2017 ANNUAL REPORT aising the Bar To create opportunities
years after TAO Corp. took-over
722 Years from the date of establishment
Prayer of Serenity
God, grant me the serenity to accept the things I cannot change; Courage, to change the things I can: and Wisdom to know the difference…
In Jesus Name, Amen.
Let each of you look not only to his own interests, but also to the interests of others. Philippians 2:4 (ESV)
CONTENTS
01 2017 IADB Theme
02 About Us
04 Vision, Mission and Core Values
05 Corporate Policy
06 Message from the Chairman, President & CEO Financial Conditions & Results of Operations 09 Financial Highlights
11 Risk Management Framework Adopted
12 Anti-Money Laundering & Governance Culture
13 Corporate Governance
23 Corporate Information
24 Consumer Protection Practices
25 Products & Services
26 IADB’s Client as “Youth Entrepreneur of the Year”
28 Appreciation & Awards 2017
29 Board of Directors and Profiles
35 Organizational Chart
36 Our Team
37 IADB Management Team in Action
38 IADB Management Committee
39 Senior Management Profile
41 Independent Auditor’s Report—Financial Statements
49 Employee’s Activities
51 Employee Engagement & Empowerment
53 Mentoring & Creating Opportunities for our Clients
54 Community Engagement Let each of you look not only to his own interests, but also to the interests of others. 55 Our Commitment to Serve Philippians 2:4 (ESV) 56 BSP Advisories
2017 IADB THEME
Raising the Bar to Create Opportunities
Inter-Asia Development Bank (IADB) believes in the virtue of Altruism (Kapwa muna bago sarili). The company’s continuous growth can be attributed to its passion, integrity and commitment to serve. It has likewise raised consistently its standards to provide for its clients, employees and other stakeholders, excellent and efficient banking services. The Bank shows how it values its clients by providing convenient, innovative and applicable products/services to suit their needs. The Bank also supports its clients by encouraging them to participate in government and private initiated programs that will contribute to the success of their businesses. IADB gives importance to its employees by empowering and providing them the appropriate benefits as Bank Management believes in the quotation that the “Bank doesn’t build a business, it builds people and people build the business”. IADB on a regular basis, sends its employees to trainings and seminars related to banking and work functions to improve their knowledge professionally and broaden their horizon. The Bank also provides equal importance and opportunities to employees’ families as they are given the chance to attend Bank activities (family day, Christmas celebration). On-the job trainings on bank’s operations are also offered by IADB to students that are studying in the local schools and colleges within Tagaytay City Area and candidates for accounting, business administration, information technology and other business related college degrees are given the opportunities to build-up the trainee’s character and prepare them for employment and higher responsibilities upon graduation.
1 IADB ANNUAL REPORT 2017
ABOUT US
NTER-ASIA DEVELOPMENT BANK (IADB) was incorporated and registered with the Securities and Exchange Commission on May 14, 1996 and started commercial operations on May 21, 1996 upon Iissuance by the Monetary Board of the Bangko Sentral Ng Pilipinas (BSP) of authority to operate as a thrift bank to provide deposit, lending and remittance services to retail customers, farmers and tenants, and other meager income earners.
As a banking institution, the Bank’s operations are regulated and supervised by the BSP. In this regard, the Bank is required to comply with the rules and regulations of the BSP such as those relating to maintenance of reserve requirements on deposit liabilities and those relating to adoption and use of safe and sound banking practices as promulgated by the BSP.
The Bank is a subsidiary of Tao Corporation (Parent Company) who obtains control over the Bank arising from its substantive rights and ability to direct the relevant activities of the Bank since 2010. The Parent Company is a company incorporated and domiciled in the Philippines. The primary purpose of the Parent Company is to generate, develop, promote and enhance all kinds of investment opportunities and to provide management services, advices and counsel to other enterprises.
The registered office of the Parent Company which is also its principal place of business is located at 2nd Floor, TAO Corporate Center, 2291 Don Chino Roces Avenue, Makati City.
OUR LOGO
Author: Unknown
IADB ANNUAL REPORT 2017 2
Head Office and Main Branch
Address: J.P. Rizal Avenue, Mahogany Market, Kaybagal South, Tagaytay City, 4120, Cavite, Philippines
046) 483-2810, 483-2811, 413-0022
www.taocommunity.com www.interasiabank.com
Inter-Asia Development Bank
Tolentino Branch
Address: Public Market Road, Tolentino East, Tagaytay City 4120, Cavite, Philippines
(046) 483-0301
3 IADB ANNUAL REPORT 2017
OUR VISION
e are a community development bank that provides relevant financial services to families, enterprises, and communities through financial empowerment and inclusive social responsibility. Financial empowerment is defined as access to capital and banking services through W financial inclusion, literacy and discipline. Inclusive social responsibility includes responding to community needs in food, shelter, energy, education, healthcare, livelihood, and protection through financial services. We work for access to sustainable programs and services through a robust financial infrastructure (distribution, collection, remittance, etc.).
OUR MISSION
nter-Asia Development Bank helps build a community where everyone trusts and relies on each other’s strengths enabling everyone to reach their full potential and do the work each loves.
IInter -Asia Development Bank passionately serves its clients to deliver superior value in their lives and believes there is always a better way to do well. Inter-Asia Development Bank positively contributes to the quality of life of its employees and provides them a fulfilling, challenging, and meaningful work environment. Inter-Asia Development Bank justly governs its responsibilities to its stakeholders by committing to develop effective leaders, dealing fairly with partners and regulators, and producing honorable profits for its owners.
OUR CORE VALUES
Altruism (Kapwa Muna Bago Sarili)
Gratitude (Pasasalamat)
Entrepreneurial Passion (Malikhaing Pag-iisip at Dedikasyon)
Courage (Lakas Loob)
Humility (Pagpapakumbaba)
Integrity (Karangalan)
IADB ANNUAL REPORT 2017 4
CORPORATE POLICY
As a development bank, the Bank’s focus will be to service the financial and working capital needs of microfinance enterprises and small and medium enterprises to expand and improve further their financial empowerment which will enable them to access to capital and banking services through financial inclusion, literacy and discipline.
The Bank aims to achieve this Corporate policy/vision by the following initiatives to meet the expectations of Bank customers and stakeholders as well by:
> Continuous review and revision of Bank’s policies and procedures to align these with the existing regulatory requirements and market practices;
> Development of new products and services to meet the needs of customers and to be at par and competitive with the products and services of peer banks;
> Opening of additional branches in key areas to establish the presence of IADB and service the financial requirements of clients of the TAO Group of companies;
> Regular training and attendance in seminars by key IADB Officers and employees to enhance their knowledge in banking operations and industry standards; and
> Possible tie-ups with qualified investors to improve the operations and business of the Bank through technological advancements.
5 IADB ANNUAL REPORT 2017
MESSAGE FROM THE CHAIRMAN, PRESIDENT & CEO
Financial Conditions and Results of Operations
REVIEW OF OPERATIONS DEAR STAKEHOLDERS, Branch and Commercial Banking We are pleased to report to you that 2017 was a The Branch and Commercial Banking Group had remarkable year for Inter-Asia Development Bank. sustained the deposit and loans business of the Bank that We continue to improve our business operations contributed to the 2017 good performance of the Bank. and have sustained our competitiveness despite the The growth of 40.2% in 2017 or PhP70 million in the de- emergence of new market players in our areas. posit level of the Bank (PhP243 million) had provided the necessary funds to support the increase in bank’s loan The 6.7% growth in the Philippine economy supported portfolio of PhP216 million from the PhP165 million 2016 the financial performance of the Bank. We expect loan level. The increase in savings deposits and time continued growth as we explore avenues, and seek deposits accounted for the 40% growth of PhP70 M in the opportunities that may arise from the government’s deposit level of the Bank in 2017 through the following aggressive “Build, Build, Build” infrastructure programs. initiatives by the Branch and Commercial Banking Group: This is further supported by the additional capital infusion provided by our stockholders, which actually Opening of bank deposit account by loan was a requirement to meet the approved capital build-up borrowers program by the Bangko Sentral ng Pilipinas. Offering of competitive Time Deposit Rates to The Bank’s full year 2017 operations had resulted in: valued and high network clients
Net Income of PhP6.M Expansion of deposit pick-up arrangements in the Return on Earnings of 6.6% approved areas by the Bangko Sentral Ng Pilipinas (BSP) Loan Portfolio of PhP216.1M (30.8% growth vs. For the growth of Bank’s loans of 30% or PhP51.9 million 2016 level) in 2017, these were basically driven and achieved Net Non-Performing Loan (NPL) ratio of 0.08% and through: NPL cover of 165.79% Partnership with Department of Trade & Total Assets of PhP332.8 (30.6% growth vs. 2016 Industry, Cooperative & Credit Surety Fund and level) Agricultural Guarantee Fund Pool, for the grant of loans to qualified borrowers; Tie-up arrangements with affiliates for the grant of
Ka-Asenso loans to their accredited and qualified distributors/stores Account referrals from existing loan borrowers and Saladmaster Inc. for Kalusugan loans Shorter and fast turn-around time for loan processing
IADB ANNUAL REPORT 2017 6
ADMINISTRATIVE & SUPPORT SERVICES:
Enhanced technologies and automated systems improved In the light of the challenges in 2017 by the bank’s operations in terms of productivity, operating Management, the following initiatives were efficiency, cost control, employee development and customer recommended to the Board and implemented during satisfaction through the implementation of the following the year to improve further the operational projects/initiatives year 2017: efficiency and delivery of Bank’s products and Tie-up arrangement with Possible.Net for the services to clientele: acceptance of bills payments of utility bills, prepaid Regular attendance by Officers and employees loading of credits for mobile phones, money padala, on seminars related to banking by the Bangko insurance products Sentral ng Pilipinas (BSP), Bankers Association Remittance arrangement with Cebuana Lhuiller for the of the Philippines (BAIPHIL), Chamber of Thrift remittance of money through their branch network Banks (CTB), Rural Bank Association of the with some of the branches operating 24/7. Philippines (RBAP), Association of Bank Com- pliance Officers (ABCOMP), Philippine Institute Installation of the upgraded system modules of Bank’s of Certified Public Accountants (PICPA) and Core Banking System (Byte-Per-Byte) for Deposits, Department of Trade & Industry (DTI); Loans and General Ledger to minimize manual processing of bank transactions Text advices to clients of their post-dated checks maturities; Continuous coordination with Credit Information Corporation (CIC) for the implementation of Credit Improved the turn-around time for loan Information System Project for the development of a processing by streamlining the approval and comprehensive and centralized credit information review processes. system.
