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Minutes of BPI's Annual Stockholders' Meeting held on 10 April 2014
(Approved by the stockholders in the April 8, 2015 Stockholders' Meeting)


The Annual Meeting of Stockholders of the Bank of the Philippine Islands (BPI or the Bank) was held at the Ballroom 2, Fairmont Makati, 1 Raffles Drive, Makati Avenue, Makati City on the 10th day of April 2014 at 9:00 in the morning, in accordance with Article IV (Stockholders’ Meetings) of BPI’s Amended By-Laws.

I. Call to Order

The Chairman of the Board of Directors, Mr. Jaime Augusto Zobel de Ayala, (the “Chairman”) presided over and called the meeting to order at 9:00 A.M. The Corporate Secretary, Mr. Carlos B. Aquino (the “Corporate Secretary”), recorded the minutes of the meeting.

II. Notice of Meeting and Quorum

The Corporate Secretary reported to the Chairman and informed the assembly that in accordance with the requirements of the Corporation Code of the Philippines and the Amended By-Laws of BPI, written notice of the time, date, place and purpose of the annual meeting was sent to all stockholders of BPI entitled to notice and to vote and the same was published on the March 19, 2014 and April 2, 2014, issues of the Philippine Daily Inquirer, a newspaper of general circulation in the Philippines.

The Chairman then asked if there was a quorum at the meeting to transact all the items in the agenda. The Corporate Secretary reported to the Chairman and announced to the assembly that there were present at the meeting, in person and by proxy, stockholders owning/representing 3,230,474,013 or 82.22% of the 3,929,297,850 total issued and outstanding common shares of the capital stock of BPI entitled to vote and be voted at the meeting. Thereupon, the Chairman declared that a quorum was present and that the meeting was duly convened.

The following members of the Board of Directors of BPI and the nominee directors were likewise present at the meeting: 1) Mr. Jaime Augusto Zobel de Ayala - Chairman of the Board of Directors and Executive Committee, 2) Mr. Fernando Zobel de Ayala - Vice-Chairman of the Board and Executive Committee and Chairman of the Personnel and Compensation Committee, 3) Mr. Cezar P. Consing - President and Chairman of the Credit Committee, 4) Ms. Mercedita S. Nolledo - Chairman of the Trust Committee and Retirement and Pension Committee, 5) Mr. Xavier P. Loinaz - Chairman of the Audit Committee, 6) Chief Justice Artemio V. Panganiban - Chairman of the Corporate Governance Committee, 7) Ms. Vivian Que Azcona (nominee director), 8) Ms. Rebecca G. Fernando, 9) Solomon M. Hermosura, 10) Mr. Aurelio R. Montinola III, 11) Mr. Antonio Jose U. Periquet, 12) Dr. Astrid S. Tuminez, 13) Mr. Oscar S. Reyes and 14) Dolores B. Yuvienco (nominee director).

III. Rules of Conduct and Procedures

Before proceeding, the Chairman asked the stockholders to please first identify themselves as they are recognized by the Chair and that the remarks be restricted to the item of the agenda under consideration. The Chairman then requested the Corporate Secretary to discuss the voting procedures for the meeting.

The Corporate Secretary explained that stockholders may opt for manual voting or online voting. For manual voting, each stockholder had been given a ballot to enable him to vote in writing. For online voting, there are fifteen (15) stations outside the ballroom where stockholders may cast their votes online. Both the ballot and the website platform state the proposed resolutions for consideration by the stockholders.

He further said that the stockholders act by the affirmative vote of stockholders representing at least a majority of the outstanding and voting capital stock present at the meeting. Approval of item no. 9 on the Agenda, however, which is the Amendment of the Third Article of the Articles of Incorporation and Article I of the By-Laws of the Bank to indicate the complete address of its principal office, requires the vote of stockholders representing two-thirds (2/3) of the outstanding capital stock.

The Corporate Secretary added that each outstanding share would entitle the stockholder to one vote except in the election of directors where the stockholders may cumulate their votes.

IV. Approval of Minutes of Annual Stockholders’ Meeting on April 18, 2013

The Chairman announced that the next order of business was the approval of the minutes of the annual meeting of stockholders held on April 18, 2013, copies of which were distributed to the stockholders and proxies who were present at the meeting and electronic copy was available on the website of the Bank.

On motion duly made and seconded, it was -

“RESOLVED, that the minutes of the annual meeting of stockholders of the Bank of the Philippine Islands held on April 18, 2013, be, and are hereby, approved as recorded”.

Of the total number of shares present and entitled to vote and be voted at the meeting, 99.63% voted in favor of this proposal, none voted against and 0.37% abstained from voting.

