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Let’s bank onshared value

2014 Sustainability Report

BANK OF THE PHILIPPINE ISLANDS2 3 2014 SUSTAINABILITY REPORT

Over the last 163 years, the Bank of the Philippine Islands (BPI) has built stakeholder trust on the foundation of expertise in advisory and relevant products and services that empower our clients financially. Moving forward, we aim to keep every Filipino’s trust by embedding economic, social, and environmental value in everything we do. G4-3

Through our commitment to shared value, we aspire to contribute to Filipino society beyond the scale of the financial services we provide.

We realize that our continuing success as a financial institution significantly depends on how well we work for every Filipino’s long-term financial welfare and how well we enable sustainable development in the Philippines. Leveraging on our shared value focus and our vital assets—prudent capital management, engaged workforce, efficient processes, and continued trust by stakeholders—places us in a strong position to become the Filipino banking champion.

To this end, we continually innovate to transform the way Filipinos bank, enhance livelihood and businesses, and encourage more sustainable investments, while delivering value for our clients and shareholders.

In this report, we share with you our success stories thus far, our stories of “Banking on Shared Value.”

5 2014 SUSTAINABILITY REPORT

We believe in our responsibility to our Shareholders. We treat capital as a most valuable asset and seek to generate superior returns while being prudent in risk-taking, spending, and investment.

BPI at a Glance04

Let’s Foster Financial Inclusion37

06

129

Let’s Invest in Sustainable Development49

10

xx

Joint Message from the Chairman and the President and CEO

71 Let’s Enhance Our CARE Systems

Our Report

83 Let’s Empower Our People and Society

Our Business

101

109

Let’s Use Resources Efficiently

23 Let’s Set Financial Wellness in Motion

Let’s Build Trust

AppendicesGRI Content IndexIndependent Assurance StatementAcknowledgment

14

The BPI CredoWe believe our first responsibility is to our Clients. If we understand and address our clients’ financial needs, we will be entrusted with their most important financial transactions, and we will build lasting relationships. We do well when our clients do well.

We believe in our responsibility to our People. We seek to hire the best people for each job, provide them with the means to perform at a high level and reward them fairly. We value integrity, professionalism, and loyalty. We promote a culture of mutual respect, meritocracy, performance, and teamwork. We strive to be the employer of choice among Philippine financial institutions.

We believe in our responsibility to our Country. Our prosperity is greatly dependent on the well-being of our nation. We aim to be inclusive and responsible in nation building. Through BPI Foundation, we are committed to the welfare and sustainability of the communities we serve.


BPI at a Glance

84% Sustainable Engagement score

47% increase in total number of promotions

11K volunteer hours rendered for local communities

Financial InclusionFinancial Wellness

67% increase in savings volume of Save-Up accounts

40% growth in number of OFW Regular Subscription Plan investors

12% growth in the number of investors from the Personal Banking segment

27% increase in savings volume of Easy Saver accounts

26 Ka-Negosyo roadshow events nationwide

84% of transactions done through electronic channels contributing to reductions in construction of physical branches and fuel consumption of armored vehicles

234% increase in financial transactions done through mobile app

27.5B Pesos worth of approved loans to fund renewable energy, energy efficiency, and climate resilience projects

814K tonnes CO2e

avoided per year

+61.23 net promoter score – above the average score of international financial institutions

House of the Year Asia Risk Award

Building TrustPeople and Society Resource Efficiency

39% decrease in water consumption

16% decrease in carbon emissions

Operational Efficiency

Sustainable Development Investments


Joint Message from the Chairman and the President and CEO G4-1

CHANGES ARE HAPPENING FOR YOU AT BPI

To all our stakeholders,

We have placed creating shared value as a cornerstone of our business. We continue to empower our people to innovate systems, products, and services that address our biggest sustainable development challenges – poverty, food security, climate change, ecosystems degradation, among others – while generating significant value for our business and our shareholders.

This year, we report on the progress we are making on three focus areas where we can deliver most impact – Financial Wellness, Financial Inclusion, and Sustainable Development Investments.

Financial Wellness

We aim to help every Filipino attain a strong financial foundation and build a healthy and productive financial future. We assist our clients by providing financial advice and offering a wide array of financial products and services suited for their needs. Our products are designed to foster a culture of saving, responsible borrowing, informed investing, and protection of asset value. We offer investment products with lower minimum amount requirement, as well as a regular subscription plan (RSP) that allows monthly contribution for investments.


In 2014, we saw a 67% increase in Save-Up accounts, a 40% growth in OFW investors’ investments through RSP, an 8% increase in the number of mutual funds investors, and a 12% increase in the number of investors from the Personal Banking client segment.

Financial Inclusion

As a financial institution, we recognize our key role in addressing poverty. We continue to put special attention on the unbanked and low-income segments. We develop products that allow them entry into the formal banking sector.

Our Easy Saver product which does not require a maintaining balance helps low-income individuals start a relationship with the Bank. We help those who wish to start a business but do not have ready access to capital by offering affordable loans with extended payment terms.

In 2014, our total savings volume of Easy Saver accounts increased by 27% with a 14% increase in the number of account holders. We have also financed about 200 entrepreneurs who acquired franchise outlets.

Sustainable Development Investments

We focus on enabling investments that foster sustainable development, especially in the countryside. Of the total loans we provided in 2014, P94 billion went to investments in the countryside, boosting wholesale and retail trade, agriculture, manufacturing, and real estate, among others.

We are particularly proud to report that as of end of 2014, we approved P27.5 billion worth of loans to fund 174 projects in renewable energy, energy efficiency, and climate resilience. These investments generate over a thousand gigawatt hour (GWh) of renewable power, save 234 GWh of electricity from energy efficiency, and cut 814 thousand tonnes of greenhouse gas emissions.

Our Key Enablers

Our success thus far has been a product of efficient systems and channels, robust risk management, empowered employees, and customer trust.

Our electronic channels help reduce our transaction costs, thus enabling us to serve

Jaime Augusto Zobel de AyalaChairman

Cezar P. ConsingPresident & Chief Executive Officer

more low-income individuals. In 2014, 84% of total transactions were done through electronic channels, which reduced the need for many more physical branches.

We measure our performance as an employer using a sustainable engagement metric. In our latest survey, 84% of our employees consider themselves sustainably engaged, across various parameters such as involvement and empowerment, strategy and direction, as well as work tools and efficiency.

BPI’s proactive approach to enterprise and financial risk management allows us to effectively meet domestic and international market challenges. We have a strong top-down risk management culture, very experienced risk management leaders, well-defined risk appetite and metrics, and robust models and systems.

Our customers rated us 94.2% in overall customer satisfaction and 61.23 in net promoter score, which is well above the average score of international financial institutions. This is validated by the awards we received this year such as Best Payment Product Award, Diamond Award for Marketing and Best Retail Bank Award.

Our Business Bottomline

By serving our clients well, we achieve strong and sustainable financial performance. Our total revenue increased from P52.5 billion in 2013 to 55.8 billion in 2014. BPI recorded both net income and total comprehensive income of P18.0 billion, achieving a return on assets of 1.44 percent and a return on equity of 13.75 percent. For 2014, we received Bangko Sentral approval to pay P7.08 billion in total dividends, an annual payout ratio of 39.2 percent.

Looking Forward

We realize the extent of change we seek to create sustainable value for our clients, for the environment, for society and for our stakeholders via our various activities. What we achieved in 2014 inspires us to do more in the coming years. So, to all our stakeholders, “Let’s Bank on Shared Value.”


Scope and Coverage G4-28, G4-29, G4-30

Let’s bank on shared value is BPI’s seventh annual Sustainability Report. It covers our business operations, inclusive of our subsidiaries and affiliates within the period of January 1 to December 31, 2014.

Purpose

This report presents the analysis of the economic, environmental and social performance of our business. Through this report, we update our stakeholders on the progress of the Bank’s shared value initiatives.

This report adheres to the Global Reporting Initiative (GRI) G4 Sustainability Reporting Guidelines and completed GRI’s Materiality Disclosures Service Check.

Data Sources

Sector performance data are sourced from the following documents or guidelines:

Economic Performance• Audited financial statements

conforming with Philippine Financial Reporting Standards

• Internally generated reports consolidated from the management information systems of the Bank’s various units

Environmental Performance• Consolidated data from our head

offices, Philippine branches, satellite offices, and subsidiaries

• Energy and water consumption from meter readings by utility companies

• Records of diesel consumption of vehicles and facilities

• Greenhouse gas (GHG) emissions calculations using the GHG Protocol Corporate Standards, Intergovernmental Panel on Climate Change (IPCC) emission factors for direct energy and National Grid Emission Factors of the country’s Department of Energy (DOE) for indirect energy

Social Performance• Internally generated reports

on our employee engagement, legal compliances and customer satisfaction

Assurance G4-33

The Bank enlisted TUV Rheinland, a global expert in Testing, Inspection, Certification & Training, for third-party verification. TUV conducted an Environmental, Social and Governance (ESG) on-site audit to ensure balance, accuracy, completeness, and comparability of the disclosures in this report. See pages 134 to 135 for the Independent Assurance Statement.

Our Report

Reporting Standards G4-32

This report is ‘In Accordance’ with the GRI G4 Guidelines - Core option for the non-financial performance. It is guided by peer performance comparison and benchmarking. The integrated macro and micro viewpoints enabled alignment with the 360° Sustainability Framework adopted by Ayala Corporation since 2013.

This report details 40 General Standard Disclosures, 20 Material Aspects and 25 Specific Standard Disclosures. See page 130 for the complete list of Material Aspects and its boundaries; pages 132 to 133 for the GRI Content Index.

Additional Reference

The Bank’s operational and financial performance is stated and filed at the Philippine’s Securities and Exchange Commission (SEC). It forms part of the Information Statement sent to stockholders. This is available for online access at www.bpiexpressonline.com.

Contact Information G4-31

For questions, comments, and suggestions, contact us:

Fidelina A. CorcueraChief Sustainability OfficerSustainability Office16th Floor BPI Building6768 Ayala AvenueMakati City 1226, Philippines Telephone: (632) 845-5202Email: [email protected]


Sustainability Strategy FrameworkG4-2, G4-18, G4-19, G4-20, G4-21

Our Sustainability Strategy Framework guides our thrust to become every Filipino’s Banking Champion – in financial wellness, in financial inclusion and in sustainable development investments. To achieve this, we share in this report how we innovate for operational efficiency, empower our people and society, use resources efficiently, and continue to build stakeholder trust. This is aligned with our organizational philosophy as stated in our Credo.

OUR SUSTAINABILITY STRATEGY FRAMEWORK

FOCUS AREAS

ENABLERS

Enhancing Operational Efficiency

Setting Financial Wellness

in Motion

FosteringFinancialInclusion

Investing in Sustainable

Development

EmpoweringOur People and Society

Using ResourcesEfficiently

Building Trust

• Financial inclusion – We continually strive to widen our reach by developing products and services that address the needs and preferences of clients coming from low-income and underserved segments. We adhere to the ideals that true prosperity can only be achieved when everyone is involved.

• Sustainable development investments – We promote investments in industries that strengthen urban and countryside development. Advocating and advancing shared value financing, we also stimulate business innovation through cleaner, low-carbon, and resource efficient technologies. Our three main focus areas include:

• Financial wellness – We help individuals, communities and businesses grow their funds and build their wealth by facilitating financial

wellness opportunities, a range of innovative programs and more accessible investment options.

FOCUS AREAS G4-EC8

Culture of SavingResponsible BorrowingInvestment OptionsFinancial LiteracyWealth CreationAsset Insurance

Engaged EmployeesCareer DevelopmentEmployee SatisfactionEnvironmental SustainabilityEnterprise DevelopmentNation Building

G4-LA1, LA9, SO1

Convenient Banking | Electronic Channels | Cash Management Solutions | Retail ServicesReliable Remittances | International Network

Easy Saving OptionsPayment SolutionsAffordable LoansEnterprise AssistanceEmployee Stock OptionsMicro Insurance

FS7

Reduced Carbon FootprintConserved Fuel and EnergySaving on ElectricityDecreased Water ConsumptionSupply Chain Management100% Local Sourcing

Balanced DevelopmentWider AccessibilitySustainable FinancingLow-Carbon EconomyAgribusiness AssistanceCatalyzed Growth

FS6, FS8, G4-EN27

Customer SatisfactionHigh Quality ServiceMarketing BrillianceSound Risk ManagementBusiness Continuity ManagementLeadership Excellence

G4-EC1, PR5, PR7, PR8, HR3, HR4, HR5, HR6, SO5, SO8

G4-EN3, EN4, EN8, EN15, EN16, EN17, EC9

ENABLERS


Our Business G4-4, G4-5, G4-6, G4-8, G4-9

As one of the leading banks in the country for the last 163 years—our

business, products and services have contributed significantly to the national economic landscape and the day-to-day lives of Filipinos. Being the first bank established in the Philippines and in the Southeast Asian region, our history has been one of client trust, financial strength and innovation.

Our portfolio is strategically geared towards a sustainable and inclusive society. In our book, everyone is included. Individuals, enterprises and institutions alike benefit either directly or indirectly from the economic drivers generated by the Bank’s business. We will continue to deliver products and services efficiently, mindful of our corporate values of integrity, strength, innovation, and productivity.

With headquarters in the Makati Central Business District, BPI has ushered in

many firsts in the country’s banking and financial industry. This includes the automated teller machine (ATM), cash deposit machine (CDM), BPI Express Assist (BEA) machine, point-of-sale debit system, kiosk banking, phone banking, internet banking, and mobile banking. Our 825 branches and business centers and 2,575 ATMs and CDMs connect to form the largest combined network servicing seven million clients. Beyond nationwide coverage, our branch presence includes one in Hong Kong and four in Europe.

Acknowledged as a leading provider of financial services in the Philippines, together with our subsidiaries, we offer clients a wide range of financial products and services in corporate banking, consumer banking and lending, investment banking, asset management, insurance, securities distribution, foreign exchange, and leasing.

17%increase in total

economic value distributed(from 2013)

84% of revenue distributed

to key stakeholders


Economic Value Distribution G4-EC1

Responsible contribution to nation building requires us to take on the challenge of fostering inclusive growth and wealth creation for every Filipino. This process begins in our internal systems and processes. Honest, accurate, and fair handling of information ensures that stakeholders who invest with the Bank are rewarded commensurately.

Fidelity to Ethical Corporate Citizenship

Our Unibank Central Accounting Division (UCAD) consolidates financial data, while Strategic and Corporate Planning Division (SCPD) assesses them for accuracy, in preparation for presentations to the Board of Directors and submission of reporting requirements to the SEC and Philippine Stock Exchange (PSE).

UCAD controls the Bank’s books of accounts to ensure accurate, fair and timely financial statements and other management reports. It also sees to it that all entities in the group compute and pay required taxes. It ensures compliances defined to UCAD with regulatory reporting to the Bangko Sentral (BSP), SEC, PSE, and Philippine Deposit

Insurance Corporation (PDIC). This ensures that all disbursements assigned to UCAD are processed within the prescribed authority limits.

SCPD is responsible for providing sound budget and variance analysis of the reports generated by UCAD. It guarantees that reporting requirements to the Bank’s Board of Directors and to government regulators are met.

The Board conducts check-and-balance practices as well as audits of the Bank’s financial performance and targets on a monthly basis. We also undergo quarterly and annual review checks by the SEC.

In million pesos

2014 Economic Figures

Economic value generated: Revenue 52,498

2013

47,385

2012

55,787

2014

Economic value distributed 48,041 40,120 47,125

Payments to suppliers

Payments to governments

Payments to employees

Payments to communities

Payments to providers of capital

Economic value retained

6,767

8,026

10,401

38

22,811

(656)

7,502

9,842

10,481

90

12,204

12,378

8,401

11,203

11,653

51

15,817

8,662

• Revenue / economic value generated: Our total revenue increased from ₧52.5 billion in 2013 to ₧55.8 billion in 2014, largely driven by the improvement in net interest income by ₧4.5 billion. For the same period, our ₧30.3 billion net interest income increased by 14.8% to ₧34.8 billion. This upsurge is due to expansion in our asset base of 24.6%, or ₧247.0-billion, tempered by a 28-basis point drop in net interest margin.

• Economic value distributed: Our total economic value distributed increased by 17%, from ₧40.1 billion in 2013 to ₧47.1 billion in 2014.

Payments to providers of capital: This refers to dividends paid and interest payments for deposits and borrowings. Amount totals from 2013 to 2014 show a 30% increase, from ₧12.2 billion to ₧15.8 billion.

Payments to employees: Disbursements due to salaries, wages and bonuses and staff benefits rose by 11%, from ₧10.5 billion in 2013 going up to ₧11.7 billion in 2014.

Payments to governments: These are tax payments made for corporate

revenue streams, i.e., interest income, foreign exchange, security trading, fees, commissions, and other income. These also include income and fringe benefit taxes for employees and taxes derived from properties and operational transactions. Taxes in 2014 amounted to ₧11.2 billion, a 14% increase over 2013’s ₧9.8 billion.

Payments to suppliers: This covers payments for trainings abroad and all suppliers and service providers. Procurement expenditures increased by 12% in 2014 reaching ₧8.4 billion, from ₧7.5 billion in 2013.

Payments to communities: This primarily pertains to donations and contributions to charities.

• Economic value retained: BPI posted a lower economic value retained from the previous year at ₧8.7 billion in 2014. This means we have increased our disbursements to key stakeholders. Our 2014 Annual Report, available online at www.bpiexpressonline.com, discusses our financial performance in detail.

Our indirect economic impact is discussed in detail in pages 21 to 81 of this report.

Economic Value Distributed in 2014

34%15,817

In million pesos %

18%

24%

8,401

11,203

25%

0.1%

11,653

51

a Payments to suppliers

b Payments to employees

c Payments to providers of capital

d Payments to governments

e Payments to communities

a

b

c

d

e

47,125M


Defining What’s Material to UsG4-18

The Bank conducts periodic review of its materiality to identify key opportunities and risks relevant to emerging economic, social and environmental issues. We refer to key local and global sustainable development issues and define which issues we have the competencies to provide solutions to. We also value the perspectives of our four major stakeholders—Clients, People, Shareholders, and Country—that help us define our materiality, scope and boundaries.