Renovation of Tolentino Branch to accommodate the servicing of customers during peak days
While the Bank Management has accomplished its business commitments in 2017, the following were their challenges to meet their objectives:
Limited number of Bank branches to service the needs of clients located outside Cavite, Laguna, Batangas, Romblon. Quezon (CALABARZON) provinces
Increasing number of banks servicing the existing customers and depositors within CALABARZON area
Advanced technology infrastructures by universal/ foreign/commercial banks and other service providers in the area where IADB operates
Diversified products and services with minimal interest and service fees that are being offered by big banks and non-bank service providers
7 IADB ANNUAL REPORT 2017
The year 2017 was a growth year of our Bank covering deposit, loans and net income levels and we project that the same trend will happen in 2018 given the 6.7% to 7% economic growth of the country and additional capital infusion by the stockholders to support the 2018 business plans of Bank Management. The Bangko Sentral Ng Pilipinas has already approved their regulations governing “branch-lite branches” and this is one of the opportunities that Management is evaluating to improve its presence in other areas to accelerate its business expansion.
We thank our Directors for their continuous guidance and support and the Bank Officers and Staff for their unrelenting efforts and passion to meet the REMIGIO V. TAN, JR. expectations of the board. Most importantly, we thank our ROMAN G. LEUS CHAIRMAN OF THE BOARD clients and business partners for PRESIDENT & CEO their continued confidence with our Bank and we trust that they will continue their patronage of our Bank in the years to come.
“In the light of the challenges in 2017 by Management, there were initiatives recommended to the Board and implemented during the year to improve further the operational efficiency and delivery of Bank’s products and services to clientele.”
IADB ANNUAL REPORT 2017 8
FINANCIAL HIGHLIGHTS
CURRENT YEAR PREVIOUS YEAR FINANCIAL INFORMATION/DATA (2017) (2016) Profitability Total Net Interest Income PhP34,855,363 PhP28,163,808 Total Non-Interest Income 9,545,328 6,606,003 Total Non-Interest Expenses 33,338,477 26,377,618 Pre-provision profit 11,062,214 8,382,193 Allowance for credit losses 1,979,104 1,802,774 Net Income 6,889,859 6,267,712
Selected Balance Sheet Data
Liquid Assets 68,422,201 43,035,252 Gross Loans 222,340,530 171,782,747 Total Assets 332,764,090 254,849,714 Minimum Required Data Deposits 243,057,720 173,407,684 Total Equity 79,879,155 74,362,620
CURRENT YEAR PREVIOUS YEAR FINANCIAL INFORMATION/DATA (2017) (2016) Selected Ratios Return on equity 8.95% 8.43% Return on assets 2.15% 2.46% Capital Adequacy Ratio 23.48% 25.49% Net Income per share: Basic 3.87 3.40 Diluted - - Book Value 43.32 40.39 Others Cash dividends declared none none Headcount 46 45 Officers 12 12 Staff 34 33
9 IADB ANNUAL REPORT 2017
TOTAL RESOURCES DEPOSIT LIABILITIES (in million pesos) (in million pesos)
TOTAL LOANS NET INCOME (in million pesos) (in million pesos)
CAPITAL FUND (in million pesos)
IADB ANNUAL REPORT 2017 10
RISK MANAGEMENT FRAMEWORK ADOPTED
RISK APETITE AND STRATEGY loan portfolio of PhP222.3 million), Agricultural and Agrarian Reform Loan amounting to PhP33.5 million Inter-Asia Development Bank (IADB) is classified as a (15% of total loan portfolio of PhP222.3million) and simple bank by the Bangko Sentral Ng Pilipinas (BSP) Other Micro-enterprise Loan of PhP17.8m (8% of total given that only traditional deposits, loan products and loan portfolio 0f PhP222.3M) . To mitigate any possible services are being offered by the Bank to its customers. risks for the loans granted to these sectors, acceptable For 2017, the overall corporate strategy and risk collaterals were secured by Bank Management where appetite of the Bank was to continue and build-up its 80% of Unlad/Sikap loans, 14.58% of Consumer Loans loan portfolio exposures under Unlad/Sikap Loans and 15% for Agricultural and Agrarian Reform loans (Business/Agricultural Loan) by 45%, Consumer Loan were fully covered by collaterals. (Car Loans, Salary Loans, Housing Loans & Personal Consumption Loans) by 51% and Other Microfinance Overall, 55% of the total loan portfolio of the Bank in Loans by 33% or a total of PhP56 million. The Bank 2017 was covered by acceptable collaterals in the form likewise committed to increase its deposit liabilities by of deposits, chattels, real estate, surety agreement and 31% or PhP52.4 million, to fund and support the third party guarantees by the accredited agencies by increase in its loan portfolio to complement the cash the government. capital infusion of PhP10 million by the stockholders in 2017. The following considerations were taken into account for the 29.7% overall increase in the total 2017 BANK-WIDE RISK GOVERNANCE loan portfolio of the Bank vs. its 2016 loan portfolio: STRUCTURE AND BANK WIDE RISK MANAGEMENT PROCESS
As a non-complex bank, the risk management Good repayment behaviors of the target function of the Bank is under the accountability of the
loan borrowers Board of Directors and the Executive Committee who are both responsible in establishing the Bank’s risk Consistency of the asset qualities of the appetite congruent with the annual strategic goals and
loan products that management business plans of the business units. intends to increase its exposures The heads of the line and support units have been Management’s capacity to manage the delegated and responsible in the monitoring of the risk appetite and risk tolerance risk-taking activities of the Bank and are required to
undertake the following enterprise risk management Changing business economic and processes/functions: competitive conditions
systematically and continuously identify Risk appetite is aligned with the overall IDENTIFY corporate risk philosophy and culture of risks faced in making objectives the Bank
assess the significance of risks to enable ANALYZE the development of risk responses
RESPOND decide and formulate effective risk As of December 31, 2017, the significant credit risk CONTROL response to strategies and plans exposures of the Bank were on Unlad/Sikap Loans (BusinessLoan) amounting to PhP95.6 million (43% of total loan portfolio of PhP222.3 million), Consumer continuously ensure that the risk MONITOR response plans are operational and Loan (Car Loans, Salary Loans, Housing Loans & relevant Personal Consumption Loans) or PhP75.7 (34% of total
determine risk owner and report the REPORT status of risks and associated responses
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ANTI-MONEY LAUNDERING & GOVERNANCE CULTURE
It is the Bank’s guiding principle that its employees Bangko Sentral Ng Pilipinas (BSP) and other regulatory will not support or allow money-laundering activities bodies governing compliance and Anti Money and will protect the integrity and confidentiality of bank Laundering matters. accounts to ensure that the Bank’s reputation is not The Compliance System of the Bank focuses on the compromised. IADB enjoins its employees to conduct mitigation of Business Risks and as such, it was themselves in accordance with highest ethical designed to specifically identify and mitigate business standards and in consonance with Anti–Money risks which may erode the franchise value of the Bank. Laundering laws and shall extend full cooperation with Business risks, refers to conditions which may be the Anti-Money Laundering Council (AMLC). detrimental to a bank’s business model and its ability The Bank has developed a Money Laundering and to generate returns from operations, which in turn Terrorist Financing Program (MLPP) that serves as erodes its franchise value. guidelines to IADB employees and all concerned to gain The Compliance System of the Bank is subject to full understanding and ensure full compliance to independent evaluation by the Internal Audit unit to regulatory rules and company policies and procedures periodically assess the effectiveness of Bank’s governing the following: compliance with AML policies and procedures and to 1. Customer identification - shall involve minimum recommend appropriate resolutions to address the documentation requirements, minimum validation/ weaknesses noted during their review. due diligence, risk assessment and risk rating;
2. Monitoring of customers, accounts and
transactions; ANTI-MONEY LAUNDERING AND 3. Appropriate and timely verification and disposition of suspicious transactions on a daily basis; REGULATORY COMPLIANCE
4. Reporting covered and suspicious transactions to TRAINING PROGRAM the AMLC/BSP; 5. Record keeping; The Compliance Office of the Bank is continuously 6. Penalty for non-compliance; and conducting all year-round AML and regulatory compliance trainings to keep all Officers and employees 7. Legal and ethical responsibilities to prevent any of the Bank be aware of newly issued circulars and adverse impact on the Bank’s overall daily business policies by the regulatory bodies. The training includes responsibilities and goals. continuing education and information dissemination to all concerned officers and employees of the Bank of most current and up-to-dated information on AML and COMPLIANCE SYSTEM AND REGULATORY compliance issues. COMPLIANCE
In addition to the MLPP rules and policies, the Bank has developed and implemented a Compliance System where a full-time Chief Compliance Officer (CCO) was appointed to oversee the design of the Bank’s Compliance System and promote its effective implementation. The Compliance System is documented in a manual that was approved by the Bank’s board of directors where the CCO is required to review and the Bank’s existing Compliance System and include annually newly issued circulars and memoranda by the
IADB ANNUAL REPORT 2017 12
CORPORATE GOVERNANCE
OVERALL CORPORATE GOVERNANCE adequately qualified and fit for the positions and can STRUCTURE AND PRACTICES contribute in the business operations and general mission and vision of the Bank. The final nominee by All matters related to corporate governance are the President and Chairman of the Board for board initially elevated to the Executive Committee of Bank for membership and senior management position will be discussion/approval and deliberation and these will be included in the monthly Bank’s board agenda for subsequently discussed in the preceding board meeting discussion and approval by the members of the board of of the Bank for the comments and information of the IADB. other members of the board prior for its final approval. The Chairman of the Board is the designated Chairman BOARD’S OVERALL RESPONSIBILITY of the Executive Committee of the Bank and three (3) The Bank’s board of directors has the fiduciary regular members of the Board of Directors are appointed responsibility to the Bank, shareholders and other by the Board as con-current members of the Executive stakeholders and given these responsibilities, the board Committee. of directors is expected to approve, adopt and implement the following appropriate strategies and policies to achieve the Bank’s corporate objectives. SELECTION PROCESS FOR THE BOARD defined mission and vision: AND SENIOR MANAGEMENT
The selection and appointment process of Bank’s board members and senior management are subject to 1. Establishment of Code of Conduct and Ethical final approval by the board where rigid screening and Standards to promote good corporate governance validation processes are initiated by the board members practices, corporate culture and values. The Code and senior management team to confirm the of Conduct and Ethical Standards encourages the qualifications, work experience, as well as the fit and elevation to the Audit Committee of the Bank proper standards requirements of the Bangko Sentral possible breaches, non-compliance with laws, Ng Pilipinas (BSP) covering the nominees for directors regulations and company policies that require and senior management positions of the Bank. immediate investigation and resolution and institution of appropriate internal control In the case of the board members that are elected to mechanisms and procedures to avoid its represent the shareholdings of stockholders, these are recurrence prospectively. initially based on the approved board resolution by the individual stockholders of the Bank where their 2. Approval of Bank’s strategic objectives and qualifications and work experiences are checked and business plans which should be aligned with the validated by the President & CEO and Chairman of the Bank’s defined mission and vision and with the Bank to ensure that no negative findings are elicited by country’s economic and financial thrust and to external parties and by the BSP. The selection and oversee its effective implementation by Bank nomination of Independent Directors and senior management team. management positions of the Bank are normally 3. Appointment and selection of key members of through referrals made by the members of the board senior management and heads of control functions and senior management where confirmation of the where appropriate remuneration and incentive details of the resume/bio-data of the nominees are policies are secured and approved. The conducted and validated personally by the President & performance of the key members of senior CEO and Chairman of the Bank. management team and control functions are Based on the approved list of qualified nominees subject to oversight functions by the board to for Independent Directors and Senior Management ensure that are aligned with the board of directors’ positions of the Bank, the final nominees for the expectations which shall include but not limited to positions will be subjected to interviews by the President Bank’s core value principles, risk appetite and & CEO and Chairman of the Bank to inquire and secure culture. other information from the nominees to enable them to 4. Approve and oversee the effective implementation make a final assessment whether the nominees are of the Bank’s corporate governance framework.
