A Growing Bank with Big Values
2014 ANNUAL REPORT WHO WE ARE VISION RobinsonsBank as a wholly owned JG Summit Group company was We want to fulfill the financial needs of our customers, established in November 1997 to further broaden JG Summit’s financial help them create and manage wealth, and be the best reach. It has for its cornerstone a business portfolio of market leaders, consumer bank in the country. a solid financial position, a formidable management team, and a vision of leading the country to global competitiveness and making life better for every Filipino. RobinsonsBank is now positioned not only to be more responsive in meeting the banking requirements of its retail customers and business partners, but also to fully serve the general banking public MISSION via its wide array of products and services — Deposits, Loans, Trust & Treasury, Remittance and other deposit-related products, available in all To build a lasting relationship with our customers its branches nationwide. characterized by excellence, concern for the individual, CONTENTS and integrity. To respond to their banking needs by providing quality and 01 Vision and Mission 06 Message of the Chairman innovative products and services. and President & CEO 10 Operational Highlights To create leaders out of our employees within an 14 Human Resources environment that inspires growth, creativity, and a passion 20 Board of Directors for excellence. 30 Table of Organization 34 Corporate Governance 38 Risk Management To safeguard the interests of our shareholders while 54 Corporate Social Responsibility optimizing return on investments. 57 Financial Statements 163 Branch Network To be the focus of financial synergy within the JG Summit 171 Products and Services group of companies & its business partners. ABOUT 172 JG Summit Businesses THE COVER RobinsonsBank is a growing organization that is rooted in its “Customers first” tradition. It has forged lasting bonds with its clients, nurturing professional relationships with CORE VALUES unwavering trust and service that is dependable and consistently efficient.
RobinsonsBank believes in partnerships that endure through challenges and are enriched Concern for the Individual • Excellence by milestones — whether big or small — that make a powerful impact on people’s lives. Leadership • Teamwork • Integrity • Change RobinsonsBank aims to make banking easier for its clients in every possible way, so that it brings further success in other aspects of their lives.
The cover art reflects the Bank’s belief that the organization will only grow if it continues to show great care for its clients. This is one investment that has infinite returns.
2014 Annual Report 1 QUICK LOOK: ROBINSONSBANK IN 2014
Total Assets Deposit Levels (In million pesos) (In million pesos) 41,211 38,773 33,961
49,173 45,877 41,276
2012 2013 2014 2012 2013 2014
In 2014, RobinsonsBank’s total assets were reported at Php 49.1 billion, manifesting a 7.2% increase over 2013’s figure. On the other hand, the Bank’s deposit liabilities ended the year at Php 41.2 billion, a 6.3% increase from P38.7 billion in 2013.
Loan Portfolio-Net Capital Funds (In million pesos) (In million pesos)
5,673 5,766 5,287
22,583 18,279 18,810
2012 2013 2014 2012 2013 2014
RobinsonsBank’s net loan portfolio amounted to Php 22.5 billion, increasing by 20.1% from 2013. In terms of absolute amounts, RobinsonsBank’s capital grew to Php 5.7 billion for the year 2014, or a 9.1% increase from the previous year’s level.
Loan Concentration per Industry Capital Adequacy Real estate, renting business services 29.2% Wholesle and retail trade 15.5% 26.2% Manufacturing 13.1% 23.2% Loans to the individuals for consumption 11.6% Electricity, gas and water supply 7.7% 15.8% other community, social and... 6.9% Construction 6.1% Others @< 5% share 10.0% 2012 2013 2014
The loan portfolio mix is comprised of 75% commercial loans and 25% consumer loans. In terms of per industry breakdown, the As for RobinsonsBank’s capital adequacy ratio (CAR) for combined credit, market and operational risks, it dipped to 15.8% due to bulk of the portfolio is in real estate, renting business services at 29.2%. higher risk-taking and strategic initiatives.
2 RobinsonsBank 2014 Annual Report 3 Net Interest Income Net Income (In million pesos) (In million pesos) 1,903 410 406 1,600
1,170
147
2012 2013 2014 2012 2013 2014 RobinsonsBank concluded 2014 with Php 1.9 billion in net interest income, or an increase of 19% over the previous year’s number. Following the reduction in non-interest income and increase in operating expenses, RobisonsBank’s net income for the year 2014 was posted at Php 147 million. Given the overall low interest rate market sentiment, the Bank focused more on developing its resources and expanding its network in preparation for the integration in the region. Income Mix (In million pesos) NPL Levels vs Coverage 513 (In million pesos) 698 1,040 698 897 878 1,903 1,600 Non Interest Income 1,170 69.3% Net Interest Income 58.0% 59.0%
2012 2013 2014
The Bank’s non-interest income — inclusive of gains from trading and foreign exchange transactions — presented a drop to Php 513 million from the 2013’s Php 698 million. 2012 2013 2014
The Bank’s non-performing loans (NPL) level increased to Php 1.0 billion compared to last year’s Php 0.8 billion. This level rendered to an overall gross NPL ratio of 4.5%, or 2.6% if net of provisions. The Bank’s NPL cover improved to 69.3% from Operating Expenses 59.0%; as the Bank embarked on setting-up additional provisions during the year. (In million pesos) Branches & ATMs as of 2014
2,187 1,739
1,329 Branches ATMs MBOs
2012 2013 2014 RobinsonsBank 92 171 5 Meanwhile, operating expenses — which include manpower, occupancy, provisions, depreciation and amortization, among others — rose to Php 2.1 billion. That is a 25.7% increase from the previous year’s level, as the Bank made significant Legazpi Savings Bank 11 4 infrastructure investments in IT and branch network expansion. 103 175 5
4 RobinsonsBank 2014 Annual Report 5 “2014 was a challenging year for domestic banks. It was the year that was characterized by volatility and global economic headwinds that impacted our domestic markets. However, at the back of the challenging times, RobinsonsBank continued to grow its core businesses.”
MESSAGE OF THE CHAIRMAN AND PRESIDENT & CEO
Lance y. gokongwei elfren antonio s. sarte Chairman President & CEO
6 RobinsonsBank 2014 Annual Report 7 OPERATIONAL HIGHLIGHTS
2014 ACHIEVEMENTS We remain committed to 2014 was a challenging year for domestic banks. It was the our customers in delivering year that was characterized by volatility and global economic headwinds that impacted our domestic markets. However, at an exceptional banking the back of the challenging times, RobinsonsBank continued to grow its core businesses. The Bank’s net loan portfolio experience. We are grew to Php 22.5 billion, an increase of 20.1% over last year. Our deposit levels increased by 6.3% to Php 41.2 billion at continuously working to the end of 2014. Our capital of Php 5.7 billion reflected a growth of 9.1% from the previous year. We ended the year delight our customers and with total asset size of Php 49.1 billion, a 7.2% increase over 2013. We remain profitable with a net income of to ensure that we meet Php 147 million. their needs. We thank The Bank embarked and completed key technology initiatives to underpin its growth in the coming years. We completed our customers and our our migration to a new core banking platform which will provide us with the flexibility to provide relevant products employees for continuing that resonate with our clients, and the scalability to acquire new customers to experience with us an invigorated Bank. this journey with us in We deployed a world-class loans origination system that making this a great bank. will enable us to scale up our consumer business. Similarly, Legazpi Savings Bank also completed full migration and integration of its new core banking system to support its expanding retail loan portfolio.
MOVING FORWARD Lance Gokongwei Chairman We look forward to 2015 with our Roadmap 2020 which will bring us into an expansion mode and will be supported by a robust capital base. Our customer-focused strategy will be complementing our growth in loans and deposits with cash management services and new products at the front and center to support our core businesses. Elfren Antonio S. Sarte President & CEO A GROWING BANK THAT LISTENS TO ITS CUSTOMERS
8 RobinsonsBank OPERATIONAL HIGHLIGHTS 2013MAY 2013DECEMBER 2014AUGUST
RobinsonsBank The Bank launched The Bank launched acquired Legazpi the Loan Origination the Core Banking HOW WE’VE Savings Bank. System which is the System with the aim front-end application of providing better system for Consumer and more efficient Loans services for clients.
RobinsonsBankGROWN has taken the sure-and-steady route in its growth. It believes that every step it takes matters and so all its moves have been done only after careful study. Over the years, it has not wavered in its commitment to its clients’ welfare and its people’s needs.
The driving force of RobinsonsBank is the fact that it has continued its tradition of personalized, client-centered service as it rises to global standards.
JG Summit Holdings Inc. (JGSHI) and Robinsons Holdings, Inc. (RHI) jointly acquired The Royal Merger of the Bank of Scotland savings bank and RobinsonsBank (Phils.). The the commercial bank acquired the commercial bank with Robinsons RobinsonsBank branches of ABN was later renamed Bank Corporation opened for business Amro Savings Bank as Robinsons Bank (RobinsonsBank) as as a savings bank. (Phils.) Corporation. the surviving entity. 1997 20022010 2011MAY
10 RobinsonsBank 2014 Annual Report 11 HUMAN RESOURCES EXPANSION AND INNOVATION
n 2014, RobinsonsBank further strengthened its visibility Site transfers through branch expansion, as well making its services Imore accessible to its customers. Five RobinsonsBank branches are now in new offices: New branches 1. Malabon branch relocated to Robinsons Town Mall.
There were 13 new RobinsonsBank branches opened 2. Malolos branch went to Robinsons Place in the this year: same area.
1. Butuan, Butuan City 3. Tacloban branch holds office at Robinsons Place in 2. Soler, Manila the locale. 3. Roxas City, Capiz 4. Santiago City, Isabela 4. Legazpi Street – Makati branch (formerly Gamboa 5. Sucat, Parañaque City Branch) moved to Man Tower Building at No. 153 6. Cainta, Rizal Legaspi Street in Legazpi Village. 7. Asuncion, Manila 8. Visayas Avenue, Quezon City 5. Binondo branch transferred to the Pacific Centre 9. Balanga City, Bataan Building along Quintin Paredes Street. 10. Taytay, Rizal 11. Santolan, Pasig City Added ATMs 12. Ninoy Aquino Avenue, Parañaque City 13. Domestic Road, Pasay City Moreover, 20 additional ATMs were installed in 2014 — of which 15 were onsite and the other 5 in offsite locations to As of December 2014, the opening of the 13 branches provide greater access to clients. This brings the Bank’s brought the RobinsonsBank network to a total of ATM network to a total of 171. 92 branches nationwide. Online banking platforms
Meanwhile, the Bank officially utilized its new core banking and loan origination systems in 2014. It also began setting up the Retail Internet Banking (RWEB) and Corporate Cash Management System (CashWeb) to facilitate the online banking needs of customers 24/7. These alternative delivery channels were aimed to provide convenience and accessibility of customers, to transact anywhere, at the palm of their hands.
A GROWING BANK THAT VALUES ITS PEOPLE
12 RobinsonsBank HUMAN RESOURCES INVESTING IN PEOPLE
With the growing number of branches, there was a need to create more Cluster Head positions. “The Search for Cluster Heads” initiative was launched.
RobinsonsBank’s commitment to its customers is reflected in how it values its human capital — its employees. After all, great service can only be delivered by employees who are nurtured by their employers.
14 RobinsonsBank 2014 Annual Report 15 side from being on the lookout for new hires, Because of this move, by the end of 2014 or 8 months after the Bank offers benefits and opportunities its launch, the Bank saved approximately P1,000,000.00 for existing employees to grow in order to in travel and lodging expenses on 115 branch participants. Acomplement the overall strategy of the Bank. This initiative was submitted by the Bank as an entry in the Succession “Pride in Performance” contest of JG Summit Conglomerate In 2014, the Bank hired a total of 290 employees, six of under the People Focus category and won 3rd place. The Management: Outstanding whom were senior officers to fill up strategic positions in the award was jointly given to the Bank’s Human Resource organization. This brought the total headcount to 913 by the Management Group and Information Technology Group. Nurturing Leaders Players end of 2014. The average age of RobinsonsBank employees is 32 years old. Loan privileges On the financial assistance side, the Bank provides loans to its employees at reasonable rates such as personal loan, SO JO R&F Total housing loan, car loan, and motorcycle loan, under terms Headcount 46 252 615 913 duly approved by the Bank’s Board of Directors, the BSP, and compliant with the BSP Manual of Regulations.
Benefits boost The Employee Personal Loan Program (EPLP) was upgraded RobinsonsBank continues to be competitive in its offered and was increased to three (3) times one’s monthly salary. packages, and ensures that existing benefits and policies are The interest rate for all loans has also been reduced from regularly reviewed for subsequent improvements. 9% to 6.25%, and the credit ratio was increased from 30% to 40%. There is no longer a need for a co-maker for Annual compensation consists of guaranteed 15 months’ employees with 10 years of service. pay, inclusive of 13th month pay, mid-year, and Christmas Bonuses. The Bank complies with the government mandated EPLP No. of Employees The Bank makes sure that its workforce RobinsonsBank recognizes employees premium contributions for SSS, Pag-ibig, and Philhealth as who have performed their tasks Purpose who availed remains steadfast and stable for the well as on the guidelines for overtime and night Education 120 current and future business performance extraordinarily well. There has been no differential pay. Medical Expenses / Emergency 59 and challenges. Thus the line of shortage of such excellent individuals. House / Car Repair 165 Aside from the leaves mandated by law, employees who Others (non-medical / non-education) 42 succession is clear and well-managed. For starters, 106 people were promoted in 2014. That was are reviewing for the board examinations may avail of a Total Availed EPLP in 2014 386 Each year, the Bank presents a Succession Management approximately 13% of the bank’s population at the time. maximum study leave of 90 days. Plan to the Chairman. It also conducts an annual succession Eighteen employees were either honored as Service planning exercise to ensure continuity in leadership. Champions or given the Integrity Award. Some employees — due to the nature of their functions — The Employee Housing Loan Program is undergoing are provided additional personal accident insurance. Senior enhancement to be more relevant and current. As of 2014, a total of 30 successors have been identified in Twenty-fiveRobinsonsBank personnel were tagged as “Finacle Officers and selected branch personnel are entitled to the the Talent Bench for 21 critical positions, of which 7 are in the Heroes” for their contributions to the migration to the new core “Ready Now” status. These individuals are ready to assume the Car Plan. Developing leaders banking system. They were given monetary bonuses. Plus, lead at any given time. they had lunch with the Chairman. RobinsonsBank creates an atmosphere that encourages Going digital its employees to be leaders. Following this mindset, The skills development plans that are unique to the career Fifteen long-serving employees were recognized by the The Bank’s orientation program for branch employees were 2014 saw a rise in the number of employee development path of the identified successors are monitored and are President and Chairman, for their dedication and loyalty to the converted to eLearning modules. The Newbies eLink@the programs launched. reviewed constantly. Bank. Workspace (NEW) provides branch hires with basic and Thirty-nine branches were awarded with cash and plaque in essential information about the Bank. The Business Center Head Development Program (BCHDP) recognition of their excellence in Sales Performance, while two is a six-month long program that aims to provide Business employees were honored for being the best in Operations and The Hands-On Training (HOT) is supplemented with readings Development Officers (BDOs) with the necessary marketing Control. to go along with his or her actual branch exposure. The and operations skills to assess their readiness to become nature of the modules allow the trainee to remain at the full-fledged Business Center Heads. The initial run had a total branch, instead of having to be stay away from home for of 12 BDOs as trainees. two weeks. With the growing number of branches, there was a need The eLearning modules also made it easier for supervisors to to create more Cluster Head positions. “The Search for monitor the progress of the new hires. The new employees Cluster Heads” initiative was launched. With batteries of could ask questions immediately and any mistakes were exams, cases, panel interviews, and oral presentations, five corrected early on. Business Center Heads emerged as successful candidates who have now joined the roster of Cluster Heads.
16 RobinsonsBank 2014 Annual Report 17 Incentive Structure and Remuneration Policy (Developing Leaders continuation from page 17)
A certification program was provided to 16 Sales and Service Supervisors to equip them with branch operations skills. The Bank’s pay structure is designed to match with the playing field that it is in. Its For technical courses, 76 employees were sent to public seminars. policy is pay for performance, highlighted by a competitive pay scale, profit sharing Overall, 1,985 employees attended various programs to (dependent on the Bank’s performance), hone their skills in 2014. and annual merit increase hinged on the employee performance and attainment of Total wellness In addition to undergoing the annual physical examination, the Bank’s key result indicators. all regular employees, are provided the health cards and a “RobinsonsBank shall The employees’ annual compensation consists of guaranteed Group Life Insurance with a coverage amount based on the 15 months’ pay, inclusive of 13th month pay, as well as mid- employee’s monthly salary. The plan has a double indemnity year and Christmas bonuses. provision in case of accidental death. The Bank complies with the government mandated premium focus on capacity-building The Bank encourages and supports activities that promote contributions for SSS, Pag-ibig, and Philhealth as well as on the guidelines for overtime and night differential pay. work-life balance. Activities such as summer outings, Christmas parties, as well as basketball and badminton Variable incentive pay is provided for business center heads Tournaments, were among the activities that employees and marketing officers to motivate and reward performance. enjoyed in 2014. - changing its structure, The variable compensation scheme is based on achievement of the following categories like Average Daily Balance The Bank invites medical practitioners to give Wellness Talks increments on Peso Current and Savings Accounts, Foreign and Disease Prevention Seminars to employees. Periodic Currency Savings, Foreign Currency Time Deposits, Number of health advisories are released to all employees as part of expanding its operations, Deposit Accounts, as well as Volume of Loan Bookings. Health Information campaign.
With the expansion thrust of the Bank and the recent migration to the Finacle Core Banking System, new jobs have been Moreover, employees avail of gym memberships with created, while others need to be re-assessed. subsidized rates and participate in fun runs. and acquiring Given the bank-wide effect of this change, the Bank is set to The Bank ensures that its employees are safe inside and conduct a job evaluation, to ensure that the proper job grades outside the workplace. Several policies have been authored are in place, and that each worker is being paid fairly and commensurate to the job’s requirements. to address several concerns, such as (but not limited to): Policy on Violence Against Women and Children, Policy on more talents.” REMUNERATION OF KEY MANAGEMENT PERSONNEL Hepatitis B Prevention, Policy on HIV and AIDS Prevention, Parent Subsidiary Consolidated Policy on Drug-Free Workplace, Policy on Tuberculosis 2014 55,532,368 24,307,770 79,840,138 Prevention, and Policy on Sexual Harassment. These are all 2013 39,480,611 15,923,161 55,403,772 posted in the HR Public Folder. 2012 46,846,278 14,060,999 60,907,277 The Bank also reaches out to employees’ families. There are REMUNERATION OF BOARD OF DIRECTORS online games and contests for Mother’s Day, Father’s Day, Parent Subsidiary Consolidated and Valentine’s Day. Employees’ children or siblings who have 2014 1,391,150 340,000 1,731,150 finished the school year with honors are also recognized. 2013 647,532 266,667 914,199 2012 399,000 567,081 966,081
18 RobinsonsBank BOARD OF DIRECTORS
LANCE Y. GOKONGWEI FREDERICK D. GO ELFREN ANTONIO S. SARTE* ROBINA Y. GOKONGWEI-PE PATRICK HENRY C. GO OMAR BYRON T. MIER** ROBERTO S. GAERLAN ATTY. ELAINE G. MIRANDA- Chairman Vice-Chairman President & CEO Director Director Director Independent Director ARANETA Corporate Secretary He serves as the Chairman of the He is the Vice-Chairman of the Board He is the President and Chief She is the Chairman of the Bank’s He is the Vice-Chairman of the Bank’s Appointed as a Director of He is the Vice-Chairman of the Bank’s Board of Directors, Chairman of and also serves as the Vice-Chairman Executive Officer of the Bank, Trust Committee. She is presently a Trust Committee and a member of the RobinsonsBank on February 2, 2015, Audit Committee and member of the With more than two decades of the Executive Committee, and a of Executive Committee of the Bank. and is a member of the Executive director of JG Summit Holdings Inc., Corporate Governance Committee. he also serves as a member of the Risk Management Committee. His practice as a lawyer and experience member of the Trust Committee Presently, he is a director at JG Committee, Risk Management the President and COO of Robinsons He is also the Executive Vice President Audit Committee, the Corporate career in banking spans over three in the banking business, she acts of RobinsonsBank. He is also the Summit Holdings Inc. and Universal Committee and IT Steering Retail Holdings, Inc., as well as Senior and Senior Managing Director of JG Governance Committee and the decades, working with First United as the Corporate Secretary of President, Director and Chief Robina Corporation (since 2001), Committee. Prior to joining the Vice President and Group General Summit Petrochemical Corp., JG Risk Management Committee, and Bank (1973 to 1979) and with United RobinsonsBank. She also serves as Operating Officer (COO) of the JG the President, Director and COO of Bank in November 2014, he Manager of Robinsons Department Summit Olefins Corp. and URC- alternate member in the Executive Coconut Planters Bank (1979 to the Corporate Secretary of JG Summit Summit Holdings Inc. He also acts as the Robinsons Land Corporation was the President, Director and Store, Robinsons Appliances, Packaging Division, and a director of Committee. Mr. Mier is also a director 2003), where he became the Vice Capital Markets Corp., JG Summit the President, Director and Chief (since 2006), Robinsons Realty CEO of Allied Savings Bank Robinsons Supermarket, Handyman, JG Summit Holdings Inc. He was also of Legazpi Savings Bank, the Bank’s President for Branch Banking (2001 to Capital Services Corp., and Nissin- Executive Officer (CEO) of Cebu Air and Management Corporation (2013 to 2014); Consumer Robinsons Specialty Stores, and Toys the General Manager of Litton Mills subsidiary, and is a member of its Risk 2003). He graduated with a Bachelor Universal Robina Corp., among others. Inc. (since 1997), CPAir Holdings, (since 2005), Robinsons Properties Finance Group Head (2013) “R” Us. She also served as President (1996-1997). He has a Bachelor of Management Committee. Before of Arts Degree in Economics from She has a Bachelor of Arts Degree in Inc. (since 2007), JG Summit Marketing & Management Corporation and Head of Consumer Credit of The Manila Times (1989 to 1998). Science Degree in Management from joining RobinsonsBank, he holds the University of Santo Tomas and Economics from the University of the Petrochemical Corporation (since (since 2005), and Robinsons Inn, and Collection Division (2010 She has a Bachelor of Arts Degree the Ateneo de Manila University and around four decades of experience Advanced Bank Management from the Philippines and Bachelor of Laws from 2002), and Universal Robina Incorporated (since 2012). Moreover, to 2013) of Philippine National in Journalism from the New York took The General Manager Program in the banking industry, including Asian Institute of Management. the Ateneo Law School. Corporation (since 2002), among he is also the Chairman of the Bank; and Head of Consumer University. from the Harvard Business School. Citibank N.A., where he served as others. He graduated with a Bachelor Philippine Retailers Association (since Credit Risk Management Division Country Risk Manager in Manila (1983 of Science Degree in Finance from The 2013). He has a Bachelor of Science (2006 to 2010), Credit Services to 1985), Public Sector Group Head Wharton School, and a Bachelor of Degree in Management Engineering Division (1996 to 2006) and (1985 to 1987), Country Risk Officer Science Degree in Applied Science from the Ateneo de Manila University. Credit Investigation and Appraisal in Malaysia (1992 to 1995), Head of from The Penn Engineering School of Division (1995 to 1996) of Risk Management Group and World the University of Pennsylvania. Union Bank of the Philippines. Corporate Group Head (1992 to He was also a manager at the 1995); Deutsche Bank, as Deputy Credit Information Bureau (1983 General Manager and Corporate to 1985). He has a Bachelor Banking Head (1995 to 2002); and of Science Degree in Industrial Philippine National Bank (2005-2014), Management Engineering with where he held various senior positions minor in Mechanical Engineering the last of which as President and from the De La Salle University. CEO. He has a Bachelor of Science in Business Administration Major in Accounting, Bachelor of Arts in *Appointed as President and Chief Executive effective November 17, 2014 replacing Reynold Y. Gerongay who retired last Economics and Master of Arts in November 14, 2014 (approved by Board in a Special Board meeting held on November 05, 2014). Economics from the University of the Philippines. He is also a Certified ** Appointed as Director effective February 2, 2015 Public Accountant. Lisa Y. Gokongwei-Cheng was elevated to Senior Advisory Board Member. 2014 Annual Report 21 BOARD OF SENIOR DIRECTORS ADVISORY BOARD
ANGELES Z. LORAYES DAVID C. MERCADO ESPERANZA S. OSMEÑA HERMOGENES S. ROXAS LISA Y. GOKONGWEI-CHENG* Independent Director Independent Director Independent Director Independent Director Member – Senior Advisory Board
She is the Chairman of the Bank’s He is the Chairman of the IT Steering She is the Chairman of the Bank’s He is the Chairman of the Corporate Audit Committee and Vice-Chairman Committee, Vice-Chairman of the Risk Management Committee and Governance Committee and She is the President and Director of the Corporate Governance Risk Management Committee and a member of both the Corporate a member of the Bank’s Audit of Summit Media (2011 to present) Committee. She honed her banking a member of the Audit Committee. Governance Committee and Trust Committee. Mr Roxas is also a and General Manager of Gokongwei career in Citibank as Head of Financial He has more than three decades Committee. She has held various director of Legazpi Savings Bank. Brothers Foundation Inc. (2011). She Analysis and Engineering 1971 to of experience in banking and has senior positions at Asian Savings He chairs the subsidiary’s Corporate has held various senior positions and 1978). She also headed the Credit held various senior positions in Bank (1984-1987) and Equitable PCI Governance Committee and Audit directorships in the group namely: Policy and Supervision at Equitable Allied Banking Corporation and bank and its subsidiaries (1988-2000). Committee, and is the Vice-Chairman JOHNSON ROBERT G. GO, JR. WILFRED T. CO BRIAN M. GO Member – Senior Advisory Board Member – Senior Advisory Board Member – Senior Advisory Board Summit Internet Investments, Inc. PCI Bank (1978 to 2000) and United Coconut Planters Bank. At She was Executive Vice President at of its Risk Management Committee. (2000), Jobstreet Philippines (2000 Philippine National Bank (2005 to UPCB, he became Assistant Vice Equitable PCI bank (1998-2000), and He has more than three decades to present), JE Holdings, Inc. (2002), 2010). She has a degree in Business President- Account Management was Director at PCI Capital Inc., PCI of experience in banking and has He presently serves as director of He brings to the bank a wealth of He is the Finance Director of JG JG Summit Holdings, Inc., Universal business management experience Summit China Operations (since Robinsons Retail Holdings, Inc. (2002 Administration from the University of Division (1986 to 1987), Assistant Leasing Inc., PCI nsurance Brokers held various senior positions at to present), Itech Global Business the Philippines and earned MBA units Vice President - Deposit Services Inc., and Bankard Inc (1988-1999). Commercial Banking & Trust Company Robina Corporation and Robinsons starting with Herco Trading 2003). After obtaining a degree Land Corporation, among others. He Incorporated as General Manager in Economics from the Harvard Solutions, Inc. (2010), Hongkong- at the Ateneo Graduate School of Department (1987 to 1993), Vice She graduated with a Bachelor of Arts and United Coconut Planters Bank China Foods Co. (2013), and as Vice- Business. President and Regional Branch Head degree in Commerce from the Colegio and its subsidiaries. He was also the has served as President of Robinsons (1990) and President of Robinsons University, he started his career as Convenience Stores, Inc. (2002) and Handyman Incorporated (1994 consultant in Booz Allen & Hamilton President and Director of Summit-App (1993 to 2004), Vice President and de Santa Anna in Zaragoza, Spain. President of UCPB Savings Bank, a Addictive Philippines, Inc. (2000). Head of Branch Banking Group Director at UCPB Leasing & Finance as Vice President of Robinsons Daiso to 2010); Coherco Securities (1996 to 1997) and Robinsons Retail Diversified Corp. (2010). His banking Incorporated (2000); Upturn Group (1998). He also became the She was also Vice President at (2004 to 2006) and lastly, as First Corp., UCPB Foreign Exchange Corp., Metromedia Times Corporation (1993 Vice President of Consumer Banking UCPB Capital Corp., UCPB Rural experience spans around 17 years, Corporation (2006); Alsco Head of Corporate Planning in Digitel when he was elected as a director of Development Corporation (2008); Telecommunications Phils., Inc. (1998 to 1997) and Digital Communications Group (2006 to 2011). He earned his Bank, and UCPB Securities Inc. He as Project Manager (1995 to 1999). Business Administration degree from has a Bachelor of Science degree RobinsonsBank. He has Bachelor of Brandywine Corporation (2010) and to 2002). Afterwards, he became Arts in Interdisciplinary Studies from as Vice-President of Robinsons Managing Director at Digitel One She has a Bachelor of Arts degree the Philippine School of Business in Business Administration from the in Communications from Ateneo de Administration. University of the Philippines. the Ateneo de Manila University. True Serve Hardware Inc.(2006 to (2002); then as Chief Finance Officer 2010). He has a Bachelor of Science at Ding Feng Real Estate(2003); Manila University, and obtained her degree in Electrical Engineering He served as General Manager at master’s degree in Journalism at from University of the Philippines Universal Robina Corporation (URC) – Columbia University in 1993. and further honed his studies at the China (2007). University of Southern California.
22 RobinsonsBank * Lisa Y. Gokongwei-Cheng Elevated to Senior Advisory Board replaced by Director Mier 2014 Annual Report 23 KEY OFFICERS
Eric B. Santos Mykel D. Abad EVP-Chief Lending Officer Angelito V. Evangelista Elfren Antonio S. Sarte EVP-Chief Operating Officer EVP-seconded to Legazpi Savings Bank President & CEO as President
24 RobinsonsBank 2014 Annual Report 25 KEY OFFICERS
Ma. Regina N. Lumain Juanito Andres A. Henson* Dennis I. Paredes Andro M. Yee Agnes Theresa A. Salvador** Exequiel T. Tua Evie B. Abraham Sr. Vice President, Sr. Vice President, Sr. Vice President, Sr. Vice President, Sr. Vice President, Sr. Vice President, Sr. Vice President, Treasury Institutional Banking 1 Retail Banking Community Banking Cash Management Chief Risk Officer Human Resource Management
* Promoted to SVP effective February 1, 2015 ** Appointed as Senior Vice President and Head of Cash Management Group effective February 16,2015 26 RobinsonsBank 2014 Annual Report 27 KEY OFFICERS
Janette C. Gonzalvo James D. Chua Atty. Roel S. Costuna Ma. Elizabeth P. Aquino Angel U. Abagat, Jr. Cynthia C. Bautista First Vice President, First Vice President, First Vice President, Legal Vice President, Asst. Vice President, Vice President, Rosario C. Marcelo* Credit Operations Eric C. Macalintal Services Trust & Investments Trade Services Irma D. Velasco Chief Audit Officer Romel D. Meniado First Vice President, First Vice President, Vice President, Vice President, Institutional Banking 2 Chief Information Controllership Chief Compliance Officer Technology Officer
* Promoted to FVP effective February 1,2015
28 RobinsonsBank 2014 Annual Report 29 TABLE OF ORGANIZATION
BOARD OF
Corporate DIRECTORS Risk Management IT Steering Trust Audit Governance EXCOM CORSEC Committee Committee Committe Committee Committee
Trust and Internal Audit Compliance Enterprise Risk Investments Group Group Group Mgt. Group Lance Y. Gokongwei Chairman
Various Management Committee*
Elfren Antonio S. Sarte President & CEO
Legazpi Savings Bank**
Corporate Planning Security Office***
Lending Segment Business Development Segment Operations, Control, and Governance Segment Eric B. Santos Elfren Antonio S. Sarte Angelito V. Evangelista EVP & Chief Lending Officer President & Chief Executive Officer EVP & Chief Operating Officer
Institutional Institutional Institutional Institutional Consumer Community Retail Cards Cash Human Trade Legal Loans and Credit Marketing Treasury Resource I.T. Controllership Operations Banking Banking Banking Banking Finance Banking Banking Business Management Services Services Discounts Group Group Group Management Group Group Group Group 1 Group 2 Group 3 Group 4 Group Group Group Group Group Group Group Group Group
**Chief Compliance Officer, Chief Risk Officer, Chief Security Officer, *MANCOM, ALCO, CRECOM, AML, MARCOM, PERCOM, CEC,COS, Chief Audit Officer, and Chief IT Officer have oversight functions over ***Security Officer–Consultant for LSB’s Security office Bid Committe, Acquired Assets Disposal, ICAAP Committe, Legazpi Savings Bank Operations Committee
30 RobinsonsBank 2014 Annual Report 31 CORPORATE GOVERNANCE ROBINSONSBANK SENIOR OFFICERS
OFFICE OF THE PRESIDent HUMAN RESOURCE Engelbert C. Ching CREDIT GROUP Elfren Antonio S. Sarte MANAGEMENT GROUP Assistant Vice-President Janette C. Gonzalvo President & CEO Evie B. Abraham Business Center Head / First Vice-President Mykel D. Abad Senior Vice-President Cluster Head Credit Head Executive Vice-President Human Resource Bessie D. Miranda Seconded to LSB Management Head Assistant Vice-President DOCUMENTATION & POST Luan O. New, Jr. Nerissa S. Durano Business Center Head / SALES DEPARTMENT Vice-President Vice-President Cluster Head Annallette M. Rosanes Seconded to LSB Organization Design & Talent Ruth P. Montalbo Assistant Vice-President Kareen R. Villareal Acquisition Head Assistant Vice-President Documentation & Post Sales Assistant Vice-President Business Center Head Department Head Seconded to LSB SECURITY Gerardo V. Malig LENDING SEGMENT REMEDIAL & SPECIAL ASSET COMPLIANCE GROUP Assistant Vice-President Eric B. Santos MANAGEMENT DEPARTMENT Romel D. Meniado Chief Security Officer Executive Vice-President G. Fulton V. Acosta Vice-President Chief Lending Officer Assistant Vice-President Chief Compliance Officer BUSINESS DEVELOPMENT Remedial & Special Asset Visitacion D. Enriquez SEGMENT CASH INSTITUTIONAL BANKING Management Department Head Assistant Vice-President MANAGEMENT GROUP GROUP 1 Deputy Compliance Officer Agnes Theresa A. Salvador Juanito Andres A. Henson OPERATIONS, CONTROL, & Senior Vice-President Senior Vice-President GOVERNANCE SEGMENT ENTERPRISE RISK Cash Management Head Institutional Banking Angelito V. Evangelista MANAGEMENT GROUP Maria Alicia P. Figueroa Group 1 Head Executive Vice-President Exequiel T. Tua Assistant Vice-President Chief Operating Officer Senior Vice-President Product Officer INSTITUTIONAL BANKING Chief Risk Officer GROUP 2 INFORMATION TECHNOLOGY Odette G. Reyes RETAIL BANKING GROUP Rosario C. Marcelo Eric C. Macalintal Assistant Vice-President Dennis I. Paredes First Vice-President First Vice-President Market & Liquidity Risks Head Senior Vice-President Institutional Banking Chief Information Retail Banking Head Group 2 Head Technology Officer TRUST & INVESTMENTS Edward Eli B. Tan Maria Encarnacion T. Gabriel Noemi B. Panaligan GROUP First Vice-President Assistant Vice-President Assistant Vice-President Ma. Elizabeth P. Aquino Deputy RBG Head for Sales Deputy Lending 2 Head Systems Development Head Vice-President Salvador D. Paps Leopoldo M. Pangilinan Trust Head Vice-President CONSUMER FINANCE Assistant Vice-President Mary Joy C. Mendez Area Head GROUP Technical Support / Assistant Vice-President Noemi L. Narvaez Eduardo E. Orozco Service Delivery Head Trust Marketing Officer Vice-President Vice-President Area Head Auto Loan / SBL TRADE SERVICES INTERNAL AUDIT GROUP Mathew L. Onglengco Department Head Angel U. Abagat Cynthia C. Bautista Vice-President Pia Marie M.Santos Assistant Vice-President Vice-President Area Head Vice-President Trade Services Head Chief Audit Officer Robert B. Imam Home Loan Division Head John I. Bañares Assistant Vice-President Cherre S. Estrellado LEGAL SERVICES Assistant Vice-President RBG Operations Head Assistant Vice-President Roel S. Costuna EO Audit Department Head Jean J. Yap Personal Loan Department Head First Vice-President Vice-President Armin C. Butalid Legal Services Head TREASURY GROUP Business Center Head / Assistant Vice-President Ma. Regina N. Lumain Cluster Head Home Loan-Developer CONTROLLERSHIP Senior Vice-President Lynn L. Sy Channel 1 Head Irma D. Velasco Treasurer & Treasury Head Vice-President Joven S. Arcigal Vice-President Maria Teresa P. Sanchez Business Center Head / Assistant Vice-President Controller First Vice-President Cluster Head Auto Loan Dealership Head Domestic Trading Head Paul R. Benemerito OPERATIONS German Jeremy E. Pampolina III Vice-President COMMUNITY BANKING James D. Chua First Vice-President Business Center Head / GROUP First Vice-President Foreign Exchange Trading Cluster Head Andro M. Yee Operations Head A GROWING BANK Department Head Manuel Joseph B. Barredo Senior Vice-President Vice-President Community Banking Head LOANS & DISCOUNTS Business Center Head / Edward B. Santos Nathaniel P. Delos Reyes THAT UPHOLDS GOOD GOVERNANCE Cluster Head Vice-President Assistant Vice-President Rebecca C. Marcelo CBG-Credit Head Loans & Discounts Officer- Assistant Vice-President in-Charge Business Center Head
32 RobinsonsBank CORPORATE GOVERNANCE
The Bank ensures that all its Directors have completed a Risk Management Committee RobinsonsBank is governed training program on corporate governance, in compliance The Risk Management Committee oversees the development with BSP’s regulations. The Directors and senior management and oversight of the institution’s risk management program team are also provided with ample training to further develop and ensures an acceptable quality of risk asset portfolio and their skills and increase their knowledge in matters that minimize losses. by sound and responsible involve the Bank, such as seminars on AMLA updates, and briefings on the latest BSP circulars. Code of Conduct The Code of Conduct for Employees exists to develop or corporate governance To ensure that all aspects of corporate governance are pattern behavior according to the Bank’s standards, ensure covered, the Board has the Corporate Governance professional conduct, and enforce discipline and order. The Committee, which undertakes every effort necessary to Code is implemented by the Human Resources Group. create awareness on governance within the organization. Violations to the Code correspond to disciplinary actions. practices to attain and Copies of the Code of Conduct are given to employees upon Board Committees hiring, while seminars are conducted regularly to further In addition to the team concentrating on corporate expound on the subject. A copy of the Code of Conduct is preserve public trust and governance, the Board has also formed committees for other also available on the Bank’s Online Workspace. areas that are crucial to its operations. Whistle-Blowing Policy confidence. Executive Committee Employees are encouraged to and should impose upon The Executive Committee (EXCOM) provides decisions themselves the duty of disclosing to their immediate superior regarding applications for critical loan accounts and existing or potential violations and wrongdoings that they are deviations that require careful deliberation. Approvals made or may become aware of. are in compliance with internal regulations and those imposed by the BSP’s Monetary Board. Decisions made are influenced The Bank’s Policy on Timely Reporting of Concerns and by the latest profitability and delinquency figures of an Incidents — otherwise known as the Whistle-Blowing Policy This is the main function of the Board of Directors. It is their duty to make sure that all the mechanisms prescribed by law and account or loan product. — serves as a guide for all employees on reporting matters regulations are in place to safeguard the welfare of its clients, as well as maintain the integrity of the Bank. that breach integrity. Audit Committee The Audit Committee assists the Board of Directors in fulfilling Communication and Information Board of Directors Angeles Z. Lorayes Independent Director its oversight responsibilities with regard to the integrity of the The Bank provides several channels of communication, It is composed of 11 Board Directors, five of whom are Esperanza S. Osmeña Independent Director Bank’s financial reporting process, the independence and to ensure that all employees and stockholders receive Independent Directors. They had their 12 regular monthly David C. Mercado Independent Director performance of the Bank’s external and internal auditors, the timely information about matters of the Bank. For internal meetings in 2014. compliance of corporate governance policies and guidelines, communication, email announcements are done regularly. Senior Advisory Board Members and the Bank’s compliance with regulatory requirements. Marketing launched an online newsletter called, Rticle, which Lance Y. Gokongwei Chairman of the Board Johnson Robert S. Go, Jr. is housed in the Intranet Portal. Frederick D. Go Vice Chairman Brian M. Go Elfren Antonio S. Sarte President & CEO / Director Wildred T. Co The Intranet Portal also serves as an information gateway, Robina Y. Gokongwei-Pe Director Lisa Y. Gokongwei-Cheng where all groups are able to post their own respective Patrick Henry C. Go Director announcements. For external communication, information Omar Byron T. Mier Director Corporate Secretary that may affect the interests of clients are regularly reported Roberto S. Gaerlan Independent Director Atty. Elanie G. Miranda-Araneta through channels such as the RobinsonsBank website, Hermogenes S. Roxas ndependent Director RobinsonsBank Facebook page, and newspaper articles.
