie B. Abraham, 67, Filipino, Senior Vice President and Human Resource Management Group Head and the concurrent HRMG Head of its subsidiary, LSB. Ms. Evie has been in the banking industry since 1972. She started her career as a supervisor in the Bank of the Philippine Islands (BPI). After that, she held key positions in PCI Bank, Security Bank Corporation, and Chinatrust Phils. She joined the Bank in 2008 where she immediately headed its Human Resource Group. She attended numerous and extensive trainings and seminars involving human resource management, corporate governance, anti-money laundering, among others. She earned her Bachelors of Science in Business Administration degree, Major in Accounting, from Silliman University and finished the Strategic Business Economics Program from the University of Asia and Pacific.

8. Juanito Andres A. Henson, 55, Filipino, Senior Vice President, and currently heading the Bank’s Lending Segment-Account Management Group 1. He started his professional career as a management trainee in Malayan Insurance Company. He then moved to PCIBank where he was part of its Officer Development Program. From there, he worked with PCIBank’s Middle Market Group where he functioned as Credit Review Officer and as an Account Officer . Prior to joining the Bank, he also became an Account Officer of Dao Heng Bank (a bank based in Hong-Kong) and he also had a stint with the Philippine International Trading Corporation (a GOCC). He has been with the Bank since 1998, first as a Senior Manager to now as Senior Vice President. He obtained both his Bachelor of Science degree in Business & Economics as well as his Masters degree in Business Administration from the De La Salle University. He has had extensive trainings on anti-money laundering, forgery and fraud detection, and has finished the Excell Finance for Senior Executives program conducted by the Asian Institute of Management (AIM).

9. Agnes Theresa A. Salvador, 59, Filipino, Senior Vice President, and the head of the Bank’s Transaction Banking Group. She has more than 30 years of banking experience. She formerly held senior management positions as Cash Management Services Head of Philippine Bank of Communication (PBCom), Country Product Management Head of JP Morgan, and Cash Management Solutions Head of Rizal Commercial Banking Corporation (RCBC), among others. She has a Bachelor of Science degree in Architecture from the University of the Philippines and has attended and finished the Strategic Business Economic Program from University of Asia Pacific.

10. Salvador DH. Paps, 57, Filipino, Senior Vice President, and the head of the Bank’s Retail Banking Segment. His experience in the banking sector now span for more than 30 years. He has worked as the Bank’s Business Center Head, Cluster Head, and Area Head before becoming the Bank’s Retail Banking Group Head in 2016. Prior to joining the Bank, he already held senior management positions in ABN- AMRO Savings Bank and BA Savings Bank. He earned his Bachelor of Arts degree in Economics from San Beda College and has attended extensive trainings on customer experience management, business building and account servicing, Internal

Capital Adequacy Assessment Process (ICAAP) training, Related Party Transaction (RPT) Training, Coaching for Effectiveness Workshop, and Finance for Senior Executive (AIM) to name a few.

11. Eric C. Macalintal, 55, Filipino, Senior Vice President, and the Bank’s Chief Information Technology Officer. Before joining the Bank in 2011, he has worked with EastWest Bank as Vice President of their Project Management Office (PMO). He also worked with Premiere Bank where he headed their information technology department. He obtained his Bachelors of Science degree in Mathematics from the University of Sto. Tomas. He also has Masters of Science degree in Computer Science from Ateneo Professional School. He has had extensive training on Islamic Finance and anti-money laundering conducted by Malaysian Institute of Management and he also attended training on Applied Finance in Singapore Management University.

12. Roel S. Costuna, 50, Filipino, Senior Vice-President, and the Bank’s Corporate Secretary and Head of its Legal Services Group. Before joining the Bank in 2014, he was the Chief Legal Counsel and Head of Legal & Documentation Division of Philippine Veterans Bank (2007-2013), the Legal Head & Assistant Corporate Secretary of Chinatrust Commercial Bank Corporation (2005-2007), and Head Documentation and Opinion Team of International Exchange Bank (1997-2005). He has also worked with the firms of Castillo Laman Tan Pantaleon & San Jose Law Offices and SyCip Gorres Velayo & Co. - Tax Division. Committed to his continuous development, he has attended various seminars on corporate governance, anti- money laundering, mandatory continuing legal education, including a One-Year Training Program sponsored by Trust Institute of the Philippines. He obtained his Bachelor of Laws (LlB) degree from U.P. College of Law in Diliman, Quezon City in 1994. He placed 12th in the Bar Examinations given that same year. He obtained his Bachelor of Arts degree (Political Science), Magna Cum Laude, from the University of Eastern Philippines. He has been in the practice of banking and allied laws, corporate and litigation for almost 26 years.

13. Rosario C. Marcelo, 50, Filipino, Senior Vice President, Head of the Bank’s Lending Segment-Account Management Group 2. Ms. Marcelo has more than 25 years of banking experience, with strong background in commercial lending and remedial management. Prior to joining the Bank in 2012, she has held senior management positions in Planters Development Bank as Account Management Head, BDO Unibank as Credit Portfolio Review Head, and in EastWest Bank as Corporate Banking Division Head and Remedial Management Head. She sat as Director of Legazpi Savings Bank from 2013 to 2016. Ms. Marcelo obtained her Bachelors of Science degree in Business Administration from the University of the Philippines, Diliman, and has had several extensive trainings in banking and other related fields.

14. Maria Teresa Ponce-Sanchez, 57, Filipino, Senior Vice President, is the head of the Bank’s Treasury-Domestic Trading Group. She worked with PCI Bank’s Treasury Department for 14 years (1985-1999) before joining the Bank’s Treasury Group in 2000. In her more than 30 years of experience, she attended numerous trainings on treasury related topics. She is also an SEC Certified/Licensed Fixed Income

Salesman and was appointed as the Treasurer of Legazpi Savings Bank during the period starting 2014 to 2015. She obtained her Bachelors of Science degree in Business & Economics from the De La Salle University, Manila.

15. Janette C. Gonzalvo, 49, Filipino, Senior Vice President, and the Bank’s Motorcycle Finance Group Head. She has been with the banking industry for more than 25 years. She started her career in 1991 with Union Bank of the Philippines as Credit Reviewer Trainee. She left in 2002 as Credit Risk Manager. After that, she has held senior management positions in credit, collection and risk management of different prestigious banks i.e., Export and Industry Bank (2003-2006), Premiere Development Bank (2007-2010), and Philippine National Bank (2011-2012). She held a Directorship position with LSB from 2015-2018. She headed the Bank’s Credit Management Group in 2012 to 2018 prior to being appointed as the Bank’s Motorcycle Finance Group Head in January 2019. She had extensive trainings on core credit, management development program, credit risk management, operations risk management, market risk management, customer relationship management, collection, anti-money laundering, and corporate governance. She studied in De La Salle University - Taft Manila taking up Bachelors of Science degree in Marketing Management and obtained this degree from the University of St. La Salle – Bacolod.

16. Ma. Ellen A. Victor, 62, Filipino, Senior Vice President, and is the head of the Bank’s Corporate Banking Segment in charge of corporate loans and cash management services. Ms. Victor finished her Bachelor of Science degree in Accounting in De La Salle University Manila and is a Certified Public Accountant. She has more than 30 years of banking experience and previously held various positions such as Credit Evaluation Head of RCBC, Senior Lending Officer in UCPB and Eastwest Bank, Trust Investments Head of UCPB, Trust Head and Customer Service Head of Standard Chartered Bank, and Credit Administration Division Head of UCPB Savings Bank. She continuously updates her knowledge and had attended several trainings and seminars in the fields of Corporate Lending and Finance, Credit, Trust banking and AMLA, among others.

17. Alejandro Antonio B. Gaerlan, 46, Filipino, Senior Vice President, is the head of the Bank’s Treasury-Foreign Exchange/FCDU Group. He has a Bachelor of Arts degree in Economics from Ateneo De Manila University and is a Certified Treasury Professional. Prior to joining the Bank, he has held senior management positions in Rizal Commercial Banking Corporation as an Assistant Vice President (1996-2009) and with Bank of Commerce as Vice President (2009-2016).

18. Cynthia C. Bautista, 53, Filipino, First Vice President, and the concurrent Chief Audit Officer of the Bank and LSB. She started her audit career in 1989 and before joining the Bank in 2013, she held senior audit positions in East West Bank (2009- 2012) and Planters Bank (2012-2013). She also worked as an Internal Quality Review Officer of AIG Philam Savings Bank (2008-2009) and as an Operational Risk Management Officer (2001-2005) and Credit Risk Management Officer (2005-2008) of PBCom. She earned her Bachelors of Science degree in Business Administration, Major in Accounting, from the Pamantasan ng Lungsod ng Maynila (PLM). Over the years, she had attended extensive trainings on cyber-security, corporate governance,

anti-money laundering, quality assurance, risk-based audit, risk management, and Basel II, among others. She is also a Certified Public Accountant.

19. Divine Grace F. Dagoy, 47, Filipino, Chief Compliance Officer, joined the Bank on November 5, 2018. She is also a member of the Integrated Bar of the Philippines as well as the Board of Trustees of the Association of the Bank Compliance Officers, Inc. Prior to joining the Bank, she held the following positions, among others: Corporate Secretary and Compliance Officer of China Bank Capital Corporation; Employee Relations Head of Eastwest Banking Corporation; and, Deputy Legal Department Head of Planters Development Bank. She received her Juris Doctor degree from the San Sebastian College-Recolletos, Manila and Bachelor of Arts degrees in Psychology from the University of the Philippines, Diliman.

20. Lalaine C. Sta. Ana, 56, Filipino, First Vice President & Trust Officer, is principally responsible for the over-all administration of trust and fiduciary accounts held under management of the Trust & Investments Group (TIG) of Robinsons Bank. She had thirty (30) years of professional banking and work experience in both local and international banks. She was a member of the Board of Directors for the Trust Officers Association of the Philippines (TOAP) from 2015-2019. She held various key/management positions in trust portfolio management, sales, wealth management and branch banking in Metrobank, CTBC Bank Phils., and Standard Chartered Bank. She is a Certified Securities Broker and Fixed Income Salesman, by the SEC. She was also a Certified Trust Practitioner of the Philippine Trust Institute. She received a Bachelor of Science Degree in Financial Management from St. Scholastica’s College Manila.

21. Trisha Marie Gerette B. Gutierrez, 51, Filipino, OIC-Head of Enterprise Risk Management Group, she joined the bank in 2019 as Credit Risk Management Division Head. She is formerly a Director for Credit Risk and Business Control for the Bank of Singapore Ltd. – Philippine Representative Office. She is a former Credit Officer for ING Bank N.V., Manila Branch. She is also a former Credit Risk Manager at BDO Unibank, Inc. She is a former Credit Risk Manager for Banco Satander Philippines, Inc. and a former Deputy Head of Research for Abacus Securities Corporation. She received her B.S. Business Economics from the University of the Philippines, Diliman.

ANNEX “C”

MANAGEMENT REPORT

Business

(a) Form and Year of Organization

Robinsons Bank Corporation (“Bank”), as it is today, is the surviving entity of the merger on May 25, 2011 of “Robinsons Savings Bank Corp.”, a savings bank organized on October 8, 1997 and “Robinsons Bank Corporation”, formerly The Royal Bank of Scotland (Philippines), Inc., a commercial bank which was originally established on April 28, 1966.

(b) Bankruptcy, receivership and similar proceedings

The Bank is not subject to any bankruptcy, receivership or similar proceedings.

Robinsons Savings Bank, a bank which was 100% owned by JG Summit Capital Services Corporation (JGSCSC), opened its doors to business in November 1997. It has grown from a small savings bank with a single branch which soon increased to four (4) and by end of 2019 to a 161 branches-strong (148 of which belongs to the Bank and 13 to its subsidiary) and 7 branch-lites (3 for the Bank and 4 for LSB) commercial bank through organic expansion, strategic acquisitions and merger.

The Bank started to grow its branches by bidding and winning from PDIC eight (8) branches of the former Prime Savings Bank. Then in 2002, Robinsons Savings Bank acquired nineteen (19) branches of ABN Amro Savings Bank (Philippines), its licenses to operate branches and its bank deposits. This acquisition made Robinsons Savings Bank the country’s seventh largest thrift bank during the same year.

On April 28, 2010, the Bangko Sentral ng Pilipinas (BSP) approved the acquisition of The Royal Bank of Scotland (Philippines), Inc., a commercial bank, by JGSCSC and Robinsons Holdings, Inc. (RHI) on a 60:40 ratio.

On August 26, 2010, The Royal Bank of Scotland (Philippines), Inc. was renamed as “Robinsons Bank Corporation”. And on December 17, 2010, the Bangko Sentral ng Pilipinas (BSP) endorsed to the Securities and Exchange Commission (SEC) the merger between Robinsons Bank Corporation, the commercial bank, and Robinsons Savings Bank, the savings bank, with Robinsons Bank Corporation as the surviving entity. On May 25, 2011, the SEC approved the merger of Robinsons Bank Corporation and Robinsons Savings Bank, with the latter as the surviving entity. With this merger, the Bank became the 14th largest amongst commercial banks and the 31st largest bank in the Philippine banking system by the end of 2010.

In December 2012, Robinsons Bank Corporation acquired Legazpi Savings Bank, Inc. With the acquisition, Legazpi Savings Bank (LSB) became a wholly-owned subsidiary of Robinsons Bank Corporation (hereinafter collectively referred to as the “Group”). The acquisition of LSB opened up business lines and helped grew the target market for Robinsons Bank in the Bicol region. Moreover, this has allowed the Bank to operate its countryside banking through LSB’s branches and branch-lite units.

On June 27, 2018, the Bank’s Board of Directors approved the increase of the Bank’s Authorized Capital Stock from Php 15.00 billion to Php 27.00 billion divided into 2,700,000,000 common shares at Php10.00 par value per share, or a net increase of Php12.00 billion divided into 1,200,000,000 common shares at Php10.00 par value per share. The 25% of the net increase amounting to Php 3.00 billion was subscribed and paid in full by the major stockholders of the Bank namely JG Summit Capital Services Corp. and Robinsons Retail Holdings Inc. who subscribed and paid the amount of Php1,800,000,000.00 and Php1,200,000,000.00, respectively.

On August 23, 2018, a Special Stockholders’ meeting was called for the purpose of ratifying the proposed increase of the Bank’s Authorized Capital Stock. In the special meeting, the Bank’s stockholders representing more than two-thirds (2/3) of the Bank’s outstanding capital stock ratified the increase.

The increase in Bank’s Authorized Capital Stock as well as the corresponding amendment to the Bank’s Articles of Incorporation was later on approved by the BSP on December 12, 2018 and by the SEC last March 18, 2019.

Based on the BSP data, as of December 31, 2019, of the forty-six (46) universal and commercial banks operating in the Philippines, the Bank ranked 18th in terms of Total Assets; 16th in terms of Total Loans (net); 18th in terms of Total Deposits; 30th in terms of Return on Equity (ROE); and 17th in terms of Total Capital.

(d) Business of Issuer – Description of the Business and its Significant Subsidiaries

The Bank is the financial services arm of the JG Summit Group of companies. The Bank is 60.0% owned by JG Summit Capital Services Corporation (JGSCSC) and 40.0% owned by Robinsons Retail Holdings, Inc. (RRHI). It is a full-service Philippine commercial bank and has for its cornerstone a business portfolio of market leaders, a solid financial position and a formidable management team which serve the banking requirements of its customers, business partners and the general banking public through its wide array of products and services.

The Group, offers a full suite of deposit, lending (commercial and consumer), treasury, and trust products and services to corporate, commercial, and retail customers.

i. Principal Products and Services

Robinsons Bank offers a wide array of products and services that cater to a diverse range of clients – from large corporations, to SMEs, and consumer and retail markets:

A. DEPOSITS 1. Savings Account Philippine Peso  Passbook Savings Account  ATM Savings Account  Tykecoon Savings Account  Special Savings Account  Simple Savings Account  IPONsurance Foreign Currency  US Dollar Savings Account  Third Currency Account (EUR, JPY)

2. Checking Account  Regular Checking Account  Corporate Checking Account 3. Time Deposit  Peso Time Deposit  US Dollar Time Deposit  Third Currency Time Deposit (EUR, JPY)

B. LOANS 1. Corporate and SME Loans  Short Term Revolving Facilities o Revolving Promissory Note Line (RPNL) o Trade Check Discounting Line o Packing Credit Line o Domestic Bills Purchasing Line  Long-Term Loan  SME Loans o GO! mSME Loan o GO! Small Biz Loan  Trade Facilities o Import/Domestic Trade Facilities o Letter of Credit Line o Trust Receipt (TR) Line o Shipping Guarantee o Export Financing o Export Bills Purchase Line o Others o Standby LC Facility o Bank Guarantee 2. Consumer Loans  GO! Housing Loan  GO! Auto Loan  GO! Personal Loan  GO! Motorsiklo Loan  Vehicle Fleet Financing C. CREDIT CARDS 1. UNO® Mastercard 2. UNO® Platinum Mastercard 3. DOS® Mastercard 4. DOS® Platinum Mastercard 5. Robinsons Cashback Card 6. Card Acquiring Services D. TREASURY AND GLOBAL MARKETS 1. Foreign Exchange  FX Spot  FX Forwards 2. Fixed Income  Peso Denominated Government Securities and Other Debt Instruments o Peso Sovereign Bonds (Treasury Bills, FXTNs, RTBs) o Peso Corporate Bonds  Foreign Currency Denominated Bonds o US$ Sovereign Bonds (ROPs and other Sovereign Bonds) o US$ Corporate Bonds

3. Investments  Peso, US$, EUR Time Deposit E. CASH MANAGEMENT 1. Payables  Payroll Services  Electroni Crediting  eGov  Outsourced Manager’s Check Printing  Outsourced Corporate Check Printing  SME Builder Check Pro  SME Builder HRIS 2. Collections  Bills Payment (Over-the-Counter, ATM, Online Banking)  Post Dated Check Warehousing  Reference Account Collection 3. Remittance  Western Union Remittance Facility F. PAYMENTS 1. Direct2Bank PesoNet 2. Direct2Bank InstaPay 3. Real-Time Gross Settlement (RTGS) 4. Philippine Domestic Dollar Transfer System (PDDTS) 5. SWIFT

G. TRUST SERVICES 1. Unit Investment Trust Fund 2. Personal Investment Management 3. Corporate Investment Management 4. Escrows 5. Retirement Fund Management 6. Safekeeping

H. ELECTRONIC BANKING CHANNELS 1. ATM 2. Personal Online Banking 3. Mobile Banking App 4. Corporate e2Banking

I. BANCASSURANCE 1. PRU Personal Accident 2. PRU Wellness 3. PRU Shield 4. PRU Life Care Series 5. PRU Term 15 6. Mortgage Redemption Insurance (MRI)

J. ANCILLIARY SERVICES 1. Manager’s Check 2. Cash Acceptance Machine (Day & Night Depository) 3. Deposit Pick-Up and Delivery 4. Foreign Currency Conversion 5. Safety Deposit Box

ii. Percentage of Sales and Revenues

The income from the Bank’s products and services are categorized into two, namely: First, interest income from the Bank’s lending, investing, and trading activities which accounts for 88% of the Bank’s revenues; and Second, other income from commissions, fees, service charges, income from sale of assets, among others which account for the remaining 12% of the Bank’s revenues.

iii. Distribution Methods of Products and Services

The Group’s products and services are made available to its corporate, commercial and retail clients through multiple channels: 161 branch networks in 2019 (of which 148 belongs to the Bank; 13 are LSB branches); 7 Branch-Lites (3 Bank, 4 LSB); 338 ATMs (167 are onsite and 153 are offsite, 18 LSB); online banking (https://www.robinsonsbank.com.ph); and mobile banking which are made available to and can be accessed by Android and iOS users.

Group’s Branches and Branch-Lite Units Directory:

Metro Manila Branches as of December 31, 2019:

1. A. ARNAIZ AVENUE* - Unit 7A Commercial Space, The Beacon Makati, A. Arnaiz Avenue corner Chino Roces Ave, Makati City 2. ACACIA LANE - SHAW BOULEVARD* - G/F Padilla Bldg. 333 Shaw Boulevard, Brgy. Bagong Silang, Mandaluyong City 3. ADRIATICO* - Ground Floor Robinsons Manila, Adriatico Street, Ermita, Manila 4. ALABANG* - G/F Unit 4, El Molito Commercial Complex, Madrigal Avenue cor Alabang-Zapote Road, Alabang, Muntinlupa City 5. ASUNCION – BINONDO* - G/F Don Norberto & Doña Salustiana Ty Building, #403 Asuncion Street corner San Nicolas Street, Binondo, Manila 6. AYALA* - 6780 G/F JAKA 1 Building, Ayala Avenue, Makati City 7. BANAWE* - Store No. 2, Ll Commercial Building, Lot 5 Block 240, Banawe Street, Brgy. Tatalon, Quezon City 8. BETTER LIVING* - G/F Triple M Commercial Building, Doña Soledad Avenue corner Australia Street, Better Living Subd, Parañaque City 9. BGC - BURGOS CIRCLE* - G/F Unit B, The Cresent Park Residences, 30th Street corner 2nd Avenue, Bonifacio Global City, Taguig City 10. BGC – RIZAL DRIVE* - Ground Floor Udenna Tower, Rizal Drive corner 34th Street, Bonifacio South District, Bonifacio Global City, Taguig City 11. BGC 34TH STREET* - Shop 1 Panorama Tower, 34th Street corner Lane A, Bonifacio Global City, Taguig City 12. BGC 7TH AVENUE* - Unit GF 7, Trade and Financial Tower Building, 7th Avenue corner Lane Q Road, Bonifacio Global City, Taguig City 13. BINONDO* - GF01 MZ01 Pacific Centre Building, 460 Quintin Paredes corner Sabino Padilla Street, Binondo, Manila 14. BONIFACIO GLOBAL CITY* - Ground Level, Market Market Mall, Bonifacio Global City, Taguig City 15. BRIDGETOWNE* - C5 - G/F Tera Tower, Ortigas Avenue Extension corner C5, Quezon City 16. CALOOCAN* - G/F Dona Lolita Bldg., 363 Rizal Avenue Extension, Caloocan City 17. CHINO ROCES AVENUE EXTENSION* - G/F 2308 Natividad Building, Chino Roces Avenue Extension, Makati City 18. CUBAO-P. TUAZON* - G/F & Mezzanine, Genato Building, 250 P. Tuazon Cor. 15th Avenue, Cubao, Quezon City

19. D. GUEVARA MANDALUYONG* - G/F RL Building, 50 D. Guevara Street, Mandaluyong City 20. DEL MONTE* - G/F EWELL Square Bldg., Del Monte Ave corner Biak-na-Bato, Quezon City 21. DOMESTIC ROAD* - G/F Cebu Pacific Airline Operations Center Building, Domestic Road, Pasay City 22. E. RODRIGUEZ SR. AVE* - G/F JCA Building, No. 1166 E. Rodriguez Sr. Avenue, New Manila, Quezon City 23. EASTWOOD CITY** - G/F IBM Plaza Building, Eastwood City, E. Rodriguez Jr. Avenue, Bagumbayan, Quezon City 24. EDSA CALOOCAN* - G/F Insular Life Building, 462 EDSA near corner Boni Serrano Street, Caloocan City. 25. ERMITA* - Level 1 Padre Faura Wing, Robinsons Place Ermita, Ermita, Manila 26. FILINVEST-ALABANG* - Unit 104, Civic Place Condominium, 2301 Civic Drive, Filinvest Corporate City, Alabang, Muntinlupa City 27. GAMMA* - Ground Floor Cyberscape Gamma, Ruby Street, Ortigas Center, Barangay San Antonio, Pasig City 28. JP RIZAL ST. – MAKATI* - G/F Mendoza Building, 834 J. P. Rizal Street corner E. Zobel Street, Makati City 29. KATIPUNAN* - G/F Torres Building, 321 Katipunan Avenue, Loyola Heights, Quezon City 30. LAS PIÑAS* - G86-G87 Robinsons Place Las Piñas, 345 Alabang-Zapote Road, Barangay Talon, Las Piñas City 31. LAS PIÑAS* – PAMPLONA - G/F South Park Heights, 262 Alabang-Zapote Road, Pamplona, Las Piñas City 32. LEGAZPI STREET, MAKATI* - G/F, Office 1, Man Tower Legazpi Building, 153 Legazpi Street, Legazpi Village, Makati City 33. MAGINHAWA ST.** - Stalls A & B #143 Maginhawa Street, Barangay Teachers Village, Quezon City 34. MAGNOLIA TOWN CENTER* - LGF - LG026 Robinsons Magnolia Town Center, Aurora Blvd. cor Dona Hemady and N. Domingo Streets, New Manila, Quezon City 35. MAIN OFFICE BRANCH*** - G/F Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City 36. MAKATI – EVANGELISTA* - G/F #1861 Evangelista Street, Brgy. Pio Del Pilar, Makati City 37. MALABON* - Level 1 – 01127, Robinsons Town Mall Malabon, #5 Governor Pascual Avenue corner Crispin Street, Tinajeros, Malabon City 38. MARIKINA* - VC Chan Bldg. No. 8 Bayan-Bayanan Avenue, Concepcion Uno, Marikina City 39. MCKINLEY WEST* - Lower G/F Cyber Sigma, Lawton Avenue, Bonifacio South, Taguig City 40. MERALCO AVENUE* - G01 & G02, Robins Design Center, 31 Meralco Avenue, Ortigas, Pasig City 41. MOA COMPLEX* - Unit 101, Tower 1 Oceanaire Residences, Sunshine Drive corner Road 23, Coral Way, MOA Complex, Pasay City 42. MUNTINLUPA BAYAN* - G/F Joval 1 Bldg. #52 National Highway Putatan, Muntinlupa City 43. N.S. AMORANTO SR. AVENUE* - G/F Unit 102 "R" Place Building, #255 N.S. Amoranto Sr. Avenue, Quezon City 44. NINOY AQUINO AVENUE* - G/F, Rooms 2 & 3, Sky Freight Building, Sky Freight Center, Ninoy Aquino Avenue, Parañaque City 45. NOVALICHES** - Level 1 - ERS1-016, Robinsons Novaliches, Barangay Pasong Putik, Quirino Highway, Novaliches, Quezon City 46. ORTIGAS GREENHILLS* - G/F Limketkai Building, Ortigas Avenue corner Roosevelt Street, Brgy. Greenhills, San Juan City

47. PASAY – LIBERTAD* - G/F Cementina Corporation Building, 160 A. Arnaiz Avenue corner Cuenca Street, Pasay City 48. PASEO DE ROXAS* - G/F 111 Paseo de Roxas Building, Legazpi Street corner Paseo de Roxas, Makati City 49. PASIG (METRO EAST)* - L/G Robinsons Metro East, Marcos Highway, Barangay De la Paz, Pasig City 50. PASO DE BLAS* - 491 ESA Building, Paso De Blas Road, Brgy. Paso De Blas, Valenzuela City 51. PIONEER CYBERGATE* - Upper G/F, Robinsons Pioneer Cybergate Center 1, Pioneer Street, Mandaluyong City 52. QUEZON AVENUE* - G/F Q.C Avenue Mall, Quezon Avenue cor. Scout Borromeo St., South Triangle, Quezon City 53. REGALADO* - RS137-05 Robinsons Townville Regalado Fairview, Quezon City 54. ROOSEVELT AVENUE* - G/F MCCM Bldg. 311 Roosevelt Avenue, Quezon City 55. SAMSON ROAD* - G/F Units 3, 4 & 5 Samsons Square Bldg, Samson Road corner Dagohoy Street, Caloocan City 56. SAN MIGUEL* - G/F Octagon Building, San Miguel Avenue, Ortigas Center, Pasig City 57. SANTOLAN* – PASIG - G/F AD Center Square, Amang Rodriguez corner Evangelista Street, Santolan, Pasig City 58. SEDEÑO SALCEDO VILLAGE* - G/F, Unit G-104, 88 Corporate Center, #141 Sedeño corner Valero Street, Salcedo Village, Makati City 59. SEN. GIL PUYAT AVE.* - G/F New Solid Realty Inc. Building, 357 Sen. Gil Puyat Avenue, Makati City 60. SHAW BOULEVARD* - G/F Pelbel Building I, #2019 Shaw Boulevard, Pasig City 61. SOLER* - G/F Filamco Building, #1220-1222, Soler corner Masangkay Streets, Binondo, Manila 62. SUCAT* - Units B13 & B17, JAKA Plaza Mall, Dr. A. Santos Avenue, Parañaque City 63. TOMAS MORATO* - JSB Building, Tomas Morato Avenue corner Scout Delgado Street, Quezon City 64. VALENZUELA* - Unit A South Supermarket, McArthur Highway, Karuhatan, Valenzuela City 65. VISAYAS AVENUE* - G/F M & L Building, Visayas Avenue corner Road 1, Quezon City 66. WEST AVENUE* - G/F Prosperity West Center Building, 92 A West Avenue, Quezon City 67. WHITE PLAINS* - Francisco Santos Building, 138 Katipunan Avenue, Barangay Saint Ignatius, Quezon City 68. WILSON ST.* – GREENHILLS - G/F, Wilson Corporate Center, Wilson Street, Greenhills, San Juan City

Provincial Branches as of December 31, 2019:

1. ANGELES* - Level 1 Robinsons Place Angeles, Mcarthur Highway, Balibago, Angeles City, Pampanga 2. ANTIPOLO* - Unit 169-A, Robinsons Place Antipolo, Sumulong Highway/Circumference Avenue, Dela Paz, Antipolo City 3. ANTIQUE* - Level 1-116, 117 & 118 Robinsons Place Antique, Brgy. Maybato, San Jose De Buenavista, Antique 4. BACOLOD* - Level 1 C2002, The Central Citywalk, Robinsons Place Bacolod, Lacson Street, Mandalagan, Bacolod City, Negros Occidental 5. BACOLOD* - Capitol Shopping Center - R. Performance Building A 62-64 Narra Avenue, Capitol Shopping Center, Bacolod City 6. BACOOR* - Units 1 & 2, Apollo Mart Building, #369 Gen. Aguinaldo Highway, Talaba 4, Bacoor, Cavite

7. BACOOR-MOLINO BOULEVARD** - Ground Floor Main Square, Molino Boulevard, Bacoor City, Cavite 8. BAGUIO* - G/F, Ecco/Edgardomco Realty Corp. Bldg., #43 Assumption Road, Baguio City 9. BAIS* - Corner Quezon And Burgos Street, Bais City, Negros Oriental 10. BALAGTAS* - G/F 103-1 Balagtas Town Center, Mcarthur Highway, Borol 1st, Balagtas, Bulacan 11. BALANGA* - G/F, R & R Building, Don Manuel Banzon Avenue, Doña Francisca, Balanga City, Bataan 12. BALAYAN* - G/F Stalls Numbers 2, 3 & 4 Balayan Public Market, Plaza Mabini Street, Balayan Batangas 13. BATANGAS CITY* - G/F Odeste Building, P. Burgos St., Brgy. 15, Batangas City 14. BAYAWAN* - Shop 3, Bollos Street Corner National Highway, Brgy. Poblacion, Bayawan City, Negros Oriental 15. BUTUAN** - LEVEL 1 - 01160, Robinsons Place Butuan, Km. 3 J.C Aquino Avenue, Brgy Libertad, Butuan City, Agusan Del Norte 16. CABANATUAN* - G/F Franklin De Guzman Building, Km. 114 Maharlika Highway, Barangay Zulueta, Cabanatuan City, Nueva Ecija 17. CAGAYAN DE ORO* - Level 1 Robinsons Supercenter, Rosario Street, Lim Ket Kai Drive, Lapasan, Cagayan De Oro City 18. CAINTA* - G/F Gusali 888 Building, Ortigas Avenue Extension, Cainta, Rizal 19. CALAMBA** - G/F Fp Perez Building, National Highway, Parian, Calamba City, Laguna 20. CALAPAN* - G/F Neo Calapan Mall, Ls 008, Roxas Drive, Barangay Sto. Niño, Calapan, Oriental Mindoro 21. CALASIAO* - LEVEL 1 - 01134, Robinsons Place Pangasinan, Mac Arthur Highway, Brgy. San Miguel, Calasiao, Pangasinan 22. CDO-DIVISORIA* - G/F Pelaez Commercial Arcade 1 Corner Tiano Bros. And Cruz Taal Streets, Divisoria, Cagayan De Oro City, Misamis Oriental 23. CEBU BANILAD* - South Arcade 102, Banilad Town Centre, Gov. M. Cuenco Avenue, Banilad, Cebu City 24. CEBU MANDAUE* - G/F Cotiaoking Bldg, North Road, Tabok, Mandaue City, Cebu 25. CEBU OSMEÑA* - 2nd Level Robinsons Place Cebu, Fuente Osmeña Avenue, Cebu City 26. CEBU, GARCIA* – LLORENTE - G/F Robinsons Cybergate, Don Gil Garcia Corner J. Llorente Street, Capitol Site, Cebu City 27. CEBU-GALLERIA* - B101 Robinsons Galleria Cebu, Maxilom-Osmeña Boulevard, 13th Avenue & Benedicto Street, North Reclamation Area, Cebu City 28. DAGUPAN* - Guanzon Building, Perez Blvd, Dagupan City, Pangasinan 29. DASMARIÑAS* - Level 1 01302 Robinsons Place Dasmariñas, E. Aguinaldo Hi-Way Corner Governor's Drive, Pala-Pala, Dasmariñas, Cavite 30. DAVAO* - Door 1 & 2, Edward V. A. Lim Building, Sta. Ana Avenue, Davao City 31. DAVAO – BUHANGIN** - G/F Gaisano Grand City Gate Davao, Tigatto Road Corner Cabantian Road, Brgy. Buhangin, Davao City 32. DAVAO CYBERGATE* - Level 1, Unit 109, Robinsons Cybergate Davao, J.P Laurel Ave, Davao City 33. DAVAO-MONTEVERDE* - Haw Building, T. Monteverde Avenue, Davao City 34. DOLORES – SFDO* - Franda Building, Mcarthur Highway, Barrio Dolores, City Of San Fernando, Pampanga 35. DUMAGUETE* - Stall Af 25-27 Robinsons Dumaguete, Dumaguete South Road Corner Perdices Street, Dumaguete City, Negros Oriental 36. GENERAL SANTOS* - Robinsons Place General Santos, Cor. J. Catolico Ave. And Bula-Lagao Rd., General Santos City 37. GENERAL TRIAS* - LEVEL 1 - 155 & 156 Robinsons Place General Trias Mall, Antero Soriano, Epza-Bacao Diversion Road, Brgy. Tejero, General Trias, Cavite

38. ILIGAN* - Level 1 L1 136 & 137 Robinsons Place Iligan, Barangay Tubod, Iligan City, Lanao Del Norte 39. ILOCOS NORTE* - Level 2, Robinsons Place San Nicolas, Barangay 1, San Nicolas, Ilocos Norte 40. ILOILO* - Unit 189-190, G/F Robinsons Place Iloilo, Corner Mabini-Del Leon Streets, Iloilo City, Iloilo 41. IMUS* - G/F Robinsons Place Imus, Emilio Aguinaldo Highway, Imus, Cavite City 42. JARO* - LEVEL 1 – Unit G-17 B, Robinsons Place Jaro, E. Lopez Street, Brgy. San Vicente, Jaro, Iloilo 43. KABANKALAN* - G/F Nz Business Center (Nzbc) Building, Jy Perez Highway, Kabankalan City, Negros Occidental 44. LEGAZPI CITY* - G/F, Yuzon Commercial Building, Quezon Avenue, Legazpi City, Albay 45. LIPA** - G/F Robinsons Place Lipa, Expansion Wing, J.P. Laurel Highway, Mataas Na Lupa, Lipa City, Batangas 46. LOS BAÑOS* - G/F Lbdhmc Medical Arts Iii Building, Lopez Avenue, Batong Malake, Los Baños, Laguna 47. LUCENA* - G/F Azdemark Building, 11 Quezon Avenue, Lucena City 48. LUISITA TARLAC* - Unit 102 Robinsons Luisita, Mcarthur Highway, San Miguel, Tarlac City 49. MALOLOS - LEVEL 1* – 01123 Robinsons Place Malolos, Mc Arthur Highway, Barangay Mabolo, Malolos, Bulacan 50. MEYCAUAYAN* - G/F Emcco Building, Mcarthur Highway Corner Malhacan Road, Calvario, Meycauayan City, Bulacan 51. NAGA* - G/F Crown Hotel Building, Peña Francia Avenue, Naga City 52. OLONGAPO* - G/F 1370 Rizal Avenue Extension, East Tapinac, Olongapo City, Zambales 53. ORMOC** - Robinsons Place Ormoc, Palo Carigara, Ormoc City Road, Brgy. Cogon, Ormoc City, Leyte 54. PALAWAN* - Unit 220-222, 2/F, Robinsons Place Palawan Mall, Puerto Princesa City, Palawan 55. PASSI** - Units G5-G6, Ground Floor, Gaisano Capital - Passi, Simeon Aguilar Street, Passi City, Iloilo 56. PAVIA* - G/F Robinsons Place Pavia, Vice President Fernando Lopez Ave., Pavia, Iloilo City 57. ROBINSONS NORTH TACLOBAN* - G/F Robinsons North Tacloban, Brgy. Abucay, Tacloban City 58. ROBINSONS PLACE NAGA* - Level 1 Unit 101 Robinsons Place Naga, Roxas Avenue Corner Almeda Highway, Brgy. Triangulo, Naga City, Camarines Sur 59. ROBINSONS GALLERIA SOUTH** - Level 2, Robinsons Galleria South, Manila South Road, Barangay Nueva, San Pedro, Laguna 60. ROBINSONS PLACE TUGUEGARAO** - G/F Robinsons Place Tuguegarao, Brgy. Tanza, Tuguegarao City, Cagayan 61. ROXAS* - Level 1-1133b, Robinsons Place Roxas, Pueblo De Panay, Barangay Lawa-An, Roxas City, Capiz 62. SAN FERNANDO* - Level I Robinsons Starmills, Candaba Gate, Olongapo-Gapan Road, San Jose, San Fernando City, Pampanga 63. SAN JOSE CITY* - Belena Building, San Jose-Carmen Road (Romano St. Corner Bonifacio St.), Brgy. Rafael Rueda, San Jose City, Nueva Ecija 64. SAN JOSE DEL MONTE* - Quirino Highway,Tungkong Mangga, San Jose Del Monte City, Bulacan 65. SAN PABLO* - G/F Estrellado Building, Paulino Street, San Pablo City, Laguna 66. SAN PEDRO* - G/F Space 102, Etg Business Center, A. Mabini Street, Barangay Poblacion, San Pedro City, Laguna

67. SANTIAGO* - Level 1-01103, Robinsons Place Santiago, Barangay Mabini, Santiago City, Isabela 68. STA ROSA* - Level 1 Robinsons Sta. Rosa Market, Old National Highway, Bo. Tagapo, Sta. Rosa City, Laguna 69. STA. ROSA ESTATES 2* - Sta. Rosa-Tagaytay Road, Sta. Rosa City, Laguna 70. STO. TOMAS* - Gf Unit 3, Sierra Makiling Commercial Complex, Maharlika Highway, Brgy. San Antonio, Sto. Tomas, Batangas 71. TACLOBAN* - Robinsons Place Tacloban, Level 1-00103, National Highway, Tabuan, Marasbaras, Tacloban City 72. TAGAYTAY* - Space 2-00210, Robinsons Tagaytay, National Road, Barrio Maharlika, Tagaytay City 73. TAGBILARAN* - G/F Castelcelo Building 1, C. Gallares Street Corner J. S. Torralba Street, Poblacion Ii, Tagbilaran City, Bohol 74. TAGUM - LEVEL 1* – Unit 167 Robinsons Place Tagum, National Highway, Brgy. Visayan Village, Tagum, Davao Del Norte 75. TAYTAY* - Red Ribbon Uptown Building, Manila East Road, Barangay San Juan, Taytay, Rizal 76. TUGUEGARAO** - G/F, Lui Building, Bonifacio Street, Centro 04, Tuguegarao City, Cagayan Valley 77. URDANETA* - G/F S-Plaza Building, Mcarthur Highway, Urdaneta, Pangasinan 78. VALENCIA CITY** - G/F Robinsons Place Valencia, Valencia City, Bukidnon 79. VIGAN** - Ls1-08-2, Xentro Mall Vigan, Quezon Avenue, Brgy. Iii, Vigan City, Ilocos Sur 80. ZAMBOANGA* - G/F The Grand Astoria Hotel, Mayor Jaldon Street, Zamboanga City

Robinsons Bank Branch-lite Units as of December 31, 2019:

1. GAMMA* - G/F Cyberscape Gamma, Ruby Street, Origas Center, Brgy. San Antonio, Pasig City 2. LIPA - J.P. LAUREL* - G/F Mhikai Building 1, J.P. Laurel Highway, Marawoy, Lipa City Batangas 3. PASIG – C. RAYMUNDO* - G/F Marius Arcadia Building, C. Raymundo Avenue corner Pag-Asa Street, Pasig City

LSB Branches as of December 31, 2019:

1. ALBAY* - 738 bldg. Rizal St., Old Albay District, Legazpi City 2. DAET* - Subia Building, J. Lukban St., Brgy. 3, Daet, Camarines Norte 3. DARAGA* - Perete Bldg. Sta. Maria St. Brgy. San Roque Daraga, Albay 4. GUINOBATAN** - LSB Building, T. Paulate Street, Guinobatan, Albay 5. LEGAZPI CITY* - Corner Rizal and Mabini Streets, Dinagaan, Legazpi City 6. LUCENA CITY* - A. M. Lubi Bldg. M. L. Tagarao corner Elias St., Brgy. 5, Lucena City, Quezon 7. MASBATE CITY* - Unit 8 & 9 S & T Bldg., Cagba St., Brgy. Tugbo, Masbate City 8. NAGA CITY* - NEA Bldg., Central Business District, Triangulo, Naga City 9. POLANGUI* - National Road, Basud, Polangui, Albay 10. SAN FERNANDO CITY* - 4 AND 2 Bldg. Mc Arthur Highway Sindalan 11. SORSOGON CITY* - CBA Building, Jamoralin Street, Burabod, Sorsogon 12. TOBACO* - NN Building A.A. Berces, Basud, Tabaco City, Albay 13. VIRAC* - G/F D&L Building, Cor. Surtida & Rizal Streets, San Jose, Virac, Catanduanes

LSB Branch-lite Units (formerly known as MBOs) as of December 31, 2019:

1. CALAUAG* - Rizal St. Brgy. Sta. Maria Calauag Quezon 2. DASMARIÑAS CITY* - G/F Wincorp Bldg., Molino - Paliparan Road, Salawag, Dasmariñas, Cavite 3. GOA* – Unit 1, JJFQ Bldg., Rizal St., Goa Camarines Sur 4. IRIGA* - Dls Building 121, Zone 6 Highway 1, San Isidro, Iriga Camarines Sur

*One (1) ATM **Two (2) ATMs ***Three (3) ATMs

Robinsons Bank – Off-site ATM Directory

Metro Manila Off-site ATMs as of December 31, 2019:

1. RET BRIDGEWAY - G/F Robinsons Equitable Tower, Ortigas, Pasig City 2. RETAIL H. O. 2 - Building 1, Robinsons Retail Group, 110 E. Rodriguez, Jr. Ave., Libis, Quezon City 3. RDS GALLERIA - Robinsons Dept Store, 2F East Wing Entrance, Robinsons Galleria, EDSA cor. Ortigas Ave., Quezon City 4. BF HOMES - Aguirre Avenue, BF Homes, Paranaque City 5. RSC TANDANG SORA - 105 RMR Square Mall, Tandang Sora Ave., Brgy Pasong Tamo, Quezon City 6. PARK AVENUE 2 - Consumer Finance Group, Park Avenue, Robinsons Galleria, Ortigas, Quezon City 7. RSC MERVILLE - Robinsons Supermarket, Edison Ave. cor. West Service Rd., Brgy Merville, Parañaque City 8. URC 2 - E. Rodriguez Ave. cor. Pasig Blvd., Bagong Ilog, Pasig City 9. RSC GRACELAND - Robinsons Supermarket Graceland, J. P. Rizal St., Brgy. Malanday, Marikina City 10. DOMESTIC 2 - Ground Floor Cafeteria, Cebu Pacific Air Head Office, Domestic Airport Road, Pasay City 11. MS ESCRIVA - B2 L1 Escriva Drive cor. Lukban St., San Antonio, Pasig City 12. MINISTOP BANSALANGIN - 995 EDSA cor. Bansalangin St., Veterans Village, Quezon City 13. RSC MERCEDES - Robinsons Supermarket Mercedes, Mercedes Ave. Pasig City 14. RSC KARANGALAN - Robinsons Supermarket Karangalan Branch, Magsaysay St. cor. Felix Avenue, Manggahan, Pasig City 15. ST FRANCIS SQUARE - G/F St Francis Square Building, Bank Drive cor. Julia Vargas Avenue, Mandaluyong 16. RSC OTIS - 1536 Paz M. Guanzon St., 831 Zone 90, Paco, Manila 17. RETAIL H. O. 3 - Building 3, Robinsons Retail Group, 110 E. Rodriguez, Jr. Ave., Libis, Quezon City 18. CYBERSCAPE ALPHA - G/F, Cyberscape Beta Bldg., Garnett and Sapphire Roads, Ortigas Center, Pasig City 19. CYBERSCAPE BETA - G/F, Cyberscape Beta Bldg., Topaz and Ruby Roads, Ortigas Center, Pasig City 20. ROBINSONS FORUM - No. 30, Robinsons Forum, EDSA Corner Pioneer Street, Mandaluyong City. 21. RSC FEDERAL BAY - G/F, Royal Palm Tower, Macapagal Ave., Pasay City 22. MINISTOP MUNTINLUPA - National Road cor. Pedro Diaz St., Brgy. Poblacion, Muntinlupa City 23. MINISTOP MARKETPLACE - The Marketplace Shopping Mall, Gen. Kalentong, Daang Bakal, Mandaluyong City

24. MINISTOP GOLDEN GATE - 435 Real St., National Road, Barangay Talon, Las Piñas 25. MS PATEROS - 3 B. Morcilla St., Brgy. Poblacion, Pateros 26. MS INTRAMUROS 2 - Don Cabildo St. cor. Recoletos St., Intramuros, Manila 27. MINISTOP MALAYAN PLAZA - G/F Malayan Plaza Hotel, Topaz Road, Ortigas Center, Pasig City 28. RSC VALENZUELA - Robinsons Supermarket, B. Hive Plaza, 108 Gen. T. De Leon St., Valenzuela City 29. EASYMART LAGRO - Robinsons Easymart, G/F Sunbest Bldg., Lagro Subdivision, Fairview, Quezon City 30. MINISTOP MERVILLE - Km. 12, Merville Access Road, Brgy. 2014, Pasay City 31. MINISTOP GLORIA DIAZ - Gloria Diaz Ave., Corornelia St., BF Resort, Las Pinas City 32. MINISTOP MALANDAY - 507 McArthur Highway, Brgy. Malanday, Valenzuela City 33. MINISTOP PASAY ROTONDA - G/F Manchester Bldg., 2925 EDSA cor. Taft Ave. ext., Pasay City 34. MINISTOP SIGNAL VILLAGE - Visayas St. cor. Ballester St., FTI, Taguig City 35. MINISTOP SUGARTOWNE - Sugartowne Subd., Capitol Hills, Quezon City 36. CEBPAC T3 LOUNGE - Cebu Pacific Lounge, Andrews Ave., NAIA Terminal 3, Pasay City 37. CEBPAC T3 ASD OFFICE - Cebu Pacific ASD Office, Andrews Ave., NAIA Terminal 3, Pasay City 38. RSC PIONEER – Robinsons Supermarket, G/F Robinsons Forum, EDSA cor. Pioneer St., Barangka Ilaya, Mandaluyong City 39. CROWNE PLAZA – 4th flr., Crowne Plaza Manila Galleria, Ortigas Ave. cor. Asian Development Bank Ave., Quezon City 40. RSC ACACIA ESCALADE – Robinsons Supermarket, Acacia Escalades, Calle Industria cor. Amang Rodriguez Ave., Pasig City 41. EASYMART LOYOLA – 88 Rosa Alveo St., Loyola Heights, Quezon City 42. MINISTOP F. ZOBEL – F. Zobel cor. Buencamino St., Makati City 43. MINISTOP DIAN – Dian St. cor. Ampere St. Brgy. Palanan, Makati City 44. URC BAGUMBAYAN – 12 Calle Industria, Bagumbayan, Quezon City 45. MINISTOP GA TOWER – Unit 2920 G/F GA Tower, 83 EDSA cor. Boni Ave., Brgy. Malamig, Mandaluyong City 46. MINISTOP KALAYAAN – Kalayaan Ave. cor Jervois St., Makati City 47. MINISTOP SUN VALLEY – Lot 8, Blk. 33, Sun Valley Drive cor. State Ave., Sun Valley Subdivision, Parañaque City 48. PARK AVENUE 1 - Basement 1 Park Avenue, Robinsons Galleria, Ortigas, Quezon City 49. RSC GALLERIA - Level 1 Robinsons Supermarket, Robinsons Galleria, EDSA cor. Ortigas Ave., Quezon City 50. RETAIL HEAD OFFICE - Building 1, Robinsons Retail Group, 110 E. Rodriguez, Jr. Ave., Libis, Quezon City 51. MINISTOP GALLERIA - Ministop, Robinsons Galleria, EDSA cor. Ortigas Ave., Quezon City 52. RSC ERMITA - G/F Robinsons Supermarket, Robinsons Place, Ermita, Manila 53. RDS MANILA - G/F Robinsons Dept Store, Robinsons Place, Ermita, Manila 54. RDS METRO EAST - G/F Robinsons Dept Store, Robinsons Metroeast, Marcos Higjway, Brgy De la Paz, Pasig, City 55. CYBERGATE TOWER 1 - U/GF Robinsons Cybergate Tower 1, Pioneer, Mandaluyong City 56. ROCKWELL - 8th flr Rockwell Business Center Tower II, Ortigas, Pasig 57. RSC TUTUBAN - Robinsons Supermarket G/F Cluster Bldg., Tutuban Center, Manila 58. RDS MAGNOLIA - U/G Robinsons Dept Store, Robinsons Magnolia Town Center, Aurora Blvd. cor. Hemady and N. Domingo St., New Manila, Quezon City

59. TELEPERFORMANCE SHAW - Greenfield District IT Center II, United St. Mandaluyong City 60. TERA TOWER - G/F, Tera Tower, Bridgetowne – C5 corner Ortigas Avenue Extension, Quezon City 61. CYBER SIGMA - The Northwest Lobby, Cyber Sigma, Lawton Avenue, Bonifacio South, Taguig City

Provincial Off-site ATMs as of December 31, 2019:

1. RSC PULILAN - Dona Remedios Trinidad Highway, Pulilan Junction, Brgy. Cut-cot, Pulilan, Bulacan 2. RSC NUVALI - Robinsons Supermarket Nuvali, Tagaytay Road, Sta Rosa, Laguna 3. RSC MALOLOS - Robinsons Supermarket, Bulacan State University grounds, McArthur Highway, Guinhawa, Malolos, Bulacan 4. RSC PACITA - Robinsons Supermarket, Block 6 lot 3-A Pacita Ave. cor. 2nd St., Pacita Complex Phase 1, San Pedro, Laguna 5. RSC MEYCAUAYAN - Robinsons Supermarket Meycauayan Branch, EMA Town Center, El Camino Rd., Meycauayan, Bulacan 6. RSC CABUYAO - Robinsons Supermarket, Cabuyao Centro Mall, National Highway, Brgy. Pulo, Cabuyao City, Laguna 7. RDS ANTIPOLO - G/F, Robinsons Dept. Store, Robinsons Place Antipolo, Circumference Ave., Sumulong Highway, Brgy. Dela Paz, Antipolo City 8. RSC MOLINO - Robinsons Supermarket, 102 Molino Boulevard, Bacoor, Cavite 9. RSC SOUTHWOODS - G/F Southwoods Mall, Brgy. San Francisco, Biñan, Laguna 10. RSC PACITA 2 - Robinsons Supermarket, B6 L3-A, Pacita Ave. cor. 2nd St., Pacita Complex, San Pedro, Laguna 11. MINISTOP RUBLOU - Rublou Marketplace, A. Bonifacio Ave. cor. Buenmar St., Greenland Subd., Cainta, Rizal 12. URC CALAMBA - Universal Robina Corporation, National Highway, Km. 50, San Cristobal, Calamba City, Laguna 13. IQDI BOOMTOWN – Infinite Quality Design Center, Bocaue, Bulacan 14. EASYMART ALIMA BAY – Alima Bay Resindences and Commercial Complex, Gen. Evangelista St., Brgy. Alima, Bacoor, Cavite 15. URC CANLUBANG – Universal Robina Corporation, Canlubang Snack Food Plant, Km. 50, Brgy. San Cristobal, Canlubhang Laguna 16. MINISTOP BANLIC – 216 Mamatid Road, Brgy. Banlic Cabuyao, Laguna 17. MINISTOP VALLEY GOLF – Ortigas Extension, Valley Golf Avenue, Cainta, Rizal 18. MINISTOP SOUTH CITY – Sto. Tomas Rd., Brgy. Calaboso, South City Homes, Biñan, Laguna 19. MINISTOP ADDAS – Molino Blvd. cor. Addad Greenfields Subd., Brgy. Mambog Bacoor, Cavite. 20. RDS IMUS - 2nd Level Robinsons Dept Store, Robinsons Place Imus, E.Aguinaldo Highway, Imus, Cavite 21. RSC DASMARINAS - Robinsons Supermarket Dasmariñas, E.Aguinaldo Highway cor. Governor's Drive, Pala-Pala, Dasmariñas, Cavite 22. URC CAVITE - First Cavite Industrial Estate, Langkaan, Dasmarinas, Cavite 23. RSC THE DISTRICT - Robinsons Supermarket, The District Dasmariñas, Molino- Paliparan Road, Dasmariñas, Cavite 24. RSC BUHAY NA TUBIG - Robinsons Supermarket, Palico Road, Barangay Buhay na Tubig, Imus City, Cavite 25. MINISTOP DASMARINAS - E. Aguinaldo Highway cor. Governor's Drive, Dasmariñas, Cavite 26. EASYMART MALAGASANG - Robinsons Easymart, Phase 3, Greengate Subdivision, Brgy. Malagasang 2A, Imus City, Cavite

27. RSC CEBU TALAMBAN - Robinsons Supermarket Talamban, G/F Talamban Time Square, Brgy. Talamban, Cebu City 28. DUSIT MACTAN – Dusit Thani Mactan Cebu Resort, Punta Engaño Rd., Mactan Island, Lapu-lapu City, Cebu. 29. RDS BACOLOD - Level 1 Robinsons Dept Store, Robinsons Place Bacolod, Lacson St., Bacolod City 30. BACOLOD TELE - G/F Luxor Plaza IT, Magsaysay Ave. cor Lacson St., Bacolod City 31. RSC MANSILINGAN - Robinsons Supermarket, Alijis Road, Carmenville Subd., Brgy. Mansilingan, Bacolod City 32. RSC VILLAMONTE - Robinsons Supermarket, East 3 Center, Narra Extension, Burgos Ave., Villamonte, Bacolod City 33. UNIVERSITY OF SAN AGUSTIN - University of San Agustin, Jalandoni St., Iloilo City 34. RDS ILOILO - G/F Robinsons Dept. Store, Robinsons Place Iloilo, Mabini St., Iloilo City 35. ILOILO JB LACSON - John B. Lacson Maritime University, Sto Nino Sur, Arevalo, Iloilo City 36. JBL MOLO ILOILO - JB Lacson Foundation Maritime University, San Juan St., Molo, Iloilo City 37. RSC MOLO - MH Del Pilar St., Molo, Iloilo City 38. RSC MACTAN - Robinsons Supermarket, Pueblo Verde Mactan Economic Zone II along Maximo Patalinghug Highway, Brgy. Basak, Lapu-lapu City, Cebu 39. JGC TACLOBAN - JGC Financing Company Building, Corner M. H. Del Pilar and P. Gomez Sts., Tacloban City, Leyte 40. RDS DUMAGUETE - G/F Robinsons Dept Store, Robinsons Dumaguete, Dumaguete South Road cor. Perdices St., Dumaguete City 41. RSC PERDICES - Lower G/F, Mart One, Gov. Perdices St., Dumaguete City, Negros Oriental 42. URSUMCO - URSUMCO Cmpd., National Highway, Brgy. Alangilanan, Manjuyod, Negros Oriental 43. RSC CITYMALL ROXAS - Arnaldo Boulevard, Roxas City, Capiz 44. PUNTA DULOG - Punta Dulog, Pueblo De Panay, Roxas City, Capiz 45. BQ BUILDERWARE - North 6300, Carlos P. Garcia East Avenue, Tagbilaran City, Bohol 46. CEBU GALLERIA 2 - Level 1, ATM 3, Robinsons Galleria Cebu, Maxilom-Osmeña Blvd., 13th Ave. and Benedicto Sts., North Reclamation Area, Cebu City 47. RDS NORTH TACLOBAN - Level 1, Robinsons Dept. Store, Robinsons North Tacloban, Brgy. Abucay, Tacloban City, Leyte 48. PEZA BAGUIO - Baguio Economic Zone, Loakan Rd., Baguio City 49. MANAOAG - Minor Basilica of Manaoag, Milo St., Manaoag, Pangasinan 50. RSC GUAGUA - Guagua Town Center, Jose Abad Santos Ave., Brgy. San Matias, Guagua, Pampanga 51. EASYMART STO. TOMAS - La Corona, Brgy. San Matias, Sto. Tomas, Pampanga 52. RSC NAGA - G/F Robinsons Supermarket, Nagaland E-mall, Elias Angeles St., Naga City, Camarines Sur 53. MARINERS NAGA - Mariners' Polytechnic Colleges Foundation, Baras, Canaman, Camarines Sur 54. LIPA 2 - G/F Expansion Wing, Robinsons Place Lipa, J. P. Laurel Highway, Mataas- na-Lupa, Lipa City, Batangas 55. JG PETROCHEM - JG Summit Petrochemicals Corporation, Barangay Simlong, Batangas City 56. MINISTOP SICO - Orchid St., Lipa City, Batangas 57. RSC LEMERY - Robinsons Supermarket, Xentro Mall, Illustre Ave., Lemery, Batangas 58. URC BALAYAN - Barangay Caloocan, Balayan, Batangas

59. MINISTOP ST. ROSE TERMINAL - St. Rose Transit Terminal, Brgy. Uno Crossing, Calamba, Laguna 60. LIPA 3 – G/F Expansion Wing, Robinsons Place Lipa, J.P. Laurel Highway, Mataas- na-Lupa, Lipa City, Batangas 61. URC PAMPANGA PLANT - URC Pampanga Plant, Brgy Del Rosario, San Fernando, Pampanga 62. RSC MABALACAT - Robinsons Supermarket Mabalacat, JOMAFER Bldg., Lot 1 Blk. 65, Severa Subd., Brgy. Tabun, Mabalacat City, Pampanga 63. SOUTHSTAR DRUG ANGELES – South Star Drug Angeles-Friendship Ave., Friendship Highway, Anunas, Angeles City Pampanga 64. RSC TAGAYTAY - Robinsons Supermarket, Summit Ridge, Tagaytay, Cavite 65. RDS CABANATUAN - Level 2, Robinsons Dept Store, NE Pacific mall, km.111 Maharlika Highway, Cabanatuan City, Nueva Ecija 66. SOUTHSTAR DRUG CABANATUAN – Southstar Drug, Burgos St. cor. Sanciangco St., Cabanatuan City, Nueva Ecija 67. RSC TARLAC - Robinsons Supermarket, Robinsons Luisita, McArthur Highway, San Miguel, Tarlac City 68. EASYMART SAN SEBASTIAN - Robinsons Easymart, San Sebastian Village, Brgy. San Sebastian, Tarlac City 69. EASYMART CONCEPCION - Robinsons Easymart, Cor. La Purisima St., San Nicolas Poblacion, Concepcion, Tarlac 70. RSC BALAGTAS - Robinsons Supermarket, Balagtas Town Center, Mc Arthur Highway, Borol First, Balagtas, Bulacan 71. RDS PALAWAN - G/F Robinsons Dept Store, Robinsons Place Palawan Mall, Puerto Princesa City, Palawan 72. RSC CALAPAN - Robinsons Supermarket, NEO Calapan Mall, Brgy. Sto. Niño, Calapan City, Oriental Mindoro 73. RSC GEN. TRIAS - Robinsons Supermarket, Robinsons Place General Trias, Brgy, Tejero, Gen. Trias, Cavite 74. RSC DOLORES - Robinsons Supermarket, McArthur Highway, Brgy. Dolores, San Fernando, Pampanga 75. RP NAGA OFFSITE - Level 1, Robinsons Place Naga, Roxas Ave. cor. Almeda Highway, Brgy. Triangulo, Naga City, Camarines Sur 76. RDS TUGUEGARAO - 2/F, Robinsons Dept. Store, Robinsons Place Tuguegarao, Brgy. Tanza, Tuguegarao City, Cagayan 77. MINISTOP GALLERIA SOUTH – Level 1, Robinsons Galleria South, Km. 31 National Highway, Brgy. Nueva, San Pedro, Laguna 78. RSC CAGAYAN DE ORO - G/F Big R Supercenter, Cagayan de Oro, City 79. RSC GUSA - Robinsons Supermarket, Phase 2, Villa Ernesto Subd., National Highway, Cagayan de Oro City 80. RSC LIMKETKAI - Robinsons Supermarket, 1st Level, South Concourse, Limketkai Mall, Cagayan De Oro City 81. URC ESMO - Zone 3, Brgy. Sinaloc, El Salvador City, Misamis Oriental 82. RDS DAVAO - 2nd Flr Robinsons Department Store, Abreeza Mall, J.P Laurel Avenue, Davao City 83. MATINA IT PARK - Matina IT Park, Gen. Douglas McArthur Highway, Talomo, Davao City 84. RDS BUTUAN - G/F, Robinsons Deparment Store, Robinsons Place Butuan, J. C. Aquino St., Brgy. Libertad, Butuan City 85. RP ILIGAN - Level 1, Robinsons Place Iligan, Brgy. Tubod, Iligan City, Lanao Del Norte 86. RDS ILIGAN - Robinsons Dept Store, Level 1, Robinsons Place Iligan, Brgy. Tubod, Iligan City, Lanao Del Norte 87. RSC SILANG - Robinsons Supermarket, Premier Plaza, Emilio Aguinaldo Highway, Brgy. Lucsuhin, Silang, Cavite

88. RSC LIPA - Robinsons Supermarket, Robinsons Place Lipa, J. P. Laurel Highway, Lipa City, Batangas 89. RSC LIPA TOWN CENTER – Robinsons Supermarket, Lipa Town Center, J. P. Laurel Highway, Lipa City, Batangas 90. SOUTHSTAR DRUG GEN. TRIAS – Southstar Drug Manggahan GT, Governor’s Drive cor. C.M. Delos Reyes Ave., Manggahan, Gen. Trias, Cavite 91. RSC TWIN LAKES – Robinsons Supermarket, Twin Lakes Shopping Village, Barangay Dayap-Itaas, Tagaytay-Nasugbu Highway, Laurel, Batangas 92. EASYMART TANZA – San Agustin St. Poblacion II, Tanza, Cavite

Legend:

MS – Ministop RDS – Robinsons Department Store RSC – Robinsons Supermarket Corporation RP – Robinsons Place URC – Universal Robina Corporation

(e) Status of Publicly Announced New Products and Services

Robinsons Bank introduced several products and services in 2019:

PRODUCTS AND SERVICES DATE LAUNCHED IPONsurance June 3, 2019 GO! Salary Loan Online Channel June 27, 2019 Agency Banking was piloted July 1, 2019 Corporate Bonds due 2021 August 13, 2019 Hybrid Branch Format September 25, 2019 Cash Acceptance Machine September 25, 2019 Robinsons Cashback Credit Card October 1, 2019 Corporate Bonds due 2021 November 14, 2019

IPONsurance is a passbook-based, interest-earning savings account with free life insurance coverage for as low as Php20,000.00to open and maintain an account. Life insurance coverage applies to account holders with age range of 18-65 years old unlike most plans that only cover up to 60 years old. This feature is beneficial for recent retirees. More so, the product insurance coverage can go as high as four (4) times the account average daily balance (ADB) or up to Php4 million maximum, with no medical check-ups or clearances required (subject to Terms and Conditions).

The GO! Salary Online Channel provides access to an online application to a multipurpose personal loan facility for employees of accredited companies. It is collateral free loan with easy payment terms through salary deduction.

The Hybrid Branch Format simplifies the customers’ journey through its digital banking facilities and self-service hubs, along with its traditional banking services. Through the digital self-service hub, clients can do banking transactions such as account opening, online payments, and more through digital touchscreen platforms, without the hassle of queuing and hardly any forms that need to be filled in. They hybrid branch also has a Collaborative Hub, which houses conference areas for face-to-face client transactions. Customers can

16 also do Anytime Banking through the 24/7 ATM Cash Withdrawal and the Cash-In Deposit ATM.

Cash Acceptance Machine is an enhanced ATM with the added ability of accepting cash deposits anytime. This machine enhances the deposit-making experience of an RBank customer because it takes in cash deposits anytime, beyond baking hours.

Robinsons Cashback Card is a credit card variant that offers 3% rebate on any purchase at Robinsons Department Store, Robinsons Supermarket, Handyman, True Value, Toys R Us, Robinsons Appliances, and other Robinsons Brands and affiliated stores; and a 1% rebate on any purchase worth Php3,500.00 and above from any merchant. It offers a secure way to pay because SMS notifications ar e sent for every approved transaction and OTP is required for 3D-Secure merchants.

(f) Competition

The Philippine banking industry is a mature market that has, in recent years, been subject to consolidation and liberalization, including liberalization of foreign ownership restrictions. As of December 31, 2019, according to the BSP, there are 46 universal and commercial (local and foreign) banks in the Philippines. The Bank faces significant levels of competition amid a number of these Philippine banks and the presence of branches of international banks. These include, but not limited to, banks with greater financial and capital resources, bigger market share, and larger brand recognition than the Bank.

Increased competition may arise from:

 other large Philippine banking and financial institutions with significant presence in Metro Manila and large country-wide branch networks;

 foreign banks, due to, among other things, relaxed foreign bank ownership standards permitting large foreign banks to expand their branch network through acquiring domestic banks;

 ability of the Bank’s competitors to establish new branches in Metro Manila due to the removal of the existing new branch license restriction scheme in 2014;

 domestic banks entering into strategic alliances with foreign banks with significant financial and management resources;

 continued consolidation in the banking sector involving domestic and foreign banks, driven in part by the gradual removal of foreign ownership restrictions;

 the impact of financial technologies in developing and transforming banking products and services; and

 the entry of fintech companies offering financial services.

The Bank faces the challenges of such increased competition. In 2018, the Bank increased its equity by Php 3.0 billion in order to sustain the increasing size of its loan portfolio.

Per BSP data for the period 2016 to 2019, the ranking of the Bank in the last four years shows the competitive strength of Robinsons Bank against its peers.

The table below summarizes the Bank’s total assets and ranking in the last four years:

Year Total Assets Ranking 2016 75.9 billion 20th 2017 105.1 billion 19th 2018 121.4 billion 18th 2019 128.1 billion 18th

(g) Transactions with and/or Dependence on Related Parties

Except those which were entered into in the ordinary course of business such as DOSRI loans and related party transactions (RPT), the Bank has no transactions with and/or dependence on its related parties.

(h) Trademarks, License, Franchises, etc.

Except for software license agreements which it entered into in the ordinary course of business with some information technology companies, the Bank’s business and operations are not dependent upon any patents, trademarks, copyrights, licenses, franchises, and royalty agreements.

On October 5, 2018 and as corrected on March 1, 2019, the SEC approved the following business names and styles of the Bank, namely: RBank, RBC, Robinsons Bank, RobinsonsBank, Robinsons Bank Corp., RBank Corp., RBank Corporation, RobinsonsBankCorp., and Robinsons Commercial Bank.

As of December 31, 2019, the Bank was also able to cause the registration of the trade names of its new products before the Intellectual Property Office (IPO), namely:

Trade Name Date of Registration Term “UNO” November 30, 2017 Ten years (until November 30, 2027) “DOS” November 30, 2017 Ten years (until November 30, 2027) “Direct2Bank” September 28, 2018 Ten years (until September 28, 2028) “Simple Savings” November 22, 2018 Ten years (until November 22, 2028) “Businesslinker” November 1, 2018 Ten years (until November 1, 2028) “IPONsurance” April 28, 2019 Data not yet available

In 2019 and early 2020, the Bank filed for registration of the trade names of the following new products before the Intellectual Property Office (IPO). Processing of registration is still pending with the IPO.

Trade Name Date of Filing RBank November 12, 2018 Go! Auto Loan August 5, 2019 Go! Housing Loan August 5, 2019 Go! Small Biz Loan August 5, 2019 Go! Consumer Loans August 5, 2019 QuickR March 30, 2020

(i) Sources and Availability of Raw Materials and the Names of Principal Suppliers

Not applicable.

(j) Disclosures on how Dependent the Issuer’s Business is upon a Single Customer or a Few Customers

Not applicable. The Bank’s business is not dependent upon a single or few customers.

(k) Need for any Government Approval of Principal Products or Services

The Bank is governed by the rules and regulations issued by the BSP and other government regulators. The Bank faithfully observes and complies with all government laws, rules and regulations that exist prior to the launch of any of its products or services.

(l) Effect of Existing or Probable Governmental Regulations on the Business

As a domestic commercial bank, the Bank is governed by the rules and regulations of the BSP and other government regulators. As such, the Bank ensures that its business operations comply with all applicable government laws, rules and regulations such as BSP mandate on financial inclusions, limits, circulars, Capital Adequacy Ratio, reserves, liquidity, AMLA, and other reportorial requirements.

(m) Amount Spent on Research and Development Activities

In 2019, the Bank had spent Php90.81 million on research and development activities. Breakdown of the R&D expenses by the Bank are as follows:

Particulars Amount (in Php million) Education and Training 9.13 Advertising Expenses 6.45 Technology 75.23 Total for 2019 90.81

(n) Cost and Effect of Compliance with Environmental Laws

Not applicable.