V. Reading of Annual Report and Approval of the Bank’s Statements of Condition as of and for the Years Ended 31 December 2013, 2012 and 2011

The next item in the agenda was the Annual Report on the operations and other activities of BPI and its subsidiaries during the year 2013, copies of which were also distributed to the stockholders and proxies present, inclusive of the Statements of Condition of BPI for the years ended 31 December 2013, 2012 and 2011 as incorporated in said Annual Report.

At this juncture, the Chairman read to the body his message to the stockholders, to wit:

Welcome to the Annual Stockholders’ Meeting of Bank of the Philippine Islands. Last year, we celebrated the Bank’s 162nd year, a unique distinction of longevity, stability, and leadership in the Philippine financial industry.
BPI concluded 2013 on a strong note. The Bank ended the year with approximately P1.2 Trillion in assets. P635 Billion in loans and P989 Billion in deposits. Each of these financial metrics increased more than 20% over that of the prior year.

In the backdrop of robust growth, the Bank closed the year with an equity base of P105 Billion and with a capital adequacy ratio of 13.7%, which far exceeds the regulatory requirement of 10%.

Net Income, on the other hand, was P18.8 Billion, a 15% increase over the prior year representing an all-time high for the bank. BPI’s return on equity of 18.1% stood highest among its peers with solid financial results as well in terms of Return on Assets and Cost to Income Ratio metrics of 1.9% and 50.9%, respectively.

The Bank’s robust financial performance is supportive of the premium that the stock market continues to give BPI, which continues to be our country’s largest bank in terms of market capitalization as of year-end 2013.

BPI’s strong financial results mask what was a challenging year in the financial markets, in both the Philippines and internationally. The US Federal Reserve and other western central banks addressed the threat of a deep and prolonged global recession, by injecting tremendous amounts of money into the global financial system from 2008-2012. The influx of such money supply lowered interest rates, which in turn inflated prices of assets of all kinds. Over the years of declining interest rates, banks the world over increased their holdings in securities, which rose in value and inflated their proportion of trading gains to total profits.

In early 2013, however, we saw this trend reverse. The West and the US in particular began to see early indications of renewed economic growth. The US Federal Reserve reacted by hinting at “tapering” in the second quarter of 2013. The effects of the Fed’s pronouncement were felt almost immediately. Interest rates in many currencies, taking their cue from the US Dollar, began to rise. With improved economic growth expectations in the West, investors began to rotate away from Emerging Markets in favor of Developed Markets. For banks the world over, the second quarter of 2013, with interest rates beginning to rise, marked the end of the period of increasing profits from fixed income securities positions. In fact, banks began to realize losses on their securities positions.

We reacted quickly to the prospect of a change in the interest rate regime. The Bank reduced the size and tenors of its traded securities portfolio, which had the effect of preserving gains registered in the first quarter of 2013. With interest rates expected to move up further, the Bank managed its book so that a large majority of its loans could be repriced within one year, which would allow us to take advantage of higher interest rates.

On the deposit side, we placed increased emphasis on growing low cost deposits, thus, helping provide a floor on the Bank’s net interest margins.

Growth in the Bank’s assets now has to be derived primarily from our loan book, from the assumption of credit risk as opposed to interest rate risk. Gains in revenues and net income now have to be generated by higher loan balances, increases in non-interest income other than directional trading income and, eventually, higher net interest margins.

Fortunately, the Philippine economy is growing at a pace that supports a strategy that is dependent to a large extent on measured growth in the intermediation of funds. The Bank’s economists have estimated annual GDP growth at 7-8% and inflation at 2-4% over the medium term. The country’s current account and foreign exchange position is likewise seen to remain strong and healthy. The subsequent rise in real incomes will allow for greater borrowing capacity in an economy which, by Asian standards, is underleveraged. This implies that banks in the Philippines will have a significant room to grow. As long as macroeconomic conditions remain favorable, BPI will position itself for growth.

Against this backdrop, in the fourth quarter of 2013, we embarked upon a P25 Billion stock rights issue that, when it was completed in February 2014, increased the capital of the Bank by almost a quarter. The increase in capital will allow the Bank to grow at a pace commensurate with the expected growth in the Philippine economy. The rights issue, the largest capital raise completed by BPI in its entire history, was 32% oversubscribed, and is testimony to the confidence and support of the Bank’s shareholders.

At this juncture, allow me to thank you, our Shareholders, for your continued support; our Board of Directors for their stewardship; and our Management team for their dedication and hard work.

Let me now turn you over to Mr. Consing, to share with you the bank’s initiatives in the past year and its plans going forward.

At this juncture, the President read his report to the stockholders.

Thank you, Mr. Chairman. Good morning, fellow shareholders. Indeed, our recent rights offer was a critical milestone for BPI. It has allowed us to position for growth--amidst a time of unprecedented opportunity in our country.

With 162 years behind us, we inherit a great legacy. That being said, we believe our future will be as inspiring as our past. Allow me to share with you some of the excitement that we feel about our business.

