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 N O R T H E X C H A N G E , T O W E R 1

A Y A L A A V E . C O R N E R S A L C E D O S T .

L E G A S P I V I L L A G E , M A K A T I C I T Y

Atty. Angela Pilar B. Maramag (632) 8246-5902

Contact Person Company Telephone Number

1 2 3 1 1 7 - A 0 4 2 8
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

12,084
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) 8246-5902
December 31, 2021
SEC FORM 17-A

AMENDMENT DESIGNATION

FOR THE PERIOD ENDED DECEMBER 31, 2021

(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, 2021

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. AYALA NORTH EXCHANGE TOWER 1

Ayala Avenue corner Salcedo St., Legaspi Village
Makati City ZIP Code 1229
Address of principal office Postal Code

8. (632) 8246-5902
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 4,513,128,255

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 01/03/22 as of 01/01/22
4,513,128,255 P91.05 P 410,920,327,617.75

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 170-year-old Bank of the Philippine Islands (“BPI”) is the first bank in the Philippines and Southeast Asia, and 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 second 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 consummated 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.

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.
 5

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.

Also 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.

BPI 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 (2019-2021). On November 20, 2019, BPI Investment Management Inc. ("BIMI"), a wholly owned
subsidiary of BPI, and PhilAm Asset Management, Inc. (“PAMI”) first announced the agreement to transfer the
management of funds. Effective January 29, 2020, BIMI assumed the management and distribution of nine mutual funds
previously managed by PAMI.

Also, in November 2020, the Bank announced that Tokyo Century Corporation (“TCC”) has decided to acquire an
additional 2% of the issued shares of BPI Century Tokyo Lease & Finance Corp (“BPI CTL”), which will increase their equity
stake to 51%.

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

Principal Subsidiaries. The Bank’s principal subsidiaries are:

a) BPI Family Savings Bank, Inc. (“BFSB”) is BPI’s flagship platform for retail lending, in particular, housing and auto
loans. It is also one of BPI’s primary vehicles for retail deposits. BFSB was acquired by BPI in 1985. In January 2021,
the Bank announced BPI’s merger with BFSB, with BPI as the surviving entity. The merger took effect on January 1,
2022;

b) 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.

c) 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.;

d) BPI International Finance Limited (“BPI IFL”), originally established in August 1974, is a deposit-taking company
authorised 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;

e) 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
 6

Parent Bank following this;

f) BPI (Europe) Plc (“BPI Europe”) is a UK-licenced bank authorised 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;

g) 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;

h) BPI Asset Management and Trust Corporation (“BPI AMTC”) is a Stand Alone Trust Corporation (SATC) serving both
individual and institutional investors with a full suite of local and global investment solutions. BPI AMTC commenced
operations on February 1, 2017;

i) BPI Investment Management Inc. (“BIMI”) is a wholly owned subsidiary of the Bank and serves as the Bank’s fund
manager, investment advisor and principal distributor 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 71% 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 29% of net revenues.

Foreign Offices Contribution

2019 2020 2021

Share in Total Revenue (%) 0.47 0.42 0.68
Hong Kong 0.31 0.27 0.49
USA (0.00) 0.00 0.00
Europe 0.16 0.15 0.18
Share in Total Net Income (%) (0.28) (0.05) 0.66
Hong Kong (0.32) (0.14) 0.54
USA (0.06) 0.00 0.00
Europe 0.09 0.10 0.12

Distribution Network

BPI has 869 branches across the country, including 5 express banking centers (EBC), as of end-2021. EBCs are branches
much smaller than traditional full-service branches, but are fully equipped with terminals allowing direct electronic
access to product information and customers’ accounts, as well as processing of self-service transactions. EBCs serve as
sales outlets in high foot traffic areas such as supermarkets, shopping malls, transit stations, and large commercial
establishments. With the decline in over-the-counter transactions and the shift to digital, the Bank has also begun branch
 7

network optimization by co-locating 56 branches for cost efficiency and higher productivity, resulting in 813 physical
locations nationwide. Additionally, there are 307 BPI Direct BanKo branches and Branch-Lite Units (BLUs) set up in
strategic locations in the country. Overseas, BPI has one (1) Hong Kong office (BPI IFL) and two (2) BPI Europe offices in
London.

BPI maintains a specialized network of overseas offices to service Filipinos working abroad. To date, BPI has three (3)
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 25 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.

BPI’s ATM network has a total of 2,457 terminals as of end-2021, of which 2,117 are ATMs and 340 are Cash Accept
Machines (CAMs). This complements the branch network by providing cash related banking services to customers at any
place and time of the day. In addition, the interconnection with Bancnet gives BPI cardholders access to over 20,000
ATMs across the country. BPI’s ATM network is likewise interconnected with Mastercard, China Union Pay (CUP), JCB,
and Visa. Through the Bank’s extensive physical and digital networks, the Bank provides a broad range of value-added
services to its clients, enhancing convenience and self-service capabilities, as well as greater accessibility.

BPI’s retail digital platforms (BPI Online and BPI Mobile) provide clients a reliable, safe and intuitive digital banking
experience. This translates to an ultimate convenience through quick and paperless transactions anytime, anywhere.
Aside from the standard banking features (i.e. account inquiry, funds transfer, bills payment), the digital platforms have
introduced a new set of innovative features and services. Here are the new features introduced in 2021:

 Improved Device Registration and risk-based authentication. Device registration is authenticated through a unique,
pre composed Secure SMS. They also transitioned features such as Load E-wallet, Load Prepaid Phone and Enroll
account for 3rd party transfers to be Mobile Key-only;
 Lock My Access and self-service User ID Retrieval center on security while keeping customer experience in mind;
 New-to-bank digital account opening is launched to deliver a seamless journey while keeping the quality of accounts
onboarded;
 Sending/receiving money via QR, email, or mobile number to/from other banks expands our presence in the funds
transfer space;
 Enrolling of 3rd party accounts is faster on the app and approved using Mobile Key;
 More deposit product options available on the app via the New-to-Product account opening (in USD currency);
 Virtual preferred privilege card for Preferred clients can be viewed and saved from the app;
 Targeted offers through BPI Online made applying for a new BPI Credit Card much faster without the hassle of forms
with an automated in-app notification center.

BPI Phone Banking provides clients with 24/7 self-service banking facilities and a gateway to get live support through the
Bank's Contact Center. Using any phone, customers can call (+632) 889-10000 to inquire about their account balances
and latest transactions, transfer funds to other BPI accounts in real time and pay for their various bills. Concerns and
queries on any of BPI's products and services are addressed by the highly-trained Phone Banking Specialists any time,
any day.

Competition

With 46 universal and commercial banks operating in the Philippines as of December 31, 2021, 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.
 8

According to industry data on Philippine banks, BPI is second largest in terms of loans and deposits among private
universal banks, with market shares of 14% and 12%, respectively, as of December 31, 2021, and second largest in terms
of asset management and trust with market share of 17% as of December 31, 2021. 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., BFSB, 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) Express Credit, BPI Credit and BPI Credit Cards, for its credit cards
d) Express Cash, My ePrepaid, and BPI ePay, for its prepaid cards
e) BPI Phone Banking, for its contact center facility
f) BPI Online, for its internet-based transaction platform for retail customers
g) BPI Mobile, for its mobile banking facility
h) Bizlink, for its internet banking platform for business and corporate clients, including the BizLink mobile app
i) Express Collect, for its corporate deposit-related services

At BFSB, the product trademarks include the BPI Family Housing Loan with Build Your Dream, and Pay-hinga variants, the
BPI Family Auto Loan with Drive Your Dream Auto Loan variant. Other product brands of BPI, BFSB and BanKo are
Jumpstart, PondoKo Savings, Maxi-One, Save-up, Advance Savings, Maxi-Saver, Saver Plus, Pamana Savings Account,
Pamana Padala, Padala Moneyger, Plan Ahead, SME Term Loans, BPI Personal Loan, and BanKo NegosyoKo Loan.

All BPI’s trademark registrations are valid for 10 years with years of expiration varying from year 2021 to 2030.
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 BFSB and BanKo have savings
bank/thrift bank licenses. BPI Capital has an Investment House license engaged in dealing Government Securities and as
Mutual Fund Distributor. BPI AMTC has a trust license, securities custodian license and is a PERA-accredited administrator
while BIMI has an investment company adviser license, mutual fund distributor license, and is a registered transfer agent.
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 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, 2021,
DOSRI loans amounted to 1.0% of loans and advances as per Note 25, 31, and 32 of the 2021 audited consolidated
financial statement.
 9

Government Regulations (2019-2021)

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
Amendments to the BASEL III:
 Framework on Liquidity Standards –
No. 1034 NSFR
March 15, 2019 April 6, 20191
No. 1035  Liquidity Coverage Ratio Framework
and Minimum Liquidity Ratio
Framework
Reduction in Reserve Requirements:
No. 1041 May 29, 2019 May 31, 2019  100 basis points to 17%
June 28, 2019  50 basis points to 16.5%
July 26, 2019  50 basis points to 16%
No. 1056 October 22, 2019 November 1, 2019  100 basis points to 15%
December 3, 2019 December 6, 2019
No. 1063  100 basis points to 14%

Guidelines on the Management of

Interest Rate Risk in the Banking Book
No. 1044 August 6, 2019 August 27, 20191
and Amendment of the Guidelines on
Market Risk Management
Amendments to the Framework for
No. 1051 September 27, 2019 October 17, 20191 Dealing with Domestic Systemically
Important Banks (D-SIBs)
Reduction in the Reserve Requirement of
No. 1054 October 11, 2019 November 1, 2019
Bonds to 3%
Adoption of a National Quick Response
No. 1055 October 17, 2019 November 5, 20191
(QR) Code Standard
Moratorium on the lssuance of Long-
No. 1059 November 15, 2019 January 1, 2021 Term Negotiable Certificates of Time
Deposit (“LTNCDs”)
Amendment to the Definition of a Deposit
No. 1061 November 25, 2019 December 17, 20191
Substitute
Amendment of the Requirements on the
No. 1062 November 26, 2019 December 17, 20191 lssuance of LTNCTDs, Bonds and
Commercial Papers
Amendments to the Disclosure
No. 1067 December 13, 2019 January 4, 20201 Requirement on Interest Rate Risk in the
Banking Book
Key Policy Rate Cuts:
Monetary Policy May 9, 2019 May 10, 2019  25 basis points to 4.50%
Decisions August 8, 2019 August 8, 2019  25 basis points to 4.25%
September 26, 2019 September 27, 2019  25 basis points to 4.00%
Amendments to Regulations on Financial
No. 1074 February 7, 2020 February 22, 20201
Audit of Banks
 10

Amendments on Credit Information

No. 1077 February 26, 2020 March 12, 20201 System (CRIS) and Approval/Renewal of
the line
Reduction in Reserve Requirements:
No. 1082 March 31, 2020 April 3, 2020  200 basis points to 12%
No. 1092 July 27, 2020 July 31, 2020  Retained to 12%
Approval of Sustainable Finance
No. 1085 April 29, 2020 May 14, 20201
Framework
Amendments to the Risk-Based Capital
No. 1084 April 28, 2020 May 13, 20201 Adequacy Frameworks for Banks/Quasi-
Banks
August 20, 2020 September 4, 20201 Amendments to the Real Estate Limits of
No. 1093
Banks
Amendments to the Ceiling on Interest or
No. 1098 September 24, 2020 November 3, 2020 Finance Charges for Credit Card
Receivables
Guidelines on the Establishment of
No. 1105 December 2, 2020 December 17, 20201
Digital Banks
Guidelines for Virtual Asset Service
No. 1108 January 26, 2021 February 9, 20211
Providers (VASP)
Amendments to the Rules and
Regulations on the Mandatory Credit
No. 1111 March 3, 2021 March 18, 20211 Allocation for Agriculture and Agrarian
Reform Credit, “The Agri-Agra Reform
Credit Act of 2009”
Amendments to Operational Risk
No. 1112 April 8, 2021 April 23, 20211 Management and Internal Control
Measures
Amendments to Operational Risk
No. 1113 April 16, 2021 April 23, 20211 Management and Internal Control
Measures
Amendments to the Guidelines on
No. 1114 April 16, 2021 April 23, 20211 Recovery Plan of a Domestic Systemically
Important Bank (D-SIB)
Implementation of R.A. No. 1153,
No. 1117 May 27, 2021 June 4, 2021 "Financial Institutions Strategic Transfer
(FlST) Act”
Environmental and Social Risk
No. 1128 October 26, 2021 November 10, 20211
Management Framework
Amendments to Corporate Governance
No. 1129 November 12, 2021 December 3, 20211 Guidelines for BSP-Supervised Financial
Institutions
BSP Memorandum
Response Plan to Coronavirus Disease
M-2020-006 March 11, 2020 2019
(COVID-19) Epidemic
M-2020-008 March 14, 2020 Regulatory Relief for BSFIs Affected by the
Corona Virus Disease 2019 (COVID-19)
M-2020-011 March 19, 2020 Additional Operational Relief to Manage
the
COVID-19 Situation and its Health and
Safety Risks
Requirement to comply with R.A. No.
11469 or the “Bayanihan to Heal As One
M-2020-017 April 1, 2020 April 1, 2020
Act” and its Implementing Rules and
Regulations
 11

Utilization of Basel III Capital and Liquidity

M-2020-039 May 4, 2020
Buffers
Implementation and requirement to
M-2020-068 September 18, 2020 September 11, 2020 comply with R.A. No. 11494 or
“Bayanihan to Recover As One Act”
Regulatory Treatment of Restructured
Until December 31,
M-2021-056 October 21, 2021 Loans for Purposes of Measuring
2022
Expected Credit Losses
Compliance with BSP Financial Consumer
M-2021-069 December 22, 2021 December 23, 2021
Protection Framework
Moratorium on the Increase in Transfer
M-2021-071 December 28, 2021 December 29, 2021 Fee for InstaPay and PESONet
Transactions

SEC
Sustainability Reporting Guidelines for
MC No. 4-2019 February 15, 2019 March 2, 2019
Publicly-Listed Companies
Rules on Material Related Party
MC No. 10-2019 April 25, 2019 April 27, 2019 Transactions for Publicly-Listed
Companies
Code of Corporate Governance for Public
MC No. 24-2019 December 19, 2019 January 12, 2020
Companies and Registered Issuers
Revised Implementing Rules and
Regulations of Republic Act No. 9856,
MC No. 01-2020 January 20, 2020 February 5, 20201
“Real Estate Investment Trust (REIT) Act
of 2009”
Amendment of the Guidelines on Anti-
Money Laundering and Combating the
Financing of Terrorism for SEC Covered
MC No. 04-2021 March 30, 2021 April 14, 20211 Institutions (“2018 AML/CFT Guidelines”)
and 2020 Guidelines on the Submission
and Monitoring of the Money Laundering
and Terrorist Prevention Program (MTPP)

Tax
Tax Reform for Acceleration and Inclusion
(“TRAIN”).

This is the first package of the

Republic Act2 No. January 1, 2018
December 19, 2017 Comprehensive Tax Reform Program
10963
(“CTRP”), which amends various
provisions of the 1997 National Internal
Revenue Code.
Corporate Recovery and Tax Incentives
for Enterprises (CREATE) Act

Republic Act No. Retroactive to July 1, Reduced the corporate income tax rate
March 26, 2021
11534 2020. from 30% to 25% retroactive to July 1,
2020. This applies to both domestic
corporations and resident foreign
corporations, banks included.
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.
 12

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

2019 (as restated) 1,018.8 1.1
2020 1,303.0 1.3
2021 1,870.7 1.9

Employees

Below is a breakdown of the manpower complement of BPI in 2020 and 2021:

December 31, 2020 Actual December 31, 2021 Actual

Officers Staff Total Officers Staff Total
Unibank 6,825 12,562 19,387 6,646 11,967 18,613
Consumer 4,553 11,093 15,646 3,820 9,353 13,173
Corporate 906 816 1,722 895 582 1,477
Investment 393 193 586 377 142 519
Support 973 460 1,433 1,554 1,890 3,444
Insurance Companies 123 442 565 123 445 568
TOTAL 6,948 13,004 19,952 6,769 12,412 19,181

Majority or 75% 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 was concluded / signed last July 22, 2021, which covers the
period of April 1, 2021 to March 31, 2024.

CBA for BPI Family Savings Bank was concluded/ signed last December 2, 2020. The BFSB CBA covers the period
November 1, 2020 to October 31, 2023.

Enterprise Risk Management

The Bank has an established enterprise risk management (“ERM”) and capital management framework that enables the
Bank to identify, measure, control, and monitor its significant financial and non-financial risk exposures, ensure adequate
liquidity, and set aside sufficient amounts of capital to cover and mitigate such risks. The framework covers traditional
risks that the Bank is exposed to such as credit, market, and operational and information technology (IT) risks, as well as
emerging risks such as environmental and social risks, and reflects the Bank’s internal standards as guided by the
regulatory directives issued by the BSP in promoting effective risk management governance, implementing robust
business continuity and operational resiliency standards that are regularly tested, and performing the internal capital
adequacy assessment and other risk management processes. The Bank’s ERM is anchored on the pillars of:

 Sound risk management governance;

 Value-enhancing risk methods and processes; and
 Risk-intelligent data and technology.

The Bank’s Board of Directors fulfills its risk management function through the Risk Management Committee (“RMCom”),
which defines risk appetite statements at functional risk areas and on enterprise level, 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, in line with
the overall business strategies of the Bank, ensuring that risks are prudently and rationally taken, commensurate with
returns on capital, and within the Bank’s risk appetite. The CRO is supported by the Risk Management Office (“RMO”)
and they actively engage the RMCom, Management and business units to effectively communicate through various
internal channels the Bank’s risk culture, risk awareness campaigns and learning programs, and risk management best
practices.
 13

The Bank’s risk exposures are identified, measured, controlled, and monitored according to three (3) major risk
classifications:

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 approval, management and continuous monitoring of
risk exposures such as borrower (or counterparty) risk, facility, collateral, industry and concentration risks relating to
each loan account. In BPI, the entire credit risk management system is governed by stringent credit underwriting policies
and 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 reviewed as to overall
asset quality, concentration, and utilization of limits. The Bank continuously experiences modest growth in loan volumes,
but is able to manage overall low credit risk and maintain asset quality (as evidenced by generally lower-than-industry
NPLs and adequate reserves cover), and does so in general compliance with regulatory and prudential requirements
relating to credit risk management (including abidance to RPT and DOSRI restrictions, single borrower’s limits, credit risk
concentration, and internal and regulatory stress tests, amongst others).

Market and Liquidity Risks are risks to earnings and capital from adverse movements in risk factors that affect the market
value of 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 metric – 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, 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 conducts
liquidity stress tests which have consistently revealed ample liquidity to meet its financial obligations under both bank-
specific and systemic or market-wide crisis scenarios and periodical testing of an established liquidity contingency
funding plan (“LCFP”). As of end-December 2021, the Bank’s market, IRRBB, and liquidity risk exposures are generally
well within the RMCom-approved risk limits at the BPI Parent and Consolidated levels.

Operational Risks arise from the Bank’s people, internal processes, or from external events such natural disasters or
telecommunication failures that disrupt the Bank’s operations, and which may give rise to adverse legal, tax, regulatory,
or reputational consequences. Information technology risks, which is assumed 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.

As of end-December 2021, 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 in executing the Bank's day-to-day business operations. The Bank is
conscientiously aware of new and emerging industry-wide risks, and duly considers these in regular risk assessments and
in updating the Bank’s risk strategies. Despite the challenges posed by the prolonged COVID-19 pandemic, the Bank
remains operational through the guidance of its Crisis Resiliency Committee (CRCom) and its updated business continuity
playbook, which ensures the health and safety of its employees while also considering the alert level and/or restrictions
imposed by the national government.

For personnel safety and welfare, the Bank continues to fully comply with health and medical guidelines from DOH and
DOLE and maintains lesser density/physical distancing in the corporate offices through work-from-home arrangements
and split operations using the BCP sites, newly established alternate work sites, and/or mobility areas. These ensure
containment in the event of infection and at the same time improve the accessibility of corporate offices to the Bank’s
employees. A significant number of Bank employees were also made “mobile” and given adequate tools to allow work
outside of Bank premises.
 14

As additional precautionary measures, shuttles are continuously provided to employees, movements of personnel within
and across its business offices are limited, and conduct of virtual meetings are enforced. COVID-19 antigen testing for
employees and maintenance personnel who come to the office are likewise continuously being carried out.

While additional expenses are continuously incurred due to COVID-19 related expenses, the Bank is sufficiently
capitalized and has more than adequate reserves for operational risk events.

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 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, Corporate Governance, Anti-Money
Laundering Compliance and FATCA Compliance, Compliance 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 evolves 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 the accountability to it of 26 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. 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
 15

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

We have a Customer Assistance Program (CAP), 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 designated Customer Assistance Officers
(CAOs) have undergone onsite training so that they are equipped to address customer issues and ensure compliance
with the Bank’s Consumer Protection Program. There is a continuous information and education campaign on the
Financial Consumer Protection (FCP) Program to help propagate awareness. Since 2018, CXMO continuously conducted
roll-outs and on-site training on FCP and alignment meetings with the CAOs in various business areas.

As part of the FCP Program, a Customer Feedback Database was created in 2017. This is continuously developed and still
currently in use to strengthen the role of the frontliners in addressing and reporting customer issues. The complaints
data gathered is a vital tool in identifying areas of concern and process improvements.

In July 2020, CXMO was changed to Client Experience Center (CXC) and the re-organization integrated all the major
customer touchpoints which is part of the Bank’s next phase of its transformation journey as we refocus our efforts on
customer experience. CXC is composed of Contact Center, Customer Care, Service Quality and Governance. The Service
Quality unit conducts a Service Quality Review (SQR), where various business units present their performance updates
on their defined service quality goals. Business process improvements are discussed here to deepen customer
engagement and address specific customer needs. 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 discussed in the Service Quality Review (SQR) appropriate service improvements and customer satisfaction.

As part of our CAP, different touch points or channels are in place where clients can file their feedback. These include
our Contact Center via phone, e-mail, and social media accounts, Customer Care, branches, and the business units. Our
employees are guided by the internal bank policies in handling complaints and CAP where client feedback, specifically
complaints, are classified with corresponding turn-around-time which are responded accordingly.

We continuously track and monitor customer issues and feedback concerning our products and services. Action plans
were implemented to ensure that the most pressing and important issues raised by clients were resolved within the
committed turnaround times. Compliance rate for complaints resolution to our internal turnaround time was 96.75% in
2021, up from 90.53% in 2020. As of year-end 2021, 98.86% of complaints received have been resolved. The enterprise-
wide complaint report is regularly reported to BPI Management. Complaint intensity decreased by 13% from 2020 to
2021. This is calculated as every one complaint per 1,000 transactions.

Since the establishment of the Framework in 2017, we have fully complied with product and service information and
labeling regulations and/or voluntary codes. In 2021, there were no confirmed incidents of non-compliance.

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
 16

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 re-development 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 the Ayala North Exchange Tower 1, Ayala Avenue
corner Salcedo St., Legaspi Village, Makati City and BPI Buendia Center, located at Sen. Gil J. Puyat Avenue, Makati City. The
remaining business and support units have also relocated to various other sites in Makati, San Juan, Quezon City, and
Muntinlupa. Meanwhile, BFSB’s Head Office remains located at BFB Center, Paseo De Roxas, corner Dela Rosa St., Makati
City.

The rest of the business and support units have also temporarily relocated to BPI Buendia Center and various other sites in
Makati, San Juan, Quezon City, and Muntinlupa.

Of the Bank’ 869 domestic branches (excluding BanKo), 458 operate in Metro Manila/Greater Metro Manila Area and 411 in
the provincial area. BPI owns 28% of these branch locations, and leases the 72%. 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, 2021, right-of-use assets and lease liabilities amounted to ₱6,631 million and ₱7,326 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 2021 Audited Financial Statements.

Item 3. Legal Proceedings

The Bank does not have any material pending legal proceedings to which the registrant or any of its subsidiaries or affiliates
is a party or of which any of their property is the subject.

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.
 17

In Pesos
Period
High Low
Year Ended December 31, 2020
1st Quarter 89.00 51.40
2nd Quarter 78.00 57.00
3rd Quarter 75.00 61.00
4th Quarter 88.60 64.50
Year Ended December 31, 2021
1st Quarter 89.00 79.45
2nd Quarter 89.00 80.00
3rd Quarter 89.95 80.30
4th Quarter 95.80 80.50

The high and low prices of BPI at the Philippine Stock Exchange on April 11, 2022 were P100.00 and P97.35, respectively,
with a closing price of P100.00.

Holders of Common Equity

There were approximately 12,084 common shareholders of BPI as of December 31, 2021.

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 Sharelots as of December 31, 2021.

Dividends

The Bank’s practice is to declare cash dividends to its common stockholders on a regular basis as may be determined by the
Board of Directors. As its dividend payout history shows, the Bank has consistently paid at least P1.80 per share in annual
dividends; however, 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, 2019, 2020, and 2021 are as follows:

Amount of Dividends
Total
Date Declared Date of Payment Per Share (in Million Pesos)
May 15, 2019 June 19, 2019 0.90 4,056
November 20,2019 December 27, 2019 0.90 4,057
May 20, 2020 June 26, 2020 0.90 4,062
October 21, 2020 November 26, 2020 0.90 4,062
May 19, 2021 June 23, 2021 0.90 4,062
November 17, 2021 December 24, 2021 0.90 4,062

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

Dividend declaration is ultimately 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 is reflected in Note 18 of the 2021 Audited Financial Statements.
 18

Recent Sales of Unregistered or Exempt Securities

Details on shares issued to/subscribed by the Bank’s executives as a result of the Executive Stock Option Plan (“ESOP”) and
the Executive Stock Purchase Plan (“ESPP”) are reflected in Note 18 of the 2021 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 (2019-2021) are shown below:

In Million Pesos 2018 2019 2020 2021 CAGR

Assets 2,085,228 2,205,030 2,233,443 2,421,915 5.1%

Loans (Net) 1,354,896 1,475,336 1,407,413 1,476,527 2.9%

Deposits 1,585,746 1,695,343 1,716,177 1,955,147 7.2%

Capital 248,521 269,577 279,835 293,060 5.6%

Over the past three years, despite the pandemic, the Bank was able to grow total assets by 5.1%, largely funded by deposits
which grew 7.2% annually. Total loan book has exceeded pre-pandemic level and registered a 2.9% three year CAGR as of
2021. The Bank continued to accrete capital from operations at 5.6% three year CAGR.

2019

Total resources reached P2.20 trillion, P119.8 billion, or 5.7%, higher than last year’s P2.09 trillion. Total deposits grew
P109.6 billion, or 6.9% to P1.70 trillion, on the back of growth in time, demand, and savings deposits of 17.6%, 6.1%, and
1.8%, respectively. Deferred credits and other liabilities increased by P4.6 billion, or 10.8%, from the recognition of lease
liabilities on office spaces as part of the Bank’s adoption of PFRS 16: Leases. Manager’s checks and demand draft
outstanding increased by P1.4 billion, or 19.7%, on account of higher volume of manager’s checks issued. Accrued taxes,
interest and other expenses rose by P809 million, or 8.9%, on higher accrued interest payable and accrued expenses. On
the other hand, other borrowed funds decreased by P16.1 billion, or 9.6%, largely due to lower bills payable. Due to Bangko
Sentral ng Pilipinas and other banks decreased by P1.0 billion, or 26.1%, on account of lower tax collected for the Bureau
of Internal Revenues (BIR). Derivative Financial Liabilities declined by P1.0 billion, or 26.1%, due to lower market valuation
of certain derivative products.

Capital funds amounted to P269.6 billion, P21.0 billion, or 8.5%, higher than last year’s P248.5 billion. Surplus contributed
to the capital growth by P20.0 billion, or 15.7%, as a result of accumulated profits net of cash dividend payments. Reserves
likewise increased by P1.0 billion, or 24.7%, representing required appropriation of general loan loss provisions in excess of
PFRS9 loan loss provisions under BSP Circ. 1011. Accumulated other comprehensive loss increased by P263 million, or
12.1%, due to the increase in actuarial losses on defined benefit plan.

On the asset side, loans and advances, net increased P120.4 billion, or 8.9%, led by the growth in the corporate and
consumer segments. Financial assets at fair value through OCI likewise increased P16.7 billion, or 44.9%, due to the net
effect of the increase in the Bank's various holdings in hold to collect and sell debt securities. Due from Other Banks,
increased by P9.9 billion, or 79.2%, due to net increase in the account balances with various banks. Bank premises, furniture,
fixtures and equipment, net increased by P7.5 billion, or 46.1%, as the Bank adopted PRFS 16 which entails the recognition
of Right-of-Use Asset for the Bank’s leased properties and equipment. Financial assets at fair value through profit and loss
increased by P7.4 billion, or 44.2%, due to increase in holdings of securities intended for trading on outlook of lower interest
rates. Cash and other cash items grew P3.7 billion, or 8.5%, on account of higher cash requirement for the period as
compared to year-end 2018. Assets attributable to insurance operations increased by P1.2 billion, or 7.3%, due to higher
securities investments of the Bank’s non-life insurance affiliate. Deferred income tax assets, net grew P1.2 billion, or 13.7%,
on account of the impairment losses setup for the period. Investments in subsidiaries and associates, net increased P1.1
billion, or 19.2%, as a result of higher income from the asset management and trust subsidiaries.

On the other hand, Due from Bangko Sentral ng Pilipinas (BSP) decreased by P18.1 billion, or 8.0% due to lower volume of
placement in BSP deposits and lower reserve requirements. Financial assets at amortized cost decreased by P12.5 billion,
 19

or 4.3%, due to the net effect of the decrease in the Bank's various holdings in hold to collect and sell debt securities.
Interbank loans receivable and securities purchased under agreements to resell declined P11.7 billion, or 34.2%, due to
lower volume of placement in Reverse Repurchase Agreements (RRP) and interbank term loans. Other resources, net was
lower by P6.8 billion, or 30.6%, primarily attributable to lower miscellaneous assets. Assets held for sale, net also declined
P208 million, or 6.2%, due to sale of foreclosed properties.

2020

Total resources reached P2.23 trillion, up P28.41 billion, or 1.3%, from last year’s P2.21 trillion. Total deposits grew P20.83
billion, or 1.2% to P1.72 trillion, on the back of growth in demand and savings deposits of 15.7% and 16.9%, respectively.
Derivative Financial Liabilities increased P2.78 billion, or 96.6%, due to lower market valuation of certain derivative
products. On the other hand, Due to Bangko Sentral ng Pilipinas and other banks decreased by P1.46 billion, or 49.4%, on
account of lower tax collected for the Bureau of Internal Revenues (BIR). Manager’s checks and demand draft outstanding
decreased by P1.19 billion, or 14.4%, on account of lower volume of manager’s checks issued. Accrued taxes, interest and
other expenses lower by P963 million, or 9.8%, on lower accrued interest payable.

Capital funds amounted to P279.84 billion, increased P10.26 billion, or 3.8%, higher than last year’s P269.58 billion. Surplus
contributed to the capital growth by P18.05 billion, or 12.2%, as a result of accumulated profits net of cash dividend
payments. Reserves decreased by P4.69 billion, or 91.9%, representing required appropriation of general loan loss
provisions in excess of PFRS9 loan loss provisions under BSP Circ. 1011. Accumulated other comprehensive loss likewise
increased by P3.46 billion, or 141.9%, due to recognition of lower actuarial losses on defined benefit plan.

On the asset side, loans and advances, net declined P67.92 billion, or 4.6%, due to lower growth mostly across business
segments compared to 2019. However, financial assets at fair value through OCI increased P76.28 billion, or 141.5%,
largely due to the sale of hold to collect debt securities. Due from Other Banks, increased P17.80 billion, or 79.6% while
due from Bangko Sentral ng Pilipinas (BSP) increased P16.14 billion, or 7.8% due to higher volume of placements with
various banks in BSP deposits. Financial assets at fair value through profit and loss increased P13.10 billion, or 54.4%, due
to increase in holdings of securities intended for trading. Deferred income tax assets, net grew P7.82 billion, or 80.6%, on
account of the impairment losses setup for the period. Interbank loans receivable and securities purchased under
agreements to resell increased P7.68 billion, or 34.0%, due to higher volume placements of interbank term loans. Other
resources, net was higher by P1.44 billion, or 9.3%, primarily attributable to higher miscellaneous assets. Assets
attributable to insurance operations increased P935 million, or 5.3%, due to higher securities investments of the Bank’s
non-life insurance affiliate. Investments in subsidiaries and associates, net increased P764 million, or 11.3%, as a result of
higher income from the leasing business.

On the other hand, financial assets at amortized cost decreased P30.45 billion, or 11.1%, due to the net effect of the
decrease in the Bank's various holdings in hold to collect securities. Cash and other cash items was lower by P10.08 billion,
or 21.3%, on account of lower cash requirement for the period as compared to year-end 2019. Bank premises, furniture,
fixtures and equipment, net decreased P4.92 billion, or 20.7%, as the booking of the Right-of-Use Asset for the Bank’s
leased properties and equipment (PFRS 16) decreased from its first recognition in 2019. Assets held for sale, net also
declined P185 million, or 5.9%, due to sale of foreclosed properties and decline in building improvements.

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.
 20

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 was 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.

Asset Quality

The Bank’s loan portfolio mix is broken down into corporates at 76.5%, small and medium enterprises (SMEs) at 4.4%,
consumer at 19.1%, compared to last year’s 76.7%, 4.6%, and 18.7%, respectively.

Allowance for Impairment at P13.13 billion declined P14.87 billion from last year’s P28.00 billion. NPL ratio improved to
2.49% from 2.68% in 2020, which was below the industry average of 4.12%.

Details of the loan portfolio and asset quality are reflected in the 2021 Audited Financial Statements Note 10 and Note
26.1.3.1, respectively.

Funding and Liquidity

Customer deposits account for 92% of BPI’s total funding, while 4% 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 77.0%, while the Loan-to-Deposit Ratio was 75.5%.

For further details on the Bank’s deposits, borrowings, and liquidity, refer to the 2021 Audited Financial Statements Notes
15, 16, and 26.3.1, respectively.

Results of Operations

2019 vs. 2018. In 2019, the Bank’s net income reached P28.8 billion, an increase of P5.7 billion, or 24.8%, from the P23.1
billion recognized in the prior year. This increase was boosted by revenue growth of P15.8 billion, or 20.1%, which was
partially tempered by the increase in operating expenses of P6.5 billion, or 14.8%.
 21

Net interest income stood at P65.9 billion, up P10.1 billion, or 18.1%, on account of the P165.7 billion, or 8.6%, expansion
in average asset base, and 24-basis point expansion in margins.

 Interest income increased P21.4 billion or 26.7%, from previous year’s P80.2 billion. Interest income on loans and
advances increased by P17.7 billion, or 25.6%, on the back of higher average volume and asset yield by P122.8 billion,
and 84 bps, respectively. Interest income on financial assets likewise increased by P3.1 billion also due to higher
average volume and yield of P59.2 billion and 35 bps, respectively. Interest income on deposits with BSP and other
banks increased by P550 million, or 46.8%, due to higher average yield, partially tempered by the decrease in average
volume;

 Interest expense of P35.6 billion, increased P11.3 billion, or 46.4%, driven by the increases in both interest expense
on deposits at P28.9 billion, up P7.3 billion, or 34.1%, and on bills payable and other borrowings at P6.8 billion, up
P3.7 billion, or 118.7%, due to higher average volume and interest cost.

Other income at P28.4 billion, up P5.7 billion, or 25.2%, higher than the P22.7 billion earned in the same period of 2018
primarily from the securities trading gain of P4.0 billion, up P3.3 billion, or 457.7%, due to profit taking on favorable trading
opportunities. Other operating income at P12.0 billion, increased P1.6 billion, or 15.4%, due to higher credit card income
and miscellaneous income. Fees and commissions at P9.1 billion, increased P838 million, or 10.2%, mainly from the higher
service charges.

Other expenses at P50.1 billion, increased P6.5 billion, or 14.8%, due to increased spending of the following:

 Occupancy and equipment-related expenses at P16.1 billion, grew P3.0 billion, or 22.6%, due to the impact of the PRFS
16 implementation and higher technology-related outsourced services costs;
 Compensation and fringe benefits at P17.5 billion, was up P2.2 billion, or 14.2%, on increased manpower complement
for both microfinance and regular branches;
 Other operating expenses at P16.5 billion, also increased P1.3 billion, or 8.8%, primarily from higher costs for
regulatory, marketing, transaction servicing, and outsourced services.

Impairment losses stood at P5.8 billion, which includes specific reserves for the Hanjin exposure.

Provision for income tax at P9.4 billion, up P2.7 billion, or a 40.2% increase from P6.7 billion last year. Current taxes at
P10.0 billion, was higher by P2.6 billion, or 35.6%, attributable to the higher taxable income subject to regular corporate
income tax. Deferred taxes at (P685) million, on account of the higher write-offs for the year.