Through this process, we are able to focus our efforts on areas where we are most competent on and where we are able to create the most positive impact.

This report defines management approaches for issues considered as material. We present our performance on these aspects using indicators that best capture our business context.

Guided by the GRI G4 Sustainability Reporting Guidelines, we conducted the materiality process, as outlined below.

Identification: Sustainability Context and Stakeholder InclusivenessWe referred to the 10 global megaforces identified by KPMG (Expect the Unexpected: Building Business Value in a Changing World, 2012)–climate change, energy and fuel, water scarcity, material resource scarcity, population growth, wealth, urbanization, ecosystem decline, food security, and deforestation–where any changes to which are likely to have the highest impacts to our business. We also looked at national trends and statistics, company reports, market and industry developments, and regulatory updates for localized sustainability context.

We collected information on stakeholder expectations as inputs to our process.

Prioritization: Materiality and Stakeholder InclusivenessWe engaged key officers and staff to identify which of the aspects are relevant to them and which fall under their competencies. Information were obtained through extensive series of meetings with various business units and through electronic communication exchanges.

In these discussions, we defined focus areas where the Bank can provide business solutions.

Stakeholder data including customer survey results, investor briefing materials and other information were used to validate identified material aspects.

We have consolidated these material aspects into our new BPI Sustainability Strategy Framework (see pages 12 to 13).

Validation: Completeness and Stakeholder InclusivenessOur management reviewed the BPI Sustainability Strategy Framework to ensure completeness and alignment to business strategy. Our various business units also confirmed that all important aspects and impacts of the business activities are considered.

Review: Sustainability Context and Stakeholder InclusivenessWe review our previous reports and continually find better indicators that provide a balanced picture of our impacts and sustainability performance. Moving forward, we will performs similar review process for the next reporting cycle.


Stakeholder Engagement G4-25

Who are our stakeholders and how do we engage with them? G4-24, G4-26

What matters to them?

G4-27

How do we address them?

G4-27

CUSTOMERS

• Daily customer touch points – branches, personnel, phone, email and social media channels

• Annual and periodic satisfaction surveys

• Regular visits to existing clients including area briefings

INVESTORS

• Regular investor briefings

• Annual stockholders’ meeting

EMPLOYEES

• Online portals, face-to-face meetings and learning sessions

• Annual performance appraisals

• Periodic engagement survey

SUPPLIERS AND CONTRACTORS

• Accreditation

• E-mails, letters and memos

• Quality of service

• Accessible electronic services

• Convenient, affordable, reliable, and efficient delivery of products and services

• Product requirements and processes

• Personnel capability to address concerns

• Sound or customized financial advice

• Shareholder return

• Financial performance

• Business growth and continuity

• Career development programs

• Clear understanding of organizational goals

• Effective leadership

• Procurement policies (requirements, criteria for evaluation)

• Other procurement-related concerns (cost, terms of payment, mode of shipment, warranties)

• Cascade of policies

• Real-time updates

• Proactive approach to customer concerns (i.e. proper allocation of manpower resources, review of outsourcing services and setting up of more effective contact centers)

• Constant monitoring and upgrade of systems

• On-going personnel capacity building through product briefings, seminars and training

• Timely provision of customized feedback, advice and/or solutions to inquiries

• Transparent and timely disclosures

• Innovation in employee development programs, systems, processes and company practices

• Employee volunteerism programs

Who are our stakeholders and how do we engage with them?G4-24, G4-26

What matters to them?

G4-27

How do we address them?

G4-27

REGULATORY AGENCIES

• Annual bank examination

• Regular audits

• Regular correspondence through letters and e-mail

NON-GOVERNMENT AND CIVIL SOCIETY GROUPS

INDUSTRY GROUPS AND PARTNERS

• Membership

• Periodic industry meetings and working committee meetings

• Periodic conferences, seminars and fellowship activities

• Compliance with relevant national laws and regulations

• Transparency and accountability

• Feedback on the Bank’s operations

• New projects and initiatives

• Update on existing projects

• Takeaways from activities conducted

• Partnerships

• Regular correspondence through e-mails, letters and memos

• Post-event feedback

• Continuing membership

• Sharing of industry updates and common concerns related to product and service delivery

• Lobbying of significant business concerns

• Discussion of industry trends and adoption of new rules and regulations

• Setting of industry standards and market practice

• Provision of avenues for personnel growth (for example, enhancement of technical knowledge and participation in socio-civic projects)

• Building of collaborative networks

• Transparent and timely disclosures/reports

• Report on compliance to regulations

• Conduct of internal and external audits

• Formal explanations and responses to queries

• Attendance to meetings

• Real-time updates

• Attendance to meetings, exhibits, conferences, seminars, symposia and fellowship activities

• Participation in meetings with key policy and decision makers

• Active membership


Let’s set financial wellness in motion


We aim to help every Filipino attain a strong financial foundation on which they can build a healthy and productive financial future. Our wide array of products

and services address our clients’ needs throughout their path towards financial freedom. In addition, our offerings are designed to help achieve long-term benefits for our clients, from fostering the value of saving, building healthy credit, to learning how to invest wisely and protecting assets. With this approach, BPI is well-positioned to be the Filipino’s banking champion, a champion that the Filipino public could trust to lead them to financial wellness, empowerment, and growth.

5,000individuals provided with stock market education

32% increase in number

of Jumpstart accounts

₧805.9Bsum insured

for earthquakes

₧824.8B sum insured for typhoons

₧824.8Bsum insured

for floods

8% increase in number of AMTG investors


With only 43% of Filipino adults currently having savings (BSP National Baseline Survey on Financial Inclusion 2015), taking steps to improve this basic indicator of financial wellness is an imperative for us.

We offer a convenient means to help depositors regularly set aside a portion of their salary for future needs. The BPI Save-Up Account automatically transfers an amount specified by the depositor on a regular basis from an ATM source account such as Express Teller Savings, into a BPI Save-Up.

BPI Save-up also offers free insurance coverage through a tie-up with Philam Life Assurance Corporation. The insurance coverage–basic life insurance, accidental death, and accidental dismemberment–does not require medical clearance or premium payments. The coverage can equal to as much as ten times the account balance, with a maximum of ₧4 million.

Aside from scheduled automatic fund transfers, one may also transfer funds to his Save-up account any time. To further promote the habit of saving, the Save-Up account does not come with an ATM card and withdrawals cannot be made over the counter either. A Save-Up client may transfer and track his funds via our electronic banking portal, BPI Express Online (www.bpiexpressonline.com), the BPI Express Mobile app, or through our phone banking facility, BPI Express Phone (89-100). In 2014, total savings generated via Save-Up accounts grew by 26% from 2013, despite the 10% drop in the number of accounts. The average account size likewise increased significantly by 39%, showing that the average Save-Up account holder is able to save more over time.

Instilling a Culture of Saving

Year-on-Year Growth in Volume of Save-Up Accounts

2012 2013 2014

33%

Realizing that saving has more lasting impact when the habit is formed early on, we created a deposit product for the youth with the mentoring of their parents.

Branded as Jumpstart, it is BPI’s banner product in the BSP’s Build Up on Your Future (BOYF) Advocacy Program. Jumpstart’s product features enable parents to have a tool to teach their children practical money management and introductory banking, which are disciplines that hold value for life. These features are:

• Guaranteed Savings protects a portion of the child’s funds from unplanned withdrawals, to help attain a future goal.

• An allowance transfer facility ensures that the child’s allowance gets credited to his Jumpstart account on a timely basis.

• The Jumpstart ATM is as good as cash at over 40,000 BPI Express Teller Payment System-

accredited stores. It’s also the child’s Debit and Privilege Card when used at partner merchant outlets, where perks and privileges are offered.

• Cellphone reloading can be done at the nearest BPI Express Teller ATM, by calling BPI Express Phone at 89-100, by accessing BPI Express Mobile Menu on the cellphone, or on www.bpiexpressonline.com.

The continuing success of Jumpstart stems from targeted companies implemented by BPI’s Deposit Products Business Unit and Field Sales, together with the branches. Integral to these campaigns were the Financial Wellness Seminars for kids conducted in partner schools as well as product and advocacy awareness spread through Digital and Social Media Channels.

By 2014, the Jumpstart account holder base had grown by 32% from the previous year while volume has also increased by 14%.

Starting Them Young

Year-on-Year Growth in Average Savings per Account

2012 2013 2014

39%

Year-on-Year Growth in Number of Jumpstart^ Accounts

2012 2013 2014

38%

2012 2013 2014

19%

Year-on-Year Growth in Savings Volume of Jumpstart^

Accounts

26%

23%

14%

32%


We help families stretch their cash flow through the low-interest BPI Family Credit Card. Aside from having a low finance charge at 2%, it also has an affordable annual membership fee.

Part of our mission of fostering financial wellness is dealing proactively with pre-delinquent clients through special payment arrangements. Our Pre-Delinquency Management service caters to clients undergoing financial difficulty resulting from unemployment, medical conditions and natural calamities, among others.

Through the special balance conversion facility of this service, clients who meet certain requirements may have their credit card debt restructured. Payment terms under this facility range from six to 18 months at 1% interest; the minimum amount due on the credit card debt becomes the required down payment under the restructuring. In exceptional cases, the repayment period may be extended up to 36 months. Processing of requests to avail of this facility are completed within three days of the request.

Clients who became victims of of super typhoon Haiyan, locally named Yolanda, availed of a one-month Payment Holiday on credit card payments. Some 3,200 clients benefited from this program.

We also extend our services to individuals often tagged ineligible to acquire a credit card through our Express Start Program. These include those who don’t have a fixed or regular income such as homemakers and retirees, and those who for some reason are unable to submit income documents such as fresh graduates and students who are at least 18 years old. Such individuals are only required to maintain a deposit account with the Bank over a certain period of time. Annual membership fees for individuals in this program are waived for the first year.

Promoting Responsible Borrowing

Bringing the benefits of a robust economy to more Filipinos is one of our aspirations. We believe our investment products bring this aspiration closer to reality.

Filipinos seeking to achieve financial growth should not be hindered by a general lack of knowledge of alternative income sources such as from investing.

The BPI Asset Management team offers various investment options for clients looking to earn more than just interest on savings. These investment products enable clients to reach their long-term financial goals sooner by making their money “work harder” through higher earning investment instruments.

As a result of our innovative approaches and more accessible channels, our client roster for this sector increased by 8% from 81,479 in 2013 to 87,869 in 2014. Clients 30 years old and below comprise the majority at 35%.

The use of alternative channels, such as the Internet and mobile, for investment-related transactions further increased to 47% in 2014 from 41% in 2013. For the same years, use of electronic statements also grew by 40% to 9,164 from 6,539.

Bringing Investing Closer to People

Year-on-Year Growth in Number of AMTG Customers

2012 2013 2014

6% 8%


Advocating Financial Literacy

Promoting Investing as a Lifestyle

BPI consistently provides investor education programs. An important part of our efforts is an investment summit called Investment Roadmap which we conduct in various parts of the country. This summit highlights goal-setting and the means to achieve them through investing.

We also keep our clients informed on the state of economy and financial markets through financial advisories entitled BPI Asset Management WISE (Weekly Investment Series), Investment Insights and Investment Academy.

The world of investing is unfamiliar to most Filipinos. While people generally desire much bigger returns on their savings, their lack of knowledge and training in the many investment options keeps them from fulfilling their potential for financial growth.

We are adequately addressing this need through investment seminars and training. We educate our clients on the how-tos of investing based on their particular capacity, willingness, and risk appetite. Harnessing the power and reach of social media, we are gradually transforming public perception on investing, making it more accessible and attainable.


Educating People on the Stock Market

Only 1% of Filipinos invest in the stock market, in contrast to Hong Kong’s 30% plus. We aimed to change this trend by democratizing access to financial markets and increase the stock market penetration rate in the country. To this end, BPI Securities established the Invest-in-You Trading Academy (I-TRAC) to educate potential retail investors on stock market investing.

This move propelled BPI Securities to be the 9th highest ranked broker in terms of market share among 184 Philippine trading participants. It also currently holds second place among all online brokers in the country. The program’s effectiveness is evident in the increased volume of trade transactions, which has multiplied five times over the past two years.

I-TRAC’s investor education programs promote stock market investing to ordinary citizens in schools, workplaces and various organizations in the country. Since 2013, the I-TRAC program has served more than 5,000 individuals. Stock market education seminars now run five to six times a month, where previously they were held twice a month in 2013.

One of the ways by which BPI Securities promotes investing as a lifestyle is through the Pinoy Millionaryo Club (PMC). We have virtually become the industry leader, being the only broker in the country with a successful track of hosting a “community” of investors. Through social events, seminars and social media campaigns, clients become passionate about investing and gamely interact with one another in a more deeply connected environment. Our goal is to help create as many Filipino millionaires as possible.

Having access to sound financial advice helps our client to properly navigate the market, make sound investment decisions and choose the right stock options. As members of PMC, they benefit from one-on-one sessions with our stock market coaches and are given priority in our investor education seminars. Moreover, they get access to exclusive research and special events.

Creating Filipino Millionaires

To determine the best investment option for a client, BPI Asset Management considers both investment capacity and risk tolerance. The client is given access to the best available investment information to build confidence and set realistic expectations from investments.

Our clients with limited financial know-how or start-up investment money are assisted through our Investment Funds. Unlike deposit accounts (savings and current accounts) that are generally for emergency and daily needs, our investment funds serve longer term financial goals, like tuition, retirement and home ownership. Our Investment Funds allow for greater flexibility and variety of investment choices:

These allow clients to start an investment account for as low as ₧10,000. Our UITFs are invested in the money market, bonds, and equities. Clients may choose particular funds to invest in, according to their preferred investment strategy. Withdrawal of earnings from UITFs can be made at any time.

These funds are managed by BPI Investment Management Inc. (BIMI), a wholly-owned BPI subsidiary. Our professionally managed mutual funds provide more diversification than most investors could achieve on their own. ALFM mutual fund offerings by BIMI only require a minimum investment of ₧5,000.

RSP allows clients to nominate a regular contribution amount for their investment account for purchase of units or shares, on a monthly or a quarterly basis, working like forced savings. Aside from delivering affordability, convenience and control, RSP results in higher returns for investors due to cost-averaging. There is no penalty for missing a scheduled contribution.

Since the lowering of minimum investment amount requirements in 2013, there has been a marked increase in our investor count. For the overseas Filipino segment, investors increased by 40% to 6,552 in 2014 from the previous year’s 4,668. Investors from the Personal Banking segment grew by 12%, from 36,836 in 2013 to 41,200 in 2014.

Offering a Wide Array of Investment Options

BPI Unit Investment Trust Funds (UITF)

ALFM Mutual Funds

Regular Subscription Plan (RSP)

BANK OF THE PHILIPPINE ISLANDS 35 2014 SUSTAINABILITY REPORT 34

Being in a country frequently visited by typhoons and other natural calamities, we are taking the lead in instilling the value of protecting one’s assets and managing risks.

BPI/MS Insurance Corporation (BPI/MS) issued a total of 236,791 insurance policies in 2014, serving 132,211 clients. Most clients availed of our motor insurance policy, with 118,840 policies; followed by fire insurance with 78,151; marine insurance with 13,349; and personal accident with 9,679 policies.

Meanwhile, total sums insured for natural catastrophe perils are ₧805.9 billion for earthquakes; ₧824.8 billion for typhoons; and ₧815 billion for floods.

BPI/MS relies on its 12 branches/satellite offices nationwide and the Unibank network to bring our products to the market. Our distribution channels include agencies, brokers, bancassurance, branches, and the Japanese Marketing Division.

Total premiums generated for 2014 amounted to ₧5.23 billion. Of this amount, 59% is attributed to fire insurance, 28% to motor insurance and 13% to the other products.

Across our major product lines, 236,791 insurance policies were availed of by policy holders in 2014. Collectively, motor, fire and marine insurance comprise 89 percent of this total.

Insurance Policy Type

118,840

9,679

78,151

50%

4%

33%

6%

2%

1%

4%

13,349

4,647

1,817

10,308

Motor

Fire

Marine

Personal accident

Other casualty

Engineering

Bonds and other insurance policies

%

Helping Prepare for the Unexpected

Jaime Mayoral

Testimonial

Insurance Agent BPI/MS Insurance

“There is ‘less stress’ in being an agent because you manage your own time, especially so, if you are in the right company with the right products.”

Jimmy is a veteran insurance agent. He is now just 2 years shy of his 25 year engagement withBPI/MS. If a life well-lived means being married for forty-three years, having four children and 13 grandchildren, then accountant Jaime O. Mayoral is living the high-life indeed. Add a winning attitude and great outlook to life; he is among the bank’s best success stories. “At 68, I am still an active BPI/MS Agent. Compared to other businesses, you need capital. You need space. But being an insurance Agent, what you need is knowledge. For us senior citizens, that’s what we have. Experience is the best teacher, and it made us sharp and credible.” There is, according to him “less stress” in being an agent because you manage your own time, especially so, if you are in the right company with the right products. Jimmy also appreciates the high regard that agents like him are given at BPI/MS. He says, “You can feel the warmth and respect that the staff is giving to agents here at BPI/MS, especially to us elderlies. Jimmy enjoys the freedom of not being limited to what his pension brings. He says, “having good products and the right clients, being an agent is more profitable. Ultimately, there are less financial worries. At my age, I am still able to help our relatives in the province of Pagudpud, Ilocos, Norte in their livelihood.” Beyond the endless financial opportunities, selling products that truly helps the clients gives meaning to his work. “I am still an active member of insurance clubs and associations. This helps me become an even more effective agent.” “I will continue being a BPI/MS agent for as long as I could.”


Let’sfoster financial inclusion


Financial inclusion, or the delivery of financial services suited to low-income individuals and households, is a challenge that we at BPI try to address through

our various products, services, and channels.

By making banking more accessible, we help make financial well-being a reality for more Filipinos.

over 200franchise outlets

thriving

14%growth in number

of Easy Saver accounts

32cities covered by enterprise

development program


Easy SaverAn Easy Saver account may be opened with only ₧200 and a ₧50 ATM card fee, with no maintaining balance required. Only a minimal fee of ₧5 per transaction is charged for BPI ATM withdrawals and debit transactions such as payments via the Express Payment System/POS, ATMs, mobile app, among others.

