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TABLE OF
CONTENTS
Message from the Chairman 4
Message from the President and CEO 8
Financial Highlights 12
Operational Highlights 14
Branch Banking 16
Consumer Banking 20
Corporate Banking 24
Treasury 28
Trust Banking 30
Human Resources 32
Marketing 34
Corporate Social Responsibility 36
Risk Management 38
Corporate Governance 45
Board of Directors 48
Advisory Council 56
Management Committee 60
Senior Officers 62
Products and Services 68
Audited Financial Statements 70
Branches and Subsidiaries 154

About UCPB
UCPB is a leading provider of financial products and services to private corporations, middle-
market companies, small and medium-sized enterprises (SMEs), government institutions and
individual customers in the Philippines.

The country’s first privately owned universal bank, it provides expanded commercial banking
services notably domestic and foreign currency deposits, loans and trade finance, domestic and
foreign fund transfers, treasury, foreign exchange, investment banking and trust services.
ABOUT THE COVER

There are many directions that one can choose to go.

Two turns when making a decision, backwards when Being at the forefront of customer service innovations is among UCPB’s key strengths. Among the
remembering the lessons learned, but for UCPB, there first banks to introduce ATM service in the late 1980s, it took the lead with three other banks in
is only one direction to take – forward.
organizing Megalink, the Philippines’ first ATM network, in 1991.
Forward to better and brighter days, forward to
stronger business, forward to the future. There is no UCPB has a multi-channel service delivery network that enables it to meet client needs anywhere,
better time than now to take this step. with 188 branches and 277 ATMs by the end of 2012. It has embarked on putting in place mobile
and online banking facilities that effectively expands its reach and coverage of the marketplace.
Committed to bringing the Bank to the future, the
leadership and people of UCPB chart a new course in its Its subsidiaries are engaged in related areas of financial services such as thrift banking, financing,
history by creating initiatives that focus on achieving leasing, real estate development and stock brokering.
sustainable growth for the company.
Beyond banking, UCPB is also a key player in countryside development. Its UCPB-CIIF Finance
For UCPB, the future is bright, the future is now. and Development Corp. and UCPB-CIIF Foundation implement various credit programs and
community building activities in 62 of the country’s 64 coconut-producing provinces to help uplift
the quality of life in coconut-producing communities.

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 Your Bank is entering a new phase in its history as a corporation and as a universal bank.

I am pleased to report that in 2012, we reached our 50th year milestone with record performance yet unseen
in our history. As we celebrate the first five decades, we confidently look into the future and are moving
forward into UCPB’s next 50 years with greater strength, vibrancy and focus.

The Philippine Economy

The Philippines showcased its resilience and strong fundamentals when it defied global financial maelstroms
to post 6.6% growth in GDP in 2012. This surpassed expectations and earned for the country the sterling
distinction of being one of the fastest economies in Asia.

The Philippine economy accelerated in the second half of the year on the back of robust consumer
demand, higher public expenditures and a jump in farm output and property sector. Coupled with these
macroeconomic measures are the surging business process outsourcing (BPO) industry, strong remittance
inflows, and the renewed business confidence which combined to drive the economic resurgence in 2012.

Remarkably, the strong economic growth was achieved with inflation remaining low and stable, and shows
the effectiveness of fiscal and monetary policies set by the government and monetary authorities. At the
same time, the Philippines continued to have a strong external position, with balance of payments surplus of
$9.2 billion and Gross International Reserves at $83.8 billion as of year-end, which underscore the enhanced
standing and capacity of the country to meet external financial shocks.

The Banking Sector

The banking sector was a beneficiary of the robust Philippine economy, with over-all loans and deposits
going up on the strength of private consumer and business spending. Accordingly, gross assets, loans,
deposit liabilities and capital accounts continued to post significant growth. As of December 2012, the total
assets of the banking sector reached record high of 8.14 trillion , aggregate lending totalled 3.24 trillion,
16.2% up from the year before, continuing the double-digit growth rates since 2011.

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 The expansion in bank lending was sustained along with the These strategic programs would not have been possible
improvement in loan and asset quality, with non-performing without the steadfast support of shareholders as represented
loans dropping to record-low of 2% last year, in contrast to the by the Board of Directors, as well as the management team and
over 18% in the wake of the 1997 Asian financial crisis. people across the Bank. This expression of vision and support
has sustained management’s drive and strategic initiative to
The Philippine banking sector continued to exhibit build the UCPB of the future.
capitalization over and above the regulatory and international
standard thresholds, with computed capital adequacy ratio of Fresh beginning, new start
17.6 percent in 2012 and net Tier 1 CAR of 14.4 percent during Indeed, UCPB is riding high on the momentum of its strategic
the year in review. endeavors. As we celebrate UCPB’s 50th year and as we renew
our corporate mandate, we are given a fresh start and are
A Springboard for Faster Growth blazing a new trail in its history. For this opportunity to carry on
As we celebrate our 50th year, your Bank managed to register our legacy of contributing to the nation’s coconut farmers and
all-time high corporate results, highlighted by record levels of continuing to provide value to our customers and depositors,
revenues and profits. Total assets continued its ascent to 218.6 we wish to express our sincere gratitude and appreciation to
billion, bannered by the growth in total capital to 20.7 billion the Board of Directors and our shareholders.
and deposits to 172.8 billion in 2012, which underscore our
financial strength and stability. The last four years have seen the unstinting support of the
National Government and the patronage and trust of our
The country’s positive macroeconomic fundamentals and your customers, partners and the general public at large. We hope
Bank’s unrelenting effort to execute its strategic directions that to build once again a great partnership with all to create a new
was started in 2009 have put it in position to solidify its market foundation for the fast forward growth of the Bank.
standing and to grow even further in the next few years.
Mabuhay ang UCPB. Mabuhay ang Pilipino.
We stepped up momentum in 2012 as we stayed the course
in our plan to deepen our relationships with corporate and
individual clients by offering end-to-end deposit, investment
and credit products that provide superior value. Our focus is
on supplying customers with products and services that are Menardo R. Jimenez
relevant to their life-cycle needs and wants. Chairman

Through the last four years, we have invested in re-branding

effort, product development, branch expansion and in
organizational improvements that have enhanced our
capability to serve our markets efficiently and productively.

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 AND CHIEF EXECUTIVE OFFICER
The best way to create the future is to invent it.

The year 2012 caps an eventful five-year period from 2008 that has been marked by
expansion and downturns in the domestic economy and financial and economic upheavals
on the global front.

Amidst these volatility and seeming instability, your Bank delivered commendable operating
and financial results that began with the dramatic turn-around in 2009, which we have
sustained in the years hence. This is a testament to the validity of our strategic directions,
and the collective will and commitment of the UCPB organization to lead and reinvigorate its
future in the years to come.

Performance Reinvented
UCPB continued to perform, setting a new record in profitability and in attaining new levels
of resources and assets in 2012.

Net income after tax totalled 3.92 billion for the year, up 28.10 % from the 3.06 billion in
2011. This is the 4th year in a row of strong and consistent performance beginning in 2009
under the program that put the Company on track to growth.

The strong growth in earnings surpassed targets and is attributable to the expansion of our
loan portfolio and the better-than-expected income from treasury operations and our fee-
based businesses. Net interest income increased 3.63% from 6.61 billion to 6.85 billion
in 2012. Consolidated loan portfolio expanded 26.97% to 89.54 billion from 70.52 billion
in 2011. Although the loan portfolio expansion was significant, the increase in net interest
income was tempered as the Central Bank no longer pays interest on bank reserves deposited
to them.

Reflecting the expansion in our penetration of the corporate and commercial sectors,
corporate and commercial loan bookings went up 32.95% to 55.84 billion in 2012 from
42.00 billion the previous year. The growth in our consumer banking business was
sustained, with booked loans expanding 32.69% from 15.51 billion to 20.58 billion
during the year in review.

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 We supported the expansion of investable assets by increasing markets around the country, which we intend to leverage
our total resources to 218.58 billion and deposits to 172.77 to accelerate the uptake of new loans in 2013 and beyond.
billion, which enabled us to generate more loans at lower Coupled with the organizational move, we have also invested
costs. To supplement deposits, additional funding for loan in the Bank’s people and processes. Training and development
requirements primarily came from the issuance of Long-Term programs were implemented across the UCPB organization,
Negotiable Certificates of Deposits, which increased by 24.37% particularly the roll-out of our reinforced sales management
to 9.44 billion in 2012 from 7.59 billion in 2011. and marketing system to develop the process and culture to
compete in the market and drive our future growth.
The Bank managed to improve its overall NPL ratio from 7.79%
in 2011 to 5.83% in 2012, reflecting the improved quality of our The Next 50 Years
assets. Of the total NPLs, 57.31% are fully covered by allowance There is no mistaking about it – the future is now. Overall, your
for credit losses, as such NPL ratio will further improve to 2.5%. Bank has proven its capability to deliver strong and steady
growth. We have ourselves in this position by putting in place
Strategy Drives Operations sound and coherent strategies and the necessary mindset and
Since 2008, UCPB has committed itself to the reinvention and organizational enhancements for us to chart a new course in our
reinvigoration of the Bank. The far-sighted vision and wisdom history.
of the government’s move to recapitalize UCPB on the basis of
the earlier settlement of the ownership issue by the courts have We thank the Bank’s shareholders for extending our corporate
provided the focus and the impetus for the Bank to resolutely mandate for the next 50 years. This is a testimony to their
pursue its growth strategies and programs. Our performance strong commitment in supporting UCPB as a universal bank
is founded on key strategic programs. Notable of these is our that serves the general public and as an engine of development
direction is to expand our footprint in the consumer banking for the country’s coconut industry. With the continuing and
business, which enjoys significantly wider interest spreads and steadfast support of our Board of Directors and Advisory
healthy and strong growth rates. Council, customers, business partners, associates and our other
stakeholders, and in relentlessly pursuing our strategies, we are
In this regard, we continued our branch expansion program confident that we shall move decisively forward to the future
by putting up five new branches and 14 new ATM machines, we all deserve.
thus lifting our branch network to a total of 188, supplemented
by onsite and off-site ATM network of 277 machines. Moving
forward, our plan is to open more branches and operate more
ATM machines in 2013 in line with this expansion program
to increase our product and service delivery systems to more
areas around the country. This year, we undertook an important
strategic direction to escalate the throughput and productivity Jeronimo U. Kilayko
of our branch network as a marketing distribution system. We President and Chief Executive Officer
instituted the simple yet effective structural adjustment of
assigning a branch-based sales officer to deploy our various
consumer loan products in the field.

Complementing this has been our direction to beef up our corps

of consumer loan officers to market our various loan products.
These twin moves shall give us enhanced market coverage and
forward presence in many commercial and high-population

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 FINANCIAL
HIGHLIGHTS
FAST FORWARD 2012
The year 2012 culminates the first 50 years of UCPB – and marks the full turnaround of the Bank into operational and
financial stability and sustained growth.

• Sustained our position as one of the most profitable universal banks in the Philippines, with a net income of
PhP3.92 billion,
billion, 28.10% higher than in 2011;

• Continued buildup of loan assets, low-cost deposit funding growth and improved operating efficiency led to a
Return on Average Capital of 20.46% from 19.49% previously;

• Achieved vast improvement in overall asset quality, with a non-performing loan (NPL) ratio down to 5.83% in 2012
from 36.32% in 2004; and

• Increased capital buildup led to a Capital Adequacy Ratio (CAR) of 12.32% — meeting the requirement of the
Bangko Sentral ng Pilipinas and the prescribed international standard.

With its growth performance above par of that of the over-all banking industry in a period of diminishing spreads,
UCPB has definitely demonstrated that it is back on track on the way to regaining its top-tier position within the
Philippine financial space.

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 FUTURE PERFECT
The future is all about coverage, collaboration, creativity and
competitiveness – summarizing the strategic directions of the
Bank. Competitiveness and collaboration are achieved through
expansion of our market footprint and deepening our relationships
with clients to unlock opportunities to serve the whole gamut of
their needs.

In UCPB, continuous collaboration with Clients is paramount.

It means knowing and anticipating their needs, which in turn
unlocks opportunities to expand the banking business.

Coverage creates larger market spaces for the Bank to operate

and serve customers. We expand our market footprint across
geography, business classifications and socio-economic
boundaries.

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 BRANCH BANKING

Blazing the Marketing Forefront

The Branch Banking group maintained its drive to exploit and maximize opportunities in the frontlines of the
Philippine banking market.

In 2012, it continued to produce creditable operating results in generating low-cost funds. Total deposits amounted
to 172.77 billion in 2012, an increase of almost 5% from the year before. The average daily balance was even more
impressive as it grew by 12.88% during the period in review, much higher than the 9.4% posted by the overall
banking sector. Since 2009, the volume growth of checking and savings accounts of UCPB has been above that
of the industry.

The steady increase in business volumes has been supported by the introduction of innovative products and
services that fit the requirements of our customers. Among the products launched in 2012 are the UCPB Mobile
Phone Banking Service, Corporate Checkwriter, Point of Sale (POS) Collection Service and the Internet Payment
Gateway through Megalink.

The positive results were also attributable to the expansion of the branch network to 188 and the installation of 14
new ATM machines to bring the total to 277 by year-end. The new delivery portals expanded our market coverage
to new areas where we previously have no presence. In addition, 4 more branches were renovated to conform to
our rebranding program.

Beyond the branch infrastructure orbit, UCPB streamlined the regional branch organization and added three
regional managers to ensure adequate on-ground management and monitoring of operations. The branch
organization was likewise strengthened by the assignment of a sales officer dedicated to the development of
markets for our consumer loans business.

Structural improvements were matched by process enhancements and training and development of the frontline
branch officers. During the year, we continued the installation of the UCPB sales management system throughout
the branch network. An automated sales prospecting program was rolled-out in coordination with our Information
Technology and Methods Group to assure the identification of prospects and the management of the sales process
from lead generation to closing. An integral part of the system is the sales management training program for
branch officers spearheaded by Human Resources.

Moving forward, the Bank is planning to open more branches and acquire more ATMs in 2013 in line with the
positive economic outlook. UCPB aims to take advantage of buoyant consumer spending due to increased
overseas remittances and the robust business process sector, as well as higher public infrastructure expenditures
during the year.

The branch network is at the frontline to build volumes not just in deposits
but more so in driving the consumer banking business because of its reach
and presence. Our strategy is to deploy the sales officers to wherever the
clients may be – in offices, in commercial malls and districts, in schools
and population centers – and aggressively serve their deposit, payroll
processing and cash management, and other banking needs.

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 Manuel Lorenzo L. Tuason
President
CIS Bayad Center, Inc.
Ma. Lourdes S. Valero
Business Partnership All the Way Vice President for Finance
Bistro Group of Companies
With over 3,000 over-the-counter payment centers situated throughout the archipelago, CIS Bayad Center has
been receiving and processing the payments of millions of customers of such companies as Meralco, PLDT, and
more than 160 utility and other service corporations for 15 years now.
UCPB Turns A Problem into a Happy Ending
Through the years, UCPB has been an invaluable banking partner, providing cash management
and cash pick-up services for Bayad Center sites, ensuring accurate and timely processing and reports to the The roaring 1990s – a period of rapid economic growth, IPOs and global portfolio funds – came to a
business. screeching halt following the Asian contagion that hit the region in 1997. Like most businesses during
the period, the Bistro Group – bannered by popular restaurant concepts Italliani’s and TGI Fridays –
“UCPB stands out among our banking partners in that it takes time and effort to know and understand our aggressively undertook an expansion program.
business and the processes involved from start to finish,” Manuel Lorenzo L. Tuason, CIS Bayad Center President,
said. He added that the significant amount of funds that the Bank has been handling for Bayad Center reflects “The Bistro Group financed expansion primarily through bank financing,” Ms. Ma. Lourdes S. Valero,
the trust and long-standing relationship with the payment center pioneer. Vice President for Finance, explained. Due to the economic slowdown which brought lower sales and
reduced business opportunities, the Bistro Group experienced difficulties in servicing debt payments,
“We are happy to see UCPB leveling up the partnership to match our plans to create higher operating efficiencies and it applied for relief and refinancing of its loans with UCPB.
and to expand in more areas in the Philippines and in the Asia-Pacific,” Mr. Tuason declared. And UCPB remains
solidly behind it to provide its ever-ready services and business network to lend support all the way. To its credit, UCPB took cognizance of the fundamentals of the Bistro business and moved decisively to
see how it could assist the client. Ms. Valero recalled that UCPB re-structured Bistro’s loans even without
additional collateral, unlike other creditor bank which imposed attachment proceedings to some of the
Company’s properties.

“Without UCPB, we couldn’t have survived the worst time in our history,” Ms. Valero emphasized. She
Corazon D. Ong said that Bistro committed to reduce expenditures and pay back the loan, but in the end it was the
Chief Executive Officer understanding and trust of UCPB that enabled the Group to come out of the crisis to get back on its feet.
Bistro was even able to prepay the re-financed loans ahead of the 10 year timetable.
Foodsphere, Inc.
Now the Bistro Group has regained its stature as the leader in the casual dining business in the
Steady service performance fuels growth Philippines – all because of UCPB’s foresight and brave decision to trust and support a valued client.

In the consumer market, Foodsphere, Inc. has carved a reputable name as a producer of quality branded
processed meats, with brands such as CDO, Holiday, Bibbo, San Marino and Highlands becoming leaders in
various market segments and have become household names.

For fifteen years now, UCPB has become a key part of the CDO sales and distribution system that makes it
possible for their products to make their way to the tables of families who consume their products every day,
from north to south around the country.

UCPB has reliably provided cash pick-up and delivery for its distribution points in La Union and Pangasinan from
where products are off-loaded to local supermarkets and retailers in the north. The Bank likewise services the
cash pick up and delivery in the Company-owned store in Valenzuela.

Plans are underway to provide the same banking service to CDO distributors and dealers in the countryside which
potentially will lead to greater efficiencies and faster integration in the CDO sales network. For UCPB, nothing
exceptional: service excellence is all in the day’s work. Rolando de Leon
President
Bataan Transit Co., Inc.
Francisco Paulino V. Cayco
Chairman and Chief Executive Officer
Alma C. Curato Carrying A Bus Transport Group to Higher Greater Heights
Board Member and Vice President for Finance
Arellano University Operations of a bus transport company is a 24/7 business, and is all about providing reliable and
satisfactory service to the riding public.
Banking on Trust
“In running a bus transport service, doing the little things well and efficiently and with strict attention
A family owned educational institution that is treated like family by a universal bank. That is Arellano University, to schedules are key to profitable operations,” Bataan Transit Co., Inc. President and General Manager
a venerable 75-year old institution founded by the Cayco family that now boasts of six campuses around Metro Rolando De Leon declared.
Manila, with combined enrollment of 23,000 students from elementary to post-graduate levels. It is well-known
for the academic excellence of its graduates in nursing, physical therapy, other allied medical courses as well He runs the leading and most trusted bus company plying the Manila-Pampanga-Bataan corridor and the
as in law, arts and sciences, accountancy, business, hospitality and tourism management and information First North Luzon Transit, Citibus Transit and Star Bus that operates in other key destinations in Central
technology. and Northern Luzon. Together, the group has 300 operational buses that go to and from Manila to the
northern provinces of Luzon.
“Our relationship which began in 1980 has been solidly built through the years on trust and confidence,”
Chairman and Chief Executive Officer Francisco Paulino V. Cayco declares. He further states that, “ UCPB’s Mr. De Leon has credited UCPB with providing an important link to the group’s transportation business as
creative and innovative approaches lasted through the years because it offers its’ clients solutions to their a banking partner. “Even though our relationship just started two years ago, and even if our requirements
problems instead of run of the mill traditional products as other banks have been doing. This strong sensitivity are simple, the Bank has given outstanding and consistent service,” he said.
and connection is what differentiates UCPB from the other banks.” Mr. Cayco adds that UCPB’s services like
mobile cash pick-ups make their banking experience convenient, easy, simple and less complicated. Placement of corporate accounts in UCPB is supplemented by deposit pick-up service from the group’s
various terminals in Manila, Quezon City and in Bataan and the other provinces. It also avails of cash
Arellano University Vice President for Finance Alma Curato also points out that having multipoint business
management, disbursement services and payroll for its more than 500 employees.
locations poses a challenge for their financial needs, which is why flexibility and pulling out all stops to serve
its various needs in a timely fashion is so important. Arellano also avails of UCPB CM.Biz, the corporate internet
banking facility to enable easy management of cash, collections and working capital. Reliable service by a banking partner and the entrepreneurial acumen and determination by a client that
knows what it takes have transformed the Bataan Transit group into a thriving and expanding transport
“We like UCPB because it puts its money where its mouth is, “Mr. Cayco concluded. He adds that because of enterprise that is sure to serve the riding public in the many years to come.
the mutual goodwill built through the years, Arellano has stayed on as a client even during the most difficult
and challenging times. With UCPB, banking is more than a business. It is a relationship that nurtures its clients
through thick and thin,”
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 CONSUMER BANKING
New Driver of Performance

The consumer market is significantly growing in tandem with the expansion of the economy and Consumer
loans portfolio in 2012 totalled 20.58 billion, up a hefty 32.69% from that of the previous year.

Home loans provided the highest share in new loan bookings and net income contribution. The ma jority of
the home loan portfolio of UCPB consists of end-users of real property, mostly in Metro Manila and partly in
Cebu, Iloilo and Cagayan de Oro provinces. In the bid to further expand loan volumes, UCPB heightened its
accreditation and institutional tie-ups as lender-partner with ma jor property developers nationwide.

Auto loans contributed 2.70 billion in new loan accounts. Initiatives such as the “Drive Your Worries Away”
Promo, which entitled qualified borrowers to free 1-year comprehensive insurance with acts of nature coverage,
and other sales incentive schemes implemented during the year contributed to the overall portfolio.

Further, the Bank concluded partnerships with ma jor car manufacturers and dealers. We established a
beachhead in the vehicle fleet market, notably for corporate car plans and car rental operators.

The personal loans sector achieved status as one of the fastest-growing segments in consumer banking,
with new bookings nearly doubling from 0.52 billion to 1.00 billion in 2012. This consisted of salary loans of
employees of institutional clients and multi-purpose loans sourced by third-party loan marketing agencies.

Overall, the Bank benefited from the strategy adopted during the year to increase focus on selling consumer
loans by the branches, which enabled us to capitalize on cross-selling opportunities that drove up branch-
originated loan bookings by 50%.

Moreover, we are expanding and strengthening our loan product portfolio with the development and eventual
launch of the Small Business Loan, Franchise Loan and Seafarers Loan in 2013.

Looking forward, the outlook for the consumer banking business is most favorable and auspicious. We are
anticipating gross growth rate of 45% in 2013, with car loans and personal loans to grow at accelerated speeds
in line with higher consumer incomes and spending.

Consumer banking is the sunrise sector for UCPB. It enjoys positive short
to medium-term prospects, while ensuring higher yields and margins
that will drive growth in the Bank’s future earnings.

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 Atty. Albert Ocampo
Karen Bacosa

Making Things Simple to Deliver Customer Satisfaction

Impeccable Customer Experience with UCPB Lawyer Albert Anthony H. Ocampo beams whenever he recalls how UCPB walked the extra mile
to help him out to finish construction of the home of his dreams.
For first-time borrower Karen Bacosa, her experience in obtaining a car loan has been, simply perfect.
An executive of a large condominium developer, he didn’t realize that a loan application could
When she joined Mead Johnson as Brand Manager last October 2012, part of her package was a car be a little more complicated – and that the approval and release of a housing loan could take
plan with a choice of being provided a car or to purchase a new car with subsidy from the infant formula longer.
manufacturing company. She chose to avail of the latter.
He began construction of his dream house in the first half of 2012 in the family compound in Los
Once she picked a car of her choice and knocked on Kia E Rodriguez branch, she was confronted with the Banos using personal funds first and planned to avail of a Pag-Ibig loan to finance the second
decision of selecting the bank that will finance the ma jor part of the price tag. When she asked friends half of the construction. Unfortunately, it turned out that the loan application process was more
and relatives who have had experience in borrowing, they invariably singled out a bank that gave them suited to homes built by subdivision and property developers.
an impeccable customer experience: UCPB.
Moreover, little did he know that the location would further prove to be another complication
“When the Kia sales people gave good words and recommended the Bank, there never was any doubt that since the lot is in a commercial resort property. Banks in general do not allow housing loans for
it had to be UCPB,” she happily recounted. lots located in commercial zones.

Ms. Bacosa, a veteran marketing professional, knows how important the product or service experience is When his colleague referred him to UCPB, he was a pleasantly surprised that it was different.
in building rapport and inspiring loyalty with a customer. She said UCPB clearly lined up all the specific After applying for the loan , the property was appraised just a week later, and things moved like
requirements and explained the procedures involved from the start. Everything was a breeze from up to clockwork. The loan funds were released in only a few weeks, and the construction project was
the time she got the keys to her brand new Kia Sportage SUV just a few days later. completed shortly. He, together with his lovely wife and two boys moved into and now happily
reside in their new Zen-inspired two-story home.
She added that “there was never any doubt that UCPB was willing to help me as a bank loan customer.”
For a first-time borrower, the experience brings a smile to the pretty mother of two. For UCPB, customer satisfaction is paramount – even if there are a few complications. “UCPB
makes things simple for its clients,” the satisfied lawyer and first-time borrower proclaimed.
“UCPB really cares about customers like me.”

Jocelyn L. Guzman
President
Property Company of Friends Inc.
Art Joseph Francis Mercado
President
AJFM Logistics Inc.

Helping Create Communities for the Filipino Family

Contributing to Client Success Property Company of Friends (PRO-FRIENDS) Inc. is one of the fastest-growing real estate
developers in the country and has made its mark in the industry after delivering 15 horizontal
Art Joseph Francis Mercado is the scion of the family that owns a regional passenger bus operator projects even though it only started in 1999. It boasts of an array of concept communities in
that plies the Manila to southern Tagalog area. various locations in Cavite, Pampanga, Iloilo and Metro Manila.

But make no mistake about it, the 23-year old Mr. Mercado is his own man and is the principal in “Because of our exponential growth and our rapidly changing requirements, we need a bank
the AJFM Logistics Corporation. Barely a year old, his company is making its mark in product that can match the pace of our genesis as a property player,” Jocelyn L. Guzman, President and
distribution and has forged contracts with Monde Nissin, Gardenia, Chowking and Robinsons Malls. Chief Executive Officer, said.
In addition, AJFM won the customer shuttle service contract for customers of the newest gaming
and entertainment attraction in town, Solaire Hotel and Resorts. Since 2004, UCPB has proven to be a reliable primary bank by being its financing partner for
house-and-lot packages extended to its numerous customers, while providing other banking
“UCPB was recommended by Toyota when I inquired about a fleet purchase of the Grandia Hi-Ace services that are critical to a property firm.
vans for the Solaire project,” Mr. Mercado mentioned. Toyota said that UCPB was an accredited
bank for credit financing and a prime choice of the car dealer. “The bank’s strongest asset is its ability to think and operate out of the box,” Ms. Guzman
emphasized. She was quick to commend the bank’s account officers added that although they
UCPS’s consumer banking group wasted no time and effort to assist Mr. Mercado in the processing remain flexible in accommodating requirements, the company’s expectation is appropriately
of the loan application and evaluation. Shortly, Mr. Mercado was able to take delivery of the 10 managed to ensure that the bank’s interest is also protected.
vans and deployed them just as he committed to the Solaire management.
Flexibility. Innovativeness. Customer Focus. These have spelled the difference for PRO-FRIENDS
“The Bank did everything possible so that I can make it and satisfy my client,” he noted. “I believe as it continues to make even bigger strides as a force in Philippine property development
this is the start of a long and fruitful partnership.” industry.

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 CORPORATE BANKING

Greater Inroads in the Middle Market

Corporate banking reached new heights in 2012. It registered outstanding loans totaling 55.84 billion,
significantly expanding by 32.95% from the 42.00 billion posted in 2011.

UCPB’s corporate loans are much higher than the over-all loan portfolio growth of 26.97% by the universal and
commercial banking industry, reflecting the increased market penetration of the business market segment. It
was the beneficiary of the healthy business environment and highly improved economic outlook.

We strengthened our focus on new account acquisition, even as we ensured account retention through
customer relationship management and the provision of a complete range of financial solutions – from
savings, placements, payroll services to cash management. Our deep relationship and our knowledge of
customer needs allowed us to increase the average credit line utilization rate to 60%.

Our plan is to improve further improve our capability and level of service to the middle market, which as a
sector, is expected to grow more rapidly than the general economy.

The Bank is excellently positioned in the middle market business space

– family-owned business enterprises with some 100 or more employees
and characterized by personalized service and relationships –
wherein 80% of the over-all accounts are located. Positive proof of the
Company’s adherence to the logo’s slogan: “It’s personal!”

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 Clemente Garcia
President
Headland Distribution, Inc.

Customer-Centric Culture Leads to Success

For Headland Distribution, Inc., a fertilizer distribution company servicing the Northern and Central
Luzon area, speed and flexibility, quick response and open communication lines make the difference
between success or failure.

Its President, Clemente Garcia, attests to these qualities that have characterized the relationship
for the last six years. “UCPB delivers on its brand promise of personalized and quick service,” Mr.
Garcia confides.

He recounted that he personally experienced the kind of customer-driven culture of UCPB when
he needed a temporary increase in credit line to service a large order of fertilizers. “It was UCPB
that came through by quickly acting and making a decision to help me in delivering the order,” he
declared.

Since being introduced to the Bank when he started his fertilizer distributorship business by the
Rene D. de la Calzoda
Philippine Phosphate Fertilizer Company, listening and knowing the needs of the business have been President
the norm in his Company’s banking relationship. UCPB initially approved an initial clean credit line Tridharma Marketing Corporation
of 40 million, which has been eventually increased to 175 million.

This partnership has expanded through the years as UCPB is now also the collection, savings
account, cash disbursement, and payroll service provider not only of the original fertilizer business
but also his other business ventures, including rice milling facilities and warehouses, a Kia dealership
in Bulacan and soon, a BMW dealership in Quezon City. Helping to Change the Game

“UCPB has not failed to support our business consistently and continuously,” Mr. Garcia concluded. For veteran sales and marketing executive Rene de la Calzada, it was a combination of foresight
“This is surpassing customer expectations in action – day in and day out.” and faith to see beyond the adversities that has contributed to making Kopiko a frontrunner in
the coffee mix business in the Philippines.

“Considering that we were yet unproven, UCPB took the risk and got our business off and
running when it invested and provided credit line of 50million in the crucial early stage of
operations,” Mr. De la Calzada, Tridharma Marketing Corporation President, recounted.

He explained that their Indonesian principal awarded the distribution rights to Tridharma in
2006 after the previous licensee failed to grow the business and Kopiko suffered from negative
Victor C. Batungbacal image. In spite of this initial disadvantage, it worked to develop the lower-end trade channels
President that included public markets and sari-sari stores. Later, it introduced Kopiko instant coffee mix
Asiaphil Group of Companies through product sampling and comprehensive product placements in the retail shelves which
proved to be the game-changer.

Tridharma created a new market category which had long been dominated by multinational
Powering up Asiaphil’s Businesses and local instant coffee manufacturers. After six years, Kopiko has become synonymous with
3-in-1 coffee mixes and the Kopiko Brown Coffee is now one of the bestsellers.
For Asiaphil President Victor Batungbacal, UCPB is considered an integral part of the company’s
business operations and growth. Mr. de la Calzada affirmed that “we can always rely on UCPB for our financing needs because it
understands our business.” Apart from the trade lines, the Bank has provided financing for the
Asiaphil Manufacturing is a pioneering Filipino-owned electrical manufacturing and engineering purchase of its vehicles and equipment.
corporation that first assembled panel boards, electrical distribution equipment and substations
when it was founded in 1973. It has since achieved a solid reputation as a quality provider of “UCPB has been with us every step of the way,” Mr. de la Calzada declared. When a bank that
equipment and construction services in the field of power distribution for the country’s top industrial is genuinely concerned and supports a company that is in turn driven to becoming a game-
corporations. It is ISO 9001-certified for its electrical design, contracting and maintenance services. changer and a market leader, indeed, how can such a combination go wrong?

A long-time client of UCPB, the relationship began in 1989 when the corporation was trying to get
up on its feet again following the semi-retirement of its founder (Victor’s father, Guillermo). Mr.
Batungbacal recalls that the bank’s endorsement as creditor bank for a project enabled them to be
awarded one of their first ma jor orders. And that was the beginning.

Since then, this meaningful gesture has blossomed into a broad and deep relationship that has
involved UCPB’s products and services in ma jor aspects of Asiaphil’s business operations that now
includes a full range of commercial credit facilities, vehicle financing, payroll crediting and online
banking facilities.

When applying for and utilizing loans to complete large-scale projects, enjoying faster, safer, easy-
to-monitor fund transfers and account monitoring through UCPB CM.Biz, or availing of the extensive
branch network, the UCPB branch managers and relationship managers know the company’s
needs, and highly appreciate the special treatment it provides in terms of priority processing of
transactions.

“Our relationship goes beyond the documented processes and controls. And that kind of relationship
is very difficult to find, build and replace,” Mr. Batungbacal declared. “I am thankful to UCPB for its
continuing commitment to the relationship with Asiaphil and continuing to challenge us by forging
more ways to grow.”

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 Treasury Banking Group to seize opportunities and maximize gains. Its ability to make accurate market
TREASURY BANKING readings and execute timely market trades enabled the Bank to realize unprecedented earnings from treasury
operations in 2012.

A Banner Year The Bank posted a robust 19.34% growth rate in trading and treasury gains of 5.43 billion from the 4.55 billion
in 2011. The trading portfolio stood at 52.47 billion in 2012, 2.68% over the 51.10 billion the previous year.
The year 2012 was an excellent year for the Philippine financial market.
In 2013, the US economy is showing signs of firmer recovery, while the effort of international financial institutions
After two consecutive years of being one of the fastest growing capital markets in the to stabilize and manage the contagion in Europe is beginning to take a positive turn. These factors will result
world, the country is now in the global radar for investments. Moreover, rating agencies again in the shift in global flows of funds and money, which could lead to a softening of the Philippine financial
were unanimous in branding the Philippines with positive outlook in recognition of sound markets and a flattening of market yields.
macroeconomic and banking fundamentals, paving the way for the country to earn its first
investment grade status. Hence, it is anticipated that it would be hard to duplicate the extraordinary performance of our Treasury
operations in 2012. Asset re-allocations will be undertaken in our asset portfolio to shift to higher yielding
The influx of global funds to the Philippines contributed to the positive market environment instruments, while increasing our total portfolio and ensuring closer market monitoring to enable the Bank to
fueling the strong appreciation of debt instruments and securities, which enabled the take advantage of market gains.

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 TRUST BANKING in 2012. The Equity Fund’s return rate more than doubled from the 10.96% in 2011, while the return rate of the
Balanced Fund increased 40.49% versus a year ago.

Investing in the Future Positive proof of the performance of the Trust Banking group, the international consulting company Towers
Watson, in a survey of 153 retirement funds, once again ranked UCPB as the best performing fund manager
The Bank’s Trust Banking business mirrored general market for the past three-year and five-year periods.
conditions in the country’s financial markets.
The assets under management by your Bank grew 18.24% from 95.06 billion in 2011 to 112.40 billion during the
The domestic stock market has been recognized as one of year review. In view of the bigger portfolio, income from management fees attributable to the Trust Banking Group
the best-performing and growing markets for two consecutive amounted to 132.58 million in 2012, an increase of 7.56% over the 123.26 million registered the year before.
years since 2011, in line with the resurgent economy and
strong business confidence in the country. The Philippine Stock Trust Banking aims to continue the four-year uptrend in the management income by developing new trust
Exchange ranked third globally among top performing bourses fund products, including estate planning services and employee savings plans. We shall leverage on our solid
in terms of domestic market capitalization in 2012. The PSE fund management track record to generate new business and to take advantage of the economies-of-scale
Index (PSEi) registered a growth rate of nearly 33% year-on- inherent in a larger trading portfolio.
year versus that of 2011.
While the stock market has provided impetus and has been a bright spot on the Philippine economy over the
On the back of the rapid growth of the PSEi, the UCPB United last four years, the current high valuation of traded counters has put a cap on the upside of the market in
Equity Funds and Balanced Fund unit investment trust funds 2013. The Trust Business has to stay adept in spotting and quickly seizing market opportunities from across
(UITFs) posted rate a return of 25.20% and 17.41%, respectively the board as they become available to be able to match its sterling returns record.

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 Compensation and Benefits
HUMAN RESOURCES UCPB provides rewarding careers by maintaining competitive compensation and benefits program for
employees.

Future-Proofing the UCPB Organization Basic salary across the organization remains higher than the law-mandated minimum wage. Relative value
of each job and subsequent pay levels are determined by a competency-based job evaluation system. 90% of
The Human Resources Group takes the lead role in supporting UCPB’s drive to employees receive annual merit increases based on a targets-based performance management system. Review of
be more market-driven, client-centric, and opportunity-focused. It is constantly on compensation policies is undertaken regularly by Human Resources Group in consultation with the Compensation
the look-out for high potential, qualified talents to beef up its roster of professionals. and Remuneration Committee of the Board of Directors.
Collaboration with schools and tie-ups with relevant agencies are continually developed
and enhanced to ensure a steady source of talents to tap. Employment offers are regularly More so, career advancement continues to be a priority as 13% of officers & employees were promoted in 2012.
reviewed to ensure attractiveness and competitiveness.
On top of competitive salaries, UCPB employees enjoy other compensation and benefits:
HR invests heavily on adequate trainings for its associates. In 2012 alone, 25.2 million was spent on • Bonuses
various technical and behavioral trainings to equip associates with concepts and skills that will address • Overtime Pay
changing business needs, increase productivity, and develop operational efficiency. Special career and • Leaves (Vacation, Sick, Maternity, Paternity, Solo- Parent and Special Leave for Women)
management programs are continually developed and conducted for those who show strong potential for • Medical benefits (Hospitalization and out-patient benefits for employees and dependents)
greater responsibilities. The Accelerated Career Development Program and the Management Development • Financial Assistance Loans at affordable terms and other minor subsidies
Program graduated 109 first-level officers in 2012.
Retirement benefits, based on tenure and salary, are also afforded to employees to provide financial security
Progressive associates are acknowledged, rewarded, and further motivated through a Performance long after their years of dedicated service to the bank.
Management System. Revised in 2011 and fully implemented in 2012, the system measures in detail associates’
accomplishements vis-à-vis their contributions to the goals of the unit. It encouraged acquisition of additional
competencies as a way of exceeding expectations and aided supervisors in the formulation of development The noteworthy business results of the past four years are testament
plans. to the enhanced productivity and improved operational efficiency of
highly-trained associates from all levels of the organization.

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 MARKETING

Internet Payment Gateway thru MegaLink

The Bank moved decisively in 2012 to develop and deploy banking products that cater to the varied and merchants, such as retailers, restaurants and schools can now accept online payments for purchases, food
changing financial needs of the markets that we serve. Our core strategy is to expand our product mix and delivery and tuition fee from their customers.
to take advantage of all our customer touchpoints to create superior, real-time and convenient banking
experience for our clients. To address our clients’ disbursement requirements, UCPB launched the Corporate Checkwriter, an enhanced
check-cutting facility that allows corporations to pay their suppliers, service providers and other trading
In line with this drive, we launched the UCPB Mobile Phone Banking Service, an electronic banking facility that partners by simply providing the check payment instructions and other details online. UCPB also facilitates
allows clients to perform banking transactions anytime, anywhere. With the UCPB Mobile Phone Banking app, the release of the checks to the payees through the UCPB branch nearest to them.
clients can performe balance inquiry, fund transfers, bills payment and cellphone load purchase using their
mobile phones and gadgets such as iPhones, iPads and other smart phones. This new product showcases our In support of our product development efforts and on-ground sales programs, the Bank continued to implement
thrust to reach out to the younger segment of the market by leveraging on information technology. marketing communication campaigns and increased its presence in social media to raise brand and product
awareness and cement the trust and confidence of consumers.
The UCPB Point-of-Sale (POS) Collection service went online, enabling clients to collect payments electronically
from their customers’ locally-issued ATM cards through the use of the POS terminals provided by UCPB. In the next years, UCPB aims to deliver more technology-based banking products targeted to address the
specific financial requirements of our corporate, SME and individual clients.
UCPB also launched its Internet Payment Gateway through Megalink. Accredited UCPB and Megalink web

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 CORPORATE SOCIAL
RESPONSIBILITY In 2012, the Foundation deployed Educational TV (eTV) packages to 23 additional public schools in partnership
with the ABS-CBN Foundation. To date, 90 schools have received the eTV packages, with 90,000 pupils from
Grades 1 to 6 benefitting from the program. Moreover, it also donated Bright Minds Read kits to 416 public
schools for the benefit of 50,000 Grade 1 students.

Sustaining Gains, Changing Lives Aside from the efforts of the CIIF Foundation, the Human Resources Group also spearheads other corporate
social responsibility activities throughout the year.
UCPB sustained its mandate to invest in
and empower coconut farmers. Apprenticeship Program for Student Trainees

The end goal is to raise the quality of life This program enables students to relate concepts they learned from the classroom into the work environment.
of the smallest coconut farmers and their More so, it provides on-the-job training to develop and enhance the students’ work-related skills, knowledge
families by providing them opportunities and attitudes relevant to the workplace. It also creates awareness, deeper understanding and appreciation of
that will augment their incomes. It the banking business and consequently inspires them to pursue a career in banking.
implements the programs in partnership
with cooperatives in coconut farming The program also promotes and strengthens partnerships with the academe by providing job opportunities
communities around the country. and rewarding careers to future graduates. The five-week apprenticeship program provides the students the
opportunity to experience real life work situations and learn from it.
Together with the CIIF Foundation Inc.,
a non-stock, non-profit organization IT Apprenticeship Program
established on August 28, 1987, UCPB
implements projects to assist coconut The IT Apprenticeship Program was specially created for Information Technology students who want to use
farming families uplift their economic their theoretical learnings into actual applications. They are given live projects to work on. In addition, this
condition. Some of the Foundation’s program provides knowledge, comprehension and awareness of the banking business and wherefore heartens
projects include: the students to pursue a career in banking. IT students stay with the bank for six months equivalent to 6 units
in their curriculum.
Scholarship Program
Employee Engagement
Launched in 2004, the Cocofund Scholarship is the flagship youth and educational development program of
UCPB-CIIF Foundation and provides financial assistance to children of small coconut farmers to pursue tertiary CSR is a commitment shared not just by the institution but also its people and associates. UCPB employees
degrees in state colleges or technical/ vocational courses in Don Bosco Training Centers around the country. continue to participate in several CSR initiatives including disaster relief efforts in the wake of typhoons, as
well as other community outreach projects in 2012.
In 2012, the scholarship program graduated 51 college scholars, of whom one garnered summa cum laude honors,
another was awarded magna cum laude and 11 others received cum laude distinction. This demonstrates the UCPB reached out to the victims of Typhoon Sendong in Iligan and Cagayan de Oro City in January by
academic excellence of the beneficiaries of the program. Meanwhile, a total of 56 scholars completed their technical/ distributing 2,000 bags of relief goods to help them cope with their day-to-day lives at the evacuation center.
vocational courses during the year. The Foundation extended the scholarships to a total of 103 new scholars who are UCPB associates in the head office volunteered to pack the items, and key officers of the bank flew to the
enrolled in 11 colleges and another 89 new grantees in technical / vocational courses during the year. typhoon-stricken areas to distribute the goods and check on the state of the families in Tibasak-USA Calacala
Evacuation Center and Tent City Relocation Site both in Cagayan de Oro City and Echavez Elementary School
Thus, the total number of scholarships grants awarded since the program started has reached 1,619, of which in Iligan. UCPB associates from Iligan, Cagayan De Oro, Velez, and Cogon branches who suffered the same
1,014 are in the collegiate level and 605 are grants in technical / vocational courses. fate were also extended assistance by the bank. Their colleagues from UCPB also came to their aid by donating
money and old clothes to see them through the tough times.
An impact study conducted by the National University of Singapore – Lee Kuan Yew School covering the
program grantees showed that 78% are currently employed or are engaged in coconut farming or in business. The Human Resources Group visited the San Lorenzo Ruiz Home for the Elderly in Pasay City where they
Another 74% said that part of their monthly income go to funding the education of a sibling. The study brought food and entertained the senior citizens there, and even brought a team from a ma jor beauty salon
validates Cocofoundation’s success in achieving its objective of uplifting the lives of coconut farmer families chain to provide free haircuts for the residents.
under its education program.
The Bank likewise continued to actively maintain more than 33 hectares of watershed reforestation project in
Kabalikat sa Edukasyon Boso-Boso, Antipolo City near the Sierra Madre foothills. Seedlings of native tree species have been planted
by employees two years ago, which are doing well on to maturity and should help alleviate the problem of
Our initiatives in education extended to elementary schools in coconut-producing areas in country. Cognizant flooding in Metro Manila.
of the below-par performance of Grade 6 students in the annual National Achievement Test, the Foundation has
continued to donate educational resources to help enhance learning and improve instructional effectiveness Indeed, UCPB continues to serve the communities it operates in – in ways over and above its mandate as a
in public elementary schools. banking institution.

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 RISK
MANAGEMENT
This system of internal controls covers, not only financial controls, but also
controls relating to governance, operations, risk management and compliance
with applicable laws, regulations, rules, directives, guidelines as well as internal
policies, processes and procedures.

The Parent Company and its subsidiaries manage their respective financial risks separately. The subsidiaries
have their own risk management procedures but are structured similar to that of the Parent Company. To a
certain extent, the respective risk management programs and objectives are the same across the Group. The
risk reports of the subsidiaries are noted by the Parent Risk Oversight Committee (ROC).

The Parent Company’s activities are principally related to the use of financial instruments. The Parent
Company accepts deposits from customers at rates set by the Treasury Group depending on the volume of
placements, and for various periods, and seeks to earn above average interest margins by investing these
funds. The Parent Company seeks to increase these margins by consolidating short-term funds and lending
for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.

The Parent Company also trades in financial instruments where it takes positions to take advantage of short-
term market movements in bonds and shares of stocks.

The Parent Company has exposure to the following ma jor risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
• Operational risk

Risk Management Framework

To manage the financial risk for holding financial assets and liabilities, the Parent Company operates an
integrated risk management system to address the risks it faces in its banking activities, including liquidity,
credit and market risks. The Parent Company’s risk management objective is to adequately and consistently
identify, measure, control and monitor the risk profile inherent in the Parent Company’s activities.

The Parent Company’s Risk Oversight Committee

(ROC) has overall responsibility for the creation
and oversight of the Parent Company’s corporate
risk policy and is actively involved in the
assessment, planning, review and approval of all
the risks in the Parent Company’s organization.
The Parent Company also has in place an
authorization structure that defines and sets
limits on the type and value of transactions that
each position can approve.

Within the Parent Company’s overall risk

management system, the Risk Management
Division (RMD) is responsible for managing these
risks in a more detailed and proactive fashion on
a continuing basis through performance of risk
and return analysis.

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 RISK
Market Risk
Market risk is the risk of loss to future earnings, fair values or future cash flows that may result from changes
in the price of a financial instrument. The Bank’s market risk originates from its holdings of foreign exchange
instruments, debt securities and derivatives. In 2012, the focus was to continually improve risk measurement

MANAGEMENT and monitoring. Paramount is the ongoing upgrade of our purchased front, middle to back office Treasury
system. Market risks are monitored on a daily basis by the RMD, which functions independently from the
business units. The Group uses various loss limits and risk measurement methodologies as follows:
• Stop loss limits
• Loss alert limits
• Position limits
• Mark-to-market valuation
• Value-at-Risk (VaR)
• Earnings-at-Risk (EaR)
Credit Risk
VaR Methodology Assumptions and Parameters
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its
The Bank computes the statistical VaR to estimate the maximum potential loss that can be incurred in its
contractual obligations. The Group manages and controls credit risk by setting limits on the amount of risk it
trading books under normal market conditions given a specified confidence level and holding period. VaR is
is willing to accept for individual counterparties and for industry concentrations, and by monitoring exposures
one of the key measures in the Bank’s management of market risk. The Bank uses 1-day and 10-day holding
in relation to such limits.
period for its foreign exchange VaR and interest rate VaR, respectively. The Bank adopts a historical simulation
approach using a 99.0% confidence level and a 260-day observation period in its VaR calculation.
Management of Credit Risk
The Parent Company manages its credit risk and loan portfolio through a stringent process of loan approval.
The Bank’s VaR limit is agreed annually by the Treasury Group and RMD and presented to the ROC based on
The screening process is directed by the senior officers of its Corporate and Consumer Banking Group. The
the tolerable risk appetite of the Bank. Monitoring reports, which include the VaR figures and exposures to VaR
process establishes the credit worthiness of the individual loan applicant based on best credit practices, and
limits are sent to the risk-taking units on a daily basis. These are also reported monthly to the ROC.
takes into consideration the current business condition and medium-term potential of the industry in which
the loan applicant operates in.
The VaR figures are backtested against actual and unrealized profit and loss of the trading book to validate the
robustness of the VaR model. While VaR measures risk during times of normality, it is supplemented with stress
The Parent Bank also conducts annual portfolio quality review of its subsidiaries: UCPB Savings Bank (USB)
testing, which is used to measure the potential effect of a crisis or low probability event. The RMD conducts
and UCPB Leasing and Finance Corporation (ULFC).
stress testing to measure and monitor market risks in extreme market conditions. Results of backtesting and
stress testing are reported to the ROC on a monthly basis.
In compliance with BSP requirements, the Parent Bank established in December 2004 an Internal Credit
Risk Rating (ICRR) system for the purpose of measuring credit risk for corporate borrowers in a consistent
Backtesting has consistently shown results within the green zone with 0 to 4 incidents of actual and unrealized
manner, as accurately as possible, and thereafter uses the risk information for business and financial decision
losses exceeding VaR figures within a rolling one year period.
making. The ICRR system covers corporate borrowers with asset size of above 15.0 million, requiring financial
statements from 2005 onwards to be audited by SEC-accredited auditing firms.
Liquidity Risk
Liquidity risk is generally defined as the current and prospective risk to earnings or capital arising from the
On a continuing basis, the Parent Bank generates credit risk ratings for existing loan accounts to assess their
Group’s inability to meet its obligations when they become due. Liquidity risks are monitored and managed
performance and to determine which account will be retained, expanded, or phased out. A separate review of
by using the Maximum Cumulative Outflow (MCO) limits and funding diversification/concentration limits. In
the loan portfolio is conducted by the RMD to assess the quality of individual accounts and the concentration
addition, the Parent Bank manages liquidity risk by holding sufficient liquid assets of appropriate quality
of the Parent Bank’s credit exposures.
to ensure short-term funding requirements are met and by maintaining a balanced loan portfolio which is
repriced on a regular basis. In addition, the Parent Bank seeks to maintain sufficient liquidity to take advantage
Credit risk concentrations can arise whenever a significant number of borrowers have similar characteristics
of interest rate and exchange rate opportunities when they arise.
and are affected similarly by changes in economic or other conditions. The Parent Bank analyzes the credit
risk concentration to an individual borrower, related group of accounts, industry, geographic, internal rating
The MCO is subjected to stress scenarios that include simultaneous core deposit and heavy withdrawals,
buckets, currency, term and security.
government and large funding sources pullout. Portfolio under Available for sale are assumed to be reinvested
while loans are assumed to be replaced by new ones. We have periodically revisited and revised our Maximum
For risk concentration monitoring purposes, the financial assets are broadly categorized into: (1) loans and
Cumulative Outflow.
receivables, (2) trading and financial investment securities, (3) loans and advances to banks, and (4) others.
To mitigate risk concentration, the Group has established a regular monitoring system to spot breaches in
Interest Rate Risk
regulatory and internal limits.
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair
values of financial instruments. The Bank measures the sensitivity of its assets and liabilities to interest rate
Market, Liquidity, and Interest Rate Risk
fluctuations by way of gap analysis. This is measured by the Earnings at Risk (EaR) or the risk of deterioration
The Market Risk Department manages the Parent Bank’s exposure to market risk, liquidity risk, and interest
in interest income over the next 12 months due to unfavorable movements in interest rates.
rate risk in the banking book. Pursuant to our drive to ensure independence in risk monitoring, the Market
Risk Department was tasked to take an active role in managing the risk exposure of the Trust Banking Group.
In addition to the Earnings at Risk measurement using 260-day volatilities at 99% level of confidence on actual
Moreover, the Department closely monitors the current and prospective maturity structure of its resources
yields, the bank likewise subjects the EaR measurements with various interest rate shocks to determine the
and liabilities and the market condition to guide pricing and asset/liability allocation strategies to manage
impact on earnings in the banking book.
the Group’s liquidity risks.
The analysis provides the Bank with a measure of the impact of changes in interest rates on the accrual
We manage the market risk exposure of both our trading and non-trading portfolios. Our assets in both on and
portfolio or reported earnings (the risk exposure of future accounting income). The repricing gap is calculated
off balance sheet trading portfolios are subject to trading gains and losses. Market risk exposure from these
by subtracting the interest rate sensitive liabilities in each time bucket from interest rate sensitive assets to
portfolios is measured by Value at Risk models, subject to independent model validation.
produce repricing gap for that particular time bucket. The difference in the amount of assets and liabilities

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 RISK
reportorial requirement would also be complemented by appropriate measures in mitigating risk relative to
the risk appetite of the Group.

The Bank is currently utilizing the Basic Indicator Approach (BIA) to calculate risk-weighted assets. Under

MANAGEMENT the BIA, the operational risk capital charge would be the fixed percentage (15%) of the average non-negative
annual gross income for the past three years. The total operational risk-weighted assets (ORWA) would then
be computed by dividing the operational risk charge by the Capital Adequacy Ratio (CAR) of 10%.

Risk Based Capital Adequacy Ratio

The RMD oversees the management of the capital and risk assets of the Group and ensures compliance with
the regulatory capital requirement known as the Risk Based Capital Adequacy Ratio (RBCAR) expressed as a
percentage of qualifying capital to risk-weighted assets, should not be less than 10.0% for both stand-alone
basis (head office and branches) and consolidated basis (Parent Bank and subsidiaries engaged in financial
maturing would then give the Bank an indication of its exposure to the risk of potential changes in net interest allied undertakings but excluding insurance companies). In 2009, the Bank issued its first ICAAP document,
income. following the regulatory directive to conduct an Internal Capital Adequacy Assessment Process (ICAAP) based
on Basel II-Pillar II guidelines and this is updated annually.
Internal measurements of interest rate in the banking books assume that:
• For corporate and consumer amortized loans, the average of the principal balances till repricing date The bank’s RBCAR as of end-2012 are shown in the table below:
reprices on the average tenor of the loan.
• For loans payable in full at maturity, the principal balance reprices on next repricing date or for fixed rate
loans, on maturity date.
• Savings deposits and 12% of demand deposits reprice only after one year.
• Assets in the non-trading book are exposed to interest rate risk as a result of volatility or fluctuations in
interest rates.

