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    BPI Annual Audited FS 2020

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    BPI Annual Audited FS 2020

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    BPI Annual Audited FS 2020

    Uploaded by

    Veronica Rivera
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    BPI Annual Audited FS 2020

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    BPI Annual Audited FS 2020

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Download as pdf
    40 views129 pages

    BPI Annual Audited FS 2020

    Uploaded by

    Veronica Rivera
    BPI Annual Audited FS 2020

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    ‘www. pwe.com/ph, Bank of the Philippine Islands Financial Statements As at December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020 pwe Isla Lipana & Co. _-& pwc Isla Lipana & Co. Independent Auditor's Report ‘To the Board of Directors and Shareholders of Bank of the Philippine Islands Ayala North Exchange Ayala Avenue corner Salcedo Street, Legaspi Village, Makati City Report on the Audits of the Financial Statements Our Opinion In our opinion, the accompanying consolidated financial statements of the Bank of the Philippine Islands and Subsidiaries (the “BPI Group") and the parent financial statements of the Bank of the Philippine Islands (the "Parent Bank") present fairly, in all material respects, the financial position of the BPI Group and of the Parent Bank as at December 31, 2020 and 2019, and their financial performance and their cash flows for each of the three years in the period ended December g1, 2020 in accordance with Philippine Financial Reporting Standards (‘PFRSs"). What we have audited ‘The financial statements comprise: ‘+ the consolidated and parent statements of condition as at December 31, 2020 and 2019; * the consolidated and parent statements of income for each of the three years in the period ended December 31, 2020; * the consolidated and parent statements of total comprehensive income for each of the three years in the period ended December 31, 2020; * the consolidated and parent statements of changes in capital funds for each of the three years in the period ended December 31, 2020; + the consolidated and parent statements of cash flows for each of the three years in the period ended December 31, 2020; and © the notes to the consolidated and parent financial statements, which include a summary of significant accounting policies. Basis for Opinion ‘We conducted our audits in accordance with Philippine Standards on Auditing (“PSAs”). Our responsibilities under those standards are further deseribed in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. ‘We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Isla Lipana & Co,, 29th Floor, Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City, Philippines 1: 463 (2) 8845 2728, P: +63 (2) 8845 2806, wwrw.pwe.com/ph Ian & co th hse man he Puno PAC ort Phe meer em an my ae oe Pn. ah ‘meets cpr coy Pun sen por anf ea _ pwe Isla Lipana & Co. Independent Auditor's Report To the Board of Directors and Shareholders of Bank of the Philippine Islands Page 2 Independence ‘We are independent of the BPI Group and the Parent Bank in accordance with the Code of Ethies for Professional Accountants in the Philippines (Code of Bthics), together with the ethical requirements that are relevant to our audit of the consolidated and parent financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Cade of Ethics Our Audit Approach As part of designing our audit, we determined materiality and assessed the tisks of material ‘misstatement in the consolidated and parent financial statements, In particular, we considered where ‘management rade subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, inckuding among other matters, consideration of whether there was evidence of bias that represented a risk of ‘material misstatement due to fraud, We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated and parent financial statements as a whole, taking into account the structure of the BPL Group and the Parent Bank, the accounting processes and controls, and the industry in which the BPI Group and the Parent Bank operate Key audit matters Key audit matters are those matters that, in our professional judgment, were of most signifieance in our audit of the consolidated and parent financial statements of the current petiod. These matters were addressed in the context of our audit ofthe consolidated and parent financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. ‘The key audit matter identified in our audit pertains to the impairment losses on loans and advances, which applies to both the BPT Group's and the Parent Bank’s financial statements, 2 pwe Independent Auditor's Report ‘To the Board of Directors and Sharcholders of Bank of the Philippine Islands Page 3 Isla Lipana & Co. ‘Key Audit Matter _ Impairment losses on loans and advances ‘We focused on this account because of the complexity involved in the estimation process, and the significant judgments that management makes in ascertaining the