Category: News

MAKATI CITY, Philippines — Bank of the Philippine Islands booked P4.23 billion in provisions for loan losses in the first quarter of 2020 as the COVID-19 pandemic ushers in a difficult period for consumers and businesses that could lead to potentially higher NPLs. This provision is 2.4x more than the P1.80 billion set aside during the same period in 2019.

This resulted in a Net Income of P6.39 billion for first quarter 2020, a decline of 5.0% from P6.72 billion registered in the same period last year.

For the first quarter 2020, total Revenues increased by 10.9% to P25.26 billion. Net Interest Income grew by 13.0%, reaching P18.14 billion. Net Interest Margin was 3.63%, up by 24 basis points from 3.39% in the first quarter of 2019 as lower asset yields were offset by lower cost of funds. Non-Interest Income was P7.12 billion, an increase of 5.8% versus 2019, primarily from higher securities trading gains.

Operating Expenses for the first quarter 2020 totaled P12.53 billion, slightly up by 3.8% from the previous year. Cost-to-Income Ratio was at 49.6%, lower than the 53.0% recorded in the prior year.

Total Loans as of March 31, 2020 reached at P1.45 trillion, up 7.3% year-on-year, with growth recorded in microfinance, SME, consumer, and corporate loan segments at 66.6%, 14.2%, 9.5%, and 6.7%, respectively. Total Deposits increased to P1.68 trillion, up 4.3% year-on-year. The Bank’s CASA Ratio was 73.5%, while the Loan-to-Deposit Ratio was 86.3%.

The Bank’s indicative NPL Coverage Ratio increased to 109.02% in March 2020 compared to 92.55% as of March 2019. NPL Ratio stood at 1.82% as of the end of the first quarter 2020.

As of March 31, 2020, Total Assets stood at P2.19 trillion, higher by 5.1% year-on-year. The Bank’s total securities position was at P338.13 billion, of which 73.5% was in Hold-to-Collect, therefore less sensitive to market risk. Total Equity amounted to P272.70 billion, with an indicative Common Equity Tier 1 Ratio of 15.19% and a Capital Adequacy Ratio of 16.08%, both well above regulatory requirements. Return on Equity was 9.38%, while Return on Assets was 1.21%.

In January 2020, BPI successfully raised P15.3 billion in 2-year peso bonds, followed by another P33.9 billion via a 1.5-year peso bond issuance in March 2020. Both debt capital market transactions further enhanced the Bank’s liquidity position.

The Bank of the Philippine Islands (BPI) today held its first annual stockholders’ meeting via virtual conferencing as it reaffirmed its focus on digitalization, financial inclusion, and sustainability, with a continued emphasis on managing risks, especially those brought on by the coronavirus, or COVID-19.

BPI President and CEO Cezar P. Consing said BPI remains committed to address the needs of all of the Bank’s client segments despite challenges triggered by the pandemic.

“The COVID-19 pandemic has shown the importance of being able to access and transact digitally. And that is why we will continue what has been a 3-year digitalization journey, and continue to invest in technology. The pandemic has also revealed the vulnerability of our MSME sector, which employs the majority of our country’s workers. Our objective to become more financially inclusive and sustainable as a company requires that we continue to support this very important segment.”

Digitalization

Digitalization, which has been an important component of BPI’s strategy in the past few years, has accelerated digital banking.

“Digitalization helps reduce our cost to serve and facilitates banking access and transactions, thereby fostering financial inclusion and sustainability in our operations,” said Mr. Consing.

“Digitalization is gaining considerable traction, with gains that are tangible and visible. Online transactions, which in 2019 were up by 50 percent, account for practically all of the growth in the Bank’s transaction count. About 40 percent of the Bank’s customers are now enrolled in one or more of our digital channels, with 25 percent of all customers being regular digital transactors,” he said.

Mr. Consing revealed that during the enhanced community quarantine (ECQ), 90 percent of all of the Bank’s transactions were done outside branch premises, a significant jump from 72 percent pre-ECQ, reflecting an accelerating shift to digital banking. He also noted the value of BPI’s data science team, which mines BPI’s wealth of data to come up with improvements in policies and processes that allow the Bank to be nimbler in seizing opportunities.

Financial Inclusion

He said changes from within are as important as the headline numbers and the Bank’s investment or credit ratings. “We are focused on being a more financially inclusive bank. This is evident in the setting up a few years ago of our microfinance and SME lending businesses,” said Mr. Consing.

Since its inception three years ago, BPI Direct BanKo, BPI’s microfinance arm, is now the second largest microfinance bank in the country, with a loan portfolio of P4.3 billion, a growth of 100 percent in one year, a market share of 15 percent among microfinance and rural banks, a network of 300 branches, a client base of over 100,000, and total loan releases of P11 billion.

BPI’s Business Banking, which focuses on SMEs, is just two years old and is attempting to replicate the early success of BanKo.

“While the SME loan portfolio grew only 6 percent, the lower end of the portfolio – that for loans below P15 million – showed a 4.3x increase in approved loan applications, reflecting our tailor-fit solutions and dedicated coverage of the segment,” said Mr. Consing.

Sustainability

BPI also demonstrated its commitment to the communities it serves through its corporate social responsibility and sustainability initiatives.BPI was awarded by Asiamoney as the Best Bank for CSR because of its focus on financial education, environment, and employee volunteerism or Bayanihan – all critical elements of sustainability. Its beneficiaries in the last six years have grown from 1,700 to over 270,000.

“BPI makes a meaningful contribution to 14 of 17 of the United Nations’ Sustainable Development Goals. Since starting our green finance journey in 2008, we have now embedded sustainability in how we conduct our business,” said Mr. Consing.

Outstanding loans that have an impact on the UN SDGs have increased from P147 billion in 2015 to P390 billion in 2019, a compounded annual growth rate of 28 percent. The share of these loans to the total loan portfolio of the Bank increased from 17 percent to 26 percent in the last five years.

BPI’s power generation portfolio grew by a CAGR of 37 percent, from 2012 to 2019, with renewable energy registering a CAGR of 44 percent. Lending to renewables now account for 38 percent of the portfolio, compared to the country’s 21 percent renewable share of all energy.