13 IADB ANNUAL REPORT 2017
DESCRIPTION OF THE MAJOR ROLE bodies that oversee said industry or association.
AND CONTRIBUTION OF THE 2. He must have attended a seminar on corporate CHAIRMAN OF THE BOARD governance for board of directors by BSP accredited service provider for corporate The Chairman of the Board sets the annual governance seminar; and strategic business plans and direction of the Bank and shall undertake the following to maintain 3. He must have the relevant education, financial relationship of trust with members of the board of literacy, training/experience and sufficient time directors: to fully carryout the responsibilities as Bank i. Preside at all meetings of the stockholders, of the director. Board of Directors, and of any standing committees For Independent Directors of the Bank, the created by the Board; following are the additional qualifications and ii. Inform the Board of Directors and stockholders requirements (in addition to the minimum on matters of interest to them at their respective requirements of regular board members) prior to meetings; their appointment as Independent Directors: iii. Ensure that meeting agenda focuses on strategic 1. Is not or was not a director, officer or matters that will cover risk appetites/directions employee of the Bank, its affiliates or related and governance concerns; interests during the past three (3) years counted from his date of election/ iv. Ensure a sound decision making process; appointment; v. Encourage and promote critical discussion during committee or board meetings; 2. Is not or was not retained as professional adviser, consultant, agent or counsel of the vi. Ensure that members of the Board of Directors, Bank or any of the Bank’s related companies, receives accurate, timely, and relevant information; or any of its substantial shareholders either in vii. Ensure the conduct of proper orientation for his personal capacity or through his firm first time directors and provide training during the past three (3) years counted from opportunities for all directors; and the date of his election; and viii. Ensure that performance evaluation of the 3. Is not affiliated with any non-profit board of directors, are conducted once a year. organization that receives significant funding from the Bank or its related companies or
substantial stockholders. BOARD MINIMUM QUALIFICATIONS
The minimum qualifications for the appointment of a regular member in the board of the Bank are as follows:
1. He must meet the required fit and proper rule for the position of director as required by the Bangko Sentral Ng Pilipinas (BSP) where integrity and probity will be the guiding considerations where the director’s reputation, conduct and behavior in the market or industry that he is or previously connected with, are within industry standards, market rule of conduct and requirements as well as the standards set by the professional or regulatory
IADB ANNUAL REPORT 2017 14
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE FRAMEWORK ADOPTED RISK GOVERNANCE AND OVERSIGHT
The Bank’s risk framework encompasses the scope of risks to While the overall responsibility of risk be managed and the processes/systems and procedures to management rests with the Board of manage the related risks as well as the roles and Directors (BOD) of IADB, it is the duty of responsibilities of individuals involved in risk management. I A D B’ s senior management to transform The following framework of IADB is designed to strategic direction set by board to adopt capture all risks that a bank is exposed to and have the appropriate policies and procedures and to flexibility to address any change in business activities: institute an effective hierarchy to execute and implement those policies. To ensure that the Clearly defined risk management policies and procedures covering risk identification, acceptance, policies are consistent with the risk measurement, monitoring, reporting and control. tolerances of shareholders, these policies are approved by the board. A well constituted organizational structure defining clearly roles and responsibilities of individuals involved in risk taking as well as managing it. The approved risk management policies are communicated down the line and senior An effective management information system that management ensures these policies are ensures flow of information from operational level to top embedded in the culture of organization of management and a system to address any exceptions IADB by: observed which includes a procedure regarding measures Regular communication and interaction with to be taken to address such deviations. the line and business units; A mechanism to ensure an on-going review of Ensuring that risk taking r e m a i n s systems, policies and procedures for risk management and procedure to adopt changes. within limits set by senior management/ BOD of IADB and any material exception to the risk management policies and tolerances w i l l be reported to the seniors who in turn must trigger appropriat e approvals and corrective measures to the board through the Executive Committee;
To keep the policies in line with significant changes in internal and external environment, the IADB senior management team re-evaluates and reviews the policies every year and make appropriate recommendation for the changes through the Executive C o m m i t t e e .
15 IADB ANNUAL REPORT 2017
This chart illustrates the risk management structure and organization of the Bank that is continuously developing and improving the existing risk oversight, policies and process management to manage the various risks that the Bank might face.
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
COMPLIANCE OFFICER
MARKET RISK CREDIT RISK OPERATIONAL RISK (Includes Liquidity Risk)
CREDIT RISK MARKET RISK OPERATIONAL RISK POLICY POLICY POLICY
INFORMATION TECHNOLOGY
SECURITY
IADB ANNUAL REPORT 2017 16
BOARD COMPOSITION
% of Shares Principal No. of Years No. of Direct Name of Board Type of Held to Total Stockholder Served as & Indirect Member Director Bank’s O/S Represented Director Shares Held shares JR & R Distributors 1. Remigio V. Tan, Jr. Non-executive 6 213,988 11.56% Inc.
2. Julio D. Sy, Jr. Non-executive TAO Corp. 7 728,491 39.36%
3. Roman G. Leus Executive R. G. Leus 6 212,746 11.49%
4. Cristine D. Roquim Non-executive C. D. Roquim 7 178,542 9.65%
Oro Grande 5. Gaspar A. Vicente Non-executive 6 146,620 7.92% Distributors Inc. Macro-Distributors 6. Sergio A. Velez III Non-executive 2 156,395 8.45% Inc. Tridharma Marketing 7. Rey R. Roldan Non-executive 7 months 213,986 11.56% Corp.
8. Carmelita R. Araneta Independent - 2 1 -
9. Rolando B. Victoria* Independent - 5 1 -
Executive Audit Committee Board Number of Committee Number Number of Meetings DIRECTORS’ of Meetings Meetings ATTENDANCE Name of Directors Attended % Attended % Attended % ON BOARD & COMMITTEE 1 Remigio V. Tan, Jr. 11 92% 11 100% MEETINGS
2 Julio D. Sy, Jr. 12 100% 10 92%
3 Roman G. Leus 10 83% 10 100%
4 Cristine D. Roquim 9 75% 8 88%
5 Rey R. Roldan 2 17%
6 Gaspar A. Vicente 11 92% 8 73%
7 Sergio A. Velez 5 42% 2 18%
8 Carmelita R. Araneta 12 100% 11 100%
9 Rolando Victoria * 10 83% 9 82%
Total Number of Meetings Held during 12 11 11 the Year
17 IADB ANNUAL REPORT 2017
CORPORATE GOVERNANCE
LIST OF BOARD LEVEL-COMMITTEES INCLUDING MEMBERSHIP AND LIST OF THE MEMBERS OF AUDIT FUNCTION DATE ELECTED COMMITTEE 1. Executive Committee 1. Rolando B. Victoria April 6, 2017 The functions of the Executive Committee under the Bank’s Amended By-laws are as follows: 2. Gaspar A. Vicente - Member April 6, 2017
a. To pass and act as upon such matters as the Board 3. Sergio A. Velez - Member April 6, 2017 may entrust to it for action in between meetings of the 4. Carmelita R. Araneta - Member April 6, 2017 Board of Directors;
b. To delegate to the Chairman and/or to the Chief
Executive Officer, as well as to any committee or committees it may deem advisable to create any power 3. Related Party Transaction (RPT) Committee that it has or might have, as it may deem convenient Given the classification of the Bank as a simple Bank for the advantage and benefit of the Corporation; and by the Bangko Sentral Ng Pilipinas (BSP), the Bank’s c. To approve loans over PhP300,000.00 up to Board has approved the Audit Committee members as PhP5,000,000.00 as recommended by the Bank’s con-current members of the Related Party Transaction Credit Committee which will be subsequently elevated Committee with the following functions: to the Bank’s board for confirmation/approval. a. Evaluate on an on-going basis existing relations between and among businesses and counterparties to LIST OF THE MEMBERS OF THE ensure all related parties are continuously identified DATE ELECTED and monitored; EXECUTIVE COMMITTEE 1. Remigio V. Tan, Jr. - Chairman April 6, 2017 b. Evaluate all material RPTs to ensure that these are not undertaken on more favorable economic terms 2. Julio D. Sy, Jr.- Member April 6, 2017 (e.g. price, commissions, interest rates, fees, tenor, 3. Cristine D. Roquim - Member April 6, 2017 collateral requirement) to such related parties than similar with nonrelated parties under similar 4. Roman G. Leus - Alternate Member April 6, 2017 circumstances;
c. Ensure that appropriate disclosure is made, and/or information is provided to regulatory bodies relating 2. Audit Committee to Bank’s RPT exposures and policies on conflicts of interests or potential conflicts of interests; The Audit Com assist the Board of Directors in fulfilling its oversight responsibilities and shall have the d. Report to the board of directors on regular basis, the following responsibilities as approved in the board of status and aggregate exposures to each related party director’s meeting last December 20, 2010 and August as well as the total amount of exposures to all related 13, 2016: parties;
a. Monitor and evaluate the adequacy and effectiveness e. Ensure that transactions with related parties, of the Bank’s Internal Control System; including write-off of exposures are subject periodic and independent review or audit process; and b. Oversee the Financial Reporting Framework covering the Bank’s financial statements; f. Oversee the implementation of the system that identify, monitor, measure, control c. Oversee the Internal Audit function, External Audit Function and Bank’s compliance with laws and regulations;
d. Monitor the Reporting Requirements of the Bank; and
e. Other responsibilities which includes the perfor- mance other oversight functions as requested by the full board
IADB ANNUAL REPORT 2017 18
PERFORMANCE ASSESSMENT PROGRAM
The yearly performance assessments of the Bank’s 3. Board Member self-assessment: board as a whole, Board member self-assessment and Board Committee assessment are conducted every first a. Competence 15% quarter of the following year by the board members to determine its effectiveness: b. Integrity/Independence 15%
1. Bank’s Board performance assessment as a c. Preparedness as a Director 25% whole: d. Practice as a Director 25% a. Structure and effectiveness of 25% e. Committee Activity 20% Board and Committee meetings
b. Board membership 25% 100%
c. Board materials and communications 25%
d. Other board duties and responsibilities 25% 4. Senior Management Performance Appraisal
100% For Senior Management, the performance of the President & CEO is assessed annually by the Chairman of the Board where the Bank’s prior year’s business plans and budget are used as reference if the incumbent
was able to deliver and comply with his business 2. Board Committee performance assessment: commitments and plans. For the other members of the senior management, the President & CEO accomplishes
a yearly performance appraisal form per Officer where a. Structure and effectiveness of Committee 25% the following factors are considered:
b. Committee membership 25% 1. Performance vs. their prior year business plans and budget; c. Committee materials and communications 25% 2. Quality and quantity of work; d. Other committee duties and responsibilities 25% 3. Decision making/judgment; 100% 4. Creativity/innovation; and
5. Leadership
19 IADB ANNUAL REPORT 2017
CORPORATE GOVERNANCE
ORIENTATION AND EDUCATION PROGRAM
For newly appointed members of the board of the Newly appointed Senior Officers and members Bank, they are required to review and of the Board are subjected to orientations and complete/sign the following documents upon briefings upon their nomination and appointment their nomination/appointment to comply with the in the Bank. Initially they are provided in documentary requirements by the Bangko Sentral advance the following documents to gain Ng Pilipinas (BSP): knowledge about the Bank: 1. Duly accomplished/signed BSP biographical 1. Bank’s Audited Financial Statements for the data form; past two (2) years; 2. Certificate of Attendance of Corporate 2. Latest General Information Sheet of the Bank; Governance Seminars; 3. Amended Articles of Incorporation of the Bank; 3. Deed of Assignment of one (1) nominal share; 4. New By-Laws of the Bank; 4. Declaration of Trust for nominal share; 5. List and profile of the members of the board of 5. Bangko Sentral Ng Pilipinas (BSP) Verified the Bank; Statement; 6. List and profile of Bank Senior Management 6. Bangko Sentral Ng Pilipinas (BSP) Team/Officers; Authorization Form; 7. Current year Business Plans and operating 7. Bangko Sentral Ng Pilipinas (BSP) Certification budget of the Bank; and of Independent Director; and 8. Projected three (3) years Income Statement, 8. Duly accepted/signed duties and Balance Sheet, Cash Flow Statement, Capital responsibilities of the Board of Directors and expenditures and business plans of the Bank. Director of the Bank. Upon effectiveness of their appointment/ In line with the Bangko Sentral Ng Pilipinas designation, they are both introduced to the (BSP) required continuing education for the board members of the Senior Management Team of the of directors, each member of the board will be Bank to acquaint them the detailed business and required to attend at least four (4) hours operations of the Bank. annually to accredited training service providers by the Bangko Sentral Ng Pilipinas (BSP) on topics that will be relevant in carrying out their
duties and responsibilities as directors.
