COVER SHEET

P W - 1 2 1
S.E.C. Registration Number

B A N K O F T H E P H I L I P P I N E I S L A ND S

(Company's Full Name)

A Y A L A T R I A N G L E G A R D E N S T O W E R 2

P A S E O D E R O X A S C O R. MA K A T I A VE ,

B E L - A I R , MA K A T I C I T Y

Atty. Maria Lourdes P. Gatmaytan (632) 8663-6525

Contact Person Company Telephone Number

2
1 2 3 1 1 7 - A 0 4 2 3 4
Month Day FORM TYPE Month Day
Fiscal Year Annual Meeting
N/A
Secondary License Type, If Applicable

C F D
Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings

11,760
Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

File Number LCU

Document I.D. Cashier

STAMPS
 STANDARD DOCUMENT COVER SHEET
FOR SEC FILINGS

All documents should be submitted under a cover page which clearly identifies the company and the specific document
form as follows:

SEC Identification Number PW-121

File Number **

BANK OF THE PHILIPPINE ISLANDS

AYALA NORTH EXCHANGE TOWER 1, AYALA AVE. CORNER SALCEDO ST.,
LEGASPI VILLAGE, MAKATI CITY, METRO MANILA
(632) 8663-6525
December 31, 2023
SEC FORM 17-A

AMENDMENT DESIGNATION

FOR THE PERIOD ENDED DECEMBER 31, 2023

(if a report, financial statement, GIS, or related amendment or show-cause filing)

NONE
EACH ACTIVE SECONDARY LICENSE TYPE AND FILE NUMBER
(state “NONE” if that is the case)

* SEC will assign SEC No. to new companies.

** SEC will assign File No. to new applications or registrations.

*** Companies should display the File No. on any filing which is an amendment to an application or registration.
 2

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-A
ANNUAL REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF THE CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended : DECEMBER 31, 2023

2. SEC Identification Number : PW-121

3. BIR Tax Identification No. : TIN: 000-438-366-000

4. BANK OF THE PHILIPPINE ISLANDS

Exact name of issuer as specified in its charter

5. Manila, Philippines
Province, Country or other jurisdiction of incorporation or organization

6. Industry Classification Code : (SEC Use Only)

7. 22/F – 28/F Ayala Triangle Gardens Tower 2

Paseo de Roxas corner Makati Avenue,
Bel-Air, Makati City ZIP Code 1226
Address of principal office Postal Code

8. (632) 8663-6525 (CORPSEC OFFICE) / (632) 8663-6733 (IR)

Issuer’s telephone number, include area code

9. Not Applicable
Former name, former address, and former fiscal year, if changed since last report.

10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sections 4 and 8 of the RSA

Title of Each Class Number of Shares of Common Stock

Outstanding and Amount of Debt Outstanding
Common as of Dec. 31, 2023 4,945,197,291

11. Are any or all of these securities listed on a Stock Exchange?

Yes [ X ] No [ ]

If yes, state the name of such stock exchange and the classes of securities listed therein:
Philippine Stock Exchange Common

12. Check whether the issuer:

(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 11 of
the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines
during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such
reports);

Yes [ X ] No [ ]

(b) Has been subject to such filing requirements for the past ninety (90) days.

Yes [ X ] No [ ]
 3

13. State the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market
value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices
of such stock, as of a specified date within sixty (60) days prior to the date of filing. If a determination as to whether
a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the
aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions
reasonable under the circumstances, provided the assumptions are set forth in this Form. (See definition of
"affiliate" in “Annex B”).

Shares Held by Non-Affiliates Market Value per share Total Market Value
as of 04/05/24 as of 04/05/24
5,259,201,283 P114.20 P 600,600,786,518.60

APPLICABLE ONLY TO ISSUERS INVOLVED IN

INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

14. Check whether the issuer has filed all documents and reports required to be filed by Section 17 of the Code
subsequent to the distribution of securities under a plan confirmed by a court or the Commission.

Yes [ ] No [ ]

DOCUMENTS INCORPORATED BY REFERENCE

15. If any of the following documents are incorporated by reference, briefly describe them and identify the part of SEC
Form 17-A into which the document is incorporated:

X (a) Any annual report to security holders;

(b) Any information statement filed pursuant to SRC Rule 20 and 17.1(b);

(c) Any prospectus filed pursuant to SRC Rule 8.1-1.

 4

PART 1 - BUSINESS AND GENERAL INFORMATION

Item 1. Business

(A) Description of business

(1) Business Development

The 172-year-old Bank of the Philippine Islands (“BPI”) is the first bank in the Philippines and Southeast
Asia, licensed by the Bangko Sentral ng Pilipinas (“BSP”) to provide universal banking services. BPI is one of
the biggest banks in the country in terms of total assets, capital, and market capitalization, and has a
significant share of total banking system deposits, loans, and assets under management. It is recognized as
one of the country’s top providers of the following services: asset management and trust, cross-border
remittances, life and non-life bancassurance, as well as asset finance and leasing. BPI also has a significant
presence in the capital markets, particularly in fixed income and equities underwriting, distribution and
brokerage. It is also a provider of foreign exchange to both retail and corporate clients. The Bank also has
the country’s second largest branch network and operates the fifth largest ATM network. It is a leader and
innovator in the use of digital channels, and is a major provider of financial services through online and
mobile banking.

Historical Background. Founded in 1851, BPI was the first bank formed in the Philippines and was the issuer
of the country’s first currency notes in 1855. It opened its first branch in Iloilo in 1897 and pioneered in
sugar crop loans. It also financed the first tram service, telephone system, and electric power utility in
Manila and the first steamship in the country. As such, BPI and its “escudo” ranks as one of the largest
home-grown Philippine brands and carries an extensive legacy.

Recent History. For many years after its founding, BPI was the only domestic commercial bank in the
Philippines. BPI’s business was largely focused on deposit taking and extending credit to exporters and local
traders of raw materials and commodities, such as sugar, tobacco, coffee, and indigo, as well as funding
public infrastructure. In keeping with the regulatory model set by the Glass Steagall Act of 1932, the Bank
operated for many years as a private commercial bank. In the early 1980s, the Monetary Board of the
Central Bank of the Philippines (now the Bangko Sentral ng Pilipinas, or BSP) allowed BPI to evolve into a
fully diversified universal bank, with activities encompassing traditional commercial banking as well as
investment and consumer banking. This transformation into a universal bank was accomplished through
both organic growth and mergers and acquisitions, with BPI absorbing an investment house, a stock
brokerage, a leasing company, a savings bank, a retail finance company, and bancassurance platforms.

BPI has completed three bank mergers since the late 1990s. In 1996, it merged with City Trust Banking
Corp., the retail banking arm of Citibank in the Philippines, which enhanced its franchise in consumer
banking. In 2000, BPI acquired Far East Bank & Trust Company (“FEBTC”), then the largest banking merger
in the Philippines. This merger established BPI’s dominance in asset management and trust services and
branch banking; furthermore, it enhanced the Bank’s penetration of middle market clients. In 2000, BPI
also formalized its acquisition of major insurance companies in the life, non-life and reinsurance fields. In
2005, BPI acquired and merged with Prudential Bank, a medium sized bank with a clientele of middle market
entrepreneurs.

In 2011, BPI became the first bank in the Philippines to acquire the trust business of a foreign bank when it
purchased the trust and investment management business of ING Bank N.V. Manila.

In 2014, BPI completed a strategic partnership with Century Tokyo Leasing Corp., one of the largest leasing
companies in Japan, to form BPI Century Tokyo Lease & Finance Corp., with BPI retaining 51% of ownership.
This strategic partnership is expected to help BPI innovate in asset financing products and enhance the
service experience of an expanding base of Philippine consumers and corporations seeking asset leasing
and rental solutions.
 5

In 2015, BPI completed another strategic partnership with Global Payments (“GPN”), an Atlanta-based,
NYSE-listed provider of international payment services. By combining its merchant acquiring network with
that of GPN, BPI stands to provide enhanced services to its card customers, as well as to its merchant clients.
The partnership with GPN remained 49% owned by BPI.

In August 2016, BPI acquired a 10% minority stake in Rizal Bank Inc. (“RBI”), a member institution of Center
for Agriculture and Rural Development Mutually Reinforcing Institutions (“CARD MRI”), a group of social
development organizations that specialize in microfinance.

Effective September 20, 2016, BPI has taken full control over BPI Globe BanKO, Inc. after acquiring the 20%
and 40% stake of Ayala Corporation and Globe Telecom, respectively. On December 29, 2016, the Securities
and Exchange Commission approved change of the corporate name to BPI Direct BanKo, Inc., A Savings
Bank, after BPI Direct absorbed the entire assets and liabilities of BanKO.

On December 29, 2016, BPI successfully spun off its BPI Asset Management and Trust Group (“BPI AMTG”)
to a Stand-Alone Trust Corporation (“SATC”) named BPI Asset Management and Trust Corp. (“BPI AMTC”).
BPI AMTC officially commenced its operations on February 1, 2017.

The Bank evolved to its present position as a leader in Philippine banking through a continuous process of
improving its array of products and services, while maintaining a balanced and diversified risk profile that
helped reinforce the stability of its earnings.

Business Milestones (2021-2023).

In December 2021, the Securities and Exchange Commission approved the merger of BPI and its wholly
owned subsidiary BPI Family Savings Bank, Inc. with BPI as surviving entity effective January 1, 2022.

In September 2022, BPI and Robinsons Bank announced plans to merge their operations to form a leading
lender based on market capitalization. In November 2022, BPI’s board of directors approved the proposed
merger with Robinsons Bank. On January 17, 2023, shareholders approved the merger of BPI and Robinsons
Bank Corporation with BPI as the surviving bank. The Philippine Competition Commission approved the
merger on March 9, 2023, as contained in the decision released by the Commission on September 13, 2023.
The BSP through Monetary Board Resolution No. 1633 approved the merger on December 14, 2023, while
the SEC issued the Certificate of Filing of the Articles and Plan of Merger on December 29, 2023. The merger
was completed on January 1, 2024.

Principal Subsidiaries. The Bank’s principal subsidiaries are:

a) BPI Capital Corp. (“BPI Cap”) is an investment house that offers a full suite of services covering a
comprehensive program: from corporate finance and capital markets advisory, project finance and
loan syndication, to debt and equity underwriting and securities distribution. It began operations in
December 1994. BPI Cap wholly owns BPI Securities Corp., a stock brokerage.

b) BPI Direct BanKo, Inc., A Savings Bank (“BanKo”), serves microfinance customers through branch,
digital, and partnership channels. Founded in July 2009 as BPI Globe BanKO, it is now wholly owned,
following a September 2016 purchase of stakes owned by Ayala Corp. (20%) and Globe Telecom, Inc.
(40%) and a December 2016 merger with BPI Direct Savings Bank, Inc.

c) BPI International Finance Limited (“BPI IFL”), originally established in August 1974, is a deposit-taking
company authorized and regulated by the Hong Kong Monetary Authority. It is also licensed by the
Securities and Futures Commission of Hong Kong to undertake Type 1 (Dealing in Securities), Type 4
(Advising on Securities) and Type 9 (Asset Management) regulated activities. Its principal business
activities are: 1) providing banking services mainly in relation to term deposits and loans; 2) providing
securities brokerage services in relation to dealing and advising on securities; and 3) providing asset
management services.
 6

d) BPI Remittance Centre Hong Kong Ltd. ("BERC HK") is a licensed money service operator in Hong Kong
servicing the remittance services to beneficiaries residing throughout the Philippines. On November
21, 2018, BPI IFL distributed its shares in BERC HK as a property dividend to the Parent Bank. BERC HK
became an immediate subsidiary of the Parent Bank following this.

e) BPI (Europe) Plc (“BPI Europe”) is a UK-licensed bank authorized by the PRA, jointly regulated by the
PRA and the Financial Conduct Authority (FCA). It has been in operation since 2007, and started off
with a paid-up capital of £20 million, subsequently increased to £100 million after equity infusions in
2020 and 2021. The bank offers simple retail deposit products and engages in the proprietary trading
of fixed income securities, foreign exchange and syndicated loans.

f) BPI/MS Insurance Corp. (“BPI MS”) is a non-life insurance company. It is a joint venture with Mitsui
Sumitomo Insurance Co. (who owns a 49% stake) and is the result of a merger of FGU Insurance Co.
and FEB Mitsui Marine Insurance Co., which was acquired as a subsidiary of Far East Bank in 2000.

g) BPI Asset Management and Trust Corporation, doing business under the trade name and style of BPI
Wealth – A Trust Corporation, (“BPI Wealth”) is a stand-alone trust corporation serving both individual
and institutional investors with a full suite of local and global investment solutions. BPI Wealth
commenced operations on February 1, 2017.

h) BPI Investment Management Inc. (“BIMI”) is a wholly owned subsidiary of the Bank and serves as the
principal distributor and transfer agent of the ALFM & PAMI Mutual Funds – open-end investment
companies registered with, and regulated by, the Securities and Exchange Commission (SEC).

(2) Business of Issuer

Principal Products & Services

The Bank offers a wide range of corporate and retail banking products. The Bank has two major
categories for products and services. The first category covers its core financial intermediation business,
which includes deposit taking, lending, and securities investments. Revenue from this category is
collectively termed as net interest income and accounts for 75% of net revenues. The second category
covers services ancillary to the Bank’s financial intermediation business, and from which it derives
transaction-based commissions, service charges and other fees. These include investment banking and
corporate finance fees, asset management and trust fees, stock brokerage fees, credit card-related fees,
rental of bank assets, income from insurance subsidiaries and service charges or commissions earned on
international trade transactions, drafts, fund transfers, various deposit-related services, and revenues from
transactions on the digital channels. Commissions, service charges, and other fees, when combined with
trading gains and losses arising from the Bank’s fixed income and foreign exchange operations,
constitute non-interest income, which accounts for the remaining 25% of net revenues.

Foreign Offices Contribution

2021 2022 2023

Share in Total Revenue (%) 0.68 0.55 0.44
Hongkong 0.49 0.41 0.33
USA 0.00 0.00 0.00
Europe 0.18 0.14 0.10

Share in Total Revenue 0.66 0.22 (0.03)

Hongkong 0.54 0.24 0.08
USA 0.00 0.00 0.00
Europe 0.12 (0.02) (0.11)
 7

Distribution Network

BPI has 839 branch licenses as of end-2023. However, with the decline in over-the-counter transactions and
the shift to digital, the Bank has also begun branch network optimization by co-locating and consolidating
branches for cost efficiency and higher productivity. As of December 31, the Bank has 709 physical branches
nationwide. Additionally, there are 348 BPI Direct BanKo branches and Branch-Lite Units (BLUs) set up in
strategic locations in the country. Overseas, BPI has two banking subsidiaries: BPI International Finance
Limited in Hong Kong and Bank of the Philippine Islands (Europe) Plc in London.

BPI maintains a specialized network of overseas offices to service Filipinos working abroad. To date, BPI has
two (2) Remittance Centers located in Hong Kong and two (2) representative offices located in UAE and
Japan. BPI also maintains remittance tie-up arrangements with various foreign entities in several countries
to widen its network in serving the needs of Filipinos overseas.

On the lending side, there are 24 business centers and desks, servicing both corporate and retail clients,
across the country to process loan applications, loan releases, and international trade transactions. These
centers also provide after-sales servicing of loan accounts.

The Bank’s branch network is supported by a network of 1,743 ATMs (including 556 ATMs provided by
Euronet) and 343 CAMs as of 31 December 2023, which together provide cash-related banking services to
customers 24/7, located in both branches and off-site locations, such as shopping malls and high-density
office buildings. The Bank’s interconnection with Bancnet, gives the Bank’s cardholders access to over
20,000 ATMs across the country. The Bank’s ATM network is likewise interconnected with Mastercard,
China Union Pay, JCB and Visa. The Bank aims to provide more secured cash withdrawals for its depositors
through the implementation of the ATM withdrawal notification feature, which allows the Bank’s
cardholders to receive notifications via e-mail or SMS when withdrawals beyond a specified amount are
made.

The Bank aims to leverage its digital assets and capabilities across various businesses. Since 2021, the Bank
has delivered six digital user platforms:
• VYBE, BPI’s e-wallet
• New BPI mobile app, which features an improved user experience
• BPI Trade app was recently fired up and is currently in soft launch
• Bizko for SMEs
• Bizlink for corporate clients
• BanKo app for self-employed micro-entrepeneurs

As of 31 March 2024, work was ongoing on the Bank’s seventh app designed for high net worth clients.

These seven platforms will enable all Filipinos in their respective financial journeys to enjoy the benefits
that BPI channels provide. In addition, the Bank envisions these platforms to be a major vehicle for client
acquisition, financial inclusion, and business growth.

Supported by its open banking infrastructure, these platforms allow customers access to over 6,500
products and services provided by over 170 partners.

BPI’s partnership with GCash is also progressing well, with its products in GSave, GInvest and GInsure
gaining the Bank more clients and generating revenues through its collaboration with GCash.

All of these digital initiatives are underpinned by strong cybersecurity, agile core systems, and data-driven
decisions.

Competition
 8

With 45 universal and commercial banks operating in the Philippines as of December 31, 2023, the banking
industry in the Philippines is characterized by high levels of regulation and highly competitive pricing and
service offerings. BPI competes against domestic and foreign banks that offer similar products and services
as BPI. Since the further liberalization of the Philippine banking industry in 2014, foreign banks have
expanded from their traditional focus on Metro Manila and large-scale corporations to building their own
networks to increase market share, primarily through acquisitions of small domestic savings banks. Foreign
banks tend to benefit from the support of their parent companies or established regional operations, but
they are limited by local regulations to a maximum of six Philippine branches in order to protect the growth
and participation of local banks.

According to industry data on Philippine banks, BPI is second largest in terms of loans and third in terms of
deposits among private universal banks, with market shares of 15% and 12%, respectively, as of December
31, 2023. BPI Wealth, the asset and wealth management arm of BPI, is the second largest in terms of assets
under management with 20% market share. BPI believes its principal competitors are BDO Unibank, Inc.
and Metropolitan Bank & Trust Company.

Patents, Trademarks, Licenses, Franchises, etc.

BPI sells its products and services through the BPI trademark and/or trade name. All its major financial
subsidiaries carry the BPI name prefix (e.g., BPI Capital, BPI Securities, and BanKo), and so do its major
product and service lines.

Following are some of BPI’s trademarks for its products and services:

a) BPI Express Assist (“BEA”), for its branch queuing facility

b) BPI Debit and BPI Debit Cards, for its debit cards
c) BPI Credit and BPI Credit Cards, for its credit cards
d) Express Cash, My ePreapid, and BPI ePay, for its prepaid cards
e) BPI Phone Banking, for its contact center facility
f) BPI Online, for its web browser-based transaction platform used by retail customers
g) BPI Mobile, for its mobile banking app used by retail customers
h) Bizlink, for its internet banking platform for business and corporate clients, including the BizLink
mobile app
i) Express Collect, for its bills collection agreements

Other product brands of BPI and BanKo are Save-up, Saver-Plus, Pamana Savings, Jumpstart Savings, BPI
Plan Ahead, SME Term Loans, BPI Personal Loan, PondoKo Savings and NegosyoKo Loan.

All BPI’s trademark registrations are valid for 10 years with years of expiration varying from year 2027 to
2031. Trademarks intended to be used or maintained by BPI are so maintained and renewed in accordance
with applicable Intellectual Property laws and regulations. BPI closely monitors the expiry and renewal
dates of its trademarks to protect BPI’s brand equity.

In terms of business licenses, BPI has an expanded commercial banking license while BanKo has a savings
bank license. BPI Capital has an Investment House license engaged in dealing Government Securities and as
Mutual Fund Distributor. BPI Wealth has a trust license, securities custodian/registry license of the Bangko
Sentral ng Pilipinas and is a PERA-accredited administrator of the Bureau of Internal Revenue. BPI Wealth
is also accredited by the SEC as an investment company adviser/fund manager of investment
companies/mutual funds. BIMI has a mutual fund distributor license and is a registered transfer agent with
the SEC. BPI MS was granted by the Insurance Commission a Certificate of Authority to transact and sell
non-life insurance products.

For foreign business licenses, BPI (Europe) Plc is a UK-licensed bank authorized by the Prudential Regulation
Authority (“PRA”) and regulated by the PRA and the Financial Conduct Authority (“FCA”). Meanwhile, BPI
IFL is a deposit-taking company authorized and regulated by the Hong Kong Monetary Authority. It is also
 9

licensed by the Securities and Futures Commission of Hong Kong to undertake Type 1 (Dealing in Securities),
Type 4 (Advising on Securities) and Type 9 (Asset Management) regulated activities.

Related Parties

In the ordinary course of business, BPI has entered into various transactions with its Directors, Officers,
Stockholders and their Related Interest (“DOSRI”), including loan transactions. BPI and all its subsidiaries
have always been in compliance with the General Banking Act, BSP Circulars and regulations on DOSRI loans
and transactions. As of December 31, 2023, DOSRI loans amounted to 1.0% of loans and advances as per
Note 25, 31, and 32 of the 2023 audited consolidated financial statement.

Government Regulations (2021-2023)

Under the General Banking Act, the Monetary Board of the BSP is responsible for regulating and supervising
financial intermediaries like BPI. The implementation and enforcement of the BSP regulations is primarily
the responsibility of the supervision and examination sector of the BSP.

BPI, as a publicly listed company (“PLC”), is also governed by SEC memorandum circulars and BIR revenue
regulations. Below is a non-exhaustive list of the regulations BPI has adopted in the last three years:

Issuance No. Issue Date Effective Date Title/Summary

BSP Circulars
Guidelines for Virtual Asset
No. 1108 26 Jan 2021 9 Feb 20211
Service Providers (VASP)
Amendments to the Rules
and Regulations on the
Mandatory Credit Allocation
No. 1111 3 Mar 2021 18 Mar 20211 for Agriculture and Agrarian
Reform Credit, “The Agri-
Agra Reform Credit Act of
2009”
Amendments to Operational
No. 1112 8 Apr 2021 23 Apr 20211 Risk Management and
Internal Control Measures
Amendments to Operational
No. 1113 16 Apr 2021 23 Apr 20211 Risk Management and
Internal Control Measures
Amendments to the
Guidelines on Recovery Plan
No. 1114 16 Apr 2021 23 Apr 20211
of a Domestic Systemically
Important Bank (D-SIB)
Implementation of R.A. No.
No. 1117 27 May 2021 4 Jun 2021 1153, "Financial Institutions
Strategic Transfer (FlST) Act”
Environmental and Social
No. 1128 26 Oct 2021 10 Nov 20211 Risk Management
Framework
Amendments to Corporate
Governance Guidelines for
No. 1129 12 Nov 2021 3 Dec 20211
BSP-Supervised Financial
Institutions
 10

Guidelines on the Settlement

of Electronic Payments
No. 1135 21 Jan 2022 22 Jan 2022 Under the National Retail
Payment System (NRPS)
Framework
Amendments to the
Regulations on Confirmation
No. 1136 11 Feb 2022 18 Feb 20221 of the Election/Appointment
of
Directors/Trustees/Officers
Amendments to Regulations
No. 1137 18 Feb 2022 11 Mar 2022 on Outsourcing and IT Risk
Management
Guidelines for Reporting
No. 1139 23 Mar 2022 25 Mar 20221 Islamic Banking and Finance
Transactions/Arrangements
Amendments to Regulations
No. 1140 24 Mar 2022 31 Mar 20221 on Information Technology
Risk Management
Amendments to the
Guidelines on the
Computation of Minimum
No. 1142 29 Mar 2022 4 Apr 20221
Required Capital and Risk-
Based Capital Adequacy
Ratio
Updated Manual of
Regulations for Banks and
No. 1143
12 Apr 2022 6 May 2022 Non-Bank Financial
No. 1144
Institutions as of 31
December 2019
Amendment to the
Guidelines Implementing
Republic Act (R.A.) No.
No. 1147 10 Jun 2022 17 Jun 2022
11523, otherwise known as
the “Financial Institutions
Strategic Transfer (FIST) Act”
Amendment to the
Framework for Dealing with
No. 1148 17 Jun 022 29 Jun 2022
Domestic Systemically
Important Banks
Guidelines on the
Integration of Sustainability
No. 1149 23 Aug 2022 2 Sept 20221
Principles in Investment
Activities of Banks
Prudential Framework for
No. 1150 23 Aug 2022 17 Sept 2022 Large Exposures Monitoring
Threshold
Amendments to the
Regulations on Unit
No. 1152 5 Sept 2022 29 Sept 2022
Investment Trust Funds
(UITFs)
Amendments to the
Alternative Compliance with
No. 1155 21 Sept 2022 22 Oct 2022 the Reserve Requirements of
Banks and Non-Bank
Financial Institutions with
 11

Quasi-Banking Functions
(NBQBS)
Amendment to the Manual
of Regulations for Banks and
Manual of Regulations for
Non-Bank Financial
No. 1157 14 Oct 2022 20 Oct 2022 Institutions pertaining to
Bangko Sentral Issued
Securities Eligible
Counterparties

Guidelines on Recovery Plan

No. 1158 18 Oct 2022 8 Nov 2022
of Banks
Regulations on Financial
Consumer Protection to
lmplement Republic Act No.
11765, otherwise known as
No. 1160 28 Nov 2022 20 Dec 2022
the "Financial Products and
Services Consumer
Protection Act"

Amendments to the
Regulations on Credit
No. 1164 5 Jan 2023 13 Jan 20231 Exposure Limits to a Single
Borrower and Definition of
Capital
Amendments to the Ceiling
19 Jan 2023 26 Jan 20231 on Interest or Finance
No. 1165
Charges for Credit Card
Receivables
Amendments to Section
921/921Q of the Manual of
Regulations for Banks
(MORB)/ Manual of
30 Mar 2023 13 Apr 20231 Regulations for Non-Bank
No. 1170
Financial Institutions
(MORNBFI) on Customer
Due Diligence, including
Guidelines on Electronic
Know-Your-Customer
Amendments to the Rules
and Regulations on the
No. 1176 29 June 2023 30 Jun 20231 Reserves Against Deposits
and Deposit Substitute
Liabilities of Banks
BSP Memorandum
Regulatory Treatment of
Until December 31, Restructured Loans for
M-2021-056 October 21, 2021
2022 Purposes of Measuring
Expected Credit Losses
Compliance with BSP
M-2021-069 December 22, 2021 December 23, 2021 Financial Consumer
Protection Framework
Moratorium on the Increase
M-2021-071 28 Dec 2021 29 Dec 2021 in Transfer Fee for InstaPay
and PESONet Transactions
 12

Supplemental Report to the

Financial Reporting Package
M-2022-001 11 Jan 2022
(FRP) on Modified and
Restructured Loans
Supplemental Capital
Adequacy Ratio (CAR) Report
on the Temporary
Regulatory Relief on the
M-2022-002 11 Jan 2022 Capital Treatment of
Provisioning Requirements
under the Philippine
Financial Reporting Standard
(PFRS) 9
M-2022-004 Extension of BSP Prudential
17 Jan 2022
M-2022-005 Relief Measures
Operational Relief on the
Submission of Prudential
M-2022-006 21 Jan 2022
Reports to the BSP-Financial
Supervision Sector
Guidelines on the
Submission of the
Supplemental Report to the
M-2022-008 7 Feb 2022
Financial Reporting Package
(FRP) on Modified and
Restructured Loans
Guidelines on the Electronic
Submission of DDA
Reconciliation Statement
M-2022-009 7 Feb 2022
Report through the BSP
Financial Institution Portal
(FI Portal)
Guidelines on the Electronic
Submission of Annual Report
M-2022-010 11 Feb 2022 of ALL Interlocking Positions
of its Directors and Officers
(ARIPDO)
Collection of the Annual
M-2022-011
2 Mar 2022 Supervisory Fees (ASF) for
M-2022-012
the Year 2022
Guidelines on the
Designation of the PDDTS
M-2022-013 2 Mar 2022 and PVP as Systemically
Important Payment Systems
(SIPS)
Amendment to
Memorandum M-2021-034
on the Guidelines for
Obtaining a Certificate of
M-2022-014 9 Mar 2022 Eligibility (COE) under
Republic Act (R.A.) No.
11523, otherwise known as
the Financial Institutions
Strategic Transfer (FIST) Act
Recommended Control
M-2022-015 22 Mar 2022 Measures Against Cyber
Fraud and Attacks on Retail
 13

Electronic Payments and

Financial Services (EPFS)
Reminder to Verify the
Authenticity of Electronically
Issued Bangko Sentral ng
Pilipinas (BSP) Documents
for Foreign Exchange (FX)
M-2022-017 25 Mar 2022
Transactions under the
Manual of Regulations on
Foreign Exchange
Transactions (FX Manual), as
amended
Re-extension of the Waiver
M-2022-019 30 Mar 2022 of Fees on fund transfers
through the PhilPaSSplus
Extension of Temporary
Measures Implemented in
M-2022-021 31 Mar 2022 the Bangko Sentral ng
Pilipinas’ Rediscounting
Facility
Guidelines on the
Submission of the
Supplemental Capital
Adequacy Ratio (CAR) Report
on the Temporary
M-2022-022 20 April 2022 Regulatory Relief on the
Capital Treatment of
Provisioning Requirements
under the Philippine
Financial Reporting Standard
(PFRS) 9
Extension of the Submission
Deadline of the 2021 Audited
M-2022-023 29 Apr 2022
Financial Statements and the
Accompanying Reports
Collection of the Annual
M-2022-025 11 May 2022 Supervision Fees (ASF) for
the Year 2022
Updated Schedule for the
Comprehensive Credit and
M-2022-027 26 May 2022
Equity Exposures Report
(COCREE)
Prudential Relief on the
Treatment of Loss Arising
from the Sale/Transfer of
Non-Performing Assets
M-2022-028 6 Jun 2022
under Republic Act No.
11523, otherwise known as
the Financial Institutions
Strategic Transfer Act
Guidelines on Handling of
M-2022-029 6 Jun 2022 Consumer Concerns on
PESONet and InstaPay
Guidance Paper on the
M-2022-030 30 Jun 2022 Conduct of Institutional Risk
Assessment (IRA)
 14

Guidelines on the
Designation of PESONet and
M-2022-031 13 July 2022 InstaPay as Prominently
Important Payment Systems
(PIPS)
Guidelines on the
Submission of the
M-2022-032 20 July 2022 Supplemental Report to the
Financial Reporting Package
(FRP) on Islamic Banking
Updated Comprehensive
M-2022-033 5 Aug 2022 Credit and Equity Exposures
(COCREE) Report Package
Guidelines on the
Computation and Payment
of Rebates, Refunds and
M-2022-034 8 Aug 2022
Incentives (RRI) for Unfit
Banknote Deposits Under
BSP Circular No. 1106
Guidelines on the Electronic
Submission of Report of
M-2022-036
10 Aug 2022 Selected Branch Accounts
M-2022-037
through the BSP Financial
Institution (FI) Portal
2022 Guidance Paper on
M-2022-038 5 Sept 2022 Targeted Financial Sanctions
(TFS) Implementation
Extension of BSP Prudential
Relief Measure on the
Relaxation in the Credit Risk
M-2022-041 23 Sept 2022 Weight for Loans to MSMEs
under the BSP’s Risk-Based
Capital Adequacy
Frameworks
Guidance on the
Implementation of the
M-2022-042 29 Sept 2022 Environmental and Social
Risk Management (ESRM)
System
Email Security Control
M-2022-043 7 Oct 2022
Recommendations
Use and Acceptance of the
Philippine Identification
System (PhilSys) Digital ID
M-2022-044 14 Oct 2022
and Printed e-Philippine
Identification (ePhilID)

Peso Real Time Gross

M-2022-049 22 Nov 2022
Settlement (RTGS) Rules
SEC
Amendment of the
Guidelines on Anti-Money
MC No. 04-2021 30 Mar 2021 14 Apr 20211 Laundering and Combating
the Financing of Terrorism
for SEC Covered Institutions
 15

(“2018 AML/CFT
Guidelines”) and 2020
Guidelines on the
Submission and Monitoring
of the Money Laundering
and Terrorist Prevention
Program (MTPP)
Adoption of Philippine
Standards on Auditing (PASs)
MC No. 001-2022 27 Jan 2022 and Philippine Financial
Reporting Standards (PFRSs)

Schedules for Filing of

Annual Financial Statements
MC No. 002-2022 8 Feb 2022 and General Information
Sheet

Implementation of Bangko
Sentral ng Pilipinas Circular
No. 1133 Series of 2021 on
the Ceiling/s on Interest
Rates and Other Fees
MC No. 003-2022 1 Mar 2022
Charged by Lending
Companies, Financing
Companies, and their Online
Lending Platforms

Disqualifications of
Directors, Trustees and
Officers of Corporations; and
MC No. 004-2022 2 Mar 2022
the Guidelines on the
Procedure for their Removal

Rules on Qualified and/or

Eligible Personal Equity and
MC No. 007-2022 26 Aug 2022
Retirement Account (PERA)
Investment Products

Extension for Deadlines for

MC No. 1-2023
the 2023 filing of AFS
Guidelines on Annex C of Rule
12 of the Securities
Regulation Code interpreting
MC No. 13-2023 12 Sept 2023 the comparative periods
required in the
management’s discussion
and analysis
1
The Circular took effect 15 calendar days following its publication in the Official Gazette or in a newspaper
of general circulation.
2
Subsequently, BPI also complied with all pertinent BIR revenue regulations implementing it.
 16

Research and Development Activities

BPI spent the following for the last three years on Personnel Training and on Systems/Application Software:

In Million Pesos % of Revenues

2021 1,870.7 1.9
2022 1,317.0 1.1
2023 2,760.6 2.0

Employees

Below is a breakdown of the manpower complement of BPI in 2022 and 2023:

December 31, 2022 Actual December 31, 2023 Actual

Officer Staff TOTAL Officer Staff TOTAL
UNIBANK 6,823 10,849 17,672 7,544 11,453 18,997
Consumer 3,825 8,392 12,217 4,192 8,876 13,068
Corporate 955 526 1,481 950 493 1,443
Investment 452 141 593 604 175 779
Support 1,591 1,790 3,381 1,798 1,909 3,707
Insurance 114 415 529 115 410 525
Total 6,937 11,264 18,201 7,659 11,863 19,522

The majority, or 73% of the staff in the Unibank are members of various unions and are subject to Collective
Bargaining Agreements (CBAs). The current CBA of the parent company will end on March 31, 2024.

Enterprise Risk Management

The Bank has an established enterprise risk management and capital management framework that enables
the Bank to systematically identify, measure, control, and monitor its significant financial and non-financial
risk exposures, ensuring adequate liquidity levels and sufficient capital in support of business growth and
operational resilience. The framework covers not only traditional risks that the Bank is exposed to such as
credit, market, and operational and information technology (IT) risks, but also includes emerging risks such
as environmental and social risks.

The Bank’s framework is anchored on the regulatory guidance set by the BSP which emphasizes effective
risk management governance, robust business continuity and operational resiliency standards, financial
viability, and soundness through the conduct of internal capital adequacy assessments, and the adoption
of various risk management processes and methods. The Bank’s ERM is anchored on the pillars of:
• Sound risk management governance
• Value-enhancing risk methods and processes
• Risk-intelligent data and technologies

The Bank’s Board of Directors fulfils its risk management function through the Risk Management Committee
(RMCom), which defines risk appetite statements at functional and enterprise levels. The RMCom also
oversees and reviews risk management structures, metrics, limits, and issues across the BPI Group. The
Chief Risk Officer (CRO) of the BPI Group reports directly to the RMCom and is responsible in leading the
formulation of risk management policies and methodologies, aligned with the Bank’s overall business
strategies, ensuring a prudent and rational approach to risk-taking that is commensurate with returns on
capital, and within the Bank’s risk appetite. Led by the CRO, the Risk Management Office (RMO) actively
engages with the RMCom, Management, and business units to promote a robust risk culture. This includes
 17

risk awareness campaigns and learning programs, and promoting risk management industry best practices
through internal communications.

The Bank’s risk exposures are identified, measured, controlled, and monitored according to three (3) major
risk classifications of credit, market and liquidity, and operational and IT risks.

Credit Risk, the single largest financial risk for most local banks, arises from the Bank’s core lending and
investing businesses, and involves thorough credit evaluation, appropriate approvals, administration,
management, and continuous monitoring of risk exposures such as borrower (or counterparty) risk, facility,
collateral, industry, and concentration risks relating to each loan account and on a portfolio basis. In BPI,
the entire credit risk management system is governed by stringent credit underwriting policies and
risk rating parameters, and lending procedures and standards which are regularly reviewed and updated
given regulatory requirements and market developments. The Bank’s loan portfolio is continuously
monitored and risk reviewed as to overall asset quality, credit risk ratings, loan loss reserves cover, credit
concentration, and utilization of limits, among others. The Bank continuous to experience modest growth
in loan volumes, but is able to manage the overall credit risk profile and maintain asset quality (as evidenced
by acceptable levels of non-performing loans (NPLs), generally at par or lower-than-industry NPLs, and
adequate reserves cover), and does so in general compliance with internal and prudential requirements
relating to credit risk management including compliance to Related Party Transactions (RPT) guidelines,
single borrower’s limits, credit risk concentration, and internal and regulatory stress tests, among others.

Market and Liquidity Risks are risks to earnings and capital from adverse movements in risk factors that
affect the market value of financial instruments, products and transactions in the Bank’s portfolios, and the
risk arising from the potential inability to meet obligations to clients, counterparties or markets when they
fall due. Market risk arises from the Bank’s trading and distribution activities of securities, foreign exchange,
and derivative instruments (as allowed by regulations), and interest rate risk in the banking book while
liquidity risk mainly arises from cash flow gaps and mismatches in our assets, liabilities, and off-balance
sheet accounts. Market and liquidity risks are managed using a set of established policies and metrics
guided by the Bank's market, interest rate risk in the banking book (IRRBB), and liquidity risk management
frameworks set by the Board-level RMCom. The Bank employs various risk metrics such as Value-at-Risk
(VaR) and stop loss limits for price risk, and Balance sheet Value-at-Risk (BS VaR), and Earnings At-Risk (EaR)
for interest rate risk in the banking book, supplemented by quarterly stress tests. Our liquidity profile is
measured and monitored through our internal metrics – the Minimum Cumulative Liquidity Gap (MCLG) or
the smallest net cumulative cash inflow (if positively gapped) or the largest net cumulative cash outflow (if
negatively gapped) over the next three months; the Intraday Liquidity Buffer Ratio (ILBR) was implemented
to promote the Bank’s resilience against intraday liquidity risk by ensuring that adequate liquidity buffers
are in place to meet unexpected outflows throughout the day without affecting funds and reserves
management; and the regulatory metrics – Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio
(NSFR). The Bank ensures adequate levels of liquidity at all times and that contingency plans are in place in
the event of liquidity stress. The Bank also regularly conducts liquidity stress tests which consistently show
acceptable levels of liquidity to meet the Bank’s financial obligations under both bank-specific and systemic
or market-wide crisis scenarios. Periodic testing of the Bank’s established liquidity contingency funding plan
(LCFP) is also performed to build awareness and preparedness among key business groups, test the
effectiveness of various funding options, and refine the Bank’s assumptions to ensure the quality and
reasonableness of the contingency plan. As of end-December 2023, the Bank’s market, IRRBB, and liquidity
risk exposures are generally well within the RMCom-approved risk limits at the BPI Parent and Group levels.

Operational Risks arise from inadequate or failed internal processes, people and systems, or from external
threats and events such as natural disasters that damage physical assets, or electronic/telecommunication
failures that disrupt the Bank’s operations, and which may give rise to adverse legal, tax, regulatory, or
reputational consequences. Information Technology risk, which is subsumed under operational risks, arise
from the use of or reliance on IT (i.e., computer hardware, software, devices, systems, applications, and
networks), which includes, information security, service availability, reliability and availability of IT
operations, completion of IT development projects, and regulatory compliance, among others.
 18

As of end-December 2023, the Bank maintained actual operational losses below 1% of its annual gross
income. Such minimal losses are well within the Senior Management and Board/RMCom's conservative and
prudent risk appetite and are generally attributed to inherent risks associated with the products and
services being provided by the Bank. The rapidly evolving risk landscape that can trigger risks at any point
is duly considered by the Bank in regular risk assessments and in updating the Bank’s risk strategies.
Operational risk stress tests, through scenario analysis, are regularly performed to assess the impact of
unexpected and extreme operational risk events.

There is regular monitoring and reporting of the Bank’s Operational and IT risks levels, as well as current
cybercrime landscapes, emerging risks, and mitigating measures implemented.

The Bank adopts a hybrid remote working arrangement and equips its employees with the necessary access
and tools for a diversified business continuity plan. With the Bank’s digital transformation journey, business
continuity processes, awareness, business recovery plans, and other documentations were digitized,
thereby reducing manual handling and physical presence. This greatly safeguards business continuity when
the availability of the workforce is put at risk in the face of disruptions and unforeseen events such
as natural disasters and widespread emergencies or crises.

In view of the increasing cyber-related risks, enhancements of security infrastructure and technical controls
to secure the physical and computing environments are being done. This includes a broad range of
prevention, detection, and recovery mechanisms to mitigate and immediately respond to threats and
incidents.

Risk management is carried out by a dedicated team of skilled risk managers and senior officers who have
extensive prior operational experience working within the Bank. The Bank’s risk managers regularly monitor
key risk indicators and report exposures against carefully established credit, market, liquidity, and
operational risk metrics and limits approved by the RMCom. Independent reviews are regularly conducted
by the Bank’s Internal Audit, external auditors, and regulatory examiners to ensure that controls and risk
mitigation are in place and functioning effectively as intended.

Compliance

Business or compliance risk, which can be defined as “the risk of regulatory or legal sanctions, material
financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with laws,
regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its
banking activities”, is addressed and managed within the Bank through its compliance function and its
component system and program.

As the Bank’s second line of defense, the compliance function has also evolved in recent years to adapt to
the shift towards more technology-heavy strategies, as it seeks to deliver the compliance risk management
outcomes required in an era of digital transformation. While remaining a key advisory function, it has
embraced a more forward-thinking, risk-based and stress-tested approach to continuously monitor,
evaluate and improve its ability to ensure compliance in a banking landscape that is subject to disruption
and rapid change.

The Bank’s compliance system is critically important in identifying, evaluating, and addressing the
regulatory and reputational risks while the enterprise-wide compliance program helps the Bank to look at
and across business lines and activities of the organization as a whole and to consider how activities in one
area of the Bank may affect the business or compliance risks of other business lines and the entire
group/enterprise. The compliance program also helps the Board and management in understanding where
such regulatory and reputational risks in the organization are concentrated, provide comparisons of the
level and changing nature of risks, and identify those control processes that most need enhancement.

Oversight of the management of the Bank’s business risk and implementation of its compliance function is
the responsibility of our Board of Directors, through the Audit Committee and the Corporate Governance
Committee with respect to corporate governance compliance. At the management level, the compliance
 19

function is carried out by the Compliance Office, headed by the Chief Compliance Officer, who is not a
member of the Board of Directors. The Compliance Office oversees the implementation of the Bank's
enterprise-wide compliance programs. These programs take into account the size and complexity of the
Bank, the relevant rules and regulations that affect its operations, and the business risks that may arise due
to non-compliance. By using regulatory and self-assessment compliance matrices, compliance measures
are formulated to mitigate identified business risks and tested to ensure effectiveness.

The Compliance Office is currently organized to cover Regulatory Compliance with includes RPT Post-
Review and FATCA, Corporate Governance and Subsidiaries Regulatory Oversight, Anti-Money Laundering
Compliance, Compliance Systems, Projects and Analytics, and the Data Privacy Office. Considering the rapid
developments in the regulatory sphere as well as the growing complexity of bank products, services and
transactions, the Compliance Office is evolving in its coverage of compliance practice areas to anticipate
and meet forward challenges. Enhancement of our compliance function’s scope and domain is redefined
for new and emerging sources of compliance risk. The Compliance Office is also empowered by Group
Compliance Officers, or GCOs, who are embedded in operational units throughout the Bank. The GCOs are
charged with enforcing compliance office initiatives, as well as providing timely reports to the compliance
office.

Overall enforcement is through self-regulation within the business units, and independent testing and
reviews conducted by the Compliance Office and Internal Audit. The results of these reviews are elevated
to the Board’s Audit Committee and Corporate Governance Committee, with respect to governance issues.
The Compliance Office promotes adherence and awareness to laws, rules and regulations by electronically
posting information and documents in a compliance database that is accessible to all employees. Regular
meetings are conducted by the Compliance Office with the GCOs to discuss the impact of new regulations,
decide on the required compliance measures and amend compliance matrices as necessary. Through
continued liaison and dialogue with regulators, the Compliance Office ensures the prompt dissemination of
new regulations and other developments affecting bank operations.

Financial Consumer Protection

The Bank has a Financial Consumer Protection Assistance Mechanism (FCPAM), which was established by
the Customer Experience Management Office (CXMO) to institutionalize guidelines that will help ensure
that feedback from existing and potential clients are handled appropriately, as required by the Bank’s
consumer protection policies.

The Board and Senior Management is responsible for the development of the Bank’s consumer protection
strategy and establishment of an effective oversight over the Bank’s consumer protection programs. The
Board of Directors is ultimately responsible for ensuring that consumer protection practices are embedded
in the Bank’s various business operations and include the following:

• Approval of the Bank’s consumer protection policies as well as the mechanism to ensure compliance with
the said policies, including policies and mechanisms related to the consumer assistance management
process;
• Oversight on the implementation of and compliance with the Bank’s consumer protection activities;
• Promotion of a culture of ethical behavior and adherence to the highest standards of fair and responsible
dealing with consumers and relationships with third parties that may give rise to consumer protection risks;
• Ensuring that adequate information and actions taken are reported on a regular basis in terms of the
measurement of consumer protection related risks, as well as other material consumer related
developments that will impact the Bank;
• Delegation of other duties and responsibilities to a Board-level Committee or to Senior Management but
not the function of overseeing compliance with the prescribed consumer protection framework/policies.

The Board-level Executive Committee exercises the powers and fulfills the duties and responsibilities of the
Board in the management of the Bank’s consumer protection activities, including other duties and
responsibilities delegated by the Board. Senior Management ensures that the approved policies and
 20

procedures on consumer protection risk management and consumer assistance mechanism policies and
procedures are clearly documented, properly understood and appropriately implemented across all levels
and business units through:

• Establishment of an effective monitoring and management information system to regularly measure,

aggregate and analyze consumer related issues to determine level of consumer protection risk;
• Integration into the risk governance framework of appropriate and clear reporting and escalation
mechanisms;
• Putting in place of adequate systems and controls to promptly identify issues that affect the consumer
across all phases of the relationship.

In July 2020, CXMO became Client Experience Center (CXC) and integrated all the major customer
touchpoints to strengthen our focus on customer experience. CXC is now composed of four (4) units:
Customer Care, Governance, Service Quality and FCP Customer and Insights. There are also related policies
in place such as the BPI Financial Consumer Protection Program and Complaints Management and
Reporting to properly equip our bank personnel in the handling of customer feedback. Preventive measures
and treatment plans from business units with top customer concerns are presented to senior management
regularly for appropriate service improvements and customer satisfaction.

A new and more robust system to gather complaints data was acquired for the use of the enterprise in the
last quarter of 2021, to replace the Customer Feedback Database created in 2017. This is a vital tool in
identifying areas of concern and process improvements which is part of the FCP program.

As part of the Bank’s FCPAM, different touch points or channels are in place where clients can file their
feedback. These include Contact Center via phone, e-mail, and social media accounts, CX Customer Care,
branches, and the business units. Employees are guided by the internal bank policies on FCP where client
feedback, specifically complaints, are classified according to complexity which will determine the
turnaround time within which the complaint should be addressed and resolved.

We maintain a vigilant approach in addressing feedback and concerns regarding our products and services.
Throughout 2023, we diligently addressed and resolved issues, achieving a 98.60% compliance rate for
complaint resolution, consistent with our previous performance of 98.63%. By year-end 2023, all reported
complaints had been effectively resolved, reflecting our dedication to swift and satisfactory resolutions.
Our adherence to regulatory standards remains steadfast, with no confirmed incidents of non-compliance
in 2023, underscoring our unwavering commitment to product and service excellence. We continuously
uphold our enterprise-wide complaint reporting to BPI Management, ensuring transparency and
accountability across our operations. Notably, our efforts have contributed to a decrease in complaint
intensity by 3% from 2022 to 2023. This is calculated as every one complaint per 1,000 transactions.

The designated Customer Assistance Officers (CAOs) undergo training to ensure that they are equipped to
address customer issues and ensure compliance with the Bank’s Consumer Protection Program. Employees
are made aware of the FCP Program through a continuous information and education campaign. Since 2018,
the CXC has conducted rollouts and training sessions on FCP and held alignment meetings with the CAOs in
various business areas.

Employees also take the mandatory FCP Training course annually available via e-learning. With the revision
of the FCP module in 2023, there has been a notable improvement in performance among Unibankers,
evidenced by a completion rate of 97.44%, which surpasses the 98.6% achieved in 2022. To further improve
service and align with the customer obsessed culture of the Bank, Human Resource – Learning &
Development Department provides soft-skills trainings such as business writing, oral communications,
problem solving, professional image development, and collections overview, among others. FCP is also
embedded in the employee code of conduct.

For the awareness of our customers, we regularly update our product features and services in our website
and social media pages. This also includes frequent reminders on phishing, vishing and other forms of
fraudulent schemes in order to warn and protect our customers. Marketing materials and offerings
 21

involving our customers are also reviewed for proper and necessary disclosure and transparency. Our social
media team closely monitors customer engagements in our social media pages and the data collected is
regularly reported to management.

Since the establishment of the FCP Framework in 2017, we have maintained full compliance with product
and service regulations, bolstering trust and confidence in our brand with a commitment to customer
satisfaction.

Data Privacy

Republic Act No. 10173, known as the Data Privacy Act of 2012, requires government and private sector
entities to apply the principles of Transparency, Legitimate Purpose and Proportionality in their processing
of personal data so that the data is (1) only used in relevant and specifically stated ways, (2) not stored for
longer than necessary, (3) kept safe and secure, (4) used only within the confines of the law, and (5) stored
following people’s data protection rights. Cybersecurity and data privacy and protection have become
corporate governance and risk management concerns.

BPI has established a comprehensive Data Privacy Program utilizing a combination of policies,
organizational structure, access controls and technologies designed for risk reduction. The Bank has a Data
Privacy Office, headed by a Board-appointed Data Privacy Officer (“DPO”), a senior management officer.
The key focus of the DPO is to oversee data privacy compliance and manage data protection risks for the
organization consistent with the Data Privacy Act rules and regulations, issuances by the National Privacy
Commission and other applicable laws. Management has also appointed Compliance Officers for Privacy
(“COP”) for major business units of the Bank to augment the Data Privacy Office and ensure the sustained
implementation of the Data Privacy Management Program across business lines.

Item 2. Properties

In view of the planned redevelopment of the BPI Head Office building located at 6768 Ayala Avenue, Makati
City, BPI’s executive office and select business and support units have relocated to Ayala Triangle Gardens Tower
2, located at Paseo de Roxas corner Makati Avenue in May 2023. Prior to this, the executive office and select
business and support units were located at Ayala North Exchange Tower 1, Ayala Avenue corner Salcedo St.,
Legaspi Village, Makati City, whose lease expired in July 2023. The remaining business and support units are
located in various other sites in Makati, San Juan, Quezon City, and Muntinlupa.

Of the Bank’ 839 branch licenses (excluding BanKo), 436 operate in Metro Manila/Greater Metro Manila Area
and 403 in the provincial area. BPI owns 34% of the branch locations and leases the 66%. On January 1, 2019,
the Bank adopted PFRS 16: Leases which requires recognition of both right-of-use assets and lease liability
arising from long-term leases. As of December 31, 2023, right-of-use assets and lease liabilities amounted to
₱8,404 million and ₱9,756 million, respectively.

These offices and branches are maintained in good condition for the benefit of both the employees and the
transacting public. The Bank enforces standards for branch facade, layout, number and types of equipment and
upkeep of the premises. As it adjusts to the needs of its customers, the Bank also continuously reconfigures the
mix of its traditional branches, kiosk branches, and branch-lite units, while complemented by its digital channels.

BPI (as lessee) has various lease agreements which mainly pertain to branch premises and equipment that are
renewable under certain terms and conditions. Rental contracts are typically made for fixed periods of 4 to 6
years.

Further details pertaining to leases under PFRS 16 are reflected in Note 20 of the 2023 Audited Financial
Statements.
 22

Item 3. Legal Proceedings

The Bank does not have any material pending legal proceedings which may impair the registrant or any of its
subsidiaries or affiliates the capacity to perform its obligations.

Item 4. Submission of Matters to a Vote of Security Holders

None

PART II - OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuer’s Common Equity and Related Stockholders Matters

Market Information

The common shares of BPI have been listed on the Philippine Stock Exchange (PSE) since October 12, 1971,
under the ticker symbol BPI.

The table below shows the high and low prices of BPI shares transacted at the PSE for each quarter within the
last two (2) fiscal years.

The high and low prices of BPI at the Philippine Stock Exchange on April 5, 2024, were P117.50 and P114.00,
respectively, with a closing price of P114.20.

In Pesos
Period
High Low

Year Ended December 31, 2022

1st Quarter 102.00 91.00
2nd Quarter 100.00 84.80
3rd Quarter 98.25 86.00
4th Quarter 105.90 90.50

Year Ended December 31, 2023

1st Quarter 113.30 98.00
2nd Quarter 110.00 99.10
3rd Quarter 118.30 104.20
4th Quarter 111.30 98.90

Holders of Common Equity

There were approximately 11,760 common shareholders of BPI as of December 31, 2023.

Please refer to Exhibit C for the top twenty (20) shareholders with their corresponding shares and percentage
ownership of BPI.

Please see Exhibit D for a Statistical Report by Share lots as of December 31, 2023.
 23

Dividends

The Bank’s practice is to declare cash dividends to its common stockholders regularly as determined by the
Board of Directors. On May 18, 2022, the Bank adopted a dividend policy based on a dividend payout ratio
(“DPO”) of 35% to 50% of the previous year’s earnings. Before this, the Bank consistently paid a fixed P1.80
per share in annual dividends. The Bank evaluates its dividend payments from time to time in accordance with
business and regulatory requirements and cannot make explicit warranties about the quantum of future
dividend payments.

Cash dividends declared and paid during the years ending December 31, 2021, 2022, and 2023 are as follows:
Amount of Dividends
Total
Date Dec lared Date of P ayment P er Share
(in P hp Mn)
May 19, 2021 Jun 23, 2021 0.90 4,062
Nov 17, 2021 Dec 24, 2021 0.90 4,062
May 18, 2022 Jun 22, 2022 1.06 4,784
Nov 16, 2022 Dec 23, 2022 1.06 4,784
May 17, 2023 Jun 22, 2023 1.68 7,626
Nov 15, 2023 Dec 22, 2023 1.68 8,308

There are no known restrictions or impediments to the Bank’s ability to pay dividends on common equity,
whether current or future.

Relative to the BPI and BFB merger last January 2022, BPI issued treasury shares as consideration of the merger.
On March 15, 2023, the treasury shares were declared as property dividends.

Dividend declaration is the responsibility of BPI and the BPI Board of Directors which has the authority to declare
dividends as it may deem appropriate. Banks that meet the prequalification criteria including capital adequacy
requirements and applicable laws and regulations of the BSP can declare and pay dividends without prior BSP
verification.

Details of the dividend declaration are reflected in Note 18 of the 2023 Audited Financial Statements.

Recent Sales of Unregistered or Exempt Securities

Details on shares issued to/subscribed by the Bank’s executives because of the Executive Stock Option Plan
(“ESOP”) and the Executive Stock Purchase Plan (“ESPP”) are reflected in Note 18 of the 2023 Audited Financial
Statements.

Item 6. Management Discussion and Analysis of Financial Condition and Results of Operations
The highlights of the balance sheet and income statement of BPI for each year and the compounded growth rate
over the three-year period (2020-2023) are shown below:

In Million Pesos 2020 2021 2022 2023 CAGR

Assets 2,233,443 2,421,915 2,603,961 2,888,372 8.9%
Loans (Net) 1,407,413 1,476,527 1,702,990 1,882,007 10.2%
Deposits 1,716,177 1,955,147 2,096,001 2,295,106 10.2%
Capital 279,835 293,060 317,722 357,204 8.5%

The compounded annual growth rate (CAGR) of the Bank’s asset levels from 2020 to 2023 was 8.9%. Both loans
and deposits grew at the same rate, over the same period by 10.2%. Capital increased by 8.5% due to profits
generated annually, net of cash dividends paid. The Bank continued to accrete capital from operations at 8.5%
three-year CAGR.
 24

2021

Total resources reached P2.42 trillion, up P188.47 billion, or 8.4%, from last year’s P2.23 trillion. This was
driven by the expansion in total deposits of P238.97 billion, or 13.9%, as CASA deposits increased P140.28
billion, 10.3%, to P1.51 trillion and Time Deposits increased P98.69 billion, or 28.2%, to P448.94 billion. The
increase was partially offset by the settlement of maturing bonds booked under other borrowed funds, down
P56.91 billion, or 37.5%. Deferred credits and other liabilities at P43.40 billion, down 5.4%, primarily from the
decrease in other liabilities. Derivative financial liabilities also declined P2.02 billion, or 35.8%, due to lower
market valuation of certain derivative products. Liabilities attributable to insurance operations at P13.24
billion decreased P1.11 billion, or 7.7%, on account of lower reserves and other balances. Due to Bangko
Sentral ng Pilipinas and other banks decreased by P537.77 million, or 36.1%, owing to lower tax collected for
the Bureau of Internal Revenues (BIR) and other banks. Accrued taxes, interest and other expenses lower by
P488.81 million, or 5.5%, on lower accrued income tax and other expenses payable.

Capital funds amounted to P293.06 billion, increased P13.22 billion, or 4.7%, higher than last year’s P279.83
billion. Surplus contributed to the capital growth by P15.59 billion, or 9.4%, on account of the recognized
appropriation of retained earnings. Reserves likewise increased by P148.59 million, or 35.8%, due to the 10%
appropriated reserves from the trust business income in compliance with the existing BSP regulations. These
are partially tempered by the increase in accumulated other comprehensive loss by P2.77 billion, or 47.0%,
due to the recognized negative movement on defined benefit obligation in the beginning of the year.

On the asset side, financial assets at amortized cost increased P94.02 billion, up 38.4%, on account of
additional placements in medium to long-term HTC securities. Loans and advances, net have bounced back to
its pre-pandemic level at P1.48 trillion, grew P69.11 billion, or 4.9%, due to higher growth mostly across
business segments compared to 2020. With higher placements in BSP deposits, due from Bangko Sentral ng
Pilipinas (BSP) increased P44.84 billion, or 20.0%. Other resources, net was also higher by P3.05 billion, or
18.1%, on account of higher miscellaneous assets. Assets held for sale, net up P311.68 million, or 10.5%, due
to lower allowance for losses recognized in 2021.

On the other hand, financial assets at fair value through profit and loss decreased P15.88 billion, or 42.7%,
due to decrease in holdings of securities intended for trading. Due from Other Banks at P34.57 billion, down
13.9%, due to the net decrease in account balances with various banks. Cash and other cash items were lower
by P2.03 billion, or 5.5%, on account of lower cash placements as compared to year-end 2020. Deferred
income tax assets, net at P15.82 billion, down 9.7%, mainly due to the net impact of the new tax rate under
the CREATE law. Bank premises, furniture, fixtures and equipment, net decreased P1.31 billion, or 6.9%, on
account of lower booking of right-of-use assets under PFRS 16. Assets attributable to insurance operations at
P17.56 billion, down 6.2%, due to lower assets booked from the Bank’s non-life insurance affiliate.