(o) Total Number of Employees

As of December 31, 2019, the Bank had 1,845 employees composed of 852 officers and 993 staff, with 1,741 regular employees and 104 probationary employees. The Bank has no existing employees’ union. It has also no collective bargaining agreement.

In addition to salary, the Bank gives its employees fringe benefits, consisting of 13th month pay, mid-year bonus, Christmas bonus, promotion and merit increases, group life insurance, group hospitalization, personal accident insurance, car plan, motorcycle plan, hazard pay, tellers allowance, communication allowance, gas/transportation allowance, out-of-station allowance, relocation allowance, salary loans, housing loan, vehicle loan, and various leaves (sick, vacation, maternity, paternity, solo parent, among others).

(p) Risk Management

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

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

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

i. Market and Liquidity Risk

Market Risk is defined by the Bank as the risk to earnings or capital arising from changes in the value of traded portfolios of financial instruments. It is the exposure to the uncertain market value of a portfolio due to price fluctuations. The value of investments fluctuates over a given time period because of general market conditions, economic changes or the events that impact large portion of the market such as political events, natural calamities, and others. This risk arises from market-making, dealing, and position-trading and non-trading activities.

In managing Market Risk, the Bank considers the following factors in setting up the market limits: business prospects, present market conditions, expected returns and budget for the year, among others. It is the responsibility of the risk-taking personnel to request or renew market risk limits. The limits are approved by the Board through the Risk Oversight Committee.

The Board approves a set of risk control limits that are intended to prevent over-trading, excessive concentration, and limit financial loss arising from the Bank’s exposure to market risk.

Liquidity Risk, on the other hand, is defined by the Bank as the current and prospective risks to earnings or capital arising from the Bank’s inability to meet its obligations when they become due without incurring unacceptable losses. It includes the inability to manage unplanned decreases or changes in funding sources. It also arises from the failure to recognize or address changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

The Bank’s appetite for liquidity risk is measured through the limits set for each book/fund vehicle and for each liquidity target.

The Bank uses two approaches to liquidity measurement. The flow approach uses the maximum cumulative outflow (MCO) as a tool to measure liquidity gaps of maturing assets and liabilities. The stock approach is more traditional – it focuses on ratios, and generally stems from the assumption that past experience enables institutions to determine a ratio that would provide future liquidity.

The liquidity gap and balance sheet ratios are regularly measured, monitored and compared against their respective limits. These liquidity risk measures and other information on the liquidity position of the Bank are reported to ALCO weekly and to the ROC monthly.

ii. Credit Risk

Credit Risk is a probability of loss attributed to a counterparty’s failure to meet the terms of any contract with the Bank or to perform otherwise as agreed. It arises once the funds of the Bank are extended, committed, invested, or otherwise exposed through actual or implied

20 contractual agreements, whether reflected on – or off – balance sheet. Note that credit risk is not limited to loan portfolio but also covers investment portfolio.

The Bank's credit risk policies intend to maximize the return on the risk-adjusted capital by maintaining a credit risk exposure within defined parameters for asset quality and portfolio mix. To determine the (credit) risk weights, the Bank uses the Standardized Approach under Circular No. 538.

Credit Risk-Weighted Asset (CRWA) is an important risk measure of the Bank, as it used primarily to determine the Bank’s minimum capital requirement. The Bank’s minimum capital requirement for credit risk is defined as 10% of the CRWA.

Pursuant to the Bank’s policy, the credit ratings given by foreign and accredited local rating agencies were used to determine the credit risk weights of On-balance sheet, Off-balance sheet and counter party exposures.

For all rated credit exposures, regardless of currency, the Bank used the ratings of Standard & Poor’s (S&P); Moody’s, and Fitch Ratings. On the other hand, the credit rating given by Philippine Rating Services Corporation was used for Unquoted Debt Securities, certain Corporate Bonds, Peso-denominated exposures and loans to rated domestic private entities.

Given the implementation of a new accounting standard, that is the IFRS 9 - Financial Instruments, the Bank has developed its Expected Credit Loss (ECL) models. This is to allow the determination of loan loss provisioning based on a forward-looking approach. Corporate and Commercial loans, and Motorcycle loans, which cover a significant portion of the total loan portfolio, use sophisticated ECL models. The remaining portfolios, on the other hand, use simplified ECL models.

The Bank neither uses credit derivatives as credit risk mitigants, nor provides credit protection through credit derivatives. The Bank has no outstanding exposure to securitization structures and other types of structured products issued or purchased by the Bank.

iii. Operational and IT Risk

The Bank adopts the definition of BSP Circular 900 or Guidelines on Operational Risk Management, to wit; “Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, people and systems; or from external events. This includes legal risk, but excludes strategic and reputational risks.”

The Bank further acknowledges that “operational risk is inherent in all activities, products, and services, and cuts across multiple activities and business lines within the financial institution and across the different entities in a banking group or conglomerate where the financial institution belongs.”

The Bank has put in place different levels of control measures to address the operational risks on different phases. These controls are classified based on function as follows: directive, preventive, detective, and corrective. Identified controls are being assessed based on its effectiveness to mitigate a risk. Control effectiveness shall be evaluated based on two (2) factors:

1. Control Design – Considers how well the control is designed or should work in theory if applied as intended.

2. Control Performance – Considers the way in which the control is implemented or

operated in practice.

The Bank adopts the Three Lines of Defense framework in managing operational risk. The framework is enumerated below:

First Line of Defense – Business and Service Units take ownership of the risk by identifying, assessing and managing the risks from the new activities, processes, products and systems they do and use.

Second Line of Defense – Operational and Information Technology Risk Management (OITRM) under Enterprise Risk Management Group, provides the tools and the consistency in risk management language such as results of internal/external audit and supervisory issues raised in the BSP Report of Examination (ROE), Risk & Control Self-Assessment (RCSA), Key Risk Indicators (KRI), Loss Events Database (LED) and Analysis, Business Impact Analysis (BIA) and Information Asset Inventory.

Guided by the Bank’s policies and procedures, rules and regulations and with the aid of Technology and Systems as well as promotion of Risk awareness and establishment of culture and ethics, OITRM assists business units in defining the target risk exposure and reporting adequate risk-related information throughout the organization.

Third Line of Defense – Internal Audit provides comprehensive assurance based on the highest level of independence and objectivity within the organization. Risk Management liaises with Internal Audit, through latter’s reports, to perform validation, and development of accurate assessment and analysis of events, incidents and indicators.

IT Risk is defined as any potential adverse outcome, damage, loss, violation, failure, or disruption associated with the use of or reliance on computer hardware, software, devices, systems, applications and networks.

IT Risk Management System enables the identification, measurement, monitoring and controlling IT-related risks covering at least the following areas:

a. Information Security b. Project Management/Development and Acquisition c. Change Management d. IT Operations e. IT Outsourcing/Vendor Management f. Electronic Products and Services

The goal of IT Risk Management is to help the Bank accomplish its business objectives by better securing the information and information systems that store, process, or transmit Bank information.

With the emergence of new and breakthrough technologies, there are pressing needs to address the increasing risk of Cyber threats and/or Cyber-attacks. A Cybersecurity Framework and Roadmap were developed to protect the Bank’s critical infrastructure against these risks, as well as to promote awareness, research, and provision of technical security measures. The framework is composed of the following cycles:

 Identify – Develop the organizational understanding to manage risk to systems, assets, data, and capabilities;  Protect – Develop and implement the appropriate safeguards to ensure delivery of critical infrastructure services;

 Detect – Develop and implement the appropriate activities to identify the occurrence of an event;  Respond – Develop and implement the appropriate activities to take action regarding a detected event; and Recover – Develop and implement the appropriate activities to maintain plans for resilience and to restore any capabilities or services that were impaired due to event.

(q) Additional Requirements as to Certain Issues or Issuers

i. Debt Issues

The Bank's net worth exceeds P25 million has been in business for more than three years. As previously stated, on June 16, 2017, the Bank issued exempt securities in the form of Long-Term Negotiable Certificates of Deposits (LTNCDs) amounting to Php4,182,320,000. The following year, on July 16, 2018, the Bank issued another tranche of LTNCDs in the aggregate amount of Php1,781,750,000. On August 13, 2019, the Bank also issued a 5.125% Peso-denominated Fixed Rate Bonds due on 2021 for the principal amount of ₱5,000,000,000. Later, on November 14, 2019, the Bank again issued a 4.300% Peso-denominated Fixed Rate Bonds due 2021 covering the principal amount of ₱5,000,000,000. All issues (LTNCDs and bonds) were listed with Philippine Dealing & Exchange Corp. (PDEx). The LTNCDs and bonds issued by the Bank were exempt securities pursuant to Section 9 (e) of the SRC.

ii. Investment Company Securities

Not applicable.

Properties

(a) Principal Properties Owned

i. Bank-owned Properties – Metro Manila

As of December 31, 2019, the Bank owns the following properties:

 A commercial condominium unit located at 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City; and

 A parcel of land with an area of 314 square meters located at No. 1861 Evangelista Street, Bgy. Pio del Pilar, Makati City, with commercial building thereon.

There are no mortgages, liens, encumbrances or any limitations on the Bank’s ownership of the foregoing properties, except that on January 24, 2018, the Bank, through its Board, has approved the sale of the following property to Robinsons Land Corporation:

 A parcel of land with an area of 314 square meters located at No. 1861 Evangelista Street, Bgy. Pio del Pilar, Makati City, with commercial building thereon.

The execution of the sale document between the parties is currently pending due to some adverse claim issue.

ii. Leased Properties (Offices, Facilities, and Branches) - Metro Manila & Provincial

As of December 31, 2019, the Bank leases the following properties:

a. Offices

OFFICE LOCATION TERM MONTHLY EXPIRY RENTAL (in Php) DATE Robinsons Bank Robinsons Galleria, EDSA Corner 5 years 277,994.64 30-Sept-2022 Corp. Basement 1 Ortigas Avenue, Quezon City Robinsons Bank Galleria Corporate Center, EDSA 5 years 1,583,189.48 31-Aug-2020 Corp. 27th-30th corner Ortigas Avenue, Quezon City Robinsons Bank Galleria Corporate Center, EDSA 4 years 566,222.70 31-Aug-2020 Corp. 26th corner Ortigas Avenue, Quezon City Robinsons Bank Galleria Corporate Center, EDSA 3 years 127,556.83 31-Aug-2020 Corp. 16th corner Ortigas Avenue, Quezon City Robinsons Bank Robinsons Equitable Tower, ADB Corp. 24th R.E.T. Ave. cor, P. Poveda Road, Ortigas 5 years 1,295,347.92 15-Dec-2023 office Center, Pasig, 1605 Metro Manila Robinsons Bank 6F Galleria Corporate Center, EDSA 5 years 244,719.72 15-Oct-2023 Corp. – 6F GCC corner Ortigas Avenue, Quezon City Unit 501 Galleria Corporate Center, Robinsons Bank Corp. – 5F GCC EDSA corner Ortigas Avenue, 5 years 108,246.32 30-Jun-2024 Quezon City Robinsons Bank Units 2502-2506, 25th Floor, Corp. 25th R.E.T. Robinsons Equitable Tower, ADB 5 years 590,901.90 15-Apr-2025 office Ave., Ortigas Center, Pasig City

b. Facilities

Facilities LOCATION TERM MONTHLY EXPIRY RENTAL (in Php) DATE Warehouse – No. 5 Mahogany St., Octagon Village, 3 years 388,806.21 15-Jun-2020 Pasig City Brgy. Dela Paz, Pasig City Parking Space – Cyberscape Beta, No. 10 Ruby Road, Basement 4 3 years 122,523.07 15-Mar-2021 Cyberscape Beta Ortigas Center, Pasig City Podium 3 Robinsons Equitable Parking Space – Podium 3 Tower, ADB Avenue corner Poveda 3 years 6,482.71 31-May-2022 Road, Ortigas Center, Pasig City Podium 6 Robinsons Equitable Parking Space – Podium 6 Tower, ADB Avenue corner Poveda 2 years 6,482.71 31-May-2022 Road, Ortigas Center, Pasig City Signage – GCC 31F Galleria Corporate Center EDSA 5 years 185,220.00 1-Nov-2022 Roofdeck corner Ortigas Avenue, Quezon City Level 1 Galleria Corporate Center Signage – GCC Drop-off EDSA corner Ortigas Avenue, 5 years 11,200.00 30-Jun-2023 Quezon City First Balagtas Industrial Complex, Warehouse - Balagtas Barangay Pulong Gubat, Balagtas, 3 years 161,784.00 15-Apr-2022 Bulacan Parking Space – Calamba Barangay Parian, Calamba, Laguna 5 years 93,457.95 14-Jan-2023 Building Space – Data Center Robinsons Cybergate Center 3 9 years 89,475.89 31-Aug-2021 Warehouse – San Fernando Barangay Panipuan, City of San 3 years 121,307.00 26-Oct-2022

Fernando Pampanga

c. Branches

NAME OF MONTHLY EXPIRY LOCATION TERM BRANCH RENTAL (Php) DATE Unit 7A Commercial Space, The A. Arnaiz Avenue Beacon Makati, A. Arnaiz Avenue 2 years 204,326.60 21-Jun-2021 corner Chino Roces Ave, Makati City G/F Padilla Bldg. 333 Shaw Acacia Lane - Boulevard, Brgy. Bagong Silang, 5 years 188,760.00 28-Feb-2020 Shaw Boulevard Mandaluyong City G/F Robinsons Place Manila, Adriatico 5 years 399,161.70 30-Nov-2023 Adriatico Street, Ermita, Manila City G/F Unit 4, El Molito Commercial Complex, Madrigal Avenue cor Alabang 3 years 162,719.20 28-Jun-2022 Alabang-Zapote Road, Alabang, Muntinlupa City Level 1 Robinsons Place Angeles, Angeles McArthur Highway, Balibago, Angeles 5 years 102,510.00 2-Mar-2020 City, Pampanga Unit 169-A, Robinsons Place Antipolo, Sumulong Antipolo 5 years 120,792.00 30-Apr-2020 Highway/Circumference Avenue, Dela Paz, Antipolo City Level 1-116, 117 & 118 Robinsons Antique Place Antique, Brgy. Maybato, San 5 years 93,793.60 14-Jul-2020 Jose de Buenavista, Antique G/F Don Norberto & Doña Salustiana Asuncion - Ty Building, #403 Asuncion Street 5 years 89,339.71 31-May-2024 Binondo corner San Nicolas Street, Binondo, Manila 6780 G/F JAKA 1 Building, Ayala 10 Ayala 260,844.76 30-Jun-2020 Avenue, Makati City years Level 1 C2002, The Central Citywalk, Robinsons Place Bacolod, Lacson Bacolod 5 years 147,971.20 30-Jun-2024 Street, Mandalagan, Bacolod City, Negros Occidental R. PERFORMANCE Building A 62-64 Bacolod - Capitol Narra Avenue, Capitol Shopping 5 years 78,750.00 13-Sep-2023 Shopping Center Center, Bacolod City Units 1 & 2, Apollo Mart Building, Bacoor #369 Gen. Aguinaldo Highway, 5 years 63,000.00 1-Mar-2022 Talaba 4, Bacoor, Cavite Bacoor - Molino G/F Main Square Bacoor, Molino 5 years 71,695.00 31-Jul-2024 Blvd. Boulevard, Bacoor City, Cavite G/F, ECCO/EDGARDOMCO 10 Baguio REALTY CORP. Bldg., #43 187,613.39 30-Jun-2022 years Assumption Road, Baguio City Corner Quezon and Burgos Streets, Bais 5 years 42,000.00 14-Aug-2023 Bais City, Negros Oriental G/F 103-1 Balagtas Town Center, Balagtas McArthur Highway, Borol 1st, 5 years 85,323.06 26-Jul-2020 Balagtas, Bulacan G/F, R & R Building, Don Manuel Balanga Banzon Avenue, Doña Francisca, 3 years 83,532.63 30-Apr-2022 Balanga City, Bataan G/F Stalls Numbers 2, 3 & 4 Balayan 10 Balayan Public Market, Plaza Mabini Street, 75,600.00 15-Apr-2027 years Balayan Batangas Store No. 2, Ll Commercial Building, Banawe Lot 5 Block 240, Banawe Street, 5 years 182,325.94 15-Mar-2020 Brgy. Tatalon, Quezon City

G/F Odeste Building, P. Burgos St., Batangas City 5 years 75,809.17 15-Oct-2021 Brgy. 15, Batangas City Shop 3, Bollos Street corner National Bayawan Highway, Brgy. Poblacion, Bayawan 5 years 54,573.75 30-Sep-2021 City, Negros Oriental G/F Triple M Commercial Building, Doña Soledad Avenue corner Better Living 5 years 108,547.74 31-May-2023 Australia Street, Better Living Subd, Parañaque City G/F Unit B, The Cresent Park BGC - Burgos Residences, 30th Street corner 2nd 5 years 243,054.61 31-Dec-2020 Circle Avenue, Bonifacio Global City, Taguig City G/F UDENNA tower, Rizal Drive corner 4th Avenue, Bonifacio South BGC - Rizal Drive 5 years 229,380.00 31-Jul-2024 District, Bonifacio Global City, Taguig City Shop 1 Panorama Tower, 34th Street BGC 34th Street corner Lane A, Bonifacio Global City, 5 years 369,562.52 30-Jun-2020 Taguig City Unit GF 7, Trade and Financial Tower Building, 7th Avenue corner Lane Q 5 BGC 7th Avenue 850,250.00 30-Apr-2020 Road, Bonifacio Global City, Taguig months City GF01 MZ01 Pacific Centre Building, Binondo 460 Quintin Paredes corner Sabino 5 years 249,902.91 31-Jan-2024 Padilla Street, Binondo, Manila Bonifacio Global Ground Level, Market Market Mall, 1 year 251,396.25 31-Dec-2020 City Bonifacio Global City, Taguig City G/F Tera Tower, Ortigas Avenue Bridgetowne - C5 5 years 171,061.84 30-Jun-2020 Extension corner C5, Quezon City Level 1 - 01160, Robinsons Place Butuan, Km. 3 J.C Aquino Avenue, Butuan 5 years 109,300.80 31-Jan-2024 Brgy Libertad, Butuan City, Agusan del Norte G/F Franklin de Guzman Building, Km. 114 Maharlika Highway, Cabanatuan 5 years 104,186.25 30-Apr-2021 Barangay Zulueta, Cabanatuan City, Nueva Ecija Level 1 Robinsons Supercenter, Cagayan De Oro Rosario Street, Lim Ket Kai Drive, 1 year 158,518.50 14-Jul-2020 Lapasan, Cagayan De Oro City G/F Gusali 888 Building, Ortigas Cainta 5 years 90,900.00 15-Apr-2024 Avenue Extension, Cainta, Rizal G/F FP Perez Building, National Calamba Highway, Parian, Calamba City, 5 years 120,000.00 31-Dec-2021 Laguna G/F Neo Calapan Mall, LS 008, Calapan Roxas Drive, Barangay Sto. Niño, 5 years 96,600.00 31-Jan-2023 Calapan, Oriental Mindoro Level 1 - 01134, Robinsons Place Pangasinan, Mac Arthur Highway, Calasiao 5 years 103,781.60 28-Feb-2024 Brgy. San Miguel, Calasiao, Pangasinan G/F Dona Lolita Bldg., 363 Rizal Caloocan 5 years 131,010.73 28-Feb-2023 Avenue Extension, Caloocan City G/F Pelaez Commercial Arcade 1 corner Tiano Bros. and Cruz Taal CDO-Divisoria 5 years 86,821.88 14-Nov-2021 Streets, Divisoria, Cagayan De Oro City, Misamis Oriental South Arcade 102, Banilad Town Cebu - Banilad Centre, Gov. M. Cuenco Avenue, 5 years 62,046.00 31-Jan-2023 Banilad, Cebu City

G/F Cotiaoking Bldg, North Road, Cebu Mandaue 5 years 39,988.13 31-Jan-2024 Tabok, Mandaue City, Cebu 2nd Level Robinsons Place Cebu, Cebu Osmena 5 years 97,205.94 30-Jun-2022 Fuente Osmeña Avenue, Cebu City G/F Robinsons Cybergate, Don Gil Cebu, Garcia - Garcia corner J. Llorente Street, 5 years 78,283.86 29-Feb-2024 Llorente Capitol Site, Cebu City B101 Robinsons Galleria Cebu, Maxilom-Osmeña Boulevard, 13th Cebu-Galleria 5 years 147,258.24 5-Nov-2020 Avenue & Benedicto Street, North Reclamation Area, Cebu City Chino Roces G/F 2308 Natividad Building, Chino 5 years 118,350.53 31-Jul-2023 Avenue Extension Roces Avenue Extension, Makati City G/F & Mezzanine, Genato Building, Cubao-P. Tuazon 250 P. Tuazon Cor. 15th Avenue, 5 years 157,295.52 14-Sep-2020 Cubao, Quezon City D. Guevara G/F RL Building, 50 D. Guevara 5 years 95,524.18 31-May-2023 Mandaluyong Street, Mandaluyong City Guanzon Building, Perez Blvd, Dagupan 5 years 103,320.00 31-Dec-2020 Dagupan City, Pangasinan Level 1 01302 Robinsons Place Dasmariñas, E. Aguinaldo Hi-way Dasmariñas 5 years 148,142.94 14-Nov-2021 corner Governor's Drive, Pala-Pala, Dasmariñas, Cavite Door 1 & 2, Edward V. A. Lim Davao Building, Sta. Ana Avenue, Davao 5 years 101,757.82 30-Nov-2020 City G/F Gaisano Grand City Gate Davao, Davao - Buhangin Tigatto Road corner Cabantian Road, 5 years 72,000.00 30-Nov-2023 Brgy. Buhangin, Davao City Level 1, Unit 109, Robinsons Davao Cybergate Cybergate Davao, J.P Laurel Ave, 5 years 116,631.90 7-May-2021 Davao City Davao- HAW Building, T. Monteverde 5 years 151,938.28 30-Nov-2021 Monteverde Avenue, Davao City G/F EWELL Square Bldg., Del Monte Del Monte Ave corner Biak-na-Bato, Quezon 5 years 168,852.05 30-Sep-2021 City Franda Building, McArthur Highway, Dolores - SFDO Barrio Dolores, City of San Fernando, 5 years 186,322.50 20-Jun-2021 Pampanga G/F Cebu Pacific Airline Operations Domestic Road Center Building, Domestic Road, 3 years 78,976.00 31-Jul-2022 Pasay City Stall AF 25-27 Robinsons Dumaguete, Dumaguete South Road Dumaguete 5 years 126,378.72 6-May-2020 corner Perdices Street, Dumaguete City, Negros Oriental G/F JCA Building, No. 1166 E. E. Rodriguez Sr. Rodriguez Sr. Avenue, New Manila, 5 years 154,890.75 15-Jun-2023 Ave Quezon City G/F IBM Plaza Building, Eastwood Eastwood City City, E. Rodriguez Jr. Avenue, 3 years 541,717.00 31-Jan-2021 Bagumbayan, Quezon City G/F Insular Life Building, 462 EDSA EDSA Caloocan near corner Boni Serrano Street, 5 years 92,196.56 16-Apr-2022 Caloocan City. Level 1 Padre Faura Wing, Ermita Robinsons Place Ermita, Ermita, 5 years 151,119.07 31-May-2024 Manila Unit 104, Civic Place Condominium, Filinvest-Alabang 2301 Civic Drive, Filinvest Corporate 5 years 53,832.24 30-Nov-2021 City, Alabang, Muntinlupa City

L2, Robinsons Galleria South, Manila Galleria South South Road, Nueva, San Pedro, 5 years 160,725.00 31-Jul-2024 Laguna Robinsons Place General Santos, General Santos cor. J. Catolico Ave. and Bula-Lagao 3 years 69,733.30 31-Dec-2021 Rd., General Santos City Level 1 - 155 & 156 Robinsons Place General Trias Mall, Antero Soriano, General Trias 5 years 150,842.90 25-May-2021 EPZA-Bacao Diversion Road, Brgy. Tejero, General Trias, Cavite Level 1 L1 136 & 137 Robinsons Iligan Place Iligan, Barangay Tubod, Iligan 5 years 73,920.00 31-Jul-2022 City, Lanao Del Norte Level 2, Robinsons Place San Ilocos Norte Nicolas, Barangay 1, San Nicolas, 5 years 151,499.61 14-Feb-2021 Ilocos Norte Unit 189-190, G/F Robinsons Place Iloilo Iloilo, Corner Mabini-Del Leon 5 years 164,958.00 31-Mar-2024 Streets, Iloilo City, Iloilo G/F Robinsons Place Imus, Emilio Imus 5 years 201,290.10 31-Dec-2023 Aguinaldo Highway, Imus, Cavite City Level 1 – Unit G-17 B, Robinsons Jaro Place Jaro, E. Lopez Street, Brgy. 5 years 124,720.70 31-May-2021 San Vicente, Jaro, Iloilo G/F Mendoza Building, 834 J. P. JP Rizal St. - Rizal Street corner E. Zobel Street, 5 years 145,860.75 30-Apr-2020 Makati Makati City G/F NZ Business Center (NZBC) Kabankalan Building, JY Perez Highway, 5 years 39,462.50 30-Aug-2023 Kabankalan City, Negros Occidental G/F Torres Building, 321 Katipunan Katipunan 5 years 148,176.00 4-Nov-2021 Avenue, Loyola Heights, Quezon City G86-G87 Robinsons Place Las Las Piñas Piñas, 345 Alabang-Zapote Road, 5 years 123,666.75 14-Mar-2020 Barangay Talon, Las Piñas City Southbend Building, Versailles Las Piñas - Daang Subdivision, Daang Hari, Brgy. 5 years 97,092.00 14-Mar-2024 Hari Almanza Dos, Las Piñas City G/F South Park Highs, 262 Alabang- Las Piñas - Zapote Road, Pamplona, Las Piñas 6 years 125,197.14 31-Dec-2020 Pamplona City G/F, Yuzon Commercial Building, Legazpi City 5 years 127,647.60 30-Sep-2020 Quezon Avenue, Legazpi City, Albay G/F, Office 1, Man Tower Legazpi Legazpi Street, Building, 153 Legazpi Street, Legazpi 5 years 161,700.00 28-Oct-2023 Makati Village, Makati City G/F Robinsons Place Lipa, Expansion Wing, J.P. Laurel Lipa 5 years 155,983.05 13-Jan-2020 Highway, Mataas na Lupa, Lipa City, Batangas G/F LBDHMC Medical Arts III Los Baños Building, Lopez Avenue, Batong 5 years 95,355.00 31-Jul-2023 Malake, Los Baños, Laguna G/F AZDEMARK Building, 11 Quezon Lucena 2 years 80,203.73 30-Sep-2020 Avenue, Lucena City Unit 102 Robinsons Luisita, McArthur Luisita Tarlac 5 years 57,329.16 31-Oct-2023 Highway, San Miguel, Tarlac City Stalls A & B #143 Maginhawa Street, Maginhawa St. Barangay Teachers Village, Quezon 5 years 120,393.00 30-Oct-2021 City LGF - LG026 Robinsons Magnolia Magnolia Town Town Center, Aurora Blvd. cor Dona 5 years 211,084.80 31-Aug-2024 Center Hemady and N. Domingo Streets,

New Manila, Quezon City

Main Office G/F Galleria Corporate Center, EDSA 5 years 406,244.50 31-Dec-2023 Branch corner Ortigas Avenue, Quezon City Makati - G/F #1861 Evangelista Street, Brgy. 5 years 102,102.53 30-Sep-2020 Evangelista Pio Del Pilar, Makati City Level 1 – 01127, Robinsons Town Mall Malabon, #5 Governor Pascual Malabon 5 years 143,261.50 31-Jan-2024 Avenue corner Crispin Street, Tinajeros, Malabon City Level 1 – 01123 Robinsons Place Malolos Malolos, Mc Arthur Highway, 5 years 168,901.80 31-Jan-2024 Barangay Mabolo, Malolos, Bulacan VC Chan Bldg. No. 8 Bayan-Bayanan Marikina Avenue, Concepcion Uno, Marikina 5 years 96,684.84 31-Oct-2021 City Lower G/F Cyber Sigma, Lawton McKinley West 5 years 130,509.54 1-Jul-2022 Avenue, Bonifacio South, Taguig City G01 & G02, Robins Design Center, Meralco Avenue 31 Meralco Avenue, Ortigas, Pasig 5 years 217,569.54 15-Jun-2020 City G/F Sterling Square, Sterling 10 Meycauayan Industrial Park, Brgy. Iba, 74,400.00 30-Sep-2029 years Meycauayan City, Bulacan Unit 101, Tower 1 Oceanaire Residences, Sunshine Drive corner MOA Complex 5 years 123,303.60 31-May-2020 Road 23, Coral Way, MOA Complex, Pasay City G/F Joval 1 Bldg. #52 National Muntinlupa Bayan 5 years 93,712.50 16-May-2022 Highway Putatan, Muntinlupa City G/F Unit 102 "R" Place Building, #255 N.S. Amoranto Sr. N.S. Amoranto Sr. Avenue, Quezon 5 years 65,333.67 31-Mar-2023 Avenue City G/F Crown Hotel Building, Peña 10 Naga 126,639.04 31-Dec-2020 Francia Avenue, Naga City years G/F, Rooms 2 & 3, Sky Freight Ninoy Aquino Building, Sky Freight Center, Ninoy 5 years 210,586.47 15-May-2024 Avenue Aquino Avenue, Parañaque City Level 1 - ERS1-016, Robinsons Novaliches, Barangay Pasong Putik, Novaliches 5 years 140,151.12 14-Aug-2021 Quirino Highway, Novaliches, Quezon City G/F 1370 Rizal Avenue Extension, Olongapo East Tapinac, Olongapo City, 5 years 112,868.44 14-Nov-2020 Zambales Robinsons Place Ormoc, Palo Ormoc Carigara, Ormoc City Road, Brgy. 5 years 69,078.00 30-Apr-2023 Cogon, Ormoc City, Leyte G/F Limketkai Building, Ortigas Ortigas Greenhills Avenue corner Roosevelt Street, 5 years 128,901.54 14-Mar-2020 Brgy. Greenhills, San Juan City Unit 220-222, 2/F, Robinsons Place Palawan Palawan Mall, Puerto Princesa City, 5 years 166,465.60 23-May-2024 Palawan G/F Cementina Corporation Building, Pasay - Libertad 160 A. Arnaiz Avenue corner Cuenca 5 years 99,225.00 16-Jun-2020 Street, Pasay City G/F 111 Paseo de Roxas Building, Paseo De Roxas Legazpi Street corner Paseo de 2 years 292,320.00 30-Apr-2020 Roxas, Makati L/G Robinsons Metro East, Marcos Pasig 5 years 148,486.80 30-Jan-2024 Highway, Barangay De la Paz, Pasig

City

491 ESA Building, Paso De Blas Paso De Blas Road, Brgy. Paso De Blas, 5 years 81,900.00 15-Mar-2023 Valenzuela City Units G5-G6, Ground Floor, Gaisano Passi Capital - Passi, Simeon Aguilar 5 years 54,518.11 17-Dec-2021 Street, Passi City, Iloilo G/F Robinsons Place Pavia, Vice Pavia President Fernando Lopez Ave., 5 years 57,493.80 30-Jun-2023 Pavia, Iloilo City Upper G/F, Robinsons Pioneer Pioneer Cybergate Cybergate Center 1, Pioneer Street, 5 years 140,015.25 30-Jun-2021 Mandaluyong City G/F Q.C Avenue Mall, Quezon Quezon Avenue Avenue cor. Scout Borromeo St., 5 years 112,455.00 27-Dec-2022 South Triangle, Quezon City RS137-05 Robinsons Townville Regalado 5 years 121,551.00 28-Feb-2021 Regalado Fairview, Quezon City Robinsons North G/F Robinsons North Tacloban, Brgy. 5 years 70,747.20 31-Dec-2022 Tacloban Abucay, Tacloban City Level 1 Unit 101 Robinsons Place Robinsons Place Naga, Roxas Avenue corner Almeda 5 years 76,356.00 31-Mar-2022 Naga Highway, Brgy. Triangulo, Naga City, Camarines Sur G/F Robinsons Place Tuguegarao, Robinsons Place Brgy. Tanza, Tuguegarao City, 5 years 78,737.40 31-Jul-2023 Tuguegarao Cagayan G/F MCCM Bldg. 311 Roosevelt Roosevelt Avenue 5 years 127,309.09 28-Feb-2023 Avenue, Quezon City Level 1-1133B, Robinsons Place Roxas Roxas, Pueblo de Panay, Barangay 5 years 140,569.50 29-Feb-2024 Lawa-an, Roxas City, Capiz G/F Units 3, 4 & 5 Samson Square Samson Road Bldg, Samson Road corner Dagohoy 5 years 108,214.79 30-Nov-2021 Street, Caloocan City Level I Robinsons Starmills, Candaba San Fernando Gate, Olongapo-Gapan Road, San 5 years 114,878.00 31-Jan-2023 Jose, San Fernando City, Pampanga Belena Building, San Jose-Carmen Road (Romano St. corner Bonifacio San Jose City 5 years 72,000.00 1-Apr-2023 St.), Brgy. Rafael Rueda, San Jose City, Nueva Ecija San Jose Del Quirino Highway, Tungkong Mangga, 5 years 92,820.00 22-Apr-2023 Monte San Jose Del Monte City, Bulacan G/F Octagon Building, San Miguel San Miguel 7 years 316,100.00 31-Aug-2025 Avenue, Ortigas Center, Pasig City G/F Estrellado Building, Paulino San Pablo 5 years 102,102.53 31-Oct-2024 Street, San Pablo City, Laguna G/F Space 102, ETG Business 10 San Pedro Center, A. Mabini Street, Barangay 63,000.00 15-Nov-2026 years Poblacion, San Pedro City, Laguna Level 1-01103, Robinsons Place Santiago Santiago, Barangay Mabini, Santiago 5 years 127,327.20 29-Feb-2024 City, Isabela G/F AD Center Square, Amang Santolan - Pasig Rodriguez corner Evangelista Street, 5 years 105,522.95 15-Mar-2024 Santolan, Pasig City G/F, Unit G-104, 88 Corporate Sedeño Salcedo Center, #141 Sedeño corner Valero 5 years 289,059.03 15-Aug-2023 Village Street, Salcedo Village, Makati City

G/F New Solid Realty Inc. Building, Sen. Gil Puyat 357 Sen. Gil Puyat Avenue, Makati 5 years 183,204.48 14-Aug-2021 Ave. City G/F Pelbel Building I, #2019 Shaw Shaw Boulevard 5 years 102,600.00 31-Jul-2023 Boulevard, Pasig City G/F Filamco Building, #1220-1222, Soler Soler corner Masangkay Streets, 1 year 178,679.42 30-Nov-2019 Binondo, Manila Level 1 Robinsons Sta. Rosa Market, Sta Rosa Old National Highway, Bo. Tagapo, 5 years 136,021.55 30-Apr-2020 Sta. Rosa City, Laguna Sta. Rosa Estates Sta. Rosa-Tagaytay Road, Sta. Rosa 8 years 165,916.60 1-Oct-2022 2 City, Laguna GF Unit 3, Sierra Makiling Commercial Complex, Maharlika Sto. Tomas 5 years 77,175.00 14-Nov-2021 Highway, Brgy. San Antonio, Sto. Tomas, Batangas Units B13 & B17, JAKA Plaza Mall, Sucat Dr. A. Santos Avenue, Parañaque 5 years 147,062.08 14-Dec-2023 City Robinsons Place Tacloban, Level 1- Tacloban 00103, National Highway, Tabuan, 5 years 131,614.00 31-Jan-2019 Marasbaras, Tacloban City Space 2-00210, Robinsons Tagaytay, Tagaytay National Road, Barrio Maharlika, 5 years 81,000.00 14-Jul-2020 Tagaytay City G/F Castelcelo Building 1, C. Gallares Street corner J. S. Torralba Tagbilaran 5 years 109,795.30 30-Sep-2024 Street, Poblacion II, Tagbilaran City, Bohol Level 1 – Unit 167 Robinsons Place Tagum, National Highway, Brgy. Tagum 5 years 88,905.00 27-Apr-2021 Visayan Village, Tagum, Davao del Norte Red Ribbon Uptown Building, Manila Taytay East Road, Barangay San Juan, 4 years 89,600.00 15-Jun-2023 Taytay, Rizal JSB Building, Tomas Morato Avenue 10 Tomas Morato corner Scout Delgado Street, Quezon 213,554.72 31-May-2023 years City G/F, Lui Building, Bonifacio Street, Tuguegarao Centro 04, Tuguegarao City, 5 years 134,168.06 28-Feb-2020 Cagayan Valley G/F S-Plaza Building, McArthur Urdaneta 5 years 106,987.09 14-Sep-2021 Highway, Urdaneta, Pangasinan G/F Robinsons Place Valencia, Valencia City 5 years 99,312.00 31-Dec-2023 Valencia City, Bukidnon Unit A South Supermarket, McArthur Valenzuela 5 years 93,694.50 14-Nov-2020 Highway, Karuhatan, Valenzuela City LS1-08-2, Xentro Mall Vigan, Quezon Vigan Avenue, Brgy. III, Vigan City, Ilocos 5 years 113,778.00 28-Nov-2022 Sur G/F M & L Building, Visayas Avenue Visayas Avenue 5 years 165,916.60 31-Jan-2024 corner Road 1, Quezon City G/F Prosperity West Center Building, West Avenue 5 years 117,600.00 28-Feb-2023 92 A West Avenue, Quezon City Francisco Santos Building, 138 White Plains Katipunan Avenue, Barangay Saint 5 years 131,274.68 1-May-2020 Ignatius, Quezon City Wilson St. - G/F, Wilson Corporate Center, Wilson 5 years 214,697.30 31-May-2020 Greenhills Street, Greenhills, San Juan City

G/F The Grand Astoria Hotel, Mayor Zamboanga City 5 years 104,422.50 30-Nov-2023 Jaldon Street, Zamboanga City

All lease contracts have renewal options upon their termination under terms and conditions mutually acceptable to the Bank and the lessors.

d. Robinsons Bank Branch-Lite Units

OFFICE LOCATION TERM MONTHLY EXPIRY RENTAL (in Php) DATE G/F Cyberscape Gamma, Gamma Ruby Street, Ortigas Center, 5 years 166,992.00 14-Mar-2024 Brgy. San Antonio, Pasig City G/F Mhikai Building 1, J.P. Lipa - J.P. Laurel Laurel Highway, Marawoy, Lipa 5 years 42,000.00 31-May-2023 City Batangas G/F Marius Arcadia Building, C. Pasig – C. 5 years Raymundo Raymundo Avenue corner Pag- 83,544.50 31-Dec-2022 Asa Street, Pasig City

iii. LSB-owned Properties - Provincial Branches

a. Legazpi Branch

Corner, Rizal and Mabini Sts., Dinagaan, Legazpi City 100 and 72

b. Guinobatan branch

Paulate St., Pobalcion, Guinobatan Albay 294

iv. LSB Leased Properties (Head Office & Branches) - Provincial

a. Head Office

OFFICE LOCATION TERM MONTHLY EXPIRY RENTAL (in Php) DATE Head Office & Main 738 Bldg. Rizal St. Old 10 years 234,000.00 01-Sept-2027 Branch Albay District Legazpi (City/Capital) Albay Office Space Galleria Corporate Center 5 years 66,964.29 14-Apr-2023 Condominium

b. Branches

NAME OF LOCATION TERM MONTHLY EXPIRY BRANCH RENTAL (in Php) DATE Daraga Branch Sta. Maria St. Brgy. San 10 years 68,037.38 4-Mar-2029 Roque Daraga Albay Tabaco Branch NN Bldg. A.A. Berces Basud 10 years 38,288.43 30-Jun-2022 Tabaco City Albay Polangui Branch National Road Basud 3 years 77,812.27 20-Dec-2022 Polangui Albay (for signing)

Sorosogon Branch Cba Building Jamoralin 10 years 48,510.00 27-Oct-2027 Street Burabod Sorsogon (City/Capital) Daet Branch Subia Bldg. J. Lukban St. 15 years 38,288.43 30-Apr-2027 Brgy. 3, Daet (Capital) Camarines Norte Virac Branch G/F D & L Bldg. Corner 5 years 50,400.00 31-Dec-2021 Surtida & Rizal St. San Jose Virac (Capital) Masbate Branch Unit 8 & 9 S & T Bldg. 6 years 73,113.17 14-Jul-2022 Cagba St. Brgy. Tugbo Masbate (City/Capital) Naga Branch NEA Bulding Cbc Terminal 5 years 103,723.20 16-Apr-2024 Triangulo Naga City, Camarines Sur Lucena Branch A.M. Lubi Bldg. Corner 5 years 63,669.37 12-Dec-2022 Tagarao & Elias Streets Barangay 5 Lucena (City/Capital) Quezon Pampanga Branch 4 & 2 Bldg. Mc Arthur 10 years 59,062.50 5-Dec-2022 Highway Sindalan San Fernando Pampanga

c. Branch-Lite Units

NAME OF LOCATION TERM MONTHLY RENT EXPIRY BRANCH (in Php) DATE Goa Unit 1 J. Quinzon Bldg. Riza 5 years 23,210.52 30-Aug-2021 St. Bagumbayan Pequeño

Goa Camarines Sur

nd 2 Floor Goa - Addendum 20,000.00 30-Aug-2021 Calauag Rizal St. Brgy. Sta. Maria 5 years 25,000.00 1-Aug-2023 Calauag Quezon Dasmariñas Branch G/F Wincorp Bldg. Molino 5 years 37,383.18 01-May-2022 Paliparan Road Salawag Dasmariñas City Cavite Iriga Branch Dls Building 121 Zone 6 5 years 35,000.00 15-Aug-2023 Highway 1 San Isidro Iriga (City) Camarines Sur

All lease contracts have renewal options upon their termination under terms and conditions mutually acceptable to LSB and its lessors.

(b) Limitations on Properties

There are no mortgages, liens, encumbrances or any limitations on the Bank’s ownership of the foregoing properties, except that the property located at No. 1861 Evangelista Street, Brgy. Pio del Pilar, Makati City which was sold by the Bank to Robinsons Land Corporation is subject of a Contract to Sell, the consideration of which has not yet been fully paid.

The Bank has future plans to acquire properties but no details as of yet as to the description, nature, and location of the properties as of this time.

Legal Proceedings

Except for cases or proceedings which are incidental to its business such as suits for sums of money, foreclosures, writs of possession, employee relations, and other cases arising from loan transactions and operations, the Group has no material pending legal proceedings to which the Bank or any of its subsidiaries or affiliates is a party or which any of its property is the subject.

Submission of Matters to a Vote of Security Holders

Except for matters that were taken up during the Annual and Special Stockholders’ Meeting last June 26, 2019, there were no other matters that were submitted to the vote of the security holders during the calendar year covered by this report.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Market for Issuer's Common Equity and Related Stockholder Matters

a. Market Information

i. Principal market where the equity is traded

Not applicable. The Bank’s equity is not listed or traded in any Exchange.

ii. Market Value

Not applicable. The Bank’s equity is not listed or traded in any Exchange.

b. Plan of Operations and Future Prospects

In 2019, the Bank has begun crafting the next medium-term strategic initiative, Roadmap 2024, which envisions Robinsons Bank becoming the top 11-13 Philippine bank in terms of assets by 2024, via aggressive economic growth.

Through the roadmap, the Bank aspires to deliver targeted and tailored customer experience to accelerate acquisition and drive retention; expand distribution networks efficiently and cost-effectively to reach broader market; strengthen organizational structure and improve EX to support rapid growth; accelerate digital transformation; and develop a strong RBank brand. c

For 2020, the Bank aims to increase the asset base to Php 161 billion while growing its core businesses. The Bank also intends to reach greater market coverage by opening five (5) Regional Banking Business Centers, opening 10 new branches and installing 27 new ATMs and Cash Deposit Machines. The Bank will also develop new products and services to support growth, and implement its digital transformation initiatives to provide better customer experience.

Recently, the 2019 coronavirus disease (COVID-19) pandemic has impeded global economic activity, as the world’s major economies and emerging markets were put on quarantine. For the Philippines, the National Economic and Development Authority slashed the country’s growth projections to (0.6%)-4.3% for 2020, down from the government’s target

34 range of 5.5%-6.5% previously. Despite this unprecedented crisis, the Bank is one with the community in providing financial services and in fulfilling the changing needs of the customers.

c. Past Financial Conditions and Operating Highlights

2019 vs. 2018

The Group’s total assets grew by 8.07% to Php131.14 billion from Php121.35 billion which is mainly attributable to the significant increase in the loan portfolio supported by funding growth. This is through its aggressive marketing strategy that is in line with the Group’s business plan under “Roadmap 2024”.

 Cash and Other Cash Items and Interbank Loans Receivable/Securities Purchased under Resale Agreement increased by Php879.19 million and Php220.30 million, respectively, from Php2.37 billion and Php2.19 billion, respectively, as of December 2018. On the other hand, Due from BSP and Due from Other Banks decreased by Php3.89 billion and Php546.17 million, respectively, from Php16.11 billion, and Php3.01 billion, respectively, as of December 2018.

 Financial Assets at Fair Value Through Profit or Loss decreased by Php3.27 million or 39.83% to Php4.94 million due to trading related activities of the Bank while Financial Assets at Fair Value through Other Comprehensive Income increased by Php856.67 million to Php13.97 billion or 6.53% due to increase in market valuation of securities held, partly offset by net disposals for the year. Investment Securities at Amortized Cost decreased by 9.84% or Php1.24 billion due to matured securities during the year.

 Loans and Receivables registered growth of 18.20% at Php80.86 billion from the level of Php68.41 billion from the previous year due to increase in lending activities.

 Property and Equipment increased to Php685.44 million or 110.00% due to adoption of PFRS 16.

 Deferred Tax Asset – net and Other Assets was higher by Php195.09 million and Php185.94 million, respectively.

Consolidated Liabilities increased by 4.69% from Php108.97 billion in December 2018 to Php114.08 billion in December 2019.

 Total Deposit Liabilities was at Php97.60 billion. This was Php2.59 billion higher compared to the levels 2018, mainly due to increase in Time Deposits by Php2.36 billion reaching Php15.69 billion in 2019. CASA also went up by Php223.91 million to Php75.98 billion this year.

 Bonds Payable was at Php9.89 billion due to issuance of fixed rate bonds, while Bills Payable dropped by Php5.40 billion resulting from maturity of overnight lending availments from BSP.

 Accrued Expenses increased by Php78.29 million in 2019 due to higher transaction volumes.

 Other Liabilities went up by Php588.65 million brought about by the adoption of PFRS 16.

Total equity accounts stood at Php17.06 billion from Php12.38 billion or an improvement of Php4.68 billion attributed to the conversion of the Php3.00 billion ‘Deposit for Future Stock Subscription’ to ‘Common Stock’ this year, current period’s net income of Php719.43 million, and improvements in Net Unrealized Loss on Financial Assets at FVOCI, and Accumulated Translation Adjustments by Php1.02 billion, and Php9.14 million, respectively.

2018 vs. 2017

The Group’s total assets grew by 15.67% to Php121.35 billion from Php104.91 billion which is mainly attributable to the significant increase in the loan portfolio and investment securities supported by funding growth. This is through its aggressive marketing strategy that is in line with the Group's business plan under “Roadmap 2020”.

 Due from BSP and Cash and Other Cash Items increased by Php90.53 million and Php730.87 million, respectively, from Php16.02 billion and Php1.64 billion, respectively, as of December 2017. On the other hand, Due from Other Banks, and Interbank Loans Receivable/Securities Purchased under Resale Agreement decreased by Php809.89 million and Php1.14 billion, respectively, from Php3.82 billion, and Php3.33 billion, respectively, as of December 2017.

 Financial Assets at Fair Value Through Profit or Loss decreased by Php39.92 million due to trading related activities of the bank. Financial Assets at Fair Value Through Other Comprehensive Income decreased by Php6.08 billion while Investment Securities at Amortized Cost stood at Php12.60 billion due to adoption of PFRS 9.

 Loans and Receivables registered growth of 18.66% at Php68.41 billion from the level of Php57.65 billion from the previous year due to increase in lending activities.

 Property and Equipment increased to Php623.19 million or 6.24% due to expansion.

 Deferred Tax Asset- net and Other Assets was higher by Php87.11 million and Php205.16 million, respectively.

Consolidated Liabilities increased by 17.40% from Php92.82 billion in December 2017 to Php108.97 billion in December 2018.

 Total Deposit Liabilities was at Php95.01 billion, this was Php5.03 billion higher compared to the levels in 2017. This was due to increase in Demand Deposits by Php2.79 billion, and issuance of the LTNCD of Php1.78 billion.

 Bills Payable was at Php7.44 billion as the Bank increased its borrowings used to fund asset growth.

 Accrued Expenses increased by Php104.42 million in 2018 due to higher transaction volumes.

 Other Liabilities went up by Php589.41 million on account of increases in bills purchased and merchants payable.

Total equity accounts stood at Php12.38 billion from Php12.09 billion or an improvement of Php284.22 million attributed to the current period’s net income of Php317.11 million, partly offset by decreases in Net Unrealized Loss on Financial Assets at FVOCI, and Accumulated Translation Adjustments.

2017 vs. 2016

The Group’s total assets grew by 35.18% to Php104.91 billion from Php77.61 billion which is mainly attributable to the significant increase in the loan portfolio and investment securities supported by funding growth.

 Due from BSP and Interbank Loans Receivable/Securities Purchased under Resale Agreement increased by Php2.60 billion and Php2.65 billion, respectively, from Php13.42 billion and Php677.83 million, respectively, as of December 2016. On the other hand, Cash and Other Cash Items and Due from Other Banks decreased by Php45.10 million and Php270.31 million, respectively, from Php1.68 billion and Php4.09 billion, respectively, as of December 2016.

 Financial Assets at Fair Value Through Profit or Loss went up by 1780.08% or Php45.57 million.

 Available for Sale Investments went up by Php7.46 billion partly due to the reclassification of Held to Maturity Investments amounting to Php3.22 billion.

 Loans and Receivables registered growth of 48.20% at Php57.65 billion from the level of Php38.90 billion from the previous year.

 Property and Equipment increased to Php586.60 million or 14.34% due to expansion.

 Deferred Tax Asset – net was higher by Php123.28 million, while Other Assets decreased by Php536.17 million.

Consolidated Liabilities increased by 41.41% from Php65.64 billion in December 2016 to Php92.82 billion in December 2017.

 Total Deposit Liabilities was at Php89.98 billion, this was Php26.68 billion higher compared to the levels in 2016. This was due to increase in Demand Deposits and Savings Deposits by Php833.18 million and Php21.94 billion, respectively, and issuance of the LTNCD of Php4.15 billion.

 Managers’ Check and Accrued Expenses increased by Php449.87 million in 2017.

Total equity accounts stood at Php12.09 billion from Php11.97 billion or an improvement of Php125.11 million attributed to the current period’s net income of Php307.39 million, improvement/increase in Net Unrealized Loss on Available for Sale Securities, Accumulated Translation Adjustments and Remeasurement Losses on Retirement Funds.

d. Key Performance Indicators

Definition of Ratios

Profitability Ratios:

Return on Average Assets - Net Income after Income Tax Average Total Assets

Return on Average Equity - Net Income after Income Tax Average Total Equity

Net Interest Margin - Net Interest Income Average Interest Earning Assets

Cost-to-Income - OPEX – Provision for Impairment & Credit Losses Total Operating Income

Liquidity Ratios:

Liquid Assets to Total Assets - Total Liquid Assets Total Assets

Loans to Deposit Ratio - Loans (Net) Deposit Liabilities

Asset Quality Ratios:

NPL Ratio - Non-Performing Loans (net of specific allowance) Gross Loans

NPL Cover - Allowance for Probable Losses Non-Performing Loans (gross of allowance) Solvency Ratios:

Ratio of debt to equity - Total Liabilities Total Equity

Ratio of total assets to equity - Total Assets Total Equity

Interest coverage ratio - Income Before Income Tax Interest Expense

Capital Adequacy Ratios:

CET 1/ Tier 1 - CET1/Tier 1 Capital Total Risk Weighted Assets

Total CAR - Total Qualifying Capital Total Risk Weighted Assets

2019 2018 2017

Profitability (%)

Return on Average Assets 0.57 0.28 0.34 Return on Average Equity 4.89 2.59 2.56

Net Interest Margin on Average Earning 3.59 3.35 3.50 Assets Cost-to-Income 81.81 86.79 83.18

Liquidity (%) Ratio of Liquid Assets to Total Assets 15.51 19.51 23.64 Loans to deposit 82.85 72.01 64.07

Asset Quality (%) NPL Ratio 0.81 0.91 0.83 NPL Cover 53.18 40.90 56.11

Solvency Ratio (%) Ratio of debt to equity 668.69 880.41 767.53 Ratio of total assets to equity 768.69 980.41 867.53 Interest coverage ratio 26.38 20.23 30.27

Capitalization (%) Capital Adequacy Ratio CET 1/ Tier 1 16.55 14.13 18.74 Total CAR 17.46 15.00 19.62

Profitability

The Group’s net income of Php719.43 million resulted in a ROE of 4.89% and ROA of 0.57%. Cost-to-income ratio of 81.81% was lower than 86.79% in 2018 and 83.18% in 2017 given improvements in operating income. Net interest margin was at 3.59%, higher than last year’s 3.35%on account of increase in loan related activities during the year.

Liquidity

Liquid assets comprised 15.51% of the Group’s total resources, lower than 19.51% in 2018 and 23.64% in 2017, with the build-up in loans and investment securities. Loans (net)-to- deposit ratio was higher at 82.85% from 72.01% last year.

Asset Quality

NPL ratio dropped to 0.81% from 0.91% in 2018 as the Bank continued to review and clean- up past due loans. Together with the booking of loan loss reserves, NPL coverage ratio is at 83.73% from 103.30% in 2018.

Solvency Ratios

Debt-to-equity ratio for the year was computed at 668.69% lower than 880.41% in 2018 because of the capital infusion this year. Asset-to-equity ratio consequently decreased to 768.69% from 980.41% in 2018. Interest rate coverage ratio was computed at 26.38% from 20.23% in 2018.

Capitalization

The Bank maintained a sound capital position given its CET 1/ Tier 1 and Total CAR ratio of 16.55% and 17.46%, respectively. The Bank’s continued profitability contributed to its capital strength as well as its capacity to regularly pay dividends to shareholders.

e. Results of Operations

2019 vs. 2018

 For the year ended December 31, 2019, the Group registered a net income of Php719.43 million, 126.87% higher compared to the Php317.11 million net income for the same period last year.

 Net interest income totalled Php4.24 billion, higher by 18.56% or Php663.52 million for the same period last year mainly due to the growth in loans portfolio which account for the Php1.49 billion increase in interest income. Total interest income grew by Php1.44 billion from Php5.76 billion in 2018 to Php7.20 billion in 2019. This was partly offset by the increase in Interest Expense by Php773.62 million due to higher interest expense on deposits and bills payable.

 Net service fees and commission income was at Php270.07 million, higher by Php7.50 million compared to Php262.57 million registered last year.

 Other income is higher in 2019 by Php218.28 million at Php486.98 million compared to Php268.70 million for the same period last year.

 Administrative and other operating expenses for the year 2019 amounted to Php4.21 billion, Php550.87 million higher compared to the same period last year coming from increase in Depreciation and Amortization as a result of PFRS 9 adoption, Compensation and Fringe Benefits, and Other Administrative Expenses by Php280.45 million, Php199.91 million and Php70.51 million, respectively.

 The Group incurred a total comprehensive income of Php1.71 billion for the year ended December 31, 2019, from a total comprehensive loss of Php635.92 million registered last year, on account of higher net income, and net unrealized gain on financial assets at FVOCI.

2018 vs. 2017

 For the year ended December 31, 2018, the Group registered a net income of Php317.11 million, Php9.72 million higher compared to the Php307.39 million net income for the same period last year.

 Net interest income totaled Php3.57 billion, higher by 19.85% or Php592.07 million net income for the same period last year mainly due to the growth in loans portfolio and investment securities which account for the Php1.38 billion and Php349.82 million increase in interest income, respectively. Total interest income grew by Php1.65 billion from Php4.11 billion in 2017 to Php5.76 billion in 2018. This was partly offset by the increase in Interest Expense by Php1.06 billion due to higher interest expense on deposits and bills payable.

 Net service fees and commission income was at Php262.57 million, higher by Php137.81 million compared to Php124.76 million registered last year.

 Other income is lower in 2018 by Php84.89 million at Php268.70 million compared to Php353.59 million for the same period last year.

 Administrative and other operating expenses for the year 2018 amounted to Php3.66 billion, Php543.42 million higher compared to the same period last year coming from increase in Compensation and Fringe Benefits, and Taxes and Licenses by Php171.16 million, and Php233.11 million, respectively.

 The Group incurred a total comprehensive loss of Php635.92 million for the year ended December 31, 2018, from a total comprehensive income of Php125.12 million registered last year, mainly due to higher net unrealized losses on FVOCI investments as a result of PFRS 9 adoption.

2017 vs. 2016

 For the year ended December 31, 2017, the Group registered a net income of Php307.39 million, Php59.91 million higher compared to the Php247.48 million net income for the same period last year.

 Net interest income totaled Php2.98 billion, higher by 23.22% or Php562.09 million net income for the same period last year mainly due to the growth in loans portfolio and investment securities which account for the Php864.01 million and Php194.58 million increase in interest income, respectively, partly offset by decline in interest income from deposits/funds in BSP and other Banks by Php17.72 million. Total interest income grew by Php1.04 billion from Php3.07 billion in 2016 to Php4.11 billion in 2017.

 Other income is lower in 2017 by Php18.62 million at Php353.59 million compared to Php372.21 million for the same period last year.

 Net service fees and commission income were at Php124.76 million and Php116.65 million for the years ended December 31, 2017 and 2016, respectively.

 Administrative and other operating expenses for the year 2017 amounted to Php3.12 billion, Php554.71 million higher compared to the same period last year coming from increase in Compensation and Fringe Benefits, Occupancy and equipment-related costs, depreciation and amortization and miscellaneous expenses by Php191.87 million, Php32.83 million, Php24.05 million and Php305.97 million, respectively.

Total Comprehensive Income for the year ended December 31, 2017 amounted to Php125.12 million, Php145.94 million higher compared to the loss of Php20.82 million for the same period last year mainly due to lower net unrealized losses on available for sale investments and higher translation adjustments.

f. Material Changes

As to material event/s and uncertainties, the Bank has none to disclose on the following apart from those already disclosed elsewhere or presented in the accompanying audited financial statements:

 Any known trends, demands, commitments, events or uncertainties that will have a material impact on the issuer’s liquidity.

 Any events that will trigger direct or contingent financial obligation, including any default or acceleration of an obligation.

 Any material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the company.

 Any material commitments for capital expenditures, the general purpose of such commitments and the expected sources of funds for such expenditures.

 Any known trends, events or uncertainties that have had or that are reasonably expected` to have a material favorable or unfavorable impact on net sales/revenues/income from continuing operations.

 Any significant elements of income or loss that did not arise from the issuer’s continuing operations.

 Any seasonal aspects that had a material effect on the financial condition or results of operations.

g. 2020 First Quarter Report

The Bank’s 2020 First Quarter report is hereto attached as Annex “F” and made an integral part of this report.

Holders

The number of shareholders of record as of March 31, 2020 was fifteen (15). Common shares outstanding as of March 31, 2019 is 1,500,000,000.

List of Top stockholders as of March 31, 2020:

Name of Stockholder Common Total Par Value % To Total Shareholdings Issued Capital Stock JG Summit Capital 899,986,468 10 60% Services Corporation Robinsons Retail 599,988,780 10 40% Holdings, Inc. Ignacio Mamaril, Jr. 19,887 10 0% Vicente Pang 4,854 10 0% Lance Y. Gokongwei 1 10 0% Frederick D. Go 1 10 0% Elfren Antonio S. Sarte 1 10 0%

Robina Y. Gokongwei-Pe 1 10 0% Patrick Henry C. Go 1 10 0% Omar Byron T. Mier 1 10 0% Angeles Z. Lorayes 1 10 0% Esperanza S. Osmeña 1 10 0% Hermogenes S. Roxas 1 10 0% Roberto S. Gaerlan 1 10 0% David C. Mercado 1 10 0%

Dividends

The Bank has not declared any dividends in the last two (2) years.

Such non-declaration of dividends is part of the Bank’s Capital Build-Up Program to meet BSP’s Minimum Capitalization requirement under BSP Circular No. 854 Series of 2014. Salient points of the Bank’s Capital Build-Up Program includes: Non-declaration of dividends in (5) years (starting in 2015) until the required minimum capital level of Php15 billion is achieved; and shareholders’ capital infusion in case the Bank’s internally generated funds would not be enough to meet the Php15 billion requirement within the prescribed period.

Further, future subscribers and common stockholder of the newly issued common shares are entitled to receive dividends. The Board, however, may only declare dividends out of its surplus profits or unrestricted retained earnings and after making due provisions for the necessary reserves (losses and bad debts) and compliance with relevant provisions of the Corporation Code, Securities Regulation Code, General Banking Law, Manual of Regulations for Banks, and all regulations and circulars issued by the regulatory bodies (SEC & BSP).

Apart from the above, there are no more restrictions that limit the Bank’s ability to declare and pay dividends on the common shares.

Discussion of compliance with leading practices on corporate governance

Corporate Governance

(a) Organizational Structure

(b) Board of Directors

The Board of the Bank represents the owners’ interests in the Bank’s objective to sustainably increase shareholder value and to ensure the long-term success of the business. The Board is actively responsible in ensuring that the Bank is properly managed in attaining this objective. In addition to fulfilling the Board’s obligations for increased shareholder value, it also has the responsibility to protect the interests of other stakeholders which include, among others, customers, employees, suppliers, financiers, government and community in which it operates.

The Board is primarily responsible for the observance of governance, including business and risk strategies, organization, and financial soundness of the Bank. Corollary to setting the policies for the accomplishment of the corporate objectives, it shall provide an independent checking and effective oversight of the Management.

Composition of the Board

The Board is composed of 11 members elected by the stockholders, five of whom are independent. All members of the Board are Filipinos and possess all the qualifications and none of the disqualifications to hold a directorship as prescribed under the Corporation Code and existing rules and regulations of the BSP and the Securities and Exchange Commission (SEC). They all passed the fit and proper test for the position of a director of the Bank, taking into account their integrity and probity, physical and mental fitness, competence, relevant education, financial literacy and training, diligence and knowledge and expertise. They are known for their independence and professionalism, and for making decisions with complete fidelity to the Bank while cognizant of their responsibilities under existing applicable laws, rules, and regulations.

The Board determines the appropriate number of its members to ensure that the number thereof is commensurate with the size and complexity of the Bank’s operations. To the extent practicable, the members of the Board of Directors have been selected from a broad pool of qualified candidates. A sufficient number of qualified non-executive members had been elected to promote independence of the Board from the views of the senior

management. For this purpose, non-executive members of the Board are those who are not part of the day-to-day management of banking operations.

The five independent directors (ID) are independent of Management and are free from any business or other relationship which could or could reasonably be perceived, to materially interfere with their exercise of independent judgment in carrying out their responsibilities as a director. They hold no interests or relationships with the Bank that may hinder their independence from the Bank or management or will interfere with the exercise of independent judgment in fulfilling their responsibilities. They are compliant with all the qualifications required of an independent director and none of the disqualifications as provided in the MORB. An independent director only serves as such for a maximum cumulative term of nine (9) years reckoned from 2012, after which he shall be perpetually barred from serving as Independent Director but may continue to serve as regular director.

The Bank has a transparent procedure for the nomination and election of directors to the Board. Shareholders regularly nominate candidates who shall be evaluated based on qualifications provided under the MORB and a pool of qualified candidates is formed. The eleven (11) Board seats shall be filled through an election from the pool of qualified candidates.

As provided for in the Bank’s By-Laws, the Board schedules and holds regular monthly meetings and convenes special meetings when necessary. The Corporate Secretary provides the directors the notice, agenda, and meeting materials prior to each meeting. Proceedings of the meetings are properly documented and duly minuted.

In accordance with the rules and regulations of the SEC and the BSP, the members of the Board attend regular and/or special meetings in person or through teleconferencing and video conferencing which allows the directors to actively participate in the deliberations on matters taken. The Bank ensures availability of teleconferencing facilities if and when a director cannot physically attend due to unavoidable circumstances. A director may also attend the meetings by submitting written comments on the agenda to the Corporate Secretary and the Chairman prior to the meeting pursuant to Subsection X141.1 of the MORB.

Name of Directors Number of Number of Percentage of Meetings Held Meetings Meetings Attended During the Year Attended % 1.) Lance Y. Gokongwei 15 10 66.67 2.) Frederick D. Go 15 14 93.33 3.) Elfren Antonio S. Sarte 15 14 93.33 4.) Robina Y. Gokongwei-Pe 15 15 100.00 5.) Patrick Henry C. Go 15 14 93.33 6.) Omar Byron T. Mier 15 14 93.33 7.) Angeles Z. Lorayes (ID) 15 15 100.00 8.) Hermogenes S. Roxas (ID) 15 14 93.33 9.) Esperanza S. Osmeña (ID) 15 14 93.33 10.) David C. Mercado (ID) 15 15 100.00 11.) Roberto S. Gaerlan (ID) 15 15 100.00

(d) Board Committees

In order to increase efficiency and gain deeper focus in specific areas, the Board has created committees, which are relative and consistent to the size, complexity of operations, long-term strategies, and risk tolerance level of the Bank. The scope, authority and responsibilities of these committees are defined in their respective board-approved charter which is subject to regular review and updated at least annually or whenever there are significant changes.

The Board has appointed the members of the committees taking into account the optimal mix of skills and experience which would allow them to fully understand, be critical and objectively evaluate the issues. To promote objectivity, the Board has appointed independent directors and non-executive directors to the greatest extent possible and ensures that such mix will not impair the collective skills, experience and effectiveness of the committees. Each of these committees maintains appropriate records (e.g., minutes of meeting) of their deliberations and decisions, subject to notation and/or confirmation of the Board. The records document the committees’ fulfillment of their responsibilities and facilitate the assessment of the effective performance of their functions which is regularly and periodically conducted.

The Board has established and delegated responsibilities to seven committees, namely: the Executive Committee, the Corporate Governance Committee, the Risk Oversight Committee, the Audit Committee, the Trust Committee, the Related Party Transactions Committee, and the IT Steering Committee.

1. Executive Committee The Bank’s Executive Committee has been created as the highest credit approving body of the Bank after the Board. The Committee provides the necessary approvals for applications, deviations and other loan transactions. Resolutions of the Committee may be overruled only by the Board.

The Executive Committee provides decisions regarding applications for critical loan accounts and deviations that require careful deliberation. Approvals made are in compliance with internal policies and those required under existing laws, rules and regulations. Decisions made are influenced by the latest profitability and delinquency figures of an account or loan product.

Executive Committee Number of Number of Meetings Percentage of Meetings Members Meetings Held Attended Attended During the Year % 1. Lance Y. Gokongwei 45 44 100.00 2. Frederick D. Go 45 44 98.00 3. Elfren Antonio S. Sarte 45 42 93.00 4. Omar Byron T. Mier 45 43 95.55

2. Corporate Governance Committee In order to proactively assist the Board in its fulfillment of its corporate governance responsibilities and ensure transparency in all of the Bank’s transactions, it created the Corporate Governance Committee. The Committee ensures the Board’s effectiveness and due observance of corporate governance principles, best practices and guidelines which are necessary components of what constitute sound strategic business management. It generates awareness of corporate governance within the Bank.

In particular, the Committee oversees the development and implementation of corporate governance principles and policies, reviews and evaluates the qualifications of the persons

46 nominated to the Board as well as those nominated for election to other positions requiring appointment by the Board, decides the manner by which the Board’s performance is evaluated and assists the Board in the periodic performance evaluation of the Board and its committees and executive management, and oversees the development and implementation of professional development programs for directors and officers.

The Committee is composed of five members, three of whom are independent directors including the Chairperson and Vice-Chairperson. The Committee holds regular meetings and may call for special meetings as deemed necessary. To properly evaluate its performance, the Committee meetings are properly and duly minuted.

Corporate Governance Number of Number of Meetings Percentage of Meetings Committee Members Meetings Held Attended Attended During the Year % 1. Roberto S. Gaerlan (ID) 6 6 100.00 (elected as member during the Organizational Meeting on June 26, 2019) 2. Angeles Z. Lorayes (ID) 12 12 100.00 3. Esperanza S. Osmeña (ID) 12 11 91.67 4. Patrick Henry C. Go 12 12 100.00 5. Omar Byron T. Mier 12 11 91.67 6. Hermogenes S. Roxas (ID) 6 5 83.33 (replaced as member during the Organizational Meeting on June 26, 2019)

3. Risk Oversight Committee To aid the Board in efficiently carrying out its function on risk management, it created the Risk Management Committee. This committee oversees the development and oversight of the Bank’s risk management program including Trust Group and ensures an acceptable level of risk while minimizing losses. The Committee oversees the system of limits to discretionary authority that the Board delegates to management, supervises the system and ensures its effectiveness, provides and set limits and ensures that these are properly observed and that immediate corrective actions are taken should breaches occur.

The Board has appointed five members of the Committee who possess a broad-range of expertise as well as adequate knowledge of the Bank’s risk exposures which enables them to develop appropriate strategies for preventing more losses when they occur. The committee members meet regularly and may call for special meetings whenever necessary.

Risk Oversight Committee Number of Number of Meetings Percentage of Meetings Members Meetings Held Attended Attended During the Year % 1. Esperanza S. Osmeña (ID) 12 12 100.00 2. Roberto S. Gaerlan (ID) 12 12 100.00 3. David C. Mercado (ID) 12 12 100.00 4. Elfren Antonio Sarte 12 11 91.67 5. Omar Byron T. Mier 12 12 100.00

4. Audit Committee The Board has constituted an Audit Committee to provide oversight over the Bank’s financial reporting policies, practices and control, and internal and external audit functions. In particular, the Committee aids the Board in monitoring and evaluating the adequacy, effectiveness, and efficiency of the Bank’s internal controls system. Further, the Committee

47 assists the Board in fulfilling its oversight responsibilities with regard to the integrity of the Bank’s financial reporting process, the independence and performance of the Bank’s external and internal auditors, the compliance to corporate governance policies and guidelines, and the Bank’s compliance with regulatory requirements.

