BPI 2010 sustainability report

ENGAGEMENT

CARBON FOOTPRINT

RESPONSIBLE INVESTING

BANK OF THE PHILIPPINE ISL ANDS 2 010 S U S TA I N A B I L I T Y R E P O R T

EMPLOYEE

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CARBON FOOTPRINT

CUSTOMER EXPERIENCE

BANKING

STEWARDSHIP

FINANCIAL ACCESS

GREEN

BANKING

STAKEHOLDER

ENGAGEMENT

CORPORATE SOCIAL

SUSTAINABILITY

STEWARDSHIP

EMPOWER GREEN FINANCIAL ACCESS BANKING FINANCIAL ACCESS WIDER MARKET REACH

RESPONSIBILITY

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ENGAGEMENT

BANK OF THE PHILIPPINE ISL ANDS 2 010 S U S TA I N A B I L I T Y R E P O R T

FINANCIAL ACCESS

GREEN

BANKING

STAKEHOLDER

ENGAGEMENT

EMPOWER FINANCIAL ACCESS

SUSTAINABILITY

CORPORATE SOCIAL RESPONSIBILITY

CONTENTS About this Report

3

Message from the President & CEO

4

About BPI

6

Governance

8

Our Stakeholders

10

Sustainability at BPI

12

GRI Content Index

38

OUR COVER The cover depicts the central theme of BPI’s Sustainability Report: the “tree of sustainability.” The branches each represents a particular aspect of our commitment to sustainable development. On the ‘trunk’ is the word ‘sustainability’ to show that our sustainability agenda stands on solid ground. Feeding this vision are the ‘roots’ which symbolize the specific actions we have been taking to sustain our commitment.

performance, and communicates its

measures and evaluates its

progress

and challenges to its

various stakeholders as an integral part of its good governance, transparency and

sustainability.

Since we released our first sustainability report in 2008, we have been disclosing our performance on economic, social and environmental issues that are most material to our business and stakeholders every year, in addition to our annual corporate and financial performance. This exercise of collecting, analyzing and reviewing detailed report content engages and educates our people in the organization on sustainability issues.

Scope of Report This Report covers the activities of the BPI Group in the financial year 2010. Our data were consolidated from our BPI head offices, our domestic branches, satellite offices, and subsidiaries. There have been no significant changes from 2009 that would affect or alter our reporting.

Global Reporting Initiative As in our previous reports, BPI utilized the Global Reporting Initiative (G3) guidelines in determining the scope of the relevant content and performance metrics. For more information about GRI, please check out: www.globalreporting.org.

Preparation BPI has a Sustainability Technical Working Group (STWG), composed of the various unit heads of the BPI Group. The Group was created

Reporting Period

2010

2009

2008

Calendar Year Date Published GRI Application Level No. of GRI Indicators Reporting Cycle

2010 October 2011 B self-declared 33 Annual

2009 Dec. 2010 B self-declared 26 Annual

2008 Nov. 2009 C self-declared 16 Annual

in 2008 to identify and manage matters relating to the sustainability of the Bank. In the succeeding years, the STWG sub-committees actively manage their respective areas within the framework established by the STWG, implement projects, and monitor progress towards sustainable banking. Our Corporate Planning Division oversees the accomplishments of the sub-committees and validates these against the GRI Indicators.

ABOUT THE REPORT

The Bank of the Philippine Islands (BPI) regularly

All our economic data come from the Bank’s Audited Financial Statements, which were stated in accordance with the Philippine Financial Reporting Standards. Environmental and social information were culled from the management information systems of the Bank’s various units.

In our relentless efforts toward sustainable development, we shall strive to broaden our scope to include new indicators and improve our data collection process, especially in the aspect of environment and social initiatives. We also plan to employ external assurance in the near future.

GRI APPLICATION TABLE Feedback We welcome comments and suggestions to this Report. Please write or call:

Bank of the Philippine Islands Corporate Planning Division 18th Floor BPI Building 6768 Ayala Avenue Makati City 0720, Philippines Tel. (632) 845-5245 Email: gksinio@bpi.com.ph

BPI BPI2010 2010Sustainability SustainabilityReport Report

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MESSAGE FROM THE PRESIDENT AND CE

At BPI, we believe that the

long-term success

does not only depend on being financially

of our company

sound and profitable. Integrating

sustainability into our core business is equally

critical to the

longevity of our company.

Four years after the global financial crisis started, BPI continues to lead the Philippine banking industry in terms of profitability. Beyond this, we are also making progress in setting a benchmark in the sphere of sustainability.

Since our first sustainability report came out in 2008, we continue to invest in our future.

Notwithstanding the dramatic economic challenges at the time and amid the fragile recovery in advanced economies led by the United States and the debt crisis in Europe, our sustainability agenda remains a serious commitment that we will pursue, and abandoning our sustainability goals was never an option.

Better customer service Aligned with our commitment to enhance customer experience, we introduced the BPI Express Assist (BEA) machines initially to 100 of our branches nationwide. This initiative was a product of constant communication with our clients through surveys, personal interaction with our employees, as well as our continued quest for innovation and convenience banking. BEA was well received by our clients, proven by the positive written and verbal feedback we received.

We also provided our customers with new access points. In addition to opening new offices locally and abroad, we also made available our 824 Financial Advisors and 189 Lending Officers to continuously assist our clients with financial advice and the best suitable financial solution for their needs. Furthermore, our successful handling of customer feedback and complaints resulted in a 14.2% decline of complaints in 2010.

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BPI 2010 Sustainability Report

Responsible banking When we integrate sustainability into our financial solutions and services, we improve our competitiveness and create and capture customer value. By partnering with other entities, we also help ensure sound policies that promote sustainable development and innovation.

Our Sustainable Energy Financing (SEF) Program, in partnership with the International Finance Corporation (IFC), continued to provide financial access to small and medium enterprises that want to invest in sustainable energy projects. In 2010, our SEF loan portfolio reached a total of Php2 billion. Our SEF program won for us the G-20 SME Finance Challenge, an international competition for pioneering solutions to finance SMEs for their sustainability projects.

We also introduced the Ka-Negosyo Business Solutions for small businessmen to have access to funds as low as Php500,000 for whatever stage of their business life cycle.

In the area of community development, BPI and BPI Globe BanKO extended Php2 billion in loans to microfinance institutions (MFIs). These MFIs in turn provide funding for the small businesses of micro-entrepreneurs, thereby improving the lives of more Filipino families.

Embracing sustainability Internally, sustainability shapes the way our employees, suppliers and service contractors behave. In 2010, BPI introduced several initiatives in energy, solid waste management, and material use under an environmental program we call BPI I-Give.

It is essential to have a

well-defined

strategy which is aligned with our business and

country-centric values to consistently

measure our sustainability activities.

We will further achieve greater strides as we shall employ

external assurance of our

sustainability report in the near future.

Our employees, who are implementors or channels of our sustainability efforts, are likewise part of our sustainability agenda. We ensure that they are well taken care of and their concerns are appropriately addressed.

We therefore conducted “Engage 2010,” an employee survey aimed at understanding the present state of the organization for better management in the future. We received an overwhelming response from 88% of our total workforce, one of the highest response rates in engagement surveys worldwide. We take pride in our well engaged and motivated human resource.

Going the extra mile We value our continuing partnership with the WWF-Philippines that started in 2007. In 2010, we embarked on a project, aptly called “Climate Risk Adaptation,” to generate socioeconomic baseline data for selected cities outside the National Capital Region that are most likely to be adversely affected by climate change.

Moving forward In the succeeding years, we shall have greater opportunity and responsibility to take sustainability to the next level.

In order to achieve this, it is essential to have a well-defined strategy which is aligned with our business and country-centric values to consistently measure our sustainability activities. We will further achieve greater strides as we shall employ external assurance of our sustainability report in the near future.

As we continue to build on our success, we shall extend our efforts to include our customers, suppliers and service contractors.

I would like to acknowledge and thank our BPI Team and our stakeholders for their strong support over the years. As we look forward to BPI’s 160th year and beyond, we will continue to be a responsible banker to attain sustainable quality growth and enhanced value creation.

I hope you find this sustainability report informative and useful. We will continue to keep our stakeholders informed of our progress through our annual sustainability reporting and corporate website.

AURELIO R. MONTINOLA III

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BPI 2010 Sustainability Report BPI 2010 Sustainability Report

ABOUT BP

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BPI is the

first bank established in the Philippines. It is also to date the

third-largest bank in terms of assets, the country’s most

profitable

and the

highest in terms of market

capitalization. The Bank caters to consumers; micro, small and medium enterprises, including the microfinance sector; middle market; and large corporations.

The Bank of the Philippine Islands (BPI) is a commercial bank in the Philippines with an expanded banking license. It was founded in 1851 and was listed in the predecessor exchange of the Philippine Stock Exchange (PSE) in 1966.

As a universal bank, BPI also has operations in the finance and operating lease, government securities dealership, securities distribution, and foreign exchange businesses.

The BPI Group

The BPI Group consists of its Head Office located at 6768 Ayala Avenue, Makati City, its branches and satellite offices, and subsidiaries.

Major Products and Services

• Peso and Foreign Currency Deposits • Commercial and Consumer Loans • Leasing • Asset Management and Trust • Corporate Finance • Securities Dealership • Foreign Exchange • Payments and Settlement Services • Insurance

Credit Rating Rating Agency

Fitch Ratings

Rating Date

Rating

June 2011

Individual Rating Long-Term Foreign Currency Issuer Default Rating (IDR) Long-Term Local Currency IDR National Long-Term Rating Subordinated Notes

BB+ BBB AAA(phl) AA+(phl)

C

Moody’s Investor Service

June 2011

Bank Financial Strength Rating

C-

Capital Intelligence Ltd.

Sept. 2011

Financial Strength Long-Term Foreign Currency Short-Term Foreign Currency

BBB BB B

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BPI 2010 Sustainability Report BPI Sustaianability Report 2010

For more details on our subsidiaries/joint ventures and products and services, please see our 2010 Annual Report or check out our website, www.bpiexpressonline.com.

