2018 Annual Financial

and Sustainability Report

 ABOUT THE REPORT
102-50, 102-51 102-52, 102-54, 102-55

This Annual Financial and Sustainability Report provides our stakeholders with a balanced
view of our ability to use our financial resources and expertise to be a sustainable business
that creates sustainable value.

Covering the period January 1 to December 31, 2018, this report contains material information
relating to our financial and non-financial performance, operating context, prospects, risks, and
governance to address the information requirements of our current and prospective investors.
We also present information relevant to the way we create value for other key stakeholders,
including our employees, customers, regulators, and society. This follows our latest report
released in 2018 covering the period January 1 to December 31, 2017.

This report has been prepared in accordance with the GRI Standards: Core option. This has
also been aligned with the disclosure requirements of the Bangko Sentral ng Pilipinas and
the ASEAN Corporate Governance Scorecard. For the Materiality Disclosures Service, GRI
Services reviewed that the GRI content index is clearly presented and the references for
Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report.

ABOUT THE COVER

A bonsai tree with its understated elegance and strength evokes
harmony with the elements and steadiness through change. The
twists and turns of its branches symbolize age, maturity and character
acquired during its journey through time. Like a bonsai, we built
and operate our businesses and nurture our relationships with our
stakeholders with patience and great care, growing it bit by bit,
stretching limits, while remaining sensitive to, respectful of, and
mindful of the possibilities presented by, nature.

i C H I N A B A N K I N G C O R P O R AT I O N
CONTENTS
2 4 6 10
ABOUT JOURNEY TO 100 MESSAGE TO OUR IN MEMORIAM:
CHINA BANK YEARS STAKEHOLDERS HENRY “TATANG”
Company profile, Vision, Corporate milestones from From Chairman Hans T. Sy, SY SR.
Mission, and Core Values 1920 to 2018 Vice Chairman Gilbert U. Dee, A tribute to China Bank’s
and Pres. William C. Whang late Honorary Chairman

12 14 16 18
FINANCIAL SDG SUSTAINABILITY MATERIALITY
HIGHLIGHTS CONTRIBUTION- STRATEGY & PROCESS,
CORE AREAS ROADMAP MATERIAL TOPICS,
How we contributed to the AND STAKEHOLDER
Sustainable Development
Goals ENGAGEMENT

20 34 40 50
CHINA BANK AS CHINA BANK AS CHINA BANK AS CHINA BANK AS
ENABLER ADVOCATE EMPLOYER PARTNER
How we enable our How we delight and engage How we engage, develop, How we partner with our
customers’ success our customers and nurture our employees stakeholders to create
shared value

58 82 94 96
CHINA BANK AS OUR LEADERS AWARDS AND FINANCIAL
STEWARD China Bank Board of DISTINCTIONS STATEMENTS
How we earn our Directors, Management Capital structure/adequacy,
stakeholders’ trust and build Committee, and senior Audit Committee Report,
enduring relationships officers Statement of Management
Responsibility for FS,
Auditors’ Report,
Management Discussion

124 139 142 144

BRANCH SUBSIDIARIES AND PRODUCTS AND GRI Index
DIRECTORY AFFILIATE SERVICES
China Bank and
China Bank Savings

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 1
 ABOUT CHINA BANK
102-1, 102-2, 102-3, 102-4, 102-5, 102-6

China Banking Corporation (China Bank) is one of the leading Over the years, we have reinforced our human, physical, and
private universal banks in the Philippines. We offer a full range technological resources to meet the changing needs of our
of banking products and services to institutional (corporate, customers, shareholders, and regulators, while minimizing any
middle market/commercial, SMEs) and individual (retail, mass negative impact on communities and the environment.
affluent, high net worth) customers, as well as thrift banking,
investment banking, insurance brokerage, and bancassurance Our vision, mission, and the values passed on by China Bank’s
services through our subsidiaries China Bank Savings, China founders underpin our continuing story of sustainable growth,
Bank Capital, China Bank Securities, China Bank Insurance governance excellence, and enduring partnerships. We are
Brokerage, and affiliate Manulife China Bank Life Assurance. committed to place sustainability at the heart of our business
and credit decisions and to uphold the highest standards of
China Bank, established in 1920, has an in-depth understanding corporate governance to remain strongly positioned for value
of the way entrepreneurs and businessmen do business. creation.
While maintaining very close multi-generational relationships
with the Filipino-Chinese community, we have since expanded The China Bank stock (PSE: CHIB) is listed on the Philippine
the scope of our products and services to cover all market Stock Exchange (PSE). We are a member of the SM Group,
segments as we pursue and enhance ways to create greater one of the largest conglomerates in the Philippines.
value for the future.

Headquarters: China Bank Building, Paseo de Roxas corner Villar St., Makati City 1226 Philippines

620
branches
P8 B
Net income
P513 B
Gross loans
“Baa2”
Investment
+8% +13% grade credit rating
from Moody’s

966
ATMs
P866
Assets
B P722
Deposits
B
+15% +14%
Among the 50 best
publicly-listed companies
in ASEAN; the only bank
1.5 M
customers
P88
Capital
B 9,652
employees
among the top 3 listed
Philippine companies
+5%

2 C H I N A B A N K I N G C O R P O R AT I O N
VISION MISSION
102-16
We will be a leading provider of quality services consistently
Drawing strength from our rich history, we will be the best, delivered to institutions, entrepreneurs, and individuals here
most admired, and innovative financial services institution, and abroad, to meet their financial needs and exceed their
partnering with our customers, employees, and shareholders rising expectations.
in wealth and value creation.
We will be a primary catalyst in the creation of wealth for our
customers, driven by a desire to help them succeed, through
a highly engaged team of competent and empowered
professionals, guided by in-depth knowledge of their needs
and supported by leading-edge technology.

We will maintain the highest ethical standards, sense of

responsibility, and fairness with respect to our customers,
employees, shareholders, and the communities we serve.

Integrity
We will always take the high
road by practicing the highest
ethical standards and by Customer service focus
honoring our commitments. Satisfied customers are
We will take personal essential to our success. We
responsibility for our actions and will achieve total customer
treat everyone fairly and with satisfaction by understanding
trust and respect. what the customer wants and
deliver it efficiently.

High performance
standards
We will abide by well- Resourcefulness/Initiative
established professional CORE VALUES We will devise and initiate ways
and means to achieve targets/
methods of doing business that
go beyond the typical/routine We are committed to live by these goals and go beyond customer
functions and designated values in conducting our business expectations.
results. and achieving our vision and
mission.
Commitment to quality Efficiency
We will strive for continuous We will perform tasks
improvement in all that we do, promptly and accurately while
so that we will rank among the maintaining or improving the
best in the banking industry quality of results or output.
in customer, employee, and
community satisfaction.

Concern for people

We have a high regard for
people’s needs and welfare,
whether in and out of the office.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 3
 JOURNEY TO 100 YEARS

When we opened for business on August 16, 1920 in Binondo, Manila, we sought from
the outset to bring best practices in banking to be more responsive to customer needs
and remain relevant and resilient amid the changing business landscape. As we move
confidently forward, we will continue to grow, improve, and innovate to remain strongly
positioned for value creation.