IADB ANNUAL REPORT 2017 20
CORPORATE GOVERNANCE
RETIREMENT AND SUCCESSION POLICY approved the payment of PhP50,000.00 per diem per their attendance of Bank’s board meetings. The Bank’s Succession Planning Policy for Bank Officers was approved by the Bank’s board last For senior management, the compensation of the February 22, 2011 and Senior Management is top four (4) most highly compensated management required to review the Bank’s succession policy officers of the Bank is based on the approved Salary annually to determine if there is a need to update/ Structure by the board in 2014. revise or align the policies with recently issued SELF-ASSESSMENT FUNCTION regulations governing succession policies. The latest review of the bank’s existing succession policies was 1. Structure and functions of Compliance Office and conducted last October 3, 2016 and based on Senior Internal Audit Unit: Management’s assessment, the current policies of the Bank on succession planning be retained as no major The Compliance Office and Internal Audit Unit of changes were made by the regulatory bodies that will the Bank are independent units that are directly impact the required qualitative and core competencies reporting to the board thru the Audit Committee. The for the key positions in the Bank. Compliance Office is headed by Ms. Josephine Bucal- Moradoz, Compliance Officer whose appointment With the issuance of Circular 969 by the Bangko approved by Bangko Sentral Ng Pilipinas (BSP) Sentral Ng Pilipinas (BSP) last August 22, 2017, the Integrated Supervision Department II last November Senior Management Team will propose to the Board of 23, 2017. The Compliance Office function in the Bank Directors within the third quarter of 2018 the is empowered by the Board of Directors the authority retirement and succession policies for Bank Directors to manage the Bank’s compliance and regulatory to promote dynamism and avoid perpetuation in issues and to exercise independence and prudence in power of Bank Directors. addressing the following:
REMUNERATION POLICY a. Measures to ensure the independence of compliance function from the business activities of The following are the Bank’s Remuneration Policy the Bank; & Structure for executive and non-executive directors: b. Defining the organizational structure and 1. Executive Directors - the Chairman of the Board responsibilities of the Compliance Unit and Treasurer are the Bank’s Executive Directors administering the compliance program; for 2016 and as a policy by the TAO Group of Companies, no per diems, allowances or c. Defining the relationship of the Compliance Unit remuneration are given to executive directors as with other functions or units of the Bank, these are part of their compensation package in including the delineation of responsibilities and the TAO Group of Companies where TAO Corp. lines of cooperation; (Bank’s majority stockholder) is the holding company of the group. d. Ascertaining the rights to obtain access to information necessary to carry out its 2. Non-Executive Directors - the non- executive responsibilities; directors that represent the board seats of the other stockholders in the Bank (which are also e. Ascertaining its rights to conduct investigations of member of the TAO Group of Companies and possible breaches of the compliance policies; affiliates) are not likewise receiving per diems, f. Defining its reporting relationships to senior allowances or remuneration as these are also part management, the Board of Directors and the of their compensation in the TAO Group of Audit Committee; and companies that they are currently assigned. g. Assessing its right to direct access to the Board 3. Independent Directors - to attract Independent and to the Audit Committee. Directors with integrity, experience and management skills, the Bank’s shareholders has
21 IADB ANNUAL REPORT 2017
CORPORATE GOVERNANCE
As a simple bank, some of the functions f. Review of established objectives and goals of of the Compliance Office are being coordinated operations or programs; and closely with the Internal Audit Unit of the g. Special assignments which may include Bank to ensure that the approved Compliance studies on any phase of management System and Program of the Bank are carried activities, character examination, investigation out effectively. work, management representation in The Internal Audit Unit of the Bank is an negotiations, participation in Bank training independent unit that reports also to the Board of programs and other related programs. the Bank through the Audit Committee to assist 2. Review process adopted by the Board to the members of the management in the effective ensure effectiveness and adequacy of internal discharge of their duties and responsibilities by Control: providing them with analyses, appraisal recommendations and pertinent comments on the The Audit Committee is responsible for activities reviewed. The scope of Internal Audit overseeing senior management in the Unit covers practically all phases of activities maintenance of adequate and efficient internal within the Bank which include the following: control as well as the required reports to monitor Bank’s compliance with laws, regulations and a. Financial; internal controls and safeguarding of Bank b. Accounting; assets.
c. Operating Activities; and
d. Information Technology.
The following are the detailed functions of DIVIDEND POLICY Internal Audit Unit to cover the various phases of activities within the Bank: The Bank has not declared any dividends since its operation in 1996 based on the results a. Examination of control procedures to of its operations from 1996 to 2016. While the determine their adequacy and proprietary vs. Bank has been able to turn around its operations the approved policies and procedures by as of December 31, 2014, the Board of Directors management and Board of Directors; had committed to flow back the accumulated earnings of the Bank from 2014 to 2019 as part b. Verification of the reliability and integrity of of its Capital-Build Up Program to meet the information in the Bank’s financial statements minimum capital of PhP300 million by November to ascertain its accuracy; 2019. c. Review and assessment of the adequacy and With the noted sustainability of the income of effectiveness of the systems designed by the Bank from its operations, the Board of Management to comply with existing policies, Directors have committed to declare dividends regulations, plans and procedures; after the Bank has fully complied its Capital d. Review of the means of safeguarding the Build Up Program with the Bangko Sentral Ng assets of the Bank; Pilipinas (BSP).
e. Appraisal of the performance, economical and efficiency of the use of Bank resources;
IADB ANNUAL REPORT 2017 22
CORPORATE INFORMATION
LIST OF STOCKHOLDERS
No. of Shares Sub- Name of Stockholders Citizenship Amount Ratio to scribed
VOTING Common Subscribed Total Voting
VOTING
TAO Corporation Filipino 728,490 39% 72,849,000.00
Roman G. Leus Filipino 11% 212,746 21,274,600.00
Cristine Marie Carmel D. Roquim Filipino 10% 178,542 17,854,200.00
Tridharma Marketing Corporation Filipino 12% 213,985 21,398,500.00
JR&R Distributors, Inc. Filipino 12% 213,987 21,398,700.00
Oro Grande Distributors Filipino 8% 146,619 14,661,900.00
Macro Distributors, Inc. Filipino 8% 156,394 15,639,400.00
Total Voting 100% 1,850,763 185,077,500.00 NON-VOTING Total non-voting 0 0
GRAND TOTAL 1,850,775 185,077,500.00
23 IADB ANNUAL REPORT 2017
CONSUMER PROTECTION PRACTICES
The Bank is adopting the policies issued by the Bangko Sentral Ng Pilipinas (BSP) under Circular 857 last November 21, 2014 in developing the Bank’s Financial Consumer Protection Manual which took effect in December 1, 2015. The Bank’s Board of Directors and Senior Management Consumer Protection have specific and defined oversight functions in the manual to ensure that the Bank is adhering to the highest standards and embraces a culture of fair and responsible dealings in the conduct of business which is appropriate to the Bank’s corporate structure, operational and risk profile.
The related consumer protection policies are incorporated in the various product manuals of the Bank to address and prevent the various financial risks that can cause harm or loss to consumers. These policies are likewise part of the Compliance System and Program of the Bank to ensure its consistent compliance to protect the consumers from possible financial risks and losses. As part of the Bank’s control mechanisms, the Internal Audit Unit of the Bank is required to review at least annually the practices and implementation of Consumer Policies and Procedures of the Bank to determine if these are being implemented effectively and whether Management is fully implementing the policies in accordance with the Bank’s Financial Consumer Protection Manual .
Any breach in the Financial Consumer Protection Manual are reported and elevated to the Audit Committee to enable the members of the committee to assess the effectiveness of implementation and adequacy of the policies and standards in meeting the following established consumer protection objectives or practices:
1. Confidentiality and security of client information;
2. Written consent by customers are secured before sharing the customers personal information with the regulatory bodies (i.e. Credit Information Corporation, BAP Credit Bureau;
3. Affordability and suitability of product or service to client’s requirements or profile;
4. Strict evaluation of client’s profile to prevent over-indebtedness;
5. Fair and responsible treatment of clients;
6. Effective recourse in the handling of consumer concerns or complaints;
7. Continuing Financial Education and Awareness of consumers as part of the Bank’s Corporate Social Responsibility to enable our customers and clients be aware of the risks involved and clearer understanding of the financial products or services that the Bank has offered to them; and
8. Bank’s consumer assistance to persons with disabilities (PWDs), senior citizens and non-English speakers to ensure that they understand the Banks Consumer Assistance initiatives to enable them raise any concerns in their dealings with the Bank.
