Celebrating the Past. Embracing the Future. 2019 Annual Financial and Sustainability Report About the Report 102-50, 102-51 102-52, 102-54, 102-55 This Annual Financial and Sustainability Report provides our stakeholders with a balanced view of our ability to use our financial resources and expertise to be a sustainable business that creates sustainable value. Covering the period January 1 to December 31, 2019, this report contains material information relating to our financial and non-financial performance, operating context, prospects, risks, and governance to address the information requirements of our current and prospective investors. We also present information relevant to the way we create value for other key stakeholders, including our employees, customers, regulators, and society. This follows our latest report released in 2018 covering the period January 1 to December 31, 2018. This report has been prepared in accordance with the GRI Standards: Core option. This has also been aligned with the disclosure requirements of the Bangko Sentral ng Pilipinas and the ASEAN Corporate Governance Scorecard. For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report. About the Cover The hourglass represents two different eras inextricably connected with each other. While the glass bulb on top Celebrating the Past. symbolizes a traditional banking method, the Embracing the Future. one at the bottom features a more modern platform. While the eras are distinct, the timeless values of past still forms part of the fabric of the future, in a time continuum CHINA BANKING CORPORATION China Bank Building 8745 Paseo de Roxas corner Villar Street where partnerships continues to evolve in Makati City 1226, Philippines new, reimagined ways. www.chinabank.ph POST-CONSUMER RECOVERED FIBER The cover of this China Bank Annual Financial & Sustainability Report is printed on Radiance New Evolution White 280gsm. Radiance is an uncoated felt-marked paper that captures the extraordinary printing definition and effects of a coated paper, certified by the Forest Stewardship Council (FSC) which promotes environmentally appropriate, socially beneficial, and economically viable management of the world’s forest. The inside pages are printed on Magno 100gsm, a PEFC Credit material and FSC Mix Credit material certified product made from European mills. By optimizing the use of natural resources, this product achieves environmental sustainability while keeping the highest quality. 2019 Annual Financial and Sustainability Report Contents 2-3 21 80 About China Bank What our Stakeholders are Saying Awards and Distinctions Company Profile, Vision, Mission Materiality Matrix Our Core Values Key Themes 81-107 Financial Statements 4-9 22-29 Capital Structure/Adequacy, Audit Message to Our Stakeholders China Bank as Enabler Committee Report, Statement of From Chairman Hans T. Sy, Enabling Customers’ Success Management Responsibility for Vice Chairman Gilbert U. Dee, and Financial Statements, Auditors’ Report, President William C. Whang Management Discussion, Notes to 30-33 Financial Statements China Bank as Advocate 10-11 Advocating for our Customers Banking in the Time of COVID-19 108-123 Branch Directory 34-57 China Bank Branches 12-13 China Bank as Steward China Bank Business Offices Financial Highlights Being a Trusted Steward China Bank Savings Branches China Bank Savings Business Offices 14-15 58-63 SDG Contribution - Core Areas China Bank as Employer 124-126 Engaging our people Subsidiaries and Affiliate 16-18 Sustainability at China Bank 64-69 127-135 Sustainability Journey China Bank as Partner Products and Services Sustainability Strategy and Roadmap Partnering with and for our communities 136-139 19-20 GRI Index Listening to Our Stakeholders 70-79 Materiality Process Our Leaders Stakeholder Engagement China Bank Board of Directors, Management Committee, and Senior Officers ANNUAL FINANCIAL AND SUSTAINABILITY REPORT 2019 1 About China Bank 102-1, 102-2, 102-3, 102-4, 102-5, 102-6 China Banking Corporation (China Bank) is one of the Over the years, we have reinforced our human, leading private universal banks in the Philippines. physical, and technological resources to meet the We offer a full range of banking products and changing needs of our customers, shareholders, services to institutional (corporate, middle market/ and regulators, while minimizing any negative commercial, SMEs) and individual (retail, mass impact on communities and the environment. affluent, high net worth) customers, as well as thrift banking, investment banking, insurance brokerage, Our vision, mission, and the values passed on by and bancassurance services through our subsidiaries China