2019 ANNUAL REPORT Greater Inclusion, Growth for the Nation 2019 ANNUAL REPORT 1 Contents 04 LANDBANK’s Integrated Countryside Lending Framework 05 Message from the President of the Philippines 06 Chairman’s Message 08 President’s Message 10 Feature Story: Breathing New Life in Bongao 12 Operational Highlights: Pursuit of Mandate 36 Feature Story: Bringing Financial Services to the Unbanked and Underserved 38 Operational Highlights: Customer Service 60 Feature Story: Making Investment more Inclusive and Rewarding 62 Operational Highlights: Institutional Viability 188 LANDBANK Foundation and Subsidiaries 196 LANDBANK Products and Services 218 Officers’ Portraits 229 Independent Auditor’s Report 231 Statement of Management’s Responsibility for Financial Statements 232 Financial Statements 238 Notes to Financial Statements 302 Acknowledgment The Cover The LANDBANK 2019 Annual Report’s theme of “Greater Inclusion, Growth for the Nation” centers on the Bank’s commitment to reach more Filipinos through its products and services and working with them towards national development. LANDBANK anchored its strategies and directions to the National Government’s priorities and took more aggressive steps towards intensifying our support to the agriculture sector, especially to the country’s small farmers and fishers. We strive to constantly innovate our service delivery by using the latest technologies, and to improve our products to become more responsive to the needs of these mandated sectors, as well as other customers. Just like in open circles that are used as our cover’s main graphics, LANDBANK creates spaces or opportunities to link with and serve more people. 2 LAND BANK OF THE PHILIPPINES VISION Our Corporate Policy By 2023, LANDBANK shall be the leading The LANDBANK Vision and Mission Statements universal bank that promotes inclusive embody the Bank’s strategies and plans for the growth, especially in the unbanked and medium-term 2019-2023. With the identification of its priority sectors and primary partners, the underserved areas, through the delivery of development thrust of LANDBANK remains at innovative financial products and services the core of its operations. Emphasis was placed powered by digital banking platforms. on the “unbanked” and “underserved” areas, which are LANDBANK’s primary focus as it promotes inclusive growth. MISSION LANDBANK also commits to leverage on technology in bringing the financial and support To our Clients and Publics: services to its customers. Similarly, it puts high premium on the growth and development of its We provide accessible and best technology human resource, who are the Bank’s primary movers in the pursuit of its mandate and solutions to deliver timely and responsive institutional goals. financial and support services to meet the needs of our clients, especially Small Farmers and Fishers (SFFs), Micro, LANDBANK’s Brand Small and Medium Enterprises (MSMEs), Countryside Financial Institutions (CFIs), LANDBANK is unique among the universal Local Government Units (LGUs) and banks in the Philippines, as it constantly government agencies, while promoting performs a balancing act between remaining sustainable development anchored on good faithful to its social mandate and sustaining governance. institutional viability. It is one of the top banks in the country and has always lived up to its role in To our Employees: promoting countryside development, primarily through agriculture and fisheries. We are the employer of choice. Through the years, LANDBANK’s roles have evolved and expanded. Beyond lending, We develop and nurture talents who its development work involves extending exemplify the highest standards of ethics, support to the National Government in its social responsibility and service excellence. socioeconomic programs. LANDBANK is reaching out to people and communities and We support diversity and cultivate a healthy bringing to them these programs, consistent with the LANDBANK promise to be a partner work environment with equal opportunity for for the growth of its customers and other professional growth and advancement. stakeholders. 