To carry-out its mandate, the Committee has explicit authority to investigate any matter within its terms of reference, full access and cooperation by management and full discretion to invite any director or executive officer to attend its meetings, and adequate resources to enable it to effectively discharge its functions.

As prescribed under existing rules and regulations, the Committee is composed of, to the greatest extent possible, sufficient number of independent and non-executive board members. All members of the Committee, including the Chairperson who is an ID, possess the required qualifications and none of the disqualifications. The Committee holds regular meetings and may call special meetings upon the request of the Chairperson or by at least two of its members, which proceedings are duly minuted.

Audit Committee Members Number of Number of Percentage of Meetings Meetings Held Meetings Attended During the Year Attended % 1. Angeles Z. Lorayes (ID) 12 11 92.00 2. David C. Mercado (ID) 12 12 100.00 3. Roberto S. Gaerlan (ID) 12 12 100.00 4. Hermogenes S. Roxas (ID) 12 12 100.00 5. Omar Byron T. Mier (Non-voting) 12 12 100.00

5. Trust Committee The Trust Committee provides the overall direction and guidelines in the conduct of the Trust business, reviews plans for new investments, trust products and business development, and conducts assessment of Trust and Investments Group’s performance and operational effectiveness.

Trust Committee Members Number of Number of Percentage of Meetings Meetings Held Meetings Attended During the Year Attended % 1. Robina Y. Gokongwei-Pe 11 11 100.00 2. Patrick Henry C. Go 11 10 91.00 3. Lance Y. Gokongwei 11 10 91.00 4. Esperanza S. Osmeña (ID) 11 10 91.00 5. Elizabeth T. Aquino 11 11 100.00

6. Related Party Transactions Committee Pursuant to existing rules and regulations on related party transactions issued by the BSP, the Board created a Related Party Transactions Committee. This stems from the recognition of management that the Bank engages in transactions between and among related parties, which brings a need to exercise appropriate oversight and implement control systems for managing said exposures as these may potentially lead to conflict of interests if not abuses that are disadvantageous to the Bank and its depositors, creditors, and other stakeholders.

The Committee supports the Board in the exercise of appropriate oversight and implements a control system for managing exposures to related parties. It assists the Board in ensuring that transactions with related parties are handled in a sound and prudent manner and in compliance with applicable laws, rules and regulations to protect the interest of its depositors, creditors, and other stakeholders.

In particular, the Committee identifies related parties and monitors their transactions, evaluates related party transactions which are classified material and endorse the same to the Board for approval, ensures disclosure and reporting of related party transactions and oversees the implementation of a system to facilitate its functions as well as the development and periodic review of policies and procedures for related party transactions.

The Committee is composed of four members of the Board who are all independent directors. In case a member has a conflict of interest in a particular transaction, he should refrain from evaluating that particular transaction. The Chief Compliance Officer and Chief Audit Officer and/or their representatives including an executive director sit as resource persons in the said Committee.

Related Party Transactions Committee Number of Number of Percentage of Meetings Members Meetings Held Meetings Attended During the Attended % Year 1. Roberto S. Gaerlan (replaced as 6 6 100.00 Chairman during the Organizational Meeting on June 26, 2019) 2. Esperanza S. Osmeña (ID) 10 9 90.00 3. Angeles Z. Lorayes (ID) 10 10 100.00 4. Hermogenes S. Roxas (ID) 10 10 100.00 5. David C. Mercado (ID) (elected as 6 6 100.00 member during the Organizational Meeting on June 26, 2019)

7. IT Steering Committee In compliance with BSP Circular 808, the Board has created the Information Technology Steering Committee which oversees a safe, sound, controlled and efficient information technology operating environment that supports the Bank’s goals and objectives. In particular, the Committee, among others: reviews and monitors the performance of all IT projects; reviews the Bank’s current IT infrastructure, system performance, associated risks and other significant issues and events and institutes appropriate actions to achieve the desired results; monitors and evaluates the performance of third party service providers on all information technology initiatives subject of the service contract; and reports to the Board relevant and adequate information regarding IT performance, status of major IT projects and significant issues affecting the Bank’s IT operations.

The Committee is chaired by a non-executive and independent director, assisted by the Head of IT Group as Vice-Chairperson and executive officers of the Bank. The heads of Audit, Risk and Compliance are also invited in the regular and/or special meetings of the Committee as resource persons.

IT Steering Number of Number of Percentage of Committee Members Meeting Held Meetings Meetings Attended During the Year Attended % 1. Mr. David C. Mercado (replaced 6 6 100.00 as Chairman during the Organizational Meeting on June 26, 2019) 2. Mr. Elfren Antonio S. Sarte 6 6 100.00 (replaced as member during the Organizational Meeting on June 26, 2019) 3. Mr. Hermogenes S. Roxas 6 6 100.00

(elected as Chairman during the Organizational Meeting on June 26, 2019) 4. Mr. Omar Byron T. Mier (elected 6 6 100.00 as Vice-Chairman during the Organizational Meeting on June 26, 2019) 5. Mr. Angelito V. Evangelista 12 12 100.00 6. Mr. Eric C. Macalintal 12 12 100.00 7. Ms. Agnes A. Salvador (replaced 6 6 100.00 as member during the Organizational Meeting on June 26, 2019) 8. Ms. Irma D. Velasco (replaced as 6 3 50.00 member during the Organizational Meeting on June 26, 2019) 9. Mr. Ramon Eduardo E. Abasolo 6 5 83.00 (replaced as member during the Organizational Meeting on June 26, 2019)

(e) Corporate Secretary

The Bank’s Corporate Secretary, who is a separate individual from its Compliance Officer, assists the Board in its duties and is responsible primarily to the corporation and its shareholders. His duties and responsibilities, among others, include assistance to the Board and the board committees in the conduct of their meetings, including preparing an annual schedule of Board and committee meetings and the annual board calendar, and assisting the chairs of the Board and its committees to set agendas for those meetings; Safe keeps and preserves the integrity of the minutes of the meetings of the Board and its committees, as well other documents such as the corporate seal, stock certificates, stock and transfer books, records, documents and papers of the Bank; Prepare ballots for annual elections and keep a complete and up-dated list of the stockholders and their addresses; Keeps abreast on relevant laws, regulations, all governance issuances, relevant industry developments and operations of the corporation, and advises the Board and the Chairman on all relevant issues as they arise. The Bank also makes sure that the Corporate Secretary annually attends relevant trainings on corporate governance and other related topics. Presently, the Bank’s Chief Legal Counsel is its concurrent Corporate Secretary.

(f) Board Training

In accordance with the Corporate Governance Manual and Subsection X141.3 of the MORB, the Corporate Governance Committee is responsible for making recommendations to the Board on the required trainings and continuing education of the directors. Relative thereto, members of the Board have attended the required corporate governance seminar for bank directors at BSP-accredited training providers, a pre-requisite for Monetary Board confirmation. These include topics on risk and governance, audit and control, and accountability. The members of the Board and members of the Senior Management regularly attend seminars on corporate governance, Anti-Money Laundering laws and regulations, and risk management for updates in these areas.

(g) Board and Committee Performance Evaluation

The Bank’s Board represents the owner’s interests in its objective to continuously improve its shareholders value and to achieve a successful and long-term business. The Board is actively responsible in ensuring that the Bank is properly managed to attain this result. In addition to fulfilling its obligations for increased shareholder value, it also has the responsibility to other stakeholders which include, among others, customers, employees, suppliers, financiers, government and community in which it operates.

The Board is primarily responsible for the governance, including business and risk strategy, organization, and financial soundness of the Bank. Corollary to setting the policies for the accomplishment of the corporate objectives, it shall provide an independent check on and effective oversight of Management.

In order to increase efficiency and allow deeper focus in specific areas, the Board has created committees, which are relative and consistent to the size, complexity of operations, long-term strategies and risk tolerance level of the Bank. The scope, authority and responsibilities of these committees are defined in their respective board-approved charter which is subject to regular review and updated at least annually or whenever there are significant changes.

The Board has appointed the members of the committees taking into account the optimal mix of skills and experience which allow them to fully understand, be critical and objectively evaluate the issues. To promote objectivity, the Board has appointed independent directors and non-executive directors to the greatest extent possible and ensures that such mix will not impair the collective skills, experience and effectiveness of the committees. Each of these committees maintains appropriate records (e.g., minutes of meeting) of their deliberations and decisions, subject to notation and/or confirmation of the Board. The records document the committees’ fulfillment of their responsibilities and facilitate the assessment of the effective performance of their functions which is regularly and periodically being conducted.

In order to pro-actively assist the Board in its fulfillment of its corporate governance responsibilities and ensure transparency in all of the Bank’s transactions, it created the Corporate Governance Committee. The Committee ensures the Board’s effectiveness and due observance of corporate governance principles, best practices and guidelines which are necessary component of what constitutes sound strategic business management. It creates awareness of corporate governance within the Bank. In particular, the Committee oversees the development and implementation of corporate governance principles and policies, reviews and evaluates the qualifications of the persons nominated to the Board as well as those nominated for election to other positions requiring appointment by the Board, decides the manner by which the Board’s performance is evaluated and assists the Board in the periodic performance evaluation of the Board and its committees and executive management, among others. In this regard, annual performance evaluation of the board and board-committees is being conducted in accordance with the Bank's existing policies.

(h) President & CEO Evaluation

The performance of the President and CEO is evaluated as member of the Board and Senior Management where the results are discussed and approved by the Corporate Governance Committee and confirmed by the Board.

(i) Compliance System

The BSP issued Circular 747 “Revised Compliance Frameworks for Banks” as amended by Circular 972, in order to actively promote the safety and soundness of the Philippine Banking System through an enabling policy and oversight environment. Such an environment is governed by the high standards and accepted practices of good corporate governance as collectively designed by the BSP and its supervised institutions. Towards this end, a robust, dynamically-responsive and distinctly-appropriate Compliance Risk Management System has been put in place as an integral component of the Bank’s culture and risk governance framework. In this respect, it is the responsibility and shared accountability of all personnel, officers and the board of directors.

Part of the Compliance Risk Management System is the Bank’s strong compliance infrastructure. The Board of Directors, through the Corporate Governance Committee, exercises oversight implementation of compliance policy, ensuring policies and procedures are followed and corrective actions are taken by the management to address breaches, failures and control deficiencies identified. In its effort to address compliance risks effectively, the Board established the Compliance function and appointed a Chief Compliance Officer who is the lead operating officer on compliance. The Senior Management sees to it that applicable laws and regulations are complied with and, through the Chief Compliance Officer, render periodic reporting of compliance issues that the Bank is beset with. As Bank employee, everyone should conduct business activities in adherence to high standards of honesty and integrity and shall abide laws, regulations, rules, standards and codes of conduct and good governance applicable to our banking activities. This may cover observing market rules, managing conflict of interest, proper accounting and recording, applying best practices, compliance with tax laws, developing new products and electronic delivery channels, providing e-banking services and may also include specific areas such as prevention of money laundering and terrorist financing.

The Bank’s Compliance Risk Management System is anchored on a program that ensures proper dissemination of laws, rules and regulation, self-assessment of compliance therewith, validation of self-assessment and monitoring to ensure that all are compliant therewith. The Compliance Group disseminates laws, rules and regulations, including revisions or updates thereon, which are affecting the different operational areas of Bank. The different business units conduct periodic self-assessment of its compliance to relevant laws, rules and regulations through a Compliance Self-Assessment Checklist. Results of the self- assessment shall then be validated by an independent testing conducted by the Compliance Group. Any exceptions found in the self-assessment as well as independent testing are then properly reported to a Board Committee and subject of close monitoring to ensure they are properly addressed to be compliant to laws, rules and regulations. The compliance program is subject to review and revision as may be necessary to be updated with new issuances and depending on its effectiveness to achieving excellent compliance and monitoring of compliance risks.

(j) Education and Trainings

The Bank is committed to continually strengthen its compliance culture through education and training. The Compliance Group in coordination with HRMG Training Department regularly conducts briefings to employees to raise the level of awareness and understanding of the principles, concepts, and elements of good corporate governance and compliance. All new employees of the Bank undergo basic orientation on Compliance System, Anti-Money Laundering (AML), Risk Awareness, and Corporate Governance. The members of the Board

52 of Directors also attend annual updates on Corporate Governance and Anti-Money Laundering laws and practices.

(k) Corporate Governance Manual

The Board and its management committed themselves to the principles and best practices on corporate governance. They believe that corporate governance is a necessary component of what constitutes sound business management and therefore undertake every effort necessary to create awareness within the Bank.

Toward this end, the Board adopted a corporate governance framework or the Corporate Governance Manual (Manual) that embodies the rules, systems and processes in the Bank. The framework governs the performance of the Board and management of their respective duties and responsibilities to stockholders and other stakeholders. The Manual is periodically reviewed with the objective of continually aligning the Bank’s policies with the BSP and SEC circulars or issuances on corporate governance including best practices issued by the Basel Committee on Banking Supervision. This ensures that the interests of stockholders and other stakeholders are always taken into account, the directors, officers, and employees are aware of their responsibilities and the business of the Bank is conducted in a safe and sound manner.

(l) Board Compensation Policy

Board of Directors compensation is a fee or per diem in an amount as may be determined by the Board shall be paid to each director for attendance at any meeting of the Board; provided, however, that nothing herein contained shall be construed to preclude any director from serving in any other capacity and receiving compensation therefor. Under the Bank’s By-Laws, it is provided that Board shall fix the compensation and other remuneration of any Director or any other officer of the Bank should they be designated to perform executive functions or any special service to the Bank. In no case shall the total yearly compensation of directors, as such directors, exceed ten percent (10%) of the net income before income tax of the corporation during the preceding year. However, under Section 29 of the New Corporation Code, which took effect on February 23, 2019, it is mandated that the directors or trustees shall not anymore participate in the determination of their own per diems or compensation. Because of this, during the annual stockholders’ meeting of the Bank on June 26, 2019, the stockholders approved the delegation of the authority to determine the per diems and compensation of directors to the Chairman of the Board upon recommendation of the President and Chief Executive Officer.

(m) Dividend Policy

Subject to the Bank’s By-Laws, dividends may be declared annually or oftener as the Bank’s Board may determine. The Board, however, may only declare dividends out of its surplus profits or unrestricted retained earnings after making due provisions for the necessary reserves (losses and bad debts) in accordance with the Corporation Code, Securities Regulation Code, General Banking Law, MORB, and all regulations and circulars issued by the BSP.

(n) Whistleblowing

Employees of the Bank are encouraged to perform the duty of disclosing to their immediate superior the existing or potential violations and wrongdoings that they are or may become aware of. The Bank’s Policy on Timely Reporting of Concerns and Incidents, otherwise known as the Whistle-Blowing Policy, serves as a guide for all employees for reporting matters that breach integrity and the Bank’s Code of Conduct.

(o) Code of Ethics and Policy on Conflicts of Interest

The Bank’s Code of Conduct for Employees exists to develop or pattern behavior in accordance to the Bank’s standards, to instill professional conduct, and to enforce discipline and order. The Code is implemented by the Human Resources and Management Group. Copies of the Code of Conduct are given to employees upon hiring, while seminars are conducted regularly to further expound on the subject.

ANNEX "D"

*SGVFSM000714* Robinsons Bank Corporation and Subsidiary

Financial Statements December 31, 2019 and 2018 and for the Years Ended December 31, 2019, 2018 and 2017 and

Independent Auditor’s Report

*SGVFSM000714* C O V E R S H E E T for AUDITED FINANCIAL STATEMENTS

SEC Registration Number 2 9 3 1 6

C O M P A N Y N A M E R O B I N S O N S B A N K C O R P O R A T I O N A N D

S U B S I D I A R Y

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province ) 1 7 t h F l o o r , G a l l e r i a C o r p o r a t e

C e n T e r , E D S A c o r n e r O r t i g a s A

v e n u E , Q u e z o n C i t y

Form Type Department requiring the report Secondary License Type, If Applicable AAFS

C O M P A N Y I N F O R M A T I O N Company’s Email Address Company’s Telephone Number Mobile Number www.robinsonsbank.com.ph 8702-9500 N/A

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day) 15 Last week of June December 31

CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Number/s Mobile Number

Ms. Irma D. Velasco [email protected] 8702-9515 09988403139

CONTACT PERSON’s ADDRESS

17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. 2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.

*SGVFSM000714* SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001, 6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021 1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A), Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

The Board of Directors and Stockholders Robinsons Bank Corporation 17th floor, Galleria Corporate Center EDSA corner Ortigas Avenue Quezon City

Report on the Consolidated and Parent Company Financial Statements

Opinion

We have audited the consolidated financial statements of Robinsons Bank Corporation and its subsidiary (the Group) and the parent company financial statements of Robinsons Bank Corporation (the Parent Company), which comprise the consolidated and parent company statements of financial position as at December 31, 2019 and 2018, and the consolidated and parent company statements of income, consolidated and parent company statements of comprehensive income, consolidated and parent company statements of changes in equity and consolidated and parent company statements of cash flows for each of the three years in the period ended December 31, 2019, and notes to the consolidated and parent company financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Parent Company Financial Statements section of our report. We are independent of the Group and the Parent Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audit of the consolidated and parent company financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and parent company financial statements of the current period.

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These matters were addressed in the context of our audit of the consolidated and parent company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and parent company financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated and parent company financial statements.

Applicable to the audit of the Consolidated and Parent Company Financial Statements

Allowance for Credit Losses on Loans and Receivables The Group’s and the Parent Company’s application of the ECL model is significant to our audit as it involves the exercise of significant management judgment. Key areas of judgment include: segmenting the Group’s and the Parent Company’s credit risk exposures; determining the method to estimate ECL; defining default; identifying exposures with significant deterioration in credit quality ; determining assumptions to be used in the ECL model such as the counterparty credit risk rating, the expected life of the financial asset and expected recoveries from defaulted accounts; and incorporating forward-looking information (called overlays) in calculating ECL.

Allowance for credit losses on loans and receivables as of December 31, 2019 for the Group and the Parent Company amounted to P=1.17 billion and P=1.06 billion, respectively. Provision for credit losses on loans and receivables of the Group and the Parent Company in 2019 amounted to P=129.20 million and P=128.61 million, respectively.

The disclosures in relation to the allowance for credit losses on loans and receivables are included in Note 14 to the financial statements.

Audit Response We obtained an understanding of the methodologies and models used for the Group’s and the Parent Company’s different credit exposures and assessed whether these considered the requirements of PFRS 9 to reflect an unbiased and probability-weighted outcome, and to consider time value of money and the best available forward-looking information.

We (a) assessed the Group’s and the Parent Company’s segmentation of its credit risk exposures based on homogeneity of credit risk characteristics; (b) tested the definition of default and significant increase in credit risk criteria against historical analysis of accounts and credit risk management policies and practices in place, (c) tested the Group’s and the Parent Company’s application of internal credit risk rating system by reviewing the ratings of sample credit exposures; (d) assessed whether expected life is different from the contractual life by testing the maturity dates reflected in the Group’s and the Parent Company’s records and considering management’s assumptions regarding future collections, advances, extensions, renewals and modifications; (e) reviewed loss given default by inspecting historical recoveries and related costs, write-offs and collateral valuations; (f) tested exposure at default considering outstanding commitments and repayment scheme;

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(g) checked the reasonableness of forward-looking information used for overlay through statistical test and corroboration using publicly available information and our understanding of the Group’s and the Parent Company’s lending portfolios and broader industry knowledge; and (h) tested the model through backtesting of prior year loss rates versus actual observed default rates.

Further, we checked the data used in the ECL models by reconciling data from source system reports to the data warehouse and from the data warehouse to the loss allowance analysis/models and financial reporting systems. To the extent that the loss allowance analysis is based on credit exposures that have been disaggregated into subsets of debt financial assets with similar risk characteristics, we traced or re-performed the disaggregation from source systems to the loss allowance analysis. We also assessed the assumptions used where there are missing or insufficient data.

We recalculated impairment provisions on a sample basis. We reviewed the completeness of the disclosures made in the consolidated and parent company financial statements. We involved our internal specialists in the performance of the above procedures.

Accounting for Disposal of Invesment Securities under a Hold-to-Collect (HTC) Business Model During 2019, the Parent Company disposed certain USD-denominated government securities classified as HTC securities with carrying amount of USD21.36 million (P=1.11 billion), resulting in a gain of USD 1.21 million (P=62.88 million). The debt securities held under a hold-to-collect business model, which are classified as ‘Investment securities at amortized cost’, are managed with the objective of holding them in order to collect contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The accounting for the disposals is significant to our audit because the amounts of securities sold from the HTC portfolio and the gains from the sale are material to the consolidated and parent bank financial statements. Moreover, it involves exercise of significant judgement by management in assessing that the disposal of the HTC Securities would not impact the measurement of the remaining securities in the affected portfolio.

The Parent Company’s disclosures relating to the disposals from its HTC portfolio are included in Note 3 to the consolidated and parent bank financial statements.

Audit Response We obtained an understanding of the Parent Company’s reasons for the disposals of HTC securities through inquiries with management and inspection of approved internal documentations, including evidence of governance over the disposals of HTC securities. We evaluated management’s assessment of the impact of the disposal of the HTC securities in reference to the Parent Bank’s existing business model documentation, the provisions of PFRS 9 and regulatory issuances. We recalculated the gains from the disposals.

With regard to the outstanding securities of the affected portfolio, we assessed whether the nature and reasons for the disposals did not trigger a change in business model of the remaining portfolio and that all relevant available information were considered in determining that the HTC business model remains appropriate. We reviewed the measurement of the remaining securities in the affected portfolio.

Adoption of PFRS 16, Leases Effective January 1, 2019, the Group adopted Philippine Financial Reporting Standard (PFRS) 16, Leases, under the modified retrospective approach which resulted in significant changes in the Group’s accounting policy for leases. The Group’s adoption of PFRS 16 is significant to our audit because the Group has high

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A member firm of Ernst & Young Global Limited - 84 - volume of lease agreements; the recorded amounts are material to the consolidated and parent company’s financial statements; and adoption involves application of significant judgment and estimation in determining the lease term, including evaluating whether the Group is reasonably certain to exercise options to extend or terminate the lease, and in determining the incremental borrowing rate. This resulted in the recognition of right of use assets amounting =635.20P million and P=587.52 million for the Group and the Parent Company, respectively, and lease liability amounting to P=655.55 million and =611.03P million, for the Group and the Parent Company, respectively, as of January 1, 2019, and the recognition of depreciation expense of P=248.85 million and P=239.51, for the Group and the Parent Company, respectively, and interest expense of P=51.63 million and P=47.29 million, for the Group and the Parent Company, respectively, for the year ended December 31, 2019.

The disclosures related to the adoption of PFRS 16 are included in Notes 2 and 23 to the consolidated and parent company’s financial statements.

Audit response We obtained an understanding of the Group’s and the Parent Company’s process in implementing the new standard on leases, including the determination of the population of the lease contracts covered by PFRS 16, the application of the short-term and low value assets exemption, the selection of the transition approach and any election of available practical expedients.

We tested the population of lease agreements in the lease calculation prepared by management by comparing the number of leases against lease contract database. On a test basis, we inspected lease agreements (i.e., lease agreements existing prior to the adoption of PFRS 16 and new lease agreements), identified their contractual terms and conditions, and traced these contractual terms and conditions to the lease calculation prepared by management, which covers the calculation of financial impact of PFRS 16, including the transition adjustments.

For selected lease contracts with renewal and/or termination option, we reviewed the management’s assessment of whether it is reasonably certain that the Group will exercise the option to renew or not exercise the option to terminate.

We tested the parameters used in the determination of the incremental borrowing rate by reference to market data. We test computed the lease calculation prepared by management on a sample basis, including the transition adjustments.

We reviewed the disclosures related to the transition adjustments based on the requirements of PFRS 16 and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

Other Information

Management is responsible for the other information. The other information comprises the information included in the SEC Form 17-A for the year ended December 31, 2019, but does not include the consolidated and parent company financial statements and our auditor’s report thereon, which we obtained prior to the date of the auditor’s report, and the Annual Report for the year ended December 31, 2019 which is expected to be made available to us after the date of this auditor’s report.

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Our opinion on the consolidated and parent company financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated and parent company financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and parent company financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. In connection with our audits of the consolidated and parent company financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and parent company financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Parent Company Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated and parent company financial statements in accordance with PFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated and parent company financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and parent company financial statements, management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Parent Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and Parent Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Parent Company Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and parent company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and parent company financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: · Identify and assess the risks of material misstatement of the consolidated and parent company financial statements, whether due to fraud or error, design and perform audit procedures responsive to

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those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Parent Company’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and parent company financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Parent Company to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the consolidated and parent company financial statements, including the disclosures, and whether the consolidated and parent company financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and parent company financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

*SGVFSM000714*

A member firm of Ernst & Young Global Limited - 87 -

Report on the Supplementary Information Required Under Bangko Sentral ng Pilipinas (BSP) Circular No. 1074 and Revenue Regulations 15-2010

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under BSP Circular No. 1074 in Note 34 and Revenue Regulations 15-2010 in Note 33 to the financial statements is presented for purposes of filing with the BSP and Bureau of Internal Revenue, respectively, and is not a required part of the basic financial statements. Such information is the responsibility of the management of Robinsons Bank Corporation. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

The engagement partner on the audit resulting in this independent auditor’s report is Juan Carlo B. Maminta.

SYCIP GORRES VELAYO & CO.

Juan Carlo B. Maminta Partner CPA Certificate No. 115260 SEC Accreditation No. 1699-A (Group A), August 16, 2018, valid until August 15, 2021 Tax Identification No. 210-320-399 BIR Accreditation No. 08-001998-132-2018, February 9, 2018, valid until February 8, 2021 PTR No. 8125258, January 7, 2020, Makati City

April 22, 2020

*SGVFSM000714*

A member firm of Ernst & Young Global Limited - 88 -

ROBINSONS BANK CORPORATION AND SUBSIDIARY STATEMENTS OF FINANCIAL POSITION

Consolidated Parent Company December 31 2019 2018 2019 2018 ASSETS Cash and Other Cash Items P=3,249,359,133 P=2,370,171,189 P=3,176,490,713 P=2,300,112,472 Due from Bangko Sentral ng Pilipinas (Note 15) 12,216,191,774 16,108,207,737 11,824,524,807 15,586,846,184 Due from Other Banks (Note 6) 2,463,991,767 3,010,162,780 2,374,076,786 2,944,176,334 Interbank Loans Receivable and Securities Purchased Under Resale Agreements (Notes 6 and 31) 2,408,705,460 2,188,410,000 2,342,127,432 2,100,410,000 Financial Assets at Fair Value Through Profit or Loss (Note 7) 4,935,882 8,206,143 4,935,882 8,206,143 Financial Assets at Fair Value Through Other Comprehensive Income (Notes 7 and 27) 13,973,461,843 13,116,787,076 14,003,661,843 13,146,987,076 Investment Securities at Amortized Cost (Notes 7 and 27) 11,357,261,241 12,597,089,717 11,156,952,059 12,396,700,654 Loans and Receivables (Note 8) 80,805,805,712 68,411,062,216 79,240,326,174 67,396,585,901 Investment in a Subsidiary (Note 9) − − 1,357,178,340 1,236,740,437 Property and Equipment (Note 10) 1,308,628,049 623,189,601 1,165,797,623 546,878,908 Investment Properties (Note 11) 382,355,004 341,073,550 266,464,925 212,181,540 Branch Licenses (Note 12) 999,928,369 999,881,780 379,328,369 379,281,780 Goodwill (Note 9) 244,327,006 244,327,006 − − Deferred Tax Asset - net (Note 25) 458,920,202 263,829,946 511,814,656 405,775,383 Other Assets (Note 13) 1,212,839,592 1,068,239,168 1,198,608,191 1,051,368,409 P=131,086,711,034 P=121,350,637,909 P=129,002,287,800 P=119,712,251,221

LIABILITIES AND EQUITY Liabilities Deposit Liabilities (Notes 15 and 26) Demand P=17,054,484,841 P=16,050,910,830 P=16,880,570,300 P=15,876,375,795 Savings 58,931,747,324 59,709,184,942 57,516,406,672 58,456,351,809 Time 15,687,802,834 13,328,372,113 15,306,981,464 13,148,295,392 Long-term negotiable certificates of deposit 5,927,592,846 5,917,925,850 5,927,592,846 5,917,925,850 97,601,627,845 95,006,393,735 95,631,551,282 93,398,948,846 Bonds Payable (Note 17) 9,889,835,356 − 9,889,835,356 − Bills Payable (Note 18) 2,040,505,751 7,436,904,315 2,040,505,751 7,436,904,315 Manager’s Checks 1,074,514,545 719,901,336 1,074,514,545 719,901,336 Accrued Expenses (Note 19) 733,106,591 654,816,395 706,156,177 640,011,869 Deposit for Future Stock Subscription (Note 21) − 3,000,000,000 − 3,000,000,000 Other Liabilities (Note 19) 2,686,646,578 2,155,068,336 2,599,250,321 2,138,931,063 114,026,236,666 108,973,084,117 111,941,813,432 107,334,697,429 Equity Common stock (Note 21) 15,000,000,000 12,000,000,000 15,000,000,000 12,000,000,000 Surplus 1,672,850,201 1,427,893,601 1,672,850,201 1,427,893,601 Surplus reserves (Notes 21 and 27) 549,796,552 105,326,644 549,796,552 105,326,644 Remeasurement gains (loss) on retirement plan (Note 22) (39,171,510) 357,997 (35,205,102) 1,620,199 Remeasurement gains (loss) on subsidiary’s retirement plan (Note 22) − − (3,966,408) (1,262,202) Net unrealized losses on financial assets at FVOCI (Note 7) (12,124,355) (1,036,006,819) (12,124,355) (1,036,006,819) Cumulative translation adjustments (110,876,520) (120,017,631) (110,876,520) (120,017,631) 17,060,474,368 12,377,553,792 17,060,474,368 12,377,553,792 P=131,086,711,034 P=121,350,637,909 P=129,002,287,800 P=119,712,251,221

See accompanying Notes to Financial Statements

*SGVFSM000714* - 89 -

ROBINSONS BANK CORPORATION AND SUBSIDIARY STATEMENTS OF INCOME

Consolidated Parent Company Years Ended December 31 2019 2018 2017 2019 2018 2017 INTEREST INCOME ON Loans and receivables (Note 8) P=6,060,079,146 P=4,566,977,784 P=3,192,169,144 P=5,729,777,274 P=4,370,912,893 P=2,996,687,701 Investment securities (Note 7) 1,041,551,648 1,071,783,404 721,960,970 1,033,201,341 1,063,545,546 715,419,616 Due from Bangko Sentral ng Pilipinas and other banks (Note 6) 32,594,850 40,306,233 60,018,293 22,261,229 22,294,497 41,018,763 Interbank loans receivable/Securities purchased under resale agreements (Note 6) 64,535,367 82,553,113 135,331,909 58,732,167 77,478,252 130,855,296 7,198,761,011 5,761,620,534 4,109,480,316 6,843,972,011 5,534,231,188 3,883,981,376 INTEREST EXPENSE ON Deposit liabilities (Notes 15 and 26) 2,482,399,046 2,071,202,108 1,125,520,351 2,455,641,962 2,052,180,171 1,097,317,673 Bills payable (Note 18) 285,373,713 115,700,011 1,307,247 285,373,713 115,700,011 1,307,247 Bonds payable (Note 17) 141,116,925 ‒ ‒ 141,116,925 ‒ ‒ Lease liability (Note 2) 51,627,485 ‒ ‒ 47,292,619 ‒ ‒ 2,960,517,169 2,186,902,119 1,126,827,598 2,929,425,219 2,167,880,182 1,098,624,920 NET INTEREST INCOME 4,238,243,842 3,574,718,415 2,982,652,718 3,914,546,792 3,366,351,006 2,785,356,456 Service fees and commission income (Note 24) 462,302,868 352,463,888 181,649,418 460,630,646 351,037,512 179,402,682 Service fees and commission expense (Note 24) 192,232,154 89,323,918 56,886,421 183,879,745 84,897,404 52,595,251 NET SERVICE FEE AND COMMISSION INCOME 270,070,714 263,139,970 124,762,997 276,750,901 266,140,108 126,807,431 Trading and securities gains-net (Note 7) 397,719,878 18,298,145 184,893,310 397,719,878 18,298,145 184,893,310 Gains on sale of investment securities at amortized cost (Note 7) 62,879,198 ‒ ‒ 62,879,198 ‒ ‒ Foreign exchange gains – net 50,966,589 174,406,811 93,514,194 50,966,589 174,406,811 93,494,651 Miscellaneous (Note 24) (24,592,824) 75,992,748 75,192,739 (64,392,723) 61,279,486 43,891,579 TOTAL OPERATING INCOME 4,995,287,397 4,106,556,089 3,461,015,958 4,638,470,635 3,886,475,556 3,234,443,427 OPERATING EXPENSES Compensation and fringe benefits (Notes 22 and 26) 1,301,011,664 1,101,098,121 929,940,096 1,182,876,007 1,025,213,290 863,103,600 Depreciation and amortization (Note 10) 635,540,354 355,087,357 326,136,774 598,557,494 331,409,645 299,726,034 Taxes and licenses (Note 25) 580,554,943 512,286,383 279,175,060 554,997,936 497,083,053 259,222,457 Security, messengerial and janitorial 285,094,136 244,807,942 261,293,265 238,237,964 226,662,876 246,836,400 Occupancy and equipment-related costs (Notes 23 and 26) 250,544,929 475,362,477 436,541,543 228,051,360 453,623,377 418,103,184 Information technology 169,702,015 153,748,905 100,170,763 159,445,700 146,018,436 94,254,647 Communication 118,926,128 104,888,217 79,940,307 114,073,623 102,830,377 77,950,824 Insurance 173,895,313 235,188,313 194,111,901 167,358,089 229,448,403 187,223,024 Entertainment, amusement, and recreation (Note 25) 96,414,705 90,280,647 84,527,148 94,335,734 88,101,616 82,887,548 Management and professional fees 29,872,898 38,575,286 15,119,283 27,875,761 36,713,777 13,066,287 Provision for credit and impairment losses (Note 14) 127,472,603 100,133,645 241,076,252 126,876,761 99,094,504 234,917,540 Miscellaneous (Note 24) 445,231,229 252,502,146 171,939,745 413,498,437 226,579,076 151,923,269 TOTAL OPERATING EXPENSES 4,214,260,917 3,663,959,439 3,119,972,137 3,906,184,866 3,462,778,430 2,929,214,814 INCOME BEFORE SHARE IN NET INCOME OF A SUBSIDIARY 781,026,480 442,596,650 341,043,821 732,285,769 423,697,126 305,228,613 SHARE IN NET INCOME OF A SUBSIDIARY ‒ ‒ ‒ 125,666,513 9,872,906 28,183,574 INCOME BEFORE INCOME TAX 781,026,480 442,596,650 341,043,821 857,952,282 433,570,032 333,412,187 PROVISION FOR INCOME TAX (Note 25) 61,599,972 125,482,848 33,656,439 138,525,774 116,456,231 26,024,805 NET INCOME P=719,426,508 P=317,113,802 P=307,387,382 P=719,426,508 P=317,113,801 P=307,387,382

See accompanying Notes to Financial Statements. *SGVFSM000714* - 90 -

ROBINSONS BANK CO RPORATION AND SUBSIDIARY STATEMENTS OF COMPREHENSIVE INCOME

Consolidated Parent Company Years Ended December 31 2019 2018 2017 2019 2018 2017

NET INCOME P=719,426,508 P=317,113,802 P=307,387,382 P=719,426,508 P=317,113,801 P=307,387,382

OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR, NET OF TAX Item that may not be reclassified to profit or loss Change in remeasurement gains (losses) on retirement plan net of tax (Note 22) (39,529,507) 13,825,054 (3,108,448) (34,300,897) 13,344,985 (3,809,040) Change in remeasurement gains (losses) on subsidiary’s retirement plan net of tax (Note 22) − − − (5,228,610) 480,069 700,592 Change in net unrealized gains (losses) on equity financial assets at fair value through other comprehensive income (Note 7) 11,007,376 (6,642,436) ‒ 11,007,376 (6,642,436) ‒ Items that may be reclassified to profit or loss Change in allowance (losses) on debt financial assets at fair value through other comprehensive income (Note 7) 2,070,586 ‒ ‒ 2,070,586 ‒ ‒ Change in net unrealized gains (losses) on debt financial assets at fair value through other comprehensive income (Note 7) 1,010,804,502 (942,796,440) ‒ 1,010,804,502 (942,796,440) ‒ Change in net unrealized gains (losses) on AFS investments (Note 7) − ‒ (188,401,724) − ‒ (188,401,724) Translation adjustments 9,141,111 (17,420,981) 9,239,981 9,141,111 (17,420,981) 9,239,981 993,494,068 (953,034,803) (182,270,191) 993,494,068 (953,034,803) (182,270,191)

TOTAL COMPREHENSIVE INCOME (LOSS) P=1,712,920,576 (P=635,921,001) P=125,117,191 P=1,712,920,576 (P=635,921,002) P=125,117,191

See accompanying Notes to Financial Statements.

*SGVFSM000714* - 91 -

ROBINSONS BANK CORPORATION AND SUBSIDIARY STATEMENTS OF CHANGES IN EQUITY

Consolidated Net Unrealized Losses on Net Unrealized Financial Assets Remeasurement Losses on At Fair Value Surplus Gains (Losses) on Available-for-Sale Through Other Cumulative Common Stock Surplus Reserves Retirement Plan Investments Comprehensive Translation (Note 21) (Note 21) (Note 21 and 27) (Note 22) (Note 9) Income Adjustments Total Balance at January 1, 2019 P=12,000,000,000 P=1,427,893,601 P=105,326,644 P=357,997 P=− (P=1,036,006,819) (P=120,017,631) P=12,377,553,792 Total comprehensive income (loss) for the year − 719,426,508 − (39,529,507) − 1,023,882,464 9,141,111 1,712,920,576

Conversion of deposit for future stock subscription to equity (Note 21) 3,000,000,000 (30,000,000) − − − − − 2,970,000,000 Appropriations for expected credit losses (Note 21) − (444,469,908) 444,469,908 − − − − − Balance at December 31, 2019 P=15,000,000,000 P=1,672,850,201 P=549,796,552 (P=39,171,510) P=− (P=12,124,355) (P=110,876,520) P=17,060,474,368

Balance at January 1, 2018 P=12,000,000,000 P=1,210,117,731 P=5,988,712 (P=13,467,057) P=− (P=86,567,943) (P=102,596,650) P=13,013,474,793 Total comprehensive income (loss) for the year − 317,113,802 − 13,825,054 − (949,438,876) (17,420,981) (635,921,001) Appropriation for expected credit losses (Note 21) − (98,721,038) 98,721,038 − − − − − Appropriation for trust reserves (Notes 21 and 27) − (616,894) 616,894 − − − − − Balance at December 31, 2018 P=12,000,000,000 P=1,427,893,601 P=105,326,644 P=357,997 P=− (P=1,036,006,819) (P=120,017,631) P=12,377,553,792

Balance at January 1, 2017 P=12,000,000,000 P=816,363,435 P=112,303,137 (P=10,358,609) (P=838,255,143) P=− (P=111,836,631) P=11,968,216,189 Total comprehensive income (loss) for the year − 307,387,382 − (3,108,448) (188,401,724) − 9,239,981 125,117,191 Reversal of appropriation for self-insurance (Note 21) − 106,952,397 (106,952,397) − − − − − Appropriation for trust reserves (Notes 21 and 27) − (637,972) 637,972 − − − − − Balance at December 31, 2017 P=12,000,000,000 P=1,230,065,242 P=5,988,712 (P=13,467,057) (P=1,026,656,867) P=− (P=102,596,650) P=12,093,333,380

See accompanying Notes to Financial Statements

*SGVFSM000714* - 92 -

Parent Company Net Unrealized Losses on Remeasurement Net Unrealized Financial Assets Remeasurement Gains (Losses) on Losses on At Fair Value Surplus Gains (Losses) on Subsidiary’sAvailable-for-Sale Through Other Cumulative Common Stock Surplus (Deficit) Reserves Retirement Plan Retirement Plan Investments Comprehensive Translation (Note 21) (Note 21) (Note 21 and 27) (Note 22) (Note 22) (Note 7) Income Adjustments Total Balance at January 1, 2019 P=12,000,000,000 P=1,427,893,601 P=105,326,644 (P=904,205) P=1,262,202 P=− (P=1,036,006,819) (P=120,017,631) P=12,377,553,792 Total comprehensive income for the year − 719,426,508 − (34,300,897) (5,228,610) − 1,023,882,464 9,141,111 1,712,920,576

Conversion of deposit for future stock subscription to equity (Note 21) 3,000,000,000 (30,000,000) − − − − − − 2,970,000,000 Appropriations for expected credit losses (Note 21) − (444,469,908) 444,469,908 − − − − − − Balance at December 31, 2019 P=15,000,000,000 P=1,672,850,201 P=549,796,552 (P=35,205,102) (P=3,966,408) P=− (P=12,124,355) (P=110,876,520) P=17,060,474,368

Balance at January 1, 2018 P=12,000,000,000 P=1,210,117,731 P=5,988,712 (P=14,249,190) P=782,133 P=− (P=86,567,943) (P=102,596,650) P=13,013,474,793 Total comprehensive income (loss) for the year − 317,113,802 − 13,344,985 480,069 − (949,438,876) (17,420,981) (635,921,001) Appropriation for expected credit losses (Note 21) − (98,721,038) 98,721,038 − − − − − − Appropriation for trust reserves (Notes 21 and 27) − (616,894) 616,894 − − − − − − Balance at December 31, 2018 P=12,000,000,000 P=1,427,893,601 P=105,326,644 (P=904,205) P=1,262,202 P=− (P=1,036,006,819) (P=120,017,631) P=12,377,553,792

Balance at January 1, 2017 P=12,000,000,000 P=816,363,435 P=112,303,137 (P=10,440,150) P=81,541 (P=838,255,143) P=− (P=111,836,631) 11,968,216,189 Total comprehensive income (loss) for the period − 307,387,382 − (3,809,040) 700,592 (188,401,724) − 9,239,981 125,117,191 Reversal of appropriation for self- insurance (Note 21) − 106,952,397 (106,952,397) − − − − − − Appropriation for trust reserves (Notes 21 and 27) − (637,972) 637,972 − − − − − − Balance at December 31, 2017 P=12,000,000,000 P=1,230,065,242 P=5,988,712 (P=14,249,190) P=782,133 (P=1,026,656,867) P=− (P=102,596,650) P=12,093,333,380

See accompanying Notes to Financial Statements.

*SGVFSM000714* - 93 -

ROBINSONS BANK CORPORATION AND SUBSIDIARY STATEMENTS OF CASH FLOWS

Consolidated Parent Company Years Ended December 31 2019 2018 2017 2019 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=781,026,480 P=442,596,650 P=341,043,821 P=857,952,282 P=433,570,033 P=333,412,187 Adjustments for: Depreciation and amortization (Note 10) 635,540,354 355,087,357 326,136,774 598,557,494 331,409,645 299,726,034 Provision for (recovery from) credit and impairment losses (Notes 7 and 14) 127,472,603 100,133,645 241,076,252 126,876,761 99,094,504 234,917,540 Amortization of premium or discount on financial assets and liabilities 19,131,555 9,174,586 − 19,131,555 9,174,586 − Gain on sale of financial assets at FVOCI (Note 7) (331,145,509) (15,217,295) − (331,145,509) (15,217,295) − Gain on sale of investment securities at amortized cost (Note 7) (62,879,198) − − (62,879,198) − − Gain on sale of available-for-sale investments (Note 7) − − (147,619,819) − − (147,619,819) Gain on disposal of held-to-maturity investment (Note 7) − − (8,928,275) − − (8,928,275) (Gain)/ loss on sale of investment properties (Note 24) (17,356,519) 29,285,940 (5,351,114) (5,144,094) 30,677,975 (178,689) Loss on sale of repossessed chattels (Note 24) 102,709,347 8,116,298 28,274,026 102,752,315 8,116,298 28,301,193 Gain on sale of property and equipment (Notes 10 and 24) (7,251,188) (2,442,750) (16,475,650) (6,490,889) (2,434,254) (1,756,476) Gain on initial recognition of investment properties (Note 24) (33,889,780) (4,152,421) (33,889,035) (21,471,508) (47,181) (31,526,513) Loss on initial recognition of repossessed chattels (Note 24) 81,969,450 − 18,896,886 81,969,450 − 18,786,884 Retirement expense (Note 22) 67,805,248 34,909,418 27,452,904 63,397,367 32,929,041 25,448,232 Interest on lease liability (Note 23) 51,627,485 − − 47,292,619 − − Net unrealized (gain)/loss on fair value of financial assets at fair value through profit or loss and derivative assets (Note 7) (1,196,873) 137,387 5,904,377 (1,196,873) 137,387 1,190,954 Net unrealized (gain)/loss on fair value of financial assets at fair value through profit or loss and derivative liability (Note 7) 462,908 336,698 1,190,954 462,908 336,698 5,904,377 Share in net income (loss) of a subsidiary − − − (125,666,513) (9,872,906) (28,183,574) Changes in operating assets and liabilities: Decrease (increase) in: Financial assets at fair value through profit or loss 4,467,134 (38,436,809) (46,770,100) 4,467,134 (8,310,660) (46,770,100) Interbank Loans Receivable/Securities Purchased under Resale Agreements 23,500,000 250,000 72,250,000 23,500,000 250,000 72,250,000 Loans and receivables (13,162,413,820) (11,260,911,630) (19,035,339,274) (12,602,106,707) (11,227,713,859) (19,214,461,754) Other assets (135,146,899) (121,009,935) 236,081,554 (135,577,310) (123,351,633) 501,159,458 Increase (decrease) in: Deposit liabilities 2,595,234,110 3,261,120,617 26,684,487,773 2,232,602,436 3,450,246,809 26,639,369,587 Manager’s checks 354,613,209 (4,145,822) 319,866,850 354,613,209 (4,145,822) 319,866,850 Accrued expenses and other liabilities (194,812,825) 676,223,831 135,201,841 (216,585,038) 670,713,669 135,933,546 Net cash provided by (used in) operations (9,100,532,728) (6,528,944,235) 9,143,490,745 (8,994,688,109) (6,324,436,965) 9,136,841,642 Income taxes paid (256,312,142) (210,492,705.00) (158,394,368) (244,400,553) (203,204,553.00) (151,079,224) Contributions paid on retirement plan − (2,160,408) − − − − Net cash provided by (used in) operating activities (9,356,844,870) (6,741,597,348) 8,985,096,377 (9,239,088,662) (6,527,641,518) 8,985,762,418 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Financial assets at FVOCI (19,958,612,995) (8,282,281,155) − (19,958,612,995) (8,312,481,155) − Investment securities at amortized cost (Note 7) (129,009,307) (796,741,357) − (129,089,188) (796,741,357) − Available-for-sale investments − − (16,324,976,921) − − (16,324,976,921) Held-to-maturity investments (Note 7) − − (14,828,885) − − (14,828,885) Software costs (Note 13) (45,775,767) (111,276,126) (53,850,078) (44,666,874) (109,114,062) (53,650,078) (Forward) *SGVFSM000714* - 94 -

Consolidated Parent Company Years Ended December 31 2019 2018 2017 2019 2018 2017 Property and equipment (Notes 10 and 30) (P=215,147,471) (P=257,860,347) (P=229,685,485) (P=181,834,691) (P=207,556,987) (P=215,767,541) Branch license (Note 12) (46,589) (817,441) (1,814,157) (46,589) (617,441) (1,814,157) Proceeds from sale of: Financial assets at FVOCI 20,454,895,615 2,474,454,411 − 20,454,895,615 2,474,454,411 − Investment securities at amortized cost 1,174,374,755 − − 1,174,374,755 − − Available-for-sale investments − − 11,740,094,107 − − 11,940,557,816 Held-to-maturity investments (Note 7) − − 308,928,275 − − 308,928,275 Property and equipment 16,078,471 23,135,259 34,541,117 13,987,306 21,153,844 6,068,287 Investment properties 52,526,662 19,175,113 198,073,740 19,038,051 7,055,893 166,855,071 Repossessed Chattels 261,277,560 199,594,978 260,850,561 199,465,034 Proceeds from maturity of: Financial assets at FVOCI − − − − − − Available-for-sale investments − − 132,363,500 − − 132,363,500 Held-to-maturity investments (Note 7) − − 225,372,553 − − 10,000,000 Investment securities at amortized cost (Note 7) 257,010,000 171,000,000 − 257,010,000 171,000,000 − Net cash provided by (used in) investing activities 1,867,570,934 (6,561,616,665) (3,985,782,234) 1,865,905,951 (6,553,381,820) (4,046,264,633)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from deposit for future stock subscription (Note 21) − 3,000,000,000 − − 3,000,000,000 − Proceeds from bonds payable (Note 17) 9,874,305,237 − − 9,874,305,237 − − Proceeds from bills payable (Note 18) 400,000,000 7,435,000,000 − 400,000,000 7,435,000,000 − Proceeds from issuance of LTNCD (Note 15) − 1,758,415,048 − − 1,758,415,048 − Payments of bills payable (Note 18) (5,800,000,000) − − (5,800,000,000) − − Payments of lease liability (Note 23) (279,375,984) (271,088,889) Payments for issuance of common stock (30,000,000) − − (30,000,000) − − Net cash provided by financing activities 4,164,929,253 12,193,415,048 − 4,173,216,348 12,193,415,048 −

EFFECTS OF FOREIGN EXCHANGE RATE CHANGES 9,141,111 (17,420,981) 9,239,981 9,141,111 (17,420,981) 9,239,981

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,315,203,572) (1,127,219,946) 5,008,554,124 (3,190,825,252) (905,029,271) 4,948,737,766

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR Cash and other cash items 2,370,171,189 1,639,300,590 1,684,403,861 2,300,112,472 1,597,057,290 1,653,720,370 Due from Bangko Sentral ng Pilipinas 16,108,207,737 16,017,675,837 13,415,517,416 15,586,846,184 15,621,432,509 12,722,258,187 Due from other banks 3,010,162,780 3,820,050,486 4,090,364,784 2,944,176,334 3,749,409,945 3,995,280,423 Interbank loans receivable and Securities purchased under resale agreements (Note 6) 2,164,910,000 3,303,644,739 581,831,467 2,076,910,000 2,845,174,517 493,077,515 23,653,451,706 24,780,671,652 19,772,117,528 22,908,044,990 23,813,074,261 18,864,336,495

CASH AND CASH EQUIVALENTS AT END OF YEAR Cash and other cash items 3,249,359,133 2,370,171,189 1,639,300,590 3,176,490,713 2,300,112,472 1,597,057,290 Due from Bangko Sentral ng Pilipinas 12,216,191,774 16,108,207,737 16,017,675,837 11,824,524,807 15,586,846,184 15,621,432,509 Due from other banks 2,463,991,767 3,010,162,780 3,820,050,486 2,374,076,786 2,944,176,334 3,749,409,945 Interbank loans receivable and Securities purchased under resale agreements (Note 6) 2,408,705,460 2,164,910,000 3,303,644,739 2,342,127,432 2,076,910,000 2,845,174,517 P=20,338,248,134 P=23,653,451,706 P=24,780,671,652 P=19,717,219,738 P=22,908,044,990 P=23,813,074,261

OPERATIONAL CASH FLOWS FROM INTEREST Interest received P=7,071,263,588 P=5,601,755,743 P=3,991,914,367 P=6,715,151,747 P=5,372,979,425 P=3,706,854,801 Interest paid 2,941,451,067 2,133,193,817 1,073,142,567 2,914,000,598 2,114,253,601 1,044,999,479

See accompanying Notes to Financial Statements

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ROBINSONS BANK CORPORATION AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

Robinsons Bank Corporation (the Parent Company or the Bank) was domiciled and incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on April 28, 1966 and acquired its license from Bangko Sentral ng Pilipinas (BSP) to operate as a commercial bank on March 1, 2002. On March 21, 2013, the SEC granted the license extending the Bank’s corporate life for another fifty (50) years.

The registered address and principal place of business of the Parent Company is at 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City.

The Parent Company is 60.00% and 40.00% owned by JG Summit Capital Services Corp. (JGSCSC) and Robinsons Retail Holdings, Inc. (RRHI), respectively. The ultimate parent company of the Bank is JG Summit Holdings, Inc. On June 16, 2017, the Parent Company issued P=4.18 billion long-term negotiable certificate of deposits (LTNCD) carried at a tenor of 5.5 years with a coupon of 4.125%. The issuance of LTNCD represents the Parent Company’s initial entry into the debt capital market. On July 6, 2018, the Parent Company issued additional LTNCD amounting to =1.78P billion with nominal interest rate of 4.875% and effective interest rate (EIR) of 5.15% payable every quarter which will mature on January 6, 2024. On August 13, 2019, the Parent Company issued P=5.00 billion worth of Peso Corporate Bond carried at a tenor of 2.0 years with a coupon of 5.125%. Also, on November 14, 2019, the Parent Company issued P=5.00 billion worth of Corporate Bonds carried at a tenor of 2.0 years tenor with a coupon rate of 4.300%. The issuances were listed in the Philippine Dealing and Exchange Corporation (PDEx).

In December 2012, the Parent Company acquired 99.65% controlling interest in Legazpi Savings Bank, Inc. (LSB).

LSB was incorporated and registered with the SEC on May 8, 1976 and acquired license from the BSP to operate as a thrift bank. LSB’s registered address and principal place of business is at 738 Building, Rizal Street, Barangay Sagpon, Old Albay, Legazpi City. LSB operates and provides its services through a network of eighteen (18) banking units including head office and a main branch in the area of Albay.

The Parent Company and its subsidiary (the Group) is engaged in commercial and thrift banking, respectively, whose principal activities include deposit-taking, lending, treasury, foreign exchange dealing and fund transfers or remittance servicing.

2. Summary of Significant Accounting Policies

Basis of Preparation The accompanying financial statements of the Group and of the Parent Company have been prepared on a historical cost basis except for financial assets at fair value through profit or loss (FVTPL) and financial assets at fair value through other comprehensive income (FVOCI) which are measured at fair value.

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The financial statements of the Parent Company reflect the accounts of the Regular Banking Unit (RBU) and the Foreign Currency Deposit Unit (FCDU). The functional currency of RBU and FCDU is Philippine Peso (PHP) and United States Dollar (USD), respectively. For financial reporting purposes, FCDU accounts and foreign currency-denominated accounts in the RBU are translated into their equivalents in PHP (see accounting policy on Foreign Currency Translation). The financial statements individually prepared for these units are combined and inter-unit accounts and transactions are eliminated.

The financial statements are presented in PHP, and all amounts are rounded to the nearest peso (P=), except when otherwise indicated.

Statement of Compliance The financial statements of the Group and of the Parent Company have been prepared in compliance with Philippine Financial Reporting Standards (PFRSs).

Presentation of Financial Statements The Group and the Parent Company present its statements of financial position broadly in the order of liquidity. An analysis regarding recovery or settlement within twelve (12) months after the statement of financial position date (current) and more than twelve (12) months after the statement of financial position date (non-current) is presented in Note 20.

The Bank assesses that it has a currently enforceable right of offset if the right is not contingent on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Bank and all of the counterparties. Income and expense are not offset in the statement of income unless required or permitted by any accounting standard or interpretation, and as specifically disclosed in the accounting policies of the Group and of the Parent Company. This is not generally the case with master-netting agreements, where the related assets and liabilities are presented gross in the statement of financial position.

Basis of Consolidation The consolidated financial statements of the Group are prepared for the same reporting period as the subsidiary, using consistent accounting policies.

All intra-group balances, transactions, income and expenses and profit and losses resulting from intra- group transactions are eliminated in full in the consolidation.

A subsidiary is fully consolidated from the date on which control is transferred to the Parent Company. Control is achieved where the Parent Company is exposed, or has the rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of a subsidiary ceases when control is transferred out of the Parent Company. The results of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate.

When a change in ownership interest of a subsidiary occurs which results in a loss of control over the subsidiary, the Parent Company: · derecognizes the related assets (including goodwill) and liabilities of the subsidiary; · derecognizes the carrying amount of any non-controlling interests; *SGVFSM000714* - 97 -

· derecognizes the related other comprehensive income (OCI) recorded in equity and recycles the same to statement of income or surplus; · recognizes the fair value of the consideration received; · recognizes the fair value of any investment retained; and · recognizes any surplus or deficit in statement of income.

Changes in Accounting Policies and Disclosures

The accounting policies adopted are consistent with those of the previous financial year, except that the Group has adopted the following new accounting pronouncements starting January 1, 2019. Except as otherwise indicated, these changes in the accounting policies did not have any significant impact on the financial position or performance of the Group:

· Amendments to PAS 19, Plan Amendment, Curtailment or Settlement · Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures · Amendments to PFRS 9, Prepayment Features with Negative Compensation Annual Improvements 2015-2017 Cycle (issued in December 2017) Ø Amendments to PFRS 3 and PFRS 11 - Previously held interest in a joint operation Ø Amendments to PAS 12, Income tax consequences of payments on financial instruments classified as equity Ø Amendments to PAS 23, Borrowing costs eligible for capitalization

Standard that has been adopted and that is deemed to have significant impact on the financial statements or performance of the Group is described below:

PFRS 16, Leases PFRS 16 supersedes PAS 17, Leases, Philippine Interpretation IFRIC 4, Determining whether an Arrangement contains a Lease, Philippine Interpretation SIC-15, Operating Leases Incentive and Philippine Interpretation SIC-27, Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases balance sheet.

Lessor accounting under PFRS 16 is substantially unchanged from PAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in PAS 17. Therefore, PFRS 16 has no material impact for leases where the Group is the lessor.

The Group adopted PFRS 16 using the modified retrospective approach with the date of initial application at January 1, 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Group did not restate comparative figures and recognized a lease liability and right-of-use assets at the date of initial application for lease previously classified as an operating lease applying PAS 17. The Group measured the lease liability at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. The Group measured the right-of-use assets at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statement of financial position immediately before the date of initial application.

Accordingly, the adoption of PFRS 16 has no impact to the Group’s ‘Surplus’ as of January 1, 2019 and the 2018 comparative financial statements are not comparable to the information presented for 2019.

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The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’) and lease contracts for which the underlying asset is of low value (‘low-value assets’), except for office/building, parking and ATM spaces).

The effects of adopting PFRS 16 on the consolidated and parent company statements of financial position as at January 1, 2019 follow:

Increase/(Decrease) Parent Consolidated Company ASSETS Right-of-use (ROU) of assets* P=635,203,495 =587,515,373 P Prepaid expenses - rent** (20,095,831) (14,038,343) 615,107,664 573,477,030 LIABILITIES Lease liability**** 655,550,471 611,029,813 Accrued expenses - rent*** (40,442,807) (37,552,783) P=615,107,664 P=573,477,030 * Presented under Property and equipment ** Included in Prepaid expenses under other assets *** Included in Accrued expenses **** Presented under Other liabilities

The lease liability as at January 1, 2019 can be reconciled to the operating lease commitments as of December 31, 2018, as follows:

Consolidated Parent Company Operating lease commitments as at December 31, 2018 P=776,379,785 P=714,032,495 Add: Payments in optional extension periods not recognized at December 31, 2018 487,560 ─ Less: Commitments relating to short term leases (29,073,056) (27,351,195) Total gross lease payables as of January 1, 2019 747,794,289 686,681,300 Weighted average incremental borrowing rate at January 1, 2019 7.27% 7.19% Lease liabilities recognized at January 1, 2019 P=655,550,471 P=611,029,813

Amounts recognized in the consolidated statement of financial position and statement of income Set out below, are the carrying amounts of the Group’s and Parent Company’s right-of-use assets and lease liabilities and the movements during the period:

Right-of-use assets Lease Liability under under ‘Property and ‘Other liabilities’ Consolidated equipment’ (Note 10) (Note 19) As at January 1, 2019 =635,203,495P P=655,550,471 Additions 292,205,132 288,537,011 Depreciation (248,849,807) − Interest expense − 51,627,485 Payments − (275,707,863) As at December 31, 2019 P=678,558,820 P=720,007,104

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Right-of-use assets Lease Liability under under ‘Property and ‘Other liabilities’ Parent Company equipment’ (Note 10) (Note 19) As at January 1, 2019 =P587,515,373 P=611,029,813 Additions 280,341,794 276,816,221 Depreciation (239,507,076) − Interest expense − 47,292,619 Payments − (267,563,316) As at December 31, 2019 P=628,350,091 P=667,575,337

Set out below are the amounts recognized in the consolidated and parent company statement of income:

December 31, 2019 Parent Consolidated Company Depreciation expense on right-of use assets P=248,849,807 ₱239,507,076 Interest expense on lease liabilities 51,627,485 47,292,619 Rent expense - short-term leases 41,195,803 39,372,841 Rent expense - low value assets 8,556,067 44,698 Rent expense - others 60,240,393 60,240,393 Total amounts recognized in statement of income P=410,469,555 P=386,457,627

Philippine Interpretation IFRIC 23, Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of PAS 12, Income Taxes. It does not apply to taxes or levies outside the scope of PAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following: · Whether an entity considers uncertain tax treatments separately · The assumptions an entity makes about the examination of tax treatments by taxation authorities · How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates · How an entity considers changes in facts and circumstances

The Group has to determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty needs to be followed.

Upon adoption of the Interpretation, the Group considered whether it has any uncertain tax positions. The Group determined that, based on its tax compliance, it is probable that its tax treatments (including those for the subsidiaries) will be accepted by the taxation authorities. The Interpretation did not have an impact on the financial statements of the Group.

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Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement The amendments to PAS 19 address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments specify that when a plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to: · Determine current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using the actuarial assumptions used to remeasure the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event Determine net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event; and the discount rate used to remeasure that net defined benefit liability (asset).

The amendments also clarify that an entity first determines any past service cost, or a gain or loss on settlement, without considering the effect of the asset ceiling. This amount is recognized in profit or loss. An entity then determines the effect of the asset ceiling after the plan amendment, curtailment or settlement. Any change in that effect, excluding amounts included in the net interest, is recognized in other comprehensive income. In 2019, the retirement plan of the Group was amended thereby increasing the plan benefit of employees for every year of credited service based on the final daily basic salary as disclosed in Note 22. The Group considered the amendments to PAS 19 in the determination of current service cost, past service cost and interest cost for the year ended 2019.

Significant Accounting Policies

Fair Value Measurement For measurement and disclosure purposes, the Group determines the fair value of an asset or a liability at initial measurement date or at each statement of financial position date. Fair value is the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: · In the principal market for the asset or liability; or · In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

If the asset or liability measured at fair value has a bid and ask price, the price within the bid-ask spread that is the most representative of fair value in the circumstances shall be used to measure fair value, regardless of where the input is categorized within the fair value hierarchy.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. *SGVFSM000714* - 101 -

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole:

· Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities; · Level 2 – Valuation techniques for which the lowest level of input that is significant to the fair value measurement is directly or indirectly observable · Level 3 – Valuation techniques for which the lowest level input that is significant to the measurement is unobservable.

External appraisers are involved for valuation of significant non-financial assets such as investment properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

For purposes of the fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy (see Note 5).

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole at the end of each statement of financial position).

Foreign Currency Translation The consolidated financial statements are presented in Philippine peso (PHP), which is the Parent Company’s functional currency.

Transactions and balances The books of accounts of the RBU are maintained in PHP, while those of the FCDU are maintained in USD. For financial reporting purposes, FCDU accounts and the foreign currency-denominated monetary assets and liabilities in the RBU are translated into their PHP equivalents based on the Bankers Association of the Philippines (BAP) closing rate prevailing at the statement of financial position date and for, foreign currency-denominated income and expenses based on the spot exchange rate at the date of the transaction. Foreign exchange differences arising from restatements of foreign currency-denominated assets and liabilities in the RBU are credited to or charged against the statement of income under ‘Foreign exchange gain (loss) - net’ in the year in which the rates change. Foreign exchange differences arising on translation of FCDU accounts to peso are taken to other comprehensive income (OCI) under ‘Translation adjustments’.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates as at the date when the fair value is determined.

Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash and other cash items, amounts due from BSP and other banks, interbank loans receivable and Securities Purchased Under Resale Agreements (SPURA) with original maturities of three (3) months or less from dates of placements and that are subject to insignificant risk of changes in value. Due from BSP includes the statutory reserves required by the BSP which the Group considers as cash equivalents wherein withdrawals can be made to meet the Group’s cash requirements as allowed by the BSP.

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Repurchase and Reverse Repurchase Agreements Securities sold under agreements to repurchase at a specified future date (‘repos’) are not derecognized from the statement of financial position. The corresponding cash received, including accrued interest, is recognized in the statement of financial position as ‘Securities sold under repurchase agreements (SSURA)’, reflecting the economic substance of such transaction.

Conversely, securities purchased under agreements to resell at a specified future date (‘reverse repos’) are not recognized in the statement of financial position. The corresponding cash paid, including accrued interest, is recognized in the statement of financial position as SPURA, and is considered a loan to the counterparty.

The difference between the purchase price and resale price is treated as interest income and is accrued over the life of the agreement using the effective interest rate (EIR) method.

Financial Instruments - Initial Recognition and Subsequent Measurement Date of recognition Purchases or sales of financial instruments that require delivery of assets within the time frame established by regulation or convention in the market are recognized on the settlement date. Settlement date accounting refers to (a) recognition of an asset on the day it is received by the Group, and (b) the derecognition of an asset and recognition of any gain or loss on disposal on the day that it is delivered by the Group. Deposits, amounts due from banks and customers and loans are recognized when cash is received by the Group or advanced to the borrowers. Derivatives are recognized on a trade date - the date that the Group becomes a party to the contractual provisions of the instrument. Trade date accounting refers to (a) the recognition of an asset to be received and the liability to pay for it on the trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

Initial recognition of financial instruments All financial instruments are initially recognized at fair value. Except for financial assets and financial liabilities at FVTPL, the initial measurement of financial instruments includes transaction costs.

‘Day 1’ difference Where the transaction price in a non-active market is different from the fair value from other observable current market transactions in the same instrument or computed based on valuation technique whose variables include only data from observable markets, the Group recognizes the difference between the transaction price and the fair value (a ‘Day 1’ difference) in the statement of income unless it qualifies for recognition as some other type of asset or liability. In cases where fair value is determined using data which are not observable from the market, the difference between the transaction price and the model value is only recognized in the statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of recognizing the amount of ‘Day 1’ difference.

Classification and Measurement of Financial Assets

Classification and measurement The classification and measurement of financial assets is driven by the entity’s contractual cash flow characteristics of the financial assets and business model for managing the financial assets.

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As part of its classification process, the Group assesses the contractual terms of financial assets to identify whether they meet the ‘solely payments of principal and interest’ (SPPI) test. ‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (e.g. if there are repayments of principal or amortization of the premium or discount).

Business model assessment The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Group’s business model is not assessed on an instrument-by-instrument basis, but a higher level of aggregated portfolios and is based on observable factors such as:

· How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity's key management personnel · The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed · The expected frequency, value and timing of sales are also important aspects of the Group’s assessment

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stresscase’ scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Group’s original expectations, the Group does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.

The Group’s measurement categories are described below:

Investment Securities at Amortized Cost Financial assets are measured at amortized cost if both of the following conditions are met: · the asset is held within the Group’s business model whose objective is to hold financial assets in order to collect contractual cash flows; and, · the contractual terms of the instrument give rise, on specified dates, to cash flows that are SPPI on the principal amount outstanding.

Financial assets meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortized cost using the effective interest method, less any impairment in value.

As of December 31, 2019, the Group’s investment securities at amortized cost are presented in the statement of financial position as ‘Due from BSP’, ‘Due from other banks’, ‘Interbank loans receivable and SPURA’, ‘Investment securities at amortized cost’, ‘Loans and receivables’, ‘Accrued interest receivables’ and certain accounts under ‘Other assets’.

The Group may irrevocably elect at initial recognition to classify a financial asset that meets the amortized cost criteria above as at FVTPL if that designation eliminates or significantly reduces an accounting mismatch had the financial asset been measured at amortized cost.

Financial Assets at FVTPL Debt instruments that neither meet the amortized cost nor the FVOCI criteria, or that meet the criteria but the Group has chosen to designate as at FVTPL at initial recognition, are classified as financial assets at FVTPL.

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Equity investments are classified as financial assets at FVTPL, unless the Group designates an equity investment that is not held for trading as at FVOCI at initial recognition. The Group’s financial assets at FVTPL include government securities, corporate bonds and equity securities which are held for trading purposes.

A financial asset is considered as held for trading if: · it has been acquired principally for the purpose of selling it in the near term; · on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of short-term profit-taking; or, · it is a derivative that is not designated and effective as a hedging instrument or financial guarantee.

Financial assets at FVTPL are measured at fair value. Related transaction costs are recognized directly as expense in profit or loss. Gains and losses arising from changes (mark-to-market) in the fair value of the financial assets at FVTPL and gains or losses arising from disposals of these instruments are included in ‘Trading and securities gains - net’ account in the statements of income.

Interest recognized based on the modified effective interest rate of these investments is reported in statements of income under ‘Interest income’ account while dividend income is reported in statements of income under ‘Miscellaneous income’ account when the right of payment has been established.

Financial Assets at FVOCI - Equity Investments At initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate equity investments as at FVOCI, however, such designation is not permitted if the equity investment is held by the Group for trading. The Group has designated certain equity instruments as at FVOCI on initial application of PFRS 9.

Financial assets at FVOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value, with no deduction for any disposal costs. Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in ‘Net unrealized gains (losses) on financial assets at FVOCI’ in the statements of financial position. When the asset is disposed of, the cumulative gain or loss previously recognized in the Net unrealized fair value gains (losses) on financial assets at FVOCI account is not reclassified to profit or loss, but is reclassified directly to Surplus free account. Any dividends earned on holding these equity instruments are recognized in profit or loss under ‘Miscellaneous Income’ account.

Financial Assets at FVOCI - Debt Investments The Group applies the new category under PFRS 9 of debt instruments measured at FVOCI when both of the following conditions are met: · the instrument is held within a business model, the objective of which is achieved by both collecting contractual cash flows and selling financial assets, and · the contractual terms of the financial asset meet the SPPI test.