“The financial and operating results of 2019 are heartening, in that they tell us that the many initiatives that we have undertaken in the past few years are beginning to bear fruit,” he said.

BANK OF THE PHILIPPINE ISLANDS ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE OF THE PRESIDENT CEZAR P. CONSING
APRIL 23, 2020

To our shareholders, business partners, and clients, welcome to our annual gathering.

Perhaps as important as the headline numbers or rating is how we are changing from within.

We are focused on being a more financially inclusive bank.  This is evident in the setting up of our microfinance and SME lending businesses. 

Only three years since its inception, BPI BanKo is now the second largest microfinance bank in the country, with a loan portfolio of Php 4.3 billion, a growth of 100% in 1 year, a market share of 15% among microfinance and rural banks, a network of 300 branches, over 100,000 clients and total loan releases of Php 11 billion.

Asiamoney rated BPI Best Bank for Microfinance because of BanKo’s growth. 

More than the results and the accolades, we are very proud of how BanKo has changed the lives of its clients.

On the SME front, the two-year old Business Bank is attempting to replicate the early success of BanKo.  While the SME loan portfolio grew only 6%, the lower end of the portfolio – that for loans below Php 15 million – showed a 4.3x increase in approved loan applications, reflecting our tailor-fit solutions and dedicated coverage of the segment.

BPI has been rated by Asiamoney as the Best Philippine Bank for CSR because of the work done by BPI Foundation, which has been consistent in its focus on education, entrepreneurship, environment and employee engagement – all critical elements of sustainability.   BPI Foundation’s budget has grown four-fold in the last six years, and beneficiaries have grown in number from 1,700 to over 270,000 over the same period.

BPI makes a meaningful contribution to 14 of 17 of the United Nations’ Sustainable Development Goals. 

We started our green finance journey in 2008 and since then, we have embedded Sustainability in how we conduct our business. 

This is most evident in how we have allocated our loanable funds. Outstanding loans that have an impact on these UN SDGs have increased from Php 147 billion in 2015 to Php 390 billion in 2019, or a CAGR of 28%. The share of these loans to our total portfolio has also increased from 17% to 26% in the last five years.

In 2019, BPI’s commitment was most significant in four (4) SDG’s:  (1) Industry and Infrastructure (40%); (2) Zero Hunger (26%); (3) Affordable and Clean Energy (17%); and (4) Sustainable Cities (9%).  These SDGs account for 92% of BPI’s consolidated SDG-related loan portfolio.  

In the last 7 years, from 2012-2019, BPI’s power generation loan portfolio grew by a CAGR of 37%, with renewables showing the highest CAGR of 44%.

In terms of power generation mix, the Bank’s lending to renewables accounted for 38% of the portfolio, compared to the country’s 21%.

Digitalization is gaining considerable traction, with gains that are tangible and visible.  Online transactions, which in 2019 were up by 50%, account for practically all of the growth in the Bank’s transaction count.  About 40% of the Bank’s customers are now enrolled in one or more of our digital channels, with 25% of all customers regular digital transactors.  Digital service fees now amount to Php 1 billion per annum, with over Php 220 million in API revenues added in 2019 alone. 

The rate at which we are digitalizing will create about 20% additional capacity in our over 850 BPI and BFB branches by the end of 2020.

Data Science is already adding value to our retail businesses.  Coupled with thoughtful changes in polices and processes and more disciplined execution, we are already seeing the value of having recruited and trained 25 data scientists in our various consumer businesses. 

Overall, our SME/consumer loan book grew by 12.5%, outpacing the 7.9% growth of our corporate loan book.  This produced a 76-basis point shift in the year-on-year corporate to SME/consumer loan mix, which contributed to the increase in the bank’s overall net interest margin.

Capital markets has become an important competitive advantage.  BPI’s ability to tap the equity and debt capital markets for its own account is becoming increasingly important as we seek to increase the efficiency of our balance sheet, reduce our funding costs, diversify funding sources and take advantage of lending and investing opportunities.  We followed up on our one equity and two debt capital raisings in 2018 with five debt capital markets transactions in 2019, each one noteworthy. 

We raised $300 million of 5-year money via a green bond, CHF 100 million of 2-year money via a green bond that fetched a negative interest rate (a first in the region), Php 3.1 billion in 5-1/2 year LTNCDs, Php 9.5 billion 2-1/2 year bonds for our savings bank and, at the turn of the year, Php 15.3 billion in 2-year bonds.

The COVID-19 pandemic is making 2020 quite challenging. Operational resilience has been of paramount importance as we seek to ensure the safety of our employees and the continuous delivery of banking services to our clients.  We’ve maintained a skeletal workforce in our head office units across different office sites in Metro Manila. We’ve kept, on average, about a third of our branches open and ensured continuous availability of our online/mobile channels. We have temporarily waived transaction fees. We continue to have an active lending business. Even prior to the passing of the Bayanihan Act, we provided a 30-day grace period to customers in general and a 90-day grace period for our frontliners. Through BPI Foundation, donations were made to the Philippine Red Cross for the provision of face masks and personal protective equipment to COVID-19 frontliners.

The COVID-19 crisis will undoubtedly produce considerable stress on all Philippine businesses, and the SME and Consumer segments in particular. We remain committed to all our client segments. The year will require continued emphasis on managing risks as we expand our SME and consumer businesses, which provide higher lending margins and service fees, an invigorated focus on CASA deposit growth, a moderating of expense growth, continued reallocation of resources in favor of technology and digital and the consumer space, and a determination to continue to upgrade customer service.  The success of all of these efforts will contribute to a more sustainable business and, under favorable market conditions, recovery and growth of our share price.

The financial and operating results of 2019 are heartening, in that they tell us that the many initiatives that we have undertaken in the past few years are beginning to bear fruit.  While there is much more to be done, we would like to take a moment to thank our board of directors for their wise counsel, our management and staff for their professionalism and dedication, and you, our shareholders, for your continued support.  We go to work every day knowing that we owe you our very best efforts. 