The number “78.5”, which you see on the cover of our annual report, bears particular significance to us because it represents the percentage of the Filipino population that remains unbanked. Continued economic growth of the kind we are seeing today will reduce this percentage significantly.

Our ability to capture the lion’s share of this “78.5” will determine our standing in the industry, the value we can generate for our shareholders, and our role in nation building.

Since 2009 we have grown our deposit client base by approximately
3 million clients, almost 78%. Importantly, a significant majority--almost 2.8 million--of this growth is represented by current and savings accounts, or CASA. CASA depositors are traditionally the most loyal to our brand.
Furthermore, the number of our corporate client depositors--an important source of ancillary business--now stands at almost 70,000, an annualized growth rate of four (4) percent since 2009.

We should note that a small but growing number of clients bank with BPI Globe BanKO, the micro-lending joint venture between BPI, Globe Telecom, and Ayala Corp. We believe BanKO will be a critical factor in our banking the unbanked and are excited by the strides made by BanKO’s new leadership team.

As with deposits, we are growing our lending base. Corporate Lending represents approximately 75% of our total loan book, in Peso terms.

Between 2009 and 2013, the number of Corporate Borrowers grew by almost 1,400--to about 9,000. Our Corporate Borrower Base spans the “Top Corp” sector, multinationals, as well as small and medium scale enterprises.

It is also worth noting that the 9,000 Corporate Borrowers we had at the end of 2013 represented only thirteen percent of the number of Corporate depositors shown in the previous slide.

This statistic highlights BPI’s opportunities for loan growth. Converting depositors into borrowers will build loan balances and grow net income.

It is important to not just count clients, but also raise our game in terms of what we do for them.

This slide shows a selection of significant corporate finance transactions that we arranged in 2013. We underwrote important financings for our government, Development Bank of the Philippines, and top corporate names like Meralco, Filinvest and EDC. Our engagement with clients is expanding to include not just fundraising, but also critical, strategic advisory assignments.

This year’s pipeline of investment banking transactions is full and growing, and encompasses public debt and equity fund raisings, as well as M&A. Clearly, this is a space worth watching.

To say that the world is getting smaller has extra meaning to a financial institution like ours, which has to deal with global capital flows and the propect of ASEAN integration.

We therefore work in close partnership with international banks as they arrange loan and capital markets transactions. We are deploying more of our relatively large book of foreign currency deposits in support of these transactions. In the process, we are becoming increasingly capable of competing at the level of the international firms. This is one of our most important objectives at BPI: Recruiting, training, and developing the best of breed, so that we can continue to be a force domestically and credible regionally.

As this slides shows, in 2013, BPI was associated with successful transactions for some of the best names in Singapore, Indonesia, Malaysia, Thailand, and Hong Kong.
Allow me to shift gears and talk about our consumer banking effort.

Since we introduced ATMs to the Philippines in 1983, BPI has been at the forefront of banking via electronic channels—online banking, mobile banking, and phone banking. Today, a significant proportion of our clients are active users of at least one of our electronic channels.

If one were to account for every single interaction that occurs between the Bank and our clients, more than eighty percent of such interactions now occur outside of our traditional branch network. We want this number to continue to grow, and will invest so that this number becomes as large as practicable.

The extension of our alternative and electronic channels will allow our front-line personnel to devote additional time to addressing more value-added needs of our clients--to increase the number of products that we cross-sell to each of them.

Successful cross-selling means that we are more relevant to our clients. Greater relevance will translate into higher and more robust transaction volumes.

On this slide, we focus on BPI’s Retail Lending business.

Our flagship here is BPI Family Savings Bank, the country’s largest thrift bank. Here, you see the trajectory of our home, auto, and personal loan business, as well as our lending to sole proprietorships. We show 13.6% annualized growth in client count since 2011.

Our continued success in this business rests on three critical factors:

1. Increasing manpower, so that we maintain a good ratio of
marketing and servicing personnel to transaction volume;

2. Refinement of risk-scoring models, so that we can price and
mitigate our risks appropriately—and quickly; and

3. Investment in technology, to automate as many processes as
we can, as well as improve the accessibility of our credit products.

Already, we have moved the dial in terms of headcount. BPI crossed the 13,000 mark at the end of 2013. We aim to get to 14,500 within 12 months. As significant as the planned headcount increase may seem, our total staffing remains far smaller than our largest competitor.

We will also front-load our investments in the infrastructure that supports our people, so that we can respond quickly to the fast-changing—and more demanding—needs of our borrowers.

We constantly strive to improve BPI’s value proposition to its clients. We want them to feel that banking with us is easy.

For example, last year, we designed and launched a credit product suited particularly to OFs in the merchant marine, called “Personal Loan Seafarers”. In terms of processes, we are constantly streamlining our response time to clients, so they receive feedback on their applications within a day—or even faster.