2022

Total resources stood at P2.60 trillion, up P182.05 billion, or 7.5%, from last year’s P2.42 trillion. Total deposits
at P2.10 trillion, went up by P140.85 billion or 7.2%, as Time Deposits increased P88.65 billion, 19.8%, to
P537.59 billion and CASA deposits increased P52.20 billion, 3.5%, to P1.56 trillion. Deferred credits and other
liabilities at P51.21 billion, was up P7.81 billion, 18.0%, from increases in Foreign Acceptances Outstanding.
Accrued taxes, Interest and Other Expenses at P 10.59 billion, was up P2.17 billion, 25.8%, on higher accrued
interest on time certificate of deposits and performance bonus. Due to Bangko Sentral ng Pilipinas and other
banks at P2.89 billion, increased by P1.93 billion, or 202.8%, on higher marginal cash deposit. Liabilities
attributable to insurance operations at P14.92 billion, up P1.68 billion, or 12.7%, on account of higher reserves
and other balances of the Bank’s non-life insurance affiliate. Derivative financial liabilities were also up
P665.46 million, or 18.3%, on higher mark-to-market due to market movement.

Capital funds amounted to P317.72 billion, increased P24.66 billion, or 8.4%, higher than last year’s P293.06
billion. Surplus contributed to the capital growth by P29.96 billion, or 16.5%, on account of the higher net
income partly offset by higher dividends and higher appropriation of reserves. Movements in Share Premium,
Share Capital and Treasury Shares were due to the issuance of common shares to BFB shareholders on account
of the merger. Reserves also increased by P79.73 million, or 14.1%, on appropriated reserves from the trading
 25

business in compliance with Capital Markets Integrity Corporation (CMIC) ruling. These increases were partially
tempered by the increase in accumulated other comprehensive loss by P5.59 billion, or 64.4%, on higher
losses on FVOCI securities and loss on fluctuation reserves.

On the asset side, loans and advances, net, at P1.70 trillion, grew by P226.46 billion, or 15.3%, on increases in
all portfolios. Financial assets at amortized cost increased P81.86 billion, up 24.2%, on account of additional
placements in long-term HTC securities. Due from Other Banks was up P10.62 billion, or 30.7% on balances
maintained with foreign banks. Cash and other cash items similarly increased by P4.47 billion, or 12.7%, on
higher cash on hand. Bank premises, furniture, fixtures and equipment, net increased P1.83 billion, or 10.4%,
on recognition of right-of-use assets for new and renewal of leases under PFRS 16. Assets attributable to
insurance operations at P19.06 billion, up 8.5%, due to higher assets booked from the Bank’s non-life
insurance affiliate. Deferred income tax assets, net at P16.75 billion, up 5.9%, on account of the impairment
losses set up for the period. Assets held for sale, net up P477.93 million, or 14.6%, on higher acquired real and
other properties.

On the other hand, due from Bangko Sentral ng Pilipinas (BSP) declined P85.96 billion, or 32.0%, on lower
placements in BSP deposits. Financial Assets at Fair Value through OCI, at P95.27 billion, was also lower by
P39.47 billion, or 29.3%, to reduce exposures to manage portfolio risks. Interbank loans receivable and
securities purchased under agreements to resell also declined by P18.47 billion, or 59.9%, on lower interbank
reverse repurchase agreement. Other resources, net, was also lower by P3.06 billion, or 15.4%, on account of
lower miscellaneous assets.

2023

Total resources stood at P2.89 trillion, up P284.41 billion, or 10.9%, from last year’s P2.60 trillion. Total deposits
at P2.30 trillion, went up by P199.10 billion or 9.5%, mainly from increase in Time Deposits of P219.89 billion or
40.9%, to P757.48 billion. CASA deposits declined P20.78 billion, or 1.3%, to P1.54 trillion. Other borrowed
funds at P137.10 billion, was up P39.60 billion or 40.6%, on new bond issuances. Accrued taxes, interest and
other expenses at P14.97 billion, was up P4.39 billion, or 41.4%, on higher accrued interest on time deposits,
income tax and performance bonus. Manager’s checks and demand drafts outstanding at P8.46 billion, was up
P1.71 billion or 25.3%, on higher non-negotiated manager’s checks issued. Meanwhile, derivative financial
liabilities at P2.82 billion, declined P1.48 billion, or 34.4%, due to lower market valuation of certain derivative
products. Due to Bangko Sentral ng Pilipinas and other banks at P1.88 billion, was also lower by P1.01 billion
or 34.8% on lower marginal cash deposit.

Capital funds of P357.20 billion increased P39.48 billion, or 12.4% higher than last year’s P317.72 billion.
Treasury shares were up P33.04 billion or 100% on distribution of common shares as property dividends. Share
premium at P113.41 billion was up P9.29 billion due to the excess over the market price of the treasury shares
cost distributed as property dividend. Accumulated other comprehensive loss of P11.13 billion was lower by
P3.13 billion, or 21.9%, on lower losses on FVOCI securities.

On the asset side, loans and advances, net, at P1.88 trillion, grew by P179.02 billion, or 10.5%, on increases in
all portfolios. Financial assets at fair value through other comprehensive income at P218.65 billion, increased
by P123.39 billion or 129.5%, due to purchase of government and private securities. Due from Bangko Sentral
ng Pilipinas at P199.62 billion, was also up P16.75 billion or 9.2% on higher placements in BSP deposits.
Interbank loans receivable and securities purchased under agreements to resell at P20.64 billion, grew by
P8.26 billion or 66.7%, on increase in reverse repurchase agreement. Other resources, net, at P19.92 billion
was also up P3.09 billion or 18.3% on higher miscellaneous assets. Financial assets at fair value through profit
or loss increased by P1.52 billion or 6.9% to P23.65 billion due to increase in holdings of securities intended for
trading. Deferred income tax assets, net was also up by P1.43 billion or 8.6% to P18.18 billion on account of
the impairment losses set up for the period. Investment in subsidiaries and associates, net at P8.29 billion,
grew by P1.06 billion or 14.7% on account of the Bank’s share in the net income and market valuation of
investment securities of BPI AIA. Assets held for sale, net increased by P983 million or 26.1% to P4.74 billion
due to an increase in ROPA bookings.
 26

On the other hand, financial assets at amortized cost declined by P37.82 billion or 9.0% to P382.71 billion due
to sale and maturities of debt securities. Due from other banks at P36.29 billion was also lower by P8.90 billion
or 19.7% on lower working balances with correspondent banks. Cash and other cash items at P34.84 billion
also went down by P4.77 billion or 12.0% on lower level of cash and payroll for the year.

Asset Quality

The Bank’s loan portfolio mix is broken down into corporates at 78.8%, and consumer at 21.2%, compared to
last year’s 80.6%, and 19.4%, respectively.

Allowance for Impairment at P4.00 billion declined P5.17 billion, or 56.4%, from last year’s P9.17 billion. NPL
ratio deteriorated to 1.84% from 1.76% in 2022, but still better than industry’s NPL ratio of 3.31%.

Details of the loan portfolio and asset quality are reflected in the 2023 Audited Financial Statements Note 10
and Note 26.1.3.1, respectively.

Funding and Liquidity

Customer deposits account for 91% of BPI’s total funding, while 5% is attributable to other borrowings. The
Bank’s liquidity ratios (Liquidity Coverage Ratio and Net Stable Funding Ratio) are comfortably above the
regulatory minimum of 100%.

The Bank’s CASA Ratio was 67.0%, while the Loan-to-Deposit Ratio was 82.0%.

For further details on the Bank’s deposits, borrowings, and liquidity, refer to the 2023 Audited Financial
Statements Notes 15, 16, and 26.3.1, respectively.

Results of Operations

In Million Pesos 2020 2021 2022 2023 CAGR

Net Interest Income 72,264 69,583 85,065 104,350 13.0%
Non-Interest Income 29,659 27,822 33,459 33,971 4.6%
Impairment Losses 28,000 13,135 9,167 4,000 -47.7%
Operating Expenses 48,154 50,733 57,989 69,110 12.8%
Net Income 21,409 23,880 39,605 51,687 34.2%

The Bank’s income from 2020 to 2023 grew at a compounded annual rate of 34.2% as net interest income and
non-interest income increased by 13.0% and 4.6%, respectively, and impairment losses declined by 47.7%.
However, the bottom-line impact of above-mentioned improvements was partly reduced by the 12.8% CAGR
increase in operating expenses.

2021 vs. 2020

The Bank posted a net income of P23.88 billion, increased P2.47 billion, or 11.5% YoY, due to the lower
impairment losses booked in 2021 versus the accelerated recognition last year in anticipation for higher NPL.
The decline in total revenues and slightly higher operating expenses, partially tempered the growth.

Net interest income stood at P69.58 billion, down P2.68 billion, or 3.7%, as NIM at 3.30% contracted 19 bps
on account of lower asset yields cost of funds. Average assets posted a modest increase of 1.5%.

• Interest income decreased P11.69, or 12.1%, versus the P96.31 billion from last year. Interest income on
loans and advances at P72.22 billion, decreased P10.09 billion, or 12.3%, owing to lower average volume
and asset yields. Interest income on financial assets was also lower at P10.43 billion, down 13.4%, due to
 27

lower asset yield, despite higher average volume.

• Interest expense of P15.03 billion, decreased P9.01 billion, or 37.5%, primarily from the decrease in
Interest expense on deposits of P8.82 billion, or 46.4%, due to lower interest cost despite higher average
volume.

Other income at P27.82 billion, down P1.84 billion, or 6.2%, on significantly lower trading gain on securities,
down P6.35 billion, or 79.8%, on account of lower realized gains from various sales of financial assets at FVOCI
and hold collect debt securities. This was partially offset by higher fees and commissions at P11.20 billion, up
P2.21 billion, or 24.6%, on higher transaction-based service charges. Other operating income also increased
P1.66 billion, up 18.3%, owing to the increase in miscellaneous income and higher income from credit card
business. Income attributable to insurance operations at P1.85 billion, up 23.1%, owing to higher income
contribution from the Bank’s life insurance affiliates. Income from foreign exchange trading up 13.6%, due to
favorable trading opportunities.

Other expenses were higher at P50.73 billion, up P2.58 billion, or 5.4%, primarily from occupancy and
equipment-related expenses at P16.01 billion, increased P1.40 billion, or 9.6%, on higher technology spend
driven by Bank’s continued digitalization initiative.

Impairment losses stood at P13.13 billion, down 53.1%, lower than the P28.0 billion booked in 2020.

Provision for income tax at P9.43 billion, higher by P5.52 billion, compared to the P3.91 billion from last year.
Current taxes at P8.33 billion, lower by P2.42 billion, or 22.5%, and deferred taxes at P1.10 billion, higher by
P7.94 billion, brought about by the impact of CIT and DIT rate adjustments from the implementation of CREATE
law and lower loss provisioning in 2021 vs 2020.

Income attributable to non-controlling interest decreased P12.51 million, or 5.1%, owing to lower income
contribution from the Bank’s non-life insurance affiliate.

Comprehensive Income

Total comprehensive income at P21.27 billion, up P3.01 billion, or 16.5%, due to the increase in net income
before minority interest by P2.46 billion, or 11.4%, and decrease in total other comprehensive loss, net of
tax effect by P546.15 million, or 16.1%.

Net change in fair value reserve on FVOCI securities, net of tax effect at P3.59 billion loss, increased P2.23
billion, on account of lower market valuation of the Bank’s investment securities. Share in other
comprehensive loss of associates at P727.15 million loss, also increased P1.37 billion, due to the lower market
valuation of the life insurance affiliate’s investments securities. Fair value reserve on investments of insurance
subsidiaries, net of tax effect at P209.04 million loss, increased P403.24 million, as a result of lower market
valuation of the insurance subsidiaries’ investment funds. On the other hand, gain from remeasurement of
defined benefit obligation increased P3.99 billion, or 118.0%, due to the change in valuation of the Bank’s
consolidated subsidiaries’ contribution to the retirement fund. Share in other comprehensive income of
associates at P447.97 million, increased P1.69 billion, due to higher accumulated fluctuation reserves of the
Bank’s insurance affiliate. Gain from currency translation differences at P626.25 million, increased P864.09
million, on account of the higher net effect from cash flow hedging.

Comprehensive income attributable to non-controlling interest decreased P155.10 million, or 49.4%, due to
lower market valuation of the insurance’s subsidiaries’ investments.

2022 vs. 2021

In 2022, the Bank posted a net income of P39.60 billion, up P15.72 billion, or 65.8%, from the P23.88 billion
recognized in the prior year. The increase was driven by revenue growth of P21.12 billion and lower
impairment losses by P3.97 billion, partly tempered by higher operating expenses and taxes of P7.26 billion
and P2.11 billion, respectively.
 28

Net interest income stood at P85.07 billion, up P15.48 billion, or 22.2%, as the average earning asset base
grew 12.6% and NIM at 3.59% expanded 28 bps. Earning asset yield up on higher loan yields and additional
placement in financial assets at amortized cost at higher rates. Despite the 15-bps increase in deposit cost,
cost of funds was only up 6 bps due to maturity of bond issuances.

• Interest income increased by P18.65 billion, or 22.0%, versus P84.62 billion from last year. Interest income
on loans and advances at P84.91 billion, was up P12.68 billion, or 17.6%, owing to higher average volume
and higher yields. Interest income on financial assets was also higher at P16.86 billion, up 61.6%, due to
higher yields and higher volume.

• Interest expense of P18.20 billion, increased P3.17 billion, or 21.1%, on higher cost of deposit and higher
average volume. Interest expense on deposits of P14.82 billion, was up P4.65 billion or 45.8%. On the
other hand, Interest expense on bills payable and borrowings declined P1.48 billion 30.5% on maturity of
bond issuances.

Other income at P33.46 billion, up by P5.64 billion or 20.3%. Other operating income increased P6.28 billion,
up 58.3%, mainly on the one-off gains from the sale of a property. Income from foreign exchange trading up
9.7%, due to favorable trading opportunities. These increases were partly offset by the decline in Trading gain
on securities by P538.62 million or 33.5%, due to profit-taking last year on FVOCI and significant sales of HTC
securities due to PIFITA and loss from private and government securities due to generally poor market
conditions. Income attributable to insurance operations was also down by P474.28 million or 25.6% on lower
investment income of the insurance subsidiaries due to decline in value of marketable securities.

Other expenses were higher at P57.99 billion, up P7.26 billion, or 14.3%. Other operating expenses, at P19.70
billion was up P3.50 billion or 21.6%, on higher marketing, operations and regulatory expenses. Occupancy
and equipment-related expenses at P18.76 billion, was up by P2.75 billion, or 17.2%, on higher technology
spend driven by Bank’s continued digitalization initiative. Compensation and fringe benefits at P19.53 billion,
was up P1.00 billion, or 5.40% on annual pay hike and higher performance bonus accrual.

Impairment losses stood at P9.17 billion, down P3.97 billion, or 30.2%, as NPL levels declined in 2022.

Provision for income tax at P11.53 billion, higher by P2.11 billion, compared to the P9.43 billion from last year.
Current taxes at P12.44 billion, higher by P4.11 billion, or 49.4%, and deferred taxes at -P905.59 million, lower
by P2.00 billion, brought about by the impact of last year’s CIT and DIT rate adjustments from the
implementation of CREATE law.

Income attributable to non-controlling interest increased by P0.72 million, or 0.3%, owing to higher income
contribution from the Bank’s non-life insurance affiliate.

Comprehensive Income

Total comprehensive income at P34.18 billion, up P12.91 billion, or 60.7%, due to the increase in net income
before minority interest by P15.73 billion, or 65.2%, and increase in total other comprehensive loss, net of
tax effect by P2.81 billion, or 98.9%.

Net change in fair value reserve on FVOCI securities, net of tax effect at P5.03 billion loss, was higher by P1.44
billion, on account of lower market valuation of the Bank’s investment securities. Currency translation
differences at P66.26 million loss was lower by P692.51 million from last year’s P626.25 million gain, on
currency translation losses from the Bank’s foreign subsidiary Actuarial loss on defined benefit plan, net of
tax effect of P7.72 million was P615.85 million lower from last year’s P608.13 million actuarial gains on defined
benefit obligation. Share in other comprehensive loss of associates at P1.01 billion was higher from last year’s
P727.15 million loss, due to lower accumulated fluctuation reserves of the Bank’s insurance affiliate. Fair value
reserve on investments of insurance subsidiaries, net of tax effect at P225.33 million loss, was higher by
P16.28 million from last year’s P209.04 million loss, a result of lower market valuation of the insurance
subsidiaries’ investment funds.
 29

On the other hand, share in other comprehensive gain of associates at P686.86 million, was up P238.89 million
from last year’s P447.97 million due to the higher market valuation of the life insurance affiliate’s investments
securities.

Comprehensive income attributable to non-controlling interest increased P3.99 million, or 2.5%, due to
higher market valuation of the insurance’s subsidiaries’ investments.

2023 vs. 2022

In 2023, the Bank posted a net income of P51.69 billion, up P12.08 billion, or 30.5%, from the P39.60 billion
recognized in the prior year. The increase was driven by revenue growth of P19.80 billion and lower impairment
losses by P5.17 billion, partly tempered by higher operating expenses and taxes of P11.12 billion and P1.77
billion, respectively.

Net of last year’s one-off gains from the sale of a property, net income would have been higher by P15.82 billion
or 44.1%.

Net interest income stood at P104.35 billion, up P19.28 billion, or 22.7%, as average earning asset base grew
7.6% and NIM at 4.09% expanded 50 bps. Earning asset yield up on higher loan yields coupled with higher
volume and additional placement in financial assets at fair value through other comprehensive income at higher
rates. Cost of funds was up 97 bps on an increase in average deposits and on bond issuances with higher costs.

• Interest income increased by P42.30 billion, or 41.0%, to P145.57 billion. Interest income on loans and
advances at P120.90 billion, was up P35.99 billion, or 42.4%, owing to higher average volume and higher yields.
Interest income on financial assets at P21.74 billion, was also higher by P4.87 billion or 28.9%, due to higher
yields, and higher average volume for financial assets at fair value through OCI and PL. Interest income on
deposits with BSP and other banks at P2.93 billion, was also up by P1.44 billion or 96.2% on higher yields,
despite lower average volume.

• Interest expense of P41.22 billion increased P23.02 billion, or 126.5%, on higher cost with higher volume.
Interest expense on deposits of P36.03 billion, was up P21.21 billion or 143.1%; while interest expense on bills
payable and borrowings grew by P1.81 billion or 53.6%, to P5.20 billion on new bond issuances.

Other income at P33.97 billion, up by P512 million or 1.5%. Fees and commissions at P12.72 billion were up
P1.38 billion or 12.1% on higher service charges. Trading gain on securities at P1.92 billion was P848 million or
79.2% higher due to realized gains from sale of securities. Income from foreign exchange trading at P3.23
billion was also up P608 million as there were more favorable opportunities for trading this year. Income
attributable to insurance operations at P1.84 billion, was P464 million or 33.6% higher on higher investment
income of BPI AIA. Other operating income, meanwhile, declined by P2.79 billion or 16.3% to P14.27 billion, on
last year’s one-off gains from sale of property.

Netting of last year’s one-off, other income would have been up P5.50 billion or 19.3%. Other operating income
will be up P2.20 billion or 18.3% on higher credit card income.

Other expenses were higher at P69.11 billion, up P11.12 billion, or 19.2%. Other operating expenses, at P23.88
billion, was up P4.18 billion or 21.2%, on higher marketing and operations expenses. Occupancy and
equipment-related expenses at P22.01 billion, were up by P3.25 billion, or 17.3%, on higher technology spend
driven by Bank’s continued digitalization initiative. Compensation and fringe benefits at P23.22 billion, was up
P3.69 billion, or 18.9% on annual pay hike, structural salary increases, higher performance bonus and incentives.

Impairment losses stood at P4.00 billion, P5.17 billion or 56.4% lower than last year, attributable to resilient
asset quality.
 30

Provision for income tax at P13.30 billion, higher by P1.77 billion, compared to the P11.53 billion from last year.
Current taxes at P13.93 billion, higher by P1.50 billion or 12.0% on higher taxable revenue. Deferred taxes at -
P635 million, lower by P271 million, on lower loss provisioning.

Income attributable to non-controlling interest at P225 million declined by P7 million or 2.9%, owing to lower
income contribution from the Bank’s non-life insurance affiliate.

Comprehensive Income

Total comprehensive income at P55.09 billion, up P20.91 billion, or 61.2%, due to the increase in net income
before minority interest by P12.08 billion, or 30.3%, and increase in total other comprehensive income, net of
tax effect by P8.83 billion, or 156.2%, to P3.18 billion.

Net change in fair value reserve on FVOCI securities, net of tax effect at P5.17 billion, was higher by P10.19
billion from last year’s loss of P5.03 billion, on account of higher market valuation of the Bank’s investment
securities. Share in other comprehensive income of associates at P405 million was higher by P1.42 billion or
139.9%, from last year’s P1.01 billion loss, due to higher accumulated fluctuation reserves of the Bank’s
insurance affiliate. Fair value reserve on investments of insurance subsidiaries, net of tax effect at P90 million,
was higher by P315 million or 139.97% from last year’s P225 million loss, as a result of higher market valuation
of the insurance subsidiaries’ investment funds. Currency translation differences at P54 million loss was lower
by P13 million from last year’s P66 million loss, on currency translation losses from the Bank’s foreign subsidiary.

On the other hand, actuarial loss on defined benefit plan, net of tax effect of P2.48 billion loss was P2.47 billion
lower from last year’s P8 million actuarial losses on defined benefit obligation. Share in other comprehensive
gain of associates at P49 million, was also lower by P638 million from last year’s P687 million due to the lower
market valuation of the life insurance affiliate’s investments securities.

Comprehensive income attributable to non-controlling interest of P275 million, increased P112 million, or
68.9%, due to higher market valuation of the insurance’s subsidiaries’ investments.

Key Performance Indicators

2021 2022 2023

1 8.4% 13.1% 15.3%
Return on Equity
Return on Assets 1 1.1% 1.6% 1.9%
Net Interest Margin 1 3.3% 3.6% 4.1%
Operating Efficiency Ratio 52.1% 48.9% 50.0%
Capital Adequacy Ratio 2 16.7% 16.0% 16.2%
1
Using daily average method
2
Basel III Framework

The same ratios are also used to evaluate the performance of the Bank’s subsidiaries.

Return on equity (ROE), the ratio of net income to average equity, and return on assets (ROA), the ratio of net
income to average assets, were higher at 15.3% and 1.9%, respectively, because of the 30.5% increase in net
income.

Net interest margin (NIM), net interest income divided by average interest-bearing assets, was also higher at
4.1% by 50 basis points than the 3.6% in 2022, on higher earning asset yields, partially offset by higher cost of
funds.

Operating efficiency (cost to income) ratio, the ratio of operating expenses to income, was higher at 50.0%
from 48.9% in 2022, on faster acceleration of operating expenses as against revenue.
 31

Capital adequacy ratio (CAR), the ratio of total qualifying capital to total risk-weighted assets, was higher at
16.2% compared to last year’s 16.0%, as the growth of qualifying capital outpaced the growth in total risk-
weighted assets. The CET 1 ratio at 15.3%, was also higher than the 15.1% from the same period last year. Both
Bank’s capital ratios are above the BSP’s minimum requirement.

Presented below is the additional information required by BSP Circular No. 1074 issued on January 8, 2020.
This information is presented for BSP reporting purposes and is not required in the basic financial statements.

using simple average method 2022 2023

Return on Equity 12.9% 15.2%
Return on Assets 1.6% 1.9%
Net Interest Margin 3.6% 4.0%

Details of the basic quantitative indicators of financial performance are reflected in Note 32 of the 2023
Audited Financial Statements.
 32

Global Economic Outlook

Global GDP growth is expected to slow down in 2024 as economies continue to deal with inflation while
absorbing the impact of rate hikes. While 2023 rate hikes were milder than in 2022, the adjustment process to
higher borrowing costs may extend for a considerable duration.

The US economy has been resilient with the unemployment rate near record low. Despite softer economic
growth, the general consensus remains that the US economy will be able to avoid a deep recession.
Nevertheless, economic expansion is expected to decelerate in 2024 as households are likely to curtail their
spending given the increased financial strain of higher interest rates.

With demand easing and supply disruptions subsiding, inflation in major economies may continue to decline in
the coming year. However, there are upside risks to this outlook, namely the lingering effects of Covid-19 on
consumer preferences, the escalation of geopolitical tensions, the high cost of energy transition, and the effect
of El Nino/ La Nina on global food production. Inflation from US services may also remain sticky given sustained
fiscal impulse from the various US stimulus programs just as trade tensions bolster the bargaining power of
wage earners.

The Federal Reserve may start reducing rates in 2024, although the rate cuts might not be as sizeable as the
market is expecting given the tight US labor market, solid US growth, and other numerous supply-side
challenges.

Philippine Economic Outlook

Inflation has finally settled within the target of the BSP after 22 months. With global commodity prices
remaining stable, the contribution of transport and utilities to inflation has declined. Commodity prices may
remain stable given weaker demand from major economies as they continue to absorb the impact of higher
interest rates.

However, rice continues to be the primary source of risk for inflation as supply constraints will likely persist in
the coming months. Importation may help, but since other countries are also seeing a decline in their
production, food inflation may continue to rise significantly. Overall, inflation may bounce back in the second
quarter and could breach the 4% target again for a few months, before returning to the 2% to 4% range in the
2nd half of 2024.

With the anticipated easing of inflation in 2024, consumer spending may recover this year. Growth of household
consumption will likely continue to outpace that of our ASEAN peers given the favorable demographic profile
of the country, combined with the continuous inflow of remittances from abroad and the declining rate of
unemployment.

Investment spending may also grow faster now that adjustments in the construction sector have been made
just as interest rates may have already reached their peak. Businesses may become more aggressive with their
capital expenditure as the outlook for growth with lower inflation appears to be in place. Public construction
will continue to be a major driver of capital spending as the government ramps up its infrastructure program.

The BSP may keep its rates steady in the first half of the year, considering an uptick in inflation in the second
quarter. Rate cuts are possible in the second half of the year once inflation is firmly within the target of the
central bank. However, the timing of future rate cuts and their magnitude are also contingent on what the
Federal Reserve will do. If local inflation conditions are right, the BSP will likely respond immediately with rate
cuts once the Fed begins its easing cycle.

As for the Peso, it may appreciate in 2024, contingent on what the Federal Reserve will do. The Peso tends to
strengthen when the Fed eases its monetary policy. However, while a Fed cut might lead to Peso appreciation,
its gains are likely to be smaller compared to other emerging market currencies given the substantial current
account deficit of the country.
 33

Implications on Business and Strategy

With the end of the pandemic in the Philippines finally declared in July 2023, the socio-economic landscape has
since normalized, with businesses operating as usual. This is expected to be sustained in 2024 given the
economic outlook. We expect BPI’s performance to capture opportunities in core and fee-based businesses,
increase client acquisition, strengthen its balance sheet and asset quality while maintaining profitability and
delivering shareholder returns.

There are no material changes in the Bank’s strategy or key priorities for the medium term. The Bank remains
committed to working towards achieving the following:
• Becoming the undisputed leader in digital banking;
• Increasing the share of SME and Consumer loans in the loan book;
• Closing the gap in funding leadership;
• Transforming the role of branches in the new normal;
• Promoting sustainable banking; and
• Making customer obsession visible in all experiences.

Anchored on trust and the best digital offers, BPI is strategically positioned for success despite the shifts in
consumer behavior, challenges of new competitors, and continuous economic and regulatory developments.

Item 7. Financial Statements

Please refer to Exhibit A for the 2023 Audited Financial Statements as audited by the principal accountant, the
Accounting Firm of Isla Lipana & Co., and signed by the Partner Mr. John-John Patrick V. Lim.

Audit and Audit-Related Fees

BPI has paid the following fees, inclusive of taxes, to its external auditors in the past two (2) years:

Audit-related
Fiscal Year Audit Fees
Fees

2021 paid in 2022 P 21.010 Mn P 4.558 Mn

2021 Bond offering paid in 2022 P 3.662 Mn P 190.590 K
2022 paid in 2023 P 19.037 Mn P 3.674 Mn
Approved for 2023 (not yet paid) P 21.584 Mn -

The audit and audit-related fees cover services by the external auditor that are reasonably related to the
performance or review of the annual, half-year or quarter end financial statements for BPI and its subsidiaries.
There were no non-audit fees for other services not related to the audit/review of the financial statements.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There are no disagreements with Isla Lipana & Co. on accounting and financial disclosures.
 34

PART III – CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer

A-1. The Board of Directors and Executive Officers (as of December 31, 2023)

Following is the list of current directors serving the term 2023 – 2024:

1. JAIME AUGUSTO ZOBEL DE AYALA

Position: Chairman

Filipino, 65, has been a member of the board of directors of BPI since March 1990 and chairman since March
2004. He is currently the chairman of the Bank’s Executive Committee, Personnel and Compensation
Committee and a member of the Nomination Committee. Mr. Zobel served as vice chairman from 1995 to
March 2004.

Mr. Zobel serves as a director of Ayala Corporation since May 1987 and its chairman since April 2006. He
holds the following positions in other publicly listed companies: Chairman of Globe Telecom, Inc., Ayala
Land, Inc. He is the Chairman of AC Energy and Infrastructure Corporation (formerly AC Energy, Inc.) and
Asiacom Philippines, Inc. Mr. Zobel is also a Director of AC Ventures Holding Corp.

Outside the Ayala group, he is a director of Temasek Holdings (Private) Limited and a member of various
business and socio-civic organizations in the Philippines and abroad, including the JP Morgan International
Council, JP Morgan Asia Pacific Council, and Mitsubishi Corporation International Advisory Council. He is a
member of the Board of Governors of the Asian Institute of Management, the Advisory Board of Asia Global
Institute (University of Hong Kong) and of various advisory boards of Harvard University, including the
Global Advisory Council, Asia Center Advisory Committee and HBS Asia Advisory Committee. He sits as
Chairman of the Board of SMU International Advisory Council in the Philippines. He is a member of the Asia
Business Council, Asean Business Club Advisory Council, Leapfrog Investment Global Leadership Council,
The Council for Inclusive Capitalism, and World Wildlife Funds Philippines National Advisory Council. He is
the Co-Vice chairman of the Makati Business Club, the Chairman of Endeavor Philippines, and a Trustee
Emeritus of Eisenhower Fellowships.

He was awarded the Presidential Medal of Merit in 2009, the Philippine Legion of Honor with rank of Grand
Commander in 2010, and the Order of Mabini with rank of Commander in 2015 by the President of the
Philippines in recognition of his outstanding public service. In 2017, he was recognized as a United Nations
Sustainable Development Goals Pioneer by the UN Global Compact for his work in sustainable business
strategy and operations. The first recipient of the award from the Philippines, he was one of 10 individuals
recognized for championing sustainability and the pursuit of the 17 SDGs in business.

Mr. Zobel graduated with B.A. in Economics (Cum Laude) from Harvard University in 1981 and obtained an
MBA from the Harvard Graduate School of Business Administration in 1987.

2. CEZAR P. CONSING
Position: Vice-Chairman

Filipino, 64 years old, was elected as regular director of the Bank in April 2021. He has served as a board
director from 1995– 2000, 2004-2007, 2010 - present. He served as President and Chief Executive Officer
of BPI from 2013 to 2021. He is currently the vice chairman of BPI's Board and Executive Committee and
member of Nomination Committee. Mr. Consing has also served on the board of directors of various BPI
Subsidiaries namely, BPI Asset Management and Trust Corporation (also known as BPI Wealth), BPI Capital
Corporation, and BPI Direct BanKo, Inc., A Savings Bank.

Mr. Consing is currently the President & CEO of Ayala Corporation and Vice Chairman of Ayala Land, Globe
Telecom and AC Energy. He is Chairman of the Philippine Dealing System and College of St. Benilde. Mr.
 35

Consing is a member of the Trilateral Commission. He is a member of the boards of trustees of the
Philippine-American Educational (Fulbright) Foundation and the Manila Golf Club Foundation.

Mr. Consing was a Partner & Co-Head for Asia of the Rohatyn Group from 2004 – 2013. He was an
investment banker with J.P. Morgan & Co. from 1985 – 2014. For 7 years, Mr. Consing was the Head or Co-
Head of Investment Banking of Asia Pacific and President of J.P. Morgan Securities Asia. Mr. Consing has
previously served as Chairman and President of the Bankers Association of the Philippines, President of
Bancnet, and Chairman of the National Reinsurance Corporation.

Mr. Consing has previously served as an independent director of Jollibee Foods Corporation, CIMB Group
Holdings Berhad and First Gen Corporation. He has also served as a board director of SQREEM Technologies
and FILGIFTS.com. Mr. Consing has previously served as a board director of the Asian Youth Orchestra, the
US-Philippines Society, La Salle Greenhills, Endeavor Philippines, and International Care Ministries.

Mr. Consing received an A.B. Economics degree (Accelerated Program), Magna Cum Laude, and the gold
medal for Economics, from De La Salle University, Manila, in 1979. He obtained an M.A. in Applied
Economics from the University of Michigan, Ann Arbor, in 1980.

3. JOSE TEODORO K. LIMCAOCO

Position: Executive Director, President and CEO

Filipino, 62 years old, was appointed as President and Chief Executive Officer of Bank of the Philippine
Islands (BPI) in April 2021.

He serves as chairman of BPI Wealth – A Trust Corporation, Bank of the Philippine Islands (Europe) Plc., BPI
Capital Corporation, ALFM Money Market Fund, Inc., ALFM Peso Bond Fund, Inc., ALFM Dollar Bond Fund,
Inc., ALFM Growth Fund, Inc., Philippine Stock Index Fund Corporation, ALFM Global Muti-Asset Income
Fund, Inc., ALFM Real Estate Income Fund, Inc., BPI/MS Insurance Corporation, and BPI AIA Life Assurance
Corporation. He is Vice Chairman of BPI Century Tokyo Lease & Finance Corporation and BPI Century Tokyo
Rental Corporation. He is also President and Vice Chairman of BPI Foundation, Inc.

Outside of BPI, he is President of the Bankers Association of the Philippines, Chairman of Philippine
Payments Management Inc., a Trustee of the Asian Institute of Management, and a Director of AC Mobility
Holdings, Inc. He is also a current member of the Management Association of the Philippines, the Financial
Executives Institute of the Philippines (FINEX), and the Rotary Club of Makati West (where he is a Past
President). Lastly, he is a Director of Just for Kids, Inc., a homegrown business of his family.

From 2015 to 2021, he was a Senior Managing Director and the Chief Finance Officer, Chief Risk Officer,
Chief Sustainability Officer and Finance Group Head of Ayala Corporation. He was also a Director of the
Board of several Ayala companies, including publicly listed companies, namely: Globe Telecom, Inc.,
Integrated Micro-Electronics, Inc., and SSI Group, Inc. He also served as a director of a number of Ayala
group companies including those involved in healthcare, infrastructure, education, energy, and industrial
technologies.

Previously, he served as President of BPI Family Savings Bank from 2010-2015 and President of BPI Capital
Corporation from 2007-2010. He was also Officer-in-Charge of Ayala Life Assurance, Inc. in 2009,
director/chairman of Ayala Plans, Inc. in 2010-2015, and director of Globe Fintech Innovations, Inc. in 2017-
202 and AC Energy International Inc. in 2019-2022. He also worked at BPI from 1989 to 1992 and at BPI
Capital from 1995 to 1997.

Mr. Limcaoco joined Ayala Corporation as a Managing Director in 1998. His responsibilities prior to his
secondment to BPI in 2007 included Assistant Treasurer of Ayala Corporation, Trustee and Treasurer of
Ayala Foundation, Inc., President of myAyala.com, and CFO of Azalea Technology Investments, Inc. from
2001-2006. He also served as the President of the Chamber of Thrift Banks from 2013-2015. He was named
as the ING-Finex CFO of the Year in 2018. He has held prior positions with JP Morgan & Co. and with BZW
Asia.
 36

He graduated from Stanford University with a BS Mathematical Sciences (Honors Program) degree in 1984
and from the Wharton School of the University of Pennsylvania with an MBA (Finance and Investment
Management) in 1988.

4. JANET GUAT HAR ANG

Position: Independent Director

Singaporean, 64 years old, was elected as an independent director of BPI in May 2021. She is a member of
the Bank’s Risk Management Committee.

Ms. Ang is currently the Chairperson of SISTIC.com Pte Ltd, NUS–ISS, Singapore Polytechnic and the Public
Transport Council. Ms. Ang is also the Chairperson of the Singapore Business Federation Foundation as well
as Member of the Board of The Esplanade Company Ltd and the Home Team Science & Technology Agency.

Ms. Ang serves on the Council of Board Diversity and the Singapore Business Federation, and is a Senior
Advisor of the RGE Group and independent director of Tanoto Foundation, the Philanthropy Asia Alliance
and the Swire Shipping Group Pte Ltd. She is a Fellow of the Singapore Computer Society, a Fellow of
Singapore Institute of Directors and a member and past president of the International Women’s Forum
(Singapore). She is Singapore’s Non-Resident Ambassador to the Holy See and a former Nominated Member
of the Parliament of Singapore (2021-2023)

Ms. Ang had a thirty-seven-year career in the information technology industry and had lived and worked in
Japan and China over a span of eleven years. She was a managing director of IBM Singapore from 2001 to
2003 and again from 2011-2015. Her last executive role was as IBM Vice President, Head of Industry
Solutions of IBM Asia Pacific. She was also an Independent Director of SPH Ltd from 2014-2022 and
Chairperson of the Board of Trustees of Caritas Singapore Agape Fund from 2019-2022.

Ms. Ang was awarded The Public Service Medal in 2019. She was also awarded NUS Outstanding Service
Award in 2021, the Singapore Computer Society IT Leaders Award – Hall of Fame in 2018, the NUS
Distinguished Alumni Service Award in 2015 and the NUS Business School Eminent Alumni Award in 2014.

Ms. Ang graduated with a Bachelor of Business Administration (Honours) from the National University of
Singapore.

5. RENÉ G. BAÑEZ
Position: Non-Executive Director

Filipino, 68 years old, was elected as director of BPI in August 2021. He is a member of the Bank’s Executive,
Related Party Transaction, and Retirement/Pension Committees. Mr. Bañez also serves as a board director
of BPI Asset Management and Trust Corporation (also known as BPI Wealth, A Trust Corporation) and BPI
Capital Corporation.

Mr. Bañez served as the Commissioner of the Bureau of Internal Revenue (BIR) from February 2001 to
August 2002 and as Deputy Commissioner from June 1993 to November 1995.

In the private sector, he held several senior-level positions in PLDT until his retirement in 2016. He was
senior vice president and head of the Supply Chain, Asset Protection and Management Group, from 2008
to 2016; senior vice president and chief governance officer from 2004 to 2007; corporate governance
advisor from 2003 to 2004; senior vice president, Support Services and Tax Management from 2000 to
2001; and first vice president, Support Services and Tax Management from 1998 to 2000. Prior to joining
PLDT, he was Group Tax Director of Metro Pacific Investment Corporation until 1998.
 37

Before his appointment to the BIR in 1993, he spent more than 11 years at accounting firm Isla Lipana &
Co./PwC (formerly Joaquin Cunanan & Co.), starting as a tax consultant in 1982 until he became tax principal
(Partner) from 1990 to 1993.

He is affiliated with the Equestrian Order of the Holy Sepulchre, and is a member of the Finance Board of
the Archdiocese of Manila and Diocese of Pasig, Commission on the Social Apostolate of the Philippine
Province Society of Jesus, Blessed Peter Faber Spirituality Center Inc., a board member/trustee of Catholic
Travel Inc., Mirador Jesuit Villa & Retreat House Corporation, Loyola School of Theology Corporation,
Solidaritas Fund and Unitas Asia Corp. (a subsidiary of Radio Veritas Asia), board advisor of LH Paragon, Inc.
and Chair, Multinational Foundation, Inc..

Mr. Bañez earned his Bachelor of Laws degree in 1981 and his Bachelor of Arts degree in 1976 both from
Ateneo de Manila University.

6. IGNACIO R. BUNYE
Position: Independent Director

Filipino, 79 years old, was elected as an independent director of BPI in April 2016. He is the chairman of the
Bank’s Related Party Transaction Committee. He was appointed as lead independent director from April
2021 until April 2023. Mr. Bunye also serves as an independent director of BPI Asset Management and Trust
Corporation (doing business under the trade name and style of BPI Wealth - A Trust Corporation), BPI Direct
BanKo, Inc., A Savings Bank and BPI Capital Corporation.

Mr. Bunye was a member of the Monetary Board of the Bangko Sentral ng Pilipinas from 2008 to 2014. He
previously held the positions of Presidential Political Adviser in 2008, Presidential Spokesperson in 2003,
and Press Secretary in 2002. He also worked in BPI’s Treasury and Corporate Finance departments from
1983 to 1986 before he began his government service in the City of Muntinlupa (then a municipality) as
officer-in-charge and later as Mayor between 1986 and 1998.

During his twelve-year stewardship in Muntinlupa, Mr. Bunye founded the Muntinlupa Polytechnic College
(now Pamantasan ng Lungsod ng Muntinlupa) and laid the foundation for the establishment of the Ospital
ng Muntinlupa. In a concurrent capacity, he also served as Chairman of the Metropolitan Manila Authority
(now Metropolitan Manila Development Authority) between 1991 and 1992, and was a member of the
House of Representatives representing Muntinlupa between 1998 and 2001. A former print and broadcast
journalist, he now writes a regular weekly column for Manila Bulletin, Tempo, People’s Tonight, Sun Star,
BusinessWeek Mindanao, Panay News and Filipino Reporter (in New York).

Significant awards and recognition received by Mr. Bunye include the Asian Institute of Management Honor
and Prestige Award, the Bangko Sentral Service Excellence Medal, the Gran Oden de Isabela Catolica, and
the Order of Lakandula (rank of Bayani).

Mr. Bunye is a member of the Integrated Bar of the Philippines. He obtained his Bachelor of Arts degree
and Bachelor of Laws degree from the Ateneo de Manila University in 1964 and 1969, respectively. He
passed the Philippine Bar Examination in 1969. He also attained his degree in Masters in Management from
the Asian Institute of Management in 1976.

7. EMMANUEL S. DE DIOS
Position: Independent Director

Filipino, 69 years old, was elected as independent director of Bank of the Philippine Islands (BPI) in April
2022 and is the chairman of the Corporate Governance Committee. Mr. de Dios was professor at the
University of the Philippines School of Economics from 1980 until his retirement in 2019. He is currently
trustee/chairman of Pulse Asia Research, Inc. and is independent director of Rockwell Land Corporation and
ABS-CBN Holdings Corporation. He is also a Trustee of Assisi Development Foundation, Inc., the Peace and
Equity Foundation, Inc., and the FEU Public Policy Center.
 38

He was the Dean of the University of the Philippines School of Economics from 2007 to 2010.

He received his AB Economics degree from the Ateneo de Manila University (cum laude) in 1978 and his
Ph.D. in Economics from the University of the Philippines in 1987. He pursued post-doctoral studies at the
Universität Konstanz in Germany from 1987 to 1988 and is the author or editor of various books,
monographs, articles and reviews in economics.

8. OCTAVIO VICTOR R. ESPIRITU

Position: Non-Executive Director

Filipino, 80 years old, has been a member of the board of directors of BPI since April 2000 and an
independent director since April 2003 until May 2021. He is currently a member of the Risk Management
Committee and Audit Committee. He was appointed lead independent director in April 2019 until May
2021.

Mr. Espiritu is an independent director of Bloomberry Resorts Corporation and Manila Water Company Inc.
He is a member of the board of directors of PDS Group Holdings and Subsidiaries, Philippine Stratbase
Consultancy, Inc., Pueblo de Oro Golf & Country Club, and The Country Club, Inc. He is the chairman of
GANESP Ventures, Inc. and MAROV Holding Company, Inc. He is also a trustee and board member of the
Carlos P. Romulo Foundation.

Mr. Espiritu was the president and Chief Executive Officer of Far East Bank & Trust Company (which merged
with the Bank of the Philippine Islands in the year 2000) from 1987 until April 2000.

He graduated with an A.B. Economics degree from the Ateneo de Manila University in 1963 and obtained
his M.A. Economics degree from Georgetown University, U.S.A in 1966.

9. RIZALINA G. MANTARING
Position: Lead Independent Director

Filipino, 64, was elected as director of BPI in April 2023. She is a member of the Bank’s Corporate
Governance and Retirement/Pension Committees; and Chairman of the Risk Management Committee. Ms.
Mantaring is a member of the IT Steering Committee. She also serves as a board director of BPI Asset
Management and Trust Corporation (also known as BPI Wealth, A Trust Corporation).

Ms. Mantaring is an independent director of Ayala Corporation, First Philippine Holdings Corporation,
Universal Robina Corporation, PHINMA Corporation, Maxicare Healthcare Corporation, GoTYME Bank and
East Asia Computer Center Inc. She is also a director of Sun Life Grepa Financial Inc.

She was CEO & Country Head of Sun Life Financial Philippines from 2009 – 2018, Chief Operations Officer
of Sun Life Financial Asia, responsible for IT & Operations across the region, from 2008-2009, President of
the Management Association of the Philippines in 2019, and President of the Philippine Life Insurance
Association in 2015. She is a Trustee of the Makati Business Club and Philippine Business for Education.
She is also a Fellow of the Foundation for Economic Freedom.

Ms. Mantaring was recognized by prestigious award-giving bodies, among which were the Asia Talent
Management award at CNBC’s 2017 Asia Business Leader Awards, the 2018 Executive Champion of the Year
from the Asia Insurance Review and the Asia Pacific Entrepreneurship Award (Financial Services,
Philippines) in 2016. In 2010, on the occasion of the 100th anniversary of the UP College of Engineering, she
was named one of the college’s 100 Most Outstanding Alumni of the Past Century. In 2019 she received the
PAX award, the highest award conferred by St. Scholastica’s College on an outstanding alumna.

A graduate of the University of the Philippines with a B.S. Electrical Engineering degree (cum laude), Ms.
Mantaring has an M.S. Computer Science from The State University of New York at Albany and is a Fellow
of the Life Management Institute (with distinction).
 39

10. AURELIO R. MONTINOLA III

Position: Non-Executive Director

Filipino, 72 years old, has been a member of the board of directors of BPI since 2004. Mr. Montinola served
as President and Chief Executive Officer of BPI for eight years from 2005 to 2013, and BPI Family Savings
Bank, Inc. for twelve years from 1992 to 2004. He also served as chairman of BPI/MS Insurance Corporation
from 2005-2015 and remained as a director until June 2022. He is the chairman of the Bank’s
Retirement/Pension Committee and member of the Bank’s Executive, and Personnel & Compensation
Committees. Among the several BPI subsidiaries and affiliates, Mr. Montinola also served as member of the
board of directors of the following: BPI Capital Corporation, BPI Direct BanKo, Inc., A Savings Bank, and The
Bank of the Philippine Islands Foundation, Inc. until 2023.

Mr. Montinola is the chairman of Far Eastern University, Inc. and an independent director of Roxas and
Company, Inc., both PSE-listed companies. Among others, he is also the chairman of Amon Trading
Corporation, Roosevelt College, Inc. and East Asia Computer Center, Inc. He is a member of the board of
trustees of the Philippine Business for Education Inc. where he sits as vice chairman and is an independent
director of AIA Philippines Life and General Insurance Company, Inc.

Significant awards received by Mr. Montinola include Management Man of the Year 2012 (Management
Association of the Philippines), Asian Banker Leadership Award (twice), and Legion d’Honneur (Chevalier)
from the French Government.

He obtained his Bachelor of Science in Management Engineering degree at the Ateneo de Manila University
in 1973 and his MBA from the Harvard Business School in 1977.

11. CESAR V. PURISIMA

Position: Independent Director

Filipino, 64 years old, was elected as independent director of BPI in January 2021. He is the chairman of
BPI’s Nomination Committee, and member of the Executive, Risk Management and Audit Committees. He
also serves as a member of the board of directors of BPI Capital Corporation.

Mr. Purisima also serves as an independent director of Ayala Corporation, Ayala Land, Inc., Universal Robina
Corporation, and Jollibee Foods Corporation. He is also a founding partner of lkhlas Capital Singapore Pte.
Ltd., a pan-ASEAN private equity platform. He is a member of the board of AlA Group Limited, a member of
the Global Advisory Council of Sumitomo Mitsui Banking Corporation, a member of Singapore Management
University's lnternational Advisory Council in the Philippines and member of the Board of Advisors of ABS-
CBN. He is also a member of the board of trustees of the the International School of Manila. He is an Asia
Fellow at the Milken Institute, a global, non-profit, non-partisan think tank. He is a member of the
Bloomberg Task Force on Fiscal Policy for Health since 2024.

Mr. Purisima served in the government of the Philippines as Secretary of Finance and chair of Economic
Development Cluster of the President’s Cabinet from July 2010 to June 2016 and as secretary of Trade and
Industry from January 2004 to February 2005. He also previously served on the boards of a number of
government institutions, including as a member of the Monetary Board of the Bangko Sentral ng Pilipinas
(BSP), Governor of the Asian Development Bank and World Bank for the Philippines, Alternate Governor of
the International Monetary Fund for the Philippines, and chairman of the Land Bank of the Philippines.
Under his leadership, the Philippines received its first investment-grade ratings. He was named Finance
Minister of the Year seven times in six consecutive years by a number of publications, a first for the
Philippines. Prior to serving the government, Mr. Purisima was the chairman & country managing partner
of the Philippines’ largest professional services firm SGV & Co.

He was a recipient of Centenary Award of Excellence by the Professional Regulatory Board of Accountancy
on the 100th year of the Philippine accounting profession in 2023. He was conferred the Chevalier dans
 40

I'Ordre national de Ia Legion d'Honneur (Knight of the National Order of the Legion of Honour) by the
president of the French Republic in 2017, the Order of Lakandula, Rank of Grand Cross (Bayani) by the
president of the Philippines in 2016, and the Chevalier de I'Ordre national du Merite (Knight of the National
Order of Merit) by the president of the French Republic in 2001.

Mr. Purisima is a certified public accountant and has extensive experience in public accounting both in the
Philippines and abroad. Mr. Purisima obtained his Bachelor of Science in Commerce (Majors in Accounting
& Management of Financial Institutions) degree from De La Salle University (Manila) in 1979, Master of
Management degree from J.L. Kellogg Graduate School of Management, Northwestern University in 1983
and Doctor of Humanities honoris causa degree from Angeles University Foundation (Philippines) in 2012.
Mr. Purisima completed the Harvard Business School’s CEO Harvard Presidents’ Seminars in 2023 and 2024.

12. JAIME Z. URQUIJO

Position: Non-Executive Director

Filipino, 35 years old, was elected as director of BPI in September 2022. Mr. Urquijo serves as a director of
AC Industrial Technology Holdings, Inc., Merlin Solar Technologies, Inc., Merlin Solar Technologies, Inc.
(Philippines), AC Ventures Holdings Corp., BPI/MS Insurance Corporation, Integrated Micro-Electronics, Inc.,
and as Chairman of Klima 1.5 Corp. He is also Vice-Chairman of the Board of Trustees and Chairman of the
Executive Committee of Ayala Foundation.

He is currently the Chief Sustainability and Risk Officer (CSRO) of Ayala Corporation. He was previously Vice
President for Business Development at Ayala Corporation’s listed energy platform, ACEN. During his tenure
at ACEN, Mr. Urquijo led initiatives to expand the group’s portfolio of assets in the Philippines, Vietnam,
Myanmar, and Indonesia. Most recently as country manager for Indonesia, he established ACEN’s office in
Jakarta. These initiatives resulted in 500MW of operating wind and solar assets in Vietnam and over 2GW
of pipeline projects for ACEN across the region.

Mr. Urquijo served as director of BPI AIA Life Assurance Corporation (formerly BPI-Philam Life Assurance
Corporation) from 2021 to 2022. He held a key manager position in the Corporate Strategy and Business
Development Group of Ayala Corporation from 2016 to 2020. He was a founding member and Head of
Business Development of AF Payments, Inc. from 2014 to 2016, a joint venture between Ayala Corporation
and the Metro Pacific group which won a Public Private Partnership (PPP) concession to replace the ticketing
system of the LRT and MRT of Metro Manila with a unified contactless ticketing system, called the Beep
Card. The Beep Card was the first interoperable transport card in the Philippines. He started his career at
J.P. Morgan in New York in 2010 and was an analyst and associate until 2013.

Mr. Urquijo is the president of the University of Notre Dame Alumni Association of the Philippines, an
executive committee member of the INSEAD Alumni Association of the Philippines, an advisor to the board
of the Philippine Rugby Football Union and a member of the National Advisory Council of WWF Philippines.

Mr. Urquijo graduated with a B.A. in Political Science from the University of Notre Dame in 2010 and
received his M.B.A. from INSEAD in 2018.

13. MARIA DOLORES B. YUVIENCO

Position: Independent Director

Filipino, 76 years old, was elected as director of BPI in April 2014 and as independent director in April 2016.
Mrs. Yuvienco currently serves as the chairman of the Audit Committee, a member of the Related Party
Transactions Committee and the Personnel and Compensation Committee. In July 2019, Mrs. Yuvienco was
elected as independent director of BPI Asset Management and Trust Corporation (doing business under the
trade name and style of BPI Wealth - A Trust Corporation), and designated chairman of the AMTC Corporate
Governance Committee and a member of the AMTC Risk Management Committee.
 41

Ms. Yuvienco also serves as an Independent Director of Legazpi Savings Bank (LSB), a newly acquired
subsidiary of the BPI Group following the merger with Robinsons Bank Corporation. She acts as the
Chairperson of LSB’s Risk Management Committee and a member of the Audit Committee.

Ms. Yuvienco worked for 41 years with the Bangko Sentral ng Pilipinas (formerly known as Central Bank of
the Philippines) under various capacities until her compulsory retirement in March 2013. She held the post
of Assistant Governor in the Supervision and Examination Sector when she retired. Her exposure at the BSP
was largely in bank supervision where her responsibilities ranged from the crafting of policies/regulations
on banking supervision to supervising on-site examination and off-site monitoring of BSP-supervised
entities. As a ranking official in the BSP, she had opportunities to meet and share ideas with her
counterparts in other central banks in the region. Owing to her experience, she was tapped as a resource
speaker in various training programs of the Southeast Asian Center for Banking in Kuala Lumpur.

Ms. Yuvienco attended the 2023 Ayala Integrated Corporate Governance, Risk Management and
Sustainability Summit held by Institute of Corporate Directors (ICD) on 03 October 2023 and the Anti-Money
Laundering (AML) and Financial Crime Compliance by SGV on 26 September 2023 to comply with the
requirement of Bangko Sentral ng Pilipinas (BSP).

Ms. Yuvienco graduated from St. Theresa’s College, Quezon City in 1967, with a degree of Bachelor of
Science in Commerce, major in Accounting. She took up post graduate studies at the University of the
Philippines Diliman. She is a Certified Public Accountant and a Career Executive Service Professional.

14. KARL KENDRICK T. CHUA

Position: Non-Executive Director

Filipino, 45, was elected as director of BPI in April 2023. He is a member of the Bank’s Retirement/Pension
Committee. Mr. Chua also serves as a board director of BPI Direct BanKo, Inc., A Savings Bank.

Mr. Chua is currently the Managing Director for Data Science and Artificial Intelligence in Ayala Corporation.
He is also a Director of AC Ventures and an Independent Director of D&L Industries, Inc, and Golden ABC,
Inc. Mr. Chua also serves as a Board Adviser in LH Paragon, Inc.

Mr. Chua is a former Secretary of the National Economic and Development Authority and Undersecretary
for Strategy, Economics, and Results at the Department of Finance. He has extensive experience in
economic and fiscal policy, statistical development, national identification, labor and social protection
policy, poverty analysis, and digital transformation, among others.

He is currently an adviser for the World Bank’s World Development Report and a member of the Selection
Committee of the Asian Development Bank and International Economic Association Innovative Policy
Research Award.

Mr. Chua was a senior official in the Government of the Philippines for six years. As Secretary of
Socioeconomic Planning and Chief Economist of the country, he provided strategic leadership on economic
policy during the Covid-19 pandemic and the further liberalization of key sectors of the economy. He also
oversaw the implementation of the national ID program.

As Undersecretary in the Department of Finance, he led the technical team in the passage of the
Comprehensive Tax Reform Program and the Rice Tariffication Law. Prior to joining the government, he was
with the World Bank for 12 years and was the senior economist for the Philippines.

Mr. Chua graduated from the Ateneo De Manila University in 2000 with a degree in B.S. Management
Engineering. He earned his M.A. Economics (2003) and Ph.D Economics (2011) from the University of the
Philippines, and recently studied data science at the Asian Institute of Management. In 2018, he was
awarded as one of the Ten Outstanding Young Men of the Philippines (TOYM) for economic development.
 42

15. FERNANDO ZOBEL DE AYALA

Position: Non-Executive Director

Filipino, 64 years old, has been a member of the board of directors (non-executive director) of BPI since
September 2023. He also serves as a member of the Bank’s Personnel and Compensation Committee and
Executive Committee.

Mr. Zobel is a Director of Ayala Corporation, a Special Advisor of the Board of Ayala Land, Inc. and serves as
an independent director of Shell Pilipinas Corporation (formerly Pilipinas Shell Petroleum Corporation).

He is a Director of AC International Finance Ltd., Chairman of the Board of Alabang Commercial Corporation,
Accendo Commercial Corp., Hero Foundation, Inc., Ayala Foundation, Inc., and AC Health Holdings, Inc. He
is the vice chairman of Fort Bonifacio Development Corporation, Bonifacio Land Corporation, Emerging City
Holdings, Inc., Columbus Holdings, Inc., Berkshires Holdings, Inc., AC Ventures Holdings Corp., and Bonifacio
Art Foundation, Inc. He is a director of AG Holdings Ltd. and The Manila Peninsula.

He is a director of Georgetown University; member of the Hispanic Society Museum & Library International
Advisory Council; a member of the Chief Executives Organization and Young Presidents Organization;
member of Habitat for Humanity International’s Asia Pacific Development Council; member of the Tate
Museum Asia-Pacific Acquisitions Committee, Asia Philanthropy Circle and The Metropolitan Museum
International Council; member of the board of trustees of Caritas Manila, Pilipinas Shell Foundation and
Asia Society.

He holds a liberal arts degree from Harvard College and a CIM from INSEAD, France.

The Executive Officers

Officers of BPI as of December 31, 2023

1. JOSE TEODORO K. LIMCAOCO*

President & Chief Executive Officer

[Please see above.]

*Member of the Board of Directors of BPI

2. MARIA CRISTINA L. GO
Executive Vice President & Head of Consumer Banking

Filipino, 54 years old, Ms. Go heads the Consumer Banking Segment that primarily serves over 10 million
clients and oversees the 710 branches nationwide, retail digital platforms, core retail products specifically
deposits, auto loans, housing loans and life and non-life bancassurance and the support services. Since the
consolidation of these businesses into OneConsumer bank, Ms. Go has steadfastly focused on driving
strategy focused on transforming the customer experience towards becoming what BPI refers to as
“phygital”, leveraging on the Bank’s vast physical presence to offer trusted advice through its 9,300-strong
cadre of expert bank personnel complimented by best-in-class digital capabilities that make banking easier
and more convenient, anytime, anywhere. In the past year, the Consumer Bank has been able to
aggressively expand the retail customer base and drive increases in market shares through more targeted
segmentation and product offerings, upgraded digital platforms, and enhanced customer engagements and
business partnerships combined with innovative risk management and robust use of data analytics for
insighting and portfolio management. Ms. Go inspires a high performing, agile and collaborative culture
to be able to serve the ever-changing needs of customers.