Bank’s founders underpin our continuing China Bank Savings, China Bank Capital, China Bank story of sustainable growth, governance Securities, China Bank Insurance Brokerage, and excellence, and enduring partnerships. We are affiliate Manulife China Bank Life Assurance. committed to place sustainability at the heart of our business and credit decisions and to uphold China Bank, established in 1920, has an in-depth the highest standards of corporate governance to understanding of the way entrepreneurs and remain strongly positioned for value creation. businessmen do business. While maintaining very close multi-generational relationships with the The China Bank stock (PSE: CHIB) is listed on Filipino-Chinese community, we have since expanded the Philippine Stock Exchange (PSE). We are the scope of our products and services to cover all a member of the SM Group, one of the largest market segments as we pursue and enhance ways to conglomerates in the Philippines. create greater value for the future. 631 9,813 P962 billion branches employees total assets 1,002 P10.1 billion P775 billion ATMs net income total deposits 1.7 million P96 billion P578 billion customers capital gross loans 2 CHINA BANKING CORPORATION VISION MISSION 102-16 We will be a leading provider of quality services Drawing strength from our rich history, we will be the consistently delivered to institutions, entrepreneurs, and best, most admired, and innovative financial services individuals here and abroad, to meet their financial needs institution, partnering with our customers, employees, and exceed their rising expectations. and shareholders in wealth and value creation. We will be a primary catalyst in the creation of wealth for our customers, driven by a desire to help them succeed, through a highly engaged team of competent and empowered professionals, guided by in-depth knowledge of their needs and supported by leading-edge technology. We will maintain the highest ethical standards, sense of responsibility, and fairness with respect to our customers, employees, shareholders, and the communities we serve. CORE VALUES Integrity Customer service focus We will always take the high road by Satisfied customers are essential practicing the highest ethical standards to our success. We will achieve and by honoring our commitments. We total customer satisfaction by will take personal responsibility for our understanding what the customer actions and treat everyone fairly and wants and deliver it efficiently. with trust and respect. High performance We are committed Resourcefulness/ standards to live by these values Initiative in conducting our We will abide by well-established We will devise and initiate ways business and achieving professional methods of doing and means to achieve targets/ our vision and mission. business that go beyond the goals and go beyond customer typical/routine functions and expectations. designated results. Commitment to quality Efficiency We will strive for continuous We will perform tasks promptly improvement in all that we do, and accurately while maintaining so that we will rank among the or improving the quality of results best in the banking industry or output. in customer, employee, and Concern for people community satisfaction. We have a high regard for people’s needs and welfare, whether in and out of the office. ANNUAL FINANCIAL AND SUSTAINABILITY REPORT 2019 3 Message to Stakeholders 102-14, 102-15 To Our Fellow Stakeholders, 2019 was a momentous year for China Bank that marked The economy before the pandemic the end of another remarkable decade, and ushered in the next phase of our journey—China Bank’s 100th year Global economic growth in 2019 slowed to 2.9% and the exciting opportunities ahead. from 3.6% in 2018, its weakest pace since the global financial crisis a decade ago. Around the world, business However, as we were preparing this report in early 2020, sentiment and economic activity were dampened by the world was hit by an unprecedented global crisis and trade tensions, the global slowdown in manufacturing, changed everything. In the wake and in the aftermath country-specific weakness in large emerging market of the COVID-19 pandemic, our priority is to help our economies, and unrest in the Middle East. stakeholders in these challenging times. In the Philippines, economic growth also decelerated We are pleased to report that our Bank is well positioned amid challenging external environment and a contraction financially, operationally, and strategically to provide the in public investments. The country’s gross domestic needed resources, services, and support to address the product (GDP) grew 6% in 2019 compared to 6.3% in humanitarian