34 RobinsonsBank 2014 Annual Report 35 In a nutshell: Legazpi Savings Bank
By the book: How In December 2012, the Bangko Sentral ng Pilipinas LSB KEY OFFICERS Kareen R. Villareal approved the RobinsonsBank’s move to acquire Legazpi Chief Compliance Officer the Bank’s Compliance Savings Bank (LSB). By May 2013, LSB became a wholly Mykel D. Abad (Seconded from RBC) owned subsidiary of RobinsonsBank. RobinsonsBank aims President to utilize LSB’s capacity and branch network to engage in (Seconded from RBC) Ma. Elena A. Millano System Works? countryside banking and microfinance lending. Human Resource Management Group Luan O. New Major products include salary loans, microfinance loans and Vice President - Chief Operating Officer Adrian T. Llana Small & Medium Enterprise (SME) Loans. The Bank was (Seconded from RBC) Credit Cycle and Operations Head The Bank’s compliance system is granted a Department of Education (DepEd) Accreditation multi-tiered. code to extend lending services to its personnel. Ma. Teresa P. Sanchez Jason-Dennis R. Sambitan Microfinance Lending was likewise fully implemented First Vice President – Treasurer Information Technology Department Head The primary level is self-regulation within during March 2014, true to the Bank’s purpose of serving (Seconded from RBC) each work unit by abiding regulatory countryside clients. Judex Donnel G. LLamoso Ma. Socorro S. Liganor Risk Management Officer issuances, the provisions of the Bank’s Vice President - Retail Banking Group Head Corporate Governance Manual, and LSB BOARD OF DIRECTORS Atty. Zalman D. Uddin adhering to company policies and code Erlinda O. del Villar Legal Unit Officer of conduct. Lance Y. Gokongwei Vice President - Controller Chairman of the Board Jerome Regalado The secondary level is through the audit function, which is Judy H. Logronio Security Officer performed by the Internal Audit Group and the Compliance Elfren Antonio S. Sarte Deputy Head Retail Banking Group Group as well as external auditors appointed by the Board. Vice-Chairman The Audit Committee of the Board, in turn, looks into the compliance review by the internal and external auditors. John I. Bañares Mykel D. Abad Internal Audit Head The Internal Audit Team is tasked with reviewing the extent and President/Director (Seconded from RBC) quality of the Bank’s adherence to all core operating control policies and procedures. This is done through the periodic Angelito V. Evangelista review and evaluation of each operating unit including the rendering of scorecards. Director
The Compliance Group promotes compliance with the Omar Byron T. Mier regulations of the Bangko Sentral ng Pilipinas (BSP), the Director Securities and Exchange Commission (SEC), Philippine Deposit Insurance Corp. (PDIC), Bureau of Internal Revenue (BIR) and other regulatory agencies with whom the bank reports to, Irma D. Velasco through active liaison and dialogue with regulators as well as Director the dissemination of new rules, regulations, and directives. Rosario C. Marcelo The Bank’s Compliance Officer actively takes part in the Director activities and programs of the Association of Bank Compliance Officers (ABComp), as well as provides continuous in-house training on the stipulations of the Anti-Money Laundering Act. Hermogenes S. Roxas Independent Director
Victor V. Laynes Independent Director
Atty. Zalman D. Uddin Corporate Secretary
36 RobinsonsBank 2014 Annual Report 37 RISK Exposure and Assessment MANAGEMENT The major risks inherent to the Bank’s operations are credit, market and operational. In addition — and considering the Bank’s assets and liability structure — the other attendant risks include credit concentration, interest rate risk in the banking book, and liquidity risks.
The Bank’s risk management process involves risk identification, quantification, proactive monitoring and control through established process, policies, guidelines, measurement models and limits, among others. “ Credit Risk When it comes to The Bank’s credit risk policies intend to maximize the return on the risk-adjusted capital by maintaining a credit risk exposure within defined parameters including asset quality and portfolio mix, among others. risk management, The Bank has several credit risk mitigation practices: • The Bank offers a variety of loan products with substantial collateral values. The latter part of this credit risk section discusses collateral and other credit enhancements. the Bank’s • Limits are set on the amount of credit risk that the Bank is willing to take for customers and counterparties, and exposures are monitored against such credit limits. • The Bank also observes related regulatory limits such as the single borrower’s limit (SBL) and directors, officers, stockholders and related interests (DOSRI) ceiling. guiding principle • To protect against settlement risk, the Bank employs a delivery-versus-payment (DvP) settlement system, wherein payment is effected only when the corresponding asset has been delivered. • For Borrowers with asset size of more than Php 15 million, there is an internal credit risk rating system (ICRRS) in place, providing a structured format for collating and analyzing borrower data to arrive at a summary indicator of credit risk. is to protect the A credit rating model for loan accounts with asset size of P15MM and below is now being developed in order to have a complete and comprehensive credit rating for commercial lending. The ICRRS has already undergone independent validation by both internal audit and SGV. • For consumer loans, the Bank has launched FICO (Fair Isaac Company) credit scoring models. A FICO credit score card welfare of all its is a learning model that takes into consideration the demographics and behavior of a loan portfolio. It is initially available for motorcycle financing and personal loan financing. Soon, it will be used also for other consumer loan products including housing and auto, among others. While FICO is not yet utilized for the other consumer products, loans shall stakeholders.” continue to be evaluated based on defined RAC (risk acceptance criteria). • Past due and nonperforming loan (NPL) ratios are also used to measure and monitor the quality of the loan portfolio.
To proactively manage risk, the ERMG undertakes PQR (portfolio quality review) both for consumer and commercial loan products. The PQR is a detailed analysis of the loan portfolio, showing portfolio distribution and performance across various demographics.
The highlights of the PQRs are discussed and presented to the loan originating units, CRECOM and the RMC. The results of the deliberation are then used to improve existing products, design new products, define new market strategies, formulate obinsonsBank recognizes that risk management is the responsibility of the entire organization. In this regard, the action plans on asset quality management as well as calibration of existing policies. Bank’s mandate is simple: “We look out for everybody.”
The responsibility of the credit risk management function rests upon the following bodies: As such, all business units are mandated to manage risks relevant to their own operations. This is undertaken in conjunctionR with the specialized entities within the Parent Company that perform certain risk management functions. Risk Management Committee (RMC) — tasked to develop and provide oversight on the credit risk management program of the Bank. The overall risk management policy is to ensure that risks taken are within the Bank’s risk appetite, which is assessed yearly considering earnings target, risk capacity (capital adequacy), regulatory standards, strategic initiatives and direction set by the — provides the strategic framework that would govern the loan/credit activities of the Bank, Board of Directors. Credit Committee (CRECOM) manages the risk of loans in general, assures the safety of depositors’ money, earns sufficient returns of the loan portfolio of the Bank, preserves the capital/deposit of stakeholders, maintains a healthy loan portfolio and enable customers/partners to prosper.
38 RobinsonsBank 2014 Annual Report 39 Credit Evaluation Department (CED) — implements the pre-approval review of all loan accounts and all collection efforts for all For initial risks taken, risk-taking personnel and business units follow the Product Approval Process for new market risk past due accounts. Credit likewise submits its reports to senior management on a periodic basis. It also acts as the independent exposures due to different types of financial instruments. The risk-taking personnel make proposals for evaluation and/or credit risk control unit which handles the review of Credit Applications (CAs) for renewal and new transactions. approval by different committees (ALCO, CRECOM, RMC and BOD). The proposals are formalized by these risk sponsors into a Product Manual. Financial Reporting Unit (FRU) — monitors the Bank’s SBL and also provides information on industry exposures and large exposures. Approved guidelines are being followed whether to accept or reject an investment proposal. Some of the evaluation criteria include risk acceptance criteria, yield analysis, credit rating, and market liquidity, among others. Enterprise Risk Management Group (ERMG) — in charge of the implementation and execution of the Risk Management Plan as approved by the RMC. Risk mitigation continues even after acceptance of risks, through the monitoring of compliance with approved limits which serve as boundaries within which the Bank can expose itself. The Bank considers the following factors in setting up the The ERMG makes recommendations and submits reports to the RMC on risk management matters affecting the Bank. The market limits: business prospects, present market conditions, expected returns and budget for the year, among others. The Bank coordinates with the various units (e.g., FRU and CorPlan) of the Bank in monitoring the established credit risk limits and limits are approved by the Board of Directors through the Risk Management Committee. performance of each product. One of the many market risk exposures measured, monitored and controlled daily by the Bank is the Value-at-Risk (VaR). VaR The ERMG is also responsible for preparing the Credit Risk Reporting Package to monitor and report the Bank’s credit measures the potential loss of value resulting from unlikely, adverse event in the normal market environment in a specified risk profile. The Credit Risk Reporting Package is submitted to the Bank’s Management Committee (MANCOM) and Risk period of time within a specified probability of occurrence. VaR is used to alert the senior management whenever the potential Management Committee (RMC) on a regular basis. The report covers the following: Portfolio Mix; Risk Appetite and Tolerance; for losses in the Bank’s trading portfolio exceeds tolerable levels. Because the VaR measure is tied to market volatility, it gives NPL Trend; Large Exposures Monitoring per Bank; Large Exposures Monitoring per Individual Borrowers; SBL Monitoring; and an immediate “feel” for the amount of risk in a portfolio especially in dynamic and volatile market environments. It therefore TOFA Exposures per Bank, among others. allows management to react quickly and adjust its portfolio strategies in different market conditions in accordance with its risk philosophy and appetite. Our VaR models have been validated by both external and internal auditors. Credit Concentration Risk The Enterprise Risk Management Group prepares a daily risk reporting package to provide Treasury, senior management, The Bank aims to minimize the potential adverse effect of credit risks that are particular to a single borrower or family of ALCO and RMC with timely and relevant covering actual exposures, limits compliance and facilitate regularization, when any borrowers through adequate diversification of loan portfolio. breach is noted.
The Bank monitors credit concentration by SBL (single borrower limit), Bank large exposures and individual exposures as well The Bank has established structure and organization to manage market risks with the involvement of the following units: as credit concentration per industry. Treasury — initiates the limits proposal, taking into consideration target budgets, market volatility forecasts and opportunities. In order to mitigate risk, the Bank sets its internal SBL (ISBL) at 20% of its qualifying capital versus the 25% BSP-imposed SBL The 5% is a cushion or allowance to absorb market volatility that affects the qualifying capital of the Bank. ERMG — evaluates the proposed limits considering the overall risk appetite of the Bank and possible impact on the capital adequacy. On the other hand, industry concentration and top borrowers concentration are covered in details in the yearly ICAAP of the Bank. The Bank uses the simplified option in computing the capital charge for credit concentration risk. This option involves MANCOM — reviews and endorses the proposed limits to RMC/BOD. It also reviews and approves breaches on limits with the computation of the Sectoral Concentration Index (SCI) of the Bank’s credit portfolio. The rationale in using these tools lies the justification, strategy and action plan of Treasury. with the need to be commensurate with the growing complexity of the bank’s business and the environment in which it operates. RMC — reviews proposed limits considering the risk appetite set by the Board of Directors and overall direction and endorses for confirmation. The following units are involved in managing credit concentration risk: Board of Directors — reviews and confirms approval of the RMC. FRU — provides the information on large exposures (Bank and individual) single borrower’s limit (SBL) on a periodic basis. Interest Rate Risk in the Banking Book ERMG – includes large exposure in its risk reporting package and implements credit stress testing on large exposures, industry, and economic activity. The Bank’s lending activities, taking deposits with different maturities and interest rates and investing in a portfolio of fixed income securities expose it to interest rate risk. In this case, the Bank aims to achieve the optimum level of net interest income CRECOM — evaluates credit proposal considering issue on concentration risk and endorses to BOD for decision. while managing its volatility and susceptibility to changes in interest rates.
Board of Directors – deliberates and decides on the credit proposal. The Bank utilizes a repricing gap analysis as a tool for measuring interest rate risk. The analysis is created by distributing the Bank’s inflows/assets and outflows/liabilities into time bands according to each instrument’s remaining term to next repricing. Market Risk Specific assumptions are used to reflect the behavior of interest-sensitive assets and liabilities in the preparation of repricing gap: The Bank’s market risk policies seek to ensure that the market risk exposures from its traded portfolios of financial instruments satisfy its expressed risk appetite and risk capacity. Loans — Performing loans are bucketed according to either the maturity date (for accounts paying fixed interest rate) or next repricing date (for accounts paying floating interest rate). No prepayment is assumed. Non-performing loans are placed under “Non-rate sensitive”.
40 RobinsonsBank 2014 Annual Report 41 Deposits — Non-maturity deposits such as Current Accounts and Savings Account are placed under “Non-rate The liquidity gap per time band is derived by computing the difference between the inflows and outflows within the time sensitive” while Time Deposits and Special Savings Account are bucketed based on their contractual maturity. band. A positive liquidity gap is an estimate of the Bank’s net excess funds for the time band. A negative liquidity gap is an estimate of a future funding requirement of the Bank. Although such gaps are a normal part of the business, a significant The repricing gap per time band is derived by computing the difference between the rate-sensitive assets (RSA) and the rate- negative amount may bring significant liquidity risk. To help control liquidity risk arising from negative liquidity gaps, maximum sensitive liabilities (RLA) within the time band. cumulative outflow (MCO) targets are set for time bands up to 1 year.
A positive repricing gap occurs when more assets than liabilities are to be repriced, and implies that the Bank’s net interest To ensure proper identification of liquidity risk exposures, the Bank regularly reviews its plans of action depending on the income could decline if interest rates decrease upon repricing. A negative repricing gap occurs when more liabilities than assets magnitude of the liquidity risk at hand. These plans of actions are identified based on the liquidity gap report, projected are to be repriced, and implies that the Bank’s net interest income could decline if interest rates increase upon repricing. MCO and liquidity ratios. The adequacy of its financial resources is then assessed and actions to be taken in the event of an unexpected situation are also identified. Measurement models, MCO and its supporting assumptions (behavior of loans and To control interest rate risk arising from repricing gaps, maximum repricing gap and Earnings at Risk (EaR) limits are set deposits, etc.) have been developed and subjected to internal and external validation. for time bands up to one year. Earnings-at-Risk is a statistical measure derived from the repricing gaps, and calculates the likely impact of changes in interest rates to the net interest income (NII). Based on December 31, 2014 figures, the increase The Senior Management and the Board are kept well-informed for them to be able to make decisions on the sufficiency and (decrease) in NII for upward and downward rate shocks of 100 basis points is as follows (In PHP Millions): diversity of their funding sources. Likewise, breaches in limits are properly identified, reported to Senior Management and RMC/ BOD on a timely basis, and preventive measures and/or corrective actions are taken via breach regularization memorandum. Earnings at Risk Up 100 BPS Rate shock Down 100 BPS Rate shock Instruments sensitive to local interest rates (181.92) 181.92 The Bank has a defined structure and organization to manage liquidity risk, as follows: Instruments sensitive to foreign interest rates (32.92) 32.92 Total (214.84) 214.84 ERMG — helps monitor market and regulatory developments pertinent to interest rates and liquidity position; Does regular maturity gap analysis to measure the maximum cumulative outflow (MCO). The analysis is benchmarked on the MCO limits The repricing gap analysis is presently being reported on a monthly basis however, upon full automation of the ALM report, and liquidity ratios set by the BOD. it shall be reported to the ALCO on a weekly basis and to the RMC/BOD on a monthly basis. Treasury — measures the liquidity and reserves position of the Parent Company. It also submits its explanation, justification The following is the management structure and the units involved in the management of interest rate risk: and proposed strategy to manage the breach, if any.
ERMG — does regular repricing gap analysis to measure interest rate risk. The analysis is benchmarked on (EaR) limits set by MANCOM/Approving Authority — reviews and approves the breach given the justification and proposed strategy of Treasury. the BOD. ALCO — utilizes the maturity gap report to manage the matching of assets and liabilities. The Parent Company’s ALCO is Treasury — submits its explanation, justification and proposed strategy to manage the breach, if any. composed of some members of the Senior Management including the Lending Banks and Treasury Bank Heads. ALCO conducts weekly meetings. ALCO — utilizes the repricing gap report to manage the matching of interest sensitive assets and liabilities. RMC/BOD — reviews and deliberates on the result of maturity gap report considering the MCO limit and liquidity ratios set by MANCOM/Approving Authority — reviews and approves the breach given the justification and proposed strategy of Treasury. the BOD.
RMC/BOD — reviews and deliberates on the result of repricing gap report considering the repricing gap limits set by the BOD. Operational Risk
Liquidity Risk The Bank works to ensure that risks identified in the Bank’s day-to-day operations and systems are systematically identified, assessed, mitigated and reported thereby minimizing the frequency and impact of operational risk events. The objective of the Bank’s liquidity risk policies is to ensure that all future obligations, anticipated or not, can be met when due with little or no impact to the Bank’s capital and earnings. The Bank manages the operational risks through the Operational Risk Management (ORM) Framework and IT Risk Management (ITRM) Framework which are supported by various tools and methodologies to ensure risks are properly The Bank seeks to lengthen liability maturities, diversify existing fund sources, and continuously develop new instruments identified, measured, controlled and mitigated as well as monitored and reported. that cater to different segments of the market. It also keeps credit lines with financial institutions, as well as a pool of liquid or highly marketable securities. Reserves management is another specialized function within the Bank, complying with BSP These tools include RCSA (Risk Control and Self-Assessment, KRI (Key Risk Indicators), LED (Loss Events Database), BIA (Business reserve requirements, which may be a buffer against unforeseen liquidity drains. Impact Analysis) IAR (Information Asset Register) and ISITRA (Information Security/Information Technology Risk Assessment).
The Bank employs the liquidity or maturity gap report for measuring liquidity risk. Although available contractual maturity dates These said tools are employed to identify and measure, not only high risk areas, loss drivers, trends, threats and are generally used for slotting instruments into time bands, expected liquidation periods, often based on historical data, are vulnerabilities, but also controls needed in mitigating the loss emanating from such risks. used if contractual maturity dates are unavailable. For instance, performing loans are bucketed according to their contractual maturity although a 2% prepayment rate is also being applied. Unreserved and liquid government securities under HFT and AFS are placed in the earlier buckets. Deposits are bucketed based on their historical behavior as observed through statistical analysis of their weekly balances. Different roll-over rates are being distributed per bucket based on the computed volatility of each type of deposits, and the remaining balances then will be placed under “Non-maturity” bucket since these are said to be their core levels.
42 RobinsonsBank 2014 Annual Report 43 Shown in the table below are the results of 2014 RCSA exercise: The Bank based the capital charge for Legal Risk on the potential losses from cases filed by and /or against the Bank. The Bank’s Estimated Potential Loss Ratio to Total combined capital charge to Business Risk as of Dec 2014 is shown in the table below: Operational Risk Events (in Php Million) Estimated Potential Loss Internal Fraud 40.84 15% Type of Risk Capital Charge External Fraud 33.58 13% (in Php Million) Employment Practices and Workplace Safety 42.77 16% Compliance Risk 39.89 Clients, Products and Business Practices 28.01 10% Reputational Risk 23.64 Damage to Physical Assets (resulting from) 5.09 2% Legal Risk 14.78 Business Disruption and System Failure 49.40 18% Total Business Risk 78.31 Execution, Delivery or Process Management 30.89 12% Information Security and Technology Risk 39.20 15% Capital Adequacy and Capital Management TOTAL 268.15 The primary objectives of the Bank’s capital management are to ensure that the Bank complies with externally imposed capital The table below shows the combined LED report as of December 2014: requirements, as mandated by the BSP, and the Bank maintains healthy capital ratios in order to support its business and to Amount maximize shareholder’s value. Presented below are the risk-based capital components, including regulatory deductions, on a Loss Event Categories (in Php Million) parent and consolidated basis: Fraud 1.82 Extraordinary Events 124.89 Qualifying Capital Consolidated Parent Company Probable loss 138.12 (in Php Million) 2014 2013 2014 2013 TOTAL OPERATIONAL RISK LOSS 264.83 Tier 1 Capital Paid-up common stock 436.84 436.84 436.84 436.84 Operational and IT risk reporting packages are part of the overall risk reporting package of ERMG as discussed in the Additional paid-in-capital - 0.00 0.00 0.00 MANCOM and presented to the RMC/BOD on a periodic basis. The packages cover the availability of critical systems (core Retained Earnings 403.18 (48.26) 293.68 (48.26) banking, cash management, retail internet banking, etc.), information security incidents, issues raised during IT Steering Undivided profits 141.38 463.96 121.08 358.65 Committee meetings, status reports on previously raised incidents as well as process execution of critical units (liquidity Net unrealized gains or losses on AFS securities (306.40) 0.00 (306.40) 0.00 report, unmatched transactions, inward/outward check clearing, batch processing, disposition of maturing investments, etc.). Cumulative Foreign Currency Translation (102.82) (89.59) (102.82) (89.59) Corresponding explanations, justifications and strategies of the critical units as approved by management are included as well. Minority Interest - 0.00 0.00 0.00 Less: Regulatory adjustments The following is the structure and the major units involved in operational risk management: DOSRI (0.11) (0.08) 0.00 0.00 Deferred income tax (103.96) (75.49) (86.61) (75.49) ERMG — prepares risk reporting package for operational and IT risks covering key risk indicators monitoring and Goodwill (563.08) (563.08) (318.75) (318.75) process execution on identified critical units as well as information security incidents and systems availability. The report is Other Intangible Assets (636.13) 0.00 (13.10) 0.00 benchmarked on defined limits covering availability of critical systems as well as important process by the critical units of the Investments in subsidiary 0.00 0.00 (759.70) 0.00 Bank. Total Common Equity Tier 1 Capital (731.09) 124.30 (735.79) 263.39 Additional Tier 1 Capital Critical Units — submits reports regularly to ERMG which includes process and risk indicator monitoring, summary of event Instruments issued by the bank that are eligible as AT1 Capital 5,202.46 5,202.46 5,202.46 5,202.46 and proposed strategies to manage breaches, if any. Total Tier 1 Capital 4,471.37 5,326.76 4,466.68 5,465.85 Less: Investment in Subsidiary - 50% 0.00 (607.89) MANCOM/Approving Authority — reviews and approves the breach given the justification and proposed strategy of the Net Tier 1 Capital 4,471.37 5,326.76 4,466.68 4,857.96 critical units concerned. Tier 2 Capital RMC/BOD — reviews and deliberates on the reports. Redeemable preferred stock 0.00 30.70 0.00 0.00 General Loan Loss Provision (GLLP) 195.59 163.23 191.67 151.81 Business Risk Unrealized Gain AFS Equity Securities 0.00 0.00 0.00 0.00 Total Tier 2 Capital 195.59 193.93 191.67 151.81 The assessment of Business Risk is covered in the Bank’s Compliance Program, approved by the Board of Directors. Less: Investment in Subsidiary - 50% 0.00 0.00 0.00 (151.81) Net Tier 2 Capital 195.59 193.93 191.67 0.00 In assessing for the Bank’s exposure under Business Risk, capital charge was used as a metric to cover for the potential Total Gross Qualifying Capital 4,666.96 5,520.70 4,658.35 5,617.66 losses that may arise from the three specific risks included in the computation of Business Risk namely, Compliance, Less: Total Investment in Subsidiary 0.00 0.00 0.00 (759.70) Reputational and Legal risk. Total Qualifying Capital 4,666.96 5,520.70 4,658.35 4,857.96 Note: Deductions to Tier 2 Capital is capped at the Total Amount of Gross Tier 2 Capital. Any excess shall be deducted from Tier 1 Capital (for 2013).
44 RobinsonsBank 2014 Annual Report 45 The Bank manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the The capital requirements for Credit, Market and Operational Risks are provided below, on a solo and consolidated basis: risk characteristics of its activities. In order to maintain or adjust the capital structure, the Bank may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes were made in the Capital Requirement Consolidated Parent Company objectives, policies and processes from the previous years. (in Php Million) 2014 2013 2014 2013 Credit Risk 2,462.75 1,971.00 2,322.68 1,756.32 Risk-based Capital Ratios are as follows: Market Risk 150.03 128.86 149.94 128.77 Operational Risk 344.44 284.70 309.33 255.86 Qualifying Capital Consolidated Parent Company Total Capital Requirements 2,957.21 2,384.56 2,781.95 2,140.95 (in Php Million) 2014 2013 2014 2013 Common Equity Tier 1 (731.09) 124.30 (735.79) 263.39 Additional Tier 1 Capital 5,202.46 5,202.46 5,202.46 5,202.46 Credit Risk Tier 1 Capital 4,471.37 5,326.76 4,466.68 5,465.85 Tier 2 Capital 195.59 193.93 191.67 151.81 The Bank uses the Standardized Approach under Circular No. 538 in computing its exposure for credit risk. Credit Risk- Gross Qualifying Capital 4,666.96 5,520.70 4,658.35 5,617.66 Weighted Asset (CRWA) is an important risk measure of the Bank, primarily because it is used to determine the Bank’s Less : Required deductions 0.00 0.00 0.00 759.70 minimum capital requirement. The Bank’s minimum capital requirement for credit risk is defined as 10% of the CRWA. Total Qualifying Capital 4,666.96 5,520.70 4,658.35 4,857.96 Risk Weighted Assets 29,572.15 23,845.58 27,819.50 21,409.54 The following table summarizes the result of the risk quantification and capital assessment of the Bank’s credit risk using the Common Equity Tier 1 Ratio -2.47% 0.52% -2.64% 1.23% standardized approach. Capital Conservation Buffer 0.00% 0.00% 0.00% 0.00% Tier 1 Capital Ratio 15.12% 22.34% 16.06% 22.69% Credit Risk-Weighted Assets Consolidated Parent Capital Adequacy Ratio 15.78% 23.15% 16.74% 22.69% (In Php Million) 2014 2013 2014 2013 Credit Risk-Weighted Assets The regulatory qualifying capital of the Bank consists of Tier 1 (core) capital, which comprises of paid-up common stock, Total Risk Weighted On-Balance Sheet Assets 24,578.86 19,644.53 23,178.18 17,497.74 additional paid-in capital, retained earnings, surplus including current year profit, minority interest less required deductions such Total Risk-Weighted Off-Balance Sheet Assets 35.45 65.51 35.45 65.51 as unsecured accommodations to DOSRI, deferred income tax and goodwill. The other component of regulatory capital is Total Counterparty Risk-Weighted Assets in Tier 2 (supplementary) capital, which includes net unrealized gains and losses on AFS equity securities and general loan loss the Banking Book (Derivatives and provision. A capital conservation buffer of 2.5% comprised of CET 1 capital is likewise imposed in the Basel III capital ratios. Repo-style Transactions) 13.15 13.15 Total Gross Risk-Weighted Assets 24,627.46 19,710.04 23,226.78 17,563.25 In 2014, common equity tier 1 ratio of the Bank is (2.65%). In order to meet the requirement of BSP issued Circular No. 781, Deductions: the Bank plans to convert preferred shares to common shares. The request of the Bank for the conversion of its preferred to General loan loss provision [in excess of common shares awaits BSP approval. The request pertains to “Endorsement/Certificate of Authority to Convert 157,883,715 the amount permitted to be Series “A” Preferred Shares and 209,604,710 Series “B” Preferred Shares into Common Shares and To File an Amendment included in Upper Tier 2 - - to the Bank’s Articles of Incorporation to Reflect the Conversion” under the Bank’s Letters to BSP which will result in the Unbooked valuation reserves and other increase of the Bank’s Common Shares from 43,683,500 Common Shares to 411,171,925 Common shares. capital adjustments affecting asset accounts based on the latest report CET1 Ratio upon conversion of the aforecited number of Preferred “A” and “B” shares to Common Shares will be 10.56% of examination as approved by the with a conservation buffer of 4.56% for Solo, and 9.96% with conservation buffer of 3.96% for Consolidated. Monetary Board - - TOTAL CREDIT RISK-WEIGHTED ASSETS 24,627.46 19,710.04 23,226.78 17,563.25 Reconciliation between Philippine Financial Reporting Standards (PFRS) Capital, capital under Philippine Regulatory Accounting Principles and Qualified Capital for Minimum Adequacy Compliance under Basel III as follows (in Php Million): The Bank’s total CRWA as of 31 December 2014 amount to Php23,226.78 Million and Php24,627.46 Million, on solo and consolidated basis, respectively. PFRS Capital, 2014 5,765.90 Differences due to Accounting Principles (14.23) RAP Capital, 2014 5,751.67 Other Comprehensive Income - Others 22.97 General Loan Loss Provision 195.59 Capital Adjustments (1,303.27) Qualified Capital for Minimum Adequacy Compliance under Basel III 4,666.96
46 RobinsonsBank 2014 Annual Report 47 48 RobinsonsBank Presented below is the total credit exposure, on a solo and consolidated basis, broken down by type of exposures and risk buckets:
2014 (Consolidated) ON-BALANCE SHEET ITEMS Exposures Net Exposures Covered Total Credit Risk Risk Weights Total Credit (in PHP Million) of Specific by Credit Exposure After Risk Weighted Provisions Risk Mitigation Risk Mitigation 0% 20% 50% 75% 100% 150% Assets
Cash on Hand 1,715.40 1,715.40 1,715.40 1,715.40
Checks and Other Cash Items - - - - Due from Bangko Sentral ng Pilipinas (BSP) 9,495.13 - 9,495.13 9,495.13 9,495.13 Due from Other Banks 1,599.08 1,599.08 - 519.37 1,079.71 1,599.08 Available-for-Sale (AFS) Financial Assets 8,056.58 - 8,056.58 4,657.02 100.80 529.83 - 2,768.92 - 8,056.58 Held-to-Maturity (HTM) Financial Assets 1,781.08 - 1,781.08 50.36 1,519.60 - - 211.13 - 1,781.08 Unquoted Debt Securities Classified as Loans - - - Loans and Receivables Interbank Term Loans Receivable 98.40 98.40 98.40 98.40 Loans and Receivables -Others Non-defaulted exposures Corporates 14,574.35 1,279.62 13,294.72 2,435.55 10,859.18 13,294.72 Microfinance/SME 1,181.88 5.00 1,176.88 1,176.88 1,176.88 Loans to individuals for Housing Purposes 3,178.66 - 3,178.66 3,178.66 3,178.66 Loans to Individuals 2,890.49 28.36 2,862.13 - - - - 2,862.13 - 2,862.13 Defaulted exposures Housing Loans 86.71 86.71 86.71 86.71 Other than Housing Loans 530.16 530.16 530.16 530.16 Loans and Receivables Arising from Repurchase Agreements, Certificates of Assignment/Participation with Recourse, and Securities Lending and Borrowing Transactions 500.40 - 500.40 500.40 500.40 Sales Contract Receivable (SCR) 197.41 - 197.41 171.10 26.30 197.41 Real and Other Properties Acquired 251.33 251.33 251.33 251.33 Total Exposures Excluding Other Assets 46,137.05 1,312.99 44,824.06 16,418.31 4,055.95 4,227.86 1,176.88 18,137.28 807.79 44,824.06 Other Assets 1,422.11 1,422.11 1,422.11 1,422.11 Total Exposures, Including Other Assets 47,559.16 1,312.99 46,246.18 16,418.31 4,055.95 4,227.86 1,176.88 19,559.39 807.79 46,246.18 Total Risk-weighted On-Balance Sheet Assets not covered by Credit Risk Mitigants - 811.19 2,113.93 882.66 19,559.39 1,211.69 24,578.86 Total risk-weighted On-Balance Sheet Assets covered by Credit Risk Mitigants - - - - - TOTAL RISK-WEIGHTED ON-BALANCE SHEET ASSETS - 811.19 2,113.93 882.66 19,559.39 1,211.69 24,578.86
2014 (Parent) ON-BALANCE SHEET ITEMS Exposures Net Exposures Covered Total Credit Risk Risk Weights Total Credit (in PHP Million) of Specific by Credit Exposure After Risk Weighted Provisions Risk Mitigation Risk Mitigation 0% 20% 50% 75% 100% 150% Assets
Cash on Hand 1,640.84 1,640.84 1,640.84 1,640.84 Checks and Other Cash Items - - - - Due from Bangko Sentral ng Pilipinas (BSP) 8,805.42 - 8,805.42 8,805.42 8,805.42 Due from Other Banks 1,465.41 1,465.41 519.37 946.03 1,465.41 Available-for-Sale (AFS) Financial Assets 8,056.58 - 8,056.58 4,657.02 100.80 529.83 2,768.92 8,056.58 Held-to-Maturity (HTM) Financial Assets 1,781.08 - 1,781.083 50.36 1,519.60 211.13 1,781.08 Unquoted Debt Securities Classified as Loans Loans and Receivables Interbank Term Loans Receivable 98.40 98.40 98.40 98.40 Loans and Receivables - Others Non-defaulted exposures Corporates 14,574.35 1,279.62 13,294.72 2,435.55 10,859.18 13,294.72 Microfinance/ SME 1,084.32 5.00 1,079.32 1,079.32 1,079.32 Loans to individuals for Housing Purposes 3,172.50 - 3,172.50 3,172.50 3,172.50 Loans to Individuals 2,392.39 23.07 2,369.32 2,369.32 2,369.32 Defaulted exposures Housing Loans 78.85 78.85 78.85 78.85 Other than Housing Loans 323.59 323.59 323.59 323.59 Loans and Receivables Arising from Repurchase Agreements, Certificates of Assignment/Participation with Recourse, and Securities Lending and Borrowing Transactions 500.40 - 500.40 500.40 500.40 Sales Contract Receivable (SCR) 148.84 - 148.84 142.11 6.72 148.84 Real and Other Properties Acquired 86.06 86.06 86.06 86.06 Total Exposures Excluding Other Assets 44,209.01 1,307.69 42,901.32 15,654.04 4,055.95 4,221.70 1,079.32 17,473.95 416.37 42,901.32 Other Assets 1,348.15 1,348.15 1,348.15 1,348.15 Total Exposures, Including Other Assets 45,557.16 1,307.69 44,249.47 15,654.04 4,055.95 4,221.70 1,079.32 18,822.10 416.37 44,249.47 Total Risk-weighted On-Balance Sheet Assets not covered by Credit Risk Mitigants - 811.19 2,110.85 809.49 18,822.098 624.55 23,178.18 Total risk-weighted On-Balance Sheet Assets covered by 2014 AnnualReport Credit Risk Mitigants ------TOTAL RISK-WEIGHTED ON-BALANCE SHEET ASSETS - 811.19 2,110.85 809.49 18,822.10 624.55 23,178.18 49 Credit equivalent amount for off-balance sheet items, broken down by type of exposures Market Risk-Weighted Assets
Consolidated Parent The Standardized Approach is utilized by the Bank in determining its market risk-weighted assets. As at the end of December Off-balance Sheet Assets 2014 2013 2014 2013 2014, computed total market risk-weighted assets on consolidated basis stood at Php1.500 billion. This consisted of (in Php Million) Notional Credit Notional Credit Notional Credit Notional Credit Php0.917 billion interest rate risk exposure and Php0.584 billion foreign exchange exposures. Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent Direct Credit Substitutes 12.53 12.53 18.18 18.18 12.53 12.53 18.18 18.18 Market Risk Weighted Assets Consolidated Parent Company Transaction-related contingencies ------(in Php Million) 2014 2013 2014 2013 Trade-related contingencies arising Interest Rate Exposures from movement of goods 114.57 22.91 236.65 47.33 114.57 22.91 236.65 47.33 Specific Risk 0.74 0.74 - Other commitments (which can be General Market Risk done unconditionally cancelled PHP 69.84 60.81 69.84 60.81 at any time by the bank without USD 2.77 3.35 2.77 3.35 prior notice) 16,873.30 - 8,043.98 - 16,871.56 - 8,041.93 - Total Capital Charge 73.35 64.16 73.35 64.16 Total Notional Principal and Adjusted Capital Charge 91.69 80.2 91.69 80.2 credit Equivalent Amount 17,000.41 35.45 8,298.81 65.51 16,998.66 35.45 8,296.76 5.51 Total Risk Weighted Interest Rate Exposures 916.85 801.96 916.85 801.96 Total Risk Weighted Equity Exposures - - - - Credit equivalent amount for counterparty risk-weighted items, broken down by type of exposures (in Php million) exposures Foreign Exchange Exposures (in Php million) Total Capital Charge 46.68 38.93 46.61 38.86 Adjusted Capital Charge 58.35 48.66 58.26 48.58 Credit equivalent amount for off-balance sheet items, broken down by type of exposures Total Risk Weighted Foreign Exchange Exposures 583.46 486.61 582.59 485.75 Total Risk Weighted Exposures on Options - - - - Consolidated Parent Total Market Risk-Weighted Assets 1,500.31 1,288.57 1,499.44 1,287.71 Off-balance Sheet Assets 2014 2013 2014 2013 (in Php Million) Notional Credit Notional Credit Notional Credit Notional Credit Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent Operational Risk-Weighted Assets Derivatives Exposures Exchange Rate Contracts 2,630.67 26.31 2,630.67 26.31 The Bank uses the Basic Indicator approach in computing its operational risk-weighted assets. Operational risk-weighted Total Notional Amount 2,630.67 26.31 2,630.67 26.31 assets at December 2014 were Php3.093 billion and Php3.444 billion, on solo and consolidated basis, respectively. In 2013, Total Counterparty Risk- they were Php2.559 billion and Php2.847 billion, on solo and consolidated basis, respectively. weighted Assets of Derivative Transaction 13.15 13.15
Pursuant to the Bank’s policy, the credit ratings given by foreign and local rating agencies were used to determine the credit risk weights of On-balance sheet, Off-balance sheet and counter party exposures.
For all rated credit exposures, regardless of currency, the Bank used the ratings of Standard & Poor’s (S&P); Moody’s and Fitch Ratings. On the other hand, the credit rating given by Phil Ratings was used for Unquoted Debt Securities, certain Corporate Bonds, Peso-denominated exposures and loans to rated domestic private entities.
The Bank neither uses credit derivatives as credit risk mitigant nor provides credit protection through credit derivatives. The Bank has no outstanding exposure to securitization structures and other types of structured products issued or purchased by the Bank.
50 RobinsonsBank 2014 Annual Report 51 CORPORATE SOCIAL RESPONSIBILITY
The Bank believes in giving back to the community that it serves.
A GROWING BANK WITH A BIG HEART CORPORATE SOCIAL RESPONSIBILITY
For 2014, the Bank’s Corporate Social Responsibility (CSR) theme was “Read Today, Lead Tomorrow.”
Realising the importance of education, RobinsonsBank has offered its financial aid for education equipment and participated in the restoration of school buildings in various regional areas.
he Bank believes in giving back to the community The effects of all these employee programs translate to the that it serves. Bank’s 2014 Employee Engagement Rating, which garnered a score of 4.05. That means majority of our participants For 2014, the Bank’s Corporate Social affirmed that the activity had a positive impact on them. ResponsibilityT (CSR) theme was “Read Today, Lead It was noted that 30% of the Bank’s employee base Tomorrow.” This involved employees spending time with participated in this survey. public school children playing games, and reading stories. They also distributed gift bags and books to the kids. The following areas reflected the highest scores: Leadership, Employer Brand, Job Clarity, and Alignment with Company RobinsonsBank’s provincial branches visited schools in their Goals. respective localities. In Metro Manila, the employees went to West Fairview Elementary School in Quezon City and read to the pupils from Grades 1 to 4.
54 RobinsonsBank 2014 Annual Report 55 Built on the conviction that education is one of the keys to a better future for the country, the Gokongwei Brothers Foundation (GBF) was set up in 1992.
