2017 ANNUAL REPORT About the Theme 2017 ANNUAL REPORT
Our goal at Philippine Veterans Bank (PVB) is to build a sustainable and profitable bank that generates enduring value for our shareholders, primarily the World War II veterans and their heirs whom we continue to serve. Over the past three years, our efforts to turn around PVB has always dominated our corporate story. In 2017, we made significant progress in our efforts, inching closer to regaining our financial strength and putting the past behind us.
Thus, our 2017 annual report theme, “Building a Solid Foundation,” captures this continuing mission, as we serve today’s customers in a way that also safeguards future generations and preserves our legacy and that of our forefathers. TABLE OF CONTENTS
About Risk and Philippine Capital 02 Veterans Bank 20 Management Financial Corporate 04 Highlights 36 Governance Message of the Board of 05 Chairman 50 Directors Report of the Management President and Committee 08 COO 54 Operational Senior 12 Highlights 58 Officers Corporate Social Products 16 Responsibility 59 and Services Branch 60 Directory
Annual Report 2017 — 1 ABOUT PHILIPPINE VETERANS BANK
We are the preferred bank, serving beyond our heroes’ dream and living their legacy, founded on the fundamental values of professionalism, Integrity and excellence. Our We are committed to building our country by improving the quality of life of our citizenry, developing communities, and providing utmost care and Vision attention to our citizens’ and other stakeholders’ welfare.
Provide value-adding and innovative financial products and services that are tailor-fit to the needs of our niche markets.
Provide our customers with the highest standard of service in terms of delivery, continuous improvement and adaptability to their needs and Our expectations.
Mission Ensure sustainable sound profitable growth of the Bank.
Provide our employees with a healthy working environment that promotes learning and development, career growth, performance-driven recognition, and employee welfare, wellness and well-being.
Work with our regulators in ensuring that making of a robust banking industry that will help in the development of our country.
Ensure a reasonable and sustainable return of the shareholders’ investments for their benefit and welfare.
We aspire to be the Filipino heroes’ bank of choice, offering a wealth of deposit and loan products that cater to their everyday and critical needs.
2 — • Building a Solid Foundation 01
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Private Ownership As part of its charter, PVB must set Customer Reach Philippine Veterans Bank (PVB) is a aside 20% of its annual net income PVB caters to both corporate and private commercial bank owned by for the benefit of WW II veterans retail financial markets. It offers Philippine World War II veterans and and their heirs through the Board deposit and loan services, treasury their families. of Trustees of the Veterans of World products, trust services, institutional War II (BTVWWII). banking, and other services. The concept of a bank for veterans of WW II was conceived Unique Franchise As of end-December 2017, PVB has in 1956, when a war reparations While PVB was conceived and 60 branches and 139 ATMs (of which agreement was signed between created as a private commercial 86 are off-site) strategically located the governments of Japan and the bank owned by WW II veterans, nationwide. Philippines. Under Republic Act (RA) Section 27 of RA 3518 provided that No. 1789, or the Reparations Act, the it would be a government depository The New Rural Bank of Agoncillo in cash reparations were set aside into as a gesture of appreciation by Batangas, which PVB acquired in a special trust fund for the use of a grateful nation to the veterans 2016, supports its thrust to promote WW II veterans and their families. for sacrificing their freedom. This countryside development. mandate to accept government On June 18, 1963, PVB was created funds from national agencies, local with the enactment of RA 3518, government units, and government- which became its charter. owned and –controlled corporations was reaffirmed under Department of Finance Circular 01-2017.
Annual Report 2017 — 3 FINANCIAL HIGHLIGHTS
In Million Philippine Pesos (except ratios, per common share data and others) Consolidated Parent Bank 2017 2016 2017 2016 Profitability Total Net Interest Income 1,600 1,265 1,596 1,267 Total Non-Interest Income 424 481 374 441 Total Non-Interest Expenses* 2,236 2,013 2,183 1,977 Income Before Income Tax (212) (267) (213) (269) Allowance for Credit Losses 216 80 212 80 Net Income (405) (474) (405) (474) Selected Balance Sheet Data Liquid Assets 31,377 33,402 31,261 32,565 Gross Loans and Receivables** 19,040 18,374 18,992 18,360 Total Assets 50,090 51,195 49,921 51,067 Deposits 44,343 44,988 44,349 44,973 Total Equity 4,117 4,647 4,117 4,647 Selected Ratios Return on Equity (9.25) (9.86) (9.24) (9.86) Return on Assets (0.80) (0.93) (0.80) (0.93) CET 1 Capital Ratio 8.76 11.35 8.85 11.43 Tier 1 Capital Ratio 10.21 12.88 10.30 12.97 Capital Adequacy Ratio 10.83 13.32 10.92 13.41 Per common share data Net Income per Share: Basic (17.60) (20.59) Diluted - - - Book Value 163.71 186.85 163.72 186.86 Others Cash Dividends Declared - - Headcount Officers 277 278 Staff 600 581 * Total Operating Expenses per Audited FS inclusive of Provision for impairment and other credit losses ** Consist of Interbank Loans and Receivable, Loans and Receivables - Others and Loans and Receivables Arising from Repurchase Agreements
4 — • Building a Solid Foundation MESSAGE FROM THE CHAIRMAN
The theme of our 2017 annual While slightly slower than the 6.9% report, “Building a Solid Foundation,” GDP increase in 2016, this was still captures our overarching goal: to impressive given that 2017 was a build a sustainable and profitable post-election year. It was also the Building bank that generates enduring value sixth straight year that the country for our shareholders, primarily the became one of the fastest-growing on Our Legacy 384,000 World War II veterans and economies in Asia, thanks largely to their designated heirs we continue record-breaking overseas Filipino to serve. workers’ remittances, revenues from business process outsourcing, as As Philippine Veterans Bank (PVB) well as government spending on inches closer to celebrating its 26th infrastructure, which is expected to year in business, it is gratifying persist well into 2018 with a record to note that we are also setting P3.8-trillion government budget. the stage for attaining a new high-water mark in our corporate Expanding Our Reach history. In 2017, we were able to With 2017 becoming another gradually return the Bank to the “breakout” year for the Philippine path of financial growth by posting economy, PVB was able to partake its highest-ever gross income on of the gains. In spite of the feverish record. This was in spite of the competition, we were able to uncertain conditions in the local and fully serve our niche market and global business environment under gradually evolve into a serious which those results were achieved. player in the local banking industry.
Globally, 2017 remained a During the year, we also managed to challenging year. Sluggish growth attract many corporate borrowers, hounded most developed thereby significantly shoring up economies like the United States our institutional banking portfolio and many countries in Europe. and allowing us to go beyond our The world experienced major primary market comprised of war political developments that went veterans and their descendants. counter to the projections of most pundits and caught many by Another positive development was surprise. the restoration of our presence in the local government unit (LGU) Closer to home, however, Asia market. This was after the current remains a shining spot for the world. administration nullified a circular It continues to deliver strong growth of the previous administration in the face of growing protectionism, that mandated the transfer of LGU rapidly aging societies, and slow deposits solely to government productivity. The Philippines, which financial institutions. is geographically at the heart of the action, grew its GDP by 6.7% in 2017.
Annual Report 2017 — 5 MESSAGE FROM THE CHAIRMAN
Through the combined efforts of Flexing Our Financial Muscle With a more cohesive and dynamic our Board of Directors and senior PVB is a bank with a big heart. team and increased capitalization, management team, PVB was able It serves its mandate to the Filipino we can expect a bank that will be to assert its authority to accept nation and those who gave up their in far better shape than what I government deposits, as mandated life for the country. However, to inherited when I became Chairman by law. Our Charter, Republic Act serve more Filipinos, the Bank must in 2013. This redounds to the benefit 7169, grants this special privilege also possess a big chest. of our stakeholders, as the stronger as a grateful gesture of the nation’s the Bank becomes, the more it will appreciation for the service of our Thus, in a special stockholders be in a position to address the needs World War II veterans who own the meeting last November 2017, we of our beloved veterans and their Bank. With the new Department of unveiled our plan to embark on a designated heirs. Finance memorandum circular, PVB capital-raising exercise. In 2018, again started to enjoy a more robust the Bank plans to raise as much The time-honored values they pass deposit base in 2017. as ₱4 billion in fresh capital to on to us — integrity, commitment, boost its competitive footing in the honor, and love of country — have The Bank also expanded its banking industry. We are pleased set us apart as a bank. By being customer reach to all other veterans to report that we have already been there for our customers and for its pension loans. In addition to receiving expressions of interest shareholders, we have been able to extending its services to the veterans from our existing stockholders serve our mandate filled with pride, of World War II, it now also offers who are encouraged to participate and look towards the future with financial assistance through pension and will be given priority in this optimism. loans to retirees of the Armed capital call. This means that the Forces of the Philippines (AFP), and Bank will proceed with a high level We thank all of our shareholders soon the Philippine National Police of confidence, and even more for your continuing confidence and the Philippine Coast Guard. so once we are able to grow our in Veterans Bank. I would also With the dramatic expansion in our financial muscle. This would allow like to thank our dedicated Board pension loan portfolio, PVB is now us to further expand our lending members and management team uniquely positioned as the leading programs and nationwide footprint. for working tirelessly to ensure the provider of financial services to Bank’s sustained success. military veterans. Moving Full Steam Ahead While we have already accomplished I look forward to continuing this Lastly, through our rural bank much in 2017, there is still much journey together in 2018 and subsidiary, the New Rural Bank of more work to be done. Thus, we beyond. As your Chairman, it is a Agoncillo, we are able to interact continue to professionalize and privilege to serve you. with the rural banking community up-skill our senior officers and staff and contribute to building to revitalize our organization. We countryside growth through brought in more experienced people innovative lending programs for to head our key business units such agriculture and agrarian reform, as Institutional Banking, Branch small and medium enterprises, as Banking, and Human Resources. ROBERTO F. DE OCAMPO, OBE well as micro enterprises. Chairman
6 — • Building a Solid Foundation In 2017, we were able to gradually return the Bank to the path of ROBERTO F. DE OCAMPO, OBE financial growth by posting its highest-ever gross income on record. Chairman
Annual Report 2017 — 7 REPORT OF THE PRESIDENT AND CHIEF OPERATING OFFICER
2017 has been another very Boosted by the robust performance challenging year for Philippine of our institutional banking, Veterans Bank (PVB), given the branch banking, and an efficient growing competition that has management of our balance sheet Poised reacted to our success, coupled with by our Treasury Group, the Bank tightening regulation and policies was able to grow our total loan for an Upswing in the local banking industry. Still, portfolio to ₱16 billion in 2017 from we remain extremely positive and ₱13 billion previously. confident about the future of this great Bank, in pursuing objectives While deposits of ₱44 billion put in place by management. we generated were lower than year-ago’s ₱45 billion, we remain For many, PVB is a unique and iconic confident that we can work towards franchise that symbolizes Filipino our target in 2018. This was after bravery, heroism, resilience and the Department of Finance (DOF) service to country. After all, the issued Circular 01-2017, affirming Bank was built on the blood, sweat, PVB’s rightful authority to accept and tears of war heroes whom we government deposits under Section continue to honor by fulfilling our 27 of our Charter. With this clear Charter’s mandate of allocating 20% mandate, we can now continue to of our annual net income for their rebuild our banking relationships benefit. We are always conscious with LGUs and state-run corporations, of this huge responsibility, not alongside attracting new clients from just to our World War II veterans the public sector. and their heirs, but also to our customers and our employees who Our total resources remained highly are also shareholders of the Bank liquid at ₱50 billion while our capital by virtue of being the descendants stood at ₱4 billion. of our veterans. This also makes us relentless in our continued pursuit What these numbers do not to completely turn the Bank’s reveal, however, is the story of our financial state around. persistence.
Financial Results Behind the Numbers While our bottom line in 2017 When I joined the Bank three still leaves room for further years ago, it was coming from a improvement, our overall financial potential ₱1.6-billion loss, as the performance nonetheless continues Bank then was merely depending to advance, giving us assurance that on non-recurring income from we will soon reemerge financially. the sale of assets to survive. Not too many believe that a bank Inching closer to this goal, we were like PVB, perceived to be largely able to trim down our net loss by catering to war veterans, would another 15% to ₱405 million in 2017 even make money from regular from the year-ago level. Had we not banking products. But like our war set aside loan loss provisions, we heroes, we at PVB bravely took on could have reported a lower loss of the challenge to prove the pundits ₱200 million, consistent with our wrong. Since the time I joined, we effort to bring the Bank towards have already successfully shored up sustainable and profitable growth. our bottom line by more than ₱1 billion from our potential losses.
8 — • Building a Solid Foundation Over the years, we continue to make some difficult but strategic NONILO C. CRUZ decisions, placing our customers and our shareholders at the President and Chief Operating Officer heart of all we do to rebuild the business.
Annual Report 2017 — 9 REPORT OF THE PRESIDENT AND CHIEF OPERATING OFFICER
Our hard work is not yet over • Offering the Right Products to the safeguards, we entered into though. Right Market. Our business has memoranda of understanding always been at its best when we with the labor unions of the Over the years, we continue to make our customers our absolute Department of Environment make some difficult but strategic priority. Having a unique franchise and Natural Resources and the decisions, placing our customers and like PVB demands that we tailor-fit Department of Public Works and our shareholders at the heart of all our products and services to the Highways. We plan to pursue we do to rebuild the business. specific needs of our customers. similar schemes to further grow our Salary Loan market that leads • Getting the Right People for the After successfully repackaging to portfolio growth. Right Jobs. Our primary mandate and relaunching our Pension Loan from Day One is to rebuild product in 2016, we embarked Our Micro, Small and Medium PVB’s banking operations. This on a nationwide information Enterprise (MSME) loan products, is why we regard investing in campaign to ensure a personal which we launched in 2016, experienced human capital as a and direct relationship with our continued to fortify our MSME wise investment, and not as an market. We also started catering team to improve the processing expense. We believe getting the to an expanded market, which and servicing of MSME loan right people for the right positions now includes more than 120,000 referrals from our nationwide will eventually pay off in terms of retirees of the Armed Forces of branch network. In 2017, we hired operational efficiency and vastly the Philippines (AFP), in addition a new MSME Head who has a vast improved financial performance. to the thousands of pensioners experience in the business and of the Philippine Veterans Affairs this is showing great promise in Since 2015, we acquired high- Office (PVAO), after PVB entered helping build our position in this caliber talents across our into a memorandum of agreement market. management team. We now to become an accredited pension have the right balance of skills, loan provider of the AFP in 2016. We continue to fulfill our experience, and background mandate to help spur countryside to help achieve our strategic While we still need to further step development through our objectives. Our new Head of up our bookings of new pension subsidiary, the New Rural Bank of Human Resources is improving the loans, we were able to successfully Agoncilio in Batangas. In 2017, we pace of identifying and onboarding grow our portfolio to ₱2.5 billion harnessed our partnership with new PVB personnel under a in 2017 from ₱1.7 billion in 2016. the Rural Bankers Association of more-focused talent acquisition After a year of experience in the Philippines (RBAP) to promote program. We also hired dedicated building a relationship with AFP structured agricultural loans that sales and marketing, and customer retirees, we now have a developed would help spur productivity in the support people for our Branch and more focused road map to countryside. Banking business, as well as new further grow our pension loan relationship managers for our portfolio in 2018. Expanding our market segments Institutional Banking business. In and having a more efficient branch addition, we are rolling out much- We are also cultivating our market service delivery and more focused improved training programs for for our Salary Loan product. product sales approach enabled middle managers and support After the Department of Finance PVB to realize a higher net interest staff to build capability. Because recognized PVB’s right to accept income of ₱1.6 billion in 2017 from of these initiatives, the Bank was government deposits under our ₱1.3 billion, the year before. We able to manage the cost and kept Charter, we are now rejuvenating expect to double our Branch loan compensation and fringe benefits our banking relationships with portfolio to propel the Bank to a almost flat at₱ 723 million in 2017. LGUs and public sector agencies, positive financial performance in including handling their payroll 2018. accounts. After establishing credit
10 — • Building a Solid Foundation • Ensuring Operational Efficiency. poised to grow the capital muscle today’s customers in a way that During the past year, there has we need to fully take advantage of also safeguards future generations. also been a renewed focus on emerging opportunities from our We are proud to have a valuable risk management. We hired a fast-growing economy and rapidly franchise and a very attractive new Risk Officer who has a better changing technology. In a special business model that will enable grasp of the risk environment and stockholders meeting in November us to dramatically transform our the controls needed to ensure an 2017, we obtained approval to raise organization in the years to come. integrated approach to managing as much as ₱2 billion in fresh capital current and emerging threats to to boost our competitive footing in our business. the banking industry.