To get a taste of what we’re doing in Retail Lending, and for your next home, auto, personal, or Ka-Negosyo loan, visit us at: www.bpiloans.com

We have a team at BPI called Payments and Unsecured Lending—PAUL for short. They, too, have expanded their business at a healthy pace. For example:

1. Our Card Base has expanded at a six percent annualized clip
since 2009, reaching 1.1 million cards last year;

2. Our merchant acquisition business has been growing at an
even faster rate—13.9% annually--over that same period.
We ended the year with 28,000 Point-of-Sale terminals.

Our Bank aims to make great strides in the payments space, particularly as Filipinos become wealthier, more urbanized and more prepared to spend without the use of cash.

BPI, together with Ayala Corp., Globe Telecom, and the Metro Pacific Group, will build Metro Manila’s new Automated Fare Collection System, or AFCS. This is the equivalent of Hong Kong’s Octopus Card. Or Singapore’s EZ-Link. Our Consortium has been awarded the contract to exclusively manage the contactless cards that handle fares on Metro Manila’s public light rail system for a period of ten years.

BPI is the only bank and one of the largest shareholders in this consortium.

With AFCS, our Payments and Unsecured Lending business will continue to be a substantial profit driver for BPI.

Today, BPI is the Philippines’ second largest bank in terms of investment assets under management.

Clients in our asset management business have increased in number at an annualized clip of 11.2% since 2009, closing out 2013 at almost 82,000. That’s because we deliver value by making sure that their hard-earned savings are protected and growing.

Our flagship ALFM Mutual Fund increased in net asset value by an annualized 33.2% rate between 2009 and 2013. This is the kind of performance that will power continued growth in our asset management, trust, and private banking businesses.

For many of our clients, banking is no longer about just access to financial services. It is about using that access to make the kinds of financial decisions that improve and enrich lives.

Surveys confirm what we intuitively know—that our clients want the best for themselves and their families.

It is BPI’s objective to help Filipinos achieve their financial objectives by helping them make more intelligent and informed financial decisions. In a nutshell, we want to help them change the way they think about money, so that they can get the best out of life.

Our Chairman and I have spoken a lot today about BPI’s financial and operational performance. That said, BPI is more than just about pure numbers.

At BPI, we are very aware that we are part of a greater socio-economic system. We express this awareness via the BPI Foundation.

Last year, the Foundation worked to encourage entrepreneurship among OFs. Separately, working with the Department of Science and Technology and 10 leading universities, we are now in the 25th year of identifying and rewarding outstanding student scientists—in the hope that these students will continue to pursue scientific work that helps improve lives. And, in partnership with Habitat for Humanity, we provided 60 public school teachers with homes in Quezon City and Davao.

Perhaps our most notable work at the Foundation last year was with respect to the environment.

Together with the WWF, we funded a study that assessed the risks to communities and businesses in eight (8) major Philippine cities as a result of climate change. An earlier phase of the study identified Tacloban as particularly vulnerable. Sadly, the destruction wrought by Typhoon Yolanda proved the study prescient.

If you have time, I encourage you to read this report. It’s available, for free, on the website of WWF Philippines.

At BPI, citizenship means service. We take volunteerism very seriously at your bank, and speak sincerely from our hearts when we utter the phrase Bayanihan Para sa Inang Bayan—or BPI Bayan.

BPI’s spirit of volunteerism was evident in the aftermath of Typhoon Yolanda, as our employees mobilized their resources to help our 52 colleagues—and their families--struck down by this calamity.

But BPI Bayan is not just about responding to Yolanda-type situations. To us, volunteerism is business-as-usual. Since 2011, in our bank of 13,000-odd employees, we enlisted almost 5,000 volunteers who clocked almost 48,000 volunteer hours across 137 community projects in the country.

Working with our Human Resources team, the Foundation led a fundraising effort for the victims of Typhoon Yolanda. Every Peso contributed by BPI employees was matched 1-for-1 by our institution. This fundraising, known to us as “10+10” successfully raised over twenty million Pesos in a three week period. Altogether, BPI raised over P30 million for Yolanda-related relief.

Nothing defines the culture of BPI—your Bank—more than this significant accomplishment. It shows that we care not just about how we deliver value to you, but also how we serve each other. How we serve our country.
Since its founding in 1851, BPI has been closely linked to the growth of the Philippine economy. The prospects we see in our country today create tremendous opportunities for BPI. It is our intention to take advantage of good macroeconomic fundamentals by carefully and systematically overlaying scale over what are some of the best financial metrics in the Philippine banking industry.

If we execute properly, we will be the bank that clients turn to for their most important financial transactions, an employer of choice for those that want to pursue a career in banking, and a preferred bank holding for investors that appreciate superior risk adjusted returns over the economic cycle. To give life to our slogan "Make the Best Happen" is our commitment to all our stakeholders, our promise to our nation, and the standard to which we hold ourselves.

Thank you!