Operational Risk
Operational Risk refers to the risk of loss resulting from inadequate or failed internal processes, people or
systems, or from external events, that would have an impact on the Group’s earnings and capital. The risk
management process basically involves four dynamic processes 1) Identification of risks, 2) Measurement and
assessment of risks, 3) Risk control and mitigation, and 4) Risk monitoring and reporting.

Following the principles of Basel II, the Group has created an independent operations risk management
function under the BOD through the Risk Oversight Committee (ROC).

The operational risk management function is responsible for defining risk framework along with the
development of policies and procedures and strategies to identify, measure, monitor and control/mitigate
operational task.

The responsibility for implementing the framework including the day-to-day operational risk management Breakdown of risk exposures are as follows:
lies with the business and support units. Currently, the Group has an existing system of internal controls, the
enforcement of which effectively manages operational risks. Control activities engaged in by various units of
the Group include:

a. Top level reviews made by the senior management committees;

b. Detailed periodic performance and exception reports to individual senior officers;
c. Physical controls such as restricted access:
d. Enforcement of exposure limits;
e. A system of approvals and authorizations; and
f. A system of verifications and reconciliation.

In the risk identification, measurement, control & mitigation, monitoring and reporting the Bank categorizes
operational risk events according to the Basel II seven (7) ma jor risk event categories as follows:
• Internal Fraud • External Fraud
• Employment Practices and Workplace Safety • Clients, Products and Business Practices
• Damage to Physical Assets • Business Disruption and System Failures
• Execution Delivery and Process Management

The Group also performs regular risk and control assessment in the identification and measurement of these
operational risk events including legal and compliance risks. The synergy provided by such an approach
would make for an integral part of the process of monitoring and controlling the Group’s operational risk.
Accompanying this approach on operational risk management is the regular reporting of operational risk
exposures and loss experience to the BOD and the business and support units, thru senior management. The

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 CORPORATE
GOVERNANCE
RISK
MANAGEMENT
The Board of Directors is
responsible for governing the
business and affairs of the Bank
and for exercising all such powers
pursuant to the Bank’s Articles of
Incorporation. While carrying out
its duties and responsibilities, the
Board is committed to ensuring
highest corporate governance
standards by undertaking to:

• Provide strategic leadership to the Bank;

• Review, approve and monitor the implementation of the Bank’s strategic business plans and policies;
Risk weighted assets broken down by type of exposure:
• Ensure the maintenance of an effective system of internal controls that is able to identify and manage principal
risks resulting in efficiency in operations and a stable financial environment;
• Foster corporate values and ethical principles in parallel with the goal to enhance shareholders’ value;
• Monitor and evaluate the performance of the Management team to ensure that the performance criteria
remains dynamic; and
• Formulate a succession plan to ensure business continuity

Compliance System

To attain our vision to be the bank of choice of the middle and consumer markets by providing personal
and proactive service and innovative products, the Board places an emphasis on transparency, accountability,
integrity and corporate performance as the prerequisites of a responsible corporate entity.

To ensure the highest standards of integrity, business ethics and professionalism are upheld across our
organization, we follow a corporate governance program that is in accordance with the best market practices
and in conformity with regulatory requirements.

The Board has oversight responsibility for an effective Compliance function. The main responsibility for the
planning and implementation of our compliance policies rest with our Chief Executive Officer, assisted by our
Chief Compliance Officer.

Under recent regulatory mandates, UCPB’s Compliance System now covers:

• Regulatory Compliance Risk Management – identifies, assesses, monitors and mitigates risks of legal or
regulatory sanctions, financial loss that UCPB may suffer as a result of its failure to comply with all applicable
laws, rules and regulations.
• Corporate Governance Risk Management – ensures high ethical standards of business conduct and good
governance principles of transparency, accountability and fairness governs within UCPB.
• Reputation Risk Management – identifies, assesses, monitors, mitigates risks and potential risks resulting from
Management’s processes and decisions that may negatively affect UCPB’s reputation, market standing and
public trust.
• Anti-Money Laundering Act and Anti-Terrorist Financing

Under the compliance program is the enforcement of the Anti-Money Laundering Act and Anti-Terrorist
Financing (AMLTF). We have developed the Customer Due Diligence and risk rating policy that requires all our
business units to fully establish our client’s identity. This covers policies on accountabilities, account opening,
monitoring, records retention and reporting.

We are utilizing a BSP-compliant system that helps business units and branches to accurately identify clients
and efficiently monitor their accounts and transactions.

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 CORPORATE
GOVERNANCE Board of Directors Composition and Structure

Shareholders
Composition and Structure
Board of Directors
Pursuant to the Bank’s by-laws, “The Corporate powers of the Bank shall be vested in and exercised, its
business conducted, and its property controlled by a Board of Directors composed of fifteen (15) members.”
It further states that “The Board of Directors shall always act in the best interest of the Bank in a manner Board Committees
characterized by transparency, accountability and fairness. The Board of Directors, entrusted with trust and
confidence, shall, direct and supervise the affairs of the Bank under its collective responsibility, and exercise
such powers and perform such functions as are granted to it by law or reasonably necessary to accomplish Executive Audit Corporate Governance Risk Oversight
the purpose or purposes for which the Bank is formed.”
Assists in the general supervision, Ensures that the auditing, accounting, Ensures that the principles of good Assists the Board in performing its
administration and management financial management principles and corporate governance of transparency, oversight functions to manage the Bank’s
Thirteen out of fifteen members of the UCPB Board are Independent Directors. They ensure that there is an of the Bank practices are in line with international accountability and fairness shall credit, operational and reputational risks.
effective check and balance in the functioning of the Board. They meet the criteria of independence as they and Philippine best practices and govern the conduct of business of
conform with all legislative and UCPB and UCPB Group
are not involved in the day-to-day management of the Bank, nor do they participate in any business dealings regulatory requirements
of the Bank. This ensures that they remain free of any conflict of interest and can undertake their roles and
responsibilities in an effective manner.
Compensation and Remuneration Trust Coconut Farmers Corporate Social
Manages the Bank’s Program Development Responsibility
Being the governing body of a ma jor financial provider, the Board recognizes that its Members must have Assists the Board in fulfilling its responsibilities as
trust and fiduciary
related to the development of criteria and goals for
the appropriate mix of skills, as well as the necessary knowledge, experience and commitment, to effectively the Bank’s compensation policy. The Committee activities Supports and assists in the Spearheads the formulation and
development and implementation implementation of the Bank’s
contribute towards the growth and expansion of the Bank. reviews, evaluates and recommends to the Board
of impact projects beneficial initiatives to contribute to national
the benefit plans and compensation policy for the
to the small and marginalized development, with particular
Bank and wholly owned subsidiaries.
coconut farmers focus on the coconut industry,
Being on the Board of a financial institution, the Board Members are required to be responsive to the constantly thereby promoting the welfare of
changing global financial landscape. Directors attend corporate governance seminars conducted by accredited underprivileged sectors of society,
primarily the small coconut farmer
government or private institutions prior to assumption of office. In addition, the Board Members are provided Legal Oversight communities and other marginalized
briefings on anti-money laundering, BSP circulars, and other banking-related issues as needed. Recommends to the Board policies and communities in areas where the Bank
guidelines in case management including conducts its business, through the
the adoption of legal strategies in active involvement and participation
Every year, the Bank conducts a self-assessment of its corporate governance practices, covering all the important cases for or against the Bank. of the Bank’s associates in such
members of the Board, Board meetings, Board committees, and various related issues. The Bank’s 2012 self- The Committee shall render oversight initiatives and prudent and
in the monitoring, supervision and expedient allocation of the Bank’s
rating indicated that it has fully complied with the best practices in corporate governance. handling of cases by the Bank’s external other resources
counsels, as well as by its internal lawyers.
Board Meetings

Apart from the regular monthly meetings, the Board also holds special meetings to discuss directions or
decisions that require expeditious action between the scheduled meetings.

In 2012, the Board held a total of seventeen (17) meetings to discuss business strategies, financial performance,
matters pertaining to compliance and governance, as well as reports on matters deliberated by Board
Committees and their recommendations. The Board also reviewed regular management reports and
information on corporate and business issues to assess performance against business targets and objectives.

The Board also functions through committees that handle specific responsibilities pertaining to the governance
function. The following are the Board Committees with their specific membership:

Executive Committee Compensation & Legal Oversight Committee

Jeronimo U. Kilayko - Chairman Remuneration Committee Raul V. Del Mar - Chairman (until October 2012)
Cristina Q. Orbeta Menardo R. Jimenez - Chairman Karlo Marco P. Estavillo
Arthur A. Bautista Jeronimo U. Kilayko Nilo T. Divina
Ma. Angela E. Ignacio (until March 2012) Cristina Q. Orbeta Primitivo Y. Garcia III (effective April 2012)
Primitivo Y. Garcia III (effective April 2012) Karlo Marco P. Estavillo
Jose Alfonso A. Poblete Ma. Angela E. Ignacio (until March 2012) Risk Oversight Committee
Primitivo Y. Garcia III (effective April 2012) Menardo R. Jimenez - Chairman
Audit Committee John Y. Young Jeronimo U. Kilayko
Cristina Q. Orbeta - Chairman Arthur A. Bautista
Arthur A. Bautista Corporate Governance Committee Cristina Q. Orbeta
Danilo V. Pulido Danilo V. Pulido - Chairman Ma. Angela E. Ignacio (until March 2012)
Karlo Marco P. Estavillo Jeronimo U. Kilayko Oscar C. Solidor (effective August 2012)
Jose Alfonso A. Poblete Datu Mao K. Andong, Jr.
Nilo T. Divina Trust Committee
Coconut Farmers Program Jose Alfonso A. Poblete Menardo R. Jimenez - Chairman
Development Committee Jeronimo U. Kilayko
Efren M. Villaseñor - Chairman Corporate Social Alexandra C. Deveras
Jeronimo U. Kilayko Responsibility Committee Nilo T. Divina
Raul V. Del Mar (until October 2012) Jeronimo U. Kilayko - Chairman Efren M. Villaseñor
Datu Mao K. Andong, Jr. Datu Mao K. Andong, Jr.
Karlo Marco P. Estavillo Oscar C. Solidor
Oscar C. Solidor Efren M. Villaseñor
Higinio O. Macadaeg, Jr. John Y. Young

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 1. MENARDO R. JIMENEZ 5. ATTY. RAUL V. DEL MAR 9. HIGINIO O. MACADAEG, JR. 13. OSCAR C. SOLIDOR
Chairman of the Board of Directors Director Director Director

2. JERONIMO U. KILAYKO 6. ATTY. NILO T. DIVINA 10. CRISTINA Q. ORBETA 14. EFREN M. VILLASEÑOR
Director, President and Chief Executive Officer Director Director Director

3. DATU MAO K. ANDONG, JR. 7. ATTY. KARLO MARCO P. ESTAVILLO 11. JOSE ALFONSO A. POBLETE 15. JOHN Y. YOUNG
Director Director Director Director

4. ARTHUR A. BAUTISTA 8. ATTY. PRIMITIVO Y. GARCIA, III 12. DANILO V. PULIDO 16. ILDEFONSO R. JIMENEZ
Director Director Director Corporate Secretary

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 MENARDO R. JIMENEZ
CHAIRMAN OF THE BOARD OF DIRECTORS
DATU MAO K. ANDONG, JR.
CHAIRMAN DIRECTOR
Fibers Trading Inc.
Ma jent Management & Development Corporation
Menarco Holdings, Inc.
Meedson Properties Corporation NATIONAL CHAIRMAN
Nuvoland Philippines Inc. Kaunlaran ng mga Magsasaka at Manggagawa ng Pilipinas
Opticolors Inc. CHAIRMAN
Association of Abaca Pulp Manufacturers South & West Mindanao Coconut Farmers Congress
CHAIRMAN AND DIRECTOR (SOWESMINCOCO)
CBTL Holdings, Inc. DIRECTOR
Coffee Bean and Tea Leaf Philippines Kaunlaran Magsasaka, Inc.
DIRECTOR, PRESIDENT AND CEO NATIONAL PRESIDENT
Albay Agro Industrial Development Corporation Coconut Peasants’ Reform Alliance
DIRECTOR VICE PRESIDENT
San Miguel Purefoods Co. Inc., Magnolia Inc., Mindanao Pambansang Koalisyon ng mga Samahan ng
Mabuhay Philippines Satellite Corporation, Magsasaka at Manggagawa sa Niyugan
Unicapital Finance and Investments, Inc.,
HELD VARIOUS EXECUTIVE POSITIONS IN GOVERNMENT
Unicapital,Inc., Dasoland Holdings Corporation,
BACHELOR OF ARTS IN ECONOMICS
Pan Phil. Aqua Culture Corporation,
Philippine Chamber of Commerce and Industry Gregorio Araneta University Foundation
MEMBER OF BOARD OF TRUSTEE
Foundation for Crime Prevention
Teodor F. Valencia Foundation, Inc.
COMMISSIONER
Patrol 117 Commission
MEMBER
Philippine Chamber of Commerce & Industry
– Council of Business Leaders
Philippine Institute of Certified Public Accountants JERONIMO U. KILAYKO
Manila Overseas Press Club DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Philippine Constitution Association FEU Alumni Foundation, Inc.
CHAIRMAN
FORMER PRESIDENT AND CEO -
UCPB Savings Bank
GMA Network, Inc.
UCPB Leasing and Finance Corporation
DOCTORATE IN BUSINESS MANAGEMENT (HONORIS CAUSA)
UCPB Securities, Inc.
University of Pangasinan
United Foreign Exchange Corporation
Pamantasan ng Lungsod ng Maynila
DOCTORATE IN COMMUNICATIONS (HONORIS CAUSA) VICE CHAIRMAN
Polytechnic University of the Philippines UCPB CIIF Finance and UCPB Foundation
DIRECTOR
AFC Merchant Bank in Singapore
Megalink
United Coconut Chemicals Inc.
14 holding companies
PRESIDENT
ARTHUR A. BAUTISTA Techinfo Solutions and K5 Distribution
FORMER DIRECTOR AND VICE CHAIRMAN
DIRECTOR Bank of Commerce
FORMER DIRECTOR AND VICE PRESIDENT
CHAIRMAN OF THE BOARD, PRESIDENT AND CEO Central Visayas Finance Corporation
Timebound Trading Inc. FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Savoy Confections UCPB, CIIF Oil Mills, UCPB General Insurance Co. Inc.,
PRESIDENT United Coconut Planters Life Assurance Corporation,
Kuya’s at the Fort United Coconut Chemicals, Inc.
Jed and Julian’s FORMER DIRECTOR AND PRESIDENT
FORMER PRESIDENT San Miguel Properties
First Federal Consultants Corporation HELD VARIOUS EXECUTIVE POSITIONS
Sorbetes Pinoy Asean Finance Corporation Ltd. ( Singapore),
SENIOR EXECUTIVE POSITIONS IBI Asia, Bank of America, Merill Lynch,
Bank of Philippine Islands Land Bank of the Philippines
Citytrust Banking Corporation BACHELOR OF SCIENCE IN LIBERAL ARTS AND COMMERCE
Financial Transaction Corporation, USA De La Salle University
Fil-Pride Philippines
CANDIDATE, MASTERS IN BUSINESS ADMINISTRATION
De La Salle Graduate School of Business
BACHELOR OF SCIENCE IN BUSINESS ADMINSTRATION
De La Salle University
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 ATTY. RAUL V. DEL MAR
DIRECTOR
ATTY. PRIMITIVO Y. GARCIA III
FORMER DEPUTY SPEAKER House of Representatives, two terms DIRECTOR
FORMER CONGRESSMAN Cebu City-1st
City-1st District for six terms
House of Representatives contingent for two terms DIRECTOR
20 years perfect attendance in House plenary sessions UCPB Savings Bank
FORMER COMMISSION ON APPOINTMENTS HEAD UCPB Securities, Inc.
PRINCIPAL AUTHOR OF 48 LAWS PRESIDENT
PAPAL AWARDEE “Croce Pro-Ecclecia et Pontifice” conferred by Prince Group of Companies
Ricardo Cardinal Vidal ADMINISTRATOR AND GENERAL COUNSEL
BACHELOR OF LAWS Zosima Incorporated
Ateneo De Manila University PAST PRESIDENT AND MEMBER
DOCTOR OF HUMANITIES (HONORIS CAUSA), Rotary Club of Makati South
Cebu Normal University PRESIDENT
DOCTOR OF PHILOSOPHY IN TECHNOLOGY MANAGEMENT La Salle Greenhills Lawyers League, Inc.
(HONORIS CAUSA) MEMBER
Cebu Technological University Philippine Bar Association
PAST PRESIDENT BACHELOR OF ARTS MAJOR IN ECONOMICS
Cebu Chamber of Commerce and Industry, De La Salle University
Rotary Club of Cebu East and Cebu Jaycees Paul Harris BACHELOR OF LAWS
FELLOW Rotary International Jake Gonzalez & Jaycees International Ateneo de Manila University

ATTY. NILO T. DIVINA

DIRECTOR HIGINIO O. MACADAEG, JR.
DIRECTOR
AUTHOR 2010 & 2005 Handbook on Commercial Law and various law articles
FOUNDER AND MANAGING DIRECTOR Divina and Uy Law Office EXECUTIVE VICE PRESIDENT AND HEAD
EXECUTIVE VICE PRESIDENT Association of Law Schools Corporate and Consumer Banking Group
HELD SENIOR EXECUTIVE POSITIONS DIRECTOR
Equitable-PCI Bank UCPB Properties, Inc.
Philippine Charity Sweepstakes Office UCPB Leasing and Finance Corporation
RECIPIENT UCPB Securities, Inc.
2005 Most Outstanding Male Faculty Award United Foreign Exchange Corporation
FINALIST Search for the Ten Most Outstanding Students of the Philippines HELD SENIOR EXECUTIVE POSITIONS
AWARDEE Manuel Luis Quezon Award for Exemplary Leadership, University of Equitable-PCI Bank, Metropolitan Bank and Trust Company,
Sto. Tomas Solidbank Corporation, Standard Chartered Bank,
DEAN, LAW PROFESSOR AND BAR REVIEWER Citytrust Banking Corporation
University of SantoTomas ADVANCED MANAGEMENT TRAINING PROGRAM
RECTOR’S AWARDEE FOR ACADEMIC EXCELLENCE, Wharton School, University of Pennsylvania
University of Sto. Tomas BACHELOR OF SCIENCE IN MANAGEMENT
MEMBER Philippine Bar Ateneo de Manila University
INTERNATIONAL TAX LAW POST-GRADUATE DIPLOMA
Robert Kennedy College, Switzerland
BACHELOR OF LAWS (MAGNA CUM LAUDE)
University of Santo Tomas
BACHELOR OF ARTS IN BEHAVIORAL SCIENCE (CUM LAUDE)
University of Santo Tomas
CRISTINA Q. ORBETA
DIRECTOR

DIRECTOR
UCPB Savings Bank
ATTY. KARLO MARCO P. ESTAVILLO UCPB Leasing and Finance Corporation
DIRECTOR EXECUTIVE VICE PRESIDENT Philippine Deposit Insurance Corporation
FORMER DIRECTOR Bangko Sentral ng Pilipinas
GENERAL MANAGER
FORMER EXECUTIVE DIRECTOR Central Bank Board of Liquidators
San Miguel Properties, Inc.
DEPUTY SENIOR COUNTRY OFFICER Calyon Manila Offshore Branch
FELLOW AND CORPORATE SECRETARY
Asia-Pacific Policy Center DEPUTY GENERAL MANAGER Credit Lyonnais Manila Offshore Branch
ASSISTANT CORPORATE SECRETARY FORMER CONSULTANT
The Diamond Hotel The United Kingdom’s Department for International Development
LEGAL COUNSEL AND CORPORATE SECRETARY FORMER CONSULTANT Asian Development Bank
Various private corporations FORMER CONSULTANT World Bank
BACHELOR OF SCIENCE IN BUSINESS MANAGEMENT MASTER OF PUBLIC ADMINISTRATION Harvard University
Ateneo de Manila University MASTER IN ECONOMICS (ACADEMIC UNITS) University of the East
BACHELOR OF LAWS, COLLEGE OF LAW BACHELOR OF ARTS IN MATHEMATICS (MAGNA CUM LAUDE)
University of the Philippines University of the East

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 EFREN M. VILLASEÑOR
JOSE ALFONSO A. POBLETE DIRECTOR
DIRECTOR
CHAIRMAN Confederation of Coconut Farmers Organization the Philippines
FOUNDER AND MANAGING DIRECTOR CHAIRMAN AND FOUNDING MEMBER Quezon Farmers Cooperative
Assistforce, LLC, California NATIONAL PRESIDENT Pambansang Koalisyon ng mga Samahan ng mga
Tri-Globe, LLC California Magsasaka at Manggagawa sa Niyugan
HELD EXECUTIVE POSITIONS PRESIDENT AND FOUNDING MEMBER
McKesson Corporation, USA Coconut Farmers Federation for Rural Advancement
Kaiser Foundation Health Plan, Inc. USA FOUNDING MEMBER
Bancom Development Corporation Coconut Farmers Technology Center – Southern Tagalog Region
SGV and Co. The Katipunan ng mga Magsasaka at Mangigisda ng Pilipinas –
RECIPIENT NorthernSamar
Sixto Roxas Award for Excellence in Economics, De La Salle FOUNDER Samar Island Peasant Alliance Group (SIPAG)
University MUNICIPAL DEVELOPMENT ASSISTANT Municipality of Lopez in Quezon
MASTER IN HEALTH SERVICES ADMINSTRATION, COMMUNITY AFFAIRS OFFICER Bondoc Development Program
St. Mary’s College, Moraga, California FORMER ALTERNATE COMMISSIONER
MASTER OF MANAGEMENT Farmers Sector, Council of the National Anti-Poverty Commission
Kellogg School of Management, Northwestern University, IIlinois
BACHELOR OF ARTS MAJOR IN ECONOMICS (HONORS PROGRAM)
Ma jor in Economics, De La Salle University

JOHN Y. YOUNG
DANILO V. PULIDO DIRECTOR
DIRECTOR
PRESIDENT AND CEO
Ginza Restaurant Inc.
CHAIRMAN AND PRESIDENT
JEDCOR Development Corporation
Emilia Properties, Inc.
PRESIDENT
FORMER DIRECTOR
Wander Lanes Travel Co., Inc.
Rural Bank of Sanchez Mira
Victor D. Young Enterprises
HELD SENIOR EXECUTIVE POSITIONS
BACHELOR OF SCIENCE IN COMMERCE
Philippine National Bank, Philippine Exchange Company
University of San Carlos
National Investment and Development Corporation
MASTERS OF BUSINESS ADMINSTRATION
University of the Philippines
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION
University of the Philippines

ILDEFONSO R. JIMENEZ
CORPORATE SECRETARY
OSCAR C. SOLIDOR
DIRECTOR FIRST VICE PRESIDENT AND CORPORATE SECRETARY
UCPB Leasing and Finance Corporation
SECRETARY UCPB Savings Bank
Confederation of Coconut Farmers Organizations of the UCPB Securities, Inc.
Philippines (CCFOP), Inc. United Foreign Exchange Corporation
COUNCIL MEMBER PROFESSIONAL LECTURER
Pambansang Kilusan ng mga Samahang Magsasaka at College of Law, University of the Philippines
Manggagawa sa Niyugan (PKSMMN) CORPORATE SECRETARY
SECRETARY-GENERAL University of the Philippines Foundation Inc.
Lakas ng Magsasakang Pilipino (LMP) FORMER SENIOR COUNCIL AND ASSISTANT
CHAIRMAN CORPORATE SECRETARY
Alyansa Sa Mga Timawang Mag-uugmad sa Amihanang International Rice Research Institute (IRRI)
Mindanao (ATIMAN-MINDANAO) FORMER PARTNER
MEMBER Padilla Jimenez Kintanar and Asuncion Law Offices
Caraga Conference for Peace and Development (CCPD) BACHELOR OF LAWS IN BUSINESS ECONOMICS AND
BACHELOR OF SCIENCE IN AGRICULTURE BACHELOR OF LAWS
Central Mindanao University University of the Philippines

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ATTY. ANDRES D. BAUTISTA VALENTIN A. ARANETA
CHAIRMAN ADVISER

CHAIRMAN
Presidential Commission on Good Government PRESIDENT AND CHAIRMAN
INTERIM CHAIRMAN Philippine Deposit Insurance Corporation
United Coconut Planters Life Assurance Corporation (Cocolife) MEMBER, BOARD OF TRUSTEES AND CORPORATE SECRETARY
UCPB General Insurance Inc. Finex Research and Development
United Coconut Chemicals, Inc. (Cocochem) FORMER INDEPENDENT DIRECTOR
UCPB-CIIF Finance Development Corporation
Metropolitan Bank & Trust Company
UCPB-CIIF Foundation
EXECUTIVE COMMITTEE CHAIRMAN AND DIRECTOR FORMER PRESIDENT AND CHIEF OPERATING OFFICER
CIIF Oil Mills Group Rizal Commercial Banking Corporation
CO-FOUNDER FORMER VICE CHAIRMAN
Master in Business Administration - Juris Doctor Program Great Pacific Savings Bank
De La Salle Graduate School of Business FORMER DIRECTOR, SENIOR EXECUTIVE VICE PRESIDENT
FEU Institute of Law AND CHIEF OPERATING OFFICER
COLUMNIST
Philippine National Bank
The Philippine Star
PRESIDENT BACHELOR OF ARTS IN ECONOMICS
Harvard Club of the Philippines Ateneo de Manila University
MASTER OF LAWS ADVANCED MANAGEMENT PROGRAM
Harvard Law School Wharton, University of Pennsylvania
BACHELOR OF LAWS (VALEDICTORIAN)
Ateneo Law School

ATTY. RICHARD R.T. AMURAO ATTY. JOVENCITO R. ZUÑO

ADVISER ADVISER

COMMISSIONER ASSOCIATE DIRECTOR

Presidential Commission on Good Government Institute of Corporate Directors
BOARD DIRECTOR LEGAL CONSULTANT
Chemfields Inc. Senate Blue Ribbon Committee
Independent Realty Corporation MEMBER
ADVISER Melo Commission
Intercontinental Broadcasting Corporation - 13 Rotary Club of Rosario, Batangas
FORMER CONSULTANT LIFETIME MEMBER/ADVISER/COORDINATOR
Asian Development Bank National Prosecutors League of the Philippines
HELD VARIOUS POSITIONS IN THE GOVERNMENT FORMER CHIEF STATE PROSECUTOR
Office of the President of the Philippines Department of Justice
Department of Justice OUTSTANDING PROSECUTOR
JURIS-DOCTOR Consumers Union of the Philippines
Ateneo de Manila University AWARDEE FOR JUDICIAL EXCELLENCE
Evelio Javier Leadership Awardee Guillermo B. Guevarra Award
MASTER OF LAWS (WITH HONORS) BACHELOR OF LAWS
London School of Economics and Political Science, United Kingdom University of the East
BACHELOR OF ARTS IN MANAGEMENT ECONOMICS BACHELOR OF ARTS (OUTSTANDING ALUMNUS)
Ateneo de Manila University Lipa City Colleges

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 1. JERONIMO U. KILAYKO 6. EVANGELINA P. SAMONTE 11. ALEXANDRA C. DEVERAS SUBSIDIARIES:
President and Chief Executive Officer Executive Vice President and Head First Vice President, Trust Officer and Head
Operations Group Trust Banking Group 1. FRANCO P. MAGALONG
2. CESAR A. RUBIO President
Executive Vice President, Chief Finance Officer and Head 7. RAMON B. TAÑAFRANCA 12. ILDEFONSO R. JIMENEZ UCPB Leasing and Finance Corporation
Support Services Group Executive Vice President and Head First Vice President and Corporate Secretary
Information Technology and Methods Group 2. VINCENT K. DE LEON
3. EDMOND E. BERNARDO 13. PINKY S. DEREQUITO President
Executive Vice President and Head 8. ATTY. JOSE A. BARCELON First Vice President and Head UCPB Securities, Inc.
Branch Banking Group Senior Vice President and Head Internal Audit Division
Legal Services Group 3. JOSEPH C. JUSTINIANO
4. EULOGIO V. CATABRAN III 14. MARIA PAZ Q. CUEVAS President
Executive Vice President and Head 9. ROSARIO M. DAYRIT Vice President, Chief Risk Officer and Head UCPB Savings Bank
Treasury Banking Group Senior Vice President and Head Risk Management Division
Human Resources Group
5. HIGINIO O. MACADAEG, JR. 15. FRANK C. CAPALONGAN
Executive Vice President and Head 10. NORMAN MARTIN C. REYES Chief Compliance Officer, Vice President and Head
Corporate and Consumer Banking Group Senior Vice President and Head Bank Compliance Division
Marketing Group

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 SENIOR OFFICERS AS OF MARCH 2013
SENIOR OFFICERS AS OF MARCH 2013

BANK COMPLIANCE DIVISION MONINA A. SUNGA JENNIFER T. FRANCO NEPTALI F. RAMOS VICTORIA C. BERNAL RODRIGO H. PADA
Assistant Vice President 2 and Head Assistant Vice President 2 Assistant Vice President 2 Assistant Vice President 1 Assistant Vice President 1
FRANK C. CAPALONGAN Metro Manila 4 Region BM, Ayala Avenue Branch BM, Calamba Branch BM, Muñoz Branch BM, Tektite Branch
Vice President, Chief Compliance Officer
and Head, Bank Compliance Division RENE A. ALIMAGNO NOEL G. GERAPUSCO JOSE MARI V. REYES ROSITA A. CARREON DOLORES M. PALO
Assistant Vice President 2 Assistant Vice President 2 Assitant Vice President 2 Assistant Vice President 1 Assistant Vice President 1
ARTURO D. SAYAO, JR. BM, Lipa - Recto Branch BM, Jaro Branch Head, Branch Services BM, Tomas Morato Branch BM, Blue Ridge Branch
Assistant Vice President 2 and Head Department
Operations Department CLARA JEAN F. ARCE CHONA LESLIE R. GOCO CIELITO L. CELADA CRISANTIAGO T. PAROJINOG
Assistant Vice President 2 Assistant Vice President 2 ROLANDO V. ROBIÑOL Assistant Vice President 1 Assistant Vice President 1
ANTONIO C. ROMERO BM, Ortigas Branch BM, Calapan Branch Assistant Vice President 2 BM, Quirino Highway Branch BM, Cogon Branch
Assistant Vice President 2 and Head BM, Laguna Branch
Anti-Money Laundering Department CARMINDA A. BACULI JOSE JERIC E. GOMEZ ERLINDA P. DACANAY LORELEI P. PLETE
Assistant Vice President 2 Assistant Vice President 2 CRISTINA B. ROBLEDO Assistant Vice President 1 Assistant Vice President 1
ROBERTO V. FIESTA Business Development Officer BM, San Pablo Branch Assistant Vice President 2 BM, Mindanao Avenue Branch BM, Vigan Branch
Assistant Vice President 1 Metro Manila 7 Region BM, Commonwealth Branch
Compliance Officer LOLITA A. GONZALES CLARISSA R. DULATRE MA. LOURDES CARIDAD B. PONCE
HERMILO A. BAGABALDO Assistant Vice President 2 MA. DINAH V. SACRO Assistant Vice President 1 Assistant Vice President 1
BRANCH BANKING GROUP Assistant Vice President 2 BM, BF Parañaque Branch Assistant Vice President 2 BM, Chino Roces Branch BM, Banilad Branch
BM, Lacson-Galo Branch BM, Puyat-Bautista Branch
EDMOND E. BERNARDO NEBELLEE M. GUMBAN MA. THERESA T. DY GINA K. REYES
Executive Vice President and Head, EVANGELINE R. BALASBAS Assistant Vice President 2 ROSALYN R. SALINAS Assistant Vice President 1 Assistant Vice President 1
Branch Banking Group Assistant Vice President 2 BM, San Pedro-Davao Branch Assistant Vice President 2 BM, Pasong Tamo Ext. Branch BM, Baliuag Branch
BM, Boni Avenue Branch BM, Lipa-Big Ben Branch
NOEL T. CALALANG JOCELYN G. HERNANDEZ JESUS PROSPERO K. ESTARIS JOSE ANTONIO J. ROSADO
Vice President and Head CRISPULO B. BALTAZAR, JR. Assistant Vice President 2 RAYMUNDO A. SARANZA Assistant Vice President 1 Assistant Vice President 1
Branch Banking Support Division Assistant Vice President 2 BM, Lemery Branch Assistant Vice President 2 BM, Shangrila Plaza Branch BM, Iznart Branch
BM, Solano Branch BM, Tagbilaran Branch
JOSEFINA M. CARAOS IRENE L. LIM ROSARIO IRENE L. FERNANDO GRACE S. SABINO
Vice President FRANCISCO M. BASA, JR. Assistant Vice President 2 DAISY B. SERNEO Assistant Vice President 1 Assistant Vice President 1
BM, Main Office Branch Assistant Vice President 2 BM, Escolta Branch Assistant Vice President 2 BM, West Avenue Branch BM, Limay Branch
BM, Mandaluyong Branch BM, Baclaran Branch
RODOLFO G. DE GUZMAN MA. CECILIA V. LIM GLENDA V. GALLO ARTURO JEROME J. SALCEDO
Vice President and Head VOLTAIRE REX C. CASTRO Assistant Vice President 2 EMILY D. SERRANO Assistant Vice President 1 Assistant Vice President 1
North-Central Luzon Region Assistant Vice President 2 BM, Velez Branch Assistant Vice President 2 BM, Robinsons Galleria Branch BOO, Cambridge Branch
BM, Bohol Avenue Branch BM, Caloocan Branch
RONALDO E. ELAMPARO ROMEO S. LINDAIN MINA C. GAN MARY ANN H. SALGADO
Vice President and Head ROWENA Z. CATOLOS Assistant Vice President 2 MA. THERESA D. TAMAYO Assistant Vice President 1 Assistant Vice President 1
Metro Manila 6 Region Assistant Vice President 2 BM, Herrera Branch Assistant Vice President 2 SO, Hanston Square Branch BM, Libertad Branch
BM, Pioneer Branch BM, F.B. Harrison Branch
NATIVIDAD R. FRANCISCO JUAN P. LIWAG MERCEDITAS ASSUMPTION A. GUEVARA GUILBERT P. SAMPEDRO
Vice President and Head SOCORRO S. CHUA Assistant Vice President 2 LEILA O. TERTE Assistant Vice President 1 Assistant Vice President 1
Metro Manila 5 Region Assistant Vice President 2 BM, McKinley Hill Branch Assistant Vice President 2 BM, Roxas Branch BM, Global City Branch
BM, T. M. Kalaw Branch BM, Lucena - Guinto Branch
ANTHONY EVAN A. LLUCH EVA MARIE N. MAGNO ROMANA M. HIZON MARIA THERESA C. SANTOS
Vice President and Head JANE V. DE GUZMAN Assistant Vice President 2 MA. CHRISTINA V. UNTALAN Assistant Vice President 1 Assistant Vice President 1
Metro Manila 1 Region Assistant Vice President 2 BM, Cambridge Branch Business Development Officer BM, Paso de Blas Branch BM, Sto. Tomas Branch
BM, Baguio Branch Metro Manila 7 Region
MANUEL R. MACAM MERVYN NICASIO M. MAGNO, JR. JOEL VICTOR P. JAVIER FERDINAND Y. SENO
Vice President and Head MARILU P. DE GUZMAN Assistant Vice President 2 JAIME C. YU, JR. Assistant Vice President 1 Assistant Vice President 1
Metro Manila 7 Region Business Development Officer BM, Butuan Branch Assistant Vice President 2 BM, Pasay Road Branch BM, F. Ramos Branch
Metro Manila 5 Region BM, Cauayan Branch
ANGEL H. MOJICA GINA S. MERCADO ALERIS A. JOVEN ALOIDA B. TANUNLIONG
Vice President and Head MERLINE S. DELA CRUZ Assistant Vice President 2 MA. ANA T. ABALA Assistant Vice President 1 Assistant Vice President 1
Metro Manila 3 Region Assistant Vice President 2 BM, P. Ocampo Branch Assistant Vice President 1 Business Development Officer BM, J.P. Rizal Branch
BM, San Miguel Branch BM, San Andres Branch Metro Manila 3 Region
MODESTO M. SICANGCO ROMEO G. MILLERA EDGAR V. YABES
Vice President and Head ELIZABETH B. DEE Assistant Vice President 2 MARISSA D. AUYONG CEZARIO B. LARIOS Assistant Vice President 1
Visayas Region Assistant Vice President 2 BM, Sucat Branch Assistant Vice President 1 Assistant Vice President 1 BM, Dagupan Branch
BM, Juan Luna Branch BM, P. Tuazon Branch BM, Tanauan Branch
ALEXANDER L. DIMACUHA ELIZABETH D. ORBE DOREEN C. YAP
Assistant Vice President 2 and Head SUSAN C. DESAMERO Assistant Vice President 2 ANGELA L. BAES CLARITA V. LUBER Assistant Vice President 1
Mindanao Region Assistant Vice President 2 BM, Karuhatan Branch Assistant Vice President 1 Assistant Vice President 1 BM, Clark Field Branch
BM, Dela Rosa Branch BM, Zamboanga Branch BM, Metropolitan Branch
JOCELYN T. GOMEZ FIEL AMOR J. PACLEB NATALIE R. VILLANUEVA
Assistant Vice President 2 and Head ROSALINDA T. DOMINGO Assistant Vice President 2 MA. CRISTINA V. BALAOING ARTURO A. MACAM, JR. Assistant Vice President 1
South Luzon Region Assistant Vice President 2 BM, Tordesillas Branch Assistant Vice President 1 Assistant Vice President 1 BM, Tuguegarao Branch
BM, Guadalupe Branch Business Development Officer BM, Banaue Branch
SAMUEL L. SANTOS JESSICA S. PANGILINAN Metro Manila 5 Region
Assistant Vice President 2 and Head GUILLERMA M. ESPIRITU Assistant Vice President 2 JONATHAN M. MALIGAYA
Metro Manila 2 Region Assistant Vice President 2 BM, Cabanatuan Branch Assistant Vice President 1
BM, Subic Branch BM, Daet Branch

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 SENIOR OFFICERS AS OF MARCH 2013
SENIOR OFFICERS AS OF MARCH 2013

CORPORATE AND CONSUMER RAUL M. CABATINGAN STELLA MA. A. FULGENCIO DANILO U. CUA MA. LUZ H. CANTORIA ATTY. CECILIA M. CABATIT
BANKING GROUP Assistant Vice President 1 Assistant Vice President 2 and Head Assistant Vice President 2 and Head Assistant Vice President 2 and Head Assistant Vice President 2 and Legal Officer
RM, CCBD-VISMIN Area Organizational Development Department Programmers Pool Section Head Office Audit Department Branch, Trust and Operations Department
HIGINIO O. MACADAEG, JR.
Executive Vice President and Head CYNTHIA Q. CAMACHO TERESITA B. ANGELES ELENORA C. CUA ANNA RUTH F. MONTEMAYOR ATTY. CESAR G. DAVID
Corporate and Consumer Banking Group Assistant Vice President 1 Assistant Vice President 1 and Head Assistant Vice President 2 and Head Assistant Vice President 2 and Head Assistant Vice President 2 and Head
RM, CCBD-Metro Manila 2 Compensation and HR Loans Department Engineering Section Loans Audit Services Department Remedial and Enforcement Department
Remittance Marketing Division
DINAH P. CENIZA FRANCO C. LOYOLA CHRISTIAN RON P. GAERLAN NELSON J. MONTEMAYOR ATTY. ISMAEL ANDREW P. ISIP
VICTOR RUBEN L. TUASON Assistant Vice President 1 Assistant Vice President 1 and Head Assistant Vice President 2 and Head Assistant Vice President 1 Assistant Vice President 2 and Legal Officer
Vice President and Head RM, CCBD-VISMIN Area Benefits and Policy Review Department Technical Services Section Audit Officer Remedial and Enforcement Department
Remittance Marketing Division
VICTOR C. DELA CRUZ, JR. MA. ELISA D. IBANA ATTY. MIGNONETTE C. ALDAY
Asset Management and Disposition Division Assistant Vice President 1 INFORMATION TECHNOLOGY Assistant Vice President 2 and Head MARKETING GROUP Assistant Vice President 1 and Legal Officer
RM, CCBD-Luzon Area AND METHODS GROUP Automation Project Oversight Section Branch, Trust and Operations Department
RAYMOND C. ALONZO NORMAN MARTIN C. REYES
Assistant Vice President 2 and Head MA. CARMELA DELA VEGA RAMON B. TAÑAFRANCA AUGUSTO M. JOCSON, JR. Senior Vice President and Head ATTY. MARIE CHRISTINE E. AVARICIO
Asset Management and Disposition Division Assistant Vice President 1 Executive Vice President and Head Assistant Vice President 2 and Head Marketing Group Assistant Vice President 1 and Legal Officer
RM, CCBD-VISMIN Area Information Technology and Methods Group Planning Services Section Lending, Investment and Marketing
Corporate and Commercial Banking Division MARIA CARMEN D. AMBROSIO Department
RONALDO G. MANGUBAT MELVIN P. GUANZON JAIME D. LAMBINO Assistant Vice President 2 and Head
ANGELITO S. ESTANISLAO Assistant Vice President 1 Senior Vice President and Head Assistant Vice President 2 and Head Marketing Services Department ATTY. JOSIEBETH P. BASA
Vice President RM-CCBD-VISMIN Area Information Technology Division Branch Delivery / E-Commerce / STO Section Assistant Vice President 1 and Legal Officer
Team Head - Visayas & Mindanao CHARINA C. DELA CRUZ - BALANQUIT Lending, Investment and Marketing
MARIA CARLA L. PADUA ERIBERTO C. CONTRERAS GERONIMO S. MANGUBAT II Assistant Vice President 2 and Department
RAMON L. FERNANDEZ, JR. Assistant Vice President 1 Vice President and Head Assistant Vice President 2 and Head Senior Product Manager
Vice President RM-CCBD-Metro Manila 1 Data Center Services Department User Support Section ATTY. KABAITAN R. GUINHAWA-VALMONTE
Team Head - Metro Manila 3 MARY ERICA RUTH VIVIANE C. DIAGO Assistant Vice President 1 and Legal Officer
TERESITA F. SOLITARIA RAMONA E. CRUZ MICHAEL S. RABENA Assistant Vice President 2 and Remedial and Enforcement Department
CARINA FRANCESCA C. UY Assistant Vice President 1 Vice President and Head Assistant Vice President 2 and Head Senior Product Manager
Vice President RM, CCBD-VISMIN Area Consulting and Development Computer Operations Section ATTY. JASON ROBERT M. PAREDES
Team Head - Metro Manila 1 Services Department 2 JOSEPHINE L. CALUAG Assistant Vice President 1 and Legal Officer
Consumer Banking Division MA. ELENA I. REFULGENTE Assistant Vice President 1 and Product Remedial and Enforcement Department
ANNA CHRISTINA M. VICENTE GIL V. OBIAS Assistant Vice President 2 and Head Sales Head
Vice President YOLANDA L. DE CLARO Vice President and Head Automation Support Section ATTY. FRANCISCO A. SAAVEDRA
Team Head - Metro Manila 2 Vice President and Officer-in-Charge Information Planning and Assistant Vice President 1 and Legal Officer
Consumer Banking Division Management Department WILLIAM P. BRILLANTES OFFICE OF THE CORPORATE SECRETARY Remedial and Enforcement Department
RICHMOND U. TAN Assistant Vice President 1 and Head
Assistant Vice President 2 PHILIP S. PABELICO MANUEL JOEY A. REGALA Network Management Unit ATTY. ILDEFONSO R. JIMENEZ
Team Head - Luzon Area Vice President and Head Vice President and Head First Vice President and Corporate Secretary OFFICE OF THE PRESIDENT
Vehicle Financing Department Information Security and WILFREDO H. CALAPATAN
ALEXANDER M. BORJA Project Oversight Department Assistant Vice President 1 and Head ATTY. MARGARITA MARIA A. NACPIL JERONIMO U. KILAYKO
Assistant Vice President 2 KRISTINE MARIE G. CUEVAS Quality Control and Training Section Assistant Vice President 2 and Director, President and CEO
RM, CCBD-Metro Manila 2 Assistant Vice President 2 and Head IRMA C. SURTIDA Assistant Corporate Secretary
Personal Loans Department Vice President and Head JOSE MARTIN D. GERONIMO ANA LENINA P. ESTAVILLO
MA. CRISTINA J. CORONA Productivity and Methods Department Assistant Vice President 1 and Head Assistant Vice President 1
Assistant Vice President 2 LEONCIO M. ESTACION Application Support Section LEGAL SERVICES GROUP Office of the President
RM, CCBD-VISMIN Area Assistant Vice President 2 and Head JANETTE L. TEMPONGKO
Collection and Asset Recovery Department Vice President and Head IMELDA T. GONZALES ATTY. JOSE A. BARCELON MARIA TERESA T. PALOMO
MILAGROS A. CRUZ Consulting and Development Assistant Vice President 1 and Systems Senior Vice President and Head Assistant Vice President 1
Assistant Vice President 2 CHARON B. WAMBANGCO Services Department 1 Project Officer Legal Services Group Office of the President
RM, CCBD-Metro Manila 1 Assistant Vice President 2 and Product Officer Core Banking Section
Real Estate Loans Department CARIDAD P. ABAD ATTY. MARIA ANGELICA L. RAYEL
MA. CARMELA G. FELICIDARIO Assistant Vice President 2 and Head JULIET D. PERIABRAS First Vice President and Head OPERATIONS GROUP
Assistant Vice President 2 AGNELLUS RAYMUND JAY R. DATOC Trading Section Assistant Vice President 1 and Systems Lending, Investment and Marketing
RM, CCBD-Metro Manila 2 Assistant Vice President 1 and Head Project Officer Department EVANGELINA P. SAMONTE
Credit Department JESSE EPHRAIM C. ALMONTE Trading Section Executive Vice President and Head
MARY JEAN A. GO Assistant Vice President 2 and Systems Project ATTY. HILDA B. GUZMAN Operations Group
Assistant Vice President 2 CRISANTY JORGE L. DAVID Officer ALFREDO R. TORRES Vice President and Head
RM, CCBD-Metro Manila 1 Assistant Vice President 1 and Product Officer Consulting and Development Services Assistant Vice President 1 and Head Branch, Trust and Operations Department ARNEL A. VALLES
Vehicle Financing Department Department 2 Shift Operations Unit First Vice President and Head
ANNA MAY B. NIEVA ATTY. JONATHAN M. ACOSTA International Banking and Treasury
Assistant Vice President 2 CYNTHIA Y. ASONG Assistant Vice President 2 and Legal Officer Operations Division
RM, CCBD-Metro Manila 2 HUMAN RESOURCES GROUP Assistant Vice President 2 and Head INTERNAL AUDIT DIVISION Branch, Trust and Operations Department
Core Banking Section BENJAMIN P. APAN
MA. FLOREBETH O. VILLAPAZ ROSARIO M. DAYRIT PINKY S. DEREQUITO ATTY. CRISPIN V. AMORANTO Vice President and Head
Assistant Vice President 2 Senior Vice President and Head JONES J. BALLESTEROS First Vice President and Head Assistant Vice President 2 and Legal Officer Loans Operations Division
RM, CCBD-VISMIN Area Human Resources Group Assistant Vice President 2 and Head Internal Audit Division Branch, Trust and Operations Department
Telecoms Section JOJI S. NORICO
CAROLINA O. ZAVALA CYNTHIA C. DE RIVERA LILIA M. DIOKNO ATTY. ART BERNARD D. BERNALES Vice President and Head
Assistant Vice President 2 Vice President and Head Vice President and Head Assistant Vice President 2 and Legal Officer Credit Administration Division
RM, CCBD-Metro Manila 1 Customer Quality Management Division Information Systems Audit Department Lending, Investment and Marketing Department

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 SENIOR OFFICERS AS OF MARCH 2013
SENIOR OFFICERS AS OF MARCH 2013

JUSTINIANO M. BABATE SUPPORT SERVICES GROUP SHEILA S. ANG MA. ISABEL G. LORENZO JOSEFINA ANNA D. TRINIDAD
Assistant Vice President 2 and Head Assistant Vice President 2 Assistant Vice President 1 Assistant Vice President 2 and Head
Trade Services Department CESAR A. RUBIO Trading Department Portfolio Manager Human Resource Division
International Banking and Treasury Chief Financial Officer,
Operations Division Executive Vice President and Head SANDRA S. GO CHRISTINE G. PEÑAFIEL WILFREDO S. BAUTISTA
Support Services Group Assistant Vice President 2 Assistant Vice President 1 Assistant Vice President and Head
MARIO A. GULLE Trading Department Portfolio Manager Information Technology Division
Assistant Vice President 2 and Head CYNTHIA A. ALMIREZ
Clearing Center Vice President and Controller MENCHIE E. LAGAC ATTY. ROBERTO M. BUENAVENTURA
Controllership Division Assistant Vice President 2 UCPB-CIIF FOUNDATION INC. Assistant Vice President 1 and Head
RAMONITA C. MENDOZA Sales and Distribution Department UCPB-CIIF FINANCE AND Legal Services Division
Assistant Vice President 2 and Head MARGARITA A. GUADINES DEVELOPMENT CORPORATION
Loans Documentation Department Vice President and Head MA. CHRISTINE D. PAGKALINAWAN RICO C. DE GUZMAN
Credit Administration Division Strategic Planning and Analysis Division Assistant Vice President 2 EDGARDO C. AMISTAD Assistant Vice President 1 and Head
Sales and Distribution Department President Credit Administration Division
ELZEBER O. MURALLOS ALEXANDER L. ANDRES
Assistant Vice President 2 and Head Assistant Vice President 2 and Head MELIZA B. ZULUETA AMADO T. DE LEON, JR.
Remittance Services Department Subsidiaries Financial Accounting Assistant Vice President 2 SUBSIDIARIES Assistant Vice President 1 and Head
International Banking and Treasury Department MIS/Business Officer Branch Banking – Luzon Region
Operations Division Controllership Division UCPB LEASING &
DONNA LYN V. ABES FINANCE CORPORATION NARISA BERLIN R. DURAN
ROMEO L. ALONZO LINDA S. ORTIZ Assistant Vice President 1 Assistant Vice President 1 and Head
Assistant Vice President 1 and Head Assistant Vice President 2 and Head Fund Management Department FRANCO P. MAGALONG Risk Management Division
Foreign Operations Department General Services Department President
International Banking and Treasury Corporate Services Division MA. JOSEPHINA S. BAGAMASBAD CARLO P. YAMSUAN
Operations Division Assistant Vice President 1 MERCY K. CHUA Assistant Vice President 1 and Head
CRISOLOGO F. SAGNIP Financial Institutions Desk Assistant Vice President 1 Consumer Lending – Auto Loans Department
MANUEL L. CINCO Assistant Vice President 2 and Head Account Officer
Assistant Vice President 1 and Head Financial Accounting Department APRIL HOPE J. BAUTISTA
CAID-VISMIN Controllership Division Assistant Vice President 1 VIRGINIA P. FUGOSO UCPB SECURITIES INC.
Sales and Distribution Department Assistant Vice President 1
MARILOU C. DANNUG CARLITO I. SANTOS Account Officer VINCENT K. DE LEON
Assistant Vice President 1 and Head Assistant Vice President 2 MA. ANGELICA M. OLIVA President
Loans Documentation Department Administrative Control Officer Assistant Vice President 1 MA. LUISA P. GOPICO
Credit Administration Division Corporate Services Division Fund Management Department Assistant Vice President 1
Compliance Officer
NIDA C. LIM LORENA P. ALCOVER
Assistant Vice President 1 and Head Assistant Vice President 1 and Head TRUST BANKING GROUP MICHAEL ROBERT L. MENDOZA
Local Operations Department Budget and Planning Assistant Vice President 1
International Banking and Treasury Strategic Planning and Analysis Division ALEXANDRA C. DEVERAS Account Officer
Operations Division Trust Officer, First Vice President and Head
LEMUEL J. DIMAANO Trust Banking Group
REMIGIO T. VARGAS Assistant Vice President 1 and Head UCPB SAVINGS BANK
Assistant Vice President 1 and Head Corporate Real Estate Department RAMON ANTONIO C. TORRES (As of MAY 2013)
Credit Appraisal & Investigation Department Corporate Services Division First Vice President and Head
Credit Administration Division Managed Portfolios Department JOSEPH C. JUSTINIANO
President
RISK MANAGEMENT DIVISION TREASURY BANKING GROUP STEPHEN S. SEVIDAL
Vice President, Chief Investment Officer TOMAS L. CLOA, Jr.
MA. PAZ Q. CUEVAS EULOGIO V. CATABRAN III and Head,Trading and Execution Department Vice President and Head
Vice President, Executive Vice President and Head Branch Banking Division
Chief Risk Officer and Head Treasury Banking Group MA. CATALINA M. CRUZ
Risk Management Division Vice President and Head CORAZON R. GUEVARRA
HELEN G. OLETA Trust Sales Department Vice President and Head
JONATHAN THADDEUS V. JIMENEZ First Vice President and Chief Dealer Commercial Lending Division
Assistant Vice President 2 and Head Trading Department MARIA VICTORIA C. MENDOZA
Market Risk Department Assistant Vice President 2 and Head EVANGELINE P. REYES
RICHARD Q. LIM Investment Evaluation and Vice President and Head
REBECCA M. LIM Vice President Special Trust Department Controllership Division
Assistant Vice President 2 and Head Trading Department
Credit Risk Department DELIA E. MERLE MANUEL C. MADRIDEJOS
ARTURO I. LIPIO, JR. Assistant Vice President 2 and Head Assistant Vice President 2 and Head
TEODORA B. GARCIA Vice President and Head Trust Operations Division Treasury Division
Assistant Vice President 1 Sales and Distribution Department
Trust Risk Officer AMALIA Q. BELARMINO ESTER T. SALCEDO
ELIZABETH C. TERRADO Assistant Vice President 1 Assistant Vice President 2 and Head
JOY T. TAN Vice President and Head Relationship Manager Bank Compliance Division
Assistant Vice President 1 and Head Fund Management Department
Operations Risk Department

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 PRODUCTS •
•
BIR-eFPS
Pension Crediting
Open Account Arrangement
• Direct Remittance
AND SERVICES •
•
Direct Deposit for US Pensioners
U-remit System
• Advance Payment
Collection of Custom Duties and Taxes
(E2M)
Account Management Export Documentary Credit Advising
• Automatic Transfer Arrangement Export Advance
• Sweep Facility Export Bills Purchase
Export Bills for Collection
Electronic Banking Facilities
Deposits • UCPB CM.biz Treasury
Peso Accounts • UCPB Connect
• Multi-One • UCPB Mobile Phone Banking Service Peso-Denominated Investments:
• ATM Peso Savings Account • UCPB Telebanking Government Securities
• Passbook Peso Savings Account • UCPB My1Time.Com • Treasury Bills
• Regular Checking Account • Retail / Treasury Notes
• Kiddie Max Special Services • ROP US$ Denominated Debts
• Conduit Clearing Arrangement with • BSP$ Denominated Debts
Foreign Currency Accounts Online Facility (CCA.Biz) Prime Corporate Bonds
•US$ Savings Account • Depository and Custodianship Service Repurchase Agreement
• Euro • Mobile ATM
• Yen US Dollar-Denominated Investments:
• Pounds Sterling Consumer Loans Republic of the Philippines (ROP)
Auto Loans Dollar Bonds
Time Deposits - Brand New, Second Hand, Refinancing, Prime Corporate Bonds
• Peso Time Deposit Fleet Financing Commercial Papers
• US$ Time Deposit
Home Loans Trust
Remittance Services - Condominiums, Townhouses, Houses
U-remit Accounts and Lots Personal Trust Services
• U-remit ATM Savings Account - Refinancing, Construction, Multi- Living Trust Account
• U-remit Passbook Savings Account Purpose Loans Individual Agency Accounts (IMA)
• U-remit US$ Savings Account Administratorship
• U-remit Peso Checking Account Personal Loans Executorship
• Your Easy Salary Loan (YES Loans) Guardianship
Inward Remittances Through Tie-Ups • Salary Loans (Corporate Arrangements) Safekeeping
and Correspondent Banks • UCPB Credit Card Escrow - Buy and Sell, Capital Gains,
• Direct Credit to UCPB Accounts POEA
• Direct Credit to Local Bank Accounts Small Business Loans
• Cash Pick Up over UCPB Branches Corporate Trust Services
• Cash Pick Up over Mlhuillier Branches Commercial Credit Institutional Agency Account (IMA)
• Payout Centers for: Non-Trade Short-Term Loan Employee Benefit Fund Management
- MoneyGram, Coinstar, Uniteller, • Omnibus Line Mortgage Trust Indenture
EzRemit, Cash Express • Promissory note-Peso/Foreign Currency Loan Agency
• Bridge Financing Pre Need Fund Management
Cash Management • Check Discounting Safekeeping
Collections • Domestic/Foreign Bills Purchase Escrow - Buy and Sell, POEA
• Bills Payment • Foreign Currency Settlement
• Point-of-Sale (POS) Collection Service • Account Receivable Discounting Unit Investment Trust Funds
• Megalink Internet Payment Gateway • Committed Credit Line • United Cash Management Fund
• Auto Collect (Automatic Debit • Short-Term Loan • United Conservative Fund
Arrangement) • United Balanced Fund
• One-Way Depository Arrangement Non-Trade Long-Term Loan • United Equity Fund
(OWDA Plus) • Term Loan-Peso/Foreign Currency • United US$ Money Market Fund
• Post-Dated Check Warehousing with • Term Loan/Syndicated-Peso/Foreign
Online Facility (PDC.Biz) Currency UCPB LEASING AND FINANCE
• National Government Collections • Term Loan-Special Funding (DBP, CORPORATION
(Bureau of Treasury) LBP,SSS)
• Night Depository Service • Term Loan with Guarantee- Lease Financing
• Corporate Collection Service GFSME,SPGFC,HIGC, LGUGC and • Financial Lease
• Deposit Pick-Up / Cash Delivery Service PHILEXIM • Amortized Commercial Loan
• Receivable Financing
Disbursements Trade Financing
• Checkwriter.Biz (Online Check Documentary Credit-Foreign / UCPB SECURITIES, INC.
Disbursement Facility) Domestic
• UCPB eMoney Card Standby Letter of Credit – Foreign / Equities Trading – Philippine Market
• Payroll Facilities Domestic Lodgement of Securities
• CM Payroll (Payroll Crediting Trust Receipt Financing Upliftment of Securities
Facility) Shipside Bond/Bank Guarantee
• Payroll Max (Payroll Software for Documents Against Acceptance
Salary Preparation and Crediting) Documents Against Payment

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 INDEPENDENT AUDITORS’ REPORT

The Stockholders and the Board of Directors

United Coconut Planters Bank and Subsidiaries

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of United Coconut Planters Bank (“the Bank” or “the Parent
Bank”) and Subsidiaries (collectively referred to as “the Group”) and the separate financial statements of the Parent Bank, which
comprise the consolidated and separate statements of financial position as at December 31, 2012, and the consolidated and separate
statements of income, consolidated and separate statements of comprehensive income, consolidated and separate statements of
changes in equity, and the consolidated and separate statements of cash flows for the year then ended, and notes, comprising a
summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements of the Group and
separate financial statements of the Parent Bank in accordance with Philippine Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation and fair presentation of the consolidated and separate
financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted
our audit in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and
separate financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of
material misstatement of the consolidated and separate financial statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated and
separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated and separate financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide the bases for our qualified audit opinion.