Thank you and good morning.

BANK OF THE PHILIPPINE ISLANDS ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE OF THE CHAIRMAN JAIME AUGUSTO ZOBEL DE AYALA
APRIL 23, 2020

Good morning, fellow shareholders. Welcome to BPI’s Annual Stockholders’ Meeting.

Joining us today are some of our most important business partners, clients, and employees.  To all of you, welcome.

This morning, we will follow our usual practice and discuss the Bank in two parts: I will begin by touching on the broader markets and the Bank’s financial and operating performance. Our President and CEO, Bong Consing, will then discuss the Bank’s strategic initiatives moving forward.

The Philippine economy expanded 5.9% in 2019, the first time it registered a growth of below 6% in the last seven consecutive years. The slower economic growth largely stemmed from the late passing of the 2019 national budget. This led to a delay in government spending and consequently, in private sector investments. For the first time in seven years, the country registered a year-on-year decline in investment spending. 

The reduction in capital goods imports reduced the current account deficit, which in turn resulted in a stronger peso.  A smaller deficit and a stronger peso would normally be seen as a positive indication. However, the opposite is true when robust spending is imperative to sustain our economy’s growth trajectory.

Lower inflation over the course of the year allowed the Bangko Sentral to reduce bank reserve requirements from 18% to 14% and the key policy rate from 4.75% to 4.0%. 

While the increased liquidity sent a positive signal, expansionary monetary policy alone was unable to offset the investment slowdown.

Despite a lower-than-expected economic growth, the Philippines remains one of the fastest growing countries in the region. However, we believe that GDP has to grow at a faster pace if we are to become a middle-income country within this decade.

The Philippine banking industry’s performance reflected the macroeconomic story.  Slower GDP growth translated into slower loan growth at 9.4% in 2019, from 13.7% in 2018 and 16.5% in 2017.  Lower interest rates allowed banks with strong deposit franchises to expand their net interest margins, and banks with large securities positions to record good trading gains.  As a result, industry profitability was better in 2019 than the year before.

BPI’s financial results also reflected industry trends.  BPI’s asset base grew 5.7% to Php 2.2 trillion.  Its loan portfolio hit Php 1.5 trillion, an increase of 8.9% from the previous year.  Deposits increased by 6.9% to Php 1.7 trillion.

BPI registered Php 28.8 billion in net income in 2019, a 25% increase over 2018.  This translated into a return on equity (ROE) of 11% versus 10.2% in 2018 and a return on assets (ROA) of 1.4% versus 1.2% in 2018.

Net interest income grew 18% as a result of a Php 165.7 billion increase in average asset base and a 24 basis point improvement in net interest margin, the most significant expansion in over 10 years.

Non-interest income grew by 25% as a result of a 12% increase in fees, commissions and other income, with almost all businesses up—and a Php 3.3 billion increase in trading gains. 

The decision to add on to trading positions, and then take profits, was deliberate and very well-timed. 

Asset quality remained strong with a non-performing loan ratio of 1.66%, a 19 basis point improvement from 2018.  With additional provisions of almost Php 6 billion booked and NPL loss reserves totaling Php 25.4 billion, NPL coverage ratio and BSP coverage ratio reached 102% and 121%, respectively.

BPI has always been a high quality bank, and considerable effort has been made in the last few years to reinforce this view.  The bank continues to get high marks from regulators for its strong capital position, good asset quality, prudent management, good earnings, ample liquidity and relatively low sensitivity to market risk.

Let me end by saying that we are very pleased with our results in 2019 given the operating environment.  However, the coronavirus outbreak has become the greatest challenge for the global and domestic economies. 

We are hopeful that for 2020, the expansionary monetary policy coupled with a more conducive investment climate, will more than offset the expected slowdown in our country.

I will now turn you over to Bong Consing who will discuss the Bank’s various strategic initiatives. 

Thank you.

AYALA LAND ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE OF THE CHAIRMAN FERNANDO ZOBEL DE AYALA
APRIL 22, 2020

To my fellow Shareholders, good morning.

Through the years, Ayala Land has remained both resilient and resolute in its singular goal of enhancing land and enriching the lives of more Filipinos. This was demonstrated in 2019 as we built and invested in more projects across the country.

The Philippine economy grew 5.9% in 2019, slightly slower than the previous years. However, fundamental growth drivers such as BPO revenues and overseas Filipino remittances remained strong. From its peak in 2018, inflation rates stabilized and remained within government

targets. This allowed the Bangko Sentral ng Pilipinas to cut both the benchmark rates and reserve requirements to spur growth in the country.

We also saw a boost in the government’s infrastructure spending. It grew by 8% to exceed the PHP1-trillion mark for the first time.

Ayala Land continued to benefit from this positive momentum. Our net income grew by 13% to PHP33.2 billion in 2019. We continued to allocate significant resources to contribute to the development of new growth centers, helping to promote growth and progress to more people across the country.

We continued to be optimistic about the domestic environment and spent PHP108.7 billion in capital expenditure during the year. This is equivalent to 64% of our revenues amounting to PHP168.8 billion, to create and develop new projects, particularly in the residential and leasing segments.

Ayala Land continued to develop large-scale masterplanned mixed-use estates, helping spur growth and progress in many communities. To date, Ayala Land has a total of 29 estates located in different parts of the country. In these growth hubs, we provide living and recreational options for the communities that we serve— homes, office towers, malls, and industrial parks.

In 2019, Ayala Land established three new estates—two in Luzon and one in the heart of Metro Manila. This is in line with our commitment to develop new growth areas and revitalize established districts. The 120-hectare ALVEO Broadfield in Biñan, Laguna will produce 80 hectares for commercial activity and 40 hectares for residential projects. The 290-hectare Cresendo in Tarlac City, on the other hand, will enhance the province’s push to become a new metropolis with affordable living and lifestyle options. Over 80% of Cresendo will be devoted to residential areas and open spaces. Meanwhile, the 11-hectare The Junction Place in Quezon City will expand Ayala Land’s footprint in Metro Manila.