Opens for business

on August 16, 1920 The Great Depression The Japanese Accesses the
Founders: hits the Philippine military shuts down offshore capital
Dee C. Chuan, banking sector; hit by China Bank in April, markets with
Don Albino Sycip, runs, a rival bank goes liquidates its assets, US$50M floating
Head office
and a group under, but China Bank and arrests Don rate certificates
officially transfers
of top Chinese weathers the crisis Albino and George Opens first of deposit (and
to Makati
businessmen unshaken Dee Se Kiat branch in Cebu US$75M in 1997)

1931 1942 1948 1990 1996

1920
1920
1927 1935 1945 1968 1991

Listed on the P21.5M in Reopens in July; Becomes the first Introduces

Manila Stock resources and one lends to key bank in Southeast TellerPhone, the
Exchange of the country’s industries Asia to process first phone banking
biggest banks for post-war accounts online service in the
reconstruction country

4 C H I N A B A N K I N G C O R P O R AT I O N
 • Acquires Manila
Banking Corp. and
operates it as a
savings bank • Launches • Gets investment
Completes first arm, China Bank investment grade credit rating
international Savings (CBS) house subsidiary, of “Baa2” from
US$53M • Signs bancassurance China Bank Capital Moody’s
secondary share joint venture with • Launches credit • Raises P15B from
offering Manulife card business stock rights offer

2006 2007 2015 2017

2018
1997 2012 2014 2016

Best capitalized Acquires • Acquires Planters China Bank Capital • Raises P10.25 B via
bank during the Pampanga-based Development Bank acquires stock LTNCD issue
Asian Financial Unity Bank • Raises P8B from brokerage house • Signs US$150M Green
Crisis, after a 2 stock rights offer ATC Securities and Bond Agreement with
for every 3 shares renames it China IFC
stock rights Bank Securities • Recognized as the only
offering bank among the top
three listed Philippine
companies and among
the 50 best publicly-
listed companies in
ASEAN

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 5
 MESSAGE TO STAKEHOLDERS
102-14, 102-15

Vice Chairman Gilbert U. Dee, Chairman Hans T. Sy, and President William C. Whang
against a backdrop of China Bank’s original headquarters in Binondo, Manila. Built
in 1924, this historic building at the corner of Calle Juan Luna and Dasmariñas St.
is currently being restored to its former grandeur. Restoration is expected to be
completed in time for China Bank’s 100th anniversary in 2020.

6 C H I N A B A N K I N G C O R P O R AT I O N
To our Fellow Stakeholders,
Our enduring customer relationships, high governance standards, to tighten regulatory oversight and performance standards
and responsiveness to change set the stage for another year on capital adequacy and liquidity management. BSP amended
of solid growth. Amid a very competitive and challenging the Leverage Ratio framework, implementing guidelines
environment, 2018 was again a banner year for China Bank. We on Net Stable Funding Ratio and adopted the Basel III
posted our highest ever net profit in our 98-year history—P8.1 Countercyclical Buffer. It also brought down the reserve rate
billion, made good progress in our strategic objectives, scaled requirement to 18%.
up our contribution to the Sustainable Development Goals, and
achieved other milestones that bode well for our ambitious Steady growth
targets in the coming years. 2018 also marked the first full year Driven by the values and high standards set by our founders and
of our new Management team whose competent leadership is the trust and support of our customers, we achieved steady, solid
enabling our steady transition from the storied past to a changing growth year after year despite the difficult operating environment.
present and towards an exciting and sustainable future. We delivered net income of P8.1 billion in 2018, up 8% from
2017. This translated to a return on equity of 9.5% and a return
Operating context on assets of 1.0%. Our total operating income rose 11% to P28.6
The Philippines’ economic growth was slower at 6.2%, but billion, as net interest income surged 17% to P22.9 billion on
remained one of the fastest growing economies in Southeast the back of double-digit growth in loans. Meanwhile, fee-based
Asia. On the production side, economic activity was propelled revenues excluding trading gains and one-off gains grew 16%.
by the services and industry sectors. On the expenditure side,
household spending remained as the highest contributor to China Bank’s customer-centric structure lends itself to solid
growth, supported by sustained increases in revenues from the deposit and loan generation. Total assets expanded 15% to
BPO sector and inward remittances. P866 billion on the strength of our core businesses. Gross loans
reached P513 billion, 13% higher due to broad based increases
Fiscal deficit widened by 59%, overshooting the 3% of GDP across customer segments, particularly the consumer and
ceiling for the entire year. Strong government spending outpaced corporate segments. On the funding side, total deposits climbed
a moderate increase in revenue generation. The spending surge 14% to P722 billion, boosted by the 17% increase in CASA
was led by infrastructure, as more of the government’s ambitious (Checking & Savings Accounts) deposits to P401 billion.
“Build, Build, Build” projects were launched.
In spite of the fast-paced lending, asset quality remained healthy.
Trade deficit likewise widened by 22% as imports grew faster Non-performing loans (NPL) declined by 7%, further improving
than exports. This resulted in a current account shortfall as more NPL ratio to 1.2%—better than industry at both the parent bank
dollars were spent for importation. The increased demand for and subsidiary levels. NPL cover increased to 167%, with the
the greenback caused the Philippine peso to depreciate by 4%, parent bank recording a stronger ratio at 323% from 175% in
averaging P52.66: US$1 in 2018 from P50.40: US$1. Similarly, the 2017.
Philippine Stock Exchange Index lost 1,092 points or 13% year-on-
year, closing at 7,466 in 2018. At the core of our balance sheet strength is our solid capital
position. Total capital funds grew 5% to P87.8 billion. Common
The Bangko Sentral ng Pilipinas (BSP) raised its policy rate five equity tier 1 (CET 1) and total capital adequacy ratios at 12.2%
times to 4.75%, as inflation sustained an uptrend, peaking at and 13.1%, respectively, are well above the minimum regulatory
6.7% in September and October. The regulator continued requirement.

Driven by the values and high standards set by our founders and
the trust and support of our customers, we achieved steady, solid
growth year after year despite the difficult operating environment. We
delivered net income of P8.1 billion in 2018, up 8% from 2017.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 7
 MESSAGE TO STAKEHOLDERS

Sustainability is a cornerstone of our mission and the work we do.

We adopt best practices and conduct our business responsibly and
ethically to ensure China Bank’s sustainability and to contribute to a
sustainable future for all.