Income attributable to non-controlling interest increased P28 million, or 11.3%, because of higher income contribution
from the Bank’s non-life insurance affiliates.

Comprehensive Income

Total comprehensive income at P28.8 billion, increased P6.9 billion, or 31.5%, due to increases in both net income before
minority interest by P5.8 billion, or 24.7%, and total other comprehensive income, net of tax effect by P1.4 billion, or
109.9%.

Share in other comprehensive income of associates at P1.3 billion, jumped P2.6 billion, or 200.4%, due to the upward
market valuation of investments of the bancassurance affiliates. Fair value reserve on investments of insurance
subsidiaries, net of tax effect at P545.3 million, increased P945 million, or 236.4%, as a result of higher market valuation of
the bancassurance affiliates’ investment funds. Net change in fair value reserve on FVOCI securities, net of tax effect at
(P51) million, increased P739 million, or 93.5%, on account of higher market valuation of the Bank’s investment securities.
Currency translation differences at (P202) million, decreased P176 million, or 684.6%, on account of the net effect from
cash flow hedging. These increases were partly tempered by the decreases in actuarial gains (losses) on defined benefit
plan, net of tax effect, of P2.0 billion due to change in financial assumption, and share in other comprehensive gain (loss)
of associates of P627 million, due to the remeasurement/fair valuation of BPI-Philam’s liabilities, property, and equipment.
 22

Comprehensive income attributable to non-controlling interest increased P279 million, or 171.8% due to higher market
valuation of the insurance’s subsidiaries’ investments.

The Bank’s income grew at a compounded annual rate of 5.6% in the past three years despite the significantly higher
impairment losses recorded in 2020. Net interest income and non-interest income increased by 7.8% and 9.8%, respectively
while operating expenses grew at a slower rate of 6.4% over the same period.

2020 vs. 2019

On November 18, 2020, the Board of Directors approved the transfer of the Parent Bank’s majority ownership via the sale
of BPI’s 2% share in BPI CTL to TCC, effective December 22, 2020. This resulted in a 49% to 51% ownership structure
between BPI and TCC. The loss of control of the Parent Bank over BPI CTL resulted in the deconsolidation of the finance
lease operations and was presented as a discontinued operation.

Accordingly, the Bank’s net income attributable to equity holders arising from continued operations reached P21.41
billion, decreased P7.39 billion, or 25.7%, from the P28.80 billion recognized in the prior year. This amount is net of the loss
arising from the discontinued operations of (P211) million resulted from the recent transaction. Moreover, the decline in
net income was primarily from the P28.0 billion impairment losses booked for the full year 2020, as the economic
slowdown leads to an increase in non-performing loans. However, total revenues for the year increased by 10.5%, to
P101.92 billion, and operating expenses amounted to P48.15 billion, almost flat compared to previous year, declined -
0.4%.

Net interest income stood at P72.26 billion, up P6.69 billion, or 10.2%, on account of the P119.81 billion, or 5.8%, expansion
in average asset base, and 14-basis point expansion in margins.

 Interest income decreased P4.18 billion, or 4.2%, compared from the P100.49 billion of the same period last year.
Interest income on loans and advances decreased P3.74 billion, or 4.4%, on the back of lower asset yields, down by 84
bps, despite higher average volume by P122.8 billion. Interest income on financial assets likewise decreased P657
million due to lower asset yield, despite higher average volume. However, interest income on deposits with BSP and
other banks increased P222 million, or 12.9%, as both average volume and yield rose by P33.06 billion and 57 bps,
respectively.

 Interest expense of P24.04 billion, decreased P10.87 billion, or 31.1%, on the back of the decreases in both interest
expense on deposits at P18.99 billion, down P9.89 billion, or 34.2%, and on bills payable and other borrowings at
P5.06 billion, down P980 million, or 16.2%, due to higher average volume despite lower interest cost.

Other income at P29.66 billion, up P2.97 billion, or 11.1%, higher than the P26.69 billion earned in the same period of 2019.
The increase was primarily from the net gains on disposals of investment securities at amortized cost at P4.65 billion, up
P4.52 billion, or 3,520.2%, as the Bank sold a portion of debt securities portfolio. Income attributable to insurance
operations also increased P282 million, up 23.1%, to P1.51 billion, due to higher income contribution from the Bank’s life
and non-life insurance affiliates. On the other hand, other operating income at P9.14 billion, decreased P1.13 billion, or
11.0%, due to decline in gain in asset sales and credit card income.
 23

Other expenses at P48.15 billion, decreased P190 million, or 0.4%, due to controlled spending: Compensation and fringe
benefits at P18.01 billion, was up P636 million, or 3.7%, on increased manpower compensation and Bank contribution to
retirement fund;
 Occupancy and equipment-related expenses at P14.61 billion, down P129 million, or 0.9%, due lower rent and utilities
costs;
 Other operating expenses at P15.54 billion, also decreased P697 million, or 4.3%, due from lower costs for advertising
and publicity, and miscellaneous expenses.

Impairment losses stood at P28.0 billion, 5.0x more than the P5.56 billion set aside in 2019, due to pre-emptive provisioning
on anticipated credit loss.

Provision for income tax at P3.91 billion, lower by P5.45 billion, or 58.2%, relative to the P9.36 billion from last year. Current
taxes at P10.75 billion, was higher by P775 million, or 7.8%, attributable to the higher taxable income subject to regular
corporate income tax. Deferred taxes at (P6.84) billion, up 1,003%, on account of the higher provisioning set-up for the
year.

Income attributable to non-controlling interest increased P4 million, or 1.6%, due from higher income contribution from
the Bank’s non-life insurance affiliate.

Comprehensive Income

Total comprehensive income at P18.26 billion, decreased P10.95 billion, or 37.5%, due to decreases in both net income
before minority interest by P7.14 billion, or 24.6%, and total other comprehensive income (loss), net of tax effect by P3.53
billion, to (P3.39) billion. The total comprehensive income was net of the loss arising from the discontinued operations of
P215 million.

Net change in fair value reserve on FVOCI securities, net of tax effect at P643 million, increased P694 million, on account
of higher market valuation of the Bank’s investment securities. On the other hand, loss from remeasurement of defined
benefit obligation increased P1.98 billion, to (P3.38) billion, due to change in financial assumption. Share in other
comprehensive loss of associates at (P1.24) billion, also increased P1.21 billion, due to the lower market valuation of the
life insurance affiliate’s investments securities. Share in other comprehensive income of associates at P640 million, also
decreased P646 million, due lower accumulated fluctuation reserves of the Bank’s insurance affiliate. Fair value reserve on
investments of insurance subsidiaries, net of tax effect at P195 million, declined P350 million, or 64.2%, as a result of
lower market valuation of the insurance subsidiaries’ investment funds. Loss from currency translation differences at
(P238) million, increased P36 million, or 18.0%, on account of the net effect from cash flow hedging.

Comprehensive income attributable to non-controlling interest decreased P127 million, or 28.7% due to lower market
valuation of the insurance’s subsidiaries’ investments.

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. 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 also lower at P10.43 billion, down 13.4%, due to 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.
 24

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.

Key Performance Indicators

 25

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 8.4% and 1.1%, respectively, as a result of the increase in net
income of 11.5%.

Net interest margin (NIM), net interest income divided by average interest bearing assets, was lower at 3.3%
by 19 basis points than the 3.5% in 2020, as asset yields remained low, partially offset by lower cost of funds.

Operating efficiency (cost to income) ratio, the ratio of operating expenses to income, was higher at 52.1%
from 47.2%, driven by lower revenues and higher operating expenses.

Capital adequacy ratio (CAR), the ratio of total qualifying capital to total risk-weighted assets, was lower at
16.7% compared to last year’s 17.1%, as the growth in total risk-weighted assets outpaced the growth of the
qualifying capital. The CET 1 ratio at 15.8%, was also lower than the 16.2% from the same period last year.
Both of the Bank’s capital ratios are above the BSP’s minimum requirement.

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.

Details of the basic quantitative indicators of financial performance are reflected in Note 32 of the 2021 Audited Financial
Statements.

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 reasonably 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.

g) Any seasonal aspects that had a material effect on the financial condition or results of operations

Market Outlook

The Philippine economy expanded by 5.6% in 2021 after contracting by 9.6% in 2020. Economic activity rebounded amid the
easing of restrictions and the improvement in mobility. The availability of vaccines and treatments has contributed to the
recovery of consumer confidence. Household consumption rose by 4.2% in 2021 as e-commerce continued to expand. The
continuous inflow of remittances and the decline in unemployment rate have also provided a boost in consumer spending.
 26

On the other hand, investment spending continues to lag compared to 2019 level but managed to rebound by 19% in 2021.
The private sector has been conservative with its capital expenditures amid the uncertainties of the pandemic and the
upcoming elections. Despite this, imports have already exceeded pre-pandemic level given the demand for raw materials
especially semiconductors. Exports also posted substantial growth in 2021 amid the global boom in manufacturing.

If the growth momentum is sustained, economic output will likely return to pre-pandemic levels by the third quarter of 2022.
A full year growth of 6.5 to 7.5% is expected in 2022 as vaccination hits 70% of the target population and as the economic
activities adjust further to alleviate the impact of COVID-19.

Interest Rate Outlook

Inflation was faster in 2021 at 3.9% compared to 2.4% in 2020 (base year 2018) amid supply constraints and improving
demand causing the local currency depreciate against the US dollar. Looking ahead, favorable base effects could pull down
inflation in the first quarter of 2022. However, average inflation in 2022 is still expected to settle near the 4% target of the
BSP due to existing and emerging inflationary pressures. Oil and electricity prices will likely continue to increase given
expectations of higher demand and tighter supply in the global markets. Furthermore, global supply chain issues may persist
and increase the cost of imported products. The improvement in demand may also exert pressure on consumer prices and
may eventually lead to the depreciation of the Peso.

As a result, the BSP may need to adjust its policy rate to avoid the de-anchoring of inflationary expectations as the policy rate
has remained below inflation for nearly two years. Aside from this, an adjustment may be needed as a response to the rate
hikes of the Federal Reserve. Expectations of tighter dollar liquidity in the coming months might exert pressure on the Peso
and the BSP’s dollar reserves if the policy rate is kept at 2.0%.

Meanwhile, government borrowing is another factor that could push interest rates higher in 2022. With government revenues
still lagging behind expenditures amid the pandemic, the budget deficit will likely remain substantial.

Exchange Rate Outlook

With demand slowly going back to pre-pandemic level, imports will likely exceed exports and remittances in 2022. The
increase in Dollar demand due to rising imports may provide support to the Dollar and cause the Peso to weaken. Aside from
this, rising interest rates in the US may lead to Dollar outflows that could drive the depreciation of the Peso. Expectations of
tighter Dollar supply due to the bond tapering of the Federal Reserve may contribute further to this.

Implications on Business and Strategy

Macroeconomic outlook will significantly impact loan and deposits growth, net interest margins and consequently, revenue
performance.

As heightened during the pandemic, the Banking environment, fundamentals and economics are rapidly changing, with shifts
in consumer behavior, and the rise of new competitors and tech disruptors.

We continue to focus on the long game, shifting in mindset from concentrating on short term performance towards long term
goals. Thus, we have set big strategic aspirations, founded on our analysis of the macro outlook, competitive environment,
regulatory landscape, stakeholder concerns, and other relevant factors, serving as our guide in capturing new opportunities
and managing risks.

We choose to act now with bold moves supported by meaningful investment commitments to future proof our competitive
position and gain market share. This will cement ourselves as a choice investment, attractive to both domestic and offshore
investors.

Over the medium term, these key initiatives are what we set out to achieve. All underpinned by our passion for the customer:

1. Establishing ourselves as the undisputed digital leader in banking;

2. Increasing the share of SME and consumer loans in our loan book;
3. Closing the gap in funding leadership;
 27

4. Redefining the new role of branches; and

5. Promoting sustainable banking
Item 7. Financial Statements

Please refer to Exhibit A for the 2021 Audited Financial Statements as audited by the principal accountant, the Accounting
Firm of Isla Lipana & Co., and signed by the Partner Mr. Zaldy D. Aguirre.

Audit and Audit-Related Fees

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

Fiscal Year Audit Fees Audit-related Fees

2019 paid in 2020 P 18.210 M P 3.559 M
Bond Offerings P 1.250 M P 203.161 K
2020 paid in 2021 P 18.340 M P 3.767 M
Approved for 2021 P 21.010 M -
(not yet paid)

The audit and audit-related fees cover services by the external auditor that are reasonably related to the performance of the
audit 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.

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, 2021)

Following is the list of current directors serving the term 2021 – 2022:

1. JAIME AUGUSTO ZÓBEL DE AYALA

Position
Chairman
Tenure
Appointed Chairman March 2004 to Present
Appointed Vice-Chairman 1995 to March 2004
Appointed a Non-Executive Director March 1990
Board Committee membership
Chairman of the Executive Committee
Member of the Nomination Committee
Age
63, Born 1959
Nationality
Filipino
 28

Career
Mr. Zobel serves in the Board of the following Philippine Stock Exchange (PSE) – listed companies, namely: Chairman of
Ayala Corporation, Chairman of Globe Telecom, Inc. and Integrated Micro-Electronics, Inc., and Vice-Chairman of Ayala
Land, Inc., and AC Energy Corporation (formerly AC Energy Philippines, Inc.). He is also the Chairman of AC Industrial
Technology Holdings, Inc., AC Infrastructure Holdings Corporation and Asiacom Philippines, Inc.; Co-Chairman of Ayala
Foundation, Inc.; Director of AC Ventures Holding Corp., Alabang Commercial Corporation, AC Energy and Infrastructure
Corporation (formerly AC Energy, Inc.), Ayala Healthcare Holdings, Inc., Light Rail Manila Holdings, Inc. and AG Holdings
Limited.
Relevant Skills and Experience
Chairman Jaime Zobel de Ayala has a distinguished track record as an international businessman. Having been the CEO
of Ayala Corporation, a holding company established in 1834, with diverse business interests, a legacy of pioneering the
future and aspirations for sustainable national development, Mr. Zobel has received may honors including: World
Economic Forum Global Leader for Tomorrow in 1995; Emerging Markets CEO of the year in 1998 (sponsored by ING);
Philippine TOYM (Ten Outstanding Young Men) Award in 1999 and Management Association of the Philippines
Management Man of the Year Award in 2006. He has a deep understanding of international strategic, commercial and
environmental issues, and gained extensive experience as a member of the board of directors of the companies in the
Ayala Group in the areas of banking, telecommunications, property development, water distribution, health and
education, renewable energy. During his time as Chair, he has been committed to developing and maintaining a strong
dialogue with investors and other key stakeholders and has ensured that their views are considered during Board
discussions and decision-making. He has also demonstrated a strong commitment to ensuring that the highest standards
of corporate governance, ethics and compliance are maintained. Mr. Zobel has a strong commitment to national
development, which is reflected in the thrust of the Ayala Group towards new capacity-building efforts in strategic
sectors such as power and transport infrastructure. In 2007, he received the Harvard Business School Alumni
Achievement Award, the school’s highest recognition. 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.
Outside Interests/Commitments
He is a director of Temasek Holdings (Private) Limited and a member of various international and local business and
socio-civic organizations, 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 and Asia Center Advisory Committee, HBS Board of Dean’s
Advisors, and HBS Asia Advisory Committee. He sits on the board of the Singapore Management University (SMU) and is
the chairman 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 Philippines National Advisory Council. He is the Co-Vice Chairman of the Makati Business
Club, Chairman of Endeavor Philippines, and a trustee emeritus of Eisenhower Fellowships.
Environmental, Social and Governance
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. He was
formerly a chairman of the World Wildlife Fund Philippine Advisory Council.
Education
He received his B.A. in Economics (with honors) from Harvard University in 1981 and completed his MBA at Harvard
Business School in 1987.
Other Philippine Stock Exchange-Listed Companies
Ayala Corporation – Chairman of the Board
Globe Telecom, Inc. – Chairman of the Board
Integrated Micro-Electronics, Inc. – Chairman of the Board
Ayala Land, Inc. – Vice-Chairman of the Board
AC Energy Corporation – Vice-Chairman of the Board
 29

2. FERNANDO ZOBEL DE AYALA

Position
Vice-Chairman
Tenure
Appointed Vice-Chairman April 2013 to Present
Appointed a Non-Executive Director October 1994
Board Committee Membership
Vice-Chairman of the Executive Committee
Chairman of the Personnel and Compensation Committee
Member of the Nomination Committee
He is also a member of the Board of BPI Asset Management and Trust Corporation and Chairman of the Board of Trustees
of BPI Foundation, Inc.
Age
62, Born 1960
Nationality
Filipino
Career
Mr. Zobel has been a director of Ayala Corporation since May 1994 and President and Chief Executive Officer from April
2021 to present.
Relevant Skills and Experience
Vice-Chairman Fernando Zobel de Ayala also has a distinguished track record as an international businessman as the
President and CEO of Ayala Corporation. He is Chairman of Ayala Land, Inc. and AC Energy Corporation (formerly AC
Energy Philippines, Inc.); Co-Vice Chairman of Globe Telecom, Inc. and is a director of Integrated Micro-Electronics, Inc.
and Manila Water Company, Inc.; and an Independent Director of Pilipinas Shell Petroleum Corp, all PSE-listed
companies. He is Chairman of AC International Finance Ltd., Liontide Holdings, Inc., AC Energy and Infrastructure
Corporation (formerly AC Energy, Inc.), Ayala Healthcare Holdings, Inc., Alabang Commercial Corporation, Accendo
Commercial Corp. and Hero Foundation, Inc.; Co-Chairman of Ayala Foundation, Inc. He is the Vice-Chairman of AC
Industrial Technology Holdings, Inc., ALI Eton Property Development Corporation, Ceci Realty Inc., Fort Bonifacio
Development Corporation, Bonifacio Land Corporation, Emerging City Holdings, Inc., Columbus Holdings, Inc., Berkshires
Holdings, Inc. AKL Properties, Inc., AC Ventures Holdings Corp., and Bonifacio Art Foundation, Inc. He is a Director of
LiveIt Investments, Ltd., AG Holdings Ltd., AC Infrastructure Holdings Corporation, Asiacom Philippines, Inc., Ayala
Retirement Fund Holdings, Inc., Altaraza Development, Corporation and Manila Peninsula.
Outside Interests/Commitments
He is a Director of INSEAD Business School and Georgetown University; Member of the International Advisory Board of
Tikehau Capital and of the Hispanic Society Museum & Library International Advisory Council; Vice Chairman of the
Philippine-Singapore Business Council, member of the World Presidents’ Organization and Chief Executives
Organization.
Environmental, Social and Governance
He is a member of Habitat for Humanity International’s Asia-Pacific Development Council; Member of the Board of
Trustees of Caritas Manila, Pilipinas Shell Foundation, and the National Museum, Asia Philanthropy Circle and The
Metropolitan Museum International Council; and Co-Chair of the Tate Museum Asia-Pacific Acquisitions Committee.
Education
He holds a liberal arts degree from Harvard College and a CIM from INSEAD, France.
Other Philippine Stock Exchange-Listed Companies
Ayala Corporation – Vice Chairman and President and Chief Executive Officer
 30

Globe Telecom, Inc. – Co-Vice Chairman of the Board

Integrated Micro-Electronics, Inc. – Director
Ayala Land, Inc. – Chairman of the Board
Manila Water Company, Inc. – Director
AC Energy Corporation – Chairman of the Board
Pilipinas Shell Petroleum Corp. – Independent Director

3. JOSE TEODORO K. LIMCAOCO

Position
Executive Director
Tenure
Appointed Executive Director April 2021 to Present
Appointed Non-Executive Director from February 2019 to April 2021
Board Committee membership
Member of the Executive Committee
Management Committee membership
Chairman of the Credit Committee
Chairman of the Management Committee
Mr. Limcaoco serves as chairman of BPI’s thrift bank, investment bank, asset management, property and casualty
insurance, life insurance, and UK bank subsidiaries, and vice chairman of its leasing and rental, foundation.
Age
60, Born 1962
Nationality
Filipino
Career
From 2015 to 2021, he was a Senior Managing Director and the Chief Finance Officer, Chief Risk Officer, and Chief
Sustainability Officer and Finance Group Head of Ayala Corporation, a PSE-listed company. He was also the President
and CEO of AC Ventures Holding Corp. He was also a Director of several Ayala companies, including publicly listed 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 and the education, energy, infrastructure, industrial technologies, and
healthcare. He was also a director of the company that operates Zalora Philippines. He remains a director of Mynt,
operator of GCash.
Relevant Skills and Experience
Previously, he served as President of BPI Family Savings Bank from 2010-2015 and President of BPI Capital Corporation
from 2007-2010. He has also served as Officer-in-Charge for Ayala Life Assurance, Inc. and as Director and Chairman of
Ayala Plans, Inc.
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. He 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. in Singapore and New York and with BZW Asia.
Outside Interests/Commitments
He is the President of FTL Holdings Corporation and a Director of AC Energy International, Inc. (formerly Presage
Corporation), Olimpia Condo Corporation, Gym & Sports Pte Ltd., Globe Fintech Innovations Inc. and Just For Kids, Inc.,
a family business.
Environmental, Social and Governance
 31

He is a past president of the Rotary Club of Makati West.

Education
He graduated from Stanford University with a BS Mathematical Sciences (Honors Program) in 1984 and from the
Wharton School of the University of Pennsylvania with an MBA (Finance and Investment Management) in 1988.
Other Philippine Stock Exchange-Listed Companies:
None

4. JANET GUAT HAR ANG

Position
Independent Director
Tenure
Appointed Independent Director from May 2021 to Present
Board Committee membership
Member of the Risk Management Committee
Age
62, Born 1959
Nationality
Singaporean
Career
Ms. Janet Guat Har Ang is currently the Chairperson of SISTIC.com and Independent Director at Singapore Press Holdings
(SPH) Limited.
Relevant Skills and Experience
Ms. Ang spent 37 years with IBM Singapore and was a member of the IBM Industry Academy. Her last executive role was
a IBM Vice President, Head of Industry Solutions and Smarter Cities & Industry Solutions for Asia Pacific from 2015 to
2019. Prior to that she was a Managing Director of IBM Singapore from 2001 to 2003 and again from 2011 to 2015. She
is a veteran in the tech industry and has lived and worked in Japan and China for over a decade.
Ms. Ang was awarded The Public Service Medal in 2019. She was also awarded the NUS Business School Eminent Alumni
Award in 2014, the NUS Distinguished Alumni Service Award in 2015 and the Singapore Computer Society IT Leaders
Award – Hall of Fame in 2018.
Outside Interests/Commitments
She is the Deputy Chairman of the Singapore Business Federation Foundation, and Member of the Board of the Esplanade
Company Ltd, and the Home Team Science & Technology Agency (HTX), and the Cenacle Mission Singapore.
Environmental, Social and Governance
She serves as Chairman of the NUS Institute of Systems Science, the Caritas Singapore Agape Fund Board of Trustees,
SISTIC.com and the Singapore Polytechnic Board of Governors.
Ms. Ang serves on the Council for Board Diversity as well as the Singapore Business Federation, and is a Senior Advisor
of the RGE Group and board member of the Tanoto Foundation. 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), and an alumnus of the IBM Industry Academy. She has been appointed as Singapore’s Non-Resident
Ambassador (Designate) to the Holy See and Nominated MP of the Parliament of Singapore.
Education
Ms. Ang graduated with a Bachelor of Business Administration (Honours) from the National University of Singapore
 32

Other Philippine Stock Exchange-Listed Companies:

None

5. RENÉ G. BAÑEZ
Position
Non-Executive Director
Tenure
Appointed Non-Executive Director August 2021 to Present
Board Committee membership
Member of the Executive Committee
Member of the Related Party Transaction Committee
Member of the Retirement and Pension Committee
He is also a member of the Board of Directors of BPI Capital Corporation and BPI Asset Management and Trust
Corporation.
Age
66, Born 1955
Nationality
Filipino
Career
Atty. Bañez served in the government 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. Apart from serving the government,
Atty. Bañez also served in the private sector and held senior level positions in Isla Lipana & Co./PwC (formerly Joaquin
Cunanan & Co.), Metro Pacific Investment Corporation and PLDT. He was a faculty member at the Ateneo de Manila
University College of Law, handling Taxation, from 1990 to 2007.
Relevant Skills and Experience
Atty. Bañez 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. Until his retirement from PLDT 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.
Outside Interests/Commitments
He is a senior lecturer at the Ateneo de Manila School of Law.
Environmental, Social and Governance
He is also 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. He is also a Board Member/Trustee of Radio Veritas Corporation, Pope Pius
Foundation, Catholic Travel Inc., Mirador Jesuit Villa & Retreat House Corporation, Loyola School of Theology
Corporation, and Unitas Asia Corp. (a subsidiary of Radio Veritas Asia).
Education
Atty. Bañez graduated with a Bachelor of Laws degree in 1981 and his Bachelor of Arts degree in 1976 both from Ateneo
de Manila University.
Other Philippine Stock Exchange-Listed Companies:
None
 33

6. ROMEO L. BERNARDO
Position
Non-Executive Director
Tenure
Appointed Non-Executive Director April 2019 to Present
Appointed Independent Director from August 2002 to April 2019
Appointed Non-Executive Director February 1998

Until 2019, he also served as Independent Director of BPI Capital Corporation, BPI/MS Insurance Corporation, BPI-Philam
Life Assurance Corporation and BPI Asset Management and Trust Corporation.
Age
67, Born 1954
Nationality
Filipino
Career
Mr. Bernardo is a former undersecretary of the Department of Finance and founded his consultancy practice, Lazaro
Bernardo Tiu & Associates in 1997.
Relevant Skills and Experience
Mr. Bernardo has been advisor to various multilateral institutions such as the World Bank, International Finance
Corporation, Asian Development Bank, and Japan International Cooperation Agency. He has also worked with
government institutions and the National Economic Development Authority (NEDA) in policy matters involving pension
reform, capital markets reform, and fiscal and debt management.
Outside Interests/Commitments
He is the Chairman of the Board of Directors of the ALFM family of mutual funds. He also serves as a Board Director of
the Management Association of the Philippines and the Finex Foundation.
Environmental, Social and Governance
Mr. Bernardo is a public advocate of good corporate and national governance and frequently writes on the subject in
his capacity as Vice-Chairman and Co-Founder of the Foundation for Economic Freedom and the Philippine Partner of
GlobalSource Partners, Inc., a worldwide network providing insights on emerging markets.
Education
Mr. Bernardo graduated with a B.S. Business Economics degree (magna cum laude), from the University of the
Philippines in 1974. He obtained his M.A. Development Economics (Valedictorian) at Williams College, Williamstown,
Massachusetts in 1977.
Other Philippine Stock Exchange-Listed Companies
RFM Corporation - Independent Director
Globe Telecom, Inc. - Non-Executive Director
Aboitiz Equity Ventures, Inc. – Independent Director

7. IGNACIO R. BUNYE
Position
Lead Independent Director
Tenure
Appointed Independent Director April 2016 to Present
First appointed as lead independent director in April 2021
 34

Board Committee membership

Chairman of the Related Party Transaction Committee
Member of the Corporate Governance Committee
Member of the Personnel and Compensation Committee

He serves as an Independent Director of BPI Asset Management and Trust Corporation and BPI Direct BanKo, Inc., A
Savings Bank, and BPI Capital Corporation.
Age
77, Born 1945
Nationality
Filipino
Career
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 began his government service in the City of Muntinlupa (then a municipality) as officer-in-charge and mayor
between 1986 and 1998. 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.
Relevant Skills and Experience
In earlier years, he worked at the Filipinas Foundation Inc. as Assistant Corporate Secretary from 1970 to 1975, Assistant
Vice President of BPI Investment Corporation from 1976 to 1983 and Assistant Vice President for Corporate Banking and
Treasury at the Bank of the Philippine Islands from 1983 to 1985. He also held various executive positions at the Ayala
Group of Companies, including Assistant Vice President of the Ayala Investment and Development Corporation.
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).
Outside Interests/Commitments
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).
Environmental, Social and Governance
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
(hospital).
Education
Mr. Bunye is a member of the Philippine Integrated Bar. 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.
Other Philippine Stock Exchange-Listed Companies:
None

8. CEZAR P. CONSING
Position
Non-Executive Director
Tenure
Appointed Non-Executive Director April 2021 to Present
Appointed Executive Director April 2013 to April 2021
 35

Appointed a Non-Executive Director February 1995 to January 2000

Appointed Independent Director from August 2004 to January 2007 and from April 2010 to April 2013
He has served on BPI's board of directors for 19 years (1995 - 2000, 2004 - 2007, 2010 - present)
Board Committee membership
Member of the Executive Committee
Member of the Risk Management Committee
Mr. Consing is a member of the board of directors of BPI Asset Management and Trust Corporation, BPI Capital Corporation,
and BPI Direct BanKo, Inc., A Savings Bank.
Age
62, Born 1959
Nationality
Filipino
Career
Mr. Consing served as President and Chief Executive Officer of BPI for eight years from 2013 to 2021, and was also a
Senior Managing Director of Ayala Corporation, BPI’s controlling shareholder. Mr. Consing is the chairman of Philippine
Dealing System Holdings and its three operating subsidiaries, a position he has held since 2019. Mr. Consing is a director
of the following listed companies, namely: Ayala Corporation, Globe Telecom, Inc., and AC Energy Corporation. He is also
a director of the Singapore-listed Yoma Strategic Holdings Ltd. and the Myanmar-listed First Myanmar Investment Public
Company Limited.
Relevant Skills and Experience
Mr. Consing first worked for BPI, in corporate planning and corporate banking, from 1981-1985. He worked for J.P. Morgan
& Co., based in Hong Kong and Singapore, from 1985-2004. He headed the firm's investment banking business in Asia Pacific
from 1997 - 2004, the last five years as President of J.P. Morgan Securities (Asia Pacific) Ltd. As a senior Managing Director
of J.P. Morgan, Mr. Consing was a member of the firm's global investment banking management committee and its Asia
Pacific management committee. Mr. Consing was a partner at The Rohatyn Group from 2004 - 2013, headed its Hong Kong
office and its private investing business in Asia, and was a board director of its real estate, and energy and infrastructure
private equity investing subsidiaries.
Outside Interests/Commitments
Outside his association with BPI and the Ayala Group, Mr. Consing serves on the board FILGIFTS.com, SQREEM Technologies
and Endeavor Philippines. He has also served as an independent board director of the following companies: Jollibee Foods
Corporation (2010 – 2021), CIMB Group Holdings (2006 – 2013), First Gen Corporation (2005 – 2013), and National
Reinsurance Corporation (2014 – 2019), where he also served as Chairman (2018 – 2019).
Environmental, Social and Governance
He has also served on the board of the Hong Kong based Asian Youth Orchestra. He is a board director of the US-Philippines
Society and the Philippine-American Educational Foundation, and a trustee of the College of St. Benilde, La Salle Greenhills,
and the Manila Golf Club Foundation. Mr. Consing has been a member of the Trilateral Commission since 2014.
Education
Mr. Consing received an A.B. Economics degree (Accelerated Program), magna cum laude, from De La Salle University,
Manila, in 1979. Mr. Consing obtained an M.A. in Applied Economics from the University of Michigan, Ann Arbor, in 1980.
Other Philippine Stock Exchange-Listed Companies
Ayala Corporation - Director
AC Energy Corporation – Director
Globe Telecom, Inc. – Director
 36

9. RAMON R. DEL ROSARIO, JR.

Position
Non-Executive Director
Tenure
Appointed Non-Executive Director from April 2020 to Present
Board Committee membership
Member of the Corporate Governance Committee
Member of the Retirement/Pension Committee
Age
77, Born 1944
Nationality
Filipino
Career
Mr. del Rosario is the President and Chief Executive Officer of Phinma Corporation; President and Chief Executive Officer
of Philippine Investment Management, Inc.
Relevant Skills and Experience
He has managed Phinma since 2002 and brings with him a wealth of experience in leading a diversified conglomerate. He is
Chairman of Araullo University, University of Iloilo, University of Pangasinan, Cagayan de Oro College, Southwestern
University, St. Jude College, Republican College, Rizal College of Laguna, Union College of Laguna, United Pulp and Paper
Co., Inc., PHINMA Microtel Hotels, Inc. and PHINMA Hospitality, Inc. He is Vice Chairman of Phinma Foundation, Inc. and
Phinma Property Holdings Corp., director of Philcement Corp. and other PHINMA managed companies.
Outside Interests/Commitments
He is a former Chairman of the Ramon Magsaysay Award Foundation and Makati Business Club, where he remains a Trustee;
and former Chairman of the National Museum of the Philippines.
Environmental, Social and Governance
He is Chairman of Philippine Business for Education; and Vice-Chairman of Caritas Manila and Philippine Business for
Social Progress.
Education
Mr. del Rosario graduated from De La Salle College in 1967 with degrees in BSC-Accounting and AB Social Sciences (Magna
Cum Laude) and from Harvard Business School in 1969 with a Master in Business Administration degree
Other Philippine Stock Exchange-Listed Companies:
Phinma Corporation - President & CEO

10. OCTAVIO VICTOR R. ESPIRITU

Position
Non-Executive Director
Tenure
Appointed Non-Executive Director April 2021 to Present
Appointed Independent Director April 2003 to April 2021
Appointed Non-Executive Director April 2000
Board Committee membership
Member of the Risk Management Committee
Member of the Audit Committee
 37

Age
78, Born 1943
Nationality
Filipino
Career
Mr. Espiritu was the former President and Chief Executive Officer from 1984 to April 2000 of Far East Bank & Trust
Company (FEBTC), a commercial bank established in 1960 which became a publicly-listed company in 1991. In 2000, BPI
acquired FEBTC. He was also the president of the Bankers Association of the Philippines for three consecutive terms from
March 25, 1991 to March 28, 1994. He served as the chairman of the board of trustees of Ateneo de Manila University
for 14 years
Relevant Skills and Experience
Mr. Espiritu was the former Treasurer and President of FEBTC, and was an exemplary Chair for the BPI Risk Management
Committee (RMC) for several years. His expertise in markets, credit as well as banking operations particularly during the
1997 Asian financial crisis and 2008 global financial crisis also serves as a solid grounding for his membership in BPI’s Audit
Committee. During his term as Chair of the RMC, BPI risk management was thrice recognized by international bodies as Risk
House of the Year for the Philippines in 2014, 2018 and 2020 and as Bank Risk Manager in 2020 by Asia Risk and as Asean
Risk Champion at the Asean Risk Awards in 2019.
Outside Interests/Commitments
He is a member of the Board of Directors of 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.
Environmental, Social and Governance
He was the President of the Bankers Association of the Philippines for three consecutive terms from March 25, 1991 to
March 28, 1994. He was also the Chairman of the Board of Trustees of Ateneo de Manila University for 14 years.
Education
Mr. Espiritu 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.
Other Philippine Stock Exchange-Listed Companies:
Manila Water Company, Inc. – Independent Director
Bloomberry Resorts Corporation – Independent Director

11. AURELIO R. MONTINOLA III

Position
Non-Executive Director
Tenure
Appointed Non-Executive Director from April 2013 to Present
Appointed Executive Director from January 2005 to April 2013
Appointed Non-Executive Director from January 2004 to December 2004
Board Committee membership
Chairman of Retirement/Pension Committee
Member of the Executive Committee
Member of the Personnel and Compensation Committee
Among the several BPI subsidiaries and affiliates, Mr. Montinola serves as member of the Board of Directors of the
following: BPI Capital Corporation, BPI Direct BanKo, Inc., A Savings Bank, BPI Family Savings Bank, Inc., BPI/MS Insurance
Corporation, and BPI Foundation, Inc.
 38

Age
70, Born 1951
Nationality
Filipino
Career
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.
Relevant Skills and Experience
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.
Outside Interests/Commitments
Mr. Montinola is also the Chairman of the Roosevelt Colleges, Inc., East Asia Computer Center Inc., and Amon Trading
Corporation.
Environmental, Social and Governance
Mr. Montinola is the Chairman of Ramon Magsaysay Award Foundation and a member of the Board of Trustees of BPI
Foundation Inc. He also sits as Vice-chairman of Philippine Business for Education 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.
Education
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.
Other Philippine Stock Exchange-Listed Companies:
Far Eastern University, Incorporated – Chairman of the Board
Roxas and Company, Inc. – Independent Director

12. ANTONIO JOSE U. PERIQUET

Position
Non-Executive Director
Tenure
Appointed Non-Executive Director April 2021 to December 2021*
Appointed Independent Director April 2012 to April 2021
Board Committee membership
Member of the Executive Committee
Member of the Nomination Committee
Member of the Personnel and Compensation Committee
He is also a director of BPI Family Savings Bank, Inc.
Age
61, Born 1961
Nationality
Filipino
Career
Mr. Periquet spent the early part of his career doing equity research, sales and trading for several firms in London,
eventually joining Deutsche Bank as head of the Asian Equities desk. In 2000, he established Deutsche Regis Partners,
 39

Inc., a joint-venture with Deutsche Bank, which became the largest stockbroker in the Philippines were he as Chairman,
Managing Director & Head-Research.
Relevant Skills and Experience
He also, at one time, served on three government boards: the Development Bank of the Philippines, the DBP Leasing Corp.,
and the Metro Rail Transit Corp.
Outside Interests/Commitments
He is also an Independent Director of Albizia ASEAN Tenggara Fund, Chairman of the Campden Hill Group, Inc. and Pacific
Main Holdings.
Environmental, Social and Governance
He is a trustee of Lyceum University of the Philippines, a member of the finance committees of the Ateneo de Manila
University and the Philippine Jesuit Provincial and a member of the Dean’s Global Advisory Council at the University of
Virginia’s Darden School of Business.
Education
Mr. Periquet graduated from the Ateneo de Manila University with an AB Economics degree in 1982. He also holds a
Master of Science degree in Economics from Oxford University and an MBA from the University of Virginia.
Other Philippine Stock Exchange-Listed Companies
Ayala Corporation – Independent Director
DMCI Holdings, Inc. – Independent Director
Semirara Mining Corporation – Independent Director
Max's Group of Companies – Independent Director
Philippine Seven Corporation – Independent Director
Universal Robina Corporation - Independent Director

* Member of the Board until Dec. 15, 2021 and appointed to the Advisory Council effective Dec. 16, 2021.