By 2014, the number of Easy Saver accounts increased by 14% from 2013. These accounts comprise a significant portion of BPI’s depositor base.

Total volume of savings from Easy Saver accounts also grew by 27% from 2013.

Average account size steadily increased by 12% annually from 2012 to 2014. This indicates that Easy Saver is able to serve account holder needs.

These numbers show that given access to affordable deposit products, Filipinos—from all walks of life—are able to gradually build savings through their deposit accounts.

Banking the UnbankedFS7

More than 21 million or 56% of the total employed persons in the country are minimum wage earners (2015 Philippines in Figures, Philippine Statistics Authority). This reality makes it difficult for a lot of Filipinos to save enough to open and maintain a regular bank account. Our Easy Saver deposit product was developed to change this.

Debit CardsAll ATM cards issued by our Bank are debit cards. These cards may be used for cash transactions in lieu of actual cash via Express Payment System (EPS). The amount of a purchase is deducted from the account’s available balance. In support of BSP’s thrust of reducing the circulation of cash and coins, the Bank provides incentives to its customers who use the EPS through a rebate or reward. This gives risk-averse and practical customers a seamless way to pay for everyday needs.

Prepaid CardsOur prepaid cards provide an efficient way for those without regular BPI savings accounts to manage their finances. They allow the cardholder to pay for purchases and services with a pre-deposited balance, which when

used up may be replenished as desired by the cardholder.

This is the entry-level product for individuals that may have specific needs or may not yet have the credit history like the young and underbanked individuals.

As prepaid card holders become more comfortable with cashless transactions, they eventually signed up for our other products. Over the last two years, about 30,000 prepaid card holders opened deposit accounts with us. Pantawid Pasada Prepaid Cards This prepaid card variant, launched for the Department of Energy, is aimed at helping drivers of public utility jeepneys (PUJ) cushion the impact of high fuel prices. PUJ drivers may present their Pantawid Pasada prepaid cards in retail gasoline stations in order to avail of government fuel subsidies.

When loaded with money through BPI’s ExpressLink real-time funds transfer system, the cards may be used at most of the retail gasoline stations nationwide.

The use of prepaid cards reduces operational cost and relevant carbon footprint of the Bank from the management of ATMs as well as the risk to theft at ATM centers.

Our debit and prepaid cards play significant roles in helping individuals previously unfamiliar with banking and financial transactions. These provide simple, convenient and secure payment options.

Providing Payment Solutions

Year-on-Year Growth in Savings Volume of Easy Saver

2012 2013 2014

69%

27%

Year-on-Year Growth in number of Easy Saver Accounts

2012 2013 2014

51%

14%

Year-on-Year Growth in Average Savings per Account

2012 2013 2014

12%12%


Making Loans AccessibleFS7

Many Filipinos are hard-pressed to achieve financial stability and security for lack of funds and access to financial services. By providing easy access to loans, the Bank is making good progress in improving this situation.

BPI Housing Loans

We continually support events and gatherings that provide the public with information on property financing through various means.

We actively support the conduct of housing fairs, usually in consumer frequented areas like malls. By participating in these fairs, we reach prospective homebuyers. Aside from being able to educate the public we are able to receive and process loan applications on the spot. This way, we reach our market more efficiently. This resulted in increase in housing loan applications.

We hold investment talks to deepen relationships and nurture goodwill with our clients. In these talks, we share real estate trends and updates and enrich knowledge on housing loan products to improve understanding of market opportunities.

The Bank encourages community and individual growth of real estate brokers by widening the range of our accreditation and compensation programs for bona fide members of broker communities.

We also reward successful loan referrals by accredited brokers with corresponding incentives through our Brokers Circle Incentive Program. This scheme aims to inspire more brokers into our roster. This has resulted increases in loan referrals and actual real estate loan transactions.

BPI Ka-Negosyo

A good number of Filipinos who plan to start a business are unable to do so for lack of confidence or financial capability. We help them overcome these obstacles by providing financing assistance to both existing and start-up Filipino entrepreneurs through our BPI Family Ka-Negosyo loans. Short-term, long-term, or franchising loans serve to bridge capital requirements suited to different types of businesses.

We make investing in a business more interesting and appealing through social media posts and online community fora. Through these channels, we promote positive and educational conversations around business strategies, business growth and financial wellness, among others.

To educate would-be entrepreneurs, our Ka-Negosyo team regularly conducts investment seminars, training sessions, and solutions presentations.

Ka-Negosyo fosters partnerships with various business organizations such as the Philippine Franchise Association, Association of Filipino Franchisers Inc. and Go Negosyo who share our goal of helping entrepreneurs and business start-ups. We also conduct roadshows where we present our “Ka-Negosyo Best List,” a short list of franchise

brands vetted by BPI for business soundness. This allows for intelligent and less risky choices by our Ka-Negosyo loan clients.

We further alleviate overwhelming concerns of starting-up a business through extended payment terms.

We deliver this product through a 182-strong BPI Ka-Negosyo staff across 813 bank branches and 10 provincial centers nationwide.

In 2014, we conducted four major roadshow events in Metro Manila and six in the provinces, contributing to 14% growth in number of accounts.


From Fruits to Franchise

Cheysserlyn Ting always had a passion for entrepreneurship. Her parents made a decent living from selling fruits and vegetables in Cauayan, Isabela. Now, at 26 years old, her passion compelled Cheysserlyn and her husband to set up their own business franchise of Daddy’s Toasted Siopao.

Through BPI Ka-Negosyo, managing the franchise became easier. “We didn’t have a hard time contacting them – the internet made them easy to reach via their website. They lent us our

start-up capital and once we started discussing terms and conditions, the Ka-Negosyo team was very helpful and encouraging.” she states.

It has only been two months but Cheysserlyn and her husband are enjoying their experiences in franchising. “I also believe we made the right decision in starting young. My family and I can enjoy our financial independence this early and create a self-sustaining means for our security as we grow older.”

Marlowe and Roselle Mendoza

Testimonials

Restaurant Success

Since getting married in 2006, Marlowe and Roselle Mendoza have dreamt of putting up their own restaurant. While both worked hard, capital was their main challenge.

The Mendozas found a reliable partner for their initial enterprise with BPI Family Savings Bank’s Ka-Negosyo Business Loans. “The Ka-Negosyo team really helped us a lot. They knew what we needed, allowed us to negotiate, and they were also motivated to help us succeed.”

Their first business funded by Ka-Negosyo was Red Engine Diner in Makati. Over the years, the Mendozas built other dining places such as Hermana, and The Recados - all possible through Ka-Negosyo.

“We are so grateful to have found one in BPI Family Ka-Negosyo. For middle-class people like us who were not born with a silver spoon, cashing in on an opportunity when it presents itself is priceless”, Roselle exclaimed.

“BPI knew what we needed, allowed us to negotiate, and they were also motivated to help us succeed.”

Cheysserlyn Ting

“We made the right decision in starting young.”

EntrepreneurDaddy’s Toasted Siopao

Restaurateurs Red Engine Diner, Hermana, The Recados


Insuring Your Future

BPI/MS in cooperation with BPI Globe BanKO helps those in the lower income segment by providing innovative and affordable micro-insurance products and taking on the transfer of risks for their protection.

BPI/MS Bahay at Buhay product complements with microfinance loans which improve our clients’ social standing. We support and empower our clients’ financial independence by creating opportunities that allow them to continue to generate income.

PaniguroKO gives the account holder access to a non-life insurance policy that costs only ₧365 for a one-year coverage.

Educating Emerging Entrepreneurs

Sharing Financial Growth with Employees

Through the initial public offerings (IPOs) services of BPI Capital Corporation, we influence our clients to allocate stocks for their employees. This affords the employees the financial benefits gained as the company goes public.

In 2014, we have enabled around 300 employees to avail of the opportunity to invest in the company they work hard for. This allows companies to share their potential to create wealth with their employees.

BPI promotes entrepreneurship and empowers aspiring entrepreneurs as catalysts of positive change in communities.

Our Show Me, Teach Me, MSME program, in partnership with the Department of Trade and Industry’s Philippine Trade Training Center (PTTC), teaches emerging entrepreneurs basic skills that prepare them to develop better products matched to market needs.

Food packaging, labeling and product design enhancement, and assessment for the non-food sector were among the topics covered in 2014.

The program has covered 32 cities and has trained 1,526 MSMEs since 2010, making our local products more competitive.

Guiding Young Minds

The Bank believes in the Filipino youth and in the integrity of their ingenious ideas. We encourage idea innovation among our country’s brightest students who lack the groundwork for future business development.

The BPI-DOST Science Awards provides an avenue to present sound concepts having strong potential to be realized as actual science and technology-based businesses now or in future; or help advance current technologies for adoption to businesses thereby enhancing livelihood.

Counting among the most respected of local national student awards in the country, excellence in research and application in the fields of biology, chemistry, computer science, engineering, mathematics, and physics is duly recognized and rewarded. This annual program has been on-going for 25 years and is run with the Department of Science and Technology.


Let’s invest in sustainable development


A big part of our success over the years may be attributed to a conscious effort to foster sustainable growth, anchored on countryside development and sustainable

energy. We are committed to financing projects that help build more vibrant, modern and low-carbon communities.

The co-dependence of the countryside and urban areas is important to achieving significant national economic growth. The 6.1% growth in Gross Domestic Product (GDP) in 2014 is mainly contributed by growth in the countryside–at 4% (2014 Gross Regional Domestic Product Highlights, National Statistical Coordination Board). Recognizing this, we strengthened our focus in enabling investments beyond the National Capital Region (NCR).

At BPI, we make sure that the growth we enable is sustainable and inclusive.

506Bpesos worth of loans for projects in Metro Manila

1,058 GWh RE generated

94Bpesos invested in

countryside development(Corporate Clients)

97Bpesos invested in various

development projects (BPI Capital)

257Bpesos raised for various development projects

(BPI Capital)

234 GWh saved from EE

projects


Our lending to corporate entities is propelling the growth of the country’s business sector, with more than ₧600 billion released to 100,223 private enterprises in 2014. Such lending has benefited not only large business conglomerates but also small and micro-enterprises.

Our comprehensive range of lending products includes short term inventory and trade financing, term facilities for the financing of capital expenditures or acquisitions and project financing. These are aimed at spurring growth in both urban and countryside. We have evolved from being a funding partner to being a financial advisor of our clients. We also offer alternative financing for clients who are raising capital through IPOs and through the issuance of bonds and corporate notes.

Strategically located business centers and sub-centers all over the country help us to reach clients over wide areas. In 2014, we served 34,960 large, medium, small, and micro-enterprises at these business centers, an increase of 20% over the previous year, with San Pedro, Laguna (30%) and Cebu City (25%) having the highest increases.

While positioned to serve large and medium enterprises–conglomerates and multinationals whose assets are worth ₧50 million to ₧100 million–our corporate banking also provides loans to small enterprises and micro-businesses, at ₧5.7 million and ₧2.2 million, respectively in 2014.

Close to a third of our corporate lending goes to clients in the manufacturing sector at 28%. The remaining goes to clients in real estate, renting and other business activities (17%), financial intermediation (16%), and wholesale and retail trade (14%).

In 2014, our corporate clients grew by 15% from the previous year, with total outstanding loans increasing by 30%.

Ensuring a Balanced DevelopmentFS6

Increasing Accessibility Where It Matters

Distribution of Loans per Region and SectorIn million pesos

20 14010060 180

Manufacturing

Real Estate

Financial intermediation

Hotels and Restaurants

Construction

Agriculture, Forestry and Fishing

Services

Transportation, Storage and Communication

Utilities

Wholesale and Retail Trade

Mining and Quarrying

BPI Leasing and Rental

Outstanding LoansIn million pesos

15%

2%

87,126

12,674

Financing %

1%

16%

1%

8,900

95,631

6,073

2%

2%

17%

28%

4%

4%

8%

14,226

10,367

102,709

170,067

21,339

24,784

46,392

a Wholesale and Retail Trade

b BPI Leasing and Rental

c Agriculture, Forestry and Fishing

d Construction

e Financial Intermediation

h Mining and Quarrying

f Hotels and Restaurants

i Real Estate, Renting and other business activities

g Manufacturing

j Services

k Transportation, Storage and Communication

l Utilities

ab

cd

e

f

gh

i

j

k

l

600.29B

ProvincesMetropolitan A reas

151,817 18,251

90,960 11,749

85,657 9,974

14,768

7,605

6,571

2,762

59,056 28,070

7,516

8,900

10,180

5,992

6,710

-

2,494

81

42,979 3,412

20,527 4,257


DISTRIBUTION OF CORPORATE CLIENTS

We give priority to investments that create significant economic and social benefits in the countryside. In 2014, we provided ₧94.3 billion in loans for countryside businesses, 30% of which went to wholesale and retail trade, 19% to manufacturing, 12% for real estate, renting and other business activities, and about 7% to food security-related enterprises.

Among other purposes, these business activities inherently create local or regional job opportunities encouraging more individuals to live and work in the provinces, rather than move to urban areas. By supporting enterprises in food, retail, transportation and storage, we help enhance the flow of economic value between urban centers and the countryside.

This contributes to the 10.6 million total employment in 2014 by the wholesale and retail trade, manufacturing and real estate sectors in the country (Philippines and Figures 2015, Philippine Statistics Authority).

Boosting Countryside Growth

Outstanding Loans Distributed to the Provinces (Total ₧94,331 billion)

30%

11%

28,070

9,974

Financing %

7%

3%

6,710

2,762

3%

19%

12%

0%

7%

4%

4%

2,494

18,251

11,749

81

6,571

4,257

3,412

a Wholesale and Retail Trade

b Agriculture, Hunting, Forestry, and Fishing

c Construction

d Financial Intermediation

e Hotels and Restaurants

f Manufacturing

h Real Estate, Renting and other business activities

g Mining and Quarrying

i Services

j Transportation, Storage and Communication

k Utilities

ab

c

d

e

f

gh

i

j

k 94,331M


BPI has been lending to the agribusiness sector for more than 30 years now. Recognizing our potential to create positive social and economic impact, we launched Agribusiness Solutions in March 2013, an enhanced lending program for the use of state-of-the-art technology in piggery and poultry sector operations. Other types of loan products include investments for agricultural crops and post-harvest operations such as rice mill, dressing plant, meat processing plant, slaughter house, cold storage, and feed mills, among others.

In 2014, the loans provided through these products help boost job creation and food production in the rural areas. A portion of these loans were channeled through rural banks with loan portfolios for agriculture and agrarian reform. Majority was released directly to individual borrowers and corporate clients. Two cooperatives, a federation of onion growers in Nueva Ecija and a sugar cooperative in Batangas, also availed of the lending facility.

The loan proceeds invested into piggery and poultry projects result in healthier animals, better productivity and better feed conversion ratio. Through these projects, piggery operators typically recover their investment in eight to nine years; poultry operators, five to six years. The proceeds were also invested in biodigesters for production of biogas fuel from animal wastes, saving for the farmers around 65% in electricity cost while significantly reducing their greenhouse gas (GHG) emissions.

The success of Agribusiness Solutions in 2014 was a result of aggressive marketing and promotional activities by a team of five product managers and three technical staff. Aside from undertaking advertising campaigns, Agribusiness Solutions participates in conventions and exhibits for this sector, like the National Hog Convention, Inahgen and Agrilink. It also holds technical fora and product briefings. In 2014, such briefings were conducted in 10 of our business centers namely Dagupan, San Fernando, Bulacan, Laguna, Batangas in Luzon; Bacolod, Iloilo and Cebu in the Visayas; and Davao and Cagayan de Oro in Mindanao.

Advancing the Agribusiness Sector

Financing Smallholder Farmers

Feature

BPI provided a loan to onion farmers’ cooperative, KASAMNE or Katipunan ng mga Samahang Magsisibuyas ng Nueva Ecija.

KASAMNE was organized and registered in 1989 at the Bureau of Agricultural Cooperative and confirmed by Cooperative Development Authority in 1991. It has a membership of about 450 onion producers and farmers from 17 cooperatives in the towns of Bongabon, Palayan, Laur, Gabaldon, Rizal, Gen. Natividad, Pantabangan and Palayan, and San Jose City of Nueva Ecija province.

The cooperative exists to help regulate onion prices year-round, protecting farmers from low prices during harvest season and local consumers from price hike during off seasons. It also helps farmers earn sufficient income throughout the year.

Extending the shelf life of the produce is key to keeping competitive prices. KASAMNE farmers turned to BPI to help them address this challenge.

With financing from BPI, onion growers were able to acquire and operate a cold storage facility. A portion of loan proceeds were also used as working capital of a farm input trading business. Now, the cooperative generates 95% of its revenues from storage fees and profits from sales of farm inputs.

KASAMNE produces 6,463 metric tons (or 235,000 50-kg bags) of onions a year, accounting for at least 5% of the country’s total onion production.


Apart from providing direct loans, the Bank also helps clients raise capital through its investment banking subsidiary, BPI Capital. The Bank sources and manages capital in the form of debt and bonds from other investors—individual, corporate, or institutional. The capital raised helps recipient companies activate, continue, or complete projects that advance sustainable development.

In 2014, BPI Capital enabled ₧354.6 million in investments to various development projects. Of this amount, BPI Capital helped raise ₧257 million (73%) and directly funded ₧97.4 million (27%). Nineteen percent of the total investments went to real estate projects, 16% to energy, 9% to telecommunications, 4% to infrastructure.

Raising Capital to Mobilize Growth

Capital InvestmentsIn million pesos Raised

by BPIDirect loans

20 10060

Conglomerate

Real Estate

Energy

Manufacturing

Food

Retail Services

Infrastructure

Telecommunications

Finance

28,521 82,880

13,936 53,800

12,690 43,500

2,982 7,500

25,000 25,000

3,310 6,900

8,150 25,000

1,313 1,600

1,517 11,000

12080

For these services, BPI generated combined earnings of ₧634 million. These were mainly contributed by our earnings from financial services to the retail, food and energy sectors at a combined 50% share.