provision for loan ‘impairment. The calculation of impairment losses is inherently judgmental for any bank. AS at December 31, 2020, the total allowance for impairment for loans and advances amounted to PHP46,758 million for the BPI Group and. PHP34,796 million for the Parent Bank while provision for loan losses recognized in profit or Joss for the year then ended amounted to PHP26,994 million for the BPI Group and PHP20,232 million for the Parent Bank. Refer to ‘Notes 10 and 26 of the financial statements for the details of the impairment losses on loans and advances, Provision for impairment losses on loans that are assessed to be individually eredit impaired is determined in reference to the estimated future cash repayments and proceeds from the realization of collateral held by the BP! Group and the Parent Bank. For other loan accounts which are not individually credit impaired, they are included in a group of loans with similar risk characteristics and are collectively assessed on a portfolio basis using internal models developed by the BPI Group and the Parent Bank, ‘How our audit addressed the Key Audit Matter ‘We assessed the design and tested the operating effectiveness of key controls over loan loss provisioning. These key controls inlade ‘governance over the development, validation and approval of the BPI Group's ECL models to assess compliance with Philippine Financial Reporting Standard (PFRS) 9, Financial instruments; including continuous reassessment by the BPI Group that the impairment models are operating in a way which is appropriate forthe eredit risks in the BPI Group and the Parent Bank's loan portfolios; + review and approval of key judgments, assumptions and forward-looking information used in the ECL models; * review of data from source systems to the detailed ECL model analyses; * assessment of credit quality ofloans and advances relative to the established internal credit risk rating system; ‘+ thereview and approval process for the ‘outputs of the impairment models; and + the review and approval process over the determination of eredit risk rating, performance of eredit reviews and calculation of required reserves for loans assessed as credit-impaired. ‘Our work over the impairment of loans and advances included: ‘assessment of the methodology applied by the BPI Group and the Parent Bank in the development of the ECL models vis-a-vis the requirements of PFRS 9; * testing of key assumptions in the ECL, ‘models such as PD, LGD, EAD built from historical data. Our assessment included the involvement of our internal specialist; _- pwe Isla Lipana & Co. Independent Auditor's Report ‘To the Board of Directors and Sharcholders of Bank ofthe Philippine Islands Page 4 How our andit addressed the Key Audit Matter Key Audit Matter (eant'd) Key elements in the impairment of loans and advances include: the identification of credit-impaired loans, and estimation of eash flows {Gncluding the expected realizable value of any collateral held) supporting the calculation of individually assessed provisions; and ‘the application of appropriate impairment models for the collectively assessed accounts, This include the use ‘of key assumptions in the impairment models (Le., staging of accounts, significant increase in credit risk, forward-looking information), the ‘exposure at default (EAD), the probability of default (PD) and the loss given default (LGD). ‘The impairment losses inelude both quantitative and qualitative components. In calculating the Joan loss provisioning, the BPI Group and the Parent Bank applied the expected eredit loss (ECL) model prescribed by PERS 9, which is a ‘complex process that takes into account forward- looking information reflecting the BPI Group and the Parent Bank’s view on potential future ‘economic events, assessment of the appropriateness of the BPI Group's and the Parent Bank’s definition of significant increase in credit risk and staging ‘of accounts through analysis of historical trends and past credit behavior of loan portfolios; independent comparison of economic information used within, and weightings applied to, forward-looking scenarios in the ECL models against available macro- economic data; testing of the accuracy and completeness of data inputs in the ECL. models and in the ECL calculation by comparing them with the information obtained from source systems; testing the accuracy and reasonableness of the outputs of the BCL models through independent recaleulation; for a sample of individually assessed loans identified as eredit-impaired, examined relevant supporting documents such as the latest financial information of the borrower or valuation of collateral used as a basis in estimating the recoverable amount and ‘measuring the loan loss allowance; and recalculation of the collective loan loss allowance for selected accounts and ‘portfolios at reporting date using the ECL models adopted by the BPI Group and the Parent Bank. - pwe Isla Lipana & Co. Independent Auditor's Report ‘To the Board of Directors and Shareholders of Bank of the Philippine Islands Page 5 Other Information ‘Management is responsible for the other