13. CESAR V. PURISIMA

Position
Independent Director
Tenure
Elected as Independent Director January 2021 to Present
Board Committee membership
Chairman of the Corporate Governance Committee
Chairman of the Nomination Committee
Member of the Risk Management Committee
Member of the Audit Committee
Board representatives to the BPI IT Steering Committee
Age
62, Born 1960
Nationality
Filipino
Career
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. 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
 40

serving the government, Mr. Purisima was the Chairman & Country Managing Partner of the Philippines’ largest
professional services firm SGC & Co.
Relevant Skills and Experience
Mr. Purisima is a certified public accountant and has extensive experience in public accounting both in the Philippines and
abroad. Apart from his private sector experience, 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. He was conferred the Chevalier dans 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.
Outside Interests/Commitments
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, and a member of the Global Advisory Council of Sumitomo Mitsui Banking Corporation. He
is also a member of the Board of Advisors of ABS-CBN Corporation.
Environmental, Social and Governance
He is a member of Singapore Management University's lnternational Advisory Council in the Philippines He is also a
member of the board of trustees of the World Wildlife Fund- Philippines, De La Salle University, and the International
School of Manila. He is an Asia Fellow at the Milken Institute, a global, non-profit, on-partisan think tank.
Education
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.
Other Philippine Stock Exchange-Listed Companies:
Ayala Land, Inc. – Independent Director
Universal Robina Corporation – Independent Director
Jollibee Foods Corporation – Independent Director

14. ELI M. REMOLONA, JR.

Position
Independent Director
Tenure
Appointed Independent Director April 2019 to Present
Board Committee membership
Chairman of the Risk Management Committee
Age
69, Born 1952
Nationality
Filipino
Career
He is currently a Professor of Finance and Director of Central Banking at the Asia School of Business in Kuala
Lumpur. The school is a collaborative effort with the MIT Sloan School of Management. Until October 2018, Mr.
Remolona was the Chief Representative for Asia and the Pacific of the BIS. He also served as Secretary of the Asian
Consultative Council, which consists of the Governors of the 12 leading central banks in the region. Until 2008, he
was Head of Economics for Asia and the Pacific of the BIS.
 41

Relevant Skills and Experience

Mr. Remolona joined the BIS in 1999 and for 6 years served as Head of Financial Markets in Basel and Editor of the BIS
Quarterly Review. Before that, he was Research Officer of the Federal Reserve Bank of New York. He has extensive policy
experience in financial markets, sovereign risk, international finance, central banking, and monetary policy.
Outside Interests/Commitments
He has taught at Columbia University, New York University, Williams College and the School of Economics of the University
of the Philippines.
Education
Mr. Remolona obtained his Bachelor’s Degree in Economics from Ateneo de Manila University and has a Ph.D. in
Economics from Stanford University.
Other Philippine Stock Exchange-Listed Companies:
None

15. MARIA DOLORES B. YUVIENCO

Position
Independent Director
Tenure
Appointed Independent Director April 2016 to Present
Appointed Non-Executive Director April 2014
Board Committee membership
Chairman of the Audit Committee
Member of the Related Party Transaction Committee
Member of the Personnel and Compensation Committee
Ms. Yuvienco is an Independent Director of BPI Asset Management and Trust Corporation. She is also Chairman of the
AMTC Corporate Governance Committee and member of the AMTC Risk Oversight Committee
Age
74, Born 1947
Nationality
Filipino
Career
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.
Relevant Skills and Experience
Her exposure at the BSP was largely in bank supervision where her responsibilities ranged from the crafting of
policies/regulations on banking supervision to onsite 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. She is a Certified Public Accountant and a Career Executive Service Professional.
Outside Interests/Commitments
In April 2018, Ms. Yuvienco was elected as Independent Director of First Consolidated Bank (Thrift Bank), and was chosen
to chair the Nomination and Governance Committee.
Environmental, Social and Governance
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.
 42

Education
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.
Other Philippine Stock Exchange-Listed Companies:
None

*Independent Director as defined in Sec. 38 of the Securities Regulation Code and BSP Circular Nos. 296 and 749.

Per Article V of the Amended By-Laws of the Bank, all nominations for election of Directors by the stockholders shall be
submitted in writing to the Board of Directors through the Corporate Secretary, together with the written acceptance of
the nominee, not later than the date prescribed by law, rules and regulations or at such earlier or later date as the Board
of Directors may fix. No nominee shall qualify to be elected as Director unless this requirement is complied with. In
accordance with this, the nominations are subsequently processed and evaluated by the Nomination Committee of the
Bank in a meeting called for that purpose in compliance with SRC Rule 38.

The Executive Officers

Officers of BPI as of December 31, 2021

1. JOSE TEODORO K. LIMCAOCO*

President & Chief Executive Officer

[Please see above.]

*Member of the Board of Directors of BPI

2. MARIA THERESA D. MARCIAL

Executive Vice President & Chief Finance Officer

Ms. Marcial, 51 years old, Filipino, heads BPI’s Strategy and Finance Group and is also the Bank’s Chief Sustainability
Officer. She is responsible for strategic planning and sustainability, central accounting, financial control, balance sheet
management and analytics, corporate legal affairs, strategic management and sales of bank assets, and investor
relations. She chairs the Finance Committee.

Ms. Marcial is a board director of BPI MS Insurance Corporation, BPI Europe Plc, AF Payments Inc, and BPI Global
Payments Asia Pacific Philippines Inc. She is a fellow of Foundation for Economic Freedom, trustee and treasurer of World
Wide Fund for Nature (WWF) Philippines, member of WWF Asia Pacific Council, treasurer of BPI Foundation, and board
director of the Philippines Inter-Island Sailing Federation.

She joined BPI in 1995 through the Bank Officers Development Program. She has 27 years of banking experience with
expertise in strategic planning and finance, corporate banking, debt and equity capital markets, portfolio management,
trust, and retail wealth management. She previously served on the BPI Trust Committee and the board of BPI Investment
Management Inc. Prior to her banking career, she worked for the National Economic and Development Authority, and
the Agricultural Policy Credit Council.

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, alternate governor
of the Market Governance Board of Philippine Dealing and Exchange Corporation, and member of the National Advisory
Council of WWF Philippines. She was recognized as one of Top 25 Most Influential Women in Asset Management in Asia
by Asian Investor and Most Outstanding Alumnus of the University of the Philippines Los Baños.

Ms. Marcial obtained her Master’s Degree in Economics in 1995 from the University of the Philippines Diliman and BS
Economics, cum laude, from the University of the Philippines Los Baños in 1990. She completed the Advanced
Management Program at Harvard Business School in 2010 and the CFA Institute Investment Management Workshop also
at Harvard Business School in 2006.
 43

2. RAMON L. JOCSON
Executive Vice President & Chief Operating Officer

Filipino, 62 years old, Mr. Jocson heads BPI’s Enterprise Services Group which serves as the backbone of the
organization that includes Human Resources, Centralized Operations, Information Systems, Digital Channels,
Business Transformation & Data Science, Facilities Services, and Client Experience Center. He also chairs the Bank’s
IT Steering Committee.

He is also currently the Vice Chairman of the CyberSecurity Committee of the Bankers Association of the Philippines
and a Member of Yoma Bank’s (Myanmar) Technology Advisory Committee.

Mr. Jocson began his career as a Systems Analyst with IBM Manila in 1982, subsequently assumed different positions,
including Information Systems Manager, Systems Engineering Manager and Manager of Quality. In 1995, he was
assigned in Singapore where he led IBM’s Applications/Systems Integration business in ASEAN and South Asia. In
1996, he was appointed as Managing Director for IBM Philippines. In 2000, he took on a new assignment as Vice
President and GM of IBM Global Services, ASEAN and South Asia. He was then appointed as Vice President and GM
of IBM Global Services for Industrial Sector for Asia Pacific in 2005. Two years later, in 2007, he took on the role of
Vice President and GM of Application Services for the Growth Market Unit, where he led IBM’s Applications
Management and Application Integration Services in Asia Pacific, Central and Eastern Europe, Latin America and
Middle East/ Africa. He was then appointed as VP & GM of Integrated Technology Services for Asia Pacific in 2010.
In 2013, he was appointed as VP & GM of IBM Global Services for Central and Eastern Europe based in Prague, Czech
Republic. In this capacity, he was responsible for IBM’s services portfolio in Russia/CIS, Turkey, Poland & Baltics,
Central Europe and South East Europe. From January 2015 until he joined BPI in September 2015, he was in
Singapore IBM Asia Pacific VP & GM for Strategic Outsourcing which catered to major regional banks, telcos and
airlines as major clients. He was also a member of IBM’s Growth & Transformation Team, which is composed of the
top senior leaders in IBM which worked directly with the Chairman on key/strategic initiatives. He has served on
several external boards, including the Economic Development Board of Singapore, Philamlife and iPeople.

Mr. Jocson graduated with a B.S. Industrial Engineering degree from the University of the Philippines Diliman in 1982
and obtained his MBA from the Ateneo Graduate School of Business.

3. MARIE JOSEPHINE M. OCAMPO

Executive Vice President

Filipino, 59 years old, Ms. Ocampo, as Head of the Mass Retail Segment of the Bank, oversees BPI’s credit, debit
and prepaid card portfolios, personal loans and microfinance businesses.

Ms. Ocampo is currently the Chairman of the Board of BPI Direct BanKo, the Bank’s micro-finance subsidiary. She is
a member of the Board of BPI Payments Holdings Inc., Global Payments Asia Pacific Philippines, Inc., AF Payments
Inc., Zalora Philippines, 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
took the position of President for BPI Card Corporation, the Bank’s credit card subsidiary where she 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 retooling the Bank’s data warehouse
and customer analytics capabilities into its distinct competitive advantage.

Ms. Ocampo also developed the Bank’s CRM initiatives on top of driving the Bank’s advertising and digital initiatives
across the breadth of products, channels, and services. In 2015, she became the Payments and Remittance group
head, and was tasked to grow fee revenue via expanding existing businesses and developing new payment platforms.

Prior to joining BPI, Ms. Ocampo gained over 10 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.
Ms. Ocampo graduated magna cum laude and received her Bachelor of Science in Business Management, Honors
 44

Program at Ateneo de Manila University. She also completed the Advanced Management Program at the Harvard
Business School in 2007.

4. JUAN CARLOS L. SYQUIA

Executive Vice President

Filipino, 55 years old, Mr Syquia as Head of Corporate Banking is responsible for managing the Corporate Banking
Relationship Management, Corporate Credit Products, Transaction Services (Cash Management and Trade),
Remittance and Fund Transfer, Investment Banking (BPI Capital Corporation) and Equity Brokerage (BPI Securities
Corporation). He is also a member of the Board of Directors of BPI’s merchant acquiring joint venture company,
Global Payments Asia-Pacific Philippines Incorporated and Medicard Philippines Inc. Prior to taking on this role in
2018, he was the President of BPI Capital Corporation and Co-Head for Investment Banking for the Bank. He has over
30 years of work experience in the financial services industry.

Prior to joining BPI Capital Corporation in June 2016, Mr. Syquia was the 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 the Head of Corporate Finance at ING Bank Manila.
In 2007, he moved to a regional role 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 (then based in Hong Kong). 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 Cebu where he formed part of a two-man team that established the Corporate
Banking Division desk in Cebu. He holds a MBA Degree (Honors) with a 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.

List of Other Executive Officers as of December 31, 2021

NAME AGE POSITION OFFICE

Abola, Joaquin Ma. B. 55 Senior Vice President Enterprise Services
Alonso, Joseph Anthony M. 56 Senior Vice President Chief Credit
Ang, Olga S. 60 Senior Vice President Consumer Banking
Asis, Ma. Cristina F. 51 Senior Vice President Chief Risk
Cariaso, Reginaldo Anthony B. 54 Senior Vice President Corporate Banking
Chuidian, Tomas S. 55 Senior Vice President Wealth Management
Cruz, Luis Geminiano E. 52 Senior Vice President Corporate Banking
Cruz, Rosemarie B. 59 Senior Vice President Chief Risk
Eala, Maria Virginia O. 54 Senior Vice President Enterprise Services
Fernandez, Rinaldo H. 56 Senior Vice President Global Markets
Galvez, Marwin L. 42 Senior Vice President Consumer Banking
Garcia, Maria Paz A. 55 Senior Vice President Chief Risk
Gasmen, Dino R. 55 Senior Vice President Global Markets
Gatmaytan, Ma. Lourdes P. 53 Senior Vice President Strategy and Finance
Gayares, Marita Socorro D. 60 Senior Vice President Chief Risk
Go, Raymond H. 56 Senior Vice President Corporate Banking
Gomez, Jesus Angelo O. 47 Senior Vice President Mass Retail
Jereza, Jose Raul E. IV 50 Senior Vice President Consumer Banking
Lacerna, Jenelyn Z. 56 Senior Vice President Mass Retail
Luchangco, Eric Roberto M. 51 Senior Vice President Business Bank
Lukban, Maria Consuelo A. 57 Senior Vice President Strategy and Finance
 45

Marquez, Pilar Bernadette C. 1 63 Senior Vice President Enterprise Services

Mercado, Eugenio P. 58 Senior Vice President Enterprise Services
Pineda, Donarber N. 53 Senior Vice President Global Markets
Pineda, Teodoro S. Jr. 58 Senior Vice President Enterprise Services
Santamaria, Mary Catherine Elizabeth P. 54 Senior Vice President Marketing
Santiago, Noel A. 58 Senior Vice President Enterprise Services
Sta. Ana, Ana Liza C. 57 Senior Vice President Consumer Banking
Untalan, Barbara Ann C. 54 Senior Vice President Corporate Banking
Veloso, Roland Gerard Jr. R. 58 Senior Vice President Corporate Banking
1 retired and on extension contract

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, the Vice-
Chairman of the Board, are brothers.

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 2021
annual meeting of stockholders due to any disagreement with the Bank relative to its operations, policies and practices.

Item 10. Executive Compensation

2020
Names arranged
Position Fees and Other
By Rank/ By Surname Salary Bonuses
Compensation
Cezar P. Consing President & CEO
Maria Theresa M. Javier EVP & CFO
Ramon L. Jocson EVP & COO
Marie Josephine M. Ocampo EVP
Juan Carlos L. Syquia EVP
All above-named Officers as a group 158,818,822 95,507,700
All other unnamed Officers as a group 10,075,502,316 1,277,868,000
 46

2021
Names arranged
Position Fees and Other
By Rank/ By Surname Salary Bonuses
Compensation
President & CEO
Jose Teodoro K. Limcaoco
(from April 2021)
President & CEO
Cezar P. Consing
(until April 2021)
Maria Theresa M. Javier EVP & CFO
Ramon L. Jocson EVP & COO
Marie Josephine M. Ocampo EVP
Juan Carlos L. Syquia EVP
All above-named Officers as a group 187,848,883.51 72,813,500
All other unnamed Officers as a group 8,732,179,018.14 1,029,675,000

2022 Estimates
Names arranged
Position Fees and Other
By Rank/ By Surname Salary Bonuses
Compensation
Jose Teodoro K. Limcaoco President & CEO
Maria Theresa M. Javier EVP & CFO
Ramon L. Jocson EVP & COO
Marie Josephine M. Ocampo EVP
Juan Carlos L. Syquia EVP
All above-named Officers as a group 159,230,603 79,513,500
All other unnamed Officers as a group 9,502,218,275 1,109,599,500

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.”

Pursuant to the above provisions, the total compensation for 2021 for the members of the Board of Directors amounted to P81.001
million. Directors who hold executive or management positions do not receive directors’ fees or per diems. The total compensation
for each director for 2021 is disclosed in Annex A-3(b) of the 2022 Definitive Information Statement. (Recommendation 8.4 SEC CG
Code for PLCs).

1
Includes P25.7M for the year 2021 representing per diem of Directors.

Standard Arrangement

Other than the usual per diem arrangement for Board and Board Committee meetings and the abovementioned fees and
compensation of Directors, there is no Standard Arrangement with regards to compensation of directors, directly or indirectly for
any other services provided by the said directors, for the last completed fiscal year.
 47

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, 2021

Name/Address of Record Name of Beneficial

Title of Percent of
Owner & Relationship w/ Owner & Relationship Citizenship No. of Shares
Class Holdings
Issuer w/ Record Owner
PCD Nominee Corp. 1 PCD Participants acting Various 879,864,113 19.4957%
Common -Non-Filipino for themselves or for Filipino 793,575,325 17.5837%
-Filipino their customers 1,673,439,438 37.0794%
37/F Tower 1,
The Enterprise Center
6766 Ayala Avenue corner
Paseo de Roxas,
Makati City

Common Ayala Corporation2 Ayala Corporation3 Filipino 1,000,261,934 22.1634%

33rd Floor Ayala Tower One
and Exchange Plaza, Ayala
Triangle, Ayala Avenue,
Makati City
Stockholder
Common Liontide Holdings, Inc.4 Liontide Holdings, Inc.5 Filipino 904,194,682 20.0348%
33rd Floor Ayala Tower One
and Exchange Plaza, Ayala
Triangle, Ayala Avenue,
Makati City
Stockholder
Common AC International Finance Ayala Corporation6 Cayman 390,269,162 8.6474%
Limited Islands
c/o Ayala Corporation
34th Floor Ayala Tower One
and Exchange Plaza, Ayala
Triangle, Ayala Avenue,
Makati City
Stockholder
Common Roman Catholic Roman Catholic Filipino 327,904,251 7.2656%
Archbishop of Manila Archbishop of Manila7
121 Arzobispo St.,
Intramuros, 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 1,673,439,438 common shares registered in the name of PCD, 492,674,355 shares or 10.9165%, 337,807,709 shares or 7.4850%, and 306,083,277 shares or
6.7821% are for the accounts of The Hongkong and Shanghai Banking Corporation, Citibank N.A., and Standard Chartered Bank, respectively.
2 Mermac, Inc. owns 47.8657% of common shares and 57.2651% of total voting shares, while Mitsubishi Corporation owns 6.0952% of common shares and 6.9952%

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 on how AC’s shares in BPI are to be voted.
4 AC owns 84.16% of the outstanding shares of Liontide Holdings, Inc. (formerly Ayala DBS Holdings, Inc.), which translates to 78.07% 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 Under a Voting Trust Agreement dated October 12, 2017, the Board of Directors of AC International Finance Limited (AC International) has the power to decide how

AC International’s shares in BPI are to be voted.

7 The Archbishop of Manila has the power to decide how the Roman Catholic Archbishop of Manila’s shares in BPI are to be voted.
 48

1. Security Ownership of Directors and Management as of December 31, 2021

As of December 31, 2021, the following are known to be BPI to be directly the record and/or beneficial owners of BPI voting securities:

Dec 2020 Dec 2021

Title of Nature of
Name of Beneficial Owner Position No. of % of No. of % of Citizenship
Class Ownership
Shares Holdings Shares Holdings
Common Jaime Augusto Zobel de Ayala Chairman 9,628 0.00% 9,628 0.00% Direct Filipino
Common Fernando Zobel de Ayala Vice-Chair 89,137 0.00% 89,137 0.00% Direct Filipino
President
Common Jose Teodoro K. Limcaoco 11,416 0.00% 291,416 0.01% Direct/Indirect Filipino
&CEO
Common Janet Guat Har Ang Director N/A N/A 10 0.00% Direct Singaporean
Common René G. Bañez Director N/A N/A 10 0.00% Direct Filipino
Common Romeo L. Bernardo Director 12 0.00% 12 0.00% Direct Filipino
Common Ignacio R. Bunye Director 133,452 0.00% 133,452 0.00% Direct Filipino
Common Cezar P. Consing Director 2,809,099 0.06% 2,834,093 0.06% Direct Filipino
Common Ramon R. Del Rosario, Jr. Director 2,287 0.00% 2,287 0.00% Direct Filipino
Common Octavio V. Espiritu Director 1,225,110 0.03% 1,225,110 0.03% Direct Filipino
Common Aurelio R. Montinola III Director 1,794,863 0.04% 1,794,863 0.04% Direct Filipino
Common Cesar V. Purisima Director N/A N/A 10 0.00% Direct Filipino
Common Eli M. Remolona, Jr. Director 10 0.00% 10 0.00% Direct Filipino
Common Maria Dolores B. Yuvienco Director 5,813 0.00% 5,813 0.00% Direct Filipino
Common Maria Theresa D. Marcial EVP & CFO 277,994 0.01% 284,994 0.01% Direct Filipino
Common Ramon L. Jocson EVP & COO 63,783 0.00% 63,783 0.00% Direct Filipino
Common Marie Josephine M. Ocampo EVP 286,692 0.01% 281,692 0.01% Direct Filipino
Common Juan Carlos L. Syquia EVP 1,982 0.00% 8,982 0.00% Direct Filipino
Aggregate Shareholdings of Directors & Officers as a Group 6,796,021 0.15% 7,025,302 0.16%
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.
N/A Not Applicable, not a Director or Officer as of the period

2. Voting Trust Holders of 5% or More

Ayala Corporation has a Voting Trust Agreement with AC International Finance Limited.

3. Minimum Public Ownership

As of December 31, 2021, listed securities held by the public were at 39.2% of BPI’s issued and outstanding shares. This
is above the minimum required public float level of 10%.

Item 12. Certain Relationships and Related Party Transactions

In the normal course of the business, the Parent Bank transacts with related parties consisting of its subsidiaries and
associates. Likewise, the BPI Group has transactions with Ayala Corporation (AC) and its subsidiaries (Ayala Group), where
all transactions are dealt with on an arm’s length basis. AC is a substantial stockholder of BPI as at reporting date.

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

These transactions have terms and conditions that are generally comparable to those offered to non-related parties or to
similar transactions in the market.
 49

Significant related party transactions and outstanding balances as at and for the year ended December 31, 2021 are
summarized below:
Consolidated

2021
Outstanding
Transactions
Balances Terms and Conditions
(In Millions of Pesos)
Loans and Advances from: These are loans and advances granted to
Subsidiaries (189) - related parties that are generally secured
Associates (449) 60 with interest rates ranging from 2.50% to
Ayala Group (11,314) 65,195 9.63% (including those pertaining to
Other related parties (23,614) 546 foreign currency-denominated loans).
These are collectible in cash at gross
amount and with maturity periods ranging
from 5 days to 15 years.
(35,566) 65,801
Deposits from: These are demand, savings and
Subsidiaries 3,441 11,383 time deposits bearing the following
Associates (4) 1,273 average interest rates:
Ayala Group (7,349) 11,401 Demand – 0.07% to 0.14%
Key management personnel 200 984 Savings – 0.10% to 0.24%
(3,712) 25,041 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.
A more detailed discussion on related party transactions can be found in Note 25 of the 2021 Audited Financial Statements.

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.
 50

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, has five-members, including Ms. Mercedita S. Nolledo and Mr. Antonio Jose U. Periquet who
were appointed in May and December 2021, respectively. 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 2021, 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 2021, the following membership and director
classification changes occurred: 1) Election of Mr. Cesar V. Purisima as Independent Director (ID) and reclassification of
Mr. Ramon R. del Rosario, Jr., from ID to Non-Executive Director (NED) on Jan. 20, 2021; 2) Reclassification of Mr. Octavio
Victor R. Espiritu and Mr. Antonio Jose U. Periquet as NEDs in Apr. 2021 due to the maximum term limit of nine (9) years
for IDs, reckoned from 2012 under SEC and BSP regulations; 3) Election and appointment of a new President and
CEO/Executive Director Jose Teodoro K. Limcaoco on Apr. 22, 2021; 4) Resignation of NED Mercedita S. Nolledo, election
of Ms. Janet Guat Har Ang as ID and appointment of NED Aurelio R. Montinola III as Chairman, Retirement and Pension
Committee on May 19, 2021; 5) Resignation of NED Rebecca G. Fernando and election of Mr. René G. Bañez as NED as
well as his appointment to the Executive Committee, Related Party Transactions Committee and Retirement and Pension
Committee on Aug. 18, 2021; 6) Resignation of NED Antonio Jose U. Periquet from the BPI Board of Directors effective
Dec. 16, 2021.

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 2021 BPI Annual
Stockholders' Meeting, Independent Director Ignacio R. Bunye 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 2021, 2 out of 15 or 13% of the Board was comprised of women, which are
both Independent Directors. For the 2021 to 2022 Board term, five out of the 15–member board elected or 33% 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 is reviewed together 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 September 15, 2021. As stated in the Charter, the Board’s key areas of focus include:
 51

 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.

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 2021, 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 on the committees' 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
 52

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 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 24, 2021, 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 2021 Annual Stockholders Meeting. Hence, at the April 22, 2021 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) 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 due consideration. The minimum
quorum requirement for board decisions is set at a 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 highly 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 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 2021, average attendance of re-elected and newly-elected
members at the Board of Director’s 15 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 December 17, 2021 to discuss ongoing initiatives and semestral performance
 53

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.

j) 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 of the Bank's directors undergo the requisite corporate governance seminar provided by an SEC or Bangko
Sentral-accredited institution. On October 21, 2021, 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 the Corporate Governance Training conducted by Risk, Opportunities, Assessment and Management (ROAM),
Inc. on September 24, 2021, or the Corporate Governance Orientation Program conducted by the ICD on November 9 to
10 and December 6 to 7, 2021.

k) 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 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 or of a board committee. 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 outlook, risk assessment and strategies. This
relationship between remuneration and performance aligns remuneration of the Board with the long-term interests of
the Bank.
l) 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
 54

in the conduct of the Board self-assessment. In this respect, the Board conducted its 2021 annual performance evaluation
in early 2022. 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.

m) 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.

n) Retirement Policy. The Bank believes that imposing uniform and fixed limits on director tenure is counter-productive 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 regardless of age. The Bank, therefore, sets the retirement
age for Directors at 80 years of age but which 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 employees of the Bank is set at 60 years of age.

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

o) 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
 55

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 the approval and endorsement by the Audit
Committee, for subsequent confirmation and approval by the Board of Directors and finally the Stockholders.

p) 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.

q) 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.

r) 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 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

s) 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 on September 15, 2021. When updated or amended, the Manual is resubmitted to the SEC. The Manual is also
posted on the company website.

t) 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.
 56

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.

u) 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,
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.

v) Whistleblower Policy. This policy covers all employees of BPI and all wrongful acts that adversely impact the Bank and its
stakeholders. Under the policy, it is the responsibility of all personnel to comply with rules and regulations of the Bank
and to report violations 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.

w) 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.

x) 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
 57

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 strictly 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 possibly monetary penalties.

y) 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.

z) 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.

aa) 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 vis-a-vis their responsibilities, 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

bb) 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 analyst 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
 58

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.

cc) 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
2021, due to the still ongoing COVID-19 pandemic, 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] on or before April 12, 2021.

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 2021, the Notice was sent out to stockholders of record by March 27, 2021, 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 24, 2021, the Board
approved Management's recommendations for BPI to provide the Bank's stockholders with the option to vote in absentia
in the 2021 ASM. Hence, at the April 22, 2021 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 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 2021 ASM
were likewise posted on the company website within five (5) calendar days from the date of the ASM

dd) 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.

VI. Sustainability, Stakeholder Engagement and ESG Reporting

ee) Sustainability and Stakeholder Engagement. The Bank operates on a sustainability framework of shared values which
emphasizes 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; provision for
flexible work tools and work arrangements; setting-up learning and development programs; providing 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 educational programs; factoring ESG
 59

into business and risk models as well as products and services. For clients: supporting nation building through sustainable
development financing and investments as well as financial inclusion initiatives and financial wellness educational
programs. For suppliers: setting-up a supplier policy based on the principle of business transparency and fair competition-
providing equal opportunity for qualified suppliers and contractors while ensuring a properly managed supply chain from
the point-of-view of sustainability and good governance. For creditors: ensuring counterparties are protected by
fairness, accountability and transparency; policies and procedures are in place safeguarding creditor’s rights as required
by the BSP.

ff) Environmental, Social and Governance Reporting. Our ESG or non-financial performance evaluation and management
discussions are likewise disclosed regularly, primarily through the annual publication of the Integrated Report and
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. As in previous years, an external assurance provider has been engaged for our
integrated reporting process and ESG disclosures. 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 2021, BPI garnered the ASEAN Asset Class Award, ranking among the top listed firms across the six participating countries,
namely Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines. In 2021, BPI was also a recipient of the ICD’s
Golden Arrow Award as a Top Performing Company in the domestic assessment of the ACGS.

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 Exhibit A
(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 Exhibit B
(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
 60

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, 2021 Exhibit D

b. Reports on SEC Form 17-C

Items reported under SEC Form 17-C in 2021:

(1) Declaration of regular cash dividend of ninety centavos (P0.90) per share for the first semester of the year 2021
approved by the Board of Directors last May 19, 2021, reported on the same day of approval. Record date is on June
2, 2021 and payment date is on June 23, 2021.

(2) Declaration of regular cash dividend of ninety centavos (P0.90) per share for the second semester of the year 2021
approved by the Board of Directors last November 17, 2021, reported on the same day of approval. Record date is
on December 2, 2021 and payment date is on December 24, 2021.

(3) Approval of the holding of the 2021 Annual Stockholders’ Meeting last December 15, 2021.
 EXHIBIT A
(Audited Financial Statements)
www.pwc.com/ph

Bank of the
Philippine Islands
Financial Statements
As at December 31, 2021 and 2020 and for each of the three
years in the period ended December 31, 2021
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of

Bank of the Philippine Islands
Ayala North Exchange
Ayala Avenue corner Salcedo Street, Legaspi Village,
Makati City

Report on the Audits of the Financial Statements

Our Opinion

In our opinion, the accompanying consolidated financial statements of the Bank of the Philippine Islands
and Subsidiaries (the “BPI Group”) and the parent financial statements of the Bank of the Philippine
Islands (the “Parent Bank”) present fairly, in all material respects, the financial position of the BPI Group
and of the Parent Bank as at December 31, 2021 and 2020, and their financial performance and their cash
flows for each of the three years in the period ended December 31, 2021 in accordance with Philippine
Financial Reporting Standards (“PFRSs”).

What we have audited

The financial statements comprise:

• the consolidated and parent statements of condition as at December 31, 2021 and 2020;
• the consolidated and parent statements of income for each of the three years in the period ended
December 31, 2021;
• the consolidated and parent statements of total comprehensive income for each of the three years in the
period ended December 31, 2021;
• the consolidated and parent statements of changes in capital funds for each of the three years in the
period ended December 31, 2021;
• the consolidated and parent statements of cash flows for each of the three years in the period ended
December 31, 2021; and
• the notes to the consolidated and parent financial statements, which include a summary of significant
accounting policies.

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (“PSAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Isla Lipana & Co., 29th Floor, Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City, Philippines
T: +63 (2) 8845 2728, F: +63 (2) 8845 2806, www.pwc.com/ph
Isla Lipana & Co. is the Philippine member firm of the PwC network. PwC refers to the Philippine member firm, and may sometimes refer to the PwC network. Each member firm
is a separate legal entity. Please see www.pwc.com/structure for further details.
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of
Bank of the Philippine Islands
Page 2

Independence

We are independent of the BPI Group and the Parent Bank in accordance with the Code of Ethics for
Professional Accountants in the Philippines (Code of Ethics), together with the ethical requirements that
are relevant to our audit of the consolidated and parent financial statements in the Philippines, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of
Ethics.

Our Audit Approach

As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated and parent financial statements. In particular, we considered where
management made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including
among other matters, consideration of whether there was evidence of bias that represented a risk of
material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on
the consolidated and parent financial statements as a whole, taking into account the structure of the BPI
Group and the Parent Bank, the accounting processes and controls, and the industry in which the BPI
Group and the Parent Bank operate.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated and parent financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated and parent financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter identified in our audit pertains to the impairment losses on loans and advances, which
applies to both the BPI Group’s and the Parent Bank’s financial statements.
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of
Bank of the Philippine Islands
Page 3

How our audit addressed the

Key Audit Matter Key Audit Matter

Impairment losses on loans and advances

We focused on this account because of the We assessed the design and tested the operating
complexity involved in the estimation effectiveness of key controls over loan loss
process, and the significant judgments provisioning. These key controls included:
that management makes in ascertaining • governance over the development, validation
the provision for loan impairment. The and approval of the BPI Group’s ECL models
calculation of impairment losses is to assess compliance with Philippine
inherently judgmental for any bank. As at Financial Reporting Standard (PFRS) 9,
December 31, 2021, the total allowance Financial instruments; including continuous
for impairment for loans and advances re-assessment by the BPI Group that the
amounted to PHP53,764 million for the impairment models are operating in a way
BPI Group and PHP40,864 million for the which is appropriate for the credit risks in
Parent Bank while provision for loan the BPI Group and the Parent Bank’s loan
losses recognized in profit or loss for the portfolios;
year then ended amounted to • review and approval of key judgments,
PHP12,765 million for the BPI Group and assumptions and forward-looking
PHP10,226 million for the Parent Bank. information used in the ECL models;
Refer to Notes 10 and 26 of the financial • review of data from source systems to the
statements for the details of the detailed ECL model analyses;
impairment losses on loans and advances. • assessment of credit quality of loans and
advances relative to the established internal
Provision for impairment losses on loans credit risk rating system;
that are assessed to be individually credit • the review and approval process for the
impaired is determined in reference to outputs of the impairment models; and
the estimated future cash repayments and
• the review and approval process over the
proceeds from the realization of collateral
determination of credit risk rating,
held by the BPI Group and the Parent
performance of credit reviews and
Bank.
calculation of required reserves for loans
assessed as credit-impaired.
For other loan accounts which are not
individually credit impaired, they are
Our work over the impairment of loans and
included in a group of loans with similar
advances included:
risk characteristics and are collectively
• assessment of the methodology applied by
assessed on a portfolio basis using
the BPI Group and the Parent Bank in the
internal models developed by the BPI
development of the ECL models vis-a-vis the
Group and the Parent Bank.
requirements of PFRS 9;
• testing of key assumptions in the ECL
models such as PD, LGD, EAD built from
historical data. Our assessment included the
involvement of our internal specialist;
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of
Bank of the Philippine Islands
Page 4

How our audit addressed the

Key Audit Matter Key Audit Matter
(cont’d.)

Key elements in the impairment of loans • assessment of the appropriateness of the BPI
and advances include: Group’s and the Parent Bank’s definition of
• the identification of credit- significant increase in credit risk and staging
impaired loans, and estimation of of accounts through analysis of historical
cash flows (including the expected trends and past credit behavior of loan
realizable value of any collateral portfolios;
held) supporting the calculation of • independent comparison of economic
individually assessed provisions; information used within, and weightings
and applied to, forward-looking scenarios in the
• the application of appropriate ECL models against available macro-
impairment models for the economic data;
collectively assessed accounts. This • testing of the accuracy and completeness of
include the use of key assumptions data inputs in the ECL models and in the
in the impairment models (i.e., ECL calculation by comparing them with the
staging of accounts, significant information obtained from source systems;
increase in credit risk, forward- • testing the accuracy and reasonableness of
looking information), the exposure the outputs of the ECL models through
at default (EAD), the probability of independent recalculation;
default (PD) and the loss given • for a sample of individually assessed loans
default (LGD). identified as credit-impaired, examined
relevant supporting documents such as the
The impairment losses include both latest financial information of the borrower
quantitative and qualitative components. or valuation of collateral used as a basis in
In calculating the loan loss provisioning, estimating the recoverable amount and
the BPI Group and the Parent Bank measuring the loan loss allowance; and
applied the expected credit loss (ECL) • recalculation of the collective loan loss
model prescribed by PFRS 9, which is a allowance for selected accounts and
complex process that takes into account portfolios at reporting date using the ECL
forward-looking information reflecting models adopted by the BPI Group and the
the BPI Group and the Parent Bank’s view Parent Bank.
on potential future economic events.
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of
Bank of the Philippine Islands
Page 5

Other Information

Management is responsible for the other information. The other information comprises the information
included in the SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report,
but does not include the consolidated and parent financial statements and our auditor’s report thereon.
The SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report are expected
to be made available to us after the date of this auditor's report.