Earnings

In million pesos

Projects Related to Sustainable Development

Conglomerate 28,520.50

Capitalization Loaned from

BPI

82,880

Capitalization Raised by BPI

81.48

Income Earned by BPI

Property/Real Estate 53,800 13,936.17 62.21

Energy

Infrastructure

Finance

Retail Services

Telecommunications

Food

Manufacturing

TOTAL

43,500

11,000

25,000

7,500

25,000

6,900

1,600

257,180

12,690.00

1,517.00

25,000.00

2,981.58

8,150.00

3,309.86

1,313.00

97,418.00

92.52

19.94

88.98

115.35

30.69

111.95

31.21

634.33

a

b

c

d

e

f

g

h

i

634.33M

Income Earned by BPI (Total ₧643.33 million)

14%

5%

88.98

31.21

Financing %

13%

5%

81.48

30.69

10%

3%

18%

18%

14%

62.21

19.94

111.95

115.35

95.52

a Finance

b Conglomerate

c Property/Real Estate

d Manufacturing

e Telecommunications

f Infrastructure

h Food

g Retail Services

i Energy


Strengthening Business Resiliency

Since business resilience is vital to continuing countryside development, the Bank has partnered with the World Wildlife Fund for Nature-Philippines for conducting studies that measure the climate vulnerability of major cities in the Philippines outside of Metro Manila.

Entitled “Business Risk Assessment and the Management of Climate Change Impacts,” a total of sixteen cities to date have been assessed. The study ensures that climate change impacts

are correctly considered and industry players, including businesses, are able to make informed assessments of climate change impacts and realistically plan their sustainability strategies.

Research has so far covered Laoag, Baguio, Dagupan, Santiago, Angeles, Batangas, Naga, and Puerto Princesa in Luzon; Cebu, Iloilo and Tacloban in the Visayas; and Cagayan de Oro, Butuan, Davao, General Santos, and Zamboanga in Mindanao.

Raising Capital for a Food Manufacturer

BPI served as joint issue manager, lead underwriter and bookrunner for Century Pacific Food Inc. (CPFI), when it went public in May 2014. CPFI is the recognized market leader in canned fish, canned meat and milk products and the pioneer of the country’s tuna export business.

CPFI’s initial public offering (IPO) in May 2014 garnered an overwhelming response both from institutional and retail investors. It was more than 3.5 times oversubscribed. The initial offer was 229,654,404 shares for a total offer size of ₧3.16 billion. Following the strong investor demand, the IPO price settled at ₧13.75 per share, on the high end of the ₧12.50-14.50 per share price range. BPI successfully executed the transaction within four months.

On its first trading day, CPFI reached a peak of ₧16.04 and closed at ₧15.20, up 10.55% from the IPO price. Trading volume was at 60.8 million shares or about 26% of the outstanding shares issued.

The IPO’s proceeds will be used for CPFI’s capital expenditure, working capital, potential acquisitions, and debt repayment. The IPO is a prime example of how BPI’s support to the business sector stimulates growth in the economy, creates employment and eventually impacts the community. The partnership of CPFI and BPI Capital highlights their common values of management excellence, corporate social responsibility and openness to innovations.

Feature

62 63 2014 SUSTAINABILITY REPORT

In the Philippines, power generation is the biggest source of carbon emissions. Yet, according to the Department of Energy (DOE), our country has about 250,000 MW of untapped renewable energy (RE) capacity (National Renewable Energy Board Presentation on RA9513, Renewable Energy Management Bureau - DOE).

BPI contributes to tapping this RE potential capacity through the development of products and solutions that encourage investments in sustainable energy. BPI’s partnership with World Bank affiliate, International Finance Corporation (IFC) enabled the bank to get more deeply immersed in sustainable energy such as renewable energy, energy efficiency, and climate finance.

Through BPI’s Sustainable Energy Finance (SEF) Program, companies can invest in new technologies aimed at improving the efficiency of energy generation, distribution and use, and thereby cutting costs. SEF-financed projects have also significantly contributed to the bank’s finance portfolio.

We measure the impact of our various sustainable energy finance projects using three indicators:

• financial value - our business returns expressed in terms of loan amounts;

• socio-economic value - the value our clients generate as a result of the financial services we provide; and

• environmental value - the total reduction in carbon emissions as a result of these projects.

From 2010 to end-2014, BPI approved loans for 174 projects, amounting to ₧27.53 billion. Of this amount, 58% financed 110 energy efficiency projects, 34% funded 51 renewable energy projects, and the 8% funded 13 projects relating to building resilience in agriculture and water supply. By end-2014, a total of ₧22.8B SEF loans have been released. These projects are seen to generate 1,058 GWh of renewable power and save 234 GWh of electricity valued at ₧3.5 billion in annual financial benefit to our clients, preventing 813.5 thousand tonnes of carbon emissions from being emitted every year throughout the project life.

Making Headways into Low-Carbon Economy FS8

MAJOR SUSTAINABLE ENERGY FINANCING PROJECTS

₧2.9BWind

₧0.9B Geothermal

₧1.6BMini-hydro

₧2.3BConstruction of resilient poultry facilities

₧1.8BSolar

₧1.5BBiogas

₧0.7BBiomass

₧15.8BEnergy efficiency in buildings and in manufacturing

Climate Resilience

Renewable Energy

Energy Efficiency

Sustainable Energy Financing

₧9.3B34%

₧15.9B58%

₧2.3B8%

27.5B

Renewable Energy Produced and Power Saved (GWh)

1,058 82%

23418%

1,292 GWh

Annual Financial Savings

₧2.59B74%

₧0.90B26%

₧3.5B

GHG Avoidance (thousand tCO2e)

73791%

769%

813

* Total SEF loans released as of end-2014 reached P22.8B funding 174 projects.


The renewable energy projects we supported include two wind power projects with 51 MW combined capacity at ₧2.85 billion; six mini-hydropower plants with 31.59 MW combined capacity at ₧1.61 billion; 17 biogas projects at ₧1.45 billion; and 13 biomass projects at ₧0.68 billion. Biogas projects include waste-to-energy (methane capture) models for piggery and poultry farms. Biomass projects include fuel switch from fossil fuel and refuse-derived fuels production from municipal wastes. Biomass includes farm waste such as rice husk, corn and coconut wastes. We also partially financed a 20MW geothermal plant and 12 solar energy projects worth ₧900 million and ₧1.8 billion, respectively.

Renewable energy projects financed by the Bank generates one thousand GWh of renewable power

per year valued at ₧2.6 billion in annual financial benefits for our clients, including ₧1.17 billion from geothermal projects, ₧275 million from biomass projects and ₧381 million from wind power generation.

Through these RE projects, some 737 thousand tonnes of CO2e emissions are avoided including 215 thousand from biogas projects, 171 thousand from mini-hydro projects, 135 thousand from geothermal power plant, 59 thousand from wind projects, and 136 thousand from biomass projects.

In terms of cost-benefit, geothermal power plant shows optimal value generation in all three indicators – financial value for the Bank, socio-economic value for our clients, and environmental value in climate mitigation.

Renewable Energy

RENEWABLE ENERGY FINANCING (₧9.3B)

Project Type

2,850,000,000

1,451,130,000

Loans Provided

1,827,195,615

900,000,000

31%

16%

20%

10%

17%

7%

1,611,841,520

677,200,000

Wind

Solar

Mini-hydro

Biogas

Geothermal

Biomass

%

Of the ₧15.9 billion loans for energy efficiency projects, about 78% or of ₧12.33 billion was provided for the construction of 55 energy efficient buildings such as hotels, hospitals, warehouses, malls, among others. About 18% or ₧2.8 billion financed the purchase of energy efficient equipment for manufacturing, cold storage and refrigeration, elevators, among others. About 4% and 1% were provided to lighting and retrofit of heating, ventilation, and air-conditioning (HVAC) systems, respectively.

In total, these projects are estimated to save 234 GWh of electricity annually valued at ₧898 million in annual financial benefits for our clients, including ₧644 million from efficient buildings and ₧230 million from purchase and installation of energy efficient equipment.

These projects are estimated to save a total of 76.4 thousand tonnes of carbon emissions per year.

In terms of cost-benefit, construction of energy efficient buildings and purchase of efficient equipment delivers optimal value for both BPI and for the environment.

Energy Efficiency

ENERGY EFFICIENCY FINANCING (₧15.9B)

Project Type

78% 12,335,900,000

Loans Provided %

18% 2,808,897,273

4%

1%

625,450,000

125,000,000

Construction of Energy Efficient Buildings

Purchase of Equipment

Lighting and HVAC Retrofit

Purchase of EE Vehicles

Biogas

Costs and Benefit of Energy Efficiency Projects

12

in thousands (tCO

2e)

24

48

36

60

3,000

in million pesos

6,000

12,000

9,000

15,000

Lightingand HVAC Retrofit

Purchase of EE Vehicles

Construction of Energy

Efficient Buildings

Purchase ofEquipment

500

in million pesos

1,500

2,500

1,000

2,000

3,000

Mini-hydroSolarWind Geothermal Biomass

Costs and Benefit of Renewable Energy Projects

Loan amount Loan amount

Annual financial benefits Annual financial benefits

GHG avoided/year (tCO2e) GHG avoided/year (tCO

2e)

50

in thousands (t CO

2e)

150

250

100

200

300

BANK OF THE PHILIPPINE ISLANDS

Loans Provided

67 2014 SUSTAINABILITY REPORT 66

INVESTMENT COST PER TONNE OF CO2e AVOIDED

in thousand pesos

15

25

10

20

5

14.79

11.67

6.19

0.84

8.70

6.44

2.431.43

0.29

21.44

Purc

hase

of

Equi

pmen

t

Sola

r

Ligh

ting

and

HVA

C Re

trofi

t

Win

d

Biog

as

Cons

truc

tion

of E

nerg

y Ef

ficie

nt B

uild

ings

Geo

ther

mal

Min

i-hy

dro

Purc

hase

of

EE V

ehic

les

Biom

ass

ENERGY EFFICIENCY RENEWABLE EFFICIENCY

We also look into the carbon reduction cost-effectiveness of each project, that is, cost (in ₧ terms) per tonne of CO2e cut. Investments in biogas and for the purchase of energy efficient vehicles proved to be most cost-effective in delivering climate mitigation options.

For every tonne of CO2e reduced, biogas projects required ₧294 investment while purchase of energy efficient vehicles requires ₧841. In contrast, solar projects require an investment of ₧21,438 to cut one tonne of CO2e.

Financing acts as a strong incentive for enterprises to improve their efficiency, deliver better quality goods and services and invest in innovation. BPI has sought to make financing for sustainable energy projects more visible and accessible. Every year, we continue to endeavor to bring sustainable energy financing to scale.

Of the 13 projects funded under this facility, 11 projects relates to food security, i.e. poultry farms modernization, with a combined loan amount of ₧2.3 billion. A good ₧3.8 million worth of financing was also provided for Bulk Water Supply Project in Visayas region.

Carbon Reduction Cost-Effectiveness

Climate Resilience Financing Feature

Venvi Agro Piggery

a 2-site (breed-to-farrow and wean-to-finish) production facility. Once the re-expanded biogas system is fully running, the energy from the system is more than sufficient to power the farm’s full operations. Electricity bought from the electric cooperative and from diesel generators serve as standby backup power.

Electricity Yield and SavingsAt 2,400 sow level, the estimated waste production of the farm is 5,306 m3 of gas daily. Maximum yield is 11,520 kWh per day or an average of 376 kWh. The piggery is estimated to require 600 kWh for its full operation.

Biogas Technology BenefitsAs a source of renewable energy for its piggery operations, the biodigester system has been a successful venture for Venvi Agro’s previous 1,200 sow-level capacity. The expansion is seento take the farm to a higher level of success. The biodigester system provides environmental and health benefits and allows for operational cost savings. Venvi Agro is a good bio-technical model for biogas digester system adoption. Business and Community BenefitsThe new system provides environmental, health, and financial benefits including:

• High efficiency renewable power generation from biogas• Reduced operating costs• Odor control and improvement of discharge water quality• Jobs generation in areas of operation• Improved environmental and sanitation conditions• Reduced incidence of water borne diseases

Venvi Agro partnered with BPI for the expansion of its sow-level piggery capacity from 1,200 to 2,400 heads. A corresponding expansion of its existing biogas system for pig manure management is also being established. This is expected to generate additional electricity from the increased methane production. The farm site is at Sitio 3, Barangay 21 San Agustin, San Nicolas, Ilocos Norte.

BPI provided funding for the piggery farm expansion that includes the biogas system. The electricity yield from the expansion would allow the biogas system to be the facility’s main power source for farming operations.

The Venvi Agro pig farm utilizes the best technologies for optimal operations even with extreme variations in weather. The piggery is

Project Type

CLIMATE RESILIENCE FINANCING (₧2.3B)

99.8% 2,313,600,000

%

0.2% 3,800,000

CCS Poultry House Construction

Bulk Water Supply Project

raslag case study

RASLAG Corporation 10MW Photovoltaic Power Plant

RASLAG Corporation built a 10MW Photovoltaic (PV) Power Plant in Barangay Suclaban, Mexico, Pampanga, Philippines through the BPI SEF Program. It is the renewable energy subsidiary of Angeles Power, Inc.

Partnering with BPIBPI provided construction funding to the solar project. The PV power plant is seen to enhance energy security and address climate change concerns in its area of operations.

CapacityIt has an output capacity of 14,527 Mwh/year. At a 99.5% plant availability, it generates an annual production of over 11,800 MWh.

Carbon SavingsThe clean energy generated by the power plant saves 6,537.15 tons of greenhouse gas (GHG) emissions annually.

Benefits• This project is seen to expand access to electricity and help reduce energy imports and dependence to fossil fuels.• It provides a model that directly fills a gap in the Philippine energy shortage scenario.• Homes and business are provided secure clean electricity using an alternative supply to replace diesel-powered generation.

Feature


Let’s enhance our CARE systems


Garnering a greater share of the mass market is a challenging task–with more accounts to serve, transaction costs could increase, and delivering high-quality

services may be compromised. This challenge drove us to innovate and develop a more convenient, accessible, reliable, and efficient (CARE) client servicing systems.

Our diverse channels are designed to suit our customer’s lifestyle. We provide channels that are accessible anywhere, anytime at the convenience of our client’s homes, offices, or while in commute – that significantly lower our operating costs. We aggressively invested in the right IT infrastructure to ensure reliability of these transaction platforms. These embody the utmost care we have for our customers.

Apart from our traditional transactional platforms (branch, ATMs and cash deposit machines), we offer digital banking services, including online banking, mobile banking and phone banking for both retail and corporate clients. These platforms allow for secure deposits, withdrawals, bills payments, reloading of cell phone credit and prepaid cards, cash transfers, and remittances, making saving and investing easier for our clients.

In 2014, the use of electronic transactional channels by our clients rose by 3%. Of the 721 million in total transactions recorded last year, some four out of five (84%) were made via any of the electronic channels. Only one out of five (16%) was carried out through traditional channels.

154% increase in usage of BEA

online appointments

120% increase in mobile

app enrollment

261% increase in non-financial

transactions done through mobile app


BPI offers its clients highest banking convenience with its mobile banking services through SMS or mobile app. The BPI Mobile App is currently the country’s most downloaded financial application at the App Store, Google Play and Blackberry World. It is rapidly changing the face of Philippine banking as it allows people to transact while on the go.

BPI app users grew by 322% to 278,013 in 2013 and by 120% to 611,248 in 2014. Currently, nine out of 10 subscribers actively use the app.

Financial transactions include fund transfers, sale and/or purchase of investment, prepaid phone reloading and bills payments; non-financial transactions include viewing of account balances and transaction history.

The Bank has continued to invest to improve the system, from ₧8.1 million in 2012, to ₧38.9 million in 2014. The investments went toward maintaining the IT system, developing new app features and promoting the mobile service to the public.

Banking Anytime, Anywhere

Non-financial Financial

201420132012

Mobile Transactions

20 6040 80

3

1967

1

39

Clients enrolled in App

201420132012

200k 600k400k 800k

276,013

65,939

611,248

TraditionalElectronic Channels

2014 2014

2013 2013

2012

Number of Transactions Express Online Transactions

603 118

479 116

143.9

127.1 121.3

in millionsin millions

Like mobile banking, our web-based transactional platform, BPI Express Online (EOL) is a convenient banking channel that may be used in any location with Internet access.

With the Internet increasingly becoming available throughout the country, EOL is able to provide more and more Filipinos with convenient and speedy access to banking services. The facility has not only helped the Bank save on costs for brick-and-mortar branches construction in far-flung communities, it has also allowed more Filipinos to cut down on expenses and on carbon footprint generated by actual visits to physical branches.

In 2014, EOL recorded 143.9 million transactions, a 13% increase from 2013. Investors have increasingly been using this platform. In 2014, investment transactions numbered 349, 595, a 76% increase from the previous year.

BPI Credit Card applicants have also taken advantage of this platform. In 2014, online applications reached 4,072, an increase of 56% from 2013’s 2,617 applications. Deposit accounts opened via BPI Direct, BPI’s Internet-based bank subsidiary, increased by 11%, from 37,837 in 2013 to 41,957 in 2014.

Electronic statements for deposit, credit card and investment accounts and images of negotiated checks, are viewable in the EOL; in 2014, transactions to view these statements numbered 148,209.

More and more of our clients are opting to go paperless, helping us reduce our resource consumption. Some 6% of our credit card account holders, or 38,802 clients, have taken this route, resulting in considerable savings on paper, printing and delivery amounting to ₧8.2 million a year. In addition, 9,164, or 11%, of our investment account holders have gone paperless, resulting in savings worth ₧793,255 a year.

In 2014, we invested ₧24.5 million for the continuous improvement and promotion of EOL; ₧47.4 million in 2013; and ₧29.9 million in 2012.

Valuing our Customers’ Time

According to the 2013 FMSI Teller Line Study, the average bank customer waits for two to three hours for every transaction, while the transaction itself lasts four minutes. To address this, the Bank has pioneered an online solution within the EOL platform that allows clients to make appointments for bank visits. This solution is called BPI Express Assist Online, or BEA Online, an enhancement of our BEA services.