We also further strengthened We realized that we have a unique NONILO C. CRUZ our adherence to corporate and solid franchise that allows President and Chief Operating governance principles, spending a our shareholders to participate in Officer significant proportion of our time charting the destiny of their bank. in examining and strengthening This is why we enjoined them to our processes throughout the subscribe to either common shares organization. We believe that or Additional Tier 1 capital securities having a solid governance that will be allocated to our 380,000 framework is key to rebuilding war veterans and potentially their trust and transparency. Given direct descendants and other the Bank’s complex IT system, we qualified investors. also ensured that our IT Group (ITG) has a full understanding of This capital raising exercise marked what the Bank needs to support a significant milestone in PVB’s our service delivery. Thus, we history, as this is going to be the established a sales committee first time we are expanding the that includes the ITG Head to shareholder base of the Bank albeit immediately identify and support faithfully adhering to the provisions the requirements of our business in our Charter. This could also units. This more collaborative possibly be the first time a company process should lead to greater will raise additional Tier 1 capital of productivity for PVB. this magnitude in the Philippines.
Beyond the Bottom Line We recognize that our responsibility Over the past three years, our is mainly to our war veterans and efforts to turn around PVB has their families but more so, towards always dominated our corporate the society we serve and operate in. story. It is only by looking after the welfare of our heroes, supporting our In 2018, we expect to regain our customers, and helping communities financial strength and put the past to succeed, that we will become a behind us. more sustainable bank.
As we prepare to open this new We are committed to running PVB as chapter in PVB’s history, we are a more sustainable business, serving
Annual Report 2017 — 11 OPERATIONAL HIGHLIGHTS
Branch Banking Amid an organizational transformation to boost profitability and performance standards, the Branch Banking Group (BBG) managed to generate ₱44 billion in deposits in 2017.
The year marked the restoration of the Bank’s rightful authority to accept government deposits under Section 27 of its Charter after the Department of Finance issued Circular 01-2017, affirming PVB’s mandate. With this, the Bank can now rebuild its banking relationships with local government units (LGUs) and state-run corporations. In 2017, BBG was also able to expand its government clientele for Salary Loan to include the Department of Environment and Natural Resources’ Multipurpose Cooperative and the Armed Forces of the Philippines (AFP).
BBG also mounted activities to promote and expand its market for the Bank’s flagship and high-yielding products, Pension Loan and Salary Loan. It held simultaneous roadshows to generate product awareness; capitalized on its long-standing relationship with the Veterans Federation of the Philippines-Sons and Daughters Association, Inc.; and strengthened our relationship Our ATM cards now feature with the AFP Pension and Gratuity EMV chip technology for greater Management Center to facilitate security and protection. the efficient release of pension loans.
As a result of these efforts, BBG was able to expand its pension loan portfolio to ₱2.5 billion, a 52% improvement from the 2016 level.
12 — • Building a Solid Foundation Institutional Banking from wholesale and retail trading, as In the face of major transformation well as manufacturing. and reorganization, the Institutional Banking Group (IBG) brought The Consumer Lending Division significant value to the Bank through (CLD), serves the dynamic consumer a whole range of innovative banking banking requirements of our clients. solutions to customers. It continued In 2017, the Bank booked a total of to address the banking needs of ₱340.2 million in consumer loans corporate and institutional clients of from ₱282.1 million in 2016, a 21% various types and sizes. climb. Interest income and other income stood at ₱94.4 million and IBG is composed of 4 main divisions: ₱2.4 million, respectively, due to Relationship Management Division increased consumer loan bookings. 1 for the private sector; Relationship Management Division 2 for local The Bank established more tie-ups government units; Consumer with real estate developers, which Lending Division and Micro and resulted in more loan referrals. Small and Medium Enterprises (MSME), which was merged under the group in 2017.
The year also saw the IBG onboarding additional senior officers, relationship managers, and marketing assistants. The move allows the Bank to deliver superior financing solutions, packages, and services to its clients.
With this revamped team in place and an intensified focus on private sector accounts, IBG posted a 20.2% growth in assets, closing the year at ₱11.1 billion. It accounted for 71.4% of the Bank’s total loan bookings, spread across industries. New accounts onboarded largely came
We sit down with corporate and institutional clients of various types and sizes to provide a roster of innovative banking solutions.
Annual Report 2017 — 13 OPERATIONAL HIGHLIGHTS
Trust and Investment Treasury Apart from building stronger ties Performance in 2017 vs. 2016 The Bank’s Treasury Group with the Bank’s other business remained resilient amid headwinds units to raise further awareness that hit domestic and international around trust products and financial markets in 2017. Treasury services, TID is actively offering worked towards continuous Investment Management Account growth and stability through the arrangements with government- prudent control of risks on portfolio owned and -controlled corporations 16%growth in Assets holdings, combined with efficient and developing new offerings that management of the Bank’s balance skillfully navigate clients’ changing sheet and liquidity. needs, enabling the Bank to maintain its competitive edge in the Treasury also undertook product market. enhancements and seized cross- selling opportunities, which took Information Technology ₱ off in 2015 in support of the Bank’s 2017 marked a busy season for the billion Assets10.2 held in Trust brand overhaul and expansion of Information Technology Group (ITG), client base. This enabled Treasury which enhanced its IT infrastructure to increase the volume of its client- and rolled out new and upgraded based transactions, which in turn systems for greater business translated to improved business efficiency and customer experience. flow for the Bank. ITG enabled PVB to comply with Going forward, Treasury is counting various regulatory requirements on the full integration of its involving security and fraud treasury system to benefit from protection. ITG upgraded the Bank’s improved trading capabilities and term deposit system to fully comply agile movement amid changing with the Know Your Customer regulations and customer demands. (KYC) requirements of the Bangko Sentral ng Pilipinas (BSP), as well Trust and Investment as implemented the check image Despite the volatility that hounded clearing system (CICS) to convert the financial markets in 2017, our traditionally paper-based system Trust and Investment Division into an image-based check clearing (TID) delivered a commendable system. performance and contributed positively to the Bank’s bottom line. ITG also enhanced the Bank’s loans Total assets grew 16% and reached collection system for effective ₱10.2 billion, compared with ₱8.8 management via accurate recording billion in 2016. and monitoring of related efforts. It also prepared the Bank’s ATM As the Bank’s fiduciary arm, TID terminals to accommodate EMV chip focused on growing the business technology on all cards. with an array of products and services that cater to the unique needs ITG also enabled the Treasury Group of our clientele, including investment to migrate to a fully integrated front- management account, employee middle-back office solution that benefit trust, personal management can perform data analytics, stress trust, escrow arrangements, facility testing, real-time pricing, and other agency, safekeeping, and mortgage capabilities that enhanced flexibility trust indenture. and service delivery.
14 — • Building a Solid Foundation 2017 also saw other ITG initiatives such as server virtualization, In 2017, we reinvigorated bandwidth upgrading, and network our Performance monitoring. These formed part Management System of the bigger aim to optimize the (PMS) to further instill Bank’s IT infrastructure, establish a performance-based reliable internet connectivity and culture in the Bank and backup, ensure business continuity better equip our people and disaster recovery, and spell to take the Bank through greater efficiencies in various areas transformation and to of its operations. a bright future for our customers. The banking environment is faced with growing interconnection and steadily increasing threats to cybersecurity. Thus the ITG continued to beef up the Bank’s Units (BU) reviewed its current concrete support for enhancing overall security framework and functional structure vis-à-vis its performance. The employee practices in 2017. It undertook business processes and capacity. or “ratee” and the immediate firewall implementation at This aims to achieve greater supervisor or “rater” collaborate disaster recovery site for business customer orientation, increased to review work performance continuity, as well as upgraded efficiency and productivity, and anchored on established and time- anti-virus, email security, and web optimally operating organizational honored standards, discuss ways security systems to shield against talent. for improvement, and identify virus penetration from all sources goals for professional growth. This and thwart message-based and Our transformation project also process paves the way, not only web-based attacks. It also fielded involved coming up with a 2020 for individual career development, additional defense against external vision to set the Bank’s roadmap but also for efficient succession attacks via perimeter firewall for the future. HR systems were set planning. implementation, which blocks access up to support the changes that we to inappropriate content from inside envision to happen in pursuing this In 2017, the Bank also strengthened our organization. roadmap. its talent bench by filing up 78% of identified critical positions in the Human Resources We revisited and revised our organization and by successfully As part of the Bank’s strategic Performance Management System recruiting new talents within 90 objectives, our Human Resources (PMS) to promote a performance- processing days on average. Division (HRD) embarked on several based culture in the Bank. This initiatives in 2017 that focused on crucial tool is used to record and With a strong and vibrant workforce, building human capital as a major reflect individual employees’ work the Bank is well positioned to step towards future-proofing the performance in a manner consistent become a significant mover in business and mobilizing the best with the Bank’s expectations, as it the banking community, and be workforce possible. provides feedback, based not only the bank of choice of Filipino on “what” has been accomplished, war veterans. It begins with our We started marching towards the but also on “how” the work was unwavering belief in our people: we future by fostering organization- undertaken. take their interests to heart and look wide change and transformation, after their health and well being, and taking a look at the internal and A key feature of the PMS is the then equip them with the tools they external environment, structure, Performance Improvement Plan need to reach their full potential. and people. Upholding the (PIP) that respects differences organizational principles of lean and among employees, encourages keen, each of the Bank’s Business positive change, and provides
Annual Report 2017 — 15 CORPORATE SOCIAL RESPONSIBILITY
At Veterans Bank, giving back is not with the History Channel, and in just a commitment; it is a mandate. coordination with the Philippine Our Charter requires us to allocate Veterans Affairs Office (PVAO), the 20% of our annual net income for Provincial Governments of Bataan, Preserving the benefit of World War II veterans Pampanga and Tarlac, and AAP and their heirs through medical and Travel. The two-day event covered Our Legacy livelihood programs. three provinces: Bataan, Pampanga, and Tarlac, also tracing the actual We continued to preserve the legacy route of the Death March. of our shareholders by supporting various activities in 2017. The twin events raised over ₱500,000, which will go to the 75th Philippine Veterans Week: restoration of WW II historical History Relived markers about the Battle for Bataan We joined the nation in and the Death March. commemorating the 75th Philippine Veterans Week through the Bataan 72nd Liberation of the Philippines: Freedom Run and Freedom Trail in A National Celebration April 2017. Every third of September, the City Government of Baguio The Bataan Freedom Run, held celebrates the Baguio City Day to in partnership with the Provincial commemorate the surrender of Government of Bataan, Municipality Japanese soldier Gen. Tomoyuki of Mariveles, Freeport Area of Yamashita to Allied troops on Bataan, and the Philippine Veterans September 2, 1945 in Kiangan, Affairs Office (PVAO), was held on Ifugao. While this signified the end April 2, 2017 at the Freeport Zone of WW II in the Philippines 72 years in Mariveles, Bataan. The event ago, the event has largely remained drew over 1,300 runners of all ages a local commemoration in Kiangan, who competed in the run’s various Ifugao and Baguio City. distances including 1K, 5K, 10K, 21K, and the ultra-marathon at 42 To generate national attention kilometers. Winners were showered to the historic event, we in colors as they breezed through extended assistance to the local the finish line. government of Baguio City so the local celebration could be On its fourth year, the Bataan commemorated nationwide and Freedom Run was held to honor the remind today’s generation and thousands of Filipino and American peace-loving Filipinos about the prisoners-of-war in Bataan province significance of September 3 in when they were forced to march by relation to ending WW II. their Japanese captors after the fall of Bataan and Corregidor, known Thus, in partnership with the City in history as the Bataan Death Government of Baguio and Baguio- March. The Bataan Freedom Run PMA Host Parents Association, we saw participants traversing the same commemorated National Victory Day historic route 75 years ago. and Baguio Day with the 1st Baguio and Victory Day Golf Tournament In addition, the Bank also held the at the Baguio Country Club on first-ever Freedom Trail (Mariveles- September 2, 2017. The event San Fernando-Capas) in partnership aimed to raise national awareness
16 — • Building a Solid Foundation Left: The Bataan Freedom Run continues to honor the thousands of Filipino and American prisoners- of-war who were part of the grueling Bataan Death March after the fall of the province during WWII.
On its 4th year, the event drew over 1,300 runners of all ages and raised funds for the restoration of WWII historical markers about the Battle for Bataan and the Death March. and recognition of our forefathers’ PVB History Wall: In 2017, we added 11 branches with bravery, patriotism, and love of More Than a Gallery PVB History Walls. These branches country after gallantly resisting and Seeking to revitalize our brand are: victoriously capturing a commanding image and emphasize our • Lingayen officer of the invading force. uniqueness in the Philippine banking • Parañaque City industry, we embarked on a branch • Clark Proceeds from the tournament will redesign program and mounted • Taguig be used for the construction of the dedicated walls that detailed • Iloilo proposed marker at the Veterans historic events and images of the • Baguio Park Branch in Baguio City or for any city during WW II. The PVB History • Davao other WW II history-related projects Wall is prominently displayed on all • San Fernando, Pampanga in the “Summer Capital of the our branches to pay homage to our • Paniqui Philippines.” shareholders, the nearly 400,000 • Camp Crame Filipino heroes of the war. • Lucena
Annual Report 2017 — 17 CORPORATE SOCIAL RESPONSIBILITY
Above: Our award-winning traveling exhibit of World War Below: The History Wall in every PVB branch retells the II historical panels, war-era jeep, and refurbished M1- story of heroism of recognized freedom fighters and Stuart tank wowed the 68,800 visitors of the History Asia ordinary Filipinos alike. Convention at the World Trade Center in Pasay City.
18 — • Building a Solid Foundation Each branch’s History Wall features Valor: The Documentary The lead agencies for the project a montage of events during the In coordination with Spyron-AV are the PVAO, the Filipino War Liberation, a reminder that freedom Manila, we showcased our latest Veterans Foundation, and GeoEstate fighters did not have a monopoly docu-film “Valor” in film showings Development Corporation. of heroism at the time, but instead held in the University of the shared the glory with many Filipinos. Philippines in Los Baños, Davao, We also mounted a roadshow in Cebu, and Cagayan de Oro. The key cities to reach researchers, Sights and Sounds: main audience for the film showings teachers, and college students from Multimedia Initiatives were students and WW II veterans both public and private schools, as We also supported a number of key and community groups. well as the City Tourism offices and multimedia projects in 2017 that local historians. The roadshow also undertook a colorful yet faithful The documentary recounts the aimed to help them expand their rendering of WW II and Philippine heroism of the late Col. Emmanuel knowledge of WW II history and history. V. de Ocampo during the war as promote nationalist pride. a member of the Hunters-ROTC Multi-Awarded WWI Traveling Exhibit Guerrillas, as well as his post-war We brought our award-winning feats such as heading the Veterans traveling exhibit to the History Asia Federation of the Philippines (VFP). Convention at the World Trade He was also a long-time Chairman of Center in Pasay City, which attracted Veterans Bank and was instrumental 80,000 people, beating the 2016 in its reopening in 1992. He also attendance of 50,000. The exhibit played a pivotal role in reviving the occupied a massive floor area that VFP and turning it into an influential showcased WW II historical panels, a organization that champions Filipino war-era jeep, and a refurbished M1- veterans’ causes and advocacies. Stuart tank. BGen Francisco Licuanan Memorial We also staged a reenactment of Collections–Philippine Guerilla Files WW II battles during the four-day We organized a lecture series on event. Reenactors played Japanese, “Finding our Heroes” with head American, and Filipino soldier roles, researcher Marie Vallejo, talking giving the audience a glimpse of the about accessing Filipino Guerrilla bloody encounters that took place Files, the primary source for 280,000 during the war. This served as the records on Filipino guerrilla soldiers. Bank’s unwavering commitment to The Files, which contain extensively its purpose of preserving the legacy scanned records that reveal little- of our forefathers, particularly those known guerrilla activities in various who fought for the nation’s freedom parts of the country, are available to with nothing but their big hearts. researchers, history, teachers, and libraries.
Annual Report 2017 — 19 RISK AND CAPITAL MANAGEMENT
Risk Management Framework top of the assumed write-off rate as Risk management is a central part of PVB’s overall management. It is the defined under the Circular. process whereby the bank methodically addresses the risks related to its activities with the goal of achieving sustained benefit within each activity and PVB also conducted a uniform across the portfolio of all activities. The bank’s objective in risk management credit risk stress test on its loan is to ensure that it identifies, measures, monitors, reports, and controls the and investment portfolio covering various risks that arise from its business activities. the large exposures, exposure as to economic activity and consumer The risk management framework of PVB is illustrated as follows: loan portfolio.