Under her leadership, the Consumer Bank converted 19 branches to the phygital formats in 2023, redefining
the customer experience at the branch and integrating digital education. Following the upskilling and
reskilling of bank personnel started in 2022, the physical and experiential journey to transform branches
 43

from transactional to advisory centers began last year. Her experience in transformational work covering
manpower, processes, products, systems, and culture enabled market-creating business growth and a high-
quality customer portfolio. The client-first transformation journey is anchored on making customers happy
and measured in terms of Net Promoter Score (NPS). Ms. Go rallied the team towards achieving #1 in NPS
by the end of 2023 through relentless pursuit of segmented, omni-channel, delightful customer
experience. She is a member of the bank’s Sustainability Council. Now, BPI has 11 Edge-certified branches
and introduced products such as Green Saver, MyBahay and MyKotse to support sustainability. Before
assuming leadership of the Consumer Bank, she served as the President of BPI Family Savings Bank (BFSB)
and was responsible for the smooth merger integration and consolidation with BPI, unlocking the value of
the combined entities. She also served as Group Head of BFSB Retail Loans in 2015 after heading BPI’s
Payments and Unsecured Lending Group for 11 years where she led initiatives and innovations that
differentiated BPI in the industry, such as the launches of the first EMV-compliant credit cards and Real
Thrills, the first instant rewards program.

Before joining BPI, Ms. Go was Vice President at Citibank Philippines managing the bank’s Retail Bank
Marketing then at Citibank Credit Cards Cross Sell Division in New York. She also worked in Ayala Land to
establish and head its Market Planning and Development Division where she became part of the team
responsible for the company’s foray into the middle-market. She started her career in Procter & Gamble as
Brand Assistant then was promoted to Assistant Brand Manager, managing brands such as Mr. Clean, Perla,
Star and Dari Crème. She earned a master's degree from the Harvard Business School with honors in
1996. She graduated magna cum laude with a degree in BS Business Administration and Accountancy from
the University of the Philippines Diliman, was awarded one of the Ten Outstanding Students of the
Philippines, placed first in the CPA licensure exam in 1991, and was recognized as one of the UP College of
Business Administration’s Distinguished Alumni in 2012. She was also recognized by the Filipina Women’s
Network as One of the 100 Most Influential Filipina Women the World in 2016.

Ms. Go currently serves Chairman of the Personnel Committee and Director of BPI MS Insurance
Corporation, Chairman of BPI Payments Holdings, Inc., and a Director of the Board of TransUnion
Philippines. She has been part of the Ayala Group’s Innovation Advisory Council since its inception in 2013.
She serves as a mentor for high-impact entrepreneurs in Endeavor Philippines and is a contributor to the
Philippine Star’s Property Report section. She is a member of the Management Association of the
Philippines, Harvard Global Club of the Philippines, Harvard Business School Club of the Philippines, Filipina
Women’s Network, Filipina CEO Circle and NextGen Organization of Women Corporate Directors. Ms. Go
actively mentors current and future young leaders in BPI and in the various organizations she is involved in.

3. MARIA THERESA D. MARCIAL

President & CEO of BPI Wealth

Ms. Marcial, 53, is the President & CEO of BPI Wealth - A Trust Corporation, the asset and wealth
management arm of the Bank of the Philippine Islands. She is a seasoned banker with diverse experience
spanning 29 years across various disciplines such as investment management, trust, private banking,
corporate banking, debt and equity capital markets, finance, corporate strategy, and sustainability.

She is the chairman of BPI International Finance Ltd Hong Kong, board director of BPI AIA Life Assurance
Corporation and BPI Europe Plc, independent director of Alternergy Holdings Corporation, a fellow of
Foundation for Economic Freedom, a member of FINEX, MAP, NextGen Organization of Women Corporate
Directors, and Filipina CEO Circle. She held key roles in BPI including a 5-year stint as Chief Finance Officer,
chairman of BPI Finance Committee and BPI Sustainability Council, member of BPI Asset and Liability
Committee and BPI Credit Committee, treasurer of BPI Foundation, board director and treasurer of BPI MS
Insurance Corporation, board director of AF Payments, BPI Global Payments Asia Pacific Philippines, BPI
Investment Management, and ALFM Mutual Funds. She previously served as president of the Fund
Managers Association of the Philippines, president of the Trust Officers Association of the Philippines, vice-
chairman of Capital Markets Development Committee of FINEX, and alternate governor of the Market
Governance Board of Philippine Dealing and Exchange Corporation. Prior to her banking career, she worked
for the Philippine government - the Agricultural Policy Credit Council and the National Economic and
Development Authority.
 44

Ms. Marcial is an advocate of marine conservation and renewable energy. She is a trustee and treasurer of
WWF Philippines, member of WWF Asia Pacific Council, board trustee of Philippines Inter-Island Sailing
Federation, and the Ocean Racing Club of the Philippines. She previously served as member of the National
Advisory Council of WWF Philippines. She is an outdoor enthusiast, with interests in open water scuba
diving, wreck diving, underwater photography, offshore sailing and yacht racing. She obtained the Royal
Yachting Association Skipper Certification in Sydney, Australia. She participated in the 2018 Rolex Middle
Sea Race, a 606-nautical mile Category 2 offshore yacht race around Sicily organized by the Royal Malta
Yacht Club, and the 2023 Rolex China Sea Race, a 565-nautical mile category 1 offshore yacht race from
Hongkong to Subic organized by the Royal Hongkong Yacht Club. She has logged over 8,000 nautical miles
sailing in offshore and coastal waters of the Philippines, New South Wales Australia, South China Sea, and
Mediterranean Sea.

She has a Master's Degree in Economics from the University of the Philippines Diliman and Bachelor's
Degree in Economics (cum laude) from the University of the Philippines Los Baños. She completed the
Advanced Management Program (2010) and the CFA Institute Investment Management Workshop (2006)
at Harvard Business School. She was recognized as Outstanding Alumnus of the College of Economics and
Management at UP Los Baños in 2006, one of Top 25 Most Influential Women in Asset Management in
Asia by Asian Investor in 2014, CEM Centennial Outstanding Alumnus at UP Los Baños in 2019, Most
Outstanding Alumnus of the University of the Philippines Los Baños in 2022, and Best CFO Institutional
Investor in 2023.

4. EUGENIO P. MERCADO
Executive Vice President & Head of Enterprise Operations

Filipino, 61 years old, Mr. Mercado heads BPI’s Enterprise Operations Segment which serves as the
backbone of the organization that includes Centralized Operations, Vendor Management, Enterprise Fraud,
Contact Center and Facilities Services. He also oversees the performance of major outsourcing companies
related to Operations such as Brinks, ATPI, Unisys, Gemalto, Euronet and various security and courier
agencies.

Mr. Mercado began his career as an Economics Research Assistant with the then Commercial Bank of Manila
in 1984, and subsequently transferred to Credit as a Credit Analyst/Investigator. In 1988, he joined San
Miguel Corporation and worked under the Finance Group of the Beer Division as a Credit Analyst. He
continued to pursue his banking career with Citibank as Consumer Credit Analyst and Collections Head from
1992-1998. In 1998, he took on a new assignment as Assistant Vice-President, Head of Credit and
Collections of Far East Bank-Credit Cards Group.

In 2000, BPI acquired FEBTC through a merger, with BPI as the surviving entity. He was assigned as Project
Manager of the migration of FEBTC Credit Cards to the BPI System and eventually took on the role of BPI
Cards Operations Head where he was promoted to Vice-President in 2002. In 2011, he was promoted to
Senior Vice-President and was assigned to head the Electronic Channels Group - Channel Services and
Management Division. In 2013, he was transferred to the Accounts Management and Trust Group as
Operations and Systems Head. The following year, he was assigned as Head of Centralized Operations
Group which supports all the operational requirements of various business segments that includes
Consumer Banking, Corporate Banking, Global Banking and Agency Banking. In 2023, his role was expanded
to include Vendor Management, Enterprise Fraud, Contact Center and Facilities Services where he was
eventually promoted to Executive Vice-President.

He has served on several external boards, including the Philippine Clearing House Corporation (PCHC) and
Ayala Plans, Inc. He is currently the Treasurer of PCHC. Mr. Mercado is a graduate of the University of the
Philippines with a Bachelor’s degree in Business Economics in 1984.
 45

5. MARIE JOSEPHINE M. OCAMPO

Executive Vice President and Head of Mass Retail Products

Filipino, 61 years old, Ms. Ocampo is the Head of Mass Retail Products of the Bank, where she oversees BPI’s
credit, debit, and prepaid card businesses as well as personal and microfinance loans.

Ms. Ocampo is currently the Chairman of the Board of BPI Direct BanKo, the bank's microfinance subsidiary. She
is a member of the Board of BPI Payments Holdings Inc., Global Payments Asia-Pacific Philippines, Inc., AF
Payments Inc., and CARD MRI Rizal Bank Inc.

Ms. Ocampo started her career in BPI as Vice President for Marketing and Sales of BPI Credit Cards in 1996.
She soon became the President of BPI Card Corporation, the Bank’s credit card subsidiary which won the
prestigious Agora Award-2000 Marketing Company of the Year. In 2005, Ms. Ocampo was then cross-
posted to BPI’s Consumer Banking Group as Head of Kiosk Banking and Head of Personal Banking. She also
became the Chief Marketing Officer of BPI from 2008 until 2014 where she was responsible for the Bank’s
data warehouse, customer analytic capabilities and CRM, advertising, and digital initiatives across the
breadth of products, channels, and services. In 2015, she became the Payments and Remittance Group
Head.

Prior to joining BPI, Ms. Ocampo gained over ten years of marketing experience in Procter & Gamble and
Johnson & Johnson Australia and the Philippines, where she led the expansion of J&J's Health Care, Baby
Care and Sanitary Protection business.

She holds a bachelor's degree in business management (Honors Program) and graduated magna cum laude
from the Ateneo de Manila University. She also completed the Advanced Management Program at the
Harvard Business School.

6. JUAN CARLOS L. SYQUIA

Executive Vice President and Head of Institutional Banking

Mr. Syquia, Filipino 57 years old, is the Head of Institutional Banking. Mr. Syquia’s responsibilities include
managing the Corporate Banking Relationship Management, Commercial Banking Relationship
Management, Corporate & Commercial Credit Products, Transaction Banking (Cash Management and
Trade), Remittance & Fund Transfer, and Investment Banking (which includes Equity Brokerage) units of the
Bank. He is also Chairman of the Board of Directors of BPI’s merchant acquiring joint venture company,
Global Payments Asia-Pacific Philippines Incorporated. Mr Syquia also serves as a member of the Board of
Directors of BPI’s investment banking subsidiary, BPI Capital Corporation.

Mr. Syquia has over 30 years of work experience in the financial services industry. Before taking on his
current role, he was the President of BPI Capital Corporation and Co-Head for Investment Banking of the
Bank. He re-joined the Bank via BPI Capital Corporation in June 2016. Prior to this, Mr. Syquia was Managing
Director and Country Head of Corporate Clients for Standard Chartered Bank in the Philippines serving in
that role from late 2011. In that role, he was principally responsible for wholesale banking strategy of the
bank in the Philippines.

Mr. Syquia spent 17 years with the ING Group where he started with Baring Brothers & Co. in 1994. Within
the banking group of ING, he took on various roles in relationship management, corporate finance
origination, and investment banking execution. His last role in ING Bank was as Managing Director, Head of
Corporate Finance at ING Bank Manila. In 2007, he moved to a regional role based in Hong Kong as Head of
Strategy and Business Development at ING Asia Pacific Ltd., the regional hub of ING Group’s life insurance
and asset management practice. He held Board of Director positions at ING Insurance Bhd. (Malaysia),
Pacific Antai Life Insurance Co. (Shanghai, China), ING Vysya Life Insurance (India).

Mr. Syquia is a product of the BPI’s Officer Training Program which he completed in 1990 during his first
stint at the Bank. In 1991, he was assigned to the Cebu region where he formed part of a two-man team
that established the Corporate Banking Division desk in Cebu. He carries an MBA Degree (Honors) with a
 46

concentration in Finance and International Business from Fordham University, NY as well as an AB degree
in Management Economics from the Ateneo de Manila University.

7. DINO R. GASMEN
Senior Vice President, Treasurer

Filipino, 57 years old, Mr. Gasmen is the Treasurer and Head of Global Markets. He is responsible for
optimizing the Bank’s resources through management of interest rate and liquidity gaps, as well as its fixed
income and currency market-making, trading, and distribution capabilities. He is the Chairman of the Bank’s
Asset & Liability Committee.

Mr. Gasmen also serves as Member of the Finance Committee of the Ayala Multi-Purpose Cooperative. He
is also the Head of the Interest-Rate Sub Committee of the Bankers Association of the Philippines Open
Market Committee.

Prior to joining BPI in 2014, Mr. Gasmen spent seventeen years at HSBC Global Markets covering various
roles, such as head of the Rates Trading Business in the Philippines, Indonesia, Vietnam, and Sri Lanka, as
well as Balance Sheet Management for HSBC Philippines. He also worked in HSBC Bank PLC in the United
Kingdom as Asian Product Manager where he helped local sales teams in the distribution of Asian markets
products.

In BPI, Mr. Gasmen has been at the helm of various divisions in Global Markets. He was the Head of Asset
& Liability Management (ALM) in 2014. In this role, he was responsible for ensuring multi-currency liquidity
and optimizing portfolio investments. Mr. Gasmen also served as the Head of the Treasury Trading Division
from 2015 until 2018, leading the Foreign Exchange (FX) Trading, Foreign and Local Fixed Income Trading,
and Derivatives Trading Desks. In 2018, he reassumed the role of Head of ALM until his assignment as the
Bank’s Treasurer in 2020.

Mr. Gasmen served as the President of the Money Market Association of the Philippines (MART) in 2006,
and ACI Financial Markets Association Philippines in 2018.

He holds a Bachelor’s degree in Electrical Engineering and a Master’s Degree in Business Administration
from the University of the Philippines Diliman.

8. ERIC ROBERTO M. LUCHANGCO

Senior Vice President, Chief Finance Officer, Chief Sustainability Officer and Head of Strategy and Finance

Filipino, 53 years old, Mr. Luchangco is the Chief Finance Officer, Chief Sustainability Officer, and Head of
Strategy and Finance. In this role, he oversees the Bank's strategic planning and budgeting, capital structure,
and sustainability agenda.

Before taking on his current role, Mr. Luchangco was Head of Business Banking from June 2019 until May 2022,
where he managed BPI’s presence within the space.

Mr. Luchangco initially joined the BPI Group in 2013 as Head of Debt Capital Markets of BPI Capital, the Bank’s
investment banking unit. His responsibilities were later expanded to concurrently become Head of Execution
and Treasurer of BPI Capital. In June 2017, he moved into BPI to become the Head of Corporate Credit
Products.

Prior to joining BPI Group, Mr. Luchangco worked at Daiwa Capital Markets, spending time in their Manila,
Hong Kong, and Singapore offices, originating and executing a wide variety of investment banking transactions.

He holds a Bachelor’s degree in Management Economics from the Ateneo de Manila University and a Master’s
Degree from the Ross School of Business at the University of Michigan.
 47

9. MARIA LOURDES P. GATMAYTAN

Senior Vice President, Corporate Secretary

Atty. Gatmaytan, 55, is concurrently the Co-Head of Legal/Head of Corporate Legal Affairs and Corporate
Secretary of BPI. She also serves as Corporate Secretary of BPI Asset Management and Trust Corporation,
BPI Investment Management, Inc., BPI Direct BanKo, Inc., A Savings Bank and BPI/MS Insurance
Corporation. Atty. Gatmaytan received her Bachelor of Science degree in Legal Management from the
Ateneo de Manila University in 1989. She earned her Juris Doctor degree from the Ateneo de Manila School
of Law, graduating with honors in 1993.

List of Other Executive Officers as of December 31, 2023

NAME AGE POSITION OFFICE
ABOLA, JOAQUIN MA. B. 57 GROUP HEAD STRATEGY AND FINANCE
ALONSO, JOSEPH ANTHONY M. 58 DIVISION HEAD CHIEF CREDIT
ANG, OLGA S. 62 DIVISION HEAD CONSUMER BANKING
ANICETO, HOMER L. 54 DIRECTOR CHIEF CREDIT
ASIS, MA CRISTINA F. 53 DIVISION HEAD CHIEF RISK
CHUA, SMITH L. 60 DIVISION HEAD WEALTH MANAGEMENT
CHUIDIAN, TOMAS S. 57 DIVISION HEAD WEALTH MANAGEMENT
CRUZ, LUIS GEMINIANO E. 54 GROUP HEAD INSTITUTIONAL BANKING
EALA, MARIA VIRGINIA O. 55 HEAD, HUMAN ENTERPRISE SERVICES
RESOURCES
FERNANDEZ, RINALDO H. 58 HEAD, TREASURY GLOBAL MARKETS
TRADING
FRONDA, DENNIS T. 52 GROUP HEAD CONSUMER BANKING
GALVEZ, MARWIN L. 44 DIVISION HEAD CONSUMER BANKING
GARCIA, MARIA PAZ A. 57 DIVISION HEAD WEALTH MANAGEMENT
GEALOGO, NORAVIR A. 60 DIVISION HEAD CHIEF RISK
GO, RAYMOND H. 58 DIVISION HEAD INSTITUTIONAL BANKING
GOMEZ, JESUS ANGELO O. 49 GROUP HEAD MASS RETAIL PRODUCTS
JEREZA, JOSE RAUL E. IV 52 SEGMENT HEAD AGENCY BANKING
LACERNA, JENELYN Z. 58 GROUP HEAD MASS RETAIL PRODUCTS
LIM, MARIA TERESA ANNA K. 58 DIVISION HEAD INSTITUTIONAL BANKING
LUKBAN, MARIA CONSUELO A. 59 DIVISION HEAD STRATEGY AND FINANCE
MABIASEN, RODOLFO K. Jr. 48 DEPARTMENT HEAD MASS RETAIL PRODUCTS
MACAPAGAL, JUAN JESUS C. 55 DIVISION HEAD INSTITUTIONAL BANKING
MARCOS, NOELITO C. 53 DIVISION HEAD INSTITUTIONAL BANKING
MINGLANA, JEROME B. 50 DIVISION HEAD MASS RETAIL PRODUCTS
NERI, EMILIO S. Jr. 55 HEAD, ECO & MARKETS GLOBAL MARKETS
RESEARCH
OCLIASA, DOMINIQUE R. 56 SEGMENT HEAD BUSINESS BANKING
OSALVO, EMMANUEL JESUS G. 59 DIVISION HEAD STRATEGY AND FINANCE
PAULINO, MA. GENALYN R. 53 DIVISION HEAD BUSINESS BANKING
PENA, RICARDO D. 47 DIVISION HEAD ENTERPRISE OPERATIONS
PINEDA, DONARBER N. 55 HEAD, GLOBAL MARKETS GLOBAL MARKETS
SALES
SANTAMARIA, MARY CATHERINE 56 SEGMENT HEAD CUSTOMER &
ELIZABETH P. MARKETING
SEMINIANO, ALEXANDER G. 49 GROUP HEAD ENTERPRISE
TECHNOLOGY
SEVILLA, CHRISTMAS G. 58 DIVISION HEAD WEALTH MANAGEMENT
STA ANA, ANA LIZA C. 59 DIVISION HEAD CONSUMER BANKING
SY, CRISTINA J. 54 DIVISION HEAD CONSUMER BANKING
UNTALAN, BARBARA ANN C. 56 GROUP HEAD INSTITUTIONAL BANKING
VELOSO, ROLAND GERARD JR. R. 60 GROUP HEAD INSTITUTIONAL BANKING
 48

A-2. Significant Employees

The Bank values its human resources and considers its entire workforce as significant employees. It expects each
employee to do his share in achieving the company’s set goals and objectives.

A-3. Family Relationships

The Chairman of the Board of Directors, Mr. Jaime Augusto Zobel de Ayala, and Mr. Fernando Zobel de Ayala, a
member of the Board, are brothers.

Mr. Jaime Zobel de Ayala Urquijo, a member of the Board, is a 3rd degree relative by consanguinity (nephew)
of Mr. Jaime Augusto Zobel de Ayala and Mr. Fernando Zobel de Ayala.

A-4. Legal Proceedings

To the knowledge of the Bank, none of its nominees for election as Directors and its Executive Officers have
been subject of the following legal proceedings during the last five (5) years:
i. any bankruptcy petition filed by or against any business of which such director or officer was a general
partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
ii. any conviction by final judgment, in a criminal proceeding, domestic or foreign, or being subject to a
pending criminal proceeding, domestic or foreign;
iii. any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business, securities, commodities or
banking activities; and
iv. being found by domestic or foreign court of competent jurisdiction (in a civil action), the Commission
or comparable foreign body, or a domestic or foreign Exchange or other organized trading, market or
self-regulatory organization, to have violated a securities or commodities law or regulation and the
judgment has not been reversed, suspended, or vacated.

A-5 Resignation of Directors

To date, no director has resigned from, or declined to stand for election or re-election to the Board since the
date of the 2023 annual meeting of stockholders due to any disagreement with the Bank relative to its
operations, policies and practices.
 49

Item 10. Executive Compensation

Name and Principal Position Year Salary Bonus Other Annual

Compensation
Jose Teodoro K. Limcaoco
President and CEO

Ramon L. Jocson*
Executive Vice President

Maria Cristina L. Go**

Executive Vice President

Maria Theresa D. Marcial

Executive Vice President

Marie Josephine M. Ocampo

Executive Vice President

Juan Carlos L. Syquia

Executive Vice President
CEO and Most Highly Actual 2022 P230.08 Mn P78.58 Mn P0
Compensated Executive Actual 2023 P159.83 Mn P122.90 Mn P0
Officers Projected 2024 P173.02 Mn P153.86 Mn P0
All other officers*** as a Actual 2022 P9,689.33 Mn P1,110.53 Mn P0
group unnamed Actual 2023 P12,093.37 Mn P1,815.26 Mn P0
Projected 2024 P13,217.91 Mn P2,309.83 Mn P0
*Up to December 2022
**Starting from January 2023
***Assistant Managers and up (excluding all above-named officers)

The above compensation consists of the basic salary and other compensation income (guaranteed bonus, fixed
allowances, and performance-based bonus) and does not include benefits under the Company’s Executive Stock
Purchase Plan.

Unless otherwise stated, the Company has no other arrangement regarding the remuneration of its existing officers aside
from the compensation received herein.
 50

Compensation of Directors

Article V of the Bank’s Amended By-Laws provides:

“Each director shall be entitled to receive from the Bank, pursuant to a resolution of the Board of Directors, fees
and other compensation for his services as director. The Board of Directors shall have the sole authority to
determine the amount, form and structure of the fees and other compensation of the directors. In no case shall
the total yearly compensation of directors exceed one percent (1%) of the net income before income tax of the
Bank during the preceding year.

The Personnel and Compensation Committee of the Bank shall have the responsibility for recommending to the
Board of Directors the fees and other compensation for directors. In discharging this duty, the Committee shall
be guided by the objective of ensuring that compensation should fairly pay directors for work required in a
company of the Bank’s size and scope.”

The compensation structure of the directors, as approved by the Board of Directors on 20 April 2022, and by the
stockholders during the 2023 Annual Stockholders’ Meeting dated April 27, 2023, consists of an annual retainer fee in
the amount of Php4.2M and per diem in the amount of Php70,000 per Board meeting and Php30,000 per Committee
meeting attended. Directors who hold executive or management positions do not receive directors’ fees or per diems.

The total compensation for 2023 for the members of the Board of Directors amounted to Php84,700,000.00 1.

Standard Arrangement

Other than the above-mentioned compensation for Directors, the Bank has no other arrangement with regard to
compensation of Directors, directly or indirectly, for any other services provided by the said directors, for the last
completed fiscal year.

1
Includes P25.9M for the year 2023 representing per diem of Directors at P70,000 per Board meeting and P30,000 per Committee meeting
attended.
 51

Item 11. Security Ownership of Certain Beneficial Owners and Management

1. Security Ownership of Certain Record and Beneficial Owners of more than 5% as of December 31, 2023

Name of Beneficial
Title of Name/Address of Record Owner Owner & No. of Percent of
Citizenship
Class & Relationship with Issuer Relationship with Shares Holdings
Record Owner
Common PCD Nominee Corporation1 PCD Participants Non-
964,331,662 19.5004%
37/F Tower 1, The Enterprise acting for Filipino
Center themselves or for Filipino 870,758,949 17.6082%
6766 Ayala Avenue corner Paseo their customers
de Roxas, Makati City 1,835,090,611 37.1086%
Stockholder
Common Ayala Corporation2 Ayala Corporation3 Filipino 1,515,177,839 30.6394%
37th to 39th Floor Ayala Triangle
Gardens Tower Two, Paseo de
Roxas, corner Makati Avenue,
Makati City
Stockholder
Common Liontide Holdings, Inc.4 Liontide Holdings, Filipino 823,218,041 16.6468%
38th Floor Ayala Triangle Gardens Inc.5
Tower Two, Paseo de Roxas,
corner Makati Avenue, Brgy. Bel-
Air, Makati City
Stockholder
Common Roman Catholic Archbishop of Roman Catholic Filipino 357,297,439 7.2251%
Manila Archbishop of
121 Arzobispo St., Intramuros Manila6
Manila
Stockholder

1
PCD Nominee Corporation (PCD), now known as the Philippine Depository and Trust Corporation (PDTC), Non-Filipino and Filipino, is
the registered owner of the shares beneficially owned by participants in the PDTC. The Board of Directors of each participant generally has
the power to decide on how shares are to be voted. Out of the 1,835,090,611 common shares registered in the name of PCD, 547,135,240
shares (or 11.0640% of the total outstanding shares), 444,291,288 shares (or 8.9843% of the total outstanding shares), and 344,540,182
shares (or 6.9672% of the total outstanding shares) are for the accounts of The Hongkong and Shanghai Banking Corporation, Citibank
N.A., and Standard Chartered Bank, respectively.
2
Mermac, Inc. owns 47.8577% of common shares and 57.2579% of total voting shares, while Mitsubishi Corporation owns 6.0941% of
common shares and 6.9961% of total voting shares, respectively, of the outstanding shares of Ayala Corporation (AC).
3
The Board of Directors of AC has the power to decide how AC’s shares in BPI are to be voted.
4
AC owns 95.51% of the outstanding shares of Liontide Holdings, Inc. (formerly Ayala DBS Holdings, Inc.), which translates to 93.44%
effective ownership.
5
The Board of Directors of Liontide Holdings, Inc. (“Liontide”) has the power to decide how Liontide’s shares in BPI are to be voted.
6
The Archbishop of Manila has the power to decide how the Roman Catholic Archbishop of Manila’s shares in BPI are to be voted.
 52

1. Security Ownership of Directors and Management as of December 31, 2023

As of December 31, 2023, the following are known to BPI to be the record and/or beneficial owners of BPI
voting securities:

Dec 2023 Nature of

Title of Ownership
Name of Beneficial Owner Position No. of % of Citizenship
(D) Direct
Class Shares Holdings
(I) Indirect
Common Jaime Augusto Zobel de Ayala Chairman, NED 10,402 0.00% D Filipino
Common Cezar P. Consing Vice Chairman, NED 3,062,734 0.06% D Filipino
Common Jose Teodoro K. Limcaoco ED, President & CEO 314,925 0.01% D/I Filipino
Common Janet Guat Har Ang ID 10 0.00% D Singaporean
Common René G. Bañez NED 10 0.00% D Filipino
Common Ignacio R. Bunye ID 10 0.00% D Filipino
Common Karl Kendrick T. Chua NED 10 0.00% D Filipino
Common Emmanuel S. De Dios ID 10 0.00% D Filipino
Common Octavio Victor R. Espiritu NED 1,064,583 0.02% D Filipino
Common Rizalina G. Mantaring ID 9,973 0.00% D Filipino
Common Aurelio R. Montinola III NED 1,956,471 0.04% D Filipino
Common Cesar V. Purisima ID 10 0.00% D Filipino
Common Jaime Z. Urquijo NED 10 0.00% D Filipino
Common Maria Dolores B. Yuvienco ID 6,331 0.00% D Filipino
Common Fernando Zobel de Ayala NED 96,327 0.00% D Filipino
SUB-TOTAL 6,521,816

Dec 2023 Nature of

Title of % of Ownership
Name of Beneficial Owner Position No. of Citizenship
Holdings (D) Direct
Class Shares
(I) Indirect
Common Maria Cristina L. Go EVP 59,741 0.00% D Filipino
Common Eugenio P. Mercado EVP 68,005 0.00% D Filipino
Common Marie Josephine M. Ocampo EVP 227,427 0.01% D Filipino
Common Juan Carlos L. Syquia EVP 28,080 0.00% D Filipino
SUB-TOTAL 383,253
TOTAL 6,905,069

None of the members of the Bank’s Board of Directors and Management owns 2.0% or more of the outstanding
capital stock of the Bank.

2. Voting Trust Holders of 5% or More

The Company knows of no persons holding more than 5% of common shares under a voting trust or similar
agreement.

3. Minimum Public Ownership

As of December 31, 2023, listed securities held by the public were at 51.33% of BPI’s outstanding common
shares. This is above the minimum required public float level of 10%.
 53

Item 12. Certain Relationships and Related Party Transactions

In the normal course of business, the Parent Bank transacts with related parties consisting of its DOSRI
(Directors, Officers, Stockholders, and Related Interests), Subsidiaries and Affiliates including Other Related
Parties. Likewise, BPI Group has transactions with Ayala Corporation (AC) and its subsidiaries and affiliates (Ayala
Group), on an arm's length basis. AC is a significant stockholder of BPI as at reporting date.

The Parent Bank has a Board-level Related Party Transactions Committee (RPTC) that vets and endorses all
significant related party transactions, including those involving DOSRI, for which the latter shall require final
Board approval. The RPTC consists of three directors, majority of whom are independent directors including
the Chairman, and two resource persons from management, namely, the Chief Audit Executive and the Chief
Compliance Officer.

Transactions with related parties have terms and conditions that are generally comparable to those offered to
non-related parties or to similar transactions in the market.

Significant related party transactions and outstanding balances as at and for the year ended December 31, 2023,
are summarized below:

A more detailed discussion on related party transactions can be found in Note 25 of the 2023 Audited Financial
Statements.
 54

PART IV – CORPORATE GOVERNANCE

Item 13. Corporate Governance

I. Corporate Governance Framework

We anchor our corporate governance framework on: (i) qualified and competent leadership, (ii) rigorous
internal controls, (iii) an effective risk culture and (iv) strong accountability to shareholders. The Bank’s
corporate governance framework is defined by its Articles of Incorporation, Amended By-Laws and Manual on
Corporate Governance, and takes into account the nature, size, complexity, business activities and requirements
of the Bank as well as its group operations. Banking practices, guided by BPI’s Board and Committee charters,
the Manual of Corporate Governance, Code of Business Conduct and Ethics and internal operating manuals,
reflect the integrity and ethics that define the Bank’s decision-making, conduct and behavior, and are consistent
with statutory laws, rules and regulations of the Bangko Sentral ng Pilipinas (BSP), Securities Exchange
Commission (SEC), Anti-Money Laundering Council, Philippine Deposit Insurance Corporation, among others.

As a publicly listed company, BPI recognizes that robust corporate governance policies and practices promote a
fair and sound market valuation of BPI shares and maintain the confidence of customers and investors alike. BPI
strives to be jointly compliant with corporate governance and listed company disclosure requirements and
standards of the SEC and the Philippine Stock Exchange. As an issuer in capital markets, the Bank also has a
policy of continuous disclosure and transparency and utilizes disclosure mechanisms of the various exchanges
in which its capital market issuances are traded. BPI also actively pursues alignment with best practices of
counterparts in the region. The Bank strongly supports initiatives to strengthen regional capital market
development and integration, especially through adoption of rigorous benchmarking methodology of the ASEAN
Corporate Governance Scorecard. In addition, considering BPI’s role in the group as parent and publicly-listed
company, the Board maintains an effective, high- level risk management and oversight process across other
companies in the group to ensure consistent adoption of or alignment with the aforementioned corporate
governance policies and systems.

II. Board Governance

a) Advisory Council. As part of the Bank’s efforts to strengthen stewardship further, the Bank’s Advisory
Council to the Chairman, created in 2016, currently has five-members, comprised of senior thought leaders,
captains of industry and luminaries in their respective fields, the Advisory Council expands the range of
expertise, experience, and collective wisdom available to the Bank.

b) Board of Directors. Our fifteen-member Board plays a key role in setting our governance standards to meet
our stakeholders’ expectations. In 2023, Non-Executive Directors (NEDs) comprising a majority or 14 out of
the 15, were elected to the Board in April. The only Executive Director (ED) is the President and CEO. The
size of our Board is deemed appropriate given the complexity of operations of the Bank and the entire BPI
group, the geographical spread of our business, and the significant time demands placed on the Directors.
In 2023, the following membership and director classification changes occurred:

• At its meeting held on February 15, 2023, the Board approved the appointment of Ms. Janet Guat Har Ang
as Interim Chairman of the Risk Management Committee (RMC) for the remainder of the current board
term 2022-2023 replacing Mr. Octavio Victor R. Espiritu. The Board likewise approved the update of the
composition of RMC from the current five (5), to three (3), board members, composed of Independent
Director Janet Guat Har Ang, Independent Director Cesar V. Purisima and Non-Executive Director Octavio
Victor R. Espiritu.

• At the Annual Stockholders’ Meeting on April 27, 2023, Mr. Karl Kendrick T. Chua and Ms. Rizalina G.
Mantaring were elected as new members of the Board.

• At its meeting held on May 17, 2023, the Board approved the appointment of Mr. Karl Kendrick T. Chua as
an additional member of the Retirement/Pension Committee.
 55

• At its meeting held on September 20, 2023, the Board elected Mr. Fernando Zobel de Ayala (“Mr. Zobel”)
as Director vice Mr. Romeo L. Bernardo (“Mr. Bernardo”) who had resigned effective September 12, 2023
in view of his appointment to the Monetary Board of the Bangko Sentral ng Pilipinas (BSP). Mr. Zobel was
also appointed as a member of the Executive Committee and Personnel and Compensation Committee vice
Mr. Bernardo. With his election to the Board of Directors, Mr. Zobel relinquished membership in BPI’s
Advisory Council.

Chairman and Vice-Chairman. The Board has a Chairman and Vice-Chairman, both of whom are non-
executive directors. The Chairman, who is not the CEO of the Bank in the past three years, is separately
appointed from the President and CEO. Said positions are currently held by two individuals who are not
related to each other and have roles and responsibilities that are also separate and distinct, as detailed in
the Manual on Corporate Governance. The Chairman guides the Board in its decision-making process and
ensures that the Board operates effectively as a team. The Chairman also forges a positive and constructive
working relationship between the Board and management. With the Chairman at the helm, the Board sets
BPI’s strategy and risk appetite, and approves capital and operating plans presented by management for
sustainable achievement of strategic objectives. In the absence of the Chairman of the Board, the Vice
Chairman assumes and performs all the powers and duties of the Chairman of the Board.

Lead Independent Director. At the Organizational Meeting of the Board of Directors, following the 2023 BPI
Annual Stockholders' Meeting, Independent Director Rizalina G. Mantaring was appointed as Lead
Independent Director. Although current regulations of the BSP require the appointment of a Lead
Independent Director only when the positions of Chairman of the Board of Directors and CEO are, with prior
approval of the Monetary Board, held by one person, the Board appointed a Lead Independent Director in
pursuit of best practice governance standards.

Diversity and Independence. Our leadership model ensures an appropriate balance of power,
accountability, and independence in decision-making. As disclosed on the company website, the Board
adopted a Diversity Policy, in 2015 to institute diversity at the board level; In 2023, 3 out of 15 or 20% of
the Board was comprised of women, which are all Independent Directors. For the 2023 to 2024 Board term,
six out of the 15–member board elected or 40% of the Board are classified as Independent or having no
interest or relationship with BPI at the time of election, appointment, or re-election. Fourteen or 93% of
the Board are Non-Executive Directors, who are not involved in the day-to-day management of banking
operations.

c) Board Charter. The Charter of the Board articulates, with specificity, the governance and oversight
responsibilities exercised by its directors and their roles and functions in the Bank. It includes provisions on
board composition, committees, and governance, subject to provisions of the Bank’s Articles of
Incorporation, Amended By-Laws, and applicable laws. It is incorporated in the BPI Manual on Corporate
Governance (MCG) and reviewed with the annual review of the Manual. The Bank’s updated and revised
MCG was approved and adopted by our Board in its entirety on January 17, 2024. As stated in the Charter,
the Board’s key areas of focus include:

• Governance – Ensuring that corporate responsibility and ethical standards underpin the conduct of BPI’s
business; developing succession plans for the Board and CEO; establishing the general framework of
corporate governance for the Bank;
• Strategy - Reviewing BPI’s strategic and business plans; growing the business sensibly and building resilience
into the franchise;
• Risk management – Ensuring that effective risk management, compliance and assurance processes
undergird our business;
• Financial performance – Monitoring management performance; achieving goals and targets;
• Sustainability - Considering sustainability issues (including environmental and social factors) and including
these as part of the Bank’s strategy.
 56

d) Board Committees. To heighten the efficiency of board operations, the Board has established Committees
that assist in exercising its authority for oversight of internal control, risk management, and performance
monitoring. In 2023, the Bank had eight board-level committees: Executive, Risk Management, Audit,
Corporate Governance, Personnel and Compensation, Nomination, Retirement and Pension, and Related
Party Transactions Committees. Board-level committee memberships were also evaluated and calibrated
to improve the committee’s focused oversight and high-level engagement with management. The
respective charters stating committee purpose, membership, structure, operations, reporting processes
and other information are disclosed in regulatory reports, posted on the company website and reviewed
by the committees annually. Annual performance reviews are conducted by all board-level committees.

e) Corporate Secretary. The Board is assisted in its duties by a Corporate Secretary who is not a member of
the Board of Directors and is a senior, strategic-level corporate officer who plays a leading role in the Bank's
corporate governance, serving as an adviser to the directors on their responsibilities and obligations. The
Board has separate and independent access to the Corporate Secretary. All directors and board committees
also have unrestricted access to company records and information in addition to receipt of regular detailed
financial and operational reports from senior management. Our Corporate Secretary is suitably trained and
experienced in legal, accountancy or company secretarial practices and is professionally qualified for these
responsibilities. Our Corporate Secretary also possesses the legal skills of a chief legal officer whose training
is complemented by business, organizational, human relations, and administrative work skills. Our
Corporate Secretary is also Corporate Secretary of various BPI subsidiaries and affiliates.

f) External Advice. Considering the increasing complexity of market transactions and rapid rate of change in
the regulatory sphere, the Board, if so requested by the Chairman or other directors, can call on external
specialists or consultants for advice, briefings, or assistance on specialized areas of focus such as accounting
standards, related party transactions, capital, tax, listing, mergers and acquisitions, valuation, etc.
Management can arrange for the external auditor, management services company or consultants to
present to the Board and the Bank.

g) Nomination. As we are a financial institution imbued with public interest, fit and proper qualifications for
membership in our Board of Directors are dictated by our Amended By-Laws, Manual on Corporate
Governance, the Corporation Code, and relevant regulations of the Bangko Sentral and the SEC. As a publicly
listed company, we also ensure that Board composition and director qualifications also meet pertinent
governance regulations, requirements, and standards of the PSE. As disclosed in the Manual on Corporate
Governance, candidates for directorship may be recommended by shareholders to the Nomination
Committee through the Office of the Corporate Secretary. Among other qualifications, candidates must be
fit and proper for the position of a director, taking into consideration integrity/probity, physical/mental
fitness, relevant education/financial literacy/training, possession of competencies relevant to the job such
as knowledge and experience, skills, diligence and independence of mind and sufficiency of time to carry
out responsibilities. Candidates recommended by shareholders are evaluated in the same manner as
director candidates identified by any other means. The Committee itself may likewise identify and
recommend qualified individuals for nomination and election to the board and may make use of
professional search firms or other external sources to search for qualified candidates to the board. Separate
qualifications and disqualifications for Independent Directors based on regulations are enumerated in the
Bank’s Manual on Corporate Governance. Directors must remain qualified throughout the term. All of the
Bank’s annual reports contain comprehensive profiles of the Board of Directors which disclose the age,
qualifications, date of appointment, relevant experience and directorships both in the BPI group as well as
in other companies, listed or otherwise. In compliance with SEC Memo. Cir. No. 11, s2014, the Bank also
posts biographical details of the Board of Directors and Senior Management on the company website.

h) Election and Term of Directors. Board members are elected by BPI stockholders who are entitled to one
vote per share at the Bank’s Annual Stockholders Meeting. Voting for the election of members of the Board
is considered in a poll, by shares of stock, that is, one share entitles the holder to one vote, two shares to
two votes. Votes may be cumulated as provided for in the Corporation Code. The fifteen nominees receiving
 57

the highest number of votes are declared elected. The Bank’s Amended By-Laws state that elections for the
Board of Directors will be held yearly during the Annual Stockholders Meeting. Directors are to hold office
for a term of one (1) year immediately upon their election and until the next election when their successor
shall have been elected and qualified in accordance with the Amended By-Laws and Corporation Code. No
meeting of stockholders shall be competent to transact business unless a majority of the outstanding and
subscribed capital stock entitled to vote is represented, except to adjourn from day to day or until such
time as may be deemed proper. The Rules of Conduct, voting and vote tabulation procedures are explained
during the Annual Stockholders Meeting. In its meeting held on February 15, 2023, the Board approved
Management's recommendations for BPI to provide the Bank’s stockholders with the option to vote in
absentia through an online electronic system in the 2023 Annual Stockholders Meeting. Hence, at the April
27, 2023, Annual Stockholders Meeting, BPI stockholders were able to effectively participate and had the
option to cast votes in absentia through an online electronic system, as also provided for in the Revised
Corporation Code. The Office of the Corporate Secretary tabulates all votes received and the Bank’s external
auditor validates the results. Voting results are likewise disclosed on the various exchanges where BPI’s
capital market issuances are traded and the company’s website as soon as possible after the meeting. The
election/appointment of directors/officers must also be confirmed by the Monetary Board of the BSP.
Elected/appointed directors/officers must submit required certifications and other documentary proof of
qualifications for the confirmation of their election/appointment. The nomination and election processes
and their effectiveness are reviewed annually by the Nomination Committee during its review of the
committee charter and its self-assessment, by its members, of committee performance. In adherence to
Recommendation 2.6 of the SEC CG Code for PLCs, these nomination and election policies are disclosed in
BPI’s Manual on Corporate Governance as well as on the company website.

i) Directorships in PLCs. The Bank applies a limit of five on directorships of Non-Executive Directors and
Independent Directors in publicly-listed companies and within conglomerates. Internally, the Bank ensures
that the policy does not impinge on or violate a shareholder’s ownership rights and legal right to vote and
be voted upon as directors.

j) Interlocking Directorships. The Bank has a Policy on Directors and Officers Interlocking Positions which: (1)
adopts the rules as provided by BSP Circular No. 1129 for determining allowable and prohibited interlocking
positions; (2) establishes internal guidelines, procedures and processes for proper management of
directors’ and officers’ interlocking positions, and; (3) sets out the minimum requirements from the circular
for monitoring, compliance and regulatory reporting of director and officer interlocking positions in the BPI
Group.

k) Meetings and Attendance. The BPI Board meets regularly for the effective discharge of its obligations.
Regular board meetings are convened monthly. Board of Directors meetings are scheduled at the beginning
of the year to cover the full term of the newly elected or re-elected members of the Board, reckoned from
the date of the current year’s Annual Stockholders Meeting to that of the following year. Special meetings
may be called for as needed. Items placed on the board agenda are those that have the most fundamental
importance and broad policy implications for the Bank. Directors are free to suggest items for inclusion in
the agenda and are free to raise at any board meeting subjects that are not on the agenda for that meeting.
At the Chairman’s discretion, any agenda items may also be referred for discussion in the respective
committees. The Chairman presides over meetings of the Board. The Vice Chairman presides in the absence
of the Chairman. Board and committee meetings are conducted consistent with the Bank’s Amended By-
Laws. Discussions during the board meetings are open and independent views are given consideration. The
minimum quorum requirement for board decisions is set at two-thirds (2/3) of Board members as provided
by the Bank’s Amended By-Laws. In November 2019, the Board approved the amendment of the company
By-Laws to, among others, raise the minimum quorum at any meeting for the transaction of corporate
business from a majority to two-thirds (2/3) of the members of the Board of Directors. When necessary,
the Board holds executive sessions to discuss sensitive matters. Board reference materials are made
available to the directors at least five days in advance of the scheduled meeting. As an innovation to board
governance, all materials for Board and Board committee meetings are uploaded through a secure system
 58

onto individual tablet devices specifically provided to the Board members to ensure immediate receipt and
quick access. Independent and Non-Executive Directors of the Bank also meet at least once a year without
the presence of the executive director or management. In 2023, average attendance of re-elected and
newly elected members at the Board of Director’s 14 meetings was 99%. When exigencies prevent a
Director from physically attending a Board or Board committee meeting, facilities for telephone
conferencing are made available. In those instances when a Director is unable to attend meetings even
through teleconferencing due to prior commitments or unavoidable events, said Director provides input to
the chairman so that his views can be known and considered. The Bank’s Non-Executive Directors
conducted a separate meeting on November 20, 2023 to discuss ongoing initiatives and semestral
performance of the risk management, internal audit and compliance units of the Bank. The meeting was
chaired by the Bank’s appointed lead Independent Director. Aside from the NEDs present, the meeting was
also attended by the BPI control heads – Chief Risk Officer, Chief Audit Executive and Chief Compliance
Officer. The external auditor was also in attendance.

l) Continuing Education. The Bank ensures that it has in place a formal board and director development
program. For new directors, there is a deliberate, systematic and rapid familiarization with the organization
and the operations of the board, Articles of Incorporation and Amended By-Laws, Manual of Corporate
Governance, Board Charter as well as the Code of Conduct, standards of Conflict of interest and policies
such as Insider Trading, Whistleblowing, Data Privacy and Related Party Transactions. The Bank, through its
various units, also provides continuing director education in relation to current developments; these
include regulatory initiatives with respect to Data Privacy, Cyber Risk and Cyber Security, the Anti-Money
Laundering and Terrorist Financing Prevention Program, Foreign Account Tax Compliance Act, Securities
Regulations Code, Sustainability Issues and ESG Reporting, SEC memorandum circulars, and BSP regulations,
among others. All the Bank’s directors undergo the requisite corporate governance seminar provided by an
SEC or Bangko Sentral-accredited institution. On October 03, 2023, members of the Board, including senior
officers of the Bank, attended the Annual CG Training Program conducted by the Institute of Corporate
Directors (ICD). Other directors attended corporate governance training conducted by the ICD on December
15, 2023.

m) Remuneration. The remuneration decisions for the Board and management are aligned with risk incentives
and support sustainable, long-term value creation. Apart from ensuring that Board and management pay
appropriately reflects industry conditions and financial performance, the Bank likewise rebalances returns
back to shareholders through a consistent dividend declaration. Under the Bank’s Amended By-Laws, as
approved by the shareholders, the Board, as a whole, determines the level of remuneration and/or benefits
for directors sufficient to attract and retain directors and compensate them for their time commitments
and responsibilities of their role. The Personnel and Compensation Committee recommends to the Board
the fees and other compensation for directors, ensuring that compensation fairly remunerates directors for
work required in a company of BPI’s size and scope. As provided by the Amended By-Laws and pursuant to
a Board resolution, each director is entitled to receive fees and other compensation for his services as
director. The Board has the sole authority to determine the amount, form, and structure of the fees and
other compensation of the directors. In no case shall the total yearly compensation of the Board exceed 1%
of the Bank’s net income before income tax during the preceding year. Directors receive per diems for each
occasion of attendance at meetings of the Board, P70k, or of a board committee, P30k. All fixed or variable
remuneration paid to directors may be given as approved by stockholders during the Annual Stockholders
Meeting, upon recommendation of the Personnel and Compensation Committee. Other than the usual per
diem arrangement for Board and Committee meetings and the aforementioned compensation of Directors,
there is no other standard arrangement as regards compensation of directors, directly or indirectly, for any
other service provided by the directors for the last completed fiscal year. Directors with executive
responsibilities within the BPI group are compensated as full-time officers of the company, not as Non-
Executive Directors. No director participates in discussions of the remuneration scheme for himself or
herself. Historically, total compensation paid annually to all directors has been significantly less than the
cap stipulated by the Bank’s Amended By-Laws. The remuneration policy is reviewed annually to ensure
that it remains competitive and consistent with the Bank’s high-performance culture, objectives, long-term
 59

outlook, risk assessment and strategies. This relationship between remuneration and performance aligns
the remuneration of the Board with the long-term interests of the Bank.

n) Performance Evaluation. The Board conducts an annual board effectiveness review under the guidance of
the Corporate Governance Committee, which ascertains alignment of leadership fundamentals and issues,
and validates the Board’s appreciation of its roles and responsibilities across four levels: the Board as a
body, Board Committees, individual Directors and the President and CEO. Key evaluation criteria are built
on the Board’s terms of reference and committee charters and framed around broad leadership
fundamentals and best practice. The Corporate Governance Committee processes and tabulates the results
of the self-assessments and communicates them to the Board. Areas for improvement are discussed by the
Board, in order to agree on remedial actions. The Corporate Governance Committee may also develop
recommendations and action plans for the Board, whenever necessary and desirable. In adherence to
Recommendation 6.1 SEC CG Code for PLCs the Board may also consider the use of an independent, external
facilitator in the conduct of the Board self-assessment. In this respect, the Board conducted its 2023 annual
performance evaluation in early 2024. Directors assessed that the Board as well as its committees and
individual directors had performed their duties and responsibilities effectively for the past year and that
there were no material issues with respect to membership, governance and operations. This also included
an assessment of the President and CEO.

o) Succession Planning. Our Board is regularly refreshed in a continuing cycle. The Nomination Committee and
the Corporate Governance Committee work within a general board succession plan framework to ensure
that: 1) appropriate governance processes are in place and ongoing, for identifying, assessing and
monitoring future needs of the Board; 2) there is continuity and transfer of knowledge in the Board so that
it may effectively fulfill its role and responsibilities to BPI, as that may evolve over time, and; 3) the Board
is taking a prudent and structured approach to managing succession risk. (BSP Cir. 969 and
Recommendation 2.4 SEC CG Code for PLCs) The Corporate Governance Committee assists the Nomination
Committee in the annual review and assessment of the structure, size and composition of the Board and
Board-level committees. The committees take into consideration the Bank’s current strategy and business,
regulatory requirements on independence and diversity, as well as comparative benchmark and peer group
analysis. The Corporate Governance Committee also utilizes a Skills and Expertise Matrix to proactively
shape board composition, identify competency gaps, if any, and build the desired or required competency
profile against which candidate directors will be assessed. Using a point system, succession planning
priorities are then determined to guide the Nomination Committee in the assessment of candidates and in
managing current and future requirements of the Board. The Board understands the importance of
succession planning and, through its Personnel and Compensation Committee (PerCom), manages the
talent pipeline and assembles the right executive and leadership appetency capable of navigating the Bank
through strategic, market, technology, and regulatory shifts. In consultation with the Board and the
President and CEO, either the PerCom evaluates and nominates potential successors to the President and
CEO, as well as ensures there is a sufficient pool of qualified internal candidates to fill other senior and
leadership positions. The Bank’s effective succession planning has ensured leadership continuity within the
last two decades, witnessing four President and CEO changes, marked by early planning and mentoring,
smooth organizational and operational transitioning and prudent but progressive institutional building at
BPI and across the BPI group. We believe that it is crucial to have a good balance between continuity and
fresh perspectives on the Board. In much the same way, our Board is regularly refreshed in a continuing
cycle. The Nomination Committee and the Corporate Governance Committee work within a general board
succession plan framework to ensure that the Board is able to fulfill its fiduciary duties so that the Bank
remains relevant, agile, and anticipatory of future programs and directions.

p) Retirement Policy. The Bank believes that imposing uniform and fixed limits on director tenure is
counterproductive as it may force the arbitrary retirement of valuable directors. It is the Bank’s strong view
that with age often comes unmatched wisdom and experience, expert business judgment, invaluable
industry and community relations and authority, and that the best interests of the Bank are served by its
being able to retain directors that make very meaningful contributions to the Board and the organization
 60

regardless of age. The Bank, therefore, sets the retirement age for Directors at 80 years of age but the Board
may opt to waive depending on specific conditions. Term limits of Independent Directors are set at a
maximum cumulative term of nine (9) years as prescribed in the Manual of Regulations for Banks and SEC
Mem.Cir.No. 9, Series of 2011 and No. 4, Series of 2017. Retirement of senior management is done with
the requisite succession planning and in accordance with the Bank’s policies and implementing guidelines
of its retirement plan for all employees, the Bank’s Amended By-Laws, Labor Code and the Corporation
Code of the Philippines. Currently, the retirement age for Bank employees is set at 60 years old.

III. Risk, Control, and Compliance Oversight and Management Relations

a) Audit. Based on Internal Audit assurance activities, Internal Audit provides reasonable assurance to the
Audit Committee, Board of Directors and Senior Management that the Bank’s systems of internal controls,
corporate governance, and risk management processes are adequate and generally effective. This unit
reports directly to the Board through its Audit Committee. It collaborates with other assurance providers
such as the Risk Management Office, Compliance Office, external auditors, and other oversight units.
Through this system for the comprehensive monitoring and review of risks and compliance in the
institution, the Board ensures that the Bank and all business units proactively manage the risk and
compliance exposures impacting the business. The Internal Audit Division is headed by a Chief Audit
Executive who is appointed by the Board and reports functionally to the Board of Directors through the
Audit Committee and administratively to the President and CEO. The Audit Committee recommends to the
Board the appointment of a Bangko Sentral-accredited external auditor for the purpose of preparing or
issuing an audit report or related work. The appointment or re-appointment of the Bank’s external auditor
is subject to approval and endorsement by the Audit Committee, for subsequent confirmation and approval
by the Board of Directors and finally the Stockholders.

b) Risk Management. In the same way, the Board’s Risk Management Committee, with the assistance of
management’s Risk Management Office and its Chief Risk Officer, reviews and recommends the Bank’s
enterprise risk and capital management framework to ensure that it conforms not only to the Bank’s own
rigorous standards, but also to Bangko Sentral directives promoting an effective Internal Capital Adequacy
Assessment Process. The Chief Risk Officer is appointed by the Risk Management Committee, with approval
and confirmation of the Board. The CRO is responsible for leading the formulation of risk management
policies, methodologies, and metrics in alignment with the overall strategy of the Bank, ensuring that risks
are prudently and rationally undertaken and within the Bank’s risk appetite, as well as commensurate and
disciplined to maximize returns on capital. The CRO and the RMO facilitate risk management learning
programs and promote best practices on an enterprise- wide basis. The RMC also assesses the annual
performance of the Chief Risk Officer and risk management functions taking into account how it carried out
its duties and responsibilities.

c) Compliance. Oversight of the management of the Bank’s business risk and implementation of its compliance
function is the responsibility of our Board of Directors, through the Audit Committee. At the management
level, the compliance function is carried out by the Compliance Office, led by our Chief Compliance Officer
(CCO). Designated by the Chairman of the Board, our CCO is not a member of the Board of Directors and
has the rank of Senior Vice President. The CCO’s qualifications are subject to the applicable provisions of
the Manual of Regulations for Banks, particularly considering fit and proper criteria such as
integrity/probity, competence, education, diligence, experience, and training. The CCO annually attends
corporate governance training.

d) Strategy Process. The Bank’s vision, mission, strategic objectives, key policies, and procedures for
management of the company are clearly established and communicated down the line. The Board of
Directors creates the framework within which the executive team, under the President and CEO, can lead
the business and deliver the agreed strategy. The Board conducts a periodic review of the foregoing and
has continuing oversight in its implementation. The management team articulates the agreed strategy in
periodic planning exercises and distills business plans in formal budgets. Periodic performance reviews are
conducted against budgets and past performance. Management acts in accordance with well- defined
 61

operating policies and procedures, and ensures accuracy and transparency of operational and financial
reporting to protect the Bank’s reputation for integrity and fair dealing. The management team strives to
achieve accountability in revenue performance, efficiency in expenditure of resources, and high quality in
delivery of services and achievement of customer satisfaction. Management is periodically reviewed and
rewarded according to performance relative to innovation, initiatives, assigned targets, and feedback from
customers, peers, and Board. The President heads a management team who lead supervise work of the
Bank’s business units, which includes but is not limited to the Chief Finance Officer, Chief Risk Officer, Chief
Audit Executive, and Chief Compliance Officer who provide focused and strategic, functional leadership and
expertise. Management level committees are in place to deal with operational functions from a strategic
level and serve as counterpoints to senior and mid-level managers.

IV. Corporate Governance Policies and Practices

a) Manual on Corporate Governance. The Bank has a Manual on Corporate Governance which documents the
framework of policies, rules, systems, and processes in the corporation that governs the performance by
the Board of Directors and Management of their respective duties and responsibilities to stockholders and
other stakeholders. A certification on the Bank’s full compliance with the Manual, signed and issued by the
Chief Compliance Officer, is posted on the Corporate Governance section of the company website. The
Manual on Corporate Governance, reviewed annually, was last amended in January 2024. When updated
or amended, the Manual is resubmitted to the SEC. The Manual is also posted on the company website.

b) Code of Conduct. BPI has Codes of Business Conduct and Ethics for its directors, officers and employees
that provide the key practices and behaviors derived from the BPI Credo and Core Values, that guides what
they say and do, in order that the right decisions are taken in performing their respective roles and
responsibilities across various functions in the Bank and in handling relationships with all stakeholders.

Employee Code of Business Conduct and Ethics. The Code is applicable to and mandatory for all BPI
employees at all levels, including officers, as are the core values embodied in the Bank’s Credo. As no code
could address every situation an employee may encounter, all employees, including officers, are required
to follow both the spirit and the letter of the Code, its policies, and procedures. All BPI officers and
employees must abide and fulfill their duty and personal responsibility to read, understand and comply with
the Code.

Director’s Code of Conduct. BPI has a Code of Conduct for its Board of Directors, adopted in September
2017, which applies to and is binding on all directors of the Bank. The Director’s Code is intended to provide
guidance to directors, whether executive, non-executive or independent, with policies on standards for
conduct of the business of the Bank, the protection of the rights of the Bank and its stakeholders,
maintaining BPI’s reputation for integrity and fostering compliance with applicable laws and regulations.
The Director’s Code, therefore, sets forth policy in several basic areas that commonly require directors to
exercise sound and informed judgment, recognize and deal with ethical issues, report possible unethical
conduct, and foster a culture of openness, fair dealing, diligence and accountability.