information. The other information comprises the information included in the SEC Form 20-18 (Definitive Information Statement), SEC Form 17-A and Annual Report, but does not include the consolidated and parent financial statements and our auditor's report thereon. ‘The SEC Form 20-1$ (Definitive Information Statement), SEC Form 17-A and Annual Report are expected to be made available to us after the date ofthis auditor's report. Our opinion on the consolidated and parent financial statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audits of the consolidated and parent financial statements, our responsiblity isto read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and parent financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Responsibilities of Management and Those Charged with Governance for the Financial Statements ‘Management is responsible for the preparation and fair presentation of the consolidated and parent financial statements in accordance with PFRSs and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Inpreparing the consolidated and parent financial statements, management is responsible for assessing the ability of each entity within the BPI Group and of the Parent Bank to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the entities within the BPI Group and the Parent Bank or to cease operations, or has no realistic alternative but to do so. ‘Those charged with governance are responsible for overseeing the BPI Group's and the Parent Bank's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated and parent financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a ‘guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and parent financial statements, _- pwe Isla Lipana & Co. Independent Auditor's Report ‘To the Board of Directors and Shareholders of Bank ofthe Philippine Islands Page 6 As part of an audit in accordance with PSAs, we exereise professional judgment and maintain professional skepticism throughout the audit. We also: ‘+ Identify and assess the tisks of material misstatement of the consolidated and parent financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion, The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal contro! relevant to the audit 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 BPI Group's and of the Parent Bank's internal control. *+ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. ‘* Conclude on the appropriateness of management's use of the going concern basis of accounting and, ‘based on the audit evidence obtained, whether a material uncertainty exists related to events oF conditions that may cast significant doubt on the ability of each entity within the BPI Group and the Parent Bank to continue as a going concern. If we conelude that a material uncertainty exists, we are required to dvaw attention in our auditor’s report to the related disclosures in the consolidated and parent financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’ report. However, future events or conditions may cause the entities within the BPI Group and the Parent Bank to cease to continue as a going concern. *+ Evaluate the overall presentation, structure and content of the consolidated and parent financial statements, including the disclosures, and whether the consolidated and parent financial statements represent the underlying transactions and events in a manner that achieves fur presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other ‘matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. - pwe Isla Lipana & Co. Independent Auditor’s Report To the Board of Directors and Shareholders of Bank of the Philippine Islands Page? From the matters communicated with those charged with governance, we determine those matters that ‘were of most significance in the audit of the consolidated and parent financial statements of the current period and is therefore the key audit matter. We describe these matters in our auditor’s report unless law ‘or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing s0 would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Supplementary Information Required by the Bangko Sentral ng Pilipinas (BSP) and the Bureau of Internal Revenue (BIR) Our audits were conducted for the purpose of forming an opinion on the basic finaneial statements taken as awhole. The supplementary information required under BSP Circular No. 1074 in Note 31 and BIR Revenue Regulations No, 15-2010 in Note 32 to the financial statements is presented for purposes of fling with the BSP and the BIR, respectively, and is not a required part of the basic financial statements. Such information is the responsibility of the management of the BPI Group and the Parent Bank. The information has been subjected to the auditing procedures applied in our audits of the basic financial statements. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. ‘The engagement partner on the audit resulting in this independent auditor's reportis John-John Patrick V. Lim, Isla Lipana & Co, tudo jolyf-John Patrick V. Lim Pai CPA Cert. No. 83380 BIT.R No. 0007706, issued on January 5, 2021, Makati City SECAN. (individual) as general auditors 1775 -A, Category A; effective until September 4, 2022 SECAN, (Firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024, ‘nancial statements TIN 112-071-386 BIR ANN, 08-000745-017-2018, issued on December 10, 2018; elective until December 9, 2021, BOA/PRC Reg, No, 0142, effective until January 21, 2023 Makati City February 24, 2021 _- pwc Isla Lipana & Co. Statements Required by Rule 68 Securities Regulation Code (SRC) To the Board of Directors and Shareholders of Bank of the Philippine Islands Ayala North Exchange Ayala Aventie comer Saleedo Street, Legaspi Village, Makati City ‘We have audited in accordance with Philippine Standards on Auditing, the consolidated financial statements of the Bank of the Philippine Islands and Subsidiaries (the “BPI Group”) as at December gi, 2020 and 2019 and for each of the three years in the petiod ended December 31, 2020, and have issued our report thereon dated February 24, 2021. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The Supplementary Schedule on Financial Soundness Indicators, including their definitions, formulas, calculation, and their appropriateness or usefulness tothe intended users, are the responsibility of the BPI Group's management. These financial soundness indicators are not measures of operating performance defined by Philippine Financial Reporting Standards (PFRSS) and may not be comparable to similarly titled measures presented by other companies. This schedule is presented for the purpose of complying with the Revised Securities Regulation Code Rule 68 issued by the Securities and Exchange Commission, and is not a required part ofthe basic consolidated financial statements prepared in accordance with PFRSS. The components of these financial soundness indicators have been traced to the BPI Group's consolidated financial statements as at December 31, 2020 and 2019 ‘and for each of the three years inthe period ended December g1, 2020 and no material exceptions were noted. Isla Lipana & Co. AGS fe oh mn Patrick V. Lim hs CPA Cert. No. 89389 B:T.R. No, 0007706, issued on January 5, 2021, Makati City ‘SEC AN. (individual) as general auditors 1775 -A, Category A; effective until September 4, 2022 SECAN. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024 financial statements TIN 112-071-386 BIR A.N. 08-000745-017-2016, issued on December 10, 2018; effective until December 9, 2021 BOA/PRC Reg. No. 0142, effective until January 21, 2023 Makati City February 24, 2021 Isla Lipana & Co,, 29th Floor, Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City, Philippines T: 409 (2) 8845 2728, F: +63 (2) 8845 2806, wwrw.pwe.com/ph, Intra 8 c,h Pipe manta nf ha PuC nat: oe apps ner im amy omens le ohe Pa eC Ione tis copocelogl cally Pease ace wen comin rt tae pwe Isla Lipana & Co. To the Board of Directors and Shareholders of Bank of the Philippine Islands Ayala North Exchange Ayala Avenue comer Salcedo Street, Legaspi Village, ‘Makati City We have audited the consolidated financial statements of the Bank of the Philippine Islands and Subsidiaries (the “BPI Group”) and the parent financial statements of the Bank ofthe Philippine Islands (the “Parent Bank”) as at and for the year ended December 31, 2020, on which we have rendered the attached report dated February 24, 2021. The supplementary information shown in the Reconeiliation of the Parent Bank’s Retained Earnings Available for Dividend Declaration, Map of the Conglomerate or Group of Companies within which the Bank of the Philippine Islands belongs effective as at December 31, 2020, as additional components required by Part I, Section 5 of Rule 68 of the Securities, ‘Regulation Code, and Schedules A, B, C, D, E, F and G, as required by Part I, Section 6 of Rule 68 of the Securities Regulation Code, is presented for purposes of filing with the Securities and Exchange Commission and is nota required part of the basic financial statements. Such supplementary. information is the responsibility of management and has been subjected to the auditing procedures applied in the audit of the basic financial statements. In our opinion, the supplementary information +has been prepared in accordance wrth Rule 68 of the Securities Regulation Code. Isla Lipana & Co. AG. 0) hn Patrick V. Lim Pakindr CPA Cert. No. 83389 P.T.R. No. 0007706, issued bn January 5, 2021, Makati City SEC AN. (individual) as general auditors 1775 -A, Category A; effective until September 4, 2022 SECAN. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024 financial statements TIN 112-071-386 BIR AN. 08-000745-017-2028, issued on December 10, 2018; effective until December 9, 2021 BOA/PRC Reg. No, 0142, effective until January 21, 2023 Makati City February 24, 2023 Isla Lipana & Co,,agth Floor, Philamlife Tower, 8767 Pasco de Roxas, 1226 Makati City, Philippines T: 463 (2) 8845 2728, F: +63 (2) 884s 2806, wirw.pwe.com/ph a san co. Pinan fro te PHC ra PC eee Phin rn omy onstines fhaPuC ek Eh enter Wa erate er, Poses as wep anus ter ea BANK OF THE PHILIPPINE ISLANDS ‘STATEMENTS OF CONDITION December 31,2020 and 2019 (Gn lions of Pesos) - Consolidated rent Notes a a ASSETS ‘CASH AND OTHER CASH ITEMS 4 S7A78 4725835912 45,082 [DUE FROM BANGKO SENTRAL NG PILIPINAS 4 223,989 207.845 197,974 181,815, DUE FROM OTHER BANKS 4 40185 22358 36,605 18,386 INTERBANK LOANS RECEIVABLE AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL 45 30251 22,570 26622 10,208 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR Loss, er g72t0 24,105 33,865 17,688 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER, ‘COMPREHENSIVE INCOME 8 190,196 53,905 120,300 48,320 INVESTMENT SECURITIES AT AMORTIZED COST, net ° 244653 275,108 216,810 252,006, LOANS AND ADVANCES, net 104407413 1,475,998 4478071 1,291,775 ASSETS HELD FOR SALE, net 2a 3.155 367 ee BANK PREMISES, FURNITURE, FIXTURES ‘AND EQUIPMENT, net " 2748 18491 16,505. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES, net 2 6748 11,039 10.031 [ASSETS ATTRIBUTABLE TO INSURANCE OPERATIONS 2 17,790 : : DEFERRED INCOME TAX ASSETS, net 8 9705 12838 6.659 OTHER ASSETS, not 14 15407 14412 ___9910_ “ola assets = 2205,030 4,897,936 167,898 Torwaray [BANK OF THE PHILIPPINE ISLANDS STATEMENTS OF CONDITION ‘December gu, 2020 and 2039 (Gn Milions of Pesos) Parent Noles ——"ang0" 2079 20202070. LIABILITIES AND CAPITAL FUNDS DEPOSIT LIABILITIES: 18 1.716477 1,695,343 1,470,210 1,456,488, DERIVATIVE FINANCIAL LIABILITIES 7 565728775857 2.87 BILLS PAYABLE AND OTHER BORROWED FUNDS 16 151,947 150.897 140,348 126,529, DUE TO BANGKO SENTRAL NG PILIPINAS AND OTHER BANKS 1491 2986 1481 2.066 MANAGER'S CHECKS AND DEMAND DRAFTS OUTSTANDING 7408 82985447 G42 ‘ACCRUED TAXES, INTEREST AND OTHER EXPENSES: 8902088550 7.818, LIABILITIES ATTRIBUTABLE TO INSURANCE OPERATIONS 2 14347 14,061 : DEFERRED CREDITS AND OTHER LIABILITIES s7___ 48,887 _47,768__37,103__38,939. Total abies. 7.951.488 7,051,906 7,666,766 1.641.508 CAPITAL FUNOS ATTRIGUTABLE TO THE EQUITY HOLDERS OF BPI 6 ‘Share capital 45045 44,900 45,045 44.009 Share premium Ta7ee = 7448074764 74449 Reserves ‘16 5,108 196 4.802 ‘Accumulated other comprehensive loss 249 (4,288) 2.310) Supls _ 147460115453 94.226, 269,677 231,170 216.250 NON-CONTROLLING INTERESTS. 3457 zi . Total capla fonds = 281,957 973.034 __951,170 276 950 Total labites and captal funds - 7.733.437 205,030 7,097,936 —1,897.830 (The notes on pages to 95 are an integral part ofthese financial statements) ‘BANK OF THE PHILIPPINE ISLANDS. STATEMENTS OF INCOME FOR EACH OF THE THREE YEARS INTHE PERIOD ENDED DECEMBER st, 2020 (da Milions of Pesos) Gonsafdaied Notes 2019 20% 2020 _(As estate) (As restated) 2020 2018 INTEREST INCOME ‘On cane and advances 82312 86.058 68,683 63,590 51,901 ‘On investment secures 12052 12.709 «isis. 10,788 8.942 (On deposts wih BSP ang other banks 490 4.722.473 4,343 548 36,308 100.487 Fo.eri 78.728 Bis0t INTEREST EXPENSE ‘On deposi 15 18986 zasre 24.255 ta,r77 15545 Onis payabie and other borrowed nds 16. 5058 6,098 _2'500 4.505 2.588 4046 _—34,912 23,85 47,372 76,233 ET INTEREST INGOWE 72.286 65,575 65.517 58,386 23.168 PROVISION FOR CREDIT AND 59, IMPAIRMENT LOSSES 10214 28.000 5.5062 4710 24,304 4278 TET INTEREST INCOME AFTER PROVISION FOR CREDIT AND IMPAIRMENT LOSSES 44264 00.013 60,808 36,962 38,579, THER INCOME Fees and commissions 8999 9,068 7.828 7,763, 7219 Income trom foreign exchange racing 2ass 2412128 2.022 131 Secure trading gain 3300 3g 7192857 268 Income etirotable to Insurance operations 2 4506 11223 1.2283 : : Net gains (osces) on dlsposalsof| Investnent secures at amortized cost 8 467 128 - 4078 © other operating income 19 81210275 9.105 19.458, 5919 725,659 25,687 21,003 29,979 e277 ‘OTHER EXPENSES ‘Compensation and finge benefits 2% 18,008 17,309 15,201. 43,870 11,894 (Occupancy and equpmentrelated expenses 1120 14608 14,798 11,097 42,548 10870 ‘other operating expenses zt tsis3__ 16.259 t5.047 14 708 s1287, 48,154 48,54 42,085 30.202 33,661 ‘PROFIT BEFORE INCOME TA 725,169 38,355 20,816 28,739. 20,448 INCOME TAX EXPENSE @ ‘Curent 10751 9.975790 a7 5,703 Deferred 13 sa) 62) fea) tay (76) ‘3906 9.555 6.619 4.428 3or7 NET INCOME FROM CONTINUING ‘OPERATIONS 2,863 29.001 23,203 24,614 15.428 NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS 2 any 82 126 : TET INCOME AFTER TAX 7682 7083 73.529 zat Eze fonvaray BANK OF THE PHILIPPINE ISLANDS ‘STATEMENTS OF INCOME, FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2020 (Millions of Pesos, Expt Per Sate Amounts) Consolidated Parent Notos 2010 2018 2020 _(As restates) (Asrestated) 202020192018 onward) Basic ad dlutd earings per share atbutable tothe equty haders of 81 during the year frm: 8 ‘operations 479638533 8aB ak Discontinued operations, (006) 0.01 __ ot = : 5 ‘come os) atibutabe to equilyholders of ag ‘BP aig tom: Continuing operations 21620 28781-23014 ae 82815408, Discontinued operations emt) 2 : : ° 21403 76.803 778 Tae Tea Income atrbulale tothe noncontreing intrest arising fom: Continua operations 3 24189 : : : Discontinued operations z 0 : : : 2s, 28035 = E 5 Income atbutale to Equly holders of BPI 21409 28,603 2078 aettzaz8 15408 Non-corgling interests ‘as 280251 ‘i F a Fi,es2 75083 7isee— Basti 75.718 saz (he notes on pages 1 to 05 are an integral part ofthese financial statements) BANK