Market Risk Mitigation & Monitoring & Market or price risk is the risk that Identification Measurement Control Reporting the bank’s earnings or capital may decline, either immediately or over time, as a result of adverse movement in interest rates, foreign Capital Management Framework Likewise, amendments to loan exchange rates, commodities or Following stockholders approval in classification and provisioning were equity prices that may affect the November 2017, the Bank embarked implemented. portfolios of the Bank. The bank on a capital raising program, which mitigates the risk from the trading seeks to raise ₱2 billion in 2018 and In view of the organizational portfolio by setting up limits such another ₱2 billion in 2019. changes in the bank, the Policy as loss alert limit, stop loss limit, on Credit Committee and Credit position limit, and dealer limit. Risk Management Objectives Approval limits was amended to Likewise, it adopts a market risk and Policies enhance the credit approval process. model, which is the Value-at-Risk Furthermore, its Internal Credit Risk (VaR) to estimate potential loss for a Pillar I Risks Rating System’s rating grades were given position. Pillar I assessment includes the amended to conform with global risk covered under the Regulatory practice. In line with this, the bank For a detailed discussion of market Framework as prescribed under BSP purchased two systems: 1) Standard risk management, please refer to Note Circular No. 538. The framework and Poor’s Credit Risk Rating System, 4 of Audited Financial Statement. covers the measurement of credit and 2) Ambit Optimist System, risk, market risk and operational which will cover asset underwriting, Market Risk Stress Test risk. credit risk rating, loan pricing, Sensitivity analysis is employed on loan monitoring and loan loss foreign exchange and fixed income Credit Risk classification/provisioning. trading portfolio of the bank. PVB defines credit risk as the risk It is performed by systematically of potential financial loss due to For a detailed discussion of credit risk changing parameters in the VaR possible default of counterparties management, please refer to Note 4 of models to determine the effects of or borrowers. In order to mitigate Audited Financial Statement. such changes to the earnings. this risk, the bank continuously improves its credit policies and Credit Risk Stress Test For fixed income trading portfolio, procedures to align with BSP The stress test on credit risk is the stress tests consider the effect regulation, bank strategies and conducted in accordance with BSP of either rising or declining interest market trends. In line with the Circular No. 839, Real Estate Stress rates depending on the bank’s net mandate of BSP Circular 855, the Test (REST) Limit for Real Estate position while the stress tests on bank’s credit underwriting and Exposures. foreign exchange trading portfolio review processes were amended look at the impact on earnings to delineate the functions of the Additional simulations are also should there be movements on Credit Front Office, Credit Back performed applying several write- exchange rates that will adversely Office and the Middle office. off rates to real estate exposures on affect the FX position of the bank.
20 — • Building a Solid Foundation The Bank manages its risks on all fronts – including operational, legal, IT, reputational, and strategic, and compliance risks – and ensures a strong capital position relative to all risk undertakings.
Operational Risk assessment, monitoring, controlling 1st Line Business Line Operational risk is defined as the and reporting risk, and assurance of Defense Management takes risk of loss resulting from failed of risk management processes. responsibility and or inadequate internal processes, The ORM Framework is part of an accountability for people and systems or from enterprise-wide risk management managing risks external events. The bank manages system which allows the bank to and implementing operational risk as documented in look across the enterprise in a actions to mitigate the Operational Risk Management holistic manner to create a risk risk. Framework and Tools based on profile that business/operating units 2nd Line Compliance and BSP Circular No. 900 Guidelines on and Senior Management can use to of Defense Operational Risk Operational Risk Management. better run businesses. Management teams set and maintain Operational Risk Management Operational Risk Management the standards for Framework Structure operational risk The Operational Risk Management PVB recognizes the three levels of management. (ORM) Framework is the defense in mitigating operational 3rd Line Audit provides overarching, unifying approach risk exposures. A strong risk culture of Defense assurance that and process for management of and good communication among risk management operational risk within the bank. the three lines of defense are processes are The framework includes all the key important characteristics of good adequate and building blocks for risk management operational risk governance. appropriate. which establishes a common language for risk, the bank’s risk policy and appetite, identification,
Annual Report 2017 — 21 RISK AND CAPITAL MANAGEMENT
Operational Risk Management 6. Business Disruption and System and evaluates the controls in place Tools Failures: Losses arising from to mitigate those risks. Business The Operational Risk Management disruption of business or system units use self-assessment approach Department (ORMD) is tasked with failures; and to identify risks, evaluate the the design and implementation effectiveness of controls in place, of ORM tools. For purposes of 7. Execution, Delivery and Process and assess whether the risks are identification, monitoring and Management: Losses from effectively managed within the reporting, the bank categorizes failed transaction processing business. operational risk events based on the or process management, seven Basel II Loss Event Types as from relations with trade Risk assessment results are follows: counterparties and vendors. reviewed and discussed with the heads of business units through 1. Internal Fraud: Losses due To aid in the management of the designated Risk Coordinators to acts intended to defraud, operational risk and the analysis of and agreed upon via signed off misappropriate property or the Bank operational risk profile, of the RCSA template. The final circumvent regulations, the law the following tools are continually risk assessment results are then or company policy, excluding enhanced to ensure effectiveness: aggregated to obtain the Top Key diversity/discrimination events, Residual Risks of the bank and which involves at least one Internal Loss Data Collection (ILDC) establish the Bankwide Risk Profile. internal party; Loss data collection involves The risk aggregation is based on the identification of the appropriate seven Basel II Loss Event Types. 2. External Fraud: Losses due data elements pertinent to the to acts intended to defraud, management of operational risk Key Risk Indicators misappropriate property or from various internal data sources Key risk indicators (KRI) are metrics circumvent the law, by a third then validating and capturing the identified as top risks or critical risks party; data into the operational loss that the bank faces. Top or critical database. risks are significant risks via RCSA 3. Employment Practices and or via interview with the business Workplace Safety: Losses Business units are required to report units. KRI provides risk information arising from acts inconsistent loss events in their respective areas, about potential events or top risk with employment, health or conduct a root-cause analysis and exposures that may affect the safety laws or agreements, implement the necessary corrective bank. from payment of personal action and risk mitigation. This injury claims, or from diversity/ helps the Bank assess effectiveness To facilitate implementation of discrimination events; of internal control, improve the ORM tools, officers from various control environment and establish business lines are designated as Risk 4. Clients, Products and Business risk mitigating measures. Coordinators. The Risk Coordinators Practices: Losses arising from an act as the single point of contact unintentional or negligent failure Reported operational losses for when it comes to ORM matters. to meet a professional obligation the years 2012-2017 include losses to specific clients (including reported to BSP, ATM-related fraud, In addition to the ORM tools, policies fiduciary and suitability special audit cases, regulatory and procedures relating to people, requirements), or from the penalties, and potential penalties. process, and systems management nature or design of a product; Near-miss and potential loss events are in place and are supplemented are likewise reported. by the bank’s risk-based internal 5. Damage to Physical Assets: audit process. Losses arising from loss or Risk and Control Self-Assessment damage to physical assets from (RCSA) ORM Awareness Program natural disaster or other events; The bank identifies and assesses ORM Awareness and Training all risks within each business unit Programs covering the ORM
22 — • Building a Solid Foundation Framework and Tools, as well as Information Technology Risk environment. In addition, all third- the roles and responsibilities of Management party providers go through stringent the designated RCs and functions The bank has crafted the selection criteria before they can of the three lines of defense, Information Technology Risk provide products or services to the are conducted on an ongoing Management Framework (ITRMF) bank. All third-party providers are basis with the objective of raising to keep abreast with the aggressive evaluated regularly based on service risk awareness and instilling an and widespread adoption of level agreements. operational risk culture in the technology in the financial service bank. industry and to effectively manage Operational Risk Stress Test the risks associated with use of Stress test for operational risk is Business Continuity Management technology. based on actual operational loss The Business Continuity events covering a five-year loss data Management System project was This is a type of operational risk collection. The scenario of average completed in November 2017. specifically related to and involving annual loss exposure based on five- Milestones include conduct of IT systems (e.g., breakdown and year loss data with corresponding drills/exercises, approval of BCMS error). PVB mitigates the risk percentage loss is considered. Policy Guidelines and Procedures, in the choice of technology by As to capital assessment for BCMS Roll-out, and Internal Audit ensuring that the IT Strategic Plan operational risk, the bank follows Workshop. Action plans have been is consistent with its business the Basic Indicator Approach. prepared to address impending strategies. Strategic systems crisis and incidents and continual information planning is part Pillar I Risks Risk Control Other Risk improvement is being promoted to and parcel, and a result, of the & Mitigation Mitigation strengthen the culture of readiness general Strategic Planning of Tools and resiliency in PVB. the bank. In line with this, PVB Credit Approval Credit considers the following factors: Limits Evaluation Process Legal Risk Management its vision and mission, economic Product Limits Items in litigation are closely and industry developments, Borrower Risk monitored by the Legal Services customer requirements, regulatory Exposure Rating Division (LSD) and are presented requirements, and new technology. Limits Asset Quality to the respective business units Counterparty/ Review involved for their information and/ Information Security Borrower or appropriate action. Material Information is a business asset Limits Credit Stress cases filed by and against the that has value and needs to be Testing bank are also reported to the Risk suitably protected. Information Market Position Market Stress Management Oversight Committee. security protects information from Limits/ Testing Transaction The LSD provides assessments a wide range of threats to ensure Limits Backtesting of on the cases managed by it and business continuity, minimize VaR recommends whether to increase business damage, and maximize Dealer’s Limits Validation of or decrease the existing provisions return on investment and business Management models in order for the appropriate unit of opportunities. Action the bank to institute the appropriate Triggers loss provisioning, to cushion any The bank implements policies and Annual Loss adverse impact on earnings or procedures for the availability, Limits capital. integrity and confidentiality and accountability of information VaR Limits Likewise, LSD also provides legal assets. Information Security has Duration advice, and reviews contracts, other become a critical business function limits / documents, and processes to ensure and an essential component of Portfolio Mix their legality and enforceability. governance and management Limits affecting all aspects of the business
Annual Report 2017 — 23 RISK AND CAPITAL MANAGEMENT
Pillar I Risks Risk Control Other Risk For a detailed discussion of risk measure of the bank’s earnings & Mitigation Mitigation concentration risk management, decline, either immediately or over Tools please refer to Note 4 of Audited time, as a result of change in the Operational Business Operational Financial Statement. level of interest rates. Assumptions Continuity Stress Testing on loans and deposits are based Plan on the interest repricing period Audit Liquidity Risk Loss/Events risk-based The objective of liquidity risk taking into consideration the Reporting activities management is to ensure that loan pre-payments and deposit pre-termination. EaR analysis is Anti-money Compliance all maturing obligations, and laundering system to commitments be paid fully and conducted on a quarterly basis system monitor promptly, inclusive of demand and adjustment in portfolios, if adherence to necessary, are done accordingly. Risk Control policies and deposits, savings and all off-balance Self- procedures sheet commitments. Liquidity risk, Assessment therefore, is the risk that the Bank For a detailed discussion of the will be unable to meet a financial management of interest rate risk in the Pillar II Risks commitment to a customer or banking book, please refer to Note 4 of Pillar II assessment covers all other market in any location, in any Audited Financial Statement. risks that are not included in the currency, at any time. Liquidity risk Pillar I assessment. Pillar II covers is measured using the established Reputational Risk credit concentration risk, liquidity Maximum Cumulative Outflow Reputational risk is the current and risk, interest rate risk in the banking (MCO) method, which is based prospective impact on earnings or book and other non-quantifiable on historical observations and capital arising from negative public risks. simulations of prospective liquidity opinion. This risk may expose the risk events. The bank also carries bank to litigation, financial loss, or Concentration Risk out three major activities to manage a decline in its customer base. In Concentration risk may arise from and mitigate liquidity risk: 1) Funding extreme cases, the bank may lose its excessive exposures to individual and Liquidity Plan; 2) Diversification reputation and may suffer a run on counterparties, groups of related of Funding Sources; and 3) Liquidity deposits. Its overall image is directly counterparties and groups of Contingency Plan. The Liquidity related to its capability to attract and counterparties with similar Contingency Plan is reviewed on a maintain clients and good talent for characteristics. PVB employs credit regular basis to ensure that the bank its workforce, and to protect itself approval limits and product/industry has adequate funding in case of from negative publicity. limits to control concentration risk. extreme cash outflow requirements. In addition, various reports are PVB’s corporate image is a regularly prepared such as Single For a detailed discussion of liquidity combination of: (1) its distinct Borrower’s Limit and Large Exposure risk management, please refer to Note characteristic of being a commercial to monitor this type of risk. 4 of Audited Financial Statement. bank with an authorized government depository status that allows it The Bank’s Central Liability System Interest Rate Risk in the Banking to serve both public and private captures exposure of accounts and Book (IRRBB) sector clients, as well as private group of account’s exceeding or Interest rate risk occurs with the retail customers; (2) a sound ethical will exceed the SBL and the internal mismatching of maturities or culture by adhering to moral and limit of the Bank. This system, while repricing of interest rate sensitive ethical principles; (3) employees’ grouping of accounts is manually assets and interest rate sensitive image in upholding integrity and done, integrates data from loans, liabilities including off-balance impartiality; and (4) its provision of trade, trust and treasury. Aside from sheet items at different times. The assistance to World War II veterans monitoring compliance to SBL, it is primary measure of market risk in and their descendants from 20% of likewise designed to ensure that no the accrual portfolios is the Earnings its annual net income. To protect account exceeds its approved limit. at Risk (EaR). It is an interest rate the integrity of the Bank and its
24 — • Building a Solid Foundation subsidiaries, the Bank’s guiding its customer retention, recruit • Quarterly reporting of customer principle is that all employees must competent employees, and win new queries, feedback, complaints strictly comply with the Bank’s Code business or customer relationships. and resolutions; of Ethics and Anti-Money Laundering This is being done through its • Service delivery audit standards Policies and Procedures, must not activities such as WW II History Wall of CASQD; aid or abet money laundering or on all renovated branches, Bataan • Regular review of policies and terrorist financing activities, and Freedom Run, 75th Anniversary of procedures to consider new laws must protect the confidentiality of the Bataan March, History Channel, and regulations, standards and bank and trust accounts. and commemorative book of Col. best practices; Emmanuel V. de Ocampo in 2016. • Compliance self-testing, PVB has established a Crisis independent testing and Management Committee (CMC) in PVB has a dedicated Consumer exception resolutions; the event that there is a significant Affairs and Service Quality • Compliance and risk awareness action that may trigger a negative Department (CASQD) that logs programs; impact on the organization. all consumer-related complaints, • Regular review and testing the The CMC is ultimately responsible queries, feedback, and comments effectiveness of internal controls for handling crises or any event it receives. It shall ensure that and practices; that could damage the bank’s appropriate responses are timely • Monitoring of legal issues and reputation, brand and stakeholders. provided to address concerns. cases; CMC’s objectives are: (1) to limit CASQD is also responsible for • Updated Business Continuity and the damage that could rise from a determining, establishing and Liquidity Contingency Plans; and threat; (2) to plan the appropriate auditing quality standard processes • Sincere commitment to Corporate responses; and (3) to establish and procedures related to service Social Responsibility. actions and monitoring system. delivery, feedback mechanism and corporate image. Strategic Risk While it has several programs to Strategic risk is the current and improve its corporate reputation, To ensure that its reputation is not prospective impact on earnings it boils down to two: proactive compromised, the bank commits or capital arising from adverse initiatives on the positive side; to combat money laundering business decisions, improper and media relations to address activities and/or terrorist financing implementation of decisions, or negative publicity. All the activities activities by adhering to the Know lack of responsiveness to industry related to corporate imaging and its Your Customer requirements changes. In the daily course of management of reputational risk is and full compliance with the anti- banking operation, activities relating duly approved by the Chairman and money laundering (AML) laws and to marketing of the products and CEO and /or President and COO. regulations. AML compliance is services, as well as investing of complemented by a robust AML funds by the Business and Support To quickly address negative news, system which is being upgraded to Groups/Units, involve exposure PVB has a media monitoring system ensure compliance with regulatory to strategic and business risks in place and a third-party news requirements and supervisory that has to be properly managed monitoring agency that provides recommendation/findings. for appropriate application of daily news and articles about mitigating factors. Notwithstanding the bank. These are reviewed by The Bank put in place the following the applicability, feasibility or the Corporate Communication risk measures in managing its achievability of the business plans Department and, if needed, are reputation: and strategies, quality and timing reported to the Chairman, President • Prompt crisis communication in the implementation always play and Business Unit concerned. management; a vital role and prove to be the • Periodic public relations and determining factor on the impact to The bank is sincere in its social media value analysis; or outcome of the bank operations responsibility commitment to • Customer complaint in order to achieve business goals. build its reputation to increase management;
Annual Report 2017 — 25 RISK AND CAPITAL MANAGEMENT
Compliance Risk Compliance risk (including Legal/ Regulatory) refers While the Bank has made significant progress in to current and prospective risk to earnings or capital advancing our risk controls and management, we arising from violations of, or non-conformity with, laws, are well aware that we could strengthen this more to rules, regulations, prescribed practices, internal policies safeguard operations ensuring that we continue to and procedures, or ethical standards. Compliance risk protect shareholders value while building earnings to may arise from failure to manage conflict of interest, meet expected returns. The Bank continue to identify treat customers fairly, or effectively manage risks arising risk management talents to build internal competence from money laundering and terrorist financing activities. as our environment in the financial industry is under Compliance risk also arises in situations where the laws constant threat. or rules governing certain bank products or activities of its clients may be ambiguous or untested. This risk Capital Management exposes the bank to fines, payment of damages, and The implementation of a continuing Internal Capital the voiding of contracts. Compliance risk can lead to Adequacy Assessment Process (ICAAP) is a priority diminished reputation, reduced franchise value, limited activity and is constantly enforced by the bank to ensure business opportunities, reduced expansion potential, that it has a strong capital position relative to its risk and lack of contract enforceability. It may include future undertakings. changes in laws/regulations that may have an adverse The ICAAP is a process that requires the bank to effect to the bank. The management of such risk is determine the capital adequacy and contingencies to currently subsumed under the Compliance Program manage the risks that it is exposed to, and covers the Manual. future plans apart from current operations requirement.