Strong investor confidence We continued to deepen our leadership bench with senior
With solid fundamentals, deep relationships with the Chinese- officer appointments in 2018: Ryan Martin L. Tapia as president
Filipino community, and track record of sustainable and strong of China Bank Capital, Mary Ann T. Lim as head of Trust and
earnings, China Bank continues to be among the best-rated Asset Management Group, Clarissa Maria A. Villalon as head of
companies in the country. In 2018, Moody’s affirmed our Consumer Banking Group-Operations Division, and Atty. Aileen
investment grade rating of “Baa2” Issuer Rating, citing our Paulette S. De Jesus as Chief Compliance Officer.
strong capital base and stable asset quality. We received similar
affirmation of our creditworthiness and viability—“BB+” Long To strengthen our subsidiaries and boost their capability to handle
Term Issuer Default Rating from Fitch and “BBB” Financial more business, the Board approved the Bank’s additional capital
Strength Rating from Capital Intelligence. All three agencies rated infusion of P500 million to China Bank Savings on June 6, 2018.
China Bank’s outlook as “Stable”. The Board also approved the additional capital infusion of P40
million (plus P60 million from Manulife) to Manulife China Bank
Meanwhile, local credit watchdog PhilRatings gave us an issuer Life Assurance Corp. on December 5, 2018.
rating of “PRS Aaa”, the highest corporate credit rating assigned
on the PRS scale, reflecting our strong capacity to meet financial In September 2018, Our Lead Independent Director, Mr. Roberto
obligations. F. Kuan, passed away. We are deeply saddened by the loss and
will always be grateful for his immense contribution to the Bank’s
We harnessed the momentum generated by our positive credit success in the 12 years that he served on our Board. A new
ratings by offering Long Term Negotiable Certificates of Deposit Independent Director, Mr. Philip S.L. Tsai, with over three decades
(LTNCD). In 2018, we raised P10.25 billion, the largest in the of extensive banking experience and management expertise, was
Bank’s history. We upsized the issuance from the original offer elected in November to serve Mr. Kuan’s unexpired term.
size of P5 billion due to strong investor demand. Strategic and
well-timed fund raising via LTNCDs enables us to match funding Also in September 2018, the BSP approved the amendment in
with asset maturity, support our business expansion plans, and our Articles of Incorporation and By-Laws to increase the number
create more value for stakeholders. of directors from 11 to 12. Subsequently, in January 2019, we
received Securities and Exchange Commission’s (SEC) nod
Beyond economic success to proceed with the election of a fourth independent director,
Sustainability is a cornerstone of our mission and the work we do. bringing a stronger element of independence to the Board.
We adopt best practices and conduct our business responsibly
and ethically to ensure China Bank’s longevity and to contribute to Our continued adherence to best practices to create sustainable
a sustainable future for all. value has other rewards. China Bank was cited at the 2018
ASEAN Governance Awards as the only bank among the top three
To address growing environmental concerns, we inked a US$150 listed Philippine companies and among the 50 best publicly-listed
million Green Bond Agreement with International Finance companies in ASEAN. Our excellence in corporate governance
Corporation (IFC). The Green Bond underscores our strategy to was also recognized by London-based publications Global Banking
facilitate business growth and economic development in a way & Finance Review and Capital Finance International. BSP affirmed
that is sustainable and beneficial to society and the environment. our commitment to high customer service standards, conferring
It opens up more financing for projects to address climate change, on us the Pagtugon Award for Universal and Commercial Banks.
including renewable energy, green buildings, energy efficiency, Meanwhile, our investment banking arm China Bank Capital
and water conservation initiatives. was named Best Retail Bond House in the Philippines by The
Asset for the third year in a row, and as Best Bond Adviser in the
Philippines.

8 C H I N A B A N K I N G C O R P O R AT I O N
 utilization rates for all electronic banking channels like ATMs, Cash
Our wildly important goals Accept Machines, and the internet and mobile banking platform to
We envision becoming one of the top-performing financial facilitate efficient but secure banking transactions.
institutions in terms of profitability and shareholder value over
the next five years. We adopted the “Wildly Important Goals” or We will strengthen our 98-year franchise by building a service-
WIGs concept in 2017 as the pillars of execution for our continued oriented organization with highly-engaged employees to be able
success and sustainability. In 2018 and in the coming years, we to meet the challenges of today’s competitive banking landscape.
will align our activities towards the achievement of our four WIGs: China Bank Academy will continue to design and roll-out
business growth, customer centricity, operational excellence, and development programs that are tailor fit to our growth directive,
employee engagement. digitization roadmap, and our goal of becoming customers’ bank
of choice.
At the forefront of core business expansion is fund build-up,
particularly low-cost deposits. In 2019, we will develop client Onward to 100 years and beyond
acquisition and retention programs, as well as launch new For nearly a century, we have been building a strong, resilient,
deposit products and services suited to the needs of the retail responsive, and competitive business franchise on a foundation of
and other emerging sectors. As the branch network matures, trust, integrity, accountability, and transparency. We are excited
we will continue to review the organizational structure of to celebrate China Bank’s Centenary next year and we welcome
distribution channels and recalibrate branch functions in order the opportunities and challenges ahead. It is with deep sadness,
to accommodate more high-value transactions. The synergy however, that we are continuing this journey without our Honorary
between branches and other sales desks will be tightened to Chairman and Advisor, Mr. Henry “Tatang” Sy Sr. His passing is
drive internal client sourcing, cross-selling, and leads generation a great loss to China Bank and the nation. We take comfort in the
programs, while maintaining prudent credit standards. fact that his legacy will live on.

Our consumer business is set to steadily expand and grow its As we set our sights to the future with optimism and confidence,
share to the consolidated loan portfolio. Satellite offices dedicated we will continue to leverage China Bank’s strength to facilitate
to servicing housing, auto, and personal loans will be set up in sustainable and inclusive growth and improve the lives of the
selected branches to ramp up relationship-building with new and millions we serve.
existing retail clients. This will be complemented by the suite of
fee-based products and services, such as non-life insurance, trust, On behalf of the Board of Directors, management, and staff
bancassurance, wealth management, and securities brokering, of China Bank, we thank you for your continued trust and
as well as the China Bank credit cards in order to achieve a more partnership.
comprehensive product coverage.

China Bank Savings, on its end, would further build up its

Automatic Payroll Deduction (APD) portfolio by widening the
geographical footprint of sales offices, increasing visibility in HANS T. SY
Department of Education (DepEd) events, and providing critical Chairman of the Board & Executive Committee
marketing and operational support to branches. This includes
continuous improvement to the existing loans origination
workflow, significantly cutting manual processes from application
to approval.
GILBERT U. DEE
In line with our goal of becoming a digitally-powered and Vice Chairman
highly-automated bank by our centennial year in 2020, we will
streamline key processes related to the rolling growth mandate,
cut redundancies, and automate manual procedures alongside
setting inter-departmental service level agreements to generate
operational efficiencies and provide superior customer experience. WILLIAM C. WHANG
Likewise, we will launch programs to drive up enrollment and President

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 9
 Henry “Tatang” Sy Sr.
Honorary Chairman
October 1924 – January 2019

Success comes to those who dream big, work very hard to achieve their goals, and are determined and optimistic amid
challenges. Henry Sy Sr., the founder of SM, the father of modern Philippine retail, and the Honorary Chairman of China
Bank, had attained great success and had touched so many lives in his 94 years. He was fondly called “Tatang” for his
role as patriarch to his family and extended family—employees, business partners, and friends. His inspiring rags to
riches story, grit, business philosophy, and generosity have made him an example of what it means to be a businessman.
And in his passing, he leaves a multi-billion empire that provides livelihood to tens of thousands of Filipinos, a foundation
that supports the poor members of the community, and a legacy that inspires generations of entrepreneurs.

