United Coconut Planters Bank

UCPB 2012 Annual Report / 1
TABLE OF
CONTENTS
Message from the Chairman
4
Message from the President and CEO
8
Financial Highlights
12
Operational Highlights
14
Branch Banking
16
Consumer Banking
20
Corporate Banking
24
Treasury
28
Trust Banking
30
Human Resources
32
Marketing
34
Corporate Social Responsibility
36
Risk Management
38
Corporate Governance
45
Board of Directors
48
Advisory Council
56
Management Committee
60
Senior Officers
62
Products and Services
68
Audited Financial Statements
70
Branches and Subsidiaries
154
About UCPB
UCPB is a leading provider of financial products and services to private corporations, middlemarket companies, small and medium-sized enterprises (SMEs), government institutions and
individual customers in the Philippines.
ABOUT THE COVER
The country’s first privately owned universal bank, it provides expanded commercial banking
services notably domestic and foreign currency deposits, loans and trade finance, domestic and
foreign fund transfers, treasury, foreign exchange, investment banking and trust services.
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There are many directions that one can choose to go.
Two turns when making a decision, backwards when
remembering the lessons learned, but for UCPB, there
is only one direction to take – forward.
Forward to better and brighter days, forward to
stronger business, forward to the future. There is no
better time than now to take this step.
Committed to bringing the Bank to the future, the
leadership and people of UCPB chart a new course in its
history by creating initiatives that focus on achieving
sustainable growth for the company.
For UCPB, the future is bright, the future is now.
Being at the forefront of customer service innovations is among UCPB’s key strengths. Among the
first banks to introduce ATM service in the late 1980s, it took the lead with three other banks in
organizing Megalink, the Philippines’ first ATM network, in 1991.
UCPB has a multi-channel service delivery network that enables it to meet client needs anywhere,
with 188 branches and 277 ATMs by the end of 2012. It has embarked on putting in place mobile
and online banking facilities that effectively expands its reach and coverage of the marketplace.
Its subsidiaries are engaged in related areas of financial services such as thrift banking, financing,
leasing, real estate development and stock brokering.
Beyond banking, UCPB is also a key player in countryside development. Its UCPB-CIIF Finance
and Development Corp. and UCPB-CIIF Foundation implement various credit programs and
community building activities in 62 of the country’s 64 coconut-producing provinces to help uplift
the quality of life in coconut-producing communities.
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Your Bank is entering a new phase in its history as a corporation and as a universal bank.
I am pleased to report that in 2012, we reached our 50th year milestone with record performance yet unseen
in our history. As we celebrate the first five decades, we confidently look into the future and are moving
forward into UCPB’s next 50 years with greater strength, vibrancy and focus.
The Philippine Economy
The Philippines showcased its resilience and strong fundamentals when it defied global financial maelstroms
to post 6.6% growth in GDP in 2012. This surpassed expectations and earned for the country the sterling
distinction of being one of the fastest economies in Asia.
The Philippine economy accelerated in the second half of the year on the back of robust consumer
demand, higher public expenditures and a jump in farm output and property sector. Coupled with these
macroeconomic measures are the surging business process outsourcing (BPO) industry, strong remittance
inflows, and the renewed business confidence which combined to drive the economic resurgence in 2012.
Remarkably, the strong economic growth was achieved with inflation remaining low and stable, and shows
the effectiveness of fiscal and monetary policies set by the government and monetary authorities. At the
same time, the Philippines continued to have a strong external position, with balance of payments surplus of
$9.2 billion and Gross International Reserves at $83.8 billion as of year-end, which underscore the enhanced
standing and capacity of the country to meet external financial shocks.
The Banking Sector
The banking sector was a beneficiary of the robust Philippine economy, with over-all loans and deposits
going up on the strength of private consumer and business spending. Accordingly, gross assets, loans,
deposit liabilities and capital accounts continued to post significant growth. As of December 2012, the total
assets of the banking sector reached record high of 8.14 trillion , aggregate lending totalled 3.24 trillion,
16.2% up from the year before, continuing the double-digit growth rates since 2011.
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The expansion in bank lending was sustained along with the
improvement in loan and asset quality, with non-performing
loans dropping to record-low of 2% last year, in contrast to the
over 18% in the wake of the 1997 Asian financial crisis.
The Philippine banking sector continued to exhibit
capitalization over and above the regulatory and international
standard thresholds, with computed capital adequacy ratio of
17.6 percent in 2012 and net Tier 1 CAR of 14.4 percent during
the year in review.
A Springboard for Faster Growth
As we celebrate our 50th year, your Bank managed to register
all-time high corporate results, highlighted by record levels of
revenues and profits. Total assets continued its ascent to 218.6
billion, bannered by the growth in total capital to 20.7 billion
and deposits to 172.8 billion in 2012, which underscore our
financial strength and stability.
The country’s positive macroeconomic fundamentals and your
Bank’s unrelenting effort to execute its strategic directions that
was started in 2009 have put it in position to solidify its market
standing and to grow even further in the next few years.
These strategic programs would not have been possible
without the steadfast support of shareholders as represented
by the Board of Directors, as well as the management team and
people across the Bank. This expression of vision and support
has sustained management’s drive and strategic initiative to
build the UCPB of the future.
Fresh beginning, new start
Indeed, UCPB is riding high on the momentum of its strategic
endeavors. As we celebrate UCPB’s 50th year and as we renew
our corporate mandate, we are given a fresh start and are
blazing a new trail in its history. For this opportunity to carry on
our legacy of contributing to the nation’s coconut farmers and
continuing to provide value to our customers and depositors,
we wish to express our sincere gratitude and appreciation to
the Board of Directors and our shareholders.
The last four years have seen the unstinting support of the
National Government and the patronage and trust of our
customers, partners and the general public at large. We hope
to build once again a great partnership with all to create a new
foundation for the fast forward growth of the Bank.
Mabuhay ang UCPB. Mabuhay ang Pilipino.
We stepped up momentum in 2012 as we stayed the course
in our plan to deepen our relationships with corporate and
individual clients by offering end-to-end deposit, investment
and credit products that provide superior value. Our focus is
on supplying customers with products and services that are
relevant to their life-cycle needs and wants.
Menardo R. Jimenez
Chairman
Through the last four years, we have invested in re-branding
effort, product development, branch expansion and in
organizational improvements that have enhanced our
capability to serve our markets efficiently and productively.
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AND CHIEF EXECUTIVE OFFICER
The best way to create the future is to invent it.
The year 2012 caps an eventful five-year period from 2008 that has been marked by
expansion and downturns in the domestic economy and financial and economic upheavals
on the global front.
Amidst these volatility and seeming instability, your Bank delivered commendable operating
and financial results that began with the dramatic turn-around in 2009, which we have
sustained in the years hence. This is a testament to the validity of our strategic directions,
and the collective will and commitment of the UCPB organization to lead and reinvigorate its
future in the years to come.
Performance Reinvented
UCPB continued to perform, setting a new record in profitability and in attaining new levels
of resources and assets in 2012.
Net income after tax totalled 3.92 billion for the year, up 28.10 % from the 3.06 billion in
2011. This is the 4th year in a row of strong and consistent performance beginning in 2009
under the program that put the Company on track to growth.
The strong growth in earnings surpassed targets and is attributable to the expansion of our
loan portfolio and the better-than-expected income from treasury operations and our feebased businesses. Net interest income increased 3.63% from 6.61 billion to 6.85 billion
in 2012. Consolidated loan portfolio expanded 26.97% to 89.54 billion from 70.52 billion
in 2011. Although the loan portfolio expansion was significant, the increase in net interest
income was tempered as the Central Bank no longer pays interest on bank reserves deposited
to them.
Reflecting the expansion in our penetration of the corporate and commercial sectors,
corporate and commercial loan bookings went up 32.95% to 55.84 billion in 2012 from
42.00 billion the previous year. The growth in our consumer banking business was
sustained, with booked loans expanding 32.69% from 15.51 billion to 20.58 billion
during the year in review.
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We supported the expansion of investable assets by increasing
markets around the country, which we intend to leverage
our total resources to 218.58 billion and deposits to 172.77
to accelerate the uptake of new loans in 2013 and beyond.
billion, which enabled us to generate more loans at lower
Coupled with the organizational move, we have also invested
costs. To supplement deposits, additional funding for loan
in the Bank’s people and processes. Training and development
requirements primarily came from the issuance of Long-Term
programs were implemented across the UCPB organization,
Negotiable Certificates of Deposits, which increased by 24.37%
particularly the roll-out of our reinforced sales management
to 9.44 billion in 2012 from 7.59 billion in 2011.
and marketing system to develop the process and culture to
compete in the market and drive our future growth.
The Bank managed to improve its overall NPL ratio from 7.79%
in 2011 to 5.83% in 2012, reflecting the improved quality of our
The Next 50 Years
assets. Of the total NPLs, 57.31% are fully covered by allowance
There is no mistaking about it – the future is now. Overall, your
for credit losses, as such NPL ratio will further improve to 2.5%.
Bank has proven its capability to deliver strong and steady
growth. We have ourselves in this position by putting in place
Strategy Drives Operations
sound and coherent strategies and the necessary mindset and
Since 2008, UCPB has committed itself to the reinvention and
organizational enhancements for us to chart a new course in our
reinvigoration of the Bank. The far-sighted vision and wisdom
history.
of the government’s move to recapitalize UCPB on the basis of
the earlier settlement of the ownership issue by the courts have
We thank the Bank’s shareholders for extending our corporate
provided the focus and the impetus for the Bank to resolutely
mandate for the next 50 years. This is a testimony to their
pursue its growth strategies and programs. Our performance
strong commitment in supporting UCPB as a universal bank
is founded on key strategic programs. Notable of these is our
that serves the general public and as an engine of development
direction is to expand our footprint in the consumer banking
for the country’s coconut industry. With the continuing and
business, which enjoys significantly wider interest spreads and
steadfast support of our Board of Directors and Advisory
healthy and strong growth rates.
Council, customers, business partners, associates and our other
stakeholders, and in relentlessly pursuing our strategies, we are
In this regard, we continued our branch expansion program
confident that we shall move decisively forward to the future
by putting up five new branches and 14 new ATM machines,
we all deserve.
thus lifting our branch network to a total of 188, supplemented
by onsite and off-site ATM network of 277 machines. Moving
forward, our plan is to open more branches and operate more
ATM machines in 2013 in line with this expansion program
to increase our product and service delivery systems to more
areas around the country. This year, we undertook an important
strategic direction to escalate the throughput and productivity
of our branch network as a marketing distribution system. We
Jeronimo U. Kilayko
President and Chief Executive Officer
instituted the simple yet effective structural adjustment of
assigning a branch-based sales officer to deploy our various
consumer loan products in the field.
Complementing this has been our direction to beef up our corps
of consumer loan officers to market our various loan products.
These twin moves shall give us enhanced market coverage and
forward presence in many commercial and high-population
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FINANCIAL
HIGHLIGHTS
FAST FORWARD 2012
The year 2012 culminates the first 50 years of UCPB – and marks the full turnaround of the Bank into operational and
financial stability and sustained growth.
• Sustained our position as one of the most profitable universal banks in the Philippines, with a net income of
PhP3.92 billion,
billion, 28.10% higher than in 2011;
• Continued buildup of loan assets, low-cost deposit funding growth and improved operating efficiency led to a
Return on Average Capital of 20.46% from 19.49% previously;
• Achieved vast improvement in overall asset quality, with a non-performing loan (NPL) ratio down to 5.83% in 2012
from 36.32% in 2004; and
• Increased capital buildup led to a Capital Adequacy Ratio (CAR) of 12.32% — meeting the requirement of the
Bangko Sentral ng Pilipinas and the prescribed international standard.
With its growth performance above par of that of the over-all banking industry in a period of diminishing spreads,
UCPB has definitely demonstrated that it is back on track on the way to regaining its top-tier position within the
Philippine financial space.
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FUTURE PERFECT
The future is all about coverage, collaboration, creativity and
competitiveness – summarizing the strategic directions of the
Bank. Competitiveness and collaboration are achieved through
expansion of our market footprint and deepening our relationships
with clients to unlock opportunities to serve the whole gamut of
their needs.
In UCPB, continuous collaboration with Clients is paramount.
It means knowing and anticipating their needs, which in turn
unlocks opportunities to expand the banking business.
Coverage creates larger market spaces for the Bank to operate
and serve customers. We expand our market footprint across
geography, business classifications and socio-economic
boundaries.
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BRANCH BANKING
Blazing the Marketing Forefront
The Branch Banking group maintained its drive to exploit and maximize opportunities in the frontlines of the
Philippine banking market.
In 2012, it continued to produce creditable operating results in generating low-cost funds. Total deposits amounted
to 172.77 billion in 2012, an increase of almost 5% from the year before. The average daily balance was even more
impressive as it grew by 12.88% during the period in review, much higher than the 9.4% posted by the overall
banking sector. Since 2009, the volume growth of checking and savings accounts of UCPB has been above that
of the industry.
The steady increase in business volumes has been supported by the introduction of innovative products and
services that fit the requirements of our customers. Among the products launched in 2012 are the UCPB Mobile
Phone Banking Service, Corporate Checkwriter, Point of Sale (POS) Collection Service and the Internet Payment
Gateway through Megalink.
The positive results were also attributable to the expansion of the branch network to 188 and the installation of 14
new ATM machines to bring the total to 277 by year-end. The new delivery portals expanded our market coverage
to new areas where we previously have no presence. In addition, 4 more branches were renovated to conform to
our rebranding program.
Beyond the branch infrastructure orbit, UCPB streamlined the regional branch organization and added three
regional managers to ensure adequate on-ground management and monitoring of operations. The branch
organization was likewise strengthened by the assignment of a sales officer dedicated to the development of
markets for our consumer loans business.
Structural improvements were matched by process enhancements and training and development of the frontline
branch officers. During the year, we continued the installation of the UCPB sales management system throughout
the branch network. An automated sales prospecting program was rolled-out in coordination with our Information
Technology and Methods Group to assure the identification of prospects and the management of the sales process
from lead generation to closing. An integral part of the system is the sales management training program for
branch officers spearheaded by Human Resources.
Moving forward, the Bank is planning to open more branches and acquire more ATMs in 2013 in line with the
positive economic outlook. UCPB aims to take advantage of buoyant consumer spending due to increased
overseas remittances and the robust business process sector, as well as higher public infrastructure expenditures
during the year.
The branch network is at the frontline to build volumes not just in deposits
but more so in driving the consumer banking business because of its reach
and presence. Our strategy is to deploy the sales officers to wherever the
clients may be – in offices, in commercial malls and districts, in schools
and population centers – and aggressively serve their deposit, payroll
processing and cash management, and other banking needs.
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Manuel Lorenzo L. Tuason
President
CIS Bayad Center, Inc.
Ma. Lourdes S. Valero
Vice President for Finance
Bistro Group of Companies
Business Partnership All the Way
With over 3,000 over-the-counter payment centers situated throughout the archipelago, CIS Bayad Center has
been receiving and processing the payments of millions of customers of such companies as Meralco, PLDT, and
more than 160 utility and other service corporations for 15 years now.
UCPB Turns A Problem into a Happy Ending
Through the years, UCPB has been an invaluable banking partner, providing cash management
and cash pick-up services for Bayad Center sites, ensuring accurate and timely processing and reports to the
business.
“UCPB stands out among our banking partners in that it takes time and effort to know and understand our
business and the processes involved from start to finish,” Manuel Lorenzo L. Tuason, CIS Bayad Center President,
said. He added that the significant amount of funds that the Bank has been handling for Bayad Center reflects
the trust and long-standing relationship with the payment center pioneer.
“We are happy to see UCPB leveling up the partnership to match our plans to create higher operating efficiencies
and to expand in more areas in the Philippines and in the Asia-Pacific,” Mr. Tuason declared. And UCPB remains
solidly behind it to provide its ever-ready services and business network to lend support all the way.
Corazon D. Ong
Chief Executive Officer
Foodsphere, Inc.
Steady service performance fuels growth
The roaring 1990s – a period of rapid economic growth, IPOs and global portfolio funds – came to a
screeching halt following the Asian contagion that hit the region in 1997. Like most businesses during
the period, the Bistro Group – bannered by popular restaurant concepts Italliani’s and TGI Fridays –
aggressively undertook an expansion program.
“The Bistro Group financed expansion primarily through bank financing,” Ms. Ma. Lourdes S. Valero,
Vice President for Finance, explained. Due to the economic slowdown which brought lower sales and
reduced business opportunities, the Bistro Group experienced difficulties in servicing debt payments,
and it applied for relief and refinancing of its loans with UCPB.
To its credit, UCPB took cognizance of the fundamentals of the Bistro business and moved decisively to
see how it could assist the client. Ms. Valero recalled that UCPB re-structured Bistro’s loans even without
additional collateral, unlike other creditor bank which imposed attachment proceedings to some of the
Company’s properties.
“Without UCPB, we couldn’t have survived the worst time in our history,” Ms. Valero emphasized. She
said that Bistro committed to reduce expenditures and pay back the loan, but in the end it was the
understanding and trust of UCPB that enabled the Group to come out of the crisis to get back on its feet.
Bistro was even able to prepay the re-financed loans ahead of the 10 year timetable.
Now the Bistro Group has regained its stature as the leader in the casual dining business in the
Philippines – all because of UCPB’s foresight and brave decision to trust and support a valued client.
In the consumer market, Foodsphere, Inc. has carved a reputable name as a producer of quality branded
processed meats, with brands such as CDO, Holiday, Bibbo, San Marino and Highlands becoming leaders in
various market segments and have become household names.
For fifteen years now, UCPB has become a key part of the CDO sales and distribution system that makes it
possible for their products to make their way to the tables of families who consume their products every day,
from north to south around the country.
UCPB has reliably provided cash pick-up and delivery for its distribution points in La Union and Pangasinan from
where products are off-loaded to local supermarkets and retailers in the north. The Bank likewise services the
cash pick up and delivery in the Company-owned store in Valenzuela.
Plans are underway to provide the same banking service to CDO distributors and dealers in the countryside which
potentially will lead to greater efficiencies and faster integration in the CDO sales network. For UCPB, nothing
exceptional: service excellence is all in the day’s work.
Rolando de Leon
President
Bataan Transit Co., Inc.
Francisco Paulino V. Cayco
Chairman and Chief Executive Officer
Carrying A Bus Transport Group to Higher Greater Heights
Alma C. Curato
Board Member and Vice President for Finance
Arellano University
Banking on Trust
A family owned educational institution that is treated like family by a universal bank. That is Arellano University,
a venerable 75-year old institution founded by the Cayco family that now boasts of six campuses around Metro
Manila, with combined enrollment of 23,000 students from elementary to post-graduate levels. It is well-known
for the academic excellence of its graduates in nursing, physical therapy, other allied medical courses as well
as in law, arts and sciences, accountancy, business, hospitality and tourism management and information
technology.
“Our relationship which began in 1980 has been solidly built through the years on trust and confidence,”
Chairman and Chief Executive Officer Francisco Paulino V. Cayco declares. He further states that, “ UCPB’s
creative and innovative approaches lasted through the years because it offers its’ clients solutions to their
problems instead of run of the mill traditional products as other banks have been doing. This strong sensitivity
and connection is what differentiates UCPB from the other banks.” Mr. Cayco adds that UCPB’s services like
mobile cash pick-ups make their banking experience convenient, easy, simple and less complicated.
Arellano University Vice President for Finance Alma Curato also points out that having multipoint business
locations poses a challenge for their financial needs, which is why flexibility and pulling out all stops to serve
its various needs in a timely fashion is so important. Arellano also avails of UCPB CM.Biz, the corporate internet
banking facility to enable easy management of cash, collections and working capital.
“We like UCPB because it puts its money where its mouth is, “Mr. Cayco concluded. He adds that because of
the mutual goodwill built through the years, Arellano has stayed on as a client even during the most difficult
and challenging times. With UCPB, banking is more than a business. It is a relationship that nurtures its clients
through thick and thin,”
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Operations of a bus transport company is a 24/7 business, and is all about providing reliable and
satisfactory service to the riding public.
“In running a bus transport service, doing the little things well and efficiently and with strict attention
to schedules are key to profitable operations,” Bataan Transit Co., Inc. President and General Manager
Rolando De Leon declared.
He runs the leading and most trusted bus company plying the Manila-Pampanga-Bataan corridor and the
First North Luzon Transit, Citibus Transit and Star Bus that operates in other key destinations in Central
and Northern Luzon. Together, the group has 300 operational buses that go to and from Manila to the
northern provinces of Luzon.
Mr. De Leon has credited UCPB with providing an important link to the group’s transportation business as
a banking partner. “Even though our relationship just started two years ago, and even if our requirements
are simple, the Bank has given outstanding and consistent service,” he said.
Placement of corporate accounts in UCPB is supplemented by deposit pick-up service from the group’s
various terminals in Manila, Quezon City and in Bataan and the other provinces. It also avails of cash
management, disbursement services and payroll for its more than 500 employees.
Reliable service by a banking partner and the entrepreneurial acumen and determination by a client that
knows what it takes have transformed the Bataan Transit group into a thriving and expanding transport
enterprise that is sure to serve the riding public in the many years to come.
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CONSUMER BANKING
New Driver of Performance
The consumer market is significantly growing in tandem with the expansion of the economy and Consumer
loans portfolio in 2012 totalled 20.58 billion, up a hefty 32.69% from that of the previous year.
Home loans provided the highest share in new loan bookings and net income contribution. The ma jority of
the home loan portfolio of UCPB consists of end-users of real property, mostly in Metro Manila and partly in
Cebu, Iloilo and Cagayan de Oro provinces. In the bid to further expand loan volumes, UCPB heightened its
accreditation and institutional tie-ups as lender-partner with ma jor property developers nationwide.
Auto loans contributed 2.70 billion in new loan accounts. Initiatives such as the “Drive Your Worries Away”
Promo, which entitled qualified borrowers to free 1-year comprehensive insurance with acts of nature coverage,
and other sales incentive schemes implemented during the year contributed to the overall portfolio.
Further, the Bank concluded partnerships with ma jor car manufacturers and dealers. We established a
beachhead in the vehicle fleet market, notably for corporate car plans and car rental operators.
The personal loans sector achieved status as one of the fastest-growing segments in consumer banking,
with new bookings nearly doubling from 0.52 billion to 1.00 billion in 2012. This consisted of salary loans of
employees of institutional clients and multi-purpose loans sourced by third-party loan marketing agencies.
Overall, the Bank benefited from the strategy adopted during the year to increase focus on selling consumer
loans by the branches, which enabled us to capitalize on cross-selling opportunities that drove up branchoriginated loan bookings by 50%.
Moreover, we are expanding and strengthening our loan product portfolio with the development and eventual
launch of the Small Business Loan, Franchise Loan and Seafarers Loan in 2013.
Looking forward, the outlook for the consumer banking business is most favorable and auspicious. We are
anticipating gross growth rate of 45% in 2013, with car loans and personal loans to grow at accelerated speeds
in line with higher consumer incomes and spending.
Consumer banking is the sunrise sector for UCPB. It enjoys positive short
to medium-term prospects, while ensuring higher yields and margins
that will drive growth in the Bank’s future earnings.
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Atty. Albert Ocampo
Karen Bacosa
Making Things Simple to Deliver Customer Satisfaction
Impeccable Customer Experience with UCPB
Lawyer Albert Anthony H. Ocampo beams whenever he recalls how UCPB walked the extra mile
to help him out to finish construction of the home of his dreams.
For first-time borrower Karen Bacosa, her experience in obtaining a car loan has been, simply perfect.
When she joined Mead Johnson as Brand Manager last October 2012, part of her package was a car
plan with a choice of being provided a car or to purchase a new car with subsidy from the infant formula
manufacturing company. She chose to avail of the latter.
Once she picked a car of her choice and knocked on Kia E Rodriguez branch, she was confronted with the
decision of selecting the bank that will finance the ma jor part of the price tag. When she asked friends
and relatives who have had experience in borrowing, they invariably singled out a bank that gave them
an impeccable customer experience: UCPB.
“When the Kia sales people gave good words and recommended the Bank, there never was any doubt that
it had to be UCPB,” she happily recounted.
Ms. Bacosa, a veteran marketing professional, knows how important the product or service experience is
in building rapport and inspiring loyalty with a customer. She said UCPB clearly lined up all the specific
requirements and explained the procedures involved from the start. Everything was a breeze from up to
the time she got the keys to her brand new Kia Sportage SUV just a few days later.
She added that “there was never any doubt that UCPB was willing to help me as a bank loan customer.”
For a first-time borrower, the experience brings a smile to the pretty mother of two.
An executive of a large condominium developer, he didn’t realize that a loan application could
be a little more complicated – and that the approval and release of a housing loan could take
longer.
He began construction of his dream house in the first half of 2012 in the family compound in Los
Banos using personal funds first and planned to avail of a Pag-Ibig loan to finance the second
half of the construction. Unfortunately, it turned out that the loan application process was more
suited to homes built by subdivision and property developers.
Moreover, little did he know that the location would further prove to be another complication
since the lot is in a commercial resort property. Banks in general do not allow housing loans for
lots located in commercial zones.
When his colleague referred him to UCPB, he was a pleasantly surprised that it was different.
After applying for the loan , the property was appraised just a week later, and things moved like
clockwork. The loan funds were released in only a few weeks, and the construction project was
completed shortly. He, together with his lovely wife and two boys moved into and now happily
reside in their new Zen-inspired two-story home.
For UCPB, customer satisfaction is paramount – even if there are a few complications. “UCPB
makes things simple for its clients,” the satisfied lawyer and first-time borrower proclaimed.
“UCPB really cares about customers like me.”
Jocelyn L. Guzman
President
Property Company of Friends Inc.
Art Joseph Francis Mercado
President
AJFM Logistics Inc.
Helping Create Communities for the Filipino Family
Contributing to Client Success
Art Joseph Francis Mercado is the scion of the family that owns a regional passenger bus operator
that plies the Manila to southern Tagalog area.
But make no mistake about it, the 23-year old Mr. Mercado is his own man and is the principal in
the AJFM Logistics Corporation. Barely a year old, his company is making its mark in product
distribution and has forged contracts with Monde Nissin, Gardenia, Chowking and Robinsons Malls.
In addition, AJFM won the customer shuttle service contract for customers of the newest gaming
and entertainment attraction in town, Solaire Hotel and Resorts.
“UCPB was recommended by Toyota when I inquired about a fleet purchase of the Grandia Hi-Ace
vans for the Solaire project,” Mr. Mercado mentioned. Toyota said that UCPB was an accredited
bank for credit financing and a prime choice of the car dealer.
UCPS’s consumer banking group wasted no time and effort to assist Mr. Mercado in the processing
of the loan application and evaluation. Shortly, Mr. Mercado was able to take delivery of the 10
vans and deployed them just as he committed to the Solaire management.
“The Bank did everything possible so that I can make it and satisfy my client,” he noted. “I believe
this is the start of a long and fruitful partnership.”
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Property Company of Friends (PRO-FRIENDS) Inc. is one of the fastest-growing real estate
developers in the country and has made its mark in the industry after delivering 15 horizontal
projects even though it only started in 1999. It boasts of an array of concept communities in
various locations in Cavite, Pampanga, Iloilo and Metro Manila.
“Because of our exponential growth and our rapidly changing requirements, we need a bank
that can match the pace of our genesis as a property player,” Jocelyn L. Guzman, President and
Chief Executive Officer, said.
Since 2004, UCPB has proven to be a reliable primary bank by being its financing partner for
house-and-lot packages extended to its numerous customers, while providing other banking
services that are critical to a property firm.
“The bank’s strongest asset is its ability to think and operate out of the box,” Ms. Guzman
emphasized. She was quick to commend the bank’s account officers added that although they
remain flexible in accommodating requirements, the company’s expectation is appropriately
managed to ensure that the bank’s interest is also protected.
Flexibility. Innovativeness. Customer Focus. These have spelled the difference for PRO-FRIENDS
as it continues to make even bigger strides as a force in Philippine property development
industry.
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CORPORATE BANKING
Greater Inroads in the Middle Market
Corporate banking reached new heights in 2012. It registered outstanding loans totaling
significantly expanding by 32.95% from the 42.00 billion posted in 2011.
55.84 billion,
UCPB’s corporate loans are much higher than the over-all loan portfolio growth of 26.97% by the universal and
commercial banking industry, reflecting the increased market penetration of the business market segment. It
was the beneficiary of the healthy business environment and highly improved economic outlook.
We strengthened our focus on new account acquisition, even as we ensured account retention through
customer relationship management and the provision of a complete range of financial solutions – from
savings, placements, payroll services to cash management. Our deep relationship and our knowledge of
customer needs allowed us to increase the average credit line utilization rate to 60%.
Our plan is to improve further improve our capability and level of service to the middle market, which as a
sector, is expected to grow more rapidly than the general economy.
The Bank is excellently positioned in the middle market business space
– family-owned business enterprises with some 100 or more employees
and characterized by personalized service and relationships –
wherein 80% of the over-all accounts are located. Positive proof of the
Company’s adherence to the logo’s slogan: “It’s personal!”
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Clemente Garcia
President
Headland Distribution, Inc.
Customer-Centric Culture Leads to Success
For Headland Distribution, Inc., a fertilizer distribution company servicing the Northern and Central
Luzon area, speed and flexibility, quick response and open communication lines make the difference
between success or failure.
Its President, Clemente Garcia, attests to these qualities that have characterized the relationship
for the last six years. “UCPB delivers on its brand promise of personalized and quick service,” Mr.
Garcia confides.
He recounted that he personally experienced the kind of customer-driven culture of UCPB when
he needed a temporary increase in credit line to service a large order of fertilizers. “It was UCPB
that came through by quickly acting and making a decision to help me in delivering the order,” he
declared.
Rene D. de la Calzoda
President
Tridharma Marketing Corporation
Since being introduced to the Bank when he started his fertilizer distributorship business by the
Philippine Phosphate Fertilizer Company, listening and knowing the needs of the business have been
the norm in his Company’s banking relationship. UCPB initially approved an initial clean credit line
of 40 million, which has been eventually increased to 175 million.
This partnership has expanded through the years as UCPB is now also the collection, savings
account, cash disbursement, and payroll service provider not only of the original fertilizer business
but also his other business ventures, including rice milling facilities and warehouses, a Kia dealership
in Bulacan and soon, a BMW dealership in Quezon City.
“UCPB has not failed to support our business consistently and continuously,” Mr. Garcia concluded.
“This is surpassing customer expectations in action – day in and day out.”
Helping to Change the Game
For veteran sales and marketing executive Rene de la Calzada, it was a combination of foresight
and faith to see beyond the adversities that has contributed to making Kopiko a frontrunner in
the coffee mix business in the Philippines.
“Considering that we were yet unproven, UCPB took the risk and got our business off and
running when it invested and provided credit line of 50million in the crucial early stage of
operations,” Mr. De la Calzada, Tridharma Marketing Corporation President, recounted.
Victor C. Batungbacal
President
Asiaphil Group of Companies
Powering up Asiaphil’s Businesses
For Asiaphil President Victor Batungbacal, UCPB is considered an integral part of the company’s
business operations and growth.
Asiaphil Manufacturing is a pioneering Filipino-owned electrical manufacturing and engineering
corporation that first assembled panel boards, electrical distribution equipment and substations
when it was founded in 1973. It has since achieved a solid reputation as a quality provider of
equipment and construction services in the field of power distribution for the country’s top industrial
corporations. It is ISO 9001-certified for its electrical design, contracting and maintenance services.
He explained that their Indonesian principal awarded the distribution rights to Tridharma in
2006 after the previous licensee failed to grow the business and Kopiko suffered from negative
image. In spite of this initial disadvantage, it worked to develop the lower-end trade channels
that included public markets and sari-sari stores. Later, it introduced Kopiko instant coffee mix
through product sampling and comprehensive product placements in the retail shelves which
proved to be the game-changer.
Tridharma created a new market category which had long been dominated by multinational
and local instant coffee manufacturers. After six years, Kopiko has become synonymous with
3-in-1 coffee mixes and the Kopiko Brown Coffee is now one of the bestsellers.
Mr. de la Calzada affirmed that “we can always rely on UCPB for our financing needs because it
understands our business.” Apart from the trade lines, the Bank has provided financing for the
purchase of its vehicles and equipment.
“UCPB has been with us every step of the way,” Mr. de la Calzada declared. When a bank that
is genuinely concerned and supports a company that is in turn driven to becoming a gamechanger and a market leader, indeed, how can such a combination go wrong?
A long-time client of UCPB, the relationship began in 1989 when the corporation was trying to get
up on its feet again following the semi-retirement of its founder (Victor’s father, Guillermo). Mr.
Batungbacal recalls that the bank’s endorsement as creditor bank for a project enabled them to be
awarded one of their first ma jor orders. And that was the beginning.
Since then, this meaningful gesture has blossomed into a broad and deep relationship that has
involved UCPB’s products and services in ma jor aspects of Asiaphil’s business operations that now
includes a full range of commercial credit facilities, vehicle financing, payroll crediting and online
banking facilities.
When applying for and utilizing loans to complete large-scale projects, enjoying faster, safer, easyto-monitor fund transfers and account monitoring through UCPB CM.Biz, or availing of the extensive
branch network, the UCPB branch managers and relationship managers know the company’s
needs, and highly appreciate the special treatment it provides in terms of priority processing of
transactions.
“Our relationship goes beyond the documented processes and controls. And that kind of relationship
is very difficult to find, build and replace,” Mr. Batungbacal declared. “I am thankful to UCPB for its
continuing commitment to the relationship with Asiaphil and continuing to challenge us by forging
more ways to grow.”
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TREASURY BANKING
Treasury Banking Group to seize opportunities and maximize gains. Its ability to make accurate market
readings and execute timely market trades enabled the Bank to realize unprecedented earnings from treasury
operations in 2012.
A Banner Year
The Bank posted a robust 19.34% growth rate in trading and treasury gains of 5.43 billion from the 4.55 billion
in 2011. The trading portfolio stood at 52.47 billion in 2012, 2.68% over the 51.10 billion the previous year.
The year 2012 was an excellent year for the Philippine financial market.
After two consecutive years of being one of the fastest growing capital markets in the
world, the country is now in the global radar for investments. Moreover, rating agencies
were unanimous in branding the Philippines with positive outlook in recognition of sound
macroeconomic and banking fundamentals, paving the way for the country to earn its first
investment grade status.
The influx of global funds to the Philippines contributed to the positive market environment
fueling the strong appreciation of debt instruments and securities, which enabled the
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In 2013, the US economy is showing signs of firmer recovery, while the effort of international financial institutions
to stabilize and manage the contagion in Europe is beginning to take a positive turn. These factors will result
again in the shift in global flows of funds and money, which could lead to a softening of the Philippine financial
markets and a flattening of market yields.
Hence, it is anticipated that it would be hard to duplicate the extraordinary performance of our Treasury
operations in 2012. Asset re-allocations will be undertaken in our asset portfolio to shift to higher yielding
instruments, while increasing our total portfolio and ensuring closer market monitoring to enable the Bank to
take advantage of market gains.
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TRUST BANKING
Investing in the Future
The Bank’s Trust Banking business mirrored general market
conditions in the country’s financial markets.
The domestic stock market has been recognized as one of
the best-performing and growing markets for two consecutive
years since 2011, in line with the resurgent economy and
strong business confidence in the country. The Philippine Stock
Exchange ranked third globally among top performing bourses
in terms of domestic market capitalization in 2012. The PSE
Index (PSEi) registered a growth rate of nearly 33% year-onyear versus that of 2011.
On the back of the rapid growth of the PSEi, the UCPB United
Equity Funds and Balanced Fund unit investment trust funds
(UITFs) posted rate a return of 25.20% and 17.41%, respectively
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in 2012. The Equity Fund’s return rate more than doubled from the 10.96% in 2011, while the return rate of the
Balanced Fund increased 40.49% versus a year ago.
Positive proof of the performance of the Trust Banking group, the international consulting company Towers
Watson, in a survey of 153 retirement funds, once again ranked UCPB as the best performing fund manager
for the past three-year and five-year periods.
The assets under management by your Bank grew 18.24% from 95.06 billion in 2011 to 112.40 billion during the
year review. In view of the bigger portfolio, income from management fees attributable to the Trust Banking Group
amounted to 132.58 million in 2012, an increase of 7.56% over the 123.26 million registered the year before.
Trust Banking aims to continue the four-year uptrend in the management income by developing new trust
fund products, including estate planning services and employee savings plans. We shall leverage on our solid
fund management track record to generate new business and to take advantage of the economies-of-scale
inherent in a larger trading portfolio.
While the stock market has provided impetus and has been a bright spot on the Philippine economy over the
last four years, the current high valuation of traded counters has put a cap on the upside of the market in
2013. The Trust Business has to stay adept in spotting and quickly seizing market opportunities from across
the board as they become available to be able to match its sterling returns record.
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HUMAN RESOURCES
Future-Proofing the UCPB Organization
The Human Resources Group takes the lead role in supporting UCPB’s drive to
be more market-driven, client-centric, and opportunity-focused. It is constantly on
the look-out for high potential, qualified talents to beef up its roster of professionals.
Collaboration with schools and tie-ups with relevant agencies are continually developed
and enhanced to ensure a steady source of talents to tap. Employment offers are regularly
reviewed to ensure attractiveness and competitiveness.
HR invests heavily on adequate trainings for its associates. In 2012 alone, 25.2 million was spent on
various technical and behavioral trainings to equip associates with concepts and skills that will address
changing business needs, increase productivity, and develop operational efficiency. Special career and
management programs are continually developed and conducted for those who show strong potential for
greater responsibilities. The Accelerated Career Development Program and the Management Development
Program graduated 109 first-level officers in 2012.
Progressive associates are acknowledged, rewarded, and further motivated through a Performance
Management System. Revised in 2011 and fully implemented in 2012, the system measures in detail associates’
accomplishements vis-à-vis their contributions to the goals of the unit. It encouraged acquisition of additional
competencies as a way of exceeding expectations and aided supervisors in the formulation of development
plans.
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Compensation and Benefits
UCPB provides rewarding careers by maintaining competitive compensation and benefits program for
employees.
Basic salary across the organization remains higher than the law-mandated minimum wage. Relative value
of each job and subsequent pay levels are determined by a competency-based job evaluation system. 90% of
employees receive annual merit increases based on a targets-based performance management system. Review of
compensation policies is undertaken regularly by Human Resources Group in consultation with the Compensation
and Remuneration Committee of the Board of Directors.
More so, career advancement continues to be a priority as 13% of officers & employees were promoted in 2012.
On top of competitive salaries, UCPB employees enjoy other compensation and benefits:
• Bonuses
• Overtime Pay
• Leaves (Vacation, Sick, Maternity, Paternity, Solo- Parent and Special Leave for Women)
• Medical benefits (Hospitalization and out-patient benefits for employees and dependents)
• Financial Assistance Loans at affordable terms and other minor subsidies
Retirement benefits, based on tenure and salary, are also afforded to employees to provide financial security
long after their years of dedicated service to the bank.
The noteworthy business results of the past four years are testament
to the enhanced productivity and improved operational efficiency of
highly-trained associates from all levels of the organization.
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MARKETING
Internet Payment Gateway thru MegaLink
The Bank moved decisively in 2012 to develop and deploy banking products that cater to the varied and
changing financial needs of the markets that we serve. Our core strategy is to expand our product mix and
to take advantage of all our customer touchpoints to create superior, real-time and convenient banking
experience for our clients.
In line with this drive, we launched the UCPB Mobile Phone Banking Service, an electronic banking facility that
allows clients to perform banking transactions anytime, anywhere. With the UCPB Mobile Phone Banking app,
clients can performe balance inquiry, fund transfers, bills payment and cellphone load purchase using their
mobile phones and gadgets such as iPhones, iPads and other smart phones. This new product showcases our
thrust to reach out to the younger segment of the market by leveraging on information technology.
The UCPB Point-of-Sale (POS) Collection service went online, enabling clients to collect payments electronically
from their customers’ locally-issued ATM cards through the use of the POS terminals provided by UCPB.
merchants, such as retailers, restaurants and schools can now accept online payments for purchases, food
delivery and tuition fee from their customers.
To address our clients’ disbursement requirements, UCPB launched the Corporate Checkwriter, an enhanced
check-cutting facility that allows corporations to pay their suppliers, service providers and other trading
partners by simply providing the check payment instructions and other details online. UCPB also facilitates
the release of the checks to the payees through the UCPB branch nearest to them.
In support of our product development efforts and on-ground sales programs, the Bank continued to implement
marketing communication campaigns and increased its presence in social media to raise brand and product
awareness and cement the trust and confidence of consumers.
In the next years, UCPB aims to deliver more technology-based banking products targeted to address the
specific financial requirements of our corporate, SME and individual clients.
UCPB also launched its Internet Payment Gateway through Megalink. Accredited UCPB and Megalink web
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CORPORATE SOCIAL
RESPONSIBILITY
Sustaining Gains, Changing Lives
Aside from the efforts of the CIIF Foundation, the Human Resources Group also spearheads other corporate
social responsibility activities throughout the year.
UCPB sustained its mandate to invest in
and empower coconut farmers.
Apprenticeship Program for Student Trainees
The end goal is to raise the quality of life
of the smallest coconut farmers and their
families by providing them opportunities
that will augment their incomes. It
implements the programs in partnership
with cooperatives in coconut farming
communities around the country.
This program enables students to relate concepts they learned from the classroom into the work environment.
More so, it provides on-the-job training to develop and enhance the students’ work-related skills, knowledge
and attitudes relevant to the workplace. It also creates awareness, deeper understanding and appreciation of
the banking business and consequently inspires them to pursue a career in banking.
The program also promotes and strengthens partnerships with the academe by providing job opportunities
and rewarding careers to future graduates. The five-week apprenticeship program provides the students the
opportunity to experience real life work situations and learn from it.
Together with the CIIF Foundation Inc.,
a non-stock, non-profit organization
established on August 28, 1987, UCPB
implements projects to assist coconut
farming families uplift their economic
condition.
Some of the Foundation’s
projects include:
IT Apprenticeship Program
The IT Apprenticeship Program was specially created for Information Technology students who want to use
their theoretical learnings into actual applications. They are given live projects to work on. In addition, this
program provides knowledge, comprehension and awareness of the banking business and wherefore heartens
the students to pursue a career in banking. IT students stay with the bank for six months equivalent to 6 units
in their curriculum.
Scholarship Program
Launched in 2004, the Cocofund Scholarship is the flagship youth and educational development program of
UCPB-CIIF Foundation and provides financial assistance to children of small coconut farmers to pursue tertiary
degrees in state colleges or technical/ vocational courses in Don Bosco Training Centers around the country.
In 2012, the scholarship program graduated 51 college scholars, of whom one garnered summa cum laude honors,
another was awarded magna cum laude and 11 others received cum laude distinction. This demonstrates the
academic excellence of the beneficiaries of the program. Meanwhile, a total of 56 scholars completed their technical/
vocational courses during the year. The Foundation extended the scholarships to a total of 103 new scholars who are
enrolled in 11 colleges and another 89 new grantees in technical / vocational courses during the year.
Thus, the total number of scholarships grants awarded since the program started has reached 1,619, of which
1,014 are in the collegiate level and 605 are grants in technical / vocational courses.
An impact study conducted by the National University of Singapore – Lee Kuan Yew School covering the
program grantees showed that 78% are currently employed or are engaged in coconut farming or in business.
Another 74% said that part of their monthly income go to funding the education of a sibling. The study
validates Cocofoundation’s success in achieving its objective of uplifting the lives of coconut farmer families
under its education program.
Kabalikat sa Edukasyon
Our initiatives in education extended to elementary schools in coconut-producing areas in country. Cognizant
of the below-par performance of Grade 6 students in the annual National Achievement Test, the Foundation has
continued to donate educational resources to help enhance learning and improve instructional effectiveness
in public elementary schools.
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In 2012, the Foundation deployed Educational TV (eTV) packages to 23 additional public schools in partnership
with the ABS-CBN Foundation. To date, 90 schools have received the eTV packages, with 90,000 pupils from
Grades 1 to 6 benefitting from the program. Moreover, it also donated Bright Minds Read kits to 416 public
schools for the benefit of 50,000 Grade 1 students.
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Employee Engagement
CSR is a commitment shared not just by the institution but also its people and associates. UCPB employees
continue to participate in several CSR initiatives including disaster relief efforts in the wake of typhoons, as
well as other community outreach projects in 2012.
UCPB reached out to the victims of Typhoon Sendong in Iligan and Cagayan de Oro City in January by
distributing 2,000 bags of relief goods to help them cope with their day-to-day lives at the evacuation center.
UCPB associates in the head office volunteered to pack the items, and key officers of the bank flew to the
typhoon-stricken areas to distribute the goods and check on the state of the families in Tibasak-USA Calacala
Evacuation Center and Tent City Relocation Site both in Cagayan de Oro City and Echavez Elementary School
in Iligan. UCPB associates from Iligan, Cagayan De Oro, Velez, and Cogon branches who suffered the same
fate were also extended assistance by the bank. Their colleagues from UCPB also came to their aid by donating
money and old clothes to see them through the tough times.
The Human Resources Group visited the San Lorenzo Ruiz Home for the Elderly in Pasay City where they
brought food and entertained the senior citizens there, and even brought a team from a ma jor beauty salon
chain to provide free haircuts for the residents.
The Bank likewise continued to actively maintain more than 33 hectares of watershed reforestation project in
Boso-Boso, Antipolo City near the Sierra Madre foothills. Seedlings of native tree species have been planted
by employees two years ago, which are doing well on to maturity and should help alleviate the problem of
flooding in Metro Manila.
Indeed, UCPB continues to serve the communities it operates in – in ways over and above its mandate as a
banking institution.
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RISK
MANAGEMENT
This system of internal controls covers, not only financial controls, but also
controls relating to governance, operations, risk management and compliance
with applicable laws, regulations, rules, directives, guidelines as well as internal
policies, processes and procedures.
The Parent Company and its subsidiaries manage their respective financial risks separately. The subsidiaries
have their own risk management procedures but are structured similar to that of the Parent Company. To a
certain extent, the respective risk management programs and objectives are the same across the Group. The
risk reports of the subsidiaries are noted by the Parent Risk Oversight Committee (ROC).
The Parent Company’s activities are principally related to the use of financial instruments. The Parent
Company accepts deposits from customers at rates set by the Treasury Group depending on the volume of
placements, and for various periods, and seeks to earn above average interest margins by investing these
funds. The Parent Company seeks to increase these margins by consolidating short-term funds and lending
for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.
The Parent Company also trades in financial instruments where it takes positions to take advantage of shortterm market movements in bonds and shares of stocks.
The Parent Company has exposure to the following ma jor risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
• Operational risk
Risk Management Framework
To manage the financial risk for holding financial assets and liabilities, the Parent Company operates an
integrated risk management system to address the risks it faces in its banking activities, including liquidity,
credit and market risks. The Parent Company’s risk management objective is to adequately and consistently
identify, measure, control and monitor the risk profile inherent in the Parent Company’s activities.
The Parent Company’s Risk Oversight Committee
(ROC) has overall responsibility for the creation
and oversight of the Parent Company’s corporate
risk policy and is actively involved in the
assessment, planning, review and approval of all
the risks in the Parent Company’s organization.
The Parent Company also has in place an
authorization structure that defines and sets
limits on the type and value of transactions that
each position can approve.
Within the Parent Company’s overall risk
management system, the Risk Management
Division (RMD) is responsible for managing these
risks in a more detailed and proactive fashion on
a continuing basis through performance of risk
and return analysis.
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RISK
MANAGEMENT
Credit Risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its
contractual obligations. The Group manages and controls credit risk by setting limits on the amount of risk it
is willing to accept for individual counterparties and for industry concentrations, and by monitoring exposures
in relation to such limits.
Management of Credit Risk
The Parent Company manages its credit risk and loan portfolio through a stringent process of loan approval.
The screening process is directed by the senior officers of its Corporate and Consumer Banking Group. The
process establishes the credit worthiness of the individual loan applicant based on best credit practices, and
takes into consideration the current business condition and medium-term potential of the industry in which
the loan applicant operates in.
The Parent Bank also conducts annual portfolio quality review of its subsidiaries: UCPB Savings Bank (USB)
and UCPB Leasing and Finance Corporation (ULFC).
In compliance with BSP requirements, the Parent Bank established in December 2004 an Internal Credit
Risk Rating (ICRR) system for the purpose of measuring credit risk for corporate borrowers in a consistent
manner, as accurately as possible, and thereafter uses the risk information for business and financial decision
making. The ICRR system covers corporate borrowers with asset size of above 15.0 million, requiring financial
statements from 2005 onwards to be audited by SEC-accredited auditing firms.
On a continuing basis, the Parent Bank generates credit risk ratings for existing loan accounts to assess their
performance and to determine which account will be retained, expanded, or phased out. A separate review of
the loan portfolio is conducted by the RMD to assess the quality of individual accounts and the concentration
of the Parent Bank’s credit exposures.
Credit risk concentrations can arise whenever a significant number of borrowers have similar characteristics
and are affected similarly by changes in economic or other conditions. The Parent Bank analyzes the credit
risk concentration to an individual borrower, related group of accounts, industry, geographic, internal rating
buckets, currency, term and security.
For risk concentration monitoring purposes, the financial assets are broadly categorized into: (1) loans and
receivables, (2) trading and financial investment securities, (3) loans and advances to banks, and (4) others.
To mitigate risk concentration, the Group has established a regular monitoring system to spot breaches in
regulatory and internal limits.
Market, Liquidity, and Interest Rate Risk
The Market Risk Department manages the Parent Bank’s exposure to market risk, liquidity risk, and interest
rate risk in the banking book. Pursuant to our drive to ensure independence in risk monitoring, the Market
Risk Department was tasked to take an active role in managing the risk exposure of the Trust Banking Group.
Moreover, the Department closely monitors the current and prospective maturity structure of its resources
and liabilities and the market condition to guide pricing and asset/liability allocation strategies to manage
the Group’s liquidity risks.
We manage the market risk exposure of both our trading and non-trading portfolios. Our assets in both on and
off balance sheet trading portfolios are subject to trading gains and losses. Market risk exposure from these
portfolios is measured by Value at Risk models, subject to independent model validation.
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Market Risk
Market risk is the risk of loss to future earnings, fair values or future cash flows that may result from changes
in the price of a financial instrument. The Bank’s market risk originates from its holdings of foreign exchange
instruments, debt securities and derivatives. In 2012, the focus was to continually improve risk measurement
and monitoring. Paramount is the ongoing upgrade of our purchased front, middle to back office Treasury
system. Market risks are monitored on a daily basis by the RMD, which functions independently from the
business units. The Group uses various loss limits and risk measurement methodologies as follows:
• Stop loss limits
• Loss alert limits
• Position limits
• Mark-to-market valuation
• Value-at-Risk (VaR)
• Earnings-at-Risk (EaR)
VaR Methodology Assumptions and Parameters
The Bank computes the statistical VaR to estimate the maximum potential loss that can be incurred in its
trading books under normal market conditions given a specified confidence level and holding period. VaR is
one of the key measures in the Bank’s management of market risk. The Bank uses 1-day and 10-day holding
period for its foreign exchange VaR and interest rate VaR, respectively. The Bank adopts a historical simulation
approach using a 99.0% confidence level and a 260-day observation period in its VaR calculation.
The Bank’s VaR limit is agreed annually by the Treasury Group and RMD and presented to the ROC based on
the tolerable risk appetite of the Bank. Monitoring reports, which include the VaR figures and exposures to VaR
limits are sent to the risk-taking units on a daily basis. These are also reported monthly to the ROC.
The VaR figures are backtested against actual and unrealized profit and loss of the trading book to validate the
robustness of the VaR model. While VaR measures risk during times of normality, it is supplemented with stress
testing, which is used to measure the potential effect of a crisis or low probability event. The RMD conducts
stress testing to measure and monitor market risks in extreme market conditions. Results of backtesting and
stress testing are reported to the ROC on a monthly basis.
Backtesting has consistently shown results within the green zone with 0 to 4 incidents of actual and unrealized
losses exceeding VaR figures within a rolling one year period.
Liquidity Risk
Liquidity risk is generally defined as the current and prospective risk to earnings or capital arising from the
Group’s inability to meet its obligations when they become due. Liquidity risks are monitored and managed
by using the Maximum Cumulative Outflow (MCO) limits and funding diversification/concentration limits. In
addition, the Parent Bank manages liquidity risk by holding sufficient liquid assets of appropriate quality
to ensure short-term funding requirements are met and by maintaining a balanced loan portfolio which is
repriced on a regular basis. In addition, the Parent Bank seeks to maintain sufficient liquidity to take advantage
of interest rate and exchange rate opportunities when they arise.
The MCO is subjected to stress scenarios that include simultaneous core deposit and heavy withdrawals,
government and large funding sources pullout. Portfolio under Available for sale are assumed to be reinvested
while loans are assumed to be replaced by new ones. We have periodically revisited and revised our Maximum
Cumulative Outflow.
Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair
values of financial instruments. The Bank measures the sensitivity of its assets and liabilities to interest rate
fluctuations by way of gap analysis. This is measured by the Earnings at Risk (EaR) or the risk of deterioration
in interest income over the next 12 months due to unfavorable movements in interest rates.
In addition to the Earnings at Risk measurement using 260-day volatilities at 99% level of confidence on actual
yields, the bank likewise subjects the EaR measurements with various interest rate shocks to determine the
impact on earnings in the banking book.
The analysis provides the Bank with a measure of the impact of changes in interest rates on the accrual
portfolio or reported earnings (the risk exposure of future accounting income). The repricing gap is calculated
by subtracting the interest rate sensitive liabilities in each time bucket from interest rate sensitive assets to
produce repricing gap for that particular time bucket. The difference in the amount of assets and liabilities
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RISK
MANAGEMENT
maturing would then give the Bank an indication of its exposure to the risk of potential changes in net interest
income.
Internal measurements of interest rate in the banking books assume that:
• For corporate and consumer amortized loans, the average of the principal balances till repricing date
reprices on the average tenor of the loan.
• For loans payable in full at maturity, the principal balance reprices on next repricing date or for fixed rate
loans, on maturity date.
• Savings deposits and 12% of demand deposits reprice only after one year.
• Assets in the non-trading book are exposed to interest rate risk as a result of volatility or fluctuations in
interest rates.
reportorial requirement would also be complemented by appropriate measures in mitigating risk relative to
the risk appetite of the Group.
The Bank is currently utilizing the Basic Indicator Approach (BIA) to calculate risk-weighted assets. Under
the BIA, the operational risk capital charge would be the fixed percentage (15%) of the average non-negative
annual gross income for the past three years. The total operational risk-weighted assets (ORWA) would then
be computed by dividing the operational risk charge by the Capital Adequacy Ratio (CAR) of 10%.