Financial Statements
56 RobinsonsBank SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001, 6760 Ayala Avenue Fax: (632) 819 0872 December 28, 2012, valid until December 31, 2015 1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-3 (Group A), Philippines November 15, 2012, valid until November 16, 2015
Independent Auditors’ Report INDEPENDENT AUDITORS’ REPORT - 2 -
The Stockholders and the Board of Directors Opinion Robinsons Bank Corporation In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group and of the Parent Company as at December 31, 2014 and 2013, and their financial Report on the Financial Statements performance and their cash flows for the years then ended in accordance with Philippine Financial Reporting Standards. We have audited the accompanying consolidated financial statements of Robinsons Bank Corporation and Subsidiary (the Group) and the parent company financial statements of Robinsons Bank Report on the Supplementary Information Required Under Revenue Regulations 15-2010 Corporation (the Parent Company), which comprise the statements of financial position as at December 31, 2014 and 2013, and the statements of income, statements of comprehensive income, Our audits were conducted for the purpose of forming an opinion on the basic financial statements statements of changes in equity and statements of cash flows for the years then ended, and a summary taken as a whole. The supplementary information required under Revenue Regulations 15-2010 in of significant accounting policies and other explanatory information. Note 30 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the Management’s Responsibility for the Financial Statements responsibility of the management of Robinsons Bank Corporation. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our Management is responsible for the preparation and fair presentation of these financial statements in opinion, the information is fairly stated, in all material respects, in relation to the basic financial accordance with Philippine Financial Reporting Standards, and for such internal control as statements taken as a whole. management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. SYCIP GORRES VELAYO & CO. Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable Aris C. Malantic assurance about whether the financial statements are free from material misstatement. Partner CPA Certificate No. 90190 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures SEC Accreditation No. 0326-AR-2 (Group A), in the financial statements. The procedures selected depend on the auditor’s judgment, including the March 15, 2012, valid until April 30, 2015 assessment of the risks of material misstatement of the financial statements, whether due to fraud or Tax Identification No. 152-884-691 error. In making those risk assessments, the auditor considers internal control relevant to the entity’s BIR Accreditation No. 08-001998-54-2015, preparation and fair presentation of the financial statements in order to design audit procedures that are February 27, 2015, valid until February 27, 2018 appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness PTR No. 4751296, January 5, 2015, Makati City of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as March 25, 2015 evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
*SGVFS013456*
A member firm of Ernst & Young Global Limited 58 RobinsonsBank *SGVFS013456*2014 Annual Report 59
A member firm of Ernst & Young Global Limited ROBINSONSBANK CORPORATION AND SUBSIDIARY ROBINSONS BANK CORPORATION AND SUBSIDIARY StatementsSTATEMENTS OF of FINANCIAL Financial POSITION Position - 2 -
Consolidated Parent Company Consolidated Parent Company December 31 December 31 2014 2013 2014 2013 2014 2013 2014 2013 Equity ASSETS Common stock (Note 19) P=436,835,000 P=436,835,000 P=436,835,000 P=436,835,000 Cash and Other Cash Items P=1,576,260,066 P=1,143,258,839 P=1,501,127,113 P=1,109,208,879 Preferred stock (Note 19) 5,202,462,740 5,202,462,740 5,202,462,740 5,202,462,740 Surplus 399,198,980 256,532,840 318,172,583 195,802,336 Due from Bangko Sentral ng Pilipinas Surplus reserves (Notes 19 and 25) 137,984,625 133,738,711 137,984,625 133,738,711 (Note 15) 9,494,853,206 11,437,995,107 8,805,204,359 10,287,995,577 Remeasurement losses on retirement Due from Other Banks 1,641,654,746 2,135,050,452 1,509,908,716 2,015,697,154 plan (Note 20) (33,321,046) (22,966,553) (33,085,924) (22,966,553) Net unrealized losses on Available for Interbank Loans Receivable/Securities Sale investments (Note 7) (275,369,283) (630,810,436) (275,369,283) (630,810,436) Purchased Under Resale Cumulative translation adjustments (101,893,478) (88,659,103) (101,893,478) (88,659,103) Agreements (Notes 6 and 28) 598,000,000 3,099,000,000 598,000,000 3,099,000,000 5,765,897,538 5,287,133,199 5,685,106,263 5,226,402,695 Financial Assets at Fair Value P=49,172,805,408 P=45,876,694,668 P=47,240,080,888 P=43,335,440,423 Through Profit or Loss (Note 7) 1,305,791,077 1,094,982,315 1,305,791,077 1,094,982,315 See accompanying Notes to Financial Statements. Available-for-Sale Investments (Notes 7 and 25) 7,717,407,389 5,834,159,192 7,746,407,389 5,863,159,192 Held-to-Maturity Investment (Note 7) 1,768,603,469 75,000,000 1,768,603,469 75,000,000 Loans and Receivables (Note 8) 22,582,618,007 18,810,281,293 21,695,776,380 17,767,707,037 Investment in a Subsidiary (Note 9) – – 731,000,000 731,000,000 Property and Equipment (Note 10) 490,790,131 472,102,324 437,846,674 433,953,133 Investment Properties (Note 11) 202,994,936 239,616,938 93,093,679 98,695,983 Branch Licenses (Note 12) 951,850,182 949,650,182 331,850,182 329,650,182 Goodwill (Note 9) 244,327,006 244,327,006 – – Deferred Tax Asset - net (Note 23) − – 128,708,199 99,543,511 Other Assets (Note 13) 597,655,193 341,271,020 586,763,651 329,847,460 P=49,172,805,408 P=45,876,694,668 P=47,240,080,888 P=43,335,440,423
LIABILITIES AND EQUITY Liabilities Deposit Liabilities (Notes 15 and 24) Demand P=9,098,043,386 P=8,426,641,325 P=8,960,550,167 P=8,280,498,997 Savings 23,197,699,386 23,019,440,597 22,006,003,584 21,253,515,436 Time 8,914,931,649 7,327,070,074 8,456,107,023 6,869,679,656 41,210,674,421 38,773,151,996 39,422,660,774 36,403,694,089 Manager’s Checks 278,420,426 237,145,631 278,420,426 237,145,631 Income Tax Payable 984,125 6,346,776 − 3,226,328 Redeemable Preferred Shares (Notes 9 and 16) 1,700,000 1,700,000 − – Deferred Tax Liabilities - net (Note 23) 39,896,738 68,966,845 − – Accrued Expenses and Other Liabilities (Note 17) 1,875,232,160 1,502,250,221 1,853,893,425 1,464,971,680 P=43,406,907,870 P=40,589,561,469 P=41,554,974,625 P=38,109,037,728
(Forward)
60 RobinsonsBank 2014 Annual Report 61 *SGVFS013456* *SGVFS013456* ROBINSONSBANK CORPORATION AND SUBSIDIARY ROBINSONSBANK CORPORATION AND SUBSIDIARY ROBINSONS BANK CORPORATION AND SUBSIDIARY ROBINSONS BANK CORPORATION AND SUBSIDIARY StatementsSTATEMENTS OF of INCOME Income StatementsSTATEMENTS OF of COMPREHENSIVE Comprehensive INCOME Income
Consolidated Parent Company Consolidated Parent Company Years Ended December 31 Years Ended December 31 2014 2013 2014 2013 2014 2013 2014 2013
INTEREST INCOME ON P=146,912,054 P= 406,155,606 P=126,616,161 P=345,425,102 Loans and receivables (Note 8) P=1,839,742,004 P=1,620,114,438 P=1,664,023,204 P=1,364,091,796 NET INCOME Investment securities (Note 7) 373,412,510 424,293,844 373,412,510 424,293,844 Due from Bangko Sentral ng Pilipinas and other banks 130,038,468 33,281,729 108,964,852 15,446,843 OTHER COMPREHENSIVE LOSS Interbank loans receivable (Note 6) 74,457,934 80,117,930 74,457,934 80,117,930 FOR THE YEAR, NET OF TAX 2,417,650,916 2,157,807,941 2,220,858,500 1,883,950,413 Items that may not be reclassified to profit or loss Change in remeasurement losses on retirement plan INTEREST EXPENSE ON (Note 20) (10,354,493) (4,786,687) (10,119,371) (4,786,687) Deposit liabilities (Notes 15 and 24) 514,565,724 558,108,231 470,585,770 498,533,728 Items that may be reclassified to profit or loss Change in net unrealized losses on AFS NET INTEREST INCOME 1,903,085,192 1,599,699,710 1,750,272,730 1,385,416,685 investments (Note 7) 355,441,153 (702,851,061) 355,441,153 (702,851,061) Service fees and commission income (Note 22) 154,252,479 200,454,214 135,751,724 178,229,021 Translation adjustments (13,234,375) (83,991,563) (13,234,375) (83,991,563) Service fees and commission expense (Note 22) 44,540,732 41,133,695 44,263,147 40,046,934 331,852,285 (791,629,311) 332,087,407 (791,629,311) NET SERVICE FEE AND COMMISSION INCOME 109,711,747 159,320,519 91,488,577 138,182,087 TOTAL COMPREHENSIVE INCOME (LOSS) P=478,764,339 ( P= 385,473,705) P=458,703,568 (P=446,204,209) Trading and securities gains - net (Note 7) 109,434,613 413,107,206 109,434,613 413,107,206 Foreign exchange gain (loss) - net 34,115,595 (12,067,448) 34,102,511 (12,123,170) Miscellaneous (Note 22) 260,204,762 137,514,448 241,297,963 106,741,270 See accompanying Notes to Financial Statements.
TOTAL OPERATING INCOME 2,416,551,909 2,297,574,435 2,226,596,394 2,031,324,078
OPERATING EXPENSES Compensation and fringe benefits (Notes 20 and 24) 457,950,571 401,983,044 415,727,804 359,896,061 Provision for credit and impairment losses (Note 14) 426,605,876 171,711,627 393,734,491 109,164,080 Occupancy and equipment-related costs (Notes 21 and 24) 299,983,950 226,937,938 286,119,348 211,323,418 Taxes and licenses (Note 23) 251,807,961 209,686,425 237,405,615 182,559,886 Depreciation and amortization (Note 10) 207,986,445 163,861,185 192,459,955 143,319,500 Security, messengerial and janitorial 161,496,184 190,620,940 151,453,744 180,110,439 Insurance 116,202,570 92,553,662 109,967,277 86,272,994 Entertainment, amusement, and recreation (Note 23) 42,497,075 33,422,674 41,219,316 31,660,529 Communication 42,025,927 38,676,398 37,347,921 34,339,769 Information technology 36,812,016 28,588,001 36,613,069 28,482,004 Management and professional fees 8,324,846 8,082,549 7,000,210 5,573,854 Miscellaneous (Note 22) 135,171,042 173,370,070 115,246,069 150,538,802
TOTAL OPERATING EXPENSES 2,186,864,463 1,739,494,513 2,024,294,819 1,523,241,336
INCOME BEFORE INCOME TAX 229,687,446 558,079,922 202,301,575 508,082,742
PROVISION FOR INCOME TAX (Note 23) 82,775,392 151,924,316 75,685,414 162,657,640
NET INCOME P=146,912,054 P=406,155,606 P=126,616,161 P=345,425,102 See accompanying Notes to Financial Statements.
62 RobinsonsBank 2014 Annual Report 63 *SGVFS013456* *SGVFS013456* 64
RobinsonsBank ROBINSONSBANK CORPORATION AND SUBSIDIARY StatementsROBINSONS BANK of CORPORATION Changes in AND Equity SUBSIDIARY STATEMENTS OF CHANGES IN EQUITY Consolidated Net Unrealized Gains (Losses) on Remeasurement Available for Sale Losses on Securities/ Cumulative Common Stock Preferred Stock Surplus Surplus Retirement Plan Investments Translation (Note 19) (Note 19) (Deficit) Reserves (Note 20) (Note 7) Adjustments Total Balance at January 1, 2014 P=436,835,000 P=5,202,462,740 P=256,532,840 P=133,738,711 (P=22,966,553) (P=630,810,436) (P=88,659,103) P=5,287,133,199 Total comprehensive income (loss) for the year − − 146,912,054 − (10,354,493) 355,441,153 (13,234,375) 478,764,339 Appropriation for self-insurance (Note 19) − − (3,600,000) 3,600,000 − − − − Appropriation for trust reserves (Note 19) − − (645,914) 645,914 − − − − Balance at December 31, 2014 P=436,835,000 P=5,202,462,740 P=399,198,980 P=137,984,625 (P=33,321,046) (P=275,369,283) (P=101,893,478) P=5,765,897,538
Balance at January 1, 2013 P=436,835,000 P=5,202,462,740 (P=128,124,096) P=112,240,041 (P=18,179,866) P=72,040,625 (P=4,667,540) P=5,672,606,904 Total comprehensive income (loss) for the year – – 406,155,606 – (4,786,687) (702,851,061) (83,991,563) (385,473,705) Appropriation for self-insurance (Note 19) – – (21,498,670) 21,498,670 – – – – Balance at December 31, 2013 P=436,835,000 P=5,202,462,740 P=256,532,840 P=133,738,711 (P=22,966,553) (P=630,810,436) (P=88,659,103) P=5,287,133,199
Parent Company Net Unrealized Gains (Losses) on Remeasurement Available for Sale Losses on Securities/ Cumulative Common Stock Preferred Stock Surplus Surplus Retirement Plan Investments Translation (Note 19) (Note 19) (Deficit) Reserves (Note 20) (Note 7) Adjustments Total Balance at January 1, 2014 P=436,835,000 P=5,202,462,740 P=195,802,336 P=133,738,711 (P=22,966,553) (P=630,810,436) (P=88,659,103) P=5,226,402,695 Total comprehensive income (loss) for the year − − 126,616,161 − (10,119,371) 355,441,153 (13,234,375) 458,703,568 Appropriation for self-insurance(Note 19) − − (3,600,000) 3,600,000 − − − − Appropriation for trust reserves(Note 19) − − (645,914) 645,914 − − − − Balance at December 31, 2014 P=436,835,000 P=5,202,462,740 P=318,172,583 P=137,984,625 (P=33,085,924) (P=275,369,283) (P=101,893,478) P=5,685,106,263
Balance at January 1, 2013 P=436,835,000 P=5,202,462,740 (P=128,124,096) P=112,240,041 (P=18,179,866) P=72,040,625 (P=4,667,540) P=5,672,606,904 Total comprehensive income (loss) for the year – – 345,425,102 – (4,786,687) (702,851,061) (83,991,563) (446,204,209) Appropriation for self-insurance (Note 19) – – (21,498,670) 21,498,670 – – – – Balance at December 31, 2013 P=436,835,000 P=5,202,462,740 P=195,802,336 P=133,738,711 (P=22,966,553) (P=630,810,436) (P=88,659,103) P=5,226,402,695
*SGVFS013456* Statements ofCashFlows ROBINSONSBANK CORPORATIONANDSUBSIDIARY (Forward) STATEMENTS OFCASHFLOWS SUBSIDIARY AND ROBINSONS BANKCORPORATION Proceeds from maturity of: Changesinoperating liabilities: assetsand Gain onof sale property equipmentand (Note 22) Netcash generated from (used in) operations Repossessed chattels Repossessed Investment properties Propertyequipment and Available-for-sale investments Proceeds from sale of: Loss(gain)initialon recognitionrepossessedof Netcash provided by (used in) investing activities Software costs (Note 13) (Note Software costs Branchlicenses (Note 12) Gain onof sale repossessed chattels (Note 22) impairmentlossesand (Note Provision 14) credit for Depreciationamortization and (Note 10) Adjustments for: Gaininitial on recognition of investment Available-for-sale investments of: Acquisitions ACTIVITIES INVESTING FROM FLOWS CASH Netcash provided by (used in) operating activities Income taxespaid tax income before Income CASH FLOWS FROM OPERATING ACTIVITIES other (Note banks 28) Placements with Bangko Sentral Pilipinasng and Available-for-sale investments Retirement expense (Note 20) (Note expense Retirement Property and equipment (Notes 10 and 28) Gain on saleof investment properties (Note 22) Gain on saleof available-for-sale investments Held-to-maturity investments (Note 7) Decrease (increase) in: (increase) Decrease Increase in: Increase chattels 22) (Note (Note 7) properties(Note 22) Derivative assets Manager’s checks Accrued expenses and other liabilities Deposit liabilities Other assets Loansreceivables and Financial assets at fairvalue through profit or loss (1,279,574,840) (4,184,442,146) (3,091,335,354) (1,458,603,469) (3,126,422,353) (1,398,966,651) 2,437,522,425 1,436,789,461 (346,067,230) (210,808,762) (163,477,547) (168,040,508) (119,391,811) P=229,687,446 (15,565,973) (18,823,325) (31,401,640) (17,948,892) (23,174,152) 345,637,760 185,000,000 426,605,876 207,986,445 (2,200,000) 41,274,795 42,487,673 22,425,863 16,989,688 1,000,000 3,066,658 (408,287) Consolidated 2014 − (6,475,597,440) Years Ended December 31 4,811,926,867 5,690,480,932 7,603,214,077 1,090,691,022 1,220,783,023 5,511,077,758 (231,235,850) (792,827,527) (173,983,803) (365,458,901) (179,403,174) P=558,079,922 (75,000,000) (35,943,862) 109,088,614 117,285,684 247,359,353 171,711,627 163,861,185 (3,405,000) (6,375,484) (5,400,000) (6,783,867) 66,331,078 61,162,540 35,974,592 14,555,500 25,703,594 6,458,704 (128,670) 2013 – *SGVFS013456* (4,319,754,148) (1,458,603,469) (3,126,422,353) (3,097,517,941) 3,018,966,685 1,436,789,461 (297,425,137) (833,915,536) (210,808,762) (145,722,890) (158,262,969) (151,993,570) (985,909,106) P=202,301,575 (30,012,204) (15,059,100) (17,948,892) (18,856,411) (23,174,152) 362,884,431 393,734,491 192,459,955 185,000,000 (2,200,000) 41,274,795 42,487,673 15,917,944 1,000,000 (165,841) 165,841 Parent Company 2014 − – (6,475,597,440) 2014 AnnualReport 4,475,780,979 5,426,123,636 1,090,691,022 1,162,317,851 7,571,900,064 5,250,356,334 (230,132,453) (644,788,001) (166,873,643) (365,458,901) (175,767,302) P=508,082,742 (75,000,000) (34,506,401) 165,434,717 109,164,080 143,319,500 109,088,614 247,359,353 (6,375,484) (5,400,000) 66,331,078 61,162,540 14,063,276 25,703,594 4,766,977 (274,726) 2013 – – – – 65 ROBINSONSBANK CORPORATION AND SUBSIDIARY ROBINSONS BANK CORPORATION AND SUBSIDIARY NotesNOTES TOto FINANCIALFinancial STATEMENTSStatements - 2 -
Consolidated Parent Company 1. Corporate Information Years Ended December 31 2014 2013 2014 2013 Robinsons Bank Corporation (the Parent Company or the Bank) was domiciled and incorporated EFFECTS OF FOREIGN EXCHANGE in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) RATE CHANGES (P=13,234,375) (P=83,991,563) (P=13,234,375) (P=83,991,563) on April 28, 1966 and acquired its license from Bangko Sentral ng Pilipinas (BSP) to operate as a commercial bank on March 1, 2002. On March 21, 2013, the SEC granted the license extending NET INCREASE (DECREASE) IN CASH AND CASH the Bank’s corporate life for another fifty (50) years. The Parent Company and its subsidiary (the EQUIVALENTS (4,503,536,380) 6,647,869,218 (4,096,661,422) 6,328,682,622 Group) is engaged in commercial and thrift banking, respectively, whose principal activities CASH AND CASH EQUIVALENTS include deposit-taking, lending, foreign exchange dealing and fund transfers or remittance AT BEGINNING OF YEAR servicing. Cash and other cash items 1,143,258,839 1,038,282,061 1,109,208,879 987,867,163 Due from Bangko Sentral ng Pilipinas 11,437,995,107 8,106,584,476 10,287,995,577 7,350,141,875 Due from other banks 2,135,050,452 1,923,568,643 2,015,697,154 1,746,209,950 The registered address and principal place of business of the Parent Company is at 17th Floor, Interbank loans receivable (Note 28) 3,000,000,000 – 3,000,000,000 – Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City. 17,716,304,398 11,068,435,180 16,412,901,610 10,084,218,988
CASH AND CASH EQUIVALENTS AT END OF The Parent Company is 60.00% and 40.00% owned by JG Summit Capital Services Corp. (JCSC) YEAR and Robinsons Retail Holdings, Inc. (RRHI), respectively. The ultimate parent company of the Cash and other cash items 1,576,260,066 1,143,258,839 1,501,127,113 1,109,208,879 Bank is JG Summit Holdings, Inc. Due from Bangko Sentral ng Pilipinas 9,494,853,206 11,437,995,107 8,805,204,359 10,287,995,577 Due from other banks (Note 28) 1,641,654,746 2,135,050,452 1,509,908,716 2,015,697,154 Interbank loans receivable (Note 28) 500,000,000 3,000,000,000 500,000,000 3,000,000,000 In December 2012, the Parent Company acquired 100.00% controlling interest in Legazpi Savings P=13,212,768,018 P=17,716,304,398 P=12,316,240,188 P=16,412,901,610 Bank, Inc. (LSB) (see Note 9).
LSB was incorporated and registered with the SEC on May 8, 1976 and acquired license from the OPERATIONAL CASH FLOWS FROM INTEREST Interest received P=2,299,662,957 P=2,203,388,081 P=2,123,324,127 P=1,920,474,514 BSP to operate as a thrift bank. LSB’s registered address and principal place of business is at Interest paid 489,265,387 591,152,258 445,230,554 531,170,100 Rizal Street, Barangay Sagpon, Albay, Legazpi City.
See accompanying Notes to Financial Statements. 2. Summary of Significant Accounting Policies
Basis of Preparation The accompanying financial statements of the Group and of the Parent Company have been prepared on a historical cost basis except for financial assets at fair value through profit or loss (FVPL) and available-for-sale (AFS) investments which are measured at fair value (see accounting policy on Fair Value Measurement).
The financial statements of the Parent Company include the accounts maintained in the Regular Banking Unit (RBU) and the Foreign Currency Deposit Unit (FCDU). The functional currency of the RBU and the FCDU is Philippine peso and United States dollar (USD), respectively. For financial reporting purposes, FCDU accounts and foreign currency-denominated accounts in the RBU are translated into their equivalents in Philippine peso (see accounting policy on Foreign Currency Translation). The financial statements of these units are combined after eliminating inter-unit accounts.
The financial statements are presented in Philippine peso, and all values are rounded to the nearest peso (P=), except when otherwise indicated.
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Statement of Compliance Changes in Accounting Policies and Disclosures The financial statements of the Group and of the Parent Company have been prepared in The Group applied, for the first time, the following applicable new and revised accounting compliance with Philippine Financial Reporting Standards (PFRS). standards. Unless otherwise indicated, these new and revised accounting standards have no impact to the Group. Except for these standards and amended PFRS which were adopted as of Presentation of Financial Statements January 1, 2014, the accounting policies adopted are consistent with those of the previous The Group and the Parent Company present its statements of financial position in the order of financial year. liquidity. An analysis regarding the recovery or settlement within twelve (12) months after the statement of financial position date (current) and more than twelve (12) months after the statement · Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12, of financial position date (non-current) is presented in Note 18. Disclosure of Interests in Other Entities, and Philippine Accounting Standard (PAS) 27, Separate Financial Statements) Financial assets and financial liabilities are offset and the net amount reported in the statement of These amendments provide an exception to the consolidation requirement for entities that financial position only when there is a legally enforceable right to offset the recognized amounts meet the definition of an investment entity under PFRS 10. The exception to consolidation and there is an intention to settle on a net basis, or to realize the assets and settle the liability requires investment entities to account for subsidiaries at fair value through profit or loss. The simultaneously. Income and expense are not offset in the statement of income unless required or amendments must be applied retrospectively, subject to certain transition relief. permitted by any accounting standard or interpretation, and as specifically disclosed in the accounting policies of the Group and of the Parent Company. · PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amendments) Basis of Consolidation These amendments clarify the meaning of ‘currently has a legally enforceable right to set-off’ The consolidated financial statements include the financial statements of the Parent Company and and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for of its subsidiary and are prepared for the same reporting period as the Parent Company using offsetting and are applied retrospectively. consistent accounting policies. · PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and All intra-group balances, transactions, income and expenses and profit and losses resulting from Continuation of Hedge Accounting (Amendments) intra-group transactions are eliminated in full in the consolidation. A subsidiary is fully These amendments provide relief from discontinuing hedge accounting when novation of a consolidated from the date in which control is transferred to the Parent Company. Control is derivative designated as a hedging instrument meets certain criteria and retrospective achieved where the Parent Company is exposed, or has the rights, to variable returns from its application is required. involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of a subsidiary ceases when control is transferred out of the Parent · PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets Company. The results of a subsidiary acquired or disposed of during the year are included in the (Amendments) consolidated statement of income from the date of acquisition or up to the date of disposal, as These amendments remove the unintended consequences of PFRS 13, Fair Value appropriate. Measurement, on the disclosures required under PAS 36. In addition, these amendments require disclosure of the recoverable amounts for assets or cash-generating units (CGUs) for Changes in the Parent Company’s ownership interest in a subsidiary that do not result in a loss of which impairment loss has been recognized or reversed during the period. control are accounted for within equity. Any difference between the amount by which the non- controlling interests are adjusted and the fair value of the consideration paid or received is · Philippine Interpretation of the International Financial Reporting Interpretations recognized directly in equity and attributed to the owners of the Parent Company. Committee(PFRIC) 21, Levies (PFRIC 21) PFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers When a change in ownership interest in a subsidiary occurs which results in a loss of control over payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon the subsidiary, the Parent Company: reaching a minimum threshold, the interpretation clarifies that no liability should be · derecognizes the assets (including goodwill) and liabilities of the subsidiary; anticipated before the specified minimum threshold is reached. Retrospective application is · derecognizes the carrying amount of any non-controlling interest; required for IFRIC 21. This interpretation has no impact to the Group as it has applied the · derecognizes the related other comprehensive income recorded in equity and recycles the recognition principles under PAS 37, Provisions, Contingent Liabilities and Contingent same to statement of income or surplus; Assets, consistent with the requirements of IFRIC 21 in prior years. · recognizes the fair value of the consideration received; · recognizes the fair value of any investment retained; and · Annual Improvements to PFRS (2010-2012 cycle) · recognizes any surplus or deficit in statement of income. In the 2010-2012 annual improvements cycle, seven amendments to six standards were issued, which included an amendment to PFRS 13. The amendment to PFRS 13 is effective immediately and it clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial.
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· Annual Improvements to PFRS (2011-2013 cycle) Cash and Cash Equivalents In the 2011-2013 annual improvements cycle, four amendments to four standards were issued, For purposes of reporting cash flows, cash and cash equivalents include cash and other cash items, which included an amendment to PFRS 1, First-time Adoption of Philippine Financial amounts due from BSP and other banks, and interbank loans receivable with original maturities of Reporting Standards - First-time Adoption of PFRS. The amendment to PFRS 1 is effective three (3) months or less from dates of placements and that are subject to insignificant risk of immediately. It clarifies that an entity may choose to apply either a current standard or a new changes in value. standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity’s first PFRS financial Repurchase and Reverse Repurchase Agreements statements. This amendment has no impact on the Group as it is not a first time PFRS Securities sold under agreements to repurchase at a specified future date (‘repos’) are not adopter. derecognized from the statement of financial position. The corresponding cash received, including accrued interest, is recognized in the statement of financial position as ‘Securities sold Significant Accounting Policies under repurchase agreements (SSURA)’, reflecting the economic substance of such transaction.
Fair Value Measurement Conversely, securities purchased under agreements to resell at a specified future date (‘reverse For measurement and disclosure purposes, the Group determines the fair value of an asset or a repos’) are not recognized in the statement of financial position. The corresponding cash paid, liability at initial measurement date or at each statement of financial position date. Fair value is including accrued interest, is recognized in the statement of financial position as SPURA, and is the price that would be received to sell an asset or paid to transfer a liability in an orderly considered a loan to the counterparty. The difference between the purchase price and resale price transaction between market participants at the measurement date. The fair value measurement is is treated as interest income and is accrued over the life of the agreement using the effective based on the presumption that the transaction to sell the asset or transfer the liability takes place interest method. either: Financial Instruments - Initial Recognition and Subsequent Measurement · In the principal market for the asset or liability, or Date of recognition · In the absence of a principal market, in the most advantageous market for the asset or liability. Purchases or sales of financial instruments that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized on the settlement date. The principal or the most advantageous market must be accessible to by the Group. Settlement date accounting refers to (a) recognition of an asset on the day it is received by the Group, and (b) the derecognition of an asset and recognition of any gain or loss on disposal on the The fair value of an asset or a liability is measured using the assumptions that market participants day that it is delivered by the Group. Derivatives are recognized on a trade date basis. Deposits, would use when pricing the asset or liability, assuming that market participants act in their amounts due from banks and customers and loans are recognized when cash is received by the economic best interest. Group or advanced to the borrowers.
A fair value measurement of a non-financial asset takes into account a market participant’s ability Initial recognition of financial instruments to generate economic benefits by using the asset in its highest and best use or by selling it to All financial instruments are initially recognized at fair value. Except for financial assets and another market participant that would use the asset in its highest and best use. financial liabilities at FVPL, the initial measurement of financial instruments includes transaction costs. The Group classifies its financial assets in the following categories: financial assets at The Group uses valuation techniques that are appropriate in the circumstances and for which FVPL, AFS investments, held-to-maturity (HTM) investments, and loans and receivables. sufficient data are available to measure fair value, maximizing the use of relevant observable Financial liabilities are classified into financial liabilities at FVPL and financial liabilities at inputs and minimizing the use of unobservable inputs. amortized cost. The classification depends on the purpose for which the financial instruments were acquired and whether they are quoted in an active market. Management determines the Foreign Currency Translation classification of its financial instruments at initial recognition and re-evaluates this designation at Transactions and balances every statement of financial position date. The books of accounts of the RBU are maintained in Philippine peso, while those of the FCDU are maintained in USD. For financial reporting purposes, FCDU accounts and the foreign currency- ‘Day 1’ difference denominated monetary assets and liabilities in the RBU are translated into their equivalents in Where the transaction price in a non-active market is different from the fair value from other Philippine peso based on the Philippine Dealing System (PDS) closing rate prevailing at the end of observable current market transactions in the same instrument or computed based on valuation the year and, foreign currency-denominated income and expenses based on the spot exchange rate technique whose variables include only data from observable market factors, the Group recognizes at the date of the transaction. Foreign exchange differences arising from restatements of foreign the difference between the transaction price and the fair value (a ‘Day 1’ difference) in the currency-denominated assets and liabilities in the RBU are credited to or charged against the statement of income, unless it qualifies for recognition as some other type of asset or liability. In statement of income under ‘Foreign exchange loss - net’ in the year in which the rates change. cases where fair value is determined using data which are not observable from the market, the Foreign exchange differences arising on translation of FCDU accounts to peso are taken to OCI difference between the transaction price and the model value is only recognized in the statement of under ‘Translation adjustments’. comprehensive income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of recognizing the amount of ‘Day 1’ difference.
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Financial assets held for trading After initial measurement, loans and receivables are subsequently measured at amortized cost Financial assets held for trading are recorded in the statement of financial position at fair value. using the EIR method, less allowance for credit losses and unearned interest discount. Amortized Changes in fair value relating to the held for trading positions are recognized in ‘Trading and cost is calculated by taking into account any discount or premium on acquisition and fees and securities gain - net’ and interest earned is recorded in ‘Interest income’. Included in this costs that form an integral part of the EIR. The amortization is included in ‘Interest income’ in the classification are debt securities which have been acquired principally for the purpose of selling statement of income. The losses arising from impairment are recognized in ‘Provision for credit and repurchasing in the near term. and impairment losses’ in the statement of income.
AFS investments Financial liabilities at amortized cost AFS investments are non-derivative financial assets designated as AFS or which do not qualify to This category represents issued financial instruments or their components, which are not be classified as financial assets at FVPL, HTM investments or loans and receivables. They are designated at FVPL and comprises ‘Deposit liabilities’, ‘Manager’s checks’ and some items in purchased and held indefinitely, and may be sold in response to liquidity requirements or changes ‘Accrued expenses and other liabilities’ in the statement of financial position, where the substance in market conditions. They include equity investments, government securities and other debt of the contractual arrangement results in the Group having an obligation either to deliver cash or instruments. another financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of own equity shares. The After initial measurement, AFS investments are subsequently measured at fair value. The components of issued financial instruments that contain both liability and equity elements effective yield component of AFS debt securities, as well as the impact of restatement on foreign (‘compound’ financial instruments) are accounted for separately, with the equity component being currency-denominated AFS debt securities, is reported in the statement of income. The unrealized assigned the residual amount after deducting from the instrument as a whole the amount separately gains and losses arising from the fair valuation of AFS investments are excluded, net of tax, from determined as the fair value of the liability component on the date of issue. After initial reported income and are reported as part of OCI. measurement, financial liabilities at amortized cost are subsequently measured at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or When an AFS investment is disposed of, the cumulative gain or loss previously recognized in OCI premium on the issue and debt issuance costs that form an integral part of the EIR. is recognized as ‘Trading and securities gain - net’ in the statement of income. Where the Group holds more than one investment in the same security, these are deemed to be disposed of on a first- Derecognition of Financial Assets and Liabilities in first-out basis. Interest earned on holding AFS debt investments are reported as ‘Interest Financial asset income’ using the effective interest rate (EIR) method. Dividends earned on holding AFS equity A financial asset (or, where applicable a part of a financial asset or part of a group of similar investments are recognized in the statement of income as ‘Miscellaneous income’ when the right financial assets) is derecognized when: of the payment has been established. The losses arising from impairment of AFS investments are recognized as ‘Provision for credit and impairment losses’ in the statement of income. · the rights to receive cash flows from the asset have expired; or · the Group retains the right to receive cash flows from the asset but has assumed an obligation HTM investments to pay the received cash flows in full without material delay to a third party under a ‘pass- HTM investments are quoted non-derivative financial assets with fixed or determinable payments through’ arrangement; and and fixed maturities which the Group’s management has the positive intention and ability to hold · the Group either (a) has transferred substantially all the risks and rewards of the asset, or to maturity. Where the Group sells other than an insignificant amount of HTM investments before (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but their maturity, the entire category would be tainted and reclassified as AFS investments. Once has transferred control over the asset. tainted, the Group is not permitted to classify any of its financial assets as HTM investments for the next two fiscal years after the year of reclassification. Where the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and After initial measurement, these investments are subsequently measured at amortized cost using rewards of the asset nor transferred control over the asset, the asset is recognized to the extent of the effective interest method, less any impairment in value. Amortized cost is calculated by taking the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a into account any discount or premium on acquisition and fees that are an integral part of the guarantee over the transferred asset is measured at the lower of the original carrying amount of the effective interest rate (EIR). Gains and losses are recognized in profit or loss in the consolidated asset and the maximum amount of consideration that the Group could be required to repay. statement of comprehensive income when the HTM investments are derecognized and impaired, as well as through the amortization process. The effects of restatement of foreign currency- Financial liability denominated HTM investments are recognized in profit or loss in the consolidated statement of A financial liability is derecognized when the obligation under the liability is discharged or comprehensive income. cancelled or has expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially Loans and receivables modified, such an exchange or modification is treated as a derecognition of the original liability This category comprises ‘Cash and other cash items’, ‘Due from BSP’, ‘Due from other banks’, and the recognition of a new liability, and the difference in the respective carrying amounts is ‘Interbank loans receivable’, Loans and receivables’ and some items in ‘Other assets’. These are recognized in statement of income. non-derivative financial assets with fixed or determinable payments and fixed maturities that are not quoted in an active market. They are not entered into with the intention of immediate or short- term resale and are not designated as AFS investments or financial assets at FVPL.
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Impairment of Financial Assets Future cash flows in a group of loans and receivables that are collectively evaluated for The Group assesses at each statement of financial position date whether there is objective impairment are estimated on the basis of historical loss experience for assets within the same evidence that a financial asset or a group of financial assets is impaired. A financial asset or a credit risk groupings. Historical loss experience is adjusted on the basis of current observable data group of financial assets is deemed to be impaired if, and only if, there is objective evidence of to reflect the effects of current conditions. Estimates of changes in future cash flows reflect impairment as a result of one or more events that has occurred after the initial recognition of the changes in related observable data from year to year (such as changes in unemployment rates, asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated property prices, payment status, or other factors that are indicative of incurred losses in the Bank future cash flows of the financial asset or the group of financial assets that can be reliably and their magnitude). The methodology and assumptions used for estimating future cash flows are estimated. Evidence of impairment may include indications that the borrower or a group of reviewed regularly by the Group to reduce any differences between loss estimates and actual loss borrowers is experiencing significant financial difficulty, default or delinquency in interest or experience. principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the The Group also uses the Net Flow Rate method to determine the credit loss rate of a particular estimated future cash flows of the financial asset or group of financial assets, such as changes in delinquency age bucket based on historical data of flow-through and flow-back of loans across arrears or economic conditions that correlate with defaults. specific delinquency age buckets. The allowance for credit losses is determined based on the results of the net flow to write-off methodology. Net flow tables are derived from monitoring of Financial assets carried at amortized cost monthly peso movements between different stage buckets, from 1-day past due to 180-day past For loans and receivables and HTM investments, the Group first assesses at each statement of due. The net flow to write-off methodology relies on the last 12 months of net flow tables to financial position date whether objective evidence of impairment exists individually for financial establish a percentage (‘net flow rate’) of receivables from customers that are current or in any assets carried at amortized cost that are individually significant. If there is objective evidence that state of delinquency (i.e., 30, 60, 90, 120, 150 and 180 day past due) as of reporting date that will an impairment loss has been incurred, the amount of loss is measured as the difference between eventually result in write-off. The gross provision is then computed based on the outstanding the asset’s carrying amount and the present value of the estimated future cash flows (excluding balances of the receivables as of statement of financial position date and the net flow rates future credit losses that have not been incurred), discounted using the financial asset’s original determined for the current and each delinquency bucket. This gross provision is reduced by the EIR. If a financial asset carried at amortized cost has a variable interest rate, the discount rate for estimated recoveries, which are also based on historical data, to arrive at the required allowance measuring any impairment loss is the current EIR, adjusted for the original credit risk premium. for credit losses. The calculation of the present value of the estimated future cash flows of collateralized financial assets reflects the cash flows that may result from foreclosure, less cost for obtaining and selling If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be the collateral, whether or not foreclosure is probable. related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is The carrying amount of the asset is reduced through the use of an allowance account, and the recognized in the statement of income, to the extent that the carrying value of the asset does not amount of loss is charged to the statement of income as ‘Provision for credit and impairment exceed its amortized cost at the reversal date. losses’. Interest income continues to be recognized based on the original EIR of the asset. Financial assets, together with the associated allowance accounts, are written off when there is no Renegotiated loans realistic prospect of future recovery and all collateral has been realized. If subsequently, the Where possible, the Group seeks to restructure past due loans rather than take possession of the amount of the estimated impairment loss decreases because of an event occurring after the related collateral. This may involve extending the payment arrangements and the agreement of impairment was recognized, the previously recognized impairment loss is reduced by adjusting the new loan conditions. Once the terms have been renegotiated, any impairment is measured using allowance account. If a future write-off is later recovered, any amounts formerly charged are the original EIR as calculated before the modification of terms and the loan is no longer credited to ‘Provision for credit and impairment losses’ in the statement of income.If the Group considered past due. Management continually reviews renegotiated loans to ensure that all criteria determines that no objective evidence of impairment exists for individually-assessed loans and are met and that future payments are likely to occur. The loans continue to be subject to an receivables, whether significant or not, it includes the asset in a group of assets with similar credit individual or collective impairment assessment, calculated using the loan’s original EIR. risk characteristics and collectively assesses for impairment in order to capture losses which the Group believes has been incurred during the reporting period, but has not yet identified to specific AFS investments financial assets. Financial assets that are individually assessed for impairment and for which an For equity securities classified as AFS investments, this would include a significant or prolonged impairment loss is or continues to be recognized are not included in a collective assessment for decline in the fair value of the investments below its cost. Where there is evidence of impairment, impairment. the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in OCI is removed For the purpose of a collective evaluation of impairment, loans and receivables are grouped on the from OCI and recognized in the statement of income. Impairment losses on equity securities are basis of asset type, industry, collateral type, past-due status and other relevant factors. Those not reversed through the statement of income. Increases in fair value after impairment are groupings reflect credit risk characteristics relevant to the estimation of future cash flows and recognized directly in OCI. indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the loans and receivables being evaluated.
74 RobinsonsBank 2014 Annual Report 75 *SGVFS013456* *SGVFS013456* - 10 - - 11 -
For debt securities classified as AFS investments, impairment is assessed based on the same Investment in a Subsidiary criteria as financial assets carried at amortized cost. Interest income from impaired AFS debt Subsidiary pertains to entity over which the Parent Company has control. Control is achieved securities is based on the reduced carrying amount and is accrued based on the original EIR used when the Parent Company is exposed, or has rights, to variable returns from its involvement with to discount future cash flows for the purpose of measuring impairment loss. Such accrual is the investee and has the ability to affect those returns through its power over the investee. When recorded as part of ‘Interest income’ in the statement of income. If subsequently, the fair value of the Parent Company has less than a majority of the voting or similar rights of an investee, the a debt security increases and the increase can be objectively related to an event occurring after the Parent Company considers all relevant facts and circumstances in assessing whether it has power impairment loss was recognized in the statement of income, the impairment loss is reversed over an investee, including: through the statement of income. • the contra arrangement with the other vote holders of the investee; Property and Equipment • rights arising from other contractual arrangements; and Depreciable property and equipment are carried at cost less accumulated depreciation and • the Parent Company’s voting rights and potential voting rights. amortization and any impairment in value. As of December 31, 2014 and 2013, the sole and wholly owned subsidiary of the Parent Company The initial cost of property and equipment consists of its purchase price and any directly is LSB. attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as Investment Properties repairs and maintenance, are normally charged against operations in the year the costs are Investment properties are measured initially at cost, including transaction costs. Transaction costs incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in represent nonrefundable taxes such as capital gains tax and documentary stamp tax that are for the an increase in the future economic benefits expected to be obtained from the use of property and account of the Group. An investment property acquired through an exchange transaction is equipment beyond its originally assessed standard of performance, the expenditures are capitalized measured at fair value of the asset acquired unless the fair value of such an asset cannot be as an additional cost of property and equipment. measured in which case the investment property acquired is measured at the fair value of asset given up. Foreclosed properties are classified as investment properties upon: a) entry of judgment Depreciation and amortization is calculated using the straight-line method over the estimated in case of judicial foreclosure; b) execution of the Sheriff’s Certificate of Sale in case of extra- useful life of the depreciable assets. Leasehold improvements are amortized over the shorter of judicial foreclosure; or c) notarization of the Deed of Dacion in case of dation in payment (dacion the terms of the covering leases and the estimated useful lives of the improvements. en pago). The difference between the fair value of the asset acquired and the carrying amount of the asset given up is recognized as gain (loss) on initial recognition of investment properties in the The estimated useful lives of property and equipment follow: statement of income.
Building 25 years Subsequent to initial recognition, depreciable investment properties are carried at cost less Transportation equipment 5 years accumulated depreciation and any impairment in value. Leasehold improvements 5 years Furniture, fixtures and equipment 3 to 5 years Investment properties are derecognized when they have either been disposed of or when they are permanently withdrawn from use and no future benefit is expected from their disposal. Any gains The useful lives and the depreciation and amortization method are reviewed periodically to ensure or losses on the retirement or disposal of an investment property are recognized in the statement of that the period and the method of depreciation and amortization are consistent with the expected income under ‘Miscellaneous income or expense’ in the year of retirement or disposal. pattern of economic benefits from the items of property and equipment. Expenditures incurred after the investment properties have been put into operations, such as The carrying values of the property and equipment are reviewed for impairment when events or repairs and maintenance costs, are normally charged against income in the year in which the costs changes in circumstances indicate the carrying values may not be recoverable. If any such are incurred. indication exists and where the carrying values exceed the estimated recoverable amount, an impairment loss is recognized in the statement of income (see accounting policy on Impairment of Depreciation is calculated on a straight-line basis using the remaining useful lives from the time of Nonfinancial Assets). acquisition of the investment properties but not to exceed ten (10) years for buildings.
An item of property and equipment is derecognized upon disposal or when no future economic Transfers are made to investment properties when, and only when, there is a change in use benefits are expected from its use or disposal. Any gain or loss arising from derecognition of the evidenced by ending of owner occupation, commencement of an operating lease to another party asset (calculated as the difference between the net disposal proceeds and the carrying amount of or ending of construction or development. Transfers are made from investment properties when, the asset) is included in the statement of income in the year the asset is derecognized. and only when, there is a change in use evidenced by commencement of owner occupation or commencement of development with a view to sale.
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For a transfer from investment property to owner-occupied property, the deemed cost of property The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets for subsequent accounting is its fair value at the date of change in use. If the property occupied by with finite lives are amortized over the useful economic life and assessed for impairment the Group as an owner-occupied property becomes an investment property, the Group accounts for whenever there is an indication that the intangible assets may be impaired. The amortization such property in compliance with the policy stated under property and equipment up to the date of period and the amortization method for an intangible asset with a finite useful life are reviewed at change in use. least at each statement of financial position date. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted Other Assets - Repossessed Chattels for by changing the amortization period or method, as appropriate, and treated as change in Repossessed chattels represent other repossessed items comprising mainly of repossessed vehicles. accounting estimates. The amortization expense on intangible assets with finite lives is Repossessed chattels are stated at cost less accumulated depreciation and impairment in value. recognized in the statement of income consistent with the function of the intangible asset. Depreciation is calculated on a straight-line basis using the remaining useful lives of the vehicles from the time of acquisition. The useful lives of repossessed chattels are estimated to be five (5) Intangible assets with indefinite useful lives are tested for impairment annually either individually years. or at the CGU level. Such intangibles are not amortized. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment Business Combinations and Goodwill continues to be supportable. If not, the change in the useful life assessment from indefinite to Business combinations are accounted for using the purchase method of accounting. This involves finite is made on a prospective basis. recognizing identifiable assets (including previously unrecognized intangible assets) and liabilities (including contingent liabilities but excluding future restructuring) of the acquired business at fair Gains or losses arising from the derecognition of an intangible asset are measured as the difference value. Any excess of the cost of acquisition over the fair values of the identifiable net assets between the net disposal proceeds and the carrying amount of the asset and are recognized in the acquired is recognized as goodwill. If the cost of acquisition is less than the fair values of the statement of income when the asset is derecognized. identifiable net assets acquired, the discount on acquisition is recognized directly in the statement of income in the year of acquisition. Branch licenses Branch licenses arise from the acquisition of branches of a local bank by the Parent Company. Goodwill acquired in a business combination is initially measured at cost being the excess of the The Parent Company’s branch licenses have indefinite useful lives and are subject to annual cost of the business combination over the Parent Company’s interest in the net fair value of the individual impairment testing. identifiable assets, liabilities and contingent liabilities acquired.