Our opinion on the consolidated and parent financial statements does not cover the other information and
we will not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated and parent financial statements, our responsibility is to
read the other information identified above when it becomes available and, in doing so, consider whether
the other information is materially inconsistent with the consolidated and parent financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Financial
Statements

Management is responsible for the preparation and fair presentation of the consolidated and parent
financial statements in accordance with PFRSs and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.

In preparing the consolidated and parent financial statements, management is responsible for assessing
the ability of each entity within the BPI Group and of the Parent Bank to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the entities within the BPI Group and the Parent Bank or to
cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the BPI Group’s and the Parent Bank’s
financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and parent financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated and parent financial statements.
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of
Bank of the Philippine Islands
Page 6

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and parent financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the BPI Group’s and of the Parent Bank’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the ability of each entity within the BPI Group and the
Parent Bank to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated and
parent financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the entities within the BPI Group and the Parent Bank to cease
to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and parent financial
statements, including the disclosures, and whether the consolidated and parent financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
 Isla Lipana & Co.

Independent Auditor’s Report

To the Board of Directors and Shareholders of
Bank of the Philippine Islands
Page 7

From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated and parent financial statements of the current
period and is therefore the key audit matter. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Supplementary Information Required by the Bangko Sentral ng Pilipinas

(BSP) and the Bureau of Internal Revenue (BIR)

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The supplementary information required under BSP Circular No. 1074 in Note 32 and BIR
Revenue Regulations No. 15-2010 in Note 33 to the financial statements is presented for the purposes of
filing with the BSP and the BIR, respectively, and is not a required part of the basic financial statements.
Such information is the responsibility of the management of the BPI Group and the Parent Bank. The
information has been subjected to the auditing procedures applied in our audits of the basic financial
statements. In our opinion, the information is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.

The engagement partner on the audit resulting in this independent auditor’s report is
John-John Patrick V. Lim.

Isla Lipana & Co.

John-John Patrick V. Lim

Partner
CPA Cert. No. 83389
P.T.R. No. 0007706; issued on January 6, 2022 at Makati City
SEC A.N. (individual) as general auditors 1775-A, Category A; effective until September 4, 2022
SEC A.N. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024
financial statements
T.I.N. 112-071-386
BIR A.N. 08-000745-017-2021, issued on November 23, 2021; effective until November 22, 2024
BOA/PRC Reg. No. 0142, effective until January 21, 2023

Makati City
February 22, 2022
 Isla Lipana & Co.

Statements Required by Rule 68

Securities Regulation Code (SRC)

To the Board of Directors and Shareholders of

Bank of the Philippine Islands
Ayala North Exchange
Ayala Avenue corner Salcedo Street, Legaspi Village,
Makati City

We have audited in accordance with Philippine Standards on Auditing the consolidated financial
statements of the Bank of the Philippine Islands and Subsidiaries (the “BPI Group”) as at
December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021,
and have issued our report thereon dated February 22, 2022. Our audits were made for the purpose of
forming an opinion on the basic consolidated financial statements taken as a whole. The
Supplementary Schedule on Financial Soundness Indicators, including their definitions, formulas,
calculation, and their appropriateness or usefulness to the intended users, are the responsibility of the
BPI Group’s management. These financial soundness indicators are not measures of operating
performance defined by Philippine Financial Reporting Standards (PFRSs) and may not be
comparable to similarly titled measures presented by other companies. This schedule is presented for
the purpose of complying with the Revised Securities Regulation Code Rule 68 issued by the Securities
and Exchange Commission, and is not a required part of the basic consolidated financial statements
prepared in accordance with PFRSs. The components of these financial soundness indicators have
been traced to the BPI Group’s consolidated financial statements as at December 31, 2021 and 2020
and for each of the three years in the period ended December 31, 2021 and no material exceptions
were noted.

Isla Lipana & Co.

John-John Patrick V. Lim

Partner
CPA Cert. No. 83389
P.T.R. No. 0007706; issued on January 6, 2022 at Makati City
SEC A.N. (individual) as general auditors 1775-A, Category A; effective until September 4, 2022
SEC A.N. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024
financial statements
T.I.N. 112-071-386
BIR A.N. 08-000745-017-2021, issued on November 23, 2021; effective until November 22, 2024
BOA/PRC Reg. No. 0142, effective until January 21, 2023

Makati City
February 22, 2022

Isla Lipana & Co., 29th Floor, Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City, Philippines
T: +63 (2) 8845 2728, F: +63 (2) 8845 2806, www.pwc.com/ph
Isla Lipana & Co. is the Philippine member firm of the PwC network. PwC refers to the Philippine member firm, and may sometimes refer to the PwC network. Each member firm
is a separate legal entity. Please see www.pwc.com/structure for further details
 Isla Lipana & Co.

Statements Required by Rule 68

Securities Regulation Code (SRC)

To the Board of Directors and Shareholders of

Bank of the Philippine Islands
Ayala North Exchange
Ayala Avenue corner Salcedo Street, Legaspi Village,
Makati City

We have audited the consolidated financial statements of the Bank of the Philippine Islands and
Subsidiaries (the “BPI Group”) and the parent financial statements of the Bank of the Philippine
Islands (the “Parent Bank”) as at and for the year ended December 31, 2021, on which we have
rendered the attached report dated February 22, 2022. The supplementary information shown in the
Reconciliation of the Parent Bank’s Retained Earnings Available for Dividend Declaration, Map of
the Conglomerate or Group of Companies within which the Bank of the Philippine Islands belongs
effective as at December 31, 2021, as additional components required by Part I, Section 5 of Rule 68
of the Securities Regulation Code, and Schedules A, B, C, D, E, F and G, as required by Part II,
Section 6 of Rule 68 of the Securities Regulation Code, is presented for the purposes of filing with
the Securities and Exchange Commission and is not a required part of the basic financial statements.
Such supplementary information is the responsibility of management and has been subjected to the
auditing procedures applied in the audit of the basic financial statements. In our opinion, the
supplementary information has been prepared in accordance with Rule 68 of the Securities
Regulation Code.

Isla Lipana & Co.

John-John Patrick V. Lim

Partner
CPA Cert. No. 83389
P.T.R. No. 0007706; issued on January 6, 2022 at Makati City
SEC A.N. (individual) as general auditors 1775-A, Category A; effective until September 4, 2022
SEC A.N. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024
financial statements
T.I.N. 112-071-386
BIR A.N. 08-000745-017-2021, issued on November 23, 2021; effective until November 22, 2024
BOA/PRC Reg. No. 0142, effective until January 21, 2023

Makati City
February 22, 2022

Isla Lipana & Co., 29th Floor, Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City, Philippines
T: +63 (2) 8845 2728, F: +63 (2) 8845 2806, www.pwc.com/ph
Isla Lipana & Co. is the Philippine member firm of the PwC network. PwC refers to the Philippine member firm, and may sometimes refer to the PwC network. Each member firm
is a separate legal entity. Please see www.pwc.com/structure for further details
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CONDITION
December 31, 2021 and 2020
(In Millions of Pesos)

Consolidated Parent
Notes 2021 2020 2021 2020

ASSETS

CASH AND OTHER CASH ITEMS 4 35,143 37,176 33,868 35,912

DUE FROM BANGKO SENTRAL NG PILIPINAS 4 268,827 223,989 197,435 197,974
DUE FROM OTHER BANKS 4 34,572 40,155 27,734 36,605
INTERBANK LOANS RECEIVABLE AND SECURITIES
PURCHASED UNDER AGREEMENTS TO RESELL 4,5 30,852 30,251 30,023 26,622
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS 6,7 21,334 37,210 15,575 33,865
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME 8 134,741 130,186 115,541 120,300
INVESTMENT SECURITIES AT AMORTIZED COST, net 9 338,672 244,653 333,193 216,810
LOANS AND ADVANCES, net 10 1,476,527 1,407,413 1,233,052 1,175,071
ASSETS HELD FOR SALE, net 3,282 2,971 505 357
BANK PREMISES, FURNITURE, FIXTURES
AND EQUIPMENT, net 11 17,525 18,832 15,243 16,131
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES, net 12 7,165 7,510 15,556 11,039
ASSETS ATTRIBUTABLE TO INSURANCE OPERATIONS 2 17,563 18,726 - -
DEFERRED INCOME TAX ASSETS, net 13 15,819 17,525 11,953 12,838
OTHER ASSETS, net 14 19,893 16,846 21,648 14,412
Total assets 2,421,915 2,233,443 2,051,326 1,897,936
(forward)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CONDITION
December 31, 2021 and 2020
(In Millions of Pesos)

Consolidated Parent
Notes 2021 2020 2021 2020

LIABILITIES AND CAPITAL FUNDS

DEPOSIT LIABILITIES 15 1,955,147 1,716,177 1,675,785 1,470,210

DERIVATIVE FINANCIAL LIABILITIES 7 3,632 5,657 3,545 5,657
BILLS PAYABLE AND OTHER BORROWED FUNDS 16 95,039 151,947 82,550 140,348
DUE TO BANGKO SENTRAL NG PILIPINAS AND OTHER BANKS 953 1,491 814 1,491
MANAGER’S CHECKS AND DEMAND DRAFTS OUTSTANDING 6,931 7,108 5,243 5,447
ACCRUED TAXES, INTEREST AND OTHER EXPENSES 8,413 8,902 6,127 6,510
LIABILITIES ATTRIBUTABLE TO INSURANCE OPERATIONS 2 13,242 14,347 - -
DEFERRED CREDITS AND OTHER LIABILITIES 17 43,402 45,857 33,762 37,103
Total liabilities 2,126,759 1,951,486 1,807,826 1,666,766
CAPITAL FUNDS ATTRIBUTABLE TO THE
EQUITY HOLDERS OF BPI 18
Share capital 45,131 45,045 45,131 45,045
Share premium 74,934 74,764 74,934 74,764
Reserves 564 416 160 196
Accumulated other comprehensive loss (8,670) (5,899) (6,825) (4,288)
Surplus 181,101 165,509 130,100 115,453
293,060 279,835 243,500 231,170
NON-CONTROLLING INTERESTS 2,096 2,122 - -
Total capital funds 295,156 281,957 243,500 231,170
Total liabilities and capital funds 2,421,915 2,233,443 2,051,326 1,897,936

(The notes on pages 1 to 101 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, 2021
(In Millions of Pesos)

Consolidated Parent
Notes 2021 2020 2019 2021 2020 2019
INTEREST INCOME
On loans and advances 72,225 82,312 86,056 53,426 63,599 67,895
On investment securities 10,436 12,052 12,709 9,949 10,786 11,776
On deposits with BSP and other banks 1,956 1,944 1,722 1,271 1,343 808
84,617 96,308 100,487 64,646 75,728 80,479
INTEREST EXPENSE
On deposits 15 10,168 18,986 28,874 5,587 12,777 21,476
On bills payable and other borrowed funds 16 4,866 5,058 6,038 4,396 4,595 6,031
15,034 24,044 34,912 9,983 17,372 27,507
NET INTEREST INCOME 69,583 72,264 65,575 54,663 58,356 52,972
PROVISION FOR CREDIT AND
IMPAIRMENT LOSSES 26 13,135 28,000 5,562 10,591 21,394 4,666
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT AND
IMPAIRMENT LOSSES 56,448 44,264 60,013 44,072 36,962 48,306
OTHER INCOME
Fees and commissions 11,204 8,899 9,068 9,051 7,763 8,502
Income from foreign exchange trading 2,384 2,155 2,111 2,206 2,022 1,930
Securities trading gain 97 3,310 3,882 4 2,657 3,574
Income attributable to insurance operations 2 1,854 1,506 1,223 - - -
Net gains on disposals of investment
securities at amortized cost 9 1,513 4,647 128 1,166 4,078 104
Other operating income 19 10,770 9,142 10,275 13,026 13,459 10,487
27,822 29,659 26,687 25,453 29,979 24,597
OTHER EXPENSES
Compensation and fringe benefits 21 18,528 18,005 17,369 14,094 13,870 13,479
Occupancy and equipment-related
expenses 11,20 16,010 14,606 14,736 13,352 12,544 12,943
Other operating expenses 21 16,195 15,543 16,239 12,220 11,788 12,058
50,733 48,154 48,344 39,666 38,202 38,480
PROFIT BEFORE INCOME TAX 33,537 25,769 38,356 29,859 28,739 34,423
INCOME TAX EXPENSE 22
Current 8,328 10,751 9,975 6,701 9,272 8,788
Deferred 13 1,099 (6,845) (620) 375 (5,144) (583)
9,427 3,906 9,355 7,076 4,128 8,205
NET INCOME FROM CONTINUING
OPERATIONS 24,110 21,863 29,001 22,783 24,611 26,218
NET (LOSS) INCOME FROM
DISCONTINUED OPERATIONS 12 - (211) 82 - - -
NET INCOME AFTER TAX 24,110 21,652 29,083 22,783 24,611 26,218
(forward)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF INCOME
For each of the three years in the period ended December 31, 2021
(In Millions of Pesos, Except Per Share Amounts)

Consolidated Parent
Note 2021 2020 2019 2021 2020 2019
(forwarded)

Basic and diluted earnings per share

attributable to the equity holders of BPI during
the year from: 18
Continuing operations 5.29 4.79 6.38 5.05 5.45 5.82
Discontinued operations - (0.05) 0.01 - - -

Income (loss) attributable to equity holders of

18
BPI arising from:
Continuing operations 23,880 21,620 28,761 22,783 24,611 26,218
Discontinued operations - (211) 42 - - -
23,880 21,409 28,803 22,783 24,611 26,218

Income attributable to the non-controlling

interests arising from:
Continuing operations 230 243 240 - - -
Discontinued operations - - 40 - - -
230 243 280 - - -

Income attributable to
Equity holders of BPI 23,880 21,409 28,803 22,783 24,611 26,218
Non-controlling interests 230 243 280 - - -
24,110 21,652 29,083 22,783 24,611 26,218

(The notes on pages 1 to 101 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, 2021
(In Millions of Pesos)

Consolidated Parent
Note 2021 2020 2019 2021 2020 2019
NET INCOME FROM CONTINUING
OPERATIONS 24,110 21,863 29,001 22,783 24,611 26,218
OTHER COMPREHENSIVE (LOSS) INCOME 18
Items that may be subsequently reclassified to
profit or loss
Share in other comprehensive (loss) income of
associates (728) 640 1,286 - - -
Net change in fair value reserve on investments in
debt instruments measured at FVOCI, net of tax
effect (548) 428 262 (506) 428 249
Fair value reserve on investments of insurance
subsidiaries, net of tax effect (209) 195 545 - - -
Currency translation differences and others 627 (238) (202) 291 (167) (124)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit obligation 608 (3,383) (1,402) 431 (2,798) (1,141)
Share in other comprehensive income (loss) of
associates 448 (1,242) (32) - - -
Net change in fair value reserve on investments in
equity instruments measured at FVOCI, net of
tax effect (3,041) 215 (313) (2,753) 565 (379)
Total other comprehensive (loss) income, net of tax
effect from continuing operations (2,843) (3,385) 144 (2,537) (1,972) (1,395)
Total comprehensive income for the year from
continuing operations 21,267 18,478 29,145 20,246 22,639 24,823

NET (LOSS) INCOME FROM DISCONTINUED

OPERATIONS - (211) 82 - - -
Total other comprehensive loss, net of tax effect
from discontinued operations - (3) (16) - - -
Total comprehensive (loss) income, for the year
from discontinued operations - (214) 66 - - -

TOTAL COMPREHENSIVE INCOME FOR THE

YEAR 21,267 18,264 29,211 20,246 22,639 24,823

Total comprehensive income (loss) attributable to

equity holders of BPI arising from:
Continuing operations 21,109 18,163 28,735 20,246 22,639 24,823
Discontinued operations - (214) 34 - - -
21,109 17,949 28,769 20,246 22,639 24,823

Total comprehensive income attributable to the

non-controlling interest arising from:
Continuing operations 158 315 410 - - -
Discontinued operations - - 32 - - -
158 315 442 - - -

Total comprehensive income attributable to:

Equity holders of BPI 21,109 17,949 28,769 20,246 22,639 24,823
Non-controlling interests 158 315 442 - - -
21,267 18,264 29,211 20,246 22,639 24,823

(The notes on pages 1 to 101 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, 2021
(In Millions of Pesos)

Consolidated
Attributable to equity holders of BPI (Note 18)
Accumulated
other Non-
Share Share comprehensive controlling Total
capital premium Reserves Surplus income (loss) Total interests equity
Balance, January 1, 2019 44,961 74,181 4,096 127,459 (2,176) 248,521 3,017 251,538
Comprehensive income
Net income for the year - - - 28,803 - 28,803 280 29,083
Other comprehensive income (loss)
for the year - - - - (34) (34) 162 128
Total comprehensive income (loss)
for the year - - - 28,803 (34) 28,769 442 29,211
Transactions with owners
Exercise of stock option plans 38 268 30 - - 336 - 336
Cash dividends - - - (8,113) - (8,113) - (8,113)
Total transactions with owners 38 268 30 (8,113) - (7,777) - (7,777)
Transfer from surplus to reserves - - 2,002 (2,002) - - - -
Transfer from reserves to surplus - - (1,020) 1,020 - - - -
Other movements - - - 293 (229) 64 (2) 62
- - 982 (689) (229) 64 (2) 62
Balance, December 31, 2019 44,999 74,449 5,108 147,460 (2,439) 269,577 3,457 273,034
Comprehensive income
Net income for the year - - - 21,409 - 21,409 243 21,652
Other comprehensive (loss) income
for the year - - - - (3,460) (3,460) 72 (3,388)
Total comprehensive income (loss) -
for the year - - 21,409 (3,460) 17,949 315 18,264
Transactions with owners
Exercise of stock option plans 46 315 47 - - 408 - 408
Cash dividends - - - (8,124) - (8,124) - (8,124)
Total transactions with owners 46 315 47 (8,124) - (7,716) - (7,716)
Transfer from reserves to surplus - - (4,739) 4,739 - - - -
Other movements - - - 25 - 25 (1,650) (1,625)
- - (4,739) 4,764 - 25 (1,650) (1,625)
Balance, December 31, 2020 45,045 74,764 416 165,509 (5,899) 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 - - - 23,880 (2,771) 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)
Transfer from reserves to surplus - - 190 (190) - - - -
Other movements - - - 25 - 25 - 25
- - 190 (165) - 25 - 25
Balance, December 31, 2021 45,131 74,934 564 181,101 (8,670) 293,060 2,096 295,156

(The notes on pages 1 to 101 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, 2021
(In Millions of Pesos)

Parent (Note 18)

Accumulated
other
Share Share comprehensive
capital premium Reserves Surplus income (loss) Total
Balance, January 1, 2019 44,961 74,181 3,977 76,958 (921) 199,156
Comprehensive income
Net income for the year - - - 26,218 - 26,218
Other comprehensive loss for the year - - - - (1,395) (1,395)
Total comprehensive income (loss) for the year - - - 26,218 (1,395) 24,823
Transactions with owners
Exercise of stock option plans 38 268 43 - - 349
Cash dividends - - - (8,113) - (8,113)
Total transactions with owners 38 268 43 (8,113) - (7,764)
Transfer from surplus to reserves - - 1,892 (1,892) - -
Transfer from reserves to surplus - - (1,020) 1,020 - -
Other movements - - - 35 - 35
- - 872 (837) - 35
Balance, December 31, 2019 44,999 74,449 4,892 94,226 (2,316) 216,250
Comprehensive income
Net income for the year - - - 24,611 - 24,611
Other comprehensive loss for the year - - - - (1,972) (1,972)
Total comprehensive income (loss) for the year - - - 24,611 (1,972) 22,639
Transactions with owners
Exercise of stock option plans 46 315 43 - - 404
Cash dividends - - - (8,124) - (8,124)
Total transactions with owners 46 315 43 (8,124) - (7,720)
Transfer from reserves to surplus - - (4,739) 4,739 - -
Other movements - - - 1 - 1
- - (4,739) 4,740 - 1
Balance, December 31, 2020 45,045 74,764 196 115,453 (4,288) 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 - - - 22,783 (2,537) 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)
Balance, December 31, 2021 45,131 74,934 160 130,100 (6,825) 243,500

(The notes on pages 1 to 101 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, 2021
(In Millions of Pesos)

Consolidated Parent
Notes 2021 2020 2019 2021 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax from:
Continuing operations 33,537 25,769 38,356 29,859 28,739 34,423
Discontinued operations 12 - (246) 79 - - -
33,537 25,523 38,435 29,859 28,739 34,423
Adjustments for:
Impairment losses 26 13,135 28,000 5,822 10,591 21,394 4,666
Depreciation and amortization 11,14 6,249 6,023 7,132 5,213 4,860 4,767
Share in net income of associates 12 (1,086) (487) (372) - -
Dividend and other income 19 (30) (57) (77) (6,939) (7,792) (3,794)
Share-based compensation 18 (41) 47 30 (36) 44 42
Interest income (84,617) (96,308) (101,583) (64,646) (75,728) (83,279)
Interest received 85,450 98,573 100,293 64,866 77,998 83,294
Interest expense 15,345 24,401 35,638 10,229 17,651 27,507
Interest paid (15,352) (25,768) (35,300) (10,214) (18,749) (27,375)
(Increase) decrease in:
Interbank loans receivable and securities purchased
under agreements to resell (2,167) 320 1,898 (2,117) 201 1,895
Financial assets at fair value through profit or loss 16,134 (13,270) (8,472) 18,548 (16,339) (8,469)
Loans and advances, net (82,837) 39,921 (125,028) (68,754) 35,369 (109,711)
Assets held for sale (355) 173 400 (168) 63 353
Assets attributable to insurance operations 450 (351) 287 - -
Other assets (4,046) (3,084) 5,611 (4,556) (5,609) 5,702
Increase (decrease) in:
Deposit liabilities 238,976 20,827 109,598 205,581 13,744 109,252
Due to Bangko Sentral ng Pilipinas and other banks (232) (150) (1,041) (371) (150) (1,041)
Manager’s checks and demand drafts outstanding (177) (1,191) 1,368 (204) (974) 1,067
Accrued taxes, interest and other expenses (707) 315 303 (582) (42) 411
Liabilities attributable to insurance operations (1,290) 286 5 - -
Derivative financial instruments (2,025) 2,780 (38) (2,112) 2,780 (28)
Deferred credits and other liabilities (337) (5,668) 8,806 (1,735) (4,832) 7,245
Net cash from operations 213,977 100,855 43,715 182,453 72,628 46,927
Income taxes paid (7,497) (11,601) (10,363) (6,008) (10,080) (9,135)
Net cash from operating activities 206,480 89,254 33,352 176,445 62,548 37,792
(forward)
 BANK OF THE PHILIPPINE ISLANDS

STATEMENTS OF CASH FLOWS

For each of the three years in the period ended December 31, 2021
(In Millions of Pesos)

Consolidated Parent
Notes 2021 2020 2019 2021 2020 2019
(forwarded)

CASH FLOWS FROM INVESTING

ACTIVITIES
(Increase) decrease in:
Investment securities, net 8,9 (101,885) (46,513) (4,343) (114,316) (37,113) (3,574)
Bank premises, furniture, fixtures and
equipment, net 11 (4,806) (768) (13,400) (4,331) (4,397) (10,285)
Investment properties, net 14 (12) 6 (57) (14) 4 (55)
Investment in subsidiaries and associates,
net 12 1,432 (1,926) 933 (4,516) (1,321) (89)
Assets attributable to insurance operations 804 (481) (1,368) - - -
Dividends received 19 30 57 77 3,400 7,792 3,794
Net cash used in investing activities (104,437) (49,625) (18,158) (119,777) (35,035) (10,209)
CASH FLOWS FROM FINANCING
ACTIVITIES
Cash dividends paid 17,18 (8,124) (8,124) (12,167) (8,124) (8,124) (12,165)
Proceeds from share issuance 18 256 361 306 256 361 306
Increase (decrease) in bills payable and
other borrowed funds 16 (56,908) 1,110 (16,064) (57,798) 13,819 (24,351)
Payments for principal portion of lease
liabilities (1,900) (1,458) (1,471) (1,478) (1,108) (1,151)
Net cash (used in) from financing activities (66,676) (8,111) (29,396) (67,144) 4,948 (37,361)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 35,367 31,518 (14,202) (10,476) 32,461 (9,778)

CASH AND CASH EQUIVALENTS

January 1 4,5 330,586 299,068 313,270 295,805 263,344 273,122
December 31 365,953 330,586 299,068 285,329 295,805 263,344

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

Cash flows from discontinued operations 12

(The notes on pages 1 to 101 are an integral part of these financial statements.)
BANK OF THE PHILIPPINE ISLANDS

NOTES TO FINANCIAL STATEMENTS

AS AT DECEMBER 31, 2021 and 2020 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 2021

Note 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.

In 2019, the Parent Bank’s office address, which also serves as its principal place of business, was transferred to Ayala North
Exchange, Ayala Avenue corner Salcedo Street, Legaspi Village, Makati City. Prior to 2019, BPI’s registered office address
and principal place of business were both located at BPI Building, Ayala Avenue corner Paseo de Roxas, 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, 2021, the BPI Group has 18,619 employees (2020 - 19,952 employees) and operates
1,176 branches (2020 - 1,173 branches) and 2,457 automated teller machines (ATMs) and cash accept machines (CAMs)
(2020 - 2,707) 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, 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 January 22, 2021, BPI announced that its Board of Directors (BOD) has approved on January 21, 2021, the plan to merge
with BPI Family Savings Bank, Inc. (“BFB”), with the Parent Bank as the surviving entity. Subsequently, the BOD and
shareholder of BFB approved the proposed merger at their respective meetings held on February 24, 2021 and
April 22, 2021, respectively (Note 30.1).

Coronavirus pandemic

The BPI Group has successfully adapted to the challenges posed by the coronavirus disease (COVID-19) to its business
model, including compliance with the country’s evolving regulatory impositions and mobility restrictions.

Reinforcing the BPI Group’s operational resilience, management has put in motion business continuity plans and a
pandemic response plan and protocol for the entire organization. These include, but are not limited to, changes in the
workforce arrangements and set-up of corporate offices, allowing for rotational schedules, split operations, and alternative
work sites, all duly supported by the use of mobility tools and virtual communications. The BPI Group’s accelerated shift
to digitalization has also ensured continuous client service through its various distribution platforms with maintained
back-office efficiency during the nationwide implementation of community quarantines. Along with this new operating
environment, new threats and vulnerabilities identified have been mitigated by both technical and organizational process
controls. As such, while cybersecurity risks are theoretically heightened by remote access, a robust risk management
process enables the Bank to effectively manage these changes.

The Bank has seen an increase in the level of non-performing loans since December 2019. Notwithstanding the impact of
COVID-19 on businesses, e.g. temporary/permanent closure of certain businesses, suspended operations, limited travel
and exchange of goods, the Banks’s asset quality remained better than initially expected and more favorable than industry
averages. To mitigate risks arising from the pandemic, the Bank has taken a pro-active stance by constantly monitoring
vulnerable industries and sectors that have been affected by COVID-19, identifying new opportunities in other industries
and sectors, and having regular conversations with its clients. Asset quality is constantly monitored and the Bank
continues to uphold its stringent credit process while also enhancing aspects of its underwriting, monitoring, and
collections, in consideration of the changes in regulatory, economic, and customer behaviors post-crisis. The Bank’s robust
capital and liquidity levels also serve as sufficient buffers for any adverse scenario during the ongoing pandemic.
Approval and authorization for issuance of financial statements

These financial statements have been approved and authorized for issuance by the BOD on February 22, 2022.

The consolidated financial statements comprise the financial statements of the Parent Bank and the following
subsidiaries:

Country of % of ownership
Subsidiaries incorporation Principal activities 2021 2020
BPI Family Savings Bank, Inc. Philippines Banking 100 100
BPI Capital Corporation Philippines Investment house 100 100
BPI Direct BanKo, Inc., A Savings Bank Philippines Banking 100 100
BPI Asset Management and Trust Corporation Philippines Asset management 100 100
BPI International Finance Limited Hong Kong Financing 100 100
BPI Europe Plc. England and Wales Banking (deposit) 100 100
BPI Securities Corp. Philippines Securities dealer 100 100
BPI Payments Holdings Inc. Philippines Financing 100 100
Filinvest Algo Financial Corp. Philippines Financing 100 100
BPI Investment Management, Inc. Philippines Investment management 100 100
Santiago Land Development Corporation Philippines Land holding 100 100
BPI Operations Management Corp. Philippines Operations management - 100
BPI Computer Systems Corp. Philippines Business systems service 100 100
BPI Forex Corp. Philippines Foreign exchange 100 100
BPI Remittance Centre (HK) Ltd. Hong Kong Remittance 100 100
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

Note 2 - Assets and Liabilities Attributable to Insurance Operations

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

Note 2021 2020

(In Millions of Pesos)
Assets
Cash and cash equivalents 4 412 321
Insurance balances receivable, net 4,797 5,512
Investment securities
Financial assets at fair value through profit or loss 2,306 5,300
Financial assets at fair value through other comprehensive income 6,982 4,835
Financial assets at amortized cost 269 224
Investment in associates 167 169
Accounts receivable and other assets, net 2,423 2,203
Land, building and equipment 207 162
17,563 18,726

2021 2020
(In Millions of Pesos)
Liabilities
Reserves and other balances 11,307 12,565
Accounts payable, accrued expenses and other payables 1,935 1,782
13,242 14,347

(2)
Details of income attributable to insurance operations before income tax and minority interest for the years ended
December 31 are as follows:

2021 2020 2019

(In Millions of Pesos)
Premiums earned and related income 3.071 3,607 3,841
Investment and other income 1,504 1,026 712
4,575 4,633 4,553
Benefits, claims and maturities 1,502 1,720 1,942
Decrease in actuarial reserve liabilities (486) (315) (412)
Commissions 856 879 938
Management and general expenses 817 822 838
Other expenses 32 21 24
2,721 3,127 3,330
Income before income tax and minority interest 1,854 1,506 1,223

Note 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.

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.

• Corporate banking - this segment caters both high-end corporations and middle market clients. Services offered include
deposit taking and servicing, loan facilities, trade and cash management 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.

(3)
Following the loss of control of the Parent Bank over BPI CTL BPI Century Tokyo Lease and Finance Corporation (BPI CTL)
effective December 23, 2020 (Note 12), the BPI Group’s segment reporting was updated to exclude the contribution of BPI
CTL. The details of the BPI Group’s reportable segments as at and for the years ended December 31 follows:

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 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

2020
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 43,564 26,112 5,909 75,585
Provision for credit and impairment losses 13,325 14,491 183 27,999
Net interest income after provision for credit and
impairment losses 30,239 11,621 5,726 47,586
Fees, commissions and other income, net 12,659 2,365 13,166 28,190
Total income 42,898 13,986 18,892 75,776
Compensation and fringe benefits 14,512 2,513 1,037 18,062
Occupancy and equipment-related expenses 9,064 545 330 9,939
Other operating expenses 16,975 3,374 1,755 22,104
Total other expenses 40,551 6,432 3,122 50,105
Operating profit 2,347 7,554 15,770 25,671
Income tax expense 3,906
Net income from
Continuing operations 21,863
Discontinued operations (211)
Share in net income of associates 487
Total assets 478,439 1,129,281 578,047 2,185,767
Total liabilities 1,251,744 511,995 162,255 1,925,994

(4)
 2019
Total per
Consumer Corporate Investment management
banking banking banking reporting
(In Millions of Pesos)
Net interest income 41,494 16,791 11,860 70,145
Provision for credit and impairment losses 3,489 2,068 5 5,562
Net interest income after provision for credit and
impairment losses 38,005 14,723 11,855 64,583
Fees, commissions and other income, net 14,314 2,199 8,329 24,842
Total income 52,319 16,922 20,184 89,425
Compensation and fringe benefits 14,373 2,479 1,108 17,960
Occupancy and equipment-related expenses 10,147 681 314 11,142
Other operating expenses 15,057 3,066 1,721 19,844
Total other expenses 39,577 6,226 3,143 48,946
Operating profit 12,742 10,696 17,041 40,479
Income tax expense 9,355
Net income from
Continuing operations 29,001
Discontinued operations 82
Share in net income of associates 372
Total assets 539,093 1,208,553 427,571 2,175,217
Total liabilities 1,211,212 552,549 145,398 1,909,159

Reconciliation of segment results to consolidated results of operations:

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

(5)
 2020
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 75,585 (3,321) 72,264
Provision for credit and impairment losses 27,999 1 28,000
Net interest income after provision for credit and impairment
losses 47,586 (3,322) 44,264
Fees, commissions and other income, net 28,190 1,469 29,659
Total income 75,776 (1,853) 73,923
Compensation and fringe benefits 18,062 (57) 18,005
Occupancy and equipment-related expenses 9,939 4,667 14,606
Other operating expenses 22,104 (6,561) 15,543
Total other expenses 50,105 (1,951) 48,154
Operating profit 25,671 98 25,769
Income tax expense 3,906 3,906
Net income from
Continuing operations 21,863 21,863
Discontinued operations (211) (211)
Share in net income of associates 487 487
Total assets 2,185,767 47,676 2,233,443
Total liabilities 1,925,994 25,492 1,951,486

2019
Total per
Total per Consolidation consolidated
management adjustments/ financial
reporting Others statements
(In Millions of Pesos)
Net interest income 70,145 (4,570) 65,575
Provision for credit and impairment losses 5,562 - 5,562
Net interest income after provision for credit and impairment
losses 64,583 (4,570) 60,013
Fees, commissions and other income, net 24,842 1,845 26,687
Total income 89,425 (2,725) 86,700
Compensation and fringe benefits 17,960 (591) 17,369
Occupancy and equipment-related expenses 11,142 3,594 14,736
Other operating expenses 19,844 (3,605) 16,239
Total other expenses 48,946 (602) 48,344
Operating profit 40,479 (2,123) 38,356
Income tax expense 9,355 9,355
Net income from
Continuing operations 29,001 29,001
Discontinued operations 82 82
Share in net income of associates 372 372
Total assets 2,175,217 29,813 2,205,030
Total liabilities 1,909,159 22,837 1,931,996

*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.

(6)
Note 4 - Cash and Cash Equivalents

The account at December 31 consists of:

Consolidated Parent
Notes 2021 2020 2021 2020
(In Millions of Pesos)
Cash and other cash items 35,143 37,176 33,868 35,912
Due from Bangko Sentral ng Pilipinas (BSP) 268,827 223,989 197,435 197,974
Due from other banks 34,572 40,155 27,734 36,605
Interbank loans receivable and securities purchased under
agreements to resell (SPAR) 5 26,999 28,945 26,292 25,314
Cash and cash equivalents attributable to insurance operations 2 412 321 - -
365,953 330,586 285,329 295,805

Note 5 - Interbank Loans Receivable and SPAR

The account at December 31 consists of transactions with:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
BSP 16,163 19,450 15,800 15,819
Other banks 14,733 10,836 14,267 10,839
30,896 30,286 30,067 26,658
Accrued interest receivable 2 6 2 5
30,898 30,292 30,069 26,663
Allowance for impairment (46) (41) (46) (41)
30,852 30,251 30,023 26,622

As at December 31, 2021, Interbank loans receivable and SPAR maturing within 90 days from the date of acquisition
amounting to P26,999 million (2020 - P28,945 million) for the BPI Group and P26,292 million (2020 - P25,314 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
2021 2020 2021 2020
Peso-denominated 2.00 - 8.28 2.00 - 8.28 2.00 - 8.28 2.00 - 8.28
US dollar-denominated 0.02 - 0.47 0.07 - 0.30 0.02 - 0.47 0.07 - 0.30

Note 6 - Financial Assets at Fair Value through Profit or Loss (FVTPL)

The account at December 31 consists of:

Consolidated Parent
Note 2021 2020 2021 2020
(In Millions of Pesos)
Debt securities
Government securities 14,343 29,942 11,872 28,784
Commercial papers of private companies 3,250 2,410 183 365
Listed equity securities 188 70 - -
Derivative financial assets 7 3,553 4,788 3,520 4,716
21,334 37,210 15,575 33,865

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

(7)
Note 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
2021 2020 2021 2020
(In Millions of Pesos)
Held for trading
Foreign exchange derivatives
Currency swaps 232 851 310 1,699
Currency forwards 1,488 560 1,584 806
Interest rate swaps 1,821 3,088 1,738 3,152
Warrants 2 1 - -
Equity option 10 10 - -
Held for hedging
Cross currency interest rate swap - 278 - -
3,553 4,788 3,632 5,657

Parent

Assets Liabilities
2021 2020 2021 2020
(In Millions of Pesos)
Held for trading
Foreign exchange derivatives
Currency swaps 232 851 310 1,699
Currency forwards 1,465 498 1,497 806
Interest rate swaps 1,821 3,088 1,738 3,152
Warrants 2 1 - -
Held for hedging
Cross currency interest rate swap - 278 - -
3,520 4,716 3,545 5,657

The Parent Bank was granted a Type 1 Derivative License by the BSP allowing it to issue options and hedged investments,
among others.