Bases for Qualified Opinion

As described in the Other Matter paragraph, the opinion expressed on the consolidated financial statements of the Group and the
separate financial statements of the Parent Bank as at and for the year ended December 31, 2011 was a qualified opinion due to
non-compliance of certain items with accounting principles generally accepted in the Philippines for banks (“PGAAP for banks”).

As discussed in Note 1 to the financial statements, the Parent Bank embarked on a 10-year Rehabilitation Plan (the “Rehabilitation
Plan”) as part of the Financial Assistance Agreement entered into with the Philippine Deposit Insurance Corporation (PDIC) on July 7,
2003. The Rehabilitation Plan and subsequent amendments thereof allow the recording of certain items which, although allowed by the
Bangko Sentral ng Pilipinas (BSP), are not in accordance with Philippine Financial Reporting Standards (PFRS). The Rehabilitation Plan
was approved by the BSP on January 10, 2005. On May 15, 2008, as endorsed by PDIC, the Monetary Board of the BSP, in its Resolution
No. 590, approved the amended Rehabilitation Plan of the Parent Bank which involves the following: (a) issuance of 12.0 billion
Capital Notes to PDIC; (b) authority to accept deposits from the National Government, Local Government Units and Government-Owned
and Controlled Corporations; (c) staggered booking of unbooked valuation reserves and deferred charges for 10 years starting January
2008; (d) waiver of certain monetary penalties; and (e) continued access to the BSP rediscounting facility. On February 26, 2009, the
Monetary Board of the BSP, in its Resolution No. 345, approved to defer the start of the staggered booking of the unbooked valuation
reserves and deferred charges to January 1, 2009 and exempt the Parent Bank from sanctions that may be imposed for its non-
compliance with the 10.0% capital adequacy ratio and all the capital-based regulatory ratios for the year 2008 until such time that the
Parent Bank’s amended Rehabilitation Plan is fully implemented.

In relation to (a) above and as discussed in Note 25 to the financial statements, the 12.0 billion Capital Notes issued to PDIC in 2009
should have been presented as a financial liability and not as an equity instrument in the statement of financial position because of its
contingent settlement provision. As allowed by the BSP and in keeping with the objectives of the Rehabilitation Plan, the Parent Bank has
presented the Capital Notes in the equity section of the statement of financial position. Had the Parent Bank presented the Capital Notes
as financial liability, total liabilities would have increased and total equity would have decreased by 12.0 billion as at December 31, 2012.

As discussed in Note 9, on various dates in 2011, the Parent Bank sold held-to-maturity (HTM) investments with aggregate carrying
amount of 3.2 billion thereby realizing gains of 0.3 billion. As a result of these disposals, the Parent Bank is prohibited under
PFRS from classifying any financial asset as HTM investments in 2011 until 2013. The Monetary Board, in its Resolution No. 2141
dated December 20, 2012, approved the request of the Parent Bank to exempt its P28.0 billion investment in government securities
classified as HTM investments, which were funded from the P30.0 billion savings deposits maintained by the National Government
with the Parent Bank as part of the concessions granted under the amended Rehabilitation Plan, as discussed in (b) above, from the
“tainting provision” under Subsection x388.5(b) and Appendix 33 of the Manual of Regulations for Banks and retain classification

70 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 71

 INDEPENDENT AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT

auditors, had the matters of qualification been properly accounted for in accordance with PGAAP for banks, the
of such securities under the HTM investments portfolio. As at December 31, 2012, the Parent Bank continues to classify these combined effects on the December 31, 2011 financial statements would have decreased assets and increased liabilities
government securities with aggregate carrying amount of 28.0 billion and fair value of 32.5 billion as HTM investments. Had the by 20.2 billion and 12.0 billion, respectively, as at December 31, 2011, while equity and net income would have
Parent Bank reclassified these investments to available-for-sale (AFS) financial assets, net unrealized gain on AFS financial assets decreased by 32.2 billion and 787.5 million, respectively, in 2011. More specifically, the report of the predecessor
of the Group and of the Parent Bank, which is included in the equity section of the statement of financial position, would have auditors expressed a qualified opinion due to the effects on the financial statements of the following matters:
increased by 4.5 billion.
a. Staggered recognition of unbooked valuation reserves relating to credit and impairment losses on AFS financial
In relation to (c) above under the amended Rehabilitation Plan as at December 31, 2008, (i) the Parent Bank did not book credit and assets, loans and receivables, investment properties and other assets;
impairment losses on AFS financial assets, loans and receivables, investment properties, and other assets totaling 13.4 billion, and b. Deferral of the full recognition of losses on sale and dacion en pago settlement;
(ii) deferred the recognition of losses on sale and dacion en pago settlement totaling 15.7 billion. These 29.1 billion unbooked c. Non-recognition of the related accumulated depreciation on certain investment properties;
valuation reserves and deferred losses have been booked by the Parent Bank on a staggered basis starting in 2009. The BSP allowed d. Presentation of the 12.0 billion Capital Notes issued to PDIC as financial liability instead of equity; and
and approved the staggered recognition of the foregoing required provisioning pursuant to the Financial Assistance Agreement between e. Non-reclassification of remaining HTM investments to AFS financial assets as a consequence of the sale of other HTM
the Parent Bank and PDIC. PFRS require the recognition of impairment and losses on sale and other forms of settlement losses in the investments during 2011 resulting to a prohibition under PGAAP for banks from classifying any financial asset as HTM
period incurred. As discussed in Notes 1, 14 and 15, the Parent Bank recognized 963.0 million of the unbooked valuation reserves and investments in 2011 until 2013.
deferred losses in 2012 by a charge to surplus (deficit) for the year and not to the opening balance of surplus (deficit) of the earliest
year presented. Unbooked valuation reserves and deferred losses amounted to 27.1 billion as at December 31, 2012. Report on the Supplementary Information Required Under Revenue Regulations (RR) No. 15-2010 and RR No. 19-
2011 of the Bureau of Internal Revenue
As discussed in Notes 14 and 15 to the financial statements, under PFRS, as at December 31, 2012 and 2011, the Parent Bank’s assets
referred to in (i) above were determined to be impaired. The Parent Bank deferred the full recognition of the credit and impairment Our audit was conducted for the purpose of forming an opinion on the basic separate financial statements of the Parent
losses and instead recognized credit and impairment losses in its financial statements in accordance with the BSP approved Bank taken as a whole. The supplementary information in Note 33 to the financial statements is presented for purposes
staggered basis of recognition. PFRS require the recognition of credit and impairment losses during the period when impairment of filing with the Bureau of Internal Revenue and is not a required part of the basic separate financial statements of
was incurred. The booking of the losses arising from the sale of nonperforming loans (NPLs) and real and other properties acquired the Parent Bank. Such information is the responsibility of the management of the Parent Bank. The information has
(ROPA) referred to in Note 14 and in (ii) of the preceding paragraph as at December 31, 2012 amounting to 15.9 billion, was been subjected to the auditing procedures applied in our audit of the basic separate financial statements of the Parent
deferred by the Parent Bank. PFRS require the foregoing losses to be recognized in full in the period such losses were incurred. Had Bank. In our opinion, the information is fairly stated in all material respects in relation to the basic separate financial
the Parent Bank recognized in full the credit and impairment losses and the losses arising from the foregoing sale of NPLs and statements of the Parent Bank taken as a whole.
ROPA in the years when these were incurred as required by PFRS, total assets and equity would have decreased by 18.7 billion in
2012, and net income would have increased by 1.7 billion in 2012.

As discussed in Note 13 to the financial statements, the Parent Bank did not recognize the related accumulated depreciation
on certain investment properties referred to in (i) above amounting to 1.4 billion as at December 31, 2012. PFRS require that
depreciation expense be recognized on depreciable investment properties. The Parent Bank determined the effect of accumulated May 30, 2013
depreciation that should have been considered in the determination of the gain or loss on sale or disposal of certain investment Makati City, Metro Manila
properties. Had the Parent Bank recognized the effect of depreciation expense that should have been recognized during the year
and the effect of any accumulated depreciation that should have been considered in the determination of the gain or loss on the
sale or disposal of its investment properties, net income would have decreased by 43.4 million and increased by 20.3 million,
respectively, in 2012.

Had the matters discussed in the preceding five paragraphs been accounted for by the Parent Bank in accordance with PFRS, total
assets and equity would have decreased by 15.6 billion and 27.6 billion as at December 31, 2012, respectively, and net income
would have increased by 1.7 billion in 2012. The Parent Bank did not recognize the losses since it believes that the total unbooked
valuation reserves and deferred losses referred to in (c) in the first paragraph under Bases for Qualified Opinion that will be
recognized on a staggered basis is sufficient to cover the financial impact of the unbooked adjustments for losses.

Qualified Opinion

In our opinion, except for the effects of the matters described in the Bases for Qualified Opinion paragraphs, the consolidated
financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31,
2012, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with
Philippine Financial Reporting Standards. Also, in our opinion, except for the effects of the matters described in the Bases for
Qualified Opinion paragraphs, the separate financial statements of the Parent Bank present fairly, in all material respects, the
unconsolidated financial position of the Parent Bank as at December 31, 2012, and its unconsolidated financial performance and its
unconsolidated cash flows for the year then ended in accordance with Philippine Financial Reporting Standards.

Emphasis of Matters

Without further qualifying our opinion, we draw attention to Notes 12, 25 and 29 to the financial statements, which discuss the decision
rendered by the Supreme Court in two cases involving: (a) the ownership of certain sequestered shares in United Coconut Planters Bank
by the PCGG; and (b) the ownership over the Coconut Industry Investment Fund (CIIF) Companies, the Fourteen CIIF Holding Companies
and the shares of stock in San Miguel Corporation (SMC) held by the Fourteen CIIF Holding Companies, together with all dividends
declared, paid and issued thereon as well as any increments thereto arising from, but not limited to, exercise of preemptive rights. The
Supreme Court declared that these are owned by the Government and to be used only for the benefit of all coconut farmers and for
the development of the coconut industry, and ordered reconveyed to the Government. As at December 31, 2012, the total dividends on
the SMC shares prior to redemption and related interest earned thereon amounting to 13.7 billion are deposited with United Coconut
Planters Bank in the name of the Republic of the Philippines represented by PCGG in trust for the Fourteen CIIF Holding Companies. The
impact of the Supreme Court Ruling on the financial statements cannot be determined at this time.

Other Matter

The accompanying consolidated financial statements of the Group and the separate financial statements of the Parent Bank as at and
for the year ended December 31, 2011 prepared in accordance with PGAAP for banks were audited by other auditors whose report
thereon dated March 29, 2012, expressed a qualified opinion on those financial statements. Based on the report of the predecessor

72 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 73

 UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENTS OF FINANCIAL POSITION STATEMENT OF INCOME
DECEMBER 31, 2012 FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Figures for 2011) (With Comparative Figures for 2011)
(Amounts in Thousands) (Amounts in Thousands)

Consolidated Parent Bank Consolidated Parent Bank

Note 2012 2011 2012 2011 Note 2012 2011 2012 2011
ASSETS INTEREST INCOME
Cash and Other Cash Items 16 5,978,605 4,757,246 5,834,451 4,607,502 Loans and other receivables 10,28 6,526,049 5,781,544 5,497,776 4,837,163
Due from Bangko Sentral ng Pilipinas 7,16 28,254,415 32,579,118 27,679,351 32,305,984 Trading and investment securities 9 3,448,824 3,421,058 3,413,918 3,394,140
Due from Other Banks 2,208,451 1,898,901 2,083,221 1,851,226 Due from BSP and other banks 7 136,269 254,340 131,994 248,797
Interbank Loans Receivable and Securities Interbank loans receivable and securities
Purchased Under Resale Agreements 8 226,775 1,225,579 226,775 1,098,579 purchased under resale agreements 8 11,042 9,545 3,214 3,240
Financial Assets at Fair Value Through Profit or Loss 9 827,886 1,931,324 822,597 1,923,896 10,122,184 9,466,487 9,046,902 8,483,340
Available-for-Sale Financial Assets 6, 9,15 23,255,121 19,734,335 22,996,793 19,518,546
Held-to-Maturity Investments 6, 9 28,159,197 28,216,682 28,016,774 28,073,365 INTEREST AND FINANCE CHARGES
Loans and Receivables 10,15,28 89,541,213 70,517,710 80,766,191 63,890,062 Deposit liabilities 16,28 2,736,100 2,480,759 2,634,790 2,399,204
Property and Equipment 11 2,337,687 2,342,591 2,138,179 2,232,671 Bills payable 17 532,192 379,910 503,488 330,265
Investments in Subsidiaries, 3,268,292 2,860,669 3,138,278 2,729,469
Associates and Joint Venture 12,15 8,502,183 7,482,576 4,088,540 3,919,787 NET INTEREST INCOME 6,853,892 6,605,818 5,908,624 5,753,871
Investment Properties 13,15 5,989,291 6,778,291 5,719,705 6,494,918 Trading and securities gains - net 9,28 1,816,120 899,206 1,792,005 890,045
Deferred Tax Assets 24 85,840 54,201 — — Service charges, fees and commissions 702,990 720,529 531,543 557,567
Intangible and Other Assets 14,15 23,212,128 22,952,884 20,015,966 19,746,619 Income from trust operations 132,582 123,264 132,540 123,417
218,578,792 200,471,438 200,388,543 185,663,155 Gains on sale of nonfinancial assets 94,374 131,579 65,836 102,636
Foreign exchange gains (losses) - net 9 17,682 (32,733) 17,690 (32,733)
LIABILITIES AND EQUITY
Miscellaneous 22 190,288 521,370 204,297 476,147
LIABILITIES
Deposit Liabilities 16,28 TOTAL OPERATING INCOME 9,807,928 8,969,033 8,652,535 7,870,950
Demand 17,848,937 13,007,774 17,619,081 12,929,685 Compensation and fringe benefits 27,28 1,744,327 1,663,335 1,531,853 1,482,617
Savings 98,313,724 98,722,144 95,927,015 96,478,317 Taxes and licenses 765,580 701,724 662,308 617,778
Time 47,160,888 45,284,080 44,626,234 43,528,507 Provision for credit and impairment losses 15 632,195 471,972 358,280 450,282
Long term negotiable certificates of deposits 9,443,866 7,593,890 9,443,866 7,593,890 Occupancy 21 555,724 559,942 512,976 523,570
172,767,415 164,607,888 167,616,196 160,530,399 Depreciation and amortization 11,13 524,752 530,247 475,397 481,663
Bills Payable and Securities Sold Security, clerical and messengerial 402,332 372,694 377,601 354,502
Under Repurchase Agreements 17 14,917,502 8,757,569 13,867,994 8,431,403 Insurance 396,073 364,331 378,172 348,592
Accrued Taxes, Interest and Other Expenses 18 705,335 574,203 632,690 616,476 Litigation and assets acquired 56,097 88,290 44,811 77,999
Income Tax Payable 24 36,986 46,622 4,358 — Miscellaneous 23 930,375 824,253 823,582 713,709
Deferred Tax Liabilities 24 78,674 66,121 31,318 30,492 TOTAL OPERATING EXPENSES 6,007,455 5,576,788 5,164,980 5,050,712
Other Liabilities 19 9,375,071 8,797,583 8,531,580 8,229,068
INCOME BEFORE SHARE IN NET INCOME OF ASSOCIATES 3,800,473 3,392,245 3,487,555 2,820,238
197,880,983 182,849,986 190,684,136 177,837,838 SHARE IN NET INCOME OF ASSOCIATES 12 1,021,454 527,068 — —
EQUITY INCOME BEFORE INCOME TAX 4,821,927 3,919,313 3,487,555 2,820,238
Equity Attributable to Equity Holders of the Parent Bank PROVISION FOR INCOME TAX 24 901,910 859,653 738,998 713,718
Common stock 25 1,484,843 1,484,843 1,484,843 1,484,843
Capital notes 25 12,000,000 12,000,000 12,000,000 12,000,000 NET INCOME 3,920,017 3,059,660 2,748,557 2,106,520
Surplus reserves 26 149,664 896,483 149,664 896,483 Attributable to:
Surplus (deficit) 15,25 6,357,329 2,661,295 (4,515,912) (7,048,288) Equity holders of the Parent Bank 3,912,215 3,052,271
Net unrealized gains on available-for-sale financial assets 9 645,801 523,533 587,580 492,935 Non-controlling interest 7,802 7,389
Equity in net unrealized gains on available-for-sale
3,920,017 3,059,660
financial assets of associates 12 920 426 — —
Translation adjustment (1,768) (656) (1,768) (656)
Equity in translation adjustment of associates 12 303 2,644 — — See Notes to the Financial Statements.
20,637,092 17,568,568 9,704,407 7,825,317
Non-controlling Interest 60,717 52,884 — —
20,697,809 17,621,452 9,704,407 7,825,317
218,578,792 200,471,438 200,388,543 185,663,155

See Notes to the Financial Statements.

74 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 75

 UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2012 FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Figures for 2011) (With Comparative Figures for 2011)
(Amounts in Thousands) (Amounts in Thousands)

Consolidated Parent Bank

Note 2012 2011 2012 2011 Consolidated
NET INCOME 3,920,017 3,059,660 2,748,557 2,106,520 Equity Attributable to Equity Holders of the Parent Bank
OTHER COMPREHENSIVE INCOME (LOSS) - net of tax Equity in
Net unrealized gains on available-for-sale financial assets 9 122,268 383,650 94,645 377,167 Net Unrealized
Equity in net unrealized gains on available-for-sale Net Unrealized Gains on
financial assets of associates 12 494 258 — — Gains on Available- Equity in
Translation adjustment (1,112) 64,783 (1,112) 64,783 Available- for-Sale Translation
Equity in translation adjustment of associates 12 (2,341) 1 — — Common Capital Surplus for-Sale Investments Adjustments
119,309 448,692 93,533 441,950 Stock Notes Reserves Surplus Financial Assets of Associates Translation of Associates Non-controlling
Note (Note 25) (Note 25) (Note 26) (Notes 15 and 25) (Note 9) (Note 12) Adjustment (Note 12) Total Interest Total Equity
TOTAL COMPREHENSIVE INCOME 4,039,326 3,508,352 2,842,090 2,548,470
Balance at January 1, 2012 1,484,843 12,000,000 896,483 2,661,295 523,533 426 ( 656) 2,644 17,568,568 52,884 17,621,452
Total comprehensive income attributable to: Amortization of unbooked
Equity holders of the Parent Bank 4,031,493 3,500,950 valuation reserves and losses 1,15 — — — (963,000) — — — — (963,000) — (963,000)
Non-controlling interest 7,833 7,402 Transfer of reserves — — (746,819) 746,819 — — — — — —
4,039,326 3,508,352 Net income for the year — — — 3,912,215 — — — — 3,912,215 7,802 3,920,017
Other comprehensive income (loss) — — — — 122,237 494 (1,112) (2,341) 119,278 31 119,309
Balance at December 31, 2012 1,484,843 12,000,000 149,664 6,357,329 645,770 920 ( 1,768) 303 20,637,061 60,717 20,697,778
See Notes to the Financial Statements.
Balance at January 1, 2011 1,484,843 12,000,000 896,483 191,024 139,896 168 ( 65,439) 2,643 14,649,618 45,482 14,695,100
Amortization of unbooked valuation
reserves and losses 1,15 — — — (582,000) — — — — (582,000) — (582,000)
Net income for the year — — — 3,052,271 — — — — 3,052,271 7,389 3,059,660
Other comprehensive income (loss) — — — — 383,637 258 64,783 1 448,679 13 448,692
Balance at December 31, 2011 1,484,843 12,000,000 896,483 2,661,295 523,533 426 ( 656) 2,644 17,568,568 52,884 17,621,452

Parent Bank
Net Unrealized
Gain (Loss) on
Available-
Common Capital Surplus for-Sale
Stock Notes Reserves Deficit Investments Translation
Note (Note 25) (Note 25) (Note 26) (Notes 15 and 25) (Note 9) Adjustment Total
Balance at January 1, 2012 1,484,843 12,000,000 896,483 ( 7,048,288) 492,935 ( 656) 7,825,317
Amortization of unbooked valuation reserves
and losses 15 — — — (963,000) — — (963,000)
Transfer of reserves 26 — — (746,819) 746,819 — — —
Net income for the year — — — 2,748,557 — — 2,748,557
Other comprehensive income (loss) — — — — 94,645 (1,112) 93,533
Balance at December 31, 2012 1,484,843 12,000,000 149,664 ( 4,515,912) 587,580 ( 1,768) 9,704,407
Balance at January 1, 2011, 1,484,843 12,000,000 896,483 ( 8,572,808) ( 115,768) ( 65,439) 5,858,847
Amortization of unbooked valuation reserves
and losses 15 — — — (582,000) — — (582,000)
Total comprehensive income (loss) — — — 2,106,520 377,167 64,783 2,548,470
Balance at December 31, 2011 1,484,843 12,000,000 896,483 ( 7,048,288) 492,935 ( 656) 7,825,317

See Notes to the Financial Statements.

76 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 77

 UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
STATEMENT OF CASH FLOWS STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012 FOR THE YEAR ENDED DECEMBER 31, 2012
(With Comparative Figures for 2011) (With Comparative Figures for 2011)
(Amounts in Thousands) (Amounts in Thousands)

Consolidated Parent Bank

Note 2012 2011 2012 2011 Consolidated Parent Bank
CASH FLOWS FROM OPERATING ACTIVITIES Note 2012 2011 2012 2011
Income before income tax 4,821,927 3,919,313 3,487,555 2,820,238 CASH AND CASH EQUIVALENTS AT END OF YEAR
Adjustments for: Cash and other cash items 5,978,605 4,757,246 5,834,451 4,607,502
Provision for credit and impairment losses 15 632,195 471,972 358,280 450,282 Due from Bangko Sentral ng Pilipinas 7,16 28,254,415 32,579,118 27,679,351 32,305,984
Depreciation and amortization 13 524,752 530,247 475,397 481,663 Due from other banks 2,208,451 1,898,901 2,083,221 1,851,226
Gain on sale of nonfinancial assets (94,374) (131,579) (65,836) (102,636) Interbank loans receivable and securities purchased
Loss on foreclosure of collaterals — 2,122 — 2,122 under resale agreements 8 226,775 1,225,579 226,775 1,098,579
Mark-to-market gains on financial assets at fair value 36,668,246 40,460,844 35,823,798 39,863,291
through profit or loss 9 (5,714) (279,153) (5,682) (271,310)
Trading gains on available-for-sale financial assets 9 (1,442,513) (212,072) (1,431,736) (210,754) OPERATING CASH FLOWS FROM INTEREST
Trading gains on held-to-maturity investments 9 — (335,213) — (335,213) Interest received 3,141,779 3,555,428 3,126,369 3,326,075
Share in net income of associates 12 (1,021,454) (527,068) — — Interest paid 10,114,197 9,456,463 9,042,626 8,841,022
Amortization of discounts on held-to-maturity investments 57,485 — 56,591 —
Amortization of discounts on Long Term Negotiable
Certificates of Deposits 16 18,835 10,663 18,835 10,663 See Notes to the Financial Statements.
Changes in operating assets and liabilities:
Decrease (increase) in the amounts of:
Financial assets at fair value through profit or loss 1,109,152 164,569 1,106,981 103,991
Loans and receivables (19,648,229) (9,466,649) (17,226,940) (8,509,732)
Other assets (712,014) 992,444 (850,662) 915,976
Increase (decrease) in the amounts of:
Deposit liabilities 6,309,550 7,644,694 5,235,821 7,487,902
Accrued taxes, interest and other expenses 131,131 (642,790) 16,214 (560,437)
Other liabilities 577,488 2,095,223 302,512 2,037,577
Cash generated from (absorbed by) operating activities (8,741,783) 4,236,723 (8,522,670) 4,320,332
Income taxes paid (930,632) (864,034) (733,814) (740,303)
Net cash (used in) provided by operating activities (9,672,415) 3,372,689 (9,256,484) 3,580,027
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Available-for-sale financial assets ( 82,247,239) ( 27,399,382) ( 81,183,526) ( 26,664,172)
Held-to-maturity investments — (113,924) — (113,294)
Property and equipment 11 (491,804) (978,568) (363,404) (927,440)
Software costs 14 (39,354) (58,313) (36,458) (55,329)
Proceeds from sale of:
Available-for-sale financial assets 80,440,055 23,004,057 79,379,985 22,325,468
Held-to-maturity investments — 3,925,684 — 3,925,684
Property and equipment 131,923 37,211 125,090 34,119
Investments properties 98,614 884,773 28,682 819,739
Proceeds from maturity of held-to-maturity investments — 1,882,000 — 1,882,000
Net cash provided by (used in) investing activities (2,107,805) 1,183,538 (2,049,631) 1,226,145
CASH FLOWS FROM FINANCING ACTIVITIES
Settlements of bills payable (123,759,432) (2,521,452) (121,552,059) (577,439)
Availments of bills payable 129,919,365 4,052,926 126,988,651 2,008,900
Issuance of Long Term Negotiable Certificates of Deposits 16 1,831,142 3,116,462 1,831,142 3,116,462
Net cash provided by financing activities 7,991,075 4,647,936 7,267,734 4,547,923
TRANSLATION ADJUSTMENT (3,453) 64,783 (1,112) 64,783
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,792,598) 9,268,946 (4,039,493) 9,418,880
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
Cash and other cash items 4,757,246 5,080,842 4,607,502 4,934,052
Due from Bangko Sentral ng Pilipinas 7,16 32,579,118 22,601,760 32,305,984 22,480,433
Due from other banks 1,898,901 2,154,600 1,851,226 1,959,230
Interbank loans receivable and securities purchased
under resale agreements 8 1,225,579 1,354,696 1,098,579 1,070,696
40,460,844 31,191,898 39,863,291 30,444,411
Forward

78 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 79

 UNITED COCONUT PLANTERS BANK AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS On May 15, 2008, the PDIC Board, in its Resolution No. 2008-05-073, approved the conversion of PDIC’s 12.0 billion Financial
Assistance into Capital Notes eligible as Interim Tier 1 capital.
(With Comparative Figures for 2011)
(Amounts in Thousands Except Number of Shares and Unless Otherwise Stated) On July 25, 2008, the Republic of the Philippines (ROP), PDIC, Presidential Commission on Good Government (PCGG) and the
Bank executed a Memorandum of Agreement (MOA), for the strengthening of the Bank’s capital through the issuance of Capital
Notes consistent with BSP rules and regulations, and subscription thereof by PDIC via the conversion of PDIC’s outstanding 2003
1. Corporate Information Financial Assistance of 12.0 billion. In addition, the MOA provides for the maintenance by the ROP of at least 25.0 billion but
not to exceed 30.0 billion of deposits in the Bank.
United Coconut Planters Bank (“the Bank”, “UCPB” or the “Parent Bank”) is a universal bank incorporated in the Philippines on May
10, 1963. The Parent Bank and its subsidiaries (the Group) are engaged in all aspects of financial services such as banking, financing, The government deposits shall be used to (i) establish and maintain a pool of government securities and (ii) open, as part of
leasing, real estate and stock brokering. As a bank, the Parent Bank is organized to provide expanded commercial banking services UCPB’s compliance with the statutory reserves on the government deposits, a demand deposit account (DDA) with the BSP. The
such as deposit products, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange, investment aggregate of items (i) and (ii) shall at all times be in the same amount as the government deposits.
banking and trust services. In addition, the Bank is allowed by the Bangko Sentral ng Pilipinas (BSP) to engage in generally-authorized
plain vanilla derivatives. The Parent Bank was authorized to engage in trust operations in June 1963 and in foreign currency deposit On March 31, 2009, the 2003 FAA and the Subscription Agreement were amended and signed, respectively, by the PDIC, UCPB and PCGG (only
operations in October 1977. At the end of 2012, the Parent Bank has 188 branches and 277 automated teller machines, located for Amended 2003 FAA). On the same date, the Bank issued the Capital Notes, which has no maturity date and has the following features:
nationwide. The Parent Bank’s registered address and main office is at UCPB Building, Makati Avenue, Makati City.
1. Dividend/Coupon Rate - Dividend/Coupon rates as follows:
As a banking institution, the Bank’s operations are regulated and supervised by the BSP. In this regard, the Bank is required
to comply with the rules and regulations of the BSP such as those relating to maintenance of reserve requirements on deposit • 2.0% from April 1, 2009 to March 31, 2011;
liabilities and deposit substitutes and those relating to the adoption and use of safe and sound banking practices as promulgated • 4.0% from April 1, 2011 to March 31, 2013;
by the BSP. The Bank is subject to the provisions of the General Banking Law of 2000 (Republic Act No. 8791). • 8.0% from April 1, 2013 to March 31, 2015;
• 12.0% from April 1, 2015 to March 31, 2017; and
The Bank’s corporate life was supposed to expire on May 10, 2013. On June 30, 2011, the Board of Directors (BOD) approved the • 14.0% from April 1, 2017 onwards.
extension of the Bank’s corporate term for another 50 years or up to May 10, 2063. On January 26, 2012, the BOD approved the
calling of a Stockholders’ Meeting of the Bank to approve the extension of the corporate life. On May 2, 2012, a resolution was The Issuer shall have full and absolute discretion (i) whether or not to declare and pay coupons on the Notes, and (ii) over the
unanimously approved and adopted at a special meeting of stockholders, extending the life of the Bank for another 50 years from amount and timing of coupon payments, in the event that, in the exercise of its discretion, the Issuer decides to declare and pay
and after May 10, 2013, and for this purpose, amending the Bank’s Articles of Incorporation. On August 14, 2012, the Philippine coupons. The Issuer shall, every time it declares and pays dividends on its common shares, likewise pay coupons on the Notes.
Securities and Exchange Commission (SEC) approved the renewal of the Bank’s corporate life for another 50 years up to 2063. Coupons on the Notes may be declared and paid only (i) to the extent that the Issuer has sufficient profits and/or retained earnings
distributable; and (ii) if, after such declaration and payment, the Issuer shall be able to meet the capital adequacy and liquidity
Rehabilitation Plan thresholds, determined in accordance with BSP regulations prevailing at the time of declaration and payment of coupons.
On July 7, 2003, the Bank entered into a Financial Assistance Agreement (the “Agreement” or FAA) with the Philippine Deposit
Insurance Corporation (PDIC). The financial assistance from PDIC amounting to 20.0 billion has three components: Coupons on the Notes shall be non-cumulative. Moreover, the Issuer shall have full control and access to any waived coupon
payments. The Notes have no step-up provisions in the coupon rate in conjunction with the redemption option.
a. 8.0 billion direct purchase of nonperforming loans;
b. 7.0 billion in Tier 2 capital with a cost to the Bank of 5.0% due in 2013; and 2. Repayment/Redemption of the Capital Notes - Redemption of the Notes shall be subject to prior written BSP approval. The
c. 5.0 billion purchase of nonperforming loans with buyback by 2013. Capital Notes may be redeemed, in whole or in part, at the sole option of the Issuer, anytime after five (5) years from the
date of issuance of the Notes. However, the option granted to the Issuer may be exercised within five (5) years from the date
On February 26, 2004, PDIC endorsed to the BSP for approval the Bank’s 10-year Business/Rehabilitation Plan (the “Rehabilitation of issuance of the Notes upon the infusion of sufficient capital which is neither smaller in size nor lower in quality than the
Plan”). Part of the Rehabilitation Plan is the Bank’s business strategy that has the following elements: (1) separation of the “bad Notes, unless the Issuer’s capital adequacy ratio remains more than adequate after redemption of the Notes. In the event of
bank” from the “good bank”; (2) right-sizing and streamlining of operations to reduce costs; and (3) capital-raising which aims insolvency of the Issuer, the Holder shall be, immediately and without need for demand, entitled to repayment of the Notes.
to withstand the limitation brought about by the unresolved ownership issues (see Note 25). The BSP approved the Rehabilitation
Plan on January 10, 2005, including the following concessions: (a) temporary relief by reducing the risk-weighted capital ratio 3. Assignability - The Holder may assign or transfer the Capital Notes to any person or entity provided prior written notice of
to 8.0% for a period of three years up to 2007 or until such time that the Bank is able to comply with the required 10.0% capital such assignment or transfer is given to the Issuer.
adequacy ratio (CAR), whichever comes earlier; and (b) staggered booking of required valuation reserves for 10 years.
4. Conversion Right - At any time, the Holder of the Notes shall have the right to convert the Notes, in whole or in part, to Special
Amendments to the Rehabilitation Plan and Conversion of PDIC financial assistance to Interim Tier 1 Capital Notes Preferred Shares of the Issuer which, in turn, shall be convertible into Common Shares. The Issuer shall ensure that its Articles of
The Monetary Board (MB), in its Resolution No. 590 dated May 15, 2008, decided to: Incorporation and By-laws shall be amended to accommodate all the rights of the Holder under the Notes. The conversion right
provided herein shall be superior to the redemption option of the Issuer. Accordingly, in the event the Issuer serves notice to
1. Approve the amended 10-Year Rehabilitation/Business Plan (2008-2017) of the Bank and grant to the Bank (the Issuer) the the Holder of the exercise of a redemption option, the Holder shall have 45 days to notify the Issuer and the BSP in writing that
authority to issue P12.0 billion Interim Tier 1 Capital Notes (the “Capital Notes” or “Notes”) to PDIC which will qualify as instead of being repaid pursuant to the redemption, the Holder shall instead convert the Notes to Special Preferred Shares.
Interim Tier 1 capital (see Note 25), provided that:
5. Conversion Price - The Notes shall be convertible to Special Preferred Shares or Common Shares with an aggregate par value
a. The Capital Notes to be issued meet the minimum features under Circular No. 595 dated January 11, 2008; and of 12.0 billion at the time of conversion.
b. UCPB’s Articles of Incorporation shall be amended to:
i. increase its authorized capital of 3.25 billion to an amount that will cover the amount of the Capital Notes; and 6. Failure to Comply with Obligations - In case the Issuer fails to perform any of its material obligations under the Notes,
ii. remove the ownership limitation in the Bank, which is 1.0% of the issued and outstanding preferred and common shares, including the conversion of the Notes into Special Preferred Shares or Common Shares, then the Notes shall become due and
for a stockholder who is not a stockholder as at December 31, 1979. demandable, and the Holder shall have the following rights:
2. Grant to UCPB the following concessions: a) Collect the principal of the Notes in the amount of 12.0 billion and interest at the rate of 14.0%; and
b) Institute such proceedings to enforce any of the obligations of the Issuer if the Issuer continues to fail to perform its
a. Authority to accept deposits from the National Government (NG), Local Government Units (LGUs) and Government-Owned and material obligation within 30 days from written notice of the Holder.
Controlled Corporations (GOCCs), with the ceiling of P5.9 billion increased by the amount that the NG will deposit with the Bank;
b. Consider the government securities (GS) purchased out of the 30.0 billion deposit of the NG as alternative/eligible The Subscription Agreement includes Insolvency of the Issuer clause with the following consequences:
compliance with the liquidity reserves and liquidity floor requirement;
c. Stagger the booking of the unbooked valuation reserves and deferred charges aggregating to 27.9 billion consistent with a) If the Issuer becomes insolvent, PDIC shall, within fifteen (15) days after it acquires knowledge of the occurrence of the
the Bank’s approved 10-Year Business/Rehabilitation Plan, provided that subsequent valuation reserves to be required in Issuer’s insolvency, give the Issuer a written notice declaring all the Notes then outstanding, including all accrued coupon
excess of the 27.9 billion shall be immediately booked and no dividend shall be declared while the concession is in effect; thereon, to be due and payable immediately, and upon any such declaration the same shall be immediately due and payable,
d. Waiver of certain monetary penalties; and subject only to subordination.
e. Continued access to the BSP Rediscounting Facility, subject to a rediscount ceiling of 1.5 billion.
b) Paragraph (a) is further subject to the condition that PDIC may rescind and annul such declaration and its consequences,
The aforementioned MB approval was further clarified under MB Resolution No. 687 issued on June 17, 2008, which states that upon such terms, conditions, and agreements, if any, as it may determine, but no such rescission and annulment shall extend
“UCPB’s Articles of Incorporation shall be amended prior to the conversion of the Capital Notes to capital stock”. to or shall affect any subsequent default or shall impair any right of PDIC consequent thereto.
1
Non-performing assets wherein the required valuation reserves were approved by the BSP for staggered booking are considered “bad bank” assets.

80 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 81

 Subordination mentioned under paragraph (a) means that the Notes are not deposits of the Issuer and are not guaranteed
or insured by the Issuer or any party related to the Issuer or covered by any other arrangement that legally or economically 2. Basis of Preparation
enhances the priority of the claim of the Holder as against the depositors, other creditors and holders of Lower Tier 2 and Upper
Tier 2 capital instruments, if any, of the Issuer. Statement of Compliance
The accompanying financial statements have been prepared in accordance with PFRS. PFRS are based on International Financial
In order to accommodate the conversion of the Capital Notes to Special Preferred Shares or Common Shares, should the Holder of the Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). PFRS consist of PFRS, Philippine
Capital Notes decide to convert, the proposed amendment to the Bank’s Articles of Incorporation was approved at the regular BOD Accounting Standards (PAS), and Philippine Interpretations issued by the Financial Reporting Standards Council (FRSC).
meeting on April 28, 2009 with the written assent of at least 2/3 of the Bank’s stockholders. The proposed amendments include:
However, the Bank accounted for certain transactions in accordance with the following concessions approved by the BSP:
a) Reclassifying (i) 1,002,829,769 unissued common shares of the Bank and (ii) 750,000,000 unissued preferred shares of the
Bank, all with a par value of 1.00 per share, into 1,752,829,769 Special Preferred Shares; • staggered booking of required credit and impairment losses on AFS financial assets, loans and receivables, investment properties
b) Denying pre-emptive right over the issuance of special preferred and common shares for the conversion of special preferred and other assets, and losses on sale and dacion en pago settlement, which were allowed separately by the BSP (see Note 1);
shares and the Capital Notes; and • non-recognition of depreciation on certain investment properties (see Note 13);
c) Deletion of ownership limitation in the Bank, which is 1.0% of the issued and outstanding preferred and common shares, for a • presentation of Interim Tier 1 Capital Notes as an equity instrument instead of as a financial liability in the statement of
stockholder who is not a stockholder as at December 31, 1979. financial position (see Note 25); and
• non-reclassification of held-to-maturity (HTM) investments with aggregate amortized cost of 28.2 billion and fair value of
In March 2011, the Bank filed with the SEC the application for the amended Articles of Incorporation to address these proposed 32.7 billion for the Group and 28.0 billion and 32.5 billion for the Parent Bank as at December 31, 2012 to AFS financial
amendments. The SEC approved the said amendments on May 10, 2011 (see Note 25). assets despite breaching the tainting rule of PAS 39, Financial Instruments: Recognition and Measurement in 2011(see Note 9).

Staggered Booking of Required Valuation Reserves and Deferred Charges The financial statements of the Group and of the Parent Bank were authorized for issue by the BOD on May 30, 2013.
On February 26, 2009, the MB, in its Resolution No. 345, decided to:
Basis of Measurement
1. Approve the year 2009 as the start of the 10-year rehabilitation period (2009-2018) of the Bank instead of 2008 as contained The accompanying financial statements have been prepared on the historical cost basis except for financial assets and financial
in the Bank’s Rehabilitation Plan approved by the MB under Resolution No. 590 dated May 15, 2008; liabilities at fair value through profit or loss (FVPL) and AFS financial assets, which are measured at fair value.
2. Exempt the Bank from sanctions that may be imposed for its non-compliance with the 10.0% CAR and all the capital-based
regulatory ratios for the year 2008 until such time that the Bank’s Rehabilitation Plan is fully implemented; and Functional and Presentation Currency
3. Approve the following requests of the Bank: The financial statements of the Parent Bank reflect the accounts maintained in the Regular Banking Unit (RBU) and Foreign
Currency Deposit Unit (FCDU). The financial statements individually prepared for these units are combined after eliminating
a. Reversal of all previous staggered bookings of unbooked valuation reserves and amortization of deferred losses, based on inter-unit accounts.
the Special Purpose Vehicle (SPV) formula that the Bank has been providing starting 2007 in accordance with the original
rehabilitation program approved by the BSP on January 10, 2005 (the Bank’s Surplus as at January 1, 2008 was restated for The functional currency of the RBU and FCDU is the Philippine peso and United States dollar (USD), respectively. For financial
the effect of the amortization of valuation reserves); reporting purposes, FCDU accounts and foreign currency-denominated accounts in the RBU are translated into their equivalents
b. Deferment of any staggered booking or amortization of unbooked valuation reserves and deferred losses until the Bank’s in Philippine peso (see accounting policy on Foreign Currency Translation).
recapitalization is completely in place starting January 2009 and to accordingly revise the schedule of the staggered
booking of unbooked valuation reserves and amortization of deferred losses following the concept of affordability per the Each entity in the Group determines its own functional currency and items included in the financial statements of each entity
latest approved business plan by the BSP; and are measured using that functional currency. The functional currency of all the subsidiaries is the Philippine peso.
c. Temporary relief from full compliance with the required 10.0% CAR as provided under Section 34 of Republic Act No. 8791
(the General Banking Law of 2000) by reducing the Bank’s CAR to 8.0% for a period of three years up to 2011 or until such The consolidated financial statements and separate financial statements of the Parent Bank are presented in Philippine peso,
time that the Bank is able to comply with the required 10.0% CAR, whichever comes first. and all values are rounded off to the nearest thousand ( 000) except as otherwise indicated.

As at December 31, 2008, the unbooked valuation reserves that the Parent Bank will recognize on a staggered basis starting Basis for Consolidation
January 2009, as allowed by the BSP, amounted to 29.1 billion. This consists of the (a) 27.9 billion unbooked valuation reserves The consolidated financial statements of the Group are prepared for the same reporting period as the Parent Bank, using
and deferred charges allowed to be staggered in the MB Resolution No. 590 dated May 15, 2008, and (b) 1.2 billion additional consistent accounting policies.
unbooked valuation reserves that will be recognized on a staggered basis arising from the reversal of previously amortized valuation
reserves due to the resetting of the start of amortization of the unbooked valuation reserves and deferred charges as allowed under The following are the wholly and majority-owned subsidiaries of the Parent Bank as at December 31, 2012 and 2011:
MB Resolution No. 345 dated February 26, 2009. The unbooked valuation reserves and deferred charges were determined based on
the criteria set by the BSP which differs from Philippine Financial Reporting Standards (PFRS) in certain respects. Effective Percentage Country of Functional
Subsidiary of Ownership Incorporation Currency
On May 20, 2010, the MB, in its Resolution No. 697 confirmed the implementation of the Bank’s approved amortization of Financial Markets:
unbooked valuation reserves and deferred losses as follows: UCPB Leasing and Finance Corporation (ULFC) 100.00 Philippines Philippine peso
UCPB Securities, Inc. (USI) 100.00 Philippines Philippine peso
1. Any excess valuation reserves resulting from assets pertaining to the “bad bank” shall be allowed for re-allocation to another UCPB Savings Bank, Inc. (USB) 97.37 Philippines Philippine peso
asset requiring additional valuation reserves as long as these assets are part of the “bad bank” assets and within the 29.1 Real Estate:
billion approved for staggered booking; and Balmoral Resources Corporation (BRC) 100.00 Philippines Philippine peso
2. Any actual losses from the sale of real and other properties acquired from the “bad bank” assets shall be booked as deferred Green Homes Development Corporation (GHDC) 100.00 Philippines Philippine peso
losses provided the total losses to be deferred shall not exceed the unbooked valuation reserves for that property and UPI - Macaria Homes Corporation (UPI-MHC) 100.00 Philippines Philippine peso
subject to the condition that the Bank shall submit quarterly monitoring reports for the status of the “bad bank” assets and
allocation of valuation reserves for each asset pool.
All significant intra-group balances, transactions, income and expenses, and profits and losses resulting from intra-group
As discussed in Notes 14 and 15, as at December 31, 2008, the 29.1 billion unbooked valuation reserves and deferred charges transactions are eliminated in full.
allowed by BSP to be deferred consist of 13.4 billion credit and impairment losses on available-for-sale (AFS) financial assets,
loans and receivables, investment properties and other assets, and 15.7 billion losses on sale and dacion en pago settlement. Subsidiaries are consolidated from the date when control is transferred to the Parent Bank. Control is achieved when the Parent
Bank has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The
As at December 31, 2012 and 2011, the balance of unbooked valuation reserves and deferred charges amounted to 27.1 existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether
billion and 28.0 billion, respectively, net of the 963.0 million and 582.0 million amortization recognized in 2012 and 2011, the Parent Bank controls another entity. Consolidation of subsidiaries ceases when control is transferred out of the Group.
respectively, which were charged directly to deficit (see Note 15).

Under PFRS, the deficiency in credit and impairment losses and unbooked deferred charges amounts to 2.8 billion and 15.9
billion, respectively, for 2012 and 5.5 billion and 15.8 billion, respectively, for 2011 (see Notes 14 and 15).

82 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 83

 The results of subsidiaries acquired or disposed of are included in the consolidated statement of income up to the date of disposal. The financial statements of the Parent Bank reflect the accounts maintained in the RBU and FCDU with functional currencies of
When a change in ownership interest in a subsidiary occurs which results in loss of control over the subsidiary, the Parent Bank: Philippine peso and USD, respectively.

• derecognizes the assets (including goodwill) and liabilities of the subsidiary; Transactions in foreign currencies are initially recorded at the functional rate of exchange at the date of transaction.
• derecognizes the carrying amount of any non-controlling interest;
• derecognizes the related other comprehensive income recorded in equity and recycle the same to profit or loss or surplus (deficit); Foreign currency-denominated monetary assets and liabilities of the Group are translated into their respective functional
• recognizes the fair value of the consideration received; currencies based on the Philippine Dealing System (PDS) closing rate prevailing as at the reporting date and PDS weighted
• recognizes the fair value of any investment retained; and average rate (PDSWAR) for the reporting period for income and expenses. Foreign exchange differences arising from foreign
• recognizes any surplus or deficit in profit or loss. currency transactions and restatements of foreign currency-denominated assets and liabilities are credited to or charged against
profit or loss in the period in which the rates change.
Until December 31, 2010, UCPB Properties, Inc. (UPI) was a wholly-owned subsidiary of the Parent Bank. On March 23, 2011 and
March 1, 2011, the BOD and stockholders of BRC and UPI, respectively, approved a Plan of Merger where UPI shall be merged Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
into and be part of BRC, and its separate corporate existence shall cease by operation of law effective January 1, 2011. On as at the dates of the transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
July 13, 2011, the SEC approved the Certificate of Filing of the Articles and Plan of Merger. The merger was accounted for in exchange rates at the date when the fair value was determined.
accordance with the pooling of interest method where the identifiable assets acquired and liabilities assumed from UPI were
recognized by BRC at their carrying values in UPI’s books. As at the reporting date, the assets and liabilities of the FCDU of the Parent Bank are translated from its functional currency
into the Parent Bank’s presentation currency, the Philippine peso, at PDS closing rate prevailing at the reporting date, and their
On June 2, 2011, the Parent Bank’s interest in UPI-MHC increased from 50% to 100% (see Note 12). income and expenses are translated at PDSWAR for the year. Exchange differences arising on translation are taken directly
to other comprehensive income and accumulated as a separate component of equity in the statement of financial position as
In the Parent Bank’s separate financial statements, investments in subsidiaries are carried at cost, less accumulated impairment “Translation adjustment”.
in value. Dividends earned are reported as dividend income when the right to receive the payment is established.
Financial Instruments - Recognition and Measurement
Non-controlling Interests Date of Recognition
Non-controlling interests represent the portion of profit or loss and the net assets not owned, directly or indirectly, by the Group Regular way purchases and sales of financial assets that require delivery of assets within the time frame generally established
and are presented separately in the consolidated statement of income, consolidated statement of comprehensive income and by regulation or convention in the market, except for derivatives, are recognized on the settlement date. Settlement date
within equity in the consolidated statement of financial position, separately from equity attributable to the Parent Bank. Any is the date when the transaction is settled by delivery of the assets that are the subject of the agreement. Settlement date
losses applicable to the non-controlling interests are allocated against the interests of the non-controlling interest even if this accounting refers to: (a) the recognition of an asset on the day it is received by the Group, and (b) the derecognition of an
results in the non-controlling interests having a deficit balance. asset and recognition of any gain or loss on disposal on the day that it is delivered by the Group. Any change in the fair value of
the financial asset to be received is recognized in the statement of income for financial assets at FVPL and in the statement of
Acquisitions of non-controlling interests that do not result in a loss of control are accounted for as an equity transaction comprehensive income for AFS financial assets. Deposits, amounts due to banks and customers, loans and receivables and spot
whereby the difference between the consideration and the fair value of the share of the net assets acquired is recognized as an transactions are recognized when cash is received by the Group or advanced to the borrowers.
equity transaction and attributed to the owners of the Parent Bank.
Derivatives are recognized on trade date - the date that the Group becomes a party to the contractual provisions of the
instrument. Trade date accounting refers to: (a) the recognition of an asset to be received and the liability to pay for it on the
trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a
3. Summary of Significant Accounting Policies receivable from the buyer for payment on the trade date.

