2019 Annual Report / 1 Building Possibilities 2019 ANNUAL REPORT CONTENTS2 / Development Bank of the Philippines We are DBP Purpose and Philosophy 01 Message from the President 02 of the Philippines Financial Highlights 03 Report to Stakeholders 04 2019 in Review 06 2019 Operational Highlights 08 Building Together 18 Philippine Quality Award Recognition 30 Distinctions 31 Building Possibilities Board of Directors 32 Building Inclusive Governance 34 Board Profle 35 Management Committee 44 Senior Ofcers 50 Organizational Structure 55 The Ties that Bind: Deepening 56 our Customer Engagement Fortifying our Development 58 Realizing Possibilities 66 Future-proofng our Organization 68 Institutional Features 71 Making Progress Possible Statement of Management’s 75 Responsibility for Financial Statements Independent Auditor’s Report 76 Statement of Financial Position 78 Statement of Proft or Loss 79 Statement of Proft or Loss and Other Comprehensive Income 80 Statement of Changes in Equity 81 Statement of Cash Flows 82 DBP Subsidiaries 83 DBP Products and Services 85 DBP Expanded Network for Growth 90 ABOUT THE COVER The cover highlights the Bank’s strengthened role as the country’s infrastructure development partner, tasked with building possibilities for Filipinos. The various development projects under its priority thrusts are shown as blocks in DBP’s corporate colors of blue and red. It is from these blocks that the Bank hopes to build a stable structure for the country’s inclusive and equitable development. 2019 Annual Report / 1 % Countryside 53 Reach 53 LUZON Branches/ 48 Branches 5 BLUs Branch-lite 283 ATMs 140140 Units (BLUs) 10 Lending Centers Lending VISAYAS Centers 2222 27 Branches METRO MANILA 3 BLUs 187 ATMs 19 Branches 5 Lending Centers 159 ATMs 836836 ATMs SUBSIDIARIES OWNERSHIP DBP Leasing Corporation 100.00% DBP Data Center, Inc. 100.00% DBP Management Corporation 100.00% Al-Amanah Islamic Investment 99.80% Bank of the Philippines MINDANAO 35 Branches 3 BLUs 207 ATMs AFFILIATES 7 Lending Centers LGU Guarantee Corporation 47.94% DBP Service Corporation 28.04% DBP Insurance Brokerage, Inc. 40.00% DBP Daiwa Capital Markets 17.06% Philippines, Inc. PURPOSE AND PHILOSOPHY VISION 2022 The Development Bank of the Philippines is the country’s By 2022, a one-trillion Bank capable of supporting and premiere development bank primarily tasked to undertake spearheading development in half of the Philippine fnancing and investments in strategic sectors especially countryside. in the areas of infrastructure and logistics, environment, social services and small and medium enterprises. MISSION As a 100% government-owned policy bank, we work To support infrastructure development, responsible hand-in-hand with the National Government in providing entrepreneurship, efcient social services and and sustaining opportunities for economic growth and protection of the environment. prosperity countrywide. To work for raising the level of competitiveness of As a universal-commercial bank, we are also in the the economy for sustainable growth. forefront of providing increased access to deposit products and other fnancial services for the underserved To promote and maintain the highest standards of and underbanked. good governance. 2 / Development Bank of the Philippines Message from the President of the Philippines My warmest greetings to the Development Bank of the Philippines (DBP) as it publishes its 2019 Annual Report. For many years, DBP remains a leading driver of our nation’s economic growth and development. I have no doubt that its strategic fnancial programs will continue to support the progress of various sectors across the country. May this annual report highlight the success of the bank’s operations, including your efforts in the modernization of our public transport sector and the Bangsamoro peace initiatives. I trust that your milestones in the previous year will further inspire you to help the nation as we recover from the COVID-19 pandemic. Your commitment to contribute in building a strong and resilient fnancial environment is important as we take great strides in achieving a more stable and progressive future for all Filipinos. Congratulations on your accomplishments and I wish you all the best. RODRIGO ROA DUTERTE President Republic of the Philippines Manila October 2020 2019 Annual Report / 3 FINANCIAL HIGHLIGHTS (In thousand Pesos) CONSOLIDATED PARENT 2019 2018 2019 2018 Selected Balance Sheet Data Liquid Assets 232,537,410 226,949,877 232,198,921 226,537,824 Gross Loans 418,178,511 332,738,090 414,049,785 328,921,094 Total Assets 763,503,353 671,559,084 761,243,423 669,588,020 Deposits 554,527,603 474,867,742 554,183,010 474,443,723 Total Equity 59,385,588 51,348,036 59,827,597 51,718,139 Proftability Total Net Interest Income 16,715,719 14,480,726 16,662,179 14,402,648 Total