Risk Based Capital Adequacy Ratio
The RMD oversees the management of the capital and risk assets of the Group and ensures compliance with
the regulatory capital requirement known as the Risk Based Capital Adequacy Ratio (RBCAR) expressed as a
percentage of qualifying capital to risk-weighted assets, should not be less than 10.0% for both stand-alone
basis (head office and branches) and consolidated basis (Parent Bank and subsidiaries engaged in financial
allied undertakings but excluding insurance companies). In 2009, the Bank issued its first ICAAP document,
following the regulatory directive to conduct an Internal Capital Adequacy Assessment Process (ICAAP) based
on Basel II-Pillar II guidelines and this is updated annually.
The bank’s RBCAR as of end-2012 are shown in the table below:
Operational Risk
Operational Risk refers to the risk of loss resulting from inadequate or failed internal processes, people or
systems, or from external events, that would have an impact on the Group’s earnings and capital. The risk
management process basically involves four dynamic processes 1) Identification of risks, 2) Measurement and
assessment of risks, 3) Risk control and mitigation, and 4) Risk monitoring and reporting.
Following the principles of Basel II, the Group has created an independent operations risk management
function under the BOD through the Risk Oversight Committee (ROC).
The operational risk management function is responsible for defining risk framework along with the
development of policies and procedures and strategies to identify, measure, monitor and control/mitigate
operational task.
The responsibility for implementing the framework including the day-to-day operational risk management
lies with the business and support units. Currently, the Group has an existing system of internal controls, the
enforcement of which effectively manages operational risks. Control activities engaged in by various units of
the Group include:
Breakdown of risk exposures are as follows:
a. Top level reviews made by the senior management committees;
b. Detailed periodic performance and exception reports to individual senior officers;
c. Physical controls such as restricted access:
d. Enforcement of exposure limits;
e. A system of approvals and authorizations; and
f. A system of verifications and reconciliation.
In the risk identification, measurement, control & mitigation, monitoring and reporting the Bank categorizes
operational risk events according to the Basel II seven (7) ma jor risk event categories as follows:
• Internal Fraud
• External Fraud
• Employment Practices and Workplace Safety
• Clients, Products and Business Practices
• Damage to Physical Assets
• Business Disruption and System Failures
• Execution Delivery and Process Management
The Group also performs regular risk and control assessment in the identification and measurement of these
operational risk events including legal and compliance risks. The synergy provided by such an approach
would make for an integral part of the process of monitoring and controlling the Group’s operational risk.
Accompanying this approach on operational risk management is the regular reporting of operational risk
exposures and loss experience to the BOD and the business and support units, thru senior management. The
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GOVERNANCE
RISK
MANAGEMENT
The Board of Directors is
responsible for governing the
business and affairs of the Bank
and for exercising all such powers
pursuant to the Bank’s Articles of
Incorporation. While carrying out
its duties and responsibilities, the
Board is committed to ensuring
highest corporate governance
standards by undertaking to:
Risk weighted assets broken down by type of exposure:
• Provide strategic leadership to the Bank;
• Review, approve and monitor the implementation of the Bank’s strategic business plans and policies;
• Ensure the maintenance of an effective system of internal controls that is able to identify and manage principal
risks resulting in efficiency in operations and a stable financial environment;
• Foster corporate values and ethical principles in parallel with the goal to enhance shareholders’ value;
• Monitor and evaluate the performance of the Management team to ensure that the performance criteria
remains dynamic; and
• Formulate a succession plan to ensure business continuity
Compliance System
To attain our vision to be the bank of choice of the middle and consumer markets by providing personal
and proactive service and innovative products, the Board places an emphasis on transparency, accountability,
integrity and corporate performance as the prerequisites of a responsible corporate entity.
To ensure the highest standards of integrity, business ethics and professionalism are upheld across our
organization, we follow a corporate governance program that is in accordance with the best market practices
and in conformity with regulatory requirements.
The Board has oversight responsibility for an effective Compliance function. The main responsibility for the
planning and implementation of our compliance policies rest with our Chief Executive Officer, assisted by our
Chief Compliance Officer.
Under recent regulatory mandates, UCPB’s Compliance System now covers:
• Regulatory Compliance Risk Management – identifies, assesses, monitors and mitigates risks of legal or
regulatory sanctions, financial loss that UCPB may suffer as a result of its failure to comply with all applicable
laws, rules and regulations.
• Corporate Governance Risk Management – ensures high ethical standards of business conduct and good
governance principles of transparency, accountability and fairness governs within UCPB.
• Reputation Risk Management – identifies, assesses, monitors, mitigates risks and potential risks resulting from
Management’s processes and decisions that may negatively affect UCPB’s reputation, market standing and
public trust.
• Anti-Money Laundering Act and Anti-Terrorist Financing
Under the compliance program is the enforcement of the Anti-Money Laundering Act and Anti-Terrorist
Financing (AMLTF). We have developed the Customer Due Diligence and risk rating policy that requires all our
business units to fully establish our client’s identity. This covers policies on accountabilities, account opening,
monitoring, records retention and reporting.
We are utilizing a BSP-compliant system that helps business units and branches to accurately identify clients
and efficiently monitor their accounts and transactions.
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Board of Directors Composition and Structure
Shareholders
Composition and Structure
Pursuant to the Bank’s by-laws, “The Corporate powers of the Bank shall be vested in and exercised, its
business conducted, and its property controlled by a Board of Directors composed of fifteen (15) members.”
It further states that “The Board of Directors shall always act in the best interest of the Bank in a manner
characterized by transparency, accountability and fairness. The Board of Directors, entrusted with trust and
confidence, shall, direct and supervise the affairs of the Bank under its collective responsibility, and exercise
such powers and perform such functions as are granted to it by law or reasonably necessary to accomplish
the purpose or purposes for which the Bank is formed.”
Thirteen out of fifteen members of the UCPB Board are Independent Directors. They ensure that there is an
effective check and balance in the functioning of the Board. They meet the criteria of independence as they
are not involved in the day-to-day management of the Bank, nor do they participate in any business dealings
of the Bank. This ensures that they remain free of any conflict of interest and can undertake their roles and
responsibilities in an effective manner.
Being the governing body of a ma jor financial provider, the Board recognizes that its Members must have
the appropriate mix of skills, as well as the necessary knowledge, experience and commitment, to effectively
contribute towards the growth and expansion of the Bank.
Being on the Board of a financial institution, the Board Members are required to be responsive to the constantly
changing global financial landscape. Directors attend corporate governance seminars conducted by accredited
government or private institutions prior to assumption of office. In addition, the Board Members are provided
briefings on anti-money laundering, BSP circulars, and other banking-related issues as needed.
Every year, the Bank conducts a self-assessment of its corporate governance practices, covering all the
members of the Board, Board meetings, Board committees, and various related issues. The Bank’s 2012 selfrating indicated that it has fully complied with the best practices in corporate governance.
Board of Directors
Board Committees
Executive
Assists in the general supervision,
administration and management
of the Bank
Audit
Corporate Governance
Ensures that the auditing, accounting,
financial management principles and
practices are in line with international
and Philippine best practices and
conform with all legislative and
regulatory requirements
Compensation and Remuneration
Assists the Board in fulfilling its responsibilities as
related to the development of criteria and goals for
the Bank’s compensation policy. The Committee
reviews, evaluates and recommends to the Board
the benefit plans and compensation policy for the
Bank and wholly owned subsidiaries.
Ensures that the principles of good
corporate governance of transparency,
accountability and fairness shall
govern the conduct of business of
UCPB and UCPB Group
Trust
Manages the Bank’s
trust and fiduciary
activities
Coconut Farmers
Program Development
Supports and assists in the
development and implementation
of impact projects beneficial
to the small and marginalized
coconut farmers
Legal Oversight
Recommends to the Board policies and
guidelines in case management including
the adoption of legal strategies in
important cases for or against the Bank.
The Committee shall render oversight
in the monitoring, supervision and
handling of cases by the Bank’s external
counsels, as well as by its internal lawyers.
Risk Oversight
Assists the Board in performing its
oversight functions to manage the Bank’s
credit, operational and reputational risks.
Corporate Social
Responsibility
Spearheads the formulation and
implementation of the Bank’s
initiatives to contribute to national
development, with particular
focus on the coconut industry,
thereby promoting the welfare of
underprivileged sectors of society,
primarily the small coconut farmer
communities and other marginalized
communities in areas where the Bank
conducts its business, through the
active involvement and participation
of the Bank’s associates in such
initiatives and prudent and
expedient allocation of the Bank’s
other resources
Board Meetings
Apart from the regular monthly meetings, the Board also holds special meetings to discuss directions or
decisions that require expeditious action between the scheduled meetings.
In 2012, the Board held a total of seventeen (17) meetings to discuss business strategies, financial performance,
matters pertaining to compliance and governance, as well as reports on matters deliberated by Board
Committees and their recommendations. The Board also reviewed regular management reports and
information on corporate and business issues to assess performance against business targets and objectives.
The Board also functions through committees that handle specific responsibilities pertaining to the governance
function. The following are the Board Committees with their specific membership:
Executive Committee
Jeronimo U. Kilayko - Chairman
Cristina Q. Orbeta
Arthur A. Bautista
Ma. Angela E. Ignacio (until March 2012)
Primitivo Y. Garcia III (effective April 2012)
Jose Alfonso A. Poblete
Audit Committee
Cristina Q. Orbeta - Chairman
Arthur A. Bautista
Danilo V. Pulido
Karlo Marco P. Estavillo
Jose Alfonso A. Poblete
Coconut Farmers Program
Development Committee
Efren M. Villaseñor - Chairman
Jeronimo U. Kilayko
Raul V. Del Mar (until October 2012)
Datu Mao K. Andong, Jr.
Karlo Marco P. Estavillo
Oscar C. Solidor
Higinio O. Macadaeg, Jr.
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Compensation &
Remuneration Committee
Menardo R. Jimenez - Chairman
Jeronimo U. Kilayko
Cristina Q. Orbeta
Karlo Marco P. Estavillo
Ma. Angela E. Ignacio (until March 2012)
Primitivo Y. Garcia III (effective April 2012)
John Y. Young
Corporate Governance Committee
Danilo V. Pulido - Chairman
Jeronimo U. Kilayko
Datu Mao K. Andong, Jr.
Nilo T. Divina
Jose Alfonso A. Poblete
Corporate Social
Responsibility Committee
Jeronimo U. Kilayko - Chairman
Datu Mao K. Andong, Jr.
Oscar C. Solidor
Efren M. Villaseñor
John Y. Young
Legal Oversight Committee
Raul V. Del Mar - Chairman (until October 2012)
Karlo Marco P. Estavillo
Nilo T. Divina
Primitivo Y. Garcia III (effective April 2012)
Risk Oversight Committee
Menardo R. Jimenez - Chairman
Jeronimo U. Kilayko
Arthur A. Bautista
Cristina Q. Orbeta
Ma. Angela E. Ignacio (until March 2012)
Oscar C. Solidor (effective August 2012)
Trust Committee
Menardo R. Jimenez - Chairman
Jeronimo U. Kilayko
Alexandra C. Deveras
Nilo T. Divina
Efren M. Villaseñor
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1. MENARDO R. JIMENEZ
Chairman of the Board of Directors
5. ATTY. RAUL V. DEL MAR
Director
9. HIGINIO O. MACADAEG, JR.
Director
13. OSCAR C. SOLIDOR
Director
2. JERONIMO U. KILAYKO
Director, President and Chief Executive Officer
6. ATTY. NILO T. DIVINA
Director
10. CRISTINA Q. ORBETA
Director
14. EFREN M. VILLASEÑOR
Director
3. DATU MAO K. ANDONG, JR.
Director
7. ATTY. KARLO MARCO P. ESTAVILLO
Director
11. JOSE ALFONSO A. POBLETE
Director
15. JOHN Y. YOUNG
Director
4. ARTHUR A. BAUTISTA
Director
8. ATTY. PRIMITIVO Y. GARCIA, III
Director
12. DANILO V. PULIDO
Director
16. ILDEFONSO R. JIMENEZ
Corporate Secretary
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MENARDO R. JIMENEZ
CHAIRMAN OF THE BOARD OF DIRECTORS
CHAIRMAN
Fibers Trading Inc.
Ma jent Management & Development Corporation
Menarco Holdings, Inc.
Meedson Properties Corporation
Nuvoland Philippines Inc.
Opticolors Inc.
Association of Abaca Pulp Manufacturers
CHAIRMAN AND DIRECTOR
CBTL Holdings, Inc.
Coffee Bean and Tea Leaf Philippines
DIRECTOR, PRESIDENT AND CEO
Albay Agro Industrial Development Corporation
DIRECTOR
San Miguel Purefoods Co. Inc., Magnolia Inc.,
Mabuhay Philippines Satellite Corporation,
Unicapital Finance and Investments, Inc.,
Unicapital,Inc., Dasoland Holdings Corporation,
Pan Phil. Aqua Culture Corporation,
Philippine Chamber of Commerce and Industry
MEMBER OF BOARD OF TRUSTEE
Foundation for Crime Prevention
Teodor F. Valencia Foundation, Inc.
COMMISSIONER
Patrol 117 Commission
MEMBER
Philippine Chamber of Commerce & Industry
– Council of Business Leaders
Philippine Institute of Certified Public Accountants
Manila Overseas Press Club
Philippine Constitution Association FEU Alumni Foundation, Inc.
FORMER PRESIDENT AND CEO GMA Network, Inc.
DOCTORATE IN BUSINESS MANAGEMENT (HONORIS CAUSA)
University of Pangasinan
Pamantasan ng Lungsod ng Maynila
DOCTORATE IN COMMUNICATIONS (HONORIS CAUSA)
Polytechnic University of the Philippines
ARTHUR A. BAUTISTA
DIRECTOR
CHAIRMAN OF THE BOARD, PRESIDENT AND CEO
Timebound Trading Inc.
Savoy Confections
PRESIDENT
Kuya’s at the Fort
Jed and Julian’s
FORMER PRESIDENT
First Federal Consultants Corporation
Sorbetes Pinoy
SENIOR EXECUTIVE POSITIONS
Bank of Philippine Islands
Citytrust Banking Corporation
Financial Transaction Corporation, USA
Fil-Pride Philippines
CANDIDATE, MASTERS IN BUSINESS ADMINISTRATION
De La Salle Graduate School of Business
BACHELOR OF SCIENCE IN BUSINESS ADMINSTRATION
De La Salle University
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DATU MAO K. ANDONG, JR.
DIRECTOR
NATIONAL CHAIRMAN
Kaunlaran ng mga Magsasaka at Manggagawa ng Pilipinas
CHAIRMAN
South & West Mindanao Coconut Farmers Congress
(SOWESMINCOCO)
DIRECTOR
Kaunlaran Magsasaka, Inc.
NATIONAL PRESIDENT
Coconut Peasants’ Reform Alliance
VICE PRESIDENT
Mindanao Pambansang Koalisyon ng mga Samahan ng
Magsasaka at Manggagawa sa Niyugan
HELD VARIOUS EXECUTIVE POSITIONS IN GOVERNMENT
BACHELOR OF ARTS IN ECONOMICS
Gregorio Araneta University Foundation
JERONIMO U. KILAYKO
DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHAIRMAN
UCPB Savings Bank
UCPB Leasing and Finance Corporation
UCPB Securities, Inc.
United Foreign Exchange Corporation
VICE CHAIRMAN
UCPB CIIF Finance and UCPB Foundation
DIRECTOR
AFC Merchant Bank in Singapore
Megalink
United Coconut Chemicals Inc.
14 holding companies
PRESIDENT
Techinfo Solutions and K5 Distribution
FORMER DIRECTOR AND VICE CHAIRMAN
Bank of Commerce
FORMER DIRECTOR AND VICE PRESIDENT
Central Visayas Finance Corporation
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER
UCPB, CIIF Oil Mills, UCPB General Insurance Co. Inc.,
United Coconut Planters Life Assurance Corporation,
United Coconut Chemicals, Inc.
FORMER DIRECTOR AND PRESIDENT
San Miguel Properties
HELD VARIOUS EXECUTIVE POSITIONS
Asean Finance Corporation Ltd. ( Singapore),
IBI Asia, Bank of America, Merill Lynch,
Land Bank of the Philippines
BACHELOR OF SCIENCE IN LIBERAL ARTS AND COMMERCE
De La Salle University
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ATTY. RAUL V. DEL MAR
DIRECTOR
ATTY. PRIMITIVO Y. GARCIA III
DIRECTOR
FORMER DEPUTY SPEAKER House of Representatives, two terms
FORMER CONGRESSMAN Cebu City-1st
City-1st District for six terms
House of Representatives contingent for two terms
20 years perfect attendance in House plenary sessions
FORMER COMMISSION ON APPOINTMENTS HEAD
PRINCIPAL AUTHOR OF 48 LAWS
PAPAL AWARDEE “Croce Pro-Ecclecia et Pontifice” conferred by
Ricardo Cardinal Vidal
BACHELOR OF LAWS
Ateneo De Manila University
DOCTOR OF HUMANITIES (HONORIS CAUSA),
Cebu Normal University
DOCTOR OF PHILOSOPHY IN TECHNOLOGY MANAGEMENT
(HONORIS CAUSA)
Cebu Technological University
PAST PRESIDENT
Cebu Chamber of Commerce and Industry,
Rotary Club of Cebu East and Cebu Jaycees Paul Harris
FELLOW Rotary International Jake Gonzalez & Jaycees International
ATTY. NILO T. DIVINA
DIRECTOR
DIRECTOR
UCPB Savings Bank
UCPB Securities, Inc.
PRESIDENT
Prince Group of Companies
ADMINISTRATOR AND GENERAL COUNSEL
Zosima Incorporated
PAST PRESIDENT AND MEMBER
Rotary Club of Makati South
PRESIDENT
La Salle Greenhills Lawyers League, Inc.
MEMBER
Philippine Bar Association
BACHELOR OF ARTS MAJOR IN ECONOMICS
De La Salle University
BACHELOR OF LAWS
Ateneo de Manila University
HIGINIO O. MACADAEG, JR.
DIRECTOR
AUTHOR 2010 & 2005 Handbook on Commercial Law and various law articles
FOUNDER AND MANAGING DIRECTOR Divina and Uy Law Office
EXECUTIVE VICE PRESIDENT Association of Law Schools
HELD SENIOR EXECUTIVE POSITIONS
Equitable-PCI Bank
Philippine Charity Sweepstakes Office
RECIPIENT
2005 Most Outstanding Male Faculty Award
FINALIST Search for the Ten Most Outstanding Students of the Philippines
AWARDEE Manuel Luis Quezon Award for Exemplary Leadership, University of
Sto. Tomas
DEAN, LAW PROFESSOR AND BAR REVIEWER
University of SantoTomas
RECTOR’S AWARDEE FOR ACADEMIC EXCELLENCE,
University of Sto. Tomas
MEMBER Philippine Bar
INTERNATIONAL TAX LAW POST-GRADUATE DIPLOMA
Robert Kennedy College, Switzerland
BACHELOR OF LAWS (MAGNA CUM LAUDE)
University of Santo Tomas
BACHELOR OF ARTS IN BEHAVIORAL SCIENCE (CUM LAUDE)
University of Santo Tomas
ATTY. KARLO MARCO P. ESTAVILLO
DIRECTOR
GENERAL MANAGER
San Miguel Properties, Inc.
FELLOW AND CORPORATE SECRETARY
Asia-Pacific Policy Center
ASSISTANT CORPORATE SECRETARY
The Diamond Hotel
LEGAL COUNSEL AND CORPORATE SECRETARY
Various private corporations
BACHELOR OF SCIENCE IN BUSINESS MANAGEMENT
Ateneo de Manila University
BACHELOR OF LAWS, COLLEGE OF LAW
University of the Philippines
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EXECUTIVE VICE PRESIDENT AND HEAD
Corporate and Consumer Banking Group
DIRECTOR
UCPB Properties, Inc.
UCPB Leasing and Finance Corporation
UCPB Securities, Inc.
United Foreign Exchange Corporation
HELD SENIOR EXECUTIVE POSITIONS
Equitable-PCI Bank, Metropolitan Bank and Trust Company,
Solidbank Corporation, Standard Chartered Bank,
Citytrust Banking Corporation
ADVANCED MANAGEMENT TRAINING PROGRAM
Wharton School, University of Pennsylvania
BACHELOR OF SCIENCE IN MANAGEMENT
Ateneo de Manila University
CRISTINA Q. ORBETA
DIRECTOR
DIRECTOR
UCPB Savings Bank
UCPB Leasing and Finance Corporation
EXECUTIVE VICE PRESIDENT Philippine Deposit Insurance Corporation
FORMER DIRECTOR Bangko Sentral ng Pilipinas
FORMER EXECUTIVE DIRECTOR Central Bank Board of Liquidators
DEPUTY SENIOR COUNTRY OFFICER Calyon Manila Offshore Branch
DEPUTY GENERAL MANAGER Credit Lyonnais Manila Offshore Branch
FORMER CONSULTANT
The United Kingdom’s Department for International Development
FORMER CONSULTANT Asian Development Bank
FORMER CONSULTANT World Bank
MASTER OF PUBLIC ADMINISTRATION Harvard University
MASTER IN ECONOMICS (ACADEMIC UNITS) University of the East
BACHELOR OF ARTS IN MATHEMATICS (MAGNA CUM LAUDE)
University of the East
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EFREN M. VILLASEÑOR
JOSE ALFONSO A. POBLETE
DIRECTOR
DIRECTOR
CHAIRMAN Confederation of Coconut Farmers Organization the Philippines
CHAIRMAN AND FOUNDING MEMBER Quezon Farmers Cooperative
NATIONAL PRESIDENT Pambansang Koalisyon ng mga Samahan ng mga
Magsasaka at Manggagawa sa Niyugan
PRESIDENT AND FOUNDING MEMBER
Coconut Farmers Federation for Rural Advancement
FOUNDING MEMBER
Coconut Farmers Technology Center – Southern Tagalog Region
The Katipunan ng mga Magsasaka at Mangigisda ng Pilipinas –
NorthernSamar
FOUNDER Samar Island Peasant Alliance Group (SIPAG)
MUNICIPAL DEVELOPMENT ASSISTANT Municipality of Lopez in Quezon
COMMUNITY AFFAIRS OFFICER Bondoc Development Program
FORMER ALTERNATE COMMISSIONER
Farmers Sector, Council of the National Anti-Poverty Commission
FOUNDER AND MANAGING DIRECTOR
Assistforce, LLC, California
Tri-Globe, LLC California
HELD EXECUTIVE POSITIONS
McKesson Corporation, USA
Kaiser Foundation Health Plan, Inc. USA
Bancom Development Corporation
SGV and Co.
RECIPIENT
Sixto Roxas Award for Excellence in Economics, De La Salle
University
MASTER IN HEALTH SERVICES ADMINSTRATION,
St. Mary’s College, Moraga, California
MASTER OF MANAGEMENT
Kellogg School of Management, Northwestern University, IIlinois
BACHELOR OF ARTS MAJOR IN ECONOMICS (HONORS PROGRAM)
Ma jor in Economics, De La Salle University
JOHN Y. YOUNG
DANILO V. PULIDO
DIRECTOR
DIRECTOR
CHAIRMAN AND PRESIDENT
Emilia Properties, Inc.
FORMER DIRECTOR
Rural Bank of Sanchez Mira
HELD SENIOR EXECUTIVE POSITIONS
Philippine National Bank, Philippine Exchange Company
National Investment and Development Corporation
MASTERS OF BUSINESS ADMINSTRATION
University of the Philippines
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION
University of the Philippines
PRESIDENT AND CEO
Ginza Restaurant Inc.
JEDCOR Development Corporation
PRESIDENT
Wander Lanes Travel Co., Inc.
Victor D. Young Enterprises
BACHELOR OF SCIENCE IN COMMERCE
University of San Carlos
ILDEFONSO R. JIMENEZ
OSCAR C. SOLIDOR
DIRECTOR
SECRETARY
Confederation of Coconut Farmers Organizations of the
Philippines (CCFOP), Inc.
COUNCIL MEMBER
Pambansang Kilusan ng mga Samahang Magsasaka at
Manggagawa sa Niyugan (PKSMMN)
SECRETARY-GENERAL
Lakas ng Magsasakang Pilipino (LMP)
CHAIRMAN
Alyansa Sa Mga Timawang Mag-uugmad sa Amihanang
Mindanao (ATIMAN-MINDANAO)
MEMBER
Caraga Conference for Peace and Development (CCPD)
BACHELOR OF SCIENCE IN AGRICULTURE
Central Mindanao University
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CORPORATE SECRETARY
FIRST VICE PRESIDENT AND CORPORATE SECRETARY
UCPB Leasing and Finance Corporation
UCPB Savings Bank
UCPB Securities, Inc.
United Foreign Exchange Corporation
PROFESSIONAL LECTURER
College of Law, University of the Philippines
CORPORATE SECRETARY
University of the Philippines Foundation Inc.
FORMER SENIOR COUNCIL AND ASSISTANT
CORPORATE SECRETARY
International Rice Research Institute (IRRI)
FORMER PARTNER
Padilla Jimenez Kintanar and Asuncion Law Offices
BACHELOR OF LAWS IN BUSINESS ECONOMICS AND
BACHELOR OF LAWS
University of the Philippines
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VALENTIN A. ARANETA
ATTY. ANDRES D. BAUTISTA
ADVISER
CHAIRMAN
CHAIRMAN
Presidential Commission on Good Government
INTERIM CHAIRMAN
United Coconut Planters Life Assurance Corporation (Cocolife)
UCPB General Insurance Inc.
United Coconut Chemicals, Inc. (Cocochem)
UCPB-CIIF Finance Development Corporation
UCPB-CIIF Foundation
EXECUTIVE COMMITTEE CHAIRMAN AND DIRECTOR
CIIF Oil Mills Group
CO-FOUNDER
Master in Business Administration - Juris Doctor Program
De La Salle Graduate School of Business
FEU Institute of Law
COLUMNIST
The Philippine Star
PRESIDENT
Harvard Club of the Philippines
MASTER OF LAWS
Harvard Law School
BACHELOR OF LAWS (VALEDICTORIAN)
Ateneo Law School
ATTY. RICHARD R.T. AMURAO
ADVISER
COMMISSIONER
Presidential Commission on Good Government
BOARD DIRECTOR
Chemfields Inc.
Independent Realty Corporation
ADVISER
Intercontinental Broadcasting Corporation - 13
FORMER CONSULTANT
Asian Development Bank
HELD VARIOUS POSITIONS IN THE GOVERNMENT
Office of the President of the Philippines
Department of Justice
JURIS-DOCTOR
Ateneo de Manila University
Evelio Javier Leadership Awardee
MASTER OF LAWS (WITH HONORS)
London School of Economics and Political Science, United Kingdom
BACHELOR OF ARTS IN MANAGEMENT ECONOMICS
Ateneo de Manila University
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PRESIDENT AND CHAIRMAN
Philippine Deposit Insurance Corporation
MEMBER, BOARD OF TRUSTEES AND CORPORATE SECRETARY
Finex Research and Development
FORMER INDEPENDENT DIRECTOR
Metropolitan Bank & Trust Company
FORMER PRESIDENT AND CHIEF OPERATING OFFICER
Rizal Commercial Banking Corporation
FORMER VICE CHAIRMAN
Great Pacific Savings Bank
FORMER DIRECTOR, SENIOR EXECUTIVE VICE PRESIDENT
AND CHIEF OPERATING OFFICER
Philippine National Bank
BACHELOR OF ARTS IN ECONOMICS
Ateneo de Manila University
ADVANCED MANAGEMENT PROGRAM
Wharton, University of Pennsylvania
ATTY. JOVENCITO R. ZUÑO
ADVISER
ASSOCIATE DIRECTOR
Institute of Corporate Directors
LEGAL CONSULTANT
Senate Blue Ribbon Committee
MEMBER
Melo Commission
Rotary Club of Rosario, Batangas
LIFETIME MEMBER/ADVISER/COORDINATOR
National Prosecutors League of the Philippines
FORMER CHIEF STATE PROSECUTOR
Department of Justice
OUTSTANDING PROSECUTOR
Consumers Union of the Philippines
AWARDEE FOR JUDICIAL EXCELLENCE
Guillermo B. Guevarra Award
BACHELOR OF LAWS
University of the East
BACHELOR OF ARTS (OUTSTANDING ALUMNUS)
Lipa City Colleges
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1. JERONIMO U. KILAYKO
President and Chief Executive Officer
2. CESAR A. RUBIO
Executive Vice President, Chief Finance Officer and Head
Support Services Group
3. EDMOND E. BERNARDO
Executive Vice President and Head
Branch Banking Group
4. EULOGIO V. CATABRAN III
Executive Vice President and Head
Treasury Banking Group
5. HIGINIO O. MACADAEG, JR.
Executive Vice President and Head
Corporate and Consumer Banking Group
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6. EVANGELINA P. SAMONTE
Executive Vice President and Head
Operations Group
11. ALEXANDRA C. DEVERAS
First Vice President, Trust Officer and Head
Trust Banking Group
7. RAMON B. TAÑAFRANCA
Executive Vice President and Head
Information Technology and Methods Group
12. ILDEFONSO R. JIMENEZ
First Vice President and Corporate Secretary
8. ATTY. JOSE A. BARCELON
Senior Vice President and Head
Legal Services Group
9. ROSARIO M. DAYRIT
Senior Vice President and Head
Human Resources Group
10. NORMAN MARTIN C. REYES
Senior Vice President and Head
Marketing Group
13. PINKY S. DEREQUITO
First Vice President and Head
Internal Audit Division
14. MARIA PAZ Q. CUEVAS
Vice President, Chief Risk Officer and Head
Risk Management Division
SUBSIDIARIES:
1. FRANCO P. MAGALONG
President
UCPB Leasing and Finance Corporation
2. VINCENT K. DE LEON
President
UCPB Securities, Inc.
3. JOSEPH C. JUSTINIANO
President
UCPB Savings Bank
15. FRANK C. CAPALONGAN
Chief Compliance Officer, Vice President and Head
Bank Compliance Division
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BANK COMPLIANCE DIVISION
FRANK C. CAPALONGAN
Vice President, Chief Compliance Officer
and Head, Bank Compliance Division
ARTURO D. SAYAO, JR.
Assistant Vice President 2 and Head
Operations Department
ANTONIO C. ROMERO
Assistant Vice President 2 and Head
Anti-Money Laundering Department
ROBERTO V. FIESTA
Assistant Vice President 1
Compliance Officer
BRANCH BANKING GROUP
EDMOND E. BERNARDO
Executive Vice President and Head,
Branch Banking Group
NOEL T. CALALANG
Vice President and Head
Branch Banking Support Division
JOSEFINA M. CARAOS
Vice President
BM, Main Office Branch
RODOLFO G. DE GUZMAN
Vice President and Head
North-Central Luzon Region
RONALDO E. ELAMPARO
Vice President and Head
Metro Manila 6 Region
NATIVIDAD R. FRANCISCO
Vice President and Head
Metro Manila 5 Region
ANTHONY EVAN A. LLUCH
Vice President and Head
Metro Manila 1 Region
MANUEL R. MACAM
Vice President and Head
Metro Manila 7 Region
ANGEL H. MOJICA
Vice President and Head
Metro Manila 3 Region
MODESTO M. SICANGCO
Vice President and Head
Visayas Region
ALEXANDER L. DIMACUHA
Assistant Vice President 2 and Head
Mindanao Region
JOCELYN T. GOMEZ
Assistant Vice President 2 and Head
South Luzon Region
SAMUEL L. SANTOS
Assistant Vice President 2 and Head
Metro Manila 2 Region
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SENIOR OFFICERS
SENIOR OFFICERS
AS OF MARCH 2013
AS OF MARCH 2013
MONINA A. SUNGA
Assistant Vice President 2 and Head
Metro Manila 4 Region
JENNIFER T. FRANCO
Assistant Vice President 2
BM, Ayala Avenue Branch
NEPTALI F. RAMOS
Assistant Vice President 2
BM, Calamba Branch
VICTORIA C. BERNAL
Assistant Vice President 1
BM, Muñoz Branch
RODRIGO H. PADA
Assistant Vice President 1
BM, Tektite Branch
RENE A. ALIMAGNO
Assistant Vice President 2
BM, Lipa - Recto Branch
NOEL G. GERAPUSCO
Assistant Vice President 2
BM, Jaro Branch
JOSE MARI V. REYES
Assitant Vice President 2
Head, Branch Services
Department
ROSITA A. CARREON
Assistant Vice President 1
BM, Tomas Morato Branch
DOLORES M. PALO
Assistant Vice President 1
BM, Blue Ridge Branch
CLARA JEAN F. ARCE
Assistant Vice President 2
BM, Ortigas Branch
CHONA LESLIE R. GOCO
Assistant Vice President 2
BM, Calapan Branch
CIELITO L. CELADA
Assistant Vice President 1
BM, Quirino Highway Branch
CRISANTIAGO T. PAROJINOG
Assistant Vice President 1
BM, Cogon Branch
CARMINDA A. BACULI
Assistant Vice President 2
Business Development Officer
Metro Manila 7 Region
JOSE JERIC E. GOMEZ
Assistant Vice President 2
BM, San Pablo Branch
ERLINDA P. DACANAY
Assistant Vice President 1
BM, Mindanao Avenue Branch
LORELEI P. PLETE
Assistant Vice President 1
BM, Vigan Branch
CLARISSA R. DULATRE
Assistant Vice President 1
BM, Chino Roces Branch
MA. LOURDES CARIDAD B. PONCE
Assistant Vice President 1
BM, Banilad Branch
MA. THERESA T. DY
Assistant Vice President 1
BM, Pasong Tamo Ext. Branch
GINA K. REYES
Assistant Vice President 1
BM, Baliuag Branch
JESUS PROSPERO K. ESTARIS
Assistant Vice President 1
BM, Shangrila Plaza Branch
JOSE ANTONIO J. ROSADO
Assistant Vice President 1
BM, Iznart Branch
ROSARIO IRENE L. FERNANDO
Assistant Vice President 1
BM, West Avenue Branch
GRACE S. SABINO
Assistant Vice President 1
BM, Limay Branch
GLENDA V. GALLO
Assistant Vice President 1
BM, Robinsons Galleria Branch
ARTURO JEROME J. SALCEDO
Assistant Vice President 1
BOO, Cambridge Branch
MINA C. GAN
Assistant Vice President 1
SO, Hanston Square Branch
MARY ANN H. SALGADO
Assistant Vice President 1
BM, Libertad Branch
MERCEDITAS ASSUMPTION A. GUEVARA
Assistant Vice President 1
BM, Roxas Branch
GUILBERT P. SAMPEDRO
Assistant Vice President 1
BM, Global City Branch
ROMANA M. HIZON
Assistant Vice President 1
BM, Paso de Blas Branch
MARIA THERESA C. SANTOS
Assistant Vice President 1
BM, Sto. Tomas Branch
JOEL VICTOR P. JAVIER
Assistant Vice President 1
BM, Pasay Road Branch
FERDINAND Y. SENO
Assistant Vice President 1
BM, F. Ramos Branch
MA. ANA T. ABALA
Assistant Vice President 1
BM, San Andres Branch
ALERIS A. JOVEN
Assistant Vice President 1
Business Development Officer
Metro Manila 3 Region
ALOIDA B. TANUNLIONG
Assistant Vice President 1
BM, J.P. Rizal Branch
MARISSA D. AUYONG
Assistant Vice President 1
BM, P. Tuazon Branch
CEZARIO B. LARIOS
Assistant Vice President 1
BM, Tanauan Branch
ANGELA L. BAES
Assistant Vice President 1
BM, Zamboanga Branch
CLARITA V. LUBER
Assistant Vice President 1
BM, Metropolitan Branch
MA. CRISTINA V. BALAOING
Assistant Vice President 1
Business Development Officer
Metro Manila 5 Region
ARTURO A. MACAM, JR.
Assistant Vice President 1
BM, Banaue Branch
HERMILO A. BAGABALDO
Assistant Vice President 2
BM, Lacson-Galo Branch
EVANGELINE R. BALASBAS
Assistant Vice President 2
BM, Boni Avenue Branch
CRISPULO B. BALTAZAR, JR.
Assistant Vice President 2
BM, Solano Branch
FRANCISCO M. BASA, JR.
Assistant Vice President 2
BM, Mandaluyong Branch
VOLTAIRE REX C. CASTRO
Assistant Vice President 2
BM, Bohol Avenue Branch
ROWENA Z. CATOLOS
Assistant Vice President 2
BM, Pioneer Branch
SOCORRO S. CHUA
Assistant Vice President 2
BM, T. M. Kalaw Branch
JANE V. DE GUZMAN
Assistant Vice President 2
BM, Baguio Branch
MARILU P. DE GUZMAN
Business Development Officer
Metro Manila 5 Region
MERLINE S. DELA CRUZ
Assistant Vice President 2
BM, San Miguel Branch
ELIZABETH B. DEE
Assistant Vice President 2
BM, Juan Luna Branch
SUSAN C. DESAMERO
Assistant Vice President 2
BM, Dela Rosa Branch
ROSALINDA T. DOMINGO
Assistant Vice President 2
BM, Guadalupe Branch
GUILLERMA M. ESPIRITU
Assistant Vice President 2
BM, Subic Branch
LOLITA A. GONZALES
Assistant Vice President 2
BM, BF Parañaque Branch
NEBELLEE M. GUMBAN
Assistant Vice President 2
BM, San Pedro-Davao Branch
JOCELYN G. HERNANDEZ
Assistant Vice President 2
BM, Lemery Branch
IRENE L. LIM
Assistant Vice President 2
BM, Escolta Branch
MA. CECILIA V. LIM
Assistant Vice President 2
BM, Velez Branch
ROMEO S. LINDAIN
Assistant Vice President 2
BM, Herrera Branch
JUAN P. LIWAG
Assistant Vice President 2
BM, McKinley Hill Branch
EVA MARIE N. MAGNO
Assistant Vice President 2
BM, Cambridge Branch
MERVYN NICASIO M. MAGNO, JR.
Assistant Vice President 2
BM, Butuan Branch
GINA S. MERCADO
Assistant Vice President 2
BM, P. Ocampo Branch
ROMEO G. MILLERA
Assistant Vice President 2
BM, Sucat Branch
ELIZABETH D. ORBE
Assistant Vice President 2
BM, Karuhatan Branch
FIEL AMOR J. PACLEB
Assistant Vice President 2
BM, Tordesillas Branch
JESSICA S. PANGILINAN
Assistant Vice President 2
BM, Cabanatuan Branch
ROLANDO V. ROBIÑOL
Assistant Vice President 2
BM, Laguna Branch
CRISTINA B. ROBLEDO
Assistant Vice President 2
BM, Commonwealth Branch
MA. DINAH V. SACRO
Assistant Vice President 2
BM, Puyat-Bautista Branch
ROSALYN R. SALINAS
Assistant Vice President 2
BM, Lipa-Big Ben Branch
RAYMUNDO A. SARANZA
Assistant Vice President 2
BM, Tagbilaran Branch
DAISY B. SERNEO
Assistant Vice President 2
BM, Baclaran Branch
EMILY D. SERRANO
Assistant Vice President 2
BM, Caloocan Branch
MA. THERESA D. TAMAYO
Assistant Vice President 2
BM, F.B. Harrison Branch
LEILA O. TERTE
Assistant Vice President 2
BM, Lucena - Guinto Branch
MA. CHRISTINA V. UNTALAN
Business Development Officer
Metro Manila 7 Region
JAIME C. YU, JR.
Assistant Vice President 2
BM, Cauayan Branch
EDGAR V. YABES
Assistant Vice President 1
BM, Dagupan Branch
DOREEN C. YAP
Assistant Vice President 1
BM, Clark Field Branch
NATALIE R. VILLANUEVA
Assistant Vice President 1
BM, Tuguegarao Branch
JONATHAN M. MALIGAYA
Assistant Vice President 1
BM, Daet Branch
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CORPORATE AND CONSUMER
BANKING GROUP
HIGINIO O. MACADAEG, JR.
Executive Vice President and Head
Corporate and Consumer Banking Group
SENIOR OFFICERS
SENIOR OFFICERS
AS OF MARCH 2013
AS OF MARCH 2013
RAUL M. CABATINGAN
Assistant Vice President 1
RM, CCBD-VISMIN Area
STELLA MA. A. FULGENCIO
Assistant Vice President 2 and Head
Organizational Development Department
DANILO U. CUA
Assistant Vice President 2 and Head
Programmers Pool Section
MA. LUZ H. CANTORIA
Assistant Vice President 2 and Head
Head Office Audit Department
ATTY. CECILIA M. CABATIT
Assistant Vice President 2 and Legal Officer
Branch, Trust and Operations Department
CYNTHIA Q. CAMACHO
Assistant Vice President 1
RM, CCBD-Metro Manila 2
TERESITA B. ANGELES
Assistant Vice President 1 and Head
Compensation and HR Loans Department
ELENORA C. CUA
Assistant Vice President 2 and Head
Engineering Section
ANNA RUTH F. MONTEMAYOR
Assistant Vice President 2 and Head
Loans Audit Services Department
ATTY. CESAR G. DAVID
Assistant Vice President 2 and Head
Remedial and Enforcement Department
DINAH P. CENIZA
Assistant Vice President 1
RM, CCBD-VISMIN Area
FRANCO C. LOYOLA
Assistant Vice President 1 and Head
Benefits and Policy Review Department
CHRISTIAN RON P. GAERLAN
Assistant Vice President 2 and Head
Technical Services Section
NELSON J. MONTEMAYOR
Assistant Vice President 1
Audit Officer
ATTY. ISMAEL ANDREW P. ISIP
Assistant Vice President 2 and Legal Officer
Remedial and Enforcement Department
VICTOR C. DELA CRUZ, JR.
Assistant Vice President 1
RM, CCBD-Luzon Area
INFORMATION TECHNOLOGY
AND METHODS GROUP
Remittance Marketing Division
VICTOR RUBEN L. TUASON
Vice President and Head
Remittance Marketing Division
Asset Management and Disposition Division
RAYMOND C. ALONZO
Assistant Vice President 2 and Head
Asset Management and Disposition Division
MA. ELISA D. IBANA
Assistant Vice President 2 and Head
Automation Project Oversight Section
MA. CARMELA DELA VEGA
Assistant Vice President 1
RM, CCBD-VISMIN Area
RAMON B. TAÑAFRANCA
Executive Vice President and Head
Information Technology and Methods Group
AUGUSTO M. JOCSON, JR.
Assistant Vice President 2 and Head
Planning Services Section
RONALDO G. MANGUBAT
Assistant Vice President 1
RM-CCBD-VISMIN Area
MELVIN P. GUANZON
Senior Vice President and Head
Information Technology Division
JAIME D. LAMBINO
Assistant Vice President 2 and Head
Branch Delivery / E-Commerce / STO Section
MARIA CARLA L. PADUA
Assistant Vice President 1
RM-CCBD-Metro Manila 1
ERIBERTO C. CONTRERAS
Vice President and Head
Data Center Services Department
GERONIMO S. MANGUBAT II
Assistant Vice President 2 and Head
User Support Section
Corporate and Commercial Banking Division
ANGELITO S. ESTANISLAO
Vice President
Team Head - Visayas & Mindanao
RAMON L. FERNANDEZ, JR.
Vice President
Team Head - Metro Manila 3
CARINA FRANCESCA C. UY
Vice President
Team Head - Metro Manila 1
TERESITA F. SOLITARIA
Assistant Vice President 1
RM, CCBD-VISMIN Area
RAMONA E. CRUZ
Vice President and Head
Consulting and Development
Services Department 2
Consumer Banking Division
ANNA CHRISTINA M. VICENTE
Vice President
Team Head - Metro Manila 2
RICHMOND U. TAN
Assistant Vice President 2
Team Head - Luzon Area
ALEXANDER M. BORJA
Assistant Vice President 2
RM, CCBD-Metro Manila 2
MA. CRISTINA J. CORONA
Assistant Vice President 2
RM, CCBD-VISMIN Area
MILAGROS A. CRUZ
Assistant Vice President 2
RM, CCBD-Metro Manila 1
MA. CARMELA G. FELICIDARIO
Assistant Vice President 2
RM, CCBD-Metro Manila 2
MARY JEAN A. GO
Assistant Vice President 2
RM, CCBD-Metro Manila 1
ANNA MAY B. NIEVA
Assistant Vice President 2
RM, CCBD-Metro Manila 2
YOLANDA L. DE CLARO
Vice President and Officer-in-Charge
Consumer Banking Division
PHILIP S. PABELICO
Vice President and Head
Vehicle Financing Department
KRISTINE MARIE G. CUEVAS
Assistant Vice President 2 and Head
Personal Loans Department
LEONCIO M. ESTACION
Assistant Vice President 2 and Head
Collection and Asset Recovery Department
CHARON B. WAMBANGCO
Assistant Vice President 2 and Product Officer
Real Estate Loans Department
AGNELLUS RAYMUND JAY R. DATOC
Assistant Vice President 1 and Head
Credit Department
CRISANTY JORGE L. DAVID
Assistant Vice President 1 and Product Officer
Vehicle Financing Department
HUMAN RESOURCES GROUP
MA. FLOREBETH O. VILLAPAZ
Assistant Vice President 2
RM, CCBD-VISMIN Area
ROSARIO M. DAYRIT
Senior Vice President and Head
Human Resources Group
CAROLINA O. ZAVALA
Assistant Vice President 2
RM, CCBD-Metro Manila 1
CYNTHIA C. DE RIVERA
Vice President and Head
Customer Quality Management Division
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GIL V. OBIAS
Vice President and Head
Information Planning and
Management Department
MANUEL JOEY A. REGALA
Vice President and Head
Information Security and
Project Oversight Department
IRMA C. SURTIDA
Vice President and Head
Productivity and Methods Department
JANETTE L. TEMPONGKO
Vice President and Head
Consulting and Development
Services Department 1
CARIDAD P. ABAD
Assistant Vice President 2 and Head
Trading Section
JESSE EPHRAIM C. ALMONTE
Assistant Vice President 2 and Systems Project
Officer
Consulting and Development Services
Department 2
CYNTHIA Y. ASONG
Assistant Vice President 2 and Head
Core Banking Section
JONES J. BALLESTEROS
Assistant Vice President 2 and Head
Telecoms Section
MICHAEL S. RABENA
Assistant Vice President 2 and Head
Computer Operations Section
MA. ELENA I. REFULGENTE
Assistant Vice President 2 and Head
Automation Support Section
WILLIAM P. BRILLANTES
Assistant Vice President 1 and Head
Network Management Unit
WILFREDO H. CALAPATAN
Assistant Vice President 1 and Head
Quality Control and Training Section
JOSE MARTIN D. GERONIMO
Assistant Vice President 1 and Head
Application Support Section
IMELDA T. GONZALES
Assistant Vice President 1 and Systems
Project Officer
Core Banking Section
JULIET D. PERIABRAS
Assistant Vice President 1 and Systems
Project Officer
Trading Section
ALFREDO R. TORRES
Assistant Vice President 1 and Head
Shift Operations Unit
INTERNAL AUDIT DIVISION
MARKETING GROUP
NORMAN MARTIN C. REYES
Senior Vice President and Head
Marketing Group
MARIA CARMEN D. AMBROSIO
Assistant Vice President 2 and Head
Marketing Services Department
CHARINA C. DELA CRUZ - BALANQUIT
Assistant Vice President 2 and
Senior Product Manager
MARY ERICA RUTH VIVIANE C. DIAGO
Assistant Vice President 2 and
Senior Product Manager
JOSEPHINE L. CALUAG
Assistant Vice President 1 and Product
Sales Head
OFFICE OF THE CORPORATE SECRETARY
ATTY. ILDEFONSO R. JIMENEZ
First Vice President and Corporate Secretary
ATTY. MARGARITA MARIA A. NACPIL
Assistant Vice President 2 and
Assistant Corporate Secretary
LEGAL SERVICES GROUP
ATTY. JOSE A. BARCELON
Senior Vice President and Head
Legal Services Group
ATTY. MARIA ANGELICA L. RAYEL
First Vice President and Head
Lending, Investment and Marketing
Department
ATTY. HILDA B. GUZMAN
Vice President and Head
Branch, Trust and Operations Department
ATTY. JONATHAN M. ACOSTA
Assistant Vice President 2 and Legal Officer
Branch, Trust and Operations Department
PINKY S. DEREQUITO
First Vice President and Head
Internal Audit Division
ATTY. CRISPIN V. AMORANTO
Assistant Vice President 2 and Legal Officer
Branch, Trust and Operations Department
LILIA M. DIOKNO
Vice President and Head
Information Systems Audit Department
ATTY. ART BERNARD D. BERNALES
Assistant Vice President 2 and Legal Officer
Lending, Investment and Marketing Department
ATTY. MIGNONETTE C. ALDAY
Assistant Vice President 1 and Legal Officer
Branch, Trust and Operations Department
ATTY. MARIE CHRISTINE E. AVARICIO
Assistant Vice President 1 and Legal Officer
Lending, Investment and Marketing
Department
ATTY. JOSIEBETH P. BASA
Assistant Vice President 1 and Legal Officer
Lending, Investment and Marketing
Department
ATTY. KABAITAN R. GUINHAWA-VALMONTE
Assistant Vice President 1 and Legal Officer
Remedial and Enforcement Department
ATTY. JASON ROBERT M. PAREDES
Assistant Vice President 1 and Legal Officer
Remedial and Enforcement Department
ATTY. FRANCISCO A. SAAVEDRA
Assistant Vice President 1 and Legal Officer
Remedial and Enforcement Department
OFFICE OF THE PRESIDENT
JERONIMO U. KILAYKO
Director, President and CEO
ANA LENINA P. ESTAVILLO
Assistant Vice President 1
Office of the President
MARIA TERESA T. PALOMO
Assistant Vice President 1
Office of the President
OPERATIONS GROUP
EVANGELINA P. SAMONTE
Executive Vice President and Head
Operations Group
ARNEL A. VALLES
First Vice President and Head
International Banking and Treasury
Operations Division
BENJAMIN P. APAN
Vice President and Head
Loans Operations Division
JOJI S. NORICO
Vice President and Head
Credit Administration Division
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JUSTINIANO M. BABATE
Assistant Vice President 2 and Head
Trade Services Department
International Banking and Treasury
Operations Division
MARIO A. GULLE
Assistant Vice President 2 and Head
Clearing Center
SENIOR OFFICERS
SENIOR OFFICERS
AS OF MARCH 2013
AS OF MARCH 2013
SUPPORT SERVICES GROUP
CESAR A. RUBIO
Chief Financial Officer,
Executive Vice President and Head
Support Services Group
CYNTHIA A. ALMIREZ
Vice President and Controller
Controllership Division
RAMONITA C. MENDOZA
Assistant Vice President 2 and Head
Loans Documentation Department
Credit Administration Division
MARGARITA A. GUADINES
Vice President and Head
Strategic Planning and Analysis Division
ELZEBER O. MURALLOS
Assistant Vice President 2 and Head
Remittance Services Department
International Banking and Treasury
Operations Division
ALEXANDER L. ANDRES
Assistant Vice President 2 and Head
Subsidiaries Financial Accounting
Department
Controllership Division
ROMEO L. ALONZO
Assistant Vice President 1 and Head
Foreign Operations Department
International Banking and Treasury
Operations Division
LINDA S. ORTIZ
Assistant Vice President 2 and Head
General Services Department
Corporate Services Division
MANUEL L. CINCO
Assistant Vice President 1 and Head
CAID-VISMIN
CRISOLOGO F. SAGNIP
Assistant Vice President 2 and Head
Financial Accounting Department
Controllership Division
MARILOU C. DANNUG
Assistant Vice President 1 and Head
Loans Documentation Department
Credit Administration Division
CARLITO I. SANTOS
Assistant Vice President 2
Administrative Control Officer
Corporate Services Division
NIDA C. LIM
Assistant Vice President 1 and Head
Local Operations Department
International Banking and Treasury
Operations Division
LORENA P. ALCOVER
Assistant Vice President 1 and Head
Budget and Planning
Strategic Planning and Analysis Division
REMIGIO T. VARGAS
Assistant Vice President 1 and Head
Credit Appraisal & Investigation Department
Credit Administration Division
RISK MANAGEMENT DIVISION
MA. PAZ Q. CUEVAS
Vice President,
Chief Risk Officer and Head
Risk Management Division
JONATHAN THADDEUS V. JIMENEZ
Assistant Vice President 2 and Head
Market Risk Department
REBECCA M. LIM
Assistant Vice President 2 and Head
Credit Risk Department
TEODORA B. GARCIA
Assistant Vice President 1
Trust Risk Officer
JOY T. TAN
Assistant Vice President 1 and Head
Operations Risk Department
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LEMUEL J. DIMAANO
Assistant Vice President 1 and Head
Corporate Real Estate Department
Corporate Services Division
TREASURY BANKING GROUP
EULOGIO V. CATABRAN III
Executive Vice President and Head
Treasury Banking Group
HELEN G. OLETA
First Vice President and Chief Dealer
Trading Department
RICHARD Q. LIM
Vice President
Trading Department
ARTURO I. LIPIO, JR.
Vice President and Head
Sales and Distribution Department
ELIZABETH C. TERRADO
Vice President and Head
Fund Management Department
SHEILA S. ANG
Assistant Vice President 2
Trading Department
MA. ISABEL G. LORENZO
Assistant Vice President 1
Portfolio Manager
JOSEFINA ANNA D. TRINIDAD
Assistant Vice President 2 and Head
Human Resource Division
SANDRA S. GO
Assistant Vice President 2
Trading Department
CHRISTINE G. PEÑAFIEL
Assistant Vice President 1
Portfolio Manager
WILFREDO S. BAUTISTA
Assistant Vice President and Head
Information Technology Division
MENCHIE E. LAGAC
Assistant Vice President 2
Sales and Distribution Department
MA. CHRISTINE D. PAGKALINAWAN
Assistant Vice President 2
Sales and Distribution Department
MELIZA B. ZULUETA
Assistant Vice President 2
MIS/Business Officer
DONNA LYN V. ABES
Assistant Vice President 1
Fund Management Department
MA. JOSEPHINA S. BAGAMASBAD
Assistant Vice President 1
Financial Institutions Desk
APRIL HOPE J. BAUTISTA
Assistant Vice President 1
Sales and Distribution Department
MA. ANGELICA M. OLIVA
Assistant Vice President 1
Fund Management Department
TRUST BANKING GROUP
ALEXANDRA C. DEVERAS
Trust Officer, First Vice President and Head
Trust Banking Group
RAMON ANTONIO C. TORRES
First Vice President and Head
Managed Portfolios Department
STEPHEN S. SEVIDAL
Vice President, Chief Investment Officer
and Head,Trading and Execution Department
MA. CATALINA M. CRUZ
Vice President and Head
Trust Sales Department
UCPB-CIIF FOUNDATION INC.
UCPB-CIIF FINANCE AND
DEVELOPMENT CORPORATION
EDGARDO C. AMISTAD
President
SUBSIDIARIES
UCPB LEASING &
FINANCE CORPORATION
FRANCO P. MAGALONG
President
MERCY K. CHUA
Assistant Vice President 1
Account Officer
VIRGINIA P. FUGOSO
Assistant Vice President 1
Account Officer
ATTY. ROBERTO M. BUENAVENTURA
Assistant Vice President 1 and Head
Legal Services Division
RICO C. DE GUZMAN
Assistant Vice President 1 and Head
Credit Administration Division
AMADO T. DE LEON, JR.