FVOCI debt instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value being recognized in OCI. Interest income and foreign exchange gains and losses are recognized in profit or loss in the same manner as for financial assets measured at amortized cost. The ECL calculation for financial assets at FVOCI is explained in the ‘Impairment of Financial Assets’ section.

On derecognition, cumulative gains or losses previously recognized in OCI are reclassified from OCI to profit or loss.

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The Group can only reclassify financial assets if the objective of its business model for managing those financial assets changes. Accordingly, the Group is required to reclassify financial assets: (i) from amortized cost to FVTPL, if the objective of the business model changes so that the amortized cost criteria are no longer met; and, (ii) from FVTPL to amortized cost, if the objective of the business model changes so that the amortized cost criteria start to be met and the characteristic of the instrument’s contractual cash flows meet the amortized cost criteria.

A change in the objective of the Group’s business model will be effected only at the beginning of the next reporting period following the change in the business model.

Derivatives recorded at FVTPL The Parent Company is a counterparty to derivative contracts, such as currency forwards and currency swaps. These derivatives are entered into as a service to customers and as a means of reducing or managing their respective foreign exchange exposures, as well as for trading purposes. Such derivative financial instruments are initially recorded at fair value on the date at which the derivative contract is entered into and are subsequently remeasured at fair value. Any gains or losses arising from changes in fair values of derivatives are taken directly to the statement of income and are included in ‘Trading and securities gains - net’. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Reclassification of financial assets The Group can only reclassify financial assets if the objective of its business model for managing those financial assets changes. Accordingly, the Group is required to reclassify financial assets: (i) from amortized cost to FVTPL, if the objective of the business model changes so that the amortized cost criteria are no longer met; and, (ii) from FVTPL to amortized cost, if the objective of the business model changes so that the amortized cost criteria start to be met and the characteristic of the instrument’s contractual cash flows meet the amortized cost criteria.

A change in the objective of the Group’s business model will be effected only at the beginning of the next reporting period following the change in the business model.

Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. The Group and the Parent Company assess that they have currently enforceable right of offset if the right is not contingent on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Group, the Parent Company and all of the counterparties.

Income and expenses are not offset in the statement of income unless required or permitted by any accounting standard or interpretation, and as specifically disclosed in the accounting policies of the Group and the Parent Company.

Derecognition of Financial Assets and Liabilities Financial asset A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when: · the rights to receive cash flows from the asset have expired; or · the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; or *SGVFSM000714* - 106 -

· the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control over the asset.

Where the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control over the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liability A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in statement of income.

Impairment of Financial Assets on or after January 1, 2018 The Group and the Parent Company record the allowance for expected credit losses for all loans and receivables and other debt financial assets not held at FVTPL, all referred to as ‘financial instruments’. Equity instruments are not subject to impairment under PFRS 9.

ECL represents credit losses that reflect an unbiased and probability-weighted amount which is determined by evaluating a range of possible outcomes, the time value of money and reasonable and supportable information about past events, current conditions and forecasts of future economic conditions. ECL allowances will be measured at amounts equal to either (i) 12-month ECL or (ii) lifetime ECL for those financial instruments which have experienced a significant increase in credit risk (SICR) since initial recognition (General Approach). The 12-month ECL is the portion of lifetime ECL that results from default events on a financial instrument that are possible within the 12 months after the reporting date. Lifetime ECL are credit losses that results from all possible default events over the expected life of a financial instrument.

Staging assessment A three-stage approach for impairment of financial assets is used, based on whether there has been a significant deterioration in the credit risk of a financial asset. These three stages then determine the amount of impairment to be recognized.

For non-credit-impaired financial instruments: · Stage 1 is comprised of all financial instruments which have not experienced a SICR since initial recognition or is considered of low credit risk as of the reporting date. The criteria for determining whether an account should be assessed under Stage 1 are as follows: (i) past due up to 30 days except for microfinance loans wherein days past due for Stage 1 accounts is 0 - 6 days; (ii) accounts tagged as ‘Current’ are tagged as Stage 1 accounts; (iii) no significant increase in the probability of default. The Group recognizes a 12-month ECL for Stage 1 financial instruments. *SGVFSM000714* - 107 -

· Stage 2 is comprised of all financial instruments which have experienced a SICR since initial recognition. A SICR is generally deemed present in accounts with: (i) more than 30 days up to 90 days past due, except for microfinance loans; (ii) loan especially mentioned or substandard; or (iii) with significant increase in PD. For the consumer loans, stage 2 criteria (i), (ii), and (iii) are considered; The Group recognizes a lifetime ECL for Stage 2 financial instruments. The Group recognizes a lifetime ECL for Stage 2 financial instruments.

For credit-impaired financial instruments: · Stage 3 is comprised of all financial assets that have objective evidence of impairment as a result of one or more loss events that have occurred after initial recognition with a negative impact on the estimated future cash flows of a loan or a portfolio of loans. The Group recognizes a lifetime ECL for Stage 3 financial instruments.

Definition of “default” and “restored” The Group classifies a financial instrument as in default when it is credit impaired, or becomes past due on its contractual payments for more than 90 days. As part of a qualitative assessment of whether a customer is in default, the Group considers a variety of instances that may indicate unlikeliness to pay. When such events occur, the Group carefully considers whether the event should result in treating the customer as defaulted. An instrument is considered to be no longer in default (i.e. restored) if there is sufficient evidence to support that full collection is probable and payments are received for at least six months.

Credit risk at initial recognition The Group uses internal credit assessment and approvals at various levels to determine the credit risk of exposures at initial recognition. Assessment can be quantitative or qualitative and depends on the materiality of the facility or the complexity of the portfolio to be assessed.

Significant increase in credit risk The assessment of whether there has been a significant increase in credit risk is based on an increase in the probability of a default occurring since initial recognition. The SICR criteria vary by portfolio and include quantitative changes in probabilities of default and qualitative factors, including a backstop based on delinquency. The credit risk of a particular exposure is deemed to have increased significantly since initial recognition if, based on the Group’s internal credit assessment, the borrower or counterparty is determined to require close monitoring or with well-defined credit weaknesses. For exposures without internal credit grades, if contractual payments are more than a specified days past due threshold, the credit risk is deemed to have increased significantly since initial recognition. Days past due are determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received. Due dates are determined without considering any grace period that might be available to the borrower. In subsequent reporting periods, if the credit risk of the financial instrument improves such that there is no longer a SICR since initial recognition, the Group shall revert to recognizing a 12-month ECL.

ECL parameters and methodologies ECL is a function of the probability of default (PD), loss given default (LGD) and exposure at default (EAD), with the timing of the loss also considered, and is estimated by incorporating forward-looking economic information and through the use of experienced credit judgment.

The PD is an estimate of the likelihood of default over a 12-month horizon for Stage 1 or lifetime horizon for Stage 2. The PD for each individual instrument is modelled based on historic data and is estimated based on current market conditions and reasonable and supportable information about future economic conditions. The Group segmented its credit exposures based on homogenous risk characteristics and developed a corresponding PD methodology for each portfolio. *SGVFSM000714* - 108 -

The PD methodology for each relevant portfolio is determined based on the underlying nature or characteristic of the portfolio, behavior of the accounts and materiality of the segment as compared to the total portfolio.

LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from any collateral. It makes use of defaulted accounts that have either been identified as cured, restructured, or liquidated. The Group segmented its LGD based on homogenous risk characteristics and calculated the corresponding averages based on security.

EAD is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, and expected drawdowns on committed facilities.

Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since its initial recognition and its measurement of ECL. A broad range of forward-looking information are considered as economic inputs, such as GDP growth, exchange rate, interest rate, inflation rate and other economic indicators. The inputs and models used for calculating ECL may not always capture all characteristics of the market at the date of the financial statements. To reflect this, qualitative adjustments or overlays are occasionally made as temporary adjustments when such differences are significantly material.

The Group applied the general approach for its receivable from customer. The Group used sophisticated method on its large-scale and medium-scale businesses and motorcycle loans. While simplified models using vintage loss rate approach was used for the remaining portfolios (i.e., home, auto, personal loans (secured and unsecured), microfinance and small-scale business).

Debt instruments measured at fair value through OCI The ECLs for debt instruments measured at FVTOCI do not reduce the carrying amount of these financial assets in the statement of financial position, which remains at fair value. Instead, an amount equal to the allowance that would arise if the assets are measured at amortized cost is recognized in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognized in OCI is recycled to the profit and loss upon derecognition of the assets.

Consumer loans and credit card receivables The Group does not limit its exposure to credit losses to the contractual notice period, but, instead calculates ECL over a period that reflects the Group’s expectations of the customer behavior, its likelihood of default and the Group’s future risk mitigation procedures, which could include reducing or cancelling the facilities. Based on past experience and the Group’s expectations, the period over which the Group calculates ECLs for these products, is up to five years.

Restructured loans Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, the loan is no longer considered as past due. Management continuously reviews restructured loans to ensure that all criteria are met and that future payments are likely to occur.

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Write-offs The Group’s accounting policy for write-offs remains the same as it was under previous version of PFRS 9.

Impairment of Financial Assets before January 1, 2018 The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is measurable decrease in the estimated future cash flows of the financial asset or group of financial assets, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost (other than AFS and HTM) The Group first assesses at each statement of financial position date whether objective evidence of impairment exists individually for financial assets that are individually significant. If there is objective evidence that an impairment loss has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred), discounted using the financial asset’s original EIR. If a financial asset carried at amortized cost has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR, adjusted for the original credit risk premium. The calculation of the present value of the estimated future cash flows of collateralized financial assets reflects the cash flows that may result from foreclosure, less cost for obtaining and selling the collateral, whether or not foreclosure is probable.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is charged to the statement of income as ‘Provision for credit and impairment losses’. Interest income continues to be recognized based on the original EIR of the asset. Financial assets, together with the associated allowance accounts, are written off when there is no realistic prospect of future recovery and all collateral has been realized. If subsequently, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is reduced by adjusting the allowance account. If a future write-off is later recovered, any amounts formerly charged are credited to ‘Provision for credit and impairment losses’ in the profit or loss. If the Group determines that no objective evidence of impairment exists for individually assessed loans and receivables, whether significant or not, it includes the asset in a group of assets with similar credit risk characteristics and collectively assesses for impairment in order to capture losses which the Group believes has been incurred during the reporting period, but has not yet been identified to specific financial assets. Financial assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment for impairment.

For the purpose of a collective evaluation of impairment, loans and receivables are grouped on the basis of asset type, industry, collateral type, past-due status and other relevant factors. Those groupings reflect credit risk characteristics relevant to the estimation of future cash flows and indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the loans and receivables being evaluated.

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Future cash flows in a group of loans and receivables that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets within the same credit risk groupings. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions. Estimates of changes in future cash flows reflect changes in related observable data from year to year (such as changes in unemployment rates, property prices, payment status, or other factors that are indicative of incurred losses in the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience.

The Group also uses the Net Flow Rate method to determine the credit loss rate of a particular delinquency age bucket based on historical data of flow-through and flow-back of loans across specific delinquency age buckets.

The allowance for credit losses is determined based on the results of the net flow to write-off methodology. Net flow tables are derived from monitoring of monthly peso movements between different stage buckets, from 1-day past due to 180-day past due. The net flow to write-off methodology relies on the last 36 months of net flow tables to establish a percentage (‘net flow rate’) of receivables from customers that are current or in any state of delinquency (i.e., 30, 60, 90, 120, 150 and 180 day past due) as of reporting date that will eventually result in write-off. The gross provision is then computed based on the outstanding balances of the receivables as of statement of financial position date and the net flow rates determined for the current and each delinquency bucket. This gross provision is reduced by the estimated recoveries, which are also based on historical data, to arrive at the required allowance for credit losses.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed.

Any subsequent reversal of an impairment loss is recognized in the statement of income, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

Restructured loans Where possible, the Group seeks to restructure past due loans rather than take possession of the related collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, any impairment is measured using the original EIR as calculated before the modification of terms and the loan is no longer considered past due.

Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to an individual or collective impairment assessment, calculated using the loan’s original EIR.

AFS investments For equity securities classified as AFS investments, this would include a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss-measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in OCI is removed from OCI and recognized in the statement of income. Impairment losses on equity securities are not reversed through the statement of income. Increases in fair value after impairment are recognized directly in OCI.

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For debt securities classified as AFS investments, impairment is assessed based on the same criteria as financial assets carried at amortized cost. Future interest income from impaired AFS debt securities is based on the reduced carrying amount and is accrued based on the original EIR used to discount future cash flows for the purpose of measuring impairment loss. Such accrual is recorded as part of ‘Interest income’ in the statement of income. If subsequently, the fair value of a debt security increased and the increase can be objectively related to an event occurring after the impairment loss was recognized in the statement of income, the impairment loss is reversed through the statement of income.

HTM investments The Group assesses at each statement of financial position date whether objective evidence of impairment exists individually for financial assets that are individually significant. If there is objective evidence that an impairment loss has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted using the financial asset’s original EIR. If a financial asset carried at amortized cost has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR, adjusted for the original credit risk premium. Impairment loss is recognized in statement of income.

Investment in a Subsidiary Subsidiary pertains to entity over which the Parent Company has control. When the Parent Company has less than a majority of the voting or similar rights of an investee, the Parent Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

· the contra arrangement with the other vote holders of the investee; · rights arising from other contractual arrangements; and · the Parent Company’s voting rights and potential voting rights.

Investment in a subsidiary in the separate financial statements is accounted for using the equity method. Under the equity method, the investment in a subsidiary is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group and the Parent Company’s share of net assets of the subsidiary since the acquisition date. Goodwill relating to the subsidiary is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.

The statement of income reflects the Parent Company’s share of the results of operations of the subsidiary. Any change in OCI of the investee is presented as part of the Group and the Parent Company’s OCI. In addition, when there has been a change recognized directly in the equity of the subsidiary, the Parent Company recognizes its share of any changes, when applicable, in the statement of changes in equity.

The aggregate of the Parent Company’s share of profit or loss of a subsidiary is shown on the face of the statement of income under ‘Share in net income (loss) of a subsidiary’ and represents profit or loss after tax in the subsidiary.

The financial statements of the subsidiary are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

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After application of the equity method, the Parent Company determines whether it is necessary to recognize an impairment loss on its investment in a subsidiary. At each statement of financial position date, the Parent Company determines whether there is objective evidence that the investment in a subsidiary is impaired. If there is such evidence, the Parent Company calculates the amount of impairment as the difference between the recoverable amount of the subsidiary and its carrying value, then recognizes the loss in the statement of income.

Upon loss of control over the subsidiary, the Parent Company measures and recognizes any retained investment at its fair value.

As of December 31, 2019 and 2018, the sole and wholly owned subsidiary of the Parent Company is LSB (see Note 9).

Property and Equipment Land is stated at cost less any impairment in value. Depreciable property and equipment are carried at cost less accumulated depreciation and amortization, and any impairment in value.

The initial cost of property and equipment consists of its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are normally charged against operations in the year the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of property and equipment.

Depreciation and amortization is calculated using the straight-line method over the estimated useful life of the depreciable assets. Leasehold improvements are amortized over the shorter of the terms of the covering leases and the estimated useful lives of the improvements.

The estimated useful lives of property and equipment follow:

Building 25 years Transportation equipment 5 years Leasehold improvements 5 years Furniture, fixtures and equipment 3 to 5 years

The useful lives and the depreciation and amortization method are reviewed periodically to ensure that the period and the method of depreciation and amortization are consistent with the expected pattern of economic benefits from the items of property and equipment.

The carrying values of the property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, an impairment loss is recognized in the statement of income (see accounting policy on Impairment of Non-financial Assets).

An item of property and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of income in the year the asset is derecognized. *SGVFSM000714* - 113 -

Effecitve January 1, 2019, the Group classifies ROU assets as part of property and equipment. Prior to that date, all of the Group’s leases are accounted for as operating leases in accordance with PAS 17, hence, not recorded on the sstatement of financial position. The Group recognizes ROU assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). ROU assets are initially measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The initial cost of ROU assets includes the amount of lease liabilities recognized, initial direct costs incurred, lease payments made at or before the commencement date less any less any lease incentives received and estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of their estimated useful life and lease term. Right-of-use assets are subject to impairment.

Investment Properties Investment properties are measured initially at cost, including transaction costs. Transaction costs represent nonrefundable taxes such as capital gains tax and documentary stamp tax that are for the account of the Group. An investment property acquired through an exchange transaction is measured at fair value of the asset acquired unless the fair value of such an asset cannot be measured in which case the investment property acquired is measured at the carrying amount of asset given up. Foreclosed properties are classified as ‘Investment properties’ upon: a) entry of judgment in case of judicial foreclosure; b) execution of the Sheriff’s Certificate of Sale in case of extra-judicial foreclosure; or c) notarization of the Deed of Dacion in case of dation in payment (dacion en pago).

The difference between the fair value of the asset acquired and the carrying amount of the asset given up is recognized as ‘Gain (loss) on initial recognition of investment properties’ under ‘Miscellaneous income’ in the statement of income.

Subsequent to initial recognition, depreciable investment properties are carried at cost less accumulated depreciation and any impairment in value.

Investment properties are derecognized when they have either been disposed of or when they are permanently withdrawn from use and no future benefit is expected from their disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the statement of income under ‘Miscellaneous income’ in the year of retirement or disposal.

Expenditures incurred after the investment properties have been put into operations, such as repairs and maintenance costs, are normally charged against income in the year in which the costs are incurred.

Depreciation is calculated on a straight-line basis using the remaining useful lives from the time of acquisition of the investment properties but not to exceed ten (10) years for buildings and condominium units.

Transfers are made to investment properties when, and only when, there is a change in use evidenced by ending of owner occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment properties when, and only when, there is a change in use evidenced by commencement of owner occupation or commencement of development with a view to sale.

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For a transfer from investment property to owner-occupied property, the deemed cost of the property for subsequent accounting is its carrying value at the date of change in use. If the property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in compliance with the policy stated under property and equipment up to the date of change in use.

Other Assets - Repossessed Chattels Repossessed chattels represent other properties acquired in settlement of loan receivables comprising mainly of repossessed vehicles. Repossessed chattels are stated at cost less accumulated depreciation and impairment in value. Depreciation is calculated on a straight-line basis using the remaining useful lives of the vehicles from the time of acquisition. The useful lives of repossessed chattels are estimated to be three (3) to five (5) years.

Business Combinations and Goodwill Business combinations are accounted for using the purchase method of accounting. This involves recognizing identifiable assets (including previously unrecognized intangible assets) and liabilities (including contingent liabilities but excluding future restructuring) of the acquired business at fair value. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. If the cost of acquisition is less than the fair values of the identifiable net assets acquired, the discount on acquisition is recognized directly in the statement of income in the year of acquisition.

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Parent Company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more frequently, if event or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated at each of the Parent Company’s cash-generating units (CGUs) or group of CGUs, which are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes, and is not larger that an operating segment in accordance with PFRS 8, Operating Segments.

Where goodwill has been allocated to a CGU and part of the operation within the unit is disposed of, the goodwill associated with the operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in these circumstances is measured based on the relative values of the disposed operation and the portion of the CGU retained.

When subsidiaries are sold, the difference between the selling price and net assets plus cumulative translation differences and goodwill is recognized in the statement of income.

Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets, excluding capitalized

*SGVFSM000714* - 115 - development costs, are not capitalized and expenditure is reflected in the statement of income in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each statement of financial position date. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as change in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of income consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the CGU level. Such intangibles are not amortized. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of income when the asset is derecognized.

Branch licenses Branch licenses arise from the acquisition of branches and lincenses of a local bank by the Parent Company. The Parent Company’s branch licenses have indefinite useful lives and are subject to annual individual impairment testing. These are tested for impairment annually either individually or at the CGU level. Such intangibles are not amortized. The useful life is reviewed annually to determine whether indefinite useful life assessment continues to be supportable. If not, the change in the useful life from indefinite to finite is made on a prospective basis.

Software costs Software costs are carried at cost less accumulated amortization and any impairment loss. Software costs are amortized on a straight-line basis over the estimated useful life which ranges from three (3) to seven (7) years.

Impairment of Non-financial Assets Property and equipment, investment in a subsidiary, investment properties and repossessed chattels At each statement of financial position date, the Group assesses whether there is any indication that its non-financial assets may be impaired. When an indicator of impairment exists or when an annual impairment testing for an asset is required, the Group makes a formal estimate of recoverable amount.

Recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is assessed as part of the CGU to which it belongs. Where the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or CGU).

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An impairment loss is charged to operations in the year in which it arises. An assessment is made at each statement of financial position date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset (or CGU) is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of income. After such a reversal, the depreciation and amortization expense is adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining life.

Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually at the statement of financial position date either individually or at the CGU level, as appropriate. Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Revenue Recognition Revenue is recognized to the extent that it is probable that future economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. The Group concluded that it is acting as a principal in all of its revenue arrangements except for commission income arrangements.

PFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. The five-step model is as follows: a. Identify the contract(s) with a customer b. Identify the performance obligations in the contract c. Determine the transaction price d. Allocate the transaction price to the performance obligation in the contract e. Recognize revenue when (or as) the entity satisfies a performance obligation

Under PFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires the Group to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers.

The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.

The following specific recognition criteria must also be met before revenue is recognized:

Revenues within the scope of PFRS 15

Service fees and commission income Fees earned for the provision of services over a period of time are accrued over that period. These fees include investment fund fees, custodian fees, fiduciary fees, portfolio fees, commission income, credit-related fees and other service and management fees. Fees on deposit-related accounts are recognized only upon collection or accrued when there is reasonable degree of certainty as to its collection.

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Income from sale of property and equipment, investment property and repossessed chattels Income from sale of property and equipment, investment property and repossessed chattels is recognized at point-in-time upon completion of the earning process and the collectability of the sales price is reasonably assured.

Other income Other income is recognized when earned at a point in time and is recorded under ‘Miscellaneous income’ in the statement of income.

Revenues outside the scope of PFRS 15

Interest income For all financial instruments measured at amortized cost and interest-bearing financial instruments, interest income is recorded at the EIR, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options), includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future credit losses.

The carrying amount of the financial asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original EIR and the change in carrying amount is recorded as ‘Interest income’.

Once the recorded value of a financial asset or group of similar financial assets has been reduced due to an impairment loss, interest income continues to be recognized using the original EIR applied to the new carrying amount.

Interest income - finance lease The excess of aggregate lease rentals plus the estimated residual value over the cost of the leased investment property constitutes the unearned lease income. Residual values represent estimated proceeds from the disposal of investment property at the time lease is estimated. The unearned lease income is amortized over the term of the lease, commencing on the month the lease is executed using the EIR method.

Unearned lease income ceases to be amortized when the lease contract receivables become past due for more than three months.

Dividend income Dividend income, included in ‘Miscellaneous income’, is recognized when the Group’s right to receive payment is established.

Trading and securities gains - net Trading and securities gains - net represents results arising from disposal of AFS and HTM investments and trading activities including all gains and losses from changes in fair value of financial assets at FVTPL.

Gains on sale of investment securities at amortized cost Gains on sale of investment securities at amortized cost is recognized when the risk and rewards of the amortized cost securities are transferred to the buyer at an amount equal to the difference of the selling price and the carrying amount of the securities.

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Rental income Rental income arising from leased properties is accounted for on a straight-line basis over the lease terms on ongoing leases and is recorded in the statement of income under ‘Miscellaneous income’.

Expense Recognition Expenses are recognized when it is probable that decrease in future economic benefits related to the decrease in asset or an increase in liability has occurred and that the decrease in economic benefits can be measured reliably. Expenses that may arise in the course of ordinary regular activities of the Group include, among others, the operating expenses on the Group’s operation.

Operating expenses Operating expenses constitute costs which arise in the normal business operation and are recognized when incurred.

Taxes and licenses This includes all other taxes, local and national, including gross receipts taxes (GRT), documentary stamp taxes, real estate taxes, licenses and permit fees and are recognized when incurred.

Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a. there is a change in contractual terms, other than a renewal or extension of the arrangement; b. a renewal option is exercised or extension granted, unless that term of the renewal or extension was initially included in the lease term; c. there is a change in the determination of whether fulfillment is dependent on a specified asset; or d. there is a substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b).

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

Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in the year in which they are earned.

Group as lessee Applicable beginning January 1, 2019 The Group applies a single recognition and measurement approach for all leases, except for short- term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and ROU assets representing the right to use the underlying assets. *SGVFSM000714* - 119 -

Right-of-use assets The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are presented under ‘Property and equipment’ in the consolidated statement of financial position and are subject to impairment.

Lease liabilities At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Lease liabilities are presented under ‘Other liabilities’ in the consolidated statement of financial position.

Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option), except for office/building, parking and ATM spaces. It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below =250,000).P Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.

Applicable as at and for the year ended December 31, 208 and prior years Group as lessee Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Any rental payments are accounted for on a straight-line basis over the lease term and included in ‘Occupancy and equipment-related costs’ in the statement of income.

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

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

The cost of providing benefits under the defined benefit plans is actuarially determined using the projected unit credit method.

Defined benefit costs comprise the following: · Service cost · Net interest on the net defined benefit liability or asset · Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non- routine settlements are recognized as expense in the statement of income. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent qualified actuaries.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognized as expense or income in the statement of income.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in OCI in the period in which they arise. Remeasurements are not reclassified to profit or loss in subsequent periods.

Plan assets are assets that are held by a long-term employee benefit fund. Plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the settlement of the related obligations). If the fair value of the plan assets is higher than the present value of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognized as a separate asset at fair value when and only when reimbursement is virtually certain.

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Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of assets embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of income, net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as ‘Interest expense’ in the statement of income.

Contingent Liabilities and Contingent Assets Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of assets embodying economic benefits is remote. Contingent assets are not recognized but are disclosed in the financial statements when an inflow of economic benefits is probable.

Income Taxes Current tax Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the statement of financial position date. Effective January 1, 2019, management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and establishes provisions where appropriate.

Deferred tax Deferred tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

· When the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting income nor taxable income; and · In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused net operating loss carryover (NOLCO) and carryforward of unsed tax benefits from excess of the minimum corporate income tax (MCIT) over regular corporate income tax (RCIT).

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Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized, except:

· Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting income nor taxable income; and · In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient future taxable income will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each statement of financial position date and are recognized to the extent that it has become probable that future taxable income will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settles, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transactions either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognized in profit or loss.

Segment Reporting The Group’s operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. If the Group changes the structure of its internal organization in a manner that causes the composition of its reportable segment to change, the corresponding information for earlier periods, including interim periods, shall be restated unless the information is not available and the cost to develop it would be excessive. Financial information on business segments is presented in Note 27.

Events after the Reporting Period Post year-end events that provide additional information about the Group’s position at the statement of financial position date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.

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Standards Issued but not yet Effective Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the Group does not expect that the future adoption of the said pronouncements will have a significant impact on its consolidated financial statements. The Group intends to adopt the following pronouncements when they become effective:

Effective beginning on or after January 1, 2020 · Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove the assessment of a market participant’s ability to replace missing elements, and narrow the definition of outputs. The amendments also add guidance to assess whether an acquired process is substantive and add illustrative examples. An optional fair value concentration test is introduced which permits a simplified assessment of whether an acquired set of activities and assets is not a business.

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted.

These amendments will apply on future business combinations of the Group.

Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used across PFRSs and other pronouncements. They are intended to improve the understanding of the existing requirements rather than to significantly impact an entity’s materiality judgements.

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted.

Effective beginning on or after January 1, 2021 · PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replace PFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply. The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are largely based on grandfathering previous local accounting policies, PFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of PFRS 17 is the general model, supplemented by: • A specific adaptation for contracts with direct participation features (the variable fee approach) • A simplified approach (the premium allocation approach) mainly for short-duration contracts

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PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with comparative figures required. Early application is permitted.

Deferred effectivity · Amendments to PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture.

The amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint venture involves a business as defined in PFRS 3, Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does not constitute a business, however, is recognized only to the extent of unrelated investors’ interests in the associate or joint venture. On January 13, 2016, the FRSC postponed the original effective date of January 1, 2016 of the said amendments until the IASB has completed its broader review of the research project on equity accounting that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures.

3. Significant Accounting Judgments and Estimates

The preparation of the Group’s consolidated financial statements requires the management of the Group and the Parent Company to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosures of contingent assets and contingent liabilities at the statement of financial position date. Future events may occur which can cause the assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in the financial statements as they become reasonably determinable.

Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The following are the critical judgments and key assumptions that have a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Judgments a) Leases Applicable beginning January 1, 2019

Determination of the lease term for lease contracts with renewal and termination options - Group as lessee The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has several lease contracts that include extension and termination options. Upon the adoption of PFRS 16, The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factos that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a *SGVFSM000714* - 125 -

significant event or change in circumstances that is whitin its control that affects its ability to exercise or not to exercise the option to renew or the terminate.

Estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (‘IBR’) to measure lease liabilities. The IBR is the rate of interest that the Bank would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Bank ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease. Group developed business models which reflect how it manages its portfolio of financial instruments. The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific adjjustments (such as the credit spread for a stand-alone credit rating, or to reflect the terms and conditions of the lease).

Applicable as at and for the year ended December 31, 2018 and prior years

Operating lease Group as lessee The Group has entered into commercial property leases for its head office and branch premises. The Group has determined, based on the evaluation of the terms and conditions of the lease agreement (i.e., the lease does not transfer ownership of the asset to the lessee by the end of the lease term and lease term is not for the major part of the asset’s economic life), that the lessor retains all the significant risks and rewards of ownership of the properties which are leased out on operating leases.

Finance lease Group as lessor The Group has determined based on an evaluation of terms and conditions of the lease arrangements (i.e., present value of minimum lease payments amounts to at least substantially all of the fair value of leased asset, lease term is for the major part of the economic useful life of the asset, and lessor’s losses associated with the cancellation are borne by the lessee) that it has transferred all significant risks and rewards of ownership of the properties it leases out on finance leases. b) Contingencies The Group is currently involved in legal proceedings. The estimate of the probable cost for the resolution of claims has been developed in consultation with the aid of the outside legal counsel handling the Group’s defense in this matter and is based upon an analysis of potential results. Management does not believe that the outcome of this matter will affect the results of operations.

It is probable, however, that future results of operations could be materially affected by changes in the estimates or in the effectiveness of the strategies relating to these proceedings (see Note 28). c) Evaluation of business model in managing financial instruments (PFRS 9) The Group manages its financial assets based on business models that maintain an adequate level of financial assets to match its expected cash outflows, largely arising from customers’ withdrawals and continuing loan disbursements to borrowers, while maintaining a strategic portfolio of financial assets for investment and trading activities consistent with its risk appetite. *SGVFSM000714* - 126 -

The The Group’s business models need not be assessed at entity level or as a whole but applied at the level of a portfolio of financial instruments (i.e., group of financial instruments that are managed together by the Group) and not on an instrument-by-instrument basis (i.e., not based on intention or specific characteristics of individual financial instrument).

In determining the classification of a financial instrument under PFRS 9, the Group evaluates in which business model a financial instrument or a portfolio of financial instruments belong to taking into consideration the objectives of each business model established by the Group, various risks and key performance indicators being reviewed and monitored by responsible officers, as well as the manner of compensation for them.

The Parent Company’s BOD approved its documentation of business models which contains broad categories of business models. The business model includes the Parent Bank’s lending activities as well as treasury business activities broken down into liquidity and investment portfolios.

In addition, PFRS 9 emphasizes that if more than an infrequent and more than an insignificant sale is made out of a portfolio of financial assets carried at amortized cost, an entity should assess whether and how such sales are consistent with the objective of collecting contractual cash flows. In making this judgment, the Group considers certain circumstances documented in its business model manual to assess that an increase in the frequency or value of sales of financial instruments in a particular period is not necessarily inconsistent with a held-to-collect business model if the Group can explain the reasons for those sales and why those sales do not reflect a change in the Group’s objective for the business model.

In 2019, the Parent Company sold various foreign-currency denominated securities under its HTC portfolio. The sale was driven by the change in investment policy with respect to additional Risk Aceptance Criteria (RAC) for bonds booked under HTC. This is in anticipation of new regulations in country risk and Interest Rate Risk in the Banking Books (IRRBB) to be issued that push for a more robust risk management for investments. The Parent Company disposed all of its foreign-currency denominated HTC securities with tenor of more than fifteen (15) years. Effectively, the Parent Company abandoned its foreign currency denominated HTC portfolio with a tenor of more than 15 years. The remaining securities in the HTC portfolio will continue to be measured at amortized cost. Details of the disposal of HTC are included in Note 7. d) Uncertainties over income tax treatments The Group applies significant judgement in identifying uncertainties over income tax treatments. Since the Group operates in a highly regulated environment, it assessed whether the Interpretation had an impact on its consolidated financial statements.

The Group applies significant judgment whether it is probable that a particular uncertain income tax treatment will be acceptable to the taxation authority. The Group considers the following: · Past experience related to similar tax treatments · Legal advice or case law related to other entities · Practice guidelines published by the taxation authority that are applicable to the case

The Group reassesses the judgement if the facts and circumstances on which the judgement was based change or as a result of new information that affects the judgement.

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Estimates a) Expected credit losses on financial assets (PFRS 9) The Group reviews its financial assets and commitments at each reporting date to determine the amount of expected credit losses to be recognized in the balance sheet and any changes thereto in the statement of income. In particular, judgments and estimates by management are required in determining the following: · whether a financial asset has had a significant increase in credit risk since initial recognition; whether default has taken place and what comprises a default; · macro-economic factors that are relevant in measuring a financial asset’s probability of · default as well as the Group’s forecast of these macro-economic factors; · probability weights applied over a range of possible outcomes; · sufficiency and appropriateness of data used and relationships assumed in building the · components of the Group’s expected credit loss models; · measuring the exposure at default for unused commitments on which an expected credit loss · should be recognized and the applicable loss rate

The details of the expected credit losses on financial assets are presented in Notes 7, 8, and 14 b) Impairment of non-financial assets Investment properties and repossessed chattels The Group assesses impairment on investment properties and repossessed chattels whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Group considers important which could trigger an impairment review include the following: a. significant underperformance relative to expected historical or projected future operating results; b. significant changes in the manner of use of the acquired assets or the strategy for overall business; and c. significant negative industry or economic trends.

An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is computed using the fair value less costs to sell for investment properties and repossessed chattels. Recoverable amounts are estimated for individual assets.

The carrying values of and the allowance for impairment losses, if any, on investment properties and repossessed chattels of the Group and of the Parent Company are disclosed in Notes 11, 13 and 14.

Branch licenses Branch License is considered an intangible asset with an indefinite useful life and it is required to be tested for impairment annually by comparing its carrying amount with its recoverable amount, irrespective of whether there is any indication that it may be impaired. The recoverable amount of the CGU has been determined based on a value in use calculations using cash flow projections from financial budgets approve by senior management covering a five-year period. The Group used the cost of equity as discount rate. Key assumptions used in the value in use calculation are pre-tax discount rate and growth rate, which are at 10.54% and 5.00%, respectively in 2019. Management believes that no reasonably possible change in any of the key assumptions used would cause the carrying value of the CGUs to exceed their recoverable amount. The carrying values of and allowance for impairment losses on branch licenses of the Group are disclosed in Note 12.

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Goodwill Goodwill is reviewed for impairment, annually or more frequently if events of changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or group of CGUs) to which goodwill has been allocated, an impairment loss is recognized immediately in the statement of income. The Group estimated the discount rate used for the computation of the net present value be referenced to industry cost of capital. The recoverable amount of the CGU has been determined based on a value in use calculations using cash flow projections from financial budgets approve by senior management covering a five-year period. Average growth rate was derived from the average increase in annual income during the last five (5) years. Key assumptions used in the value in use calculation are pre-tax discount rate and growth rate, which are at 10.13% and 5.00%, respectively in 2019 and 12.80% and 5.70%, respectively, in 2018. Management believes that no reasonably possible change in any of the key assumptions used would cause the carrying value of the CGUs to exceed their recoverable amount.

The carrying values of goodwill of the Group are disclosed in Note 9. c) Recoverability of deferred taxes Deferred tax assets are recognized for temporary differences, unused tax losses and excess of MCIT over RCIT to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits available which is primarily derived from interest income on loans and receivables and affected by expected future market or economic conditions and the expected performance of the Group and the Parent Company together with future tax planning strategies.

The estimates of future taxable income indicate that certain temporary differences will be realized in the future. The primary source of the income of the Group and Parent Company is coming from interest income from loans and receivables, Management uses historical information and future economic conditions as basis of growth in projecting future taxable income. Growth rate applied to the projections in 2019 and 2018 are 48.59% and 25.00% for 2018 and 2017, respectively. Details of recognized and unrecognized deferred tax on temporary differences are disclosed in Note 25. d) Present value of retirement liability The cost of defined benefit retirement plan and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. The assumed discount rates were determined using market yields on Philippine government bonds with terms consistent with the expected employee benefit payouts as of the statement of financial position date.

The present values of the Group and the Parent Company’s defined benefit obligation as of December 31, 2019 and 2018 are disclosed in Note 22.

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4. Financial Risk Management Objectives and Polices

The main risks arising from the Group’s financial instruments are credit, market and liquidity risks. In general, the Group’s risk management objective is to ensure that risks taken are within the Group’s risk appetite, which is assessed based on the Group’s capital adequacy framework. The risk management process involves risk identification, measurement, monitoring and control.

The Group recognizes that risk management is the responsibility of the entire organization. Accordingly, all employees are expected to manage risks relating to their own responsibilities.

The Board of Directors (BOD) ultimately oversees and approves significant matters related to risk management throughout the Parent Company, upon the review and recommendation of various committees composed of members of the BOD and Senior Management. Among the Parent Company’s committees are: · Corporate Governance Committee, which ensures the BOD’s effectiveness and due observance of the corporate governance principles and guidelines; · Risk Management Committee (RMC), which is responsible for the development and oversight of the Parent Company’s risk management program; · Audit Committee, which examines the Parent Company’s framework of risk management, control and governance process to ensure that these are adequate and functional; and · Credit Committee, which recommends credit policies and evaluates credit applications.

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

These units submit various risk reports to the Management Committee, the RMC and the BOD, among others.

Further specific risk management disclosures, including mitigation, measurement and control, are in the succeeding sections.

Credit Risk Credit risk may be defined as the possibility of loss due to the failure of a customer/borrower or counterparty to perform its obligation to the Group.

The Group has several credit risk mitigation practices: · The Group offers a variety of loan products with substantial collateral values. The latter part of this credit risk section discusses collateral and other credit enhancements. · Limits are set on the amount of credit risk that the Group is willing to take for customers and counterparties, and exposures are monitored against such credit limits. · The Group also observes related regulatory limits such as the single borrower’s limit (SBL) and directors, officers, stockholders and related interests (DOSRI) ceiling.

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· To protect against settlement risk, the Group employs a delivery-versus-payment (DvP) settlement system, wherein payment is effected only when the corresponding asset has been delivered. · There is an internal credit risk rating system (ICRRS) in place, providing a structured format for collating and analyzing borrower data to arrive at a summary indicator of credit risk. · Past due and non-performing loan (NPL) ratios are also used to measure and monitor the quality of the loan portfolio.

Maximum exposure to credit risk The table below shows the Group’s net credit risk exposure for financial assets with maximum exposure to credit risk different from its carrying amounts after considering the financial effect of collateral and other credit enhancements:

Consolidated December 31, 2019 Financial Maximum Carrying Fair Value Effect of Exposure to Amount of Collateral Collateral Credit Risk Interbank loans receivables and SPURA P=2,408,705,460 P=1,603,350,278 P=1,603,350,278 P=805,355,182 Loans and receivables: Receivables from customers: Commercial 57,341,200,915 13,987,243,724 12,243,098,112 45,098,102,803 Real estate 19,067,998,568 20,073,949,576 10,462,536,023 8,605,462,545 Consumption 12,391,266,516 9,693,487,573 5,702,215,994 6,689,050,522 Domestic bills purchased 495,192,826 − − 495,192,826 Other receivables: Accrued interest receivable 850,258,038 − − 850,258,038 Accounts receivable 1,050,173,005 − − 1,050,173,005 Sales contract receivable 73,433,537 190,577,389 73,433,537 − P=93,678,228,865 P=45,548,608,540 P=30,084,633,944 P=63,593,594,921

Parent Company December 31, 2019 Maximum Carrying Fair Value Financial Effect Exposure to Amount of Collateral of Collateral Credit Risk Interbank loans receivables and SPURA P=2,342,127,432 P=1,536,772,250 P=1,536,772,250 P=805,355,182 Loans and receivables: Receivables from customers: Commercial 57,160,149,323 13,916,347,785 12,221,076,818 44,939,072,505 Real estate 19,021,295,006 20,070,091,876 10,461,836,172 8,559,458,834 Consumption 11,116,495,285 9,507,255,241 5,696,782,843 5,419,712,442 Domestic bills purchased 495,192,826 − − 495,192,826 Other receivables: Accrued interest receivable 838,769,184 − − 838,769,184 Accounts receivable 1,028,012,253 − − 1,028,012,253 Sales contract receivable 46,365,590 125,754,429 46,365,590 − P=92,048,406,899 P=45,156,221,581 P=29,962,833,673 P=62,085,573,226

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Consolidated December 31,2018 Financial Maximum Carrying Fair Value Effect of Exposure to Amount of Collateral Collateral Credit Risk Interbank loans receivables and SPURA P=2,188,410,000 P=2,188,410,000 P=2,188,410,000 P=− Loans and receivables: Receivables from customers: Commercial 46,963,115,555 23,871,607,869 14,075,190,106 32,887,925,449 Real estate 14,012,497,129 19,992,307,212 13,799,034,388 213,462,741 Consumption 8,033,865,678 8,122,768,600 5,114,230,502 2,919,635,176 Domestic bills purchased 834,447,716 − − 834,447,716 Other receivables: Accrued interest receivable 719,091,672 − − 719,091,672 Accounts receivable 729,515,033 − − 729,515,033 Sales contract receivable 18,191,403 29,811,636 10,406,402 7,785,001 Lease receivable 9,660,132 − − 9,660,132 P=70,599,472,216 P=54,204,905,317 P=35,187,271,398 P=38,321,522,920

Parent Company December 31, 2018 Maximum Carrying Fair Value Financial Effect Exposure to Amount of Collateral of Collateral Credit Risk Interbank loans receivables and SPURA P=2,100,410,000 P=2,123,675,000 P=2,100,410,000 P=− Loans and receivables: Receivables from customers: Commercial 48,766,498,353 23,739,687,904 14,026,909,000 34,739,589,353 Real estate 14,000,598,525 19,968,769,662 13,794,037,287 206,561,238 Consumption 8,175,548,313 8,106,443,370 5,108,244,559 3,067,303,754 Domestic bills purchased 834,447,716 − − 834,447,716 Other receivables: Accrued interest receivable 707,881,692 − − 707,881,692 Accounts receivable 717,144,173 − − 717,144,173 Sales contract receivable 10,781,280 8,005,314 2,996,279 7,785,001 P=76,041,235,505 P=53,946,581,250 P=35,032,597,125 P=40,280,712,927

Offsetting of financial assets and financial liabilities The Parent Company has derivative financial instruments with various counterparties transacted under the International Swaps and Derivatives Association (ISDA) which are subject to enforceable master netting agreements. Under the agreements, the Parent Company has the right to settle its derivative financial instruments either: (1) upon election of the parties; or (2) in the case of default and insolvency or bankruptcy. The Parent Company, however, has no intention to net settle or to gross settle the accounts simultaneously.

The following table shows the effect of rights of set-off associated with the recognized financial assets and financial liabilities of the Parent Company:

Consolidated Gross amounts set-off in Net amount Effect of remaining rights of Gross amounts of accordance with presented in set-off that do not meet recognized the PAS 32 statements of PAS 32 offsetting criteria financial offsetting financial Financial Financial instruments criteria position instruments collateral Net exposure 2019 Financial Assets SPURA (Note 6) P=871,933,210 P=− P=871,933,210 P=− P=871,933,210 P=− Derivative assets (Note 7) 992,618 − 992,618 − − 992,618 Total P=872,925,828 P=− P=872,925,828 P=− P=871,933,210 P=992,618 (Forward)

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Consolidated Gross amounts set-off in Net amount Effect of remaining rights of Gross amounts of accordance with presented in set-off that do not meet recognized the PAS 32 statements of PAS 32 offsetting criteria financial offsetting financial Financial Financial instruments criteria position instruments collateral Net exposure Financial Liabilities Derivative liabilities (Note 7) P=462,908 P=− P=462,908 P=− P=− P=462,908 2018 Financial Assets SPURA (Note 6) P=88,000,000 P=− P=88,000,000 − P=88,000,000 P=− Financial Liabilities Derivative liabilities (Note 7) P=336,698 P=− P=336,698 P=− P=− P=336,698

Parent Company Gross amounts set-off in Gross amounts accordance Net amount Effect of remaining rights of of with presented in set-off that do not meet recognized the PAS 32 statements of PAS 32 offsetting criteria financial offsetting financial Financial Financial instruments criteria position instruments collateral Net exposure 2019 Financial Assets SPURA (Note 6) P=805,355,182 P=− P=805,355,182 P=− P=805,355,182 P=− Derivative assets (Note 7) 992,618 992,618 − − 992,618 P=806,347,800 P=− P=806,347,800 P=− P=805,355,182 P=992,618 Financial Liabilities Derivative liabilities (Note 7) P=462,908 P=− P=462,908 P=− P=− P=462,908 2018 Financial Liabilities Derivative liabilities (Note 7) P=336,698 P=− P=336,698 P=− P=− P=336,698

Collateral and other credit enhancement The amount and type of collateral required depends on an assessment of credit risk. Guidelines are implemented regarding the acceptability of types of collateral and valuation parameters.

The main types of collateral obtained are as follows: · Mortgages over real estate and vehicle for consumer lending · Chattels over inventory and receivable for commercial lending · Government securities for interbank lending

It is the Group’s policy to dispose repossessed properties in an orderly fashion. In general, the proceeds are used to reduce or repay the outstanding claim, and are not occupied for business use.

Concentration of credit Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.

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The tables below show the distribution of maximum exposure to credit risk by industry sector of the Group before taking into account collateral held and other credit enhancements (in millions):

Consolidated 2019 Loans and Investment Receivables* Securities** Total Real estate, renting and business services P=27,077 P=3,176 P=30,253 Financial intermediaries 21,519 389 21,908 Wholesale and retail 12,257 − 12,257 Personal consumption 11,671 447 12,118 Electricity, gas and water 9,361 2,866 12,227 Transport, storage and communication 7,939 660 8,599 Manufacturing 6,096 − 6,096 Construction 2,946 − 2,946 Agriculture, hunting and forestry 873 − 873 Government institutions 282 17,782 18,064 Others 9,569 16 9,585 109,590 25,336 134,926 Less allowance for credit losses 1,167 − 1,167 P=108,423 P=25,336 P=133,759 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines **Financial assets at FVTPL, FVOCI and amortized cost

Parent Company 2019 Loans and Investment Receivables* Securities** Total Real estate, renting and business services P=27,000 P=3,161 P=30,161 Financial intermediaries 20,960 239 21,199 Wholesale and retail 11,983 − 11,983 Personal consumption 11,033 447 11,480 Electricity, gas and water 9,361 2,866 12,227 Transport, storage and communication 7,936 660 8,596 Manufacturing 6,088 − 6,088 Construction 2,923 − 2,923 Agriculture, hunting and forestry 766 − 766 Government institutions 282 17,782 18,064 Others 9,036 11 9,047 107,368 25,166 132,534 Less allowance for credit losses 1,059 − 1,059 P=106,309 P=25,166 P=131,475 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines **Financial assets at FVTPL, FVOCI and amortized cost

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Consolidated 2018 Loans and Investment Receivables* Securities** Total Government institutions P=16,541 P=17,800 P=34,341 Financial intermediaries 18,439 49 18,488 Real estate, renting and business services 11,181 3,403 14,386 Electricity, gas and water 10,003 2,332 12,335 Wholesale and retail 10,192 − 10,192 Personal consumption 8,661 435 9,096 Transport, storage and communication 7,205 1,449 8,654 Manufacturing 4,708 − 4,708 Construction 1,145 181 1,326 Agriculture, hunting and forestry 1,214 73 1,287 Others 7,400 − 7,400 96,689 25,722 122,213 Less allowance for credit losses 1,095 − 1,095 P=95,594 P=25,722 P=121,118 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines **Financial assets at FVTPL, FVOCI and amortized cost

Parent Company 2018 Loans and Investment Receivables* Securities** Total Government institutions P=15,641 P=17,800 P=33,441 Financial intermediaries 18,392 − 18,392 Real estate, renting and business services 10,506 3,282 13,560 Electricity, gas and water 9,996 2,332 12,328 Wholesale and retail 10,065 − 10,065 Personal consumption 8,658 435 9,093 Transport, storage and communication 7,205 1,449 8,654 Manufacturing 4,705 − 4,705 Agriculture, hunting and forestry 1,183 73 1,256 Construction 974 181 1,155 Others 7,544 − 7,544 94,869 25,324 120,193 Less allowance for credit losses 966 − 966 P=93,903 P=25,324 P=119,227 *All financial assets other than investment securities and cash on hand (net of UID), including guarantees issued and committed credit lines **Financial assets at FVTPL, FVOCI and amortized cost

Credit quality Parent Company Enhancement was made in 2017 for the ICRRS covering corporate credit exposures as defined by BSP Circular 439, initially for those borrowers with asset size of more than P=15.00 million. In compliance with BSP Circular 855, the Parent Company also developed another ICRRS in 2016 for those borrowers with asset size of =15.00P million and below which was also enhanced in 2017.

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Grades Categories Description High grade Risk rating 1 Excellent Lowest probability of default; exceptionally strong capacity for financial commitments; highly unlikely to be adversely affected by foreseeable events. Risk rating 2 Super Prime Very low probability of default; very strong capacity for payment of financial commitments; less vulnerable to foreseeable events. Risk rating 3 Prime Low probability of default; strong capacity for payment of financial commitments; may be more vulnerable to adverse business/economic conditions. Risk rating 4 Very Good Moderately low probability of default; more than adequate capacity for payment of financial commitments; but adverse business/economic conditions are more likely to impair this capacity. Risk rating 5 Good More pronounced probability of default; business or financial flexibility exists which supports the servicing of financial commitments; vulnerable to adverse business/economic changes. Standard Risk rating 6 Satisfactory Material probability of default is present, but a margin of safety remains; financial commitments are currently being met although the capacity for continued payment is vulnerable to deterioration in the business/economic condition. Risk rating 7 Average Greater probability of default which is reflected in the volatility of earnings and overall performance; repayment source is presently adequate; however, prolonged unfavorable economic period would create deterioration beyond acceptable levels. Risk rating 8 Fair Sufficiently pronounced probability of default, although borrowers should still be able to withstand normal business cycles; any prolonged unfavorable economic/market conditions would create an immediate deterioration of cash flow beyond acceptable levels. Sub-standard grade Risk rating 9 Marginal Elevated level of probability of default, with limited margin; Repayment source is adequate to marginal. Risk rating 10 Watchlist Unfavorable industry or company specific risk factors represent a concern, financial strength may be marginal; will find it difficult to cope with significant downturn. Risk rating 11 Special mention Loans have potential weaknesses that deserve close attention; borrower has reached a point where there is a real risk that the borrower’s ability to pay the interest and repay the principal timely could be jeopardize due to evidence of weakness in the borrower’s financial condition.

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Grades Categories Description Risk rating 12 Substandard Substantial and unreasonable degree of risk to the institution because of unfavorable record or unsatisfactory characteristics; with well-defined weakness(es) that jeopardize their liquidation. e.g. negative cash flow, in case of fraud. Past due and impaired Risk rating 13 Doubtful Weaknesses similar to “Substandard”, but with added characteristics that make liquidation highly improbable. Risk rating 14 Loss Uncollectible or worthless.

The Parent Company’s ICRR system intends to provide a structure to define the credit portfolio, and consists of an initial rating for the borrower risk adjusted for the facility risk. Inputs include an assessment of management, credit experience, financial condition, industry outlook, documentation, security and term.

Below is the staging parameters adopted by the Parent Company effective January 1, 2018 in relation to its PFRS 9 adoption.

Staging Parameter Stage Description Staging by Days Past Due Applicable to all loan products. 1 Accounts with 0 – 30 days past due (applicable for all loan products except for microfinancing loans wherein days past due for Stage 1 accounts is 0 – 6 days). 2 Accounts with 31 – 90 days past due (applicable for all loan products except for microfinancing loans wherein days past due for Stage 2 accounts is 7 – 10 days). 3 Accounts with days past due of 91 days and above (applicable for all loan products except for microfinancing loans wherein days past due for Stage 3 accounts is 11 days and above).

Staging by Status Applicable to all loan products except for Microfinance. 1 Accounts tagged as Current in its Status are classified under Stage 1. 2 Accounts tagged as Past due performing in its Status are classified under Stage 2. 3 Accounts tagged as ITL and NPL in its Status are classified under Stage 3.

Staging by Origination Applicable to Commercial Loans (Large Scale and Rating vs Current Rating Medium Scale) only. 1 If no movement in the ratings from origination rating against the latest rating, the staging will be based on the current ICRRS rating. If the account’s current rating is either Excellent, Super Prime, Prime, Very Good, Good, Satisfactory, Average, Fair, the account will be tagged under Stage 1.

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Staging Parameter Stage Description 2 If the account’s current rating/equivalent Risk Level deteriorates by 2 notches from its origination rating/equivalent Risk Level, the account is tagged under Stage 2. If no movement in the ratings from origination rating against the latest rating, the staging will be based on the latest ICRRS rating. If the account’s latest Rating is either Marginal, Watchlist or Especially Mentioned, account will be tagged under Stage 2. 1 If maturity date of the account is after the cut-off date of the ECL Calculation, and if the days leading up to the cut- off date from the maturity date is less than 30 days, the account is tagged under Stage 1 (For Microfinance loans, if maturity date of the account is after the cut-off date of the ECL Calculation, and if the days leading up to the cut- off date from the maturity date is less than 10 days, the account is tagged under Stage 1). 3 If maturity date of the account is prior to the cut-off date of the ECL Calculation, and if the days leading up to the cut-off date from the maturity date is more than 30 days, the account is tagged under Stage 3 (For Microfinance loans, if Maturity Date of the account is prior the cut-off date of the ECL Calculation, and if the days leading up to the cut-off date from the maturity date is more than 10 days, the account is tagged under Stage 3).

The following tables show the credit quality per class of loans and receivables, gross of allowance for credit losses and unearned interest and discount of the Group and Parent Company (in millions):

Consolidated December 31, 2019 Stage 1 Stage 2 Stage 3 Total Receivable from customers: Commercial Neither Past Due nor Individually Impaired High grade P=18,717 P=7 P=− P=18,724 Standard 25,695 2,585 − 28,280 Substandard 711 1,240 − 1,951 Unrated 21 − − 21 Past due but not individually impaired 15 29 155 199 Individually impaired − − 340 340 P=45,159 P=3,861 P=495 P=49,515 Real estate Neither Past Due nor Individually Impaired High grade P=21 P=− P=− P=21 Standard 132 − − 132 Substandard 10 − − 10 Unrated 17,874 − − 17,874 Past due but not individually impaired − 1,035 242 1,277 Individually impaired − − 14 14 P=18,037 P=1,035 P=256 P=19,328 Consumption Neither Past Due nor Individually Impaired High grade P=92 P=− P=− P=92 Standard 1,405 − − 1,405 Substandard 48 − − 48 Unrated 7,993 − − 7,993 Past due but not individually impaired − 598 484 1,082 Individually impaired − − 207 207 P=9,538 P=598 P=691 P=10,827

(forward)

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Consolidated December 31, 2019 Stage 1 Stage 2 Stage 3 Total Domestic bills purchased Neither Past Due nor Individually Impaired High grade P=491 P=− P=− P=491 Standard − − − − Substandard − − − − Unrated 4 − − 4 Past due but not individually impaired − − − − Individually impaired − − − − 495 − − 495 Total receivable from customers P=73,229 P=5,494 P=1,442 P=80,165 Other receivables: Neither Past Due nor Individually Impaired High grade P=1,193 P=− P=− P=1,193 Standard 426 − − 426 Substandard 31 − − 31 Unrated 95 − − 95 Past due but not individually impaired 68 110 123 301 Individually impaired − − 89 89 1,813 110 212 2,135 P=75,042 P=5,604 P=1,654 P=82,300

Parent Company December 31, 2019 Stage 1 Stage 2 Stage 3 Total Receivable from customers: Commercial Neither Past Due nor Individually Impaired High grade P=18,717 P=7 P=− P=18,724 Standard 25,641 2,585 − 28,226 Substandard 775 1,240 − 2,015 Unrated 21 − − 21 Past due but not individually impaired 15 16 155 186 Individually impaired − − 235 235 P=45,169 P=3,848 P=390 P=49,407 Real estate Neither Past Due nor Individually Impaired High grade P=21 P=− P=− P=21 Standard 89 − − 89 Substandard 7 − − 7 Unrated 17,874 − − 17,874 Past due but not individually impaired − 1,035 242 1,277 Individually impaired − − 8 8 P=17,991 P=1,035 P=250 P=19,276 Consumption Neither Past Due nor Individually Impaired High grade P=92 P=− P=− P=92 Standard 66 − − 66 Substandard 22 − − 22 Unrated 8,070 − − 8,070 Past due but not individually impaired − 575 484 1,059 Individually impaired − − 1 1 P=8,250 P=575 P=485 P=9,310 Domestic bills purchased Neither Past Due nor Individually Impaired High grade P=491 P=– P=– P=491 Standard – – – – Substandard – – – – Unrated 4 – – 4 Past due but not individually impaired – – – – Individually impaired – – – – 495 – – 495 Total receivable from customers P=71,905 P=5,458 P=1,125 P=78,488 Other receivables: Neither Past Due nor Individually Impaired High grade P=1,190 P=− P=– P=1,190 Standard 398 − – 398 Substandard 7 − – 7 Unrated 95 − − 94 Past due but not individually impaired 73 103 123 300 Individually impaired – – 62 62 1,763 103 185 2,051 P=73,668 P=5,561 P=1,310 P=80,539

*SGVFSM000714* - 139 -

Consolidated December 31, 2018 Stage 1 Stage 2 Stage 3 Total Receivable from customers: Commercial Neither Past Due nor Individually Impaired High grade P=22,168 P=− P=− P=22,168 Standard 17,826 − − 17,826 Substandard − 4,018 − 4,018 Unrated − − 18 18 Past due but not individually impaired 14 39 17 70 Individually impaired − − 423 423 P=40,008 P=4,057 P=458 P=44,523 Real estate Neither Past Due nor Individually Impaired High grade P=20 P=− P=− P=20 Standard 13,735 − − 13,735 Substandard − 6 − 6 Unrated − 52 2 54 Past due but not individually impaired 1 455 85 541 Individually impaired 20 − − 20 P=13,776 P=513 P=87 P=14,376 Consumption Neither Past Due nor Individually Impaired High grade P=20 P=− P=− P=20 Standard 963 − − 963 Substandard − 32 − 32 Unrated − − 6,779 6,779 Past due but not individually impaired 2 255 329 586 Individually impaired − − 165 165 P=985 P=287 P=7,273 P=8,545 Domestic bills purchased Neither Past Due nor Individually Impaired High grade P=738 P=− P=− P=738 Standard − − − − Substandard − − − − Unrated 96 − − 96 Past due but not individually impaired − − − − Individually impaired − − − − 834 − − 834 Total receivable from customers P=55,603 P=4,857 P=7,818 P=68,278 Other receivables: Neither Past Due nor Individually Impaired High grade P=59 P=− P=− P=59 Standard 1,125 − − 1,125 Substandard − 77 − 77 Unrated − − 94 94 Past due but not individually impaired − 67 110 177 Individually impaired − − 107 107 1,184 144 311 1,639 P=56,787 P=5,001 P=8,129 P=69,917

Parent Company December 31, 2018 Stage 1 Stage 2 Stage 3 Total Receivable from customers: Commercial Neither Past Due nor Individually Impaired High grade P=22,168 P=− P=− P=22,168 Standard 17,786 − − 17,786 Substandard − 4,016 − 4,016 Unrated − − 17 17 Past due but not individually impaired 14 16 17 47 Individually impaired − − 285 285 P=39,968 P=4,032 P=319 P=44,319 Real estate Neither Past Due nor Individually Impaired High grade P=20 P=− P=− P=20 Standard 52 − − 52 Substandard − 1 − 1 Unrated − − 13,744 13,744 Past due but not individually impaired 1 455 85 541 Individually impaired − − − − P=73 P=456 P=13,829 P=14,358

(Forward)

*SGVFSM000714* - 140 -

Parent Company December 31, 2018 Stage 1 Stage 2 Stage 3 Total Consumption Neither Past Due nor Individually Impaired High grade P=20 P=− P=− P=20 Standard 233 − − 233 Substandard − 23 − 23 Unrated − − 6,779 6,779 Past due but not individually impaired 2 236 329 567 Individually impaired − − − − P=255 P=259 P=7,108 P=7,622 Domestic bills purchased Neither Past Due nor Individually Impaired High grade P=738 P=– P=– P=738 Standard – – – – Substandard – – – – Unrated 96 – – 96 Past due but not individually impaired – – – – Individually impaired – – – – 834 – – 834 Total receivable from customers P=41,130 P=4,747 P=21,256 P=67,133 Other receivables: Neither Past Due nor Individually Impaired High grade P=56 P=− P=– P=56 Standard 1,085 4 – 1,089 Substandard 46 30 – 76 Unrated 90 4 − 94 Past due but not individually impaired − 63 110 173 Individually impaired – – 84 84 1,277 101 194 1,573 P=42,407 P=4,848 P=21,450 P=68,705

External ratings In ensuring a quality investment portfolio, the Parent Company monitors credit risk from investments using credit ratings based on Standard and Poor (S&P).

Credit quality of due from BSP and other banks and interbank loans receivable are based on available accredited international and local credit raters using Fitch as standard of rating.

The Parent Company assigns the following credit quality groupings based on ratings prior to PFRS 9 adoption as follows:

Credit Quality Fitch Moody’s S&P Stage High Grade AAA to A- Aaa to A3 AAA to A- 1 Standard Grade BBB+ to BB- Baa1 to Ba3 BBB+ to BB- 1 Substandard Grade B+ to C- B1 to Ca B+ to C 2 Past due and impaired D C D 3

The following tables show the credit quality per class of financial assets other than receivables from customers and other receivables of the Group and Parent Company (in millions):

Consolidated December 31, 2019 Stage 1 Stage 2 Stage 3 Total Financial assets at FVTPL Standard P=5 P=− P=− P=5 Financial assets at FVOCI Government securities High 111 − − 111 Standard 8,100 210 − 8,310 Private bonds High 2,896 − − 2,896 Standard 2,373 75 − 2,448

(Forward)

*SGVFSM000714* - 141 -

Consolidated December 31, 2019 Stage 1 Stage 2 Stage 3 Total Investment securities at amortized cost Government securities Standard P=9,507 P=− P=− P=9,507 Private bonds High 1,335 − − 1,335 Standard 515 − − 515 Loans and receivables: Due from BSP Standard 12,216 − − 12,216 Due from other banks Standard 2,464 − − 2,464 Interbank loans receivable and SPURA Standard 2,409 − − 2,409 Other assets: Refundable deposits Standard 61 − − 61 Unrated 1 − − 1 P=41,993 P=285 P=− P=42,278

Parent Company December 31, 2019 Stage 1 Stage 2 Stage 3 Total Financial assets at FVTPL Standard P=5 P=− P=− P=5 Financial assets at FVOCI Government securities High 111 − − 111 Standard 8,100 210 − 8,310 Private bonds High 2,896 − − 2,896 Standard 2,373 75 − 2,448 Investment securities at amortized cost Government securities Standard 9,357 − − 9,357 Private bonds High 1,300 − − 1,300 Standard 500 − − 500 Loans and receivables: Due from BSP Standard 11,825 − − 11,825 Due from other banks Standard 2,374 − − 2,374 Interbank loans receivable and SPURA Standard 2,342 − − 2,342 Other assets: Refundable deposits Standard 61 − − 61 P=41,244 P=285 P=− P=41,529

Consolidated December 31, 2018 Stage 1 Stage 2 Stage 3 Total Financial assets at FVTPL Standard P=8 P=− P=− P=8 Financial assets at FVOCI Government securities High 386 − − 386 Standard 6,883 − − 6,883 Private bonds High 2,735 − − 2,735 Standard 2,916 − − 2,916

(Forward)

*SGVFSM000714* - 142 -

Consolidated December 31, 2018 Stage 1 Stage 2 Stage 3 Total Investment securities at amortized cost Government securities Standard P=10,674 P=− P=− P=10,674 Private bonds High 773 − − 773 Standard 1,150 − − 1,150 Loans and receivables: Due from BSP Standard 16,108 − − 16,108 Due from other banks Standard 3,010 − − 3,010 Interbank loans receivable and SPURA Standard 2,188 − − 2,188 Other assets: Refundable deposits Standard 63 − − 63 Unrated 1 − − 1 P=46,895 P=− P=− P=46,895

Parent Company December 31, 2018 Stage 1 Stage 2 Stage 3 Total Financial assets at FVTPL Standard grade P=8 P=− P=− P=8 Financial assets at FVOCI Government securities High 386 − − 386 Standard 6,883 − − 6,883 Private bonds High 2,735 − − 2,735 Standard 2,916 − − 2,916 Investment securities at amortized cost Government securities Standard 10,523 − − 10,523 Private bonds High 773 − − 773 Standard 1,100 − − 1,100 Loans and receivables: Due from BSP Standard 15,587 − − 15,587 Due from other banks Standard 2,944 − − 2,944 Interbank loans receivable and SPURA Standard 2,100 − − 2,100 Other assets: Refundable deposits Standard 63 − − 63 P=46,018 P=− P=− P=46,018

As of December 31, 2019, the Group’s and Parent Company’s commitments amounting to P=2.87 billion, =3.99P billion and =3.61P billion have a risk rating class of High Grade, Standard Grade and Unrated, respectively.

As of December 31, 2018, the Group’s and Parent Company’s commitments amounting to P=3.29 million and P=1.08 billion, have a risk rating class of Standard Grade and Unrated, respectively (see Note 28).

Liquidity Risk Liquidity risk may be defined as the possibility of loss due to the Group’s inability to meet its financial obligations when they become due. Liquidity risk is considered in the Group’s assets and liabilities management. The Group seeks to lengthen liability maturities, diversify existing fund sources, and continuously develop new instruments that cater to different segments of the market. *SGVFSM000714* - 143 -

The Parent Company’s Assets and Liabilities Committee (ALCO) is composed of some members of the Senior Management including the Lending Groups and Treasury Group Heads. ALCO conducts weekly meetings. The Parent Company also has specialized units that help monitor market and regulatory developments pertinent to interest rates and liquidity position, as well as prepare cash position reports as needed to measure the liquidity and reserves position of the Parent Company.

The Parent Company also keeps credit lines with financial institutions, as well as a pool of liquid or highly marketable securities. Reserves management is another specialized function within the Bank, complying with BSP reserve requirements, which may be a buffer against unforeseen liquidity drains.

The liquidity or maturity gap report is another tool for measuring liquidity risk. Although available contractual maturity dates are generally used for putting instruments into time bands, expected liquidation periods, often based on historical data, are used if contractual maturity dates are unavailable. The liquidity gap per time band is computed by getting the difference between the inflows and outflows within the time band. A positive liquidity gap is an estimate of the Group’s net excess funds for the time band. A negative liquidity gap is an estimate of a future funding requirement of the Group. Although such gaps are a normal part of the business, a significant negative amount may bring significant liquidity risk.