BEA Online significantly reduces the customers’ waiting time in our branches and allows our branch personnel to serve more clients. In 2014, a total of 248,851 transactions were done through BEA Online Appointments, representing a 154% increase from the previous year.

Web-Based Banking

Transactions

100k 200k150k 250k 300k

2014

2013

BEA Online Appointments

248,851

97,807


Our corporate clients may also carry out transactions via BPI ExpressLink or ELink, an Internet-based financial management solution for businesses of all sizes. SMEs as well as large corporations benefit from this efficient and secure cash management and disbursement system, built on work simplification and automated straight-through processes.

Functions enabled by ELink include inquiry of deposit accounts’ balances, data file transfers, fund transfers, payroll uploading, tax payments, and collection and payment transactions.

In 2014, ELink handled 26.5 million account inquiry transactions, including viewed and downloaded bank statements.

ELink also provides an efficient financial transaction channel for the supply chain. Corporate clients can pay service providers and suppliers who are maintaining BPI accounts by simply crediting to their accounts online, in real time. It does away with the lengthy and costly process of individually preparing, printing and signing of checks and vouchers.

Last year, 2.5 million online payment transactions amounting to ₧320 billion were done via ELink.

With ELink, business owners can now devote more time to grow their ventures.

Our continuous marketing efforts through roadshows and presentations have resulted in the growing number of ELink clients.

By December 2014, a total of 21,610 clients were enrolled in ELink, up 19% from the previous year.

Payroll transactions accounting for 80% of our total number of ELink transactions reached 27.2 million in 2014, up by 16% from 23.4 million in 2013. In terms of peso amount, total payroll coursed through the channel totaled ₧289 billion in 2014.

Our expenditure to continuously improve and promote ELink in 2014 amounted to ₧9.5 million, from ₧21.5 million in 2012.

Cash Management Solution for Business

2014

2013

2012

Number of Transactions

27.2

23.4 18.8

In millions

21,610Accounts enrolled

in 2014

MSMEs

70%

Top 20% Corporations

30%

Feature

Excellence Award for Our Retail Financial Services

Bank of the Philippine Islands was named the Best Retail Bank in the Philippines and Best Payment Product Awards 2014, in The Asian Banker’s 13th International Excellence in Retail Financial Services 2014 Awards.

The Bank was cited for its outstanding financial performance as a result of revenue and profit growth, higher fee income and reduction in cost-to-income ratio. The Bank’s Current and Savings Deposit Accounts also grew by an impressive 43%, increasing its market share to 21.28%.

The awards also took note of the Bank’s efforts and innovative solutions to consistently deliver cost-efficient services to clients. Among

these solutions is the BPI Express Assist, an automated queuing system that significantly reducing transaction time.

The Asian Banker also cited BPI’s high electronic banking activity, with 84% of the Bank’s client transactions now done electronically.

The Asian Banker also named BPI My ePrepaid MasterCard as the Best Payment Product for 2014. This card, which is meant to address the shopping needs of those who don’t have credit cards, contributes over 50% of business revenues for BPI Prepaid card with 1.6 million cards activated to date.


Our remittance business has enabled fund transfers to be received within 24 hours of sending via straight-through processing, branch pick-up and door-to-door delivery alternatives.

The growth in this business is testament to its efficiency and reliability. In 2014, remittance volume and transaction count grew by 11% and 10%, respectively, giving us a 29-percent share of the remittance market.

Transparent and Reliable

Our fixed remittance fees and foreign exchange rates enable our clients to calculate market prices and make informed decisions about our services. We remove the difficulties formerly associated with

remitting money—for example, language barriers, identification requirements to open a foreign local bank account, and expensive cross-border transfer fees—for clients remitting their funds via direct-to-account arrangement.

Broad Network of Business Partners

Our network of international business partners has grown from 129 in 2012 to 140 in 2014, while our domestic distributor partners doubled to 10 in 2014. These partners help us reach underserved areas, especially where we don’t have a branch. Through this network, we provide adequate foreign and local payment financial infrastructure so that the remittances are safeguarded, sent and received quickly.

Transparent and Reliable Remittance Services

Customers Served

2012 2013 2014

211,676

160,288165,825

The Bank salutes the sacrifices that overseas Filipinos (OFs) who take on job opportunities abroad in order to give their families a more comfortable life and a better future back home. The remittances that our foreign-based compatriots send back, account for 10% of our GDP (World Development Indicators 2014, World Bank) and is the country’s largest source of external funding. Such immense contribution requires a reliable and efficient remittance system and network, a need that our Remittances and Payments team has sought to answer.

In addition to offering remittance services, we conduct “pre-departure orientation seminars” (PDOS) for those about to embark on their work stint abroad. PDOS are focused on the basics of money management and are held in what we call BPInoy information centers in our business and satellite offices in the country and abroad. BPInoy centers also provide information on our various remittance services, banking products and services, and investment opportunities for the OF.Maintaining the Bank’s international reach is a product of several sales channels, including remittance tie-ups, BPINOY regional partnerships, online applications, and its largest segment–the offsite sales channels, which serve the land-based as well as the sea-based OFs.

Looking after our Filipino Seafarers

The close to 600,000 Filipino seafarers we have today are estimated to represent 30% of the total number of seafarers in the world. No less than 20% of remittances sent to the country annually are from these seafarers.

In 2014, the Maritime Industry Authority (MARINA), the government agency tasked with developing, promoting and regulating the country’s maritime industry, partnered with the Bank to deliver personal financial management and financial counseling programs for our seafarers. These programs help ensure that overseas Filipinos and their families reap the benefits of the OFs’ hard-earned funds in a positive and enduring way.


Reggie Guillen has been working in Doha, Qatar for more than three years now. He has been remitting funds through BPI since receiving his first salary in May 2012.

“BPI makes my banking transactions so much easier and faster,” Reggie says. “I can do online bank transfers to my other BPI accounts, as well to the BPI accounts of my loved ones from the comfort of my home, while abroad.”

Reggie notes the security features of BPI’s online services and their reasonable and competitive remittance fees. “I trust BPI so much that majority of my accounts are with them—savings, UITF, housing loans, credit cards. In addition, its over-the-counter transactions are more convenient than any other bank in the country,” he says. “BPI has one of the best banking services, if not the best, in the Philippines today.”

Adding that the process of subscribing and redeeming investment funds from BPI is so easy and convenient, Reggie has recommended BPI’s products to other Filipinos working abroad.

Reggie says that on those occasions when he had to ask the Bank to resolve certain issues, such issues were resolved “in no time.”

Reggie Guillen

Assistant Vice PresidentHamad Medical Corporation

“I believe that BPI’s remittance fees are reasonable and competitive.”

Testimonials

Gerald L. Flora is a veteran Master Mariner working on board of one of IMS Philippines Maritime Corporation’s oil tankers. Wishing a better life for his family, in 1997, Gerald embarked on working abroad, in search of higher-paying employment.

Steadfast on his financial goals, Gerald sought a reliable bank through which he could remit funds to his family. For 18 years now, he has done so through BPI.

Gerald says that his loyalty to the Bank has been matched by the latter’s “secure, convenient, prompt, and reliable service.” He finds assurance in the Bank’s stability, saying it is easier for his beneficiaries to receive his remittance through BPI, in as fast as “less than a day.”

Gerald also commends the Bank’s fair remittance fees and competitive exchange rates.

Apart from providing well for his family, Gerald wants his money to work as hard as he does. With his savings, he is able to invest in stock trading and UITF. He relies on the Bank’s timely market updates and knowledgeable fund managers to maintain the security of his accounts and grow his funds while he works overseas.

“I feel secure with BPI’s services. I haven’t had any security issues with them,” says Gerald. He has recommended BPI to his fellow OFWs “for the same reasons I chose the Bank—its safe, reliable, on-time, and convenient banking service.”

“I feel secure with BPI’s services. It is safe, reliable, on time, and convenient.”

Gerald L. Flora

Veteran Master Mariner IMS Philippines Maritime Corporation


Let’s empower our people and society


People have always been BPI’s valued asset—their integrity, professionalism and loyalty are the foundations of our competitive advantage.

In 2014, the Board approved the Bank’s new Credo, which further underscores our emphasis on mutual respect, teamwork and meritocracy to drive outstanding performance and employee retention. Furthermore, an integral part of our HR strategy is the development and adoption of innovative approaches to promote well-being of our people, and to stay as the employer of choice within the banking industry.

We also offer mechanisms that enable Unibankers to reach out to the communities where we are and help address development challenges in these areas.

93% Sustainable Engagement survey

response rate

over 3,000employee volunteers for

BPI BAYAN projects


Our Human Resources Management (HRM) Group leads our employee management programs. We employ strategic and systematic approaches to maintain high levels of employee engagement. Career advancement trainings and development programs are provided for our employees regardless of their tenure and rank. A wide range of mandatory, functional, leadership and core courses are being offered. We have also built partnerships with the Harvard Business Publishing for customized programs.

We have promotion acceleration programs, interests clubs, volunteerism platforms, as well as health and wellness seminars.

Various loans and facilities are also accessible to our employees. Team and individual medical insurance plans are also provided for. Financial wellness is an achievable goal for our employees from day one, until their retirement. They have opportunities to participate in seminars that help them make informed decisions on investing or entrepreneurial planning.

Being aware of our performance is important for us as employer. High level of employee satisfaction drives our business success. Data that we gather helps us focus our actions toward areas needing our attention.

Engaging Our Employees

Employee Engagement Survey

We gauge our performance as an employer by our ability to keep our employees highly engaged. Since 2010, we measure employee engagement through a survey administered by a third party–Towers Watson, a leading professional services firm.

We adopted Tower Watson’s Sustainable Engagement framework which indicates how well we create a work environment that keeps our employees energized, enabled, and engaged to contribute positively to our overall objectives as a financial institution.

Our understanding of our performance on these three levels of sustainable engagement enables us to find better engagement approaches and prioritize initiatives that will significantly raise our ability to keep our employees highly engaged.

Our Performance

In our 2015 survey, 13,245 employees comprising 93% of total employees provided a response. This is ten percentage points higher than global survey response rate. Overall, the Bank’s sustainable engagement score is at 84% which represents the number of respondents who consider themselves sustainably engaged. This is a percentage point higher than the global norm of financial services companies.

BPI’s Sustainable Engagement Index

2010 2012 2015 2015Benchmark*

20%

40%

60%

80%

100%

*2015 Benchmark is Tower Watsons’ global norm among Financial Services Companies.

81%85% 84% 83%


Engagement Drivers

Our sustainable engagement performance is shaped mainly by our scores on three key drivers, as follows:

These drivers have the most influence on the level of energy, enablement, and engagement of our employees towards the Bank. We continually look for ways to improve our performance on these drivers, by looking into the many other influencing factors such as our ability to provide career development, training, fair appraisal, and promotion of most competent employees. We set specific metrics and indicators to track our progress on these areas.

Average Training HoursThe Bank’s HRM Group monitors the total and average training hours provided per employee.

In 2014, Unibankers underwent a total of 525,077 hours of training. On the average, each of our 14,532 employees received 36.11 training hours.

Staff-level employee trained for more hours in 2014, on average reaching 35.99 hours, 23% more than the 29.15 hours recorded in 2013. Average training hours of middle and senior management officers declined by 7% and 28%, respectively.

Overall, we are steadily moving closer to our ideal of 40 hours, or five days’ worth of training hours for each employee yearly.

Promotions Annually, we are able to carry out promotions, demonstrating the Bank’s ability to develop and prepare employees to take on higher responsibilities and roles.

In 2014, there were 948 promotions across all ranks, a 47% increase from 644 promotions in 2012.

Career Development and Opportunities

BPI continuously provides its employees opportunities for professional growth and career development. We track our performance on this aspect using indicator such as average training hours, number of promotions, and average time in rank.

Key Drivers

Work Tools and Efficiency Measures our effort to make the Bank’s operations and processes more streamlined and cost-effective.

84%

Our Definition Our Performance

Involvement and Empowerment

Relates to the management trust placed on employees and the level of authority they have to do their job well.

81%

Strategy and Direction Pertains to the clarity of management direction and the level of optimism about the future of the Bank.

88%

= 6 hours

2012 2013 2014

STAFF

MIDDLE MANAGEMENT

SENIOR MANAGEMENT

Average Training Hours per Employee Category G4-LA9

Level

Staff 29.1542.4 35.99

2012 2013 2014

Middle Management 39.6962.23 37.08

Senior Management 17.5755.95 12.69

To Assistant Manager

To Senior Manager

To Manager

290 | 494 42 | 62204 | 258 17 | 2083 | 110 7 | 3 1 | 1

To AVP To SVP To EVPTo VP

Number of Promotions 2012 2014


Number of Years in Rank

2012 2014

2

4

6

8

Assistant Manager

Manager SeniorManager

AVP VP SVP EVP

Average Time in RankWe continually review the progress of the careers of our employees to enable deserving employees to move up faster in the organization.

We use metrics such as average time in rank–the length of stay in a rank before promotion–to track our performance. From 2012 to 2014, the average time in rank of our employees improved on the average by two years for most levels.


Employee Breakdown by Age GroupG4-10

30 to 50 years old

Over 50 years old

5,854

1,097

896

578

6,264

1,115

2012 2013 2014

Below 30 years old 6,04910,932 7,163

G4-9

Year-on-Year Employee Headcount

2012 2013 2014

12,406

13,000

14,542

Our Employee Statistics

Employee Breakdown, by GenderG4-10

3,7838,623

2012

3,854

20139,146

4,378

201410,164

Our total employee headcount grew by 12% from 13,000 in 2013 to 14,542 in 2014.

Of our total employees in 2014, 70% are females and 30% are males. Forty-nine percent are below 30 years old, 43% are between 30 to 50 years old, and 8% are over 50 years old.

Eighty-seven percent of our current employees are in Luzon, 8% in Visayas and 5% in Mindanao. Sixty-two percent of our employees are staff level, 37% belong to middle management and 1% are in senior management.

New Employee Hires, by GenderG4-LA1

604 1,3302013

2,0019892014

New Employee Hiresby Age GroupG4-LA1

30 to 50 years old

Over 50 years old

226

16

152

11

2013 2014

Below 30 years old 2,7481,771

New Employee Hiresby RegionG4-LA1

Visayas

Mindanao

236

164

132

115

2013 2014

Luzon 2,5901,685

Employee Breakdownby RegionG4-10

Visayas

Mindanao

1,023 1,203

679 752

896

578

2012 2013 2014

Luzon 11,298 12,58710,932

Employee Breakdownby Employee CategoryG4-10

Middle Management

Senior Management

4,695 5,410

168 180

3,689

169

2012 2013 2014

Staff 8,161 8,9528,5272012 20122013 20132014 2014

by region by employee category


As of 2014, of the 2,990 new employee hires, 67% are females and 33% are males. Nearly 92% of them are below 30 years old, 7% are between 30 to 50 years old, and less than 1% are over 50 years old. Eighty-seven percent of them are in Luzon, 8% in Visayas and 5% in Mindanao.

Our turnover rates in 2014 indicate that out of 1,472 employees, 67% are female and 33% are male. Seventy-one percent of them are below 30 years old, 19% are between 30 to 50 years old, and 10% are older than 50 years old. Eighty-nine percent are from Luzon, 5% are from Visayas and 6% from Mindanao.

In 2014, employees in our Middle Management consist of 66% females and 34% males. Thirty-two

percent are below 30 years old, 57% are between 30 to 50 years old, and 11% are over 50 years old. In the case of our staff, 73% are females and 27% are males. Sixty-one percent of them are below 30 years old, 35% are between 30 to 50 years old, and 4% are over 50 years old.

On the other hand, 51% of our Senior Management are male and 49% are female. Among them, 65% are over 50 years old and 35% are between 30 to 50 years old.

In 2014, collective bargaining agreements covered 95% percent or 8,516 staff level employees out of a total 8,952. BPI recognized twenty-five (25) labor unions during the reporting year. G4-11

Employee Turnover by RegionG4-LA1

Visayas

Mindanao

80

83

60

50

2013 2014

Luzon 1,3091,205

Employee Turnover by Age GroupG4-LA1

30 to 50 years old

Over 50 years old

278

143

315

151

2013 2014

Below 30 years old 1,051849

Diversity in the Middle Management and Staff LevelsG4-LA12

by gender by genderby age group by age group

Middle Management Staff

3,562

1,848

1,719

606 392

3,085

6,514

2,438

5,444

3,116

30 to 50 years old

Over 50 years old

Below 30 years old

486512

2013 2014

Employee Turnover, by GenderG4-LA1 G4-LA12

Diversity in the Senior Management Levels

by gender by age group

2012 2013

30 to 50 years old

Female

Male

Over 50 years old

88 92 63 117


583 students and beneficiaries of various learning materials, tools, scholarships, etc.

Education 3,741

1,519 participants from low-income families

166 beneficiaries

Uplifting the Social and Economic Well-being of Filipinos

BPI BAYAN G4-SO1

One of our important programs is our unique employee volunteering platform, BPI BAYAN (Bayanihan Para sa Inang Bayan). Our employees get to create and facilitate programs that address the needs of local communities in all areas where we have existing branches.

We envision a nation that is made up of self-reliant, financially healthy and empowered communities. The BPI Foundation has several initiatives in place that directly engage and advance education, entrepreneurship and environmental sustainability. These programs run parallel with the Bank’s products, services and innovations resulting in financial wellness and economic empowerment synergies.

How do we do this?

• Stakeholder and Needs Identification Unlike most community organizing and

volunteering practices where employees are encouraged to be participants of already established projects, BPI BAYAN inspires and activates employees to identify their own beneficiaries with the most pressing needs in their local community. These needs are assessed and determined through community consultations, site visits, surveys, and interviews with key persons of the locality.

• Implementation Based on the results of the assessments and

consultations, employees conceptualize, organize and deliver the project that addresses the help or service that the community needs. This way, we assure

that the projects carried out are relevant to the communities where BPI employees live and work.

• Funding Even as the Bank owns the BPI BAYAN

program, each group of BPI volunteers is tasked to design their own approach towards funding their project. This motivates employees to enhance their management skills, resourcefulness, and interpersonal relations to ensure the success of the project.

