rizal commercial banking corporation

RIZAL COMMERCIAL BANKING CORPORATION
STRICTLY CONFIDENTIAL
INTRODUCING RCBC
STRICTLY CONFIDENTIAL
PAGE 1
RCBC AT A GLANCE
RCBC is a leading financial services provider in the Philippines
Background
Key statistics (6m14)
Incorporated on 4 August 1960 as Rizal Development Bank and received
approval to operate as a commercial bank in December 1962. RCBC is
currently the 6th largest private domestic bank in the Philippines by assets.
Total assets
PHP427.4 bn
USD9.71 bn
Net loans
PHP235.9 bn
USD5.36 bn
Presence
Deposits
PHP301.1 bn
USD6.84 bn
Over 130 locations across Asia Pacific, The Middle East, US, Canada, and
Europe
Total shareholder’s equity
PHP45.3 bn
USD1.03 bn
Net income
PHP2.02 bn
USD45.91 mn
Tier 1 (Basel III)
10.91%
Total CAR (Basel III)
13.76%
ROAA*
0.97%
ROE*
8.95%
NIM
4.31%
NPL ratio
1.18%
Cost to Income
65.83%
Services










Corporate, SME, and Consumer lending
Investment banking
Trust Services and Wealth management
Foreign exchange brokerage
Leasing and Treasury
Credit card retail banking
Microfinance
Bancassurance
Remittances
And other financial services
*Annualized
Awards
Best Banking Group in the Philippines
2012, 2013 ,2014
Best Cash Management Bank in the
Philippines
2012
Domestic Retail Bank of the Year
2011 & 2012
Philippines’ Overall Best for
Interest rates
in 2012
Philippines SME Bank of the Year
2012
STRICTLY CONFIDENTIAL
Best Domestic Private Bank in the
Philippines
2012, 2013, 2014
Exchange Rate - US$1=PHP44.00
Other statistics (6m14)
Market Cap
PHP67.61 bn
(USD1.54 bn)
Branches
ATMs
443
1,177
Employees
Customers
Moody’s
5,846
6.3 million
Ba2 / stable
PAGE 2
RCBC’S ORGANIZATION STRUCTURE
RCBC
RCBC Capital
Corporation
RCBC Forex
Brokers
Corporation
RCBC Savings
Bank
Investment Bank
Foreign Exchange
Broker
Thrift Bank
RCBC Securities
Corporation
Securities
Brokerage
RCBC Bankard
Services
Corporation
Rizal Micro Bank
Microfinance Thrift
Bank
RCBC
Telemoney
Europe
RCBC Leasing
Remittance
Company
Leasing
Company
RCBC Rental
RCBC Intl
Finance
Hong Kong
Financing
Company
RCBC
Investment Ltd
Rental Company
Remittance
Credit Card Services
Provider
*Operational until March 2014
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PAGE 3
KEY MILESTONES IN THE RCBC STORY
RCBC has an extended history in Philippines going back more than 50 years
1960
Began operations as a Private Devt.
Bank under the name Rizal
Development Bank
1986
Successful listing of RCBC
shares on the stock exchange
2000
Acquired 67% stake
in Bankard Inc.
2008
Acquired Merchants Bank
to kickstart
microfinance business
in Mindanao
2013
Placed additional
shares with
institutional investors
2010
Granted expanded
derivatives license which
allows RCBC to conduct
a full range of derivative
transactions
IFC infused
additional equity
1973
Formed alliances with Continental
Illinois Bank and UFJ (Sanwa Bank)
1960
1965
1962
Received approval
from BSP to
operate
as a commercial
bank
under its present
name
1970
1985
Continental Illinois
Bank
sold its
shareholding to
UFJ (Sanwa Bank)
1975
Sold stake in RCBC
Realty and Bankard
1980
1996
RCBC Savings Bank
was incorporated to
provide
retail/consumer
banking services to
its
target clientele
1985
1998
Acquired
Capitol
Development
Bank and
merged with
RCBC
Savings
1990
1995
2006
UFJ (Sanwa
Bank)
disposed entire
Shareholding to
Spinnaker
2000
2005
2009
Spinnaker sold its
entire
stake back to RCBC
and the Yuchengco
Group
Acquired JP Laurel
Rural
Bank in Batangas
2010
2011
2011
Formed alliances
with IFC and CVC
Capital Partners
Formed
Bancassurance
partnership with
Sunlife GREPA
Financial
2012 2013
2012
Acquired
First Malayan
Leasing
and Finance
Corporation and
its subsidiary
Malayan Rental
RCBC is the 6th largest private domestic commercial bank in the Philippines by assets as of end 2Q14 (1)
Source: (1) Bangko Sentral ng Pilipinas (BSP)
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PAGE 4
RCBC’S VALUES
Vision
To be the Most Admired and Trusted Financial Services Group
in the Philippines
Success factors
RCBC invests in BOTH people and technology
Hire the best talent and develop them over their career
Hire globally
competitive people
Invest in training
human capital
Multiple electronic channels to continuously improve cost
efficiency and speed
Mobile
Banking
ATM
Phone
Banking
Internet
Banking
Bills
Payment
Point-ofsale
Best practices / culture change
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PAGE 5
THE MARKET
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PAGE 6
THE PHILIPPINE MARKET
Strong economic and demographics support overall growth in the Philippines
The market