Compliance with the Codes. All employees, including senior officers and directors, acknowledge annually
through a Statement of Affirmation that they have read and understood the employee Code of Conduct
and/or the Director’s Code, respectively, as well as the Manual on Corporate Governance, and fully comply
and adhere to principles, standards and policies therein.

c) Conflict of Interest. BPI does not tolerate those who place their interest above that of our institution, our
clients, or our business partners. We have in place standards on conflict-of- interest that elevate the interest
of the Bank above that of the personal interests of Directors, officers, and employees. These standards
prohibit Directors, officers, and employees from using their position of authority or rank to directly or
indirectly derive personal gain or advantage. Our standards on conflict of interest expect all Directors,
officers and employees to refrain from any conduct that could be viewed unfavorably by our clients, co-
employees, competitors, suppliers, investors, regulators, or the public. The standards also require full
cooperation and provision of complete and accurate information from employees during government,
 62

regulatory or internal enquiries, investigations, and audits. The standards also cover specific conflict-of-
interest situations such as receipt of gifts from third parties, respect for trade secrets, and use of non-public
information, and use of company funds, assets and information.

d) Whistleblower Policy. This policy covers all employees of BPI and all wrongful acts that adversely impact
the Bank and its stakeholders. Under the policy, all personnel are responsible for complying with rules and
regulations of the Bank and reporting or suspected violations in accordance with the policy. Anybody who
knowingly aids, abets, or conceals or otherwise deliberately permits the commission of any irregular or
fraudulent act directed against the Bank shall be considered as guilty as the principal perpetrators of the
fraud or irregularity. Hence, all employees have a duty to cooperate with investigations initiated under the
policy. No action will be taken against anyone for reporting such violations in good faith or participating or
assisting in investigations of a suspected violation. Any act of retaliation against a whistleblower is a
violation of the Whistleblower Policy and Code of Business Conduct and Ethics.

e) Related Party Transactions Policy. This policy guards against internal conflicts of interest between the
company and/or its group and their directors, officers and significant shareholders and ensures that
transactions such as loans and advances, deposit arrangements, trading of government securities and
commercial papers, sale of assets, lease of bank premises, investment advisory/management, service
arrangements and advances for operating expenses are made in the normal course of banking activities
with terms and conditions that are generally comparable to those offered to nonrelated parties or to similar
transactions in the market. Vetting transactions with related parties is done either by the board-level
Related Party Transaction Committee (RPTC) or Management Vetting Committee (MVC), depending on
materiality, prior to implementation. The two committees provide guidance and vet on credit and non-
credit related party transactions of significant amounts (P50Mn and above for RPTC and below P50Mn for
MVC). Related party transactions are properly disclosed in BPI’s audited financial statements, and
applicable fillings in accordance with relevant rules and issuances of SEC, BSP, etc.

f) Insider Trading Policy. This policy, in general, prohibits covered persons, i.e., directors, officers, employees
of BPI and BPI’s subsidiaries, and other parties who are considered to have knowledge, made aware of or
have access to inside information or material non-public information, from buying or selling BPI stocks for
their own personal account to benefit themselves or others, especially during the blackout trading period.
All directors and senior management (SVP and up), Treasurer, Corporate Secretary and Assistant Corporate
Secretary, are also required to report to the Compliance Office within ten (10) days from the end of each
quarter their trades of shares of BPI stock during such quarter. In compliance with the SEC, all directors and
senior management file within three (3) business days the required SEC Form 23A/B. Officers and directors
are expected to comply with the Policy and to be knowledgeable of BPI’s related policies, standards, or
internal procedures such as on information barriers, which impact on compliance with the Insider Trading
Policy. A breach of the Insider Trading Policy may result in internal disciplinary action and any violation of
related securities laws may also subject the Bank and/or the director to civil liability and monetary penalties.

g) Anti-Bribery and Anti-Corruption Policy, Anti-Money Laundering and Financial Crime Policies. The Bank puts
the highest premium on sound, responsible and effective corporate governance and does not tolerate
bribery, corruption or improper payments of any kind. It advocates that Directors, officers and employees
do not tolerate corruption or any form of bribery nor provide or accept improper inducements in the course
of any business dealing. Aligned with the Bank’s commitment to act fairly and with integrity in all business
dealings and relationships, the Anti-Bribery and Anti-Corruption Policy complements the BPI’s financial
crime policies/programs such as the Money Laundering and Terrorist Financing Prevention Program and
Whistleblower Policy. Guidance on the Bank’s Anti-Corruption and Anti-Bribery program is supplemented
by the Bank’s Standards on Conflict of Interest under Request or Acceptance of Fees, Commissions, Gifts.
Monitoring and compliance with the Code of Conduct and related policies are undertaken by departments
or units of the Bank such as Human Resources and Corporate Governance, Compliance Division.
 63

h) Data Privacy Policy. BPI has a strong Data Privacy Policy in place, which complies with the requirements of
the Data Privacy Act and the National Privacy Commission (NPC). BPI’s Data Privacy Policy, posted on the
company website, is supported by a comprehensive program utilizing a combination of policies,
organizational structure, access controls and technologies designed for risk reduction. The Bank has a Data
Privacy Office, headed by a Board-appointed Data Privacy Officer (DPO), a lead senior management officer.
The key focus of the DPO is to oversee data privacy compliance and manage data protection risks consistent
with Data Privacy Act rules and regulations, issuances by the NPC and other applicable laws. Management
has also appointed Compliance Officers for Privacy for major business units of the Bank.

i) Employee Welfare, Health and Safety. Having engaged and competent employees is BPI’s goal for delivering
best-in-class customer experiences and for achieving its vision of being recognized as the most trusted
partner and financial advisor. The Bank strives to be an employer of choice among Philippine financial
institutions. We have a wide array of training and development programs and activities designed along the
Bank’s business objectives, aimed at honing the skills and capabilities of our employees in carrying out their
daily duties, as well as preparing them to assume higher responsibilities as the next leaders of the
organization. The Bank has adopted a compensation policy that it believes is competitive with industry
standards in the Philippines. Regular employees are provided with a comprehensive pay and benefits
package, which is reviewed periodically and adjusted to retain current employees and attract new talent.
Tied to this is a performance management system that calls for the alignment of individual key results,
competencies, and development plans with the Bank’s overall business targets and strategy. Officers and
employees undergo regular performance evaluations based on their individual accomplishments as well as
that of the business unit or the Bank. The Bank has an Executive Stock Purchase Plan (ESPP), a major
initiative under its long-term incentive program, which aligns management’s interest with shareholders and
the long-term prospects of the Bank. Moreover, we strive to provide a safe, secure, and conducive working
environment for our employees, to continually safeguard their health and rights and provide equal
opportunity for everyone to realize their fullest potential and make them agents of uplifting change for
their communities. (Recommendation 2.9 of the SEC CG Code for PLCs)

V. Investor Relations, Continuous Disclosure and Transparency

a) Investor Relations. Through its Investor Relations Office, the Bank employs a program of proactive, uniform,
appropriate and timely communication, and reporting, in the spirit of full disclosure and in compliance with
the Securities Regulation Code and Bangko Sentral, SEC and PSE rules, regulations and disclosure guidelines.
The Bank provides company presentations in the Annual Stockholders Meeting and conducts analysts and
media or press briefings apart from maintaining the relevant disclosures on its website. The Board has a
policy of continuous disclosure and transparency and commits at all times to fully disclose all material
information about the company for the benefit of the stockholder and other stakeholders. Such information
includes earnings results, materially significant acquisition or disposal of assets, board changes, related
party transactions which are not in the ordinary course of business, shareholding of directors and major
changes to ownership/voting rights, group structures, intra- group relations, ownership data, and beneficial
ownership. As a listed company, BPI files structured and unstructured disclosures through the appropriate
Exchange mechanisms for listed companies and submits mandated regulatory reports to the SEC. The Bank
also maintains an official company website in accordance with the SEC-prescribed format and template to
ensure a comprehensive, cost-efficient, transparent, timely manner of disseminating relevant information
to the public. BPI also maintains official company sites on social media-based platforms.

b) Annual Stockholders Meeting (ASM). The ASM is held annually and is organized in an easy to reach and cost-
efficient venue and location in Metro Manila. The ASM allows shareholders to advise and adopt resolutions
on important matters affecting the Bank, such as: ratification of all acts and resolutions of the Board of
Directors and Management, approval of the annual report of the President and Bank’s statement of
condition, amendments to the Articles of Incorporation or By-Laws, election of Board of Directors and
external auditor as well as measures to amend the shareholders' equity. In 2023, the Annual Stockholders
meeting was conducted virtually via http://www.ayalagroupshareholders.com/. Shareholders intending to
participate by remote communication were requested to notify the Bank by email to [email protected].
 64

Notice of the ASM. The Notice is sent to shareholders well before the meeting date to allow shareholders
to review the meeting’s agenda and provide shareholders with sufficient information regarding issues to be
decided at the meeting; the Definitive Information Statement, or SEC Form 20-IS is issued in accordance
with BPI's Amended By-Laws and SRC 20. In 2023, the Notice was sent out to stockholders of record by
March 10, 2023, 27 days before the ASM.

Voting and Voting Results. All items in the agenda requiring stockholder approval need the affirmative vote
of at least a majority of the issued and outstanding voting stock. Stockholders may vote in person or in
absentia by proxy executed in writing by the stockholder or by a duly authorized attorney-in-fact. In its
meeting held on February 15, 2023, the Board approved Management's recommendations for BPI to
provide the Bank’s stockholders with the option to vote in absentia in the 2023 ASM. Hence, at the April
27, 2023, ASM, stockholders were able to effectively participate and had the option to cast votes in absentia
through an online electronic system, as also provided for in the Revised Corporation Code. Voting is
considered in a poll, by shares of stock, that is, one share entitles the holder to one vote. Cumulative voting
as provided for in the Corporation Code may be applied in the election of the Board of Directors and
directors are elected individually. The Rules of Conduct, voting and vote tabulation procedures are likewise
explained during the meeting. The Office of the Corporate Secretary tabulates all votes received and the
Bank’s external auditor validates the results. Voting results are disclosed on PSE EDGE and the company’s
website.

Shareholder Participation. BPI proactively encourages the full participation of all shareholders, including
institutional shareholders, at the ASM each year. Shareholders are encouraged to ask questions at the ASM
to ensure accountability and identification with the Board of Directors’ and Management’s strategy and
goals for the business of BPI.

Minutes of the Annual Stockholders’ Meeting. The Minutes of the ASM includes all information pertinent
to the meeting and is promptly disclosed on the company website within the period mandated by the SEC.
Minutes of the 2023 ASM were likewise posted on the company website within five (5) calendar days from
the date of the ASM.

c) Annual and Quarterly Reports. The Bank’s Annual, Quarterly and Current Reports are its primary disclosure
mechanisms used to impart knowledge about the Bank to all its stakeholders in an informative, structured
and cost-effective manner. The Annual and Quarterly accountability reports effectively detail its
performance during the period under review and put that performance in context of the objectives of the
Bank, its strategies and future direction. The Current Reports similarly provide timely updates on significant
corporate actions undertaken by the Bank. The Annual, Quarterly and Current Reports are regularly
submitted to the SEC pursuant to Section 17 of the SRC, which also prescribes format and content. These
Reports are also disclosed on the websites of the various exchanges where BPI capital market issues are
traded and on the company’s website. These may also be viewed at www.bpi.com.ph.
 65

VI. Sustainability, Stakeholder Engagement and ESG Reporting

a) Sustainability and Stakeholder Engagement

The Bank operates on a sustainability framework of shared values which emphasizes the importance of all
stakeholders and how their interests are integrated into the business of BPI. Stakeholder engagement takes
on various forms and is carried out through a range of information, communication, and consultative
activities and disclosures.

For employees: safeguarding and ensuring health and safety in the workplace; provisioning for flexible
work tools and work arrangements; setting-up learning and development programs; providing short and
long-term, merit-based performance incentive mechanisms and employee benefit programs.

For communities: extending credit and financial services to underserved and unbanked sectors;
providing financial literacy and capacity building educational programs; integrating ESG considerations
which affects local communities in credit assessment practices prior to loan approval and disbursement;
factoring ESG into business and risk models, products and services, as well as day-to-day operations;
holding Corporate Social Responsibility (CSR) initiatives centered on financial literacy, enterprise
development and livelihood, and disaster recovery.

For clients: supporting nation-building through sustainable development financing as well as financial
inclusion initiatives; providing financial wellness educational programs; ensuring financial consumer
protection and data privacy in accessing products and services; expanding means by which products and
services can be accessed (e.g. traditional brick-and-mortar branches, digital platforms, and agency banking
partners)

For suppliers: setting up a supplier policy based on the principle of business transparency and fair
competition; providing equal opportunities for qualified suppliers and contractors while ensuring a
sustainable supply chain observing good governance practices.

For creditors: ensuring counterparties are protected by fairness, accountability, and transparency; policies
and procedures are in place for safeguarding creditor’s rights as required by the BSP.

b) Environmental, Social and Governance Reporting

Our ESG performance evaluation and management discussions are likewise disclosed regularly, primarily
through the annual publication of the Integrated Report as well as periodic and special updates of the BPI
website. Sustainability disclosures are in accordance with the Integrated Reporting <IR> Framework, Global
Reporting Initiative (GRI) Standards, and Sustainability Accounting Standards Board (SASB) Standards for
Commercial Banks. Disclosures recommended by the Task Force for Climate-Related Financial Disclosures
(TCFD) are still included in BPI’s 2023 Integrated Report, following the discontinuation of the Task Force last
October 2023. As in previous years, an external assurance provider has been engaged for the ESG
disclosures in our integrated report. A copy of the latest BPI Integrated Report is available for download
from the BPI website (www.bpi.com.ph).

VII. Corporate Governance Awards and Recognition

In 2023, BPI was a recipient of the ICD’s Golden Arrow Award as a Top Performing Company in the domestic
assessment of the ACGS.
 66

PART V – EXHIBITS AND SCHEDULES

Item 14. Exhibits and Reports on SEC Form 17-C

a. Exhibits
Securities Regulation Code Forms

(1) Publication of Notice re: Filing NA

(2) Underwriting Agreement NA
(3) Plan of Acquisition, Reorganization, Arrangement, Liquidation, or Succession NA
(4) (A) Articles of Incorporation NA
(B) By-laws NA
(5) Instruments Defining the Rights of Security Holders, including indentures NA
(6) Opinion re: Legality NA
(7) Opinion re: Tax Matters NA
(8) Voting Trust Agreement NA
(9) Material Contracts NA
(10) Annual Report to Security Holders NA
(11) Material Foreign Patents NA
(12) Letter re: Unaudited Interim Financial Information NA
(13) Letter re: Change in Certifying Accountant NA
(14) Letter re: Director Resignation NA
(15) Letter re: Change in Accounting Principles NA
(16) Report Furnished to Security Holders NA
(17) Other Documents or Statements to Security Holders NA
(18) Subsidiaries of the Registrants NA
(19) Published Report Regarding Matters Submitted to Vote of Security Holders NA
(20) Consents of Experts and Independent Counsel NA
(21) (A) Power of Attorney NA
(B) Power of Attorney-Foreign Registrant NA
(22) Statement of Eligibility of Trustee NA
(23) Exhibits to be filed with Commercial Papers/Bonds Issues NA
(24) Exhibits to be filed with Stock Options Issues NA
(25) Exhibits to be filed by Investment Companies NA
(26) Notarized Curriculum Vitae and Photographs of Officers and Members of the
Board of Directors NA
(27) Copy of the BOI Certificate for BOI Registered Companies NA
(28) Authorization re: Registrant’s Bank Accounts NA
(29) Additional Exhibits NA
Financial Indicators Exhibit A
Sch. A – Financial Assets Exhibit A
Sch. B - Amounts Receivable from Directors, Officers, Employees,
Related Parties and Principal Stockholders Exhibit A
Sch. C – Amounts Receivable from Related Parties which are
Eliminated during the Consolidation of Financial Statements Exhibit A
Sch. D - Long-Term Debt Exhibit A
Sch. E – Indebtedness to Related Parties Exhibit A
Sch. F – Guarantees of Securities of Other Issuers Exhibit A
Sch. G – Capital Stock Exhibit A
List of Subsidiaries Exhibit B
Top 20 Shareholders Exhibit C
Statistical Report by Sharelots as of December 31, 2023 Exhibit D
 67

b. Reports on SEC Form 17-C

Items reported under SEC Form 17-C in 2023:

(1) Signing on 26 January 2023 of Supplement to the Merger Agreement and the Plan and Articles of
Merger between Robinsons Bank Corporation (RBC) and Bank of the Philippine Islands (BPI). The
Merger was approved by the BPI Board on 30 September 2022, and by stockholders representing at
least two-thirds of the total outstanding shares on 17 January 2023.

(2) Approval of the Board on March 15, 2023, of the declaration of property dividends consisting of
406,179,276 common shares of BPI held in treasury, to be distributed to all eligible stockholders of BPI
as of record date of March 29, 2023, which property dividends shall be paid at a future date to be
determined by the management of BPI, subject to regulatory approvals. The property dividend shall
be paid at an entitlement ratio of 0.0896395563 common share for every one (1) common share of BPI
held by the stockholder. Any resulting fractional share shall be paid in cash.

(3) On April 18, 2023, declaration of property dividend was amended to provide Supplement to BPI
Property Dividend Distribution Guidelines and Advisory to Scripless Stockholders.

(4) Approval of the 2023 BPI Executive Stock Purchase Plan (“BPI ESPP” of “Program”) for qualified
participants, with April 26, 2023, as grant date.

(5) Declaration of cash dividend of One Peso and Sixty-Eight Centavos (Php 1.68) per share for the first
semester of 2023, on the total outstanding common shares of the capital stock of BPI. The record date
is May 31, 2023, and payment date is June 22, 2023.

(6) Approval of SEC of Property Dividends

(7) Payment Date for Property Dividend and Reimbursement of Property Dividend Tax

(8) Disclosure on Final Cross Date of Property Dividend Distribution, which is 16 June 2023, Cross Price and
Fair Market Value for the transfer of the Property Dividend through the Exchange is P105.00 per share.
Fair Market Value which shall be used for the purpose of determining the final withholding tax on the
Property Dividend shares due to the BIR is P105 per share.

(9) Disclosure on 21 June 2023 on the Update on the Property Dividend Tax Reimbursement

(10) Clearance by the Philippine Competition Commission on September 2023, of the proposed merger
between the BPI and Robinsons Bank Corporation.

(11) Declaration of cash dividend of One Peso and Sixty-Eight Centavos (P1.68) per share, for the second
semester of the year 2023, on the total outstanding common shares of the capital stock of BPI. The
record date is November 30, 2023, and payment date is December 22, 2023.

(12) Election by the Board of Directors of Mr. Fernando Zobel de Ayala as Board of Director, replacing Mr.
Romeo L. Bernardo who had resigned effective 12 September 2023 in view of his appointment to the
Monetary Board.

(13) Update on 06 September 2023 of the date of execution of the Plan of Merger and Articles of Merger
on the proposed merger of Bank of the Philippine Islands (BPI) and Robinsons Bank Corporation (RBC)

(14) Approval of BSP in its Monetary Board Resolution dated 14 December 2023 of the merger between
Bank of the Philippine Islands (“BPI”) and Robinsons Bank Corporation, with BPI as the surviving bank.

(15) Approval of SEC on 29 December 2023 of the merger between BPI and RBC, with BPI as the surviving
bank, as well as the amendments to Article Seventh of BPI’s Amended Articles of Incorporation.
 68

Items reported under SEC Form 17-C in 2024:

(1) Closing and effectivity of the merger between BPI and Robinsons Bank Corporation, with BPI as the
surviving bank. All corporate and regulatory approvals have been obtained, and RBC and BPI merged,
effective 1 January 2024.

(2) On March 19, 2024, BPI successfully tapped the international capital markets with a public USD bond
issuance for the first time since 2019, with its offering of US$400 million 5-year Reg S senior unsecured
notes. The Notes were issued under BPI’s US$3 billion Medium Term Notes Programme, and the
proceeds will be used for refinancing and general corporate purposes. The 5-year Notes were priced at
U.S. Treasury spread of T+105 basis points (bps) with a coupon of 5.25%, representing the tightest ever
spread on a 5-year bond from a non-sovereign Philippine issuer, adding another milestone to BPI’s long
list of achievements.

(3) On March 20, 2024, the Board of Directors of BPI approved the sale of its 752,056,290 common shares,
representing all its stake in GoTyme Bank, to GoTyme Financial Pte Ltd. (744,099,587 common shares)
and Giga Investment Holdings Pte. Ltd., (7,956,703 common shares), respectively, at Php1.20 per share,
subject to BSP approval. The shares of BPI in GoTyme Bank were acquired by BPI pursuant to the merger
between BPI and Robinsons Bank Corporation with BPI as the surviving bank.
On 1 April 2024, Deeds of Absolute Sale of Shares covering the abovementioned sale of GoTyme Bank
shares were signed by the authorized representatives of BPI.

Material Event/s and Uncertainties:

Other than the disclosure enumerated above, the Bank has nothing to report on the following:

a) Any known trends, demands, commitments, events, or uncertainties that will have a material impact
on its liquidity.

b) Events that will trigger direct or contingent financial obligation that is material to the company,
including any default or acceleration of an obligation.

c) Material off-balance sheet transactions, arrangements, obligations (including contingent obligations),

and other relationships of the bank with unconsolidated entities or other persons created during the
reporting period.

d) Any material commitments for capital expenditures.

e) Any known trends, events or uncertainties that have had or that are expected to have a material
favorable or unfavorable impact on net sales/revenues/income from continuing operations.

f) Any significant elements of income or loss that did not arise from the Bank’s continuing operations.
 EXHIBIT A
(Audited Financial Statements)
The following document has been received:

Receiving: REGGIENALD DE CASTRO

Receipt Date and Time: April 30, 2024 05:18:24 PM

Company Information
____________________________________________________________________________

SEC Registration No.: PW00000121

Company Name: BANK OF THE PHILIPPINE ISLANDS
Industry Classification: J65910
Company Type: Stock Corporation

Document Information
____________________________________________________________________________
____________________________________________________________________________

Document ID: OST10430202482311656

Document Type: Financial Statement
Document Code: FS
Period Covered: December 31, 2023
Submission Type: Annual
Remarks: None
____________________________________________________________________________
____________________________________________________________________________
Acceptance of this document is subject to review of forms and contents
 COVER SHEET
for
AUDITED FINANCIAL STATEMENTS

SEC Registration Number

P W - 1 2 1

Company Name
B A N K O F T H E P H I L I P P I N E I S L A N D S

Principal Office (No./Street/Barangay/City/Town/Province)

2 2 / F - 2 8 / F A Y A L A T R I A N G L E

G A R D E N S T O W E R 2 , P A S E O D E

R O X A S C O R . M A K A T I A V E . ,

B E L - A I R , M A K A T I C I T Y 1 2 2 6

Form Type Department requiring the report Secondary License Type, if applicable

A A F S S E C N A

COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number(s) Mobile Number

[email protected] 8663-6525 +639958726360

No. of Stockholders Annual Meeting (Month/Day) Fiscal Year (Month/Day)

11,760 04/27 December 31

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Mobile
Name of Contact Person Email Address Telephone Number(s) Number

Eric Roberto M. Luchangco [email protected] 8663-6740 N/A

Contact Person’s Address

Ayala Triangle Gardens Tower 2, Paseo De Roxas corner Makati Ave., Bel-Air, Makati City

Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the
Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person
designated.
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CONDITION
December 31, 2023 and 2022
(In Millions of Pesos)

Consolidated Parent
Notes 2023 2022 2023 2022

ASSETS
CASH AND OTHER CASH ITEMS 4 34,843 39,613 34,444 39,359
DUE FROM BANGKO SENTRAL NG PILIPINAS (BSP) 4 199,619 182,869 192,246 178,534
DUE FROM OTHER BANKS 4 36,292 45,190 33,081 43,096
INTERBANK LOANS RECEIVABLE AND SECURITIES
PURCHASED UNDER AGREEMENTS TO RESELL, net 4,5 20,643 12,382 17,342 11,631
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS 6,7 23,654 22,133 17,456 16,941
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME 8 218,654 95,267 214,183 92,153
INVESTMENT SECURITIES AT AMORTIZED COST, net 9 382,711 420,533 377,120 415,035
LOANS AND ADVANCES, net 10 1,882,007 1,702,990 1,849,840 1,680,684
ASSETS HELD FOR SALE, net 4,743 3,760 4,646 3,650
BANK PREMISES, FURNITURE, FIXTURES
AND EQUIPMENT, net 11 19,751 19,355 18,401 18,721
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES, net 12 8,287 7,227 15,526 15,406
ASSETS ATTRIBUTABLE TO INSURANCE OPERATIONS 2 19,067 19,060 - -
DEFERRED INCOME TAX ASSETS, net 13 18,185 16,752 17,536 16,356
OTHER ASSETS, net 14 19,916 16,830 20,001 16,103
Total assets 2,888,372 2,603,961 2,811,822 2,547,669
(forward)
-
BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CONDITION
December 31, 2023 and 2022
(In Millions of Pesos)

Consolidated Parent
Notes 2023 2022 2023 2022

LIABILITIES AND CAPITAL FUNDS

DEPOSIT LIABILITIES 15 2,295,106 2,096,001 2,264,133 2,082,584

DUE TO BSP AND OTHER BANKS 1,881 2,887 1,881 2,811
DERIVATIVE FINANCIAL LIABILITIES 7 2,821 4,297 2,774 4,253
BILLS PAYABLE AND OTHER BORROWED FUNDS 16 137,104 97,503 133,726 93,002
MANAGER’S CHECKS AND DEMAND DRAFTS OUTSTANDING 8,463 6,755 8,431 6,751
ACCRUED TAXES, INTEREST AND OTHER EXPENSES 14,973 10,587 13,543 9,794
LIABILITIES ATTRIBUTABLE TO INSURANCE OPERATIONS 2 15,202 14,919 - -
DEFERRED CREDITS AND OTHER LIABILITIES 17 53,452 51,208 51,031 49,445
Total liabilities 2,529,002 2,284,157 2,475,519 2,248,640
CAPITAL FUNDS ATTRIBUTABLE TO THE EQUITY HOLDERS
OF BPI 18
Share capital 49,307 49,193 49,307 49,193
Share premium 113,414 104,123 113,383 104,123
Treasury shares - (33,043) - (33,043)
Reserves 643 644 32,975 33,055
Accumulated other comprehensive loss (11,127) (14,256) (9,076) (11,843)
Surplus 204,967 211,061 149,714 157,544
357,204 317,722 336,303 299,029
NON-CONTROLLING INTERESTS 2,166 2,082 - -
Total capital funds 359,370 319,804 336,303 299,029
Total liabilities and capital funds 2,888,372 2,603,961 2,811,822 2,547,669

(The notes on pages 1 to 116 are an integral part of these financial statements.)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF INCOME
For each of the three years in the period ended December 31, 2023
(In Millions of Pesos)

Consolidated Parent
Notes 2023 2022 2021 2023 2022 2021
INTEREST INCOME
On loans and advances 120,900 84,909 72,225 114,050 80,724 53,426
On investment securities 21,737 16,863 10,436 21,466 16,683 9,949
On deposits with BSP and other banks 2,935 1,496 1,956 2,460 1,385 1,271
145,572 103,268 84,617 137,976 98,792 64,646
INTEREST EXPENSE
On deposits 15 36,027 14,821 10,168 34,934 14,711 5,587
On bills payable and other borrowed funds 16 5,195 3,381 4,866 4,956 3,273 4,396
41,222 18,202 15,034 39,890 17,984 9,983
NET INTEREST INCOME 104,350 85,066 69,583 98,086 80,808 54,663
PROVISION FOR CREDIT AND IMPAIRMENT
LOSSES 26 4,000 9,167 13,135 2,202 8,437 10,591
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT AND IMPAIRMENT LOSSES 100,350 75,899 56,448 95,884 72,371 44,072
OTHER INCOME
Fees and commissions 19 12,717 11,339 11,204 11,166 9,516 9,051
Income from foreign exchange trading 3,223 2,617 2,384 3,205 2,511 2,206
Securities trading gain 1,919 857 97 1,827 831 4
Income attributable to insurance operations 2 1,843 1,379 1,854 - - -
Net gains on disposals of investment securities
at amortized cost 9 2 214 1,513 2 214 1,166
Other operating income 19 14,267 17,053 10,770 12,741 14,565 13,026
33,971 33,459 27,822 28,941 27,637 25,453
OTHER EXPENSES
Compensation and fringe benefits 21 23,221 19,528 18,528 20,310 17,407 14,094
Occupancy and equipment-related expenses 11,20 22,012 18,761 16,010 20,139 17,124 13,352
Other operating expenses 21 23,877 19,701 16,195 22,142 18,195 12,220
69,110 57,990 50,733 62,591 52,726 39,666
PROFIT BEFORE INCOME TAX 65,211 51,368 33,537 62,234 47,282 29,859
INCOME TAX EXPENSE 22
Current 13,934 12,438 8,328 12,600 11,226 6,701
Deferred 13 (635) (906) 1,099 (419) (943) 375
13,299 11,532 9,427 12,181 10,283 7,076
NET INCOME AFTER TAX 51,912 39,836 24,110 50,053 36,999 22,783

Attributable to:
Equity holders of BPI 51,687 39,605 23,880 50,053 36,999 22,783
Non-controlling interests 225 231 230 - - -
51,912 39,836 24,110 50,053 36,999 22,783

Basic and diluted earnings per share attributable

to the equity holders of BPI during the year 18 10.90 8.78 5.29 10.56 8.20 5.05

(The notes on pages 1 to 116 are an integral part of these financial statements.)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF TOTAL COMPREHENSIVE INCOME

For each of the three years in the period ended December 31, 2023
(In Millions of Pesos)

Consolidated Parent
Note 2023 2022 2021 2023 2022 2021
NET INCOME FOR THE YEAR 51,912 39,836 24,110 50,053 36,999 22,783
OTHER COMPREHENSIVE INCOME (LOSS) 18
Items that may be subsequently reclassified to
profit or loss
Share in other comprehensive income (loss) of
associates 405 (1,015) (728) - - -
Net change in fair value reserve on investments in
debt instruments measured at FVOCI, net of
tax effect 556 (1,525) (548) 546 (1,480) (506)
Fair value reserve on investments of insurance
subsidiaries, net of tax effect 90 (225) (209) - - -
Currency translation differences and others (54) (65) 627 - - 291
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit obligation (2,476) (8) 608 (2,395) 120 431
Share in other comprehensive income of
associates 49 687 448 - - -
Net change in fair value reserve on investments in
equity instruments measured at FVOCI, net of
tax effect 4,609 (3,503) (3,041) 4,616 (3,658) (2,753)
Total other comprehensive income (loss), net of
tax effect 3,179 (5,654) (2,843) 2,767 (5,018) (2,537)
Total comprehensive income for the year 55,091 34,182 21,267 52,820 31,981 20,246

Attributable to:
Equity holders of BPI 54,816 34,019 21,109 52,820 31,981 20,246
Non-controlling interests 275 163 158 - - -
55,091 34,182 21,267 52,820 31,981 20,246

(The notes on pages 1 to 116 are an integral part of these financial statements.)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CHANGES IN CAPITAL FUNDS

For each of the three years in the period ended December 31, 2023
(In Millions of Pesos)
Attributable to equity holders of BPI (Note 18)
Treasury Accumulated other Non-controlling Total capital
Consolidated Share capital Share premium shares Reserves comprehensive loss Surplus Total interests funds
Balance, January 1, 2021 45,045 74,764 - 416 (5,899) 165,509 279,835 2,122 281,957
Comprehensive income
Net income for the year - - - - - 23,880 23,880 230 24,110
Other comprehensive loss for the year - - - - (2,771) - (2,771) (72) (2,843)
Total comprehensive income (loss) for the year - - - - (2,771) 23,880 21,109 158 21,267
Transactions with owners
Exercise of stock option plans 86 170 - (41) - - 215 - 215
Cash dividends - - - - - (8,124) (8,124) (184) (8,308)
Total transactions with owners 86 170 - (41) - (8,124) (7,909) (184) (8,093)
Other movements
Transfer from surplus to reserves - - - 189 - (189) - - -
Others - - - - - 25 25 - 25
Total other movements - - - 189 - (164) 25 - 25
Balance, December 31, 2021 45,131 74,934 - 564 (8,670) 181,101 293,060 2,096 295,156
Comprehensive income
Net income for the year - - - - - 39,605 39,605 231 39,836
Other comprehensive loss for the year - - - - (5,586) - (5,586) (68) (5,654)
Total comprehensive income (loss) for the year - - - - (5,586) 39,605 34,019 163 34,182
Transactions with owners
Issuance of shares as a consideration of the merger 4,062 28,981 (33,043) - - - - - -
Executive stock plan amortization - 208 - (8) - - 200 - 200
Cash dividends - - - - - (9,568) (9,568) (177) (9,745)
Total transaction with owners 4,062 29,189 (33,043) (8) - (9,568) (9,368) (177) (9,545)
Other movements
Transfer from surplus to reserves - - - 73 - (73) - - -
Transfer from reserves to surplus - - - (2) - 2 - - -
Others - - - 17 - (6) 11 - 11
Total other movements - - - 88 - (77) 11 - 11
Balance, December 31, 2022 49,193 104,123 (33,043) 644 (14,256) 211,061 317,722 2,082 319,804
Comprehensive income
Net income for the year - - - - - 51,687 51,687 225 51,912
Other comprehensive income for the year - - - - 3,129 - 3,129 50 3,179
Total comprehensive income for the year - - - - 3,129 51,687 54,816 275 55,091
Transactions with owners
Executive stock plan exercise and amortization 114 342 - (84) - - 372 - 372
Cash dividends - - - - - (15,934) (15,934) (191) (16,125)
Dividends - treasury shares - 8,949 33,043 - - (42,364) (372) - (372)
Total transaction with owners 114 9,291 33,043 (84) - (58,298) (15,934) (191) (16,125)
Other movements
Transfer from surplus to reserves - - - 13 - (13) - - -
Others - - - 70 - 530 600 - 600
Total other movements - - - 83 - 517 600 - 600
Balance, December 31, 2023 49,307 113,414 - 643 (11,127) 204,967 357,204 2,166 359,370

(The notes on pages 1 to 116 are an integral part of the financial statements.)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CHANGES IN CAPITAL FUNDS

For each of the three years in the period ended December 31, 2023
(In Millions of Pesos)

Share Treasury Accumulated other Total capital

Parent (Note 18) Share capital premium shares Reserves comprehensive loss Surplus funds
Balance, January 1, 2021 45,045 74,764 - 196 (4,288) 115,453 231,170
Comprehensive income
Net income for the year - - - - - 22,783 22,783
Other comprehensive loss for the year - - - - (2,537) - (2,537)
Total comprehensive income (loss) for
the year - - - - (2,537) 22,783 20,246
Transactions with owners
Exercise of stock option plans 86 170 - (36) - - 220
Cash dividends - - - - - (8,124) (8,124)
Total transactions with owners 86 170 - (36) - (8,124) (7,904)
Other movements - - - - - (12) (12)
86 170 (36) - (8,136) (7,916)
Balance, December 31, 2021 45,131 74,934 - 160 (6,825) 130,100 243,500
Comprehensive income
Net income for the year - - - - - 36,999 36,999
Other comprehensive loss for the year - - - (5,018) - (5,018)
Total comprehensive income (loss) for
the year - - - - (5,018) 36,999 31,981
Transactions with owners
Issuance of shares 4,062 28,981 (33,043) - - - -
Executive stock plan amortization - 208 - (10) - - 198
Cash dividends - - - - - (9,568) (9,568)
Total transactions with owners 4,062 29,189 (33,043) (10) - (9,568) (9,370)
Other movements - - - 32,905 - 13 32,918
4,062 29,189 (33,043) 32,895 - (9,555) 23,548
Balance, December 31, 2022 49,193 104,123 (33,043) 33,055 (11,843) 157,544 299,029
Comprehensive income
Net income for the year - - - - - 50,053 50,053
Other comprehensive income for the year - - - - 2,767 - 2,767
Total comprehensive income for the year - - - - 2,767 50,053 52,820
Transactions with owners
Executive stock plan exercise and
amortization 114 342 - (80) - - 376
Cash dividends - - - - - (15,934) (15,934)
Dividends - treasury shares - 8,918 33,043 - - (42,364) (403)
Total transactions with owners 114 9,260 33,043 (80) - (58,298) (15,961)
Other movements - - - - - 415 415
114 9,260 33,043 (80) - (57,883) (15,546)
Balance, December 31, 2023 49,307 113,383 - 32,975 (9,076) 149,714 336,303

(The notes on pages 1 to 116 are an integral part of these financial statements.)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CASH FLOWS

For each of the three years in the period ended December 31, 2023
(In Millions of Pesos)

Consolidated Parent
Notes 2023 2022 2021 2023 2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax 65,211 51,368 33,537 62,234 47,282 29,859
Adjustments for:
Impairment losses 26 4,000 9,167 13,135 2,202 8,437 10,591
Depreciation and amortization 11,14 6,615 5,445 6,249 6,195 4,871 5,213
Share in net income of associates 12 (1,372) (1,055) (1,086) - - -
Dividend and other income 19 (100) (60) (30) (3,066) (1,810) (6,939)
Share-based compensation 18 (84) (8) (41) (80) (11) (36)
Profit from asset sold (139) (5,392) - (126) (5,392) -
Realized gain - investment securities (949) (189) - (949) (189) -
Interest income (145,572) (103,268) (84,617) (137,976) (98,792) (64,646)
Interest received 142,013 98,874 85,450 134,880 92,487 64,866
Interest expense 41,543 18,503 15,345 40,171 18,265 10,229
Interest paid (38,683) (17,238) (15,352) (37,801) (17,061) (10,214)
Decrease (increase) in:
Interbank loans receivable and securities
purchased under agreements to resell 4,117 (2,612) (2,167) 4,058 (2,699) (2,117)
Financial assets at fair value through profit or loss (1,455) (801) 16,134 (450) (1,267) 18,548
Loans and advances, net (181,412) (231,573) (82,837) (170,155) (221,575) (68,754)
Assets held for sale (761) (914) (355) (773) (927) (168)
Assets attributable to insurance operations 254 (2,316) 450 - - -
Other assets (5,753) 540 (4,046) (6,564) 4,870 (4,556)
Increase (decrease) in:
Deposit liabilities 199,096 140,855 238,976 181,540 132,034 205,581
Due to BSP and other banks (1,151) 1,680 (232) (1,075) 1,744 (371)
Manager’s checks and demand drafts outstanding 1,708 (176) (177) 1,680 (169) (204)
Accrued taxes, interest and other expenses 798 1,382 (707) 730 1,133 (582)
Liabilities attributable to insurance operations 306 1,693 (1,290) - - -
Derivative financial liabilities (1,476) 665 (2,025) (1,479) 708 (2,112)
Deferred credits and other liabilities 213 4,950 (337) 353 2,064 (1,735)
Net cash from (absorbed by) operations 86,967 (30,480) 213,977 73,549 (35,997) 182,453
Income taxes paid (14,004) (12,938) (7,497) (12,712) (11,605) (6,008)
Net cash from (used in) operating activities 72,963 (43,418) 206,480 60,837 (47,602) 176,445
(forward)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CASH FLOWS

For each of the three years in the period ended December 31, 2023
(In Millions of Pesos)

Consolidated Parent
Notes 2023 2022 2021 2023 2022 2021
(forwarded)

CASH FLOWS FROM INVESTING

ACTIVITIES
Acquisition of bank premises, furniture,
fixtures and equipment (4,778) (1,657) (5,595) (4,578) (1,580) (5,108)
Disposal of bank premises, furniture, fixtures
and equipment 2,144 1,200 789 2,127 1,191 777
Placements in investment securities (248,565) (95,218) (278,718) (247,299) (94,789) (272,363)
Proceeds from:
Maturities/sales of investment securities 171,331 49,008 176,833 171,332 49,008 158,047
Net gains on sale of investment properties - 4,721 (12) - 4,721 (14)
Decrease (increase) in:
Investment in subsidiaries and associates,
net 769 694 1,432 (120) - (4,516)
Assets attributable to insurance operations (270) 474 804 - - -
Impact of merger 30.1 - - - - 78,200 -
Dividends received 100 60 30 3,066 880 3,400
Net cash (used in) from investing activities (79,269) (40,718) (104,437) (75,472) 37,631 (119,777)
CASH FLOWS FROM FINANCING
ACTIVITIES
Cash dividends paid 17,18 (16,125) (9,745) (8,124) (15,934) (9,568) (8,124)
Issuance cost of treasury shares as dividends 18 (372) - - (403) - -
Proceeds from share issuance 18 456 208 256 456 208 256
Increase (decrease) in bills payable and
other borrowed funds 16 39,601 2,464 (56,908) 40,724 868 (57,798)
Payments for principal portion of lease
liabilities (1,892) (1,624) (1,900) (1,652) (1,417) (1,478)
Net cash from (used in) financing activities 21,668 (8,697) (66,676) 23,191 (9,909) (67,144)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 15,362 (92,833) 35,367 8,556 (19,880) (10,476)

CASH AND CASH EQUIVALENTS

January 1 4,5 273,120 365,953 330,586 265,449 285,329 295,805
December 31 288,482 273,120 365,953 274,005 265,449 285,329

Non-cash financing and investing activities 11,16,18

(The notes on pages 1 to 116 are an integral part of these financial statements.)
BANK OF THE PHILIPPINE ISLANDS

Notes to Financial Statements

As at December 31, 2023 and 2022 and for each of the three years
in the period ended December 31, 2023

1 General information

Bank of the Philippine Islands (“BPI” or the “Parent Bank”) is a domestic commercial bank with an expanded
banking license and was registered with the Securities and Exchange Commission (SEC) on January 4, 1943.
The Parent Bank’s license was extended for another 50 years on January 4, 1993.

The Parent Bank’s office address, which also serves as its principal place of business, is located at Ayala
Triangle Gardens Tower 2, Paseo De Roxas corner Makati Ave., Bel-Air, Makati City.

BPI and its subsidiaries (collectively referred to as the “BPI Group”) offer a whole breadth of financial services
that include corporate banking, consumer banking, investment banking, asset management, corporate finance,
securities distribution and insurance services. At December 31, 2023, the BPI Group has 18,982 employees
(2022 - 17,573 employees) and operates 1,187 branches (2022 - 1,189 branches) and 1,530 automated teller
machines (ATMs) and cash accept machines (CAMs) (2022 - 2,080) to support its delivery of services. The BPI
Group also serves its customers through alternative electronic banking channels such as telephone, mobile
phone and the internet.

The Parent Bank is considered a public company under Rule 3.1 of Implementing Rules and Regulations of the
Securities Regulation Code (SRC), which, among others, defines a public company as any corporation with a
class of equity securities listed on an exchange, or with assets of at least P50 million and having 200 or more
shareholders, each of which holds at least 100 shares of its equity securities.

On September 30, 2022, the Board of Directors (BOD) of BPI approved the execution of an agreement
between the Parent Bank and Robinsons Bank Corporation (“RBC”) and Robinsons Retail Holdings, Inc. and
JG Summit Capital Services Corporation, as RBC shareholders, for the merger of BPI and RBC, with BPI as
the surviving entity. As at December 31, 2023, all corporate and regulatory approvals have been obtained,
and the Parent Bank and RBC merged, effective January 1, 2024 (Note 30.3).

The merger between BPI and BPI Family Savings Bank, Inc. (“BFB”), a wholly-owned subsidiary, became
effective on January 1, 2022 with the Parent Bank as the surviving entity (Note 30.1). The comparative figures
presented in the financial statements and notes to financial statements pertaining to the Parent Bank for the
year ended December 31, 2021 are exclusive of BFB balances.

Approval and authorization for issuance of financial statements

These financial statements have been approved and authorized for issuance by the BOD on
February 21, 2024.
The consolidated financial statements comprise the financial statements of the Parent Bank and the following
subsidiaries:

Country of % of ownership
Subsidiaries incorporation Principal activities 2023 2022
BPI Capital Corporation Philippines Investment house 100 100
BPI Direct BanKo, Inc., A Savings Bank (BanKo) Philippines Banking 100 100
BPI Asset Management and Trust Corporation Philippines Asset management 100 100
operating under the trade name, BPI Wealth
BPI International Finance Limited Hong Kong Financing 100 100
BPI Europe Plc. England and Banking (deposit) 100 100
Wales
BPI Securities Corp. Philippines Securities dealer 100 100
BPI Payments Holdings Inc. (BPHI) Philippines Financing 100 100
Filinvest Algo Financial Corp. Philippines Financing 100 100
BPI Investment Management, Inc. Philippines Investment 100 100
management
Santiago Land Development Corporation Philippines Land holding 100 100
BPI Computer Systems Corp. Philippines Business systems 100 100
service
BPI Forex Corp. Philippines Foreign exchange 100 100
BPI Remittance Centre (HK) Ltd. Hong Kong Remittance 100 100
BPI Wealth Singapore Pte Ltd Singapore Asset management 100 -
First Far East Development Corporation Philippines Real estate 100 100
FEB Stock Brokers, Inc. Philippines Securities dealer 100 100
FEB Speed International Philippines Remittance 100 100
Ayala Plans, Inc. Philippines Pre-need 98.93 98.93
FGU Insurance Corporation Philippines Non-life insurance 94.62 94.62
BPI/MS Insurance Corporation Philippines Non-life insurance 50.85 50.85

2
2 Assets and liabilities attributable to insurance operations

Details of assets and liabilities attributable to insurance operations at December 31 are as follows:

Note 2023 2022

(In Millions of Pesos)
Assets
Cash and cash equivalents 4 193 292
Insurance balances receivable, net 6,111 6,449
Investment securities
Financial assets at fair value through profit or loss 1,814 1,771
Financial assets at fair value through other comprehensive
6,905 6,618
income
Financial assets at amortized cost 353 267
Investment in associates 167 167
Accounts receivable and other assets, net 3,378 3,294
Land, building and equipment 146 202
19,067 19,060

2023 2022
(In Millions of Pesos)
Liabilities
Reserves and other balances 13,240 13,094
Accounts payable, accrued expenses and other payables 1,962 1,825
15,202 14,919

Details of income attributable to insurance operations before income tax and minority interest for the years
ended December 31 are as follows:

2023 2022 2021

(In Millions of Pesos)
Premiums earned and related income 3,312 3,016 3,071
Investment and other income 1,675 1,070 1,504
4,987 4,086 4,575
Benefits, claims and maturities 1,573 1,280 1,502
Decrease in actuarial reserve liabilities (288) (336) (486)
Commissions 954 924 856
Management and general expenses 876 811 817
Other expenses 29 28 32
3,144 2,707 2,721
Income before income tax and minority interest 1,843 1,379 1,854

3 Business segments

Operating segments are reported in accordance with the internal reporting provided to the Chief Executive
Officer (CEO), who is responsible for allocating resources to the reportable segments and assessing their
performance. All operating segments used by the BPI Group individually meet the definition of a reportable
segment under Philippine Financial Reporting Standards (PFRS) 8, Operating Segments.

The BPI Group has determined the operating segments based on the nature of the services provided and the
different clients/markets served representing a strategic business unit.

3
The BPI Group’s main operating business segments follow:

 Consumer banking - this segment serves the individual and retail markets. Services cover deposit taking
and servicing, consumer lending such as home mortgages, auto loans and credit card finance as well as the
remittance business. The segment also includes the entire transaction processing and service delivery
infrastructure consisting of network of branches and ATMs as well as phone and internet-based banking
platforms for individual customers.

 Corporate banking - this segment caters both high-end corporations and middle market clients. Services
offered include deposit taking and servicing, loan facilities, trade, cash management and internet-based
banking platforms for corporate and institutional customers.

 Investment banking - this segment includes the various business groups operating in the investment
markets and dealing in activities other than lending and deposit taking. These services cover corporate
finance, securities distribution, asset management, trust and fiduciary services as well as proprietary trading
and investment activities.

The performance of the Parent Bank is assessed as a single unit using financial information presented in the
separate or Parent only financial statements. Likewise, the CEO assesses the performance of the insurance
business as a standalone business segment separate from the banking and allied financial undertakings.
Information on the assets, liabilities and results of operations of the insurance business is fully disclosed in
Note 2.

The BPI Group and the Parent Bank mainly derive revenue within the Philippines; accordingly, no
geographical segment is presented.

The segment report forms part of management’s assessment of the performance of the segment, among other
performance indicators.

There were no changes in the reportable segments during the year. Transactions between the business
segments are carried out at arm’s length. Funds are ordinarily allocated between segments, resulting in funding
cost transfers disclosed in inter-segment net interest income.

Internal charges and transfer pricing adjustments have been reflected in the performance of each business.
Revenue-sharing agreements are used to allocate external customer revenues to a business segment on a
reasonable basis. Inter-segment revenues, however, are deemed insignificant for financial reporting purposes,
thus, not reported in segment analysis below.

The BPI Group’s management reporting is based on a measure of operating profit comprising net interest
income, impairment charge, fees and commission income, other income and operating expenses.

Segment assets and liabilities comprise majority of operating assets and liabilities, measured in a manner
consistent with that shown in the statement of condition, but exclude items such as taxation.

4
The segment assets and liabilities as at December 31 and the results of the operations of the reportable
segments of the BPI Group’s for the years ended December 31 follow:

2023
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 65,271 28,108 15,117 108,496
Provision for (reversal of) credit and
impairment losses 7,711 (3,837) 140 4,014
Net interest income after provision for credit
and impairment losses 57,560 31,945 14,977 104,482
Fees, commissions and other income, net 20,328 2,932 8,749 32,009
Total income 77,888 34,877 23,726 136,491
Compensation and fringe benefits 19,375 3,314 1,786 24,475
Occupancy and equipment-related
expenses 10,144 1,089 865 12,098
Other operating expenses 26,485 4,082 3,221 33,788
Total other expenses 56,004 8,485 5,872 70,361
Operating profit 21,884 26,392 17,854 66,130
Income tax expense 13,299
Net income 51,912
Share in net income of associates 1,372
Total assets 644,092 1,505,254 717,734 2,867,080
Total liabilities 1,670,879 687,265 163,858 2,522,002

2022
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 49,614 26,746 12,281 88,641
Provision for credit and impairment losses 2,808 6,326 25 9,159
Net interest income after provision for credit
and impairment losses 46,806 20,420 12,256 79,482
Fees, commissions and other income, net 17,017 2,847 7,064 26,928
Total income 63,823 23,267 19,320 106,410
Compensation and fringe benefits 14,698 2,459 1,162 18,319
Occupancy and equipment-related
expenses 5,471 115 646 6,232
Other operating expenses 25,215 3,211 1,484 29,910
Total other expenses 45,384 5,785 3,292 54,461
Operating profit 18,439 17,482 16,028 51,949
Income tax expense 11,532
Net income 39,836
Share in net income of associates 1,056
Total assets 579,926 1,390,803 658,828 2,629,557
Total liabilities 1,534,471 618,008 142,236 2,294,715

5
 2021
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 36,478 27,934 8,988 73,400
Provision for (reversal of) credit and
impairment losses 3,157 10,118 (172) 13,103
Net interest income after provision for credit
and impairment losses 33,321 17,816 9,160 60,297
Fees, commissions and other income, net 15,846 2,703 7,333 25,882
Total income 49,167 20,519 16,493 86,179
Compensation and fringe benefits 13,911 2,280 1,053 17,244
Occupancy and equipment-related
expenses 5,988 112 472 6,572
Other operating expenses 20,075 3,295 1,566 24,936
Total other expenses 39,974 5,687 3,091 48,752
Operating profit 9,193 14,832 13,402 37,427
Income tax expense 9,427
Net income 24,110
Share in net income of associates 1,086
Total assets 495,878 1,205,841 679,536 2,381,255
Total liabilities 1,334,077 667,821 101,686 2,103,584

Reconciliation of segment results to consolidated results of operations:

2023
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 108,496 (4,146) 104,350
Provision for credit and impairment losses 4,014 (14) 4,000
Net interest income after provision for credit and
impairment losses 104,482 (4,132) 100,350
Fees, commissions and other income, net 32,009 1,962 33,971
Total income 136,491 (2,170) 134,321
Compensation and fringe benefits 24,475 (1,254) 23,221
Occupancy and equipment-related expenses 12,098 9,914 22,012
Other operating expenses 33,788 (9,911) 23,877
Total other expenses 70,361 (1,251) 69,110
Operating profit 66,130 (919) 65,211
Income tax expense 13,299 13,299
Net income 51,912 51,912
Share in net income of associates 1,372 1,372
Total assets 2,867,080 21,292 2,888,372
Total liabilities 2,522,002 7,000 2,529,002

6
 2022
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 88,641 (3,575) 85,066
Provision for credit and impairment losses 9,159 8 9,167
Net interest income after provision for credit and
impairment losses 79,482 (3,583) 75,899
Fees, commissions and other income, net 26,928 6,531 33,459
Total income 106,410 2,948 109,358
Compensation and fringe benefits 18,319 1,209 19,528
Occupancy and equipment-related expenses 6,232 12,529 18,761
Other operating expenses 29,910 (10,209) 19,701
Total other expenses 54,461 3,529 57,990
Operating profit 51,949 (581) 51,368
Income tax expense 11,532 11,532
Net income 39,836 39,836
Share in net income of associates 1,056 1,056
Total assets 2,629,557 (25,596) 2,603,961
Total liabilities 2,294,715 (10,558) 2,284,157

2021
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)

Net interest income 73,400 (3,817) 69,583

Provision for credit and impairment losses 13,103 32 13,135
Net interest income after provision for credit and
impairment losses 60,297 (3,849) 56,448
Fees, commissions and other income, net 25,882 1,940 27,822
Total income 86,179 (1,909) 84,270
Compensation and fringe benefits 17,244 1,284 18,528
Occupancy and equipment-related expenses 6,572 9,438 16,010
Other operating expenses 24,936 (8,741) 16,195
Total other expenses 48,752 1,981 50,733
Operating profit 37,427 (3,890) 33,537
Income tax expense 9,427 9,427
Net income 24,110 24,110
Share in net income of associates 1,086 1,086
Total assets 2,381,255 40,660 2,421,915
Total liabilities 2,103,584 23,175 2,126,759

“Consolidation adjustments/Others” pertain to amounts of insurance operations and support units and inter-
segment elimination in accordance with the BPI Group’s internal reporting.

7
4 Cash and cash equivalents

The account at December 31 consists of:

Consolidated Parent
Notes 2023 2022 2023 2022
(In Millions of Pesos)
Cash and other cash items 34,843 39,613 34,444 39,359
Due from BSP 199,619 182,869 192,246 178,534
Due from other banks 36,292 45,190 33,081 43,096
Interbank loans receivable and securities purchased
under agreements to resell (SPAR) 5 17,535 5,156 14,234 4,460
Cash and cash equivalents attributable to insurance
operations 2 193 292 - -
288,482 273,120 274,005 265,449

5 Interbank loans receivable and SPAR, net

The account at December 31 consists of transactions with:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
BSP 15,177 136 11,982 -
Other banks 5,483 12,259 5,379 11,645
20,660 12,395 17,361 11,645
Accrued interest receivable 26 27 24 26
20,686 12,422 17,385 11,671
Allowance for impairment (43) (40) (43) (40)
20,643 12,382 17,342 11,631

As at December 31, 2023, interbank loans receivable and SPAR maturing within 90 days from the date of
acquisition amounting to P17,535 million (2022 - P5,156 million) for the BPI Group and P14,234 million
(2022 - P4,460 million) for the Parent Bank are classified as cash equivalents in the statements of cash flows
(Note 4).

Government bonds are pledged by the BSP as collateral under reverse repurchase agreements. The aggregate
face value of securities pledged approximates the total balance of outstanding placements as at reporting date.

The range of average interest rates (%) of interbank loans receivable and SPAR for the years ended
December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
Peso-denominated 4.75 - 8.50 4.50 - 8.28 4.75 - 8.50 4.50 - 8.28
US dollar-denominated 4.85 - 5.25 3.13 - 4.29 4.85 - 5.15 4.05 - 4.18

8
6 Financial assets at fair value through profit or loss (FVTPL)

The account at December 31 consists of:

Consolidated Parent
Note 2023 2022 2023 2022
(In Millions of Pesos)
Debt securities
Government securities 15,928 10,974 13,654 9,876
Commercial papers of private companies 3,813 3,820 6 30
Listed equity securities 111 192 - -
Derivative financial assets 7 3,802 7,147 3,796 7,035
23,654 22,133 17,456 16,941

All financial assets at FVTPL held by the BPI Group and the Parent Bank are classified as current.

7 Derivative financial instruments

Derivatives held by the BPI Group consist mainly of the following:

 Foreign exchange forwards represent commitments to purchase or sell one currency against another at
an agreed forward rate on a specified date in the future. Settlement can be made via full delivery of
forward proceeds or via payment of the difference (non-deliverable forward) between the contracted
forward rate and the prevailing market rate at maturity.

 Foreign exchange swaps refer to spot purchase or sale of one currency against another with an offsetting
agreement to sell or purchase the same currency at an agreed forward rate in the future.

 Interest rate swaps refer to agreement to exchange fixed rate versus floating interest payments (or vice
versa) on a reference notional amount over an agreed period.

 Cross currency swaps refer to an exchange of notional amounts on two currencies at a given exchange
rate where the parties on the transaction agree to pay a stated interest rate on the received notional
amount and accept a stated interest rate on the delivered notional amount, payable and receivable or net
settled (non-deliverable swaps) periodically over the term of the transaction.

The BPI Group’s credit risk represents the potential cost to replace the swap contracts if counterparties fail to
fulfill their obligation. This risk is monitored on an ongoing basis with reference to the current fair value, a
proportion of the notional amount of the contracts and the liquidity of the market. To control the level of credit
risk taken, the BPI Group assesses counterparties using the same techniques as for its lending activities.

The fair values of derivative financial instruments as at December 31 are set out below:

Consolidated

Assets Liabilities
2023 2022 2023 2022
(In Millions of Pesos)
Held for trading
Foreign exchange derivatives
Currency swaps 174 411 53 52
Currency forwards 1,309 3,557 1,262 2,184
Options - 3 - -
Interest rate swaps 2,317 3,164 1,506 2,061
Warrants 2 2 - -
Equity options - 10 - -
3,802 7,147 2,821 4,297

9
Parent

Assets Liabilities
2023 2022 2023 2022
(In Millions of Pesos)
Held for trading
Foreign exchange derivatives
Currency swaps 173 411 53 52
Currency forwards 1,304 3,455 1,215 2,140
Options - 3 - -
Interest rate swaps 2,317 3,164 1,506 2,061
Warrants 2 2 - -
3,796 7,035 2,774 4,253

In 2022, the Parent Bank began trading foreign exchange options as part of the BPI Group’s strategy
subsequent to the granting of Type 1 derivative license by the BSP in 2021. During the years ended
December 31, 2023 and 2022, the BPI Group did not enter into any transactions under hedge accounting.

As at December 31, 2023, the Parent Bank has no derivative financial assets referenced to London Interbank
Offered Rate (LIBOR) (2022 - P104,915 million). The Parent Bank has fully transitioned to LIBOR-fallback in
accordance with the fallback protocol that the Parent Bank adhered to with International Swaps and
Derivatives Association (ISDA).

Critical accounting estimate - Determination of fair value of derivatives and other financial instruments

The fair values of financial instruments that are not quoted in active markets are determined by using generally
accepted valuation techniques. Where valuation techniques (for example, discounted cash flow models) are
used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of
the area that created them. Inputs used in these models are from observable data and quoted market prices in
respect of similar financial instruments.

All models are approved by the BOD before they are used, and models are calibrated to ensure that outputs
reflect actual data and comparative market prices. Changes in assumptions about these factors could affect
reported fair value of financial instruments. The BPI Group considers that it is impracticable, however, to disclose
with sufficient reliability the possible effects of sensitivities surrounding the fair value of financial instruments that
are not quoted in active markets.

8 Financial assets at fair value through other comprehensive income (FVOCI)

Details of the account at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Debt securities
Government securities 191,506 85,143 188,459 83,588
Commercial papers of private companies 21,732 6,701 21,452 6,294
213,238 91,844 209,911 89,882
Accrued interest receivable 2,542 603 2,531 595
215,780 92,447 212,442 90,477
Equity securities
Listed 1,266 1,709 1,043 1,331
Unlisted 1,608 1,111 698 345
2,874 2,820 1,741 1,676
218,654 95,267 214,183 92,153

10
The BPI Group has designated a small portfolio of equity securities from listed and unlisted private
corporations as financial assets at FVOCI. The BPI Group adopted this presentation as the investments were
made for strategic purposes rather than with a view to profit on a subsequent sale, and there are no plans to
dispose of these investments in the short or medium term.

Debt securities classified as financial assets at FVOCI are classified as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 40,551 7,959 38,990 6,788
Non-current (over 12 months) 175,229 84,488 173,452 83,689
215,780 92,447 212,442 90,477

The range of average effective interest rates (%) of financial assets at FVOCI for the years ended
December 31 follows:

Consolidated Parent
2023 2022 2023 2022
Peso-denominated 2.20 - 8.57 2.20 - 8.57 2.20 - 8.57 2.20 - 8.57
Foreign currency-denominated 0.24 - 7.00 0.15 - 6.10 0.24 - 7.00 0.15 - 6.10

Interest income from debt instruments recognized in the statement of income for the year ended
December 31, 2023 amounts to P6,176 million (2022 - P1,987 million; 2021 - P2,473 million) and
P6,060 million (2022 - P1,945 million; 2021 - P2,306 million) for the BPI Group and Parent Bank, respectively.