“Mr. Henry Sy Sr. was a dreamer. Journey to success

Tatang was born in 1924 in Xiamen, China as Sy Chi Sieng,
He taught me the meaning of the word
which means “to attain ultimate success.” At the age of 12,
‘patience’ and he showed it to me when he he ventured the rough seas alone to join his father in the
built his stake in China Bank. He was such a Philippines. He imagined life to be better because his father
was able to regularly send money back to China. He was
good man. He helped out the poor and the surprised to find him operating just a small ‘sari-sari’ store
needy. For this, I admire him very much. along Carriedo.
During the Japanese occupation in 1942, his father’s store
He was my boss.” was burned down and another was looted. Devastated, his
- China Bank Vice Chairman Gilbert U. Dee father returned to China after the war, but Tatang chose to
stay. In the smoldering ruins of Manila, he foresaw that shoes
would be in big demand. He sold surplus G.I. boots which led

10 C H I N A B A N K I N G C O R P O R AT I O N
to him to open his first Shoemart. But in order to grow his
business, he needed more capital.
This capital came in the form of a one million Peso loan
from China Bank in 1949, his first credit line.
“The loan facilities given to me by the Bank gave me
‘pinsin’, a Fujianese word meaning ‘trustworthiness’ or
‘credibility’, in the Chinese community. It established me
as trustworthy. It built up my credit. It proved that I was
considered a very trusted customer by the Bank, and that
helped my business. If China Bank considered me a good
credit risk, then other people would also. That’s why I
appreciate that loan so much,” said Tatang in China Bank’s
90th anniversary commemorative book, A Matter of Trust: The
China Bank Story.

Steadfast through good times and bad

Tatang dreamed of making his little Shoemart into big business
and set out to do everything he can to make it happen. His
persistent attitude, amazing foresight, and optimism enabled
him to see the good out of any bad situation. La Salle University, the University of the Philippines, Miriam
He opened the first SM department store in Quiapo just College, and Tatang’s alma mater, Far Eastern University. In
after the declaration of Martial Law. Then following Ninoy 1991, the foundation established Asia Pacific College with
Aquino’s assassination, in one of the most turbulent periods IBM, and in 2008, acquired National University.
in the country’s political and economic history, he opened the “He worked hard and sacrificed so much early in his life
country’s first supermall, SM City in North EDSA, in 1985. just to be able to receive formal education. He wants the same
In 1989, at the height of the coup d’états against the for every Filipino,” said China Bank Chairman Hans Sy, the
Philippine government, SM Centerpoint (Sta. Mesa) was fourth of Tatang’s six children.
opened, followed by SM Megamall in 1991, the first mall in the The SM Foundation also provides healthcare, shelter,
country that featured the most advanced cinema of that time disaster response, farmers’ training, and environmental
and an ice skating rink. programs. In 2016, the foundation built 1,000 houses for
Even after the 1997 Asian crisis, Tatang went against Yolanda survivors.
conventional wisdom by fast-tracking mall expansion and
building two to three new malls every year since then. In A mark in history
2005, when the country was besieged with fiscal problems, Tatang had said that there is no such thing as overnight
political scandals and poor credit ratings, SM Investments success or easy money. From a very young age, he held fast
Corp. was able to conduct a successful IPO. SM Mall of Asia to a simple way of life where one works for what one gets.
was opened in May 2006. Starting with his flagship Shoemart store, Tatang founded the
SM group, which has evolved into one of the country’s largest
Sharing his blessings conglomerates spanning retail, banking, hotels, and property
Tatang is known not just for his business success but also for development. As of December 2018, SM has 72 shopping
his philanthropic work. He generously gave back to society malls across the country and seven more in China. It also has
through the SM Foundation, established in 1983. over 2,300 SM retail outlets, six hotels, and 11 office buildings.
Tatang started the SM College Scholarship Program in Tatang made his dreams a reality, and in the process,
1993, which has since supported almost 4,000 scholars and changed the country’s landscape with his property
branched out to provide technical-vocational scholarships to developments, provided jobs, turned malling into a national
deserving indigent high school graduates. recreation, and redefined the limits of banking.
The SM Foundation also donated billions to build public Farewell, Tatang. Thank you for your lessons and
schools for the poor, gave to established schools such as De contributions to society. You will forever be in our hearts.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 11
 FINANCIAL HIGHLIGHTS
102-7

2016 2017 2018

FOR THE YEAR (IN THOUSAND PESOS)
Net Interest Income 16,694,195 19,626,403 22,926,186
Non-Interest Income 5,094,746 6,101,694 5,658,296
Operating Income 21,788,941 25,728,097 28,584,482
Provision for Impairment & Credit Losses 850,546 754,171 141,076
Operating Expenses 13,350,873 15,961,818 18,055,880
Net Income Attributable to Equity Holders of the Parent Bank 6,458,296 7,513,972 8,110,379
AT YEAR END (IN THOUSAND PESOS)
Total Resources 633,198,011 751, 447, 510 866,071,640
Loan Portfolio (Net) 386, 827, 300 448,970,942 505,804,955
Investment Securities 98,982,422 127, 970, 546 190,234,824
Total Deposits 541,583,018 635,093,393 722,123,297
Stockholders’ Equity 63,386,204 83,655,497 87, 856,587
Number of Branches 541 596 620
Number of ATMs 805 888 966
Number of Employees 8,124 9,124 9,652
KEY PERFORMANCE INDICATORS (IN %)
Profitability
Return on Average Equity 10.42 10.01 9.54
Return on Average Assets 1.16 1.12 1.04
Net Interest Margin 3.20 3.11 3.10
Cost to Income Ratio 61 62 63
Liquidity
Liquid Assets to Total Assets 34 36 38
Loans (net) to Deposits Ratio 71 71 70
Asset Quality
Gross Non-Performing Loans Ratio 1.9 1.4 1.2
NPL Cover 91 99 167
Capitalization
Capital Adequacy Ratio (CET 1/Tier 1) 11.30 13.47 12.16
Capital Adequacy Ratio (Total CAR) 12.21 14.22 13.09
SHAREHOLDER INFORMATION
Market Value
1/
Market Price Per Share (In Pesos) 33.51 33.30 27.10
Market Capitalization (In Thousand Pesos) 76,077,058 89,402,898 72,787,885
Valuation
1/
Earnings Per Share (In Pesos) 2.88 2.91 3.02
1/
Book Value Per Share (In Pesos) 27.92 31.16 32.71
Price to Book Ratio (x) 1.20 1.07 0.83
Price to Earnings Ratio 11.64 11.44 8.97
Dividends
Cash Dividends Paid (In Thousand Pesos) 1,853,728 1,988,720 2,229,297
Cash Dividend Per Share (In Pesos) 1.00 0.80 0.83
Cash Payout Ratio (In %) 33 31 30
Cash Dividend Yield (In %) 3.09 2.36 2.49
Stock Dividends Paid (In Pesos) 1,482,993 1,988,729 –
Stock Dividend Per Share (In %) 8 8 –

1/
Restated to show the cumulative effects of stock dividends & stock rights

12 C H I N A B A N K I N G C O R P O R AT I O N
NET INCOME TOTAL RESOURCES STOCKHOLDERS’ EQUITY
In Billion Pesos In Billion Pesos In Billion Pesos
8.1 866.1 87.9
7.5
751.4 83.7
6.5
633.2 63.4
5.6
5.1 526.8 59.2
471.2 56.6

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

DEPOSITS DISTRIBUTION NETWORK TOTAL CAR

In Billion Pesos Branches ATM In Percent
966

722.1 14.88 14.22

888

635.1 13.50 13.09

805

541.6 12.21
740
661

620
596

439.3
541
517
470

399.3

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

RETURN ON EQUITY CASH DIVIDENDS PAID MARKET CAPITALIZATION

In Percent In Billion Pesos In Billion Pesos

10.42 2.2 89.4

9.91 10.01
9.62 9.54 2.0 80.7
1.9 76.1 72.8
1.7 69.0
1.6

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 13
 SDG CONTRIBUTION - CORE AREAS
203-2

