2 0 1 0

The Bank of the Philippine Islands (BPI) registered strong business volume and revenue growth in 2009. Full year unaudited net income rose to P 8.5 billion, 33% higher than 2008, and equivalent to a 13% Return on Equity and a 1.3% Return on Assets. Correspondingly, net income for the fourth quarter of 2009 was 7% better than 2008.

Unaudited total resources ended at P725 billion, 9% higher than previous year. Total funds managed by the Bank increased by P187 billion or 22% and now stands at over P1 trillion. Deposits expanded by 7% to P579 billion and assets under management increased by a hefty 50% to P439 billion.

Overall net loans grew only 2%, primarily due to multinationals paying down their loans by 22%. However, Credit Cards receivables grew 16%, SME loans 11%, consumer loans grew 10%, and local middle market names 9%. Clearly, multinational and top tier domestic lending were challenged by high liquidity and availability of funding through the capital markets.

Total remittances grew 15%, as against projections of an industry growth of 5%. BPI continued to capture over 20% of the overseas Filipino remittance business.

BPI also launched a Bank Anywhere capability by which a client can transact at any BPI branch and not be confined to their home branch. This, together with superior availability and reliability during Typhoons Ondoy and Pepeng, resulted in low cost deposit funds growing 20% during the year.

To extend market reach and refine its product suite, BPI implemented two joint ventures with strategic partners - BPI Globe BanKO, a mobile microfinance bank with Ayala Corporation and Globe Telecom; and BPI-Philam Life Assurance, Inc., a bancassurance platform with Philippine American Life Insurance Company.

Total revenues improved by 15% with increments contributed by both net interest and non-interest income. Net interest income was ahead by 10% on account of the 9% expansion in average asset base and a slight improvement in net spreads.

Non-interest income recorded a higher 25% largely on account of securities trading gain of P1.5 billion as against losses the previous year. Other income also exhibited positive gains from income from asset sales, rental income, income from insurance operations and various fees and commissions.

BPI set aside P2.5 billion in impairment losses, P605 million higher than a year ago. The BSP net 30-day non-performing loan ratio though fell to 2.8% and reserve cover further improved to 87.3%.

Operating expenses were 7% ahead of previous year due to manpower and premises-related expenses. Income taxes was P463 million higher than the previous year in view of the higher level of write-offs of deferred income tax on net operating loss carry-over (NOLCO).

BPI issued its first Sustainability Report for 2008 along the Global Reporting Initiatives (GRI) Sustainability Reporting Guidelines, the first in the banking industry. BPI was also recognized as the ‘Most Sustainable Bank, Philippines’ in the New Economy Sustainability Banking Awards 2009.

BPI President and Chief Executive Officer Mr. Aurelio R. Montinola III comments on the 2009 performance: "After all the doom and gloom at the beginning of the year, we are grateful that BPI had solid growth and earnings in almost all sectors in 2009. While there continue to be differing views on the strength of the recovery in 2010, we are confident that BPI will continue to serve its clients in a proactive financial advisory manner and be an innovative financial trailblazer in this new decade. With the global economic recovery under way, we expect BPI to even perform better in 2010."

BPI has received the Bangko Sentral ng Pilipinas' approval on January 27, 2010 for the payment of the Php 0.90 regular cash dividend on the outstanding common shares of the capital stock for the second semester of 2009. In accordance with the BPI Board's resolution, the cash dividend is payable on February 26, 2010 to all BPI common shares stockholders of record as of February 11, 2010.