BY THE

Awards and Recognition in 2010

NUMBERS

International Awards

Awarding Body: The Asian Banker Strongest Bank in the Philippines Best Retail Bank in the Philippines Excellence in Mobile Phone Banking Awarding Body: FinanceAsia #10 Best Corporate Governance # 6 Most Committed to a Strong Dividend Policy Best Cash Management Bank (for the 2nd year) Best Trade Finance Bank Awarding Body: The Asset Best Domestic Bank in the Philippines (for the 5th year) Government Bonds Market Share 1st Bank, Philippines Best Cash Management Bank (for the 6th year) Awarding Body: Alpha Southeast Asia Best Remittances Provider of the Year in Southeast Asia Best Cash Management Bank (Philippines) Best Trade Finance Bank (Philippines) Best SME Bank (Philippines) Awarding Body: Reader’s Digest Trusted Brands Credit Card Issuing Bank – Gold Investment Fund Company – Gold Awarding Body: AsiaMoney Best Domestic Provider in the Philippines for Local Currency Products-Structured Currency Products Best Local Cash Management Bank in the Philippines as voted by small, medium or large-sized corporates Best Local Currency Cash Management Services in the Philippines as voted by Financial Institutions - PHP Best Domestic Provider of FX services as voted by corporates Best for Innovative FX products and structured ideas Best FX prime broking services Best single-bank electronic trading platform

EMPLOYEES

12,035 BRANCHES

809

Awarding Body: Institute of Corporate Directors Gold Awardee (2009 Corporate Governance Scorecard for Publicly Listed Companies in the Philippines) Awarding Body: Institute of Internal Auditors Philippines 2009 Corporate Partner (for the 2nd year) Awarding Body: Bangko Sentral ng Pilipinas Best Commercial Bank Respondent on Overseas Filipinos Remittances Award (BSP Stakeholders’ Awards 2010)

3

International branches

Domestic branches

(Hong Kong and London)

NETWORK PRESENCE

13 23 1,656

Business Centers

ATMs

Remittance Centers

OWNERSHIP 7.7%

Public (1.4 billion shares)

8.5%

Ayala Corp.

40.7%

Ayala DBS Holdings, Ltd.

21.3%

Roman Catholic Archbishop of Manila Others

21.8%

Awarding Body: Group of 20 and Ashoka’s Changemakers G-20 SME Finance Challenge

Local Awards

Combined workforce for banking and insurance services

FINANCIAL HIGHLIGHTS in 2010

33%

Increase in Net Income (2010 vs. 2009) to Php11.3 billion

210 15.6%

Market Capitalization (in billion Php) Return on Equity

878

Total Assets (in billion Php)

39

Total Revenues (in billion Php)

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BPI2010 2010Sustainability Sustainability Report BPI BPI Sustaianability 2010 Sustainability Report Report Report 2010

GOVERNANC

By strictly adhering to

corporate governance principles, BPI is

maintain the confidence of investors and other stakeholders, ensure management efficiency, and meet the expectations of able to

various

publics

.

BPI has long adhered to principles designed to ensure effective corporate governance. The Bank follows a set of corporate governance guidelines that address the operation of the Board of Directors and its committees, strategic and succession planning, and the qualifications, independence and compensation of Directors.

It is the Bank’s policy to fully comply with all laws and regulations governing its business activities. Compliance is a direct responsibility of each employee and each one is held accountable for all compliance obligations associated with his/her work. The Bank believes compliance is not just a business imperative but is also key to the sustainability of our operation, as it impacts on our integrity, transparency and corporate responsibility.

Governance Structure at BPI Board of Directors

OFFICE OF THE CHAIRMAN

Excom

Corporate Secretary & SEC Reg. Liaison

President

Internal Audit

Compliance Office

OFFICE OF THE PRESIDENT

Corporate Planning & Accounting

Corporate Banking Group

Consumer Banking Group

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Overseas Banking & Channel Services Group

Card Banking Group

BPI 2010 Sustainability Report

Assets Management & Trust Group

Financial Markets Group

Credit Policy

Human Resources Management Group

Risk Management Office

Information Systems Group

Consumer Lending Group (BPI Family)

Central Security Office

Investment Banking Group (BPI Capital)

Insurance Group (BPI/MS, BPI-Philam)

Board of Directors The Board of Directors is the highest governance body of BPI and is primarily responsible for creating and enhancing BPI’s shareholder value and ensuring that this objective is achieved in all its business activities.

Composition

15 Directors, including five independent directors, of which 14 are non-executive members

Selection

Elected by BPI stockholders entitled to one vote at the annual stockholders’ meeting

Competence

Highly qualified business professionals possessing a variety of expertise and experiences required in the governance of a financial services institution and possess the qualifications required for a director as embodied in our Corporate Governance Manual

Compensation

• Per diems for attendance at meetings of the Board and Board Committees, of which the amount is fixed by a resolution of the Board of Directors • Directors may be given bonus as approved by the Stockholders during the stockholders’ meeting upon the recommendation of the Personnel Committee

Sub-Committees

• • • • • • • •

Executive Committee Nominations Committee Personnel & Compensation Committee Audit Committee Risk Management Committee Corporate Governance Committee Trust Committee Retirement/Pension Committee

Management Structure The President and Chief Executive Officer (CEO), the Treasurer, and the Corporate Secretary, all of whom appointed by the Board of Directors, are the executive officers of the Bank.

The President and CEO is mainly responsible for the general supervision of the business, affairs and property of BPI, and over its employees. Aside from the fulfillment of his assigned duties, he executes strategic directions and resolutions of the Board of Directors.

Conflict of Interest Policy The Bank ensures that its interest – and that of its shareholders – is always protected. This we do by requiring all our employees not to directly or indirectly take advantage of their position or employment in BPI for any personal gain or privilege.

To enforce this policy, the Bank has adopted policies and guidelines on avoiding conflict of interest. These are contained in our Management and Operating Manual (MOM) and Personnel Policy Manual, which are accessible electronically to all our employees.

The MOM also includes a Whistleblower Policy, which allows BPI personnel to report any knowledge or suspicion of violation of the conflict of interest policy.

Anti-Money Laundering Program BPI has instituted an Anti-Money Laundering Program that covers all companies of the BPI group. The program outlines the policies and procedures on detecting or countering acts of money laundering, as well as how to handle suspicious transactions.

To ensure that all our employees are aware and knowledgeable of this program, the Bank requires them to undergo an anti-money laundering training course. The program and other related policies and procedures are all posted in our MOM database.

For more information on our corporate governance principles and practices and organizational core values, please refer to our 2010 Annual Report, Corporate Governance Manual and Our Statement of Purpose in our website, www.bpiexpressonline.com.

2010 Sustainability BPIBPI Sustaianability ReportReport 2010

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OUR STAKEHOLDER

At BPI, we view business

stakeholder engagement as a

imperative. Being a responsive organization allows us to solicit

feedback in a timely manner, which guides us in our decision making process.

We aim to build

constructive

are impacted by our business and share

Stakeholder engagement serves to inform and guide us in our decision-making process across our organization. At the same time, it allows us to deepen our understanding of our stakeholders, which feeds into our sustainability strategy.

Our aim is for both BPI and our stakeholders to benefit from the process. In cases where we do not agree or cannot respond to the feedback we have received, we aim to explain our position honestly and openly.

Our stakeholders include investors, employees and suppliers, who are directly affected by our business performance, and institutional and retail clients who relate to us as a financial solution provider. The Bank also deals with local communities, non-governmental and civil society groups, government and regulatory agencies, and industry organizations which influence the way we do our business.

We tailor our engagement processes to suit each stakeholder group. We are committed to developing constructive relationships with all groups as we strive to manage our business successfully and responsibly.

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relationships with all those who

in our success.

ENGAGING

for SUSTAINABILITY STAKEHOLDERS

KEY ISSUES & CONCERNS

HOW WE ENGAGE THEM/ ADDRESS ISSUES RAISED

Customers

Customer service Financial access Banking convenience Secured banking Service reliability Realtime feedback and communication

Conducting customer satisfaction surveys Tracking customer feedback Ensuring prompt action on complaints Supporting customer needs through our branches, call centers, and web-based facilities Keeping abreast of industry best practices in customer relationship management Participating in industry/government-based consultations on customer issues

Employees

Workplace environment Pay and benefits Job security Career advancement

Conducting regular meetings, performance measurement, and instituting an open communication policy covering all employees of the Bank Conducting employee survey Initiating work-life balance programs Providing leadership and career development training programs Giving access to mail and databases for speedy exchange of communication Engaging in volunteerism program

Government, regulators

Compliance Transparency and good governance

Complying with all laws and regulations Engaging in constant dialogue/consultations Making timely and accurate disclosures of company information material to our business and to our stakeholders

Industry Organizations

Banking regulation Benchmarking

Engaging in constant dialogue/consultations Sharing best practices Participating in public policy making Enforcing self-regulation

Communities

Financial inclusion Corporate social responsibility

Engaging various community stakeholder groups, particularly in the areas of entrepreneurship, education, and the environment, through BPI Foundation and the branches

Non-Government and other Civil Society Groups

Corporate social responsibility Environmental stewardship and sustainability

Participating in corporate social responsibility programs through various Bank units and through BPI’s membership in the Ayala Social Initiatives Lending expertise in assessing the performance of organizations in the not-for-profit sector Helping mobilize resources for disaster and emergency relief Carrying out sustainable development initiatives, especially on environmental stewardship

• Top-tier companies • Middle-market companies • Micro, small, and medium enterprises • Individuals

• 11,704 in banking services • 331 in insurance services

• Bangko Sentral ng Pilipinas • Philippine Deposit Insurance Corporation • Securities and Exchange Commission • Philippine Stock Exchange • Other agencies • Bankers Association of the Philippines (BAP) • Chamber of Thrift Banks (CTB) • Bank Marketing Association of the Philippines (BMAP) • Bank Administration Institute of the Philippines (BAIPHIL) • Makati Business Club (MBC) • Other organizations • Community at large

• League of Corporate Foundations • Association of Foundations • Philippine Council for NGO Certification • Corporate Network for Disaster Response • International Finance Corporation • WWF-Philippines • Habitat for Humanity Philippines • Philippine Business for Education

Investors

• 96.6% institutional investors* • 3.4% individual investors

Shareholder return Competitive position Strategies and thrusts Outlook and prospects

Suppliers

Ethical practices Transparency and accountability Professionalism

For various product inputs and goods and services

Conducting shareholder dialogue through the annual stockholders’ meeting Holding investors’ and analysts’ meetings Publishing of bank’s performance and developments thru press releases and website posting Conducting yearly accreditation process Adopting an open communication policy with suppliers Initiating comprehensive reviews of practices

*Includes participants to the PCD Nominee Corporation which may serve both institutional and individual investors.