PVB manages Compliance Risk Exposures through the Furthermore, PVB’s compliance with the risk-based formulation and implementation of tools and mitigation capital adequacy framework defined under the BSP techniques. The bank put in place the Board-approved Circular 538 is a continuous process and is being Bank Compliance System/Program which governs monitored at all times. PricewaterhouseCoopers PVB’s Compliance function, process and programs. was engaged by PVB to assist in the ICAAP report for The Board, through the Corporate Governance and submission in March 2018. Compliance Oversight Committee, Audit Committee, and Risk Management Oversight Committee, oversees the The Bank’s capital-to-risk asset ratios as of December 31, effectiveness of the Board and the bank’s compliance 2017 and 2016 under Basel III and Basel II framework, system, internal control and risk management. respectively, are shown in the table (see next page): PVB appoints the Chief Compliance Officer (with Monetary Board approval) who shall serve on a full-time basis to oversee and coordinate the implementation of its Compliance System.
26 — • Building a Solid Foundation Capital Structure and Capital Adequacy
In Million Philippine Pesos 31-Dec-17 31-Dec-16 Tier 1 Capital Common Equity Tier (CET) 1 Capital Paid-up common stock 2,132.42 2,131.53 Common stock dividends distributable 7.86 8.17 Additional paid-in capital 20.98 20.98 Retained earnings 1,660.18 2,548.52 Undivided profits (402.42) (520.53) Other Comprehensive Income Net unrealized gains or losses on AFS securities (478.52) (377.16) Cumulative foreign currency translation (0.07) (0.07) Retained Earnings Reserve - Appropriated - (363.17) Sub-Total 2,940.43 3,448.27 Regulatory Deductions: Deferred tax assets 556.33 556.46 Other intangible assets - 0.006 Defined benefit pension fund assets (liabilities) 32.84 33.141 Other equity investments in non-financial allied undertakings 140.66 171.61 and non-allied undertakings Total Deductions CET1 Capital 729.84 761.22 CET1 Capital 2,210.59 2,687.05
Additional Tier (AT) 1 Capital Instruments issued by the bank that are eligible as AT1 capital 361.12 361.14 Total Tier 1 Capital 2,571.71 3,048.19
Tier 2 Capital General loan loss provision, limited to a maximum of 1% of 155.29 103.42 credit risk-weighted assets Total Tier 2 Capital 155.29 103.42
Total Qualifying Capital 2,727.00 3,151.62
Total Credit Risk-Weighted Assets 21,834.00 20,421.17 Total Market Risk-Weighted Assets 307.35 81.48 Total Operational Risk-Weighted Assets 2,829.53 3,002.52 Total Risk-Weighted Assets 24,970.88 23,505.17
Annual Report 2017 — 27 RISK AND CAPITAL MANAGEMENT
The capital-to-risk assets ratios are computed by dividing the Common Equity Tier 1 (CET1) capital, Tier 1 capital and total Qualifying Capital over the Total Risk-Weighted Assets. Details are as follows (amounts in million Philippine pesos):
31-Dec-17 31-Dec-16 CET 1 Ratio CET 1 Capital 2,210.59 2,687.07 Risk-Weighted Assets 24,970.88 23,505.17 CET 1 Ratio 8.85% 11.43% Minimum CET 1 Ratio 6.00% 6.00% Capital Conservation Buffer 2.85% 5.43% Tier 1 Capital Ratio Tier 1 Capital 2,571.72 3,048.21 Risk-Weighted Assets 24,970.88 23,505.17 Tier 1 Ratio 10.30% 12.97% Minimum Tier 1 Ratio 7.50% 7.50% Total Capital Ratio Total Qualifying Capital 2,727.00 3,151.63 Risk-Weighted Assets 24,970.88 23,505.17 Total Capital Adequacy Ratio (CAR) 10.92% 13.41% Minimum CAR 10.00% 10.00%
Under the Basel III framework, the bank’s regulatory qualifying capital is comprised of Tier 1 (going concern) capital and Tier 2 (gone-concern) capital. Tier 1 capital consists of CET1 capital, which comprises paid-up common stock, common stock dividends distributable, additional paid-in capital, retained earnings (excluding appropriated surplus), current year profit and other comprehensive income (net unrealized gains or losses on available-for-sale securities and cumulative foreign currency translation) less regulatory adjustments such as deferred tax assets, other intangible assets, defined benefit pension and equity investments in non-financial allied undertakings and non-allied undertakings. The Tier 1 capital also includes instruments eligible for Additional Tier 1 (AT1) capital. The other component of the regulatory capital is the Tier 2 capital, which includes the general loan loss provision.
Currently, the bank only issues common stock and preferred shares as instruments eligible for the Tier 1 capital.
28 — • Building a Solid Foundation The full reconciliation of all regulatory capital elements back to the balance sheet in the audited financial statements is shown in the table below (amounts in million Philippine pesos):
Parent Company December 31, 2017 Qualifying Reconciling Adjusted Financial Capital Items Statements Paid-up common stock 2,509.802 - 2,509.802 Common stock dividends distributable 7.856 - 7.856 Additional paid-in capital 20.979 - 20.979 Retained earnings 1,660.184 (865.435) 2,525.619 Undivided profits (402.419) 2.640 (405.059) Net unrealized gains or losses on AFS securities (478.522) (1.143) (477.379) Re-measurement of Net Defined Benefit Liability/ (Asset) Cumulative foreign currency translation and others (32.919) 15.174 (48.093) Deductions (1,074.372) (199.041) (875.332) TOTAL COMMON EQUITY TIER 1 CAPITAL 2,210.589 (1,047.805) 3,258.394 Additional Tier 1 (AT1) Capital 361.124 - 361.124 TOTAL TIER 1 CAPITAL 2,571.713 (1,047.805) 3,619.518 Tier 2 (T2) Capital 155.290 155.290 - TOTAL QUALIFYING CAPITAL 2,727.003 (892.515) 3,619.518
Parent Company December 31, 2016 Qualifying Reconciling Adjusted Financial Capital Items Statements Paid-up common stock 2,131.543 - 2,131.543 Common stock dividends distributable 8.165 - 8.165 Additional paid-in capital 20.979 - 20.979 Retained earnings 2,548.521 (451.098) 2,999.618 Undivided profits (520.529) (46.580) (473.949) Net unrealized gains or losses on AFS securities (377.161) (42.243) (334.918) Re-measurement of Net Defined Benefit Liability/ (Asset) (33.142) 32.638 (65.779) Cumulative foreign currency translation and others (0.073) (0.065) (0.008) Retained Earnings Reserve - Appropriated (363.171) (0.007) (363.164) Deductions (728.064) (176.655) (551.409) TOTAL COMMON EQUITY TIER 1 CAPITAL 2,687.068 (684.010) 3,371.078 Additional Tier 1 (AT1) Capital 361.140 - 361.140 TOTAL TIER 1 CAPITAL 3,048.207 (684.010) 3,732.218 Tier 2 (T2) Capital 103.418 33.138 70.280
TOTAL QUALIFYING CAPITAL 3,151.625 (650.873) 3,802.498
Annual Report 2017 — 29 RISK AND CAPITAL MANAGEMENT
Risk Weighted Assets and Capital Requirement
Credit Risk In order to calculate the credit risk capital charge, the bank uses the Standardized Approach.
Bank assets covered by credit risk mitigants are in the forms of cash collateral or deposit hold-out and guarantees by the Philippine National Government and those guarantors with highest credit rating such as Home Guaranty Corporation (HGC) and Philippine Export-Import Credit Agency (PhilEXIM).
The Bank’s counterparty risk exposure is basically from its deposit/clearing activities, money market and capital market transactions emanated from dealing with financial institutions and entities whose credit assessments were rated by third party accredited agencies such as S&P, Moody’s, Fitch, and PhilRatings.
Currently, the bank does not provide credit protection through credit derivatives and does not have exposures to securitization structures and investments in other types of structured products.
31-Dec-17 31-Dec-16 On-Balance Sheet Assets 21,506.84 19,802.31 Off-Balance Sheet Assets 327.17 618.86 Total 21,834.01 20,421.17 Capital Requirements 2,183.40 2,042.12
Details of credit risk exposures for on-balance sheet and off-balance sheet broken down by type of exposures as of December 31, 2017 and 2016 are presented in the table on the next page:
30 — • Building a Solid Foundation 2017 In million Philippine pesos Exposures Exposures, Covered Risk Weights Exposures ON-BALANCE SHEET Net of by CRM, not Covered Total ASSETS Specific Gross of by CRM Provisions Materiality 0% 20% 50% 75% 100% 150% Threshold
Cash on hand 824.58 824.58 - 824.58 824.58 - - - - - Checks and other
cash items ------
Due from BSP 17,453.29 17,453.29 - 17,453.29 17,453.29 - - - - - Due from other 848.20 banks 848.20 - 848.20 - - 137.07 - 711.13 - Available-for-sale 5,190.61 (AFS) financial assets 5,190.61 - 5,190.61 4,233.86 945.13 - - 11.62 - Unquoted debt
securities classified 998.89 998.82 0.07 998.82 207.23 - - - 791.59 - as loans Held to Maturity (HTM) 604.38 - 604.38 - 604.38 - - - - 604.38 Financial Assets Loans and 810.67 14,727.54 receivables 15,715.88 988.35 14,727.53 - 865.62 - 12.644.46 406.79 Loans and Receivables Arising from Repurchase Agreements, Certificate of Assignment/ 1,767.30 - 1,767.30 1,767.30 - - - - - 1,767.30 Participation with Recourse, and Securities lending and Borrowing Transactions Sales contracts 33.36 receivables (SCR) 33.36 - 33.36 - - - - 31.82 1.54 Real and other 1,859.75 properties acquired 1,859.75 - 1,859.75 - - - - - 1,859.75 Total exposures
excluding other 44,307.83 45,296.24 988.42 44,307.82 24,486.26 2,360.18 1,002.69 - 14,190.62 2,268.08 assets
Other assets 2,939.96 2,939.96 - 2,939.96 - - - - 2,939.96 - Total exposures,
including other 47,247.79 48,236.20 988.42 47,247.78 24,486.26 2,360.18 1,002.69 - 17,130.58 2,268.08 assets
Total risk-weighted on-balance sheet 21,506.07 assets not covered by - 472.04 501.35 - 17,130.57 3,402.11 credit risk mitigants
Total risk-weighted on-balance sheet 0.77 assets covered by - 0.77 - - - - credit risk mitigants TOTAL RISK- WEIGHTED ON-
BALANCE SHEET - 472.81 501.35 - 17,130.57 3,402.11 21,506.84 ASSETS
Annual Report 2017 — 31 RISK AND CAPITAL MANAGEMENT
2016 In million Philippine pesos Exposures Exposures, Covered Risk Weights Exposures ON-BALANCE SHEET Net of by CRM, not Covered Total ASSETS Specific Gross of by CRM Provisions Materiality 0% 20% 50% 75% 100% 150% Threshold
Cash on hand 612.38 612.38 - 612.38 612.38 - - - - - Checks and other
cash items ------
Due from BSP 19,504.97 19,504.97 - 19,504.97 19,504.97 - - - - - Due from other 823.49 banks 823.49 - 823.49 - - 119.33 - 704.17 - Available-for-sale 6.44 5,878.45 (AFS) financial assets 5,878.45 - 5,878.45 4,926.31 945.70 - - - Unquoted debt
securities classified 1,068.03 1,068.31 0.28 1,068.31 209.00 - - - 859.03 - as loans Loans and Receivables Arising from Repurchase Agreements, Certificate of Assignment/ 3,945.61 - 3,945.61 3,945.61 - - - - - 3,945.61 Participation with Recourse, and Securities lending and Borrowing Transactions Loans and - 11,182.52 receivables 12,142.60 960.08 11,182.52 - 826.61 - 9,956.10 399.82 Sales contracts 28.90 receivables (SCR) 28.90 - 28.90 - - - - 27.78 1.11 Real and other 1,998.76 properties acquired 1,998.76 - 1,998.76 - - - - - 1,998.76 Total exposures
excluding other 945.93 45,043.09 46,003.45 960.36 45,043.09 29,198.26 945.70 - 11,553.51 2,399.69 assets
Other assets 3,986.26 3,986.26 - 3,986.26 - - - - 3,986.26 - Total exposures,
including other 945.93 49,029.36 49,989.71 960.36 49,029.36 29,198.26 945.70 - 15,539.78 2,399.69 assets
Total risk-weighted on-balance sheet 19,801.41 assets not covered by - 189.14 472.97 - 15,539.78 3,599.53 credit risk mitigants
Total risk-weighted on-balance sheet 0.90 assets covered by - 0.90 - - - - credit risk mitigants TOTAL RISK- WEIGHTED ON-
BALANCE SHEET - 190.04 472.97 - 15,539.78 3,499.53 19,802.31 ASSETS
32 — • Building a Solid Foundation 2017 In million Philippine pesos
Risk Weights OFF-BALANCE Credit SHEET ASSETS Equivalent Total Amount 0% 20% 50% 75% 100% 150%
Direct credit substitutes (.e.g. general guarantees of indebtedness and ------acceptances)
Transaction-related contingencies (e.g., performance bonds, bid
bonds, warrantees and stand------309.31 309.31 by LCs related to particular transactions)
Trade-related contingencies arising from movement of goods (e.g., documentary credits collateralized by the - - - - 17.86 - underlying shipments) and 17.86 commitments with an original maturity of up to one year
TOTAL RISK-WEIGHTED
OFF-BALANCE SHEET ASSETS - - - - - 327.17 327.17
Annual Report 2017 — 33 RISK AND CAPITAL MANAGEMENT
2016 In million Philippine pesos
Risk Weights OFF-BALANCE Credit SHEET ASSETS Equivalent Total Amount 0% 20% 50% 75% 100% 150%
Direct credit substitutes (.e.g. general guarantees
of indebtedness and - - - - 1.13 - 1.13 acceptances)
Transaction-related contingencies (e.g., performance bonds, bid
bonds, warrantees and stand------601.44 601.44 by LCs related to particular transactions)
Trade-related contingencies arising from movement of goods (e.g., documentary credits collateralized by the - - - - 16.29 - underlying shipments) and 16.29 commitments with an original maturity of up to one year
TOTAL RISK-WEIGHTED
OFF-BALANCE SHEET ASSETS - - - - - 618.86 618.86
34 — • Building a Solid Foundation Deductions from others assets are those that are deducted from the CET 1 capital. As of December 31, 2016, the total deductions amounted to ₱728.064 million. These include financial assets held for trading, deferred tax assets, other intangible assets, defined benefit pension and equity investments in non-financial allied undertakings and non-allied undertakings.
Market Risk Market risk-weighted assets by type of exposure as of December 2017 and 2016 consist of the following items as presented in the table below. The bank uses the Standardized approach to measure the market risk capital charge.
Market Risk (In million Philippine pesos) 31-Dec-17 31-Dec-16 Interest Rate Exposures 297.78 80.12 Foreign Exchange Exposures 9.57 1.36 Total 307.35 81.48 Capital Requirements 30.74 8.15
Operational Risk The table below shows the operational risk-weighted assets as of December 2017 and 2016. The Basic Indicator Approach (BIA) is employed to measure the operational risk capital charge.
Operational Risk (In million Philippine pesos) 31-Dec-17 31-Dec-16 Basic Indicator Approach 2,829.53 3,002.52 Capital Requirements 282.95 300.25
Annual Report 2017 — 35 CORPORATE GOVERNANCE
Beyond Compliance
The Board of Directors (BOD), Officers and Employees of PVB recognize the critical role that corporate governance plays in building a strategically sustainable business. As such, the Bank affirms its commitment to good corporate governance as it continues to work towards a solid control environment and high level transparency with an empowered Board leading the way.