BPI BAYAN’s Program Features

Management support is provided by the area head through BPI BAYAN group leader.

Volunteer managers are nurtured through annual workshops or summits organized by the Bank.

Recognition, in the form of annual awards, trophies and cash prizes, is given to best-performing and most relevant community projects.

Campaign platforms such as the company intranet and BPI BAYAN Facebook page are used to promote its projects and endeavors internally and externally.

Monitoring and evaluation is ensured by the quarterly reports submitted by various group leaders; these reports are then consolidated and reviewed by the BPI Foundation. The reports contain comprehensive information on needs identification, project objectives, fund-raising, partner engagement and management, project implementation metrics, impact assessment, project sustainability methods and features, as well as testimonials from the stakeholders.

2014 Project Highlights

In 2014, 65% or 31 of our branch business areas and 8 head office-based business units undertook BPI BAYAN projects across five focus areas—education, livelihood, health, financial wellness, and the environment.

A total of 11,007 volunteer hours, or 459 days, were rendered by 21% of all BPI employees.

BPI BAYAN 2014 SERVICE AREA HIGHLIGHTS

Pillar

1,847

Volunteer Hours Key Outcomes

967 attendees of the livelihood training programs*

Livelihood 2,596

1,790

Health

Financial wellness

Environment 1,034 868 members of local communities

*Participants were mostly parents, women, housewives, visually impaired persons, alternative learning system students, outsourced security and maintenance personnel. Training programs conducted include candle, rag, soap, and craft making, paper weaving, hair cutting, hair coloring, snap hydroponics, reflexology, etc.


Barangay Tuburan is a coastal community of 835 families in Negros Occidental that used to be lushed with vegetation in the 90’s but has become degraded due to human activity. The locals’ main source of livelihood is fishing. Hence, protecting the area’s coastal ecosystem is a major concern. The Tuburan Fisherfolks and Mangrove Development Association (TFAMDA) is an existing community organization that aims to rehabilitate and protect Tuburan’s mangrove ecosystem.

The Project

BPI BAYAN employee volunteers from the Negros Occidental cluster wanted to provide a sustainable program for the rehabilitation and maintenance of the mangroves by establishing a mangrove nursery.

The group’s first step was to seek assistance from the Provincial Agriculture Office in acquiring the

first batch of mangrove seedlings to be planted along the shore. They gathered people from various local organizations and other BPI employees from branches and offices within the area as manpower for the mangrove planting. Bamboo fences were set up to protect the newly-planted seedlings from barnacles.

In preparation for the next planting season, the nursery was replenished with propagules taken from grown up mangroves. The propagules are cultivated in the nursery to ensure that the seedlings are healthy and strong enough to withstand erosion and are able to provide the ideal environment for fish to breed before they are planted along the shore. Working with TFAMDA, the employee volunteers help oversee the newly-planted seedlings and propagules in the nursery to ensure high survival rate.

Oplan: Save Tuburan

The Challenges

Generating the necessary funds to procure bamboo fences and other materials for the nursery was the group’s biggest challenge. By spreading the word on the need for support and conducting several fund-raising activities, the members were able to secure the resources needed to deliver on their commitment to the residents of Barangay Tuburan.

The Results

The group completed 2 mangrove planting activities, set up 2 nurseries and conducted several financial wellness seminars for the residents.

An Inspiration to OthersThe success of the project has enticed many organizations in the region to take part in the planting activities–schools and universities, local government units (LGUs), the Armed Forces of the Philippines, and others. The local government has constructed a concrete pathway which replaced the makeshift bamboo bridge used to reach the project site. Other barangays have also invited the group to implement similar projects for their communities. An agriculturist from Antique approached the group and expressed his intention to adopt the project in his community.

RecognitionsThe project was featured in 2 local newspapers and Barangay Tuburan was awarded as one of the most environment-friendly barangays in the province of Negros Occidental.

Impact on the ResidentsResidents are very happy because of the ripple effect brought by the project. With raised consciousness, more and more people visit the

area. This gives them a greater opportunity to sell their products and earn extra income. The fisherfolk association has also become a well-known mangrove supplier to government and private organizations. The nursery has become a viable source of additional income for the fishermen.

TESTIMONIALS

“We are grateful for BPI for this project that was introduced to our barangay. Because of this, more associations have been encouraged to do the same–putting up nurseries and conducting tree-planting activities. This serves as a wake-up call for the people in the community to develop awareness on the importance of our natural resources. If an organization like BPI can invest time in taking care of the mangroves in our barangay, then our people are expected to give 101% effort in taking care of their environment. To date, the roads have been repaired and this is protected by the mangroves planted through the BPI BAYAN project which line the coastal area of Barangay Tuburan. This shields the area from strong waves and prevents soil erosion. Thank you BPI BAYAN. Mabuhay kayo!”

barangay captain espacio

“At first, I considered the BPI BAYAN project as just another task that I was assigned to lead. But as we conducted the various activities, BPI BAYAN has become an integral part of our existence in BPI. I take pride in being involved in such a marvelous endeavor. We are happy to reminisce the things we have done and are extremely enthusiastic about laying down our hopes and aspirations for the project. It was a humbling experience to be appreciated by the local residents on how we were able to influence them to give back to Mother Earth.”

sol evelet orciso, bpi volunteer group leader

Feature


Let’s use resources efficiently


The Bank recognizes its role as a responsible financial institution both a resource user and generator of waste. In our business operations, we reduce our negative

impacts to the environment through responsible environmental leadership across the organization, making us more cost-effective and helping improve our margins.

We have put in place a system of tracking the environmental impacts of our places of business. We also encourage our clients, suppliers and partners to reduce their own environmental footprint.

Data on energy and water consumption of our branches and kiosks are consolidated per business area. Those of our head offices are being monitored by our General and Administrative Shared Services (GASS) unit. In addition, we continually explore behavioral and technological interventions to reduce our resource consumption such as the replacement of centralized air-conditioning systems with more energy-efficient technology.

33% increase in number of

local suppliers engaged

38% decrease in fuel

consumption (gensets)

5% decrease in electricity

consumption


GASS keeps a record and manages all the service providers, contractors and suppliers the Bank engages. We enforce strict and detailed supplier accreditation processes to ensure that our suppliers, service providers and business partners comply with all legal standards. Our rigorous processes help identify contractors that operate or manufacture to recognized quality standards. We seek to use suppliers who, like us, pursue continual improvement and commit only to best practices.

Throughout the procurement process, we implement various mechanisms including setting up of accreditation committees, standards covering accreditation criteria, better information on requirements and documentation, various modes of procurement, and service performance monitoring.

By following this procedure, the Bank and its suppliers are made aware of ethical, environmental and social risks and opportunities that relate to operations and products. The same holds true in the construction of new branches in all stages of work.

In 2014, individuals and entities making up BPI’s pool of suppliers numbers 458, more by 38% than the 333 engaged the previous year. Our requirements for input materials and services are all sourced locally.

The Bank paid a total of ₧8.4 billion for the products and services rendered by contractors, suppliers and other providers. This is 12% more than the amount paid in 2013.

Managing Our Supply ChainG4-12, G4-EC9

VALUE DELIVERY CHAIN FOR NEW BRANCHES AND ACCESS POINTS

Sourcing and

SupplierManagement

Turnover and

Acceptance

Repair and

Maintenance

Construction,Purchasing,

Implementation

Planning and

Design

PropertyAssessment

2014

2013

2012

Managed suppliers

458

333 399

Business, cash and processing centersHead Office and Main Offices

Tenanted siteBranches

2012 2013 2014

Fuel Consumptionin gigajoules, G4-EN3

610.17

594.85

2,168.14

Energy ConsumptionG4-EN3, G4-EN4

Fuel Use of Transport Armored Vehicles

The energy we consume comes in the form of purchased electricity and fuel used in our backup generators and armored vehicles. Occasionally, we run our gen-sets to sustain full operating capacity, test our disaster preparedness and carry out preventive maintenance.

In 2014, we reduced our total fuel consumption by 38% with most of the cuts achieved in the branches and cash processing centers.

Fuel consumed by the armored vehicles of our contractors is also monitored by the Bank and computed as part of our GHG emissions. The increase in cash requirements for over-the-counter and ATM transactions caused our armored vehicle fuel consumption to rise by 11% from 2013.

Fuel Consumed by Armoured Vehiclesin gigajoules, G4-EN4

2012 2013 2014

25,715.23

26,836.89

29,886.30

Total Energy Consumptionin gigajoules, G4-EN3

Fuel Consumption Electricity Consumption

2012 2013 2014

8,572.80

6,986.61

4,374.79

7,599.42

5,800.97

1,460.85

8,378.96 6,802.00 4,199.52


Reducing our Carbon FootprintG4-EN15, G4-EN16, G4-EN17

Our total carbon footprint in 2014 is significantly lower due to reduced energy consumption—from 32,844 tCO2e in 2013, our greenhouse gas (GHG) emissions went down by 16% to 27,738 tCO2e in 2014.

Conserving WaterG4-EN8

Our water consumption in 2014 dropped by 39% from 658,542 cu. m in 2013, to 398,763 cu.m. The reduction is contributed mainly by water management strategies in our branches.

In 2014, our total electricity consumption decreased by 5%. Lower consumption at our branches and at the Head Office helped bring down 93.2 gigajoules (GJ) in 2013 to 91.6 GJ in 2014.

We also replaced centralized air-conditioning systems in our head and main offices, resulting to further reduction in our electricity used.

Saving on Electricity

100

200

300

400500

600

700

800

900

2012 2013 2014

10

60

50

40

30

20

2012 2013 2014

10

60

50

40

30

20

Water Consumptionin cubic meters, G4-EN8

Tenanted site

Business, cash and processing centers

98,634

3,368

89,068

2,510

68,898

5,328

2012 2013 2014

Head office and main offices 150,464133,277 143,880

Branches 406,076303,466 180,657

Electricity Consumptionin gigajoules, G4-EN3

Tenanted site

Business, cash and processing centers

40.03

1.64

43.66

1.54

36.39

2.41

2012 2013 2014

Head office and main offices 49.7850.63 44.84

Branches 93.1798.00 91.63

*2014 data for tenanted site includes BPI Buendia Center only.

GHG Emissionsin tonnes C0

2e, G4-EN15, G4-EN16, G4-EN27

Scope 2: Electricity

Scope 3: Fuel consumed by armored vehicles

30,518

1,878

37,132

1,800

25,379

2,092

2012 2013 2014

Scope 1: Fuel consumed (gensets) 448559 268

*2012 and 2013 data were restated to exclude CO2 emissions generated from business travels.


Let’s build trust


Our clients’ trust is a strong pillar of our Institution. We nurture that trust through open communication by which we are able to address our client’s financial needs

to satisfaction.

In four client satisfaction metrics, our Bank has garnered ratings comparable with those of the best companies in the world.

94.2% overall Customer

Satisfaction Rating

Diamond Award for Marketing

Best Payment Product Award

Best Retail Bank Award


Measuring Client Loyalty and Enthusiasm

The Net Promoter Score (NPS) is a measure of the client’s willingness to recommend or promote a company’s services to others. Our net promoter score increased by 13% from +54.28 in 2013 to +61.23 in 2014. Only the top two of 283 companies across 20 industries in the United States surveyed by the Tempkin Group in its Q3 2014 Consumer Benchmark Survey got an NPS of over 60.

BPI’s +61.23 NPS places the loyalty and enthusiasm of the Bank’s clientele to our services at par with the world’s best companies. This, by far, is a most accurate indication that our clients are happy with the way we manage their money.

Measuring Customer Satisfaction

Our in-house Customer Satisfaction Surveys measure client satisfaction with the use of a questionnaire. Questions are standardized to ensure they capture product and overall satisfaction with BPI. For 2014, our rating was 94.20% or 3 Sigma level (see Process Capability Sigma Level Chart).

Measuring Service Standards

The Mystery Client Survey is another in-house measurement tool designed to get customer feedback on our service standards. Service time, grooming and corporate image projection, service readiness, and product/service inquiry are scrutinized in this survey. In 2013, when we conducted the most recent survey, we scored 89.92%.

Measuring Feedback Objectively

We employ Sigma Level analyses for each of our channels and product lines. Sigma level refers to defects per million opportunities (DPMO). Applied to customer service quality, Sigma levels are based on the number of complaints received from the total number of transactions, thus serving as the voice of our clients.

Sigma levels range from 1 (lowest) to 6 (highest). High levels indicate good performance with underlying causes of complaints either avoided or mitigated.

Sigma levels 4 to 6 are within the 99% percentile range, signifying well-established efficiencies within the organization. Overall, BPI’s performance demonstrates sigma levels of 4 or above. Our challenge now is to maintain or surpass these levels of efficiencies.

Sigma levels of our various transactional channels are at par with levels recorded the previous year. Our branches, online facilities, mobile banking channels, and text (or call) centers continue to be avenues where we deliver stellar performances.

Sigma levels by product line also remain at the same levels with those posted the previous year. Deposits, retail foreign exchange currency, funds, and leasing had relatively high scores.

Our Total Quality and Risk Management Offices and Customer Care unit take care of tracking and monitoring our performance in relation to customer satisfaction. Our policies are fully aligned with BSP’s “Service Code for Consumer Banking in the Philippines” (issued 2005); in addition, we are working towards full conformity with the regulator’s Financial Consumer Protection framework by yearend 2015.

Lifetime Marketing Brilliance

In 2014, BPI was bestowed the Diamond Award by the Philippine Marketing Association (PMA), for reaching the “pinnacle in marketing brilliance” in establishing and growing the Bank’s business in the country. The Diamond Award is a lifetime recognition given by the PMA to companies that have consistently exhibited marketing excellence. The recognition is twice special—the PMA gave out the one-time award in commemoration of its 60th anniversary last year.

BPI was one of only five companies who were able to earn the said distinction.

Sigma Levels–Channels 2013 2014

1.0

3.0

2.0

5.0

4.0

6.0

ATM Express Phone

MobileBanking

ExpressOnline

ExpressLink

ContactCenter

POS BPITrade

TextCenter

Branches

Type of Complaint

TURNAROUND TIME

Undispensed and short withdrawals

ATM Channel

TAT to Resolve Source

On Us

Unauthorized withdrawals Card Fraud

1 day

2 days

Local (Bancnet/Megalink)

CAM complaints

International (MDS/VISA)

ATM Channel

6 days

1 day, if Line error and hardware error (up to ₧30K); 3 to 5 days (upon receipt of retrieval report) Hardware error (₧30K and up)

45 days

PrepaidCard

Sigma Levels–Products 2013 2014

1.0

3.0

2.0

5.0

4.0

6.0

CreditCard

Debit Card

Deposits Remittance Non LifeInsurance

ConsumerLoans

PersonalLoans

StockTransfer

RetailFX

Currency

FundsAsset Mgmt

Leases

Process Capability Sigma Level

2 69.15%308,537

Defects per Million Opportunities (DPMO)

Long Term Yield

3

6

93.32%

99.99966%

66,807

3.4

4

5

99.38%6,210

99.38%233


BPI’s Board of Directors inspires us to operate responsibly, conducting our affairs with transparency and fairness while upholding shareholder interests. We exercise prudence following a robust risk management framework, allowing us to deliver excellent governance standards while sustainably promoting the business and driving our performance.

The Board brings together, for the greater benefit of the Bank and shareholders, a mix of leadership, experience, skills, and diversity. It consists of 15 directors, seven of whom are classified as independent or having no interest or relationship with BPI at time of election, appointment, or re-election. Fourteen of these 15 directors are non-executive officers of the Bank and the one executive director is the Bank’s President and CEO.

Our Board members are business and civic professionals of significant stature with a track record of accomplishment in their own right. They deliver a broad range of experience and expertise on subject matters relevant to the governance of present-day universal banking institutions.

Our nine Board Committees provide structure to the Board in the exercise of its duties and responsibilities or specific focus consistent with applicable laws. The Charter and membership assignments are reviewed annually.

The Executive Committee exercises the full authority of the Board in the management and

direction of the Bank’s affairs in the interval periods between Board meetings. It is the key decision-making committee of the Bank in matters relating to governance including, but not limited to, consequential, internal and external affairs as well as the approval of the Bank’s material credit exposures. All decisions remain subject to BPI By-Laws and the limitations prescribed by applicable laws. The committee is composed of five directors, one of whom is independent.

The Nomination Committee ensures the probity and competence of the nominees to the Board of Directors. It safeguards the balance of the value additions each board member brings to the Bank and his capacity for independent decision-making. This committee also oversees the review of employee qualifications for nominated positions requiring Board approval. It is composed of at least three directors, one of whom must be independent.

The Personnel & Compensation Committee guarantees that the long-term strategies and plans for human resource development are effectively designed and implemented in support of corporate goals and objectives. This committee is composed of at least four directors, one of whom is independent.

The Audit Committee evaluates the effectiveness of the Bank’s internal controls, operating risks, range and results of internal audits reviews and external audits. Its oversight covers the regulatory

Continuing a Legacy of Leadership ExcellenceG4-34

Since 1851, our commitment to clients, people, shareholders, and country remain unbroken. Our high and uncompromising regard for values and ethics in our daily conduct of business make our name a trusted brand of over 163 years.

framework including financial reporting statutory compliance. This committee is composed of at least three non-executive directors, two of whom are independent.

The Risk Management Committee works to instill risk consciousness in the entire organization. It provides the governing structure and framework to identify and manage risks from Board to business unit levels and gives recommendations across the Bank through the Chief Risk Officer and the Risk Management Office for relevant business risk parameters, metrics and strategy. It also oversees compliance with prescribed laws, regulations and international standards on risk management. Key risk management personnel are given sufficient technological and training support. The committee is composed of six directors, four of whom are independent.

The Corporate Governance Committee assists the Board in executing its corporate governance responsibilities. It makes sure that the Board remains true, effective, transparent, and accountable to the governance principles and guidelines expressed in the Corporate Governance Manual. The committee is composed of at least three directors, two of whom are independent, including the chairperson.

The Trust Committee oversees the capable management of the Bank’s innate business risks including trust, other fiduciary business and all investment activities.