Following initial recognition, goodwill is measured at cost less any accumulated impairment Branch licenses are determined to have indefinite useful lives. These are tested for impairment losses. Goodwill is reviewed for impairment annually, or more frequently, if event or changes in annually either individually or at the CGU level. Such intangibles are not amortized. The useful circumstances indicate that the carrying value may be impaired. For the purpose of impairment life is reviewed annually to determine whether indefinite useful life assessment continues to be testing, goodwill acquired in a business combination is, from the acquisition date, allocated at each supportable. If not, the change in the useful life from indefinite to finite is made on a prospective of the Parent Company’s cash-generating units (CGUs) or group of CGUs, which are expected to basis. benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit to which the goodwill is allocated represents Software costs the lowest level within the Group at which the goodwill is monitored for internal management Software costs are carried at cost less accumulated amortization and any impairment loss. purposes, and is not larger that an operating segment in accordance with PFRS 8, Operating Software costs are amortized on a straight-line basis over the estimated useful life which is five (5) Segments. years.
Where goodwill has been allocated to a CGU and part of the operation within the unit is disposed Software development costs of, the goodwill associated with the operation is included in the carrying amount of the operation Costs that are directly associated with the production of identifiable and unique software products when determining the gain or loss on disposal. Goodwill disposed of in these circumstances is controlled by the Group and that will probably generate economic benefits exceeding costs beyond measured based on the relative values of the disposed operation and the portion of the CGU one (1) year are capitalized. These costs are capitalized during the period of software retained. development and are amortized on a straight-line basis over a period of seven (7) years upon completion. The amortization is revised prospectively to reflect the new expectations. When subsidiaries are sold, the difference between the selling price and net assets plus cumulative translation differences and goodwill is recognized in the statement of income. Impairment of Nonfinancial Assets Property and equipment, investment in a subsidiary, investment properties and repossessed Intangible Assets chattels Intangible assets acquired separately are measured on initial recognition at cost. The cost of At each statement of financial position date, the Group assesses whether there is any indication intangible assets acquired in a business combination is its fair value as at the date of acquisition. that its nonfinancial assets may be impaired. When an indicator of impairment exists or when an Following initial recognition, intangible assets are carried at cost less any accumulated annual impairment testing for an asset is required, the Group makes a formal estimate of amortization and any accumulated impairment losses. Internally generated intangible assets, recoverable amount. Recoverable amount is the higher of an asset’s (or CGU’s) fair value less excluding capitalized development costs, are not capitalized and expenditure is reflected in the costs to sell and its value in use and is determined for an individual asset, unless the asset does not statement of income in the year in which the expenditure is incurred. 78 RobinsonsBank *SGVFS013456* *SGVFS013456*2014 Annual Report 79 - 14 - - 15 -
generate cash inflows that are largely independent of those from other assets or groups of assets, in Interest income - finance lease which case the recoverable amount is assessed as part of the CGU to which it belongs. Where the The excess of aggregate lease rentals plus the estimated residual value over the cost of the leased carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is investment property constitutes the unearned lease income. Residual values represent estimated considered impaired and is written down to its recoverable amount. In assessing value in use, the proceeds from the disposal of investment property at the time lease is estimated. The unearned estimated future cash flows are discounted to their present value using a pre-tax discount rate that lease income is amortized over the term of the lease, commencing on the month the lease is reflects current market assessments of the time value of money and the risks specific to the asset executed using the EIR method. (or CGU). Unearned lease income ceases to be amortized when the lease contract receivables become past An impairment loss is charged to operations in the year in which it arises. An assessment is made due for more than three months. at each statement of financial position date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication Service fees and commission income exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed Fees earned for the provision of services over a period of time are accrued over that period. These only if there has been a change in the estimates used to determine the asset’s recoverable amount fees include investment fund fees, custodian fees, fiduciary fees, portfolio fees, credit-related fees since the last impairment loss was recognized. If that is the case, the carrying amount of the asset and other service and management fees. Fees on deposit-related accounts are recognized only (or CGU) is increased to its recoverable amount. That increased amount cannot exceed the upon collection or accrued when there is reasonable degree of certainty as to its collection. carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the Dividend income statement of income unless the asset (or CGU) is carried at a revalued amount, in which case the Dividend income, included in ‘Miscellaneous income’, is recognized when the Group’s right to reversal is treated as a revaluation increase. After such a reversal, the depreciation and receive payment is established. amortization expense is adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining life. Trading and securities gain (loss) - net Trading and securities gain (loss) - net represent results arising from disposal of AFS investments and trading activities including all gains and losses from changes in fair value of financial assets at Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually at the statement of FVPL. financial position date either individually or at the CGU level, as appropriate. Intangible assets Rental income with finite lives are assessed for impairment whenever there is an indication that the intangible Rental income arising from leased properties is accounted for on a straight-line basis over the asset may be impaired. lease terms on ongoing leases and is recorded in the statement of income under ‘Miscellaneous Revenue Recognition income’. Revenue is recognized to the extent that it is probable that future economic benefits will flow to Income from sale of property and equipment, investment property and repossessed chattels the Group and the revenue can be measured reliably. The Group concluded that it is acting as a Income from sale of property and equipment, investment property and repossessed chattels is principal in all of its revenue arrangements except for commission income arrangements. The recognized upon completion of the earning process and the collectability of the sales price is following specific recognition criteria must also be met before revenue is recognized: reasonably assured.
Interest income Expense Recognition For all financial instruments measured at amortized cost and interest-bearing financial instruments, Expenses are recognized when it is probable that decrease in future economic benefits related to interest income is recorded at the EIR, which is the rate that exactly discounts estimated future the decrease in asset or an increase in liability has occurred and that the decrease in economic cash payments or receipts through the expected life of the financial instrument or a shorter period, benefits can be measured reliably. Expenses that may arise in the course of ordinary regular where appropriate, to the net carrying amount of the financial asset or financial liability. The activities of the Group include, among others, the operating expenses on the Group’s operation. calculation takes into account all contractual terms of the financial instrument (for example, prepayment options), includes any fees or incremental costs that are directly attributable to the Borrowing Cost instrument and are an integral part of the EIR, but not future credit losses. Borrowing costs are capitalized if they are directly attributable to the acquisition of a qualifying asset. Capitalization of borrowing costs commences when the activities to prepare the qualifying The carrying amount of the financial asset or financial liability is adjusted if the Group revises its assets are in progress and expenditures and borrowing costs are incurred. Borrowing costs are estimates of payments or receipts. The adjusted carrying amount is calculated based on the capitalized until the qualifying assets are substantially ready for their intended use. All other original EIR and the change in carrying amount is recorded as ‘Interest income’. borrowing costs are expensed as incurred.
Once the recorded value of a financial asset or group of similar financial assets has been reduced Leases due to an impairment loss, interest income continues to be recognized using the original EIR The determination of whether an arrangement is, or contains a lease is based on the substance of applied to the new carrying amount. the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. 80 RobinsonsBank 2014 Annual Report 81 *SGVFS013456* *SGVFS013456* - 16 - - 17 -
A reassessment is made after inception of the lease only if one of the following applies: Defined benefit costs comprise the following:
a. there is a change in contractual terms, other than a renewal or extension of the arrangement; · Service cost b. a renewal option is exercised or extension granted, unless that term of the renewal or · Net interest on the net defined benefit liability or asset extension was initially included in the lease term; · Remeasurements of net defined benefit liability or asset c. there is a change in the determination of whether fulfillment is dependent on a specified asset; or Service costs which include current service costs, past service costs and gains or losses on non- d. there is a substantial change to the asset. routine settlements are recognized as expense in the statement of income. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated Where a reassessment is made, lease accounting shall commence or cease from the date when the periodically by independent qualified actuaries. change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b). Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by Group as lessee applying the discount rate based on government bonds to the net defined benefit liability or asset. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are Net interest on the net defined benefit liability or asset is recognized as expense or income in the classified as operating leases. Any rental payments are accounted for on a straight-line basis over statement of income. the lease term and included in ‘Occupancy and equipment-related costs’ in the statement of income. Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized Group as lessor immediately in OCI in the period in which they arise. Remeasurements are not reclassified to Finance leases, where the Group transfers substantially all the risks and benefits incidental to profit or loss in subsequent periods. ownership of the leased item to the lessee, are included in the statement of financial position under ‘Loans and receivables’ account. A lease receivable is recognized at an amount equal to the net Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance investment in the lease. All income resulting from the receivables is included in ‘Interest income policies. Plan assets are not available to the creditors of the Group, nor can they be paid directly on loans and receivables’ in the statement of income. to the Group. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash Leases where the Group does not transfer substantially all the risks and benefits of ownership of flows using a discount rate that reflects both the risk associated with the plan assets and the the assets are classified as operating leases. Initial direct costs incurred in negotiating operating maturity or expected disposal date of those assets (or, if they have no maturity, the expected leases are added to the carrying amount of the leased asset and recognized over the lease term on period until the settlement of the related obligations). If the fair value of the plan assets is higher the same basis as the rental income. Contingent rents are recognized as revenue in the year in than the present value of the defined benefit obligation, the measurement of the resulting defined which they are earned. benefit asset is limited to the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Retirement Cost The Group has a noncontributory defined benefit retirement plan. The retirement cost of the The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined Group is actuarially determined using the projected unit credit method. Under this method, the benefit obligation is recognized as a separate asset at fair value when and only when current service cost is the present value of retirement benefits payable in the future with respect to reimbursement is virtually certain. services rendered in the current period. Provisions The net defined benefit liability or asset is the aggregate of the present value of the defined benefit Provisions are recognized when the Group has a present obligation (legal or constructive) as a obligation at the end of the reporting period reduced by the fair value of plan assets (if any), result of a past event and it is probable that an outflow of assets embodying economic benefits will adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling be required to settle the obligation and a reliable estimate can be made of the amount of the is the present value of any economic benefits available in the form of refunds from the plan or obligation. Where the Group expects some or all of a provision to be reimbursed, for example, reductions in future contributions to the plan. under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the The cost of providing benefits under the defined benefit plans is actuarially determined using the statement of income, net of any reimbursement. If the effect of the time value of money is projected unit credit method. material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as ‘Interest expense’ in the statement of income.
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Contingent Liabilities and Contingent Assets Standards and Interpretations Issued but not yet Effective Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of assets embodying economic benefits is remote. Contingent assets are Standards and interpretations issued but not yet effective up to the date of issuance of the Group’s not recognized but are disclosed in the financial statements when an inflow of economic benefits financial statements are listed below. This listing is of standards and interpretations issued, which is probable. the Group reasonably expects to be applicable at a future date. The Group intends to adopt these standards when they become effective. Except as otherwise indicated, the Group does not expect Income Taxes the adoption of these new and amended PAS, PFRS and Philippine Interpretations to have Current tax significant impact on the consolidated financial statements. Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the Effective in 2015 · amount are those that are enacted or substantively enacted at the statement of financial position PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions (Amendments) date. PAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they Deferred tax should be attributed to periods of service as a negative benefit. These amendments clarify Deferred tax is provided, using the balance sheet liability method, on all temporary differences at that, if the amount of the contributions is independent of the number of years of service, an the statement of financial position date between the tax bases of assets and liabilities and their entity is permitted to recognize such contributions as a reduction in the service cost in the carrying amounts for financial reporting purposes. period in which the service is rendered, instead of allocating the contributions to the periods of service. It is expected that this amendment would be relevant to the Group. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits from · Annual Improvements to PFRS (2010-2012 cycle) the excess of minimum corporate income tax (MCIT) over the regular corporate income tax The Annual Improvements to PFRS (2010-2012 cycle) are effective for annual periods (RCIT) and unused net operating loss carryover (NOLCO), to the extent that it is probable that beginning on or after January 1, 2015 and are not expected to have a material impact on the future taxable profit will be available against which the deductible temporary differences and Group, unless otherwise stated. They include: carryforward of unused tax credits from the excess of MCIT over the RCIT and unused NOLCO can be utilized. Deferred income tax, however, is not recognized when it arises from the initial o PFRS 2, Share-based Payment - Definition of Vesting Condition recognition of an asset or liability in a transaction that is not a business combination and, at the This improvement is applied prospectively and clarifies various issues relating to the time of the transaction, affects neither the accounting income nor taxable income or loss. definitions of performance and service conditions which are vesting conditions, including:
The carrying amount of deferred tax assets is reviewed at each statement of financial position date § A performance condition must contain a service condition and reduced to the extent that it is no longer probable that sufficient future taxable profit will be § A performance target must be met while the counterparty is rendering service available to allow all or part of the deferred income tax asset to be utilized. Unrecognized § A performance target may relate to the operations or activities of an entity, or to those deferred tax assets are reassessed at each statement of financial position date and are recognized to of another entity in the same group the extent that it has become probable that future taxable profit will allow the deferred tax asset to § A performance condition may be a market or non-market condition be recovered. § If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied. Deferred tax assets and liabilities are measured at the tax rates that are applicable to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been o PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business enacted or substantively enacted at the statement of financial position date. Combination The amendment is applied prospectively for business combinations for which the Current tax and deferred tax relating to items recognized directly in OCI is recognized in OCI and acquisition date is on or after July 1, 2014. It clarifies that a contingent consideration that not in the statement of income. is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of PAS 39, Financial Instruments: Recognition Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set and Measurement (or PFRS 9, Financial Instruments, if early adopted). The Group shall off current tax assets against current tax liabilities and deferred taxes related to the same taxable consider this amendment for future business combinations. entity and the same taxation authority.
Events after the Statement of Financial Position Date Post year-end events that provide additional information about the Group’s position at the statement of financial position date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.
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Effective in 2016 o PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets · PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of The amendments are applied retrospectively and clarify that: Acceptable Methods of Depreciation and Amortization (Amendments) The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of § An entity must disclose the judgments made by management in applying the economic benefits that are generated from operating a business (of which the asset is part) aggregation criteria in the standard, including a brief description of operating rather than the economic benefits that are consumed through use of the asset. As a result, a segments that have been aggregated and the economic characteristics (e.g., sales and revenue-based method cannot be used to depreciate property, plant and equipment and may gross margins) used to assess whether the segments are ‘similar’. only be used in very limited circumstances to amortize intangible assets. The amendments are § The reconciliation of segment assets to total assets is only required to be disclosed if effective prospectively for annual periods beginning on or after January 1, 2016, with early the reconciliation is reported to the chief operating decision maker, similar to the adoption permitted. required disclosure for segment liabilities. · PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants (Amendments) o PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation Method - Proportionate Restatement of Accumulated Depreciation and Amortization The amendments change the accounting requirements for biological assets that meet the The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the definition of bearer plants. Under the amendments, biological assets that meet the definition asset may be revalued by reference to the observable data on either the gross or the net of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply. carrying amount. In addition, the accumulated depreciation or amortization is the After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost difference between the gross and carrying amounts of the asset. (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of PAS 41 measured at fair value less costs to sell. For government grants related to bearer o PAS 24, Related Party Disclosures - Key Management Personnel The amendment is applied retrospectively and clarifies that a management entity, which is plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance, an entity that provides key management personnel services, is a related party subject to the will apply. The amendments are retrospectively effective for annual periods beginning on or related party disclosures. In addition, an entity that uses a management entity is required after January 1, 2016, with early adoption permitted. to disclose the expenses incurred for management services. · PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements · Annual Improvements to PFRS (2011-2013 cycle) (Amendments) The Annual Improvements to PFRS (2011-2013 cycle) are effective for annual periods The amendments will allow entities to use the equity method to account for investments in beginning on or after January 1, 2015 and are not expected to have a material impact on the subsidiaries, joint ventures and associates in their separate financial statements. Entities Group, unless otherwise stated. They include: already applying PFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. For first-time adopters of PFRS o PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements electing to use the equity method in its separate financial statements, they will be required to The amendment is applied prospectively and clarifies the following regarding the scope apply this method from the date of transition to PFRS. The amendments are effective for exceptions within PFRS 3: annual periods beginning on or after January 1, 2016, with early adoption permitted.
§ Joint arrangements, not just joint ventures, are outside the scope of PFRS 3. · PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint § This scope exception applies only to the accounting in the financial statements of the Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint joint arrangement itself. Venture These amendments address an acknowledged inconsistency between the requirements in PFRS 10 and those in PAS 28 (2011) in dealing with the sale or contribution of assets between o PFRS 13, Fair Value Measurement - Portfolio Exception The amendment is applied prospectively and clarifies that the portfolio exception in PFRS an investor and its associate or joint venture. The amendments require that a full gain or loss 13 can be applied not only to financial assets and financial liabilities, but also to other is recognized when a transaction involves a business (whether it is housed in a subsidiary or contracts within the scope of PAS 39 (or PFRS 9, as applicable). not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. o PAS 40, Investment Property The amendment is applied prospectively and clarifies that PFRS 3, and not the description of ancillary services in PAS 40, is used to determine if the transaction is the purchase of an asset or business combination. The description of ancillary services in PAS 40 only differentiates between investment property and owner-occupied property (i.e., property, plant and equipment).
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· PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations o PFRS 7, Financial Instruments: Disclosures - Servicing Contracts (Amendments) PFRS 7 requires an entity to provide disclosures for any continuing involvement in a The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an transferred asset that is derecognized in its entirety. The amendment clarifies that a interest in a joint operation, in which the activity of the joint operation constitutes a business servicing contract that includes a fee can constitute continuing involvement in a financial must apply the relevant PFRS 3 principles for business combinations accounting. The asset. An entity must assess the nature of the fee and arrangement against the guidance in amendments also clarify that a previously held interest in a joint operation is not remeasured PFRS 7 in order to assess whether the disclosures are required. The amendment is to be on the acquisition of an additional interest in the same joint operation while joint control is applied such that the assessment of which servicing contracts constitute continuing retained. In addition, a scope exclusion has been added to PFRS 11 to specify that the involvement will need to be done retrospectively. However, comparative disclosures are amendments do not apply when the parties sharing joint control, including the reporting entity, not required to be provided for any period beginning before the annual period in which the are under common control of the same ultimate controlling party. entity first applies the amendments.
The amendments apply to both the acquisition of the initial interest in a joint operation and the o PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial acquisition of any additional interests in the same joint operation and are prospectively Statements effective for annual periods beginning on or after January 1, 2016, with early adoption This amendment is applied retrospectively and clarifies that the disclosures on offsetting permitted. of financial assets and financial liabilities are not required in the condensed interim financial report unless they provide a significant update to the information reported in the · PFRS 14, Regulatory Deferral Accounts most recent annual report. PFRS 14 is an optional standard that allows an entity, whose activities are subject to rate- regulation, to continue applying most of its existing accounting policies for regulatory deferral o PAS 19, Employee Benefits - Regional Market Issue regarding Discount Rate account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must This amendment is applied prospectively and clarifies that market depth of high quality present the regulatory deferral accounts as separate line items on the statement of financial corporate bonds is assessed based on the currency in which the obligation is denominated, position and present movements in these account balances as separate line items in the rather than the country where the obligation is located. When there is no deep market for statement of profit or loss and other comprehensive income. The standard requires disclosures high quality corporate bonds in that currency, government bond rates must be used. on the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements. PFRS 14 is effective for annual periods beginning o PAS 34, Interim Financial Reporting - Disclosure of Information ‘Elsewhere in the on or after January 1, 2016. Since the Group is an existing PFRS preparer, this standard Interim Financial Report’ would not apply. The amendment is applied retrospectively and clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross- · Annual Improvements to PFRS (2012-2014 cycle) reference between the interim financial statements and wherever they are included within The Annual Improvements to PFRS (2012-2014 cycle) are effective for annual periods the greater interim financial report (e.g., in the management commentary or risk report). beginning on or after January 1, 2016 and are not expected to have a material impact on the Group, unless otherwise stated. They include: Effective in 2018 · PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and o PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in PAS 39 (2013 version) Methods of Disposal PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which The amendment is applied prospectively and clarifies that changing from a disposal pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge through sale to a disposal through distribution to owners and vice-versa should not be accounting model of PAS 39 with a more principles-based approach. Changes include considered to be a new plan of disposal, rather it is a continuation of the original plan. replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on There is, therefore, no interruption of the application of the requirements in PFRS 5. The the economic relationship between the hedged item and the hedging instrument, and the effect amendment also clarifies that changing the disposal method does not change the date of of credit risk on that economic relationship; allowing risk components to be designated as the classification. hedged item, not only for financial items but also for non-financial items, provided that the risk component is separately identifiable and reliably measurable; and allowing the time value of an option, the forward element of a forward contract and any foreign currency basis spread to be excluded from the designation of a derivative instrument as the hedging instrument and accounted for as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge accounting.
PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of January 1, 2018 was eventually set when the final version of PFRS 9 was adopted by the FRSC. The adoption of the final version of PFRS 9, however, is still for approval by BOA.
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The adoption of PFRS 9 will have an effect on the classification and measurement of the 3. Significant Accounting Judgments and Estimates Group’s financial assets but will have no impact on the classification and measurement of the Group’s financial liabilities. The Group is currently assessing the impact of adopting this The preparation of the consolidated financial statements in compliance with PFRS requires the standard. Group to make judgments and estimates that affect the reported amounts of assets, liabilities, income and expenses and the disclosures of contingent assets and contingent liabilities at the · PFRS 9, Financial Instruments (2014 or final version) statement of financial position date. Future events may occur which can cause the assumptions In July 2014, the final version of PFRS 9, Financial Instruments, was issued. PFRS 9 reflects used in arriving at the estimates to change. The effects of any change in estimates are reflected in all phases of the financial instruments project and replaces PAS 39, Financial Instruments: the financial statements as they become reasonably determinable. Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. Judgments and estimates are continually evaluated and are based on historical experience and PFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early other factors, including expectations of future events that are believed to be reasonable under the application permitted. Retrospective application is required, but comparative information is circumstances. not compulsory. Early application of previous versions of PFRS 9 is permitted if the date of initial application is before February 1, 2015. The following are the critical judgments and key assumptions that have a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year: The adoption of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets and impairment methodology for financial assets, but will have no Judgments impact on the classification and measurement of the Group’s financial liabilities. The a) Going concern adoption will also have an effect on the Group’s application of hedge accounting. The Group The Group’s management has made an assessment of the Group’s ability to continue as a will quantify this effect to present a comprehensive picture of the impact of adoption on the going concern and is satisfied that the Group has the resources to continue in business for the financial position or performance of the Group. foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. · PFRS 15, Revenue from Contracts with Customers Therefore, the financial statements continue to be prepared on a going concern basis. PFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under PFRS 15, revenue is recognized at an b) HTM investments amount that reflects the consideration to which an entity expects to be entitled in exchange for The classification under HTM investments requires significant judgment. In making this transferring goods or services to a customer. The principles in PFRS 15 provide a more judgment, the Group evaluates its intention and ability to hold such investments to maturity. structured approach to measuring and recognizing revenue. The new revenue standard is If the Group fails to keep these investments to maturity other than in certain specific applicable to all entities and will supersede all current revenue recognition requirements under circumstances - for example, selling an insignificant amount close to maturity - it will be PFRS. Either a full or modified retrospective application is required for annual periods required to reclassify the entire portfolio as AFS investments. The investments would beginning on or after January 1, 2017 with early adoption permitted. The Group is currently therefore be measured at fair value and not at amortized cost. assessing the impact of PFRS 15 and plans to adopt the new standard on the required effective date once adopted locally. c) Leases Operating lease Mandatory Date Yet to be Determined Group as lessee · Philippine Interpretation PFRIC 15, Agreements for the Construction of Real Estate The Group has entered into commercial property leases for its head office and branch This interpretation covers accounting for revenue and associated expenses by entities that premises. The Group has determined, based on the evaluation of the terms and conditions of undertake the construction of real estate directly or through subcontractors. The interpretation the lease agreement (i.e., the lease does not transfer ownership of the asset to the lessee by the requires that revenue on construction of real estate be recognized only upon completion, end of the lease term and lease term is not for the major part of the asset’s economic life), that except when such contract qualifies as construction contract to be accounted for under the lessor retains all the significant risks and rewards of ownership of the properties which are PAS 11, Construction Contracts, or involves rendering of services in which case revenue is leased out on operating leases recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the Finance lease buyer on a continuous basis will also be accounted for based on stage of completion. The Group as lessor SEC and the Financial Reporting Standards Council (FRSC) have deferred the effectivity of The Group has determined based on an evaluation of terms and conditions of the lease this interpretation until the final Revenue standard is issued by the International Accounting arrangements (i.e., present value of minimum lease payments amounts to at least substantially Standards Board (IASB) and an evaluation of the requirements of the final Revenue standard all of the fair value of leased asset, lease term is for the major part of the economic useful life against the practices of the Philippine real estate industry is completed. of the asset, and lessor’s losses associated with the cancellation are borne by the lessee) that it has transferred all significant risks and rewards of ownership of the properties it leases out on finance leases. 90 RobinsonsBank 2014 Annual Report 91
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d) Fair value of financial instruments b) Impairment of AFS debt securities Where the fair values of financial instruments recorded in the statement of financial position The Group reviews its debt securities classified as AFS investments at each statement of cannot be derived from active markets, these are determined using internal valuation financial position date to assess whether they are impaired. This requires similar judgment techniques using generally accepted market valuation models. The inputs to these models are applied to the individual assessment of loans and receivables. taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. These judgments may include consideration No impairment loss was recognized on AFS debt securities in 2014 and 2013 (see Note 7). of liquidity, correlation and volatility for longer dated derivatives. The carrying value of AFS debt securities of the Group and of the Parent Company as of December 31, 2014 and 2013 are disclosed in Note 7. e) Financial assets not quoted in an active market The Group classifies financial assets by evaluating, among others, whether the asset is quoted c) Impairment of AFS equity securities or not in an active market. Included in the evaluation on whether a financial asset is quoted in The Group treats AFS equity securities as impaired when there has been a significant or an active market is the determination on whether quoted prices are readily and regularly prolonged decline in the fair value below its cost or where other objective evidence of available, and whether those prices represent actual and regularly occurring market impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires transactions on an arm’s length basis. judgment. The Group treats ‘significant’ generally as 20.00% or more and ‘prolonged’ greater than twelve (12) months. In addition, the Group evaluates other factors, including normal f) Contingencies volatility in share prices for quoted equities and the future cash flows and discount factors for The Group is currently involved in legal proceedings. The estimate of the probable cost for unquoted equity investments. the resolution of claims has been developed in consultation with the aid of the outside legal counsel handling the Group’s defense in this matter and is based upon an analysis of potential No impairment loss was recognized on AFS equity securities in 2014 and 2013 (see Note 7). results. Management does not believe that the outcome of this matter will affect the results of The carrying value of AFS equity securities of the Group and of the Parent Company as of operations. It is probable, however, that future results of operations could be materially December 31, 2014 and 2013 are disclosed in Note 7. affected by changes in the estimates or in the effectiveness of the strategies relating to this proceedings (see Note 26). d) Valuation of unquoted equity securities The Group’s investments in equity securities that do not have quoted market price in an active g) Functional currency market and whose fair value cannot be reliably measured are carried at cost less impairment PAS 21, The Effects of Changes in Foreign Exchange Rates, requires management to use its losses. judgment to determine the entity’s functional currency such that it most faithfully represents the economic effects of the underlying transactions, events and conditions that are relevant to The carrying value of unquoted AFS equity securities of the Group and of the Parent the entity. In making this judgment, the Group considers the following: Company as of December 31, 2014 and 2013 are disclosed in Note 7.
· the currency that mainly influences sales prices for financial instruments and services (this e) Impairment of nonfinancial assets will often be the currency in which sales prices for its financial instruments and services Property and equipment, investment properties and repossessed chattels are denominated and settled); The Group assesses impairment on property and equipment, investment properties and · the currency in which funds from financing activities are generated; and repossessed chattels whenever events or changes in circumstances indicate that the carrying · the currency in which receipts from operating activities are usually retained. amount of an asset may not be recoverable. The factors that the Group considers important which could trigger an impairment review include the following: Estimates a) Credit losses on loans and receivables (a) significant underperformance relative to expected historical or projected future operating The Group reviews its loans and receivables at each statement of financial position date to results; assess whether a credit loss should be recorded in the statement of income. In particular, (b) significant changes in the manner of use of the acquired assets or the strategy for overall judgment by management is required in the estimation of the amount and timing of future cash business; and flows when determining the level of allowance required. Such estimates are based on (c) significant negative industry or economic trends. assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is computed using the value in use approach for The carrying value of and the allowance for credit losses on loans and receivables of the property and equipment and fair value less costs to sell for investment properties and Group and of the Parent Company as of December 31, 2014 and 2013 are disclosed in Note 8. repossessed chattels. Recoverable amounts are estimated for individual assets or, if it is not possible, for the Cash Generating Unit (CGU) to which the asset belongs.
The carrying values of and the allowance for impairment losses, if any, on property and equipment, investment properties and repossessed chattels of the Group and of the Parent Company are disclosed in Notes 10, 11, 13 and 14, respectively.
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No provision for impairment loss was recognized on property and equipment in 2014 and No impairment loss was recognized on software costs in 2014 and 2013 (see Note 13). The 2013 (see Note 10). carrying values of software costs of the Group and of the Parent Company are disclosed in Note 13. The net realizable value of investment property as of December 31, 2014, and 2013 amounted to P=202.99 million and =239.62P million, respectively, for the Group, and =93.09P million and f) Recognition of deferred taxes P=98.70 million, repectively, for the Parent Company (see Note 11). As of December 31, 2014 Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that and 2013, the net realizable value of repossessed chattels amounted to P=62.01 million and taxable profit will be available against which the losses can be utilized. Significant P=34.02 million, respectively, for the Group, and P=61.97 million and P=34.01 million, management judgment is required to determine the amount of deferred tax assets that can be respectively, for the Parent Company (see Note 13). recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Branch licenses Branch license is considered an intangible asset with an indefinite useful life and it is required The estimates of future taxable income indicate that certain temporary differences will be to be tested for impairment annually by comparing its carrying amount with its recoverable realized in the future. Details of recognized and unrecognized deferred tax assets on amount, irrespective of whether there is any indication that it may be impaired. temporary differences are disclosed in Note 23.
When the branch license’s fair value less cost of disposal is lower than its carrying amount, g) Present value of retirement liability the Group’s impairment test is based on value in use calculations that use a discounted cash The cost of defined benefit retirement plan and other post-employment benefits is determined flow model. The cash flows are derived from the budget for the next five (5) years and do not using actuarial valuations. The actuarial valuation involves making assumptions about include restructuring activities that the Group is not yet committed to or significant future discount rates, future salary increases, mortality rates and future pension increases. Due to the investments that will enhance the asset base of the CGU being tested. The recoverable long-term nature of these plans, such estimates are subject to significant uncertainty. amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The assumed discount rates were determined using market yields on Philippine government bonds with terms consistent with the expected employee benefit payouts as of the statement of No additional impairment was recognized for the Group’s branch licenses in 2014 and 2013. financial position date. The carrying amounts of branch licenses as of December 31, 2014 and 2013 approximate their respective fair values less cost to sell. The carrying values of branch licenses of the Group are The present value of the Parent Company’s defined benefit obligation as of disclosed in Note 12. December 31, 2014 and 2013 is disclosed in Note 20.
Goodwill Goodwill is reviewed for impairment, annually or more frequently if events of changes in 4. Financial Risk Management Objectives and Polices circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the CGU (or group of CGUs) to which the The main risks arising from the Group’s financial instruments are credit, market and liquidity goodwill relates. Where the recoverable amount of the CGU (or group of CGUs) is less than risks. In general, the Group’s risk management objective is to ensure that risks taken are within the carrying amount of the CGU (or group of CGUs) to which goodwill has been allocated, an the Group’s risk appetite, which is assessed based on the Group’s capital adequacy framework. impairment loss is recognized immediately in the statement of income. The Group estimated The risk management process involves risk identification, measurement, monitoring and control. the discount rate used for the computation of the net present value be referenced to industry cost of capital. Future cash flows from the business are estimated based on the theoretical The Group recognizes that risk management is the responsibility of the entire organization. annual income of the CGUs. Average growth rate was derived from the average increase in Accordingly, all employees are expected to manage risks relating to their own responsibilities. annual income during the last five (5) years. The recoverable amount of the CGU has been Still, there are specialized entities within the Group that perform certain risk management determined based on a value in use calculations using cash flow projections from financial functions. budgets approve by senior management covering a five-year period. The applicable pre-tax discount rate applied to cash flow projections is 14.39% and 13.09% in 2014 and 2013, The Board of Directors (BOD) ultimately oversees and approves significant matters related to risk respectively. Key assumptions in value in use calculation of CGUs are most sensitive to management throughout the Parent Company, upon the review and recommendation of various discount rates and growth rates used to project cash flows. committees composed of members of the BOD and Senior Management. Among the Parent Company’s committees are: The carrying values of goodwill of the Group are disclosed in Note 9. · the Corporate Governance Committee, which ensures the BOD’s effectiveness and due Software costs observance of the corporate governance principles and guidelines; Software costs are reviewed for impairment annually or more frequently if events or changes · the Risk Management Committee (RMC), which is responsible for the development and in circumstances indicate that the carrying values may be impaired. oversight of the Parent Company’s risk management program;
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· the Audit Committee, which examines the Parent Company’s framework of risk management, Maximum exposure to credit risk control and governance process to ensure that these are adequate and functional; and The table below shows the Group’s net credit risk exposure for financial assets with maximum · the Credit Committee, which recommends credit policies and evaluates credit applications. exposure to credit risk different from its carrying amounts after considering the financial effect of collateral and other credit enhancements: The following units within the Parent Company jointly perform risk management functions on a daily basis: Consolidated December 31, 2014 Maximum · Compliance for regulatory risk; Carrying Fair Value Financial Effect Exposure to · Treasury for funding and liquidity risk; Amount of Collateral of Collateral Credit Risk · Credit Cycle Operations for credit risk; Interbank loans receivable/ · Enterprise Risk Management Unit (ERMU) for various risks, including market risk; credit and SPURA P=598,000,000 P=600,123,797 P=598,000,000 P= – operational risks; and Loans and receivables: Receivables from customers: · Internal Audit for the evaluation of the adequacy of internal control systems, covering Consumption 2,494,539,467 3,401,187,090 1,655,673,694 838,865,772 operational risk. Commercial 1,037,792,195 1,361,343,016 960,256,290 77,535,905 Real estate 3,281,296,991 4,586,234,593 2,993,734,049 287,562,943 These units submit various risk reports to the Management Committee, the RMC and the BOD, Other receivables: among others. Sales contract receivable 185,184,059 331,412,473 185,348,205 216,871 P=7,596,812,712 P=10,280,300,969 P=6,393,012,238 P=1,204,181,491 Further specific risk management disclosures, including mitigation, measurement and control, are in the succeeding sections. Consolidated December 31, 2013 Credit Risk Maximum Carrying Fair Value Financial Effect Exposure to Credit risk may be defined as the possibility of loss due to the failure of a customer/borrower or Amount of Collateral of Collateral Credit Risk counterparty to perform its obligation to the Group. Interbank loans receivable/ SPURA P=3,099,000,000 P=3,102,512,904 P=3,099,000,000 P= − The Group has several credit risk mitigation practices: Loans and receivables: Receivables from customers: · The Group offers a variety of loan products with substantial collateral values. The latter part Consumption 1,541,641,656 844,335,520 844,335,520 697,306,136 of this credit risk section discusses collateral and other credit enhancements. Commercial 1,074,891,295 2,127,396,668 886,562,200 188,329,095 Real estate 2,853,251,997 5,254,030,943 2,853,251,997 – · Limits are set on the amount of credit risk that the Group is willing to take for customers and Other receivables: counterparties, and exposures are monitored against such credit limits. Sales contract receivable 107,295,629 129,030,344 107,295,629 – · The Group also observes related regulatory limits such as the single borrower’s limit (SBL) P=8,676,080,577 P=11,457,306,379 P=7,790,445,346 P=885,635,231 and directors, officers, stockholders and related interests (DOSRI) ceiling. · To protect against settlement risk, the Group employs a delivery-versus-payment (DvP) Parent Company settlement system, wherein payment is effected only when the corresponding asset has been December 31, 2014 delivered. Maximum · There is an internal credit risk rating system (ICRRS) in place, providing a structured format Carrying Fair Value Financial Effect Exposure to Amount of Collateral of Collateral Credit Risk for collating and analyzing borrower data to arrive at a summary indicator of credit risk. Interbank loans receivable/ · Past due and non-performing loan (NPL) ratios are also used to measure and monitor the SPURA P=598,000,000 P=600,123,797 P=598,000,000 P= – quality of the loan portfolio. Loans and receivables: Receivables from customers: Consumption 1,642,278,236 3,286,527,320 1,618,167,673 292,033,913 Commercial 896,397,891 1,125,762,862 895,734,082 1,445,583 Real estate 3,259,040,052 4,523,698,256 2,972,448,396 24,556,115 Other receivables: Sales contract receivable 144,512,118 176,885,512 144,492,090 298,207 P=6,540,228,297 P=9,712,997,747 P=6,228,842,241 P=318,333,818
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Parent Company The tables below show the distribution of maximum exposure to credit risk by industry sector of December 31, 2013 the Group before taking into account collateral held and other credit enhancements Maximum (in millions): Carrying Fair Value Financial Effect Exposure to Amount of Collateral of Collateral Credit Risk Consolidated Interbank loans receivable/ SPURA P=3,099,000,000 P=3,102,512,904 P=3,099,000,000 P= – 2014 Loans and receivables: Loans and Investment Receivables from customers: Receivables* Securities** Total Consumption 751,602,051 719,626,159 719,626,159 31,975,892 Financial intermediaries P=14,730 P=2,996 P=17,726 Commercial 669,826,015 1,928,975,983 669,826,015 – Real estate, renting and Real estate 2,844,331,284 5,233,217,933 2,844,331,284 – business services 6,659 − 6,659 Other receivables: Wholesale and retail 3,368 − 3,368 Sales contract receivable 10,908,602 26,168,055 10,908,602 – Personal consumption 1,559 − 1,559 P=7,375,667,952 P=11,010,501,034 P=7,343,692,060 P=31,975,892 Electricity, gas and water 1,332 − 1,332 Manufacturing 909 − 909 Collateral and other credit enhancement Transport, storage and The amount and type of collateral required depends on an assessment of credit risk. Guidelines communication 833 − 833 Construction are implemented regarding the acceptability of types of collateral and valuation parameters. 328 − 328 Agriculture, hunting and forestry 462 − 462 The main types of collateral obtained are as follows: Government institutions − 7,743 7,743 Others 4,698 53 4,751 · Mortgages over real estate and vehicle for consumer lending 34,878 10,792 45,670 · Chattels over inventory and receivable for commercial lending Less allowance for credit losses 721 − 721 · Government securities for interbank lending P=34,157 P=10,792 P=44,949 * All financial assets other than investment securities and cash on hand (net of UID) It is the Group’s policy to dispose repossessed properties in an orderly fashion. In general, the ** Financial assets at FVPL, AFS and HTM investments proceeds are used to reduce or repay the outstanding claim, and are not occupied for business use. Consolidated 2013 Concentration of credit Loans and Investment Concentrations arise when a number of counterparties are engaged in similar business activities, or Receivables* Securities** Total activities in the same geographic region, or have similar economic features that would cause their Financial intermediaries P=17,441 P=1,779 P=19,220 ability to meet contractual obligations to be similarly affected by changes in economic, political or Real estate, renting and business other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to services 4,982 75 5,057 developments affecting a particular industry. Wholesale and retail 2,825 – 2,825 Electricity, gas and water 1,749 – 1,749 Transport, storage and communication 1,302 – 1,302 Construction 936 – 936 Agriculture, hunting and forestry 906 – 906 Manufacturing 573 – 573 Government institutions – 5,126 5,126 Others 5,320 24 5,344 36,034 7,004 43,038 Less allowance for credit losses 518 – 518 P=35,516 P=7,004 P=42,520 * All financial assets other than investment securities and cash on hand (net of UID) ** Financial assets at FVPL, AFS and HTM investments
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Parent Company The Parent Company’s ICRR is as follows: 2014 Loans and Investment Grades Categories Description Receivables* Securities** Total High grade Financial intermediaries P=13,884 P=3,025 P=16,909 Risk rating 1 Excellent Lowest probability of default; exceptionally strong Real estate, renting and business capacity for financial commitments; highly services 6,586 − 6,586 unlikely to be adversely affected by foreseeable Wholesale and retail 3,270 − 3,270 events. Electricity, gas and water 1,332 − 1,332 Risk rating 2 Super Prime Very low probability of default; very strong Manufacturing 909 − 909 capacity for payment of financial commitments; Transport, storage and less vulnerable to foreseeable events. communication 833 − 833 Personal consumption 664 − 664 Risk rating 3 Prime Low probability of default; strong capacity for Agriculture, hunting and forestry 338 − 338 payment of financial commitments; may be more Construction 328 − 328 vulnerable to adverse business/economic Government institutions − 7,743 7,743 conditions. Others 4,986 53 5,039 Risk rating 4 Very Good Moderately low probability of default; more than 33,130 10,821 43,951 adequate capacity for payment of financial Less allowance for credit losses 634 – 634 commitments; but adverse business/economic P=32,496 P=10,821 P=43,317 conditions are more likely to impair this capacity. * All financial assets other than investment securities and cash on hand (net of UID) Risk rating 5 Good More pronounced probability of default; business ** Financial assets at FVPL, AFS and HTM investments or financial flexibility exists which supports the Parent Company servicing of financial commitments; vulnerable to 2013 adverse business/economic changes. Loans and Investment Standard Receivables* Securities** Total Risk rating 6 Satisfactory Material probability of default is present, but a Financial intermediaries P=16,170 P=1,808 P=17,978 margin of safety remains; financial commitments Real estate, renting and business are currently being met although the capacity for services 4,915 75 4,990 continued payment is vulnerable to deterioration in Wholesale and retail 2,581 – 2,581 the business/economic condition. Electricity, gas and water 1,749 – 1,749 Transport, storage and Risk rating 7 Average Greater probability of default which is reflected in communication 1,302 – 1,302 the volatility of earnings and overall performance; Construction 936 – 936 repayment source is presently adequate; however, Agriculture, hunting and forestry 662 – 662 prolonged unfavorable economic period would Manufacturing 573 – 573 create deterioration beyond acceptable levels. Government institutions – 5,126 5,126 Risk rating 8 Fair Sufficiently pronounced probability of default, Others 4,774 24 4,798 although borrowers should still be able to 33,662 7,033 40,695 withstand normal business cycles; any prolonged Less allowance for credit losses 460 – 460 unfavorable economic/market conditions would P=33,202 P=7,033 P=40,235 create an immediate deterioration of cash flow * All financial assets other than investment securities and cash on hand (net of UID) beyond acceptable levels. ** Financial assets at FVPL, AFS and HTM investments
Credit quality Parent Company For receivables from customers, the Parent Company’s internal credit rating risk (ICRR) system was approved in 2007 and improved in 2011 in accordance with BSP requirement, to cover corporate credit exposures, which is defined by BSP Circular no. 439 as exposures to companies with assets of more than P=15.00 million.
