2013 Annual Report

Transcription

2013 Annual Report

COVER SHEET
P W 1 0 5
S.E.C. Registration Number
P H I L T R U S T
P H I L I P P I N E
B A N K
T R U S T
C OMP A N Y
(Company's Full Name)
UN I T E D
S A N
N A T I O N S
MA R C E L I N O
A VE NU E
S T R E E T
C O R NE R
MA N I L A
(Business Address: No. Street City / Town / Province)
MARTIN B. ISIDRO
524-9061
Contact Person
Company Telephone Number
ANNUAL REPORT
1 2
Month
3 1
Day
1 7 - A
0 4
FORM TYPE
Month
Fiscal Year
2 9
Day
Annual Meeting
Secondary License Type, If Applicable
CG F D
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
Total No. of Stockholders
Domestic
To be accomplished by SEC Personnel concerned
File Number
LCU
Document I. D.
Cashier
STAMPS
Foreign
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, 2013
2.
SEC Identification Number
:
PW-105
3.
BIR Tax Identification Code :
4.
Exact name of issuer as
specified in its charter
:
Philtrust Bank
(Philippine Trust Company)
Province, Country of
Incorporation
:
Manila, Philippines
5.
034-000-541-102
6.
Industry Classification Code :
___________________
7.
Address of Principal Office :
Philtrust Bank Building
United Nations Avenue
corner San Marcelino Street,
Manila
8.
Telephone Number
(062) 524-90-61
9.
Former name, former address,
former fiscal year
:
10.
:
Not applicable
Securities registered pursuant to Sections 8 and 12 of the SRC:
The Bank's securities are exempt from registration.
11.
Are any or all of registrant's securities listed on a Stock Exchange?
The Bank's 1,000,000,000 total outstanding common shares are listed in the
Philippine Stock Exchange, Inc. (PSE).
1
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 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.
(b)
has been subject to such filing requirements for the past ninety (90) days?
No.
13.
State the aggregate value of the voting stock held by non-affiliates.
Not applicable.
2
I. BUSINESS
(A)
Description of Business
(1)
Business Development
Philtrust Bank, also known as Philippine Trust Company, was established on
October 21, 1916 and will celebrate its 98th anniversary this year. It is the third
oldest private commercial bank in the country. On June 5, 2007, the Bangko Sentral
ng Pilipinas granted Philtrust Bank authority to operate as a universal bank.
Throughout its 98 years in banking, Philtrust Bank has acquired a reputation
for conservatism and reliability and has enjoyed the trust and confidence of the
business community and the general public. With this policy as its guiding principle
throughout its banking history, the Bank has grown steadily since its establishment.
Philtrust Bank has been consistently rated as one of the most outstanding
banks in the country for its liquid position. It has not borrowed or availed of any
rediscounting facility from the Bangko Sentral ng Pilipinas or other banks, instead it
has been a consistent lender to these institutions.
The Bank has an authorized capital stock of Twenty Two Billion Pesos
(P22 Billion) divided into Two Billion Two Hundred Million shares of the par value
of Ten Pesos (P10.00) per share.
As shown in its audited financial statements as of December 31, 2013, hereto
attached as Annex “B1”, the Bank has a total assets of P120,953,500.00 and a
total equity of P20,103,691,000.00, with paid-up capital of P10 Billion Pesos.
Philtrust Bank Head Office is located at United Nations Avenue corner San
Marcelino Street, Manila. Aside from the Head Office, the Bank has a network of
fifty-six (56) branches including the Batangas City Branch located at Rizal Avenue
corner P. Gomez Street, Batangas City, which opened on June 14, 2013.
The Bank is still buying or leasing suitable locations in Metro Manila and in
other key cities and provinces for opening of more branches to further augment its
present network of 56 branches, 38 of which are located in Metro Manila while 18 are
in the provinces, thereby making its market presence and service availability felt in
major financial, commercial and population centers in the country. Greater emphasis
is being given to regional operations and financing of priority industries relevant to
the needs of the country’s growing economy.
The Bank does not anticipate any material reclassification, merger,
consolidation or purchase/sale of a significant amount of its assets outside the course
of its business.
3
Philtrust Bank is one of the first few banks that listed and traded their shares
in the then Manila Stock Exchange and Makati Stock Exchange, presently known as
the Philippine Stock Exchange, Inc. (PSE). The Bank has registered a compounded
annual growth rate of 15 to 16 percent since it officially listed its shares on February
17, 1988. Its 25th anniversary as a listed company was recognized in a fitting
ceremony held at the PSE trading floor on February 26, 2013 attended by its
Chairman and President Dr. Jaime C. Laya, Vice Chairmen Justice Josue N.
Bellosillo and Basilio C. Yap, Director Dr. Johnny C. Yap and Director/Corporate
Secretary Martin B. Isidro, and PSE Officers.
(2)
Business of Issuer
The Bank offers domestic, international and trust services. Domestic services
include checking accounts, savings accounts, time deposits, money market
placements, business loans, transfer of funds and collections, remittances, securities
investments and safety deposit boxes. International transactions involve commercial
letters of credit, collections and remittances, foreign exchange, traveler’s checks and
FCDU transactions. Trust operations include trust placement, investment
management, estate administration/trustee of bond issues, savings and pension plan
administration, insurance trust, and acting as escrow agent and stock registrar and
transfer agent.
On June 5, 2007, the Bangko Sentral ng Pilipinas granted the Bank authority
to operate as a universal bank. The Securities and Exchange Commission approved
the registration of the Bank’s Amended Articles of Incorporation, with powers among
others, to engage in the business of expanded commercial banking as a universal
bank, to carry on the business of a trust company, exercise the powers of investment
houses as provided in pertinent laws and the power and authority to invest in the
equity of allied and non-allied corporations, businesses or undertakings, and to
perform such other acts and functions as may be permitted by law.
The percentage of sales and net income contributed by foreign sales are as follows:
Details
Exchange Profits
Net Income
Percentage
2013
P127,211,779
P1,357,021,712
9.37
2012
P21,866,398
P1,711,030,777
1.28%
2011
P30,690,329
P2,021,634,000
1.52%
The above-mentioned exchange profits/loss, net income and percentages
represent the consolidated sales of US Dollars, a significant percentage of which were
made to the Asian and European markets in that order.
In order to achieve better market access, the Bank has put up thirty-eight (38)
on-site Automated Teller Machines (ATM) distributed at its Head Office and
branches and fifteen (15) off-site ATMs as of December 31, 2013. The full
computerization of the Bank's fifty-six (56) branches will soon be in place.
4
These significant steps were taken by the Bank to serve the needs of its broadbased clientele.
The Bank’s principal competitors are the other universal and commercial
banks particularly those located within its vicinity.
The Bank's guiding principle which through the years has enabled the Bank to
effectively compete in the industry is principally anchored on conservatism,
efficiency and personalized service to its clients thereby gaining their trust,
confidence and continued patronage. It has proven to be an effective means of
generating more business and of making the Bank a worthy participant in the financial
community.
The Bank's operations have never been dependent on transactions with related
parties, or upon a single customer/client or a few customers/clients. No single
customer/client or group of clients accounts for twenty percent (20%) or more of the
bank’s business operations.
Other than the licenses issued by the Bangko Sentral ng Pilipinas (BSP) and
the Securities and Exchange Commission (SEC), the Bank's operations do not depend
on any other patents, trademarks, copyrights, licenses, franchises, concessions or
royalties.
The Bank is not aware of any existing or probable governmental regulations
which will have a material effect on its business.
For the last three (3) fiscal years, the Bank has spent a minimal amount on
research and development activities consisting mostly of attending seminars and
conventions relevant to the banking industry.
There was no matter submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended
December 31, 2013.
By year-end, manpower complement reached 718 consisting of 394 officers
and 324 rank-and-file employees. The Bank continues to pursue manpower
recruitment to effectively bring itself closer to clients by rendering efficient and
prompt services. Within the ensuing twelve (12) months, based on the number of new
branches that would be opened in 2014 and the previous years’ experience, the Bank
anticipates manpower to increase by at least 50 personnel for a projected total of 768,
consisting of 404 officers and 364 rank and file employees.
A collective bargaining agreement (CBA) was signed on October 20, 2009
which covers the period from January 1, 2010 to December 31, 2014. Negotiations
between the Union and the Management for a new CBA shall be undertaken within
six (6) months prior to the expiration of the existing CBA.
5
The Bank maintains a plan for the retirement, death, disability and separation
of all its regular employees. The plan is being funded by the contributions of the
employees and the Bank.
The Bank gives a percentual bonus or profit sharing equivalent to ten percent
(10%) of the total yearly net profits of the Corporation before payment of income tax
which is distributed as follows: 4% to employees; 4% to officers and 2% to directors
as an incentive to them to help promote the business of the corporation. This is
provided for in the By-Laws.
Outstanding Warrants or Options
The Bank has no information on any outstanding warrant or option held by its
directors or officers.
Major Risks
As a conservatively managed institution, Bank Management believes that no
potential risk could affect the Bank’s liquidity or profitability. In particular, the loan
portfolio is sound and adequately secured. Available cash and assets, taking into
account the maturity of Bank investments, are more than sufficient to meet client
requirements and other possible needs.
Risks from market, liquidity and credit considerations are constantly
monitored by management and the Board of Directors. These are kept to a minimum
with the establishment of prudent approval limits and careful day-to-day management
to ensure compliance with established controls and procedures and that target
performance levels are achieved and even exceeded.
Approved policy and procedure are constantly reviewed and strengthened,
involving legal, compliance, operations, operations/transactions processing, cash
accountability or management, accounting and financial, settlement, systems and
technology matters, with the aim of reducing to a minimum quantifiable and nonquantifiable risks.
Bank experience and the best practices of other institutions are routinely
evaluated as basis for improving the Bank’s risk management practices, including risk
objectives, policies, controls and reports, and detailed procedures.
6
(B)
Description of Property
Based on records, not a single Bank-owned building or lot is subject to
mortgage, lien or limitations on ownership or usage. The branch sites, whether owned
or leased, are all in good condition. Please refer to Annex “D” for the Description of
Bank Properties.
For the ensuing year 2014 or the next twelve (12) months, the Bank intends to
acquire by purchase or lease properties as future branch sites, located as follows:
-
(C)
Tagum, Davao del Norte
Quezon Avenue, Lucena City
FTI, Taguig City
Laguna Province
Bayanan, Muntinlupa City
Legal Proceedings
Neither the Bank nor any of its properties is involved in any material legal
proceeding.
II. OPERATIONAL AND FINANCIAL INFORMATION
(A)
Market Price and Dividends on Registrant’s Common Equity and Related
Stockholder Matters
(1)
Market Information
The principal market of the Bank's equity is the Philippine Stock Exchange,
Inc. (PSE), formerly the Manila and Makati Stock Exchanges when the Bank initially
listed its shares on February 17, 1988. Presently, the Bank’s 1,000,000,000 total
outstanding common shares are listed and traded in the PSE with a market price of
P82.00 per share as of March 31, 2014.
(a)
Quarterly Sales Prices
2012
March 31
June 30
September 30
December 31
High
P58.00
61.00
58.00
65.00
Low
P58.00
61.00
58.00
65.00
2013
March 31
June 30
September 30
December 31
High
P72.00
72.00
72.00
82.00
Low
P72.00
72.00
72.00
82.00
7
(b)
Shown below are the price information as of December 27, 2013 based
on the market quotations published daily by the PSE. No further price
change occurred thereafter.
Open
P82.00
(2)
High
P82.00
Low
P82.00
Close
P82.00
Prev. Close
P82.00
Holders
The Bank has an authorized capital stock of P22 Billion consisting
entirely of 2.2 Billion common shares with the par value of P10.00 per share. Paid-up
capital stands at P10 Billion. As of March 31, 2014, there are 79 holders of the
Bank’s 1,000,000,000 outstanding shares, all of which are listed in the Philippine
Stock Exchange.
The Top Twenty Stockholders as of March 31, 2014 are as follows:
TOTAL
Citizenship NUMBER OF
SHARES
PAID-UP*
1 PHILTRUST REALTY CORPORATION
Filipino
269,000,014
2 U.S. AUTOMOTIVE CO., INC.
Filipino
208,852,159
3 SEABREEZE ENTERPRISES, INC.
Filipino
194,746,709
4 ORIENT ENTERPRISES, INC.
Filipino
184,783,230
5 PIONEER INSURANCE & SURETY CORP. Filipino
70,950,694
6 MARKET SOURCE CORPORATION
Filipino
20,027,690
7 PCD NOMINEE CORPORATION
Filipino
19,019,161
8 PIONEER LIFE, INC.
Filipino
8,031,881
9 GAW, ROSALINDA Y.
Filipino
6,946,221
10 TAN, TEODORA D.
Filipino
4,321,814
11 PIONEER INTERCONTINENTAL
Filipino
2,697,384
INSURANCE CORPORATION
12 PIONEER INSURANCE CO. RETIREMENT Filipino
1,411,116
PLAN
13 YAP, BASILIO C.
Filipino
1,369,722
14 AWAD,YVONNE
American
756,667
15 GO, CARLOS S.
Filipino
683,352
16 GO, ENRIQUE S.
Filipino
683,352
17 GO, EUSEBIO S.
Filipino
683,352
18 GO, VICTORIANO S.
Filipino
683,352
19 CU, MIRIAM C.
Filipino
548,881
20 GO, ARTURO S.
Filipino
536,920
NAME OF STOCKHOLDER
*All common shares
8
%
26.9000
20.8852
19.4747
18.4783
7.0951
2.0028
1.9019
0.8032
0.6946
0.4322
0.2697
0.1411
0.1370
0.0756
0.0683
0.0683
0.0683
0.0683
0.0549
0.0537
(3)
Dividends
The Stockholders of the Bank, at their annual meeting held on April
26, 2011, approved, confirmed and ratified the declaration by the Board of
Directors on April 26, 2011 of stock dividend of Three Billion Three Hundred
Eighty Three Million Pesos (P3,383,000,000.00) worth of shares
(approximately 51.126%) out of the surplus profit of the Bank as of March 31,
2011, thereby increasing the paid-up capital from Six Billion Six Hundred
Seventeen Million Pesos (P6,617,000,000.00) to Ten Billion Pesos
(P10,000,000,000.00).
The Bangko Sentral ng Pilipinas (BSP) approved on June 30, 2011 the
foregoing stock dividend declaration and the Bank scheduled the payment date
on August 10, 2011.
On July 29, 2011, the Philippine Stock Exchange, Inc. (PSE) approved
to additionally list on August 10, 2011 the 338,300,000 common shares, with a
par value of P10.00 per share, to cover the 51.125887865% stock dividend
declaration to stockholders of record as of July 18, 2011.
There are no restrictions that would limit the ability of the Bank to pay
dividends on its common shares or likely to do so in the future.
(4)
Recent Sales of Securities
Date
02-20-13
Title
Amount
To Whom Sold Terms
Common P68,000.00
Chief Justice
(1,000 shares @ P68.00/sh. Hilario G.
Cash
Davide, Jr.
No other sale of securities was entered in the Bank’s stock and transfer
book after February 20, 2013
Recent issuance of securities constituting exempt transactions cover
the stock dividend declaration in April 2011 and the full payment of the
balance of subscription the issuance and listing of which was approved by the
PSE in April 2012.
9
III. FINANCIAL INFORMATION
(A)
Management's Discussion and Analysis or Plan of Operation
Please refer to Annexes “C1”, “C2” and “C3”.
(B)
Financial Statements
Please refer to Annexes “B” and “B1”
(C)
Changes in and disagreement with accountants on accounting and financial
disclosure
The stockholders approved the appointment of Mercado, Calderon, Jaravata &
Co. (MCJC) as the Bank’s external auditor for the year 2013 during their annual
meeting held last April 30, 2013.
At their Special Meeting held on March 18, 2014, the stockholders approved
the revocation of the said appointment of MCJC because its application for the
renewal of its accreditation is still pending with the Bangko Sentral ng Pilipinas.
In its place, the stockholders approved the appointment of Maceda, Valencia
& Co. (formerly Maceda, Farnacio & Co.), a BSP-accredited external auditor as the
Bank’s external auditor for 2013, to see to the completion of the Bank’s Audited
Financial Statements on time for the Bank’s annual meeting in April and their timely
submission to tax authorities and the regulatory agencies concerned.
Representatives of Maceda Valencia & Co. are expected to be present at the
stockholders’ meeting to respond to appropriate questions and to make a statement, if
they so desire, regarding the 2013 financial statements.
The address of the Bank’s external auditor is as follows:
Maceda Valencia & Co.
Certified Public Accountants and
Management Consultants
Suite 705 Midland Mansions
839 A- Arnaiz Avenue, Makati City.
Information on Independent Accountant
The aggregate fees billed for professional services rendered by the Bank’s
former external auditor MCJC for the audit of the Bank’s annual financial statements
or services that are normally provided by the external auditor in connection with
statutory and regulatory filings or engagements are as follows:
10
MERCADO CALDERON JARAVATA & CO.
SCHEDULE OF EXTERNAL AUDIT FEES AND SERVICES
2011
P588,000.00
Audit and Audit-Related Fees
(Retainer fees and audit
engagement fees)
-
Tax Fees
All Other Fees
(Reimbursements of various
audit-related expenses)
Total
2012
P 694,400.00
2013*
P 336,000.00
-
410,618.07
351,841.81
8,400.00
P998,618.07
P1,046,241.81
P 344,400.00
*Excluding fees to be charged by Maceda Valencia & Co.
The scope of services to be rendered by it as well as the fees to be charged
therefor were previously considered and approved by the Board’s Audit Committee
composed of the following Directors, to wit:
Mr. Ernesto O. Chan
Dr. Jaime C. Laya
Congressman Tomas V. Apacible
-
Chairman (Independent Director)
Member
Member (Independent Director)
Mr. Ernesto O. Chan, an independent director, is the Chairman of the Board’s
Audit Committee as required under SEC Circular No. 6, Series of 2004.
The Chairman and members of the said Committee attended the last two (2)
Annual Meetings of the Stockholders.
Audit Committee’s Approval Policies and Procedures on Dealings with External
Auditors
The Audit Committee shall assist the Board of Directors in fulfilling its
oversight responsibilities for (1) the integrity of the company’s financial statements,
(2) the company’s compliance with legal and regulatory requirements, (3) the
independent auditor’s qualifications and independence, and (4) the performance of the
company’s internal audit function and independent auditors.
It shall have the authority to conduct or authorize investigations into any
matter within its scope of responsibility, to wit:
1. Appoint, compensate, and oversee the work of the public accounting firm
employed by the organization to conduct the annual audit. This firm will
report directly to the audit committee.
2. Resolve any disagreement between management and the auditor regarding
financial reporting.
11
3. Pre-approve all auditing and permit non-audit services performed by the
company’s external audit firm.
4. Retain independent counsel, accountants, or others to advise the committee
or assist in the conduct of an investigation.
5. Seek any information it requires from employees – all of whom are
directed to cooperate with the committee’s requests – or external parties.
6. Meet with company officers, external auditors, or outside counsel, as
necessary.
7. The committee may delegate authority to subcommittees, including the
authority to pre-approve all auditing and permit no-audit services,
provided that such decisions are presented to the full committee at its next
scheduled meeting.
IV.
(A)
MANAGEMENT AND CERTAIN SECURITY HOLDERS
Directors and Executive Officers as of December 31, 2013:
(1)
Hereunder are the Directors of the Bank who were elected during the Annual
Stockholders’ Meeting held on April 30, 2013, to wit:
Name
Dr. Emilio T. Yap
1. Dr. Jaime C. Laya
2. Senior Justice Josue N. Bellosillo (Ret.)
3. Basilio C. Yap
4. Ernesto O. Chan
5. Tomas V. Apacible
6. Chief Justice Hilario G. Davide, Jr. (Ret.)
7. Dr. Emilio C. Yap III
8. Jose M. Fernandez
9. Dr. Johnny C. Yap
10. Miriam C. Cu
11. Mariano L. Crisostomo
Position
Age
Citizenship
Chairman Emeritus
Chairman
Vice Chairman
Vice Chairman
Independent Director
Director
Director
Director
Director
Director
88
75
80
64
67
68
78
42
71
41
55
85
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Dr. Emilio T. Yap passed away on April 7, 2014 after having served the Bank
as Chairman of the Board of Directors for twenty-five (25) years or from October 17,
1978 up to October 28, 2003 when he was elevated to the honorary position of
Chairman Emeritus.
Six of the eleven Directors have served the Bank for less than five (5) years.
Independent Directors Davide and Apacible were elected on April 30, 2013 and
April 27, 2010, respectively, Vice-Chairman Senior Justice Josue N. Bellosillo and
Directors Dr. Emilio C. Yap III and Ms. Miriam C. Cu were elected on April 28,
2009, and Dr. Johnny C. Yap was elected on April 25, 2012. All the other directors
have been directors of the Bank for more than five (5) years.
12
The Bank’s incumbent Independent Directors, Chief Justice Hilario G.
Davide, Jr. (Ret.), Tomas V. Apacible and Ernesto O. Chan possess all the
qualifications and none of the disqualifications under SRC Rule 38.
The Bank has adopted the SRC Rule 38 (Requirements on Nomination and
Election of Independent Directors) and compliance therewith has been made.
No one of the Bank’s three (3) independent directors had served the Bank as
independent director for more than five (5) consecutive years counted from January 2,
2012 in compliance with SEC Memorandum Circular No. 9, Series of 2011.
Senior Justice Josue N. Bellosillo nominated them to the said positions as
recommended by the Board’s Nomination, Election and Compensation Committee.
Senior Justice Bellosillo is not related to any of them.
Pursuant to the SEC Notice dated October 20, 2006, the Certifications on the
Qualification of Independent Directors Apacible, Chan and Davide are hereto
attached as Annexes “A1”, “A2” and “A3”. Please refer to Annex “A” for a more
detailed business experience of the Bank’s incumbent directors.
No one of the incumbent directors currently holds government position.
At the Organizational Meeting of the Board held on May 28, 2013, the
following corporate/executive officers were elected for the year 2013-2014 and until
their successors are duly elected and qualified, to wit:
Name
2.
3.
4.
5.
6.
Position
Chairman of the Board
and President (Former
Chairman, Monetary Board
and Governor, Central
Bank of the Philippines)
Senior Justice Josue N. Vice Chairman of the Board
and Corporate Counsel
Bellosillo (Ret.)
(Former Senior Justice of
the Supreme Court)
Vice Chairman of the Board
Basilio C. Yap
Atty. Martin B. Isidro Senior Vice President,
Corporate Secretary and
Asst. Corporate Counsel
(Former Congressman,
Vice Mayor, and Councilor
of the City of Manila)
Paterno C. Bacani, Jr. Executive Vice President
Executive Vice President
Virginia S. Choa-Shi
13
Age
75
Citizenship
Filipino
80
Filipino
64
84
Filipino
Filipino
63
58
Filipino
Filipino
Except for former Supreme Court Senior Justice Josue N. Bellosillo (Ret.), all
the above officers have been corporate/executive officers of the Bank for more than
five (5) years.
No one of the above officers has any substantial interest, direct or indirect, in
any matter to be acted upon by the stockholders.
No one of the incumbent officers currently holds government position.
At the said Organizational Meeting, the Chairman and Members of the
different Board and Management Committees were elected for a term of one (1) year
effective June 3, 2013 and until their successors are duly elected and qualified.
The Board’s Nomination, Election and Compensation Committee is composed
of the following:
Senior Justice Josue N. Bellosillo (Ret.)
Basilio C. Yap
Ernesto O. Chan
-
Chairman
Member
Member
(Independent Director)
The Chairman and members of the said Committee attended the last two (2)
Annual Meetings of the Stockholders.
For the ensuing year, the nominees for the position of the eleven (11)
Directors of the Bank were likewise formally nominated to and endorsed by the
Nomination and Election Committee of the Board of Directors.
In compliance with the requirements of the Bangko Sentral ng Pilipinas on the
minimun number of independent directors, Senior Justice Josue N. Bellosillo (Ret.),
Chairman of the said Committee, nominated three (3) independent directors, namely:
Ernesto O. Chan, Tomas V. Apacible and former Chief Justice Hilario G. Davide, Jr.
All of them possess all the qualifications and none of the disqualifications for an
independent director as required under SRC Rule 38. Chief Justice Davide currently
serves as an independent director of the Manila Bulletin Publishing Corporation.
Senior Justice Bellosillo is not related to any of the nominees for the positions
of independent directors.
The said Committee, in approving the nomination of the independent
directors, has likewise taken into consideration, adopted and complied with the
guidelines and procedures prescribed under SRC Rule 38 (Requirements on
Nomination and Election of Independent Directors).
14
No one of the nominees for independent director had served the Bank as
independent director for more than five (5) consecutive years counted from January 2,
2012 in compliance with SEC Memorandum Circular No. 9, Series of 2011.
Hereunder are the nominees for the positions of the eleven (11) Directors of
the Bank for the ensuing year 2014-2015, with no one of them declining his/her
nomination:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Dr. Jaime C. Laya
Senior Justice Josue N. Bellosillo (Ret.)
Basilio C. Yap
Chief Justice Hilario G. Davide, Jr. (Ret.), Independent Director
Ernesto O. Chan, Independent Director
Tomas V. Apacible, Independent Director
Dr. Emilio C. Yap III
Jose M. Fernandez
Miriam C. Cu
Dr. Johnny C. Yap
Atty. Martin B. Isidro
Please refer to Annex “A”, hereto attached, for the age, citizenship,
qualifications and business affiliations of the above nominees, and to Annexes “A1”,
“A2” and “A3” for the Certifications on the Qualification of Independent Directors
Ernesto O. Chan, Tomas V. Apacible and Chief Justice Hilario G. Davide, Jr. pursuant
to the SEC Notice dated October 20, 2006.
No one of the above nominees has any substantial interest, direct or indirect,
in any matter to be acted upon by the stockholders other than their election as
directors of the Bank.
No one of the above nominees currently holds government position.
The Bank’s corporate and executive officers for the ensuing year 2014-2015
will be elected by the Board of Directors in its organizational meeting to be held on a
later date. The incumbent officers are expected to be re-elected/re-appointed to their
respective positions with no one signifying his intention to decline the same.
Please refer to Annex “A”, hereto attached, for the age, citizenship and
qualifications of the following incumbent corporate and executive officers of the
Bank:
15
- Chairman of the Board and
President
2. Senior Justice Josue N. Bellosillo (Ret.)
- Vice Chairman of the Board and
Corporate Counsel
3. Basilio C. Yap
- Vice Chairman of the Board
4. Atty. Martin B. Isidro
- Senior Vice President,
5. Paterno C. Bacani, Jr.
- Executive Vice President
6. Virginia S. Choa-Shi
- Executive Vice President
Except for Senior Justice Bellosillo, all the above officers have been
corporate/executive officers of the Bank for more than five (5) years.
Significant Employees
The Bank does not expect a significant contribution to its business from
employees who are not its corporate or executive officers.
Family Relations
Directors Dr. Emilio C. Yap III and Dr. Johnny C. Yap are nephews of ViceChairman Basilio C. Yap.
Involvement in Certain Legal Proceedings
The Bank has no knowledge that any of its directors and/or executive officers
is a party to, or any of their properties is subject of, a pending material legal
proceeding which occurred within the past 5 years.
16
(B)
Executive Compensation
Summary of Compensation
Name/Principal Position
Dr. Jaime C. Laya*
Chairman of the Board and
President
Year
Salary
Bonus
Others
2014****
4,800,000.00
1,600,000.00
4,800,000.00
2013
4,620,000.00
1,492,666.67
5,691,260.74
2012
4,852,027.65
1,323,071.04
9,032,782.85
2014****
280,000,000.00
97,000,000.00
143,500,000.00
2013
250,887,352.74
89,688,529.68
150,968,823.90
2012
226,585,213.30
83,274,681.70
164,601,541.72
Antonio H. Ozaeta**
Director/President
Ciriaco M. Dator***
EVP / Compliance Officer
Paterno C. Bacani, Jr.
All Directors and Officers
As a group
The next highest paid executive officers are senior vice presidents.
Each Director receives a per diem of P10,000.00 for his attendance in every
Board meeting. The Directors who are members of the Executive Committee receive
an additional per diem of P5,000.00 each for their attendance in Committee meeting.
Aside from their per diems and the allocated profit-sharing as provided for in
the By-Laws, there is no other standard arrangement that would directly or indirectly
compensate the Bank’s Directors.
_____________________________
*Elected President effective April 25, 2012, concurrently Chairman of the Board.
**Retired as Director/President effective April 24, 2012.
***Retired effective May 31, 2013.
****Estimated Compensation.
17
(C)
Security Ownership of Certain Record and Beneficial Owners and Management
as of March 31, 2014:
Title
of Class
Name, Address
of Record Owner
and Relationship
to Issuer
Name of Beneficial
Owner and Relationship
to Record Owner
Citizenship
Common
Shares
Philtrust Realty Corp. U.S. Automotive Co., Inc.
P.O. Box 1848, Manila Major Stockholder
Filipino
major stockholder
Petronila M. Pasimanero
Authorized Representative
Common
Shares
U.S. Automotive
Co., Inc.
P.O. Box 3399,
Manila
major stockholder
Emilio T. Yap
Major Stockholder
Filipino
No. of
Shares
Held
Percent
269,000,014 26.9000%
208,852,159 20.8852%
Basilio C. Yap
Common
Shares
Seabreeze Enterprises, Basilio C. Yap
Inc.
Nena Cheng Yap
Filipino
P.O. Box 4279, Manila Major Stockholders
major stockholder
Purificacion M. Cipriano
Common
Shares
Orient Enterprises, Inc. Rosalinda Y. Gaw
P.O. Box 3435,
Miriam C. Cu
Filipino
Manila
Major Stockholders
major stockholder
Francis Y. Gaw
Common
Shares
Pioneer Insurance &
Surety Corporation
P.O. Box 1437 MCC,
Makati
major stockholder
Pioneer Inc.
Major Stockholder
Filipino
Ernesto O. Chan
*The issuer, Philtrust Bank, does not have any subsidiary or parent company.
18
194,746,709 19.4747%
184,783,230 18.4783%
70,950,694 7.0951%
(2)
Security Ownership of Management as of March 31, 2014:
DIRECTORS
Title of
Class
Name of Beneficial Owner
Common
Shares
Common
Shares
(Chairman and President)
2. Sr. Justice Josue N. Bellosillo (Ret.)
(Vice Chairman and
Corporate Counsel)
3. Basilio C. Yap
(Vice Chairman)
4. Ernesto O. Chan
6. Chief Justice Hilario G.
Davide, Jr. (Ret.)
Common
Shares
Common
Shares
Common
Shares
Common
Shares
Common
Shares
Common
Shares
Common
Shares
Common
Shares
Common
Shares
(Senior Vice President)
10. Miriam C. Cu
Amount and Nature
of Beneficial
Ownership
333,250 Direct
Citizenship
Percent
of Class
Filipino
0.0033%
15,120 Direct
Filipino
0.0002%
13,697,220 Direct
Filipino
0.1370%
175,660 Direct
Filipino
0.0018%
15,120 Direct
Filipino
0.0002%
10,000 Direct
Filipino
0.0001%
1,086,240 Direct
Filipino
0.0109%
4,400 Direct
Filipino
0.0000%
20,000 Direct
Filipino
0.0002%
5,488,810 Direct
Filipino
0.0549%
5,050 Direct
Filipino
0.0000%
OFFICERS
Title of
Class
Common
Shares
Common
Shares
Name of Beneficial Owner
Amount of Beneficial
Ownership
(Senior Vice President
Asst. Corp. Counsel)
(Executive Vice President)
P3,202,090 Direct
P5,050
19
Direct
Citizenship
Percent
of Class
Filipino
0.0320%
Filipino
0.0000%
DIRECTORS AND OFFICERS AS A GROUP
Common
Shares
P24,058,010.00
0.2406%
Voting Trust Holders of 5% or more
The Bank has no voting trust holders.
Change in control since the beginning of the last fiscal year
No change in control has occurred since January 1, 2013.
(D)
Certain Relationships and Related Transactions
The Bank does not have a parent company or subsidiary and does not have
any transaction with promoters.
The Bank had not undertaken any transaction during the last two (2) years
involving directly the material interest of any director, executive officer or
stockholder owning ten percent (10%) or more of total issued and outstanding shares,
and members of their immediate family. The Bank, however, had transactions with
related parties.
As defined in the Notes to Financial Statements included in the Audited
Financial Statements hereto attached as Annex “B1”, parties are considered related if
one party has the ability, directly or indirectly, to control the other party or exercise
significant influence over the other party in making financial and operating decisions.
Parties are also considered to be related if they are subject to common control or
common significant influence.
The Bank’s transactions with related parties such as deposit-taking,
investments and lease of properties, were made in the ordinary course of business and
on substantially the same terms, including interest and collateral, as those prevailing
at the time for comparable transactions with other parties. These transactions also did
not involve more than the normal risk of collectability or present other unfavorable
condition. They were duly approved by the Board of Directors and where applicable,
reported to the Bangko Sentral ng Pilipinas.
20
Annex “A”
BUSINESS EXPERIENCE OF DIRECTORS AND OFFICERS
(As of April 8, 2014)
Name
Address
Title
Corporation/Affiliation*
75 years old
Filipino
11 Panay Avenue
Quezon City
Chairman and President
Former Governor
Former Chairman
Philtrust Bank
Central Bank of the Philippines, 1981- 1984
Monetary Board, Central Bank of the Philippines,
1981-1984
Don Norberto Ty Foundation, Inc.
Chairman
2. Senior Justice Josue N.
Bellosillo (Ret.)
80 years old
Filipino
13 Doña Ines,
Alabang Hills Village,
Muntinlupa City
Director
Philippine Ratings Services Corporation
Philippine AXA Life Insurance Co., Inc.
GMA Network, Inc. and GMA Holdings, Inc.
Ayala Land, Inc., 2010-present
Calata Corporation, 2011-present
Philippines-Mexico Business Council
Manila Polo Club, Inc.
Trustee
Cultural Center of the Philippines, 2010-present
Cofradia de la Inmaculada Concepcion
Heart Foundation of the Philippines, Inc.
Opera Guild of the Philippines
CIBI Foundation, Inc.
St. Paul’s University-Quezon City
Fundacion Santiago, Inc.
Metropolitan Museum of Manila
De La Salle University-Taft
Yuchengco Museum
Society for Cultural Enrichment, Inc., 2010-present
Vice Chairman
Corporate Counsel
Dean
Philtrust Bank (April 28, 2009-Present)
Philtrust Bank (May 26, 2009-Present)
Centro Escolar University-School of Law
and Jurisprudence
Supreme Court of the Philippines
Former Senior Justice
*Current positions held for more than five (5) years unless otherwise indicated
1
Profession/Occupation
Ph.D. - Financial Management
CPA
Lawyer
Name
Address
Title
3. Basilio C. Yap
64 years old
Filipino
1000 United Nations Ave.
Manila
4. Ernesto O. Chan
67 years old
Filipino
60 Dapitan Street
Quezon City
68 years old
Filipino
20 Lily corner Camia St.
Valle Verde II
Pasig City
Vice Chairman
Chairman
Chairman/Treasurer/SVP
Chairman
Director
Director
Director/Treasurer
Director/Treasurer
Former Congressman
Board of Advisers
Fellow
Philtrust Bank
Seabreeze Enterprises, Inc.
U.S. Automotive Co., Inc.
Philtrust Realty Corporation
Usautoco, Inc.
Manila Prince Hotel Corp.
Cocusphil Development Corporation
Philtrust Bank
Pioneer Insurance and Surety Corp.
Pioneer Intercontinental Insurance Corp.
Pioneer Asia Insurance Corporation
Pioneer Life, Inc.
Bancasia Financial and Investment Corp.
Bancasia Capital Corp.
Philtrust Bank (April 27, 2010 – Present)
Batangas, First District (June 2010 – June 2013)
Philippine Cancer Society
Institute of Corporate Directors
6. Chief Justice Hilario G.
Davide, Jr. (Ret.)
78 years old
Filipino
2 H.C. Moncado Street
BF Homes, Quezon City
Independent Director/
Vice Chairman
Member
Former Chief Justice
Chairman/ Board of
Trustee
Chairman/Board of
Trustee
Trustee
Trustee
Incorporator/Director
MBA / CPA
Business Executive
MBA
Lawyer
Manila Bulletin Publishing Corporation (2011-Present)
Knights of Rizal – Council of Elders (2008-Present)
Supreme Court of the Philippines
Knights of Columbus Fraternal Association of the
Philippines, Inc. (KCFAPI)
Chief Justice Claudio Teehankee Memorial
Foundation, Inc.
Knights of Columbus Fr. George J. Willman, SJ
Charities, Inc.
Knights of Columbus of the Philippines Foundation, Inc.
Kompass Credit and Financing Corporation
(registration still pending with SEC)
2
Business Executive
Doctor of Philosophy
in Journalism
Honoris Causa
Doctor of Philosophy
in Business Administration
Honoris Causa
Name
Address
Title
42 years old
Filipino
United Nations Avenue
corner San Marcelino St.
Manila
Director
Director/EVP
Chairman
Director
Director
Director/VP
Director/Asst. Treasurer/
Asst. Corp. Sec.
Director/Vice President
Director
Director
Senior Vice President
Chief Risk Officer
Manila Bulletin Publishing Corporation
Manila Prime Land Holdings, Inc.
Manila Hotel Corporation (April 29, 2009-Present)
Centro Escolar University (September 1, 2009-Present)
U.S. Automotive Co., Inc.
Director
Director/CFO
Director/CFO
Director/CFO
Director/CFO
Chairman
Director
Director
Director
Vice President
Vice President
Director
Director
Euro-Med Laboratories, Philippines
Centro Escolar University
Manila Prime Land Holdings, Inc.
Maynila Properties & Management Inc.
Café France
Philtrust Bank
Orient Enterprises, Inc.
Brightworld Int’l Trading, Inc.
Seabreeze Enterprises, Inc.
Cu Unjieng Realty, Inc.
Philtrust Bank
Philtrust Bank
Business Executive
Doctor of Humanitites
Honoris Causa
Corporate Secretary
Corp. Information Officer
Director
Vice President
Former Congressman,
Vice-Mayor, and
Councilor
Philtrust Bank
Philtrust Bank
Philtrust Bank
Philtrust Bank
Philtrust Bank (December 1, 2003 – April 30, 2013)
Philtrust Bank (January 2, 2002 – July 1, 2007)
Lawyer
71 years old
Filipino
36 Leo St., Veraville
Homes I, Almanza
Las Piñas
41 years old
Filipino
1020 United Nations Ave.
Manila
10. Miriam C. Cu
55 years old
Filipino
36 4th Street
Quezon City
85 years old
Filipino
No. 5 New Saint Francis
Subd., Jai Alai St.
Cainta, Rizal
83 years old
Filipino
1513 Velasquez, Tondo
Manila
Usautoco, Inc.
Philtrust Realty Corporation
Philtrust Bank
Philtrust Bank
Philtrust Bank
City of Manila
3
CPA/MBA
CPA
Banker
Name
Address
58 years old
Filipino
Paterno C. Bacani, Jr.
63years old
Filipino
Title
89-E Circumferential Road Executive Vice President
Araneta Vill., Malabon
Philtrust Bank
Banker
10 Dama De Noche St.
Tahanan Village
Parañaque City
Philtrust Bank
RTG & Company, Inc.
Banker
Director
4
PHILTRUST BANK
(PHILIPPINE TRUST COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
1. Reporting Entity
Philtrust Bank (Philippine Trust Company) (the “Bank”) is one of the oldest private commercial
banks in the Philippines. Founded on October 21, 1916, its history parallels the growth of the
Philippine banking system.
Philtrust was conferred full universal bank status on June 5, 2007. Its principal activities are
commercial and investment banking. It offers domestic, international and trust services. Its
domestic services are: savings, checking and time deposits, money market placements,
business loans, remittances, fund transfer, safety deposit services and securities investments.
International transactions include: travelers cheque, foreign exchange, Foreign Currency
Deposit Unit (FCDU) transactions, commercial letters of credit, international remittances and
collections through a network of 57 local branches.
In order to achieve better market access, the Bank has put up 52 automated teller machines
(ATMs): 37 on-site distributed at its head office and branches and 15 off-site as at
December 31, 2013.
The Bank also provides investments management, estate administration, escrow services,
administration of savings, insurance and pension plans, stock registry and transfer services.
The Bank’s principal office is located at 1000 United Nation Avenue corner San Marcelino St.,
Manila. It has 718 employees as at December 31, 2013 (2012 - 704 employees)
These financial statements were approved and authorized for issuance by the Board of
Directors (BOD) on March 31, 2014.
2. Basis of Preparation
Statement of Compliance
The financial statements of the Bank have been prepared in accordance with Philippine
Financial Reporting Standards (PFRS), which includes all applicable PFRS, Philippine
Accounting Standards (PAS), and interpretations issued by the Philippine Interpretations
Committee (PIC), Standing Interpretations Committee (SIC), and International Financial
Reporting Interpretations Committee (IFRIC), as approved by the Financial Reporting Standards
Council (FRSC) and adopted by the SEC.
Basis of Measurement
These financial statements reflect the accounts of the Regular Banking Unit (RBU) and FCDU
maintained in their respective books after eliminating all inter-unit accounts. These have been
prepared under the historical cost convention, as modified by the revaluation of available-forsale (AFS) investments.
Functional and Presentation Currency
These financial statements are presented in Philippine peso, which is the functional and
presentation currency of the Bank. The books of accounts of the RBU are maintained in
Philippine peso while those of the FCDU are maintained in United States Dollar (USD)
(see Note 3, Foreign Currency Transactions). All values are rounded off to the nearest thousands,
except as otherwise indicated.
Presentation of Financial Statements
The Bank presents its statement of financial position broadly in order of liquidity.
PHILTRUST BANK
Use of Estimates and Judgments
The preparation of the financial statements requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any
future periods affected.
In particular, information about significant areas of estimation uncertainty and critical
judgments in applying accounting policies that have the most significant effect on the amounts
recognized in the financial statements are in Note 4.
3. Significant Accounting Policies
Adoption of New and Revised Standards, Amendments to Standards and Interpretations
The Financial Reporting Standards Council approved the adoption of new and revised
standards, amendments to standards, and interpretations issued by the PIC and IFRIC as part of
PFRS.
New and Revised Standard, Amendments to Standards and Interpretation adopted in 2013.
The following standards have been adopted by the Bank effective January 1, 2013 and have a
material impact on the Bank:

PAS 1 (Amendment), Financial Statement Presentation - Other Comprehensive Income . The
main change resulting from these amendments is a requirement for entities to group items
presented in other comprehensive income on the basis of whether they are potentially
reclassifiable to profit or loss subsequently (reclassification adjustments). The required
change in presentation has been effected in the statement of income.

PAS 19 (Revised), Employee Benefits. These amendments eliminate the corridor approach
and calculate finance costs on a net funding basis. They would also require recognition of
all actuarial gains and losses in other comprehensive income as they occur and of all past
service costs in profit or loss. The amendments replace interest cost and expected return on
plan assets with a net interest amount that is calculated by applying the discount rate to the
net defined benefit liability (asset). See Note 28 for the impact of the adoption in the
financial statements.

PIC Q&A No. 2013-03 PAS 19 - Accounting for Employee Benefits under a Defined
Contribution Plan subject to Requirements of Republic Act (RA) 7641, The Philippine
Retirement Law. The Q&A seeks to provide guidance in accounting for post-employment
benefits for an entity which has opted to provide a defined contribution plan as its only
post-employment benefit plan despite the minimum retirement benefits required to be
provided to employees under RA 7641.

PFRS 7 (Amendment), Financial Instruments: Disclosures - Offsetting Financial Assets and
Financial Liabilities. This amendment includes new disclosures to facilitate comparison
between those entities that prepare PFRS financial statements to those that prepare
financial statements in accordance with US GAAP.
-2-
PHILTRUST BANK

PFRS 13, Fair Value Measurement. This new standard aims to improve consistency and
reduce complexity by providing a clarified definition of fair value and a single source of
fair value measurement and disclosure requirements for use across PFRS. The requirements,
which are largely aligned with IFRS and US GAAP, do not extend the use of fair value
accounting but provide guidance on how it should be applied where its use is already
required or permitted by other standards within PFRS.

2011 Annual Improvements. These annual improvements, address six issues in the
2009- 2011 reporting cycle. It includes changes to:
-
PAS 1 (Amendment), Presentation of Financial Statements and consequential
amendment to PFRS 1, First-time Adoption of PFRS. The amendment clarifies the
disclosure requirements for comparative information when an entity provides a third
balance sheet either: (i) as required by PAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors; or (ii) voluntarily.
-
PAS 32 (Amendment), Financial Instruments: Presentation. The amendment clarifies the
treatment of income tax relating to distributions and transaction costs.
-
PAS 34 (Amendment), Interim Financial Reporting. The amendment clarifies the
disclosure requirements for segment assets and liabilities in interim financial
statements.
New and Revised Standards and Amendments to Standards Not Yet Adopted
The following new and revised standards and amendments to standards which are not yet
effective for the year ended December 31, 2013 and have not been applied in preparing the
financial statements
Effective January 1, 2014:

PAS 32 (Amendment), Financial Instruments: Presentation - Asset and Liability Offsetting
(effective January 1, 2014). These amendments are to the application guidance in PAS 32,
‘Financial Instruments: Presentation’, and clarify some of the requirements for offsetting
financial assets and financial liabilities on the balance sheet.
Effective January 1, 2015:

PFRS 9, Financial Instruments. This new standard addresses the classification, measurement
and recognition of financial assets and financial liabilities. It replaces the parts of PAS 39,
Financial Instruments: Recognition and Measurement that relate to the classification and
measurement of financial instruments, and hedge accounting. PFRS 9 requires financial
assets to be classified into two measurement categories: those measured as at fair value and
those measured at amortized cost. The determination is made at initial recognition. The
classification depends on the entity’s business model for managing its financial instruments
and the contractual cash flow characteristics of the instrument. For financial liabilities, the
standard retains most of the PAS 39 requirements. The main change is that, in cases where
the fair value option is taken for financial liabilities, part of the fair value change due to an
entity’s own credit risk is recorded in other comprehensive income rather than profit or
loss, unless this creates an accounting mismatch. PFRS also details the changes in
requirements to hedge accounting that will allow entities to better reflect their risk
management activities in the financial statements.
-3-
PHILTRUST BANK
Except for the amendments to PAS 1, Revised PAS 19 and PIC Q&A No. 2013-03, the adoption
of the above new and revised standards, amendments to standards and interpretation in 2013
did not have any other material effect on the Bank’s financial statements. The impact of the
adoption of Revised PAS 19 and PIC Q&A No. 2013-03 resulted to retrospective restatements,
as discussed in Note 27.
The Bank is yet to assess the full impact of PFRS 9 and intends to adopt the new standard upon
completion of the International Accounting Standards Board (IASB) project. Likewise, the Bank
will consider the impact of the remaining phases of the PFRS 9 when issued.
The accounting policies set out below have been applied consistently to all periods presented
in the financial statements.
Foreign Currency Transactions and Translations
The books of accounts of the RBU are maintained in Philippine peso, while those of the FCDU
are maintained in USD. For financial reporting purposes, the monetary assets and liabilities of
the FCDU and the foreign currency-denominated monetary assets and liabilities in the RBU are
translated in Philippine peso based on the Philippine Dealing System (PDS) closing rate
prevailing at the statement of financial position date. Foreign currency denominated income and
expenses are translated at the prevailing exchange rate at the date of transaction. Foreign
exchange differences arising from revaluation and translation of foreign currency-denominated
assets and liabilities of the RBU are credited or charged against operation in the period in which
the rates change.
Non-monetary items that are measured in terms of historical cost are translated using the
exchange rates as the dates of initial transactions. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value was
determined.
Cash and Cash Equivalents
Cash and cash equivalents include notes and coins on hand, amounts due from Bangko Sentral
ng Pilipinas (BSP) and other banks and securities held under agreements to sell that are
convertible to known amounts of cash, with original maturities of three months or less from
dates of placements and that are subject to an insignificant risk of changes in value, and are
used by the Bank in the management of its short-term commitments.
Financial Instruments
Date of recognition
Financial instruments are recognized in the statement of financial position when the Bank
becomes a party to the contractual provisions of the instruments. Regular way purchases or
sales of financial assets that require delivery of assets within the time frame established by the
regulation or convention in the marketplace are recognized on the settlement date, the date
that an asset is delivered to or by the Bank.
Classification, recognition and measurement of financial instruments
Financial instruments are recognized initially at fair value. Except for financial instruments at
FVPL, the initial measurement of financial assets and liabilities includes transaction cost.
-4-
PHILTRUST BANK
The Bank classifies its financial assets in the following categories: financial assets at fair value
through profit and loss (FVPL), held to-maturity (HTM) investments, AFS investments, and loans
and receivables. The Bank classifies its financial liabilities as other financial liabilities. The
classification depends on the purpose for which the investments were acquired and whether
they are quoted in an active market. Management determines the classification of its
investments at initial recognition and, where allowed and appropriate, re-evaluates such
designation at every reporting date.
a) Financial assets or financial liabilities designated at FVPL
The Bank has designated financial assets and liabilities at FVPL when the following criteria are
met:
•
The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on
them on a different basis;
•
The assets and liabilities are part of the Bank’s financial assets, financial liabilities or both
which are managed and their performance evaluated on a fair value basis, in accordance
with a documented risk management or investment strategy; or
•
The financial instrument contains an embedded derivative, unless the embedded derivative
does not significantly modify the cash flows or it is clear, with little or no analysis, that it
would not be separately recorded.
Financial assets and liabilities designated at FVPL are recorded in the statement of financial
position at fair value. Changes in fair value on financial assets and liabilities designated at FVPL
are recorded in ‘Trading and foreign gains (losses) - net.’ Interest earned or incurred is recorded
in interest income or expense, while dividend income is recorded in other operating income
according to the terms of the contract, or when the right of the payment has been established.
b) HTM investments
HTM investments are quoted non-derivative financial assets with fixed or determinable
payments and fixed maturities for which management has the positive intention and ability to
hold to maturity. Where the Bank sells other than an insignificant amount of HTM investments,
the entire category would be tainted and reclassified as AFS securities.
After initial measurement, these investments are subsequently measured at amortized cost using
the effective interest rate method, less of impairment in value. Amortized cost is calculated by
taking into account any discount or premium on acquisition and fees that are an integral part of
the effective interest rate. The amortization is included in the investment income in the
statement of income. Gains and losses are amortized in income when the HTM investments are
derecognized and impaired, as well as through the amortization process. The losses arising
from impairment of such investments are recognized in the statement of income.
c) Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments and fixed
maturities that are not quoted in an active market. They are not entered into with the intention
of immediate or short-term resale and are not classified as financial assets held for trading,
designated as AFS or FVPL. This financial asset category relates to the statement of financial
position caption: (a) due from BSP, (b) due from other banks, and (c) loans and receivable.
After initial measurement, loans and receivables are subsequently measured at amortized cost
using the effective interest rate method, less allowance for impairment. Amortization cost is
calculated by taking into account any discount or premium on acquisition and fees that are an
-5-
PHILTRUST BANK
integral part of the effective interest rate. The amortization is included in the interest income in
the statement of income. The losses arising from impairment of such loans and receivables are
recognized in ‘Provision for credit losses’ in the statement of income.
d) AFS investments
AFS investments are those which are designated as such or do not qualify to be classified as
designated as financial assets at FVPL, HTM investment or loans and receivables. They are
purchased and held indefinitely, and may be sold in response to liquidity requirement or
changes in market conditions. These include government securities, equity investments and
other debt instruments.
After initial measurement, AFS investments are subsequently measured at fair value.
The effective yield component of AFS debt securities, as well as the impact of restatement on
foreign currency-denominated AFS debt securities, is reported in earnings. Interest earned on
holding AFS investments are reported as interest income using the effective interest rate.
Dividends earned on holding AFS investments are recognized in the statement of income as
‘Dividend income’ when the right of the payment has been established. The unrealized gains
and losses arising from the fair valuation of AFS investments are reported as ‘Unrealized gains
and losses on available-for-sale investments’ in the equity section of the balance sheet.
The losses arising from impairment of such investments are recognized as ‘Provision on
impairment losses’ in the statement of income. When the security is disposed of, the
cumulative gain or loss previously recognized in equity is recognized as ‘Net realized gain on
sale of AFS investments’ in the statement of income.
When the fair value of AFS investments cannot be measured reliably because of lack of reliable
estimates of future cash flows and discount rates necessary to calculate the fair value of
unquoted equity instruments, these investments are carried at cost.
e) Classification of financial instruments between debt and equity
A financial instrument is classified as debt, otherwise as equity, if it has a contractual obligation
to:
•
Deliver cash or another financial asset to another entity, or
•
Exchange financial assets or financial liabilities with another entity under conditions that
are potentially unfavorable to the Bank.
If the Bank does not have any unconditional right to avoid delivering cash or another financial
asset to settle its contractual obligation, the obligation meets the definition of a financial
liability.
Financial instruments are classified as liabilities or equity in accordance with the substance of
the contractual arrangement. Interest, dividends, gains and losses relating to a financial
instrument or a component that is a financial liability, are reported as expense or income.
Distributions to holders of financial instruments classified as equity are charged directly to
equity, net of any related income tax benefits.
Other financial liabilities
Issued financial instruments or their components, which are not designated as financial
liabilities at FVPL are classified as other financial liabilities, where the substance of the
contractual arrangement results in the Bank having an obligation either to deliver cash or
another financial assets to the holder, or to satisfy the obligation other than by the exchange of
a fixed amount of cash or another financial asset for a fixed number of own equity shares. This
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PHILTRUST BANK
includes investment contracts which mainly transfer financial risk and has no or insignificant
insurance risk.
After initial measurement, other financial liabilities are subsequently measured at amortized
cost using the effective interest rate method. Amortization cost is calculated by taking into
account any discount or premium on the issue and fees that are an integral part of the effective
interest rate. Any effects of restatement of foreign currency-denominated liabilities are
recognized in the statement of income.
This accounting policy applies primarily to the Bank’s accounts payable and accrued expenses
that meet the above definition (other than liabilities covered by other accounting standards,
such as pension liabilities and income tax payable).
Derecognition of Financial Assets and Liabilities
The Bank recognizes a financial asset when the contractual rights to the cash flows from the
asset expired, or it transfers the rights to receive the contractual cash flows on the financial
asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred financial assets that is created or
retained by the Bank is recognized as a separate asset and liability.
The Bank derecognizes a financial liability when the contractual obligations are discharged or
cancelled or expired.
The Bank enters into transactions whereby it transfers assets recognized on its balance sheet,
but retained either all risks or rewards of the transferred assets or a portion of them. If all or
substantially all risks and rewards are retained, then the transferred assets are not derecognized
from the statements of financial position. Transfers of assets with retention of all or substantially
all risks and rewards include, for example, securities lending and repurchase transactions.
The Bank also derecognizes certain assets when it charges off balances pertaining to the assets
deemed to be uncollectible.
Impairment of Financial Assets and Liabilities
At each reporting date, the Bank assesses whether a financial asset or group of financial assets
is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and
only if, there is objective evidence of impairment as a result of one or more events that has
occurred after the initial recognition of the asset (an incurred ‘loss event’ and that loss event
(or events) has an impact on the estimated future cash flows of the financial asset or the group
of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the borrower or a group of borrowers is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will
enter bankruptcy or other financial reorganization and where observable data indicate that
there is measurable decrease in the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
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PHILTRUST BANK
a) Loans and receivables
For loans and receivables carried at amortized cost, the Bank first assesses whether objective
evidence of impairment exists individually for financial assets that are individually significant,
or collectively for financial assets that are not individually significant. If the Bank determines
that no objective evidence of impairment exists for individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar credit
risk characteristics and collectively assesses for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is, continues to be, recognized are
not included in a collective assessment for impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss
is measured as the difference between the asset’s carrying amount and the present value of the
estimated future cash flows. The carrying amount of the asset is reduced through use of an
allowance account and the amount of loss is charged to the statement of income. Interest
income continues to be recognized based on the original effective interest rate of the asset.
Loans, together with the associated allowance account, are written off when there is no
realistic prospect of future recovery and all collateral has been realized. If, in a subsequent
period, the amount of the estimated impairment loss decreases because of an event occurring
after the impairment was recognized, the previously recognized impairment loss is reversed.
Any subsequent reversal of an impairment loss is recognized in the statement of income, to the
extent that the carrying value of the asset does not exceed its amortized cost at the reversal
date.
The present value of the estimated future cash flows is discounted at the financial asset’s
original effective interest rate. Time value is generally not considered when the effect of
discounting is not material. If a loan has a variable interest rate, the discount rate for measuring
any impairment loss is the current effective interest rate, adjusted for the original credit risk
premium. The calculation of the present value of the estimated future cash flows of a
collateralized financial asset reflects the cash flows that may result from foreclosure less costs
for obtaining and selling the collateral, whether or not foreclosure is probable. For the purpose
of a collective evaluation of impairment, financial assets are group on the basis of such credit
risk characteristics as type of borrower, collateral type, past-due status and term.
Future cash flows in a group of financial assets that are collectively evaluated for impairment
are estimated on the basis of historical loss experience for assets with credit risk characteristics
similar to those in the group. Historical loss experience is adjusted on the basis of current
observable data to reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of conditions in the
historical period that do not exist currently. Estimates of changes in future cash flows reflect,
and are directionally consistent with changes in related observable data from period to period
(such changes in unemployment rates, property prices, commodity prices, payment status, or
other factors that are indicative of incurred losses in the group and their magnitude).
The methodology and assumptions used for estimating future cash flows are reviewed regularly
by the Bank to reduce any differences between loss estimates and actual loss experience.
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PHILTRUST BANK
b) AFS investments carried at fair value
In case of equity investments classified as AFS investments, impairment indicators would
include a significant or prolonged decline in the fair value of the investments below its cost.
Where there is evidence of impairment, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognized in the statement of income – is removed from the equity
and recognized in the statement of income. Impairment losses on equity investments are not
reversed through the statement of income. Increases in fair value after impairment are
recognized directly in equity.
In the case of debt instruments classified as AFS investments, impairment is assessed based on
the same criteria as financial assets carried at amortized cost. Interest continues to be accrued
at the original effective interest rate on the reduced carrying amount of the asset and is
recorded as part of ‘Investment income’ in the statement of income. If in subsequent year, the
fair value of a debt instrument increased and the increase can be objectively related to an event
occurring after the impairment loss was recognized in the statement of income, the impairment
loss is reversed through the statement of income.
c) AFS investment carried at cost
If there is objective evidence that an impairment loss on an unquoted equity instrument that is
not carried at fair value because its fair value cannot be reliably measured, or on a derivative
asset that is linked to and must be settled by delivery of such unquoted equity instrument has
been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the curre nt
market rate of return for a similar asset.
d) HTM investments
For HTM investments, the Bank assesses whether there is objective evidence of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss
is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future expected credit losses that have not yet been
incurred). The carrying amount of the asset is reduced through use of an allowance account
and the amount of loss is charged to the statement of income. Interest income continues to be
recognized based on the original EIR of the asset. If subsequently, the amount of the estimated
impairment loss decreases because of an event occurring after the impairment was recognized,
any amount formerly charged are credited to the ‘Provision for impairment and credit losses’ in
the statement of income and the allowance account, reduced. The HTM investments, together
with the associated allowance accounts, are written off when there is no realistic prospect of
future recovery and all collateral has been realized.
Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the statements
of financial position if, and only if, the Bank has a legal right to set off the recognized amounts
and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously. This is generally the case with master netting agreements; thus, the related
assets and liabilities are presented gross in the statement of financial position.
Income and expenses are presented on a net basis only when permitted by PFRS.
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
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PHILTRUST BANK
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
receivables to other banks or to customers and included in the statement of financial position
under “Interbank loans receivable and securities purchased under agreements to resell”.
Securities lent to counterparties are also retained in the financial statements.
Bank’s Premises, Furniture, Fixtures and Equipment
Land is stated at cost less any impairment in value and depreciable properties including
buildings, leasehold improvements and furniture, fixtures and equipment are stated at cost less
accumulated depreciation and amortization, and any impairment in value. Historical cost
includes expenditure that is directly attributable to the acquisition of the items which comprises
its purchase price, import duties and any directly attributable costs of bringing the assets to its
working condition and location for its intended use.
Subsequent costs are included in the asset’s carrying amount or are recognized as separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Bank and the asset can be measured reliably. All other repairs and maintenance
are charged to profit and loss during the year in which they are incurred.
Depreciation for buildings and furniture, fixtures and equipment is calculated using the straightline to allocate cost or residual values over the estimated useful lives as follows:
Number of years
Building and improvements
Furniture, fixtures and equipment
25
5
Leasehold improvements are depreciated over the shorter of the lease term (normally ranging
from 5 to 10 years) and the useful lives of the related improvements (ranges from 5 to 10 years).
Major renovations are depreciated over the remaining life of the related assets.
The assets residual values and useful lives are reviewed and adjusted if appropriate, at each
reporting date. Assets are reviewed for impairment whenever assets or changes in circumstances
indicate that the carrying amount may not be recoverable.
An asset in carrying amount is written down immediately to its recoverable amount if the assets’
carrying amount is greater than the estimated recoverable amount. The recoverable amount is
the higher of an asset fair value less cost to sell.
An item of bank’s 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 the statement of
income, in the year the item is derecognized.
Investment Properties
Investment properties are measured initially at cost, including transaction costs. An investment
property acquired through an exchange transaction is measured at fair value of the asset
acquired unless the fair value of such an asset cannot be measured in which the case the
investment property acquired is measured at carrying amount of the asset given up. Foreclosed
properties are recorded as “Investment properties” upon: (a) entry of judgment in case of judicial
foreclosure; (b) execution of Sheriff’s Certificate of Sale in case of extra-judicial foreclosure; or
(c) notarization of the “Deed of Dacion” in case dation in payment (dacion en pago).
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PHILTRUST BANK
Subsequent to initial recognition, depreciable investment properties are carried at cost less
accumulated depreciation less any impairment in value.
Investment properties are derecognized when they have either been disposed of or when the
investment properties are permanently withdrawn from use and no future benefit is expected
from their disposal. Any gains or losses on the retirement or disposal of investment properties are
recognized in the statement of income under ‘Gain on sale of assets’ in the year of retirement or
disposal. Gains and losses on retirement or disposal are determined by comparing proceeds with
carrying amount.
Expenditures incurred after the investment properties have been put into operations, such as
repairs and maintenance costs, are normally charged to income in the period in which the costs
are incurred.
Depreciation is calculated on a straight-line basis using the remaining useful lives from the time
of acquisition of the investment properties but not to exceed 10 years for both buildings and
condominium units.
Transfers are made to investment properties when, and only when, there is a change in use
evidenced by ending of owner occupation, commencement of an operating lease to another
party or ending of construction or development. Transfers are made from investment properties
when, and only when, there is a change in use evidenced by commencement of owner
occupation or commencement of development with view to sale.
An item of investment properties 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.
Foreclosed Properties
Foreclosed properties of land or building are classified under investment properties from
foreclosure date, accounted for using cost model under PAS 40.
Assets foreclosed which are available for immediate sale in its present condition subject only to
terms that are usual and customary for sales of such assets (or disposal groups) and which sale is
highly probable, are recognized as non-current assets (or disposal groups) held for sale and 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 less allowance
for impairment at the time of foreclosure. Impairment loss is recognized for any subsequent
write-down of the asset to fair value less cost to sell.
Other foreclosed non-financial assets which are not land or building, or to be used by the Bank
for its operations are classified as Bank-occupied property and is accounted for using the cost
model under PAS 16. Financial assets held as collaterals are classified as available-for-sale under
PAS 39 when foreclosed.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of
intangible assets acquired is their fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and any
accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or indefinite.
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PHILTRUST BANK
Intangible assets with finite lives are amortized over the useful economic life and assessed for
impairment whenever there is an indication that the intangible assets may be impaired.
The amortization period and amortization method for an intangible asset with a finite useful life
are reviewed at least at each financial year-end. Changes in the expected useful life or the
expected pattern on consumption of future economic benefits embodied in the asset is
accounted for by changing the amortization period or method, as appropriate, and treated as
changes in accounting estimates. The amortization expense on intangible assets with finite life is
recognized in the statement of income.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment
annually or more frequently, either individually or at the Cash Generating Unit (CGU) level.
The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from definite to fine is made on a
prospective basis.
Gains or losses arising from the derecognition of an intangible asset, upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset, are measured
as the difference between the net disposal proceeds and the carrying amount of the asset and are
recognized in profit or loss when the asset is derecognized.
Intangible assets include capitalized software. Capitalized software acquired separately is
measured at cost at initial recognition. Following initial recognition, capitalized software is
carried at cost less accumulated amortization and any accumulated impairment losses.
The capitalized software is amortized over its estimated useful life of 5 years.
Impairment of Non-Financial Assets
At each reporting date, the Bank assesses whether there is any indication of impairment on
bank’s premises, furniture, fixtures and equipment and intangible asset. When an indicator of
impairment exists or when an annual impairment testing for an asset is required, the Bank makes
a formal estimate of recoverable amount. Recoverable amount is the higher of an asset’s
(or cash-generating units) fair value less costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets, in which case the recoverable amount is assessed as
part of the cash-generating unit to which it belongs. Where the carrying amount of an asset
(or cash generating unit) exceeds its recoverable mount, the asset (or cash-generating unit) is
considered impaired and is written down to its recoverable amount. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to
the asset (or cash-generating unit). In determining fair value lest cost to sell, recent market
transactions are taken into account, if available. If no such transaction can be identified, an
appropriate valuation model is used. These calculations are corroborated by valuation multiples,
quoted share prices for publicly traded entities or other available fair value indicators.
An assessment is made at each reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognized impairment loss
is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognized. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. That increased amount
cannot exceed the carrying amount that would have been determined, net of depreciation and
amortization, had no impairment loss been recognized for the asset in prior years. Such reversal
is recognized in the statement of income unless the asset is carried at revalued amount, in which
case the reversal is treated as revaluation increase.
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PHILTRUST BANK
After such reversal, the depreciation and amortization expense is adjusted in future periods to
allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over
its remaining useful life.
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 Bank 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,
Philippine Stock Exchange, Inc., 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. ; and
•
Level 3 - inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs).
The appropriate level is determined on the basis of the lowest level input that is significant to
the fair value measurement.
a) Financial instruments
The fair value of financial instruments traded in active markets is based on quoted market
prices at the reporting date. A market is regarded as active if quoted prices are readily and
regularly available from an exchange, dealer, broker, industry group, pricing service, or
regulatory agency, and those prices represent actual and regularly occurring market
transactions on an arm’s length basis. The quoted market price used for financial assets held by
the Group is the current bid price. These instruments are included in Level 1.
The fair value of assets and liabilities that are not traded in an active market (for example, overthe-counter derivatives) is determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument
are observable, the asset or liability is included in Level 2. If one or more of the significant
inputs is not based on observable market data, the asset or liability is included in Level 3.
For all other financial instruments not listed in an active market, the fair value is determined by
using appropriate valuation techniques. Valuation techniques included net present value
techniques, comparison to similar instruments for which market observable prices exist, options
pricing models, and other relevant valuation models.
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PHILTRUST BANK
b) Non-financial assets or liabilities
The Bank uses valuation techniques that are appropriate in the circumstances and applies the
technique consistently. Commonly used valuation techniques are as follows:
•
Market approach - A valuation technique that uses prices and other relevant information
generated by market transactions involving identical or comparable assets, liabilities or a
group of assets and liabilities, such as a business.
•
Income approach - Valuation techniques that convert future amounts (e.g., cash flows or
income and expenses) to a single current (i.e., discounted) amount. The fair value
measurement is determined on the basis of the value indicated by current market
expectations about those future amounts.
•
Cost approach - A valuation technique that reflects the amount that would be required
currently to replace the service capacity of an asset (often referred to as current
replacement cost).
Income and Expense Recognition
Income is recognized to the extent that it is probable that the economic benefits will flow to the
Bank, the income can be reliably measured and when specific criteria have been met for each
of the Group’s activities, as described below. Expense is recognized when a decrease in future
economic benefit related to a decrease in an asset or an increase of a liability has arisen to the
Bank that can be measured reliably.
The following specific recognition criteria must also be met before income is recognized:
Interest Income and Interest Expense
Interest income and interest expense are recognized in the statement of income for all financial
instruments measured at amortized cost and interest-bearing financial instruments classified as
AFS investments as they accrue, using the effective interest rate (EIR).
EIR is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument or a shorter period, where appropriate, to the net
carrying amount of the financial asset or financial liability. The calculation takes into account all
the contractual terms of the financial instruments including any fees or incremental costs that are
directly attributable to the instrument and are integral part of the effective interest rate, but not
future credit losses. The EIR is established on the initial recognition of the financial asset and
liability and is not revised subsequently. The carrying amount of the financial asset or liability is
adjusted if the Bank revises its estimates of payments or receipts. The change in carrying amount
is recognized in profit or loss as interest income or expense.
Once the recorded value of a financial asset or group of similar financial assets has been
reduced due to impairment loss, interest income continues to be recognized using the original
EIR used to discount future cash flows.
Loan Fees, Service Charges and Penalties
Loan commitment fees are recognized as earned over the terms of the credit lines granted to
borrowers. Loan syndication fees are recognized upon completion of all syndication activities
where the Bank does not have further obligations to perform under the syndication agreement.
Service charges and penalties are recognized only upon collection or accrued when there is a
reasonable degree of certainty as to its collectibility. When a loan commitment is not expected
to result in the draw-down of a loan, loan commitment fees are recognized on a straight-line
basis over the commitment period.
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PHILTRUST BANK
Rental Income
Rental income arising on leased properties is accounted for on a straight-line basis over the lease
terms of ongoing leases and is recorded in the statement of income under ‘Other Operating
Income’.
Dividends
Dividend income is recognized when the Bank’s right to receive payment is established.
Foreign Exchange Gains (Losses) - net
Foreign exchange gains and losses arising from the settlement of such transactions or from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income.
Other Income
Income from assets sold or exchanged is recognized when the title to the assets is transferred to
the buyer or when the collectibilty of the entire sales price is reasonably assured. Income from
sale of services is recognized upon rendition of the service. Other operating income is
recognized when earned and upon disposal of the investments.
Expenses
Expenses are recognized on the statement of income:



on the basis of direct association between the costs incurred and the earning of specific
items of income;
on the basis of systematic and rational allocation procedures when economic benefits are
expected to arise over several accounting periods and the association can be broadly or
indirectly determined; or
immediately when expenditures produces no future economic benefits or when, and to the
extent that, future economic benefits do not qualify or cease to qualify, for recognition in the
statement of financial position as an asset.
Expenses in the statement of income are presented using the nature of expense method.
General and administrative expenses are cost attributable to administrative activities of the Bank.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance
of the arrangement at inception date, and requires an assessment of whether the fulfillment of
the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset. A reassessment is made after inception of the lease only if one
of the following applies:




there is a change in contractual terms, other than a renewal or extension of the
arrangement;
a renewal option is exercised or an extension is granted, unless that term of the renewal or
extension was initially included in the lease term;
there is a change in the determination of whether fulfillment is dependent on a specified
asset; or
there is a substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the date when
the change in circumstances gave rise to the reassessment for any of the scenarios above, and at
the date of renewal or extension period for the second scenario.
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PHILTRUST BANK
Bank as a lessee
Leases where the lessor retains substantially all the risks and rewards of ownership of the assets
are classified as operating leases. Operating lease payments are recognized as an expense in the
statement of income on a straight-line basis over the lease term.
Bank as a lessor
The Bank is also a party of operating leases as a lessor. Lease payments received are recognized
as income in the statement of income on a straight-line basis over the lease term. Initial direct
costs incurred in negotiating operating leases are added to the carrying amount of the leased
asset and recognized over the lease term on the same basis as the rental income. Contingent
rents are recognized as revenue in the period in which they are earned.
Retirement Cost
Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided.
A provision is recognized for the amount expected to be paid under short-term cash bonus,
short-term compensated absences or profit-sharing plans if the Bank has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee
and the obligation can be measured reliably.
Post employment benefits
The Bank operates a funded, contributory and defined contribution (DC) plan covering its
regular employees wherein the Bank pays a fixed contribution into a separate entity known as
trustee; which administers, manages and invests the funds. The Bank, however, is covered under
Republic Act (RA) No. 7641, The Philippine Retirement Law, which provides for its qualified
employees a defined benefit (DB) minimum guarantee. The DB 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 7641.
Accordingly, the Bank accounts for its retirement obligation under the higher of the DB
obligation relating to the minimum guarantee and the obligation arising from the DC plan. For
the DB minimum guarantee plan, the liability is determined based on the present value of the
excess of the projected DB obligation over the projected DC obligation at the end of the
reporting period. The DB obligation is calculated annually by a qualified independent actuary
using the projected unit credit method. The Bank determines the net interest expense (income)
on the net DB liability (asset) for the period by applying the discount rate used to measure the
DB obligation at the beginning of the annual period to the then net DB liability (asset), taking
into account any changes in the net DB liability (asset) during the period as a result of
contributions and benefit payments. Net interest expense and other expenses related to the DB
plan are recognized in profit or loss.
The DC liability, on the other hand, is measured at the fair value of the DC assets upon which
the DC benefits depend, with an adjustment for any margin on asset returns where this is
reflected in the DC benefits.
Remeasurements of the net DB liability, which comprise actuarial gains and losses, the return on
unallocated plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding
interest), are recognized immediately in other comprehensive income.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in
benefit that relates to past service or the gain or loss on curtailment is recognized immediately in
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PHILTRUST BANK
profit or loss. The Company recognizes gains or losses on the settlement of a DB plan when the
settlement occurs.
Termination benefits
Termination benefits are recognized as an expense when the Bank is demonstrably committed,
without realistic possibility of withdrawal, to a formal detailed plan to terminate employment
before the normal retirement date. Termination benefits for voluntary redundancies are
recognized if the Bank has made an offer encouraging voluntary redundancy, it is probable that
the offer will be accepted, and the number of acceptances can be measured reliably.
Provisions and Contingencies
Provision
Provisions are recognized when the Bank has a present obligation (legal or constructive) as a
result of a past event; it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation; and a reliable estimate can be made of the amount of
the obligation. Where the Bank expects some or all of a provision to be reimbursed, for example
under an insurance contract, the reimbursement is recognized as a separate asset but only when
the reimbursement is virtually certain. The expense relating to any provision is presented in the
statement of income net of any reimbursement. If the effect of the time value of money material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and where appropriate, the risks
specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognized as a borrowing cost.
Contingencies
A contingent asset is not recognized in the financial statements but disclosed when an inflow of
economic benefits is probable. Contingent liabilities are not recognized in the financial
statements. They are disclosed unless the possibility of an outflow of resources embodying
economic benefits is remote.
Income Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or
loss, except to the extent that it relates to items recognized in other comprehensive income or
directly in equity. In this case, the tax is also recognized in other comprehensive income or
directly in equity, respectively.
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted at the reporting date.
Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is provided using the liability method on all temporary differences at the statement
of financial position date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences with certain
exceptions. Deferred income tax assets are recognized for all deductible temporary differences,
carry forward of unused tax credits from the excess of the minimum corporate income tax
(MCIT) over the regular corporate income tax and unused net operating loss carryover
- 17 -
PHILTRUST BANK
(NOLCO), to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences and carry forward of unused MCIT and unused NOLCO can
be utilized. Deferred tax, however, is not recognized when it arises from the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates applicable to the period
when the asset is realized or the liability is settled, based on tax rates (tax base) and regulations
that have been enacted or substantively enacted at the reporting date.
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.
Borrowings and Borrowing Costs
Borrowings are recognized initially at fair value, 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.
General and specific borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost of those assets, until such time
as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are
incurred.
Equity
Share capital is measured at par value for all shares issued.
Surplus free includes all current and prior period results as disclosed in profit or loss and which
are available for dividend declaration and not restricted for use by the Bank.
Reserves pertain to a portion of the Bank’s income from trust operations set-up on a yearly basis
in compliance with BSP regulations. Reserves also consist of reserve for contingencies and selfinsurance.
Net unrealized fair value gains (losses) on available-for-sale securities pertain to cumulative
market-to-market valuation of AFS investments.
Dividends on Common Shares
Dividends on common shares are recognized as a liability and deducted from equity when
approved by the Board of Directors of the Bank and to BSP. Dividends for the year that are
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PHILTRUST BANK
approved after the statement of financial position date are dealt with as an event after the
statement of financial position date.
Related Party Transactions
Parties are considered to be related if one party has the ability, directly or indirectly to control
the other party or exercise significant influence over the other party in making financial and
operating decisions. Parties are also considered to be related if they are subject to common
control or common significant influence. Related parties may be individuals or corporate
entities. Transactions between related parties are based on terms similar to those offered to nonrelated parties.
Earnings per Share
The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is computed by dividing the profit or loss attributable to ordinary shareholders of the
bank by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive
potential ordinary shares, if any.
Events after the Reporting Period
The Bank identifies events after the end of the reporting period as those events, both favorable
and unfavorable, that occur between the end of the reporting period and the date when the
financial statements are authorized for issue. The financial statements of the Bank are adjusted
to reflect those events that provide evidence of conditions that existed at the end of the
reporting period. Non-adjusting events after the end of the reporting period are disclosed in the
notes to the financial statements when material.
Fiduciary Activities
Assets and income arising from fiduciary activities together with related undertakings to return
such assets to customers are excluded from the financial statements where the Bank acts in a
fiduciary capacity such as nominee, trustee or agent.
Reclassifications
Certain amounts in the 2012 financial statements and supporting note disclosures have been
reclassified to conform to the current period presentation, including the reclassification from
other investments to investment property in the statement of financial position. Such
reclassification did not affect the statement of cash flows nor did it impact previously reported
net income or retained earnings.
4. Critical Accounting Judgments and Key Sources of Estimation
In the application of the Bank's accounting policies, Management is required to make
judgments, estimates and assumptions about the carrying amounts of assets and liabilities that
are not readily apparent from other sources. The estimates and associated assumptions are
based on the historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if the revision
affects both current and future periods.
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PHILTRUST BANK
Critical Accounting Estimates
a) Impairment of Loans and Receivables
The Bank reviews its loans and receivables at each reporting date to assess whether an
additional provision for credit losses should be recorded in the statement of income.
In particular, judgment by management is required in the estimation of the amount and timing of
future cash flows when determining the level of allowance required. Such estimates are based
on assumptions about a number of factors and actual results may differ, resulting in future
changes to the allowance.
In addition to specific allowance against individually significant loans and receivables, the Bank
also makes a collective impairment allowance against exposures which, although not
specifically identified as requiring a specific allowance, have a greater risk of default than when
originally granted. This collective allowance takes into consideration on any deterioration in the
loan or investment rating since it was granted or acquired. This collective allowance is based on
changes in factors that are indicative of incurred losses, such as deterioration in payment status
and underlying property prices, among others.
To the extent that the net present value of estimated cash flows of individually impaired
accounts and the estimated impairment for collectively assessed accounts differs by +/- 5%,
impairment provision for the year ended December 31, 2013 would be an estimated P3.39
million (2012 – P5.54 million) higher or lower.
As of December 31, 2013 and 2012, loans and receivables of the Bank are carried at P41.7
billion and P35.2 billion, respectively (see Note 10).
b) Impairment of bank’s premises, furniture, fixtures and equipment and investment properties
The Bank assesses impairment on assets whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The factors that the Bank considers
important which could trigger an impairment review include the following:



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 Bank considers that it is impracticable to disclose with sufficient reliability the possible
effects of sensitivities surrounding the fair value of its long-term non-financial assets.
As of December 31, 2013 and 2012, the carrying value of bank’s premises, furniture, fixtures
and equipment amounted to P2.5 billion and P2.4 billion, respectively, while the carrying
values of the Bank’s investment properties amounted to P2.8 billion (see Notes 12 and 13).
c) Retirement benefits under R.A. 7641
The present value of the excess of the projected DB minimum guarantee over the projected DC
obligation at the end of the reporting period depends on a number of factors that are determined
on an actuarial basis. The assumptions used in determining the net cost (income) for pensions
include the discount rate. Any changes in these assumptions will impact the carrying amount of
retirement obligations.
The Bank 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. In determining the appropriate
discount rate, the Bank considers the interest rates of government securities that are
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PHILTRUST BANK
denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating the terms of the related retirement obligation.
Other key assumptions for retirement obligations are based in part on current market conditions.
Additional information is disclosed in Note 21.
Judgments
a) Contingencies
The Bank is currently involved in various legal proceedings. The estimate of the probable costs
for the resolution of these claims has been developed in consultation with outside counsel
handling the Bank’s defense in these matters and is based upon an analysis of potential results.
Management does not believe that these proceedings will have a material adverse effect on its
financial position. It is possible, however, that future results of operations could be materially
affected by changes in the estimates or in the effectiveness of the strategies relating to these
proceedings.
b) Functional Currency
PAS 21 requires management to use its judgment to determine the entity’s functional currency
such that it most faithfully represents the economic effects of the underlying transactions, events
and conditions that are relevant to the entity. In making this judgment, the Bank considers the
following:



the currency that mainly influences sales prices for financial instruments and services;
the currency in which funds from financing activities are generated; and
the currency in which receipts from operating activities are usually retained.
c) Operating Leases
The Bank has entered into various lease agreements either as a lessor or as a lessee.
Critical judgment was exercised by the management to distinguish each lease agreement as
either an operating lease of finance lease by looking at the transfer or retention of significant risk
and rewards of ownership of the properties covered by the agreements. All of the Bank’s lease
agreements were determined as operating lease (see Note 24).
d) Fair Value of Financial Instruments
Where the fair values of financial assets and financial liabilities recorded on the statement of
financial position cannot be derived from active markets, they are determined using a variety of
valuation techniques that include the use of mathematical models. The input to these models is
taken from observable markets where possible, but where this is not feasible, a degree of
judgment is required in establishing fair values. The judgments include considerations of
liquidity and model inputs such as correlation and volatility.
The Bank considers that it is impracticable to disclose with sufficient reliability the possible
effects of sensitivities surrounding the fair value of financial instruments that are not quoted in
active markets. The fair values of the Bank’s financial instruments are presented in Note 5 to the
financial statements.
e) Impairment of AFS investments
The Bank treats AFS equity investments as impaired when there has been significant or
prolonged decline in the fair value below its cost or where other objective evidence of
impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires judgment.
The Bank treats ‘significant’ generally as 20% or more of the original cost of investment, and
‘prolonged’, greater than 12 months. In addition, the Bank evaluates other factors, including
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PHILTRUST BANK
normal volatility in share price for quoted equities and the future cash flows and the discounted
factors for unquoted equities.
As of December 31, 2013 and 2012, the carrying value of the Bank’s AFS investments amounted
P38.5 billion and P38.9 billion, respectively (see Note 8). The Bank assessed that no allowance
for impairment losses on AFS investments is necessary as of December 31, 2013 and 2012.
f)
Classification of HTM investments
The classification to HTM investment requires significant judgment. In making this judgment, the
Bank evaluates its intention and ability to hold such investments to maturity. If the Bank fails to
keep these investments to maturity other than in certain specific circumstances – for example,
selling a significant amount close to maturity – it will be required to reclassify the entire portfolio
as AFS investments. The investment would therefore be measured at fair value and not
amortized cost.
g) Distinction between investment properties and owner-occupied properties
The Bank determines whether a property qualifies as investment property. In making its
judgment, the Bank considers whether the property generates cash flows largely independent of
the other assets held by an entity. Owner-occupied properties generate cash flows that are
attributable not only to property but also to the other assets used in the production or supply
process.
Some properties consist of a portion that is held to earn rentals or for capital appreciation and
another portion that is held for use in the production of services or for administrative purposes.
If these portions cannot be sold separately, the property is accounted for as investment property
only if an insignificant portion is held for use in the production of services or for administrative
purposes. Judgment is applied in determining whether ancillary services are so significant that a
property does not qualify as investment property. The Bank considers each property separately
in making judgment.
The Bank classifies all properties which have a portion that is earning rentals and another
portion which are used in production of services or used in administrative purposes as owneroccupied properties based on the criterion above. In this case, such properties were included in
the account ‘Bank’s premises, furniture, fixtures and equipment’.
h) Realizability of Deferred Tax Assets
The Bank reviews its deferred tax assets at each financial position date and reduces the carrying
amount to the extent that is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be utilized. Any deferred tax asset will be
re-measured if it might result in derecognition when the expected tax law to be enacted has a
possible risk on the realization. Management believes that sufficient taxable profit will be
generated to allow all or part of the deferred income tax assets to be utilized.
As of December 31, 2013 and 2012, the Bank’s recognized deferred tax assets amounted to
P770.4 million and P909.3 million, respectively (see Note 26).
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PHILTRUST BANK
5. Financial Risk Management
Risk Management Framework
The Board of Directors (BOD) of the Bank is responsible for establishing and maintaining a
sound risk management system. It is the primary responsibility of the BOD to establish the risk
culture and the risk management organization and incorporate the risk process as an essential
part of the corporate strategic planning.
The Bank classifies the major risks that the Bank manages between quantifiable risks such as
credit, liquidity and markets risks, and non-quantifiable risks such as operations risk among
others.
Through the direction of the BOD, the following comprise the risk management structure of the
Bank:
Executive Committee
The Executive Committee plays the crucial role of analyzing, evaluating, and approving product
attributes such as: market, liquidity and credit risk; operations risk; control and compliance;
audit, legal and regulatory; and system and technology issues for new activities/products.
Risk Management Committee (RMC)
The RMC is responsible for the creation and oversight of the Bank’s corporate risk policy.
It is tasked to identify and analyze the risks faced by the Bank, to set and recommend to the
BOD the system of risk limits and controls, and to ensure that each business unit continuously
monitors the adequacy and soundness of policies, assumptions and practices.
Asset and Liability Committee (ALC)
The ALC ensures that at all times the Bank maintains adequate liquidity, sufficient capital and
appropriate funding to meet all business requirements and complies with all regulatory
requirements.
Credit Committee (CreCom)
The CreCom is primarily responsible for credit risk management of the Bank. It establishes the
standards for credit analysis, define credit risk measurements, establish internal risk ratings and
review the credit risk infrastructure’s ability to support the Bank’s risk policies.
Risk Management Group (RMG)
The RMG is an in independent business function to identify, analyze, and measure risks from the
Bank’s trading, position-taking, lending, borrowing, and other transactional activities.
Audit Committee (AC)
The Audit Committee is responsible for monitoring compliance with the Bank’s risk
management policies and procedures, and for reviewing the adequacy of the risk managements
system in placed in relation to the risks faced by the Bank. The Bank’s Audit Committee is
assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc
reviews of risk management controls and procedures, the results of which are reported to the
Audit Committee.
Credit Risk
Credit risk is the risk that a customer or counterparty will be unable or unwilling to pay
obligations on time or in full as expected or previously contracted, subjecting the Bank to a
financial loss. The goal of the Bank’s credit risk management is to maximize the risk-adjusted
rate of return by maintaining credit risk exposure within the approved parameters.
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PHILTRUST BANK
The Bank’s credit risk covers mostly loan portfolio analysis, where the Bank employs risk
management techniques to quantify and qualify cyclical versus specific risks for a given portfolio
under potentially adverse economic conditions. Diversification against loan concentration, such
as lending in a single geographic area or business sector, enables the Bank to manage risks
associated with its largest exposures in the market.
Credit Risk Management
Measurement of Credit Risk
In measuring credit risk at a counterparty level, the Bank mainly relies on its sound lending
philosophy and considers three components: (i) the probability of default by the client or
counterparty on its contractual obligations; (ii) current exposures to the counterparty and its
likely future development; and (iii) the likely recovery ratio on the defaulted obligations. The
Bank uses two statistical-based credit risk methodology in measuring credit risk namely: defaultprobability models, which predict future losses and thus anticipate provisioning and capital
needs, and risk-adjusted return on capital (RAROC) techniques, which incorporate credit risk
into the initial loan pricing and eventually evaluate the true economic capital needs of the Bank.
(a) Loans and receivables
The clients of the Bank are segmented and internally rated into the following standards BSP
classifications:
•
Unclassified – these are loans that do not have any greater-than normal risk and do not
possess the characteristics of loans classified below. The counterparty has the ability to
satisfy the obligation in full and therefore minimal loss, if any, is anticipated.
•
Loans especially mentioned – these are loans that have potential weaknesses that deserve
management’s close attention. These potential weaknesses, if left uncorrected, may affect
the repayment of the loan and thus increase the credit risk of the Bank.
•
Substandard - these are loans which appear to involve a substantial degree of risk to the
Bank because of unfavorable record or unsatisfactory characteristics. Further, these loans
with well-defined weaknesses which may include adverse trends or development of a
financial, managerial, economic or potential nature, or a significant deterioration in
collateral.
•
Doubtful – these are loans which have the weaknesses similar to those of the Sub-standard
classification with added characteristics that existing facts, conditions, and values make
collection or liquidation in full highly improbable and substantial loss is probable.
•
Loss – these are loans which are considered uncollectible and of such little value that their
continuance as bankable assets is not warranted although the loans may have some
recovery or salvage value.
(b) Debt securities and other bills
For debt securities and other bills, external rating agencies such as Standard & Poor’s and
Moody’s ratings or their equivalents are used by the Bank for managing credit exposures.
Likewise, investments in these securities and bills are reviewed through its regular meetings with
top management as a way to gain credit quality mix and maintain a readily available source to
meet funding requirements.
Risk Limit Control and Mitigation Policies
The Bank, through a Credit Manual, established policies for sound credit granting process.
Sufficient client information, to enable a comprehensive assessment of the true risk profile of the
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PHILTRUST BANK
borrower or counterparty, are gathered and at a minimum certain factors are considered in
documentation and credit approvals.
Overall credit limits at individual borrower’s or counterparty’s level and groups of connected
counterparties that aggregate in a comparable and informative manner are established by the
Bank as one of the core risk control. Subsequent credit administration and monitoring is also
maintained through a well-structured internal risk rating system, which allows a more accurate
determination of the overall characteristics of the credit portfolio, concentration of risk, problem
credits and adequacy of loan loss reserves.
The Bank employs some of these specific control and mitigation measures as outlined below.
(a) Collateral
One of the most traditional and common practice in mitigating credit risk is requiring security
for loans and receivables. The Bank implements guidelines on the acceptability of specific
classes of collateral for credit risk mitigation. The principal collateral types for loans and
receivables are:
•
•
Mortgage over real estate properties and chattels; and
Hold-out on financial instruments such as debt securities deposits, and equities
In order to preserve the collateral cover for loans and receivables, management monitors the
market value of real property collateral on an annual basis and as needed for marketable
securities. Key management considers the existing market value of collateral during the review
of the credit facilities and adequacy of the allowance for credit losses. Upon careful evaluation,
the Bank may seeks additional collateral from the counterparty for the relevant individual loans
and receivables, in order to minimize credit loss or impairment.
The following table presents the breakdown of receivables from customers by type of security as
of December 31:
2013
Amount
Secured
Real estate mortgage
Hold-out
Certificate of stocks
Chattel mortgage
Others
Unsecured
Percentage
2012
Amount
Percentage
P5,323,252
1,897,407
307,929
50,957
18,347,000
16,923,115
12.42%
4.43%
0.72%
0.12%
42.82%
39.49%
P4,781,064
1,023,858
325,491
36,823
5,653,000
24,423,706
13.19%
2.82%
0.90%
0.10%
15.60%
67.39%
P42,849,660
100%
P36,243,942
100%
(a) Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as
required. Standby letters of credit carry the same risk as loans. Documentary and commercial
letters of credit – which are written undertaking by the Bank on behalf of a customer authorizing
a third party to draw drafts on the Banks up to a stipulated amount under specific terms and
conditions – are collateralized by the underlying shipments of goods to which they relate and
therefore carry less risk than a direct loan.
The Bank monitors the term to maturity of credit commitments because longer-term
commitments generally have a greater degree of credit risk than shorter-term commitments.
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PHILTRUST BANK
Impairment and Provisioning Policies
The Bank’s credit-quality mapping on loans and receivables is based on the standard BSP
classifications. Impairment provisions, however, are recognized for financial reporting purposes
only for losses that have been incurred at the reporting date based on objective evidence of
impairment.
Loans with renegotiated terms
Loans with renegotiated terms are loans that have been restructured due to deterioration in the
borrower’s financial position. In respect of some of these loans, the Bank has made concessions
that it would not otherwise consider. Once the loan is restructured it remains in this category
independent of satisfactory performance after restructuring.
Write-off policy
The Bank writes off a loan or an investment debt security balance, and any related allowances
for impairment losses, when Bank’s Credit Department determines that the loan or security is
uncollectible. This determination is made after considering information such as the occurrence
of significant changes in the borrower’s/issuer’s financial position such that the borrower/issuer
can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay
back the entire exposure. For smaller balance standardized loans, write-off decisions generally
are based on a product-specific past due status.
The table below shows the Bank’s loans and receivable from customers and the related
allowance for credit losses and impairment.
2013
Loans and
Allowance for
receivables
credit losses
Unclassified
Loans especially mentioned
Substandard
Doubtful
Loss
2012
Loans and
Allowance for
receivables
credit losses
P31,631,637
6,800,548
3,123,430
1,040,424
253,621
P172
340
680
520
253
P24,919,184
6,891,598
3,249,491
959,745
223,924
P140
345
709
480
223
P42,849,660
P1,965
P36,243,942
P1,897
Maximum Exposure to Credit Risk before Collaterals Held or Other Credit Enhancements
Credit risk exposures relating to significant on-balance sheet financial assets are as follows
(amounts in millions):
Due from BSP
Due from other banks
AFS investments - debt securities
HTM investments
Loans and receivables - net
Other assets
2013
2012
P26,418
916
37,968
6,172
41,698
22
P22,325
1,258
38,275
6,862
35,178
24
P113,194
P103,922
The above table represents the maximum credit exposure of the Bank at December 31, 2013
and 2012 without taking into account any collateral held or other credit enhancements.
The exposures set out above are based on net carrying amounts as reported in the statements of
financial position.
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PHILTRUST BANK
Credit risk exposures relating to off-balance sheet items are as follows:
2013
2012
P 14,724
336,653
843,870
P 17,107
220,729
779,050
P1,195,247
1,016,886
2013
2012
P41,700,854
566,910
581,896
P35,059,061
590,939
593,942
42,849,660
(1,965,620)
36,243,942
(1,897,491)
P40,884,040
P34,346,451
Undrawn loan commitments
Bills for collection
Unused letters of credit
Others
Credit Quality of Loans Receivable from Customers
Loans receivables from customers are summarized as follows:
Note
Neither past due nor impaired
Past due but not impaired
Impaired
10
11
Allowance for credit and impairment losses
(a) Loans and receivables neither past due nor impaired
The table below shows loans and receivables that were neither past due nor impaired which
consist mainly of accounts with Unclassified rating and those loans accounts in a portfolio to
which an impairment has been allocated on a collective basis, per class that the Bank held as of
December 31, 2013 and 2012 (amounts in millions).
Retail/Individuals
Small and medium enterprises
Private corporation
Bangko Sentral ng Pilipinas
2013
2012
P2,529
3,140
17,882
18,150
P3,014
3,184
22,361
5,500
P41,701
P34,059
(b) Loans and receivables past due but not impaired
The table below shows the aging analysis of past due but not impaired loans and receivables per
class that the Bank held as of December 31, 2013 and 2012. Collateralized past due loans are
not considered impaired when the cash flows that may result from foreclosure of the related
collateral are higher than the carrying amount of the loans (amounts in millions).
Individuals
Past due up to 30 days
Past due 31 - 90 days
Over 180 days
Fair value of collateral
2013
Small and
medium
Private
enterprises
corporation
Total
P 105
P 112
P 350
P 567
P105
P112
P350
P567
P1
P628
P333
P962
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PHILTRUST BANK
Individuals
Past due up to 30 days
Over 180 days
2012
Small and
medium
Private
enterprises
corporation
Total
P 105
P 126
P 360
P 591
P105
P126
P360
P591
P1
P628
P333
P962
(c) Loans and receivables individually impaired
The table below shows the gross amount of individually impaired loans and receivables by class
that the Bank held as of December 31, 2013 and 2012 (amounts in millions).
Retail/Individuals
Small and medium enterprises
Private corporation
2013
2012
P209
68
305
P211
68
315
P582
P594
P155
P161
Credit Quality of Other Financial Assets
(a) Due from Bangko Sentral ng Pilipinas
This account consists of fully performing balances at December 31, 2013 and 2012 as follows:
Clearing account
Special deposit accounts
Reserve deposit accounts
2013
2012
P13,367,998
13,050,000
-
P11,825,130
10,500,000
-
P26,417,998
P22,325,130
(b) Due from other banks
This account consists of fully performing balances presented by credit ratings of counterparty
banks at December 31, 2013 and 2012:
AA- to AA+
A- to A+
Lower than AUnrated
- 28 -
2013
2012
P562,125
344,916
9,046
-
P735,117
515,786
7,434
-
P916,087
P1,258,337
PHILTRUST BANK
(c) Debt securities, treasury bills and other government securities
This account consists of fully performing balances presented by credit ratings based on Standard
& Poor’s at December 31, 2013 and 2012:
2013
AAA
AA- to AA+
A- to A+
Lower than AUnrated
AFS investments
HTM investments
Total
P 32,593,392
5,375,097
P 6,171,861
-
P 38,765,253
5,375,097
P37,968,489
P6,171,861
P44,140,350
AFS investments
HTM investments
Total
P 35,974,405
2,300,515
P 6,861,786
-
P 42,836,191
2,300,515
P38,274,920
P6,861,786
P45,136,706
2012
AAA
AA- to AA+
A- to A+
Lower than AUnrated
(d) Other financial assets
The Bank’s other financial assets as of December 31, 2013 and 2012 consist mainly of other
investments, other receivables and cash items from various unrated counterparties with good
credit standing.
Concentrations of Risk of Financial Assets with Credit Exposure
An analysis of concentration of credit risk by sector on due from banks, loans and receivables,
AFS investments and HTM investments as of December 31 are shown below (amounts in
millions):
2013
Due from banks
AFS investments
HTM investments
Loans and receivables
Sovereign
Bank
Retail/
Individuals
Total
P26,418
37,968
6,172
-
P916
-
P 41,698
P27,334
37,968
6,172
41,698
P70,558
P916
P41,698
P113,172
2012
Due from banks
AFS investments
HTM investments
Sovereign
Bank
Retail/
Individuals
Total
P22,325
38,275
6,862
-
P1,258
-
P 35,178
P23,583
38,275
6,862
35,178
P67,462
P1,258
P35,178
P103,898
- 29 -
PHILTRUST BANK
The following table presents information on the concentration of credit risk exposure on loans
receivables from customers as to industry as of December 31, 2013 and 2012:
2013
Amount
Wholesale and retail trade
Real estate, renting and business
activities
Financial intermediaries
Manufacturing
Agriculture
Construction
Mining and quarrying
Transportation, storage and
communication
Hotels and restaurants
Health and social work
Education
Private households with
employed persons
Electricity, gas and water
Other community, social and
personal services
Percentage
2012
Amount
Percentage
P7,910,138
18.46%
P9,905,980
27.33%
4,535,122
20,550,740
2,472,485
2,342,259
2,038,097
-
10.58%
47.96%
5.77%
5.47%
4.76%
0.00%
4,706,112
7,874,240
3,712,475
3,396,440
2,426,655
500
12.98%
21.73%
10.24%
9.37%
6.70%
0.00%
648,443
510,473
234,575
159,892
1.51%
1.19%
0.55%
0.37%
1,170,662
946,555
192,005
73,308
3.23%
2.61%
0.53%
0.20%
27,000
3,600
0.06%
0.01%
2,000
1,940
0.01%
0.01%
1,416,836
3.31%
1,835,070
5.06%
P42,849,660
100%
P36,243,942
100%
Foreclosed Collaterals
Repossessed properties are sold as soon as practicable and are classified initially under
‘Investment Properties’ in the statements of financial position until further assessed and
measured. As of December 31, 2013 and 2012, the related foreclosed collaterals have an
aggregate carrying amount of P2.8 billion. Foreclosed collaterals include real estate (land,
building and improvements), auto or chattel, bonds and stocks.
Liquidity Risk
Liquidity risk is generally defined as the current and prospective risk to earnings or capital
arising from the Bank’s inability to meet its obligations in all currencies when they become due
without incurring unacceptable losses or costs. The Bank’s liquidity management is
characterized by the following elements: a) good management information system, b) effective
analysis of funding requirements under alternative scenarios, c) diversification of funding
sources, and d) contingency planning.
Liquidity Risk Management
The Bank’s liquidity management involves maintaining funding capacity to accommodate
fluctuations in asset and liability levels due to changes in the Bank’s business operations or
unanticipated events created by customer behavior or capital market conditions. The Bank seeks
to ensure liquidity through a combination of active management of liabilities, a liquid asset
portfolio composed substantially of deposits in primary and secondary reserves, and the securing
of money market lines and the maintenance of repurchase facilities to address any unexpected
liquidity situations.
The Bank’s net funding requirements are determined by analyzing its future cash flows based on
assumptions of the future behavior of assets, liabilities and off balance sheet items, and then
calculating the cumulative net excess on shortfall over the time frame for the liquidity
assessment. Such analysis of net funding requirements involves construction of a Maturity
Ladder and calculation of cumulative net excess or deficit. Furthermore, an internal liquidity
ratio has been set to determine sufficiency of liquid assets over deposit liabilities. Scenario stress
tests are conducted periodically wherein liquidity managers analyze the behavior of cash flows
- 30 -
PHILTRUST BANK
under different conditions, i.e. from “normal” conditions to “extreme” situations. Finally, the
BOD sets the Maximum Cumulative Outflow (MCO) Limit in order to control liquidity gap for
each currency.
The table below shows the maturity profile of the Bank’s assets and liabilities, based on
contractual undiscounted cash flows (amounts in millions):
2013
Financial Assets
Cash and other cash items
Due from BSP
HTM securities, net
Loans and advances, net
Financial Liabilities
Deposit liabilities
Manager’s checks and demand
drafts outstanding
Accrued interest, taxes and others
expenses
Deferred credits and other liabilities
Total maturity gap
On demand
Less than
one year
1 to 5 years
Over
5 years
Total
P1,009
26,418
916
2
P 533
32,534
P 1,001
4,639
4,533
P 36,967
1,000
4,629
P1,009
26,418
916
37,968
6,172
41,698
28,345
33,067
10,173
42,596
114,181
69,271
25,286
2,069
3,718
100,344
-
74
-
-
74
-
255
169
-
-
255
169
69,271
25,784
2,069
3,718
100,842
(P40,926)
P7,283
P8,104
P38,878
P13,339
On demand
Less than
one year
1 to 5 years
Over
5 years
Total
P1,195
22,325
1,258
320
6
P 481
25,736
P 458
5,060
5,287
P 37,817
1,001
4,149
P1,195
22,325
1,258
38,275
6,862
35,178
25,104
26,217
10,805
42,967
105,093
60,775
23,542
1,612
2,887
88,816
2012
Financial Assets
Due from BSP
HTM securities, net
Deposit liabilities
drafts outstanding
expenses
Total maturity gap
-
69
-
-
69
-
272
281
-
-
272
281
60,775
24,164
1,612
2,887
89,438
(P35,671)
P2,053
P9,193
P40,080
P15,655
Market Risk
Market risk the risk of loss, immediate or overtime due to adverse fluctuations in the price or
market value of instruments, products, and transactions in the Bank’s overall portfolio. The value
of these financial instruments may change as a result of changes in interest rate, foreign
exchange rate, and other market changes. The Bank’s market risk originates from its inventory of
foreign exchange and debt securities. The objective of market risk management is to manage
and control the market risk exposures within acceptable parameters, while optimizing the return
on investments.
- 31 -
PHILTRUST BANK
The Bank manages market risk inherent in the Bank’s portfolio using three measures namely:
a) sensitivity analysis of the position or portfolio to market factors, b) factor volatility norm for
estimating the expected movement in the market risk factor, and value-at-risk (VaR), which is a
tool for measuring the potential loss from an unlikely adverse event in a normal market
environment.
Interest rate risk
Interest rate risk involves the movements of rates across yield curves of one or more instruments.
The principal risk to which financial instruments are exposed is the risk of loss from fluctuations
in the future cash flows or fair values of financial instrument because of a change in market
interest rates. The Bank manages its resources and liabilities so as to ensure that exposure to
fluctuations in interest rates are kept within acceptable limits. Interest rate risk is managed
principally through monitoring interest rate gaps and by having pre-approved limits for interest
rate repricing. Bank’s management monitors compliance with these limits.
The details of the Bank’s exposure to interest rate risk at the reporting date are shown below in
reference to their contractual repricing or maturity dates (amounts in millions):
2013
Repricing
Less than
one year
Financial Assets
Due from BSP
HTM securities, net
Deposit liabilities
drafts outstanding
expenses
1 to 5 years
P 40,884
P -
Nonrepricing
Total
P26,418
916
37,968
6,172
144
P26,418
916
37,968
6,172
41,698
71,618
113,172
5
P 665
40,884
5
665
94,557
2,069
3,718
-
100,344
-
-
-
74
74
-
-
-
255
169
255
169
2,069
3,718
498
100,842
(P2,064)
(P3,053)
P71,120
P12,330
Over
5 years
Nonrepricing
Total
94,557
Total interest gap
Over
5 years
(P53,673)
2012
Repricing
Financial Assets
Due from BSP
HTM securities, net
Less than
one year
1 to 5 years
P 33,787
P 29
P -
P22,325
1,258
38,275
6,862
1,362
P22,325
1,258
38,275
6,862
35,178
33,787
29
-
70,082
103,898
Forward
- 32 -
PHILTRUST BANK
2012
Repricing
Deposit liabilities
drafts outstanding
expenses
Total interest gap
Less than
one year
1 to 5 years
Over
5 years
84,317
1,612
2,887
Nonrepricing
-
Total
88,816
-
-
-
69
69
-
-
-
272
281
272
281
84,317
1,612
2,887
622
89,438
(P50,530)
(P1,583)
(P2,887)
P69,460
P14,460
The Bank computes stress test on interest sensitive assets and liabilities except for available forsale investments through gapping. The details of the reported stress testing on interest gaps at the
reporting date are shown below:
2013
Less than one
month
1 to 3 months
Over 3 months
Total
P55,831
67,688
P9,703
4,272
P1,528
686
P67,062
72,646
(11,857)
5,431
842
(5,584)
Cumulative asset - liability gap
(P11,857)
(P6,426)
(P5,584)
P -
Foreign-denominated interest
sensitive assets and liabilities
Assets
Liabilities
P1,213
1,027
P 19,172
P 1,711
P1,213
21,910
186
(19,172)
(1,711)
(20,697)
P186
(P18,986)
(P20,697)
Peso-denominated interest
Assets
Liabilities
Gap
Gap
P -
2012
Less than one
month
1 to 3 months
Over 3 months
Total
P41,039
59,859
P14,199
3,459
P2,443
869
P57,681
64,187
(18,820)
10,740
1,574
(6,506)
(P18,820)
(P8,080)
(P6,506)
P -
Foreign-denominated interest
Assets
Liabilities
P1,068
1,027
P 17,581
P246
1,520
P1,314
20,128
41
(17,581)
(1,274)
(18,814)
P41
(P17,540)
(P18,814)
Peso-denominated interest
Assets
Liabilities
Gap
Gap
- 33 -
P -
PHILTRUST BANK
The details of the reported impact of negative gaps on net interest income at the reporting date
are shown below (amounts in millions):
2013
Peso-denominated
50 bps increase in Php interest
rates
100 bps increase in Php interest
rates
Foreign-denominated
50 bps increase in USD interest
rates (in USD)
100 bps increase in USD
interest rates (in USD)
50 bps increase in USD interest
rates (in Php)
100 bps increase in USD
interest rates (in Php)
Peso-denominated
50 bps decrease in Php interest
rates
100 bps decrease in Php
interest rates
Foreign-denominated
50 bps decrease in USD interest
rates (in USD)
100 bps decrease in USD
interest rates (in USD)
50 bps decrease in USD interest
rates (in Php)
100 bps decrease in USD
interest rates (in Php)
2012
Amount
Percentage to
Net Income
Amount
Percentage to
Net Income
(P57.18)
(4.21%)
(P32.52)
(1.90%)
(114.35)
(8.42%)
(65.06)
(3.80%)
(0.15)
(2.29)
(0.30)
(4.58)
(6.83)
(0.50%)
(94.10)
(5.50%)
(13.66)
(1.01%)
(188.21)
(10.99%)
57.18
4.21%
32.52
1.90%
114.35
8.42%
65.06
3.80%
0.15
2.29
0.30
4.58
6.83
0.50%
94.10
5.50%
13.66
1.01%
188.21
10.99%
The Bank also calculates price volatility on available for-sale investments (thru Modified
duration) in case of changes in interest rates. The following details are shown below:
2013
Market value
- 50 bps
- 100 bps
+ 50 bps
+ 100 bps
P 313,465
4,966,607
5,023,890
P 5,962
196,414
301,350
P 11,924
392,828
602,700
P (5,962)
(196,414)
(301,350)
P (11,924)
(392,828)
(602,700)
P10,303,962
P503,726
P1,007,452
(P503,726)
(P1,007,452)
$ 15,485
259,730
347,888
$ 145
9,636
19,398
$ 290
19,272
38,796
$ (145)
(9,636)
(19,398)
$ (290)
(19,272)
(38,796)
$623,103
$29,179
$58,358
($29,179)
($58,358)
Total in Php
P27,664,527
P1,295,489
P2,590,978
(P1,295,489)
(P2,590,978)
Total (Peso and FX)
P37,968,489
P1,799,215
P3,598,430
(P1,799,215)
(P3,598,430)
4.74%
9.48%
(4.74%)
(9.48%)
Peso-denominated
Less than one year
1 to 3 years
3 to 5 years
5 to 15 years
Over 15 years
Foreign-denominated
Less than one year
1 to 3 years
3 to 5 years
5 to 15 years
Over 15 years
Total in USD
As percentage of AFS
- 34 -
PHILTRUST BANK
2012
Market value
- 50 bps
- 100 bps
+ 50 bps
+ 100 bps
P 152,974
4,526,390
5,317,006
P 3,328
179,624
312,388
P 6,656
359,248
624,777
P (3,328)
(179,624)
(312,388)
P (6,656)
(359,248)
(624,777)
P9,996,370
P495,340
P990,681
(P495,340)
(P990,681)
$ 16,373
288,415
383,623
$ 222
11,202
24,897
$ 444
22,404
49,794
$ (222)
(11,202)
(24,897)
$ (444)
(22,404)
(49,794)
$688,411
$36,321
$72,642
($36,321)
($72,642)
Total in Php
P28,278,550
P1,491,994
P2,983,988
(P1,491,994)
(P2,983,988)
Total (Peso and FX)
P38,274,920
P1,987,334
P3,974,669
(P1,987,334)
(P3,974,669)
5.20%
10.40%
(5.20%)
(10.40%)
Peso-denominated
Less than one year
1 to 3 years
3 to 5 years
5 to 15 years
Over 15 years
Foreign-denominated
Less than one year
1 to 3 years
3 to 5 years
5 to 15 years
Over 15 years
Total in USD
As percentage of AFS
Foreign Exchange Risk
Foreign exchange risk arises on financial instruments that are denominated in a foreign currency
other than the functional currency in which they are measured. The Bank takes on exposure to
effects of fluctuations in the prevailing foreign currency exchange rates on its financial position
and cash flows.
Information on the Bank’s foreign-denominated monetary assets and liabilities in their Philippine
Peso equivalents follows (amounts in thousands):
2013
Financial Assets
AFS investments
HTM investments
Deposit liabilities
Savings
Time
Accrued interest payable
Net foreign currency denominated assets (liabilities)
In Dollars
In Peso
$2,620
623,103
33,151
7,881
P116,310
27,664,527
1,471,861
349,513
666,755
29,602,211
23,125
599,831
1,296
506
1,026,682
26,631,300
57,556
22,166
624,758
27,737,704
$41,997
P1,864,507
Foreign currency liabilities generally consist of foreign currency deposits in the Bank's FCDU,
which are generated from remittances to the Philippines by Filipino expatriates and overseas
Filipino workers who retain for their own benefit or for the benefit of a third party.
- 35 -
PHILTRUST BANK
Foreign currency deposits are generally used to fund the Bank's foreign currency denominated
loans and FCDU investment portfolio. Banks are required by the BSP to match foreign currency
assets with the foreign currency liabilities held through FCDUs. In addition, the BSP requires a
30% liquidity reserve on all foreign currency liabilities held through FCDUs.
Bank policy is to maintain foreign currency exposure within acceptable limits and within
existing regulatory guidelines. The Bank believes that its profile of foreign currency exposure on
its assets and liabilities is within conservative limits for a financial institution engaged in the type
of business in which the Bank is engaged.
Operational Risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes
associated with the Bank’s processes, personnel, technology and infrastructure, and from
external factors other than credit, market, and liquidity risks such as those arising from legal and
regulatory requirements and generally accepted standards of corporate behavior. Operational
risks arise from Bank operations.
The Bank’s objective is to manage operational risk so as to balance the avoidance of financial
losses and damage to the Bank’s reputation with overall cost effectiveness and to avoid control
procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address
operational risk is assigned to senior management. This responsibility is supported by the
development of overall standards for the management of operational risk in the following areas:
•
•
•
•
•
•
•
•
•
•
Requirements for appropriate segregation of duties, including the independent
authorization of transactions;
Requirements for the reconciliation and monitoring of transactions;
Compliance with regulatory and other legal requirements;
Documentation of controls and procedures;
Requirements for the periodic assessment of operational risks faced, and the adequacy
of controls and procedures to address the risks identified;
Requirements for the reporting of operational losses and proposed remedial action;
Development of contingency plans;
Training and professional development;
Ethical and business standards; and
Risk mitigation, including insurance where this is effective.
Fair Value Estimation
The table below presents a comparison of carrying amounts and estimated fair values of all of
the Bank’s financial instruments as of December 31:
2013
Carrying
amount
Financial Assets
Due from BSP
Available-for-sale securities
Held-to-maturity securities, net
P1,008,992
26,417,998
916,087
38,532,327
6,171,861
41,697,860
Forward
- 36 -
Fair value
P1,008,992
26,417,998
916,087
38,532,327
6,739,503
41,697,860
2012
Carrying
amount
P1,194,631
22,325,130
1,258,337
38,934,750
6,861,786
35,178,192
Fair value
P1,194631
22,325,130
1,258,337
38,934,750
6,861,786
35,178,192
PHILTRUST BANK
2013
Carrying
amount
Deposit liabilities
drafts outstanding
Accrued interest, taxes and
others expenses
Deferred credits and other
liabilities
Fair value
2012
Carrying
amount
Fair value
100,343,678
100,343,678
88,815,936
88,815,936
73,995
73,995
69,087
69,087
254,956
254,956
271,907
271,907
169,117
169,117
280,749
280,749
The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value:
Cash and other cash items, due from BSP and other banks - The carrying amounts approximate
their fair values in view of the relatively short-term maturities of these instruments.
Debt securities - Fair values are generally based on quoted market prices. If the market prices
are not readily available, fair values are estimated using either values obtained from
independent parties offering pricing services or adjusted quoted market prices of comparable
investments or using the discounted cash flow methodology.
Equity securities - For publicly traded equity securities, fair values are based on quoted prices
published in the Philippine equity markets. For unquoted equity securities for which no reliable
basis for fair value measurement is available, these are carried at cost net of impairment, if any.
Loans and receivables, net - Fair values of loans and receivables are estimated using the
discounted cash flow methodology, using the Bank’s current incremental lending rates for
similar types of loans and receivables.
Deposit liabilities (time, demand and savings deposits) - Fair values of time deposits are
estimated using the discounted cash flow methodology, using the Bank’s current incremental
borrowing rates for similar borrowings with maturities consistent with those remaining for the
liability being valued. For demand and savings deposits, carrying amounts approximate fair
values considering that these are currently due and demandable.
Manager’s checks and accrued interest and other expenses - Carrying amounts approximate fair
values due to the short-term nature of the accounts.
Other liabilities - Quoted market prices are not readily available for these liabilities. These are
reported at cost and are not significant in relation to the Bank’s total portfolio.
- 37 -
PHILTRUST BANK
Fair Value Hierarchy
As of December 31, 2013 and 2012, the fair value hierarchy of the Bank’s financial instruments
measured at fair values is presented below (amounts in millions):
Level 1
AFS investments
Government securities
Listed equity securities
Others
HTM investments
P33,819
564
4,149
HTM investments
P -
Level 3
P -
Total
P33,819
564
4,149
6,172
-
-
6,172
P44,704
P -
P -
P44,704
Level 1
AFS investments
Listed equity securities
Others
2013
Level 2
P37,260
660
1,015
2012
Level 2
P -
Level 3
P -
Total
P37,260
660
1,015
6,862
-
-
6,862
P45,797
P -
P -
P45,797
There were no transfers between levels 1 and 2 during the year.
6. Capital Risk Management
The primary objectives of the Bank’s capital management are to ensure that it complies with
externally imposed capital requirements and that it maintains strong credit ratings and healthy
capital ratios in order to support its business and to maximize shareholders’ value.
The Bank manages its capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of its activities. In order to maintain or adjust
the capital structure, the Bank may adjust the amount of dividend payment to shareholders,
return capital to shareholders or issue capital securities. No changes were made in the
objectives, policies and processes as of December 31, 2013 and 2012.
Regulatory Qualifying Capital
The Bank manages its capital following the framework of Basel Committee on Banking
Supervision Accord II (Basel II) and its implementation in the Philippines by the BSP. The BSP
through its Circular 538 requires each bank and its financial affiliated subsidiaries to keep its