Assistant Vice President 1 and Head
Branch Banking – Luzon Region
NARISA BERLIN R. DURAN
Assistant Vice President 1 and Head
Risk Management Division
CARLO P. YAMSUAN
Assistant Vice President 1 and Head
Consumer Lending – Auto Loans Department
UCPB SECURITIES INC.
VINCENT K. DE LEON
President
MA. LUISA P. GOPICO
Assistant Vice President 1
Compliance Officer
MICHAEL ROBERT L. MENDOZA
Assistant Vice President 1
Account Officer
UCPB SAVINGS BANK
(As of MAY 2013)
JOSEPH C. JUSTINIANO
President
TOMAS L. CLOA, Jr.
Vice President and Head
Branch Banking Division
CORAZON R. GUEVARRA
Vice President and Head
Commercial Lending Division
MARIA VICTORIA C. MENDOZA
Assistant Vice President 2 and Head
Investment Evaluation and
Special Trust Department
EVANGELINE P. REYES
Vice President and Head
Controllership Division
DELIA E. MERLE
Assistant Vice President 2 and Head
Trust Operations Division
MANUEL C. MADRIDEJOS
Assistant Vice President 2 and Head
Treasury Division
AMALIA Q. BELARMINO
Assistant Vice President 1
Relationship Manager
ESTER T. SALCEDO
Assistant Vice President 2 and Head
Bank Compliance Division
2012
Annual
Report
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67UCPB
/ UCPB
2012
Annual
Report
PRODUCTS
AND SERVICES
•
•
•
•
BIR-eFPS
Pension Crediting
Direct Deposit for US Pensioners
U-remit System
Account Management
• Automatic Transfer Arrangement
• Sweep Facility
Deposits
Peso Accounts
• Multi-One
• ATM Peso Savings Account
• Passbook Peso Savings Account
• Regular Checking Account
• Kiddie Max
Foreign Currency Accounts
•US$ Savings Account
• Euro
• Yen
• Pounds Sterling
Time Deposits
• Peso Time Deposit
• US$ Time Deposit
Remittance Services
U-remit Accounts
• U-remit ATM Savings Account
• U-remit Passbook Savings Account
• U-remit US$ Savings Account
• U-remit Peso Checking Account
Inward Remittances Through Tie-Ups
and Correspondent Banks
• Direct Credit to UCPB Accounts
• Direct Credit to Local Bank Accounts
• Cash Pick Up over UCPB Branches
• Cash Pick Up over Mlhuillier Branches
• Payout Centers for:
- MoneyGram, Coinstar, Uniteller,
EzRemit, Cash Express
Cash Management
Collections
• Bills Payment
• Point-of-Sale (POS) Collection Service
• Megalink Internet Payment Gateway
• Auto Collect (Automatic Debit
Arrangement)
• One-Way Depository Arrangement
(OWDA Plus)
• Post-Dated Check Warehousing with
Online Facility (PDC.Biz)
• National Government Collections
(Bureau of Treasury)
• Night Depository Service
• Corporate Collection Service
• Deposit Pick-Up / Cash Delivery Service
Disbursements
• Checkwriter.Biz (Online Check
Disbursement Facility)
• UCPB eMoney Card
• Payroll Facilities
• CM Payroll (Payroll Crediting
Facility)
• Payroll Max (Payroll Software for
Salary Preparation and Crediting)
68// UCPB
UCPB2012
2012Annual
AnnualReport
Report
68
Electronic Banking Facilities
• UCPB CM.biz
• UCPB Connect
• UCPB Mobile Phone Banking Service
• UCPB Telebanking
• UCPB My1Time.Com
Special Services
• Conduit Clearing Arrangement with
Online Facility (CCA.Biz)
• Depository and Custodianship Service
• Mobile ATM
Consumer Loans
Auto Loans
- Brand New, Second Hand, Refinancing,
Fleet Financing
Home Loans
- Condominiums, Townhouses, Houses
and Lots
- Refinancing, Construction, MultiPurpose Loans
Personal Loans
• Your Easy Salary Loan (YES Loans)
• Salary Loans (Corporate Arrangements)
• UCPB Credit Card
Open Account Arrangement
• Direct Remittance
• Advance Payment
Collection of Custom Duties and Taxes
(E2M)
Export Documentary Credit Advising
Export Advance
Export Bills Purchase
Export Bills for Collection
Treasury
Peso-Denominated Investments:
Government Securities
• Treasury Bills
• Retail / Treasury Notes
• ROP US$ Denominated Debts
• BSP$ Denominated Debts
Prime Corporate Bonds
Repurchase Agreement
US Dollar-Denominated Investments:
Republic of the Philippines (ROP)
Dollar Bonds
Prime Corporate Bonds
Commercial Papers
Trust
Personal Trust Services
Living Trust Account
Individual Agency Accounts (IMA)
Administratorship
Executorship
Guardianship
Safekeeping
Escrow - Buy and Sell, Capital Gains,
POEA
Small Business Loans
Commercial Credit
Non-Trade Short-Term Loan
• Omnibus Line
• Promissory note-Peso/Foreign Currency
• Bridge Financing
• Check Discounting
• Domestic/Foreign Bills Purchase
• Foreign Currency Settlement
• Account Receivable Discounting
• Committed Credit Line
• Short-Term Loan
Non-Trade Long-Term Loan
• Term Loan-Peso/Foreign Currency
• Term Loan/Syndicated-Peso/Foreign
Currency
• Term Loan-Special Funding (DBP,
LBP,SSS)
• Term Loan with GuaranteeGFSME,SPGFC,HIGC, LGUGC and
PHILEXIM
Trade Financing
Documentary Credit-Foreign /
Domestic
Standby Letter of Credit – Foreign /
Domestic
Trust Receipt Financing
Shipside Bond/Bank Guarantee
Documents Against Acceptance
Documents Against Payment
Corporate Trust Services
Institutional Agency Account (IMA)
Employee Benefit Fund Management
Mortgage Trust Indenture
Loan Agency
Pre Need Fund Management
Safekeeping
Escrow - Buy and Sell, POEA
Unit Investment Trust Funds
• United Cash Management Fund
• United Conservative Fund
• United Balanced Fund
• United Equity Fund
• United US$ Money Market Fund
UCPB LEASING AND FINANCE
CORPORATION
Lease Financing
• Financial Lease
• Amortized Commercial Loan
• Receivable Financing
UCPB SECURITIES, INC.
Equities Trading – Philippine Market
Lodgement of Securities
Upliftment of Securities
2012
Annual
Report
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69UCPB
/ UCPB
2012
Annual
Report
INDEPENDENT AUDITORS’ REPORT
The Stockholders and the Board of Directors
United Coconut Planters Bank and Subsidiaries
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of United Coconut Planters Bank (“the Bank” or “the Parent
Bank”) and Subsidiaries (collectively referred to as “the Group”) and the separate financial statements of the Parent Bank, which
comprise the consolidated and separate statements of financial position as at December 31, 2012, and the consolidated and separate
statements of income, consolidated and separate statements of comprehensive income, consolidated and separate statements of
changes in equity, and the consolidated and separate statements of cash flows for the year then ended, and notes, comprising a
summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements of the Group and
separate financial statements of the Parent Bank in accordance with Philippine Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation and fair presentation of the consolidated and separate
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted
our audit in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and
separate financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of
material misstatement of the consolidated and separate financial statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated and
separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated and separate financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide the bases for our qualified audit opinion.
Bases for Qualified Opinion
As described in the Other Matter paragraph, the opinion expressed on the consolidated financial statements of the Group and the
separate financial statements of the Parent Bank as at and for the year ended December 31, 2011 was a qualified opinion due to
non-compliance of certain items with accounting principles generally accepted in the Philippines for banks (“PGAAP for banks”).
As discussed in Note 1 to the financial statements, the Parent Bank embarked on a 10-year Rehabilitation Plan (the “Rehabilitation
Plan”) as part of the Financial Assistance Agreement entered into with the Philippine Deposit Insurance Corporation (PDIC) on July 7,
2003. The Rehabilitation Plan and subsequent amendments thereof allow the recording of certain items which, although allowed by the
Bangko Sentral ng Pilipinas (BSP), are not in accordance with Philippine Financial Reporting Standards (PFRS). The Rehabilitation Plan
was approved by the BSP on January 10, 2005. On May 15, 2008, as endorsed by PDIC, the Monetary Board of the BSP, in its Resolution
No. 590, approved the amended Rehabilitation Plan of the Parent Bank which involves the following: (a) issuance of 12.0 billion
Capital Notes to PDIC; (b) authority to accept deposits from the National Government, Local Government Units and Government-Owned
and Controlled Corporations; (c) staggered booking of unbooked valuation reserves and deferred charges for 10 years starting January
2008; (d) waiver of certain monetary penalties; and (e) continued access to the BSP rediscounting facility. On February 26, 2009, the
Monetary Board of the BSP, in its Resolution No. 345, approved to defer the start of the staggered booking of the unbooked valuation
reserves and deferred charges to January 1, 2009 and exempt the Parent Bank from sanctions that may be imposed for its noncompliance with the 10.0% capital adequacy ratio and all the capital-based regulatory ratios for the year 2008 until such time that the
Parent Bank’s amended Rehabilitation Plan is fully implemented.
In relation to (a) above and as discussed in Note 25 to the financial statements, the 12.0 billion Capital Notes issued to PDIC in 2009
should have been presented as a financial liability and not as an equity instrument in the statement of financial position because of its
contingent settlement provision. As allowed by the BSP and in keeping with the objectives of the Rehabilitation Plan, the Parent Bank has
presented the Capital Notes in the equity section of the statement of financial position. Had the Parent Bank presented the Capital Notes
as financial liability, total liabilities would have increased and total equity would have decreased by 12.0 billion as at December 31, 2012.
As discussed in Note 9, on various dates in 2011, the Parent Bank sold held-to-maturity (HTM) investments with aggregate carrying
amount of 3.2 billion thereby realizing gains of 0.3 billion. As a result of these disposals, the Parent Bank is prohibited under
PFRS from classifying any financial asset as HTM investments in 2011 until 2013. The Monetary Board, in its Resolution No. 2141
dated December 20, 2012, approved the request of the Parent Bank to exempt its P28.0 billion investment in government securities
classified as HTM investments, which were funded from the P30.0 billion savings deposits maintained by the National Government
with the Parent Bank as part of the concessions granted under the amended Rehabilitation Plan, as discussed in (b) above, from the
“tainting provision” under Subsection x388.5(b) and Appendix 33 of the Manual of Regulations for Banks and retain classification
70 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 71
INDEPENDENT AUDITORS’ REPORT
of such securities under the HTM investments portfolio. As at December 31, 2012, the Parent Bank continues to classify these
government securities with aggregate carrying amount of 28.0 billion and fair value of 32.5 billion as HTM investments. Had the
Parent Bank reclassified these investments to available-for-sale (AFS) financial assets, net unrealized gain on AFS financial assets
of the Group and of the Parent Bank, which is included in the equity section of the statement of financial position, would have
increased by 4.5 billion.
In relation to (c) above under the amended Rehabilitation Plan as at December 31, 2008, (i) the Parent Bank did not book credit and
impairment losses on AFS financial assets, loans and receivables, investment properties, and other assets totaling 13.4 billion, and
(ii) deferred the recognition of losses on sale and dacion en pago settlement totaling 15.7 billion. These 29.1 billion unbooked
valuation reserves and deferred losses have been booked by the Parent Bank on a staggered basis starting in 2009. The BSP allowed
and approved the staggered recognition of the foregoing required provisioning pursuant to the Financial Assistance Agreement between
the Parent Bank and PDIC. PFRS require the recognition of impairment and losses on sale and other forms of settlement losses in the
period incurred. As discussed in Notes 1, 14 and 15, the Parent Bank recognized 963.0 million of the unbooked valuation reserves and
deferred losses in 2012 by a charge to surplus (deficit) for the year and not to the opening balance of surplus (deficit) of the earliest
year presented. Unbooked valuation reserves and deferred losses amounted to 27.1 billion as at December 31, 2012.
As discussed in Notes 14 and 15 to the financial statements, under PFRS, as at December 31, 2012 and 2011, the Parent Bank’s assets
referred to in (i) above were determined to be impaired. The Parent Bank deferred the full recognition of the credit and impairment
losses and instead recognized credit and impairment losses in its financial statements in accordance with the BSP approved
staggered basis of recognition. PFRS require the recognition of credit and impairment losses during the period when impairment
was incurred. The booking of the losses arising from the sale of nonperforming loans (NPLs) and real and other properties acquired
(ROPA) referred to in Note 14 and in (ii) of the preceding paragraph as at December 31, 2012 amounting to 15.9 billion, was
deferred by the Parent Bank. PFRS require the foregoing losses to be recognized in full in the period such losses were incurred. Had
the Parent Bank recognized in full the credit and impairment losses and the losses arising from the foregoing sale of NPLs and
ROPA in the years when these were incurred as required by PFRS, total assets and equity would have decreased by 18.7 billion in
2012, and net income would have increased by 1.7 billion in 2012.
As discussed in Note 13 to the financial statements, the Parent Bank did not recognize the related accumulated depreciation
on certain investment properties referred to in (i) above amounting to 1.4 billion as at December 31, 2012. PFRS require that
depreciation expense be recognized on depreciable investment properties. The Parent Bank determined the effect of accumulated
depreciation that should have been considered in the determination of the gain or loss on sale or disposal of certain investment
properties. Had the Parent Bank recognized the effect of depreciation expense that should have been recognized during the year
and the effect of any accumulated depreciation that should have been considered in the determination of the gain or loss on the
sale or disposal of its investment properties, net income would have decreased by 43.4 million and increased by 20.3 million,
respectively, in 2012.
INDEPENDENT AUDITORS’ REPORT
auditors, had the matters of qualification been properly accounted for in accordance with PGAAP for banks, the
combined effects on the December 31, 2011 financial statements would have decreased assets and increased liabilities
by 20.2 billion and 12.0 billion, respectively, as at December 31, 2011, while equity and net income would have
decreased by 32.2 billion and 787.5 million, respectively, in 2011. More specifically, the report of the predecessor
auditors expressed a qualified opinion due to the effects on the financial statements of the following matters:
a. Staggered recognition of unbooked valuation reserves relating to credit and impairment losses on AFS financial
assets, loans and receivables, investment properties and other assets;
b. Deferral of the full recognition of losses on sale and dacion en pago settlement;
c. Non-recognition of the related accumulated depreciation on certain investment properties;
d. Presentation of the 12.0 billion Capital Notes issued to PDIC as financial liability instead of equity; and
e. Non-reclassification of remaining HTM investments to AFS financial assets as a consequence of the sale of other HTM
investments during 2011 resulting to a prohibition under PGAAP for banks from classifying any financial asset as HTM
investments in 2011 until 2013.
Report on the Supplementary Information Required Under Revenue Regulations (RR) No. 15-2010 and RR No. 192011 of the Bureau of Internal Revenue
Our audit was conducted for the purpose of forming an opinion on the basic separate financial statements of the Parent
Bank taken as a whole. The supplementary information in Note 33 to the financial statements is presented for purposes
of filing with the Bureau of Internal Revenue and is not a required part of the basic separate financial statements of
the Parent Bank. Such information is the responsibility of the management of the Parent Bank. The information has
been subjected to the auditing procedures applied in our audit of the basic separate financial statements of the Parent
Bank. In our opinion, the information is fairly stated in all material respects in relation to the basic separate financial
statements of the Parent Bank taken as a whole.
May 30, 2013
Makati City, Metro Manila
Had the matters discussed in the preceding five paragraphs been accounted for by the Parent Bank in accordance with PFRS, total
assets and equity would have decreased by 15.6 billion and 27.6 billion as at December 31, 2012, respectively, and net income
would have increased by 1.7 billion in 2012. The Parent Bank did not recognize the losses since it believes that the total unbooked
valuation reserves and deferred losses referred to in (c) in the first paragraph under Bases for Qualified Opinion that will be
recognized on a staggered basis is sufficient to cover the financial impact of the unbooked adjustments for losses.
Qualified Opinion
In our opinion, except for the effects of the matters described in the Bases for Qualified Opinion paragraphs, the consolidated
financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31,
2012, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with
Philippine Financial Reporting Standards. Also, in our opinion, except for the effects of the matters described in the Bases for
Qualified Opinion paragraphs, the separate financial statements of the Parent Bank present fairly, in all material respects, the
unconsolidated financial position of the Parent Bank as at December 31, 2012, and its unconsolidated financial performance and its
unconsolidated cash flows for the year then ended in accordance with Philippine Financial Reporting Standards.
Emphasis of Matters
Without further qualifying our opinion, we draw attention to Notes 12, 25 and 29 to the financial statements, which discuss the decision
rendered by the Supreme Court in two cases involving: (a) the ownership of certain sequestered shares in United Coconut Planters Bank
by the PCGG; and (b) the ownership over the Coconut Industry Investment Fund (CIIF) Companies, the Fourteen CIIF Holding Companies
and the shares of stock in San Miguel Corporation (SMC) held by the Fourteen CIIF Holding Companies, together with all dividends
declared, paid and issued thereon as well as any increments thereto arising from, but not limited to, exercise of preemptive rights. The
Supreme Court declared that these are owned by the Government and to be used only for the benefit of all coconut farmers and for
the development of the coconut industry, and ordered reconveyed to the Government. As at December 31, 2012, the total dividends on
the SMC shares prior to redemption and related interest earned thereon amounting to 13.7 billion are deposited with United Coconut
Planters Bank in the name of the Republic of the Philippines represented by PCGG in trust for the Fourteen CIIF Holding Companies. The
impact of the Supreme Court Ruling on the financial statements cannot be determined at this time.
Other Matter
The accompanying consolidated financial statements of the Group and the separate financial statements of the Parent Bank as at and
for the year ended December 31, 2011 prepared in accordance with PGAAP for banks were audited by other auditors whose report
thereon dated March 29, 2012, expressed a qualified opinion on those financial statements. Based on the report of the predecessor
72 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 73
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2012
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Figures for 2011)
(Amounts in Thousands)
(With Comparative Figures for 2011)
(Amounts in Thousands)
Consolidated
Note
ASSETS
Cash and Other Cash Items
Due from Bangko Sentral ng Pilipinas
Due from Other Banks
Interbank Loans Receivable and Securities
Purchased Under Resale Agreements
Financial Assets at Fair Value Through Profit or Loss
Available-for-Sale Financial Assets
Held-to-Maturity Investments
Loans and Receivables
Property and Equipment
Investments in Subsidiaries,
Associates and Joint Venture
Investment Properties
Deferred Tax Assets
Intangible and Other Assets
LIABILITIES AND EQUITY
LIABILITIES
Deposit Liabilities
Demand
Savings
Time
Long term negotiable certificates of deposits
Bills Payable and Securities Sold
Under Repurchase Agreements
Accrued Taxes, Interest and Other Expenses
Income Tax Payable
Deferred Tax Liabilities
Other Liabilities
2011
Parent Bank
2012
5,978,605
28,254,415
2,208,451
4,757,246
32,579,118
1,898,901
5,834,451
27,679,351
2,083,221
4,607,502
32,305,984
1,851,226
8
9
6, 9,15
6, 9
10,15,28
11
226,775
827,886
23,255,121
28,159,197
89,541,213
2,337,687
1,225,579
1,931,324
19,734,335
28,216,682
70,517,710
2,342,591
226,775
822,597
22,996,793
28,016,774
80,766,191
2,138,179
1,098,579
1,923,896
19,518,546
28,073,365
63,890,062
2,232,671
12,15
13,15
24
14,15
8,502,183
5,989,291
85,840
23,212,128
218,578,792
7,482,576
6,778,291
54,201
22,952,884
200,471,438
4,088,540
5,719,705
—
20,015,966
200,388,543
3,919,787
6,494,918
—
19,746,619
185,663,155
17,848,937
98,313,724
47,160,888
9,443,866
172,767,415
13,007,774
98,722,144
45,284,080
7,593,890
164,607,888
17,619,081
95,927,015
44,626,234
9,443,866
167,616,196
12,929,685
96,478,317
43,528,507
7,593,890
160,530,399
14,917,502
705,335
36,986
78,674
9,375,071
197,880,983
8,757,569
574,203
46,622
66,121
8,797,583
182,849,986
13,867,994
632,690
4,358
31,318
8,531,580
190,684,136
8,431,403
616,476
—
30,492
8,229,068
177,837,838
1,484,843
12,000,000
149,664
6,357,329
645,801
1,484,843
12,000,000
896,483
2,661,295
523,533
1,484,843
12,000,000
149,664
(4,515,912)
587,580
1,484,843
12,000,000
896,483
(7,048,288)
492,935
920
(1,768)
303
20,637,092
60,717
20,697,809
218,578,792
426
(656)
2,644
17,568,568
52,884
17,621,452
200,471,438
—
(1,768)
—
9,704,407
—
9,704,407
200,388,543
—
(656)
—
7,825,317
—
7,825,317
185,663,155
16,28
17
18
24
24
19
Consolidated
2011
16
7,16
EQUITY
Equity Attributable to Equity Holders of the Parent Bank
Common stock
25
Capital notes
25
Surplus reserves
26
Surplus (deficit)
15,25
Net unrealized gains on available-for-sale financial assets
9
Equity in net unrealized gains on available-for-sale
financial assets of associates
12
Translation adjustment
Equity in translation adjustment of associates
12
Non-controlling Interest
2012
Parent Bank
Note
2012
2011
2012
2011
10,28
9
7
6,526,049
3,448,824
136,269
5,781,544
3,421,058
254,340
5,497,776
3,413,918
131,994
4,837,163
3,394,140
248,797
8
11,042
10,122,184
9,545
9,466,487
3,214
9,046,902
3,240
8,483,340
16,28
17
NET INTEREST INCOME
Trading and securities gains - net
9,28
Service charges, fees and commissions
Income from trust operations
Gains on sale of nonfinancial assets
Foreign exchange gains (losses) - net
9
Miscellaneous
22
TOTAL OPERATING INCOME
Compensation and fringe benefits
27,28
Taxes and licenses
Provision for credit and impairment losses
15
Occupancy
21
Depreciation and amortization
11,13
Security, clerical and messengerial
Insurance
Litigation and assets acquired
Miscellaneous
23
TOTAL OPERATING EXPENSES
INCOME BEFORE SHARE IN NET INCOME OF ASSOCIATES
SHARE IN NET INCOME OF ASSOCIATES
12
INCOME BEFORE INCOME TAX
PROVISION FOR INCOME TAX
24
2,736,100
532,192
3,268,292
6,853,892
1,816,120
702,990
132,582
94,374
17,682
190,288
9,807,928
1,744,327
765,580
632,195
555,724
524,752
402,332
396,073
56,097
930,375
6,007,455
3,800,473
1,021,454
4,821,927
901,910
2,480,759
379,910
2,860,669
6,605,818
899,206
720,529
123,264
131,579
(32,733)
521,370
8,969,033
1,663,335
701,724
471,972
559,942
530,247
372,694
364,331
88,290
824,253
5,576,788
3,392,245
527,068
3,919,313
859,653
2,634,790
503,488
3,138,278
5,908,624
1,792,005
531,543
132,540
65,836
17,690
204,297
8,652,535
1,531,853
662,308
358,280
512,976
475,397
377,601
378,172
44,811
823,582
5,164,980
3,487,555
—
3,487,555
738,998
2,399,204
330,265
2,729,469
5,753,871
890,045
557,567
123,417
102,636
(32,733)
476,147
7,870,950
1,482,617
617,778
450,282
523,570
481,663
354,502
348,592
77,999
713,709
5,050,712
2,820,238
—
2,820,238
713,718
NET INCOME
3,920,017
3,059,660
2,748,557
2,106,520
3,912,215
7,802
3,920,017
3,052,271
7,389
3,059,660
INTEREST INCOME
Loans and other receivables
Trading and investment securities
Due from BSP and other banks
Interbank loans receivable and securities
purchased under resale agreements
INTEREST AND FINANCE CHARGES
Deposit liabilities
Bills payable
Attributable to:
Equity holders of the Parent Bank
Non-controlling interest
See Notes to the Financial Statements.
See Notes to the Financial Statements.
74 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 75
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Figures for 2011)
(Amounts in Thousands)
(With Comparative Figures for 2011)
(Amounts in Thousands)
Consolidated
Note
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS) - net of tax
Net unrealized gains on available-for-sale financial assets
Equity in net unrealized gains on available-for-sale
financial assets of associates
Translation adjustment
Equity in translation adjustment of associates
TOTAL COMPREHENSIVE INCOME
Total comprehensive income attributable to:
Equity holders of the Parent Bank
Non-controlling interest
See Notes to the Financial Statements.
9
12
12
Parent Bank
2012
2011
2012
2011
3,920,017
3,059,660
2,748,557
2,106,520
122,268
383,650
94,645
377,167
494
(1,112)
(2,341)
119,309
4,039,326
258
64,783
1
448,692
3,508,352
—
(1,112)
—
93,533
2,842,090
—
64,783
—
441,950
2,548,470
4,031,493
7,833
4,039,326
3,500,950
7,402
3,508,352
Consolidated
Equity Attributable to Equity Holders of the Parent Bank
Note
Balance at January 1, 2012
Amortization of unbooked
valuation reserves and losses
Transfer of reserves
Net income for the year
Other comprehensive income (loss)
Balance at December 31, 2012
Balance at January 1, 2011
Amortization of unbooked valuation
reserves and losses
Net income for the year
Other comprehensive income (loss)
Balance at December 31, 2011
1,15
1,15
Equity in
Net Unrealized
Gains on
Availablefor-Sale
Investments
of Associates
(Note 12)
426
Common
Stock
(Note 25)
1,484,843
Capital
Notes
(Note 25)
12,000,000
Surplus
Reserves
(Note 26)
896,483
Surplus
(Notes 15 and 25)
2,661,295
Net Unrealized
Gains on
Availablefor-Sale
Financial Assets
(Note 9)
523,533
—
—
—
—
1,484,843
—
—
—
—
12,000,000
—
(746,819)
—
—
149,664
(963,000)
746,819
3,912,215
—
6,357,329
—
—
—
122,237
645,770
—
—
—
494
920
—
—
—
(1,112)
( 1,768)
—
—
—
(2,341)
303
(963,000)
—
3,912,215
119,278
20,637,061
7,802
31
60,717
(963,000)
—
3,920,017
119,309
20,697,778
1,484,843
12,000,000
896,483
191,024
139,896
168
( 65,439)
2,643
14,649,618
45,482
14,695,100
—
—
—
1,484,843
—
—
—
12,000,000
—
—
—
896,483
(582,000)
3,052,271
—
2,661,295
—
—
383,637
523,533
—
—
258
426
—
—
64,783
( 656)
—
—
1
2,644
(582,000)
3,052,271
448,679
17,568,568
—
7,389
13
52,884
(582,000)
3,059,660
448,692
17,621,452
Translation
Adjustment
( 656)
Total
7,825,317
Translation
Adjustment
( 656)
Equity in
Translation
Adjustments
of Associates
(Note 12)
2,644
Total
17,568,568
Parent Bank
Note
Balance at January 1, 2012
Amortization of unbooked valuation reserves
and losses
Transfer of reserves
Net income for the year
Other comprehensive income (loss)
Balance at December 31, 2012
Balance at January 1, 2011,
Amortization of unbooked valuation reserves
and losses
Total comprehensive income (loss)
Balance at December 31, 2011
15
26
15
Common
Stock
(Note 25)
1,484,843
Capital
Notes
(Note 25)
12,000,000
Surplus
Reserves
(Note 26)
896,483
Deficit
(Notes 15 and 25)
( 7,048,288)
Net Unrealized
Gain (Loss) on
Availablefor-Sale
Investments
(Note 9)
492,935
—
—
—
—
1,484,843
—
—
—
—
12,000,000
—
(746,819)
—
—
149,664
(963,000)
746,819
2,748,557
—
( 4,515,912)
—
—
—
94,645
587,580
—
—
—
(1,112)
( 1,768)
(963,000)
—
2,748,557
93,533
9,704,407
1,484,843
12,000,000
896,483
( 8,572,808)
( 115,768)
( 65,439)
5,858,847
—
—
1,484,843
—
—
12,000,000
—
—
896,483
(582,000)
2,106,520
( 7,048,288)
See Notes to the Financial Statements.
76 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 77
—
377,167
492,935
—
64,783
( 656)
(582,000)
2,548,470
7,825,317
Non-controlling
Interest
52,884
—
Total Equity
17,621,452
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Figures for 2011)
(Amounts in Thousands)
(With Comparative Figures for 2011)
(Amounts in Thousands)
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Provision for credit and impairment losses
Depreciation and amortization
Gain on sale of nonfinancial assets
Loss on foreclosure of collaterals
Mark-to-market gains on financial assets at fair value
through profit or loss
Trading gains on available-for-sale financial assets
Trading gains on held-to-maturity investments
Share in net income of associates
Amortization of discounts on held-to-maturity investments
Amortization of discounts on Long Term Negotiable
Certificates of Deposits
Changes in operating assets and liabilities:
Decrease (increase) in the amounts of:
Financial assets at fair value through profit or loss
Loans and receivables
Other assets
Increase (decrease) in the amounts of:
Deposit liabilities
Accrued taxes, interest and other expenses
Other liabilities
Cash generated from (absorbed by) operating activities
Income taxes paid
Net cash (used in) provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Available-for-sale financial assets
Held-to-maturity investments
Property and equipment
Software costs
Proceeds from sale of:
Available-for-sale financial assets
Held-to-maturity investments
Property and equipment
Investments properties
Proceeds from maturity of held-to-maturity investments
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Settlements of bills payable
Availments of bills payable
Issuance of Long Term Negotiable Certificates of Deposits
Net cash provided by financing activities
TRANSLATION ADJUSTMENT
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
Cash and other cash items
Due from Bangko Sentral ng Pilipinas
Due from other banks
Interbank loans receivable and securities purchased
under resale agreements
Consolidated
2012
2011
Parent Bank
2012
2011
Note
4,821,927
15
13
9
9
9
12
16
11
14
3,919,313
3,487,555
632,195
524,752
(94,374)
—
471,972
530,247
(131,579)
2,122
358,280
475,397
(65,836)
—
450,282
481,663
(102,636)
2,122
(5,714)
(1,442,513)
—
(1,021,454)
57,485
(279,153)
(212,072)
(335,213)
(527,068)
—
(5,682)
(1,431,736)
—
—
56,591
(271,310)
(210,754)
(335,213)
—
—
18,835
7,16
8
18,835
10,663
1,109,152
(19,648,229)
(712,014)
164,569
(9,466,649)
992,444
1,106,981
(17,226,940)
(850,662)
103,991
(8,509,732)
915,976
6,309,550
131,131
577,488
(8,741,783)
(930,632)
(9,672,415)
7,644,694
(642,790)
2,095,223
4,236,723
(864,034)
3,372,689
5,235,821
16,214
302,512
(8,522,670)
(733,814)
(9,256,484)
7,487,902
(560,437)
2,037,577
4,320,332
(740,303)
3,580,027
( 82,247,239)
—
(491,804)
(39,354)
( 27,399,382)
(113,924)
(978,568)
(58,313)
80,440,055
—
131,923
98,614
—
(2,107,805)
16
10,663
2,820,238
(123,759,432)
129,919,365
1,831,142
7,991,075
(3,453)
(3,792,598)
23,004,057
3,925,684
37,211
884,773
1,882,000
1,183,538
CASH AND CASH EQUIVALENTS AT END OF YEAR
Cash and other cash items
Due from Bangko Sentral ng Pilipinas
Due from other banks
Interbank loans receivable and securities purchased
under resale agreements
OPERATING CASH FLOWS FROM INTEREST
Interest received
Interest paid
7,16
8
Consolidated
2012
2011
Parent Bank
2012
2011
5,978,605
28,254,415
2,208,451
4,757,246
32,579,118
1,898,901
5,834,451
27,679,351
2,083,221
4,607,502
32,305,984
1,851,226
226,775
36,668,246
1,225,579
40,460,844
226,775
35,823,798
1,098,579
39,863,291
3,141,779
10,114,197
3,555,428
9,456,463
3,126,369
9,042,626
3,326,075
8,841,022
See Notes to the Financial Statements.
( 81,183,526) ( 26,664,172)
—
(113,294)
(363,404)
(927,440)
(36,458)
(55,329)
79,379,985
—
125,090
28,682
—
(2,049,631)
(2,521,452) (121,552,059)
4,052,926
126,988,651
3,116,462
1,831,142
4,647,936
7,267,734
64,783
(1,112)
9,268,946
(4,039,493)
22,325,468
3,925,684
34,119
819,739
1,882,000
1,226,145
(577,439)
2,008,900
3,116,462
4,547,923
64,783
9,418,880
4,757,246
32,579,118
1,898,901
5,080,842
22,601,760
2,154,600
4,607,502
32,305,984
1,851,226
4,934,052
22,480,433
1,959,230
1,225,579
40,460,844
1,354,696
31,191,898
1,098,579
39,863,291
1,070,696
30,444,411
Forward
78 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 79
UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(With Comparative Figures for 2011)
(Amounts in Thousands Except Number of Shares and Unless Otherwise Stated)
1. Corporate Information
United Coconut Planters Bank (“the Bank”, “UCPB” or the “Parent Bank”) is a universal bank incorporated in the Philippines on May
10, 1963. The Parent Bank and its subsidiaries (the Group) are engaged in all aspects of financial services such as banking, financing,
leasing, real estate and stock brokering. As a bank, the Parent Bank is organized to provide expanded commercial banking services
such as deposit products, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange, investment
banking and trust services. In addition, the Bank is allowed by the Bangko Sentral ng Pilipinas (BSP) to engage in generally-authorized
plain vanilla derivatives. The Parent Bank was authorized to engage in trust operations in June 1963 and in foreign currency deposit
operations in October 1977. At the end of 2012, the Parent Bank has 188 branches and 277 automated teller machines, located
nationwide. The Parent Bank’s registered address and main office is at UCPB Building, Makati Avenue, Makati City.
As a banking institution, the Bank’s operations are regulated and supervised by the BSP. In this regard, the Bank is required
to comply with the rules and regulations of the BSP such as those relating to maintenance of reserve requirements on deposit
liabilities and deposit substitutes and those relating to the adoption and use of safe and sound banking practices as promulgated
by the BSP. The Bank is subject to the provisions of the General Banking Law of 2000 (Republic Act No. 8791).
The Bank’s corporate life was supposed to expire on May 10, 2013. On June 30, 2011, the Board of Directors (BOD) approved the
extension of the Bank’s corporate term for another 50 years or up to May 10, 2063. On January 26, 2012, the BOD approved the
calling of a Stockholders’ Meeting of the Bank to approve the extension of the corporate life. On May 2, 2012, a resolution was
unanimously approved and adopted at a special meeting of stockholders, extending the life of the Bank for another 50 years from
and after May 10, 2013, and for this purpose, amending the Bank’s Articles of Incorporation. On August 14, 2012, the Philippine
Securities and Exchange Commission (SEC) approved the renewal of the Bank’s corporate life for another 50 years up to 2063.
Rehabilitation Plan
On July 7, 2003, the Bank entered into a Financial Assistance Agreement (the “Agreement” or FAA) with the Philippine Deposit
Insurance Corporation (PDIC). The financial assistance from PDIC amounting to 20.0 billion has three components:
a.
b.
c.
8.0 billion direct purchase of nonperforming loans;
7.0 billion in Tier 2 capital with a cost to the Bank of 5.0% due in 2013; and
5.0 billion purchase of nonperforming loans with buyback by 2013.
On February 26, 2004, PDIC endorsed to the BSP for approval the Bank’s 10-year Business/Rehabilitation Plan (the “Rehabilitation
Plan”). Part of the Rehabilitation Plan is the Bank’s business strategy that has the following elements: (1) separation of the “bad
bank” from the “good bank”; (2) right-sizing and streamlining of operations to reduce costs; and (3) capital-raising which aims
to withstand the limitation brought about by the unresolved ownership issues (see Note 25). The BSP approved the Rehabilitation
Plan on January 10, 2005, including the following concessions: (a) temporary relief by reducing the risk-weighted capital ratio
to 8.0% for a period of three years up to 2007 or until such time that the Bank is able to comply with the required 10.0% capital
adequacy ratio (CAR), whichever comes earlier; and (b) staggered booking of required valuation reserves for 10 years.
Amendments to the Rehabilitation Plan and Conversion of PDIC financial assistance to Interim Tier 1 Capital Notes
The Monetary Board (MB), in its Resolution No. 590 dated May 15, 2008, decided to:
1. Approve the amended 10-Year Rehabilitation/Business Plan (2008-2017) of the Bank and grant to the Bank (the Issuer) the
authority to issue P12.0 billion Interim Tier 1 Capital Notes (the “Capital Notes” or “Notes”) to PDIC which will qualify as
Interim Tier 1 capital (see Note 25), provided that:
a. The Capital Notes to be issued meet the minimum features under Circular No. 595 dated January 11, 2008; and
b. UCPB’s Articles of Incorporation shall be amended to:
i. increase its authorized capital of 3.25 billion to an amount that will cover the amount of the Capital Notes; and
ii. remove the ownership limitation in the Bank, which is 1.0% of the issued and outstanding preferred and common shares,
for a stockholder who is not a stockholder as at December 31, 1979.
2. Grant to UCPB the following concessions:
a. Authority to accept deposits from the National Government (NG), Local Government Units (LGUs) and Government-Owned and
Controlled Corporations (GOCCs), with the ceiling of P5.9 billion increased by the amount that the NG will deposit with the Bank;
b. Consider the government securities (GS) purchased out of the 30.0 billion deposit of the NG as alternative/eligible
compliance with the liquidity reserves and liquidity floor requirement;
c. Stagger the booking of the unbooked valuation reserves and deferred charges aggregating to 27.9 billion consistent with
the Bank’s approved 10-Year Business/Rehabilitation Plan, provided that subsequent valuation reserves to be required in
excess of the 27.9 billion shall be immediately booked and no dividend shall be declared while the concession is in effect;
d. Waiver of certain monetary penalties; and
e. Continued access to the BSP Rediscounting Facility, subject to a rediscount ceiling of 1.5 billion.
The aforementioned MB approval was further clarified under MB Resolution No. 687 issued on June 17, 2008, which states that
“UCPB’s Articles of Incorporation shall be amended prior to the conversion of the Capital Notes to capital stock”.
1
On May 15, 2008, the PDIC Board, in its Resolution No. 2008-05-073, approved the conversion of PDIC’s 12.0 billion Financial
Assistance into Capital Notes eligible as Interim Tier 1 capital.
On July 25, 2008, the Republic of the Philippines (ROP), PDIC, Presidential Commission on Good Government (PCGG) and the
Bank executed a Memorandum of Agreement (MOA), for the strengthening of the Bank’s capital through the issuance of Capital
Notes consistent with BSP rules and regulations, and subscription thereof by PDIC via the conversion of PDIC’s outstanding 2003
Financial Assistance of 12.0 billion. In addition, the MOA provides for the maintenance by the ROP of at least 25.0 billion but
not to exceed 30.0 billion of deposits in the Bank.
The government deposits shall be used to (i) establish and maintain a pool of government securities and (ii) open, as part of
UCPB’s compliance with the statutory reserves on the government deposits, a demand deposit account (DDA) with the BSP. The
aggregate of items (i) and (ii) shall at all times be in the same amount as the government deposits.
On March 31, 2009, the 2003 FAA and the Subscription Agreement were amended and signed, respectively, by the PDIC, UCPB and PCGG (only
for Amended 2003 FAA). On the same date, the Bank issued the Capital Notes, which has no maturity date and has the following features:
1. Dividend/Coupon Rate - Dividend/Coupon rates as follows:
•
•
•
•
•
2.0% from April 1, 2009 to March 31, 2011;
4.0% from April 1, 2011 to March 31, 2013;
8.0% from April 1, 2013 to March 31, 2015;
12.0% from April 1, 2015 to March 31, 2017; and
14.0% from April 1, 2017 onwards.
The Issuer shall have full and absolute discretion (i) whether or not to declare and pay coupons on the Notes, and (ii) over the
amount and timing of coupon payments, in the event that, in the exercise of its discretion, the Issuer decides to declare and pay
coupons. The Issuer shall, every time it declares and pays dividends on its common shares, likewise pay coupons on the Notes.
Coupons on the Notes may be declared and paid only (i) to the extent that the Issuer has sufficient profits and/or retained earnings
distributable; and (ii) if, after such declaration and payment, the Issuer shall be able to meet the capital adequacy and liquidity
thresholds, determined in accordance with BSP regulations prevailing at the time of declaration and payment of coupons.
Coupons on the Notes shall be non-cumulative. Moreover, the Issuer shall have full control and access to any waived coupon
payments. The Notes have no step-up provisions in the coupon rate in conjunction with the redemption option.
2. Repayment/Redemption of the Capital Notes - Redemption of the Notes shall be subject to prior written BSP approval. The
Capital Notes may be redeemed, in whole or in part, at the sole option of the Issuer, anytime after five (5) years from the
date of issuance of the Notes. However, the option granted to the Issuer may be exercised within five (5) years from the date
of issuance of the Notes upon the infusion of sufficient capital which is neither smaller in size nor lower in quality than the
Notes, unless the Issuer’s capital adequacy ratio remains more than adequate after redemption of the Notes. In the event of
insolvency of the Issuer, the Holder shall be, immediately and without need for demand, entitled to repayment of the Notes.
3. Assignability - The Holder may assign or transfer the Capital Notes to any person or entity provided prior written notice of
such assignment or transfer is given to the Issuer.
4. Conversion Right - At any time, the Holder of the Notes shall have the right to convert the Notes, in whole or in part, to Special
Preferred Shares of the Issuer which, in turn, shall be convertible into Common Shares. The Issuer shall ensure that its Articles of
Incorporation and By-laws shall be amended to accommodate all the rights of the Holder under the Notes. The conversion right
provided herein shall be superior to the redemption option of the Issuer. Accordingly, in the event the Issuer serves notice to
the Holder of the exercise of a redemption option, the Holder shall have 45 days to notify the Issuer and the BSP in writing that
instead of being repaid pursuant to the redemption, the Holder shall instead convert the Notes to Special Preferred Shares.
5. Conversion Price - The Notes shall be convertible to Special Preferred Shares or Common Shares with an aggregate par value
of 12.0 billion at the time of conversion.
6. Failure to Comply with Obligations - In case the Issuer fails to perform any of its material obligations under the Notes,
including the conversion of the Notes into Special Preferred Shares or Common Shares, then the Notes shall become due and
demandable, and the Holder shall have the following rights:
a) Collect the principal of the Notes in the amount of 12.0 billion and interest at the rate of 14.0%; and
b) Institute such proceedings to enforce any of the obligations of the Issuer if the Issuer continues to fail to perform its
material obligation within 30 days from written notice of the Holder.
The Subscription Agreement includes Insolvency of the Issuer clause with the following consequences:
a) If the Issuer becomes insolvent, PDIC shall, within fifteen (15) days after it acquires knowledge of the occurrence of the
Issuer’s insolvency, give the Issuer a written notice declaring all the Notes then outstanding, including all accrued coupon
thereon, to be due and payable immediately, and upon any such declaration the same shall be immediately due and payable,
subject only to subordination.
b) Paragraph (a) is further subject to the condition that PDIC may rescind and annul such declaration and its consequences,
upon such terms, conditions, and agreements, if any, as it may determine, but no such rescission and annulment shall extend
to or shall affect any subsequent default or shall impair any right of PDIC consequent thereto.
Non-performing assets wherein the required valuation reserves were approved by the BSP for staggered booking are considered “bad bank” assets.
80 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 81
Subordination mentioned under paragraph (a) means that the Notes are not deposits of the Issuer and are not guaranteed
or insured by the Issuer or any party related to the Issuer or covered by any other arrangement that legally or economically
enhances the priority of the claim of the Holder as against the depositors, other creditors and holders of Lower Tier 2 and Upper
Tier 2 capital instruments, if any, of the Issuer.
In order to accommodate the conversion of the Capital Notes to Special Preferred Shares or Common Shares, should the Holder of the
Capital Notes decide to convert, the proposed amendment to the Bank’s Articles of Incorporation was approved at the regular BOD
meeting on April 28, 2009 with the written assent of at least 2/3 of the Bank’s stockholders. The proposed amendments include:
a) Reclassifying (i) 1,002,829,769 unissued common shares of the Bank and (ii) 750,000,000 unissued preferred shares of the
Bank, all with a par value of 1.00 per share, into 1,752,829,769 Special Preferred Shares;
b) Denying pre-emptive right over the issuance of special preferred and common shares for the conversion of special preferred
shares and the Capital Notes; and
c) Deletion of ownership limitation in the Bank, which is 1.0% of the issued and outstanding preferred and common shares, for a
stockholder who is not a stockholder as at December 31, 1979.
In March 2011, the Bank filed with the SEC the application for the amended Articles of Incorporation to address these proposed
amendments. The SEC approved the said amendments on May 10, 2011 (see Note 25).
Staggered Booking of Required Valuation Reserves and Deferred Charges
On February 26, 2009, the MB, in its Resolution No. 345, decided to:
1. Approve the year 2009 as the start of the 10-year rehabilitation period (2009-2018) of the Bank instead of 2008 as contained
in the Bank’s Rehabilitation Plan approved by the MB under Resolution No. 590 dated May 15, 2008;
2. Exempt the Bank from sanctions that may be imposed for its non-compliance with the 10.0% CAR and all the capital-based
regulatory ratios for the year 2008 until such time that the Bank’s Rehabilitation Plan is fully implemented; and
3. Approve the following requests of the Bank:
a. Reversal of all previous staggered bookings of unbooked valuation reserves and amortization of deferred losses, based on
the Special Purpose Vehicle (SPV) formula that the Bank has been providing starting 2007 in accordance with the original
rehabilitation program approved by the BSP on January 10, 2005 (the Bank’s Surplus as at January 1, 2008 was restated for
the effect of the amortization of valuation reserves);
b. Deferment of any staggered booking or amortization of unbooked valuation reserves and deferred losses until the Bank’s
recapitalization is completely in place starting January 2009 and to accordingly revise the schedule of the staggered
booking of unbooked valuation reserves and amortization of deferred losses following the concept of affordability per the
latest approved business plan by the BSP; and
c. Temporary relief from full compliance with the required 10.0% CAR as provided under Section 34 of Republic Act No. 8791
(the General Banking Law of 2000) by reducing the Bank’s CAR to 8.0% for a period of three years up to 2011 or until such
time that the Bank is able to comply with the required 10.0% CAR, whichever comes first.
As at December 31, 2008, the unbooked valuation reserves that the Parent Bank will recognize on a staggered basis starting
January 2009, as allowed by the BSP, amounted to 29.1 billion. This consists of the (a) 27.9 billion unbooked valuation reserves
and deferred charges allowed to be staggered in the MB Resolution No. 590 dated May 15, 2008, and (b) 1.2 billion additional
unbooked valuation reserves that will be recognized on a staggered basis arising from the reversal of previously amortized valuation
reserves due to the resetting of the start of amortization of the unbooked valuation reserves and deferred charges as allowed under
MB Resolution No. 345 dated February 26, 2009. The unbooked valuation reserves and deferred charges were determined based on
the criteria set by the BSP which differs from Philippine Financial Reporting Standards (PFRS) in certain respects.
On May 20, 2010, the MB, in its Resolution No. 697 confirmed the implementation of the Bank’s approved amortization of
unbooked valuation reserves and deferred losses as follows:
1. Any excess valuation reserves resulting from assets pertaining to the “bad bank” shall be allowed for re-allocation to another
asset requiring additional valuation reserves as long as these assets are part of the “bad bank” assets and within the 29.1
billion approved for staggered booking; and
2. Any actual losses from the sale of real and other properties acquired from the “bad bank” assets shall be booked as deferred
losses provided the total losses to be deferred shall not exceed the unbooked valuation reserves for that property and
subject to the condition that the Bank shall submit quarterly monitoring reports for the status of the “bad bank” assets and
allocation of valuation reserves for each asset pool.
As discussed in Notes 14 and 15, as at December 31, 2008, the 29.1 billion unbooked valuation reserves and deferred charges
allowed by BSP to be deferred consist of 13.4 billion credit and impairment losses on available-for-sale (AFS) financial assets,
loans and receivables, investment properties and other assets, and 15.7 billion losses on sale and dacion en pago settlement.
As at December 31, 2012 and 2011, the balance of unbooked valuation reserves and deferred charges amounted to 27.1
billion and 28.0 billion, respectively, net of the 963.0 million and 582.0 million amortization recognized in 2012 and 2011,
respectively, which were charged directly to deficit (see Note 15).
2. Basis of Preparation
Statement of Compliance
The accompanying financial statements have been prepared in accordance with PFRS. PFRS are based on International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). PFRS consist of PFRS, Philippine
Accounting Standards (PAS), and Philippine Interpretations issued by the Financial Reporting Standards Council (FRSC).
However, the Bank accounted for certain transactions in accordance with the following concessions approved by the BSP:
• staggered booking of required credit and impairment losses on AFS financial assets, loans and receivables, investment properties
and other assets, and losses on sale and dacion en pago settlement, which were allowed separately by the BSP (see Note 1);
• non-recognition of depreciation on certain investment properties (see Note 13);
• presentation of Interim Tier 1 Capital Notes as an equity instrument instead of as a financial liability in the statement of
financial position (see Note 25); and
• non-reclassification of held-to-maturity (HTM) investments with aggregate amortized cost of 28.2 billion and fair value of
32.7 billion for the Group and 28.0 billion and 32.5 billion for the Parent Bank as at December 31, 2012 to AFS financial
assets despite breaching the tainting rule of PAS 39, Financial Instruments: Recognition and Measurement in 2011(see Note 9).
The financial statements of the Group and of the Parent Bank were authorized for issue by the BOD on May 30, 2013.
Basis of Measurement
The accompanying financial statements have been prepared on the historical cost basis except for financial assets and financial
liabilities at fair value through profit or loss (FVPL) and AFS financial assets, which are measured at fair value.
Functional and Presentation Currency
The financial statements of the Parent Bank reflect the accounts maintained in the Regular Banking Unit (RBU) and Foreign
Currency Deposit Unit (FCDU). The financial statements individually prepared for these units are combined after eliminating
inter-unit accounts.
The functional currency of the RBU and FCDU is the Philippine peso and United States dollar (USD), respectively. For financial
reporting purposes, FCDU accounts and foreign currency-denominated accounts in the RBU are translated into their equivalents
in Philippine peso (see accounting policy on Foreign Currency Translation).
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity
are measured using that functional currency. The functional currency of all the subsidiaries is the Philippine peso.
The consolidated financial statements and separate financial statements of the Parent Bank are presented in Philippine peso,
and all values are rounded off to the nearest thousand ( 000) except as otherwise indicated.
Basis for Consolidation
The consolidated financial statements of the Group are prepared for the same reporting period as the Parent Bank, using
consistent accounting policies.
The following are the wholly and majority-owned subsidiaries of the Parent Bank as at December 31, 2012 and 2011:
Subsidiary
Financial Markets:
UCPB Leasing and Finance Corporation (ULFC)
UCPB Securities, Inc. (USI)
UCPB Savings Bank, Inc. (USB)
Real Estate:
Balmoral Resources Corporation (BRC)
Green Homes Development Corporation (GHDC)
UPI - Macaria Homes Corporation (UPI-MHC)
Effective Percentage
of Ownership
Country of
Incorporation
Functional
Currency
100.00
100.00
97.37
Philippines
Philippines
Philippines
Philippine peso
Philippine peso
Philippine peso
100.00
100.00
100.00
Philippines
Philippines
Philippines
Philippine peso
Philippine peso
Philippine peso
All significant intra-group balances, transactions, income and expenses, and profits and losses resulting from intra-group
transactions are eliminated in full.
Subsidiaries are consolidated from the date when control is transferred to the Parent Bank. Control is achieved when the Parent
Bank has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Parent Bank controls another entity. Consolidation of subsidiaries ceases when control is transferred out of the Group.
Under PFRS, the deficiency in credit and impairment losses and unbooked deferred charges amounts to 2.8 billion and 15.9
billion, respectively, for 2012 and 5.5 billion and 15.8 billion, respectively, for 2011 (see Notes 14 and 15).
82 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 83
The results of subsidiaries acquired or disposed of are included in the consolidated statement of income up to the date of disposal.
When a change in ownership interest in a subsidiary occurs which results in loss of control over the subsidiary, the Parent Bank:
•
•
•
•
•
•
derecognizes the assets (including goodwill) and liabilities of the subsidiary;
derecognizes the carrying amount of any non-controlling interest;
derecognizes the related other comprehensive income recorded in equity and recycle the same to profit or loss or surplus (deficit);
recognizes the fair value of the consideration received;
recognizes the fair value of any investment retained; and
recognizes any surplus or deficit in profit or loss.
Until December 31, 2010, UCPB Properties, Inc. (UPI) was a wholly-owned subsidiary of the Parent Bank. On March 23, 2011 and
March 1, 2011, the BOD and stockholders of BRC and UPI, respectively, approved a Plan of Merger where UPI shall be merged
into and be part of BRC, and its separate corporate existence shall cease by operation of law effective January 1, 2011. On
July 13, 2011, the SEC approved the Certificate of Filing of the Articles and Plan of Merger. The merger was accounted for in
accordance with the pooling of interest method where the identifiable assets acquired and liabilities assumed from UPI were
recognized by BRC at their carrying values in UPI’s books.
On June 2, 2011, the Parent Bank’s interest in UPI-MHC increased from 50% to 100% (see Note 12).
In the Parent Bank’s separate financial statements, investments in subsidiaries are carried at cost, less accumulated impairment
in value. Dividends earned are reported as dividend income when the right to receive the payment is established.
Non-controlling Interests
Non-controlling interests represent the portion of profit or loss and the net assets not owned, directly or indirectly, by the Group
and are presented separately in the consolidated statement of income, consolidated statement of comprehensive income and
within equity in the consolidated statement of financial position, separately from equity attributable to the Parent Bank. Any
losses applicable to the non-controlling interests are allocated against the interests of the non-controlling interest even if this
results in the non-controlling interests having a deficit balance.
Acquisitions of non-controlling interests that do not result in a loss of control are accounted for as an equity transaction
whereby the difference between the consideration and the fair value of the share of the net assets acquired is recognized as an
equity transaction and attributed to the owners of the Parent Bank.
3. Summary of Significant Accounting Policies
The accounting policies set out below have been applied consistently to all years presented in these financial statements, and
have been applied consistently by the Group entities, except for the changes in accounting policies as explained below.
Adoption of New or Revised Standards, Amendments to Standards and Interpretations
The Group has adopted the following amendment to standard starting January 1, 2012 and accordingly changed its accounting
policies. Except as otherwise indicated, the adoption of this amendment to standard did not have any significant impact on the
Group’s financial statements.