The Chairman then inquired if there were any questions or comments on the Annual Report or the 2013 Audited Financial Statements. The Chairman also advised the stockholders with technical/customer service concerns to approach the customer care desk near the registration table anytime after the meeting.

Mr. Philip Turner, one of the stockholders present, congratulated the Management for keeping non-performing levels at one percent (1%), and asked the actual amount of BPI’s non-performing assets. The President replied that there are around 10Bn of non-performing assets, down from 11.0Bn to 12.0Bn in previous years.

Mr. Turner then commented on the user interface of the electronic voting system and asked if a confirmation page can be incorporated which shows the user his/her votes and asked if she/he is sure of the vote before confirming. The Chairman replied that Management will look into his suggestion.

Mr. Turner further said that ATM fraud is a problem for all banks, and, considering that the bank has spent a lot of money to control the fraud, he asked if the bank is succeeding in its efforts. The President replied in the affirmative, saying that in recent years, the Bank’s net loss as result of fraud has gone down in absolute percentage term.

Mr. Turner then inquired about the Bank’s exposure in China, as some banks in China are in trouble. The President replied that BPI has a very small exposure to Chinese banks, mostly in terms of settlement risks.

Mr. Turner expressed his thanks to the Chairman and again extended his congratulations to Management for having an excellent year. The Chairman also thanked Mr. Turner for his comments and suggestions.

Mr. Jose Ferrer, another stockholder, then asked if BPI has taken steps to change the magnetic stripe on ATM cards to microprocessor chips, as directed by the Bangko Sentral Ng Pilipinas (BSP). The Chairman called on Ms. Ma. Cristina L. Go, Head of Card Banking, to reply. Ms. Go said that the Bank has already submitted to the BSP its proposal to migrate to EMV technology by 2017 as required by the BSP. Mr. Ferrer added that the Bank should fast track the migration to microchips, considering the losses incurred by banks due to ATM fraud. The Chairman said that the Bank is moving forward in that direction.

The Chairman then called on Mr. Mario Liuag. Mr. Liuag suggested that new branches be opened in Nagcarlan, Laguna, where there are no nearby branches, and in San Juan, Batangas, due to proximity to resorts in Laiya, Batangas. Mr. Liuag added that he had received a message from Dr. Allan Robert Caraan, one of the doctors at Makati Medical Center and a stockholder of BPI, asking if BPI is planning to put up a Branch in the parking area of Makati Medical. The Chairman replied that there is already an ATM inside Makati Medical Center and other nearby branches in Makati, and Management will look into his suggestions to expand the Bank’s branch network. Mr. Liuag thanked the Chairman.

Ms. Gelia Castillo, another stockholder, inquired from the Chairman why BPI is not number one. The Chairman replied that number one can be defined in many ways. In terms of assets, BPI has a track record of being number one in terms of return in equity and also market capitalization. That means that the value created from stockholder funds in the Bank is seen by investors as superior in many ways to others available. Ms. Castillo thanked the Chairman for his reply.

Another stockholder asked about the plans for the Evangelista Bangkal Branch, because the location is under litigation and he had heard that the Bank was looking for another place. The President asked Ms. Natividad Alejo, Head of Branches, to respond to this question. Ms. Alejo explained that Management is reviewing that site, not because of the ownership issues, but to upgrade the branch. She stated that the Bank is looking at the best possible site for the convenience of customers, considering also that there is flooding in the area during the rainy season. Said stockholder mentioned that another factor is parking space, and that he hoped that the new site will have convenient parking for clients. He expressed his thanks to Ms. Alejo.

Mr. Antonio Garcia, a stockholder, inquired if the personnel responding to 89-100 are BPI employees or contracted out. He also said that his experience when calling 89-100 is that the queue takes around 30 minutes. Ms. Alejo replied that the personnel at the 89-100 call center are BPI employees. To address the long waiting time, she said that additional phone banking agents are being hired, but there is competition with the BPO industry for talent.

Another stockholder, Mr. Hernan Rivadilla, remarked that the BPI Alfaro branch always seems to be offline. Ms. Alejo said that there are situations when the branch is offline due to telecommunications problems, but with branch anywhere, transactions can be done at other branches. Mr. Rivadilla also asked about the charges for non-payment of credit cards balance, and he said that the call center agent at 89-100 was only able to tell him that the calculation was computer-generated. The Chairman asked Ms. Go to reply, and she said that the rate is generally 3.4% on the previous month’s balance. She added that the call center’s response will be reviewed, as they should be able to reply in more detail because the interest and charges can be viewed on their screen.

Mr. Jose Leonardo, a depositor at BPI Family Bank, said that when he withdrew cash at an ATM using a BPI Express Teller card, no cash came out of the ATM but his account was debited. He filed a complaint with JP Rizal branch, but he has not yet received a reply. The Chairman asked Ms. Alejo to discuss directly with Mr. Leonardo to address his concerns.