Capital Adequacy Ratio (CAR) - the ratio of qualified capital to risk-weighted exposures - to be
no less than 10%. In quantifying its CAR, the Bank currently uses the Standardized Approach
(for credit risk and market risk) and the Basic Indicator Approach (for operational risk).
Capital adequacy reports are filed with the BSP every quarter.
Under existing BSP regulations, the determination of the Bank’s compliance with regulatory
requirements and ratios is based on the amount of the Bank’s unimpaired capital (regulatory
capital) as reported to the BSP. This is determined on the basis of regulatory accounting
policies which differ from PFRS in some respects.
- 38 -
PHILTRUST BANK
In addition, the risk-based capital ratio of a bank, expressed as a percentage of qualifying
capital to risk-weighted assets, should not be less than 10% for head office and branches.
Qualifying capital and risk-weighted assets are computed based on BSP regulations.
Risk-weighted assets consist of total assets less cash on hand, due from BSP, loans covered by
hold-out on or assignment of deposits, loans or acceptances under letters of credit to the extent
covered by margin deposits and other non-risk items determined by the Monetary Board of the
BSP.
On August 4, 2006, the BSP, under BSP Circular No. 538, issued the prescribed guidelines
implementing the revised risk-based capital adequacy framework for the Philippine banking
system to conform to the capital adequacy framework of Basel Committee on Banking
Supervision Accord II (Basel II). The new BSP guidelines took effect on July 1, 2007. The BSP
through its Circular 538 requires each bank and its financial affiliated subsidiaries to keep its
Capital Adequacy Ratio (CAR) - the ratio of qualified capital to risk-weighted exposures - to be
no less than 10%.
As of December 31, 2013 and 2012, the Bank’s CAR under BSP Circular No. 538 is 38.33%
and 21.88%, respectively.
The CAR of the Bank as of December 31, 2013 and December 31, 2012 are shown in the table
below.
2013
2012
P16,588
172
P14,606
140
Gross qualifying capital
Less: Required deductions
16,760
-
14,746
-
Total qualifying capital
16,760
14,746
43,726
38.33%
67,383
21.88%
Tier 1 capital
Tier 2 capital
Risk weighted assets
CAR (%)
The regulatory qualifying capital of the Bank consists of Tier 1 (core) capital, which comprises
paid-up common stock, hybrid tier 1 capital securities, surplus including current year profit and
surplus reserves less required deductions such as unsecured credit accommodations to DOSRI,
deferred income tax, and goodwill, if any. Certain adjustments were made to the accounts and
reserves of the Bank which were determined based on PFRS in order to conform to BSP’s
requirements and guidelines in computing capital adequacy. The other component of
regulatory capital is Tier 2 (supplementary) capital, which includes unsecured subordinated
debt and general loan loss provision.
The Bank has fully complied with the CAR requirement of the BSP for each of the period
presented.
As part of the reforms of the Philippine Stock Exchange (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 Bank has fully complied with this requirement.
- 39 -
PHILTRUST BANK
7. Cash and Cash Equivalents
Due from BSP
2013
2012
P1,008,992
26,417,998
916,087
P1,194,631
22,325,130
1,258,337
P28,343,077
P24,778,098
Due from other banks represents balances of funds on deposit with domestic and other foreign
banks, including Head office and other branches.
8. Available-for-sale Investments
This account consists of:
Debt securities
Others
Equity securities
Listed
Unlisted
2013
2012
P33,819,070
4,149,419
P37,260,146
1,014,774
37,968,489
38,274,920
563,670
168
659,662
168
563,838
659,830
P38,532,327
P38,934,750
Unlisted equity securities
This account comprise of stocks of private corporations that are carried at cost since fair value
cannot be reliably estimated due to lack of reliable estimates of future cash flows and discount
rates necessary to calculate the fair value. There is currently no market for these investments and
the Bank intends to hold them for the long term.
The movements in available-for-sale investments are summarized as follows:
Balance at beginning of year
Additions
Disposals
Amortization of discount - net
Foreign exchange gain (loss)
Unrealized fair value gain (loss)
- 40 -
2013
2012
P38,934,750
10,491,171
(8,848,094)
25,495
1,834,558
(3,905,553)
P32,237,285
15,617,721
(10,371,259)
176,743
(1,629,276)
2,903,536
P38,532,327
P38,934,750
PHILTRUST BANK
Net unrealized gain
AFS investments include net unrealized fair value gain of P2.3 billion and P6.2 billion as of
December 31, 2013 and 2012, respectively. The net unrealized fair value gains are recognized
under other comprehensive income. No impairment loss on permanent decline in value was
charged to operations on AFS investments in 2013, 2012 and 2011.
The movement in net unrealized gains (loss) on AFS investments is as follow:
2013
2012
Beginning balance
Fair value gain (loss) for the year
P6,201,798
(3,905,553)
P3,298,262
2,903,536
Ending balance
P2,296,245
P6,201,798
The range of average interest rates (%) of AFS debt securities of the Bank for the years ended
December 31 follows:
Peso-denominated
Foreign-denominated
2013
2012
3.25% - 6.25%
4.00% - 7.75%
3.88% - 6.25%
2.75% - 7.75%
9. Held-to-maturity Investments
The movement in held-to-maturity investments is summarized as follows:
Beginning balance
Maturities
Amortization of discount
Foreign exchange gain/(loss)
2013
2012
P6,861,786
(825,605)
25,724
109,956
P7,028,742
(100,000)
27,037
(93,993)
P6,171,861
P6,861,786
The range of average interest rates (%) of HTM investments of the Bank for the years ended
Peso-denominated
Foreign-denominated
- 41 -
2013
2012
5.00% - 9.00%
8.25% - 8.88%
5.00% - 9.00%
8.25% - 8.88%
PHILTRUST BANK
10. Loans and Receivables
Note
5
Loans receivable from customers
Other receivables
Accrued interest receivables
Sales contract receivables
Accounts receivable
11
2013
2012
P42,849,660
P36,243,942
911,341
32,044
26,120
914,629
42,750
30,048
43,819,165
(2,121,305)
37,231,369
(2,053,177)
P41,697,860
P35,178,192
2013
2012
P21,649,979
P26,918,812
18,150,000
2,442,669
5,500,000
3,479,573
607,012
345,557
P42,849,660
P36,243,942
Receivable from customers consists of:
Repurchase agreements and certificate of
assignments
Agrarian reform
Customers’ liabilities under letter of
credit/trust receipts
Interest income on loans and receivables consists of:
Receivables from customers
Items in litigation
2013
2012
2011
P2,048,387
16,415
2,333
P2,506,197
15,312
2,690
P2,564,137
17,771
2,785
P2,067,135
P2,524,199
P2,584,693
BSP Reporting
Past due loans amounted to P1.14 billion (2.68% of total loan portfolio) and P1.18 billion
(3.27 % of total loan portfolio) as of December 31, 2013, and 2012, respectively.
BSP Circular 351 issued on September 19, 2002, authorizes banks that have no unbooked useful
valuation reserves and capital adjustments required by the said regulatory body, to exclude from
non-performing classification, loans classified as loss in the latest examination of the BSP which
are fully covered by allowance for probable losses, provided that, interest on said loans shall not
be accrued.
- 42 -
PHILTRUST BANK
Non-performing accounts (over 30 days past due), net of accounts in the “loss” category and
covered with 100% reserves (excluded under BSP Circular 351), are as follows:
Non-performing accounts (NPL 30)
Loss category loans with 100% reserves
Net NPL 30
2013
2012
P1,148,806
(253,621)
P1,184,881
(223,924)
P895,185
P960,957
Non-performing loans (NPLs) represented approximately 2.68% and 3.27% of the loan
receivable portfolio as of December 31, 2013 and 2012, respectively.
Under banking regulations, NPLs shall, as a general rule, refer to loan accounts whose principal
and/or interest is unpaid for thirty (30) days or more after due date or after they have become
past due in accordance with existing rules and regulations. This shall apply to loans payable in
lump sum and loans payable in quarterly, semi-annual, or annual installments, in which case,
the total outstanding balance thereof shall be considered non-performing.
In the case of receivables that are payable in monthly installments, the total outstanding balance
thereof shall be considered non-performing when three (3) or more installments are in arrears.
In the case of receivables that are payable in daily, weekly, or semi-monthly installments, the
total outstanding balance thereof shall be considered non-performing at the same time that they
become past due in accordance with existing BSP regulations, i.e., the entire outstanding
balance of the receivable shall be considered as past due when the total amount of arrearages
reaches ten percent (10%) of the total receivable balance. Restructured receivables which do
not meet the requirements to be treated as performing receivables shall also be considered as
NPLs.
As at December 31, 2013 and 2012, there were no outstanding loans to Bank Directors,
Officers, Stockholders and Related Interests (DOSRI).
The range of average interest rates (%) of loans and receivables of the Bank for the years ended
Commercial loans
Peso
Foreign
Real estate mortgages
2013
2012
1.85% - 9.00%
1.85% - 9.00%
3.08% - 9.00%
3.08% - 9.00%
11. Allowance for Credit and Impairment Losses
Allowance for credit and impairment losses relate to the following:
Note
5
Loans receivable from customers
Other receivables
Accrued interest receivable
Accounts receivable
10
- 43 -
2013
2012
P1,965,620
P1,897,491
131,393
24,292
131,393
24,293
P2,121,305
P2,053,177
PHILTRUST BANK
With the foregoing level of allowance for credit and impairment losses, management believes
that the Bank has sufficient allowance to take care of any losses that the Bank may incur from
the non-collection or non-realization of its receivables and other risk assets.
The changes in the allowance for credit and impairment losses on loans and receivables were as
follows:
2013
2012
Provision for the year
Reclassifications
P2,053,177
67,836
292
P1,953,295
110,768
(10,886)
Balance at end of year
P2,121,305
P2,053,177
12. Bank’s Premises, Furniture, Fixtures and Equipment
For the Years Ended December 31, 2013 and 2012
Furniture,
Building and
Fixtures and
Land Improvements
Equipment
Cost
January 1, 2012
Additions
Total
P1,700,663
72,959
P758,646
74,477
P536,537
15,893
P2,995,846
163,329
December 31, 2012
Additions
1,773,622
61,308
833,123
20,899
552,430
29,280
3,159,175
111,487
December 31, 2013
1,834,930
854,022
581,710
3,270,662
Accumulated depreciation and
amortization:
January 1, 2012
-
248,989
37,046
432,612
22,774
681,601
59,820
December 31, 2012
-
286,035
39,423
455,386
36,084
741,421
75,507
December 31, 2013
-
325,458
491,470
816,928
Carrying value:
December 31, 2013
P1,834,930
P528,564
P90,240
P2,453,734
December 31, 2012
P1,773,622
P547,088
P97,044
P2,417,754
- 44 -
PHILTRUST BANK
13. Investment Properties
For the Years Ended December 31, 2013 and 2012
Building and
Land
Improvements
Total
Cost:
January 1, 2012
Additions
Disposals
P1,844,372
65,247
(207,862)
P1,431,759
12,976
(17,131)
P3,276,131
78,223
(224,993)
December 31, 2012
Additions
Disposals
1,701,757
72,430
(60,670)
1,427,604
9,713
(1,829)
3,129,361
82,143
(62,499)
December 31, 2013
1,713,517
1,435,488
3,149,005
Accumulated depreciation and amortization:
January 1, 2012
Disposals
-
265,194
21,661
(16,368)
265,194
21,661
(16,368)
December 31, 2012
Disposals
-
270,487
23,466
(1,829)
270,487
23,466
(1,829)
December 31, 2013
-
292,124
292,124
P14,200
9,855
P1,171
1,031
P15,371
10,886
December 31, 2012
24,055
878
2,202
(1,171)
26,257
(293)
December 31, 2013
24,933
1,031
25,964
December 31, 2013
P1,688,584
P1,142,333
P2,830,917
December 31, 2012
P1,677,702
P1,154,915
P2,832,617
Accumulated impairment losses:
January 1, 2012
Carrying Value:
The Bank’s investment properties consist entirely of real estate properties acquired in settlement
of loans and receivables. The difference between the fair value of the investment property upon
foreclosure and the carrying value of the loan is recognized under ‘Gain on asset foreclosure
and dacion transactions’ in the statement of income.
The aggregate fair value of the investment properties amounted to P3.4 billion and P4.2 billion
in 2013 and 2012, respectively. Fair value has been determined based on valuations made by
independent and/or in-house appraisers. Valuations were derived on the basis of recent sales of
similar properties in the same area as the investment properties and taking into account the
economic conditions prevailing at the time the valuations were made.
Direct operating expenses from investment properties of the Bank not generating rent income
amounted to P69.12 million and P50.93 million in 2013 and 2012, respectively.
- 45 -
PHILTRUST BANK
14. Other Assets
Inter-office float items
Prepaid expenses
Other investments
Documentary stamps
Software cost
Returned checks and other cash items
Miscellaneous
2013
2012
P22,191
54,177
21,023
20,756
14,171
1,437
19,611
P 51,154
20,723
11,329
19,400
3,862
78,660
P153,366
P185,128
Inter-office float items represent net due from/to head office accounts which arise from timing
differences on recognition and are subsequently closed after the reporting date.
Prepaid expenses consist of advance payment for taxes and insurance premium coverage.
Other investments represent required minimum amount of investment infused to the various
banking facilities to avail of its services and support the viability and sustainability of the
banking network system.
Miscellaneous assets consist mainly of utility deposits, security deposits and bid amount on
auctioned properties.
Movements in software cost are as follows:
Cost:
Beginning balance
Additions
Accumulated amortization:
Beginning balance
Amortization
2013
2012
P29,733
78
P22,246
7,487
29,811
29,733
10,333
5,307
5,785
4,548
15,640
10,333
P14,171
P19,400
15. Deposit Liabilities
Non-FCDU deposit liabilities are subject to liquidity reserves equivalent to 11.00% starting
July 15, 2005 (under BSP Circular No. 491), and statutory reserve equivalent to 10.00% starting
August 5, 2011 (under BSP Circular No. 732). Prior to August 5, 2011, statutory reserve
equivalent was 9.00%. In accordance with BSP Circular No. 753 issued in 2012, reserve
requirement effective on the April 6, 2012 reserve week shall be 18.00% for deposits and
deposit substitutes and 3.00% for long-term negotiable certificates of deposits.
As of December 31, 2013 and 2012, the Bank is in compliance with such regulations.
- 46 -
PHILTRUST BANK
Available reserves of the Bank per latest report submitted to the BSP are as follows:
Due from BSP
2013
2012
P1,008,992
26,417,998
P1,194,631
22,325,130
P27,426,990
P23,519,761
Interest expense related to the deposit liabilities account consists of:
Savings
Time
2013
2012
2011
P1,955,299
1,016,146
P2,138,080
953,356
P2,158,065
951,905
P2,971,445
P3,091,436
P3,109,970
2013
2012
P66,363
15,401
173,192
P71,165
11,253
189,489
P254,956
P271,907
2013
2012
P41,619
20,564
20,494
11,659
17,928
311
109
56,433
P33,973
9,266
23,156
8,784
12,546
311
45,671
77,142
20,920
48,980
P169,117
P280,749
16. Accrued Taxes, Interest and Other Expenses
Accrued interest payable
Accrued income and other taxes payable
Other
Others represent accrued profit sharing.
17. Deferred Credits and Other Liabilities
Accounts payable
Outstanding acceptances
Deferred revenue
Due to the Treasure of the Philippines
Sundry credits
Marginal deposits
Cash letters of credit
Inter-office float items
Due to BSP
Others
Inter-office float items represent net due from/to head office accounts which arise from timing
differences on recognition and are subsequently closed after the reporting date.
Accounts payable comprise of accrued payroll and tellers’ honorarium.
- 47 -
PHILTRUST BANK
Deferred revenue consists of unearned rental income and advance deposits.
Others consist mainly of withholding taxes payable, deposits, dormant deposit accounts and
other miscellaneous liabilities.
18. Equity
The Bank’s share capital consists of:
Authorized – 2.2 billion shares at P10 par value
Issued and fully paid:
Balance at beginning of year (1.0 billion shares)
Issuances
2013
2012
P22,000,000
P22,000,000
10,000,000
-
10,000,000
-
P10,000,000
P10,000,000
2013
2012
P320
33,342
38,658
P320
33,342
38,658
P72,320
P72,320
Reserve
The Bank’s reserves consist of:
Reserve for trust business
Reserve for self-insurance
Reserve for contingencies
In compliance with existing BSP regulations, 10.00% of the Bank’s income from trust business
is appropriated to surplus reserves. This yearly appropriation is required until the surplus
reserve for trust business equals 20.00% of the Bank’s regulatory net worth.
Reserve for self-insurance represents the amount set aside to cover losses due to fire,
defalcation by and other unlawful acts of the Bank’s personnel or third parties.
19. Earnings Per Share
Basic EPS amounts are calculated by dividing the net income for the year by the weighted
average number of common shares outstanding during the year (adjusted for stock dividends).
The following reflects the income and share data used in the basic earnings per share
computations (in hundreds):
Net income
Weighted average of common
shares outstanding
2013
2012
2011
P1,357,021,713
P1,711,030,778
P2,021,634,501
1,000,000,000
1,000,000,000
830,850,000
P1.36
P1.71
P2.43
As of December 31, 2013, 2012 and 2011, there were no outstanding dilutive potential
common shares.
- 48 -
PHILTRUST BANK
20. Other Operating Income
Gain on sale of investments
Rental income
Dividend income
Gain on sale of assets
Recovery from charged-off
assets
Loss from trust operations
Miscellaneous
2013
2012
2011
P1,049,201
32,029
19,434
19,661
P979,927
35,844
12,509
29,474
P1,193,808
37,571
482
18,650
(3,712)
38,409
69
(3,558)
7,306
1,862
(3,101)
16,720
P1,155,022
P1,061,571
P1,265,992
2013
2012
2011
P644,795
39,105
12,278
11,959
P609,144
36,452
11,856
12,065
P610,545
34,671
11,505
10,724
P708,137
P669,517
P667,445
21. Compensation and Employee Benefits
Salaries and other employee benefits
Retirement
SSS, HDMF and Philhealth premiums
Dental, medical and hospitalization
Retirement benefits
The Bank has a funded, defined contribution (DC) plan for qualifying employees. Under the
plan, the employees are entitled to retirement benefits in relation to the proportion of the fair
value of the total contributions on their attainment of the retirement age. The assets of the fund
are being administered by trustees and are held separately from those of the Bank.
Under the R.A. 7641 – “The Retirement Pay Law”, the Bank also provides for its qualified
employees a defined benefit (DB) minimum guarantee, which 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.
As of December 31, 2013 and 2012, the present value of the DB minimum guarantee under
the Retirement Pay Law amounted to P8.1 million. The Bank has no unallocated DC plan
assets as of December 31, 2013 and 2012.
The Bank is exposed to the risk of changes in government securities yields, wherein a decrease
in government securities yields will increase the projected DB minimum guarantee, although
this will be partially offset by an increase in the value of any unallocated plan assets’ securities
holdings.
- 49 -
PHILTRUST BANK
Following are the details of the present value of the DB minimum guarantee obligation:
Present value of obligation, beginning
Interest expense
Current service cost
Remeasurement loss (gain) on:
Experience adjustments
Changes in financial assumptions
2013
2012
P8,116
438
117
P14,136
877
218
(655)
47
(7,164)
49
P8,063
P8,116
Following are the details of the total retirement expense recognized for the DB minimum
guarantee obligation and DC plan contributions:
Interest expense
Current service cost
Additional retirement expense recognized
Retirement expense on DC plan (contribution
during the year)
2013
2012
P438
117
P877
218
555
1,095
38,550
35,357
P39,105
P36,452
The Bank’s assumptions are based on actual historical experience and external data regarding
salary and discount rate trends. The Bank considers that it is impracticable to disclose with
sufficient reliability the possible effects of sensitivities surrounding the estimation of DB
obligation.
22. Occupancy and Equipment - Related Expenses
Depreciation and amortization
Rentals
- 50 -
2013
2012
2011
P104,280
68,308
P86,029
62,675
P115,212
59,200
P172,588
P148,704
P174,412
PHILTRUST BANK
23. Other Operating Expenses
Insurance
Taxes and licenses
Security, messengerial and janitorial
Communication, light and water
Supervision and examination fees
Litigation on assets acquired
Promotion and business development
Information technology
Repairs and maintenance
Stationary and office supplies
Documentary stamps
Transportation
Professional fees
Donation and contribution
Magazines and periodicals
Miscellaneous
2013
2012
2011
P189,924
170,726
114,178
54,272
31,214
26,519
14,419
13,977
10,562
7,237
5,240
4,725
3,455
1,312
470
21,381
P181,631
203,886
101,414
55,709
28,791
36,667
13,716
7,225
7,907
6,857
9,381
5,367
4,090
1,002
486
17,166
P170,734
238,912
100,757
53,441
23,586
73,329
27,663
10,444
8,559
6,563
25,146
5,389
3,173
118
598
20,243
P669,611
P681,295
P768,655
24. Leases
Operating lease commitments - Bank as a lessor
Included in Bank’s premises are properties of which a portion is being leased out to earn rentals.
The Bank determines that a significant portion of these leased properties is being used for
administrative purposes and or for Bank operations. These non-cancellable leases have
escalation clauses based on prevailing market condition.
Rent income from leased properties which is included in ‘Miscellaneous income’ account in the
statement of income amounted to P32.0 million, P35.8 million and P37.6 million for the years
ended December 31, 2013, 2012 and 2011, respectively (see Note 20).
Future minimum rental receivables under operating leases as of December 31 are as follows:
Within one year
After one year but not more than five years
After more than five years
2013
2012
P25,958
124,493
265,550
P29,131
126,728
290,150
P416,001
P446,009
Operating lease commitments - Bank as a lessee
The Bank leases a number of branch and office premises under non-cancellable operating
leases. The leases typically run for a period up to 5 years, with the option to renew the lease
after that date. Lease payments are increased every three to five years to reflect market rentals.
Rental expense which is included in “Occupancy and equipment-related expenses” amounted
to P68.31 million, P62.68 and P59.20 million for the years ended December 31, 2013, 2012
and 2011, respectively (see Note 22).
- 51 -
PHILTRUST BANK
Future minimum rental payables under operating leases as of December 31 are as follows:
2013
2012
P61,076
108,420
84,423
P47,412
137,298
71,793
P253,919
P256,503
Within one year
After one year but not more than five years
After more than five years
25. Related Party Transactions
In the ordinary course of business, the Company has transactions with related parties
summarized as follows:
The following transactions were carried out with related parties:
Related Party
Transactions
2013
Amount
Terms and conditions
Centro Escolar University - Under common control
Rent Income
P 24 million
Lease transaction – lessor. Lease term is for
one (1) year period and renewable annually
upon mutual agreement of the parties.
Rental
expense
0.53 million
Lease transaction – lessee. Lease term is for
Investment in
shares of stock
2.2 million
Savings and
current
deposits
P6.5 million
206,498 common
unimpaired.
shares;
fully
paid;
Earn interest at the prevailing bank deposit
rates; unimpaired; and unrestricted as to
withdrawals.
Euro-Med Laboratories, Inc. - Under common control
Savings and
current
deposits
P127.81million
withdrawals.
Investment in 547.67 million
shares of stock
365,111,291 common shares; fully paid;
unimpaired.
Manila Bulletin Publishing Corp. - Under common
control
Advertising
services
P2.10 million
Advertising rates charged are the same as
charged to regular customers; Unsecured
and will be settled in cash.
Savings and
current
deposits
17.83 million
withdrawals.
Rental income
1.20 million
- 52 -
PHILTRUST BANK
Related Party
Transactions
2013
Amount
CafeFrance Corporation - Under common control
Savings and
current
deposits
0.033 million
withdrawals.
Rental income
0.60 million
Cocusphil Development Corporation - Under common control
Related Party
Savings and
current
deposits
2.20 million
withdrawals.
Rental expense
1.88 million
Lease transaction – lessee. Lease term is for
Transactions
2012
Amount
Centro Escolar University - Under common control
Rental
expense
P0.51 million
Lease transaction – lessee. Lease term is
for one (1) year period and renewable
annually upon mutual agreement of the
parties.
Rental income
23.70 million
Lease transaction – lessor. Lease term is
for one (1) year period and renewable
parties.
Investment in
shares of stock
2.46 million
206,498 common shares; fully paid;
unimpaired.
Euro-Med Laboratories, Inc. - Under common control
Savings and
current
deposits
P15.90 million
withdrawals.
Investment in
shares of stock
657.20 million
365,111,291 common shares; fully paid;
unimpaired.
Forward
- 53 -
PHILTRUST BANK
Related Party
2012
Amount
Transactions
Manila Bulletin Publishing Corp. -Under common control
Advertising
services
10.50 million
Savings and
current
deposits
38.30 million
Rental income
1.10 million
Advertising rates charged are the same as
charged to regular customers; Unsecured
and will be settled in cash.
withdrawals.
one (1) year period and renewable
parties.
CafeFrance Corporation - Under common control
Savings and
current
deposits
32.70 million
withdrawals.
Rental income
0.25 million
parties.
Cocusphil Development Corporation- under common control
Rental income
0.63 million
parties.
Compensation of Key Management Personnel
Compensation of key management personnel included under compensation and employee
benefits in the statements of income follows:
Short-term employee benefits
Post-employment pension benefits
2013
2012
2011
P142,493
36,823
P138,391
5,350
P123,188
24,281
P179,316
P143,741
P147,469
Regulatory Reporting
In the ordinary course of business, the Bank has loans and other transactions with its directors,
officers, stockholders and related interests (DOSRI). Under the Bank’s policy, these loans and
other transactions are made substantially on the same terms as with other individuals and
businesses of comparable risks. The amount of individual loans to DOSRI, of which 70% must
be secured, should not exceed the amount of their respective deposits and book value of their
respective investments in the Bank. In the aggregate, loans to DOSRI generally should not
exceed the Bank’s total capital funds or 15.00% of the Bank’s total loan portfolio, whichever is
lower. As of December 31, 2013 and 2012, the Bank has complied with all these regulatory
requirements.
BSP Circular No. 423 dated March 15, 2004 amended the definition of DOSRI accounts.
In January 31, 2007, BSP Circular No. 560 was issued providing the rules and regulations that
govern loans, other credit accommodations and guarantees granted to subsidiaries and affiliates
of banks and quasi-banks. Under the said circular, the total outstanding exposures of the bank
- 54 -
PHILTRUST BANK
shall not exceed 10.00% of the bank’s net worth, the unsecured portion of which shall not
exceed 5.00% of such net worth. Further, the total outstanding exposures to subsidiaries and
affiliates shall not exceed 20.00% of the net worth of the lending bank. BSP Circular No. 560 is
effective February 15, 2007.
As at December 31, 2013 and 2012, there were no outstanding loans and advances to Bank
Directors, Officers, Stockholders and Related Interests (DOSRI).
26. Income Taxes
Income taxes include corporate income tax and FCDU final taxes, as discussed below, and final
tax paid at the rate of 20.00% on gross interest income from government securities and other
deposit substitutes. These income taxes, as well as the deferred tax benefits and provisions, are
presented as ‘Provision for income tax’ in the statement of income.
Effective in May 2004, RA No. 9294 restored the tax exemption of FCDUs and offshore banking
units (OBUs). Under such law, the income derived by the FCDU from foreign currency
transactions with nonresidents, OBUs, local commercial banks including branches of foreign
banks is tax-exempt while interest income on foreign currency loans from residents other than
OBUs or other depository banks under the expanded system is subject to 10.00% gross income
tax.
FCDU offshore income is tax-exempt while interest income on deposit placements with other
FCDU and offshore banking units (OBUs) is taxed at 7.50%. All other income of the FCDU is
subject to the 30.00% corporate tax.
The components of income tax expense (benefit) are as follows:
Current taxes
Deferred income tax
2013
2012
P303,079
138,726
P298,042
(120,714)
P441,805
P177,328
The reconciliation of the statutory tax rate on income before income tax to the Bank’s effective
tax rate is as follows:
Income before income tax
Statutory income tax
Tax effects of:
FCDU income
Interest income subjected
to final tax
Non-taxable income
Non-deductible expenses
Unrecognized DTA and
expiration of NOLCO
2013
2012
2011
P1,798,827
P1,888,358
P2,249,977
P539,648
P566,508
P674,993
(321,274)
(364,393)
(393,706)
(559,417)
(16,919)
499,074
(493,550)
(17,093)
386,720
(494,695)
(18,304)
450,721
300,693
99,136
9,334
P441,805
P177,328
P228,343
- 55 -
PHILTRUST BANK
Deferred tax assets arise from the following:
MCIT
NOLCO
Retirement benefit obligation
2013
2012
P644,181
15,290
108,468
2,419
P623,830
15,048
267,954
2,435
P770,358
P909,267
The component of deferred tax assets not recognized by the Bank as at December 31, 2013 is
as follows:
Deductible Temporary
Differences/ Unused
Tax Credits
Deferred Tax
Asset
P470,689
P141,207
NOLCO
Details of NOLCO are as follows:
Year of
incurrence
Year of
expiry
2010
2011
2012
2013
2013
2014
2015
2016
Amount
Applied
Expired
Balance
P531,614
31,114
330,452
470,689
P -
P531,614
-
P 31,114
330,452
470,689
P1,363,869
P -
P531,614
P832,255
Expired
Balance
Details of MCIT are as follows:
Year of
incurrence
Year of
expiry
Amount
2011
2012
2013
2014
2015
2016
P11,787
3,261
242
P -
P -
P11,787
3,261
242
P15,290
P -
P -
P15,290
Applied
27. Restatement
During the year, the Bank adopted the revised PAS 19 and PIC Q&A No. 2013-03, which are
effective beginning January 1, 2013. As discussed in Note 3, the Q&A provided a guidance in
accounting for post-employment benefits for an entity which has opted to provide a defined
contribution plan as its only post-employment benefit plan despite the minimum retirement
benefits required to be provided to employees under RA 7641. Such benefits due under RA
7641 are accounted for as defined benefit plan under the revised PAS 19. Further, the Revised
PAS 19 eliminated the corridor approach and requires the recognition of all of the Bank’s
actuarial gains/losses and past service cost on the projected DB minimum guarantee under RA
7641, immediately in other comprehensive income and profit or loss, respectively.
- 56 -
PHILTRUST BANK
Also, the Bank reversed the deferred tax effect recognized in the previous years on its
unrealized gain on fair value movements of AFS investments, to reflect the actual tax
consequence of these investments upon derecognition.
In effecting the restatements, the Bank adjusted the amounts reported previously in the
financial statements as at the beginning of the earliest period presented.
The effects of such restatement on remeasurements of retirement benefit obligation on DB
minimum guarantee, deferred tax liabilities, unrealized gain (loss) on AFS investments, surplus,
net income (loss) and total equity are summarized in the tables below:
2012
Remeasurements
of retirement
benefit obligation
As previously reported
Effect of restatement
Revised PAS 19
Deferred tax effect
Deferred tax on
unrealized gain
on AFS
investment
P -
Unrealized gain
(losses) on AFS
investments
Surplus
Net income
Total equity
P4,341,258
P4,671,564
P1,711,796
P20,796,938
(15,381)
4,614
(1,094)
328
(8,115)
2,434
8,360
(2,508)
-
As restated
-
1,860,540
P5,852
P6,201,798
Remeasurements
of retirement
benefit obligation
Unrealized gain
(losses) on AFS
investments
P2,308,784
-
-
P4,660,797
1,860,540
P1,711,030
P22,651,797
Surplus
Net income
Total equity
P6,031,927
P2,022,637
P17,052,668
(13,948)
4,184
(1,433)
430
(14,137)
4,241
2011
Revised PAS 19
Deferred tax effect
Deferred tax on
unrealized gain
on AFS
investment
As restated
P 1,244
(373)
-
-
989,478
P871
P3,298,262
989,478
P6,022,163
P2,021,634
P18,032,250
The effects of this restatement on total assets and total liabilities are summarized in the table
below:
2012
2011
Total assets
Total liabilities
Total assets
Total liabilities
Revised PAS 19
Deferred tax effect
Deferred tax on unrealized
gain on AFS investment
P111,188,324
P90,391,387
P105,400,177
P88,347,509
906,833
(953,708)
771,205
(218,272)
As restated
P112,097,592
P89,445,795
P106,175,623
P88,143,373
8,116
2,435
- 57 -
14,136
4,241
PHILTRUST BANK
28. Trust Operations
Securities and other properties (other than deposits) held by the Bank in fiduciary or agency
capacities for clients and beneficiaries are not included in the accompanying statements of
financial position since these are not assets of the Bank (see Note 29).
In compliance with the requirements of current banking regulations relative to the Bank’s trust
functions: (a) government securities included under held to maturity investments in the
statement of financial position with a total face value of P10 million as of December 31, 2013
and 2012 are deposited with the BSP as security for the Bank’s faithful compliance with its
fiduciary obligations; and (b) a certain percentage of the Bank’s trust fee income is transferred to
surplus reserve. This yearly transfer is required until the surplus reserve for trust function equals
20.00% of the Bank’s authorized share capital.
29. Commitments and Contingent Assets and Liabilities
In the normal course of the Bank’s operations, there are various outstanding commitments and
contingent liabilities which are not reflected in the accompanying financial statements.
Management does not anticipate any material losses as a result of these transactions.
The following is a summary of contingencies and commitments of the Bank with the equivalent
peso contractual amounts:
Note
28
Trust department accounts
Unused commercial letters of credit
Late deposits/payments received
Inward bills for collection
Outward bills for collection
Outstanding guarantees issued
Items held as collateral
Others
2013
2012
P775,028
336,653
61,342
13,078
1,646
6,204
3
1,293
P746,836
220,729
31,729
12,054
5,053
483
2
-
P1,195,247
P1,016,886
30. Financial Performance Ratios
The key financial performance indicators of the Bank are presented below:
Return on average equity
Return on average assets
Net margin
Capital to risk assets
- 58 -
2013
2012
6.35%
1.16%
21.24%
38.33%
8.41%
1.57%
25.26%
21.88%
PHILTRUST BANK
31. Supplementary Information Required by the Bureau of Internal Revenue (BIR)
I.
Revenue Regulation No. 15-2010
On December 28, 2010, Revenue Regulation (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 the Financial Statements information on
taxes, duties and license fees paid or accrued during the year in addition to what is
mandated by PFRS.
Below is the additional information required by RR No. 15-2010. This information is
presented for purposes of filing with the BIR and is not a required part of the basic financial
statements.
A. Creditable Withholding Taxes
2013
2012
Add: Tax withheld for income payments
Less: Tax credit used against current income tax
P3,765
5,946
(241)
P2,619
4,407
(3,261)
P9,470
P3,765
2013
2012
P132,347
12,140
443,395
P132,222
12,682
427,993
P587,882
P572,897
2013
2012
P137,733
5,299
12,603
15,091
P172,042
7,461
10,826
13,557
P170,726
P203,886
B. Withholding Taxes
Withholding tax on compensation and benefits
Expanded withholding taxes
Final withholding tax
C. All Other Local and National Taxes
Gross receipts tax
Real property taxes
Business permits and licenses
Other taxes
The above local and national taxes are lodged under Taxes and licenses account in
operating expenses.
- 59 -
PHILTRUST BANK
II. Revenue Regulation No. 19-2011
RR No. 19-2011 prescribes the new BIR forms that should be used for income tax filing
covering and starting with the calendar year 2011 and modifies Revenue Memorandum
Circular No. 57-2011. The Guidelines and Instructions Section of the new BIR Form 1702
(version November 2011) requires an attachment to the income tax returns is an Account
Information Form and/or Financial Statements that include in the Notes to Financial
Statements schedules of sales/receipts/fees, cost of sales/services, non-operating and
taxable other income, itemized deductions (if the taxpayer did not avail of the Optional
Standard Deduction or OSD), taxes and licenses and other information prescribed to be
disclosed in the Notes to the Financial statements.
The Bank’s schedules for the year ended December 31, 2013 are as follows:
A. Fees
Interest income
P2,067,304
B. Cost of Services
Interest expense
Compensation
Insurance
Supervision and examination fees
Fines, Penalties and other charges
P1,455,322
693,899
118,786
18,621
2,627
Total cost of services
P2,289,255
C. Non-operating and Taxable Other Income
Foreign exchange gain
Service charges, commissions and fees
Other income
P96,519
47,016
90,489
234,024
D. Itemized Deductions
Nature of Expense
Taxes and licenses
Security, messengerial and janitorial
Depreciation and amortization
Rent
Communication light and water
Promotion and business development
Stationery and office supplies
Repairs and maintenance
Insurance
Documentary stamps
Forward
- 60 -
P167,984
74,458
68,004
44,545
35,392
9,403
7,110
6,888
5,068
3,417
PHILTRUST BANK
Nature of Expense
Management and other professional fees
Transportation
Donation and other contributions
Miscellaneous
Total expenses
E.
P3,353
3,081
855
53,204
P482,762
Taxes and Licenses
Nature
Amount
Percentage taxes for year 2013
Business permits and licenses
Real property taxes for Head Office and Branches
Community tax for Head Office
Other taxes
P137,733
12,592
5,299
11
15,091
P170,726
- 61 -
PHILTRUST BANK (PHILIPPINE TRUST COMPANY)
Schedule I
RECONCILIATION OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION
As of December 31, 2013
(Amounts in thousands)
Unappropriated Retained Earnings, beginning
Net income during the period closed to Retained
Earnings
Less: Non-actual/unrealized income net of tax
Equity in net income of associate/joint venture
Unrealized foreign exchange gain - net (except
those attributable to Cash and Cash
Equivalents)
Unrealized actuarial gain
Fair value adjustments (M2M gains)
Fair value adjustment of Investment Property
resulting to gain adjustment due to deviation
from PFRS/GAAP-gain
Other unrealized gains or adjustments to the
retained earnings as a result of certain
transactions accounted for under the PFRS
Add: Non-actual losses
Depreciation on revaluation increment (after tax)
Adjustment due to deviation from PFRS/GAAPloss
Loss on fair value adjustment to investment
property (after tax)
P6,371,827
Net income actually earned/realized during the period
1,357,022
Add (Less):
Dividend declarations during the period
Appropriations of Retained Earnings during the
period
Reversals of appropriations
Treasury shares
TOTAL RETAINED EARNINGS, END AVAILABLE FOR
DIVIDEND
1,357,022
-
P7,728,849
Schedule II
Financial Soundness Indicators
Current Ratio(1)
Debt to Equity Ratio(2)
Asset to Equity Ratio(3)
Interest Coverage Ratio(4)
Profit Margin Ratio(5)
Return on Assets(6)
Return on Equity(7)
Solvency Ratio(8)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
2013
0.696
5.016
6.016
1.605
0.212
0.012
0.063
0.015
2012
0.672
3.949
4.949
1.611
0.260
0.016
0.084
0.021
Current ratio is measured as current assets divided by current liabilities.
Debt to equity ratio is measured as total liabilities divided by total equity.
Asset to equity ratio is measured as total assets divided by total equity.
Interest coverage ratio is measured by EBIT, or earnings before interest and taxes, divided by total financing
costs.
Profit margin ratio is derived by dividing net income with total revenues.
Return on assets is measured by dividing net income with average total assets.
Return on equity is measured by dividing net income with average total revenues.
Solvency ratio is measured by dividing net income after tax plus depreciation with total liabilities.
Schedule III
List of Philippine Financial Reporting Standards (PFRS)
Effective as of December 31, 2013
PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS
Adopted
Framework for the Preparation and Presentation of Financial Statements
Not
Adopted
Not
Applicable