The Related Party Transactions Committee independently reviews, vets and may endorse all related party transactions—transactions above and beyond those qualifying under directors, officers, stockholders and related interests (DOSRI) restrictions—making sure that these transactions are dealt with on terms no less favourable to the Bank than those generally available to an unaffiliated third party under the same or similar circumstances. This Committee, along with the Executive and Corporate Governance Committees, abides with the Guidelines in Strengthening Corporate Governance in BSP Supervised Financial Institutions (BSP Circular 749).

The Retirement and Pension Committee governs all aspects relating to the Bank’s retirement programs—trust, investment, non-investment, and administrative.

The President and CEO is responsible for overall management and devises strategies for turning out desired outcomes for the Bank.

More information on our Board of Directors and Principal Officers may be viewed on our 2014 Annual Report.


JAIME AUGUSTO ZOBEL DE AYALA

EXECUTIVE COMMITTEE MEMBERS NOMINATIONS COMMITTEE MEMBERS

RISK MANAGEMENT COMMITTEE MEMBERS CORPORATE GOVERNANCE COMMITTEE MEMBERS

PERSONNEL AND COMPENSATION COMMITTEE MEMBERS AUDIT COMMITTEE MEMBERS

TRUST COMMITTEE MEMBERS RELATED PARTY TRANSACTIONS COMMITTEE MEMBERS

RETIREMENT AND PENSION COMMITTEE MEMBERS

ChairmanVice chairmanMembers

ChairmanMembers

ChairmanMembers

ChairmanMembers

ChairmanMembers

ChairmanMembers

ChairmanVice ChairmanMembers

ChairmanMembers

ChairmanVice ChairmanMembers

Jaime Augusto Zobel de AyalaFernando Zobel de AyalaCezar P. Consing, President and CEORebecca G. FernandoAurelio R. Montinola IIIAntonio Jose U. Periquet (Independent)Mercedita S. Nolledo

Romeo L. Bernardo (Independent)Jaime Augusto Zobel de AyalaFernando Zobel de AyalaXavier P. Loinaz (Independent)Vivian Que Azcona

Octavio V. Espiritu (Independent)Cezar P. ConsingRomeo L. Bernardo (Independent)Aurelio R. Montinola IIIAntonio Jose U. Periquet (Independent)Astrid S. Tuminez (Independent)

Artemio V. Panganiban (Independent)Romeo L. Bernardo (Independent)Mercedita S. NolledoOscar S. ReyesAstrid S. Tuminez (Independent)Dolores B. Yuvienco

Fernando Zobel de AyalaRomeo L. Bernardo (Independent)Aurelio R. Montinola IIIOscar S. ReyesVivian Que Azcona

Xavier P. Loinaz (Independent)Octavio V. Espiritu (Independent)Aurelio R. Montinola IIIOscar S. ReyesDolores B. Yuvienco

Mercedita S. NolledoAntonio Jose U. Periquet (Independent)Fernando Zobel de AyalaCezar P. ConsingRomeo L. Bernardo (Independent)Rebecca G. FernandoMaria Theresa M. Javier, Trust Officer

Octavio V. Espiritu (Independent)Rebecca G. FernandoOscar S. ReyesRomeo L. Bernardo (Independent)Rosemarie B. Cruz, Chief Audit Executive (Non-voting)Marita Socorro D. Gayares, Chief Compliance Officer (Non-voting)

Mercedita S. NolledoCezar P. ConsingRebecca G. FernandoFlorendo G. Maranan, Head of Human Resources Management

Board Committees

CEZAR P. CONSING

REBECCA G. FERNANDO ANTONIO JOSE U. PERIQUET ROMEO L. BERNARDO

VIVIAN QUE AZCONA ARTEMIO V. PANGANIBAN

OCTAVIO V. ESPIRITU MERCEDITA S. NOLLEDO AURELIO MONTINOLA III

DOLORES B. YUVIENCO XAVIER P. LOINAZ

OSCAR S. REYES ASTRID S. TUMINEZ

FERNANDO ZOBEL DE AYALA


Currently, five Principal Officers report to the President and CEO on matters relating to specific areas of business. They ensure the development and expansion of the Bank’s client relationships, service quality and innovation in products and services, management of the Bank’s trading business including enterprise asset-liability management, reliability, productivity, and cost-efficiency in the Bank’s operating infrastructure. These Principal Officers are:

Joseph A. Gotuaco, Executive Vice President and Head of Enterprise Services; Dennis G. Montecillo, Executive Vice President and Head of Corporate Clients; Antonio V. Paner, Executive Vice President, Treasurer and Head of Global Markets; Simon R. Paterno, Executive Vice President and Head of Financial Products and Services; and Natividad N. Alejo, President of BPI Family Savings Bank (effective 2015)

Our Planning and Performance Management System articulates our strategy from planning to execution. It uses quantifiable metrics to gauge accountability, performance, expenditure, and risk.

More details on our Corporate Governance and Risk Management, including relevant policies affecting integrity and fair dealing are discussed in our 2014 Annual Report.

CENTRALIZED CREDIT

Electronic channels

Customer segments

DepositsRETAIL

CLIENT SEGMENTS FINANCIAL PRODUCTS AND SERVICES

CORPORATE

Top corporates and FLs

Treasury trading Centralized operations

PEZA and Asian MNCs

Human resources

Branches

Remittance and payments

Metro Manila

Balance sheet and ALM

Shared administrativeservices

Provincial

Strategic and corporate planning

Field sales

Corporate products

Large-medium enterprises

Global market salesBPI Foundation

and Sustainability

Filipino-Chinese

Legal services

Customer relationship management

Bancassurance International offices Information technology

ASSET MANAGEMENTAND TRUST RISK MANAGEMENT

RELATED PARTY TRANSACTION

ACCOUNTING

SECURITY OFFICE

RISK MANAGEMENT

PRESIDENT

BOARD OF DIRECTORS

COMPLIANCE

EXECUTIVE COMMITTEE

CORPORATE SECRETARY

INTERNAL AUDIT

AUDIT COMMITTEE OTHER COMMITTEES*TRUST

ENTERPRISE SERVICESGLOBAL MARKETS

Board Committees

Other committees are Personnel and Compensation, Retirement and Pension, Nominations, and Corporate Governance.

BPI Forex Corporation

BPI/MS Insurance,Ayala Plans

BPI Capital Corporation

BPI Family Savings Bank

G4-34

Our BPI Group Risk and Capital Management Framework details the process of identifying risks for the Bank and all its subsidiaries. This is further supported by the Group’s robust risk and capital review processes, as embedded in the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP is annually updated in accordance with the existing BSP regulations. The risk management framework consists of three components, namely: (1) sound governance; (2) effective ERM processes and controls; and (3) business-enabling, timely and reliable risk data and information systems.

Risk awareness is embedded in our corporate culture. Every employee is educated and trained to be responsible for risks and controls in his area of authority. The Bank follows a strict code of transparency in reporting to our respective committees up to the Board level, confident that every effort is being done to address issues. Transparency is combined with integrity where all reports and key risk indicators are handled with accuracy and honesty. We make a thorough review of empirical data and systems and other internal process improvements when necessary to enhance our effectiveness.

Building Lines of Defense

We have identified the Bank’s three main risks to be credit risk, market risk, and operational and IT risk. Accordingly, we apply three lines of defense in enterprise risk management and internal controls, as follows:

First Line of Defense: Risk Owners (includes all business unit-level functions) manage risks by identifying, assessing and treating risks. Processes, procedures, controls instituted and the monitoring thereof ensure effectiveness at the business unit levels.

Second Line of Defense: Oversight is undertaken by Group risk management functions in support of the First Line of Defense. They are guided by the Bank’s enterprise risk management framework, which may be adjusted to adopt to business goals or some internal or external factors. Employees actively engage in risk management processes and training initiatives.

Third Line of Defense: Independent Assurance• The Board Audit Committee, through Internal Audit as defined in the Corporate Governance Manual and Audit Committee Charter;• Internal Audit conducts regular independent risk assessments of risk management controls in place, specifically, timeliness, efficiency and effectiveness, as those of periodic reporting. Risk management processes and controls are reviewed periodically and recommendations for enhancements are made when deemed necessary.• External Audit makes regular periodic independent assessments of financial controls and processes in conjunction with the preparation of the Bank’s Financial Statements.

Managing RisksG4-2, G4-14, G4-45, G4-46, G4-47

We take strategic steps to guard against various risks encountered in the normal course of operations and in making business decisions. Aware that this is critical to delivering sustainable value for stakeholders and fulfilling our commitment to all shareholders , we identify all relevant risks, conduct process and system risk assessments and measure (or monitor) via key risk indicators against established risk limits to ensure acceptable returns.


The Board and Executive Management likewise monitor the various risks the Bank is exposed to through the regular reports and briefings from the Business Units, Risk Management Office, Compliance, and Internal Audit functions and external audit.

We also have Business Risk Officers who are accountable for managing and coordinating all matters of risk specifically operational and IT. BROs cascade and see to the effective application/adoption of the Bank’s Risk Management Programs. He is the central contact for all risk-related concerns for his business area.

Ensuring Uninterrupted Service

Our Group of Companies relies heavily on information systems in its day-to-day operations. Any perceived disruption to the delivery of products or services, however minimal, may affect overall client satisfaction. The Bank therefore depends on its established Business Continuity Management (BCM) processes to resolve problems and address products and services concerns. This may include operational processes or resources-related issues.

Our Business Continuity Management unit manages the Bank’s BCM Program. As part of the Risk Management Office, they identify and monitor against possible significant threats to business continuity. A strong and competent BCM unit is critical to our overall enterprise risk management approach. Effective BCM processes ensure compliance to information security and risk management objectives of availability, reliability and the soonest recovery in cases of internal or external events.

Our Business Continuity Plan (BCP) contains the necessary information for the proper

implementation and documentation of BCM, consisting of the following: • Normal Operating Procedures cover preventive or pro-active prevention of disruptions• Manual Recovery Procedures define steps to enable normal operations after an interruption, with acceptable process recovery and turnaround time• The Procedure for Resolution and Escalation contains guidelines on when to escalate or cascade necessary information to whom and how to do so• Communications Procedures safeguard timely, effective dissemination of accurate and reliable information to affected parties/stakeholders• System Recovery Procedure are steps to correct processing errors to resume normal operations of automated processes within a prescribed turnaround time• System Recovery Test Procedure are guidelines for testing documented recovery procedures, helping ensure proper execution should the need arise.

BCP manuals are subject to regular reviews and are updated as needed for relevance and benchmarking to best practices.

Strengthening Our Compliance Practices

Regulatory and legal compliance is intrinsic to companies that operate with high ethical standards and integrity, strong compliance management programs and policies and an excellent management team and human resources.

Our Compliance Office is charged with nurturing the Bank’s culture of integrity, ethical business practice, fair dealing and effective compliance management. It is directly accountable to the

Audit Committee. We maintain compliance with the BSP, SEC, Philippine Deposit Insurance Corporation (PDIC) and other regulating bodies relevant to the business. The Compliance Office is thus tasked to oversee the Bank’s implementation of enterprise-wide compliance programs and stakeholder-related compliance issues such as money laundering and Terrorist Financing Prevention Program. The compliance officer is ably complemented by a competent Legal Services Division.

Fourteen (14) Group Compliance Coordinating Officers (GCCOs), assigned in various business and operational units, lend support to the Compliance Office.

The Bank utilizes a three-layered compliance testing and monitoring process: Business units self-regulate on compliance with the corporate governance manual, policies and code of business conduct and ethics. The Compliance Office and Internal Audit give independent reviews that are elevated to the board level Corporate Governance Committee. Employees have a compliance database, ensuring access to electronically posted information by the Compliance Office. Meetings are regularly conducted with GCCOs on the status and needs on compliance. Regular dialogues with regulators ensure they are updated on new regulatory developments that may affect bank operations.


HUMAN RIGHTS

SOCIETY

PRODUCT RESPONSIBILITY

Category and Aspect Name of Policy/Reference Description Performance

Non-discrimination/Workplace discrimination

Accounting fraud and corruption

Marketing Communications

Customer Privacy

Freedom of Association and Collective Bargaining

International Declarations

Child Labor

National, regional and local laws and regulations

Forced or Compulsory Labor

Part of Employee Handbook/CBA

Collective Bargaining Agreement/HR Policies

Bank Policies/Legal Memoranda/Legal Advisory Bulletins

Bank Policies/Legal Memoranda/Legal Advisory Bulletins

Company Union

Abides with Philippine and international laws

Employs only persons of legal age

Collective Bargaining Agreement/HR Policies

The Bank does not discriminate on gender, religion, race, color, political stand, or social background.

The Bank utilizes Unibank Investigation Unit to investigate employee fraud and corruption.

Bank adheres with privacy laws, copyright laws, code of conduct of advertising

The Bank strictly implements Bank Secrecy laws, Data Privacy Act and other Consumer Protection laws and regulations. It has sent officers to in-house and external Financial Consumer Protection

The Bank recognizes the existence of Company Union(s).

The Bank complies with all laws and regulations as a matter of policy, business philosophy and CREDO. Our compliance extends to treaties and international agreements.

The Bank strictly enforces non-employment of minors.

The Bank is against forced/compulsory labor.

There was no reported incident of discrimination in 2014.

There was no reported incidents of accounting fraud and/or corruption in 2014.

There was no incidents of non-compliance related to this aspect in 2014.

No complaints regarding breaches of customer privacy and/or losses of customer data were recorded in 2014.

No aspect of our operations prohibits this freedom.

The Bank is conformant with all applicable regulations at the local, regional and national levels.

No aspect of our operations has been identified as having significant risk for child labor.

There were no incidents of compulsory labor reported in 2014.

G4-HR3, HR4, HR5, HR6, SO5, SO8, PR7, PR8 Feature

Winning the “House of the Year” Award

Overhauling its risk management structures has paid off big time for the Bank of the Philippine Islands (BPI)—it recently gained the Asia Risk Awards 2014 “House of the Year” for the Philippines, the first-ever bestowed on a Philippine bank.

This year, BPI joins an esteemed roster of global banks and financial institutions such as Hong Kong and Shanghai Banking Corporation (HSBC, Hong Kong), Development Bank of Singapore (DBS, Singapore) and Commerce International Merchant Bankers (CIMB, Malaysia) in receiving their respective “House of the Year” awards from Asia Risk.

The award was conferred by Risk.net which is owned by Incisive Media, a global business media company and one of the world’s leading business-to-business information providers. It was the first time in 19 years of giving out awards that the media firm gave a “House of the Year” citation for the Philippines.

The Bank spent a year overhauling its risk management structures partially in response to the country’s new capital adequacy framework introduced by the Bangko Sentral ng Pilipinas at the start of the year. BPI has shifted much more from a risk control approach to one of true risk management.

BPI’s proactive approach in enterprise and financial risk management, which entails a strong top-down risk management culture, competent risk management leaders, well-defined risk appetite and metrics, and robust models and systems are the key elements to the Bank’s capability to face both global and local market challenges and its thrust to be at the forefront of ethical, prudent and proactive enterprise risk management best practices in the country.

BPI’s Basel III capital adequacy ratio currently stands at above 15 percent.

“The risk management process should be about handling risk so that the company can grow and be profitable; at the same time being transparent with the Board so that everyone understands the profile of the company. I am very comfortable with where we are now.” edgardo o. madrilejo Chief Risk Officer

In October 2014, BPI Chief Risk Officer and Senior Vice President Edgardo O. Madrilejo received the award in behalf of the Bank. The awarding ceremony was held during the gala dinner of the Asia Risk Congress at the Four Seasons Hotel, Hong Kong.


A Quick Glance at Yolanda Numbers for BPI

• Affected branches – 5 including BPI-Philam (BPLAC) and BPI Globe BanKO • The Bank suffered zero injuries and casualties• All local employees were accounted for by the 9th day including outsourced services employees• Employee count: 53 employees including BPLAC and BPI Globe BanKO• Bank reopening – 12 November Ormoc, Baybay; 22 November Tacloban Main Branch• Actual bank losses to date ₧11.5 million: ₧7.8M in cost of branch repairs, ₧2.9 million on cost of mutilated/damaged bills and ₧0.8 million in spending for relief goods and travel expenses of employees and their families during relief operations

Quick Facts

• Yolanda made landfall on 8 November 2013• 16 million lives were affected• Total deaths: 6,300• Injuries: 28,626• Gone missing: 1,785• Displacement: 4.1 million people• More than 1.1 million houses damaged, 490,000 of which were totally destroyed and swept away • In the worst affected areas of Leyte and Samar 90% of houses were completely gone and 48% of primary livelihoods lost

Sources: USAID Typhoon Haiyan/Yolanda Fact Sheet #22 released 14 April 2014 and/or NDRRMC Update on Effects of Typhoon Yolanda (Haiyan) issued on 17 April 2014

Yolanda A Story Revisited

• Unibankers joined the Ayala Group’s One Big Ayala Volunteer Night in helping pack relief goods in various relief

centers of the Department of Social Welfare and Development.

• In just 17 days, the “10M + 10M” fund raising campaign of the Bank raised over ₧11 million for the victims of super typhoon Yolanda. Matched peso for peso by BPI, this resulted in a total donation

of more than ₧22 million.

• Donations made by the public through the BPI Foundation amounted to ₧10 million, which were then used to fund disaster recovery efforts and construct 2-storey, 4-classroom school buildings in the devastated areas.

Community Initiatives

• BPI Foundation partnered with The Foundation for These Abled Persons Inc. (FTI) for the development of a livelihood recovery program for people with disabilities and other marginalized community members. The program is also meant to contribute to the rehabilitation and reconstruction of devastated communities in Leyte through sustainable enterprises.

• The Foundation’s Bancas for the Philippines program promotes fiberglass technology in building fishing boats to help fishermen earn decent incomes again, especially those struck hard by Typhoon Yolanda and other disasters. Each banca is 15 feet long and weighs only 30 kg. Its expected lifespan of 20 years, twice of that of traditional wooden boats. In June 2014, BPI Foundation and WWF-Philippines turned over 50 fiberglass boats to Leyte fishermen and another 50 to Iloilo fisherfolk.