• Disclosures - Transfers of Financial Assets (Amendments to PFRS 7), require additional disclosures about transfers of financial
assets. The amendments require disclosure of information that enables users of financial statements to understand the
relationship between transferred financial assets that are not derecognized in their entirety and the associated liabilities; and
to evaluate the nature of, and risks associated with, the entity’s continuing involvement in derecognized financial assets.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents consist of cash and other cash items, due from BSP and other
banks, and interbank loans receivable and securities purchased under resale agreements (SPURA) with the BSP 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 insignificant risk of changes in value.
Repurchase and Reverse Repurchase Agreements
Securities sold under agreements to repurchase at a specified future date (‘repos’) are not derecognized from the statement
of financial position. The corresponding cash received, including accrued interest, is recognized in the statement of financial
position as securities sold under repurchase agreements (SSURA) and is considered as a loan to the Group, reflecting the
economic substance of such transaction.
Conversely, securities purchased under agreements to resell at a specified future date (‘reverse repos’) are not recognized in
the statement of financial position. The corresponding cash paid including accrued interest, is recognized in the statement of
financial position as SPURA, and is considered a loan to the counterparty. The difference between the purchase price and resale
price is treated as interest income and is accrued over the life of the agreement using the effective interest method.
Foreign Currency Translation
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity
are measured using that functional currency. The functional currency of the Parent Bank’s subsidiaries is the Philippine peso.
84 / UCPB 2012 Annual Report
The financial statements of the Parent Bank reflect the accounts maintained in the RBU and FCDU with functional currencies of
Philippine peso and USD, respectively.
Transactions in foreign currencies are initially recorded at the functional rate of exchange at the date of transaction.
Foreign currency-denominated monetary assets and liabilities of the Group are translated into their respective functional
currencies based on the Philippine Dealing System (PDS) closing rate prevailing as at the reporting date and PDS weighted
average rate (PDSWAR) for the reporting period for income and expenses. Foreign exchange differences arising from foreign
currency transactions and restatements of foreign currency-denominated assets and liabilities are credited to or charged against
profit or loss in the period in which the rates change.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
as at the dates of the 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.
As at the reporting date, the assets and liabilities of the FCDU of the Parent Bank are translated from its functional currency
into the Parent Bank’s presentation currency, the Philippine peso, at PDS closing rate prevailing at the reporting date, and their
income and expenses are translated at PDSWAR for the year. Exchange differences arising on translation are taken directly
to other comprehensive income and accumulated as a separate component of equity in the statement of financial position as
“Translation adjustment”.
Financial Instruments - Recognition and Measurement
Date of Recognition
Regular way purchases and sales of financial assets that require delivery of assets within the time frame generally established
by regulation or convention in the market, except for derivatives, are recognized on the settlement date. Settlement date
is the date when the transaction is settled by delivery of the assets that are the subject of the agreement. Settlement date
accounting refers to: (a) the recognition of an asset on the day it is received by the Group, and (b) the derecognition of an
asset and recognition of any gain or loss on disposal on the day that it is delivered by the Group. Any change in the fair value of
the financial asset to be received is recognized in the statement of income for financial assets at FVPL and in the statement of
comprehensive income for AFS financial assets. Deposits, amounts due to banks and customers, loans and receivables and spot
transactions are recognized when cash is received by the Group or advanced to the borrowers.
Derivatives are recognized on trade date - the date that the Group becomes a party to the contractual provisions of the
instrument. Trade date accounting refers to: (a) the recognition of an asset to be received and the liability to pay for it on the
trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a
receivable from the buyer for payment on the trade date.
Initial Recognition of Financial Instruments
The classification of financial instruments at initial recognition depends on the purpose for which the financial instruments
were acquired and their characteristics. All financial assets and financial liabilities are recognized initially at fair value plus
any directly attributable cost of acquisition or issue, except in the case of financial assets and financial liabilities at FVPL. The
Group categorizes its financial assets as: financial assets at FVPL, differentiating those that are held-for-trading (HFT) and those
designated as such, HTM investments, AFS financial assets, and loans and receivables. Financial liabilities are categorized into
financial liabilities at FVPL and other financial liabilities. Management determines the classification of these instruments at
initial recognition and, where allowed and appropriate, re-evaluates such designation at every reporting date.
Deposit Liabilities to the Government
As allowed by Philippine Interpretations Committee (PIC) Q&A 2007-02, Accounting for Government Loans with Low Interest
Rates, the Bank initially recognized the deposit liabilities received as part of the Rehabilitation Plan at nominal amounts and
these are not subsequently revalued.
Determination of Fair Value
The fair value for financial instruments traded in active markets at the reporting date is based on their quoted market price or
dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.
When current bid and ask prices are not available, the price of the most recent transaction is used since it provides evidence of the
current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation
techniques. Valuation techniques include net present value techniques, comparison to similar instruments for which market
observable prices exist, option pricing models, and other relevant valuation models.
‘Day 1’ Difference
Where the transaction price is different from the fair value of other observable current market transactions in the same
instrument or based on a valuation technique whose variables include only data from observable market, the Group immediately
recognizes the difference between the transaction price and fair value (a ‘Day 1’ difference) in the statement of income unless
it qualifies for recognition as some other type of asset or liability. In cases where the data used is not observable, the difference
between the transaction price and model value is only recognized in the statement of income when the inputs become
observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of
recognizing the ‘Day 1’ difference amount.
UCPB 2012 Annual Report / 85
Financial Assets or Financial Liabilities at Fair Value through Profit or Loss
This category includes HFT financial assets and financial assets or liabilities designated at FVPL.
a. HFT Financial Assets
HFT financial assets are recorded in the statement of financial position at fair value. Changes in fair value relating to the HFT
positions are recognized in the statement of income under “Trading and securities gains (losses)” account. Interest earned or
incurred is recognized as “Interest income” or “Interest and finance charges,” respectively, in the statement of income, while
dividends earned are recognized as Dividends (included under “Miscellaneous Income”) when the right to receive payment has
been established.
Included in this classification are the Group’s investments in debt and equity securities which have been acquired principally
for the purpose of selling in the near term.
b. Financial Assets or Liabilities Designated at FVPL
Financial assets and liabilities classified in this category are designated by management on initial recognition. Management
may only designate an instrument at FVPL upon initial recognition when the following criteria are met, and designation is
determined on an instrument-by-instrument basis:
• 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; or
• The assets and liabilities are part of a group of 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.
As at December 31, 2012 and 2011, the Group does not have financial assets or financial liabilities designated as at FVPL.
Derivative Instruments
The Parent Bank is counterparty to derivative contracts, such as forward foreign exchange contracts and warrants. These
derivatives are entered into as a service to customers and as a means for reducing or managing the Parent Bank’s respective
foreign exchange exposures, as well as for trading purposes. Such derivative instruments are initially recorded at fair value on
the date at which the derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried
as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes
in fair value of derivatives are taken directly to the statement of income and are included in “Trading and securities gains
(losses)” for warrants and in “Foreign exchange gains (losses)” for forward foreign exchange contracts.
Embedded Derivatives
Embedded derivatives are bifurcated from their host contracts and carried at fair value with fair value changes being recognized
in the statement of income and are included in “Trading and securities gains (losses)” account, when the entire hybrid contracts
(composed of both the host contract and the embedded derivative) are not accounted for as financial assets or financial
liabilities at FVPL, when their economic risks and characteristics are not closely related to those of their respective host
contracts, and when a separate instrument with the same terms as the embedded derivatives would meet the definition of a
derivative. As at December 31, 2012 and 2011, the Parent Bank’s embedded derivatives are comprised of call and index-linked
options and range accrual.
The Group assesses the existence of an embedded derivative on the date it first becomes a party to the contract, and performs
re-assessment only where there is a change to the contract that significantly modifies the contractual cash flows.
AFS Financial Assets
AFS financial assets are those which are designated as such or do not qualify to be classified as designated at FVPL, HTM
investments or loans and receivables. These are purchased and held indefinitely, and may be sold in response to liquidity
requirements or changes in market conditions. Included in this classification are the Group’s investments in government and
private debt securities and quoted and unquoted equity securities.
After initial measurement, AFS financial assets 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 the
statement of income. The unrealized gains and losses arising from the fair valuation of AFS financial assets are excluded, net
of tax, from reported earnings and are recognized as other comprehensive income and accumulated in “Net unrealized gains
(losses) on AFS financial assets” account in the equity section of the statement of financial position.
When the instrument is disposed of, the cumulative gain or loss previously recognized in other comprehensive income is
recognized as “Trading and securities gains (losses)” in the statement of income as a reclassification adjustment. Where the
Group holds more than one investment in the same security, these are deemed to be disposed of on a weighted average basis.
Interest earned on holding AFS financial assets are reported as “Interest income” using the effective interest method. Dividends
earned on holding AFS financial assets are recognized in the statement of income as Dividends (included under “Miscellaneous
Income”) in the statement of income) when the right to receive payment has been established. The losses arising from impairment
of such investments are recognized as “Provision for credit and impairment losses” account in the statement of income.
HTM Investments
HTM investments are quoted non-derivative financial assets with fixed or determinable payments and fixed maturities for which
the Group’s management has the positive intention and ability to hold to maturity. After initial measurement, these investments
are carried at amortized cost using the effective interest method, less any 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
86 / UCPB 2012 Annual Report
(EIR). The amortization is included in “Interest income” in the statement of income. The losses arising from impairment of
such investments are recognized in the statement of income under “Provision for credit and impairment losses”. The effects of
restatement on foreign currency-denominated HTM investments are recognized in the statement of income.
If the Group were to sell more than an insignificant amount of HTM investments before maturity (other than in certain specific
circumstances), the entire category would be tainted and would have to be reclassified as AFS financial assets. Furthermore,
the Group would be prohibited to classify any financial assets as HTM investments for the following two years. In 2011, the Bank
partly disposed its HTM investments (see Note 9).
Loans and Receivables, Due From BSP and Other Banks, Interbank Loans Receivables and SPURA
Loans and receivables include cash and other cash items, due from BSP and other banks, and interbank loans and receivables
and SPURA. These 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 as such are not categorized as
financial assets at FVPL or AFS financial assets. They also do not include those for which the Group may not recover substantially
all of its initial investments, other than because of credit deterioration.
After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest
method, less allowance for credit losses. Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees and costs that are an integral part of the EIR. The amortization is included in “Interest income” in the
statement of income. The losses arising from impairment are recognized in “Provision for credit and impairment losses” in the
statement of income.
Other Financial Liabilities
Issued financial instruments or their components, which are not designated at FVPL, are classified as liabilities under deposit
liabilities, bills payable and SSURA or other appropriate financial liability accounts, where the substance of the contractual
arrangement results in the Group having an obligation either to deliver cash or another financial asset 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. The components of issued financial instruments that contain both liability and equity elements are accounted for
separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the
amount separately determined as the fair value of the liability component on the date of issue.
After initial measurement, other financial liabilities not qualified as and not designated at FVPL, are subsequently measured at
amortized cost using the effective interest method. Amortized cost is calculated by taking into account any discount or premium
on the issue and fees that are an integral part of the EIR.
Reclassification of Financial Assets
A financial asset is reclassified out of the FVPL category when the following conditions are met:
• the financial asset is no longer held for the purpose of selling or repurchasing it in the near term; and
• there is a rare circumstance.
A financial asset that is reclassified out of the FVPL category is reclassified at its fair value on the date of reclassification. Any
gain or loss already recognized in the statement of income is not reversed. The fair value of the financial asset on the date of
reclassification becomes its new cost or amortized cost, as applicable.
For a financial asset reclassified out of the AFS financial assets category to loans and receivables or HTM investments, any
previous gain or loss on that asset that has been recognized in other comprehensive income is amortized to profit or loss over
the remaining life of the investment using the effective interest method. Any difference between the new amortized cost and
the expected cash flows is also amortized over the remaining life of the asset using the effective interest method. If the asset is
subsequently determined to be impaired then the amount recorded in equity is recycled to the statement of income.
Derecognition of Financial Assets and Liabilities
Financial Assets
A financial asset (or, where applicable a part of a financial asset or part of a group of financial assets) is derecognized when:
• the rights to receive cash flows from the asset have expired; or
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a “pass-through” arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either: (a) has transferred substantially all the
risks and rewards of the asset, or (b) has neither transferred nor retained the risk and rewards of the asset but has transferred
the control of the asset.
Where the Group has transferred its rights to receive cash flows from an asset or has entered into a ‘pass-through’ arrangement,
and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset,
the asset is recognized to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes
the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of the asset and the
maximum amount of consideration that the Group could be required to repay.
Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired. Where an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognized in the statement of income.
UCPB 2012 Annual Report / 87
Impairment of Financial Assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a 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 had occurred after the initial recognition of the asset (an incurred ‘loss event’)
and that loss event (or events) has (have) 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.
Financial Assets Carried at Amortized Cost
For financial assets carried at amortized cost, which includes HTM investments and loans and receivables, the Group 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.
For individually assessed financial assets, 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 credit losses that have not been incurred).
The present value of the estimated future cash flows is discounted at the financial asset’s original EIR. If a loan has a variable
interest rate, the discount rate for measuring any impairment loss is the current EIR, 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. The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is
recognized in “Provision for credit and impairment losses” account in the statement of income. Interest income continues to be
recognized based on the original EIR of the asset.
If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal
of an impairment loss is credited to “Provision for credit and impairment losses” 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.
A write-off is made when all or part of a claim is deemed uncollectible. Write-offs are charged against previously established
allowance for credit losses. Recoveries in part or in full of amounts previously written off are credited to “Provision for credit
and impairment losses” account in the statement of income.
If the Group determined that no objective evidence of impairment exists for an individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and that group of
financial assets is collectively assessed for impairment. Those characteristics are relevant to the estimation of future cash flows
for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of
the assets being evaluated. Assets that are individually assessed for impairment and for which an impairment loss is or continues
to be recognized are not included in a collective assessment of impairment.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the industry of the
borrower. 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 property 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 Group to reduce any differences between loss estimates and actual loss experience.
Certain consumer loans are assessed for impairment collectively because these receivables are not individually significant. The
allowance for credit losses is determined based on the results of the net flow to write-off methodology. Net flow tables are
derived from account-level monitoring of monthly peso movements between different age buckets, from 1 day past due to 180
days past due. The net flow to write-off methodology relies on the historical data of net flow tables to establish a percentage
(“net flow rate”) of receivables that are current or in any state of delinquency (i.e., 30, 60, 90, 120, 150 and 180 days past
due) as at reporting date that will eventually result in write-off. The gross provision is then computed based on the outstanding
balances of receivables as at the reporting date and the net flow rates determined for the current and each delinquency bucket.
The carrying amount of the financial asset at amortized cost is reduced by the impairment loss (included under “Provision for credit
and impairment losses”) directly for all financial assets at amortized cost with the exception of Loans and receivables, where
the carrying amount is reduced through the use of an allowance account. Loans and receivables, together with the associated
allowance accounts, are written off when there is no realistic prospect of future recovery and all collateral has been realized. The
amount of impairment loss is recognized as “Provision for credit and impairment losses” in the statement of income.
Restructured Loans
Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the
payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, the loan is no longer
considered past due. Management continuously reviews restructured loans to ensure that all criteria are met and that future
payments are likely to occur. The loans continue to be subject to an individual or collective impairment assessment, calculated using
the loan’s original EIR. The difference between the recorded value of the original loan and the present value of the restructured cash
flows, discounted at the original EIR, is recognized in “Provision for credit and impairment losses” in the statement of income.
88 / UCPB 2012 Annual Report
AFS Financial Assets
For AFS financial assets, the Group assesses at each reporting date whether there is objective evidence that an investment is impaired.
In the case of AFS equity securities, objective evidence of impairment would include a significant or prolonged decline in the fair
value of the investment below its cost. The Group treats ‘significant’ generally as 20.0% and ‘prolonged’ as greater than
twelve (12) months. 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 equity and recognized in the statement of income. Impairment losses on equity securities
are not reversed through the statement of income. Increases in fair value after impairment are recognized directly in other
comprehensive income.
If there is objective evidence that there is 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 an
unquoted equity instrument has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
In the case of AFS debt securities, the Group assesses individually whether there is objective evidence of impairment based on
the same criteria as financial assets carried at amortized cost. However, the amount recorded for impairment is the cumulative
loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that
investment previously recognized in the statement of income. Future interest income is based on the reduced carrying amount
and is accrued based on the rate of interest used to discount future cash flows for the purpose of measuring impairment loss.
Such accrual is recorded as part of “Interest income” in the statement of income. If, in a subsequent year, the fair value of a
debt investment increased and the increase can be objectively related to a credit event occurring after the impairment loss was
recognized in the statement of income, the credit loss is reversed through the statement of income.
As discussed in Note 1, as at December 31, 2008, the Parent Bank, as allowed by the BSP, has deferred the recognition of
valuation reserves aggregating to 13.4 billion. As allowed by the BSP, these unbooked valuation reserves were recognized on a
staggered basis starting January 2009. The Parent Bank recognizes the amortization as a charge to deficit (see Note 15).
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position, if and only
if, there is a legally enforceable right to offset the recognized amounts and there is an intention to either settle on a net basis,
or to realize the asset and settle the liability simultaneously. This is not generally the case with master netting agreements,
therefore, the related assets and liabilities are presented gross in the statement of financial position.
Operating Segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating
segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to
be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of corporate assets (primarily the
Group’s main office), main office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property and equipment, and intangible
assets other than goodwill.
Revenue Recognition
The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent.
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding taxes. The
following specific recognition criteria must also be met before revenue is recognized:
Interest Income
For all financial instruments measured at amortized cost and interest-bearing HFT and AFS financial assets, interest income is recorded
at the EIR which 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 contractual terms of the financial instrument (e.g., prepayment options), including any fees or
incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future credit losses.
Once the recorded value of a financial asset or group of similar financial assets has been reduced due to an impairment loss,
interest income should be recognized using the original EIR applied to the new carrying amount.
Service Charges and Penalties
Service charges and penalties are recognized only upon collection or accrued when there is reasonable degree of certainty as to
its collectibility.
UCPB 2012 Annual Report / 89
Fee and Commission Income
The Group earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be
divided into the following two categories:
a. Fee Income Earned from Services that are Provided Over a Certain Period of Time
Fees earned for the provision of services over a period of time are accrued over that period. These fees include investment
fund fees, custodian fees, fiduciary fees, commission income, credit related fees, asset management fees, portfolio and
other management fees, and advisory fees. Loan commitment fees for loans that are likely to be drawn down are deferred
(together with any incremental costs) and recognized as an adjustment to the EIR on the loan.
Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are
charged against operations in the year the costs are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item
of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an
additional cost of property and equipment.
Depreciation is calculated on the straight-line method over the estimated useful life of the depreciable assets. Leasehold improvements
are amortized over the shorter of the terms of the covering leases and the estimated useful lives of the improvements.
The range of estimated useful life of property and equipment follow:
b. Fee Income from Providing Transaction Services
Fees arising from negotiating or participating in the negotiation of a transaction for a third party - such as underwriting
fees, corporate finance fees, and brokerage fees for the arrangement of the acquisition of shares or other securities or the
purchase or sale of businesses - are recognized on completion of the underlying transaction. Fees or components of fees
that are linked to a certain performance are recognized after fulfilling the corresponding criteria. Loan syndication fees are
recognized in the statement of income when the syndication has been completed and the Group retains no part of the loans
for itself or retains part at the same EIR as for the other participants.
Dividend Income
Dividend income is recognized when the Group’s right to receive payment is established.
Trading and Securities Gains (Losses)
Trading and securities gains (losses) represent results arising from trading activities including all gains and losses from changes in
fair value of financial assets held for trading and derivatives, and gains and losses from disposal of financial assets at FVPL, AFS
financial assets and HTM investments.
Rent Income
Rent income arising on leased properties is accounted for on a straight-line basis over the lease terms on ongoing leases and is
recognized in the statement of income under “Miscellaneous Income”.
Gains (Losses) on Foreclosed Assets
Gains or losses on foreclosed assets is recognized upon collection of existing receivable through foreclosure of asset used as collateral
as the difference between the fair market value of the foreclosed asset and the net carrying value of the receivable settled.
Gains (Losses) on Sale of Receivables
Gains or losses on sale of receivables is recognized upon sale of receivables, without recourse, as the difference between the
selling price and the outstanding balance of receivables sold.
Other Income
Income from sale of services is recognized upon rendition of the service. Income from sale of properties is recognized upon
completion of the earning process and when the collectibility of the sales price is reasonably assured.
Real Estate Revenue
Real estate sales are generally accounted for under the full accrual method. Under this method, the gain on sale is recognized
when: (a) the collectibility of the sales price is reasonably assured; (b) the earnings process is virtually complete; and (c) the
seller does not have a substantial continuing involvement with the subject properties. If any of the criteria under the full accrual
is not met, the deposit method applies until all the conditions for recording a sale are met.
Pending recognition of sale, cash received from buyers are presented under the reservation deposit account which is shown as
“Customers’ deposits” account in the liabilities section of the statement of financial position.
Expense Recognition
Expenses are recognized when decrease in future economic benefits related to a decrease in an asset or increase in liability has
arisen that can be measured reliably. Expenses are recognized when incurred or when the related revenue is earned.
Operating Expenses
Operating expenses constitute costs which arise in the normal business operation and are recognized when incurred.
Taxes and Licenses
This includes all other taxes, local, and national and are recognized when incurred.
Interest Expense
Interest expense for all interest-bearing financial liabilities is recognized in the statement of income using the EIR of the
financial liabilities to which they relate.
Property 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.
The initial cost of the Group’s property and equipment consists of its purchase price, including import duties, taxes and any
directly attributable cost to bring the property and equipment to its working condition and location for its intended use.
90 / UCPB 2012 Annual Report
Number of Years
Buildings and improvements
Furniture, fixtures and equipment
Leasehold improvements
10 - 50
3 - 10
5 - 10
The depreciation and amortization method and useful life are reviewed periodically to ensure that the method and period of
depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the statement of income in the year the asset is derecognized.
The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable
amounts, the assets are written down to their recoverable amounts (see accounting policy on Impairment of Nonfinancial Assets).
Investments in Associates and Joint Venture
The Group’s investments in associates and joint venture are accounted for using the equity method of accounting. Associates
pertain to all entities over which the Group has significant influence but not control, generally accompanying a shareholding
of between 20.0% and 50.0% of the voting rights. Joint venture pertains to the Group’s interest in a jointly controlled entity,
whereby the venturers have contractual arrangement that establishes control over the economic activities of the entity.
Under the equity method, investments in associates and joint venture are carried in the statement of financial position at cost
plus post-acquisition changes in the Group’s share of the net assets of the associate and joint venture. Goodwill relating to an
associate is included in the carrying value of the investment and is not amortized. The Group’s share in an associate’s and joint
venture’s post-acquisition profits or losses is recognized in the statement of income, and its share of post-acquisition movements
in the associates and joint venture’s equity reserves is recognized in other comprehensive income. When the Group’s share of
losses in its associates and joint venture equals or exceeds its interest in the associates and joint venture, including any other
unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on
behalf of the associates and joint venture. Profits and losses resulting from transactions between the Group and its associates
and joint venture are eliminated to the extent of the interest in the associates and joint venture.
After the application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on
the Group’s investments in associates and joint venture. The Group determines at each reporting date whether there is any
objective evidence that the investment in associates and joint venture is impaired. If this is the case, the Group calculates
the amount of impairment as the difference between the recoverable amount of the investment and its carrying value and
recognizes the impairment loss in the statement of income.
Upon loss of significant influence over the associate, the Group measures and recognizes any remaining investment at its fair
value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the
remaining investment and proceeds from disposal is recognized in the statement of income.
Upon loss of joint control and provided the former jointly controlled entity does not become a subsidiary or associate, the Group
measures and recognizes its remaining investment at its fair value. Any difference between the carrying amount of the former
jointly controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal is
recognized in the statement of income. When the remaining investment constitutes significant influence, it is accounted for as
an investment in an associate.
Upon loss of joint control and provided the former associate or jointly controlled entity becomes a subsidiary, the Group
discontinues the use of the equity method from the date when its investment ceases to be an associate or joint venture and
accounts for its investment in accordance with PFRS 3, Business Combinations. In a business combination achieved in stages, the
acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the
resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate.
In the Parent Bank’s separate financial statements, investments in associates and joint venture are carried at cost, less
allowance for impairment losses.
Jointly Controlled Operations
A jointly controlled operation involves the use of assets and other resources of the Group and other venturers rather than the
establishment of a corporation, partnership or other entity. The Group accounts for the assets it controls and the liabilities and
expenses it incurs, and the share of the income that it earns from the sale of goods or services by the joint venture.
UCPB 2012 Annual Report / 91
Investment Properties
Investment properties are measured initially at cost, including transaction costs. An investment property acquired through an
exchange transaction is initially measured at fair value of the asset acquired unless the fair value of such an asset cannot be
measured in which case the investment property acquired is measured at the carrying amount of the asset given up. Foreclosed
properties are classified under “Investment properties” account upon: a) entry of judgment in case of judicial foreclosure; b)
execution of the sheriff’s certificate of sale in case of extra-judicial foreclosure; or c) notarization of the deed of dacion in case
of dation in payment (dacion en pago).
Subsequent to initial recognition, depreciable investment properties are carried at cost less accumulated depreciation and impairment
in value. However, as discussed in Note 13, the Parent Bank does not recognize depreciation on certain investment properties.
For exchange trading right, impairment is determined by assessing the recoverable amount of the asset at each reporting date. Where
the recoverable amount is less than the carrying amount of the asset, an impairment loss is recognized immediately in the statement of
income. Impairment losses cannot be reversed for subsequent increases in the recoverable amount in future periods.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement 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:
Investment properties are derecognized when they have either been disposed of or when the investment property is permanently
withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment
property are recognized in the statement of income under “Gains on sale of nonfinancial assets” in the year of retirement or disposal.
(a) there is a change in contractual terms, other than a renewal or extension of the arrangement; or
(b) a renewal option is exercised or extension granted, unless that term of the renewal or extension was initially included in the
lease term; or
(c) there is a change in the determination of whether fulfillment is dependent on a specified asset; or
(d) there is a substantial change to the asset.
Expenditures incurred after the investment properties have been put into operations, such as repairs and maintenance costs, are
normally charged to profit or loss in the year in which the costs are incurred.
Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gives
rise to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b).
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:
Group as Lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to the ownership of the leased
item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of
the minimum lease payments and included in “Property and equipment” account with the corresponding liability to the lessor
included in “Other liabilities” account in the statement of financial position. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recorded under “Interest and finance charges” account in the statement of income.
Number of Years
Buildings
Condominium units
10 - 50
5
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 a view to sale.
Real Estate Inventories
Real estate inventories are stated at the lower of cost and net realizable value (NRV). Cost shall comprise all costs of purchase,
costs of conversion and other costs incurred in bringing the inventories to their present location and condition. NRV is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale.
Intangible Assets
Intangible assets consist of software costs and exchange trading right. An intangible asset is recognized only when its cost can be
measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Group.
Software Costs
Software costs (presented under “Intangible and other assets” in the statement of financial position) are capitalized on the basis
of the cost incurred to acquire and bring to use the specific software. These costs are amortized over three to ten years on a
straight-line basis. Costs associated with maintaining the computer software programs are recognized as expense when incurred.
The amortization period and the amortization method for software cost are reviewed periodically to be consistent with the
changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset.
Exchange Trading Right
The exchange trading right is an intangible asset that is regarded as having an indefinite useful life as there is no foreseeable limit to
the period over which this asset is expected to generate net cash inflow for the Company. Exchange trading right (presented under
“Intangible and other assets” in the statement of financial position) is carried at the amount allocated from the original cost of the
exchange membership seat of USI (after a corresponding allocation was made to the value of the Philippine Stock Exchange shares) less
impairment in value. USI does not intend to sell the exchange trading right in the near future.
Impairment of Nonfinancial Assets
The Group assesses at each reporting date whether there is any indication that an asset may be impaired. Nonfinancial assets
include property and equipment, investment properties, investment in subsidiaries, associates and joint venture, software costs,
and exchange trading right. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates
the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value
less cost to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset
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. In determining fair value less costs to sell, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples or other available fair value indicators.
For assets excluding exchange trading right, 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 Group
estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying
amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized for the
asset in prior years. Such reversal is recognized in the statement of income.
92 / UCPB 2012 Annual Report
Capitalized leased assets are depreciated over the shorter of the estimated useful lives of the assets or the respective lease
terms, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Leases where the lessor retains substantially all the risks and benefits 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.
Group as Lessor
Finance leases, where the Group transfers substantially all the risks and benefits incidental to the ownership of the leased item
to the lessee, are included under “Loans and receivables” account in the statement of financial position. A lease receivable is
recognized at an amount equivalent to the net investment (asset cost) in the lease. All income resulting from the receivable is
included under “Interest income” account in the statement of income.
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are classified as operating
leases. 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 rent income. Contingent rent is recognized as revenue in the year in which this is earned.
Residual Value of Leased Assets and Deposits on Finance Leases
The residual value of leased assets, which approximates the amount of guaranty deposit paid by the lessee at the inception of the lease,
is the estimated proceeds from the sale of the leased asset at the end of the lease term. At the end of the lease term, the residual
value of the leased asset is generally applied against the guaranty deposit of the lessee when the lessee decides to buy the leased asset.
Retirement Cost
The Group has funded noncontributory defined benefit retirement plans. The retirement cost of the Group is calculated annually
by an independent actuary using the projected unit credit method. Under this method, the current service cost is the present
value of retirement benefits payable in the future with respect to services rendered in the current year.
The liability or asset recognized in the statement of financial position in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for
unrecognized actuarial gains or losses and past service costs. The present value of the defined benefit obligation is determined
by discounting the estimated future cash outflows using interest rate on government bonds that have terms to maturity
approximating the terms of the related retirement liability. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are credited to or charged against income when the net cumulative unrecognized actuarial
gains and losses at the end of the previous period exceeded 10.0% of the higher of the defined benefit obligation and the fair
value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the
employees participating in the plan.
Past service costs, if any, are recognized immediately in the statement of income, unless the changes to the pension plan are
conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the pastservice costs are amortized on a straight-line basis over the vesting period.
The defined benefit asset or liability comprises the present value of the defined benefit obligation less past service costs not yet
recognized and less the fair value of plan assets out of which the obligations are to be settled directly. The value of any asset
is restricted to the sum of any cumulative unrecognized net actuarial losses and past service cost and the present value of any
economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.
UCPB 2012 Annual Report / 93
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and 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 Group 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.
Dividends on Common Shares
Dividends on common shares are recognized as a liability and deducted from equity when approved by the BOD of the Parent
Bank and the BSP, in the case of cash dividends; and the BOD, shareholders of the Parent Bank and its subsidiaries and the BSP
in the case of stock dividends. Dividends declared during the year but are approved by the BSP after the reporting date is dealt
with as an event after the reporting period.
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 is 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 “Interest and finance charges” in the statement of income.
Debt Issue Costs
Issuance, underwriting and other related expenses incurred in connection with the issuance of debt instruments are deferred and
amortized over the terms of the instruments using the effective interest method. Unamortized debt issue costs are included in
the measurement of the related carrying value of the debt instrument in the statement of financial position.
Contingent Liabilities and Contingent Assets
Contingent liabilities are not recognized in the financial statements but are disclosed in the notes to the financial statements
unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized
but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable.
Events After the Reporting Date
Any post-year-end event that provides additional information about the Group’s position at the reporting date (adjusting event)
is reflected in the financial statements when material. Post-year-end events that are not adjusting events, if any, are disclosed
in the notes to the financial statements when material to the financial statements.
Income Taxes
Current Taxes
Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid
to the taxing authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted at the reporting date.
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 Parent Bank and a subsidiary act in a fiduciary capacity such as nominee, trustee or agent.
Deferred Taxes
Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting 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, except:
• Where the deferred tax liability arises from the initial recognition of goodwill or 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 income nor taxable income; and
• In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward benefit of unused tax credits from the
excess of minimum corporate income tax (MCIT) over the regular corporate income tax (RCIT), and unused net operating loss
carryover (NOLCO), to the extent that it is probable that sufficient taxable profit will be available against which the deductible
temporary differences and carryforward benefit of unused tax credits from MCIT and unused NOLCO can be utilized except:
• Where the deferred tax asset relating to the deductible temporary difference 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
income nor taxable income; and
• In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets
are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and
taxable income will be available against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at reporting date and reduced to the extent that it is no longer probable
that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized
deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that
future taxable income will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are applicable to the period when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current tax and deferred tax relating to items recognized in other comprehensive income are also recognized in other
comprehensive income and not in the statement of income.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against
current tax liabilities and deferred taxes related to the same taxable entity and the same taxation authority.
Equity
Common stock is measured at par value for all shares issued and outstanding. When the shares are sold at a premium, the
difference between the proceeds and the par value is credited to “Additional paid-in capital” account. Direct costs incurred
related to equity issuance, such as underwriting, accounting and legal fees, printing costs and taxes are chargeable to
“Additional paid-in capital” account. If the additional paid-in capital is not sufficient, the excess is charged to deficit.
New or Revised Standards, Amendments to Standards and Interpretations Not Yet Adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
January 1, 2012, and have not been applied in preparing the financial statements. However, none of these is expected to have a
significant effect on the financial statements of the Group and the Parent Bank, except for PFRS 9, Financial Instruments, which
becomes mandatory for the Group’s and the Parent Bank’s 2015 financial statements and could change the classification and
measurement of financial assets, and PAS 19, Employee Benefits (amended 2011). The Group and the Parent Bank are currently
assessing the impact of these standards on the financial statements.
The Group and the Parent Bank will adopt the new or revised standards, amendments to standards and interpretations on the
respective effective dates as discussed below:
To be Adopted on January 1, 2013
• Presentation of Items of Other Comprehensive Income (Amendments to PAS 1). The amendments:
• require that an entity present separately the items of other comprehensive income that would be reclassified to profit or
loss in the future if certain conditions are met from those that would never be reclassified to profit or loss;
• do not change the existing option to present profit or loss and other comprehensive income in two statements; and
• change the title of the statement of comprehensive income to the statement of profit or loss and other comprehensive
income. However, an entity is still allowed to use other titles.
The amendments do not address which items are presented in other comprehensive income or which items need to be
reclassified. The requirements of other PFRS continue to apply in this regard.
• Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to PFRS 7). These amendments include
minimum disclosure requirements related to financial assets and financial liabilities that are:
• offset in the statement of financial position; or
• subject to enforceable master netting arrangements or similar agreements.
They include a tabular reconciliation of gross and net amounts of financial assets and financial liabilities, separately showing
amounts offset and not offset in the statement of financial position.
• PFRS 10, Consolidated Financial Statements
PFRS 10 introduces a new approach to determining which investees should be consolidated and provides a single model to be
applied in the control analysis for all investees.
An investor controls an investee when:
• it is exposed or has rights to variable returns from its involvement with that investee;
• it has the ability to affect those returns through its power over that investee; and
• there is a link between power and returns.
Control is re-assessed as facts and circumstances change.
PFRS 10 supersedes PAS 27 (2008) Consolidated and Separate Financial Statements and Philippine Interpretation SIC-12,
Consolidation - Special Purpose Entities.
When the Parent Bank issues more than one class of stock, a separate account is maintained for each class of stock and the
number of shares issued.
Deficit represents accumulated losses (net of earnings) of the Parent Bank and amortization of unbooked valuation reserves and
deferred losses, as discussed in Note 1 to the financial statements.
94 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 95
• PFRS 11, Joint Arrangements
PFRS 11 focuses on the rights and obligations of joint arrangements, rather than the legal form (as is currently the case). It:
• distinguishes joint arrangements between joint operations and joint ventures; and
• always requires the equity method for jointly controlled entities that are now called joint ventures; they are stripped of the
free choice of using the equity method or proportionate consolidation.
PFRS 11 supersedes PAS 31, Interests in Joint Ventures and Philippine Interpretation SIC-13, Jointly Controlled Entities - NonMonetary Contributions by Venturers.
• PFRS 12, Disclosure of Interests in Other Entities
PFRS 12 contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements (i.e. joint
operations or joint ventures), associates and/or unconsolidated structured entities, aiming to provide information to enable
users to evaluate:
• the nature of, and risks associated with, an entity’s interests in other entities; and
• the effects of those interests on the entity’s financial position, financial performance and cash flows.
• Investment Entities [Amendments to PFRS 10, PFRS 12, and PAS 27 (2011)]. These amendments provide consolidation
exception for investment funds and require qualifying investment entities to recognize their investments in controlled
entities, as well as investments in associates and joint ventures, in a single line item in the statement of financial position,
measured at fair value through profit or loss; the only exception would be subsidiaries that are considered an extension of the
investment entity’s investing activities. However, the parent of an investment entity (that is not itself an investment entity) is
still required to consolidate all subsidiaries. This consolidation exception is mandatory.
To be Adopted on January 1, 2015
• PFRS 9, Financial Instruments (2010), PFRS 9, Financial Instruments (2009)
PFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under PFRS 9 (2009),
financial assets are classified and measured based on the business model in which they are held and the characteristics of
their contractual cash flows. PFRS 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an
active project to make limited amendments to the classification and measurement requirements of PFRS 9 and add new
requirements to address the impairment of financial assets and hedge accounting.
• Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
(Amendments to PFRS 10, PFRS 11, and PFRS 12)
The amendments simplify the process of adopting PFRS 10 and 11, and provide relief from the disclosures in respect of
unconsolidated structured entities. Depending on the extent of comparative information provided in the financial statements,
the amendments simplify the transition and provide additional relief from the disclosures that could have been onerous. The
amendments limit the restatement of comparatives to the immediately preceding period; this applies to the full suite of standards.
Entities that provide comparatives for more than one period have the option of leaving additional comparative periods unchanged.
In addition, the date of initial application is now defined in PFRS 10 as the beginning of the annual reporting period in which the
standard is applied for the first time. At this date, an entity tests whether there is a change in the consolidation conclusion for its
investees.
• PFRS 13, Fair Value Measurement
PFRS 13 replaces the fair value measurement guidance contained in individual PFRS with a single source of fair value
measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure
requirements for fair value measurements. It explains how to measure fair value when it is required or permitted by
other PFRS. It does not introduce new requirements to measure assets or liabilities at fair value, nor does it eliminate the
practicability exceptions to fair value measurements that currently exist in certain standards.
• PAS 19, Employee Benefits (Amended 2011)
The amended PAS 19 includes the following requirements:
• actuarial gains and losses are recognized immediately in other comprehensive income; this change will remove the corridor
method and eliminate the ability for entities to recognize all changes in the defined benefit obligation and in plan assets in
profit or loss, which is currently allowed under PAS 19; and
• expected return on plan assets recognized in profit or loss is calculated based on the rate used to discount the defined
benefit obligation.
• PAS 27, Separate Financial Statements (2011)
PAS 27 (2011) supersedes PAS 27 (2008). PAS 27 (2011) carries forward the existing accounting and disclosure requirements for
separate financial statements, with some minor clarifications. This standard is effective for annual periods beginning on or
after January 1, 2013 with early adoption permitted.
• PAS 28, Investments in Associates and Joint Ventures (2011)
PAS 28 (2011) supersedes PAS 28 (2008) Investments in Associates. PAS 28 (2011) makes the following amendments:
• On cessation of significant influence or joint control, even if an investment in an associate becomes an investment in a joint
venture or vice versa, the entity does not remeasure the retained interest.
• Annual Improvements to PFRS 2009 - 2011 Cycle - various standards contain amendments to five standards with consequential
amendments to other standards and interpretations. The amendments are effective for annual periods beginning on or after January
1, 2013. None of the said improvements or amendments to PFRS have a significant effect on the financial statements of the Group.
To be Adopted on January 1, 2014
• Offsetting Financial Assets and Financial Liabilities (Amendments to PAS 32). These amendments clarify that:
• An entity currently has a legally enforceable right to set-off if that right is:
- not contingent on a future event; and
- enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and
all counterparties.
• Gross settlement is equivalent to net settlement if and only if the gross settlement mechanism has features that:
- eliminate or result in insignificant credit and liquidity risk; and
- process receivables and payables in a single settlement process or cycle.
96 / UCPB 2012 Annual Report
4. Significant Accounting Judgments and Estimates
The preparation of the consolidated financial statements and the financial statements of the Parent Bank in compliance with
PFRS requires the Group to make judgments and estimates that affect the reported amounts of assets, liabilities, income and
expenses and the disclosures of contingent assets and contingent liabilities. Future events may occur which can cause the
judgments and assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in
the financial statements as they become reasonably determinable.
Judgments and estimates are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The following are the critical judgments and key assumptions that have a significant risk of material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
Judgments
a) Going Concern
The Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the
Group has the resources to continue in business for the foreseeable future. Though the Parent Bank’s losses prior to 2005, including
the losses not recognized as discussed in Notes 14 and 15, brought its capital below the required minimum capital requirements
for a universal bank, the Parent Bank’s management has taken active steps in ensuring its continued liquidity and implemented its
capital build-up plan pursuant to the FAA with PDIC and the MOA that was signed with the ROP, PDIC and PCGG (see Notes 1 and
25). As at December 31, 2012 and 2011, considering the regulatory relief mentioned in Note 1, the Bank has already complied with
the risk-based capital ratio of 10%. Thus, the financial statements continue to be prepared on a going concern basis.
b) Operating Leases
Group as Lessor
The Group has entered into commercial property leases for its investment property portfolio. Based on factors such as
retention of ownership title to the leased property, period of lease contract relative to the estimated useful economic life
of the leased property and bearer of executory costs, the Group has determined that it retains all the significant risks and
rewards of ownership of these properties, and so accounts for these as operating leases.
Group as Lessee
The Group has entered into leases for premises it uses for its operations. The Group has determined, based on the evaluation
of the lease agreement that all significant risks and rewards of ownership of the properties remain with the lessors and so
accounts for these as operating leases.
c) Finance Leases
ULFC has entered into finance leases in which it has determined, based on the evaluation of the lease agreement, that it
transfers all the significant risks and rewards of ownership of the properties it leases out. The lessees have the option to
purchase the leased assets at a price that is expected to be sufficiently lower than the fair value at the date the option becomes
exercisable and the lease term is for the major part of the economic life of the asset and at the inception of the lease, the
present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset.
d) Fair Value of Financial Instruments
Where the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be
derived from active markets, these are determined using internal valuation techniques using generally accepted market
valuation models. The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgment is required in establishing fair values. These judgments may include considerations of liquidity
and model inputs such as correlation and volatility for longer-dated derivatives. Refer to Note 6 to the financial statements
for the fair values and the measurement bases of the financial instruments.
UCPB 2012 Annual Report / 97
e) HTM Investments
The classification under HTM investments requires significant judgment. In making this judgment, the Group evaluates its
intention and ability to hold such investments to maturity. If the Group fails to keep these investments to maturity other than in
certain specific circumstances - for example, selling an insignificant amount close to maturity - it will be required to reclassify
the entire portfolio as AFS financial assets. The investments would therefore be measured at fair value and not at amortized
cost. Refer to Note 9 to the financial statements for discussion on the Parent Bank’s breach of the tainting rule in 2011.
f) Financial Assets not Quoted in an Active Market
The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market.
Included in the evaluation on whether a financial asset is quoted in an active market is the determination on whether
quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring market
transactions on an arm’s length basis.
g) Embedded Derivatives
Where a hybrid instrument is not classified as financial assets at FVPL, the Group evaluates whether the embedded derivative
should be bifurcated and accounted for separately. This includes assessing whether the embedded derivative has a close
economic relationship to the host contract.
h) Contingencies
The Group is currently involved in legal proceedings. The estimate of the probable cost for the resolution of claims has been
developed in consultation and with the aid of the legal counsel handling the Group’s defense in this matter and is based
upon an analysis of potential results. Management does not believe that the outcome of this matter will affect the results of
operations. It is probable, 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 (see Note 30).
i) 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 Group considers the following:
a) the currency that mainly influences sales prices for financial instruments and services;
b) the currency in which funds from financing activities are generated; and
c) the currency in which receipts from operating activities are usually retained.
j) Sequestration of Shares of the Bank and the Coconut Industry Investment Fund (CIIF) Oil Mills by the Republic of the Philippines
As discussed in Note 25 to the financial statements, the Group is involved in legal proceedings on the ownership shares of the
Bank and CIIF Oils Mills, which were subject of the January 2012 Decision issued by the Supreme Court in the Philippine Coconut
Producers Federation, Inc. (COCOFED), et al. case. The motion for the reconsideration of the January 2012 Decision has been
denied with finality on September 4, 2012. An entry of judgment has yet to be issued by the Supreme Court in said case.
On December 28, 2012, the Bank filed a Special Civil Action for Declaratory Relief seeking clarification on the Bank’s
proportionate right, title and interest in the CIIF Companies, as well as the Bank’s indirect equity in the 14 Holding
Companies and the CIIF block of SMC shares. The case, docketed as Civil Case No. 12-1251 before the Regional Trial Court of
Makati Branch 59, has not reached the pre-trial stage.
c) Valuation of Unquoted Equity Securities
The Group’s investments in equity securities that do not have a quoted market price in an active market and whose fair value
cannot be reliably measured are carried at cost, less allowance for impairment losses.
As at December 31, 2012 and 2011, the carrying value of unquoted AFS equity securities (included under AFS financial
assets) amounted to 293.2 million and 149.6 million, respectively, for the Group and 292.6 million and 148.6 million,
respectively, for the Parent Bank (see Notes 9 and 15).
d) Impairment of AFS Equity Securities
The Group determines that AFS equity securities are impaired when there has been a significant or prolonged decline in
the fair value below its cost. This determination of what is significant or prolonged requires judgment. The Group treats
‘significant’ generally as 20.0% or more of the original cost of investment, and ‘prolonged’ as greater than 12 months. In
making this judgment, the Group evaluates among other factors, the normal volatility in share price for quoted equity
securities and the future cash flows and the discount factors for unquoted equity securities.
In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee,
industry and sector performance, changes in technology, and operational and financing cash flows.
As at December 31, 2012 and 2011, allowance for impairment losses on certain AFS equity securities amounted to 337.4
million and 508.3 million, respectively, for the Group and 337.3 million and 508.2 million, respectively, for the Parent
Bank (see Note 15). As at December 31, 2012 and 2011, the carrying value of AFS equity securities (included under AFS
financial assets) amounted to 779.1 million and 626.3 million, respectively, for the Group and 689.1 million and P576.1
million, respectively, for the Parent Bank (see Notes 9 and 15).
As at December 31, 2012 and 2011, however, the Parent Bank has deferred the booking of impairment losses on certain AFS
equity securities amounting to 516.5 million and 384.3 million, respectively (see Note 15). This forms part of the unbooked
valuation reserves allowed by the BSP as discussed in Note 1.
e) Impairment of AFS Debt Investments
The Group determines that AFS debt investments are impaired based on the same criteria used for financial assets carried at
amortized cost.
The Group and the Parent Bank determined that there is no evidence of impairment on its AFS debt investments. As at
December 31, 2012 and 2011, the carrying value of AFS debt investments (included under AFS financial assets) amounted to
22.5 billion and 19.1 billion, respectively, for the Group and 22.3 billion and 19.0 billion, respectively, for the Parent
Bank (see Notes 9 and 15).
f) Impairment of Nonfinancial Assets
Property and Equipment, Investment Properties, Land Held-for-Sale, Software Cost and
Exchange Trading Right
The Group 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 Group considers important which could trigger an impairment review include the following:
Estimates
a) Impairment of Loans and Receivables
The Group reviews its individually significant loans and receivables at each reporting date to assess whether an impairment
loss 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 impairment loss. In estimating these cash flows, the
Group makes judgments about the borrower’s financial situation and the NRV of collateral. These estimates are based on
assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.
Loans and receivables that have been assessed individually and found not to be impaired and all individually insignificant
loans and advances are then assessed collectively, in groups of assets with similar characteristics, to determine whether
provision should be made due to incurred loss events for which there is objective evidence but whose effects are not yet
evident. The collective assessment takes account of data from the loan portfolio, concentrations of risks and economic data.
The carrying values of loans and receivables and the related allowance for credit losses of the Group and the Parent Bank are
disclosed in Notes 10 and 15 to the financial statements.
As at December 31, 2012 and 2011, however, the Parent Bank has not booked the reversal and deferred the booking of credit
and impairment losses on certain loans and receivables amounting to 103.0 million and 602.4 million, respectively (see Note
15), which form part of the unbooked valuation reserves allowed by the BSP as discussed in Note 1 to the financial statements.
b) Fair Values of Structured Debt Instruments and Derivatives
The fair values of structured debt instruments and derivatives that are not quoted in active markets are determined using
valuation techniques such as discounted cash flow analysis and standard option pricing models. Where valuation techniques
are used to determine fair values, they are reviewed by qualified personnel independent of the area that created them.
All models are reviewed before they are used and to the extent practicable, models use only observable data. Changes in
assumptions about these factors could affect the reported fair value of the financial instruments. Refer to Notes 6 and 9 to
the financial statements for information on the fair values of these instruments.
98 / UCPB 2012 Annual Report
• 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.
An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
In 2012 and 2011, there were no indicators of impairment on the Group’s and the Parent Bank’s property and equipment,
software costs and exchange trading right that could trigger an impairment review.
As at December 31, 2012 and 2011, the carrying value of property and equipment for the Group amounted to 2.3 billion for
both years and 2.1 billion and 2.2 billion, respectively, for the Parent Bank (see Note 11).
As at December 31, 2012 and 2011, the carrying value of land held-for-sale of the Group and of the Parent bank amounted to
2.0 billion for both years (see Note 14).
As at December 31, 2012 and 2011, the carrying value of software costs amounted to 364.1 million and 411.9 million,
respectively, for the Group and 359.7 million and 408.3 million, respectively, for the Parent Bank (see Note 14).
As at December 31, 2012 and 2011, the carrying value of the Group’s exchange trading right amounted to 1.5 million (see Note 14).
The recoverable amount of investment properties is determined based on fair value less cost to sell. As at December 31, 2012
and 2011, the carrying value of investment properties amounted to 6.0 billion and 6.8 billion, respectively, for the Group
and 5.7 billion and 6.5 billion, respectively, for the Parent Bank (see Note 13).
As at December 31, 2012 and 2011, the Parent Bank, however, has deferred the booking of impairment losses on investment
properties amounting to 586.5 million and 2.5 billion (see Note 15). This forms part of the unbooked valuation reserves
allowed by the BSP as discussed in Note 1 to the financial statements.
UCPB 2012 Annual Report / 99
Investments in Subsidiaries, Associates, and Joint Venture
The Group and the Parent Bank assess impairment on its investments in subsidiaries, associates and joint venture whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Among others, the
factors that the Group and the Parent Bank consider important which could trigger an impairment review on its investments
in subsidiaries, associates and joint venture include the following:
• deteriorating or poor financial condition;
• recurring net losses; and
• significant changes (i.e. technological, market, economic, or legal environment in which the subsidiary, associate and
jointly controlled entity operates) with an adverse effect on the subsidiary, associate or jointly controlled entity have
taken place during the period, or will take place in the near future.
An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is determined based on the asset’s fair value less cost to sell, which considers the estimated realizable and
settlement amounts of the assets and liabilities of the subsidiary, associate or joint venture.
As at December 31, 2012 and 2011, the carrying values of the Group’s investment in associates and joint venture amounted
to 8.5 billion and 7.5 billion, respectively. As at December 31, 2012 and 2011, the carrying values of the Parent Bank’s
investments in subsidiaries, associates and joint venture amounted to 4.1 billion and 3.9 billion respectively, net of
allowance for impairment losses amounting to 201.5 million and 370.3 million, respectively (see Notes 12 and 15).
g) Estimated Useful Lives of Property and Equipment, Investment Properties and Software Costs
The Group reviews on an annual basis the estimated useful lives of property and equipment, depreciable investment
properties and software costs based on expected asset utilization as anchored on business plans and strategies that also
consider expected future technological developments and market behavior. It is possible that future results of operations
could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in
the estimated useful lives of property and equipment, depreciable investment properties and software costs would decrease
their respective balances and increase the recorded depreciation and amortization expense.
As at December 31, 2012 and 2011, the carrying value of depreciable property and equipment for the Group amounted to
2.2 billion for both years and 2.0 billion and 2.1 billion, respectively, for the Parent Bank (see Note 11).
As at December 31, 2012 and 2011, the carrying value of depreciable investment properties amounted to 2.9 billion and
3.1 billion, respectively, for the Group and 2.8 billion and 3.0 billion, respectively, for the Parent Bank. In 2012 and
in prior years, the Parent Bank did not recognize depreciation on its investment properties from the “bad bank” assets as
required under PAS 40, Investment Property. As at December 31, 2012 and 2011, the unbooked accumulated depreciation
amounted to 1.4 billion and 2.9 billion, respectively (see Note 13).
h) Recognition of Deferred Tax Assets
Deferred tax assets are recognized for all unused tax losses and credits to the extent that it is probable that taxable income
will be available against which the losses can be utilized. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable income
together with future tax planning strategies.
The Group reviews its deferred tax assets at each reporting date and reduces the carrying amount to the extent that it is no
longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be utilized. The
estimates of future taxable net income indicate that certain temporary differences will be realized in the future. The recognized
net deferred tax assets and unrecognized deferred tax assets for the Group and the Parent Bank are disclosed in Note 24.
i) Retirement Benefits
The cost of defined retirement pension plan and other post employment benefits is determined using actuarial valuations.
The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary
increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject
to significant uncertainty.
The assumed discount rates were determined using the market yields on Philippine government bonds with terms consistent with the
expected employee benefit payout as at the reporting date. Refer to Note 27 to the financial statements for the details of assumptions
used in the calculation. While the Group believes that the assumptions are reasonable and appropriate, significant differences
between actual experiences and assumptions may materially affect the cost of employee benefits and related obligations.
5. Financial Risk Management
a. Introduction
The Group manages their respective financial risks separately. The financial subsidiaries have their own risk management
procedures but are structured similar to that of the Parent Bank. To a certain extent, the respective risk management
programs and objectives are the same across the Group.
The Parent Bank’s activities are principally related to the use of financial instruments. The Parent Bank accepts deposits from
customers at rates set by the Treasury Group depending on the volume of placements, and for various periods, and seeks to earn
above-average interest margins by investing these funds. The Parent Bank seeks to increase these margins by consolidating short-term
funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.
The Parent Bank also trades in financial instruments where it takes positions to take advantage of short-term market
movements in bonds and shares of stocks.
The Parent Bank has exposure to the following risks from its use of financial instruments:
• Credit Risk
• Liquidity Risk
• Market Risk
Risk Management Framework
To manage the financial risk for holding financial assets and liabilities, the Parent Bank operates an integrated risk
management system to address the risks it faces in its banking activities, including credit, liquidity and market risks. The
Parent Bank’s risk management objective is to adequately and consistently identify, measure, control and monitor the
risk profile inherent in the Parent Bank’s activities. The Parent Bank’s Risk Management Committee (RMC) has overall
responsibility for the creation and oversight of the Parent Bank’s corporate risk policy and is actively involved in the
assessment, planning, review and approval of all the risks in the Parent Bank’s organization. The Parent Bank also has in place
an authorization structure that defines and sets limits on the type and value of transactions that each position can approve.