The accounting policies set out below have been applied consistently to all years presented in these financial statements, and Initial Recognition of Financial Instruments
have been applied consistently by the Group entities, except for the changes in accounting policies as explained below. The classification of financial instruments at initial recognition depends on the purpose for which the financial instruments
were acquired and their characteristics. All financial assets and financial liabilities are recognized initially at fair value plus
Adoption of New or Revised Standards, Amendments to Standards and Interpretations any directly attributable cost of acquisition or issue, except in the case of financial assets and financial liabilities at FVPL. The
The Group has adopted the following amendment to standard starting January 1, 2012 and accordingly changed its accounting Group categorizes its financial assets as: financial assets at FVPL, differentiating those that are held-for-trading (HFT) and those
policies. Except as otherwise indicated, the adoption of this amendment to standard did not have any significant impact on the designated as such, HTM investments, AFS financial assets, and loans and receivables. Financial liabilities are categorized into
Group’s financial statements. financial liabilities at FVPL and other financial liabilities. Management determines the classification of these instruments at
initial recognition and, where allowed and appropriate, re-evaluates such designation at every reporting date.
• Disclosures - Transfers of Financial Assets (Amendments to PFRS 7), require additional disclosures about transfers of financial
assets. The amendments require disclosure of information that enables users of financial statements to understand the Deposit Liabilities to the Government
relationship between transferred financial assets that are not derecognized in their entirety and the associated liabilities; and As allowed by Philippine Interpretations Committee (PIC) Q&A 2007-02, Accounting for Government Loans with Low Interest
to evaluate the nature of, and risks associated with, the entity’s continuing involvement in derecognized financial assets. Rates, the Bank initially recognized the deposit liabilities received as part of the Rehabilitation Plan at nominal amounts and
these are not subsequently revalued.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents consist of cash and other cash items, due from BSP and other Determination of Fair Value
banks, and interbank loans receivable and securities purchased under resale agreements (SPURA) with the BSP that are The fair value for financial instruments traded in active markets at the reporting date is based on their quoted market price or
convertible to known amounts of cash, with original maturities of three months or less from dates of placements and that are dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.
subject to insignificant risk of changes in value. When current bid and ask prices are not available, the price of the most recent transaction is used since it provides evidence of the
current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction.
Repurchase and Reverse Repurchase Agreements
Securities sold under agreements to repurchase at a specified future date (‘repos’) are not derecognized from the statement For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation
of financial position. The corresponding cash received, including accrued interest, is recognized in the statement of financial techniques. Valuation techniques include net present value techniques, comparison to similar instruments for which market
position as securities sold under repurchase agreements (SSURA) and is considered as a loan to the Group, reflecting the observable prices exist, option pricing models, and other relevant valuation models.
economic substance of such transaction.
‘Day 1’ Difference
Conversely, securities purchased under agreements to resell at a specified future date (‘reverse repos’) are not recognized in Where the transaction price is different from the fair value of other observable current market transactions in the same
the statement of financial position. The corresponding cash paid including accrued interest, is recognized in the statement of instrument or based on a valuation technique whose variables include only data from observable market, the Group immediately
financial position as SPURA, and is considered a loan to the counterparty. The difference between the purchase price and resale recognizes the difference between the transaction price and fair value (a ‘Day 1’ difference) in the statement of income unless
price is treated as interest income and is accrued over the life of the agreement using the effective interest method. it qualifies for recognition as some other type of asset or liability. In cases where the data used is not observable, the difference
between the transaction price and model value is only recognized in the statement of income when the inputs become
Foreign Currency Translation observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity recognizing the ‘Day 1’ difference amount.
are measured using that functional currency. The functional currency of the Parent Bank’s subsidiaries is the Philippine peso.

84 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 85

 Financial Assets or Financial Liabilities at Fair Value through Profit or Loss (EIR). The amortization is included in “Interest income” in the statement of income. The losses arising from impairment of
This category includes HFT financial assets and financial assets or liabilities designated at FVPL. such investments are recognized in the statement of income under “Provision for credit and impairment losses”. The effects of
restatement on foreign currency-denominated HTM investments are recognized in the statement of income.
a. HFT Financial Assets
HFT financial assets are recorded in the statement of financial position at fair value. Changes in fair value relating to the HFT If the Group were to sell more than an insignificant amount of HTM investments before maturity (other than in certain specific
positions are recognized in the statement of income under “Trading and securities gains (losses)” account. Interest earned or circumstances), the entire category would be tainted and would have to be reclassified as AFS financial assets. Furthermore,
incurred is recognized as “Interest income” or “Interest and finance charges,” respectively, in the statement of income, while the Group would be prohibited to classify any financial assets as HTM investments for the following two years. In 2011, the Bank
dividends earned are recognized as Dividends (included under “Miscellaneous Income”) when the right to receive payment has partly disposed its HTM investments (see Note 9).
been established.
Loans and Receivables, Due From BSP and Other Banks, Interbank Loans Receivables and SPURA
Included in this classification are the Group’s investments in debt and equity securities which have been acquired principally Loans and receivables include cash and other cash items, due from BSP and other banks, and interbank loans and receivables
for the purpose of selling in the near term. and SPURA. These are financial assets with fixed or determinable payments and fixed maturities that are not quoted in an active
b. Financial Assets or Liabilities Designated at FVPL market. They are not entered into with the intention of immediate or short-term resale and as such are not categorized as
Financial assets and liabilities classified in this category are designated by management on initial recognition. Management financial assets at FVPL or AFS financial assets. They also do not include those for which the Group may not recover substantially
may only designate an instrument at FVPL upon initial recognition when the following criteria are met, and designation is all of its initial investments, other than because of credit deterioration.
determined on an instrument-by-instrument basis:
After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest
• The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring method, less allowance for credit losses. Amortized cost is calculated by taking into account any discount or premium on
the assets or liabilities or recognizing gains or losses on them on a different basis; or acquisition and fees and costs that are an integral part of the EIR. The amortization is included in “Interest income” in the
• The assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their statement of income. The losses arising from impairment are recognized in “Provision for credit and impairment losses” in the
performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or statement of income.
• The financial instrument contains an embedded derivative, unless the embedded derivative does not significantly modify the
cash flows or it is clear, with little or no analysis, that it would not be separately recorded. Other Financial Liabilities
Issued financial instruments or their components, which are not designated at FVPL, are classified as liabilities under deposit
As at December 31, 2012 and 2011, the Group does not have financial assets or financial liabilities designated as at FVPL. liabilities, bills payable and SSURA or other appropriate financial liability accounts, where the substance of the contractual
arrangement results in the Group having an obligation either to deliver cash or another financial asset to the holder, or to
Derivative Instruments satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of own
The Parent Bank is counterparty to derivative contracts, such as forward foreign exchange contracts and warrants. These equity shares. The components of issued financial instruments that contain both liability and equity elements are accounted for
derivatives are entered into as a service to customers and as a means for reducing or managing the Parent Bank’s respective separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the
foreign exchange exposures, as well as for trading purposes. Such derivative instruments are initially recorded at fair value on amount separately determined as the fair value of the liability component on the date of issue.
the date at which the derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried
as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes After initial measurement, other financial liabilities not qualified as and not designated at FVPL, are subsequently measured at
in fair value of derivatives are taken directly to the statement of income and are included in “Trading and securities gains amortized cost using the effective interest method. Amortized cost is calculated by taking into account any discount or premium
(losses)” for warrants and in “Foreign exchange gains (losses)” for forward foreign exchange contracts. on the issue and fees that are an integral part of the EIR.

Embedded Derivatives Reclassification of Financial Assets

Embedded derivatives are bifurcated from their host contracts and carried at fair value with fair value changes being recognized A financial asset is reclassified out of the FVPL category when the following conditions are met:
in the statement of income and are included in “Trading and securities gains (losses)” account, when the entire hybrid contracts • the financial asset is no longer held for the purpose of selling or repurchasing it in the near term; and
(composed of both the host contract and the embedded derivative) are not accounted for as financial assets or financial • there is a rare circumstance.
liabilities at FVPL, when their economic risks and characteristics are not closely related to those of their respective host
contracts, and when a separate instrument with the same terms as the embedded derivatives would meet the definition of a A financial asset that is reclassified out of the FVPL category is reclassified at its fair value on the date of reclassification. Any
derivative. As at December 31, 2012 and 2011, the Parent Bank’s embedded derivatives are comprised of call and index-linked gain or loss already recognized in the statement of income is not reversed. The fair value of the financial asset on the date of
options and range accrual. reclassification becomes its new cost or amortized cost, as applicable.

The Group assesses the existence of an embedded derivative on the date it first becomes a party to the contract, and performs For a financial asset reclassified out of the AFS financial assets category to loans and receivables or HTM investments, any
re-assessment only where there is a change to the contract that significantly modifies the contractual cash flows. previous gain or loss on that asset that has been recognized in other comprehensive income is amortized to profit or loss over
the remaining life of the investment using the effective interest method. Any difference between the new amortized cost and
AFS Financial Assets the expected cash flows is also amortized over the remaining life of the asset using the effective interest method. If the asset is
AFS financial assets are those which are designated as such or do not qualify to be classified as designated at FVPL, HTM subsequently determined to be impaired then the amount recorded in equity is recycled to the statement of income.
investments or loans and receivables. These are purchased and held indefinitely, and may be sold in response to liquidity
requirements or changes in market conditions. Included in this classification are the Group’s investments in government and Derecognition of Financial Assets and Liabilities
private debt securities and quoted and unquoted equity securities. Financial Assets
A financial asset (or, where applicable a part of a financial asset or part of a group of financial assets) is derecognized when:
After initial measurement, AFS financial assets are subsequently measured at fair value. The effective yield component of AFS • the rights to receive cash flows from the asset have expired; or
debt securities, as well as the impact of restatement on foreign currency-denominated AFS debt securities, is reported in the • the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
statement of income. The unrealized gains and losses arising from the fair valuation of AFS financial assets are excluded, net material delay to a third party under a “pass-through” arrangement; or
of tax, from reported earnings and are recognized as other comprehensive income and accumulated in “Net unrealized gains • the Group has transferred its rights to receive cash flows from the asset and either: (a) has transferred substantially all the
(losses) on AFS financial assets” account in the equity section of the statement of financial position. risks and rewards of the asset, or (b) has neither transferred nor retained the risk and rewards of the asset but has transferred
the control of the asset.
When the instrument is disposed of, the cumulative gain or loss previously recognized in other comprehensive income is
recognized as “Trading and securities gains (losses)” in the statement of income as a reclassification adjustment. Where the Where the Group has transferred its rights to receive cash flows from an asset or has entered into a ‘pass-through’ arrangement,
Group holds more than one investment in the same security, these are deemed to be disposed of on a weighted average basis. and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset,
the asset is recognized to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes
Interest earned on holding AFS financial assets are reported as “Interest income” using the effective interest method. Dividends the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of the asset and the
earned on holding AFS financial assets are recognized in the statement of income as Dividends (included under “Miscellaneous maximum amount of consideration that the Group could be required to repay.
Income”) in the statement of income) when the right to receive payment has been established. The losses arising from impairment
of such investments are recognized as “Provision for credit and impairment losses” account in the statement of income. Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired. Where an
HTM Investments existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
HTM investments are quoted non-derivative financial assets with fixed or determinable payments and fixed maturities for which liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
the Group’s management has the positive intention and ability to hold to maturity. After initial measurement, these investments recognition of a new liability, and the difference in the respective carrying amounts is recognized in the statement of income.
are carried at amortized cost using the effective interest method, less any impairment in value. Amortized cost is calculated
by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate

86 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 87

 Impairment of Financial Assets AFS Financial Assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets For AFS financial assets, the Group assesses at each reporting date whether there is objective evidence that an investment is impaired.
is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that had occurred after the initial recognition of the asset (an incurred ‘loss event’) In the case of AFS equity securities, objective evidence of impairment would include a significant or prolonged decline in the fair
and that loss event (or events) has (have) an impact on the estimated future cash flows of the financial asset or the group of value of the investment below its cost. The Group treats ‘significant’ generally as 20.0% and ‘prolonged’ as greater than
financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group of twelve (12) months. Where there is evidence of impairment, the cumulative loss - measured as the difference between
borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the
that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is measurable statement of income - is removed from equity and recognized in the statement of income. Impairment losses on equity securities
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. are not reversed through the statement of income. Increases in fair value after impairment are recognized directly in other
comprehensive income.
Financial Assets Carried at Amortized Cost
For financial assets carried at amortized cost, which includes HTM investments and loans and receivables, the Group first If there is objective evidence that there is impairment loss on an unquoted equity instrument that is not carried at fair value because
assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an
collectively for financial assets that are not individually significant. unquoted equity instrument has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
For individually assessed financial assets, the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). In the case of AFS debt securities, the Group assesses individually whether there is objective evidence of impairment based on
The present value of the estimated future cash flows is discounted at the financial asset’s original EIR. If a loan has a variable the same criteria as financial assets carried at amortized cost. However, the amount recorded for impairment is the cumulative
interest rate, the discount rate for measuring any impairment loss is the current EIR, adjusted for the original credit risk loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that
premium. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects investment previously recognized in the statement of income. Future interest income is based on the reduced carrying amount
the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure and is accrued based on the rate of interest used to discount future cash flows for the purpose of measuring impairment loss.
is probable. The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is Such accrual is recorded as part of “Interest income” in the statement of income. If, in a subsequent year, the fair value of a
recognized in “Provision for credit and impairment losses” account in the statement of income. Interest income continues to be debt investment increased and the increase can be objectively related to a credit event occurring after the impairment loss was
recognized based on the original EIR of the asset. recognized in the statement of income, the credit loss is reversed through the statement of income.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event As discussed in Note 1, as at December 31, 2008, the Parent Bank, as allowed by the BSP, has deferred the recognition of
occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal valuation reserves aggregating to 13.4 billion. As allowed by the BSP, these unbooked valuation reserves were recognized on a
of an impairment loss is credited to “Provision for credit and impairment losses” in the statement of income, to the extent that staggered basis starting January 2009. The Parent Bank recognizes the amortization as a charge to deficit (see Note 15).
the carrying value of the asset does not exceed its amortized cost at the reversal date.
Offsetting Financial Instruments
A write-off is made when all or part of a claim is deemed uncollectible. Write-offs are charged against previously established Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position, if and only
allowance for credit losses. Recoveries in part or in full of amounts previously written off are credited to “Provision for credit if, there is a legally enforceable right to offset the recognized amounts and there is an intention to either settle on a net basis,
and impairment losses” account in the statement of income. or to realize the asset and settle the liability simultaneously. This is not generally the case with master netting agreements,
therefore, the related assets and liabilities are presented gross in the statement of financial position.
If the Group determined that no objective evidence of impairment exists for an individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and that group of Operating Segments
financial assets is collectively assessed for impairment. Those characteristics are relevant to the estimation of future cash flows An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating
the assets being evaluated. Assets that are individually assessed for impairment and for which an impairment loss is or continues segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to
to be recognized are not included in a collective assessment of impairment. be allocated to the segment and assess its performance, and for which discrete financial information is available.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the industry of the Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as
borrower. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of corporate assets (primarily the
the basis of historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss Group’s main office), main office expenses, and income tax assets and liabilities.
experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect
the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that Segment capital expenditure is the total cost incurred during the period to acquire property and equipment, and intangible
do not exist currently. Estimates of changes in future cash flows reflect, and are directionally consistent with changes in related assets other than goodwill.
observable data from period to period (such changes in property prices, payment status, or other factors that are indicative of
incurred losses in the Group and their magnitude). The methodology and assumptions used for estimating future cash flows are Revenue Recognition
reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent.
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Group and the revenue can be
Certain consumer loans are assessed for impairment collectively because these receivables are not individually significant. The reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding taxes. The
allowance for credit losses is determined based on the results of the net flow to write-off methodology. Net flow tables are following specific recognition criteria must also be met before revenue is recognized:
derived from account-level monitoring of monthly peso movements between different age buckets, from 1 day past due to 180
days past due. The net flow to write-off methodology relies on the historical data of net flow tables to establish a percentage Interest Income
(“net flow rate”) of receivables that are current or in any state of delinquency (i.e., 30, 60, 90, 120, 150 and 180 days past For all financial instruments measured at amortized cost and interest-bearing HFT and AFS financial assets, interest income is recorded
due) as at reporting date that will eventually result in write-off. The gross provision is then computed based on the outstanding at the EIR which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the
balances of receivables as at the reporting date and the net flow rates determined for the current and each delinquency bucket. financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability.
The calculation takes into account all contractual terms of the financial instrument (e.g., prepayment options), including any fees or
The carrying amount of the financial asset at amortized cost is reduced by the impairment loss (included under “Provision for credit incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future credit losses.
and impairment losses”) directly for all financial assets at amortized cost with the exception of Loans and receivables, where
the carrying amount is reduced through the use of an allowance account. Loans and receivables, together with the associated Once the recorded value of a financial asset or group of similar financial assets has been reduced due to an impairment loss,
allowance accounts, are written off when there is no realistic prospect of future recovery and all collateral has been realized. The interest income should be recognized using the original EIR applied to the new carrying amount.
amount of impairment loss is recognized as “Provision for credit and impairment losses” in the statement of income.
Service Charges and Penalties
Restructured Loans Service charges and penalties are recognized only upon collection or accrued when there is reasonable degree of certainty as to
Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the its collectibility.
payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, the loan is no longer
considered past due. Management continuously reviews restructured loans to ensure that all criteria are met and that future
payments are likely to occur. The loans continue to be subject to an individual or collective impairment assessment, calculated using
the loan’s original EIR. The difference between the recorded value of the original loan and the present value of the restructured cash
flows, discounted at the original EIR, is recognized in “Provision for credit and impairment losses” in the statement of income.

88 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 89

 Fee and Commission Income Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are
The Group earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be charged against operations in the year the costs are incurred. In situations where it can be clearly demonstrated that the
divided into the following two categories: expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item
of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an
a. Fee Income Earned from Services that are Provided Over a Certain Period of Time additional cost of property and equipment.
Fees earned for the provision of services over a period of time are accrued over that period. These fees include investment
fund fees, custodian fees, fiduciary fees, commission income, credit related fees, asset management fees, portfolio and Depreciation is calculated on the straight-line method over the estimated useful life of the depreciable assets. Leasehold improvements
other management fees, and advisory fees. Loan commitment fees for loans that are likely to be drawn down are deferred are amortized over the shorter of the terms of the covering leases and the estimated useful lives of the improvements.
(together with any incremental costs) and recognized as an adjustment to the EIR on the loan.
The range of estimated useful life of property and equipment follow:
b. Fee Income from Providing Transaction Services
Fees arising from negotiating or participating in the negotiation of a transaction for a third party - such as underwriting Number of Years
fees, corporate finance fees, and brokerage fees for the arrangement of the acquisition of shares or other securities or the Buildings and improvements 10 - 50
purchase or sale of businesses - are recognized on completion of the underlying transaction. Fees or components of fees Furniture, fixtures and equipment 3 - 10
that are linked to a certain performance are recognized after fulfilling the corresponding criteria. Loan syndication fees are Leasehold improvements 5 - 10
recognized in the statement of income when the syndication has been completed and the Group retains no part of the loans
for itself or retains part at the same EIR as for the other participants.
The depreciation and amortization method and useful life are reviewed periodically to ensure that the method and period of
Dividend Income depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment.
Dividend income is recognized when the Group’s right to receive payment is established.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its
Trading and Securities Gains (Losses) use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net disposal
Trading and securities gains (losses) represent results arising from trading activities including all gains and losses from changes in proceeds and the carrying amount of the asset) is included in the statement of income in the year the asset is derecognized.
fair value of financial assets held for trading and derivatives, and gains and losses from disposal of financial assets at FVPL, AFS
financial assets and HTM investments. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable
Rent Income amounts, the assets are written down to their recoverable amounts (see accounting policy on Impairment of Nonfinancial Assets).
Rent income arising on leased properties is accounted for on a straight-line basis over the lease terms on ongoing leases and is
recognized in the statement of income under “Miscellaneous Income”. Investments in Associates and Joint Venture
The Group’s investments in associates and joint venture are accounted for using the equity method of accounting. Associates
Gains (Losses) on Foreclosed Assets pertain to all entities over which the Group has significant influence but not control, generally accompanying a shareholding
Gains or losses on foreclosed assets is recognized upon collection of existing receivable through foreclosure of asset used as collateral of between 20.0% and 50.0% of the voting rights. Joint venture pertains to the Group’s interest in a jointly controlled entity,
as the difference between the fair market value of the foreclosed asset and the net carrying value of the receivable settled. whereby the venturers have contractual arrangement that establishes control over the economic activities of the entity.
Gains (Losses) on Sale of Receivables Under the equity method, investments in associates and joint venture are carried in the statement of financial position at cost
Gains or losses on sale of receivables is recognized upon sale of receivables, without recourse, as the difference between the plus post-acquisition changes in the Group’s share of the net assets of the associate and joint venture. Goodwill relating to an
selling price and the outstanding balance of receivables sold. associate is included in the carrying value of the investment and is not amortized. The Group’s share in an associate’s and joint
venture’s post-acquisition profits or losses is recognized in the statement of income, and its share of post-acquisition movements
Other Income in the associates and joint venture’s equity reserves is recognized in other comprehensive income. When the Group’s share of
Income from sale of services is recognized upon rendition of the service. Income from sale of properties is recognized upon losses in its associates and joint venture equals or exceeds its interest in the associates and joint venture, including any other
completion of the earning process and when the collectibility of the sales price is reasonably assured. unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on
behalf of the associates and joint venture. Profits and losses resulting from transactions between the Group and its associates
Real Estate Revenue and joint venture are eliminated to the extent of the interest in the associates and joint venture.
Real estate sales are generally accounted for under the full accrual method. Under this method, the gain on sale is recognized
when: (a) the collectibility of the sales price is reasonably assured; (b) the earnings process is virtually complete; and (c) the After the application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on
seller does not have a substantial continuing involvement with the subject properties. If any of the criteria under the full accrual the Group’s investments in associates and joint venture. The Group determines at each reporting date whether there is any
is not met, the deposit method applies until all the conditions for recording a sale are met. objective evidence that the investment in associates and joint venture is impaired. If this is the case, the Group calculates
the amount of impairment as the difference between the recoverable amount of the investment and its carrying value and
Pending recognition of sale, cash received from buyers are presented under the reservation deposit account which is shown as recognizes the impairment loss in the statement of income.
“Customers’ deposits” account in the liabilities section of the statement of financial position.
Upon loss of significant influence over the associate, the Group measures and recognizes any remaining investment at its fair
Expense Recognition value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the
Expenses are recognized when decrease in future economic benefits related to a decrease in an asset or increase in liability has remaining investment and proceeds from disposal is recognized in the statement of income.
arisen that can be measured reliably. Expenses are recognized when incurred or when the related revenue is earned.
Upon loss of joint control and provided the former jointly controlled entity does not become a subsidiary or associate, the Group
Operating Expenses measures and recognizes its remaining investment at its fair value. Any difference between the carrying amount of the former
Operating expenses constitute costs which arise in the normal business operation and are recognized when incurred. jointly controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal is
recognized in the statement of income. When the remaining investment constitutes significant influence, it is accounted for as
Taxes and Licenses an investment in an associate.
This includes all other taxes, local, and national and are recognized when incurred.
Upon loss of joint control and provided the former associate or jointly controlled entity becomes a subsidiary, the Group
Interest Expense discontinues the use of the equity method from the date when its investment ceases to be an associate or joint venture and
Interest expense for all interest-bearing financial liabilities is recognized in the statement of income using the EIR of the accounts for its investment in accordance with PFRS 3, Business Combinations. In a business combination achieved in stages, the
financial liabilities to which they relate. acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the
resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate.
Property and Equipment
Land is stated at cost less any impairment in value, and depreciable properties including buildings, leasehold improvements, and In the Parent Bank’s separate financial statements, investments in associates and joint venture are carried at cost, less
furniture, fixtures and equipment are stated at cost less accumulated depreciation and amortization, and any impairment in value. allowance for impairment losses.
The initial cost of the Group’s property and equipment consists of its purchase price, including import duties, taxes and any Jointly Controlled Operations
directly attributable cost to bring the property and equipment to its working condition and location for its intended use. A jointly controlled operation involves the use of assets and other resources of the Group and other venturers rather than the
establishment of a corporation, partnership or other entity. The Group accounts for the assets it controls and the liabilities and
expenses it incurs, and the share of the income that it earns from the sale of goods or services by the joint venture.

90 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 91

 Investment Properties For exchange trading right, impairment is determined by assessing the recoverable amount of the asset at each reporting date. Where
Investment properties are measured initially at cost, including transaction costs. An investment property acquired through an the recoverable amount is less than the carrying amount of the asset, an impairment loss is recognized immediately in the statement of
exchange transaction is initially measured at fair value of the asset acquired unless the fair value of such an asset cannot be income. Impairment losses cannot be reversed for subsequent increases in the recoverable amount in future periods.
measured in which case the investment property acquired is measured at the carrying amount of the asset given up. Foreclosed
properties are classified under “Investment properties” account upon: a) entry of judgment in case of judicial foreclosure; b) Leases
execution of the sheriff’s certificate of sale in case of extra-judicial foreclosure; or c) notarization of the deed of dacion in case The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an
of dation in payment (dacion en pago). assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies:
Subsequent to initial recognition, depreciable investment properties are carried at cost less accumulated depreciation and impairment
in value. However, as discussed in Note 13, the Parent Bank does not recognize depreciation on certain investment properties. (a) there is a change in contractual terms, other than a renewal or extension of the arrangement; or
(b) a renewal option is exercised or extension granted, unless that term of the renewal or extension was initially included in the
Investment properties are derecognized when they have either been disposed of or when the investment property is permanently lease term; or
withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment (c) there is a change in the determination of whether fulfillment is dependent on a specified asset; or
property are recognized in the statement of income under “Gains on sale of nonfinancial assets” in the year of retirement or disposal. (d) there is a substantial change to the asset.

Expenditures incurred after the investment properties have been put into operations, such as repairs and maintenance costs, are Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gives
normally charged to profit or loss in the year in which the costs are incurred. rise to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b).

Depreciation is calculated on a straight-line basis using the remaining useful lives from the time of acquisition of the investment Group as Lessee
properties but not to exceed: Finance leases, which transfer to the Group substantially all the risks and benefits incidental to the ownership of the leased
item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of
Number of Years the minimum lease payments and included in “Property and equipment” account with the corresponding liability to the lessor
Buildings 10 - 50 included in “Other liabilities” account in the statement of financial position. Lease payments are apportioned between the
Condominium units 5 finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recorded under “Interest and finance charges” account in the statement of income.

Transfers are made to investment properties when, and only when, there is a change in use evidenced by ending of owner Capitalized leased assets are depreciated over the shorter of the estimated useful lives of the assets or the respective lease
occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are terms, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
made from investment properties when, and only when, there is a change in use evidenced by commencement of owner
occupation or commencement of development with a view to sale. Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are classified as operating leases.
Operating lease payments are recognized as an expense in the statement of income on a straight-line basis over the lease term.
Real Estate Inventories
Real estate inventories are stated at the lower of cost and net realizable value (NRV). Cost shall comprise all costs of purchase, Group as Lessor
costs of conversion and other costs incurred in bringing the inventories to their present location and condition. NRV is the Finance leases, where the Group transfers substantially all the risks and benefits incidental to the ownership of the leased item
estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs to the lessee, are included under “Loans and receivables” account in the statement of financial position. A lease receivable is
necessary to make the sale. recognized at an amount equivalent to the net investment (asset cost) in the lease. All income resulting from the receivable is
included under “Interest income” account in the statement of income.
Intangible Assets
Intangible assets consist of software costs and exchange trading right. An intangible asset is recognized only when its cost can be Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are classified as operating
measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Group. leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized
over the lease term on the same basis as the rent income. Contingent rent is recognized as revenue in the year in which this is earned.
Software Costs
Software costs (presented under “Intangible and other assets” in the statement of financial position) are capitalized on the basis Residual Value of Leased Assets and Deposits on Finance Leases
of the cost incurred to acquire and bring to use the specific software. These costs are amortized over three to ten years on a The residual value of leased assets, which approximates the amount of guaranty deposit paid by the lessee at the inception of the lease,
straight-line basis. Costs associated with maintaining the computer software programs are recognized as expense when incurred. is the estimated proceeds from the sale of the leased asset at the end of the lease term. At the end of the lease term, the residual
The amortization period and the amortization method for software cost are reviewed periodically to be consistent with the value of the leased asset is generally applied against the guaranty deposit of the lessee when the lessee decides to buy the leased asset.
changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset.
Retirement Cost
Exchange Trading Right The Group has funded noncontributory defined benefit retirement plans. The retirement cost of the Group is calculated annually
The exchange trading right is an intangible asset that is regarded as having an indefinite useful life as there is no foreseeable limit to by an independent actuary using the projected unit credit method. Under this method, the current service cost is the present
the period over which this asset is expected to generate net cash inflow for the Company. Exchange trading right (presented under value of retirement benefits payable in the future with respect to services rendered in the current year.
“Intangible and other assets” in the statement of financial position) is carried at the amount allocated from the original cost of the
exchange membership seat of USI (after a corresponding allocation was made to the value of the Philippine Stock Exchange shares) less The liability or asset recognized in the statement of financial position in respect of defined benefit pension plans is the present
impairment in value. USI does not intend to sell the exchange trading right in the near future. value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for
unrecognized actuarial gains or losses and past service costs. The present value of the defined benefit obligation is determined
Impairment of Nonfinancial Assets by discounting the estimated future cash outflows using interest rate on government bonds that have terms to maturity
The Group assesses at each reporting date whether there is any indication that an asset may be impaired. Nonfinancial assets approximating the terms of the related retirement liability. Actuarial gains and losses arising from experience adjustments and
include property and equipment, investment properties, investment in subsidiaries, associates and joint venture, software costs, changes in actuarial assumptions are credited to or charged against income when the net cumulative unrecognized actuarial
and exchange trading right. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates gains and losses at the end of the previous period exceeded 10.0% of the higher of the defined benefit obligation and the fair
the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the
less cost to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset employees participating in the plan.
is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of Past service costs, if any, are recognized immediately in the statement of income, unless the changes to the pension plan are
money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-
calculations are corroborated by valuation multiples or other available fair value indicators. service costs are amortized on a straight-line basis over the vesting period.

For assets excluding exchange trading right, an assessment is made at each reporting date as to whether there is any indication The defined benefit asset or liability comprises the present value of the defined benefit obligation less past service costs not yet
that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group recognized and less the fair value of plan assets out of which the obligations are to be settled directly. The value of any asset
estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a is restricted to the sum of any cumulative unrecognized net actuarial losses and past service cost and the present value of any
change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.
reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying
amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized for the
asset in prior years. Such reversal is recognized in the statement of income.

92 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 93

 Provisions Dividends on Common Shares
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable Dividends on common shares are recognized as a liability and deducted from equity when approved by the BOD of the Parent
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be Bank and the BSP, in the case of cash dividends; and the BOD, shareholders of the Parent Bank and its subsidiaries and the BSP
made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example, under an in the case of stock dividends. Dividends declared during the year but are approved by the BSP after the reporting date is dealt
insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. with as an event after the reporting period.

The expense relating to any provision is presented in the statement of income, net of any reimbursement. If the effect of the time value Debt Issue Costs
of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current Issuance, underwriting and other related expenses incurred in connection with the issuance of debt instruments are deferred and
market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the amortized over the terms of the instruments using the effective interest method. Unamortized debt issue costs are included in
increase in the provision due to the passage of time is recognized as “Interest and finance charges” in the statement of income. the measurement of the related carrying value of the debt instrument in the statement of financial position.

Contingent Liabilities and Contingent Assets Events After the Reporting Date
Contingent liabilities are not recognized in the financial statements but are disclosed in the notes to the financial statements Any post-year-end event that provides additional information about the Group’s position at the reporting date (adjusting event)
unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized is reflected in the financial statements when material. Post-year-end events that are not adjusting events, if any, are disclosed
but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable. in the notes to the financial statements when material to the financial statements.

Income Taxes Fiduciary Activities

Current Taxes Assets and income arising from fiduciary activities together with related undertakings to return such assets to customers are excluded
Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid from the financial statements where the Parent Bank and a subsidiary act in a fiduciary capacity such as nominee, trustee or agent.
to the taxing authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted at the reporting date. New or Revised Standards, Amendments to Standards and Interpretations Not Yet Adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
Deferred Taxes January 1, 2012, and have not been applied in preparing the financial statements. However, none of these is expected to have a
Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax significant effect on the financial statements of the Group and the Parent Bank, except for PFRS 9, Financial Instruments, which
bases of assets and liabilities and their carrying amounts for financial reporting purposes. becomes mandatory for the Group’s and the Parent Bank’s 2015 financial statements and could change the classification and
measurement of financial assets, and PAS 19, Employee Benefits (amended 2011). The Group and the Parent Bank are currently
Deferred tax liabilities are recognized for all taxable temporary differences, except: assessing the impact of these standards on the financial statements.

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not The Group and the Parent Bank will adopt the new or revised standards, amendments to standards and interpretations on the
a business combination and, at the time of the transaction, affects neither the accounting income nor taxable income; and respective effective dates as discussed below:
• In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of
the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse To be Adopted on January 1, 2013
in the foreseeable future.
• Presentation of Items of Other Comprehensive Income (Amendments to PAS 1). The amendments:
Deferred tax assets are recognized for all deductible temporary differences, carryforward benefit of unused tax credits from the • require that an entity present separately the items of other comprehensive income that would be reclassified to profit or
excess of minimum corporate income tax (MCIT) over the regular corporate income tax (RCIT), and unused net operating loss loss in the future if certain conditions are met from those that would never be reclassified to profit or loss;
carryover (NOLCO), to the extent that it is probable that sufficient taxable profit will be available against which the deductible • do not change the existing option to present profit or loss and other comprehensive income in two statements; and
temporary differences and carryforward benefit of unused tax credits from MCIT and unused NOLCO can be utilized except: • change the title of the statement of comprehensive income to the statement of profit or loss and other comprehensive
income. However, an entity is still allowed to use other titles.
• Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting The amendments do not address which items are presented in other comprehensive income or which items need to be
income nor taxable income; and reclassified. The requirements of other PFRS continue to apply in this regard.
• In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets
are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and • Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to PFRS 7). These amendments include
taxable income will be available against which the temporary differences can be utilized. minimum disclosure requirements related to financial assets and financial liabilities that are:

The carrying amount of deferred tax assets is reviewed at reporting date and reduced to the extent that it is no longer probable • offset in the statement of financial position; or
that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized • subject to enforceable master netting arrangements or similar agreements.
deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that
future taxable income will allow the deferred tax asset to be recovered. They include a tabular reconciliation of gross and net amounts of financial assets and financial liabilities, separately showing
amounts offset and not offset in the statement of financial position.
Deferred tax assets and liabilities are measured at the tax rates that are applicable to the period when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. • PFRS 10, Consolidated Financial Statements
PFRS 10 introduces a new approach to determining which investees should be consolidated and provides a single model to be
Current tax and deferred tax relating to items recognized in other comprehensive income are also recognized in other applied in the control analysis for all investees.
comprehensive income and not in the statement of income.
An investor controls an investee when:
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against • it is exposed or has rights to variable returns from its involvement with that investee;
current tax liabilities and deferred taxes related to the same taxable entity and the same taxation authority. • it has the ability to affect those returns through its power over that investee; and
• there is a link between power and returns.
Equity
Common stock is measured at par value for all shares issued and outstanding. When the shares are sold at a premium, the Control is re-assessed as facts and circumstances change.
difference between the proceeds and the par value is credited to “Additional paid-in capital” account. Direct costs incurred
related to equity issuance, such as underwriting, accounting and legal fees, printing costs and taxes are chargeable to PFRS 10 supersedes PAS 27 (2008) Consolidated and Separate Financial Statements and Philippine Interpretation SIC-12,
“Additional paid-in capital” account. If the additional paid-in capital is not sufficient, the excess is charged to deficit. Consolidation - Special Purpose Entities.

When the Parent Bank issues more than one class of stock, a separate account is maintained for each class of stock and the
number of shares issued.

Deficit represents accumulated losses (net of earnings) of the Parent Bank and amortization of unbooked valuation reserves and
deferred losses, as discussed in Note 1 to the financial statements.

94 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 95

 • PFRS 11, Joint Arrangements • Investment Entities [Amendments to PFRS 10, PFRS 12, and PAS 27 (2011)]. These amendments provide consolidation
PFRS 11 focuses on the rights and obligations of joint arrangements, rather than the legal form (as is currently the case). It: exception for investment funds and require qualifying investment entities to recognize their investments in controlled
• distinguishes joint arrangements between joint operations and joint ventures; and entities, as well as investments in associates and joint ventures, in a single line item in the statement of financial position,
• always requires the equity method for jointly controlled entities that are now called joint ventures; they are stripped of the measured at fair value through profit or loss; the only exception would be subsidiaries that are considered an extension of the
free choice of using the equity method or proportionate consolidation. investment entity’s investing activities. However, the parent of an investment entity (that is not itself an investment entity) is
still required to consolidate all subsidiaries. This consolidation exception is mandatory.
PFRS 11 supersedes PAS 31, Interests in Joint Ventures and Philippine Interpretation SIC-13, Jointly Controlled Entities - Non-
Monetary Contributions by Venturers. To be Adopted on January 1, 2015

• PFRS 12, Disclosure of Interests in Other Entities • PFRS 9, Financial Instruments (2010), PFRS 9, Financial Instruments (2009)
PFRS 12 contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements (i.e. joint PFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under PFRS 9 (2009),
operations or joint ventures), associates and/or unconsolidated structured entities, aiming to provide information to enable financial assets are classified and measured based on the business model in which they are held and the characteristics of
users to evaluate: their contractual cash flows. PFRS 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an
• the nature of, and risks associated with, an entity’s interests in other entities; and active project to make limited amendments to the classification and measurement requirements of PFRS 9 and add new
• the effects of those interests on the entity’s financial position, financial performance and cash flows. requirements to address the impairment of financial assets and hedge accounting.

• Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
(Amendments to PFRS 10, PFRS 11, and PFRS 12)
4. Significant Accounting Judgments and Estimates
The amendments simplify the process of adopting PFRS 10 and 11, and provide relief from the disclosures in respect of
unconsolidated structured entities. Depending on the extent of comparative information provided in the financial statements, The preparation of the consolidated financial statements and the financial statements of the Parent Bank in compliance with
the amendments simplify the transition and provide additional relief from the disclosures that could have been onerous. The PFRS requires the Group to make judgments and estimates that affect the reported amounts of assets, liabilities, income and
amendments limit the restatement of comparatives to the immediately preceding period; this applies to the full suite of standards. expenses and the disclosures of contingent assets and contingent liabilities. Future events may occur which can cause the
Entities that provide comparatives for more than one period have the option of leaving additional comparative periods unchanged. judgments and assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in
In addition, the date of initial application is now defined in PFRS 10 as the beginning of the annual reporting period in which the the financial statements as they become reasonably determinable.
standard is applied for the first time. At this date, an entity tests whether there is a change in the consolidation conclusion for its
investees. Judgments and estimates are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
• PFRS 13, Fair Value Measurement
PFRS 13 replaces the fair value measurement guidance contained in individual PFRS with a single source of fair value The following are the critical judgments and key assumptions that have a significant risk of material adjustment to the carrying
measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure amounts of assets and liabilities within the next financial year:
requirements for fair value measurements. It explains how to measure fair value when it is required or permitted by
other PFRS. It does not introduce new requirements to measure assets or liabilities at fair value, nor does it eliminate the Judgments
practicability exceptions to fair value measurements that currently exist in certain standards.
a) Going Concern
• PAS 19, Employee Benefits (Amended 2011) The Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the
The amended PAS 19 includes the following requirements: Group has the resources to continue in business for the foreseeable future. Though the Parent Bank’s losses prior to 2005, including
• actuarial gains and losses are recognized immediately in other comprehensive income; this change will remove the corridor the losses not recognized as discussed in Notes 14 and 15, brought its capital below the required minimum capital requirements
method and eliminate the ability for entities to recognize all changes in the defined benefit obligation and in plan assets in for a universal bank, the Parent Bank’s management has taken active steps in ensuring its continued liquidity and implemented its
profit or loss, which is currently allowed under PAS 19; and capital build-up plan pursuant to the FAA with PDIC and the MOA that was signed with the ROP, PDIC and PCGG (see Notes 1 and
• expected return on plan assets recognized in profit or loss is calculated based on the rate used to discount the defined 25). As at December 31, 2012 and 2011, considering the regulatory relief mentioned in Note 1, the Bank has already complied with
benefit obligation. the risk-based capital ratio of 10%. Thus, the financial statements continue to be prepared on a going concern basis.

• PAS 27, Separate Financial Statements (2011) b) Operating Leases

PAS 27 (2011) supersedes PAS 27 (2008). PAS 27 (2011) carries forward the existing accounting and disclosure requirements for
separate financial statements, with some minor clarifications. This standard is effective for annual periods beginning on or Group as Lessor
after January 1, 2013 with early adoption permitted. The Group has entered into commercial property leases for its investment property portfolio. Based on factors such as
retention of ownership title to the leased property, period of lease contract relative to the estimated useful economic life
• PAS 28, Investments in Associates and Joint Ventures (2011) of the leased property and bearer of executory costs, the Group has determined that it retains all the significant risks and
PAS 28 (2011) supersedes PAS 28 (2008) Investments in Associates. PAS 28 (2011) makes the following amendments: rewards of ownership of these properties, and so accounts for these as operating leases.
• On cessation of significant influence or joint control, even if an investment in an associate becomes an investment in a joint
venture or vice versa, the entity does not remeasure the retained interest. Group as Lessee
The Group has entered into leases for premises it uses for its operations. The Group has determined, based on the evaluation
• Annual Improvements to PFRS 2009 - 2011 Cycle - various standards contain amendments to five standards with consequential of the lease agreement that all significant risks and rewards of ownership of the properties remain with the lessors and so
amendments to other standards and interpretations. The amendments are effective for annual periods beginning on or after January accounts for these as operating leases.
1, 2013. None of the said improvements or amendments to PFRS have a significant effect on the financial statements of the Group.
c) Finance Leases
To be Adopted on January 1, 2014 ULFC has entered into finance leases in which it has determined, based on the evaluation of the lease agreement, that it
transfers all the significant risks and rewards of ownership of the properties it leases out. The lessees have the option to
• Offsetting Financial Assets and Financial Liabilities (Amendments to PAS 32). These amendments clarify that: purchase the leased assets at a price that is expected to be sufficiently lower than the fair value at the date the option becomes
• An entity currently has a legally enforceable right to set-off if that right is: exercisable and the lease term is for the major part of the economic life of the asset and at the inception of the lease, the
- not contingent on a future event; and present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset.
- enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and
all counterparties. d) Fair Value of Financial Instruments
Where the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be
• Gross settlement is equivalent to net settlement if and only if the gross settlement mechanism has features that: derived from active markets, these are determined using internal valuation techniques using generally accepted market
- eliminate or result in insignificant credit and liquidity risk; and valuation models. The inputs to these models are taken from observable markets where possible, but where this is not
- process receivables and payables in a single settlement process or cycle. feasible, a degree of judgment is required in establishing fair values. These judgments may include considerations of liquidity
and model inputs such as correlation and volatility for longer-dated derivatives. Refer to Note 6 to the financial statements
for the fair values and the measurement bases of the financial instruments.

96 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 97

 e) HTM Investments c) Valuation of Unquoted Equity Securities
The classification under HTM investments requires significant judgment. In making this judgment, the Group evaluates its The Group’s investments in equity securities that do not have a quoted market price in an active market and whose fair value
intention and ability to hold such investments to maturity. If the Group fails to keep these investments to maturity other than in cannot be reliably measured are carried at cost, less allowance for impairment losses.
certain specific circumstances - for example, selling an insignificant amount close to maturity - it will be required to reclassify
the entire portfolio as AFS financial assets. The investments would therefore be measured at fair value and not at amortized As at December 31, 2012 and 2011, the carrying value of unquoted AFS equity securities (included under AFS financial
cost. Refer to Note 9 to the financial statements for discussion on the Parent Bank’s breach of the tainting rule in 2011. assets) amounted to 293.2 million and 149.6 million, respectively, for the Group and 292.6 million and 148.6 million,
respectively, for the Parent Bank (see Notes 9 and 15).
f) Financial Assets not Quoted in an Active Market
The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. d) Impairment of AFS Equity Securities
Included in the evaluation on whether a financial asset is quoted in an active market is the determination on whether The Group determines that AFS equity securities are impaired when there has been a significant or prolonged decline in
quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring market the fair value below its cost. This determination of what is significant or prolonged requires judgment. The Group treats
transactions on an arm’s length basis. ‘significant’ generally as 20.0% or more of the original cost of investment, and ‘prolonged’ as greater than 12 months. In
making this judgment, the Group evaluates among other factors, the normal volatility in share price for quoted equity
g) Embedded Derivatives securities and the future cash flows and the discount factors for unquoted equity securities.
Where a hybrid instrument is not classified as financial assets at FVPL, the Group evaluates whether the embedded derivative
should be bifurcated and accounted for separately. This includes assessing whether the embedded derivative has a close In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee,
economic relationship to the host contract. industry and sector performance, changes in technology, and operational and financing cash flows.

h) Contingencies As at December 31, 2012 and 2011, allowance for impairment losses on certain AFS equity securities amounted to 337.4
The Group is currently involved in legal proceedings. The estimate of the probable cost for the resolution of claims has been million and 508.3 million, respectively, for the Group and 337.3 million and 508.2 million, respectively, for the Parent
developed in consultation and with the aid of the legal counsel handling the Group’s defense in this matter and is based Bank (see Note 15). As at December 31, 2012 and 2011, the carrying value of AFS equity securities (included under AFS
upon an analysis of potential results. Management does not believe that the outcome of this matter will affect the results of financial assets) amounted to 779.1 million and 626.3 million, respectively, for the Group and 689.1 million and P576.1
operations. It is probable, however, that future results of operations could be materially affected by changes in the estimates million, respectively, for the Parent Bank (see Notes 9 and 15).
or in the effectiveness of the strategies relating to these proceedings (see Note 30).
As at December 31, 2012 and 2011, however, the Parent Bank has deferred the booking of impairment losses on certain AFS
i) Functional Currency equity securities amounting to 516.5 million and 384.3 million, respectively (see Note 15). This forms part of the unbooked
PAS 21 requires management to use its judgment to determine the entity’s functional currency such that it most faithfully valuation reserves allowed by the BSP as discussed in Note 1.
represents the economic effects of the underlying transactions, events and conditions that are relevant to the entity. In
making this judgment, the Group considers the following: e) Impairment of AFS Debt Investments
The Group determines that AFS debt investments are impaired based on the same criteria used for financial assets carried at
a) the currency that mainly influences sales prices for financial instruments and services; amortized cost.
b) the currency in which funds from financing activities are generated; and
c) the currency in which receipts from operating activities are usually retained. The Group and the Parent Bank determined that there is no evidence of impairment on its AFS debt investments. As at
December 31, 2012 and 2011, the carrying value of AFS debt investments (included under AFS financial assets) amounted to
j) Sequestration of Shares of the Bank and the Coconut Industry Investment Fund (CIIF) Oil Mills by the Republic of the Philippines 22.5 billion and 19.1 billion, respectively, for the Group and 22.3 billion and 19.0 billion, respectively, for the Parent
As discussed in Note 25 to the financial statements, the Group is involved in legal proceedings on the ownership shares of the Bank (see Notes 9 and 15).
Bank and CIIF Oils Mills, which were subject of the January 2012 Decision issued by the Supreme Court in the Philippine Coconut
Producers Federation, Inc. (COCOFED), et al. case. The motion for the reconsideration of the January 2012 Decision has been f) Impairment of Nonfinancial Assets
denied with finality on September 4, 2012. An entry of judgment has yet to be issued by the Supreme Court in said case. Property and Equipment, Investment Properties, Land Held-for-Sale, Software Cost and

On December 28, 2012, the Bank filed a Special Civil Action for Declaratory Relief seeking clarification on the Bank’s Exchange Trading Right
proportionate right, title and interest in the CIIF Companies, as well as the Bank’s indirect equity in the 14 Holding The Group assesses impairment on assets whenever events or changes in circumstances indicate that the carrying amount of
Companies and the CIIF block of SMC shares. The case, docketed as Civil Case No. 12-1251 before the Regional Trial Court of an asset may not be recoverable.
Makati Branch 59, has not reached the pre-trial stage.
The factors that the Group considers important which could trigger an impairment review include the following:
Estimates
• significant underperformance relative to expected historical or projected future operating results;
a) Impairment of Loans and Receivables • significant changes in the manner of use of the acquired assets or the strategy for overall business; and
The Group reviews its individually significant loans and receivables at each reporting date to assess whether an impairment • significant negative industry or economic trends.
loss should be recorded in the statement of income. In particular, judgment by management is required in the estimation
of the amount and timing of future cash flows when determining the impairment loss. In estimating these cash flows, the An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
Group makes judgments about the borrower’s financial situation and the NRV of collateral. These estimates are based on
assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. In 2012 and 2011, there were no indicators of impairment on the Group’s and the Parent Bank’s property and equipment,
software costs and exchange trading right that could trigger an impairment review.
Loans and receivables that have been assessed individually and found not to be impaired and all individually insignificant
loans and advances are then assessed collectively, in groups of assets with similar characteristics, to determine whether As at December 31, 2012 and 2011, the carrying value of property and equipment for the Group amounted to 2.3 billion for
provision should be made due to incurred loss events for which there is objective evidence but whose effects are not yet both years and 2.1 billion and 2.2 billion, respectively, for the Parent Bank (see Note 11).
evident. The collective assessment takes account of data from the loan portfolio, concentrations of risks and economic data.
As at December 31, 2012 and 2011, the carrying value of land held-for-sale of the Group and of the Parent bank amounted to
The carrying values of loans and receivables and the related allowance for credit losses of the Group and the Parent Bank are 2.0 billion for both years (see Note 14).
disclosed in Notes 10 and 15 to the financial statements.
As at December 31, 2012 and 2011, the carrying value of software costs amounted to 364.1 million and 411.9 million,
As at December 31, 2012 and 2011, however, the Parent Bank has not booked the reversal and deferred the booking of credit respectively, for the Group and 359.7 million and 408.3 million, respectively, for the Parent Bank (see Note 14).
and impairment losses on certain loans and receivables amounting to 103.0 million and 602.4 million, respectively (see Note
15), which form part of the unbooked valuation reserves allowed by the BSP as discussed in Note 1 to the financial statements. As at December 31, 2012 and 2011, the carrying value of the Group’s exchange trading right amounted to 1.5 million (see Note 14).

b) Fair Values of Structured Debt Instruments and Derivatives The recoverable amount of investment properties is determined based on fair value less cost to sell. As at December 31, 2012
The fair values of structured debt instruments and derivatives that are not quoted in active markets are determined using and 2011, the carrying value of investment properties amounted to 6.0 billion and 6.8 billion, respectively, for the Group
valuation techniques such as discounted cash flow analysis and standard option pricing models. Where valuation techniques and 5.7 billion and 6.5 billion, respectively, for the Parent Bank (see Note 13).
are used to determine fair values, they are reviewed by qualified personnel independent of the area that created them.
All models are reviewed before they are used and to the extent practicable, models use only observable data. Changes in As at December 31, 2012 and 2011, the Parent Bank, however, has deferred the booking of impairment losses on investment
assumptions about these factors could affect the reported fair value of the financial instruments. Refer to Notes 6 and 9 to properties amounting to 586.5 million and 2.5 billion (see Note 15). This forms part of the unbooked valuation reserves
the financial statements for information on the fair values of these instruments. allowed by the BSP as discussed in Note 1 to the financial statements.