Dividend income from equity instruments recognized in the statement of income under other operating income
for the year ended December 31, 2023 amounts to P100 million (2022 - P60 million; 2021 - P30 million) and
P66 million (2022 - P36 million; 2021 - P16 million) for the BPI Group and Parent Bank, respectively (Note 19).

9 Investment securities at amortized cost, net

Details of the account at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Government securities 320,808 338,323 320,161 337,661
Commercial papers of private companies 58,326 78,345 53,448 73,568
379,134 416,668 373,609 411,229
Accrued interest receivable 3,608 3,876 3,542 3,817
382,742 420,544 377,151 415,046
Allowance for impairment (31) (11) (31) (11)
382,711 420,533 377,120 415,035

The range of average effective interest rates (%) for the years ended December 31 follows:

Consolidated Parent
2023 2022 2023 2022
Peso-denominated 2.09 - 8.13 2.00 - 8.13 2.09 - 8.13 2.00 - 8.13
Foreign currency-denominated 0.13 - 7.32 0.13 - 7.13 0.80 - 6.07 0.13 - 7.13

11
In 2023, the BPI Group and the Parent Bank sold close-to-maturity debt securities which resulted in a net gain
of P2 million. In 2022, the BPI Group and the Parent Bank recognized a net gain on disposal of P214 million
resulting from sale of an insignificant amount of debt securities. In 2021, the BPI Group and the Parent Bank
recognized a net gain on derecognition of P1,513 million and P1,166 million, respectively, due mainly to its
disposal of a portfolio of debt securities in response to an impending change in tax regulations and as part of
disposal of the entire portfolio of investments securities at amortized cost of a significant subsidiary. Consistent
with the allowed sales of investments under the hold-to-collect business model following the requirements of
PFRS 9, Financial Instruments, and BSP Circular 708, the circumstances resulting in the disposals are deemed
isolated and non-recurring events that are beyond the BPI Group’s control and could not have been reasonably
anticipated at the time that the business model has been established.

As at December 31, 2023, government securities aggregating P3.43 billion (2022 - P19.11 billion) are used as
security for bills payable of the Parent Bank (Note 16).

Interest income from these investment securities recognized in the statement of income for the year ended
December 31, 2023 amounts to P14,678 million (2022 - P14,514 million; 2021 - P7,657 million) and
P14,549 million (2022 - P14,388 million; 2021 - P7,347 million) for the BPI Group and the Parent Bank,
respectively.

Investment securities at amortized cost are expected to be realized as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 64,063 41,813 63,742 41,918
Non-current (over 12 months) 318,648 378,720 313,378 373,117
382,711 420,533 377,120 415,035

As at December 31, 2023, the Parent Bank has P6,459 million (2022 - P6,401 million) outstanding securities
overlying securitization structures measured at amortized cost. The securities are held for collection of
contractual cash flows until maturity and those cash flows represent solely payments of principal and interest.

Critical accounting judgment - Classification of investment securities at amortized cost

The BPI Group classifies its financial assets at initial recognition as to whether it will be subsequently measured
at FVOCI, at amortized cost, or at FVTPL. The BPI Group determines the classification based on the contractual
cash flow characteristics of the financial assets and on the business model it uses to manage these financial
assets. The BPI Group determines whether the contractual cash flows associated with the financial asset are
solely payments of principal and interest (the “SPPI”). If the instrument fails the SPPI test, it will be measured at
FVTPL.

12
10 Loans and advances, net

Details of this account at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Corporate loans
Large corporate customers 1,446,426 1,348,210 1,442,251 1,342,447
Small and medium enterprise 79,097 76,046 79,093 76,039
Retail loans
Credit cards 137,889 99,680 137,889 99,680
Real estate mortgages 171,495 158,137 170,321 156,862
Auto loans 71,896 58,009 71,895 58,009
Others 28,536 16,675 229 225
1,935,339 1,756,757 1,901,678 1,733,262
Accrued interest receivable 12,943 11,189 12,006 10,632
Unearned discount/income (8,801) (7,189) (8,795) (7,179)
1,939,481 1,760,757 1,904,889 1,736,715
Allowance for impairment (57,474) (57,767) (55,049) (56,031)
1,882,007 1,702,990 1,849,840 1,680,684

As at December 31, 2023 and 2022, the BPI Group has no outstanding loans and advances used as security
for bills payable (Note 16).

As at December 31, 2023, the Parent Bank has no LIBOR referenced loans (2022 - P63,263 million). In 2023,
the Parent Bank has fully transitioned these LIBOR referenced loans to the alternative reference rate adopted
by the Parent Bank.

Loans and advances include amounts due from related parties (Note 25).

Loans and advances are expected to be realized as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 776,788 678,738 766,284 669,478
Non-current (over 12 months) 1,162,693 1,082,019 1,138,605 1,067,237
1,939,481 1,760,757 1,904,889 1,736,715

The range of average interest rates (%) of loans and advances for the years ended December 31 follows:

Consolidated Parent
2023 2022 2023 2022
Commercial loans
Peso-denominated loans 5.44 - 6.13 4.15 - 5.24 5.44 - 6.13 4.16 - 5.24
Foreign currency-denominated loans 5.80 - 6.63 2.73 - 5.85 5.80 - 6.63 2.73 - 5.85
Real estate mortgages 6.63 - 7.32 6.11 - 7.03 6.72 - 7.31 6.09 - 7.02
Auto loans 9.76 - 10.32 9.54 - 10.01 9.76 - 10.32 9.54 - 10.01

Interest income from loans and advances for the year ended December 31, 2023 for the BPI Group and the
Parent Bank amounts to P120,900 million (2022 - P84,909 million; 2021 - P72,225 million) and
P114,050 million (2022 - P80,724 million; 2021 - P53,426 million), respectively.

13
Details of the loans and advances portfolio at December 31 as to collateral (amounts net of unearned
discounts and exclusive of accrued interest receivable) are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Secured loans
Real estate mortgage 304,090 281,974 302,870 280,633
Project assets 138,915 143,541 138,915 143,541
Chattel mortgage 75,028 60,287 75,028 60,287
Others 25,912 39,698 25,757 38,944
543,945 525,500 542,570 523,405
Unsecured loans 1,382,593 1,224,068 1,350,313 1,202,678
1,926,538 1,749,568 1,892,883 1,726,083

Others represent loans secured mainly by hold-out deposits, mortgage trust indentures, government and
corporate securities and bonds, quedan/warehouse receipts, standby letters of credit, trust receipts, and
deposit substitutes.

11 Bank premises, furniture, fixtures and equipment, net

The details of and movements in the account are summarized below:

Consolidated

2023
Buildings and
leasehold Furniture and
Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2023 3,015 31,087 16,400 50,502
Additions - 3,523 2,954 6,477
Disposals (30) (330) (2,946) (3,306)
Transfers - (30) (19) (49)
Other changes (2) 43 - 41
December 31, 2023 2,983 34,293 16,389 53,665
Accumulated depreciation
January 1, 2023 - 16,622 14,525 31,147
Depreciation and amortization - 2,922 989 3,911
Disposals - (244) (980) (1,224)
Transfers - 4 (8) (4)
Other changes - 84 - 84
December 31, 2023 - 19,388 14,526 33,914
Net book value, December 31, 2023 2,983 14,905 1,863 19,751

14
 2022
Buildings and
leasehold Furniture and
Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2022 3,048 26,192 16,941 46,181
Additions 5 5,196 951 6,152
Disposals (38) (552) (1,492) (2,082)
Transfers - (6) (2) (8)
Other changes - 257 2 259
December 31, 2022 3,015 31,087 16,400 50,502
Accumulated depreciation
January 1, 2022 - 13,827 14,829 28,656
Depreciation and amortization - 3,054 938 3,992
Disposals - (391) (1,243) (1,634)
Transfers - (4) (1) (5)
Other changes - 136 2 138
December 31, 2022 - 16,622 14,525 31,147
Net book value, December 31, 2022 3,015 14,465 1,875 19,355

Parent

2023
Buildings and
leasehold Furniture and
Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2023 3,015 28,880 15,693 47,588
Additions - 3,167 2,870 6,037
Disposals (30) (294) (2,936) (3,260)
Transfers - (30) - (30)
Other changes (3) (749) - (752)
December 31, 2023 2,982 30,974 15,627 49,583
Accumulated depreciation
January 1, 2023 - 14,934 13,933 28,867
Depreciation and amortization - 2,567 928 3,495
Disposals - (209) (974) (1,183)
Transfers - 3 - 3
Other changes - - - -
December 31, 2023 - 17,295 13,887 31,182
Net book value, December 31, 2023 2,982 13,679 1,740 18,401

15
 2022
Buildings and
leasehold Furniture and
Note Land improvements equipment Total
(In Millions of Pesos)
Cost
December 31, 2021 2,703 22,461 14,914 40,078
Impact of merger 30.1 346 1,964 1,354 3,664
January 1, 2022 3,049 24,425 16,268 43,742
Additions 4 4,892 903 5,799
Disposals (38) (429) (1,478) (1,945)
Transfers - (6) - (6)
Other changes - (2) - (2)
December 31, 2022 3,015 28,880 15,693 47,588
Accumulated depreciation
December 31, 2021 - 11,708 13,127 24,835
Impact of merger 30.1 - 760 1,190 1,950
January 1, 2022 - 12,468 14,317 26,785
Depreciation and amortization - 2,743 850 3,593
Disposals - (272) (1,234) (1,506)
Transfers - (4) - (4)
Other changes - (1) - (1)
December 31, 2022 - 14,934 13,933 28,867
Net book value, December 31, 2022 3,015 13,946 1,760 18,721

As at December 31, 2023, the BPI Group has recognized construction-in-progress amounting to P1.45 billion
(2022 - P914 million) in relation to the redevelopment of its main office.

In 2022, the Parent Bank entered into a contract of lease with Ayala Land, Inc., a related party, for the lease of
an office unit at Ayala Triangle Gardens Tower 2. In 2023, the Parent Bank assigned a portion of its office unit
to BPI Securities Corporation, BPI Capital Corporation and BPI Wealth, effective July 1, 2023.

Other changes pertain to additions and remeasurement of right-of-use assets due to lease modification,
renewal of lease agreements, extension of lease terms and deferral of escalation clause on existing lease
contracts.

Depreciation and amortization charges are included in “Occupancy and equipment-related expenses”
category in the statements of income.

In 2023, the Parent Bank realized a gain of P420 million (2022 - P5,295 million) (Note 19) from the disposal of
certain bank premises, furniture, fixtures and equipment.

In 2022, the Parent Bank sold two properties located at Pasong Tamo, Makati City with a net book value of
P126 million for a purchase price of P5.49 billion resulting in a gain on sale of P4.99 billion, net of gross
receipts tax, which forms part of the realized gain recorded within Other operating income (Note 19). Out of
the total gain of P4.99 billion, P4.31 billion pertains to the portion of the property classified as investment
property under Other assets (Note 14).

Critical accounting estimate - Useful lives of bank premises, furniture, fixtures and equipment

The BPI Group determines the estimated useful lives of its bank premises, furniture, fixtures and equipment
based on the period over which the assets are expected to be available for use. The BPI Group annually
reviews the estimated useful lives of bank premises, furniture, fixtures and equipment based on factors that
include asset utilization, internal technical evaluation, technological changes, environmental and anticipated
use of assets tempered by related industry benchmark information. It is possible that future results of
operations could be materially affected by changes in these estimates brought about by changes in the factors
mentioned.

16
The BPI Group considers that it is impracticable to disclose with sufficient reliability the possible effects of
sensitivities surrounding the carrying values of bank premises, furniture, fixtures and equipment.

12 Investments in subsidiaries and associates, net

This account at December 31 consists of investments in shares of stock as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Carrying value (net of impairment)
Investments at equity method 8,287 7,227 - -
Investments at cost method - - 15,526 15,406
8,287 7,227 15,526 15,406

Investments in associates accounted for using the equity method in the consolidated statement of condition
are as follows:

Place of business/ Percentage of

country of ownership interest Acquisition cost
Name of entity incorporation 2023 2022 2023 2022
(in %) (In Millions of Pesos)
Global Payments Asia-Pacific Philippines,
Incorporated Philippines 49.00 49.00 1,342 1,342
AF Payments, Inc. (AFPI) Philippines 20.00 20.00 1,060 940
BPI AIA Life Assurance Corporation (formerly
BPI-Philamlife Assurance Corporation) Philippines 47.96 47.96 389 389
BPI Century Tokyo Lease and Finance
Corporation Philippines 49.00 49.00 316 316
Beacon Property Ventures, Inc. Philippines 20.00 20.00 72 72
CityTrust Realty Corporation Philippines 40.00 40.00 2 2
3,181 3,061

The movements in investments in associates accounted for using the equity method in the consolidated
financial statements are summarized as follows:

2023 2022
(In Millions of Pesos)
Acquisition cost
At January 1 3,061 3,061
Additions during the year 120 -
At December 31 3,181 3,061
Accumulated equity in net income
At January 1 4,437 4,076
Share in net income for the year 1,372 1,055
Dividends received (889) (694)
At December 31 4,920 4,437
Accumulated share in other comprehensive income (loss)
At January 1 (131) 168
Share in other comprehensive income (loss) for the year 457 (299)
At December 31 326 (131)
Allowance for impairment (140) (140)
8,287 7,227

17
No associate is deemed individually significant for financial reporting purposes. Accordingly, the relevant
unaudited financial information of associates as at and for the years ended December 31 are aggregated as
follows:

2023 2022
(In Millions of Pesos)
Total assets 129,429 127,610
Total liabilities 111,601 112,119
Total revenues 24,198 13,771
Total net income 2,924 1,925

The details of equity investments accounted for using the cost method in the separate financial statements of
the Parent Bank follow:

Allowance for
Acquisition cost impairment Carrying value
2023 2022 2023 2022 2023 2022
(In Millions of Pesos)
Subsidiaries
BPI Europe Plc. 7,180 7,180 - - 7,180 7,180
BPI Direct BanKo, Inc., A Savings Bank 2,009 2,009 - - 2,009 2,009
BPI Wealth 1,502 1,502 - - 1,502 1,502
Ayala Plans, Inc. 864 864 - - 864 864
BPI Payments Holdings Inc. 813 693 (672) (672) 141 21
BPI Capital Corporation 623 623 - - 623 623
FGU Insurance Corporation 303 303 - - 303 303
BPI Forex Corp. 195 195 - - 195 195
BPI International Finance Limited 143 143 - - 143 143
Santiago Land Development Corporation 140 140 - - 140 140
BPI Remittance Centre (HK) Ltd. 132 132 - - 132 132
First Far East Development Corporation 91 91 - - 91 91
FEB Stock Brokers, Inc. 25 25 - - 25 25
BPI Computer Systems Corp. 23 23 - - 23 23
Others 35 35 - - 35 35
Associates 2,120 2,120 - - 2,120 2,120
16,198 16,078 (672) (672) 15,526 15,406

In 2023, the Parent Bank made additional capital infusions to BPHI amounting to P120 million.

In June 2023, BPI Wealth Singapore Pte. Ltd. was incorporated with the Accounting and Corporate
Regulatory Authority of Singapore with BPI Parent as the sole owner of its share amounting to 1 SGD. As at
December 31, 2023, the entity is non-operational and awaiting approval of its Capital Market Services license
by the Monetary Authority of Singapore.

In 2021, the Parent Bank recognized an impairment loss of P60 million on its investment in BPHI due to
financial losses incurred by BPHI’s associate, AFPI. In computing for its recoverable amount, the Parent Bank
used a discount rate of 13.08% in assessing its value in use, which amounts to P21 million. There are no
changes in the allowance for impairment for the year ended December 31, 2023.

No non-controlling interest arising from investments in subsidiaries is deemed material to the BPI Group.

18
Critical accounting judgment and estimate - Impairment of investments in subsidiaries and associates

The BPI Group assesses impairment on non-financial assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The factors that the BPI Group
considers important which could trigger an impairment review include the following:

 significant decline in market value;

 significant underperformance relative to expected historical or projected future operating results;
 significant changes in the manner of use of the acquired assets or the strategy for overall business; and,
 significant negative industry or economic trends.

The BPI Group recognizes an impairment loss whenever the carrying amount of an asset exceeds its
recoverable amount. Recoverable amounts are estimated for individual assets or, if it is not possible, for the
cash-generating unit to which the asset belongs. Management has not identified any indicators of impairment
as at December 31, 2023 and 2022 in its subsidiaries apart from BPHI.

For the 2023 and 2022 reporting periods, the recoverable amount of the subsidiary was determined based on
the higher between fair value less cost to sell and value-in-use (VIU) calculations which require the use of
assumptions. The VIU calculations use cash flow projections based on financial budgets approved by
management.

The BPI Group considers that it is impracticable to disclose with sufficient reliability the possible effects of
sensitivities surrounding the recoverable amount of the subsidiary.

13 Deferred income taxes

Details of deferred income tax assets and liabilities at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Deferred income tax assets
Allowance for credit and impairment losses 15,277 15,380 14,607 14,889
Pension liability 2,499 1,736 2,419 1,736
Provisions 644 480 595 434
Others (62) (63) 24 19
Total deferred income tax assets 18,358 17,533 17,645 17,078
Deferred income tax liabilities
Unrealized gain on property appraisal (39) (394) (39) (394)
Others (134) (387) (70) (328)
Total deferred income tax liabilities (173) (781) (109) (722)
Deferred income tax assets, net 18,185 16,752 17,536 16,356

Movements in net deferred income tax assets are summarized as follows:

Consolidated Parent
Note 2023 2022 2023 2022
(In Millions of Pesos)
Beginning of the year 16,752 15,819 16,356 11,953
Impact of merger 30.1 - - - 3,449
Amounts recognized in statement of income 635 906 419 943
Amounts recognized in other comprehensive
income 798 27 761 11
End of the year 18,185 16,752 17,536 16,356

19
Details of deferred income tax items recognized in the statement of income are as follows:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Allowance for impairment 99 (1,164) (1,816) 280 (1,152) (1,541)
Pension (629) 33 (131) (606) 46 (121)
Net operating loss carryover (NOLCO) - - (6) - - -
Others (105) 225 3,052 (93) 163 2,037
(635) (906) 1,099 (419) (943) 375

Critical accounting judgment - Realization of deferred income tax assets

Management reviews at each reporting date the carrying amounts of deferred tax assets. The carrying amount
of deferred tax assets is reduced to the extent that the related tax assets cannot be utilized due to insufficient
taxable profit against which the deferred tax assets will be applied. Management believes that sufficient taxable
profit will be generated to allow all or part of the deferred income tax assets to be utilized.

14 Other assets, net

The account at December 31 consists of the following:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Sundry debits 10,025 2,839 9,988 2,723
Accounts receivable 2,780 6,327 4,118 6,728
Prepaid expenses 1,991 1,608 1,924 1,546
Intangible assets 854 2,316 831 2,277
Rental deposits 828 825 782 782
Accrued trust and other fees 673 645 138 139
Creditable withholding tax 428 328 286 189
Investment properties 69 73 58 62
Miscellaneous assets 3,376 3,058 2,895 2,792
21,024 18,019 21,020 17,238
Allowance for impairment (1,108) (1,189) (1,019) (1,135)
19,916 16,830 20,001 16,103

Sundry debits are float items caused by timing differences in recording of transactions. These float items are
normally cleared within one day.

Accounts receivable includes non-loan related receivables from merchants and service providers, litigation
related receivables and receivables from employees.

Prepaid expenses include Philippine Deposit Insurance Corporation (PDIC) assessment dues, prepayments
for rent, allowances and taxes.

Intangible assets comprise computer software costs, contractual customer relationships and management
contracts.

Miscellaneous assets include postage stamps, stationery and supplies.

20
The allowance for impairment pertains mainly to accounts receivable. The reconciliation of the allowance for
impairment at December 31 is summarized as follows:

Consolidated Parent
Note 2023 2022 2023 2022
(In Millions of Pesos)
Beginning of the year 1,189 1,099 1,135 908
Impact of merger 30.1 - - - 136
Provision for impairment losses 61 255 40 243
Transfer/reallocation (6) (33) (20) (20)
Write-off (136) (132) (136) (132)
End of the year 1,108 1,189 1,019 1,135

Other assets are expected to be realized as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 20,040 15,554 20,117 14,883
Non-current (over 12 months) 984 2,465 903 2,355
21,024 18,019 21,020 17,238

15 Deposit liabilities

The account at December 31 consists of:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Demand 379,076 376,337 382,443 379,169
Savings 1,158,548 1,182,071 1,148,770 1,172,009
Time 757,482 537,593 732,920 531,406
2,295,106 2,096,001 2,264,133 2,082,584

Deposit liabilities include amounts due to related parties (Note 25).

Deposit liabilities are expected to be settled as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 1,392,507 1,272,994 1,368,484 1,265,986
Non-current (over 12 months) 902,599 823,007 895,649 816,598
2,295,106 2,096,001 2,264,133 2,082,584

In 2019, the Parent Bank issued the first tranche of long-term negotiable certificates of deposit (LTNCD)
amounting to P3 billion out of the established P50-billion LTNCD program approved by the BSP. The LTNCDs
pay interest on a quarterly basis at a rate 4% per annum and carry a tenor of 5.5 years maturing on
April 25, 2025. The proceeds from the LTNCD issuance are included in “Time deposits” category.

21
Related interest expense on deposit liabilities is presented below:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Demand 248 287 377 248 286 359
Savings 2,115 2,420 3,419 2,065 2,375 2,841
Time 33,664 12,114 6,372 32,621 12,050 2,387
36,027 14,821 10,168 34,934 14,711 5,587

BSP reserve requirement

The Parent Bank and its bank subsidiaries should comply with a minimum reserve requirement on deposit and
deposit substitute liabilities in local currency.

In 2023, the BSP approved the reduction in reserves which brought the requirement down to 9.5% for
universal and commercial banks effective June 30,2023 by virtue of BSP Circular No.1175. For thrift banks,
the BSP approved reduction in reserves which brought the requirement from 3% down to 2% effective
June 30, 2023 by virtue of BSP Circular No.1175. These rates continue to be consistent throughout 2023.

Reserves must be set aside in deposits with the BSP. As at December 31, 2023, the reserves (included in
Due from BSP) amounted to P186,356 million (2022 - P212,276 million) for the BPI Group and
P185,703 million (2022 - P211,789 million) for the Parent Bank. The BPI Group is in full compliance with the
reserve requirement as at December 31, 2023 and 2022.

16 Bills payable and other borrowed funds

The account at December 31 consists of:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Bills payable
Local banks 720 3,471 - 3,471
Foreign banks 22,359 17,056 19,701 12,555
Other borrowed funds 114,025 76,976 114,025 76,976
137,104 97,503 133,726 93,002

Bills payable

Bills payable include mainly funds borrowed from various banking institutions which were lent out to
customers of the BPI Group in accordance with the agreed financing programs. Investment securities at
amortized cost serve as collateral for the Parent Bank’s bills payable (Note 9). The average payment terms of
these bills payable is one year (2022 - 1.11 years).

On August 24, 2023, the Parent Bank signed a facility agreement for an unsecured syndicated term loan
amounting to US Dollar (USD) 300 million. The three-year loan which was drawn down on August 24, 2023
bears a floating interest payable on a quarterly basis commencing in November 2023. The loan matures on
August 24, 2026 and has a carrying amount of P16,494 million as at December 31, 2023. The Parent Bank
incurred origination costs amounting to USD 2.35 million.

The range of average interest rates (%) of bills payable for the years ended December 31 follows:

Consolidated Parent
2023 2022 2023 2022
Private firms and local banks - Peso - denominated 5.75 - 7.00 3.75 - 6.40 5.75 - 7.00 3.75 - 6.40
Foreign banks - Foreign currency-denominated 2.70 - 7.23 0.13 - 5.96 5.00 - 6.33 2.95 - 4.27

22
Other borrowed funds

This represents funds raised via the BPI Group’s debt issuance programs as follows:

(a) Peso Bond and Commercial Paper Program

In 2018, the Parent Bank established a Peso Bond and Commercial Paper Program in the aggregate amount
of up to P50,000 million, out of which a total of P25,000 million notes were issued with a coupon of 6.797%
per annum, payable quarterly which matured on March 6, 2020. On November 20, 2019, BPI's Board of
Directors approved the issuance of Peso-denominated bonds and commercial papers of up to P100 billion, of
which P97 billion has been drawdown in multiple tranches, under an updated Bank Bond Issuance Program
with outstanding drawdown as follows:

Carrying amount
Description Interest Face
of instrument Date of drawdown rate Maturity amount 2023 2022
(In Millions of Pesos)
Fixed rate bond,
unconditional,
unsecured and
unsubordinated
bonds January 31, 2022 2.81% January 31, 2024 27,000 27,000 26,874

Bonds with a total face amount of P36,828 million which were issued in two tranches under this Program
matured in 2022.

(b) Peso-denominated Bonds under the P100 billion Bond Program

On May 18, 2022, the BOD of the Parent Bank approved a new P100 billion Bond Program. On
January 30, 2023, BPI issued the first tranche called BPI Reinforcing Inclusive Support for Micro, Small and
Medium Enterprises (MSMEs) Bonds (“BPI RISE Bonds”). The net proceeds amounting to P26,763 million will
be used to finance or refinance the business requirements of eligible MSMEs, consistent with BPI’s
Sustainable Funding Framework. On November 13, 2023, BPI issued the second tranche of this Bond
Program. As at December 31, 2023, both drawdowns are outstanding with the following details:

Carrying amount
Description Interest Face
of instrument Date of drawdown rate Maturity amount 2023 2022
(In Millions of Pesos)
Fixed rate bond,
unconditional,
unsecured and
unsubordinated
bonds January 30, 2023 5.75% July 30, 2024 20,300 20,236 -
Fixed rate bond,
unconditional,
unsecured and
unsubordinated
bonds November 13, 2023 6.43% May 13, 2025 36,661 36,371 -

23
(c) Medium-Term Note (MTN) Program

On June 21, 2018, the BOD of the Parent Bank approved the establishment of the MTN Program in the
aggregate amount of up to USD 2,000 million. On December 13, 2023, the BOD approved the increase in size
of this program to USD 3,000 million. As at December 31, 2023 and 2022, the outstanding drawdowns under
the MTN program are as follows:

Carrying amount
Interest Face
Description of instrument Date of drawdown rate Maturity amount 2023 2022
(In Millions of Pesos)
US$ 600 million, 5-year
senior unsecured
Bonds September 4, 2018 4.25% September 4, 2023 32,000 - 33,417
US$ 300 million, 5-year
senior unsecured
Green Bonds September 10, 2019 2.50% September 10, 2024 15,572 16,594 16,685

(d) Private Placement

On August 25, 2023, the Parent Bank issued a green bond amounting to USD 250 million with the International
Finance Corporation as the sole subscriber. The bond carries floating interest payable on a semiannual basis.
The bond is unconditional, unsecured and unsubordinated and is expected to mature on August 25, 2026. As at
December 31, 2023, the carrying amount of the bond amounts to P13,824 million.

Following the BPI-BFB merger (Note 30.1), BPI assumed a P9,600 million bond with a coupon of 4.30% per
annum, payable quarterly. At the acquisition date, the carrying amount of the bond amounted to P9,584 million.
The bond matured on June 16, 2022.

Interest expense for the years ended December 31 is summarized as follows:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Bills payable 1,050 143 77 811 35 59
Other borrowed funds 4,145 3,238 4,789 4,145 3,238 4,337
5,195 3,381 4,866 4,956 3,273 4,396

The movements in bills payable and other borrowed funds are summarized as follows:

Consolidated Parent
Note 2023 2022 2023 2022
(In Millions of Pesos)
At January 1 97,503 95,039 93,002 82,550
Impact of merger 30.1 - - - 9,584
Additions 138,190 61,113 122,029 42,788
Maturities (98,232) (63,434) (80,976) (46,428)
Amortization of discount 342 241 342 241
Exchange differences (699) 4,544 (671) 4,267
At December 31 137,104 97,503 133,726 93,002

24
Bills payable and other borrowed funds are expected to be settled as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 69,861 51,715 67,038 49,443
Non-current (over 12 months) 67,243 45,788 66,688 43,559
137,104 97,503 133,726 93,002

17 Deferred credits and other liabilities

The account at December 31 consists of the following:

Consolidated Parent
Note 2023 2022 2023 2022
(In Millions of Pesos)
Bills purchased - contra 10,674 12,270 10,674 12,270
Lease liabilities 20 9,756 10,095 8,678 9,726
Outstanding acceptances 7,862 9,100 7,862 9,100
Accounts payable 7,603 4,011 7,082 3,465
Other deferred credits 3,063 3,342 3,063 3,342
Due to the Treasurer of the Philippines 1,568 1,174 1,557 1,164
Withholding tax payable 1,503 880 1,441 841
Miscellaneous liabilities 11,423 10,336 10,674 9,537
53,452 51,208 51,031 49,445

Bills purchased - contra represents liabilities arising from the outright purchases of checks due for clearing as
a means of immediate financing offered by the BPI Group to its clients.

Outstanding acceptances represent liabilities arising from the bank drafts and bills of exchange the Parent
Bank has accepted from its clients.

Accounts payable consists of unpaid balances arising from transfer tax payments, settlement fees and
operating expenses.

Other deferred credits mainly pertain to unexpired portion of membership fee paid by the credit card holders
and discount on purchased contract-to-sell receivables from developers.

Miscellaneous liabilities include pension liability, allowance for credit losses for undrawn committed credit
facilities and other employee-related payables.

The account is expected to be settled as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Current (within 12 months) 41,642 41,678 40,268 40,116
Non-current (over 12 months) 11,810 9,530 10,763 9,329
53,452 51,208 51,031 49,445

25
18 Capital funds

(a) Share capital

Details of authorized share capital of the Parent Bank follow:

2023 2022 2021

(In Millions of Pesos, except par value per share)
Authorized capital (at P10 par value per share)
Common shares 54,000 50,000 50,000
Preferred A shares 600 600 600
54,600 50,600 50,600

Details of the Parent Bank’s subscribed common shares are as follows:

2023 2022 2021

(In absolute number of shares)
Common shares
At January 1 4,919,307,531 4,513,128,255 4,513,101,605
Subscription of shares during the year 25,889,760 406,179,276 26,650
At December 31 4,945,197,291 4,919,307,531 4,513,128,255
(In absolute amounts)
Subscription receivable 144,726,145 - -

The BPI common shares are listed and traded in the PSE since October 12, 1971.

As at December 31, 2023, the Parent Bank has a subscription receivable representing the amortization of
Executive Stock Purchase Plan (ESPP) shares in excess of par value and booked against share premium
amounting to P342 million (2022 - P208 million; 2021 - P416 million).

On February 10, 2014, additional 370,370,370 common shares were listed as a result of the stock rights offer.
Likewise, on April 25, 2018, BPI completed its P50 billion stock rights offer, which paved the way for the
issuance of 558,659,210 new common shares at P89.50 per share. The new shares were issued to
shareholders as of record date of April 6, 2018, at a ratio of 1:7.0594, or 1 new common share for every 7
shares held, or 14.2% of BPI’s outstanding common shares. These new shares were listed on the Philippine
Stock Exchange (PSE) on May 4, 2018.

As at December 31, 2023, 2022 and 2021, the Parent Bank has 11,760, 11,864 and 12,084 common
shareholders, respectively. There are no preferred shares issued and outstanding at
December 31, 2023, 2022 and 2021.

Preferred A shares shall have pre-emptive rights with respect to additional issues of Preferred A shares of the
Parent Bank.

On June 8, 2021, the BSP approved the amendment to the Parent Bank's Articles of Incorporation reflecting
the increase in its authorized share capital from 4.9 billion shares to 5 billion shares. The SEC approved the
amendment on December 21, 2021.

On September 30, 2022, the BOD of the Parent Bank approved the increase in authorized share capital in the
amount of P4,000 million divided into 400 million common shares with a par value of P10 per share. On
December 21, 2023, the BSP approved the amendment of Article Seventh of the Amended Articles of
Incorporation of the Parent Bank. On December 29, 2023, the SEC issued a Certificate of Approval and
Increase of Capital Stock from P50.60 billion to P54.60 billion.

26
BPI and BFB merger (Note 30.1)

The Parent Bank issued 406,179,276 treasury shares on January 1, 2022 at a price of P81.35 per share as a
consideration for the merger amounting to P33,042 billion (Note 30.1). The number of treasury shares issued
was computed based on the net assets of BFB as at December 31, 2020 over the share price of the Parent
Bank as at December 29, 2020. Treasury shares are stated at the cost of reacquiring such shares and are
deducted from equity attributable to the Parent Bank’s equity holders until the shares are cancelled, reissued
or disposed of.

Pursuant to the issuance of shares due to the merger as at January 1, 2022, the Parent Bank’s share capital
and share premium increased by P4,062 million and P28,981 million, respectively, as at January 1, 2022.

On March 15, 2023, the treasury shares were declared as property dividends by the BOD amounting to
P42,364 billion consisting of 406.18 million common shares at an entitlement ratio of 0.0896395563 for every
1 common share held by an eligible stockholder of BPI as of record date of March 29, 2023. Amount in excess
of the cost of the treasury shares amounting to P8,949 million is presented as addition to share premium in
the statement of changes in capital funds. Transaction costs incurred by the BPI Group and Parent Bank
amounted to P372 million and P403 million, respectively.

(b) Reserves

The account consists of:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Reserve for trust business 400 387 389 - - -
Executive stock option plan amortization 49 132 141 37 116 126
Reserve for trading participants 73 73 - - - -
Reserve for self-insurance 34 34 34 34 34 34
Merger reserves - - - 32,905 32,905 -
Others 87 18 - - - -
643 644 564 32,976 33,055 160

General loan loss provision (GLLP)

In 2018, the BSP issued Circular 1011 which mandates among others, banks to set up GLLP equal to 1% of all
outstanding “Stage 1” on-balance sheet loans, except for accounts considered as credit risk-free under existing
regulations. Under the said Circular, if the PFRS 9 “Stage 1” loan loss provision is lower than the required GLLP,
the deficiency shall be recognized as an appropriation of retained earnings or surplus. Until December 31, 2019,
the BPI Group has appropriated P4,739 million (2018 - P3,867 million) representing the excess of GLLP over
PFRS 9 loan loss provision out of surplus to meet the requirements of the BSP. As at December 31, 2023 and
December 31, 2022, the GLLP appropriation is nil as the loan loss provision for both years are higher than the
required GLLP.

Reserve for trust business

In compliance with existing BSP regulations, 10% of BPI Wealth’s, a wholly-owned subsidiary of the Parent
Bank, income from trust business should be appropriated to surplus reserve. This appropriation is required until
the surplus reserve for trust business reaches 20% of BPI Wealth’s regulatory net worth.

Reserve for self-insurance

Reserve for self-insurance represents the amount set aside to cover losses due to fire, defalcation by and
other unlawful acts of personnel and third parties.

27
Reserve for trading participants

Reserve for trading participants represents the required annual minimum appropriation of net income of the
BPI Group’s broker/dealer activities through BPI Securities Corporation, a wholly-owned subsidiary of the
Parent Bank, to a reserve fund in compliance with SEC Memorandum Circular No. 16-2004.

Merger reserves

Merger reserves represent the difference between the value of shares issued by the Parent Bank in exchange
for the value of the shares acquired in respect of the acquisition of BFB accounted for under the pooling-of-
interest method. It also include the results of operations of BFB during the year ended December 31, 2021,
net of dividends declared on December 29, 2021.

Share-based compensation plan

The BOD of the Parent Bank approved to grant the Executive Stock Option Plan (ESOP) and ESPP to
qualified beneficiaries/participants up to the following number of shares for future distribution:

Date Approved ESOP shares Approved ESPP shares

July 1, 2021 - 34,000,000
December 11, 2019 4,035,000 9,100,000
December 12, 2018 4,168,000 11,500,000
December 6, 2017 3,560,000 7,500,000
January 25, 2017 3,560,000 4,500,000

The ESOP has a three-year vesting period from grant date while the ESPP has a five-year payment period.

The exercise price for ESOP is equal to the volume weighted average of BPI share price for the 30-trading
days immediately prior to the grant date. The weighted average fair value of options granted determined using
the Black-Scholes valuation model was P19.04 and P6.50 for the options granted in
December 2019 and 2018, respectively.

Movements in the number of share options under the ESOP are summarized as follows:

2023 2022 2021

At January 1 9,866,999 12,905,000 15,921,667
Granted - - -
Exercised (3,900,440) (2,353,001) (1,650,000)
Cancelled - (685,000) (1,366,667)
At December 31 5,966,559 9,866,999 12,905,000
Exercisable 5,966,559 8,708,666 9,095,002

The impact of ESOP is not considered material to the financial statements; thus, the disclosures were limited
only to the information mentioned above.

The subscription price for ESPP is equivalent to 10% below the volume weighted average of BPI share price.
The subscribed shares will vest over a period of three 3 years from grant date. The grant dates for the last
three-year ESPP were on April 26, 2023, December 13, 2022 and February 4, 2020. The initial subscriptions
for the ESPP granted on April 26, 2023 and December 13, 2022 were received on April 26, 2023 and
March 10, 2023, respectively.

28
(c) Accumulated other comprehensive loss

Details of and movements in the account are as follows:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Fair value reserve on financial assets at
FVOCI
At January 1 (8,058) (3,030) 559 (7,465) (2,327) 932
Unrealized fair value gain (loss)
before tax 6,996 (4,337) (2,864) 7,005 (4,393) (2,779)
Amount recycled to profit or loss (947) (28) 47 (947) (28) 148
Deferred income tax effect (884) (663) (772) (896) (717) (628)
At December 31 (2,893) (8,058) (3,030) (2,303) (7,465) (2,327)
Share in other comprehensive (loss)
income of insurance subsidiaries
At January 1 (80) 71 219 - - -
Share in other comprehensive
income (loss) for the year, before
tax 63 (187) (184) - - -
Deferred income tax effect (13) 36 36 - - -
At December 31 (30) (80) 71 - - -
Share in other comprehensive income
(loss) of associates
At January 1 (162) 166 446 - - -
Share in other comprehensive
income (loss) for the year 454 (328) (280) - - -
At December 31 292 (162) 166 - - -
Translation adjustment on foreign
operations
At January 1 (582) (517) (1,144) - - (291)
Translation differences and others (54) (65) 627 - - 291
At December 31 (636) (582) (517) - - -
Remeasurements of defined benefit
obligation, net
At January 1 (5,374) (5,360) (5,979) (4,378) (4,498) (4,929)
Actuarial (losses) gains for the year (3,434) 191 1,372 (3,342) 104 1,039
Deferred income tax effect 948 (205) (753) 947 16 (608)
At December 31 (7,860) (5,374) (5,360) (6,773) (4,378) (4,498)
(11,127) (14,256) (8,670) (9,076) (11,843) (6,825)

29
(d) Dividend declarations

Cash dividends

Dividends declared by the BOD of the Parent Bank are as follows:

Amount of dividends
Date declared Per share Total
(In Millions of Pesos)
For the year ended December 31, 2023
May 17, 2023 1.68 7,626
November 15, 2023 1.68 8,308
15,934
For the year ended December 31, 2022
May 18, 2022 1.06 4,784
November 16, 2022 1.06 4,784
9,568
For the year ended December 31, 2021
May 19, 2021 0.90 4,062
November 17, 2021 0.90 4,062
8,124

Property dividends

On March 15, 2023, the BOD declared the treasury shares as property dividends (Note 18a).

(e) Earnings per share (EPS)

EPS is calculated as follows:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos, except earnings per share amounts)
a) Net income attributable to equity
holders of the Parent Bank 51,687 39,605 23,880 50,053 36,999 22,783
b) Weighted average number of common
shares outstanding during the year 4,741 4,513 4,513 4,741 4,513 4,513
c) Basic EPS (a/b) based on net income 10.90 8.78 5.29 10.56 8.20 5.05

The basic and diluted EPS are the same for the years presented as the impact of stock options outstanding is
not significant to the calculation of weighted average number of common shares.

30
19 Other income

(a) Fees and commission

Details of fees and commission are as follows:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Service charges 9,673 8,382 8,206 9,000 7,745 7,511
Bank commissions 2,168 1,787 1,796 2,166 1,771 1,540
Underwriting fees 693 936 858 - - -
Stock brokerage fees 183 234 344 - - -
12,717 11,339 11,204 11,166 9,516 9,051

Service charges represents service fees and processing fees collected from customers.

Bank commissions include foreign and domestic commissions collected for services rendered.

(b) Other operating income

Details of other operating income are as follows:

Consolidated Parent
Notes 2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Credit card income 6,207 4,594 3,542 6,209 4,594 3,449
Trust and asset management fees 4,211 3,802 3,913 2 4 6
Gain on sale of assets 11 407 5,303 477 420 5,295 129
Rental income 135 195 236 167 225 285
Dividend income 8 100 60 30 3,066 1,810 6,939
Miscellaneous income 3,207 3,099 2,572 2,877 2,637 2,218
14,267 17,053 10,770 12,741 14,565 13,026

Dividend income recognized by the Parent Bank substantially pertains to dividend distributions of subsidiaries.

Miscellaneous income includes recoveries on charged-off assets, fees arising from service arrangements with
customers and related parties and share in net income (loss) of associates.

31
20 Leases

The BPI Group (as lessee) has various lease agreements which mainly pertain to branch premises and
equipment. Lease terms are negotiated either on a collective or individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose any covenants other than the security
interests in the leased assets that are held by the lessor. Leased assets cannot be used as security for
borrowing purposes. The balances arising from the lease contracts are presented below:

Right-of-use assets and lease liabilities (PFRS 16)

Details of right-of-use assets and lease liabilities as at December 31 are as follows:

Consolidated Parent
Notes 2023 2022 2023 2022
(In Millions of Pesos)
Right-of-use assets
Buildings and leasehold improvements 11 8,404 9,011 7,365 8,666
Lease liabilities (included in “Deferred credits and other
liabilities”) 17
Current 2,577 3,417 2,337 3,225
Non-current 7,179 6,678 6,341 6,501
9,756 10,095 8,678 9,726

Additions to the right-of-use assets (Note 11) in 2023 aggregated P1,701 million (2022 - P4,495 million) and
P1,459 million (2022 - P4,220 million) for BPI Group and Parent bank, respectively. Total cash outflow for
leases in 2023 amounted to P2,214 million (2022 - P1,925 million) and P1,933 million (2022 - P1,698 million)
for BPI Group and Parent bank, respectively.

Amounts recognized in the statement of income relating to leases:

Consolidated Parent
Note 2023 2022 2023 2022
(In Millions of Pesos)
Depreciation expense
Buildings and leasehold improvements 11 2,186 2,088 1,936 1,632
Interest expense (included in “Occupancy and equipment-
related expenses”) 321 301 281 281
Expense relating to short-term leases (included in “Occupancy
and equipment-related expenses”) 101 124 101 124
Expense relating to leases of low-value assets that are not
shown above as short-term leases (included in “Occupancy
and equipment-related expenses”) 397 235 354 213
3,005 2,748 2,672 2,250

The BPI Group has received COVID-19 related rent discount and deferral of the escalation of lease payments
and has applied the practical expedients allowed under PFRS 16, Leases, introduced in May 2020 in accounting
for the rent concessions. Consequently, the BPI Group recognized the following amounts for the years ended
December 31:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Rent concession (included in “Other operating income”) 1 1 1 1

32
Critical accounting judgment - Determining the lease term

In determining the lease term, the BPI Group considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated).

Critical accounting judgment - Determining the incremental borrowing rate

To determine the incremental borrowing rate, each entity within the BPI Group:
 where possible, uses recent third-party financing received as a starting point, adjusted to reflect changes
in financing conditions since third party financing was received; or
 uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held
which do not have recent third-party financing; and
 makes adjustments specific to the lease (e.g. term, currency and security).

The BPI Group’s weighted average incremental borrowing rates applied to the lease liabilities ranged from
2.00% to 7.40% (2022 - 4.10% to 6.83%). The rates were determined in reference to the borrowing rates
arising from the most recent debt issuances of the Parent Bank.

21 Operating expenses

(a) Compensation and fringe benefits

Details of the account for the years ended December 31:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Salaries and wages 18,600 16,024 15,050 16,320 14,236 11,461
Retirement expense 23 1,232 1,438 1,443 1,148 1,379 1,135
Other employee benefit expenses 3,389 2,066 2,035 2,842 1,792 1,498
23,221 19,528 18,528 20,310 17,407 14,094

Other employee benefit expenses pertain to employee incentives like HMO coverage and SSS premiums.

(b) Other operating expenses

Details of the account for the years ended December 31:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Insurance 5,204 4,768 4,188 5,140 4,711 3,090
Advertising 4,124 2,393 970 4,020 2,259 920
Travel and communication 1,575 1,194 1,123 1,414 1,069 950
Supervision and examination fees 963 873 843 783 695 593
Management and other professional fees 730 651 337 673 572 254
Litigation expenses 477 349 373 468 345 101
Office supplies 428 358 343 363 305 254
Taxes and licenses 224 1,214 1,285 165 1,147 996
Amortization expense 18 172 135 1 3 -
Shared expenses - - - - - 53
Others 10,134 7,729 6,598 9,115 7,089 5,009
23,877 19,701 16,195 22,142 18,195 12,220

33
Insurance expense comprise mainly of premium payments made to PDIC and other product-related insurance
costs.

Other expenses mainly include fees and incentives paid to agents, outsourcing fees, freight charges and other
business expense such as those incurred in staff meetings, donations, periodicals and magazines.

22 Income taxes

The reconciliation between the income tax expense at the statutory tax rate and the effective income tax for
the years ended December 31 is shown below:

Consolidated
2023 2022 2021
Amount Rate (%) Amount Rate (%) Amount Rate (%)
(In Millions of Pesos)
Statutory income tax 16,303 25.00 12,842 25.00 8,384 25.00
Effect of items not subject to statutory tax rate:
Income subjected to lower tax rates (392) (0.60) (723) (1.41) 39 0.12
Tax-exempt income (1,134) (1.74) (1,318) (2.56) (1,780) (5.31)
Others, net (1,478) (2.27) 731 1.42 2,784 8.30
Effective income tax 13,299 20.39 11,532 22.45 9,427 28.11

Parent
2023 2022 2021
Amount Rate (%) Amount Rate (%) Amount Rate (%)
(In Millions of Pesos)
Statutory income tax 15,559 25.00 11,821 25.00 7,465 25.00
Effect of items not subject to statutory tax rate:
Income subjected to lower tax rates (446) (0.72) (77) (0.17) 91 0.30
Tax-exempt income (1,872) (3.01) (1,506) (3.18) (933) (3.12)
Others, net (1,060) (1.70) 45 0.10 453 1.52
Effective income tax 12,181 19.57 10,283 21.75 7,076 23.70

The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill which provides for lower
corporate income tax rates and rationalizes fiscal incentives had been signed into law by the President of the
Philippines in 2021 but with an effective date of July 1, 2020. As a result of the CREATE law, the BPI Group
recognized an adjustment in 2021 pertaining to the December 31, 2020 balances which resulted in a
decrease of P819 million in current income tax expense and an increase of P2,718 million in deferred income
tax expense using the weighted average effective annual income tax rate of 27.5%. The Parent Bank likewise
recognized a decrease of P724 million in current income tax expense and an increase of P1,976 million in
deferred income tax expense, respectively.

34
23 Retirement plans

The BPI Group maintains both defined benefit and defined contribution retirement plans. Assets of both
retirement plans are held in trust and governed by local regulations and practices in the Philippines. The key
terms of these pension plans are discussed below.

a) Defined benefit retirement plan

BPI Group (excluding insurance operations)

BPI has a unified plan which covers all subsidiaries except insurance entities. Under this plan, the normal
retirement age is 60 years. Those who elect to retire prior to the normal retirement age will require company
approval, subject to meeting the eligibility conditions on age and years of credited services. Normal retirement
benefit consists of a lump sum benefit equivalent to 200% of the basic monthly salary of the employee at the
time of his retirement for each year of service, if he has rendered at least 10 years of service, or to 150% of
his basic monthly salary, if he has rendered less than 10 years of service and cash equivalent of the accrued
and unused vacation and sick leave, if any subject to the BPI Group’s implementing guidelines and policies.
For voluntary retirement, the benefit is equivalent to 112.50% of the employee’s basic monthly salary for a
minimum of 10 years of service with the rate factor progressing to a maximum of 200% of basic monthly
salary for service years of 25 or more. Death or disability benefit, on the other hand, shall be the highest
amount among the (1) same basis as in voluntary retirement; (2) 100% of basic monthly salary of the
employee at the time of his retirement for each year of service; and (3) minimum amount required by Labor
Code.

The net defined benefit cost and contributions to be paid by the entities within the BPI Group are determined
by an independent actuary.

Non-life insurance subsidiary

BPI/MS Insurance Corporation has a separate trusteed defined benefit plan. Under the plan, the normal
retirement age is 60 years. Normal retirement benefit consists of a lump sum benefit equivalent to 175% of the
basic monthly salary of the employee at the time of his retirement for each year of service, if he has rendered
as least 10 years of service, or to 150% of his basic monthly salary, if he has rendered less than 10 years of
service. Death or disability benefit for all employees of the non-life insurance subsidiary shall be determined
on the same basis as in normal or voluntary retirement as the case may be.

Following are the amounts recognized based on recent actuarial valuation exercise:

(a) Pension liability as at December 31 recognized in the statement of condition:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Present value of defined benefit obligation 18,632 15,600 18,098 15,296
Fair value of plan assets (14,103) (12,876) (13,722) (12,515)
Pension liability recognized in the statement of
condition 4,529 2,724 4,376 2,781
Effect of asset ceiling 12 24 - -
4,541 2,748 4,376 2,781

Pension liability is shown as part of “Miscellaneous liabilities” within Deferred credits and other liabilities
(Note 17).

35
The movements in plan assets are summarized as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
At January 1 12,876 9,999 12,515 8,504
Contributions 2,251 4,182 2,229 3,733
Interest income 886 473 860 401
Benefit payments (1,032) (834) (1,030) (776)
Remeasurement - return on plan assets (878) (944) (852) (804)
Transfer to the plan - - - 1,457
At December 31 14,103 12,876 13,722 12,515

The carrying values of the plan assets represent their fair value as at December 31, 2023 and 2022.

The merger between the Parent Bank and BFB became effective on January 1, 2022 (Note 30.1), accordingly,
the plan assets of BFB were transferred to the Parent Bank.

The plan assets are comprised of the following:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Debt securities 8,517 6,759 8,287 6,569
Equity securities 4,307 4,852 4,191 4,716
Others 1,279 1,265 1,244 1,230
14,103 12,876 13,722 12,515

The plan assets of the unified retirement plan include investment in BPI’s common shares with aggregate fair
value of P2,413 million at December 31, 2023 (2022 - P489 million). An officer of the Parent Bank exercises
the voting rights over the plan’s investment in BPI’s common shares.

Others include cash and cash equivalents and other receivables.

The movements in the present value of defined benefit obligation are summarized as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
At January 1 15,600 15,580 15,296 13,361
Interest cost 1,115 768 1,088 659
Current service cost 757 782 730 656
Remeasurement - changes in financial assumptions 1,013 (1,428) 980 (1,223)
Remeasurement - experience adjustment 1,512 543 1,416 919
Remeasurement - changes in demographic assumption (332) - (306) -
Benefit payments (1,033) (834) (1,030) (776)
Past service cost - plan amendment - 189 - 163
Transfer to the plan - - (76) 1,537
At December 31 18,632 15,600 18,098 15,296

The BPI Group has no other transactions with the plan other than the regular funding contributions presented
above for the years ended December 31, 2023 and 2022.

36
(b) Expense recognized in the statement of income for the years ended December 31 are as follows:

Consolidated Parent
2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Current service cost 757 782 853 730 656 703
Net interest cost 229 295 298 228 258 256
986 1,077 1,151 958 914 959

The principal assumptions used for the actuarial valuations of the unified plan are as follows:

Consolidated Parent
2023 2022 2023 2022
Discount rate 6.03% 7.15% 6.03% 7.15%
Future salary increases 6.00% 6.00% 6.00% 6.00%

Assumptions regarding future mortality and disability experience are based on published statistics generally
used for local actuarial valuation purposes.

The defined benefit plan typically exposes the BPI Group to a number of risks such as investment risk,
interest rate risk and salary risk. The most significant of which relate to investment and interest rate risk. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates of government bonds that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating the terms of the related pension liability. A decrease in
government bond yields will increase the defined benefit obligation although this will also be partially offset by
an increase in the value of the plan’s fixed income holdings. Hence, the present value of defined benefit
obligation is directly affected by the discount rate to be applied by the BPI Group. However, the BPI Group
believes that due to the long-term nature of the pension liability and the strength of the BPI Group itself, the
mix of debt and equity securities holdings of the plan is an appropriate element of the BPI Group’s long-term
strategy to manage the plan efficiently.

The BPI Group ensures that the investment positions are managed within an asset-liability matching framework
that has been developed to achieve long-term investments that are in line with the obligations under the plan.
The BPI Group’s main objective is to match assets to the defined benefit obligation by investing primarily in long-
term debt securities with maturities that match the benefit payments as they fall due. The asset-liability matching
is being monitored on a regular basis and potential change in investment mix is being discussed with the trustor,
as necessary to better ensure the appropriate asset-liability matching.

The BPI Group contributes to the plan depending on the suggested funding contribution as calculated by an
independent actuary engaged by management. The expected contributions for the year ending
December 31, 2024 for the BPI Group and the Parent Bank amount to P1,273 billion and P1,217 billion,
respectively (2022 - P987 million and P964 million, respectively). The weighted average duration of the
defined benefit obligation under the BPI unified retirement plan as at December 31, 2023 is 5.09 years
(2022 - 7.32 years).

The projected maturity analysis of retirement benefit payments as at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Up to one year 3,347 1,661 3,260 1,647
More than 1 year to 5 years 3,095 3,327 2,980 3,272
More than 5 years to 10 years 2,649 9,955 2,566 9,729
More than 10 years to 15 years 2,783 10,850 2,627 10,644
More than 15 years to 20 years 2,661 6,550 2,573 6,321
Over 20 years 23,833 21,648 22,364 20,612

37
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions as at
December 31 follows:

Consolidated

2023
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 1.00% Decrease by 4.90% Increase by 5.30%
Salary growth rate 1.00% Increase by 5.20% Decrease by 4.90%

2022
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 1.00% Decrease by 6.80% Increase by 7.80%
Salary growth rate 1.00% Increase by 7.80% Decrease by 7.00%

Parent

2023
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 1.00% Decrease by 4.90% Increase by 5.30%
Salary growth rate 1.00% Increase by 5.20% Decrease by 4.90%

2022
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 1.00% Decrease by 6.80% Increase by 7.70%
Salary growth rate 1.00% Increase by 7.70% Decrease by 6.90%

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the
same method (present value of the defined benefit obligation calculated with the projected unit credit method
at the end of the reporting period) has been applied as when calculating the retirement liability recognized
within the statement of condition.

b) Defined contribution retirement plan subject to the requirements of Republic Act (RA) No. 7641

All non-unionized employees hired on or after the January 1, 2016 are automatically under the new defined
contribution plan. Employees hired prior to the effective date shall have the option to elect to become
members of the new defined contribution plan.

Upon normal or late retirement, employees are entitled to a lump sum benefit equal to the total of the
following amounts:

 The greater of the (a) updated member account balance where the company periodically contributes 8%
of the basic monthly salary and (b) the minimum legal retirement benefit under the Labor Code; and
 The updated member account balance funded by (a) voluntary employee contribution and (b) employer
matching contribution; and
 Cash equivalent of the accrued and unused vacation and sick leave, if any.

38
The defined contribution retirement plan has a defined benefit minimum guarantee equivalent to a certain
percentage of the monthly salary payable to an employee at normal retirement age with the required credited
years of service based on the provisions of RA No. 7641.

Accordingly, the liability for the defined benefit minimum guarantee is actuarially calculated similar to the
defined benefit plan.

The funding status of the defined contribution plan as at December 31 is shown below:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Fair value of plan assets 2,261 1,961 1,898 1,684
Present value of defined benefit obligation (595) (889) (531) (767)
1,666 1,072 1,367 917
Effect of asset ceiling 1,666 1,072 1,367 917
- - - -

The movements in the present value of the defined benefit obligation follow:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
At January 1 889 760 767 563
Interest cost 66 37 56 28
Current service cost 120 122 95 84
Benefit payments (184) (147) (156) (128)
Remeasurement - changes in financial assumptions 54 (212) 45 (161)
Remeasurement - experience adjustment 369 282 336 284
Remeasurement - changes in demographic
assumptions (719) - (601) -
Past service cost - plan amendment - 47 - 36
Transfer to the plan - - (11) 61
At December 31 595 889 531 767

The movements in the fair value of plan assets follow:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
At January 1 1,961 1,981 1,684 1,474
Contribution paid by employer 332 176 270 121
Interest income 145 100 124 74
Benefit payments (184) (147) (156) (128)
Remeasurement - return on plan assets 7 (149) (24) 108
Transfer to the plan - - - 35
At December 31 2,261 1,961 1,898 1,684

Total retirement expense for the year ended December 31, 2023 under the defined contribution plan for the
BPI Group and Parent Bank amounts to P119 million (2022 - P210 million) and P94 million
(2022 - P170 million), respectively.

39
The components of plan assets of the defined contribution as at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Debt securities 619 554 520 476
Equity securities 1,495 1,302 1,255 1,118
Others 147 105 123 90
2,261 1,961 1,898 1,684

The weighted average duration of the defined contribution retirement plan for the BPI Group and Parent
Bank is 8.17 years (2022 - 15.46 years).

Critical accounting estimate - Calculation of defined benefit obligation

The BPI Group estimates its pension benefit obligation and expense for defined benefit pension plans based on
the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include,
among others, the discount rate and future salary increases. The BPI Group determines the appropriate discount
rate at the end of each year. This is the interest rate that should be used to determine the present value of
estimated future cash outflows expected to be required to settle the retirement obligations. The present value of
the defined benefit obligations of the BPI Group at December 31, 2023 and 2022 are determined using the
market yields on Philippine government bonds with terms consistent with the expected payments of employee
benefits. Plan assets are invested in either equity securities, debt securities or other forms of investments. Equity
markets may experience volatility, which could affect the value of pension plan assets. This volatility may make it
difficult to estimate the long-term rate of return on plan assets. Actual results that differ from the BPI Group’s
assumptions are reflected as remeasurements in other comprehensive income. The BPI Group’s assumptions
are based on actual historical experience and external data regarding compensation and discount rate trends.

24 Asset management business

At December 31, 2023, the total trust and fund assets under management of the BPI Group through BPI Wealth
amounts to P1,223 billion (2022 - P875 billion).

As required by the General Banking Act, BPI Wealth has deposited government securities with the BSP valued
at P990 million (2022 - P673 million).

25 Related party transactions

In the normal course of business, the Parent Bank transacts with related parties consisting of its DOSRI
(Directors, Officers, Stockholders, and Related Interests), Subsidiaries and Affiliates including Other Related
Parties. Likewise, the BPI Group has transactions with Ayala Corporation (AC) and its subsidiaries
(Ayala Group), on an arm's length basis. AC is a significant stockholder of BPI as at reporting date.

The Parent Bank has a Board-level Related Party Transactions Committee (RPTC) that vets and endorses all
significant related party transactions which exceed the Parent Bank's set materiality threshold, including those
involving DOSRI, for which the latter shall require final BOD approval. The RPTC consists of three directors,
majority of whom are independent directors including the Chairman, and two resource persons from
management's control groups, namely, the Chief Audit Executive and the Chief Compliance Officer. Those
related party transactions involving amounts below the materiality threshold, the Management Vetting
Committee (MVC), which is composed of the Parent Bank's Executive Vice Presidents, the Bank’s Chief
Finance Officer, and the Bank’s Treasurer, shall have the authority to vet these transactions. In case any of
the vetting committees has conflict of interest, be it actual or perceived, in a particular related party
transaction, he or she is required to inhibit from the vetting and endorsement of the particular RPT.

