Vision To be the most admired and trusted profitable financial services group providing and adapting to customers’ changing needs - for every Filipino worldwide - through innovative products, excellent service and a highly motivated, committed and impassioned team. Mission We are a leading universal bank providing quality Integrated Financial Services that best meet our clients’ needs. We are committed to: Conducting our business with utmost integrity, excellence, and commitment as responsible corporate citizens; and, Providing professional growth opportunities to develop a talented base of officers and employees, and achieving the best returns for our stockholders. RCBC AWARDS 2010 VISA ASIAMONEY BIZNEWS ASIA ASIAN BANKING AND FINANCE Best Domestic Provider of FX Platinum Business Core Banking Initiative BUREAU OF TREASURY Best Overall Provider of Visa Prepaid Services in the Prime Broking Services Icon Award of the Year One of the Top 10 Philippines for 2011 in the Philippines Government Securities (as voted by Corporates) Management Philippines’ SME Bank Eligible Dealers Best Performer in Transaction Excellence Award of the Year Number Growth Best Domestic Provider for Interest Rates - Philippines BUREAU OF TREASURY GLOBAL BANKING & FINANCE 2011 Payment Volume Growth and REVIEW AWARDS Cards-in-force Growth Top 10 Government ASIA CEO AWARDS Overall Best Private Bank Securities Eligible Best Electronic Banking in the Philippines Dealers Website Philippines Most Admired WORLD FINANCE Board of Directors 2013 Best Commercial Bank in Philippines’ Overall Best for PDEX ASIA RESPONSIBLE the Philippines Interest Rate Top 10 for overall ASIAN BANKING AND FINANCE ENTREPRENEURSHIP AWARDS Trading Activity Best Green Bank for Best for Interest Rate Online Banking Southeast Asia 2012 Derivatives Initiative of the Year - THE ASIAN BANKER Philippines ASIAMONEY ASIAN BANKING AND FINANCE Best Market Coverage Best Cash Overall Best for Interest Rates Management Bank in Philippine Best Retail ASIAMONEY Bank of the Year Best Interest Rate Research the Philippines Joint #1 Best Liquidity and Market Overall Best Philippine Best Support for Credit Best Domestic Private Best Core Banking Private Bank in the Bank Website Bank in the Philippines Implementation Philippines for 2012 Projects Best Domestic Provider for Best Domestic ASIAN FINANCIAL SERVICES Interest Rates - Philippines WORLD FINANCE Private Bank in the CONGRESS 2012 ASIAN BANKING AND FINANCE Philippines Excellence in Enterprise Best Pricing and Execution Best Banking Group in Operational Transformation capabilities for Interest Rates Philippines Domestic the Philippines Technology & Operations Bank WORLD FINANCE of the Year - Phone-a-Loan BUREAU OF TREASURY Best Interest Rates Research Best Banking Group in Program the Philippines Top 10 Government and Market Coverage 2013 Securities Eligible Dealers Philippine SME Bank BAIPHIL ASIA RESPONSIBLE Best Sales Service in Interest of the Year ENTREPRENEURSHIP AWARDS FINANCE ASIA Rates Derivatives Green Bank Champion: One of the Best Managed Earth Care Program with Social Empowerment Mid-Cap Company Domestic Retail Bank of Centennial Forest Award Best Domestic Provider of FX the Year - Philippines Services in the Philippines INSTITUTE OF CELENT 2014 CORPORATE DIRECTORS (as voted by Corporates) BANKING & PAYMENTS ASIA - TRAILBLAZER AWARDS Celent Model Bank: RETAIL BANKER Silver Award - 2011 Best Domestic Provider of FX Transaction Processing Corporate Governance Special Commendation Category INTERNATIONAL Services in the Philippines for Product Excellence Product Excellence Scorecard for Publicly (as voted by Financial Institutions) Listed Companies (MyWallet) in Credit Cards Table of Contents 2 VISION/MISSION 4 FINANCIAL Highlights 6 Message From THE Honorary Chairman 10 Message TO OUR StocKHOLDERS 15 FINANCIAL performance 16 Operational Highlights 22 SUBSIDIARIES 26 Corporate GOVERNANCE 48 RISK AND capital management 91 Corporate SOCIAL Responsibility 92 Board OF Directors 96 SENIOR Management 100 FINANCIAL Statements 198 LIST OF SENIOR OFFICERS 202 RCBC Branch Directory 206 RCBC Savings BANK Branch Directory 208 RCBC SUBSIDIARIES AND Associates ProdUcts AND Services Hope Rises (Based on the Painting “Lumiere Rises”) The spirit of bayanihan; our peoples’ warm smiles; and, our joyous festivals. All of these only prove that no catastrophe - not even in the magnitude of the great super typhoon Yolanda (Haiyan) can break the Filipinos’ positivity and optimism. In a similar fashion, RCBC