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2010 Sustainability Report BPIBPI 2010 Sustainability Report

SUSTAINABILITY AT BP

BPI’s

sustainability agenda focuses on four pillars: enhancing total

customer experience, serving a wider market, engaging our employees, and reducing our environmental footprint. The concept of

sustainable value underpins

all of our sustainability activities. By taking action to address our

impacts today, we

help our business thrive in the future.

BPI approaches sustainability through three different but interdependent lenses: sustainability of our core business, sustainability of our resources, and sustainability of our operations.

Apart from giving the most innovative and value-laden products to our clients, BPI ensures customer management practices are effective, customer satisfaction levels are high, customer communication is continually enhanced, and customer privacy is ensured.

• Engaging Our Employees BPI believes the engagement of employees lies at the heart of its business strategy and is inextricably linked with sustainability.

Employees drive our innovation. They link us to our customers, and are key sources of ideas – both for how we can run our company better and how we can help others do the same.

To keep our employees constantly engaged, the Bank strives to provide them competitive pay and comprehensive financial benefits, equal job opportunities, a healthy and safe workplace, and honor their rights. Our primary objective is to develop our employees through various training programs to make them more competitive, performance-driven and goaloriented. We also ensure that they share our corporate social responsibility by encouraging them to take part in the Bank’s and other partner-organizations’ socially relevant activities, making donations or through volunteerism.

• Serving a Wider Market In addition to addressing the financial needs of corporations and individuals, BPI also provides access to the “underbanked” sector of the market. We continue to identify new markets to serve, create and customize products for them, so they can meaningfully contribute to the economy and to society at large. Our sustainability initiatives in this regard include reaching micro entrepreneurs, who comprise

• Reducing Our Environmental Footprint BPI aims to reduce the impact of its operations to drive responsible environmental leadership and reduce its ecological footprint. We do this through effective energy, water, paper and waste management, as well as the promotion of sustainable energy through financing. We are also committed to pursue banking innovation that helps individuals and corporations improve the environment.

As we integrate our business operations with our sustainable development objectives, we continue to focus on four strategic themes: • Enhancing Total Customer Experience Maintaining and growing our customer base is crucial to our sustainability. We strive to ensure that all aspects of the customer experience are positive, and that we actively engage with customers to continuously improve our financial solutions, internal systems and operations.

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nearly 90% of the market, and serving the needs of Filipinos around the world.

BPI 2010 Sustainability Report

ECONOMIC IMPACT GENERATED

BPI’s gross revenues in 2010 increased by 13.4% to Php38.997 billion from Php34.395 billion in 2009.

As BPI prospers, so do our stakeholders. In 2010, economic value distributed rose by nearly 20% from 2009 levels, in step with the Bank’s continuous growth.

DISTRIBUTED

BENEFITED

• Dividends paid to shareholders grew by 55% during the period; • Salaries and benefits paid to employees slightly dipped by 1.1%; • Taxes paid to the government jumped by 23%; and • Value distributed to our suppliers and service contractors has increased by more than 13% Our community investment grew by Php21 million during the period. With improved corporate performance, we were able to increase our support to community initiatives and partnerships, with a focus on education, entrepreneurship, and the environment.

For more information about our community investments, please see the Social section of this report.

CREATING

economic RIPPLES In million Php

Note: The figures represent the consolidated BPI Group as of December 31, 2010, except for dividends paid to stockholders, which applies to the parent company only.

9,005

9,045

*

Salaries and benefits paid to employees

Dividends paid to stockholders

paid to communities 55 Amount and project beneficiaries

5,631

Amount paid to suppliers and contractors

7,586 Taxes paid to the government

For a more comprehensive discussion on the economic and financial performance of BPI, please refer to our 2010 Annual Report in our website, www.bpiexpressonline.com. * Declared in 2010 was Php6,122 million

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2010 Sustainability Report BPIBPI 2010 Sustainability Report

ENHANCING TOTAL CUSTOMER EXPERIENC

As a customer-driven company, BPI’s success and our service level excellence to our

sustainability hinges on

customers. As such, we consider total

customer satisfaction

as a critical corporate performance

indicator, hence we strive to uphold this across and at every level of our organization.

Our commitment to reach more Filipinos poses the biggest challenge of constantly improving our service quality amidst a growing number of customers. While we deliberately ensure a robust infrastructure at all times, what is of primary importance is to understand and anticipate the needs of our customers by closely interacting with them so that we can deliver the best financial solutions.

Our approach is to regularly undertake market research studies and customer satisfaction surveys, as well as continually enhance our customer feedback system.

Internally, we maintain a centralized and secure customer information database to know our customers better. We also utilize data mining techniques to track customer transaction behavior and discern changing trends. Moreover, our various customer events provide us first-hand insights into our customers’ thoughts and aspirations.

To intensify convenience, reliability and accessibility, we further institutionalize our Bank Anywhere, Anytime and Anyhow proposition. The convergence of our up-todate banking channels – internet, mobile, phone and branch banking technology – continues to serve the ever-changing and increasingly sophisticated needs of our customers.

Extending Access Access and convenience have always been high on our customers’ list of priorities.

We work hard to identify areas where we have existing and potential customers and

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BPI 2010 Sustainability Report BPI Sustainability Report 2010

where there is an opportunity to strengthen our presence, we improve on our service infrastructure.

In 2010, we undertook the following initiatives to better serve our growing customer base: • Opening of new lending desks in underserved areas such as Tuguegarao and Zamboanga to assist countrywide development; • Setting up of a new satellite office in Davao to serve the foreign exchange requirements of our customers in Mindanao; • Opening of new offices in Madrid and California to cater to overseas Filipino customers’ remittance needs; and • Opening of new BPI/MS Insurance Corp. office in Tuguegarao to serve Filipinos in Northern Philippines Deepening Customer Relationships BPI recognizes that an important element of our business success is building long-term customer relationships. To create sustainable value, we have instituted programs to support our customer acquisition and retention strategies, as well as the expansion of our customer-oriented portfolio.

Custom-fit Solutions. The Bank assigns Relationship Managers (RMs) to dispense financial investment advice and assist our

>700,000 Number of new BPI customers in 2010

high standard

Providing a of customer service is to the way we do business. It builds customers’ confidence in our products and services and helps to build

integral

relationships.

customers on matters related to delivery channels and operations. In 2010, we increased our total RMs to 351 from last year’s 332. To ensure the delivery of quality service and properly customize financial solutions, BPI has a total of 824 Financial Advisors and 189 Lending Officers in 2010.

The “New Sales Operating Model” has been providing our branch personnel with daily sales huddles, coaching by sales experts, sales scripts and product cross-sell strategies that would enable them to offer our clients with the products suited to them. In 2010, the program, in tandem with the sales expertise of the RMs, was able to sell over 1.2 million products.

BPI On Call. The Bank utilizes Worksite Marketing to take advantage of its wide customer base for corporate payroll and provide an additional cross-selling channel.

The program was branded “BPI on Call” to convey that Bank representatives were making “house calls” at the premises of the corporate client to bring financial advice and solutions to their employees. BPI on Call involves financial wellness seminars on topics such as building one’s savings, budgeting and smart spending, building and protecting assets, and introduction to investments.

lasting

In 2010, BPI on Call catered to over 1,800 companies and sold 104,754 BPI products and channels. An immeasurable result of the initiative was the goodwill that it has generated from both client employers and employees.

Satisfaction Surveys. BPI undertakes regular customer satisfaction surveys to help us better understand how the brand is viewed in the marketplace and whether we are meeting our customer experience objectives.

In 2010, the Bank scored 89.37% in the Mystery Client Survey, an effective tool in measuring the service turnaround time, as well as the behavior and quality of service, of our personnel and security guards.

The Bank’s Net Promoter Survey (NPS) score also jumped to 61.90% in 2010, above the global standard of 60% and higher than the 2009 level. The survey tracked responses from 3,000 personal banking and 496 preferred banking customers of BPI. These studies provide valuable information as to how we perform against a range of important measures of our brand such as being responsive, approachable and accessible. The findings are used to develop our improvement plans for the following year.

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Enhancing Customer Communication We have been continually improving the sustainability features of our products and services in response to customer feedback.

Aside from our branches, we have three other platforms for communicating with our customers: Call Center. In 2010, our Call Center worked closely with our branches to enhance productivity and efficiency, especially on critical service requests such as ATM cash dispensing problems and credit card servicing.

This entails adopting standard spiels and strictly adhering to work procedures for consistent and fast delivery of services among all Call Center and branch personnel.

BPI Expressphone and Expressonline.

Customers could also send feedback through the BPI Expressphone (dialing 89100) and the BPI Expressonline (e-mails).

After receiving feedback, the Bank’s Fulfillment Banking forwards these to the Bank’s Customer Care Department (CCD), which then solicits response from the concerned branch or unit of BPI. Customer feedback are also elicited from direct visits of clients and other correspondence sent directly to concerned departments, the Office of the President, or through the Bangko Sentral ng Pilipinas (BSP).

Managing Customer Concerns BPI seeks to provide the best service to our customers. However, in the event that dissatisfaction occurs, we have systems in place for dealing with customer complaints.

Through regular service clinics and morning huddles in our branches, customer complaints and resolutions are discussed to enhance proper handling and to avoid recurrences.

Various support units of the Bank also regularly issue notices through bulletins and circulars to proactively share customer feedback and service rules, institutionalize countermeasures, and increase customer satisfaction.

We have expanded our Customer Care Department (CCD) to cover other customer concerns in coordination with other units of the Bank and ensure that all client issues are attended to within mandated turnaround times. For immediate resolution of complaints, branches that directly receive customer concerns act in coordination with the pertinent units of the Bank which are the subject of the concerns.

16 |

BPI 2010 Sustainability Report

Nature of Customer Concerns

954

1,000 800 600

610

568

400 200

321 131

0

2009

50

210

152 24 2010

Branch Personnel Branch Services Branch Premises Others

Total number of customer complaints generated in 2010, of which 60% are branch personnel related

14.2 %

Decline in the number of customer complaints in 2010 vs. 2009

Safeguarding Customer Privacy Ensuring customer privacy is the backbone of public trust and confidence in banking with BPI. To ensure that customer privacy will not be compromised, BPI has put in place internal policies and systems on customer information security. All BPI personnel are required to adhere to these policies, as well as with regulatory requirements, on customer privacy and protection.

We are proud of the fact that there have been no substantiated complaints on breaches in customer privacy in 2010.

