QUOTING Charles Dickens (A Tale of Two Cities), Bank of the Philippine Islands (BPI) Chairman Jaime Augusto Zobel de Ayala (JAZA) described what 2020 was like for the country and for BPI during the bank's annual stockholders meeting held last Thursday, April 22.

"It was the best of times. It was the worst of times. It was a spring of hope. And it was a winter of despair."

JAZA narrated a chronology of the worst events that happened last year -- the Taal Volcano eruptions, Covid-19 and the imposition of the strictest lockdown measures, the series of earthquakes in Mindanao and the two super typhoons just before the year ended.

As a result, mobility plummeted. GDP declined by 9.5 percent. Unemployment surged to 17 percent before settling at 8.7 percent. Inflation rose to 2.6 percent. Weak fiscal response negated aggressive monetary policy. A negative real interest rate regime set in. Import demand slowed. The historical double digit loan growth contracted to 2.8 percent. NPL rose to 3.7 percent, necessitating a five-fold increase in loan loss provisions. BSP cap on interest on credit card loans caused banks to reduce credit to riskier customers. The provisions pulled down net income 25 percent. ROE dropped to half that of 2019. Market capitalization went down 21.1 percent, the worst in years.

But the best things also happened in BPI in 2020. BPI revenues increased by 10.5 percent, an all-time high on the back of higher net interest income and trading income. Outgoing BPI President Cesar P. "Bong" Consing further elaborated: "Ironically, the very challenging year presented BPI the opportunity to assert its position as a banking industry leader and a trusted Filipino institution. The banks continuity plan immediately kicked in ensuring that critical banking products and services, including the availability of cash and payment transfers, are readily available."

At the height of the pandemic, at least half of the critical branches and units were up and running, with BPI giving utmost consideration to the safety and well-being of its staff and its customers.

The bank's many years of investments in technology, particularly digitalization, paid off. At the height of the lockdown, digital transactions went as high as 95 per cent then settled to 92 percent as the lockdown eased. Thousands of customers enrolled in BPI's channels every single week. Today, 52 percent of all customers are digitally-enabled, with more than half of them classified as active users.

Having executed 1.8 billion in online transactions in 2020, BPI is now the acknowledged leader in digital banking. BPI's finance app is Number 5 in App Store, Number 6 in Google Play. In Instapay, BPI ranked No. 2 in receiving transactions and No. 3 in sending transactions. BPI worked with dozens of open banking partners (like Lazada, GCash, PayMaya) to become a key focal point of financial intermediation. According to the media intelligence firm Essencia, BPI is the most mentioned Philippine bank in social media.

Despite its slowest balance sheet growth in years (1.3 percent), BPI had its moments in 2020. BPI issued 70.7 billion in bonds, including 21.5 billion in CARE Bonds. Capital adequacy ratio grew to 17.1 percent. BPI's asset management and mutual funds businesses saw assets under management growing by 16.8 percent and 95.6 percent, respectively. Mortgage lending grew by 6.6 percent. BPI's microfinance bank, BPI Direct BanKo, already the second largest (in its class) in the country, grew by 6.5 percent. BPI's investment banking unit, BPI Capital, was the leading debt and equity underwriter in the country. Its underwriting fees grew 66 percent on the back of 30 mega transactions.

Consing described BPI as one of only two Philippine companies which was given by Standard and Poor's, a BBB+ rating, equaling that of the Philippine government. The BSP continues to give BPI the highest ratings for its capital position, asset quality, management, and low sensitivity to market risk. BPI's ESG scores consistently place it either first or second among Philippine banks. Moreover, BPI is the only large Philippine bank whose shares outperformed the Philippine Stock Exchange index in 2020. BPI remains the second largest bank by market capitalization. The prestigious finance publication Euromoney named BPI as the Best Philippine Bank in 2020.

Consing briefed the shareholders of moves to future proof the bank, namely: 1. The merger of BPI and BPI Family Savings Bank -- a move that will provide the new entity scale that will be beneficial to both customers and employees. 2. Establishing BPI as the undisputed leader in digital banking. 3. Increasing the share of SME and consumer loans in BPI's loan books. 4. Closing the gap on funding leadership. 5. Using branches as sales points, rather than service points, and 6. Promoting sustainable banking.

JAZA thanked Consing for his eight years of stewardship of the bank including the last year, which proved to be the most challenging in the bank's 170 year history. Consing assumed in 2013 which coincidentally made him BPI's 13th president. JAZA welcomed Jose Teodoro "TG" Limcaoco, who is no stranger to BPI, as its 14thpresident and also paid tribute to Xavier P. Loinaz, BPI's 11th president. Loinaz resigned last year from the bank's board due to health reasons.

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