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Parent Company Grades Categories Description 2013 Sub-standard grade Neither past due nor impaired Risk rating 9 Marginal Elevated level of probability of default, with Past due but not High Standard Substandard Individually Individually limited margin; Repayment source is adequate to Grade Grade Grade Unrated Impaired Impaired Total marginal. Receivables from customers: Risk rating 10 Watchlist Unfavorable industry or company specific risk Commercial P=5,090 P= 3,021 P=2,235 P=340 P= 5 P=504 P=11,195 Real estate – 2,759 – – 115 – 2,874 factors represent a concern, financial strength may Consumption – 2,282 – – 294 – 2,576 be marginal; will find it difficult to cope with Domestic bills purchased – 717 – – – – 717 significant downturn. Other receivables: Unquoted debt securities – 555 – – – – 555 Risk rating 11 Special mention Loans have potential weaknesses that deserve Accrued interest receivable – 213 – – 5 218 Accounts receivable – 57 – – 22 – 79 close attention; borrower has reached a point Sales contract receivable – 4 – – 10 – 14 where there is a real risk that the borrower’s ability P=5,090 P= 9,608 P=2,235 P=340 P=451 P=504 P=18,228 to pay the interest and repay the principal timely could be jeopardize due to evidence of weakness External ratings in the borrower’s financial condition. In ensuring a quality investment portfolio, the Parent Company monitors credit risk from Risk rating 12 Substandard Substantial and unreasonable degree of risk to the investments using credit ratings based on Moody’s Investors Service (Moody’s rating). institution because of unfavorable record or unsatisfactory characteristics; with well-defined Credit quality of due from BSP and other banks and interbank loans receivable are based on weakness(es) that jeopardize their liquidation. e.g. available accredited international and local credit raters using Fitch as standard of rating. negative cash flow, case of fraud. Past due and impaired The Parent Company assigns the following credit quality groupings based on Fitch Ratings and Risk rating 13 Doubtful Weaknesses similar to “Substandard”, but with Moody’s rating as follows: added characteristics that make liquidation highly improbable. Credit Quality Fitch Moody’s Risk rating 14 Loss Uncollectible or worthless. High Grade AAA to A- Aaa to A3 Standard Grade BBB+ to BB- Baa1 to Ba3 The Parent Company’s ICRR system intends to provide a structure to define the credit portfolio, Substandard Grade B+ to C- B1 to Ca and consists of an initial rating for the borrower risk adjusted for the facility risk. Inputs include Past due and impaired D C an assessment of management, credit experience, financial condition, industry outlook, documentation, security and term. The following tables show the credit quality per class of financial assets other than receivables from customers and other receivables of the Parent Company (in millions): The following tables show the credit quality per class of loans and receivables, gross of allowance Parent Company for credit losses and unearned interest and discount of the Parent Company (in millions): 2014 Neither past due nor impaired Parent Company Past due but not 2014 High Standard Substandard Individually Individually Neither past due nor individually impaired Grade Grade Grade Unrated Impaired Impaired Total Past due but not Financial assets at FVPL P= – P= 1306 P= – P= – P= – P= – P=1,306 AFS investments: High Standard Substandard Individually Individually Government securities – 6,387 – – – 6,387 Grade Grade Grade Unrated Impaired Impaired Total Private bonds – 1,306 – – – 1,306 Receivables from customers: Unquoted equity securities – – – 53 – – 53 Commercial P=4,219 P= 6 , 091 P=3,609 P=514 P= 7 P=313 P=14,753 HTM investment – 1,769 – – – – 1,769 Real estate – 3,164 – 28 85 – 3,277 Loans and receivables: Consumption – 2,457 – – 401 – 2,858 Due from BSP – 8,805 – – – – 8,805 Domestic bills purchased – 842 – – – – 842 Due from other banks 1,510 – – – 1,510 Other receivables: Interbank loans receivable/ Accrued interest receivable 87 127 77 7 – 18 316 SPURA 500 98 – – – – 598 Accounts receivable – 143 – – – – 143 Other assets: Sales contract receivable – 142 – 6 – 148 Refundable deposits – 37 – – – – 37 P=4,306 P= 12,966 P=3,686 P=549 P= 4 9 9 P=331 P=22,337 P=500 P= 21,218 P= – P= 5 3 P= – P= – P=21,771
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Parent Company Individually impaired 2013 Neither past due nor impaired Accounts which show evidence of impairment as of statement of financial position date. Past due but not High Standard Substandard Individually Individually The following tables show credit quality per class of loans and receivables, gross of allowance for Grade Grade Grade Unrated Impaired Impaired Total Financial assets at FVPL P= – P= 1,095 P= – P= – P= – P= – P=1,095 credit losses and unearned interest and discount of LSB (in millions): AFS investments: Government securities – 4,540 – – – – 4,540 December 31, 2014 Private bonds – 1,270 – – – – 1,270 Neither past due nor impaired Unquated equity securities – – – 53 – – 53 Past due but not HTM Investments – – – 75 – – 75 High Standard Substandard Individually Individually Loans and receivables: Grade Grade Grade Unrated Impaired Impaired Total Due from BSP – 10,288 – – – – 10,288 Receivables from customers: Due from other banks 61 1,955 – – – – 2,016 Consumption P= – P=211 P= 7 3 P= – P=487 P=124 P=895 Interbank loans receivable – 3,099 – – – – 3,099 Commercial − 37 25 – 15 145 222 Other assets: Real estate – 8 4 – 8 3 23 Refundable deposits – – – 32 – – 32 Other receivables: P=61 P= 22,247 P= – P=160 P= – P= – P=22,468 Sales contract receivable – 3 11 – 23 4 41 Accounts receivable – 24 – – 1 9 34 Accrued interest receivable – 4 – – 1 13 18 As of December 31, 2014 and 2013, the Parent Company’s commitments amounting to Finance lease receivable – – 7 – – – 7 P=4.57 billion and =2.52P billion, respectively, have a risk rating class of Standard Grade. P= – P=287 P=120 P= – P=535 P=298 P=1,240
LSB December 31, 2013 For receivables from customers, credit quality is being evaluated by LSB using the following Neither past due nor impaired Past due but not classifications: High Standard Substandard Individually Individually Grade Grade Grade Unrated Impaired Impaired Total Neither past due nor individually impaired Receivables from customers: Consumption P= – P=72 P= – P= – P=64 P=353 P=489 LSB classifies those accounts under current status having the following loan grades: Real estate – 639 – – 134 84 857 · High grade Commercial – 4 – – – 13 17 Other receivables: This pertains to accounts with a very low probability of default as demonstrated by the Sales contract receivable – – – – – 18 18 borrower’s long history of stability, profitability and diversity. The borrower has the ability to Accounts receivable – 17 – – – 5 22 raise substantial amounts of funds through the public markets. The borrower has a strong debt Accrued interest receivable – 36 – – 14 – 50 Finance lease receivable – – 8 – – – 8 service record and a moderate use of leverage. P= – P=768 P= 8 P= – P=212 P=473 P=1,461
· Standard grade The credit quality of LSB’s financial assets at amortized cost and investment securities are all The borrower has no history of default. The borrower has sufficient liquidity to fully service classified as high grade except for ‘Refundable deposits’ which is classified as unrated. LSB does its debt over the medium term. The borrower has adequate capital to readily absorb any not have financial assets (excluding loans and receivables) and investment securities which are potential losses from its operations and any reasonably foreseeable contingencies. The either past due but not impaired or individually impaired as of December 31, 2014 and 2013, borrower reported profitable operations for at least the past 3 years. respectively.
· Substandard grade The borrower is expected to be able to adjust to the cyclical downturns in its operations. Any prolonged adverse economic conditions would however ostensibly create profitability and liquidity issues.
· Unrated grade Other credit assets which cannot be classified as High, Standard or Substandard are tagged as Unrated.
Past due but not individually impaired These are accounts which are classified as delinquent but LSB assesses that there is no objective evidence that these accounts are impaired as of statement of financial position date.
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Aging analysis of past due but not impaired loans and receivables per class Parent Company The tables below show the aging analysis of past due but not impaired loans and receivables per 2013 Less than 30 to 60 61 to 90 91 days class of the Group (in millions): 30 days Days days and above Total Receivables from customers: Consolidated Commercial P= – P= – P= – P= 4 P= 4 2014 Consumption 219 9 5 62 295 Less than 30 to 60 61 to 90 91 days Real estate 96 1 _ 18 115 30 days days days and above Total Other receivables: Receivables from customers: Accrued interest Commercial P= 1 P= 1 P= − P= 2 0 P= 2 2 receivable 1 – 1 3 5 Real estate 15 5 − 6 26 Accounts receivable – 1 4 17 22 Consumption 398 232 48 211 889 Sales contract Other receivables: receivable – – – 10 10 Accrued interest P=316 P=11 P=10 P=114 P=451 receivable 10 − − 13 23 Accounts receivable 6 − − − 6 Sales contract Liquidity Risk receivable − 1 − 5 6 Liquidity risk may be defined as the possibility of loss due to the Group’s inability to meet its P=430 P=239 P= 4 8 P=255 P=972 financial obligations when they become due. Liquidity risk is considered in the Group’s assets and liabilities management. The Group seeks to lengthen liability maturities, diversify existing Parent Company 2014 fund sources, and continuously develop new instruments that cater to different segments of the Less than 30 to 60 61 to 90 91 days market. 30 days Days days and above Total Receivables from customers: Commercial P= − P= − P= − P= 7 P= 7 The Parent Company’s Assets and Liabilities Committee (ALCO) is composed of some members Real estate 71 1 − 13 85 of the Senior Management including the Lending Groups and Treasury Group Heads. ALCO Consumption 217 106 14 64 401 conducts weekly meetings. The Parent Company also has specialized units that help monitor Other receivables: Accrued interest market and regulatory developments pertinent to interest rates and liquidity position, as well as Receivable − − − − − prepare cash position reports as needed to measure the liquidity and reserves position of the Parent Accounts receivable − − − − − Company. Sales contract Receivable − 1 − 5 6 P=288 P=108 P= 1 4 P= 8 9 P=499 The Parent Company also keeps credit lines with financial institutions, as well as a pool of liquid or highly marketable securities. Reserves management is another specialized function within the Consolidated Bank, complying with BSP reserve requirements, which may be a buffer against unforeseen 2013 liquidity drains. Less than 30 to 60 61 to 90 91 days 30 days Days days and above Total Receivables from customers: The liquidity or maturity gap report is another tool for measuring liquidity risk. Although Commercial P=18 P=30 P= 4 P=16 P=68 available contractual maturity dates are generally used for putting instruments into time bands, Real estate 96 1 – 18 115 Consumption 232 113 15 69 429 expected liquidation periods, often based on historical data, are used if contractual maturity dates Other receivables: are unavailable. The liquidity gap per time band is computed by getting the difference between Accrued interest receivable 1 – 1 3 5 the inflows and outflows within the time band. A positive liquidity gap is an estimate of the Accounts receivable – 1 4 17 22 Group’s net excess funds for the time band. A negative liquidity gap is an estimate of a future Sales contract funding requirement of the Group. Although such gaps are a normal part of the business, a receivable – 2 – 22 24 P=347 P=147 P=24 P=145 P=663 significant negative amount may bring significant liquidity risk. To help control liquidity risk arising from negative liquidity gaps, maximum cumulative outflow (MCO) targets are set for time bands up to one (1) year.
Analysis of financial instruments by remaining maturities The table below summarized the maturity profile of the Group’s financial instruments based on contractual undiscounted cash flows except for financial assets at FVPL which and based on expected disposal (in millions):
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Consolidated Consolidated 2014 2013 Up to Over 3 up Over 1 to Up to Over 3 up Over 1 to On demand 3 months to 12 months 5 Years Over 5 years Total On demand 3 months to 12 months 5 Years Over 5 years Total Financial Assets Financial Assets Cash and other cash items P=1,576 P= – P= – P= – P= – P=1,576 Cash and other cash items P=1,143 P= – P= – P= – P= – P=1,143 Due from BSP 7,670 1,825 – – – 9,495 Due from BSP 5,712 5,727 – – – 11,439 Due from other banks 1,100 542 – – – 1,642 Due from other banks 1,381 755 – – – 2,136 Interbank loans receivable/ Interbank loans receivable – 3,008 – 90 33 3,131 SPURA – 502 – 85 31 618 Financial assets at FVPL – 1,095 – – – 1,095 Financial assets at FVPL – 1,306 – – – 1,306 AFS investments – 175 369 1,745 9,510 11,799 HTM investments – 140 137 2,087 2,364 HTM investments – 1 3 15 84 103 AFS investments – 10 99 650 14,164 14,923 Loans and receivables 777 3,350 3,681 10,011 9,261 27,080 Loans and receivables 528 3,894 2,261 9,098 15,374 31,155 Other assets – – 32 – 1 33 Other assets – – 35 2 − 37 9,013 14,111 4,085 11,861 18,889 57,959 10,874 8,079 2,535 9,972 31,656 63,116 Financial Liabilities Financial Liabilities Deposit liabilities 31,448 3,886 1,186 2,587 – 39,107 Deposit liabilities 31,985 5,863 1,449 2,123 1 41,421 Manager’s checks 237 – – – – 237 Manager’s checks 278 – – – – 278 Redeemable preferred shares 2 – – – – 2 Redeemable preferred shares 2 – – – – 2 Accrued expenses and other Accrued expenses and other liabilities 1,350 55 – – – 1,405 liabilities 61 1,505 126 22 – 1,714 33,037 3,941 1,186 2,587 – 40,751 32,326 7,368 1,575 2,145 1 43,415 Commitments 2,520 – – – – 2,520 Commitments 4,572 – – – – 4,572 35,557 3,941 1,186 2,587 – 43,271 36,898 6,957 1,575 2,145 1 47,987 (P=26,544) P=10,170 P=2,899 P=9,274 P=18,889 P=14,688 (P=26,024) P=1,122 P=960 P=7,827 P=31,655 P=15,129 Parent Company Parent Company 2013 2014 Up to Over 3 up Over 1 to Up to Over 3 up Over 1 to On demand 3 months to 12 months 5 Years Over 5 years Total On demand 3 months to 12 months 5 Years Over 5 years Total Financial Assets Financial Assets Cash and other cash items P=1,109 P= – P= – P= – P= – P=1,109 Cash and other cash items P=1,501 P= − P= − P= − P= − P=1,501 Due from BSP 5,574 4,714 – – – 10,288 Due from BSP 7,526 1,279 − − − 8,805 Due from other banks 1,262 754 – – – 2,016 Due from other banks 969 542 − − − 1511 Interbank loans receivable – 3,008 – 90 33 3,131 Interbank loans receivable/ Financial assets at FVPL – 1,095 – – – 1,095 SPURA − 501 − 85 31 617 AFS investments – 175 369 1,745 9,510 11,799 Financial assets at FVPL − 1,306 − − − 1,306 HTM investments – 1 3 15 84 103 AFS investments − 10 99 650 14,164 14,923 Loans and receivables 228 3,171 3,356 9,061 9,209 25,025 HTM investment − − 140 166 2,087 2,393 Other assets – – 32 – – 32 Loans and receivables 363 3,845 2,158 8,197 15,135 29,698 8,173 12,918 3,760 10,911 18,836 54,598 Other assets − − 36 − − 36 Financial Liabilities 10,359 7,483 2,433 9,098 31,417 60,790 Deposit liabilities 29,535 3,876 1,150 2,097 – 36,658 Financial Liabilities Manager’s checks 237 – – – – 237 Deposit liabilities 31,027 5,567 1,398 1,641 − 39,633 Accrued expenses and other Manager’s checks 278 − − − – 278 liabilities 1,327 55 – – – 1,382 Accrued expenses and other 31,099 3,931 1,150 2,097 – 38,277 liabilities 452 1,094 126 22 – 1,694 Commitments 2,520 – – – – 2,520 31,757 6,661 1,524 1,663 – 41,605 33,619 3,931 1,150 2,097 – 40,797 Commitments 4,572 – – – – 4,572 (P=25,446) P=8,987 P=2,610 P=8,814 P=18,836 P=13,801 36,329 6,661 1,524 1,663 – 46,177 (P=25,970) P=822 P=909 P=7,435 P=31,417 P=14,613 Market Risk Market risk may be defined as the possibility of loss due to adverse movements in market factors such as rates and prices. Market risk is present in both trading and non-trading activities. These are the risk to earnings or capital arising from changes in the value of traded portfolios of financial instruments. The risk arises from market-making, dealing and position-taking in quoted debt securities and foreign exchange.
The Parent Company observes market risk limits, which are approved by the BOD and reviewed at least annually. Limits are set in such a way as to ensure that risks taken are based on the Parent Company’s existing capital adequacy framework, and corresponding monitoring reports are prepared regularly by an independent risk management unit.
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When limits are breached, approval is sought from successive levels of authority depending on the 2013 amount of the excess. Limit breaches are periodically presented to the BOD. Average Daily Highest Lowest December 31 Local interest rates P=38.39 P=53.02 P=13.73 P=36.30 Foreign interest rate 1.77 3.08 1.31 2.88 Value-at-Risk (VaR) is computed to estimate potential losses arising from market movements. The Parent Company calculates and monitors VaR and profit or loss on a daily basis. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash VaR objectives and methodology flows or the fair values of financial instruments. VaR is used by the Parent Company to measure market risk exposure from its trading and investment activities. VaR is an estimate of the maximum decline in value on a given position The sensitivity analysis below shows the impact of movement in interest rates on AFS investments over a specified holding period in a normal market environment, with a given probability of of the Parent Company as of December 31, 2014 and 2013 (in millions). occurrence. The Parent Company uses the historical simulation method in estimating VaR. The historical simulation method is a non-parametric approach to VaR calculation, in which asset 100 bps returns are not subject to any functional distribution assumption. VaR is estimated directly from Net Carrying parallel shift historical data without deriving parameters or making assumptions about the entire data December 31,2014 Value in yield curve distribution. Peso Denominated AFS P=4,963.80 (P=463.45) Dollar Denominated AFS (in PHP) The historical data used by the Parent Company covers the most recent 260 business days 2,697.97 (260.37) (approximately 1 year). The Parent Company updates its dataset on a daily basis. Per the Parent 100 bps Company policy, VaR is based on a 1-day holding period and a confidence level of 99.50%. Net Carrying parallel shift December 31,2013 Value in yield curve VaR methodology limitations and assumptions Discussed below are the limitations and assumptions applied by the Parent Company on its VaR Peso Denominated AFS P=3,206.79 (=P376.59) methodology: Dollar Denominated AFS (in PHP) 2,557.73 (300.98) a. VaR is a statistical estimate; thus, it does not give the precise amount of loss the Parent Company may incur in the future; The Parent Company’s ALCO surveys the interest rate environment, adjusts the interest rates for b. VaR is not designed to give the probability of bank failure, but only attempts to quantify the Parent Company’s loans and deposits, assesses investment opportunities and reviews the losses that may arise from a Parent Company’s exposure to market risk; structure of assets and liabilities. The Parent Company uses Earnings-at-Risk (EaR) as a tool for c. Since VaR is computed from end-of-day positions and market factors, VaR does not capture measuring and managing interest rate risk in the banking book. intraday market risk. d. VaR systems depend on historical data. It attempts to forecast likely future losses using past Earnings-at-Risk objectives and methodology data. As such, this assumes that past relationships will continue to hold in the future. EAR is a statistical measure of the likely impact of changes in interest rates to the Bank’s net Therefore, market shifts (i.e., an unexpected collapse of the market) will not be captured and interest income (NII). To do this, repricing gaps (difference between interest rate-sensitive assets may inflict losses larger than VaR; and and liabilities) are classified according to time to repricing and multiplied with applicable e. The limitation relating to the pattern of historical returns being indicative of future returns is historical interest rate volatility, although available contractual repricing dates are generally used addressed by supplementing VaR with daily stress testing reported to the RMC, ALCO and for putting instruments into time bands, contractual maturity dates (e.g., for fixed rate instruments) the concerned risk-takers. or expected liquidation periods often based on historical data are used alternatively. The repricing gap per time band is computed by getting the difference between the inflows and outflows within VaR back testing is the process by which financial institutions periodically compare ex-post profit the time band. A positive repricing gap implies that the Parent Company’s NII could decline if or loss with the ex-ante VaR figures to gauge the robustness of the VaR model. The Parent interest rates decrease upon repricing. A negative repricing gap implies that the Parent Company performs quarterly back testing. Company’s NII could decline if interest rates increase upon repricing. Although such gaps are a normal part of the business, a significant change may bring significant interest rate risk. To help The Parent Company’s VaR figures are as follows (in millions): control interest rate risk arising from repricing gaps, maximum repricing gap and EaR/NII targets are set for time bands up to one year. EaR is prepared and reported to the RMC quarterly. 2014 Average Daily Highest Lowest December 31 Local interest rates P=60.01 P=91.14 P=32.63 P=55.22 Foreign interest rate 5.39 8.5 1.62 2.80
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The Parent Company’s EaR figures are as follows (in PHP millions): Trading and investment securities Fair values of debt securities (financial assets at FVPL, AFS and HTM investments) and equity 2014 investments are generally based on quoted market prices. If the market prices are not readily Average Highest Lowest December 31 available, fair values are estimated using either values obtained from independent parties offering Instruments sensitive to local interest pricing services or adjusted quoted market prices of comparable investments or using the rates P=68.91 P=145.40 P=32.28 P=48.19 Instruments sensitive to foreign interest discounted cash flow methodology. For equity investments that are not quoted, the investments rates 0.06 0.10 0.03 0.04 are carried at cost less allowance for impairment losses due to the unpredictable nature of future cash flows and the lack of suitable methods of arriving at a reliable fair value. 2013 Average Highest Lowest December 31 Receivables from customers Instruments sensitive to local interest Fair values are estimated using the discounted cash flow methodology, using the Group’s current rates P=20.49 P=44.27 P=3.40 P=16.56 incremental lending rates for similar types of receivables at current market rates. Where the Instruments sensitive to foreign interest rates 0.02 0.04 0.01 0.04 instruments reprice on a short-term basis or have a relatively short maturity, the carrying amounts approximate fair values. Foreign currency risk Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to Investment properties changes in foreign exchange rates. The BOD has set limits on positions by currency. In Fair value of investment properties are based on market data (or direct sales comparison) accordance with the Parent Company’s policy, positions are monitored on a daily basis and are approach. This approach relies on the comparison of recent sale transactions or offerings of used to ensure positions are maintained within established limits. similar properties which have occurred and/or offered with close proximity to the subject property.
Statement of The fair values of the Group’s investment properties have been determined by appaisers, including December 31, 2014 Income OCI independent external appraisers, in the basis of the recent sales of similar properties in the same +10% USD appreciation USD (P=218,512,786) P=269,707,070 areas as the investment properties and taking into account the economic conditions prevailing at Other Foreign Currencies* (4,248,614) − -10% USD depreciation USD 218,512,786 (269,707,070) the time of the valuations are made. Other Foreign Currencies* 4,248,614 − The Group has determined that the highest and best use of the property used for the land and Statement of building is its current use. December 31, 2013 Income OCI +10% USD appreciation USD P=26,037,177 (P=36,739,536) Other Foreign Currencies* 1,911,036 – Time deposits -10% USD depreciation USD (26,037,177) 36,739,536 Fair values are estimated using the discounted cash flow methodology using the Group’s current Other Foreign Currencies* (1,911,036) – incremental borrowing rates for similar borrowings with maturities consistent with those *significant positions held in EUR and AUD remaining for the liability being valued.
Financial liabilities at amortized cost except time deposits 5. Fair Value Measurement Carrying amounts approximate fair values due to either the demand nature or the relatively short- term maturities of these liabilities. The methods and assumptions used by the Group in estimating the Group’s assets and liabilities are: The following tables show the Group’s assets and liabilities carried at fair value and those whose fair value are required to be disclosed, analyzed among those whose fair value is based on: Cash and other cash items, due from BSP, due from other banks, interbank loans receivable, · Quoted market prices in active markets for identical assets or liabilities (Level 1); accounts receivable and accrued interest receivable · Those involving inputs other than quoted prices included in Level 1 that are observable for the Carrying value approximates fair value given the short-term nature of these financial assets and asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and insignificant risk of changes in value. · Those with inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
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Consolidated Parent Company 2014 2014 Carrying Value Level 1 Level 2 Level 3 Total Fair Value Carrying Value Level 1 Level 2 Level 3 Total Fair Value Assets Measured at Fair Value Liabilities for which Fair Values are Financial Assets Disclosed Financial assets at FVPL P=1,305,791,077 P=1,305,791,077 P= – P= – P=1,305,791,077 Financial Liabilities AFS investments: Financial liabilities at amortized cost: Government securities 6,387,347,027 6,387,347,027 – – 6,387,347,027 Deposit liabilities: Private bonds 1,306,182,162 1,306,182,162 – – 1,306,182,162 Time deposits P=8,456,107,023 P= – P= – P=8,471,041,885 P=8,471,041,885 Quoted equity securities 272,500 272,500 – – 272,500 P=8,999,592,766 P=8,999,592,766 P= – P= – P=8,999,592,766 Consolidated Assets for which Fair Values are 2013 Disclosed Carrying Value Level 1 Level 2 Level 3 Total Fair Value Financial Assets Assets Measured at Fair Value HTM investment P=1,768,603,469 P=1,268,657,311 P= – P= – P=1,268,657,311 Financial Assets AFS - unquoted securities 23,605,700 – – 23,605,700 23,605,700 Financial assets at FVPL P=1,094,982,315 P=1,094,982,315 P= – P=– P=1,094,982,315 Loans and receivables: AFS investments: Receivables from customers: Government securities 4,540,129,118 4,540,129,118 – – 4,540,129,118 Commercial 14,624,217,537 – – 15,535,253,619 15,535,253,619 Private bonds 1,270,151,874 1,270,151,874 – – 1,270,151,874 Real estate 3,253,717,060 – – 3,849,044,586 3,849,044,586 Quoted equity securities 272,500 272,500 – – 272,500 Consumption 3,433,069,919 – – 5,150,356,145 5,150,356,145 P=6,905,535,807 P=6,905,535,807 P= – P=– P=6,905,535,807 Other receivables: Sales contract receivable 185,802,532 – – 184,490,918 184,490,918 Assets for which Fair Values are Accrued interest receivables 262,100,096 − 334,034,290 334,034,290 Disclosed Accounts receivable 156,891,589 − − 156,891,589 156,891,589 Financial Assets Lease receivable 7,203,863 − − 9,733,830 9,733,830 HTM investment P=75,000,000 P=74,856,968 P= – P= – P=74,856,968 Non-Financial Assets Loans and receivables: Investment properties 202,944,136 − − 304,319,306 304,319,306 Receivables from customers: P=23,918,155,901 P=1,268,657,311 P= − P=25,547,729,983 P=26,816,387,294 Commercial 11,308,655,720 – – 11,484,679,723 11,484,484,708 Real estate 2,840,869,479 – – 3,051,214,325 3,051,214,325 Liabilities for which Fair Values are Disclosed Consumption 3,330,502,052 – – 5,122,764,207 5,122,764,207 Financial Liabilities Other receivables: Financial liabilities at amortized cost: Unquoted debt securities 555,000,000 – – 561,386,784 561,386,784 Deposit liabilities: Sales contract receivable 59,707,329 – – 73,870,939 73,870,939 Time deposits P=8,914,931,649 P= – P= – P=8,970,109,543 P=8,970,109,543 Non-Financial Assets Investment properties 239,616,938 – – 381,015,660 381,015,660 Liabilities for which Fair Values are Parent Company Disclosed 2014 Financial Liabilities Carrying Value Level 1 Level 2 Level 3 Total Fair Value Financial liabilities at amortized cost: Assets Measured at Fair Value Deposit liabilities: Financial Assets Time deposits P=7,327,070,074 P= – P=– P=7,345,102,076 P=7,345,102,076 Financial assets at FVPL P=1,305,791,077 P=1,305,791,077 P= – P= – P=1,305,791,077 AFS investments: Parent Company Government securities 6,387,347,027 6,387,347,027 – – 6,387,347,027 2013 Private bonds 1,306,182,162 1,306,182,162 – – 1,306,182,162 Quoted equity securities 272,500 272,500 – – 272,500 Carrying Value Level 1 Level 2 Level 3 Total Fair Value P=8,999,592,766 P=8,999,592,766 P= – P= – P=8,999,592,766 Assets Measured at Fair Value Financial Assets Assets for which Fair Values are Financial assets at FVPL P=1,094,982,315 P=1,094,982,315 P= – P=– P=1,094,982,315 Disclosed AFS investments: Financial Assets Government securities 4,540,129,118 4,540,129,118 – – 4,540,129,118 HTM investment P=1,768,603,469 P=1,268,657,311 P= – P= – P=1,268,657,311 Private bonds 1,270,151,874 1,270,151,874 – – 1,270,151,874 AFS-Unquoted debt securities 52,605,700 − − 52,605,700 52,605,700 Quoted equity securities 272,500 272,500 – – 272,500 Loans and receivables: P=6,905,535,807 P=6,905,535,807 P= – P=– P=6,905,535,807 Receivables from customers: Assets for which Fair Values are Commercial 14,446,703,115 – – 15,389,557,720 15,389,557,720 Disclosed Real estate 3,231,667,562 – – 3,816,888,044 3,816,888,044 Financial assets Consumption 2,625,765,472 – – 3,838,763,544 3,838,763,544 HTM investment P=75,000,000 P=74,856,968 P= – P= – P=74,856,968 Other receivable Loans and receivables: Sales contract receivable 145,130,591 – – 143,878,912 143,878,912 Receivables from customers: Accrued interest receivable 262,100,096 – – 316,133,096 316,133,096 Commercial 11,109,367,996 – – 11,362,654,132 11,362,654,132 Accounts receivable 156,891,589 156,891,589 156,891,589 Real estate 2,832,740,814 – – 3,045,773,563 3,045,773,563 Non-financial assets Consumption 2,443,780,203 – – 3,975,989,213 3,975,989,213 Investment properties 93,093,679 – – 103,863,457 103,863,457 Other receivables: P=22,782,561,273 P=1,268,657,311 – P=23,818,582,062 P=25,087,239,373 Unquoted debt securities 555,000,000 – – 561,386,784 561,386,784 Sales contract receivable 10,908,601 – – 17,453,426 17,453,426 (Forward) Non-financial assets Investment properties 98,695,983 – – 215,232,859 215,232,859
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Parent Company 6. Interbank Loans Receivable/Securities Purchased Under Resale Agreement 2013 Carrying Value Level 1 Level 2 Level 3 Total Fair Value Liabilities for which Fair Values are This account consists of placements by the Parent Company in: Disclosed Financial liabilities Financial liabilities at amortized cost: 2014 2013 Deposit liabilities: BSP P=500,000,000 P=3,000,000,000 Time deposits P=6,869,679,656 P= – P=– P=6,895,465,199 P=6,895,465,199 Local savings bank 98,000,000 99,000,000 P=598,000,000 P=3,099,000,000 In 2014 and 2013, there were no transfers between Level 1 and Level 2 fair value measurements and there were no transfers into and out of the Level 3 category. Placement by the parent company on reverse repurchase agreement with BSP has remaining maturity of twelve (12) days while placement in local savings bank has remaining maturity of Description of significant unobservable inputs to valuation: three (3) to four (4) years.
Significant Unobservable In 2014 and 2013, interest rates on placements in BSP and other local savings bank range from Accounts Valuation Technique Inputs 3.50% to 6.17%. Loans and receivables Discounted cash flow 4% - 5% risk premium rate method Investment properties Market data approach Price per square meter, size, 7. Investment Securities shape, location, time element and discount Financial Assets at FVPL Repossessed chattel Market data approach Price per unit, size, shape, As of December 31, 2014 and 2013, this account consists of investment in government securities. location, time element and The EIR on investment in peso-denominated government securities ranges from 1.21% to 5.75% discount in 2014 and 2.47% and 5.75% in 2013, respectively. The EIR on investment in foreign currency- Time deposits Discounted cash flow 0.25% - 3.00% risk premium denominated government securities ranges from 2.47% to 4.36% in 2014 and from 3.86% to method rate 5.31% in 2013.
Significant increases (decreases) in price per square meter and size of investment properties would AFS Investments result in a significantly higher (lower) fair value of the properties. Significant increases This account consists of investments in: (decreases) in discount would result in a significantly lower (higher) fair value of the properties. Consolidated Parent Company Significant Unobservable Inputs 2014 2013 2014 2013 Government securities P=6,387,347,027 P=4,540,129,118 P=6,387,347,027 P=4,540,129,118 Size Size of lot in terms of area. Evaluate if the lot size of property or comparable Private bonds 1,306,182,162 1,270,151,874 1,306,182,162 1,270,151,874 conforms to the average cut of the lots in the area and estimate the impact of the Quoted equity securities 272,500 272,500 272,500 272,500 lot size differences on land value. Unquoted equity securities 23,605,700 23,605,700 52,605,700 52,605,700 Shape Particular form or configuration of the lot. A highly irregular shape limits the P=7,717,407,389 P=5,834,159,192 P=7,746,407,389 P=5,863,159,192 usable area whereas an ideal lot configuration maximizes the usable area of the lot which is associated in designing an improvement which conforms with the highest The EIR on AFS investments in peso-denominated government securities ranges from 1.55% to and best use of the property. 8.14% and from 2.35% to 8.14% in 2014 and in 2013, respectively. The EIR on AFS investments Location Location of comparative properties whether on a main road, or secondary road. in foreign currency-denominated government securities ranges from 2.22% to 4.72% in 2014 and Road width could also be a consideration if data is available. As a rule, properties from 2.75% to 4.72% in 2013. The EIR on AFS investments in peso-denominated private bonds located along a main road are superior to properties located along a secondary ranges from 4.41% to 7.00% in 2014 and 2013. The EIR on AFS investments in foreign currency- road. denominated private bonds ranges from 3.74% to 6.50% in 2014 and 2013, respectively. Time element An adjustment for market conditions is made if general property values have appreciated or depreciated since the transaction dates due to inflation or deflation As of December 31, 2014 and 2013, the quoted equity securities of the Group consist of shares of or a change in investor’s perceptions of the market over time. In which case, the stocks in a private corporation. current data is superior to historic data. Discount Generally, asking prices in ads posted for sale are negotiable. Discount is the amount the seller or developer is willing to deduct from the posted selling price if the transaction will be in cash or equivalent. Risk premium The return in excess of the risk-free rate of return that an investment is expected to yield.
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Investments in unquoted equity securities include investment in shares of stock of Philippine ‘Interest income’ on investment securities of the Group and the Parent Company consists of: Clearing House Corporation (PCHC). This investment is required to be held by the Parent Company as part of its operations. The Parent Company does not have any plans to sell these 2014 2013 shares in the future. These securities are carried at cost due to the unpredictable nature of future Financial assets at FVPL P=55,014,642 P=61,114,213 cash flows from these securities and the lack of suitable valuation for arriving at a reliable fair AFS investments 261,732,984 357,151,990 value estimate. HTM investments 56,664,884 456,266 Derivative assets – 5,571,375 For the years ended December 31, 2014 and 2013, dividend income from equity securities under P=373,412,510 P=424,293,844 ‘AFS investments’ presented under ‘Miscellaneous income’ of the Group amounted to P=0.01 million and =0.64P million, respectively (see Note 22). ‘Trading and securities gains - net’ of the Group and the Parent Company consist of: As of December 31, 2014 and 2013, the unquoted equity securities of the Parent Company include 2014 2013 29,000 redeemable preferred shares of LSB amounting to =29.00P million (see Note 16). Unrealized mark-to-market gains (losses) on Movements in net unrealized gains (losses) of the Group and the Parent Company included in the financial assets at FVPL P=87,828,056 (P=170,474,874) carrying value of ‘AFS investments’ follow: Net realized gains taken to profit or loss on AFS securities 23,174,152 365,458,901 2014 2013 Net realized gains (losses) taken to profit or loss on Balance at beginning of year (P=630,810,436) P=72,040,625 financial assets at FVPL (1,567,595) 218,123,179 Changes in fair value 378,615,305 (338,531,012) P=109,434,613 P=413,107,206 Gains taken to profit or loss (23,174,152) (365,458,901) Tax effect (Note 23) – 1,138,852 Change in unrealized gains (losses) on AFS investments 355,441,153 (702,851,061) 8. Loans and Receivables Balance at end of year (P=275,369,283) (P=630,810,436) This account consists of: HTM Investments Consolidated Parent Company This account consists of investments by the Parent Company in: 2014 2013 2014 2013 Receivables from customers: 2014 2013 Commercial P= 15,280,806,177 P= 11,393,884,511 P= 14,753,934,888 P= 11,194,596,787 Real estate 3,286,319,552 2,883,406,449 3,277,077,645 2,873,570,444 Government securities P=50,231,565 P=− Consumption 3,216,871,364 3,405,099,647 2,858,841,550 2,576,318,937 Private bonds 1,718,371,904 75,000,000 Domestic bills purchased 841,772,714 717,356,029 841,772,714 717,356,029 P=1,768,603,469 P=75,000,000 22,625,769,807 18,399,746,636 21,731,626,797 17,361,842,197 Less:unearned interest and discount 9,364,486 546,863 8,548,784 315,662 HTM investments in government securities earn interest of 2.63% in 2014. HTM investments on 22,616,405,321 18,399,199,773 21,723,078,013 17,361,526,535 private bonds earn interest ranging from 2.62% to 8.64% in 2014 and 5.09% in 2013, respectively. Other receivables: Accrued interest receivable 334,034,290 215,137,360 316,133,096 217,806,094 Accounts receivable 156,891,589 87,631,689 142,636,828 78,907,100 Derivative Financial Instruments Sales contract receivable 189,313,688 63,861,339 147,925,591 14,346,455 The Parent Company entered into two (2) cross currency swaps (CCSs) with notional values of Lease receivables (Note 21) 7,203,863 7,502,619 − − USD5.0 million and USD2.0 million, respectively, with a foreign bank to achieve an economic Unquoted debt securities − 555,000,000 − 555,000,000 hedge against its exposure in foreign currency risk related to its foreign currency-denominated 687,443,430 929,133,007 606,695,515 866,059,649 Less:allowance for credit losses AFS government securities. (Note 14) 721,230,744 518,051,487 633,997,148 459,879,147 P=22,582,618,007 P=18,810,281,293 P=21,695,776,380 P=17,767,707,037 On February 15, 2013, the Parent Company received =395.57P million upon maturity of its CCSs resulting to a gain of P=1.62 million recorded under ‘Trading and securities gain-net’ in the The unquoted debt securities pertain to investments in private bonds with local companies. statement of income. Unquoted debt securities earn interest at annual fixed rates ranging from 5.67% to 8.88% in 2014 As of December 31, 2014 and 2013, the Parent Company has no outstanding derivative contracts. and 2013. Sales contract receivable earn interest at annual fixed rates ranging from 6.25% to 47.07% and from 3.45% to 52.04% in 2014 and 2013, respectively.