Marketing Responsibly BPI believes in always keeping its markets informed to communicate new offers, share pertinent company information and maintain brand presence. Our marketing communication efforts cover both traditional and non-traditional media channels such as out-of-home advertising.

We contract the services of reputable advertising agencies that are usually members of the Philippine Association of National Advertisers (PANA), Kapisanan ng mga Brodkaster ng Pilipinas (KBP), and Association of Accredited Advertising Agencies (4As). As members, they are mandated to follow the guidelines and code of ethics in developing advertising materials for the Bank.

As an advertiser, the Bank adheres to the regulations set by governing bodies such as the Advertising Standards Council (ASC) which requires prior approval for advertising materials before airing/publication. BPI also secures permits for brand advertising and promotions from the Department of Trade and Industry (DTI), and regularly communicates with the Bangko Sentral ng Pilipinas all information related to its products and services.

BPI has not encountered any incident of non-compliance with regulations concerning marketing communications.

Neither has the bank been charged or has been a party to any legal disputes relating to anti-competitive behavior, anti-trust, and monopoly practices.

BPI Express Assist

Faster, better banking with BEA Where would today’s customers rather be: a traditional bank branch where they have to join a long queue to transact with tellers over the counter, or one where they get to sit comfortably and do other things besides waiting?

When BPI was looking into further system enhancements to serve branch customers better, it found the solution in BPI Express Assist or BEA (originally named Customer Transaction Assist).

The Bank has been known for being a step ahead when it comes to innovative banking technologies and pioneering best practices. These include being the first to launch an ATM system, introducing the concept of a banking kiosk, and eventually the integrated 24/7 banking - ATM, phone banking, internet banking, and mobile banking among other innovations. It thus came naturally for BPI to turn to modern technology to also ease the traffic inside its branches.

With BEA, BPI customers can now be spared from the long queue and the need to fill out deposit, withdrawal and payment slips for over-the-counter (OTC) transactions.

Upon entering the branch, customers can simply approach a BEA touchscreen machine, enter their transaction data and the service they require such as cash and check deposits, withdrawal, bills payment, or making BIR and SSS payments.

The transaction is automatically transmitted by the system to the tellers with a corresponding queue number. The queue number is called out electronically in a monitor, so the customer knows which teller to approach to hand in the deposit or payment or get the cash withdrawn.

BEA is all about ensuring precision and accuracy.

It eliminates the risk of misreading customers’ handwritings on deposit, withdrawal and payment slips.

“The automation process also cuts customers’ total transaction time by 33%,” said Natividad Alejo, BPI Senior Vice President and Head of Consumer Banking Group.

“This technology was borne out of BPI’s aim to provide an easier and more convenient banking experience for our clients,” Ms. Alejo added.

After pilot-testing BEA in selected branches in 2010, getting customer acceptance and positive feedback from 100 branch locations, BPI plans to bring it to 500 branches nationwide to simplify the banking experience of every customer.

In 2010, the Bank won the Best Branch Automation and Networking Award at the 5th Asian Banker Technology Implementation Awards Program for its BEA system. This prestigious recognition reflects BPI’s commitment to improving processes to continuously delight its customers.

BPI 2010 Sustainability Report

| 17

SERVING A WIDER MARKE

Expanding our reach to cater to a wider segment of the market offers vast

opportunities as well as challenges. Beyond providing banking services to new customer segments that improve our playing a bigger role in

asset mix

, we see BPI

financial inclusion, a major strategic

sustainability objective.

BPI strives to increase the number of Filipinos availing the services offered by the financial system by improving access to our financial solutions that best meet their needs.

We reach these potential new customers in two key ways: • Directly, through our varied customer touch points and wide array of existing and new product and service offerings, and • Indirectly, by working with institutional partners and financial intermediaries which can augment and enhance our customers’ access to BPI. Banking with the Base of the Pyramid The ‘unbanked’ and ‘underbanked’ segments of the population, which have very low incomes, have limited financial access due to their location and rural condition. Hence, these segments offer ample opportunities for providing easy payment services, secured savings deposits, and appropriate credit at affordable rates. BPI seeks to address these segments through BPI Globe BanKO Savings Bank (BanKO).

BanKO is the Philippines’ first mobile savings bank which was publicly launched in February 2010. This new venture was borne out of our desire, together with our partner affiliates Ayala Corporation and Globe Telecom, to reach the ‘unbanked’ and ‘underbanked’ segments of the market. This venture focuses on supporting microfinance institutions with funding and capacity-building programs, as well as reaching the untapped retail market.

18 || 18

BPI Sustainability 2010 Sustainability Report BPI Report 2010

BPI has been lending to microfinance institutions since 1989 (the first commercial bank to do so), and formally integrated a Microfinance Unit into our business in 2005.

With BanKO, which absorbed and expanded the wholesale microfinance portfolio of the Bank, we could now more vigorously provide innovative products and services, establish a market-oriented ecosystem, and utilize alternative low-cost channels of delivery.

As of end-2010, BPI’s total outstanding loans to microfinance institutions reached Php2 billion, more than double the level in 2009. Of the total, Php924 million was extended by BPI while the new venture accounted for Php1.1 billion. The credit program benefited over 200,000 micro entrepreneurs.

>200,000 Number of micro entrepreneurs benefited

Php2B

Outstanding loans to microfinance institutions as of end-2010

In 2010, BPI was recognized by the Bangko Sentral ng Pilipinas (BSP) as the Best Commercial Bank Respondent on Overseas Filipino Remittances for two consecutive years. The Bank maintained its in overseas banking, after being the first bank to receive the much-coveted Hall of Fame award for being the Top Commercial Bank for Overseas Filipino Remittances for three consecutive years (2005 to 2007).

leadership

Empowering Entrepreneurs The Bank, through BPI Family Savings Bank (BFSB), also launched Ka-Negosyo Business Loans in 2010 to cater to the financial needs of micro and small entrepreneurs, which are estimated to comprise 99% of the domestic economy.

The product offers collateralized loan amounts as low as Php500,000 to allow more small entrepeneurs with an asset base of Php15 million or less to gain access to formal credit channels. Aside from more accessible financing, the program also offers faster loan processing time of an average of 5 to 10 banking days.

Since Ka-Negosyo Business Loans was launched in February 2010, BFSB new SME loan releases had grown by an average of 27% in terms of loan amount.

Reaching Out to More Filipinos Overseas BPI marked another milestone in 2010 as the number of our overseas Filipino depositors reached one million.

To maintain the service quality standards that the Bank is known for, BPI launched several initiatives to make it easier and faster for Filipinos to do remittance transactions across the globe.

These include: • BPI’s partnerships with financial intermediaries, namely Cebuana Lhuillier and One Network Bank as remittance pickup outlets, Havoc Digital Media and Jollibee Foods Corporation for the Gift Remittance service, and XOOM Corporation for cash pickup in the Philippines; • setting up more remittance offices such as in Madrid and California; and • providing Call Remit Service in the US to allow clients to remit via telephone

SME Loan Releases In billion Php 18

16.33

16 14

13.92

27%

Growth in 2010 vs. 2009

12.82

12 10 0

2008

2009

2010

19 | ||19 19

BPI 2010 Sustainability Report BPI BPI 2010 Sustaianability Sustainability Report Report 2010

Promoting Excellence and Pride Beyond providing remittance services, BPI uniquely boosts excellence and pride among Filipinos through our financial wellness and empowerment programs.

Aligned with the thrust of the government to support the country’s “unsung heroes,” BPI organized more than 20 caravans nationwide under its BPInoy Learning Series serving about 15,000 families. The program seeks to educate overseas Filipinos and their families on the value of saving to achieve their dreams of owning a home, providing valuable education to their children, and managing a business.

The BPInoy Learning program gained recognition from the Philippine Association for National Advertisers (PANA) as one of the outstanding marketing communication campaigns that promote positive Filipino values.

Through the annual BPInoy Awards, which marked its fifth year in 2010, BPI recognizes outstanding overseas Filipinos who made significant contributions to the global Filipino community. The 2010 awardees were: international singing sensation Charice Pempengco and Indiana-based neurosurgeon Dr. Manny Cacdac, head of the Hydrocephalus Foundation of the Philippines.

We also sustained the Search for the Ten Outstanding Expat Pinoy Children and honored ten more children of overseas Filipinos for their outstanding academic and non-academic achievements. This year, the Commission on Higher Education (CHED) supported the Bank in this program by endorsing and encouraging schools to participate in the Search.

As of 2010, BPI has already recognized 11 BPInoy awardees and 40 outstanding children of overseas Filipinos.

BPI continues to support the Overseas Workers and Welfare Administration (OWWA) in its annual Model OFW Family of the Year Award (MOFYA), a program that recognizes outstanding OFW families and promotes best practices in maintaining strong family relations among overseas Filipinos’ households.

20 |

BPI 2010 Sustainability Report

Remittances from Overseas Filipinos In billion USD 5 4

4.54

4.78

3.97

5.29%

Growth in 2010 vs. 2009

3 2 1 0

2008

2009

37.6

2010

Deposits of Overseas Filipinos and their families in 2010 (in billion Php)

11%

Increase in the number of Overseas Filipinos with deposit accounts in BPI in 2010 vs. 2009

FOUR EASY WAYS TO REMIT THROUGH BPI

featur BPI Globe BanKO

Banking on the ‘unbankable’ Millionaires and blue-chip companies have no trouble getting loans. But what if you just need to buy a goat?

October 2008. By end-2008, the Bank had provided over Php865 million in credit facilities to 21 MFIs, which benefited over 170,000 micro businesses.

Forbes Magazine posed this question in 2002, in an article extolling the benefits of microfinance.

Much earlier than this, BPI, through its social development arm BPI Foundation, became the first commercial bank to grant loans to microfinance institutions (MFIs) in 1989. Six years later, BPI made microfinance part of its core business when it created a microfinance unit under its Corporate Banking Division.

“We found out that only 20% of the local population has transacted with a bank. And more than 93% of the country’s enterprises are made up of micro enterprises which are usually considered ‘unbankable’,” said BPI Globe BanKO Vice President Josaias T. Dela Cruz.

To this day, MFIs continue to flourish in the country and are successfully serving their own communities.

Yet, there is still a large section of the population that do not have access to credit.

A solution presented itself when Filipinos started to rely on text messaging. If Pinoys can knock on the window of a friendly neighborhood sari-sari store to buy a cell phone load, it would not be hard to imagine banking there, too, or anywhere they are for that matter.