was able to provide domestic and international 2013 clients financial resiliency, in a year that was tested by political, economic and Annual Report environmental challenges. Both for the Philippines and RCBC, hope for the brighter things ahead truly springs eternal. Financial Highlights 2013 2012 2011 Audited Audited - as Restated Audited - as Restated FOR THE YEAR (in million pesos except ratios) Operating Earnings 23,121 22,744 20,936 Operating Expenses 14,474 13,557 12,396 Net Income Attributable to Parent Bank’s Shareholders 5,321 5,949 5,061 Return on Average Capital Funds 12.18 % 16.07 % 17.44 % Return on Average Assets 1.39 % 1.70 % 1.63 % NET INTEREST MARGIN 4.22 % 3.93 % 4.13 % AT YEAR-END (in million pesos except no. of shares) Total Resources 421,869 363,339 343,786 Interest-Earning Assets 349,442 293,587 294,210 Liquid Assets1/ 183,148 151,745 151,938 Loans and Receivables, Net 237,960 190,903 186,192 Investment Securities 92,700 95,179 87,728 Deposit Liabilities 297,853 246,757 255,283 Equity 44,808 42,162 36,146 Paid-In 28,908 20,809 20,809 Surplus and Reserve for Trust 16,430 13,005 8,617 Hybrid Perpetual Securities 4,883 4,883 4,883 Others (5,413) 3,465 1,837 Number of Common Shares 1,275,658,638 1,140,857,133 1,140,135,121 PER SHARE OF COMMON STOCK Net Earnings (Basic and Diluted) 3.95 4.85 4.49 Book Value (Diluted) 31.29 32.68 27.40 Capital Adequacy Ratio (CAR) 16.52 % 17.61 % 18.52 % NUMBER OF EMPLOYEES 5,671 5,442 5,136 Number of Branches (including extension offices and FX desk) 435 420 389 Number of Atms 1,150 1,010 761 1/- COCI, Due from BSP, Due from other banks, FVPL, AFS, Interbank loans 4 2013 Annual Report NET INCOME MARKET CapitaLIZatiON CapitaL (IN BILLION PESOS) (IN BILLION PESOS) (IN BILLION PESOS) 6 80 50 5 70 40 60 4 50 30 3 40 20 2 30 20 1 10 10 2.05 3.21 2.15 3.34 4.28 5.09 5.96 5.33 13.21 23.11 9.44 17.09 28.13 34.32 68.45 54.22 23.39 29.02 27.64 30.55 26.16 36.15 42.16 44.81 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 (Restated) (Restated) (Restated) (Restated) (Restated) (Restated) TOtaL RESOUrcES NET LOANS TOtaL DEPOSITS (IN BILLION PESOS) (IN BILLION PESOS) (IN BILLION PESOS) 500 250 300 250 400 200 200 300 150 150 200 100 100 100 50 50 223.71 239.10 268.27 288.52 315.67 343.79 363.34 421.87 108.93 117.2 164.4 164.89 165.43 186.19 190.9 237.96 157.55 175.93 196.23 220.28 236.63 255.28 246.76 297.85 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 (Restated) (Restated) (Restated) (Restated) (Restated) (Restated) LOANS TO DEPOSITS RatiO ca/SA TO TOtaL DEPOSITS 350 90% 350 70% 79.9% 62.3% 77.3% 83.7% 75.0% 72.9% 80% 56.5% 57.1% 300 69.9% 72.3% 300 60% 69.2% 50.6% 70% 47.5% 112 250 250 44.4% 50% 60% 44.3% 111 43.3% 117 106 200 50% 200 116 40% 109 150 40% 150 98 157 30% 89 30% 134 130 100 100 108 20% 20% 94 109 117 164 165 215 186 191 238 76 50 50 58 67 10% 10% 156 176 196 220 297 255 247 298 28 0% 0 0% 0 10 11 11 11 12 10 11 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 Net Loans Deposits ldr (%) (Restated) (Restated) Demand Deposits (In Billion Pesos) Savings Deposits Time Deposits CA/SA to Total Deposits GROSS INCOME BREAKDOWN DISTRIBUTION NETWORK 100% 1400 90% 1200 80% 1000 33.98% 35.2% 36.4% 42.4% 70% 42.25% 42.3% 48.2% 49.9% 800 50% 600 40% 66.02% 64.8% 63.6% 57.6% 57.75% 57.7% 51.8% 50.1% 400 30% 200 20% 325 380 350 471 371 609 389 761 420 1,010 435 1,150 0 10% 2008 2009 2010 2011 2012 2013 BRANCHES 325 350 371 389 420 435 0% 2006 2007 2008 2009 2010 2011 2012 2013 ATMs 380 471 609 761 1,010 1,150 Net Interest Income Other Income ATMs to Branch Ratio 1.17:1 1.35:1 1.64:1 1.96:1 2.40:1 2.64:1 5 MESSAGE FROM THE HONOrary CHairman Our continuous drive for growth In the year 2013, we have witnessed how our own hard work and effort paid off through changing and challenging circumstances. Our continuous drive for growth and excellence made us one of the most respected institutions in the country. RCBC again demonstrated its commitment during the year, continuing to support its customers through tough times. We have constantly promoted sustainable financial solutions to our customers and stakeholders. We have highly provided our local and international clients financial resiliency, enduring the test of political, economical, and environmental challenges this year. Constantly innovating ourselves made us realize our strengths and highlight our advantages. We have been keeping up with the newest trends in banking technology and have been providing significant insights to our clients’ evolving needs.