OF THE PHILIPPINE ISLANDS ‘STATEMENTS OF TOTAL COMPREHENSIVE INCOME OR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31,2020 ‘n Millions of Pesos) ‘Consolidated Paror Note 2019 28 2020__(Asrestated) (As esated) 2020 20192018, NET INCOME FROW CONTINUING OPERATIONS, 24,963 20.001 23,203 24614 26.218 15,428 ‘OTHER COMPREHENSIVE (LOSS) INCOME 7% tems tha may be subsequently reclassified to proftorloss ‘Shae in other comprehensive income (oss) of associates cao 1,288 (4,281) ‘ : : Ne change in fl value reserve on investments in ‘debt instruments measured at FVOCI, net of tax fect 428 202 cn a Fair value reserve on investments of insurance ‘subsidies, nel of ax effect 195 545 (409) - : : CCurency translation aferances and others (238) 202) 2) tenia) tems tat vill not be rectassid to proft or oss Remeasurements of defined Benet obigaton (3.383) (1.402) 655 (2798) (1.41) 43 ‘Shae in other comprehensive (oss) neame of ‘associales (1,242) @ 598 : . "Net change i falr value reserve on investments in equity istuments measured at FVOCI, net of texefiect 253i) a 565 79) 320 ‘ola other comprehensive Goss) mncome, nal ora effect fom continuing operations (stp tea 24s) .97) 108 200 “Toalcomprerensive income forthe year Fam contig operations 19478 20,145 21.968 22639 24.823 5718 INET (LOSS) INCOME FROM DISCONTINUED ‘OPERATIONS, 21) 82 126 : : : “Total other compranensive iss, net of ax afecd ‘om discontinued operations ishemeee cy 4) : : F Total comprehensive (oss) incor, forthe year ‘fom discontinued operation, 214) 65, 82 : : : ‘TOTAL COMPREHENSIVE INCOME FOR THE Year 19264 29211 27.040 2639 24.823 15,718, otal comprehensive income (loss) atbutabe to ‘equty heloere of BPI arising from: CContuing operations te163 28,735 2858 2,630 r8718 Discontinued operations (244) 34 20 cane 7,949 25709 ai g7s 363024809 STS “Total comprehensive income atbutabe tothe ‘controling interest arising rom: CContruing operations 35 410 100 : : —Discontraod operations si 2 62 : : as maz 762, : : ‘Total comprehersive income atvibulabie to qty hloes of BPI t7949 28760 2h.a78 24923 15:718 Noncontroling inerests 315 ‘saz 62 E z Tezee__— a2 a 2B i676 (he notes on pages 1to 9s.are an integral pat ofthese financial statements.) BANK OP THE PHILIPPINE ISLANDS STATEMENTS OF CHANGES IN CAPITAL FUNDS FOR EACH OP THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2020 (dn Millions of Pesos) = Consolidated Abate Te eguiy hates STP Note 18) ‘Accuated other Non Share comprehensive contoling Total premium Reserves Surplus _income(ioss) Total ‘interests’ __equly Balance, January 12578 BIT 284 116,353 (977) tsa 737 2.865 107 692, ‘Comprehensive income Netincame forthe year : : 23.078 . 2307s 281 23,320 Other comprehensive ess fo the year : 1200) (1200) (65) 1.280) Total comprehensive ame Tons) forthe year : e = 23078 (4200) 24.978 __462__ 2,040 Transactions wih owners Proceeds fom stock ighis ering 5.587 44,120 5 vom - gor Exercise of stock option plans 38 208) - 303 303 (Gash dividends 7 - = 6,104) 10) = (8.108) ‘Total ransections wir omnes 5a28 waa (25) (00) 741,308 49,806 “Transfer fom suplus fo eserves E = 3867 867) - Other movements ur : e G 4 é 5 : 2 - "S867 asa) 1 = = = Balance, December ST, 2075 ai96i —7aaei 4008 127,489 76) bu 527 517 251 538 ‘Comprehensive income Net income forthe year : p - 28.805 : 26803 28020088, Other comprehensive less forthe at : = oa, 4 128 Total camiprehensive income (088) forthe year : - = 28,03 [a “Transactions with onners Exercise of stock option plans 38 20 - : se Cash avidends near ont) : gt “otal ransacions wif owners x 30 (en) zs (army = Transfer rom surplus to reserves i ~ 2002 2002) : : : Transfer rom reserves to sups : 2 020) “F020 : : : ther movements : zi 203, 29), e @ = = 882 —(6s]__ (220) sa zy Balance, Osceriber 37, 2070 909 aaa 6,108 447,460 2.439) 260,577 3.487 ‘Comprehensive income Net income forthe yeat : - 2409 : 21409243 Other comprehensive iss forthe eae : . G48) 3.460) 72 olal comprehensive carne (ass) for the year : : + 21409 (9.460) 47.809 315 18,204 “Transactions with ownare Exercise of stock option plans 435 aT z 408 408 ‘Cash dividends - - = @.r24 XE “Total ransacions wih own. 68 a 32) (7716) 786) Transfer fom reserves o Suplus : = (eraa) 4790 - . = ther movements: é ee 25, 7 25 (1.650) (1,626), - = zi = e735)__a764 = 25 (1,650) (1,628), Balange, December 37,2020 5D 7a7ed "446 765,500 (6899) __770,a05 2.122 01.867 (The notes on pages to 95 are an integral part of these financial statements.) BANK OF THE PHILIPPINE ISLANDS ‘STATEMENTS OF CHANGES IN CAPITAL FUNDS FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2020 (Gn Milions of Pesos) Parent (Nets 18) “asurated other Shae Share comprehensive capital premium Reserves Surplus income (08s) Total Balance, Januaiy 1, 2078 39590 29,771 142 73,501 (4,241) _—444,899) ‘Comprehensive income Net income forthe year : ~ 16.428 5 15,428, Other comprehensive income for the year zi : : 200 200 “Total comprenensive Income forthe year 2 ies 290 F571 “Transactions with owners Proceeds fom stock righ ofering 5587 44,120 - e 49,707 Exercise of stock option plans 38290 2) : "296 Gash dividends - = (8.104 a 