36 — • Building a Solid Foundation Philippine Veterans Bank (PVB) At PVB, corporate governance starts Board Composition believes that corporate governance at the top. Our BOD and Senior The Board is composed of is an essential element of what Management Team set the tone 11 members, including three constitutes sound strategic and ensure that mechanisms for independent directors (ID), six non- business management. The Board full disclosure, protection of the executive directors (NED), and two of Directors (BOD), officers, and rights of shareholders, and equitable executive directors (ED). Profiles of employees of the Bank recognize treatment of shareholders are in the members of the Board are on the critical role that corporate place. pages 50-51. governance plays in building a strategically sustainable business. The Board Chairperson works The members of the Board comply As such, the Bank affirms its closely with the President and with the fit and proper rule of the commitment to good corporate Chief Operating Officer. This BSP, as well as the qualification governance as it continues to work complementary relationship and disqualification parameters towards a solid control environment provides appropriate balance of set forth by the Securities and and high level of transparency with power, increased accountability, and Exchange Commission (SEC). Board an empowered Board leading the independent decision-making by the members hold office for one year way. Board while management has the or until their successors are elected responsibility to execute strategic and qualified in accordance with As of 31 December 2017, the Bank plans of the Bank. the Bank’s By-Laws. The Bank has continued to fully comply with the adopted fit and proper standards code of corporate governance, as Board Charter on directors and key personnel, directed by its regulatory agencies, The charter of the BOD articulates taking into consideration their and remained steadfast in adopting the governance and oversight integrity or probity, technical the principles in its Corporate responsibilities exercised by the expertise, physical or mental fitness, Governance (CG) Manual while directors and their roles and competence, relevant education aligning its practices with the functions in the Bank. It includes or financial literacy, diligence, industry’s best practices. provisions on the composition, and knowledge, experience or committees, and governance of training. The qualifications of those BOARD GOVERNANCE the Board, subject to provisions nominated to the Board, as well PVB is headed by a competent and of PVB’s articles of incorporation, as those nominated for positions working Board that is primarily by-laws, and applicable laws. The requiring appointment by the responsible for overseeing the charter is not intended to limit, Board, are reviewed and evaluated implementation of the Bank’s enlarge, or change in any way the by the Corporate Governance and strategic objectives, governance responsibilities of the Board as Compliance Oversight Committee framework, and corporate values. determined by such articles, by- (CGCOC) or Nomination Committee The Board defines the appropriate laws, and applicable laws. The Board (NOMCOM). corporate governance framework charter of the Bank is incorporated and practices, not only for the Bank, in its manual of corporate In June 2017, Director Pablito H. but for the subsidiaries as well. It governance, which, in turn, is Yap’s resignation was accepted. ensures that there are governance reviewed annually. The Board Mr. Gerardo B. Anonas was elected policies and mechanisms charter is in the process of review as his replacement on September appropriate to the structure, to align with the key provisions 2017. business and risks of the Bank. stated under the BSP Circular 969 (Enhanced Corporate Governance Guidelines).
Annual Report 2017 — 37 CORPORATE GOVERNANCE
% of shares Principal Type of No. of years No. of direct held to total Stockholder Directors served as and indirect outstanding Board of Directors represented, if (NED,ED,ID) director shares held shares of the nominee bank Chairman Roberto F. De Ocampo ED N/A 4 years 61 .00026280% Vice Chairman Guillermo L. Parayno Jr. NED N/A 4 years 64 .00027573% Dir. Umberto A. Rodriguez NED N/A 15 years 128 .00055146% Dir. Laurito E. Serrano NED N/A 5 years 128 .00055146% Dir. Percianita G. Racho ID N/A 8 years 704 .00303302% Dir. Alfonso B. Cruz Jr. NED N/A 4 years 128 .00055146% Dir. Judith V. Lopez ID N/A 4 years 1 .00000431% Dir. Ma. Nieves R. Confesor ID N/A 4 years 1 .00000431% Dir. Renato A. Claravall NED N/A 2 years 64 .00027573% Dir. Nonilo C. Cruz ED N/A 2 years 1 .00000431% Dir. Pablito H. Yap* NED N/A 3 years 64 .00027573% Dir. Gerardo B. Anonas** NED N/A 4 months 64 .00027573% * Effectivity of resignation in June 2017 ** Elected effective September 2017
Performance Assessment summary result, as prepared by his or her election. The Bank also The Board assessment process the Corporate Governance Officer has a policy on continuing education is undertaken to measure Board (CGO), and presented back to the for Directors. In maintaining efficiency through a balanced and Board and the various Committees their professional proficiency, objective platform against the for their consideration and the Directors are encouraged to goals that the Board has set at the discussion. continuously enhance their skills, beginning of the year, roles and knowledge and understanding of the responsibilities as mandated by Orientation and Continuing activities that the Bank is engaged the various regulatory agencies, as Education in or intends to pursue, as well as well as the Bank’s own CG Manual. All first-time Directors must have the developments in the banking Further, the assessment provides attended a special seminar on industry, including regulatory the Board valuable information corporate governance for board of changes through continuing that can be used as guiding tools in directors. The orientation for first- education or training. succession planning and objective time Directors begins immediately setting as well as analysis of after they are selected and before Board Committees strengths and weaknesses thereby their first Board meeting. They To assist the Board in competently enabling the Board to act to address are furnished with a copy of the acting upon its responsibilities, it concerns. general responsibility and specific established 12 committees, namely: duties and responsibilities of the 1. Executive Committee (EXECOM) In 2017, the self-assessment exercise Board and of a Director. Directors 2. Corporate Governance was conducted in three areas: are required to certify under oath & Compliance Oversight a. The Individual Directors that they have received copies and Committee (CGCOC) Assessment; fully understand and accept the 3. Nomination Committee b. The Board Assessment and; general responsibility and specific (NOMCOM) c. The Board Committee’s duties. The certification is also 4. Remuneration Committee Assessment submitted to the BSP, together with (REMCOM) a certification that the Director has 5. Audit Committee (AUDITCOM) Performance Assessment is all the prescribed qualifications and 6. Risk Management Oversight conducted annually with the none of the disqualifications after Committee (RMOC)
38 — • Building a Solid Foundation 7. Trust Committee (TRUSTCOM) EXECUTIVE COMMITTEE 8. RPT Committee (RPTCOM) No. of No. of Percentage 9. Credit Committee (CRECOM) Name of Directors Meetings Meetings (%) of 10. Human Resources Committee (HRCOM) Held Attended Attendance 11. IT Steering Committee; (ITSC) Nonilo C. Cruz 11 9 82 12. Asset Disposal Committee (ADCOM) Renato A. Claravall** 3 3 100 Ma. Nieves R. Confesor 11 11 100 The authority, duties and responsibilities, as well as the Independent Director, frequency of the Board committee meetings, are stated Non-voting in their respective charters. Meetings are generally Judith V. Lopez 11 11 100 held on a monthly basis which may include special Independent Director, board committee meetings when necessary. The Board Resource Person committee secretariats are responsible for ensuring Gerardo B. Anonas *** 2 2 100 that the regular agenda of the meetings and resource Pablito H. Yap* 6 6 100 persons are informed and provided with committee *Effectivity of resignation on June 30, 2017 materials prior to meetings. The committee secretariat **July to September 2017 prepares the minutes of the committee meetings for ***Elected in September 2017 endorsement and confirmation of the PVB Board and records the attendance of the committee members. The Corporate Governance and Compliance Oversight Committee (CGCOC) ensures the Board’s The Independent Directors are appointed Chairperson effectiveness and due observance of the corporate of the oversight control committees namely, the governance principles and guidelines as well as good Corporate Governance and Compliance Oversight corporate governance and compliance across the Committee, Risk Management Oversight Committee, organization. CGCOC oversees the periodic performance Audit Committee, and Related Party Transaction evaluation of the Board, Board Committees, individual Committee. Directors, and Executive Management.
The Executive Committee (ExCom) is a subset of The Committee held 12 meetings from January to the Board and functions as the Board’s operating December 2017. committee. It also approves and oversees the Bank’s risk management on a more detailed basis. The members of CORPORATE GOVERNANCE & COMPLIANCE COMMITTEE the ExCom are all Directors which include the Chairman No. of No. of Percentage and Vice Chairman of the Board. Some of ExCom’s Name of Directors Meetings Meetings (%) of duties and responsibilities include providing insights to Held Attended Attendance the Board’s Chairman, initiating investigative studies in Ma. Nieves R. Confesor 12 12 100 any business area, developing new ventures or new/ Chairperson, additional facilities, and suggesting new organizational, Independent Director administrative, financial, and operational procedures of Judith V. Lopez 12 11 92 the Bank, among others. Independent Director Percianita G. Racho 12 9 75 The Committee held 11 meetings from January to Independent Director, December 2017, during which it reviewed and endorsed Resource Person numerous transactions to the Board. Laurito E. Serrano* 12 8 67 *Resigned effective March 2018 EXECUTIVE COMMITTEE The Audit Committee (AuditCom) provides oversight of No. of No. of Percentage Name of Directors Meetings Meetings (%) of the Bank’s financial reporting and control and internal/ Held Attended Attendance external audit functions. The AuditCom reviews and Roberto F. De Ocampo 11 9 82 approves (for the ratification of the Board) reports Chairperson submitted by the internal and external auditors, reviews Guillermo L. Parayno Jr. 11 10 91 the internal control policies and procedures of the Bank, and oversees their proper implementation.
Annual Report 2017 — 39 CORPORATE GOVERNANCE
The Committee held 14 meetings from January to The Credit Committee (CreCom) has the authority to December 2017. review and recommend to the Board the approval of all credit and credit-related proposals, programs, policies AUDIT COMMITTEE and procedures. This function shall also include regular receipt from Management of information on credit- No. of No. of Percentage Name of Directors Meetings Meetings (%) of related risk exposures and risk management activities. Held Attended Attendance The Committee held 25 meetings from January 2017 to Judith V. Lopez 14 14 100 December 2017. Chairperson, Independent Director CREDIT COMMITTEE Ma. Nieves R. Confesor 14 10 71 No. of No. of Percentage Independent Director Name of Directors Meetings Meetings (%) of Alfonso B. Cruz Jr. 14 14 100 Held Attended Attendance Umberto A. Rodriguez* 14 14 100 Renato A. Claravall 25 25 100 Non-Executive Director Chairperson Percianita G. Racho** 1 1 100 Pablito H. Yap* 11 10 90 Independent Director Laurito E. Serrano** 25 18 72 *Resigned effective January 2018 Alfonso B. Cruz Jr.*** 4 3 75 **Member since August 2017 (Aug. 1 and 31 meetings) and non- member from October to December 2017 Gerardo B. Anonas**** 9 8 89 *Member until June 30, 2017 The Risk Management Oversight Committee (RMOC) ** Resigned effective March 2018 ***Member from July to August 2017 has the basic function of developing and reviewing ****Elected Committee Chairman in September 2017 the Bank’s risk management programs, policies and procedures, as well as overseeing their implementation to ensure that the Bank’s risk exposures (e.g., credit, The Trust Committee (TrustCom) oversees the liquidity, market, operations, compliance risks, and administration of the Bank’s trust, investment activities, others) are properly identified, assessed or measured, and other fiduciary business through the determination, monitored, reported, and controlled. RMOC oversees the formulation, implementation, and periodic review of the implementation of the risk management plan, and reports general policies and guidelines which will govern the to the Board the state of the Bank’s risk and profile. Bank’s trust and related business.
The Committee held 11 meetings from January to The Committee held seven meetings from January to December 2017. December 2017.
RISK MANAGEMENT OVERSIGHT COMMITTEE TRUST COMMITTEE No. of No. of Percentage No. of No. of Percentage Name of Directors Meetings Meetings (%) of Name of Director Meetings Meetings (%) of Held Attended Attendance Held Attended Attendance Judith V. Lopez 11 10 90 Karen Liza M. Roa* 7 6 86 Chairperson, Chairperson Independent Director Regina Paz Goco-Morales* 7 6 86 Alfonso B. Cruz Jr. 11 9 82 Percianita G. Racho 7 6 86 Umberto A. Rodriguez* 11 11 100 Independent Director Non-Executive Director Nonilo C. Cruz 7 6 86 Percianita G. Racho** 2 2 100 Independent Director *Independent Professional Nonilo C. Cruz 11 8 73 * Resigned effective January 2018 **Member since August 2017 (Aug. 1, 31 meetings) and non-member from Oct.-Dec. 2017
40 — • Building a Solid Foundation The Human Resources Committee (HRCom) reviews IT STEERING COMMITTEE the recommendation for the recruitment of officers and No. of No. of Percentage staff, promotions, compensation, salary increases and Name of Directors Meetings Meetings (%) of major human resource policies, prior to the approval of Held Attended Attendance the Board, consistent with the Bank’s culture, strategy, Percianita G. Racho 12 9 75 and business environment. Independent Director, Resource Person The Committee held 12 meetings from January to Gerardo B. Anonas** 3 1 33 December 2017. *Resigned effective January 2018 **Member since October 2017
HUMAN RESOURCES COMMITTEE The Related Party Transaction Committee (RPTCom) No. of No. of Percentage Name of Directors Meetings Meetings (%) of assists the Board in its oversight of the conduct of all Held Attended Attendance Related Party Transactions (RPTs) to protect the interest Guillermo L. Parayno Jr. 12 11 92 of the Bank and its stakeholders. It ensures proper Chairperson disclosure of all approved RPTs in accordance with all Pablito H. Yap* 7 7 100 applicable regulatory requirements. Laurito E. Serrano** 12 6 50 The Committee held 12 meetings from January 2017 to Percianita G. Racho 12 9 75 Independent Director December 2017. Ma.Nieves R. Confesor 12 10 83 Independent Director, RELATED PARTY TRANSACTION COMMITTEE Resource Person No. of No. of Percentage Gerardo B. Anonas*** 2 2 100 Name of Directors Meetings Meetings (%) of Held Attended Attendance *Member until June 2017 **Resigned effective March 2018 Ma. Nieves R. Confesor 12 12 100 ***Member since September 2017 Chairperson, Independent Director Judith V. Lopez 12 10 83 The IT Steering Committee (ITSC) oversees the Independent Director formulation of basic policies, objectives, and programs Umberto A. Rodriguez* 12 12 100 in relation to the Information Technology (IT) Non-Executive Director requirements of the Bank. ITSC reviews, approves, and Laurito E. Serrano** 12 7 58 proposes to the Board the long-term business plans Resource Person for the Bank’s IT development including changes in IT *Resigned effective Jan. 2018 procedures, and proposals for IT policies and expanded **Resigned effective March 2018 services. The top three activities of the ITSC are IT project prioritization, approval of IT projects, and IT The Asset Disposal Committee (ADCom) oversees strategic planning. the administration of the Bank’s asset disposal which includes real estate and other properties, in accordance IT STEERING COMMITTEE with the business direction of the Bank. ADCom provides insights, information, and updates to the Board No. of No. of Percentage Name of Directors Meetings Meetings (%) of concerning the short-range, long-range, and specific Held Attended Attendance emergency planning and implementation/management Umberto A. Rodriguez* 12 12 100 on asset recovery and disposal. Chairperson, Non-Executive Director The Committee held 20 meetings from January to Guillermo L. Parayno Jr. 12 11 92 December 2017. Alfonso B. Cruz Jr. 12 12 100 Ma. Nieves R. Confesor 12 5 42 Independent Director, Non-Voting
Annual Report 2017 — 41 CORPORATE GOVERNANCE
ASSET DISPOSAL COMMITTEE REMUNERATION COMMITTEE No. of No. of Percentage No. of No. of Percentage Name of Directors Meetings Meetings (%) of Name of Directors Meetings Meetings (%) of Held Attended Attendance Held Attended Attendance Renato A. Claravall 20 20 100 Ma. Nieves R. Confesor 2 2 100 Chairperson Independent Director Alfonso B. Cruz Jr. 20 19 95 Judith V. Lopez 2 2 100 Independent Director Nonilo C. Cruz 20 14 70 Laurito E. Serrano* 2 0 0 *Resigned effective March 2018 The Nomination Committee (NomCom) reviews and evaluates the qualifications of all persons nominated to Board of Directors Meetings and Attendance the Board. The NomCom takes into consideration the The PVB Board meets regularly for the effective regulatory requirements, future development of the discharge of its obligations. Regular board meetings are Bank, various rules on independence of the Board and convened monthly and held every second Tuesday of sufficient time to undertake the role. the month. Special meetings may be called as needed. In 2017, the average meeting attendance of the Board was The Committee held one meeting from January to at 92%. The Office of the Board Secretary (OBS) plays an December 2017. important role in supporting the Board in discharging its responsibilities, prepares the agenda and sends out NOMINATION COMMITTEE notices and materials. No. of No. of Percentage Name of Directors Meetings Meetings (%) of No. of No. of Percentage Held Attended Attendance Name of Directors Meetings Meetings (%) of Held Attended Attendance Guillermo L. Parayno Jr. 1 1 100% Chairperson Roberto F. De Ocampo 16 13 81 Ma. Nieves R. Confesor 1 1 100% Guillermo L. Parayno Jr. 16 16 100 Independent Director Nonilo C. Cruz 16 15 94 Judith V. Lopez 1 1 100% Renato A. Claravall 16 16 100 Independent Director Ma. Nieves R. Confesor 16 15 94 The Remuneration Committee (RemCom) has the Alfonso B. Cruz Jr. 16 15 94 basic function of setting bank policy and providing Judith V. Lopez 16 15 94 strategic direction in the study and determination Percianita G. Racho 16 15 94 of the most fair and effective means and modes Umberto A. Rodriguez*** 16 16 100 of compensation and remuneration of its Board of Directors and Senior Officers (VP and above). Laurito E. Serrano**** 16 12 75 RemCom is tasked to assist the Board of Directors by Pablito H. Yap* 5 4 80 recommending and overseeing the implementation of Gerardo B. Anonas** 5 5 100 a program of salaries and benefits for Directors and *Effectivity of resignation June 30, 2017 Senior Officers that would attract and retain the calibre ** Elected on September 1, 2017 and quality of talents needed to sustain and grow its *** Resigned effective Jan. 2018 **** Resigned effective March 2018 operations.