To help control liquidity risk arising from negative liquidity gaps, maximum cumulative outflow (MCO) targets are set for time bands up to one (1) year.,

Analysis of financial instruments by remaining maturities The table below summarized the maturity profile of the Group’s financial instruments based on contractual undiscounted cash flows except for financial assets at FVTPL which and based on expected disposal (in millions):

Consolidated 2019 Over 3 up On Up to to 12 Over 1 to Over 5 demand 3 months months 5 Years years Total Financial Assets Cash and other cash items P=3,249 P=– P=– P=– P=– P=3,249 Due from BSP 11,901 315 − − − 12,216 Due from other banks 2,464 – − − − 2,464 Interbank loans receivable and SPURA − 3,215 − − − 3,215 Financial assets at FVTPL − 4 − − 1 5 Financial assets at FVOCI − 6,676 282 4,500 6,501 17,959 Investment securities at amortized cost − 232 445 7,452 6,272 14,401 Loans and receivables 63 19,696 13,006 33,024 25,239 91,028 Other assets − 1 2 16 44 63 17,677 30,139 13,735 44,992 38,057 144,600 Financial Liabilities Deposit liabilities 39,641 42,090 5,794 11,799 3 99,327 Bills payable − 499 281 1,500 − 2,280 Bonds payable − 78 368 10,345 − 10,791 Manager’s checks 1,075 – – – – 1,075 Lease liabilies − 73 182 515 28 798 Accrued expenses and other liabilities 677 952 1,563 – – 3,192 41,393 43,692 8,188 24,159 31 117,463 Commitments 7,260 – – – – 7,260 48,653 43,692 8,188 24,159 31 124,723 (P=30,976) (P=13,553) P=5,547 P=20,833 P=38,026 P=19,877 *SGVFSM000714* - 144 -

Parent Company 2019 Over 3 up Up to to 12 Over 1 to Over 5 On demand 3 months months 5 Years years Total Financial Assets Cash and other cash items P=3,176 P=– P=– P=– P=– P=3,176 Due from BSP 11,825 − – – – 11,825 Due from other banks 2,374 − – – – 2,374 Interbank loans receivable and SPURA – 3,148 – − – 3,148 Financial assets at FVTPL – 4 – – 1 5 Financial assets at FVOCI − 6,676 282 4,500 6,501 17,959 Investment securities at amortized cost – 232 445 7,320 6,170 14,167 Loans and receivables – 19,624 12,720 31,417 25,059 88,820 Other assets – 1 2 15 44 62 17,375 29,685 13,449 43,252 37,775 141,536 Financial Liabilities Deposit liabilities 38,285 41,927 5,656 11,486 – 97,354 Bills payable − 499 281 1,500 – 2,280 Bonds payable – 78 368 10,345 – 10,791 Manager’s checks 1,075 – – – – 1,075 Lease liabilies − 72 178 486 9 745 Accrued expenses and other liabilities 556 925 1,563 – – 3,044 39,916 43,501 8,046 23,817 9 115,289 Commitments 7,259 – – – – 7,259 47,175 43,501 8,046 23,817 9 122,548 (P=29,800) (P=13,816) P=5,403 P=19,435 P=37,766 P=18,988

Consolidated 2018 Up to Over 3 up Over 1 to On demand 3 months to 12 months 5 Years Over 5 years Total Financial Assets Cash and other cash items P=2,370 P=– P=– P=– P=– P=2,370 Due from BSP 15,743 365 − − − 16,108 Due from other banks 688 2,322 − − − 3,010 Interbank loans receivable and SPURA − 2,188 24 − − 2,212 Financial assets at FVTPL 8 − − − − 8 Financial assets at FVOCI − − − 4,172 12,606 16,778 Investment securities at amortized cost 2 2 255 5,177 9,670 15,106 Loans and receivables 6,054 5,585 6,986 17,488 32,335 68,448 Other assets − − − 31 33 64 24,865 10,462 7,265 26,868 54,644 124,104 Financial Liabilities Deposit liabilities P=31,022 P=51,503 P=2,963 P=9,254 P=1,820 P=96,562 Bills payable − 5,604 293 1,420 467 7,784 Manager’s checks 720 – – – – 720 Accrued expenses 110 358 187 – – 655 Other liabilities 1,740 – – – – 1,740 33,592 57,465 3,443 10,674 2,287 107,461 Commitments 949 – – – – 949 34,541 57,465 3,443 10,674 2,287 108,410 (P=9,676) (P=46,972) P=3,831 P=16,194 P=52,358 P=15,735

*SGVFSM000714* - 145 -

Parent Company 2018 Up to Over 3 up Over 1 to On demand 3 months to 12 months 5 Years Over 5 years Total Financial Assets Cash and other cash items P=2,300 P=– P=– P=– P=– P=2,300 Due from BSP 15,587 − – – – 15,587 Due from other banks 852 2,092 – – – 2,944 Interbank loans receivable and SPURA – 2,077 23 − – 2,100 Financial assets at FVTPL 8 – – – – 8 Financial assets at FVOCI − − − 4,172 12,606 16,778 Investment securities at amortized cost − − 250 5,144 9,498 14,892 Loans and receivables 5,122 5,584 6,955 17,488 32,573 67,722 Other assets – – – 30 33 63 23,869 9,753 7,228 26,834 122,396 122,394

Financial Liabilities Deposit liabilities 29,826 51,314 2,870 9,107 1,817 94,934 Bills payable − 5,604 293 1,420 467 7,784 Manager’s checks 720 – – – – 720 Accrued expenses 110 343 157 – – 610 Other liabilities 1,730 – – – – 1,730 32,386 57,261 3,320 10,527 2,284 105,778 Commitments 949 – – – – 949 33,335 57,261 3,320 10,527 2,284 106,727 (P=9,466) (P=47,508) P=3,909 P=16,308 P=52,426 P=15,669

Market Risk Market risk may be defined as the possibility of loss due to adverse movements in market factors such as rates and prices. Market risk is present in both trading and non-trading activities. These are the risk to earnings or capital arising from changes in the value of traded portfolios of financial instruments. The risk arises from market-making, dealing and position-taking in quoted debt securities and foreign exchange.

The Parent Company observes market risk limits, which are approved by the BOD and reviewed at least annually. Limits are set in such a way as to ensure that risks taken are based on the Parent Company’s existing capital adequacy framework, and corresponding monitoring reports are prepared regularly by an independent risk management unit.

When limits are breached, approval is sought from successive levels of authority depending on the amount of the excess. Limit breaches are periodically presented to the BOD.

Value-at-Risk (VaR) is computed to estimate potential losses arising from market movements. The Parent Company calculates and monitors VaR and profit or loss on a daily basis.

VaR objectives and methodology VaR is used by the Parent Company to measure market risk exposure from its trading and investment activities. VaR is an estimate of the maximum decline in value on a given position over a specified holding period in a normal market environment, with a given probability of occurrence. The Parent Company uses the historical simulation method in estimating VaR. The historical simulation method is a non-parametric approach to VaR calculation, in which asset returns are not subject to any functional distribution assumption. VaR is estimated directly from historical data without deriving parameters or making assumptions about the entire data distribution.

*SGVFSM000714* - 146 -

In employing the historical simulation method, the Parent Company assumes a 500 historical data (approximately 2 years). The Parent Company updates its dataset on a daily basis per Parent Company policy, VaR is based on a 1-day holding period and a confidence level of 99%.

VaR methodology limitations and assumptions Discussed below are the limitations and assumptions applied by the Parent Company on its VaR methodology: a. VaR is a statistical estimate; thus, it does not give the precise amount of loss the Parent Company may incur in the future; b. VaR is not designed to give the probability of bank failure, but only attempts to quantify losses that may arise from a Parent Company’s exposure to market risk; c. Since VaR is computed from end-of-day positions and market factors, VaR does not capture intraday market risk. d. VaR systems depend on historical data. It attempts to forecast likely future losses using past data. As such, this assumes that past relationships will continue to hold in the future. Therefore, market shifts (i.e., an unexpected collapse of the market) will not be captured and may inflict losses larger than VaR; and e. The limitation relating to the pattern of historical returns being indicative of future returns is addressed by supplementing VaR with daily stress testing reported to the ROC, ALCO and the concerned risk-takers.

VaR back testing is the process by which financial institutions periodically compare ex-post profit or loss with the ex-ante VaR figures to gauge the robustness of the VaR model. The Parent Company performs quarterly back testing.

The Parent Company’s VaR figures are as follows (in millions):

2019 Average Daily Lowest Highest December 31 Local interest rates P=0.0092 P=1.8670 P=0.0382 P=− Foreign interest rate $0.0005 $0.0022 $0.0001 $0.0004

2018 Average Daily Lowest Highest December 31 Local interest rates P=0.1622 P=1.8121 P=0.0005 P=− Foreign interest rate $0.0018 $0.0034 $0.0005 $0.0020

Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments.

The sensitivity analysis below shows the impact of movement in interest rates on FVOCI investments of the Parent Company as of December 31, 2019 and 2018 (in millions).

Net Carrying +100 bps parallel -100 bps parallel shift December 31, 2019 Value shift in yield curve in yield curve Peso Denominated FVOCI P=9,774 (P=558) P=558 Dollar Denominated FVOCI (in PHP) 3,995 (466) 466

Net Carrying +100 bps parallel shift -100 bps parallel shift December 31, 2018 Value in yield curve in yield curve Peso Denominated AFS P=7,202 (P=372) P=372 Dollar Denominated AFS (in PHP) 5,726 (643) 643 *SGVFSM000714* - 147 -

The effects of the movement in interest rates on AFS investments are recorded under ‘other comprehensive income’.

The Parent Company’s ALCO surveys the interest rate environment, adjusts the interest rates for the Parent Company’s loans and deposits, assesses investment opportunities and reviews the structure of assets and liabilities. The Parent Company uses Earnings-at-Risk (EaR) as a tool for measuring and managing interest rate risk in the banking book.

Equity price risk Equity price risk is the risk that the fair values of the equities will decrease as a result of changes in the levels of equity indices and the value of the individual stocks. As of December 31, 2019 and 2018, the Group’s FVOCI equity investments amounted to =175.88P million and =157.50P million, respectively. Management assessed that the equity price risk on these equity securities to be insignificant.

Earnings-at-Risk objectives and methodology EaR is a statistical measure of the likely impact of changes in interest rates to the Bank’s net interest income (NII). To do this, repricing gaps (difference between interest rate-sensitive assets and liabilities) are classified according to time to repricing and multiplied with applicable historical interest rate volatility, although available contractual repricing dates are generally used for putting instruments into time bands, contractual maturity dates (e.g., for fixed rate instruments) or expected liquidation periods often based on historical data are used alternatively. The repricing gap per time band is computed by getting the difference between the inflows and outflows within the time band. A positive repricing gap implies that the Parent Company’s NII could decline if interest rates decrease upon repricing. A negative repricing gap implies that the Parent Company’s NII could decline if interest rates increase upon repricing. Although such gaps are a normal part of the business, a significant change may bring significant interest rate risk.

To help control interest rate risk arising from repricing gaps, maximum repricing gap and EaR/NII targets are set for time bands up to one year. EaR is prepared and reported to the ROC monthly.

Economic value of equity or EVE, a complement of EaR, will soon be utilized by the Bank in measurement of IRRBB in compliance with new regulations. EVE, as a measure, compute a change in the net present value of the bank’s assets, liabilities, and off-balance sheet items subject to specific interest rate shock and stress scenarios throughout their remaining life. To measure EVE, the Bank will establish behavioral and modelling assumptions, shock scenarios, and develop policies pertaining to them.

The Parent Company’s EaR figures are as follows (in millions):

2019 Average Highest Lowest December 31 Instruments sensitive to local interest rates P=292.65 P=361.38 P=195.18 P=302.75 Instruments sensitive to foreign interest rates $0.18 $0.25 $0.11 $0.18

2018 Average Highest Lowest December 31 Instruments sensitive to local interest rates P=322.01 P=392.20 P=271.40 P=392.20 Instruments sensitive to foreign interest rates $0.14 $0.18 $0.11 $0.13

*SGVFSM000714* - 148 -

Foreign currency risk Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

The BOD has set limits on positions by currency. In accordance with the Parent Company’s policy, positions are monitored on a daily basis and are used to ensure positions are maintained within established limits.

Statement of December 31, 2019 Income +10% USD appreciation USD (P=64,889,289) Other Foreign Currencies* (813,063) -10% USD depreciation USD 64,889,289 Other Foreign Currencies* 813,063

Statement of December 31, 2018 Income +10% USD appreciation USD P=4,692,232 Other Foreign Currencies* (31,755,352) -10% USD depreciation USD (4,692,232) Other Foreign Currencies* 31,755,352 *Significant position held in EUR, GBP and AUD

5. Fair Value Measurement

The methods and assumptions used by the Group in estimating the Group’s assets and liabilities are:

Cash and other cash items, due from BSP, due from other banks, interbank loans receivable/securities purchased under resale agreements, accrued interest receivables and accounts receivable Carrying value approximates fair value given the short-term nature of these financial assets and insignificant risk of changes in value.

Trading and investment securities Fair values of debt securities and equity investments are generally based on quoted market prices. If the fair value of financial assets cannot be derived from active markets, these are determined using internal valuation techniques using generally accepted market valuation models using inputs from observable markets subject to a degree of judgment.

For equity investments that are not quoted, the fair value are derived using the net asset value method.

Derivative instruments Fair values of quoted warrants are based on quoted market prices. Other derivative products are valued using valuation techniques using market observable inputs including foreign exchange rates and interest rate curves prevailing at the statements of financial position date. For interest rate swaps, cross-currency swaps and foreign exchange contracts, discounted cash flow model is applied. This valuation model discounts each cash flow of the derivatives at a rate that is dependent on the tenor of the cash flow.

*SGVFSM000714* - 149 -

Receivables from customers Fair values are estimated using the discounted cash flow methodology, using the Group’s current incremental lending rates for similar types of receivables at current market rates ranging from 7.58% to 42%. Where the instruments reprice on a short-term basis or have a relatively short maturity, the carrying amounts approximate fair values.

Other receivables - Accounts receivable and accrued interest receivable Carrying amounts approximate fair values given their short-term nature.

Investment properties Fair value of investment properties are based on market data (or direct sales comparison) approach. This approach relies on the comparison of recent sale transactions or offerings of similar properties which have occurred and/or offered with close proximity to the subject property.

The fair values of the Group’s investment properties have been determined by appraisers, including independent external appraisers, in the basis of the recent sales of similar properties in the same areas as the investment properties and taking into account the economic conditions prevailing at the time of the valuations are made.

The Group has determined that the highest and best use of the property used for the land and building is its current use.

Refundable deposits Fair values are estimated using the discounted cash flow methodology, using the average market price for similar types of receivables with maturities consistent to the receivable being valued. Where the instruments reprice on a short-term basis or have a relatively short maturity, the carrying amounts approximate fair values.

Time deposits Fair values are estimated using the discounted cash flow methodology using the Group’s current incremental borrowing rates for similar borrowings with maturities consistent with those remaining for the liability being valued.

Long-term negotiable certificates of deposit (LTNCD) Fair values of LTNCD are estimated using quoted price for identical assets or liabilities in markets that are not active.

Bonds payable Fair Values of the Bonds Payable are estimated using quoted price for identical assets or liabilities in markets that are not active.

Other financial liabilities Carrying amounts approximate fair values due to either the demand nature or the relatively short-term maturities of these liabilities.

Consolidated 2019 Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Financial Assets At FVTPL P=4,935,882 P=3,943,264 P=992,618 P=– P=4,935,882 At FVOCI: Government securities 8,421,114,497 8,367,728,123 53,386,374 – 8,421,114,497 Private bonds 5,344,204,206 4,910,995,793 433,208,413 – 5,344,204,206 Quoted equity securities 175,875,000 175,875,000 – – 175,875,000 Unquoted equity securities 32,268,140 – – 32,268,140 32,268,140 P=13,978,397,725 P=13,458,542,180 P=487,587,405 P=32,268,140 P=13,978,397,725 Assets for which Fair Values are Disclosed Financial Assets Investment securities at amortized cost P=11,357,261,241 P=3,954,282,864 P=7,126,636,855 P=– P=11,080,919,719

Loans and receivables: Receivables from customers: Commercial 49,174,334,783 – – 42,588,556,509 42,588,556,509 Real estate 19,068,816,886 – – 18,556,376,219 18,556,376,219 Consumption 10,165,626,272 – – 9,955,355,261 9,955,355,261 Domestic bills purchased 444,884,387 – – 444,884,387 444,884,387 Other receivables: Sales contract receivable 82,767,162 – – 75,667,608 75,667,608 Refundable deposits 62,313,746 – – 62,236,208 62,236,208 Non-Financial Assets Investment properties 382,355,004 – – 671,273,189 671,273,189 P=90,738,359,481 P=3,954,282,864 P=7,126,636,855 P=72,354,349,381 P=83,435,269,100

Liabilities for which Fair Values are Disclosed Financial Liabilities Derivative liabilities P=462,908 P=– P=462,908 P=– P=462,908 Deposit liabilities: Demand 17,054,484,841 – – 17,054,203,891 17,054,203,891 Savings 58,931,747,324 – – 58,852,787,140 58,852,787,140 Time 15,687,802,834 – – 15,670,406,621 15,670,406,621 Long-term negotiable certificates of deposits 5,927,592,846 – 5,859,723,907 – 5,859,723,907 Bonds payable 9,889,835,356 – 10,054,821,503 – 10,054,821,503 Bills payable 2,040,505,751 – – 2,040,505,751 2,040,505,751 P=109,532,431,860 P=– P=15,915,008,318 P=93,617,903,403 P=109,532,911,721

Parent Company 2019 Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Financial Assets At FVTPL P=4,935,882 P=3,943,264 P=992,618 P=– P=4,935,882 At FVOCI: Government securities 8,421,114,497 8,367,728,123 53,386,374 – 8,421,114,497 Private bonds 5,344,204,206 4,910,995,793 433,208,413 – 5,344,204,206 Quoted equity securities 175,875,000 175,875,000 – – 175,875,000 Unquoted equity securities 62,468,140 – – 62,468,140 62,468,140 P=14,008,597,725 P=13,458,542,180 P=487,587,405 P=62,468,140 P=14,008,597,725 Assets for which Fair Values are Disclosed Financial Assets Investment securities at amortized cost P=11,156,952,059 P=3,857,949,366 P=7,026,215,188 P=– P=10,884,164,554 Loans and receivables: Receivables from customers: Commercial 48,993,283,191 – – 42,405,026,261 42,405,026,261 Real estate 19,022,113,324 – – 18,480,454,224 18,480,454,224 Consumption 8,860,045,099 – – 8,171,271,748 8,171,271,748 Domestic bills purchased 444,884,387 – – 444,884,387 444,884,387 Other receivables: Sales contract receivable 55,699,215 – – 55,699,215 55,699,215 Refundable deposits 61,066,765 – – 61,066,765 61,066,765 Non-Financial Assets Investment properties 266,464,925 – – 489,821,931 489,821,931 P=88,860,508,965 P=3,857,949,366 P=7,026,215,188 P=70,108,224,531 P=80,992,389,085

(Forward)

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Parent Company 2019 Total Fair Carrying Value Level 1 Level 2 Level 3 Value Liabilities for which Fair Values are Disclosed Financial Liabilities Derivative liabilities P=462,908 P=– P=462,908 P=– P=462,908 Deposit liabilities: Demand 16,880,570,300 – – 16,878,334,700 16,878,334,700 Savings 57,516,406,672 – – 57,438,382,008 57,438,382,008 Time 15,306,981,464 – – 15,306,981,382 15,306,981,382 Long-term negotiable certificates of deposits 5,927,592,846 – 5,859,723,907 – 5,859,723,907 Bonds payable 9,889,835,356 – 10,054,821,503 – 10,054,821,503 Bills payable 2,040,505,751 – – 2,207,219,540 2,207,219,540 P=107,562,355,297 P=– P=15,915,008,318 P=91,830,917,630 P=107,745,925,948

Consolidated 2018 Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Financial Assets Financial assets at FVTPL P=8,206,143 P=− P=8,206,143 P=− P=8,206,143 Financial assets at FVOCI Government securities 7,268,522,839 2,867,172,896 4,401,349,943 − 7,268,522,839 Private bonds 5,651,128,473 − 5,651,128,473 − 5,651,128,473 Quoted equity securities 157,500,000 157,500,000 − − 157,500,000 Unquoted equity securities 39,635,764 − − 39,635,764 39,635,764 P=13,124,993,219 P=3,024,672,896 P=10,060,684,559 P=39,635,764 P=13,124,993,219 Assets for which Fair Values are Disclosed Financial Assets Interbank loans receivable and SPURA P=2,188,410,000 P=− P=− P=2,188,410,932 P=2,188,410,932 Investment securities at amortized cost 12,597,089,717 7,553,114,222 3,270,414,468 − 10,823,528,690 Loans and receivables: Receivables from customers: Commercial 44,053,793,453 − − 47,136,797,181 47,136,797,181 Real estate 14,012,497,129 − − 17,242,929,073 17,242,929,073 Consumption 8,033,865,678 − − 8,562,533,172 8,562,533,172 Domestic bills purchased 834,447,716 − − 834,447,716 834,447,716 Other receivables: Accrued interest receivables 719,091,672 − − 719,091,672 719,091,672 Accounts receivable 729,515,033 − − 729,515,033 729,515,033 Sales contract receivable 18,191,403 − − 18,493,297 18,493,297 Lease receivable 9,660,132 − − 1,017,802 1,017,802 Refundable deposits 64,481,147 − − 64,786,802 64,786,802 Non-Financial Assets Investment properties 341,073,550 − − 517,300,140 517,300,140 P=83,602,116,630 P=7,553,114,222 P=3,270,414,468 P=78,015,322,820 P=88,838,851,510 Financial Liabilities Derivative liabilities P=336,698 P=− P=336,698 P=− P=336,698 Deposit liabilities: Demand 16,050,910,830 − − 16,050,910,830 16,050,910,830 Savings 59,709,184,942 − − 59,685,940,558 59,685,940,558 Time 13,328,372,113 − − 12,884,740,145 12,884,740,145 Long-term negotiable certificates of deposits 5,917,925,850 − 5,964,070,000 − 5,964,070,000 Bills payable 7,436,904,315 − − 7,436,904,315 7,436,904,315 P=102,443,634,748 P=− P=5,964,406,698 P=96,058,495,848 P=102,022,902,546

Parent Company 2018 Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Financial Assets Financial assets at FVTPL P=8,206,143 P=− P=8,206,143 P=− P=8,206,143 Financial assets at FVOCI Government securities 7,268,522,839 2,867,172,896 4,401,349,943 − 7,268,522,839 Private bonds 5,651,128,473 − 5,651,128,473 − 5,651,128,473 Quoted equity securities 157,500,000 157,500,000 − − 157,500,000 Unquoted equity securities 69,635,764 − − 69,635,764 69,635,764 P=13,154,993,219 P=3,024,672,896 P=10,060,684,559 P=69,635,764 P=13,154,993,219

(Forward)

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Parent Company 2018 Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets for which Fair Values are Disclosed Financial Assets Interbank loans receivable and SPURA P=2,100,410,000 P=− P=− P=2,100,410,932 P=2,100,410,932 Investment securities at amortized cost 12,396,700,654 7,467,052,657 3,181,633,642 − 10,648,686,299 Loans and receivables: Receivables from customers: Commercial 43,899,258,477 − − 46,872,042,755 46,872,042,755 Real estate 14,000,598,525 − − 17,221,764,561 17,221,764,561 Consumption 7,226,474,038 − − 7,451,176,964 7,451,176,964 Domestic bills purchased 834,447,716 − − 834,447,716 834,447,716

Other receivables: Accrued interest receivables 707,881,692 − − 707,881,692 707,881,692 Accounts receivable 717,144,173 − − 717,144,173 717,144,173 Sales contract receivable 10,781,280 − − 10,781,280 10,781,280 Lease receivable − − − − − Refundable deposits 63,369,966 − − 63,570,466 63,570,466 Non-Financial Assets Investment properties 212,181,540 − − 320,901,491 320,901,491 P=82,169,248,061 P=7,467,052,657 P=3,181,633,642 P=76,300,122,030 P=86,948,808,329 Financial Liabilities Derivative liabilities P=336,698 P=− P=336,698 P=− P=336,698 Deposit liabilities: Demand 15,876,375,795 − − 15,876,375,795 15,876,375,795 Savings 58,456,351,809 − − 58,456,351,809 58,456,351,809 Time 13,148,295,392 − − 12,651,587,964 12,651,587,964 Long-term negotiable certificates of deposits 5,917,925,850 − 5,964,070,000 − 5,964,070,000 Bills payable 7,436,904,315 − − 7,436,904,315 7,436,904,315 P=100,836,189,859 P=− P=5,964,406,698 P=94,421,219,883 P=100,385,626,581

For assets and liabilities that are recognized at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole at the end of each statement of financial position).

In 2019 and 2018, government securities classified as financial assets at FVTPL are moved from Level 2 to Level 1.

Description of significant unobservable inputs to valuation:

Consolidated Accounts Valuation Technique Significant Unobservable Inputs Loans and receivables Discounted cash flow method 4.00% - 42.00% risk premium rate Investment properties Land Market data approach Price per square meter, size, shape, location, time element and discount Building Cost approach Cost per square meter, size, shape, location, condition and time element Refundable deposits Discounted cash flow method 0.25% - 11.00% risk premium rate Time deposits Discounted cash flow method 0.25% - 3.90% risk premium rate Unquoted equity Adjusted net asset value method 30% degree of lack of marketability instruments

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Parent Company Accounts Valuation Technique Significant Unobservable Inputs Loans and receivables Discounted cash flow method 4.00% - 42% risk premium rate Investment properties Land Market data approach Price per square meter, size, shape, location, time element and discount Building Cost approach Cost per square meter, size, shape, location, condition and time element Refundable deposits Discounted cash flow method 0.25% - 3.00% risk premium rate DBP Bills Payable Discounted cash flow method 4.28% risk premium rate Unquoted equity Adjusted net asset value method 30% degree of lack of marketability instruments

Significant increases (decreases) in price per square meter and size of investment properties would result in a significantly higher (lower) fair value of the properties. Significant increases (decreases) in discount would result in a significantly lower (higher) fair value of the properties. Significant increase (decrease) in degree of lack of marketability would result in lower (higher) fair value of unquoted equity securities.

Significant Unobservable Inputs

Size Size of lot in terms of area. Evaluate if the lot size of property or comparable conforms to the average cut of the lots in the area and estimate the impact of the lot size differences on land value. Shape Particular form or configuration of the lot. A highly irregular shape limits the usable area whereas an ideal lot configuration maximizes the usable area of the lot which is associated in designing an improvement which conforms with the highest and best use of the property. Location Location of comparative properties whether on a main road, or secondary road. Road width could also be a consideration if data is available. As a rule, properties located along a main road are superior to properties located along a secondary road. Time element An adjustment for market conditions is made if general property values have appreciated or depreciated since the transaction dates due to inflation or deflation or a change in investor’s perceptions of the market over time. In which case, the current data is superior to historic data. Discount Generally, asking prices in ads posted for sale are negotiable. Discount is the amount the seller or developer is willing to deduct from the posted selling price if the transaction will be in cash or equivalent. Degree of Marketability is the degree to which ownership interest can be converted to cash lack of quickly without unreasonable experience and with certainty of the amount of marketability proceeds.

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6. Due from Other Banks, Interbank Loans Receivable and Securities Purchased Under Resale Agreement

Due from Other Banks This account consists of:

Consolidated Parent Company 2019 2018 2019 2018 Foreign banks P=1,462,853,252 P=1,772,754,799 P=1,462,853,252 P=1,772,754,799 Local banks 1,001,138,515 1,237,407,981 911,223,534 1,171,421,535 P=2,463,991,767 P=3,010,162,780 P=2,374,076,786 P=2,944,176,334

For the years ended December 31, 2019, 2018 and 2017, peso-denominated due from other banks bear nominal interest rates ranging from 0.10% to 1.00% while foreign currency-denominated due from other banks bear nominal interest rates ranging from 0.10% to 0.25%.

Total interest income on ‘Due from other banks’ earned by the Group amounted to =20.59P million, P=13.05 million and P=6.87 million for the years ended December 31, 2019, 2018 and 2017, respectively, while total interest income earned by the Parent Company amounted to =20.47P million, P=12.99 million and P=6.84 million for the years ended December 31, 2019, 2018 and 2017, respectively, presented in ‘Interest income on deposits with banks and others’ in the statements of income.

Total interest income on ‘Due from BSP’ earned by the Group amounted to =12.00P million, P=27.25 million and P=53.14 million for the years ended December 31, 2019, 2018 and 2017, respectively, while total interest income earned by Parent Company earned P=1.79 million, P=9.30 million and P=34.18 million for the years ended December 31, 2019, 2018 and 2017, respectively, presented in ‘Interest income on deposits with banks and others’ in the statements of income.

Interbank Loans and Receivable and Securities Purchased Under Resale Agreement This account consists of:

Consolidated Parent Company 2019 2018 2019 2018 Interbank loans receivable P=2,342,127,432 P=2,100,410,000 P=2,342,127,432 P=2,100,410,000 SPURA 66,578,028 88,000,000 − − P=2,408,705,460 P=2,188,410,000 P=2,342,127,432 P=2,100,410,000

Interbank loans receivable of the Parent Company from a local savings bank has a remaining maturity of two (2) days to six (6) days in 2019 and four (4) days to four (4) months in 2018. As of December 31, 2019 and 2018, placement on SPURA with the BSP had a remaining maturity of six (6) days and two (2) days, respectively. The fair value of the related collateral of SPURA is disclosed in Note 5.

The interest income of the Group in 2019, 2018 and 2017 from interbank loan receivable and SPURA amounted to =64.54P million, =82.55P million and =135.33P million, respectively.

The interest income of Parent Company in 2019, 2018, and 2017 from interbank loan receivable and SPURA amounted to P=58.73 million, =77.48P million and =130.86P million, respectively.

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7. Investment Securities

Financial Assets at FVTPL This account consists of investments by the Parent Company in:

2019 2018 Government securities P=3,943,264 P=8,206,143 Derivatives assets 992,618 − P=4,935,882 P=8,206,143

Derivative assets are composed of foreign currency swaps. currency swaps represent commitments to purchase/sell foreign currency on a future date at an agreed exchange rate.

The nominal annual interest rates of peso-denominated government securities range from 3.25% to 8.00% in 2019, 2.13% to 8.00% in 2018 and from 3.25% to 7.25% in 2017. The nominal annual interest rates of foreign currency-denominated government securities is 3.00% to 8.38% in 2019, and range from 3.00% to 3.70% in 2018 and from 3.70% to 3.95% in 2017.

The table below shows the fair values of derivative financial instruments entered into by the Parent Company, recorded as derivative assets/liabilities, together with the notional amounts. The notional amount is the amount of a derivative’s underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding as of December 31, 2019 and 2018 and are not indicative of either market risk or credit risk.

2019 Average Liabilities Forward Notional Assets (Note 17) Rate Amount Maturity Date Freestanding Derivatives Currency Swaps Sold: AUD/USD P=− P=382,636 0.69 $687,243 January 3, 2020 EUR/USD − 80,272 1.11 $1,108,915 January 2, 2020 USD/JPY 992,618 − 109.38 ¥9,142,606 January 21, 2020 P=992,618 P=462,908

2018 Average Liabilities Forward Notional Assets (Note 17) Rate Amount Maturity Date Freestanding Derivatives Currency Swaps Sold: USD/JPY P=− P=336,698 110.99 ¥540,580 January 4, 2019

Movements in the Group’s and Parent Company’s derivative financial instruments follow: 2019 2018 Balance at beginning of the year (P=336,698) (P=5,871,507) Fair value changes during the year 45,381,998 4,355,889 Settled transactions (44,515,590) 1,178,920 Balance at end of the year P=529,710 (P=336,698)

The Bank’s subsidiary has nil financial assets at FVTPL as of December 31, 2019 and 2018.

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Financial Assets at Fair Value through Other Comprehensive Income The financial assets at fair value through other comprehensive income of the Group and Parent Company consist of the following as of:

Consolidated Parent Company 2019 2018 2019 2018 Government securities P=8,421,114,497 P=7,268,522,839 P=8,421,114,497 P=7,268,522,839 Private bonds 5,344,204,206 5,651,128,473 5,344,204,206 5651,128,473 Quoted equity securities 175,875,000 157,500,000 175,875,000 157,500,000 Unquoted equity securities 32,268,140 39,635,764 62,468,140 69,835,764 P=13,973,461,843 P=13,116,787,076 P=14,003,661,843 P=13,146,987,076

As of December 31, 2019 and 2018, the quoted equity securities of the Group consist of shares of stocks in a private corporation.

Investments in unquoted equity securities include investment in shares of stock of Philippine Clearing House Corporation (PCHC), BancNet, and LGU Guarantee Corporation. These investments are required to be held by the Parent Company as part of its operations. The Parent Company does not have any plans to sell these shares in the future. Fair values of these securities are derived based on the adjusted net asset value method.

As of December 31, 2019 and 2018, the unquoted equity securities of the Parent Company include redeemable preferred shares of LSB amounting to P=30.20 million equivalent to 30,200 shares.

The range of the Group’s effective interest rate on government securities are as follows:

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

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

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

In 2019, 2018 and 2017, dividend income from equity securities presented under ‘Miscellaneous income - others’ of the Group amounted to P=10.18 million, P=11.21 million and =13.40P million, respectively (see Note 24).

Movements in net unrealized losses of the Group and the Parent Company included in the carrying value of ‘FVOCI investments’ follow:

2019 2018 Balance at beginning of year (P=1,036,006,819) (P=1,026,656,867) Changes due to reclassification to HTC – 940,088,924 Balance at beginning of year, as restated (1,036,006,819) (86,567,943) Changes in fair value 1,352,957,387 (934,221,581) Realized gains taken to profit or loss (331,145,509) (15,217,295) Change in unrealized losses on FVOCI investments 1,021,811,878 (949,438,876) Provision for impairment loss 2,070,586 – Balance at end of year (P=12,124,355) (P=1,036,006,819)

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The Bank’s subsidiary has nil financial assets at FVOCI as of December 31, 2019 and 2018.

Investment Securities at Amortized Cost The investment securities at amortized cost of the Group and Parent Company consist of the following as of:

Consolidated Parent Company 2019 2018 2019 2018 Government securities P=9,507,201,849 P=10,673,679,979 P=9,356,915,213 P=10,523,326,784 Private bonds 1,850,398,340 1,923,410,533 1,800,369,072 1,873,373,870 11,357,600,189 12,597,090,512 11,157,284,285 12,396,700,654 Less:Allowance for impairment losses (Note 14) 338,948 795 332,226 – P=11,357,261,241 P=12,597,089,717 P=11,156,952,059 P=12,396,700,654

In 2019 and 2018, investment securities at amortized cost were carried at Stage 1 and there were no transfers into and out of Stage 1.

As of December 31, 2019, the Bank’s bills payable was secured by government securities classified as investment securities at amortized cost with carrying of =800.00P million (see Note 18).

The effective interest rates for peso-denominated investment securities at amortized cost of the Group range from 3.25% to 8.13% in 2019 and from 2.08% to 6.00% in 2018. The effective interest rates for foreign currency-denominated investment securities at amortized cost of the Group is 2.75% in 2019 and range from 2.76% to 5.31% in 2018. Interest income on investment securities of the Group and the Parent Company consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Financial assets at FVOCI P=550,579,895 P=706,749,553 P=− P=550,579,895 P=706,749,553 P=− Investment securities at amortized cost 486,140,405 364,317,419 − 477,790,098 356,079,561 − Financial assets at FVTPL 4,831,348 716,432 3,164,288 4,831,348 716,432 3,164,288 AFS investments − − 695,049,519 − − 688,508,165 HTM investments − − 23,747,163 − − 23,747,163 P=1,041,551,648 P=1,071,783,404 P=721,960,970 P=1,033,201,341 P=1,063,545,546 P=715,419,616

‘Trading and securities gains - net’ of the Group and Parent Company consist of:

2019 2018 2017 Net realized gains on financial assets at FVOCI taken to profit or loss P=331,145,509 P=15,217,295 P=− Realized gain (losses) on derivatives 44,515,590 (1,178,920) 21,215,876 Net realized gains (losses) on sale of financial assets at FVTPL 21,324,814 4,596,322 14,224,671 Unrealized mark-to-market gains (losses) on financial assets at FVTPL 204,255 146 (1,223,824) Net unrealized gains (losses) on derivatives 529,710 (336,698) (5,871,507) Net realized gains on AFS taken to profit or loss − − 147,619,819 Gain on disposal of HTM investments − − 8,928,275 P=397,719,878 P=18,298,145 P=184,893,310

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In 2019, the Parent Company disposed ‘Investment Securities at Amortized Cost’ with carrying value of P=1.11 billion resulting in a gain on disposal amounting to =62.88P million. As a result of the Parent Company’s change in investment policy to prepare for the implementation of IRRBB measured using EVE in accordance with the provisions under BSP Circular No. 1044, Guidelindes on the Management of Interest Rate Risk in the Banking Book and amendment of the Guidelines on Market Risk Management, it abandoned the HTC business model for its foreign currency denominated HTC securities with tenor of more than fifteen (15) years. The remaining HTC securities of the Parent Company amounting to USD8 million will remain to be under a HTC business model.

8. Loans and Receivables

This account consists of:

Consolidated Parent Company 2019 2018 2019 2018 Receivables from customers: Commercial (Note 26) P=49,514,835,477 P=44,523,131,006 P=49,406,873,364 P=44,319,486,548 Real estate 19,328,435,011 14,376,289,959 19,276,101,474 14,357,642,678 Consumption 10,827,271,508 8,545,058,560 9,309,822,493 7,621,965,636 Domestic bills purchased (Notes 19 and 26) 495,192,826 834,447,716 495,192,826 834,447,716 80,165,734,822 68,278,927,241 78,487,990,157 67,133,542,578 Less: unearned interest and discount 328,181,769 416,063,873 240,737,163 346,925,553 79,837,553,053 67,862,863,368 78,247,252,994 66,786,617,025 Other receivables: Accrued interest receivable 950,249,772 822,752,349 921,953,322 793,133,058 Accounts receivable 1,101,982,028 777,941,081 1,074,175,868 760,767,610 Sales contract receivable 82,942,164 28,501,001 55,699,215 18,319,215 Lease receivables (Note 23) − 9,660,132 − − 81,972,727,017 69,501,717,931 80,299,081,399 68,358,836,908 Less: Allowance for credit losses (Note 14) 1,166,921,305 1,090,655,715 1,058,755,225 962,251,007 P=80,805,805,712 P=68,411,062,216 P=79,240,326,174 P=67,396,585,901

On May 26, 2017, the Parent Company entered into a purchase of receivables agreement with Robinsons Land Corporation (RLC) whereby, the Parent Company will purchase, on a without recourse basis, certain finance lease receivables of RLC up to an aggregate amount of P=2.00 billion. In 2017, total lease receivables purchased by the Parent Company amounted to =1.08P billion. On June 29, 2018, the Bank entered into an agreement with RLC thereby increasing the aggregate amount of lease receivables to be purchased to =3.00P billion. In 2019 and 2018, total lease receivable purchased by the Parent Company amounted =33.0P million to and P=1.3 billion, respectively.

The Parent Company's acquisition cost of the lease receivables approximate the fair value at the acquisition date. As of December 31, 2019 and 2018, the carrying amount of these receivables amounting to P=1.76 billion and P=2.12 billion, respectively, is included under 'Real Estate' loans of the Parent Company.

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Interest income on loans and receivables consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Receivables from customers: Commercial P=3,173,161,721 P=2,488,181,208 P=1,692,098,388 P=3,162,141,109 P=2,435,437,049 P=1,646,008,628 Consumption 1,806,095,578 1,334,075,467 1,016,984,816 1,491,361,934 1,193,095,355 870,261,156 Real estate 1,076,020,078 741,540,449 480,287,737 1,073,851,062 741,044,086 479,910,163 Domestic bills purchased 459,690 278,928 304,453 459,690 278,928 304,453 Others 4,342,079 2,901,732 2,493,750 1,963,479 1,057,475 203,301 P=6,060,079,146 P=4,566,977,784 P=3,192,169,144 P=5,729,777,274 P=4,370,912,893 P=2,996,687,701

Receivables from customers earns annual effective interest rates, as follow:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Effective interest rate 2.00- 60.95 2.00- 54.06 2.00-52.10 2.00- 60.95 2.00- 54.06 2.00-52.10

Others consist of sales contract receivables and lease receivables.

The range of effective interest rates of the Group’s sales contract receivables are as follows:

Year Interest Rate 2019 6.50% to 54.18% 2018 7.00% to 12.00% 2017 6.50% to 16.73%

9. Investment in a Subsidiary

On December 26, 2012, the MB of the BSP approved the share purchase agreement (SPA) covering the Parent Company’s acquisition of the 100.00% common shares of LSB. The deeds of sale to implement the SPA were executed afterwards.

In addition to the approval of the acquisition, the MB of the BSP approved the following merger incentives:

1. Grant of several branch licenses to the Parent Company in restricted areas and waiver of corresponding P=20.00 million special branch licensing fee for each restricted branch license, subject to the following conditions: (a) the establishment of the awarded branches in restricted areas shall be subject to compliance with all other applicable provisions on branch establishment prescribed under Section X151 of the Manual of Regulations for Banks (MORB); and (b) branches shall be opened within three (3) years from BSP final approval of the Parent Company’s acquisition of LSB.

2. Waiver of (a) the monetary penalties aggregating P=6.40 million as of November 30, 2012 for violation of laws assessed by BSP on LSB, except penalties accruing to other parties, e.g., Micro, Small and Medium Enterprises Development Council Fund. Such waiver shall not preclude BSP from pursuing watchlisting and imposition of non-monetary and administrative sanctions (e.g., fines, disqualifications, suspensions and/or removal from office) against the directors and officers of LSB in accordance with applicable banking laws and regulations, without prejudice to the filing of criminal cases against liable persons under Section 34, 35 and 36 of Republic Act No. 7653

*SGVFSM000714* - 160 -

(the New Central Bank Act); (b) the applicable restrictions/ceilings on transactions between the Parent Company and LSB, for a period of three months, with respect to the Parent Company’s liquidity support to LSB (through deposits to and/or purchase of receivables from LSB).

3. Staggered booking, up to five (5) years from final BSP approval of the Parent Company’s acquisition of LSB, of the =274.10P million required allowance for probable losses on LSB’s risk assets. The periodic amortization shall be charged against current operations, in accordance with the regulatory accounting guidelines for deferred loss recognition under Appendix 56a (to Subsection X394.10) of the MORB. The unamortized losses shall be deducted from qualifying capital for purposes of capital adequacy ratio computation and from computation of LSB’s unimpaired capital under Subsection X116.1 of the MORB.

4. Retention of the thrift branch license of LSB on its existing eleven (11) branches, for its operations as a wholly-owned subsidiary of the Parent Company to pursue microfinance and country-side banking.

5. Approval of the following interlocking positions: a. concurrent assignment of the Parent Company’s Head of Legal Services as Corporate Secretary of LSB; b. secondment of the officers of the Parent Company to LSB to assume the position of President and Chief Compliance Officer subject to the condition that these officers shall (i) relinquish all their duties, responsibilities, and signing authorities in the Parent Company and (ii) receive compensation/salaries and other emoluments from LSB; and c. notation of the interlocking directorships and officership-directorships of the Parent Company.

Based on the foregoing events, the Parent Company acquired effective control and management of LSB as of December 26, 2012. Accordingly, in accordance with PFRS 3, Business Combinations, the Parent Company’s date of acquisition of LSB is December 26, 2012. However, for convenience purposes, the Group used December 31, 2012 as the cut-off in determining the fair value of the net assets of LSB. Therefore, only the fair values of the identifiable assets and liabilities of LSB as December 31, 2012 were consolidated and the profit and loss of LSB for the year ended December 31, 2012 were excluded from the Group’s consolidated financial statements as of December 31, 2012.

The acquisition resulted in recognition of goodwill amounting to P=244.33 million. There were no adjustments resulting from the final purchase price allocation from LSB. As of December 31, 2019 and 2018, goodwill amounted to =244.33P million.

As of December 31, 2019 and 2018, the Parent Company‘s investment in LSB consists of:

December 31, December 31, 2019 2018 Cost Balance at beginning and end of year P=1,131,000,000 P=1,131,000,000 Accumulated equity in net income Balance at beginning of year 104,478,235 101,986,043 PFRS 9 transition adjustment for ECL − (7,380,714) Share in net income of a subsidiary 125,666,513 9,872,906 Balance at end of year 230,144,748 104,478,235

(Forward) *SGVFSM000714* - 161 -

December 31, December 31, 2019 2018 Accumulated equity in OCI Balance at beginning of year P=1,262,202 (P=17,272,868) PFRS 9 transition adjustment for reclassification of unrealized gain (loss) on available-for-sale investments − 18,055,001 Remeasurement gain on retirement liability (5,228,610) 480,069 Balance at end of year (3,966,408) 1,262,202 P=1,357,178,340 P=1,236,740,437

10. Property and Equipment

The composition of and the movements in this account follow:

Consolidated 2019 Furniture, Right-of-Use Transportation Leasehold Fixtures and of Asset Land Building Equipment Improvements Equipment (Note 2) Total Cost Balance at beginning of year P=35,605,323 P=75,895,770 P=186,519,745 P=813,355,101 P=964,265,910 P=635,203,495 P=2,710,845,344 Additions − 765,777 20,729,436 92,900,208 100,752,050 292,205,132 507,352,603 Disposals − − (23,042,137) (1,099,324) (7,731,931) − (31,873,392) Reclassification (Notes 11 and 13) 8,340,000 150,000 4,749,187 − − − 13,239,187 Balance at end of year 43,945,323 76,811,547 188,956,231 905,155,985 1,057,286,029 927,408,627 3,199,563,742 Accumulated depreciation and amortization Balance at beginning of year − 31,483,112 135,174,522 525,851,294 747,228,193 − 1,439,737,121 Depreciation and amortization − 4,565,656 23,989,615 93,235,517 90,745,167 248,849,807 461,385,762 Disposals − − (15,738,868) (810,232) (6,497,009) − (23,046,109) Balance at end of year − 36,048,768 143,425,269 618,276,579 831,476,351 248,849,807 1,878,076,774 Allowance for impairment losses (Note 14) Balance at beginning of year 11,385,054 1,050,745 − − 279,328 − 12,715,127 Provision − − − − − − − Reclassification (Notes 11 and 13) − 143,792 − − − − 143,792 Balance at end of year 11,385,054 1,194,537 − − 279,328 − 12,858,919 Net Book Value at End of the Year P=32,560,269 P=39,568,242 P=45,530,962 P=286,879,406 P=225,530,350 P=678,558,820 P=1,308,628,049

Parent Company 2019 Furniture, Right-of Use Transportation Leasehold Fixtures and of Asset Land Building Equipment Improvements Equipment (Note 2) Total Cost Balance at beginning of year P=23,590,796 P=57,709,845 P=169,879,756 P=753,581,127 P=865,528,419 P=587,515,373 P=2,457,805,316 Additions − − 15,617,157 80,289,172 85,529,553 280,341,794 461,777,676 Disposals − − (19,110,936) (1,057,504) (6,369,690) − (26,538,130) Matured Leases − − − − − − − Reclassification (Notes 11 and 13) − − 4,749,187 − − − 4,749,187 Balance at end of year 23,590,796 57,709,845 171,135,164 832,812,795 944,688,282 867,857,167 2,897,794,049 Accumulated depreciation and amortization Balance at beginning of year − 24,047,267 123,672,820 505,254,643 670,156,977 − 1,323,131,707 Depreciation and amortization − 3,374,202 22,055,980 84,467,659 78,222,187 239,507,076 427,627,104 Disposals − − (12,393,150) (807,909) (5,840,654) − (19,041,713) Balance at end of year − 27,421,469 133,335,650 588,914,393 742,538,510 239,507,076 1,731,717,098 Allowance for impairment losses (Note 14) Balance at beginning of year − − − − 279,328 − 279,328 Provision − − − − − − − Balance at end of year − − − − 279,328 − 279,328 Net Book Value at End of the Year P=23,590,796 P=30,288,376 P=37,799,514 P=243,898,402 P=201,870,444 P=628,350,091 P=1,165,797,623

*SGVFSM000714* - 162 -

Consolidated 2018 Furniture, Transportation Leasehold Fixtures and Land Building Equipment Improvements Equipment Total Cost Balance at beginning of year P=35,605,323 P=75,895,770 P=179,163,323 P=680,851,683 P=872,284,181 P=1,843,800,280 Additions − − 29,816,294 132,597,756 95,446,297 257,860,347 Disposals − − (27,495,112) (94,338) (3,464,568) (31,054,018) Reclassification (Notes 11 and 13) − − 5,035,240 − − 5,035,240 Balance at end of year 35,605,323 75,895,770 186,519,745 813,355,101 964,265,910 2,075,641,849 Accumulated depreciation and amortization Balance at beginning of year − 27,175,002 120,860,892 437,350,492 659,221,848 1,244,608,234 Depreciation and amortization − 4,308,110 24,596,734 88,500,802 88,084,749 205,490,395 Disposals − − (10,283,104) − (78,404) (10,361,508) Balance at end of year − 31,483,112 135,174,522 525,851,294 747,228,193 1,439,737,121 Allowance for impairment losses (Note 14) Balance at beginning of year 7,742,527 4,574,411 − − 279,328 12,596,266 Provision − 54,276 − − − 54,276 Reclassification (Notes 11 and 13) 3,642,527 (3,577,942) − − − 64,585 Balance at end of year 11,385,054 1,050,745 − − 279,328 12,715,127 Net Book Value at End of the Year P=24,220,269 P=43,361,913 P=51,345,223 P=287,503,807 P=216,758,389 P=623,189,601

Parent Company 2018 Furniture, Transportation Leasehold Fixtures and Land Building Equipment Improvements Equipment Total Cost Balance at beginning of year P=23,590,796 P=57,709,845 P=163,688,842 P=653,135,660 P=787,837,377 P=1,685,962,520 Additions − − 27,806,136 100,445,467 79,305,384 207,556,987 Disposals − − (26,650,461) − (1,614,342) (28,264,803) Reclassification (Notes 11 and 13) − − 5,035,239 − − 5,035,239 Balance at end of year 23,590,796 57,709,845 169,879,756 753,581,127 865,528,419 1,870,289,943 Accumulated depreciation and amortization Balance at beginning of year − 20,673,065 110,208,715 421,793,860 592,218,236 1,144,893,876 Depreciation and amortization − 3,374,202 22,907,811 83,460,783 78,040,248 187,783,044 Disposals − − (9,443,706) − (101,507) (9,545,213) Balance at end of year − 24,047,267 123,672,820 505,254,643 670,156,977 1,323,131,707 Allowance for impairment losses (Note 14) Balance at beginning of year − − − − 279,328 279,328 Provision − − − − − − Balance at end of year − − − − 279,328 279,328 Net Book Value at End of the Year P=23,590,796 P=33,662,578 P=46,206,936 P=248,326,484 P=195,092,114 P=546,878,908

Gain on sale of property and equipment included in ‘Miscellaneous income’ amounted to P=7.25 million, P=2.44 million and P=16.48 million in 2019, 2018 and 2017, respectively, for the Group, and P=6.49 million, =2.43P million and P=1.76 million in 2019, 2018 and 2017, respectively, for the Parent Company (see Note 24).

The details of depreciation and amortization follow:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Property and equipment (Note 10) P=212,535,955 P=205,490,395 P=189,022,965 P=188,120,028 P=187,783,044 P=168,941,922 Right-of-use of asset (Note 10) 248,849,807 – – 239,507,076 – – Software costs (Note 13) 93,616,013 91,165,641 80,336,227 91,886,690 88,132,100 76,990,421 Repossessed chattels (Note 13) 56,400,520 36,744,920 40,901,818 56,128,078 36,602,627 40,784,202 Investment properties (Note 11) 24,138,059 21,686,401 15,875,764 22,915,622 18,891,874 13,009,489 P=635,540,354 P=355,087,357 P=326,136,774 P=598,557,494 P=331,409,645 P=299,726,034

As of December 31, 2019 and 2018, the cost of fully depreciated items of property and equipment still in use by the Group amounted to P=1.10 billion and =0.95P billion, respectively.

As of December 31, 2019 and 2018, the cost of fully depreciated items of property and equipment still in use by the Parent Company amounted to P=1.02 billion and P=0.88 billion, respectively.

*SGVFSM000714* - 163 -

11. Investment Properties

The movements in this account follow:

Consolidated 2019 Land Building Total Cost Balances at beginning of year P=192,258,950 P=249,313,337 P=441,572,287 Additions (Note 29) 15,891,065 88,822,365 104,713,430 Disposals (19,858,904) (28,909,615) (48,768,519) Reclassifications (Note 10) (8,340,000) (150,000) (8,490,000) Balances at end of year 179,951,111 309,076,087 489,027,198 Accumulated depreciation Balances at beginning of year − 65,839,241 65,839,241 Depreciation (Note 10) − 24,138,059 24,138,059 Disposals − (10,635,522) (10,635,522) Balances at end of year − 79,341,778 79,341,778 Allowance for impairment losses (Note 14) Balances at beginning of year 29,086,118 5,573,378 34,659,496 Recoveries (470,209) (3,353,416) (3,823,625) Disposals (2,195,305) (767,549) (2,962,854) Reclassifications (Note 10) (490,411) (52,190) (542,601) Balances at end of year 25,930,193 1,400,223 27,330,416 Net Book Value at End of the Year P=154,020,918 P=228,334,086 P=382,355,004

Parent Company 2019 Land Building Total Cost Balances at beginning of year P=48,449,646 P=214,601,881 P=263,051,527 Additions (Note 29) 2,363,165 84,507,365 86,870,530 Disposals (1,137,562) (18,804,879) (19,942,441) Balances at end of year 49,675,249 280,304,367 329,979,616 Accumulated depreciation Balances at beginning of year − 43,478,857 43,478,857 Depreciation (Note 10) − 22,915,622 22,915,622 Disposals − (6,048,484) (6,048,484) Balances at end of year − 60,345,995 60,345,995 Allowance for impairment losses (Note 14) Balances at beginning of year 2,916,600 4,474,530 7,391,130 Recoveries (470,209) (3,353,416) (3,823,625) Reclassification (Note 10) (398,809) − (398,809) Balances at end of year 2,047,582 1,121,114 3,168,696 Net Book Value at End of the Year P=47,627,667 P=218,837,258 P=266,464,925

Consolidated 2018 Land Building Total Cost Balances at beginning of year P=191,277,293 P=186,551,932 P=377,829,225 Additions (Note 29) 17,862,416 98,984,584 116,847,000 Disposals (16,880,759) (36,223,179) (53,103,938) Balances at end of year 192,258,950 249,313,337 441,572,287 Accumulated depreciation Balances at beginning of year − 48,289,885 48,289,885 Depreciation (Note 10) − 21,686,401 21,686,401 Disposals − (4,137,045) (4,137,045) Balances at end of year − 65,839,241 65,839,241 (Forward) *SGVFSM000714* - 164 -

Consolidated 2018 Land Building Total Allowance for impairment losses (Note 14) Balances at beginning of year P=33,581,998 P=11,444,696 P=45,026,694 Provisions (3,690,741) (6,079,473) (9,770,214) Disposals (155,967) (349,873) (505,840) Reclassifications (Note 10) (649,172) 558,028 (91,144) Balances at end of year 29,086,118 5,573,378 34,659,496 Net Book Value at End of the Year P=163,172,832 P=177,900,718 P=341,073,550

Parent Company 2018 Land Building Total Cost Balances at beginning of year P=45,368,950 P=151,656,720 P=197,025,670 Additions (Note 29) 11,699,109 95,877,809 107,576,918 Disposals (8,618,413) (32,932,648) (41,551,061) Balances at end of year 48,449,646 214,601,881 263,051,527 Accumulated depreciation Balances at beginning of year − 28,224,684 28,224,684 Depreciation (Note 10) − 18,891,874 18,891,874 Disposals − (3,637,701) (3,637,701) Balances at end of year − 43,478,857 43,478,857 Allowance for impairment losses (Note 14) Balances at beginning of year 6,607,341 10,733,495 17,340,836 Provision (3,690,741) (6,079,473) (9,770,214) Disposals − (179,492) (179,492) Balances at end of year 2,916,600 4,474,530 7,391,130 Net Book Value at End of the Year P=45,533,046 P=166,648,494 P=212,181,540

Investment properties include real estate properties acquired in settlement of loans and receivables. The difference between the fair value of the asset upon foreclosure and the carrying value of the loan is recognized as gain or loss on initial recognition recorded included under ‘Miscellaneous Income’.

The fair values of investment properties are disclosed in Note 5.

Direct operating expenses on investment properties (recorded in ‘Litigation expense’ under ‘Miscellaneous expense’) amounted to =18.62P million, =12.07P million and P=14.01 million in 2019, 2018 and 2017, respectively, for the Group, and P=14.51 million, P=11.07 million and P=10.21 million in 2019, 2018 and 2017, respectively, for the Parent Company (see Note 24).

Gain on initial recognition of investment properties included in ‘Miscellaneous income’ of the Group amounted to =33.89P million, =4.15P million and =33.89P million in 2019, 2018 and 2017, respectively, for the Group, and =21.47P million, P=0.05 million and P=31.53 million in 2019, 2018 and 2017, respectively, for the Parent Company (see Note 24).

Gain (loss) on sale of investment properties included in ‘Miscellaneous income’ amounted to P=17.36 million, (P=29.29) million and =5.35P million in 2019, 2018 and 2017, respectively for the Group and =5.14P million, (P=30.68) million and =0.18P million in 2019, 2018 and 2017, respectively, for the Parent Company (see Note 24).

*SGVFSM000714* - 165 -

12. Branch Licenses

The movements in this account follow:

Consolidated Parent Company 2019 2018 2019 2018 Cost Balance at beginning of year P=1,232,408,709 P=1,231,591,268 P=611,808,709 P=611,191,268 Additions 246,589 617,441 246,589 617,441 Reclassifications − 200,000 − − Balance at end of year 1,232,655,298 1,232,408,709 612,055,298 611,808,709 Allowance for impairment losses (Note 14) Balance at beginning and end of year 232,726,929 232,526,929 232,726,929 232,526,929 P=999,928,369 P=999,881,780 P=379,328,369 P=379,281,780

The allowance for impairment losses amounting to =232.53P million relates to branches that the Parent Company ceased to operate in 2010.

13. Other Assets

This account consists of:

Consolidated Parent Company 2019 2018 2019 2018 Creditable withholding tax P=435,473,067 P=342,880,003 P=435,473,067 P=342,880,003 Software costs - net 299,873,508 347,713,754 298,423,442 345,643,258 Repossessed chattels - net 161,266,891 100,996,525 158,980,575 100,938,347 Prepaid expenses 72,543,068 86,803,471 67,094,699 75,952,290 Refundable deposits 62,313,746 64,481,147 61,066,765 63,369,966 Sundry debits 45,269,074 10,039,066 45,269,074 10,039,066 Advance payment to suppliers 26,089,718 25,675,033 26,089,718 25,675,033 Bills payment - contra 16,064,097 5,622,641 16,064,097 5,622,641 Documentary stamp tax on hand 6,360,875 8,546,975 5,572,536 8,186,850 Others 100,649,753 89,497,576 95,114,589 84,554,144 1,225,903,797 1,082,256,191 1,209,148,562 1,062,861,598 Allowance for impairment losses (Note 14) (13,064,205) (14,017,023) (10,540,371) (11,493,189) P=1,212,839,592 P=1,068,239,168 P=1,198,608,191 P=1,051,368,409

Software costs - net represent the carrying amount of software purchased by the Group for use in operations, net of amortization.

Advance payment to suppliers consists of various down payments made to various suppliers and contractors in connection with the Group’s and the Parent Company’s operation and other projects such as branch expansions.

Bills payment-contra is the contra account of bills payment under ‘Accrued expenses and other liabilities’ (see Note 19).

The Group’s ‘Others’ include stationeries and office supplies amounting to P=19.98 million in 2019 and P=8.44 million in 2018, margin calls amounting to P=60.61 million in 2019 and P=62.94 million in 2018, and other miscellaneous assets amounting to P=20.06 million in 2019 and P=18.12 million in 2018.

*SGVFSM000714* - 166 -

The Parent Company’s ‘Others’ include stationeries and office supplies amounting to P=17.88 million in 2019 and P=7.84 million in 2018, margin calls amounting to P=60.61 million in 2019 and P=62.94 million in 2018, and other miscellaneous assets amounting to P=16.62 million in 2019 and P=13.77 million in 2018.

The composition of and the movements in ‘Repossessed chattels - net’ of the Group and the Parent Company follow:

Consolidated 2019 Cars Others Total Cost Balances at beginning of year P=20,880,000 P=120,439,129 P=141,319,129 Additions (Note 31) 67,370,000 417,904,889 485,274,889 Disposals (35,910,000) (368,958,752) (404,868,752) Reclassifications (Note 10) (5,645,000) (165,395) (5,810,395) Balances at end of year 46,695,000 169,219,871 215,914,871 Accumulated depreciation Balances at beginning of year 3,207,855 35,712,317 38,920,172 Depreciation (Note 10) 11,488,950 44,911,570 56,400,520 Disposals (6,582,586) (34,146,844) (40,729,430) Reclassifications (Note 10) (995,620) (23,304) (1,018,924) Balances at end of year 7,118,599 46,453,739 53,572,338

Allowance for impairment losses (Note 14) Balances at beginning of year 36,588 1,365,844 1,402,432 Recoveries (12,258) (123,228) (135,486) Disposals (98,746) (53,669) (152,415) Reclassifications (Note 10) 97,887 (136,776) (38,889) Balances at end of year 23,471 1,052,171 1,075,642 Net Book Value at End of the Year P=39,552,930 P=121,713,961 P=161,266,891

Parent Company 2019 Cars Others Total Cost Balances at beginning of year P=20,880,000 P=120,179,532 P=141,059,532 Additions (Note 31) 67,370,000 415,013,000 482,383,000 Disposals (35,910,000) (368,543,151) (404,453,151) Reclassifications (Note 10) (5,645,000) (162,000) (5,807,000) Balances at end of year 46,695,000 166,487,381 213,182,381 Accumulated depreciation Balances at beginning of year 3,207,855 35,519,552 38,727,407 Depreciation (Note 10) 11,488,950 44,639,128 56,128,078 Disposals (6,582,586) (34,123,928) (40,706,514) Reclassifications (Note 10) (995,620) (23,304) (1,018,924) Balances at end of year 7,118,599 46,011,448 53,130,047 Allowance for impairment losses (Note 14) Balances at beginning of year 36,588 1,357,190 1,393,778 Recoveries (12,258) (127,111) (139,369) Disposals (98,746) (45,015) (143,761) Reclassifications (Note 10) 97,887 (136,776) (38,889) Balances at end of year 23,471 1,048,288 1,071,759 Net Book Value at End of the Year P=39,552,930 119,427,645 P=158,980,575

*SGVFSM000714* - 167 -

Consolidated 2018 Cars Others Total Cost Balances at beginning of year P=14,950,947 P=117,093,000 P=132,043,947 Additions (Note 29) 34,415,000 219,722,176 254,137,176 Disposals (22,870,947) (215,706,742) (238,577,689) Reclassifications (Note 10) (5,615,000) (669,305) (6,284,305) Balances at end of year 20,880,000 120,439,129 141,319,129 Accumulated depreciation Balances at beginning of year 514,323 29,147,183 29,661,506 Depreciation (Note 10) 5,472,418 31,272,502 36,744,920 Disposals (2,016,497) (24,506,871) (26,523,368) Reclassifications (Note 10) (762,389) (200,497) (962,886) Balances at end of year 3,207,855 35,712,317 38,920,172 Allowance for impairment losses (Note 14) Balances at beginning of year 649,317 11,751,543 12,400,860 Provisions 170,169 (6,562,534) (6,392,365) Disposals (494,318) (3,848,727) (4,343,045) Reclassifications (Note 10) (288,580) 25,562 (263,018) Balances at end of year 36,588 1,365,844 1,402,432 Net Book Value at End of the Year P=17,635,557 P=83,360,968 P=100,996,525

Parent Company 2018 Cars Others Total Cost Balances at beginning of year P=14,950,947 P=116,569,798 P=131,520,745 Additions (Note 29) 34,415,000 219,722,176 254,137,176 Disposals (22,870,947) (215,439,742) (238,310,689) Reclassifications (Note 10) (5,615,000) (672,700) (6,287,700) Balances at end of year 20,880,000 120,179,532 141,059,532 Accumulated depreciation Balances at beginning of year 514,323 28,959,655 29,473,978 Depreciation (Note 10) 5,472,418 31,130,209 36,602,627 Disposals (2,016,497) (24,369,815) (26,386,312) Reclassifications (Note 10) (762,389) (200,497) (962,886) Balances at end of year 3,207,855 35,519,552 38,727,407 Allowance for impairment losses (Note 14) Balances at beginning of year 649,317 11,742,889 12,392,206 Provision 170,169 (6,535,978) (6,365,809) Disposals (494,318) (3,848,726) (4,343,044) Reclassifications (Note 10) (288,580) (995) (289,575) Balances at end of year 36,588 1,357,190 1,393,778 Net Book Value at End of the Year P=17,635,557 P=83,302,790 P=100,938,347

In 2019, loss on initial recognition of repossessed chattels included in ‘Miscellaneous income’ amounted to =81.97P million for the Group and the Parent Company. In 2018 and 2017, loss on initial recognition of repossessed chattels included in ‘Miscellaneous income’ amounted to nil and P=18.90 million, respectively, for the Group and nil and =18.79P million, respectively, for the Parent Company (Note 24).

In 2019, loss on sale of repossessed chattels included in ‘Miscellaneous income’ amounted to P=102.71 million and P=102.75 million, respectively, for the Group and the Parent Company. In 2018 and 2017, loss on sale of repossessed chattels included in ‘Miscellaneous income’ amounted to P=8.12 million and P=28.27 million, respectively, for the Group and =8.12P million and =28.30P million, respectively for the Parent Company (see Note 24).

*SGVFSM000714* - 168 -

Movements in ‘Software costs - net’ follow:

Consolidated Parent Company 2019 2018 2019 2018 Cost Balance at beginning of year P=764,937,509 P=653,896,383 P=746,802,127 P=637,688,065 Additions 45,775,767 111,276,126 44,666,874 109,114,062 Reclassifications − (235,000) − − 810,713,276 764,937,509 791,469,001 746,802,127 Accumulated amortization Balance at beginning of year 417,223,755 326,075,614 401,158,869 313,026,769 Amortization (Note 10) 93,616,013 91,165,641 91,886,690 88,132,100 Reclassifications − (17,500) − − Balance at end of year 510,839,768 417,223,755 493,045,559 401,158,869 Net Book Value at the End of the Year P=299,873,508 P=347,713,754 P=298,423,442 P=345,643,258

14. Allowance for Credit and Impairment Losses

Movements in the allowance for credit and impairment losses follow:

Consolidated Parent Company 2019 2018 2019 2018 Balances at beginning of year FA at amortized cost (Note 7) P=795 P=− P=– P=− Loans and receivables (Note 8) 1,090,655,715 1,103,022,464 962,251,007 989,801,606 Property and equipment (Note 10) 12,715,127 12,596,266 279,328 279,328 Investment properties (Note 11) 34,659,496 45,026,694 7,391,130 17,340,836 Branch licenses (Note 12) 232,526,929 232,526,929 232,526,929 232,526,929 Repossessed chattels (Note 13) 1,402,432 12,400,860 1,393,778 12,392,206 Other assets (Note 13) 14,017,023 10,201,994 11,493,189 7,678,160 1,385,977,517 1,415,775,207 1,215,335,361 1,260,019,065 PFRS 9 transition adjustments – 21,163,184 – 13,782,470 Provision for the year 125,402,017 100,133,645 124,806,175 99,094,504 Disposals (52,934,656) (150,478,595) (32,109,997) (157,271,103) Reversals/others (4,128,514) (615,924) (1,157,005) (289,575) 68,338,847 (29,797,690) 91,539,173 (44,683,704) Balances at end of year FA at amortized cost (Note 7) 338,948 795 332,226 − Loans and receivables (Note 8) 1,166,921,305 1,090,655,715 1,058,755,225 962,251,007 Property and equipment (Note 10) 12,858,919 12,715,127 279,328 279,328 Investment properties (Note 11) 27,330,416 34,659,496 3,168,696 7,391,130 Branch licenses (Note 12) 232,726,929 232,526,929 232,726,929 232,526,929 Repossessed chattels (Note 13) 1,075,642 1,402,432 1,071,759 1,393,778 Other assets (Note 13) 13,064,205 14,017,023 10,540,371 11,493,189 P=1,454,316,364 P=1,385,977,517 P=1,306,874,534 P=1,215,335,361

Provision for financial assets at Fair Value through Other Comprehensive Income amounting to P=2.07 million is presented in movements in net unrealized losses of the Group and the Parent Company (Note 7).