12th most populous nation in the world

108 mn Filipinos

53% are less than 25 yrs old; 71% are below 35

10.4 mn less than 4 yrs old

132 mn Filipinos by 2025

12 mn computers; 33 mn Facebook users

38 mn internet users
Drivers

Banking tomorrow’s ―Middle Class‖

Highly underpenetrated banking market, with
approximately 78.5% of households without deposit
accounts

$23 bn in Overseas Filipino Worker (OFW) remittances
in 2013

37% of families have an OFW (survey of 1,000
respondents); 13.5 mn Filipinos working abroad

$15.5 bn in Business Process Outsourcing (BPO) sector
revenues in 2013

23 mn ATM users


World’s biggest destination for call center operations
110 mn cellular phone users
Sources: Bangko Sentral ng Pilipinas (BSP), World Bank, Department of Science and Technology, Business Process Outsourcing Association of the Philippines (BPAP), Globe Telecom, PLDT, The Market, National
Statistics Coordination Board (NSCB), National Statistics Office (NSO)
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PAGE 7
PHILIPPINE BANKS OUTLOOK
Banking sector outlook is positive supported by strong economic backdrop and operating
environment
Philippine banking sector is robust and poised for further
growth

Credit expansion to continue supported by strong economic and corporate
earnings.

Non-performing loans in Philippine banks have been declining in the past 10
years, with the NPL ratio at 2.13% as of end-2013 from a high of 18% in 2002.
With improved asset quality, potential upside in bottom-line growth from lower
provisions.
Among the strictest regulatory requirements in Asia

Under the BSP Guidelines, 8.5% CET 1 and 10.0% Tier 1 (both with 2.5% capital
conservation buffer included) was implemented starting January 2014.

Strict interpretation of Basel III standards ensures adequate capitalization for
growth.
Source: Bangko Sentral ng Pilipinas (BSP)
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PAGE 8
STRATEGIC INITIATIVES AND
FINANCIAL OVERVIEW
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PAGE 9
STRATEGIC INITIATIVES UNDER BASEL III REGIME
Invest in IT
Establish broad distribution channel
1
2
Achieve
Diversify loan portfolio
3
strategic five
year
goals
Secure funding position
Think ASEAN
4
5
Source: Company information.
RCBC’s strategic initiatives will help the company to deliver on its five year goals
Source: Company filings.
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PAGE 10
INVEST IN IT
RCBC developed a scalable and nimble “Core Banking Platform” through major investments in
Operations & IT
Oracle e-Business Platform
IBM Enterprise Servers
Banking transformation technology & software solutions
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PAGE 11
INVEST IN IT
IT investments provide the tools to enhance RCBC’s platform
Highly scalable banking platform