Transactions with related parties have terms and conditions that are generally comparable to those offered to
non-related parties and/or to similar transactions in the market. Any deviation or amendment from previously
vetted terms and conditions shall require appropriate RPT vetting and approval.

40
To ensure that related party transactions are within prudent levels, the Parent Bank's BOD shall prescribe,
from time to time, internal limits or sub-limits for individual and aggregate credit exposures to related parties
that are consistent with the Parent Bank’s risk appetite and regulatory guidelines. The limits shall be
computed and based on the Parent Bank’s prescribed capital metrics.

The RPTC shall report to the BOD, on a regular basis, the status and aggregate credit exposures of the
Parent Bank to each related party as well as the total amount of credit exposure to all related parties.

A summary of significant related party transactions and outstanding balances as at and for the years ended
December 31 is shown below (transactions with subsidiaries have been eliminated in the consolidated
financial statements):

Consolidated

2023
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Associates 71 113 These are loans and advances granted
Ayala Group (3,087) 61,567 to related parties that are generally
Other related parties - - secured with interest rates ranging from
6.45% to 7.58% (including those
pertaining to foreign currency-
denominated loans) and with maturity
periods ranging from 1 day to 12 years.
Additional information on DOSRI loans
are discussed below.
(3,016) 61,680
Deposits from:
Associates 912 1,949 These are demand, savings and time
Ayala Group (2,239) 687 deposits bearing the following average
Key management personnel 958 1,215 interest rates:
Demand - 0.05% to 0.70%
Savings - 0.08% to 0.10%
Time - 4.35% to 5.38%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
(369) 3,851

41
 2022
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Associates (18) 42 These are loans and advances granted
Ayala Group (541) 64,654 to related parties that are generally
Other related parties (546) - secured with interest rates ranging from
4.95% to 6.09% (including those
pertaining to foreign currency-
denominated loans). These are
collectible in cash at gross amount and
with maturity periods ranging from 5
days to 15 years. Additional information
on DOSRI loans are discussed below.
(1,105) 64,696
Deposits from:
Associates (236) 1,037 These are demand, savings and time
Ayala Group (8,475) 2,926 deposits bearing the following average
Key management personnel (727) 257 interest rates:
Demand - 0.06% to 0.80%
Savings - 0.09% to 0.10%
Time - 1.71% to 4.17%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
(9,438) 4,220

2021
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Associates (449) 60 These are loans and advances granted
Ayala Group (35,474) 65,195 to related parties that are generally
Other related parties 546 546 secured with interest rates ranging from
2.50% to 9.63% (including those
pertaining to foreign currency-
denominated loans). These are
collectible in cash at gross amount and
with maturity periods ranging from 5
days to 15 years. Additional information
on DOSRI loans are discussed below.
(35,377) 65,801
Deposits from:
Associates (4) 1,273 These are demand, savings and time
Ayala Group (7,349) 11,401 deposits bearing the following average
Key management personnel 200 984 interest rates:
Demand - 0.07% to 0.14%
Savings - 0.10% to 0.24%
Time - 1.73% to 2.00%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
(7,153) 13,658

42
Parent

2023
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 53 87 These are loans and advances granted
Associates 71 113 to related parties that are generally
Ayala Group (3,087) 61,567 secured with interest rates ranging from
Other related parties - - 6.22% to 7.23% (including those
pertaining to foreign currency-
denominated loans). These are
collectible in cash at gross amount and
with maturity periods ranging from 1 day
to 12 years. Additional information on
DOSRI loans are discussed below.
(2,963) 61,767
Deposits from:
Subsidiaries 442 6,365 These are demand, savings and time
Associates 912 1,949 deposits bearing the following average
Ayala Group (2,239) 687 interest rates:
Key management personnel 936 1,191 Demand - 0.05% to 0.80%
Savings - 0.09% to 0.09%
Time - 4.35% to 5.35%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
51 10,192

2022
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 34 34 These are loans and advances granted
Associates (18) 42 to related parties that are generally
Ayala Group (541) 64,654 secured with interest rates ranging from
Other related parties (546) - 4.95% to 6.09% (including those
pertaining to foreign currency-
denominated loans). These are
collectible in cash at gross amount and
with maturity periods ranging from 5 days
to 15 years. Additional information on
DOSRI loans are discussed below.
(1,071) 64,730
Deposits from:
Subsidiaries (5,408) 5,923 These are demand, savings and time
Associates (234) 1,037 deposits bearing the following average
Ayala Group (7,203) 2,926 interest rates:
Key management personnel (692) 255 Demand - 0.06% to 0.80%
Savings - 0.09% to 0.10%
Time - 1.71% to 4.17%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
(13,537) 10,141

43
 2021
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries - - These are loans and advances granted
Associates (449) 60 to related parties that are generally
Ayala Group (13,474) 65,195 secured with interest rates ranging from
Other related parties 546 546 2.50% to 4.56% (including those
pertaining to foreign currency-
denominated loans). These are
collectible in cash at gross amount and
with maturity periods ranging from 5 days
to 15 years. Additional information on
DOSRI loans are discussed below.
(13,377) 65,801
Deposits from:
Subsidiaries 3,399 11,331 These are demand, savings and time
Associates 17 1,271 deposits bearing the following average
Ayala Group (6,721) 10,129 interest rates:
Key management personnel 219 947 Demand - 0.07% to 0.14%
Savings - 0.10% to 0.22%
Time - 0.79% to 1.04%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
(3,086) 23,678

The aggregate amounts included in the determination of income before income tax (after elimination) that
resulted from transactions with each class of related parties are as follows:

Consolidated 2023 2022 2021

(In Millions of Pesos)
Interest income
Associates 8 - 11
Ayala Group 2,297 1,724 2,782
Other related parties - - 21
2,305 1,724 2,814
Other income
Associates 327 1,771 312
Ayala Group 935 833 2,470
1,262 2,604 2,782
Interest expense
Associates 18 1 1
Ayala Group 4 29 18
Key management personnel 14 1 2
36 31 21
Other expenses
Associates 191 389 -
Ayala Group 799 1,769 1,112
990 2,158 1,112
Retirement benefits
Key management personnel 50 52 46
Salaries, allowances and other short-term benefits
Key management personnel 1,477 831 829
Directors’ remuneration 113 157 119

44
 Parent 2023 2022 2021
(In Millions of Pesos)
Interest income
Subsidiaries 19 5 5
Associates 8 - 11
Ayala Group 2,297 1,724 2,782
Other related parties - - 21
2,324 1,729 2,819
Other income
Subsidiaries 209 733 1,630
Associates 139 1,771 312
Ayala Group 935 648 1,645
1,283 3,152 3,587
Interest expense
Subsidiaries 19 5 5
Associates 18 1 1
Ayala Group 4 29 13
Key management personnel 14 1 1
55 36 20
Other expenses
Subsidiaries 127 817 10
Associates - 282 -
Ayala Group 799 1,744 867
926 2,843 877
Retirement benefits
Key management personnel 48 51 41
Salaries, allowances and other short-term benefits
Key management personnel 1,433 796 746
Directors’ remuneration 88 131 86

Other income mainly consists of revenue from service arrangements with related parties in which the related
outstanding balance is included under accounts receivable. Other expenses pertain to shared costs with
related parties and the related outstanding balance is recognized as accounts payable.

Details of DOSRI loans are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Outstanding DOSRI loans 18,701 19,571 18,701 19,571

As at December 31, 2023, allowance for credit losses amounting to P247 million (2022 - P589 million) have
been recognized against receivables from related parties.

26 Financial risk management

The BOD carries out its risk management function through the Risk Management Committee (RMC). The RMC
is tasked with nurturing a culture of risk management across the BPI Group. The RMC sets the risk appetite;
proposes and approves risk management policies, frameworks, and guidelines; and regularly reviews risk
management structures, metrics, limits, and issues across the BPI Group, in order to meet and comply with
regulatory and international standards on risk measurement and management.

At the management level, the Risk Management Office (RMO) is headed by the Chief Risk Officer (CRO). The
CRO is ultimately responsible in leading the formulation of risk management policies and methodologies in
alignment with the overall business strategy of BPI, ensuring that risks are prudently and rationally undertaken
and within its risk appetite, as well as commensurate and disciplined to maximize returns on shareholders'
capital. Risk management is carried out by a dedicated team of skilled risk managers and senior officers who
have extensive prior operational experience. BPI’s risk managers regularly monitor key risk indicators and report
exposures against carefully established financial and business risk metrics and limits approved by the RMC.

45
Finally, independent reviews are regularly conducted by the Internal Audit group, external auditors, and
regulatory examiners to ensure that risk controls and mitigants are in place and functioning effectively as
intended.

The possibility of incurring losses is, however, compensated by the possibility of earning more than expected
income. Risk-taking is, therefore, not entirely negative to be avoided. Risk-taking actions present opportunities
if risks are fully identified and accounted, deliberately taken, and are kept within prudent and rationalized limits.

Credit risk, liquidity risk and market risk, as well as operational and cyber security risks are some of the top risks
that the BPI Group manages.

26.1 Credit risk

The BPI Group takes on exposure to credit risk, which is the risk that may arise if a borrower or counterparty fails
to meet its obligations in accordance with agreed repayment terms. Credit risk is the single largest risk for the
BPI Group’s business; management therefore carefully manages its exposure to credit risk as governed by
prudent credit policies, standards and methodologies, relevant regulatory requirements, and international
benchmarks.

Loans and advances are the most evident source of credit risks; however, other sources of credit risk exist
throughout the activities of the BPI Group, including in credit-related activities recorded in the banking books,
investment securities in the trading books and off-balance sheet transactions.

26.1.1 Credit risk management

The Credit Policy and Risk Management (CPRM) division is responsible for the overall management of the
BPI Group’s credit risks. CPRM supports the Senior Management in coordination with various business
lending and operations units in identifying, measuring, reporting, and managing credit risk.

The BPI Group employs a range of policies and practices to mitigate credit risks. The BPI Group monitors its
loan and investment portfolios based on different segmentations to reflect the acceptable level of
diversification and concentration. Concentration risk in credit portfolios is inherent in banking and cannot be
eliminated. However, said risk may be reduced by adopting proper risk controls, mitigation, and diversification
strategies to prevent undue credit risk concentrations from excessive exposures to counterparties, borrower-
groups, industries, countries or regions.

The BPI Group structures the levels of credit risks it undertakes by placing limits or monitoring thresholds on
the amount of risks accepted in relation to one borrower, or group of borrowers, industry segments, and
countries or regions. Such risks are monitored on a regular basis and subjected to annual or more frequent
review, when deemed necessary. Limits on large exposures and credit concentration are approved by the
BOD through the RMC.

The exposure to any borrower may also be further restricted by sub-limits covering on- and off-balance sheet
exposures. Actual exposures against risk limits are monitored regularly. Methodologies for measuring credit
risk vary depending on several factors, including type of asset, borrower or counterparties’ risk profiles, risk
measurement parameters and risk management and collection processes. Credit risk measurement is based
on the probability of default (PD) of an obligor or counterparty, the loss severity given a default (LGD) event
and the exposure at default (EAD).

A rigorous control framework is applied in the determination of expected credit loss (ECL) models. The BPI
Group has policies and procedures that govern the calculation of ECL, which is performed by the Credit Risk
Modeling, Analytics and MIS (CRMA-MIS) division. All ECL models are regularly reviewed by the Risk
Management Office to ensure that necessary controls are in place and the models are applied accordingly.

46
The review and validation of ECL models are performed by groups that are independent of CRMA-MIS, e.g.,
Risk Models Validation Division, Internal Auditors, and/or external assurance partners. Expert judgments on
measurement methodologies and assumptions are reviewed by a group of internal experts from various
functions across the Parent Bank.

Credit loss estimates are based on estimates of the PD and loss severity given a default. The PD is the
likelihood that a borrower will default on its obligation; the LGD is the estimated loss that would be realized
upon the default and takes into consideration collateral and structural support for each credit facility. The
estimation process includes assigning risk ratings to each borrower and credit facility to differentiate risk within
the portfolio. These risk ratings are reviewed regularly by RMO and revised as needed to reflect the
borrower’s current financial position, risk profile, related collateral or credit enhancements, and other credit
risk mitigants. The calculations and assumptions are based on both internal and external historical experience
and management judgment and are reviewed regularly.

The BPI Group’s forward-looking, point-in-time PD models are driven by internal forecasts of macroeconomic
variables (MEVs) over the next five years. These models were previously recalibrated annually, but in view of
the COVID-19 pandemic, more frequent review and update of these models were conducted starting April
2020 as MEV forecasts were revised quarterly in response to changing macroeconomic conditions.
Furthermore, the pandemic was expected to significantly increase foreclosures and dampen demand for auto
and real estate collaterals and thus decrease market prices, so appropriate haircuts were applied on
estimated recoveries from collaterals.

The BPI Group also manages counterparty credit risk arising from both pre-settlement and settlement risks.
Pre-settlement risk is the risk that a counterparty will default prior to the final settlement/maturity of a
transaction, while settlement risk pertains to the risk that a counterparty fails to deliver on settlement/maturity
date when the Bank has already delivered on its contractual obligations. In managing counterparty risks, pre-
settlement and settlement risk limits are established and exposures are monitored daily for each counterparty
to cover the aggregate of pre-settlement and settlement risks arising from transactions with the BPI Group.
The BPI Group also employs various tools and methods including use of delivery versus payment settlement,
payment versus payment settlement, use of collateral agreements, and other acceptable credit risk mitigation
techniques to further manage counterparty credit risk.

The BPI Group employs specific control and risk mitigation measures, some of which are outlined below:

(a) Collateral or guarantees

One of the most traditional and common practice in mitigating credit risks is requiring collaterals and/or
securities particularly for loans and advances. The BPI Group implements guidelines on the acceptability of
specific classes of collateral for credit risk mitigation. The BPI Group assesses the valuation of the collateral
obtained as part of the loan origination process. This assessment is reviewed periodically. The common
collateral types for loans and advances are:

 Mortgages over physical properties (e.g., real estate and personal);

 Mortgages over financial assets [e.g., guarantees, investments (bonds or equities)]; and
 Margin agreement for derivatives, for which the BPI Group has also entered into master netting
agreements.

In order to minimize credit loss, the BPI Group seeks additional collateral and/or securities from the
counterparty when impairment indicators are observed for the relevant individual loans and advances.

The BPI Group’s policies regarding obtaining collateral have not significantly changed during the reporting
period and there has been no significant change in the overall quality of the collaterals held by the BPI Group
since the prior period.

47
(b) Market Limits

The BPI Group maintains market limits on net open derivative positions (i.e., the difference between purchase
and sale contracts). Credit risk is limited to the net current fair value of instruments, which in relation to
derivatives is only a portion of the contract, or notional values used to express the volume of instruments
outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together
with potential exposures from market movements. Collateral or other security is not usually obtained for credit
risk exposures on these instruments (except where the BPI Group requires margin deposits from
counterparties).

(c) Master netting arrangements

The BPI Group further restricts its exposure to credit losses by entering master netting arrangements with certain
counterparties with which it undertakes significant volume of transactions. Master netting arrangements do not
generally result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross
basis. However, the credit risk associated with favorable contracts (asset position) is reduced by a master
netting arrangement to the extent that if a default occurs, all amounts with the counterparty are terminated and
settled on a net basis. The BPI Group’s overall exposure to credit risk on derivative instruments subject to
master netting arrangements can change substantially within a short period, as it is affected by each transaction
subject to the arrangement.

(d) Credit-related commitments

Documentary and commercial letters of credit - which are written undertakings by the BPI Group on behalf of a
customer authorizing a third party to draw drafts on the BPI Group up to a stipulated amount under specific
terms and conditions - are collateralized by the underlying shipments of goods and therefore carry less risk than
a direct loan.

26.1.2 Credit risk rating

The BPI Group uses internal credit risk gradings that reflect its assessment of the PD of individual
counterparties. The BPI Group uses its internal credit risk rating system, credit models (e.g. credit risk
scorecards) or external ratings from reputable credit rating agencies. Specific data about the borrower and
loan are collected at the time of application and credit evaluation (such as financial and business information,
source of incomes/revenues, and level of collateral for retail exposures; and turnover and industry type for
wholesale exposures) and are used in the internal credit scoring models. In addition, the internal models allow
expert judgment from the Credit Risk Rating Committee and consideration of other data inputs not captured
into the model in the determination of the final internal credit score for each borrower.

The BPI Group has adopted an internal credit classification system that is aligned with regulatory guidelines and
aims to identify deteriorating credit exposures on a timely basis. Exposures are classified into each of the
following categories:

 Standard monitoring - This category includes accounts which do not have a greater-than-normal risk and do
not possess the characteristics of special monitoring and defaulted loans. The borrower or counterparty has
the ability to satisfy the obligation in full and therefore minimal loss, if any, is anticipated.

 Special monitoring - This category includes accounts which need closer and frequent monitoring to prevent
any further credit deterioration. The counterparty is assessed to be vulnerable to highly vulnerable and its
capacity to meet its financial obligations is dependent upon favorable business, financial, and economic
conditions.

 Default - This category includes accounts which exhibit probable to severe weaknesses wherein probability
of non-repayment of loan obligation is ranging from high to extremely high.

48
i. Corporate (including cross-border loans, contracts-to-sell/group plans with recourse, floorstock lines) and
Small and Medium-sized Enterprise (SME) loans

The BPI Group’s internal credit risk rating system comprises a 22-scale rating with eighteen (18) ‘pass’ rating
levels for large corporate accounts, a 14-scale rating system with ten (10) ‘pass’ rating grades for SME accounts,
and a 23-scale rating with nineteen (19) ‘pass’ rating levels for cross-border accounts. For cross-border
accounts, the BPI Group also uses available external/benchmark credit ratings issued by reputable rating
agencies if there is no internal rating. The level of risk and associated PD are determined using either the
internal credit risk ratings or external/benchmark credit ratings, as applicable, for corporate loans.

The BPI Group uses the following set of classifications:

Classifications Large corporate SME Cross-Border

Standard AAA to B-, unrated, and < 30 AAA to B-, unrated, and < 30 AAA to B- with no significant
monitoring days past due (dpd) dpd increase in credit risk (SICR),
and < 30 dpd
Special CCC to C or based on CCC to C or based on Downgraded to lower than
monitoring prescribed dpd threshold prescribed dpd threshold BB+ with SICR but not
impaired, or based on
prescribed dpd threshold
Default Adversely classified accounts ACA or >90 dpd or IL Default/ACA with objective
(ACA) or >90 dpd or Items in evidence of impairment, or >
Litigation (IL) 90 dpd

ii. Retail loans

The BPI Group uses automated credit scoring models to assess the level of risk for retail accounts. Behavioral
indicators are considered in conjunction with other forward-looking information (e.g., industry forecast) to assess
the level of risk of a loan. After the date of initial recognition, the payment behavior of the borrower is monitored
on a periodic basis to develop a behavioral score which is mapped to a PD.

In 2023, the BPI Group updated the default definition for SEME loan portfolio from 7 days to 10 days in line with
the amended cure period from 7 days to 10 days in 2022 as a result of the Cure Period Analysis study
conducted by the BPI Group’s Enterprise Risk Stress Testing Department of the RMO, taking into account the
changes in the BPI Group's collection activities and impact of the Coronavirus pandemic to the borrowers.

Personal, auto and

Classifications Credit cards housing SEME*
Standard monitoring < 29 dpd < 30 dpd < 10 dpd
Special monitoring 30 to 89 dpd 31 to 90 dpd or based on Not applicable
prescribed dpd threshold
Default >89 dpd or IL >90 dpd or IL >10 dpd
*Self-employed micro-entrepreneurs

49
iii. Treasury and other investment debt securities

Investments in high grade securities and bills are viewed as a way to gain better credit quality mix and at the
same time, maintain a readily available source to meet funding requirements. The level of credit risk for treasury
and other investment debt securities and their associated PD are determined using either internal ratings or
reputable external ratings and/or available and reliable qualitative and quantitative information. In the absence of
both internal and external credit ratings, a comparable issuer or guarantor rating is used. Should there be a
change in the credit rating of the chosen comparable, evaluation is made to ascertain whether the rating change
is applicable to the security being assessed for impairment.

Classifications Applicable ratings

Standard monitoring AAA to B- with no SICR
Special monitoring Downgraded to lower than BB+ with SICR but not
impaired
Default Default, with objective evidence of impairment

iv. Other financial assets at amortized cost

For other financial assets (non-credit receivables), the BPI Group applies the PFRS 9 simplified approach to
measuring expected credit losses which uses a lifetime expected credit loss methodology. These financial
assets are grouped based on shared risk characteristics and aging profile. For some of these, impairment is
assessed individually at a counterparty level.

26.1.3 Maximum exposure to credit risk

26.1.3.1 Loans and advances, net

Credit risk exposures relating to on-balance sheet loans and advances are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Corporate and SME loans, net 1,482,335 1,372,660 1,478,037 1,366,793
Retail loans, net 399,672 330,330 371,803 313,891
1,882,007 1,702,990 1,849,840 1,680,684

The carrying amount of loans and advances above also represents the BPI Group’s maximum exposure to credit
risk. The following tables contain an analysis of the credit risk exposure of each financial instrument for which an
ECL allowance is recognized.

50
Credit quality of loans and advances, net

Consolidated

Corporate and SME loans

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard
monitoring 1,152,071 1,865 - 1,153,936 1,171,215 52,183 - 1,223,398
Special monitoring 129,537 199,296 - 328,833 78,737 79,040 - 157,777
Default - - 38,812 38,812 - - 35,167 35,167
Gross amount 1,281,608 201,161 38,812 1,521,581 1,249,952 131,223 35,167 1,416,342
Loss allowance (10,596) (3,483) (25,167) (39,246) (9,855) (1,444) (32,383) (43,682)
Carrying amount 1,271,012 197,678 13,645 1,482,335 1,240,097 129,779 2,784 1,372,660

Retail loans

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 373,296 16,217 3 389,516 308,616 13,005 - 321,621
Special monitoring 525 8,705 - 9,230 401 6,333 - 6,734
Default - - 19,154 19,154 - - 16,060 16,060
Gross amount 373,821 24,922 19,157 417,900 309,017 19,338 16,060 344,415
Loss allowance (4,890) (3,242) (10,096) (18,228) (4,045) (2,195) (7,845) (14,085)
Carrying amount 368,931 21,680 9,061 399,672 304,972 17,143 8,215 330,330

Parent

Corporate and SME loans

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 1,147,940 1,865 - 1,149,805 1,165,519 52,183 - 1,217,702
Special monitoring 129,537 199,296 - 328,833 78,737 79,040 - 157,777
Default - - 38,813 38,813 - - 35,117 35,117
Gross amount 1,277,477 201,161 38,813 1,517,451 1,244,256 131,223 35,117 1,410,596
Loss allowance (10,767) (3,483) (25,164) (39,414) (10,026) (1,444) (32,333) (43,803)
Carrying amount 1,266,710 197,678 13,649 1,478,037 1,234,230 129,779 2,784 1,366,793

51
Retail loans

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 345,864 16,160 3 362,027 292,362 12,940 - 305,302
Special monitoring 524 8,286 - 8,810 401 6,162 - 6,563
Default - - 16,601 16,601 - - 14,254 14,254
Gross amount 346,388 24,446 16,604 387,438 292,763 19,102 14,254 326,119
Loss allowance (4,135) (3,229) (8,271) (15,635) (3,509) (2,188) (6,531) (12,228)
Carrying amount 342,253 21,217 8,333 371,803 289,254 16,914 7,723 313,891

The tables below present the gross amount of “Stage 2” loans and advances by age category.

Consolidated

2023 2022
Corporate Corporate
and SME Retail and SME Retail
loans loans Total loans loans Total
(In Millions of Pesos)
Current 200,390 12,072 212,462 130,601 9,721 140,322
Past due up to 30 days 389 4,544 4,933 520 3,618 4,138
Past due 31 - 90 days 382 8,306 8,688 102 5,999 6,101
Past due 91 - 180 days - - - - - -
Over 180 days - - - - - -
201,161 24,922 226,083 131,223 19,338 150,561

Parent

2023 2022
Corporate Corporate
and SME Retail and SME Retail
loans loans Total loans loans Total
(In Millions of Pesos)
Current 200,390 12,033 212,423 130,601 9,671 140,272
Past due up to 30 days 389 4,522 4,911 520 3,596 4,116
Past due 31 - 90 days 382 7,891 8,273 102 5,835 5,937
Past due 91 - 180 days - - - - - -
Over 180 days - - - - - -
201,161 24,446 225,607 131,223 19,102 150,325

52
26.1.3.2 Treasury and other investment securities, net

Credit risk exposures arising from treasury and other investment securities are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Due from BSP 199,619 182,869 192,246 178,534
Due from other banks 36,292 45,190 33,081 43,096
Interbank loans receivable and SPAR, net 20,643 12,382 17,342 11,631
Financial assets at FVTPL 23,543 21,941 17,456 16,941
Financial assets at FVOCI 215,780 92,447 212,442 90,477
Investment securities at amortized cost, net 382,711 420,533 377,120 415,035
878,588 775,362 849,687 755,714

Credit quality of treasury and other investment securities, net

Consolidated

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring
Due from BSP 199,619 - - 199,619 182,869 - - 182,869
Due from other banks 36,292 - - 36,292 45,190 - - 45,190
Interbank loans receivable and SPAR 20,645 - - 20,645 12,382 - - 12,382
Financial assets at FVTPL 23,543 - - 23,543 21,941 - - 21,941
Financial assets at FVOCI 215,438 342 - 215,780 92,040 407 - 92,447
Investment securities at amortized
cost 381,811 931 - 382,742 419,614 930 - 420,544
Default
Interbank loans receivable and SPAR - - 41 41 - - 40 40
Gross carrying amount 877,348 1,273 41 878,662 774,036 1,337 40 775,413
Loss allowance (33) - (41) (74) (1) (10) (40) (51)
Carrying amount 877,315 1,273 - 878,588 774,035 1,327 - 775,362

Parent

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring
Due from BSP 192,246 - - 192,246 178,534 - - 178,534
Due from other banks 33,081 - - 33,081 43,096 - - 43,096
Interbank loans receivable and SPAR 17,344 - - 17,344 11,631 - - 11,631
Financial assets at FVTPL 17,456 - - 17,456 16,941 - - 16,941
Financial assets at FVOCI 212,100 342 - 212,442 90,070 407 - 90,477
Investment securities at amortized cost
376,220 931 - 377,151 414,116 930 - 415,046
Default
Interbank loans receivable and SPAR - - 41 41 - - 40 40
Gross carrying amount 848,447 1,273 41 849,761 754,388 1,337 40 755,765
Loss allowance (33) - (41) (74) (1) (10) (40) (51)
Carrying amount 848,414 1,273 - 849,687 754,387 1,327 - 755,714

53
26.1.3.3 Other financial assets at amortized cost

Other financial assets at amortized cost that are exposed to credit risk are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Accounts receivable, net 1,242 1,346 2,758 1,791
Rental deposits 828 825 781 782
Other accrued interest and fees receivable 76 64 9 10
Others 377 216 358 212
2,523 2,451 3,906 2,795

The carrying amounts of the above financial assets represent the BPI Group’s maximum exposure to credit risk.

The BPI Group’s other financial assets at amortized cost (shown under Other assets, net) generally arise from
transactions with various unrated counterparties with good credit standing. The BPI Group applies the PFRS 9
simplified approach to measuring expected credit losses which uses a lifetime expected loss methodology for
other financial assets.

26.1.3.4 Loan commitments

Credit risk exposures arising from undrawn loan commitments are as follows:

Consolidated

2023 2022
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 542,193 1,749 - 543,942 1,087,193 1,280 - 1,088,473
Special monitoring 16,241 - - 16,241 111,801 - - 111,801
Default - - 543 543 - - 579 579
Gross amount 558,434 1,749 543 560,726 1,198,994 1,280 579 1,200,853
Loss allowance* (1,067) (94) (71) (1,232) (924) (56) (54) (1,034)
Carrying amount 557,367 1,655 472 559,494 1,198,070 1,224 525 1,199,819
*Included in “Miscellaneous liabilities” in Note 17

Parent

2023 2022
Stage 1 Stage 3 Stage 1 Stage 2 Stage 3
12-month Stage 2 Lifetime 12-month Lifetime Lifetime
ECL Lifetime ECL ECL Total ECL ECL ECL Total
(In Millions of Pesos)
Credit grade
Standard monitoring 542,193 1,749 - 543,942 1,087,193 1,280 - 1,088,473
Special monitoring 16,241 - - 16,241 111,801 - - 111,801
Default - - 543 543 - - 579 579
Gross amount 558,434 1,749 543 560,726 1,198,994 1,280 579 1,200,853
Loss allowance* (1,067) (94) (71) (1,232) (924) (56) (54) (1,034)
Carrying amount 557,367 1,655 472 559,494 1,198,070 1,224 525 1,199,819
*Included in “Miscellaneous liabilities” in Note 17

54
26.1.4 Credit impaired loans and advances

The BPI Group closely monitors collaterals held for financial assets considered to be credit-impaired (Stage 3),
as it becomes more likely that the BPI Group will take possession of collateral to mitigate potential credit
losses. Loans and advances that are credit-impaired and related collateral held in order to mitigate potential
losses are shown below:

Consolidated

2023 2022
Net Net
Gross Impairment carrying Gross Impairment carrying
exposure allowance amount exposure allowance amount
(In Millions of Pesos)
Credit-impaired assets
Corporate and SME loans 38,812 25,167 13,645 35,167 32,383 2,784
Retail loans 19,157 10,096 9,061 16,060 7,845 8,215
Total credit-impaired assets 57,969 35,263 22,706 51,227 40,228 10,999
Fair value of collateral 21,713 35,970

Parent

2023 2022
Net Net
Gross Impairment carrying Gross Impairment carrying
exposure allowance amount exposure allowance amount
(In Millions of Pesos)
Credit-impaired assets
Corporate and SME loans 38,813 25,164 13,649 35,117 32,333 2,784
Retail loans 16,604 8,271 8,333 14,254 6,531 7,723
Total credit-impaired assets 55,417 33,435 21,982 49,371 38,864 10,507
Fair value of collateral 27,654 35,856

The BPI Group acquires assets by taking possession of collaterals held as security for loans and advances.

As at December 31, 2023, the BPI Group’s foreclosed collaterals have carrying amount of P4,743 million
(2022 - P3,760 million). The related foreclosed collaterals have aggregate fair value of P14,424 million
(2022 - P12,607 million). Foreclosed collaterals include real estate (land, building, and improvements), auto and
chattel. Repossessed properties are sold as soon as practicable and are classified as Assets held for sale in the
statement of condition. In 2023, the Parent Bank realized a gain of P83 million (2022 - P81 million loss) from
disposals of foreclosed collaterals with book value of P2,149 million (2022 - P1,731 million).

55
26.1.5 Loss allowance

The loss allowance recognized in the period is impacted by a variety of factors, as described below:

 Transfers between Stage 1 and Stages 2 or 3 due to financial instruments experiencing significant
increases (or decreases) in credit risk or becoming credit-impaired in the period, and the consequent
transfer between 12-month and lifetime ECL;
 Additional allowances for new financial instruments recognized during the year and releases for financial
instruments derecognized during the year;
 Write-offs of allowances related to assets that were written off during the year;
 Impact on the measurement of ECL due to changes in PDs, EADs and LGDs during the year;
 Impacts on the measurement of ECL due to changes made to models and assumptions; and
 Foreign exchange translations for assets denominated in foreign currencies and other movements.

The following tables summarize the changes in the loss allowance for loans and advances between the
beginning and the end of the annual period. No movement analysis of allowance for impairment is presented
for treasury and other investment debt securities and other financial assets subject to impairment as the
related loss allowance is deemed insignificant for financial reporting purposes.

Consolidated

Stage 1 Stage 2 Stage 3

Corporate and SME loans 12-month ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2023 9,855 1,444 32,383 43,682
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (2,237) 2,435 2,597 2,795
Transfer from Stage 2 26 (211) 143 (42)
Transfer from Stage 3 - - (106) (106)
New financial assets originated 3,727 - - 3,727
Financial assets derecognized during the year (872) (426) (1,596) (2,894)
Changes in assumptions and other movements in
provision 102 243 (7,564) (7,219)
746 2,041 (6,526) (3,739)
Write-offs and other movements (5) (2) (690) (697)
Loss allowance, at December 31, 2023 10,596 3,483 25,167 39,246

Stage 1 Stage 2 Stage 3

Retail loans 12-month ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2023 4,045 2,195 7,845 14,085
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,839) 2,348 4,569 5,078
Transfer from Stage 2 116 (1,198) 1,573 491
Transfer from Stage 3 6 40 (266) (220)
New financial assets originated 2,744 - - 2,744
Financial assets derecognized during the year (395) (107) (502) (1,004)
Changes in assumptions and other movements in
provision 222 (32) 400 590
854 1,051 5,774 7,679
Write-offs and other movements (9) (4) (3,523) (3,536)
Loss allowance, at December 31, 2023 4,890 3,242 10,096 18,228

56
Parent
Stage 1 Stage 2 Stage 3
12-month
Corporate and SME loans ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2023 10,026 1,444 32,333 43,803
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (2,237) 2,435 2,597 2,795
Transfer from Stage 2 26 (211) 143 (42)
Transfer from Stage 3 - - (106) (106)
New financial assets originated 3,727 - - 3,727
Financial assets derecognized during the year (872) (426) (1,596) (2,894)
Changes in assumptions and other
movements in provision 102 243 (7,567) (7,222)
746 2,041 (6,529) (3,742)
Write-offs and other movements (5) (2) (640) (647)
Loss allowance, at December 31, 2023 10,767 3,483 25,164 39,414

Stage 1 Stage 2 Stage 3

12-month
Retail loans ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2023 3,509 2,188 6,531 12,228
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,049) 2,337 3,315 4,603
Transfer from Stage 2 116 (1,152) 1,489 453
Transfer from Stage 3 6 40 (252) (206)
New financial assets originated 1,525 - - 1,525
Financial assets derecognized during the year (112) (106) (415) (633)
Changes in assumptions and other
movements in provision 142 (74) 96 164
628 1,045 4,233 5,906
Write-offs and other movements (2) (4) (2,493) (2,499)
Loss allowance, at December 31, 2023 4,135 3,229 8,271 15,635

Consolidated

Stage 1 Stage 2 Stage 3

12-month
Corporate and SME loans ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2022 11,318 2,728 23,865 37,911
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,555) 723 1,256 424
Transfer from Stage 2 21 (817) 165 (631)
Transfer from Stage 3 1 5 (49) (43)
New financial assets originated 2,640 - - 2,640
Financial assets derecognized during the year (1,353) (843) (2,708) (4,904)
Changes in assumptions and other
movements in provision (1,105) (356) 10,153 8,692
(1,351) (1,288) 8,817 6,178
Write-offs and other movements (112) 4 (299) (407)
Loss allowance, at December 31, 2022 9,855 1,444 32,383 43,682

57
 Stage 1 Stage 2 Stage 3
12-month
Retail loans ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2022 4,967 1,970 8,916 15,853
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,233) 1,381 2,565 2,713
Transfer from Stage 2 113 (1,324) 1,338 127
Transfer from Stage 3 13 66 (440) (361)
New financial assets originated 1,669 - - 1,669
Financial assets derecognized during the year (519) (124) (729) (1,372)
Changes in assumptions and other
movements in provision (960) 228 (7) (739)
(917) 227 2,727 2,037
Write-offs and other movements (5) (2) (3,798) (3,805)
Loss allowance, at December 31, 2022 4,045 2,195 7,845 14,085

Parent
Stage 1 Stage 2 Stage 3
12-month
Corporate and SME loans ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2022 10,689 2,709 21,866 35,264
Impact of merger 806 19 1,941 2,766
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,555) 723 1,256 424
Transfer from Stage 2 21 (817) 165 (631)
Transfer from Stage 3 1 5 (49) (43)
New financial assets originated 2,640 - - 2,640
Financial assets derecognized during the year (1,353) (843) (2,708) (4,904)
Changes in assumptions and other
movements in provision (1,110) (356) 10,152 8,686
(1,356) (1,288) 8,816 6,172
Write-offs and other movements (113) 4 (290) (399)
Loss allowance, at December 31, 2022 10,026 1,444 32,333 43,803

Stage 1 Stage 2 Stage 3

12-month
Retail loans ECL Lifetime ECL Lifetime ECL Total
(In Millions of Pesos)
Loss allowance, at January 1, 2022 1,057 920 3,623 5,600
Impact of merger 3,500 1,040 3,869 8,409
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (838) 1,376 1,905 2,443
Transfer from Stage 2 112 (1,291) 1,292 113
Transfer from Stage 3 11 66 (423) (346)
New financial assets originated 955 - - 955
Financial assets derecognized during the year (280) (123) (625) (1,028)
Changes in assumptions and other
movements in provision (1,007) 202 8 (797)
(1,047) 230 2,157 1,340
Write-offs and other movements (1) (2) (3,118) (3,121)
Loss allowance, at December 31, 2022 3,509 2,188 6,531 12,228

58
Critical accounting estimate and judgment - Measurement of expected credit loss for loans and advances

The measurement of the expected credit loss (ECL) for loans and advances is an area that requires the use of
complex models and significant assumptions about future economic conditions and credit behavior (e.g. the
likelihood of customers defaulting and the resulting losses). The explanation of the inputs, assumptions and
estimation techniques used in measuring ECL is further detailed in Note 31.3.2.2.

A number of significant judgments are also required in applying the accounting requirements for measuring ECL,
such as:

 determining criteria for SICR;

 choosing appropriate models and assumptions for the measurement of ECL;
 establishing the number and relative weightings of forward-looking scenarios for each type of product and
the associated ECL; and
 establishing groups of similar financial assets for the purposes of measuring ECL.

Forward-looking information incorporated in the ECL models

Three distinct macroeconomic scenarios (baseline, upside and downside) are considered in the BPI Group’s
estimation of expected credit losses in Stage 1 and Stage 2. These scenarios are based on assumptions
supported by economic theories and historical experience. The downside scenario reflects a negative
macroeconomic event occurring within the first 12 months, with conditions deteriorating for up to two years,
followed by a recovery for the remainder of the period. This scenario is grounded in historical experience and
assumes a monetary policy response that returns the economy to a long-run, sustainable growth rate within
the forecast period. The probability of each scenario is determined using expert judgment and recession
probability tools provided by reputable external service providers. The baseline case incorporates the BPI
Group’s outlook both for the domestic and global economy. The upside and downside scenarios take into
account certain adjustments that will lead to a more positive or negative economic outcome, respectively.

Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the
impact of any climate, regulatory, legislative or political changes is likewise considered as post-model
adjustments, if material.

The BPI Group has performed historical analyses and identified the key economic variables impacting credit risk
and expected credit losses for each portfolio. The most significant period-end assumptions used for the ECL
estimate are set out below. The scenarios “base”, “upside” and “downside” were used for all portfolios.

At December 31, 2023

Base Scenario Upside Scenario Downside Scenario

2 to 5 2 to 5
Next 12 years Next 12 years Next 12 2 to 5 years
Months (Average) Months (Average) Months (Average)
Real GDP growth (%) 6.2 6.3 7.3 7.9 1.9 1.0
Inflation rate (%) 3.7 2.8 3.4 2.1 6.5 9.2
BVAL 5Y (%) 6.1 5.3 4.9 3.4 7.8 10.1
US Treasury 5Y (%) 4.6 4.0 3.5 2.1 6.4 8.8
Exchange rate 54.325 57.325 53.459 55.648 55.648 67.662

59
At December 31, 2022

Base Scenario Upside Scenario Downside Scenario

2 to 5 2 to 5
Next 12 years Next 12 years Next 12 2 to 5 years
Months (Average) Months (Average) Months (Average)
Real GDP growth (%) 5.5 5.1 6.7 6.8 4.3 3.4
Inflation rate (%) 3.9 2.8 2.9 1.5 5.0 4.0
BVAL 5Y (%) 7.3 5.8 5.1 3.2 9.4 8.4
US Treasury 5Y (%) 5.5 4.2 3.4 1.5 7.6 6.8
Exchange rate 56.725 56.552 56.379 53.158 57.071 60.148

Sensitivity analysis

The loan portfolios have different sensitivities to movements in MEVs, so the above three scenarios have
varying impact on the expected credit losses of the BPI Group’s portfolios. The allowance for impairment is
calculated as the weighted average of expected credit losses under the baseline, upside and downside
scenarios. The impact of weighting these multiple scenarios was an increase in the allowance for impairment by
P247 million as at December 31, 2023 from the baseline scenario (2022 - P15 million).

Transfers between stages

Transfers from Stage 1 and Stage 2 are based on the assessment of SICR from initial recognition. The impact of
moving from 12 month expected credit losses to lifetime expected credit losses, or vice versa, varies by product
and is dependent on the expected remaining life at the date of the transfer. Stage transfers may result in
significant fluctuations in expected credit losses. Assuming all Stage 2 accounts are considered as Stage 1,
allowance for impairment would have decreased by P2,626 million as at December 31, 2023
(2022 - P1,059 million).

26.1.6 Concentrations of risks of financial assets with credit risk exposure

The BPI Group’s main credit exposure at their carrying amounts, as categorized by industry sectors follow:

Consolidated (December 31, 2023)

Interbank
Due loans Investment Other
Due from receivable Financial Financial securities at Loans and financial
from other and SPAR, assets at assets at amortized advances, assets,
BSP banks net FVTPL FVOCI cost, net net net Total
(In Millions of Pesos)
Financial and insurance
activities 199,619 36,292 20,686 7,415 26,354 15,988 188,185 - 494,539
Real estate activities - - - - 438 3,061 448,479 - 451,978
Manufacturing - - - 261 4,260 5,204 300,056 - 309,781
Consumer - - - - - - 221,824 - 221,824
Transportation, storage
and communications - - - - 1,915 12,453 219,845 - 234,213
Wholesale and retail
trade, repair of
motor vehicle,
motorcycle - - - - 1,455 6,433 217,264 - 225,152
Electricity, gas, steam
and air-conditioning
supply - - - 18 537 30,803 177,949 - 209,307
Others - - - 15,849 180,821 308,800 165,879 3,438 674,787
Allowance - - (43) - - (31) (57,474) (915) (58,463)
At December 31, 2023 199,619 36,292 20,643 23,543 215,780 382,711 1,882,007 2,523 2,763,118

60
Consolidated (December 31, 2022)

Interbank
Due loans Investment Other
Due from receivable Financial Financial securities at Loans and financial
from other and SPAR, assets at assets at amortized advances, assets,
BSP banks net FVTPL FVOCI cost, net net net Total
(In Millions of Pesos)
Financial and insurance
activities 182,869 45,190 12,422 11,145 1,822 18,090 163,038 - 434,576
Real estate activities - - - 2 407 3,955 404,678 - 409,042
Manufacturing - - - 221 2,331 4,525 288,524 - 295,601
Consumer - - - - - - 162,155 - 162,155
Transportation, storage
and communications - - - - 829 11,210 193,222 - 205,261
Wholesale and retail
trade, repair of motor
vehicle, motorcycle - - - 8 699 5,637 191,816 - 198,160
Electricity, gas, steam
and air-conditioning
supply - - - 17 32 32,263 208,671 - 240,983
Others - - - 10,548 86,327 344,864 148,653 3,402 593,794
Allowance - - (40) - - (11) (57,767) (951) (58,769)
At December 31, 2022 182,869 45,190 12,382 21,941 92,447 420,533 1,702,990 2,451 2,480,803

Parent Bank (December 31, 2023)

Interbank
Due loans Investment Other
Due from receivable Financial Financial securities at Loans and financial
from other and SPAR, assets at assets at amortized advances, assets,
BSP banks net FVTPL FVOCI cost, net net net Total
(In Millions of Pesos)
Financial and insurance
activities 192,246 33,081 17,385 3,335 26,073 15,264 187,619 - 475,531
Real estate activities - - - 31 438 3,061 447,244 - 450,743
Manufacturing - - - 85 4,260 4,452 299,068 - 307,780
Consumer - - - - - - 202,241 - 202,241
Transportation, storage
and communications - - - 64 1,915 11,073 218,718 - 231,706
Wholesale and retail
trade, repair of motor
vehicle, motorcycle - - - 1 1,455 5,489 209,654 - 216,598
Electricity, gas, steam
and air-conditioning
supply - - - 135 537 29,677 177,890 - 208,121
Others - - - 13,805 177,764 308,135 162,455 4,742 666,672
Allowance - - (43) - - (31) (55,049) (836) (55,959)
At December 31, 2023 192,246 33,081 17,342 17,456 212,442 377,120 1,849,840 3,906 2,703,433

61
Parent Bank (December 31, 2022)

Interbank
Due loans Investment Other
Due from receivable Financial Financial securities at Loans and financial
from other and SPAR, assets at assets at amortized advances, assets,
BSP banks net FVTPL FVOCI cost, net net net Total
(In Millions of Pesos)
Financial and insurance
activities 178,534 43,096 11,671 7,570 1,822 18,090 162,971 - 423,754
Real estate activities - - - 2 407 3,955 403,380 - 407,744
Manufacturing - - - 221 2,202 4,525 286,928 - 293,876
Consumer - - - - - - 151,910 - 151,910
Transportation, storage
and communications - - - - 829 11,210 191,819 - 203,858
Wholesale and retail
trade, repair of motor
vehicle, motorcycle - - - 8 699 5,637 186,567 - 192,911
Electricity, gas, steam
and air-conditioning
supply - - - 17 32 32,263 208,636 - 240,948
Others - - - 9,123 84,486 339,366 144,504 3,703 581,182
Allowance - - (40) - - (11) (56,031) (908) (56,990)
At December 31, 2022 178,534 43,096 11,631 16,941 90,477 415,035 1,680,684 2,795 2,439,193

26.1.7 Provision for (reversal of) credit and impairment losses

The BPI Group’s provision for (reversal of) credit and impairment losses are attributable to the following
accounts:

Consolidated Parent
Notes 2023 2022 2021 2023 2022 2021
(In Millions of Pesos)
Loans and advances 10 3,940 8,215 12,765 2,164 7,512 10,226
Assets held for sale (222) 411 44 (223) 396 20
Interbank loans receivable and SPAR 5 3 (6) 5 3 (6) 5
Investment securities at amortized
cost 9 20 5 (7) 20 5 (7)
Undrawn loan commitments 32 198 287 (212) 198 287 (199)
Impairment on equity investment 12 - - - - - 60
Accounts receivable 14 34 172 83 12 160 215
Other assets 27 83 457 28 83 271
4,000 9,167 13,135 2,202 8,437 10,591

26.2 Market risk

The BPI Group is exposed to market risk - the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. Market risk management in BPI covers
managing exposures to trading risk, foreign exchange risk, and interest rate risk in the banking book.

Market risk management is incumbent on the BOD through the RMC. At the management level, the BPI Group’s
market risk exposures are managed by the RMO, headed by the Parent Bank’s CRO who reports directly to the
RMC. In order to effectively manage market risk, the Bank has well established policies and procedures
approved by the RMC and confirmed by the Executive Committee/BOD. In addition, the Internal Audit is
responsible for the independent review of risk assessment measures and procedures and the control
environment.

The BPI Group reviews and controls market risk exposures of both its trading and non-trading portfolios.
Trading portfolios include those positions arising from BPI’s market-making and risk-taking activities. The BPI
Group also has derivatives exposures in interest rate swaps, currency swaps and structured notes as part of
its trading and position taking activities. Non-trading portfolios include positions arising from core banking
activities, which includes the BPI Group’s retail and commercial banking assets and liabilities.

62
Value-at-Risk (VaR) measurement is an integral part of the BPI Group’s market risk control system. This
metric estimates, at 99% confidence level, the maximum loss that a trading portfolio may incur over a trading
day. This metric indicates as well that there is 1% statistical probability that the trading portfolios’ actual loss
would be greater than the computed VaR. To ensure model soundness, the VaR is periodically subject to
model validation and back testing. VaR is supplemented by other risk metrics and measurements that would
provide preliminary signals to Treasury and to Management to assess the vulnerability of BPI Group’s
positions. To control the risk, the RMC sets risk limits for trading portfolios which are consistent with the BPI
Group’s goals, objectives, risk appetite, and strategies.

Stress tests indicate the potential losses that could arise in extreme conditions that would have detrimental effect
to the BPI Group’s positions. The BPI Group periodically performs price stress testing to assess the BPI Group’s
condition on assumed stress scenarios. Contingency plans are frequently reviewed to ensure the BPI Group’s
preparedness in the event of real stress. Results of stress tests are reviewed by Senior Management and by the
RMC.

The average daily VaR for the trading portfolios are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Local fixed-income 50 28 47 27
Foreign fixed-income 184 89 173 81
Foreign exchange 214 131 118 48
Derivatives 158 180 158 115
Equity securities 14 24 - -
Mutual fund 18 31 - -
638 483 496 271

26.2.1 Foreign exchange risk

Foreign exchange risk is the risk that the fair value or future cash flows of financial instrument will fluctuate
because of changes in foreign exchange rates. It arises on financial instruments that are denominated in a
foreign currency other than the functional currency which they are measured.

63
The BPI Group takes on exposure to the effects of fluctuations in the prevailing exchange rates on its foreign
currency financial position and cash flows. The table below summarizes the BPI Group’s exposure to more
material foreign currency exchange rate risk primarily in USD, shown in their Peso equivalent at December 31:

Consolidated

2023 2022
USD Others* Total USD Others* Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 3,196 344 3,540 2,886 385 3,271
Due from other banks 16,038 12,530 28,568 27,638 16,993 44,631
Interbank loans receivable and SPAR 2,287 32 2,319 4,553 524 5,077
Financial assets at FVTPL 12,745 455 13,200 6,537 1,111 7,648
Financial assets at FVOCI - debt
securities 51,353 1,143 52,496 23,336 1,083 24,419
Investment securities at amortized
cost 138,928 1,768 140,696 141,692 2,597 144,289
Loans and advances, net 115,324 5,284 120,608 139,617 6,171 145,788
Others financial assets 22,429 1 22,430 35,983 1 35,984
Total financial assets 362,300 21,557 383,857 382,242 28,865 411,107
Financial liabilities
Deposit liabilities 271,646 17,685 289,331 269,677 37,096 306,773
Due to BSP and other banks 1,149 - 1,149 2,284 - 2,284
Derivative financial liabilities 1,568 449 2,017 2,109 928 3,037
Bills payable 53,497 - 53,497 67,158 - 67,158
Manager’s checks and demand drafts
outstanding 209 1 210 210 8 218
Accounts payable 475 3 478 346 2 348
Other financial liabilities 712 1 713 121 2 123
Total financial liabilities 329,256 18,139 347,395 341,905 38,036 379,941
Net on-balance sheet position 33,044 3,418 36,462 40,337 (9,171) 31,166
*Others category includes financial instruments denominated in JPY, EUR and GBP.

Parent Bank

2023 2022
USD Others* Total USD Others* Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 3,195 344 3,539 2,886 385 3,271
Due from other banks 15,701 12,510 28,211 27,330 16,975 44,305
Interbank loans receivable and SPAR 2,214 - 2,214 4,460 - 4,460
Financial assets at FVTPL 11,661 385 12,046 6,107 910 7,017
Financial assets at FVOCI - debt
securities 50,898 1,143 52,041 22,792 1,066 23,858
Investment securities at amortized
cost 134,797 303 135,100 137,606 1,180 138,786
Loans and advances, net 111,902 659 112,561 134,884 5,212 140,096
Others financial assets 22,429 - 22,429 35,982 - 35,982
Total financial assets 352,797 15,344 368,141 372,047 25,728 397,775
Financial liabilities
Deposit liabilities 270,759 17,566 288,325 268,592 36,978 305,570
Due to BSP and other banks 1,149 - 1,149 2,209 - 2,209
Derivative financial liabilities 1,520 449 1,969 2,090 928 3,018
Bills payable 50,119 - 50,119 62,656 - 62,656
Manager’s checks and demand drafts
outstanding 209 1 210 210 8 218
Accounts payable 208 3 211 346 2 348
Other financial liabilities 712 - 712 121 2 123
Total financial liabilities 324,676 18,019 342,695 336,224 37,918 374,142
Net on-balance sheet position 28,121 (2,675) 25,446 35,823 (12,190) 23,633
*Others category includes financial instruments denominated in JPY, EUR and GBP.

Presented below is a sensitivity analysis demonstrating the impact on pre-tax income of reasonably possible
change in the exchange rate between US Dollar and Philippine Peso. The fluctuation rate is based on the
historical movement of US Dollar against the Philippine Peso year on year.
64
 Effect on pre-tax income
Year Change in currency Consolidated Parent
(In millions of Pesos)
2023 +/-1.42% +/- 469 +/- 399
2022 +/-4.82% +/- 1,948 +/- 1,727

26.2.2 Interest rate risk

Interest rate risk is the risk that cash flows or fair value of a financial instrument will fluctuate due to movements
in market interest rates.

Interest Rate Risk in the Banking Book (IRRBB)

IRRBB is the current and prospective risk to the BPI Group's capital and earnings arising from the adverse
movements in interest rates that affect its banking book positions (core banking activities). The BPI Group is
exposed to interest rate risk arising from financial assets and liabilities that have different maturities and
repricing schedules and are re-priced taking into account the prevailing market interest rates. Excessive levels
of interest rate risks in the banking book can pose a significant threat to the BPI Group's earnings and capital
base.

The BPI Group employs two methods to measure the potential impact of interest rate risk in the banking book:
(i) one that focuses on the impact on economic value of the future cash flows in the banking book due to
changes in interest rates - Balance Sheet VaR (BSVaR), and (ii) one that focuses on the potential
deterioration in net interest earnings - Earnings-at-Risk (EaR). The RMC sets limits on the two interest rate
risk metrics which are monitored daily by the Market and Liquidity Risk Management Division of the RMO. The
EaR and BSVaR are built on the interest rate/repricing gap profile of the bank.

The interest rate gap is the difference between the amount of interest rate sensitive assets and liabilities and
off-balance sheet items. It distributes the balance sheet accounts according to their contractual maturity if
fixed, or repricing date if floating. For accounts that do not have defined maturity or repricing schedules (i.e.,
non-maturity deposits), and accounts with embedded optionality (i.e., time deposit pretermination, fixed-rate
loan prepayment), historical patterns/behaviors are utilized and assessed to determine their expected
repricing schedules. These behavioral assumptions are derived from historical customer behavior and are
regularly back tested to ensure accuracy and propriety of these assumptions. Interest rate derivatives are
used to hedge banking book interest rate exposures, and these are also included in the repricing gap analysis.
There were no outstanding interest rate hedges as at December 31, 2023 and 2022.

Earnings-at-Risk (EaR)

The EaR is built on the repricing profile of the BPI Group and considers principal payments only. The BPI Group
projects interest inflows from its financial assets and interest outflows from its financial liabilities in the next 12 to
36 months as earnings are affected when interest rates move against the BPI Group’s position. In determining
the appropriate rate shocks in calculating EaR, the daily year-on-year change in rates is determined using the
parametric approach at 99% confidence level. The Parent Bank uses more than ten years’ worth of data in
deriving the rate shocks. As at December 31, 2023, the net interest income impact of movement in interest rates
resulted in an increase of P275 million (2022 - P1,199 million decrease) for the whole BPI Group and an
increase of P329 million (2022 - P1,195 million decrease) for the Parent Bank over a short-term (12-month)
horizon. Likewise, the net interest income impact of movement in interest rates over the medium-term
(36-month) horizon resulted in an increase of P7,019 million (2022 - P371 million decrease) for the whole BPI
Group and an increase of P7,005 million (2022 - P501 million decrease) for the Parent Bank.

65
Balance Sheet Value at Risk (BSVaR)

The BSVaR model is also built on repricing gap or the difference between the amount of rate-sensitive financial
assets and liabilities which considers both principal and interest payments. It measures the deterioration in the
economic/present value of the BPI Group’s expected net cash flows due to adverse interest rate movements. In
determining the appropriate rate shocks in calculating BSVaR, the adverse daily year-on-year change in rates is
determined using the historical approach for the past one year at 99% confidence level. As at
December 31, 2023, the average monthly BSVaR for the banking book stood at P16,842 million
(2022 - P16,861 million) for the whole BPI Group and P15,883 million (2022 - P16,277 million) for the Parent
Bank.

The IRRBB levels are closely monitored against RMC-approved limits and results are reported and discussed
regularly at the Management level through the Asset and Liability Committee (ALCO) and at the Board level
through the RMC. The BPI Group manages interest rate exposures related to its assets and liabilities through a
transfer-pricing system administered by Treasury. Investment securities and interest rate derivatives are also
used to hedge interest rate risk and manage repricing gaps in the balance sheet.

The BPI Group also conducts price stress tests in the banking book and EaR stress tests utilizing a variety of
interest rate shock scenarios to identify the impact of adverse movements in interest rates on the BPI Group's
economic value and earnings. The design of the price and EaR stress tests include the following:

 Internal rate shocks scenarios including extreme yet plausible historical stressed events, curve shifting
(parallel up/down) and twisting (steepening and flattening yield curves), and forward-looking scenarios;
and
 Other rate shocks as prescribed by Basel.

The interest rate shocks applied are calibrated for all major currencies in which the BPI Group has significant
positions. The BPI Group also conducts Uniform Stress Testing in accordance with the prescribed scenarios of
the BSP.

The results of the stress test are reported to the RMC and Senior Management and are integrated into the
overall risk management framework of the BPI Group.

The BPI Group has established comprehensive risk management framework (e.g., policies, procedures, risk
limits structures) supported by a robust risk management system. Furthermore, the risk management process,
including its various components, is subject to periodic independent review (i.e. internal audit and model
validation) and consistently calibrated to ensure accuracy, relevance, propriety and timeliness of data and
assumptions employed. The assumptions and parameters used in building these metrics are properly
documented. Any changes in the methodology and assumptions used are duly approved by the Chief Risk
Officer and noted by the RMC.

66
The table below summarizes the BPI Group’s exposure to interest rate risk, categorized by the earlier of
contractual repricing or maturity dates.