(8)
Cash flow hedge of foreign currency-denominated bond

Consistent with its established risk management framework and asset liability management strategies, the Parent Bank
decided to hedge the foreign currency exposure arising from the CHF-denominated debt (hedged item) issued in 2019
(Note 16).

The Parent Bank aims to minimize or reduce the volatility in the overall portfolio brought about by the movement of CHF
against the US Dollar through a hedging instrument - cross currency interest rate swap (CCIRS). Under the terms of the
CCIRS, the Parent Bank agrees to receive CHF in exchange for US Dollar at settlement date which coincides with the
maturity date of the hedged item. The volatility arising from movement of US Dollar against the functional currency
(Philippine Peso), however, is managed in conjunction with the Parent Bank’s overall foreign currency risk management.
The hedge ratio of 1:1 is observed so as not to create an imbalance that would create hedge ineffectiveness.

On September 24, 2021, the Parent Bank’s CCIRS hedging instrument matured resulting in a net gain of P290 million
attributable to the net cash inflow from receive leg of CHF100 million or P5,493 million and pay leg of USD 102 million or
P5,203 million. The hedged item matured on the same date resulting in a cash settlement of CHF100 million or
P5,493 million.

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.

Note 8 - Financial Assets at Fair Value through Other Comprehensive Income (FVOCI)

Details of the account at December 31 are as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Debt securities
Government securities 122,966 100,063 105,369 91,971
Commercial papers of private companies 7,869 26,092 7,869 26,006
130,835 126,155 113,238 117,977
Accrued interest receivable 555 696 475 646
131,390 126,851 113,713 118,623
Equity securities
Listed 1,982 1,784 1,517 1,369
Unlisted 1,369 1,551 311 308
3,351 3,335 1,828 1,677
134,741 130,186 115,541 120,300

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
2021 2020 2021 2020
(In Millions of Pesos)
Current (within 12 months) 34,060 42,777 26,921 41,472
Non-current (over 12 months) 97,330 84,074 86,792 77,151
131,390 126,851 113,713 118,623

(9)
The range of average effective interest rates (%) of financial assets at FVOCI for the years ended December 31 follows:

Consolidated Parent
2021 2020 2021 2020
Peso-denominated 1.58 - 8.57 1.70 - 7.18 1.58 - 7.18 1.70 - 7.18
Foreign currency-denominated 0.01 - 4.41 0.06 - 5.73 0.01 - 4.41 0.06 - 5.73

Interest income from debt instruments recognized in the statement of income for the year ended December 31, 2021
amounts to P2,473 million (2020 - P3,398 million; 2019 - P1,937 million) and P2,306 million (2020 - P3,124 million;
2019 - P1,871 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, 2021 amounts to P30 million (2020 - P57 million; 2019 - P76 million) and P16 million
(2020 - P48 million; 2019 - P48 million) for the BPI Group and Parent Bank, respectively.

Note 9 - Investment Securities at Amortized Cost, net

Details of the account at December 31 are as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Government securities 293,751 166,907 292,573 150,209
Commercial papers of private companies 42,039 75,411 37,809 64,522
335,790 242,318 330,382 214,731
Accrued interest receivable 2,888 2,348 2,817 2,092
338,678 244,666 333,199 216,823
Allowance for impairment (6) (13) (6) (13)
338,672 244,653 333,193 216,810

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

Consolidated Parent
2021 2020 2021 2020
Peso-denominated 1.61 - 8.13 1.67 - 4.20 1.61 - 8.13 1.67 - 4.20
Foreign currency-denominated 0.13 - 4.88 2.45 - 2.61 0.16 - 4.88 2.45 - 2.61

In 2021, the BPI Group and the Parent Bank recognized a net gain on derecognition of P1,513 million
(2020 - P4,647 million) and P1,166 million (2020 - P4,078 million), 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. In 2019,
the BPI Group and the Parent Bank sold an insignificant amount of debt securities, which resulted in a gain of P128 million
and P104 million, respectively.

Interest income from these investment securities recognized in the statement of income for the year ended
December 31, 2021 amounts to P7,657 million (2020 - P8,398 million; 2019 - P10,318 million) and P7,347 million
(2020 - P7,386 million; 2019 - P9,675 million) for the BPI Group and the Parent Bank, respectively.

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

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Current (within 12 months) 29,061 46,389 28,384 33,404
Non-current (over 12 months) 309,611 198,264 304,809 183,406
338,672 244,653 333,193 216,810

As at December 31, 2021, the Parent Bank has P4,421 million (2020 - P1,755 million) outstanding securities overlying
securitization structures (SOSS) 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.

(10)
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.

Note 10 - Loans and Advances, net

Details of this account at December 31 are as follows:

Consolidated Parent
2021 2020 2021 2020
Corporate loans (In Millions of Pesos)
Large corporate customers 1,169,551 1,112,069 1,151,417 1,092,514
Small and medium enterprise 66,594 66,869 48,678 49,699
Retail loans
Credit cards 76,048 68,057 74,125 65,686
Real estate mortgages 153,303 140,552 10 10
Auto loans 51,182 51,045 3 -
Others 11,952 11,616 283 616
1,528,630 1,450,208 1,274,516 1,208,525
Accrued interest receivable 7,819 8,976 5,447 6,180
Unearned discount/income (6,158) (5,013) (6,047) (4,838)
1,530,291 1,454,171 1,273,916 1,209,867
Allowance for impairment (53,764) (46,758) (40,864) (34,796)
1,476,527 1,407,413 1,233,052 1,175,071

As at December 31, 2021 and 2020, the BPI Group has no outstanding loans and advances used as security for bills
payable (Note 16).

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

Loans and advances are expected to be realized as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Current (within 12 months) 520,838 520,304 488,979 489,943
Non-current (over 12 months) 1,009,453 933,867 784,937 719,924
1,530,291 1,454,171 1,273,916 1,209,867

Finance lease operations (the BPI Group as the lessor)

In December 2020, certain receivables from finance lease arrangements of BPI Century Tokyo Lease and Finance
Corporation (BPI CTL) amounting to P5,669 million were assigned to BPI and BFB. These loan accounts are subsequently
grouped as part of “Corporate loans” and “Auto loans” categories for BPI and BFB, respectively. Guaranteed deposits related
to the assigned receivables were not transferred to BPI and BFB and have been retained by BPI CTL.

Until December 22, 2020, the BPI Group, through BPI CTL is engaged in the leasing out of transportation equipment under
various finance lease arrangements which typically run for a non-cancellable period of five years. The lease contracts
generally include an option for the lessee to purchase the leased asset after the lease period at a price that approximates to
about 5% to 40% of the fair value of the asset at the inception of the lease. Likewise, the lease contract requires the lessee to
put up a guarantee deposit equivalent to the residual value of the leased asset at the end of lease term. In the event that the
residual value of the leased asset exceeds the guaranteed deposit liability at the end of the lease term, the BPI Group receives
additional payment from the lessee prior to the transfer of the leased asset.

Effective December 23, 2020, the majority ownership in BPI CTL was transferred to Tokyo Century Corporation (TCC)
(Note 12). The loss of control of the Parent Bank over BPI CTL resulted in the deconsolidation of the finance lease
operations in the books of the BPI Group as at December 31, 2020.

(11)
The range of average interest rates (%) of loans and advances for the years ended December 31 follows:

Consolidated Parent
2021 2020 2021 2020
Commercial loans
Peso-denominated loans 4.33 - 4.59 4.53 - 5.20 4.30 - 4.56 4.75 - 5.25
Foreign currency-denominated loans 2.50 - 2.97 2.32 - 3.98 2.50 - 2.97 2.41 - 3.98
Real estate mortgages 5.65 - 6.20 6.50 - 8.05 - -
Auto loans 8.86 - 9.63 8.97 - 9.87 - -

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
2021 2020 2021 2020
(In Millions of Pesos)
Secured loans
Real estate mortgage 268,427 257,311 138,333 132,600
Chattel mortgage 51,878 51,821 6 8
Others 122,943 203,629 120,803 201,013
443,248 512,761 259,142 333,621
Unsecured loans 1,079,224 932,434 1,009,327 870,066
1,522,472 1,445,195 1,268,469 1,203,687

Other collaterals include hold-out deposits, mortgage trust indentures, government and corporate securities and bonds,
quedan/warehouse receipts, standby letters of credit, trust receipts, and deposit substitutes.

Note 11 - Bank Premises, Furniture, Fixtures and Equipment, net

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

Consolidated

2021
Buildings and
leasehold Furniture and
Notes Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2021 3,013 24,305 17,038 44,356
Additions 47 2,306 1,504 3,857
Disposals (13) (286) (1,601) (1,900)
Transfers 1 (24) (2) (25)
Other changes 20 - (109) 2 (107)
December 31, 2021 3,048 26,192 16,941 46,181
Accumulated depreciation
January 1, 2020 - 11,084 14,440 25,524
Depreciation and amortization - 2,946 1,313 4,259
Disposals - (187) (924) (1,111)
Transfers - - (2) (2)
Other changes 20 - (16) 2 (14)
December 31, 2021 - 13,827 14,829 28,656
Net book value, December 31, 2021 3,048 12,365 2,112 17,525

(12)
 2020
Buildings and
leasehold Furniture and Equipment
Notes Land improvements equipment for lease Total
(In Millions of Pesos)
Cost
January 1, 2020 3,019 21,956 17,023 6,131 48,129
Additions - 857 1,733 1,072 3,662
Disposals (6) (4) (1,684) (842) (2,536)
Transfers - 2 (9) (13) (20)
Effect of deconsolidation 12 - (2) (25) (6,348) (6,375)
Other changes 20 - 1,496 - - 1,496
December 31, 2020 3,013 24,305 17,038 - 44,356
Accumulated depreciation
January 1, 2020 - 8,179 14,357 1,845 24,381
Depreciation and amortization - 847 1,523 1,326 3,696
Disposals - (2) (1,424) (564) (1,990)
Transfers - - (5) (7) (12)
Effect of deconsolidation 12 - (8) (11) (2,600) (2,619)
Other changes 20 - 2,068 - - 2,068
December 31, 2020 - 11,084 14,440 - 25,524
Net book value, December 31, 2020 3,013 13,221 2,598 - 18,832

Parent

2021
Buildings and Furniture
leasehold and
Notes Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2021 2,668 20,783 15,160 38,611
Additions 46 1,978 1,296 3,320
Disposals (13) (278) (1,542) (1,833)
Transfers 2 (20) - (18)
Other changes 20 - (2) - (2)
December 31, 2021 2,703 22,461 14,914 40,078
Accumulated depreciation
January 1, 2021 - 9,563 12,917 22,480
Depreciation and amortization - 2,326 1,083 3,409
Disposals - (181) (873) (1,054)
December 31, 2021 - 11,708 13,127 24,835
Net book value, December 31, 2021 2,703 10,753 1,787 15,243

2020
Buildings and Furniture
leasehold and
Notes Land improvements equipment Total
(In Millions of Pesos)
Cost
January 1, 2020 2,668 18,956 15,177 36,801
Additions - 750 1,547 2,297
Disposals - - (1,564) (1,564)
Other changes 20 - 1,077 - 1,077
December 31, 2020 2,668 20,783 15,160 38,611
Accumulated depreciation
January 1, 2020 - 7,232 12,974 20,206
Depreciation and amortization - 640 1,286 1,926
Disposals - - (1,343) (1,343)
Other changes 20 - 1,691 - 1,691
December 31, 2020 - 9,563 12,917 22,480
Net book value, December 31, 2020 2,668 11,220 2,243 16,131

(13)
As at December 31, 2021, the BPI Group has recognized construction-in-progress amounting to P475.1 million in relation
to the redevelopment of its main office. This is recorded as part of “Buildings and leasehold improvements” category in the
table above.

Other changes pertain to additions and remeasurement of right-of-use assets due to renewal of lease agreements,
extension of lease terms and deferral of escalation clause on existing lease contracts. The impact of remeasurement is
presented in Note 20.

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

In 2021, the Parent Bank realized a gain of P78 million (2020 - P77 million) (Note 19) from the disposal of certain bank
premises, furniture, fixtures and equipment.

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.

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.

Note 12 - Investments in Subsidiaries and Associates, net

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

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Carrying value (net of impairment)
Investments at equity method 7,165 7,510 - -
Investments at cost method - - 15,556 11,039
7,165 7,510 15,556 11,039

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 2021 2020 2021 2020
(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 20.00 940 880
BPI AIA Life Assurance Corporation (formerly BPI-
Philamlife Assurance Corporation) Philippines 47.96 47.96 389 389
BPI CTL 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
3,061 3,001

(14)
The movements in investments in associates accounted for using the equity method in the consolidated financial
statements are summarized as follows:

2021 2020
(In Millions of Pesos)
Acquisition cost
At January 1 3,001 2,829
Additions during the year 60 60
Reclassification - (204)
Effect of deconsolidation - 316
At December 31 3,061 3,001
Accumulated equity in net income
At January 1 4,201 3,007
Share in net income for the year 1,086 487
Dividends received (1,211) (343)
Reclassification - (302)
Effect of deconsolidation - 1,352
At December 31 4,076 4,201
Accumulated share in other comprehensive income (loss)
At January 1 448 1,050
Share in other comprehensive income for the year (280) (589)
Effect of deconsolidation - (13)
At December 31 168 448
Allowance for impairment (140) (140)
7,165 7,510

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:

2021 2020
(In Millions of Pesos)
Total assets 129,058 128,719
Total liabilities 114,717 113,630
Total revenues 24,044 19,042
Total net income 2,629 1,484

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
2021 2020 2021 2020 2021 2020
(In Millions of Pesos)
Subsidiaries
BPI Europe Plc.(BPI Europe) 7,181 3,160 - - 7,180 3,160
BPI Direct BanKo, Inc., A Savings Bank (BanKo) 2,009 1,509 - - 1,392 1,509
BPI Asset Management and Trust Corporation 1,502 1,502 - - 1,502 1,502
Ayala Plans, Inc. 864 864 - - 864 864
BPI Payments Holdings Inc. (BPHI) 693 633 (672) (612) 21 21
BPI Capital Corporation 623 623 - - 623 623
FGU Insurance Corporation 303 303 - - 303 303
BPI Forex Corp. 195 195 - - 195 195
BPI Family Savings Bank, Inc. 150 150 - - 150 150
BPI Remittance Centre (HK) Ltd. (BERC HK) 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 317 321 - - 935 321
Associates 2,120 2,120 - - 2,120 2,120
16,228 11,651 (672) (612) 15,556 11,039

In 2021, the Parent Bank made additional capital infusions to BPI Europe, BanKo and BPHI amounting to P4,021 million
(2020 - P1,250 million), P500 million (2020 - P500 million) and P60 million (2020 - P60 million), respectively.

(15)
Likewise, the Parent Bank in 2021, recognized an impairment loss of P60 million (2020 - P313 million) on its investment
in BPHI due to financial losses incurred by BPHI’s associate, AFPI, as disclosed above. In computing for its recoverable
amount, the Parent Bank used a discount rate of 13.08% (2020 - 11.63%) in assessing its value in use, which amounts to
P21 million in 2021 (2020 - P21 million).

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

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, 2021 and 2020 in its
subsidiaries apart from BPHI.

For the 2021 and 2020 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.

Discontinued operations

On November 18, 2020, the Board of Directors approved the transfer of the Parent Bank’s majority ownership via the sale
of its 2% share in BPI CTL effective December 22, 2020, to TCC, resulting in a 49% and 51% ownership structure between
BPI and TCC. The consideration paid by TCC is equivalent to the price-to-book value multiple of 1.06x of BPI CTL’s book
value as at December 31, 2019.

(16)
Accordingly, the sale of shares resulting in a loss of control of the subsidiary was presented as discontinued operations.
The financial performance and cash flow information presented below are for the period from January 1, 2020 to
December 22, 2020 (2020 column), and for the year ended December 31, 2019.

2020 2019
(In Millions of Pesos)
INTEREST INCOME
On loans and advances 370 1,095
On investment securities - -
On deposits with BSP and other banks 1 1
371 1,096
INTEREST EXPENSE
On bills payable and other borrowed funds 271 726
NET INTEREST INCOME 100 370
PROVISION FOR CREDIT AND IMPAIRMENT LOSSES 418 260
NET INTEREST (EXPENSE) INCOME AFTER PROVISION FOR CREDIT AND
IMPAIRMENT LOSSES (318) 110
OTHER INCOME
Fees, commissions, and other operating income 949 1,867
Income (loss) from foreign exchange trading 28 (9)
977 1,858
OTHER EXPENSES
Compensation and fringe benefits 63 118
Occupancy and equipment-related expenses 727 1,543
Other operating expenses 115 228
905 1,889
(LOSS) PROFIT BEFORE INCOME TAX (246) 79
INCOME TAX EXPENSE
Current 90 62
Deferred (125) (65)
(35) (3)
NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (211) 82

2020 2019
(In Millions of Pesos)
Net cash flows from operating activities 3,791 941
Net cash flows from investing activities 3,539 3
Net cash flows from financing activities (7,326) (884)
Net increase in cash flows from discontinued operations 4 60

The carrying amounts of assets and liabilities of BPI CTL as at the date of sale (December 23, 2020) are as follows:

Amount
(In Millions of Pesos)
Due from other banks 1,769
Investment securities at amortized cost, net 12
Loans and advances, net 2,610
Bank premises, furniture, fixtures and equipment, net 3,756
Other assets, net 3,747
Total assets 11,894

Bills payable and other borrowed funds 5,472

Accrued taxes, interest and other expenses 170
Deferred credits and other liabilities 3,231
Total liabilities 8,873
Net assets 3,021

The details of the sale of the 2% ownership in CTL are as follows:

Consolidated Parent
(In Millions of Pesos)
Cash consideration received 72 72
Carrying amount of net assets sold (62) (13)
Gain on sale 10 59

(17)
The resulting gain is recorded as part of miscellaneous income under other operating income (Note 19).

Note 13 - Deferred Income Taxes

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

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Deferred income tax assets
Allowance for credit and impairment losses 14,222 15,067 10,579 10,675
Pension liability 1,794 2,558 1,525 2,368
Provisions 304 307 225 251
Others (102) 155 23 144
Total deferred income tax assets 16,218 18,087 12,352 13,438
Deferred income tax liabilities
Unrealized gain on property appraisal (395) (476) (395) (476)
Others (4) (86) (4) (124)
Total deferred income tax liabilities (399) (562) (399) (600)
Deferred income tax assets, net 15,819 17,525 11,953 12,838

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

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
At January 1 17,525 9,706 12,838 6,653
Amounts recognized in statement of income (1,099) 6,845 (375) 5,144
Amounts recognized in other comprehensive income (607) 974 (510) 1,041
At December 31 15,819 17,525 11,953 12,838

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

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Allowance for impairment (1,816) (6,637) (946) (1,541) (4,992) (718)
Pension (131) (45) 18 (121) (55) 9
NOLCO (6) 17 83 - - -
Others 3,052 (180) 160 2,037 (97) 126
1,099 (6,845) (685) 375 (5,144) (583)

The deferred income tax benefit recognized in the statement of income of the BPI Group as presented above includes the
portion of BPI CTL for the year ended December 31, 2020 and 2019 amounting to P125 million and P65 million,
respectively (Note 12).

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.

(18)
Note 14 - Other Assets, net

The account at December 31 consists of the following:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Sundry debits 9,458 6,456 9,367 6,098
Accounts receivable 2,928 2,690 6,405 2,402
Intangible assets 1,989 2,530 1,770 2,178
Prepaid expenses 1,426 984 1,153 705
Rental deposits 762 762 647 650
Accrued trust and other fees 715 703 136 141
Creditable withholding tax 216 330 76 193
Investment properties 165 150 153 139
Miscellaneous assets 3,333 3,224 2,849 2,728
20,992 17,829 22,556 15,234
Allowance for impairment (1,099) (983) (908) (822)
19,893 16,846 21,648 14,412

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

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

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

Residual value of equipment for lease pertains to refundable operating and finance lease deposits held under BPI CTL.

Miscellaneous assets include postage stamps, stationery and supplies.

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
2021 2020 2021 2020
(In Millions of Pesos)
At January 1 983 515 822 310
Provision for impairment losses 269 684 214 614
Transfer/reallocation 13 - 21 (29)
Write-off (166) (216) (149) (73)
At December 31 1,099 983 908 822

Other assets are expected to be realized as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Current (within 12 months) 18,758 15,079 20,624 12,907
Non-current (over 12 months) 2,234 2,750 1,932 2,327
20,992 17,829 22,556 15,234

Note 15 - Deposit Liabilities

The account at December 31 consists of:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Demand 369,079 314,853 356,398 304,140
Savings 1,137,124 1,051,069 1,012,722 925,409
Time 448,944 350,255 306,665 240,661
1,955,147 1,716,177 1,675,785 1,470,210

(19)
Deposit liabilities include amounts due to related parties (Note 25).

Deposit liabilities are expected to be settled as follows:

Consolidated Parent
2021 2020 2020 2019
(In Millions of Pesos)
Current (within 12 months) 1,087,175 731,596 957,669 646,179
Non-current (over 12 months) 867,972 984,581 718,116 824,031
1,955,147 1,716,177 1,675,785 1,470,210

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.

Related interest expense on deposit liabilities is presented below:

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Demand 377 625 628 359 578 574
Savings 3,419 6,053 6,738 2,841 4,944 5,541
Time 6,372 12,308 21,508 2,387 7,255 15,361
10,168 18,986 28,874 5,587 12,777 21,476

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 2020, the BSP approved the reduction in reserves which brought the requirement down to 12% for universal and
commercial banks effective April 3, 2020 by virtue of BSP Circular 1082. For thrift banks, the BSP approved reduction in
reserves which brought the requirement from 4% down to 3% effective July 31, 2020 by virtue of BSP Circular 1092. These
rates continue to be consistent throughout 2021.

Reserves must be set aside in deposits with the BSP. As at December 31, 2021, the reserves (included in Due from BSP)
amounted to P175,759 million (2020 - P154,696 million) for the BPI Group and P167,530 million
(2020 - P147,618 million) for the Parent Bank. The BPI Group is in full compliance with the reserve requirement as at
December 31, 2021 and 2020.

Note 16 - Bills Payable and Other Borrowed Funds

The account at December 31 consists of:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Bills payable
Local banks - 5,406 - 5,406
Foreign banks 2,906 18,190 - 16,136
Other borrowed funds 92,133 128,351 82,550 118,806
95,039 151,947 82,550 140,348

Bills payable

Bills payable include mainly funds borrowed from various banking institutions which were lent out to customers of the
BPI Group. As of December 31, 2021, the Parent Bank no longer holds any bills payable as they all matured within the
year. The average payment terms of these bills payable is 1.12 years (2020 - 0.59 years).

(20)
The range of average interest rates (%) of bills payable for the years ended December 31 follows:

Consolidated Parent
2021 2020 2021 2020
Private firms and local banks - Peso-denominated - 0.89 - 4.30 - 0.89 - 4.00
Foreign banks - Foreign currency-denominated 0.77 - 1.44 0.11 - 2.85 0.77 - 1.44 0.11 - 2.85

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, in one or more tranches, under an updated Bank
Bond Issuance Program with drawdowns as follows:

Carrying amount
Interest Face
Description of instrument Date of drawdown rate Maturity amount 2021 2020
Fixed rate bonds,
unconditional, unsecured
and unsubordinated bonds January 24, 2020 4.24% January 24, 2022 15,328 15,328 15,251
Fixed rate bonds,
unconditional, unsecured
and unsubordinated bonds March 27, 2020 4.05% September 27, 2021 33,896 - 33,724
BPI CARe bonds,
unconditional, unsecured
and unsubordinated bonds August 7, 2020 3.05% May 7, 2022 21,500 21,463 21,391

Likewise, on October 31, 2019, the BOD of BFB, a wholly-owned subsidiary, approved the establishment of a Peso Bond
Program in the aggregate amount of P35,000 million. In line with the said program, on December 16, 2019, BFB issued
P9,600 million with a coupon of 4.30% per annum, payable quarterly to mature on June 16, 2022 and with a carrying
amount of P9,584 million as at December 31, 2021 (2020 - P9,545 million).

The Parent Bank’s fixed rate bonds with a coupon rate of 4.05% matured on September 27, 2021 resulting in a cash
settlement of P33,896 million.

b) 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 US$2,000 million with drawdowns as follows:

Interest Carrying amount

Description of instrument Date of drawdown rate Maturity Face amount 2021 2020
(In Millions of Pesos)
US$ 600 million, 5-year
senior unsecured Bonds September 4, 2018 4.25% September 4, 2023 32,000 30,519 28,695
US$ 300 million, 5-year
senior unsecured Green
Bonds September 10, 2019 2.50% September 10, 2024 15,572 15,240 14,330
CHF 100 million, 2-year
senior unsecured Green
Bonds September 24, 2019 - September 24, 2021 5,250 - 5,415

The CHF-denominated bonds are designated as hedged items in a cash flow hedge initiated by the Parent Bank in 2019
(Note 7). These bonds matured on September 24, 2021, resulting in a cash settlement of CHF100 million or P5,493 million.

(21)
Interest expense for the years ended December 31 is summarized as follows:

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Bills payable 77 471 2,823 59 458 2,834
Other borrowed funds 4,789 4,587 3,215 4,337 4,137 3,197
4,866 5,058 6,038 4,396 4,595 6,031

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

Consolidated Parent
Note 2021 2020 2021 2020
(In Millions of Pesos)
At January 1 151,947 150,837 140,348 126,529
Additions 87,461 233,553 74,530 185,258
Maturities (147,618) (221,404) (135,539) (165,879)
Amortization of discount 462 (238) 424 (275)
Exchange differences 2,787 (5,329) 2,787 (5,285)
Effect of deconsolidation 12 - (5,472) - -
At December 31 95,039 151,947 82,550 140,348

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

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Current (within 12 months) 48,261 57,955 36,791 55,901
Non-current (over 12 months) 46,778 93,992 45,759 84,447
95,039 151,947 82,550 140,348

Note 17 - Deferred Credits and Other Liabilities

The account at December 31 consists of the following:

Consolidated Parent
Note 2021 2020 2021 2020
(In Millions of Pesos)
Bills purchased - contra 9,989 12,802 9,989 12,801
Lease liabilities 20 7,326 7,811 6,248 6,559
Accounts payable 5,396 5,984 3,397 4,661
Other deferred credits 4,129 2,718 342 400
Outstanding acceptances 2,842 934 2,842 934
Due to the Treasurer of the Philippines 1,182 942 1,031 823
Withholding tax payable 632 604 519 438
Miscellaneous liabilities 11,906 14,062 9,394 10,487
43,402 45,857 33,762 37,103

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.

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

Other deferred credits pertain to discount on purchased contract-to-sell receivables from developers. These are being
amortized on a monthly basis over the life of the receivable using the effective interest rate method.

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

(22)
The account is expected to be settled as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Current (within 12 months) 32,810 32,332 24,770 25,677
Non-current (over 12 months) 10,592 13,525 8,992 11,426
43,402 45,857 33,762 37,103

Note 18 - Capital Funds

a) Share capital

Details of authorized share capital of the Parent Bank follow:

2021 2020 2019

(In Millions of Pesos, except par value per share)
Authorized capital (at P10 par value per share)
Common shares 50,000 49,000 49,000
Preferred A shares 600 600 600
50,600 49,600 49,600

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

2021 2020 2019

(In absolute number of shares)
Common shares
At January 1 4,513,101,605 4,507,071,644 4,502,449,501
Subscription of shares during the year 26,650 6,029,961 4,622,143
At December 31 4,513,128,255 4,513,101,605 4,507,071,644
(In absolute amounts)
Subscription receivable - 85,612,950 71,637,390

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

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 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, 2021, 2020 and 2019, the Parent Bank has 12,084, 12,306 and 12,396 common shareholders,
respectively. There are no preferred shares issued and outstanding at December 31, 2021, 2020 and 2019.

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.

b) Reserves

The account consists of:

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)

Reserve for trust business 389 199 199 - - -

Executive stock option plan amortization 141 183 136 126 162 119
Reserve for self-insurance 34 34 34 34 34 34
General loan loss provision - - 4,739 - - 4,739
564 416 5,108 160 196 4,892

(23)
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, 2021 and December 31, 2020, the GLLP appropriation is nil as the loan loss
provision for both periods are higher than the required GLLP.

Reserve for trust business

In compliance with existing BSP regulations, 10% of BPI AMTC’s income from trust business is appropriated to surplus
reserve. This yearly appropriation is required until the surplus reserve for trust business reaches 20% of the authorized
capital of BPI AMTC.

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.

Share-based compensation plan

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

Date Approved ESOP shares Approved ESPP shares

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:

2021 2020 2019

At January 1 15,921,667 13,965,001 11,773,334
Granted - 3,950,000 4,000,000
Exercised (1,650,000) (141,667) (1,116,666)
Cancelled (1,366,667) (1,851,667) (691,667)
At December 31 12,905,000 15,921,667 13,965,001
Exercisable 9,095,002 8,526,667 6,733,334

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 15% below the volume weighted average of BPI share price for the
30-trading days immediately prior to the grant date. The subscription dates for the last three-year ESPP were on
February 4, 2020, January 7, 2019 and January 8, 2018.

(24)
c) Accumulated other comprehensive loss

Details of and movements in the account are as follows:

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Fair value reserve on financial assets at FVOCI
At January 1 559 (84) (33) 932 (61) 69
From continuing operations
Unrealized fair value loss before tax (2,864) (69) (424) (2,779) 889 (94)
Amount recycled to profit or loss 47 494 387 148 479 (32)
Deferred income tax effect (772) 218 (14) (628) (375) (4)
At December 31 (3,030) 559 (84) (2,327) 932 (61)
Share in other comprehensive income (loss)
of insurance subsidiaries
At January 1 219 118 (36) - - -
Share in other comprehensive income (loss)
for the year, before tax (184) 131 389 - - -
Effect of PFRS9 adoption - - (229) - - -
Deferred income tax effect 36 (30) (6) - - -
At December 31 71 219 118 - - -
Share in other comprehensive income (loss) of
associates
At January 1 446 1,048 (206) - - -
Share in other comprehensive (loss)income
for the year (280) (602) 1,254 - - -
At December 31 166 446 1,048 - - -
Translation adjustment on foreign operations
At January 1 (1,144) (906) (704) (291) (124) -
Translation differences and others 627 (238) (202) 291 (167) (124)
At December 31 (517) (1,144) (906) - (291) (124)
Remeasurements of defined benefit
obligation, net
At January 1 (5,979) (2,615) (1,197) (4,929) (2,131) (990)
From continuing operations
Actuarial gains (losses) for the year 1,372 (4,729) (1,829) 1,039 (4,214) (1,508)
Deferred income tax effect (753) 1,368 427 (608) 1,416 367
From discontinued operations
Actuarial losses for the year - (7) (22) - - -
Deferred income tax effect - 4 6 - - -
At December 31 (5,360) (5,979) (2,615) (4,498) (4,929) (2,131)
(8,670) (5,899) (2,439) (6,825) (4,288) (2,316)

d) Dividend declarations

Cash 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, 2021
May 19, 2021 0.90 4,062
November 17, 2021 0.90 4,062
8,124
For the year ended December 31, 2020
May 20, 2020 0.90 4,062
October 21, 2020 0.90 4,062
8,124
For the year ended December 31, 2019
May 15, 2019 0.90 4,056
November 20, 2019 0.90 4,057
8,113

On September 30, 2021, the BOD of BPI/MS Insurance Corporation, a subsidiary of the Parent Bank, approved the cash
dividend declaration of P376 million to be paid on or before November 30, 2021, of which P184 million is attributable to
the non-controlling interest.

(25)
e) Earnings per share (EPS)

EPS is calculated as follows:

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos, except earnings per share amounts)
a) Net income attributable to equity holders of
the Parent Bank from:
Continuing operations 23,880 21,620 28,761 22,783 24,611 26,218
Discontinued operations - (211) 42 - - -
b) Weighted average number of common
shares outstanding during the year 4,513 4,513 4,507 4,513 4,513 4,507
c) Basic EPS (a/b) based on net income from:
Continuing operations 5.29 4.79 6.38 5.05 5.45 5.82
Discontinued operations - (0.05) 0.01 - - -

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.

Note 19 - Other Operating Income

Details of other operating income are as follows:

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Trust and asset management fees 3,913 3,495 2,868 6 5 4
Credit card income 3,542 3,091 3,523 3,449 3,013 3,423
Gain on sale of assets 477 372 1,284 129 124 898
Rental income 236 208 226 285 260 267
Dividend income 30 57 76 6,939 7,792 3,794
Miscellaneous income 2,572 1,919 2,298 2,218 2,265 2,101
10,770 9,142 10,275 13,026 13,459 10,487

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.

Note 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 2021 2020 2021 2020
(In Millions of Pesos)
Right-of-use assets
Buildings and leasehold improvements 11 6,631 7,222 5,712 6,114
Lease liabilities (included in “Deferred credits and other liabilities”) 17
Current 2,486 1,772 2,188 1,448
Non-current 4,840 6,039 4,060 5,111
7,326 7,811 6,248 6,559

(26)
Additions to the right-of-use assets (Note 11) in 2021 aggregated P1,622 million (2020 - P1,484 million) and P1,351 million
(2020 - P1,074 million) for BPI Group and BPI Parent, respectively. Total cash outflow for leases in 2021 amounted to
P2,211 million (2020 - P1,814 million) and P1,724 million (2020 - P1,387 million) for BPI Group and BPI Parent, respectively.

Amounts recognized in the statement of income relating to leases:

Consolidated Parent
Note 2021 2020 2021 2020
(In Millions of Pesos)
Depreciation expense
Buildings and leasehold improvements 11 2,029 2,068 1,663 1,691
Interest expense (included in “Occupancy and equipment-related
expenses”) 313 357 246 279
Expense relating to short-term leases (included in “Occupancy and
equipment-related expenses”) 141 125 141 117
Expense relating to leases of low-value assets that are not shown
above as short-term leases (included in “Occupancy and
equipment-related expenses”) 144 108 101 57
2,627 2,658 2,151 2,144

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
2021 2020 2021 2020
(In Millions of Pesos)
Rent concession (included in “Miscellaneous income”) 70 149 69 141
Rent escalation deferral
Increase (decrease) in right-of-use assets 45 (222) 45 (205)
Increase (decrease) in lease liabilities 45 (144) 45 (101)

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 3.94% to 7.19%
(2020 - 4.30% to 4.84%). The rates were determined in reference to the borrowing rates arising from the most recent debt
issuances of the Parent Bank.

Note 21 - Operating Expenses

a) Compensation and fringe benefits

Details of the account for the years ended December 31:

Consolidated Parent
Note 2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Salaries and wages 15,050 14,896 14,517 11,461 11,411 11,231
Retirement expense 23 1,443 1,068 771 1,135 872 536
Other employee benefit expenses 2,035 2,041 2,081 1,498 1,587 1,712
18,528 18,005 17,369 14,094 13,870 13,479

(27)
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
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Insurance 4,188 4,289 4,142 3,090 3,065 2,861
Taxes and licenses 1,285 1,263 927 996 957 657
Travel and communication 1,123 1,132 1,199 950 961 974
Advertising 970 804 1,492 920 754 1,316
Supervision and examination fees 843 733 653 593 570 506
Litigation expenses 373 430 549 101 249 308
Office supplies 343 390 477 254 309 389
Management and other professional fees 337 301 501 254 248 388
Amortization expense 135 339 311 - - 30
Shared expenses - - - 53 39 39
Others 6,598 5,862 5,988 5,009 4,636 4,590
16,195 15,543 16,239 12,220 11,788 12,058

Insurance expense comprise mainly of premium payments made to Philippine Deposit Insurance Corporation 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.