We have always aspired to provide Filipinos with high-quality living, working, and recreational options. In 2019, we launched 48 new projects worth PHP158.9 billion, the equivalent of close to 95% of our gross revenues.

Furthermore, we will continue Ayala Land’s efforts to protect the environment, which is an integral and core aspect of our business model. We reduced emissions from our commercial properties by 72%, keeping us on track with our carbon neutrality target by 2022.  In addition, we doubled the number of our green building portfolio to 10 LEED certified buildings as of end-2019.  Finally, we opened two processing facilities, in Arca South and Lio Palawan, to convert plastic waste in our properties into inputs for eco-bricks and eco-pavers to be used in our developments.

In closing, I would like to thank the management and staff of Ayala Land for their dedication and hard work. I am proud of their high engagement in the many communities that we serve, providing opportunities for employment, livelihood, and productivity while ensuring their health and safety.

I would like to especially thank our President and CEO Bobby Dy, whose leadership has sustained Ayala Land’s position as a dominant player in the Philippine property industry.

Finally, I thank our Board of Directors for their guidance and our many stakeholders for your continued trust and support to Ayala Land.

The publication of this message comes at a time when the world is facing enormous economic, health, and social challenges brought about by the COVID-19 pandemic. Ayala Land is doing everything it can to support its employees and reaching out to help some of the most vulnerable communities in our country. Notwithstanding the challenges the world and our country are facing today, we remain optimistic of the long-term prospects as we continue to develop, innovate, and build for our many stakeholders.

At this point, I would like to call Mr. Bobby Dy to present his annual report.

Thank you very much. A good day to all of you.

AYALA LAND ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE OF THE PRESIDENT BERNARD VINCENT O. DY
APRIL 22, 2020

Members of the Board, fellow shareholders, ladies and gentlemen, Good Morning!

Our commitment to advance the country’s development goals is best demonstrated in our investments across the various business lines. With these investments, we build sustainable communities and create products and services that enable more Filipinos to partake in the benefits of economic growth and social progress.

In 2019, we continued to live up to this commitment as our investments translated into further expansion of our core businesses. We achieved revenues of PHP168.8 billion, 2% higher than a year-ago. Back-ended residential product launches and nearly completed projects sold out in previous years accounted for the significantly slower revenue growth.

However, strong leasing revenues and commercial lot sales coupled with tight cost management fueled our net income to PHP33.2 billion, 13% higher than a year ago.  The strong leasing growth is a result of our strategy rolled out six years ago to invest heavily in commercial assets and we saw many of these completions now bearing fruit.

All these resulted in a return on equity (ROE) of 16.7%, the highest in the Philippine property sector.

Since the rollout of our 2020-40 plan in 2014, I am pleased with how our organization has responded to the challenge and delivered significant growth over this period.

From a net income of PHP11.7 billion in 2013, we have been able to increase our bottom line at a compounded annual growth rate (CAGR) of 19% by the end of 2019.

The net income from property development increased at a CAGR of 17%, lifted by consistent demand for our residential products as reservation sales grew at an annual average of 8%.

Meanwhile, net income from commercial leasing advanced at a CAGR of 25% as our malls’ gross leasable area (GLA) increased by 68% to 2.12 million sq. meters, offices’ GLA doubled to 1.17 million sq. meters, and the number of hotel and resorts rooms increased by 85% to 3,705 rooms.

This consistent strong growth has allowed us to disburse PHP7.7 billion in dividends in 2019, 3% higher than previous year.

Notwithstanding our achievements and strong cash flows, we ensured the stability of our balance sheet through prudent cash management and optimal capital deployment. With this, we ended 2019 with a net debt-to-equity ratio of 0.78:1, affirming our Triple-A credit rating.

These results were made possible as the Philippine economy paved the way for steady progress. The country benefitted from lower inflation and interest rates, a strong peso, robust household consumption, and a growing middle class. These macroeconomic factors have provided for an environment that is supportive of growth, enabling us to sustain our momentum and fulfill our vision of “enhancing land, enriching lives for more people.”

We best demonstrate this through our investments in estate development, residential projects, commercial leasing, and other property-related businesses. In 2019, we spent a total of PHP108.7 billion in capital expenditures. 

We introduced three new mixed-use estates, further venturing into more locations—the 120-hectare ALVEO Broadfield in Biñan, Laguna; the 11-hectare The Junction Place in Quezon City; and the 290-hectare Cresendo in Tarlac City.

Broadfield is a mixed-use commercial development located close to Laguna Technopark and adjacent to De La Salle University Canlubang. It is poised to benefit from the completion of the Cavite-Laguna Expressway (CALAX) and the planned Cavite-Tagaytay-Batangas Expressway.

Meanwhile, The Junction Place is a pocket urban development located on Quirino Highway near Tandang Sora Avenue which will host an Amaia neighborhood. We see this strengthening our footprint in Quezon City, following the success of Vertis North and Cloverleaf.

Lastly, Cresendo is our first estate in Tarlac province and will feature a 30-hectare downtown area, a 32-hectare industrial park, a school by Don Bosco Technical Institute, and an Avida community.

We are investing a total of PHP35 billion for the buildup of these estates over the next few years to spur commercial activity, promote job generation, and foster community development.

With these three planned mixed-use projects, Ayala Land will have 29 estates nationwide, cementing its place as the largest mixed-use developer in the Philippines.

To ensure adequate inventory across all market segments we serve and to continue the buildup in our various communities, we launched PHP158.9-billion worth of projects for sale during the year.  Eighty-five percent (85%) of the launches were accounted for by residential products, with the balance composed of office units, commercial lots, and industrial land for sale. I am also pleased with our progress in addressing the broader housing market served by Avida, Amaia, and BellaVita. In total, they delivered 11,476 units in 2019, a compounded annual growth rate of 28% over the last five years.

In commercial leasing, we opened new malls and retail spaces, capitalizing on strong local consumption. These are Ayala North Exchange Retail in Makati City, Ayala Malls Central Bloc in Cebu, and our biggest mall to date, Ayala Malls Manila Bay in Parañaque. Altogether, these account for 213,000 sq. meters of GLA.