How we contribute 2018 performance

Target 1.4 1.5 M

Equal rights to Making banking accessible Customers nationwide
economic resources and convenient through
distribution network P4.5 B
Personal loans
expansion, digital innovation,
and systems and process P23.2 B
Total economic
improvements to encourage value distributed
more people, especially the
unbanked sector, to join the 160,535
Target 3.8 Number of life and non-life
formal financial system.
Financial risk insurance policies
protection
P221.1 M
Prudently managing our risks, Insurance claims paid
capital, and balance sheet to
Target 4.6 remain profitable and capable 28,400
Literacy and of supporting the Philippines’ Beneficiaries of
numeracy economic development. financial literacy
programs

Promoting financial education

Target 5.5 63%
Equal leadership and developing affordable of China Bank officers
opportunities for women and innovative banking, are female
insurance, and financial
products and services to
help more people achieve
Target 8.10 620 966
their dreams and secure their Branches ATMs
Access to banking,
financial future.
insurance, and financial
services for all
200,351
Number of no maintaining/
no min. balance accounts
Target 8.5 Providing equal opportunities
Full and productive
for gainful employment and
9,652
employment and Jobs directly created
equal pay for work equitable compensation
of equal value while ensuring employees’ P6.1 B
overall wellbeing. Salary and benefits
Target 8.8 paid to employees
Labor rights and safe
and secure working
environments
100%
compliance with
Philippine labor laws

14 C H I N A B A N K I N G C O R P O R AT I O N
 How we contribute 2018 performance

Target 7.1 P7.0 B

Access to energy Supporting key business Loans for energy access
sectors in driving sustainable
industrialization. P7.2 B
Renewable energy financed

Target 9.3 P84 B

Access to affordable credit Supporting the SME and
Commercial & SME loans
middle market segments to
increase their capacity for
growth and expansion.
P49 B
Target 11.1 Housing loans
Affordable housing for all

Target 11.2 Actively lending to support P21 B

Access to sustainable home and vehicle ownership Auto loans
transport and help raise the quality of
life.

Target 12.6 2nd

Sustainable practices Annual Financial &
Sustainability Report
Investing in and raising
finance for climate-smart
projects to help accelerate
Target 13.A
Climate change the transition to a low-carbon US$150 M
mitigation economy. Green Bond

Target 16.5 Adopting global best 6,700

Employees trained on
Reduction of bribery practices and upholding Anti-Money Laundering
and corruption
the highest governance
Target 16.6 standards to ensure 1,684
Employees trained on
Effective, accountable, sustainable value creation Anti-Bribery & Corruption
and transparent institutions for all stakeholders
100+ pts. ACGS*
Among the 50 best in
ASEAN in corporate
governance

* ASEAN Corporate Governance Scorecard

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 15
 SUSTAINABILTY STRATEGY AND ROADMAP

Banking is a stakeholder business. China Bank’s sustainability is underpinned by the

enduring relationships of trust we have built with our customers, employees, investors,
regulators, and society in general. We are driven to continuously create value by
delivering on our role to our stakeholders and contributing to the achievement of the
Sustainable Development Goals.

AS AS AS
ENABLER ADVOCATE EMPLOYER

• Number of
• Number of • Customer
employees
branches and ATMs Satisfaction rating
• Number of new
• Number of • Volume of
hires
customers inquiries, requests,
complaints received
• Workforce
• New products/
proportion in terms
services launched • Number of
of gender, age, and
METRICS • Transaction volume
reported concerns
rank
(E-banking) • Complaint
• Number of
resolution rate
employees
• Deposit volume
promoted
• Remittance volume
• Number of training
hours
• Loan volume
• Attrition rate
• Deal volume
• Retention rate
• Investment volume
• Number of
• Insurance volume
engagement, team
effectiveness, and
work-life integration
programs

• Target 1.4 • Target 16.6 • Target 5.5

• Target 3.8 • Target 8.5
• Target 8.10 • Target 8.8
SDG • Target 9.3
Contribution • Target 13.A
• Target 7.1
• Target 11.1, 11.2

16 C H I N A B A N K I N G C O R P O R AT I O N
 AS AS
PARTNER STEWARD

• Economic value • Board Direction Developing new Setting

distributed and Senior
Management shared value ambitious
• Energy and fuel performance approaches to targets to scale
consumption
• Governance better serve up contribution
• Scope 2 and Scope policies and ethical the needs of to the SDGs
3 GHG emissions business practices
and continue to
• Number and impact • Board and Board make a positive
of Corporate Social Committee
Responsibility meetings, directors’ impact on our
programs and attendance, and stakeholders
activities assessments

• Compliance
with the ASEAN
Corporate
Governance
Scorecard

• Governance awards

• Target 1.4 • Target 12.6

• Target 4.6 • Target 16.5, 16.6

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 17
 MATERIALITY PROCESS AND MATERIAL TOPICS
102-42, 102-46, 102-47, 103-1

Addressing what’s important to our stakeholders and our business is an opportunity for us to strengthen our Bank, improve
the way we do businesses, and create sustainable value. In 2018, we conducted a materiality assessment to identify
and prioritize China Bank’s material sustainability topics. We engaged an external consultant, Philippine Business for the
Environment (PBE), to provide additional rigor and analysis to the process.

1 2 3 4
BENCHMARKING IDENTIFICATION PRIORITIZATION VALIDATION

We researched competitors, We consulted our key We conducted working We consolidated their

international standards of stakeholder groups to identify sessions, face-to-face feedback, confirmed with
best practice and globally an array of environmental, interviews, and phone/email the various business groups
accepted frameworks, and social, and governance consultations with our senior that all significant aspects
peer companies to establish topics. To gain broader management and various and impacts have been
a baseline understanding perspective on these topics business groups and select considered, and presented
of trends, best practices, of interest, we also reviewed external stakeholders. We the materiality results to
and material topics in the various stakeholder reports, asked the respondents to senior management.
banking industry. investor briefing materials, select issues that present
results of our customer significant risk, leadership
satisfaction surveys, and opportunities, or long-term
other sources. effects on our business.

Material Topics and Boundary

103-1
Resulting from the materiality process are the following material topics that are important to our stakeholders and
strategically important to China Bank’s operations and sustainability.

Category Topic GRI-Related Disclosure Boundary

Sound business practices Alignment with BSP, SEC and PSE Internal
Risk management and international best practices*
Governance Regulatory compliance GRI 102-18 to 102-39 General
Disclosures on Governance
GRI 205 Anti-corruption

Financial performance GRI 201 Economic Performance Internal and external

Economic Economic contribution GRI 203 Indirect Economic
Impacts

Energy and fuel consumption GRI 302 Energy Internal

Environment
GRI 305 Emissions
Talent acquisition and GRI 401 Employment Internal and external
development GRI 404 Training and Education
Employee engagement GRI 405 Diversity and Equal
and retention Opportunity
Social Employee well being GRI 403 Occupational Health and
Customer protection Safety
Customer relationships GRI 418 Customer Privacy
Customer satisfaction
Community investment GRI 413 Local Communities

Impact to sustainable Financial contribution to SDG Internal and external

Value creation development of our financial Investment Areas*
products

*China Bank-defined metrics

18 C H I N A B A N K I N G C O R P O R AT I O N
STAKEHOLDER ENGAGEMENT
102-40, 102-43 102-44

Our approach to sustainability is shaped by our engagement with stakeholders. Through dialogues, meetings, surveys, and
correspondences, we endeavor to understand our stakeholders’ concerns and expectations so we can align them with our
strategic objectives and initiatives.