Consolidated (December 31, 2023)

Repricing
Over 1 up to Non-
Up to 1 year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2023
Financial Assets
Cash and other cash items - - - 34,843 34,843
Due from BSP - - - 199,619 199,619
Due from other banks - - - 36,292 36,292
Interbank loans receivable and SPAR - - - 20,643 20,643
Financial assets at FVTPL 150 1,144 1,023 21,226 23,543
Financial assets at FVOCI - - - 215,780 215,780
Investment securities at amortized cost - - - 382,711 382,711
Loans and advances, net 1,096,399 327,690 257,835 200,083 1,882,007
Other financial assets - - - 2,523 2,523
Total financial assets 1,096,549 328,834 258,858 1,113,720 2,797,961
Financial Liabilities
Deposit liabilities 1,392,507 349,672 552,927 - 2,295,106
Due to BSP and other banks - - - 1,881 1,881
Derivative financial liabilities 12 822 672 1,315 2,821
Bills payable and other borrowed funds 1,661 - - 135,443 137,104
Manager’s checks and demand drafts
outstanding - - - 8,463 8,463
Other financial liabilities - - - 11,316 11,316
Total financial liabilities 1,394,180 350,494 553,599 158,418 2,456,691
Total interest gap (297,631) (21,660) (294,741) 955,302 341,270

Consolidated (December 31, 2022)

Repricing
Over 1 up to Non-
Up to 1 year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2022
Financial Assets
Cash and other cash items - - - 39,613 39,613
Due from BSP - - - 182,869 182,869
Due from other banks - - - 45,190 45,190
Interbank loans receivable and SPAR - - - 12,382 12,382
Financial assets at FVTPL 48 957 2,159 18,777 21,941
Financial assets at FVOCI - - - 92,447 92,447
Investment securities at amortized cost - - - 420,533 420,533
Loans and advances, net 983,901 291,744 292,685 134,660 1,702,990
Other financial assets - - - 2,451 2,451
Total financial assets 983,949 292,701 294,844 948,922 2,520,416
Financial Liabilities
Deposit liabilities 1,272,993 337,648 485,360 - 2,096,001
Due to BSP and other banks - - - 2,887 2,887
Derivative financial liabilities 28 879 1,154 2,236 4,297
Bills payable and other borrowed funds 2,176 - - 95,327 97,503
Manager’s checks and demand drafts
outstanding - - - 6,755 6,755
Other financial liabilities - - - 6,138 6,138
Total financial liabilities 1,275,197 338,527 486,514 113,343 2,213,581
Total interest gap (291,248) (45,826) (191,670) 835,579 306,835

67
Parent Bank (December 31, 2023)

Repricing
Over 1 up to Non-
Up to 1 year 3 years Over 3 years repricing Total
(In Millions of Pesos)
As at December 31, 2023
Financial Assets
Cash and other cash items - - - 34,444 34,444
Due from BSP - - - 192,246 192,246
Due from other banks - - - 33,081 33,081
Interbank loans receivable and SPAR - - - 17,342 17,342
Financial assets at FVTPL 150 1,144 1,023 15,139 17,456
Financial assets at FVOCI - - - 212,442 212,442
Investment securities at amortized cost - - - 377,120 377,120
Loans and advances, net 1,091,862 327,352 257,263 173,363 1,849,840
Other financial assets - - - 3,906 3,906
Total financial assets 1,092,012 328,496 258,286 1,059,083 2,737,877
Financial Liabilities
Deposit liabilities 1,368,484 346,892 548,757 - 2,264,133
Due to BSP and other banks - - - 1,881 1,881
Derivative financial liabilities 12 822 673 1,267 2,774
Bills payable and other borrowed funds - - - 133,726 133,726
Manager’s checks and demand drafts
outstanding - - - 8,431 8,431
Other financial liabilities - - - 10,721 10,721
Total financial liabilities 1,368,496 347,714 549,429 156,026 2,421,666
Total interest gap (276,484) (19,218) (291,143) 903,057 316,211

Parent Bank (December 31, 2022)

Repricing

Over 1 up to Over 3 Non-

Up to 1 year 3 years years repricing Total
(In Millions of Pesos)
As at December 31, 2022
Financial Assets
Cash and other cash items - - - 39,359 39,359
Due from BSP - - - 178,534 178,534
Due from other banks - - - 43,096 43,096
Interbank loans receivable and SPAR - - - 11,631 11,631
Financial assets at FVTPL 48 957 2,159 13,777 16,941
Financial assets at FVOCI - - - 90,477 90,477
Investment securities at amortized cost - - - 415,035 415,035
Loans and advances, net 976,541 291,337 292,618 120,188 1,680,684
Other financial assets - - - 2,794 2,794
Total financial assets 976,589 292,294 294,777 914,891 2,478,551
Financial Liabilities
Deposit liabilities 1,265,986 335,084 481,514 - 2,082,584
Due to BSP and other banks - - - 2,811 2,811
Derivative financial liabilities 28 879 1,154 2,192 4,253
Bills payable and other borrowed funds - - - 93,002 93,002
Manager’s checks and demand drafts
outstanding - - - 6,751 6,751
Other financial liabilities - - - 5,542 5,542
Total financial liabilities 1,266,014 335,963 482,668 110,298 2,194,943
Total interest gap (289,425) (43,669) (187,891) 804,593 283,608

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26.3 Liquidity risk

Liquidity risk is the risk that the BPI Group will be unable to meet its payment obligations associated with its
financial liabilities when they fall due, and to replace funds when they are withdrawn. The consequence may
be the failure to meet obligations to repay depositors and fulfill commitments to lend.

The BPI Group’s liquidity profile is observed and monitored through its metric, the Minimum Cumulative
Liquidity Gap (MCLG). The MCLG is the smallest net cumulative cash inflow (if positive) or the largest net
cumulative cash outflow (if negative) over the next three (3) months. The MCLG indicates the biggest funding
requirement in the short term and the degree of liquidity risk present in the current cash flow profile of the BPI
Group. A red flag is immediately raised and reported to management and the RMC when the MCLG level
projected over the next 3 months is about to breach the RMC-prescribed MCLG limit.

26.3.1 Liquidity risk management process

The BPI Group’s liquidity management process, as carried out within the BPI Group and monitored by the
RMC includes:

 day-to-day funding managed by monitoring future cash flows to ensure that requirements can be met.
This includes replenishment of funds as they mature or as borrowed by customers;
 maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any
unforeseen interruption to cash flow;
 monitoring liquidity gaps and ratios against internal and regulatory requirements;
 managing the concentration and profile of debt maturities; and
 performing periodic liquidity stress testing on the BPI Group’s liquidity position by assuming a faster rate
of withdrawals in its deposit base.

Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and
month as these are key periods for liquidity management. The starting point for these projections is an
analysis of the contractual maturity of the financial liabilities (Note 26.3.2) and the expected collection date of
the financial assets. Sources of liquidity are regularly reviewed by the BPI Group to maintain a wide
diversification by currency, geography, counterparty, product and term.

The BPI Group also monitors unmatched medium-term assets, the level and type of undrawn lending
commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of
credit.

Liquidity Coverage Ratio (LCR)

Pursuant to BSP Circular No. 905 issued in 2016, the Parent Bank is required to hold and maintain an
adequate level of unencumbered High Quality Liquid Assets (HQLA) that are sufficient to meet its estimated
total cash outflows over a 30 calendar-day period of liquidity stress. The LCR is the ratio of HQLAs to total net
cash outflows which should be no lower than 100% on a daily basis. It is designed to promote short-term
resilience of the BPI Group’s liquidity risk profile to withstand significant liquidity shocks that may last over 30
calendar days. HQLA represents the Parent Bank’s stock of liquid assets that qualify for inclusion in the LCR
which consists mainly of cash, regulatory reserves and unencumbered high-quality liquid securities. This
serves as defense against potential stress events.

The main drivers of the Parent Bank’s LCR comprise the changes in the total stock of HQLA as well as
changes in net cash outflows related to deposits, unsecured borrowings, committed and/or uncommitted
facilities, derivatives cash flows and cash inflows from maturing corporate, business and retail loans, among
others. Significant portion of funding comes from retail and wholesale deposits, and unsecured wholesale
funding. The Parent Bank has derivatives exposures in foreign exchange derivatives and interest rate swaps.
Cash outflows from the derivatives contracts are effectively offset by the derivatives cash inflows. These two
are accorded 100% outflow and inflow factors, respectively. The exposures coming from derivatives and
potential counterparty collateral calls are not significant to impact the LCR, with Parent Bank’s Peso and USD
LCR both well above the minimum regulatory limit of 100%. There is also no significant currency mismatch
noted in the LCR.

69
The Parent Bank manages its liquidity position through line of business and asset-liability management
activities. A centralized approach to funding and liquidity management enhances the Parent Bank’s ability to
monitor liquidity requirements, maximizes access to funding sources, minimizes borrowing costs and
facilitates timely responses to liquidity events.

Net Stable Funding Ratio (NSFR)

On January 1, 2019, the Parent Bank adopted BSP Circular No. 1007 issued in 2018 regarding the NSFR
requirement. The NSFR is aimed at strengthening the Parent Bank’s long-term resilience by maintaining a
stable funding in relation to its assets and off-balance sheet items as well as to limit the maturity
transformation risk of the BPI Group. The NSFR is expressed as the ratio of Available Stable Funding (ASF)
and the Required Stable Funding and complements the LCR as it takes a longer view of the BPI Group’s
liquidity risk profile. The BPI Group’s capital, retail deposits and long-term debt are considered as stable
funding sources whereas the BPI Group’s assets including, but not limited to, performing and non-performing
loans and receivables, HQLA and non-HQLA securities as well as off-balance items form part of the required
stable funding. The Parent Bank’s solo and consolidated NSFRs are well-above the regulatory minimum of
100%.

The Parent Bank maintains a well-diversified funding base and has a substantial amount of core deposits,
thereby avoiding undue concentrations by counterparty, maturity, and currency. The Parent Bank manages its
liquidity position through asset-liability management activities supported by a well-developed funds
management practice as well as a sound risk management system. As part of risk oversight, the Parent Bank
monitors its liquidity risk on a daily basis, in terms of single currency and significant currencies, to ensure it is
operating within the risk appetite set by the BOD and to assess ongoing compliance with the minimum
requirement of the liquidity ratios. Furthermore, the Parent Bank has a set of policies and escalation
procedures in place that govern its day-to-day risk monitoring and reporting processes.

The table below shows the actual liquidity metrics of the BPI Group and the Parent Bank:

Consolidated Parent
2023 2022 2023 2022
Liquidity coverage ratio 206.67% 194.52% 207.35% 194.37%
Net stable funding ratio 153.55% 148.81% 152.54% 148.02%
Leverage ratio 10.95% 10.71% 10.38% 10.08%
Total exposure measure 2,957,335 2,669,592 2,892,222 2,607,989

The increase in the Parent Bank's LCR was driven by higher HQLA coming from reserves and government
securities. Cash, reserves and due from BSP make up 31% (2022 - 33%) of the total stock of HQLA for the
year ended December 31, 2023. Likewise, the Parent Bank’s NSFR increased driven by higher ASF from
deposits and borrowings.

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26.3.2 Maturity profile - Non-derivative financial instruments

The tables below present the maturity profile of non-derivative financial instruments based on undiscounted
cash flows including future interest which the BPI Group uses to manage the inherent liquidity risk. The
maturity analysis is based on the remaining period from the end of the reporting period to the contractual
maturity date or, if earlier, the expected date the financial asset will be realized, or the financial liability will be
settled.

Consolidated (December 31, 2023)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2023
Financial Assets
Cash and other cash items 34,843 - - 34,843
Due from BSP 199,631 - - 199,631
Due from other banks 36,292 - - 36,292
Interbank loans receivable and SPAR 19,336 1,571 - 20,907
Financial assets at FVTPL 6,969 2,334 10,797 20,100
Financial assets at FVOCI 51,952 70,326 153,682 275,960
Investment securities at amortized cost 82,480 116,931 241,188 440,599
Loans and advances 909,354 343,250 740,942 1,993,546
Other financial assets 2,523 - - 2,523
Total financial assets 1,343,380 534,412 1,146,609 3,024,401
Financial Liabilities
Deposit liabilities 1,385,666 348,469 543,061 2,277,196
Due to BSP and other banks 1,882 - - 1,882
Bills payable and other borrowed funds 69,861 67,243 - 137,104
Manager’s checks and demand drafts outstanding 8,463 - - 8,463
Lease liabilities 2,144 4,686 3,230 10,060
Other financial liabilities 11,316 - - 11,316
Total financial liabilities 1,479,332 420,398 546,291 2,446,021
Total maturity gap (135,952) 114,014 600,318 578,380

Consolidated (December 31, 2022)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2022
Financial Assets
Cash and other cash items 39,613 - - 39,613
Due from BSP 182,879 - - 182,879
Due from other banks 45,190 - - 45,190
Interbank loans receivable and SPAR 12,353 51 2 12,406
Financial assets at FVTPL 6,145 1,964 6,500 14,609
Financial assets at FVOCI 12,973 57,426 41,665 112,064
Investment securities at amortized cost 62,896 110,946 314,923 488,765
Loans and advances 888,065 435,069 752,413 2,075,547
Other financial assets 2,451 - - 2,451
Total financial assets 1,252,565 605,456 1,115,503 2,973,524
Financial Liabilities
Deposit liabilities 1,268,490 332,382 472,451 2,073,323
Due to BSP and other banks 2,887 - - 2,887
Bills payable and other borrowed funds 52,227 46,191 - 98,418
Manager’s checks and demand drafts outstanding 6,755 - - 6,755
Lease liabilities 1,896 3,852 4,013 9,761
Other financial liabilities 6,138 - - 6,138
Total financial liabilities 1,338,393 382,425 476,464 2,197,282
Total maturity gap (85,828) 223,031 639,039 776,242

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Parent Bank (December 31, 2023)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2023
Financial Assets
Cash and other cash items 34,444 - - 34,444
Due from BSP 192,246 - - 192,246
Due from other banks 33,081 - - 33,081
Interbank loans receivable and SPAR 16,036 1,571 - 17,607
Financial assets at FVTPL 4,544 2,116 10,498 17,158
Financial assets at FVOCI 50,373 69,399 152,626 272,398
Investment securities at amortized cost 81,802 114,845 237,741 434,388
Loans and advances 895,784 321,011 736,857 1,953,652
Other financial assets 3,906 - - 3,906
Total financial assets 1,312,216 508,942 1,137,722 2,958,880
Financial Liabilities
Deposit liabilities 1,362,155 345,688 538,892 2,246,735
Due to BSP and other banks 1,882 - - 1,882
Bills payable and other borrowed funds 67,038 66,688 - 133,726
Manager’s checks and demand drafts outstanding 8,431 - - 8,431
Lease liabilities 1,977 4,385 3,200 9,562
Other financial liabilities 10,721 - - 10,721
Total financial liabilities 1,452,204 416,761 542,092 2,411,057
Total maturity gap (139,988) 92,181 595,630 547,823

Parent Bank (December 31, 2022)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2022
Financial Assets
Cash and other cash items 39,359 - - 39,359
Due from BSP 178,538 - - 178,538
Due from other banks 43,096 - - 43,096
Interbank loans receivable and SPAR 11,602 51 2 11,655
Financial assets at FVTPL 4,595 1,852 6,500 12,947
Financial assets at FVOCI 11,117 57,220 40,939 109,276
Investment securities at amortized cost 62,648 108,971 310,935 482,554
Loans and advances 871,926 421,804 747,813 2,041,543
Other financial assets 2,794 - - 2,794
Total financial assets 1,225,675 589,898 1,106,189 2,921,762
Financial Liabilities
Deposit liabilities 1,144,684 290,277 409,293 1,844,254
Due to BSP and other banks 2,811 - - 2,811
Bills payable and other borrowed funds 49,937 43,830 - 93,767
Manager’s checks and demand drafts
outstanding 6,751 - - 6,751
Lease liabilities 1,722 3,639 3,991 9,352
Other financial liabilities 5,542 - - 5,542
Total financial liabilities 1,211,447 337,746 413,284 1,962,477
Total maturity gap 14,228 252,152 692,905 959,285

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26.3.3 Maturity profile - Derivative instruments

 Derivatives settled on a net basis

The BPI Group’s derivatives that are settled on a net basis consist of interest rate swaps, non-deliverable
forwards and non-deliverable swaps. The table below presents the contractual undiscounted cash flows of
interest rate swaps based on the remaining period from December 31 to the contractual maturity dates that
are subject to offsetting, enforceable master netting arrangements and similar agreements.

Consolidated and Parent Bank

Up to 1 Over 1 up Over 3
year to 3 years years Total
2023 (In Millions of Pesos)
Interest rate swap contracts - held for trading
- Inflow 150 1,144 1,023 2,317
- Outflow (12) (822) (672) (1,506)
- Net inflow 138 322 351 811

Non-deliverable forwards and swaps - held for trading

- Inflow 34 - - 34
- Outflow (172) - - (172)
- Net outflow (138) - - (138)

Up to 1 Over 1 up Over 3
year to 3 years years Total
2022 (In Millions of Pesos)
Interest rate swap contracts - held for trading
- Inflow 48 957 2,159 3,164
- Outflow (28) (879) (1,154) (2,061)
- Net inflow 20 78 1,005 1,103

Non-deliverable forwards and swaps - held for trading

- Inflow 123 356 - 479
- Outflow (147) - - (147)
- Net outflow (24) 356 - 332

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 Derivatives settled on a gross basis

The BPI Group’s derivatives that are settled on a gross basis include foreign exchange derivatives mainly
currency forwards and currency swaps and warrants. The table below presents the contractual undiscounted
cash flows of foreign exchange derivatives based on the remaining period from reporting date to the
contractual maturity dates.

Consolidated

Up to 1 Over 1 up Over 3
year to 3 years years Total
2023 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 1,273 124 49 1,446
- Outflow (1,097) (36) (9) (1,142)
- Net inflow 176 88 40 304
Warrants
- Inflow - - 2 2
- Outflow - - - -
- Net inflow - - 2 2

Up to 1 Over 1 up Over 3
year to 3 years years Total
2022 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 3,385 52 55 3,492
- Outflow (2,025) (54) (9) (2,088)
- Net inflow 1,360 (2) 46 1,404
Warrants
- Inflow - - 2 2
- Outflow - - - -
- Net inflow - - 2 2

Parent Bank

Up to 1 Over 1 up Over 3
year to 3 years years Total
2023 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 1,272 124 49 1,445
- Outflow (1,050) (36) (9) (1,096)
- Net inflow 222 88 40 349
Warrants
- Inflow - - 2 2
- Outflow - - - -
- Net inflow - - 2 2

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 Up to 1 Over 1 up Over 3
year to 3 years years Total
2022 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 3,282 52 55 3,389
- Outflow (1,980) (54) (9) (2,043)
- Net inflow 1,302 (2) 46 1,346
Warrants
- Inflow - - 2 2
- Outflow - - - -
- Net inflow - - 2 2

26.4 Fair value measurement

The following tables present the carrying value of assets and liabilities and the level of fair value hierarchy
within which the fair value measurements are categorized:

26.4.1 Assets and liabilities measured at fair value on a recurring or non-recurring basis

Consolidated (December 31, 2023)

Carrying Fair value

Amount Level 1 Level 2 Level 3 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 3,802 - 3,802 - 3,802
Trading assets
- Debt securities 19,741 19,741 - - 19,741
- Equity securities 111 111 - - 111
Financial assets at FVOCI
- Debt securities 215,780 215,780 - - 215,780
- Equity securities 2,874 1,266 699 909 2,874
242,308 236,898 4,501 909 242,308
Financial liabilities
Derivative financial liabilities 2,821 - 2,821 - 2,821
Non-recurring measurements
Assets held for sale, net 4,743 - 14,424 - 14,424

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Consolidated (December 31, 2022)

Carrying Fair value

Amount Level 1 Level 2 Level 3 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 7,147 - 7,147 - 7,147
Trading assets
- Debt securities 14,794 14,794 - - 14,794
- Equity securities 192 191 1 - 192
Financial assets at FVOCI
- Debt securities 92,447 92,317 130 - 92,447
- Equity securities 2,820 1,709 346 765 2,820
117,400 109,011 7,624 765 117,400
Financial liabilities
Derivative financial liabilities 4,297 - 4,297 - 4,297
Non-recurring measurements
Assets held for sale, net 3,760 - 12,607 - 12,607

Parent Bank (December 31, 2023)

Carrying Fair value

Amount Level 1 Level 2 Level 3 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 3,796 - 3,796 - 3,796
Trading assets
- Debt securities 13,660 13,660 - - 13,660
- Equity securities - - - - -
Financial assets at FVOCI
- Debt securities 212,442 212,442 - - 212,442
- Equity securities 1,741 1,043 698 - 1,741
231,639 227,145 4,494 - 231,639
Financial liabilities
Derivative financial liabilities 2,774 - 2,774 - 2,774
Non-recurring measurements
Assets held for sale, net 4,646 - 14,092 - 14,092

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Parent Bank (December 31, 2022)

Carrying Fair value

Amount Level 1 Level 2 Level 3 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 7,035 - 7,035 - 7,035
Trading assets
- Debt securities 9,906 9,906 - - 9,906
- Equity securities - - - - -
Financial assets at FVOCI
- Debt securities 90,477 90,477 - - 90,477
- Equity securities 1,676 1,331 345 - 1,676
109,094 101,714 7,380 - 109,094
Financial liabilities
Derivative financial liabilities 4,253 - 4,253 - 4,253
Non-recurring measurements
Assets held for sale, net 3,650 - 12,183 - 12,183

The table below shows the valuation techniques and applicable unobservable inputs used to measure the BPI
Group’s Level 3 financial instruments (equities classified at FVOCI) as at December 31:

Amount
Description Valuation technique Unobservable inputs 2023 2022
Unlisted equity Net asset value; Net asset value; investment
securities investment multiple multiple 909 765

The investment valuation sensitivity of the underlying portfolio investee company is mainly impacted by the
movement in net asset value and investment multiple. At December 31, 2023, if the net asset value and
investment had increased/ decreased by 1% with all other variables held constant, net income and equity as
at and for the year ended December 31, 2023 would have been P6.82 million (2022 - P5.74 million)
higher/lower.

There were no transfers between the fair value hierarchy levels during the years ended
December 31, 2023 and 2022.

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26.4.2 Fair value disclosures of assets and liabilities not measured at fair value

Consolidated (December 31, 2023)

Carrying Fair value

amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 34,843 - 34,843 34,843
Due from BSP 199,619 - 199,619 199,619
Due from other banks 36,292 - 36,292 36,292
Interbank loans receivable and SPAR, net 20,643 - 20,643 20,643
Investment securities at amortized cost, net 382,711 364,286 - 364,286
Loans and advances, net 1,882,007 - 2,154,136 2,154,136
Other financial assets 2,523 - 2,523 2,523
Financial liabilities
Deposit liabilities 2,295,106 - 2,277,196 2,277,196
Due to BSP and other banks 1,881 - 1,881 1,881
Bills payable and other borrowed funds 137,104 133,726 3,378 137,104
Manager’s checks and demand drafts outstanding 8,463 - 8,463 8,463
Other financial liabilities 11,316 - 11,316 11,316
Non-financial assets
Investment properties 69 - 463 463

Consolidated (December 31, 2022)

Carrying Fair value

amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 39,613 - 39,613 39,613
Due from BSP 182,869 - 182,869 182,869
Due from other banks 45,190 - 45,190 45,190
Interbank loans receivable and SPAR, net 12,382 - 12,382 12,382
Investment securities at amortized cost, net 420,533 391,540 - 391,540
Loans and advances, net 1,702,990 - 2,060,167 2,060,167
Other financial assets 2,451 - 2,451 2,451
Financial liabilities
Deposit liabilities 2,096,001 - 2,073,323 2,073,323
Due to BSP and other banks 2,887 - 2,887 2,887
Bills payable and other borrowed funds 97,503 93,001 4,651 97,652
Manager’s checks and demand drafts outstanding 6,755 - 6,755 6,755
Other financial liabilities 6,138 - 6,138 6,138
Non-financial assets
Investment properties 74 - 248 248

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Parent Bank (December 31, 2023)

Carrying Fair value

amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 34,444 - 34,444 34,444
Due from BSP 192,246 - 192,246 192,246
Due from other banks 33,081 - 33,081 33,081
Interbank loans receivable and SPAR, net 17,342 - 17,342 17,342
Investment securities at amortized cost, net 377,120 359,164 - 359,164
Loans and advances, net 1,849,840 - 1,923,161 1,923,161
Other financial assets 3,906 - 3,906 3,906
Financial liabilities
Deposit liabilities 2,264,133 - 2,246,735 2,246,735
Due to BSP and other banks 1,881 - 1,881 1,881
Bills payable and other borrowed funds 133,726 133,726 - 133,726
Manager’s checks and demand drafts outstanding 8,431 - 8,431 8,431
Other financial liabilities 10,721 - 10,721 10,721
Non-financial assets
Investment properties 58 - 463 463

Parent Bank (December 31, 2022)

Carrying Fair value

amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 39,359 - 39,359 39,359
Due from BSP 178,534 - 178,534 178,534
Due from other banks 43,096 - 43,096 43,096
Interbank loans receivable and SPAR, net 11,631 - 11,631 11,631
Investment securities at amortized cost, net 415,035 386,717 - 386,717
Loans and advances, net 1,680,684 - 1,656,995 1,656,995
Other financial assets 2,794 - 2,794 2,794
Financial liabilities
Deposit liabilities 2,082,584 - 1,844,254 1,844,254
Due to BSP and other banks 2,811 - 2,811 2,811
Bills payable and other borrowed funds 93,002 93,002 - 93,002
Manager’s checks and demand drafts outstanding 6,751 - 6,751 6,751
Other financial liabilities 5,542 - 5,542 5,542
Non-financial assets
Investment properties 64 - 227 227

26.5 Insurance risk management

The non-life insurance entities decide on the retention, or the absolute amount that they are ready to assume
insurance risk from one event. The retention amount is a function of capital, experience, actuarial study and
risk appetite or aversion.

In excess of the retention, these entities arrange reinsurances either thru treaties or facultative placements.
They also accredit reinsurers based on certain criteria and set limits as to what can be reinsured. The
reinsurance treaties and the accreditation of reinsurers require BOD’s approval.

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27 Capital management

Capital management is understood to be a facet of risk management. The primary objective of the BPI Group is
the generation of recurring acceptable returns to shareholders’ capital. To this end, the BPI Group’s policies,
business strategies and activities are directed towards the generation of cash flows that are in excess of its
fiduciary and contractual obligations to its depositors, and to its various funders and stakeholders.

Cognizant of its exposure to risks, the BPI Group maintains sufficient capital to absorb unexpected losses,
stay in business for the long haul, and satisfy regulatory requirements. The BPI Group further understands
that its performance, as well as the performance of its various units, should be measured in terms of returns
generated vis-à-vis allocated capital and the amount of risk borne in the conduct of business.

Effective January 1, 2014, the BSP, through its Circular No. 781, requires each bank and its financial affiliated
subsidiaries to adopt new capital requirements in accordance with the provisions of Basel III. The new
guidelines are meant to strengthen the composition of the bank's capital by increasing the level of core capital
and regulatory capital. The Circular sets out minimum Common Equity (CET1) ratio and Tier 1 Capital ratios
of 6.0% and 7.5%, respectively. A capital conservation buffer of 2.5%, comprised of CET1 capital, was
likewise imposed. The minimum required capital adequacy ratio remains at 10% which includes the capital
conservation buffer.

Information on the regulatory capital is summarized below:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Tier 1 capital 355,303 349,160 355,255 349,113
Tier 2 capital 18,792 16,929 18,414 16,634
Gross qualifying capital 374,095 366,089 373,669 365,747
Less: Regulatory adjustments/required deductions 31,359 63,351 55,040 86,177
Total qualifying capital 342,736 302,738 318,629 279,570

Risk weighted assets 2,118,317 1,890,562 2,058,301 1,835,412

CAR (%) 16.18 16.01 15.48 15.23
CET1 (%) 15.29 15.12 14.59 14.33

The BPI Group has fully complied with the CAR requirement of the BSP.

Likewise, regulatory capital structures of certain subsidiaries on a standalone basis are managed to meet the
requirements of the relevant regulatory bodies (i.e. Insurance Commission (IC), SEC, PSE etc.). These
subsidiaries have fully complied with the applicable regulatory capital requirements.

As part of the reforms of the PSE to expand capital market and improve transparency among listed firms, PSE
requires listed entities to maintain a minimum of ten percent (10%) of their issued and outstanding shares,
exclusive of any treasury shares, held by the public. The Parent Bank is likewise fully compliant with this
requirement.

28 Commitments and contingencies

At present, there are lawsuits, claims and tax assessments pending against the BPI Group. In the opinion of
management, after reviewing all actions and proceedings and court decisions with legal counsels, the aggregate
liability or loss, if any, arising therefrom will not have a material effect on the BPI Group’s financial position or
financial performance.

BPI and some of its subsidiaries are defendants in legal actions arising from normal business activities.
Management believes that these actions are without merit or that the ultimate liability, if any, resulting from them
will not materially affect the financial statements.

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In the normal course of business, the BPI Group makes various commitments that are not presented in the
financial statements. The BPI Group does not anticipate any material losses from these commitments.

29 Subsequent event

BPI and RBC Merger

As the merger between the Parent Bank and RBC was agreed to be effective on the first day of the calendar
quarter following the completion of the regulatory approval, the merger is effective January 1, 2024 (Note 30.3).

In line with this, the Parent Bank issued 314 million common shares on January 1, 2024 bringing the total
issued and outstanding shares to 5.36 billion shares.

30 Other disclosures

30.1 BPI and BFB merger

On January 1, 2022, the merger of BPI and BFB, its wholly owned thrift bank subsidiary, officially took effect,
with BPI as the surviving entity. The Parent Bank has secured all necessary approvals for the transaction from
its regulatory agencies and shareholders.

The integration of both entities will provide considerable advantages to the customers and employees of BPI and
BFB, and present potential synergies that will benefit shareholders. The accelerated shift to digital, the focus on
operational efficiency and the expected reduction in the gap in regulatory reserve requirements between
commercial banks and thrift banks were factors in the timing of the transaction.

Purchase consideration

On January 1, 2022, the Parent Bank issued common shares to BFB amounting to the net assets of the latter as
reflected in the standalone financial statements as at December 31, 2020.

The Parent Bank, owning 100% of the shares of BFB, issued treasury shares as a consideration of the merger.
The number of treasury shares issued was computed based on the net assets of BFB as of December 31, 2020
over the share price of the Parent Bank as of December 29, 2020. The details are as follows:

Amount
(In Thousands of Pesos,
except share price and number
of treasury shares)
Net assets of BFB as of December 31, 2020
Total assets 287,090,333
Total liabilities 254,047,648
33,042,685
Share price of BPI as of December 29, 2020 P81.35
Number of treasury shares issued 406,179,276

These treasury shares are expected to be sold or disposed of by the Parent Bank within six (6) months following
the effective date of the merger in accordance with Chapter 3, Section 10 of the General Banking Law of 2000
(Republic Act 8791).

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Net assets acquired

Details of BFB assets and liabilities as at acquisition date (January 1, 2022) and December 31, 2020 are as
follows:

January 1, 2022 December 31, 2020

(In Thousands of Pesos)
Assets acquired
Cash and other cash items 982,150 1,004,339
Due from BSP 67,065,132 17,846,031
Due from other banks 10,152,692 4,935,660
Interbank loans receivable and securities purchased
under agreements to resell - 3,631,258
Financial assets at fair value through profit or loss 101,960 -
Financial assets at fair value through other comprehensive income 16,220,549 6,802,621
Investment securities at amortized cost, net - 24,233,039
Loans and advances, net 228,649,520 219,636,857
Assets held for sale, net 2,639,361 2,452,159
Bank premises, furniture, fixtures and equipment, net 1,713,807 1,791,553
Deferred income tax assets 3,448,694 3,885,474
Other assets, net 686,981 871,342
331,660,846 287,090,333
Liabilities assumed
Deposit liabilities 274,766,919 234,582,648
Other borrowed funds 9,583,528 9,544,988
Manager’s checks and demand drafts outstanding 1,676,663 1,644,409
Accrued taxes, interest and other expenses 1,698,772 1,734,264
Deferred credits and other liabilities 11,018,995 6,541,339
298,744,877 254,047,648
Net assets 32,915,969 33,042,685

The above assets and liabilities were acquired through a tax-free exchange as evidenced by the Plan of Merger.

Goodwill; Other reserves

As the transaction is outside the scope of PFRS 3, Business Combinations, the merger was accounted for using
the pooling of interests method following the guidance under the PIC Q&A No. 2018-06. In applying the pooling
of interests method, all assets and liabilities of BFB are taken into the merged business at their carrying values
with no restatement of comparative 2020 figures. Likewise, no goodwill was recognized as a result of a business
combination.

The difference between the carrying amount of the net assets acquired and the purchase consideration shall be
an addition/deduction to the other reserves balance as follows:

Amount
(In Thousands of Pesos)
Purchase price 33,042,685
Carrying amount of net assets acquired 32,915,969
Other reserves (addition to capital funds) 126,716

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i. Contingencies and commitments acquired

As a result of the merger, the Parent Bank acquired certain off-balance sheet items pertaining to undrawn loan
commitments within the scope of PFRS 9. Details of such liabilities are as follows:

Amount
(In Thousands of Pesos)
Undrawn loan commitments 6,422,982
Loss allowance (18,984)
Carrying amount 6,403,998

ii. Acquired receivables

The details of the loans and advances, net, acquired as a result of the business combination and its related fair
value is as follows:

Amount
(In Thousands of Pesos)
Corporate loans
Large corporate customers 15,135,453
Small and medium enterprises 17,916,051
Retail loans
Real estate mortgages 151,807,726
Auto loans 51,177,718
Credit cards 1,922,634
Others 174
237,959,756
Accrued interest receivable 1,972,675
Unearned discount/income (107,809)
239,824,622
Allowance for impairment (11,175,102)
Net carrying amount 228,649,520
Fair value 292,693,036

The details of the other receivables, net, which form part of Other assets, net, acquired as a result of the
business combination and its related fair value are as follows:

Amount
In Thousands of Pesos
Gross carrying amount 256,831
Allowance for impairment (136,311)
Net carrying amount 120,520
Fair value 120,520

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iii. Revenue and profit contribution

In accordance with the Plan of Merger between the Parent Bank and BFB, any net income earned by the latter
from January 1, 2021 until the effective date shall be declared and paid as dividends to the Parent Bank. On
December 29, 2021, the BOD of BFB declared cash dividends amounting to P3,532 million (P353 per share) out
of its unrestricted surplus payable to the Parent Bank as at December 29, 2021. The remaining net income after
dividend declaration amounting to P18 million formed part of Other reserves (Note 18) upon effectivity of the
merger.

iv. Cash flows as a result of the merger

Cash and cash equivalents acquired as a result of the business combination shall form part of the net cash
inflows from investing activities in the statement of cash flows for the period beginning January 1, 2022. The
breakdown of cash and cash equivalents acquired are as follows:

Amount
(In Thousands of Pesos)
Cash and other cash items 982,150
Due from BSP 67,065,132
Due from other banks 10,152,692
78,199,974

v. Acquisition-related costs

Acquisition-related costs of P121 million that were not directly attributable to the issue of shares are included in
other operating expenses in the statement of income and in operating cash flows in the statement of cash flows
for the period beginning January 1, 2021 until effectivity of the merger.

30.2 Regulatory treatment of restructured loans for purposes of measuring expected credit losses

On October 14, 2021, the Monetary Board approved the guidelines on restructured loans under BSP
Memorandum No. M-2021-056 which shall be effective until December 31, 2022.

Key points of the issuance include:

 Establishment of prudent criteria in the assessment and modification of terms and conditions of loans.
 Classification under Stage 1, 2, or 3 shall be based on the assessment of the borrowers’ financial difficulty
and ability to pay based on revised terms.
 Restructured loans should not automatically be considered as credit-impaired warranting classification as
non-performing. It will only be classified as such when it falls under Stage 3.
 Monitoring of list of restructured loans including risk classification, staging, and provisioning.

The Bank adopted the BSP guidelines also for prudential reporting purposes of its corporate and business
banking loan portfolio beginning January 1, 2022. Following the reprieve requirements, the Bank implemented a
process to identify and evaluate accounts that were qualified under the regulations and applied the necessary
internal risk controls for qualified exposures from credit evaluation to credit monitoring and risk reporting. As at
December 31, 2022, Modified Loans consist 0.01% of total corporate loan portfolio, while Restructured-Modified
Loans consist 0.12% of the total corporate loan portfolio. As at December 31, 2022, there are no past due or
non-performing loans which availed the reprieve under BSP M-2021-056.

84
30.3 BPI and RBC merger

On September 30, 2022, the BOD of BPI approved the merger of BPI and RBC, subject to shareholders and
regulatory approvals. In exchange, BPI shall issue to the RBC shareholders such number of BPI common
shares as would result to the RBC shareholders collectively holding approximately 6% of the resulting
outstanding common stock of BPI as of the closing date but in no case more than 314,003,992 shares.

Subsequently, the BOD of BPI in its meeting on December 14, 2022 amended the previous resolution dated
September 30, 2022 to increase the number of BPI common shares that may be issued to the RBC
shareholders pursuant to the proposed merger from “in no case more than 314,003,992 primary common shares”
to “in no case more than 318,912,309 primary common shares.”

On January 17, 2023, the shareholders of BPI approved the merger with BPI as the surviving bank. The
Philippine Competition Commission approved the merger on March 9, 2023 as contained in the decision
released by the Commission on September 13, 2023. On December 14, 2023, the BSP, through Monetary
Board Resolution No. 1633 approved the merger. The SEC issued the Certificate of Filing of the Articles and
Plan of Merger on December 29, 2023.

The merger will be effective on the first day of the calendar quarter following the completion of the regulatory
approvals which is on January 1, 2024 and therefore, the December 31, 2023 and 2022 financial statements of
the BPI Group do not include the financial information of RBC.

The merger with RBC will unlock various synergies across several products and service platforms and expand
the customer and deposit base of both banks through the merged entity, and, at the same time, by capitalizing
on BPI’s expertise and network, enhance the overall banking experience of RBC customers. BPI will be able to
expand its client base, accelerate growth, and ultimately increase shareholder value through partnerships with
the Gokongwei Group.

Purchase consideration

On merger date, the Parent Bank issued common shares to RBC shareholders as consideration of the merger.
The fair value of the 314,003,992 shares to be issued is based on the share price on December 31, 2023 of
P103.80 per share.

85
Net assets acquired

Details of RBC assets and liabilities as at acquisition date (January 1, 2024) based on provisional amounts
determined by management are as follows:

Amount
(In Thousands of Pesos)
Assets acquired
Cash and other cash items 6,456,997
Due from BSP 12,406,617
Due from other banks 1,707,648
Interbank loans receivable and SPAR 5,491,857
Financial assets at FVTPL 24,191
Financial assets at FVOCI 7,098,491
Investment securities at amortized cost, net 26,391,007
Loans and advances, net 111,444,574
Investments in subsidiary and associates, net 903,663
Bank premises, furniture, fixtures and equipment, net 953,683
Investment properties 2,583,060
Branch licenses 380,510
Deferred tax asset, net 919,713
Other assets, net 2,685,605
Core deposits 6,935,408
Customer relationship 423,690
Trust business 9,684
Deferred tax asset - fair value (FV) adjustments 1,893,968
188,710,366
Liabilities assumed
Deposit liabilities
Demand 27,640,996
Savings 91,837,208
Time 21,156,959
Long-term negotiable certificate of deposits 1,781,750
Derivative financial liabilities 24
Bills payable 14,951,631
Manager’s checks 1,103,883
Accrued taxes, interest and other expenses 1,388,443
Other liabilities 4,137,608
Deferred tax liability - FV adjustments 627,291
164,625,793
Net assets 24,084,573

The above assets and liabilities were acquired through a tax-free exchange as evidenced by the Plan of Merger.

Goodwill

The difference between the fair value of the net assets acquired, including intangible assets, and the purchase
consideration shall be recognized as goodwill as follows:

Amount
(In Thousands of Pesos)
Purchase price 32,593,614
Fair value of net assets acquired 24,084,573
Goodwill 8,509,041

The goodwill is attributable to the workforce and the expected synergies from combining the operations of RBC
with BPI. The amount of goodwill will not be deductible for tax purposes.

86
 i. Contingencies and commitments acquired

As a result of the merger, the Parent Bank acquired certain off-balance sheet items as follows:

Amount
(In Thousands of Pesos)
Trust accounts* 37,630,184
Derivatives 10,606,025
Commitments 8,143,887
Spot foreign exchange contracts 3,884,410
Performance standby letters of credit 568,597
Financial standby letters of credit 77,065
Guarantees issued 42,424
Commercial letters of credit 36,612
Others 1,805,396
Carrying amount 62,794,600
*The trust accounts will be transferred to BPI Wealth effective January 1, 2024 in accordance with the Assignment
Agreement between the Parent Bank and BPI Wealth.

ii. Acquired receivables

The details of the loans and advances, net, acquired as a result of the business combination and its related fair
value are as follows:

Amount
(In Thousands of Pesos)
Receivables from customers
Commercial 62,743,614
Real estate 36,235,122
Consumption 11,145,903
Credit cards 1,809,555
Domestic bills purchased 573,816
Other receivables
Accrued interest receivable 1,433,010
Accounts receivable 1,670,012
Sales contract receivable 321,023
115,932,055
Unearned interest and discounts (70,408)
115,861,647
Allowance for credit losses (2,993,718)
Net carrying amount 112,867,929
Fair value 111,444,574

iii. Revenue and profit contribution

There is no revenue and profit contribution for the year ended December 31, 2023 as the merger will be effective
on January 1, 2024.

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iv. Cash flows as a result of the merger

Cash and cash equivalents acquired as a result of the business combination shall form part of the net cash
inflows from investing activities in the statement of cash flows for the period beginning January 1, 2024. The
breakdown of cash and cash equivalents acquired are as follows:

Amount
(In Thousands of Pesos)
Cash and other cash items 6,456,997
Due from BSP 12,406,617
Due from other banks 1,707,648
20,571,262

v. Acquisition-related costs

Acquisition-related costs of P179 million that were not directly attributable to the issue of shares are included in
other operating expenses in the statement of income and in operating cash flows in the statement of cash flows
for the period beginning January 1, 2023 until effectivity of the merger.

31 Summary of material accounting policies

The material information of the principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.

31.1 Basis of preparation

The financial statements of the BPI Group have been prepared in accordance with Philippine Financial
Reporting Standards (PFRSs). The term PFRSs in general includes all applicable PFRSs, Philippine
Accounting Standards (PAS), and interpretations of the Philippine Interpretations Committee (PIC), Standing
Interpretations Committee and International Financial Reporting Interpretations Committee which have been
approved by the Financial and Sustainability Reporting Standards Council (formerly known as
Financial Reporting Standards Council) and adopted by the SEC.

As allowed by the SEC, the pre-need subsidiary of the Parent Bank continues to follow the provisions of the
Pre-Need Uniform Chart of Accounts (PNUCA) prescribed by the SEC and adopted by the IC.

The financial statements comprise the statements of condition, statements of income and statements of total
comprehensive income shown as two statements, statements of changes in capital funds, statements of cash
flows and the notes.

These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of financial assets at FVTPL, financial assets at FVOCI, and plan assets of the BPI Group’s
defined benefit plans.

88
The preparation of financial statements in conformity with PFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of applying the BPI
Group’s accounting policies. Changes in assumptions may have a significant impact on the financial
statements in the period the assumptions changed. Management believes that the underlying assumptions
are appropriate and that the financial statements therefore fairly present the financial position and results of
the BPI Group. The areas involving a higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the financial statements are shown below:

Critical accounting estimates

 Fair value of derivatives and other financial instruments (Note 7)
 Useful lives of bank premises, furniture, fixtures and equipment (Note 11)
 Impairment of investments subsidiaries and associates (Note 12)
 Calculation of defined benefit obligation (Note 23)
 Measurement of expected credit losses for loans and advances (Note 26.1.4)

Critical accounting judgments

 Classification of investment securities at amortized cost (Note 9)
 Realization of deferred income tax assets (Note 13)
 Determining the lease term (Note 20)
 Determining the incremental borrowing rate (Note 20)

31.2 Changes in accounting policy and disclosures

(a) Amendments to existing standards adopted by the BPI Group

The BPI Group has adopted the following amendments to existing standards effective January 1, 2023:

● Amendments to PAS1, ‘Presentation of Financial Statements’, and PFRS Practice Statement 2

The amendments require entities to disclose their material rather than their significant accounting policies.
The amendments define what is ‘material accounting policy information’ (being information that, when
considered together with other information included in an entity’s financial statements, can reasonably be
expected to influence decisions that the primary users of general purpose financial statements make on
the basis of those financial statements) and explain how to identify when accounting policy information is
material. They further clarify that immaterial accounting policy information does not need to be disclosed.
If it is disclosed, it should not obscure material accounting information.

To support these amendments, PFRS Practice Statement 2 Making Materiality Judgements was also
amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures.

The adoption of these amendments resulted to changes in the accounting policies disclosure in Note 31
series.

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(b) New standard not yet adopted by the BPI Group

The following new accounting standard is not mandatory for December 31, 2023 reporting period and has not
been early adopted by the BPI Group:

 PFRS 17, ‘Insurance Contracts’

PFRS 17 was issued in May 2017 as replacement for PFRS 4, Insurance Contracts. PFRS 17 represents
a fundamental change in the accounting framework for insurance contracts requiring liabilities to be
measured at a current fulfilment value and provides a more uniform measurement and presentation
approach for all insurance contracts. It requires a current measurement model where estimates are re-
measured each reporting period. Contracts are measured using the building blocks of (1) discounted
probability-weighted cash flows, (2) an explicit risk adjustment, and (3) a contractual service margin
(“CSM”) representing the unearned profit of the contract which is recognized as revenue over the
coverage period. The standard allows a choice between recognizing changes in discount rates either in
the statement of income or directly in other comprehensive income. The choice is likely to reflect how
insurers account for their financial assets under PFRS 9. An optional, simplified premium allocation
approach is permitted for the liability for the remaining coverage for short duration contracts, which are
often written by non-life insurers. The new rules will affect the financial statements and key performance
indicators of all entities that issue insurance contracts or investment contracts with discretionary
participation features.

The IC, in coordination with Philippine Insurers and Reinsurers Association, is currently reviewing the
impact of PFRS 17 across the entire industry and has established a project team to manage the
implementation approach. The IC, considering the extension of IFRS 17 and the challenges of the
COVID-19 pandemic to the insurance industry, has deferred the implementation of PFRS 17 to
January 1, 2025, granting an additional two-year period from the date of effectivity proposed by the IASB.
The BPI Group is assessing the quantitative impact of PFRS 17 as at reporting date.

There are no other new standards, amendments to existing standards, or interpretations that are effective for
annual periods beginning on or after January 1, 2023 that are considered relevant or expected to have a
material effect on the financial statement of the BPI Group.

31.3 Financial instruments

31.3.1 Measurement methods

Amortized cost and effective interest rate

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial asset or financial liability to the gross carrying amount of a financial
asset (i.e. its amortized cost before any impairment allowance) or to the amortized cost of a financial liability.
The calculation does not consider expected credit losses and includes transaction costs, premiums or
discounts and fees and points paid or received that are integral to the effective interest rate, such as
origination fees. For purchased or originated credit-impaired (‘POCI’) financial assets - assets that are credit-
impaired (see definition on Note 31.3.2.2) at initial recognition - the BPI Group calculates the credit-adjusted
effective interest rate, which is calculated based on the amortized cost of the financial asset instead of its
gross carrying amount and incorporates the impact of expected credit losses in estimated future cash flows.
When the BPI Group revises the estimates of future cash flows, the carrying amount of the respective
financial assets or financial liability is adjusted to reflect the new estimate discounted using the original
effective interest rate. Any changes are recognized in profit or loss.

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Interest income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial
assets, except for:

 POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the
amortized cost of the financial asset.
 Financial assets that are not ‘POCI’ but have subsequently become credit-impaired (or ‘Stage 3’), for
which interest revenue is calculated by applying the effective interest rate to their amortized cost (i.e. net
of the expected credit loss provision).

Initial recognition and measurement

Financial assets and financial liabilities are recognized when the entity becomes a party to the contractual
provisions of the instrument. Regular way purchases and sales of financial assets are recognized on trade-
date, the date on which the BPI Group commits to purchase or sell the asset.

At initial recognition, the BPI Group measures a financial asset or financial liability at its fair value plus or
minus, in the case of a financial asset or financial liability not at FVTPL, transaction costs that are incremental
and directly attributable to the acquisition or issue of the financial asset or financial liability, such as fees and
commissions. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in
profit or loss. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognized for
financial assets measured at amortized cost and investments in debt instruments measured at FVOCI, as
described in Note 31.3.2.1 below, which results in the loss provision being recognized in profit or loss when an
asset is newly originated.

When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the
BPI Group recognizes the difference as follows:

 When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e.
a Level 1 input) or based on a valuation technique that uses only data from observable markets, the
difference is recognized as a gain or loss.
 In all other cases, the difference is deferred, and the timing of recognition of deferred day one profit or
loss is determined individually. It is either amortized over the life of the instrument, deferred until the
instrument’s fair value can be determined using market observable inputs, or realized through settlement.

31.3.2 Financial assets

31.3.2.1 Classification and subsequent measurement

The BPI Group classifies its financial assets in the following measurement categories: at FVTPL, FVOCI, and
at amortized cost. The classification requirements for debt and equity instruments are described below:

Debt instruments

Classification and subsequent measurement of debt instruments depend on the BPI Group’s business model
for managing the asset and the cash flow characteristics of the asset.

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Based on these factors, the BPI Group classifies its debt instruments into one of the following three
measurement categories:

 Amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest, and that are not designated at FVTPL, are measured at amortized
cost. The carrying amount of these assets is adjusted by any expected credit loss allowance recognized
and measured. Interest income from these financial assets is included in ‘Interest income’ using the
effective interest rate method. The BPI Group's amortized cost financial assets include cash and other
cash items, due from BSP, due from other banks, interbank loans receivables and SPAR, loans and
advances, and other financial assets.

 FVOCI

Financial assets that are held for collection of contractual cash flows and for selling the assets, where the
assets’ cash flows represent solely payments of principal and interest, and that are not designated at
FVTPL, are measured at FVOCI. Movements in the carrying amount are taken through other
comprehensive income, except for the recognition of impairment gains or losses, interest revenue and
foreign exchange gains and losses on the instrument’s amortized cost which are recognized in the
statements of income. When the financial asset is derecognized, the cumulative gain or loss previously
recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income
from these financial assets is included in ‘Interest income’ using the effective interest rate method.

 FVTPL

Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss
on a debt investment that is subsequently measured at FVTPL and is not part of a hedging relationship is
recognized in profit or loss and presented in the statements of income within “Securities trading gain” in
the period in which it arises, unless it arises from debt instruments that were designated at fair value or
which are not held for trading, in which case they are presented separately.

Business model

The business model reflects how the BPI Group manages the assets in order to generate cash flows. That is,
whether the BPI Group’s objective is solely to collect the contractual cash flows from the assets or is to collect
both the contractual cash flows and cash flows arising from the sale of assets. If neither of these is applicable,
then the financial assets are classified and measured at FVTPL. Factors considered by the BPI Group in
determining the business model for a group of assets include past experience on how the cash flows for these
assets were collected, how the asset’s performance is evaluated and reported to key management personnel,
how risks are assessed and managed and how managers are compensated.

Solely Payment of Principal and Interest

Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash
flows and sell, the BPI Group assesses whether the financial instruments’ cash flows represent solely
payments of principal and interest (the ‘SPPI test’). In making this assessment, the BPI Group considers
whether the contractual cash flows are consistent with a basic lending arrangement i.e. interest includes only
consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is
consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or
volatility that are inconsistent with a basic lending arrangement, the related financial asset is classified and
measured at FVTPL.

The BPI Group reclassifies debt investments when and only when its business model for managing those
assets changes. The reclassification takes place from the start of the first reporting period following the
change. Such changes are expected to be very infrequent and none occurred during the period.

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Equity instruments

The BPI Group subsequently measures all equity investments at FVTPL, except where the BPI Group’s
management has elected, at initial recognition, to irrevocably designate an equity investment at FVOCI. The
BPI Group’s policy is to designate equity investments as FVOCI when those investments are held for
purposes other than to generate investment returns. When this election is used, fair value gains and losses
are recognized in other comprehensive income and are not subsequently reclassified to profit or loss, even on
disposal. Impairment losses (and reversal of impairment losses) are not reported separately from other
changes in fair value. Dividends, when representing a return on such investments, continue to be recognized
in profit or loss as ‘Other operating income’ when the BPI Group’s right to receive payments is established.
Gains and losses on equity investments at FVTPL are included in the “Securities trading gain” in the
statements of income.

31.3.2.2 Impairment of amortized cost and FVOCI financial assets

The BPI Group assesses impairment as follows:

 individually for loans that exceed specified thresholds. Where there is objective evidence of impairment,
individually assessed provisions will be recognized; and
 collectively for loans below the specified thresholds noted above or if there is no objective evidence of
impairment. These loans are included in a group of loans with similar risk characteristics and collectively
assessed for impairment. If there is objective evidence that the group of loans is collectively impaired,
collectively assessed provisions will be recognized.

Expected credit losses

The BPI Group assesses on a forward-looking basis the ECL associated with its debt instrument assets
carried at amortized cost and FVOCI and with the exposure arising from loan commitments. The BPI Group
recognizes a loss allowance for such losses including post-model adjustments, as applicable, at each
reporting date. The measurement of ECL reflects:

 an unbiased and probability-weighted amount that is determined by evaluating a range of possible

outcomes;
 the time value of money; and
 reasonable and supportable information that is available without undue cost or effort at the reporting date
about past events, current conditions and forecasts of future economic conditions.

PFRS 9 outlines a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition
as summarized below:

 A financial instrument that is not credit-impaired on initial recognition is classified in “Stage 1” and has its
credit risk continuously monitored by the BPI Group.
 If a significant increase in credit risk since initial recognition is identified, the financial instrument is moved to
“Stage 2” but is not yet deemed to be credit-impaired. The BPI Group determines SICR based on prescribed
benchmarks approved by the Board of the Directors.
 If the financial instrument is credit-impaired, the financial instrument is then moved to “Stage 3”.
 Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of lifetime
expected credit losses that results from default events possible within the next 12 months. Instruments in
Stages 2 or 3 have their ECL measured based on expected credit losses on a lifetime basis.
 A pervasive concept in measuring ECL in accordance with PFRS 9 is that it should consider forward-looking
information both in the ECL models and post-model adjustments, as applicable.
 POCI financial assets are those financial assets that are credit impaired on initial recognition. Their ECL is
always measured on a lifetime basis (Stage 3). The BPI Group has no POCI as at December 31, 2023 and
December 31, 2022.

For expected credit loss provisions modelled on a collective basis, a grouping of exposures is performed on
the basis of shared risk characteristics, such that risk exposures within a group are homogeneous.

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Determination of SICR

The BPI Group compares the probabilities of default occurring over its expected life as at the reporting date
with the PD occurring over its expected life on the date of initial recognition to determine SICR. Since
comparison is made between forward-looking information at reporting date against initial recognition, the
deterioration in credit risk may be triggered by the following factors:

 substantial deterioration in credit quality as measured by the applicable internal or external ratings or
credit score or the shift from investment grade category to non-investment grade category;
 adverse changes in business, financial and/or economic conditions of the borrower;
 early warning signs of worsening credit where the ability of the counterparty to honor his obligation is
dependent upon the business or economic condition;
 the account has become past due beyond 30 days where an account is classified under special
monitoring category (refer to Note 26.1.2 for the description of special monitoring); and
 expert judgment for the other quantitative and qualitative factors which may result to SICR as defined by
the BPI Group.

Measuring ECL - Inputs, assumptions and estimation techniques

The ECL is measured on either a 12-month or lifetime basis depending on whether a significant increase in
credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired.
Expected credit losses are the discounted product of the PD, EAD and LGD, defined as follows:

(a) The PD represents the likelihood that the borrower will default (as per “Definition of default and credit-
impaired” above), either over the next 12 months (12M PD), or over the remaining life (lifetime PD) of the
asset.

(b) EAD is based on the amounts the BPI Group expects to be owed at the time of default, over the next 12
months (12M EAD) or over the remaining life (lifetime EAD). For example, for a revolving commitment, the
BPI Group includes the current drawn balance plus any further amount that is expected to be drawn up to
the current contractual limit by the time of default, should it occur.

The 12-month and lifetime EADs are determined based on the expected payment profile, which varies by
product type.

- For amortizing products and bullet repayment loans, this is based on the contractual repayments
owed by the borrower over a 12-month or lifetime basis.
- For committed credit lines, the EAD is predicted by taking current drawn balance and adding a “credit
conversion factor” which allows for the expected drawdown of the remaining limit by the time of
default.

(c) LGD represents the BPI Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by
type of counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is
expressed as a percentage loss per unit of exposure at the time of default.

The LGDs are determined based on the factors which impact the recoveries made post-default.

- For secured products, this is primarily based on collateral type and projected collateral values,
historical discounts to market/book values due to forced sales, time to repossession and recovery
costs observed.
- For unsecured products, LGDs are typically set at product level due to the limited differentiation in
recoveries achieved across different borrowers. These LGDs are influenced by collection strategies
and historical recoveries.

The ECL is determined by multiplying the PD, LGD and EAD together for each individual exposure or
collective segment. This effectively calculates an ECL for each future year, which is then discounted back to
the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest
rate or an approximation thereof.

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The lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile looks at
how defaults develop on a portfolio from the point of initial recognition throughout the life of the loans. The
maturity profile is based on historical observed data and is assumed to be the same across all assets within a
portfolio and credit grade band.

Forward-looking economic information is also included in determining the 12-month and lifetime PD. These
assumptions vary by product type.

The assumptions underlying the ECL calculation - such as how the maturity profile of the PDs and how
collateral values change - are monitored and reviewed regularly.

There have been no significant changes in estimation techniques or significant assumptions made during the
reporting period from the time of the adoption of PFRS 9 on January 1, 2018 to the reporting date.

Forward-looking information incorporated in the ECL models

The BPI Group incorporates historical and current information, and forecasts forward-looking events and key
economic variables that are assessed to impact credit risk and expected credit losses for each portfolio. MEVs
that affect a specific portfolio’s non-performing loan rate(s) are determined through statistical modelling and
the application of expert judgment. The BPI Group’s economics team establishes possible global and
domestic economic scenarios. With the use of economic theories and conventions, expert judgment and
external forecasts, the economics team develops assumptions to be used in forecasting variables in the next
five (5) years, subsequently reverting to long run-averages. The probability-weighted ECL is calculated by
running each scenario through the relevant ECL models and multiplying it by the appropriate scenario
weighting.

The estimation and application of forward-looking information requires significant judgment. As with any
economic forecasts, the projections and likelihood of occurrences are subject to a high degree of inherent
uncertainty and therefore the actual outcomes may be significantly different to those projected. The scenarios
and their attributes are reassessed at each reporting date. Information regarding the forward-looking economic
variables and the relevant sensitivity analysis is disclosed in Note 26.

Financial assets with low credit risk

Loss allowance for financial assets at amortized cost and FVOCI that have low credit risk is limited to 12-
month expected credit losses. Management considers “low credit risk” for listed government bonds to be an
investment grade credit rating with at least one major rating agency. Other debt instruments are considered to
be low credit risk when they have a low risk of default and the issuer has a strong capacity to meet its
contractual cash flow obligations in the near term.

Definition of default and credit-impaired assets

The BPI Group considers a financial instrument in default or credit-impaired, when it meets one or more of the
following criteria:

Quantitative criteria

The borrower is more than 90 days past due on its contractual payments (with the exception of credit cards
and micro-finance loans where a borrower is required to be 90 days past due and over 7 days past due,
respectively, to be considered in default).

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Qualitative criteria

The counterparty is experiencing significant financial difficulty which may lead to non-payment of loan as may
be indicated by any or combination of the following events:

 The counterparty is in long-term forbearance;

 The counterparty is insolvent;
 The counterparty is in breach of major financial covenant(s) which lead(s) to event of default;
 An active market for the security has disappeared;
 Granting of concession that would not be otherwise considered due to economic or contractual reasons
relating to the counterparty’s financial difficulty;
 It is becoming probable that the counterparty will enter bankruptcy or other financial reorganization; and
 Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

The criteria above have been applied to all financial instruments held by the BPI Group and are consistent
with the definition of default used for internal credit risk management purposes. The default definition has
been applied consistently to model the PD, EAD, and LGD throughout the BPI Group’s expected credit loss
calculations.

The BPI Group’s definition of default is substantially consistent with non-performing loan definition of the BSP.
For cross-border, treasury and debt securities, these are classified as defaulted based on combination of BSP
and external credit rating agency definitions.

31.3.3 Modification of loans

The BPI Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers.
When this happens, the BPI Group assesses whether or not the new terms are substantially different to the
original terms. The BPI Group does this by considering, among others, the following factors:

 If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to
amounts the borrower is expected to be able to pay.
 Significant extension of the loan term when the borrower is not in financial difficulty.
 Significant change in the interest rate.
 Change in the currency the loan is denominated in.
 Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated
with the loan.

If the terms are substantially different, the BPI Group derecognizes the original financial asset and recognizes
a ‘new’ asset at fair value and recalculates a new effective interest rate for the asset. The date of
renegotiation is consequently considered to be the date of initial recognition for impairment calculation
purposes, including for the purpose of determining whether a significant increase in credit risk has occurred.
However, the BPI Group also assesses whether the new financial asset recognized is deemed to be credit-
impaired at initial recognition, especially in circumstances where the renegotiation was driven by the debtor
being unable to make the originally agreed payments. Differences in the carrying amount are also recognized
in the statements of income as a gain or loss on derecognition.