To meet the demand requirements from various office locators, we completed Ayala North Exchange BPO, Manila Bay BPO, and Central Bloc Corporate Center 1 in Cebu, offering 70,000 sq. meters in total GLA.

In addition, we opened 774 new rooms in our various hotels and resorts such as Seda Residences Makati; Seda BGC expansion; Seda Lio in Palawan, Huni in Lio, Palawan and Sicogon, Iloilo; and Circuit Corporate Residences in Makati.

In other leasing formats, Clock In, our co-working space provider catering to entrepreneurs, startups, freelancers, and flexible-space users, tripled its capacity to 1,404 seats by opening five new branches—in Vertis North, The 30th, Ayala North Exchange, Alabang Town Center, and Lio. Meanwhile, The Flats, our co-living space offering, opened a new branch in BGC. Together with its first branch in Amorsolo, Makati, The Flats now has 2,044 beds to serve young office professionals who require accessible and affordable housing within the CBDs. We also expanded our standard factory buildings and warehouses, now totaling 175,000 sq. meters of GLA. This is managed and operated by our listed subsidiary, AyalaLand Logistics Holdings, Corp. (ALLHC), accommodating demand for light manufacturing facilities and storage requirements from various industries.

Our ability to execute on these investments would not have been possible without our construction arm, Makati Development Corporation (MDC). I am proud to share that MDC celebrated its 45th anniversary in 2019. MDC managed 193 ongoing projects and completed 44 projects as it continued to improve its safety, quality, and timely delivery performance. It has also significantly increased its design-and-build engagements and has started to gear up for prefabricated, prefinished volumetric construction. With its nine local training facilities accredited by the Technical Education and Skills Development Authority (TESDA), MDC produced 5,139 graduates in 2019, bringing its total to 29,845 graduates since the inception of the program in 2015.

Complementing MDC is Ayala Property Management Corporation (APMC). APMC conducted 13,260 emergency response team drills and 192 night drills, and rolled out a centralized fire detection alarm monitoring system to ensure the safety of residents and tenants. Through these efforts, APMC achieved a “zero major fire incident” record across its 256 managed properties. APMC received an overall satisfaction rating of 89.1% in 2019 from a survey of 5,786 respondents. Both MDC and APMC ensure that we are able to fulfill our customer commitments and maintain the quality of our completed projects over time.

I am also glad to report on the performance of our strategic investments—ALLHC, Ortigas Land, and MCT Bhd. Through ALLHC, we were able to build further on our position as the largest industrial estate developer in the country. In 2019, it launched the 105-hectare Laguindingan Technopark in Misamis Oriental. This brought our total number of industrial estates to five, adding to our portfolio of 29 mixed-use estates. Ortigas Land, on the other hand, launched new projects such as The Galleon in Ortigas Center and Empress in Capitol Commons and opened a new wing in its Estancia Mall. Meanwhile, MCT Bhd is preparing the launch of new projects in Petaling Jaya and Subang Jaya after the strong sellout of its projects in 2019.

2019 was a year of significant investments and business activity for our company.  As we continue to build projects and communities, we remain steadfast in our commitment to integrate sustainability in our day-to-day operations. Three years ago, we embarked on our ambitious plan to offset the carbon footprint of all our commercial assets by the year 2022.  I am pleased to report that as of end-2019 we have already offset 72% of our carbon emissions through a deliberate shift of 16 properties to renewable energy and allocating 586 hectares of our landbank to become protected forests.

We also rolled out new programs for waste management with the launch of our first eco hub in Arca South to drive segregation and improve waste reduction. In 2019, the facility was able to collect 32,000 kgs of plastic and converted the sub particles into construction materials to be used in our developments.  A second hub in Lio, Palawan was also introduced in the last quarter of the year.   

Indeed, we realized significant achievements and progress across multiple fronts in 2019.  But as I speak to you today, the world is going through the biggest crisis of our generation, a global pandemic brought about by COVID-19. An overwhelming majority of business activity stopped overnight and the entire Luzon region was placed under an enhanced community quarantine, with major cities in Visayas and Mindanao also under quarantine. Filipinos’ movements were restricted to help control the spread of the virus and our operations were brought to a standstill, with the exception of our BPO offices and hotels that continue to operate on a limited basis to accommodate current business needs.

Today, we cannot ascertain the effect this crisis would have on our business. We do know, however, that this will have a major impact on the short term and our performance for the year 2020, with high likelihood of a spillover into 2021.  We are now in the process of adjusting our plans to ensure that we adapt quickly to this new reality and remain resilient throughout this crisis. 

In the midst of this situation, what gives me comfort is knowing that our balance sheet remains robust and I am confident that this strength would enable us to weather this storm.

As I look back over the last decade, it gives me tremendous pride knowing that our company has undergone an unprecedented period of growth, expanding our product lines and services to benefit more Filipinos, enhance their quality of life, and help bring economic activity to various growth centers in our country.

As we enter this new decade and a new chapter, we will start by creating a plan to adapt to the unprecedented disruption resulting from the COVID-19 crisis.

As I close this report, let me take this opportunity to thank all my colleagues at Ayala Land.  All our company’s achievements would not have been possible without your hard work, dedication, and commitment. For this I am truly grateful. I am also confident that this same team will allow us to overcome the challenges brought about by the pandemic and that we will bounce back stronger and more united as a company, “one despite the distance.”

To our Board of Directors, I would like to express my gratitude for your continued engagement, providing the guidance and wisdom that has allowed our company to achieve market leadership and thrive all these years.

Finally, to you, our shareholders and stakeholders, your unwavering support and belief in Ayala Land is what inspires us to be of service to the Filipino people. Thank you for standing by us as we continue our journey to enhance land and enrich lives for more Filipinos.

At this point, I would like to invite everyone to watch our corporate video.

Once again, thank you and good morning.

Despite the dampened economic growth in the global and domestic front last year, Globe Telecom recorded a robust performance driven by its integrated approach to value creation, sustainability, and risk management.