The Chairman thanked the stockholders for their suggestions and comments, and assured them that the appropriate group of the Bank will look into their feedback and evaluate the same.

There being no further questions/comments, the Chairman proceeded to asked for a motion for the approval of the Annual Report and Statement of Condition.

Thereupon, on motion duly made and seconded, the stockholders approved the Annual Report and the 2013 Audited Financial Statements to wit:

“RESOLVED, that the Annual Report of the Bank and the 2013 Audited Financial Statements incorporated in the said Annual Report be, and are hereby approved”.

For the 2013 Annual Report and Statement of Condition, of the total number of shares present and entitled to vote and be voted at the meeting, 99.63% voted in favor of this proposal, none voted against and 0.37% abstained from voting.

VI. Approval and Confirmation of All Acts during the Past Year of the Board of Directors, Committees and Officers

The next item on the agenda was the approval and confirmation of all acts taken up by the Board of Directors, all Committees and Officers of BPI during the past year up to the date of this annual stockholders meeting. Upon request of the Chairman, the Corporate Secretary explained to the stockholders the nature of the acts and resolutions approved by the Bank in the regular course of its business.

The Corporate Secretary said that these acts include among others approval of loans, credits, contracts, housekeeping matters done to promote the interest and business of the Bank.

Thereupon on motion duly made and seconded, the stockholders adopted and approved the following resolution:

“RESOLVED, That all acts, proceedings and resolutions of the Board of Directors (Board), Executive Committee, Audit Committee, Trust Committee, Nomination Committee, Personnel and Compensation Committee, Risk Management Committee, Corporate Governance Committee, all other Board and Management Committees heretofore taken and adopted at their various meetings held during the past year up to the date of this annual stockholders meeting and as recorded in the minutes of their respective meetings, and all acts of the Officers and Management of the Bank of the Philippine Islands (BPI) during the past year up to the date of this meeting in carrying out and promoting the interests and business of BPI be, and the same are hereby approved, ratified and confirmed. These will include among others, acts of approval of loans, credits, contracts, and other acts which have been covered by disclosures to the Philippine Stock Exchange and the Securities and Exchange Commission. Also included are resolutions involving housekeeping matters such as authorized signatories, bank related transactions, adoption and/or amendment of manual of operations and charters of various committees and By-Laws of the Bank, and CAPEX among others.”

Of the total number of shares present and entitled to vote and be voted at the meeting, 99.63% voted in favor of this proposal, none voted against and 0.37% abstained from voting.

VII. Election of 15 Members of the Board of Directors

The next item in the agenda was the election of fifteen (15) members of the Board of Directors for the ensuing year.

At the request of the Chairman, Atty. Solomon M. Hermosura, a member of the Nomination Committee, reported that as approved by the Nomination Committee of BPI and subsequently confirmed by the Board of Directors, the following were nominated for election/re-election as members of the Board of Directors of BPI for the year 2014-2015 and until their successors are duly elected and qualified:

1. Jaime Augusto Zobel de Ayala
2. Fernando Zobel de Ayala
3. Cezar P. Consing
4. Vivian Que Azcona
5. Romeo L. Bernardo
6. Octavio V. Espiritu
7. Rebecca G. Fernando
8. Xavier P. Loinaz
9. Aurelio R. Montinola III
10. Mercedita S. Nolledo
11. Artemio V. Panganiban
12. Antonio Jose U. Periquet
13. Oscar S. Reyes
14. Astrid S. Tuminez
15. Dolores B. Yuvienco

Atty. Hermosura further reported that there were only fifteen (15) nominees for the 15 Board seats to be filled up. All the nominees had been evaluated and approved by the Nomination Committee of BPI in a meeting called for that purpose which approval was subsequently confirmed by the Board of Directors. The Nomination Committee concluded that the 15 nominees were qualified to serve as directors of the Bank. All nominees have given their consent to the nomination.

The Nomination Committee was composed of Mr. Romeo L. Bernardo as Chairman and Messrs. Jaime Augusto Zobel de Ayala, Xavier P. Loinaz, and Solomon M. Hermosura as members.

Of the above-named nominees, six (6) were nominated and are eligible as Independent Directors. They are: Messrs. Romeo L. Bernardo, Octavio V. Espiritu, Xavier P. Loinaz, Artemio V. Panganiban, Antonio Jose U. Periquet, and Dr. Astrid S. Tuminez. Messrs. Romeo L. Bernardo, Octavio V. Espiritu, Xavier P. Loinaz, Artemio V. Panganiban, and Antonio Jose U. Periquet were nominated by Ms. Maria Ysabel P. Sylianteng, long-time stockholder of BPI, while Dr. Astrid S. Tuminez was nominated by Mr. Romeo L. Bernardo, a long time Independent Director of BPI. None of the aforementioned nominees has any business or personal relationship with Ms. Sylianteng or Mr. Bernardo. The following nominees namely, Messrs. Xavier P. Loinaz, Octavio V. Espiritu, Artemio V. Panganiban, Antonio Jose U. Periquet, Romeo L. Bernardo and Dr. Astrid S. Tuminez were nominated for re-election as independent director. The Bank has adopted the SRC Rule 38 (Requirements on Nomination and Election of Independent Directors) and compliance therewith has been made. All nominations were submitted, evaluated and approved by the Bank’s Nomination Committee in compliance with Section 38 (a) of SRC on Independent Directors and SEC Memorandum Circular No. 9 dated December 05, 2011 [Term Limits for Independent Directors].