*SGVFSM000714* - 169 -

An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to commercial loans follow:

Consolidated 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=42,149,016,419 P=1,967,149,606 P=406,964,981 P=44,523,131,006 New assets originated or purchased 49,489,572,259 − − 49,489,572,259 Assets derecognized or repaid (excluding write offs) (43,809,440,560) (670,285,867) (9,653,851) (44,489,380,278) Transfers to Stage 1 19,042,241 (18,262,028) (780,213) − Transfers to Stage 2 (2,606,146,389) 2,606,146,389 − − Transfers to Stage 3 (82,754,966) (23,879,279) 106,634,245 − Amounts written off − − (8,487,510) (8,487,510) P=45,159,289,004 P=3,860,868,821 P=494,677,652 P=49,514,835,477 ECL allowance as at January 1, 2019 under PFRS 9 P=83,537,302 P=100,794,487 P=166,440,628 P=350,772,417 Provisions for (recovery of) credit losses 117,899,120 (55,321,666) (19,441,269) 43,136,185 Transfers to Stage 1 563,644 (555,842) (7,802) − Transfers to Stage 2 (41,030,960) 41,030,960 − − Transfers to Stage 3 (25,948,619) (12,810,656) 38,759,275 − Amounts written off/reversals/others − − 10,056,463 10,056,463 P=135,020,487 P=73,137,283 P=195,807,295 P=403,965,065

Parent Company 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=42,074,366,564 P=1,943,193,988 P=301,925,996 P=44,319,486,548 New assets originated or purchased 49,407,533,259 − − 49,407,533,259 Assets derecognized or repaid (excluding write offs) (43,649,242,716) (667,583,641) (3,320,086) (44,320,146,443) Transfers to Stage 1 16,710,557 (16,710,557) − − Transfers to Stage 2 (2,598,748,766) 2,598,748,766 − − Transfers to Stage 3 (81,358,519) (10,114,725) 91,473,244 − P=45,169,260,379 P=3,847,533,831 P=390,079,154 P=49,406,873,364 ECL allowance as at January 1, 2019 under PFRS 9 P=116,451,662 P=97,537,072 P=201,825,421 P=415,814,155 Provisions for (recovery of) credit losses 118,056,289 (55,174,073) (14,537,232) 48,344,984 Transfers to Stage 1 540,327 (540,327) − − Transfers to Stage 2 (40,971,079) 40,971,079 − − Transfers to Stage 3 (25,925,046) (4,083,027) 30,008,073 − Amounts written off/reversals/others − − 18,543,973 18,543,973 P=168,152,153 P=78,710,724 P=235,840,235 P=482,703,112

Consolidated 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=39,464,292,540 P=1,174,867,003 P=404,745,990 ₱41,043,905,533 New assets originated or purchased 23,746,112,952 − − 23,746,112,952 Assets derecognized or repaid (excluding write offs) (19,772,421,689) (457,351,529) (28,524,321) (20,258,297,539) Transfers to Stage 1 307,476,095 (307,441,613) (34,482) − Transfers to Stage 2 (1,559,983,696) 1,560,048,995 (65,299) − Transfers to Stage 3 (36,459,783) (2,973,250) 39,433,033 − Amounts written off − − (8,589,940) (8,589,940) P=42,149,016,419 P=1,967,149,606 P=406,964,981 P=44,523,131,006 (Forward) *SGVFSM000714* - 170 -

Consolidated 2018 Stage 1 Stage 2 Stage 3 Total ECL allowance as at January 1, 2018 under PFRS 9 P=118,551,456 P=43,048,715 P=167,968,553 P=329,568,724 Provisions for (recovery of) credit losses 84,771 (5,581,679) 100,012,287 94,515,379 Transfers to Stage 1 22,394,829 (22,386,173) (8,656) − Transfers to Stage 2 (2,305,027) 2,335,326 (30,299) − Transfers to Stage 3 (327,588) (62,753) 390,341 − Amounts written off/reversals/others (54,861,139) 83,441,051 (101,891,598) (73,311,686) P=83,537,302 P=100,794,487 P=166,440,628 P=350,772,417

Parent Company 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=39,400,227,665 P=1,159,076,326 P=296,107,936 P=40,855,411,927 New assets originated or purchased 23,678,069,440 − − 23,678,069,440 Assets derecognized or repaid (excluding write offs) (19,727,858,974) (456,676,198) (20,869,706) (20,205,404,878) Transfers to Stage 1 307,441,613 (307,441,613) − − Transfers to Stage 2 (1,551,137,539) 1,551,137,539 − − Transfers to Stage 3 (32,375,641) (2,902,066) 35,277,707 − Amounts written off − − (8,589,941) (8,589,941) P=42,074,366,564 P=1,943,193,988 P=301,925,996 P=44,319,486,548 ECL allowance as at January 1, 2018 under PFRS 9 P=152,570,441 P=34,266,421 P=208,709,651 P=395,546,513 Provisions for (recovery of) credit losses − − 100,371,837 100,371,837 Transfers to Stage 1 22,386,173 (22,386,173) − − Transfers to Stage 2 (2,248,087) 2,248,087 − − Transfers to Stage 3 (37,225) (32,314) 69,539 − Amounts written off/reversals/others (56,219,640) 83,441,051 (107,325,606) (80,104,195) P=116,451,662 P=97,537,072 P=201,825,421 P=415,814,155

An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to real estate loans follow:

Consolidated 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=13,754,241,696 P=523,087,026 P=98,961,237 P=14,376,289,959 New assets originated or purchased 6,971,027,197 − − 6,971,027,197 Assets derecognized or repaid (excluding write offs) (1,864,917,020) (131,983,754) (21,981,371) (2,018,882,145) Transfers to Stage 1 153,185,241 (145,123,078) (8,062,163) − Transfers to Stage 2 (869,062,811) 870,508,779 (1,445,968) − Transfers to Stage 3 (107,115,914) (81,285,519) 188,401,433 − P=18,037,358,389 P=1,035,203,454 P=255,873,168 P=19,328,435,011 ECL allowance as at January 1, 2019 under PFRS 9 P=3,192,152 P=77,690 P=21,255,559 P=24,525,401 Provisions for (recovery of) credit losses 10,278,182 178,556 (15,024,227) (4,567,489) Transfers to Stage 1 65,712 (62,917) (2,795) − Transfers to Stage 2 (1,258,639) 1,259,253 (614) − Transfers to Stage 3 (295,489) (70,408) 365,897 − Amounts written off/reversals/others − − (238,903) (238,903) P=11,981,918 P=1,382,174 P=6,354,917 P=19,719,009

*SGVFSM000714* - 171 -

Parent Company 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=13,741,340,565 P=523,087,026 P=93,215,087 P=14,357,642,678 New assets originated or purchased 6,935,403,126 − − 6,935,403,126 Assets derecognized or repaid (excluding write offs) (1,863,230,834) (131,890,961) (21,822,535) (2,016,944,330) Transfers to Stage 1 153,185,241 (145,123,078) (8,062,163) − Transfers to Stage 2 (868,916,903) 870,362,871 (1,445,968) − Transfers to Stage 3 (107,115,914) (81,285,519) 188,401,433 − Amounts written off/reversals/others − − − − P=17,990,665,281 P=1,035,150,339 P=250,285,854 P=19,276,101,474 ECL allowance as at January 1, 2019 under PFRS 9 P=3,050,680 P=77,690 P=15,966,982 P=19,095,352 Provisions for (recovery of) credit losses 10,376,992 178,556 (15,024,227) (4,468,679) Transfers to Stage 1 65,712 (62,917) (2,795) − Transfers to Stage 2 (1,258,639) 1,259,253 (614) − Transfers to Stage 3 (295,489) (70,408) 365,897 − Amounts written off/reversals/others − − (238,903) (238,903) P=11,939,256 P=1,382,174 P=1,066,340 P=14,387,770

Consolidated 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=8,904,302,261 P=454,990,766 P=71,095,894 P=9,430,388,921 New assets originated or purchased 6,121,050,263 − − 6,121,050,263 Assets derecognized or repaid (excluding write offs) (1,079,174,629) (62,701,256) (33,273,340) (1,175,149,225) Transfers to Stage 1 251,522,723 (248,679,679) (2,843,044) − Transfers to Stage 2 (405,610,226) 407,985,730 (2,375,504) − Transfers to Stage 3 (37,848,696) (28,508,535) 66,357,231 − Amounts written off − − − − P=13,754,241,696 P=523,087,026 P=98,961,237 P=14,376,289,959 ECL allowance as at January 1, 2018 under PFRS 9 P=2,943,318 P=146,529 P=14,309,948 P=17,399,795 Provisions for (recovery of) credit losses 101,264 − 4,490,635 4,591,899 Transfers to Stage 1 318,455 (90,538) (227,917) − Transfers to Stage 2 (94,116) 284,552 (190,436) − Transfers to Stage 3 (6,061) (13,465) 19,526 − Amounts written off/reversals/others (70,708) (249,388) 2,853,803 2,533,707 P=3,192,152 P=77,690 P=21,255,559 P=24,525,401

Parent Company 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=8,900,654,163 P=454,614,612 P=65,309,777 P=9,420,578,552 New assets originated or purchased 6,107,091,263 − − 6,107,091,263 Assets derecognized or repaid (excluding write offs) (1,074,293,242) (62,500,522) (33,233,373) (1,170,027,137) Transfers to Stage 1 251,347,303 (248,504,259) (2,843,044) − Transfers to Stage 2 (405,610,226) 407,985,730 (2,375,504) − Transfers to Stage 3 (37,848,696) (28,508,535) 66,357,231 − P=13,741,340,565 P=523,087,026 P=93,215,087 P=14,357,642,678

(Forward)

*SGVFSM000714* - 172 -

Parent Company 2018 Stage 1 Stage 2 Stage 3 Total ECL allowance as at January 1, 2018 under PFRS 9 P=2,916,036 P=133,603 P=8,635,022 P=11,684,661 Provisions for (recovery of) credit losses − − 4,876,984 4,876,984 Transfers to Stage 1 305,529 (77,612) (227,917) − Transfers to Stage 2 (94,116) 284,552 (190,436) − Transfers to Stage 3 (6,061) (13,465) 19,526 − Amounts written off/reversals/others (70,708) (249,388) 2,853,803 2,533,707 P=3,050,680 P=77,690 P=15,966,982 P=19,095,352

An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to consumer loans follow:

Consolidated 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=7,576,153,808 P=424,836,811 P=544,067,941 P=8,545,058,560 New assets originated or purchased 13,901,492,269 − − 13,901,492,269 Assets derecognized or repaid (excluding write offs) (11,130,225,581) (290,567,974) (113,801,863) (11,534,595,418) Transfers to Stage 1 37,818,753 (33,334,187) (4,484,566) − Transfers to Stage 2 (555,784,021) 560,260,790 (4,476,769) − Transfers to Stage 3 (229,800,248) (53,131,558) 282,931,806 − Amounts written off/reversals/others (61,469,155) (9,962,381) (13,252,367) (84,683,903) P=9,538,185,825 P=598,101,501 P=690,984,182 P=10,827,271,508 ECL allowance as at January 1, 2019 under PFRS 9 P=94,119,653 P=29,016,475 P=429,825,444 P=552,961,572 Provisions for (recovery of) credit losses 81,102,019 (6,372,457) 7,066,879 81,796,441 Transfers to Stage 1 714,750 (591,394) (123,356) − Transfers to Stage 2 (6,887,238) 7,005,271 (118,033) − Transfers to Stage 3 (67,296,152) (21,425,387) 88,721,539 − Amounts written off/reversals/others − − (50,594,568) (50,594,568) P=101,753,032 P=7,632,508 P=474,777,905 P=584,163,445

Parent Company 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=6,868,579,903 P=406,155,574 P=347,230,159 P=7,621,965,636 New assets originated or purchased 11,763,809,217 − − 11,763,809,217 Assets derecognized or repaid (excluding write offs) (9,650,548,236) (275,380,706) (69,933,548) (9,995,862,490) Transfers to Stage 1 37,133,815 (33,071,561) (4,062,254) − Transfers to Stage 2 (531,718,368) 536,079,632 (4,361,264) − Transfers to Stage 3 (175,967,348) (48,642,858) 224,610,206 − Amounts written off/reversals/others (61,469,155) (9,962,381) (8,658,334) (80,089,870) P=8,249,819,828 P=575,177,700 P=484,824,965 P=9,309,822,493 ECL allowance as at January 1, 2019 under PFRS 9 P=77,866,135 P=27,103,972 P=285,958,655 P=390,928,762 Provisions for (recovery of) credit losses 79,138,684 (5,835,873) 4,751,924 78,054,735 Transfers to Stage 1 637,162 (588,768) (48,394) − Transfers to Stage 2 (6,805,703) 6,850,070 (44,367) − Transfers to Stage 3 (66,561,603) (20,181,105) 86,742,708 − Amounts written off/reversals/others − − (46,000,533) (46,000,533) P=84,274,675 P=7,348,296 P=331,359,993 P=422,982,964

*SGVFSM000714* - 173 -

Consolidated 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=5,982,202,651 P=261,421,486 P=603,641,275 P=6,847,265,412 New assets originated or purchased 5,044,475,854 − − 5,044,475,854 Assets derecognized or repaid (excluding write offs) (2,851,270,552) (278,325,013) (133,397,071) (3,262,992,636) Transfers to Stage 1 50,749,426 (48,133,361) (2,616,065) − Transfers to Stage 2 (532,081,829) 536,346,098 (4,264,269) − Transfers to Stage 3 (117,921,742) (46,472,399) 164,394,141 − Amounts written off − − (83,690,070) (83,690,070) P=7,576,153,808 P=424,836,811 P=544,067,941 P=8,545,058,560 ECL allowance as at January 1, 2018 under PFRS 9 P=61,091,031 P=18,228,660 P=483,060,785 P=562,380,476 Provisions for (recovery of) credit losses 6,527,664 1,164,467 12,006,007 19,698,138 Transfers to Stage 1 2,504,082 (1,527,203) (976,879) − Transfers to Stage 2 (7,964,592) 9,714,157 (1,749,565) − Transfers to Stage 3 (2,763,153) (5,260,527) 8,023,680 − Amounts written off/reversals/others 34,724,621 6,696,921 (70,538,584) (29,117,042) P=94,119,653 P=29,016,475 P=429,825,444 P=552,961,572

Parent Company 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=5,294,770,310 P=252,808,259 P=411,441,999 P=5,959,020,568 New assets originated or purchased 4,065,954,951 − − 4,065,954,951 Assets derecognized or repaid (excluding write offs) (1,945,289,085) (269,132,703) (104,898,025) (2,319,319,813) Transfers to Stage 1 48,062,329 (46,427,318) (1,635,011) − Transfers to Stage 2 (503,310,242) 507,162,708 (3,852,466) − Transfers to Stage 3 (91,608,360) (38,255,372) 129,863,732 − Amounts written off − − (83,690,070) (83,690,070) P=6,868,579,903 P=406,155,574 P=347,230,159 P=7,621,965,636 ECL allowance as at January 1, 2018 under PFRS 9 P=50,619,418 P=15,878,438 P=343,570,043 P=410,067,899 Provisions for (recovery of) credit losses (45,868,678) 45,014,476 10,832,107 9,977,905 Transfers to Stage 1 48,062,329 (46,427,318) (1,635,011) − Transfers to Stage 2 (7,846,945) 9,522,407 (1,675,462) − Transfers to Stage 3 (1,824,610) (3,580,952) 5,405,562 − Amounts written off/reversals/others 34,724,621 6,696,921 (70,538,584) (29,117,042) P=77,866,135 P=27,103,972 P=285,958,655 P=390,928,762

An analysis of changes in the gross carrying amount and the corresponding ECL allowances in relation to other receivables follow:

Consolidated 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=1,376,553,881 P=72,111,102 P=190,189,580 P=1,638,854,563 New assets originated or purchased 2,341,390,051 − − 2,341,390,051 Assets derecognized or repaid (excluding write offs) (1,841,300,583) (39,236,252) (36,880,570) (1,917,417,405) Transfers to Stage 1 2,472,781 (2,381,126) (91,655) −

(Forward)

*SGVFSM000714* - 174 -

Consolidated 2019 Stage 1 Stage 2 Stage 3 Total Transfers to Stage 2 (P=82,169,378) P=82,424,142 (P=254,764) P=− Transfers to Stage 3 (45,115,816) (12,775,852) 57,891,668 − Amounts written off/reversals/others 61,469,155 9,962,381 915,219 72,346,755 P=1,813,300,091 P=110,104,395 P=211,769,478 P=2,135,173,964 ECL allowance as at January 1, 2019 under PFRS 9 P=3,174,997 P=4,519,229 P=154,702,099 P=162,396,325 Provisions for (recovery of) credit losses 21,233,009 (724,723) (11,672,428) 8,835,858 Transfers to Stage 1 14,951 (13,637) (1,314) − Transfers to Stage 2 (2,287,719) 2,293,955 (6,236) − Transfers to Stage 3 (17,090,651) (3,517,260) 20,607,911 − Amounts written off/reversals/others − − (12,158,397) (12,158,397) P=5,044,587 P=2,557,564 P=151,471,635 P=159,073,786

Parent Company 2019 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2019 P=1,344,785,704 P=68,258,285 P=159,175,894 P=1,572,219,883 New assets originated or purchased 2,285,236,499 − − 2,285,236,499 Assets derecognized or repaid (excluding write offs) (1,811,802,560) (39,117,106) (34,798,181) (1,885,717,847) Transfers to Stage 1 1,539,027 (1,449,484) (89,543) − Transfers to Stage 2 (75,322,577) 75,573,632 (251,055) − Transfers to Stage 3 (42,349,985) (9,978,245) 52,328,230 − Amounts written off 61,469,155 9,962,381 8,658,334 80,089,870 P=1,763,555,263 P=103,249,463 P=185,023,679 P=2,051,828,405 ECL allowance as at January 1, 2019 under PFRS 9 P=3,050,257 P=4,338,166 P=129,024,315 P=136,412,738 Provisions for (recovery of) credit losses 19,555,395 (1,000,396) (11,871,077) 6,683,922 Transfers to Stage 1 14,455 (13,550) (905) − Transfers to Stage 2 (1,663,527) 1,666,054 (2,527) − Transfers to Stage 3 (16,585,788) (3,041,700) 19,627,488 − Amounts written off/reversals/others − − (4,415,281) (4,415,281) P=4,370,792 P=1,948,574 P=132,362,013 P=138,681,379

Consolidated 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=995,152,892 P=51,781,820 P=125,282,339 P=1,172,217,051 New assets originated or purchased 831,507,573 − − 831,507,573 Assets derecognized or repaid (excluding write offs) (302,679,855) (8,009,086) (5,431,362) (316,120,303) Transfers to Stage 1 9,675,781 (9,393,356) (282,425) − Transfers to Stage 2 (44,772,247) 45,679,124 (906,877) − Transfers to Stage 3 (112,330,263) (7,947,400) 120,277,663 − Amounts written off − − (48,749,758) (48,749,758) P=1,376,553,881 P=72,111,102 P=190,189,580 P=1,638,854,563 ECL allowance as at January 1, 2018 under PFRS 9 P=2,408,635 P=4,347,681 P=207,462,102 P=214,218,418 Provisions for (recovery of) credit losses 816,865 648,556 (4,028,889) (2,563,468) Transfers to Stage 1 403,536 (306,784) (96,752) − Transfers to Stage 2 (190,299) 478,719 (288,420) −

(Forward) *SGVFSM000714* - 175 -

Consolidated 2018 Stage 1 Stage 2 Stage 3 Total Transfers to Stage 3 (P=42,690) (P=361,126) P=403,816 P=− Amounts written off/reversals/others (221,050) (287,817) (48,749,758) (49,258,625) P=3,174,997 P=4,519,229 P=154,702,099 P=162,396,325

Parent Company 2018 Stage 1 Stage 2 Stage 3 Total Gross carrying amount as at January 1, 2018 P=947,527,987 P=41,985,610 P=96,321,942 P=1,085,835,539 New assets originated or purchased 813,911,161 − − 813,911,161 Assets derecognized or repaid (excluding write offs) (272,708,867) (2,007,053) (4,061,139) (278,777,059) Transfers to Stage 1 8,561,601 (8,279,176) (282,425) − Transfers to Stage 2 (43,666,565) 44,333,162 (666,597) − Transfers to Stage 3 (108,839,613) (7,774,658) 116,613,871 − Amounts written off − − (48,749,758) (48,749,758) P=1,344,785,704 P=68,258,285 P=159,175,894 P=1,572,219,883 ECL allowance as at January 1, 2018 under PFRS 9 P=2,399,598 P=3,124,355 P=180,143,612 P=185,667,565 Provisions for (recovery of) credit losses 701,164 1,714,847 (2,412,211) 3,800 Transfers to Stage 1 403,536 (306,784) (96,752) − Transfers to Stage 2 (190,299) 454,691 (264,392) − Transfers to Stage 3 (42,690) (361,126) 403,816 − Amounts written off/reversals/others (221,052) (287,817) (48,749,758) (49,258,627) P=3,050,257 P=4,338,166 P=129,024,315 P=136,412,738

Below is the breakdown of provision for (reversal of) credit and impairment losses:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Loans and receivables P=129,200,995 P=116,241,948 P=227,033,785 P=128,614,962 P=115,230,526 P=225,309,770 Investment properties (3,823,625) (9,770,214) 1,885,207 (3,823,625) (9,770,214) 1,885,206 HTC Securities 160,133 − − 154,207 − − Repossessed chattels (135,486) (6,392,365) 7,443,236 (139,369) (6,365,808) 7,443,236 Property and equipment – 54,276 4,714,024 – – 279,328 Other assets – – – – – – P=125,402,017 P=100,133,645 P=241,076,252 P=124,806,175 P=99,094,504 P=234,917,540

In 2019, provision for impairment losses is recognized from FVOCI securities amounting to P2.07 million.

15. Deposit Liabilities

Outstanding deposit liabilities bear annual fixed interest rates ranging from nil to 6.75% in 2019 and from nil to 6.90% in 2018, respectively.

The BSP approved the decrease in reserve requirements on non-FCDU deposit liabilities through the following circulars:

· Circular 1041 dated May 23, 2019 to 17.00% effective May 31, 2019; 16.50% effective June 28, 2019; 16.00% effective July 26, 2019 for the Parent Company and from 7.00% to 6.50% and 6.00% respectively for LSB. *SGVFSM000714* - 176 -

· Circular 1056 dated October 3, 2019 to 15.00% for the Parent Company and 5.00% for LSB effective November 1, 2019. · Circular No. 1063 to 14.00% for the Parent Company and 4.00% for LSB effective December 06, 2019.

The Group’s liquidity and statutory reserves as reported to the BSP follow:

Consolidated Parent Company 2019 2018 2019 2018 Due from BSP P=11,900,726,219 P=16,108,207,737 P=11,824,059,252 P=15,586,846,184

As of December 31, 2019 and 2018, the Group is in compliance with the regulations.

Details of interest expense on deposit liabilities follow:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Demand P=4,334,999 P=3,062,044 P=2,456,744 P=4,334,999 P=3,062,044 P=2,456,744 Savings 1,717,487,944 1,521,200,688 707,442,240 1,703,702,694 1,510,869,332 697,253,892 Time 492,682,489 327,337,429 318,812,552 479,710,655 318,646,848 300,798,222 LTNCD 267,893,614 219,601,947 96,808,815 267,893,614 219,601,947 96,808,815 P=2,482,399,046 P=2,071,202,108 P=1,125,520,351 P=2,455,641,962 P=2,052,180,171 P=1,097,317,673

Long-Term Negotiable Certificates of Deposit (LTNCD) On May 4, 2017, the BSP approved the Parent Company’s issuance of the =3.00P billion LTNCD, with a right to increase the aggregate issue up to =5.00P billion in the event of over subscription.

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

16. Redeemable Preferred Shares

In 2013, the Parent Company acquired 29,000 redeemable preferred shares at =1,000P par value from LSB (see Note 7). In 2016, the Parent Company acquired additional 1,200 redeemable preferred shares amounting to P=1.20 million. Details of LSB’s redeemable preferred shares as of December 31, 2019 and 2018 follow:

Shares Amount Preferred shares – =P1,000 par value Authorized 50,000 P=50,000,000 Issued and outstanding Balances at beginning and end of year 30,200 P=30,200,000

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The preferred shares has the following features: a. The minimum subscription is 100 shares and payable in cash; b. The shares shall earn monthly interest at a rate to be fixed by the BOD, but such interest shall not be less than the prevailing market interest rates and said shares shall not be treated as time deposit, deposit substitute or as other form of borrowings; c. The interest shall be paid in the form of dividends cumulatively, which may be declared annually or as often as the BOD may determine; d. The shares shall have preference in the distribution of dividends and in the distribution of assets in case of liquidation or dissolution, provided, however that no dividend shall be declared or paid on redeemable shares in the absence of sufficient undivided profits, free surplus and approval of the BSP; e. The shares are non-voting on matters provided for in the last paragraph of Section 6 of the Corporation Code; f. Pre-emptive rights are not available on preferred shares nor shall they be subject to one and the shares shall be held for five (5) years with a right of alienation or encumbrance of the same to any third person within the period of five years from the original date of subscription, provided, however, that on the 5th year the holder shall be obliged to surrender the same to the corporation and upon prior approval of the BSP and in compliance with the provisions of the MORB and the BSP’s circulars regarding this matter, the corporation shall be obliged to take up the subscription at the price when the preferred shares of stock were originally subscribed. Provided that shares redeemed are replaced with at least an equivalent amount of newly paid-in shares so that the total paid-in capital stock is maintained at the same level immediately prior to redemption and provided further, that the corporation is not insolvent or if such redemption will not cause insolvency, impairment of capital or inability of the corporation to meet its debts as they mature; and g. As of December 31, 2013, LSB has not yet created a sinking fund pending request from BSP to redeem and retire the preferred shares. The fund that will be used to redeem the preferred shares will be taken from the equity infused by the Parent Company.

As discussed in Note 9, the SEC’s approved LSB’s application for increase in authorized capital stock on January 13, 2016.

The shares may again be disposed of by LSB for a price fixed by the BOD. Based on the BOD resolution on March 6, 2013, the entire redeemable preferred shares of LSB will be retired after its redemption subject to BSP’s approval. As of December 31, 2019 and 2018, the entire redeemable preferred shares of LSB are still subject to BSP’s approval.

17. Bonds Payable

On August 13, 2019, the Parent Company issued =5.00P billion fixed rate bonds due on August 13, 2021. The bond, which are listed in Philippine Dealing and Exchange Corporation, were priced at par with a coupon rate of 5.125% fixed rate (EIR of 5.82%) payable on a quarterly basis.

On November 14, 2019, the Parent Company issued another =5.00P billion fixed rate bonds due on November 14, 2021. The bond, which are listed in Philippine Dealing and Exchange Corporation, were priced at par with a coupon rate of 4.3% fixed rate (EIR of 4.94%) payable on a quarterly basis.

Interest expense on bonds payable amounted to =141.12P million for 2019.

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18. Bills Payable

As of December 31, 2019, bills payable consist of long-term peso denominated borrowing with Development Bank of the Philippines (DBP) wholesale lending facility amounting to =1.64P billion with interest rate of 5.00% and BSP rediscounting amounting to =400P million with interest rate of 4.88%.

DBP wholesale lending facility is unsecured while BSP rediscounting is secured by government securities. Carrying value and fair value of the government securities classified as HTC amounted to P=800.00 million and P=769.45 million, respectively, as of 2019 (see Note 7).

As of December 31, 2018, short-term peso denominated borrowings with various local banks amounted to =0.50P billion with interest rates ranging from 5.06% to 5.38%, long-term peso denominated borrowing with DBP wholesale lending facility amounted to =1.95P billion with interest rate of 5.00% and overnight lending availments from the BSP amounted to P=5.00 billion with interest rate of 5.25%.

The interest expense of the Group and Parent Company in 2019, 2018 and 2017 for bills payable amounted to =285.37P million, P=115.70 million and P=1.31 million, respectively.

19. Accrued Expenses and Other Liabilities

Accrued expenses account consist of:

Consolidated Parent Company 2019 2018 2019 2018 Accrued expenses P=508,538,965 P=449,314,871 P=485,744,317 P=435,024,630 Accrued interest payable 224,567,626 205,501,524 220,411,860 204,987,239 P=733,106,591 P=654,816,395 P=706,156,177 P=640,011,869

Accrued expenses consist of accruals and provisions for general expenses, bonuses and insurance on deposits, fees and advertisements.

Other liabilities include:

Consolidated Parent Company 2019 2018 2019 2018 Accounts payable P=1,043,336,941 P=854,798,024 P=1,028,377,292 P=844,466,242 Lease liability 720,007,104 − 667,575,337 − Bills purchased - contra (Note 8) 495,192,826 834,447,716 495,192,826 834,447,716 Retirement liability (Note 20) 218,899,798 94,623,826 202,336,341 89,937,693 Withholding taxes payable 67,753,938 61,891,312 66,855,874 60,805,834 Other taxes payable 56,678,357 55,888,417 56,678,358 55,888,417 Dormant manager’s checks 36,502,279 49,884,459 36,502,279 49,884,459 Acceptances payable 3,198,400 116,846,747 3,198,400 116,846,747 Income tax payable 2,700,053 2,321,967 1,125,723 961,229 Redeemable preferred shares (Note 16) 500,000 500,000 − − Derivative liabilities (Note 7) 462,908 336,698 462,908 336,698 Others 41,413,974 83,529,170 40,944,983 85,356,028 P=2,686,646,578 P=2,155,068,336 P=2,599,250,321 P=2,138,931,063

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Accounts payable consists of payables to service providers, advance payments from customers and unreleased checks.

Bills purchased-contra is the contra account of bills purchased under loans. Bills purchased are receivables from customers from converting checks and bank drafts to cash. As of December 31, 2019 and 2018, bills purchased-contra consists mainly of DOSRI accounts.

The Group’s ‘Others’ consist mainly of sundry credits amounting to =0.32P million in 2019 and P=58.93 million in 2018, escheat accounts amounting to P=12.90 million in 2019 and P=7.07 million in 2018, unearned income amounting to P=11.26 million in 2019 and =10.60P million in 2018, payables to agencies servicing employee welfare such as Social Security System, Home Development Mutual Fund and Medicare amounting to =8.09P million in 2019 and P=6.26 million in 2018, and other miscellaneous liabilities amounting to P=8.48 million in 2019 and =0.67P million in 2018.

The Parent Company’s ‘Others’ consist mainly of sundry credits amounting to P=0.32 million in 2019 and P=58.93 million in 2018, escheat accounts amounting to =12.90P million in 2019 and P=7.07 million in 2018, unearned income amounting to =11.26P million in 2019 and =10.60P million in 2018, payables to agencies servicing employee welfare such as Social Security System, Home Development Mutual Fund and Medicare amounting to =6.89P million in 2019 and P=5.47 million in 2018, and other miscellaneous liabilities amounting to P=9.57 million in 2019 and =3.29P million in 2018.

20. Maturity Analysis of Assets and Liabilities

The following table shows an analysis of assets and liabilities analyzed according to whether they are expected to be recovered or settled within one year and beyond one year from statements of financial position date:

Consolidated 2019 2018 Due Within Due Beyond Due Within Due Beyond One Year One Year Total One Year One Year Total Financial Assets Cash and other cash items P=3,249,359,133 P=− P=3,249,359,133 P=2,370,171,189 P=− P=2,370,171,189 Due from BSP 12,216,191,774 − 12,216,191,774 16,108,207,737 − 16,108,207,737 Due from other banks 2,463,991,767 − 2,463,991,767 3,010,162,780 − 3,010,162,780 Interbank loans receivable/SPURA 2,408,705,460 − 2,408,705,460 2,188,410,000 − 2,188,410,000 Financial assets at FVTPL 3,943,264 992,618 4,935,882 8,206,143 − 8,206,143 Financial assets at FVOCI 6,595,199,030 7,378,262,813 13,973,461,843 − 13,116,787,076 13,116,787,076 Investment securities at amortized cost 193,400,238 11,163,861,003 11,357,261,241 − 12,597,089,717 12,597,089,717 Loans and receivables – 25,569,306,917 56,731,601,869 82,300,908,786 29,965,195,825 39,952,585,979 69,917,781,804 gross Other assets 16,817,554 45,496,193 62,313,747 − 64,481,147 64,481,147 52,716,915,137 75,320,214,496 128,037,129,633 53,650,353,674 65,730,943,919 119,381,297,593 Non-financial Assets Property and equipment – net − 1,308,628,049 1,308,628,049 − 623,189,601 623,189,601 Investment properties – net − 382,355,004 382,355,004 − 341,073,550 341,073,550 Branch licenses – net − 999,928,369 999,928,369 − 999,881,780 999,881,780 Deferred tax asset − 458,920,202 458,920,202 − 263,829,946 263,829,946 Goodwill − 244,327,006 244,327,006 − 244,327,006 244,327,006 Other assets 699,925,818 450,600,026 1,150,525,844 569,064,766 438,508,284 1,007,573,050 P=53,416,840,955 P=79,164,973,152 P=132,581,814,107 P=54,219,418,440 P=68,641,754,086 P=122,861,172,526

Less: Unearned interest and discounts (loans) 328,181,769 416,063,873 Allowance for credit and impairment losses – loans and receivables 1,166,921,305 1,090,655,715 P=131,086,711,033 P=121,354,452,938

(Forward) Financial Liabilities *SGVFSM000714* - 180 -

Consolidated 2019 2018 Due Within Due Beyond Due Within Due Beyond One Year One Year Total One Year One Year Total Deposit liabilities P=87,092,747,246 P=10,508,880,599 P=97,601,627,845 P=84,517,612,415 P=10,488,781,320 P=95,006,393,735 Bonds payable − 9,889,835,356 9,889,835,356 − − − Bills payable 400,000,000 1,640,505,751 2,040,505,751 5,500,000,000 1,936,904,315 7,436,904,315 Manager’s checks 1,074,514,545 − 1,074,514,545 719,901,336 − 719,901,336 Accrued expenses 733,106,591 − 733,106,591 654,816,395 − 654,816,395 Lease liability 5,051,558 714,955,546 720,007,104 − − − Other liabilities 1,576,214,591 − 1,576,214,591 1,739,647,777 − 1,739,647,777 Deposit for future stock Subscription − − − 3,000,000,000 − 3,000,000,000 90,881,634,531 22,754,177,252 113,635,811,783 96,131,977,923 12,425,685,635 108,557,663,558 Non-financial Liabilities Other liabilities 172,293,471 218,131,412 390,424,883 320,796,733 94,623,826 415,420,559 P=91,053,928,002 P=22,972,308,664 P=114,026,236,666 P=96,452,774,656 P=12,520,309,461 P=108,973,084,117

Parent 2019 2018 Due Within Due Beyond Due Within Due Beyond One Year One Year Total One Year One Year Total Financial Assets Cash and other cash items P=3,176,490,713 P=− P=3,176,490,713 P=2,300,112,472 P=− P=2,300,112,472 Due from BSP 11,824,524,807 − 11,824,524,807 15,586,846,184 − 15,586,846,184 Due from other banks 2,374,076,786 − 2,374,076,786 2,944,176,334 − 2,944,176,334 Interbank loans receivable/SPURA 2,342,127,432 − 2,342,127,432 2,100,410,000 − 2,100,410,000 Financial assets at FVTPL 3,943,264 992,618 4,935,882 8,206,143 − 8,206,143 Financial assets at FVOCI 6,595,199,030 7,408,462,813 14,003,661,843 − 13,146,987,076 13,146,987,076 Investment securities at amortized cost 193,400,238 10,963,551,821 11,156,952,059 − 12,396,700,654 12,396,700,654 Loans and receivables – gross 24,946,249,836 55,593,568,726 80,539,818,562 29,532,217,509 39,173,544,952 68,705,762,461 Other assets 16,817,554 44,249,211 61,066,765 − 63,369,966 63,369,966 51,472,829,660 74,010,825,189 125,483,654,849 52,471,968,642 64,780,602,648 117,252,571,290 Non-financial Assets Property and equipment – net − 1,165,797,623 1,165,797,623 − 546,878,908 546,878,908 Investment properties – net − 266,464,925 266,464,925 − 212,181,540 212,181,540 Branch licenses – net − 379,328,369 379,328,369 − 379,281,780 379,281,780 Deferred tax asset − 511,814,656 511,814,656 − 405,775,383 405,775,383 Investment in a subsidiary − 1,357,178,340 1,357,178,340 − 1,236,740,437 1,236,740,437 Other assets 690,677,780 446,863,646 1,137,541,426 552,910,028 438,903,445 991,813,473 P=52,163,507,440 P=78,138,272,748 P=130,301,780,188 P=53,024,878,670 P=68,000,364,141 P=121,025,242,811 Less: Unearned interest and discounts (loans) 240,737,163 346,925,553 Allowance for credit and impairment losses – loans and receivables 1,058,755,225 962,251,007 P=129,002,287,800 P=119,716,066,251 Financial Liabilities Deposit liabilities P=85,436,199,761 P=10,195,351,521 P=95,631,551,282 P=85,423,213,158 P=7,975,735,688 P=93,398,948,846 Bonds payable − 9,889,835,356 9,889,835,356 − − − Bills payable 400,000,000 1,640,505,751 2,040,505,751 5,500,000,000 1,936,904,315 7,436,904,315 Manager’s checks 1,074,514,545 − 1,074,514,545 719,901,336 − 719,901,336 Accrued expenses 638,367,322 67,788,855 706,156,177 640,011,869 − 640,011,869 Lease liability − 667,575,337 667,575,337 − − − Other liabilities 1,560,535,305 − 1,560,535,305 1,730,096,344 − 1,730,096,344 Deposit for future stock subscription − − − 3,000,000,000 − 3,000,000,000 89,109,616,933 22,461,056,820 111,570,673,753 97,013,222,707 9,912,640,003 106,925,862,710

Non-financial Liabilities Other liabilities 168,803,338 202,336,341 371,139,679 318,897,026 89,937,693 408,834,719 P=89,278,420,271 P=22,663,393,161 P=111,941,813,432 P=97,332,119,733 P=10,002,577,696 P=107,334,697,429

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21. Equity

As of December 31, 2019 and 2018, the Parent Company’s capital stock consists of:

Shares Amount 2019 2018 2019 2018 Common shares - P=10 par value Authorized 2,700,000,000 1,500,000,000 P=27,000,000,000 P=15,000,000,000 Issued and outstanding Issued and outstanding 1,500,000,000 1,200,000,000 P=15,000,000,000 P=12,000,000,000 Issued during the year − − − − Balances at end of year 1,500,000,000 1,200,000,000 P=15,000,000,000 P=12,000,000,000

Surplus Reserves In compliance with existing BSP regulations, 10.00% of the net profits realized by the Parent Company from its trust business is appropriated to surplus reserve. The yearly appropriation is required until the surplus reserve for trust business equals 20.00% of the Parent Company’s regulatory capital.

In 2019 and 2018, the Parent Company’s BOD approved to appropriate reserves for trust reserves amounting to nil and =0.62P million, respectively.

In 2019 and 2018, the Parent Company’s BOD approved to appropriate reserves for expected credit losses amounting to P=444.5 million and P=98.7 million, respectively, in compliance with the requirements of the BSP Circular No. 1011. Under this BSP Circular, the Bank shall treat Stage 1 provisions for loan accounts as General Provisions (GP) while Stage 2 and 3 provisions shall be treated as Specific Provisions (SP). The Bank shall set up GLLP equivalent to 1% of all outstanding on-balance sheet loan accounts, except for accounts considered as credit risk-free under existing regulations. In cases when the computed allowance for credit losses on Stage 1 accounts is less than the 1% required GP, the deficiency shall be recognized by appropriating the ‘Surplus’ account. GP recognized in profit or loss as allowance for credit losses for Stage 1 accounts and the amount appropriated in surplus shall be considered as Tier 2 capital subject to the limit provided under the CAR framework.

Capital Management The Group considers the equity attributable to the equity holders of the Parent Company as the capital base of the Group. The primary objectives of the Group’s capital management are to ensure that it complies with externally imposed capital requirements and that it maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize shareholders value.

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities and assessment of prospective business requirements or directions. In order to maintain or adjust the capital structure, the Group may adjust the amount and mode of dividend payment to shareholders, issue capital securities or undertake a share buy-back. The processes and policies guiding the determination of the sufficiency of capital for the Group relative to its business risks are the very same methodology that have been incorporated into the Group’s Internal Capital Adequacy Assessment Process (ICAAP) in compliance with the requirements of BSP Circular No. 639 for its adoption. Under this framework, the assessment of risks extends beyond the Pillar 1 set of credit, market and operational risks and onto other risks deemed material by the Group. The level and structure of capital are assessed and determined in light of the Group’s business environment, plans, performance, risks and budget, as well as regulatory edicts. BSP requires submission of an ICAAP document every March 31.

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The Group had complied with all externally imposed capital requirements throughout the year.

Regulatory Qualifying Capital In 2013, the determination of the Parent Company’s compliance with regulatory requirements and ratios is based on the amount of the Parent Company’s ‘unimpaired capital’ (regulatory net worth) reported to the BSP, which is determined on the basis of regulatory policies. In addition, the risk- based capital ratio of a bank, expressed as a percentage of qualifying capital to risk-weighted assets, should not be less than 10.00% for both solo basis (head office and branches) and consolidated basis (parent company and subsidiaries engaged in financial allied undertakings). Qualifying capital and risk-weighted assets are computed based on BSP regulations.

The regulatory Gross Qualifying Capital of the Parent Company consists of Tier 1 (core) and Tier 2 (supplementary) capital. Tier 1 capital comprises share capital, retained earnings (including current year profit) and non-controlling interest less required deductions such as deferred tax and unsecured credit accommodations to DOSRI. Tier 2 capital includes unsecured subordinated note, revaluation reserves and general loan loss provision. Certain items are deducted from the regulatory Gross Qualifying Capital, such as but not limited to equity investments in unconsolidated subsidiary banks and other financial allied undertakings, but excluding investments in debt capital instruments of unconsolidated subsidiary banks (for solo basis) and equity investments in subsidiary non-financial allied undertakings.

Risk-weighted assets are determined by assigning defined risk weights to statement of financial position exposures and to the credit equivalent amounts of off-balance sheet exposures. Certain items are deducted from risk-weighted assets, such as the excess of general loan loss provision over the amount permitted to be included in Tier 2 capital. The risk weights vary from 0.00% to 125.00% depending on the type of exposure, with the risk weights of off-balance sheet exposures being subjected further to credit conversion factors.

Following is a summary of risk weights and selected exposure types:

Risk weight Exposure/Asset type* 0% Cash on hand; claims collateralized by securities issued by the non-government, BSP; loans covered by the Trade and Investment Development Corporation of the Philippines; real estate mortgages covered by the Home Guarantee Corporation 20% COCI, claims guaranteed by Philippine incorporated banks/quasi-banks with the highest credit quality; claims guaranteed by foreign incorporated banks with the highest credit quality; loans to exporters to the extent guaranteed by Small Business Guarantee and Finance Corporation 50% Housing loans fully secured by first mortgage on residential property; Local Government Unit (LGU) bonds which are covered by Deed of Assignment of Internal Revenue allotment of the LGU and guaranteed by the LGU Guarantee Corporation 75% Direct loans of defined Small Medium Enterprise and microfinance loans portfolio; nonperforming housing loans fully secured by first mortgage 100% All other assets (e.g., real estate assets) excluding those deducted from capital (e.g., deferred tax) 150% All NPLs (except nonperforming housing loans fully secured by first mortgage) and all nonperforming debt securities * Not all inclusive

With respect to off-balance sheet exposures, the exposure amount is multiplied by a credit conversion factor (CCF), ranging from 0.00% to 100.00%, to arrive at the credit equivalent amount, before the risk weight factor is multiplied to arrive at the risk-weighted exposure. Direct credit substitutes (e.g., guarantees) have a CCF of 100.00%, while items not involving credit risk has a CCF of 0.00%.

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On January 15, 2013, the BSP issued Circular No. 781, Basel III Implementing Guidelines on Minimum Capital Requirements, which provides the implementing guidelines on the revised risk- based capital adequacy framework particularly on the minimum capital and disclosure requirements for universal banks and commercial banks, as well as their subsidiary banks and quasi-banks, in accordance with the Basel III standards. The circular is effective on January 1, 2014.

The Circular sets out a minimum Common Equity Tier 1 (CET1) ratio of 6.00% and Tier 1 capital ratio of 7.50%. It also introduces a capital conservation buffer of 2.50% comprised of CET1 capital. The BSP’s existing requirement for Total CAR remains unchanged at 10.00% and these ratios shall be maintained at all times.

Further, existing capital instruments as of December 31, 2010 which do not meet the eligibility criteria for capital instruments under the revised capital framework shall no longer be recognized as capital upon the effectivity of Basel III. Capital instruments issued under BSP Circular Nos. 709 and 716 (the circulars amending the definition of qualifying capital particularly on Hybrid Tier 1 and Lower Tier 2 capitals), starting January 1, 2011 and before the effectivity of BSP Circular No. 781, shall be recognized as qualifying capital until December 31, 2016. In addition to changes in minimum capital requirements, this Circular also requires various regulatory adjustments in the calculation of qualifying capital.

On June 9, 2016, the BSP issued Circular No. 881, Implementing Guidelines on the Basel III Leverage Ratio Framework, which provides implementing guidelines for universal, commercial, and their subsidiary banks/quasi banks. The circular sets out a minimum leverage ratio of 5.00% on a solo and consolidated basis and shall be complied with at all times.

The CAR of the Group and of the Parent Company as reported to the BSP as of December 31, 2019 and 2018 follows:

Consolidated Parent Company 2019 2018 2019 2018 Common Equity Tier 1 Capital P=14,500 P=10,274 P=14,205 P=10,039 Additional Tier 1 Capital − − − − Tier 1 capital 14,500 10,274 14,205 10,039 Tier 2 capital 803 632 783 619 Total qualifying capital P=15,303 P=10,906 P=14,988 P=10,658 Credit RWA P=80,264 P=66,962 P=78,316 P=65,567 Market RWA 887 347 887 347 Operational RWA 6,477 5,399 6,100 5,068 Total RWA P=87,628 P=72,708 P=85,303 P=70,982 Common Equity Tier 1 Ratio 1 16.55% 14.13% 16.65% 14.14% Additional Tier 1 Ratio 0.00% 0.00% 0.00% 0.00% Tier 1 capital ratio 16.55% 14.13% 16.65% 14.14% Tier 2 capital ratio 0.92% 0.87% 0.92% 0.87% Risk-based capital adequacy ratio 17.46% 15.00% 17.57% 15.01%

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

On October 29, 2014, the BSP issued amendments to Circular No. 854 which required a new minimum capitalization for Banks. The Parent Company, as a commercial bank with more than 100 branches, was required to increase its capitalization to P=15.00 billion.

On January 28, 2016 and February 25, 2016, the BOD of the Parent Company and the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, respectively, approved the issuance of the remaining 46,070,226 unissued preferred shares (A and B) at =10.00P par value in favor of JGSCSC and RRHI as follows:

No. of Shares Stockholder Types of Shares Subscribed Par Value Amount JGSCSC Preferred A 27,404,962 P=10 P=274,049,620 Preferred B 237,174 10 2,371,740 RRHI Preferred A 18,269,974 10 182,699,740 Preferred B 158,116 10 1,581,160 Total 46,070,226 P=460,702,260

Furthermore, the BOD also approved the following resolutions: · Conversion of all preferred shares of the Parent Company, whether issued or unissued, particularly the 356.32 million preferred shares A and the 210.00 million preferred shares B, into common shares, and removal of all the other class of shares of the Parent Company, except common shares. · Increase in the Parent Company’s authorized capital stock from =6.10P billion divided into 610.00 million common shares with par value of P=10.00 each. · The total authorized stock of the Parent Company is =15.00P billion divided into 1.50 billion common shares with a par value of P=10.00 each.

On March 15, 2016, JGSCSC acquired additional preferred shares A and B of 27,404,962 shares and 237,174 shares, respectively.

In 2016, RRHI acquired additional preferred shares A and B of 18,269,974 shares and 158,116 shares, respectively.

On June 17, 2016, RRHI subscribed to an additional 297,094,118 common shares at =10.00P per share.

On July 8, 2016, JGSCSC subscribed to an additional 292,905,882 common shares at =10.00P per share.

On July 9, 2016, the Parent Company BOD approved the increase in authorized capital stock amounting to P=8.90 billion composed of 890.00 million common shares at P=10.00 per share. Out of the =8.90P billion increase, =5.90P billion was paid-up and subscribed as follows:

No. of Shares Stockholder Subscribed Amount JGSCSC 292,905,882 P=2,929,058,820 RRHI 297,094,118 2,970,941,180 Total 590,000,000 P=5,900,000,000

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On November 15, 2016, the BSP approved the Parent Company’s capital build-up program with the following milestones: 1. Capital infusion from unissued shares up to the existing authorized capital stock of P=6.10 billion. 2. Capital infusion from the increase in authorized capital stock from =6.10P billion to P=15.00 billion of which P=12.00 billion is paid up. 3. Internally generated capital based on the Parent Company’s financial projections for the period 2016 to 2019.

The approval of BSP to the capital build-up program further provides that the Parent Company shall: 1. Refrain from declaring and distributing cash dividends until the =15.00P billion minimum capital requirement is attained; 2. Call on its stockholders to infuse additional capital in case of shortfall in internally-generated income to meet the target capital levels; and 3. Submit progress reports with supporting documents, duly noted by its BOD, to the Central Point of Contact Department II, within 20 banking days from end of December of each tear until the Bank is deemed by the BSP to have fully complied with its capital build-up program.

On December 15, 2016, the Parent Company filed its application for the increase in its authorized capital stock as approved by the BOD and the BSP with the SEC.

On January 29, 2017, the SEC approved the Parent Company’s application for the increase in authorized capital stock from =6.10P billion divided into 43.68 million common shares, 356.32 million preferred shares A and 210.00 million preferred shares B of P=10.00 par value each, to =12.00P billion divided into 633.64 million common shares, 356.32 million preferred shares A and 210.00 million preferred shares B of =10.00P par value each.

In 2017, the Parent Company issued 590.00 million common shares amounting to P=5.90 billion in exchange for the deposits for future subscriptions.

In 2017, the Parent Company removed all the other classes of shares, except common shares, and converted its 356.32 million preferred shares A and 210.00 million preferred shares B to 566.32 million common shares with =10.00P par value.

Capital stock On June 27, 2018, the Parent Company’s BOD approved the increase in authorized capital stock from P=15.00 billion to P=27.00 billion or an increase of P=12.00 billion composed of 1.2 billion common shares at P=10.00 par value per share. On July 16, 2018, the Bank received the subscription from its stockholders amounting to P=3.00 billion and recorded it as ‘Deposit for Future Subscription’ in the liability section of the statement of financial position. On August 23, 2018, the said increase in authorized capital stock was approved by the stockholders of Parent Company in a special meeting held for that purpose. Out of the P=12.00 billion increase, =3.00P billion was subscribed and paid-up as follows:

No. of Shares Stockholder Subscribed Amount JGSCSC 180,000,000 P=1,800,000,000 RRHI 120,000,000 1,200,000,000 Total 300,000,000 P=3,000,000,000

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On August 29, 2018, the Parent Company filed with the BSP the request for authority and endorsement to SEC of the proposed increase in authorized capital stock.

On December 12, 2018, BSP approved the proposed increase and issued to the corresponding Certificate of Authority.

On February 4, 2019, the Parent Company filed with the SEC the request for approval of the aforementioned proposed increase in authorized capital stock as approved by the BOD, stockholders, and BSP.

On March 18, 2019, the SEC approved the increase in authorized capital stock of the Parent Company from P=15.00 billion to =27.00P billion.

On March 22, 2019, the Parent Company converted the =3.00P billion ‘Deposit for Future Stock Subscription’ to ‘Common Stock’. The transaction cost amounting to =30.00P million related to the issuance of common stock is treated as a deduction to ‘Surplus’ account.

22. Retirement Plan

The Parent Company has a noncontributory defined benefit retirement covering substantially all its officers and regular employees. Under this retirement plan, all covered officers and employees are entitled to cash benefits after satisfying certain age and service requirements. In 2008, the Parent Company established a plan asset for its defined benefit retirement plan. On April 1, 2019, the retirement plan was amended to increase the previous benefit pay of 22.5 days to 26.08 days for every year of credited service based on the final daily basic salary for all service years until separation. The effect of the change in retirement plan amounting to P=16.78 million is reflected as ‘Past service cost’ and recognized as ‘Retirement expense’ in 2019.

LSB has funded noncontributory retirement plan covering all its regular permanent employees. Under the retirement plan, all employees are entitled to cash benefits after satisfying certain age and service requirements.

The latest actuarial valuation of the retirement plan of the Group was made as of December 31, 2019. The principal actuarial assumptions used in determining retirement liability of the Group as of January 1 follow:

Parent Company LSB 2019 2018 2019 2018 Average remaining working life in years 9 7 8 8 Discount rate 4.95% 7.30% 4.99% 7.36% Salary rate increase 5.70% 5.70% 5.70% 5.70%

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The amounts recognized in the statements of financial position follow:

Consolidated Parent Company 2019 2018 2019 2018 Present value of defined benefit obligation P=288,376,525 P=172,506,477 P=270,554,168 P=165,800,184 Fair value of plan assets (69,476,727) (77,882,651) (68,217,827) (75,862,491) Retirement liability P=218,899,798 P=94,623,826 P=202,336,341 P=89,937,693

The amounts of ‘Retirement expense’ included in ‘Compensation and other benefits’ in the statements of income follow:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Current service cost P=42,307,642 P=30,227,421 P=24,820,397 P=39,653,004 P=28,562,456 P=23,067,077 Past service cost/(credit) 16,784,998 − − 15,622,294 − − Net interest cost 8,712,608 4,681,997 2,632,507 8,122,069 4,366,585 2,381,155 P=67,805,248 P=34,909,418 P=27,452,904 P=63,397,367 P=32,929,041 P=25,448,232

Changes in net defined benefit obligation (DBO) of funded funds follow:

Present Value Fair Value of Net Retirement Consolidated of DBO Plan Assets Liability January 1, 2019 P=172,506,477 P=77,882,651 P=94,623,826 Net Benefit Cost in Consolidated Statement of Income Current service cost 42,307,642 − 42,307,642 Past service cost/(credit) 16,784,998 − 16,784,998 Net interest cost 13,012,006 4,299,398 8,712,608 Sub-total 72,104,646 4,299,398 67,805,248 Benefits paid (22,675,901) (22,675,901) − Remeasurement in OCI Return on plan assets (excluding amount included in net interest) − 9,970,579 (9,970,579) Actuarial changes arising from experience adjustments 2,819,436 − 2,819,436 Actuarial changes arising from changes in financial/ demographic assumptions 63,621,867 − 63,621,867 Sub-total 66,441,303 9,970,579 56,470,724 Contributions – – – December 31, 2019 P=288,376,525 P=69,476,727 P=218,899,798

Present Value Fair Value of Net Retirement Consolidated of DBO Plan Assets Liability January 1, 2018 P=159,432,652 P=77,807,757 P=81,624,895 Net Benefit Cost in Consolidated Statement of Income Current service cost 30,227,421 − 30,227,421 Net interest cost 8,865,543 4,183,546 4,681,997 Sub-total 39,092,964 4,183,546 34,909,418 (Forward)

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Present Value Fair Value of Net Retirement Consolidated of DBO Plan Assets Liability Benefits paid (P=4,740,476) (P=4,740,476) P=− Remeasurement in OCI Return on plan assets (excluding amount included in net interest) − (1,528,584) 1,528,584 Actuarial changes arising from experience adjustments (142,183) − (142,183) Actuarial changes arising from changes in financial/ demographic assumptions (21,136,480) − (21,136,480) Sub-total (21,278,663) (1,528,584) (19,750,079) Contributions – 2,160,408 (2,160,408) December 31, 2018 P=172,506,477 P=77,882,651 P=94,623,826

Present Value Fair Value of Net Retirement Parent Company of DBO Plan Assets Liability January 1, 2019 P=165,800,184 P=75,862,491 P=89,937,693 Net Benefit Cost Statement of Income Current service cost 39,653,004 − 39,653,004 Past service cost 15,622,294 − 15,622,294 Net interest cost 12,325,361 4,203,292 8,122,069 Sub-total 67,600,659 4,203,292 63,397,367 Benefits paid (22,139,594) (22,139,594) − Remeasurement in OCI Return on plan assets (excluding amount included in net interest) − 10,291,638 (10,291,638) Actuarial changes arising from experience adjustments (394,091) − (394,091) Actuarial changes arising from changes in financial/ demographic assumptions 59,687,010 − 59,687,010 Sub-total 59,292,919 10,291,638 49,001,281 December 31, 2019 P=270,554,168 P=68,217,827 P=202,336,341

Present Value Fair Value of Net Retirement Parent Company of DBO Plan Assets Liability January 1, 2018 P=153,880,674 P=77,807,757 P=76,072,917 Net Benefit Cost Statement of Income Current service cost 28,562,456 − 28,562,456 Net interest cost 8,550,131 4,183,546 4,366,585 Sub-total 37,112,587 4,183,546 32,929,041 Benefits paid (4,535,559) (4,535,559) − Remeasurement in OCI Return on plan assets (excluding amount included in net interest) − (1,593,253) 1,593,253 Actuarial changes arising from experience adjustments (875,736) − (875,736)

(Forward)

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Present Value Fair Value of Net Retirement Parent Company of DBO Plan Assets Liability Actuarial changes arising from changes in financial assumptions (P=19,781,782) P=− (P=19,781,782) Sub-total (20,657,518) (1,593,253) (19,064,265) December 31, 2018 P=165,800,184 P=75,862,491 P=89,937,693

The Parent Company’s major categories of plan assets as a percentage of the fair value of total plan assets follow:

2019 2018 Deposits in banks 2.72% 8.62% Debt securities: Government securities 5.57% 82.58% Private securities 32.02% 8.39% 37.59% 90.97% Equity securities 0.43% 0.00% Investment in UITF 58.95% 0.00% Other assets 0.31% 0.41% 100.00% 100.00%

Movements in “Remeasurement gains (losses) on retirement plan” in OCI follow:

Consolidated 2019 2018 Balance at beginning of year P=357,997 (P=13,467,057) Remeasurement gains (losses) on retirement plan in OCI Return on plan assets (excluding amount included in net interest) 9,970,579 (1,593,253) Due to experience adjustments (2,819,436) 206,853 Due to changes in financial/demographic assumptions (63,621,867) 21,136,477 Remeasurement gains (losses) during the year (56,470,724) 19,750,077 Tax effect 16,941,217 (5,925,023) Remeasurement gains (losses) during the year, net of tax (39,529,507) 13,825,054 Balance at end of year, net of tax (P=39,171,510) P=357,997

Parent Company 2019 2018 Balance at beginning of year P=357,997 (=P13,467,057) Remeasurement gains (losses) on retirement plan in OCI Return on plan assets (excluding amount included in net interest) 10,291,638 (1,593,253) Due to experience adjustments 394,091 875,736 Due to changes in financial/demographic assumptions (59,687,010) 19,781,782

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Parent Company 2019 2018 Remeasurement gains (losses) during the year (P=49,001,281) P=19,064,265 Tax effect 14,700,384 (5,719,280) Remeasurement gains (losses) during the year, net of tax (34,300,897) 13,344,985 Share in OCI of the subsidiary (5,228,610) 480,069 (39,529,507) 13,825,054 Balance at end of year, net of tax (P=39,171,510) P=357,997

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the DBO as of December 31, 2018 and 2017, assuming if all other assumptions were held constant:

2019 Consolidated Parent Company +/- basis points (bps) Impact to DBO Impact to DBO Discount rate +100 bps P=261,288,030 P=245,447,174 -100 bps 320,214,555 300,031,373 Salary increase rate +100 bps 321,050,513 300,819,158 -100 bps 260,078,434 244,313,861

2018 Consolidated Parent Company +/- basis points (bps) Impact to DBO Impact to DBO Discount rate +100 bps P=160,396,746 P=154,331,259 -100 bps 186,293,544 178,837,861 Salary increase rate +100 bps 187,539,581 180,030,852 -100 bps 159,108,876 153,097,334

Shown below is the maturity analysis of the undiscounted benefit payments:

Consolidated Parent Company 2019 2018 2019 2018 Less than 1 year P=12,407,174 P=18,924,763 P=12,159,143 P=18,029,614 More than 1 year to 5 years 112,659,428 77,402,111 107,771,274 76,258,488 More than 5 years to 10 years 240,208,802 172,870,529 223,574,970 164,696,042 More than 10 years to 15 years 439,557,653 302,801,447 414,717,153 286,339,487 More than 15 years to 20 years 365,889,941 244,427,264 332,226,569 227,938,556 More than 20 years 1,270,761,917 527,512,499 1,171,584,436 471,656,677

The Parent Company’s weighted average duration of the defined benefit obligation is equivalent to 19.49 years and 16.75 years in 2019 and 2018, respectively.

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23. Leases

The Group’s leases mostly pertain to building and parking spaces and generally have terms ranging from 2 to 10 years. The lease contracts are cancellable upon mutual agreement of the parties or renewable at the Group’s option under certain terms and conditions. Various lease contracts include escalation clauses. As of December 31, 2019 and 2018, the Group has neither a contingent rent payable nor an asset restoration obligation in relation with these lease agreements.

Shown below is the maturity analysis of the undiscounted lease payments as of December 31, 2019:

Consolidated Parent 1 year or less P=258,948,338 P=249,759,051 More than 1 year to 5 years 525,022,763 485,590,096 More than 5 years to 10 years 29,891,105 9,363,149 More than 10 years to 15 years ─ ─ More than 15 years to 20 years ─ ─ More than 20 years ─ ─ P=813,862,206 P=744,712,296

As of December 31, 2018, the estimated minimum future annual rentals payable under non-cancellable oprating leases follows:

Consolidated Parent Within one year P=257,354,868 P=249,496,696 Beyond one year but within five years 487,410,319 455,033,741 Beyond five years 31,614,598 9,502,058 P=776,379,785 P=714,032,495

The Group also has certain leases of building and parking spaces with lease terms of 12 months or less and leases with low value. The Group applies the recognition exemptions for these type of leases.

Right-of-use Assets Details of the carrying amounts of ROU assets recognized and the movements during the year ended December 31, 2019 are disclosed in Note 10.

Lease Liabilities Details of the rollforward analysis of the Group’s and Parent Company’s lease liabilities as at December 31, 2019 are disclosed in Note 2.

Total cash payments in 2019 for the Group’s leases amounted to P=275.43 million. The Group also had non-cash additions to ROU assets and lease liabilities of P=291.44 million and =286.90P million, respectively in 2019.

Summarized in Note 2 are the amounts recognized in the 2019 consolidated statement of comprehensive income in relation to the Group’s leases.

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24. Income and Expenses

Net service fees and commission income consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Service fees and commission income: Credit-related P=288,490,349 P=216,219,087 P=52,709,375 P=288,490,349 P=216,219,087 P=52,709,375 Commissions 70,688,636 48,259,738 33,275,605 70,627,661 48,208,008 32,569,202 Deposit-related 65,563,650 54,533,131 65,967,676 63,952,403 53,158,485 64,427,343 Utility and store payment charges 21,456,252 18,898,411 15,233,502 21,456,252 18,898,411 15,233,502 Trust and other fiduciary 16,103,981 14,553,521 14,463,260 16,103,981 14,553,521 14,463,260 462,302,868 352,463,888 181,649,418 460,630,646 351,037,512 179,402,682 Service charges and commission expense: Banking fees 28,144,406 38,052,033 42,765,040 28,144,406 38,052,033 42,765,040 Brokerage and commissions 22,631,672 16,937,626 14,121,381 14,279,263 12,511,112 9,830,211 Cards fees and commissions 141,456,076 34,334,259 – 141,456,076 34,334,259 – 192,232,154 89,323,918 56,886,421 183,879,745 84,897,404 52,595,251 P=270,070,714 P=263,139,970 P=124,762,997 P=276,750,901 P=266,140,108 P=126,807,431

Miscellaneous income consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Gain (loss) on sale of repossessed chattels (Note 13) (P=102,709,347) (P=8,116,298) (P=28,274,026) (P=102,752,315) (P=8,116,298) (P=28,301,193) Gain (loss) on initial recognition of repossessed chattels (Note 11) (81,969,450) − (18,896,886) (81,969,450) − (18,786,884) Penalties 39,330,748 39,059,762 18,534,384 39,330,748 39,059,762 18,534,384 Gain (loss) on initial recognition of investment properties (Note 11) 33,889,780 4,152,421 33,889,035 21,471,508 47,181 31,526,513 Gain (loss) on sale of investment properties (Note 11) 17,356,519 (29,285,940) 5,351,114 5,144,094 (30,677,975) 178,689 Gain on sale of property and equipment (Note 10) 7,251,188 2,442,750 16,475,650 6,490,889 2,434,254 1,756,476 Recovery on charged-off assets 2,680,358 1,823,272 318,879 2,607,521 1,448,223 48,970 Others 59,577,380 65,916,779 47,794,589 45,284,282 57,084,339 38,934,624 (P=24,592,824) P=75,992,746 P=75,192,739 (P=64,392,723) P=61,279,486 P=43,891,579

Others include other bank charges amounting =27.64P million in 2019 and =19.03P million in 2018, dividend income amounting to P=10.18 million in 2019 and P=11.21 million in 2018, rental income from safety deposit box and night depository amounting to =2.99P million in 2019 and P=3.27 million in 2018, and other miscellaneous income amounting to =18.77P million in 2019 and =32.41P million in 2018.

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Miscellaneous expenses consist of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Fines, penalties and other charges P=95,128,532 P=406,495 P=17,991,040 P=94,645,408 P=25,347,577 P=17,584,545 Advertising 76,128,492 41,080,496 24,971,786 75,087,172 40,206,385 23,632,177 Transportation and travel 68,002,449 56,301,105 47,966,358 50,751,471 45,338,283 39,176,801 Stationery and supplies 47,803,913 39,761,779 41,780,709 44,152,095 36,703,926 39,556,205 BSP Supervisory Fees 41,429,429 32,792,069 – 40,897,575 32,220,716 – Filing Fees 24,861,154 25,347,577 – 24,861,154 – Litigation expense (Note 11) 18,622,491 12,068,320 14,012,833 14,509,141 11,067,770 10,208,486 Appraisal fees 17,650,770 8,641,816 6,063,676 17,650,770 8,641,816 6,063,676 Membership dues 9,307,987 9,012,731 5,651,017 8,791,614 8,624,770 5,537,984 Others 46,296,012 27,089,758 13,502,326 42,152,037 18,427,833 10,163,395 P=445,231,229 P=252,502,146 P=171,939,745 P=413,498,437 P=226,579,076 P=151,923,269

The Group’s ‘Others’ include POS rental amounting to P=18.31 million in 2019 and nil in 2018, freight charges amounting to P=10.75 million in 2019 and P=9.46 million in 2018, and other miscellaneous expenses such as documentary stamps used, periodicals and magazines, donations, and others amounting to =17.24P million in 2019 and =17.05P million in 2018.

The Parent’s ‘Others’ include POS rental amounting to P=18.31 million in 2019 and nil in 2018, freight charges amounting to P=10.75 million in 2019 and P=9.46 million in 2018, and other miscellaneous expenses such as documentary stamps used, periodicals and magazines, donations, and others amounting to =13.09P million in 2019 and =8.97P million in 2018.

25. Income and Other Taxes

Under Philippine tax laws, the Parent Company is subject to percentage and other taxes (presented as ‘Taxes and licenses’ in the statement of income) as well as income taxes. Percentage and other taxes paid consist principally of gross receipts tax (GRT) and documentary stamp taxes.

Breakdown of taxes and licenses of the Group and Parent Company consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Gross receipts tax P=243,253,507 P=162,200,977 P=91,113,845 P=222,552,358 P=150,771,107 P=76,670,482 Documentary stamps used 310,836,158 329,747,775 171,022,069 310,836,158 329,747,775 171,022,069 Permits 26,465,278 20,337,631 17,039,146 21,609,420 16,564,171 11,529,906 P=580,554,943 P=512,286,383 P=279,175,060 P=554,997,936 P=497,083,053 P=259,222,457

Income taxes consist of final withholding taxes on gross interest income from government securities, deposits and other deposit substitutes, tax on the FCDU income and RCIT, as discussed below, on net taxable income. These income taxes, as well as the deferred tax benefit, are presented in the statement of income as ‘Provision for income tax’.

Current tax regulations provide that the RCIT rate shall be 30.00%. Interest allowed as deductible expense shall be 33.00% of interest income subjected to final tax.

The optional standard deduction (OSD) equivalent to 40.00% of gross income may be claimed as an alternative deduction in computing for the RCIT. In 2018 and 2017, the Parent Company elected to claim itemized expense deductions instead of the OSD in the RCIT computation.

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The regulations also provide for MCIT of 2.00% of modified gross income and allow a NOLCO benefit. Both the excess of over the RCIT and NOLCO may be applied against the regular tax liability and taxable income, respectively, over three (3) years from the year of inception.

Current tax regulations also provide for the ceiling on the amount of entertainment and representation (EAR) expense that can be claimed as a deduction against taxable income. Under the regulation, EAR expense allowed as a deductible expense for a service company like the Parent Company is limited to the actual EAR paid or incurred but not to exceed 1.00% of net revenue. EAR expenses of the Parent Company amounted to P=94.34 million, P=88.10 million and P=82.89 million in 2019, 2018 and 2017, respectively.

FCDU offshore income (income from non-residents) is tax-exempt while gross onshore income (income from residents) is generally subject to 10.00% income tax. In addition, interest income on deposit placement with other FCDUs and offshore banking units (OBUs) is taxed at 7.50%.

Current tax regulations provide that the income derived by the FCDU from foreign currency- denominated transactions with non-residents, OBUs, local commercial banks including branches of foreign banks is tax-exempt while interest income on foreign currency-denominated loans from residents other than OBUs or other depository banks under the expanded system is subject to 10.00% income tax. FCDUs’ all other income is subject to 30.00% income tax.

Provision for income tax of the Group and Parent Company consists of:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Current: Final P=178,961,223 P=176,665,322 P=151,415,187 P=174,143,850 P=170,810,970 P=147,025,406 MCIT 52,851,638 40,325,963 3,241,853 52,851,638 37,545,317 – RCIT 11,195,136 1,595,059 47,595,411 2,869,176 1,595,059 47,595,411 243,007,997 218,586,344 202,252,451 229,864,664 209,951,346 194,620,817 Deferred (181,408,025) (93,103,496) (168,596,012) (91,338,890) (93,495,115) (168,596,012) P=61,599,972 P=125,482,848 P=33,656,439 P=138,525,774 P=116,456,231 P=26,024,805

The provision for deferred taxes charged to other comprehensive income of the Group as of 2019, 2018 and 2017 amounted to nil, =5.93P million, and nil, respectively. The benefit for deferred taxes charged to other comprehensive income for the year 2019, 2018 and 2017 amounted to P=16.94 million, nil and P=4.44 million, respectively.

The provision for deferred taxes charged to other comprehensive income of the Parent Company as of 2019, 2018 and 2017 amounted to nil, =5.72P million, and P=4.44 million, respectively. The benefit for deferred taxes charged to other comprehensive income as of 2019, 2018 and 2017 amounted to P=14.70 million, nil and =1.63P million, respectively.

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Net deferred tax assets (liabilities) of the Group and the Parent Company consist of the following:

Consolidated Parent Company 2019 2018 2019 2018 Deferred tax assets on: Allowance for credit and impairment losses P=523,526,016 P=416,122,000 P=391,970,270 P=364,600,608 Provision for employee benefits 21,263,333 27,799,416 21,263,333 27,799,416 Retirement liability 63,429,107 26,981,308 60,700,902 26,981,308 Accumulated depreciation on investment properties and repossessed chattels 39,874,235 24,661,879 34,042,813 24,661,879 Accrued rent 91,529 9,523,740 − 9,523,740 Lease liability, net 12,434,485 − 11,767,574 − Accrued SL VL 22,033,160 13,534,895 22,033,160 13,534,895 Impairment loss on FVOCI 621,176 − 621,176 − Unrealized loss on foreign exchange 5,909,577 − 5,909,577 − 689,182,618 518,623,238 548,308,805 467,101,846

Deferred tax liabilities on: Branch licenses 186,000,000 186,000,000 − − Unrealized gain on initial recognition of investment properties and repossessed chattels 44,201,096 35,371,641 36,432,829 31,140,491 Unrealized foreign exchange gain − 30,144,756 − 30,144,756 Unrealized income on finance lease receivable − 2,694,735 − − Retirement liability − 540,944 − − Unrealized gain on financial assets at FVTPL 61,320 41,216 61,320 41,216 230,262,416 254,793,292 36,494,149 61,326,463 P=458,920,202 P=263,829,946 P=511,814,656 P=405,775,383

The Group did not set up deferred tax assets on the following temporary differences since management believes that it is not highly probable that these differences will be realized in the future:

Consolidated Parent Company 2019 2018 2019 2018 Allowance for credit and impairment losses P=201,557,853 P=412,012,623 P=− P=− Unrealized loss on AFS investments − 56,772,717 − 56,772,717 Excess of MCIT over RCIT 57,498,747 34,848,610 57,498,747 28,826,111 Accumulated depreciation on − investment properties and repossessed chattels 22,360,384 − − NOLCO − 15,568,878 − − Accrued rent − 5,763,248 − − Unfunded retirement liability − 4,686,133 − − P=259,056,600 P=552,012,593 P=57,498,747 P=85,598,828

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Details of NOLCO follow:

Subsidiary Inception Year Amount Used Balance Expiry Year 2017 P=49,280,590 P=49,280,590 P=– 2020

Details of the excess of MCIT over RCIT follow:

Consolidated Inception Year Amount Used/Expired Balance Expiry Year 2019 P=28,672,636 P=– P=28,672,636 2022 2018 28,843,243 17,132 28,826,111 2021 2017 3,241,853 3,241,853 – 2020 P=60,757,732 P=3,258,985 P=57,498,747

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

A reconciliation of statutory income tax rate to the effective income tax rate of the Group and the Parent Company follows:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Statutory income tax rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% Tax effect of: Tax paid and tax-exempt income (18.66) (28.51) (34.06) (16.70) (28.58) (33.58) Non-deductible expenses 17.02 45.08 44.19 15.05 43.59 41.02 Unrecognized deferred tax assets (11.03) (15.60) (30.65) 0.79 (14.80) (22.07) FCDU income (9.44) (2.62) (4.90) (8.60) (2.67) (5.01) Others – net 0.00 0.00 5.29 (4.39) (0.68) (2.55) Effective income tax rate 7.89% 28.35% 9.87% 16.15% 26.86% 7.81%

26. Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions or if they are subjected to common control of common significant influence such as subsidiaries and associates of subsidiaries or other related parties. Related parties may be individuals or corporate entities.