The Committee held two meetings from January to Oversight of Senior Management December 2017. • The Board selects the CEO and may select other key personnel, including members of senior management. • The Board provides oversight of senior management. It hold members of senior management accountable for their actions and
42 — • Building a Solid Foundation enumerate the possible across the organization. assets and assessment of capital consequences (including BAMLEC deliberates, evaluates, (in relation to the estimate of dismissal) if those actions are and determines eligibility organizational risks). IAD reports not aligned with the Board’s of transactions reported as directly to AuditCom. performance expectations. This suspicious transactions prior to includes adhering to the Bank’s its submission to the Anti-Money • The Compliance Department, values, risk appetite and risk Laundering Council (AMLC). led by the Chief Compliance culture, under all circumstances. BAMLEC, likewise, reports to Officer, identifies/monitors all CGCOC. relevant laws and regulations Various Management Committees or jurisdictions and ensures The President is assisted by the Oversight Units of the Bank the Bank’s compliance in these following management committees, There are four support units of the laws and regulations. Likewise, among others: oversight committees of the Board it is charged to ensure that all which are independent from the new or amended compliance • The Management Committee business activities of the Bank, to policies are communicated and (ManCom) oversees the day-to- wit: understood by all concerned day supervision of the business. banking units. The Compliance It is chaired or led by the • The Risk Management Department reports directly to President/CEO and is composed Department (RMD), led by the the CGCOC. of the Bank’s most senior line Chief Risk Officer, oversees the management officers. risk management function in • The Corporate Governance the Bank. RMD assesses risks Officer assists the Corporate • The Assets and Liability (identification of potential Governance & Compliance Committee (ALCO) ensures that risks and evaluation of the Oversight Committee on matters the Bank and its business units potential impact of risks) and related to corporate governance. maintain adequate liquidity, designs a risk-mitigation plan He shall oversee, promote, capital, and funding to meet (eliminate or mitigate the impact and ensure that accountability, all business requirements at of the risk events) concerning fairness, and transparency in all times. ALCO is tasked to trading, position-taking, the Bank’s relationship with the effectively manage capital with lending, borrowing and other Board, stockholders, customers, strict adherence to the risk transactional and operational management, employees, disciplines set by the Board. activities of the Bank. RMD regulators, and the government ALCO is chaired/led by the reports directly to RMOC. are effectively implemented. President/COO and is composed of senior line management • The Internal Audit Department Corporate Governance Initiatives officers. (IAD), led by the Chief Audit The following are the Corporate Executive, examines and reviews Governance initiatives and key focus • The Administrative Investigation regularly the extent and quality of the Bank in 2017: Committee (AIC) investigates of the Bank’s adherence to offenses involving deliberate internal control policies and 1. Strengthening the governance disobedience, fraud, dishonesty, procedures, including the framework for the Board and its unethical behaviour, and other application and effectiveness of committees: Expanded audit of offenses that carry the sanction risk management procedures the Bank and its units, regular of suspension to dismissal. and assessment methodologies independent compliance testing and management, financial in addition to compliance liaison • The Bank Anti-Money information, and compliance officers, and the appointment Laundering Evaluation systems. IAD likewise provides of a Chief Risk Officer (CRO) and Committee (BAMLEC) primarily an independent appraisal of the Risk Oversight team; oversees the implementation functional units, system and of the Bank’s AMLA Program procedures of safeguarding
Annual Report 2017 — 43 CORPORATE GOVERNANCE
2. Communication between 10. Social responsibility: financial B. Related Party Transactions Board and Management: Open assistance to the WWII Veterans’ It is the policy of the Bank to ensure platforms for engagement, Federation. that related party transactions especially in the area of (RPT) are all entered at arm’s length strategy formulation and Governance Policies and standard. These transactions are execution; oversight reports Mechanisms: made and entered substantially on and assessments; and access the same terms and conditions as to available subject experts in A. Corporate Governance Manual transactions with other individuals Management; In its effort to improve its level of and businesses of comparable risks. compliance, not only to governing Hence, they likewise go through the 3. Alignment of composition and laws set forth by various regulating same process applicable to ordinary membership in the executive agencies but also to benchmark or unrelated party transactions as and oversight committees with itself against recognized corporate set forth in the Bank’s RPT Policy. the BSP circular on enhanced CG governance best practices, the Bank This policy was endorsed by the RPT guidelines and Board-approved adopted a Corporate Governance Committee and approved by the road map with subsequent re- Manual on 12 July 2007. The Manual Board of Directors. In 2017, the Bank formulation of charters; institutionalizes the principles of revisited the process and system good corporate governance by and enhanced the DOSRI database 4. Strengthening of AML setting sound governance policies to include the requirements of supervision, with acquisition of across the board, the management, related parties. The DOSRI/RPT AML Base 60; and its shareholders. The Manual database captures the information is subject to periodic review to of all Directors and Officers and their 5. Opening of more client/ ensure the relevance of its content Related Interests. The database is consumer engagement channels, to current governance practices continued to be reviewed to ensure website, and Consumer Affairs and regulatory amendments. The that all information stated in the BSP and Service Quality Department last review of the Manual took biographical data are uploaded and (CASQD); place in September 2017 upon the captured accurately. Most recently, endorsement of the Corporate the Management Committee 6. Related Party Transactions Governance & Compliance (MANCOM) was requested to submit (RPT) mechanism for effective Oversight Committee (CGCOC) a memo to the RPTCOM, even where oversight, transparency, strong and subsequently approved by the are no material transactions to be checks and balances, collective members of the Board. It is currently reported. This would necessitate accountability: monitoring and undergoing review for further the MANCOM Chairperson to the buildup of the RPT database; amendments to comply with recent ensure and assure the correctness corporate governance regulatory of their statements that there are 7. Manuals upgrade: aligned issuances. The relevant provisions of no material transactions for the with the “tone at the top” and the Enhanced Corporate Guidelines month. On the area of education strong checks and balances, and for BSFIs (Circular 969) shall be and awareness, RPT forums were accountabilities; incorporated in the CG manual conducted by the Governance and will be adopted after the next Officer, compliance awareness 8. Self-assessment by and of Annual Stockholders Meeting (ASM) program of the Compliance Office the Board: sets the tone for in 2018. and the establishment of E-learning accountability and transparency; modules. There are also periodic reports that are utilized to monitor 9. Board remuneration: more in RPTs. line with the industry and or similar institutions, making it aligned with actual/measurable Board work and performance (vs. lump-sum allowances, etc.);
44 — • Building a Solid Foundation Schedule of Material Related Party Transactions (Amounts in Philippine pesos) As of 31 December 2017 Name of Counterparty Relationship Type of transaction Amount (in Php) Outstanding balance New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 8,650,537.99 616,129.00 receivables New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 21,783,644.60 11,366,622.47 receivables New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 7,641,568.38 4,346,115.30 receivables New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 5,355,060.13 1,496,092.31 receivables Pabaza Import and Export, Inc. Dir. Claravall sit as LC/TR 160,000,000.00 n/a consultant in the company New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 8,518,615.34 7,370,492.60 receivables New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 8,164,861.43 6,796,732.43 receivables New Rural Bank of Agoncillo, Inc. (NAGON) Subsidiary Sale of salary loan 10,336,121.54 9,754,007.11 receivables
C. Compliance and Money trainings (via E-Learning, focus partnership with the Internal Audit Laundering Prevention Risk group discussions and classroom Department is likewise in place Management Framework lectures) for all employees; and for branches and HO Units that The Bank, through its Compliance a more effective upstream, and cannot be tested due to resource Division, remains dedicated to downstream communication constraints. strengthening money laundering within the organization to prevention and has a risk address AML and compliance D. Risk Management management framework to address matters; and Risk management at PVB is a regulatory compliance and adopt 7. Adherence to Annual Due continuous and developing process best practices. Among its initiatives Diligence of Counterparty Banks. which runs throughout the Bank’s are: strategy and the implementation To fulfill its mandate to measure of that strategy. It is integrated 1. The acquisition of the new or mitigate compliance risk, the into the culture of the Bank with and more robust Anti-Money Independent Compliance Testing an effective policy and a program Laundering System (AML Base (ICT) Team of the Compliance led by senior management, which 60); Division conducted an independent is translated into tactical and 2. Revision of the Money testing on selected branch and operational objectives, assigning Laundering and Terrorist head office units, as indicated in responsibility throughout the Financing Prevention Program the Board-approved 2017 Testing Bank with each manager or team (MLPP) Manual; Plan. The Bank’s objective is to member responsible for the 3. Risk assessment and sanctions assess the level of compliance management of risk as part of his/ screening mechanisms; to the AML, general regulations, her job description. It supports 4. Reorganization of AML and its internal policies. In 2017, accountability, performance personnel to ensure proper notable deficiencies, process gaps measurement and reward, thus management of system and breaches were addressed promoting operational efficiency at development/enhancement; and are now continuously being all levels. 5. Regular self-assessments/ monitored for re-occurrence. For compliance testing to proactively 2018, the office has expanded its Risk management is a top-down identify, measure and monitor testing universe to include “medium process in the Bank’s organization. compliance risks; risk” branches, “high/ medium It is performed at three different 6. Promotion of awareness risk HO Units” and subsidiaries. A levels:
Annual Report 2017 — 45 CORPORATE GOVERNANCE
1. Strategic level: provides a macro Bank’s By-Laws but do not receive providing an avenue for employees perspective which sets out the compensation for services rendered. to raise concerns and receive business plan and the risks to The Bank’s key executives and feedback on any action taken. be undertaken to achieve the officers receive salaries, bonuses desired revenue goals; and other standard bank benefits The Bank has a Whistle Blowing 2. Transactional level: looks at and fringe benefit loan program, as Policy which aims to guide officers the actual risk-taking activities, approved by the BSP, in accordance and staff on reporting complaints identifying, measuring, and with the performance management related to fraud, malpractice, monitoring risk limits and philosophy of the Bank based on conflict of interest or violation of controls; and meritocracy or pay for performance. internal and regulatory policies, 3. Portfolio level: provides procedures and controls. The policy a constant review of risk F. Integrity Upholding Policy also provides for the protection of methodologies, controls and (Whistle Blowing) the reporting employee. Under the performance of risk-taking PVB is committed to maintaining policy, the Bank shall maintain the activities. the highest possible standards of identity of the reporting employee ethics, honesty, accountability, and as confidential and retaliation At present, the Risk Management to adhering to the principles of against any reporting employee shall Division is comprised of three good governance. All employees not be allowed. In 2017, an integrity main units: Credit Risk, Market are encouraged to play their part in upholding campaign drive was and Liquidity Risk, and Operational improving the overall effectiveness initiated on all employees, of which Risk. While the efficient operation and success of the Bank and in 100% said that integrity is important of the division was hampered strengthening the Bank’s system of and find value in it. by a number of vacancies, the integrity by creating an atmosphere Bank has been able to onboard of openness and trust and by experienced professionals in key risk management positions and continues to exert efforts in attracting new and experienced personnel. Further, the Bank intends to revamp its existing risk management processes through the development of an enterprise- wide risk management framework that is aligned with regulatory requirements and leading industry practices such as the 2017 COSO ERM. Included in the ERM framework is the setting of risk appetite, To help ensure that PVB’s strengthening of risk culture and Customer experience in overall good governance its branches continues to improve, the Bank has E. Remuneration Policy initiated a Service Quality The Bank’s Remuneration Audit for all branches. Committee assists the Board by recommending and overseeing the implementation of programs for the remuneration of the members of the Board of Directors and Senior Management. Directors receive per diems for attendance in meetings of the Board and its committees in accordance with the
46 — • Building a Solid Foundation % OF LODGED LODGED SETTLED PENDING TOP 10 EXTERNAL COMPLAINTS COMPLAINTS
1 No cash dispensed 76.5% 776 776 2 Delayed release of ATM/inactive ATM 3.8% 39 39 3 Debited cash 33% 33 33 4 Unauthorized withdrawal/ATM skimming 25% 25 21 4 5 Offline ATM 1.6% 16 16 Long waiting time in processing loan (lack of documents 6 15% 15 15 submitted by the client, not branch of account) 7 ATM PIN tries exceeded 1.1% 11 11 8 Long process in releasing the account of deceased depositor 1.0% 10 10 9 Late delivery/long waiting of pension delivery 1.0% 10 10 10 Non-approval of BancNet Online Registration 1.0% 10 10
Integrity Pledge and Self- aims to truly become the Bank with For simple complaints, the Bank was assessment of Officers (Integrity a heart for every Filipino. able to maintain its 100% resolution Practices) rate. These include ATM-related PVB is committed to ethical business Under its Consumer Protection complaints such as NCD during the practices and corporate governance. Risk Management System, the transaction. The overall resolution The integrity pledge and self- Bank’s customers, stakeholders and of all complaints is 78%, including assessment exercise encourage stockholders are given access to those that fall on the critical or all officers to commit to the Bank’s share their experiences, grievances, complex category. position against corruption, illegal, and complaints through a feedback and unethical practices. These led mechanism called the Integrated To help ensure that PVB’s customer to the findings that the level of Consumer Management System experience in its branches implementation of integrity practices (ICMS) which is reported regularly to continues to improve, the Bank was adequate and that the Bank senior management and the Board has initiated a Service Quality Audit implements integrity standards bank through the CGCOC. for all branches, which was 100% wide, and evaluates its effectiveness completed in 2017. The criteria for continuous improvement. On the PVB also added SMS/text messaging for this audit include a Time in integrity pledge and practices, of the to its current existing channels — Motion Study for over-the-counter 99% of the officers who participated namely, customer hotline number, transactions (50%), risk assessment in the self-assessment integrity email and the contact us page (35%), and outdoors and indoors practices in 2017, 77% rated the of the PVB Website — to provide premises (15%). As an incentive, Bank as expanding and consistent. customers more ways to reach the the Bank recognized the top ten Bank. branches with the highest audit G. Consumer Protection scores bankwide. PVB believes that effective consumer In 2017, the ICMS received 1,014 protection and care are essential lodged complaints whereby No For 2017, the top 10 branches for its continuous operation and Cash Dispensed (NCD) came out as were (in order of ranking): Cebu, existence. It believes that superior the top recurring complaint with a Baguio, Baliuag, Lingayen, Catarman, customer service and continuous 76.8% occurrence overall. It is to be Santiago Isabela, Dumaguete, Imus, engagement with our clients is noted that there had been a 37% Naga, and Pasay. vital in maintaining our clients’ significant drop of NCDs in 2017 patronage, loyalty, and support as it compared with 2016.