2019 ANNUAL REPORT 3 LANDBANK’s Integrated Countryside Lending Framework WHOLESALE LENDING RETAIL LENDING Accredited Cooperatives • Rural Banks, Cooperative Banks • Microfinance Institutions • Farmers’ Organizations/Associations • ARB Organizations RELENDING • Local Governments Units • Agribusiness Enterprises • • Small Farmers and Fishers Small and Medium Enterprises • Agrarian Reform Beneficiaries Agri-Processors • • • Microenterprises INFRA, ANCILLARY SERVICES 4 LAND BANK OF THE PHILIPPINES Message from the President of the Philippines My warmest greetings to the Land Bank of the Philippines (LANDBANK) as it publishes its 2019 Annual Report. I commend LANDBANK for maintaining its position as one of the top performing banks in the country, with 18.5 billion pesos in net income and over two trillion pesos in total resources for 2019. Your intensified support for our agricultural sector through expanded loan services for small farmers and fisherfolk, including agrarian reform beneficiaries, is truly remarkable. As you chronicle your achievements and policy directions in this publication, I hope that it will also strengthen your commitment to help promote greater countryside development. May you continue to provide timely and accessible financial assistance to our priority sectors in the agriculture and fishery industries. Together, let us work with a renewed fervor to achieve a stronger and more progressive future for all Filipinos. I wish you success in all your endeavors. RODRIGO ROA DUTERTE MANILA July 2020 2019 ANNUAL REPORT 5 Chairman’s Message he year 2019 underscored LANDBANK’s This commitment makes it equally important to unique and crucial role in carrying out key ensure LANDBANK’s financial viability. Sustaining T socioeconomic programs of the government. the Bank’s strong financial footing will help intensify The Bank has achieved significant milestones as lending to the agricultural sector, as well as to a source of financing for underserved sectors, other priority sectors that play significant roles in especially farmers and fisherfolk, while maintaining spurring development across the country. its strength as one of the largest and soundest financial institutions in the country. In 2019, LANDBANK breached the P2.00-Trillion mark in total assets at P2.03 Trillion, 8 percent By extending more credit to farming and fishing higher than Pl.88 Trillion in 2018. Net income also communities, LANDBANK has helped drive the grew by 20 percent to P18.51 Billion, and deposits government’s efforts to modernize the agriculture increased by 8 percent to P1.78 Trillion. Capital and fisheries sector. likewise expanded by 13 percent to P149.00 Billion. Under the Agricultural Competitiveness Enhancement A sound financial position results in the continued Fund (ACEF) Program, P1.04 Billion in loans was trust of customers and the confidence of partners. released as of end-2019, which benefited more With this in mind, LANDBANK will continue to than 7,000 farmers. For the Expanded Rice Credit offer innovative financial products and services to Assistance under the Rice Competitiveness its customers, especially those in the agriculture Enhancement Fund (ERCA-RCEF), LANDBANK sector. released P358.25 Million in loans to 7,468 farmers. As LANDBANK promotes increased efficiencies in With LANDBANK, the government extended agriculture and across various industries, it also immediate financial assistance to farmers nationwide paves the way for meaningful and lasting through the Expanded Survival and Recovery development in the grassroots. The Bank will Assistance Program for Rice Farmers (SURE Aid) remain strong, so that it can continue to serve its and the Rice Farmer Financial Assistance (RFFA) unique and indispensable role in nation-building. Program. LANDBANK has also enhanced its own lending programs and processes in support of the country’s agriculture sector. The LANDBANK Board of Directors is committed to aggressively expanding the Bank’s assistance to small farmers, aiming to reach 2.0 Million farmer beneficiaries in 2020; 2.5 Million in 2021; and 3.0 Million by the end of 2022. 6 LAND BANK OF THE PHILIPPINES The LANDBANK Board of Directors is committed to “aggressively expanding the Bank’s assistance to small farmers, aiming to reach “ 2.0 Million farmer beneficiaries in 2020; 2.5 Million in 2021; and 3.0 Million by the end of 2022. CARLOS G. DOMINGUEZ Secretary of Finance Chairman, Land Bank of the Philippines 2019 ANNUAL REPORT 7 President’s Message edoubling our efforts in pursuit of the Bank’s organizations, microfinance, and other countryside social mandate was the biggest challenge for financial institutions which lend to and extend R Landbankers in 2019, and we are proud that financial services to our people in the grassroots, the results of LANDBANK’s operations speak of our LANDBANK has been providing assistance directly to fervent response to this challenge. those who need it most. This is the strategy that we are pursuing under the legislated lending programs, We re-focused our strategy and enhanced our which we jointly implement with the Department of processes to intensify the Bank’s support to the Agriculture (DA). agricultural sector, especially to small farmers and fishers, even as we continued to ensure the viability Also in partnership with the DA, LANDBANK of LANDBANK’s commercial banking operations. introduced facilities in 2019 to cater