98 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 99

 Investments in Subsidiaries, Associates, and Joint Venture
The Group and the Parent Bank assess impairment on its investments in subsidiaries, associates and joint venture whenever 5. Financial Risk Management
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Among others, the
factors that the Group and the Parent Bank consider important which could trigger an impairment review on its investments
in subsidiaries, associates and joint venture include the following: a. Introduction
The Group manages their respective financial risks separately. The financial subsidiaries have their own risk management
• deteriorating or poor financial condition; procedures but are structured similar to that of the Parent Bank. To a certain extent, the respective risk management
• recurring net losses; and programs and objectives are the same across the Group.
• significant changes (i.e. technological, market, economic, or legal environment in which the subsidiary, associate and
jointly controlled entity operates) with an adverse effect on the subsidiary, associate or jointly controlled entity have The Parent Bank’s activities are principally related to the use of financial instruments. The Parent Bank accepts deposits from
taken place during the period, or will take place in the near future. customers at rates set by the Treasury Group depending on the volume of placements, and for various periods, and seeks to earn
above-average interest margins by investing these funds. The Parent Bank seeks to increase these margins by consolidating short-term
An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.
amount is determined based on the asset’s fair value less cost to sell, which considers the estimated realizable and
settlement amounts of the assets and liabilities of the subsidiary, associate or joint venture. The Parent Bank also trades in financial instruments where it takes positions to take advantage of short-term market
movements in bonds and shares of stocks.
As at December 31, 2012 and 2011, the carrying values of the Group’s investment in associates and joint venture amounted
to 8.5 billion and 7.5 billion, respectively. As at December 31, 2012 and 2011, the carrying values of the Parent Bank’s The Parent Bank has exposure to the following risks from its use of financial instruments:
investments in subsidiaries, associates and joint venture amounted to 4.1 billion and 3.9 billion respectively, net of
allowance for impairment losses amounting to 201.5 million and 370.3 million, respectively (see Notes 12 and 15). • Credit Risk
• Liquidity Risk
g) Estimated Useful Lives of Property and Equipment, Investment Properties and Software Costs • Market Risk
The Group reviews on an annual basis the estimated useful lives of property and equipment, depreciable investment
properties and software costs based on expected asset utilization as anchored on business plans and strategies that also Risk Management Framework
consider expected future technological developments and market behavior. It is possible that future results of operations To manage the financial risk for holding financial assets and liabilities, the Parent Bank operates an integrated risk
could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in management system to address the risks it faces in its banking activities, including credit, liquidity and market risks. The
the estimated useful lives of property and equipment, depreciable investment properties and software costs would decrease Parent Bank’s risk management objective is to adequately and consistently identify, measure, control and monitor the
their respective balances and increase the recorded depreciation and amortization expense. risk profile inherent in the Parent Bank’s activities. The Parent Bank’s Risk Management Committee (RMC) has overall
responsibility for the creation and oversight of the Parent Bank’s corporate risk policy and is actively involved in the
As at December 31, 2012 and 2011, the carrying value of depreciable property and equipment for the Group amounted to
assessment, planning, review and approval of all the risks in the Parent Bank’s organization. The Parent Bank also has in place
2.2 billion for both years and 2.0 billion and 2.1 billion, respectively, for the Parent Bank (see Note 11).
an authorization structure that defines and sets limits on the type and value of transactions that each position can approve.
As at December 31, 2012 and 2011, the carrying value of depreciable investment properties amounted to 2.9 billion and
Within the Parent Bank’s overall risk management system, the Risk Management Division (RMD) is responsible for managing
3.1 billion, respectively, for the Group and 2.8 billion and 3.0 billion, respectively, for the Parent Bank. In 2012 and
these risks in a more detailed and proactive fashion on a continuing basis through performance of risk and return analysis.
in prior years, the Parent Bank did not recognize depreciation on its investment properties from the “bad bank” assets as
required under PAS 40, Investment Property. As at December 31, 2012 and 2011, the unbooked accumulated depreciation
amounted to 1.4 billion and 2.9 billion, respectively (see Note 13). Credit Risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual
h) Recognition of Deferred Tax Assets obligations. The Group manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual
Deferred tax assets are recognized for all unused tax losses and credits to the extent that it is probable that taxable income counterparties and for geographical and industry concentrations, and by monitoring exposures in relation to such limits.
will be available against which the losses can be utilized. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable income Management of Credit Risk
together with future tax planning strategies. The Parent Bank manages its credit risk and loan portfolio through a stringent process of loan approval. The screening process
is directed by the senior officers of the Bank’s Corporate and Consumer Banking Group (CCBG). The process establishes the
The Group reviews its deferred tax assets at each reporting date and reduces the carrying amount to the extent that it is no creditworthiness of the individual loan applicant based on best credit practices, and takes into consideration the current
longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be utilized. The business condition and medium-term potential of the industry in which the loan applicant operates in.
estimates of future taxable net income indicate that certain temporary differences will be realized in the future. The recognized
net deferred tax assets and unrecognized deferred tax assets for the Group and the Parent Bank are disclosed in Note 24. In compliance with BSP requirements, the Parent Bank established in December 2004 an Internal Credit Risk Rating (ICRR) system
for the purpose of measuring credit risk for corporate borrowers in a consistent manner, as accurately as possible, and thereafter
i) Retirement Benefits uses the risk information for business and financial decision making. The ICRR system covers corporate borrowers with asset size
The cost of defined retirement pension plan and other post employment benefits is determined using actuarial valuations. of above 15.0 million, requiring financial statements from 2005 onwards to be audited by SEC-accredited auditing firms.
The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary
increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject On a continuing basis, the Parent Bank generates credit risk ratings for existing loan accounts to assess their performance and
to significant uncertainty. to determine which account will be retained, expanded, or phased out. A separate review of the loan portfolio is conducted
by the RMD to assess the quality of individual accounts and the concentration of the Parent Bank’s credit exposures.
The assumed discount rates were determined using the market yields on Philippine government bonds with terms consistent with the
expected employee benefit payout as at the reporting date. Refer to Note 27 to the financial statements for the details of assumptions Maximum Exposure to Credit Risk after Collateral Held or Other Credit Enhancements
used in the calculation. While the Group believes that the assumptions are reasonable and appropriate, significant differences The Bank’s maximum exposure to credit risk is equal to the carrying value of its financial assets except for certain secured
between actual experiences and assumptions may materially affect the cost of employee benefits and related obligations. loans and receivables shown below:

As at December 31, 2012 and 2011, the Group’s net retirement asset (included under “Other assets” in the statement of financial Consolidated
position) amounted to 4.2 million and P10.6 million (see Note 14), respectively, while its net retirement liability (included under
2012 2011
“Other liabilities” in the statement of financial position) amounted to 6.4 million and 6.6 million, respectively (see Note 19).
Gross Fair Financial Gross Fair Financial
Maximum Value of Net Effect of Maximum Value of Net Effect of
As at December 31, 2012 and 2011, the Parent Bank’s net retirement asset is nil and 6.3 million, respectively (see Note 14).
Exposure Collaterals Exposure Collaterals Exposure Collaterals Exposure Collaterals
j) NRV of Real Estate Inventories Loans and receivables:
The Group determines the net realizable value of its real estate inventories based on its estimated selling price in the ordinary Receivables from
course of business less the estimated costs of completion and the estimated costs necessary to make the sale. In determining the customers
net realizable value of the real estate inventories, management considers whether those real estate inventories are damaged Corporate loans 55,626,261 50,663,577 39,600,416 16,025,845 41,097,910 38,870,692 25,006,407 16,091,503
or if their selling prices have declined. Likewise, management also considers whether the estimated costs of completion or the Consumer loans 24,199,820 29,047,220 4,561,788 19,638,032 17,876,504 19,279,196 3,842,238 14,034,266
estimated costs to be incurred to make the sale have increased. The amount and timing of recorded expenses for any period would Sales contracts receivable 630,999 1,376,565 275,509 355,490 1,063,640 895,932 409,390 654,250
differ if different estimates were utilized. As at December 31, 2012 and 2011, real estate inventories of the Group amounted to 80,457,080 81,087,362 44,437,713 36,019,367 60,038,054 59,045,820 29,258,035 30,780,019
3.1 billion (net of impairment losses amounting to 114.5 million) for both years (see Notes 14 and 15).

100 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 101
 Parent Consolidated
2012 2011 2011
Gross Fair Financial Gross Fair Financial Loans and
Maximum Value of Net Effect of Maximum Value of Net Effect of Loans and Investment Advances
Exposure Collaterals Exposure Collaterals Exposure Collaterals Exposure Collaterals Receivables Securities (a) to Banks (b) Others (c) Total
Loans and receivables: Wholesale and retail trade, repair of motor
Receivables from vehicles, motorcycles, personal
customers and household goods 14,946,686 — — — 14,946,686
Corporate loans 51,191,693 46,223,984 37,173,658 14,018,035 38,299,781 36,795,618 24,074,304 14,225,477 Manufacturing 10,928,894 516,093 — — 11,444,987
Consumer loans 20,303,829 27,448,820 1,265,168 19,038,661 14,555,310 17,630,210 788,128 13,767,182 Agriculture, hunting and forestry and fishing 6,545,291 733 — — 6,546,024
Sales contracts receivable 561,720 1,289,346 275,509 286,211 994,502 826,794 340,252 654,250 Construction 44,628 1,280,989 — — 1,325,617
72,057,242 74,962,150 38,714,335 33,342,907 53,849,593 55,252,622 25,202,684 28,646,909 Transport, storage and communication 634,816 2,159 — — 636,975
Other community, social and personal
services activities 16,039,188 181,462 — 3,405,541 19,626,191
The Group holds collateral against loans and receivables to customers in the form of hold-out on deposits, real estate mortgage, 76,310,855 50,390,624 35,703,598 3,408,041 165,813,118
chattel mortgage, mortgage trust indenture, standby letters of credit or bank guaranty, government guaranty, assignment of Less: Unearned interest discount 337,212 — — — 337,212
receivables, pledge of shares, personal and corporate guaranty and other forms of security. Fair market value is based on the value Allowance for credit and impairment losses 5,010,226 508,283 — — 5,518,509
of the collateral assessed at the time of borrowing and are updated upon renewal of the loan. Collateral is generally not held over 70,963,417 49,882,341 35,703,598 3,408,041 159,957,397
loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity.
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
It is the Group’s policy to dispose of foreclosed assets in an orderly fashion. Sale is facilitated by offering incentives to b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
the Bank’s accredited brokers and through formulating programs to attract buyers like offering fixed interest rates for an c. Comprised of letters of credit.
extended period of time and reduced rates for down payment as compared to prevailing market rates as examples.
Parent Bank
Excessive Risk Concentration 2012
Credit risk concentrations can arise whenever a significant number of borrowers have similar characteristics and are affected Loans and
similarly by changes in economic or other conditions. The Parent Bank analyzes the credit risk concentration to an individual Loans and Investment Advances
Receivables Securities (a) to Banks (b) Others (c) Total
borrower, related group of accounts, industry, geographic, internal rating buckets, currency, term and security.
Financial intermediaries 6,524,208 4,477,561 29,989,347 — 40,991,116
For risk concentration monitoring purposes, the financial assets are broadly categorized into: (1) loans and receivables, (2) Government 1,311,487 43,003,422 — — 44,314,909
trading and financial investment securities, (3) loans and advances to banks, and (4) others. To mitigate risk concentration, Real estate, renting and business activities 23,169,179 1,354,709 — — 24,523,888
the Group has established a regular monitoring system to spot breaches in regulatory and internal limits. Wholesale and retail trade, repair of motor
vehicles, motorcycles, personal
and household goods 12,078,135 — — — 12,078,135
An analysis of concentrations of credit risk at the reporting date is shown below:
Manufacturing 12,159,867 327,427 — — 12,487,294
Agriculture, hunting and forestry and fishing 8,144,857 — — — 8,144,857
Construction 1,807,647 — — — 1,807,647
Consolidated Transport, storage and communication 10,060,459 893,038 — — 10,953,497
2012 Other community, social and personal
Loans and services activities 10,901,260 2,117,331 — 2,765,888 15,784,479
Loans and Investment Advances 86,157,099 52,173,488 29,989,347 2,765,888 171,085,822
Receivables Securities (a) to Banks (b) Others (c) Total Less: Unearned interest discount 51,724 — — — 51,724
Financial intermediaries 8,018,442 4,562,765 30,689,641 — 43,270,848 Allowance for credit and impairment losses 5,339,184 337,324 — — 5,676,508
Government 1,695,520 43,314,484 — — 45,010,004 80,766,191 51,836,164 29,989,347 2,765,888 165,357,590
Real estate, renting and business activities 23,272,118 1,355,429 — 2,500 24,630,047
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
Wholesale and retail trade, repair of motor
b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
vehicles ,motorcycles, personal
c. Comprised of letters of credit.
and household goods 12,798,421 4,412 — — 12,802,833
Manufacturing 13,116,691 327,427 — — 13,444,118
Agriculture, hunting and forestry and fishing 8,295,091 1,969 — — 8,297,060 Parent Bank
Construction 1,807,647 — — — 1,807,647 2011
Transport, storage and communication 10,060,459 893,343 — — 10,953,802 Loans and
Other community, social and personal Loans and Investment Advances
services activities 16,408,056 2,119,775 — 2,765,888 21,293,719 Receivables Securities (a) to Banks (b) Others (c) Total
95,472,445 52,579,604 30,689,641 2,768,388 181,510,078 Financial intermediaries 5,480,705 3,407,103 35,255,789 — 44,143,597
Less: Unearned interest discount 293,861 — — 293,861 Government 1,743,675 42,739,262 — — 44,482,937
Allowance for credit and impairment losses 5,637,371 337,400 — — 5,974,771 Real estate, renting and business activities 18,674,750 1,901,534 — — 20,576,284
89,541,213 52,242,204 30,689,641 2,768,388 175,241,446 Wholesale and retail trade, repair of motor
vehicles, motorcycles, personal
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments. and household goods 14,729,308 — — — 14,729,308
b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA. Manufacturing 9,930,793 515,806 — — 10,446,599
c. Comprised of letters of credit. Agriculture, hunting and forestry and fishing 6,413,404 — — — 6,413,404
Construction 44,628 1,280,988 — — 1,325,616
Consolidated Transport, storage and communication 634,816 — — — 634,816
2011 Other community, social and personal
Loans and services activities 11,174,536 179,322 — 3,405,541 14,759,399
Loans and Investment Advances 68,826,615 50,024,015 35,255,789 3,405,541 157,511,960
Receivables Securities (a) to Banks (b) Others (c) Total Less: Unearned interest discount 137,013 — — — 137,013
Financial intermediaries 6,615,315 3,453,759 35,703,598 2,500 45,775,172 Allowance for credit and impairment losses 4,799,540 508,208 — — 5,307,748
Government 1,743,675 43,053,269 — — 44,796,944 63,890,062 49,515,807 35,255,789 3,405,541 152,067,199
Real estate, renting and business activities 18,812,362 1,902,160 — — 20,714,522
a. Comprised of financial assets at FVPL, AFS financial assets and HTM investments.
(Forward) b. Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
c. Comprised of letters of credit.

102 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 103
 Credit Quality per Class of Financial Assets 10 - Loss
The credit quality of financial assets is assessed and managed using external and internal ratings. This rating is given to a borrower whose loans or portions thereof are considered uncollectible. The collectible amount,
with no collateral or which collateral is of little value, is difficult to measure and more practical to write-off than to defer
Loans and Receivables even though partial recovery may be obtained in the future.
The credit quality is generally monitored using the 10-grade ICRR system which is integrated in the credit process particularly in
loan pricing and provision for credit losses. The model on risk ratings is assessed and updated regularly. Validation of the risk rating The Parent Bank only subjects commercial loans with ICRR of 8 to 10 to specific impairment test.
is performed by the Risk Management Division RMD to maintain accurate and consistent risk ratings across the credit portfolio.
Due from BSP, due from other banks and interbank loans receivable are classified as high grade since these are deposited in/
The following table shows the description of credit quality of commercial loans: or transacted with reputable banks which have low probability of insolvency. Unquoted debt securities classified as loans are
classified as high grade based on the reputation of the counterparties.
Credit Quality ICRR System Grade Description
High grade 1 Excellent The table below shows credit quality per class of financial assets, based on the Parent Bank’s rating system (gross of
2 Strong allowance for credit losses and unearned discount):
3 Good
4 Satisfactory Consolidated
Standard grade 5 Acceptable 2012
6 Watchlist Neither Past Due nor Impaired Past Due
7 Especially mentioned Standard Sub-standard but not
Substandard grade 8 Substandard High Grade (a) Grade (b) Grade (c) Unrated Impaired Impaired Total
9 Doubtful
Impaired 10 Loss Due from BSP 28,254,415 — — — — — 28,254,415
Due from other banks 2,208,451 — — — — — 2,208,451
Interbank loans receivable and SPURA 226,775 — — — — — 226,775
1 - Excellent
The rating is given to a borrower with a very low probability of going into default in the coming year. The borrower has a 30,689,641 — — — — — 30,689,641
high degree of stability, substance and diversity and has access to public markets to raise substantial amounts of funds at Loans and receivables
any time; has a very strong debt service capacity and has conservative balance sheet leverage. The track record of the Receivables from customers
borrower in terms of profit is very good and exhibits highest quality under virtually all economic conditions. Corporate loans 24,475,208 25,624,724 1,541,538 6,780,234 502,624 1,323,008 60,247,336
Consumer loans 22,752,460 182,990 — 365,017 320,350 1,131,328 24,752,145
Unquoted debt securities 6,870,196 — — — — 6,870,196
2 - Strong
Sales contracts receivable 87,938 — 503 177,535 2,870 431,204 700,050
This rating is given to borrowers with low probability of going into default in the coming year. Normally has a comfortable
Accrued interest receivable 958,930 170,618 17,258 40,174 1,050 269,476 1,457,506
degree of stability, substance and diversity. Under normal market conditions, borrower has good access to public markets Accounts receivable 17,367 294 — 135,105 417 780,688 933,871
to raise funds. Borrower has a strong market and financial position with a history of successful performance. Overall debt Other receivables 508,751 151 2,439 — — — 511,341
service capacity is deemed very strong; critical balance sheet ratios are conservative. Other assets - security deposit with
Philippine Clearing House
3 - Good Corporation (PCHC) — 3,397 — — — — 3,397
This rating is given to smaller corporations with limited access to public capital markets or to alternative financial markets. 55,670,850 25,982,174 1,561,738 7,498,065 827,311 3,935,704 95,475,842
Probability of default is quite low and it bears some degree of stability and substance. However, borrower may be susceptible Total 86,360,491 25,982,174 1,561,738 7,498,065 827,311 3,935,704 126,165,483
to cyclical changes and more concentration of business risk, by product or by market. Typical for this type of borrower is the
combination of comfortable asset protection and an acceptable balance sheet structure. The debt service capacity of the a. Includes loans and receivables with an ICRR system Grade of 1-4
borrower is strong and has reported profits for the past three years and is expected to be profitable again in the current year. b. Includes loans and receivables with an ICRR system Grade of 5-7
c. Includes loans and receivables with an ICRR system Grade of 8-9
4 - Satisfactory
This rating is given to a borrower where clear risk elements exist, the probability of default is somewhat greater and normally
has limited access to public markets. The probability is reflected in volatility of earnings and overall performance. The borrower Consolidated
should be able to withstand normal business cycles, but any prolonged unfavorable economic period would create deterioration 2011
beyond acceptable levels. The borrower has the combination of reasonably sound asset and cash flow protection with adequate Neither Past Due nor Impaired Past Due
debt service capacity and has reported profits in the past year and is expected to report a profit in the current year. Standard Sub-standard but not
High Grade (a) Grade (b) Grade (c) Unrated Impaired Impaired Total
5 - Acceptable Due from BSP 32,579,118 — — — — — 32,579,118
This rating is given to a borrower whose risk elements are sufficiently pronounced to withstand normal business cycles but any Due from other banks 1,898,901 — — — — — 1,898,901
prolonged unfavorable economic and/or market period would create an immediate deterioration beyond acceptable levels. Interbank loans receivable and SPURA 1,225,579 — — — — — 1,225,579
The risk to this borrower is still acceptable as there is sufficient cash flow either historically or expected for the future; new 35,703,598 — — — — — 35,703,598
business or projected finance transaction; an existing borrower where the nature of the exposure represents a higher risk Loans and receivables
because of extraordinary developments but for which a decreasing risk within an acceptable period can be expected. Receivables from customers
Corporate loans 18,925,846 17,948,103 1,249,144 3,140,890 426,602 3,368,937 45,059,522
6 - Watchlist Consumer loans 3,141,136 137,938 — 14,353,235 1,194,381 134,199 18,960,889
This rating is given to a borrower which incurs net losses and has salient financial weaknesses, specifically in profitability, Unquoted debt securities 8,213,719 — — — — 8,213,719
reflected on its financial statements. Credit exposure is not at risk of loss at the moment but performance of the borrower Sales contracts receivable 39,573 28,383 795 631,237 2,819 380,262 1,083,069
has weakened and unless present trends are reversed, could lead to losses. Accrued interest receivable 956,361 139,534 20,665 64,288 14,415 254,256 1,449,519
Accounts receivable 22,854 369 — 633 — 681,149 705,005
7 - Especially Mentioned Other receivables 391,561 226 1,638 — — — 393,425
This rating is given to a borrower that exhibits potential weaknesses that deserve management’s close attention. No Other assets - security deposit to
immediate threat to the repayment of the loan exists through normal course of business but factors may exist that could Philippine Clearing House
adversely affect the creditworthiness of the borrower. Corporation with (PCHC) 445,707 — — — — — 445,707
32,136,757 18,254,553 1,272,242 18,190,283 1,638,217 4,818,803 76,310,855
8 - Substandard Total 67,840,355 18,254,553 1,272,242 18,190,283 1,638,217 4,818,803 112,014,453
This rating is given to borrower where repayment of the loan, through normal course of business, may be in jeopardy due
a. Includes loans and receivables with an ICRR system Grade of 1-4
to adverse events. There exists the possibility of future losses to the institution unless given closer supervision. b. Includes loans and receivables with an ICRR system Grade of 5-7
c. Includes loans and receivables with an ICRR system Grade of 8-9
9 - Doubtful
This rating is given to borrower who is unable or unwilling to service debt over an extended period of time and near future
prospects of orderly debt service is doubtful. Existing facts, conditions, and values make full collection or liquidation
highly improbable and in which substantial loss is probable.

104 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 105
 Parent Bank Consolidated
2012 2012
Neither Past Due nor Impaired Past Due CCC to D
Standard Sub-standard but not AAA to B BB- BB+ to B- and Unrated Total
High Grade (a) Grade (b) Grade (c) Unrated Impaired Impaired Total Equity securities:
Due from BSP 27,679,351 — — — — — 27,679,351 Quoted 89,405 — 396,475 485,880
Due from other banks 2,083,221 — — — — — 2,083,221 Unquoted 10,945 619,626 — 630,571
Interbank loans receivable and SPURA 226,775 — — — — — 226,775 6,537,152 15,622,558 1,432,811 23,592,521
29,989,347 — — — — — 29,989,347
HTM investments:
Loans and receivables Government debt securities — 28,159,197 — 28,159,197
Receivables from customers
Corporate loans 22,242,462 23,965,610 1,353,997 6,780,234 307,454 1,186,671 55,836,428 6,967,423 44,122,392 1,489,789 52,579,604
Consumer loans 18,949,821 — — 365,017 214,356 1,048,117 20,577,311
Unquoted debt securities 6,601,192 6,601,192 Consolidated
Sales contracts receivable 177,535 431,204 608,739 2011
Accrued interest receivable 959,532 118,255 16,582 39,391 440 269,476 1,403,676 CCC to D
Accounts receivable 365,446 764,307 1,129,753 AAA to BBB- BB+ to B- and Unrated Total
48,753,007 24,083,865 1,370,579 7,727,623 522,250 3,699,775 86,157,099
Financial assets at FVPL:
Total 78,742,354 24,083,865 1,370,579 7,727,623 522,250 3,699,775 116,146,446 Debt securities:
Government — 1,673,691 — 1,673,691
a. Includes loans and receivables with an ICRR system Grade of 1-4
Private 82,994 — — 82,994
b. Includes loans and receivables with an ICRR system Grade of 5-7
Quoted equity securities 51,045 — 12,630 63,675
c. Includes loans and receivables with an ICRR system Grade of 8-9
Derivative assets 79,754 31,210 — 110,964
213,793 1,704,901 12,630 1,931,324
Parent Bank
AFS financial assets:
2011
Debt securities:
Neither Past Due nor Impaired Past Due Government — 13,126,687 — 13,126,687
Standard Sub-standard but not Private 4,571,399 — 1,432,321 6,003,720
High Grade (a) Grade (b) Grade (c) Unrated Impaired Impaired Total Equity securities:
Due from BSP 32,305,984 — — — — — 32,305,984 Quoted 51,109 320 425,213 476,642
Due from other banks 1,851,226 — — — — — 1,851,226 Unquoted — 1,145 634,424 635,569
Interbank loans receivable and SPURA 1,098,579 — — — — — 1,098,579 4,622,508 13,128,152 2,491,958 20,242,618
35,255,789 — — — — — 35,255,789 HTM investments:
Loans and receivables Government debt securities — 28,216,682 — 28,216,682
Receivables from customers 4,836,301 43,049,735 2,504,588 50,390,624
Corporate loans 16,153,636 16,944,209 1,230,494 4,064,854 366,291 3,241,001 42,000,485
Consumer loans — — — 14,353,235 1,094,974 65,089 15,513,298
Parent Bank
Unquoted debt securities 7,932,107 — — — — — 7,932,107
Sales contracts receivable — — — 631,237 — 380,262 1,011,499 2012
Accrued interest receivable 954,903 99,424 20,665 64,288 14,415 254,256 1,407,951 CCC to D
Accounts receivable — — — 295,829 — 665,446 961,275 AAA to BBB- BB+ to B- and Unrated Total
25,040,646 17,043,633 1,251,159 19,409,443 1,475,680 4,606,054 68,826,615 Financial assets at FVPL:
Total 60,296,435 17,043,633 1,251,159 19,409,443 1,475,680 4,606,054 104,082,404 Debt securities:
Government — 311,138 — 311,138
a. Includes loans and receivables with an ICRRS Grade of 1-4 Private 67,320 — 57,440 124,760
b. Includes loans and receivables with an ICRRS Grade of 5-7 Quoted equity securities 192,170 — 56,978 249,148
c. Includes loans and receivables with an ICRRS Grade of 8-9 Derivative assets 108,328 29,223 — 137,551
367,818 340,361 114,418 822,597
Trading and Investment Securities
AFS financial assets:
In ensuring the quality of its trading and investment portfolio, the Parent Bank uses the credit risk rating from published data Debt securities:
providers like Moody’s, Standard & Poor’s (S & P), Fitch, and such other rating agencies as may be approved by the MB of the BSP. Government 2,169,349 12,665,218 — 14,834,567
Private 6,436,802 — 1,036,336 7,473,138
The table below shows the credit risk rating of trading and investment securities (gross of allowance for credit and impairment losses): Equity securities:
Quoted 42 — 396,475 396,517
Consolidated Unquoted — 10,269 619,626 629,895
2012 8,606,193 12,675,487 2,052,437 23,334,117
CCC to D HTM investments:
AAA to B BB- BB+ to B- and Unrated Total Government debt securities — 28,016,774 — 28,016,774
Financial assets at FVPL: 8,974,011 41,032,622 2,166,855 52,173,488
Debt securities:
Government — 311,414 — 311,414
Private 124,760 — — 124,760
Quoted equity securities 197,183 56,978 254,161
Derivative assets 108,328 29,223 — 137,551
430,271 340,637 56,978 827,886
AFS financial assets:
Debt securities:
Government — 15,002,932 — 15,002,932
Private 6,436,802 — 1,036,336 7,473,138
(Forward)

106 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 107
 Parent Bank Past Due but not Impaired Loans and Receivables
2011 These are loans and receivables where contractual interest or principal payments are past due but the Group believes that
CCC to D impairment is not appropriate on the basis of the level of collateral available or status of collection of amounts owed to the Group.
AAA to BBB- BB+ to B- and Unrated Total
Impaired Loans and Receivables and Investment Securities
Financial assets at FVPL: Impaired loans and receivables and investment securities are loans and receivables and investment securities for which the
Debt securities: Group determines that it is probable that it will be unable to collect all principal and interest due based on the contractual
Government — 1,668,573 — 1,668,573 terms of the promissory note and securities agreements.
Private 82,994 — — 82,994
Quoted Equity securities 48,735 — 12,630 61,365 Liquidity Risk
Derivative assets 79,754 31,210 110,964 Liquidity risk is generally defined as the current and prospective risk to earnings or capital arising from the Group’s inability
211,483 1,699,783 12,630 1,923,896 to meet its obligations when they become due.

AFS financial assets: The Parent Bank closely monitors the current and prospective maturity structure of its resources and liabilities and the
Debt securities: market condition to guide pricing and asset/liability allocation strategies to manage its liquidity risks. Liquidity risks are
Government — 12,961,114 — 12,961,114 monitored and managed by using the Maximum Cumulative Outflow limits and funding diversification/concentration limits.
Private 4,571,399 — 1,432,321 6,003,720
Equity securities: In addition, the Parent Bank manages liquidity risk by holding sufficient liquid assets of appropriate quality to ensure
Quoted 1,963 320 425,213 427,496 short-term funding requirements are met and by maintaining a balanced loan portfolio which is repriced on a regular basis.
Unquoted — — 634,424 634,424 In addition, the Parent Bank seeks to maintain sufficient liquidity to take advantage of interest rate and exchange rate
4,573,362 12,961,434 2,491,958 20,026,754 opportunities when they arise.
HTM investments:
Government debt securities — 28,073,365 — 28,073,365 The table below shows the maturity profile of the financial instruments based on contractual undiscounted cash flows:
4,784,845 42,734,582 2,504,588 50,024,015
Consolidated
2012
Aging analysis of past due but not impaired loans and receivables are shown below: On Demand Within 1 Year Beyond 1 Year Total
Financial Assets
Consolidated Cash and other cash items 5,978,605 — — 5,978,605
Due from BSP 5,320,555 4,493,004 18,440,856 28,254,415
2012 Due from other banks 2,208,451 — — 2,208,451
Within 1 Year More than 1 Year Total Interbank loans receivable and SPURA 225,775 1,009 — 226,784
Receivables from customers Derivative assets 137,551 — — 137,551
Corporate loans 251,486 251,138 502,624 HFT securities* — 440,911 249,424 690,335
Consumer loans 188,220 132,130 320,350 AFS financial assets*, ** 646,408 21,218,385 2,127,722 23,992,515
Accrued interest receivable 1,050 — 1,050 Loans and receivables** 2,126,829 47,256,249 52,256,092 101,639,170
Accounts receivable 417 — 417 16,644,174 73,409,558 73,074,094 163,127,826
Sales contracts receivable 2,870 — 2,870
*Includes future interest payments
444,043 383,268 827,311

Consolidated Consolidated
2011 2012
Within 1 Year More than 1 Year Total On Demand Within 1 Year Beyond 1 Year Total
Receivables from customers Financial Liabilities
Corporate loans 155,556 271,046 426,602 Non-derivative Liabilities
Consumer loans 1,138,430 55,951 1,194,381 Deposit liabilities
Accrued interest receivable 14,415 — 14,415 Demand 17,848,937 — — 17,848,937
Sales contracts receivable 2,819 — 2,819 Savings** 2,783,607 92,340,904 3,201,900 98,326,411
1,311,220 326,997 1,638,217 Time** — 38,371,172 25,375,774 63,746,946
Long Term Negotiable
Parent Bank Certificates of Deposits (LTNCD)** — 580,143 11,129,392 11,709,535
20,632,544 131,292,219 39,707,066 191,631,829
2012
Bills payable and SSURA** — 28,056,529 1,051,532 29,108,061
Within 1 Year More than 1 Year Total Accrued interest and other expenses 47,074 599,906 — 646,980
Receivables from customers Other liabilities
Corporate loans 102,375 205,079 307,454 Bills purchased - contra — 4,631,187 — 4,631,187
Consumer loans 124,244 90,112 214,356 Cash letters of credit — 285,671 — 285,671
Accrued interest receivable 440 — 440 Accounts payable — 1,241,861 — 1,241,861
227,059 295,191 522,250 Margin deposits — 655,500 — 655,500
Manager’s check — 973,031 — 973,031
Parent Bank Deposit on lease contracts — — 412,242 412,242
Outstanding acceptances — 147,955 — 147,955
2011 Due to PDIC — 168,642 — 168,642
Within 1 Year More than 1 Year Total Due to Treasury of the Philippines — 63,081 — 63,081
Receivables from customers Derivative liabilities — 59,487 — 59,487
Corporate loans 95,245 271,046 366,291 Miscellaneous — 64,274 — 64,274
Consumer loans 1,039,023 55,951 1,094,974 20,679,618 168,239,343 41,170,840 230,089,801
Accrued interest receivable 14,415 — 14,415
* Includes equity securities, based on expected disposal
1,148,683 326,997 1,475,680 ** Includes future interest payments

108 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 109
 Consolidated Parent Bank
2011 2012
On Demand Within 1 Year Beyond 1 Year Total On Demand Within 1 Year Beyond 1 Year Total
Financial Liabilities Financial Liabilities
Financial Assets Deposit liabilities
Cash and other cash items 4,757,246 — — 4,757,246 Demand 17,619,081 — — 17,619,081
Due from BSP 13,221,394 9,059,153 10,490,054 32,770,601 Savings** — 92,737,802 3,201,900 95,939,702
Due from other banks 1,898,901 — — 1,898,901 Time** — 36,010,573 25,201,719 61,212,292
Interbank loans receivable and SPURA 1,224,596 1,009 — 1,225,605 LTNCD** — 580,143 11,129,392 11,709,535
HFT securities* 2,310 1,836,005 63,675 1,901,990 17,619,081 129,328,518 39,533,011 186,480,610
AFS financial assets*, ** — 21,815,624 789,931 22,605,555 Bills payable and SSURA** — 13,139,027 1,051,532 14,190,559
Loans and receivables 696,986 41,558,111 47,270,641 89,525,73 Accrued interest and other expenses — 599,806 — 599,806
21,801,433 74,269,902 58,614,301 154,685,636 Other liabilities
Bills purchased - contra — 4,628,187 — 4,628,187
Cash letters of credit — 285,671 — 285,671
Consolidated Accounts payable — 1,169,232 — 1,169,232
2011 Margin deposits — 655,500 — 655,500
On Demand Within 1 Year Beyond 1 Year Total Manager’s check — 898,615 — 898,615
Outstanding acceptances — 147,955 — 147,955
Financial Liabilities
Due to PDIC — 168,643 — 168,643
Non-derivative Liabilities
Due to Treasury of the Philippines — 59,703 — 59,703
Deposit liabilities
Derivative liabilities — 59,487 — 59,487
Demand 13,007,774 — — 13,007,774
Savings** 2,530,026 96,478,317 — 99,008,343 17,619,081 151,140,344 40,584,543 209,343,968
Time** — 37,405,341 7,955,017 45,360,358 *Includes equity securities, based on expected disposal
Long Term Negotiable Certificates **Includes future interest payments
of Deposits (LTNCD)** — 471,438 9,342,922 9,814,360

15,537,800 134,355,096 17,297,939 167,190,835 Parent Bank

Bills payable and SSURA** — 8,864,261 26,166 8,890,427 2011
Accrued interest and other expenses 25,034 506,362 — 531,396 On Demand Within 1 Year Beyond 1 Year Total
Other liabilities Financial Assets
Bills purchased - contra — 3,021,230 — 3,021,230 Cash and other cash items 4,607,502 — — 4,607,502
Cash letters of credit — 1,255,053 — 1,255,053 Due from BSP 12,948,260 9,059,153 10,490,054 32,497,467
Accounts payable — 1,176,681 — 1,176,681 Due from other banks 1,851,226 — — 1,851,226
Margin deposits — 1,119,049 — 1,119,049 Interbank loans receivable and SPURA 1,097,596 1,009 — 1,098,605
Manager’s check — 836,404 — 836,404 HFT securities* — 1,834,725 — 1,834,725
Deposit on lease contracts — — 304,245 304,245 AFS equity securities* — 21,810,329 663,032 22,473,361
Outstanding acceptances — 183,769 — 183,769 Loans and receivables — 36,912,068 41,832,083 78,744,151
Due to PDIC — 153,779 — 153,779 20,504,584 69,617,284 52,985,169 143,107,037
Due to Treasury of the Philippines — 64,669 — 64,669
Miscellaneous — 63,419 — 63,419
15,562,834 151,599,772 17,628,350 184,790,956
Parent Bank
*Includes equity securities, based on expected disposal 2011
**Includes future interest payments On Demand Within 1 Year Beyond 1 Year Total
Financial Liabilities
Parent Bank Deposit liabilities
2012 Demand 12,929,685 — — 12,929,685
On Demand Within 1 Year Beyond 1 Year Total Savings** — 96,659,437 — 96,659,437
Time** — 35,725,122 7,872,565 43,597,687
Financial Assets
LTNCD** — 471,438 9,342,922 9,814,360
Cash and other cash items 5,834,451 — — 5,834,451
Due from BSP 4,745,491 4,493,004 18,440,856 27,679,351 12,929,685 132,855,997 17,215,487 163,001,169
Due from other banks 2,083,221 — — 2,083,221 Bills payable and SSURA** — 8,564,261 — 8,564,261
Interbank loans receivable and SPURA 225,775 1,009 — 226,784 Accrued interest and other expenses — 587,579 — 587,579
Derivative assets 137,551 — — 137,551 Other liabilities
HFT securities — 435,898 249,148 685,046 Bills purchased - contra — 3,018,208 — 3,018,208
AFS financial assets* 646,408 20,959,981 2,127,222 23,733,611 Cash letters of credit — 1,255,053 — 1,255,053
Loans and receivables 1,414,343 42,877,402 48,032,079 92,323,824 Accounts payable — 1,088,285 — 1,088,285
15,087,240 68,767,294 68,849,305 152,703,839 Margin deposits — 1,119,049 — 1,119,049
Manager’s check — 789,926 — 789,926
*Includes future interest payments Outstanding acceptances — 183,769 — 183,769
Due to PDIC — 153,779 — 153,779
Due to Treasury of the Philippines — 61,292 — 61,292
Miscellaneous — 13 — 13
12,929,685 149,677,211 17,215,487 179,822,383
* Includes equity securities, based on expected disposal
** Includes future interest payments

110 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 111
 Market Risk The limitations of the VaR methodology are recognized by supplementing VaR limits with other position and sensitivity limit
Market risk is the risk of loss to future earnings, fair values or future cash flows that may result from changes in the price of structures, including limits to address potential concentration risks within each trading portfolio. In addition, the Bank uses
a financial instrument. Trading portfolios are exposed to market risk because the values of trading positions are sensitive to a wide range of stress tests to model the financial impact of a variety of exceptional market scenarios on individual trading
changes in market prices. Assets and liabilities portfolios are affected by market risks because the revenues derived from these portfolios and the Bank’s overall position.
activities, such as securities gains and losses and net interest income are sensitive to changes in interest and foreign exchange
rates. The Bank’s market risk originates from its holdings of foreign exchange instruments, debt securities and derivatives. Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair values of
Market risks are monitored on a daily basis by the RMD, which functions independently from the business units. The Group financial instruments.
uses various loss limits and risk measurement methodologies as follows:
The Bank measures the sensitivity of its assets and liabilities to interest rate fluctuations by way of gap analysis. The
• Stop loss limits analysis provides the Bank with a measure of the impact of changes in interest rates on the accrual portfolio or reported
• Loss alert limits earnings (the risk exposure of future accounting income). The repricing gap is calculated by subtracting the interest rate
• Position limits sensitive liabilities in each time bucket from interest rate sensitive assets to produce repricing gap for that particular
• Mark-to-market valuation time bucket. The difference in the amount of assets and liabilities maturing would then give the Bank an indication of its
• Value-at-Risk (VaR) exposure to the risk of potential changes in net interest income.
• Earnings-at-Risk (EaR)
A positive gap occurs when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities
VaR Methodology Assumptions and Parameters and is favorable to the Bank during a period of rising interest rates since it is in a better position to invest in higher yielding
The Bank computes the statistical VaR to estimate the maximum potential loss that can be incurred in its trading books assets more quickly than it would need to refinance its interest bearing liabilities. Conversely, during a period of falling
under normal market conditions given a specified confidence level and holding period. VaR is one of the key measures in interest rates, a positively gapped position could result in a restrained growth for or even declining net interest income.
the Bank’s management of market risk. The Bank uses a 1-day and a 10-day holding period for its foreign exchange VaR and
interest rate VaR, respectively. The Bank adopts a historical simulation approach using a 99.0% confidence level and a 260- The Group also monitors its exposure to fluctuations in interest rates by measuring the impact of interest rate movements
day observation period in its VaR calculation. on its interest income. This is done by modeling the impact and doing a sensitivity scenario analysis of various changes in
interest rates to the Group’s interest-related income and expenses.
The Bank’s VaR limit is agreed annually by the Treasury Group and RMD and presented to the RMC based on the tolerable risk
appetite of the Bank. Monitoring reports, which include the VaR figures and exposures to VaR limits are sent to the risk- The following table sets forth the repricing gap position of the Parent Bank as at December 31, 2012 and 2011:
taking units on a daily basis. These are also reported monthly to the RMC.

The VaR figures are backtested against actual and unrealized profit and loss of the trading book to validate the robustness of the 2012
VaR model. While VaR measures risk during times of normality, it is supplemented with stress testing, which is used to measure Up to 1 month 1 to 3 months 3 to 6 months 6 to 12 months Total
the potential effect of a crisis or low probability event. The RMD conducts stress testing to measure and monitor market risks in
Financial assets
extreme market conditions. Results of backtesting and stress testing are reported to the RMC on a monthly basis.
Due from BSP 2,000 — — — 2,000
Due from other banks 1 — — 1,873 1,874
Although VaR is an important tool for measuring market risk, the assumptions on which the model is based do give rise to the Interbank loans receivable 227 — — — 227
following limitations: Loans and receivables 1,094 27,007 3,640 305 32,046
Financial assets at FVPL 4,654 15,212 — — 19,866
• The holding period assumes that it is possible to hedge or dispose of positions within that period. This is considered to be AFS investments 4,228 15,201 205 — 19,634
a realistic assumption in almost all cases but may not be the case in situations in which there is severe market illiquidity Total financial assets 12,204 57,420 3,845 2,178 75,647
for a prolonged period;
• A 99.0% confidence level does not reflect losses that may occur beyond this level. Even within the model used, there is a Financial Liabilities
one percent probability that losses could exceed the VaR; Deposit liabilities
• VaR is calculated on an end-of-day basis and does not reflect exposures that may arise on positions during the trading day; Time 32,090 3,490 42 365 35,987
Bills payable 8,422 2,470 — 1,011 11,903
• The use of historical data as a basis for determining the possible range of future outcomes may not always cover all
possible scenarios, especially those of an exceptional nature; Total financial liabilities 40,512 5,960 42 1,376 47,890
• The VaR measure is dependent upon the Bank’s position and the volatility of market prices; and Repricing Gap ( 28,308) 51,460 3,803 802 27,757
• The VaR of an unchanged position reduces if the market price volatility declines and vice versa. Cumulative Gap (28,308) 23,152 26,955 27,757 —

A summary of the VaR position of the trading portfolios of the Bank as at December 31, 2012 and 2011 is as follows:
2011
2012 Up to 1 month 1 to 3 months 3 to 6 months 6 to 12 months Total
At Dec 31 Average Maximum Minimum Financial assets
Foreign currency risk 619 7,702 21,101 45 Due from BSP
Interest rate risk 9,156 52,765 118,905 6,889 Due from other banks 1,498 — — — 1,498
Interbank loans receivable 961 — — — 961
2011 Loans and receivables 26,450 5,639 3,062 7,063 42,214
Financial assets at FVPL 1,742 11 — — 1,753
At Dec 31 Average Maximum Minimum
HTM investments 4,010 12,876 — 219 17,105
Foreign currency risk 2,530 6,884 18,665 37 Total financial assets 34,661 18,526 3,062 7,282 63,531
Interest rate risk 21,025 30,787 69,738 5,001
Financial Liabilities
Deposit liabilities
The total interest rate risk VaR of the fixed income instruments in the portfolios of the Bank as at December 31, 2012 and Demand — — — 1,584 1,584
Savings — — — 60,738 60,738
2011 is as follows:
Time 30,039 1,493 279 1,203 33,014
2012
Bills payable 7,783 646 — — 8,429
At Dec 31 Average Maximum Minimum Other liabilities 37,822 2,139 279 63,525 103,765
Interest rate risk 365,616 319,897 566,712 87,594 Total financial liabilities 75,644 4,278 558 127,050 207,530
Repricing Gap ( 40,983) 14,248 2,504 ( 119,768) ( 143,999)
2011 Cumulative Gap (40,983) (26,735) (24,231) (143,999) —
At Dec 31 Average Maximum Minimum
Interest rate risk 275,100 196,661 328,627 77,714

112 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 113
 The following table sets forth, for the period indicated, the impact of changes in interest rates on the Parent Bank’s net The following tables summarize the Parent Bank’s exposure to foreign exchange risk as at December 31, 2012 and 2011.
interest income: Included in the table are the Parent Bank’s assets and liabilities at carrying amounts, categorized by currency (amounts in USD):

2012 2012
Changes in interest rates (in basis points) +50 -50 +100 -100 USD Others Total
Change on annualized net interest income: Assets
PHP ( 15,120) 15,120 ( 13,775) 13,775 Cash and due from BSP 11,118 36 11,154
USD 5,624 (5,624) 8,415 (8,415) Due from other banks 42,507 1,395 43,902
( 9,496) 9,496 ( 5,360) 5,360 Interbank loans receivable 5,500 — 5,500
Financial assets at FVPL 5,695 — 5,695
AFS financial assets 231,494 94 231,588
2011 HTM investments — — —
Loans and receivables 218,984 27 219,011
Changes in interest rates (in basis points) +50 -50 +100 -100
Other assets 2,391 — 2,391
Change on annualized net interest income:
PHP ( 53,854) 53,854 ( 48,437) 48,437 517,689 1,552 519,241
USD 7,866 (7,866) 9,833 (9,833) Liabilities
( 45,988) 45,988 ( 38,604) 38,604 Deposit liabilities 407,757 438 408,195
Bills payable 62,887 — 62,887
Accrued taxes, interest and other expenses 473 — 473
Other liabilities 11,014 30 11,044
Given the repricing position of the assets and liabilities of the Parent Bank as at December 31, 2012 and 2011, if interest
rates increased by 100 basis points, the Parent Bank would expect annualized interest income to decrease by 5.4 million 482,131 468 482,599
and 38.6 million, respectively. This EaR computation is accomplished monthly. Net Exposure 35,558 1,084 36,642

The following table sets forth the estimated change in equity due to a reasonably possible change in market prices of quoted bonds
classified under AFS financial assets, brought about by movement in the interest rate curve as at December 31, 2012 and 2011: 2011
USD Others Total
Assets
Consolidated Cash and due from BSP 11,986 319 12,305
2012 Due from other banks 34,455 3,567 38,022
Interbank loans receivable 25,036 — 25,036
Changes in interest rates (in basis points) +50 -50 +100 -100
Financial assets at FVPL 2,862 13 2,875
Change in equity ( 421,384) 421,784 ( 841,968) 844,368 AFS financial assets 204,646 2,564 207,210
HTM investments — — —
Consolidated Loans and receivables 138,782 1,062 139,844
Other assets 3,533 — 3,533
2011
421,300 7,525 428,825
Changes in interest rates (in basis points) +50 -50 +100 -100
Liabilities
Change in equity ( 561,763) 617,997 ( 1,129,205) 1,244,781 Deposit liabilities 372,058 914 372,972
Bills payable 11,300 — 11,300
Parent Bank Accrued taxes, interest and other expenses 263 — 263
Other liabilities 37,220 2,008 39,228
2012
420,841 2,922 423,763
Changes in interest rates (in basis points) +50 -50 +100 -100
Net Exposure 459 4,603 5,062
Change in equity ( 412,884) 412,884 ( 825,767) 825,767

The following table sets forth, for the period indicated, the impact of reasonably possible changes in foreign exchange rates
Parent Bank on the Parent Bank’s pretax income and equity:
2011
Changes in interest rates (in basis points) +50 -50 +100 -100
2012 2011
Change in equity ( 583,763) 603,697 ( 1,129,105) 1,251,181
Change in Effect Change in Effect
Currency Rate on Profit Effect on Currency Rate on Profit Effect on
in % before Tax Equity in % before Tax Equity
Foreign Currency Risk
Foreign currency risk is the probability of loss to earnings or capital arising from changes in foreign exchange rates. Currency
The Group takes on exposure to effects of fluctuations in the current foreign currency exchange rates on its financial USD 1% 1,462 1,462 1% ( 5,373) 5,575
performance and cash flows. Others 1% 2,224 2,224 1% 1,124 893
Currency
The Parent Bank manages its exposure to effects of fluctuations in the foreign currency exchange rates by maintaining USD -1% (1,462) (1,462) -1% 5,373 (5,575)
foreign currency exposure within the existing regulatory guidelines and at a level that it believes to be relatively Others -1% (2,224) (2,224) -1% (1,124) (893)
conservative for a financial institution engaged in that type of business. Banks are required by the BSP to match the foreign
currency liabilities with the foreign currency assets held in the FCDU. In addition, the BSP requires a 30.0% liquidity reserve
on all foreign currency liabilities held in the FCDU. Equity Price Risk
Equity price risk is the risk of loss arising from movements in equity prices. The Bank manages its exposures to equity
The Parent Bank’s policy is to maintain foreign currency exposure within acceptable limits and within existing regulatory prices by way of stop loss limits. The BOD approves limits on the amount of potential loss that may be undertaken, which is
guidelines. The Parent Bank believes that its foreign currency exposure on its assets and liabilities is within conservative monitored daily by the RMD and reported to the RMC.
limits for a financial institution engaged in this type of business.
The effect of equity price fluctuations is insignificant, therefore, the sensitivity analysis was not presented.
The Group does not present a sensitivity analysis on the impact on profit and loss and equity based on the reasonably
possible change of foreign currency since its subsidiaries’ exposure to foreign currency risk is minimal.

114 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 115
 2012
6. Fair Value Measurement Consolidated Parent Bank
Carrying Amount Fair Value Carrying Amount Fair Value
The methods and assumptions used by the Group and the Parent Bank in estimating the fair value of financial instruments are:
Accounts receivable 836,669 254,506 807,269 225,106
Other receivables 123,611 123,611 — —
Cash and Other Cash Items, Due from BSP and Other Banks and Interbank Loans Receivable and SPURA Other assets - security deposit with PCHC 18,439 18,439 — —
Carrying amounts approximate fair values considering that these accounts consist mainly of overnight deposits and floating rate
90,299,937 94,108,426 81,016,191 81,675,620
placements.
179,210,387 187,540,451 168,676,153 173,804,995
Trading and Investment Securities
Fair values of debt securities (financial assets at FVPL, AFS financial assets and HTM investments) and equity securities (financial
2012
assets at FVPL and AFS financial assets) are generally based on quoted market prices. Where the debt securities are not quoted
or the market prices are not readily available, the Group used internal valuation techniques using generally accepted market Consolidated Parent Bank
valuation models. For equity securities that are not quoted, the investments are carried at cost less allowance for impairment Carrying Amount Fair Value Carrying Amount Fair Value
losses due to the unpredictable nature of future cash flows and the lack of suitable methods of arriving at a reliable fair value. Financial Liabilities
Deposit liabilities
Derivative Instruments Demand 17,848,937 17,848,937 17,619,081 17,619,081
Fair values are based on quoted market prices, prices provided by independent parties, or prices derived using acceptable Savings 98,313,724 98,313,724 95,927,015 95,927,015
valuation models. Time 47,160,888 45,675,916 44,626,234 43,157,308
LTNCD 9,443,866 10,105,821 9,443,866 10,105,821
Loans and Receivables 172,767,415 171,944,398 167,616,196 166,809,225
Fair values of loans and receivables are estimated using the discounted cash flow methodology, using current incremental Bills payable 14,917,502 14,917,502 13,867,994 13,867,994
lending rates for similar types of loans. Where the instrument reprices on a quarterly basis or has a relatively short maturity, the Accrued interest and other expenses * 646,980 646,980 364,409 364,409
carrying amounts approximate fair values. Other liabilities
Bills purchased - contra 4,631,187 4,631,187 4,628,187 4,628,187
Deposit Liabilities and Bills Payable Accounts payable 1,241,861 1,241,861 1,169,232 1,169,232
Carrying amounts of demand and savings deposit liabilities approximates fair value considering that these are due and Manager’s checks 973,031 973,031 898,615 898,615
demandable. Carrying amounts of bills payable approximates fair value due to their short term maturities. Fair values of time Margin deposits 655,500 655,500 655,500 655,500
deposit liabilities and LTNCDs are estimated using the discounted cash flow methodology, using current incremental borrowing Deposits on lease contracts 412,242 412,242 — —
Cash letters of credit 285,671 285,671 285,671 285,671
rates for similar borrowings with maturities consistent with those remaining for the liability being valued.
Due to PDIC 168,642 168,642 168,643 168,643
Outstanding acceptances 147,955 147,955 147,955 147,955
Other Liabilities Due to Treasurer of the Philippines 63,081 63,081 59,703 59,703
Carrying amounts of other liabilities approximate fair values in view of the relatively short-term maturities of these instruments. Derivative liabilities 59,487 59,487 59,487 59,487
Miscellaneous 64,274 64,274 — —
The following tables summarize the carrying amounts and fair values of the financial assets and liabilities 197,034,828 196,211,811 189,921,592 189,114,621
* Excludes accrued taxes payable
2012
Consolidated Parent Bank
2011
Carrying Amount Fair Value Carrying Amount Fair Value
Consolidated Parent Bank
Financial Assets
Cash and other cash items 5,978,605 5,978,605 5,834,451 5,834,451 Carrying Amount Fair Value Carrying Amount Fair Value
Due from BSP 28,254,415 28,254,415 27,679,351 27,679,351 Financial Assets
Due from other banks 2,208,451 2,208,451 2,083,221 2,083,221 Cash and other cash items 4,757,246 4,757,246 4,607,502 4,607,502
Interbank loans receivable and SPURA 226,775 226,775 226,775 226,775 Due from BSP 32,579,118 32,579,118 32,305,984 32,305,984
36,668,246 36,668,246 35,823,798 35,823,798 Due from other banks 1,898,901 1,898,901 1,851,226 1,851,226
Interbank loans receivable and SPURA 1,225,579 1,225,579 1,098,579 1,098,579
Financial assets at FVPL
40,460,844 40,460,844 39,863,291 39,863,291
Debt securities
Government 311,414 311,414 311,138 311,138 Financial assets at FVPL
Private 124,760 124,760 124,760 124,760 Debt securities
Quoted equity securities 254,161 254,161 249,148 249,148 Government 1,673,691 1,673,691 1,668,573 1,668,573
Derivative assets 137,551 137,551 137,551 137,551 Private 82,994 82,994 82,994 82,994
827,886 827,886 822,597 822,597 Quoted equity securities 63,675 63,675 61,365 61,365
Derivative assets 110,964 110,964 110,964 110,964
AFS financial assets 1,931,324 1,931,324 1,923,896 1,923,896
Debt securities
Government 15,002,932 15,002,932 14,834,567 14,834,567 AFS financial assets
Private 7,473,138 7,473,138 7,473,138 7,473,138 Debt securities
Equity securities Government 13,126,687 13,126,687 12,961,114 12,961,114
Quoted 485,880 485,880 396,517 396,517 Private 6,003,720 6,003,720 6,003,720 6,003,720
Unquoted 293,171 293,171 292,571 292,571 Equity securities
Quoted 454,301 454,301 405,155 405,155
23,255,121 23,255,121 22,996,793 22,996,793
Unquoted 149,627 149,627 148,557 148,557
HTM investments 19,734,335 19,734,335 19,518,546 19,518,546
Government debt securities 28,159,197 32,680,772 28,016,774 32,486,187
HTM investments
Loans and receivables
Government debt securities 28,216,682 32,229,607 28,073,365 32,035,358
Receivables from customers
Corporate loans 57,137,496 58,327,104 51,389,969 50,032,634 Loans and receivables
Consumer loans 23,250,704 26,184,751 20,303,829 22,669,846 Receivables from customers
Unquoted debt securities 6,870,196 7,163,591 6,601,192 6,865,869 Corporate loans 41,097,910 41,076,531 38,299,781 38,459,492
Sales contracts receivable 654,734 628,336 561,720 529,953 Consumer loans 17,876,504 18,758,609 14,555,310 16,440,407
Accrued interest receivable 1,408,088 1,408,088 1,352,212 1,352,212 Unquoted debt securities 8,213,719 8,550,643 7,932,107 8,129,705
(Forward) (Forward)

116 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 117
 2011 Consolidated Parent
Consolidated Parent Bank 2011
Carrying Amount Fair Value Carrying Amount Fair Value Note Level 1 Level 2 Total Level 1 Level 2 Total
Sales contracts receivable 1,063,640 764,768 994,502 719,334 Financial Assets at FVPL 9
Accrued interest receivable 1,415,629 1,415,629 1,379,273 1,379,273 Debt securities
Accounts receivable 456,883 241,711 729,089 218,723 Government 1,673,691 — 1,673,691 1,668,573 — 1,668,573
Other receivables 393,425 393,425 — — Private 82,994 — 82,994 82,994 — 82,994
Other assets - security deposit with PCHC 445,707 445,707 — — Quoted equity securities 63,675 — 63,675 61,365 — 61,365
70,963,417 71,647,023 63,890,062 65,346,934 Derivative assets — 110,964 110,964 — 110,964 110,964
AFS Financial Assets 9
161,306,602 166,003,133 153,269,160 158,688,025 Debt securities
Government 13,126,687 — 13,126,687 12,961,114 — 12,961,114
Private 5,573,956 429,764 6,003,720 5,573,956 429,764 6,003,720
2011 Quoted equity securities 454,301 — 454,301 405,155 — 405,155
Consolidated Parent Bank 20,975,304 540,728 21,516,032 20,753,157 540,728 21,293,885
Carrying Amount Fair Value Carrying Amount Fair Value
Financial Liabilities As at December 31, 2012 and 2011, there are no financial assets and liabilities classified under Level 3.
Deposit liabilities
Demand 13,007,774 13,010,823 12,929,685 12,917,380 During the years ended December 31, 2012 and 2011, there were no transfers between Level 1 and Level 2 fair value
Savings 98,722,144 99,020,647 96,478,317 96,490,621 measurements, and no transfers into and out of Level 3 fair value measurement.
Time 45,284,080 43,406,172 43,528,507 41,514,381
LTNCD 7,593,890 7,669,289 7,593,890 7,669,289
164,607,888 163,106,931 160,530,399 158,591,671
Bills payable 8,757,569 8,757,569 8,431,403 8,431,403 7. Due from Bangko Sentral ng Pilipinas
Accrued interest and other expenses * 531,396 531,396 587,579 587,579
Other liabilities This account consists of:
Bills purchased - contra 3,021,230 3,021,230 3,018,208 3,018,208
Cash letters of credit 1,255,053 1,255,053 1,255,053 1,255,053
Accounts payable 1,176,681 1,176,681 1,088,285 1,088,285 Consolidated Parent Bank
Margin deposits 1,119,049 1,119,049 1,119,049 1,119,049 2012 2011 2012 2011
Manager’s checks 836,404 836,404 789,925 789,925 Demand deposit account 26,254,415 13,391,118 25,679,351 13,205,984
Deposits on lease contracts 304,245 304,245 — — Special deposit account 2,000,000 10,100,000 2,000,000 10,100,000
Outstanding acceptances 183,769 183,769 183,769 183,769 Reserve deposit account — 9,088,000 — 9,000,000
Due to PDIC 153,779 153,779 153,779 153,779 28,254,415 32,579,118 27,679,351 32,305,984
Due to Treasurer of the Philippines 64,669 64,669 61,292 61,292
Derivative liabilities 4,286 4,286 4,286 4,286
Miscellaneous 63,419 63,419 13 13
The demand deposit account earned average annual interest of 0% in 2012 and 1.6% in 2011. The special deposit account earned
182,079,437 180,578,480 177,223,040 175,284,312 average annual interest of 3.6% in 2012 and 4.3% in 2011. Reserve deposit account (RDA), on the other hand, earned average
* Excludes accrued taxes payable annual interest of 0.1% to 0.8% in 2012 and 0.1% to 0.4% in 2011. The RDA facility was discontinued and the BSP no longer
accepted new RDA placements from banks upon effectivity of BSP Circular No. 753, which contains the rules and regulations for
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: unification of the statutory and liquidity reserve requirements effective on the reserve week starting in April 2012. There were
no existing RDAs as at December 31, 2012.
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either In 2012 and 2011, interest income on placement with BSP amounted to 122.5 million and 240.5 million, respectively, for the
directly or indirectly; and Group and 119.6 million and 236.6 million, respectively, for the Parent Bank.
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy.
8. Interbank Loans Receivable and Securities Purchased under Resale Agreements

Consolidated Parent This account consists of:

2012
Note Level 1 Level 2 Total Level 1 Level 2 Total Consolidated Parent Bank
Financial Assets at FVPL 9 2012 2011 2012 2011
Debt securities Interbank loans receivable 226,775 1,098,579 226,775 1,098,579
Government 311,414 — 311,414 311,138 — 311,138 Securities purchased under resale agreements — 127,000 — —
Private 124,760 — 124,760 124,760 — 124,760 226,775 1,225,579 226,775 1,098,579
Quoted equity securities 254,161 — 254,161 249,148 — 249,148
Derivative assets — 137,551 137,551 — 137,551 137,551 Interbank loans receivable have maturities of one day to three months and earn annual interest of 2.0% to 4.3% and 1.0% to 4.8%
AFS Financial Assets 9 for Philippine peso-denominated receivables and 0.02% to 2.1% and 0.1% to 0.8% for US dollar-denominated receivables in 2012
Debt securities and 2011, respectively.
Government 15,002,932 — 15,002,932 14,834,567 — 14,834,567
Private 7,253,421 219,717 7,473,138 7,253,421 219,717 7,473,138 As at December 31, 2011, the Group’s outstanding balance of SPURA represents overnight placements with BSP where the underlying
Quoted equity securities 485,880 — 485,880 396,517 — 396,517 collateral securities cannot be sold or re-pledged. As at December 31, 2012, the Group has no outstanding balance of SPURA.
23,432,568 357,268 23,789,836 23,169,551 357,268 23,526,819

118 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 119
 HTM Investments
9. Trading and Investments Securities HTM investments as at December 31, 2012 and 2011 are composed of government securities.