Our stakeholders How we engage them and how often What matters to them What we are doing

Customers • Daily customer interactions: face-to-face • Service quality • Continuous service, process, and
with personnel at branches; via e-mail, technology improvements
• Reliability and security of electronic
telephone, and social media channels
banking channels • Ongoing branch and ATM network
• Annual customer satisfaction survey expansion
• Accessibility of branches
• Regular visits to select customers • Ongoing capacity building: hiring
• Easy account opening/loan application people with the right qualifications,
• Year-round events: market outlook requirements and processes competencies, and attitude and further
briefings, wealth forums, etc.
• Sound financial advice developing their skills through training
• Capable personnel to efficiently address
concerns
• Fast complaints resolution
Stockholders/ • Regular investor briefings and one-on-one • Shareholder returns • Timely and transparent updates and
Investors meetings disclosures
• Financial performance
• Periodic roadshows with Investor Relations • Continuous fiscal management and risk
• Continued growth, managed risks management improvement to enhance
• Annual stockholders’ meeting profitability and deliver dividends
• Accurate and timely disclosures

Analysts • Regular correspondence via letters and • Updates on the performance of the Bank • Timely and transparent disclosures
email
• Transparency
• Periodic roadshows with Investor
Relations
• Periodic one-on-one dialogues
Employees • Regular face-to-face meetings, trainings, • Career development • Continuous implementation and
and digital interactions through email, enhancement of employee recruitment,
• Equitable compensation
Intranet, and e-Learning Portal development, and engagement programs
• Work-life balance
• Regular conduct of Work-life Integration, • Cascade of Wildly Important Goals (WIGs)
Team Effectiveness, and Personal Social • Understanding of organizational goals
Responsibility programs
• Monthly area meetings
• Annual National Convention
• Annual performance evaluation
Regulators • Regular correspondence via letters and • Transparency and accountability • Prompt response to inquiries and requests
email for explanation on certain matters
• Compliance with relevant Philippine laws,
• Regular audits rules, and regulations • Timely and transparent disclosures and
• Responsible lending regulatory compliance reports
• Annual BSP examination • Cascade of policies and regular updates
• Ethics and compliance
• Annual conduct of internal and external audits
Suppliers and • Accreditation • Procurement policies • Cascade of policies and regular updates
contractors
• Regular correspondence via letters and
email
• Regular dialogues during the procurement
process
Industry groups • Membership • Continuing membership • Active membership
• Periodic general membership meetings, • Discussion of industry trends, updates, • Attendance in meetings, conferences, and
working committee meetings, common concerns, and advocacy fellowship activities
conferences, and fellowship activities
• Adoption of new rules and regulations • Participation in meetings with key policy
decision makers
• Collaboration
• Participation in socio-civic projects
NGOs and • Regular correspondence via letters and • Support for projects and initiatives • Participation in and support of worthy
charitable email causes
• Collaboration
institutions
• Periodic partnerships/sponsorships • Continuous enhancement of community
• Feedback on activities conducted relations
• Post-event feedback

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 19
 CHINA BANK
AS ENABLER

SDGs
1
Target 1.4
17 Equal rights to economic
2 resources
16
3
Target 3.8
15 Financial risk protection

Target 7.1
4 Access to energy
14

Target 8.10
Access to banking,
5 insurance, and financial
13
services for all

Target 9.3
12 6
Access to affordable
credit

Target 11.1
11 7 Affordable housing for all
10

8 Target 11.2
9
Access to sustainable
transport

Target 13.A
Climate change
mitigation

20 C H I N A B A N K I N G C O R P O R AT I O N
Enabling our
customers’ success
Driven by our mission to be a
catalyst of wealth creation, we
embrace our role as an enabler
of our customers’ success. In
2018, we focused on building
our capabilities, enhancing
our distribution channels, and
improving our offerings and
processes around our customers’
needs to help them succeed
financially and ultimately, to help
raise the quality of life in the
country.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 21
22 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ENABLER

Banking for everyone

A bank account not only brings peace of mind that hard-earned money is
kept safe, it also provides the opportunity to get a loan for a car, house, and
business. Banking is essential to prosperous living.

To make banking more accessible to more people, we expanded our reach,

adding 24 more China Bank and China Bank Savings branches nationwide,
and enhanced our digital platform. We extended our branches’ banking
hours by one hour to have more time serving customers, shortened check
clearing time so funds become available five hours sooner, and streamlined
processes for faster turnaround time. To make banking convenient and
accessible everywhere else, we launched the new and improved China China Bank Mobile App
Bank Mobile App with first-in-the-market features, deployed more ATMs
and POS cash-out facilities even in remote areas. And to translate banking We launched in March 2018 a more robust
convenience to a better commuter experience, we launched another first version of China Bank Mobile App. It has
in the market—beep™ card balance inquiry and reloading via select China the usual functionalities for convenient
Bank and China Bank Savings ATMs. beep™ cards are used to pay for fare banking on the go—inquire balance, view
at MRT and LRT trains, P2P buses, highway toll, as well as for purchases at transaction history, pay bills, transfer
funds—plus pre-login features like ATM/
select retail outlets.
Branch locator, exchange rates viewer, and
loan calculator/simulator, as well as new
functionalities not available in other mobile

620
branches
966 ATMs
banking apps:

• SLEX RFID Reload – easy RFID reloading

for South Luzon Expressway

• JUMP (Just Use your Mobile Phone) –

Longer banking hours easy fund transfer feature. The funds can
be withdrawn from any China Bank ATM
Later check clearing cut-off time using the passcode sent to the payee’s
mobile phone, no ATM card needed.
Faster turnaround time
• NOW (No card On Withdrawal) -
Emergency cash feature for card-less
Our wider footprint and enhanced customer journey and electronic banking withdrawals at China Bank ATMs.
channels enabled us to capture more opportunities for customer acquisition
and deposit generation in 2018. Deposits increased 14% to P722 billion,
boosted by the 17% growth in CASA deposits (Checking and Savings
Accounts) to P401 billion. Our no opening/ maintaining balance deposits
accounts, China Bank Overseas Kababayan Savings and CBS Easi-Save
Basic, combined with our year-round financial awareness campaigns,
encouraged more people to save. The number of accounts under these P722 B P401 B
deposits CASA deposits
deposit products increased 27% to 200,351 accounts. And as we
continued to promote savings consciousness to children, the number of up 14% up 17%
CBS Easi-Save Kids accounts increased 32% to 8,122.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 23
 Photo on left: CMS Mindanao Sales Officer John Carlo
Bacong, Travie’s Store owner Analyn Yuting, and Butuan
City Branch Head Sheelah Kho. Photos on right: Crossing
the river to Las Nieves and the boat dock.