6.104 Total ransscions wifi Onna as aa ato (93) (fo zi 41,899 ‘Transfer fom surplus fo reserves 3867 0.85 = Balance, December 31,2018 aioe 7448.97 76,988, a|__798,586 ‘Compretiensive income Netincome forthe year - - mate 25210 Other comprehensive loss forthe year : : E (1,305) (1306) “otal comprehensive income for he year —— : = 36318 11.385), 24,823, “Transactions wih owners Exertise of stock option plane 3888 ry és : 249 Cash alvidends : - 6.113) : 113) “otal transecions with owners aa @_—(et3) : (7.786) Transfer fom surplus to reserves ~ B82 (1,892) : ‘Transfer rom reserves to surpIus : = 020) “20 : : Other movements : 2 35 : 35 = = ae a7, =a Balan, Deceriber 37, 2070. B38 _74asS 4.992 94,208 276) 276.380 ‘Comprehensive income Not income forthe year : E 2611 : (ther comprehensive los fr the year : : si 4,972) “olal comprehensive income forthe year = : ae 972) “Transactions with owner Exercise of stock option plane 318 4“ : Gash divsends zi = 2.124) : Total ransactons wih owners = ma 31 (65124) Transfer rom surplus to reserves 5 : : Transfer rom reserves o surplus : 2 @rI) 4730 : (Other movements _ : zi : is 4 4740 4 Balance, Desariber 37, 2020 ALLEL T8353 280) at a70 (The notes on pages xo 95 are an integral part ofthese financial statements.) BANK OF THE PHILIPPINE ISLANDS ‘STATEMENTS OF CASH FLOWS POR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER g2, 2020 {in Milions of Pes) nt Notes 26 2019 208 ‘GASH FLOWS FROM OPERATING ‘ACTIVITIES, Profi (os) before income tax from: ‘Continuing operations 25769 98,956 29.818 34423 20,448 ‘jsconbnved operations 2 24a) To 183 75,623 38.435 79.909 79739 a4 29 PLAS “Rajstnenis Immpakment asses 590,124 79,000 58224023 23944584274 DDoprecitin and amortization ania Gaz 732 yor 4a60 4.767 2.018 ‘Shae ret income of associates ‘2 wn mo E - Divdend and other income 1° (7) 7) 5) 792) TH (GH) Share-based compensation 8 a7 3 aH aa 4232) interestincome (96,908) (101,583) (80,190) (75728) (63,279) (61.201), Intorest oceived ‘98573 10020377715 77.908 83.204 50,960 Intorest expanse Damo 35638 4367 17.851 27.507 18.253 Interest pas (25,768) (957300) (25,440) (18748) 273TH) (171404), (crease) decease in Inferark loans receivable and secutios purchased under agreements to retal 20 1082) ,805 (88) Financ assets al fa valve tough proto loss (13270) 6472) 2257) (18,990) (.409) (208), Loans and advances, net 98821 (125.028) (184077) 35,368 (109,711) (140,860) ‘Assets held for eale ‘73 coo 85 ay 508 ‘Assos atbtable to insurance ‘operations 287465, - E : other assets 5611 (096) (608) 5702 (3781) Increase (decrease in ‘epost abies 2oazT 100,508 23548 13,748 100.252 25,246 Due to Bangko Sentra ng Pilpinas and ‘ther banks (150) (4041) 2770 (150) (4,081) .770 ‘Managers checks and demand dats ‘outstanding (a9) 1,388 (era) 4087 (408) ‘Acctued tat, Interest and oer ‘expenses 35 sta at 52 abies altitabl to insurance ‘operations 208 5 as - ; Derivative francial instruments 2.780 52 27a as) as Deferred crodts and other Fables (5885) 9806 2403 (aaaay) 7.248) 2.508 Ta cash from (used i) operations 100,885 43,715 (67.435) 72628 46,927 (20,801) Income taxes paid (94,601) _ (1069) __ 7.115) _(o,080)_‘@,138) 61560) ‘Not each rom (usod i) oporaing avis 89.254 39.352 (04.550) 62.548 37,792 (06.151) Gorward) BANK OF THE PHILIPPINE ISLANDS STATEMENTS OF CASH FLOWS FOR EACH OF THE THREE YEARS INTHE PERIOD ENDED DECEMBER 31, 2020 (la Milions of Pesos) ‘Consort Parent __ Notes_ "26202018 2018 aa20 "2019 aaa Tonardegs ‘CASH FLOWS FROM INVESTING ‘ACTIVITES, (ierease) decrease ie: Investment secure, net 89 (8813) 4.343) 25.28) (a7,119) 3.874) (34,400) Bank premises, future, dures and ‘equlpment, et " (758) (13.400) (6048) (487) (10285) 518) Investment properties, net 1“ 6 on 1 ‘ 65) 2 Investment in subsiiares and associates, net 12 (4928) 933s taetye)0N) Asses atoutable fo insurance operations (ast) (1388) 4 : ~ Dhidends rocolved 19 Gl 77 777923704 ge Net cash (used in) on vesting acon 828) 8-356) Bo, F30] (85,098) 70,209) S001 ‘GASH FLOWS FROM FINANCING ‘ACTIVITIES Cash dsonds pa 1748 (8424) (12,07) 80 (ae) (12,168) (7.508) Proceeds tom share issuance 18 ‘61 ‘30850035 ‘set 306) 50.035 Increaso(Gocreace) in ils payable ana ‘the borrowed funds 6 10 (16,056) 895904 13,819 (24,351) 00,158 Payments fr principal porton of lease Tables. (6459) c.art) (1.108) 0.451) - Tiel cash (osedinj fom fhancing acviies (111) (20,306) T2521 4940 (a7 961) —Taa.50s NET INCREASE (DECREASE) IN CASH "AND CASH EQUIVALENTS x 18 (147202) (8.855) 2481 (0.778) 7.487) (CASH AND CASH EQUIVALENTS, January 1 . 