The Parent Company has several business relationships with related parties. Transactions with such parties are made in the ordinary course of business and on substantially same terms, including interest and collateral, as those prevailing at the time of comparable transactions with other parties. These transactions also did not involve more than the normal risk of collectability or present other unfavorable conditions.

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The significant transactions and outstanding balances of the Parent Company and the Subsidiary with its related parties follow:

Parent Company 2019 2018 Amount/ Outstanding Amount/ Outstanding Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature Subsidiary Advances from a subsidiary P=362,900 P=2,235,600 P=798,049 P=1,872,700 Transportation expenses and down payment for software cost Accounts receivable 2,708,634 5,194,096 (256,069) 2,485,462 Unsecured, noninterest-bearing, payable on demand Deposit liabilities 4,006,119 29,025,194 12,862,013 25,019,075 Regular checking account, noninterest bearing Affiliates Receivable from customers (848,280,812) 3,020,682,938 (874,585,000) 3,868,963,750 Secured loans with annual - commercial loans interest of 2.50% Receivable from customers (308,995,424) 495,192,826 302,813,353 804,188,250 Non-interest bearing domestic bills - bills purchased purchased Deposit liabilities 14,014,806,786 36,449,205,960 1,357,093,379 22,434,399,174 Various terms and with annual interest rates ranging from nil to 2.55% Interest expense 37,664,071 42,671,212 Interest expense on deposit liabilities Interest income 171,478,041 204,828,013 Interest income from secured commercial loans Service fee income 188,673 91,757 Income from non-interest bearing domestic bills purchased Rent expense 25,860,861 125,269,576 Office rental paid to affiliates and JG Summit Holdings Inc.

ROU assets Lease renewed every 5 years with 5% 287,222,361 287,222,361 escalation rate Depreciation expense on Lease renewed every 5 years with 5% ROU assets 103,671,794 escalation rate Lease liability Lease renewed every 5 years with 5% 304,426,696 304,426,696 escalation rate Interest expense on lease Lease renewed every 5 years with 5% liability 21,471,425 escalation rate

Shareholders Deposit liabilities (196,066) 4,250,767 (56,629,686) 4,446,833 Various terms and with annual interest rates ranging from nil to 2.55% Interest expense 10,214 103,612 Interest expense on deposit liabilities

Board of Directors Deposit liabilities 12,009,889,059 12,565,904,113 (4,037,165,813) 556,015,054 Various terms and with annual interest rates ranging from nil to 2.25% Interest expense 34,753,005 19,642,021 Interest expense on deposit liabilities

Key Officers Deposit liabilities 26,791,849 33,449,698 (12,357,825) 6,657,849 Various terms and with annual interest rates ranging from nil to 1.88% Interest expense 171,254 Interest expense on deposit liabilities

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Details on significant related party transactions of the Subsidiary with its other related parties follow:

Subsidiary 2019 2018 Amount/ Outstanding Amount/ Outstanding Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature

Key employees Receivables from (P=20,555,447) P=4,353,251 P=11,115,550 P=24,908,698 Loans of directors, officers and customers stockholders Interest income 101,045 − 91,617 − Interest earned from loans of directors, officers and stockholders Deposit liabilities (8,617,646) 288,369 8,132,265 8,906,015 Deposits of directors, officers and stockholders Interest expense 2,783 − 6,540 − Interest expense on deposit liabilities Compensation and fringe 14,537,909 − 7,837,461 − Remuneration and benefits to directors benefits and key management personnel Post-employment benefits 772,446 − 506,902 − Post-employment benefits

The retirement fund of the Parent Company’s employees amounted to =68.22P million and P=75.86 million as of December 31, 2019 and 2018, respectively (see Note 22). The fund is being managed by JG Summit Multi-Employer Retirement Plan (MERP), a corporation created for the purpose of managing the funds of the Group, with Robinsons Bank Corporation (RBC)-Trust and Investment Group (TIG) as the trustee. Income earned by the Parent Company through its TIG from managing these funds amounted to =3.00P milion =3.47P million and =4.49P million in 2019, 2018 and 2017, respectively.

Details of the transactions of the Parent Company with its retirement plan follow:

2019 Amount/ Outstanding Related Party Nature of Transaction Volume Balance Terms and Conditions/Nature Retirement plan Contribution, benefits (P=7,644,664) P=68,217,827 Contributions to the Fund plus paid and interest interest earned during the year earned

2018 Amount/ Outstanding Related Party Nature of Transaction Volume Balance Terms and Conditions/Nature Retirement plan Contribution , benefits (P=1,945,266) P=75,862,491 Contributions to the Fund plus paid and interest interest earned during the year earned

The retirement plan under the MERP has an Executive Retirement Committee, which is mandated to approve the plan, trust agreement, investment plan, including any amendments or modifications thereto, and other activities of the plan. Certain members of the BOD of the Parent Company are represented in the Executive Retirement Committee. RBC Trust and Investment Group manages the plan based on the mandate as defined in the trust agreement.

Details of remuneration of directors and other key management personnel of the Group and the Parent Company follow:

Consolidated Parent Company 2019 2018 2019 2018 Short-term benefits P=192,148,981 P=105,817,874 P=112,402,307 P=97,980,413 Post-employment benefits 14,352,430 7,564,343 13,540,331 7,057,441 P=206,501,411 P=113,382,217 P=125,942,638 P=105,037,854

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27. Trust Operations

Properties held by the Parent Company in fiduciary or agency capacity for their customers are not included in the accompanying statement of financial position since these are not assets of the Parent Company (see Note 28).

In compliance with the requirements of the General Banking Law relative to the Parent Company’s trust functions, treasury bills with a total face value of P195.00 million included under Financial Assets at Fair Value through OCI as of December 31, 2019 and P181.00 million as of December 31, 2018, were deposited with the BSP (see Note 7).

An appropriation of 10.00% of the Parent Company’s income from trust operations is set aside as surplus reserve to absorb any losses that may arise from its trust functions.

28. Commitments and Contingencies

a. The Group is also involved in a number of legal proceedings. The estimate of the probable costs for the resolutions of these claims has been developed in consultation with outside counsel handling the Group’s defense and is based on an analysis of potential results. The Group does not believe that these proceedings will have a material adverse effect on the financial statements.

b. In the normal course of the Group’s operations, there are various outstanding commitments, contingent liabilities and bank guarantees which are not reflected in the accompanying financial statements. The Group does not anticipate material unreserved losses as a result of these transactions.

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

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

29. Segment Information

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· Corporate Banking - principally handling loans and other credit facilities and deposit and current accounts for corporate and institutional customers; · Treasury - principally providing money market, trading and treasury services, as well as the management of the Group’s funding operations by use of treasury bills, government securities and placements and acceptances with other banks, through treasury and corporate banking; · Branch Banking - principally handling branch deposits and providing loans and other loan related businesses for domestic middle market clients; and · Others - principally handling other services including but not limited to trust operations, remittances, leasing, account financing, and other support services. Other operations of the Group comprise the operations and financial control groups.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The General Ledger system of the Bank captures the transactions on a segment level, and segment performance is evaluated based on net income before taxes.

In 2019, the Parent Company incorporated the use of Transfer Pool Rate (TPR) in monitoring the performance of the business units where the fund generating segments such as Treasury and Branch Banking charge the net fund users such as Consumer Banking and Corporate Banking for the excess funds provided.

TPR is reviewed and set by the Bank's Asset and Liabilities Committee. It is the blended cost of interest bearing funds including all funding-related costs such as reserves, document stamp taxes, and other intermediary costs.

This segment performance review is regularly provided to the Bank's Chief Operating Decision maker who is the Parent Company’s President and Chief Executive Officer.

Segment assets are those operating assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis. Segment liabilities are those operating liabilities that result from the operating activities of a segment and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis. Interest income is reported net, as management primarily relies on the net interest income as performance measure, not the gross income and expense.

The Group’s revenue-producing assets are located in the Philippines (i.e., one geographical location), therefore, geographical segment information is no longer presented.

The Group has no significant customers which contributes 10.00% or more of the consolidated revenue net of interest expense. Transactions between segments are conducted at estimated market rates on an arm’s length basis. Interest is charged/credited to business segments based on a pool rate which approximates the cost of funds.

The following table presents revenue and income information of operating segments presented in accordance with PFRS and segment assets and liabilities: (amounts in millions):

December 31, 2019 Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Income Net interest income: Third party P=2,902 P=2,723 (P=943) (P=662) P=218 P=4,238 Intersegment (1,490) (2,548) 882 2,164 992 −

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December 31, 2019 Consumer Corporate Branch Banking Banking Treasury Banking Others Total (Forward) P=1,412 P=175 (P=61) P=1,502 P=1,210 P=4,238 Noninterest income 177 (19) 492 142 (35) 757 Revenue - net of interest expense 1,589 156 431 1,644 1,175 4,995 Noninterest expense 904 222 314 1,222 1,552 4,214 Income (loss) before income tax P=685 P=(66) P=117 P=422 (P=377) 781 Provision for income tax 62 Net income P=719

December 31, 2019 Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Financial Position Total assets P=40,363 P=38,040 P=41,521 P=4,561 P=6,656 P=131,141 Total liabilities P=1,555 P=2,691 P=52,203 P=54,225 P=3,405 P=114,079

Other Segment Information Capital expenditures P=13 P=12 P=15 P=131 P=89 P=260 Depreciation and amortization P=51 P=41 P=3 P=115 P=426 P=636 Provision for (recovery of) credit and impairment losses ₱44 P=16 P=− P=− P=67 P=127

December 31, 2018 Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Income Net interest income: Third party P=1,772 P=2,436 (P=504) (P=382) P=252 P=3,574 1,772 2,436 (504) (382) 252 3,574 Noninterest income 126 − 162 71 262 621 Revenue - net of interest expense 1,898 2,436 (342) (311) 514 4,195 Noninterest expense 443 156 411 1,284 1,459 3,753 Income (loss) before income tax P=1,455 P=2,280 (P=753) (P=1,595) (P=945) 442 Provision for income tax 125 Net income P=317

Statement of Financial Position Total assets P=18,664 P=45,233 P=47,003 P=3,507 P=6,944 P=121,351 Total liabilities P=829 P=287 P=51,847 P=51,378 P=4,632 P=108,973

Other Segment Information Capital expenditures P=20 P=2 P=4 P=215 P=128 P=369 Depreciation and amortization P=68 P=2 P=1 P=101 P=183 P=355 Provision for credit and impairment losses ₱15 P=100 P=− P=− (P=15) P=100

December 31, 2017 Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Income Net interest income: Third party P=1,418 P=1,600 P=221 (P=418) P=162 P=2,983 1,418 1,600 221 (418) 162 2,983 Noninterest income 35 2 258 98 142 535 Revenue - net of interest expense 1,453 1,602 479 (320) 304 3,518 Noninterest expense 520 290 187 968 1,211 3,176 Income (loss) before income tax P=933 P=1,312 P=292 (P=1,288) (P=907) 342 Provision for income tax 34 Net income P=308

Statement of Financial Position Total assets P=16,332 P=39,584 P=41,133 P=3,069 P=4,795 P=104,913 *SGVFSM000714* - 202 -

December 31, 2017 Consumer Corporate Branch Banking Banking Treasury Banking Others Total Total liabilities P=716 P=248 P=44,763 P=44,358 P=2,735 P=92,820

Other Segment Information Capital expenditures P=18 P=12 P=1 P=120 P=133 P=284 Depreciation and amortization P=50 P=7 P=1 P=38 P=230 P=326 Provision for credit and impairment losses P=51 P=160 P=− P=− P=30 P=241

Non-interest income consists of service charges, fees and commissions, profit from assets sold, trading and securities gains - net, foreign exchange gain - net, income from trust operations, leasing, dividends and miscellaneous income. Non-interest expense consists of compensation and fringe benefits, taxes and licenses, provision for credit and impairment losses, depreciation and amortization, occupancy and equipment-related cost, amortization of software costs, income (loss) attributable to non-equity non-controlling interest and miscellaneous expense.

30. Notes to Statements of Cash Flows

As of December 31, 2018, interbank loans receivables of the Group and Parent Company to local savings bank amounting to nil and P=23.5 million, which has an original maturity of more than three (3) months is not considered cash and cash equivalents.

Details of non-cash investing activities follow:

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Increase in capital stock due to conversion of deposit for future stock subscription P=3,000,000,000 P=− P=− P=3,000,000,000 P=− P=− Increase in NUGL due to MTM loss (gain) on AFS − − 170,346,723 − − 170,346,723 Increase in NUGL due to MTM loss (gain) on financial assets at FVOCI 1,021,811,878 949,438,876 − 1,021,811,878 949,438,876 − Decrease in investment securities at amortized cost due to reclassification of allowance for losses from other assets (178,019) − − (178,019) − − Additions to investment properties due to foreclosure 70,823,650 111,825,388 85,503,774 65,399,022 107,529,737 78,438,983 Disposal of investment properties and repossessed chattels through sales contract receivable 395,414 13,560,422 − − − − Increase in property and equipment due to reclassifications 13,095,395 2,997,740 2,435,778 4,749,187 5,035,239 46,497,771 Increase in repossessed chattels due to foreclosure 567,244,339 254,137,176 234,419,527 564,352,450 254,137,176 233,867,525 Increase in Investment in subsidiary from share on remeasurement gain (loss) on retirement plan − − − (5,228,610) 480,069 − Effect of PFRS 9 Adoption Increase in FA@FVOCI due to reclassification due to reclassification from AFS − 8,243,181,913 − − 8,243,181,913 − Increase in investment securities at amortized cost due to reclassification from AFS − 10,951,842,651 − − 10,799,633,943 − Increase in investment securities at amortized cost due to reclassification from HFT − 78,227,610 − − 48,101,461 − Increase in investment securities at amortized cost due to C&M transition adjustment of HFT transfers − 1,215,673 − − 1,215,673 − Decrease in FA@FVOCI due to ECL transition adjustment − (591,735) − − (591,735) −

(Forward) *SGVFSM000714* - 203 -

Consolidated Parent Company 2019 2018 2017 2019 2018 2017 Decrease in investment securities at amortized cost due to ECL transition adjustment P=− (P=26,498) P=− P=− (P=25,703) P=− Decrease in Loans and receivables due to ECL transition adjustment − (20,544,951) − − (13,165,032) − Decrease in Investment in subsidiary due to ECL transition adjustment − − − − (7,380,714) − Increase in Investment in subsidiary due to reversal of NUGL of AFS − − − − 18,055,001 − Increase in investment securities at amortized cost due to reversal of NUGL from transfer of AFS − 940,088,924 − − 922,033,923 − Increase in NUGL on FA@FVOCI due to reclassification from NUGL on AFS − 1,026,656,867 − − 1,026,656,867 − Effect of PFRS 16 Adoption Increase in property and equipment 635,203,495 − − 587,515,373 − − Decrease in other assets (20,095,831) − − (14,038,343) − − Decrease in accrued expenses (40,442,807) − − (37,552,783) − − Increase in lease liability 655,550,471 − − 611,029,813 − − Recognition of new ROU of asset and lease liability 292,205,132 − − 280,341,794 − −

Presented below is the supplemental information on the Group’s and the Parent Company’s liabilities arising from financing activities:

Consolidated Deposit for Stock LTNCD Bills Payable Bonds Payable Lease Liabilities Subscription Total Balances at January 1, 2019 P=5,917,925,850 P=7,436,904,315 P=− P=− P=3,000,000,000 P=16,354,830,165 Cashflows from financing activities: Additions − 400,000,000 9,874,305,237 292,205,132 − 10,566,510,369 Repayment of borrowings − (5,800,000,000) − (279,375,984) − (6,079,375,984) Non-cash financing activities: Adoption of PFRS 16 655,550,471 − 655,550,471 Amortization of debt issue costs and accretion of interest 9,666,996 3,601,436 15,530,119 51,627,485 − 80,426,036 Conversion of deposit for future stock subscription − − − − (3,000,000,000) (3,000,000,000) Balances at December 31, 2019 P=5,927,592,846 P=2,040,505,751 P=9,889,835,356 P=720,007,104 P=− P=18,577,941,057

Parent Company Deposit for Stock LTNCD Bills Payable Bonds Payable Lease Liabilities Subscription Total Balances at January 1, 2019 P=5,917,925,850 P=7,436,904,315 P=− P=− P=3,000,000,000 P=16,354,830,165 Cashflows from financing activities: Additions − 400,000,000 9,874,305,237 280,341,794 − 10,554,647,031 Repayment of borrowings − (5,800,000,000) − (271,088,889) − (6,071,088,889) Non-cash financing activities: Adoption of PFRS 16 611,029,813 − 611,029,813 Amortization of debt issue costs and accretion of interest 9,666,996 3,601,436 15,530,119 47,292,619 − 76,091,170 Conversion of deposit for future stock subscription − − − − (3,000,000,000) (3,000,000,000) Balances at December 31, 2019 P=5,927,592,846 P=2,040,505,751 P=9,889,835,356 P=667,575,337 P=− P=18,525,509,290

Consolidated and Parent Company Deposit for Stock LTNCD Bills Payable Bonds Payable Lease Liabilities Subscription Total Balances at January 1, 2018 P=4,152,240,531 P=− P=− P=− P=− P=4,152,240,531 Cashflows from financing activities: − − − − − − Additions 1,758,415,048 7,435,000,000 − − 3,000,000,000 12,193,415,048 Repayment of borrowings − − − − − − Non-cash financing activities: Adoption of PFRS 16 − − − − − − Amortization of debt issue costs and accretion of interest 7,270,271 1,904,315 − − − 9,174,586 Conversion of deposit for future stock subscription − − − − − − Balances at December 31, 2018 P=5,917,925,850 P=7,436,904,315 P=− P=− P=3,000,000,000 P=16,354,830,165

*SGVFSM000714* - 204 -

31. Approval of the Release of the Financial Statements

The accompanying financial statements of the Group and of the Parent Company were approved and authorized for issue by the BOD on April 30, 2020.

32. Subsequent Events - COVID-19 Outbreak

Key actions were implemented to prevent and control the Coronavirus Disease 2019 (COVID-19) outbreak in the country. On March 13, 2020, a Memorandum on Stringent Social Distancing Measures and Further Guidelines for the Management of the COVID-19 Situation issued by the Executive Secretary of the Philippines placed National Capital Region (NCR) under these measures for 30 days starting March 15. On March 16, 2020, Presidential Proclamation No. 929 was issued declaring a state of calamity throughout the Philippines for a period of six (6) months and imposed an Enhanced Community Quarantine (ECQ) throughout the island of Luzon until April 30, 2020, unless earlier lifted or extended. These measures have caused disruptions to businesses and economic activities, and its impact on businesses continue to evolve. On March 24, Republic Act No. 11469 was enacted declaring the existence of a national emergency arising from COVID-19 situation and a national policy in connection therewith, and authorizing the President of the Republic of the Philippines for a limited period and subject to restrictions, to exercise powers necessary and proper to carry out the declared national policy and for other purposes. On April 1, the Implementing Rules and Regulations (IRR) of Section 4(aa) of Republic Act No. 11469, Otherwise Known as the “Bayanihan to Heal As One Act” was released.

Under the ECQ guidelines, the government identified banks as one of the essential business establishments that needs to be operational. The Bank ensures continued operations and uninterrupted services and triggered business continuity plan. RBank is committed to provide the financial requirements of our clients, as well as to support the entire financial system given the limitations of the ECQ. The head office implemented measures and operated under business continuity plan. The Bank carried out skeletal crew and rotation schedules for highly critical functions, opened as much feasible branches, and ensured cash availability in our ATMs. Various digital and online products are available. To ease the burden of our clients, the Bank offered 30-day grace period for loan payments. For the safety and well-being of our Bank personnel and customers, the Bank provided personal protective equipment, transportation, accommodation, meals, and allowances. As protective measures, the Bank regularly disinfects and deep cleans offices and branches, deployed thermal scanners, and set up provision for teller stations.

The Bank considers the events surrounding the outbreak as non-adjusting subsequent events, which do not impact its financial position and performance as of and for the year ended December 31, 2019. However, the outbreak could have a material impact on its 2020 financial results and even periods thereafter. Considering the evolving nature of this outbreak, the Bank cannot determine at this time the impact to its financial position, performance and cash flows. The Bank will continue to monitor the situation. The Bank ensures that measures are put in place to mitigate future risks and uncertainties that this outbreak may bring.

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32. Supplementary Information Required under Revenue Regulations (RR) 15-2010

The BIR issued RR No. 15-2010 prescribing the manner of compliance in connection with the preparation and submission of financial statements accompanying the tax returns. This RR include provisions for additional disclosure requirements in the notes to the financial statements, particularly on composition of taxes, duties, licenses paid or accrued during the year.

Supplementary Information Required Under RR No. 15-2010 The Parent Company reported and/or paid the following types of taxes for the year:

Gross Receipts Tax (GRT) The National Internal Revenue Code (NIRC) of 1997 provides for the imposition of GRT on gross receipts derived by banks from sources within the Philippines. Accordingly, the Parent Company’s gross receipts are subject to GRT as re-imposed in RA No. 9238 beginning January 1, 2004.

Details of the Parent Company’s gross receipts and GRT due declared and paid for taxable year 2019 follow:

Gross Receipts GRT Due Interest income P=6,553,002,879 P=208,240,641 Other income 204,453,105 14,311,717 P=6,757,455,984 P=222,552,358

Documentary Stamp Tax: The Documentary stamp tax (DST) paid or accrued on the following transactions are:

Transaction Amount DST thereon Deposits P=849,610,294,037 P=261,526,767 Loan instruments 38,000,000,000 285,000,000 P=887,610,294,037 P=546,526,767

Part of the DST remitted to the BIR are shouldered/ charged to clients/borrowers.

Other Taxes and Licenses This includes all other taxes, local and national, including documentary stamp tax, local business tax, licenses and permit fees lodged under the ‘Taxes and Licenses’ account in the statement of income and expenses.

Permits P=20,066,753 Real property taxes 1,542,667 P=21,609,420

Withholding Taxes The following table shows the breakdown of taxes withheld and remitted in 2019: Total Withheld Total Remitted Withholding tax on deposits P=378,661,939 P=349,141,580 Withholding taxes on compensation and benefits 133,010,935 110,988,751 Expanded withholding taxes 125,750,205 110,436,874 Final withholding taxes - others 4,092,351 4,092,351 P=641,515,430 P=574,659,556 *SGVFSM000714* - 206 -

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

33. Supplementary Information Required under BSP Circular No. 1074

On February 7, 2020, the BSP issued Circular No. 1074 to amend certain provisions of the MORB and Manual of Regulations for Foreign Exchange Transactions (MORFXT). The Circular provides for new and amended disclosure requirements to the audited financial statements, which are to be presented either (i) on specific notes to the financial statements, or (ii) in a separate note containing supplementary information as required by the BSP. This supplementary information is not a required disclosure under PFRS.

In compliance with the requirements set forth by Circular No. 1074, hereunder are the supplementary information:

Financial performance indicators

The following basic ratios measure the financial performance of the Group and the Parent Company:

Consolidated Parent Company 2019 2018 2019 2018 Return on average equity 4.89% 2.56% 4.22% 2.56% Return on average assets 0.57% 0.26% 0.56% 0.26% Net interest margin on average earnings assets 3.59% 3.52% 3.36% 3.87%

The following formulas were used to compute the indicators:

Performance Indicator BSP Prescribed Formula Return on Average Equity Net Income (or Loss) after Income Tax x 100 Average Total Capital Accounts*

Return on Average Assets Net Income (or Loss) after Income Tax x 100 Average Total Assets*

Net Interest Margin Net Income Income x 100 Average Interest Earning Assets*

*Average amount is calculated based on current year-end and previous year-end balances

Leverage ratio, Total Exposure Measure and liquidity position The following ratios, measure the financial health and liquidity position of the Group and of the Parent Company as of December 31, 2019 and 2018:

Consolidated Parent Company (₱ in millions, except for %) 2019 2018 2019 2018 Total exposure measure ₱134,332 ₱123,927 ₱131,686 ₱121,813 Leverage ratio 10.79% 8.29% 10.79% 8.24% Liquidity coverage ratio 115.78% 115.64% 108.87% 111.60% Net stable funding ratio 133% 115.04% 134% 116.08%

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Capital instruments During 2019, the Parent Company converted the =3.00P billion ‘Deposit for Future Stock Subscription’ to ‘Common Stock’.

As of December 31, 2019 and 2018, the Parent Company has outstanding capital stock shown below:

Breakdown of total loans as to security and status The following table shows the breakdown of receivable from customers as to secured and secured and the breakdown of secured receivables from customers as to the type of security as of December 31, 2019 and 2018:

Consolidated 2019 2018 Amount % Amount % Secured by: Real estate P=17,942,714,917 22.38 P=14,226,259,780 20.84 Chattel 4,783,022,909 5.95 4,356,482,289 6.38 Deposit hold-outs 3,822,824,753 4.77 4,444,952,668 6.51 Others 9,555,083,218 11.92 8,897,834,363 13.03 36,103,645,797 45.02 31,925,529,100 46.76 Unsecured 44,062,089,025 54.98 36,353,398,141 53.24 P=80,165,734,822 100.00 P=68,278,927,241 100.00

Parent Company 2019 2018 Amount % Amount % Secured by: Real estate P=17,782,237,003 22.66 P=14,113,012,720 21.02 Chattel 4,629,495,300 5.90 4,444,444,856 6.62 Deposit hold-outs 3,822,311,941 4.87 4,306,244,201 6.41 Others 9,539,857,698 12.15 8,897,834,363 13.25 35,773,901,942 45.58 31,761,536,140 47.31 Unsecured 42,714,088,215 54.42 35,372,006,438 52.69 P=78,487,990,157 100.00 P=67,133,542,578 100.00

Others include jewelry, mortgage trust indenture, company guarantees, deed of assignments of receivables and deed of suretyships.

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As of December 31, 2019 and 2018, details of status of loans follow:

Consolidated Performing Non-Performing 2019 2018 2019 2018 Commercial loan P=49,020,083,658 P=44,080,453,462 P=494,677,651 P=439,389,163 Consumption 10,076,813,061 7,947,952,180 662,769,544 523,415,184 Domestic bills purchased 495,192,826 834,447,716 – – Real estate 18,851,873,001 13,944,201,234 236,143,312 93,004,429 P=78,443,962,546 P=66,807,054,592 P=1,393,590,507 P=1,055,808,776

Parent Performing Non-Performing 2019 2018 2019 2018 Commercial loan P=49,016,794,211 P=43,997,213,639 P=390,079,153 P=319,056,960 Consumption 8,839,398,807 7,293,659,182 470,105,222 323,743,617 Domestic bills purchased 495,192,826 834,447,716 – – Real estate 18,805,126,778 13,931,237,633 230,555,997 87,258,278 P=77,156,512,622 P=66,056,558,170 P=1,090,740,372 P=730,058,855

Under banking regulations, loans, investments, receivables, or any financial asset shall be considered non-performing, even without any missed contractual payments, when it is considered impaired under existing accounting standards, classified as doubtful or loss, in litigation, and/or there is evidence that full repayment of principal and interest is unlikely without foreclosure of collateral, if any. All other loans, even if not considered impaired, shall be considered nonperforming if any principal and/or interest are unpaid for more than ninety (90) days from contractual due date, or accrued interests for more than ninety (90) days have been capitalized, refinanced, or delayed by agreement. Restructured loans shall be considered non-performing. However, if prior to restructuring, the loans were categorized as performing, such classification shall be retained.

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

As of December 31, 2019 and 2018, details of gross NPLs follow:

Consolidated Parent Company 2019 2018 2019 2018 Secured P=394,830,210 P=230,071,101 P=341,449,668 P=168,314,608 Unsecured 998,760,297 825,737,675 749,290,704 561,744,247 P=1,393,590,507 P=1,055,808,776 P=1,090,740,372 P=730,058,855

As of December 31, 2019, 2018 and 2017, 40.91%, 45.51% and 41.07%, respectively, of the Group’s total receivables from customers are subject to periodic interest repricing.

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As of December 31, 2019, 2018 and 2017, 41.72%, 46.40% and 41.98%, respectively of the Parent Company’s total receivables from customers are subject to periodic interest repricing.

As of December 31, 2019 and 2018, net NPLs of the Group and of the Parent Company as reported to the BSP follow:

Consolidated Parent Company 2019 2018 2019 2018 Total NPLs P=1,393,590,507 P=1,055,808,776 P=1,090,740,372 P=730,058,855 Deductions as required by the BSP* 741,102,342 431,860,200 656,882,379 349,554,694 P=652,488,165 P=623,948,576 P=433,857,993 P=380,504,161 *Allowance for credit losses per BSP

Restructured receivables which do not meet the requirements to be treated as performing receivables shall also be considered as NPLs.

Significant credit exposures as to industry/economic sector As of December 31, 2019 and 2018, information on the concentration of credit as to industry follows (in millions):

Consolidated Parent Company 2019 2018 2019 2018 Amount % Amount % Amount % Amount % Real estate activities 23,531 29.47 18,415 26.97 23,470 29.99 18,053 27.03 Wholesale and retail trade, repair of motor vehicles, motorcycles 12,190 15.27 10,190 14.92 11,916 15.23 10,065 15.07 Activities of households as employers and undiffirentiated goods-and-services-producing activities of households for own use 8,739 10.95 6,679 9.78 8,099 10.35 7,205 10.79 Manufacturing 8,679 10.87 7,095 10.39 8,671 11.08 6,750 10.11 Electricity, gas, steam and air conditioning supply 6,043 7.57 7,205 10.55 6,043 7.72 7,087 10.61 Transportation and storage 5,198 6.51 4,708 6.90 5,195 6.64 4,705 7.04 Financial and insurance activities 3,441 4.31 3,563 5.22 3,433 4.39 3,472 5.20 Arts, entertainment and recreation 3,368 4.22 3,472 5.09 3,368 4.30 3,631 5.44 Accommodation and food service activities 2,039 2.55 935 1.37 2,033 2.60 1,183 1.77 Agriculture, forestry and fishing 1,539 1.93 1,018 1.49 1,435 1.83 929 1.39 Information and communication 1,188 1.49 948 1.39 1,188 1.52 989 1.48 Construction 778 0.97 1,212 1.78 745 0.95 845 1.27 Administrative and support service activities 514 0.64 292 0.43 514 0.66 948 1.42 Water supply, sewerage, waste management and remediation services 321 0.40 989 1.45 321 0.41 291 0.44 Other service activities 2,271 2.85 1,558 2.30 1,816 2.32 634 0.95 P=79,839 100.00 P=68,279 100.00 P=78,247 100.00 P=66,787 100.00

Other service activities include public administration and defense, compulsory social security, education, human health, social work, professional, scientific, technical, mining and quarrying activities.

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The BSP considers that concentration risk exists when the total loan exposure to a particular industry or economic sector exceeds 30.00% of the total loan portfolio.

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

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

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

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

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

Consolidated Parent Company 2019 2018 2019 2018 Total outstanding DOSRI accounts P=3,572,664,382 P=4,727,361,725 P=3,572,376,013 P=4,727,312,686 Percent of DOSRI accounts to total loans 4.48% 6.98% 4.57% 7.09% Percent of past due DOSRI loans to total DOSRI loans 0.02% − 0.02% − Percent of nonperforming DOSRI loans to total DOSRI loans 0.02% − 0.02% − Percent of unsecured DOSRI loans to total DOSRI loans 1.24% 0.06% 1.24% 0.06%

The Parent Company has no assets pledged as collaterals on its liabilities.

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

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

INDEPENDENT AUDITOR’S REPORT ON SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors Robinsons Bank Corporation 17th Floor, Galleria Corporate Center EDSA corner Ortigas Avenue Quezon City

We have audited in accordance with Philippine Standards on auditing, the financial statements of Robinsons Bank Corporation and Subsidiary (the Group) as at December 31, 2019 and 2018 and for each of the three years ended December 31, 2019, including Form 17-A and have issued our report thereon dated April 22, 2020. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the Index to the Financial Statements and Supplementary Schedules are the responsibility of the Group’s management. These schedules are presented for purposes of complying with Revised Securities Regulation Code Rule 68, and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state, in all material respects, the financial information required to be set forth therein in relation to the basic financial statements taken as whole.

SYCIP GORRES VELAYO & CO.

April 22, 2020

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A member firm of Ernst & Young Global Limited - 213 -

ROBINSONS BANK CORPORATION AND SUBSIDIARY INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES DECEMBER 31, 2019

Schedule Content Part I I Schedule of Reconciliation of Retained Earnings Available for Dividend Declaration (Part 1 4C, Annex 68-C) 214 II Map Showing Relationships Between and Among Parent and Subsidiaries (Part 1 4H) 215

Part II A Financial Assets · Financial assets at fair value through profit or loss · Financial assets at fair value through other comprehensive income · Investment securities at amortized cost (Part II 6D, Annex 68-E, A) 216 B Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) (Part II 6D, Annex 68-E, B) 217 C Amounts Receivable from Related Parties which are Eliminated During the Consolidation of Financial Statements (Part II 6D, Annex 68-E, C) 218 D Intangible Assets - Other Assets (Part II 6D, Annex 68-E, D) 219 E Long-Term Debt (Part II 6D, Annex 68-E, E) 220 F Indebtedness to Related Parties (Included in the Consolidated Statements of Financial Position) (Part II 6D, Annex 68-E, F) 221 G Guarantees of Securities of Other Issuers (Part II 6D, Annex 68-E, G) 222

Part III Schedule of Financial Soundness Indicators 223

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ROBINSONS BANK CORPORATION SCHEDULE I RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER 31, 2019

The table below presents the retained earnings available for dividend declaration as of December 31, 2019:

Unappropriated Retained Earnings, beginning P=1,427,893,601 Adjustments: Benefits from deferred tax assets (263,676,519) Market valuation loss on financial assets at FVTPL 336,552 Unrealized gain on foreclosure of investment properties and repossessed chattels (117,905,470) Unappropriated Retained Earnings, as adjusted, beginning 1,046,648,164

Add: Net income actually earned/realized during the period Net income during the period closed to Retained Earnings 719,426,508 Less: Non-actual/unrealized income net of tax Benefits from deferred tax assets (181,408,025) Unrealized gain on foreclosure of investment properties and repossessed chattels (29,431,517) Add: Non-actual losses Unrealized foreign exchange loss 19,698,591 Market valuation loss on financial assets at FVTPL 4,373,793 Subtotal 532,659,350

Less: Other Adjustments Appropriations of retained earnings during the year 444,469,908 DST on issuance of common stock 30,000,000 Subtotal 474,469,908 Total Retained Earnings available for dividend declaration as of December 31, 2019 P=1,104,837,606

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE II MAP SHOWING RELATIONSHIPS BETWEEN AND AMONG PARENT AND SUBSIDIARY

ROBINSONS BANK CORPORATION

LEGAZPI SAVINGS BANK (100%)

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE A -FINANCIAL ASSETS DECEMBER 31, 2019

Value Based on Name of Issuing Entity and Amount Shown in the Market Quotations Income Received and Accrued Description of Each Issue Balance Sheet/Notes at Balance Sheet Date

Financial Assets at Fair Value Through Profit or Loss Various/Government Bonds P=4,935,882 P=4,935,882 P=4,831,348 4,935,882 4,935,882 4,831,348 Financial Assets at Fair Value Through Other Comprehensive Income Various/Government Bonds 8,421,114,497 8,421,114,497 268,795,879 Various/Private Bonds 5,344,204,206 5,344,204,206 281,784,016 Various Equity Quoted Securities 175,875,000 175,875,000 – Various Equity Unquoted Securities 32,268,140 32,268,140 – 13,973,461,843 13,973,461,843 550,579,895 Financial Assets at Amortized Cost Various/Government Bonds 9,507,201,849 9,312,995,815 405,655,731 Various/Private Bonds 1,850,059,392 1,767,923,904 80,484,674 11,357,261,241 11,080,919,719 486,140,405 P=25,335,658,966 P=25,059,317,444 P=1,041,551,648

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE B - AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES AND PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES) DECEMBER 31, 2019

Balance at Amounts Amounts Non- Balance at end Name of Debtor beginning of Additions Written- Current Collected Current of period period off

NONE TO REPORT

Receivables from Directors, Officers, Employees, Related Parties and Principal Stockholders are subject to usual terms in the normal course of business.

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE C - AMOUNTS RECEIVABLE FROM RELATED PARTIES WHICH ARE ELIMINATED DURING THE CONSOLIDATION OF FINANCIAL STATEMENTS DECEMBER 31, 2019

Balance at Amounts Amounts Balance at end Name of Debtor beginning of Additions Current Non- Current Collected Written-off of period period

Legazpi Savings Bank (Subsidiary) P= 2,485,462 P=2,708,634 P=− P=− P=5,194,096 P=− P=5,194,096

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE D - LONG-TERM DEBT DECEMBER 31, 2019

Amount shown Amount shown Amount authorized by Interest Rate Title of issue and type of obligation under caption under caption Maturity Date indenture % “Current portion” “Long-Term Debt”

Long-term Negotiable Certificates of Deposit P=3,000,000,000 P=− P=4,163,614,550 4.125 12/16/2022 (maturing on December 16, 2022) (with a right to increase the aggregate issue up to P=5,000,000,000 in the event of over subscription) Long-term Negotiable Certificates of Deposit (maturing on January 1, 2024) Up to ₱5,000,000,000 ₱− ₱1,763,978,296 4.875 1/6/2024 Time Deposits ₱123,248,302 P=15,564,554,532 0.25-8.50 Various dates Bills payable ₱− P=1,640,505,751 5.0 11/8/2024 Bonds payable P=9,889,835,356 4.30-5.125 Various dates

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE E - INDEBTEDNESS TO RELATED PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES) DECEMBER 31, 2019

Name of Related Parties (i) Balance at beginning of period Balance at end of period (ii)

- NONE TO REPORT -

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE F – GUARANTEES OF SECURITIES OF OTHER ISSUERS DECEMBER 31, 2019

Name of issuing entity of Total amount of securities guaranteed by Title of issue of each class Amount owned by person guaranteed and Nature of guarantee the company for which this of securities guaranteed of which statement is filed outstanding statement is filed

- NONE TO REPORT -

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ROBINSONS BANK CORPORATION AND SUBSIDIARY SCHEDULE G - CAPITAL STOCK DECEMBER 31, 2019

Number of shares Number of shares issued and Number of shares held by Number of reserved for outstanding as Title of Issue shares options, warrants, shown under the Directors, authorized conversion and related balance Related parties officers and Others other rights sheet caption employees

Common stock - P=10 par value 2,700,000,000 1,500,000,00 − 1,499,975,248 11 24,741

*SGVFSM000714* ROBINSONS BANK CORPORATION AND SUBSIDIARY SUPPLEMENTARY SCHEDULE OF FINANCIAL SOUNDNESS RATIOS AS AT DECEMBER 31, 2019 AND 2018

CONSOLIDATED PARENT COMPANY Liquidity ratio 2019 2018 2019 2018 Liquid assets 20,338,248,134 23,676,951,706 19,717,219,738 22,931,544,990 Total assets 131,086,711,034 121,350,637,909 129,002,287,800 119,712,251,221 Ratio of liquid assets to total 15.52% 19.51% 15.28% 19.16% assets

2019 2018 2019 2018 Loans (net) 80,805,805,712 68,411,062,216 79,240,326,174 67,396,585,901 Total deposits 97,601,627,845 95,006,393,735 95,631,551,282 93,398,948,846 Ratio of loans to total deposit 82.79% 72.01% 82.86% 72.16%

Debt to equity ratio 2019 2018 2019 2018 Total liabilities 114,026,236,666 108,973,084,117 111,941,813,432 107,334,697,429 Total equity 17,060,474,368 12,377,553,792 17,060,474,368 12,377,553,792 Ratio of debt to equity 668.36% 880.41% 656.15% 867.17%

Asset to equity ratio 2019 2018 2019 2018 Total assets 131,086,711,034 121,350,637,909 129,002,287,800 119,712,251,221 Total equity 17,060,474,368 12,377,553,792 17,060,474,368 12,377,553,792 Ratio of total assets to equity 768.36% 980.41% 756.15% 967.17%

Interest rate coverage ratio 2019 2018 2019 2018 Income before income tax 781,026,480 442,596,650 857,952,282 433,570,033 Interest expense 2,960,517,169 2,186,902,119 2,929,425,219 2,167,880,182 Interest coverage ratio 26.38% 20.24% 29.29% 20.00%

Profitability ratio 2019 2018 2019 2018 Net income 719,426,508 317,113,802 719,426,508 317,113,802 Average total equity 14,719,014,080 12,235,443,586 14,719,014,080 12,235,443,586 Return on average equity 4.89% 2.59% 4.89% 2.59% Net income 719,426,508 317,113,802 719,426,508 317,113,802 Average total assets 126,218,674,472 113,131,834,390 124,357,269,511 111,402,857,519 Return on average assets 0.57% 0.28% 0.58% 0.28% Net financial margin 4,238,243,842 3,574,718,414 3,914,546,792 3,366,351,005 *SGVFSM000714* - 2 -

Average interest earning asset 118,110,440,033 106,674,628,494 116,352,859,024 92,231,026,689 Net interest margin on average 3.59% 3.35% 3.36% 3.65% earning assets

Asset quality ratio 2019 2018 2019 2018 Non-performing loans (net of 652,488,166 623,948,576 433,857,993 419,768,110 specific allowance) Gross Loans 80,165,734,822 68,278,927,241 78,487,990,157 67,133,542,578 Non-performing loans ratio* 0.81% 0.91% 0.55% 0.63% Allowance for probable losses 741,102,342 431,860,200 656,882,379 310,290,745 Non-performing loans (gross of 1,393,590,507 1,055,808,776 1,090,740,372 730,058,855 allowance) Non-performing loan cover* 53.18% 40.90% 60.22% 42.50% * Computed based on BSP Circular 772

*SGVFSM000714* ANNEX "E"

Robinsons Bank Corporation and Subsidiary

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 (With Comparative Audited Consolidated Statement of Financial Position as of December 31, 2019)

ROBINSONS BANK CORPORATION AND SUBSIDIARY UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF March 31, 2020 (With Comparative Audited Figures as of December 31, 2019)

March 31, December 31, 2020 2019

ASSETS Cash and Other Cash Items P=1,585,057,374 P=3,249,359,133 Due from Bangko Sentral ng Pilipinas 12,610,404,066 12,216,191,774 Due from Other Banks 2,896,936,562 2,463,991,767 Interbank Loans Receivable and Securities Purchased Under Resale Agreements (Note 5) 3,231,269,280 2,408,705,460 Financial Assets at Fair Value Through Profit or Loss (Note 6) 16,217,084 4,935,882 Financial Assets at Fair Value Through Other Comprehensive Income (Note 6) 11,810,660,669 13,973,461,843 Investment Securities at Amortized Cost (Note 6) 11,355,345,123 11,357,261,241 Loans and Receivables (Note 7) 80,360,222,023 80,805,805,712 Property and Equipment (Note 8) 1,222,269,517 1,308,628,049 Investment Properties (Note 9) 447,892,142 382,355,004 Branch Licenses (Note 10) 999,948,369 999,928,369 Goodwill 244,327,006 244,327,006 Deferred Tax Asset - net 458,920,202 458,920,202 Other Assets (Note 11) 1,272,577,595 1,212,839,592 P=128,512,047,012 P=131,086,711,034

LIABILITIES AND EQUITY

Liabilities Deposit Liabilities (Note 13) Demand P=17,931,192,329 P=17,054,484,841 Savings 56,903,551,557 58,931,747,324 Time 14,991,067,154 15,687,802,834 Long-term negotiable certificates of deposit 5,930,079,956 5,927,592,846 95,755,890,996 97,601,627,845 Bonds Payable (Note 14) 9,905,038,258 9,889,835,356 Bills Payable (Note 15) 1,566,323,135 2,040,505,751 Manager’s Checks 852,393,770 1,074,514,545 Accrued Expenses (Note 16) 899,429,149 733,106,591 Other Liabilities (Note 16) 2,866,349,863 2,686,646,578 111,845,425,171 114,026,236,666

(Forward)

March 31, December 31, 2019 2019 Equity (Note 17) Common stock P=15,000,000,000 P=15,000,000,000 Surplus 2,024,827,174 1,672,850,201 Surplus reserves 549,796,552 549,796,552 Remeasurement gains on retirement plan (39,171,510) (39,171,510) Net unrealized losses on financial assets at fair value through other comprehensive income (766,260,885) (12,124,355) Cumulative translation adjustments (102,569,490) (110,876,520) 16,666,621,841 17,060,474,368 P=128,512,047,012 P=131,086,711,034

See accompanying Notes to Financial Statements

ROBINSONS BANK CORPORATION AND SUBSIDIARY UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31 2020 2019 INTEREST INCOME ON Loans and receivables (Note 7) P=1,681,585,861 P=1,404,147,219 Investment securities (Note 6) 272,622,205 302,524,323 Due from Bangko Sentral ng Pilipinas and other banks 6,569,621 9,927,797 Interbank loans receivable/Securities purchased under resale agreements (Note 5) 16,215,131 14,521,483 1,976,992,818 1,731,120,822 INTEREST EXPENSE ON Deposit liabilities (Note 13) 446,986,353 772,558,983 Bills payable (Note 15) 29,160,935 53,435,386 Bonds payable 133,015,405 ‒ Lease liability 11,445,606 8,132,241 620,608,299 834,126,610 NET INTEREST INCOME 1,356,384,519 896,994,212 Service fees and commission income (Note 19) 116,939,215 111,845,196 Service fees and commission expense (Note 19) 55,954,673 59,789,140

NET SERVICE FEE AND COMMISSION INCOME 60,984,542 52,056,056 Trading and securities gains - net (Note 6) 233,657,520 49,191,019 Foreign exchange gains - net 670,451 14,844,126 Miscellaneous (Note 19) 18,356,299 (1,778,038) TOTAL OPERATING INCOME 1,670,053,331 1,011,307,375 OPERATING EXPENSES Compensation and fringe benefits 353,608,621 299,256,492 Depreciation and amortization (Note 8) 166,364,894 161,789,053 Taxes and licenses 150,311,868 150,473,669 Security, messengerial and janitorial 72,506,788 68,409,740 Occupancy and equipment-related costs 61,269,366 51,578,626 Information technology 68,259,786 32,597,607 Communication 29,175,080 27,955,701 Insurance 59,538,137 27,775,537 Entertainment, amusement, and recreation 24,252,066 23,376,841 Management and professional fees 6,981,663 2,832,215 Provision for credit and impairment losses (Note 12) 106,460,745 - Miscellaneous (Note 19) 149,351,905 83,952,318 TOTAL OPERATING EXPENSES 1,248,080,919 929,997,799 INCOME BEFORE INCOME TAX 421,972,412 81,309,576 PROVISION FOR INCOME TAX (Note 20) 69,995,439 19,508,796 NET INCOME P=351,976,973 P=61,800,780

See accompanying Notes to Financial Statements.

ROBINSONS BANK CORPORATION AND SUBSIDIARY UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31 2020 2019

NET INCOME P=351,976,973 P=61,800,780

OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR, NET OF TAX Item that may not be reclassified to profit or loss Change in net unrealized gains (losses) on equity financial assets at fair value through other comprehensive income (Note 6) (4,375,000) 4,375,000 Items that may be reclassified to profit or loss Change in net unrealized gains (losses) on debt financial assets at fair value through other comprehensive income (Note 6) (749,761,530) 615,807,607 Translation adjustments 8,307,030 13,898,664 (745,829,500) 634,081,271

TOTAL COMPREHENSIVE INCOME (LOSS) (P=393,852,527) P=695,882,051

ROBINSONS BANK CORPORATION AND SUBSIDIARY UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

Net Unrealized Losses on Financial Assets At Fair Value Remeasurement Through Other Cumulative Surplus Gains (Losses) on Comprehensive Translation Common Stock Surplus Reserves Retirement Plan Income Adjustments Total Balance at January 1, 2020 P= 15,000,000,000 P=1,672,850,201 P=549,796,552 (P=39,171,510) (P=12,124,355) (P=110,876,520) P=17,060,474,368 Total comprehensive income for the period − 351,976,973 − − (754,136,530) 8,307,030 (393,852,527) Conversion of deposit for future stock − − subscription to equity (Note 17) − − − − − Appropriations for expected credit losses − − (Note 17) − − − − − Balance at March 31, 2020 P=15,000,000,000 P=2,024,827,174 P=549,796,552 (P=39,171,510) (P=766,260,885) (P=102,569,490) P=16,666,621,841

Balance at January 1, 2019 P=12,000,000,000 P=1,427,893,601 P=105,326,644 P=357,997 (P=1,036,006,819) (P=120,017,631) P=12,377,553,792 Total comprehensive income (loss) for the period − 61,800,780 − − 620,182,607 13,898,664 695,882,051 Conversion of deposit for future stock subscription to equity 3,000,000,000 − − − − − 3,000,000,000 Appropriation for expected credit losses − (425,304,640) 425,304,640 − − − − Balance at March 31, 2019 P=15,000,000,000 P=1,064,389,741 P=530,631,284 P=357,997 (P=415,824,212) (P=106,118,967) P=16,073,435,843

ROBINSONS BANK CORPORATION AND SUBSIDIARY UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=421,972,412 P=81,309,576 Adjustments for: Depreciation and amortization (Note 8) 100,481,958 161,789,053 Depreciation on ROU of assets 65,882,937 − Provision for credit and impairment losses (Note 12) 106,460,745 − Amortization of premium or discount on financial assets and liabilities 16,020,286 − Gain on sale of financial assets at FVOCI (Note 6) (226,052,432) (40,096,326) (Gain)/ Loss on sale of investment properties (Note 9) 22,261,049 (5,506,406) Loss on sale of repossessed chattels (Note 19) 2,130,073 20,337,357 Gain on sale of property and equipment (Note 8 and 19) (918,785) (2,576,645) (Gain)/ Loss on initial recognition of investment properties and repossessed chattels (Note 19) (11,240,728) 9,985,377 Retirement expense 15,489,136 8,276,840 Interest expense on lease liability 11,445,606 Net unrealized (gain)/loss on fair value of financial assets at fair value through profit or loss and derivative assets (Note 6) (671,856) (658,697) Net unrealized (gain)/loss on fair value of financial assets at fair value through profit or loss and derivative liability (Note 6) 4,504,374 − Changes in operating assets and liabilities: Decrease (increase) in: Financial assets at fair value through profit or loss (10,609,346) 9,656,390 Loans and receivables 163,119,736 (2,177,347,438) Other assets (54,354,255) (142,910,481) Increase (decrease) in: Deposit liabilities (1,845,736,849) (1,682,804,166) Manager’s checks (222,120,775) 415,234,132 Accrued expenses and other liabilities 387,951,538 (289,108,665) Net cash used in operations (1,053,985,176) (3,634,420,099) Income taxes paid (68,896,689) (79,095,490) Contributions paid on retirement plan − 13,893,209 Net cash used in operating activities (1,122,881,865) (3,699,622,380) CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Financial assets at FVOCI (9,871,596,978) (3,242,023,664) Investment securities at amortized cost (136,309,828) (115,864,836) Software costs (36,174,061) (12,403,634) Property and equipment (33,719,534) (54,055,061) Branch license (20,000) (5,834) Proceeds from sale of: Financial assets at FVOCI 11,504,243,468 5,440,548,101 Investment securities at amortized cost 8,225,946 − Property and equipment 2,239,990 6,380,309 Investment properties and repossessed chattels 82,293,072 66,760,091 Proceeds from maturity of: Investment securities at amortized cost 130,000,000 201,000,000 Net cash provided by (used in) investing activities 1,649,182,075 2,290,335,472 (Forward)

For The Three Months Ended March 31 2020 2019 CASH FLOWS FROM FINANCING ACTIVITIES Payments of lease liability (P=74,188,092) − Payments of interbank loans payable availment (475,000,000) 325,936,147 Net cash provided by financing activities (549,188,092) 325,936,147 EFFECTS OF FOREIGN EXCHANGE RATE CHANGES 8,307,030 13,898,664 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (P=14,580,852) (P=1,069,452,097) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD Cash and other cash items P=3,249,359,133 P=2,370,171,189 Due from Bangko Sentral ng Pilipinas 12,216,191,774 16,108,207,737 Due from other banks 2,463,991,767 3,010,162,780 Interbank loans receivable and Securities purchased under resale agreements (Note 5) 2,408,705,460 2,164,910,000 P=20,338,248,134 P=23,653,451,706 CASH AND CASH EQUIVALENTS AT END OF PERIOD Cash and other cash items P=1,585,057,374 P=1,407,054,999 Due from Bangko Sentral ng Pilipinas 12,610,404,066 14,201,440,515 Due from other banks 2,896,936,562 3,140,355,753 Interbank loans receivable and Securities purchased under resale agreements (Note 5) 3,231,269,280 3,835,148,342 P=20,323,667,282 P=22,583,999,609

OPERATIONAL CASH FLOWS FROM INTEREST Interest received P=1,863,303,979 P=1,711,477,488 Interest paid 666,715,245 829,729,471

ROBINSONS BANK CORPORATION AND SUBSIDIARY NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information

The registered address and principal place of business of the Parent Company is at 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City.

The Parent Company is 60.00% and 40.00% owned by JG Summit Capital Services Corp. (JGSCSC) and Robinsons Retail Holdings, Inc. (RRHI), respectively. The ultimate parent company of the Bank is JG Summit Holdings, Inc. On June 16, 2017, the Parent Company issued P=4.18 billion long-term negotiable certificate of deposits (LTNCD) carried at a tenor of 5.5 years with a coupon of 4.125%. The issuance of LTNCD represents the Parent Company’s initial entry into the debt capital market. On July 6, 2018, the Parent Company issued additional LTNCD amounting to P=1.78 billion with nominal interest rate of 4.875% and effective interest rate (EIR) of 5.15% payable every quarter which will mature on January 6, 2024. On August 13, 2019, the Parent Company issued ₱5.00 billion worth of Peso Corporate Bond carried at a tenor of 2.0 years with a coupon of 5.125%. Also, on November 14, 2019, the Parent Company issued P=5.00 billion worth of Corporate Bonds carried at a tenor of 2.0 years tenor with a coupon rate of 4.300%. The issuances were listed in the Philippine Dealing and Exchange Corporation (PDEx).

In December 2012, the Parent Company acquired 100.00% controlling interest in Legazpi Savings Bank, Inc. (LSB).

LSB was incorporated and registered with the SEC on May 8, 1976 and acquired license from the BSP to operate as a thrift bank. LSB’s registered address and principal place of business is at 738 Building, Rizal Street, Barangay Sagpon, Old Albay, Legazpi City. LSB operates and provides its services through a network of seventeen (17) banking units including head office and a main branch in the area of Albay.

2. Summary of Significant Accounting Policies, Judgements and Estimates

Basis of Preparation The interim condensed consolidated financial statements for the three months ended March 31, 2020 and 2019 have been prepared in accordance with Philippine Accounting Standards (PAS) 34, Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as at December 31, 2019.

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The accompanying interim condensed consolidated financial statements of the Group have been prepared on a historical cost basis except for financial assets at fair value through profit or loss (FVTPL) and financial assets at fair value through other comprehensive income (FVOCI) which are measured at fair value.

The interim condensed consolidated financial statements of the Group reflect the accounts of the Regular Banking Unit (RBU) and the Foreign Currency Deposit Unit (FCDU). The functional currency of RBU and FCDU is Philippine Peso (PHP) and United States dollar (USD), respectively. For financial reporting purposes, FCDU accounts and foreign currency-denominated accounts in the RBU are translated into their equivalents in PHP. The financial statements individually prepared for these units are combined and inter-unit accounts and transactions are eliminated.

The interim condensed consolidated financial statements are presented in PHP, and all amounts are rounded to the nearest peso (P=), except when otherwise indicated.

Explanatory Comments about the Seasonality or Cyclicality of Interim Operations Seasonality or cyclicality of interim operations is not applicable to the Group’s type of business.

Statement of Compliance The interim condensed consolidated financial statements of the Group have been prepared in compliance with PAS 34.

Presentation of Financial Statements The Group present its interim consolidated statement of financial position broadly in the order of liquidity.

The Parent Company assesses that it has a currently enforceable right of offset if the right is not contingent on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Bank and all of the counterparties. Income and expense are not offset in the interim consolidated statement of income unless required or permitted by any accounting standard or interpretation, and as specifically disclosed in the accounting policies of the Group. This is not generally the case with master-netting agreements, where the related assets and liabilities are presented gross in the interim consolidated statement of financial position.

Basis of Consolidation The interim condensed consolidated financial statements include the financial statements of the Parent Company and of its subsidiary and are prepared for the same reporting period as the subsidiary, using consistent accounting policies.

All intra-group balances, transactions, income and expenses and profit and losses resulting from intra- group transactions are eliminated in full in the consolidation.

A subsidiary is fully consolidated from the date on which control is transferred to the Parent Company. Control is achieved where the Parent Company is exposed, or has the rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of a subsidiary ceases when control is transferred out of the Parent Company. The results of a subsidiary acquired or disposed of during the year are included in the interim consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate.

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A change in the Parent Company’s ownership interest in a subsidiary, without a loss of control, is accounted for as an equity transaction. Any difference between the amount by which the non- controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Parent Company. When a change in ownership interest in a subsidiary occurs which results in a loss of control over the subsidiary, the Parent Company:  derecognizes the related assets (including goodwill) and liabilities of the subsidiary;  derecognizes the carrying amount of any non-controlling interests;  derecognizes the related other comprehensive income (OCI) recorded in equity and recycles the same to interim consolidated statement of income or surplus;  recognizes the fair value of the consideration received;  recognizes the fair value of any investment retained; and  recognizes any surplus or deficit in interim consolidated statement of income.

Changes in Accounting Policies and Disclosures Except for the following standards and amended PFRSs which were adopted as of January 1, 2020, the accounting policies and methods of computation adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the previous financial year. These new and revised accounting standards have no impact to the Group.

Amendments to Standards  Amendments to PFRS 3, Definition of a Business

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted.

These amendments will apply on future business combinations of the Group.

 Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted

Judgments The preparation of the financial statements requires the Group to make judgments and estimates that affect the reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets and contingent liabilities. Future events may occur which will cause the assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in the financial statements as they become reasonably determinable.

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Following is the additional critical judgment applied in 2019 that has a risk of material adjustment to the carrying amounts of assets and liabilities:

Uncertainties over income tax treatments The Group applies significant judgement in identifying uncertainties over income tax treatments. Since the Group operates in a highly regulated environment, it assessed whether the Interpretation had an impact on its consolidated financial statements.

The Group applies significant judgment whether it is probable that a particular uncertain income tax treatment will be acceptable to the taxation authority. The Group considers the following:  Past experience related to similar tax treatments  Legal advice or case law related to other entities  Practice guidelines published by the taxation authority that are applicable to the case

The Group reassesses the judgement if the facts and circumstances on which the judgement was based change or as a result of new information that affects the judgement.

3. Financial Risk Management Objectives and Policies

The Group recognizes that risk management is the responsibility of the entire organization. Accordingly, all employees are expected to manage risks relating to their own responsibilities. Still, there are specialized entities within the Group that perform certain risk management functions.

The Board of Directors (BOD) ultimately oversees and approves significant matters related to risk management throughout the Parent Company, upon the review and recommendation of various committees composed of members of the BOD and Senior Management. Among the Parent Company’s committees are:  the Corporate Governance Committee, which ensures the BOD’s effectiveness and due observance of the corporate governance principles and guidelines;  the Risk Oversight Committee (ROC), which is responsible for the development and oversight of the Parent Company’s risk management program;  the Audit Committee, which examines the Parent Company’s framework of risk management, control and governance process to ensure that these are adequate and functional; and  the Credit Committee, which recommends credit policies and evaluates credit applications.

The following units within the Parent Company jointly perform risk management functions on a daily basis:  Compliance for regulatory risk;  Treasury for funding and liquidity risk;

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 Credit Cycle Operations for credit risk;  Enterprise Risk Management Group (ERMG) for various risks, including market risk; credit and operational risks; and  Internal Audit for the evaluation of the adequacy of internal control systems, covering operational risk.

These units submit various risk reports to the Management Committee, the ROC and the BOD, among others.

Further specific risk management disclosures, including mitigation, measurement and control, are in the succeeding sections.

Credit Risk Credit risk may be defined as the possibility of loss due to the failure of a customer/borrower or counterparty to perform its obligation to the Group.

The Group has several credit risk mitigation practices:  The Group offers a variety of loan products with substantial collateral values. The latter part of this credit risk section discusses collateral and other credit enhancements.  Limits are set on the amount of credit risk that the Group is willing to take for customers and counterparties, and exposures are monitored against such credit limits.  The Group also observes related regulatory limits such as the single borrower’s limit (SBL) and directors, officers, stockholders and related interests (DOSRI) ceiling.  To protect against settlement risk, the Group employs a delivery-versus-payment (DvP) settlement system, wherein payment is effected only when the corresponding asset has been delivered.  There is an internal credit risk rating system (ICRRS) in place, providing a structured format for collating and analyzing borrower data to arrive at a summary indicator of credit risk.  Past due and non-performing loan (NPL) ratios are also used to measure and monitor the quality of the loan portfolio.

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To help control liquidity risk arising from negative liquidity gaps, maximum cumulative outflow (MCO) targets are set for time bands up to one (1) year.

When limits are breached, approval is sought from successive levels of authority depending on the amount of the excess. Limit breaches are periodically presented to the BOD.

Value-at-Risk (VaR) is computed to estimate potential losses arising from market movements. The Parent Company calculates and monitors VaR and profit or loss on a daily basis.

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d. VaR systems depend on historical data. It attempts to forecast likely future losses using past data. As such, this assumes that past relationships will continue to hold in the future. Therefore, market shifts (i.e., an unexpected collapse of the market) will not be captured and may inflict losses larger than VaR; and e. The limitation relating to the pattern of historical returns being indicative of future returns is addressed by supplementing VaR with daily stress testing reported to the ROC, ALCO and the concerned risk-takers.

Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments.

Earnings-at-Risk objectives and methodology EAR is a statistical measure of the likely impact of changes in interest rates to the Bank’s net interest income (NII). To do this, repricing gaps (difference between interest rate-sensitive assets and liabilities) are classified according to time to repricing and multiplied with applicable historical interest rate volatility, although available contractual repricing dates are generally used for putting instruments into time bands, contractual maturity dates (e.g., for fixed rate instruments) or expected liquidation periods often based on historical data are used alternatively. The repricing gap per time band is computed by getting the difference between the inflows and outflows within the time band. A positive repricing gap implies that the Parent Company’s NII could decline if interest rates decrease upon repricing. A negative repricing gap implies that the Parent Company’s NII could decline if interest rates increase upon repricing. Although such gaps are a normal part of the business, a significant change may bring significant interest rate risk.

To help control interest rate risk arising from repricing gaps, maximum repricing gap and EaR/NII targets are set for time bands up to one year. EaR is prepared and reported to the ROC monthly.

Foreign currency risk Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The BOD has set limits on positions by currency. In accordance with the Parent Company’s policy, positions are monitored on a daily basis and are used to ensure positions are maintained within established limits.

4. Fair Value Measurement

The methods and assumptions used by the Group in estimating the Group’s assets and liabilities are:

Cash and other cash items, due from BSP, due from other banks and interbank loans receivable/securities purchased under resale agreements

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Carrying value approximates fair value given the short-term nature of these financial assets and insignificant risk of changes in value.

For equity investments that are not quoted, the fair value are derived using the net asset value method.

Other receivables - Accounts receivable and accrued interest receivable Carrying amounts approximate fair values given their short-term nature.

The Group has determined that the highest and best use of the property used for the land and building is its current use.

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Long-term negotiable certificates of deposit (LTNCD) Fair values of LTNCD are estimated using discounted cash flows using the rate of latest LTNCD issuance in the market.

Bonds Payable Fair Values of the Bonds Payable are estimated by discounting the cash flows using the corresponding benchmark rates.

Carrying amounts approximate fair values due to either the demand nature or the relatively short-term maturities of these liabilities.

The following tables show the Group’s assets and liabilities carried at fair value and those whose fair value are required to be disclosed, analyzed among those whose fair value is based on:  Quoted market prices in active markets for identical assets or liabilities (Level 1); and  Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and those with inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). March 31, 2020 (Unaudited) Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Financial Assets At FVPL P=16,217,084 P=– P=16,217,084 P=– P=16,217,084 At FVOCI: Government securities 5,057,421,553 3,373,488,809 1,683,932,744 – 5,057,421,553 Private bonds 6,549,470,976 3,661,402,099 2,888,068,877 – 6,549,470,976 Quoted equity securities 171,500,000 171,500,000 – – 171,500,000 Unquoted equity securities 32,268,140 – – 32,268,140 32,268,140 P=11,826,877,753 P=7,206,390,908 P=4,588,218,705 P=32,268,140 P=11,826,877,753 Assets for which Fair Values are Disclosed Financial Assets Investment securities at amortized cost 11,355,345,123 6,544,693,617 4,927,842,703 194,115,320 11,666,651,640 Loans and receivables: Receivables from customers: Commercial 47,367,462,043 – – 42,989,977,650 42,989,977,650 Real estate 20,199,851,660 – – 16,369,324,711 16,369,324,711 Consumption 10,404,130,218 – – 10,174,196,030 10,174,196,030 Domestic bills purchased 785,733,643 – – 785,733,643 785,733,643 Other receivables: Sales contract receivable 50,772,239 – – 44,879,987 44,879,987 Refundable deposits 65,544,001 – – 65,525,266 65,525,266 Non-Financial Assets Investment properties 447,892,142 – – 656,131,187 656,131,187 P=90,676,731,070 P=6,544,693,617 P=4,927,842,703 P=71,279,883,795 P=82,752,420,115 Liabilities for which Fair Values are Disclosed Financial Liabilities Derivative liabilities P=4,504,374 P=– P=4,504,374 P=– P=4,504,374 Deposit liabilities: Demand 17,931,192,329 – – 17,931,192,329 17,931,192,329 Savings 56,903,551,557 – – 56,902,719,793 56,902,719,793 Time 14,991,067,154 – – 14,973,820,391 14,973,820,391 Long-term negotiable certificates of deposits 5,930,079,956 – – 5,667,680,347 5,667,680,347 Bonds payable 9,905,038,258 10,485,595,573 10,485,595,573 Bills Payable 1,566,323,135 – – 1,728,469,204 1,728,469,204 P=107,231,756,763 P=– P=4,504,374 P=107,689,477,637 P=107,693,982,011

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December 31, 2019 (Audited) Total Fair Carrying Value Level 1 Level 2 Level 3 Value Assets Measured at Fair Value Financial Assets Financial assets at FVPL P=4,935,882 P=3,943,264 P=992,618 P=− P=4,935,882 Financial assets at FVOCI Government securities 8,421,114,497 8,421,114,497 − − 8,421,114,497 Private bonds 5,344,204,206 4,910,998,983 433,205,223 − 5,344,204,206 Quoted equity securities 175,875,000 175,875,000 − − 175,875,000 Unquoted equity securities 32,268,140 − − 32,268,140 32,268,140 P=13,978,397,725 P=13,511,931,744 P=434,197,841 P=32,268,140 P=13,978,397,725

Assets for which Fair Values are Disclosed Financial Assets Interbank loans receivable and SPURA P=2,408,705,460 P=− P=− P=2,408,705,460 P=2,408,705,460 Investment securities at amortized cost 11,357,261,241 2,901,864,783 7,982,299,771 196,755,165 P=11,080,919,719 Loans and receivables: Receivables from customers: Commercial 49,174,334,783 − − 42,588,556,509 42,588,556,509 Real estate 19,068,816,886 − − 15,145,817,926 15,145,817,926 Consumption 10,165,626,272 − − 9,955,355,261 9,955,355,261 Domestic bills purchased 444,884,387 − − 444,884,387 444,884,387 Other receivables: Accrued interest receivables 816,974,406 − − 847,784,348 847,784,348 Accounts receivable 1,052,401,816 − − 1,114,357,327 1,114,357,327 Sales contract receivable 82,767,162 − − 75,667,608 75,667,608 Lease receivable − − − − − Refundable deposits 62,313,746 − − 62,236,208 62,236,208 Non-Financial Assets Investment properties 382,355,004 − − 671,273,189 671,273,189 P=95,016,441,163 P=2,901,864,783 P=7,982,299,771 P=73,511,393,388 P=84,395,557,942 Financial Liabilities Derivative liabilities P=462,908 P=− P=462,908 P=− P=462,908 Deposit liabilities: Demand 17,052,249,241 − − 17,054,203,891 17,054,203,891 Savings 58,931,747,324 − − 58,852,787,140 58,852,787,140 Time 15,687,802,834 − − 15,670,406,621 15,670,406,621 Long-term negotiable certificates of deposits 5,927,592,846 − − 5,998,369,651 5,998,369,651 Bonds payable 9,889,835,356 10,644,497,382 10,644,497,382 Bills payable 2,040,505,751 − − 2,040,505,751 2,040,505,751 P=109,530,196,260 − P=462,908 P=110,260,770,436 P=110,261,233,344

Description of significant unobservable inputs to valuation:

Accounts Valuation Technique Significant Unobservable Inputs Loans and receivables Discounted cash flow method 4.00% - 42.00% risk premium rate Investment properties Land Market data approach Price per square meter, size, shape, location, time element and discount Building Cost approach Cost per square meter, size, shape, location, condition and time element Refundable deposits Discounted cash flow method 0.25% - 11.00% risk premium rate Time deposits Discounted cash flow method 0.25% - 3.90% risk premium rate Unquoted equity instruments Adjusted net asset value method 30% degree of lack of marketability LTNCD Deposits Discounted cash flow method 4.50% risk premium rate DBP Bills Payable Discounted cash flow method 4.60% risk premium rate Bonds Payable Discounted cash flow method 4.47% risk premium rate

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Significant Unobservable Inputs

Size Size of lot in terms of area. Evaluate if the lot size of property or comparable conforms to the average cut of the lots in the area and estimate the impact of the lot size differences on land value. Shape Particular form or configuration of the lot. A highly irregular shape limits the usable area whereas an ideal lot configuration maximizes the usable area of the lot which is associated in designing an improvement which conforms with the highest and best use of the property. Location Location of comparative properties whether on a main road, or secondary road. Road width could also be a consideration if data is available. As a rule, properties located along a main road are superior to properties located along a secondary road. Time element An adjustment for market conditions is made if general property values have appreciated or depreciated since the transaction dates due to inflation or deflation or a change in investor’s perceptions of the market over time. In which case, the current data is superior to historic data. Discount Generally, asking prices in ads posted for sale are negotiable. Discount is the amount the seller or developer is willing to deduct from the posted selling price if the transaction will be in cash or equivalent. Degree of lack Marketability is the degree to which ownership interest can be converted to cash of marketability quickly without unreasonable experience and with certainty of the amount of proceeds.

