INNOVATING TO LEAD 2018 ANNUAL REPORT About the Theme Digital technology has been changing the way we do things and the way we do business. Thus, we need to develop new ways of thinking in order to design better products, services, and solutions that address our customers’ needs and enrich their banking experience. For PSBank, doing things innovatively is more than just being different or using technology. It’s about having an innovation mindset that ultimately translates to being an exceptional bank for our customers, shareholders, and our employees. Contents About PSBank 02 Message from the Chairman 04 04 06 President’s Report 06 Financial Highlights 08 Statements of Condition 09 Statements of Income 09 Innovation Features Innovation: Products & Services 10 10 12 Innovation: Technology 12 Innovation: Organization 14 Employee & Community Engagement 16 Risk Management 18 Audit Committee Report 23 Corporate Governance 24 Organizational Chart 37 14 16 Board of Directors 38 Senior Ofcers 40 Products and Services 44 PSBank Branch Directory 46 Metrobank Group Directory 56 18 24 Shareholders Information 57 44 46 02 | INNOVATING TO LEAD About PSBank Philippine Savings Bank (PSBank), a Delivery Channels unauthorized use in any ATM, Point-of- subsidiary of the Metropolitan Bank The bank has a network of 250 Sale, or online transaction that reQuires & Trust Company (Metrobank), is the branches and 575 ATMs strategically the card number. country’s second largest thrift bank in located nationwide. terms of assets. PSBank also pioneered in the local In addition, PSBank has been growing market the One Touch ID so customers History its digital ecosystem for its banking can quickly access the PSBank Mobile On September 26, 1960, PSBank services with the aim of making things App by just using their registered opened as a small neighborhood simple for its customers and enhancing fingerprint and without keying in a bank in the historic Plaza Miranda in their banking experience at every password. Quiapo, Manila, formerly the country’s encounter. commercial hub. After more than Another innovation is the PayMe half a century, it has grown to serve Innovations solution, which allows clients using thousands of Filipinos with its wide Always at the forefront of innovation, the PSBank Mobile App to reQuest for selection of products and services the bank is one of the first to introduce money and payments from other app available 24/7. in the Philippines the use of Cardless users in a snap. Withdrawal, which allows withdrawal Business Model of cash from any PSBank ATM without Other digital banking solutions include The core business of PSBank is using an ATM card. Complementing the PSBank Online Loan Application focused on expansion of the consumer this innovation is the ATM Lock, an (POLA) which can be accessed through business by growing its retail deposit ATM card security feature that can the PSBank website (www.psbank.com. and consumer loans, including small be accessed via PSBank Online and ph) for borrowers applying for a car or and medium enterprises, through PSBank Mobile. This enables clients personal loan using their PC or mobile various channels. to lock their ATM card and prevent its device. VISION To be the country’s consumer and retail bank of choice. MISSION • As an INSTITUTION To conform to the highest standards of integrity, professionalism and teamwork. • For our CLIENTS To provide superior products and reliable, top-Quality services responsive to their banking needs. • For our EMPLOYEES To place a premium on their growth, and nurture an environment of teamwork where outstanding performance is recognized. • For our SHAREHOLDERS To enhance the value of their investments. PSBANK 2018 Annual Report | 03 Customer Experience Corporate Governance CX Asia ExCellence Awards Institute of Corporate Directors • Silver Award, Top-Performing Publicly Best Customer Listed Company based on Experience the 2017 ASEAN Corporate • Silver Award, Governance Scorecard. Best Customer Experience Team • Bronze Award, Best Social Media Strategy • Bronze Award, Best Use of Mobile 1st Philippines Best Employee Engagement Employer Brand Awards 2018 Philippines’ Best Employer Award in recognition of the Bank’s efective Global HR ExCellence Awards use of marketing communications in attracting and • 2018 Global Best developing talent as well as in talent retention. Employer Brand • Continuous Innovation in HR Workplace by Facebook Award Strategy at Work Best Launch Strategy Award in recognition of PSBank’s high The Award is in recognition of PSBank’s adoption rate achievement exemplary initiatives and practices to shortly after rolling out become the top-of-mind employer of Workplace, the enterprise choice. version of the Facebook platform. 