Given the strength of its platform, RCBC is able to increase its customer base
without incurring incremental costs

RCBC can potentially increase its current 6.3 million customers  20 million
customers without additional investment
With flexibility afforded by IT

Ability to finely segment customer base and provide personalised services and
support

Real-time information available to map customer needs

Capability to increase exposure to customers and engage in cross-selling
opportunities
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PAGE 12
INVEST IN IT
Invest in Mobile Banking
Mobile banking services to serve every market
segment
First local bank to be accredited by Apple to
publish mobile banking applications on its
devices
High-end: Apps for iOS
and Android
Mid-level: I-Mobile
Low-end: SMS Banking
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First local bank to equip branch managers with
iPad as a planning tool
PAGE 13
SECURE FUNDING POSITION
Increasing growth and proportion of CA/SA deposits serves to lower overall
funding costs
Customer deposits (PHP bn)
CA/SA to Total Deposits (%)
297
221
237
255
301
247
196
176
157
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PAGE 14
THINK ASEAN
Strong economic and demographics support overall growth in the Philippines
The Philippine market
 108
mn Filipinos
 47%
are aged 15-45 years old
 11.2mn
less than 5 yrs old
 $224
Billion GDP at Current Market
Prices
$
1.3 Billion FDI Inflows
 15%
of mobile phone users are
smartphone users
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The ASEAN market
 604
 49
mn total ASEAN population
% are aged 15-45 years old
 55.3mn
less than 5 yrs old
 $2.2
Trillion GDP at Current Market
Prices
$
114 Billion FDI Inflows
 75-87%
of mobile phone users are
smartphone users (Hong Kong,
Singapore, Malaysia, Australia)
PAGE 15
SUSTAINABLE PORTFOLIO QUALITY
RCBC has one of the lowest NPL ratios in the sector and prudent loan loss coverage
120%
3.75%
100%
4.0%
3.10%
3.5%
102.10%
80%
60%
71.98%
81.97%
1.62%
97.35%
1.85%
3.0%
87.59%
1.07%
40%
83.11%
1.18%
2.5%
2.0%
1.5%
1.0%
20%
0.5%
0%
0.0%
2009
2010
2011
NPL Coverage
STRICTLY CONFIDENTIAL
2012
2013
6m14
NPL Ratio
PAGE 16
LOANS TO DEPOSIT RATIO
Strong liquidity position and diversified funding base
Loans (excluding Interbank), deposits and LDR
Funding mix (6m14)
Total funds: PHP 427.45 billion (USD9.71 billion)
ASEAN 5 Average – 85.2%
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PAGE 17
PERFORMANCE
RECOGNITION
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PAGE 18
RCBC THIRD PARTY RECOGNITIONS
RCBC has been recognised by various third party organisations for business excellence
World Finance
— Best Banking Group in the Philippines – 2012, 2013, 2014
— Best Commercial Bank in the Philippines – 2011
AsiaMoney
— Best Domestic Private Bank in the Philippines - 2012, 2013, 2014
— Philippines’ Overall Best for Interest Rates - 2012
— Best for Interest Rate Derivatives – 2012
— Best Market Coverage – 2012
— Best Interest Rate Research -2012
— Joint #1 Best Liquidity and Market Support for Credit - 2011
— Best Domestic Provider for Interest Rates – Philippines -2011