This account consists of the following: The Group’s HTM investments earn annual interest of 2.8% to 18.3% and 3.8% to 18.3% in 2012 and 2011, respectively, for
Philippine peso-denominated investments while its US dollar-denominated investments earn annual interest of nil and 6.3% to
Financial Assets at FVPL 6.8% in 2012 and 2011, respectively.

Consolidated Parent Bank The Parent Bank’s HTM investments earn annual interest of 2.8% to 10.8% and 3.8% to 7.8% in 2012 and 2011, respectively.
2012 2011 2012 2011
On various dates in 2011, the Parent Bank sold HTM investments with aggregate carrying amount of 3.2 billion thereby realizing
Held-for-trading
Debt securities: gains of 0.3 billion. As a result of these disposals, the Group and the Parent Bank is prohibited under PFRS from classifying
Government 311,414 1,673,691 311,138 1,668,573 any financial asset as HTM in 2011 and until 2013. However, as at December 31, 2012, the Group and the Parent Bank continue
Private 124,760 82,994 124,760 82,994 to classify government securities as HTM investments with an aggregate carrying amount of 28.2 billion and 28.0 billion,
respectively, with fair value of 32.7 billion and 32.5 billion, respectively. The Parent Bank’s remaining HTM investments were
436,174 1,756,685 435,898 1,751,567
funded from the P30.0 billion savings deposits maintained by the NG with the Parent Bank as part of the concessions granted by
Quoted equity securities 254,161 63,675 249,148 61,365
the MB, in its resolution No. 590, in the Amended Rehabilitation Plan (see Note 16). Had the Parent Bank reclassified these HTM
690,335 1,820,360 685,046 1,812,932 investments to AFS financial assets, net unrealized gain on AFS financial assets of the Group and of the Parent Bank, which is
Derivative assets 137,551 110,964 137,551 110,964 included in the equity section of the statement of financial position, would have increased by 4.5 billion. On December 28, 2012,
827,886 1,931,324 822,597 1,923,896 the BSP approved the exemption of the remaining HTM investments from the “tainting rule” as required per MORB Subsection
X388.5 (b), however, the Group and the Parent Bank is prohibited from using the HTM account for other debt securities investments
Philippine peso-denominated debt securities classified as financial assets at FVPL earn annual interest of 2.4% to 8.8% and 0.8% from 2011 to 2013.
to 8.8% in 2012 and 2011, respectively.
Interest Income and Trading and Securities Gains (Losses)
US dollar-denominated debt securities classified as financial assets at FVPL earn annual interest of 2.1% to 7.0% and 3.8% to 7.0% For the year ended December 31, 2012 and 2011, interest income on trading and investment securities follows:
in 2012 and 2011, respectively.

AFS Financial Assets Consolidated Parent Bank

This account consists of the following:
2012 2011 2012 2011
Financial assets at FVPL 149,263 149,397 144,919 143,129
Consolidated Parent Bank AFS financial assets 1,122,743 857,851 1,106,962 852,042
2012 2011 2012 2011 HTM investments 2,176,818 2,413,810 2,162,037 2,398,969
3,448,824 3,421,058 3,413,918 3,394,140
Debt securities:
Government 15,002,932 13,126,687 14,834,567 12,961,114
Private 7,473,138 6,003,720 7,473,138 6,003,720
For the year ended December 31, 2012 and 2011, trading and securities gains (losses) consists of the following:
22,476,070 19,130,407 22,307,705 18,964,834
Equity securities:
Quoted 485,880 476,642 396,517 427,496 Consolidated Parent Bank
Unquoted 630,571 635,569 629,895 634,424
2012 2011 2012 2011
1,116,451 1,112,211 1,026,412 1,061,920 Financial assets at FVPL
23,592,521 20,242,618 23,334,117 20,026,754 HFT securities
Less: Allowance for impairment losses 337,400 508,283 337,324 508,208 Realized 283,665 303,903 270,360 295,433
23,255,121 19,734,335 22,996,793 19,518,546 Unrealized 5,714 16,358 5,682 16,985
Derivatives 3,191 (41,108) 3,191 (41,108)
Philippine peso-denominated debt securities classified as AFS financial assets earn annual interest of 2.5% to 8.5% and 3.2% to 292,570 279,153 279,233 271,310
8.9% in 2012 and 2011, respectively. AFS financial assets 1,442,513 212,072 1,431,736 210,754
HTM investments — 335,213 — 335,213
Unquoted debt securities classified as loans 81,037 72,768 81,036 72,768
US dollar-denominated debt securities classified as AFS financial assets earn annual interest of 1.9% to 12.0% in 2012 and 2011.
1,816,120 899,206 1,792,005 890,045
Unquoted equity securities represent long-term investments of the Group and the Parent Bank and are not actively traded in the
market. The Group and the Parent Bank do not intend to sell these securities in the near future.
Reclassification of Financial Assets
The Group’s and the Parent Bank’s investments in unquoted equity shares include shares of stock of ASEAN Finance Corporation 2008 was characterized by a substantial deterioration in global market conditions, including severe shortage of liquidity and
(AFC), with acquisition cost of Singaporean dollars (SGD) 5 million ( 168.1 million and 169.0 million as at December 31, credit availability. These conditions led to a reduction in the level of market activity for many assets and the inability to sell
2012 and 2011, respectively). As at December 31, 2012 and 2011, the related allowance for impairment losses on such equity other than at substantially lower prices. Following the amendments to PAS 39 and PFRS 7 effective July 1, 2008, and as a result
securities amounted to 38.0 million and 38.3 million, respectively (see Note 15). of the contraction in the market for many classes of assets, the Group reviewed its financial assets that were classified as HFT
and AFS financial assets, in order to determine whether the classification remained appropriate.
Investments in unquoted equity securities also include investments in public utilities and other private companies.
Reclassification from Financial Assets at FVPL to HTM Investments
The movements of net unrealized gains on AFS financial assets are as follows: The Parent Bank identified financial assets eligible under the amendments, and reclassifications were made on September 11, 2008.
Where it was determined that the Parent Bank no longer intended to trade, management reviewed the instruments to determine
whether it was appropriate to reclassify to AFS investments, HTM investments or Loans and receivables. The reclassification was
Consolidated Parent Bank
performed where the Parent Bank, at the reclassification date, had the clear intention and ability to hold the financial asset for the
2012 2011 2012 2011 foreseeable future or until maturity.
Balance at beginning of year 523,533 139,896 492,935 115,768
Unrealized gains during the year 1,564,781 595,709 1,526,381 587,921 In 2011, all remaining government debt securities reclassified from financial assets at FVPL to HTM investments with total
Amounts realized in profit or loss (1,442,513) (212,072) (1,431,736) (210,754) carrying amount of 331.0 million were sold on various dates for net gains of 54.3 million.
Balance at the end of year 645,801 523,533 587,580 492,935
As at December 31, 2012, there are no outstanding debt securities reclassified from financial assets at FVPL to AFS financial
As at December 31, 2012 and 2011, the unrealized gains on AFS financial assets presented in equity is net of deferred taxes assets, HTM investments or loans and receivables.
amounting to 24.5 million and 15.8 million, respectively (see Note 24).

120 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 121
 Reclassifications from AFS Financial Assets to HTM Investments The movements in the fair values of the derivatives follow:
As a result of change in intention, on September 11, 2008, the Parent Bank reclassified certain AFS financial assets to HTM
investments. The Parent Bank established the positive intention and ability to hold these investments until maturity. 2012 2011
Balance at beginning of year 106,678 214,250
In 2011, all securities reclassified from AFS financial assets to HTM investments with total carrying amount of 2.7 billion were Changes in fair value during the year 32,242 (6,753)
sold on various dates for net gains of 277.6 million. Fair value of settled contracts (60,856) (100,819)
Balance at end of year 78,064 106,678
Structured Notes
The Parent Bank invested in structured notes, which are broadly defined as bond instruments (which can be floating rate, fixed rate
or zero coupon) embedded with forwards or options that are linked to interest indices and reference credits (or reference entities).
Changes in fair value of derivatives other than currency forwards amounting to 3.2 million and ( 41.1 million) in 2012 and
2011, respectively, are included under “Trading and securities gains (losses)” in the statement of income. Changes in fair value
The Parent Bank also has structured investments that contain enhanced coupons - such as a bonus interest rate where the Parent
of currency forwards amounting to 29.1 million and 34.4 million in 2012 and 2011, respectively, are included under “Foreign
Bank will receive additional interest when the ROP-credit default swap (CDS) spread will fall within a certain range.
exchange gains (losses)” in the statement of income.
As at December 31, 2012 and 2011, the host instruments of the structured notes described above are included under “AFS
financial assets” and “Loans and receivables” in the statement of financial position, while the embedded derivatives were
bifurcated and presented separately under “Financial assets or liabilities at FVPL” in the statement of financial position.
10. Loans and Receivables
Shown below are the details of the carrying amounts of the host instruments and the embedded derivatives:

This account consists of:

Note 2012 2011
Host instruments included in: Consolidated Parent Bank
AFS financial assets — 211,660
Loans and receivables 10 11,970 26,824 Note 2012 2011 2012 2011
Embedded derivatives included in: Receivables from customers:
Derivative assets 40,998 40,536 Corporate loans 60,247,336 45,059,522 55,836,428 42,000,485
Consumer loans 24,752,145 18,960,889 20,577,311 15,513,298
84,999,481 64,020,411 76,413,739 57,513,783
Less: Unearned discounts 293,861 337,212 51,724 137,013
The Parent Bank used market observable inputs and acceptable standard valuation models in calculating the fair values of the 84,705,620 63,683,199 76,362,015 57,376,770
structured notes and the embedded derivatives. Market observable inputs are either directly based on estimates coming from Unquoted debt securities 9 6,870,196 8,213,719 6,601,192 7,932,107
independent pricing services or indirectly observed from historical and prevailing movements in critical valuation inputs. Accrued interest receivable 1,457,506 1,449,519 1,403,676 1,407,951
Accounts receivable 933,871 705,005 1,129,753 961,275
The fair values calculated by the Parent Bank are significantly affected by the choice of the valuation models and the underlying Sales contracts receivable 700,050 1,083,069 608,739 1,011,499
assumptions. Even if market observable inputs were used, fair value estimates may significantly change, in light of the judgment Other receivables 511,341 393,425 — —
exercised in the selection of assumptions. Among the assumptions used include probability of default on the reference entity (as 95,178,584 75,527,936 86,105,375 68,689,602
implied by market observable spreads), counterparty spread, volatility, interest rate curve estimation and recovery rate. Less: Allowance for credit and impairment losses 15 5,637,371 5,010,226 5,339,184 4,799,540
89,541,213 70,517,710 80,766,191 63,890,062
Derivative Financial Instruments
The succeeding table shows the fair values of the derivative financial instruments of the Parent Bank, recorded as derivative
assets or derivative liabilities, together with the notional amounts. The notional amount is the amount of a derivative’s
Sales contracts receivable arise mainly from the sale of foreclosed properties booked under “Investment properties” account.
underlying asset, reference rate or index and is the basis upon which changes in the value of the derivative are measured.
Accounts receivable mainly consists of amounts due from customers and other parties under open-account arrangements, claims
such as tax refund and insurance proceeds, receivables from employees, receivable from BSP and other miscellaneous receivables.
The notional amounts indicate the volume of transactions outstanding as at December 31, 2012 and 2011 and are not indicative
of either market risk or credit risk.
In 2012 and 2011, unquoted Philippine peso-denominated debt securities consist of private securities with EIR ranging from 2.8%
to 10.8% and 6.2% to 10.8%, respectively.
2012
Assets Liabilities Notional Amounts In 2012 and 2011, unquoted US dollar-denominated debt securities consist of private securities with EIR ranging from 4.4% to
Freestanding derivatives: 19.7% and 3.4% to 19.7%, respectively.
Forward exchange sold 66,580 9,134 US 60,000
Warrants 29,223 — US 68 In 2008, the Parent Bank entered into a sale agreement covering certain zero coupon-bearing bonds with total face amount
Forward exchange bought 750 50,168 US 33,000 of US$44.7 million or 2.1 billion. The objective of this sale agreement was to convert the zero coupon-bearing bonds into
Forward exchange bought — 185 SG 2,500 coupon-earning instruments. Based on the derecognition principles of PAS 39, the sale did not qualify for derecognition because
Embedded derivatives: the significant risks and rewards on the bonds remained with the Parent Bank. As at December 31, 2012 and 2011, the carrying
Range accrual 40,998 — US 14,688 amount of the bonds amounted to 501.8 million and 694.4 million, respectively.
Index linked option — — US 5,000
137,551 59,487 Interest income on loans and receivables consist of:

2011 Consolidated Parent Bank

Assets Liabilities Notional Amounts 2012 2011 2012 2011
Freestanding derivatives: Receivables from customers 5,724,352 4,885,671 4,734,302 3,977,814
Forward exchange bought 35,569 — US 1,068,250 Unquoted debt securities 631,015 642,722 604,635 625,284
Warrants 31,210 — US 68 Restructured loans 96,544 158,756 89,849 142,639
Forward exchange sold 3,072 4,286 US 55,000 Sales contracts receivable 74,138 94,364 68,990 91,426
Forward exchange bought 577 — SGD2,500 Others — 31 — —
Embedded derivatives:
Range accrual 40,536 — US 14,688 6,526,049 5,781,544 5,497,776 4,837,163
Index linked option — — US 5,000
110,964 4,286

122 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 123
 Regulatory Reporting semi-monthly installments, the total outstanding balance thereof shall be considered nonperforming at the same time that they become
As at December 31, 2012 and 2011, the breakdown of receivables from customers by type of security is as follows: past due in accordance with existing BSP regulations, (i.e., the entire outstanding balance of the receivable shall be considered as past
due when the total amount of arrearages reaches ten percent (10.0%) of the total receivable balance.) Restructured receivables which
do not meet the requirements to be treated as performing receivables shall also be considered as NPLs.
Consolidated Parent Bank
2012 2011 2012 2011 The breakdown of restructured receivables from customers follows:
Amount % Amount % Amount % Amount %
Secured by: Consolidated Parent Bank
Real estate mortgage 22,026,966 25.91 20,945,572 32.72 21,900,463 28.66 19,120,771 33.25 2012 2011 2012 2011
Chattel mortgage 6,507,158 7.66 6,379,415 9.96 6,268,348 8.20 5,933,665 10.32 Corporate loans 1,462,958 1,690,145 1,342,693 1,556,975
Assignment of deposits 1,125,072 1.32 871,841 1.36 1,094,798 1.43 871,841 1.52 Consumer loans 57,360 17,144 18,149 13,751
Rights other than above 134,457 0.16 1,404,484 2.20 60,525 0.08 1,404,484 2.44
1,520,318 1,707,289 1,360,842 1,570,726
Other securities 7,511,660 8.84 6,651,790 10.39 7,407,716 9.69 5,804,300 10.09
37,305,313 43.89 36,253,102 56.63 36,731,850 48.06 33,135,061 57.62
Unsecured 47,694,168 56.11 27,767,309 43.37 39,681,889 51.94 24,378,722 42.39 As at December 31, 2012 and 2011, restructured receivables from customers considered as NPLs amounted to 157.3 million and
84,999,481 100.00 64,020,411 100.00 76,413,739 100.00 57,513,783 100.00 567.7 million, respectively.

Certain receivables from customers amounting to 919.0 million and nil as at December 31, 2012 and 2011, respectively, were
As at December 31, 2012 and 2011, information on the concentration of credit as to industry of receivables from customers follows: rediscounted with the BSP (included under Bills Payable - BSP) under the rediscounting privileges of the Parent Bank (see Note 17).

Consolidated Parent Bank

2012 2011 2012 2011
Amount % Amount % Amount % Amount % 11. Property and Equipment

Real estate, renting and The composition of and movements in property and equipment account follow:
business activities 22,217,909 26.14 13,366,144 20.88 20,343,133 26.62 12,516,891 21.76
Manufacturing 12,464,599 14.66 10,159,416 15.87 11,795,828 15.44 9,293,508 16.16
Wholesale and retail trade,
Consolidated
repair of motor vehicles,
motorcycles, personal and 2012
household goods 12,071,323 14.20 14,890,774 23 .26 11,584,623 15.16 14,702,187 25.56 Furniture,
Transport, storage and Building and Fixtures and Leasehold
communication 8,839,214 10.40 611,682 0.96 8,056,164 10.54 611,682 1.06 Note Land Improvement Equipment Improvements Total
Agriculture, hunting and Cost
forestry, fishing 8,199,138 9.65 6,919,165 10.81 8,144,098 10.66 6,344,966 11.03 Balance at beginning of year 101,678 1,295,971 2,489,911 797,141 4,684,701
Financial intermediaries 6,864,177 8.08 5,191,907 8.11 5,520,009 7.22 5,066,320 8.81 Additions 57,912 100,899 237,478 95,515 491,804
Construction 1,802,312 2.12 25,972 0.04 1,798,937 2.35 25,972 0.05 Disposals (4,949) (118,364) (116,839) (5,768) (245,920)
Other community, social and
personal services activities 12,246,948 14.41 12,518,139 19.55 9,119,223 11.93 8,815,244 15.33 Balance at end of year 154,641 1,278,506 2,610,550 886,888 4,930,585
Total 84,705,620 99.66 63,683,199 99.48 76,362,015 99.92 57,376,770 99.76 Accumulated depreciation and amortization
Unearned discounts 293,861 0.34 337,212 0.52 51,724 0.08 137,013 0.24 Balance at beginning of year — 714,539 1,417,427 210,144 2,342,110
Depreciation and amortization 13 — 64,657 282,683 71,369 418,709
84,999,481 100.00 64,020,411 100.00 76,413,739 100.00 57,513,783 100.00 Disposals — (107,691) (59,766) (464) (167,921)
Balance at end of year — 671,505 1,640,344 281,049 2,592,898
The BSP considers that loan concentration exists when the total loan exposure to a particular industry exceeds 30.0% of the total Net book value at end of year 154,641 607,001 970,206 605,839 2,337,687
loan portfolio. The Group’s RMD constantly monitors the credit risk concentration of the Bank.

Current banking regulations allow banks with no unbooked valuation reserves and capital adjustments to exclude from
nonperforming classification those receivables from customers classified as “Loss” in the latest examination of the BSP which are Consolidated
fully covered by allowance for credit losses, provided that interest on said receivables shall not be accrued. 2011
Furniture,
As at December 31, 2012 and 2011, nonperforming loans (NPLs) not fully covered by allowance for credit losses follow: Building and Fixtures and Leasehold
Note Land Improvement Equipment Improvements Total
Consolidated Parent Bank Cost
2012 2011 2012 2011 Balance at beginning of year 100,703 1,036,794 2,702,373 506,535 4,346,405
Additions 975 259,177 433,145 320,091 1,013,388
Total NPLs 4,830,371 4,789,067 4,444,962 4,519,229 Disposals — — (645,607) (29,485) (675,092)
Less: NPLs fully covered by allowance for credit
and impairment losses 1,943,505 3,006,647 2,547,449 2,914,069 Balance at end of year 101,678 1,295,971 2,489,911 797,141 4,684,701
2,886,866 1,782,420 1,897,513 1,605,160 Accumulated depreciation and amortization
Balance at beginning of year — 660,023 1,757,755 162,067 2,579,845
Depreciation and amortization 13 — 54,516 263,922 50,545 368,983
Disposals — — (604,250) (2,468) (606,718)
Under banking regulations, NPLs shall, as a general rule, refer to loan accounts whose principal and/or interest remain unpaid
Balance at end of year — 714,539 1,417,427 210,144 2,342,110
for thirty (30) days or more after due date or after they have become past due in accordance with existing rules and regulations.
This shall apply to loans payable in lump sum and loans payable in quarterly, semi-annual or annual installments, in which case, Net book value at end of year 101,678 581,432 1,072,484 586,997 2,342,591
the total outstanding balance thereof shall be considered nonperforming.

In the case of receivables that are payable in monthly installments, the total outstanding balance thereof shall be considered
nonperforming when three (3) or more installments are in arrears. In the case of receivables that are payable in daily, weekly or

124 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 125
 Parent Bank Consolidated Parent Bank
2012 Note 2012 2011 2012 2011
Furniture, Acquisition cost:
Building and Fixtures and Leasehold Associates
Note Land Improvement Equipment Improvements Total UCPB-CIIF Finance and Development
Cost Corporation (UCFDC) (10.26% owned) 100,000 100,000 100,000 100,000
Balance at beginning of year 95,837 1,279,697 2,329,596 751,980 4,457,110 Legaspi Oil Company, Inc. (LOCI) (17.50% owned) 56,000 56,000 56,000 56,000
Additions 626 100,676 191,943 70,159 363,404 San Pablo Manufacturing Corporation
Disposals (4,949) (118,363) (101,557) (4,764) (229,633) (SPMC) (12.77% owned) 25,000 25,000 25,000 25,000
Southern Luzon Coconut Oil Mills, Inc.
Balance at end of year 91,514 1,262,010 2,419,982 817,375 4,590,881 (SLCOMI) (17.48% owned) 24,950 24,950 24,950 24,950
Accumulated depreciation and amortization Granexport Manufacturing Corporation
Balance at beginning of year — 708,589 1,315,271 200,579 2,224,439 (GMC) (2.84% owned) 6,250 6,250 6,250 6,250
Depreciation and amortization 13 — 63,885 258,913 61,916 384,714 212,200 212,200 212,200 212,200
Disposals — (107,690) (48,761) — (156,451)
Accumulated equity in net income:
Balance at end of year — 664,784 1,525,423 262,495 2,452,702 Balance at beginning of year 7,267,306 6,740,238 — —
Net book value at end of year 91,514 597,226 894,559 554,880 2,138,179 Share in net income of associates 1,021,454 527,068 — —
Balance at end of year 8,288,760 7,267,306 — —
Equity in net unrealized gain on AFS financial
assets of associates 920 426 — —
Parent Bank Equity in translation adjustment 303 2,644 — —
2011 8,502,183 7,482,576 4,088,540 3,919,787
Furniture,
Building and Fixtures and Leasehold
Note Land Improvement Equipment Improvements Total Investments in CIIF Companies
Cost The Parent Bank established significant influence over UCFDC, LOCI, SPMC, SLCOMI and GMC through its direct ownership in
Balance at beginning of year 94,862 1,029,242 2,543,714 477,256 4,145,074 such investee companies and through the exercise of its fiduciary functions as administrator of the CIIF. In addition, the Parent
Additions 975 250,455 409,755 301,075 962,260 Bank has indirect investments in Cagayan de Oro Oil Co., Inc. (CDOOCI) and Iligan Coconut Industries, Inc. (ICII) through LOCI.
Disposals — — (623,873) (26,351) (650,224) LOCI, SPMC, SLCOMI, GMC, CDOOCI and ICII, herein referred to as the “CIIF Companies”, were established from the CIIF. The CIIF
Balance at end of year 95,837 1,279,697 2,329,596 751,980 4,457,110 formed part of the Coconut Consumers Stabilization Fund (CCSF), otherwise known as the coconut levy fund, which was created
Accumulated depreciation and amortization in 1973 by Presidential Decree (PD) No. 276.
Balance at beginning of year — 654,573 1,653,194 156,630 2,464,397
Depreciation and amortization 13 — 54,016 247,020 43,949 344,985 The CIIF Companies wholly own, collectively, the fourteen CIIF Holding Companies whose funds were invested in 725 million
Disposals — — (584,943) — (584,943) common shares of San Miguel Corporation (SMC) that were sequestered by the PCGG in May 1986 (see Note 29).
Balance at end of year — 708,589 1,315,271 200,579 2,224,439
Net book value at end of year 95,837 571,108 1,014,325 551,401 2,232,671 On December 28, 2012, the Bank filed a Special Civil Action for Declaratory Relief seeking clarification on the Bank’s
proportionate right, title and interest in the CIIF Companies as stockholder, as well as the Bank’s indirect equity in the fourteen
Holding Companies and the SMC shares. The case, docketed as Civil Case No. 12-1251 before the Regional Trial Court of Makati
As at December 31, 2012 and 2011, the cost of fully depreciated property and equipment still in use amounted to 943.9 million Branch 59, has not reached the pre-trial stage.
and 309.8 million, respectively, for the Group and 874.5 million and 246.6 million, respectively, for the Parent Bank.
The following tables present the financial information of significant associates as at and for the years ended December 31, 2012
and 2011:

2012
12. Investments in Subsidiaries, Associates and Joint Venture Statements of Financial Position Statements of Income
Total Operating
Total Assets Liabilities Gross Income* Income (Loss) Net Income
This account consists of investments in shares of stocks as follows:
LOCI 28,318,716 1,879,773 199,397 1,989,829 1,966,584
GMC 17,207,934 2,506,791 119,775 20,530 937,228
Consolidated Parent Bank SPMC 16,071,224 904,782 331,473 5,407 937,228
Note 2012 2011 2012 2011 UCFDC 1,122,841 7,624 — 30,035 27,103
Acquisition cost: SLCOMI 8,047,587 217 637,231 560,392 560,375
Wholly-owned subsidiaries * Represents sales less cost of sales
BRC — — 2,970,130 2,970,130
ULFC — — 400,000 400,000 2011
GHDC — — 287,489 287,489
Statements of Financial Position Statements of Income
USI — — 35,000 35,000
UPI-MHC — — 14,451 14,451 Total Operating
Majority-owned subsidiary Total Assets Liabilities Gross Income* Income (Loss) Net Income
USB — — 370,781 370,781 LOCI 25,585,060 1,112,702 195,326 61,071 1,666,311
— — 4,077,851 4,077,851 GMC 16,135,951 2,289,087 347,716 153,800 957,392
Allowance for impairment losses 15 — — (201,511) (370,264) SPMC 2,138,724 442,423 318,857 1,599,977 39,340
UCFDC 1,094,290 12,302 83,748 91,628 16,635
— — 3,876,340 3,707,587
SLCOMI 7,479,297 65,067 — (12,227) 508,567
(Forward)
* Represents sales less cost of sales

126 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 127
 Investment in a Joint Venture Parent Bank
On January 12, 1997, UPI entered into a Joint Venture Agreement with Macaria Homes Corporation (MHC) to establish a joint 2012 2011
venture corporation, UPI-MHC, which shall engage in the real estate development of properties located in Biñan and Sta. Buildings and Buildings and
Rosa, Laguna, utilizing a self-contained community concept, including facilities for social and recreational, commercial and Note Land Improvements Total Land Improvements Total
institutional use and to sell house and lot packages within such community at a profit or rate of return mutually agreed upon by Accumulated depreciation and amortization:
both UPI and MHC. Balance at beginning of year — 7,072 7,072 — 2,603 2,603
Depreciation and amortization — 5,615 5,615 — 5,249 5,249
In 2010, UPI assigned its investment in and advances to UPI-MHC amounting to 6.3 million and 86.7 million, respectively, to Disposals — (3,041) (3,041) — (780) (780)
the Parent Bank to settle its outstanding loans payable amounting to 74.5 million. The fair value of the net assets of UPI-MHC at Transfer-out — 7,876 7,876 — — —
assignment date was 20.0 million and the fair value of the 50.0% ownership interest transferred to the Parent Bank was Balance at end of year — 17,522 17,522 — 7,072 7,072
10.0 million. Gain recognized by the Parent Bank from the assignment, included as Others under “Miscellaneous income” in the
Allowance for impairment losses: 15
statement of income, amounted to 20.9 million. Balance at beginning of year 23,131 295,686 318,817 — 304,626 304,626
Provision for (recovery of) impairment loss — — — 20,368 (53,942) (33,574)
On August 31, 2011, the Parent Bank’s co-venturer in UPI-MHC assigned its investment in and advances to UPI-MHC amounting to Amortization of unbooked valuation reserves 748,295 271,754 1,020,049 2,763 45,002 47,765
6.3 million and 52.1 million, respectively, to the Parent Bank as consideration for certain investment properties amounting to Disposals (313,448) (2,005) (315,453)
39.6 million. The fair value of the net assets of UPI-MHC at assignment date was 21.4 million and the fair value of the 50.0% Reclassifications 56,187 50,413 106,600
ownership interest transferred to the Parent Bank was 10.7 million. Gain recognized by the Parent Bank from the assignment, Balance at end of year 514,165 615,848 1,130,013 23,131 295,686 318,817
included as Others under “Miscellaneous income” in the statement of income, amounted to 22.8 million (net of incidental Net book value at end of year 2,887,936 2,831,769 5,719,705 3,440,270 3,054,648 6,494,918
expenses amounting to 0.4 million). With the assignment, UPI-MHC became a wholly-owned subsidiary of the Parent Bank.

On August 1, 2011, the Parent Bank received 49.0 million from UPI-MHC as return of its capital of 6.3 million and partial The aggregate market value of investment properties as at December 31, 2012 and 2011 amounted to 6.4 billion and 8.6 billion,
settlement of advances to the joint venture in the amount of 42.7 million. respectively, for the Group and 6.0 billion and 8.2 billion, respectively, for the Parent Bank. Fair value has been determined
based on valuations made by independent and/or in-house appraisers. Valuations were derived on the basis of recent sales of
similar properties in the same area as the investment properties and taking into account the economic conditions prevailing at the
time the valuations were made. The Group is exerting continuing efforts to dispose these properties.
13. Investment Properties Depreciation and Amortization
The details of depreciation and amortization recognized in the statement of income follow:
Investment properties consist of foreclosed real estate properties and investments in real estate. The difference between the
fair value of the asset upon foreclosure and the carrying value of the loan is recognized as Others under “Miscellaneous income”
Consolidated Parent Bank
in the statement of income (see Note 22).
Note 2012 2011 2012 2011
Property and equipment 11 418,709 368,983 384,714 344,985
Consolidated Investment properties 10,529 10,668 5,615 5,249
Other assets 14 95,514 150,596 85,068 131,429
2012 2011
524,752 530,247 475,397 481,663
Buildings and Buildings and
Note Land Improvements Total Land Improvements Total The Parent Bank’s depreciation and amortization on investment properties pertain to the “good bank”. In 2012 and in prior years, the
Cost: Parent Bank did not recognize depreciation on its investment properties pertaining to the “bad bank” (as defined in Note 1), as required
Balance at beginning of year 3,723,603 3,393,653 7,117,256 4,140,037 3,375,005 7,515,042 under PAS 40, Investment Property. As at December 31, 2012 and 2011, the unbooked accumulated depreciation amounted to 1.4
Additions 280,810 208,478 489,288 191,600 172,085 363,685 billion and 2.9 billion, respectively. Had the Parent Bank recognized depreciation expense on these investment properties, net income
Disposals (317,086) (66,941) (384,027) (608,034) (153,437) (761,471) in 2012 and 2011 of both the Group and the Parent Bank would have decreased by 43.4 million and 26.7 million, respectively.
Reclassifications (42,856) (25,389) (68,245) — — —
Balance at end of Year 3,644,471 3,509,801 7,154,272 3,723,603 3,393,653 7,117,256
Accumulated depreciation and amortization:
Balance at beginning of year — 21,602 21,602 — 15,200 15,200 14. Intangible and Other Assets
Depreciation and amortization — 10,529 10,529 — 10,668 10,668
Reclassifications — — — — 395 395 This account consists of:
Disposals — (7,913) (7,913) — (4,661) (4,661)
Transfer-out — 7,876 7,876 — — — Consolidated Parent Bank
Balance at end of year — 32,094 32,094 — 21,602 21,602 Note 2012 2011 2012 2011
Allowance for impairment losses: 15 Deferred charges 15,850,766 15,761,535 15,850,766 15,761,535
Balance at beginning of year 21,437 295,926 317,363 49,808 306,199 356,007 Real estate inventories 3,137,035 3,183,895 — —
Provision for (recovery of) impairment loss 8,924 (687) 8,237 (35,137) (53,942) (89,079) Land held-for-sale 1,996,007 2,019,258 1,996,007 2,019,258
Amortization of unbooked valuation reserves 748,295 271,754 1,020,049 2,763 45,002 47,765 Interoffice float items 968,674 693,366 941,178 694,191
Disposals (315,946) (2,005) (317,951) (934) — (934) Creditable withholding tax 530,015 556,544 436,816 455,470
Reclassifications 53,511 51,678 105,189 4,937 (1,333) 3,604 Software costs 364,150 411,898 359,700 408,251
Balance at end of year 516,221 616,666 1,132,887 21,437 295,926 317,363 Chattel properties acquired 311,116 238,185 290,947 203,165
Prepaid expenses 70,985 410,048 64,022 396,681
Net book value at end of year 3,128,250 2,861,041 5,989,291 3,702,166 3,076,125 6,778,291
Documentary stamps on hand 39,698 21,694 10,326 20,653
Sundry debit 19,048 50,142 18,879 49,592
Retirement assets 27 4,201 10,570 — 6,347
Parent Bank Exchange trading right 1,500 1,500 — —
2012 2011 Others 759,438 260,615 685,145 211,219
Buildings and Buildings and 24,052,633 23,619,250 20,653,786 20,226,362
Note Land Improvements Total Land Improvements Total Less: Allowance for credit and impairment 15 840,505 666,366 637,820 479,743
Cost: 23,212,128 22,952,884 20,015,966 19,746,619
Balance at beginning of year 3,463,401 3,357,406 6,820,807 3,875,953 3,340,175 7,216,128
Additions 263,205 184,720 447,925 166,162 163,533 329,695 Others include deposits on rental, power, water and telephone meter.
Disposals (281,649) (51,598) (333,247) (578,714) (146,302) (725,016)
Reclassification (42,856) (25,389) (68,245) — — — As at December 31, 2012 and 2011, the latest transacted price of the exchange trading right (as provided by the PSE) amounted
Balance at end of Year 3,402,101 3,465,139 6,867,240 3,463,401 3,357,406 6,820,807 to 8.5 million for both years.
(Forward)

128 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 129
 The composition of and movements in deferred charges of the Parent Bank follow: As at December 31, 2012 and 2011, the Parent Bank recognized advances from customers (included in Accounts payable
under “Other liabilities” in the statement of financial position) amounting to 197.3 million and 158.1 million, respectively,
2012 representing collections from pre-sold units.
Loss on sale Loss on sale of
Loss on sale of Investment Land Held-
of NPLs Properties for-Sale Others Total
15. Allowance for Credit and Impairment Losses
Balance at January 1 10,952,911 3,326,415 46,433 1,435,776 15,761,535
Additions (reversal) - net — 93,244 (4,013) — 89,231
Changes in the allowance for credit and impairment losses follow:
Balance at December 31 10,952,911 3,419,659 42,420 1,435,776 15,850,766
Consolidated Parent Bank
Note 2012 2011 2012 2011
2011
Balance at beginning of year:
Loss on sale Loss on sale of AFS financial assets 9
Loss on sale of Investment Land Held- Quoted equity securities 22,341 13,331 22,341 13,331
of NPLs Properties for-Sale Others Total Unquoted equity securities 485,942 287,864 485,867 287,789
Balance at January 1 10,916,063 3,097,238 41,147 1,435,793 15,490,241 508,283 301,195 508,208 301,120
Additions (reversal) - net 36,848 229,177 5,286 (17) 271,294 Loans and receivables 10
Balance at December 31 10,952,911 3,326,415 46,433 1,435,776 15,761,535 Receivables from customers
Corporate loans 3,630,831 3,387,962 3,565,759 3,130,837
Consumer loans 1,077,954 881,208 955,920 880,668
Deferred charges pertain to losses incurred from sale of investment securities and dacion en pago settlement. Sales contracts receivable 19,429 — 16,997 —
Accounts receivable 248,122 263,769 232,186 247,226
As discussed in Note 1 to the financial statements, the BSP has allowed the Parent Bank to defer the losses on sale and dacion en pago Accrued interest receivable 33,890 15,507 28,678 15,507
settlement up to 15.7 billion and to start amortization in 2009. Any additional losses on the sale of investment properties pertaining 5,010,226 4,548,446 4,799,540 4,274,238
to the “bad bank” (see Note 1) were allowed by BSP to be deferred provided that the losses deferred do not exceed the approved Investments in subsidiaries and associates 12 — — 370,264 372,186
unbooked valuation reserves. In 2011, no amortization has been booked. Had the Parent Bank booked these losses in the years they Investment properties 13 317,363 356,007 318,817 304,626
were incurred, net of reversal of or provision for impairment losses, net income in 2012 and 2011 would have increased by 1.7 billion Other assets 14
and decreased by 787.5 million, respectively. Land held-for-sale 301,716 — 301,716 —
Real estate inventories 114,529 — — —
Real estate inventories pertain mainly to the real estate inventories of BRC, GHDC and UPI-MHC. The carrying value of the real estate Chattel properties acquired 25,202 — 42,308 —
inventories of BRC as at December 31, 2012 and 2011 amounted to 3.1 billion and 3.0 billion (net of impairment losses amounting to Others 224,919 206,293 135,719 193,910
114.5 million), respectively. 666,366 206,293 479,743 193,910
6,502,238 5,411,941 6,476,572 5,446,080
Movements in software costs of the Group and the Parent Bank follow:
Provision for credit and impairment losses 632,195 471,972 358,280 450,282
Amortization of unbooked valuation reserves 963,000 582,000 963,000 582,000
Consolidated Parent Bank Foreign currency revaluation (23,376) (1,790) (23,376) (1,790)
2012 2011 2012 2011 Reclassifications/reallocation (125,895) — (128,624) —
Balance at beginning of year 411,898 459,037 408,251 451,458 Accounts written-off/recoveries — 38,115 — —
Additions 39,354 58,313 36,459 55,329 1,445,924 1,090,297 1,169,280 1,030,492
Amortization (87,102) (105,452) (85,010) (98,536)
Balance at end of year 364,150 411,898 359,700 408,251 Balance at end of year:
AFS financial assets 9
Quoted equity securities — 22,341 — 22,341
Unquoted equity securities 337,400 485,942 337,324 485,867
Land Held-for-Sale
337,400 508,283 337,324 508,208
The Parent Bank entered into various memoranda of agreement (MOA) for the development of various parcels of land as follows:
Loans and receivables 10
Receivables from customers
a) In 2005, the Parent Bank entered into a MOA with a third party individual (as co-landowner) and Sta. Lucia Realty and
Corporate loans 4,621,075 3,630,831 4,644,735 3,565,759
Development, Inc. (SLRD - as the developer) for the development of land located in Alfonso, Cavite into a subdivision. The parties Consumer loans 552,325 1,077,954 273,482 955,920
agreed that the Parent Bank and the third party individual will contribute the land and SLRD shall contribute its expertise as a Sales contracts receivable 69,051 19,429 47,019 16,997
developer. In consideration of the services to be rendered, SLRD is entitled to receive 47.0% of the saleable lots, while the Parent Accounts receivable 338,426 248,122 322,485 232,186
Bank and the third party individual are entitled to 35.0% and 18.0% of the saleable lots, respectively. The construction has been Accrued interest receivable 56,494 33,890 51,463 28,678
completed and selling activities are actively being performed by the Parent Bank’s accredited marketing agency. 5,637,371 5,010,226 5,339,184 4,799,540
Investments in subsidiaries, associates and joint venture 12 — — 201,511 370,264
b) In 2006, the Parent Bank entered into a MOA with Century Properties Inc. (CPI) for the development of land located along H.V Investment properties 13 1,132,887 317,363 1,130,013 318,817
Dela Costa Street, Salcedo Village, Makati City into a multi-storey mixed-used condominium building. The parties agreed that
the Parent Bank will contribute the land and CPI shall contribute its expertise as a developer. CPI shall invite individuals and Other assets 14
other parties who wish or intend to own a condominium unit and for said parties to contribute funds to answer for the costs of Land held-for-sale 355,611 301,716 355,611 301,716
Real estate inventories 114,529 114,529 — —
construction and other related expenses. In consideration of the services to be rendered by CPI, the Parent Bank shall transfer/
Chattel properties acquired 8,125 25,202 7,961 42,308
convey to CPI 80.0% of the saleable units and parking spaces. In 2010, the construction of the multi-storey condominium was
Others 362,240 224,919 274,248 135,719
completed and all the units (except for parking spaces) have been turned over to the buyers/owners. This transaction resulted
in a loss (included in Deferred charges under “Intangible and other assets” in the statement of financial position to be booked 840,505 666,366 637,820 479,743
on a staggered basis as allowed by BSP) in 2011 amounting to 5.3 million. The agreement was concluded in 2011. 7,948,163 6,502,238 7,645,852 6,476,572

c) In 2006, the Parent Bank entered into a MOA with Tagaytay Grasslands Company, Inc. (TGCI) for the development of land
located in Nasugbu, Batangas into a hotel and beach club, parking spaces and condominiums. The parties agreed that the
Parent Bank will contribute the land and TGCI shall contribute its expertise as a developer and financial capital by way of
funding the development and all related expenses of the hotel and beach club, parking spaces and condominiums, and related
site development and improvements. In consideration of the services to be rendered by TGCI, the Parent Bank shall transfer/
convey to TGCI 62.0% of the saleable units of the hotel and beach club and condominiums and 50% of the parking spaces.

130 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 131
 Below is the breakdown of provision for (reversal of) credit and impairment losses: As at December 31, 2012, the carrying amount of the assets assessed for impairment amounts to 31.0 billion and the unbooked
valuation reserves and deferred charges amount to 22.7 billion. The decrease in carrying amount, from 49.2 billion to 31.0
Consolidated Parent Bank billion, resulted from collections of loans and receivables, sales of investment properties, foreclosures and redemptions.
Note 2012 2011 2012 2011
As at December 31, 2012 and 2011, the following table shows the comparison of the allowance for credit and impairment losses
AFS Financial Assets 9
recognized by the Parent Bank and the required balances under PFRS:
Quoted equity securities — 9,009 — 9,009
Unquoted equity securities — 48,713 — 48,713
2012
— 57,722 — 57,722 Excess
Loans and Receivables 10 Per books Per PFRS (Deficiency)
Receivables from customers AFS financial assets 337,325 853,853 ( 516,528)
Corporate loans 569,816 586,339 350,000 586,339 Loans and receivables 5,339,185 5,236,225 102,960
Consumer loans 41,502 123,325 8,280 75,252 Investment properties 1,130,013 1,716,474 (586,461)
Accounts receivable 218 (63,470) — (63,550) Other assets 839,331 2,658,326 (1,818,995)
Sales contracts receivable 5,382 16,997 — 16,997 7,645,854 10,464,878 ( 2,819,024)
Accrued interest receivable 2,999 (8,220) — (8,220)
619,917 654,971 358,280 606,818
Investments in Subsidiaries and Associates 2011
and Joint Venture 12 — — — (116,450) Per books Per PFRS Deficiency
Investment properties 13 8,237 (89,079) — (33,574)
AFS financial assets 508,208 892,530 ( 384,322)
Other assets 14 4,041 (151,642) — (64,234)
Loans and receivables 4,799,540 5,401,955 (602,415)
632,195 471,972 358,280 450,282 Investment properties 318,817 2,850,487 (2,531,670)
Other assets 850,008 2,878,013 (2,028,005)
6,476,573 12,022,985 ( 5,546,412)
As discussed in Note 1, the BSP has allowed the Parent Bank to defer recognition of credit and impairment losses on AFS financial
assets, loans and receivables, investment properties and other assets amounting to 13.4 billion as at December 31, 2008. BSP also
allowed deferral of losses on sale and dacion en pago settlement amounting to 15.7 billion as at December 31, 2008. As allowed As at December 31, 2012, the Bank did not book adjustments to reflect the fair market value of the “bad bank” investment
by the BSP, the Parent Bank is to amortize the unbooked valuation reserves and losses over 10 years starting in 2009 based on the properties on initial recognition amounting to 915.0 million.
affordability plan approved by the BSP. In 2012 and 2011, amortization recognized by the Parent Bank as an addition to negative
surplus amounted to 963.0 million and 582.0 million, respectively, with details as follows: The net deficiency of 2.8 billion was not booked by the Parent Bank as it is included in the valuation reserves and losses allowed
by the BSP to be deferred and amortized over 10 years. Had the Parent Bank booked the deficiency in the years the losses were
incurred, net income in 2012 and 2011 would have increased by 1.3 billion and decreased by 489.5 million, respectively.
2012 2011
AFS financial assets ( 148,327) 149,888 On May 9, 2013, the Monetary Board, through Resolution No. 759, approved the direct charge to surplus (deficit) of the
Loans and receivables (7,469) (80,248) amortization of the unbooked valuation reserves and deferred losses. If the Parent Bank had recognized amortization of the
Investment properties 1,020,049 47,765 unbooked valuation reserves in profit or loss, net income would have decreased by 963.0 million.
Other assets* 98,747 464,595
Amortization of unbooked valuation reserves 963,000 582,000
* Includes amortization for investment in BRC, chattel properties acquired, land held-for-sale and other assets pertaining to the “bad bank”.

16. Deposit Liabilities

Movements in unbooked valuation reserves and losses based on the affordability plan approved by the MB, in its Resolution No.
Philippine peso-denominated demand, savings and time deposit liabilities bear annual interest rates ranging from 0.3% to 6.8%
590 dated May 15, 2008, follow:
and 0.5% to 4.5% in 2012 and 2011, respectively; 0.01% to 2.1% and 0.0% to 4.6% in 2012 and 2011, respectively, for US dollar-
denominated deposit liabilities.
2012 2011 2010 2009
Balance at beginning of the year 28,036,198 28,618,198 28,909,271 29,169,000 As discussed in Note 1, as part of the concessions granted to the Parent Bank by the MB under Resolution No. 590 dated May 15, 2008
Amortization during the year 963,000 582,000 291,073 259,729 under the amended rehabilitation plan, the Parent Bank is authorized to accept deposits from the NG, LGUs and GOCCs, with the
Balance at end of year 27,073,198 28,036,198 28,618,198 28,909,271 ceiling of 5.9 billion increased by the amount that the NG will deposit with the Parent Bank. As at December 31, 2012 and 2011, the
savings deposits of the NG amounted to 30.0 billion. 27.6 billion of the 30.0 billion was used to purchase government securities
which the Parent Bank is using to comply with liquidity reserves and liquidity floor requirements of the BSP. These government securities
The Bank submits to the BSP the quarterly impairment assessments based on ICRR system on assets pertaining to the “bad are classified as HTM investments (see Note 9). The remaining balance of 2.4 billion is included under “Due from BSP.”
bank.” The table below shows the comparative information in terms of carrying amount and unbooked valuation reserves and
deferred charges as per the Rehabilitation Plan against balances as at December 31, 2012: Long Term Negotiable Certificates of Deposits due 2016 (LTNCD Series 1)
On November 25, 2010, the Parent Bank issued 6.3% fixed coupon rate (EIR of 6.5%) Unsecured LTNCD at par value of 4.5
billion. The LTNCD matures on February 25, 2016, subject to pre-termination by the Parent Bank in whole, but not in part, in
Per Rehabilitation Plan As at December 31, 2012 accordance with BSP rules. As at December 31, 2012 and 2011, the fair value of LTNCD Series 1 amounted to 4.5 billion.
Unbooked Unbooked
Valuation Valuation The issuance of the foregoing LTNCD under the terms approved by the BOD was approved by the BSP on October 19, 2010.
Reserves and Reserves and
Carrying Deferred Carrying Deferred Long Term Negotiable Certificates of Deposits due 2016 (LTNCD Series 2)
Amount Charges Amount Charges On August 19, 2011, the Parent Bank issued 6.0% fixed coupon rate (EIR of 6.3%) Unsecured LTNCD at par value of 3.2 billion.
Loans and receivables 13,460,000 2,978,000 1,569,266 454,078 The LTNCD matures on November 19, 2016, subject to pre-termination by the Parent Bank in whole, but not in part, in
Investment properties 24,188,040 8,725,000 11,669,863 6,656,472 accordance with BSP rules. As at December 31, 2012 and 2011, the fair value of LTNCD Series 2 amounted to 3.1 billion.
Other assets 1,771,000 1,375,000 1,479,859 1,467,521
AFS financial assets — 397,000 396,517 395,513
Long Term Negotiable Certificates of Deposits due 2017 (LTNCD Series 3)
Deferred charges 9,809,000 15,694,000 15,850,766 15,850,766
On May 21, 2012, the Parent Bank issued 5.9% fixed coupon rate (EIR of 6.1%) unsecured LTNCD at par value of 1.9 billion. The
Total 49,228,040 29,169,000 30,966,271 24,824,350 LTNCD matures on August 21, 2017, subject to pre-termination by the Parent Bank in whole, but not in part, in accordance with
Less: Amortization of unbooked valuation reserves BSP rules. As at December 31, 2012, the fair value of LTNCD Series 3 amounted to 1.8 billion.
and deferred losses — — — 2,095,802
49,228,040 29,169,000 30,966,271 22,728,548 The issuance of series 2 and 3 of the foregoing LTNCD under the terms approved by the BOD was approved by the BSP on May 20, 2011.