IADB ANNUAL REPORT 2017 24
PRODUCTS & SERVICES
LOANS
U - Unlad Loan (Business/Agricultural) is a regular loan product of the Bank under business loans that caters to clients with bigger additional capital requirement for their business and with asset size of more than PhP100 million excluding land.
S - Sikap Loan (Business/Agricultural) is also a regular loan product of the Bank under business loans that caters to clients classified either as small or medium enterprises with asset size of PhP3 million to PhP100 million excluding the value of land and
E - Educational Loans are granted to Bank clients who need additional funds for the education of their family members to avoid the use of their business capital for their personal use; minimum and maximum amount is from PhP3 thousand to PhP60 thousand from one (1) month to one (1) year;
C - Car Loans are granted to qualified borrowers for the acquisition of brand new or secondhand motor vehicles personal use or business; minimum and maximum amount of the loan is from PhP150 thousand to PhP3 million for a term of one (1) month to five (5) years;
A - Appliance Loans are granted to qualified borrowers for the acquisition of appliances and gadgets for personal use or business; minimum and maximum amount of the loan is from PhP3 thousand to PhP60 thousand for a term of one (1) month to twelve (12) months;
S - Salary Loans are granted to qualified borrowers for personal use and other purpose of client; minimum and maximum amount of the loan is from P3,000 thousand to PhP1 million for a term of three (3) months to thirty six (36) months;
H - Housing Loans are granted to qualified borrowers for the purchase of house and lot, lot only, home improvement, home construction or condominium purchase; minimum and maximum amount of the loan is from P150 thousand to the Bank’s single borrower’s limit for term of one (1) month to sixty (60) months.
OTHER LOANS
Other Microfinance Loan are granted to individuals who need larger funds for their micro-enterprises business; OTHER BANK SERVICES minimum and maximum amount of the loan is from Titling of Free Patent for residential Land PhP150 thousand to PhP300 thousand for a term of three (3) months to twelve (12) months. Remittance Service
Agri Tao Loan Bayad Center Tagaytay City Water District (TCWD) Bills Payment Kaasenso Loan for Pharma & Sari-sari stores in partnership with JR & R Distributors Inc.
25 IADB ANNUAL REPORT 2017
IADB’s CLIENT KEITH VARIAS WAS NAMED “YOUTH ENTREPRENEUR OF THE YEAR BY CITI PHILIPPINES”
Awardee of IADB 2017
On October 16, 2017, one of Inter-Asia Development Bank’s clients Mr. Keith Varias, was honored by Citi Philippines in the launching event of the 15th Citi Micro-entrepreneurship Award held at the Bangko Sentral ng Pilipinas (BSP).
The Citi Micro-entrepreneurship Awards (CMA) is a nationwide search for outstanding micro-entrepreneurs in the Philippines. Now on its 15th year, the awards program has been successful in increasing awareness for microfinance, and providing incentives to micro-entrepreneurs in the country. It is funded by the Citi Foundation. The CMA program was launched in 2002 as part of the celebrations for Citi’s 100th year in the Philippines. The awards program is a partnership among the Bangko Sentral ng Pilipinas (BSP), Citi Philippines, and the Microfinance Council of the Philippines, Inc. (MCPI).
BANK-CLIENT RELATIONSHIP
Keith Varias has been our client since 2014 . IN PHOTOS (FROM L-R) MR. AFTAB N. AHMED, CEO, CITI PHILIPPINES; MR. ROMAN G. LEUS, PRESIDENT & CEO OF IADB; MR. KEITH VARIAS, YOUTH MICROENTREPRENEUR Inter-Asia Development Bank became OF THE YEAR; MRS. MERLE G. VARIAS, MOTHER OF KEITH; MS. MARIXI RUFINO- instrumental in helping Keith expand his small PRIETO, CHAIRPERSON OF THE PHILIPPINE DAILY INQUIRER; MS. ADORA V. SANTOS, VP- computer shop business in Alfonso, Cavite OPERATIONS HEAD OF IADB; MR. NOLI M. ENCARNACION, ACCOUNT OFFICER. Through the loan obtained from the bank and as a result of the fiduciary relationship established, he was able to add more computers to his shop, offer computer repair services, and start building another computer center in Trece Martires City. Inspired by his success story, IADB nominated Keith in the Youth Microentrepreneur category and after the rigorous screening process, Keith Varias emerged as the recipient of the said award.
IADB ANNUAL REPORT 2017 26
Keith Varias’ Town Hall Visit
NATIONWIDE NEWS
Now, his story is all over the news—inspiring the hearts of many. For winning the award, Varias received PHP 100,000 cash, laptop, insurance, one-day computer training, and two-day hotel accommodation at Orchids Hotel, Manila. His account officer Noli Encarnacion and Inter-Asia Development Bank also received PHP 10,000 cash and a plaque of recognition from Citi Philippines.
The recognition of his success did not end there. On January 30, 2018, MCPI sponsored a Town Hall Celebration held at Casa Jaya in Matagbak, Alfonso, Cavite to increase micro- entrepreneurship awareness at the local level and to inspire other micro-entrepreneurs. The event gave an opportunity for Keith Varias’ family, friends and community to celebrate his success. This occasion was graced by the Municipality of Alfonso Mayor, Hon. Virgilio Varias who gave an Inspirational Message, Vice- Mayor Salamat and the Barangay officials of Mangas, Alfonso, Cavite. IADB also invited its valued micro-entrepreneur clients to show them that they, too, can also be winners like Keith if they give their hearts to their passion and work hard to attain their goals.
The celebration would not be complete without the the message from the winner himself. His story brought the audience into tears as they listen to how he survived all the struggles and sufferings he experienced before reaching the place where he is now. Truly, success is never beyond one’s reach.
To Keith, continue to inspire other people. Your IADB family is proud of you!
27 IADB ANNUAL REPORT 2017
APPRECIATION & AWARDS 2017
IADB ANNUAL REPORT 2017 28
BOARD OF DIRECTORS
29 IADB ANNUAL REPORT 2017
BOARD OF DIRECTORS
REMIGIO V. TAN, JR. JULIO D. SY, JR. ROMAN G. LEUS Chairman Vice Chairman Director/President & CEO
CRISTINE MARIE GASPAR A. VICENTE SERGIO A. VELEZ III CARMEL D. ROQUIM Director Director Treasurer
REY R. ROLDAN CARMELITA R. ARANETA ROLANDO B. VICTORIA Director Independent Director Independent Director
LAURA LOVE P. GUEVARA Corporate Secretary
IADB ANNUAL REPORT 2017 30
BOARD OF DIRECTORS’ PROFILE
REMIGIO V. TAN, JR., Filipino, 65 was re-elected as Chairman of the Board of the Bank on April 6, 2017. He has been the Chairman of the Bank since 2015 and concurrently the Chairman of the Bank’s Executive Committee. He is likewise the Chairman of JR & R Distributors, Inc. (since 1993) and Humabon Distributors, Inc. (since 1995) and President of Megavia Motor Company Inc. (since 2010)). He is appointed as Director of Macro-Distributors Inc. (since 1995), Megavia Corporation (since 2005), Leyte Agri Corporation (since 2010), Granvia Sur Distribution, Inc., (since 2011) and DAG Xpress Courier, Inc. (since 2011) He served as Credit Analyst in Far East Bank & Trust Company (from1977 to 1979) and Loans and Credit Manager of The Bank of Tokyo, Ltd., Manila Offshore Banking Unit (from 1979-1981)
He received his AB/East Asian Studies Communication/Business Administration degree from De La Salle College, Manila in 1974 and completed his Masters In Business Administration degree from Sofia University, Tokyo, Japan in 1981. His trainings included Corporate Governance for Directors, Strategic & Corporate Planning, Budget & Planning and Risk Management.
JULIO D. SY, JR., Filipino, 54 was re-elected as Vice Chairman of the Board of the Bank on April 6, 2017. He has been the Vice Chairman of the Bank since 2010 and concurrently a Member of the Bank’s Executive Committee. He is likewise the Chairman of JR & R Distributors, Inc. (since 1999), Megavia Cor- poration (since 2002), Tridharma Marketing Corporation (since 2005),Health Solutions Enterprise, Inc. (since 2007), Altus Communications Inc. (since 2007),Combrands Inc. (since 2008),I-Can Worldwide Inc. (since 2007), Oro Grande Distributors Inc. (since 2009),Total Nutrition Corportion (since 2010), I Can Capital Lending Inc. (since 2010),Snaptech Inc. (since 2010), AV Seneca Corporation (since 2008), In-site Digital Inc. (since 2012), Tridharma Food Service Inc. (since 2012), Ecoessential Foods Corp. (since 2010), Hygiene Science Inc. (since 2011), ThinkDharma Inc. (since 2012), Opal Holdings Inc. (since 2011), Con- versa Mobile Inc. (since 2013), Prestige e-Media, Inc. (since 2013), Worldhealth Shop Inc. (since 2014), Skinthologie (since 2014), Airworks Aviation Company (since 2014), Prime Path Corporation (since 2014), and Maple Three Holdings Inc. (since 2014). He is also the con-current Vice Chairman of TAO Commodity Trader, Inc. (since 1995) and President of TAO Corporation (since 2005), Dumaguete Busi- ness Park (since 2006), Chams Retail Corp, (since 2009), JOS Holdings (since 2003) and Director of New Marketlink Pharmaceuticals Inc. (since 2006), Godiva Inc. (since 2007), Southbay Bulk Terminal Inc. (since 2002), New Orient Food Industries Inc. (since 2012), Meat District Inc. (since 2012),Tridiamonds Corp. (since 2013) and Via Urbino Holdings Inc. (since 2015). He is currently a member of the Board of Trustee of Sacred Heart School Ateneo and Child Protection Unit – Philippine General Hospital (since 2009).
He received his Bachelor of Science – Business Management Honors degree from Ateneo de Manila University in 1984 and his trainings including Corporate Governance Seminar from Institute of Corporate Directors, Strategic & Corporate Planning, Budget & Planning and Risk Management.
31 IADB ANNUAL REPORT 2017
ROMAN G. LEUS, Filipino, 55 was elected Director and re- appointed as President & Chief Executive Officer of the Bank on April 6, 2017. He has been the President and Chief Executive Officer of the Bank since 2011. He is the Chairman of Management Committee, Asset & Liability Committee and Credit Committee. He is also a Director of A.V. Seneca Construction Corporation since (June 2011) and I-Can Capital Lending Corporation (since May 2015). Prior to joining the bank, he was the former President of E-Pera Philippines, Inc. (from Jan. 2009 to Aug. 2011); Chief Finance Officer of I Can Worldwide Inc. (from Jan 2009 to August 2011). He served as Vice President - FX Head and FX Derivative Sales Division of Security Bank Corporation (from Feb. 2000 to June 2008), Asst. Vice President - Corporate Banking Head -Japan Desk of Equitable— PCI Bank (now BDO) (from Feb. 1996 to Feb. 2000), Pilipinas Bank - Dept. Head Japanese Business Division (from July 1991 to Feb. 1996), Philippine Banking Corp. - Account Officer Commerical Banking Division (from Oct. 1990 July 1991) and as Internal Auditor of Philippine Banking Corporation (from 1987 to Oct. 1990).