China Bank POS Cash-Out facility

Travelling long distances over mountains and across a river sustainable if the offsite ATM were to be situated in
is the norm for the residents of Las Nieves, a community remote areas in the country like Las Nieves in Agusan
of households that are recipients of the Government’s del Norte.
Pantawid Pamilyang Pilipino Program or conditional cash
transfer program called “4P’s”. Funds are credited monthly By installing a POS terminal at Travie’s Store, we made
to their ATM accounts, which they need to withdraw from it more convenient for the 4Ps beneficiaries to withdraw
a Bancnet ATM Terminal in Butuan City 50 km. away. their money. We also help the proprietor Mrs. Analyn
Yuting generate a new revenue stream for she earns
To service the needs of this isolated community and P20.00 per transaction as a convenience fee. The facility
protect them from the risk of getting robbed on their way also helps her better manage the store’s excess cash,
to and from Butuan City to withdraw, we installed a POS minimizing her risk from the travel she needs to take to
Cash-Out Facility at the community’s only convenience make bank deposits.
store, Travie’s Store, to facilitate cash withdrawals
through a POS terminal using any local ATM card. Offsite We are partnering with more businesses to deploy more
ATMs are costly to install and maintain. They require POS Cash-Out facilities to promote financial inclusion and
regular maintenance, a dedicated security per site, and convenient access to cash.
routine cash replenishment. Such requirements are not

24 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ENABLER

US$3.2 B remittances
up 11%
New customers are automatically enrolled in China Bank Online so they
can enjoy convenient and secure access to their accounts using their
computer or smart phone. We were among the first banks to implement
PesoNet in November 2017 and InstaPay in May 2018, the electronic fund
transfer service under the National Retail Payment System (NRPS) that
28
international remittance
allows customers to transfer funds directly to accounts of participating partners with branches
BSP-supervised banks and non-bank e-money issuers in the Philippines. worldwide
These initiatives led to the 18% increase in the usage of our electronic
banking channels, supporting NRPS’ aim to increase digital transactions

5
to 20% by 2020.

domestic payout
partners with
8,500
branches nationwide

In 2019, we are targeting to open over 20

branches. We will also continue to enhance
our digital platform, simplify account opening
procedures, and launch new products,
service enhancements, and promos to make
banking more accessible, inclusive, and
rewarding.
For OFWs and their families, we offer fast, safe, and affordable remittance
service. In 2018, we expanded our international and local remittance
tie-ups and launched promos to make sending money through China
Bank more convenient and rewarding. Our remittance volume increased
11% to US$3.2 billion, accounting for 11% of the OFW remittances sent
through banks.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 25
26 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ENABLER

Financing dreams
203-2

We support our customers’ ambitions, providing a range of consumer,

commercial/SME, and corporate loans and solutions to meet their financial
needs. We expedited loan processing with streamlined processes and
more branches and consumer loan centers, standardized credit proposal
formats for commercial and more complicated accounts to ensure the
availability of critical information vital to credit decision, and instituted a fast
lane for simple loan renewals with a structured credit guide checklist based
on the 5 Cs of credit to expedite the credit evaluation process. Our gross
loan portfolio rose 13% to P513 billion in 2018. P513 Bgross loans
Access to credit is crucial to the country’s inclusive economic growth.
We provide business owners with the relevant financial products,
up 13%
services, and advice to enable them to achieve their goals and become
active contributors to the economy and to job creation.

We actively lent to businesses of all sizes, and recognizing that our lending
decisions have an impact on sustainability, we carefully considered the
purpose for which the loans were used.

China Bank US$150 million

Green Bond Agreement
In October 2018, we signed an agreement
with IFC for China Bank’s first green bond
issue worth US$150 million to finance
climate-smart projects, including renewable
energy, green buildings, energy efficiency
and water conservation initiatives.

The green bond will bring up China Bank’s

climate portfolio to over US$200 million
(equivalent to about P11 billion), affirming
our commitment to sustainability. The bond
also supports the continuing development
of the nascent green bond market in the
Philippines and the government’s target of
reducing carbon emissions by 70% by 2030.

China Bank’s Chairman Hans Sy and COO Romeo Uyan Jr. (seated 2nd from right and
rightmost, respectively), IFC’s Regional Director Vivek Pathak and CEO Phillippe Le Houerou
(seated leftmost and 2nd from left , respectively), and the China Bank Green Bond working
team during the agreement signing on October 19, 2018.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 27
 Our business loans increased 11% to a total of P437 billion. Loans to
corporates grew 18% to P342 billion, loans to the commercial and SME
segments declined 9% to P84 billion, and loans to developers rose 6%
to P11 billion. The loans helped finance the development of sustainable
communities, the modernization of transportation, the expansion of the
food and agriculture industry, and more.
P342 B
corporate loans

P84 B
Commercial
and SME loans

P49 B 5,611
housing loans new homes
financed in 2018
Owning a home and vehicle is a dream for the everyday Filipino.
We continued to offer very competitive consumer loan rates and fast
processing to make it easy and affordable for more people to achieve this
dream. Our housing loans increased 23% to P49 billion, while auto loans
grew 10% to P21 billion. Majority of the loans were used by the borrowers
to purchase their very first residential property and vehicle. A small
percentage of the auto loans were used to buy vehicles for business use.
In 2018, we financed 5,611 new houses and 10,216 new vehicles.
P21 B 10,216
auto loans new vehicles
Through China Bank Savings (CBS), we provide personal loans to help financed in 2018
people with their short-term credit needs. In 2018, CBS’ personal loan
portfolio expanded 60% to P4.5 billion, P3.5 billion of which, or 79%,
was comprised of Easi-Automatic Payroll Deduction Salary (Easi-APDS)
loans. Easi-APDS loan is for the teaching and non-teaching employees of
the Department of Education, Technical Education and Skills Development
P3.5 B
loans to DepEd
teachers and
employees

28 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ENABLER

Easi-APDS Loan
for teachers
China Bank Savings partnered with
Manulife China Bank Life Assurance
Corporation (MCBLife) to offer a salary
loan with free life insurance coverage
for employees of the Department of
Education and its affiliated agencies—a
first in the industry. The Easi-APDS loan
helps borrowers with their short-term
credit needs while protecting their
families from uncertain financial burden.

The minimum loan amount is P5,000

and the maximum is P1 million, payable
in 12, 24 or 36 months. For the duration
of the loan, the borrower gets free life
insurance coverage. In the first three
months, coverage is the same amount
as the outstanding balance, which will
increase to 1.5 times of the outstanding
balance in the fourth month onwards.

Authority (TESDA), Department of Science and Technology

(DOST), and state universities and colleges. With the added
benefit of free life insurance and the opening of more APD
Salary Loan Centers, new Easi-APDS loans released in 2018
doubled to P3.5 billion. More than half of the loan proceeds
P5.5 B
credit card
were for general personal needs, the rest were for housing gross billings
(repair/renovation), medical/hospitalization, and education.

China Bank Credit Cards provide everyday consumers the We conduct our lending activities in line with best practices
flexibility to afford their needs and the purchasing power to and international principles safeguarding the environment
accommodate their lifestyles. We switched to a new credit and human rights and promoting anti-corruption. We are
card system in 2018 for enhanced efficiencies and improved developing a framework for assessing possible environmental,
service moving forward. Outstanding loans rose 5% to P1.4 social, and governance (ESG) risks associated with lending
billion, while gross billings increased 6% to P5.5 billion. to business customers. Moving forward, we will continue
We expect to see significant improvement in the coming to improve our lending practices and processes to meet
years as the additional feature of the new card system are roll our customers’ needs and contribute more to a sustainable
out together with exciting promos. economy.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 29
 Creating and protecting wealth

30 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ENABLER

Creating and protecting

wealth
In building strong relationships with our customers, we endeavor to
know them and their financial needs well. We connect them to experts
and resources within the China Bank Group to help them find the right
solutions for their more complex financing requirements and to match their
personal circumstances, lifestyle, and investment objectives with the right
investments to build and protect their wealth.