Within the Parent Bank’s overall risk management system, the Risk Management Division (RMD) is responsible for managing
these risks in a more detailed and proactive fashion on a continuing basis through performance of risk and return analysis.
Credit Risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual
obligations. The Group manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual
counterparties and for geographical and industry concentrations, and by monitoring exposures in relation to such limits.
Management of Credit Risk
The Parent Bank manages its credit risk and loan portfolio through a stringent process of loan approval. The screening process
is directed by the senior officers of the Bank’s Corporate and Consumer Banking Group (CCBG). The process establishes the
creditworthiness of the individual loan applicant based on best credit practices, and takes into consideration the current
business condition and medium-term potential of the industry in which the loan applicant operates in.
In compliance with BSP requirements, the Parent Bank established in December 2004 an Internal Credit Risk Rating (ICRR) system
for the purpose of measuring credit risk for corporate borrowers in a consistent manner, as accurately as possible, and thereafter
uses the risk information for business and financial decision making. The ICRR system covers corporate borrowers with asset size
of above 15.0 million, requiring financial statements from 2005 onwards to be audited by SEC-accredited auditing firms.
On a continuing basis, the Parent Bank generates credit risk ratings for existing loan accounts to assess their performance and
to determine which account will be retained, expanded, or phased out. A separate review of the loan portfolio is conducted
by the RMD to assess the quality of individual accounts and the concentration of the Parent Bank’s credit exposures.
Maximum Exposure to Credit Risk after Collateral Held or Other Credit Enhancements
The Bank’s maximum exposure to credit risk is equal to the carrying value of its financial assets except for certain secured
loans and receivables shown below:
As at December 31, 2012 and 2011, the Group’s net retirement asset (included under “Other assets” in the statement of financial
position) amounted to 4.2 million and P10.6 million (see Note 14), respectively, while its net retirement liability (included under
“Other liabilities” in the statement of financial position) amounted to 6.4 million and 6.6 million, respectively (see Note 19).
Consolidated
2012
Gross
Maximum
Exposure
As at December 31, 2012 and 2011, the Parent Bank’s net retirement asset is nil and 6.3 million, respectively (see Note 14).
j) NRV of Real Estate Inventories
The Group determines the net realizable value of its real estate inventories based on its estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary to make the sale. In determining the
net realizable value of the real estate inventories, management considers whether those real estate inventories are damaged
or if their selling prices have declined. Likewise, management also considers whether the estimated costs of completion or the
estimated costs to be incurred to make the sale have increased. The amount and timing of recorded expenses for any period would
differ if different estimates were utilized. As at December 31, 2012 and 2011, real estate inventories of the Group amounted to
3.1 billion (net of impairment losses amounting to 114.5 million) for both years (see Notes 14 and 15).
100 / UCPB 2012 Annual Report
Loans and receivables:
Receivables from
customers
Corporate loans
Consumer loans
Sales contracts receivable
Fair
Value of
Collaterals
55,626,261 50,663,577
24,199,820 29,047,220
630,999 1,376,565
80,457,080 81,087,362
Net
Exposure
Financial
Effect of
Collaterals
Gross
Maximum
Exposure
2011
Fair
Value of
Net
Collaterals
Exposure
39,600,416
4,561,788
275,509
44,437,713
16,025,845
19,638,032
355,490
36,019,367
41,097,910
17,876,504
1,063,640
60,038,054
38,870,692
19,279,196
895,932
59,045,820
25,006,407
3,842,238
409,390
29,258,035
Financial
Effect of
Collaterals
16,091,503
14,034,266
654,250
30,780,019
UCPB 2012 Annual Report / 101
Parent
2012
Gross
Maximum
Exposure
Loans and receivables:
Receivables from
customers
Corporate loans
Consumer loans
Sales contracts receivable
Fair
Value of
Collaterals
51,191,693 46,223,984
20,303,829 27,448,820
561,720
1,289,346
72,057,242 74,962,150
Net
Exposure
37,173,658
1,265,168
275,509
38,714,335
Financial
Effect of
Collaterals
14,018,035
19,038,661
286,211
33,342,907
Gross
Maximum
Exposure
38,299,781
14,555,310
994,502
53,849,593
2011
Fair
Value of
Net
Collaterals
Exposure
36,795,618
17,630,210
826,794
55,252,622
24,074,304
788,128
340,252
25,202,684
Financial
Effect of
Collaterals
14,225,477
13,767,182
654,250
28,646,909
The Group holds collateral against loans and receivables to customers in the form of hold-out on deposits, real estate mortgage,
chattel mortgage, mortgage trust indenture, standby letters of credit or bank guaranty, government guaranty, assignment of
receivables, pledge of shares, personal and corporate guaranty and other forms of security. Fair market value is based on the value
of the collateral assessed at the time of borrowing and are updated upon renewal of the loan. Collateral is generally not held over
loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity.
It is the Group’s policy to dispose of foreclosed assets in an orderly fashion. Sale is facilitated by offering incentives to
the Bank’s accredited brokers and through formulating programs to attract buyers like offering fixed interest rates for an
extended period of time and reduced rates for down payment as compared to prevailing market rates as examples.
Excessive Risk Concentration
Credit risk concentrations can arise whenever a significant number of borrowers have similar characteristics and are affected
similarly by changes in economic or other conditions. The Parent Bank analyzes the credit risk concentration to an individual
borrower, related group of accounts, industry, geographic, internal rating buckets, currency, term and security.
For risk concentration monitoring purposes, the financial assets are broadly categorized into: (1) loans and receivables, (2)
trading and financial investment securities, (3) loans and advances to banks, and (4) others. To mitigate risk concentration,
the Group has established a regular monitoring system to spot breaches in regulatory and internal limits.
An analysis of concentrations of credit risk at the reporting date is shown below:
Consolidated
2012
Loans and
Loans and Investment
Advances
Receivables Securities (a) to Banks (b)
Financial intermediaries
Government
Real estate, renting and business activities
Wholesale and retail trade, repair of motor
vehicles ,motorcycles, personal
and household goods
Manufacturing
Agriculture, hunting and forestry and fishing
Construction
Transport, storage and communication
Other community, social and personal
services activities
Less: Unearned interest discount
Allowance for credit and impairment losses
Others (c)
Total
8,018,442
1,695,520
23,272,118
4,562,765
43,314,484
1,355,429
30,689,641
—
—
—
—
2,500
43,270,848
45,010,004
24,630,047
12,798,421
13,116,691
8,295,091
1,807,647
10,060,459
4,412
327,427
1,969
—
893,343
—
—
—
—
—
—
—
—
—
—
12,802,833
13,444,118
8,297,060
1,807,647
10,953,802
16,408,056
95,472,445
293,861
5,637,371
89,541,213
2,119,775
52,579,604
—
30,689,641
—
—
30,689,641
337,400
52,242,204
2,765,888 21,293,719
2,768,388 181,510,078
—
293,861
—
5,974,771
2,768,388 175,241,446
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
c. Comprised of letters of credit.
Financial intermediaries
Government
Real estate, renting and business activities
(Forward)
102 / UCPB 2012 Annual Report
Loans and
Investment
Receivables Securities (a)
6,615,315
3,453,759
1,743,675
43,053,269
18,812,362
1,902,160
Consolidated
2011
Loans and
Advances
to Banks (b)
35,703,598
—
—
Others (c)
2,500
—
—
Consolidated
2011
Loans and
Loans and
Investment
Advances
Receivables Securities (a) to Banks (b)
Total
45,775,172
44,796,944
20,714,522
Wholesale and retail trade, repair of motor
vehicles, motorcycles, personal
and household goods
Manufacturing
Agriculture, hunting and forestry and fishing
Construction
Transport, storage and communication
Other community, social and personal
services activities
Less: Unearned interest discount
Allowance for credit and impairment losses
Others (c)
Total
14,946,686
10,928,894
6,545,291
44,628
634,816
—
516,093
733
1,280,989
2,159
—
—
—
—
—
—
—
—
—
—
14,946,686
11,444,987
6,546,024
1,325,617
636,975
16,039,188
76,310,855
337,212
5,010,226
70,963,417
181,462
50,390,624
—
508,283
49,882,341
—
35,703,598
—
—
35,703,598
3,405,541
3,408,041
—
—
3,408,041
19,626,191
165,813,118
337,212
5,518,509
159,957,397
Others (c)
—
—
—
Total
40,991,116
44,314,909
24,523,888
—
—
—
—
—
12,078,135
12,487,294
8,144,857
1,807,647
10,953,497
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
c. Comprised of letters of credit.
Financial intermediaries
Government
Real estate, renting and business activities
Wholesale and retail trade, repair of motor
vehicles, motorcycles, personal
and household goods
Manufacturing
Agriculture, hunting and forestry and fishing
Construction
Transport, storage and communication
Other community, social and personal
services activities
Less: Unearned interest discount
Allowance for credit and impairment losses
Loans and
Receivables
6,524,208
1,311,487
23,169,179
Parent Bank
2012
Loans and
Investment
Advances
Securities (a) to Banks (b)
4,477,561 29,989,347
43,003,422
—
1,354,709
—
12,078,135
12,159,867
8,144,857
1,807,647
10,060,459
—
327,427
—
—
893,038
—
—
—
—
—
10,901,260
86,157,099
51,724
5,339,184
80,766,191
2,117,331
52,173,488
—
337,324
51,836,164
—
29,989,347
—
—
29,989,347
2,765,888 15,784,479
2,765,888 171,085,822
—
51,724
—
5,676,508
2,765,888 165,357,590
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
c. Comprised of letters of credit.
Financial intermediaries
Government
Real estate, renting and business activities
Wholesale and retail trade, repair of motor
vehicles, motorcycles, personal
and household goods
Manufacturing
Agriculture, hunting and forestry and fishing
Construction
Transport, storage and communication
Other community, social and personal
services activities
Less: Unearned interest discount
Allowance for credit and impairment losses
Loans and
Receivables
5,480,705
1,743,675
18,674,750
Parent Bank
2011
Loans and
Investment
Advances
Securities (a) to Banks (b)
3,407,103
35,255,789
42,739,262
—
1,901,534
—
Others (c)
—
—
—
Total
44,143,597
44,482,937
20,576,284
14,729,308
9,930,793
6,413,404
44,628
634,816
—
515,806
—
1,280,988
—
—
—
—
—
—
—
—
—
—
—
14,729,308
10,446,599
6,413,404
1,325,616
634,816
11,174,536
68,826,615
137,013
4,799,540
63,890,062
179,322
50,024,015
—
508,208
49,515,807
—
35,255,789
—
—
35,255,789
3,405,541
3,405,541
—
—
3,405,541
14,759,399
157,511,960
137,013
5,307,748
152,067,199
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
c. Comprised of letters of credit.
UCPB 2012 Annual Report / 103
Credit Quality per Class of Financial Assets
The credit quality of financial assets is assessed and managed using external and internal ratings.
Loans and Receivables
The credit quality is generally monitored using the 10-grade ICRR system which is integrated in the credit process particularly in
loan pricing and provision for credit losses. The model on risk ratings is assessed and updated regularly. Validation of the risk rating
is performed by the Risk Management Division RMD to maintain accurate and consistent risk ratings across the credit portfolio.
Standard grade
Substandard grade
Impaired
ICRR System Grade
1
2
3
4
5
6
7
8
9
10
The Parent Bank only subjects commercial loans with ICRR of 8 to 10 to specific impairment test.
Due from BSP, due from other banks and interbank loans receivable are classified as high grade since these are deposited in/
or transacted with reputable banks which have low probability of insolvency. Unquoted debt securities classified as loans are
classified as high grade based on the reputation of the counterparties.
The following table shows the description of credit quality of commercial loans:
Credit Quality
High grade
10 - Loss
This rating is given to a borrower whose loans or portions thereof are considered uncollectible. The collectible amount,
with no collateral or which collateral is of little value, is difficult to measure and more practical to write-off than to defer
even though partial recovery may be obtained in the future.
Description
Excellent
Strong
Good
Satisfactory
Acceptable
Watchlist
Especially mentioned
Substandard
Doubtful
Loss
1 - Excellent
The rating is given to a borrower with a very low probability of going into default in the coming year. The borrower has a
high degree of stability, substance and diversity and has access to public markets to raise substantial amounts of funds at
any time; has a very strong debt service capacity and has conservative balance sheet leverage. The track record of the
borrower in terms of profit is very good and exhibits highest quality under virtually all economic conditions.
2 - Strong
This rating is given to borrowers with low probability of going into default in the coming year. Normally has a comfortable
degree of stability, substance and diversity. Under normal market conditions, borrower has good access to public markets
to raise funds. Borrower has a strong market and financial position with a history of successful performance. Overall debt
service capacity is deemed very strong; critical balance sheet ratios are conservative.
3 - Good
This rating is given to smaller corporations with limited access to public capital markets or to alternative financial markets.
Probability of default is quite low and it bears some degree of stability and substance. However, borrower may be susceptible
to cyclical changes and more concentration of business risk, by product or by market. Typical for this type of borrower is the
combination of comfortable asset protection and an acceptable balance sheet structure. The debt service capacity of the
borrower is strong and has reported profits for the past three years and is expected to be profitable again in the current year.
The table below shows credit quality per class of financial assets, based on the Parent Bank’s rating system (gross of
allowance for credit losses and unearned discount):
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Unquoted debt securities
Sales contracts receivable
Accrued interest receivable
Accounts receivable
Other receivables
Other assets - security deposit with
Philippine Clearing House
Corporation (PCHC)
Total
6 - Watchlist
This rating is given to a borrower which incurs net losses and has salient financial weaknesses, specifically in profitability,
reflected on its financial statements. Credit exposure is not at risk of loss at the moment but performance of the borrower
has weakened and unless present trends are reversed, could lead to losses.
7 - Especially Mentioned
This rating is given to a borrower that exhibits potential weaknesses that deserve management’s close attention. No
immediate threat to the repayment of the loan exists through normal course of business but factors may exist that could
adversely affect the creditworthiness of the borrower.
8 - Substandard
This rating is given to borrower where repayment of the loan, through normal course of business, may be in jeopardy due
to adverse events. There exists the possibility of future losses to the institution unless given closer supervision.
9 - Doubtful
This rating is given to borrower who is unable or unwilling to service debt over an extended period of time and near future
prospects of orderly debt service is doubtful. Existing facts, conditions, and values make full collection or liquidation
highly improbable and in which substantial loss is probable.
104 / UCPB 2012 Annual Report
Past Due
but not
Impaired
—
—
—
—
Impaired
—
—
—
—
Total
28,254,415
2,208,451
226,775
30,689,641
24,475,208
22,752,460
6,870,196
87,938
958,930
17,367
508,751
25,624,724
182,990
—
—
170,618
294
151
1,541,538
—
—
503
17,258
—
2,439
6,780,234
365,017
—
177,535
40,174
135,105
—
502,624 1,323,008
320,350 1,131,328
—
2,870
431,204
1,050
269,476
417
780,688
—
—
60,247,336
24,752,145
6,870,196
700,050
1,457,506
933,871
511,341
—
55,670,850
86,360,491
3,397
25,982,174
25,982,174
—
1,561,738
1,561,738
—
7,498,065
7,498,065
—
—
827,311 3,935,704
827,311 3,935,704
3,397
95,475,842
126,165,483
a. Includes loans and receivables with an ICRR system Grade of 1-4
b. Includes loans and receivables with an ICRR system Grade of 5-7
c. Includes loans and receivables with an ICRR system Grade of 8-9
4 - Satisfactory
This rating is given to a borrower where clear risk elements exist, the probability of default is somewhat greater and normally
has limited access to public markets. The probability is reflected in volatility of earnings and overall performance. The borrower
should be able to withstand normal business cycles, but any prolonged unfavorable economic period would create deterioration
beyond acceptable levels. The borrower has the combination of reasonably sound asset and cash flow protection with adequate
debt service capacity and has reported profits in the past year and is expected to report a profit in the current year.
5 - Acceptable
This rating is given to a borrower whose risk elements are sufficiently pronounced to withstand normal business cycles but any
prolonged unfavorable economic and/or market period would create an immediate deterioration beyond acceptable levels.
The risk to this borrower is still acceptable as there is sufficient cash flow either historically or expected for the future; new
business or projected finance transaction; an existing borrower where the nature of the exposure represents a higher risk
because of extraordinary developments but for which a decreasing risk within an acceptable period can be expected.
Consolidated
2012
Neither Past Due nor Impaired
Standard Sub-standard
High Grade (a)
Grade (b)
Grade (c)
Unrated
28,254,415
—
—
—
2,208,451
—
—
—
226,775
—
—
—
30,689,641
—
—
—
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Unquoted debt securities
Sales contracts receivable
Accrued interest receivable
Accounts receivable
Other receivables
Other assets - security deposit to
Philippine Clearing House
Corporation with (PCHC)
Total
Consolidated
2011
Neither Past Due nor Impaired
Standard
Sub-standard
High Grade (a)
Grade (b)
Grade (c)
Unrated
32,579,118
—
—
—
1,898,901
—
—
—
1,225,579
—
—
—
35,703,598
—
—
—
Past Due
but not
Impaired
—
—
—
—
Impaired
—
—
—
—
Total
32,579,118
1,898,901
1,225,579
35,703,598
18,925,846
3,141,136
8,213,719
39,573
956,361
22,854
391,561
17,948,103
137,938
—
28,383
139,534
369
226
1,249,144
—
—
795
20,665
—
1,638
3,140,890
14,353,235
—
631,237
64,288
633
—
426,602
1,194,381
—
2,819
14,415
—
—
3,368,937
134,199
380,262
254,256
681,149
—
45,059,522
18,960,889
8,213,719
1,083,069
1,449,519
705,005
393,425
445,707
32,136,757
67,840,355
—
18,254,553
18,254,553
—
1,272,242
1,272,242
—
18,190,283
18,190,283
—
1,638,217
1,638,217
—
4,818,803
4,818,803
445,707
76,310,855
112,014,453
a. Includes loans and receivables with an ICRR system Grade of 1-4
b. Includes loans and receivables with an ICRR system Grade of 5-7
c. Includes loans and receivables with an ICRR system Grade of 8-9
UCPB 2012 Annual Report / 105
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Unquoted debt securities
Sales contracts receivable
Accrued interest receivable
Accounts receivable
Total
Parent Bank
2012
Neither Past Due nor Impaired
Standard Sub-standard
High Grade (a)
Grade (b)
Grade (c)
Unrated
27,679,351
—
—
—
2,083,221
—
—
—
226,775
—
—
—
29,989,347
—
—
—
22,242,462
18,949,821
6,601,192
23,965,610
—
959,532
118,255
48,753,007
78,742,354
24,083,865
24,083,865
1,353,997
—
16,582
1,370,579
1,370,579
Consolidated
Past Due
but not
Impaired
—
—
—
—
2012
Impaired
—
—
—
—
6,780,234
365,017
307,454
214,356
1,186,671
1,048,117
177,535
39,391
365,446
7,727,623
7,727,623
431,204
440
269,476
764,307
522,250 3,699,775
522,250 3,699,775
Total
27,679,351
2,083,221
226,775
29,989,347
55,836,428
20,577,311
6,601,192
608,739
1,403,676
1,129,753
86,157,099
116,146,446
a. Includes loans and receivables with an ICRR system Grade of 1-4
b. Includes loans and receivables with an ICRR system Grade of 5-7
c. Includes loans and receivables with an ICRR system Grade of 8-9
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Unquoted debt securities
Sales contracts receivable
Accrued interest receivable
Accounts receivable
Total
Parent Bank
2011
Neither Past Due nor Impaired
Standard Sub-standard
High Grade (a)
Grade (b)
Grade (c)
Unrated
32,305,984
—
—
—
1,851,226
—
—
—
1,098,579
—
—
—
35,255,789
—
—
—
16,153,636
—
7,932,107
—
954,903
—
25,040,646
60,296,435
16,944,209
—
—
—
99,424
—
17,043,633
17,043,633
1,230,494
—
—
—
20,665
—
1,251,159
1,251,159
4,064,854
14,353,235
—
631,237
64,288
295,829
19,409,443
19,409,443
Past Due
but not
Impaired
—
—
—
—
366,291
1,094,974
—
—
14,415
—
1,475,680
1,475,680
Impaired
—
—
—
—
3,241,001
65,089
—
380,262
254,256
665,446
4,606,054
4,606,054
Total
32,305,984
1,851,226
1,098,579
35,255,789
42,000,485
15,513,298
7,932,107
1,011,499
1,407,951
961,275
68,826,615
104,082,404
a. Includes loans and receivables with an ICRRS Grade of 1-4
b. Includes loans and receivables with an ICRRS Grade of 5-7
c. Includes loans and receivables with an ICRRS Grade of 8-9
Trading and Investment Securities
In ensuring the quality of its trading and investment portfolio, the Parent Bank uses the credit risk rating from published data
providers like Moody’s, Standard & Poor’s (S & P), Fitch, and such other rating agencies as may be approved by the MB of the BSP.
The table below shows the credit risk rating of trading and investment securities (gross of allowance for credit and impairment losses):
Consolidated
2012
Financial assets at FVPL:
Debt securities:
Government
Private
Quoted equity securities
Derivative assets
AFS financial assets:
Debt securities:
Government
Private
CCC to D
and Unrated
Total
311,414
124,760
254,161
137,551
827,886
15,002,932
7,473,138
AAA to B BB-
BB+ to B-
—
124,760
197,183
108,328
430,271
311,414
—
29,223
340,637
—
—
56,978
—
56,978
—
6,436,802
15,002,932
—
—
1,036,336
Equity securities:
Quoted
Unquoted
HTM investments:
Government debt securities
AAA to B BB-
BB+ to B-
CCC to D
and Unrated
Total
89,405
10,945
—
619,626
396,475
—
485,880
630,571
6,537,152
15,622,558
1,432,811
23,592,521
—
6,967,423
28,159,197
44,122,392
—
1,489,789
28,159,197
52,579,604
Consolidated
2011
Financial assets at FVPL:
Debt securities:
Government
Private
Quoted equity securities
Derivative assets
AFS financial assets:
Debt securities:
Government
Private
Equity securities:
Quoted
Unquoted
HTM investments:
Government debt securities
AAA to BBB-
BB+ to B-
CCC to D
and Unrated
Total
—
82,994
51,045
79,754
213,793
1,673,691
—
—
31,210
1,704,901
—
—
12,630
—
12,630
1,673,691
82,994
63,675
110,964
1,931,324
—
4,571,399
13,126,687
—
—
1,432,321
13,126,687
6,003,720
51,109
—
320
1,145
425,213
634,424
476,642
635,569
4,622,508
13,128,152
2,491,958
20,242,618
—
4,836,301
28,216,682
43,049,735
—
2,504,588
28,216,682
50,390,624
Parent Bank
2012
Financial assets at FVPL:
Debt securities:
Government
Private
Quoted equity securities
Derivative assets
AFS financial assets:
Debt securities:
Government
Private
Equity securities:
Quoted
Unquoted
HTM investments:
Government debt securities
AAA to BBB-
BB+ to B-
CCC to D
and Unrated
Total
—
67,320
192,170
108,328
311,138
—
—
29,223
—
57,440
56,978
—
311,138
124,760
249,148
137,551
367,818
340,361
114,418
822,597
2,169,349
6,436,802
12,665,218
—
—
1,036,336
14,834,567
7,473,138
42
—
—
10,269
396,475
619,626
396,517
629,895
8,606,193
12,675,487
2,052,437
23,334,117
—
8,974,011
28,016,774
41,032,622
—
2,166,855
28,016,774
52,173,488
(Forward)
106 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 107
Past Due but not Impaired Loans and Receivables
These are loans and receivables where contractual interest or principal payments are past due but the Group believes that
impairment is not appropriate on the basis of the level of collateral available or status of collection of amounts owed to the Group.
Parent Bank
2011
Financial assets at FVPL:
Debt securities:
Government
Private
Quoted Equity securities
Derivative assets
AFS financial assets:
Debt securities:
Government
Private
Equity securities:
Quoted
Unquoted
HTM investments:
Government debt securities
CCC to D
and Unrated
AAA to BBB-
BB+ to B-
Total
—
82,994
48,735
79,754
1,668,573
—
—
31,210
—
—
12,630
1,668,573
82,994
61,365
110,964
211,483
1,699,783
12,630
1,923,896
—
4,571,399
12,961,114
—
—
1,432,321
12,961,114
6,003,720
1,963
—
320
—
425,213
634,424
427,496
634,424
4,573,362
12,961,434
2,491,958
20,026,754
—
4,784,845
28,073,365
42,734,582
—
2,504,588
28,073,365
50,024,015
Receivables from customers
Corporate loans
Consumer loans
Accrued interest receivable
Sales contracts receivable
Receivables from customers
Corporate loans
Consumer loans
Accrued interest receivable
Receivables from customers
Corporate loans
Consumer loans
Accrued interest receivable
108 / UCPB 2012 Annual Report
Liquidity Risk
Liquidity risk is generally defined as the current and prospective risk to earnings or capital arising from the Group’s inability
to meet its obligations when they become due.
The Parent Bank closely monitors the current and prospective maturity structure of its resources and liabilities and the
market condition to guide pricing and asset/liability allocation strategies to manage its liquidity risks. Liquidity risks are
monitored and managed by using the Maximum Cumulative Outflow limits and funding diversification/concentration limits.
In addition, the Parent Bank manages liquidity risk by holding sufficient liquid assets of appropriate quality to ensure
short-term funding requirements are met and by maintaining a balanced loan portfolio which is repriced on a regular basis.
In addition, the Parent Bank seeks to maintain sufficient liquidity to take advantage of interest rate and exchange rate
opportunities when they arise.
The table below shows the maturity profile of the financial instruments based on contractual undiscounted cash flows:
On Demand
Aging analysis of past due but not impaired loans and receivables are shown below:
Receivables from customers
Corporate loans
Consumer loans
Accrued interest receivable
Accounts receivable
Sales contracts receivable
Impaired Loans and Receivables and Investment Securities
Impaired loans and receivables and investment securities are loans and receivables and investment securities for which the
Group determines that it is probable that it will be unable to collect all principal and interest due based on the contractual
terms of the promissory note and securities agreements.
Within 1 Year
Consolidated
2012
More than 1 Year
Total
251,486
188,220
1,050
417
2,870
444,043
251,138
132,130
—
—
—
383,268
502,624
320,350
1,050
417
2,870
827,311
Within 1 Year
Consolidated
2011
More than 1 Year
Financial Assets
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Derivative assets
HFT securities*
AFS financial assets*, **
Loans and receivables**
271,046
55,951
—
—
326,997
426,602
1,194,381
14,415
2,819
1,638,217
Within 1 Year
Parent Bank
2012
More than 1 Year
Total
102,375
124,244
440
227,059
205,079
90,112
—
295,191
307,454
214,356
440
522,250
Within 1 Year
Parent Bank
2011
More than 1 Year
Total
95,245
1,039,023
14,415
1,148,683
271,046
55,951
—
326,997
366,291
1,094,974
14,415
1,475,680
—
4,493,004
—
1,009
—
440,911
21,218,385
47,256,249
73,409,558
Total
—
18,440,856
—
—
—
249,424
2,127,722
52,256,092
73,074,094
5,978,605
28,254,415
2,208,451
226,784
137,551
690,335
23,992,515
101,639,170
163,127,826
Consolidated
2012
Within 1 Year
Beyond 1 Year
Total
*Includes future interest payments
Total
155,556
1,138,430
14,415
2,819
1,311,220
5,978,605
5,320,555
2,208,451
225,775
137,551
—
646,408
2,126,829
16,644,174
Consolidated
2012
Within 1 Year
Beyond 1 Year
On Demand
Financial Liabilities
Non-derivative Liabilities
Deposit liabilities
Demand
Savings**
Time**
Long Term Negotiable
Certificates of Deposits (LTNCD)**
Bills payable and SSURA**
Accrued interest and other expenses
Other liabilities
Bills purchased - contra
Cash letters of credit
Accounts payable
Margin deposits
Manager’s check
Deposit on lease contracts
Outstanding acceptances
Due to PDIC
Due to Treasury of the Philippines
Derivative liabilities
Miscellaneous
17,848,937
2,783,607
—
—
92,340,904
38,371,172
—
3,201,900
25,375,774
17,848,937
98,326,411
63,746,946
—
20,632,544
—
47,074
580,143
131,292,219
28,056,529
599,906
11,129,392
39,707,066
1,051,532
—
11,709,535
191,631,829
29,108,061
646,980
—
—
—
—
—
—
—
—
—
—
—
20,679,618
4,631,187
285,671
1,241,861
655,500
973,031
—
147,955
168,642
63,081
59,487
64,274
168,239,343
—
—
—
—
—
412,242
—
—
—
—
—
41,170,840
4,631,187
285,671
1,241,861
655,500
973,031
412,242
147,955
168,642
63,081
59,487
64,274
230,089,801
* Includes equity securities, based on expected disposal
** Includes future interest payments
UCPB 2012 Annual Report / 109
On Demand
Financial Liabilities
Financial Assets
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
HFT securities*
AFS financial assets*, **
Loans and receivables
4,757,246
13,221,394
1,898,901
1,224,596
2,310
—
696,986
21,801,433
On Demand
Financial Liabilities
Non-derivative Liabilities
Deposit liabilities
Demand
Savings**
Time**
Long Term Negotiable Certificates
of Deposits (LTNCD)**
Bills payable and SSURA**
Accrued interest and other expenses
Other liabilities
Bills purchased - contra
Cash letters of credit
Accounts payable
Margin deposits
Manager’s check
Deposit on lease contracts
Outstanding acceptances
Due to PDIC
Due to Treasury of the Philippines
Miscellaneous
Consolidated
2011
Within 1 Year
Beyond 1 Year
—
9,059,153
—
1,009
1,836,005
21,815,624
41,558,111
74,269,902
—
10,490,054
—
—
63,675
789,931
47,270,641
58,614,301
Consolidated
2011
Within 1 Year
Beyond 1 Year
Total
4,757,246
32,770,601
1,898,901
1,225,605
1,901,990
22,605,555
89,525,73
154,685,636
Total
13,007,774
2,530,026
—
—
96,478,317
37,405,341
—
—
7,955,017
13,007,774
99,008,343
45,360,358
—
471,438
9,342,922
9,814,360
15,537,800
—
25,034
134,355,096
8,864,261
506,362
17,297,939
26,166
—
167,190,835
8,890,427
531,396
—
—
—
—
—
—
—
—
—
—
15,562,834
3,021,230
1,255,053
1,176,681
1,119,049
836,404
—
183,769
153,779
64,669
63,419
151,599,772
—
—
—
—
—
304,245
—
—
—
—
17,628,350
3,021,230
1,255,053
1,176,681
1,119,049
836,404
304,245
183,769
153,779
64,669
63,419
184,790,956
Financial Liabilities
Deposit liabilities
Demand
Savings**
Time**
LTNCD**
Bills payable and SSURA**
Accrued interest and other expenses
Other liabilities
Bills purchased - contra
Cash letters of credit
Accounts payable
Margin deposits
Manager’s check
Outstanding acceptances
Due to PDIC
Due to Treasury of the Philippines
Derivative liabilities
Financial Assets
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Derivative assets
HFT securities
AFS financial assets*
Loans and receivables
*Includes future interest payments
5,834,451
4,745,491
2,083,221
225,775
137,551
—
646,408
1,414,343
15,087,240
17,619,081
—
—
—
17,619,081
—
—
—
92,737,802
36,010,573
580,143
129,328,518
13,139,027
599,806
—
3,201,900
25,201,719
11,129,392
39,533,011
1,051,532
—
17,619,081
95,939,702
61,212,292
11,709,535
186,480,610
14,190,559
599,806
—
—
—
—
—
—
—
—
—
17,619,081
4,628,187
285,671
1,169,232
655,500
898,615
147,955
168,643
59,703
59,487
151,140,344
—
—
—
—
—
—
—
—
—
40,584,543
4,628,187
285,671
1,169,232
655,500
898,615
147,955
168,643
59,703
59,487
209,343,968
Parent Bank
2011
Within 1 Year
Beyond 1 Year
Total
On Demand
Financial Assets
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
HFT securities*
AFS equity securities*
Loans and receivables
4,607,502
12,948,260
1,851,226
1,097,596
—
—
—
20,504,584
On Demand
Parent Bank
2012
Within 1 Year
Beyond 1 Year
—
4,493,004
—
1,009
—
435,898
20,959,981
42,877,402
68,767,294
—
18,440,856
—
—
—
249,148
2,127,222
48,032,079
68,849,305
Total
5,834,451
27,679,351
2,083,221
226,784
137,551
685,046
23,733,611
92,323,824
152,703,839
Total
*Includes equity securities, based on expected disposal
**Includes future interest payments
*Includes equity securities, based on expected disposal
**Includes future interest payments
On Demand
On Demand
Parent Bank
2012
Within 1 Year
Beyond 1 Year
Financial Liabilities
Deposit liabilities
Demand
Savings**
Time**
LTNCD**
Bills payable and SSURA**
Accrued interest and other expenses
Other liabilities
Bills purchased - contra
Cash letters of credit
Accounts payable
Margin deposits
Manager’s check
Outstanding acceptances
Due to PDIC
Due to Treasury of the Philippines
Miscellaneous
—
9,059,153
—
1,009
1,834,725
21,810,329
36,912,068
69,617,284
—
10,490,054
—
—
—
663,032
41,832,083
52,985,169
4,607,502
32,497,467
1,851,226
1,098,605
1,834,725
22,473,361
78,744,151
143,107,037
Parent Bank
2011
Within 1 Year
Beyond 1 Year
Total
12,929,685
—
—
—
12,929,685
—
—
—
96,659,437
35,725,122
471,438
132,855,997
8,564,261
587,579
—
—
7,872,565
9,342,922
17,215,487
—
—
12,929,685
96,659,437
43,597,687
9,814,360
163,001,169
8,564,261
587,579
—
—
—
—
—
—
—
—
—
12,929,685
3,018,208
1,255,053
1,088,285
1,119,049
789,926
183,769
153,779
61,292
13
149,677,211
—
—
—
—
—
—
—
—
—
17,215,487
3,018,208
1,255,053
1,088,285
1,119,049
789,926
183,769
153,779
61,292
13
179,822,383
* Includes equity securities, based on expected disposal
** Includes future interest payments
110 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 111
Market Risk
Market risk is the risk of loss to future earnings, fair values or future cash flows that may result from changes in the price of
a financial instrument. Trading portfolios are exposed to market risk because the values of trading positions are sensitive to
changes in market prices. Assets and liabilities portfolios are affected by market risks because the revenues derived from these
activities, such as securities gains and losses and net interest income are sensitive to changes in interest and foreign exchange
rates. The Bank’s market risk originates from its holdings of foreign exchange instruments, debt securities and derivatives.
Market risks are monitored on a daily basis by the RMD, which functions independently from the business units. The Group
uses various loss limits and risk measurement methodologies as follows:
•
•
•
•
•
•
The limitations of the VaR methodology are recognized by supplementing VaR limits with other position and sensitivity limit
structures, including limits to address potential concentration risks within each trading portfolio. In addition, the Bank uses
a wide range of stress tests to model the financial impact of a variety of exceptional market scenarios on individual trading
portfolios and the Bank’s overall position.
Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair values of
financial instruments.
The Bank measures the sensitivity of its assets and liabilities to interest rate fluctuations by way of gap analysis. The
analysis provides the Bank with a measure of the impact of changes in interest rates on the accrual portfolio or reported
earnings (the risk exposure of future accounting income). The repricing gap is calculated by subtracting the interest rate
sensitive liabilities in each time bucket from interest rate sensitive assets to produce repricing gap for that particular
time bucket. The difference in the amount of assets and liabilities maturing would then give the Bank an indication of its
exposure to the risk of potential changes in net interest income.
Stop loss limits
Loss alert limits
Position limits
Mark-to-market valuation
Value-at-Risk (VaR)
Earnings-at-Risk (EaR)
VaR Methodology Assumptions and Parameters
The Bank computes the statistical VaR to estimate the maximum potential loss that can be incurred in its trading books
under normal market conditions given a specified confidence level and holding period. VaR is one of the key measures in
the Bank’s management of market risk. The Bank uses a 1-day and a 10-day holding period for its foreign exchange VaR and
interest rate VaR, respectively. The Bank adopts a historical simulation approach using a 99.0% confidence level and a 260day observation period in its VaR calculation.
The Bank’s VaR limit is agreed annually by the Treasury Group and RMD and presented to the RMC based on the tolerable risk
appetite of the Bank. Monitoring reports, which include the VaR figures and exposures to VaR limits are sent to the risktaking units on a daily basis. These are also reported monthly to the RMC.
The VaR figures are backtested against actual and unrealized profit and loss of the trading book to validate the robustness of the
VaR model. While VaR measures risk during times of normality, it is supplemented with stress testing, which is used to measure
the potential effect of a crisis or low probability event. The RMD conducts stress testing to measure and monitor market risks in
extreme market conditions. Results of backtesting and stress testing are reported to the RMC on a monthly basis.
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based do give rise to the
following limitations:
• The holding period assumes that it is possible to hedge or dispose of positions within that period. This is considered to be
a realistic assumption in almost all cases but may not be the case in situations in which there is severe market illiquidity
for a prolonged period;
• A 99.0% confidence level does not reflect losses that may occur beyond this level. Even within the model used, there is a
one percent probability that losses could exceed the VaR;
• VaR is calculated on an end-of-day basis and does not reflect exposures that may arise on positions during the trading day;
• The use of historical data as a basis for determining the possible range of future outcomes may not always cover all
possible scenarios, especially those of an exceptional nature;
• The VaR measure is dependent upon the Bank’s position and the volatility of market prices; and
• The VaR of an unchanged position reduces if the market price volatility declines and vice versa.
A positive gap occurs when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities
and is favorable to the Bank during a period of rising interest rates since it is in a better position to invest in higher yielding
assets more quickly than it would need to refinance its interest bearing liabilities. Conversely, during a period of falling
interest rates, a positively gapped position could result in a restrained growth for or even declining net interest income.
The Group also monitors its exposure to fluctuations in interest rates by measuring the impact of interest rate movements
on its interest income. This is done by modeling the impact and doing a sensitivity scenario analysis of various changes in
interest rates to the Group’s interest-related income and expenses.
The following table sets forth the repricing gap position of the Parent Bank as at December 31, 2012 and 2011:
Up to 1 month
2012
1 to 3 months 3 to 6 months 6 to 12 months
Total
Financial assets
Due from BSP
Due from other banks
Interbank loans receivable
Loans and receivables
Financial assets at FVPL
AFS investments
Total financial assets
2,000
1
227
1,094
4,654
4,228
12,204
—
—
—
27,007
15,212
15,201
57,420
—
—
—
3,640
—
205
3,845
—
1,873
—
305
—
—
2,178
2,000
1,874
227
32,046
19,866
19,634
75,647
Financial Liabilities
Deposit liabilities
Time
Bills payable
Total financial liabilities
32,090
8,422
40,512
3,490
2,470
5,960
42
—
42
365
1,011
1,376
35,987
11,903
47,890
( 28,308)
(28,308)
51,460
23,152
3,803
26,955
802
27,757
27,757
—
Up to 1 month
1 to 3 months
2011
3 to 6 months 6 to 12 months
Total
Financial assets
Due from BSP
Due from other banks
Interbank loans receivable
Loans and receivables
Financial assets at FVPL
HTM investments
Total financial assets
1,498
961
26,450
1,742
4,010
34,661
—
—
5,639
11
12,876
18,526
—
—
3,062
—
—
3,062
—
—
7,063
—
219
7,282
1,498
961
42,214
1,753
17,105
63,531
Financial Liabilities
Deposit liabilities
Demand
Savings
Time
Bills payable
Other liabilities
Total financial liabilities
—
—
30,039
7,783
37,822
75,644
—
—
1,493
646
2,139
4,278
—
—
279
—
279
558
1,584
60,738
1,203
—
63,525
127,050
1,584
60,738
33,014
8,429
103,765
207,530
Repricing Gap
Cumulative Gap
A summary of the VaR position of the trading portfolios of the Bank as at December 31, 2012 and 2011 is as follows:
2012
Foreign currency risk
Interest rate risk
At Dec 31
619
9,156
Average
7,702
52,765
Maximum
21,101
118,905
Minimum
45
6,889
At Dec 31
Average
2,530
21,025
Maximum
Minimum
6,884
30,787
18,665
69,738
37
5,001
2011
Foreign currency risk
Interest rate risk
The total interest rate risk VaR of the fixed income instruments in the portfolios of the Bank as at December 31, 2012 and
2011 is as follows:
2012
At Dec 31
Average
Maximum
Minimum
Interest rate risk
365,616
319,897
566,712
87,594
2011
Interest rate risk
112 / UCPB 2012 Annual Report
At Dec 31
Average
Maximum
Minimum
275,100
196,661
328,627
77,714
Repricing Gap
Cumulative Gap
( 40,983)
(40,983)
14,248
(26,735)
2,504
(24,231)
( 119,768)
(143,999)
( 143,999)
—
UCPB 2012 Annual Report / 113
The following table sets forth, for the period indicated, the impact of changes in interest rates on the Parent Bank’s net
interest income:
The following tables summarize the Parent Bank’s exposure to foreign exchange risk as at December 31, 2012 and 2011.
Included in the table are the Parent Bank’s assets and liabilities at carrying amounts, categorized by currency (amounts in USD):
2012
Changes in interest rates (in basis points)
Change on annualized net interest income:
PHP
USD
+50
( 15,120)
5,624
( 9,496)
-50
15,120
(5,624)
9,496
+100
( 13,775)
8,415
( 5,360)
-100
13,775
(8,415)
5,360
2011
Changes in interest rates (in basis points)
Change on annualized net interest income:
PHP
USD
+50
( 53,854)
7,866
( 45,988)
-50
53,854
(7,866)
45,988
+100
-100
( 48,437)
9,833
( 38,604)
48,437
(9,833)
38,604
Given the repricing position of the assets and liabilities of the Parent Bank as at December 31, 2012 and 2011, if interest
rates increased by 100 basis points, the Parent Bank would expect annualized interest income to decrease by 5.4 million
and 38.6 million, respectively. This EaR computation is accomplished monthly.
Assets
Cash and due from BSP
Due from other banks
Interbank loans receivable
Financial assets at FVPL
AFS financial assets
HTM investments
Loans and receivables
Other assets
Liabilities
Deposit liabilities
Bills payable
Accrued taxes, interest and other expenses
Other liabilities
Net Exposure
The following table sets forth the estimated change in equity due to a reasonably possible change in market prices of quoted bonds
classified under AFS financial assets, brought about by movement in the interest rate curve as at December 31, 2012 and 2011:
Changes in interest rates (in basis points)
Change in equity
Changes in interest rates (in basis points)
Change in equity
Changes in interest rates (in basis points)
Change in equity
Changes in interest rates (in basis points)
Change in equity
+50
( 421,384)
Consolidated
2012
-50
+100
421,784
( 841,968)
-100
844,368
+50
( 561,763)
Consolidated
2011
-50
+100
617,997
( 1,129,205)
-100
1,244,781
+50
( 412,884)
Parent Bank
2012
-50
+100
412,884
( 825,767)
-100
825,767
+50
( 583,763)
Parent Bank
2011
-50
+100
603,697
( 1,129,105)
Assets
Cash and due from BSP
Due from other banks
Interbank loans receivable
Financial assets at FVPL
AFS financial assets
HTM investments
Loans and receivables
Other assets
Liabilities
Deposit liabilities
Bills payable
Accrued taxes, interest and other expenses
Other liabilities
Net Exposure
USD
2012
Others
Total
11,118
42,507
5,500
5,695
231,494
—
218,984
2,391
517,689
36
1,395
—
—
94
—
27
—
1,552
11,154
43,902
5,500
5,695
231,588
—
219,011
2,391
519,241
407,757
62,887
473
11,014
482,131
35,558
438
—
—
30
468
1,084
408,195
62,887
473
11,044
482,599
36,642
USD
2011
Others
Total
11,986
34,455
25,036
2,862
204,646
—
138,782
3,533
421,300
319
3,567
—
13
2,564
—
1,062
—
7,525
12,305
38,022
25,036
2,875
207,210
—
139,844
3,533
428,825
372,058
11,300
263
37,220
420,841
459
914
—
—
2,008
2,922
4,603
372,972
11,300
263
39,228
423,763
5,062
The following table sets forth, for the period indicated, the impact of reasonably possible changes in foreign exchange rates
on the Parent Bank’s pretax income and equity:
-100
1,251,181
Foreign Currency Risk
Foreign currency risk is the probability of loss to earnings or capital arising from changes in foreign exchange rates.
The Group takes on exposure to effects of fluctuations in the current foreign currency exchange rates on its financial
performance and cash flows.
The Parent Bank manages its exposure to effects of fluctuations in the foreign currency exchange rates by maintaining
foreign currency exposure within the existing regulatory guidelines and at a level that it believes to be relatively
conservative for a financial institution engaged in that type of business. Banks are required by the BSP to match the foreign
currency liabilities with the foreign currency assets held in the FCDU. In addition, the BSP requires a 30.0% liquidity reserve
on all foreign currency liabilities held in the FCDU.
The Parent Bank’s policy is to maintain foreign currency exposure within acceptable limits and within existing regulatory
guidelines. The Parent Bank believes that its foreign currency exposure on its assets and liabilities is within conservative
limits for a financial institution engaged in this type of business.
Currency
USD
Others
Currency
USD
Others
Change in
Currency Rate
in %
2012
Effect
on Profit
before Tax
Effect on
Equity
Change in
Currency Rate
in %
2011
Effect
on Profit
before Tax
1%
1%
1,462
2,224
1,462
2,224
1%
1%
( 5,373)
1,124
5,575
893
-1%
-1%
(1,462)
(2,224)
(1,462)
(2,224)
-1%
-1%
5,373
(1,124)
(5,575)
(893)
Effect on
Equity
Equity Price Risk
Equity price risk is the risk of loss arising from movements in equity prices. The Bank manages its exposures to equity
prices by way of stop loss limits. The BOD approves limits on the amount of potential loss that may be undertaken, which is
monitored daily by the RMD and reported to the RMC.
The effect of equity price fluctuations is insignificant, therefore, the sensitivity analysis was not presented.
The Group does not present a sensitivity analysis on the impact on profit and loss and equity based on the reasonably
possible change of foreign currency since its subsidiaries’ exposure to foreign currency risk is minimal.
114 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 115
6. Fair Value Measurement
The methods and assumptions used by the Group and the Parent Bank in estimating the fair value of financial instruments are:
Cash and Other Cash Items, Due from BSP and Other Banks and Interbank Loans Receivable and SPURA
Carrying amounts approximate fair values considering that these accounts consist mainly of overnight deposits and floating rate
placements.
Trading and Investment Securities
Fair values of debt securities (financial assets at FVPL, AFS financial assets and HTM investments) and equity securities (financial
assets at FVPL and AFS financial assets) are generally based on quoted market prices. Where the debt securities are not quoted
or the market prices are not readily available, the Group used internal valuation techniques using generally accepted market
valuation models. For equity securities that are not quoted, the investments are carried at cost less allowance for impairment
losses due to the unpredictable nature of future cash flows and the lack of suitable methods of arriving at a reliable fair value.
Derivative Instruments
Fair values are based on quoted market prices, prices provided by independent parties, or prices derived using acceptable
valuation models.
Loans and Receivables
Fair values of loans and receivables are estimated using the discounted cash flow methodology, using current incremental
lending rates for similar types of loans. Where the instrument reprices on a quarterly basis or has a relatively short maturity, the
carrying amounts approximate fair values.
Deposit Liabilities and Bills Payable
Carrying amounts of demand and savings deposit liabilities approximates fair value considering that these are due and
demandable. Carrying amounts of bills payable approximates fair value due to their short term maturities. Fair values of time
deposit liabilities and LTNCDs are estimated using the discounted cash flow methodology, using current incremental borrowing
rates for similar borrowings with maturities consistent with those remaining for the liability being valued.
Other Liabilities
Carrying amounts of other liabilities approximate fair values in view of the relatively short-term maturities of these instruments.
The following tables summarize the carrying amounts and fair values of the financial assets and liabilities
Accounts receivable
Other receivables
Other assets - security deposit with PCHC
2012
Consolidated
Parent Bank
Carrying Amount
Fair Value Carrying Amount
Fair Value
836,669
254,506
807,269
225,106
123,611
123,611
—
—
18,439
18,439
—
—
90,299,937
94,108,426
81,016,191
81,675,620
179,210,387
187,540,451
168,676,153
173,804,995
2012
Consolidated
Parent Bank
Carrying Amount
Fair Value Carrying Amount
Fair Value
Financial Liabilities
Deposit liabilities
Demand
Savings
Time
LTNCD
Bills payable
Accrued interest and other expenses *
Other liabilities
Bills purchased - contra
Accounts payable
Manager’s checks
Margin deposits
Deposits on lease contracts
Cash letters of credit
Due to PDIC
Outstanding acceptances
Due to Treasurer of the Philippines
Derivative liabilities
Miscellaneous
17,848,937
98,313,724
47,160,888
9,443,866
172,767,415
14,917,502
646,980
17,848,937
98,313,724
45,675,916
10,105,821
171,944,398
14,917,502
646,980
17,619,081
95,927,015
44,626,234
9,443,866
167,616,196
13,867,994
364,409
17,619,081
95,927,015
43,157,308
10,105,821
166,809,225
13,867,994
364,409
4,631,187
1,241,861
973,031
655,500
412,242
285,671
168,642
147,955
63,081
59,487
64,274
197,034,828
4,631,187
1,241,861
973,031
655,500
412,242
285,671
168,642
147,955
63,081
59,487
64,274
196,211,811
4,628,187
1,169,232
898,615
655,500
—
285,671
168,643
147,955
59,703
59,487
—
189,921,592
4,628,187
1,169,232
898,615
655,500
—
285,671
168,643
147,955
59,703
59,487
—
189,114,621
* Excludes accrued taxes payable
2012
Consolidated
Parent Bank
Carrying Amount
Fair Value Carrying Amount
Fair Value
Financial Assets
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Financial assets at FVPL
Debt securities
Government
Private
Quoted equity securities
Derivative assets
AFS financial assets
Debt securities
Government
Private
Equity securities
Quoted
Unquoted
HTM investments
Government debt securities
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Unquoted debt securities
Sales contracts receivable
Accrued interest receivable
(Forward)
116 / UCPB 2012 Annual Report
5,978,605
28,254,415
2,208,451
226,775
36,668,246
5,978,605
28,254,415
2,208,451
226,775
36,668,246
5,834,451
27,679,351
2,083,221
226,775
35,823,798
5,834,451
27,679,351
2,083,221
226,775
35,823,798
311,414
124,760
254,161
137,551
827,886
311,414
124,760
254,161
137,551
827,886
311,138
124,760
249,148
137,551
822,597
311,138
124,760
249,148
137,551
822,597
15,002,932
7,473,138
15,002,932
7,473,138
14,834,567
7,473,138
14,834,567
7,473,138
485,880
293,171
23,255,121
485,880
293,171
23,255,121
396,517
292,571
22,996,793
396,517
292,571
22,996,793
28,159,197
32,680,772
28,016,774
32,486,187
57,137,496
23,250,704
6,870,196
654,734
1,408,088
58,327,104
26,184,751
7,163,591
628,336
1,408,088
51,389,969
20,303,829
6,601,192
561,720
1,352,212
50,032,634
22,669,846
6,865,869
529,953
1,352,212
2011
Consolidated
Parent Bank
Carrying Amount
Fair Value Carrying Amount
Fair Value
Financial Assets
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Financial assets at FVPL
Debt securities
Government
Private
Quoted equity securities
Derivative assets
AFS financial assets
Debt securities
Government
Private
Equity securities
Quoted
Unquoted
HTM investments
Government debt securities
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Unquoted debt securities
(Forward)
4,757,246
32,579,118
1,898,901
1,225,579
40,460,844
4,757,246
32,579,118
1,898,901
1,225,579
40,460,844
4,607,502
32,305,984
1,851,226
1,098,579
39,863,291
4,607,502
32,305,984
1,851,226
1,098,579
39,863,291
1,673,691
82,994
63,675
110,964
1,931,324
1,673,691
82,994
63,675
110,964
1,931,324
1,668,573
82,994
61,365
110,964
1,923,896
1,668,573
82,994
61,365
110,964
1,923,896
13,126,687
6,003,720
13,126,687
6,003,720
12,961,114
6,003,720
12,961,114
6,003,720
454,301
149,627
19,734,335
454,301
149,627
19,734,335
405,155
148,557
19,518,546
405,155
148,557
19,518,546
28,216,682
32,229,607
28,073,365
32,035,358
41,097,910
17,876,504
8,213,719
41,076,531
18,758,609
8,550,643
38,299,781
14,555,310
7,932,107
38,459,492
16,440,407
8,129,705
UCPB 2012 Annual Report / 117
2011
Consolidated
Parent Bank
Carrying Amount
Fair Value Carrying Amount
Fair Value
1,063,640
764,768
994,502
719,334
1,415,629
1,415,629
1,379,273
1,379,273
456,883
241,711
729,089
218,723
393,425
393,425
—
—
445,707
445,707
—
—
70,963,417
71,647,023
63,890,062
65,346,934
161,306,602
166,003,133
153,269,160
158,688,025
Sales contracts receivable
Accrued interest receivable
Accounts receivable
Other receivables
Other assets - security deposit with PCHC
2011
Consolidated
Parent Bank
Carrying Amount
Fair Value Carrying Amount
Fair Value
Bills payable
Accrued interest and other expenses *
Other liabilities
Bills purchased - contra
Cash letters of credit
Accounts payable
Margin deposits
Manager’s checks
Deposits on lease contracts
Outstanding acceptances
Due to PDIC
Due to Treasurer of the Philippines
Derivative liabilities
Miscellaneous
13,007,774
98,722,144
45,284,080
7,593,890
164,607,888
8,757,569
531,396
13,010,823
99,020,647
43,406,172
7,669,289
163,106,931
8,757,569
531,396
12,929,685
96,478,317
43,528,507
7,593,890
160,530,399
8,431,403
587,579
12,917,380
96,490,621
41,514,381
7,669,289
158,591,671
8,431,403
587,579
3,021,230
1,255,053
1,176,681
1,119,049
836,404
304,245
183,769
153,779
64,669
4,286
63,419
182,079,437
3,021,230
1,255,053
1,176,681
1,119,049
836,404
304,245
183,769
153,779
64,669
4,286
63,419
180,578,480
3,018,208
1,255,053
1,088,285
1,119,049
789,925
—
183,769
153,779
61,292
4,286
13
177,223,040
3,018,208
1,255,053
1,088,285
1,119,049
789,925
—
183,769
153,779
61,292
4,286
13
175,284,312
* Excludes accrued taxes payable
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly; and
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy.