He is a double degree holder. He received his AB Economics degree from Ateneo de Manila University in 1984, Bachelor of Science in Commerce major in Accounting in 1987 from De La Salle University and obtained his Certified Public Accountant license in 1989. He completed his Masters in Business Administration from Ateneo Graduate School of Business in 1995 and obtained his Doctor of Philosophy (PHD-major in Management) degree with International Academy of Management and Economics in 2005. His trainings included Derivatives, Intermediate Options, Credit Derivatives, Derivatives Documentation, Treasury Certification Program, Core Credit, FX and MM Trading, Anti Money Laundering Seminar, Corporate Governance Seminar for Directors and Strategic Planning.
CRISTINE MARIE CARMEL D. ROQUIM, Filipino, 49 was elected Director and appointed as Treasurer of the Bank on April 6, 2017. She is a member of the Executive Committee of the Bank since 2016. She is also the Chief Finance Officer (since 1995) of TAO Corporation, TAO Commodity Trader, Inc., (since 1995) and Director of Health Solutions Inc. (since 2001), Altus Communications Inc. (since 2005), Total Nutrition Corporation (since 2001), Yngen Group of Companies (since 2009), I Can Worldwide, Inc. (since 2009) Assistant Tresurer of Tridharma Distriobutors Inc., (since 2006), Treasurer of New Marketlink Pharmaceuticals, Inc. (since 2007), and Teasurer/Director of Southbay Bulk Terminal Inc. (since2007).
She received her Bachelor of Science & Economics, Accounting from De La Salle University, Manila in 1989 and passed the Certified Public Accountancy examination in 1990. Her trainings included Corporate Governance for Directors, Strategic & Corporate Planning, Budget & Planning, Risk Management, Audit & Financial Accounting and Taxation.
IADB ANNUAL REPORT 2017 32
BOARD OF DIRECTORS’ PROFILE
GASPAR A. VICENTE, Filipino, 55, was reelected as Director of the Bank last April 6, 2017. He has been a Director of the Bank since 2016 and currently a member of the Bank’s Audit Committee. He is the Chairman of the Board of Semigere Corporation (since 2005) and President of Macro Distributors Inc. (since 1995), MS Panay Distribution, Inc. (since 2014), LDL Adgricultural Development (since 2004), Canefist Corporation (since 2013), Tres Locos Agri Aqua Corporation (since 2009) and Director of Oro Grande Distributors, Inc. since 1996. He is likewise the proprietor of Veltan Farms and Lorenzo Hauling Services since 2010 and 2012 respectively.
He received his Bachelor of Science in Economics – Major in Marketing from De La Salle University in 1990 and his trainings included Corporate Governance Seminar, Corporate Planning, Budget & Planning and Risk Management.
SERGIO A. VELEZ III, Filipino, 48, was reelected as Director of the Bank last April 6, 2017. He has been a Director of the Bank since 2013 and currently a member of the Bank’s Audit Committee. He is the President of Oro Grande Distributor Inc. (since 2002) and Granvia Sur Distribution Inc. (since 2009) and Director of TAO Corporation (since 2004), and since 2013 he served as Director of Megavia Motors TAO Shipping Corp., Brigadoon Trader, Eccoessential Food Corp., New Orient Food Corp., South Bay Bulk Terminal, Tridharma Food Service and Combrands Inc.. He is likewise the designated Regional Manager TAO Commodity since 1996.
He received his Bachelor of Science in Business Administration from Silliman University in 1985 and his trainings included Corporate Governance Seminar, Corporate Planning, Budget & Planning and Risk Management.
REY R. ROLDAN, Filipino, 48, was elected as Director of the Bank in May 9, 2017. He is currently the Chief Finance Officer of Eccoessential Foods Corporation since 2016 and has served as Comptroller/Project Manager of Tridharma Marketing Corporation from February 2015 to June 2016. He used to be connected with Coca-Cola Bottlers Phils. Inc. and has occupied various positions (Market Analyst, Channel Development Officer, Trade Promotion and Marketing, Territory Finance Head, National Sales Accounting and Finance, Commercial Finance Manager, Region Cost and Performance Manager, Process Manager and Business Integration Manager.
He received his Bachelor of Science in Commerce, Major In Accounting from St. Louis College in 1990 and passed the Certified Public Accountancy Board examination in 1990. His trainings included Corporate Governance Seminar, Corporate Planning, Budget & Planning, Risk Management and various financial accounting seminars from P & A Grant Thornton (Araullo & Punongbayan Accounting and Philippine Institute of Certified Public Accountant.
33 IADB ANNUAL REPORT 2017
CARMELITA R. ARANETA, Filipino, 67, was reelected as Independent Director of the Bank last April 6, 2017 and has been the Independent Director since April 2016. She is the Consultant of Bank of Commerce since 2015 and has occupied various key positions in private banking institutions and Central Bank of the Philippines (Bank of Commerce –Executive Vice President (2009-2015), Metrobank Executive Vice President (2005-2009), First Metro Investment Corp. (2006-2009), Metrobank -Sr, Vice President/Chief Risk Officer (2000-2005), First Vice President/Deputy Operations Group Head 1997- 2000), General Manager – Metrobank Tokyo Branch (1996-1997), Director – First Charter Insurance Corp.). She likewise served critical positions with the Bangko Sentral ng Pilipinas (Director of External Trade Department (1993-1994), Officer-In-Charge of Current Imports and Commodity Classification Office 1988-1993), Data Analyst/Bank Executive Assistant (1975-1988) and Tariff Commission as Commodity Specialist from 1972-1975.
She received her Bachelor of Science in Chemical Engineering in 1971 and candidate for Masters In Business Administration from Ateneo de Manila University and Master In Economics from De La Salle Graduate School of Business. Her trainings included Advanced Management Program for Overseas Banking from Wharton School of Business and Risk Management Course from Nanyang Technological Institute of Singapore.
ROLANDO B. VICTORIA, Filipino, 62, was reelected as Independent Director of the Bank last April 6, 2017 and has been an Independent Director of the Bank since 2012. He is currently the President and CEO of Alalay Sa Kinabukasan Inc. (ASKI) Group of Companies since 2016, ASKI Skills And Knowledge Inc. (since 2010), Alalay Holding and Trading Corp. (since 2011), ISYNERGIES (since 2012), and Chairman of ASKI Global Inc. (since 2010), ASKI Employees Credit Pinoy Ako Microinsurance Inc. (since 20015), Pinoy Ako Microinsurance Services Inc. (since 2011) and Vice-Chairman of Append Micorfinance Enterprise Development Inc. (since 2016). He is likewise the Executive Director (Ex Officio) of Alalay sa Kaunlaran Inc. (since 1987) and serve as Advisory Board of ASKI Mutual Benefit Association (since 2010) and ASKI Foundation Inc. (since 2013). He serves as Board Member of ASKI Multi-Purpose Cooperative, Victorious Labor Service Cooperative (since 2015), Opportunity International Network (since 2014) and Familia Foundation of Nueva Ecija, Inc. (since 2015). He is also the Treasurer of ASKI School of Knowledge (since 2015) and Opportunity Kauswagan Remit Inc. (since 2015). He was previously connected with various companies (Banco Filipino, Opportunity Microfinance Inc. Alliance of Philippine Partner In Enterprise Development, Rimansi for Asia and the Pacific, Inc., Alliance of Philippine Partners In Enterprise Development, Microfinance Council of the Phils, Social Initiative Against Catastrophe Inc., Central Luzon Association of Microfinance Institute, Aurora Bank, ASKI School of Knowledge, ABS-CBN Bayan Academy for Social Entrpreneurship, Peoples Law and Enforcement Board, Familia Foundation of Nueva Ecija, Inc., St. Isodore Bread of Life Foundation Inc. and Policy Advisory Group – The Philippine Coalition For Microfinance Standards) from 1975 to 2015.
He received his Bachelor of Science in Commerce, Major in Accounting degree from Araullo Lyceum in 1977 and completed his Program for Development Manager from Asian Institute of Management in 1989. His trainings included Development Banking – Best Practices and Future Trends, Governance and AMLA Workshop for MSAs, Partner’s Dialogue, Corporate Governance & Risk Management Course for Banks and Board of Directors and Vanguard of Vision -Governance.
IADB ANNUAL REPORT 2017 34
ORGANIZATIONAL CHART
35 IADB ANNUAL REPORT 2017
OUR TEAM
IADB ANNUAL REPORT 2017 36
IADB Management Team in Action
37 IADB ANNUAL REPORT 2017
IADB Management Team
ROMAN G. LEUS ADORA V. SANTOS DANILO V. PALUGOD President & CEO VP- Head of Operations Admin & Support Services Head
JOSEPHINE B. MORADOZ MARISSA D. CUISON REDENTOR N. DELA ROSA JULIE ANN F. PANGANIBAN Compliance Officer Acting Internal Auditor IT Head/ Branch Manager Security Officer (Mahogany)
AUREA R. VIDAMO MYNARD IAN B. JAVIER KAREN MAE T. FERMA MARIA PAMELA R. PINEDA Branch Manager Credit Management Dept. Commercial Banking Group Accounting & Reports (Tolentino) Head Head Supervisor
IADB ANNUAL REPORT 2017 38
SENIOR MANAGEMENT PROFILE
LAURA LOVE P. GUEVARA, Filipino, 45 was re-appointed as Corporate Secretary on April 6, 2017, a position which she held since 2010. She is also the Legal Counsel of TAO Corp. (since 2004), Corporate Secretary/Director of Health Solutions (since 2007), Health Harmony Inc. (since 2009), I Can Capital Lending Inc. (since 2010), Altus Communications Inc. (since 2009), AV Seneca Construction Corp. (since 2011), Manila Execon Group Inc. (since 1997, E-Pera Philippines Inc. (since2009), Combrands Inc. (since 2008), Corporate Secretary of TAO Commodity Trader (since 2004), Megavia Corp. (since 2004), South Bay Bulk Terminal, Inc. (since 2004), New Market Link Pharmaceutical Corp. (since 2006) Tridharma Marketing Corp. (Since 2005),Think Dharma Inc. ( since 2012), Tala Inc. (since 2012),Total Nutrition Inc. (since 2010),Chams Retail Corp. (since 2010), Snaptech Inc. (since 2010), 7101 Music Nation Corp., (since 2010), Tridharma Holdings Inc. (since 2012),JOS Holdings (since 2004), Dumaguete Business Park Inc.(since 2006), Godiva Inc. (since 2007),New Orient Food Industries Inc. (since 2012), On-Site Digital Inc. (since 2012) Meat District Inc. (since 2012),Tridharma Food Service Inc. (since 2012),TAODharma (since 2013)Mercy Medical Inc., (since 2012), Ecoessential Foods Corp. (since 2010), Stardharma Inc. (since 2013),Man and Machine Racing Sports Promotions Inc. (since 2013),TriDiamonds Corporation (since 2013),Conversa Mobile Inc. (since 2013),Casco Commodity Inc. (since 2013),Prestige e-media, Inc. (since 2013),Worlhealth Shop Inc., (since 2014),Skinthologie Essentials Corp. (since 2014), Airworks Aviation Co. Inc., (since 2014), Lux Et Sal Corporation (since 2014), Prime Path Corporation (since 2014), Maple Three Holdings, Inc. (since 2014), 8 Simple Corporation (since 2014), Auto Top-Up Ventures, Inc. (since 2009) and Thinghub Inc. (since 2015).