This in fact became the business model of BPI Globe BanKO, the first bank that uses “microfinance go mobile” to provide financial access to the “entrepreneurial poor.”

After seeing the benefits from the convergence of mobile technology with financial services, combined with social responsibility and sustainable development, BPI teamed up with Ayala Corporation and Globe Telecom to form BPI Globe BanKO in

Using alternative low-cost channels of delivery like a mobile phone, BanKO can reach a larger segment of the population typically shunned by traditional banks, or areas of the Philippine archipelago where there are no brick-and-mortar bank branches.

Among BanKO’s products are: microloans, where small borrowers can tap non-collateralized personal loans to start a micro enterprise, and microdeposit, where the low-income group can open a personal savings account for only Php100 with no monthly average deposit balance required. It also offers MFIs wholesale loans, as well as developmental capacitybuilding loans for training of their staff.

BanKO is now in the process of growing its network of partner outlets. In 2010, it forged a partnership with the international developmental organization Mercy Corps, funded by the Bill and Melinda Gates Foundation, to do research and technology development for microfinance in order to deliver financial services to low-income and remote clients in the country using mobile banking.

BPI 2010 Sustainability Report

| 21

ENGAGING OUR PEOPL

BPI’s long-term success depends on the quality of our Their

workforce.

innovative ideas, passion

and

commitment over the years provide value and help sustain our gains in

customer satisfaction.

Engaging our workforce The engagement of our employees is one of the strongest examples of how BPI’s business strategy is inextricably linked with sustainability.

People are the greatest asset in an organization. At BPI, this statement happens to be more than just a truism. We believe that the business of banking is more than just financial intermediation – rather, it is the simple translation of customer understanding into creative financial solutions, a process that starts and ends with our workforce.

In 2010, we commissioned Towers Watson to conduct a Bank-wide survey called “Engage 2010.” This aimed to understand how our employees feel toward the present state of the organization – their belief in the goals and support of the values of the company, their sense of pride and identification with the company, their willingness to go the extra mile and work beyond what is required to make the company succeed, and their intention to stay in the company.

Attracting, training, and retaining the best and the brightest employees is not only a business concern for BPI but a key to our sustainable success. To this end, the Bank focuses on creating a work environment which induces a wide variety of people to work enthusiastically.

How We Fare

BPI’s Overall Rating vs. Global Financial Services Companies Norm* Category Scores

Favorable Scores

Differences from Global Benchmark

81 86 80 72 86 77 84 78 65 91 63 82 79 84 81 76

Responsiveness ....................................

Customer Focus ....................................

Innovation ............................................

Leadership ............................................

Strategy & Direction .............................

Training ................................................

Ethics & Corporate Governance ...........

Involvement & Empowerment ............

Career Development & Opportunities..

Goal Clarity ...........................................

Performance Appraisal ........................

Work Tools & Efficiency .......................

Communication ....................................

Teamwork ............................................

Engagement ........................................

Supervision ..........................................

Rewards & Recognition ........................

Stress, Balance & Workload .................

18 16 14 13 10 9 9 9 8 8 5 5 4 3 0 0

49 45 0

25

50

75

100

-40

-20

0

20

81% BPI’s engagement score – 3 points higher than the global benchmark

-11

* 159,898 employees of global financial services companies tracked by Towers Watson in 2010

| BPI 2010 Sustainability 22 | 22 BPI Sustainability Report 2010 Report

33

40

sustainability

Employees drive our agenda. They link us to our customers. Beyond this, the they make everyday – from work habits to volunteerism – contribute to the ultimate difference we are working to in the world.

choices

create

The response was overwhelming, with 88% employee participation, considered one of the highest in engagement surveys Towers Watson has tracked worldwide. We also got an engagement score of 81% – three notches higher than the global financial services company norm. BPI scored higher in 15 out of these 18 key drivers and at par in two drivers.

We view these survey results as a strong indication of our well-engaged and highly motivated human resource. We also consider this as an affirmation of our policies toward having an open, fair and motivating work environment for our employees.

Fostering equal opportunities We continue to ensure that men and women have equal opportunities to work and advance their careers in BPI. In 2010, women made up 69.5% of our workforce and men, 30.5%. The 2:1 femalemale ratio was unchanged from 2009 and applied to all the ranks, except for the senior management level (nearly 1:1) and the Board of Directors level (nearly 3:1 in favor of males).

WORKFORCEPROFILE

BY GENDER (in %)

30.54 Male employees

69.46 Female employees

BY AGE (in %)

9.17

43.27

Below 30 years old

47.55

30 to 50 years old

Over 50 years old

BPI 2010 Sustainability Report

| 23

BPI employees also span a wide age range.

Of our workforce, 47.6% was between ages 30 and 50, while nearly the same percentage was below 30. Less than 10% was over 50 years old, of whom nearly 40% belonged to the rank and file. In the Board, 73% was above 50 years old and the rest was in the 30-50 age range.

In the same year, BPI generated jobs for 12,281 people. Of the total, 92% were composed of our permanent staff, who receive full benefits in accordance with law and company policies. Employees in probationary status made up 6% and the rest (2%) were contractual workers hired for a specific period of time and usually on an hourly basis.

As in the previous years, we have no reported incidents of discrimination nor is the Bank a party to any legal case related to discrimination of any of our employees in 2010. We shall continue to actively recruit qualified people to our workforce, regardless of race, color, gender, religion, or political beliefs, and take advantage of the abundance of talented candidates available from which we can hone the next generation of industry leaders.

Rewarding performance Throughout their employment with BPI, our employees undergo regular performance evaluations based on their individual accomplishments vis-a-vis their responsibilities, as well as that of the business unit or the Bank. This evaluation takes into consideration the Bank’s earnings performance, capital strength, business volume, customer satisfaction, and corporate governance, among other things.

In 2010, a total of 6,603 employees, accounting for 55% of the entire organization, had undergone performance evaluation. This evaluation served as basis for their salary increases, as well as promotions. The rest of our workforce receive annual salary increases based on the collective bargaining agreements with the various employees union of the Bank where 80% of our rank and file are members.

BY GENDER and RANK Female

Male

49 % 51 %

Senior Management

82

80

Middle Management

457

268

Junior Supervisory

2,156

1,165

BPI 2010 Sustainability Report

37 %

35 %

63 %

65 %

72 %

Rank and File

2,163

5,664

TOTAL

3,676

8,359

28 %

BY AGE and RANK 4,065

Below 30 30 to 50 Over 50 years old

3,333 1,896

111 51

Senior management

1,140

443 279

285

3 Middle management

Junior supervisory

BY EMPLOYMENT TYPE

429

Rank and file

BOARD OF DIRECTORS

92 %

11,354

Permanent

681 246

6%

Probationary

2%

Contractuals

24 |

%

73 %

Percentage of Board members who are over 50 years old while the rest are between 30-50

Compensating our people A critical component of BPI’s vision is to be a rewarding place to work. By providing competitive pay and benefits packages at all levels of our business, we acquire and retain employees with the best talent, passion and commitment to grow with our company.

BPI’s compensation package includes a base salary and comprehensive benefits, which are reviewed regularly. We offer a basic monthly salary that is above the minimum wage mandated by law, and is applied uniformly across the country. We determine job levels (A, B, C or specialist hire) based on our assessment of the employee’s job qualifications and position.

Being a financial institution also allows us to extend the benefits of our products and services to our employees as well as their families. These include low-interest auto and housing loans, emergency loans, medical and group term insurance, salary and emergency loans, on top of the sick, vacation and maternity/paternity leave privileges.

BPI also takes upon itself to provide financial security to its employees even after their retirement from the company through its retirement benefit plan without additional cost to the employees. The plan defines an amount of retirement benefit that employees will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. (For more information on our retirement benefits, please refer to our Annual Report, particularly in the Notes to Financial Statements items 2.28 and 30).

BASIC SALARY RATIO Moving towards greater gender equality, the Bank improved its ratio of the basic salary of men and women by employee category in 2010.

Senior Management

49

51

Middle Management

51

49

Junior Supervisory

51

49

Rank and File

51

49

TOTAL

55

45

By providing competitive pay and benefit packages at all levels of our business, we attract and retain employees with the best talent and with the passion and commitment to grow with our company.

Driving a Performance Culture Subject to Regular Performance Evaluation

2010

2009

Officers 3,494 3,535 Specialists 469 484 Non-unionized staff 1,489 948 TOTAL 5,452 4,967

Subject to Special / Career Development Evaluation 2010

2009

961 264 392 1,617

Staff who became regular Promoted MT/OTP TOTAL

6,603

Total number of employees who had undergone performance evaluations in 2010 (from 6,584 in 2009)

517 394 240 1,151

55%

Percentage of employees who had undergone performance evaluations in 2010

BPI Sustaianability 2010 Sustainability Report BPI Report 2010

|| 25 25

Developing competencies We maintain a set of standards that calls for hiring highly qualified employees capable of adopting and living our corporate values and working towards the achievement of our business goals. However, we believe in continuously improving the capabilities of our people in order for them to contribute to the higher aspirations of the Bank as well as for their own personal growth.

We fulfill the training and development needs of our employees by following a blended learning approach that includes workshops, coaching/mentoring, instructorled training sessions, and web-based training courses.

Training Hours 2010 Days Hours Ave. Hours/Employee Senior Management

3,711

29,688

183.26

Middle Management

6,494

51,952

71.66

Junior Supervisory

31,300

250,400

75.40

Rank and File

41,051

328,408

41.96

Grand Total

82,556

660,448

54.88

2009 Days Hours Ave. Hours/Employee Senior Management

1,870

14,960

94.09

We design and facilitate leadership and management training programs for supervisors, functional managers, and senior managers to support our investment in leadership development.

Middle Management

19,955

159,640

228.38

Junior Supervisory

10,667

85,336

25.70

Rank and File

39,346

314,768

39.46

In addition, the Bank continued to provide a strategic training program called the BPIHarvard Leadership Excellence Acceleration Program (LEAP). The program aims to build competencies and skills, including strategic thinking, leadership, customer management, innovation and customer-centricity.

Grand Total

71,838

574,704

47.28

To ensure continuous learning of our employees, a goal of at least five days training per employee per year is being observed by the Bank.

Average number of days of training every employee received in 2010 (up from 5.97 days in 2009)

26 |

BPI 2010 Sustainability Report

6.86

14.92

%

Percentage increase in average number of training days received by employees in 2010 versus in 2009

In 2010, we exceeded this target and provided 6.86 average training days per employee or a total of 660,448 hours. This translates to an increase of 14.92% in total training hours from the previous year’s level.