Thereafter on motion duly made and seconded, the stockholders adopted the following resolution:

“RESOLVED that there being only 15 nominees for the 15 Board seats, votes be cast in favor of the said nominees and that they be declared elected as members of the Board of Directors of BPI for the year 2014-2015 and until their successors are duly elected and qualified”.

As tabulated by the office of the Corporate Secretary and validated by the auditors, the votes received by the nominees were as follows:


VIII. Re-Engagement of Isla Lipana & Co. as External Auditors of BPI for Year 2014 and Fixing of Their Remuneration

The next item in the agenda was the election of BPI’s External Auditors and fixing their remuneration.

At the request of the Chairman, Mr. Xavier P. Loinaz, Chairman of the Audit Committee reported to the stockholders that at the meeting of the Board of Directors of BPI on March 19, 2014, the Board, upon recommendation of the Audit Committee, approved and recommended to the stockholders for their approval, the re-engagement of Isla Lipana & Co. as the External Auditors of BPI and its major subsidiaries and affiliates for the year 2014 for a fee of 12.1M against last year 12.3M or a reduction of 1.0%. He further reported that the Audit Committee of BPI had evaluated the performance of Isla Lipana & Co. during the past years and the Committee was satisfied with their performance.

Thereupon, on motion duly made and seconded, the stockholders adopted the following resolution:

“RESOLVED that the re-engagement of Isla Lipana & Co. as the External Auditors of BPI and its major subsidiaries and affiliates for the current fiscal year for a fee of 12.1M be, and is hereby, approved”.

Of the total number of shares present and entitled to vote and be voted at the meeting, 98.60% voted in favor of this proposal, 0.98% voted against and 0.42% abstained from voting.

IX. Amendment of the Third Article of BPI Articles of Incorporation and Article I of its By-Laws (on specific address of its Principal Office)

The next item on the agenda was the amendment of the Third Article of BPI’s Articles of Incorporation and Article I of its By-Laws. Upon request of the Chairman, the Corporate Secretary explained that at the meeting of the Board of Directors of BPI on March 19, 2014, the Board approved and endorsed for ratification and approval of the stockholders the amendment to the Third Article of BPI’s Articles of Incorporation and Article I of its By-Laws concerning the principal office of the corporation. A recent Securities and Exchange Commission Memorandum, Circular No. 6 dated February 20, 2014, directed all corporations whose Articles of Incorporation indicate only the general address of their principal office such that it refers only to a city, town or municipality, to file an amended Articles of Incorporation in order to specify their complete address to include the name of the building, street number if feasible, street and city.

Thereafter, on motion duly made and seconded, the stockholders adopted the following resolution:

“RESOLVED, that the Board of Directors of the Bank of the Philippine Islands (hereafter referred to as “BPI”) hereby approves and ratifies the amendment to the Third Article of the Articles of Incorporation of BPI and Article I of its By-Laws to indicate the complete address of BPI’s principal office, in compliance with Securities and Exchange Commission (SEC) Memorandum Circular No. 6 dated 20 February 2014, as follows:

(a) Amended Articles of Incorporation of BPI

xxx

FROM: THIRD - That the place where the principal office of the Corporation is to be established or located at Makati, Rizal, Philippines, xxx

TO: THIRD - That the place where the principal office of the Corporation is to be established or located is at BPI Building, 6768 Ayala Avenue, corner Paseo de Roxas, Barangay San Lorenzo, Makati City, Philippines, xxx

(b) Amended By-Laws of BPI

FROM:

ARTICLE I

HEAD OFFICE AND BRANCHES

The Head Office of the Bank shall be located in Makati, Rizal. xxx

TO:

ARTICLE I

HEAD OFFICE AND BRANCHES

The Head Office of the Bank shall be located at BPI Building, 6768 Ayala Avenue corner Paseo de Roxas, Barangay San Lorenzo, Makati City, Philippines. xxx

RESOLVED FURTHER, That any of the following officers
of BPI: - The President, the Corporate Secretary, the Deputy Corporate Secretary – be, and is hereby, authorized and directed to make and to take such actions or steps as may be necessary, required and proper to carry into effect the foregoing resolutions and the intent thereof.”