Prior to her appointment in the Bank, she was an Associate Lawyer of Ocampo & Ocampo Law Offices (from 1999 to March 2004)and Sycip Salazar Hernandez Gatmaitan Law Officers (Dec. 1997 to March 1999).
She received her BACHELOR OF Science In Legal Management from the Ateneo de Manila University in 1993 and Juris Doctor degree from Ateneo Law School in 1997.
Her trainings included Corporate Governance and Strategic & Budget Planning.
ADORA V. SANTOS, Filipino, 39 was re-appointed as Vice President Head of Operations on April 6, 2017. She is a member of the Bank’s Management Committee, Credit Committee and Asset & Liability Committee. A Certified Public Accountant (CPA) with a Masters in Business Administration major in Management and with more than 14 years of experience in Banking and Microfinance. Ms. Santos had previously worked as Internal Auditor/Compliance officer for Producers Savings Bank Corporation and the Cooperative Rural Bank of Nueva Ecija. She had various work experiences too in the hospital industry as well as airline industry where she was in-charge of the accounting and finance department. She is also a CPA Practitioner/Consultant with specialization in the areas of bookkeeping, auditing and taxation.
She also worked in Chemonics International- RBAP-MABS Program, the USAID funded program where as Senior Microfinance Specialist she provided technical assistance and training support to MABS participating banks.
She received her Bachelor of Science in Accountancy from the College of Immaculate Conception and graduated as Cum Laude in 1999 and passed the Certified Public Accountant (CPA) board examination in 2000. She completed her Master in Business Administration major in Management from Araullo University in 2003. Her recent trainings included Bridging the Generally Accepted Accounting Principle (GAAP) with Tax Accounting and the New Tax Reform Acceleration and Inclusion (TRAIN) Program, Seminar on Audit report and workshop on Philippine Financial Reporting Standard (PFRS) for Small and Medium Enterprises (SMEs), Introduction to Compilation Services and Selected PSA Updates ,Accounting for Non-Accountants & Financial Management, Entrepreneurial Mindset & Bureau of Internal Revenue (BIR) Reportorial Requirements, Barangay Micro Business Enterprises (BMBEs) 2nd Central Luzon Regional Conference Career Updates and Personal Development of CPAs, Securities and Exchange Commission (SEC) and Board of Accountancy (BOA) Updates,Corporate Governance and Ethical Dilemmas, Effective Conversation Fluency.
39 IADB ANNUAL REPORT 2017
DANILO V. PALUGOD, Filipino, 69 was appointed as Administration and Support Services Head of the Bank on April 6, 2017. He is a member of the bank’s Management Committee and Asset and Liability Committee. Prior to joining the bank in September 2010, he served as Operations Officer of CityTrust Banking Corporation (from 1970-1981), Trade & Treasury Officer of Equitable/PCIBank (from 1981 to 2001), Bangko Sentral Ng Pilipinas Consultant (Comptrollership from 2002 to 2004), Chief Compliance Officer of Security Bank (from 2005 to 2010), Consultant - TAO Corporation (from June 2010 to August 2010).
He received his Bachelor of Science in Business Administration major in Accounting from FEATI University in 1969 and passed the Certified Public Accountant board examination in 1972. He is candidate for a Master Degree in Business Administration from the Ateneo de Manila University and had completed the Advanced Bank Management Program of the Asian Institute of Management.
His trainings included Basic Banking and Management Course, Trade Operations Seminar, Foreign Exchange Operations, Operation Seminar for Asian Bankers, Accounting For Derivatives, Corporate Governance, Emerging Trends in Growing the Risk Based Business for Financial Institution, Anti Money Laundering Prevention, Anti-Money Laundering Seminar,Productivity Improvement, Strategic Planning, Risk Management and Operational Risk, Career Updates and Personal Development for CPAs, A Clearer Approach to Financial Statements, PFRS for SMEs: Key Concepts, Issues and Relevant Changes,The Thrusts of the New Board of Accountancy, Tools and Tips for Powerful Communication, ABCs of Expanded Withholding Tax, Value Added Tax, and Final Withholding Tax, Code of Ethics and Good Governance, How to Handle BIR Audit and Investigation, Accounting for Non-Accountants and Financial Management.
JOSEPHINE BUCAL-MORADOZ, Filipino, 32 was appointed as Compliance Officer of the Bank on April 6, 2017 and was approved by the Bangko Sentral ng Pilipinas (BSP) Monetary Board last November 23, 2017. She works at the Bank for more than 7 years. Her experiences started from Microfinance (MF) Bookkeeper (2011- 2012), Senior MF Bookkeeper (2012-2013), Audit & Compliance Assistant (2013-2015), Audit and Compliance Supervisor (2015-2017) and currently, Compliance Officer.
She received her Bachelor of Science in Business Administration major in Management from Philippine School of Business Administration – Manila in 2006. She completed her Master in Business Administration (MBA) from Cavite State University – Indang, Cavite in 2015. She also finished her Certificate Course in Strategic Compliance for the Banking Industry under De La Salle University Center for Professional Development in Business and Association of Bank Compliance Officers, Inc. (ABCOMP) at De La Salle University (DLSU) Taft Campus on 2016 and received an award of Outstanding Performance on the Case Presentation.
Her recent training included Anti-Money Laundering/Countering the Financing Terrorism (AML/CFT) Training Workshop, Biennial Compliance Workshop Compliance Risk Management #Align and Fortify, Governance, Ethics and Compliance Officers’ Summit, MCPI Annual Conference: “Embracing New Milestones & Challenges in Philippine Microfinance, BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System, Accounting for Non-Accountants & Financial Management, Entrepreneurial Mindset & BIR Reportorial Requirements, Cyber Security Summit 2017: Cyber Attacks: Clear and Present Danger, entitled Seminar on BSP Circular Nos. 855 (Sound Credit Risk Management Practices) and 857 (Financial Consumer Protection), Financial Inclusion and Updated AML Regulations, Internal Audit Training (A Practical Approach), Philippine Deposit Insurance Corporation (PDIC) Proposed Regulatory Issuance (RI) on Computerized Records of Bank Deposits, Training on the Anti-Money Laundering Council (AMLC) Reporting Procedures for electronic Covered Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs). She is also actively participating on the Association of Bank Compliance Officers (ABCOMP) and the Chamber of Thrift Banks (CTB).
IADB ANNUAL REPORT 2017 40
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the Stockholders and Board of Directors
INTER-ASIA DEVELOPMENT BANK, INC.
(A Subsidiary of Tao Corporation)
J.P. Rizal Avenue corner
Mahogany Market Street, Tagaytay City
Opinion
We have audited the financial statements INTER-ASIA DEVELOPMENT BANK, INC. (the “Bank”) which comprise the statement of financial position as of December 31, 2017, and the related statement of income, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position ofthe Bank as at December 31, 2017, and its financial performance and its cash flows for the year then ended in accordance with Philippine Financial Reporting Standards.
Basis for Opinion
We conducted our audit in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the financial statements in the Philippines, the Code of Ethics for Professional Accountants in the Philippines, and we have fulfilled our other responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation of the financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Bank’s financial reporting process.
41 IADB ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to providea basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during ouraudit.
Other Matter
The financial statements of the Bank as of December 31, 2016, were audited by another auditor whose report dated March 23, 2017 expressed an unqualified opinion on those statements.