Note 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
2021 2020 2019
Amount Rate (%) Amount Rate (%) Amount Rate (%)
(In Millions of Pesos)
Statutory income tax 8,384 25.00 7,667 30.00 11,506 30.00
Effect of items not subject to statutory tax rate:
Income subjected to lower tax rates 39 0.12 (229) (0.90) (1,553) (4.05)
Tax-exempt income (1,780) (5.31) (5,320) (20.82) (2,925) (7.63)
Others, net 2,784 8.30 1,788 6.88 2,327 6.07
Effective income tax 9,427 28.11 3,906 15.16 9,355 24.39

Parent
2021 2020 2019
Amount Rate (%) Amount Rate (%) Amount Rate (%)
(In Millions of Pesos)
Statutory income tax 7,465 25.00 8,621 30.00 10,327 30.00
Effect of items not subject to statutory tax rate:
Income subjected to lower tax rates 91 0.30 (258) (0.90) (1,445) (4.20)
Tax-exempt income (933) (3.12) (3,823) (13.30) (1,637) (4.76)
Others, net 453 1.52 (412) (1.43) 960 2.79
Effective income tax 7,076 23.70 4,128 14.37 8,205 23.83

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.

(28)
Note 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. 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
2021 2020 2021 2020
(In Millions of Pesos)
Present value of defined benefit obligation 15,580 16,532 13,361 14,008
Fair value of plan assets (9,999) (9,189) (8,504) (7,762)
Pension liability recognized in the statement of condition 5,581 7,343 4,857 6,246
Effect of asset ceiling 23 16 - -
5,604 7,359 4,857 6,246

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

The movements in plan assets are summarized as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
At January 1 9,189 12,172 7,762 10,130
Contributions 1,386 915 1,194 770
Interest income 356 666 299 556
Benefit payments (909) (2,077) (733) (1,633)
Remeasurement - return on plan assets (23) (2,468) (18) (2,061)
Effect of deconsolidation - (19) - -
At December 31 9,999 9,189 8,504 7,762

The carrying values of the plan assets represent their fair value as at December 31, 2021 and 2020.

(29)
The plan assets are comprised of the following:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Debt securities 6,228 4,343 5,297 3,668
Equity securities 2,692 3,807 2,289 3,216
Others 1,079 1,039 918 878
9,999 9,189 8,504 7,762

The plan assets of the unified retirement plan include investment in BPI’s common shares with aggregate fair value of
P485 million at December 31, 2021 (2020 - P390 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
2021 2020 2021 2020
(In Millions of Pesos)
At January 1 16,532 14,892 14,008 12,545
Interest cost 654 830 555 698
Current service cost 853 756 703 628
Remeasurement - changes in financial assumptions (1,313) 2,265 (1,094) 1,832
Remeasurement - experience adjustment (18) (80) 97 (62)
Remeasurement - changes in demographic assumption (219) - (175) -
Benefit payments (909) (2,077) (733) (1,633)
Effect of deconsolidation - (54) - -
At December 31 15,580 16,532 13,361 14,008

The BPI Group has no other transactions with the plan other than the regular funding contributions presented above for
the years ended December 31, 2021 and 2020.

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

Consolidated Parent
2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Current service cost 853 754 545 703 628 456
Net interest cost 298 164 86 256 142 80
1,151 918 631 959 770 536

The current service cost and net interest cost of the BPI Group as presented above include the portion of BPI CTL for the
year ended December 31, 2019 amounting to P2.4 million.

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

Consolidated Parent
2021 2020 2021 2020
Discount rate 4.93% 3.96% 4.93% 3.96%
Future salary increases 5.00% 5.00% 5.00% 5.00%

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

(30)
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, 2022 for the BPI Group
and the Parent Bank amount to P1,312 million and P1,111 million, respectively (2020 - P1,562 million and P1,301 million,
respectively). The weighted average duration of the defined benefit obligation under the BPI unified retirement plan as at
December 31, 2021 is 8.12 years (2020 - 9.56 years).

The projected maturity analysis of retirement benefit payments as at December 31 are as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Up to one year 1,535 1,225 1,346 1,081
More than 1 year to 5 years 5,671 4,715 4,997 4,302
More than 5 years to 10 years 9,397 8,604 8,018 7,388
More than 10 years to 15 years 8,430 9,781 7,111 8,127
More than 15 years to 20 years 4,839 5,243 3,905 4,327
Over 20 years 13,553 18,369 10,428 12,669

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions as at December 31
follows:

Consolidated

2021
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 1.00% Decrease by 7.60% Increase by 8.70%
Salary growth rate 1.00% Increase by 8.60% Decrease by 7.60%

2020
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 0.5% Decrease by 5.40% Increase by 6.00%
Salary growth rate 1.0% Increase by 10.10% Decrease by 8.80%

Parent

2021
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 1.00% Decrease by 7.40% Increase by 8.50%
Salary growth rate 1.00% Increase by 8.40% Decrease by 7.50%

(31)
2020
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 0.5% Decrease by 4.40% Increase by 4.70%
Salary growth rate 1.0% Increase by 9.60% Decrease by 8.50%

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.

Under the normal or late retirement, employees are entitled to a benefit equal to the total of the following amounts:
• The higher between (a) cumulative fund balance equivalent to 8% of the basic monthly salary and
(b) the minimum legal retirement benefit under the Labor Code; and
• Employee contributions fund

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
2021 2020 2021 2020
(In Millions of Pesos)
Fair value of plan assets 1,981 1,478 1,474 1,102
Present value of defined benefit obligation (760) (1,069) (563) (692)
1,221 409 911 410
Effect of asset ceiling 1,221 428 911 410
- (19) - -

The movements in the present value of the defined benefit obligation follow:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
At January 1 1,069 811 692 604
Interest cost 42 45 27 34
Current service cost 196 154 112 105
Benefit payments (71) (93) (49) (73)
Remeasurement - changes in financial assumptions (155) 303 (112) 189
Remeasurement - experience adjustment (65) (146) 79 (167)
Remeasurement - changes in demographic assumptions (256) - (186) -
Effect of deconsolidation - (5) - -
At December 31 760 1,069 563 692

(32)
The movements in the fair value of plan assets follow:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
At January 1 1,478 1,748 1,102 1,325
Contribution paid by employer 320 318 220 218
Interest income 62 101 46 77
Benefit payments (71) (93) (49) (73)
Remeasurement - return on plan assets 192 (585) 155 (445)
Effect of deconsolidation - (11) - -
At December 31 1,981 1,478 1,474 1,102

Total retirement expense for the year ended December 31, 2021 under the defined contribution plan for the BPI Group
and Parent Bank amounts to P193 million (2020 - P150 million) and P110 million (2020 - P102 million), respectively.

The components of plan assets of the defined contribution as at December 31 are as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Debt securities 1,139 720 847 537
Equity securities 839 695 624 518
Others 3 63 3 47
1,981 1,478 1,474 1,102

The weighted average duration of the defined contribution retirement plan for the BPI Group and Parent Bank is
18.88 years (2020 - 20.46 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, 2021 and 2020 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.

Note 24 - Asset Management Business

At December 31, 2021, the net asset value of trust and fund assets managed by the BPI Group through BPI AMTC amounts to
P882 billion (2020 - P854 billion).

As required by the General Banking Act, BPI AMTC has deposited government securities with the BSP valued at P503 million
(2020 - P426 million).

Note 25 - Related Party Transactions

In the normal course of business, the Parent Bank transacts with related parties consisting of its subsidiaries and associates.
Likewise, the BPI Group has transactions with Ayala Corporation (AC) and 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 that vets and endorses all significant related
party transactions, including those involving directors, officers, stockholders and their related interests (DOSRI), for
which the latter shall require final Board approval. The Committee consists of three directors, majority of whom are
independent directors including the Chairman, and two non-voting members 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.

(33)
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

2021
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries (189) - These are loans and advances granted
Associates (449) 60 to related parties that are generally
Ayala Group (11,314) 65,195 secured with interest rates ranging from
Other related parties (23,614) 546 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.
(35,566) 65,801
Deposits from:
Subsidiaries 3,441 11,383 These are demand, savings and time
Associates (4) 1,273 deposits bearing the following average
Ayala Group (7,349) 11,401 interest rates:
Key management personnel 200 984 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.
(3,712) 25,041

2020
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 131 189 These are loans and advances granted to
Associates 159 509 related parties that are generally secured
Ayala Group 16,624 76,509 with interest rates ranging from 2.32% to
Other related parties 23,424 24,160 9.87% (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.
40,338 101,367
Deposits from:
Subsidiaries (1,804) 7,942 These are demand, savings and time
Associates (626) 1,277 deposits bearing the following average
Ayala Group 5,463 18,750 interest rates:
Key management personnel (454) 783 Demand - 0.13% to 0.26%
Savings - 0.25% to 0.61%
Time - 1.91% to 3.65%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
2,579 28,752

(34)
 2019
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 5 58 These are loans and advances granted to
Associates (38) 350 related parties that are generally secured
Ayala Group 27,306 59,885 with interest rates ranging from 4.18% to
Other related parties 275 736 10.69% (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.
27,548 61,029
Deposits from:
Subsidiaries 1,024 9,746 These are demand, savings and time
Associates 1,486 1,903 deposits bearing the following average
Ayala Group (3,517) 13,287 interest rates:
Key management personnel 694 1,238 Demand - 0.22% to 0.27%
Savings - 0.59% to 0.62%
Time - 3.61% to 5.15%
Demand and savings deposits are
payable in cash and on demand. Time
deposits are payable in cash at maturity.
(313) 26,174

Parent

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 to
Associates (449) 60 related parties that are generally secured
Ayala Group (5,928) 65,195 with interest rates ranging from 2.50% to
Other related parties (7,025) 544 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.
(13,402) 65,799
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

(35)
 2020
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries (58) - These are loans and advances granted to
Associates 159 509 related parties that are generally secured
Ayala Group 11,237 71,123 with interest rates ranging from 2.41% to
Other related parties 6,833 7,569 5.25% (including those pertaining to
foreign currency-denominated loans).
These are collectible at gross amount in
cash and with maturity periods ranging
from 5 days to 15 years. Additional
information on DOSRI loans are discussed
below.
18,171 79,201
Deposits from:
Subsidiaries (1,782) 7,933 These are demand, savings and time
Associates (632) 1,254 deposits bearing the following average
Ayala Group 3,930 16,851 interest rates:
Key management personnel (378) 727 Demand - 0.12% to 0.25%
Savings - 0.24% to 0.56%
Time - 0.99% to 3.44%
Demand and savings deposits are payable
in cash and on demand. Time deposits are
payable in cash at maturity.
1,138 26,765

2019
Transactions Outstanding
for the year balances Terms and conditions
(In Millions of Pesos)
Loans and advances from:
Subsidiaries 5 58 These are loans and advances granted to
Associates (38) 350 related parties that are generally secured
Ayala Group 27,306 59,885 with interest rates ranging from 0.10% to
Other related parties 275 736 5.88% (including those pertaining to
foreign currency-denominated loans).
These are collectible at gross amount in
cash and with maturity periods ranging
from 5 days to 15 years. Additional
information on DOSRI loans are discussed
below.
27,548 61,029
Deposits from:
Subsidiaries 1,083 9,715 These are demand, savings and time
Associates 1,473 1,887 deposits bearing the following average
Ayala Group (2,053) 12,921 interest rates:
Key management personnel 642 1,105 Demand - 0.21% to 0.26%
Savings - 0.55% to 0.58%
Time - 3.27% to 5.41%
Demand and savings deposits are payable
in cash and on demand. Time deposits are
payable in cash at maturity.
1,145 25,628

(36)
The aggregate amounts included in the determination of income before income tax (prior to elimination) that resulted
from transactions with each class of related parties are as follows:

Consolidated

2021 2020 2019

(In Millions of Pesos)
Interest income
Subsidiaries 5 21 99
Associates 11 19 21
Ayala Group 2,782 3,283 2,867
Other related parties 21 910 44
2,819 4,233 3,031
Other income
Subsidiaries 1,671 1,896 2,260
Associates 245 1,246 1,511
Ayala Group 2,470 656 580
4,386 3,798 4,351
Interest expense
Subsidiaries 5 21 99
Associates 1 3 3
Ayala Group 18 39 128
Key management personnel 2 5 9
26 68 239
Other expenses
Subsidiaries 1,534 1,766 2,148
Associates - - 22
Ayala Group 1,112 114 435
2,646 1,880 2,605
Retirement benefits
Key management personnel 46 56 51
Salaries, allowances and other short-term benefits
Key management personnel 829 966 871
Directors’ remuneration 119 126 121

(37)
Parent

2021 2020 2019

(In Millions of Pesos)
Interest income
Subsidiaries - - -
Associates 11 19 21
Ayala Group 2,782 3,283 2,867
Other related parties 21 390 44
2,814 3,692 2,932
Other income
Subsidiaries 1,630 2,019 2,157
Associates 312 1,139 1,272
Ayala Group 1,645 287 372
3,587 3,445 3,801
Interest expense
Subsidiaries 5 21 99
Associates 1 3 3
Ayala Group 13 29 123
Key management personnel 1 4 5
20 57 230
Other expenses
Subsidiaries 10 9 28
Ayala Group 867 103 435
877 112 463
Retirement benefits
Key management personnel 41 52 44
Salaries, allowances and other short-term benefits
Key management personnel 746 890 751
Directors’ remuneration 86 98 92

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
2021 2020 2021 2020
(In Millions of Pesos)
Outstanding DOSRI loans 15,230 15,675 15,229 15,673

As at December 31, 2021, allowance for credit losses amounting to P280 million (2020 - P674 million) have been
recognized against receivables from related parties.

Note 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 enterprise. 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. Finally, independent reviews are regularly conducted by the Internal Audit group
and regulatory examiners to ensure that risk controls and mitigants are in place and functioning effectively as intended.

(38)
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.

The most important financial risks that the BPI Group manages are credit risk, liquidity risk and market risk.

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 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 relevant regulatory requirements and international
benchmarks.

The most evident source of credit risk is loans and advances; 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 risk. CPRM supports the senior management in coordination with various business lending and operations units in
identifying, measuring and managing credit risk.

The BPI Group employs a range of policies and practices to mitigate credit risk. The BPI Group monitors its portfolio
based on different segmentation to reflect the acceptable level of diversification and concentration. Concentration risk in
credit portfolios is inherent in banking and cannot be totally eliminated. However, said risk may be reduced by adopting
proper risk controls and diversification strategies to prevent undue risk concentrations from excessive exposures to
particular counterparties, industries, countries or regions.

The BPI Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation
to one borrower, or group of borrowers, and to industry segments. 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 one borrower is further restricted by sub-limits covering on- and off-balance sheet exposures. Actual
exposures against limits are monitored regularly. Methodologies for measuring credit risk vary depending on several
factors, including type of asset, risk measurement parameters and risk management and collection processes. Credit risk
measurement is based on the PD of an obligor or counterparty, the loss severity given a default event and the 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. 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.

The review and validation of ECL models are performed by groups that are independent of the team that prepares the
calculations, e.g., Risk Models Validation Department and Internal Auditors. Expert judgments on measurement
methodologies and assumptions are reviewed by a group of internal experts from various functions.

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 on the loan 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 Credit Risk Management and revised as needed to reflect the borrower’s current financial position,
risk profile and related collateral. 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.

(39)
Settlement risk arises in any situation where a payment in cash, securities, foreign exchange currencies, or equities is
made in the expectation of a corresponding receipt in cash, securities, foreign exchange currencies, or equities. Daily
settlement limits are established for each counterparty to cover the aggregate of all settlement risk arising from the BPI
Group’s market transactions on any single day. For certain securities, the introduction of the delivery versus payment
facility in the local market has brought down settlement risk significantly.

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 risk is requiring security 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); 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 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.

(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 into 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 or external ratings from reputable credit rating agencies.
Specific data about the borrower and loan are collected at the time of application (such as disposable income, and level of
collateral for retail exposures; and turnover and industry type for wholesale exposures) and are fed into 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.

(40)
The BPI Group has adopted a credit classification system that aims to identify deteriorating 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 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.

i. Corporate (including cross-border loans) 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 and 14-scale rating system with ten (10) ‘pass’ rating grades for SME accounts. For cross-border loans, the
BPI Group also uses the available external credit ratings issued by reputable rating agencies. The level of risk and associated
PD are determined using either the internal credit risk ratings or external credit ratings, as applicable, for corporate loans.

The BPI Group uses the following set of classifications:

External Credit Rating by

Internal Credit Risk Rating System (ICRRS) reputable rating agencies
Classifications Large corporate SME Cross-Border
Standard AAA to B- or unrated AAA to B- or unrated and based on Investment grade (IG) or Non-IG
monitoring and based on prescribed days past prescribed dpd threshold with no significant increase in credit
due (dpd) threshold risk (SICR)
Special monitoring CCC to C or based on prescribed dpd CCC to C or based on prescribed Non-IG with SICR but assessed to
threshold dpd threshold be non-impaired
Default Adversely classified accounts (ACA) or ACA or based on prescribed dpd Default, with objective evidence of
based on prescribed dpd threshold or threshold or IL impairment
Item in litigation (IL)

ii. Retail loans

The BPI Group uses automated 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.

Classifications Credit cards Personal, auto and housing SEME*

Standard monitoring Current to 29 dpd Current to 30 dpd Current to 7 dpd
Special monitoring 30 to 89 dpd 31 to 90 dpd Not applicable
Default 90 dpd and up or IL >90, IL, Loss 8 dpd and up
*Self-employed micro-entrepreneurs

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 reputable external ratings and/or available and reliable
qualitative and quantitative information. In the absence of 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 External credit rating by reputable rating agencies

Standard monitoring IG or Non-IG with no SICR
Special monitoring Non-IG with SICR but assessed to be non-impaired
Default Default, with objective evidence of impairment

(41)
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
2021 2020 2021 2020
(In Millions of Pesos)
Corporate and SME loans, net 1,183,793 1,143,340 1,168,666 1,120,784
Retail loans, net 292,734 264,073 64,386 54,287
1,476,527 1,407,413 1,233,052 1,175,071

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.

Credit quality of loans and advances, net

Consolidated

Corporate and SME loans

2021 2020
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 945,623 65,057 - 1,010,680 941,379 76,645 - 1,018,024
Special monitoring 77,983 96,818 - 174,801 47,630 69,579 - 117,209
Default - - 36,223 36,223 - - 37,566 37,566
Gross amount 1,023,606 161,875 36,223 1,221,704 989,009 146,224 37,566 1,172,799
Loss allowance (11,318) (2,728) (23,865) (37,911) (12,721) (6,667) (10,071) (29,459)
Carrying amount 1,012,288 159,147 12,358 1,183,793 976,288 139,557 27,495 1,143,340

Retail loans

2021 2020
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 271,163 11,784 - 282,947 221,206 28,821 - 250,027
Special monitoring 465 5,702 - 6,167 88 8,364 - 8,452
Default - - 19,473 19,473 - - 22,893 22,893
Gross amount 271,628 17,486 19,473 308,587 221,294 37,185 22,893 281,372
Loss allowance (4,967) (1,970) (8,916) (15,853) (4,282) (3,530) (9,487) (17,299)
Carrying amount 266,661 15,516 10,557 292,734 217,012 33,655 13,406 264,073

(42)
Parent

Corporate and SME loans

2021 2020
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 936,805 64,334 - 1,001,139 927,938 76,339 - 1,004,277
Special monitoring 73,232 95,982 - 169,214 45,033 65,005 - 110,038
Default - - 33,577 33,577 - - 33,922 33,922
Gross amount 1,010,037 160,316 33,577 1,203,930 972,971 141,344 33,922 1,148,237
Loss allowance (10,689) (2,709) (21,866) (35,264) (12,655) (6,445) (8,353) (27,453)
Carrying amount 999,348 157,607 11,711 1,168,666 960,316 134,899 25,569 1,120,784

Retail loans

2021 2020
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 60,454 4,552 - 65,006 49,855 5,729 - 55,584
Special monitoring 80 701 - 781 68 711 - 779
Default - - 4,199 4,199 - - 5,267 5,267
Gross amount 60,534 5,253 4,199 69,986 49,923 6,440 5,267 61,630
Loss allowance (1,057) (920) (3,623) (5,600) (1,391) (1,546) (4,406) (7,343)
Carrying amount 59,477 4,333 576 64,386 48,532 4,894 861 54,287

The tables below present the gross amount of “Stage 2” loans and advances by age category.

Consolidated

2021 2020
Corporate Corporate
and SME and SME
loans Retail loans Total loans Retail loans Total
(In Millions of Pesos)
Current 161,128 7,831 168,959 139,146 21,790 160,936
Past due up to 30 days 605 4,172 4,777 6,573 7,468 14,041
Past due 31 - 90 days 142 5,483 5,625 505 7,927 8,432
Past due 91 - 180 days - - - - - -
Over 180 days - - - - - -
161,875 17,486 179,631 146,224 37,185 183,409

Parent

2021 2020
Corporate Corporate
and SME and SME
loans Retail loans Total loans Retail loans Total
(In Millions of Pesos)
Current 160,063 4,012 164,075 134,433 4,533 138,966
Past due up to 30 days 143 540 683 6,536 1,196 7,732
Past due 31 - 90 days 110 701 811 375 711 1,086
Past due 91 - 180 days - - - - - -
Over 180 days - - - - - -
160,316 5,253 165,569 141,344 6,440 147,784

(43)
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
2021 2020 2021 2020
(In Millions of Pesos)
Due from BSP 268,827 223,989 197,435 197,974
Due from other banks 34,572 40,155 27,734 36,605
Interbank loans receivable and SPAR, net 30,852 30,251 30,023 26,622
Financial assets at FVTPL 21,146 37,140 15,575 33,865
Financial assets at FVOCI 131,390 126,851 113,713 118,623
Investment securities at amortized cost, net 338,672 244,653 333,193 216,810
825,459 703,039 717,673 630,499

Credit quality of treasury and other investment securities, net

Consolidated

2021 2020
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 268,827 - - 268,827 223,989 - - 223,989
Due from other banks 34,572 - - 34,572 40,155 - - 40,155
Interbank loans receivable and SPAR 30,852 - - 30,852 30,245 - - 30,245
Financial assets at FVTPL 21,146 - - 21,146 37,140 - - 37,140
Financial assets at FVOCI 131,390 - - 131,390 126,851 - - 126,851
Investment securities at amortized cost 338,678 - - 338,678 244,666 - - 244,666
Default
Interbank loans receivable and SPAR - - 46 46 - - 47 47
Gross carrying amount 825,465 - 46 825,511 703,046 - 47 703,093
Loss allowance (6) - (46) (52) (13) - (41) (54)
Carrying amount 825,459 - - 825,459 703,033 - 6 703,039

Parent

2021 2020
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 197,435 - - 197,435 197,974 - - 197,974
Due from other banks 27,734 - - 27,734 36,605 - - 36,605
Interbank loans receivable and SPAR 30,023 - - 30,023 26,616 - - 26,616
Financial assets at FVTPL 15,575 - - 15,575 33,865 - - 33,865
Financial assets at FVOCI 113,713 - - 113,713 118,623 - - 118,623
Investment securities at amortized cost 333,199 - - 333,199 216,823 - - 216,823
Default
Interbank loans receivable and SPAR - - 46 46 - - 47 47
Gross carrying amount 717,679 - 46 717,725 630,506 - 47 630,553
Loss allowance (6) - (46) (52) (13) - (41) (54)
Carrying amount 717,673 - - 717,673 630,493 - 6 630,499

(44)
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
2021 2020 2021 2020
(In Millions of Pesos)
Accounts receivable, net 1,367 1,662 5,369 1,342
Rental deposits 762 767 647 650
Other accrued interest and fees receivable 79 58 7 12
Others 130 61 98 34
2,338 2,548 6,121 2,038

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

2021 2020
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 376,603 2,099 - 378,702 364,305 2,309 - 366,614
Special monitoring 15,239 - - 15,239 10,152 - - 10,152
Default - - 615 615 - - 590 590
Gross amount 391,842 2,099 615 394,556 374,457 2,309 590 377,356
Loss allowance* (546) (75) (126) (747) (760) (119) (80) (959)
Carrying amount 391,296 2,024 489 393,809 373,697 2,190 510 376,397
*Included in “Miscellaneous liabilities” in Note 17

Parent

2021 2020
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 370,603 1,964 - 372,567 358,804 2,183 - 360,987
Special monitoring 14,955 - - 14,955 9,934 - - 9,934
Default - - 611 611 - - 586 586
Gross amount 385,558 1,964 611 388,133 368,738 2,183 586 371,507
Loss allowance* (534) (68) (126) (728) (738) (110) (79) (927)
Carrying amount 385,024 1,896 485 387,405 368,000 2,073 507 370,580
*Included in “Miscellaneous liabilities” in Note 17

(45)
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

2021 2020
Net
Gross Impairment carrying Gross Impairment Net carrying
exposure allowance amount exposure allowance amount
(In Millions of Pesos)
Credit-impaired assets
Corporate and SME loans 36,223 23,865 12,358 37,566 10,071 27,495
Retail loans 19,473 8,916 10,557 22,893 9,487 13,406
Total credit-impaired assets 55,696 32,781 22,915 60,459 19,558 40,901
Fair value of collateral 27,302 26,531

Parent

2021 2020
Net
Gross Impairment carrying Gross Impairment Net carrying
exposure allowance amount exposure allowance amount
(In Millions of Pesos)
Credit-impaired assets
Corporate and SME loans 33,577 21,866 11,711 33,922 8,353 25,569
Retail loans 4,199 3,623 576 5,267 4,406 861
Total credit-impaired assets 37,776 25,489 12,287 39,189 12,759 26,430
Fair value of collateral 15,534 12,493

The BPI Group acquires assets by taking possession of collaterals held as security for loans and advances.

As at December 31, 2021, the BPI Group’s foreclosed collaterals have carrying amount of P3,282 million
(2020 - P2,971 million). The related foreclosed collaterals have aggregate fair value of P10,630 million
(2020 - P9,494 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 2021, the Parent Bank realized a gain of P140 million (2020 - P53 million) from disposals of foreclosed collaterals with
book value of P62 million (2020 - P148 million).

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.

(46)
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, 2021 12,721 6,667 10,071 29,459
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (2,204) 1,770 1,261 827
Transfer from Stage 2 41 (1,194) 233 (920)
Transfer from Stage 3 1 5 (166) (160)
New financial assets originated 3,802 - - 3,802
Financial assets derecognized during the year (2,802) (3,108) (675) (6,585)
Changes in assumptions and other movements in
provision (787) (1,134) 14,258 12,337
(1,949) (3,661) 14,911 9,301
Write-offs and other movements 546 (278) (1,117) (849)
Loss allowance, at December 31, 2021 11,318 2,728 23,865 37,911

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, 2021 4,282 3,530 9,487 17,299
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (904) 1,094 2,557 2,747
Transfer from Stage 2 193 (2,193) 1,350 (650)
Transfer from Stage 3 39 103 (608) (466)
New financial assets originated 2,465 - - 2,465
Financial assets derecognized during the year (495) (196) (830) (1,521)
Changes in assumptions and other movements in
provision (593) (357) 1,839 889
705 (1,549) 4,308 3,464
Write-offs and other movements (20) (11) (4,879) (4,910)
Loss allowance, at December 31, 2021 4,967 1,970 8,916 15,853

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, 2021 12,655 6,445 8,353 27,453
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (2,165) 1,758 1,156 749
Transfer from Stage 2 31 (1,154) 206 (917)
Transfer from Stage 3 - 5 (135) (130)
New financial assets originated 3,727 - - 3,727
Financial assets derecognized during the year (2,737) (2,955) (430) (6,122)
Changes in assumptions and other movements in
provision (702) (1,121) 13,183 11,360
(1,846) (3,467) 13,980 8,667
Write-offs and other movements (120) (269) (467) (856)
Loss allowance, at December 31, 2021 10,689 2,709 21,866 35,264

(47)
 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, 2021 1,391 1,546 4,406 7,343
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (261) 589 1,276 1,604
Transfer from Stage 2 89 (982) 799 (94)
Transfer from Stage 3 1 3 (36) (32)
New financial assets originated 109 - - 109
Financial assets derecognized during the year (24) (59) (395) (478)
Changes in assumptions and other movements in
provision (244) (176) 870 450
(330) (625) 2,514 1,559
Write-offs and other movements (4) (1) (3,297) (3,302)
Loss allowance, at December 31, 2021 1,057 920 3,623 5,600

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, 2020 6,870 3,110 6,157 16,137
Less: Beginning balance of CTL (249) (39) (325) (613)
Adjusted loss allowance, at January 1, 2020 6,621 3,071 5,832 15,524
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (3,608) 5,046 2,827 4,265
Transfer from Stage 2 83 (589) 126 (380)
Transfer from Stage 3 - - - -
New financial assets originated 6,920 - - 6,920
Financial assets derecognized during the year (1,375) (1,108) (391) (2,874)
Changes in assumptions and other movements in
provision 5,925 (110) 661 6,476
7,945 3,239 3,223 14,407
Write-offs and other movements (1,845) 357 1,016 (472)
Loss allowance, at December 31, 2020 12,721 6,667 10,071 29,459

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, 2020 3,236 1,780 4,821 9,837
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (1,138) 2,697 5,362 6,921
Transfer from Stage 2 100 (1,014) 1,586 672
Transfer from Stage 3 3 33 (113) (77)
New financial assets originated 2,000 - - 2,000
Financial assets derecognized during the year (68) (99) (314) (481)
Changes in assumptions and other movements in
provision 2,023 101 1,428 3,552
2,920 1,718 7,949 12,587
Write-offs and other movements (1,874) 32 (3,283) (5,125)
Loss allowance, at December 31, 2020 4,282 3,530 9,487 17,299

(48)
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, 2020 5,972 2,990 4,809 13,771
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (3,409) 4,865 2,801 4,257
Transfer from Stage 2 81 (569) 126 (362)
Transfer from Stage 3 - - - -
New financial assets originated 6,657 - - 6,657
Financial assets derecognized during the year (1,336) (1,095) (263) (2,694)
Changes in assumptions and other movements in
provision 5,929 (111) 302 6,120
7,922 3,090 2,966 13,978
Write-offs and other movements (1,239) 365 578 (296)
Loss allowance, at December 31, 2020 12,655 6,445 8,353 27,453

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, 2020 808 941 3,085 4,834
Provision for credit losses for the year
Transfers:
Transfer from Stage 1 (273) 1,186 3,004 3,917
Transfer from Stage 2 79 (646) 921 354
Transfer from Stage 3 2 1 (42) (39)
New financial assets originated 201 - - 201
Financial assets derecognized during the year (15) (47) (227) (289)
Changes in assumptions and other movements in
provision 589 111 1,410 2,110
583 605 5,066 6,254
Write-offs and other movements - - (3,745) (3,745)
Loss allowance, at December 31, 2020 1,391 1,546 4,406 7,343

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
regulatory, legislative or political changes is likewise considered, if material.

(49)
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, 2021

Base Scenario Upside Scenario Downside Scenario

Next 12 2 to 5 years Next 12 2 to 5 years 2 to 5 years
Months (Average) Months (Average) Next 12 Months (Average)
Real GDP growth (%) 7.4 6.3 8.4 7.3 4.4 3.3
Inflation rate (%) 3.5 3.2 2.5 2.2 4.5 4.2
BVAL 5Y (%) 4.6 3.7 4.3 3.4 6.1 5.2
US Treasury 5Y (%) 1.5 2.8 1.2 2.3 1.8 3.0
Exchange rate 52.500 55.234 51.921 53.928 53.095 56.587

At December 31, 2020

Base Scenario Upside Scenario Downside Scenario

Next 12 2 to 5 years Next 12 2 to 5 years 2 to 5 years
Months (Average) Months (Average) Next 12 Months (Average)
Real GDP growth (%) 7.4 5.9 8.4 6.9 5.4 3.9
Inflation rate (%) 3.0 2.5 2.0 1.5 4.7 3.5
BVAL 5Y (%) 3.0 3.6 2.5 3.1 5.5 6.1
US Treasury 5Y (%) 0.5 0.5 0.7 0.7 0.3 0.3
Exchange rate 49.848 53.780 48.375 49.672 51.340 58.171

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 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 P42 million as at December 31, 2021 from the baseline scenario
(2020 - P23 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 months 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
P1,137 million as at December 31, 2021 (2020 - P1,839 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, 2021)

Financial
institutions Consumer Manufacturing Real estate Others Allowance Total
(In Millions of Pesos)
Due from BSP 268,827 - - - - - 268,827
Due from other banks 34,572 - - - - - 34,572
Interbank loans receivable
and SPAR 30,898 - - - - (46) 30,852
Financial assets at FVTPL 11,306 113 11 - 9,716 - 21,146
Financial assets at FVOCI 2,609 1,049 2,509 477 124,746 - 131,390
Investment securities at
amortized cost 12,321 3,960 3,114 2,420 316,863 (6) 338,672
Loans and advances 123,701 123,621 238,971 392,168 651,830 (53,764) 1,476,527
Other financial assets - - - - 3,262 (924) 2,338
At December 31, 2021 484,234 128,743 244,605 395,065 1,106,417 (54,740) 2,304,324

(50)
Consolidated (December 31, 2020)

Financial
institutions Consumer Manufacturing Real estate Others Allowance Total
(In Millions of Pesos)
Due from BSP 223,989 - - - - - 223,989
Due from other banks 40,155 - - - - - 40,155
Interbank loans receivable
and SPAR 30,292 - - - - (41) 30,251
Financial assets at FVTPL 7,199 - - - 29,941 - 37,140
Financial assets at FVOCI 10,691 3,307 - 1,881 110,972 - 126,851
Investment securities at
amortized cost 43,342 1,784 2,081 1,083 196,376 (13) 244,653
Loans and advances 129,101 116,525 217,675 369,704 621,166 (46,758) 1,407,413
Other financial assets - - - - 3,531 (983) 2,548
At December 31, 2020 484,769 121,616 219,756 372,668 961,986 (47,795) 2,113,000

Parent Bank (December 31, 2021)

Financial
institutions Consumer Manufacturing Real estate Others Allowance Total
(In Millions of Pesos)
Due from BSP 197,435 - - - - - 197,435
Due from other banks 27,734 - - - - - 27,734
Interbank loans receivable
and SPAR 30,069 - - - - (46) 30,023
Financial assets at FVTPL 8,547 - 11 - 7,017 - 15,575
Financial assets at FVOCI 1,249 1,049 2,509 477 108,429 - 113,713
Investment securities at
amortized cost 11,723 3,004 2,956 2,420 313,096 (6) 333,193
Loans and advances 122,757 69,347 236,226 229,964 615,622 (40,864) 1,233,052
Other financial assets - - - - 6,874 (753) 6,121
At December 31, 2021 399,514 73,400 241,702 232,861 1,051,038 (41,669) 1,956,846

Parent Bank (December 31, 2020)

Financial
institutions Consumer Manufacturing Real estate Others Allowance Total
(In Millions of Pesos)
Due from BSP 197,974 - - - - - 197,974
Due from other banks 36,605 - - - - - 36,605
Interbank loans receivable
and SPAR 26,663 - - - - (41) 26,622
Financial assets at FVTPL 5,081 - - - 28,784 - 33,865
Financial assets at FVOCI 10,321 3,307 - 1,881 103,114 - 118,623
Investment securities at
amortized cost 34,749 1,185 1,743 1,083 178,063 (13) 216,810
Loans and advances 127,929 61,909 215,238 218,201 586,590 (34,796) 1,175,071
Other financial assets - - - - 2,860 (822) 2,038
At December 31, 2020 439,322 66,401 216,981 221,165 899,411 (35,672) 1,807,608

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 2021 2020 2019 2021 2020 2019
(In Millions of Pesos)
Loans and advances 10,26 12,765 26,994 5,852 10,226 20,232 5,014
Assets held for sale 44 12 (197) 20 (78) (240)
Interbank loans receivable and SPAR 5 5 1 (11) 5 1 (9)
Investment securities at amortized
cost 9 (7) 13 (2) (7) 13 (2)
Undrawn loan commitments 26,32 (212) 309 (101) (199) 308 (103)
Impairment on equity investment 12 - - - 60 313 -
Accounts receivable 14 83 509 30 215 452 11
Other assets 457 162 (9) 271 153 (5)
13,135 28,000 5,562 10,591 21,394 4,666

(51)
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.

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.
In order 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 the
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
2021 2020 2021 2020
(In Millions of Pesos)
Local fixed-income 76 63 75 62
Foreign fixed-income 94 68 85 58
Foreign exchange 105 52 6 5
Derivatives 180 100 147 100
Equity securities 21 31 - -
Mutual fund 24 - - -
500 314 313 225

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.