Annual Report 2017 — 47 CORPORATE GOVERNANCE
Veterans Affairs Office (VAO) Corporate Social Responsibility news, announcements, and other PVB is unlike any other bank in the The Bank continuously provides valuable information. Through Philippines, having close to 400,000 financial assistance to the BTVWWII, this website, shareholders (and stockholders limited to World War which fund shall be available for other stakeholders for that matter) II veterans and their descendants. “grants-in-aid” to veterans, their may request/inquire relevant The average stockholder holds 74 heirs, orphans and compulsory information, and raise questions or shares of stock. The Bank continues heirs, for educational, social, concerns through the contact details to enhance the Stockholders’ charitable and rehabilitation provided for in the website. Database by proactively looking purposes, to organizations doing for the shareholder heirs, in close service for the cause of the veterans, Equitable Treatment of collaboration with the Veterans’ and for such other purposes Shareholders Sons and Daughters Association, Inc. beneficial to the veterans, and to As a matter of policy, the Bank (SDAI). sustain the continuous operation treats all its shareholders equally or of the BTVWWII Outpatient Clinic, without discrimination. Likewise, the In order to address this peculiar Museum, Archives and Theater. Bank gives its shareholders the right situation, the Bank created a to participate in the shareholders Veterans Affairs Office (VAO) for Rights of Shareholders meetings and to be informed of the purpose of developing and PVB respects the rights of matters that relate directly to the sustaining a closer relationship shareholders as provided for in the business of the Bank. with its veterans/heirs stockholders Corporation Code, to wit: through various veterans’ affairs • Right to vote on all matters that The Bank also owes its very programs. Such programs include: require their consent/approval; existence to the hundreds of • Regular meetings with the • Pre-emptive right to all stock thousands of World War II veterans veterans; issuances of the Bank; and their families, who are also the • Joint medical missions being • Right to inspect corporate books Bank’s shareholders. The Bank, in conducted by FILVETs and Board and records; upholding its unique legacy, has of Trustees of the Veterans of • Right to information; embraced as part of its values World War II (BTVWWII); • Right to dividends; and and beliefs the principles of moral • Constant communication/ • Appraisal right. integrity, professionalism, and celebration of life; honor, as demonstrated by our • Coordination with NHC/ The Bank announces in advance the Filipino veterans of World War II, the Museums/historical clubs/ venue, date, time, and agenda of nation’s heroes. organizations regarding WW II the annual shareholders’ meeting, activities; discussion of each agenda item • Educational programs/ requiring shareholders’ approval, scholarships; provides opportunities to ask • Job fairs; questions and/or raise issues, • Nationwide youth/leadership and has a method of voting camps; including disclosure of voting • Publications; results. Recognizing the need of • Commemorative bills from the shareholders for accurate and BSP; updated information, the PVB • Film tourism; website (www.veteransbank.com. • PhilHealth special card; and ph) contains information about the • Training programs. Bank’s financial condition, product and services, annual reports,
48 — • Building a Solid Foundation TABLE OF ORGANIZATION As of May 31, 2018
CHAIRMAN BOARD OF DIRECTORS
Related Executive Party Committee Transaction Chief Compliance Committee Office of Veterans Credit Officer/Head, the Board Affairs Committee Compliance Division Secretary Corporate Officer (Vacant) Atty. Federico Asset Disposal Governance (Vacant) Manalo Committee Corporate Committee Governance Officer Head, Corporate & Human Resource Rameses Esber, VP Head, Legal Consumer Relations Committee Nominations Services Division Committee Division Miguel Angelo Villa-Real, Vincent Jason FVP Chief Risk Officer / Remuneration Villanueva, FVP Risk Management Risk Committee Division Management Ma. Antonia Bacabac, Oversight Head, Assests Trust Trust Officer FVP Committee Recovery & Remedial Committee / Head, Trust Management Division & Investment Atty. Ma. Rosario Division Chief Auditor/ Audit Sabalburo, FVP IT Steering Ma. Virginia Head, Internal Audit Committee Committee Saquido, VP Division Ma. Flor Manaois, FVP (Acting)
PRESIDENT / Head, Human Resources Division CHIEF OPERATING OFFICER Controller/Head, Finance Group Ivy Rose Samson, FVP NONILO CRUZ Jose Noel Cadiena, SVP
Head, Security Department / Chief Strategy Officer Chief Security Officer (Vacant) Col. Adelio Lebin, M (OIC) Head, Credit Group Chief Information Officer / Head, Clodoveo Atienza, SVP Information Technology Group Camille Canullas, SVP Business Development Department (Vacant)
Head, Institutional Banking Group Head, Branch Banking Group Treasurer/Head, Treasury Group Patrick Jerold Juan, FVP Vilma Noche, SVP Noel Malabag, SVP
Head, Relationship Management Head, Product Management Head, Balance Sheet & Division - Private (Vacant) Liquidity Management Danilo Belo, AVP (Acting Head) Louiesito De Leon, AVP Head, Relationship Management Business Intelligence Department Head, Sales Division - Public Meliza San Luis, SM Michael Medero, VP Plato Tirol, VP Head, Electronic Channels Head, Consumer Lending Division (Vacant) Annabelle Yong, SVP Head, Trading Head, Sales (Vacant) Head, Trade Sales Division Ma. Visitacion Gajitos, FVP
Financial Institution Department Head, Operations and Control (Vacant) Evener Monzones, FVP
Annual Report 2017 — 49 BOARD OF DIRECTORS
2. 1. 3. 4.
Roberto F. De Ocampo He was also a member of the Boards 1. Dr. Roberto F. De Ocampo Chairman of Governors of the World Bank, the Chairman 72, Filipino International Monetary Fund, and the Asian Development Bank. 2. Guillermo L. Parayno Jr. Dr. Roberto F. De Ocampo, OBE was Vice Chairman the former Secretary of Finance of the He was Secretary of Finance (1994- Philippines, and became the first Filipino 1998) during the presidency of Fidel Directors to receive the most internationally V. Ramos, and was widely recognized 3. Ma. Nieves R. Confesor prestigious award to Finance Ministers as the principal architect of the 4. Alfonso B. Cruz Jr. Worldwide, the “Global Finance Minister resurgence of the Philippine economy of the Year” award from Euromoney in whose achievement was hailed by the 1995. In 1996, Euromoney named him international finance community. 5. Nonilo C. Cruz “Asian Finance Minister of the Year.” In President and COO 1997, he was again recognized as Asian He is the past president of the Asian Finance Minister of the Year, this time by Institute of Management having retired Directors Asiamoney Magazine. from that position in May 2006, and until 6. Renato A. Claravall recently was a member of the AIM Board 7. Judith V. Lopez He is known nationally and of Trustees. 8. Percianita G. Racho internationally for public and 9. Gerardo Manuel Luis B. Anonas international finance, having been Prior to these posts, he also served as 10. Laurito Serrano Chairman of the APEC and ASEAN Chairman and CEO of the Development (Not in Photo) Finance Ministers (at the onset of the Bank of the Philippines (DBP) and led Asian financial crisis) whose meetings its rehabilitation. This earned DBP he chaired and resulted in the landmark the recognition from the prestigious Manila Framework that prescribed the international The Banker magazine as steps to exit the crisis. one of the “world’s soundest banks”
50 — • Building a Solid Foundation 9. 5. 6. 7. 8.
during his tenure. As Secretary of He has also been awarded the Philippine Dr. De Ocampo was 1975 Ten Finance he was concurrently Chairman Legion of Honor, the highest honor Outstanding Young Men (TOYM) of the Land Bank of the Philippines. conferred on Filipino civilians by the awardee in the field of National Republic of the Philippines in 1998 Economic Development for pioneering Dr. De Ocampo is a recipient of many for his outstanding contributions the Philippine rural electrification international and national honors. to the country. He is one of the first program. He had been cited as one In September 2001, he was named ASEAN members of the Trilateral of the 500 Great Asians in 2001 and a to the Ordre National de la Legion d’ Commission, an international think- recipient of several Baron’s Who’s Who Honneur by the Republic of France with tank of distinguished global leaders and awards. In 2004, he was elected to the the rank of Chevalier for his successful was also the first recipient of the Man Board of Advisors of the Conference efforts and initiatives to promote of the Year Award from the Association Board, one of the world’s leading closer Philippine-France relations. On of Development Finance Institutions of authorities in international business the occasion of the Queen’s Diamond Asia Pacific (ADFIAP). He is a founding economics (based in New York). In 2006, Jubilee, he was conferred by Her Partner of a Global Advisory Group he was conferred with the Asian Human Majesty Queen Elizabeth II the Most (Centennial Group) based in Washington Resources Development Award by the Excellent Order of the British Empire D.C. and is a Founding Director of the Asia HRD Congress. (OBE) for his outstanding efforts in Global Economic Forum: The Emerging promoting Philippine-UK relations Markets Forum. He is the first Asian to At present, he Chairs the Board Advisers during his years in public service, and in be elected to the Board of the Global of the RFO Center for Public Finance & his capacity as Chairman of the British Reporting Initiative (GRI) which is the Regional Economic Cooperation, an ADB Alumni Association. Recently, he was global authority on Sustainability Regional Knowledge Hub. He is also the vested by the Vatican as a knight of the Reporting based in Amsterdam. present Chairman of Intervest Projects, Equestrian Order of the Holy Sepulchre Inc. and Intervest Insurance Agency, Inc., of Jerusalem. wholly owned subsidiaries of Veterans Bank.
Annual Report 2017 — 51 BOARD OF DIRECTORS’ PROFILES
Guillermo L. Parayno Jr. debt capital markets, leverage • First lady Dean of the Asian Institute of Vice Chairman financing, and structured asset Management (AIM) and Associates 70, Filipino and export financing; and remedial • Professor of the Asian Institute of management. Management (AIM) • Appointed to the PVB Board in July • First started with the former Solidbank • Gawad Maestra Award (PSTD), 2014 2013 Corporation, an affiliate of Bank of • Chairperson, Galing Pook Foundation, • Independent Director, Metro Retails Nova Scotia, as a relationship manager 2011-2013 Stores Inc. of Corporate Banking Group and • Member of the Board of Trustees, • Current President of E-Konek Pilipinas; concurrently a VP, Treasurer and Miriam College Foundation, Bagong Silang Farms, Inc.; and Director of Solid Philippines Venture 1996-present Parayno Consultancy Services Capital Corporation, a joint venture • Chairperson, Kaunlaran ng • Commissioner, Bureau of Customs, between Solidbank Corporation and Manggagawang Pilipino, Inc., 1992-1998 the Philippine Government 2011-present • Commissioner, Bureau of Internal • A former Vice President of Equitable • Member of the Board, International Revenue, 2002-2005 Banking Corporation who contributed Livestock Research Institute (ILRI) – • Co-Chairman, Lina Group of to the expansion of the Bank’s Nairobi/Addis Ababa -World Bank and Companies, 199-2002 Corporate Banking Group in Makati, CGIAR, 2008-2014 • PMA Alumni Cavalier Awardee for Philippines. • Ten Outstanding Women in the outstanding accomplishments in • And a pioneer executive of Australia Nation’s Service (TOWNS) Awardee, Public Administration and New Zealand (ANZ) Banking 1992 • Outstanding Professional of the Group Ltd, Philippine Branch, that • External Collaborator/Expert – Asian Year by the Professional Regulatory today is a major commercial and Development Bank, World Bank, UN, Commission of the Philippines investment bank in the Philippines. ILO • Economic Warrior Award of the • Education: Master’s Degree in • Education: Master of Public Policy Department of Finance Business Administration, Murdoch and Administration, John F. Kennedy • Education: Masters in Psychology, University of Australia (Manila School of Government of Harvard University of the Philippines; Master Program); Bachelor’s Degree in University; Master of Business of Business Management, Asian Marketing Management, De La Salle Administration, Ateneo Graduate Institute of Management; Computer University School of Business; and Bachelor of Programming, National Computer Arts in Literary Studies, Magna Cum Center; Bachelor of Science degree, Laude, Maryknoll College (now Miriam Magna Cum Laude, Philippine Military College) Academy Ma. Nieves R. Confesor Independent Director 68, Filipino Renato A. Claravall Nonilo C. Cruz • Appointed to the PVB Board in July Director President & Chief Operating 2013 66, Filipino Officer • Secretary of the Department of Labor 58, Filipino and Employment during the Aquino • Appointed to the PVB Board in June and Ramos administrations 2015 • A career professional with over • Chairperson, GRP Negotiating Panel • Senior Vice President and Chief 30 years of banking and finance for the CPP-NDF-NPA process (2005- Finance Officer, Benguet Corporation, experience that includes general 2010) 2010-2015 banking; commercial banking • Member of the Board, Land Bank of • Director, various wholly owned particularly relationship management, the Philippines, Philippine National companies of Benguet Corporation risk management, transactional Bank, Metrobank of the Philippines, • Senior Management positions in banking, trade finance, markets; Social Security System, Philippine various financial institutions, 1997- Investment Banking that includes Overseas Administration, Overseas 2010 global and domestic loan syndications, Worker Welfare Administration
52 — • Building a Solid Foundation • Deputy General Manager, Bank of • President, Association of Certified Laurito E. Serrano Boston Manila Offshore Branch, 1984- Public Accountants in Public Practice Director 1997 (ACPAPP), 2007 57, Filipino • Senior Manager, Union Bank of the • Outstanding Professional of the Year Philippines, 1979-1984 Awardee in the field of Accountancy • Appointed to the PVB Board in June from the Professional Regulation 2012; Resigned as of March 6, 2018 Commission, 2014 • Engaged in the Corporate Finance • Education: Certificate in Business Advisory practice with private entity Alfonso B. Cruz Jr. Economics-Strategic Economic clients and currently serves as Director Business Program, University of Director, Independent Director and/ 74, Filipino Asia and the Pacific, 2017; Executive or Advisor in a number of private Program, Harvard School of Business, and public companies mainly in the • Appointed to the PVB Board in July 2009; Executive Business Course mining, hotel, food and beverage, 2013 for PWC Partners from University of logistics, shipping, gaming and • Over 40 years of experience in various Western Ontario, 1996; Management integrated property development fields in banking services here and Development Program from Asian business overseas Institute of Management; and • Former Partner, Corporate Finance • One Wealthy Nation Fund, 2014 Bachelor of Science in Business Consulting and Business Advisory • Director, Capital Markets Integrity Administration, Cum Laude, University Group, SGV & Co. Corporation, 2011-2013 of the East • Education: Certified Public Accountant; • Director, Advent Capital and Finance Masters in Business Administration Corporation, 2006-2008 (MBA), Harvard Graduate School of • Senior Executive Vice President, Land Business; and Bachelor of Science in Bank of the Philippines and Director, Percianita G. Racho Commerce, Degree in Accounting, various LandBank subsidiaries, 1998- Independent Director Cum Laude, Polytechnic University of 2009 60, Filipino the Philippines • Education: Bachelor of Science in Economics, Ateneo de Manila • Reappointed to the PVB Board in May University 2011 • Provincial Administrator, Agusan del Gerardo Manuel Luis B. Anonas Norte,2009-2015 Director • Former Mayor, Municipality of 60, Filipino Judith V. Lopez Buenavista, Agusan del Norte, 2001- Independent Director 2004 • Appointed Director of Veterans Bank 60, Filipino • Assistant Legal Officer, Agusan del in September 2017 Norte, 1998-2001 • President, Optimum Development • Appointed to the PVB Board in July • Former Vice Mayor, Municipality of Bank, 2015-2017 2013 Buenavista, Agusan del Norte, 1992- • Executive Vice President, East West • Former Chairperson, Isla Lipana & 1995 Banking Corp., 1998-2006 Co., the Philippine member firm of • Former National President of the VFP • Executive Vice President, Philippine Pricewaterhouse Coopers, 2009-2013 - Sons & Daughters Association, Inc. Banking Corp., 1994-1998 • Chairman, Auditing and Assurance (VFP-SDAI) • Senior Vice President, Urban Bank, Standard Council (AASC), 2010-2014 • Education: Bachelor of Laws, 1991-1994 • Chairman, FINEX Foundation, 2014 University of Bohol and AB Political • Education: Masters in International • Past President, Financial Executives Science, University of Bohol Business, Shiller International Association of the Philippines (FINEX), University Paris Study Center; Bachelor 2013 of Science in Management, Ateneo de • Member, Financial Reporting Manila University Standards Council 2014-2016