Consolidated
AFS Financial Assets
Debt securities
Government
Private
Quoted equity securities
118 / UCPB 2012 Annual Report
Financial Assets at FVPL
Debt securities
Government
Private
Quoted equity securities
Derivative assets
AFS Financial Assets
Debt securities
Government
Private
Quoted equity securities
Note
9
9
Level 1
Level 2
1,673,691
82,994
63,675
—
—
—
—
110,964
13,126,687
5,573,956
454,301
20,975,304
—
429,764
—
540,728
Parent
2011
Total
Level 1
Level 2
Total
1,673,691
82,994
63,675
110,964
1,668,573
82,994
61,365
—
—
—
—
110,964
1,668,573
82,994
61,365
110,964
13,126,687
6,003,720
454,301
21,516,032
12,961,114
5,573,956
405,155
20,753,157
—
429,764
—
540,728
12,961,114
6,003,720
405,155
21,293,885
As at December 31, 2012 and 2011, there are no financial assets and liabilities classified under Level 3.
Financial Liabilities
Deposit liabilities
Demand
Savings
Time
LTNCD
Financial Assets at FVPL
Debt securities
Government
Private
Quoted equity securities
Derivative assets
Consolidated
Note
9
Level 1
Level 2
311,414
124,760
254,161
—
—
—
—
137,551
15,002,932
7,253,421
485,880
23,432,568
—
219,717
—
357,268
7. Due from Bangko Sentral ng Pilipinas
This account consists of:
Demand deposit account
Special deposit account
Reserve deposit account
Consolidated
2012
2011
26,254,415
13,391,118
2,000,000
10,100,000
—
9,088,000
28,254,415
32,579,118
Parent Bank
2012
2011
25,679,351
13,205,984
2,000,000
10,100,000
—
9,000,000
27,679,351
32,305,984
The demand deposit account earned average annual interest of 0% in 2012 and 1.6% in 2011. The special deposit account earned
average annual interest of 3.6% in 2012 and 4.3% in 2011. Reserve deposit account (RDA), on the other hand, earned average
annual interest of 0.1% to 0.8% in 2012 and 0.1% to 0.4% in 2011. The RDA facility was discontinued and the BSP no longer
accepted new RDA placements from banks upon effectivity of BSP Circular No. 753, which contains the rules and regulations for
unification of the statutory and liquidity reserve requirements effective on the reserve week starting in April 2012. There were
no existing RDAs as at December 31, 2012.
In 2012 and 2011, interest income on placement with BSP amounted to 122.5 million and 240.5 million, respectively, for the
Group and 119.6 million and 236.6 million, respectively, for the Parent Bank.
8. Interbank Loans Receivable and Securities Purchased under Resale Agreements
This account consists of:
Parent
2012
Total
During the years ended December 31, 2012 and 2011, there were no transfers between Level 1 and Level 2 fair value
measurements, and no transfers into and out of Level 3 fair value measurement.
Level 1
Level 2
Total
311,414
124,760
254,161
137,551
311,138
124,760
249,148
—
—
—
—
137,551
311,138
124,760
249,148
137,551
15,002,932
7,473,138
485,880
23,789,836
14,834,567
7,253,421
396,517
23,169,551
—
219,717
—
357,268
14,834,567
7,473,138
396,517
23,526,819
9
Interbank loans receivable
Securities purchased under resale agreements
Consolidated
2012
2011
226,775
1,098,579
—
127,000
226,775
1,225,579
Parent Bank
2012
2011
226,775
1,098,579
—
—
226,775
1,098,579
Interbank loans receivable have maturities of one day to three months and earn annual interest of 2.0% to 4.3% and 1.0% to 4.8%
for Philippine peso-denominated receivables and 0.02% to 2.1% and 0.1% to 0.8% for US dollar-denominated receivables in 2012
and 2011, respectively.
As at December 31, 2011, the Group’s outstanding balance of SPURA represents overnight placements with BSP where the underlying
collateral securities cannot be sold or re-pledged. As at December 31, 2012, the Group has no outstanding balance of SPURA.
UCPB 2012 Annual Report / 119
HTM Investments
HTM investments as at December 31, 2012 and 2011 are composed of government securities.
9. Trading and Investments Securities
The Group’s HTM investments earn annual interest of 2.8% to 18.3% and 3.8% to 18.3% in 2012 and 2011, respectively, for
Philippine peso-denominated investments while its US dollar-denominated investments earn annual interest of nil and 6.3% to
6.8% in 2012 and 2011, respectively.
This account consists of the following:
Financial Assets at FVPL
Consolidated
2012
2011
Held-for-trading
Debt securities:
Government
Private
Quoted equity securities
Derivative assets
311,414
124,760
436,174
254,161
690,335
137,551
827,886
1,673,691
82,994
1,756,685
63,675
1,820,360
110,964
1,931,324
Parent Bank
2012
2011
311,138
124,760
435,898
249,148
685,046
137,551
822,597
1,668,573
82,994
1,751,567
61,365
1,812,932
110,964
1,923,896
Philippine peso-denominated debt securities classified as financial assets at FVPL earn annual interest of 2.4% to 8.8% and 0.8%
to 8.8% in 2012 and 2011, respectively.
US dollar-denominated debt securities classified as financial assets at FVPL earn annual interest of 2.1% to 7.0% and 3.8% to 7.0%
in 2012 and 2011, respectively.
The Parent Bank’s HTM investments earn annual interest of 2.8% to 10.8% and 3.8% to 7.8% in 2012 and 2011, respectively.
On various dates in 2011, the Parent Bank sold HTM investments with aggregate carrying amount of 3.2 billion thereby realizing
gains of 0.3 billion. As a result of these disposals, the Group and the Parent Bank is prohibited under PFRS from classifying
any financial asset as HTM in 2011 and until 2013. However, as at December 31, 2012, the Group and the Parent Bank continue
to classify government securities as HTM investments with an aggregate carrying amount of 28.2 billion and 28.0 billion,
respectively, with fair value of 32.7 billion and 32.5 billion, respectively. The Parent Bank’s remaining HTM investments were
funded from the P30.0 billion savings deposits maintained by the NG with the Parent Bank as part of the concessions granted by
the MB, in its resolution No. 590, in the Amended Rehabilitation Plan (see Note 16). Had the Parent Bank reclassified these HTM
investments to AFS financial assets, net unrealized gain on AFS financial assets of the Group and of the Parent Bank, which is
included in the equity section of the statement of financial position, would have increased by 4.5 billion. On December 28, 2012,
the BSP approved the exemption of the remaining HTM investments from the “tainting rule” as required per MORB Subsection
X388.5 (b), however, the Group and the Parent Bank is prohibited from using the HTM account for other debt securities investments
from 2011 to 2013.
Interest Income and Trading and Securities Gains (Losses)
For the year ended December 31, 2012 and 2011, interest income on trading and investment securities follows:
AFS Financial Assets
This account consists of the following:
Consolidated
2012
2011
Debt securities:
Government
Private
Equity securities:
Quoted
Unquoted
Less: Allowance for impairment losses
Parent Bank
2012
2011
15,002,932
7,473,138
22,476,070
13,126,687
6,003,720
19,130,407
14,834,567
7,473,138
22,307,705
12,961,114
6,003,720
18,964,834
485,880
630,571
1,116,451
23,592,521
337,400
23,255,121
476,642
635,569
1,112,211
20,242,618
508,283
19,734,335
396,517
629,895
1,026,412
23,334,117
337,324
22,996,793
427,496
634,424
1,061,920
20,026,754
508,208
19,518,546
Philippine peso-denominated debt securities classified as AFS financial assets earn annual interest of 2.5% to 8.5% and 3.2% to
8.9% in 2012 and 2011, respectively.
US dollar-denominated debt securities classified as AFS financial assets earn annual interest of 1.9% to 12.0% in 2012 and 2011.
Unquoted equity securities represent long-term investments of the Group and the Parent Bank and are not actively traded in the
market. The Group and the Parent Bank do not intend to sell these securities in the near future.
The Group’s and the Parent Bank’s investments in unquoted equity shares include shares of stock of ASEAN Finance Corporation
(AFC), with acquisition cost of Singaporean dollars (SGD) 5 million ( 168.1 million and 169.0 million as at December 31,
2012 and 2011, respectively). As at December 31, 2012 and 2011, the related allowance for impairment losses on such equity
securities amounted to 38.0 million and 38.3 million, respectively (see Note 15).
Investments in unquoted equity securities also include investments in public utilities and other private companies.
The movements of net unrealized gains on AFS financial assets are as follows:
Balance at beginning of year
Unrealized gains during the year
Amounts realized in profit or loss
Balance at the end of year
Consolidated
2012
2011
523,533
139,896
595,709
1,564,781
(212,072)
(1,442,513)
645,801
523,533
Parent
2012
492,935
1,526,381
(1,431,736)
587,580
Bank
2011
115,768
587,921
(210,754)
492,935
As at December 31, 2012 and 2011, the unrealized gains on AFS financial assets presented in equity is net of deferred taxes
amounting to 24.5 million and 15.8 million, respectively (see Note 24).
120 / UCPB 2012 Annual Report
Financial assets at FVPL
AFS financial assets
HTM investments
Consolidated
2012
2011
149,263
149,397
1,122,743
857,851
2,176,818
2,413,810
3,448,824
3,421,058
Parent Bank
2012
2011
144,919
143,129
1,106,962
852,042
2,162,037
2,398,969
3,413,918
3,394,140
For the year ended December 31, 2012 and 2011, trading and securities gains (losses) consists of the following:
Consolidated
2012
2011
Financial assets at FVPL
HFT securities
Realized
Unrealized
Derivatives
AFS financial assets
HTM investments
Unquoted debt securities classified as loans
283,665
5,714
3,191
292,570
1,442,513
—
81,037
1,816,120
303,903
16,358
(41,108)
279,153
212,072
335,213
72,768
899,206
Parent Bank
2012
2011
270,360
5,682
3,191
279,233
1,431,736
—
81,036
1,792,005
295,433
16,985
(41,108)
271,310
210,754
335,213
72,768
890,045
Reclassification of Financial Assets
2008 was characterized by a substantial deterioration in global market conditions, including severe shortage of liquidity and
credit availability. These conditions led to a reduction in the level of market activity for many assets and the inability to sell
other than at substantially lower prices. Following the amendments to PAS 39 and PFRS 7 effective July 1, 2008, and as a result
of the contraction in the market for many classes of assets, the Group reviewed its financial assets that were classified as HFT
and AFS financial assets, in order to determine whether the classification remained appropriate.
Reclassification from Financial Assets at FVPL to HTM Investments
The Parent Bank identified financial assets eligible under the amendments, and reclassifications were made on September 11, 2008.
Where it was determined that the Parent Bank no longer intended to trade, management reviewed the instruments to determine
whether it was appropriate to reclassify to AFS investments, HTM investments or Loans and receivables. The reclassification was
performed where the Parent Bank, at the reclassification date, had the clear intention and ability to hold the financial asset for the
foreseeable future or until maturity.
In 2011, all remaining government debt securities reclassified from financial assets at FVPL to HTM investments with total
carrying amount of 331.0 million were sold on various dates for net gains of 54.3 million.
As at December 31, 2012, there are no outstanding debt securities reclassified from financial assets at FVPL to AFS financial
assets, HTM investments or loans and receivables.
UCPB 2012 Annual Report / 121
Reclassifications from AFS Financial Assets to HTM Investments
As a result of change in intention, on September 11, 2008, the Parent Bank reclassified certain AFS financial assets to HTM
investments. The Parent Bank established the positive intention and ability to hold these investments until maturity.
In 2011, all securities reclassified from AFS financial assets to HTM investments with total carrying amount of 2.7 billion were
sold on various dates for net gains of 277.6 million.
Structured Notes
The Parent Bank invested in structured notes, which are broadly defined as bond instruments (which can be floating rate, fixed rate
or zero coupon) embedded with forwards or options that are linked to interest indices and reference credits (or reference entities).
The Parent Bank also has structured investments that contain enhanced coupons - such as a bonus interest rate where the Parent
Bank will receive additional interest when the ROP-credit default swap (CDS) spread will fall within a certain range.
The movements in the fair values of the derivatives follow:
2012
106,678
32,242
(60,856)
78,064
Balance at beginning of year
Changes in fair value during the year
Fair value of settled contracts
Balance at end of year
2011
214,250
(6,753)
(100,819)
106,678
Changes in fair value of derivatives other than currency forwards amounting to 3.2 million and ( 41.1 million) in 2012 and
2011, respectively, are included under “Trading and securities gains (losses)” in the statement of income. Changes in fair value
of currency forwards amounting to 29.1 million and 34.4 million in 2012 and 2011, respectively, are included under “Foreign
exchange gains (losses)” in the statement of income.
As at December 31, 2012 and 2011, the host instruments of the structured notes described above are included under “AFS
financial assets” and “Loans and receivables” in the statement of financial position, while the embedded derivatives were
bifurcated and presented separately under “Financial assets or liabilities at FVPL” in the statement of financial position.
10. Loans and Receivables
Shown below are the details of the carrying amounts of the host instruments and the embedded derivatives:
Host instruments included in:
AFS financial assets
Loans and receivables
Embedded derivatives included in:
Derivative assets
Note
2012
2011
10
—
11,970
211,660
26,824
40,998
40,536
This account consists of:
Note
Receivables from customers:
Corporate loans
Consumer loans
Less: Unearned discounts
The Parent Bank used market observable inputs and acceptable standard valuation models in calculating the fair values of the
structured notes and the embedded derivatives. Market observable inputs are either directly based on estimates coming from
independent pricing services or indirectly observed from historical and prevailing movements in critical valuation inputs.
The fair values calculated by the Parent Bank are significantly affected by the choice of the valuation models and the underlying
assumptions. Even if market observable inputs were used, fair value estimates may significantly change, in light of the judgment
exercised in the selection of assumptions. Among the assumptions used include probability of default on the reference entity (as
implied by market observable spreads), counterparty spread, volatility, interest rate curve estimation and recovery rate.
Derivative Financial Instruments
The succeeding table shows the fair values of the derivative financial instruments of the Parent Bank, recorded as derivative
assets or derivative liabilities, together with the notional amounts. The notional amount is the amount of a derivative’s
underlying asset, reference rate or index and is the basis upon which changes in the value of the derivative are measured.
The notional amounts indicate the volume of transactions outstanding as at December 31, 2012 and 2011 and are not indicative
of either market risk or credit risk.
Freestanding derivatives:
Forward exchange sold
Warrants
Forward exchange bought
Forward exchange bought
Embedded derivatives:
Range accrual
Index linked option
Freestanding derivatives:
Forward exchange bought
Warrants
Forward exchange sold
Forward exchange bought
Embedded derivatives:
Range accrual
Index linked option
122 / UCPB 2012 Annual Report
Assets
2012
Liabilities
Notional Amounts
66,580
29,223
750
—
9,134
—
50,168
185
US 60,000
US 68
US 33,000
SG 2,500
40,998
—
137,551
—
—
59,487
US 14,688
US 5,000
Assets
2011
Liabilities
Notional Amounts
35,569
31,210
3,072
577
—
—
4,286
—
US 1,068,250
US 68
US 55,000
SGD2,500
40,536
—
110,964
—
—
4,286
US 14,688
US 5,000
Unquoted debt securities
Accrued interest receivable
Accounts receivable
Sales contracts receivable
Other receivables
Less: Allowance for credit and impairment losses
9
15
Consolidated
2012
2011
Parent Bank
2012
2011
60,247,336
24,752,145
84,999,481
293,861
45,059,522
18,960,889
64,020,411
337,212
55,836,428
20,577,311
76,413,739
51,724
42,000,485
15,513,298
57,513,783
137,013
84,705,620
6,870,196
1,457,506
933,871
700,050
511,341
63,683,199
8,213,719
1,449,519
705,005
1,083,069
393,425
76,362,015
6,601,192
1,403,676
1,129,753
608,739
—
57,376,770
7,932,107
1,407,951
961,275
1,011,499
—
95,178,584
5,637,371
75,527,936
5,010,226
86,105,375
5,339,184
68,689,602
4,799,540
89,541,213
70,517,710
80,766,191
63,890,062
Sales contracts receivable arise mainly from the sale of foreclosed properties booked under “Investment properties” account.
Accounts receivable mainly consists of amounts due from customers and other parties under open-account arrangements, claims
such as tax refund and insurance proceeds, receivables from employees, receivable from BSP and other miscellaneous receivables.
In 2012 and 2011, unquoted Philippine peso-denominated debt securities consist of private securities with EIR ranging from 2.8%
to 10.8% and 6.2% to 10.8%, respectively.
In 2012 and 2011, unquoted US dollar-denominated debt securities consist of private securities with EIR ranging from 4.4% to
19.7% and 3.4% to 19.7%, respectively.
In 2008, the Parent Bank entered into a sale agreement covering certain zero coupon-bearing bonds with total face amount
of US$44.7 million or 2.1 billion. The objective of this sale agreement was to convert the zero coupon-bearing bonds into
coupon-earning instruments. Based on the derecognition principles of PAS 39, the sale did not qualify for derecognition because
the significant risks and rewards on the bonds remained with the Parent Bank. As at December 31, 2012 and 2011, the carrying
amount of the bonds amounted to 501.8 million and 694.4 million, respectively.
Interest income on loans and receivables consist of:
Receivables from customers
Unquoted debt securities
Restructured loans
Sales contracts receivable
Others
Consolidated
2012
2011
5,724,352
4,885,671
642,722
631,015
158,756
96,544
74,138
94,364
—
31
Parent Bank
2012
2011
4,734,302
3,977,814
625,284
604,635
142,639
89,849
68,990
91,426
—
—
6,526,049
5,497,776
5,781,544
4,837,163
UCPB 2012 Annual Report / 123
semi-monthly installments, the total outstanding balance thereof shall be considered nonperforming 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 (10.0%) 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.
Regulatory Reporting
As at December 31, 2012 and 2011, the breakdown of receivables from customers by type of security is as follows:
Consolidated
2012
Amount
Secured by:
Real estate mortgage
Chattel mortgage
Assignment of deposits
Rights other than above
Other securities
Unsecured
22,026,966
6,507,158
1,125,072
134,457
7,511,660
37,305,313
47,694,168
84,999,481
%
25.91
7.66
1.32
0.16
8.84
43.89
56.11
100.00
2011
Amount
20,945,572
6,379,415
871,841
1,404,484
6,651,790
36,253,102
27,767,309
64,020,411
Parent Bank
%
32.72
9.96
1.36
2.20
10.39
56.63
43.37
100.00
2012
Amount
21,900,463
6,268,348
1,094,798
60,525
7,407,716
36,731,850
39,681,889
76,413,739
%
28.66
8.20
1.43
0.08
9.69
48.06
51.94
100.00
2011
Amount
19,120,771
5,933,665
871,841
1,404,484
5,804,300
33,135,061
24,378,722
57,513,783
The breakdown of restructured receivables from customers follows:
%
33.25
10.32
1.52
2.44
10.09
57.62
42.39
100.00
As at December 31, 2012 and 2011, information on the concentration of credit as to industry of receivables from customers follows:
Consolidated
2012
Amount
Real estate, renting and
business activities
Manufacturing
Wholesale and retail trade,
repair of motor vehicles,
motorcycles, personal and
household goods
Transport, storage and
communication
Agriculture, hunting and
forestry, fishing
Financial intermediaries
Construction
Other community, social and
personal services activities
Total
Unearned discounts
22,217,909
12,464,599
%
26.14
14.66
2011
Amount
13,366,144
10,159,416
Consolidated
2012
2011
1,462,958
1,690,145
17,144
57,360
1,520,318
1,707,289
Corporate loans
Consumer loans
As at December 31, 2012 and 2011, restructured receivables from customers considered as NPLs amounted to 157.3 million and
567.7 million, respectively.
Certain receivables from customers amounting to 919.0 million and nil as at December 31, 2012 and 2011, respectively, were
rediscounted with the BSP (included under Bills Payable - BSP) under the rediscounting privileges of the Parent Bank (see Note 17).
Parent Bank
%
20.88
15.87
2012
Amount
%
20,343,133
11,795,828
26.62
15.44
2011
Amount
12,516,891
9,293,508
%
21.76
16.16
12,071,323
14.20
14,890,774
23 .26
11,584,623
15.16
14,702,187
25.56
8,839,214
10.40
611,682
0.96
8,056,164
10.54
611,682
1.06
8,199,138
6,864,177
1,802,312
9.65
8.08
2.12
6,919,165
5,191,907
25,972
10.81
8.11
0.04
8,144,098
5,520,009
1,798,937
10.66
7.22
2.35
6,344,966
5,066,320
25,972
11.03
8.81
0.05
12,246,948
84,705,620
293,861
84,999,481
14.41
99.66
0.34
100.00
12,518,139
63,683,199
337,212
64,020,411
19.55
99.48
0.52
100.00
9,119,223
76,362,015
51,724
76,413,739
11.93
99.92
0.08
100.00
8,815,244
57,376,770
137,013
57,513,783
15.33
99.76
0.24
100.00
The BSP considers that loan concentration exists when the total loan exposure to a particular industry exceeds 30.0% of the total
loan portfolio. The Group’s RMD constantly monitors the credit risk concentration of the Bank.
11. Property and Equipment
The composition of and movements in property and equipment account follow:
Note
Cost
Balance at beginning of year
Additions
Disposals
Balance at end of year
Accumulated depreciation and amortization
Balance at beginning of year
Depreciation and amortization
Disposals
Balance at end of year
Net book value at end of year
Land
101,678
57,912
(4,949)
154,641
13
—
—
—
—
154,641
Current banking regulations allow banks with no unbooked valuation reserves and capital adjustments to exclude from
nonperforming classification those receivables from customers classified as “Loss” in the latest examination of the BSP which are
fully covered by allowance for credit losses, provided that interest on said receivables shall not be accrued.
As at December 31, 2012 and 2011, nonperforming loans (NPLs) not fully covered by allowance for credit losses follow:
Total NPLs
Less: NPLs fully covered by allowance for credit
and impairment losses
Parent Bank
2012
2011
1,342,693
1,556,975
18,149
13,751
1,360,842
1,570,726
Consolidated
2012
2011
4,830,371
4,789,067
Parent Bank
2012
2011
4,444,962
4,519,229
1,943,505
2,886,866
2,547,449
1,897,513
3,006,647
1,782,420
2,914,069
1,605,160
Under banking regulations, NPLs shall, as a general rule, refer to loan accounts whose principal and/or interest remain 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 nonperforming.
Note
Cost
Balance at beginning of year
Additions
Disposals
Balance at end of year
Accumulated depreciation and amortization
Balance at beginning of year
Depreciation and amortization
Disposals
Balance at end of year
Net book value at end of year
13
Land
Consolidated
2012
Furniture,
Building and
Fixtures and
Leasehold
Improvement
Equipment Improvements
Total
1,295,971
100,899
(118,364)
1,278,506
2,489,911
237,478
(116,839)
2,610,550
797,141
95,515
(5,768)
886,888
4,684,701
491,804
(245,920)
4,930,585
714,539
64,657
(107,691)
671,505
607,001
1,417,427
282,683
(59,766)
1,640,344
970,206
210,144
71,369
(464)
281,049
605,839
2,342,110
418,709
(167,921)
2,592,898
2,337,687
Consolidated
2011
Furniture,
Building and
Fixtures and
Leasehold
Improvement
Equipment Improvements
Total
100,703
975
—
101,678
1,036,794
259,177
—
1,295,971
2,702,373
433,145
(645,607)
2,489,911
506,535
320,091
(29,485)
797,141
4,346,405
1,013,388
(675,092)
4,684,701
—
—
—
—
101,678
660,023
54,516
—
714,539
581,432
1,757,755
263,922
(604,250)
1,417,427
1,072,484
162,067
50,545
(2,468)
210,144
586,997
2,579,845
368,983
(606,718)
2,342,110
2,342,591
In the case of receivables that are payable in monthly installments, the total outstanding balance thereof shall be considered
nonperforming when three (3) or more installments are in arrears. In the case of receivables that are payable in daily, weekly or
124 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 125
Note
Cost
Balance at beginning of year
Additions
Disposals
Balance at end of year
Accumulated depreciation and amortization
Balance at beginning of year
Depreciation and amortization
Disposals
Balance at end of year
Net book value at end of year
Land
13
2,329,596
191,943
(101,557)
2,419,982
751,980
70,159
(4,764)
817,375
4,457,110
363,404
(229,633)
4,590,881
—
—
—
—
91,514
708,589
63,885
(107,690)
664,784
597,226
1,315,271
258,913
(48,761)
1,525,423
894,559
200,579
61,916
—
262,495
554,880
2,224,439
384,714
(156,451)
2,452,702
2,138,179
Land
13
Total
1,279,697
100,676
(118,363)
1,262,010
Parent Bank
2011
Furniture,
Building and
Fixtures and
Leasehold
Improvement
Equipment Improvements
Consolidated
2012
2011
Note
95,837
626
(4,949)
91,514
Note
Cost
Balance at beginning of year
Additions
Disposals
Balance at end of year
Accumulated depreciation and amortization
Balance at beginning of year
Depreciation and amortization
Disposals
Balance at end of year
Net book value at end of year
Parent Bank
2012
Furniture,
Building and
Fixtures and
Leasehold
Improvement
Equipment Improvements
Total
94,862
975
—
95,837
1,029,242
250,455
—
1,279,697
2,543,714
409,755
(623,873)
2,329,596
477,256
301,075
(26,351)
751,980
4,145,074
962,260
(650,224)
4,457,110
—
—
—
—
95,837
654,573
54,016
—
708,589
571,108
1,653,194
247,020
(584,943)
1,315,271
1,014,325
156,630
43,949
—
200,579
551,401
2,464,397
344,985
(584,943)
2,224,439
2,232,671
As at December 31, 2012 and 2011, the cost of fully depreciated property and equipment still in use amounted to 943.9 million
and 309.8 million, respectively, for the Group and 874.5 million and 246.6 million, respectively, for the Parent Bank.
Acquisition cost:
Associates
UCPB-CIIF Finance and Development
Corporation (UCFDC) (10.26% owned)
Legaspi Oil Company, Inc. (LOCI) (17.50% owned)
San Pablo Manufacturing Corporation
(SPMC) (12.77% owned)
Southern Luzon Coconut Oil Mills, Inc.
(SLCOMI) (17.48% owned)
Granexport Manufacturing Corporation
(GMC) (2.84% owned)
Accumulated equity in net income:
Balance at beginning of year
Share in net income of associates
Balance at end of year
Equity in net unrealized gain on AFS financial
assets of associates
Equity in translation adjustment
Parent Bank
2012
2011
100,000
56,000
100,000
56,000
100,000
56,000
100,000
56,000
25,000
25,000
25,000
25,000
24,950
24,950
24,950
24,950
6,250
212,200
6,250
212,200
6,250
212,200
6,250
212,200
7,267,306
1,021,454
8,288,760
6,740,238
527,068
7,267,306
—
—
—
—
—
—
920
303
8,502,183
426
2,644
7,482,576
—
—
4,088,540
—
—
3,919,787
Investments in CIIF Companies
The Parent Bank established significant influence over UCFDC, LOCI, SPMC, SLCOMI and GMC through its direct ownership in
such investee companies and through the exercise of its fiduciary functions as administrator of the CIIF. In addition, the Parent
Bank has indirect investments in Cagayan de Oro Oil Co., Inc. (CDOOCI) and Iligan Coconut Industries, Inc. (ICII) through LOCI.
LOCI, SPMC, SLCOMI, GMC, CDOOCI and ICII, herein referred to as the “CIIF Companies”, were established from the CIIF. The CIIF
formed part of the Coconut Consumers Stabilization Fund (CCSF), otherwise known as the coconut levy fund, which was created
in 1973 by Presidential Decree (PD) No. 276.
The CIIF Companies wholly own, collectively, the fourteen CIIF Holding Companies whose funds were invested in 725 million
common shares of San Miguel Corporation (SMC) that were sequestered by the PCGG in May 1986 (see Note 29).
On December 28, 2012, the Bank filed a Special Civil Action for Declaratory Relief seeking clarification on the Bank’s
proportionate right, title and interest in the CIIF Companies as stockholder, as well as the Bank’s indirect equity in the fourteen
Holding Companies and the SMC shares. The case, docketed as Civil Case No. 12-1251 before the Regional Trial Court of Makati
Branch 59, has not reached the pre-trial stage.
The following tables present the financial information of significant associates as at and for the years ended December 31, 2012
and 2011:
2012
12. Investments in Subsidiaries, Associates and Joint Venture
This account consists of investments in shares of stocks as follows:
Note
Acquisition cost:
Wholly-owned subsidiaries
BRC
ULFC
GHDC
USI
UPI-MHC
Majority-owned subsidiary
USB
Allowance for impairment losses
(Forward)
126 / UCPB 2012 Annual Report
15
Consolidated
2012
2011
Parent Bank
2012
2011
—
—
—
—
—
—
—
—
—
—
2,970,130
400,000
287,489
35,000
14,451
2,970,130
400,000
287,489
35,000
14,451
—
—
—
—
—
—
—
—
370,781
4,077,851
(201,511)
3,876,340
370,781
4,077,851
(370,264)
3,707,587
LOCI
GMC
SPMC
UCFDC
SLCOMI
Statements of Financial Position
Total
Total Assets
Liabilities
28,318,716
1,879,773
17,207,934
2,506,791
16,071,224
904,782
1,122,841
7,624
8,047,587
217
Statements of Income
Operating
Gross Income*
Income (Loss)
199,397
1,989,829
119,775
20,530
331,473
5,407
—
30,035
637,231
560,392
Net Income
1,966,584
937,228
937,228
27,103
560,375
* Represents sales less cost of sales
2011
LOCI
GMC
SPMC
UCFDC
SLCOMI
Statements of Financial Position
Total
Total Assets
Liabilities
25,585,060
1,112,702
16,135,951
2,289,087
2,138,724
442,423
1,094,290
12,302
7,479,297
65,067
Statements of Income
Operating
Gross Income*
Income (Loss)
195,326
61,071
347,716
153,800
318,857
1,599,977
83,748
91,628
—
(12,227)
Net Income
1,666,311
957,392
39,340
16,635
508,567
* Represents sales less cost of sales
UCPB 2012 Annual Report / 127
Investment in a Joint Venture
On January 12, 1997, UPI entered into a Joint Venture Agreement with Macaria Homes Corporation (MHC) to establish a joint
venture corporation, UPI-MHC, which shall engage in the real estate development of properties located in Biñan and Sta.
Rosa, Laguna, utilizing a self-contained community concept, including facilities for social and recreational, commercial and
institutional use and to sell house and lot packages within such community at a profit or rate of return mutually agreed upon by
both UPI and MHC.
In 2010, UPI assigned its investment in and advances to UPI-MHC amounting to 6.3 million and 86.7 million, respectively, to
the Parent Bank to settle its outstanding loans payable amounting to 74.5 million. The fair value of the net assets of UPI-MHC at
assignment date was 20.0 million and the fair value of the 50.0% ownership interest transferred to the Parent Bank was
10.0 million. Gain recognized by the Parent Bank from the assignment, included as Others under “Miscellaneous income” in the
statement of income, amounted to 20.9 million.
On August 31, 2011, the Parent Bank’s co-venturer in UPI-MHC assigned its investment in and advances to UPI-MHC amounting to
6.3 million and 52.1 million, respectively, to the Parent Bank as consideration for certain investment properties amounting to
39.6 million. The fair value of the net assets of UPI-MHC at assignment date was 21.4 million and the fair value of the 50.0%
ownership interest transferred to the Parent Bank was 10.7 million. Gain recognized by the Parent Bank from the assignment,
included as Others under “Miscellaneous income” in the statement of income, amounted to 22.8 million (net of incidental
expenses amounting to 0.4 million). With the assignment, UPI-MHC became a wholly-owned subsidiary of the Parent Bank.
On August 1, 2011, the Parent Bank received 49.0 million from UPI-MHC as return of its capital of 6.3 million and partial
settlement of advances to the joint venture in the amount of 42.7 million.
Investment properties consist of foreclosed real estate properties and investments in real estate. The difference between the
fair value of the asset upon foreclosure and the carrying value of the loan is recognized as Others under “Miscellaneous income”
in the statement of income (see Note 22).
Note
3,723,603
280,810
(317,086)
(42,856)
3,644,471
—
—
—
—
—
—
15
21,437
8,924
748,295
(315,946)
53,511
516,221
3,128,250
Total
Land
2011
Buildings and
Improvements
3,393,653
208,478
(66,941)
(25,389)
3,509,801
7,117,256
489,288
(384,027)
(68,245)
7,154,272
4,140,037
191,600
(608,034)
—
3,723,603
3,375,005
172,085
(153,437)
—
3,393,653
7,515,042
363,685
(761,471)
—
7,117,256
21,602
10,529
—
(7,913)
7,876
32,094
21,602
10,529
—
(7,913)
7,876
32,094
—
—
—
—
—
—
15,200
10,668
395
(4,661)
—
21,602
15,200
10,668
395
(4,661)
—
21,602
295,926
(687)
271,754
(2,005)
51,678
616,666
2,861,041
317,363
8,237
1,020,049
(317,951)
105,189
1,132,887
5,989,291
49,808
(35,137)
2,763
(934)
4,937
21,437
3,702,166
306,199
(53,942)
45,002
—
(1,333)
295,926
3,076,125
356,007
(89,079)
47,765
(934)
3,604
317,363
6,778,291
Total
Parent Bank
Note
Cost:
Balance at beginning of year
Additions
Disposals
Reclassification
Balance at end of Year
2012
Buildings and
Land Improvements
3,463,401
263,205
(281,649)
(42,856)
3,402,101
3,357,406
184,720
(51,598)
(25,389)
3,465,139
Total
Land
2011
Buildings and
Improvements
6,820,807
447,925
(333,247)
(68,245)
6,867,240
3,875,953
166,162
(578,714)
—
3,463,401
3,340,175
163,533
(146,302)
—
3,357,406
—
—
—
—
—
15
23,131
—
748,295
(313,448)
56,187
514,165
2,887,936
Total
Land
7,072
5,615
(3,041)
7,876
17,522
7,072
5,615
(3,041)
7,876
17,522
—
—
—
—
—
2,603
5,249
(780)
—
7,072
2,603
5,249
(780)
—
7,072
295,686
—
271,754
(2,005)
50,413
615,848
2,831,769
318,817
—
1,020,049
(315,453)
106,600
1,130,013
5,719,705
—
20,368
2,763
304,626
(53,942)
45,002
304,626
(33,574)
47,765
23,131
3,440,270
295,686
3,054,648
Total
318,817
6,494,918
Depreciation and Amortization
The details of depreciation and amortization recognized in the statement of income follow:
Property and equipment
Investment properties
Other assets
Consolidated
Cost:
Balance at beginning of year
Additions
Disposals
Reclassifications
Balance at end of Year
Accumulated depreciation and amortization:
Balance at beginning of year
Depreciation and amortization
Reclassifications
Disposals
Transfer-out
Balance at end of year
Allowance for impairment losses:
Balance at beginning of year
Provision for (recovery of) impairment loss
Amortization of unbooked valuation reserves
Disposals
Reclassifications
Balance at end of year
Net book value at end of year
Note
Accumulated depreciation and amortization:
Balance at beginning of year
Depreciation and amortization
Disposals
Transfer-out
Balance at end of year
Allowance for impairment losses:
Balance at beginning of year
Provision for (recovery of) impairment loss
Amortization of unbooked valuation reserves
Disposals
Reclassifications
Balance at end of year
Net book value at end of year
2011
Buildings and
Improvements
The aggregate market value of investment properties as at December 31, 2012 and 2011 amounted to 6.4 billion and 8.6 billion,
respectively, for the Group and 6.0 billion and 8.2 billion, respectively, for the Parent Bank. 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. The Group is exerting continuing efforts to dispose these properties.
13. Investment Properties
2012
Buildings and
Land Improvements
Parent Bank
2012
Buildings and
Land Improvements
Total
7,216,128
329,695
(725,016)
—
6,820,807
Consolidated
2012
2011
418,709
368,983
10,668
10,529
95,514
150,596
524,752
530,247
Note
11
14
Parent
2012
384,714
5,615
85,068
475,397
Bank
2011
344,985
5,249
131,429
481,663
The Parent Bank’s depreciation and amortization on investment properties pertain to the “good bank”. In 2012 and in prior years, the
Parent Bank did not recognize depreciation on its investment properties pertaining to the “bad bank” (as defined in Note 1), as required
under PAS 40, Investment Property. As at December 31, 2012 and 2011, the unbooked accumulated depreciation amounted to 1.4
billion and 2.9 billion, respectively. Had the Parent Bank recognized depreciation expense on these investment properties, net income
in 2012 and 2011 of both the Group and the Parent Bank would have decreased by 43.4 million and 26.7 million, respectively.
14. Intangible and Other Assets
This account consists of:
Note
Deferred charges
Real estate inventories
Land held-for-sale
Interoffice float items
Creditable withholding tax
Software costs
Chattel properties acquired
Prepaid expenses
Documentary stamps on hand
Sundry debit
Retirement assets
Exchange trading right
Others
Less: Allowance for credit and impairment
27
15
Consolidated
2012
2011
15,850,766
15,761,535
3,137,035
3,183,895
1,996,007
2,019,258
968,674
693,366
530,015
556,544
364,150
411,898
311,116
238,185
70,985
410,048
39,698
21,694
19,048
50,142
4,201
10,570
1,500
1,500
759,438
260,615
24,052,633
23,619,250
840,505
666,366
23,212,128
22,952,884
Parent Bank
2012
2011
15,850,766
15,761,535
—
—
1,996,007
2,019,258
941,178
694,191
436,816
455,470
359,700
408,251
290,947
203,165
64,022
396,681
10,326
20,653
18,879
49,592
—
6,347
—
—
685,145
211,219
20,653,786
20,226,362
637,820
479,743
20,015,966
19,746,619
Others include deposits on rental, power, water and telephone meter.
As at December 31, 2012 and 2011, the latest transacted price of the exchange trading right (as provided by the PSE) amounted
to 8.5 million for both years.
(Forward)
128 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 129
The composition of and movements in deferred charges of the Parent Bank follow:
Balance at January 1
Additions (reversal) - net
Balance at December 31
Balance at January 1
Additions (reversal) - net
Balance at December 31
Loss on sale
of NPLs
10,952,911
—
10,952,911
Loss on sale
of NPLs
10,916,063
36,848
10,952,911
Loss on sale
of Investment
Properties
3,326,415
93,244
3,419,659
Loss on sale
of Investment
Properties
3,097,238
229,177
3,326,415
2012
Loss on sale of
Land Heldfor-Sale
46,433
(4,013)
42,420
2011
Loss on sale of
Land Heldfor-Sale
41,147
5,286
46,433
As at December 31, 2012 and 2011, the Parent Bank recognized advances from customers (included in Accounts payable
under “Other liabilities” in the statement of financial position) amounting to 197.3 million and 158.1 million, respectively,
representing collections from pre-sold units.
Others
1,435,776
—
1,435,776
Total
15,761,535
89,231
15,850,766
Others
1,435,793
(17)
1,435,776
Total
15,490,241
271,294
15,761,535
As discussed in Note 1 to the financial statements, the BSP has allowed the Parent Bank to defer the losses on sale and dacion en pago
settlement up to 15.7 billion and to start amortization in 2009. Any additional losses on the sale of investment properties pertaining
to the “bad bank” (see Note 1) were allowed by BSP to be deferred provided that the losses deferred do not exceed the approved
unbooked valuation reserves. In 2011, no amortization has been booked. Had the Parent Bank booked these losses in the years they
were incurred, net of reversal of or provision for impairment losses, net income in 2012 and 2011 would have increased by 1.7 billion
and decreased by 787.5 million, respectively.
Real estate inventories pertain mainly to the real estate inventories of BRC, GHDC and UPI-MHC. The carrying value of the real estate
inventories of BRC as at December 31, 2012 and 2011 amounted to 3.1 billion and 3.0 billion (net of impairment losses amounting to
114.5 million), respectively.
Movements in software costs of the Group and the Parent Bank follow:
Balance at beginning of year
Additions
Amortization
Balance at end of year
Changes in the allowance for credit and impairment losses follow:
Note
Deferred charges pertain to losses incurred from sale of investment securities and dacion en pago settlement.
Consolidated
2012
2011
411,898
459,037
39,354
58,313
(87,102)
(105,452)
364,150
411,898
15. Allowance for Credit and Impairment Losses
Parent
2012
408,251
36,459
(85,010)
359,700
Bank
2011
451,458
55,329
(98,536)
408,251
Land Held-for-Sale
The Parent Bank entered into various memoranda of agreement (MOA) for the development of various parcels of land as follows:
a) In 2005, the Parent Bank entered into a MOA with a third party individual (as co-landowner) and Sta. Lucia Realty and
Development, Inc. (SLRD - as the developer) for the development of land located in Alfonso, Cavite into a subdivision. The parties
agreed that the Parent Bank and the third party individual will contribute the land and SLRD shall contribute its expertise as a
developer. In consideration of the services to be rendered, SLRD is entitled to receive 47.0% of the saleable lots, while the Parent
Bank and the third party individual are entitled to 35.0% and 18.0% of the saleable lots, respectively. The construction has been
completed and selling activities are actively being performed by the Parent Bank’s accredited marketing agency.
b) In 2006, the Parent Bank entered into a MOA with Century Properties Inc. (CPI) for the development of land located along H.V
Dela Costa Street, Salcedo Village, Makati City into a multi-storey mixed-used condominium building. The parties agreed that
the Parent Bank will contribute the land and CPI shall contribute its expertise as a developer. CPI shall invite individuals and
other parties who wish or intend to own a condominium unit and for said parties to contribute funds to answer for the costs of
construction and other related expenses. In consideration of the services to be rendered by CPI, the Parent Bank shall transfer/
convey to CPI 80.0% of the saleable units and parking spaces. In 2010, the construction of the multi-storey condominium was
completed and all the units (except for parking spaces) have been turned over to the buyers/owners. This transaction resulted
in a loss (included in Deferred charges under “Intangible and other assets” in the statement of financial position to be booked
on a staggered basis as allowed by BSP) in 2011 amounting to 5.3 million. The agreement was concluded in 2011.
Balance at beginning of year:
AFS financial assets
Quoted equity securities
Unquoted equity securities
9
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Sales contracts receivable
Accounts receivable
Accrued interest receivable
10
Investments in subsidiaries and associates
Investment properties
Other assets
Land held-for-sale
Real estate inventories
Chattel properties acquired
Others
12
13
14
Provision for credit and impairment losses
Amortization of unbooked valuation reserves
Foreign currency revaluation
Reclassifications/reallocation
Accounts written-off/recoveries
Balance at end of year:
AFS financial assets
Quoted equity securities
Unquoted equity securities
9
Loans and receivables
Receivables from customers
Corporate loans
Consumer loans
Sales contracts receivable
Accounts receivable
Accrued interest receivable
10
Investments in subsidiaries, associates and joint venture
Investment properties
12
13
Other assets
Land held-for-sale
Real estate inventories
Chattel properties acquired
Others
14
Consolidated
2012
2011
Parent Bank
2012
2011
22,341
485,942
508,283
13,331
287,864
301,195
22,341
485,867
508,208
13,331
287,789
301,120
3,630,831
1,077,954
19,429
248,122
33,890
5,010,226
—
317,363
3,387,962
881,208
—
263,769
15,507
4,548,446
—
356,007
3,565,759
955,920
16,997
232,186
28,678
4,799,540
370,264
318,817
3,130,837
880,668
—
247,226
15,507
4,274,238
372,186
304,626
301,716
114,529
25,202
224,919
666,366
6,502,238
632,195
963,000
(23,376)
(125,895)
—
—
—
—
206,293
206,293
5,411,941
471,972
582,000
(1,790)
—
38,115
301,716
—
42,308
135,719
479,743
6,476,572
358,280
963,000
(23,376)
(128,624)
—
—
—
—
193,910
193,910
5,446,080
450,282
582,000
(1,790)
—
—
1,445,924
1,090,297
1,169,280
1,030,492
—
337,400
337,400
22,341
485,942
508,283
—
337,324
337,324
22,341
485,867
508,208
4,621,075
552,325
69,051
338,426
56,494
5,637,371
—
1,132,887
3,630,831
1,077,954
19,429
248,122
33,890
5,010,226
—
317,363
4,644,735
273,482
47,019
322,485
51,463
5,339,184
201,511
1,130,013
3,565,759
955,920
16,997
232,186
28,678
4,799,540
370,264
318,817
355,611
114,529
8,125
362,240
840,505
7,948,163
301,716
114,529
25,202
224,919
666,366
6,502,238
355,611
—
7,961
274,248
637,820
7,645,852
301,716
—
42,308
135,719
479,743
6,476,572
c) In 2006, the Parent Bank entered into a MOA with Tagaytay Grasslands Company, Inc. (TGCI) for the development of land
located in Nasugbu, Batangas into a hotel and beach club, parking spaces and condominiums. The parties agreed that the
Parent Bank will contribute the land and TGCI shall contribute its expertise as a developer and financial capital by way of
funding the development and all related expenses of the hotel and beach club, parking spaces and condominiums, and related
site development and improvements. In consideration of the services to be rendered by TGCI, the Parent Bank shall transfer/
convey to TGCI 62.0% of the saleable units of the hotel and beach club and condominiums and 50% of the parking spaces.
130 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 131
Below is the breakdown of provision for (reversal of) credit and impairment losses:
AFS Financial Assets
Quoted equity securities
Unquoted equity securities
Loans and Receivables
Receivables from customers
Corporate loans
Consumer loans
Accounts receivable
Sales contracts receivable
Accrued interest receivable
Investments in Subsidiaries and Associates
and Joint Venture
Investment properties
Other assets
Note
9
Consolidated
2012
2011
—
—
—
9,009
48,713
57,722
Parent Bank
2012
2011
—
—
—
9,009
48,713
57,722
As at December 31, 2012, the carrying amount of the assets assessed for impairment amounts to 31.0 billion and the unbooked
valuation reserves and deferred charges amount to 22.7 billion. The decrease in carrying amount, from 49.2 billion to 31.0
billion, resulted from collections of loans and receivables, sales of investment properties, foreclosures and redemptions.
As at December 31, 2012 and 2011, the following table shows the comparison of the allowance for credit and impairment losses
recognized by the Parent Bank and the required balances under PFRS:
2012
AFS financial assets
Loans and receivables
Investment properties
Other assets
Per books
337,325
5,339,185
1,130,013
839,331
7,645,854
Per PFRS
853,853
5,236,225
1,716,474
2,658,326
10,464,878
Excess
(Deficiency)
( 516,528)
102,960
(586,461)
(1,818,995)
( 2,819,024)
AFS financial assets
Loans and receivables
Investment properties
Other assets
Per books
508,208
4,799,540
318,817
850,008
6,476,573
2011
Per PFRS
892,530
5,401,955
2,850,487
2,878,013
12,022,985
Deficiency
( 384,322)
(602,415)
(2,531,670)
(2,028,005)
( 5,546,412)
10
12
13
14
569,816
41,502
218
5,382
2,999
619,917
586,339
123,325
(63,470)
16,997
(8,220)
654,971
350,000
8,280
—
—
—
358,280
586,339
75,252
(63,550)
16,997
(8,220)
606,818
—
8,237
4,041
632,195
—
(89,079)
(151,642)
471,972
—
—
—
358,280
(116,450)
(33,574)
(64,234)
450,282
As discussed in Note 1, the BSP has allowed the Parent Bank to defer recognition of credit and impairment losses on AFS financial
assets, loans and receivables, investment properties and other assets amounting to 13.4 billion as at December 31, 2008. BSP also
allowed deferral of losses on sale and dacion en pago settlement amounting to 15.7 billion as at December 31, 2008. As allowed
by the BSP, the Parent Bank is to amortize the unbooked valuation reserves and losses over 10 years starting in 2009 based on the
affordability plan approved by the BSP. In 2012 and 2011, amortization recognized by the Parent Bank as an addition to negative
surplus amounted to 963.0 million and 582.0 million, respectively, with details as follows:
AFS financial assets
Loans and receivables
Investment properties
Other assets*
Amortization of unbooked valuation reserves
2012
( 148,327)
(7,469)
1,020,049
98,747
2011
149,888
(80,248)
47,765
464,595
963,000
582,000
As at December 31, 2012, the Bank did not book adjustments to reflect the fair market value of the “bad bank” investment
properties on initial recognition amounting to 915.0 million.
The net deficiency of 2.8 billion was not booked by the Parent Bank as it is included in the valuation reserves and losses allowed
by the BSP to be deferred and amortized over 10 years. Had the Parent Bank booked the deficiency in the years the losses were
incurred, net income in 2012 and 2011 would have increased by 1.3 billion and decreased by 489.5 million, respectively.
On May 9, 2013, the Monetary Board, through Resolution No. 759, approved the direct charge to surplus (deficit) of the
amortization of the unbooked valuation reserves and deferred losses. If the Parent Bank had recognized amortization of the
unbooked valuation reserves in profit or loss, net income would have decreased by 963.0 million.
* Includes amortization for investment in BRC, chattel properties acquired, land held-for-sale and other assets pertaining to the “bad bank”.
16. Deposit Liabilities
Movements in unbooked valuation reserves and losses based on the affordability plan approved by the MB, in its Resolution No.
590 dated May 15, 2008, follow:
Balance at beginning of the year
Amortization during the year
Balance at end of year
2012
28,036,198
963,000
27,073,198
2011
28,618,198
582,000
28,036,198
2010
28,909,271
291,073
28,618,198
2009
29,169,000
259,729
28,909,271
The Bank submits to the BSP the quarterly impairment assessments based on ICRR system on assets pertaining to the “bad
bank.” The table below shows the comparative information in terms of carrying amount and unbooked valuation reserves and
deferred charges as per the Rehabilitation Plan against balances as at December 31, 2012:
Loans and receivables
Investment properties
Other assets
AFS financial assets
Deferred charges
Total
Less: Amortization of unbooked valuation reserves
and deferred losses
132 / UCPB 2012 Annual Report
Per Rehabilitation Plan
Unbooked
Valuation
Reserves and
Carrying
Deferred
Amount
Charges
13,460,000
2,978,000
24,188,040
8,725,000
1,771,000
1,375,000
—
397,000
9,809,000 15,694,000
49,228,040 29,169,000
As at December 31, 2012
Unbooked
Valuation
Reserves and
Carrying
Deferred
Amount
Charges
1,569,266
454,078
11,669,863
6,656,472
1,479,859
1,467,521
396,517
395,513
15,850,766 15,850,766
30,966,271 24,824,350
—
49,228,040
—
30,966,271
—
29,169,000
2,095,802
22,728,548
Philippine peso-denominated demand, savings and time deposit liabilities bear annual interest rates ranging from 0.3% to 6.8%
and 0.5% to 4.5% in 2012 and 2011, respectively; 0.01% to 2.1% and 0.0% to 4.6% in 2012 and 2011, respectively, for US dollardenominated deposit liabilities.
As discussed in Note 1, as part of the concessions granted to the Parent Bank by the MB under Resolution No. 590 dated May 15, 2008
under the amended rehabilitation plan, the Parent Bank is authorized to accept deposits from the NG, LGUs and GOCCs, with the
ceiling of 5.9 billion increased by the amount that the NG will deposit with the Parent Bank. As at December 31, 2012 and 2011, the
savings deposits of the NG amounted to 30.0 billion. 27.6 billion of the 30.0 billion was used to purchase government securities
which the Parent Bank is using to comply with liquidity reserves and liquidity floor requirements of the BSP. These government securities
are classified as HTM investments (see Note 9). The remaining balance of 2.4 billion is included under “Due from BSP.”
Long Term Negotiable Certificates of Deposits due 2016 (LTNCD Series 1)
On November 25, 2010, the Parent Bank issued 6.3% fixed coupon rate (EIR of 6.5%) Unsecured LTNCD at par value of 4.5
billion. The LTNCD matures on February 25, 2016, subject to pre-termination by the Parent Bank in whole, but not in part, in
accordance with BSP rules. As at December 31, 2012 and 2011, the fair value of LTNCD Series 1 amounted to 4.5 billion.
The issuance of the foregoing LTNCD under the terms approved by the BOD was approved by the BSP on October 19, 2010.
Long Term Negotiable Certificates of Deposits due 2016 (LTNCD Series 2)
On August 19, 2011, the Parent Bank issued 6.0% fixed coupon rate (EIR of 6.3%) Unsecured LTNCD at par value of 3.2 billion.
The LTNCD matures on November 19, 2016, subject to pre-termination by the Parent Bank in whole, but not in part, in
accordance with BSP rules. As at December 31, 2012 and 2011, the fair value of LTNCD Series 2 amounted to 3.1 billion.
Long Term Negotiable Certificates of Deposits due 2017 (LTNCD Series 3)
On May 21, 2012, the Parent Bank issued 5.9% fixed coupon rate (EIR of 6.1%) unsecured LTNCD at par value of 1.9 billion. The
LTNCD matures on August 21, 2017, subject to pre-termination by the Parent Bank in whole, but not in part, in accordance with
BSP rules. As at December 31, 2012, the fair value of LTNCD Series 3 amounted to 1.8 billion.
The issuance of series 2 and 3 of the foregoing LTNCD under the terms approved by the BOD was approved by the BSP on May 20, 2011.
UCPB 2012 Annual Report / 133
On February 3, 2011, November 11, 2011 and May 21, 2012 the Parent Bank listed its P4.5 billion LTNCD Series 1 due 2016, 3.2
billion LTNCD Series 2 due 2016 and 1.9 billion LTNCD Series 3 due 2017, respectively, in the Philippine Dealing and Exchange
Corp. (PDEX) subject to its Trading and Settlement Operating Guidelines. The Parent Bank’s LTNCD Series 1, 2 and 3 are traded
and settled in accordance with PDEX rules, procedures and guidelines.
18. Accrued Taxes, Interest and Other Expenses
This account consists of:
The Parent Bank incurred debt issue costs amounting to 53.4 million, 33.5 million and 18.9 million on the LTNCD Series 1, 2
and 3, respectively. The movements in unamortized debt issue costs in 2012 and 2011 follow:
Consolidated and Parent Bank
2012
2011
75,399
52,524
18,927
33,538
(18,835)
(10,663)
75,491
75,399
Balance at beginning of year
Issuances
Amortization
Balance at end of year
On March 29, 2012, BSP issued BSP Circular No. 753 implementing the unification of the statutory and liquidity reserve
requirement on deposit liabilities of the Parent Bank and USB equivalent to 18.0% and 6.0%, respectively. The Parent Bank and
USB were in compliance with such regulations as at December 31, 2012 and 2011.
Consolidated
2012
2011
5,978,423
4,756,454
—
26,017,480
31,995,903
9,088,000
13,310,811
27,155,265
Parent Bank
2012
2011
5,834,146
4,607,212
—
25,679,351
31,513,497
9,000,000
13,205,430
26,812,642
Interest expense on deposit liabilities follow:
Demand
Savings
Time
LTNCD
benefits to employees
interest payable
taxes payable
other expenses
Parent
2012
235,397
183,681
32,884
180,728
632,690
Bank
2011
223,052
176,754
26,726
189,944
616,476
Accrued other expenses include accruals for various operating expenses such as payroll, repairs and maintenance, utilities,
rental and contractual services.