Non-Interest Income 3,520,080 2,841,991 3,242,778 2,833,106 Total Non-Interest Expenses 11,197,641 9,776,891 10,847,513 9,521,556 Pre-provision Proft 9,038,158 7,545,826 9,057,444 7,714,198 Allowance For Credit Losses 1,960,834 610,674 1,952,636 503,557 Net Income (after tax) 5,559,309 5,425,368 5,604,103 5,722,650 Selected Ratios Return on Average Equity 10.04% 10.90% 10.05% 11.44% Return on Average Assets 0.77% 0.86% 0.78% 0.91% Net Interest Margin 2.71% 2.72% 2.72% 2.72% CET 1 Capital Ratio 12.01% 11.00% 11.92% 10.84% Tier 1 Capital Ratio 12.01% 11.00% 11.92% 10.84% Capital Adequacy Ratio 14.09% 13.91% 13.90% 13.66% Per Common Share Data Net Income per Share: Basic 28.51 27.82 28.74 29.35 Others Cash Dividends Paid 26,678 985,845 - 959,038 TOTAL GROSS NET ASSETS LOANS DEPOSITS INCOME (After Tax) Php Bn Php Bn Php Bn Php Bn 5.56 5.43 763.50 554.53 671.56 418.18 474.87 332.74 CY 2018 CY 2019 CY 2018 CY 2019 CY 2018 CY 2019 CY 2018 CY 2019 4 / Development Bank of the Philippines REPORT TO OUR STAKEHOLDERS In 2019, the Development Bank of the Philippines persisted amidst the challenges of market volatility and increased competition, and consistently delivered on its refreshed mandate as the country’s Infrastructure Bank. It likewise remained true to its claim of building possibilities for the Filipino people through its countrywide development initiatives that promote fnancial inclusion and bring the country closer to the realization of its Ambisyon 2040 vision of a Matatag, Maginhawa at Panatag na Buhay. We are therefore honored to share with our stakeholders the Bank’s 2019 Annual Report which chronicles its contributions to nation-building. Sustaining Growth, Expanding Reach DBP built on the previous years’ gains through its maiden ASEAN Sustainability Bonds which raised Php18.125Bn, opting for the more responsive sustainability bonds in place of a plain vanilla issuance as a demonstration of its commitment to sustainable development and in support of its responsible banking practice. This enabled the Bank to fnance critical infrastructures more sustainably, resulting in a 32% increase in its infrastructure loan portfolio amounting to Php250.06Bn. Supported by a 14% increase in total deposits of Php554.53Bn and a strong resulting net income of Php5.56Bn, the Bank maintained its no. 8 position among top universal-commercial banks in the Philippines with an asset size of Php763.50Bn. DBP is the frst bank in Alegria, Cebu. Financial access has also improved in Tubod, Lanao del Norte and Abulug, Cagayan with the addition of a DBP branch in each area. The Bank’s strong fnancial position and active participation in the domestic capital market allowed DBP to be recognized as one of the Top 5 Corporate Issue Managers/Arrangers by the Philippine Dealing System. Through its fduciary activities, the Bank was also able to participate in the syndication of the Cebu-Cordova Link Expressway (CCLEX), a major project of the National Government, intended to realize inter-island land travel between Cebu and Cordova. Its landmark venture with DOTr, the DBP PASADA, continued to support the National Government’s Public Utility Vehicle Modernization Program by providing fnancial support in transforming the public transport sector into one that is safer and more environment-friendly. 2019 Annual Report / 5 In 2019, DBP became the frst bank to open in the Municipality of Alegria, Cebu while it further improved fnancial access in other underbanked and underserved areas in the Philippines through two more branches in Tubod, Lanao del Norte and Abulug, Cagayan. Accessibility further improved with an increase in the total number of ATMs nationwide from 789 to 836. This spirit of collaboration and public service also resonates in the Bank’s partnership with fntech companies such as PayMaya, with cooperatives, and with various local government units such as LGU Parañaque and LGU Isabela, in support of its fnancial inclusion advocacy. These efforts helped the Bank exceed its target of covering 50% of the Philippine countryside by 2022, three years ahead of schedule, as it reached a coverage of 53% at the close of 2019. % increase in infrastructure 32 portfolio Recognizing that peace is an essential foundation for development and progress, DBP takes pride in being chosen as the partner of the Ofce of the Presidential Adviser on the Peace Process as fnancial service provider of the Bangsamoro in Mindanao. Through this role, the Bank can be more actively involved in ensuring peace for the Bangsamoro people by accelerating development through infrastructure and capacity building. As the country grapples with the rest of the world with unprecedented challenges brought about by the COVID-19 pandemic, we will continue building possibilities as we remain committed to our mission of being an agent of sustainable economic growth.