Annual and Sustainability Report 2019 Building a Solid Foundation for a Sustainable Future CONTENTS About Our Report OVERVIEW 02 Our Business at a Glance 04 Message from the Chairperson 06 Report of the President and CEO Building a Solid Foundation 01 10 Financial Highlights for a Sustainable Future 14 Business Review OUR APPROACH TO SUSTAINABILITY At RCBC, we believe in playing our part Our report’s content and scope are 26 Our Sustainability Framework as one of the largest financial institutions based on our primary business areas in a country that ranks among the and sustainability-related initiatives 02 most vulnerable in the world to climate undertaken in RCBC Plaza in Makati City, change. The emerging challenges in our A.T. Yuchengco Centre in Taguig City, in ECONOMIC CONTRIBUTIONS world do not deter us, but all the more our subsidiaries and associate offices, 30 Economic Performance embolden us, to help more Filipinos and in our 507 branches nationwide tackle tomorrow’s challenges today. between January 1, 2019 and December Embedded in our corporate DNA is our 31, 2019. The economic value tables, 03 ability to forge partnerships with various including audited financial statements, stakeholders. We bring people together reflect consolidated figures. ENVIRONMENTAL CONTRIBUTIONS to achieve a shared purpose, thus 42 Environmental Performance magnifying the impact of our actions to As part of our ongoing efforts to build a sustainable future for all. engage stakeholders and to improve our reporting performance, RCBC welcomes 04 We recognize that the path to sustaining your feedback. You may reach us at: SOCIAL CONTRIBUTIONS the trust of our investors, customers, 58 Social Performance regulators, employees, and all of our Email: [email protected] stakeholders is through transparent and Tel.: (632) 8894-9000 responsible reporting. Thus, in addition to our financial performance, we are also An electronic version of this Report is CONTRIBUTING TO SUSTAINABLE DEVELOPment reporting our economic, environmental, also available at: 05 through our products and services and social contributions as a bank for the www.rcbc.com/annual-reports first time. 78 RCBC and the UN Sustainable Development Goals This 2019 Annual & Sustainability Report was prepared in accordance with the guidelines of the Bangko 06 STANDARD SECTIONS Sentral ng Pilipinas, and the Sustainability Reporting 82 Risk Management 186 Branch Directory Guidelines for Publicly Listed 130 Corporate Governance 202 Products and Services Companies of the Securities 158 Board of Directors 216 Rizal MicroBank Branch Directory and Exchange Commission. 164 Senior Management 217 Subsidiaries and Associates 07 174 Senior Officers 434 Shareholders' Information FINANCIAL STATEMENTS 218 Statement of Management’s Responsibility 219 Balance Sheets 08 240 Notes to Financial Statements 02 Building a Solid Foundation for a Sustainable Future RCBC 2019 Annual & Sustainability Report 03 Our Business at a Glance Rizal Commercial Banking Corporation Net interest income comprises 62.0% of (RCBC) traces its beginnings as a its total operating income, while 38.0% development bank established in 1960. of the balance is derived from fees or It has grown to become one of the largest commissions from other financial services universal banks in the Philippines with total and activities, and trading income from consolidated resources of Php767.1 billion proprietary trading activities. as of 31 December 2019. In 2019, RCBC merged with its thrift unit, RCBC Savings Ownership Bank. RCBC is majority-owned by the Yuchengco Group of Companies (YGC), one of RCBC operates from its corporate the oldest and largest conglomerates headquarters in Makati City, Philippines. in Southeast Asia covering over 60 It has more than 6,611 employees as of end- businesses. YGC businesses include 2019. Malayan Insurance (non-life insurance), SunLifeGREPA Financial, Inc. (life insurance PRODUCTS AND SERVICES joint venture with Sun Life Financial Philippines); EEI Corp. (construction); As a diversified financial services institution, educational institutions, and vehicle RCBC serves corporate and individual dealerships. Aside from YGC, RCBC’s banking needs, providing a wide range of other significant investors include Cathay financial services to its customers through Life Insurance Co., Ltd., a wholly owned its retail and investment bank, microfinance subsidiary of Cathay Financial Holding., unit, foreign exchange brokerage house, Ltd.; and the World Bank’s International leasing company and overseas remittance Finance Corporation. tie-ups. In synergy with SunLife GREPA Financials (SLGFI) and Malayan Insurance Awards and Recognitions Company, Inc. (MICO), RCBC also offers As a financial institution noted for