— Best Domestic Provider for Credit – Philippines - 2011
— Best Pricing and Execution Capabilities for Interest Rates - 2011
— Best Interest Rates Research and Market Coverage - 2011
— Best Sales Service in Interest Rates Derivatives - 2011
— Best Domestic Provider of FX Services in the Philippines (as voted by corporates) - 2011
— Best Domestic Provider of FX Services in the Philippines (as voted by Financial Institutions) -2011
— Best Domestic Provider of FX Prime Broking Services in the Philippines (as voted by corporates) - 2011
Asia Banking & Finance
— Philippine SME Bank of the Year – 2012, 2013
— Online Banking Initiative of the Year – Philippines – 2013
— Core Banking Initiative of the Year - 2013
— Philippines Domestic Technology & Operations Bank of the Year – Phone-a-Loan-Program – 2012
— Domestic Retail Bank of the Year – Philippines – 2012
— Philippine Best Retail Bank of the Year – 2011
— Philippine Best Bank Website – 2011
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Source: Annual report, Company website
PAGE 19
RCBC THIRD PARTY RECOGNITIONS (CONT’D)
56 awards and recognitions
Bangko Sentral ng Pilipinas
— Outstanding Commercial Bank Respondent on Overseas Filipino Remittances Award - 2014
Retail Banker International
— Product Excellence in Credit Cards - 2014
PDEx
— Top-6 Fixed-Income Brokering Participant - 2014
— Top-10 for Overall Trading Activity - 2012
Asia Responsible Entrepreneurship Awards
— Green Leadership Award – Rizal Microbank - 2014
— Social Empowerment Award – Rizal Microbank - 2013
— Best Green Bank for Southeast Asia – 2011
Celent
— Celent Model Bank: Transaction processing category – 2013
Baiphil
— Green banking Champion: Earth care program with Centennial Forest – 2013
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PAGE 20
RCBC THIRD PARTY RECOGNITIONS (CONT’D)
56 awards and recognitions
Global Banking and Finance Review
- Excellence in Enterprise Operational Transformation – 2013
Bureau of Treasury
— Top-10 Government Securities Eligible Dealers – 2010, 2011, 2012
Asian Financial Services Congress 2012
— Best Electronic Banking Website-Philippines - 2012
BizNews Asia
— Platinum Business Icon Award – 2012
— Management Excellence Award – 2012
The Asian Banker
-Best Cash Management Bank in the Philippines – 2012
-Best Core Banking Implementation Project – 2012
Asia Trailblazer Awards
— Special commendation for product excellernce (MyWallet) - 2012
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PAGE 21
RCBC THIRD PARTY RECOGNITIONS (CONT’D)
56 awards and recognitions
FinanceAsia
— Best Managed Mid-Cap Company - 2011
Visa
— Best Overall Provider of Visa Prepaid Services in the Philippines for 2011
— Best Performer in Transaction Number Growth, Payment Volume Growth & Cards-in-Force Growth - 2011
Institute of Corporate Directors
— Silver Award – 2011 Corporate Governance Scorecard for Publicly Listed Companies
Asia CEO Awards
— Most Admired Board of Directors – 2011
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PAGE 22
APPENDIX
FINANCIAL INFORMATION
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PAGE 23
CONSOLIDATED INCOME STATEMENT
(PHP bn)
7.26
1.75
5.05
8.82
0.94
4.38