(52)
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 US Dollar (USD), shown in their Peso equivalent at December 31:

Consolidated

2021 2020
USD Others* Total USD Others* Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 3,195 203 3,398 2,440 410 2,850
Due from other banks 31,044 1,896 32,940 32,976 4,342 37,318
Interbank loans receivable and SPAR 13,158 620 13,778 9,353 - 9,353
Financial assets at FVTPL 5,758 140 5,898 8,009 1,154 9,163
Financial assets at FVOCI - debt
securities 47,979 1,568 49,547 39,691 1,046 40,737
Investment securities at amortized
cost 111,205 1,695 112,900 102,826 1,098 103,924
Loans and advances, net 113,229 6,450 119,679 120,709 10,406 131,115
Others financial assets 2,723 9 2,732 3,274 113 3,387
Total financial assets 328,291 12,581 340,872 319,278 18,569 337,847
Financial liabilities
Deposit liabilities 257,513 7,713 265,226 238,496 11,323 249,819
Derivative financial liabilities 1,846 204 2,050 3,209 165 3,374
Bills payable 48,664 - 48,664 66,038 5,998 72,036
Due to BSP and other banks 609 - 609 868 - 868
Manager’s checks and demand drafts
outstanding 444 37 481 235 5 240
Other financial liabilities 5,938 311 6,249 3,960 125 4,085
Accounts payable 199 2 201 136 85 221
Total financial liabilities 315,213 8,267 323,480 312,942 17,701 330,643
Net on-balance sheet position 13,078 4,314 17,392 6,336 868 7,204
*Others category includes financial instruments denominated in JPY, EUR and GBP.

Parent Bank

2021 2020
USD Others* Total USD Others* Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 3,031 203 3,234 2,267 405 2,672
Due from other banks 23,616 1,513 25,129 31,912 3,396 35,308
Interbank loans receivable and
SPAR 13,158 - 13,158 9,353 - 9,353
Financial assets at FVTPL 3,788 128 3,916 7,639 1,094 8,733
Financial assets at FVOCI - debt
securities 38,659 1,568 40,227 36,001 1,027 37,028
Investment securities at amortized
cost 107,977 - 107,977 90,870 136 91,006
Loans and advances, net 111,401 5,283 116,684 117,208 8,990 126,198
Others financial assets 11,581 2,664 14,245 8,417 145 8,562
Total financial assets 313,211 11,359 324,570 303,667 15,193 318,860
Financial liabilities
Deposit liabilities 240,939 7,585 248,524 224,134 9,526 233,660
Derivative financial liabilities 1,770 204 1,974 3,209 165 3,374
Bills payable 45,758 - 45,758 64,567 5,415 69,982
Due to BSP and other banks 470 - 470 868 - 868
Manager’s checks and demand
drafts outstanding 441 37 478 232 5 237
Other financial liabilities 14,817 2,950 17,767 3,797 8,874 12,671
Accounts payable 199 2 201 60 3 63
Total financial liabilities 304,394 10,778 315,172 296,867 23,988 320,855
Net on-balance sheet position 8,817 581 9,398 6,800 (8,795) (1,995)
*Others category includes financial instruments denominated in JPY, EUR and GBP.

(53)
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.

Effect on pre-tax income

Year Change in currency Consolidated Parent
(In millions of Pesos)
2021 +/-2.19% +/- 286 +/- 193
2020 +/- 2.29% +/- 589 +/- 656

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 re-pricing risk
arising from financial assets and liabilities that have different maturities 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 regularly 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
(e.g. non-maturity deposits), behavioural models are employed to determine their repricing buckets.

Earnings-at-Risk (EaR)

The EaR is built on 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 months as earnings are
affected when interest rates move against the BPI Group’s position. As of December 31, 2021, the net interest income impact
of movement in interest rates resulted to a decrease of P210 million (2020 - P5,174 million increase) for the whole BPI Group
and decrease of P204 million (2020 - P4,614 million increase) for the Parent Bank.

BSVaR

The BS VaR 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 is the present value of the BPI Group’s expected net cash
flows due to changes in interest rates. As at December 31, 2021, the average monthly BSVaR for the banking book stood at
P24,497 million (2020 - P21,251 million) for the whole BPI Group and P20,806 million (2020 - P17,397 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 Risk Management
Committee (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 for 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 steepening and flattening yield curves, parallel up/down and short rate
up/down shocks. The interest rate shocks applied is calibrated for all major currencies in which the BPI Group has significant
positions. 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.

(54)
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.

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, 2021)

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, 2021
Financial Assets
Cash and other cash items - - - 35,143 35,143
Due from BSP - - - 268,827 268,827
Due from other banks - - - 34,572 34,572
Interbank loans receivable and SPAR - - - 30,852 30,852
Financial assets at FVTPL 406 444 971 19,325 21,146
Financial assets at FVOCI - - - 131,390 131,390
Investment securities at amortized cost - - - 338,672 338,672
Loans and advances, net 487,616 311,336 568,296 109,279 1,476,527
Other financial assets - - - 2,338 2,338
Total financial assets 488,022 311,780 569,267 970,398 2,339,467
Financial Liabilities
Deposit liabilities 1,087,175 370,115 497,857 - 1,955,147
Derivative financial liabilities 395 472 870 1,895 3,632
Bills payable and other borrowed funds 1,886 1,020 - 92,133 95,039
Due to BSP and other banks - - - 953 953
Manager’s checks and demand drafts
outstanding - - - 6,931 6,931
Other financial liabilities - - - 7,256 7,256
Total financial liabilities 1,089,456 371,607 498,727 109,168 2,068,958
Total interest gap (601,434) (59,827) 70,540 861,230 270,509

(55)
Consolidated (December 31, 2020)

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, 2020
Financial Assets
Cash and other cash items - - - 37,176 37,176
Due from BSP - - - 223,989 223,989
Due from other banks - - - 40,155 40,155
Interbank loans receivable and SPAR - - - 30,251 30,251
Financial assets at FVTPL 188 1,790 1,108 34,054 37,140
Financial assets at FVOCI - - - 126,851 126,851
Investment securities at amortized cost - - - 244,653 244,653
Loans and advances, net 490,534 218,351 590,879 107,649 1,407,413
Other financial assets - - - 2,548 2,548
Total financial assets 490,722 220,141 591,987 847,326 2,150,176
Financial Liabilities
Deposit liabilities 731,596 407,805 576,776 - 1,716,177
Derivative financial liabilities 193 1,752 1,207 2,505 5,657
Bills payable and other borrowed funds 2,054 9,571 - 140,322 151,947
Due to BSP and other banks - - - 1,491 1,491
Manager’s checks and demand drafts
outstanding - - - 7,108 7,108
Other financial liabilities - - - 10,694 10,694
Total financial liabilities 733,843 419,128 577,983 162,120 1,893,074
Total interest gap (243,121) (198,987) 14,004 685,206 257,102

Parent Bank (December 31, 2021)

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, 2021
Financial Assets
Cash and other cash items - - - 33,868 33,868
Due from BSP - - - 197,435 197,435
Due from other banks - - - 27,734 27,734
Interbank loans receivable and SPAR - - - 30,023 30,023
Financial assets at FVTPL 406 444 971 13,754 15,575
Financial assets at FVOCI - - - 113,713 113,713
Investment securities at amortized cost - - - 333,193 333,193
Loans and advances, net 424,674 238,764 524,511 45,103 1,233,052
Other financial assets - - - 6,121 6,121
Total financial assets 425,080 239,208 525,482 800,944 1,990,714
Financial Liabilities
Deposit liabilities 957,669 288,826 429,290 - 1,675,785
Derivative financial liabilities 395 472 870 1,808 3,545
Bills payable and other borrowed funds - - - 82,550 82,550
Due to BSP and other banks - - - 814 814
Manager’s checks and demand drafts
outstanding - - - 5,243 5,243
Other financial liabilities - - - 4,974 4,974
Total financial liabilities 958,064 289,298 430,160 95,389 1,772,911
Total interest gap (530,880) (50,090) 95,323 705,654 217,803

(56)
Parent Bank (December 31, 2020)

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, 2020
Financial Assets
Cash and other cash items - - - 35,912 35,912
Due from BSP - - - 197,974 197,974
Due from other banks - - - 36,605 36,605
Interbank loans receivable and SPAR - - - 26,622 26,622
Financial assets at FVTPL 188 1,791 1,108 30,778 33,865
Financial assets at FVOCI - - - 118,623 118,623
Investment securities at amortized cost - - - 216,810 216,810
Loans and advances, net 431,004 161,565 544,112 38,390 1,175,071
Other financial assets - - - 2,038 2,038
Total financial assets 431,192 163,356 545,220 703,752 1,843,520
Financial Liabilities
Deposit liabilities 646,179 331,517 492,514 - 1,470,210
Derivative financial liabilities 193 1,752 1,207 2,505 5,657
Bills payable and other borrowed funds - 9,571 - 130,777 140,348
Due to BSP and other banks - - - 1,491 1,491
Manager’s checks and demand drafts
outstanding - - - 5,447 5,447
Other financial liabilities - - - 5,924 5,924
Total financial liabilities 646,372 342,840 493,721 146,144 1,629,077
Total interest gap (215,180) (179,484) 51,499 557,608 214,443

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.

(57)
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. HQLAs therefore, serve 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. Cash outflows from derivatives contracts
are effectively offset by derivatives cash inflows. These two are accorded 100% outflow and inflow factors, respectively.

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 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
2021 2020 2021 2020
Liquidity coverage ratio 220.68% 231.86% 221.67% 240.40%
Net stable funding ratio 154.88% 153.58% 152.11% 153.13%
Leverage ratio 10.63% 10.92% 10.22% 10.61%
Total exposure measure 2,471,163 2,262,656 2,085,573 1,924,061

The decline in the Parent Bank's LCR was driven by higher volumes of operational deposits. Cash, reserves and due from
BSP make up 38% of the total stock of HQLA for the year ended December 31, 2021.

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.

(58)
Consolidated (December 31, 2021)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2021
Financial Assets
Cash and other cash items 35,143 - - 35,143
Due from BSP 268,866 - - 268,866
Due from other banks 34,572 - - 34,572
Interbank loans receivable and SPAR 30,859 71 - 30,930
Financial assets at FVTPL 13,301 1,182 3,694 18,177
Financial assets at FVOCI 37,499 36,415 69,980 143,894
Investment securities at amortized cost 45,432 105,717 240,363 391,512
Loans and advances, net 521,202 550,196 458,500 1,529,898
Other financial assets 2,338 - - 2,338
Total financial assets 989,212 693,581 772,537 2,455,330
Financial Liabilities
Deposit liabilities 1,086,489 366,365 491,971 1,944,825
Bills payable and other borrowed funds 48,679 47,391 - 96,070
Due to BSP and other banks 953 - - 953
Manager’s checks and demand drafts
outstanding 6,931 - - 6,931
Lease liabilities 2,081 3,358 2,911 8,350
Other financial liabilities 7,256 - - 7,256
Total financial liabilities 1,152,389 417,114 494,882 2,064,385
Total maturity gap (163,177) 276,467 277,655 390,945

Consolidated (December 31, 2020)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2020
Financial Assets
Cash and other cash items 37,176 - - 37,176
Due from BSP 223,989 - - 223,989
Due from other banks 40,155 - - 40,155
Interbank loans receivable and SPAR 30,345 14 87 30,446
Financial assets at FVTPL 21,637 1,010 11,093 33,740
Financial assets at FVOCI 45,333 19,051 70,602 134,986
Investment securities at amortized cost 53,430 84,155 123,368 260,953
Loans and advances, net 621,097 318,461 605,102 1,544,660
Other financial assets 2,548 - - 2,548
Total financial assets 1,075,710 422,691 810,252 2,308,653
Financial Liabilities
Deposit liabilities 731,729 408,122 577,286 1,717,137
Bills payable and other borrowed funds 84,810 25,197 43,132 153,139
Due to BSP and other banks 1,491 - - 1,491
Manager’s checks and demand drafts
outstanding 7,108 - - 7,108
Lease liabilities 2,098 3,299 4,278 9,675
Other financial liabilities 10,694 - - 10,694
Total financial liabilities 837,930 436,618 624,696 1,899,244
Total maturity gap 237,780 (13,927) 185,556 409,409

(59)
Parent Bank (December 31, 2021)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2021
Financial Assets
Cash and other cash items 33,868 - - 33,868
Due from BSP 197,445 - - 197,445
Due from other banks 27,734 - - 27,734
Interbank loans receivable and SPAR 30,030 71 - 30,101
Financial assets at FVTPL 8,915 344 3,393 12,652
Financial assets at FVOCI 29,982 33,274 61,710 124,966
Investment securities at amortized cost 44,439 105,013 235,943 385,395
Loans and advances, net 488,979 436,227 348,710 1,273,916
Other financial assets, net 6,121 - - 6,121
Total financial assets 867,513 574,929 649,756 2,092,198
Financial Liabilities
Deposit liabilities 957,211 288,208 426,338 1,671,757
Bills payable and other borrowed funds 37,003 46,371 - 83,374
Due to BSP and other banks 814 - - 814
Manager’s checks and demand drafts
outstanding 5,243 - - 5,243
Lease liabilities 1,463 2,554 2,634 6,651
Other financial liabilities 4,974 - - 4,974
Total financial liabilities 1,006,708 337,133 428,972 1,772,813
Total maturity gap (139,195) 237,796 220,784 319,385

Parent Bank (December 31, 2020)

Over 1 up to 3
Up to 1 year years Over 3 years Total
(In Millions of Pesos)
As at December 31, 2020
Financial Assets
Cash and other cash items 35,912 - - 35,912
Due from BSP 197,974 - - 197,974
Due from other banks 36,605 - - 36,605
Interbank loans receivable and SPAR 26,716 14 87 26,817
Financial assets at FVTPL 18,566 915 11,055 30,536
Financial assets at FVOCI 43,863 18,633 63,680 126,176
Investment securities at amortized cost 39,940 79,680 112,647 232,267
Loans and advances, net 556,706 232,501 428,088 1,217,295
Other financial assets, net 2,038 - - 2,038
Total financial assets 958,320 331,743 615,557 1,905,620
Financial Liabilities
Deposit liabilities 646,279 331,570 492,702 1,470,551
Bills payable and other borrowed funds 82,343 14,995 43,132 140,470
Due to BSP and other banks 1,491 - - 1,491
Manager’s checks and demand drafts
outstanding 5,447 - - 5,447
Lease liabilities 1,676 2,469 3,765 7,910
Other financial liabilities 5,924 - - 5,924
Total financial liabilities 743,160 349,034 539,599 1,631,793
Total maturity gap 215,160 (17,291) 75,958 273,827

(60)
26.3.3 Maturity profile - Derivative instruments

(a) 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

Over 1 up to Over 3
Up to 1 year 3 years years Total
2021 (In Millions of Pesos)
Interest rate swap contracts - held for trading
- Inflow 406 444 971 1,821
- Outflow (395) (472) (871) (1,738)
- Net inflow 11 (28) 100 83

Non-deliverable forwards and swaps - held for trading

- Inflow 167 30 - 197
- Outflow (34) (167) (14) (215)
- Net outflow 133 (137) (14) (18)

Over 1 up to Over 3
Up to 1 year 3 years years Total
2020 (In Millions of Pesos)
Interest rate swap contracts - held for trading
- Inflow 188 1,792 1,108 3,088
- Outflow (193) (1,752) (1,207) (3,152)
- Net inflow (5) 40 (99) (64)

Non-deliverable forwards and swaps - held for trading

- Inflow 13 - - 13
- Outflow (679) (794) (287) (1,760)
- Net outflow (666) (794) (287) (1,747)

(b) 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. 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

Over 1 up to Over 3
Up to 1 year 3 years years Total
2021 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 1,449 34 41 1,524
- Outflow (1,679) - - (1,679)
- Net inflow (230) 34 41 (155)

Foreign exchange derivatives - held for hedging

- Inflow - - - -
- Outflow - - - -
- Net outflow - - - -

(61)
 Over 1 up to Over 3
Up to 1 year 3 years years Total
2020 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 1,168 188 42 1,398
- Outflow (740) (1) (4) (745)
- Net inflow 428 187 38 653

Foreign exchange derivatives - held for hedging

- Inflow 278 - - 278
- Outflow - - - -
- Net outflow 278 - - 278

Parent Bank

Over 1 up to Over 3
Up to 1 year 3 years years Total
2021 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 1,426 34 41 1,501
- Outflow (1,602) - - (1,602)
- Net inflow (176) 34 41 (101)

Foreign exchange derivatives - held for hedging

- Inflow - - - -
- Outflow - - - -
- Net outflow - - - -

Over 1 up to Over 3
Up to 1 year 3 years years Total
2020 (In Millions of Pesos)
Foreign exchange derivatives - held for trading
- Inflow 1,106 188 42 1,336
- Outflow (740) (1) (4) (745)
- Net inflow 366 187 38 591

Foreign exchange derivatives - held for hedging

- Inflow 278 - - 278
- Outflow - - - -
- Net outflow 278 - - 278

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:

(62)
26.4.1 Assets and liabilities measured at fair value on a recurring or non-recurring basis

Consolidated (December 31, 2021)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 3,553 - 3,553 3,553
Trading assets
- Debt securities 17,593 14,784 2,809 17,593
- Equity securities 188 188 - 188
Financial assets at FVOCI
- Debt securities 131,390 131,390 - 131,390
- Equity securities 3,351 1,982 1,369 3,351
156,075 148,344 7,731 156,075
Financial liabilities
Derivative financial liabilities 3,632 - 3,632 3,632
Non-recurring measurements
Assets held for sale, net 3,282 - 10,630 10,630

Consolidated (December 31, 2020)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements: (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 4,788 - 4,788 4,788
Trading assets
- Debt securities 32,352 30,307 2,045 32,352
- Equity securities 70 70 - 70
Financial assets at FVOCI
- Debt securities 126,851 126,765 86 126,851
- Equity securities 3,335 1,784 1,551 3,335
167,396 158,926 8,470 167,396
Financial liabilities
Derivative financial liabilities 5,657 - 5,657 5,657
Non-recurring measurements
Assets held for sale, net 2,971 - 9,494 9,494

Parent Bank (December 31, 2021)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 3,520 - 3,520 3,520
Trading assets - debt securities 12,055 12,055 - 12,055
Financial assets at FVOCI
- Debt securities 113,713 113,713 - 113,713
- Equity securities 1,828 1,517 311 1,828
131,116 127,285 3,831 131,116
Financial liabilities
Derivative financial liabilities 3,545 - 3,545 3,545
Non-recurring measurements
Assets held for sale, net 505 - 3,866 3,866

(63)
Parent Bank (December 31, 2020)

Carrying Fair value

Amount Level 1 Level 2 Total
Recurring measurements (In Millions of Pesos)
Financial assets
Financial assets at FVTPL
Derivative financial assets 4,716 - 4,716 4,716
Trading assets - debt securities 29,149 29,149 - 29,149
Financial assets at FVOCI
- Debt securities 118,623 118,623 - 118,623
- Equity securities 1,677 1,370 307 1,677
154,165 149,142 5,023 154,165
Financial liabilities
Derivative financial liabilities 5,657 - 5,657 5,657
Non-recurring measurements
Assets held for sale, net 357 - 3,439 3,439

There are no assets and liabilities whose fair values fall under the Level 3 category as at December 31, 2021 and 2020.
Likewise, there were no transfers between Level 1 and Level 2 during the years ended December 31, 2021 and 2020.

26.4.2 Fair value disclosures of assets and liabilities not measured at fair value

Consolidated (December 31, 2021)

Carrying Fair value

Amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 35,143 - 35,143 35,143
Due from BSP 268,827 - 268,827 268,827
Due from other banks 34,572 - 34,572 34,572
Interbank loans receivable and SPAR, net 30,852 - 30,852 30,852
Investment securities at amortized cost, net 338,672 339,189 - 339,189
Loans and advances, net 1,476,527 - 1,524,826 1,524,826
Other financial assets 2,338 2,338 2,338
Financial liabilities
Deposit liabilities 1,944,825 - 1,944,825 1,944,825
Bills payable and other borrowed funds 95,039 82,550 12,695 95,245
Due to BSP and other banks 953 - 953 953
Manager’s checks and demand drafts
outstanding 6,931 - 6,931 6,931
Other financial liabilities 7,256 - 7,256 7,256
Non-financial assets
Investment properties 165 - 1,899 1,899

(64)
Consolidated (December 31, 2020)

Carrying Fair value

Amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 37,176 - 37,176 37,176
Due from BSP 223,989 - 223,989 223,989
Due from other banks 40,155 - 40,155 40,155
Interbank loans receivable and SPAR, net 30,251 - 30,251 30,251
Investment securities at amortized cost, net 244,653 253,097 - 253,097
Loans and advances, net 1,407,413 - 1,511,405 1,511,405
Other financial assets 2,548 - 2,548 2,548
Financial liabilities
Deposit liabilities 1,716,177 - 1,708,322 1,708,322
Bills payable and other borrowed funds 151,947 128,351 21,498 149,849
Due to BSP and other banks 1,491 - 1,491 1,491
Manager’s checks and demand drafts
outstanding 7,108 - 7,108 7,108
Other financial liabilities 10,694 - 10,694 10,694
Non-financial assets
Investment properties 150 - 638 638

Parent Bank (December 31, 2021)

Carrying Fair value

Amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 33,868 - 33,868 33,868
Due from BSP 197,435 - 197,435 197,435
Due from other banks 27,734 - 27,734 27,734
Interbank loans receivable and SPAR, net 30,023 - 30,023 30,023
Investment securities at amortized cost, net 333,193 333,720 - 333,720
Loans and advances, net 1,233,052 - 1,217,489 1,217,489
Other financial assets 6,121 - 6,121 6,121
Financial liabilities
Deposit liabilities 1,671,757 - 1,671,757 1,671,757
Bills payable and other borrowed funds 82,550 82,550 - 82,550
Due to BSP and other banks 814 - 814 814
Manager’s checks and demand drafts
outstanding 5,243 - 5,243 5,243
Other financial liabilities 4,974 - 4,974 4,974
Non-financial assets
Investment properties 153 - 1,860 1,860

(65)
Parent Bank (December 31, 2020)

Carrying Fair value

Amount Level 1 Level 2 Total
(In Millions of Pesos)
Financial assets
Cash and other cash items 35,912 - 35,912 35,912
Due from BSP 197,974 - 197,974 197,974
Due from other banks 36,605 - 36,605 36,605
Interbank loans receivable and SPAR, net 26,622 - 26,622 26,622
Investment securities at amortized cost, net 216,810 224,636 - 224,636
Loans and advances, net 1,175,071 - 1,199,349 1,199,349
Other financial assets 2,038 - 2,038 2,038
Financial liabilities
Deposit liabilities 1,470,210 - 1,467,541 1,467,541
Bills payable and other borrowed funds 140,348 118,806 21,498 140,304
Due to BSP and other banks 1,491 - 1,491 1,491
Manager’s checks and demand drafts
outstanding 5,447 - 5,447 5,447
Other financial liabilities 5,924 - 5,924 5,924
Non-financial assets
Investment properties 139 - 638 638

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.

Note 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 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.

(66)
Information on the regulatory capital is summarized below:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Tier 1 capital 291,396 277,830 291,322 277,755
Tier 2 capital 14,847 13,593 12,961 11,835
Gross qualifying capital 306,243 291,423 304,283 289,590
Less: Regulatory adjustments/required deductions 28,688 30,760 78,076 73,557
Total qualifying capital 277,555 260,663 226,207 216,033

Risk weighted assets 1,664,989 1,527,572 1,430,838 1,309,660

CAR (%) 16.67 17.06 15.81 16.50
CET1 (%) 15.78 16.17 14.90 15.59

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.

Note 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.

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.

Note 29 - Subsequent Event

Release of the 4th Tranche of the Peso Bond and Commercial Paper Program

On January 31, 2022, the BPI Group released the fourth tranche of the Peso Bond Commercial Paper Program with a par
value amounting to P27,000 million. These bonds issued at a fixed rate of 2.81% p.a., payable quarterly. These bonds are
unconditional, unsecured and unsubordinated, and are expected to mature within 2 years from issuance or January 31, 2024.

Note 30 - Other Disclosures

30.1 BPI and BFB Merger

The plan of merger between the Parent Bank and BFB was cleared by the Philippine Deposit Insurance Corporation on
June 30, 2021 and the Monetary Board in its resolution dated September 30, 2021 as reflected in the letter of the BSP dated
October 4, 2021. On December 21, 2021, the SEC likewise signified its approval on the merger effective January 1, 2022.

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 merger date, the Parent Bank shall issue common shares to BFB shareholders amounting to the net assets of the latter in
the standalone financial statements as at December 31, 2020.

(67)
The Parent Bank, owning 100% of the shares of BFB, shall effectively issue treasury shares as a consideration of the merger.
The number of treasury shares to be issued shall be 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 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 to be 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).

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 Bangko Sentral ng Pilipinas 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

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 the result of the 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

(68)
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

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 cash dividends remain to be outstanding as at reporting date. The
remaining net income after dividend declaration will form part of Other reserves upon effectivity of the merger.

(69)
A summary of the statement of income of BFB for the year ended December 31, 2021 is as follows:

Amount
(In Thousands of Pesos)
INTEREST INCOME
On loans and advances 15,446,743
On investment securities 339,408
On deposits with BSP and other banks 602,061
16,388,212
INTEREST EXPENSE
On deposits 4,452,939
On other borrowed funds 451,342
4,904,281
NET INTEREST INCOME 11,483,931
IMPAIRMENT LOSSES 2,000,000
NET INTEREST INCOME AFTER IMPAIRMENT LOSSES 9,483,931
OTHER INCOME
Fees and commissions 1,450,304
Foreign exchange profit and securities trading gain 13,038
Net gains on disposals of investment securities measured at amortized cost 319,673
Other operating income 484,954
2,267,969
OTHER EXPENSES
Compensation and fringe benefits 2,398,486
Occupancy and equipment-related expenses 1,950,452
Other operating expenses 2,887,531
7,236,469
INCOME BEFORE INCOME TAX 4,515,431
PROVISION FOR INCOME TAX
Current 669,987
Deferred 296,133
966,120
NET INCOME FOR THE YEAR 3,549,311

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 the cash and
cash equivalents acquired are as follows:

Amount
(In Thousands of Pesos)
Cash and other cash items 982,150
Due from Bangko Sentral ng Pilipinas 67,065,132
Due from other banks 10,152,692
Interbank loans receivable and securities purchased
under agreements to resell (with maturity of three months or less) -
78,199,974

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.

(70)
• 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 will be applying the guidelines, which will only be relevant for prudential reporting purposes, to its commercial
loan portfolio beginning January 1, 2022.

Note 31 - Summary of Significant Accounting Policies

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 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.

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) New amendments to existing standards adopted by the BPI Group

The BPI Group has adopted the following amendments to existing standards effective January 1, 2021:

• Amendment to PFRS 16, ‘Leases’

The amendment provides lessees with an option to treat qualifying rent concessions in the same way as they would if
they were not lease modifications. In many cases, this will result in accounting for the concessions as variable lease
payments in the period in which they are granted.

As at December 31, 2021, the Bank recognized a lease concession adjustment to reflect the amendments made to the
existing lease contracts following the reliefs provided by the Bank’s lessors due to the COVID-19 pandemic. The lease
concession adjustment is deemed immaterial for financial reporting purposes.

(71)
• Amendments to PFRS 9, ‘Financial Instruments’, PFRS 7 ‘Financial Instruments: Disclosures’, PFRS 4, ‘Insurance
Contracts’ and PFRS 16 ‘Leases’

These amendments that were issued in August 2020 address issues that arise during the reform of an interest rate
benchmark rate (IBOR), including the replacement of one benchmark rate with an alternative one.

The key reliefs provided by the amendments are as follows:

• Changes to contractual cash flows. When changing the basis for determining contractual cash flows for financial
assets and liabilities (including lease liabilities), the reliefs have the effect that the changes that are required by an
interest rate benchmark reform (that is, are necessary as a direct consequence of IBOR reform and are economically
equivalent) will not result in an immediate gain or loss in the income statement.

• Hedge accounting. The hedge accounting reliefs will allow most PFRS 9 hedge relationships that are directly
affected by IBOR reform to continue (Note 19). However, additional ineffectiveness might need to be recorded.

Hedge relationships

The ‘Phase 2’ amendments address issues arising during interest rate benchmark reform, including specifying when the
‘Phase 1’ amendments will cease to apply, when hedge designations and documentation should be updated, and when
hedges of the alternative benchmark rate as the hedged risk are permitted.

The ‘Phase 1’ amendments provided temporary relief from applying specific hedge accounting requirements to hedging
relationships directly affected by IBOR reform. The reliefs had the effect that IBOR reform should not generally cause
hedge accounting to terminate prior to contracts being amended. However, any hedge ineffectiveness is continued to be
recorded in the statement of income. Furthermore, the amendments set out triggers for when the reliefs would end, which
included the uncertainty arising from interest rate benchmark reform no longer being present. The BPI Group has not
adopted any hedge accounting reliefs provided by ‘Phase 1’ in 2020 as the sole cash flow hedge held was not IBOR-based
(Note 7).

The hedge accounting reliefs provided by ‘Phase 2’ of the amendments are as follows:

• Hedge designation: When the phase 1 amendments cease to apply, the BPI Group will amend its hedge designation to
reflect changes which are required by IBOR reform, but only to make one or more of these changes:
o designating an alternative benchmark rate (contractually or non-contractually specified) as a hedged risk;
o amending the description of the hedged item, including the description of the designated portion of the cash
flows or fair value being hedged; or
o amending the description of the hedging instrument. The BPI Group will update its hedge documentation to
reflect this change in designation by the end of the reporting period in which the changes are made. These
amendments to the hedge documentation do not require the Group to discontinue its hedge relationships.

• Hedges of groups of items: When amending hedges for groups of items (such as the fair value hedge of interest rate
risk within the mortgage portfolio) for IBOR reform, hedged items are allocated to sub-groups within that hedge
designation, based on the benchmark rate being hedged for that subgroup (for example, a GBP LIBOR sub-group and
a SONIA sub-group within the fair value hedge of the mortgage portfolio). The benchmark rate for each sub-group is
designated as the hedged risk.

• Risk components: The BPI Group is permitted to designate an alternative benchmark rate as a noncontractually
specified risk component, even if it is not separately identifiable at the date when it is designated, provided that the
BPI Group reasonably expects that it will meet the requirements within 24 months of the first designation and the
risk component is reliably measurable. The 24-month period applies separately to each alternative benchmark rate
which the BPI Group might designate.

For the year ended December 31, 2021, the BPI Group has not adopted any hedge accounting reliefs provided by ‘Phase 2’
of the amendments since there are no outstanding hedging relationships for the year then ended.

Effect of IBOR reform

Following the financial crisis, the reform and replacement of benchmark interest rates such as USD, GBP and EUR LIBOR
and other inter-bank offered rates (‘IBORs’) has become a priority for global regulators. There is currently uncertainty
around the timing and precise nature of these changes.

(72)
As part of the reforms noted above, the international regulators have decided to no longer compel panel banks to
participate in the LIBOR submission process after the end of 2021 - although it acknowledges that COVID-19 might
impact on these plans - and to cease oversight of these benchmark interest rates. Regulatory authorities and private sector
working groups, including the International Swaps and Derivatives Association (‘ISDA’) and the Working Group on
Sterling and Risk-Free Reference Rates, continue to discuss alternative benchmark rates for LIBOR.

It is currently expected that SOFR (Secured Overnight Financing Rate), SONIA (Sterling Overnight Index Average) and
€STR (Euro Short Term-Rate) (collectively, “replacement rates”) will replace USD LIBOR, GBP LIBOR and EUR LIBOR,
respectively. There remain key differences between LIBOR and the replacement rates. LIBOR is a ‘term rate’, which means
that it is published for a borrowing period (such as three months or six months) and is ‘forward looking’, because it is
published at the beginning of the borrowing period. The replacement rates are currently ‘backward-looking’ rates, based
on overnight rates from actual transactions, and it is published at the end of the overnight borrowing period. Furthermore,
LIBOR includes a credit spread over the risk-free rate, which the replacement rates currently do not. To transition existing
contracts and agreements that reference LIBOR to their respective replacement rates, adjustments for term differences
and credit differences might need to be applied to the replacement rates, to enable the two benchmark rates to be
economically equivalent on transition.

The Philippine Interbank Reference Rate (PHIREF) is the benchmark rate used by key local players in setting the reset
value for the Philippine Peso floating leg of interest rate swaps. This is derived from done deals in the interbank foreign
exchange swap market and computed using USD LIBOR.

As at December 31, 2021, the BPI Group has approved SOFR and SONIA as the replacement rates for USD and GBP
LIBOR, respectively, while the remaining exposure on EUR LIBOR matured prior to the cessation of the related
benchmark rate. The adoption of the above changes in interest rate benchmark did not have a material impact on the
financial statements of the BPI Group.

The following table contains details of all financial instruments that BPI Group holds which reference LIBOR as at
December 31, 2021:

Consolidated:

Of which:
have reference to a currency LIBOR*
(In Millions of Pesos)
Carrying Value USD Libor PHIREF GBP Libor Total
Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities

Non-derivative assets and

liabilities
Measured at amortized cost
Cash and other cash items 35,143 - - - - - - - - -
Due from BSP 268,827 - - - - - - - - -
Due from other banks 34,572 - - - - - - - - -
Interbank loans receivable and
SPAR 30,852 - - - - - - - - -
Investment securities at - - - - -
amortized cost 338,672 - 4,421 - 4,421
Loans and advances, net 1,476,527 - 68,787 - - - 2,069 - 70,856 -
Other financial assets 2,338 - - - - - - - - -
Deposit liabilities - 1,955,147 - 774 - - - - - 774
Bills payable and other - - - - - -
borrowed funds - 95,039 - -
Due to BSP and other banks - 953 - - - - - - - -
Manager’s checks and demand - - - - - -
drafts outstanding - 6,931 - -
Lease liabilities - 7,326 - - - - - - - -
Other financial liabilities - 7,256 - - - - - - - -
2,186,931 2,072,652 73,208 774 - - 2,069 - 75,277 774
Measured at fair value
Financial assets at FVTPL 17,781 - - - - - - - - -
Financial assets at FVOCI 134,741 - - - - - - - - -
152,522 - - - - - - - - -
Total carrying value of non-
derivative assets and liabilities 2,339,453 2,072,652 73,208 774 - - 2,069 - 75,277 774
Derivative assets and liabilities 3,553 3,632 150,842 - 9,900 - 785 - 161,527 -
Total carrying value of assets
and liabilities exposed 2,343,006 2,076,284 224,050 774 9,900 - 2,854 - 236,804 774
*Based on the notional amounts of their related contracts

(73)
Parent:

Of which:
have reference to a currency LIBOR*
(In Millions of Pesos)
Carrying Value USD Libor PHIREF GBP Libor Total
(in millions of Pesos) Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities

Non-derivative assets and

liabilities
Measured at amortized cost
Cash and other cash items 33,868 - - - - - - - - -
Due from BSP 197,435 - - - - - - - - -
Due from other banks 27,734 - - - - - - - - -
Interbank loans receivable and
SPAR 30,023 - - - - - - - - -
Investment securities at - - - - -
amortized cost 333,193 - 4,421 - 4,421
Loans and advances, net 1,233,052 - 68,091 - - - 2,069 - 70,160 -
Other financial assets 6,121 - - - - - - - - -
Deposit liabilities - 1,675,875 - 774 - - - - - 774
Bills payable and other - - - - - -
borrowed funds - 82,550 - -
Due to BSP and other banks - 814 - - - - - - - -
Manager’s checks and demand - - - - - -
drafts outstanding - 5,243 - -
Lease liabilities - 6,248 - - - - - - - -
Other financial liabilities - 4,974 - - - - - - - -
1,861,426 1,775,704 72,512 774 - - 2,069 - 74,581 774
Measured at fair value
Financial assets at FVTPL 12,055 - - - - - - - - -
Financial assets at FVOCI 115,541 - - - - - - - - -
127,596 - - - - - - - - -
Total carrying value of non-
derivative assets and liabilities 1,989,022 1,775,704 72,512 774 - - 2,069 - 74,581 774
Derivative assets and liabilities 3,520 3,545 147,673 - 9,900 - - - 157,573 -
Total carrying value of assets
and liabilities exposed 1,992,542 1,779,249 220,185 774 9,900 - 2,069 - 232,154 774
*Based on the notional amounts of their related contracts

(b) New standards and amendments to existing standards not yet adopted by the BPI Group

The following new accounting standards and amendments to existing standards are not mandatory for December 31, 2021
reporting period and have not been early adopted by the BPI Group:

• PFRS 17, Insurance Contracts (effective for annual periods beginning on or after January 1, 2025)

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.

Likewise, the following amendments to existing standards are not mandatory for December 31, 2021 reporting period and
have not been early adopted by the BPI Group:

• Amendments to PAS 16, ‘Property, Plant and Equipment’

The amendment prohibits an entity from deducting from the cost of an item of property, plant and equipment any
proceeds received from selling items produced while the entity is preparing the asset for its intended use. It also
clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical
performance of the asset.