various investment-linked life insurance products, pioneering innovations, RCBC continued auto, fire, personal accident, and other to reap major awards in 2019, a year when non-life insurance products. It also serves many banks felt the pinch from many global the country’s microenterprise and small challenges. business operators, as well as value chain players in the agricultural sector, through its These awards and recognitions from various microfinance arm, Rizal MicroBank (RMB). institutions included "Best Banking Group in the Philippines" from World Finance, Delivery Channels and "Best in Private Banking" from AI RCBC has a strong and extensive domestic Global Awards. RCBC was also recognized distribution network of 507 branches. by several international award-giving Through RMB, our presence extends to bodies for taking the lead in financing key areas in Luzon, Visayas and Mindanao some of the country’s major infrastructure with a total of 17 branches and four micro- projects. These recognitions are: “The banking offices. Asset Benchmarking Award for Excellence in Environmental, Social, and Governance In addition to its branch locations, its (ESG) – Titanium Award,” “Best Issuer for Sustainable Finance – Financial Institution,” traditional delivery channel, it also serves VISION MISSION customers via its 1,530 ATMs all over the and “Best Sustainability Bond” for the Bank's Php8.0-billion ASEAN Sustainability country, through the internet, and mobile To be the most admired and trusted profitable financial We are a leading universal bank, providing quality banking (IOS and android applications). Bond, the first ASEAN Sustainability Bond Integrated Financial Services that best meet our clients’ issued in the Philippines. services group providing and adapting to customers’ changing needs - for every Filipino worldwide - through needs. We are committed to conducting our business Corporate Citizenship innovative products, excellent service and a highly with utmost integrity, excellence, and commitment Business Model as responsible corporate citizens; and, providing RCBC is committed to uplifting the quality motivated, committed and impassioned team. RCBC lends to corporations and individuals. professional growth opportunities to develop a talented of people’s lives through its corporate social It derives its funding from customer base of officers and employees, and achieving the best responsibility (CSR) and environmental deposits, which account for nearly 60.0% returns for our stockholders. of its total resources. This is supported by sustainability programs. Through the AY other borrowings at 30.0% and capital at Foundation, the CSR arm of the YGC, RCBC 11.0%. Its main source of revenue is from its helps rehabilitate calamity-stricken areas, lending business, which account for 59.0% bankrolls projects on sustainable livelihood, of total resources. and grants educational scholarships for the youth. 04 Building a Solid Foundation for a Sustainable Future RCBC 2019 Annual & Sustainability Report 05 Message from the Chairperson Dear shareholders, customers, colleagues, and partners: As we prepare this annual letter to this pandemic will pose a challenge to “Now more than ever, our shareholders, the whole world our business, as with others, but will is battling a global pandemic from not make us waver in our commitment we need passionate and COVID-19 — one that threatens to do more as a responsible corporate our survival and is bound to have a entity. motivated employees to get profound impact on the way we live. As a bank, we remain strong, resilient, our customers out of this The fact that this global threat emerged and well-positioned to support our just as we are preparing to release our clients, customers, communities, storm and to safer harbor; 2019 Annual and Sustainability Report and our nation particularly during forces us to confront the question: how this difficult time. But, as this global a strong balance sheet that do we talk about sustaining the future pandemic has taught us, we need post-COVID-19? each other to pull us through. That allows us to invest in good is why we are not only stepping up In recent history, the term “new normal” our commitment, but also in the way times and in bad times; a has been used to describe financial we collaborate. This crisis offers us proactive risk assessment conditions following the 2008 global yet another opportunity to foster a financial crisis. In 2019, we faced collaborative culture of bayanihan and management model to the lingering U.S.-China trade war, where everyone will have equal access the United Kingdom’s exit from the to services and benefits, including guide us in making quick European Union (‘Brexit’), the political access to much-needed financing.