8.47
1
4.6
10.27
2.24
5.89
2013
6m14
(Restated)
(Restated)
Audited
10.88
10.84
11.4
13.31
7.58
3.16
2.54
2.49
2.05
1.13
8.41
10.09
11.34
9.81
2.88
10.56
12.26
12.07
13.91
16.13
18.39
20.25
21.07
9.33
8.05
2.52
0.63
1.89
8.17
4.09
0.85
3.24
8.98
3.09
0.92
2.17
9.83
4.08
0.75
3.34
10.88
5.26
1
4.26
12.4
5.99
0.92
5.09
13.56
6.7
0.75
5.96
14.47
6.59
1.26
5.33
6.88
2.45
0.43
2.02
0.16
(0.04)
(0.02)
(0.01)
(0.01)
(0.03)
(0.01)
(0.01)
(0.00)
2.05
3.21
2.15
3.33
4.25
5.06
5.95
5.32
2.02
2006
Net Interest Income
Provision for Loan Losses
Total Non Interest Income
Income before Operating Expenses
Total Operating Expenses
Income before Tax
Provision for Income Tax
Net Income
Net Income / (Loss) attributable to
Minority Interest
Net Income attributable Parent
Company Shareholders
STRICTLY CONFIDENTIAL
2007
2008
2009
2010
2011
2012
PAGE 24
CONSOLIDATED BALANCE SHEET
(PHP bn)
2006
Cash/Due from BSP/Due from Other Banks
2007
2008
2009
2010
2011
2012
2013 Audited
(Restated) (Restated)
6m14
26.45
28.23
28.06
29.2
35.7
46.22
51.88
69.85
75.47
21
11.42
23.6
24.36
24.26
17.97
4.69
20.59
1.47
58.91
64.58
26.14
45.8
70.97
87.73
95.18
92.7
24.38
-
-
20.67
19.96
18.5
-
-
-
71.69
87.93
105.78
140.8
140.54
139.72
168.23
186.21
217.37
234.43
Bank Premises, Property & Eqpt. - net
3.39
3.5
4.03
4.75
5.34
6.46
7.51
8.81
8.60
Equity Investments - net
2.05
4.17
4.29
4.02
3.5
3.61
3.95
0.33
0.30
Real & Other Properties Owned/Acq. - net
9.99
7.76
7.39
5.07
7.3
7.65
6.78
4.58
4.82
Other Assets
14
13.65
13.28
14.82
14.11
7.41
7.14
7.63
6.29
Total Assets
223.71
239.1
268.27
288.52
319.4
345.27
363.34
421.87
427.45
Demand
9.88
10.77
11.13
11.03
11.6
10
10.57
28.45
28.41
Savings
57.98
66.77
75.74
93.57
108.41
134.24
130.3
157.07
159.28
89.7
98.39
109.36
115.67
116.77
111.04
105.89
112.34
113.41
157.55
175.93
196.23
220.28
236.78
255.28
246.76
297.85
301.10
30.65
23.34
31.46
20.93
28.93
30.27
41.88
55.89
51.20
Senior Debt
6.69
5.65
6
5.84
10.93
10.91
21.55
23.32
22.93
Subordinated Debt
5.43
5.16
6.94
10.93
10.95
10.97
10.99
-
6.94
200.32
210.08
240.63
257.97
287.58
307.42
321.18
377.06
382.16
Minority Interest in Subsidiary/Allied Undertakings
-0.28
-0.31
-0.04
0
-0.03
0.2
0.03
0.23
0.02
Capital Funds
23.68
29.33
27.68
30.55
31.85
37.65
42.13
44.79
45.26
223.71
239.1
268.27
288.52
319.4
345.27
363.34
421.87
427.45
Interbank Loans Receivables
FVPL/AFS
Held to Maturity Investments
Loans-net
Time
Deposit Liabilities
Other Liabilities
Total Liabilities
Total Liabilities & Capital
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PAGE 25
KEY RATIOS
2006
Return on Average Capital
Funds
Return on Average Assets
Net Interest Margin
Cost-to-Income Ratio
NPL Ratio
CAR
2007
12.64% 12.43%
2008
2009
2010
2011
(Restated)
2012
2013 Audited
(Restated)
6m14*
7.40% 11.95% 14.08%
17.44%
16.07%
12.18%
8.95%
1.01% 1.42% 0.87% 1.24% 1.47%
4.84% 5.00% 4.25% 4.62% 4.55%
65.36% 61.88% 68.69% 60.86% 56.37%
1.63%
4.13%
59.41%
1.70%
3.93%
58.56%
1.39%
4.22%
61.14%
0.97%
4.31%
65.83%
5.62% 5.27% 2.55% 3.75% 3.10%
20.30% 18.70% 17.30% 18.47% 17.77%
1.62%
18.52%
1.85%
17.61%
1.07%
1.18%
16.52% 13.76%1/
1/ BASEL III
*Annualized
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PAGE 26