“For us, the true value we create lies in the impact we have on the lives of people — our customers, employees, business associates, suppliers, vendors and Filipinos at large.  Our employees are at the forefront of helping us achieve our goals and vision and are key to furthering our sustainability agenda,” said Ernest Cu, Globe President and CEO.

Globe achieved an important milestone when it launched the Globe At Home Air Fiber 5G postpaid plans which made the Philippines the first Southeast Asian country to experience the fifth generation fixed wireless broadband.

The company, in total, spent Php 51 billion in capital investments which represents 34% of gross service revenues and 67% of full year earnings before interest, taxes, depreciation, and amortization (EBITDA).  It also forged more partnerships to anchor infrastructure development at a larger scale, resulting in 139% more cell sites and 28% more 3G and 4G base stations compared to 2018.

Through innovative customer-centric solutioning, Globe ended 2019 with over 94 million mobile customers and over 2 million home broadband customers, representing a year-on-year increase of 27% and 25%, respectively.

“We have made strong strides aligned with our vision of redefining customer experience, enabling last mile connectivity and revitalizing the country’s digital economy. Our performance in 2019 is a testament of our integrated approach to value creation by focusing on customer experience, driving sustainability and adopting a holistic approach to risk management,” Cu said.

Together with its digitalization efforts, Globe embarked on various sustainability programs as it aims to be a market disruptor in terms of innovative technology and sustainability initiatives.

Globe became a signatory to the United Nations Global Compact, committing to implement universal sustainability principles and contribute to the UN Sustainable Development Goals focusing on education, environmental conservation, digital inclusion and development.

As natural resources play an indispensable role in the well-being of society, Globe strives to conduct its operations with minimum impact on the environment by rolling out almost 7,000 green network solutions in 2019, avoiding Single-Use Plastic in all its offices, advocating for e-waste management, participating in reforestation efforts, shifting to paperless billing which translates to over 650 tons of paper saved, and automating and migrating to a paperless process and saving over 20 tons of paper, among other initiatives.

Globe also undertook a marine protection program aimed towards biodiversity conservation, and devised a dedicated climate strategy focusing on building the resilience of its value chain to extreme weather events and ensuring protection of the network in times of disaster.

Likewise, the company expanded the reach of the Digital Thumbprint Program which teaches responsible online behavior to young adults.  DTP was adopted by the Department of Education for incorporation in the values education subject for K-12 students. Globe also encouraged social innovators to use technology to address social issues through its Future Makers Program.

Meanwhile, Globe installed a dedicated Board Risk Oversight Committee in April last year which allowed the company to balance risk governance and define risk-taking responsibility and authority.  This step plays a crucial role in enhancing the robustness of the company by proactively managing risks, and thereby, ensuring continuous stakeholder value generation.

Moving forward, Globe has committed P63 billion for its capital expenditures in 2020 which the company intends to fulfill despite the global health crisis.

“We recognize the critical risks that a disruption from an emerging infectious disease can bring to our operations.  And from the onset, as part of our Business Continuity Management Plan, we already prepared for workforce health and safety, supply chain disruption and the need to provide seamless connectivity, among other things,” Cu said.

However, he said the magnitude of COVID-19’s impact on the company’s overall business operations and the whole economy will have to be assessed further.

See more.

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For more information, please contact:

Yoly C. Crisanto
SVP, Corporate Communications
Globe Telecom, Inc.
Email Address: gtcorpcomm@globe.com.ph
Globe Press Room: globe.com.ph/about-us/newsroom 
Twitter: @talk2GLOBE │ Facebook: www.facebook.com/globeph

GLOBE TELECOM 2020 ANNUAL STOCKHOLDERS’ MEETING MESSAGE FROM THE PRESIDENT

Welcome/Introduction
Thank you, Mr. Chairman and a pleasant morning to all present in this meeting.

Fast Tracking Digital Transformation
2019 has been a year of remarkable growth, driven by innovative customer-centric solutions, paving the way to enabling the fast-tracked digital transformation of the economy. The year in focus has been special for all of us at Globe, as we launched 5G in June 2019, strengthening our service delivery of broadband via fixed wireless access technology. Having made a record investment of ₱51.0 billion, we have made strong strides towards our vision of redefining customer experience, enabling last mile connectivity and revitalizing the digital economy of the country. We were able to deliver strong financial performance, while making a substantial positive impact on our society and environment.

Our company emerged with strong performance despite market changes, and the domestic and global economic slowdown. We posted a service revenue of ₱149.0 billion, 12% higher compared to 2018. This growth was primarily fueled by the gains from data services – spanning mobile, broadband and corporate data. Total data revenues at the end of 2019
accounted for 71% of total service revenues, evidence that more Filipinos are embracing a digitally enabled lifestyle.

Commitment to Improving Customer Experience
I am delighted to report that today, we are the service provider of choice for over 96 million customers nationwide. This positions us as an important player in connecting minds and inspiring ideas across the Philippines through digitization. With an increasing customer base and emerging customer needs, we endeavored to make substantial investments towards building our network infrastructure. As of December 2019, we put up 139% more sites and 28% more 3G and 4G base stations compared to 2018. These investments have translated to more customers enjoying higher data speeds, specifically improved LTE download and upload speeds, and lower latency as confirmed by a third party network quality test provider.

We have also extended our partnerships with leading providers of content, mobile messaging, social media and other popular OTT applications in order to provide products and services that cater to shifting customer preferences. As our customers realize the potential of digitization, our service proposition will focus on “owning our customers” through superior service experience. We anticipate enhanced customer delight, given our improved service delivery capabilities, coupled with unique offerings encompassing personalized plans and attractive product/device bundles.

Creating Impact and Leading with Purpose
For us at Globe, the true value we create lies in the impact we have on the lives of people – our customers, employees, business associates, suppliers, vendors, and Filipinos at large. Our employees are at the forefront of helping us achieve our goals and vision of ensuring that we create value for all our stakeholders. They share our desire for sustainable practices, and are key to furthering our sustainability agenda. We make it known to our employees that the ideas and innovation they bring to the company are central to the success we achieve year on year. In recognition of our employee-centric organizational culture, we have achieved 91% Sustainable Engagement score in 2018 (net of retention score) and 88% on Organizational Health Index Score in 2018.