Motor

08 November 2013 Number | Amount Number | Amount | %

INSURANCE CLAIMS Typhoon Yolanda

429 | 104,059,936.16 405 | 101,365,866.21 | 94.4%

Claims Filed Settled and Billed

Non-motor 314 | 849,730,000.00 120 | 536,390,000.00 | 38.2%

743 525 | | 70.7%


Our Yolanda Story

The day typhoon Yolanda came began just like any ordinary day in anticipation of a long weekend. Everyone had taken heed of weather bulletins broadcasted two weeks prior about the incoming storm. Most had stocked up on food at home and taken other precautions in case the weather turned bad enough that they had to stay in. Everyone thought they had undergone enough preparations.

Then the typhoon came with unexpected storm surges. Everything changed within 20 minutes. Along with the massive destruction, chaos reigned.

While Business Continuity was not applicable in the immediate aftermath of the storm, BPI’s response had still been swift and decisive. The directives were simple and came from the very top: account for and extricate our people; ensure they have access to food, water, medicine, and sanitation; secure all the money that the Bank is entrusted with.

Major Erwin L. Rosete was our designated man on the ground for retrieval operations. He was there on Day 3 and the Philippine Army came the following day. Other staff were able to join Maj. Rosete by the Day 5. Rescue efforts were not confined to BPI-Ayala employees. It was a definite challenge to find our people and get them and their extended families evacuated to Cebu. A Manila-based employee had a family in Tacloban, who were also given assistance. While people were

cooperative, there were also security concerns to address, such as desperate attempts to open ATMs. Resources were extremely scarce. Everyone was a target for opportunists.

Among our people, check-ups on one another were being done over that weekend to ensure everyone was safe and accounted for. These were things our employees never signed up for but done nonetheless and voluntarily out of utmost compassion for our people, compassion for the Bank.

Resuming Service Immediately

BPI’s guiding principle of service was at work in the hardest of times. Even on the exact day that Yolanda hit, a Tacloban branch closed at 6pm to ensure the ATMs were loaded for the long weekend. Our mandate at the Bank includes servicing the community immediately after a calamity. In the chaos that ensued after the storm surges, our people made an effort to secure all the money in our 9 ATMS and in the cash vaults in Tacloban. After the typhoon onslaught and as soon as the signal was up, the ATM at our Romualdez branch was back in operation.

To ensure fair opportunity for all our local clients to access funds, we lowered the limit on cash withdrawals. Efforts were made to service clients’ needs even for those whose identity cards were washed away or whose signature cards were damaged.

Below is an account of the Bank’s experience with the super-typhoon Yolanda, a result of a composite of answers given in a group interview in relation to the Bank’s Business Continuity Management as it was then applied.

Our 2013 Integrated Annual and Sustainability Report contained some of our actions to address the devastation Yolanda has wrought and how the Bank, as one family, helped communities. As we look anew at lessons learned from Yolanda, we encounter anew the human side of the story – a story of a Bank and its people.

Lesson 1: A Solid Business Continuity Management Plan is Key

Looking back, our BCM gave us the necessary controls we needed for an effective retrieval and relief operations throughout the Yolanda experience. A definite and effective working structure was in place. It enabled us to systematically account for our people and allowed us to organize and mobilize daily. All of our activities, even minor ones, were reported without impediment to discretion for management decisions and actions taken.

Lesson 2: Keeping Physical Infrastructure Resilient

Taking off from our experiences with Typhoon Yolanda, we have fortified the branches which were deemed to be at high risk. We invested in generator sets and placed them on higher floors. For each of our branch areas, the designated evacuation site is exact with clearly identified central points for relief and recovery operations. We also have the necessary supplies in place in case of calamity.

While Yolanda was unique, with something of similar magnitude, the first thing necessary is to let our employees know where to bunker in and provide them enough food to last a certain number of days. Disruption in communications is assumed, so we keep an employees’ contact database, updating it regularly at both the BPI Group and Ayala Group levels. Our people are now aware of alternative means of communication when cellular signals fail. The importance of adequate preparation can never be over-emphasized.

Lesson 3: Going Beyond Their Duties

Yolanda validated our belief and reality–the main strength of our Institution is our people. We witnessed then how our employees needed no further directives and what needed doing was

voluntarily done. They naturally acted to protect the Bank and what it stands for. The fact that they went beyond normal procedures is significant. Their natural compassion for the Bank and of each other contributed greatly to the immediacy and effectiveness of our BCM.

Included but not limited to our employee engagement are accounting for our people and assets; fundraising of money and other necessities for affected employees and communities; volunteering in relief and recovery efforts both in the affected areas and remotely (e.g. donations packing); and taking part in post Yolanda recovery and rehabilitation initiatives.

Lesson 4: Maintaining Strong Leadership and Compassion

Under normal operations, each BPI employee is aware of how rigorous our policies and procedures are in running the Bank. Adherence to a budget is always a must. However, during the Yolanda calamity, we saw the funding, the instructions and the hands-on approach—all cascading instantly from our top management. Their instructions were very clear and direct to make certain that our people were taken care of. Our Crisis Management Team convened and monitored even as the events unfolded. We felt the urgency of the imperatives of relief, mobilization and action.

The Bank’s goals went beyond rescue—it was to locate, retrieve and send our people back. After everyone was accounted for, recovery became the priority. There are guidelines within our bank policy for assisting staff who are victims of disasters. The unique Yolanda situation called for an extraordinary response level and this was delivered. The Management authorized cash releases as immediate employee aid for those severely affected. Interest-free housing loans for affected employees were likewise approved.


Appendices


Appendix A: Material Aspects and IndicatorsG4-19, G4-20, G4-21

Category/ Subcategory

Why this is material Material AspectGRI

IndicatorDescription

Aspect Boundary

Product Responsibility

“We believe our first responsibility is to our Clients. If we understand and address our clients’ financial needs, we will be trusted with their most important financial transactions, and we will build lasting relationships. We do well when our clients do well.”

Product and Service Labeling

G4-PR5 Customer satisfaction survey results Internal

Marketing Communications

G4-PR7 Non-compliance with marketing regulations Internal

Customer Privacy G4-PR8 Complaints on customer privacy violation and data losses Internal

Financial Services Sector Disclosures

Product Portfolio FS6 Percentage of the portfolio for business lines by specific region, size and by sector

Internal

FS7 Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose

Internal

FS8 Monetary value of products and services designed to deliver a specific environmental benefit for each business line broken down by purpose

Internal

Labor Practices and Decent Work

“We believe in our responsibility to our People. We seek to hire the best people for each job, provide them with the means to perform at a high level and reward them fairly. We value integrity, professionalism and loyalty. We promote a culture of mutual respect, meritocracy, performance and teamwork. We strive to be the employer of choice among Philippine financial institutions.”

Employment G4-LA1 Employee hires and turnover Internal

Training and Education G4-LA9 Training hours for employees by gender and employee category

Internal

Human Rights Non-discrimination G4-HR3 Discrimination incidents and actions taken Internal


G4-HR4 Violation of freedom of association/collective bargaining and actions taken

Internal

Child Labor G4-HR5 Risk and incidents of child labor in operations, suppliers, and measures taken

Internal

Forced or Compulsory Labor

G4-HR6 Risk and incidents of forced or compulsory labor in operations, suppliers, and measures taken

Internal

Economic “We believe in our responsibility to our Shareholders. We treat capital as a most valuable asset, and seek to generate superior returns while being prudent in risk-taking, spending and investment.”

Economic Performance G4-EC1 Economic value generated and distributed Internal and external (suppliers, government, and

local communities)

Indirect Economic Impacts

G4-EC8 Indirect economic impacts Internal and external

(customers)

Procurement Practices G4-EC9 Spending on local suppliers Internal and external (suppliers)

Society “We believe in our responsibility to our Country. Our prosperity is greatly dependent on the well-being of our nation. We aim to be inclusive and responsible in nation building. Through BPI Foundation, we are committed to the welfare and sustainability of the communities we serve.”

Local Communities G4-SO1 Local communities Internal and external

(beneficiaries of CSR programs)

Anti-corruption G4-SO5 Confirmed incidents of corruption and actions taken Internal

Compliance G4-SO8 Cost of fines and number of sanctions for breaching laws and regulations

Internal

Environment “We contribute to nation building through investment and/or funding businesses that have direct impact to the environment. We expect our clients to value and respect the environment as we do. Further, in our day-to-day operations, we track and implement measures to become more eco-efficient.”

Energy G4-EN3 Energy consumption within the organization Internal

G4-EN4 Energy consumption outside the organization Internal and external (suppliers)

Water G4-EN8 Water withdrawal by source Internal

Emissions G4-EN15 Direct GHG emissions Internal

G4-EN16 Indirect GHG emissions Internal

G4-EN17 Other Indirect GHG emissions Internal and external (suppliers)

Products and Services G4-EN27 Environmental impact mitigation for products and services Internal and exter-nal (customers)

Business Unit Responsible Industry Associations

Bank of the Philippine Islands

Corporate Planning

Deposits

Remittance

Asset Management and Trust

BPI/MS Insurance Corporation

BPI Capital Corporation

Foundation

ACI PhilippinesAssociation of Bank Compliance OfficersAssociation of Certified Fraud ExaminersBankers’ Association of the PhilippinesBanker’s Institute of the PhilippinesChamber of Thrift BanksCredit Card Association of the PhilippinesCredit Management Association of the PhilippinesPhilippine Business for the EnvironmentRural Bankers’ Association of the Philippines

Makati Business ClubManagement Association of the Philippines Money Market Association of the PhilippinesVarious business clubs in areas

Bank Marketing Association of the Philippines

Association of Bank Remittance Officers Inc.

Fund Managers Association of the PhilippinesTrust Officers Association of the Philippines

Insurance Institute of Asia and the PacificJunior Insurance Executives CircleMarine Tuesday ClubMarine Underwriters Association of the PhilippinesPhilippine Association of Surety Underwriters, Inc.Philippine Insurers ClubPhilippine Insurers and Reinsurers AssociationReinsurers Club of the PhilippinesSociety of Underwriters

Financial Executives of the PhilippinesInvestment House Association of the Philippines

Association of Foundations Corporate Network for Disaster ResponseLeague of Corporate FoundationsPhilippine Council for NGO Certification

Appendix B: Membership in Industry AssociationsG4-16


GENERAL STANDARD DISCLOSURES

Section or sub-section, Page/s External Assurance

STRATEGY AND ANALYSIS

G4-1 Message from the Chairman and the President and CEO, 6-9 Yes, 134-135

G4-2 Sustainability Strategy Framework, 12 Yes, 134-135

Managing Risks, 119

ORGANIZATIONAL PROFILE

G4-3 Inside front cover Yes, 134-135

G4-4, G4-5, G4-6 Our Business, 15 Yes, 134-135

G4-7 BPI is a publicly listed company governed by a Board of Directors. Details of our ownership structure can be found in page 4 of our 2014 Annual Report.

Yes, 134-135

G4-8, G4-9 Our Business, 15 Yes, 134-135

G4-10 Employee Statistics, 92-93 Yes, 134-135

G4-11 Employee Statistics, 94 Yes, 134-135

G4-12 Supply Chain Management, 104 Yes, 134-135

G4-13 There have been no significant changes in the Bank’s size, structure, ownership, or its supply chain. Yes, 134-135

G4-14 Managing Risks, 119 Yes, 134-135

G4-15 Currently, BPI has no record of external charters, principles, or initiatives that it subscribes to or which it supports. Yes, 134-135

G4-16 Membership in Industry Associations, 131 Yes, 134-135

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17 The information and indicators reported are related to BPI and its business units. Yes, 134-135


Defining What’s Material to Us, 18


Appendix A, 130


Appendix A, 130 Yes, 134-135


Appendix A, 130 Yes, 134-135

G4-22 Previous years' economic figures as well as energy consumption at BPI Head Office were updated. Yes, 134-135

G4-23 There were no significant changes. Yes, 134-135

STAKEHOLDER ENGAGEMENT

G4-24 Stakeholder Engagement, 20-21 Yes, 134-135

G4-25 Stakeholder Engagement, 20 Yes, 134-135



REPORT PROFILE

G4-28, G4-29, G4-30 Scope and Coverage, 10 Yes, 134-135

G4-31 Contact Information, 11 Yes, 134-135

G4-32 Reporting Standards, 11 Yes, 134-135

G4-33 Assurance, 10 Yes, 134-135

GOVERNANCE

G4-34 Continuing a Legacy of Leadership Excellence, 114, 118 Yes, 134-135

G4-45, G4-46, G4-47 Managing Risks, 119 Yes, 134-135

G4-48 Ms. Fidelina A. Corcuera Senior Vice President & Head - BPI Sustainability Office Executive Director, BPI Foundation

Yes, 134-135

ETHICS AND INTEGRITY

G4-56 The BPI Credo, 2-3 Yes, 134-135

G4-57Details of our existing mechanisms for seeking advice on ethical and lawful behavior and matters related to organizational integrity may be viewed on pages 58 to 59 of our 2014 Annual Report.

Yes, 134-135

GRI Content Index

SPECIFIC STANDARD DISCLOSURES

Material Aspects DMA and Indicators - Page (s) Reason for Omission External Assurance

ECONOMIC

Economic Performance • G4-DMA – 16• G4-EC1 – 16-17

Not applicable Yes, 134-135

Indirect Economic Impacts • G4-DMA – 25, 39, 51, 73• G4-EC8 – 23-81


Procurement Practices • G4-DMA – 102• G4-EC9 – 102


ENVIRONMENT

Energy • G4-DMA – 103• G4-EN3 – 105-107• G4-EN4 – 105


Water • G4-DMA –103• G4-EN8 – 106-107


Emissions • G4-DMA – 103• G4-EN15 – 106-107• G4-EN16 – 106-107• G4-EN17 – 106-107


Products and Services • G4-DMA – 62, 103• G4-EN27 – 62-69


SOCIAL: LABOR PRACTICES AND DECENT WORK

Employment • G4-DMA – 85-86• G4-LA1 – 93-95


Training and Education • G4-DMA – 88• G4-LA9 – 88-89


SOCIAL: HUMAN RIGHTS

Non-discrimination • G4-DMA – 120-121• G4-HR3 – 122



• G4-DMA – 120-121• G4-HR4 – 122


Child Labor • G4-DMA – 120-121• G4-HR5 – 122


Forced or Compulsory Labor • G4-DMA – 120-121• G4-HR6 – 122


SOCIAL: SOCIETY

Local Communities • G4-DMA – 96• G4-SO1 – 96-97


Anti-Corruption • G4-DMA – 120-121• G4-SO5 – 122


Compliance • G4-DMA – 120-121• G4-SO8 – 122


SOCIAL: PRODUCT RESPONSIBILITY

Product and Service Labeling • G4-DMA – 111-112• G4-PR5 – 112-113


Marketing Communication • G4-DMA – 120-121• G4-PR7 – 122


Customer Privacy • G4-DMA – 120-121• G4-PR8 – 122


SECTOR DISCLOSURES

FINANCIAL SERVICES

Product Portfolio • G4-DMA – 51-53• FS6 – 52-53• FS7 – 40, 42-43• FS8 – 62-69

Yes, 134-135

GRI Content Index


Independent Assurance Statement


All BPI and BFSB branch officersAll Business Center, Cash Center, Processing Center, and Provincial Office Heads

Acknowledgement

Vladimir S. AdrianoJerwin A. AgaraoRamon Noel S. AltamiranoJeffrey S. AmorosoMaria Ramona O. AngMa. Gracia S. ArandaGina O. AstillaWinston C. AustriaLuningning L. AvendanoBrian T. BadillaEugenia D. BaguioroAthena G. BallezaAllely M. BarboDonna Michelle T. BarrogaMa. Teresa Lea L. CalalangMaria Ilizza M. CanlasEileen May G. CariagaJames Christler B. CariagaReginaldo Anthony B. CariasoFitzgerald S. CheeMa. Carmela D. ConcepcionMary Anne S. Concepcion Ma. Perpetua A. Cutiongco Rachelle Marie G. DanginKatrina Blanca B. De CastroDennis A. delos ReyesJose Augurio N. De Vera, Jr.Leah B. del Castillo Perry Alfonso Froilan E. DacumosAnna Christina U. del FierroJo Ann B. EalaRitchie G. Fariñas

Josephine F. FernandezDiane Faith S. FigueroaAgatha Joy A. FloresDaniel Jerome P. FragoMarita Socorro D. GayaresRaymond H. GoAnna Christina P. GomezKatrina Marie Vc. GonzalesJoseph Albert L. GotuacoMarie Eileen M. HipolitoJollybee E. JamiasIvan Angelo E. JavierJose Raul E. Jereza IVRicardo T. JimenezRachel C. JuyoEdgar A. LaguraEbony Arianne G. LautnerCharlie G. LedesmaSteven S. LimMarie Louise D. LiwanagMaria Consuelo A. LukbanElaine Ruth S. LumbreDino S. MacasaetEdgardo O. MadrilejoAndrew Angelo MahinayFlorendo G. MarananLea Angeline A. MarananMa. Carmina T. MarquezMauren C. MayorgaMarjorie Kathereen A. MendozaMichael B. MercadoRoberto Isabelo P. Mercado

Jomar O. MislangKristofer T. Molina Lady Janelle M. MonsantoGelyn F. MijaresJosenia Jessica D. NemeñoApril Ria M. Ng UyMica Rose P. NopuenteEmmanuel Jesus G. OsalvoMichaelangelo R. Oyson, CFAPerlina I. PadillaMaria Cristina R. PeñarandaMa. Isabel R. PereyManny F. QuiambaoTricia Marie C. QuiambaoRosemary F. RaymundoJulius R. RespicioBenjamin Christian C. Ricalde(Ret.) Major Erwin L. RoseteEdelyn B. SagalesJuan Miguel A. SantianoAlberto C. Santos Jr.Joanne V. SiguaSarah Jane S. SongaliaSylvia P. SumagpangCherish Honey C. TanJavie Kristine C. TatadMaureen Eve. DA. TiangsonEdelinda R. TinedValerie Gayle L. UyAngeli D. ValdiviaAngelica M. YlaganAtty. Paul Roderick A. Ysmael

Philippine Business for the EnvironmentTink Tank Studio

BANK OF THE PHILIPPINE ISLANDS6768 Ayala AvenueMakati City 0720 Philippines www.bpi.com.ph

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