If the terms are not substantially different, the BPI Group recalculates the gross carrying amount of the
financial asset and recognizes a modification gain or loss in the statement of income. The gross carrying
amount of the financial asset shall be recalculated as the present value of the renegotiated or modified
contractual cash flows that are discounted at the financial asset’s original effective interest rate (or credit-
adjusted effective interest rate for purchased or originated credit-impaired financial assets.

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31.3.4 Derecognition of financial assets other than modification

The BPI Group enters into transactions where it retains the contractual rights to receive cash flows from
assets but assumes a contractual obligation to pay those cash flows to other entities and transfers
substantially all of the risks and rewards. These transactions are accounted for as ‘pass through’ transfers that
result in derecognition if the BPI Group:

 Has no obligation to make payments unless it collects equivalent amounts from the assets;
 Is prohibited from selling or pledging the assets; and
 Has an obligation to remit any cash it collects from the assets without material delay.

Collateral (shares and bonds) furnished by the BPI Group under standard repurchase agreements and
securities lending and borrowing transactions are not derecognized because the BPI Group retains
substantially all the risks and rewards on the basis of the predetermined repurchase price, and the criteria for
derecognition are therefore not met.

31.3.5 Write-off of financial assets

The BPI Group writes off financial assets when it has exhausted all practical recovery efforts and has
concluded there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation
of recovery include (i) ceasing enforcement activity and (ii) where the BPI Group’s recovery method is
foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation of
recovering in full.

The BPI Group may write-off financial assets that are still subject to enforcement activity. The write-off of
loans is approved by the BOD in compliance with the BSP requirements. Loans written-off are fully covered
with allowance.

Recoveries on charged-off assets

Collections on accounts or recoveries from impaired financial assets previously written off are recognized in
profit or loss under Miscellaneous income in the period where the recovery transaction occurs.

31.3.6 Financial liabilities

31.3.6.1 Classification of financial liabilities

The BPI Group classifies its financial liabilities in the following categories: financial liabilities at FVTPL and
financial liabilities at amortized cost.

(a) Financial liabilities at FVTPL

This category comprises two sub-categories: financial liabilities classified as held for trading, and financial
liabilities designated by the BPI Group as at FVTPL upon initial recognition.

A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of
selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are
managed together and for which there is evidence of a recent actual pattern of short-term profit-taking.
Derivatives are also categorized as held for trading unless they are designated and effective as hedging
instruments. Gains and losses arising from changes in fair value of financial liabilities classified as held for
trading are included in the statements of income and are reported as “Securities trading gain”. The BPI Group
has no financial liabilities that are designated at fair value through profit loss.

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(b) Other liabilities measured at amortized cost

Financial liabilities that are not classified as at FVTPL fall into this category and are measured at amortized
cost. Financial liabilities measured at amortized cost include deposits from customers and banks, bills payable,
amounts due to BSP and other banks, manager’s checks and demand drafts outstanding, subordinated notes
and other financial liabilities under deferred credits and other liabilities.

31.3.6.2 Subsequent measurement and derecognition

Financial liabilities at FVTPL are subsequently carried at fair value. Other liabilities are measured at amortized
cost using the effective interest method.

Financial liabilities are derecognized when they have been redeemed or otherwise extinguished (i.e. when the
obligation is discharged or is cancelled or has expired). Collateral (shares and bonds) furnished by the BPI
Group under standard repurchase agreements and securities lending and borrowing transactions is not
derecognized because the BPI Group retains substantially all the risks and rewards on the basis of the
predetermined repurchase price, and the criteria for derecognition are therefore not met.

31.3.7 Loan commitments

Loan commitments are not issued at below-market interest rates and are not settled net in cash or by
delivering or issuing another financial instrument.

31.3.8 Derivative financial instruments

A derivative instrument is initially recognized at fair value on the date a derivative contract is entered into, and
is subsequently remeasured to its fair value at the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument or
is held for trading.

Changes in the fair value of any derivative instrument that does not qualify for hedge accounting (and
therefore, held for trading) are recognized immediately in profit or loss and are included in “Securities trading
gain”.

31.3.8.1 Embedded derivatives

Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If
the hybrid contract contains a host that is a financial asset, then the BPI Group assesses the entire contract
for classification and measurement in accordance with the policy outlined in Note 31.3.2 above. Otherwise,
the embedded derivatives are treated as separate derivatives when:

 Their economic characteristics and risks are not closely related to those of the host contract;
 A separate instrument with the same terms would meet the definition of a derivative; and
 The hybrid contract is not measured at FVTPL.

These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized
in the statements of income unless the BPI Group chooses to designate the hybrid contracts at FVTPL.

31.3.9 Fair value measurement

The fair value of a non-financial asset is measured based on its highest and best use. The asset’s current use
is presumed to be its highest and best use.

The fair value of financial and non-financial liabilities takes into account non-performance risk, which is the
risk that the entity will not fulfill an obligation.

A subsidiary of the Parent Bank has investments in non-marketable equity securities classified under Level 3
as at December 31, 2023 and 2022 (Note 26.4.1).

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31.3.10 Interest income and expense

Interest income and expense for all interest-bearing financial instruments are recognized using the effective
interest method.

When calculating the effective interest rate, the BPI Group estimates cash flows considering all contractual terms
of the financial instrument but does not consider future credit losses. The calculation includes all fees paid or
received between parties to the contract that are an integral part of the effective interest rate, transaction costs,
and all other premiums or discounts.

Once a financial asset or a group of similar financial assets have been written down as a result of an impairment
loss, interest income is recognized using the rate of interest used to discount the future cash flows for the
purpose of measuring impairment loss.

31.3.11 Cash and cash equivalents

Interbank loans receivable and securities purchased under agreements to resell (SPAR) are presented as
cash equivalents if they have a maturity of three months or less and are readily convertible to known amount
of cash and which are subject to insignificant changes in value.

31.3.12 Repurchase and reverse repurchase agreements

Securities sold subject to repurchase agreements (‘repos’) are reclassified in the financial statements as
pledged assets when the transferee has the right by contract or custom to sell or repledge the collateral; the
counterparty liability is included in deposits from banks or deposits from customers, as appropriate. The
difference between sale and repurchase price is treated as interest and accrued over the life of the
agreements using the effective interest method.

Securities purchased under agreements to resell (‘reverse repos’) are recorded as loans and advances to
other banks and customers and included in the statement of condition under “Interbank loans receivable and
securities purchased under agreements to resell”. Securities lent to counterparties are also retained in the
financial statements.

31.4 Consolidation

The subsidiaries’ financial statements are prepared for the same reporting year as the consolidated financial
statements. Refer to Note 1 for the list of the Parent Bank’s subsidiaries.

(a) Subsidiaries

Inter-company transactions, balances and unrealized gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the BPI Group, except for the pre-need
subsidiary which follows the provisions of the PNUCA as allowed by the SEC.

(b) Associates

Associates are all entities over which the BPI Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates in the
consolidated financial statements are accounted for using the equity method of accounting.

The BPI Group determines at each reporting date whether there is any objective evidence that the investment
in the associate is impaired. If this is the case, the BPI Group calculates the amount of impairment as the
difference between the recoverable amount of the associate and its carrying value and recognizes the amount
adjacent to ‘share of profit (loss) of an associate’ in profit or loss.

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Unrealized gains on transactions between the BPI Group and its associates are eliminated to the extent of the
BPI Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of associates have been changed
where necessary to ensure consistency with the policies adopted by the BPI Group.

(c) Business combination between entities under common control

Business combinations under common control are accounted for using the pooling of interest method
following the guidance under the PIC Q&A No. 2018-06. Under this method, the Parent Bank does not restate
the acquired businesses or assets and liabilities to their fair values. The net assets of the combining entities or
businesses are combined using the carrying amounts of assets and liabilities of the acquired entity. No
amount is recognized in consideration for goodwill or the excess of acquirer’s interest in the net fair value of
acquired identifiable assets, liabilities and contingent liabilities over their cost at the time of the common
control combination.

(d) Business combination under PFRS 3

The BPI Group applies the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a company is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the equity interests issued by the BPI Group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement, if any, and fair value of any pre-existing equity interest in the acquiree, if any.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
On an acquisition-by-acquisition basis, the BPI Group recognizes any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net
assets.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit
or loss.

Any contingent consideration to be transferred by the BPI Group is recognized at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or
liability is recognized in accordance with PFRS 9 either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not re-measured, and its subsequent
settlement is not accounted for within equity.

The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value
of the BPI Group’s share of the identifiable net assets acquired is recorded as goodwill. If the total of
consideration transferred, non-controlling interest recognized and previously held interest measured is less
than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the
difference is recognized directly in profit or loss.

Measurement period

The quantitative information disclosed in Note 30.3 are provisional amounts as at audit report date. PFRS 3
allows a one year measurement period for the acquirer to retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new information obtained about facts and circumstances that
existed as of the acquisition date and, if known, would have affected the measurement of the amounts
recognized as of that date. During the measurement period, the acquirer shall also recognize additional
assets or liabilities if new information is obtained about facts and circumstances that existed as of the
acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that
date. The measurement period ends as soon as the acquirer receives the information it was seeking about
facts and circumstances that existed as of the acquisition date or learns that more information is not
obtainable.

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31.5 Investments in subsidiaries and associates

Investments in subsidiaries and associates in the Parent Bank’s separate financial statements are accounted
for using the cost method in accordance with PAS 27. Under this method, income from investment is
recognized in profit or loss only to the extent that the investor receives distributions from accumulated profits
of the investee arising after the acquisition date. Distributions received in excess of such profits are regarded
as a recovery of investment and are recognized as reduction of the cost of the investment.

The Parent Bank recognizes a dividend from a subsidiary or associate in profit or loss in its separate financial
statements when its right to receive the dividend is established.

The Parent Bank determines at each reporting date whether there is any indicator of impairment that the
investment in the subsidiary or associate is impaired. If this is the case, the Parent Bank calculates the
amount of impairment as the difference between the recoverable amount and carrying value and the
difference is recognized in profit or loss.

Investments in subsidiaries and associates are derecognized upon disposal or when no future economic
benefits are expected to be derived from the subsidiaries and associates at which time the cost and the
related accumulated impairment loss are removed in the statements of condition. Any gains and losses on
disposal are determined by comparing the proceeds with the carrying amount of the investment and
recognized in profit or loss.

31.6 Segment reporting

All transactions between business segments are conducted on an arm’s length basis, with intra-segment
revenue and costs being eliminated upon consolidation. Income and expenses directly associated with each
segment are included in determining business segment performance.

In accordance with PFRS 8, the BPI Group has the following main banking business segments: consumer
banking, corporate banking and investment banking. Its insurance business is assessed separately from
these banking business segments (Note 3).

31.7 Bank premises, furniture, fixtures and equipment

Land and buildings comprise mainly of branches and offices. All bank premises, furniture, fixtures and
equipment are stated at historical cost less accumulated depreciation and impairment loss, if any.

Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the BPI
Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
profit or loss during the year in which they are incurred.

Construction-in-progress is initially recognized at cost and will be depreciated once completed and available
for use. The cost of construction-in-progress includes the cost of materials and direct labor, any other costs
directly attributable to bringing the asset to a working condition for its intended use and the costs of
dismantling and removing the items on the site on which it is located. Borrowing costs related to the
acquisition or construction of qualifying assets are capitalized as part of the cost of those assets during the
construction period. The construction-in-progress is internally funded by the Parent Bank hence, no borrowing
costs were capitalized. The construction-in-progress is recorded as part of Buildings and leasehold
improvements.

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Land is carried at historical cost and is not depreciated. Depreciation for buildings and furniture and
equipment is calculated using the straight-line method to allocate cost or residual values over the estimated
useful lives of the assets, as follows:

Building 25-50 years

Furniture and equipment 3-5 years
Equipment for lease 2-8 years

Leasehold improvements are depreciated over the shorter of the lease term (ranges from 5 to 10 years) and
the useful life of the related improvement (ranges from 5 to 10 years). Major renovations are depreciated over
the remaining useful life of the related asset.

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. There are no bank premises,
furniture, fixtures and equipment that are fully impaired as at December 31, 2023 and 2022.

31.8 Investment properties

Properties that are held either to earn rental income or for capital appreciation or both, and that are not
significantly occupied by the BPI Group are classified as investment properties. Transfers to, and from,
investment property are made when, and only when, there is a change in use, evidenced by:

(a) Commencement of owner-occupation, for a transfer from investment property to owner-occupied property;
(b) Commencement of development with a view of sale, for a transfer from investment property to real
properties held-for-sale and development;
(c) End of owner occupation, for a transfer from owner-occupied property to investment property; or
(d) Commencement of an operating lease to another party, for a transfer from real properties held-for-sale
and development to investment property.

Transfers to and from investment property do not result in gain or loss.

Investment properties comprise land and building. Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less
accumulated depreciation and impairment losses, if any. Depreciation on investment property is determined
using the same policy as applied to Bank premises, furniture, fixtures, and equipment. Impairment test is
conducted when there is an indication that the carrying amount of the asset may not be recovered. An
impairment loss is recognized for the amount by which the property’s carrying amount exceeds its recoverable
amount, which is the higher of the property’s fair value less costs to sell and value in use.

An item of investment property is derecognized upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. Any gains and losses arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included
in profit or loss in the period the item is derecognized.

31.9 Foreclosed assets

Assets foreclosed shown as Assets held for sale in the statements of condition are accounted for at the lower of
cost and fair value less cost to sell similar to the principles of PFRS 5. The cost of assets foreclosed includes the
carrying amount of the related loan. Impairment loss is recognized for any subsequent write-down of the asset to
fair value less cost to sell.

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Foreclosed assets not classified as Assets held for sale are accounted for in any of the following classification
using the measurement basis appropriate to the asset as follows:

(a) Investment property is accounted for using the cost model under PAS 40;
(b) Bank-occupied property is accounted for using the cost model under PAS 16; and
(c) Financial assets are accounted for under PFRS 9.

When foreclosed assets are recovered through a sale transaction, the gain or loss recognized from the
difference between the carrying amount of the foreclosed asset disposed and the net disposal proceeds is
recognized in profit or loss.

31.10 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the BPI Group’s share in the
net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included under Other assets, net in the statements of condition. Goodwill on acquisitions of
associates is included in Investments in subsidiaries and associates. Separately recognized goodwill is carried at
cost less accumulated impairment losses. Gains and losses on the disposal of a subsidiary/associate include
carrying amount of goodwill relating to the subsidiary/associate sold.

Goodwill is an indefinite-lived intangible asset and hence not subject to amortization.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each cash-generating unit is
represented by each primary reporting segment.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances
indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is
the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an
expense and is not subsequently reversed.

(b) Contractual customer relationships

Contractual customer relationships acquired in a business combination are recognized at fair value at the
acquisition date. The contractual customer relationships have finite useful lives of ten years and are carried at
cost less accumulated amortization. Amortization is calculated using the straight-line method over the expected
life of the customer relationship. Contractual customer relationships are included under Other assets, net in the
statements of condition.

(c) Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to
use the specific software. These costs are amortized on a straight-line basis over the expected useful lives
(three to five years). Computer software is included under Other assets, net in the statements of condition.

Costs associated with maintaining computer software programs are recognized as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by the BPI Group are recognized as intangible assets when the following criteria are met:

 it is technically feasible to complete the software product so that it will be available for use;
 management intends to complete the software product and use or sell it;
 there is an ability to use or sell the software product;
 it can be demonstrated how the software product will generate probable future economic benefits;
 adequate technical, financial and other assets to complete the development and to use or sell the
software product are available; and
 the expenditure attributable to the software product during its development can be reliably measured.

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Directly attributable costs that are capitalized as part of the software product include the software development
employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognized as an expense when incurred.
Development costs previously recognized as an expense are not recognized as an asset in a subsequent
period.

(d) Management contracts

Management contracts are recognized at fair value at the acquisition date. They have a finite useful life of five
years and are subsequently carried at cost less accumulated amortization and impairment losses, if any.
Amortization is calculated using the straight-line method over the estimated useful life of the contract.
Management contracts are included under Other assets in the statement of condition.

31.11 Impairment of non-financial assets

Assets that have indefinite useful lives - for example, goodwill or intangible assets not ready for use - are not
subject to amortization and are tested annually for impairment and more frequently if there are indicators of
impairment. Assets that have definite useful lives are subject to amortization and are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).

Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of
impairment at each reporting date.

31.12 Borrowings and borrowing costs

The BPI Group’s borrowings consist mainly of bills payable and other borrowed funds. Borrowings are
recognized initially at fair value, which is the issue proceeds, net of transaction costs incurred. Borrowings are
subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognized in profit or loss over the period of the borrowings using the effective interest
method.

Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset
are capitalized as part of the cost of the asset. All other borrowing costs are expensed as incurred. The BPI
Group has no qualifying asset as at December 31, 2023 and 2022. Borrowings derecognized when the
obligation specified in the contract is discharged, cancelled, or expired. The difference between the carrying
amount of a financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognized in the Statements of Income
as other income.

31.13 Fees and commission income

The BPI Group has applied PFRS 15 where revenue is recognized when (or as) The BPI Group satisfies a
performance obligation by transferring a promised good or service to a customer (i.e. an asset). An asset is
transferred when (or as) the customer obtains control of that asset.

The recognition of revenue can be either over time or at a point in time depending on when the performance
obligation is satisfied.

When control of a good or service is transferred over time, that is, when the customer simultaneously receives
and consumes the benefits, the BPI Group satisfies the performance obligation and recognizes revenue over
time. Otherwise, revenue is recognized at the point in time at the point of transfer control of the good or service
to the customer.

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Variable consideration is measured using either the expected value method or the most likely amount method
depending on which method the BPI Group expects to better predict the amount of consideration to which it will
be entitled. This is the estimated amount of variable consideration, or the portion, if any, of that amount for which
it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
Where there is a single performance obligation, the transaction price is allocated in its entirety to that
performance obligation. Where there are multiple performance obligations, the transaction price is allocated to
the performance obligation to which it relates based on stand-alone selling prices.

The BPI Group recognizes revenue based on the price specified in the contract, net of the estimated
rebates/discounts and include variable consideration, if there is any. Accumulated experience is used to
estimate and provide for the discounts and revenue is only recognized to the extent that it is highly probable that
a significant reversal will not occur.

The BPI Group does not expect to have any contracts where the period between the transfer of the promised
goods or services to the customer and payment by the customer exceeds one year. As a consequence, the
BPI Group does not adjust any of the transaction prices for the time value of money.

Commission and fees arising from negotiating or participating in the negotiation of a transaction for a third
party (i.e. the arrangement of the acquisition of shares or other securities, or the purchase or sale of
businesses) are recognized on completion of underlying transactions. Portfolio and other management
advisory and service fees are recognized based on the applicable service contracts, usually on a time-
proportionate basis. Asset management fees related to investment funds are recognized ratably over the
period in which the service is provided.

31.14 Credit card income

Credit card arrangements involve numerous contracts between various parties. The BPI Group has
determined that the more significant contracts within the scope of PFRS 15 are (1) the contract between the
BPI Group and the credit card holder (‘Cardholder Agreement’) under which the BPI Group earn
miscellaneous fees (e.g., annual membership fees, late payment fees, foreign exchange fees, etc.) and (2) an
implied contract between the BPI Group and merchants who accept the credit cards in connection with the
purchase of their goods and/or services (‘Merchant Agreement’) under which the BPI Group earn interchange
fees.

The Cardholder Agreement obligates the BPI Group, as the card issuer, to perform activities such as process
redemption of loyalty points by providing goods, services, or other benefits to the cardholder; provide ancillary
services such as concierge services, travel insurance, airport lounge access and the like; process late
payments; provide foreign exchange services and others. The amount of fees stated in the contract
represents the transaction price for that performance obligation.

The implied contract between the BPI Group and the merchant results in the BPI Group receiving an
interchange fee from the merchant. The interchange fee represents the transaction price associated with the
implied contract between the BPI Group and the merchant because it represents the amount of consideration
to which the BPI Group expects to be entitled in exchange for transferring the promised service (i.e., purchase
approval and payment remittance) to the merchant. The performance obligation associated with the implied
contract between the BPI Group and the merchant is satisfied upon performance and simultaneous
consumption by the customer of the underlying service. Therefore, a portion of the interchange fee is
allocated to the performance obligations based on stand-alone transaction price and revenue is recognized
when these performance obligations are satisfied.

31.15 Foreign currency translation

(a) Functional and presentation currency

Items in the financial statements of each entity in the BPI Group are measured using the currency of the
primary economic environment in which the entity operates (the “functional currency”). The financial
statements are presented in Philippine Peso, which is the Parent Bank’s functional and presentation currency.

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(b) Foreign subsidiaries

The results and financial position of BPI’s foreign subsidiaries (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:

 assets and liabilities are translated at the closing rate at reporting date;
 income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
 all resulting exchange differences are recognized as a separate component (Currency translation
differences) of Accumulated other comprehensive income (loss) in the capital funds. When a foreign
operation is sold, such exchange differences are recognized in profit or loss as part of the gain or loss on
sale.

(c) Income from foreign exchange trading

Foreign exchange gains and losses arising from trading of foreign currencies are recorded under “Income from
foreign exchange trading” in the statement of income. Gains or losses are calculated as the difference between
the carrying amount of the asset sold and the net disposal proceeds at the date of sale.

31.16 Provisions for legal or contractual obligations

Provisions are recognized when all of the following conditions are met: (i) the BPI Group has a present legal
or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be
required to settle the obligation; and (iii) the amount has been reliably estimated. Provisions are not
recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood
of an outflow with respect to any one item is included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects the current market assessments of the time value of money and
the risk specific to the obligation. The increase in the provision due to the passage of time is recognized as
interest expense.

31.17 Income taxes

(a) Current income tax

Income tax payable is calculated on the basis of the applicable tax law in the respective jurisdiction.

The BPI Group has substantial income from its investment in government securities subject to final withholding
tax. Such income is presented at its gross amount and the final tax paid or withheld is included in Income tax
expense - Current.

(b) Deferred income tax

The deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of the transaction affects neither accounting
nor taxable profit or loss.

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Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused
tax losses (net operating loss carryover or NOLCO) and unused tax credits (excess minimum corporate
income tax or MCIT) to the extent that it is probable that future taxable profit will be available against which
the temporary differences, unused tax losses and unused tax credits can be utilized. Deferred income tax
liabilities are recognized in full for all taxable temporary differences except to the extent that the deferred tax
liability arises from the initial recognition of goodwill.

The BPI Group reassesses at each reporting date the need to recognize a previously unrecognized deferred
income tax asset.

31.18 Employee benefits

(a) Short-term benefits

The BPI Group recognizes a liability net of amount already paid and an expense for services rendered by
employees during the accounting period. Short-term benefits given by to its employees include salaries and
wages, social security contributions, short-term compensated absences and bonuses, and non-monetary
benefits.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.

(b) Defined benefit retirement plan

The BPI Group has a defined benefit plan that shares risks among entities within the group. A defined benefit
plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation.

The liability recognized in the statement of condition in respect of defined benefit pension plan is the present
value of the defined benefit obligation at the reporting date less the fair value of plan assets. The defined
benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates of government bonds that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating the terms of the related pension liability.

Defined benefit costs comprise of service cost, net interest on the net defined benefit liability or asset and
remeasurements of net defined liability or asset.

Service costs which include current service costs, past service costs and gains or losses on non-routine
settlements are recognized as expense in the statement of income. Past service costs are recognized when
the plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined
benefit liability or asset that arises from the passage of time which is determined by applying the discount rate
based on government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit
liability or asset is recognized as interest income or expense in the statement of income.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are
charged or credited to equity in other comprehensive income in the period in which they arise.

For individual financial reporting purposes, the unified plan assets are allocated among the BPI Group entities
based on the level of the defined benefit obligation attributable to each entity to arrive at the net liability or
asset that should be recognized in the individual financial statements.

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(c) Defined contribution retirement plan

The BPI Group also maintains a defined contribution plan that covers certain full-time employees. Under its
defined contribution plan, the BPI Group pays fixed contributions based on the employees’ monthly salaries.
The BPI Group, however, is covered under RA No. 7641, otherwise known as The Philippine Retirement Pay
Law, which provides for its qualified employees a defined benefit minimum guarantee. The defined benefit
minimum guarantee is equivalent to a certain percentage of the monthly salary payable to an employee at
normal retirement age with the required credited years of service based on the provisions of RA No. 7641.
Accordingly, the BPI Group accounts for its retirement obligation under the higher of the defined benefit
obligation relating to the minimum guarantee and the obligation arising from the defined contribution plan.

For the defined benefit minimum guarantee plan, the liability is determined based on the present value of the
excess of the projected defined benefit obligation over the projected defined contribution obligation at the end
of the reporting period. The defined benefit obligation is calculated annually by a qualified independent
actuary using the projected unit credit method. The BPI Group and Parent Bank determine the net interest
expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used
to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit
liability (asset) then, taking into account any changes in the net defined benefit liability (asset) during the
period as a result of contributions and benefit payments. Net interest and other expenses related to the
defined benefit plan are recognized in the statement of income.

The defined contribution liability is measured at the fair value of the defined contribution assets upon which
the defined contribution benefits depend, with an adjustment for margin on asset returns, if any, where this is
reflected in the defined contribution benefits.

Actuarial gains and losses arising from the remeasurements of the net defined contribution liability are
recognized immediately in the other comprehensive income.

(d) Share-based compensation

The BPI Group engages in equity-settled share-based payment transactions in respect of services received
from certain employees.

The fair value of the services received is measured by reference to the fair value of the shares or share
options granted on the date of the grant. The cost of employee services received in respect of the shares or
share options granted is recognized in profit or loss (with a corresponding increase in reserve in capital funds)
over the period that the services are received, which is the vesting period.

The fair value of the options granted is determined using option pricing models which take into account the
exercise price of the option, the current share price, the risk-free interest rate, the expected volatility of the
share price over the life of the option and other relevant factors.

When the stock options are exercised, the proceeds received, net of any directly attributable transaction costs,
are credited to share capital (par value) and share premium for the excess of exercise price over par value.

(e) Bonus plans

The BPI Group recognizes a liability and an expense for bonuses and recognizes a provision where
contractually obliged or where there is a past practice that has created a constructive obligation.

31.19 Capital funds

Treasury shares

Except for dividends to be settled through BPI's own shares which are recognized in equity, dividends on
common shares are recognized as a liability in the BPI Group’s financial statements in the period in which the
dividends are approved by the BOD.

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Cash dividends are measured based on the amount declared by the BPI Group. Treasury shares declared as
dividends are measured at its fair value at the time of declaration. Any costs attributable to the distribution of
treasury shares are deducted from fair value and recognized within equity.

Merger reserves

Merger reserves represent the difference between the value of shares issued by the Parent Bank in exchange
for the value of the shares acquired in respect of the acquisition of BFB accounted for under the pooling-of-
interest method and the difference between the results of operations of BFB during the year ended
December 31, 2021 and the dividends declared on December 29, 2021.

31.20 Fiduciary activities

The BPI Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of
assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income
arising thereon are excluded from these financial statements, as they are not assets of the BPI Group (Note 24).

31.21 Leases

31.21.1 BPI Group is the lessee

Measurement of lease liabilities

Lease payments to be made under reasonably certain extension options are included in the measurement of the
lease liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the BPI Group, the lessee’s incremental borrowing rate is
used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and
conditions.

To determine the incremental borrowing rate, the BPI Group:

 where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received;
 uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held for
entities which do not have recent third-party financing; and
 makes adjustments specific to the lease (i.e. term, currency and security).

Measurement of right-of-use assets

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis. If the BPI Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.

Extension and termination options

In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or
not terminated). The lease term is reassessed if an option is actually exercised (or not exercised) or the BPI
Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is revised only if
a significant event or a significant change in circumstances occurs, which affects this assessment, and that is
within the control of the lessee.

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Lease modification

Lease modifications are accounted either as a separate lease or not a separate lease. The BPI Group accounts
for the lease modification as a separate lease if both:

 the modification increases the scope of the lease by adding the right of use to one or more underlying
assets; and
 the consideration for the lease increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances
of the particular contract.

For lease modification that is not accounted for a separate lease, at the effective date of lease modification, the
BPI Group:

 allocates the consideration in the modified contract on the basis of the relative stand-alone price of the
lease component and the aggregate stand-alone price of the non-lease components;
 determine the lease term of the modified lease; and
 remeasure the lease liability by discounting the revised lease payments using a revised discount rate.

The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease
term, or the lessee’s incremental borrowing rate at the effective date of the modification, if the interest rate
implicit in the lease cannot be readily determined.

For a lease modification that is not accounted for as a separate lease, the BPI Group accounts for the
remeasurement of the lease liability by:

 decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the
lease for lease modifications that decrease the scope of the lease; and
 making a corresponding adjustment to the right-of-use asset for all other lease modifications.

The BPI Group recognizes in profit or loss any gain or loss relating to the partial or full termination of the lease.

Short-term leases and leases of low-value assets

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line
basis as an expense in the statements of income. Short-term leases are leases with a lease term of 12 months
or less. Low-value assets comprise IT-equipment and small items of office furniture.

31.21.2 BPI Group is the lessor

BPI Group (as a lessor) continues to classify its leases as operating leases.

31.22 Insurance and pre-need operations

(a) Non-life insurance

The more significant accounting policies observed by the non-life insurance subsidiaries follow: (a) gross
premiums written from short-term insurance contracts are recognized at the inception date of the risks
underwritten and are earned over the period of cover in accordance with the incidence of risk using the 24th
method; (b) acquisition costs are deferred and charged to expense in proportion to the premium revenue
recognized; reinsurance commissions are deferred and deducted from the applicable deferred acquisition costs,
subject to the same amortization method as the related acquisition costs; (c) a liability adequacy test is
performed which compares the subsidiaries’ reported insurance contract liabilities against current best
estimates of all contractual future cash flows and claims handling, and policy administration expenses as well
as investment income backing up such liabilities, with any deficiency immediately charged to profit or loss; and
(d) financial assets and liabilities are measured following the classification and valuation provisions of PFRS 9.

110
(b) Pre-need

The material provisions of the PNUCA as applied by the pre-need subsidiary follow: (a) costs of contracts
issued and other direct costs and expenses are recognized as expense when incurred; (b) pre-need reserves
which represent the accrued net liabilities of the subsidiary to its plan holders are actuarially computed based
on standards and guidelines set forth by the Insurance Commission; the increase or decrease in the account
is charged or credited to other costs of contracts issued in profit or loss; and (c) insurance premium reserves
which represent the amount that must be set aside by the subsidiary to pay for premiums for insurance
coverage of fully paid plan holders, are actuarially computed based on standards and guidelines set forth by
the Insurance Commission.

32 Supplementary information required under BSP Circular No. 1074

Presented below are the additional information required by BSP Circular No. 1074 issued on January 8, 2020.
This information is presented for BSP reporting purposes and is not required in the basic financial statements.

(i) Basic Quantitative Indicators of Financial Performance

The key financial performance indicators follow (in %):

Consolidated Parent
2023 2022 2023 2022
Return on average equity
- Daily average1 15.35 13.14 15.71 13.02
- Simple average2 15.22 12.88 15.76 13.64
Return on average assets
- Daily average3 1.93 1.59 1.91 1.52
- Simple average4 1.88 1.58 1.87 1.61
Net interest margin
- Daily average5 4.09 3.59 3.93 3.47
- Simple average6 3.98 3.55 3.82 3.68
1Net income divided by average total equity for the period indicated. Average equity is based on the daily average balance of equity for the years ended December 31, 2023 and 2022.
2Net income divided by average total equity for the period indicated. Average total equity is based on the year-on-year balance of equity for the years ended December 31, 2023 and 2022.
3
Net income divided by average total assets as at period indicated. Average total assets are based on the daily average balance of total assets as at December 31, 2023 and 2022.
4Net income divided by average total assets as at period indicated. Average total assets are based on the year-on-year balance of total assets as at December 31, 2023 and 2022.
5Net interest income divided by average interest-earning assets. Average interest earning assets is based on the daily average balance of interest earning assets as at December 31, 2023 and 2022.
6
Net interest income divided by average interest-earning assets. Average interest earning assets is based on the year-on-year balance of interest earning assets as at December 31, 2023 and 2022.

(ii) Description of Capital Instrument Issued

BPI considers its common shares as capital instrument for purposes of calculating its capital adequacy ratio as
at December 31, 2023 and 2022.

Significant credit exposures

Details of the loans and advances portfolio as to concentration per industry/economic sector over total loan
portfolio (in %) as at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
Real estate, renting and other related activities 23.12 22.98 23.48 15.88
Manufacturing 15.47 16.39 15.70 19.21
Consumer 11.44 9.21 10.62 6.21
Transportation, storage and communications 11.33 10.74 11.48 11.04
Wholesale and retail trade 11.20 10.42 11.01 11.98
Financial institutions 9.70 9.26 9.85 10.88
Electricity, gas, steam and air-conditioning supply 9.18 11.85 9.34 12.01
Agriculture and forestry 1.73 1.91 1.75 2.23
Others 6.83 7.24 6.77 10.56
100.00 100.00 100.00 100.00

111
Details of the loans and advances portfolio as to concentration per industry/economic sector over Tier 1
Capital (in %) as at December 31 are as follows:

Consolidated Parent
2023 2022 2023 2022
Real estate, renting and other related activities 138.44 115.90 148.97 67.71
Manufacturing 92.63 82.63 99.62 81.88
Consumer 68.48 46.44 67.37 26.48
Transportation, storage and communications 67.87 55.34 72.85 54.94
Wholesale and retail trade 67.07 52.56 69.83 51.07
Financial institutions 58.09 46.69 62.49 46.40
Electricity, gas, steam and air-conditioning supply 54.93 59.76 59.25 59.76
Agriculture and forestry 10.36 9.63 11.11 9.51
Others 40.84 35.32 43.00 31.85

Breakdown of total loans

Details of the loans and advances portfolio as at December 31 as to collateral (amounts net of unearned
discounts and exclusive of accrued interest receivable) are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Secured loans
Real estate mortgage 304,090 281,974 302,870 280,633
Project assets 138,915 143,541 138,915 143,541
Chattel mortgage 75,028 60,287 75,028 60,287
Others 25,912 39,698 25,757 38,944
543,945 525,500 542,570 523,405
Unsecured loans 1,382,593 1,224,068 1,350,313 1,202,678
1,926,538 1,749,568 1,892,883 1,726,083

Others represent loans secured mainly by hold-out deposits, mortgage trust indentures, government and
corporate securities and bonds, quedan/warehouse receipts, standby letters of credit, trust receipts, and
deposit substitutes.

Breakdown of performing and non-performing loans net of allowance for credit losses, as reported to the
BSP, are as follows:

Consolidated

2023 2022
Non- Non-
Performing performing Total Performing performing Total
(In Millions of Pesos)
Corporate loans 1,483,876 16,662 1,500,538 1,385,660 14,502 1,400,162
Credit cards 124,606 5,107 129,713 90,515 2,970 93,485
Other retail loans 282,627 13,666 296,293 242,496 13,407 255,903
1,891,109 35,435 1,926,544 1,718,671 30,879 1,749,550
Allowance for
probable losses (11,154) (22,726) (33,880) (6,934) (21,415) (28,349)
Net carrying
amount 1,879,955 12,709 1,892,664 1,711,737 9,464 1,721,201
*Amounts exclude accrued interest receivables and GLLP

112
Parent

2023 2022
Non- Non-
Performing performing Total Performing performing Total
(In Millions of Pesos)
Corporate loans 1,483,636 16,635 1,500,271 1,385,211 14,428 1,399,639
Credit cards 124,606 5,107 129,713 90,515 2,970 93,485
Other retail loans 251,171 11,735 262,906 220,904 12,038 232,942
1,859,413 33,477 1,892,890 1,696,630 29,436 1,726,066
Allowance for
probable losses (11,336) (21,280) (32,616) (7,116) (20,359) (27,475)
Net carrying
amount 1,848,077 12,197 1,860,274 1,689,514 9,077 1,698,591
*Amounts exclude accrued interest receivables and GLLP

BSP Circular 941, Amendments to Regulations on Past Due and Non-Performing Loans, states that loans,
investments, receivables, or any financial asset shall be considered non-performing, even without any missed
contractual payments, when it is considered impaired under existing accounting standards, classified as
doubtful or loss, in litigation, and if there is an evidence that full repayment of principal and interest is unlikely
without foreclosure of collateral. All other loans, even if not considered impaired, shall be considered non-
performing if any principal and/or interest are unpaid for more than ninety (90) days from contractual due date,
or accrued interests for more than ninety (90) days have been capitalized, refinanced, or delayed by
agreement.

Microfinance and other small loans with similar credit characteristics shall be considered non-performing after
contractual due date or after they have become past due.

Restructured loans shall be considered non-performing. However, if prior to restructuring, the loans were
categorized as performing, such classification shall be retained.

(iii) Information on Related Party Loans

Details of related party loans are as follows (transactions with subsidiaries have been eliminated in the
consolidated financial statements):

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Loans and advances from:
Subsidiaries - - 87 34
Associates 113 42 113 42
Ayala Group 61,567 64,654 61,567 64,654
Other related parties - - - -

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos, except percentages)
Total outstanding loans and advances 61,680 64,696 61,767 64,730
% to total outstanding related party loans
Subsidiaries - - 0.14 0.05
Associates 0.18 0.06 0.18 0.06
Ayala Group 99.82 99.94 99.68 99.89
Other related parties - - - -

113
 Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos, except percentages)
Total outstanding loans and advances 61,680 64,696 61,767 64,730
% to total outstanding related party loans
Unsecured related party loans 8.82 63.77 8.81 63.74
Past due related party loans - - - -
Non-performing related party loans - - - -

Details of DOSRI loans are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Outstanding DOSRI loans 18,701 19,571 18,701 19,571

Consolidated Parent
2023 2022 2023 2022
(In percentages)
% to total outstanding loans and advances 0.97 1.12 0.99 1.13
% to total outstanding DOSRI loans
Unsecured DOSRI loans 2.30 2.40 2.30 2.40
Past due DOSRI loans 0.04 0.02 0.04 0.02
Non-performing DOSRI loans 0.02 0.03 0.02 0.03

The BPI Group is in full compliance with the General Banking Act and the BSP regulations on DOSRI loans as
at December 31, 2023 and 2022.

(iv) Secured Liabilities and Assets Pledged as Security

The BPI Group’s Bills payable (Note 16) include mainly funds borrowed from various banking institutions
which were lent out to customers of the BPI Group. As at December 31, 2023 and 2022, part of the bills
payable of the Parent Bank is secured by government securities classified as investment securities at
amortized cost (Note 9).

Contingencies and commitments arising from off-balance sheet items

The following is a summary of BPI’s contingencies and commitments at their equivalent peso amounts as
reported to the BSP:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Trust accounts 1,223,096 875,063 - -
Derivatives 319,337 422,807 314,881 413,679
Commitments 186,611 148,935 186,611 148,935
Financial standby letters of credit - foreign 30,472 28,960 30,472 28,960
Bills for collection 22,923 23,470 22,923 23,470
Commercial letters of credit 11,322 14,142 11,322 14,142
Performance standby letters of credit - foreign 10,898 6,045 10,898 6,045
Spot foreign exchange contracts 7,310 13,264 7,310 13,264
Guarantees issued 2,521 2,774 2,521 2,774
Trade related guarantees 1,208 5,203 1,208 5,203
Other contingent accounts 39,712 160,435 39,618 11,536
1,855,410 1,701,098 627,764 668,008

Other contingent accounts pertain to late deposits or payments received, deficiency claims receivable, items
held for safekeeping, and items held as collateral.
114
Significant credit risk exposures arising from off-balance sheet items are as follows:

Consolidated Parent
2023 2022 2023 2022
(In Millions of Pesos)
Undrawn loan commitments 504,918 1,143,705 504,918 1,143,705
Unused letters of credit 55,808 57,148 55,808 57,148
Gross carrying amount 560,726 1,200,853 560,726 1,200,853
Loss allowance (1,232) (1,034) (1,232) (1,034)
Carrying amount 559,494 1,199,819 559,494 1,199,819

Undrawn loan commitments and letters of credit are commitments under which over the duration of the
commitment, the BPI Group is required to provide a loan with pre-specified terms to the customer. These off-
balance sheet items are within the scope of PFRS 9 where the BPI Group estimates that the expected portion
of the undrawn loan commitments that will be drawn over their expected life. The ECL related to the off-
balance sheet items is recognized in “Miscellaneous liabilities” (Note 17).

The BPI Group has no other off-balance sheet items other than the items listed above.

33 Supplementary information required by the Bureau of Internal Revenue

On December 28, 2010, Revenue Regulations (RR) No. 15-2010 became effective and amended certain
provisions of RR No. 21-2002 prescribing the manner of compliance with any documentary and/or procedural
requirements in connection with the preparation and submission of financial statements and income tax returns.
Section 2 of RR No. 21-2002 was further amended to include in the Notes to Financial Statements information
on taxes, duties and license fees paid or accrued during the year in addition to what is mandated by PFRSs.

Below is the additional information required by RR No. 15-2010 that is relevant to the Parent Bank. This
information is presented for purposes of filing with the Bureau of Internal Revenue (BIR) and is not a required
part of the basic financial statements.

(i) Documentary stamp tax

Documentary stamp taxes paid through the Electronic Documentary Stamp Tax System for the year ended
December 31, 2023 consist of:

Amount
(In Millions of Pesos)
Deposit and loan documents 10,685
Trade finance documents 846
Mortgage documents 500
Shares of stocks 3
Others 4
12,038

115
(ii) Withholding taxes

Withholding taxes paid/accrued and/or withheld for the year ended December 31, 2023 consist of:

Amount
Paid Accrued Total
(In Millions of Pesos)
Income taxes withheld on compensation 2,829 338 3,167
Withholding tax on withdrawal from decedent’s account 19 1 20
Final income taxes withheld on interest on deposits and yield on
deposit substitutes 5,013 589 5,602
Final income taxes withheld on income payment 2,610 399 3,009
Creditable income taxes withheld (expanded) 727 103 830
Fringe benefit tax 87 31 118
Withholding value-added tax 56 10 66
11,341 1,471 12,812

(iii) All other local and national taxes

All other local and national taxes paid/accrued for the year ended December 31, 2023 consist of:

Amount
Paid Accrued Total
(In Millions of Pesos)
Gross receipts tax 6,661 750 7,411
Real property tax 153 - 153
Municipal taxes 338 - 338
Others 100 - 100
7,252 750 8,002

Local and national taxes imposed by the government which are incurred under the normal courses of
business are part of “Taxes and Licenses” within Other Operating Expense (Note 21).

(iv) Tax cases and assessments

As at reporting date, the Parent Bank has various claims of tax refund pending with tax authorities. There are
no outstanding tax cases under preliminary investigation, litigation and/or prosecution in courts or bodies
outside the BIR.

116
 Bank of the Philippine Islands
Financial Indicators
As at December 31, 2023 and 2022

Formula Current year Prior year

Ratio (in Millions of Pesos, except ratios) in percentage
Liquidity ratio Total current assets divided by total current
liabilities
Total current assets 1,343,380 58.53 59.25
Divided by: Total deposits 2,295,106
Liquidity ratio 0.5853

Debt-to-equity ratio Total liabilities (Bills payable and Bonds payable)

divided by total equity
Total liabilities (Bills payable
and Bonds payable) 137,104 38.38 30.69
Divided by: Total equity 357,204
Debt-to-equity ratio 0.3838

Asset-to-equity ratio Total assets divided by total equity

Total assets 2,888,372
Divided by: Total equity 357,204 808.61 819.57
Asset-to-equity ratio 8.0861

Interest rate Earnings before interest expense, income taxes,

coverage ratio depreciation, and amortization
EBITDA 113,048
Divided by: Total interest expense 41,222 274.24 412.13
Interest rate coverage ratio 2.7424

Return on equity Net income divided by daily average equity

Net income 51,687
Divided by: Daily average equity 336,806 15.35 13.14
Return on equity 0.1535

Return on assets Net income divided by daily average assets

Net income 51,687
Divided by: Daily average assets 2,683,583 1.93 1.59
Return on assets 0.0193
 Net interest margin Net interest income (return on investment less
(NIM) interest expense) divided by daily average net
interest bearing assets
Net interest income 104,350
Divided by: Daily average 4.09 3.59
Net Interest Bearing Assets 2,551,920
NIM 0.0409

Other ratios:
Average assets to Daily average assets divided by daily average
average equity equity

Daily average assets 2,683,583 796.78 826.91

Divided by: Daily average equity 336,806
Average assets to average equity 7.9678

Net interest to Net interest income divided by daily average

average assets assets
(NRFF)
Net interest income 104,350 3.89 3.41
Divided by: Daily average assets 2,683,583
NRFF 0.0389

Cost to income ratio Total operating expense divided by total income

(Net interest income and Other income)
Total operating expense 69,110
Divided by: Total income 49.96 48.93
(Net Interest income and
Other income) 138,321
Cost to income ratio 0.4996

Cost to asset ratio Total operating expense divided by daily average

assets
Total operating expense 69,110 2.58 2.33
Divided by: Daily average assets 2,683,583
Cost to asset ratio 0.0258

Capital to assets Total equity divided by total assets

ratio Total equity 357,204
Divided by: Total assets 2,888,372 12.37 12.20
Capital to assets ratio 0.1237
 Bank of the Philippine Islands
Ayala Triangle Gardens Tower 2
Paseo De Roxas corner Makati Ave., Bel-Air
Makati City

Reconciliation of Retained Earnings Available for Dividend Declaration

For the year ended December 31, 2023
(in Millions of Pesos)

Unappropriated retained earnings, beginning of the year 121,432

Add: Category A: Items that are directly credited to

Unappropriated retained earnings
Reversal of Retained earnings appropriation/s -
Effect of restatements or prior-period adjustments -
Others (Realized Gain on Sale of FVOCI equity
securities) 415 415
121,847
Less: Category B: Items that are directly debited to
Unappropriated retained earnings
Dividend declaration during the reporting period 58,298
Retained earnings appropriated during the reporting
period -
Effect of restatements or prior-period adjustments -
Others (describe nature) - 58,298
Unappropriated retained earnings, as adjusted 63,549

Add/Less: Net Income (loss) for the current year 50,053

Less: Category C.1: Unrealized income recognized in the
profit or loss during the year (net of tax)
Equity in net income of associate/joint venture, net of
dividends declared -
Unrealized foreign exchange gain, except those
attributable to cash and cash equivalents 557
Unrealized fair value adjustment (mark-to-market
gains) of financial instruments at fair value through
profit or loss (FVTPL) 123
Unrealized fair value gain of investment property -
Other unrealized gains or adjustments to the retained
earnings as a result of certain transactions
accounted for under the PFRS (describe nature) - 680
49,373
(continued)
Bank of the Philippine Islands
Reconciliation of Retained Earnings Available for Dividend Declaration
For the year ended December 31, 2023
Page 2

Add: Category C.2: Unrealized income recognized in the profit or

loss in prior reporting periods but realized in the current
reporting period (net of tax) -
Realized foreign exchange gain, except those attributable
to Cash and cash equivalents -
Realized fair value adjustment (mark-to-market gains) of
financial instruments at fair value through profit or loss
(FVTPL) -
Realized fair value gain of Investment property -
Other realized gains or adjustments to the retained
earnings as a result of certain transactions accounted for
under the PFRS (describe nature) - -
49,373
Add: Category C.3: Unrealized income recognized in profit or loss
in prior periods but reversed in the current reporting period
(net of tax) -
Reversal of previously recorded foreign exchange gain,
except those attributable to cash and cash equivalents 1,647
Reversal of previously recorded fair value adjustment
(mark-to-market gains) of financial instruments at fair
value through profit or loss (FVTPL) 1,422
Reversal of previously recorded fair value gain of
investment property -
Reversal of other unrealized gains or adjustments to the
retained earnings as a result of certain transactions
accounted for under the PFRS, previously recorded
(describe nature) - 3,069
Adjusted net income/loss 52,442

Add: Category D: Non-actual losses recognized in profit or loss

during the reporting period (net of tax)
Depreciation on revaluation increment (after tax) - -

Add/Less: Category E: Adjustments related to relief granted by

the SEC and BSP
Amortization of the effect of reporting relief -
Total amount of reporting relief granted during the -
year
Others (describe nature) - -
-
(continued)
Bank of the Philippine Islands
Reconciliation of Retained Earnings Available for Dividend Declaration
For the year ended December 31, 2023
Page 3

Add/Less: Category F: Other items that should be excluded from

the determination of the amount of available for
dividends distribution
Net movement of treasury shares (except for
reacquisition of redeemable shares) 33,043
Net movement of deferred tax asset not considered
in the reconciling items under the previous -
categories
Net movement in deferred tax asset and deferred tax
liabilities related to same transaction, e.g., set up of
right of use of asset and lease liability, set-up of
asset and asset retirement obligation, and set-up of
service concession asset and concession payable -
Adjustment due to deviation from PFRS/GAAP - gain -
(loss)
Others - 33,043
Total retained earnings, end of the year available for dividend
declaration 149,034
 BANK OF THE PHILIPPINE ISLANDS

BPI (EUROPE) PLC 100% BPI DIRECT BANKO, INC. BPI CAPITAL CORP. 100% BPI PAYMENTS HOLDINGS
a SAVINGS BANK 100% INC. 100%

BPI INTERNATIONAL BPI REMITTANCE CENTRE BPI SECURITIES CORP. AF PAYMENTS, INC. 20%
FINANCE LIMITED 100% HK, LIMITED 100% 100%

BPI ASSET MANAGEMENT BPI WEALTH SINGAPORE BPI INVESTMENT

AND TRUST PTE. LTD.** 100% MANAGEMENT, INC. 100%
CORPORATION 100%

ALFM GLOBAL MULTI- ALFM RETAIL CORPORATE

ASSET INCOME FUND, INC. FIXED INCOME FUND, INC.
BPI FOREX CORP. 100% 100% 100%

ALFM FIXED INCOME ALFM REAL ESTATE

FEEDER FUND, INC. INCOME FUND, INC.
100% 100%

FGU INSURANCE CORP. BPI/MS INSURANCE CORP. AYALA PLANS, INC.

94.62% 41.40% 98.93%

BPI/MS INSURANCE CORP. FCS INSURANCE AGENCY

9.45% 24.92%

FEB SPEED FEBSTOCK BROKERS INC. SANTIAGO LAND DEV’T FIRST FAR EAST DEV’T
INTERNATIONAL 100% 100% CORP. 100% CORP. 100%

FILINVEST ALGO BPI COMPUTER SYSTEMS

FINANCIAL CORP. 100% CORP. 100%

CITYTRUST REALTY CORP. BEACON PROPERTY BPI CENTURY TOKYO GLOBAL PAYMENTS ASIA- BPI AIA LIFE ASSURANCE
40% VENTURES, INC. LEASE & FINANCE CORP PACIFIC PHILIPPINES INC. CORPORATION
20% 49% 49% 47.96%

BPI CENTURY TOKYO CITYTRUST SECURITIES

RENTAL CORP. 100% CORP. 100%

*Updated as of March 5, 2024

** Incorporated on June 20, 2023 with the Accounting and Corporate Regulatory Authority of Singapore; with
Capital Market Services license application still pending approval by the Monetary Authority of Singapore
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023
(in Millions of Pesos)

Schedule A - Financial Assets

Number of shares or
principal amount of Amount shown in the Income received and
bonds and notes balance sheet accrued
Due from Bangko Sentral ng Pilipinas 199,619
Due from other banks 36,292
Interbank loans receivable and Securities purchase
under agreements to resell 20,643
Subtotal 256,554 2,935
Financial assets at fair value through profit or loss-
Trading securities (*) 19,852 883
Financial assets at fair value through profit or loss-
Derivative financial assets 3,802
Subtotal 23,654
Financial assets at fair value through other
comprehensive income (FVOCI) (*) 218,654 6,176
Investment securities at amortized cost (*) 382,711 14,678
Loans and advances, net 1,882,007 120,900
Others 2,523 -
TOTAL 2,766,103 145,572
(*) Please refer succeeding pages for the detailed information on these financial assets.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023

Schedule B: Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties)

Name and Balance at

Designation of beginning of Balance at end of
debtor period Additions Amount collected Amount written off Current Non-current period

Nothing to report. Transactions with these parties are made under the normal course of business.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023
(in Millions of Pesos)

Schedule C - Amounts Receivable from Related Parties which are eliminated during the consolidation of financial
statements

Balance at Balance at
beginning of Amounts Amounts end of
Name and designation of debtor period Additions collected written-off Current Non-current period

BANK OF THE PHILIPPINE ISLANDS 3 - 3 - - - -

BPI DIRECT BANKO, INC. 768 757 - - 1,525 - 1,525
BPI CAPITAL CORP. 8 - - - 8 - 8
BPI INVESTMENT MANAGEMENT, INC. 2 5 - - 7 - 7
BPI SECURITIES CORP. 97 18 - - 115 - 115
BPI CENTURY TOKYO RENTAL CORP. 1 - 1 - - - -
BPI ASSET MANAGEMENT AND TRUST CORP. 45 - 15 - 30 - 30
BPI/MS INSURANCE CORPORATION 5 1 - - 6 - 6
929 781 19 - 1,691 - 1,691
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023
(in Millions of Pesos)

Schedule D - Long-term Debt

Amount shown under Amount shown under

caption “Current portion caption “Long-term
Amount authorized of long-term debt” in debt” in related balance
Title of issue and type of by indenture related balance sheet sheet
obligation (Original currency) (in PHP) (in PHP) Terms of long-term debts
Parent Bank
Bonds payable PHP 27,000 27,000 - Int Rate : 2.81%
Frequency of Payment: Quarterly
Maturity Date : 01/31/2024
Face Value : PHP
27,000,000,000
Bonds payable PHP 20,236 20,236 - Int Rate : 5.75%
Frequency of Payment: Quarterly
Maturity Date : 07/30/2024
Face Value : PHP
20,300,000,000
Bonds payable USD 300 16,594 - Int Rate : 2.50%
Frequency of Payment:
Semi - Annual
Maturity Date : 09/10/2024
Face Value : USD 300,000,000
Bonds payable PHP 36,371 - 36,371 Int Rate : 6.43%
Frequency of Payment: Quarterly
Maturity Date : 05/13/2025
Face Value : PHP
36,660,800,000
Bonds payable USD 250 - 13,824 Int Rate : 6.42%
Frequency of Payment:
Semi - Annual
Maturity Date : 08/25/2026
Face Value : USD 250,000,000
Bills payable USD 298 - 16,494 Int Rate : 6.33%
Frequency of Payment: Quarterly
Maturity Date : 08/24/2026
Face Value : USD 300,000,000
Bills payable 3,207 - Various
SUB-TOTAL 67,037 66,689 133,726
BPI Europe
Bills payable 2,824 554 Various
TOTAL 69,861 67,243 137,104
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023

Schedule E - Indebtedness to Related Parties (Long-Term Loans from Related Companies)

Name of related party Balance at beginning of period Balance at end period

Nothing to report.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023

Schedule F - Guarantees of Securities of Other Issuers

Name of issuing
entity of securities
guaranteed by the Title of issue of each Total amount Amount owned by
company for which class of securities guaranteed and person for which
this statement is filed guaranteed outstanding statement is filed Nature of guarantee

Nothing to report.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2023

Schedule G - Capital Stock

Number of Number of
shares issued shares reserved
and outstanding for options,
Number of as shown under warrants, Number of Directors,
shares related balance conversion and shares held by officers and
Title of issue authorized sheet caption other rights * related parties employees Others
Common Shares 5,400,000,000 4,945,197,291 5,966,559 2,338,395,880 68,252,333 2,538,549,078
Preferred A Shares 60,000,000 - - - - -

* Shares granted but not yet exercised

 EXHIBIT B
(List of Subsidiaries)
 LIST OF SUBSIDIARIES

1. BPI Capital Corporation

2. BPI Direct BanKo, Inc., A Savings Bank (BanKo)
3. BPI Asset Management and Trust Corporation operating under the trade name, BPI Wealth
4. BPI International Finance Limited
5. BPI Europe Plc
6. BPI Securities Corp.
7. BPI Payments Holdings Inc. (BPHI)
8. Filinvest Algo Financial Corp.
9. BPI Investment Management, Inc
10. Santiago Land Development Corporation
11. BPI Computer Systems Corp.
12. BPI Forex Corp.
13. BPI Remittance Centre (HK) Ltd.
14. BPI Wealth Singapore Pte Ltd
15. First Far East Development Corporation
16. FEB Stock Brokers, Inc.
17. FEB Speed International
18. Ayala Plans, Inc.
19. FGU Insurance Corporation
20. BPI/MS Insurance Corporation
 EXHIBIT C
(Top 20 Stockholders)
 BPI STOCK TRANSFER OFFICE
BANK OF THE PHILIPPINE ISLANDS
TOP 20 STOCKHOLDERS
AS OF DECEMBER 31, 2023

RANK STOCKHOLDER NAME OUTSTANDING SHARES PERCENTAGE TOTAL

1 AYALA CORPORATION 1,515,177,839 30.6394% 1,515,177,839

2 PCD NOMINEE CORPORATION (NON-FILIPINO) 964,331,662 19.5004% 964,331,662

3 PCD NOMINEE CORPORATION (FILIPINO) 870,758,949 17.6082% 870,758,949

4 LIONTIDE HOLDINGS INC. 823,218,041 16.6468% 823,218,041

5 ROMAN CATHOLIC ARCHBISHOP OF MANILA 357,297,439 7.2251% 357,297,439

6 ROBINSONS RETAIL HOLDINGS, INC. 162,028,250 3.2765% 162,028,250

7 MICHIGAN HOLDINGS, INC. 100,993,230 2.0422% 100,993,230

8 BPI - ESPP 2021 9,913,450 0.2005% 9,913,450

9 MERCURY GRP. OF COMPANIES, INC 8,339,940 0.1686% 8,339,940

10 BPI - ESPP 2022 8,208,700 0.1660% 8,208,700

11 ESTATE OF VICENTE M. WARNS 8,160,037 0.1650% 8,160,037

12 BPI ESPP 2023 7,767,610 0.1571% 7,767,610

13 BPI - ESPP 2019 4,627,240 0.0936% 4,627,240

14 SOCIAL SECURITY SYSTEM 4,554,911 0.0921% 4,554,911

15 BPI GROUP OF COMPANIES RETIREMENT FUND 4,548,420 0.0920% 4,548,420

16 XAVIER P. LOINAZ AND/OR MA. TERESA J. LOINAZ 4,255,918 0.0861% 4,255,918

17 HERMANN BARRETTO WARNS 3,135,572 0.0634% 3,135,572

18 SAHARA MANAGEMENT AND DEVELOPMENT 2,952,394 0.0597% 2,952,394

CORPORATION
19 BLOOMINGDALE ENTERPRISES INC 2,925,927 0.0592% 2,925,927

20 SOCIAL SECURITY SYSTEM ASSIGNED TO EMPLOYEES 2,905,959 0.0588% 2,905,959

COMPENSATION FUND
4,866,101,488

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 EXHIBIT D
(Statistical Report by Sharelots)
 Page 1 of 1

USER ID : SK192045

STATISTICAL REPORT BY SHARELOTS

BANK OF THE PHILIPPINE ISLANDS

As of December 31, 2023
SHARE LOTS NUMBER OF STOCKHOLDERS ISSUED SHARES

1 - 100 1,571 56,169

101 - 500 3,942 1,043,784
501 - 1,000 1,799 1,283,795
1,001 - 5,000 3,021 6,423,102
5,001 - 10,000 544 3,781,934
10,001 - 50,000 601 12,802,036
50,001 - 100,000 115 7,960,351
100,001 - 500,000 127 26,767,205
500,001 - 1,000,000 16 11,745,833
1,000,001 - 5,000,000 12 37,137,935
5,000,001 - 10,000,000 5 42,389,737
10,000,001 - 50,000,000 0 0
50,000,001 - UP 7 4,793,805,410
GRAND TOTAL 11,760 4,945,197,291