132 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 133
 On February 3, 2011, November 11, 2011 and May 21, 2012 the Parent Bank listed its P4.5 billion LTNCD Series 1 due 2016, 3.2
billion LTNCD Series 2 due 2016 and 1.9 billion LTNCD Series 3 due 2017, respectively, in the Philippine Dealing and Exchange 18. Accrued Taxes, Interest and Other Expenses
Corp. (PDEX) subject to its Trading and Settlement Operating Guidelines. The Parent Bank’s LTNCD Series 1, 2 and 3 are traded
and settled in accordance with PDEX rules, procedures and guidelines. This account consists of:

The Parent Bank incurred debt issue costs amounting to 53.4 million, 33.5 million and 18.9 million on the LTNCD Series 1, 2 Consolidated Parent Bank
and 3, respectively. The movements in unamortized debt issue costs in 2012 and 2011 follow: 2012 2011 2012 2011
Accrued benefits to employees 237,578 223,051 235,397 223,052
Consolidated and Parent Bank Accrued interest payable 192,759 184,757 183,681 176,754
2012 2011 Accrued taxes payable 58,355 40,636 32,884 26,726
Balance at beginning of year 75,399 52,524 Accrued other expenses 216,643 125,759 180,728 189,944
Issuances 18,927 33,538 705,335 574,203 632,690 616,476
Amortization (18,835) (10,663)
Balance at end of year 75,491 75,399 Accrued other expenses include accruals for various operating expenses such as payroll, repairs and maintenance, utilities,
rental and contractual services.
On March 29, 2012, BSP issued BSP Circular No. 753 implementing the unification of the statutory and liquidity reserve
requirement on deposit liabilities of the Parent Bank and USB equivalent to 18.0% and 6.0%, respectively. The Parent Bank and
USB were in compliance with such regulations as at December 31, 2012 and 2011.
19. Other Liabilities
The total liquidity and statutory reserves as reported to the BSP follows:
This account consists of:
Consolidated Parent Bank Consolidated Parent Bank
2012 2011 2012 2011 Note 2012 2011 2012 2011
Cash and other cash items 5,978,423 4,756,454 5,834,146 4,607,212
Due from BSP: Bills purchased - contra 4,631,187 3,021,230 4,628,187 3,018,208
Reserve deposit account — 9,088,000 — 9,000,000 Accounts payable 1,241,861 1,176,681 1,169,232 1,088,285
Demand deposit account 26,017,480 13,310,811 25,679,351 13,205,430 Manager’s checks 973,031 836,404 898,615 789,926
31,995,903 27,155,265 31,513,497 26,812,642 Margin deposits 655,500 1,119,049 655,500 1,119,049
Other credits 465,407 396,368 385,717 378,587
Interest expense on deposit liabilities follow: Deposit on lease contract 412,242 304,245 — —
Cash letters of credit 285,671 1,255,053 285,671 1,255,053
Consolidated Parent Bank Miscellaneous 204,022 175,212 18,134 81,456
2012 2011 2012 2011 Due to PDIC 168,643 153,779 168,643 153,779
Demand 35,575 23,814 35,142 23,816 Outstanding acceptances 147,955 183,769 147,955 183,769
Savings 494,265 492,147 479,268 468,798 Due to Treasury of the Philippines 63,081 64,669 59,703 61,292
Time 1,649,851 1,602,822 1,563,971 1,544,614 Derivative liabilities 9 59,487 4,286 59,487 4,286
LTNCD 556,409 361,976 556,409 361,976 Withholding tax payable 53,751 50,882 48,271 46,095
2,736,100 2,480,759 2,634,790 2,399,204 Sundry credit 6,862 49,323 6,465 49,283
Retirement liability 27 6,371 6,633 — —
9,375,071 8,797,583 8,531,580 8,229,068

17. Bills Payable and Securities Sold Under Repurchase Agreements

This account consists of from the following: 20. Maturity Profile of Assets and Liabilities

Consolidated Parent Bank The following tables present the assets and liabilities by contractual maturity, settlement, and expected recovery dates:
2012 2011 2012 2011
SSURA 12,949,038 7,934,044 12,949,038 7,934,044 Consolidated
Borrowings from: 2012 2011
Local banks 1,049,508 326,166 — —
Due Within Due Beyond Due Within Due Beyond
BSP 918,956 — 918,956 —
One Year One Year Total One Year One Year Total
Social Security System (SSS) — 1,967 — 1,967
Foreign banks — 495,392 — 495,392 Financial Assets - at gross
14,917,502 8,757,569 13,867,994 8,431,403 Cash and other cash items 5,978,605 — 5,978,605 4,757,246 — 4,757,246
Due from BSP 28,254,415 — 28,254,415 32,579,118 — 32,579,118
Due from other banks 2,208,451 — 2,208,451 1,898,901 — 1,898,901
Interbank loans receivable and SPURA 226,775 — 226,775 1,225,579 — 1,225,579
Bills payable bear annual interest rates ranging from 1.5% to 5.9% and 0.4% to 5.6% in 2012 and 2011, respectively. Interest Financial assets at FVPL 827,886 — 827,886 1,931,324 — 1,931,324
expense on bills payable amounted to 532.2 million in 2012 and 379.9 million in 2011 for the Group, and 503.5 million in AFS financial assets — 23,592,521 23,592,521 — 20,242,618 20,242,618
2012 and 330.3 million in 2011, for the Parent Bank. HTM investments — 28,159,197 28,159,197 — 28,216,682 28,216,682
Loans and receivables
Bills Payable to BSP Receivables from customers 46,109,791 38,889,690 84,999,481 33,174,152 30,846,259 64,020,411
Certain receivables from customers amounting to 919.0 million and nil as at December 31, 2012 and 2011, respectively, were Unquoted debt securities 62,492 6,807,704 6,870,196 1,750,182 6,463,537 8,213,719
rediscounted with the BSP under the rediscounting privileges of the Parent Bank (see Note 10). Sales contracts receivable 283,511 416,539 700,050 246,245 836,824 1,083,069
Accrued interest receivable 1,457,506 — 1,457,506 1,449,519 — 1,449,519
Bills Payable to SSS Accounts receivable 386,396 547,475 933,871 473,594 231,411 705,005
Borrowings from SSS represent amounts loaned to educational institutions through the Parent Bank, as a conduit financial Other receivables 511,341 — 511,341 393,425 — 393,425
institution of the SSS for its lending programs, at annual interest rates ranging from 10.0% to 13.0%. These are secured through a Other assets 249,210 21 249,231 186,926 415 187,341
deed of assignment of the credits and collaterals of the individual borrowers and are being repaid in the same manner and in the 86,556,379 98,413,147 184,969,526 80,066,211 86,837,746 166,903,957
same term/period provided in the promissory notes of the borrowers with due dates ranging from December 2011 to April 2016. (Forward)
As at December 31, 2011, the fair value of collateral held approximates the carrying value of the bills payable.

134 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 135
 Consolidated Parent Bank
2012 2011 2012 2011
Due Within Due Beyond Due Within Due Beyond Due Within Due Beyond Due Within Due Beyond
One Year One Year Total One Year One Year Total One Year One Year Total One Year One Year Total
Nonfinancial Assets - at gross Unquoted debt securities 41,674 6,559,518 6,601,192 1,740,028 6,192,079 7,932,107
Property and equipment — 4,930,585 4,930,585 — 4,684,701 4,684,701 Sales contract receivable 259,150 349,589 608,739 239,923 771,576 1,011,499
Investments in subsidiaries, Accrued interest receivable 1,403,676 — 1,403,676 1,168,353 239,598 1,407,951
associates and joint venture — 8,502,183 8,502,183 — 7,482,576 7,482,576 Accounts receivable 508,690 621,063 1,129,753 444,661 516,614 961,275
Investment properties — 7,154,272 7,154,272 — 7,117,256 7,117,256 Other assets 239,291 — 239,291 — 177,313 177,313
Deferred tax assets — 85,840 85,840 — 54,201 54,201 80,526,340 93,867,336 174,393,676 76,892,590 81,998,644 158,891,234
Other assets 93,226 23,710,176 23,803,402 269,344 23,162,565 23,431,909
Nonfinancial Assets - at gross
93,226 44,383,056 44,476,282 269,344 42,501,299 42,770,643 Property and equipment — 4,590,881 4,590,881 — 4,457,110 4,457,110
86,649,605 142,796,203 229,445,808 80,335,555 129,339,045 209,674,600 Investments in subsidiaries
Less: and associates — 4,290,051 4,290,051 — 4,290,051 4,290,051
Unearned interest discount 293,861 337,212 Investment properties — 6,867,240 6,867,240 — 6,820,807 6,820,807
Accumulated depreciation Other assets 93,226 20,321,269 20,414,495 260,709 19,788,341 20,049,050
and amortization 2,624,992 2,363,712 93,226 36,069,441 36,162,667 260,709 35,356,309 35,617,018
Allowance for credit and Total 80,619,566 129,936,777 210,556,343 77,153,299 117,354,953 194,508,252
impairment losses 7,948,163 6,502,238
Less:
Total 218,578,792 200,471,438 Unearned interest discount 51,724 137,013
Accumulated depreciation
Consolidated and amortization 2,470,224 2,231,511
2012 2011 Allowance for credit and
Due Within Due Beyond Due Within Due Beyond impairment losses 7,645,852 6,476,573
One Year One Year Total One Year One Year Total Total 200,388,543 185,663,155
Financial Liabilities Financial Liabilities
Deposit liabilities Deposit liabilities
Demand 17,848,937 — 17,848,937 13,007,774 — 13,007,774 Demand 17,619,081 — 17,619,081 12,929,685 — 12,929,685
Savings 98,313,724 — 98,313,724 98,722,144 — 98,722,144 Savings 95,927,015 — 95,927,015 96,478,317 — 96,478,317
Time 38,089,322 9,071,566 47,160,888 37,407,506 7,876,574 45,284,080 Time 35,728,723 8,897,511 44,626,234 35,651,933 7,876,574 43,528,507
LTNCD — 9,443,866 9,443,866 — 7,593,890 7,593,890 LTNCD — 9,443,866 9,443,866 — 7,593,890 7,593,890
154,251,983 18,515,432 172,767,415 149,137,424 15,470,464 164,607,888 149,274,819 18,341,377 167,616,196 145,059,935 15,470,464 160,530,399
Bills payable and SSURA 14,917,502 — 14,917,502 8,731,403 26,166 8,757,569 Bills payable and SSURA 13,867,994 — 13,867,994 8,431,403 — 8,431,403
Accrued interest and other expenses 646,980 — 646,980 531,396 — 531,396 Accrued interest and other expense 599,806 — 599,806 587,579 — 587,579
Other liabilities Other liabilities
Bills purchased-contra 4,631,187 — 4,631,187 3,021,230 — 3,021,230 Bills purchased-contra 4,628,187 — 4,628,187 3,018,208 — 3,018,208
Accounts payable 1,241,861 — 1,241,861 1,176,681 — 1,176,681 Accounts payable 1,169,232 — 1,169,232 1,088,285 — 1,088,285
Manager’s checks 973,031 — 973,031 836,404 — 836,404 Manager’s checks 898,615 — 898,615 789,926 — 789,926
Margin deposits 655,500 — 655,500 1,119,049 — 1,119,049 Margin deposits 655,500 — 655,500 1,119,049 — 1,119,049
Deposits on lease contracts — 412,242 412,242 — 304,245 304,245 Cash letters of credit 285,671 — 285,671 1,255,053 — 1,255,053
Cash letters of credit 285,671 — 285,671 1,255,053 — 1,255,053 Due to PDIC 168,643 — 168,643 153,779 — 153,779
Outstanding acceptances 147,955 — 147,955 183,769 — 183,769 Outstanding acceptances 147,955 — 147,955 183,769 — 183,769
Due to PDIC 168,643 — 168,643 153,779 — 153,779 Due to Treasurer of the Philippines 59,703 — 59,703 61,292 — 61,292
Due to Treasurer of the Philippines 63,081 — 63,081 64,669 — 64,669 Derivative liabilities 59,487 — 59,487 4,286 — 4,286
Derivative liabilities 59,487 — 59,487 4,286 — 4,286 Miscellaneous — — — 13 — 13
Miscellaneous 204,022 — 204,022 63,419 — 63,419 171,815,612 18,341,377 190,156,989 161,752,577 15,470,464 177,223,041
178,246,903 18,927,674 197,174,577 166,278,562 15,800,875 182,079,437 Nonfinancial Liabilities
Nonfinancial Liabilities Deferred tax liabilities — 31,318 31,318 — 30,492 30,492
Deferred tax liabilities — 78,674 78,674 — 66,121 66,121 Accrued taxes payable 32,884 — 32,884 28,897 — 28,897
Accrued taxes payable 58,355 — 58,355 42,807 — 42,807 Income tax payable 4,358 — 4,358 — — —
Income tax payable 36,986 — 36,986 46,622 — 46,622 Withholding taxes payable 48,271 — 48,271 46,095 — 46,095
Withholding taxes payable 53,751 — 53,751 50,882 — 50,882 Other liabilities — 410,316 410,316 — 509,314 509,314
Other liabilities — 478,640 478,640 19 564,098 564,117 85,513 441,634 527,147 74,992 539,806 614,798
178,395,995 19,484,988 197,880,983 166,418,892 16,431,094 182,849,986 171,901,125 18,783,011 190,684,136 161,827,569 16,010,270 177,837,839

Parent Bank
2012 2011
Due Within Due Beyond Due Within Due Beyond
One Year One Year Total One Year One Year Total
21. Operating Lease Contracts
Financial Assets - at gross
Cash and other cash items 5,834,451 — 5,834,451 4,607,502 — 4,607,502
Due from BSP 27,679,351 — 27,679,351 32,305,984 — 32,305,984 The Group leases the premises of most of its offices and branches for periods ranging from one to 20 years from the date of the
Due from other banks 2,083,221 — 2,083,221 1,851,226 — 1,851,226 contracts, which terms are renewable upon the mutual agreement of the parties. Rent expense charged to operations (included
Interbank loans receivable and SPURA 226,775 — 226,775 1,098,579 — 1,098,579 under “Occupancy expense” in the statement of income) amounted to 317.9 million and 319.5 million in 2012 and 2011,
Financial assets at FVPL 822,597 — 822,597 1,923,896 — 1,923,896 respectively, for the Group and 287.7 million and 300.3 million in 2012 and 2011, respectively, for the Parent Bank.
AFS financial assets — 23,334,117 23,334,117 — 20,026,754 20,026,754
HTM investments — 28,016,774 28,016,774 — 28,073,365 28,073,365
Loans and receivables
Receivables from customers 41,427,464 34,986,275 76,413,739 31,512,438 26,001,345 57,513,783
(Forward)

136 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 137
 Future minimum rentals payable under non-cancelable operating leases are as follows: The regulations also provide for MCIT of 2.0% on modified gross income and allow NOLCO. The MCIT and NOLCO may be applied
against the Bank’s income tax liability and taxable income, respectively, over a three-year period from the year of incurrence.
Consolidated Parent Bank
2012 2011 2012 2011 Current tax regulations also provide for the ceiling on the amount of entertainment, amusement and recreation (EAR) expense
Within one year 403,078 214,551 250,703 193,913 that can be claimed as a deduction against taxable income. In 2012 and 2011, EAR amounted to 161.8 million and 76.4
After one year but not more than five years 625,927 416,879 572,554 375,338 million, respectively, for the Group and 158.3 million and 72.4 million, respectively, for the Parent Bank (see Note 23).
After more than five years 142,916 85,013 134,014 74,286 Under the regulation, EAR expense allowed as a deductible expense for a service company like the Parent Bank and some of its
1,171,921 716,443 957,271 643,537 subsidiaries is limited to the actual EAR paid or incurred but not to exceed 1.0% of net revenue.

In 2011, the BIR issued Revenue Regulations (RR) No. 4-2011 which requires banks to allocate and claim as deduction only those costs and
expenses attributable to RBU to arrive at the taxable income of the RBU subject to regular income tax. Any cost or expense related with
or incurred for the operations of the FCDU are not allowed as deduction from the RBU’s taxable income. In computing for the amount
22. Miscellaneous Income allowable as deduction from RBU operations, all costs and expenses should be allocated between RBU and FCDU by specific identification.

This account consists of the following: FCDU offshore income (income from non-residents) is tax-exempt while gross onshore income (income from residents) is subject
to 10.0% income tax. In addition, interest income on deposit placements with other FCDUs and offshore banking units (OBUs) is
taxed at 7.5%. Income derived by the FCDU from foreign currency transactions with non-residents, OBUs, local commercial banks
Consolidated Parent Bank including branches of foreign banks is tax-exempt while interest income on foreign currency loans from residents other than
Note 2012 2011 2012 2011 OBUs or other depository banks under the expanded system is subject to 10.0% income tax.
Rent income 28 24,285 22,665 30,107 28,270
Income from assets acquired 20,512 41,308 6,328 42,737 The provision for income tax consists of:
Dividends 10,205 8,734 132,842 7,132
Others 135,286 448,663 35,020 398,008
Consolidated Parent Bank
190,288 521,370 204,297 476,147
2012 2011 2012 2011
Current:
Others include recovery on written-off accounts and penalty charges. Final tax 676,044 654,760 663,163 647,987
RCIT 171,064 147,683 — —
MCIT 86,507 70,030 75,009 70,030
933,615 872,473 738,172 718,017
Deferred (31,705) (12,820) 826 (4,299)
23. Miscellaneous Expense
901,910 859,653 738,998 713,718
This account consists of the following:
The reconciliation of the statutory income tax to the effective income tax is shown below:

Consolidated Parent Bank

Consolidated Parent Bank
Note 2012 2011 2012 2011
2012 2011 2012 2011
Representation and entertainment 24 161,824 76,426 158,306 72,421
Postage, telephone, cable and telegram 138,453 136,671 127,289 126,763 Statutory income tax 1,232,715 1,175,794 1,046,266 846,071
Travelling expense 107,128 104,515 99,844 96,305 Tax effects of:
Fuel and lubricant 85,859 76,001 78,640 68,545 FCDU income (458,688) (364,703) (458,688) (364,703)
Stationery and supplies used 81,372 83,403 72,409 75,016 Nondeductible expenses 644,122 441,448 628,544 426,713
Management and other professional fees 77,607 83,619 60,205 80,712 Net unrecognized DTA (38,323) 168,810 (31,381) 205,426
Supervision and examination fees 74,768 62,076 71,904 60,415 Tax paid and tax-exempt income (227,990) (248,817) (241,784) (248,738)
Computer-related expense 59,429 32,258 58,637 32,203 Nontaxable income (249,926) (312,879) (203,959) (151,051)
Advertising 35,014 33,640 25,475 31,941 Effective income tax 901,910 859,653 738,998 713,718
Fees and commission 18,590 22,048 15,091 20,636
Freight expense 12,762 18,230 10,279 15,516
Membership fees 9,046 8,678 8,731 8,172 Components of net deferred tax liabilities are as follows:
Fines, penalties and other charges 1,939 4,506 1,396 269
Miscellaneous 66,584 82,182 35,376 24,795 Consolidated Parent Bank
930,375 824,253 823,582 713,709 2012 2011 2012 2011
Deferred tax asset on:
Allowance for credit and impairment losses 38,148 20,559 — —
Unrealized loss on foreclosed assets 6,258 5,665 — —
Accumulated depreciation on investment properties 6,186 467 — —
24. Income and Other Taxes MCIT — 41 — —
Others 725 — — —
Under Philippine tax laws, the RBU of the Parent Bank and its domestic subsidiaries are subject to percentage and other taxes 51,317 26,732 — —
(presented as “Taxes and licenses” in the statement of income) as well as income taxes. Percentage and other taxes paid consist Deferred tax liability on:
principally of gross receipts tax (GRT) and documentary stamp taxes (DST). Income taxes include corporate income tax, as Lease income differential between finance and
discussed below, and 20.0% final taxes paid, which is a final withholding tax on gross interest income from government securities operating lease method (52,373) (28,245) — —
and other deposit substitutes. Unrealized gain on AFS financial assets (24,515) (15,823) — —
Retirement asset (22,819) (3,171) (1,904) (1,904)
The corporate income tax rate is 30.0%. Interest allowed as a deductible expense is reduced by an amount equivalent to 33.0% Expense on LTNCD (15,446) (13,680) (15,446) (13,680)
of interest income subjected to final tax. Unrealized gain on financial assets at FVPL (5,052) (3,608) (5,052) (3,608)
Unrealized gain on foreclosure — (19,655) — (2,629)
Others (9,786) (8,671) (8,916) (8,671)
(129,991) (92,853) (31,318) (30,492)
Net deferred tax liabilities ( 78,674) ( 66,121) ( 31,318) ( 30,492)

138 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 139
 Components of net deferred tax assets shown in the consolidated statement of financial position follow:
25. Capital

2012 2011 As at December 31, 2012 and 2011, the Bank’s equity consists of:
Deferred tax asset on:
Allowance for credit and impairment losses 83,548 52,570 Note
Provision for accrual of expenses 2,516 3,308 Common stock - 1 par value 1
Retirement liability 1,911 1,990 Authorized shares - 1,497,170,231 shares in 2012 and 2011
Others 1,843 1,737 Subscribed - 1,497,170,231 shares (net of subscription receivable of 12,327) 1,484,843
89,818 59,605 Special Preferred stock - 1 par value 1
Deferred tax liability on: Authorized shares - 1,752,829,769 shares in 2012
Unrealized gain on foreclosure (2,918) (5,350) Subscribed
Lease income differential between finance and operating lease method (1,050) — Capital notes 1 12,000,000
Unrealized gain on FVPL (10) (54) 13,484,843
(3,978) (5,404)
Net deferred tax assets 85,840 54,201
Common Shares
A substantial portion of the outstanding common shares of the Bank remains sequestered as a result of the sequestration
The Group and the Parent Bank did not set up deferred tax asset on the following temporary differences: orders issued by the PCGG on June 26, 1986. Court proceedings on the ownership issue have been ongoing since then with the
Sandiganbayan and the Supreme Court. In the meantime, PCGG exercises the right to vote on the sequestered shares of the Bank.
Consolidated Parent Bank
2012 2011 2012 2011 On July 11, 2003, the Sandiganbayan promulgated its “Partial Summary Judgment” granting the ROP’s “Motions for Partial
Summary Judgment” and stated that 64.98% of the Bank’s shares of stock, which form part of the 72.2% charged by the
Allowance for credit and impairment losses 5,431,396 5,414,282 5,671,991 5,313,711 Philippine Coconut Authority (PCA) to the Coconut Consumers Stabilization Fund (CCSF), are conclusively owned by the ROP and
NOLCO 277,081 4,172,110 266,014 4,157,813 that the Bank’s shares registered in the name of defendant Cojuangco and those of his dummies and nominees belong to the ROP
Unrealized loss on AFS financial assets 192,706 82,589 192,706 82,406 as the true and beneficial owner.
MCIT 176,828 107,036 176,750 107,036
Accrued expense 80,118 19,277 80,118 19,277 On May 11, 2007, the Sandiganbayan ruled that there are no more triable issues that have to be addressed that would
Unrealized foreign exchange loss 70,476 61,708 70,476 61,708 necessitate the presentation of evidence by the parties. The Sandiganbayan had rendered Partial Summary Judgment
Accumulated depreciation on investment properties 44,514 62,892 63,056 57,441 promulgated on July 11, 2003 that practically excluded any other issue concerning the ownership of the 72.2% shares of the
Unrealized loss on foreclosure 40,119 — 40,119 — Bank, which the Court has declared to be owned by the government.
6,313,238 9,919,894 6,561,230 9,799,392
As the Sandiganbayan had already declared Presidential Decree (P.D.) 755 to be constitutionally infirm: “(i) for having allowed
Management believes that the future income tax benefits arising from these temporary differences can be realized in the coming years. the use of the CCSF to benefit directly private interests by the outright and constitutional grant of absolute ownership of the
UCPB (formerly First United Bank or “FUB”) shares paid for by PCA entirely with the CCSF to the undefined “coconut farmers”,
The breakdown of NOLCO with the corresponding validity periods follow: which negated or circumvented the national policy or public purpose declared by P.D. No. 755 to accelerate the growth and
Consolidated development of the coconut industry and achieve its vertical integration; and (ii) for having unduly delegated legislative power
Year Incurred Amount Applied/Expired Balance Expiry Year to the PCA”, there appears to be no other issue on ownership, such defense of defendants COCOFED, et al. which seeks to prove
during trial will necessarily fail and would only be a futile effort.
2012 1,896 — 1,896 2015
2011 6,472 — 6,472 2014
2010 268,713 — 268,713 2013 While initially, in its Partial Summary Judgment of July 11, 2003, the Court ordered the instant case to proceed with respect to
2009 3,895,029 3,895,029 — 2012 issues not disposed of, it appears that all pertinent issues have already been addressed by the Court and trial could be dispensed
4,172,110 3,895,029 277,081 with. The Sandiganbayan also said that “there is no more point in proceeding with trial where the principal issue of ownership of
the Bank’s shares as well as the relevant sub-issues has already been resolved.”
Parent Bank On May 28, 2007, defendant Cojuangco filed a Motion for Reconsideration/ Modification, praying that the Resolution of the Court
Year Incurred Amount Applied/Expired Balance Expiry Year on May 11, 2007 be reconsidered so as to allow defendant Cojuangco to present evidence in his defense, particularly on the fact
2010 266,014 — 266,014 2013 the Court itself has found relevant but not established because not stipulated upon, and his counterclaims, subject to whatever
2009 3,891,799 3,891,799 — 2012 rebuttal evidence plaintiff may present and, thereafter, the Court may declare its “Partial Summary Judgment” of July 11, 2003,
4,157,813 3,891,799 266,014 subject to whatever modifications it may find appropriate to make, final and subject to appeal by any of the parties.”

On May 28, 2007, COCOFED, et. al., filed a Class Action Petition for Review on Certiorari praying that the Supreme Court: (i)
Details of the MCIT are as follows: annul and set aside the Partial Summary Judgment dated July 11, 2003; (ii) annul and set aside the Partial Summary Judgment
Consolidated dated May 7, 2004 (see Note 29), and Resolution dated May 11, 2007, of the Sandiganbayan; (iii) dismiss with prejudice, the two
cases in so far as COCOFED, et. al., and the more than one million coconut farmers who are similarly situated are concerned;
Year Incurred Amount Applied/Expired Balance Expiry Year
and (iv) lift the sequestration orders of the PCGG issued and levied over the sequestered assets.
2012 75,087 — 75,087 2015
2011 70,030 — 70,030 2014 However, in its Resolution dated June 5, 2007, the Sandiganbayan declared that “in view of its judgment declaring ownership
2010 31,711 — 31,711 2013 in favor of the government of the subject UCPB shares, the Partial Summary Judgment is now considered a final and appealable
2009 5,295 (5,295) — 2012 judgment.”
182,123 ( 5,295) 176,828
On June 20, 2007, defendant Cojuangco filed a Motion for Reconsideration on the Sandiganbayan Resolution dated June 5,
Parent Bank 2007, and the Partial Summary Judgment dated July 11, 2003. The court did not grant defendant Cojuangco any opportunity to
Year Incurred Amount Applied/Expired Balance Expiry Year present evidence on his counterclaims, nor did it render judgment thereon; and the Court’s decision is “indefinite” and may not
2012 75,009 — 75,009 2015 be considered as final and may not be executed in at least two aspects, namely: (i)it does not identify with particularity “the
2011 70,030 — 70,030 2014 Cojuangco UCPB shares of stock” which are declared as belonging to the plaintiff Republic as the true and beneficial owner; and
2010 31,711 — 31,711 2013
2009 5,295 (5,295) — 2012
182,045 ( 5,295) 176,750

140 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 141
 ii) while it includes in its judgment the UCPB shares of stock of alleged fronts, nominees and dummies of defendant Cojuangco The BSP sets and monitors capital requirements for the Bank. In implementing current capital requirements, the BSP requires
which form part of the 72.2% shares of the FUB/UCPB paid for by the PCA, the alleged fronts, nominees and dummies are not the Bank to maintain a prescribed ratio of qualifying capital to risk-weighted assets.
named and identified, much less the particular shares of stock belonging to them.
In addition, the risk-based capital ratio (RBCAR) of a bank, expressed as a percentage of qualifying capital to risk-weighted
On November 29, 2007, the Sandiganbayan resolved that the Motion for Reconsideration of defendant Cojuangco was bereft assets, should not be less than 10.0% for both stand-alone basis (head office and branches) and consolidated basis (Parent
of merit as it found no cogent reasons to reverse its Resolution of June 5, 2007 and the Partial Summary Judgment dated July Bank and subsidiaries engaged in financial allied undertakings but excluding insurance companies). Qualifying capital and risk-
11, 2003. Consequently, defendant Cojuangco filed a separate Petition for Review under Rule 45 praying that the Supreme weighted assets are computed based on BSP regulations. Risk-weighted assets consist of total assets less cash on hand, due from
Court annual the “Partial Summary Judgment” of July 11, 2003, particularly the portion pertaining to the 7.22% UCPB shares BSP, loans covered by hold-out on or assignment of deposits, loans or acceptances under letters of credit to the extent covered
transferred to him. by margin deposits and other non-risk items determined by the MB of the BSP.

On January 24, 2012, the Supreme Court denied the petition of COCOFED, et. al., and affirmed the resolutions issued by the On August 4, 2006, the BSP, under BSP Circular No. 538, issued the prescribed guidelines implementing the revised risk-based
Sandiganbayan on June 5, 2007, that there is no more necessity of further trial with respect to the issue of ownership of (i) the capital adequacy framework for the Philippine banking system to conform to Basel II capital adequacy framework. The new BSP
sequestered UCPB shares, (ii) the CIIF block of SMC shares, and (iii) the CIIF Companies as they have been finally adjudicated in guidelines took effect on July 1, 2007. Thereafter, banks were required to compute their Capital Adequacy Ratio CAR using these
the Partial Summary Judgment dated July 11, 2003 and May 7, 2004. The January 24, 2012 decision, however, did not resolve the guidelines.
issues raised in Cojuangco’s petition.
The Bank’s RBCAR, as submitted to the BSP as at December 31, 2012 and 2011 are shown in the table below:
On February 14, 2012, COCOFED et. al., filed a Motion for Reconsideration (the “Motion”) of the decision rendered by the
Supreme Court on January 24, 2012, citing certain substantial and grave errors of fact. The Motion was denied with finality by Consolidated Parent Bank
the Supreme Court on September 4, 2012. 2012 2011 2012 2011
(In Millions)
On November 27, 2012, the Supreme Court denied defendant Cojuangco’s petition and affirmed the portion of Sandiganbayan’s Tier 1 capital 19,394 16,529 19,333 16,529
Partial Summary Judgment dated July 11, 2003 declaring the UCPB shares transferred to defendant Cojuangco as “conclusively” Tier 2 capital 887 659 799 587
owned by the ROP. As at May 30, 2013, entries of judgment have yet to be issued by the Supreme Court in both the COCOFED, et Gross qualifying capital 20,281 17,188 20,132 17,116
al. and defendant Cojuangco cases. Less required deductions 2,179 1,720 5,541 4,683
Total qualifying capital 18,102 15,468 14,591 12,433
Special Preferred Shares
On May 10, 2011, the SEC approved the amendments on the Articles of Incorporation of the Bank including the reclassification Risk weighted assets 146,954 129,762 136,214 121,299
of 1,002,829,769 unissued common shares and 750,000,000 unissued preferred shares of the Bank, all with par value of 1.0 per Tier 1 capital ratio 11.95% 11.66% 10.71% 10.25%
share into 1,752,829,769 perpetual, non-cumulative, special preferred shares. Total capital ratio 12.32% 11,92% 10.71% 10.25%

In the event of winding up, the holder(s) of Special Preferred Shares shall have no priority claim in respect of principal and
dividends on the Special Preferred Shares which is higher than or equal to that of the depositors, other creditors and holders of The regulatory qualifying capital of the Group and of the Parent Bank consists of Tier 1 (core) capital, which comprises paid-up
Lower Tier 2 and Upper Tier 2 capital instruments, if any, of the Bank. However, the rights and claims of such holder(s) of the common, capital notes, surplus (deficit) including current year profit and surplus reserves less required deductions such as unbooked
Special Preferred Shares, in the event of winding up, are superior to the rights and claims of holder(s) of Common Stock. valuation reserves (except for the 22.7 billion deferral of losses as at December 31, 2012 as discussed in Note 15), unsecured
credit accommodations to directors, officers, stockholders and related interests (DOSRI) and deferred tax. The other component of
No stockholder of the Bank shall have any pre-emptive right or preferential right to purchase or subscribe to: (i) the regulatory capital is Tier 2 (supplementary) capital, which includes unsecured subordinated debt and general loan loss provision.
1,752,829,769 Special Preferred Shares stated above, (ii) any additional Special Preferred Shares, (iii) any unissued Common
Stock upon conversion of Special Preferred Shares, and (iv) any unissued Common Stock upon conversion of the Interim Capital As at December 31, 2012 and 2011, considering the regulatory relief mentioned in Note 1, the Bank has already complied with
Notes of the Bank, with (ii), (iii) and (iv) becoming operative upon an increase in the authorized capital stock of the Bank. the required RBCAR. Also, as discussed in Note 1, on February 26, 2009, the MB of the BSP exempted the Bank from sanctions
that may be imposed for its non-compliance with the 10.0% CAR and all capital-based regulatory ratios for the year 2008 until
Capital Notes such time that the Bank’s Rehabilitation Plan is fully implemented and approved the Bank’s request for temporary relief by
As fully discussed in Note 1, the Bank obtained 12.0 billion financial assistance from PDIC on July 7, 2003 consisting of a 7.0 reducing the Bank’s CAR to 8.0% for a period of three years up to 2011 or until such time that the Bank is able to comply with
billion 5.0% Unsecured Subordinated debt due in 2013 and 5.0 billion proceeds from sale of NPLs with buyback by 2013. On the required 10.0% CAR, whichever comes first.
March 31, 2009, the ROP, PDIC, PCGG and the Bank agreed to convert the PDIC financial assistance into Capital Notes. On
the same date, the Bank issued 12.0 billion Interim Tier 1 Capital Notes (the “Capital Notes” or “Notes”) to PDIC which will
qualify as Interim Tier 1 capital. As discussed also in Note 1, the Capital Notes has no maturity date but shall become due
and demandable if the Bank fails to perform any of its material obligations under the Notes. As not all such obligations are 26. Surplus Reserves
within the control of the Bank, the Capital Notes does not qualify as an equity instrument under PAS 32, Financial Instruments:
Presentation. Under PAS 32, the Capital Notes should be presented as a financial liability in the statement of financial position. This account consists of:
However, as allowed by the BSP and in keeping with the objectives of the Rehabilitation Plan, the Bank has presented the
Capital Notes in the equity section of the statement of financial position. 2012 2011
Reserve for trust business 117,664 117,664
Capital Management Reserve for self-insurance 26,000 26,000
The primary objectives of the Group’s capital management are to ensure that it complies with externally imposed capital Reserve for contingencies 6,000 6,000
requirements and it maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize Others — 746,819
shareholders’ value. 149,664 896,483

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the In compliance with existing BSP regulations, 10.0% of the Parent Bank’s income from trust business is appropriated to surplus
risk characteristics of its activities. In order to maintain or adjust the capital structure, the Group may adjust the amount of reserves. This yearly appropriation is required until the surplus reserve for trust business equals 20.0% of the Parent Bank’s
dividend payment to shareholders, return capital structure, or issue capital securities. No changes were made in the objectives, regulatory net worth (see Note 29).
policies and processes from the previous years.
Reserve for self-insurance represents the amount set aside to cover losses due to fire, defalcation by and other unlawful acts of
Regulatory Qualifying Capital the Parent Bank’s personnel or third parties.
Under existing BSP regulations, the determination of the Parent Bank’s compliance with regulatory requirements and ratios
is based on the amount of the Parent Bank’s “unimpaired capital” (regulatory net worth) as reported to the BSP, which is “Others” represents stock dividends declared on common stock in prior years, which were not released to the Parent Bank’s
determined on the basis of regulatory accounting policies which differ from PFRS in some respects. shareholders due to the unsettled sequestration issue. In 2012, the amount of 746.8 million was transferred out of Surplus
Reserves to Deficit.
The amount of surplus funds available for dividend declaration is also determined on the basis of regulatory net worth after
considering certain adjustments.

142 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 143
 As at December 31, 2012 and 2011, the retirement asset liability was fully recognized because it did not exceed the limit as
27. Retirement Plan and Other Employee Benefits provided by PAS 19, Employee Benefits.

Expenses recognized for salaries and employee benefits are presented below: Changes in the present value of retirement obligation follow:

Consolidated Parent Bank

2012 2011 2012 2011 Consolidated Parent Bank
Salaries and wages 1,091,540 1,006,082 928,708 869,495 2012 2011 2012 2011
Fringe benefits 403,478 435,795 370,132 411,850 Balance at beginning of year 1,695,171 1,286,946 1,643,131 1,253,630
Short-term medical benefits 126,098 137,332 120,429 124,582 Actuarial losses 223,156 348,682 213,183 322,648
Retirement - defined benefit plan 123,211 84,126 112,584 76,690 Benefits paid (135,620) (143,185) (132,953) (129,084)
1,744,327 1,663,335 1,531,853 1,482,617 Interest cost 112,039 116,400 108,447 112,827
Current service cost 114,448 86,328 107,986 83,110
Balance at end of year 2,009,194 1,695,171 1,939,794 1,643,131
The Parent Bank and its significant subsidiaries have funded noncontributory defined benefit retirement plans covering all their
respective permanent and full-time employees. The movements in the fair value of plan assets follow:

The principal actuarial assumptions used in determining the retirement liability of the Parent Bank and significant subsidiaries as Consolidated Parent Bank
at January 1, 2012 and 2011 are shown below: 2012 2011 2012 2011
Balance at beginning of year 1,502,624 1,469,193 1,484,309 1,444,114
2012 2011 Actuarial gains (losses) 119,863 (12,191) 119,559 (12,352)
Parent Parent Benefits paid (135,620) (143,185) (132,953) (129,084)
Company USB USI Company USB USI Expected return on plan assets 104,950 117,088 103,902 115,530
Average remaining working life 16 years 16 years 16 years 16 years 16 years 17 years Contributions 117,104 71,719 106,237 66,101
Discount rate 6.6% 6.9% 12.0% 9.0% 10.7% 12.0% Balance at end of year 1,708,921 1,502,624 1,681,054 1,484,309
Expected rate of return on assets 7.0% 6.0% 7.0% 8.0% 6.0% 7.0%
Future salary increases 5.0% 6.0% 5.0% 6.0% 6.0% 5.0%
The movements in unrecognized actuarial gains (losses) follow:

As at December 31, 2012, the discount rate (with reference to PDST-R2 index) of the Parent Bank, USB and USI is 6.6%, 6.9% and
Consolidated Parent Bank
12.0%, respectively.
2012 2011 2012 2011
The overall expected rate of return on plan assets is determined based on the market prices prevailing on that date applicable Balance at beginning of year ( 196,484) 165,903 ( 165,169) 171,526
to the year over which the obligation is to be settled. Actuarial losses on retirement obligation (223,156) (348,682) (213,183) (322,648)
Actuarial gains (losses) on plan assets 119,863 (12,191) 119,559 (12,352)
The net retirement asset (liability) of the Group and the Parent Bank follows: (299,777) (194,970) (258,793) (163,474)
Actuarial gains (losses) recognized 1,674 (1,514) 53 (1,695)
Balance at end of year ( 298,103) ( 196,484) ( 258,740) ( 165,169)
Consolidated Parent Bank
2012 2011 2012 2011
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Fair value of plan assets 1,708,921 1,502,624 1,681,054 1,484,309
Present value of obligation 2,009,194 1,695,171 1,939,794 1,643,131
Deficit (300,273) (192,547) (258,740) (158,822) 2012 2011
Unrecognized actuarial losses (298,103) (196,484) (258,740) (165,169)
Parent Parent
Net retirement asset (liability) ( 2,170) 3,937 — 6,347 Bank USB USI Bank USB USI
Cash and cash equivalents 6.92% 37.27% 15.33% 6.09% 30.59% 15.33%
Fixed income 42.72% 49.45% 51.39% 50.73% 66.55% 51.39%
Retirement asset (liability) included in Other assets (Other liabilities) are as follows:
Equity instruments 45.06% 3.18% 30.92% 36.40% — 30.92%
Others 5.30% 10.10% 2.36% 6.78% 2.86% 2.36%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Consolidated Parent Bank
Note 2012 2011 2012 2011
Retirement asset 14 4,201 10,570 — 6,347 The amounts included in “Compensation and fringe benefits” in the statement of income are as follows:
Retirement liability 19 (6,371) (6,633) — —
Net retirement asset ( 2,170) 3,937 — 6,347
Consolidated Parent Bank
2012 2011 2012 2011
The movements in the retirement asset (liability) recognized in the statement of financial position follow:
Current service cost 114,448 86,328 107,986 83,110
Interest cost 112,039 116,400 108,447 112,827
Expected return on plan assets (104,950) (117,088) (103,902) (115,530)
Consolidated Parent Bank Amortizations of actuarial gains (losses) 1,674 (1,514) 53 (1,695)
2012 2011 2012 2011 123,211 84,126 112,584** 78,712*
Balance at beginning of year 3,937 16,344 6,347 18,958
* P2.0 million of which pertains to retirement expense charged by the Parent Bank to subsidiaries for seconded employees.
Retirement expense (123,211) (84,126) (112,584) (78,712)
** P2.4 million of which pertains to retirement expense charged by the Parent Bank to subsidiaries for seconded employees.
Contributions 117,104 71,719 106,237 66,101
Balance at end of year ( 2,170) 3,937 — 6,347

144 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 145
 The actual return on plan assets follows: BSP Circular No. 560 provides the rules and regulations that govern loans, other credit accommodations and guarantees
granted to subsidiaries and affiliates of banks and quasi-banks. Under the said Circular, the total outstanding loans, other credit
Consolidated Parent Bank accommodations and guarantees to each of the bank’s/quasi-bank’s subsidiaries and affiliates shall not exceed 10.0% of the net
2012 2011 2012 2011 worth of the lending bank/quasi-bank, provided that the unsecured portion of which shall not exceed 5.0% of such net worth.
Actuarial gains (losses) on plan assets 119,863 ( 12,191) 119,559 ( 12,352) Further, the total outstanding loans, credit accommodations and guarantees to all subsidiaries and affiliates shall not exceed 20.0%
Expected return on plan assets 104,950 117,088 103,902 115,530 of the net worth of the lending bank/quasi-bank; and the subsidiaries and affiliates of the lending bank/quasi-bank are not related
224,813 104,897 223,461 103,178 interest of any director, officer and/or stockholder of the lending institution, except where such director, officer or stockholder sits
in the BOD or is appointed officer of such corporation as representative of the bank/quasi-bank. As at December 31, 2012 and 2011,
the total outstanding loans, other credit accommodations and guarantees to each of the Parent Bank’s subsidiaries and affiliates did
The Group and the Parent Bank expect to contribute 141.3 million and 127.3 million, respectively, to its retirement plan in 2013. not exceed 10.0% of the Parent Bank’s net worth, as reported to the BSP, and the unsecured portion did not exceed 5.0% of such net
worth and the total outstanding loans, other credit accommodations and guarantees to all such subsidiaries and affiliates represent
Amounts for the current and previous years follow: 8.6% and 10.5%, respectively, of the Parent Bank’s net worth.

The account balances with respect to transactions of the Parent Bank with its subsidiaries as at and for the years ended
Consolidated December 31, 2012 and 2011 follow:
2012 2011 2010 2009 2008
Fair value of plan assets 1,708,921 1,502,624 1,469,193 1,187,066 970,068 Elements of Transactions
Present value of retirement obligation 2,009,194 1,695,171 1,286,946 1,041,886 976,655 Statements of Financial Statements of
Surplus (deficit) (300,273) (192,547) 182,247 145,180 (6,587) Position Amounts Income Amounts
Experience adjustments on retirement obligation 36,790 (76,210) 55,026 (78,381) 250,520
Nature of
Experience adjustments on plan asset 119,863 (12,191) 234,563 158,421 (64,806)
Related Party Transaction 2012 2011 2012 2011 Terms Conditions
Change in assumptions 186,366 (154,022) 144,694 77,427 (243,765)
USB Loans and receivable 300,000 80,000 — — 29 and 44 days;5.25% Unsecured
Accounts receivable 54 684 — — On-demand Unsecured
Parent Bank
Deposit liabilities 86,141 118,558 — — On-demand;0.25%
2012 2011 2010 2009 2008 Interest income — — 6,496 3,422
Fair value of plan assets 1,681,054 1,484,309 1,444,114 1,159,254 938,510 Interest expense — — 149 157
Present value of retirement obligation 1,939,794 1,643,131 1,253,630 1,002,301 949,867 Rent income — — 4,141 2,939 3 years
Surplus (deficit) (258,740) (158,822) 190,484 156,953 (11,357) ULFC Loans and receivable 840,250 650,250 — — 30 and 31 days;5.45% Unsecured
Experience adjustments on retirement obligation 34,510 (51,427) 51,427 (94,352) 255,438 Accounts receivable 120 414 — — On-demand Unsecured
Experience adjustments on plan asset 119,559 (12,352) 234,358 157,830 (64,585) Deposit liabilities 287,416 95,759 — — On-demand;0.25% Unsecured
Change in assumptions 178,674 (154,022) 154,022 77,171 (242,863) Interest income — — 37,578 34,263
Interest expense — — 197 179
Rent income — — 1,507 3,153 5 years
USI Accounts receivable 152 200 — — On-demand Unsecured
Deposit liabilities 35,483 33,888 — — On-demand;0.25%
28. Related Party Transactions Interest expense — — 124 55
Rent income — — 1,090 1,260 3 years
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise BRC Loans and receivable 98,470 193,714 — — 59 days;7% Unsecured
significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if Deposit liabilities 29,928 17,722 — — On-demand;0.25%
they are subject to common control or common significant influence. Interest income — — 1,495 14,111 35 days;2%
Interest expense — — 118 150
In the ordinary course of business, the Group has loan and deposit transactions with certain directors, officers, stockholders, GHDC Deposit liabilities 37,614 24,464 — — On-demand;0.25%
and related interests (DOSRI). The Parent Bank also has loans and deposit transactions with its subsidiaries and associates. Under UPI-MHC Accounts receivable 105,070 105,070 — — On-demand
existing policies of the Group, these loans are made on substantially the same terms as loans granted to other individuals and Deposit liabilities 509 1,799 — — On-demand;0.25%
businesses of comparable risks. Existing banking regulations limit the amount of individual loans to DOSRI, 70.0% of which must Interest expense — — 4 19
be secured, to the total of their respective deposits and book value of their respective investments in the lending company
UFEC Deposit liabilities 5,089 5,020 — — On-demand; 0.25% and
within the Group. In the aggregate, loans to DOSRI generally should not exceed the respective total equity or 15.0% of the total
Interest expense — — 161 72 30 days; 3.25%
loan portfolio of the Group, whichever is lower. In 2012 and 2011, interest income on DOSRI loans amounted to 11.0 million and
10.7 million, respectively.

BSP Circular No. 423 dated March 15, 2004 amended the definition of DOSRI accounts. The following table shows information
Transactions with Subsidiaries
relating to the loans, other credit accommodations and guarantees classified as DOSRI accounts under regulations existing prior
For the years ended December 31, 2012 and 2011, transactions with subsidiaries involving financial assets at FVPL and AFS
to the said Circular, and new DOSRI loans, other credit accommodations granted under said circular:
financial assets include outright sales totaling 6.5 billion and 5.8 billion, respectively, and outright purchases totaling
7.8 billion and 5.7 billion, respectively. Gains (losses) on sale of financial assets at FVPL and AFS financial assets in 2012 and
2011 amounted to 15.3 million and 26.7 million, respectively.
Consolidated Parent Bank
2012 2011 2012 2011 In 2012 and 2011, the Parent Bank purchased lease contracts and other loans receivables from ULFC, on a without recourse
Total outstanding DOSRI accounts* 220,366 289,868 217,704 287,058 basis, with a total price of 709.45 million and 570.6 million, respectively.
Percent of DOSRI accounts granted prior to effectivity
of BSP Circular No. 423 to total loans 0.26% 0.46% 0.29% 0.50% The Parent Bank has lease agreements with some of its subsidiaries in 2012 and 2011 with monthly rental of 0.6 million for both
Percent of DOSRI accounts granted after effectivity years for periods ranging from one to three years. The lease agreements include the share of the subsidiaries in the maintenance
of BSP Circular No. 423 to total loans 0.26% 0.46% 0.29% 0.50% of the building. The income related to these agreements, is included as rent income under “Miscellaneous income” in the Parent
Percent of DOSRI accounts to total loans 0.26% 0.46% 0.29% 0.50% Bank’s statement of income.
Percent of unsecured DOSRI accounts to total DOSRI accounts 18.21% 14.13% 18.43% 14.27%
Percent of past due DOSRI accounts to total DOSRI accounts* 1.58% 1.22% 1.60% 1.24%
Accounts receivable from UPI-MHC pertains to expenses paid by the Parent Bank, which were billed subsequently for reimbursement.
*As reported to the BSP

146 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 147
 Transactions with Associates when it has sufficient surplus to cover such appropriation. As at December 31, 2012 and 2011, the cumulative unrecognized
The account balances with respect to transactions of the Parent Bank with its associates as at and for the years ended December 31, 2012 appropriation amounted to 181.6 million and 176.2 million, respectively.
and 2011 follow:
On March 5, 1981, the BSP directed the Bank to manage the investments of the CIIF. The Bank, as administrator of the CIIF
Elements of Transactions through its BOD, placed the CIIF assets under the management of the Trust Banking Group (TBG).
Statements of Financial Statements of
Position Amounts Income Amounts The Parent Bank has investments in LOCI, SPMC, SLCOMI and GMC. The CIIF forms part of the CCSF, otherwise known as the
Nature of coconut levy fund which was created in 1973 by Presidential Decree No. 276. These CIIF companies have investments in 14
Related Party Transaction 2012 2011 2012 2011 Terms Conditions Holding Companies whose funds were invested in SMC shares that were sequestered by the PCGG in May 1986.
LOCI Loans receivable 464,193 335,117 — — 111-165 days;4% Unsecured The ownership of the CIIF block of SMC shares, as well as the CIIF companies, became the subject of legal proceedings before
Deposit liabilities 32,431 11,373 — — On-demand;0.25% the Sandiganbayan and Supreme Court.
Interest income — — 20,226 16,525
Interest expense — — 206 33 On January 24, 2012, the Supreme Court declared that the CIIF block of SMC shares of stock totaling 33,133,266 shares as of
Trust fees from CIIF — — 424 451 1983 together with all the dividends declared, paid and issued thereon as well as any increments thereto arising from, but
SPMC Loans receivable 15,346 — — — 51-55 days; 0% Unsecured not limited to, exercise of pre-emptive rights are declared owned by the government to be used only for the benefit of all
Deposit liabilities 36,398 22,198 — — On-demand;0.25% coconut farmers and for the development of the coconut industry and ordered reconveyed to the government. The Supreme
Interest income — — — 308 Court affirmed the resolution issued by the Sandiganbayan on June 5, 2007, that there is no more necessity of further trial with
Interest expense — — 65 41
respect to the issue of ownership of the CIIF block of SMC shares, and the CIIF Companies as they have been finally adjudicated
Trust fees from CIIF — — 149 117
in the Partial Summary Judgment dated July 11, 2003 and May 7, 2004.
SLCOMI Deposit liabilities 1,629 261 — — On-demand;0.25%
Interest expense — — 2 1 On February 14, 2012, COCOFED et. al., filed a Motion for Reconsideration on the decision rendered by the Supreme Court on
Trust fees from CIIF — — 12 8 January 24, 2012, citing certain substantial and grave errors of fact. The Motion for Reconsideration was denied with finality by
GMC Loans receivable 550,645 804,358 — — 148-170 days;4% Unsecured the Supreme Court on September 4, 2012. As at May 30, 2013, an entry of judgment has yet to be issued by the Supreme Court
Deposit liabilities 121,524 23,558 — — On-demand;0.25% in the COCOFED, et al. case.
Interest income — — 21,008 20,781
Interest expense — — 137 71 On December 28, 2012, the Bank filed a Special Civil Action for Declaratory Relief seeking clarification on the Bank’s
Trust fees from CIIF — — 459 460 proportionate right, title and interest in the CIIF Companies, as well as the Bank’s indirect equity in the 14 Holding Companies
UCFDC Deposit liabilities 4,941 337,566 — — On-demand;0.25% and the CIIF block of SMC shares. The case, docketed as Civil Case No. 12-1251 before the Regional Trial Court of Makati Branch
Accounts payable — 24 — — On-demand 59, has not reached the pre-trial stage.
Interest expense — — 76 66

The compensation of the key management personnel of the Group in 2012 and 2011 follows presented as part of “Compensation 30. Commitments and Contingent Liabilities
and fringe benefits” in the statement of income follows:
In the normal course of the Group’s operations, there are various outstanding commitments and contingent liabilities which are
Consolidated Parent Bank not reflected in the accompanying financial statements. The Group recognizes in its books any losses and liabilities incurred in
2012 2011 2012 2011 the course of its operations as soon as these become determinable and quantifiable. No material loss or liability is anticipated to
Short-term employee benefits 301,423 319,955 293,836 284,389 be recognized in the accompanying financial statements as a result of these commitments and transactions.
Termination benefit — 18,623 — 18,623
Post-employment benefits 1,662 1,455 — — The following is a summary of contingencies and commitments at their peso-equivalent contractual amounts arising from off-
303,085 340,033 293,836 303,012 balance sheet items:

Consolidated Parent Bank

Transactions with Other Related Party Note 2012 2011 2012 2011
Loans and receivables from Stepan Philippines, Inc., a related party through the associates, amounted to 182.7 million and Trust department accounts 29 112,400,418 95,056,740 112,400,418 95,056,740
320.7 million as at December 31, 2012 and 2011, respectively, with related interest income of 4.5 million and 6.6 million in Standby letters of credit 1,965,785 1,781,271 1,965,785 1,781,271
2012 and 2011, respectively. Sight import LC outstanding 612,240 1,282,846 612,240 1,282,846
Spot exchange sold 533,650 920,640 533,650 920,640
Usance impor tletters of credit outstanding 187,863 341,424 187,863 341,424
Outward bills for collection 175,382 136,741 175,382 136,741
29. Trust Operations Spot exchange bought 20,525 2,148,160 20,525 2,148,160
Others 5,295,536 4,993,428 5,274,978 4,903,461
Securities and other properties amounting to 112.4 billion and 95.1 billion as at December 31, 2012 and 2011, respectively, 21,191,399 106,661,250 121,170,841 106,571,283
held by the Bank in fiduciary or agency capacity (for a fee) for its customers, are not included in the accompanying statement of
financial position since these are not properties of the Bank (see Note 30).
The Group received various letter notices and preliminary assessment notices from the Bureau of Internal Revenue (BIR) for
In compliance with the requirements of the General Banking Act relative to the Bank’s trust functions: taxable years 1998 to 2002. The Group, and all other banks with FCDU operations, was assessed for the FCDU’s GRT and DST.
The assessments were protested on the basis of their legality. Compromise settlements were made with the BIR and the Group is
a. Investments in government securities with total face value of 1.1 billion (included under AFS financial assets) and 907.5 still waiting for the issuance of clearances.
million (included under HTM investments) as at December 31, 2012 and 2011, respectively, are deposited with the BSP as
security for the Bank’s faithful compliance with its fiduciary obligations; and The Group is defendant in various cases pending in courts for alleged claims against the Group, the outcome of which are not
fully determinable at present. However, in the opinion of the Group’s management, the liabilities or losses, if any, arising from
b. 10.0% of the Bank’s trust income is transferred to surplus reserve. This yearly transfer is required until the surplus reserve for these claims is not material and should be recorded upon their final determination.
trust function is equivalent to 20.0% of the Bank’s authorized capital stock. Income from trust operations is reported net of
the related expenses.