Annual Report 2017 — 53 MANAGEMENT COMMITTEE
Roberto F. De Ocampo, OBE Chairman & Chief Executive Officer
Nonilo C. Cruz President & Chief Operating Officer
54 — • Building a Solid Foundation Patrick Jerold T. Juan First Vice-President
Clodoveo P. Atienza Senior Vice-President
Miguel Angelo C. Villa-Real First Vice-President
Ivy Rose D. Samson First Vice-President
Vincent Jason T. Villanueva First Vice-President
Camille Maricelle C. Canullas Senior Vice-President
Noel C. Malabag Senior Vice-President
Jose Noel L. Cadiena Senior Vice-President
Vilma A. Noche Senior Vice-President (Not in photo)
Annual Report 2017 — 55 MANAGEMENT COMMITTEE PROFILES
Roberto F. De Ocampo, OBE Chairman / Chief Executive Officer 72, Filipino Profiles • See page 50 (Board of Director’s profiles)
Nonilo C. Cruz President / Chief Operating Officer 58, Filipino • See page 52 (Board of Director’s profiles)
Clodoveo P. Atienza Senior Vice-President and Head-Credit Group 63, Filipino • Joined PVB in 2015 • Past Positions: Head-Credit Administration Division, Philippine National Bank • Education: Bachelor of Science in Business Economics, University of the Philippines, Diliman
Jose Noel L. Cadiena Senior Vice-President and Head – Finance and Operations Group 44, Filipino • Joined PVB in 2015 • Past Positions: First Vice-President - Head of Finance and Operations Group, Philippine Veterans Bank; Vice-President and Country Head of Finance, ANZ; Assistant Vice-President for Corporate Finance – Financial Analysis, Deutsche Bank • Education: AB Economics, BS Accountancy, Dela Salle University
Camille Maricelle M. Canullas Senior Vice-President and Head-Information Technology Group 51, Filipino • Joined PVB in 2003 • Past Positions: Director, SGV & Co.; Vice-President, Urban Bank • Education: Masters in Business Administration, Ateneo Graduate School of Business; and Bachelor of Science in Computer Science, Dela Salle University
Noel C. Malabag Senior Vice-President and Treasurer 46, Filipino • Joined PVB in 2015 • Has 23 years of treasury experience, including 19 years with HSBC • Currently a member of the Open Market Committee of the Bankers Association of the Philippines, Asociación Cambiste Internationale (ACI) Philippines, and Money Market Association of the Philippines • Certified Treasury Professional, Ateneo-Bankers Association of the Philippines, and Certified Fixed Income Salesmen, Securities and Exchange Commission • Education: Bachelor of Science in Commerce major in Marketing Management, De La Salle University
56 — • Building a Solid Foundation Vilma A. Noche Miguel Angelo C. Villa-Real Senior Vice-President and Head – Branch Banking First Vice-President and Head – Corporate and Group Consumer Relations Division 52, Filipino 50, Filipino • Joined PVB in January 2014 • Joined PVB in 2003 • Past Positions: Head Operations Group, Philippine Veterans • Current Position: Director for Industry Relations, Bank Bank; First Vice-President-Bank Operations Group, East Marketing Association of the Philippines West Banking Corporation; Senior Vice-President-Banking • Past Positions: Head – Manager, Corporate Communications, Operations Group, Chinatrust (Phils) Commercial; Vice- Bank of the Philippine Islands; Past President, Bank Marketing President-Recovery Collections, Citibank NA Philippines; Vice- Association of the Philippines President-Customer Service and various positions, Standard • Education: Program for Development Management, Asian Chartered Bank Philippines Institute of Management; Bachelor of Science in Community • Education: Bachelor of Science in Computer Science, Dela Development, University of the Philippines Salle University Vincent Jason T. Villanueva First Vice-President and Head – Legal Services Patrick Jerold T. Juan Division First Vice-President and Head – Institutional Banking 51, Filipino Group • Joined PVB in 2016 48, Filipino • Past Positions: Executive Attorney, Balgos & Perez Law • Joined PVB in 2017 Offices; Litigation Section Head, Legal Head, Country Legal • Past Positions: Head – Business Development Department, Officer, ABN AMRO Savings Bank Offshore Banking Unit (later Philippine Veterans Bank; Head – Large Corporates, ANZ PNG RBS Offshore Banking Unit); Associated Person, ABN AMRO Ltd. Asia Securities (Phil.), Inc. (later RBS Asia Securities (Phil.), • Education: Bachelor of Science in Industrial Management Inc. (concurrent with the Country Legal Officer position); Engineering, minor in Mechanical Engineering, Dela Salle Compliance Officer, Royal Bank of Scotland (Phil.), Inc.; Legal University Head, Robinsons Bank Corporation • Education: Bachelor of Laws and Bachelor of Science in Business Management, Ateneo de Manila University Ivy Rose D. Samson First Vice-President and Head – Human Resources Division 49, Filipino • Joined PVB in February 2018 • Past Positions: Chief Operating Officer, Georgia Academy; Chairman & President, Vista Center for Professional Development; Vice President – Corporate Services Sector, Asiatrust Bank; Vice President-Business Support Division, Mega Publishing Group; Branch Sales & Service Division Head, Philippine Savings Bank and Training Head, Metrobank. • Education: PhD Candidate, Dela Salle University; Masters in Business Administration, Ateneo De Manila University; Bachelor of Science in Psychology, Colegio De San Juan De Letran
Annual Report 2017 — 57 SENIOR OFFICERS As of May 2018
Chairman of the Board Vice Presidents Assistant Vice Presidents and Chief Executive Officer Marie Jean J. Carranceja Danilo L. Belo Roberto F. De Ocampo, OBE Tomas L. Cloa, Jr. Ma. Victoria O. Brago Rameses L. Esber Edgardo A. Calzado Armand D. Eugenio Moises T. Carpio Board Secretary Jonathan Thaddeus V. Jimenez Erwin V. De Guia Federico A. Manalo Arlino M. Magsakay Louiesito L. De Leon Racquel B. Mañago Joel I. Dilig Michael T. Medrero Enrique T. Dominguez President and Ma. Theresa T. Nacar Rodil S. Eslava Chief Operating Officer Florence T. Palacio Heintje Rey B. Ferrer Nonilo C. Cruz Frederick P. Rosario Leilani S. Francisco Ma. Virginia C. Saquido Ma. Justina M. Francisco Plato Raymund C. Tirol Rowena A. Generoso Senior Vice Presidents Allan G. Unson Ezmeralda S. Halal Clodoveo P. Atienza Nestor L. Lacuesta Jose Noel L. Cadiena Ella R. Makalintal Camille Maricelle M. Canullas Ma. Bernadette Y. Peregrino Noel C. Malabag Mario L. Rabie Vilma A. Noche Jose Francisco C. Ramos Annabelle Y. Yong Ma. Melyn B. Ramos Jonathan J. Remorosa Johanna C. Reyes First Vice Presidents Geraldine L. Romano Ma. Antonia N. Bacabac Christina B. Romero Ma. Visitacion V. Gajitos Catherine V. Sacro Patrick Jerold T. Juan Amelito A. Velasco Ma. Flor B. Manaois Evener H. Monzones Intervest Projects Inc. Ma. Rosario A. Sabalburo Rogerio B. Panlasigui - President Ivy Rose D. Samson and COO Rufino J. Villaluna Vincent Jason T. Villanueva Miguel Angelo C. Villa-Real
58 — • Building a Solid Foundation PRODUCTS AND SERVICES As of May 2018
Deposit Services International Services Peso Savings and Checking Account Import/Export Financing US Dollar Deposits Commercial Letters of Credit Regular Time Deposit Purchase and Sale of Foreign Currency 5–Year Long Term Time Deposit Foreign Currency Loans & Advances Veteran Teller ATM Card Bulilit Build-Up Savings Treasury Services Securities Dealership Loan Services • Government Treasury Bills Regular Housing Loans • Government Treasury Bonds Home Loan with Cash Back (20 years term) • Corporate Bonds Business and Commercial Loans Foreign Exchange Salary Loans Pension Loans MSME Loans Trust Services Agri – Agra Loans Asset Management Services LGU Financing & Loan Facility • Investment Management Account (IMA) • Employee Benefit Trust Fund • Pre-need Plan Cash Management Services Estate Planning Complete Payroll Package • Personal Management Trust • ATM/Company ID Card/Time-Keeping Other Special Trust and Fiduciary Services • Payroll System • Safekeeping Installation of Offsite ATMs • Escrow Point-of-Sale (POS) Facility • Administratorship/Executorship Deposit Pick-Up/Cash Delivery Services • Mortgage Trust Indenture Check Writing and Disbursement Facility • Facility Agency/ LGU
Other Services Collection of Notes Veterans Assistance SSS, BIR and PhilHealth Collection
Annual Report 2017 — 59 BRANCHES As of May 2018
METRO MANILA Gagalangin Pasay PVB Building, 2666 J. Luna Units 9-B and 10-A Main SVC Department (MOSD) corner Fernandez Streets Liberty Commercial Center PVB Building, 101 V.A. Rufino Gagalangin, Tondo, Manila Libertad Street, Pasay City corner Dela Rosa Streets Tel: (02) 252-7222 • 252-7228 Tel: (02) 556-4163 • 556-4164 Legaspi Village, Makati City Fax: (02) 252-7216 Fax: (02) 556-6118 Tel: (02) 857-3805 • 902-1600 Fax: (02) 840-3639 Imus Port Area JSS Building, Bayan Luma IV Ground Floor, PPA Building Alta Vista E. Aguinaldo Highway, Imus, Cavite A. Bonifacio Drive, South Harbor, Manila PVB Building, Aurora Boulevard Tel: (046) 515-7724 • 471-4583 Tel: (02) 524-5950 • 310-5117 corner Katipunan Road Fax: (046) 471-4635 Fax: (02) 524-9173 Quezon City Tel: (02) 913-4732 • 437-5991 Las Piñas Taguig Fax: (02) 913-4760 Units 101-103 Ground Floor, VFP MDC Building The Palm Square Building Veterans Center Antipolo Pamplona 3, Alabang-Zapote Road Western Bicutan, Taguig City 182 P. Oliveros Street Las Piñas City Tel: (02) 838-3886 | 838-3888 Barangay San Roque Tel: (02) 799-7210 • 799-7205 Fax: (02) 838-3887 Antipolo City Fax: (02) 799-7210 Tel: (02) 470-1892 • 470-1879 Timog Fax: (02) 470-1832 Malolos Bulacan 130 Cabrera 1 Building Units 1-2, MTKJ Building Timog Avenue, Quezon City Baliuag Paseo del Congreso, Barangay Catmon Tel: (02) 441-1809 • 920-7455 PVB Building, Rizal c Malolos City, Bulacan Fax: (02) 441-1809 orner Barrera Streets Tel: (044) 796-2025 • 796-2239 Poblacion, Baliuag, Bulacan Fax: (044) 796-2299 U.P. Diliman Tel: (044) 766-5012 • 766-5013 Ang Bahay Ng Alumni Fax: (044) 766-5014 Marikina R. Magsaysay Avenue PVB Building, G. Fernando corner Balagtas Streets Caloocan corner Redwood Streets UP Diliman, Quezon City Caloocan Judicial Building San Roque, Marikina City Tel: (02) 434-7440 • 929-5340 10th Avenue, Caloocan City Tel: (02) 682-9102 • 682-9104 Fax: (02) 434-5757 Tel: (02) 355-2346 • 355-2340 Fax: (02) 682-9103 Fax: (02) 355-2334 Muntinlupa NORTHERN LUZON Camp Aguinaldo CVA Building, National Road PVB Building, Boni Serrano Avenue Putatan, Muntinlupa City Baguio Murphy Cubao, Quezon City Tel: (02) 861-0392 • 861-0452 Pine Lake View Building, Rizal Park Tel: (02) 911-8964 • 911-7329 Fax: (02) 861-0413 Road 1 corner Otek Street, South Road 437-9849 Baguio City Fax: (02) 911-9293 • 911-9295 Parañaque Tel: (074) 619-0997 • 444-9319 Buenamart Commercial Complex Fax: (074) 443-5033 Camp Crame 8280 Dr. A Santos Avenue PVB Building, Boni Serrano Avenue Barangay San Isidro, Parañaque City Cabanatuan Camp Crame, Quezon City Tel: (02) 820-4940 • 478-8035 Ground Floor, Ramos Building Maharlika Tel: (02) 726-9707 • 726-9714 Fax: (02) 820-4941 Highway, Barrera District Cabanatuan Fax: (02) 724-3103 City, Nueva Ecija Tel: (044) 940-2571 • 940-2573 Fax: (044) 940-2574
60 — • Building a Solid Foundation Clark San Fernando Lucena Building 2435, E. Quirino Street Units 2-3, The Peninsula Plaza Ground Floor, CAP Building Clark Freeport Zone, Pampanga McArthur Highway, Dolores C.T. Profugo corner Granja Streets Tel: (045) 599-6683 San Fernando City, Pampanga Barangay V. Poblacion Fax: (045) 893-6684 Tel: (045) 961-4410 • 961-7733 Lucena City, Quezon Fax: (045) 961-4410 Tel: (042) 373-0376 • 373-0373 Dagupan Fax: (042)373-0383 Ground Floor, CAP Building Santiago, Isabela Burgos Street, Dagupan City Bretania Building, Camacam Naga Pangasinan corner Turingan Streets PVB Building, Elias Angeles Street Tel: (075) 515-3209 • 522-0895 Santiago City, Isabela Naga City, Camarines Sur Fax: (075) 522-0895 Tel: (078) 305-1862 • 305-0624 Tel: (054) 473-8251 • 472-2270 Fax: (078) 305-1872 Fax: (054) 473-9303 La Union PVB Building, P. Burgos St. Tuguegarao Puerto Princesa San Fernando City, La Union PVB Building, Mabini Rizal Avenue, Barangay Tanglaw Tel: (072) 700-4953 • 700-2654 corner Luna Streets Puerto Princesa City, Palawan Fax: (072) 607-8853 Tuguegarao, Cagayan Tel: (048) 433-7842 • 433-7843 Tel: (078) 844-1905 • 255-1945 Fax: (048) 433-7841 Laoag Fax: (078) 844-0596 PVB Building, Gen. Segundo Avenue San Jose Brgy. 13, Laoag City, Ilocos Norte PVB Building, Rizal Tel: (077) 770-3187 • 770-3188 SOUTHERN LUZON corner Quirino Streets, San Jose Fax: (077) 771-3187 Occidental Mindoro Batangas Tel: (043) 457-0456 Lingayen Ground Floor, CAP Building Fax: (043) 491-1563 RBP Building, Avenida, Rizal 53 Rizal Avenue, Batangas City West Poblacion, Lingayen, Pangasinan Tel: (043) 723-5686 San Pablo Tel: (075) 542-3849 • 542-3850 Fax: (043) 723-2782 Azores Building, Regidor Fax: (075) 542-3850 corner Lopez Jaena Streets Calamba San Pablo City, Laguna Olongapo PVB Building Crossing Tel: (049) 561-1133 Saver’s Digital Hub Barangay Real, Calamba, Laguna Fax: (049) 561-1132 Appliance Depot Building Tel: (049) 545-3002 • 545-3006 Rizal Avenue, West Tapinac Fax: (049) 545-3058 Talisay, Batangas Olongapo City, Zambales Unit 101-102, Paseo de San Guillermo Tel: (047) 222-8385 • 222-8382 Legazpi Club Balai Isabel, Talisay, Batangas Fax: (047) 222-8384 PVB Building, Peñaranda Street Tel: (043) 722-1715 • 722-2441 Legazpi City, Albay Fax: (043) 727-2229 Paniqui Tel: (052) 820-2247 • 480-8909 PVB Building, Zamora Fax: (052) 480-8908 corner Burgos Streets, Paniqui, Tarlac VISAYAS Tel: (045) 931-1726 Lipa, Batangas Fax: (045) 931-1422 SMB Building, Barangay Marauoy Bacolod Lipa City, Batangas PVB Building, General Lacson Street Tel: (043) 757-4250 • 757-4175 corner Cottage Road, Bacolod City Fax: (043) 757-4277 Negros Occidental Tel: (034) 434-2371 • 434-1538 Fax: (034) 434-1537
Annual Report 2017 — 61 BRANCHES As of May 2018
Catarman Tacloban Kidapawan City Ortiz Building, Eusebio Moore PVB Building CAP Building, Quezon Boulevard corner Bonifacio Streets Justice Romualdez Street corner Datu Matalam Street Barangay Mabolo, Catarman Tacloban City, Leyte Kidapawan City, North Cotabato Tel: (055) 500-9183 Tel: (053) 321-2556 Tel: (064) 577-5201 • 521-0277 Fax: (055) 500-9183 Fax: (053) 523-9701 Fax: (064) 521-0275
Cebu Tagbilaran Koronadal Ground Floor, PVB Building PQVC Business Plaza YMEI Building, Gen. Santos Drive Osmeña Boulevard, Cebu City C.P. Garcia Avenue Koronadal, South Cotabato Tel: (032) 253-7745 • 255-1168 Tagbilaran City, Bohol Tel: (083) 520-1138 Fax: (032) 254-7200 Tel: (038) 412-7076 • 412-7077 Fax: (083) 520-1139 Fax: (038) 501-9802 Dumaguete Pagadian City PVB Building, Perdices JAVAVED Business Corp. Building corner San Juan Sreets MINDANAO Rizal Avenue , Pagadian City Dumaguete City, Negros Oriental Zamboanga del Sur Tel: (035) 421-0870 • 225-2033 Butuan Tel: (062) 925-0250 • 215-4380 Fax: (035) 225-2031 JC Aquino Avenue Fax: (062) 925-0259 corner Imadejas Subdivision Iloilo Butuan City, Agusan del Norte Valencia, Bukidnon PVB Building, Valeria Tel: (085) 255-5681 • 342-5082 Ground Floor, GV Hotel corner Delgado Streets, Iloilo City Fax: (085) 815-4289 Triple J Building Tel: (033) 335-8410 • 335-0452 Sayre National Highway Fax: (033) 335-0451 Cagayan De Oro Valencia, Bukidnon PVB Building, R. N Abejuela Tel. (088) 828-5514 Kalibo corner Tiano Bros. Streets Telefax: (088) 828-5515 Ruiz-Igtanloc Building, Capitol Site Cagayan de Oro City Kalibo, Aklan Misamis Oriental Zamboanga Tel: (036) 268-1970 • 262-8696 Tel: (088) 857-3386 PVB Building, Gov. Lim Avenue Fax: (036) 268-1970 Fax: (088) 857-3386 corner Saavedra Streets Zamboanga City, Zamboanga del Sur Mandaue Davao Tel: (062) 991-1077 • 992-2168 Aracada 5, Lopez Jaena National Highway PVB Building, CM Recto Street Fax: (062) 991-1079 Tipolo, Mandaue City, Cebu Barrio Sexy, Davao City Tel: (032) 349-3196 • 268-9322 Tel: (082) 221-4012 • 221-4011 Fax: (032) 420-6128 Fax: (082) 224-0698
Roxas General Santos PVB Building, Legaspi Tri-Star Building I, Santiago Boulevard corner P. Gomez Streets General Santos City, South Cotabato Roxas City, Capiz Tel: (083) 553-3995 • 301-3990 Tel: (036) 621-6206 • 621-6123 Fax: (083) 553-3995 Fax: (036) 621-6122
62 — • Building a Solid Foundation A BANK WITH A HEART FOR EVERY FILIPINO 101 V.A. Rufino corner Dela Rosa Streets, Legaspi Village, Makati City 1229 Philippines Tel. Nos. (632) 857-3800 | (632) 902-1700 www.veteransbank.com.ph.