Globe aspires to be an industry leader with purpose, helping customers discover new ways to enjoy life. As a company driven by passion and purpose, we are proud to share the result of our Purpose Survey with 3 Purpose Index Indicators: (1.) Role and Work contribution to Globe Purpose: 91 in 2019 vs 87 in 2018; (2.) Personal Purpose contribution to Globe Purpose: 88 in 2019 vs 87 in 2018; (3.) Employer NPS is the likeliness to recommend Globe as an employer: 53.40 vs 43.38 in 2018. The Purpose Survey serves as a gauge to determine how our employees resonate with the Globe Purpose, and their insights on factors that contribute to how they can live out Purpose in Globe including culture, clarity and ways of working.

Solving Problems Beyond Telecom
Aside from our employees, our business partners, vendors and suppliers play a vital role in furthering our business in a sustainable manner. We have formed an ecosystem that creates a mutually inspiring atmosphere to achieve greater integration of sustainability in business.

This year we reinforced our position as a change agent, leading Filipinos to a digitally-enabled lifestyle by incubating, developing, and operating new non-telecom businesses. By leveraging on Globe’s strengths and assets, these startups are nurtured by Globe to maximize the value they generate. We launched a new subsidiary, 917Ventures which will hold all of Globe’s incubated startups that are beyond telecommunication. 917Ventures will also now house Globe Fintech Innovations (Mynt), the company that operates mobile wallet GCash; AdSpark Holdings, a digital advertising firm; and Konsulta MD, a telehealth firm. Globe’s push for new digital businesses is seen to play an important role in actualizing the company’s vision, while sealing its future growth trajectory. Through this initiative, we are confident that the Philippines can catch up with the rest of the region in terms of ICT adoption, especially in areas of great importance like advanced medicine, health and wellness, delivery of basic services, and education.

Commitment to Environmental Conservation
As natural resources play an indispensable role in the well-being of the society, we strive to conduct our expansion and capability building in a manner that exerts minimum impact on the environment. We strive to find innovative avenues to offset our environmental impact. We have focused on deploying green network solutions and have rolled out almost 7,000 solutions in 2019.

Indeed, we are now living in times where we are experiencing the impacts of climate change. We have worked towards instating a robust Business Continuity Management Plan to mitigate the risks arising from extreme weather events and climate linked risks. We are also actively contributing to climate change mitigation. For instance, we have been able to save over 650 tons of paper through customers shifting to paperless billing. In addition, by automating and migrating to a paperless process, we were able to save over 20 tons of paper, equivalent to saving 480 trees.

We also institutionalized the avoidance of Single-Use Plastics (SUP) in our office and engaged our concessionaires to look for SUP alternatives. Last September, we held the Plastic Exchange Program in seven barangays in Metro Manila in partnership with Ayala Land and Green Antz. Over 245,000 pieces of single-use plastic waste were collected and turned into 24,500 ecobricks by Green Antz Builders, Inc. The ecobricks will be used to build community gardens and benches, a waste segregation facility and a creek fence. It would also be used for rehabilitation for daycare centers.

In 2019, Globe became a signatory to the United Nations Global Compact, and we commit to implement universal sustainability principles and integrate these into the business.

Sustaining Momentum and Growth in 2020
For the global telecom sector, interesting and promising times lie ahead. To sustain the momentum we have gained, we will ramp up infrastructure to improve network experience with a committed spending of ₱63.0 billion in capital expenditures in 2020. Our acquisitions and partnerships in the area of electronic payments (EC Pay) and IT (Yondu) point toward how we intend to grow new businesses by leveraging our core assets.

For 0917 Lifestyle, we are excited for the next year, as we expand outside our Globe stores and online shop, to open our first flagship 0917 Store in Makati. Our flagship store will be carrying our exclusive Vanguard collection – infusing Fashion and Tech in our Apparel collection, as well as key collaborations to give life to our vision for 0917 to become a Fashion and Tech Brand that consumers will desire.

Closing Remarks
This concludes my report. It is my hope that this has enabled you to understand our shared value creation story and approach toward entrenching the culture of sustainability in our business endeavors.

Thank you.

GLOBE TELECOM ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE CHAIRMAN JAIME AUGUSTO ZOBEL DE AYALA
APRIL 21, 2020

To our fellow shareholders, members of the Board of Directors, and friends: Good morning and welcome to Globe Telecom’s Annual Stockholders Meeting.

This year Globe achieved an important milestone as the Company launched the “Globe At Home Air Fiber 5G” postpaid plans. This made the Philippines the first Southeast Asian country to experience the fifth generation (5G) fixed wireless broadband.

Over the years our Company has been at the forefront of enabling digital inclusion and empowering Filipinos with the power of connectivity. Today we cater to over 94.2 million mobile customers.

We also serve over 2 million home broadband customers, a notable 25% increase compared to year 2018. At Globe, the belief is that we grow when our customers further enhance their digital lifestyle, the economy flourishes through digital transformation, and the natural ecosystem is nurtured in the process. With the ability to contribute towards a digitally enabled economy, our mission is to revitalize businesses and empower customers with enhanced digital capabilities.

Despite the country’s dampened economic growth in the global and domestic front, Globe had a record performance with a 12% growth in service revenues year-on-year. In line with past year trends, revenue growth has been predominantly data-driven. Total data revenues accounted for 71% of total service revenues compared to 61% reported last year. We have also been able to consistently increase our customer base; we witnessed a 27% rise in customer base this year compared to 2018.

Conscientious of our fiduciary duty to generate sustained value for our shareholders, we paid out ₱12.1 billion in common share dividends, which is similar to what we paid out in the previous year. This represents about 65% of 2018 core net income, in line with our new dividend policy of 60% to 75% of prior year’s core net income. This also translates to a 4.8% dividend yield, which is more competitive than other Philippine listed companies.