5. Interbank Loans Receivable and Securities Purchased Under Resale Agreements

This account consists of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Interbank loans receivable P=2,980,658,000 P=2,342,127,432 Securities purchased under resale agreements 250,611,280 66,578,028 P=3,231,269,280 P=2,408,705,460

As of March 31, 2020, the interbank loans receivable of the Group has a remaining maturity from one (1) days to six (6) days and bears an interest rate of 0.375% to 3.375%.

As of December 31, 2019, the interbank loans receivable of the Group from a local savings bank has a remaining maturity of two (2) days to six (6) days. As of March 31, 2019, these placements bears an interest rate of 1.30% to 3.375%.

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The Securities Purchased under Resale Agreement (SPURA) of the Group is composed of reverse repurchase placements (RRP) with the BSP. These RRPs has a maturity of one (1) day and bears an interest rate of 3.25%.

For the three months ended March 31, 2020 and 2019, interest income from interbank loan receivable and SPURA amounted to P=15.89 million and P=14.52 million, respectively.

6. Investment Securities

Financial Assets at Fair Value through Profit or Loss The Group’s financial assets at FVPL consist of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Government securities P=14,981,844 P=3,943,264 Derivative assets 1,235,240 992,618 P=16,217,084 P=4,935,882

Derivative assets are composed of foreign currency swaps. Foreign currency swaps represent commitments to purchase/sell foreign currency on a future date at an agreed exchange rate.

Financial Assets at Fair Value through Other Comprehensive Income The Group’s financial assets at FVOCI consist of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Private bonds P=6,549,470,976 P=5,344,204,206 Government securities 5,057,421,553 8,421,114,497 Quoted equity securities 171,500,000 175,875,000 Unquoted equity securities 32,268,140 32,268,140 P=11,810,660,669 P=13,973,461,843

The government securities and private bonds of the Group earn annual interest ranging from 3.90% to 8.50% and from 3.18% to 7.82% for the period ended March 31, 2020 and March 31, 2019, respectively; and have maturities from 2021 to 2050, and 2020 to 2050 as of March 31, 2020 and March 31, 2019, respectively

The quoted equity securities of the Group consist of preferred shares of stocks in a publicly listed corporation as of March 31, 2020.

Investment Securities at Amortized Cost The Group’s investment securities at amortized cost consist of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Government securities P=9,504,965,259 P=9,507,201,849 Private bonds 1,850,718,822 1,850,398,340 11,355,684,081 11,357,600,189 Less allowance for impairment losses (Note 12) (338,958) (338,948) P=11,355,345,123 P=11,357,261,241

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Interest income on investment securities of the Group consists of:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Financial assets at FVOCI P=155,883,153 P=166,630,878 Investment securities at amortized cost 116,380,776 126,929,481 Financial assets at FVPL 358,276 8,963,964 P=272,622,205 P=302,524,323

‘Trading and securities gains - net’ of the Group consist of:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Net realized gains on financial assets at FVOCI taken to profit or loss P=226,052,432 P=40,096,326 Realized gains (losses) on derivatives 11,738,391 (4,494,537) Net realized gains on sale of financial assets at FVPL 934,455 12,930,533 Net unrealized gains (losses) on derivatives (4,504,374) 735,187 Unrealized mark-to-market gains (losses) on financial assets at FVPL (563,384) (76,490) P=233,657,520 P=49,191,019

7. Loans and Receivables

This account consists of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Receivables from customers: Commercial P=47,722,950,546 P=49,514,835,477 Real estate 20,458,575,341 19,328,435,011 Consumption 11,109,577,838 10,827,271,508 Domestic bills purchased 836,042,082 495,192,826 80,127,145,808 80,165,734,822 Less unearned interest and discount 305,781,301 328,181,769 79,821,364,507 79,837,553,053 Other receivables: Accrued interest receivable 1,063,938,611 950,249,772 Accounts receivable 680,380,422 1,101,982,028 Sales contract receivable 50,947,241 82,942,164 Lease receivables − − 81,616,630,781 81,972,727,017 Less allowance for credit losses (Note 12) 1,256,408,758 1,166,921,305 P=80,360,222,023 P=80,805,805,712

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Receivables from customers earns annual EIR ranging from 2.00% to 60.95% for the periods ended March 31, 2020 and December 31, 2019.

Interest income on loans and receivables amounted to P=1.68 billion and P=1.40 billion for the three months ended March 31, 2020 and 2019, respectively.

8. Property and Equipment

Property and equipment consists of land, building and improvements, furniture, fixtures and equipment, transportation equipment, and leasehold rights and improvements.

Right-of-use of asset consists of leasehold rights and improvements and ATM space.

December 31, 2019 March 31, 2020 (Unaudited) (Audited) Furniture, Fixtures and Right-of -Use Transportation Leasehold Equipment of Asset Property and Land Building Equipment Improvements (Note 2) Total Equipment Cost P=43,945,323 P=76,811,547 P=186,615,456 P=922,391,278 P=1,070,158,557 P=927,408,627 P=3,227,330,788 P=3,199,563,742 Less: Accumulated depreciation and Amortization − 37,235,473 143,837,103 642,015,040 854,381,992 314,732,744 1,992,202,352 1,878,076,774 Allowance impairment losses (Note 12) 11,385,054 1,194,537 − − 279,328 − 12,858,919 12,858,919 P=32,560,269 P=38,381,537 P=42,778,353 P=280,376,238 P=215,497,237 P=612,675,883 P=1,222,269,517 P=1,308,628,049

The details of depreciation and amortization recognized in the interim consolidated statements of income follow:

For the three months ended March 31 2020 2019 Right-of-use assets P=65,882,937 P=68,187,362 Property and equipment 53,113,431 52,807,527 Software costs 23,741,878 23,260,715 Repossessed chattels 16,142,143 11,570,148 Investment properties 7,484,505 5,963,301 P=166,364,894 P=161,789,053

Gain on sale of property and equipment included in ‘Miscellaneous income’ in the unaudited interim statement of income amounted to P=0.92 million and P=2.58 million in March 31, 2020 and 2019, respectively (see Note 19).

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9. Investment Properties

This account consists of:

December 31, 2019 March 31, 2020 (Unaudited) (Audited) Land Building Total Total Cost P=243,634,369 P=318,013,561 P=561,647,930 P=489,027,198 Less: Accumulated depreciation − 86,425,372 86,425,372 79,341,778 Allowance for impairment losses (Note 12) 25,930,193 1,400,223 27,330,416 27,330,416 P=217,704,176 P=230,187,966 447,892,142 P=382,355,004

The difference between the fair value of the asset upon foreclosure and the carrying value of the loan is recognized as ‘Gain (Loss) on initial recognition of investment properties’ presented under ‘Miscellaneous income’ in the unaudited interim statement of income (see Note 19).

The fair values of investment properties are disclosed in Note 4.

Gain(loss) on sale of investment properties recorded for the three months ended March 31, 2020 and 2019 amounted to (P=22.26) million and P=5.51 million, respectively (see Note 19).

10. Branch Licenses

This account consists of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Cost P=1,232,675,298 P=1,232,655,298 Less allowance for impairment losses (Note 12) 232,726,929 232,726,929 P=999,948,369 P=999,928,369

The allowance for impairment losses amounting to P=232.53 million pertain to branches that the Parent Company ceased to operate in 2010.

11. Other Assets

This account consists of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Creditable withholding tax P=456,556,117 P=435,473,067 Software costs - net 312,305,690 299,873,508 Repossessed chattels - net 154,218,457 161,266,891 Prepaid expenses 134,897,290 72,543,068 Refundable deposits 65,544,001 62,313,746 Advance payment to suppliers 24,818,888 26,089,718 Documentary stamp tax on hand 7,435,932 6,360,875 Sundry debits 6,398,727 45,269,074 (Forward)

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Others 123,466,698 116,713,850 1,285,641,800 1,225,903,797 Less: Allowance for impairment losses (Note 12) (13,064,205) (13,064,205) P=1,272,577,595 P=1,212,839,592

Others include margin calls amounting to P=89.04 million and P=60.61 million as of March 31, 2020 and December 31, 2019, respectively.

The composition of ‘Repossessed chattels - net’ of the Group follows:

December 31, 2019 March 31, 2020 (Unaudited) (Audited) Cars Others Total Total Cost P=46,945,000 P=165,813,546 P=212,758,546 P=215,914,871 Less: Accumulated depreciation 7,422,139 50,098,280 57,520,419 53,572,338 Allowance for impairment losses (Note 12) (32,501) 1,052,171 1,019,670 1,075,642 P=39,555,362 P=114,663,095 P=154,218,457 P=161,266,891

Details of ‘Software costs - net’ follow:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Cost P=846,887,337 P=810,713,276 Less: Accumulated amortization 534,581,647 510,839,768 P=312,305,690 P=299,873,508

12. Allowance for Credit and Impairment Losses

Movements in the allowance for credit and impairment losses follow:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Balance at beginning of period: Financial asset at amortized cost (Note 6) P= 338,948 P=795 Loans and receivables (Note 7) 1,166,921,305 1,090,655,715 Property and equipment (Note 8) 12,858,919 12,715,127 Investment properties (Note 9) 27,330,416 34,659,496 Branch licenses (Note 10) 232,726,929 232,526,929 Repossessed chattels (Note 11) 1,075,642 1,402,432 Other assets (Note 11) 13,064,205 14,017,023 1,454,316,364 1,385,977,517 Provision for the year 106,460,745 125,402,017 Disposals/reversal/others (17,029,254) (57,063,170) 89,431,491 68,338,847

(Forward)

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Balance at end of period: Financial asset at amortized cost (Note 6) 338,958 338,948 Loans and receivables (Note 7) 1,256,408,758 1,166,921,305 Property and equipment (Note 8) 12,858,919 12,858,919 Investment properties (Note 9) 27,330,416 27,330,416 Branch licenses (Note 10) 232,726,929 232,726,929 Repossessed chattels (Note 11) 1,019,670 1,075,642 Other assets (Note 11) 13,064,205 13,064,205 P=1,543,747,855 P=1,454,316,364

13. Deposit Liabilities

The breakdown of deposit liabilities account as to currency follows:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Philippine pesos P=86,493,926,472 P=88,309,776,577 Foreign currencies 9,261,964,524 9,291,851,268 P=95,755,890,996 P=97,601,627,845

Outstanding deposit liabilities of the Group bear annual fixed interest rates ranging from nil to 8.00% and from nil to 6.75% for the period ended March 31, 2020 and December 31, 2019, respectively.

Long-Term Negotiable Certificates of Deposit (LTNCD) On May 4, 2017, the BSP approved the Parent Company’s issuance of the P=3.00 billion LTNCD, with a right to increase the aggregate issue up to P=5.0 billion in the event of over subscription.

On June 16, 2017, the Parent Company listed its LTNCD issuance amounting to P=4.18 billion through the PDEx. The minimum investment was P=50,000 with increments of P=10,000 thereafter. The peso-denominated issue will mature on December 16, 2022 with nominal interest rate of 4.125% and EIR of 4.29%, payable every quarter. On July 6, 2018, the Parent Company issued additional LTNCD amounting to P=1.78 billion with nominal interest rate of 4.88% and EIR of 5.15% payable every quarter which will mature on January 6, 2024. The proceeds was used to diversify the Parent Company’s maturity profile and funding sources and for general corporate purposes.

The BSP approved the decrease in reserve requirements on non-FCDU deposit liabilities through the following circulars:  Circular 1041 dated May 23, 2019 to 17.00% effective May 31, 2019; 16.50% effective June 28, 2019; 16.00% effective July 26, 2019 for the Parent Company and from 7.00% to 6.50% and 6.00% respectively for LSB.  Circular 1056 dated October 3, 2019 to 15.00% for the Parent Company and 5.00% for LSB effective November 1, 2019.  Circular No. 1063 to 14.00% for the Parent Company and 4.00% for LSB effective December 06, 2019.

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Interest expense on deposit liabilities consists of:

For the period ended March 31 2020 2019 Demand P=870,635 P=876,776 Savings 250,805,288 598,152,123 Time 128,008,400 106,446,390 LTNCD 67,302,030 67,083,694 P=446,986,353 P=772,558,983

14. Bonds Payable

On August 13, 2019, the Parent Company issued P=5.00 billion fixed rate bonds due on August 13, 2021. The bond, which are listed in Philippine Dealing and Exchange Corporation, were priced at par with a coupon rate of 5.125% fixed rate payable on a quarterly basis.

On November 14, 2019, the Parent Company issued another ₱5.00 billion fixed rate bonds due on November 14, 2021. The bond, which are listed in Philippine Dealing and Exchange Corporation, were priced at par with a coupon rate of 4.3% fixed rate payable on a quarterly basis.

Interest expense on bonds payable amounted to P=133.01 million for the period ending March 31, 2020.

15. Bills Payable

Bills payable consist of long-term peso denominated borrowing with Development Bank of the Philippines (DBP) wholesale lending facility amounting to P=1.57 billion with interest rate of 5.00%. as of March 31, 2020.

As of December 31, 2019, bills payable consist of long-term peso denominated borrowing with DBP wholesale lending facility amounting to ₱1.64 billion with interest rate of 5.00% and BSP rediscounting amounting to ₱400 million with interest rate of 4.88%.

16. Accrued Expenses and Other Liabilities

Accrued expenses account consist of:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Accrued expenses P=720,968,469 P=508,538,965 Accrued interest payable 178,460,680 224,567,626 P=899,429,149 P=733,106,591

Accrued expenses consist of accruals and provisions for general expenses, bonuses and insurance on deposits, fees and advertisements.

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Other liabilities include:

March 31, December 31, 2020 2019 (Unaudited) (Audited) Accounts payable P=955,005,500 P=1,043,336,941 Bills purchased-contra 836,042,082 495,192,826 Lease liability 657,264,618 720,007,104 Retirement liability 234,388,934 218,899,798 Withholding taxes and other taxes payable 111,086,711 124,432,295 Dormant manager’s checks 38,587,138 36,502,279 Income tax payable 3,798,803 2,700,053 Derivative liabilities 4,504,374 462,908 Acceptances payable − 3,198,400 Redeemable preferred shares 500,000 500,000 Others 25,171,703 41,413,974 P= 2,866,349,863 P=2,686,646,578

Others consist mainly of sundry credits and payables to agencies servicing employee welfare such as Social Security System, Home Development Mutual Fund and Medicare.

17. Equity

This account consists of:

Shares Amount March 31, December 31, March 31, December 31, 2020 2019 2020 2019 (Unaudited) (Audited) (Unaudited) (Audited) Common shares - P=10 par value Authorized 2,700,000,000 2,700,000,000 P=27,000,000,000 P=27,000,000,000 Issued and outstanding Balances at beginning of the period 1,500,000,000 1,500,000,000 P=15,000,000,000 P=15,000,000,000 Conversion of deposit stock for future stock subscription − − − − Balances at end of the period 1,500,000,000 1,500,000,000 P=15,000,000,000 P=15,000,000,000

Capital stock On June 27, 2018, the Parent Company’s BOD approved the increase in authorized capital stock from P=15.00 billion to P=27.00 billion or an increase of P=12.00 billion composed of 1.2 billion common shares at P=10.00 par value per share. On July 16, 2018, the Bank received the subscription from its stockholders amounting to P=3.00 billion and recorded it as ‘Deposit for Future Stock Subscription’ in the liability section of the statement of financial position. On August 23, 2018, the said increase in authorized capital stock was approved by the stockholders of the Parent Company in a special meeting held for that purpose. The P=3.00 billion was subscribed and paid-up as follows:

No. of Shares Stockholder Subscribed Amount JGSCSC 180,000,000 P=1,800,000,000 RRHI 120,000,000 1,200,000,000 Total 300,000,000 P=3,000,000,000

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On August 29, 2018, the Parent Company filed with the BSP the request for authority and endorsement to the SEC of the proposed increase in authorized capital stock.

On December 12, 2018, the BSP approved the proposed increase and issued the corresponding Certificate of Authority.

On February 4, 2019, the Parent Company filed with the SEC the request for approval of the aforementioned proposed increase in authorized capital stock as approved by the BOD, the stockholders, and the BSP. Accordingly, the Bank transferred the ‘Deposit for Future Subscription’ to the equity section of the statement of financial position.

On March 18, 2019, the SEC approved the increase in authorized capital stock of the Parent Company from P=15.00 billion to P=27.00 billion.

On March 22, 2019, the Parent Company converted the P=3.00 billion ‘Deposit for Future Stock Subscription’ to ‘Common Stock’. The transaction cost amounting to P=30.00 million related to the issuance of common stock is treated as a deduction to ‘Surplus’ account.

As of March 31, 2020 and December 31, 2019, the Parent Company’s BOD approved to appropriate reserves for trust reserves amounting to nil and nil, respectively.

As of December 31, 2019, the Parent Company’s BOD approved to appropriate reserves for expected credit losses amounting to P=444.50 million, in compliance with the requirements of the BSP Circular No. 1011. Under this BSP Circular, the Bank shall treat Stage 1 provisions for loan accounts as General Provisions (GP) while Stage 2 and 3 provisions shall be treated as Specific Provisions (SP). The Bank shall set up GLLP equivalent to 1.00% of all outstanding on-balance sheet loan accounts, except for accounts considered as credit risk-free under existing regulations. In cases when the computed allowance for credit losses on Stage 1 accounts is less than the 1.00% required GP, the deficiency shall be recognized by appropriating the ‘Surplus’ account. GP recognized in profit or loss as allowance for credit losses for Stage 1 accounts and the amount appropriated in surplus shall be considered as Tier 2 capital subject to the limit provided under the CAR framework.

The Group manages its capital structure and makes adjustments to it in light of the changes in economic conditions and the risk characteristics of its activities and assessment of prospective business requirements or directions. In order to maintain or adjust the capital structure, the Group may adjust the amount and mode of dividend payment to shareholders, issue capital securities or undertake a share buy-back. The processes and policies guiding the determination of the sufficiency of capital for the Group relative to its business risks are the very same methodology that have been incorporated into the Group’s Internal Capital Adequacy Assessment Process (ICAAP) in compliance with the requirements of BSP Circular No. 639 for its adoption. Under this framework, the

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assessment of risks extends beyond the Pillar 1 set of credit, market and operational risks and onto other risks deemed material by the Group. The level and structure of capital are assessed and determined in light of the Group’s business environment, plans, performance, risks and budget; as well as regulatory edicts. BSP requires submission of an ICAAP document every March 31.

The Group had complied with all externally imposed capital requirements throughout the year.

Risk-weighted assets are determined by assigning defined risk weights to statement of financial position exposures and to the credit equivalent amounts of off-balance sheet exposures. Certain items are deducted from risk-weighted assets, such as the excess of general loan loss provision over the amount permitted to be included in Tier 2 capital. The risk weights vary from 0.00% to 150.00% depending on the type of exposure, with the risk weights of off-balance sheet exposures being subjected further to credit conversion factors.

Following is a summary of risk weights and selected exposure types:

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On June 27, 2014, the BSP issued Circular No. 839, REST Limit for Real Estate Exposures which provides the implementing guidelines on the prudential REST limit for universal, commercial, and thrift banks on their aggregate real estate exposures. The Circular sets out a minimum REST limit of 6.00% CET1 capital ratio and 10.00% risk-based capital adequacy ratio, on a solo and consolidated basis, under a prescribed write-off rate of 25.00% on the Group’s real estate exposure. These limits shall be complied with at all times. On June 9, 2016, the BSP issued Circular No. 881, Implementing Guidelines on the Basel III Leverage Ratio Framework, which provides implementing guidelines for universal, commercial, and their subsidiary banks/quasi banks. The circular sets out a minimum leverage ratio of 5.00% on a solo and consolidated basis and shall be complied with at all times.

The CAR of the Group as reported to the BSP as of March 31, 2020 and December 31, 2019 follows:

Consolidated March 31, 2020 December 31, 2019 (Unaudited) (Audited) Common Equity Tier 1 Capital P=14,508 P=14,500 Additional Tier 1 Capital − − Tier 1 capital 14,508 14,500 Tier 2 capital 798 803 Total qualifying capital P=15,306 P=15,303 Credit RWA P=79,799 P=80,264 Market RWA 681 887 Operational RWA 7,897 6,477 Total RWA P=88,377 P=87,628 (Forward)

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Common Equity Tier 1 Ratio 1 16.42% 16.55% Additional Tier 1 Ratio 0.00% 0.00% Tier 1 capital ratio 16.42% 16.55% Tier 2 capital ratio 0.90% 0.92% Risk-based capital adequacy ratio 17.32% 17.46%

As of March 31, 2020 and December 31, 2019, the Group was in compliance with the required CAR.

18. Leases

The Group’s leases mostly pertain to building and parking spaces and generally have terms ranging from 2 to 10 years. The lease contracts are cancellable upon mutual agreement of the parties or renewable at the Group’s option under certain terms and conditions. Various lease contracts include escalation clauses. As of March 31, 2020 and December 31, 2019, the Group has neither a contingent rent payable nor an asset restoration obligation in relation with these lease agreements.

Shown below is the maturity analysis of the undiscounted lease payments as of December 31, 2019:

Consolidated Parent 1 year or less ₱ 244,539,328 ₱234,526,082 More than 1 year to 5 years 484,541,955 439,108,421 More than 5 years to 10 years 20,086,588 8,638,029 More than 10 years to 15 years ─ ─ (Forward) More than 15 years to 20 years ─ ─ More than 20 years ─ ─ ₱749,167,871 ₱682,272,532

Summarized below are the amounts recognized in March 31, 2020 and 2019 consolidated statement of comprehensive income in relation to the Group’s leases:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Depreciation expense on right-of-use assets P=65,882,936 P=68,187,362 Interest expense on lease liabilities 11,445,606 8,586,871 Rent expense – short-term leases 16,240,710 7,811,958 Rent expense – low-value assets 1,670,367 1,103,310 Rent expense – others 9,739,222 10,153,049 P=104,978,841 P=95,842,550

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19. Income and Expenses

Net service fees and commission income consists of:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Service fees and commission income: Credit-related P=70,118,033 P=75,241,791 Deposit-related 23,385,185 13,612,040 Commissions 13,553,240 13,581,281 Utility and store payment charges 5,571,926 5,477,215 Trust and other fiduciary 4,310,831 3,932,869 116,939,215 111,845,196 Service charges and commission expense: Brokerage and commissions 2,576,949 5,779,148 Banking fees 8,097,734 17,044,701 Cards fees and commissions 45,279,990 36,965,291 55,954,673 59,789,140 P=60,984,542 P=52,056,056

Credit-related service fees and commission income include merchant discount and interchange fees from the credit card business of the Bank totaling to P=37.83 million and P=36.09 million for the period ended March 31, 2020 and 2019, respectively.

Miscellaneous income (loss) consists of:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Penalties P=17,828,460 P=7,779,007 Gain (loss) on initial recognition of investment properties and repossessed chattels (Note 9) 11,240,728 (9,985,377) Gain on sale of property and equipment (Note 8) 918,785 2,576,645 Recovery on charged-off assets 322,629 1,053,290 Gain (loss) on sale of investment properties (Note 9) (22,261,049) 5,506,406 Loss on sale of repossessed chattels (2,130,073) (20,337,357) Others 12,436,819 11,629,348 P=18,356,299 (P=1,778,038)

Others include share on notarial and insurance fees, rental income from safety deposit box, night depository and dividend income.

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Miscellaneous expenses consist of: March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Advertising P=45,424,963 P=11,840,737 Transportation and travel 15,065,234 15,660,270 Fines, penalties and other charges 22,653,191 4,879,433 Filing fees 156,678 24,190,341 Stationery and supplies 16,125,295 12,526,068 BSP supervisory fees 11,405,501 − Appraisal fees 4,815,464 3,914,195 Litigation expense on assets acquired 3,858,012 2,460,930 Membership dues 2,548,836 1,860,351 Others 27,298,731 6,619,993 P=149,351,905 P=83,952,318

Other miscellaneous expenses consist of freight charges, notarial and filing fees, brokerages fees, miscellaneous fees for credit investigators, appraisal and processing and Christmas giveaways.

20. Income and Other Taxes

Provision for income tax of the Group consists of: March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Current: Final P=55,008,980 P=44,430,927 RCIT 199,868 1,034,179 MCIT 14,786,591 11,071,412 69,995,439 56,536,518 Deferred − (37,027,722) P=69,995,439 P=19,508,796

A reconciliation of the statutory income tax rate to the effective income tax rate of the Group follows:

March 31, 2020 March 31, 2019 (Unaudited) (Unaudited) Statutory income tax rate 30.00% 30.00% Tax effect of: Tax paid and tax-exempt income (19.75%) (53.72%) Non-deductible expenses 5.54% 19.00% Unrecognized deferred tax assets 8.26% 33.60% FCDU income (7.46%) (4.89%) Effective income tax rate 16.59% 23.99%

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21. Related Party Transactions

The significant transactions and outstanding balances of the Parent Company and the Subsidiary with its related parties follow:

December 31, 2019 March 31, 2020 (Unaudited) (Audited) Amount/ Outstanding Outstanding Nature of Transaction Volume Balance Balance Terms and Conditions/Nature

Subsidiary Advances from a subsidiary P=621,700 P=621,700 P=2,235,600 Transportation expenses and down payment for software cost Accounts receivable 718,641 5,912,737 5,194,096 Unsecured, noninterest-bearing, payable on demand Deposit liabilities 6,422,502 35,447,697 29,025,194 Regular checking account, noninterest bearing

Affiliates Receivable from customers 281,062,017 3,301,744,955 3,020,682,938 Secured loans with annual - commercial loans interest of 2.50% Receivable from customers (120,225,163) 374,967,663 495,192,826 Non-interest bearing domestic - bills purchased bills purchased Deposit liabilities 3,722,809,000 40,172,014,960 36,449,205,960 Various terms and with annual interest rates ranging from nil to 2.55%

Interest expense 26,603,123 − − Interest expense on deposit liabilities Interest income 39,452,879 − − Interest income from secured commercial loans Service fee income 51,734 − − Income from non-interest bearing domestic bills purchased Rent expense 4,527,182 − − Office rental paid to affiliates and JG Summit Holdings Inc. ROU assets (27,639,605) 259,582,756 287,222,361 Lease renewed every 5 years with 5% escalation rate Depreciation expense on 27,639,605 − Lease renewed every 5 years with ROU assets 5% escalation rate

Lease liability (26,796,385) 277,630,311 304,426,696 Lease renewed every 5 years with 5% escalation rate Interest expense on lease 4,761,813 − Lease renewed every 5 years with liability 5% escalation rate

Shareholders Deposit liabilities 614,349,370 618,600,137 4,250,767 Various terms and with annual interest rates ranging from nil to 2.55% Interest expense 27,500 − − Interest expense on deposit liabilities (Forward)

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December 31, 2019 March 31, 2020 (Unaudited) (Audited) Amount/ Outstanding Outstanding Nature of Transaction Volume Balance Balance Terms and Conditions/Nature

Board of Directors Deposit liabilities 505,496,064 13,071,400,177 12,565,904,113 Various terms and with annual interest rates ranging from nil to 2.25% Interest expense 53,462,543 − − Interest expense on deposit liabilities

Key Officers Deposit liabilities (23,168,786) 10,280,912 33,449,698 Various terms and with annual interest rates ranging from nil to 1.88% Interest Expense 43,731 − − Interest expense on deposit liabilities

Details on significant related party transactions of the Subsidiary with its other related parties follow:

December 31, March 31, 2020 (Unaudited) 2019 (Audited) Amount/ Outstanding Outstanding Nature of Transaction Volume Balance Balance Terms and Conditions/Nature

Key employees Receivables from customers (P=466,204) P=3,887,047 P=4,353,251 Loans of directors, officers and stockholders Interest income 68,053 − − Interest earned from loans of directors, officers and stockholders Deposit liabilities 956,802 1,245,171 288,369 Deposits of directors, officers and stockholders Interest expense 1,426 − − Interest expense on deposit liabilities Compensation and fringe 4,463,938 − − Remuneration and benefits to directors benefits and key management personnel Post-employment benefits 351,821 − − Post-employment benefits

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

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

March 31, December 31, 2020 2019 (Unaudited) (Audited) Total outstanding DOSRI accounts P=3,359,158,414 P=3,572,664,382 Percent of DOSRI accounts to total loans 4.20% 4.48% Percent of past due DOSRI loans to total DOSRI loans 0.00% 0.02% Percent of nonperforming DOSRI loans to total DOSRI loans 0.01% 0.02% Percent of unsecured DOSRI loans to total DOSRI loans 1.39% 1.24%

The fair value of plan assets of the Parent Company’s employees amounted to P=67.48 million as of December 31, 2019. The fund is being managed by JG Summit Multi-Employer Retirement Plan (MERP), a corporation created for the purpose of managing the funds of the Group, with Robinsons Bank Corporation (RBC)-Trust and Investment Group as the trustee.

The retirement plan under the MERP has an Executive Retirement Committee, which is mandated to approve the plan, trust agreement, investment plan, including any amendments or modifications thereto, and other activities of the plan. Certain members of the BOD of the Parent Company are represented in the Executive Retirement Committee. RBC manages the plan based on the mandate as defined in the trust agreement.

22. Commitments and Contingencies

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

March 31, December 31, 2020 2019 (Unaudited) (Audited) Trust and investment group accounts P=17,159,229,677 P=17,739,157,589 Committed credit lines 7,152,256,372 7,258,540,906 Spot exchange - foreign currency 4,020,216,849 2,654,047,816 Guarantees issued 3,309,602,441 3,207,412,389 Inward bills for collection 1,170,030,126 984,396,933 Letters of credit 306,407,637 328,561,049 Contingent - foreign currency swap 3,778,913,712 1,284,358,910 Late deposit/payment received 26,879,825 93,764,025 Items held for safekeeping 81,196 79,472 Other contingent account 183,657 183,907

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23. Segment Information

The Group’s operating businesses are recognized and managed separately according to the nature of services provided and the different markets served with segment representing a strategic business unit. The Group’s business segments follow:  Consumer Banking - principally providing consumer type loans and support for effective sourcing and generation of consumer business;  Corporate Banking - principally handling loans and other credit facilities and deposit and current accounts for corporate and institutional customers;  Treasury - principally providing money market, trading and treasury services, as well as the management of the Group’s funding operations by use of treasury bills, government securities and placements and acceptances with other banks, through treasury and corporate banking;  Branch Banking - principally handling branch deposits and providing loans and other loan related businesses for domestic middle market clients; and  Others - principally handling other services including but not limited to trust operations, remittances, leasing, account financing, and other support services. Other operations of the Group comprise the operations and financial control groups.

This segment performance review is regularly provided to the Bank's Chief Operating Decision maker who is the Parent Company’s President and Chief Executive Officer

The Group’s revenue-producing assets are located in the Philippines (i.e., one geographical location), therefore, geographical segment information is no longer presented.

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The following table presents revenue and income information of operating segments presented in accordance with PFRS and segment assets and liabilities (amounts in millions):

March 31, 2020 (Unaudited) Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Income Net interest income: Third party P=583 P=237 (P=52) P=329 P=259 P=1,356 583 237 (52) 329 259 1,356 Noninterest income 47 (4) 232 43 (4) 314 Revenue - net of interest expense 630 233 180 372 255 1,670 Noninterest expense 330 99 77 315 427 1,248 Income before income tax P=300 P=134 P=103 P=57 (P=172) P=422 Provision for income tax 70 Net income P=352

Other Segment Information Capital expenditures P=3 P=1 P=− P=28 P=36 P=68 Depreciation and amortization P=14 P=12 P=1 P=30 P=109 P=166 Provision for credit and impairment losses P=61 P=45 P=− P=− P=− P=106

March 31, 2019 (Unaudited) Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Income Net interest income: Third party P=673 P=636 (P=320) (P=158) P=66 P=897 673 636 (320) (158) 66 897 Noninterest income 42 4 72 33 23 174 Revenue - net of interest expense 715 640 (248) (125) 89 1,071 Noninterest expense 199 48 86 290 367 990 Income before income tax P=516 P=592 (P=334) (P=415) (P=278) P=81 Provision for income tax 20 Net income P=61

Other Segment Information Capital expenditures P=3 P=0 P=4 P=26 P=33 P=66 Depreciation and amortization P=10 P=8 P=1 P=12 P=131 P=162 Provision for credit and impairment losses P=− P=− P=− P=− P=− P=−

March 31, 2020 (Unaudited) Consumer Corporate Branch Banking Banking Treasury Banking Others Total Statement of Financial Position Total assets P=40,407 P=38,544 P=42,556 P=1,815 P=5,190 P=128,512 Total liabilities P=1,165 P=2,382 P=51,909 P=54,097 P=2,292 P=111,845

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Non-interest income consists of service charges, fees and commissions, profit from assets sold, trading and securities gain - net, foreign exchange gain - net, income from trust operations, leasing, dividends and miscellaneous income. Non-interest expense consists of compensation and fringe benefits, taxes and licenses, provision for credit and impairment losses, depreciation and amortization, occupancy and equipment-related cost, amortization of software costs, income (loss) attributable to non-equity non-controlling interest and miscellaneous expense.

24. Financial Performance

The following basic ratios measure the financial performance of the Group:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Return on average equity 8.35% 2.29% Return on average assets 1.08% 0.13% Net interest margin on average earnings assets 4.48% 3.12%

25. Notes to Statements of Cash Flows

1. On January 1, 2019, the Group has the following non-cash investing activities with the effect of the adoption of PFRS 16:

Increase in ROU of assets P=635,203,495 Increase in lease liability 655,550,471 Decrease in accrued expenses (40,442,807) Decrease in prepaid expenses (20,095,831)

2. For the period ended March 31, 2020 and 2019, the ROU of assets and lease liability of the Group has been increased by P=4.2 million and P=137.9 million, respectively, to recognize new lease contracts entered during the period.

3. Foreclosure of investment properties and repossessed chattels for 2020 and 2019 are considered non-cash transfers (Note 9 and 11).

4. The following are other non-cash investing activities:

March 31, March 31, 2020 2019 (Unaudited) (Unaudited) Increase (decrease) in NUGL due to MTM gain on financial assets at FVOCI (P=756,207,116) P=634,182,607 Increase in investment properties and repossessed chattels due to foreclosure 177,808,332 109,788,461 Increase in property and equipment due to reclassification 239,507 1,513,24 Disposal of investment properties and repossessed chattels through sales contract receivables (10,007) (121,646) Increase in property and equipment due to reclassification from repossessed chattels 249,514 1,513,241

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26. Subsequent Events - COVID-19 Outbreak

Key actions were implemented to prevent and control the Coronavirus Disease 2019 (COVID-19) outbreak in the country. On March 13, 2020, a Memorandum on Stringent Social Distancing Measures and Further Guidelines for the Management of the COVID-19 Situation issued by the Executive Secretary of the Philippines placed National Capital Region (NCR) under these measures for 30 days starting March 15. On March 16, 2020, Presidential Proclamation No. 929 was issued declaring a state of calamity throughout the Philippines for a period of six (6) months and imposed an Enhanced Community Quarantine (ECQ) throughout the island of Luzon until April 30, 2020, which was later extended to May 15, 2020 for high risk areas of the country, subject to further evaluation. These measures have caused disruptions to businesses and economic activities, and its impact on businesses continue to evolve. On March 24, Republic Act No. 11469 was enacted declaring the existence of a national emergency arising from COVID-19 situation and a national policy in connection therewith, and authorizing the President of the Republic of the Philippines for a limited period and subject to restrictions, to exercise powers necessary and proper to carry out the declared national policy and for other purposes. On April 1, the Implementing Rules and Regulations (IRR) of Section 4(aa) of Republic Act No. 11469, Otherwise Known as the “Bayanihan to Heal As One Act” was released.

Under the ECQ guidelines, the government identified banks as one of the essential business establishments that needs to be operational. The Bank ensures continued operations and uninterrupted services and triggered business continuity plan. RBank is committed to provide the financial requirements of our clients, as well as to support the entire financial system given the limitations of the ECQ. The head office implemented measures and operated under business continuity plan. The Bank carried out skeletal crew and rotation schedules for highly critical functions, opened as much feasible branches, and ensured cash availability in our ATMs. Various digital and online products are available. To ease the burden of our clients, the Bank offered 60-day grace period for loan payments. For the safety and well-being of our Bank personnel and customers, the Bank provided personal protective equipment, transportation, accommodation, meals, and allowances. As protective measures, the Bank regularly disinfects and deep cleans offices and branches, deployed thermal scanners, and set up provision for teller stations.

ROBINSONS BANK CORPORATION AND SUBSIDIARY AGING OF ACCOUNTS RECEIVABLES AS OF MARCH 31, 2020

NO. OF DAYS AMOUNT OUTSTANDING (In thousands)

P=226,008 1 - 90

3,355 91 - 180

12,084 181 - 360

35,575 OVER 360

P=277,022 GRAND TOTAL

ROBINSONS BANK CORPORATION AND SUBSIDIARY FINANCIAL SOUNDNESS INDICATORS AS OF AND FOR THE PERIOD ENDED MARCH 31, 2020 AND DECEMBER 31, 2019

March 2020 2019

Ratio of liquid assets to total assets 15.81% 15.52%

Ratio of debt to equity 671.07% 668.36%

Return on average equity 8.35% 4.89%

Return on average assets 1.08% 0.57%

Net interest margin on average earning assets 4.48% 3.59%

Capital Adequacy Ratio (CAR) 17.32% 17.46%

Robinsons Bank Corporation and Subsidiary

Management's Discussion and Detailed Analysis of Financial Condition and Results of Operations

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ROBINSONS BANK CORPORATION AND SUBSIDIARY KEY PERFORMANCE INDICATORS

The Group monitors its financial performance based on the following indicators:

March 31, 2020 December 31, 2019 Capital Adequacy Ratio (CAR) 17.32% 17.46% Non-Performing Loans (NPL) Ratio 0.85% 0.81% Non-Performing Loans (NPL) Cover 59.43% 53.18%

YTD March 31, 2020 YTD December 31, 2019 Return on Equity (RoE) 8.35% 4.89% Return on Assets (RoA) 1.08% 0.57% Net Interest Margin (NIM) 4.48% 3.59%

Capital Adequacy Ratio (CAR)

CAR, also known as Capital to Risk Weighted Assets Ratio, is the ratio of a bank's capital to its risk. Qualifying capital and risk-weighted assets are computed based on BSP regulations.

As of March 31, 2020 and December 31, 2019, the Group was in compliance with the required CAR.

Non-Performing Loans (NPL) Ratio

NPL Ratio is computed based on total NPL (net of specific allowance for probable losses) over gross loans.

Non-Performing Loans (NPL) Cover

NPL Cover is computed based on total allowance for probable losses on loans over total NPL (gross of specific allowance for probable losses).

Return on Equity (RoE)

RoE or the ratio of annualized net income to average capital funds, measures the return on capital provided by the stockholders.

Return on Assets (RoA)

RoA or the ratio of annualized net income to average total assets, measures the return on money provided by both stockholders and creditors, as well as how efficiently all assets are managed.

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ROBINSONS BANK CORPORATION AND SUBSIDIARY ANALYSIS OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF MARCH 31, 2020 (UNAUDITED) AND DECEMBER 31, 2019 (AUDITED)

Assets

The Group’s Total Assets as of March 31, 2020 stood at ₱128.5 billion or 2.0% lower from ₱131.1 billion in 2019, on account of decreases in Financial Assets at Fair Value through Other Comprehensive Income, Loans and Receivables, and Cash and Other Cash Items, partly offset by increases in Interbank Loans Receivable and Securities Purchased Under Resale Agreement (SPURA), Due from Other Banks, and Due from Bangko Sentral ng Pilipinas (BSP).

Cash and Other Cash Items decreased by 51.2% to ₱1.6 billion which can be attributed to the decrease in savings deposits, while Due from BSP and Due from Other Banks was higher by ₱394.2 million or 3.2% and ₱432.9 million or 17.6%, respectively. Interbank Loans Receivable and SPURA increased by ₱822.6 million or 34.1%.

Financial Assets at Fair Value through Other Comprehensive Income decreased by ₱2.2 billion to ₱11.8 billion or 15.5% due to net disposals and decrease in market valuation of securities held. Financial Assets at Fair Value Through Profit or Loss went up by ₱11.3 million or 228.6% to ₱16.2 million while Investment Securities at Amortized Cost stood at ₱11.4 billion as of March 31, 2020.

Loans and Receivables slightly decreased by 0.6% or ₱445.6 million to ₱80.4 billion in the first quarter of the year. Property and Equipment decreased by 6.6% to ₱1.2 billion, while Investment Properties increased by 17.1% to ₱447.9 million due to real and other properties foreclosed during the period. Other Assets increased by 2.7% to ₱2.3 billion due to increase in margin calls.

Liabilities

The Group’s Total Liabilities decreased by 1.9% or ₱2.2 billion to ₱111.8 billion on account of decreases in Deposit Liabilities, Bills Payable and outstanding Manager’s Checks, partly offset by increases in Accrued Expenses and Other Liabilities.

The Group’s deposit level stood at ₱95.8 billion as of March 31, 2020, comprising mainly of CASA deposits at 78.2% or ₱74.8 billion. Deposit Liabilities went down by 1.9% from ₱97.6 billion in 2019 contributed by decreases in Savings and Time Deposits tempered by increases in Demand and Long-term Negotiable Certificates of Deposit.

Bonds payable increased by ₱15.2 million or 0.2% at ₱9.9 billion, while Bills Payable dropped by ₱474.2 million or 23.2% at ₱1.6 billion due to matured borrowing with BSP rediscounting.

Manager’s Checks Outstanding decreased by ₱222.1 million or 20.7% at ₱852.4 million in March 2020, while Accrued Expenses and Other Liabilities went up by ₱346.0 million or 10.12% at ₱3.8 billion due to provision for general expenses for the period.

Equity

The Group’s Total Equity accounts stood at ₱16.7 billion from ₱17.1 billion in 2019, or a decrease of ₱393.8 million or 2.3% attributed to increase in Net Unrealized Loss on Financial Assets at FVOCI by ₱754.1 million, partly offset by current period’s Net Income of ₱352.0 million, and improvement in Accumulated Translation Adjustments of ₱8.3 million.

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ROBINSONS BANK CORPORATION AND SUBSIDIARY ANALYSIS OF CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE PERIODS ENDED MARCH 31, 2020 AND 2019

Net Income

Net income amounted to ₱352.0 million for the period ended March 31, 2020, showing an improvement of ₱290.2 million or 469.5% from a level of ₱61.8 million in March 2019. The increase is brought about by the growth in Total Operating Income by 65.1% or ₱658.7 million higher than the same period last year. This was partly offset by the increase in Total Operating Expenses by ₱318.1 million reaching ₱1.2 billion this year or 34.2% increase from ₱930.0 million in the first quarter of 2019.

Interest Income

Interest Income was higher than prior year by 14.2% or ₱245.9 million at ₱2.0 billion in March 2020 on account of improvement in loan-related activities during the period. Interest on Loans and Receivables rose by 19.8% or ₱277.4 million attributed to bigger loan portfolio this year, while Interest on Financial Investments decreased by 9.9% or ₱29.9 million due to lower level of financial investments this year. Interest on Deposits with BSP and Other Banks dropped by 33.8% or ₱3.4 million, while Interest on Interbank Loans Receivables and SPURA increased by 11.7% or ₱1.7 million higher compared to the same period last year.

Interest Expense

Interest Expense dropped by 25.6% or ₱213.5 million to ₱620.6 million this year due to decline in volume of high-cost deposits coupled by lower interest rate; and lower bills payable which accounted for lower interest by ₱325.6 million or 42.1% and ₱24.3 million or 45.4% respectively, despite the issuance of corporate bonds which generated an interest of ₱133.0 million this year. Meanwhile, Interest expense on lease liability amounted to ₱11.4 million or 40.7% higher on a period-to-period basis.

Other Income

Other Income increased by 174.4% to ₱313.7 million for the period ended March 31, 2020 due to increases in Net Service Fees and Commission Income and Trading and Securities Gains. The increase in these line items however, was partly offset by the decrease in Foreign Exchange Gains.

Net Service Fees and Commission Income rose by 17.2% or ₱8.9 million from March 2019 on account of higher revenues earned on fee-based activities. Trading and Securities Gains likewise improved by ₱184.5 million or 375.0% from ₱49.2 million in the first quarter of 2019 to ₱233.7 million in the same period this year, while Net Foreign Exchange Gains decreased by ₱14.2 million or 95.5% lower at only ₱0.7 million in March 2020.

Operating Expenses

Operating expenses were up by 34.2% or ₱318.1 million this year due to significant increases in Provision for Credit Losses, Miscellaneous Expenses, Compensation and fringe benefits, Information Technology Expenses, and Insurance by ₱106.5 million (100.0%), ₱65.4 million (77.9%), ₱54.4 million (18.2%), ₱35.7 million (109.4%), and ₱31.8 million (114.4%) respectively, mainly attributed to business expansion activities.

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ROBINSONS BANK CORPORATION AND SUBSIDIARY OTHER MATTERS

Liquidity

The Bank’s liquidity position is sufficient with liquid assets to total assets ratio of 15.8% as of March 31, 2020. The Bank does not foresee any cash flow problems within the next 12 months and is not in default or breach of any form of indebtedness. Payables have been paid by the Bank within the stated terms. Lastly, there are no known trends, events or uncertainties that will likely affect the Bank’s liquidity position in any material way.

Events That Will Trigger Material Direct or Contingent Financial Obligation

These events are discussed under Note 22 - Commitments and Contingencies of the Notes to Unaudited Interim Consolidated Condensed Financial Statements.

Material Off-Balance Sheet Transactions, Arrangements or Obligations

The summary of contingencies and commitments at their peso-equivalent contractual amounts arising from off-balance sheet items are discussed under Note 22 - Commitments and Contingencies of the Notes to Unaudited Interim Condensed Financial Statements.

Material Commitments for Capital Expenditures

For the year 2020, the Bank estimates to incur capital expenditures of about ₱877.7 million, mainly for branch expansion and implementation of IT-related projects. These will be funded out of cash flows from operations.

Material Impact on Income from Continuing Operations

In the normal course of operations, the Group’s activities are affected by changes in interest rates, foreign currency exchange rates and other market changes. The Group follows a prudent policy on managing its assets and liabilities to ensure that exposure to fluctuations in interest rates and foreign currency exchange rates are kept within acceptable limits and within regulatory guidelines.

Significant Elements of Income or Loss that did not arise from Continuing Operations

There are no significant elements of income or loss that did not arise from continuing operations of the Group.

Seasonal aspects that have a material effect on the financial condition or results of operations.

The Group’s financial position or results of operations are not affected by seasonal aspects.

MINUTES OF THE ANNUAL STOCKHOLDERS’ MEETING ANNEX "F" ROBINSONS BANK CORPORATION1 HELD ON WEDNESDAY, JUNE 26, 2019 42/F BOARDROOM, ROBINSONS EQUITABLE TOWER ADB AVE. COR. POVEDA RD., ORTIGAS CENTER, PASIG CITY

Stockholders Present Total Number of Shares : 1,500,000000 Number of Shares of Stockholders Present in Person : 10 Number of Shares of Stockholders Represented by Proxy : 1,499,975,248 Total Number of Shares Present or Represented : 1,499,975,258 Total Number of Shares Not Represented : 24,742

Directors Present:

Lance Y. Gokongwei - Chairman, Board of Directors Chairman, Executive Committee Member, Trust Committee

Frederick D. Go - Vice-Chairman, Board of Directors Vice-Chairman, Executive Committee

Elfren Antonio S. Sarte - President and CEO Member, Executive Committee Member, Risk Oversight Committee Member, IT Steering Committee

Robina Y. Gokongwei-Pe - Chairman, Trust Committee

Patrick Henry C. Go. - Vice-Chairman, Trust Committee Member, Corporate Governance Committee

Angeles Z. Lorayes - Chairman, Audit Committee Vice-Chairman, Corporate Governance Committee Member, RPT Committee

Esperanza S. Osmeña - Chairman, Risk Oversight Committee Vice-Chairman, RPT Committee Member, Corporate Governance Committee Member, Trust Committee

1 These minutes will be approved by the stockholders at the next Annual Stockholders’ Meeting Hermogenes S. Roxas - Chairman, Corporate Governance Committee Member, Audit Committee Member, RPT Committee

David C. Mercado - Chairman, IT Steering Committee Vice-Chairman, Risk Oversight Committee Member, Audit Committee

Roberto S. Gaerlan - Chairman, RPT Committee Vice-Chairman, Audit Committee Member, Risk Oversight Committee

Directors Absent:

Omar Byron T. Mier - Alternate Member, Executive Committee Member, Risk Oversight Committee (Non-Voting) Resource Person, Audit Committee Resource Person, Corporate Governance Committee Resource Person, RPT Committee

Senior Board Advisers Present:

James L. Go Johnson Robert G. Go, Jr.

Officers Present:

Atty. Roel S. Costuna - Corporate Secretary Angelito V. Evangelista - Executive Vice President and COO Eric B. Santos - Executive Vice President and Head of Consumer and Retail Banking Segment Ma. Regina N. Lumain - Executive Vice President and Treasurer Salvador D. Paps - Senior Vice President and Head of Retail Banking Segment Ellen A. Victor - Senior Vice President and OIC/Head of Corporate Banking Segment Irma D. Velasco - First Vice President and Controller Glenn H. Francisco - First Vice President and Head of Credit Management Group Rosario C. Marcelo - Senior Vice President and Head of Account Management Group III Cynthia C. Bautista - Chief Audit Officer and Head of Internal Audit Group

Luis Miguel R. Confesor - Merchant Acquiring and Management Department Head Melissa Althea P. Lim - Trust Investment Officer, Trust & Investments Group Evie B. Abraham - Senior Vice President and Head of Human Resource Management Group Maria Encarnacion T. Gabriel - Assistant Vice President and Head of Account Management Group 4

PROCEEDINGS OF THE MEETING

I. CALL TO ORDER

The Chairman of the Board, Mr. Lance Y. Gokongwei, called the stockholders’ meeting to order and presided over the same. The Corporate Secretary, Atty. Roel S. Costuna, recorded the minutes of the proceedings.

II. PROOF OF DUE NOTICE OF MEETING

The Chairman inquired from the Corporate Secretary about the sending of the notice of meeting to stockholders.

The Corporate Secretary certified that notices of the annual meeting including the SEC Form 20-IS or Information statement required under the law, were duly sent to all the stockholders on record in accordance with the period and manner prescribed under the provisions of the Bank’s By- Laws.

III. PROOF OF PRESENCE OF QUORUM

Relative to the Chairman’s inquiry on the presence of quorum, the Corporate Secretary affirmed the same, certifying that based on the attendance sheet, out of the 1,500,000,000 total issued and outstanding shares of the Bank, there are present in person and by proxy 1,499,975,258 shares2 entitled to vote, representing an attendance of 99.99%, constituting more than a majority of the total issued and outstanding shares entitled to vote. Therefore the meeting was competent to transact the business for which it was called.

IV. CONFIRMATION OF THE MINUTES OF THE SPECIAL STOCKHOLDERS’ MEETING ON AUGUST 23, 2018

2 The 19,887 shares of Mr. Ignacio Mamaril, Jr., the 4,854 shares of Mr. Vincente Pang, and the 1 share of Mr Omar Byron T. Mier, were not counted as present.

The Chairman stated that the first item in the agenda is the confirmation of the Minutes of the Special Stockholders’ Meeting held on August 23, 2018. The Corporate Secretary certified that the stockholders were furnished copies of the meeting on June 4, 2019 as part of the SEC Form 20-IS or Information Statement.

Upon motion duly made by stockholder Ms. Esperanza S. Osmeña, which was seconded by stockholder Mr. Hermogenes Roxas, and with no objections from the stockholders present, reading of the Minutes of the Special Stockholders’ Meeting held on 23 August 2018 was dispensed with, and that the same were approved as distributed, and the stockholders adopted the following resolution:

Resolution No. 2019-01

“RESOLVED, that the Minutes of the Annual Stockholders’ Meeting held on August 23, 2018 of Robinsons Bank Corporation is hereby noted and approved.”

The Corporate Secretary recorded the following votes cast for this agenda item:

Vote Number of Votes (One Share Percentage of Shares – One Vote) Represented Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

V. REPORT OF THE PRESIDENT AND THE MANAGEMENT

The Chairman called upon the Bank’s President, Mr. Elfren Antonio S. Sarte to provide his report on the results of the Bank’s operations for the year which ended on December 31, 2018 and the Bank’s Audited Financial Statements also for the year which ended on December 31, 2018.

The President commenced his report by stating that the items required by law for disclosure to the shareholders are already part of the Information Statement distributed by the Corporate Secretary. He proceeded to deliver the highlights of the results of the Bank’s operations for the year ended December 31, 2018.

Using a power point presentation, he discussed in detail the Operational highlights of the bank together with its Business Outlook for the end of year 2018 until the midyear of 2019.

For Operational Highlights, he recapped the year 2018 as a landmark year for the launch of new products and services such as the bancassurance partnership with Pru-Life UK, launch of Direct2Bank Pesonet and Instapay, Robinsons Bank UNO and DOS Credit Cards, and Simplé Savings Account, issuance of Php1.78 Billion in Long Term Negotiable Certificate of Deposit (LTNCD), venture in merchant acquiring business and the increase of the Bank’s geographic reach through the opening of 12 new branches of the Bank and 3 Legazpi Savings Bank (LSB) branches, and installation of 64 new ATMs.

Relative to the Bank’s Credit Card Business, 2018 yielded 16,060 active cards, which increased to 21,099 at the end of May 2019. Merchant Acquiring ended 2018 with a Merchant Sales Volume of Php2.4 Billion which by May 2019 grew to Php13.6 Billion. For Retail Banking, the efforts of the branches on the Bancassurance business resulted to an annual premium equivalent (APE) amounting to Php31.4 Million YE2018 and Php16.8 Million for May 2019, which consequently brought in Php10.3 Million in commissions for 2018 and Php5.2 Million as of May 2019. Simplé Savings ended 2018 with 945 accounts and Php9.2 Million in aggregate balance and 17,124 accounts as of May 2019 with Php25.5 Million aggregate balance.

The President proceeded with the highlights of the Bank’s Financial Position for the end of 2018 vis-a-vis the performance as of May 2019. The Bank’s total assets were at Php119.712 Billion by the end of 2018, which grew to Php121.479 Billion at the end of May 2019. Total assets consolidated with that of LSB’s amounted to Php121.351 in 2018 and Php123.936 in May 2019. Gross loans of the Bank amounted to Php67.134 Billion by the end of 2018, and grew to Php69.635 Billion on May 2019. Gross Non-Performing Loans (NPL) ratio as of May 2019 was 1.3%, which was below the 2.1% industry ratio, while Net NPL ratio was 0.6% vis-à-vis the industry ratio of 1.1%.

Relative to the Bank’s deposit levels, the President reported that at the end of 2018 it has grown by 5.9% at Php93.399 Billion from Php88.183 Billion in 2017, and is currently at Php89.772 Billion as of May 2019, although a significant portion of the decline was composed of high cost deposits. For the end of 2018, the Bank’s Capital Level is at Php12.4 Billion. This translates to a Capital Adequacy Ratio of 15% which is above the regulatory requirement of 10%.

For the Bank’s Profitability, the President reported that the consolidated Interest Income expanded by 40.2% in 2018 at Php5.762 Billion compared to the Php4.109 Billion in 2017, while Interest expense increased by 94.1% in 2018 at Php2.187 Billion compared to the Php1.127 Billion in 2017 due to high-cost deposits. The consolidated Net Interest Income increased by 19.8% at Php3.574 Billion, while the consolidated Non-Interest Income of the Bank in 2018 amounted to Php553 Million, with share of fee-based income at 63%. Consolidated Net Income grew by 3.2% at Php317 Million. The Bank’s Return on Equity (ROE) is at 2.6% while Return on Assets (ROA) is at 0.3% level.

Legazpi Savings Bank (LSB) expanded its Microfinance and Teacher’s Loan portfolio through LSB kiosks established within the premises of selected branches of the Bank. It ended 2018 with

13 branches, 3 branch-lites, and 4 kiosks, and as of May 2019 it had 13 branches, 4 branch-lites, and 31 kiosks. Its loan portfolio increased by 4.3% at Php1.290 Billion by the end of 2018. Loans portfolio is at Php1.645 Million as of May 2019, which reflects a 47% increase year-on-year.

By the end of 2018, LSB had a Gross Income of Php220 Million, and Php144 Million at the end of May 2019. Net Income at the end of 2018 amounted to Php10 Million while a net income of Php17 Million was booked at the end of May 2019. Regarding the Bank’s Business Outlook, the President stated that the Bank plans to proceed with Corporate Bond Issuances. It intends to issue corporate bonds in the amount of Php10.0 Billion, which will be issued in several tranches up to three (3) years from Board approval and when the market becomes favorable.

The President also reported on the New Card Products of the Bank. First is “Robinsons Cashback Card” which is a co-branded Credit Card of the Bank with Robinsons Retail Group that will replace the Metrobank-issued Robinsons Mastercard. There will also be a Corporate/Commercial Card which will be a company/corporate-guaranteed credit card issued to respective employees for payment of various official expenses such as travel, entertainment, supplier payments, and the like. There will be a Robinsons Bank Secured Credit Card which is a card that is secured by an RBank deposit account and will be used to target the un-cardable base. There will be new features which will include balance transfer, credit to cash, transaction conversion, and balance conversion.

The President also mentioned the launch by the Bank on June 3, 2019 of an insurance program called IPONsurance, which is essentially a deposit account with a free life insurance coverage. As of June 20, 2019, 332 IPONsurance accounts have been opened, with an aggregate balance of Php49.08 Million.

The Bank had 162 branches at the end of 2018, 16 of which were LSB branches. By the end of 2019, the total number of branches are expected to reach 179. The 308 ATMs in 2018 are expected to reach 340 by the end of 2019.

There will be a pilot testing of the Agency Banking with Premiumbikes. The Agency Banking will cover Cash-in/Deposit, Cash-out/Withdrawal, Balance Inquiry, and Bills Payment, which will all be PIN Based (Card Present). The pilot testing will be done at the Taytay, Antipolo, Montalban, Bagong Silang, and Las Piñas branches of Premiumbikes.

The President also discussed the Digital Initiatives of the Bank, which include the digitization of the Personal Loan application process, Online Deposit Account Opening, the upgrading of the features and services of the Personal Online Banking website of the Bank, the Open Banking Architecture which will enable third-party Fintech apps to seamlessly and securely connect to RBank via Application Program Interfaces (API), the Omni-Channel Architecture, and the Robotics Process Automation.

For the Cards Business, active cards as of May 2019 are at 21,099. The Gross billings as of May 2019 is at Php672,216,065.00 and total Income is at Php49,776,900.00. Relative to Cards Merchant Acquiring, by the end of May 2019, 152 merchants have been onboarded, with 2,025 terminals therein. There was a total of 1.9 Million transactions with a merchant sales volume of Php13.6 Billion and Merchant Discount Rate (MDR) Revenue at Php258 Million.

The President also discussed the Business Outlook of the Bank for 2019. The Bank total consolidated assets is expected to reach Php164 Billion by the end of 2019, with projected consolidated gross loans amounting to Php94 Billion. Consolidated total deposits are estimated at Php137 Billion, and consolidated net income at Php817 Million.

The Chairman asked the stockholders present whether they had any questions regarding the report. After some discussion, stockholder Mr. Roberto S. Gaerlan moved that the President’s Report on the results of the operations of the Bank for the year ended December 31, 2018 and the Bank’s Audited Financial Statements for the same period be noted and approved, which was seconded by stockholder Mr. David C. Mercado. There being no objection from the stockholders present, the stockholders approved the following resolution:

Resolution No. 2019-02

“RESOLVED, that the President’s Report on the operations of Robinsons Bank Corporation for the year ended 31 December 2018 is hereby noted and approved.”

The Corporate Secretary recorded the following votes cast for this agenda item:

Vote Number of Votes (One Share Percentage of Shares – One Vote) Represented Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

VI. APPROVAL AND RATIFICATION OF ALL ACTS AND RESOLUTIONS OF THE BOARD OF DIRECTORS, BOARD-LEVEL COMMITTEES, AND THE MANAGEMENT FOR 2018

The Chairman informed the stockholders that the next item on the agenda was the confirmation and ratification of the acts of the Board of Directors, Board-level Committees, and the Management of the Bank, including related party transactions, for the year 2018. All of the said items were covered in the Information Statement and the President’s Report.

Upon motion duly made by stockholder Ms. Angeles Z. Lorayes that all of the said acts and transactions be, in all respects confirmed, ratified, and approved, which was seconded by stockholder Mr. David C. Mercado, and with no objections from the stockholders present, the stockholders approved the following resolution:

Resolution No. 2019-03

“RESOLVED, that all the acts of the Board of Directors, Board-level Committees, and Management, including related party transactions of Robinsons Bank Corporation (the “Bank”) for the year 2018 are hereby confirmed, ratified and approved.”

The Corporate Secretary recorded the following votes cast for this agenda item:

Vote Number of Votes (One Share Percentage of Shares – One Vote) Represented Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

VII. ELECTION OF BOARD OF DIRECTORS FOR THE ENSUING TERM

The Chairman proceeded to the next item on the agenda which was the election of members of Robinsons Bank’s Board of Directors for the year 2019-2020. The election is made in accordance with the Bank’s By-Laws where the directors of the Bank have a term of one (1) year, until the next election.

The Chairman declared that there are eleven (11) seats to be filled. The table was then opened for nominations to the position of members of the Board of Directors of the Bank, to serve as directors under the new term.

Stockholder Mr. Elfren Antonio S. Sarte moved to nominate the following as members of the Bank’s Board of Directors:

8. Ms. Esperanza S. Osmeña as Independent Director 9. Mr. Hermogenes S. Roxas as Independent Director 10. Mr. Roberto S. Gaerlan as Independent Director, and 11. Mr. David C. Mercado as Independent Director

Stockholder Ms. Robina Y. Gokongwei-Pe moved to close the nomination, which was seconded by stockholder Mr. Patrick Henry C. Go. There being no objections to the motion, it was carried and the Corporate Secretary was hereby instructed to cast all the votes of those present in favor of the nominees.

The Corporate Secretary recorded the votes of the stockholders present and represented. The Chairman requested the Corporate Secretary to apply all the votes of stockholders present and represented in the meeting in favor of the eleven (11) nominees. The Corporate Secretary confirmed that all the votes received have been applied, whereupon all eleven nominees were deemed duly elected Directors of the Bank to serve their 1 year term or until their successors shall have been duly elected and qualified.

The Chairman extended his congratulations to all the re-elected members of the Board of Directors of the Bank.

The following are the votes cast for this agenda item:

Nominee Vote No. of Votes (One Percentage Share – One Vote) of Shares Represented* 1. Mr. Lance Y. Gokongwei Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 2. Mr. Frederick D. Go Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 3. Mr. Elfren Antonio S. Sarte Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 4. Ms. Robina Y. Gokongwei-Pe Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 5. Mr. Patrick Henry C. Go Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

6. Mr. Omar Byron T. Mier Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 7. Ms. Angeles Z. Lorayes Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 8. Ms. Esperanza S. Osmeña Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 9. Mr. Hermogenes S. Roxas Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 10. Mr. Roberto S. Gaerlan Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 11. Mr. David C. Mercado Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100 *Rounded off to the nearest two (2) decimal points.

Resolution No. 2019-04

“RESOLVED, that all votes deemed cast in favor of all those nominated, the following are the new duly elected members of the Board of Robinsons Bank Corporation:

1. Mr. Lance Y. Gokongwei 2. Mr. Frederick D. Go 3. Mr. Elfren Antonio S. Sarte 4. Ms. Robina Y. Gokongwei-Pe 5. Mr. Patrick Henry C. Go 6. Mr. Omar Byron T. Mier 7. Ms. Angeles Z. Lorayes, as Independent Director 8. Ms. Esperanza S. Osmeña, as Independent Director 9. Mr. Hermogenes S. Roxas, as Independent Director 10. Mr. Roberto S. Gaerlan, as Independent Director 11. Mr. David C. Mercado, as Independent Director”

VIII. APPOINTMENT OF EXTERNAL AUDITOR

The Chairman announced that the next order of business was the appointment of the Bank’s external auditor for the year 2019-2020. The Audited Financial Statements of the Bank for the fiscal year 2018 was prepared by Sycip, Gorres, Velayo & Co. (SGV & Co.).

Stockholder Mr. Frederick D. Go moved that the same firm, Sycip, Gorres, Velayo & Co. or SGV be re-appointed as the external auditor of the Bank. Stockholder Mr. Hermogenes S. Roxas seconded the motion.

There being no objections, the Chairman declared that the motion is unanimously approved and SGV is hereby re-appointed as the Bank’s external auditor in the following resolution:

Resolution No. 2019-05

“RESOLVED, that the re-appointment of Sycip, Gorres, Velayo & Co. as external auditor of Robinsons Bank Corporation is hereby approved.”

The Corporate Secretary recorded the following votes cast for this agenda item:

Vote Number of Votes (One Share Percentage of Shares – One Vote) Represented Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

IX. OTHER MATTERS

The Chairman asked the Corporate Secretary if there are any other matters in the agenda. The Corporate Secretary then informed those stockholders present that in the previous year’s annual stockholders’ meeting, the stockholders, through a resolution, delegated to the Board the authority to amend the By-Laws to facilitate expedient revisions, which may be required by government regulators and/or to adopt good governance practices, without calling for another stockholders’ meeting. This delegated authority was transitory and was valid only until the next annual stockholders’ meeting.

The Corporate Secretary acting as such and as legal counsel of the Bank, recommended to the stockholders the renewal of the validity of the above-mentioned delegated authority to the Board for another year or until the next annual stockholders’ meeting for the same reasons that it was approved in the previous year.

The Chairman then opened the floor for any questions, clarifications, or discussions. After some discussions, stockholder Ms. Esperanza S. Osmeña moved that the authority delegated by the stockholders to the Board to amend the By-Laws in order to facilitate revisions which may be required by government regulators and/or to adopt good governance practices, be renewed for another year or until the next annual stockholders meeting. Stockholder Mr. David C. Mercado seconded the motion.

There being no objections, the motion was approved in the following resolution:

Resolution No. 2019-06

“RESOLVED, that the validity of the existing stockholders’ resolution delegating to the Board the authority to amend the Bank’s By-Laws to facilitate revisions which may be required by the government regulators and/or to adopt good governance practices be renewed for another year or until the next annual or regular stockholders’ meeting is hereby approved.”

The Corporate Secretary recorded the following votes cast for this agenda item:

Vote Number of Votes (One Share Percentage of Shares – One Vote) Represented Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

The Corporate Secretary also advised the stockholders that under Section 29 of the New Corporation Code which took effect on February 23, 2019, it is expressly provided that the directors or trustees shall no longer participate in the determination of their own per diems or compensation. To ensure flexibility, the Corporate Secretary recommended to the stockholders that in the event per diems of directors are to be adjusted to make the same competitive or commensurate to their responsibilities, or where compensation (other than per diem) is to be granted to some directors for additional duties given other than the usual attendance in Board and/or Board-level Committee meetings, the authority to approve adjusted per diems or grant of compensation be delegated to the Chairman of the Board upon recommendation of the President & Chief Executive Officer. He mentioned that this delegated authority may also be transitory and be valid only until the next regular stockholders’ meeting.

The Chairman then inquired from the floor for any questions, clarifications, or discussions on the recommendation of the Corporate Secretary. After a brief exchange, stockholder Hermogenes S. Roxas moved that the authority to approve adjusted per diems of directors or grant of compensation to some directors for additional duties given to them other than the usual attendance in Board and/or Board-level Committee meetings be delegated to the Chairman of the Board upon

recommendation of the President & Chief Executive Officer. Stockholder Mr. David C. Mercado seconded the motion.

There being no objections, the motion was approved in the following resolution:

Resolution No. 2019-07

“RESOLVED, that the authority to approve adjusted per diems of directors or grant of compensation to some directors for additional duties given to them other than the usual attendance in Board and/or Board-level Committee meetings be delegated to the Chairman of the Board upon recommendation of the President & Chief Executive Officer is hereby approved.”

The Corporate Secretary recorded the following votes cast for this agenda item:

Vote Number of Votes (One Share Percentage of Shares – One Vote) Represented Yes 1,499,975,258 100 No 0 0 Abstain 0 0 Total 1,499,975,258 100

X. ADJOURNMENT

The Chairman inquired whether or not there were any other items of business that needed to be discussed. The Corporate Secretary informed him that there are no more items in the agenda. As such, the Chairman opened the floor for a motion to adjourn. Stockholder Mr. Elfren Antonio S. Sarte moved that the meeting be adjourned. Stockholder Ms. Angeles Z. Lorayes seconded the motion. There being no objections, the meeting was adjourned.

CERTIFIED CORRECT:

ATTY. ROEL S. COSTUNA Corporate Secretary

ATTESTED BY:

LANCE Y. GOKONGWEI ELFREN ANTONIO S. SARTE Chairman President & Chief Executive Officer