45 299088 919.270 27,120 253,364 273.122 240,870 Dacombar 37 = “330,588 290,068 315,270 —_ 265,008 263,344 273.122 Non-cashfrancing and investing actos, 11,1618 Cash flows rom discon operations 2 (The notes on pages 1 95 ae an integral part ofthese Rascal statements) BANK OF THE PHILIPPINE ISLANDS ‘NOTES TO FINANCIAL STATEMENTS AS AT DECEMBER 31, 2020 and 2019 AND FOR EACH OF THE THREE YEARS INTHE PERIOD ENDED DECEMBER 31, 2020 Note 1-General Information Bank ofthe Philippine Islands (“BPT’ or the "Parent Bank’) is a domestic commercial bank with an expanded banking license and was registered with the Securities and Exchange Commission (SEC) on Januaty 4, 1943. The Parent Bank's license was extended for another 50 years on January 4, 1993. In 201, the Parent Bank’s office address, which also serves as its principal place of business, was transferred to Ayala North Exchange, Ayala Avenue corner Salcedo Street, Legaspi Village, Makati City, Prior to 2019, BPI's registered office address and principal place of business were both located at BPI Building, Ayala Avenue comer Paseo de Roxas, Makati City BPI and its subsidiaries (collectively referred to as the "BPI Group") offer a whole breadth of financial services that include corporate banking, consumer banking, investment banking, asset management, corporate finance, securities distribution, and insurance services. At December $1, 2020, the BPI Group has 19,952 employees (2019 ~ 23,429 employees) and operates 1,173 branches (2019 - 1,167 branches) and 2,707 automated teller machines (ATMs) and cash accept machines (CAMs) (2019 - 2,822) to support its delivery of services. The BPI Group also serves its customers through alternative electronic banking channels such as telephone, mobile phone and the internet, ‘The Parent Bank is considered a public company under Rule 3.1 of Implementing Rules and Regulations of the Securities ‘Regulation Code, which, among others, defines a public company as any corporation with a class of equity securities listed ‘on an exchange, or with assets of atleast P50 million and having 200 or more shareholders, each of which holds at least 100 shares of ts equity securities. Coronavirus pandemic (On March 16, 2020, the Philippine Government declared the entire island of Luzon under an Enhanced Community Quarantine (CQ) due to the increasing coronavirus disease (COVID-19) cases in the country, The ECQ mandated the closure of non-essential businesses and striet home quarantine which resulted in the slowdown of the economy. Measures are implemented to protect the health and safety of the BPI Group’s employees, clients and partners, to support business. continuity and to manage financial impact to a minimum, These measures have caused disruptions to businesses and economic activities, and its impact on businesses continue to evolve. While banks are authorized to operate during ECQ, branch operations were sorely impacted by COVID-19, with 25% of the branches operating on a skeletal basis during the ‘beginning of the lockdown. With the transition to general community quarantine (GCQ) on June 1, 2020, branch ‘operations have been back to 100%. At this stage, the BPI Group decms it prudent to review its branch network strategy «given the acceleration in digital adoption by its clients and other considerations, ‘While quarantine measures over highly urbanized cities in the National Capital Region (NCR) were relaxed following the proclamation of a modified enhanced community quarantine effective May 16, 2020, and subsequently, a GCQ effective ‘June 1, 2020, operations across various industries remain below full capacity in these areas. Further, certain parts of the Philippines remain under ECQ. Effect ofthe suspension of loan payments mandated by the Bayanihan Acts I and IT (On March 24, 2020, Congress passed Republic Act No. 11469 or the Bayanihan to Heal as One Act (Bayanihan Act 1) into law, which conferred emergency powers tothe President ofthe Philippines, Section 4(aa) of Bayanihian Act 1 directed all ‘banks to implement a thirty (30)-day grace period for the payment of all loans falling due within the BCQ period without Interests, penalties, and other charges. Under this aw, persons with mukiple loans wee granted a grace period of 30 days foreach and every joan, ‘The following were the reprieve measures issued by the government through the Implementing Rules and Regulations IRR) of Section 4(aa) of Bayanihan Act I forall loans regardless of status with payments (e-., principal and/or interest) falling due within the ECQ period (March 17, 2020 to May 31, 2020, or as extended) + implementation of mandatory grace period to extend payment due dates of loans; + non-imposition of interest on interest and waiver of fees and charges for non-payment; + non-imposition of documentary stamp tax on eredit extensions; and + paymenton a staggered basis for acerued interest on implemented mandatory grace period, ‘The status ofthe loans prior to the grant of the mandatory grace period and/or extension of maturity dates or payment ddue dates were retained. The BPI Group monitored non-performing loans (NPL) internally: 1) based on aging of accounts ‘without the grace period and 2) aging with grace period, as the grant of the grace period may have artificially understated ‘the actual NPL levels, On September 11, 2020, the President of the Philippines signed into law Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan Act I), in view of the continuing rise of COVID-19 cases and the ensuing economic disruption brought about by the pandemic. Under Section 4(uu) of Bayanihan Act I, all banks are directed to implement a ‘mandatory one-time sixty (60)-

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