19. Other Liabilities
The total liquidity and statutory reserves as reported to the BSP follows:
Cash and other cash items
Due from BSP:
Reserve deposit account
Demand deposit account
Accrued
Accrued
Accrued
Accrued
Consolidated
2012
2011
237,578
223,051
192,759
184,757
58,355
40,636
216,643
125,759
705,335
574,203
Consolidated
2012
2011
35,575
23,814
494,265
492,147
1,649,851
1,602,822
556,409
361,976
2,736,100
2,480,759
Parent Bank
2012
2011
35,142
23,816
479,268
468,798
1,563,971
1,544,614
556,409
361,976
2,634,790
2,399,204
This account consists of:
Note
Bills purchased - contra
Accounts payable
Manager’s checks
Margin deposits
Other credits
Deposit on lease contract
Cash letters of credit
Miscellaneous
Due to PDIC
Outstanding acceptances
Due to Treasury of the Philippines
Derivative liabilities
Withholding tax payable
Sundry credit
Retirement liability
9
27
Consolidated
2012
2011
4,631,187
1,241,861
973,031
655,500
465,407
412,242
285,671
204,022
168,643
147,955
63,081
59,487
53,751
6,862
6,371
9,375,071
3,021,230
1,176,681
836,404
1,119,049
396,368
304,245
1,255,053
175,212
153,779
183,769
64,669
4,286
50,882
49,323
6,633
8,797,583
Parent Bank
2012
2011
4,628,187
1,169,232
898,615
655,500
385,717
—
285,671
18,134
168,643
147,955
59,703
59,487
48,271
6,465
—
8,531,580
3,018,208
1,088,285
789,926
1,119,049
378,587
—
1,255,053
81,456
153,779
183,769
61,292
4,286
46,095
49,283
—
8,229,068
17. Bills Payable and Securities Sold Under Repurchase Agreements
This account consists of from the following:
SSURA
Borrowings from:
Local banks
BSP
Social Security System (SSS)
Foreign banks
20. Maturity Profile of Assets and Liabilities
Consolidated
2012
2011
12,949,038
7,934,044
1,049,508
918,956
—
—
14,917,502
326,166
—
1,967
495,392
8,757,569
Parent Bank
2012
2011
12,949,038
7,934,044
—
918,956
—
—
13,867,994
—
—
1,967
495,392
8,431,403
Bills payable bear annual interest rates ranging from 1.5% to 5.9% and 0.4% to 5.6% in 2012 and 2011, respectively. Interest
expense on bills payable amounted to 532.2 million in 2012 and 379.9 million in 2011 for the Group, and 503.5 million in
2012 and 330.3 million in 2011, for the Parent Bank.
Bills Payable to BSP
Certain receivables from customers amounting to 919.0 million and nil as at December 31, 2012 and 2011, respectively, were
rediscounted with the BSP under the rediscounting privileges of the Parent Bank (see Note 10).
Bills Payable to SSS
Borrowings from SSS represent amounts loaned to educational institutions through the Parent Bank, as a conduit financial
institution of the SSS for its lending programs, at annual interest rates ranging from 10.0% to 13.0%. These are secured through a
deed of assignment of the credits and collaterals of the individual borrowers and are being repaid in the same manner and in the
same term/period provided in the promissory notes of the borrowers with due dates ranging from December 2011 to April 2016.
As at December 31, 2011, the fair value of collateral held approximates the carrying value of the bills payable.
134 / UCPB 2012 Annual Report
The following tables present the assets and liabilities by contractual maturity, settlement, and expected recovery dates:
Consolidated
Financial Assets - at gross
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Financial assets at FVPL
AFS financial assets
HTM investments
Loans and receivables
Receivables from customers
Unquoted debt securities
Sales contracts receivable
Accrued interest receivable
Accounts receivable
Other receivables
Other assets
Due Within
One Year
2012
Due Beyond
One Year
Total
Due Within
One Year
2011
Due Beyond
One Year
Total
5,978,605
28,254,415
2,208,451
226,775
827,886
—
—
—
—
—
—
—
23,592,521
28,159,197
5,978,605
28,254,415
2,208,451
226,775
827,886
23,592,521
28,159,197
4,757,246
32,579,118
1,898,901
1,225,579
1,931,324
—
—
—
—
—
—
—
20,242,618
28,216,682
4,757,246
32,579,118
1,898,901
1,225,579
1,931,324
20,242,618
28,216,682
46,109,791
62,492
283,511
1,457,506
386,396
511,341
249,210
86,556,379
38,889,690
6,807,704
416,539
—
547,475
—
21
98,413,147
84,999,481
6,870,196
700,050
1,457,506
933,871
511,341
249,231
184,969,526
33,174,152
1,750,182
246,245
1,449,519
473,594
393,425
186,926
80,066,211
30,846,259
6,463,537
836,824
—
231,411
—
415
86,837,746
64,020,411
8,213,719
1,083,069
1,449,519
705,005
393,425
187,341
166,903,957
(Forward)
UCPB 2012 Annual Report / 135
Consolidated
Due Within
One Year
Nonfinancial Assets - at gross
Property and equipment
Investments in subsidiaries,
associates and joint venture
Investment properties
Deferred tax assets
Other assets
2012
Due Beyond
One Year
Total
Parent Bank
Due Within
One Year
2011
Due Beyond
One Year
Total
—
4,930,585
4,930,585
—
4,684,701
4,684,701
—
—
—
93,226
93,226
86,649,605
8,502,183
7,154,272
85,840
23,710,176
44,383,056
142,796,203
8,502,183
7,154,272
85,840
23,803,402
44,476,282
229,445,808
—
—
—
269,344
269,344
80,335,555
7,482,576
7,117,256
54,201
23,162,565
42,501,299
129,339,045
7,482,576
7,117,256
54,201
23,431,909
42,770,643
209,674,600
Less:
Unearned interest discount
Accumulated depreciation
and amortization
Allowance for credit and
impairment losses
Total
293,861
337,212
2,624,992
2,363,712
7,948,163
218,578,792
6,502,238
200,471,438
Consolidated
Due Within
One Year
Financial Liabilities
Deposit liabilities
Demand
Savings
Time
LTNCD
Bills payable and SSURA
Accrued interest and other expenses
Other liabilities
Bills purchased-contra
Accounts payable
Manager’s checks
Margin deposits
Deposits on lease contracts
Cash letters of credit
Outstanding acceptances
Due to PDIC
Due to Treasurer of the Philippines
Derivative liabilities
Miscellaneous
Nonfinancial Liabilities
Deferred tax liabilities
Accrued taxes payable
Income tax payable
Withholding taxes payable
Other liabilities
2012
Due Beyond
One Year
Total
Due Within
One Year
2011
Due Beyond
One Year
Total
17,848,937
98,313,724
38,089,322
—
154,251,983
14,917,502
646,980
—
—
9,071,566
9,443,866
18,515,432
—
—
17,848,937
98,313,724
47,160,888
9,443,866
172,767,415
14,917,502
646,980
13,007,774
98,722,144
37,407,506
—
149,137,424
8,731,403
531,396
—
—
7,876,574
7,593,890
15,470,464
26,166
—
13,007,774
98,722,144
45,284,080
7,593,890
164,607,888
8,757,569
531,396
4,631,187
1,241,861
973,031
655,500
—
285,671
147,955
168,643
63,081
59,487
204,022
178,246,903
—
—
—
—
412,242
—
—
—
—
—
—
18,927,674
4,631,187
1,241,861
973,031
655,500
412,242
285,671
147,955
168,643
63,081
59,487
204,022
197,174,577
3,021,230
1,176,681
836,404
1,119,049
—
1,255,053
183,769
153,779
64,669
4,286
63,419
166,278,562
—
—
—
—
304,245
—
—
—
—
—
—
15,800,875
3,021,230
1,176,681
836,404
1,119,049
304,245
1,255,053
183,769
153,779
64,669
4,286
63,419
182,079,437
—
58,355
36,986
53,751
—
178,395,995
78,674
—
—
—
478,640
19,484,988
78,674
58,355
36,986
53,751
478,640
197,880,983
—
42,807
46,622
50,882
19
166,418,892
66,121
—
—
—
564,098
16,431,094
66,121
42,807
46,622
50,882
564,117
182,849,986
Due Within
One Year
2012
Due Beyond
One Year
Total
Due Within
One Year
2011
Due Beyond
One Year
Total
5,834,451
27,679,351
2,083,221
226,775
822,597
—
—
—
—
—
—
—
23,334,117
28,016,774
5,834,451
27,679,351
2,083,221
226,775
822,597
23,334,117
28,016,774
4,607,502
32,305,984
1,851,226
1,098,579
1,923,896
—
—
—
—
—
—
—
20,026,754
28,073,365
4,607,502
32,305,984
1,851,226
1,098,579
1,923,896
20,026,754
28,073,365
41,427,464
34,986,275
76,413,739
31,512,438
26,001,345
57,513,783
Unquoted debt securities
Sales contract receivable
Accrued interest receivable
Accounts receivable
Other assets
Nonfinancial Assets - at gross
Property and equipment
Investments in subsidiaries
and associates
Investment properties
Other assets
Total
Due Within
One Year
41,674
259,150
1,403,676
508,690
239,291
80,526,340
2012
Due Beyond
One Year
6,559,518
349,589
—
621,063
—
93,867,336
Total
6,601,192
608,739
1,403,676
1,129,753
239,291
174,393,676
Due Within
One Year
1,740,028
239,923
1,168,353
444,661
—
76,892,590
2011
Due Beyond
One Year
6,192,079
771,576
239,598
516,614
177,313
81,998,644
Total
7,932,107
1,011,499
1,407,951
961,275
177,313
158,891,234
—
4,590,881
4,590,881
—
4,457,110
4,457,110
—
—
93,226
93,226
80,619,566
4,290,051
6,867,240
20,321,269
36,069,441
129,936,777
4,290,051
6,867,240
20,414,495
36,162,667
210,556,343
—
—
260,709
260,709
77,153,299
4,290,051
6,820,807
19,788,341
35,356,309
117,354,953
4,290,051
6,820,807
20,049,050
35,617,018
194,508,252
Less:
Unearned interest discount
Accumulated depreciation
and amortization
Allowance for credit and
impairment losses
Total
Financial Liabilities
Deposit liabilities
Demand
Savings
Time
LTNCD
Bills payable and SSURA
Accrued interest and other expense
Other liabilities
Bills purchased-contra
Accounts payable
Manager’s checks
Margin deposits
Cash letters of credit
Due to PDIC
Outstanding acceptances
Due to Treasurer of the Philippines
Derivative liabilities
Miscellaneous
Nonfinancial Liabilities
Deferred tax liabilities
Accrued taxes payable
Income tax payable
Withholding taxes payable
Other liabilities
51,724
137,013
2,470,224
2,231,511
7,645,852
200,388,543
6,476,573
185,663,155
17,619,081
95,927,015
35,728,723
—
149,274,819
13,867,994
599,806
—
—
8,897,511
9,443,866
18,341,377
—
—
17,619,081
95,927,015
44,626,234
9,443,866
167,616,196
13,867,994
599,806
12,929,685
96,478,317
35,651,933
—
145,059,935
8,431,403
587,579
—
—
7,876,574
7,593,890
15,470,464
—
—
12,929,685
96,478,317
43,528,507
7,593,890
160,530,399
8,431,403
587,579
4,628,187
1,169,232
898,615
655,500
285,671
168,643
147,955
59,703
59,487
—
171,815,612
—
—
—
—
—
—
—
—
—
—
18,341,377
4,628,187
1,169,232
898,615
655,500
285,671
168,643
147,955
59,703
59,487
—
190,156,989
3,018,208
1,088,285
789,926
1,119,049
1,255,053
153,779
183,769
61,292
4,286
13
161,752,577
—
—
—
—
—
—
—
—
—
—
15,470,464
3,018,208
1,088,285
789,926
1,119,049
1,255,053
153,779
183,769
61,292
4,286
13
177,223,041
—
32,884
4,358
48,271
—
85,513
171,901,125
31,318
—
—
—
410,316
441,634
18,783,011
31,318
32,884
4,358
48,271
410,316
527,147
190,684,136
—
28,897
—
46,095
—
74,992
161,827,569
30,492
—
—
—
509,314
539,806
16,010,270
30,492
28,897
—
46,095
509,314
614,798
177,837,839
Parent Bank
Financial Assets - at gross
Cash and other cash items
Due from BSP
Due from other banks
Interbank loans receivable and SPURA
Financial assets at FVPL
AFS financial assets
HTM investments
Loans and receivables
Receivables from customers
21. Operating Lease Contracts
The Group leases the premises of most of its offices and branches for periods ranging from one to 20 years from the date of the
contracts, which terms are renewable upon the mutual agreement of the parties. Rent expense charged to operations (included
under “Occupancy expense” in the statement of income) amounted to 317.9 million and 319.5 million in 2012 and 2011,
respectively, for the Group and 287.7 million and 300.3 million in 2012 and 2011, respectively, for the Parent Bank.
(Forward)
136 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 137
The regulations also provide for MCIT of 2.0% on modified gross income and allow NOLCO. The MCIT and NOLCO may be applied
against the Bank’s income tax liability and taxable income, respectively, over a three-year period from the year of incurrence.
Future minimum rentals payable under non-cancelable operating leases are as follows:
Consolidated
2012
2011
403,078
214,551
625,927
416,879
142,916
85,013
1,171,921
716,443
Within one year
After one year but not more than five years
After more than five years
Parent
2012
250,703
572,554
134,014
957,271
Bank
2011
193,913
375,338
74,286
643,537
In 2011, the BIR issued Revenue Regulations (RR) No. 4-2011 which requires banks to allocate and claim as deduction only those costs and
expenses attributable to RBU to arrive at the taxable income of the RBU subject to regular income tax. Any cost or expense related with
or incurred for the operations of the FCDU are not allowed as deduction from the RBU’s taxable income. In computing for the amount
allowable as deduction from RBU operations, all costs and expenses should be allocated between RBU and FCDU by specific identification.
22. Miscellaneous Income
This account consists of the following:
Rent income
Income from assets acquired
Dividends
Others
Current tax regulations also provide for the ceiling on the amount of entertainment, amusement and recreation (EAR) expense
that can be claimed as a deduction against taxable income. In 2012 and 2011, EAR amounted to 161.8 million and 76.4
million, respectively, for the Group and 158.3 million and 72.4 million, respectively, for the Parent Bank (see Note 23).
Under the regulation, EAR expense allowed as a deductible expense for a service company like the Parent Bank and some of its
subsidiaries is limited to the actual EAR paid or incurred but not to exceed 1.0% of net revenue.
Note
28
Consolidated
2012
2011
24,285
22,665
20,512
41,308
10,205
8,734
135,286
448,663
190,288
521,370
Parent Bank
2012
2011
30,107
28,270
6,328
42,737
132,842
7,132
35,020
398,008
204,297
476,147
FCDU offshore income (income from non-residents) is tax-exempt while gross onshore income (income from residents) is subject
to 10.0% income tax. In addition, interest income on deposit placements with other FCDUs and offshore banking units (OBUs) is
taxed at 7.5%. Income derived by the FCDU from foreign currency transactions with non-residents, 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 10.0% income tax.
The provision for income tax consists of:
Consolidated
2012
2011
Current:
Final tax
RCIT
MCIT
Others include recovery on written-off accounts and penalty charges.
Deferred
23. Miscellaneous Expense
676,044
171,064
86,507
933,615
(31,705)
901,910
654,760
147,683
70,030
872,473
(12,820)
859,653
Parent Bank
2012
2011
663,163
—
75,009
738,172
826
738,998
647,987
—
70,030
718,017
(4,299)
713,718
This account consists of the following:
The reconciliation of the statutory income tax to the effective income tax is shown below:
Representation and entertainment
Postage, telephone, cable and telegram
Travelling expense
Fuel and lubricant
Stationery and supplies used
Management and other professional fees
Supervision and examination fees
Computer-related expense
Advertising
Fees and commission
Freight expense
Membership fees
Fines, penalties and other charges
Miscellaneous
Note
24
Consolidated
2012
2011
161,824
76,426
138,453
136,671
107,128
104,515
85,859
76,001
81,372
83,403
77,607
83,619
74,768
62,076
59,429
32,258
35,014
33,640
18,590
22,048
12,762
18,230
9,046
8,678
1,939
4,506
66,584
82,182
930,375
824,253
Parent Bank
2012
2011
158,306
72,421
127,289
126,763
99,844
96,305
78,640
68,545
72,409
75,016
60,205
80,712
71,904
60,415
58,637
32,203
25,475
31,941
15,091
20,636
10,279
15,516
8,731
8,172
1,396
269
35,376
24,795
823,582
713,709
24. Income and Other Taxes
Under Philippine tax laws, the RBU of the Parent Bank and its domestic subsidiaries are subject to percentage and other taxes
(presented as “Taxes and licenses” in the statement of income) as well as income taxes. Percentage and other taxes paid consist
principally of gross receipts tax (GRT) and documentary stamp taxes (DST). Income taxes include corporate income tax, as
discussed below, and 20.0% final taxes paid, which is a final withholding tax on gross interest income from government securities
and other deposit substitutes.
The corporate income tax rate is 30.0%. Interest allowed as a deductible expense is reduced by an amount equivalent to 33.0%
of interest income subjected to final tax.
Statutory income tax
Tax effects of:
FCDU income
Nondeductible expenses
Net unrecognized DTA
Tax paid and tax-exempt income
Nontaxable income
Effective income tax
(458,688)
644,122
(38,323)
(227,990)
(249,926)
901,910
(364,703)
441,448
168,810
(248,817)
(312,879)
859,653
Parent Bank
2012
2011
1,046,266
846,071
(458,688)
628,544
(31,381)
(241,784)
(203,959)
738,998
(364,703)
426,713
205,426
(248,738)
(151,051)
713,718
Components of net deferred tax liabilities are as follows:
Consolidated
2012
2011
Deferred tax asset on:
Allowance for credit and impairment losses
Unrealized loss on foreclosed assets
Accumulated depreciation on investment properties
MCIT
Others
Deferred tax liability on:
Lease income differential between finance and
operating lease method
Unrealized gain on AFS financial assets
Retirement asset
Expense on LTNCD
Unrealized gain on financial assets at FVPL
Unrealized gain on foreclosure
Others
Net deferred tax liabilities
138 / UCPB 2012 Annual Report
Consolidated
2012
2011
1,232,715
1,175,794
38,148
6,258
6,186
—
725
51,317
(52,373)
(24,515)
(22,819)
(15,446)
(5,052)
—
(9,786)
(129,991)
( 78,674)
20,559
5,665
467
41
—
26,732
(28,245)
(15,823)
(3,171)
(13,680)
(3,608)
(19,655)
(8,671)
(92,853)
( 66,121)
Parent Bank
2012
2011
—
—
—
—
—
—
—
—
(1,904)
(15,446)
(5,052)
—
(8,916)
(31,318)
( 31,318)
—
—
—
—
—
—
—
—
(1,904)
(13,680)
(3,608)
(2,629)
(8,671)
(30,492)
( 30,492)
UCPB 2012 Annual Report / 139
Components of net deferred tax assets shown in the consolidated statement of financial position follow:
25. Capital
Deferred tax asset on:
Allowance for credit and impairment losses
Provision for accrual of expenses
Retirement liability
Others
Deferred tax liability on:
Unrealized gain on foreclosure
Lease income differential between finance and operating lease method
Unrealized gain on FVPL
Net deferred tax assets
2012
2011
83,548
2,516
1,911
1,843
89,818
52,570
3,308
1,990
1,737
59,605
(2,918)
(1,050)
(10)
(3,978)
85,840
(5,350)
—
(54)
(5,404)
54,201
Allowance for credit and impairment losses
NOLCO
Unrealized loss on AFS financial assets
MCIT
Accrued expense
Unrealized foreign exchange loss
Accumulated depreciation on investment properties
Unrealized loss on foreclosure
5,431,396
277,081
192,706
176,828
80,118
70,476
44,514
40,119
6,313,238
5,414,282
4,172,110
82,589
107,036
19,277
61,708
62,892
—
9,919,894
Parent Bank
2012
2011
5,671,991
266,014
192,706
176,750
80,118
70,476
63,056
40,119
6,561,230
5,313,711
4,157,813
82,406
107,036
19,277
61,708
57,441
—
9,799,392
Management believes that the future income tax benefits arising from these temporary differences can be realized in the coming years.
The breakdown of NOLCO with the corresponding validity periods follow:
Consolidated
Year Incurred
2012
2011
2010
2009
Amount
1,896
6,472
268,713
3,895,029
4,172,110
Applied/Expired
—
—
—
3,895,029
3,895,029
Year Incurred
2010
2009
Amount
266,014
3,891,799
4,157,813
Applied/Expired
—
3,891,799
3,891,799
Balance
1,896
6,472
268,713
—
277,081
Expiry Year
2015
2014
2013
2012
Balance
266,014
—
266,014
Expiry Year
2013
2012
Parent Bank
Details of the MCIT are as follows:
Consolidated
Year Incurred
2012
2011
2010
2009
Amount
75,087
70,030
31,711
5,295
182,123
Applied/Expired
—
—
—
(5,295)
( 5,295)
Balance
75,087
70,030
31,711
—
176,828
Expiry Year
2015
2014
2013
2012
Parent Bank
Year Incurred
2012
2011
2010
2009
140 / UCPB 2012 Annual Report
Amount
75,009
70,030
31,711
5,295
182,045
Applied/Expired
—
—
—
(5,295)
( 5,295)
Balance
75,009
70,030
31,711
—
176,750
Common stock - 1 par value
Authorized shares - 1,497,170,231 shares in 2012 and 2011
Subscribed - 1,497,170,231 shares (net of subscription receivable of 12,327)
Special Preferred stock - 1 par value
Authorized shares - 1,752,829,769 shares in 2012
Subscribed
Capital notes
Note
1
1
1
1,484,843
12,000,000
13,484,843
Common Shares
A substantial portion of the outstanding common shares of the Bank remains sequestered as a result of the sequestration
orders issued by the PCGG on June 26, 1986. Court proceedings on the ownership issue have been ongoing since then with the
Sandiganbayan and the Supreme Court. In the meantime, PCGG exercises the right to vote on the sequestered shares of the Bank.
The Group and the Parent Bank did not set up deferred tax asset on the following temporary differences:
Consolidated
2012
2011
As at December 31, 2012 and 2011, the Bank’s equity consists of:
Expiry Year
2015
2014
2013
2012
On July 11, 2003, the Sandiganbayan promulgated its “Partial Summary Judgment” granting the ROP’s “Motions for Partial
Summary Judgment” and stated that 64.98% of the Bank’s shares of stock, which form part of the 72.2% charged by the
Philippine Coconut Authority (PCA) to the Coconut Consumers Stabilization Fund (CCSF), are conclusively owned by the ROP and
that the Bank’s shares registered in the name of defendant Cojuangco and those of his dummies and nominees belong to the ROP
as the true and beneficial owner.
On May 11, 2007, the Sandiganbayan ruled that there are no more triable issues that have to be addressed that would
necessitate the presentation of evidence by the parties. The Sandiganbayan had rendered Partial Summary Judgment
promulgated on July 11, 2003 that practically excluded any other issue concerning the ownership of the 72.2% shares of the
Bank, which the Court has declared to be owned by the government.
As the Sandiganbayan had already declared Presidential Decree (P.D.) 755 to be constitutionally infirm: “(i) for having allowed
the use of the CCSF to benefit directly private interests by the outright and constitutional grant of absolute ownership of the
UCPB (formerly First United Bank or “FUB”) shares paid for by PCA entirely with the CCSF to the undefined “coconut farmers”,
which negated or circumvented the national policy or public purpose declared by P.D. No. 755 to accelerate the growth and
development of the coconut industry and achieve its vertical integration; and (ii) for having unduly delegated legislative power
to the PCA”, there appears to be no other issue on ownership, such defense of defendants COCOFED, et al. which seeks to prove
during trial will necessarily fail and would only be a futile effort.
While initially, in its Partial Summary Judgment of July 11, 2003, the Court ordered the instant case to proceed with respect to
issues not disposed of, it appears that all pertinent issues have already been addressed by the Court and trial could be dispensed
with. The Sandiganbayan also said that “there is no more point in proceeding with trial where the principal issue of ownership of
the Bank’s shares as well as the relevant sub-issues has already been resolved.”
On May 28, 2007, defendant Cojuangco filed a Motion for Reconsideration/ Modification, praying that the Resolution of the Court
on May 11, 2007 be reconsidered so as to allow defendant Cojuangco to present evidence in his defense, particularly on the fact
the Court itself has found relevant but not established because not stipulated upon, and his counterclaims, subject to whatever
rebuttal evidence plaintiff may present and, thereafter, the Court may declare its “Partial Summary Judgment” of July 11, 2003,
subject to whatever modifications it may find appropriate to make, final and subject to appeal by any of the parties.”
On May 28, 2007, COCOFED, et. al., filed a Class Action Petition for Review on Certiorari praying that the Supreme Court: (i)
annul and set aside the Partial Summary Judgment dated July 11, 2003; (ii) annul and set aside the Partial Summary Judgment
dated May 7, 2004 (see Note 29), and Resolution dated May 11, 2007, of the Sandiganbayan; (iii) dismiss with prejudice, the two
cases in so far as COCOFED, et. al., and the more than one million coconut farmers who are similarly situated are concerned;
and (iv) lift the sequestration orders of the PCGG issued and levied over the sequestered assets.
However, in its Resolution dated June 5, 2007, the Sandiganbayan declared that “in view of its judgment declaring ownership
in favor of the government of the subject UCPB shares, the Partial Summary Judgment is now considered a final and appealable
judgment.”
On June 20, 2007, defendant Cojuangco filed a Motion for Reconsideration on the Sandiganbayan Resolution dated June 5,
2007, and the Partial Summary Judgment dated July 11, 2003. The court did not grant defendant Cojuangco any opportunity to
present evidence on his counterclaims, nor did it render judgment thereon; and the Court’s decision is “indefinite” and may not
be considered as final and may not be executed in at least two aspects, namely: (i)it does not identify with particularity “the
Cojuangco UCPB shares of stock” which are declared as belonging to the plaintiff Republic as the true and beneficial owner; and
UCPB 2012 Annual Report / 141
ii) while it includes in its judgment the UCPB shares of stock of alleged fronts, nominees and dummies of defendant Cojuangco
which form part of the 72.2% shares of the FUB/UCPB paid for by the PCA, the alleged fronts, nominees and dummies are not
named and identified, much less the particular shares of stock belonging to them.
On November 29, 2007, the Sandiganbayan resolved that the Motion for Reconsideration of defendant Cojuangco was bereft
of merit as it found no cogent reasons to reverse its Resolution of June 5, 2007 and the Partial Summary Judgment dated July
11, 2003. Consequently, defendant Cojuangco filed a separate Petition for Review under Rule 45 praying that the Supreme
Court annual the “Partial Summary Judgment” of July 11, 2003, particularly the portion pertaining to the 7.22% UCPB shares
transferred to him.
On January 24, 2012, the Supreme Court denied the petition of COCOFED, et. al., and affirmed the resolutions issued by the
Sandiganbayan on June 5, 2007, that there is no more necessity of further trial with respect to the issue of ownership of (i) the
sequestered UCPB shares, (ii) the CIIF block of SMC shares, and (iii) the CIIF Companies as they have been finally adjudicated in
the Partial Summary Judgment dated July 11, 2003 and May 7, 2004. The January 24, 2012 decision, however, did not resolve the
issues raised in Cojuangco’s petition.
The BSP sets and monitors capital requirements for the Bank. In implementing current capital requirements, the BSP requires
the Bank to maintain a prescribed ratio of qualifying capital to risk-weighted assets.
In addition, the risk-based capital ratio (RBCAR) of a bank, expressed as a percentage of qualifying capital to risk-weighted
assets, should not be less than 10.0% for both stand-alone basis (head office and branches) and consolidated basis (Parent
Bank and subsidiaries engaged in financial allied undertakings but excluding insurance companies). Qualifying capital and riskweighted 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 MB 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 Basel II capital adequacy framework. The new BSP
guidelines took effect on July 1, 2007. Thereafter, banks were required to compute their Capital Adequacy Ratio CAR using these
guidelines.
The Bank’s RBCAR, as submitted to the BSP as at December 31, 2012 and 2011 are shown in the table below:
On February 14, 2012, COCOFED et. al., filed a Motion for Reconsideration (the “Motion”) of the decision rendered by the
Supreme Court on January 24, 2012, citing certain substantial and grave errors of fact. The Motion was denied with finality by
the Supreme Court on September 4, 2012.
On November 27, 2012, the Supreme Court denied defendant Cojuangco’s petition and affirmed the portion of Sandiganbayan’s
Partial Summary Judgment dated July 11, 2003 declaring the UCPB shares transferred to defendant Cojuangco as “conclusively”
owned by the ROP. As at May 30, 2013, entries of judgment have yet to be issued by the Supreme Court in both the COCOFED, et
al. and defendant Cojuangco cases.
Special Preferred Shares
On May 10, 2011, the SEC approved the amendments on the Articles of Incorporation of the Bank including the reclassification
of 1,002,829,769 unissued common shares and 750,000,000 unissued preferred shares of the Bank, all with par value of 1.0 per
share into 1,752,829,769 perpetual, non-cumulative, special preferred shares.
In the event of winding up, the holder(s) of Special Preferred Shares shall have no priority claim in respect of principal and
dividends on the Special Preferred Shares which is higher than or equal to that of the depositors, other creditors and holders of
Lower Tier 2 and Upper Tier 2 capital instruments, if any, of the Bank. However, the rights and claims of such holder(s) of the
Special Preferred Shares, in the event of winding up, are superior to the rights and claims of holder(s) of Common Stock.
No stockholder of the Bank shall have any pre-emptive right or preferential right to purchase or subscribe to: (i) the
1,752,829,769 Special Preferred Shares stated above, (ii) any additional Special Preferred Shares, (iii) any unissued Common
Stock upon conversion of Special Preferred Shares, and (iv) any unissued Common Stock upon conversion of the Interim Capital
Notes of the Bank, with (ii), (iii) and (iv) becoming operative upon an increase in the authorized capital stock of the Bank.
Capital Notes
As fully discussed in Note 1, the Bank obtained 12.0 billion financial assistance from PDIC on July 7, 2003 consisting of a 7.0
billion 5.0% Unsecured Subordinated debt due in 2013 and 5.0 billion proceeds from sale of NPLs with buyback by 2013. On
March 31, 2009, the ROP, PDIC, PCGG and the Bank agreed to convert the PDIC financial assistance into Capital Notes. On
the same date, the Bank issued 12.0 billion Interim Tier 1 Capital Notes (the “Capital Notes” or “Notes”) to PDIC which will
qualify as Interim Tier 1 capital. As discussed also in Note 1, the Capital Notes has no maturity date but shall become due
and demandable if the Bank fails to perform any of its material obligations under the Notes. As not all such obligations are
within the control of the Bank, the Capital Notes does not qualify as an equity instrument under PAS 32, Financial Instruments:
Presentation. Under PAS 32, the Capital Notes should be presented as a financial liability in the statement of financial position.
However, as allowed by the BSP and in keeping with the objectives of the Rehabilitation Plan, the Bank has presented the
Capital Notes in the equity section of the statement of financial position.
Capital Management
The primary objectives of the Group’s capital management are to ensure that it complies with externally imposed capital
requirements and it maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize
shareholders’ value.
The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the
risk characteristics of its activities. In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividend payment to shareholders, return capital structure, or issue capital securities. No changes were made in the objectives,
policies and processes from the previous years.
Regulatory Qualifying Capital
Under existing BSP regulations, the determination of the Parent Bank’s compliance with regulatory requirements and ratios
is based on the amount of the Parent Bank’s “unimpaired capital” (regulatory net worth) as reported to the BSP, which is
determined on the basis of regulatory accounting policies which differ from PFRS in some respects.
The amount of surplus funds available for dividend declaration is also determined on the basis of regulatory net worth after
considering certain adjustments.
142 / UCPB 2012 Annual Report
Tier 1 capital
Tier 2 capital
Gross qualifying capital
Less required deductions
Total qualifying capital
Risk weighted assets
Tier 1 capital ratio
Total capital ratio
Consolidated
Parent Bank
2012
2011
2012
2011
(In Millions)
19,394
16,529
19,333
16,529
887
659
799
587
20,281
17,188
20,132
17,116
2,179
1,720
5,541
4,683
18,102
15,468
14,591
12,433
146,954
129,762
136,214
121,299
11.95%
12.32%
11.66%
11,92%
10.71%
10.71%
10.25%
10.25%
The regulatory qualifying capital of the Group and of the Parent Bank consists of Tier 1 (core) capital, which comprises paid-up
common, capital notes, surplus (deficit) including current year profit and surplus reserves less required deductions such as unbooked
valuation reserves (except for the 22.7 billion deferral of losses as at December 31, 2012 as discussed in Note 15), unsecured
credit accommodations to directors, officers, stockholders and related interests (DOSRI) and deferred tax. The other component of
regulatory capital is Tier 2 (supplementary) capital, which includes unsecured subordinated debt and general loan loss provision.
As at December 31, 2012 and 2011, considering the regulatory relief mentioned in Note 1, the Bank has already complied with
the required RBCAR. Also, as discussed in Note 1, on February 26, 2009, the MB of the BSP exempted the Bank from sanctions
that may be imposed for its non-compliance with the 10.0% CAR and all capital-based regulatory ratios for the year 2008 until
such time that the Bank’s Rehabilitation Plan is fully implemented and approved the Bank’s request for temporary relief by
reducing the Bank’s CAR to 8.0% for a period of three years up to 2011 or until such time that the Bank is able to comply with
the required 10.0% CAR, whichever comes first.
26. Surplus Reserves
This account consists of:
Reserve for trust business
Reserve for self-insurance
Reserve for contingencies
Others
2012
117,664
26,000
6,000
—
149,664
2011
117,664
26,000
6,000
746,819
896,483
In compliance with existing BSP regulations, 10.0% of the Parent Bank’s income from trust business is appropriated to surplus
reserves. This yearly appropriation is required until the surplus reserve for trust business equals 20.0% of the Parent Bank’s
regulatory net worth (see Note 29).
Reserve for self-insurance represents the amount set aside to cover losses due to fire, defalcation by and other unlawful acts of
the Parent Bank’s personnel or third parties.
“Others” represents stock dividends declared on common stock in prior years, which were not released to the Parent Bank’s
shareholders due to the unsettled sequestration issue. In 2012, the amount of 746.8 million was transferred out of Surplus
Reserves to Deficit.
UCPB 2012 Annual Report / 143
As at December 31, 2012 and 2011, the retirement asset liability was fully recognized because it did not exceed the limit as
provided by PAS 19, Employee Benefits.
27. Retirement Plan and Other Employee Benefits
Changes in the present value of retirement obligation follow:
Expenses recognized for salaries and employee benefits are presented below:
Consolidated
2012
2011
1,091,540
1,006,082
403,478
435,795
126,098
137,332
123,211
84,126
1,744,327
1,663,335
Salaries and wages
Fringe benefits
Short-term medical benefits
Retirement - defined benefit plan
Parent Bank
2012
2011
928,708
869,495
370,132
411,850
120,429
124,582
112,584
76,690
1,531,853
1,482,617
The Parent Bank and its significant subsidiaries have funded noncontributory defined benefit retirement plans covering all their
respective permanent and full-time employees.
Balance at beginning of year
Actuarial losses
Benefits paid
Interest cost
Current service cost
Balance at end of year
Average remaining working life
Discount rate
Expected rate of return on assets
Future salary increases
Parent
Company
16 years
6.6%
7.0%
5.0%
USB
16 years
6.9%
6.0%
6.0%
2011
USI
16 years
12.0%
7.0%
5.0%
Parent
Company
16 years
9.0%
8.0%
6.0%
USB
16 years
10.7%
6.0%
6.0%
USI
17 years
12.0%
7.0%
5.0%
Parent Bank
2012
2011
1,643,131
1,253,630
213,183
322,648
(132,953)
(129,084)
108,447
112,827
107,986
83,110
1,939,794
1,643,131
Consolidated
2012
2011
1,502,624
1,469,193
119,863
(12,191)
(135,620)
(143,185)
104,950
117,088
117,104
71,719
1,708,921
1,502,624
Parent Bank
2012
2011
1,484,309
1,444,114
119,559
(12,352)
(132,953)
(129,084)
103,902
115,530
106,237
66,101
1,681,054
1,484,309
Consolidated
2012
2011
( 196,484)
165,903
(223,156)
(348,682)
119,863
(12,191)
(299,777)
(194,970)
1,674
(1,514)
( 298,103)
( 196,484)
Parent Bank
2012
2011
( 165,169)
171,526
(213,183)
(322,648)
119,559
(12,352)
(258,793)
(163,474)
53
(1,695)
( 258,740)
( 165,169)
The movements in the fair value of plan assets follow:
The principal actuarial assumptions used in determining the retirement liability of the Parent Bank and significant subsidiaries as
at January 1, 2012 and 2011 are shown below:
2012
Consolidated
2012
2011
1,695,171
1,286,946
223,156
348,682
(135,620)
(143,185)
112,039
116,400
114,448
86,328
2,009,194
1,695,171
Balance at beginning of year
Actuarial gains (losses)
Benefits paid
Expected return on plan assets
Contributions
Balance at end of year
The movements in unrecognized actuarial gains (losses) follow:
As at December 31, 2012, the discount rate (with reference to PDST-R2 index) of the Parent Bank, USB and USI is 6.6%, 6.9% and
12.0%, respectively.
The overall expected rate of return on plan assets is determined based on the market prices prevailing on that date applicable
to the year over which the obligation is to be settled.
The net retirement asset (liability) of the Group and the Parent Bank follows:
Consolidated
2012
2011
1,708,921
1,502,624
2,009,194
1,695,171
(300,273)
(192,547)
(298,103)
(196,484)
( 2,170)
3,937
Fair value of plan assets
Present value of obligation
Deficit
Unrecognized actuarial losses
Net retirement asset (liability)
Actuarial gains (losses) recognized
Balance at end of year
Parent Bank
2012
2011
1,681,054
1,484,309
1,939,794
1,643,131
(258,740)
(158,822)
(258,740)
(165,169)
—
6,347
Retirement asset
Retirement liability
Net retirement asset
Consolidated
2012
2011
4,201
10,570
(6,371)
(6,633)
( 2,170)
3,937
Parent Bank
2012
2011
—
6,347
—
—
—
6,347
The movements in the retirement asset (liability) recognized in the statement of financial position follow:
Balance at beginning of year
Retirement expense
Contributions
Balance at end of year
144 / UCPB 2012 Annual Report
Consolidated
2012
2011
3,937
16,344
(123,211)
(84,126)
117,104
71,719
( 2,170)
3,937
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
2012
Cash and cash equivalents
Fixed income
Equity instruments
Others
Retirement asset (liability) included in Other assets (Other liabilities) are as follows:
Note
14
19
Balance at beginning of year
Actuarial losses on retirement obligation
Actuarial gains (losses) on plan assets
Parent Bank
2012
2011
6,347
18,958
(112,584)
(78,712)
106,237
66,101
—
6,347
Parent
Bank
6.92%
42.72%
45.06%
5.30%
100.00%
USB
37.27%
49.45%
3.18%
10.10%
100.00%
2011
USI
15.33%
51.39%
30.92%
2.36%
100.00%
Parent
Bank
6.09%
50.73%
36.40%
6.78%
100.00%
USB
30.59%
66.55%
—
2.86%
100.00%
USI
15.33%
51.39%
30.92%
2.36%
100.00%
The amounts included in “Compensation and fringe benefits” in the statement of income are as follows:
Current service cost
Interest cost
Expected return on plan assets
Amortizations of actuarial gains (losses)
Consolidated
2012
2011
114,448
86,328
112,039
116,400
(104,950)
(117,088)
1,674
(1,514)
123,211
84,126
Parent Bank
2012
2011
107,986
83,110
108,447
112,827
(103,902)
(115,530)
53
(1,695)
112,584**
78,712*
* P2.0 million of which pertains to retirement expense charged by the Parent Bank to subsidiaries for seconded employees.
** P2.4 million of which pertains to retirement expense charged by the Parent Bank to subsidiaries for seconded employees.
UCPB 2012 Annual Report / 145
The actual return on plan assets follows:
Consolidated
2012
2011
119,863
( 12,191)
104,950
117,088
224,813
104,897
Actuarial gains (losses) on plan assets
Expected return on plan assets
Parent Bank
2012
2011
119,559
( 12,352)
103,902
115,530
223,461
103,178
The Group and the Parent Bank expect to contribute 141.3 million and 127.3 million, respectively, to its retirement plan in 2013.
Amounts for the current and previous years follow:
Fair value of plan assets
Present value of retirement obligation
Surplus (deficit)
Experience adjustments on retirement obligation
Experience adjustments on plan asset
Change in assumptions
2012
1,708,921
2,009,194
(300,273)
36,790
119,863
186,366
2011
1,502,624
1,695,171
(192,547)
(76,210)
(12,191)
(154,022)
Consolidated
2010
2009
1,469,193
1,187,066
1,286,946
1,041,886
182,247
145,180
55,026
(78,381)
234,563
158,421
144,694
77,427
Fair value of plan assets
Present value of retirement obligation
Surplus (deficit)
Experience adjustments on retirement obligation
Experience adjustments on plan asset
Change in assumptions
2012
1,681,054
1,939,794
(258,740)
34,510
119,559
178,674
2011
1,484,309
1,643,131
(158,822)
(51,427)
(12,352)
(154,022)
Parent Bank
2010
2009
1,444,114
1,159,254
1,253,630
1,002,301
190,484
156,953
51,427
(94,352)
234,358
157,830
154,022
77,171
2008
970,068
976,655
(6,587)
250,520
(64,806)
(243,765)
2008
938,510
949,867
(11,357)
255,438
(64,585)
(242,863)
BSP Circular No. 560 provides 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 loans, other credit
accommodations and guarantees to each of the bank’s/quasi-bank’s subsidiaries and affiliates shall not exceed 10.0% of the net
worth of the lending bank/quasi-bank, provided that the unsecured portion of which shall not exceed 5.0% of such net worth.
Further, the total outstanding loans, credit accommodations and guarantees to all subsidiaries and affiliates shall not exceed 20.0%
of the net worth of the lending bank/quasi-bank; and the subsidiaries and affiliates of the lending bank/quasi-bank are not related
interest of any director, officer and/or stockholder of the lending institution, except where such director, officer or stockholder sits
in the BOD or is appointed officer of such corporation as representative of the bank/quasi-bank. As at December 31, 2012 and 2011,
the total outstanding loans, other credit accommodations and guarantees to each of the Parent Bank’s subsidiaries and affiliates did
not exceed 10.0% of the Parent Bank’s net worth, as reported to the BSP, and the unsecured portion did not exceed 5.0% of such net
worth and the total outstanding loans, other credit accommodations and guarantees to all such subsidiaries and affiliates represent
8.6% and 10.5%, respectively, of the Parent Bank’s net worth.
The account balances with respect to transactions of the Parent Bank with its subsidiaries as at and for the years ended
December 31, 2012 and 2011 follow:
Elements of Transactions
Statements of Financial
Statements of
Position Amounts
Income Amounts
Related Party
USB
ULFC
USI
28. 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.
BRC
In the ordinary course of business, the Group has loan and deposit transactions with certain directors, officers, stockholders,
and related interests (DOSRI). The Parent Bank also has loans and deposit transactions with its subsidiaries and associates. Under
existing policies of the Group, these loans are made on substantially the same terms as loans granted to other individuals and
businesses of comparable risks. Existing banking regulations limit the amount of individual loans to DOSRI, 70.0% of which must
be secured, to the total of their respective deposits and book value of their respective investments in the lending company
within the Group. In the aggregate, loans to DOSRI generally should not exceed the respective total equity or 15.0% of the total
loan portfolio of the Group, whichever is lower. In 2012 and 2011, interest income on DOSRI loans amounted to 11.0 million and
10.7 million, respectively.
GHDC
UPI-MHC
BSP Circular No. 423 dated March 15, 2004 amended the definition of DOSRI accounts. The following table shows information
relating to the loans, other credit accommodations and guarantees classified as DOSRI accounts under regulations existing prior
to the said Circular, and new DOSRI loans, other credit accommodations granted under said circular:
Total outstanding DOSRI accounts*
Percent of DOSRI accounts granted prior to effectivity
of BSP Circular No. 423 to total loans
Percent of DOSRI accounts granted after effectivity
of BSP Circular No. 423 to total loans
Percent of DOSRI accounts to total loans
Percent of unsecured DOSRI accounts to total DOSRI accounts
Percent of past due DOSRI accounts to total DOSRI accounts*
Consolidated
2012
2011
220,366
289,868
Parent Bank
2012
2011
217,704
287,058
0.26%
0.46%
0.29%
0.50%
0.26%
0.26%
18.21%
1.58%
0.46%
0.46%
14.13%
1.22%
0.29%
0.29%
18.43%
1.60%
0.50%
0.50%
14.27%
1.24%
UFEC
Nature of
Transaction
Loans and receivable
Accounts receivable
Deposit liabilities
Interest income
Interest expense
Rent income
Loans and receivable
Accounts receivable
Deposit liabilities
Interest income
Interest expense
Rent income
Accounts receivable
Deposit liabilities
Interest expense
Rent income
Loans and receivable
Deposit liabilities
Interest income
Interest expense
Deposit liabilities
Accounts receivable
Deposit liabilities
Interest expense
Deposit liabilities
Interest expense
2012
300,000
54
86,141
—
—
—
840,250
120
287,416
—
—
—
152
35,483
—
—
98,470
29,928
—
—
37,614
105,070
509
—
5,089
—
2011
80,000
684
118,558
—
—
—
650,250
414
95,759
—
—
—
200
33,888
—
—
193,714
17,722
—
—
24,464
105,070
1,799
—
5,020
—
2012
—
—
—
6,496
149
4,141
—
—
—
37,578
197
1,507
—
—
124
1,090
—
—
1,495
118
—
—
—
4
—
161
2011
—
—
—
3,422
157
2,939
—
—
—
34,263
179
3,153
—
—
55
1,260
—
—
14,111
150
—
—
—
19
—
72
Terms
29 and 44 days;5.25%
On-demand
On-demand;0.25%
3 years
30 and 31 days;5.45%
On-demand
On-demand;0.25%
Conditions
Unsecured
Unsecured
Unsecured
Unsecured
Unsecured
5 years
On-demand
On-demand;0.25%
Unsecured
3 years
59 days;7%
On-demand;0.25%
35 days;2%
Unsecured
On-demand;0.25%
On-demand
On-demand;0.25%
On-demand; 0.25% and
30 days; 3.25%
Transactions with Subsidiaries
For the years ended December 31, 2012 and 2011, transactions with subsidiaries involving financial assets at FVPL and AFS
financial assets include outright sales totaling 6.5 billion and 5.8 billion, respectively, and outright purchases totaling
7.8 billion and 5.7 billion, respectively. Gains (losses) on sale of financial assets at FVPL and AFS financial assets in 2012 and
2011 amounted to 15.3 million and 26.7 million, respectively.
In 2012 and 2011, the Parent Bank purchased lease contracts and other loans receivables from ULFC, on a without recourse
basis, with a total price of 709.45 million and 570.6 million, respectively.
The Parent Bank has lease agreements with some of its subsidiaries in 2012 and 2011 with monthly rental of 0.6 million for both
years for periods ranging from one to three years. The lease agreements include the share of the subsidiaries in the maintenance
of the building. The income related to these agreements, is included as rent income under “Miscellaneous income” in the Parent
Bank’s statement of income.
Accounts receivable from UPI-MHC pertains to expenses paid by the Parent Bank, which were billed subsequently for reimbursement.
*As reported to the BSP
146 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 147
Transactions with Associates
The account balances with respect to transactions of the Parent Bank with its associates as at and for the years ended December 31, 2012
and 2011 follow:
On March 5, 1981, the BSP directed the Bank to manage the investments of the CIIF. The Bank, as administrator of the CIIF
through its BOD, placed the CIIF assets under the management of the Trust Banking Group (TBG).
Elements of Transactions
Statements of Financial
Statements of
Position Amounts
Income Amounts
Related Party
LOCI
SPMC
SLCOMI
GMC
UCFDC
Nature of
Transaction
Loans receivable
Deposit liabilities
Interest income
Interest expense
Trust fees from CIIF
Loans receivable
Deposit liabilities
Interest income
Interest expense
Trust fees from CIIF
Deposit liabilities
Interest expense
Trust fees from CIIF
Loans receivable
Deposit liabilities
Interest income
Interest expense
Trust fees from CIIF
Deposit liabilities
Accounts payable
Interest expense
2012
464,193
32,431
—
—
—
15,346
36,398
—
—
—
1,629
—
—
550,645
121,524
—
—
—
4,941
—
—
2011
335,117
11,373
—
—
—
—
22,198
—
—
—
261
—
—
804,358
23,558
—
—
—
337,566
24
—
2012
—
—
20,226
206
424
—
—
—
65
149
—
2
12
—
—
21,008
137
459
—
—
76
2011
Terms
— 111-165 days;4%
— On-demand;0.25%
16,525
33
451
— 51-55 days; 0%
— On-demand;0.25%
308
41
117
— On-demand;0.25%
1
8
— 148-170 days;4%
— On-demand;0.25%
20,781
71
460
— On-demand;0.25%
— On-demand
66
Conditions
Unsecured
Unsecured
Unsecured
The compensation of the key management personnel of the Group in 2012 and 2011 follows presented as part of “Compensation
and fringe benefits” in the statement of income follows:
Short-term employee benefits
Termination benefit
Post-employment benefits
Consolidated
2012
2011
301,423
319,955
—
18,623
1,455
1,662
303,085
340,033
when it has sufficient surplus to cover such appropriation. As at December 31, 2012 and 2011, the cumulative unrecognized
appropriation amounted to 181.6 million and 176.2 million, respectively.
Parent Bank
2012
2011
293,836
284,389
—
18,623
—
—
293,836
303,012
Transactions with Other Related Party
Loans and receivables from Stepan Philippines, Inc., a related party through the associates, amounted to 182.7 million and
320.7 million as at December 31, 2012 and 2011, respectively, with related interest income of 4.5 million and 6.6 million in
2012 and 2011, respectively.
29. Trust Operations
Securities and other properties amounting to 112.4 billion and 95.1 billion as at December 31, 2012 and 2011, respectively,
held by the Bank in fiduciary or agency capacity (for a fee) for its customers, are not included in the accompanying statement of
financial position since these are not properties of the Bank (see Note 30).
In compliance with the requirements of the General Banking Act relative to the Bank’s trust functions:
a. Investments in government securities with total face value of 1.1 billion (included under AFS financial assets) and 907.5
million (included under HTM investments) as at December 31, 2012 and 2011, respectively, are deposited with the BSP as
security for the Bank’s faithful compliance with its fiduciary obligations; and
b. 10.0% of the Bank’s trust income is transferred to surplus reserve. This yearly transfer is required until the surplus reserve for
trust function is equivalent to 20.0% of the Bank’s authorized capital stock. Income from trust operations is reported net of
the related expenses.
The Parent Bank has investments in LOCI, SPMC, SLCOMI and GMC. The CIIF forms part of the CCSF, otherwise known as the
coconut levy fund which was created in 1973 by Presidential Decree No. 276. These CIIF companies have investments in 14
Holding Companies whose funds were invested in SMC shares that were sequestered by the PCGG in May 1986.
The ownership of the CIIF block of SMC shares, as well as the CIIF companies, became the subject of legal proceedings before
the Sandiganbayan and Supreme Court.
On January 24, 2012, the Supreme Court declared that the CIIF block of SMC shares of stock totaling 33,133,266 shares as of
1983 together with all the dividends declared, paid and issued thereon as well as any increments thereto arising from, but
not limited to, exercise of pre-emptive rights are declared owned by the government to be used only for the benefit of all
coconut farmers and for the development of the coconut industry and ordered reconveyed to the government. The Supreme
Court affirmed the resolution issued by the Sandiganbayan on June 5, 2007, that there is no more necessity of further trial with
respect to the issue of ownership of the CIIF block of SMC shares, and the CIIF Companies as they have been finally adjudicated
in the Partial Summary Judgment dated July 11, 2003 and May 7, 2004.
On February 14, 2012, COCOFED et. al., filed a Motion for Reconsideration on the decision rendered by the Supreme Court on
January 24, 2012, citing certain substantial and grave errors of fact. The Motion for Reconsideration was denied with finality by
the Supreme Court on September 4, 2012. As at May 30, 2013, an entry of judgment has yet to be issued by the Supreme Court
in the COCOFED, et al. case.
On December 28, 2012, the Bank filed a Special Civil Action for Declaratory Relief seeking clarification on the Bank’s
proportionate right, title and interest in the CIIF Companies, as well as the Bank’s indirect equity in the 14 Holding Companies
and the CIIF block of SMC shares. The case, docketed as Civil Case No. 12-1251 before the Regional Trial Court of Makati Branch
59, has not reached the pre-trial stage.
30. Commitments and Contingent Liabilities
In the normal course of the Group’s operations, there are various outstanding commitments and contingent liabilities which are
not reflected in the accompanying financial statements. The Group recognizes in its books any losses and liabilities incurred in
the course of its operations as soon as these become determinable and quantifiable. No material loss or liability is anticipated to
be recognized in the accompanying financial statements as a result of these commitments and transactions.
The following is a summary of contingencies and commitments at their peso-equivalent contractual amounts arising from offbalance sheet items:
Trust department accounts
Standby letters of credit
Sight import LC outstanding
Spot exchange sold
Usance impor tletters of credit outstanding
Outward bills for collection
Spot exchange bought
Others
Note
29
Consolidated
2012
2011
112,400,418
95,056,740
1,965,785
1,781,271
612,240
1,282,846
533,650
920,640
187,863
341,424
175,382
136,741
20,525
2,148,160
5,295,536
4,993,428
21,191,399
106,661,250
Parent Bank
2012
2011
112,400,418
95,056,740
1,965,785
1,781,271
612,240
1,282,846
533,650
920,640
187,863
341,424
175,382
136,741
20,525
2,148,160
5,274,978
4,903,461
121,170,841 106,571,283
The Group received various letter notices and preliminary assessment notices from the Bureau of Internal Revenue (BIR) for
taxable years 1998 to 2002. The Group, and all other banks with FCDU operations, was assessed for the FCDU’s GRT and DST.
The assessments were protested on the basis of their legality. Compromise settlements were made with the BIR and the Group is
still waiting for the issuance of clearances.
The Group is defendant in various cases pending in courts for alleged claims against the Group, the outcome of which are not
fully determinable at present. However, in the opinion of the Group’s management, the liabilities or losses, if any, arising from
these claims is not material and should be recorded upon their final determination.