TURNOVERby gender Senior Management

2% (9) 0% (2)

We will continue to provide a range of training programs and workshops designed along the Bank’s business objectives.

These development programs are aimed at honing the skills and capabilities of our employees in carrying out their daily duties, as well as preparing them to assume higher responsibilities as the next leaders of the organization.

7% (31) 3% (25)

Middle Management

33% (143) 25% (183)

Junior Supervisory

58% (247)

Rank and File

72% (536)

TURNOVERby age Senior Management

1 10

Below 30 30 to 50 Over 50

17 39 Middle Management

Junior Supervisory

Rank and File

52

110 164

117 197

469

0 100 200 300 400 500

Managing employee turnover The banking industry remains a competitive and dynamic environment to work in, and the competition extends to the acquisition and retention of top-quality skills and the best talent. BPI is regarded as one of the best banks to work for and this is one of the reasons our staff turnover is regarded as below the average for our industry. This reputation results partly from our standing as a quality brand and partly from our company culture.

In 2010, our employee turnover rate stood at 10%, equivalent to 1,176 staff. Although this was higher than the 7% rate the previous year, we are consistently focused on improving our turnover numbers by creating an engaging and rewarding work environment with a strong culture of people development. This includes increasing employee engagement and satisfaction with the aid of the “Engage 2010” survey, offering opportunities for career advancement, and identifying retention factors such as employee benefit programs.

Promoting health, safety and work-life balance As a financial services company, BPI does not face the occupational health and safety issues usually associated with manufacturing and industrial companies.

We have no recorded incidents of injury, occupational diseases, serious workrelated diseases and other fatalities in our organization. As such, we have not started implementing programs related to the control and prevention of serious diseases.

Through our intranet portal called myBPIonline, our employees are able to exchange workplacerelated information and access self-help tools.

However, we still face the challenge of achieving a healthy working environment and lifestyle for our employees.

BPI Sustainability Report BPI2010 Sustainability Report 2010

| | 27 27

We recognize that the nature of our work has the potential to create sedentary jobs in a constantly changing business environment that demands intense focus and adaptabilty.

In 2010, we launched a unique initiative called “Keep Fit, Feed a Child” as our banner wellness program. This was an advocacy program aimed at encouraging our employees to make a conscious decision to make wellness a lifestyle choice. At the same time, it also served as a vehicle for the Bank to directly engage our employees in a Corporate Social Responsibility program that helps Filipino children who are in dire need of nourishment.

Under the program, BPI matched with a Php50 donation to the Supplemental Feeding program of the Kabisig ng Kalahi Foundation every pound that was lost or gained by participating employees during the threemonth cycle. Supplementing the program was a Health Risk Assessment activity conducted to assess the employees’ health status. Nutritional and medical advices were dispensed by nutritionists and doctors to employees who needed them.

The “Keep Fit, Feed a Child” successfully raised Php60,000 worth of donations that provided 30 malnourished school children with wellbalanced meals and supplemental milk for every school day for six months. (See sidebar story on page 31.)

As part of the advocacy program, several wellness activities were also mounted, targeting the participation of at least one third of our total workforce in the BPI Head Office and another 1,000 employees from Metro Manila and provincial branches by the end of 2010.

These included regular activities of the BPI Runners Club at the Ayala Triangle, aerobics sessions, and discounted membership at the gym. The Bank also organized a “Health is Wealth” Day, where private groups were invited to offer diamond peel trials, free body fat analysis and skin consultations (Slimmer’s World), food tasting and preparation (Nutrimeal), a briefing on lifestyle diseases (Pfizer), and cervical cancer and hepatitis B vaccination (GSK).

Moreover, health advisories tackling issues such as cervical cancer, dengue, and losing weight were issued via email to promote health awareness among BPI employees.

28 |

BPI 2010 Sustainability Report

Cervical cancer and hepatitis B vaccines were offered to female employees as part of the “Keep Fit, Feed a Child” wellness program in 2010.

To ensure security and safety awareness of both our security personnel and employees, an annual fire drill was conducted in our BPI and BPI Family Savings Bank Head Office buildings, and the BPI Card Center building in March 2010. On the same month, the bulletin on what to do during an earthquake was likewise circulated via email to all employees.

Upholding fundamental rights We acknowledge the importance of fundamental issues on human rights, more importantly, the prohibition of child labor and forced labor, non-discrimination, as well as the right to freedom of association.

To our knowledge, such issues are not a significant risk factor in our business operations. However, we recognize the need to improve our understanding of these human rights risks and are constantly working with stakeholders to more fully understand our responsibilities in this area.

BPI also guards its harmonious relations with its 25 labor unions, the most number in the local banking industry. As of end-2010, BPI had a total of 6,294 unionized employees all over the country, representing 80.14% of its entire workforce.

Outside of the CBA negotiations, the Bank has an opendoor communications policy so that concerns among employees are immediately addressed before they escalate. Moreover, our security personnel, as required in their certification process, are trained and retrained every two years on human rights-related topics. This is to ensure that they uphold the rights not only of our employees but also of our clients, suppliers and other stakeholders that do business with the Bank.

Keeping constantly connected BPI strives to ensure that our people hear about the progress and challenges of the organization in a way that best meets their information needs.

In 2010, we continued to rely on our Human Resource (HR) Portal called myBPIonline, which serves as an intranet platform for exchanging workplace-related information and self-help tools. All employees are also given access to Lotus Notes Mail to streamline the sharing of information for seamless execution and coordination within the organization.

Making a difference in communities BPI and its employees support communities nationwide through financial contributions, sponsorships, employee volunteerism and base-of-the-pyramid initiatives. For the past 32 years, BPI Foundation, our corporate social responsibility arm, has been benefiting people in need, at the same time providing opportunities for wider stakeholder engagement.

In 2010, BPI and BPI Foundation allocated a total of Php55 million for donations, charitable contributions and other CSR projects. This was 62% higher than Php33.8 million made in 2009.

Our CSR initiatives focus on three Es: Education Through our sponsorship of the BPI-DOST Science Awards, BPI is able to support and promote excellence in science education and scientific research in the country.

In 2010, the Awards marked its 22nd year in recognizing the science research projects of 30 more students from 10 partner universities.

The 2010 “BPI-DOST Best Project of the Year” award went to Ma. Ivy S. Dela Cruz, a BS Chemical Engineering student of the University of the Philippines in Los Baños, for her project on the removal of toxicity from tannery wastewater.

We also run the BPI College Scholarship Program for qualified dependents of our employees from the BPI Group. For school year 2010, five new scholars were added to the roster of 18 existing college scholars. The scholars are enrolled in the country’s top universities and are taking up science and engineering courses.

Other education-related programs supported by the Bank are the “1000 Teachers” Program of the Philippine Business for Education (PBEd); and the Philippine Dictionary Project, which was part of the De La Salle University’s (DLSU) Centennial Celebration. Our support for the Philippine Dictionary Project helped DLSU conduct training sessions for English teachers of various public elementary schools who became recipients of the dictionaries.

BPI Sustainability Report BPI2010 Sustainability Report 2010

| | 29 29

Entrepreneurship BPI also works to empower communities economically and improve access to livelihood opportunities.

Through our program on Building Capacities for Microfinance Institutions, MFIs and small and medium enterprises (SMEs) are able to strengthen their operations by undergoing training and availing of affordable credit. In 2010, BPI approved Php2.16 million of developmental loan lines for four MFIs, and conducted 10 microfinance courses in Bacolod, Davao, Manila, Iloilo and Dipolog, in partnership with the Ateneo de Manila University.

These capacity-building sessions now form part of BPI Globe-BanKO’s regular programs.

We also expanded our Show Me, Teach Me, SME - Empowering Entrepreneurs to benefit more SMEs. From half-day sessions, the courses now run for 1.5 days and are also offered in two new areas: Iligan City and Puerto Princesa. We have also forged a partnership with the Philippine Trade Training Center, the training arm of the Department of Trade and Industry, and linked up with the regional and provincial DTI offices to reach more entrepreneurs.

Environment As a leading banking institution, we recognize our role in helping protect the environment and increase environmental awareness. Thus we take part in initiatives such as the International Coastal Cleanup in Cebu, where 38 employee volunteers from various BPI branches and Business Centers in Cebu actively participated in 2010.

Volunteerism Believing in the power of numbers, BPI also encourages employees to volunteer their time and expertise in local communities.

In 2010, BPI joined the Ayala Group in the Habitat Build in Calauan, Laguna to develop a community for the Pasig River dwellers, in cooperation with Habitat for Humanity Philippines. Employee volunteers participated in a series of builds from May to August 2010 to help erect the 175 houses in Site 2 of the resettlement area that BPI is funding.

For the Servathon 2010 of Hands-On Manila, 30 BPI employees volunteered to repaint the Activity Hall of the Don Bosco Pugad Foundation and at the same time constructed tables for the multipurpose room.

30 || 30

BPI Sustaianability 2010 Sustainability Report BPI Report 2010

BY THE

NUMBERS 30 23

EDUCATION

Student participants in BPI-DOST Science Awards

College scholars for school year 2010-2011

ENTREPRENEURSHIP

Php2.16M

329

Participants from microfinance institutions reached by BPI-Ateneo partnership on capacity building for MFIs

Total approved credit lines for developmental loans in 2010

96

Small and medium enterprises which participated in the Show Me, Teach Me, SME – Empowering Entrepreneurs program

ENVIRONMENT

38

Employee volunteers who participated in the International Coastal Cleanup in various BPI branches and Business Centers in Cebu

EMPLOYEE VOLUNTEERISM

1,520

Total volunteer hours logged by BPI employees during the series of Habitat Builds in Calauan, Laguna

featur Keep Fit, Feed a Child Program

Losing weight, bringing hope Think of the irony: while we become overweight due to our unhealthy eating habits and even obese with our sedentary work life, mainly sitting in front of the computer everyday, there are children who drop out of school just because they do not have enough to eat.

BPI confronted this reality and joined the private sector in supporting the ‘Pasiglahin ang Estudyanteng Pinoy’ (PEP), a supplemental feeding program to curb absenteeism due to undernourishment among public elementary school students. A project spearheaded by the National Competitiveness Council (NCC), Kabisig ng Kalahi and the Department of Education (DepEd), PEP aims to reduce the dropout rates of grades 1 and 2 pupils by as much as 30%.