2018 Awards Ceremony for BSP Stakeholders • 2018 Bangko Sentral ng Pilipinas Pagtugon Award • Finalist, Outstanding PhilPaSS Participant Servicing Customer e-Payments for Thrift Banks • Finalist, Outstanding Partner for Children’s Savings Mobilization Marketing and Communications 16th Philippine Quill Awards 53rd Anvil Awards • Quill Award of Merit, • Silver Anvil Award, PSBank’s PayMe PSBank’s PayMe situational commercial situational commercial “Sweldo” “Sweldo” • Quill Award of Merit, PSBank’s 2016 Annual • Silver Anvil Award, PSBank’s 2016 Annual Report publication, #WeAreWhereYouAre Report publication, #WeAreWhereYouAre 2018 PANAta Awards Bronze Award in Brand Builder Excellence in Brand Positioning category, PSBank’s “Techie” campaign 04 | INNOVATING TO LEAD It is better to challenge the status quo as this usually leads to better ways of doing things. By testing the unproven, diving deep in the unspoken, and challenging the unchallenged, we create innovation. Creating the Innovation Mindset Growing up, I have always had a probing mind — fascinated by the kind of knowledge that unlocks a window to a whole new world of meaning and understanding. Books were my best friends, and “how to” books that teach me how things work were my favorite of all. This made me embrace an entrepreneurial mindset — one that takes a certain way of thinking, or a new way of approaching challenges and mistakes. Perhaps more than that, it is all about having the knack to fnd a need, the ability to fll the need, and the tenacity to try and try again. PSBANK 2018 Annual Report | 05 Message from the Chairman I once said one does not have to reinvent the wheel to our workplace and learn to work as one cohesive, purpose- become successful in business. As the old adage says, “If driven team. it ain’t broke, why fx it?” On the other hand, I have come to discover that it is better to challenge the status quo as this The future we see usually leads to better ways of doing things. By testing the Despite the volatility and disruptive technology we will unproven, diving deep in the unspoken, and challenging the continue to face, we at PSBank look at the future with unchallenged, we create innovation. optimism. By 2022, the Philippines is expected to graduate into becoming an upper middle-income country. This could The world we live in be a turning point for our country’s storied history, which has It is this kind of mindset that is needed in the current world always been in cycles of boom and bust. we live in: an era of disruption characterized by volatility, uncertainty, complexity, and ambiguity or what is now As technology advances, the fear that robots will take over called the “VUCA world.” With the rapid spread of digital jobs looms larger. By 2025, it is estimated that a whopping technologies, the world is becoming one village that is easy one third of jobs will be replaced by robots and smart to react, easy to be afected, and easy to be infected. machines (Source: Gartner Research). However, there is something that robots can never have and this is the human 2018 was a watershed year in many respects. While heart. As Alibaba founder Jack Ma said:, “We have the cross-border fows of goods and fnance lost momentum, responsibility to have a good heart, and do something good. data-driven fows drove global GDP and are even Make sure that everything you do is for the future.” projected to grow exponentially in the next fve years due to the digitalization of information, e-commerce, video, While there are new business models void of physical communication, and data trafc surges (Source: McKinsey contact or without the need to ever walk into a branch, Global Institute, January 2019 Executive Briefng). there are still those who would strongly prefer face-to- face interactions for establishing mutual trust or resolving This was largely driven by growing internet access and problems, and they happen to comprise a majority of connectivity around the world. For the frst time ever, more Filipinos who are currently considered as fnancially than half of the global population or 4.2 billion are using the “underserved.” Until we have helped bridge this yawning internet, and 96% now live within range of a mobile network fnancial gap, we will continue to deepen our relationships (Source: Digital in 2018, We Are Social and Hootsuite). with our customers with the right balance of digital and physical engagements. In the Philippines, an estimated 67 million are internet users (around 63% of the population) while the mobile The PSBank of the future will be highly digital, but one thing internet penetration rate is growing at a rate of 1.5 times (or that we will not lose is our human touch. about 30 million users) every year. Leading the pack are the approximately 28 million Filipino millennials who are In serving our customers, we draw inspiration from the late technologically savvy, and who spend for the latest gadgets Dr. George S.K. Ty, who was known for being a business icon yet prefer to shop at small businesses, and support the new as well as a philanthropist.