IADB ANNUAL REPORT 2017 42
INDEPENDENT AUDITOR’S REPORT
Report on Other Legal and Regulatory Requirements
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplementary Information Required under Revenue Regulations Nos. 15- 2010 and 19-2011 on taxes, duties and license fees paid or accrued during the taxable year, taxable income, and deductions in Notes 29 and 30 to the financial statements are 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 responsibility of the management of INTER-ASIA DEVELOPMENT BANK, INC. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
ALAS, OPLAS & CO., CPAs
BOA Registration No. 0190, valid from January 1, 2017 to December 31, 2019
SEC A.N. (Firm) 0321-F, issued on February 3, 2016; effective until February 2, 2019
TIN 002-013-406-000
BIR A.N. 08-001026-000-2018, issued on January 25, 2018; effective until January 24, 2021
By:
RYAN A. SABUG
Partner
CPA License No. 0111183
SEC A.N. (Individual) 1530-A, February 3, 2016; effective until February 2, 2019
TIN 232-158-286-000
BIR A.N. 08-006531-001-2016, issued on September 9, 2016; effective until September 8, 2019
43 IADB ANNUAL REPORT 2017
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2017 (With Comparative Figures for 2016) In Philippine Peso Unrealized Fair Value Accumulated Capital Stock Deficit Losses on Available- Actuarial Losses on for-Sale Securities Post-employment Total (Note 18) (Note 19) Defined Benefit (Note 9) Obligation Balance at December 31, 2015, as previ- 184,100,000 (116,867,083) (160,419) 2,432,829 69,505,327 ously reported Prior period adjustments – (1,342,742) – – (1,342,742) Balance at December 31, 2015, 184,100,000 (118,209,825) (160,419) 2,432,829 68,162,585 as restated Total comprehensive income Profit – 6,267,712 – – 6,267,712 Other comprehensive income – – (67,677) – (67,677)
– 6,267,712 (67,677) 6,200,035 – Balance at December 31, 2016 184,100,000 (111,942,113) (228,096) 2,432,829 74,362,620 Issuance of share capital 977,500 – – – 977,500 Prior period adjustments – (750,405) – – (750,405)
185,077,500 (112,692,518) (228,096) 2,432,829 74,589,715
Total comprehensive income Profit – 6,889,859 – – 6,889,859 Other comprehensive income – – 23,149 (1,623,568) (1,600,419)
– 6,889,859 23,149 (1,623,568) 5,289,440
Balance at December 31, 2017 185,077,500 (105,802,659) (204,947) 809,261 79,879,155
TIER 1 CAPITAL 78,639,785 Paid up Common Stock 185,077,500 Surplus/(Deficit) (112,692,518) Undivided Profits 6,889,858 Other Comprehensive Income 604,314 79,879,154 Deduction on TIER 1 Unbooked valuation reserve 496,000 Unsecured credit accommodation - Deferred Income tax 743,369 1,239,369
TIER 2 CAPITAL 1,957,376 General loan loss provision 1,957,376
GROSS QUALIFYING CAPITAL 80,597,161 Deduction from Tier 1 (50%) and Tier 2 (505) Capital - TOTAL QUALIFYING CAPITAL 80,597,161 Capital requirement for Credit Risk 289,038,207 Capital requirement for Market Risk 0 Capital requirement for Operational Risk 54,287,472 Risk-weighted Assets 343,325,680
Total and Tier 1 Capital Adequacy Ratio 23.48%
IADB ANNUAL REPORT 2017 44
STATEMENT OF FINANCIAL POSITION
As of DECEMBER 31, 2017 (With Comparative Figures for 2016) In Philippine Peso
Notes 2017 2016
ASSETS Cash and other cash items 8 1,947,622 2,025,535 Due from Bangko Sentral ng Pilipinas 8 20,119,242 14,027,752 Due from other banks 8 43,560,284 24,210,061 Available-for-sale securities 9 2,795,053 2,771,904 Loans and other receivables – net 10 216,186,957 165,306,644 Bank premises, furniture, fixtures and equipment 11 6,498,178 8,703,998 Investment properties – net 12 39,862,800 33,972,750 Deferred tax asset 23 107,806 994,441 Other assets 13 1,686,148 2,836,629 TOTAL ASSETS 332,764,090 254,849,714 LIABILITIES AND EQUITY LIABILITIES Deposit liabilities 14 243,057,720 173,407,684 Accrued and other liabilities 15 4,460,597 4,151,910 Retirement benefit obligation 16 3,947,180 2,082,712 Due to related party 17 676,069 695,112 Deferred tax liability 23 743,369 – Income tax payable – 149,676 Total Liabilities 252,884,935 180,487,094
EQUITY Capital stock 18 185,077,500 184,100,000 (105,802,65 (111,942,113 Deficit 19 9) ) Unrealized fair value losses on available-for-sale 9 (204,947) financial assets (228,096) Accumulated actuarial gains on post-employment 809,261 defined benefit obligation 2,432,829
79,879,155 74,362,620 Total Equity TOTAL LIABILITIES AND EQUITY 332,764,090 254,849,714
45 IADB ANNUAL REPORT 2017
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2017 (With Comparative Figures for 2016) In Philippine Peso
Notes 2017 2016
INTEREST INCOME Deposits with banks 8 118,944 97,135 Available-for-sale securities 9 78,000 109,958 Loans and other receivable 10 38,961,328 31,016,165 39,158,272 31,223,258 INTEREST EXPENSE Deposit liabilities 14 (4,302,909) (3,059,450)
NET INTEREST INCOME 34,855,363 28,163,808
OTHER INCOME 20 9,545,328 6,606,003
TOTAL OPERATING INCOME 44,400,691 34,769,811
OPERATING EXPENSES 21 (33,338,477) (26,377,618)
NET OPERATING INCOME BEFORE 11,062,214 8,392,193 PROVISIONS
PROVISION FOR IMPAIRMENT LOSSES 10 (1,979,104) (1,802,774)
PROFIT BEFORE TAX 9,083,110 6,589,419
INCOME TAX EXPENSE 23 (2,193,251) (321,707)
PROFIT 6,889,859 6,267,712
OTHER COMPREHENSIVE LOSS Item that will not be reclassified subsequently
to profit or loss Actuarial losses on remeasurement of post- 16 (1,623,568) – employment defined benefit plan Item that will be reclassified subsequently to
profit or loss Unrealized fair value gains (losses) on available 9 23,149 (67,677) -for-sale securities
(1,600,419) (67,677)
TOTAL COMPREHENSIVE INCOME 5,289,440 6,200,035
IADB ANNUAL REPORT 2017 46
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017 In Philippine Peso
Notes 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 9,083,110 6,589,419 Adjustments for: Depreciation and amortization 22 4,418,905 2,088,071 Fair value gain on investment properties 12 (2,477,895) (669,111) Provision for impairment losses 10 1,979,104 1,802,774 Provision for retirement benefit 16 658,263 623,597 Interest income 8,9 (196,944) (207,093)
Operating income before working capital changes 13,464,543 10,227,657
Decrease (increase) in operating assets: (56,951,011 Loans and other receivables (29,792,570) ) Other assets 841,331 (915,296) Increase (decrease) in operating liabilities: Deposit liabilities 69,650,035 26,318,967 Accrued expenses and other liabilities 308,689 128,926 Cash generated from operations 27,313,587 5,967,684 Income tax paid (712,922) (473,339) Interest received 8,9 196,944 207,093 Retirement benefits paid 16 (417,363) (431,608) Net cash generated from operating activities 26,380,246 5,269,830
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of bank premises, furniture fixture and equip- 11 (1,974,903) (3,829,157) ment Proceeds from disposal of bank premises, furniture, fix- 11 – 7,375 ture and equipment
Net cash used in investing activities (1,974,903) (3,821,782)
47 IADB ANNUAL REPORT 2017
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017 (With Comparative Figures for 2016) In Philippine Peso
Notes 2017 2016
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of share capital 18 977,500 –
Payments of due to related party 17 (19,043) (3,848)
Net cash generated from (used in) financing activities 958,457 (3,848)
NET INCREASE IN CASH AND CASH EQUIVALENTS 25,363,800 1,444,200
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
Cash and other cash items 2,025,535 736,113
Due from Bangko Sentral ng Pilipinas 14,027,752 13,085,677
Due from other banks 24,210,061 24,997,358
40,263,348 38,819,148
CASH AND CASH EQUIVALENTS AT END OF YEAR 8
Cash and other cash items 1,947,622 2,025,535
Due from Bangko Sentral ng Pilipinas 20,119,242 14,027,752
Due from other banks 43,560,284 24,210,061
65,627,148 40,263,348
IADB ANNUAL REPORT 2017 48 EMPLOYEES ACTIVITIES
Fun Run for Employees, Employees Family Members & Clients at Tagaytay City Oval last 29 August 2015
IADB’s 5th Year Anniversary Celebra- JR & R Rhythm in Blue Christ- tion (TAO take-over) at Banquette mas Party at The Glass Garden Hall, Crosswinds, Tagaytay City last Events Venue, Pasig City last 29 September 2015 12 December 2017
49 IADB ANNUAL REPORT 2017
Recollection at Sa La Leo Regular Devotion and Focolare, Tagaytay City last morning briefing 13 May 2017
Christmas Party at Marco Monthly General Assembly Polo, Silang, Cavite last 19 December 2016
Christmas Party at Caffmaco, Silang, Cavite last 22 December 2017
IADB ANNUAL REPORT 2017 50
EMPLOYEE ENGAGEMENT & EMPOWERMENT
IADB is known in providing innovative financial services to its clients. It also aims to promote the continuous learning of its employees. As President Roman G. Leus said, “Seminars and trainings for their clients are considered as an additional service offered by the bank, to live out its mission”. It is in this context that IADB , in partnership with DTI, conducted several trainings for its stakeholders.
51 IADB ANNUAL REPORT 2017
IADB ANNUAL REPORT 2017 52
MENTORING & CREATING OPPORTUNITIES FOR OUR CLIENTS
Entrepreneurial Mindset and BIR Reportorial Requirements
IADB is known in providing innovative financial services to its clients. It also aims to promote the continuous learning of its employees. As President Roman G. Leus said, “Seminars and trainings for their clients are considered as an additional service offered by the bank, to live out its mission”. It is in this context that IADB , in partnership with DTI, conducted several trainings for its stakeholders.
IADB organized an informational seminar entitled Entrepre- neurial Mindset and BIR Reportorial Requirements last February 23, 2017 at the IADB Building. Ms. Lilibeth Chavez, DTI representative, discussed about the Fair Trade Law : explaining the concept of customers’ rights and the importance of consumer awareness on different business permits and government departments responsible for business related matters. Meanwhile, Mr. Joel D.S. Sarmiento, Revenue Officer of Cavite Chapter, talked about the BIR Reportorial Requirements for those who are engaged in business. He emphasized the important dates and deadlines to avoid possible fines and penalties. An open forum was held after the presentation. Different queries from clients were raised which gave further enlightenment on the topics discussed. Mr. Joel D. S Sarmiento (Revenue Of- ficer of BIR-Cavite Chapter) while demonstrating the BIR Reportorial Re- Accounting for Non-Accountants quirements with IADB clients.
IADB hosted another value-adding service for its clients entitled Ac- counting for Non-accountants last April 5, 2017. DTI representa- tive, Dr. Kherby B. Reyes discussed topics that covered mainly the uses of accounting, accounting principles and financial statement report- ing wherein clients realized that they should have basic knowledge of accounting. He further noted that in order to sustain the business operations, one should have at least 10% Return on Investment (ROI). And one can achieve that, by starting each day a task or project with a clear vision of your desired direction and destination.
IADB CLIENTS VISIT MALACAÑANG PALACE
Clients attended the Go Negosyo Awarding Ceremony at Malacañang Palace
Last March 30, 2017, it was a great surprise and privilege for the clients, when they were given the opportunity to attend the Go Negosyo Awarding Ceremony at Malacañang Palace. Through the Go Negosyo Program ad- vertised in the newspaper Inter-Asia Development Bank sent selected cli- ents’ success stories. This program aimed to recognize different batch of inspiring Filipina entrepreneurs who have shown great leadership to the next generations. The awarding ceremony was attended by different Filipina Entrepreneurs with diversified businesses from various places in the Philip- pines. IADB’s clients who were able to attend the prestigious ceremony were Ms. Babylyn Morales from Binan, Laguna who is in footwear busi- ness, Ms. Arlyn Besar who manages her tailor shop at Silang, Cavite and Ms. Cristina Amora who is engaged in room rental business located in Ta- gaytay City. They were accompanied by Ms. Mylene Medina, a Senior Account Officer of the Bank. According to Ms. Medina the highlight of the speeches of the awardees presented in the ceremony was “In every busi- ness, downfalls exist but failures should not be the reason to stop but the reason to continue for your upcoming success”. This truly inspired our cli- ents. The ceremony became more special when President Duterte personal-
ly handed the trophies to all awardees. 53 IADB ANNUAL REPORT 2017
COMMUNITY ENGAGEMENT
Inverted Christmas Caroling the IADB Way
The Christmas season is a time intended for thanksgiving and sharing of blessings. As part of IADB’s corporate social responsibility, the Bank steered an inverted Christmas caroling. Unlike the traditional caroling , IADB employees visited some indigent families in barangay Kaybagal South, San Jose and Zambal in Tagaytay City thru the help of the barangay officials. The bank employees serenaded each family with Christmas carols and gave them gifts obtained thru the generosity of the bank’s employees and valued clients. Small tho’ it may seem, but the happiness that glowed in the face of each recipient is incomparable and truly uplifting to the hearts of the givers. Indeed, it is better to give than to receive.
IADB ANNUAL REPORT 2017 54
OUR COMMITMENT TO SERVE
...with passion to do our tasks and love to our clients to personally touch their lives.
55 IADB ANNUAL REPORT 2017
BSP ADVISORIES