Conceptual Framework Phase A: Objectives and qualitative characteristics
PFRS Practice Statement Management Commentary

Philippine Financial Reporting Standards
PFRS 1
(Revised)
PFRS 2
First-time Adoption of Philippine Financial Reporting Standards

Amendments to PFRS 1 and PAS 27: Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or Associate

Amendments to PFRS 1: Additional Exemptions for First-time
Adopters

Amendment to PFRS 1: Limited Exemption from Comparative
PFRS 7 Disclosures for First-time Adopters

Amendments to PFRS 1: Severe Hyperinflation and Removal of
Fixed Date for First-time Adopters

Amendments to PFRS 1: Government Loans

Share-based Payment

Amendments to PFRS 2: Vesting Conditions and Cancellations

Amendments to PFRS 2: Group Cash-settled Share-based
Payment Transactions

PFRS 3
(Revised)
Business Combinations
PFRS 4
Insurance Contracts

Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts

PFRS 5
Non-current Assets Held for Sale and Discontinued Operations

PFRS 6
Exploration for and Evaluation of Mineral Resources

PFRS 7
Financial Instruments: Disclosures

Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets

Financial Assets - Effective Date and Transition

Amendments to PFRS 7: Improving Disclosures about Financial
Instruments

Amendments to PFRS 7: Disclosures - Transfers of Financial
Assets

Amendments to PFRS 7: Disclosures – Offsetting Financial
Assets and Financial Liabilities

Amendments to PFRS 7: Mandatory Effective Date of PFRS 9
and Transition Disclosures


Adopted
Not
Adopted

PFRS 8
Operating Segments
PFRS 9*
Financial Instruments

Amendments to PFRS 9: Mandatory Effective Date of PFRS 9
and Transition Disclosures

PFRS 10
Not
Applicable

Consolidated Financial Statements
Amendments to PFRS 10, 12 and PAS 27 - Consolidation for
Investment Entities *
PFRS 11
Joint Arrangements

PFRS 12
Disclosure of Interests in Other Entities

PFRS 13
Fair Value Measurement

Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements

Amendment to PAS 1: Capital Disclosures

Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation
Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income



PAS 2
Inventories
PAS 7
Statement of Cash Flows

PAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors

PAS 10
Events after the Reporting Period

PAS 11
Construction Contracts
PAS 12
Income Taxes

Amendment to PAS 12 - Deferred Tax: Recovery of Underlying
Assets

PAS 16
Property, Plant and Equipment

PAS 17
Leases

PAS 18
Revenue

PAS 19
Employee Benefits

Amendments to PAS 19: Actuarial Gains and Losses, Group
Plans and Disclosures

PAS 19
(Amended)
Employee Benefits


PAS 20
Accounting for Government Grants and Disclosure of
Government Assistance
PAS 21
The Effects of Changes in Foreign Exchange Rates

Amendment: Net Investment in a Foreign Operation

PAS 23
(Revised)
Borrowing Costs


Adopted
Not
Adopted
Not
Applicable
PAS 24
(Revised)
Related Party Disclosures
PAS 26
Accounting and Reporting by Retirement Benefit Plans

PAS 27
Consolidated and Separate Financial Statements



PAS 27
(Amended)
Separate Financial Statements
PAS 28
Investments in Associates
PAS 28
(Amended)
Investments in Associates and Joint Ventures
PAS 29
Financial Reporting in Hyperinflationary Economies

PAS 31
Interests in Joint Ventures

PAS 32
Financial Instruments: Disclosure and Presentation




Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation

Amendment to PAS 32: Classification of Rights Issues

Amendments to PAS 32: Offsetting Financial Assets and

Amendments to PAS 32: Offsetting Financial Assets and
Financial Liabilities – clarifications*

PAS 33
Earnings per Share

PAS 34
Interim Financial Reporting

PAS 36
Impairment of Assets


Amendments to PAS 36: Recoverable Amount Disclosures*
PAS 37
Provisions, Contingent Liabilities and Contingent Assets

PAS 38
Intangible Assets

PAS 39
Financial Instruments: Recognition and Measurement

Amendments to PAS 39: Transition and Initial Recognition of
Financial Assets and Financial Liabilities

Amendments to PAS 39: Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option


Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts

Financial Assets

Financial Assets – Effective Date and Transition

Amendments to Philippine Interpretation IFRIC–9 and PAS 39:
Embedded Derivatives

Amendment to PAS 39: Eligible Hedged Items

Adopted
Investment Property
PAS 41
Agriculture
Not
Applicable

Amendment to PAS 39: Novation of Derivatives
PAS 40
Not
Adopted


Philippine Interpretations
IFRIC 1
Changes in Existing Decommissioning, Restoration and Similar
Liabilities

IFRIC 2
Members' Share in Co-operative Entities and Similar
Instruments

IFRIC 4
Determining Whether an Arrangement Contains a Lease
IFRIC 5
Rights to Interests arising from Decommissioning, Restoration
and Environmental Rehabilitation Funds

IFRIC 6
Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment

IFRIC 7
Applying the Restatement Approach under PAS 29 Financial
Reporting in Hyperinflationary Economies

IFRIC 8
Scope of PFRS 2

IFRIC 9
Reassessment of Embedded Derivatives

Amendments to Philippine Interpretation IFRIC–9 and PAS 39:
Embedded Derivatives



IFRIC 10
Interim Financial Reporting and Impairment
IFRIC 11
PFRS 2- Group and Treasury Share Transactions

IFRIC 12
Service Concession Arrangements

IFRIC 13
Customer Loyalty Programmes

IFRIC 14
The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction

Amendments to Philippine Interpretations IFRIC- 14,
Prepayments of a Minimum Funding Requirement

IFRIC 15*
Agreements for the Construction of Real Estate

IFRIC 16
Hedges of a Net Investment in a Foreign Operation

IFRIC 17
Distributions of Non-cash Assets to Owners

IFRIC 18
Transfers of Assets from Customers

IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine

IFRIC 21*
Levies

SIC-7
Introduction of the Euro

SIC-10
Government Assistance - No Specific Relation to Operating
Activities

SIC-12
Consolidation - Special Purpose Entities

Amendment to SIC - 12: Scope of SIC 12

Jointly Controlled Entities - Non-Monetary Contributions by
Venturers

SIC-13

Adopted
Not
Adopted
Not
Applicable

SIC-15
Operating Leases - Incentives
SIC-21
Income Taxes – Recovery of Revalued Non-Depreciable Assets

SIC-25
Income Taxes - Changes in the Tax Status of an Entity or its
Shareholders

SIC-27
Evaluating the Substance of Transactions Involving the Legal
Form of a Lease
SIC-29
Service Concession Arrangements: Disclosures.