(74)
• Amendments to PFRS 3, ‘Business Combinations’

Amendments were made to update the references to the Conceptual Framework for Financial Reporting and add an
exception for the recognition of liabilities and contingent liabilities within the scope of PAS 37, ‘Provisions,
Contingent Liabilities and Contingent Assets’ and Interpretation 21, Levies.

• Amendment to PAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’

The amendment clarifies that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the
contract and an allocation of other costs directly related to fulfilling the contracts. Before recognizing a separate
provision for an onerous contract, the entity recognizes any impairment loss that has occurred on assets used in
fulfilling the contract.

• Amendments to PAS 1, ‘Presentation of Financial Statements’

The amendments clarify that liabilities are classified as either current or noncurrent, depending on the rights that
exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the
reporting date (e.g. the receipt of a waver or a breach of covenant). The amendments also clarify what PAS 1 means
when it refers to the ‘settlement’ of a liability.

In addition, PAS 1 requires entities to disclose their material rather than their significant accounting policies. The
amendments define what is ‘material accounting policy information’ 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.

• Amendment to PAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’

The amendment clarifies how companies should distinguish changes in accounting policies from changes in
accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively
to future transactions and other future events, but changes in accounting policies are generally applied retrospectively
to past transactions and other past events as well as the current period.

• Amendments to PAS 12, ‘Income Taxes

The amendments require entities to recognize deferred tax on transactions that, on initial recognition, give rise to
equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as
leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets
and liabilities. The amendment should be applied to transactions that occur on or after the beginning of the earliest
comparative period presented. In addition, entities should recognize deferred tax assets (to the extent that it is
probable that they can be utilized) and deferred tax liabilities at the beginning of the earliest comparative period for
all deductible and taxable temporary differences associated with (a) right-of-use assets and lease liabilities, and
(b) decommissioning, restoration and similar liabilities, and the corresponding amounts recognized as part of the cost
of the related assets. The cumulative effect of recognizing these adjustments is recognized in retained earnings, or
another component of equity, as appropriate.

• Annual Improvements to PFRS Standards 2018-2020

The following improvements were finalized in May 2020:

i. PFRS 9, ‘Financial Instruments’, clarifies which fees should be included in the 10% test for derecognition of
financial liabilities.
ii. PFRS 16, ‘Leases’, amendment to remove the illustration of payments from the lessor relating to leasehold
improvements, to remove any confusion about the treatment of lease incentives.

The adoption of the above amendments is not expected to have a material impact on the financial statements of the BPI
Group.

31.3 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity. The BPI Group recognizes a financial instrument in the statements of condition when, and
only when, the BPI Group becomes a party to the contractual provisions of the instrument.

(75)
31.3.1 Measurement methods

Amortized cost and effective interest rate

The amortized cost is the amount at which the financial asset or financial liability is measured at initial recognition minus
the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference
between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

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.

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.

(76)
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

Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such
as loans and advances, due from BSP and other banks, government and corporate bonds and other financial receivables.

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.

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. 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.

(77)
Equity instruments

Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments
that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets.

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 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.
• 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, 2021 and 2020.

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.

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;

(78)
• 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:

• 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.

• 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.

• 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.

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.

(79)
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).

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.

(80)
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.

Loan modifications in compliance with the Bayanihan Acts I and II in 2020, was treated in line with BPI Group’s policies
discussed above.

31.3.4 Derecognition of financial assets other than modification

Financial assets, or a portion thereof, are derecognized when the contractual rights to receive the cash flows from the
assets have expired, or when they have been transferred and either (i) the BPI Group transfers substantially all the risks
and rewards of ownership, or (ii) the BPI Group neither transfers nor retains substantially all the risks and rewards of
ownership and the BPI Group has not retained control.

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.

(81)
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.

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 contracts in which the BPI Group is required to provide loans with pre-specified terms to
customers. These contracts, which are not issued at below-market interest rates and are not settled net in cash or by
delivering or issuing another financial instrument, are not recorded in the statements of condition.

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”.

Hedge accounting

The BPI Group designates derivatives as either:

• hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedges)
• hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly probable
forecast transactions (cash flow hedges), or
• hedges of a net investment in a foreign operation (net investment hedges).

At inception of the hedge relationship, the BPI Group documents the economic relationship between hedging
instruments and hedged items, including whether changes in the cash flows of the hedging instruments are
expected to offset changes in the cash flows of hedged items. The BPI Group documents its risk management objective and
strategy for undertaking its hedge transactions.

In 2021, the BPI Group's existing cash flow hedge activity in 2020 has matured (Note 7). There are no fair value hedges or
net investment hedges as of reporting date.

Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in the “Cash flow hedge reserve” within equity. The gain or loss relating to the ineffective portion is
recognized immediately in profit or loss, within “Other operating income”.

(82)
When the group excludes the forward element of a forward contract and foreign currency basis spread of financial
instruments in the hedge designation, the fair value change of the forward element and currency basis spread that relates
to the hedged item (‘aligned forward element/currency basis spread’) is recognized within OCI in the costs of hedging
reserve within equity. If the group designates the full change in fair value of the derivative (including forward points and
currency basis spreads) the gains or losses relating to the effective portion of the change in fair value of the entire
derivative are recognized in the cash flow hedge reserve within equity.

Amounts accumulated in equity are reclassified to profit or loss within other operating income in the same periods
during which the hedged future cash flows affect profit or loss. However, if the amount is a loss and the BPI Group
expects that all or a portion of that loss will not be recovered in one or more future periods, the amount that is not
expected to be recovered shall immediately be reclassified to profit or loss.

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time shall be
reclassified to profit or loss in the same periods during which the future cash flows affect profit or loss. When the
future cash flows are no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that
were reported in equity are immediately reclassified to profit or loss.

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 30.3.2 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

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.

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.

The BPI Group classifies its fair value measurements using a fair value hierarchy that reflects the significance of the inputs
used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity
securities and debt instruments on exchanges (for example, PSE, Philippine Dealing and Exchange Corp., etc.).
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices). This level includes the majority of the over-the-
counter (OTC) derivative contracts. The primary source of input parameters like LIBOR yield curve or counterparty
credit risk is Bloomberg.
• Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This
level includes equity investments and debt instruments with significant unobservable components. This hierarchy
requires the use of observable market data when available. The BPI Group considers relevant and observable market
prices in its valuations where possible. The BPI Group has no assets or liabilities classified under Level 3 as at and for
the year ended December 31, 2021 and 2020.

(83)
31.3.10 Interest income and expense

Interest income and expense are recognized in profit or loss for all interest-bearing financial instruments using the effective
interest method.

The effective interest method is a method of calculating the amortized cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.

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 Dividend income

Dividend income is recognized in profit or loss when the BPI Group’s right to receive payment is established.

31.3.12 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statements of condition when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and
settle the liability simultaneously.

As at December 31, 2021 and 2020, there are no financial assets and liabilities presented at net amounts due to offsetting.

31.3.13 Cash and cash equivalents

Cash and cash equivalents consist of Cash and other cash items, Due from BSP, Due from other banks, and Interbank
loans receivable and securities purchased under agreements to resell (SPAR) with maturities of less than three months
from the date of acquisition and that are subject to insignificant risk of changes in value.

31.3.14 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

Subsidiaries are all entities over which the BPI Group has control. The BPI Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. The BPI Group also assesses existence of control where it does not have more than 50% of the
voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may
arise in circumstances where the size of the BPI Group’s voting rights relative to the size and dispersion of holdings of
other shareholders give the BPI Group the power to govern the financial and operating policies.

Subsidiaries are fully consolidated from the date on which control is transferred to the BPI Group. They are
de-consolidated from the date that control ceases.

(84)
The BPI Group applies the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary 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. 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.

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.

When the BPI Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date
when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying
amount for purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset.
In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for
as if the BPI Group had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognized in other comprehensive income are reclassified to profit or loss.

If the Parent Bank loses control of a subsidiary, the Parent Bank:

• derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position.
• recognizes any investment retained in the former subsidiary and subsequently accounts for it and for any amounts
owed by or to the former subsidiary in accordance with relevant PFRSs. The remeasured value at the date that control
is lost shall be regarded as the fair value on initial recognition of a financial asset in accordance with PFRS 9 or the
cost on initial recognition of an investment in an associate or joint venture, if applicable.
• recognizes the gain or loss associated with the loss of control attributable to the former controlling interest.

(b) Transactions with non-controlling interests

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions -
that is, as transactions with the owners in their capacity as owners. For purchases from non-controlling interests, the
difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests other than those related to
discontinued operation are also recorded in equity.

Interests in the equity of subsidiaries not attributable to the Parent Bank are reported in consolidated equity as non-
controlling interests. Profits or losses attributable to non-controlling interests are reported in the statements of income as
net income (loss) attributable to non-controlling interests.

(c) 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. Under the equity method, the investment is initially
recognized at cost and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss
of the investee after the date of acquisition.

(85)
If the ownership interest in an associate is reduced but significant influence is retained, a proportionate share of the
amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.

The BPI Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of
post-acquisition movements in reserves is recognized in other comprehensive income. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. When the BPI Group’s share of losses in an
associate equals or exceeds its interest in the associate, including any other unsecured receivables, the BPI Group does not
recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the
associate.

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.

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.

(d) 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. 2018-01. 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.

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

Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive officer
who allocates resources to, and assesses the performance of the operating segments of the BPI Group.

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).

(86)
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. Historical cost includes expenditure
that is directly attributable to the acquisition of an asset which comprises its purchase price, import duties and any
directly attributable costs of bringing the asset to its working condition and location for its intended use.

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.

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.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 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, 2021 and 2020.

An item of Bank premises, furniture, fixtures and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss 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.

31.8 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.

(87)
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.

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 Discontinued operations

A discontinued operation is a component of the BPI Group that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose
of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the statement of income, statement of total comprehensive income and
statement of cash flows. Likewise, prior year balances of such statements are restated in accordance with the provisions of
PFRS 5. The details of the discontinued operations are disclosed in Note 12.

31.11 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;

(88)
• 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.

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.

31.12 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.

31.13 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, 2021 and 2020.

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.

31.14 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.

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.

(89)
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.

There are no warranties and other similar obligation and refunds agreed with customers.

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.

31.15 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.

31.16 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.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in profit or loss. Non-monetary items measured at historical cost
denominated in a foreign currency are translated at exchange rates as at the date of initial recognition. Non-monetary
items in a foreign currency that are measured at fair value are translated using the exchange rates at the date when the fair
value is determined.

Changes in the fair value of monetary securities denominated in foreign currency classified as financial assets at FVOCI
are analyzed between translation differences resulting from changes in the amortized cost of the security, and other
changes in the carrying amount of the security. Translation differences are recognized in profit or loss, and other changes
in carrying amount are recognized in other comprehensive income.

Translation differences on non-monetary financial instruments, such as equities held at FVTPL, are reported as part of the
fair value gain or loss recognized under “Securities trading gain” in the statement of income. Translation differences on
non-monetary financial instruments, such as equities classified as financial assets at FVOCI, are included in Accumulated
other comprehensive income (loss) in the capital funds.

(90)
(c) 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.

(d) 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.

31.17 Accrued expenses and other liabilities

Accrued expenses and other liabilities are recognized in the period in which the related money, goods or services are received
or when a legally enforceable claim against the BPI Group is established.

31.18 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.

31.19 Income taxes

(a) Current income tax

Income tax payable is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognized as an
expense for the year except to the extent that current tax is related to items (for example, current tax on financial assets at
FVOCI) that are charged or credited in other comprehensive income or directly to capital funds.

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 Provision for income
tax - Current.

(b) Deferred income tax

Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. 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. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred
income tax asset is realized, or the deferred income tax liability is settled.

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.

(91)
Deferred income tax assets are recognized on deductible temporary differences arising from investments in subsidiaries, and
associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and
there is sufficient taxable profit available against which the temporary difference can be utilized.

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, and
associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary
difference is controlled by the BPI Group and it is probable that the temporary difference will not reverse in the foreseeable
future. Generally, the BPI Group is unable to control the reversal of the temporary difference for associates except when there
is an agreement in place that gives the BPI Group the ability to control the reversal of the temporary difference.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same
taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on
a net basis.

31.20 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.

(92)
(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.

31.21 Capital funds

Share capital consists of common shares which are instruments that meet the definition of “equity”.

Share premium includes any premiums or consideration received in excess of the total par value of the common shares
issued.

Incremental costs directly attributable to the issue of new shares are treated as a deduction from the share issuance
proceeds.

31.22 Earnings per share (EPS)

Basic EPS is calculated by dividing income applicable to common shares by the weighted average number of common
shares outstanding during the year with retroactive adjustments for stock dividends. In case of a rights issue, an
adjustment factor is being considered for the weighted average number of shares outstanding for all periods before the
rights issue. Diluted EPS is computed in the same manner as basic EPS, however, net income attributable to common
shares and the weighted average number of shares outstanding are adjusted for the effects of all dilutive potential
common shares.

(93)
31.23 Dividends on common shares

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.

31.24 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).

31.25 Leases

31.25.1 BPI Group is the lessee

Assets and liabilities arising from a lease are initially measured on a present value basis. The interest expense is recognized in
the statement of income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term
on a straight-line basis.

Measurement of lease liabilities

Lease liabilities include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the 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).

Lease payments are allocated between principal and interest expense. The interest expense is charged to profit or loss over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Measurement of right-of-use assets

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability,
• any lease payments made at or before the commencement date less any lease incentives received,
• any initial direct costs, and
• restoration costs.

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.

(94)
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.

31.25.2 BPI Group is the lessor

PFRS 16 substantially carries forward the lessor accounting requirements in PAS 17. Accordingly, the BPI Group (as a
lessor) continues to classify its leases as operating leases or finance leases.

Operating lease

Properties (land and building) leased out under operating leases are included in “Investment properties” in the statements
of condition. Rental income under operating leases is recognized in profit or loss on a straight-line basis over the period of
the lease.

Finance lease

When assets are leased out under a finance lease, the present value of the lease payments is recognized as a receivable. The
difference between the gross receivable and the present value of the receivable is recognized as unearned finance income.

Lease income under finance lease is recognized over the term of the lease using the net investment method before tax,
which reflects a constant periodic rate of return.

(95)
31.26 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; (d) amounts
recoverable from reinsurers and loss adjustment expenses are classified as assets, with an allowance for estimated
uncollectible amounts; and (e) financial assets and liabilities are measured following the classification and valuation
provisions of PFRS 9.

(b) Pre-need

The more significant provisions of the PNUCA as applied by the pre-need subsidiary follow: (a) premium income from sale
of pre-need plans is recognized as earned when collected; (b) costs of contracts issued and other direct costs and expenses
are recognized as expense when incurred; (c) 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 (d) 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.

31.27 Related party relationships and transactions

Related party relationship exists when one party has the ability to control, directly, or indirectly through one or more
intermediaries, the other party or exercises significant influence over the other party in making financial and operating
decisions. Such relationship also exists between and/or among entities which are under common control with the reporting
enterprise, or between and/or among the reporting enterprise and its key management personnel, directors, or its
shareholders. In considering each possible related party relationship, attention is directed to the substance of the
relationship, and not merely the legal form.

31.28 Comparatives

Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with
comparative information.

Where PAS 8 applies, comparative figures have been adjusted to conform with changes in presentation in the current year.
There were no changes to the presentation made during the year.

31.29 Subsequent events (or Events after the reporting date)

Post year-end events that provide additional information about the BPI Group’s financial position at the reporting date
(adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in
the notes to financial statements when material.

(96)
Note 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
2021 2020 2021 2020
Return on average equity
- Daily average1 8.40 7.70 9.70 10.81
- Simple average2 8.28 7.79 9.60 11.00
Return on average assets
- Daily average3 1.08 0.98 1.21 1.33
- Simple average4 1.03 0.96 1.15 1.31
Net interest margin
- Daily average5 3.30 3.49 3.06 3.31
- Simple average6 3.15 3.45 2.91 3.26
1
Net 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, 2021 and 2020.
2
Net 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, 2021 and 2020.
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, 2021 and 2020.
4
Net 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, 2021 and 2020.
5
Net 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, 2021 and 2020.
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, 2021 and 2020.

(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, 2021 and 2020.

Significant Credit Exposures

Details of the loans and advances portfolio as to concentration per industry/economic sector (in %) as at December 31 are
as follows:

Consolidated Parent
2021 2020 2021 2020
Real estate, renting and other related activities 25.63 25.42 18.05 18.04
Manufacturing 15.62 14.97 18.54 17.79
Wholesale and retail trade 10.69 10.97 11.83 12.18
Consumer 8.08 8.01 5.44 5.12
Financial institutions 8.08 8.88 9.64 10.57
Agriculture and forestry 1.94 2.53 2.31 3.01
Others 29.96 29.22 34.19 33.29
100.00 100.00 100.00 100.00

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
2021 2020 2021 2020
(In Millions of Pesos)
Secured loans
Real estate mortgage 268,427 257,311 138,333 132,600
Chattel mortgage 51,878 51,821 6 8
Others 122,943 203,629 120,803 201,013
443,248 512,761 259,142 333,621
Unsecured loans 1,079,224 932,434 1,009,327 870,066
1,522,472 1,445,195 1,268,469 1,203,687

Other collaterals include hold-out deposits, mortgage trust indentures, government and corporate securities and bonds,
quedan/warehouse receipts, standby letters of credit, trust receipts, and deposit substitutes.

(97)
Breakdown of performing and non-performing loans net of allowance for credit losses, as reported to the BSP, are as
follows:

Consolidated

2021 2020
Non- Non-
Performing performing Total Performing performing Total
(In Millions of Pesos)
Corporate loans 1,198,873 17,531 1,216,404 1,147,201 12,990 1,160,191
Credit cards 67,397 3,762 71,159 58,652 5,453 64,105
Other retail loans 218,255 16,663 234,918 200,612 20,310 220,922
1,484,525 37,956 1,522,481 1,406,465 38,753 1,445,218
Allowance for
probable losses (8,546) (17,572) (26,118) (13,073) (14,483) (27,556)
Net carrying amount 1,475,979 20,384 1,496,363 1,393,392 24,270 1,417,662
*Amounts exclude accrued interest receivables and GLLP

Parent

2021 2020
Non- Non-
Performing performing Total Performing performing Total
(In Millions of Pesos)
Corporate loans 1,177,981 16,087 1,194,068 1,127,042 10,507 1,137,549
Credit cards 65,765 3,576 69,341 56,803 5,096 61,899
Other retail loans 4,584 476 5,060 3,823 430 4,253
1,248,330 20,139 1,268,469 1,187,668 16,033 1,203,701
Allowance for
probable losses (7,378) (12,790) (20,168) (11,001) (9,470) (20,471)
Net carrying amount 1,240,952 7,349 1,248,301 1,176,667 6,563 1,183,230
*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:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Loans and advances from:
Subsidiaries - 189 - -
Associates 60 509 60 509
Ayala Group 65,195 76,509 65,195 71,123
Other related parties 546 24,160 544 7,569

(98)
 Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos, except percentages)
Total outstanding loans and advances 65,801 101,367 65,799 79,201
% to total outstanding related party loans
Subsidiaries - 0.19 - 0.00
Associates 0.09 0.50 0.09 0.64
Ayala Group 99.08 75.48 99.08 89.80
Other related parties 0.83 23.83 0.83 9.56

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos, except percentages)
Total outstanding loans and advances 65,801 101,367 65,799 79,201
% to total outstanding related party loans
Unsecured related party loans 66.61 32.58 66.61 41.69
Past due related party loans 0.00 0.00 0.00 0.00
Non-performing related party loans 0.00 0.00 0.00 0.00

Details of DOSRI loans are as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Outstanding DOSRI loans 15,230 15,675 15,229 15,673

Consolidated Parent
2021 2020 2021 2020
(In percentages)
% to total outstanding loans and advances 1.00 1.08 1.20 1.30
% to total outstanding DOSRI loans
Unsecured DOSRI loans 3.11 3.20 3.11 3.20
Past due DOSRI loans 0.01 0.00 0.01 0.00
Non-performing DOSRI loans 0.02 0.00 0.02 0.00

The BPI Group is in full compliance with the General Banking Act and the BSP regulations on DOSRI loans as at
December 31, 2021 and 2020.

(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, 2021 and 2020, the BPI Group has no outstanding loans and
advances used as security for bills payable (Note 10).

(v) 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
2021 2020 2021 2020
(In Millions of Pesos)
Guarantees issued 2,327 1,401 2,327 1,401
Financial standby letters of credit - foreign 15,367 8,370 15,367 8,370
Performance standby letters of credit - foreign 4,453 3,442 4,453 3,442
Commercial letters of credit 10,719 9,055 10,719 9,055
Trade related guarantees 1,305 2,255 1,305 2,255
Commitments 124,754 126,903 122,689 125,004
Spot foreign exchange contracts 10,208 18,616 10,208 18,616
Derivatives 357,556 339,259 349,039 336,211
Other contingent accounts 1,141,823 1,095,617 27,337 45,902
1,668,512 1,604,918 543,444 550,256

(99)
Other contingent accounts pertain to inward and outward bills for collection, late deposits or payments received, and trust
department accounts.

Significant credit risk exposures arising from off-balance sheet items are as follows:

Consolidated Parent
2021 2020 2021 2020
(In Millions of Pesos)
Undrawn loan commitments 360,425 352,844 354,002 346,995
Unused letters of credit 34,131 24,512 34,131 24,512
Gross carrying amount 394,556 377,356 388,133 371,507
Loss allowance (747) (959) (728) (927)
Carrying amount 393,809 376,397 387,405 370,580

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 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.

Note 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, 2021 consist of:

Amount
(In Millions of Pesos)
Deposit and loan documents 6,016
Trade finance documents 565
Mortgage documents 453
Others 2
7,063

(ii) Withholding taxes

Withholding taxes paid/accrued and/or withheld for the year ended December 31, 2021 consist of:

Amount
Paid Accrued Total
(In Millions of Pesos)
Income taxes withheld on compensation 1,868 214 2,082
Withholding tax on withdrawal from decedent’s account 22 2 24
Final income taxes withheld on interest on deposits and yield on deposit
substitutes 1,041 46 1,087
Final income taxes withheld on income payment 285 204 489
Creditable income taxes withheld (expanded) 390 51 441
Fringe benefit tax 76 20 96
VAT withholding tax 36 2 38
3,718 539 4,257

(100)
(iii) All other local and national taxes

All other local and national taxes paid/accrued for the year ended December 31, 2021 consist of:

Amount
Paid Accrued Total
(In Millions of Pesos)
Gross receipts tax 3,819 370 4,189
Real property tax 119 - 119
Municipal taxes 291 - 291
Others 82 - 82
4,311 370 4,681

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 pending cases filed in courts, with the tax authorities contesting certain tax
assessments, and for various claims for tax refund.

(101)
 Bank of the Philippine Island
Financial Indicators
As at December 31, 2021 and 2020

Ratio Formula Current Year Prior Year

(in Millions of Pesos, except ratios) in percentage
Liquidity ratio Total current assets divided by total current
liabilities

Total current assets 989,212

50.60 62.68
Divided by: Total deposits 1,955,147
Liquidity ratio 0.5060

Debt-to-equity ratio Total liabilities (Bills payable and Bonds payable)

divided by total equity

Total liabilities (Bills payable

and Bonds payable) 95,039 32.43 54.30
Divided by: Total equity 293,060
Debt-to-equity ratio 0.3243

Asset-to-equity ratio Total assets divided by total equity

Total assets 2,421,915

826.42 798.13
Divided by: Total equity 293,060
Asset-to-equity ratio 8.2642

Interest rate Earnings before interest expense, income taxes,

coverage ratio depreciation, and amortization

EBITDA 54,820
Divided by: Total interest 364.64 231.35
Expense 15,034
Interest rate coverage ratio 3.6464

Return on equity Net income divided by daily average equity

Net income 23,880

Divided by: Daily average 8.40 7.70
equity 284,414
Return on equity 0.0840

Return on assets Net income divided by daily average assets

Net income 23,880

Divided by: Daily average 1.08 0.98
assets 2,220,644
Return on assets 0.0108
Net interest margin Net interest income (return on investment less
(NIM) interest expense) divided by daily average net
interest bearing assets

Net interest income 69,583

Divided by: Daily average 3.30 3.49
Net Interest Bearing
Assets 2,106,049
NIM 0.0330

Other ratios:
Average assets to Daily average assets divided by daily average
average equity equity
Daily average assets 2,220,644
Divided by: Daily average 780.78 786.84
equity 284,414
Average assets to average
equity 7.8078

Net interest to Net interest income divided by daliy average

average assets assets
(NRFF)
Net interest income 69,583
Divided by: Daily average 3.13 3.30
assets 2,220,644
NRFF 0.0313

Cost to income ratio Total operating expense divided by total income

(Net interest income and Other income)

Total operating expense 50,733

Divided by: Total income 52.08 47.25
(Net Interest income and
Other income) 97,405
Cost to income ratio 0.5208

Cost to asset ratio Total operating expense divided by daily average

assets

Total operating expense 50,733

Divided by: Daily average 2.28 2.20
assets 2,220,644
Cost to asset ratio 0.0228

Capital to assets Total equity divided by total assets

ratio

Total equity 293,060

12.10 12.53
Divided by: Total assets 2,421,915
Capital to assets ratio 0.1210
 Bank of the Philippine Islands
14/F Ayala North Exchange, Tower I
6796 Ayala Avenue corner Salcedo Street,
Legaspi Village, Makati City Philippines

Reconciliation of Retained Earnings Available for Dividend Declaration

As at and for the year ended December 31, 2021
(In Millions of Pesos)

Unappropriated Retained Earnings, based on audited financial

statements, beginning of the year 115,453

Add: Net income actually earned/realized during the

period 22,783

Less: Non-actual/unrealized income net of tax:

• Equity in net income of associate/joint venture -
• Unrealized foreign exchange gain (after tax) except
those attributable to Cash and cash equivalents 542
• Unrealized actuarial gain -
• Fair value adjustment (mark-to-market gains) 1,948
• Fair value adjustment of investment property
resulting to gain -
• Adjustment due to deviation from PFRS (gain) -
• Other unrealized gains or adjustments to retained
earnings as a result of certain transactions
accounted for under PFRS -
Subtotal 2,490

Add: Non-actual losses, net of tax:

• Depreciation on revaluation increment (after tax) -
• Adjustment due to deviation from PFRS/GAAP -
loss -
• Loss on fair value adjustment of investment
property (after tax) -
Subtotal -
Net income actually earned during the year 20,293

Add (Less): Dividend declarations during the year (8,124)

Appropriations of Retained Earnings during the year -
Reversals of appropriations -
Effects of prior period adjustments -
Treasury shares -
Others (12)
Subtotal (8,136)
Unappropriated retained earnings available for dividend
distribution, end of the year 127,610
 BANK OF THE PHILIPPINE ISLANDS
As at December 31, 2021
(in Millions of Pesos)
Schedule A - Financial Assets
Number of shares
Income
or principal Amount shown in the
received and
amount of bonds balance sheet
accrued
and notes
Due from Bangko Sentral ng Pilipinas 268,827
Due from other banks 34,572
Interbank loans receivable and Securities
purchase under agreements to resell 30,852
Sub-total 334,251 1,956
Financial assets at fair value through profit or
loss – Trading securities (*) 17,781
Financial assets at fair value through profit or
loss – Derivative financial assets 3,553
Sub-total 21,334 306
Financial assets at fair value through other
comprehensive income (*) 134,741 2,473
Investment Securities at amortized cost (*) 338,672 7,657
Loans and advances, net 1,476,527 72,225
Others 2,338 -
TOTAL 2,307,863 84,617
(*) Please refer succeeding pages for the detailed information on these financial assets
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2021

Schedule B: Amounts Receivable from Directors, Officers, Employees, Related Parties and
Principal Stockholders (Other than Related Parties)

Name and Designation Balance at beginning Balance at end of

Additions Amount Collected Amount written off Current Not Current
of debtor of period period

Nothing to report. Transactions with these parties are made under the normal course of business.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2021
(In Millions of Pesos)

Schedule C - Amounts Receivable from Related Parties which are Eliminated during the Consolidation of
Financial Statements.

Balance at Balance at
Amounts Amounts Not
beginning Additions Current the end of
Collected written-off Current
Name and Designation of debtor of period period

BANK OF THE PHILIPPINE ISLANDS 3 19 2 - 20 - 20

BPI DIRECT BANKO, INC. 445 76 - - 521 - 521
BPI COMPUTER SYSTEMS CORP. - 8 - - 8 - 8
BPI CAPITAL CORP. 4 - - - 4 - 4
BPI FAMILY SAVINGS BANK, INC. 151 3,532 105 - 3,578 - 3,578
BPI INVESTMENT MANAGEMENT, INC. 7 7 - - 14 - 14
BPI SECURITIES CORP. 100 - 2 - 98 - 98
BPI ASSET MANAGEMENT AND TRUST
CORP. 59 221 - - 280 - 280
BPI/MS INSURANCE CORPORATION 2 - 1 - 1 - 1
771 3,863 110 - 4,524 - 4,524
 BANK OF THE PHILIPPINE ISLANDS
As at December 31, 2021
(in Millions of Pesos)
Schedule D - Long-term Debt
Amount shown
under caption Amount shown
“Current portion of under caption
long-term debt” in “Long-term debt” in
Amount authorized related balance related balance
Title of issue and by indenture sheet sheet Terms of Long-term
type of obligation (Original Currency) (in PHP) (in PHP) debts
Parent Bank
Bonds payable USD 600 - 30,519 Int Rate : 4.25 %
Frequency of Payment:
Semi - Annual
Maturity Date : 9/4/2023
Face Value :
USD 600,000,000
Bonds payable USD 300 - 15,239 Int Rate : 2.5 %
Frequency of Payment:
Semi - Annual
Maturity Date : 9/10/2024
Face Value :
USD 300,000,000
Bonds payable Php 15,328 15,328 - Int Rate : 0.424 %
Frequency of Payment:
Quarterly
Maturity Date : 1/24/2022
Face Value :
PHP 15,328,200,000
Bonds payable Php 21,500 21,463 - Int Rate : 0.0305 %
Frequency of Payment:
Quarterly
Maturity Date : 5/07/2022
Face Value :
PHP 21,500,000,000
SUB-TOTAL 36,791 45,758

BPI Family Savings Bank, Inc.

Bonds payable Php 9,600 9,584 - Int Rate : 4.30 %
Frequency of Payment:
Quarterly
Maturity Date : 06/16/2022
Face Value :
PHP 9,600,000,000

BPI Europe
Bills payabe 1,886 1,020 Various
TOTAL 48,261 46,778
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2021

Schedule E - Indebtedness to Related Parties (Long-Term Loans from Related Companies)

Name of related party Balance at beginning of period Balance at end of period

Nothing to report.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2021

Schedule F - Guarantees of Securities of Other Issuers

Name of Issuing entity of securities Title of issue of each Total amount Amount owned by
guaranteed by the company for which this class of securities guaranteed and Person for which Nature of guarantee
statement is filed guaranteed outstanding statement is filed

Nothing to report.
 BANK OF THE PHILIPPINE ISLANDS
December 31, 2021

Schedule G - Capital stock

Number of Number of
shares shares
issued and reserved for
outstanding options, Directors,
as shown warrants, Number of officers
Number of under related conversion shares held and Others
Title of Shares balance sheet and other by related employees
Issue Authorized caption rights * parties
Common
Shares 5,000,000,000 4,513,128,255 12,905,000 2,294,725,778 30,133,482 2,188,268,995
Preferred
A Shares 60,000,000 - - - - -

*Shares granted but not yet exercised

 EXHIBIT B
(List of Subsidiaries)
 BANK OF THE PHILIPPINE ISLANDS

BPI FAMILY SAVINGS BPI DIRECT BANKO, INC. a BPI COMPUTER SYSTEMS BPI FOREX CORP. 100%
BANK, INC. 100% SAVINGS BANK 100% CORP. 100%

BPI PAYMENTS HOLDINGS FEB SPEED INT’L 100% FEBSTOCK BROKERS INC. FIRST FAR EAST DEV’T
INC. 100% 100% CORP. 100%

AF PAYMENTS, INC 20% AYALA PLANS. 98.93%

BPI CAPITAL CORP 100% BPI ASSET BPI INVESTMENT

MANAGEMENT AND MGT., INC. 100%
TRUST
CORPORATION 100%

BPI SECURITIES CORP

100% ALFM GLOBAL ALFM FIXED ALFM RETAIL
MULTI-ASSET INCOME FEEDER CORPORATE
INCOME FUND, FUND, INC. 100% FIXED INCOME
INC. 98% FUND, INC. 100%

BPI REMITTANCE BPI INT’L FINANCE LIMITED FGU INSURANCE CORP BPI/MS INSURANCE CORP.
CENTRE HK, LTD. 100% 100% 94.62% 41.40%

BPI/MS INSURANCE CORP. FCS INSURANCE AGENCY

9.45% 24.92%

SANTIAGO LAND DEV’T

CORP. 100%

BPI (EUROPE) PLC 100% FILINVEST ALGO

FINANCIAL CORP. 100%

CITYTRUST REALTY CORP. BEACON PROPERTY GLOBAL PAYMENTS ASIA- BPI CENTURY TOKYO BPI PHILAM LIFE
40% VENTURES, INC. 20% PACIFIC PHILIPPINES INC. LEASE & FINANCE CORP ASSURANCE
49% 49% CORPORATION 47.96%

BPI CENTURY TOKYO CITYTRUST SECURITIES

RENTAL CORP. 100% CORP. 100%
 EXHIBIT C
(Top 20 Stockholders)
 BPI STOCK TRANSFER OFFICE
BANK OF THE PHILIPPINE ISLANDS
TOP 20 STOCKHOLDERS
AS OF DECEMBER 31, 2021

RANK STOCKHOLDER NAME OUTSTANDING SHARES PERCENTAGE TOTAL

1 PCD NOMINEE CORPORATION (NON-FILIPINO) 879,864,113 19.4957%

PCD NOMINEE CORPORATION (FILIPINO) 793,575,325 17.5837% 1,673,439,438

2 AYALA CORPORATION 1,000,261,934 22.1634% 1,000,261,934

3 LIONTIDE HOLDINGS INC. 904,194,682 20.0348% 904,194,682

4 AC INTERNATIONAL FINANCE LIMITED 390,269,162 8.6474% 390,269,162

5 ROMAN CATHOLIC ARCHBISHOP OF MANILA 327,904,251 7.2656% 327,904,251

6 MICHIGAN HOLDINGS, INC. 92,684,989 2.0537% 92,684,989

7 MERCURY GRP. OF COMPANIES, INC 7,653,853 0.1696% 7,653,853

8 ESTATE OF VICENTE M. WARNS 7,550,868 0.1673% 7,550,868

9 BPI - ESPP 2019 5,591,260 0.1239% 5,591,260

10 BPI GROUP OF COMPANIES RETIREMENT FUND 4,174,243 0.0925% 4,174,243

11 XAVIER P. LOINAZ AND/OR MA. TERESA J. LOINAZ 3,938,203 0.0873% 3,938,203

12 BPI - ESPP 2018 3,817,820 0.0846% 3,817,820

13 BPI - ESPP 2017 2,965,550 0.0657% 2,965,550

14 HERMANN BARRETTO WARNS 2,920,000 0.0647% 2,920,000

15 BLOOMINGDALE ENTERPRISES INC 2,685,225 0.0595% 2,685,225

16 SAHARA MGT. & DEV. CORP. 2,535,146 0.0562% 2,535,146

17 LA FILIPINA UY GONGCO CORPORATION 2,299,790 0.0510% 2,299,790

18 FORESIGHT REALTY & DEVELOPMENT CORPORATION 1,958,595 0.0434% 1,958,595

19 HYLAND REALTY & DEV`T. CORP. 1,935,413 0.0429% 1,935,413

20 BPI - ESPP 2016 1,637,760 0.0363% 1,637,760

GRAND TOTAL 4,440,418,182

Page 1 of 1
 EXHIBIT D
(Statistical Report by Sharelots)
USER ID : SK187405
RUN DATE : 4/12/2022
RUN TIME : 09:10:19

STATISTICAL REPORT BY SHARELOTS

BANK OF THE PHILIPPINE ISLANDS

As of December 31, 2021
SHARE LOTS NUMBER OF STOCKHOLDERS ISSUED SHARES

1 - 100 1,553 57,667

101 - 500 4,092 1,067,633
501 - 1,000 2,001 1,458,238
1,001 - 5,000 2,941 6,376,829
5,001 - 10,000 582 4,014,339
10,001 - 50,000 629 13,490,445
50,001 - 100,000 107 7,327,501
100,001 - 500,000 136 27,332,480
500,001 - 1,000,000 12 8,253,385
1,000,001 - 5,000,000 17 42,921,689
5,000,001 - 10,000,000 4 26,812,497
10,000,001 - 50,000,000 2 63,481,023
50,000,001 - UP 8 4,310,534,529
GRAND TOTAL 12,084 4,513,128,255