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Interest income on loans and receivables consists of: As of December 31, 2014 and 2013, information on the concentration of credit as to industry follows (in millions): Consolidated Parent Company 2014 2013 2014 2013 Receivables from customers: Consolidated Parent Company Commercial P=787,056,780 P=733,303,237 P=760,726,385 P=611,133,149 2014 2013 2014 2013 Amount % Consumption 765,662,455 370,865,955 621,743,056 240,611,024 Amount % Amount % Amount % Real estate, renting and business services P=6,600 29.17 P=4,931 26.34 P=6,586 30.31 P=4,915 28.31 Real estate 471,751,970 471,287,153 239,803,461 238,862,936 Wholesale and retail trade 3,502 15.48 2,825 15.09 3,272 15.06 2,581 14.87 Domestic bills purchased 24,156,909 822,235 24,156,909 822,235 Manufacturing 2,972 13.14 573 3.06 2,972 13.68 573 3.30 Unquoted debt securities 14,987,550 36,476,080 14,987,550 36,476,080 Loans to individuals for consumption Sales contract receivable 7,924,849 5,846,594 3,546,368 3,762,155 purposes 2,625 11.60 2,277 12.16 2,625 12.08 2,277 13.11 Lease receivables 150,000 1,048,367 − − Electricity, gas and water supply 1,733 7.66 1,748 9.34 1,733 7.97 1,748 10.07 P=1,839,742,004 P=1,620,114,438 P=1,664,023,204 P=1,364,091,796 Other community, social and personal activities 1,553 6.86 1,975 12.28 1,029 4.73 1,442 8.31 Construction 1,389 6.14 936 5.00 1,389 6.39 936 5.39 Of the total receivables from customers of the Parent Company as of December 31, 2014 and Transport, storage and communication 833 3.68 1,302 6.95 833 3.83 1,302 7.50 Agriculture, hunting and forestry 496 2.19 907 4.84 339 1.56 662 3.81 2013, 50.04% and 24.21%, respectively, are subject to periodic interest repricing. The EIR of the Health and social work 332 1.47 119 0.63 332 1.53 119 0.69 rem aining receivables from customers ranges from 2.38% to 60.95% in 2014 and from 2.24% to Financial intermediaries 1 0.00 768 4.10 1 0.00 768 4.42 60.95% in 2013. Others 590 2.61 39 0.21 621 2.86 39 0.22 P=22,626 100.00 P=18,400 100.00 P=21,732 100.00 P=17,362 100.00 BSP Reporting Others relate to mining and quarrying, hotels and restaurants and education. As of December 31, 2014 and 2013, information relating to secured loans by collateral type and unsecured receivables from customers follows: The BSP considers that concentration risk exists when the total loan exposure to a particular industry or economic sector exceeds 30.00% of the total loan portfolio except for thrift banks. Consolidated 2014 2013 Under banking regulations, non-performing loans (NPLs) shall, as a general rule, refer to loans Amount % Amount % whose principal and/or interest is unpaid for thirty (30) days or more after due date or after they Secured by: have become past due in accordance with existing BSP rules and regulations. This shall apply to Real estate P=4,331,333,652 19.14 P=3,799,710,067 20.65 loans payable in lump sum and loans payable in quarterly, semi-annual, or annual installments, in Chattel 756,692,049 3.34 873,499,823 4.75 which case, the total outstanding balance thereof shall be considered non-performing. Deposit hold-outs 1,309,961,561 5.79 594,537,622 3.23 Others 2,735,275,232 12.09 3,991,288,785 21.69 In the case of receivables that are payable in monthly installments, the total outstanding balance 9,133,262,494 40.36 9,259,036,297 50.32 thereof shall be considered non-performing when three (3) or more installments are in arrears. In Unsecured 13,492,507,313 59.64 9,140,710,339 49.68 the case of receivables that are payable in daily, weekly, or semi-monthly installments, the total P=22,625,769,807 100.00 P=18,399,746,636 100.00 outstanding balance thereof shall be considered non-performing at the same time that they become past due in accordance with existing BSP regulations, i.e., the entire outstanding balance of the Parent Company receivable shall be considered as past due when the total amount of arrearages reaches 10.00% of 2014 2013 the total receivable balance. Restructured receivables which do not meet the requirements to be Amount % Amount % treated as performing receivables shall also be considered as NPLs. Secured by: Real estate P=4,216,344,188 19.40 P=3,659,171,699 21.08 The Group classifies its loans and receivables as NPL in compliance with BSP regulations, or Chattel 756,679,939 3.48 858,316,358 4.94 when, in the opinion of management, collection of interest or principal is doubtful. Loans and Deposit hold-outs 1,303,012,632 6.00 575,013,803 3.31 receivables are not reclassified as performing until interest and principal payments are brought Others 2,735,275,232 12.59 3,991,288,785 22.99 current or the loans are restructured in accordance with existing BSP regulations and future 9,011,311,991 41.47 9,083,790,645 52.32 payments appear assured. Unsecured 12,720,314,806 58.53 8,278,051,552 47.68 P=21,731,626,797 100.00 P=17,361,842,197 100.00
Others include deed of assignments of receivables and deed of suretyships.
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Restructured receivables which do not meet the requirements to be treated as performing On December 26, 2012, the MB of the BSP approved the SPA covering the Parent Company’s receivables shall also be considered as NPLs. Restructured receivables of the Parent Company as acquisition of the 100.00% common shares of LSB. The deeds of sale to implement the SPA were of December 31, 2014 and 2013 amounted to =264.81P million and =273.36P million, respectively. executed afterwards. As of December 31, 2014 and 2013, details of these NPLs follow: In addition to the approval of the acquisition, the MB of the BSP approved the following merger Consolidated Parent Company incentives: 2014 2013 2014 2013 Secured P= 244,343,184 P=267,307,604 P=201,559,646 P=223,168,897 1. Grant of several branch licenses to the Parent Company in restricted areas and waiver of Unsecured 795,717,001 610,970,166 442,495,440 298,374,167 corresponding P=20.00 million special branch licensing fee for each restricted branch license, P= 1,040,060,185 P=878,277,770 P=644,055,086 P=521,543,064 subject to the following conditions: (a) the establishment of the awarded branches in restricted areas shall be subject to compliance with all other applicable provisions on branch Generally, NPLs refer to loans whose principal and/or interest is unpaid for thirty (30) days or establishment prescribed under Section X151 of the Manual of Regulations for Banks more after due date or after they have become past due in accordance with existing BSP rules and (MORB); and (b) branches shall be opened within three (3) years from BSP final approval of regulations. This shall apply to loans payable in lump sum and loans payable in quarterly, semi- the Parent Company’s acquisition of LSB. annual, or annual installments, in which case, the total outstanding balance thereof shall be considered nonperforming. Under BSP Circular No. 772, which was issued on October 16, 2012, 2. Waiver of (a) the monetary penalties aggregating P=6.40 million as of November 30, 2012 for gross NPLs include NPLs that are covered with 100% allowance. violation of laws assessed by BSP on LSB, except penalties accruing to other parties, e.g., Micro, Small and Medium Enterprises Development Council Fund. Such waiver shall not As of December 31, 2014 and 2013, NPLs of the Group and of the Parent Company as reported to preclude BSP from pursuing watchlisting and imposition of non-monetary and administrative the BSP follow: sanctions (e.g., fines, disqualifications, suspensions and/or removal from office) against the Consolidated Parent Company directors and officers of LSB in accordance with applicable banking laws and regulations, 2014 2013 2014 2013 without prejudice to the filing of criminal cases against liable persons under Section 34, 35 Total NPLs P= 1,040,060,185 P= 878,277,770 P= 644,055,086 P= 521,543,064 and 36 of Republic Act No. 7653 (the New Central Bank Act); (b) the applicable Deductions as required by the BSP 564,617,482 517,674,265 357,061,998 271,325,124 restrictions/ceilings on transactions between the Parent Company and LSB, for a period of P=475,442,703 P= 360,603,505 P=286,993,088 P=250,217,940 three months, with respect to the Parent Company’s liquidity support to LSB (through deposits to and/or purchase of receivables from LSB).
9. Investment in a Subsidiary 3. Staggered booking, up to five (5) years from final BSP approval of the Parent Company’s acquisition of LSB, of the P=274.10 million required allowance for probable losses on LSB’s On July 25, 2012, the Parent Company’s BOD approved the acquisition of the 100.00% risk assets. The periodic amortization shall be charged against current operations, in controlling interest (both common and preferred shares) in LSB. Further, it was resolved that the accordance with the regulatory accounting guidelines for deferred loss recognition under Parent Company would seek approval from the Monetary Board (MB) of the BSP for the Appendix 56a (to Subsection X394.10) of the MORB. The unamortized losses shall be acquisition and other incentives. deducted from qualifying capital for purposes of capital adequacy ratio computation and from computation of LSB’s unimpaired capital under Subsection X116.1 of the MORB. On August 15, 2012, the MB of the BSP issued its approval in principle of the Parent Company’s request to acquire LSB and of all the incentives requested by the Parent Company subject to the 4. Retention of the thrift branch license of LSB on its existing eleven (11) branches, for its submission of the necessary requirements. operations as a wholly-owned subsidiary of the Parent Company to pursue microfinance and country-side banking. Beginning August 27, 2012, the Parent Company executed a share purchase agreement (SPA) with the LSB stockholders and made the related partial settlements therewith. The stock and transfer 5. Approval of the following interlocking positions: books of LSB will be updated upon the issuance of the certificate authorizing registration from the a. concurrent assignment of the Parent Company’s Head of Legal Services as Corporate BIR. As of December 26, 2012, the Parent Company and majority of LSB stockholders had Secretary of LSB; however,as of to date, the aforementioned officer is not holding any signed on the SPA. position. b. secondment of the officers of the Parent Company to LSB to assume the position of On September 22, 2012, a new set of BOD members for LSB was elected consisting mostly of the President, Chief Operating Officer, Treasurer and Audit Head, subject to the condition Parent Company’s officers. that these officers shall (i) relinquish all their duties, responsibilities, and signing authorities in the Parent Company and (ii) receive compensation/salaries and other emoluments from LSB; c. notation of the interlocking directorships and officership-directorships of the Parent Company.
122 RobinsonsBank 2014 Annual Report 123 *SGVFS013456* *SGVFS013456* - 58 - - 59 -
Based on the foregoing events, the Parent Company acquired effective control and management of On August 22, 2012, the BOD of the Parent Company approved the infusion of cash equity to LSB as of December 26, 2012. Accordingly, in accordance with PFRS 3, Business Combinations, bring LSB’s capital adequacy ratio (CAR) to at least 10.00% amounting to P=620.00 million. In the Parent Company’s date of acquisition of LSB is December 26, 2012. However, for December 2012, the Parent Company infused the P=620.00 million to LSB. The capital infused by convenience purposes, the Group used December 31, 2012 as the cut-off in determining the fair the Parent Company continues to be carried by LSB as deposit for future stock subscription. It value of the net assets of LSB. Therefore, only the fair values of the identifiable assets and will be converted to paid-up capital upon approval by the BSP and SEC of LSB’s increase in liabilities of LSB as December 31, 2012 were consolidated and the profit and loss of LSB for the authorized capital stock. year ended December 31, 2012 were excluded from the Group’s consolidated financial statements as of December 31, 2012. There were no adjustments resulting from the final purchase price allocation from LSB.
The fair values of the identifiable assets and liabilities of LSB as at December 31, 2012 follow:
Fair Value Recognized on Acquisition Assets Cash and cash equivalents P=360,157,091 Available-for-sale investment 2,314,013 Loans and receivables 965,692,025 Property and equipment 43,910,651 Investment property 175,029,262 Branch licenses 620,000,000 Other assets 11,974,787 2,179,077,829 Liabilities Deposit liabilities P=2,033,312,019 Redeemable preferred shares 30,700,000 Deferred tax liability 186,000,000 Accrued expenses and other liabilities 62,392,816 2,312,404,835 Total identifiable net liabilities at fair value (=P133,327,006)
The acquisition resulted in recognition of goodwill determined as follows:
Total acquisition cost P=111,000,000 Fair value of net liabilities acquired 133,327,006 Goodwill P=244,327,006
Cash flow on acquisition follows:
Cash and cash equivalents acquired from LSB P=360,157,091 Cash paid (111,000,000) Net cash inflow P=249,157,091
As of December 31, 2012, the Parent Company’s investment in LSB consists of:
Acquisition cost P=111,000,000 Additional capital infusion 620,000,000 Net cash outflow P=731,000,000
124 RobinsonsBank 2014 Annual Report 125 *SGVFS013456* *SGVFS013456* 126 RobinsonsBank
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10. Property and Equipment
The composition of and the movements in this account follow:
Consolidated 2014 Furniture, Transportation Leasehold Fixtures and Land Building Equipment Improvements Equipment Total Cost Balance at beginning of year P=6,184,400 P=44,973,781 P=100,911,618 P=323,837,883 P=601,371,260 P=1,077,278,942 Additions – 58,568 31,056,392 77,946,314 59,908,349 168,969,623 Disposals – − (6,128,861) (550,458) (3,678,833) (10,358,152) Reclassification 8,518,932 8,043,709 6,620,189 (5,999,137) 29,596,364 46,780,057 Balance at end of year 14,703,332 53,076,058 132,459,338 395,234,602 687,197,140 1,282,670,470 Accumulated Depreciation and Amortization Balance at beginning of year – 14,091,833 52,531,535 180,408,050 358,145,200 605,176,618 Depreciation and amortization – 3,083,912 22,781,409 45,119,747 87,242,880 158,227,948 Disposals – − (4,988,939) (550,458) (2,160,384) (7,699,781) Reclassification – 4,473,838 7,621,566 (4,964,934) 29,045,084 36,175,554 Balance at end of year – 21,649,583 77,945,571 220,012,405 472,272,780 791,880,339 Net Book Value at End of the Year P=14,703,332 P=31,426,475 P=54,513,767 P=175,222,197 P=214,924,360 P=490,790,131
*SGVFS013456*
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Consolidated 2013 Furniture, Transportation Leasehold Fixtures and Land Building Equipment Improvements Equipment Total Cost Balance at beginning of year P=6,184,400 P=45,755,143 P=94,604,103 P=279,775,876 P=491,339,013 P=917,658,535 Additions – 852,997 17,017,322 59,497,708 111,369,384 188,737,411 Disposals – (849,140) (10,060,543) (14,631,234) (3,576,087) (29,117,004) Reclassification – (785,219) (649,264) (804,467) 2,238,950 – Balance at end of year 6,184,400 44,973,781 100,911,618 323,837,883 601,371,260 1,077,278,942 Accumulated Depreciation and Amortization Balance at beginning of year – 11,928,770 41,594,113 153,537,564 290,741,633 497,802,080 Depreciation and amortization – 2,948,282 18,336,218 41,388,296 67,488,712 130,161,508 Disposals – – (6,749,532) (13,713,343) (2,324,095) (22,786,970) Reclassification – (785,219) (649,264) (804,467) 2,238,950 – Balance at end of year – 14,091,833 52,531,535 180,408,050 358,145,200 605,176,618 Net Book Value at End of the Year P=6,184,400 P=30,881,948 P=48,380,083 P=143,429,833 P=243,226,060 P=472,102,324
Parent Company 2014 Furniture, Transportation Leasehold Fixtures and Building Equipment Improvements Equipment Total Cost Balance at beginning of year P=39,946,381 P=98,042,312 P=305,261,536 P=585,055,226 P=1,028,305,455 Additions – 26,278,715 73,171,758 51,764,493 151,214,966 Disposals – (2,934,978) (550,458) – (3,485,436) Balance at end of year 39,946,381 121,386,049 377,882,836 636,819,719 1,176,034,985 Accumulated Depreciation and Amortization Balance at beginning of year 13,526,625 51,884,503 177,913,005 351,028,189 594,352,322 2014 AnnualReport Depreciation and amortization 1,731,011 21,914,265 42,649,858 81,026,291 147,321,425 Disposals – (2,934,978) (550,458) – (3,485,436) Balance at end of year 15,257,636 70,863,790 220,012,405 432,054,480 738,188,311 Net Book Value at End of the Year P=24,688,745 P=50,522,259 P=157,870,431 P=204,765,239 P=437,846,674 127 *SGVFS013456* 128 RobinsonsBank
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Parent Company 2013 Fixtures, Transportation Leasehold Furniture and Building Equipment Improvements Equipment Total Cost Balance at beginning of year P=39,946,381 P=91,768,932 P=261,928,236 P=480,104,335 P=873,747,884 Additions – 15,135,739 57,964,534 108,526,978 181,627,251 Disposals – (8,862,359) (14,631,234) (3,576,087) (27,069,680) Balance at end of year 39,946,381 98,042,312 305,261,536 585,055,226 1,028,305,455 Accumulated Depreciation and Amortization Balance at beginning of year 11,928,770 41,594,113 153,537,564 290,741,633 497,802,080 Depreciation and amortization 1,597,855 17,017,713 38,088,784 62,423,319 119,127,671 Disposals – (6,727,323) (13,713,343) (2,136,763) (22,577,429) Balance at end of year 13,526,625 51,884,503 177,913,005 351,028,189 594,352,322 Net Book Value at End of the Year P=26,419,756 P=46,157,809 P=127,348,531 P=234,027,037 P=433,953,133
Gain on sale of property and equipment included in ‘Miscellaneous income’ of the Group amounted to P=0.41 million and P=0.13 million in 2014 and 2013 for the Group, and =0.17P million and =0.27P million in 2014 and 2013, respectively, for the Parent Company (see Note 22).
*SGVFS013456* (see Note 10). (seeThe Note 10). transferred properties intendedare staffusedbe houseas to thefor Parent equipment’ and ‘Property its to LSB by transferred were building a and land of parcel Certain 11. respectively. still in use the by Parent Company amounted P=366.97to million and P As ofDecember31, 2014 and 2013, the cost offully depreciated items of property and equipment still in use by the Group amounted to P=404.55 million and P=415.59As ofDecember31, 2014 and 2013, the cost offully million,depreciated respectively.items of property and equipment The movements in this account which consists of land and buildings follow: 13) (Note costs Software Repossessed chattels (Note 13) 11) (Note properties Investment equipmentProperty and Company’s officers and employees seconded to work for the LSB. the for work to seconded employees and officers Company’s P=8.53of amount P=3.15 carrying and with in 2014 million account respectively, million, The detailsof depreciation and amortization follow: Investment Properties Investment Reclassification Disposals NetBook Valueat End of Reclassification Balance at beginning of year ImpairmentAllowance for Reclassification Disposals Depreciation (Note 10) Balance at beginning of year Accumulated Depreciation Additions Balance at beginning of year Cost Balance at end of year Balance at end of year Disposals Balance at end of year Provision Year Losses (Note 28) (Note (Note 14) (Note P=332,780,563 P=202,994,936 (12,356,277) (60,919,253) 289,602,005 (6,902,540) (6,633,945) 30,096,972 65,259,452 27,904,173 59,426,588 27,180,481 1,069,676 6,585,320 (675,067) P=207,986,445 P=158,227,948 36,781,870 6,391,307 6,585,320 2014 Consolidated – Consolidated - 63 - - 2014 P=324,318,890 P=239,616,938 (38,645,101) 332,780,563 (1,398,933) (8,054,842) 47,106,774 64,219,606 11,928,409 24,030,606 65,259,452 27,904,173 P=163,861,185 P=130,161,508 2,438,779 11,928,410 19,231,157 2,540,110 2013 2013 – – – P=107,400,000 =385.69 million,=385.69 (32,629,229) P=93,093,679 103,052,143 P=147,321,425 P=192,459,955 (1,730,467) 28,281,372 1,548,319 (383,456) *SGVFS013456* 3,368,370 7,155,698 1,164,863 8,793,601 36,761,700 3,368,370 5,008,460 Parent Company Parent Company 2014 2014 – – – – P=143,319,500 P=119,127,671 2014 AnnualReport P=69,559,140 P=98,695,983 107,400,000 37,840,860 19,220,922 3,282,047 3,873,651 1,548,319 7,155,698 1,651,673 3,282,047 1,688,860 (103,354) 2013 2013 – – – – – – 129 - 64 - - 65 -
Direct operating expenses on investment properties (included in ‘Litigation expense on assets Software development costs represent costs incurred to date in the development of the Parent acquired’ under ‘Miscellaneous expense’) amounted to P=12.48 million and P=7.79 million in 2014 Company’s core banking and other systems that are under the testing phase and will be rolled out and 2013 for the Group, and P=8.97 million and P=2.43 million in 2014 and 2013, respectively, for after completion of all the phases, including but not limited to further enhancement and testing. the Parent Company (see Note 22). Advance payment to suppliers consists of various down payments made to various suppliers and Gain on initial recognition of investment properties included in ‘Miscellaneous income’ of the contractors in connection with the Group’s and the Parent Company’s operation and other projects Group amounted to P=18.82 million and P=35.94 million in 2014 and 2013 for the Group, and such as branch expansions. P=18.86 million and P=34.51 million in 2014 and 2013, respectively, for the Parent Company (see Note 22). Others include stationeries, office supplies, and other miscellaneous assets.
Gain on sale of investment properties included in ‘Miscellaneous income’ amounted to The composition of and the movements in repossessed chattels - net of the Group follow: P=168.04 million and P=6.78 million in 2014 and 2013 for the Group and P=158.26 million and nil in 2014 and 2013, respectively, for the Parent Company (see Note 22). 2014 Cars Others Total Cost 12. Branch Licenses Balance at beginning of year P=24,401,695 P=34,378,584 P=58,780,279 Additions (Note 28) 25,433,000 71,180,256 96,613,256 Disposals (12,720,793) (35,899,114) (48,619,907) The movements in this account follow: Reclassifications (Note 10) (6,884,999) (2,709,136) (9,594,135) Balance at end of year 30,228,903 66,950,590 97,179,493 Consolidated Parent Company Accumulated Depreciation 2014 2013 2014 2013 Balance at beginning of year 8,803,684 6,787,258 15,590,942 Cost Depreciation (Note 10) 6,194,642 30,587,228 36,781,870 Balance at beginning of year P=1,182,177,111 P=1,176,777,111 P=562,177,111 P=556,777,111 Disposals (5,372,740) (17,119,860) (22,492,600) Additions 2,200,000 5,400,000 2,200,000 5,400,000 Reclassifications (Note 10) (2,112,701) (121,166) (2,233,867) Balance at end of year 1,184,377,111 1,182,177,111 564,377,111 562,177,111 Balance at end of year 7,512,885 20,133,460 27,646,345 Allowance for Impairment Allowance for Impairment Losses Losses (Note 14) Balance at beginning and end of Balance at beginning of year 2,825,063 6,348,235 9,173,298 year (Note 14) 232,526,929 232,526,929 232,526,929 232,526,929 Provision − 1,181,308 1,181,308 P=951,850,182 P=949,650,182 P=331,850,182 P=329,650,182 Disposals (1,588,526) − (1,588,526) Reclassifications (Note 10) (1,236,537) (6,396) (1,242,933) Balance at end of year − 7,523,147 7,523,147 13. Other Assets Net Book Value at End of the Year P=22,716,018 P=39,293,983 P=62,010,001
This account consists of: Consolidated Parent Company 2014 2013 2014 2013 Software development costs P=310,628,199 P=226,490,082 P=310,628,199 =P226,490,082 Repossessed chattels - net 62,010,001 34,016,039 61,965,898 34,006,789 Creditable withholding tax 43,917,140 − 43,917,140 − Refundable deposits 36,696,401 33,326,499 35,254,769 32,219,206 Software costs - net 30,956,509 5,175,518 28,396,170 2,621,768 Sundry debits 28,101,264 4,867,314 26,740,792 4,805,764 Advance payment to suppliers 24,923,782 3,502,929 29,119,107 3,502,929 Prepaid expenses 15,944,907 22,053,819 12,202,154 20,597,909 Documentary stamp tax on hand 4,915,267 3,250,258 2,475,988 495,716 Shortages − 1,735,916 − 1,735,916 Others - net 39,561,723 6,852,646 36,063,434 3,371,381 P=597,655,193 P=341,271,020 P=586,763,651 P=329,847,460
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2013 2013 Cars Others Total Cars Others Total Cost Cost Balance at beginning of year P=28,094,957 P=40,643,031 P=68,737,988 Balance at beginning of year P=28,094,957 P=30,963,794 P=59,058,751 Additions 25,286,250 56,026,662 81,312,912 Additions 25,286,250 56,007,178 81,293,428 Disposals (21,720,338) (45,308,857) (67,029,195) Disposals (21,720,338) (45,308,857) (67,029,195) Reclassifications (7,259,174) (16,982,252) (24,241,426) Reclassifications (7,259,174) (7,494,434) (14,753,608) Balance at end of year 24,401,695 34,378,584 58,780,279 Balance at end of year 24,401,695 34,167,681 58,569,376 Accumulated Depreciation Accumulated Depreciation Balance at beginning of year 4,532,094 6,002,821 10,534,915 Balance at beginning of year 4,532,094 6,002,821 10,534,915 Depreciation (Note 10) 10,325,593 8,905,564 19,231,157 Depreciation (Note 10) 10,325,593 8,895,329 19,220,922 Disposals (4,406,476) (7,835,663) (12,242,139) Disposals (4,406,476) (7,835,663) (12,242,139) Reclassifications (1,647,527) (285,464) (1,932,991) Reclassifications (1,647,527) (285,464) (1,932,991) Balance at end of year 8,803,684 6,787,258 15,590,942 Balance at end of year 8,803,684 6,777,023 15,580,707 Allowance for Impairment Losses Allowance for Impairment Losses (Note 14) (Note 14) Balance at beginning of year 825,063 14,330,296 15,155,359 Balance at beginning of year 825,063 4,651,059 5,476,122 Provision 2,000,000 1,500,000 3,500,000 Provision 2,000,000 1,500,000 3,500,000 Reclassifications − (9,482,061) (9,482,061) Reclassifications – 5,758 5,758 Balance at end of year 2,825,063 6,348,235 9,173,298 Balance at end of year 2,825,063 6,156,817 8,981,880 Net Book Value at End of the Year P=12,772,948 P=21,243,091 P=34,016,039 Net Book Value at End of the Year P=12,772,948 P=21,233,841 P=34,006,789
The composition of and the movements in repossessed chattels - net of the Parent Company Gain (loss) on initial recognition of repossessed chattels included in ‘Miscellaneous income’ follow: amounting to P=15.57 million in 2014 and in ‘Miscellaneous expenses’ amounting to P=25.70 million in 2013, for the Group (see Note 22), and =15.06P million, for the Parent Company. 2014 Cars Others Total Gain on sale of repossessed chattels included in ‘Miscellaneous income’ amounted to Cost P=17.95 million and =6.38P million in 2014 and 2013, respectively, for the Group and Parent Balance at beginning of year P=24,401,695 P=34,167,681 P=58,569,376 (see Note 22). Additions (Note 28) 25,433,000 71,125,233 96,558,233 Disposals (12,720,793) (35,899,114) (48,619,907) Reclassifications (Note 10) (6,884,999) (2,709,136) (9,594,135) Movements in software costs - net follow: Balance at end of year 30,228,903 66,684,664 96,913,567 Accumulated Depreciation Consolidated Parent Company Balance at beginning of year 8,803,684 6,777,023 15,580,707 2014 2013 2014 2013 Depreciation (Note 10) 6,194,642 30,567,058 36,761,700 Cost Disposals (5,372,740) (17,119,860) (22,492,600) Balance at beginning of year P=77,946,514 P=74,785,967 P=74,541,514 P=74,785,967 Reclassifications (Note 10) (2,112,701) (121,166) (2,233,867) Additions 31,401,638 3,405,000 30,012,202 – Balance at end of year 7,512,885 20,103,055 27,615,940 Reclassification – (244,453) – (244,453) Allowance for Impairment Losses 109,348,152 77,946,514 104,553,716 74,541,514 (Note 14) Accumulated Amortization Balance at beginning of year 2,825,063 6,156,817 8,981,880 Balance at beginning of year 72,770,996 70,475,339 71,919,746 70,475,339 Provision − 1,181,308 1,181,308 Amortization (Note 10) 6,391,307 2,540,110 5,008,460 1,688,860 Disposal (1,588,526) − (1,588,526) Reclassification/others (770,660) (244,453) (770,660) (244,453) Reclassifications (Note 10) (1,236,537) (6,396) (1,242,933) Balance at end of year 78,391,643 72,770,996 76,157,546 71,919,746 Balance at end of year − 7,331,729 7,331,729 Net Book Value at the End of the Net Book Value at End of the Year P=22,716,018 P=39,249,880 P=61,965,898 Year P=30,956,509 P= 5,175,518 P=28,396,170 P=2,621,768
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14. Allowance for Credit and Impairment Losses Parent Company 2014 Domestic Movements in the allowance for credit and impairment losses follow: Bills Commercial Consumption Real Estate Purchased Others Total Consolidated Parent Company Balance at beginning of year P=183,866 P=172,020 P=67,893 P=2,795 P=33,306 P=459,880 2014 2013 2014 2013 Provision for the year 148,641 95,594 10,304 − 138,014 392,553 Reclassifications/reversals/ Balance at beginning of year others (31,313) (20,476) (34,128) − 12,831 (73,086) Loans and receivables P=518,051,487 P=520,580,484 P=459,879,147 =520,580,484P Accounts charged-off − (21,307) − − (124,043) (145,350) Investment properties 65,259,452 1,651,673 1,548,319 1,651,673 Balance at end of year P=301,194 P=225,831 P=44,069 P=2,795 P=60,108 P=633,997 Branch licenses 232,526,929 232,526,929 232,526,929 232,526,929 Individual impairment P=194,806 P= – P= – P= – P= – P=194,806 Repossessed chattels 9,173,298 5,476,122 8,981,880 5,476,122 Collective impairment 106,388 225,831 44,069 2,795 60,108 439,191 Other assets 144,018,316 143,630,166 − − P=301,194 P=225,831 P=44,069 P=2,795 P=60,108 P=633,997 969,029,482 903,865,374 702,936,275 760,235,208 Gross amount of loans and Provision for the year 426,605,876 171,711,627 393,734,491 109,164,080 receivables individually Disposals (1,971,982) (3,770,731) (1,971,982) (3,741,870) determined to be impaired P=330,563 P= − P= − P= − P= − P=330,563 Reversals/ others (83,607,410) (2,815,597) (74,327,757) − Accounts charged-off (145,330,242) (162,721,143) (145,350,358) (162,721,143) Consolidated 2013 195,696,242 2,404,156 172,084,394 (57,298,933) Domestic Balance at end of year Bills Loans and receivables Commercial Consumption Real Estate Purchased Others Total (Note 8) 721,230,744 =518,051,487P 633,997,148 459,879,147 Balance at beginning of year P=361,786 P=98,798 P=36,922 P=2,795 P=20,280 P=520,581 Investment properties Provision for the year 115,764 30,552 453 – 18,617 165,386 Writedown of assets sold/ (Note 11) 59,426,588 65,259,452 1,164,863 1,548,319 foreclosed (114,691) (31,912) – – (7,412) (154,015) Branch licenses (Note 12) 232,526,929 232,526,929 232,526,929 232,526,929 Accounts charged-off (125,345) 75,757 30,518 – 5,170 (13,900) Repossessed chattels Balance at end of year P=237,514 P=173,195 P=67,893 P=2,795 P=36,655 P=518,052 (Note 13) 7,523,147 9,173,298 7,331,729 8,981,880 Individual impairment P=162,445 P= – P= – P= – P= – P=162,445 Other assets (Note 13) 144,018,316 144,018,316 − – Collective impairment 75,069 173,195 67,893 2,795 36,655 355,607 P=1,164,725,724 P=969,029,482 P=875,020,669 P=702,936,275 P=237,514 P=173,195 P=67,893 P=2,795 P=36,655 P=518,052 Gross amount of loans and Other assets include allowance for probable losses maintained by LSB. receivables individually determined to be impaired P=857,533 P=84,204 P=12,736 P= – P=22,821 P=977,294 A reconciliation of the allowance for credit losses by class of loans and receivables follows (in thousands): Parent Company 2013 Domestic Consolidated Bills 2014 Commercial Consumption Real Estate Purchased Others Total Domestic Balance at beginning of year P=361,786 P=98,798 P=36,922 P=2,795 P=20,280 P=520,581 Bills Provision for the year 57,935 29,376 453 – 17,901 105,665 Commercial Consumption Real Estate Purchased Others Total – Balance at beginning of Reclassifications/reversals/others (110,510) (31,912) – (10,045) (152,467) year P=237,514 P=173,195 P=67,893 P=2,795 P=36,654 P=518,051 Accounts charged-off (125,345) 75,757 30,518 – 5,170 (13,900) Provision for the year 164,144 106,439 11,937 − 142,905 425,425 Balance at end of year P=183,866 P=172,019 P=67,893 P=2,795 P=33,306 P=459,879 Reclassifications/reversals/ Individual impairment P=108,111 P= – P= – P= – P= – P=108,111 others (31,313) (26,027) (33,540) − 13,965 (76,915) Collective impairment 75,755 172,019 67,893 2,795 33,306 351,768 Accounts charged-off 4,474 (21,307) 1,969 − (130,466) (145,330) P=183,866 P=172,019 P=67,893 P=2,795 P=33,306 P=459,879 Balance at end of year P=374,819 P=232,300 P=48,259 P=2,795 P=63,058 P=721,231 Gross amount of loans and Individual impairment P=232,135 P=58,873 P=346 P= − P=21,308 P=312,662 receivables individually Collective impairment 142,684 173,427 47,913 2,795 41,750 408,569 determined to be impaired P=504,427 P= – P= – P= – P= – P=504,427 P=374,819 P=232,300 P=48,259 P=2,795 P=63,058 P=721,231 Gross amount of loans and receivables individually determined to be impaired P=330,708 P=124 P= 3 P= – P= 2 4 P=330,589
134 RobinsonsBank 2014 Annual Report 135 *SGVFS013456* *SGVFS013456* - 70 - - 71 -
15. Deposit Liabilities 16. Redeemable Preferred Shares
Of the total deposit liabilities of the Group as of December 31, 2014 and 2013, 63.17% and In 2013, the Parent Company acquired 29,000 redeemable preferred shares at =1,000P par value 62.57%, respectively, are subject to periodic interest repricing. Remaining deposit liabilities bear from LSB (See Note 7). The details of LSB’s redeemable preferred shares as of December 31, annual fixed interest rates ranging from nil to 0.75% in both 2014 and 2013, respectively. 2014 and 2013 follow:
In 2011, under existing BSP regulations, non - FCDU deposit liabilities of the Group are subject to Shares Amount liquidity reserves equivalent to 2.0% and statutory reserves equivalent to 6.0%. To support the Preferred stock - P=1,000 par value implementation of the provisions of subsections X343.3 and X601.3 of Manual of Regulations for Authorized 50,000 P=50,000,000 Banks (MORB) applicable during 2011, the cash-in-vault (CIV) component of available reserves Issued and outstanding shall be based on the actual CIV balance outstanding one (1) banking day lag, for purposes of Balances at beginning and end of year 30,700 P=30,700,000 computing the reserve position of the current day. In March 2012, BSP issued Circular 753 effective April 6, 2012 unifying the liquidity and statutory reserves requirements to 6.0% with The preferred stock has the following features: cash in vault no longer eligible as reserve. a. The minimum subscription is 100 shares and payable in cash; In Resolution No. 703 dated May 8, 2014, the Monetary Board (MB) approved the 1-percentage- b. The shares shall earn monthly interest at a rate to be fixed by the BOD, but such interest shall point increase in the reserve requirements of banks and non-bank financial institutions with quasi- not be less than the prevailing market interest rates and said shares shall not be treated as time banking functions. Effective on week starting May 30, 2014, non-foreign currency deposit unit deposit, deposit substitute or as other form of borrowings; (FCDU) deposit liabilities among thrift banks are subject to required reserves equivalent to 8.00% c. The interest shall be paid in the form of dividends cumulatively, which may be declared from the previous 6.00%. The required reserves shall be kept in the form of deposits maintained annually or as often as the BOD may determine; in the Demand Deposit Accounts (DDA) with the BSP and any government securities which are d. The shares shall have preference in the distribution of dividends and in the distribution of previously used as compliance until they mature. assets in case of liquidation or dissolution, provided, however that no dividend shall be declared or paid on redeemable shares in the absence of sufficient undivided profits, free As mandated by the Circular, only demand deposit accounts maintained by banks with the BSP surplus and approval of the BSP; are eligible for compliance with reserve requirements, thereby excluding government securities e. The shares are non-voting on matters provided for in the last paragraph of Section 6 of the and cash in vault as eligible reserves. Further, deposits maintained with the BSP in compliance Corporation Code. with the reserve requirement shall no longer be paid interest. f. Pre-emptive rights are not available on preferred shares nor shall they be subject to one and the shares shall be held for five (5) years with a right of alienation or encumbrance of the same The Group’s liquidity and statutory reserves as reported to the BSP follow: to any third person within the period of five years from the original date of subscription, provided, however, that on the 5th year the holder shall be obliged to surrender the same to the Consolidated Parent Company corporation and upon prior approval of the BSP and in compliance with the provisions of the 2014 2013 2014 2013 MORB and the BSP's circulars regarding this matter, the corporation shall be obliged to take Due from BSP P=9,494,853,206 P=6,724,995,107 P=8,805,204,359 P=5,574,995,577 up the subscription at the price when the preferred shares of stock were originally subscribed. Provided that shares redeemed are replaced with at least an equivalent amount of newly paid- As of December 31, 2014 and 2013, the Group is in compliance with the regulations. in shares so that the total paid-in capital stock is maintained at the same level immediately prior to redemption and provided further, that the corporation is not insolvent or if such The details of interest expense on deposit liabilities follow: redemption will not cause insolvency, impairment of capital or inability of the corporation to meet its debts as they mature; and Consolidated Parent Company g. As of December 31, 2013, LSB has not yet created a sinking fund pending request from BSP 2014 2013 2014 2013 to redeem and retire the preferred shares. The fund that will be used to redeem the preferred Savings P=271,316,988 P=306,021,071 P=247,881,651 P=283,945,832 shares will be taken from the equity infused by the Parent Company, of which a large part is Time 240,855,108 247,514,827 220,310,491 210,015,563 Demand 2,393,628 4,572,333 2,393,628 4,572,333 now lodged in LSB’s books as ‘Deposit for stock subscription’ pending approval from P=514,565,724 P=558,108,231 P=470,585,770 P=498,533,728 regulators of the increase in LSB’s authorized capital stock. The shares may again be disposed of by LSB for a price fixed by the BOD. Based on the BOD resolution on March 6, 2013, the entire redeemable preferred shares of LSB will be retired after its redemption subject to BSP’s approval. As of December 31, 2014, the entire redeemable preferred shares of LSB is still subject to BSP’s approval.
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17. Accrued Expenses and Other Liabilities 18. Maturity Analysis of Assets and Liabilities
This account consists of: The following table shows an analysis of assets and liabilities analyzed according to whether they are expected to be recovered or settled within one year and beyond one year from statements of Consolidated Parent Company financial position date: 2014 2013 2014 2013 Bills purchased - contra P=841,772,714 P=717,356,029 P=841,772,714 P=717,356,029 Consolidated 2014 2013 Accrued expenses 378,270,338 401,967,533 351,647,578 371,123,140 Due Within Due Beyond Due Within Due Beyond Accounts payable 373,900,087 188,975,911 363,097,185 181,038,276 One Year One Year Total One Year One Year Total Accrued interest payable 80,702,618 54,609,652 80,483,009 54,335,164 Financial Assets Cash and other cash items P=1,576,260,066 P=− P=1,576,260,066 P=1,143,258,839 P= − P=1,143,258,839 Withholding taxes and other Due from BSP 9,494,853,206 − 9,494,853,206 11,437,995,107 – 11,437,995,107 taxes payable 79,719,557 34,165,455 79,019,420 33,408,273 Due from other banks 1,641,654,746 − 1,641,654,746 2,135,050,452 – 2,135,050,452 Dormant manager’s checks 57,481,588 51,076,102 57,481,588 51,076,102 Interbank loans receivable/ SPURA 500,000,000 98,000,000 598,000,000 3,000,000,000 99,000,000 3,099,000,000 Retirement liability (Note 20) 53,746,367 36,221,179 51,947,277 35,728,955 Financial assets at FVPL 1,305,791,077 − 1,305,791,077 1,094,982,315 – 1,094,982,315 Advances from LSB – – 19,613,504 7,301,429 AFS investments 105,122,915 7,612,284,474 7,717,407,389 229,518,278 5,604,640,914 5,834,159,192 Others 9,638,891 17,878,360 8,831,150 13,604,312 HTM investment − 1,768,603,469 1,768,603,469 – 75,000,000 75,000,000 Loans and receivables - gross 6,403,600,260 16,909,612,977 23,313,213,237 6,156,737,612 13,172,142,031 19,328,879,643 P=1,875,232,160 P=1,502,250,221 P=1,853,893,425 P=1,464,971,680 Other assets 35,254,769 1,441,632 36,696,401 32,219,206 1,107,293 33,326,499 21,062,537,039 26,389,942,552 47,452,479,591 25,229,761,809 18,951,890,238 44,181,652,047 Nonfinancial Assets Bills purchased contra consists of payables from DOSRI accounts of the Parent Company which is Property and equipment - net − 490,790,131 490,790,131 – 472,102,324 472,102,324 the contra account of bills purchased under loans and (see Note 8). Investment properties - net − 202,994,936 202,994,936 – 239,616,938 239,616,938 Branch licenses - net − 951,850,182 951,850,182 – 949,650,182 949,650,182 Goodwill − 244,327,006 244,327,006 – 244,327,006 244,327,006 Accounts payable consists of payables to service providers, advance payments from customers and Other assets 150,518,615 410,440,177 560,958,792 161,028,965 146,915,556 307,944,521 unreleased checks. P=21,213,055,654 P=28,690,344,984 49,903,400,638 P=25,390,790,774 P=21,004,502,244 46,395,293,018 Less: Unearned interest and discounts 9,364,486 546,863 Accrued expenses consist of accruals and provisions for general expenses, bonuses and insurance Allowance for credit and impairment losses - on deposits, fees and advertisements. loans and receivables 721,230,744 518,051,487 P=49,172,805,408 P=45,876,694,668 Financial Liabilities In January 2013 and February 2014, LSB paid the retirement benefits to retrenched employees Deposit liabilities P=39,736,405,004 P=1,474,269,417 P=41,210,674,421 P=36,398,416,848 P=2,374,735,148 P=38,773,151,996 Manager’s checks 278,420,426 − 278,420,426 237,145,631 – 237,145,631 amounting to P=41.53 million and P=3.78 million. Redeemable preferred shares − 1,700,000 1,700,000 – 1,700,000 1,700,000 Accrued expenses and other Others consist mainly of sundry credits, customer liabilities under acceptances, payables to liabilities 1,692,392,748 22,204,537 1,714,597,285 1,405,073,299 492,224 1,405,565,523 41,707,218,178 1,498,173,954 43,205,392,132 38,040,635,778 2,376,927,372 40,417,563,150 agencies servicing employee welfare such as Social Security System, Home Development Mutual Nonfinancial Liabilities Fund, Medicare and accrued separation benefits of LSB and the Parent Company. Income tax payable 984,125 − 984,125 6,346,776 – 6,346,776 Deferred tax liability − 39,896,738 39,896,738 – 68,966,845 68,966,845 Accrued expenses and other liabilities 108,687,598 51,947,277 160,634,875 60,955,743 35,728,955 96,684,698 109,671,723 91,844,015 201,515,738 67,302,519 104,695,800 171,998,319 P=41,868,837,178 P=1,590,017,969 P=43,406,907,870 P=38,107,938,297 P=2,481,623,172 P=40,589,561, 469
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Parent Company 2014 2013 The preferred stock has the following features: Due Within Due Beyond Due Within Due Beyond One Year One Year Total One Year One Year Total a. Concurrent assignment of the Parent Company’s Legal Officer as Corporate Secretary of LSB; Financial Assets Cash and other cash items P=1,501,127,113 P=− P=1,501,127,113 P= 1,109,208,879 P= – P=1,109,208,879 b. Preferred stocks are redeemable at the option of the Parent Company at any time provided that Due from BSP 8,805,204,359 − 8,805,204,359 10,287,995,577 – 10,287,995,577 the redemption price shall not be lower than the par value or higher than 110.00% of said par Due from other banks 1,509,908,716 − 1,509,908,716 2,015,697,154 – 2,015,697,154 Interbank loans receivable/ value; SPURA 500,000,000 98,000,000 598,000,000 3,000,000,000 99,000,000 3,099,000,000 c. In the event of any voluntary or involuntary liquidation, the preferred stockholders are entitled Financial assets at FVPL 1,305,791,077 − 1,305,791,077 1,094,982,315 – 1,094,982,315 AFS investments 105,122,915 7,641,284,474 7,746,407,389 229,518,278 5,633,640,914 5,863,159,192 to receive the liquidation value of the said shares equivalent to 110.00% of the par value plus HTM investment − 1,768,603,469 1,768,603,469 – 75,000,000 75,000,000 any unpaid but declared dividends thereon. If the net assets of the Parent Company shall be Loans and receivables - gross 6,404,257,054 15,934,065,258 22,338,322,312 5,332,493,882 12,895,407,964 18,227,901,846 Other assets 35,254,769 – 35,254,769 32,219,206 – 32,219,206 insufficient to pay in full the liquidation value of all the preferred stock, then such net 20,166,666,004 25,441,953,200 45,608,611,204 23,102,115,291 18,703,048,878 41,805,164,169 resources shall be distributed among such preferred stock ratably in accordance with the Nonfinancial Assets respective liquidation value of the shares they are holding. Property and equipment − 437,846,674 437,846,674 – 433,953,133 433,953,133 Investment properties – net − 93,093,679 93,093,679 – 98,695,983 98,695,983 Branch licenses - net − 331,850,182 331,850,182 – 329,650,182 329,650,182 Surplus Reserves Deferred tax asset − 128,708,199 128,708,199 – 99,543,511 99,543,511 Investment in a subsidiary − 731,000,000 731,000,000 – 731,000,000 731,000,000 In 2014 and 2013, the Parent Company’s BOD approved to appropriate reserves for self-insurance Other assets 150,518,615 400,990,267 550,700,217 297,628,254 – 297,628,254 amounting to P=3.60 million and P=21.50 million, respectively, and for trust reserves amounting to P=20,317,184,619 P=27,565,442,201 47,882,626,820 P=23,399,743,545 P=20,395,891,687 43,795,635,232 =0.65P million and nil, respectively . Less: Unearned interest and discounts 8,548,784 315,662 Allowance for credit and Capital Management impairment losses - loans and receivables 633,997,148 459,879,147 P=47,240,080,888 P=43,335,440,423 The Group considers the equity attributable to the equity holders of the Parent Company as the Financial Liabilities capital base of the Group. The primary objectives of the Group’s capital management are to Deposit liabilities P=37,948,391,358 P=1,474,269,416 P=39,422,660,774 P= 34,459,544,214 P=1,944,149,875 P=36,403,694,089 ensure that it complies with externally imposed capital requirements and that it maintains strong Manager’s checks 278,420,426 − 278,420,426 237,145,631 – 237,145,631 Accrued expenses and other credit ratings and healthy capital ratios in order to support its business and to maximize liabilities 1,672,277,535 22,204,537 1,694,482,072 1,382,230,140 – 1,382,230,140 shareholders value. 39,899,089,320 1,496,473,954 41,395,563,272 36,078,919,985 1,944,149,875 38,023,069,860 Nonfinancial Liabilities Income tax payable − − − 3,226,328 – 3,226,328 The Group manages its capital structure and makes adjustments to it in the light of changes in Accrued expenses and other economic conditions and the risk characteristics of its activities and assessment of prospective liabilities 107,464,076 51,947,277 159,411,353 47,012,585 35,728,955 82,741,540 P=40,006,553,395 P= 1,548,421,230 P=41,554,974,625 P= 36,129,158,898 P=1,979,878,830 P=38,109,037,728 business requirements or directions. In order to maintain or adjust the capital structure, the Group may adjust the amount and mode of dividend payment to shareholders, issue capital securities or undertake a share buy-back. The processes and policies guiding the determination of the 19. Equity sufficiency of capital for the Group relative to its business risks are the very same methodology that have been incorporated into the Group’s Internal Capital Adequacy Assessment Process Capital Stock (ICAAP) in compliance with the requirements of BSP Circular No. 639 for its adoption. Under The details of the Parent Company’s capital stock follow: this framework, the assessment of risks extends beyond the Pillar 1 set of credit, market and operational risks and onto other risks deemed material by the Group. The level and structure of Preferred stock A- P=10 par value capital are assessed and determined in light of the Group’s business environment, plans, Authorized - 356,316,500 performance, risks and budget; as well as regulatory edicts. BSP requires submission of an Issued - 310,641,564 P= 3,106,415,640 ICAAP document every January 31. Preferred stock B - P=10 par value Authorized - 210,000,000 The Group had complied with all externally imposed capital requirements throughout the year. Issued - 209,604,710 2,096,047,100 Preferred stock P=5,202,462,740 Regulatory Qualifying Capital Common stock - P=10 par value In 2013, the determination of the Parent Company’s compliance with regulatory requirements and Authorized and issued - 43,683,500 P= 436,835,000 ratios is based on the amount of the Parent Company’s ‘unimpaired capital’ (regulatory net worth) P=5,639,297,740 reported to the BSP, which is determined on the basis of regulatory policies. In addition, the risk- based capital ratio of a bank, expressed as a percentage of qualifying capital to risk-weighted assets, should not be less than 10.00% for both solo basis (head office and branches) and consolidated basis (parent company and subsidiaries engaged in financial allied undertakings). Qualifying capital and risk-weighted assets are computed based on BSP regulations.