Of the total number of shares present and entitled to vote and be voted at the meeting, 99.63% voted in favor of this proposal, which is more than the required two-thirds (2/3) of the outstanding capital stock of BPI, none voted against and 0.37% abstained from voting.

IX. Other Matters

The Chairman inquired if there were other matters anyone may want to take up.

Mr. Philip Turner referred to the relief efforts for typhoon Yolanda, and said that he has received very bad feedback on the donations sent from Europe. He then asked what BPI is doing for the Yolanda victims. The Chairman asked Mr. Florendo Maranan, Head of BPI Foundation, to reply. Mr. Maranan said that BPI Foundation has partnered with Habitat for Humanity Philippines to put up school buildings and housing for public school teachers, concentrating on Tacloban and Iloilo province. Mr. Turner said that he was pleased to hear this and suggested that the message be put forward for fuller distribution to all that needed help. The Chairman thanked Mr. Turner for his comments.

Mr. Ed Lucero, another stockholder, congratulated the Officers, Management and Board of Directors for a job well done this year. He added that President Consing is doing very well. The Chairman expressed his appreciation to Mr. Lucero.

X. Adjournment

There being no other comments or questions from the stockholders and no other matters to discuss, the meeting was, on motion duly made and seconded, adjourned at 10:35 A.M.


PRESS STATEMENT
BPI reports P5.2-B net income, P1.33 EPS for Q4 2014

P18.0-B net income, P4.59 EPS for full year 2014


Makati City, Metro Manila–Bank of the Philippine Islands (BPI) posted an unaudited net income of P5.2 billion and earnings per share (EPS) of P1.33 in 2014 Q4. This represents a 72% increase over P3.0 billion in net income earned in 2013 Q4, a 10% sequential increase from 2014 Q3, and the fourth straight consecutive increase in quarterly net income for the Bank.

On a full year basis, net income amounted to P18.0 billion, a 4% decline from 2013, which included extraordinary gains from securities trading. Furthermore, total comprehensive income amounted to P18.0 billion, a 27% increase from 2013.

BPI’s core business in lending to corporate and retail clients continued to drive growth. Net loans reached P800 billion, an increase of 26% over year-end 2013. Deposits ended at P1,176 billion, an increase of 19% over year-end 2013. Furthermore, the Bank registered a CASA ratio of 69%. For all of 2014, net interest income grew 15%, to P34.8 billion.

Non-interest income amounted to P21.0 billion for the year, representing a 5% decline compared to 2013. Income from securities and foreign exchange trading was P3.1 billion, a significant reduction relative to P6.3 billion one year ago. As of year-end 2014, Held for Trading (HFT) and Available for Sale (AFS) securities portfolios totaled P67.2 billion, a 27% reduction relative to year-ago levels. Non-interest income excluding securities and foreign exchange trading income was P17.8 billion, a 13% increase from the prior year.

Operating expenses grew by 11%, attributable to the Bank’s investment in infrastructure, technology and additional headcount. The Bank’s manpower complement was 14,542 as compared to 13,024 at end-2013, a 12% increase. Cost-to-income ratio ended the year at 53%.

BPI maintained strong asset quality and capitalization ratios as of the end of 2014. Gross 90-day NPLs fell to 1.51% of total loans, as compared to 1.74% one year ago and 1.78% at the end of 2014 Q3. BPI’s reserve levels, which attribute no value to collateral, rose to 110% of NPLs, from 107% in the prior quarter. Equity capital ended 2014 at P144 billion, resulting in a Basel III Capital Adequacy Ratio (CAR) of 14.85% and CET 1 ratio of 13.97%. The Bank raised P25 billion of capital in a rights issue in January 2014. The additional capital was a key factor in the decline in the Bank’s return on equity, which ended the year at 13.8% from 18.1% in 2013.

BPI’s board of directors has approved a cash dividend of P0.90 per share in respect of 2014 H2. The Bank anticipates settlement to shareholders around the first week of March, pending receipt of BSP approval.

“BPI enters 2015 with good momentum,” says Cezar P. Consing, President and CEO. “In 2014, we used the capital that we raised to invest for the future and meet robust loan demand. At the end of last year, we inked a JV with Century Tokyo Leasing, to broaden our suite of products for corporate clients. We also announced a strategic partnership with Global Payments, as we look to better serve our merchant clients and enhance the experience of BPI cardholders. We have mobilized our firm to focus more sharply on customers—and this bodes very well for our future financial performance.”

REGULAR CASH DIVIDEND PAYMENT


Bank of the Philippine Islands has received approval from the Bangko Sentral ng Pilipinas for its regular cash dividend of P0.90 per share for the second semester of 2014 on the total outstanding common shares of the Bank. This will be payable to all common shares stockholders of record as of February 24, 2015 and distributable to the said stockholders on March 17, 2015.

 
 


Member: PDIC. Maximum Deposit Insurance for Each Depositor P500,000.