As at December 31, 2012 and 2011, the reserve for trust functions amounted to 117.7 million and is shown as part of “Surplus
reserves” in the statement of financial position (see Note 26). The amount of surplus for appropriation for 2012 and 2011 in
compliance with BSP requirement amounted to 5.4 million and 6.5 million, respectively. This will be recognized by the Bank
148 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 149
Segment information as at and for the year ended December 31 follows:
31. Segment Information
The Group’s operating businesses are recognized and managed separately according to the nature of services provided and
the different markets served with each segment representing a strategic business unit. The Group derives revenues from the
following main operating business segments:
Corporate and Consumer Banking Group
The Corporate and Consumer Banking Group (CCBG) manages the Group’s loan portfolio. It has a Consumer Banking Division
to handle the consumer loan market, a Corporate and Commercial Banking Division to handle the corporate and institutional
loan markets, and a Remittance Marketing Division for the overseas remittance market. Apart from credit lines, the Corporate
and Commercial Banking Division also provides transactional banking, trade finance, foreign exchange, trust banking, financial
advisory and capital markets solutions to its corporate and institutional clients.
Interest income
Interest expense
Net interest income (expense)
Depreciation and amortization
Provision for (reversal of) credit
and impairment losses
Net interest income (expense)
after depreciation and impairment
Other income
Other expenses
Net income or loss before income tax
Provision for income tax
Net income (loss) for the year
(
The CCBG also oversees the Group’s equity brokerage business through USI and the Group’s lease financing business through ULFC.
Total assets
Total liabilities
Branch Banking Group
The Branch Banking Group oversees the operation of the Group’s branches and ATM networks, which are the primary sales and
distribution platforms for products and services. Its primary tasks are to: solicit deposits; cross-sell and distribute all of the
Group’s products and services, as allowed by regulation; generate sales leads for specialized products; and manage customer
relationships.
Treasury Group
The TG manages the Group’s assets and liabilities. Working with the Asset and Liability Committee, TG recommends the pricing
strategy for deposits and loans to ensure that deposit-taking units offer competitive yields to generate the funding requirements
of the Group, and the lending units, in turn, offer rates that will attract the targeted borrowers. In addition, TG manages the
regulatory reserve requirements of the Group as well as ensures its liquidity position. The TG also engages in fixed income
securities and foreign exchange trading.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is evaluated based on net income before income tax, which is
measured in a manner consistent with that in the statement of income.
Interest income
Interest expense
Net interest income (expense)
Depreciation and amortization
Provision for (reversal of) credit
and impairment losses
Net interest income (expense)
after depreciation and impairment
Other income
Other expenses
Net income or loss before income tax
Provision for income tax
Net income (loss) for the year
Segment assets are those operating assets that are employed by a segment in its operating activities and that either directly
attributable to the segment or can be allocated to the segment on a reasonable basis.
Total assets
Total liabilities
USB
The Group considers USB as one operating business segment. USB manages the Group’s consumer loan market particularly
focusing on public school teachers and employees of local government units. USB also provides services such as deposit-taking,
domestic fund transfers and treasury.
Other Segments
This segment includes other segments that provide support to its core activities.
Segment liabilities are those operating liabilities that result from the operating activities of a segment and that either are
directly attributable to the segment or can be allocated to the segment on a reasonable basis.
The Group’s assets producing revenues are located in the Philippines (i.e., one geographical location), therefore, geographical
segment information is no longer presented.
The Group has no significant customers which contribute 10.0% or more of the consolidated revenue, net of interest expense.
Funds are ordinarily allocated between segments, resulting in funding cost transfers disclosed in operating income. Interest
charged for these funds is based on the Group’s cost of capital. There are no other material items of income or expense
between business segments.
150 / UCPB 2012 Annual Report
BBG
40,860
(1,934,221)
(1,893,361)
(247,945)
—
(2,141,306)
(2,349,830)
(771,062)
(5,262,198)
(151)
5,262,349)
153,535,933
158,798,627
BBG
40,020
(1,896,130)
(1,856,110)
(199,730)
—
CCBG
4,943,826
(39,995)
4,903,831
—
—
4,903,831
2,459,484
(200,922)
7,162,393
(11,913)
7,150,480
11,922,050
3,091,169
CCBG
4,219,138
(63,833)
4,155,305
(50,356)
2012
Treasury Other Segments
4,230,362
41,854
(1,164,062)
(22,211)
3,066,300
19,643
—
(238,459)
—
3,066,300
2,407,621
(150,831)
5,323,090
(630,550)
4,692,540 (
33,077,954
27,796,030
USB
865,282
(107,803)
757,479
(38,348)
Total
10,122,184
(3,268,292)
6,853,892
(524,752)
(552,584)
(79,611)
(632,195)
(771,400)
1,270,603
(3,312,314)
(2,813,111)
(144,161)
2,957,272)
639,520
187,612
(415,379)
411,753
(115,135)
296,618
5,696,945
3,975,490
(4,850,508)
4,821,927
(901,910)
3,920,017
8,457,415
6,148,771
218,578,792
197,880,983
USB
782,526
(82,312)
700,214
(36,342)
Total
9,466,487
(2,860,669)
6,605,818
(530,247)
(49,675)
(471,972)
614,197
167,872
(417,136)
364,933
(130,411)
234,522
5,603,599
3,354,867
(5,046,542)
3,911,924
(859,653)
3,052,271
11,585,440
2,046,386
2011
Treasury Other Segments
4,401,272
23,531
(818,394)
—
3,582,878
23,531
—
(243,819)
(481,982)
(15,443)
(2,055,840)
929,385
(741,692)
(1,868,147)
—
( 1,868,147)
3,622,967
285,620
(123,178)
3,785,409
(4,122)
3,781,287
3,567,435
657,264
(88,199)
4,136,500
—
4,136,500
136,424,795
153,026,133
9,595,867
4,232,622
38,234,571
20,525,390
75,128
(145,160)
1,314,726
(3,676,337)
(2,506,771)
(725,120)
( 3,231,891)
11,742,436
392,870
4,473,769
4,672,971
200,471,438
182,849,986
32. Financial Performance
The following basic ratios measure the financial performance of the Group and the Parent Bank before the effects of the
adjustments related to the exceptions discussed in the Statement of Compliance under Note 2 to the financial statements for
the years ended December 31, 2012 and 2011:
Consolidated
Parent Bank
2012
2011
2012
2011
Return on average equity (a/b)
20.5%
19.5%
31.4%
30.8%
a. Net income
3,920,017
3,059,660
2,748,557
2,106,520
b. Average equity
19,159,631
15,691,771
8,764,862
6,842,083
Return on average assets (c/d)
c. Net income
d. Average total assets
1.9%
3,920,017
209,525,115
1.6%
1.4%
3,059,660
2,748,557
186,948,683 193,025,849
1.2%
2,106,520
177,931,399
Net interest margin (e/f)
e. Net interest income
f. Average earning assets
4.2%
6,853,892
164,413,354
4.7%
3.8%
6,605,818
5,908,624
140,741,299 155,751,680
4.0%
5,753,871
142,232,458
UCPB 2012 Annual Report / 151
II. Based on RR No. 15-2010
33. Supplementary Information Required by the Bureau of Internal Revenue (BIR)
The Parent Bank reported and/or paid the following types of taxes for 2012:
In addition to the disclosures mandated under PFRS, and such other standards and/or conventions as may be adopted,
companies are required by the BIR to provide in the notes to the financial statements, certain supplementary information for
the taxable year.
The amounts relating to such information may not necessarily be the same with those amounts disclosed in the financial
statements which were prepared in accordance with PFRS. The following is the Parent Bank’s tax information required for the
taxable year ended December 31, 2012 under Regular/Normal Rate:
Gross Receipt Tax
Under the Philippine tax laws, financial institutions are subject to percentage and other taxes as well as income taxes.
Percentage and other taxes paid by the Parent Bank consist principally of GRT and DST.
Details of the Parent Bank’s income and related GRT accounts in 2012 are as follows:
I. Based on Revenue Regulations (RR) No. 19-2011
A. Sales/Receipts/Fees
Interest income:
Loans and receivable
Trading and investment securities
Due from BSP and other banks
Interbank loans receivable
Total
RBU
FCDU
5,052,944
62,758
107,329
1,785
5,224,816
—
—
—
—
—
B. Direct Cost of Services
Interest expense
Salaries and wages and other contributions
Supervision and examination fees
Insurance expense - PDIC
Total
RBU
1,749,100
571,534
60,043
252,070
2,632,747
FCDU
—
23,742
1,132
7,453
32,327
RBU
354,529
504,649
132,540
54,492
39,032
73,131
1,158,374
FCDU
—
17,693
—
—
—
1,510
19,203
RBU
550,462
546,540
315,415
306,022
65,312
FCDU
22,867
—
8,540
12,270
2,713
271,972
123,089
40,819
45,019
44,811
39,730
9,687
5,113
1,696
1,870
—
1,436
93,791
90,735
79,416
63,832
61,016
55,821
41,727
19,767
14,269
9,296
8,763
7,864
1,367
610
24,723
2,922,188
—
3,769
2,891
3,311
2,420
2,309
944
815
647
386
328
—
—
25
17,744
101,781
C. Operating and Other Income
Trading gain
Service charges and fees
Income from trust operation
Gain on asset sold/exchange
Foreign exchange gain
Miscellaneous
Total
D. Itemized Deductions
Compensation and employee benefits
Taxes and licenses
Security, messengerial and janitorial
Depreciation expense
Amortization
Occupancy expense:
Rent expense
Power, light, water
Repairs and maintenance
IT expenses
Litigation expense
Insurance expense
Miscellaneous expense:
Loss on sale of Loss on sale of real and other properties acquired
Telephone and postage
Travelling expense
Representation and entertainment
Fuel and lubricant
Stationery and supplies
Management and other professional fee
Advertising and publicity
Fees and commission expense
Director’s fees
Freight expense
Membership fees
Fines and penalties
Periodicals and magazines
Miscellaneous
Total
152 / UCPB 2012 Annual Report
Interest income
Other income
Gross Receipts
7,388,781
1,712,458
9,101,239
GRT
327,064
119,872
446,936
Other Taxes and Licenses
In 2012, other taxes and licenses of the Parent Bank consist of:
Amount
405,284
16,186
56,196
1,269
478,935
Documentary stamps tax*
Fringe benefit tax
Local taxes
Others
*Includes DST charged to the Parent Bank’s clients/customers
Withholding Taxes
Details of total remittances in 2012 and balance of withholding taxes as at December 31, 2012 are as follows:
Final withholding taxes
Withholding taxes on compensation and benefits
Expanded withholding taxes
Total Remittances
Balance
356,258
196,030
48,535
600,823
31,028
13,842
3,399
48,269
Tax Assessments and Cases
As at December 31, 2012, the Parent Bank has an ongoing case with the Supreme Court on FCDU GRT.
UCPB 2012 Annual Report / 153
REGIONAL OFFICES
METRO MANILA 1 REGION
Torre Lorenzo Building,
Taft Avenue corner P.
Ocampo Street
Malate, Manila
(02) 521-5667; 521-8397
(02) 521-9436 (fax)
MINDANAO REGION
UCPB Building, R. Magsaysay
corner Sales Streets, Davao City
(082) 221-2696
(082) 300-3658 (fax)
CALOOCAN / MALABON /
NAVOTAS CITIES
10th Ave. Caloocan
10th Avenue, cor. A. Mabini
Street, Caloocan City
(02) 310-5090; 310-5091
(02) 310-5093
METRO MANILA 3 REGION
UCPB Building, 725 Aurora
Boulevard, New Manila,
Quezon City
(02) 584-9708; 410-6525
(02) 414-7764 (fax)
Caloocan
283 EDSA corner Gen. Tinio
Street, Morning Breeze
Subdivision, Caloocan City
(02) 361-9779; 361-9729
(02) 366-0428 (fax)
METRO MANILA 4 REGION
UCPB Building, 190 Katipunan
Avenue cor. Raja Matanda St.,
Blue Ridge A, Quezon City
(02) 437-8831; 437-8828
(02) 647-1499 (fax)
Grace Park
Solid Tech Services Building,
205 Rizal Avenue Extension
corner 6th Avenue, Caloocan City
(02) 365-7305 to 07
(02) 362-1266 (fax)
METRO MANILA 5 REGION
UCPB Building, 358 Shaw
Boulevard, Mandaluyong City
(02) 533-4801
(02) 727-3145 (fax)
Karuhatan
246 McArthur Highway,
Karuhatan, Valenzuela City
(02) 291-5224 to 25
(02) 293-1390 (fax)
METRO MANILA 7 REGION
Ground Floor, UCPB
Corporate Offices, 7907
Makati Avenue, Makati City
(02) 811-9224; 811-9226
(02) 811-9227 (telefax)
NORTH-CENTRAL LUZON REGION
UCPB Building, Sto. Rosario
corner Plaridel Streets,
Angeles City, Pampanga
(045) 625-9230
(045) 887-2156 (fax)
SOUTH LUZON REGION
UCPB Building, Quezon Avenue
and Leon Guinto St., Lucena City
(042) 373-6821
(042) 710-2303 (telefax)
VISAYAS REGION
UCPB Building, Osmeña
Boulevard, Cebu City
(032) 253-3798
(032) 253-0344 (fax)
154 / UCPB 2012 Annual Report
BRANCHES
AS OF MAY 2013
AS OF MAY 2013
Anonas
Hi-Top Supermart, Aurora
Boulevard corner F. Castillo St.,
Project 4, Quezon City
(02) 421-0753 to 54
(02) 913-8301 (fax)
METRO MANILA
METRO MANILA 2 REGION
Tres Hermanas Inc. Building
Roosevelt Avenue corner
Quezon Avennue, Quezon City
(02) 372-4740; 372-4741
(02) 372-4739
METRO MANILA 6 REGION
Richville Corporate Center,
1314 Commerce Ave. Extension,
Madrigal Business Park
Ayala Alabang, Muntinlupa City
(02) 807-2929; 807-2931
(02) 807-2930 (fax)
BRANCHES
Malabon
153 M.H. Del Pilar corner
Gov. A. Pascual, Tinajeros,
Malabon City
(02) 352-4776; 352-6119
(02) 442-6900 (fax)
Malanday
UCPB Building, McArthur
Highway corner P. Adriano St.,
Malanday, Valenzuela City
(02) 445-8825, 794-6316
(02) 292-3657 (fax)
Navotas
Lot 1 Lapu-Lapu Avenue
corner North Bay Boulevard,
Kaunlaran Village, Navotas City
(02) 355-5588; 282-3881
(02) 282-3880 (fax)
Paso de Blas
Servando Building, Paso de
Blas, Malinta, Valenzuela City
(02) 332-8515; 291-1099
(02) 293-2811 (fax)
Araneta Avenue
Doña Nena Building, 425
Araneta Avenue corner
Bayani Street, Quezon City
(02) 732-9087; 713-1838
(02) 731-2260 (fax)
Aurora Boulevard
UCPB Building, 725 Aurora Blvd.,
New Manila, Quezon City
(02) 584-9752 to 55
(02) 584-9751 (fax)
Banaue
PPSTA Dormitory Building,
245 Banaue Street, Quezon City
(02) 732-5131; 732-5132
(02) 7712-6388 (fax)
Batasan
Sweet Haven Square Building,
Commonwealth Avenue corner
Villongco Street, Quezon City
(02) 430-9066; 951-0188
(02) 951-1998 (fax)
Blue Ridge
UCPB Building, 190 Katipunan
Avenue corner Raja Matanda
Street, Blue Ridge A, Quezon City
(02) 647-1089; 647-1515
(02) 647-1499 (fax)
Bohol Avenue
UCPB Building, Sgt. Esguerra
Street corner Quezon Avenue,
South Triangle, Quezon City
(02) 926-7626; 927-5606
(02) 922-2098 (fax)
Cambridge
Coronet Building, Cambridge
Street corner Aurora Blvd.,
Cubao, Quezon City
(02) 912-2339 to 40
(02) 912-2341 (fax)
Commonwealth Avenue
UCPB Building, 125 Commonwealth
Avenue, Diliman, Quezon City
(02) 931-9395 to 96
(02) 931-0471 (fax)
QUEZON CITY
Del Monte-Bonifacio
161 Del Monte Avenue,
Quezon City
(02) 367-0072; 415-2792
(02) 367-0073 (fax)
Acropolis
The Village Center, 187 E.
Rodriguez Jr. Avenue,
Bagumbayan (Libis), Quezon City
(02) 635-6872; 438-1177
(02) 655-4614 (fax)
Diliman
J&L Building, 23 Matalino
Street, Brgy. Central,
Diliman, Quezon City
(02) 921-6217; 921-9688
(02) 922-1030 (fax)
E. Rodriguez
2 Judge Jimenez Street
corner E. Rodriguez Sr.
Avenue, Brgy Pinagkaisahan,
Cubao, Quezon City
(02) 726-8649; 726-1063
(02) 726-1067 (fax)
Lagro
St. Andrew Building,
Quirino Highway, Lagro,
Novaliches, Quezon City
(02) 930-7291; 930-7293
(02) 930-7276 (fax)
Loyola Heights
SMRC Building, 331 Katipunan
Avenue, Loyola Heights,
Quezon City
(02) 927-6672 to 75
(02) 433-4308 (fax)
Mindanao Avenue
UCPB Building, 14 Mindanao
Avenue, Dominic Subdivision,
Tandang Sora, Quezon City
(02) 453-8616; 929-3718
(02) 983-9477 (fax)
Muñoz
304 Roosevelt Avenue corner
M.H. del Pilar Street,
San Francisco del Monte,
Quezon City
(02) 372-2421; 372-2422
(02) 372-2423 (fax)
New Manila
Cortes Building, 958 E.
Rodriguez, Sr. Avenue,
Quezon City
(02) 722-5474; 722-4714
(02) 721-8658 (fax)
Novaliches
UCPB Building, 937 Quirino
Highway, Novaliches, Quezon City
(02) 939-5590; 419-1609
(02) 939-6435 (fax)
P. Tuazon
STG Building, 190 P. Tuazon
St. corner 10th Avenue, Cubao,
Quezon City
(02) 911-7221; 911-7202
(02) 911-7208
Quirino Highway
380 Oeshram Building,
Sangandaan, Quirino Highway,
Novaliches, Quezon City
(02) 938-6863 to 64
(02) 938-6865 (fax)
Roosevelt Avenue
Tres Hermanas, Inc. Building,
Roosevelt corner Quezon
Avenue, Quezon City
(02) 372-4740 to 41
(02) 372-4739 (fax)
Tomas Morato
F.C. Building, 290 Tomas
Morato Avenue, Quezon City
(02) 922-1694; 924-7505
(02) 924-6783 (fax)
Pioneer
San Buena Building, 9 Shaw Blvd.
corner Pioneer St., Pasig City
(02) 631-3261 to 62
(02) 631-3271 (fax)
Visayas Avenue
Far East Asia Commercial
Complex, 282 Visayas corner
Congressional Avenues, Quezon City
(02) 924-5504; 924-5107
(02) 924-5884 (fax)
San Miguel
Unit D San Miguel Properties
Center, St. Francis Avenue,
Ortigas Center, Mandaluyong City
(02) 632-0855 to 57
(02) 632-0862 (fax)
Welcome Rotonda
299 E. Rodriguez Avenue,
Quezon City
(02) 740-8462 to 64
(02) 712-9751 (fax)
Tektite
West Tower, Philippine Stock
Exchange Center, Exchange Road,
Ortigas Center, Pasig City
(02) 638-6756; 638-6758
(02) 638-6759 (fax)
West Avenue
CBT Building, 60 West Avenue,
Quezon City
(02) 371-9796; 374-2143
(02) 374-3048 (fax)
SAN JUAN
Annapolis
Atlanta Centre Building,
Annapolis St., Greenhills,
San Juan
(02) 722-7176; 726-6662
(02) 722-8197 (fax)
Greenhills
A&E Building, Ortigas Avenue,
Greenhills, San Juan
(02) 722-6961 to 64
(02) 721-3393 (fax)
N. Domingo
UCPB Building, 120 N. Domingo
Street, San Juan City
(02) 726-0521; 744-5564
(02) 724-8008 (fax)
PASIG
Hanston Square
Hanston Square Building,
17 San Miguel Avenue, Ortigas
Center, Pasig City
(02) 706-0937 to 39
(02) 706-0434 (fax)
Ortigas
Emerald Building, 14 F. Ortigas Jr.
Avenue, Ortigas Center, Pasig City
(02) 636-0680; 631-6415
(02) 631-6413 (fax)
Pasig
UCPB Building, 12 Dr. Sixto
Antonio Avenue, Kapasigan,
Pasig City
(02) 641-0336; 641-0338
(02) 641-3451 (fax)
MANDALUYONG
Boni Avenue
Jemtee Building, 677 Boni
Avenue corner Aliw St.,
Mandaluyong City
(02) 533-7651 to 53;
(02) 532-1944 (fax)
Kalentong
214 Romualdez corner
Kalentong Streets,
Mandaluyong City
(02) 532-0771; 718-0246
(02) 531-0959 (fax)
Mandaluyong
UCPB Building, 358 Shaw
Boulevard, Mandaluyong City
(02) 727-5233; 727-1842
(02) 726-2192 (fax)
Robinsons Galleria
Galleria Corporate Center, EDSA
corner Ortigas Avenue, Quezon City
(02) 633-4951; 637-1688
(02) 632-9550 (fax)
Shangri-la Plaza
1st Level Shangri-la Plaza
Mall, EDSA corner Shaw Blvd.,
Mandaluyong City
(02) 633-9276 to 79
(02) 634-3183 (fax)
MARIKINA
Concepcion
David Building, Bayan-Bayanan
Avenue, Concepcion, Marikina City
(02) 942-2328 to 29
(02) 948-4020 (fax)
Marikina
20 Sumulong Highway, Sto.
Niño, Marikina City
(02) 646-9639; 646-9641
(02) 646-9640 (fax)
RIZAL
Antipolo
Circumferential Road, Barangay
San Roque, Antipolo City
(02) 696-7804; 630-1091
(02) 696-7806 (fax)
Cainta
UCPB Building, Felix Avenue,
Junction, Cainta, Rizal
(02) 655-4050 to 52
(02) 655-3037 (fax)
Masinag
Silicone Valley Building,
Sumulong Highway, Antipolo City
(02) 682-3018; 682-3013
(02) 681-5849 (fax)
Q. Plaza
Q. Plaza Commercial Complex,
Imelda Avenue corner Marcos
Highway, Cainta, Rizal
(02) 645-7068; 645-2547
(02) 645-2541 (fax)
Taytay
Fortunil Building, National
Road, San Juan, Taytay, Rizal
(02) 658-6986 to 89
(02) 658-6990 (fax)
MANILA
Binondo
509-513 Q. Paredes Street,
Binondo, Manila
(02) 242-5961 to 62
(02) 242-5665 (fax)
Elcano
601-603 Elcano corner
San Nicolas Streets,
Binondo, Manila
(02) 244-4251 to 53
(02) 242-9405 (fax)
Escolta
FUB Building, David corner
Escolta Streets, Sta. Cruz, Manila
(02) 243-1326 to 29
(02) 241-4869 (fax)
Juan Luna
First Binondo Centre Building,
524 Juan Luna Street,
Binondo, Manila
(02) 243-1980; 243-1982
(02) 243-1981 (fax)
Malate
1322 Golden Empire Tower,
Roxas Boulevard corner Padre
Faura, Ermita, Manila
(02) 567-0020; 353-3325
(02) 526-7455 (fax)
P. Ocampo
Torre Lorenzo Building, Taft
Avenue corner P. Ocampo St.,
Malate, Manila
(02) 536-3119; 536-3120
(02) 523-1766 (fax)
P. Paterno
713 P. Paterno Street,
Quiapo, Manila
(02) 733-4239; 733-4941
(02) 733-4225 (fax)
San Andres
Marc 2000 Tower, 1973 Taft
Avenue corner San Andres Street,
Malate, Manila
(02) 524-5426; 524-8116
(02) 524-8107 (fax)
Soler
Aceada Building, 949-951
Soler Street, Binondo, Manila
(02) 245-0216; 245-0016
(02) 245-0011 (fax)
T.M. Kalaw
Traveller’s Life Building, 490
T.M. Kalaw corner Cortada St.,
Ermita, Manila
(02) 522-4775; 522-0746
(02) 524-0504 (fax)
Tomas Mapua
Hian Chiong Building, 725 Tomas
Mapua Street, Sta. Cruz, Manila
(02) 733-3367; 734-3158
(02) 733-3359 (fax)
U.N. Avenue
Medical Center Manila
Building, U.N. Avenue corner
Gen. Luna Street, Ermita, Manila
(02) 521-3089; 521-3091
(02) 521-3090 (fax)
MAKATI
Main Office
Ground Floor, UCPB
Corporate Offices, 7907
Makati Avenue, Makati City
(02) 811-9243; 811-9245
(02) 811-9222 (fax)
Aguirre
PET Building, 114 Aguirre St.,
Legaspi Village, Makati City
(02) 892-3778; 817-8217
(02) 892-3757 (fax)
Ayala Avenue
Ayala Life - FGU Center,
6811 Ayala Avenue, Makati City
(02) 845-1630; 845-1240
(02) 845-1265 (fax)
Chino Roces
Alegria Building, 2229 Don
Chino Roces Avenue, Makati City
(02) 816-4675; 819-1223
(02) 893-1657 (fax)
UCPB 2012 Annual Report / 155
Dela Rosa
Asian Mansion I Building,
109 Dela Rosa Street, Legaspi
Village, Makati City
(02) 894-4445; 812-8433
(02) 815-2163 (fax)
Guadalupe
Tan Hock Building, P. Burgos
corner EDSA, Guadalupe Nuevo,
Makati City
(02) 882-0364; 882-4311
(02) 882-4577 (fax)
Herrera
Coherco Corporate Center,
116 V.A. Rufino Street, Legaspi
Village, Makati City
(02) 813-2990; 813-2992
(02) 817-8829 (fax)
J.P. Rizal
905 J.P. Rizal corner Santiago St.,
Brgy. Poblacion, Makati City
(02) 897-0020; 899-7235
(02) 899-7236 (fax)
Reposo - J.P. Rizal
Margarita Building, 748 JP Rizal St.,
Brgy. Poblacion, Makati City
(02) 553-0393 to 95
(02) 553-0396 (fax)
Salcedo
Philcox Building, 172 Salcedo St.,
Legaspi Village, Makati City
(02) 893-4251; 892-6916
(02) 894-0430 (fax)
Tordesillas
Tower A, Three Salcedo Place
Condominium, 102 Tordesillas St.,
Salcedo Village, Makati City
(02) 843-4022 to 23
(02) 843-4024 (fax)
Valero
Antel 2000 Corporate Center,
121 Valero Street, Salcedo Village,
Makati City
(02) 887-5255 to 57
(02) 887-5258 (fax)
TAGUIG
Makati Avenue
Tower A Somerset Olympia
Condominium, Makati Avenue
corner Sto. Tomas St., Urdaneta
Village, Makati City
(02) 892-1511 to 14
(02) 813-2288 (fax)
Marvin Plaza
Marvin Plaza Building, Don
Chino Roces Avenue, Makati City
(02) 893-0480; 840-3502
(02) 893-0485 (fax)
Metropolitan Avenue
Bormaheco Condominium,
Metropolitan Avenue corner
Zapote St., Makati City
(02) 899-4128; 897-1647
(02) 899-1751 (fax)
Pasay Road
Ginbo Building, 824 Arnaiz
Avenue, San Lorenzo Village,
Makati City
(02) 813-6501; 813-6483
(02) 813-6497 (fax)
32nd Street BGC
F1 Building, 32nd Street,
Bonifacio Global City, Taguig
(02) 478-7623; 478-0357
(02) 478-0834 (fax)
Global City
Fort Palm Spring Building,
30th Street, corner 1st Avenue,
Bonifacio Global City, Taguig
(02) 659-3749; 659-3753
(02) 846-5609 (fax)
McKinley Hill
IPC Building, Upper Mckinley
Road, Fort Bonifacio, Taguig
(02) 519-1800; 478-7139
(02) 519-1655 (fax)
The Fort
Units 114-115, Forbes Wood
Heights Condominium, Rizal Drive,
Bonifacio Global City, Taguig
(02) 856-6045 to 47
(02) 856-6049 (fax)
PASAY CITY
Pasong Tamo Extension
Jannov Plaza, 2295 Pasong
Tamo Extension, Makati City
(02) 893-1586; 810-5805
(02) 892-5169 (fax)
Puyat - Bautista
Majalco Building, Gil Puyat
Avenue and Bautista St.,
Palanan, Makati City
(02) 815-1324 to 26
(02) 893-2852 (fax)
156 / UCPB 2012 Annual Report
Coral Way
Fly Ace Corporate Center, 13
Coral Way, Central Business
Park, Pasay City
(02) 808-6680; 808-6684
(02) 808-6703 (fax)
F.B. Harrison
AIMS Building, A. Arnaiz
Avenue corner F.B. Harrison
Street, Pasay City
(02) 551-9381; 831-5790
(02) 833-2919 (fax)
BRANCHES
BRANCHES
AS OF MAY 2013
AS OF MAY 2013
Malibay
Commercial Building, 715 EDSA,
Malibay, Pasay City
(02) 889-9467 to 69
(02) 844-3644 (fax)
MUNTINLUPA /
PARAÑAQUE / LAS PIÑAS
Alabang
Civic Prime Building, 2501 Civic
corner Market Drive, Filinvest
Corporate City, Alabang,
Muntinlupa City
(02) 846-7445 to 46
(02) 856-4294 (fax)
Aquino Avenue
Skyfreight Building, Aquino
Avenue, Parañaque City
(02) 854-5292; 854-5161
(02) 854-5689 (fax)
Sucat
8415 Dr. A. Santos Avenue,
Brgy. San Antonio, Sucat,
Parañaque City
(02) 825-0839; 829-2517
(02) 825-0841 (fax)
Zapote
UCPB Building, Real Street,
Alabang-Zapote Road,
Las Pinas City
(02) 873-0939; 873-0207
(02) 873-0217 (fax)
ISABELA
Cauayan
C. Uy Building, National
Highway, Cauayan City, Isabela
(078) 652-3116; 662-1323
(078) 652-3117 (fax)
Santiago
UCPB Building, National
Highway corner Camacam St.,
Santiago, Isabela
(078) 305-2561; 305-2903
(078) 682-7097 (fax)
NORTH-CENTRAL LUZON
BF Parañaque
EJV Building, 21 Aguirre Avenue,
BF Homes Commercial Center,
Parañaque City
(02) 836-4945; 836-4937
(02) 836-4946 (fax)
Bicutan
J&M Mendoza Building, Doña
Soledad Avenue corner Argentina
Street, Better Living Subdivision,
Parañaque City
(02) 824-3337; 823-5260
(02) 821-9774 (fax)
Las Piñas
URCI Townhomes, Alabang
Zapote Road, Pamplona 3,
Las Pinas City
(02) 871-1883; 871-2961
(02) 873-2896 (fax)
Madrigal
Richville Corporate Center,
1314 Commerce Avenue
Extension, Madrigal Business Park,
Ayala-Alabang, Muntinlupa City
(02) 807-2927 to 29
(02) 807-2930 (fax)
Muntinlupa
Elizabeth Center Building,
National Road, Putatan,
Muntinlupa City
(02) 862-0025 to 26
(02) 862-0027 (fax)
Olongapo
UCPB Building, 1869 Rizal
Avenue, West Bajac-Bajac,
Olongapo City
(047) 223-4870; 222-3478
(047) 222-3046 (fax)
Subic Bay Freeport
Royal Sky Plaza, Royal Gateway
District, Argonaut Highway,
Subic Freeport Zone
(047) 252-7447; 252-6247
(047) 252-2421 (fax)
NUEVA VIZCAYA
BAGUIO CITY
Baguio
UCPB Building, Calderon and
T. Claudio Streets, Baguio City
(074) 442-3132; 443-4685;
(074) 442-3133 (fax)
PAMPANGA
Solano
J.P. Rizal Street, Poblacion,
Solano, Nueva Vizcaya
(078) 326-5487; 326-5047
(078) 326-5619 (fax)
BATAAN
Baclaran
UCPB Building, 4010 Airport
Road, Baclaran, Paranaque City
(02) 853-9746 to 47
(02) 852-1251 (fax)
ZAMBALES
ILOCOS NORTE /
ILOCOS SUR
Laoag
Bueno Building, J.P. Rizal corner
E. Ruiz Streets, Laoag City
(077) 771-4475; 772-2037
(077) 771-5800 (fax)
Vigan
UCPB Building, M.L. Quezon
Avenue, Vigan City, Ilocos Sur
(077) 722-2720; 632-0086
(077) 722-2719 (fax)
LA UNION
La Union
Unison Realty Building, Quezon
Avenue, San Fernando, La Union
(072) 242-0491; 888-5733;
(072) 242-0492 (fax)
PANGASINAN
Dagupan
UCPB Building, A. B. Fernandez
Avenue corner Herrero St.,
Dagupan City
(075) 522-0709; 515-3855
(075) 522-0914 (fax)
Urdaneta
UCPB Building, Alexander St.,
Urdaneta City, Pangasinan
(075) 568-1003; 656-2208
(075) 568-2828 (telefax)
CAGAYAN
Tuguegarao
Lim Building, A. Luna and A.
Bonifacio Streets, Tuguegarao
City, Cagayan
(078) 844-1060 to 61
(078) 844-1059 (fax)
Angeles
UCPB Building, Sto. Rosario
corner Plaridel Streets
Angeles City, Pampanga
(045) 625-9818; 888-2754
(045) 888-1672 (fax)
Balanga
UCPB Building, Don M. Banzon
Avenue, Balanga City, Bataan
(047) 237-2765; 791-2084
(047) 237-2875 (fax)
Clark Field
Lily Hill Plaza, C.M. Recto Highway,
Clark Freeport Zone, Pampanga
(045) 599-3472 to 73
(045) 599-3474 (fax)
Limay
UCPB Building, Roman National
Highway, Alangan, Limay, Bataan
(047) 244-5890; 244-5891
(047) 244-5892 (fax)
San Fernando
U2 Building, McArthur Highway,
Dolores, San Fernando, Pampanga
(045) 961-4581; 961-4582
(045) 963-1942 (fax)
BULACAN
TARLAC
Balagtas
Roma Building, 491 McArthur
Highway, San Juan, Balagtas,
Bulacan
(044) 693-2748; 769-1224
(044) 769-1900 (fax)
Baliuag
PVR Building, Benigno S. Aquino
Avenue, Baliuag, Bulacan
(044) 766-3227 to 28
(044) 766-7703 (fax)
Paniqui
UCPB Building, National
Highway, Paniqui, Tarlac
(045) 931-0225; 326-0109
(045) 931-0554 (fax)
Tarlac
Que Kian Juat Building, F. Tanedo St.,
San Nicolas, Tarlac City
(045) 982-0158; 982-3028
(045) 982-0159 (fax)
SOUTHERN LUZON
Meycauayan
Sarmiento Building, McArthur
Highway, Calvario, Meycauayan,
Bulacan
(044) 815-2389; 840-2708
(044) 815-3300 (fax)
NUEVA ECIJA
Cabanatuan
Ramoso Building, Burgos Avenue
and A. Bonifacio St., Cabanatuan City
(044) 463-2558; 463-1941
(044) 463-2168 (fax)
BATANGAS
Batangas
UCPB Building, C. Tirona corner
P. Zamora Streets, Batangas City
(043) 723-3490; 300-3490
(043) 723-0250 (fax)
Lemery
UCPB Building, Ilustre Avenue
corner Gen. Luna Street,
Lemery, Batangas
(043) 214-2588; 411-1019
(043) 411-1362 (fax)
Lipa - Big Ben
Big Ben Commercial Building,
Ayala Highway, Lipa City, Batangas
(043) 756-7131; 312-0103
(043) 756-7130 (fax)
Lipa - Recto
Wood Heights Building, C.M. Recto
Avenue, Lipa City, Batangas
(043) 756-1811; 312-3811;
(043) 756-1312 (fax)
Sto. Tomas
NDN Building, 34 JP Laurel
Highway, Brgy. San Roque, Sto.
Tomas, Batangas
(043) 784-8360; 784-8210
(043) 784-8226 (fax)
Tanauan
P&G Commercial Complex,
JP Laurel Highway, Tanauan City,
Batangas
(043) 778-6801 to 03
(043) 778-6804 (fax)
San Pablo
UCPB Building, Rizal Avenue
corner P. Alcantara Street,
San Pablo City, Laguna
(049) 562-0977; 562-7721
(049) 562-5120 (fax)
Sta. Cruz
UCPB Building, P. Guevarra and
P. Burgos Streets, Sta. Cruz,
Laguna
(049) 501-2590; 810-0728
(049) 808-2003 (fax)
Sta. Rosa
UCPB Building, National Highway
corner Provincial Highway,
Balibago, Sta. Rosa, Laguna
(049) 534-1364; 534-1366
(02) 520-8424 (fax)
CAVITE
QUEZON
Dasmariñas
Toledo Building, 2-A Sampaloc 1,
Aguinaldo Highway, Dasmariñas,
Cavite
(046) 416-6956 to 57
(046) 416-6953 (fax)
Imus
Maliksi Building, Tanzang Luma,
Aguinaldo Highway, Imus, Cavite
(046) 471-0306; 471-2494
(02) 529-8608 (fax)
Molino
Sologrande Center, Molino,
Bacoor, Cavite
(046) 476-0500; 476-0503
(046) 476-0504 (fax)
Rosario
UCPB Building, Gen. Trias Drive,
Rosario, Cavite
(046) 438-3712 to 14
(02) 529-8818 (fax)
LAGUNA
Biñan
UCPB Building, Biñan Business
Center, National Highway,
Platero, Biñan, Laguna
(049) 411-3889; 411-3899
(02) 520-6724 (fax)
Calamba
Lazaro and Borres Building,
National Road, Crossing,
Calamba, Laguna
(049) 545-2252; 545-2902
(02) 520-8837 (fax)
Laguna
UCPB Building, Km. 32 Old
National Highway, San Pedro,
Laguna
(02) 808-4193; 808-5374
(02) 808-3934 (fax)
Gumaca
Dalisay Building, Gen.
Antonio Luna and Bonifacio
Streets, Gumaca, Quezon
(042) 421-1312; 317-6304
(042) 317-7712 (fax)
Lucena - Centro
Quezon Avenue corne San
Fernando St., Lucena City
(042) 373-1431; 660-7080
(042) 373-7138 (fax)
Lucena - Guinto
UCPB Building, Quezon
Avenue and Leon Guinto
Street, Lucena City
(042) 710-2417; 660-3667
(042) 710-3659 (fax)
MINDORO
Calapan
Baniway Building, J.P. Rizal Street,
Brgy. San Vicente, Calapan City,
Oriental Mindoro
(043) 288-5678; 288-5252;
(043) 288-1733 (fax)
San Jose
Lopez Jaena Street, San Jose,
Occidental Mindoro
(043) 491-1014
(043) 491-2038 (fax)
ALBAY
Legaspi
UCPB Building, Quezon
Avenue Legaspi City
(052) 480-8721; 820-6450
(052) 480-7881 (fax)
UCPB 2012 Annual Report / 157
CAMARINES NORTE/
CAMARINES SUR
Daet
UCPB Building, F. Pimentel Street,
Daet, Camarines Norte
(054) 721-1353; 440-3294
(02) 429-0035 (fax)
Naga
UCPB Building, Evangelista Street
Naga City, Camarines Sur
(054) 811-2414
(054) 473-9172 (telefax)
BICOL
Masbate
UCPB Building, Quezon Avenue
corner Rosero Stairway, Masbate
(056) 333-2182; 333-2252
(056) 333-3477 (fax)
Sorsogon
UCPB Building, Magsaysay
Avenue and Rizal St., Sorsogon City
(056) 211-2058
(056) 421-5004 (telefax)
BACOLOD
Lacson-Galo
UCPB Building, Lacson corner
Galo Street, Bacolod City
(034) 433-7521 to 25
(034) 433-4085 (fax)
Libertad
UCPB Building, P. Hernaez and
Doña Juliana Streets,
Bacolod City
(034) 434-7862; 435-0278
(034) 435-2258 (fax)
North Drive
Northpoint Building,
North Drive, Bacolod City
(034) 435-4114; 434-1370
(034) 434-1373 (fax)
San Juan
UCPB Building, San Juan corner
Luzuriaga Streets, Bacolod City
(034) 433-7990; 435-4299
(034) 434-5437 (fax)
CENTRAL VISAYAS
BRANCHES
BRANCHES
AS OF MAY 2013
AS OF MAY 2013
Mandaue
UCPB Building, National
Highway, Mandaue, Cebu City
(032) 345-2894 to 95
(032) 346-2579 (fax)
Mango Avenue
Gen. Maxilom Avenue, Cebu City
(032) 233-7771; 233-7566
(032) 233-7778 (fax)
SM City - Cebu
Lower Ground Floor, SM City Cebu,
Reclamation Area, Cebu City
(032) 231-7971 to 72
(032) 231-7973 (fax)
DUMAGUETE
Dumaguete
UCPB Building, Real and San
Jose Streets,Dumaguete City
(035) 225-4444; 422-7806
(035) 225-4445 (fax)
EASTERN VISAYAS
Velez
Leonila Building, Apolinar Velez and
Pacana Streets, Cagayan de Oro City
(088) 856-4420; 852-1860
(088) 856-4474 (fax)
LANAO DEL NORTE
Iligan
UCPB Building, Mabini &
Aguinaldo Streets, Iligan City
(063) 492-3317; 221-3317
(063) 221-6218 (fax)
MISAMIS OCCIDENTAL
Oroquieta
UCPB Building, Washington
Street, Oroquieta City
(088) 531-1123 to 24
(088) 531-1444 (fax)
Ozamiz
UCPB Building, Rizal Avenue &
Laurel Street, Ozamiz City
(088) 521-0322; 521-0323
(088) 521-1516 (fax)
LEYTE
DAVAO REGION
WESTERN VISAYAS
AKLAN
Kalibo
UCPB Building, Martelino Street,
Kalibo, Aklan
(036) 262-3303; 268-4319
(036) 500-7513 (fax)
CAPIZ
Roxas
Gaisano Building, Arnaldo
Boulevard, Roxas City, Capiz
(036) 621-1850; 621-3547
(036) 621-0239 (fax)
ILOILO
Iznart
UCPB Building, Iznart St., Iloilo City
(033) 335-0741; 337-8843
(033) 338-1471 (fax)
Jaro
UCPB Building, Rizal Avenue and
Libertad Street, Jaro, Iloilo City
(033) 320-3477; 329-0746
(033) 320-1948 (fax)
Mabini
J&B Building, Mabini Street, Iloilo City
(033) 337-8008; 335-0429
(033) 335-0415 (fax)
158 / UCPB 2012 Annual Report
BOHOL
Tagbilaran
UCPB Building, C.P. Garcia
Avenue, Tagbilaran City
(038) 411-3262; 501-7891
(038) 411-5204 (fax)
CEBU
Banilad
TPE Building, Banilad Road,
Cebu City
(032) 346-9252; 346-9234
(032) 344-1181 (fax)
Carbon
UCPB Building, Manalili and
Cebu City
(032) 256-1571; 255-3382
(032) 254-1922 (fax)
F. Ramos
Yap Building, Ramos St.,
Brgy. Cogon, Cebu City
(032) 255-8497; 256-3772
(032) 255-8498 (fax)
Jones Avenue
UCPB Building, Osmeña
Boulevard, Cebu City
(032) 253-1251 to 53
(032) 256-2901 (fax)
Mabolo
AMV Bros. Building Almendras
and F. Cabahug Streets,
Mabolo, Cebu City
(032) 233-2123; 233-1500
(032) 232-7389 (fax)
Tacloban
UCPB Building, Zamora
Street, Tacloban City
(053) 325-5056; 523-7173
(053) 325-8682 (fax)
Bajada
DASI Building, JP Laurel
Avenue, Davao City
(082) 305-2887; 305-2890
(082) 222-5917 (fax)
SAMAR
Calbayog
UCPB Building, Gomez and Nijiaga
Streets, Calbayog City, Samar
(055) 209-1456; 209-1384
(055) 209-3024 (fax)
MINDANAO
ZAMBOANGA
Pagadian
Rizal Avenue, Sta. Lucia District,
Pagadian City
(062) 214-1409; 214-1526
(062) 241-1410 (fax)
Zamboanga
UCPB Building, Rizal corner
Corcuera Streets, Zamboanga City
(062) 991-7791; 991-4576
(062) 991-1484 (telefax)
NORTHERN MINDANAO
CAGAYAN DE ORO
Cogon
Chee Building, Osmeña & Lim Ket
Kai Avenue, Cagayan de Oro City
(08822) 726-581; 725-135
(088) 857-1840 (fax)
GENERAL SANTOS CITY
General Santos
UCPB Building, Santiago
Boulevard & Magsaysay
Avenue, General Santos City
(083) 552-3783; 552-3574
(083) 301-4948 (fax)
BUTUAN
Butuan
St. Joseph Parish Hall, Ester Luna
Street, Butuan City
(085) 341-1010; 342-8624
(085) 815-4090 (fax)
STO. TOMAS
NDN Building, 34 JP Laurel
Highway, Brgy. San Roque, Sto.
Tomas, Batangas
(043) 702-3759 (telefax)
SUBSIDIARIES
Sta. Cruz
M.F. Tiaoqui Building, Plaza
Sta. Cruz, Sta. Cruz, Manila
(02) 733-0258; 733-7860 to 61
(02) 733-0262 (telefax)
QUEZON
Morong
317 T. Claudio Street,
Morong, Rizal
(02) 653-0281; 653-1102
(02) 653-0282 (telefax)
San Mateo
44 General Luna Street,
Brgy. Banaba, San Mateo, Rizal
(02) 661-6146; 661-6149
(02) 584-9023 (telefax)
Tanay
F.T. Catapusan Street, Plaza
Aldea, Tanay, Rizal
(02) 654-0880
(02) 654-0818 (telefax)
Surigao
UCPB Building, San Nicolas
and Diaz Streets, Surigao City
(086) 231-7151; 231-7153
(086) 826-0299 (fax)
Consumer Finance
Business Centers
HEAD OFFICE
Ground Floor, UCPB Corporate
Offices, 7907 Makati Avenue,
Makati City
811-9000 local 9117
811-9106 or 07 (telefax)
R. Magsaysay
UCPB Building, R. Magsaysay
corner Sales Streets, Davao City
(082) 221-2933; 226-3950
(082) 221-7608 (fax)
BACOLOD
UCPB Building, P. Hernaez and
Doña Juliana Streets,
Bacolod City
(043) 435-2259 (telefax)
San Pedro
UCPB Business Center,
San Pedro St., Davao City
(082) 221-3227; 226-3865
(082) 300-2600 (fax)
CAGAYAN DE ORO
Chee Building, Osmeña & Lim Ket
Kai Avenue, Cagayan de Oro City
(088)880-7201 (telefax)
UCPB LEASING AND
FINANCE CORPORATION
HEAD OFFICE
14/F UCPB Corporate Offices
Makati Avenue, Makati City
Marketing
(02) 811-9488; 811-9143
(02) 811-9613 (fax)
Sta. Rosa
Sta. Rosa - Tagaytay Road, Santa
Rosa Estates Commercial,
Sta. Rosa, Laguna
(049) 508-1784; 508-1785
(049) 508-1533 (telefax)
RIZAL
SURIGAO
ANGELES
UCPB Building, Sto. Rosario
corner Plaridel Streets
Angeles City, Pampanga
888-3632 (telefax)
COTABATO
NAGA
UCPB Building, Evangelista Street
Naga City, Camarines Sur
(054) 811-2048 (telefax)
CARAGA REGION
Palma Gil
Ground Floor, Cocolife Building,
C.M. Recto Avenue corner Palma
Gil Street, Davao City
(082) 222-0900 to 02;
(082) 222-0903 (fax)
SOCKSARGEN
ILOILO
UCPB Building, Rizal Avenue and
Libertad Street, Jaro, Iloilo City
(033) 320-3790 (telefax)
CENTRAL / NORTHERN LUZON
TARLAC
Sta. Ignacia
URI Building, Romulo Highway,
Poblacion West, Sta. Ignacia, Tarlac
(045) 606-3379; 606-3380
(045) 605-0379 (telefax)
Atimonan
Quezon and Rizal Streets,
Brgy. Zone II, Atimonan, Quezon
(042) 511-1053; 511-1561
(042) 316-5314 (telefax)
Calauag
Arguelles corner Quezon
Streets, Barangay 5, Calauag,
Quezon
(042) 301-7320
(042) 301-8300 (telefax)
Lucban
Rizal Avenue corner San Luis
Street, Barangay 8, Lucban,
Quezon
(042) 911-1495
(042) 540-4213 (telefax)
Tayabas
Quezon Avenue corner
General Luna Streets,
Tayabas, Quezon
(042) 793-2329
(042) 793-2205 (telefax)
BULACAN
MINDORO
CEBU
UCPB Building, Osmeña
Boulevard, Cebu City
(032) 254-7976 (telefax)
Cotabato
UCPB Building, Don Rufino
Alonzo Street, Cotabato City
(064) 421-2640; 421-3229
(064) 421-3229 (fax)
DAGUPAN
UCPB Building, A. B. Fernandez
Avenue corner Herrero St.,
Dagupan City
(075) 522-1516 (telefax)
Kidapawan
UCPB Building, Quezon
Boulevard, Kidapawan,
North Cotabato
(064) 288-1520; 288-1787
(064) 288-1421 (fax)
DAVAO
UCPB Building, R. Magsaysay
corner Sales Streets, Davao City
(082) 221-7642 (telefax)
Operations
(02) 811-9142
Malolos
Paseo Del Congreso, Catmon,
Malolos, Bulacan
(044) 794-0022; 794-0188
(044) 794-0021 (telefax)
SOUTHERN LUZON
CAVITE
UCPB SAVINGS BANK
HEAD OFFICE
18th Floor, UCPB Corporate Offices,
7907 Makati Avenue, Makati City
(02) 811-9080
(02) 811-9000 loc. 7231
METRO MANILA
C.M. Recto
Saint Augustine Law Building
San Sebastian College- Recoletos,
C.M. Recto, Sampaloc, Manila
(02) 734-6262; 734-6276
(02) 734-6277 (telefax)
Rizal Avenue
Tan Han Chi Place , 1558 Rizal
Avenue corner Mayhaligue Street,
Sta. Cruz, Manila
(02) 309-9558; 743-7426
(02) 743-0750 (telefax)
Tanza
7 A. Soriano Highway, Daang
Amayo 1, Tanza, Cavite
(046) 437-1162; 437-1167
(02) 529-8970 (telefax)
Sablayan
420 P. Urueta Street, Brgy.
Buenavista, Sablayan,
Occidental Mindoro
(043) 458-0012
(0917) 881-7938
PALAWAN
Puerto Princesa
55 Roxas Street, Brgy.
Magkakaibigan, Puerto
Princesa City, Palawan
(048) 433-2066
(048) 433-8187 (telefax)
LAGUNA
Alaminos
Del Pilar Street, Poblacion,
Alaminos, Laguna
(049) 805-1723; 521-0309
(049) 567-1296 (telefax)
Nagcarlan
E.A. Fernandez corner
E. Lucido Streets, Poblacion,
Nagcaran, Laguna
(049) 563-3489; 563-3490
(049) 563-3488 (telefax)
CAMARINES SUR
Caramoan
41 Real Street, Tawog
Caramoan, Camarines Sur
(054) 238-5041
(02) 697-2421
(0917) 850-1381
Goa
Rizal corner Panday Street, Brgy.
Poblacion, Goa, Camarines Sur
(054) 453-1523; 453-0319
(054) 453-1524 (telefax)
UCPB 2012 Annual Report / 159
BRANCHES
AS OF MAY 2013
Libmanan
T. Dilanco Street, Brgy.
Poblacion, Libmanan,
Camarines Sur
(054) 511-8222
(054) 451-2048 (telefax)
Pili
National Highway, Brgy. Old
San Roque, Pili, Camarines Sur
(054) 477-7752; 361-1142
(02) 250-8056 (telefax)
VISAYAS
AKLAN
Numancia
Estrella Building, National
Highway corner Zamora Street,
Poblacion, Numancia, Aklan
(036) 265-6953
(036) 265-6952 (fax)
CEBU
Tuburan
Tabo-tabo Street, Poblacion,
Tuburan, Cebu City
(032) 463-9088
(032) 463-9151 (fax)
ILOILO
Iloilo
Angeles Arcade, De Leon
Street, Iloilo City
(033) 335-0422; 508-7090
(033) 508-7490 (telefax)
LEYTE
Sogod
Osmeña Street, Brgy. Zone III,
Sogod, Southern Leyte
(053) 382-2039
(053) 382-3262 (telefax)
MINDANAO
BASILAN
Lamitan
Quezon Boulevard, Brgy.
Malakas, Lamitan, Basilan
(062) 936-0018
(062) 991-2681 (telefax)
DAVAO
Davao
MK Central Building, J.P. Laurel
Avenue, Bajada, Davao City
(082) 300-0541; 226-3800
(082) 224-4229 (telefax)
MISAMIS OCCIDENTAL
Aloran
Jose Mutia Street, Brgy. Ospital,
Aloran, Misamis Occidental
(0918) 911-3683
(088) 545-4011 (telefax)
MISAMIS ORIENTAL
Bulua
Forever Books Building, Zone
6, Bulua, Cagayan de Oro City,
Misamis Oriental
(088) 858-8063
(08822) 754-519 (telefax)
UCPB SECURITIES, INC.
HEAD OFFICE
7th Floor, UCPB Corporate
Offices, 7907 Makati Avenue,
Makati City
Sales and Marketing
(02) 811-9975; 811-9978 to 79
Operations
(02) 811-9970 to 71
Trading Floor
(02) 891-9735 to 37
Lapasan
Market City, Agora Lapasan
Cagayan de Oro City
(088) 555-0264
(0822) 75-6728 (telefax)
Cagayan de Oro
Capistrano Cruz and Taal
Streets, Barangay 7, Cagayan de
Oro City, Misamis Oriental
(088) 857-2355; 852-4099
(08822) 72-2695 (telefax)
Lapasan
Market City, Agora, Lapasan,
Cagayan de Oro City
(08822) 555-0264
(08822) 75-6728 (telefax)
NEGROS OCCIDENTAL
ZAMBOANGA
Bacolod
San Antonio Park Square,
Brgy. Mandalangan, Bacolod City
(034) 709-7485 to 86
(034) 441-2103 (telefax)
Glan
182-C Enrique Yap St., Poblacion,
Glan, Saranggani Province
(083) 893-0080
(083) 262-1010 (telefax)
Escalante
New Libra Mart, Victoria Building
North Avenue, Escalante City
Negros Occidental
(034) 724-8022; 724-8011
(034) 454-0734 (telefax)
Sindangan
Mabini St., Brgy. Poblacion,
Sindangan, Zamboanga del Norte
(065) 918-5259
(065) 224-2013 (telefax)
La Castellana
Feria corner Roxas Streets,
Brgy. Robles, La Castellana,
Negros Occidental
(034) 485-0160
(034) 485-0059(telefax)
160 / UCPB 2012 Annual Report
UCPB 2012 Annual Report / 161