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The regulatory Gross Qualifying Capital of the Parent Company consists of Tier 1 (core) and Further, existing capital instruments as of December 31, 2010 which do not meet the eligibility Tier 2 (supplementary) capital. Tier 1 capital comprises share capital, retained earnings (including criteria for capital instruments under the revised capital framework shall no longer be recognized current year profit) and non-controlling interest less required deductions such as deferred tax and as capital upon the effectivity of Basel III. Capital instruments issued under BSP Circular unsecured credit accommodations to DOSRI. Tier 2 capital includes unsecured subordinated note, Nos.709 and 716 (the circulars amending the definition of qualifying capital particularly on revaluation reserves and general loan loss provision. Certain items are deducted from the Hybrid Tier 1 and Lower Tier 2 capitals), starting January 1, 2011 and before the effectivity of regulatory Gross Qualifying Capital, such as but not limited to equity investments in BSP Circular No. 781, shall be recognized as qualifying capital until December 31, 2015. In unconsolidated subsidiary banks and other financial allied undertakings, but excluding addition to changes in minimum capital requirements, this Circular also requires various investments in debt capital instruments of unconsolidated subsidiary banks (for solo basis) and regulatory adjustments in the calculation of qualifying capital. equity investments in subsidiary nonfinancial allied undertakings. On June 27, 2014, the BSP issued Circular No. 839, REST Limit for Real Estate Exposures which Risk-weighted assets are determined by assigning defined risk weights to statement of financial provides the implementing guidelines on the prudential REST limit for universal, commercial, and position exposures and to the credit equivalent amounts of off-balance sheet exposures. Certain thrift banks on their aggregate real estate exposures. The Circular sets out a minimum REST limit items are deducted from risk-weighted assets, such as the excess of general loan loss provision of 6.0% CET1 capital ratio and 10% risk-based capital adequacy ratio, on a solo and consolidated over the amount permitted to be included in Tier 2 capital. The risk weights vary from 0.00% to basis, under a prescribed write-off rate of 25% on the Group’s real estate exposure. These limits 125.00% depending on the type of exposure, with the risk weights of off-balance sheet exposures shall be complied with at all times. being subjected further to credit conversion factors. Following is a summary of risk weights and selected exposure types: The CAR of the Group and of the Parent Company as reported to the BSP as of December 31, 2014 and 2013 follows: Risk weight Exposure/Asset type* 0% Cash on hand; claims collateralized by securities issued by the non-government, BSP; loans 2014 2013 covered by the Trade and Investment Development Corporation of the Philippines; real estate Common Equity Tier 1 Capital (P=736) P=− mortgages covered by the Home Guarantee Corporation 20% COCI, claims guaranteed by Philippine incorporated banks/quasi-banks with the highest credit Additional Tier 1 Capital 5,202 − quality; claims guaranteed by foreign incorporated banks with the highest credit quality; loans Tier 1 capital 4,466 4,858 to exporters to the extent guaranteed by Small Business Guarantee and Finance Corporation Tier 2 capital 192 – 50% Housing loans fully secured by first mortgage on residential property; Local Government Unit Total qualifying capital 4,658 4,858 (LGU) bonds which are covered by Deed of Assignment of Internal Revenue allotment of the LGU and guaranteed by the LGU Guarantee Corporation Less required deductions – – Total qualifying capital P=4,658 P=4,858 75% Direct loans of defined Small Medium Enterprise and microfinance loans portfolio; nonperforming housing loans fully secured by first mortgage Credit RWA P=23,227 P=17,563 100% All other assets (e.g., real estate assets) excluding those deducted from capital (e.g., deferred Market RWA 1,499 1,288 tax) Operational RWA 3,093 2,559 125% All NPLs (except nonperforming housing loans fully secured by first mortgage) and all nonperforming debt securities Total RWA P=27,819 P=21,410 * Not all inclusive Common Equity Tier 1 Ratio 1 (2.65%) 22.69% Additional Tier 1 Ratio 18.70% – With respect to off-balance sheet exposures, the exposure amount is multiplied by a credit Tier 1 capital ratio 16.05% 22.69% conversion factor (CCF), ranging from 0.00% to 100.00%, to arrive at the credit equivalent Tier 2 capital ratio 0.69% – amount, before the risk weight factor is multiplied to arrive at the risk-weighted exposure. Direct Risk-based capital adequacy ratio 16.74% 22.69% credit substitutes (e.g., guarantees) have a CCF of 100.00%, while items not involving credit risk has a CCF of 0.00%. As of December 31, 2014 and 2013, the Group was in compliance with the required capital adequacy ratio (CAR). On January 15, 2013, the BSP issued Circular No. 781, Basel III Implementing Guidelines on Minimum Capital Requirements, which provides the implementing guidelines on the revised risk- In 2014, common equity tier 1 ratio of the Bank is (2.65%). In order to meet the requirement of based capital adequacy framework particularly on the minimum capital and disclosure BSP issued Circular No. 781, the Bank plans to covert preferred to common shares which will requirements for universal banks and commercial banks, as well as their subsidiary banks and give rise to additional tier 1 ratio for the Bank of 18.70%. The request of the Bank for the quasi-banks, in accordance with the Basel III standards. The circular is effective on conversion of its preferred to common shares awaits approval for the BSP. The request pertains to January 1, 2014. "Endorsement/Certificate of Authority to Convert 157,883,715 Series "A" Preferred Shares and 209,604,710 Series "B" Preferred Shares into Common Shares and To File an Amendment to the The Circular sets out a minimum Common Equity Tier 1 (CET1) ratio of 6.0% and Tier 1 capital Bank's Articles of Incorporation to Reflect the Conversion" under the Bank's Letters to BSP dated ratio of 7.5%. It also introduces a capital conservation buffer of 2.5% comprised of CET1 capital. March 21, 2013, May 17, 2013, November 20, 2013 and December 9, 2013, which will result in The BSP’s existing requirement for Total CAR remains unchanged at 10% and these ratios shall the increase of the Bank's Common Shares from 43,683,500 Common Shares to 411,171,925 be maintained at all times. Common shares. The Group had complied with all externally imposed capital requirements other than as mentioned above.
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This will also result in the reduction of the Bank's Preferred "A" Shares from 356,316,500 shares The amounts of ‘Retirement expense’ included in ‘Compensation and fringe benefits’ in the to 198,432,785 shares, while the Preferred "B" Shares will go down from 210,000,000 shares to statement of income follow: 395,290 shares. Consolidated Parent Company 2014 2013 2014 2013 Similarly, the bank has a pending request with the BSP for "Certificate of Authority to classify Current service cost P=15,056,169 P=11,480,639 P=14,012,186 P=10,988,415 and register with the Securities and Exchange Commission (SEC) the Series "A" Preferred Shares Net interest cost 1,933,519 3,074,861 1,905,758 3,074,861 into non-cumulative, perpetual and convertible to common shares while the Series "B" Preferred P=16,989,688 P=14,555,500 P=15,917,944 P=14,063,276 Shares into non-cumulative, perpetual, non-redeemable and convertible to common shares" (presumably the remaining shares after the aforementioned conversion) under the Bank's Letter Changes in net defined benefit obligation (DBO) of funded funds follow: dated December 9, 2013 in order for such preferred shares to qualify as Additional Tier 1 Capital under BSP Circular No. 781, series of 2013. Present Value Fair Value of Net Retirement Consolidated of DBO Plan Assets Liability Once approved, CET1 Ratio will be 10.565 upon conversion of the aforecited number of Preferred "A" and "B" shares to Common Shares. January 1, 2014 P=87,975,678 P=51,754,499 P=36,221,179 Net Benefit Cost in Consolidated The Group has taken into consideration the impact of the foregoing requirements to ensure that the Statement of Income approprx`iate level and quality of capital are maintained on an ongoing basis. Current service cost 15,056,169 − 15,056,169 Net interest cost 4,694,068 2,760,549 1,933,519 Sub-total 19,750,237 2,760,549 16,989,688 20. Retirement Plan Remeasurement in OCI Return on plan assets (excluding The Parent Company has a noncontributory defined benefit retirement covering substantially all amount included in net its officers and regular employees. Under this retirement plan, all covered officers and employees interest) – (15,256,999) 15,256,999 are entitled to cash benefits after satisfying certain age and service requirements. In 2008, the Actuarial changes arising from Parent Company established a plan asset for its defined benefit retirement plan. experience adjustments (3,838,278) − (3,838,278) LSB has an unfunded noncontributory retirement plan covering all its regular permanent Actuarial changes arising from employees. Under the retirement plan, all employees are entitled to cash benefits after satisfying changes in certain age and service requirements. financial/demographic assumptions 3,272,645 − 3,272,645 The latest actuarial valuation of the retirement plan of the Group was made as of Sub-total (565,633) (15,256,999) 14,691,366 December 31, 2014. The principal actuarial assumptions used in determining retirement liability Contributions − 14,155,866 (14,155,866) of the Group as of January 1 follow: December 31, 2014 P=107,160,282 P=53,413,915 P=53,746,367 Parent Company LSB 2014 2013 2014 2013 Average remaining working life in years 11 11 12 13 Discount rate 4.58% 5.82% 4.67% − Salary rate increase 5.50% 5.50% 5.50% 5.50%
The amounts recognized in the statements of financial position follow:
Consolidated Parent Company 2014 2013 2014 2013 Present value of defined benefit obligation P=107,160,282 P=87,975,678 P=105,361,192 P=87,483,454 Fair value of plan assets (53,413,915) (51,754,499) (53,413,915) (51,754,499) Retirement liability P=53,746,367 P=36,221,179 P=51,947,277 P=35,728,955
144 RobinsonsBank 2014 Annual Report 145
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Present Value Fair Value of Net Retirement Present Value Fair Value of Net Retirement Consolidated of DBO Plan Assets Liability Parent Company of DBO Plan Assets Liability January 1, 2013 P=65,542,509 P=12,709,843 P=52,832,666 January 1, 2013 P=65,542,509 P=12,709,843 P=52,832,666 Net Benefit Cost in Consolidated Net Benefit Cost in Consolidated Statement of Income Statement of Income Current service cost 11,480,639 – 11,480,639 Current service cost 10,988,415 – 10,988,415 Net interest cost 3,814,574 739,713 3,074,861 Net interest 3,814,574 739,713 3,074,861 Sub-total 15,295,213 739,713 14,555,500 Sub-total 14,802,989 739,713 14,063,276 Benefits paid (2,435,491) (2,435,491) – Benefits paid (2,435,491) (2,435,491) – Remeasurement in OCI Remeasurement in OCI Return on plan assets (excluding Return on plan assets (excluding amount included in net amount included in net interest) – 2,735,322 (2,735,322) interest) – 2,735,322 (2,735,322) Actuarial changes arising from Actuarial changes arising from experience adjustments 5,129,438 – 5,129,438 experience adjustments 5,129,438 – 5,129,438 Actuarial changes arising from Actuarial changes arising from changes in changes in financial/demographic financial/demographic assumptions 4,444,009 – 4,444,009 assumptions 4,444,009 – 4,444,009 Sub-total 9,573,447 2,735,322 6,838,125 Sub-total 9,573,447 2,735,322 6,838,125 Contributions – 38,005,112 (38,005,112) Contributions – 38,005,112 (38,005,112) December 31, 2013 P=87,975,678 P=51,754,499 P=36,221,179 December 31, 2013 P=87,483,454 P=51,754,499 P=35,728,955
Present Value Fair Value of Net Retirement The major categories of plan assets as a percentage of the fair value of total plan assets follow: Parent Company of DBO Plan Assets Liability January 1, 2014 P=87,483,454 P=51,754,499 P=35,728,955 2014 2013 Net Benefit Cost Deposits in banks 62.43% 63.60% Statement of Income Debt securities 37.21% 35.98% Current service cost 14,012,186 − 14,012,186 Other assets 0.36% 0.42% Net interest cost 4,666,307 2,760,549 1,905,758 Sub-total 18,678,493 2,760,549 15,917,944 100.00% 100.00% Remeasurement in OCI Return on plan assets (excluding Movements in “Remeasurement losses on retirement plan” in OCI follow: amount included in net interest) – (15,256,999) 15,256,999 Consolidated Actuarial changes arising from 2014 2013 experience adjustments (3,795,941) − (3,795,941) Balance at beginning of year P=22,966,553 P=18,179,866 Actuarial changes arising from changes in Remeasurement losses on retirement plan in OCI financial assumptions 2,995,186 − 2,995,186 Return on plan assets (excluding amount Sub-total (800,755) (15,256,999) 14,456,244 included in net interest) 15,256,999 (2,735,322) Contributions − 14,155,866 (14,155,866) Due to experience adjustments (3,838,278) 5,129,438 December 31, 2014 P=105,361,192 P=53,413,915 P=51,947,277 Due to changes in financial/demographic assumptions 3,272,645 4,444,009 Remeasurement losses during the year 14,691,366 6,838,125 Tax effect (4,336,873) (2,051,438) Remeasurement losses during the year, net of tax 10,354,493 4,786,687 Balance at end of year, net of tax P=33,321,046 P=22,966,553
146 RobinsonsBank 2014 Annual Report 147
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Parent Company 21. Leases 2014 2013 Balance at beginning of year P=22,966,553 P=18,179,866 Operating Lease - Group as Lessee Remeasurement losses on retirement plan in OCI The Parent Company leases its head office and branch premises for periods ranging from one (1) Return on plan assets (excluding amount to ten (10) years, renewable upon mutual agreement of both parties. LSB also leases the premises included in net interest) 15,256,999 (2,735,322) occupied by its Head Offices and most of its branches for periods ranging from five (5) to fifteen Due to experience adjustments (3,795,941) 5,129,438 (15) years, renewable upon mutual agreement of both parties. Various lease contracts of the Due to changes in financial/demographic Group include escalation clauses, most of which bear annual rent increase ranging from 5.00% to assumptions 2,995,186 4,444,009 10.00%. Remeasurement losses during the year 14,456,244 6,838,125 Tax effect (4,336,873) (2,051,438) Lease rentals charged to operations amounting to P=187.90 million and P=125.59 million in 2014 Remeasurement losses during the year, net of tax 10,119,371 4,786,687 and 2013, respectively, are included under ‘Occupancy and equipment-related expenses’ in the Balance at end of year, net of tax P=33,085,924 P=22,966,553 statements of income for the Group. Future minimum rentals payable on non-cancellable leases follow: The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the DBO as of December 31, 2014, assuming if all other Consolidated Parent Company assumptions were held constant: 2014 2013 2014 2013 Within one year P=155,319,477 P=111,685,416 P=147,709,404 P=106,005,561 Consolidated Parent Company Beyond one year but not more +/- basis points (bps) Impact to DBO Impact to DBO than five years 406,835,950 285,684,755 380,077,876 266,193,771 Discount rate +100 bps P=96,636,159 P=95,120,893 More than five years 45,394,754 32,009,632 20,552,856 16,711,447 -100 bps 119,794,310 117,641,353 P=607,550,181 P=429,379,803 P=548,340,136 P=388,910,779 Salary increase rate +100 bps 119,056,074 116,921,070 -100 bps 97,025,982 95,503,356 Turnover rate +100 bps 104,705,388 103,015,355 Finance Lease - LSB as Lessor -100 bps 109,997,132 108,071,213 LSB has entered to a lease on its investment property portfolio. The lease contract provides an option to purchase the properties the end of the lease term. The lease has a lease term of ten (10) The sensitivity analysis below has been determined based on reasonably possible changes of years, from April 30, 2009 to March 31, 2019. The building being leased out has an estimated each significant assumption on the DBO as of December 31, 2014, assuming if all other useful life of ten (10) years. Lease receivables amounts to P=7.20 million and P=7.50 million as of assumptions were held constant: December 31, 2014 and 2013, respectively (see Note 8).
Parent Company +/- basis points (bps) Impact to DBO 22. Income and Expenses Discount rate +100 bps P=78,684,208 -100 bps 98,021,314 Net service fees and commission income consists of: Salary increase rate +100 bps 97,447,296 -100 bps 78,977,016 Consolidated Parent Company 2014 2013 2014 2013 Shown below is the maturity analysis of the undiscounted benefit payments: Service fees and commission income: Deposit-related P=71,272,511 P=73,485,328 P=66,150,891 P=67,253,376 Consolidated Parent Company Credit-related 51,259,535 105,833,569 38,203,155 90,051,446 2014 2013 2014 2013 Commissions 12,709,607 7,881,727 12,386,852 7,670,609 Less than 1 year P=22,752,122 P=7,895,285 P=22,752,122 P=7,895,285 Utility and store payment charges 12,049,435 202,592 12,049,435 202,592 More than 1 year to 5 years 22,050,301 27,048,333 20,956,218 26,697,288 Trust and other fiduciary 6,961,391 13,050,998 6,961,391 13,050,998 More than 5 years to 10 years 72,245,828 50,029,756 71,410,179 49,131,399 154,252,479 200,454,214 135,751,724 178,229,021 More than 10 years to 15 years 101,676,700 101,899,689 96,831,552 97,767,079 Service charges and commission expense: More than 15 years to 20 years 192,398,476 184,845,108 177,451,354 172,185,365 More than 20 years 545,431,966 557,686,382 489,864,341 504,567,407 Banking fees 31,594,058 31,022,190 31,316,473 31,022,190 Brokerage and commissions 7,523,499 5,454,995 7,523,499 4,368,234 Other banking fees 5,423,175 4,656,510 5,423,175 4,656,510 44,540,732 41,133,695 44,263,147 40,046,934 P=109,711,747 P=159,320,519 P=91,488,577 P=138,182,087
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Miscellaneous income consists of: Current tax regulations provide that the RCIT rate shall be 30.00%. Interest allowed as deductible expense shall be 33.00% of interest income subjected to final tax. Consolidated Parent Company 2014 2013 2014 2013 The optional standard deduction (OSD) equivalent to 40.00% of gross income may be claimed as Gain on sale of investment properties an alternative deduction in computing for the RCIT. In 2013 and 2012, the Parent Company (Note 11) P=168,040,508 P=6,783,867 P=158,262,969 P= – Penalties 24,092,951 67,375,148 19,277,283 59,934,254 elected to claim itemized expense deductions instead of the OSD in the RCIT computation. Gain on initial recognition of investment properties (Note 11) 18,823,325 35,943,862 18,856,411 34,506,401 The regulations also provide for MCIT of 2.00% of modified gross income and allow a NOLCO Gain on sale of repossessed chattels benefit. Both the excess of MCIT over the RCIT and NOLCO may be applied against the regular (Note 13) 17,948,892 6,375,484 17,948,892 6,375,484 tax liability and taxable income, respectively, over three (3) years from the year of inception. Gain on initial recognition of repossessed chattels (Note 13) 15,565,973 – 15,059,100 – Current tax regulations also provide for the ceiling on the amount of entertainment and Recovery on charged-off assets 3,162,000 4,666,113 2,620,604 4,297,127 representation (EAR) expense that can be claimed as a deduction against taxable income. Under Gain on sale of property and the regulation, EAR expense allowed as a deductible expense for a service company like the equipment (Note 10) 408,287 128,670 165,841 274,726 Parent Company is limited to the actual EAR paid or incurred but not to exceed 1.00% of net Others 12,162,826 16,241,304 9,106,863 1,353,278 revenue. EAR expenses of the Parent Company amounted to =41.22P million and P=31.66 million P=260,204,762 P=137,514,448 P=241,297,963 P=106,741,270 in 2014 and 2013, respectively.
Other income includes share on notarial and insurance fees, rental income from safety deposit box, FCDU offshore income (income from non-residents) is tax-exempt while gross onshore income night depository and dividend income. (income from residents) is generally subject to 10.00% income tax. In addition, interest income on deposit placement with other FCDUs and offshore banking units (OBUs) is taxed at 7.50%. Miscellaneous expenses consist of: Current tax regulations provide that the income derived by the FCDU from foreign currency- denominated transactions with non-residents, OBUs, local commercial banks including branches Consolidated Parent Company of foreign banks is tax-exempt while interest income on foreign currency-denominated loans from 2014 2013 2014 2013 residents other than OBUs or other depository banks under the expanded system is subject to Transportation and travel P=31,369,908 P=24,589,297 P=25,910,789 P=19,370,239 10.00% income tax. FCDUs’ all other income is subject to 30.00% income tax. Stationery and supplies 31,326,518 24,319,793 28,456,164 21,160,435 Advertising 18,767,940 16,423,604 17,718,277 9,766,729 Provision for income tax consists of: Litigation expense on assets acquired (Note 11) 12,477,614 7,793,037 8,966,797 2,425,616 Consolidated Parent Company Membership dues 6,798,897 6,006,973 6,717,704 5,924,173 2014 2013 2014 2013 Appraisal fees 3,322,040 4,030,626 938,006 4,030,626 Current: Loss on initial recognition of Final P=51,031,372 P=83,894,074 P=46,824,827 P=81,079,846 repossessed chattels (Note 13) − 25,703,594 − 25,703,594 RCIT 56,366,221 96,788,893 53,688,402 96,788,893 Others 31,108,125 64,503,146 26,538,332 62,157,390 MCIT – 4,154,340 – 353,337 P=135,171,042 P=173,370,070 P=115,246,069 P=150,538,802 Special rate – 1,678,180 – 1,678,180 107,397,593 186,515,487 100,513,229 179,900,256 Other expenses include notarial fee, registration expense, periodicals and magazines, donations, Deferred (24,622,201) (34,591,171) (24,827,815) (17,242,616) freight charges and loss on skimming. P=82,775,392 P=151,924,316 P=75,685,414 P=162,657,640
23. Income and Other Taxes
Under Philippine tax laws, the Parent Company is subject to percentage and other taxes (presented as ‘Taxes and licenses’ in the statement of income) as well as income taxes. Percentage and other taxes paid consist principally of gross receipts tax (GRT) and documentary stamp taxes.
Income taxes consist of final withholding taxes on gross interest income from government securities, deposits and other deposit substitutes, tax on the FCDU income and RCIT, as discussed below, on net taxable income. These income taxes, as well as the deferred tax benefit, are presented in the statement of income as ‘Provision for income tax’.
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Net deferred tax assets (liabilities) of the Group and the Parent Company consist of the following: Details of NOLCO follow: Consolidated Consolidated Parent Company Inception 2014 2013 2014 2013 Year Amount Used/Expired Balance Expiry Year Deferred tax assets on: Allowance for credit and impairment 2014 P=30,950,156 P=− P=30,950,156 2017 losses P=87,853,956 P=23,808,015 P=68,125,456 P=4,190,547 2013 23,109,442 − 23,109,442 2016 Unfunded profit sharing 46,609,484 53,951,603 46,609,484 53,951,603 2012 148,733 − 148,733 2015 Retirement liability 15,584,183 19,921,338 15,584,183 19,921,338 2011 6,697,547 6,697,547 − 2014 Accumulated depreciation on investment properties and repossessed chattels 10,922,862 11,024,153 10,922,862 11,024,153 P=60,905,878 P=6,697,547 P=54,208,331 Accrued rent 4,693,743 – 4,693,743 – Unrealized foreign exchange loss 4,537,595 – 4,537,595 – Parent Company Unrealized loss on financial asset at Inception FVPL – 16,284,420 – 16,284,420 Unrealized loss on initial recognition of Year Amount Used/Expired Balance Expiry Year repossessed chattels – 7,535,592 – 7,535,592 2011 P=6,697,547 P=6,697,547 P=− 2014 Net unrealized loss on AFS investments – 1,138,852 – 1,138,852 Details of the excess of MCIT over RCIT follow: 170,201,823 133,663,973 150,473,323 114,046,505 Deferred tax liabilities on: Branch licenses (186,000,000) (186,000,000) – – Consolidated Unrealized gain on initial recognition of Inception Expiry investment properties (19,942,922) (14,953,209) (17,613,410) (12,825,385) Year Amount Used/Expired Balance Year Unrealized gain on initial recognition of 2014 P=2,677,819 P=– P=2,677,819 2017 repossessed chattels (4,033,848) – (4,033,848) – 2013 4,073,213 – 4,073,213 2016 Net unrealized gain on AFS investments (117,865) – (117,866) – Unrealized foreign exchange gain (3,926) (11,926) – (11,926) 2012 2,704,326 – 2,704,326 2015 Prepaid rent – (1,665,683) – (1,665,683) 2011 2,656,971 2,656,971 − 2014 (210,098,561) (202,630,818) (21,765,124) (14,502,994) P=12,112,329 P=2,656,971 P=9,455,358 (P=39,896,738) (P=68,966,845) P=128,708,199 P=99,543,511 Parent Company The Group did not set up deferred tax assets on the following temporary differences since Inception Expiry management believes that it is not highly probable that these differences will be realized in the Year Amount Used/Expired Balance Year future: 2013 P=353,337 P=– P=353,337 2016 2012 337,363 – 337,363 2015 Consolidated Parent Company P=690,700 P=– P=690,700 2014 2013 2014 2013 Allowance for credit and impairment A reconciliation of statutory income tax rate to the effective income tax rate of the Group and the losses P=871,879,205 P=974,389,481 P=647,935,817 P=659,635,012 Parent Company follows: NOLCO 54,208,331 29,955,722 − 6,697,547 Accumulated depreciation on investment Consolidated Parent Company properties and repossessed chattels 18,417,284 20,748,473 − – 2014 2013 2014 2013 9,455,358 9,434,510 690,700 690,700 Excess of MCIT over RCIT Statutory income tax rate 30.00% 30.00% 30.00% 30.00% Unearned income 9,044,108 − − − Tax effect of: Unfunded retirement liability 1,799,090 5,537,627 − − Tax paid and tax-exempt income (75.00%) (44.13%) (84.09%) (47.98%) Accrued rent 919,372 2,926,222 − − Nondeductible expenses 61.14% 34.93% 65.17% 42.95% Unrealized loss on financial assets at Unrecognized deferred tax assets 18.63% 6.78% 26.33% 7.28% FVPL − 100,050,737 − 100,050,737 MCIT 1.17% – – – P=965,722,748 P=1,143,042,772 P=648,626,517 P=767,073,996 Taxable income 0.11% – – – Application of NOLCO – (0.36%) – (0.24%) Effective income tax rate 36.04% 27.22% 37.41% 32.01%
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Parent Company 24. Related Party Transactions 2014 2013 Amount/ Outstanding Amount/ Outstanding Parties are considered to be related if one party has the ability, directly or indirectly, to control the Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature other party or exercise significant influence over the other party in making financial and operating decisions or if they are subjected to common control of common significant influence such as Board of Directors Deposit liabilities P=105,207,595 P=105,207,595 P= – P= – Various terms and with annual subsidiaries and associates of subsidiaries or other related parties. Related parties may be interest rates ranging from individuals or corporate entities. nil to 5.25% Interest expense 484,040 9,147,533 Interest expense on deposit The Parent Company has several business relationships with related parties. Transactions with liabilities such parties are made in the ordinary course of business and on substantially same terms, Key Officers including interest and collateral, as those prevailing at the time of comparable transactions with Deposit liabilities 243,384,475 243,384,475 Various terms and with annual other parties. These transactions also did not involve more than the normal risk of collectability or interest rates ranging from present other unfavorable conditions. nil to 5.50% Interest expense 1,569,756 – Interest expense on deposit The significant transactions and outstanding balances of the Parent Company and the Subsidiary liabilities with its related parties follow: Subsidiary 2014 2013 Parent Company Amount/ Outstanding Amount/ Outstanding 2014 2013 Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature Amount/ Outstanding Amount/ Outstanding Nature of Transaction Volume Balance Volume Balance Terms and Conditions/Nature Parent Accounts payable P= – P=19,613,504 P= – P=–Unsecured, noninterest-bearing, Subsidiary payable on demand Advances from a subsidiary P=7,301,429 P= – P=13,758,895 P= 7,301,429 Transportation expenses and Accounts receivable 7,301,429 1,030,987 7,301,429Non interest bearing accounts down payment for payable software cost Key employees Receivables from customers 56,935 104,591 54,403 2,394,223 Loans of directors, officers and Affiliates stockholders Receivable from customers - 140,000,000 – 170,000,000 140,000,000 Secured loans with annual Interest income 270,951 189,327 − Interest earned from loans of commercial loans interest ranging from 3.50% directors, officers and to 6.375% stockholders Receivable from customers - 715,095,969 – 715,095,969 715,095,969 Non-interest bearing domestic Deposit liabilities 3,308,220 1,903,187 869,217 70,318 Deposits of directors, officers and bills purchased bills purchased stockholders Deposit liabilities 6,128,205,887 9,240,353,877 15,368,559,764 15,368,559,764 Various terms and with annual Interest expense 10,481 2,535 Interest expense on deposit interest rates ranging from liabilities nil to 3.50% Compensation and fringe 24,310,258 12,475,979 Remuneration and benefits to Interest expense 3,620,143 9,147,533 Interest expense on deposit benefits directors and key management liabilities personnel Interest income 3,620,143 9,675,104 Interest income from secured Post-employment benefits 337,512 205,218 Post-employment benefits commercial loans Service fee income 237,165.19 – Income from non-interest bearing domestic bills In the ordinary course of business, the Parent Company has loan transactions with affiliates and purchased with certain DOSRI. Existing banking regulations limit the amount of individual loans to DOSRI, Rent expense – 39,826,425 Office rental for branches with 70.00% of which must be secured, to the total of their respective deposits and book value of their Robinsons Land Corporation respective investments in the Parent Company. In the aggregate, loans to DOSRI generally should not exceed the Bank’s total regulatory capital or 15.00% of total loan portfolio, whichever is Shareholders lower. Deposit liabilities 8,678,651,300 8,678,651,300 – Various terms and with annual interest rates ranging from nil to 5.75% Interest expense 121,582,752 – Interest expense on deposit liabilities
154 RobinsonsBank 2014 Annual Report 155
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Parent Company LSB Details of remuneration of directors and other key management personnel of the Group and the 2014 2013 2014 2013 Parent Company follow: Total outstanding DOSRI accounts P=841,772,714 P=855,095,969 P=3,215,627 P= 2,387,476.82 Percent of DOSRI accounts to total Consolidated Parent Company loans 3.86 4.93 0.28 0.17 Percent of past due DOSRI loans to 2014 2013 2014 2013 total DOSRI loans − − − − Short-term benefits P=66,523,516 P=49,114,576 P=42,213,258 P=36,638,597 Percent of nonperforming DOSRI loans Post-employment benefits 15,047,772 3,489,546 14,710,260 3,489,546 to total DOSRI loans − − − − P=81,571,288 P=52,604,122 P=56,923,518 P=40,128,143 Percent of unsecured DOSRI loans to total DOSRI loans − − − −
The Parent Company has no assets pledged as collaterals on its liabilities. 25. Trust Operations
On January 31, 2007, BSP Circular No. 560 was issued providing the rules and regulations that Properties held by the Parent Company in fiduciary or agency capacity for their customers are not govern loans, other credit accommodations and guarantees granted to subsidiaries and affiliates of included in the accompanying statement of financial position since these are not assets of the banks and quasi-banks. Under the said circular, the total outstanding exposures to each of the Parent Company (see Note 26). bank’s subsidiaries and affiliates shall not exceed 10.00% of bank’s net worth, the unsecured portion of which shall not exceed 5.00% of such net worth. Further, the total outstanding In compliance with the current banking regulations relative to the Parent Company’s trust exposures to subsidiaries and affiliates shall not exceed 20.00% of the net worth of the lending functions as of December 31, 2014 and 2013, government securities classified under AFS bank. BSP Circular No. 560 is effective on February 15, 2007. investments amounting to P=85.80 million and =245.00P million, respectively, are deposited with the BSP (see Note 7). The retirement fund of the Parent Company’s employees amounted to P=53.41 million and P=51.75 million as of December 31, 2014 and 2013, respectively (see Note 20). This includes pay An appropriation of 10.00% of the Parent Company’s income from trust operations is set aside as off to resigned employees amounting to P=14.10million. The fund is being managed by JG Summit surplus reserve to absorb any losses that may arise from its trust functions. Multi-Employer Retirement Plan (MERP), a corporation created for the purpose of managing the funds of the Group, with Robinsons Bank Corporation (RBC)-Trust and Investment Group as the trustee. 26. Commitments and Contingencies
Details of the transactions of the Parent Company with its retirement plan follow: a. The Group is also involved in a number of legal proceedings. The estimate of the probable costs for the resolutions of these claims has been developed in consultation with outside 2014 counsel handling the Group’s defense and is based on an analysis of potential results. The Nature of Amount/ Outstanding Terms and Group does not believe that these proceedings will have a material adverse effect on the Related Party Transaction Volume Balance Conditions/Nature financial statements. Retirement plan Contribution and P=24,255,866 P=53,413,915 Contributions to the Fund plus interest earned interest earned during the b. In the normal course of the Group’s operations, there are various outstanding commitments, year contingent liabilities and bank guarantees which are not reflected in the accompanying financial statements. The Group does not anticipate material unreserved losses as a result of 2013 these transactions. Nature of Amount/ Outstanding Related Party Transaction Volume Balance Terms and Conditions/Nature Retirement plan Contribution and P=38,005,112 P=51,754,499 Contributions to the Fund plus interest earned interest earned during the year
The retirement plan under the MERP has an Executive Retirement Committee , that is mandated to approve the plan, trust agreement, investment plan, including any amendments or modifications thereto, and other activities of the plan. Certain members of the BOD of the Parent Company are represented in the Executive Retirement Committee. RBC manages the plan based on the mandate as defined in the trust agreement.
156 RobinsonsBank 2014 Annual Report 157
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Following is a summary of the Group’s commitments and contingent liabilities at their equivalent 29. Approval of the Release of the Financial Statements peso contractual amounts: The accompanying financial statements of the Group and of the Parent Company were approved Consolidated Parent Company and authorized for issue by the BOD on March 25, 2015. 2014 2013 2014 2013 Trust and investment group accounts (Note 25) P=9,462,183,960 P=4,988,508,329 P=9,462,183,960 P=4,988,508,329 30. Supplementary Information Required under Revenue Regulations (RR) 15-2010 Spot exchange - foreign currency 2,287,921,501 424,860,317 2,287,921,501 424,860,317 The BIR issued RR No. 15-2010 prescribing the manner of compliance in connection with the Committed credit lines 4,452,039,310 2,276,299,665 4,452,039,310 2,276,299,665 preparation and submission of financial statements accompanying the tax returns. This RR Letters of credit 119,868,315 243,353,864 119,868,315 243,353,864 include provisions for additional disclosure requirements in the notes to the financial statements, Contingent - foreign particularly on composition of taxes, duties, licenses paid or accrued during the year. currency swap 2,630,668,955 – 2,630,668,955 – Inward bills for collection 401,510,039 282,155,080 401,510,039 282,155,080 Supplementary Information Required Under RR No. 15-2010 Late deposit/payment The Parent Company reported and/or paid the following types of taxes for the year: received 19,238,989 58,127,241 17,499,722 56,082,436 11,479,860 11,479,860 Guarantees issued 7,232,310 7,232,310 Gross Receipts Tax (GRT) Outward bills for collection 250,058,849 13,655,160 250,058,849 13,655,160 The National Internal Revenue Code (NIRC) of 1997 provides for the imposition of GRT on gross Items held for safekeeping 92,669 72,229 89,481 68,992 Other contingent account 298,566 297,227 296,427 296,814 receipts derived by banks from sources within the Philippines. Accordingly, the Parent Company’s gross receipts are subject to GRT as re-imposed in RA No. 9238 beginning January 1, 2004. 27. Financial Performance Details of the Parent Company’s gross receipts and GRT due declared and paid for taxable year The following basic ratios measure the financial performance of the Group: 2014 follow:
Consolidated Parent Company Gross 2014 2013 2014 2013 Receipts GRT Due Return on average equity 2.20% 7.41% 2.60% 6.06% Interest income P=2,096,070,775 P=92,199,064 Return on average assets 1.70% 0.93% 0.30% 0.86% Other income 272,324,934 19,062,746 Net interest margin on average earnings assets 4.00% 3.96% 4.20% 3.64% P=2,368,395,709 P=111,261,810
28. Notes to Statements of Cash Flows Documentary Stamp Tax: The Documentary stamp tax (DST) paid or accrued on the following transactions are: As of December 31, 2014 and 2013, interbank loans receivables of the Parent Company to local savings bank amounting to P98.00 million and P99.00 million, respectively, have original maturity Transaction Amount DST thereon of more than three (3) months are not considered cash and cash equivalents. Deposits P=190,907,081,617 P=90,699,646 Loan instruments 19,799,758,014 58,833,815 Details of non-cash investing activities follow: P=210,706,839,631 P=149,533,461
Consolidated Parent Company Other Taxes and Licenses 2014 2013 2014 2013 This includes all other taxes, local and national, including documentary stamp tax, fringe benefits Disposal of investment properties tax, local business tax, licenses and permit fees lodged under the ‘Salaries and employees’ benefits through sales contract and ‘Taxes and Licenses’ account in the statement of income and expenses. receivable P=192,997,413 P= – P=188,778,275 P= – Increase in investment properties due to foreclosure 30,096,972 15,112,327 28,281,372 3,674,787 a. Local Increase in repossessed Business Permits P=7,276,218 chattels due to foreclosure 96,613,256 81,293,428 96,558,233 81,293,428 Community Tax Certificates 1,031,539 Increase in property and equipment due to b. National reclassifications from Gross Receipt Tax P=110,820,073 chattels 14,034,137 14,753,608 5,492,076 14,753,608
158 RobinsonsBank *SGVFS013456* *SGVFS013456*2014 Annual Report 159 BRANCHES AND BUSINESSES - 94 -
Part of the GRT and DST remitted to the BIR are shouldered/ charged to clients/borrowers.