In 2010, BPI launched “Keep Fit, Feed a Child,” an innovative wellness program that engages its employees. Under the program, employees voluntarily underwent several educational and organizational activities designed to promote health and wellness. For every pound lost by overweight employees or gained by underweight employees, BPI matched it with a corresponding amount of donation to the PEP supplemental feeding program.

More than 800 BPI employees enrolled in the program, of which about half successfully lost nearly 1,400 pounds over six months.

As a result, BPI gave an equivalent Php60,000 donation to the program, which benefited 30 undernourished students of the Gen. Gregorio del Pilar Elementary School in Tondo, Manila.

School principal Trinidad Galang said the 30 children were identified by the school nurse as “severely wasted” based on their Body Mass Index (BMI).

A Home Economics teacher plans the nutritional meals and administers the daily feeding. A typical lunch consists of squash soup with malunggay leaves and ground pork or vegetables which are freshly picked from the school’s garden, Ms. Galang said. The meal is served with a glass of milk.

After the six-month period, all 30 children attained normal BMI and their grades improved because of their school attendance.

“It only cost at least Php15 a day to feed an undernourished child. This is really an investment in education that has a good return on investment,” said Ms. Galang.

“We know that losing weight is no small effort,” said Ms. Galang. “And if you think of all these undernourished children who no longer have to drop out of school, what BPI and its employees have done is really a big feat. They have provided these children some glimmer of hope to get out of poverty. And for this, we will be eternally grateful.”

BPI 2010 Sustainability Report

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REDUCING OUR ENVIRONMENTAL FOOTPRIN

As one of the country’s

leading institutions, it is essential to manage

environmental impact – not only because it is ethically right, but because it is financially responsible. our

Our business utilizes resources and in the process generates waste, hence we acknowledge the ecological footprint of our operations and our responsibility in reducing the environmental risk to our community.

As one of the country’s leading bank, we know that every choice we make in our business activity has an impact – not only on our financial bottom line – but also on the environment and on society. Thus we consciously evaluate the impact of what we do and identify opportunities with widespread benefits.

World-class innovator Since 2008, BPI has played a pioneering role in providing loans and leases for renewable energy and energy-efficient projects through our Sustainable Energy Financing (SEF) program.

This program not only helps us unlock the potential of Filipino entrepreneurs in growing their businesses sustainably and contributing to the national economy, but it also earned BPI a global recognition as a green bank.

In 2010, the Bank became the first bank in the Philippines to leverage on the SEF program by winning the prestigious G-20 SME Finance Challenge.

The online competition, sponsored by Ashoka’s Changemakers with support from the Rockefeller Foundation, was launched to find the best models worldwide for public-private partnerships that catalyze finance for small and medium scale enterprises.

BPI received the award at the G-20 Summit in Seoul, South Korea in November 2010.

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BPI 2010 Sustainability Report

ENVIRONMENTALfootprint in 2010 Direct energy consumption by primary energy source (in liters)

103,448 Purchased electricity (in kwh)

GHG emissions from businessrelated travel (in miles)

Water consumption (in cu. m.)

56M

2,318,274

708,171

We are working hard to manage our and on the environment.

By adhering to environmental laws and regulations, we are helping to contribute to a future and a better environment for our future generation of stakeholders.

direct indirect impact sustainable

As of end-2010, the Bank’s outstanding SEF portfolio stood at Php2 billion, 52% higher than the previous year’s level. Projects financed by the Bank in 2010 included the Sheridan Hotel and Resort located on Sabang Island in Palawan, a “green” hotel that uses LED and CFL lights, solar-powered street lamps, a rainwater harvesting system and a comprehensive recycling system.

Our environmental impact Within our corporate walls, we recognize our obligation to manage the direct and indirect environmental impact that our business and our employees’ activities have on society.

We impact directly on the environment in our daily business activities through our consumption of energy and other resources.

By complying with environmental laws and regulations, we are also contributing to a sustainable future and a better environment for the future generation of our stakeholders.

NOT JUST CLEANING BOTTLES. Through BPI’s Sustainable Energy Financing (SEF) program, Pepsi Cola Philippines is able to harness for the first time renewable energy from rice husks to produce steam for its bottle cleaning operations. Using this technology, Pepsi is able to save 25% on fuel and reduce its greenhouse gas emissions to 19,089 tons CO2/year. BPI extended financing to Restored Energy Development Corporation, the technology provider for Pepsi’s Muntinlupa City Plant, shown in photo being visited by representatives of the World Bank and International Finance Corporation, BPI’s partner in the SEF program.

We are happy to report that in 2010, we were not penalized, either by way of monetary fines or such other non-monetary sanctions, for non-compliance with environmental laws and regulations.

BPI Sustainability Report BPI 2010 Sustainability Report 2010

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11,268 Business Centers and Cash Centers

34,631 Branches*

18,200 Head Office 7,800 Head Office-Managed Buildings

12,865 Business Centers and Cash Centers

By primary energy source (fuel for generator sets) (in liters)

58,784 Branches*

Green initiatives In 2007, BPI tapped the assistance of the WWFPhilippines in designing programs aimed at reducing our carbon footprint and promoting environmental consciousness among our employees. The BPI-WWF partnership led to a program called BPI I-GIVE (I Get Involved, I Volunteer for the Environment), which engaged our employees in caring for the planet.

DIRECT ENERGY CONSUMPTION

19,800 Head Office 12,000 Head Office-Managed Buildings

In addition to compliance, we have also been raising environmental awareness among our stakeholders, particularly our employees and suppliers. We are also encouraging our clients and partners to reduce their own environmental footprint when running their businesses.

Building on this program, we have carried out seven green initiatives in 2010 to further reduce our carbon footprint.

Upgrade of air-conditioning system. BPI commissioned Cofely Philippines, an energy service company (ESCO), to oversee the upgrade of the 30-year-old air-conditioning system in our BPI Head Office building.

The project, which involves the change and installation of a new cooling system, is expected to bring more than Php6 million in annual electricity savings and up to 300 tons of carbon emission reduction per year. At the end of 2010, chillers 1, 2 and 3 were already replaced.

2010 Total: 103,448.30 liters * Number of branches covered: 2010-524; 2009-564

PURCHASED ELECTRICITY (in kilowatt hours) 13,156,500

This is BPI’s way of showing our stakeholders, especially our customers, our willingness to make an investment for an energy-efficient operation, and in the process inspire them to take on similar initiatives in their own business operations.

No overtime Fridays. One of our programs to save on electricity was the adoption of “No OT (overtime) Fridays” every second and fourth Fridays of the month.

Under this new initiative, all our employees in BPI Head Office Buildings, which include the BPI Head Office, BPI Family Savings Bank (BFSB) Head Office, the BPI Card Center and the Intramuros Building, can only stay in their offices up to 6:00 p.m.

While it may be too early to measure its full impact, this energy conservation program, launched in July 2010, has already started to reap benefits for the Bank.

34 |

BPI 2010 Sustainability Report

2009 Total: 71,899.00 liters

12,936,000

15,245,120 26,972,365

15,344,020

977,576

963,875

25,400,934

2010

Total: 56,351,562 kwh

2009

Head Office-Managed Buildings Head Office Branches* Business Centers & Cash Centers

Total: 54,644,829 kwh

* Number of branches covered: 2010-736; 2009-759

98,900 Total kilowatt hours saved in BPI Head Office (2010 vs. 2009)

1%

Decline in kwh of energy consumed in 2010 vs. 2009

CARBON EMISSIONS (in tons) 2010

Sources Total Direct and Indirect Greenhouse Gas Emissions (by weight)

2009

Change

% Change

27,250

2,221

8.15

277

193

84

43.46

29,194

27,057

2,137

7.90

82,753

28,793

53,960

187.41

80,947

26,832

54,115

201.68

1,806

1,961

(155)

(7.92)

29,471

Fuel from generator set 1 Purchased electricity 2 Business-Related Travel 3

Employees’ foreign travel Cash Centers’ armored car travel

Notes on Calculations:

Based on World Resources Institute (2008) GHG Protocol Tool for Stationary Combustion, Version 4.

Based on emissions factors from the “CDM Baseline Construction for the Electricity Grids in the Philippines” published by the Institute for Global Environment Strategies and the Manila Observatory. The calculation of emissions factors in this document was based on electricity generation for the period 2002-2004.

These emissions factors may no longer reflect the actual power generation mix of the electricity grids. However, we opted to use these factors in the absence of updated emissions factors for the Philippine grids, and for comparability from year to year.

3 Based on the World Resources Institute (2008), GHG Protocol tool for mobile combustion, Version 2.

1 2

BUSINESS-RELATED TRAVEL (in miles)

2010 749,817

1,568,457

123,838 Total miles saved (2010 vs. 2009)

5.07 %

2009 739,035 Employee foreign travel

1,703,077

Decline in miles (2010 vs. 2009)

Armored car travel

BPI Sustainability Report BPI2010 Sustainability Report 2010

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As of end-2010, electricity consumption in our BPI Head Office significantly went down by 98,900 total kilowatt hours or 1% from 2009 levels. Equally important, the “No OT Fridays” policy not only helped us manage our environmental footprint, but also improved employee productivity and work-life balance.

Energy-efficient lighting system. Still part of the Bank’s efforts to reduce its carbon footprint is the continuous replacement of fluorescent lamps (40 watts) into 18-watt compact fluorescent lamps (CFLs). In 2010, we installed over 32,000 CFLs in our head office buildings (BPI, BFSB, BPI Card Center and Intramuros) and branches.

More responsible waste disposal. To embed an environmentally conscious culture, we also mounted a Recyclables Fair at the BPI Head Office three times in 2010. A policy banning the use of polystyrene plastic (Styrofoam) materials for food and drinks was also implemented effective August 2, 2010 in all canteens at the BPI Head Office, BFSB Head Office and BPI Card Center.

Extending the environmental awareness campaign down the line, we also organized Solid Waste Management Orientation Trainings for all our maintenance personnel in our Head Office buildings. This was supplemented by a Waste Assessment and Characterization Study for the BPI Head Office, which was conducted

by Ayala Foundation in January 2010.

Working with partners Recognizing the need to magnify our efforts and contributions, we work in partnership with other stakeholders on environmental issues that impact us as a business and as a corporate citizen.

In April 2010, BPI employees joined the Ayala group of companies in celebrating Earth Day with a unique activity aligned with our commitment to protecting the environment.