It is noteworthy that we have been able to showcase this performance with the looming entry of the third player. This reaffirms my belief that with the evolving market dynamic, strategic innovation is critical to reaffirm our reputation as a nimble service provider committed to bringing world class services to our customers.

In our quest to enhance customer experience and build the Philippine’s digital economy we made substantial capital investments this year. We spent ₱51.0 billion, which represents 34% of gross service revenues and 67% of full year EBITDA.

We also forged more partnerships to anchor infrastructure development at a larger scale.

In our endeavor to digitally transform businesses, we acquired a 77% equity interest in EC Pay, Inc., whose platform will enable small business owners to offer more products and services. This move will also future-proof Globe’s distribution network, bringing the company a step closer to its vision of a digitally-enabled Philippines. Additionally, our GCash partnership with CIMB Philippines reached a milestone of 1 million GSave accounts opened after only 8 months from launch. Moreover, together with other operators, we entered into a consortium and selected Syniverse as the Mobile Number Portability service provider.

We became a signatory to the United Nations Global Compact, committing to implement universal sustainability principles and contribute to the United Nations Sustainable Development Goals. Our focus areas in this vision include education, environmental conservation, digital inclusion and development.

We have rolled out various programs to realize our vision.

We also expanded the reach of DTP via the National Summit on Digital Citizenship and Responsibility (NSDCR) in partnership with the Department of Education last September. Over 400 curriculum experts on Values Education and ICT from DedEd were in attendance and help them become responsible online citizens. We also encourage social innovators, using ICT through the regional Future Makers program.

In line with Globe’s commitment to holistic value creation, we have made considerable progress in our environmental stewardship programs. This year we rolled out our Marine Protection Program for Boracay and Siargao Islands aimed towards biodiversity conservation. In recognition of the material risks and opportunities climate change presents, we have devised a dedicated climate strategy. Our strategy focuses on building the resilience of our value chain to extreme weather events and ensuring protection of the Globe network in times of disasters.

While focusing on climate adaptation, our strategy also contributes towards climate change mitigation through fostering an organizational culture of resource conservation and actively taking part in reforestation activities. Globe is also committed to resource usage optimization and waste minimization with a focus on effective E-waste management.

The strong performance we witnessed this year serves as a testament of our integrated approach to value creation and our commitment to adopting a holistic approach to risk management. Globe instated a dedicated Board Risk Oversight Committee (BROC) in April 2019. The BROC was established to assist the Board of Directors in fulfilling its oversight responsibilities in relation to risk governance to anchor clear definition of risk-taking responsibility and authority while ensuring effective functioning of the Enterprise Risk Management framework. This step will play a crucial role in enhancing the robustness of the company by proactively managing risks thereby ensuring continuous stakeholder value generation.

In closing, I would like to thank our Board of Directors, the management team, and all our employees for their untiring commitment and dedication to serving our customers. Our board members remained engaged across a variety of governance committees throughout the year and our employee and executive teams work tirelessly to improve our standards, to innovate, and to enhance our customers’ experience.  I would also like to thank our business partners for their support, our customers for their loyal patronage, and our fellow shareholders for their trust and confidence in our ability to build and create stakeholder value in the years ahead.

Thank you again for joining us here today. I now hand over the floor to our President and CEO, Mr. Ernest Cu, to deliver his report.

ACE ENEXOR ASM SPEECH
2020 ANNUAL STOCKHOLDERS’ MEETING
MESSAGE FROM THE CHAIRMAN JOHN ERIC T. FRANCIA
APRIL 20, 2020

Esteemed shareholders, my colleagues on the Board and management, ladies and gentlemen, good afternoon to all of you.

COVID-19

The impact of the COVID-19 pandemic continues to be felt globally, and the crisis is set to hit the most vulnerable the hardest.

Our various businesses within the Ayala group have been proactive in mobilizing resources to help overcome the challenges. 

We are fortunate that there are no known Covid cases among ACE Enexor and AC Energy Group employees. The Company is fully supportive of the government efforts to address the challenges by ensuring the health and safety of our employees and their families, providing support to immediate communities where we operate, and supporting broader efforts such as feeding programs, creation of additional health facilities, and the provision of medical supplies and PPEs. 

Headwinds encountered, but we remain on course

Amidst the current challenges we are making progress on the Company’s initiatives. Significant strides have been made on investments and towards exploratory drilling, yet we acknowledge that headwinds were encountered on the macro environment in which we operate.

The year was marked by oversupply, few reserves replacement, and modest annual increase in capital spending. From a high of $86 per barrel in 2018, Brent crude settled in the $60 level through most of 2019. Meanwhile the COVID-19 crisis reached pandemic levels in early 2020, severely affecting economic activity and oil demand, resulting in Crude prices declining to less than $30 per barrel. 

We anticipate that the same challenges we experienced will persist into 2020. The local upstream sector has been in dormancy in the last four years. 

Efforts to revitalize exploration have so far not achieved the desired results, despite the latest petroleum bid round that was formally launched in November 2018.

Outlook 

Your Company is well aware of the country’s dire need for replacement reserves.  Palawan55 Exploration & Production Corporation, ACE Enexor’s subsidiary, has responded proactively by bringing its primary asset, Service Contract 55, closer to exploratory drilling. 

A big positive of our efforts was Palawan55’s acquisition of the entire participating interest of its erstwhile foreign partner, thereby doubling its stake in SC 55 to 75%, highly encouraged by the results of its technical studies centered on a gas discovery made in the area in 2015.

Furthermore, just last week, the DOE confirmed SC 55’s entry into the Appraisal Period, with a commitment to drill one exploratory well within the first two years of the said time frame. Two candidate target sites are currently being evaluated using leading edge standards, and upon completion of the assessment, preparations for drilling will commence soon after.

Looking ahead to the future of oil and gas exploration

2019 has been a year of good progress for our Company. Our decisions and actions during this period positioned us well to work on our future growth and aid in the country’s future energy landscape.  

The business of oil and gas exploration continues to be challenging, uncertain and very complex. With your continued trust and support, we will constantly pursue business growth and value creation while we move towards playing a significant role in helping the country’s energy security in due course.

Thank you.