As at December 31, 2012 and 2011, the reserve for trust functions amounted to 117.7 million and is shown as part of “Surplus
reserves” in the statement of financial position (see Note 26). The amount of surplus for appropriation for 2012 and 2011 in
compliance with BSP requirement amounted to 5.4 million and 6.5 million, respectively. This will be recognized by the Bank

148 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 149
 Segment information as at and for the year ended December 31 follows:
31. Segment Information

The Group’s operating businesses are recognized and managed separately according to the nature of services provided and 2012
the different markets served with each segment representing a strategic business unit. The Group derives revenues from the BBG CCBG Treasury Other Segments USB Total
following main operating business segments: Interest income 40,860 4,943,826 4,230,362 41,854 865,282 10,122,184
Interest expense (1,934,221) (39,995) (1,164,062) (22,211) (107,803) (3,268,292)
Branch Banking Group
Net interest income (expense) (1,893,361) 4,903,831 3,066,300 19,643 757,479 6,853,892
The Branch Banking Group oversees the operation of the Group’s branches and ATM networks, which are the primary sales and
Depreciation and amortization (247,945) — — (238,459) (38,348) (524,752)
distribution platforms for products and services. Its primary tasks are to: solicit deposits; cross-sell and distribute all of the
Provision for (reversal of) credit
Group’s products and services, as allowed by regulation; generate sales leads for specialized products; and manage customer and impairment losses — — — (552,584) (79,611) (632,195)
relationships.
Net interest income (expense)
after depreciation and impairment (2,141,306) 4,903,831 3,066,300 (771,400) 639,520 5,696,945
Corporate and Consumer Banking Group
Other income (2,349,830) 2,459,484 2,407,621 1,270,603 187,612 3,975,490
The Corporate and Consumer Banking Group (CCBG) manages the Group’s loan portfolio. It has a Consumer Banking Division
Other expenses (771,062) (200,922) (150,831) (3,312,314) (415,379) (4,850,508)
to handle the consumer loan market, a Corporate and Commercial Banking Division to handle the corporate and institutional
loan markets, and a Remittance Marketing Division for the overseas remittance market. Apart from credit lines, the Corporate Net income or loss before income tax (5,262,198) 7,162,393 5,323,090 (2,813,111) 411,753 4,821,927
and Commercial Banking Division also provides transactional banking, trade finance, foreign exchange, trust banking, financial Provision for income tax (151) (11,913) (630,550) (144,161) (115,135) (901,910)
advisory and capital markets solutions to its corporate and institutional clients. Net income (loss) for the year ( 5,262,349) 7,150,480 4,692,540 ( 2,957,272) 296,618 3,920,017
Total assets 153,535,933 11,922,050 33,077,954 11,585,440 8,457,415 218,578,792
The CCBG also oversees the Group’s equity brokerage business through USI and the Group’s lease financing business through ULFC. Total liabilities 158,798,627 3,091,169 27,796,030 2,046,386 6,148,771 197,880,983

Treasury Group
The TG manages the Group’s assets and liabilities. Working with the Asset and Liability Committee, TG recommends the pricing
strategy for deposits and loans to ensure that deposit-taking units offer competitive yields to generate the funding requirements 2011
of the Group, and the lending units, in turn, offer rates that will attract the targeted borrowers. In addition, TG manages the BBG CCBG Treasury Other Segments USB Total
regulatory reserve requirements of the Group as well as ensures its liquidity position. The TG also engages in fixed income
Interest income 40,020 4,219,138 4,401,272 23,531 782,526 9,466,487
securities and foreign exchange trading.
Interest expense (1,896,130) (63,833) (818,394) — (82,312) (2,860,669)
USB Net interest income (expense) (1,856,110) 4,155,305 3,582,878 23,531 700,214 6,605,818
The Group considers USB as one operating business segment. USB manages the Group’s consumer loan market particularly Depreciation and amortization (199,730) (50,356) — (243,819) (36,342) (530,247)
focusing on public school teachers and employees of local government units. USB also provides services such as deposit-taking, Provision for (reversal of) credit
domestic fund transfers and treasury. and impairment losses — (481,982) (15,443) 75,128 (49,675) (471,972)
Net interest income (expense)
Other Segments after depreciation and impairment (2,055,840) 3,622,967 3,567,435 (145,160) 614,197 5,603,599
This segment includes other segments that provide support to its core activities. Other income 929,385 285,620 657,264 1,314,726 167,872 3,354,867
Other expenses (741,692) (123,178) (88,199) (3,676,337) (417,136) (5,046,542)
Management monitors the operating results of its business units separately for the purpose of making decisions about resource Net income or loss before income tax (1,868,147) 3,785,409 4,136,500 (2,506,771) 364,933 3,911,924
allocation and performance assessment. Segment performance is evaluated based on net income before income tax, which is Provision for income tax — (4,122) — (725,120) (130,411) (859,653)
measured in a manner consistent with that in the statement of income. Net income (loss) for the year ( 1,868,147) 3,781,287 4,136,500 ( 3,231,891) 234,522 3,052,271

Segment assets are those operating assets that are employed by a segment in its operating activities and that either directly Total assets 136,424,795 9,595,867 38,234,571 11,742,436 4,473,769 200,471,438
attributable to the segment or can be allocated to the segment on a reasonable basis. Total liabilities 153,026,133 4,232,622 20,525,390 392,870 4,672,971 182,849,986

Segment liabilities are those operating liabilities that result from the operating activities of a segment and that either are
directly attributable to the segment or can be allocated to the segment on a reasonable basis.
32. Financial Performance
The Group’s assets producing revenues are located in the Philippines (i.e., one geographical location), therefore, geographical
segment information is no longer presented. The following basic ratios measure the financial performance of the Group and the Parent Bank before the effects of the
adjustments related to the exceptions discussed in the Statement of Compliance under Note 2 to the financial statements for
The Group has no significant customers which contribute 10.0% or more of the consolidated revenue, net of interest expense. the years ended December 31, 2012 and 2011:
Consolidated Parent Bank
Funds are ordinarily allocated between segments, resulting in funding cost transfers disclosed in operating income. Interest 2012 2011 2012 2011
charged for these funds is based on the Group’s cost of capital. There are no other material items of income or expense Return on average equity (a/b) 20.5% 19.5% 31.4% 30.8%
between business segments. a. Net income 3,920,017 3,059,660 2,748,557 2,106,520
b. Average equity 19,159,631 15,691,771 8,764,862 6,842,083

Return on average assets (c/d) 1.9% 1.6% 1.4% 1.2%

c. Net income 3,920,017 3,059,660 2,748,557 2,106,520
d. Average total assets 209,525,115 186,948,683 193,025,849 177,931,399

Net interest margin (e/f) 4.2% 4.7% 3.8% 4.0%

e. Net interest income 6,853,892 6,605,818 5,908,624 5,753,871
f. Average earning assets 164,413,354 140,741,299 155,751,680 142,232,458

150 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 151
 II. Based on RR No. 15-2010
33. Supplementary Information Required by the Bureau of Internal Revenue (BIR)
The Parent Bank reported and/or paid the following types of taxes for 2012:
In addition to the disclosures mandated under PFRS, and such other standards and/or conventions as may be adopted,
companies are required by the BIR to provide in the notes to the financial statements, certain supplementary information for Gross Receipt Tax
the taxable year. Under the Philippine tax laws, financial institutions are subject to percentage and other taxes as well as income taxes.
Percentage and other taxes paid by the Parent Bank consist principally of GRT and DST.
The amounts relating to such information may not necessarily be the same with those amounts disclosed in the financial
statements which were prepared in accordance with PFRS. The following is the Parent Bank’s tax information required for the Details of the Parent Bank’s income and related GRT accounts in 2012 are as follows:
taxable year ended December 31, 2012 under Regular/Normal Rate:

I. Based on Revenue Regulations (RR) No. 19-2011 Gross Receipts GRT

Interest income 7,388,781 327,064
A. Sales/Receipts/Fees Other income 1,712,458 119,872
RBU FCDU 9,101,239 446,936
Interest income:
Loans and receivable 5,052,944 —
Trading and investment securities 62,758 — Other Taxes and Licenses
Due from BSP and other banks 107,329 — In 2012, other taxes and licenses of the Parent Bank consist of:
Interbank loans receivable 1,785 —
Total 5,224,816 — Amount
Documentary stamps tax* 405,284
B. Direct Cost of Services
Fringe benefit tax 16,186
RBU FCDU
Local taxes 56,196
Interest expense 1,749,100 — Others 1,269
Salaries and wages and other contributions 571,534 23,742
478,935
Supervision and examination fees 60,043 1,132
Insurance expense - PDIC 252,070 7,453
*Includes DST charged to the Parent Bank’s clients/customers
Total 2,632,747 32,327

C. Operating and Other Income

Withholding Taxes
RBU FCDU
Details of total remittances in 2012 and balance of withholding taxes as at December 31, 2012 are as follows:
Trading gain 354,529 —
Service charges and fees 504,649 17,693
Income from trust operation 132,540 — Total Remittances Balance
Gain on asset sold/exchange 54,492 —
Foreign exchange gain 39,032 — Final withholding taxes 356,258 31,028
Miscellaneous 73,131 1,510 Withholding taxes on compensation and benefits 196,030 13,842
Total 1,158,374 19,203 Expanded withholding taxes 48,535 3,399
600,823 48,269
D. Itemized Deductions
RBU FCDU
Compensation and employee benefits 550,462 22,867 Tax Assessments and Cases
Taxes and licenses 546,540 — As at December 31, 2012, the Parent Bank has an ongoing case with the Supreme Court on FCDU GRT.
Security, messengerial and janitorial 315,415 8,540
Depreciation expense 306,022 12,270
Amortization 65,312 2,713
Occupancy expense:
Rent expense 271,972 9,687
Power, light, water 123,089 5,113
Repairs and maintenance 40,819 1,696
IT expenses 45,019 1,870
Litigation expense 44,811 —
Insurance expense 39,730 1,436
Miscellaneous expense:
Loss on sale of Loss on sale of real and other properties acquired 93,791 —
Telephone and postage 90,735 3,769
Travelling expense 79,416 2,891
Representation and entertainment 63,832 3,311
Fuel and lubricant 61,016 2,420
Stationery and supplies 55,821 2,309
Management and other professional fee 41,727 944
Advertising and publicity 19,767 815
Fees and commission expense 14,269 647
Director’s fees 9,296 386
Freight expense 8,763 328
Membership fees 7,864 —
Fines and penalties 1,367 —
Periodicals and magazines 610 25
Miscellaneous 24,723 17,744
Total 2,922,188 101,781

152 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 153
 BRANCHES AS OF MAY 2013
BRANCHES AS OF MAY 2013
REGIONAL OFFICES MINDANAO REGION Anonas E. Rodriguez Tomas Morato Pioneer RIZAL P. Ocampo
UCPB Building, R. Magsaysay Hi-Top Supermart, Aurora 2 Judge Jimenez Street F.C. Building, 290 Tomas San Buena Building, 9 Shaw Blvd. Torre Lorenzo Building, Taft
METRO MANILA 1 REGION corner Sales Streets, Davao City Boulevard corner F. Castillo St., corner E. Rodriguez Sr. Morato Avenue, Quezon City corner Pioneer St., Pasig City Antipolo Avenue corner P. Ocampo St.,
Torre Lorenzo Building, (082) 221-2696 Project 4, Quezon City Avenue, Brgy Pinagkaisahan, (02) 922-1694; 924-7505 (02) 631-3261 to 62 Circumferential Road, Barangay Malate, Manila
Taft Avenue corner P. (082) 300-3658 (fax) (02) 421-0753 to 54 Cubao, Quezon City (02) 924-6783 (fax) (02) 631-3271 (fax) San Roque, Antipolo City (02) 536-3119; 536-3120
Ocampo Street (02) 913-8301 (fax) (02) 726-8649; 726-1063 (02) 696-7804; 630-1091 (02) 523-1766 (fax)
Malate, Manila METRO MANILA (02) 726-1067 (fax) Visayas Avenue San Miguel (02) 696-7806 (fax)
(02) 521-5667; 521-8397 Araneta Avenue Far East Asia Commercial Unit D San Miguel Properties P. Paterno
(02) 521-9436 (fax) CALOOCAN / MALABON / Doña Nena Building, 425 Lagro Complex, 282 Visayas corner Center, St. Francis Avenue, Cainta 713 P. Paterno Street,
NAVOTAS CITIES Araneta Avenue corner St. Andrew Building, Congressional Avenues, Quezon City Ortigas Center, Mandaluyong City UCPB Building, Felix Avenue, Quiapo, Manila
METRO MANILA 2 REGION Bayani Street, Quezon City Quirino Highway, Lagro, (02) 924-5504; 924-5107 (02) 632-0855 to 57 Junction, Cainta, Rizal (02) 733-4239; 733-4941
Tres Hermanas Inc. Building 10th Ave. Caloocan (02) 732-9087; 713-1838 Novaliches, Quezon City (02) 924-5884 (fax) (02) 632-0862 (fax) (02) 655-4050 to 52 (02) 733-4225 (fax)
Roosevelt Avenue corner 10th Avenue, cor. A. Mabini (02) 731-2260 (fax) (02) 930-7291; 930-7293 (02) 655-3037 (fax)
Quezon Avennue, Quezon City Street, Caloocan City (02) 930-7276 (fax) Welcome Rotonda Tektite San Andres
(02) 372-4740; 372-4741 (02) 310-5090; 310-5091 Aurora Boulevard 299 E. Rodriguez Avenue, West Tower, Philippine Stock Masinag Marc 2000 Tower, 1973 Taft
(02) 372-4739 (02) 310-5093 UCPB Building, 725 Aurora Blvd., Loyola Heights Quezon City Exchange Center, Exchange Road, Silicone Valley Building, Avenue corner San Andres Street,
New Manila, Quezon City SMRC Building, 331 Katipunan (02) 740-8462 to 64 Ortigas Center, Pasig City Sumulong Highway, Antipolo City Malate, Manila
METRO MANILA 3 REGION Caloocan (02) 584-9752 to 55 Avenue, Loyola Heights, (02) 712-9751 (fax) (02) 638-6756; 638-6758 (02) 682-3018; 682-3013 (02) 524-5426; 524-8116
UCPB Building, 725 Aurora 283 EDSA corner Gen. Tinio (02) 584-9751 (fax) Quezon City (02) 638-6759 (fax) (02) 681-5849 (fax) (02) 524-8107 (fax)
Boulevard, New Manila, Street, Morning Breeze (02) 927-6672 to 75 West Avenue
Quezon City Subdivision, Caloocan City Banaue (02) 433-4308 (fax) CBT Building, 60 West Avenue, MANDALUYONG Q. Plaza Soler
(02) 584-9708; 410-6525 (02) 361-9779; 361-9729 PPSTA Dormitory Building, Quezon City Q. Plaza Commercial Complex, Aceada Building, 949-951
(02) 414-7764 (fax) (02) 366-0428 (fax) 245 Banaue Street, Quezon City Mindanao Avenue (02) 371-9796; 374-2143 Boni Avenue Imelda Avenue corner Marcos Soler Street, Binondo, Manila
(02) 732-5131; 732-5132 UCPB Building, 14 Mindanao (02) 374-3048 (fax) Jemtee Building, 677 Boni Highway, Cainta, Rizal (02) 245-0216; 245-0016
METRO MANILA 4 REGION Grace Park (02) 7712-6388 (fax) Avenue, Dominic Subdivision, Avenue corner Aliw St., (02) 645-7068; 645-2547 (02) 245-0011 (fax)
UCPB Building, 190 Katipunan Solid Tech Services Building, Tandang Sora, Quezon City SAN JUAN Mandaluyong City (02) 645-2541 (fax)
Avenue cor. Raja Matanda St., 205 Rizal Avenue Extension Batasan (02) 453-8616; 929-3718 (02) 533-7651 to 53; T.M. Kalaw
Blue Ridge A, Quezon City corner 6th Avenue, Caloocan City Sweet Haven Square Building, (02) 983-9477 (fax) Annapolis (02) 532-1944 (fax) Taytay Traveller’s Life Building, 490
(02) 437-8831; 437-8828 (02) 365-7305 to 07 Commonwealth Avenue corner Atlanta Centre Building, Fortunil Building, National T.M. Kalaw corner Cortada St.,
(02) 647-1499 (fax) (02) 362-1266 (fax) Villongco Street, Quezon City Muñoz Annapolis St., Greenhills, Kalentong Road, San Juan, Taytay, Rizal Ermita, Manila
(02) 430-9066; 951-0188 304 Roosevelt Avenue corner San Juan 214 Romualdez corner (02) 658-6986 to 89 (02) 522-4775; 522-0746
METRO MANILA 5 REGION Karuhatan (02) 951-1998 (fax) M.H. del Pilar Street, (02) 722-7176; 726-6662 Kalentong Streets, (02) 658-6990 (fax) (02) 524-0504 (fax)
UCPB Building, 358 Shaw 246 McArthur Highway, San Francisco del Monte, (02) 722-8197 (fax) Mandaluyong City
Boulevard, Mandaluyong City Karuhatan, Valenzuela City Blue Ridge Quezon City (02) 532-0771; 718-0246 MANILA Tomas Mapua
(02) 533-4801 (02) 291-5224 to 25 UCPB Building, 190 Katipunan (02) 372-2421; 372-2422 Greenhills (02) 531-0959 (fax) Hian Chiong Building, 725 Tomas
(02) 727-3145 (fax) (02) 293-1390 (fax) Avenue corner Raja Matanda (02) 372-2423 (fax) A&E Building, Ortigas Avenue, Binondo Mapua Street, Sta. Cruz, Manila
Street, Blue Ridge A, Quezon City Greenhills, San Juan Mandaluyong 509-513 Q. Paredes Street, (02) 733-3367; 734-3158
METRO MANILA 6 REGION Malabon (02) 647-1089; 647-1515 New Manila (02) 722-6961 to 64 UCPB Building, 358 Shaw Binondo, Manila (02) 733-3359 (fax)
Richville Corporate Center, 153 M.H. Del Pilar corner (02) 647-1499 (fax) Cortes Building, 958 E. (02) 721-3393 (fax) Boulevard, Mandaluyong City (02) 242-5961 to 62
1314 Commerce Ave. Extension, Gov. A. Pascual, Tinajeros, Rodriguez, Sr. Avenue, (02) 727-5233; 727-1842 (02) 242-5665 (fax) U.N. Avenue
Madrigal Business Park Malabon City Bohol Avenue Quezon City N. Domingo (02) 726-2192 (fax) Medical Center Manila
Ayala Alabang, Muntinlupa City (02) 352-4776; 352-6119 UCPB Building, Sgt. Esguerra (02) 722-5474; 722-4714 UCPB Building, 120 N. Domingo Elcano Building, U.N. Avenue corner
(02) 807-2929; 807-2931 (02) 442-6900 (fax) Street corner Quezon Avenue, (02) 721-8658 (fax) Street, San Juan City Robinsons Galleria 601-603 Elcano corner Gen. Luna Street, Ermita, Manila
(02) 807-2930 (fax) South Triangle, Quezon City (02) 726-0521; 744-5564 Galleria Corporate Center, EDSA San Nicolas Streets, (02) 521-3089; 521-3091
Malanday (02) 926-7626; 927-5606 Novaliches (02) 724-8008 (fax) corner Ortigas Avenue, Quezon City Binondo, Manila (02) 521-3090 (fax)
METRO MANILA 7 REGION UCPB Building, McArthur (02) 922-2098 (fax) UCPB Building, 937 Quirino (02) 633-4951; 637-1688 (02) 244-4251 to 53
Ground Floor, UCPB Highway corner P. Adriano St., Highway, Novaliches, Quezon City PASIG (02) 632-9550 (fax) (02) 242-9405 (fax) MAKATI
Corporate Offices, 7907 Malanday, Valenzuela City Cambridge (02) 939-5590; 419-1609
Makati Avenue, Makati City (02) 445-8825, 794-6316 Coronet Building, Cambridge (02) 939-6435 (fax) Hanston Square Shangri-la Plaza Escolta Main Office
(02) 811-9224; 811-9226 (02) 292-3657 (fax) Street corner Aurora Blvd., Hanston Square Building, 1st Level Shangri-la Plaza FUB Building, David corner Ground Floor, UCPB
(02) 811-9227 (telefax) Cubao, Quezon City P. Tuazon 17 San Miguel Avenue, Ortigas Mall, EDSA corner Shaw Blvd., Escolta Streets, Sta. Cruz, Manila Corporate Offices, 7907
Navotas (02) 912-2339 to 40 STG Building, 190 P. Tuazon Center, Pasig City Mandaluyong City (02) 243-1326 to 29 Makati Avenue, Makati City
NORTH-CENTRAL LUZON REGION Lot 1 Lapu-Lapu Avenue (02) 912-2341 (fax) St. corner 10th Avenue, Cubao, (02) 706-0937 to 39 (02) 633-9276 to 79 (02) 241-4869 (fax) (02) 811-9243; 811-9245
UCPB Building, Sto. Rosario corner North Bay Boulevard, Quezon City (02) 706-0434 (fax) (02) 634-3183 (fax) (02) 811-9222 (fax)
corner Plaridel Streets, Kaunlaran Village, Navotas City Commonwealth Avenue (02) 911-7221; 911-7202 Juan Luna
Angeles City, Pampanga (02) 355-5588; 282-3881 UCPB Building, 125 Commonwealth (02) 911-7208 Ortigas MARIKINA First Binondo Centre Building, Aguirre
(045) 625-9230 (02) 282-3880 (fax) Avenue, Diliman, Quezon City Emerald Building, 14 F. Ortigas Jr. 524 Juan Luna Street, PET Building, 114 Aguirre St.,
(045) 887-2156 (fax) (02) 931-9395 to 96 Quirino Highway Avenue, Ortigas Center, Pasig City Concepcion Binondo, Manila Legaspi Village, Makati City
Paso de Blas (02) 931-0471 (fax) 380 Oeshram Building, (02) 636-0680; 631-6415 David Building, Bayan-Bayanan (02) 243-1980; 243-1982 (02) 892-3778; 817-8217
SOUTH LUZON REGION Servando Building, Paso de Sangandaan, Quirino Highway, (02) 631-6413 (fax) Avenue, Concepcion, Marikina City (02) 243-1981 (fax) (02) 892-3757 (fax)
UCPB Building, Quezon Avenue Blas, Malinta, Valenzuela City Del Monte-Bonifacio Novaliches, Quezon City (02) 942-2328 to 29
and Leon Guinto St., Lucena City (02) 332-8515; 291-1099 161 Del Monte Avenue, (02) 938-6863 to 64 Pasig (02) 948-4020 (fax) Malate Ayala Avenue
(042) 373-6821 (02) 293-2811 (fax) Quezon City (02) 938-6865 (fax) UCPB Building, 12 Dr. Sixto 1322 Golden Empire Tower, Ayala Life - FGU Center,
(042) 710-2303 (telefax) (02) 367-0072; 415-2792 Antonio Avenue, Kapasigan, Marikina Roxas Boulevard corner Padre 6811 Ayala Avenue, Makati City
QUEZON CITY (02) 367-0073 (fax) Roosevelt Avenue Pasig City 20 Sumulong Highway, Sto. Faura, Ermita, Manila (02) 845-1630; 845-1240
VISAYAS REGION Tres Hermanas, Inc. Building, (02) 641-0336; 641-0338 Niño, Marikina City (02) 567-0020; 353-3325 (02) 845-1265 (fax)
UCPB Building, Osmeña Acropolis Diliman Roosevelt corner Quezon (02) 641-3451 (fax) (02) 646-9639; 646-9641 (02) 526-7455 (fax)
Boulevard, Cebu City The Village Center, 187 E. J&L Building, 23 Matalino Avenue, Quezon City (02) 646-9640 (fax) Chino Roces
(032) 253-3798 Rodriguez Jr. Avenue, Street, Brgy. Central, (02) 372-4740 to 41 Alegria Building, 2229 Don
(032) 253-0344 (fax) Bagumbayan (Libis), Quezon City Diliman, Quezon City (02) 372-4739 (fax) Chino Roces Avenue, Makati City
(02) 635-6872; 438-1177 (02) 921-6217; 921-9688 (02) 816-4675; 819-1223
(02) 655-4614 (fax) (02) 922-1030 (fax) (02) 893-1657 (fax)

154 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 155
 BRANCHES AS OF MAY 2013
BRANCHES AS OF MAY 2013
Dela Rosa Reposo - J.P. Rizal Malibay Sucat ISABELA ZAMBALES Lipa - Recto San Pablo
Asian Mansion I Building, Margarita Building, 748 JP Rizal St., Commercial Building, 715 EDSA, 8415 Dr. A. Santos Avenue, Wood Heights Building, C.M. Recto UCPB Building, Rizal Avenue
109 Dela Rosa Street, Legaspi Brgy. Poblacion, Makati City Malibay, Pasay City Brgy. San Antonio, Sucat, Cauayan Olongapo Avenue, Lipa City, Batangas corner P. Alcantara Street,
Village, Makati City (02) 553-0393 to 95 (02) 889-9467 to 69 Parañaque City C. Uy Building, National UCPB Building, 1869 Rizal (043) 756-1811; 312-3811; San Pablo City, Laguna
(02) 894-4445; 812-8433 (02) 553-0396 (fax) (02) 844-3644 (fax) (02) 825-0839; 829-2517 Highway, Cauayan City, Isabela Avenue, West Bajac-Bajac, (043) 756-1312 (fax) (049) 562-0977; 562-7721
(02) 815-2163 (fax) (02) 825-0841 (fax) (078) 652-3116; 662-1323 Olongapo City (049) 562-5120 (fax)
Salcedo (078) 652-3117 (fax) (047) 223-4870; 222-3478 Sto. Tomas
Guadalupe Philcox Building, 172 Salcedo St., MUNTINLUPA / Zapote (047) 222-3046 (fax) NDN Building, 34 JP Laurel Sta. Cruz
Tan Hock Building, P. Burgos Legaspi Village, Makati City PARAÑAQUE / LAS PIÑAS UCPB Building, Real Street, Santiago Highway, Brgy. San Roque, Sto. UCPB Building, P. Guevarra and
corner EDSA, Guadalupe Nuevo, (02) 893-4251; 892-6916 Alabang-Zapote Road, UCPB Building, National Subic Bay Freeport Tomas, Batangas P. Burgos Streets, Sta. Cruz,
Makati City (02) 894-0430 (fax) Alabang Las Pinas City Highway corner Camacam St., Royal Sky Plaza, Royal Gateway (043) 784-8360; 784-8210 Laguna
(02) 882-0364; 882-4311 Civic Prime Building, 2501 Civic (02) 873-0939; 873-0207 Santiago, Isabela District, Argonaut Highway, (043) 784-8226 (fax) (049) 501-2590; 810-0728
(02) 882-4577 (fax) Tordesillas corner Market Drive, Filinvest (02) 873-0217 (fax) (078) 305-2561; 305-2903 Subic Freeport Zone (049) 808-2003 (fax)
Tower A, Three Salcedo Place Corporate City, Alabang, (078) 682-7097 (fax) (047) 252-7447; 252-6247 Tanauan
Herrera Condominium, 102 Tordesillas St., Muntinlupa City NORTH-CENTRAL LUZON (047) 252-2421 (fax) P&G Commercial Complex, Sta. Rosa
Coherco Corporate Center, Salcedo Village, Makati City (02) 846-7445 to 46 NUEVA VIZCAYA JP Laurel Highway, Tanauan City, UCPB Building, National Highway
116 V.A. Rufino Street, Legaspi (02) 843-4022 to 23 (02) 856-4294 (fax) BAGUIO CITY PAMPANGA Batangas corner Provincial Highway,
Village, Makati City (02) 843-4024 (fax) Solano (043) 778-6801 to 03 Balibago, Sta. Rosa, Laguna
(02) 813-2990; 813-2992 Aquino Avenue Baguio J.P. Rizal Street, Poblacion, Angeles (043) 778-6804 (fax) (049) 534-1364; 534-1366
(02) 817-8829 (fax) Valero Skyfreight Building, Aquino UCPB Building, Calderon and Solano, Nueva Vizcaya UCPB Building, Sto. Rosario (02) 520-8424 (fax)
Antel 2000 Corporate Center, Avenue, Parañaque City T. Claudio Streets, Baguio City (078) 326-5487; 326-5047 corner Plaridel Streets CAVITE
J.P. Rizal 121 Valero Street, Salcedo Village, (02) 854-5292; 854-5161 (074) 442-3132; 443-4685; (078) 326-5619 (fax) Angeles City, Pampanga QUEZON
905 J.P. Rizal corner Santiago St., Makati City (02) 854-5689 (fax) (074) 442-3133 (fax) (045) 625-9818; 888-2754 Dasmariñas
Brgy. Poblacion, Makati City (02) 887-5255 to 57 BATAAN (045) 888-1672 (fax) Toledo Building, 2-A Sampaloc 1, Gumaca
(02) 897-0020; 899-7235 (02) 887-5258 (fax) Baclaran ILOCOS NORTE / Aguinaldo Highway, Dasmariñas, Dalisay Building, Gen.
(02) 899-7236 (fax) UCPB Building, 4010 Airport ILOCOS SUR Balanga Clark Field Cavite Antonio Luna and Bonifacio
TAGUIG Road, Baclaran, Paranaque City UCPB Building, Don M. Banzon Lily Hill Plaza, C.M. Recto Highway, (046) 416-6956 to 57 Streets, Gumaca, Quezon
Makati Avenue (02) 853-9746 to 47 Laoag Avenue, Balanga City, Bataan Clark Freeport Zone, Pampanga (046) 416-6953 (fax) (042) 421-1312; 317-6304
Tower A Somerset Olympia 32nd Street BGC (02) 852-1251 (fax) Bueno Building, J.P. Rizal corner (047) 237-2765; 791-2084 (045) 599-3472 to 73 (042) 317-7712 (fax)
Condominium, Makati Avenue F1 Building, 32nd Street, E. Ruiz Streets, Laoag City (047) 237-2875 (fax) (045) 599-3474 (fax) Imus
corner Sto. Tomas St., Urdaneta Bonifacio Global City, Taguig BF Parañaque (077) 771-4475; 772-2037 Maliksi Building, Tanzang Luma, Lucena - Centro
Village, Makati City (02) 478-7623; 478-0357 EJV Building, 21 Aguirre Avenue, (077) 771-5800 (fax) Limay San Fernando Aguinaldo Highway, Imus, Cavite Quezon Avenue corne San
(02) 892-1511 to 14 (02) 478-0834 (fax) BF Homes Commercial Center, UCPB Building, Roman National U2 Building, McArthur Highway, (046) 471-0306; 471-2494 Fernando St., Lucena City
(02) 813-2288 (fax) Parañaque City Vigan Highway, Alangan, Limay, Bataan Dolores, San Fernando, Pampanga (02) 529-8608 (fax) (042) 373-1431; 660-7080
Global City (02) 836-4945; 836-4937 UCPB Building, M.L. Quezon (047) 244-5890; 244-5891 (045) 961-4581; 961-4582 (042) 373-7138 (fax)
Marvin Plaza Fort Palm Spring Building, (02) 836-4946 (fax) Avenue, Vigan City, Ilocos Sur (047) 244-5892 (fax) (045) 963-1942 (fax) Molino
Marvin Plaza Building, Don 30th Street, corner 1st Avenue, (077) 722-2720; 632-0086 Sologrande Center, Molino, Lucena - Guinto
Chino Roces Avenue, Makati City Bonifacio Global City, Taguig Bicutan (077) 722-2719 (fax) BULACAN TARLAC Bacoor, Cavite UCPB Building, Quezon
(02) 893-0480; 840-3502 (02) 659-3749; 659-3753 J&M Mendoza Building, Doña (046) 476-0500; 476-0503 Avenue and Leon Guinto
(02) 893-0485 (fax) (02) 846-5609 (fax) Soledad Avenue corner Argentina LA UNION Balagtas Paniqui (046) 476-0504 (fax) Street, Lucena City
Street, Better Living Subdivision, Roma Building, 491 McArthur UCPB Building, National (042) 710-2417; 660-3667
Metropolitan Avenue McKinley Hill Parañaque City La Union Highway, San Juan, Balagtas, Highway, Paniqui, Tarlac Rosario (042) 710-3659 (fax)
Bormaheco Condominium, IPC Building, Upper Mckinley (02) 824-3337; 823-5260 Unison Realty Building, Quezon Bulacan (045) 931-0225; 326-0109 UCPB Building, Gen. Trias Drive,
Metropolitan Avenue corner Road, Fort Bonifacio, Taguig (02) 821-9774 (fax) Avenue, San Fernando, La Union (044) 693-2748; 769-1224 (045) 931-0554 (fax) Rosario, Cavite MINDORO
Zapote St., Makati City (02) 519-1800; 478-7139 (072) 242-0491; 888-5733; (044) 769-1900 (fax) (046) 438-3712 to 14
(02) 899-4128; 897-1647 (02) 519-1655 (fax) Las Piñas (072) 242-0492 (fax) Tarlac (02) 529-8818 (fax) Calapan
(02) 899-1751 (fax) URCI Townhomes, Alabang Baliuag Que Kian Juat Building, F. Tanedo St., Baniway Building, J.P. Rizal Street,
The Fort Zapote Road, Pamplona 3, PANGASINAN PVR Building, Benigno S. Aquino San Nicolas, Tarlac City LAGUNA Brgy. San Vicente, Calapan City,
Pasay Road Units 114-115, Forbes Wood Las Pinas City Avenue, Baliuag, Bulacan (045) 982-0158; 982-3028 Oriental Mindoro
Ginbo Building, 824 Arnaiz Heights Condominium, Rizal Drive, (02) 871-1883; 871-2961 Dagupan (044) 766-3227 to 28 (045) 982-0159 (fax) Biñan (043) 288-5678; 288-5252;
Avenue, San Lorenzo Village, Bonifacio Global City, Taguig (02) 873-2896 (fax) UCPB Building, A. B. Fernandez (044) 766-7703 (fax) UCPB Building, Biñan Business (043) 288-1733 (fax)
Makati City (02) 856-6045 to 47 Avenue corner Herrero St., SOUTHERN LUZON Center, National Highway,
(02) 813-6501; 813-6483 (02) 856-6049 (fax) Madrigal Dagupan City Meycauayan Platero, Biñan, Laguna San Jose
(02) 813-6497 (fax) Richville Corporate Center, (075) 522-0709; 515-3855 Sarmiento Building, McArthur BATANGAS (049) 411-3889; 411-3899 Lopez Jaena Street, San Jose,
PASAY CITY 1314 Commerce Avenue (075) 522-0914 (fax) Highway, Calvario, Meycauayan, (02) 520-6724 (fax) Occidental Mindoro
Pasong Tamo Extension Extension, Madrigal Business Park, Bulacan Batangas (043) 491-1014
Jannov Plaza, 2295 Pasong Coral Way Ayala-Alabang, Muntinlupa City Urdaneta (044) 815-2389; 840-2708 UCPB Building, C. Tirona corner Calamba (043) 491-2038 (fax)
Tamo Extension, Makati City Fly Ace Corporate Center, 13 (02) 807-2927 to 29 UCPB Building, Alexander St., (044) 815-3300 (fax) P. Zamora Streets, Batangas City Lazaro and Borres Building,
(02) 893-1586; 810-5805 Coral Way, Central Business (02) 807-2930 (fax) Urdaneta City, Pangasinan (043) 723-3490; 300-3490 National Road, Crossing, ALBAY
(02) 892-5169 (fax) Park, Pasay City (075) 568-1003; 656-2208 NUEVA ECIJA (043) 723-0250 (fax) Calamba, Laguna
(02) 808-6680; 808-6684 Muntinlupa (075) 568-2828 (telefax) (049) 545-2252; 545-2902 Legaspi
Puyat - Bautista (02) 808-6703 (fax) Elizabeth Center Building, Cabanatuan Lemery (02) 520-8837 (fax) UCPB Building, Quezon
Majalco Building, Gil Puyat National Road, Putatan, CAGAYAN Ramoso Building, Burgos Avenue UCPB Building, Ilustre Avenue Avenue Legaspi City
Avenue and Bautista St., F.B. Harrison Muntinlupa City and A. Bonifacio St., Cabanatuan City corner Gen. Luna Street, Laguna (052) 480-8721; 820-6450
Palanan, Makati City AIMS Building, A. Arnaiz (02) 862-0025 to 26 Tuguegarao (044) 463-2558; 463-1941 Lemery, Batangas UCPB Building, Km. 32 Old (052) 480-7881 (fax)
(02) 815-1324 to 26 Avenue corner F.B. Harrison (02) 862-0027 (fax) Lim Building, A. Luna and A. (044) 463-2168 (fax) (043) 214-2588; 411-1019 National Highway, San Pedro,
(02) 893-2852 (fax) Street, Pasay City Bonifacio Streets, Tuguegarao (043) 411-1362 (fax) Laguna
(02) 551-9381; 831-5790 City, Cagayan (02) 808-4193; 808-5374
(02) 833-2919 (fax) (078) 844-1060 to 61 Lipa - Big Ben (02) 808-3934 (fax)
(078) 844-1059 (fax) Big Ben Commercial Building,
Ayala Highway, Lipa City, Batangas
(043) 756-7131; 312-0103
(043) 756-7130 (fax)

156 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 157
 BRANCHES AS OF MAY 2013
BRANCHES AS OF MAY 2013
CAMARINES NORTE/ BACOLOD Mandaue Velez GENERAL SANTOS CITY ILOILO Sta. Cruz Sta. Rosa
CAMARINES SUR UCPB Building, National Leonila Building, Apolinar Velez and UCPB Building, Rizal Avenue and M.F. Tiaoqui Building, Plaza Sta. Rosa - Tagaytay Road, Santa
Lacson-Galo Highway, Mandaue, Cebu City Pacana Streets, Cagayan de Oro City General Santos Libertad Street, Jaro, Iloilo City Sta. Cruz, Sta. Cruz, Manila Rosa Estates Commercial,
Daet UCPB Building, Lacson corner (032) 345-2894 to 95 (088) 856-4420; 852-1860 UCPB Building, Santiago (033) 320-3790 (telefax) (02) 733-0258; 733-7860 to 61 Sta. Rosa, Laguna
UCPB Building, F. Pimentel Street, Galo Street, Bacolod City (032) 346-2579 (fax) (088) 856-4474 (fax) Boulevard & Magsaysay (02) 733-0262 (telefax) (049) 508-1784; 508-1785
Daet, Camarines Norte (034) 433-7521 to 25 Avenue, General Santos City NAGA (049) 508-1533 (telefax)
(054) 721-1353; 440-3294 (034) 433-4085 (fax) Mango Avenue LANAO DEL NORTE (083) 552-3783; 552-3574 UCPB Building, Evangelista Street RIZAL
(02) 429-0035 (fax) Gen. Maxilom Avenue, Cebu City (083) 301-4948 (fax) Naga City, Camarines Sur QUEZON
Libertad (032) 233-7771; 233-7566 Iligan (054) 811-2048 (telefax) Morong
Naga UCPB Building, P. Hernaez and (032) 233-7778 (fax) UCPB Building, Mabini & CARAGA REGION 317 T. Claudio Street, Atimonan
UCPB Building, Evangelista Street Doña Juliana Streets, Aguinaldo Streets, Iligan City STO. TOMAS Morong, Rizal Quezon and Rizal Streets,
Naga City, Camarines Sur Bacolod City SM City - Cebu (063) 492-3317; 221-3317 BUTUAN NDN Building, 34 JP Laurel (02) 653-0281; 653-1102 Brgy. Zone II, Atimonan, Quezon
(054) 811-2414 (034) 434-7862; 435-0278 Lower Ground Floor, SM City Cebu, (063) 221-6218 (fax) Highway, Brgy. San Roque, Sto. (02) 653-0282 (telefax) (042) 511-1053; 511-1561
(054) 473-9172 (telefax) (034) 435-2258 (fax) Reclamation Area, Cebu City Butuan Tomas, Batangas (042) 316-5314 (telefax)
(032) 231-7971 to 72 MISAMIS OCCIDENTAL St. Joseph Parish Hall, Ester Luna (043) 702-3759 (telefax) San Mateo
BICOL North Drive (032) 231-7973 (fax) Street, Butuan City 44 General Luna Street, Calauag
Northpoint Building, Oroquieta (085) 341-1010; 342-8624 Brgy. Banaba, San Mateo, Rizal Arguelles corner Quezon
Masbate North Drive, Bacolod City DUMAGUETE UCPB Building, Washington (085) 815-4090 (fax) SUBSIDIARIES (02) 661-6146; 661-6149 Streets, Barangay 5, Calauag,
UCPB Building, Quezon Avenue (034) 435-4114; 434-1370 Street, Oroquieta City (02) 584-9023 (telefax) Quezon
corner Rosero Stairway, Masbate (034) 434-1373 (fax) Dumaguete (088) 531-1123 to 24 SURIGAO (042) 301-7320
(056) 333-2182; 333-2252 UCPB Building, Real and San (088) 531-1444 (fax) Tanay (042) 301-8300 (telefax)
(056) 333-3477 (fax) San Juan Jose Streets,Dumaguete City Surigao F.T. Catapusan Street, Plaza
UCPB Building, San Juan corner (035) 225-4444; 422-7806 Ozamiz UCPB Building, San Nicolas Aldea, Tanay, Rizal Lucban
Sorsogon Luzuriaga Streets, Bacolod City (035) 225-4445 (fax) UCPB Building, Rizal Avenue & and Diaz Streets, Surigao City (02) 654-0880 Rizal Avenue corner San Luis
UCPB Building, Magsaysay (034) 433-7990; 435-4299 Laurel Street, Ozamiz City (086) 231-7151; 231-7153 (02) 654-0818 (telefax) Street, Barangay 8, Lucban,
Avenue and Rizal St., Sorsogon City (034) 434-5437 (fax) EASTERN VISAYAS (088) 521-0322; 521-0323 (086) 826-0299 (fax) Quezon
(056) 211-2058 (088) 521-1516 (fax) UCPB LEASING AND CENTRAL / NORTHERN LUZON (042) 911-1495
(056) 421-5004 (telefax) CENTRAL VISAYAS LEYTE Consumer Finance FINANCE CORPORATION (042) 540-4213 (telefax)
DAVAO REGION Business Centers TARLAC
WESTERN VISAYAS BOHOL Tacloban HEAD OFFICE Sta. Ignacia Tayabas
UCPB Building, Zamora Bajada HEAD OFFICE 14/F UCPB Corporate Offices URI Building, Romulo Highway, Quezon Avenue corner
AKLAN Tagbilaran Street, Tacloban City DASI Building, JP Laurel Ground Floor, UCPB Corporate Makati Avenue, Makati City Poblacion West, Sta. Ignacia, Tarlac General Luna Streets,
UCPB Building, C.P. Garcia (053) 325-5056; 523-7173 Avenue, Davao City Offices, 7907 Makati Avenue, (045) 606-3379; 606-3380 Tayabas, Quezon
Kalibo Avenue, Tagbilaran City (053) 325-8682 (fax) (082) 305-2887; 305-2890 Makati City Marketing (045) 605-0379 (telefax) (042) 793-2329
UCPB Building, Martelino Street, (038) 411-3262; 501-7891 (082) 222-5917 (fax) 811-9000 local 9117 (02) 811-9488; 811-9143 (042) 793-2205 (telefax)
Kalibo, Aklan (038) 411-5204 (fax) SAMAR 811-9106 or 07 (telefax) (02) 811-9613 (fax) BULACAN
(036) 262-3303; 268-4319 Palma Gil MINDORO
(036) 500-7513 (fax) CEBU Calbayog Ground Floor, Cocolife Building, ANGELES Operations Malolos
UCPB Building, Gomez and Nijiaga C.M. Recto Avenue corner Palma UCPB Building, Sto. Rosario (02) 811-9142 Paseo Del Congreso, Catmon, Sablayan
CAPIZ Banilad Streets, Calbayog City, Samar Gil Street, Davao City corner Plaridel Streets Malolos, Bulacan 420 P. Urueta Street, Brgy.
TPE Building, Banilad Road, (055) 209-1456; 209-1384 (082) 222-0900 to 02; Angeles City, Pampanga (044) 794-0022; 794-0188 Buenavista, Sablayan,
Roxas Cebu City (055) 209-3024 (fax) (082) 222-0903 (fax) 888-3632 (telefax) (044) 794-0021 (telefax) Occidental Mindoro
Gaisano Building, Arnaldo (032) 346-9252; 346-9234 (043) 458-0012
Boulevard, Roxas City, Capiz (032) 344-1181 (fax) MINDANAO R. Magsaysay BACOLOD SOUTHERN LUZON (0917) 881-7938
(036) 621-1850; 621-3547 UCPB Building, R. Magsaysay UCPB Building, P. Hernaez and
(036) 621-0239 (fax) Carbon ZAMBOANGA corner Sales Streets, Davao City Doña Juliana Streets, CAVITE PALAWAN
UCPB Building, Manalili and (082) 221-2933; 226-3950 Bacolod City
ILOILO Cebu City Pagadian (082) 221-7608 (fax) (043) 435-2259 (telefax) Tanza Puerto Princesa
(032) 256-1571; 255-3382 Rizal Avenue, Sta. Lucia District, 7 A. Soriano Highway, Daang 55 Roxas Street, Brgy.
Iznart (032) 254-1922 (fax) Pagadian City San Pedro CAGAYAN DE ORO UCPB SAVINGS BANK Amayo 1, Tanza, Cavite Magkakaibigan, Puerto
UCPB Building, Iznart St., Iloilo City (062) 214-1409; 214-1526 UCPB Business Center, Chee Building, Osmeña & Lim Ket (046) 437-1162; 437-1167 Princesa City, Palawan
(033) 335-0741; 337-8843 F. Ramos (062) 241-1410 (fax) San Pedro St., Davao City Kai Avenue, Cagayan de Oro City HEAD OFFICE (02) 529-8970 (telefax) (048) 433-2066
(033) 338-1471 (fax) Yap Building, Ramos St., (082) 221-3227; 226-3865 (088)880-7201 (telefax) 18th Floor, UCPB Corporate Offices, (048) 433-8187 (telefax)
Brgy. Cogon, Cebu City Zamboanga (082) 300-2600 (fax) 7907 Makati Avenue, Makati City LAGUNA
Jaro (032) 255-8497; 256-3772 UCPB Building, Rizal corner CEBU (02) 811-9080
UCPB Building, Rizal Avenue and (032) 255-8498 (fax) Corcuera Streets, Zamboanga City SOCKSARGEN UCPB Building, Osmeña (02) 811-9000 loc. 7231 Alaminos CAMARINES SUR
Libertad Street, Jaro, Iloilo City (062) 991-7791; 991-4576 Boulevard, Cebu City Del Pilar Street, Poblacion,
(033) 320-3477; 329-0746 Jones Avenue (062) 991-1484 (telefax) COTABATO (032) 254-7976 (telefax) METRO MANILA Alaminos, Laguna Caramoan
(033) 320-1948 (fax) UCPB Building, Osmeña (049) 805-1723; 521-0309 41 Real Street, Tawog
Boulevard, Cebu City NORTHERN MINDANAO Cotabato DAGUPAN C.M. Recto (049) 567-1296 (telefax) Caramoan, Camarines Sur
Mabini (032) 253-1251 to 53 UCPB Building, Don Rufino UCPB Building, A. B. Fernandez Saint Augustine Law Building (054) 238-5041
J&B Building, Mabini Street, Iloilo City (032) 256-2901 (fax) CAGAYAN DE ORO Alonzo Street, Cotabato City Avenue corner Herrero St., San Sebastian College- Recoletos, Nagcarlan (02) 697-2421
(033) 337-8008; 335-0429 (064) 421-2640; 421-3229 Dagupan City C.M. Recto, Sampaloc, Manila E.A. Fernandez corner (0917) 850-1381
(033) 335-0415 (fax) Mabolo Cogon (064) 421-3229 (fax) (075) 522-1516 (telefax) (02) 734-6262; 734-6276 E. Lucido Streets, Poblacion,
AMV Bros. Building Almendras Chee Building, Osmeña & Lim Ket (02) 734-6277 (telefax) Nagcaran, Laguna Goa
and F. Cabahug Streets, Kai Avenue, Cagayan de Oro City Kidapawan DAVAO (049) 563-3489; 563-3490 Rizal corner Panday Street, Brgy.
Mabolo, Cebu City (08822) 726-581; 725-135 UCPB Building, Quezon UCPB Building, R. Magsaysay Rizal Avenue (049) 563-3488 (telefax) Poblacion, Goa, Camarines Sur
(032) 233-2123; 233-1500 (088) 857-1840 (fax) Boulevard, Kidapawan, corner Sales Streets, Davao City Tan Han Chi Place , 1558 Rizal (054) 453-1523; 453-0319
(032) 232-7389 (fax) North Cotabato (082) 221-7642 (telefax) Avenue corner Mayhaligue Street, (054) 453-1524 (telefax)
(064) 288-1520; 288-1787 Sta. Cruz, Manila
(064) 288-1421 (fax) (02) 309-9558; 743-7426
(02) 743-0750 (telefax)

158 / UCPB 2012 Annual Report UCPB 2012 Annual Report / 159
 BRANCHES
AS OF MAY 2013
Libmanan MINDANAO
T. Dilanco Street, Brgy.
Poblacion, Libmanan, BASILAN
Camarines Sur
(054) 511-8222 Lamitan
(054) 451-2048 (telefax) Quezon Boulevard, Brgy.
Malakas, Lamitan, Basilan
Pili (062) 936-0018
National Highway, Brgy. Old (062) 991-2681 (telefax) UCPB SECURITIES, INC.
San Roque, Pili, Camarines Sur
(054) 477-7752; 361-1142 DAVAO HEAD OFFICE
(02) 250-8056 (telefax) 7th Floor, UCPB Corporate
Davao Offices, 7907 Makati Avenue,
VISAYAS MK Central Building, J.P. Laurel Makati City
Avenue, Bajada, Davao City
AKLAN (082) 300-0541; 226-3800 Sales and Marketing
(082) 224-4229 (telefax) (02) 811-9975; 811-9978 to 79
Numancia
Estrella Building, National MISAMIS OCCIDENTAL Operations
Highway corner Zamora Street, (02) 811-9970 to 71
Poblacion, Numancia, Aklan Aloran
(036) 265-6953 Jose Mutia Street, Brgy. Ospital, Trading Floor
(036) 265-6952 (fax) Aloran, Misamis Occidental (02) 891-9735 to 37
(0918) 911-3683
CEBU (088) 545-4011 (telefax) Lapasan
Market City, Agora Lapasan
Tuburan MISAMIS ORIENTAL Cagayan de Oro City
Tabo-tabo Street, Poblacion, (088) 555-0264
Tuburan, Cebu City Bulua (0822) 75-6728 (telefax)
(032) 463-9088 Forever Books Building, Zone
(032) 463-9151 (fax) 6, Bulua, Cagayan de Oro City,
Misamis Oriental
ILOILO (088) 858-8063
(08822) 754-519 (telefax)
Iloilo
Angeles Arcade, De Leon Cagayan de Oro
Street, Iloilo City Capistrano Cruz and Taal
(033) 335-0422; 508-7090 Streets, Barangay 7, Cagayan de
(033) 508-7490 (telefax) Oro City, Misamis Oriental
(088) 857-2355; 852-4099
LEYTE (08822) 72-2695 (telefax)

Sogod Lapasan
Osmeña Street, Brgy. Zone III, Market City, Agora, Lapasan,
Sogod, Southern Leyte Cagayan de Oro City
(053) 382-2039 (08822) 555-0264
(053) 382-3262 (telefax) (08822) 75-6728 (telefax)

NEGROS OCCIDENTAL ZAMBOANGA

Bacolod Glan
San Antonio Park Square, 182-C Enrique Yap St., Poblacion,
Brgy. Mandalangan, Bacolod City Glan, Saranggani Province
(034) 709-7485 to 86 (083) 893-0080
(034) 441-2103 (telefax) (083) 262-1010 (telefax)

Escalante Sindangan
New Libra Mart, Victoria Building Mabini St., Brgy. Poblacion,
North Avenue, Escalante City Sindangan, Zamboanga del Norte
Negros Occidental (065) 918-5259
(034) 724-8022; 724-8011 (065) 224-2013 (telefax)
(034) 454-0734 (telefax)

La Castellana
Feria corner Roxas Streets,
Brgy. Robles, La Castellana,
Negros Occidental
(034) 485-0160
(034) 485-0059(telefax)

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