Using Boysen’s “air-cleaning” Knox Out paint, which breaks down toxic air pollutants and converts painted surfaces into active air purifying areas, we painted the plant boxes and underpass entrances and exits at the intersection of Ayala Avenue and Paseo de Roxas. We also joined the Ayala group’s tree planting activity in Nuvali, Laguna.

In August 2010, we forged another partnership with WWF-Philippines on a climate risk adaptation project (see sidebar story on page 37).

With coordinated actions with local businesses and local government units, BPI hopes to contribute in addressing environmental challenges.

36 || BPI BPI 2010 Sustainability Report 36 Sustainability Report 2010

WATER CONSUMPTION (in cubic meters) 2009

2010

500,000

409,765

400,000 300,000

279,191

200,000 100,000

158,550

128,544

145,445

131,821

0

34,744

Head Office

Head Office-Managed Buildings

21,140 Branches (2010-507; 2009-564)

708,171

Business Centers, PLAUs & Cash Centers

Total cu. m. of water consumed and discharged in 2010

SOLID WASTE MANAGEMENT

Total weight of waste by type and disposal method (in tons) Recyclables Collected by accredited junkshops

Residuals/Landfills Surrendered to MACEA

61.20 tons

159.77 tons* 44.19 BPI Head Office 83.25 15.33 BFSB Head Office 18.89 1.68 BPI Card Center 57.63

220.97

* Estimated weight per bag = 10 kg

Total tons of waste disposed in 2010

featur

Photos courtesy of WWF-Philippines

BPI Express Assist BPI-WWF Climate Risk Adaptation Project

It pays to be ready Think of Cebu City. What comes to mind? Stunning beaches abundant in exotic sea life, world-class resorts, spas and casinos – basically almost all the natural wonders and the recreational comforts you can find.

But think of Cebu City 10 to 30 years from now. If you knew that only a third of its land is considered habitable by then, it would not be hard to understand why this bustling city keeps on reclaiming land and people are in a flurry to move to neighboring towns and cities.

WWF-Philippines warned that six airports in Central Visayas, including Cebu’s Mactan International Airport, might be submerged by rising water levels in a scenario of climate change. This could lead to economic collapse if nothing is done, the conservation organization said.

The scenario building exercise is part of the Climate Change Adaptation project of WWF-Philippines, in partnership with BPI. The project aims to assess the country’s readiness for climate change by generating socio-economic baseline data for selected cities outside the National Capital Region that are most likely to be adversely affected by climate change.

For the first phase of the study, the four cities covered are Cebu, Davao, Baguio and Iloilo. The cities were selected based on the occurrence of storms, floods, drought and other extreme climate events during the past decade.

For BPI, the project with WWF-Philippines is an example of how it integrates its social responsibility with its business goals. Florendo Maranan, executive director for BPI Foundation, said results of the study will be shared with the cities and the sectors at risk so they can better prepare for climate change disasters.

Jose Ma. Lorenzo Tan, WWF-Philippines president, said BPI can also use the econometric models for its credit policy and review when dealing with vulnerable cities and sectors. “Very few banks here understand the economic risks from climate change and prepare for the downtime and business disruptions from climate shifts. BPI does. And it takes a certain mindset to understand banks’ role in the supply chain,” he added.

The project is the second partnership of BPI with WWF-Philippines. In 2008, WWF-Philippines assisted BPI in participating in a Climate Savers Program designed to help reduce the Bank’s carbon footprint and promote environmental consciousness among employees.

“Adaptation gives you the opportunity to deal with climate change risks today,” Mr. Tan said. Climate change adaptation is still an evolving technology, and adaptation plans should be developed according to the hazards and needs particular to an area. “It’s a new world with a new set of threats. The organization that understands what these threats are will lead,” the WWF-Philippines head said.

BPI 2010 Sustainability Report

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GRI CONTENT INDE

GRI Indicator

Description Page/s

1 Strategy and Analysis 1.1 Statement from the most senior decision maker(s) of the organization ..................................... 4-5 1.2 Description of key impacts, risks, and opportunities .......................................................................... 3-5

2 Organizational Profile 2.1 Name of the organization ............................................................................................................................. Cover, 6 2.2 Primary brands, products, and/or services ............................................................................................. 6 2.3 Operational structure and major divisions ............................................................................................. 8 2.4 Location of the company headquarters ................................................................................................... 6, Back cover 2.5 Countries of operations ................................................................................................................................. 6-7 2.6 Nature of ownership and legal form ......................................................................................................... 6 2.7 Markets served .................................................................................................................................................. 6 2.8 Scale of the reporting organization .......................................................................................................... 6-7 2.9 Significant changes during the reporting period ................................................................................ N/A 2.10 Awards and recognitions received during the reporting period .................................................... 7

3 Report Parameters

Report Profile 3.1 Reporting period .............................................................................................................................................. 3 3.2 Date of most recent previous report ......................................................................................................... 3 3.3 Reporting Cycle ................................................................................................................................................. 3 3.4 Contact point for questions about the report and its contents ...................................................... 3, Back cover

Report Scope and Boundary 3.5 Process for defining report content ........................................................................................................... 3 3.6 Boundary of the report ................................................................................................................................... 3 3.7 Limitations on the scope or boundary of the report ........................................................................... 3 3.8 Basis for reporting on joint ventures, subsidiaries, and other related entities ........................... 3 3.9 Assessment methods for data and bases for estimates in data compilation ............................. 3 3.10 Explanation of the effect of any re-statements of information provided in

previous reports ................................................................................................................................................ N/A 3.11 Significant changes from previous reporting period .......................................................................... N/A

GRI Content Index 3.12 GRI Content Index Page .................................................................................................................................. 38-39 Assurance 3.13 Current policy and practice dealing with external verification ...................................................... 3

4 Governance, Commitments, and Engagement Governance 4.1 Governance structure of the organization .............................................................................................. 8-9 4.2 Indicate if the Chair of the highest governance body is also an Executive Officer .................. N/A 4.3 Number of Independent and non-executive members ..................................................................... 9 4.4 Mechanisms for shareholders and employees to provide recommendations ........................... 10-11 4.5 Association between the compensation of the members of top management,

high directors, and the performance of the organization, including environmental

and social performance .................................................................................................................................. 9 4.6 Procedures for avoiding conflict of interest ............................................................................................ 9 4.7 Procedures for determining qualifications and experience of highest governance body

for guiding the organization ......................................................................................................................... 9 4.8 Statement concerning missions and values implemented internally ........................................... 9 4.9 Procedures for highest governance body to supervise the organization’s performance ...... 9 4.10 Process to assess the performance of the highest governance body .......................................... 9 4.11 Explanation of how the organization has adopted the precautionary principle 32-37 4.12 Externally developed economic, environmental, and social standards adopted

or any other related initiatives ..................................................................................................................... 22, 31-33, 37 4.13 Listing of groups of interest included by the organization .............................................................. 11

Stakeholders Engagement 4.14 List of stakeholders groups ........................................................................................................................... 11 4.15 Basis for identification and selection of stakeholders groups ......................................................... 10 4.16 Approaches used to include interest groups ......................................................................................... 10-11 4.17 Main concerns and topics raised by stakeholders and how the organization

has responded to these concerns ............................................................................................................... 11

38 |

BPI 2010 Sustainability Report

GRI Indicator

Description

Page/s

ECONOMIC Management Approach Discussions ........................................................................................................................................... 12 EC1 Economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments ...................................................................................... 13 EC3 Coverage of the organization’s defined benefit plan obligations ................................................................. 25 EC5 Standard entry level wage compared to local minimum wage in locations of operations ................ 25

ENVIRONMENT Management Approach Discussions ........................................................................................................................................... 12, 32 EN3 Direct energy consumption by primary energy source .................................................................................... 32, 34 EN4 Indirect energy consumption by primary source ................................................................................................ 32, 34 EN5 Energy saved due to conservation and efficiency improvements ................................................................ 34, 36 EN8 Total water withdrawal by source ............................................................................................................................. 32, 36 EN16 Total direct and indirect greenhouse gas emissions by weight ..................................................................... 35 EN17 Other relevant greenhouse gas emissions by weight ....................................................................................... 35 EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved ............................................... 34, 36 EN21 Total water discharged by quality and destination ............................................................................................ 32, 36 EN22 Total weight of waste by type and disposal method ......................................................................................... 36 EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation ....................................................................................................................................................... 32-37 EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations ........................................................................... 33 SOCIAL Management Approach Discussions ........................................................................................................................................... 12, 22 LA1 Total workforce by employment type and employment contract ............................................................... 24 LA2 Total number and rate of employee turnover by gender, age ...................................................................... 27 LA3 Benefits provided to full-time (permanent) employees .................................................................................. 25 LA4 Percentage of employees covered by collective bargaining agreements ................................................ 24, 28 LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region ............................................................................................................................... 27 LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases .................. 28 LA10 Average hours of training per year per employee by employee category ............................................... 26 LA12 Percentage of employees receiving regular performance and career development reviews ........... 25 Diversity and Equal Opportunity LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity ....................... 23, 24 LA14 Ratio of basic salary of men to women by employee category ..................................................................... 25 Human Rights HR4 Total number of incidents of discrimination and action taken ..................................................................... 24 HR6 Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor ....................................................................................... 28 HR7 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contributed to the elimination of forced or compulsory labor ...................... 28 HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations ........................................................ 28

Product Responsibility Performance Indicators PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction ................................................................................................................................................... 14-17 PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship ..................................................... 16 PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship

by type of outcomes ..................................................................................................................................................... 16 PR8 Total number of substantiated complaints regarding breach of customer privacy and losses of customer data ............................................................................................................................................... 16 Society SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes .................................................................................................................................... 16

BPI 2010 Sustainability Report

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BPI welcomes comments, suggestions and inquiries on our Sustainability Report.

Please write or call: Corporate Planning Division 18th Floor, BPI Building 6768 Ayala Avenue Makati City 0720, Philippines Tel. (632) 845-5245 Email: gksinio@bpi.com.ph

BPI Sustainability Report 2010 Feedback Form 1. To which stakeholder group do you belong?

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BPI Website BPI Employee Others ______________ (pls. specify) 3. What are your general comments about the report?

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5. Which part of the report did you find most interesting and helpful?

Message from the President and CEO

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7. Please indicate other issues which should be addressed and included in the next report. _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 8. Other comments and suggestions: _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________