Revenue - Barter Transactions Involving Advertising Services

Intangible Assets - Web Site Costs

SIC-31
SIC-32

* These are standards, interpretations and amendments to existing standards that have been issued but
not yet effective as at December 31, 2013.
Schedule A – Financial Assets
December 31, 2013
Name of issuing entity and
association of each issue
Number of shares or
principal amount of bonds
or notes
Amount shown on the
balance sheet
Valued based on market
quotation at balance sheet date
P1,008,992,095
P1,008,992,095
26,417,997,780
916,086,724
26,417,997,780
916,086,724
344,379,586
493,669
P28,343,076,599
P28,343,076,599
P344,873,255
365,111,291 shares
206,498 shares
34,296 shares
2,883 shares
P547,666,936
2,234,308
8,608,296
180,188
P547,666,936
2,234,308
8,608,296
180,188
1,868 shares
1 share
4,980,088
120,200
4,980,088
120,200
1 share
1 share
27,000
20,700
27,000
20,700
365,356,839 shares
563,837,716
563,837,716
Cash and cash equivalents
Due from Bangko Sentral ng
Pilipinas (BSP)
AFS investments – equity
securities
Euromed Lab. Phil., Inc.
Centro Escolar University
Manila Electric Company
San Miguel Corp.
Philippine Long Distance
Corporation
Casino Espanol De Manila
Philippine Columbian
Association
Manila Executive Center
Income received
and accrued
P -
P 19,433,788
19,433,788
AFS investments – debt securities
PIBD0718H511
PIBD0719D531
PIBD1022H562
PIBD1022I570
PIBD0517K719
PIBD0719K560
PIID1021J039
PIID1023H046
PIID1526J019
PIID1527C023
PIID2032C014
PIID2537J015
PIBD2032B183
PIBD2033C206
ISIN US718286BK23
ISIN:US718286BD89
ISIN:US718286BG11
ISIN:USY7083VAD11
ISIN:USY7083VAB54
ISIN:US718286BW60
ISIN:US718286BB24
ISIN:US718286BN61
PHY6972FTP53/ODTB1023L018
Forward
Number of shares or
or notes
Amount shown on the
balance sheet
Income received
and accrued
P150,000,000
500,000,000
500,000,000
50,000,000
149,710,000
50,000,000
500,000,000
1,000,000,000
500,000,000
1,500,000,000
1,400,000,000
800,000,000
1,200,000,000
1,400,000,000
4,586,313,400
3,551,840,000
3,818,228,000
942,036,764
1,243,144,000
3,551,840,000
599,373,000
1,437,385,250
1,389,657,400
P159,381,900
534,336,500
543,086,000
53,961,350
154,083,029
51,225,500
564,799,500
971,797,000
598,402,500
1,648,998,000
1,556,066,400
883,278,400
1,358,197,200
1,226,348,200
4,777,288,733
4,197,848,659
4,567,746,156
1,154,748,665
1,481,579,019
3,720,552,400
794,169,225
1,595,497,628
1,225,677,827
P159,381,900
534,336,500
543,086,000
53,961,350
154,083,029
51,225,500
564,799,500
971,797,000
598,402,500
1,648,998,000
1,556,066,400
883,278,400
1,358,197,200
1,226,348,200
4,777,288,733
4,197,848,659
4,567,746,156
1,154,748,665
1,481,579,019
3,720,552,400
794,169,225
1,595,497,628
1,225,677,827
P9,117,949
25,000,000
24,375,000
2,579,514
6,038,303
5,236,529
28,750,000
12,187,500
31,250,000
73,906,250
89,340,799
61,658,333
74,073,958
38,595,694
116,480,317
272,383,740
252,300,905
64,492,167
86,140,754
158,581,841
45,450,899
122,001,364
35,307,892
ISIN:XS0579034223
ISIN:XS0875298191
ISIN:XS0876086975
ISIN:XS0879849312
ISIN:XS0894336907
ISIN:XS0914313357
ISIN:XS0908792277
ISIN:XS0921226386
ISIN:XS0975540211
HTM investments
PIBD0715E477
NFAB1019J024
PIBD0717C493
PIBD1020B508
PIID0716I018
ISIN US718286AU14
ISIN US718286AW79
ISIN USY6972CAJ63
Number of shares or
or notes
P665,970,000
272,381,730
710,368,000
1,021,198,398
399,582,000
495,481,680
199,791,000
421,781,000
237,529,300
Amount shown on the
balance sheet
P687,480,831
252,007,577
652,401,971
1,010,475,815
368,174,855
423,389,096
172,919,111
349,529,915
233,039,996
P687,480,831
252,007,577
652,401,971
1,010,475,815
368,174,855
423,389,096
172,919,111
349,529,915
233,039,996
Income received
and accrued
45,270,216
6,553,935
21,257,551
37,821,350
9,278,357
11,784,196
4,708,797
12,356,643
1,416,577
35,243,610,922
37,968,488,958
37,968,488,958
1,785,697,330
P38,532,326,674
P38,532,326,674
P1,805,131,118
P700,000,000
500,000,000
2,000,000,000
500,000,000
1,000,000,000
P700,000,000
500,000,000
2,000,000,000
500,000,000
1,000,000,000
P747,624,243
500,000,000
2,317,823,644
582,538,315
951,028,994
532,776,000
177,592,000
764,711,152
532,776,000
177,592,000
761,493,288
534,161,218
194,179,093
912,147,462
P58,625,000
31,875,000
140,000,000
38,750,000
70,000,000
43,548,959
16,091,586
65,994,434
6,175,079,152
6,171,861,288
6,739,502,969
P464,884,979
Loans and discounts
Repurchase agreements and
certificate of assignments
Agrarian reform
Customer’s liabilities under letters
of credit/trust receipts
Accrued interest receivable
Other receivable
Number of shares or
or notes
Amount shown on the
balance sheet
Income received
and accrued
P19,704,623,301
P19,704,623,301
P19,704,623,301
P1,930,131,388
18,150,000,000
2,437,351,786
18,150,000,000
2,437,351,786
18,150,000,000
2,437,351,786
322,986,417
119,263,596
592,064,711
32,044,197
779,947,653
1,828,473
592,064,711
32,044,197
779,947,653
1,828,473
592,064,711
32,044,197
779,947,653
1,828,473
15,407,439
2,332,804
-
P41,697,860,121
P41,697,860,121
P2,390,121,644
P41,697,860,121
Schedule B – Amounts Receivable from Director, Officers, Employees,
Related Parties and Principal Stockholders (Other than Related Parties)
December 31, 2013
(Amounts in Thousands)
Name of Debtor
Centro Escolar
University
Balance at the beginning
of the period
P8,000
Additions
P -
Amounts
collected
Amounts
written-off
Current
Noncurrent
P4,000
P -
P4,000
P -
Balance at the
end of period
P4,000
Note: Receivables from Directors, Officers, Employees, Related Parties and Principal Stockholders are subject to usual terms in the normal
course of business.
This pertains to accrued two months rental income at P2 million per month.
Schedule C – Amounts Receivable from Related Parties which are eliminated
during the consolidation of financial statement
December 31, 2013
Name of
Debtor
Balance at the beginning of
the period
Additions
Amounts
collected (i)
Amounts
written-off (ii)
Current
Noncurrent
None to Report.
i. If collected was other than in cash, explain.
ii. Give reasons to write-off.
Note: There is receivable from related party amounting to P8 million but it is not eliminated since it is a stand-alone Company.
Balance at the end of
period
Schedule D – Intangible Assets – Other Assets
December 31, 2013
(Amounts in Thousands)
Description (i)
Software cost
Accumulated Depreciation
i.
Charged to
other accounts
Other charges
additions
(deduction) (iii)
Beginning
Balance
Additions at
Cost (ii)
Charged to cost
and expenses
Ending
Balance
P29,733
10,333
P78
-
P (5,307)
P -
P -
P29,811
(15,640)
P19,400
P78
(P5,307)
P -
P -
P14,171
The information required shall be grouped into (a) intangibles shown under the caption intangible assets and (b) deferrals shown under the
caption Other Assets in the related balance sheet. Show by major classifications.
ii. For each change representing other than an acquisition, clearly state the nature of the change and the other accounts affected. Describe cost
of additions representing other than cash expenditures.
iii. If provision for amortization of intangible assets is credited in the books directly to the intangible asset account, the amounts shall be stated
with explanations, including the amounts charged. Clearly state the nature of deductions if these represent anything other than regular
amortization.
Schedule E – Long Term Debt
December 31, 2013
Title of issue and
type of obligation
(i)
Amount
authorized by
indenture
Amount shon under caption "Current
portion of long-term debt in related
balance sheet " (ii)
Amount shon under caption "Longterm debt in related balance sheet "
(iii)
None to report.
i. Include in this column each type of obligation authorized.
ii. This column is to be totalled to correspond to the related balance sheet caption.
iii. Include in this column details as to interest rates, amounts or numbers of periodic instalments, and maturity dates.
Interest
Rate %
Maturity
Date
Schedule F – Indebtedness to Related Parties
(included in the Consolidated Financial Statement of Position)
Name of Related Parties (i)
Balance at the beginning of the period
Balance at the end of the period (ii)
None to report.
i.
The related party shall be grouped as in Schedule D. The information called for shall be stated for any persons whose investments shown in
separately in such related schedule.
ii. For each affiliate named in the first column, explain in a note hereto the nature and purpose of any material increase during the period that
is in excess of 10% of the related balance at either the beginning or end of the period.
Schedule G – Guarantees of Securities of Other Issuers
December 31, 2013
Name of the issuing entity of securities
guaranteed by the company for which this
statement is fled
Title of issue of each
class of securities
guaranteed
Total amount of
guaranteed and
outstanding (i)
Amount owned by
person of which
statement is filed
Nature of
Guarantee (ii)
None to report.
i.
Indicate in the note any significant changes since the date of the last balance sheet file. If this schedule is filed in support of consolidated
financial statements, there shall be set forth guarantees by any person included in the consolidation except such guarantees of securities
which are included in the consolidated balance sheet.
ii. There must be a brief statement of the nature of the guarantee, such as “Guarantee of Principal and Interest”’, “Guarantee of Interest” or
“Guarantee of Dividend”. If the guarantee is of interest, dividends, or both, state the annual aggregate amount of interest or dividends so
guaranteed.
Schedule H – Share Capital
December 31, 2013
Title of
Issue (i)
Common
Number of
shares
authorized
2,200,000,000
Number of shares issued and
outstanding as shown under Number of shares reserved
the related balance sheet for
options,
warrants,
caption
conversion and other rights
1,000,000,000
-
Number of shares
held by related
parties (ii)
-
Directors,
officers and Others
employees (iii)
2,506,188
-
i. Include in this column each type of issue authorized
ii. Related parties referred to include persons for which separate financial statements are filed and those included in the consolidated financial
statements, other than the issuer of the particular security.
iii. Indicate in a note any significant changes since the date of the last balance sheet filed.
ANNEX C1
Management’s Discussion and Analysis of Financial Condition and
Results of Operations for Calendar Year 2011
Financial Condition
The Bank closed the year 2011 with Total Resources reaching a new record
high of P103.258 Billion, an increase of P8.128 Billion or 8.54% over the previous
year. Growth in resources came primarily from Loans and Receivables which rose by
30.24% from P22.708 Billion to P29.575 Billion. The increase was attributable to
higher corporate loan portfolio. Due from Other Banks decreased by 39.25% from
P2.483 Billion to P1.509 Billion, mainly triggered by lower volume of inward
remittances from both local and foreign correspondent banks. Available for sale
securities increased by 32.23% or by P6.991 Billion as the Bank rationalized its
holdings of investment securities. Due from Bangko Sentral ng Pilipinas (BSP)
decreased by P2.732 Billion as the funds were invested in Reverse Agreement with
the Bangko Sentral ng Pilipinas. Cash and Cash Items declined by 9.68% as funds
were shifted to higher yielding securities. Held to Maturity Securities fell down by
22.38% or by P2.027 Billion as the Bank sold down maturing securities for profit
taking. Other resources increased by 43.51% as movements in these asset accounts
can be accounted for by transactions in the ordinary course of business.
Deposit Liabilities of P87.595 Billion increased by 7.32% compared to last
year’s level of P81.619 Billion. Deposit growth came mainly from Savings and Time
Deposits with an 8.91% and 4.42% increase respectively. The 15.97% Increase in
Treasurer’s, Cashier’s, and Manager’s Checks outstanding represents various
payables which have not been collected by the Bank. Accrued Taxes and Other
Expenses decreased by 3.05% due to payment of fringe benefits such as annual leaves
and profit sharing. Deferred credits and other liabilities posted more than 10% year to
date change but their total variance did not have any material impact on Total
Resources. All payables were paid within the stated terms.
The Bangko Sentral ng Pilipinas approved on July 1, 2011 a P3.83 Billion
Stock Dividend to Philtrust Bank Stockholders of record as of July 18, 2011,
equivalent to 51.26% of outstanding shares. The Stock Dividend raises the Bank’s
paid up Capital from P6.617 Billion to P10 Billion.
Capital Funds reached the P15 Billion mark, now at P15.127 Billion,
reflecting a 16.93% or P2.070 Billion increase. This is the impact of the P1.878
Billion in earnings for the year and the increase in Net Unrealized Gains of P191.878
Million. The Capital Adequacy Ratio (CAR) as of the year end is 21.78%, which is
well above the BSP minimum requirement of 10%, is also indicative of the
sufficiency of Bank’s Capital to support the current level of its rich assets.
The Bank has outstanding commitments, contingent liabilities and bank
guarantees that arise from the normal course of operations. The Bank does not
anticipate any losses that will materially affect its financial position and results of
operations. Changes in nature and amounts in the financial statements were due more
to market related factors inherent in nature of the issuers’ business operations and
were not considered unusual.
Results of Operations
Total Gross Earnings amounted to P7.076 Billion compared to P6.169 Billion
of the previous year. Total interest income increased by P611.530 Million from
previous year’s level of P5.132 Billion to P5.744 Billion. Almost interest income
from all sources registered growth. Income on loans and Advances improved by
23.07% due to growth in average loans. Interest income on Available for Sale
Securities increased by 12.82%, this was offset by the decrease in Held to Maturity by
20.59%, due to Market volatility. Income from foreign exchange profits increased by
P59.189 Million because of higher exchange rate compared from last year’s level.
Other operating income increased by 23.49% because of higher transactions volume.
Interest expense increased by 16.54% due to higher level of deposits compared
from last year’s level. Disposal of some transportation and other equipments resulted
to lower depreciation expense. Compensation and fringe benefits increased by
13.44% due to salary increase and CBA related expenses. Taxes and licenses
increased by 15.56% due to higher GRT remittances and other related BIR payments.
Other operating expenses increased by 6.69% brought about by higher insurance and
security services. The provision for tax expense rose from P346.733 Million to
P373.477 Million as large portion of income was subjected to 20% final tax. Net
income for the period closed at P1.877 Billion, 21.54% higher than last year’s level of
P1.545 Billion.
With solid performance and sustained growth over the past 95 years, the Bank
looks forward with keen anticipation to the incoming years of the 21st century. It will
avail of opportunities and meet it challenges with the same dedication and
conservative policies that have characterized its corporate life. The Bank will
continue to focus on its core business and to deepen its banking relationship with
more prospective client’s ad to offer more excellent customer service. We will further
strengthen the corporate governance and risk’s management structure.
We are confident that we can successfully meet the challenges of the times, as
we have proven in the past, and make the Bank an even stronger financial institution.
We will continue investing in technology and thereby fully support electronic
commerce in the coming years.
Key Performance Indicators
The performance of the bank is reflected in the following financial ratios:
Return on Average Equity
Return on Average Assets
Net Interest Margin
Capital to Risk Assets
Cost to Income Ratio
Dec. 31, 2011
13.55%
1.91%
4.29%
21.78%
43.28%
Dec. 31, 2010
12.81%
1.70%
4.39%
22.77%
42.55%
Dec.31, 2009
11.22%
1.55%
4.72%
33.23%
45.05%
The manner by which the Bank calculates the above indicators is as follows:
Key Performance Indicator
Formula
1. Return on Average Equity (%)
Net Income after Income Tax
Average Total Capital Accounts
2. Return on Average Assets (%)
Average Total Assets
3. Net Interest Margin (%)
Net Interest Income
Average Interest Earning Assets
4. Capital to Risk Assets (%)
Total Qualifying Capital
Market and Credit Risk Weighted
Exposures
5. Cost to Income Ratio (%)
Total Operating Expenses
Net Interest Income + Other Income
Part II - Other Information
Our financial report for the year 2011 was prepared in compliance with Generally
Accepted Accounting Principles as set forth in Philippine Financial Reporting Standards
(PFRS). The term PFRS in general includes all applicable PFRS, PAS and SIC/IFRIC
interpretations which have been approved by the Financial Reporting Standards Council
(FRSC) and adopted by the SEC pronouncements. The same accounting policies and
methods of computation were consistently followed in our financial statements as
compared with the annual audited financial statements as of December 31, 2010. There
were no cash dividends paid during the year of 2011. There were no material
contingencies or any other unusual events or transactions affecting our financial
condition since December 31, 2010. There are no known trends, demands, commitments,
events or uncertainties that would have had a material conflict on our financial condition
or results of operations. There is no material commitment for capital expenditures.
There are no known trends, events or uncertainties that have had a material favorable or
unfavorable impact on net revenues from continuing operations. Our Bank does not have
any subsidiary. We don’t anticipate any events that may cause any default or
acceleration of an obligation. There are no material off-balance sheet transactions,
arrangements, obligations, including contingent obligations with unconsolidated entities.
PFRS 9, Financial Instruments: Classification & Measurements. The standard
become effective for annual period on or after January 1, 2013. Earlier application is
permitted. Our Bank decided not to early adopt PFRS 9 in its 2011 financial reporting
and therefore, the interim financial statements do not reflect the impact of such revised
standard. If applicable, the Bank shall again conduct in early 2012 another impact
evaluation using outstanding balances of financial statements as of December 31, 2011.
The decision whether to early adopt PFRS 9 for 2012 financial reporting will be disclosed
in the interim financial statements as of March 31, 2012. We believe that there is no
material impact in the financial statements for the adoption of PFRS 9. On December 16,
2011, PFRS 9 was amended and the effectivity date was moved to annual periods
beginning on or after January 1, 2015.
For the year 2011, the Bank had no transactions that would require the following
information or disclosures:
a. Explanatory comments about the seasonality or cyclicality of interim
operations;
b. The nature and amount of items affecting assets, liabilities, equity, net income
or cash flows that are unusual because of their nature, size or incidents;
c. Issuances, repurchases and repayments of debt and equity securities;
d. Segment revenue and segment result for business segments or geographical
segments, whichever is the issuer’s primary basis of segment reporting;
e. Material events subsequent to the end of the interim period that have not been
reflected in the financial statements for the interim period.
f. The effect of changes in the composition of the issuer during the interim
period, including business combinations, acquisition or disposal of subsidiaries
and long term investments, restructurings, and discontinuing operations;
g. Existence of material contingencies and any other events or transactions that
are material to an understanding of the current interim period.
h. Any significant elements of income or loss that did not arise from the issuer’s
continuing operations.
i. Any seasonal aspects that had a material effect on the financial condition or
results of operations.
ANNEX C2
Financial Condition
The healthy growth and satisfactory results of operations for the year 2012
once more reaffirmed wisdom of strictly adhering to sound and conservative banking
policies. Our resources, deposits and capital funds rose to a level that reflect the
steady firming up of its new role as a meaningful participant in the banking sector of
our country. Total resources at year end of 2012 reached a new record high of
P111.188 Billion compared to P105.400 Billion, an increase of P5.788 Billion over
the previous year. Cash and Other Cash Items declined by 25.12% as funds were
shifted to higher yielding securities. Due from Bangko Sentral ng Pilipinas decreased
by 20.15% as the funds were invested in Reverse Repurchase Agreements with the
Bangko Sentral ng Pilipinas. Due from Other Banks decreased by 16.61% due to
lower working balances maintained with correspondent banks. Available for Sale
Securities increased by 20.78% as the Bank rationalized its holdings of investments
securities. Our Bank continued the expansion of its loans as Loans and Receivables
increased by 18.94% or by P5.603 Billion compared from last year’s level of P29.575
Billion. Movements on Other Asset accounts for less than 10% increase/decrease can
be accounted for by transactions in the ordinary course of business.
Deposit Liabilities stood at P88.816 Billion compared to P87.595 from last
year’s end level. The 13.07% decrease in Manager’s Checks represents lower volume
of outstanding checks issued. Accrued taxes and other expenses decreased by 14.71%
due to payments of fringe benefits and large volume of withholding taxes. Deferred
credits and other liabilities increased by 105.86% due to higher level of trade
transactions for the year. Deferred tax liabilities posted an increase of 336.93% due to
increase of net unrealized gain for the year.
Capital Funds reached the P20 Billion mark, now at P20.797 Billion, a P3.744
Billion increase compared from last year’s level of P17.053 Billion. This is the
impact of the P1.712 Billion earnings for the year and the P2.032 Billion increase in
net unrealized gains. The Capital Adequacy Ratio (CAR) for the period is 22.08%
which is Basel 2 compliant and is well above the Bangko Sentral ng Pilipinas (BSP)
maximum requirement of 10%.
guarantees that arise from the normal course of operations. The Bank does not
anticipate any losses that will materially affect its financial positions and results of
operations. Changes in nature and amounts in the financial statements were due more
to market related factors inherent in nature of the issuer’s business operations and
were not considered unusual.
The Bank’s gross earnings amounted to P6.590 Billion compared to P7.076
Billion from previous year. Declining interest rates resulted in the decrease in interest
on loans and advances by 2.34%. Interest on deposits with the banks decreased by
35.96% due to result of decreasing interest rates by the Bangko Sentral ng Pilipinas
on SDA’s and due to non-interest bearing reserve deposits. The Bank continued to
adapt an aggressive stance in the market through sale of bonds and other securities.
Hence, gains from Available for Sale Securities increased by 15.77% while Held to
Maturity Securities decreased by 15.32% due to small amount of maturing securities
compared from last year’s level. Income from foreign exchange profit decreased by
28.75% due to lower exchange rate at year end. Other operating income increased by
16.15% due to higher profits on Sale or Redemption of Investments.
Depreciation/Amortization decreased by 25.33% due to some disposal of
transportation equipment. Taxes and licenses decreased by 14.66% because of lower
gross receipts tax compared from last year’s level. The provision for income tax
expense decreased by 22.34% due to lower income which was subjected to final tax
withheld at source. Net income closed at P1.712 Billion.
looks forward with keen anticipation to the incoming years. It will avail of
opportunities and meet it challenges with the same dedication and conservative
policies that have characterized its corporate life. The Bank will continue to focus on
its core business and to deepen its banking relationship with more prospective client’s
ad to offer more excellent customer service. We will further strengthen the corporate
governance and risk’s management structure.
We are confident that we can successfully meet the challenges of the times, as
we have proven in the past, and make the Bank an even stronger financial institution.
We will continue investing in technology and thereby fully support electronic
commerce in the coming years.
Net Interest Margin
Dec. 31, 2012
10.57%
1.64%
2.45%
21.88%
42.83%
Dec. 31, 2011
14.43%
2.06%
2.90%
21.94%
40.57%
Dec.31, 2010
12.81%
1.70%
4.39%
22.78%
42.55%
Formula
Net Interest Income
Exposures
compared with the annual audited financial statements. There were no cash dividends
paid during the year of 2012. There were no material contingencies or any other unusual
events or transactions affecting our financial condition since December 31, 2011. There
are no known trends, demands, commitments, events or uncertainties that would have
had a material conflict on our financial condition or results of operations. There is no
material commitment for capital expenditures. There are no known trends, events or
uncertainties that have had a material favorable or unfavorable impact on net revenues
from continuing operations. Our Bank does not have any subsidiary. We don’t
anticipate any events that may cause any default or acceleration of an obligation. There
are no material off-balance sheet transactions, arrangements, obligations, including
contingent obligations with unconsolidated entities.
PFRS 9, Financial Instruments: Classification & Measurements. The standard
became effective for annual period or after January 1, 2013 but change the mandatory
effective date to January 1, 2015. The Bank opted not to implement early adoption of
PFRS 9 on its financial reporting. An evaluation was conducted early this year using the
outstanding balances of financial statements as of December 31, 2011. We believe that
there is no material impact in the financial statements for the adoption of PFRS 9.
operations;
c. The nature and amount of changes in estimates of amounts reported in prior
interim periods of the current financial year or changes in estimates of
amounts reported in prior financial years, if those changes have a material
effect in the current interim period;
d. Issuances, repurchases and repayments of debt and equity securities;
e. Segment revenue and segment result for business segments or geographical
f. Material events subsequent to the end of the interim period that have not been
g. The effect of changes in the composition of the issuer during the interim
period, including business combinations, acquisition or disposal of
subsidiaries and long term investments, restructurings, and discontinuing
operations;
h. Existence of material contingencies and any other events or transactions that
i. Any significant elements of income or loss that did not arise from the issuer’s
j. Any seasonal aspects that had a material effect on the financial condition or
ANNEX C3
Financial Condition
The year 2013 proved to be another fruitful year for our Bank as Total
Resources reached a new record high of P120.954 Billion compared to P112.097
Billion in 2012. Growth in resources came primarily from deposit liabilities which
rose by 12.98% or by P11.528 Billion. Deposit growth came mainly from relatively
stable and low cost savings deposits and demand deposits. Due from Bangko Sentral
ng Pilipinas, representing 21.84% of Total Resources, went up by 18.33% or P4.092
Billion, arising from more effective management of reserve deposits and from higher
fixed term deposits or Special Deposits Accounts (SDA). The P342.250 Million
decrease in Due from Other Banks reflects lower operating balances maintained from
both local and foreign correspondent banks. Due to some maturing loans at year end,
loans and receivables from customers decreased by P5.265 Billion or by 19.57%
compared from last year’s level. Loans Arising from Repurchase Agreements
increased by P12.650 Billion as funds were invested with the Bangko Sentral ng
Pilipinas. Available for Sale Securities and Held to Maturity Securities decreased by
P402 Million and P689 Million respectively due to decrease in market value and the
effect of mark to market valuation at year end. Cash and other cash items decreased
by P185 Million as funds were invested at Special Deposit Account with the Bangko
Sentral ng Pilipinas. Deferred tax assets decreased by 15.28% due to unrecognized
deferred tax assets for 2014 net operating loss carry over. Movements in other asset
accounts can be accounted for by transactions in the ordinary course of business.
Deposit liabilities of P100.344 Billion increased by 12.98% compared to last
year’s level of P88.816 Billion. It continued to be the Bank’s main source of funding.
Deferred credits and other liabilities decreased by 39.76% due to lower level of trade
transactions. All payables were paid within stated terms.
Capital Funds reached the P20 Billion mark now at P20.104 Billion. Other
Comprehensive Income, Net Unrealized Gains/(Losses) decreased by P3.906 Billion
or 62.97% due largely on account of mark to market valuation of investments. The
Capital Adequacy Ratio (CAR) for the period is 34.81%, which is well above the BSP
minimum requirements of 10%, is indicative of the sufficiency of the Bank’s capital
to support the current level of its risk assets.
guaranties that arise from the normal course of operations. The Bank does not
anticipate any losses that will materially affect its financial positions and results of
operations.
The Bank generated a P1.357 Billion net income for the year 2013. Gross
earnings amounted to P6.388 Billion compared to P6.590 Billion of last year’s level.
Declining interest rate on loans resulted in the decrease on interest on loans and
advances by 18.11%. Income from foreign exchange profits increased by P105
Million due to higher exchange rate compared from last year’s level. Service charges
and fees increased by 54.46% due to higher volume of transactions. Other operating
income increased by P93 Million due to higher profit on Sale or Redemption of
Investments.
Interest expense decreased by 3.88% due to lower average interest rates
compared form last year’s level. Occupancy and Equipment related expenses
increased by 16.06% due to advance payments of annual rentals of leased properties.
The provision for tax expense rose from P177 Million to P441 Million, a 149.15%
increase, as large portion of income earned were subjected to 20% final tax withheld
at source.
looks forward with keen anticipation and more productivity for the incoming years.
We will continue to focus on its core business and to deepen its banking relationship
with more prospective clients and to offer more excellent customer service.
Furthermore, more branches will be opened including ATM offsite in strategic
locations to provide access to our valued clients
Net Interest Margin
Dec. 31, 2013
6.35%
1.16%
21.24%
38.33%
47.36%
Dec. 31, 2012
8.41%
1.57%
25.26%
21.88%
42.83%
Formula
Net Income After Income Tax
Net Income After Income Tax
Net Interest Income
Exposures
compared with the annual audited financial statements. There were no cash dividends
paid during the year of 2013. There were no material contingencies or any other unusual
events or transactions affecting our financial condition since December 31, 2012. There
are no known trends, demands, commitments, events or uncertainties that would have
had a material conflict on our financial condition or results of operations. There is no
material commitment for capital expenditures. There are no known trends, events or
uncertainties that have had a material favorable or unfavorable impact on net revenues
from continuing operations. Our Bank does not have any subsidiary. We don’t
anticipate any events that may cause any default or acceleration of an obligation. There
are no material off-balance sheet transactions, arrangements, obligations, including
contingent obligations with unconsolidated entities.
PFRS 9, Financial Instruments: Classification and Measurement. The standard
became effective for annual period or after January 1, 2013 but change the mandatory
effective date to January 1, 2015. The Bank opted not to implement early adoption of
PFRS 9 on its financial reporting. An evaluation was conducted early this year using the
outstanding balances of financial statements as of December 31, 2012. We believe that
there is no material impact in the financial statements for the adoption of PFRS 9.
.
operations;
c. The nature and amount of changes in estimates of amounts reported in prior
interim periods of the current financial year or changes in estimates of
amounts reported in prior financial years, if those changes have a material
effect in the current interim period;
d. Issuances, repurchases and repayments of debt and equity securities;
e. Segment revenue and segment result for business segments or geographical
f. Material events subsequent to the end of the interim period that have not been
g. The effect of changes in the composition of the issuer during the interim
period, including business combinations, acquisition or disposal of
subsidiaries and long term investments, restructurings, and discontinuing
operations;
h. Existence of material contingencies and any other events or transactions that
i. Any significant elements of income or loss that did not arise from the issuer’s
j. Any seasonal aspects that had a material effect on the financial condition or
FINANCIAL RISK
DISCLOSURE
REMARKS
a. Assess the financial risk
exposures of the company and its
subsidiaries
particularly
on
currency, interest, credit, market
and liquidity risks. If any change
thereof would materially affect the
financial condition and results of
operation of the company, provide a
discussion in the report on the
qualitative and quantitative impact
of such risks and include a
description of any enhancement in
the company’s risk management
policies to address the same;
A. Assessment of
Financial
Risk
Exposure of the Bank as of December
31, 2013.
I. Market Risk: Foreign Exchange and
Interest Rates.
1.1 Foreign Exchange Position
The net overbought open FX position of the
bank, the bulk of which is in USD as of
December 31, 2013 is in USD26.65 million,
the
peso
equivalent
of
Php1.18
billion or 6.57% of the bank’s unimpaired
capital which is well within the 20 percent
limit prescribed by BSP regulation. The
overbought (long) USD position is exposed
to foreign exchange risk as well as interest
rate risk. But the probability is small owing
to effective monetary policy of BSP and
strong economic fundamentals of the
country. In our specific case, the bank
consistently made foreign exchange gain,
for 2013 and the previous years.
It is our view that foreign exchange and
interest rates volatility will remain low and
manageable for two reasons:
1.1.1
BSP’s effective
management of foreign
exchange reserves vis-àvis the major global
currencies, to wit: USD,
SGD, CHF, Euro and Yen.
1.1.2
The interest rates on the
major global currencies
will remain low for the
medium term.
II. Liquidity Risk
The risk profile of the bank’s
balance sheet remains low with more
concentration in liquid assets and
investments in government securities other
than lending. Liquid assets and investment
securities accounted for Php73.20 billion
while loans amounted to Php41.06 billion.
Marginal returns have been affected by the
distribution in our asset portfolio but the
bank has always been conservative in
business policy.
III. Credit Risk
The bulk of bank loans are fully
secured by real estate. Some major loan
accounts are backed by guarantees, and a
small percentage of the loans are clean,
without collateral or guarantee but extended
to clients who are known to the bank for
their good credit reputation. The lending
process begins with credit selection and
continues to administration and review of
loan accounts on a regular basis. Reporting
to and review by the credit committee are
parts of the whole credit process and done
on a regular basis.
b. Evaluate whether the company
could provide clearer and more
transparent disclosure regarding its
financial instruments including but
not limited to the following
information:
1. A description of the financial
instruments of the company and the
classification and measurements
applied for each. If material in
amount,
provide
detailed
explanation on complex securities
particularly on derivatives and their
impact on the financial condition of
the company;
1. The bank has none of hedging or
derivatives financial contracts. The bank
main financial contracts are:
Available for Sale Securities and Held to
Maturity Securities. The bulk of these
securities are securitized government
obligations.
2. The amount and description of
the company’s investment in
foreign securities;
2. The bank has no investment in foreign
securities or equities.
4. An explanation of how risk is
incorporated and considered in the
valuation of assets or liabilities;
4. Asset and liability management involved
in matching the economic characteristics of
the bank cash flows. Our bank strives to
match inflows and outflows despite the
structural difference of the terms of assets
and liabilities by averaging and scheduling
terms and maturities of assets vs. liabilities.
We look at duration, the fixed/floating
nature of our commitments, the repricing
period and over liquidity position and stress
testing. Strategic decisions are made
regarding interest rate exposure.
6. The criteria used to determine
whether the market for a financial
instrument is active or inactive, as
defined under PAS 39-Financial
instruments.
6. Before our bank makes any investment
decision, it is a precondition that the market
especially the secondary, must have
liquidity, breadth and depth to transact all
tenors of financial instruments.
Annex "D"
Philippine Trust Company (Philtrust Bank)
Bank-Owned Properties (Land & Building) - Existing Bank Sites
Branch Office
Location
Improvements/Condition of
Properties
Mortgage, Lien or
Encumbrance and Limitations
on Ownership or Usage
Metro Manila Branches
Aurora Blvd. Branch
Aurora Blvd. cor. 15th Avenue, The
branch
occupies
a
Cubao, Quezon City
portion/unit of the ground floor of
None
a 6-storey condominium building
that is in good condition.
Binondo Branch
Philtrust Bank Building, Quintin The branch occupies the ground
None
Paredes St. cor. Dasmariñas floor of a 6-storey building that is
and Plaza Cervantes Sts., in good condition.
Binondo, Manila
Caloocan Branch
Philtrust
Bank
Building, 2-storey building in good
Samson Road (near Bonifacio condition, fully occupied by the
Monument), Caloocan City
branch.
None
Divisoria Branch
Philtrust Bank Building, 539 4-storey building in good
C.M. Recto Ave. cor. Carmen condition. The branch occupies
Planas St., Divisoria, Tondo, only the ground floor.
Manila
None
Elcano Branch
Philtrust Bank Building, Elcano 2-storey building in good
cor. Lavezares Sts., Binondo, condition, fully occupied by the
Manila
branch.
None
Escolta Branch
Philtrust Bank Building, Escolta 5-storey building in good
St., Binondo, Manila
condition. The branch occupies
only the ground floor.
None
Juan Luna Branch
Philtrust Bank Building, Juan 4-storey building in good
Luna St., Binondo, Manila
the ground floor and the 2nd
floor.
None
Las Piñas Branch
Philtrust
Bank
Alabang Zapote Rd., Almanza, condition, fully occupied by the
Las Piñas City
branch.
None
1 of 4
Branch Office
Location
Properties
Mortgage, Lien or
Libertad Branch
Philtrust Bank Building, Taft 3-storey building in good
Ave. cor. A. Arnaiz Ave., Pasay condition. The branch occupies
City
None
Mabini Branch
Philtrust Bank Building, U.N. 4-storey building in good
Avenue cor. A. Mabini St., condition. The branch occupies
Ermita, Manila
floor.
None
Mandaluyong Branch
Philtrust Bank Building, Shaw 3-storey building in good
Blvd. cor. Gen. Kalentong St., condition, fully occupied by the
Mandaluyong City
branch.
None
Maypajo Branch
Philtrust Bank Building, A. 4-storey building in good
Mabini St., Maypajo, Caloocan condition. The branch occupies
City
None
Morayta Branch
Philtrust Bank Building, 890- 2-storey building in good
892 Dr. Nicanor Reyes cor. R. condition, fully occupied by the
Papa Sts., Sampaloc, Manila branch.
None
Pasig Branch
Philtrust Bank Building, Dr. S. 1-storey building in good
Antonio Avenue, Caniogan, condition, fully occupied by the
Pasig City
branch.
None
Puyat Ave. Branch
Philtrust Bank Building, Sen. 9-storey building in good
Gil Puyat Ave., Makati City
only a portion of the ground
floor.
None
Quezon Ave. Branch
Quezon Avenue cor. Sto. 2-storey building in good
Domingo St., Quezon City
only a portion of the ground
floor.
None
Reina Regente Branch Philtrust Bank Building, Reina 3-storey building in good
Regente cor. Alvarado Sts., condition. The branch occupies
Binondo, Manila
None
Sta. Cruz Branch
Philtrust Bank Building, Rizal 5-storey building in good
Ave. cor. Plaza Goite, Sta. condition. The branch occupies
Cruz, Manila
2 of 4
None
Branch Office
Location
Taguig Branch
Ground Floor Unit 101A, One
Global Place, 5th Ave. cor.
25th St., Bonifacio South
District, Bonifacio Global City,
Taguig City
Properties
Mortgage, Lien or
The
branch
occupies
a
portion/unit of the ground floor of
a 25-storey building.
The
building is in good condition.
None
Angeles Branch
Philtrust
Bank
McArthur Hi-Way cor. B. condition, fully occupied by the
Aquino St., Angeles City, branch.
Pampanga
None
Bacolod Branch
Gatuslao cor. Cuadra Sts., 5-storey building in good
Bacolod City
None
Cabanatuan Branch
Philtrust Bank Building, Beedle 2-storey building in good
St., Poblacion, Cabanatuan condition, fully occupied by the
City
branch.
None
Philtrust
Bank
Osmeña cor. Ramonal Sts., condition. The branch occupies
Cogon, Cagayan De Oro City only the ground floor.
None
Cavite Branch
Philtrust Bank Building, Km. 41 1-storey building in good
Aguinaldo Highway, Silang, condition, fully occupied by the
Cavite
branch.
None
Cebu Colon Branch
Philtrust Bank Building, Colon 2-storey building in good
St., Cebu City
None
Cebu Magallanes
Branch
Philtrust
Bank
Magallanes cor. F. Gonzales condition. The branch occupies
St., Cebu City
floor.
None
Davao Sta. Ana Branch Philtrust
Bank
Monteverde Ave. cor. F. condition. The branch occupies
Bangoy St., Sta. Ana, Davao only the ground floor.
City
None
Provincial Branches
Cagayan De Oro Branch
3 of 4
Branch Office
Location
Properties
Mortgage, Lien or
Iloilo Branch
Philtrust
Bank
Quezon cor. Delgado Sts., condition. The branch occupies
Brgy. Ed Ganzon, Iloilo City
None
Limay Branch
Philtrust
Bank
National Road, Limay, Bataan condition, fully occupied by the
branch.
None
Naga Branch
Philtrust
Bank
Caceres cor. E. Angeles Sts., condition. The branch occupies
Naga City
None
Roxas Branch
Philtrust Bank Building, Roxas 1-storey building in good Under Renovation/Expansion
Ave. cor. Calle Primero De condition, fully occupied by the
Mayo, Roxas City
branch.
4 of 4
Leased Bank Sites
Branch Office
Amount of Lease
Lease Expiration
Payment Per Month
Date
Location
Lease Term
Ayala Branch
6762 Ayala Avenue, Makati
City
Php596,248.34
Dec. 31, 2014
1 year
Edsa-Muñoz Branch
EDSA cor. Roosevelt Ave.,
Quezon City
Php180,203.52
June 30, 2028
20 years
Ermita Branch
U.N. Avenue cor. Ma. Orosa
St., Ermita, Manila
Php391,025.00
Dec. 31, 2017
5 years
Grace Park Branch
225 Rizal Ave. Ext., Grace
Park, Caloocan City
Php517,415.53
Sept. 30, 2015
10 years
Makati-Pasay Road
Branch
Liberty Building, 835 A. Arnaiz
Ave., Legaspi Village, Makati
City
Php377,856.10
Sept. 30, 2015
5 years
Malabon Branch
Rizal Avenue cor. Leono St.,
Tañong, Malabon City
Php67,200.00
Feb. 28, 2017
5 years
Malate Branch
Remedios cor. M.H. Del Pilar
Sts., Malate, Manila
Php308,000.00
Dec. 31, 2014
5 years
Morayta Branch Ext.
(CEU - Mendiola)
Ground Floor, Generosa De
Leon Science Center Building,
Centro Escolar University, No.
9 Mendiola St., San Miguel,
Manila
Php44,798.54
March 31, 2016
5 years
NAIA Branch
(Terminal 1)
Departure
Level,
NAIA
Terminal 1, Parañaque City
Php36,191.24
Monthly
NAIA Branch Ext.
(Terminal 2)
Departure
Level,
NAIA
Php24,907.19
Monthly
NAIA Branch Ext.
(Terminal 3)
4th Level & Arrival Area, NAIA
Php58,293.76
1 of 3
Sept. 30, 2014
1 year
Leased Bank Sites
Amount of Lease
Lease Expiration
Payment Per Month
Date
Branch Office
Location
Ongpin Branch
800 Ongpin cor. Padilla Sts.,
Sta. Cruz, Manila
Php336,000.00
Oct. 31, 2017
5 years
Ortigas Branch
Unit No. UG-2, One San
Miguel Avenue Condominium,
San Miguel Ave. cor. Shaw
Blvd., Ortigas Center, Pasig
City
Php315,190.47
April 9, 2015
5 years
Paco Branch
Pedro Gil cor. A. Linao Sts.,
Paco, Manila
Php59,360.00
Padre Rada Branch
Padre Rada cor. Ilaya Sts.,
Tondo, Manila
Php197,568.00
Dec. 31, 2026
25 years
Quiapo Branch
Plaza Miranda, Hidalgo St.,
Quiapo, Manila
Php327,958.40
June 30, 2017
5 years
Sucat Branch
Dr. A. Santos Ave. cor. Sta.
Rita St., Parañaque City
Php114,279.00
July 1, 2018
10 years
Tabora Branch
800-802 Tabora St., Divisoria,
Manila
Php156,800.00
Aug. 31, 2014
1 year
1844 Taft Avenue, Pasay City
Php248,648.33
Tordesillas Branch
Unit
101
Le
Metropole
Condominium, Sen. Gil Puyat
Ave. cor. Tordesillas St.,
Salcedo Village, Makati City
Php137,625.60
Aug. 31, 2018
5 years
Unimart Branch
Greenhills Commercial Center,
Ortigas Ave., San Juan, Metro
Manila
Php334,072.81
Dec. 31, 2013
1 year
Valenzuela Branch
Danding Bldg., Cecilo J.
Santos St., Malinta, Valenzuela
City
Php70,818.63
July 31, 2014
1 year
Taft Branch
2 of 3
Lease Term
Monthly
Monthly
Leased Bank Sites
Branch Office
Amount of Lease
Lease Expiration
Payment Per Month
Date
Location
Lease Term
Provincial Branches
Rizal Avenue cor. P. Gomez
St., Poblacion, Batangas City
Php89,600.00
March 14, 2018
5 years
Provincial Capitol Compound,
McArthur Highway, Malolos
City, Bulacan
Php121,550.63
April 16, 2014
5 years
Cebu Fuente Branch
Osmeña Blvd. and
Llorente St., Cebu City
Julio
Php144,123.85
March 31, 2017
5 years
Davao Recto Branch
Caritas Building, C.M. Recto
St., Davao City
Php30,746.10
Oct. 1, 2014
1 year
La Union Branch
Diocesan Buildiing, P. Gomez
St., San Fernando, La Union
Php90,000.00
Dec. 31, 2015
4 years
Lucena Branch
233 Quezon Ave. cor. Don
Queblar St., Lucena City
Php67,200.00
Aug. 1, 2020
10 years
INJAP Bldg.,
Roxas City
Php50,400.00
January 31, 2014
1 year
Batangas Branch
Bulacan Branch
Roxas Branch
Mckinley
St.,
3 of 3
Bank-Owned Properties - Future Bank Sites
Branch Office
Mortgage, Lien or Encumbrance and
Limitations on Ownership of Usage
Location
Bambang Branch
1499 G. Masangkay cor. Bambang Sts.,
Tondo, Manila
None
Grace Park Branch
Rizal Avenue Ext., Grace Park, Caloocan
City
None
Marikina Branch
Sumulong Highway cor. P. Burgos St., Sto.
Niño, Marikina City
None
Novaliches Branch
486 Quirino Highway, Novaliches, Quezon
City
None
Parañaque Branch
NAIA
Road
cor.
Parañaque City
Avenue,
None
Roosevelt Branch
274 Roosevelt Avenue, San Francisco Del
Monte, Quezon City
None
Taft Avenue Branch
1812 Taft Avenue, Pasay City
None
Valenzuela Branch
McArthur Highway (Fronting Valenzuela
City Hall) Karuhatan, Valenzuela City
None
Paseo Del Congreso, Malolos City, Bulacan
None
Dumaguete Branch
Silliman Avenue cor. Real St.,
Poblacion 007, Dumaguete City
Brgy.
None
Gen. Santos Branch
Roxas
Avenue
cor.
Osmeña
Dadiangas, General Santos City
St.,
None
Isabela Branch
Maharlika Highway cor. Abauag
Poblacion, Santiago City, Isabela
St.,
None
La Union Branch
Quezon Avenue cor. Ancheta St., San
Fernando City, La Union
None
Mandaue Branch
A. Del Rosario & Zamora Sts., Centro,
Mandaue City, Cebu
None
Ozamiz Branch
Rizal cor. Juan Luna St., Ozamiz City
None
Tarlac Branch
McArthur Highway cor. R. Mercado St.,
Brgy. Sto. Cristo, Tarlac City
None
Urdaneta Branch
McArthur Highway, National Rd. cor.
Manuel Roxas St., Poblacion, Urdaneta
City, Pangasinan
None
Quirino
Provincial Branches
Bulacan Branch
1 of 1
ANNEX “E”
LIST OF ITEMS REPORTED UNDER CURRENT REPORT (SEC FORM 17-C)
Date of Submission
Type of Report
May 2, 2013
-
Election of Directors of Philtrust Bank at the Annual
Meeting of the Stockholders held on April 30, 2013.
May 2, 2013
-
Appointment of Mercado, Calderon, Jaravata and Co.,
Certified Public Accountants, as the Bank’s external
auditors for the fiscal year 2013.
May 29, 2013
-
Election/Appointment of the Bank’s Officers at the
Organizational Meeting of the Board of Directors held
on May 28, 2013.
June 3, 2013
-
Retirement of Mr. Ciriaco M. Dator as Executive Vice
President/Compliance Officer of the Bank effective
May 31, 2013 and election of Atty. Jacquelin S.
Tugonon as Vice President/Compliance Officer
effective June 3, 2013.

2013 Annual Report

Transcription

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