Withholding Taxes The following table shows the breakdown of taxes withheld and remitted in 2014:
Total Withheld Total Remitted Withholding tax on deposits P=54,036,736 P=54,036,736 Withholding taxes on compensation and benefits 64,995,511 64,995,511 Expanded withholding taxes 17,635,949 17,635,949 P=136,668,196 P=136,668,196
As of December 31, 2014, there are no outstanding tax cases under investigation, litigation or prosecution in courts or bodies outside BIR.
A GROWING BANK THAT RESPONDS TO YOUR BANKING NEEDS
160 RobinsonsBank *SGVFS013456* BRANCH NETWORK
Laog City
Vigan City Tuguegarao 92 Branches METRO MANILA • E. RODRIGUEZ SR. AVENUE
Santiago City G/F 1166 • A. ARNAIZ AVENUE San Fernando City E. Rodriguez Sr. Ave., New Manila, Quezon City Unit 7A Commercial Space, • EASTWOOD CITY Baguio The BEACON Makati, A. Arnaiz Avenue corner Chino G/F IBM Plaza Bldg., Valenzuela Dagupan 171 Roces Avenue, Makati City Eastwood City, E. Rodriguez Jr. Ave., Bagumbayan, Malabon Quezon City ATM machines • ALABANG Quezon City Caloocan Tarlac City G/F Unit 4, L. Molito Complex, Marikina • EDSA-CALOOCAN Madrigal Ave. corner Alabang-Zapote Road, Muntinlupa City 524-F EDSA, Caloocan City Angeles City Antipolo • ANTIPOLO Manila • ERMITA METRO MANILA Units 3 & 4 FLJ Bldg. Level 1 Padre Faura Wing, Cainta Olongapo City of Balanga 182 P. Oliveros St., Antipolo City Antipolo Robinsons Place Manila, Ermita, Manila Cainta Makati • ASUNCION - BINONDO • FILINVEST-ALABANG Pasay Cavite G/F, Don Norberto & Doña Salustiana Ty Building, Unit 104, Civic Place Condominium, Taguig Calamba #403 Asuncion street corner San Nicolas Street, 2301 Civic Drive, Filinvest Corporate City, Alabang, Tanauan Parañaque Lopez Binondo, Manila Batangas Muntinlupa City Naga City Catanduanes • AYALA Las Piñas • GIL PUYAT AVENUE Calapan 6780 G/F JAKA I Bldg., Ayala Ave., Makati City G/F New Solid Realty Inc. Bldg., Nuntinlupa • BETTER LIVING 357 Sen. Gil Puyat Ave., Makati City G/F Triple M Commercial Bldg., • KATIPUNAN Doña Soledad Avenue cor. Australia St., G/F Burgundy Place Condominium, Better Living Subd., Parañaque City Katipunan Ave., Loyola Heights, Quezon City San Jose Masbate • BGC 7th AVENUE • LAS PINAS Unit GF7, Trade & Financial Tower Bldg., Blk. 1 Unit 10-D Metropolitan Classic Homes, 7th Avenue corner Lane Q Road, J. Aguilar Ave., Las Piñas City Borongan City Bonifacio Global City, Taguig Roxas City • LAS PINAS-PAMPLONA • BGC-BURGOS CIRCLE Tacloban City 262 Alabang-Zapote Rd., Pamplona, Las Piñas City G/F Unit B, The Cresent Park Residences, • LEGAZPI ST.- MAKATI (GAMBOA) Ormoc City 30th St., cor. 2nd Ave., Bonifacio Global City, Taguig City Office 1, Man Tower Building, Iloilo City • BINONDO #153 Legazpi Street,Legaspi Village, Makati City Bacolod G/F, 460 Pacific Centre Building, Cebu City • MAGNOLIA TOWN CENTER Paredes cor Sabino Padilla Sts., Binondo, Manila L/G Unit LG026, Robinsons Magnolia Town Center, Kabankalan City • BONIFACIO GLOBAL CITY Aurora Boulevard, Quezon City Puerto Pricesa Ground Level, Market Market Mall, Tagbilaran City • MAIN OFFICE BRANCH Bais City Bonifacio Global City, Taguig City G/F Galleria Corporate Center, • CAINTA Dumaguete EDSA cor. Ortigas Ave., Quezon City G/F, Gusali 888 Building, • MALABON Butuan City Ortigas Avenue Extension, Cainta, Rizal Level 1 – 01127,Robinsons Town Mall Malabon, • CALOOCAN #5 Governor Pascual Avenue corner Crispin Street, G/F Dona Lolita Bldg., Tinajeros, Malabon City Cagayan de Oro Ozamiz City 363 Rizal Avenue Ext., Caloocan City • MARIKINA • CHINO ROCES AVE. EXTN Issachar Bldg II., G/F, 2308, Natividad Building, Bayan-bayanan Ave., Concepcion Uno, Marikina City Chino Roces Avenue, Extension, Makati City • NINOY AQUINO AVENUE (NAIA) Davao City • D. GUEVARA MANDALUYONG G/F, Rooms 2 & 3, Sky Freight Building. Sky Freight Center, G/F 50 D. Guevara St., Mandaluyong City Ninoy Aquino Ave., Parañaque City • DEL MONTE • NOVALICHES G/F EWELL Square G/F Robinsons Supermarket, Robinsons Place Novaliches, Del Monte Ave. cor. Biak-na-Bato Quezon City Quirino Highway, Novaliches, Quezon City • DOMESTIC ROAD General Santos City G/F, Cebu Pacific Airline Operations Center Building, Domestic Road, Pasay City
162 RobinsonsBank 2014 Annual Report 163 • N.S. AMORANTO SR. AVE. • VISAYAS AVENUE • CEBU-OSMEÑA • PALAWAN G/F Unit 102 “R” Place Bldg., G/F, M & L Building, 2ND Level Robinsons Place Cebu, Unit 220-222, 2/F, Robinsons Place Palawan Mall, #255 N.S. Amoranto Sr. Ave., Quezon City Visayas Avenue corner Road 1, Quezon City Fuente Osmeña Ave., Cebu City Puerto Princesa City, Palawan • ORTIGAS-GREENHILLS • WEST AVENUE • DAGUPAN • PASSI G/F Limketkai Bldg., G/F, Prosperity West Center Bldg. Guanzon Bldg., Perez Blvd., Dagupan City G/F, Unit G5-G6, Gaisano Capital Passi, Ortigas Ave., Greenhills, San Juan City 92 A West Avenue, Quezon City • DASMARIÑAS Simeon Aguilar St., Passi, Iloilo • PASEO DE ROXAS LEGAZPI VILLAGE G/F Robinsons Place Dasmariñas, • ROXAS G/F 111 Paseo de Roxas Bldg., E. Aguinaldo Hi-way cor. Governor’s Drive Pala-pala, Level 1-1133B, Robinsons Place Roxas, Legazpi St., cor. Paseo de Roxas, Legazpi Village, Makati PROVINCIAL Dasmarinas, Cavite City Pueblo de Panay, Barangay Lawa-an,Roxas City,Capiz • PADRE RADA TONDO • DAVAO • SAN FERNANDO 580 - 584 Padre Rada St., Tondo, Manila • ANGELES Door 1 & 2, Edward V. A. Lim Bldg., Level I Robinsons Starmills, • PASIG Level 1 Robinsons Place Angeles, Sta. Ana Ave., Davao City Candaba Gate, Olongapo-Gapan Rd., San Jose, L/G Robinsons Metro East, Mc Arthur Highway, Balibago, Angeles City, Pampanga • DAVAO-CYBERGATE San Fernando City, Pampanga Marcos Highway, Barangay De la Paz, Pasig City • BACOLOD Level 1, Unit 109, Robinsons Cybergate Davao, • SAN PABLO • PASIG C. RAYMUNDO Level 1 C2002 Robinsons Place - J. P. Laurel Ave., Davao City Lopez Jaena St. cor. Burgos St., Colago Ave., G/F Marius Arcadia Bldg., Bacolod, Lacson St., Mandalagan, Bacolod City • DUMAGUETE San Pablo City, Laguna C. Raymundo Ave., cor. Pag-asa St., Pasig City • BAGUIO Stall AF 25-27 Robinsons Dumaguete, • SAN PEDRO • PIONEER-CYBERGATE LG/F ECCO Bldg., Dumaguete South Road cor. Perdices St., Dumaguete City Kilometer 31, National Highway, Brgy. San Vicente, Upper G/F, Robinsons Pioneer Cybergate Center 1, #43 Assumption Road cor. Gen. Luna Rd., Baguio City • GENERAL SANTOS San Pedro, Laguna Pioneer St., Mandaluyong City • BAIS Robinsons Place General Santos, • SANTIAGO, ISABELA • ROOSEVELT AVENUE Stall No. 1, Bais Commercial Center, Marina Bldg., cor. J. Catolico Ave. and Bula-Lagao Rd., Level 1-01103,Robinsons Place Santiago, G/F MCCM Bldg. Aguinaldo St., National Highway, Bais City, Negros Oriental General Santos City Barangay Mabini, Santaigo City, Isabela 311 Roosevelt Ave., San Francisco Del Monte, Quezon City • BALAGTAS • ILOCOS NORTE • STA. ROSA • SAN MIGUEL G/F 103-1 Balagtas Town Center, G/F Space No. 123, Robinsons Ilocos Norte, Level 1 Robinons Sta. Rosa Market, G/F Octagon Bldg., Mc Arthur Highway, Borol 1st, Balagtas, Bulacan Valdez Center, Brgy. 1, San Nicolas, Ilocos Norte Old National Highway, Bo. Tagapo, Sta. Rosa City, Laguna San Miguel Ave., Ortigas Center, Pasig City • BALANGA • ILOILO • TAGBILARAN • SANTOLAN-PASIG G/F, R&R Building, G/F Robinsons Place Iloilo, Mabini Street, Iloilo City G/F, Castelcelo Building 1, G/F, AD Center Square, Don Manuel Banzon Avenue, Doña Francisco, • IMUS C. Gallares St., corner J. S. Torralba St., Poblacion II, Amang Rodriguez corner Evangelista Street, Santolan, Balanga City, Bataan G/F Robinsons Place Imus, Tagbilaran City, Bohol Pasig City • BATANGAS CITY Emilio Aguinaldo Highway, Imus, Cavite City • TACLOBAN • SEDEÑO SALCEDO VILLAGE G/F Odeste Bldg., P. Burgos St., Brgy. 15, Batangas City • KABANKALAN Robinsons Place Tacloban, G/F, Unit G-104, 88 Corp. Center • BUTUAN G/F NZ Business Center (NZBC) Building, Level 1-00103 National Highway, Tabuan, Marasbaras, #141 Sedeño corner Valero St., Makati City Level 1-01160, Robinsons Place Butuan, Km. 3 J.C. Aquino JY Perez HI-way, Kabankalan City, Negros Occidental Tacloban City • SHAW BLVD Street, Barangay Libertad, Butuan City • LIPA • TAGAYTAY G/F 2019, Pelbel Bldg. I • CABANATUAN G/F Robinsons Place Lipa, Expansion Wing, Level 2, 00210 Summit Ridge, Shaw Boulevard, Pasig City G/F NE Pacific Mall, J.P. Laurel Hiway, Mataas na Lupa, Lipa City General Aguinaldo Highway, National Rd., Brgy. Maharlika, • SOLER km 111 Maharlika Highway, Cabanatuan City • LUCENA Tagaytay City, Cavite G/F, Filamco Building, • CAGAYAN DE ORO G/F AZDEMARK Bldg., #11 Quezon Avenue, Lucena City • URDANETA #1220-1222, Soler corner Masangkay Streets, Level 1, Robinsons Supercenter, • LUISITA TARLAC G/F S. Plaza Bldg., Binondo, Manila Rosario St., Lim Ket Kai Drive, Lapasan, Cagayan de Oro Unit 102 Robinsons Luisita, Mc Arthur Highway, Poblacion, Urdaneta City, Pangasinan • SUCAT • CALAPAN Mac Arthur Highway, San Miguel, Tarlac City Units B13 & B17, JAKA Plaza Mall, G/F, Space # LS-008, NEO Calapan Mall, • MALOLOS Dr. A. Santos Avenue, Parañaque City Calapan City, Oriental Mindoro Level 1 – 01123,Robinsons Place Malolos, • TAYTAY • CALASIAO Mc Arthur Highway,Barangay Mabolo Malolos, Bulacan Red Ribbon Uptown Building, Level 1, 01134 Robinsons Place Pangasinan, • MEYCAUAYAN Manila East Road, Barangay San Juan,Taytay, Rizal Mc Arthur Highway, Brgy. San Miguel, Calasiao, Panagsinan G/F EMCCO Bldg., Mc Arthur Highway cor. Malhacan Rd., • TOMAS MORATO • CEBU-CYBERGATE Calvario, Meycauayan City, Bulacan JSB Bldg., G/F Robinsons Cybergate, • NAGA Tomas Morato Ave., cor. Scout Delgado St., Quezon City Don Gil Garcia cor. J. Llorente St., Capitol Site, Cebu City G/F Crown Hotel Bldg., Peña Francia Ave., Naga City • VALENZUELA • CEBU-MANDAUE • OZAMIS Unit A South Supermarket, G/F Cotiaoking Bldg., G/F Ozamis Insular Life Bldg., Mc Arthur Highway, Karuhatan, Valenzuela City North Rd., Tabok, Mandaue City, Cebu Don Anselmo Bernard Avenue Cr. Angel Medina Ave. Ozamis City, Misamis Occidental
164 RobinsonsBank 2014 Annual Report 165 OFFSITE ATM
• ALABANG • BRIDGEWAY • DAVAO • JGC TACLOBAN G/F Unit 4, El Molito Complex, G/F Robinsons Equitable Tower, Door 1 & 2, Edward V Lim Bldg., JGC Financing Company Building, Madrigal Ave. cor. Alabang-Zapote Road, Muntinlupa City Ortigas, Pasig City Sta.Ana Ave., Davao City Corner M. H. Del Pilar and P. Gomez Sts., Tacloban City, Leyte • ANGELES • BUTUAN • DAVAO CYBERGATE • KABANKALAN Stall 101 Robinsons Place Angeles, Level 1 - 01160, Robinsons Place Butuan, Level 1 Unit 109 Robinsons Cybergate Davao, G/F, NZ Business Center (NZBC) Bldg., McArthur Highway, Balibago, Angeles City, Pampanga J. C. Aquino St., Brgy. Libertad, Butuan City J.P. Laurel Ave., Davao City J. Y. Perez Highway, Kabankalan City, Negros Occidental • ANTIPOLO • CABANATUAN • DEL MONTE AVENUE • KATIPUNAN De Jesus-Anclote Commercial Bldg., Ground Floor, NE Pacific Mall, G/F EWELL Square, G/F The Burgundy Place Cond., 182 P.Oliveros St., Antipolo City, Rizal km 111 Maharlika Highway, Cabanatuan City, Nueva Ecija Del Monte Ave. cor. Biak-na-Bato St., Quezon City 174 B. Gonzales St., Katipunan Avenue, Loyola Heights, • ARNAIZ AVE. • CAGAYAN • DIGITEL COMPOUND Quezon City Unit 7A Commercial Space, The Beacon Makati, DE OROLevel 1 050-051 Robinsons Big R Supercenter, Digitel compound, Libis, Quezon City • LAGUNA OBO A. Arnaiz Ave. cor. Chino Roces Ave., Makati City Cagayan de Oro, Lim Ket Kai Drive, Lapasan, Cagayan de Oro • DIGITEL COMPOUND 2 G/F Unit A-9 Banawe De Sta. Rosa Bldg, • ASUNCION • CAINTA Digitel compound, Libis, Quezon City .Reyes Road, Purok 6, Balibago, Sta Rosa, Laguna G/F. Don Norberto & Doña Salustiana Ty Bldg., G/F, Gusali 888 Bldg., • DIGITEL COMPOUND 3 • LAS PIÑAS 403 Asuncion cor. San Nicolas St., Binondo, Manila Ortigas Ave. Ext., Cainta, Rizal Digitel compound, Libis, Quezon City Unit G-86 & G-87, Robinsons Place Las Piñas, • ATENEO DE MANILA • CALAPAN • DOMESTIC 1 #345 Alabang-Zapote Road, Barangay Talon, Las Piñas Kotska Hall, Ateneo de Manila University, G/F Space LS-008, NEO Calapan Mall, Domestic Road, Cebu Pacific Air Office, • LAS PIÑAS-PAMPLONA Capitol Hills, Quezon City Calapan City, Oriental Mindoro Airport Road, Pasay City South Park Heights, • AYALA • CALASIAO • DOMESTIC 2 262 Alabang-Zapote Rd., Pamplona, Las Piñas City G/F Jaka 1 Bldg., 6780 Ayala Ave., Makati City Level 1, 01134 Robinsons Place Pangasinan, Domestic Road, Cebu Pacific Air Office, • LEGAZPI MAKATI • BACOLOD McArthur Highway, Brgy. San Miguel, Calasiao, Pangasinan Airport Road, Pasay City Ofc. 1, Man Tower Bldg., Level 1, C2002 Robinsons Place Bacolod, • CALOOCAN • DOMESTIC ROAD Legazpi St., Legazpi Village, Makati City Lacson St., Mandalagan, Bacolod City G/F Doña Lolita Bldg., G/F, Cebu Pacific Air Head Office, • LIBIS • BACOLOD TELE 363 Rizal Ave., Caloocan City Domestic Airport Road, Pasay City Unit A, IBM Plaza Building, G/F Luxor Plaza IT, • CAVITE MBO • DUMAGUETE Eastwood City, E. Rodriguez Jr. Avenue, Libis, Quezon City Magsaysay Ave. cor Lacson St., Bacolod City Stall E, Old Bldg., Gabriella Union Square, Stall AF 25-27 Robinsons Dumaguete, • LIBIS 2 • BAIS Gen. Trias Drive, Tejeros Convention, Rosario, Cavite Dumaguete South Road cor. Perdices St., Dumaguete City Unit A, IBM Plaza Building, Stall No. 1, Basi Commercial Center, Marina Bldg., • CEBU-CYBERGATE • E. RODRIGUEZ SR. AVENUE Eastwood City, E. Rodriguez Jr. Avenue, Libis, Quezon City Aguinaldo St., National Highway, Bais City, Negros Oriental Level 1, 119 Robinsons Cybergate Cebu, G/F 1166 E Rodriguez Sr. Ave., New Manila, Quezon City • LIPA • BAGUIO Don Gil Garcia St. cor. J. Llorente St., Capitol Site, • EDSA-CALOOCAN G/F Expansion Wing , Robinsons Place Lipa, LG/F ECCO Building, F. Osmena, Cebu City 524F EDSA, Caloocan City J. P. Laurel Highway, Mataas-na-Lupa, Lipa City, Batangas 43 Assumption Road cor. General Luna, Baguio City • CEBU-MANDAUE • ERMITA • LIPA • BALANGA G/F Cotiaoking Bldg., Level 1 Padre Paura Wing, Robinsons Place Manila Level 2 Expansion Mal-1233, Robinsons Place, G/F, Alyss Commerical Hub,, North Road, Tabuk, Mandaue, Cebu City • FILINVEST-ALABANG J. P. Laurel Highway, Mataas-na-Lupa, Lipa City, Batangas Don Manuel Banzon Ave., Balanga City, Bataan • CEBU OSMEÑA Unit 104 Civic Place Condominium, • LSB NAGA • BALAGTAS 2nd Level, 047-050, Robinsons Place Cebu, 2301 Civic Drive, Filinvest Corporate City, Alabang, Muntinlupa City Legazpi Savings Bank, Naga Branch, G/F 103-1 Balagtas Town Center, Fuente-Osmeña, Cebu City • GALLERIA Panganiban Drive, Naga City McArthur Highway, Borol 1st, Balagtas, Bulacan • CFG PARK AVENUE 17th floor, Galleria Corporate Center, • LUCENA • BATANGAS CITY Basement 1 Park Avenue, Robinsons Galleria, Ortigas, Quezon City G/F AZDEMARK Bldg., 11 Quezon Avenue, Lucena City G/F Odeste Bldg., Ortigas, Quezon City • GBF ROSARIO • LUISITA TARLAC P. Burgos St., Brgy 15, Batangas City • CFG PARK AVENUE 2 Amang Rodriguez Ave, Rosario, Pasig City Unit 102 Robinsons Luisita, • BETTER LIVING Consumer Finance Group, Park Avenue, • GENERAL SANTOS McArthur Highway, San Miguel, Tarlac City G/F Triple M Commercial Bldg., Robinsons Galleria, Ortigas, Quezon City Robinsons Place General Santos, • MAIN OFFICE BRANCH Doña Soledad Ave. cor. Australia St., • CHINO ROCES Corner J.Catolico Ave and Bula-lagao Rd, Gen. Santos City G/F Lobby, Galleria Corporate Center, Better Living Subdivision, Parañaque City G/F, 2308 Natividad Bldg., • GIL PUYAT AVENUE EDSA cor. Ortigas Ave., Quezon City • BINONDO Chino Roces Ave. Ext., Makati City G/F, New Solid Reality Inc. Bldg., • MAGIC CENTERPOINT G/F, 460 Pacific Centre Bldg., • CLARK MBO 357 Sen. Gil Puyat Avenue, Makati City G/F Magic Centerpoint, Quintin Paredes cor. Sabino Padilla Sts., Binondo, Manila G/F Cecille’s Bldg, • ILOCOS Zamora St., Dagupan City • BF HOMES McArthur Highway, Balibago, Angeles City, Pampanga G/F, space no.123, Robinsons Ilocos Norte, Valdez Center, Brgy 1, • MAGNOLIA TOWN CENTER Aguirre Avenue, BF Homes, • CYBERSCAPE ALPHA San Nicolas, Ilocos Norte Units 026-028 Robinsons Magnolia Town Center, Paranaque City G/F, Cyberscape Beta Bldg., • ILOILO Aurora Blvd. cor. Hemady and N. Domingo St., • BGC Garnett and Sapphire Roads, Ortigas Center, Pasig City Level 1 189-190 G/F Robinsons Place Iloilo, New Manila, Quezon City 7TH AVE, Unit GF7, Trade & Financial Tower, • CYBERSCAPE BETA Mabini cor. De Leon St., Iloilo City • MALABON 7th Ave. cor. Lane Q Road, Bonifacio Global City, Taguig City G/F, Cyberscape Beta Bldg., • ILOILO JB LACSON Robinsons Townmall Malabon, • BGC-BURGOS CIRCLE Topaz and Ruby Roads, Ortigas Center, Pasig City John B. Lacson Maritime University, 5 Gov. Pascual Ave. cor. Crispin St., Tenejeros, Malabon G/F Unit B, The Cresent Park Residences, • D. GUEVARRA Sto Nino Sur, Arevalo, Iloilo City • MALOLOS 30th Street cor. 2nd Avenue, Bonifacio Global City, Taguig City G/F 50 D. Guevarra St., Mandaluyong City • IMUS C-101 G/F Rufina Commercial Building, • BONIFACIO GLOBAL CITY • DAGUPAN Level 1 Robinsons Place Imus, Catmon, Malolos City, Bulacan Ground Level, Market Market, G/F VIctorias Building, Perez Blvd., Dagupan City E. Aguinaldo Highway, Tanzang Luma, Imus, Cavite • MARIKINA Bonifacio Global City, Taguig City • DASMARINAS • JBL MOLO ILOILO Issachar Bldg, Level 1-003 Robinsons Place Dasmariñas, JB Lacson Foundation Maritime University, Bayan-Bayanan Ave., Concepcion 1, Marikina City E. Aguinaldo Highway cor. Governor’s Drive, Pala-Pala, San Juan St., Molo, Iloilo City Dasmariñas, Cavite
166 RobinsonsBank 2014 Annual Report 167 • MARINERS NAGA • RDS DASMARINAS • RSC KARANGALAN • SHAW BOULEVARD Mariners’ Polytechnic Colleges Foundation, 2nd Level Robinsons Dept Store Dasmariñas, Robinsons Supermarket Karangalan Branch, G/F 2019 Pelbel Bldg., Shaw Blvd., Pasig City Baras, Canaman, Camarines Sur E.Aguinaldo Highway cor. Governor’s Drive, Pala-Pala, Magsaysay St. cor. Felix Avenue, Manggahan, Pasig City • SOLER • MEYCAUAYAN Dasmariñas, Cavite • RSC LIMKETKAI Ground Floor, FILAMCO Bldg., Ground Floor EMCCO Bldg., • RDS DAVAO Robinsons Supermarket, 1st Level, South Concourse, Limketkai Mall, 1220-1222 Soler St. cor. Masangkay St., Binondo, Manila McArthur Highway cor. Malhacan Road, Calvario, 2nd Flr Robinsons Department Store, Abreeza Mall, Cagayan De Oro City • ST. FRANCIS SQUARE Meycauayan City, Bulacan J.P Laurel Avenue, Davao City • RSC MACTAN G/F St Francis Square Building, • MS BANSALANGIN • RDS DUMAGUETE Robinsons Supermarket, Pueblo Verde Mactan Economic Zone II Bank Drive cor. Julia Vargas Avenue, Mandaluyong 995 EDSA cor. Bansalangin St., Veterans Village, Quezon City G/F Robinsons Dept Store, Robinsons Dumaguete, along Maximo Patalinghug Highway, Brgy. Basak, • STA ROSA • MS ESCRIVA Dumaguete South Road cor. Perdices St., Dumaguete City Lapu-lapu City, Cebu Level 1, 067 Robinsons Place-Sta.Rosa, B2 L1 Escriva Drive cor. Lukban St., San Antonio, Pasig City • RDS ILOILO • RSC MALOLOS Old National Highway, Bo. Tagapo, Sta.Rosa, Laguna • MS IBARRA G/F Robinsons Dept. Store, Robinsons Place Iloilo, Robinsons Supermarket, Bulacan State University grounds, • SUCAT España Ave. cor. Ibarra St., Manila Mabini St., Iloilo City McArthur Highway, Guinhawa, Malolos, Bulacan Units B13 and B17, JAKA Plaza Mall, • MINISTOP ROBINSONS GALLERIA EDSA • RDS IMUS • RSC MERCEDEDES Dr. A. Santos Ave., Sucat, Parañaque City Ministop, Robinsons Galleria, 2nd Level Robinsons Dept Store, Robinsons Place Imus, Robinsons Supermarket Mercedes, Mercedes Ave. Pasig City • SUBIC BAY MBO EDSA cor. Ortigas Ave., Quezon City E.Aguinaldo Highway, Imus, Cavite • RSC MERVILLE 2nd Floor, Maritan Building, • NAGA • RDS GALLERIA Robinsons Supermarket, 896 Manila Avenue, Central Business District, Subic Bay Freeport G/F Crown Plaza Hotel Bldg., Robinsons Dept Store, 2F East Wing Entrance, Robinsons Edison Ave. cor. West Service Rd., Brgy Merville, Parañaque City Economic Zone, Olongapo, Zambales Peñafrancia Ave., Naga City Galleria, EDSA cor. Ortigas Ave., Quezon City • RSC MEYCAUAYAN • TACLOBAN • N. S. AMORANTO SR. AVENUE • RDS MANILA Robinsons Supermarket Meycauayan Branch, EMA Town Center, Robinsons Place Tacloban, Level 1-00103, G/F Unit 102 R” Place Bldg., G/F Robinsons Dept Store, Robinsons Place, El Camino Rd., Meycauayan, Bulacan National Highway, Tabuan, Marasbaras, Tacloban City, Leyte 255 N. S. Amoranto Sr. Ave., Quezon City Ermita, Manila • RSC MOLO • TAGAYTAY • NINOY AQUINO AVE. • RDS METRO EAST MH Del Pilar St., Molo, Iloilo City Level 2, 210 Summit Ridge, G/F, Rooms 2 and 3, Sky Freight Building, Sky Freight Center, G/F Robinsons Dept Store, Robinsons Metroeast, • RSC NAGA Gen. Aguinaldo Highway, National Road, Brgy. Maharlika, Ninoy Aquino Ave., Parañaque City Marcos Higjway, Brgy De la Paz, Pasig, City G/F Robinsons Supermarket, Nagaland E-mall, Tagaytay City, Cavite • NOVALICHES • RDS PALAWAN Elias Angeles St., Naga City, Camarines Sur • TAGBILARAN Level 1, Big R lobby #308, 309 & 310 Nova Market, G/F Robinsons Dept Store, Robinsons Place Palawan Mall, • RSC NUVALI G/F, Castelcelo Bldg. 1, Brgy. Pasong Putik, Quirino Highway, Novaliches, Quezon City Puerto Princesa City, Palawan Robinsons Supermarket Nuvali, C. Gallares St. cor. J. S. Torralba St., Poblacion II, • ORTIGAS-GREENHILLS • ROBINSONS CYBERGATE CENTER 2 Tagaytay Road, Sta Rosa, Laguna Tagbilaran City, Bohol Suite no. 102, G/F Limketkai building, U/GF Robinsons Cybergate Tower 1, Pioneer, Mandaluyong City • RSC OTIS • TARLAC CITY Oritgas Avenue, Greenhills, San Juan City • ROBINSONS MAGNOLIA TOWN CENTER 1536 Paz M. Guanzon St., 831 Zone 90, Paco, Manila Robinsons Supermarket, Robinsons Luisita, • OZAMIS U/G Robinsons Dept Store, Robinsons Magnolia Town Center, • RSC PACITA McArthur Highway, San Miguel, Tarlac City G/F Ozamis Insular Life Bldg., Aurora Blvd. cor. Hemady and N. Domingo St., Robinsons Supermarket, • TAYTAY Don Anselmo Bernad Ave. cor. Angel Medina Ave., New Manila, Quezon City Block 6 lot 3-A Pacita Ave. cor. 2nd St., Pacita Complex Phase 1, Red Ribbon Uptown Bldg., Ozamis City, Misamis Occidental • ROCKWELL San Pedro, Laguna Manila East Road, Brgy. San Juan, Taytay, Rizal • P. RADA-TONDO 8th flr Rockwell Business Center Tower II, Ortigas, Pasig • RSC PERDICES • TELEPERFORMANCE SHAW #580-584 Padre Rada St., Tondo, Manila • ROXAS Lower G/F, Mart One, Greenfield District IT Center II, United St. Mandaluyong City • PALAWAN Ground Floor, Jr. Anchor Space, 133 Robinsons Place Roxas, Gov. Perdices St., Dumaguete City, Negros Oriental • TOMAS MORATO Unit 220-222, 2nd floor, Robinsons Place Palawan Mall, Pueblo De Panay, Brgy. Lawaan, Roxas City, Capiz • RSC PULILAN JSB Bldg., Tomas Morato cor. Scout Delgado St., Quezon City Puerto Princesa City, Palawan • ROOSEVELT AVENUE Dona Remedios Trinidad Highway, • UNIVERSITY OF SAN AGUSTIN • PASEO DE ROXAS G/F MCCM Bldg., Pulilan Junction, Brgy. Cut-cot, Pulilan, Bulacan University of San Agustin, Jalandoni St., Iloilo City G/F, 111 Paseo De Roxas Bldg., 311 Roosevelt Ave., San Francisco Del Monte, Quezon City • RSC TAGAYTAY • URC 2 Legazpi St. cor. Paseo De Roxas, Makati City • RSC BALAGTAS Robinsons Supermarket, Summit Ridge, Tagaytay, Cavite E. Rodriguez Ave. cor. Pasig Blvd., Bagong Ilog, Pasig City • PASIG Robinsons Supermarket, Balagtas Town Center, • RSC TANDANG SORA • URC CAVITE Level 1, 106-108 Lower G/F, Robinsons Metroeast, Mc Arthur Highway, Borol First, Balagtas, Bulacan 105 RMR Square Mall, First Cavite Industrial Estate, Langkaan, Dasmarinas, Cavite Marcos Highway, Brgy. De la Paz, Pasig City • RSC BUHAY NA TUBIG Tandang Sora Ave., Brgy Pasong Tamo, Quezon City • URC COMPOUND • PASIG-C. RAYMUNDO Robinsons Supermarket, • RSC THE DISTRICT URC Compound, Bagong Ilog, Pasig City Level 101 G/F Marius Arcadia Bldg., Palico Road, Barangay Buhay na Tubig, Imus City, Cavite Robinsons Supermarket, • URC LITTON MILLS PASIG C. Raymundo Ave. cor. Pag-asa St., Pasig City • RSC CABUYAO The District Dasmariñas, Molino-Paliparan Road, Litton Mills Compound, Amang Rodriguez Ave, • PASIG SANTOLAN Robinsons Supermarket, Cabuyao Centro Mall, Dasmariñas, Cavite Rosario, Pasig City G/F, AD Center Square, National Highway, Brgy. Pulo, Cabuyao City, Laguna • RSC TUTUBAN • URC PAMPANGA PLANT Amang Rodriguez Ave. cor. Evangelista St., Santolan, Pasig City • RSC CAGAYAN DE ORO Robinsons Supermarket G/F Cluster Bldg., URC Pampanga Plant, • PASSI G/F Big R Supercenter, Cagayan de Oro, City Tutuban Center, Manila Brgy Del Rosario, San Fernando, Pampanga G/F, Unit G5-G6, • RSC ERMITA • SAN FERNANDO • URDANETA Gaisano Capital Passi, Simeon Aguilar St., Passi, Iloilo G/F Robinsons Supermarket, Robinsons Place, Ermita, Manila Level 1 # 246 Robinsons Starmills Candaba Gate, S Plaza bldg • PEZA BAGUIO • RSC GEN TRIAS San Jose, San Fernando City, Pampanga McArthur Highway, Brgy. Poblacion, Urdaneta City, Pangasinan Baguio Economic Zone, Loakan Rd., Baguio City Robinsons Supermarket, • SAN MIGUEL • URSUMCO • PIONEER-CYBERGATE Governor’s Drive, Gen. Trias, Cavite G/F, Octagon Bldg., URSUMCO Cmpd., U/G Robinsons Cybergate Center 1, • RSC GUSA San Miguel Ave., Ortigas Center, Pasig City National Highway, Brgy. Alangilanan, Manjuyod, Negros Oriental EDSA cor. Pioneer St., Mandaluyong City Robinsons Supermarket, • SAN PABLO • VALENZUELA • RDS BACOLOD Phase 2, Villa Ernesto Subd., National Highway, G/F AG & Sons Realty Devt. Corp. Bldg., Unit A South Supermarket Valenzuela, Level 1 Robinsons Dept Store, Robinsons Place Bacolod, Cagayan de Oro City Lopez Jaena St. cor. Burgos St., San Pablo City, Laguna McArthur Highway, Karuhatan, Valenzuela City Lacson St., Bacolod City • RSC GALLERIA • SAN PEDRO • VISAYAS AVE. • RDS CABANATUAN Level 1 Robinsons Supermarket, Robinsons Galleria, Km. 31 National Highway, Bgy Nueva, San Pedro, Laguna G/F, M & L Bldg., Visayas Ave. cor. Road 1, Quezon City Level 2, Robinsons Dept Store, NE Pacific mall, EDSA cor. Ortigas Ave., Quezon City • SANTIAGO • WEST AVENUE km. 111 Maharlika Highway, Cabanatuan City, Nueva Ecija • RSC GRACELAND G/F, Unit 103, Robinsons Place Isabela, G/F, Prosperity West Center Bldg., Robinsons Supermarket Graceland, Maharlika Highway, Brgy. Mabini, Santiago City, Isabela 92-A, West Avenue, Quezon City J. P. Rizal St., Brgy. Malanday, Marikina City • SEDEÑO, SALCEDO VILLAGE G/F Unit G-104, 88 Corp. Center, 141 Sedeño cor. Valero St., Makati City
168 RobinsonsBank 2014 Annual Report 169 LSB PRODUCTS AND BRANCHES SERVICES
HEAD OFFICE GUINOBATAN DEPOSIT PRODUCTS TRUST PRODUCTS Rizal Street, Sagpon, Old Albay District 4500 Legazpi City T. Paulate Street, Guinobatan, Albay • Regular Savings and Checking Account • Unit Investment Trust Fund Telephone Nos. (052) 480-6964; (052) 820-6280 Tel Nos.(052) 484-6664; (052) 838-0113 • Tykecoon Kiddie Savings • Personal Investments Fax Nos. (052) 480-7008; (052) 480-5959 Banking Hours: Mon - Fri 9am - 5pm • Cardless ATM • Corporate Investments • Special Savings Account • Escrows MAIN BRANCH DAET • Peso Time Deposit • Retirement Fund Management Rizal Street, Sagpon, Old Albay District 4500 Emil 4 Building corner Lukban & Pineapple • Foreign-Currency Denominated Savings and Time • Safekeeping Legazpi City Streets, Daet, Camarines Norte Deposit Accounts Telephone Nos. (052) 481-1145; (052) 820-2959 Tel Nos. (054) 440-0570; (054) 721-3017 TRADE SERVICES PRODUCTS Banking Hours: Mon - Fri 9am - 5pm Banking Hours: Mon - Fri 9am - 5pm CONSUMER LOAN Import • Home Loan • Letter of credit issuance/amendment (Import/Domestic) LEGAZPI VIRAC • Auto Loan • Non-documentary import collection Corner Rizal and Mabini Streets, G/F D&L Building, corner Surtida & Rizal Streets, • Personal Loan • Shipside Bond/Shipping Guaranty Issuance Legazpi City 4500 San Jose, Virac, Catanduanes 4800 • PLP-Secured Loan (against Diamond or Jewelry) • Trust Receipt Financing Tel Nos. (052) 480-7039 ; (052) 480-7758 Tel Nos. (052) 811-0525; 811-0520 • Microfinance • Duties and Taxes Collection Banking Hours: Mon - Fri 9am - 5pm Banking Hours: Mon - Fri 9am - 5pm • Motorcycle Financing Export • Small Business Loan (SBL) • Advising export letter of credit DARAGA MASBATE • Export bills purchase Rizal Street, Daraga, Albay Domingo Street, Masbate City COMMERCIAL LOAN PRODUCTS • Export bills for collection Tel Nos.(052) 483-3726 ; (052) 435-2063 Tel Nos. (056) 333-5745; (056) 333-5744 • Cash Secured Loan • Export advances facility Banking Hours: Mon - Fri 9am - 5pm Banking Hours: Mon - Fri 9am - 5pm • Revolving Credit Line • Medium and Long-term Facilities for small, medium OTHER SERVICES TABACCO NAGA BRANCH and large industries, Ground Floor, N.N. Building, AA Berces street, NEA Building, Triangulo, Naga City • Receivables Financing, Branch Banking Services: Basud, Tabaco City Tel Nos. (054) 473-5086; (054) 811-5647 • Bills Purchased Line for small, medium and large • Bills Payment Tel Nos. (052) 487-7122; (052) 830-0328 Banking Hours: Mon - Fri 9am - 5pm enterprises. • Safety Deposit Box Banking Hours: Mon - Fri 9am - 5pm • Bank Settlement Service TREASURY PRODUCTS • Deposit Pick-up Service POLANGUI • Peso Special Savings National Road, Basud, Polangui, Albay • Peso Sovereign Bonds (TBills, FXTNs, RTBs) Electronic Banking Services: Tel Nos. (052) 486-2164; (052) 835-0052 • Peso Corporate Bonds • ATM Service Banking Hours: Mon - Fri 9am - 5pm • Spot Foreign Exchange for US$ and Third Currencies • Cardless Banking (Yuan, Euro, British, Pounds, HK$, Jap Yen, Sing$,) • CashWeb (Cash Management Service) SORSOGON • US$ Sovereign Bonds (ROPs and Sovereign Bonds) • RWeb (Retail Internet Banking) Rizal Street, Sorsogon City • US$ Corporate Bonds • Payroll Crediting Service Tel Nos. (056) 421-5289;(056) 211-1040 • Remittance Banking Hours: Mon - Fri 9am - 5pm
170 RobinsonsBank 2014 Annual Report 171 JG SUMMIT BUSINESSES
Food, Agro-Industrial, Core Investments and Commodities Philippine Long Distance Telephone (PLDT) Universal Robina Corporation Ramon Cojuangco Building, 13 E. Rodriguez Jr. Avenue, Bagong Ilog, Makati Ave., Makati City Pasig City Metro Manila, Philippines 1605 Metro Manila, Philippines 1200 Tel No.: (632) 635-0751 Tel No.: (632) 888-8171 to 173
Real Estate and Hotels United Industrial Corporation (UIC) 24 Raffles Place, #22-01/06, Clifford Center, Robinsons Land Corporation Singapore 048621 Level 2, Galleria Corporate Center, (65) 622-0135-2 EDSA corner Ortigas Avenue, Quezon City, Metro Manila, Philippines 1100 Partner Companies Tel. No.: (632) 397-1888 Summit Media Air Transportation 6F & 7F Robinsons Cybergate Center (Tower 3), Robinsons Pioneer Complex, Pioneer St., Cebu Pacific Air Mandaluyong City, Metro Manila, Philippines 1550 Airline Operations Center Building, Tel. No.: (632) 451-8888 Manila Domestic Airport Complex, Old Domestic Road, Pasay City JobStreet.com Philippines, Inc. Metro Manila, Philippines 1301 20th Floor Cybergate Center Tower 3, Tel No.: (632) 702-0888 Robinson’s Pioneer Complex, Pioneer Street, Mandaluyong City 1550 Petrochemicals Tel. No. : (632) 286-6222
JG Summit Petrochemical Corporation Robinsons Retail Group Ground Floor, Robinsons Cybergate Center (Tower 1), 10 E. Rodriguez Jr. Ave., Libis Quezon City, EDSA corner Pioneer St., Mandaluyong City, Metro Manila, Philippines Metro Manila, Philippines 1550 Tel. No.: (632) 635-0751 Tel. No.: (632) 395-2674 / (632) 667-3113 Plantsite: Bo. Simlong, Batangas City i-Tech Global Business Solutions Inc Philippines 4200 3rd Floor, Robinsons Otis, 1536 P. Guazon St., Tel. No.: (6343) 300-8000 to 01 Paco, Manila, Philippines 1007 Tel. No.: (632) 249-4305 Banking Services
Robinsons Bank Corporation 17th Floor, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City, Metro Manila, Philippines 1100
172 RobinsonsBank 17F Galleria Corporate Center, EDSA corner, Ortigas Avenue, Quezon City +63 2 702 9500 www.robinsonsbank.com.ph