Aside from traditional loans, we help both the private and public sectors
raise funds through the capital market. China Bank Capital and China Bank
Securities provide expert advice and execute debt and equity financing
arrangements to help companies beef up capital through the most cost-
effective mix of debt and equity. In 2018, China Bank Capital remained
number one in retail bond issues with 33% market share. Total transactions Best Bond Adviser
reached P325 billion in 2018, more than half or P172 billion went to SDG-
For the third year in a row, China Bank
contributing investments, particularly in infrastructure development,
Capital won as the Best Bond Adviser
electrification, and water and sanitation systems. in the Philippines at The Asset Triple A
Country Awards 2018 in Hong Kong. It was
also recognized for its role in two award­
winning transactions—the Bloomberry
China Bank Capital Resorts and Hotels P73.5 billion syndicated
term loan, one of the largest corporate
No. 1 in peso retail bond issues syndications ever arranged in the
Philippine debt market, awarded as the
Participated in 30 debt and equity transactions Best Syndicated Loan in the country; and
of 22 companies that belong to the top 1,000 the Ayala Land P10 billion retail bonds
Philippine corporations issue, the first-ever corporate bond with
a repricing structure during the life of the
bond, cited as the Most Innovative Deal.

China Bank Capital was registered and

licensed as an investment house in

P325 B
10% November 2015. In just three years, it
water and has made its mark in the capital markets,
sanitation becoming the top choice of issuers.
worth of issues systems The award from The Asset follows the
and transactions accolades it received from FinanceAsia
10% as the Best Debt Capital Markets House
electrification in the Philippines, from Global Banking
47% and Finance Review as the Best Bank for
refinancing and Debt Capital Markets, from the Philippine
general financing Dealing System as the Top Corporate Issue
Manager/Arranger, and from the Investment
House Association of the Philippines as the
33% Best Fixed Income House.
infrastructure
development

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 31
 As our customers accumulate wealth, we help them preserve and grow
it and secure their financial future with a range of investment solutions to
suit their individual risk appetite and investment goals. We aim to deliver
superior long-term returns, leveraging the expertise of our seasoned team
of investment professionals and broad access to market information.

We provide our high net worth customers with customized solutions and
personalized service to manage, enhance, and preserve their wealth. In
2018, Wealth Management Group’s (WMG) assets under management
increased 25% to P106 billion. Private banking accounts rose 7% to 3,432.

P106 B
WMG assets under
3,432
accounts Best Managed Funds
management up 7%
up 25% China Bank was again recognized by the
Chartered Financial Analyst (CFA) Society
Philippines, distinguishing two of our Unit
We offer our individual and business customers the advantage of having Investment Trust Funds (UITFs)—China
a competent trustee to manage their investment portfolio, estate, and Bank Dollar Fund and China Bank Balanced
retirement funds, as well as the benefit of having a reliable escrow agent Fund—as the Best Managed Fund in
their respective categories among the
for business transactions involving large sums of money. In 2018, Trust and
82 participating funds and 16 investment
Asset Management Group’s (TAMG) assets under management reached houses and trust institutions.
P134 billion, moving China Bank to the number five spot from number six
out of 44 trust institutions. The awards affirm our commitment to
provide the best returns to investors. This is

P134 B 19,843
the third consecutive year that China Bank
Dollar Fund was awarded Best Managed
TAMG assets accounts Fund in the Long Term (Dollar FVPL)
under management, category, and the first time for China Bank
up 19% Balanced Fund to win Best Managed Fund
up 2% in the Balanced (Peso) category.
As a Government Securities Eligible Dealer (GSED), a registered broker- China Bank offers a total of ten UITFs for
dealer of fixed income securities with the Securities and Exchange a minimum investment of P10,000 for the
Commission, and a brokering participant in the Fixed Income Trading peso-denominated variants, US$1,000 for
Platform of the Philippine Dealing and Exchange Corporation, we offer China Bank Dollar Fund, and US$500 for
access to direct investments in government securities issued by the China Bank Dollar Money Market Fund.
Bureau of Treasury and to highly-rated bonds of various maturities issued
by prime Philippine corporations. Treasury Group’s trading volume in 2018
reached P82 billion, with 9,335 deals, representing 11% of total market
trades. Out of 31 broker participants, China Bank ranks second in the
number of trades and fourth in fixed income trading volume.

P82 B 9,335
deals
trading volume
No. 4 No. 2
in the industry in the industry

32 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ENABLER

We offer a full range of innovative insurance products to help our

customers prepare for life’s eventualities and protect their assets through
Manulife China Bank Life Assurance Corporation (MCBLife) and Chinabank
Insurance Brokerage (CIBI). Our customer-centric approach ensures that
our customers receive the best possible solution to meet their specific
insurance needs, with each policy underpinned by our strong claims-paying
ability. In 2018, MCBLife’s total policies in-force grew 39% to 98,499, while
insurance claims payments increased 12% to P89 million. Meanwhile,
Chinabank Insurance Brokerage, which celebrated its 20th anniversary in
2018, enhanced its roster of A-rated insurers and its brokering and claims
infrastructure. Its number of policies increased 38% to 62,036, while
insurance claims payments rose 37% to P132 million.

Best combination of
MCBLife investment and insurance

98,499
Insurance policies
P89 M
Insurance claims paid
Insurance and wealth products go hand-in-
hand to provide customers the protection
they need to grow their investments
through professionally-managed funds.
up 39% up 12%
In June 2018, MCBLife China Bank Dollar
Fixed Income Variable Unit-linked (VUL)
Fund was launched.
CIBI
A VUL insurance is a financial product

62,036
Insurance policies
P132 M
Insurance claims paid
that combines insurance coverage and
investment yields. The policy value is
“linked” to the investment funds; thus,
it is reflective of the fund’s investment
up 38% up 37% performance. It presents earning
potential that may not be offered in a
traditional life insurance policy. Like a
mutual fund investment, a VUL insurance
provides the benefits of diversification
as it allows customers to invest in fixed
income securities or bonds issued by the
Philippine government, as well as full-
time professional fund management. The
MCBLife China Bank Dollar Fixed Income
VUL Fund is available as an option for any
MCBLife Single Premium VUL product.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 33
 CHINA BANK
AS ADVOCATE

SDG

16 17 1 Target 16.6
2 Effective, accountable,
and transparent
institution
15 3

14 4

13 5

12 6

11 7

10 8
9

34 C H I N A B A N K I N G C O R P O R AT I O N
Delighting
and engaging
our customers
Customer advocacy is the
foundation of our Customer
Service and Consumer Protection
frameworks. We work hard to
make our customers happy
and engage them to know what
they need, how we can help
them, and how we can create
great customer experiences. By
advocating for our customers,
we earn their loyalty and enjoy
the reward of mutual advocacy.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 35
 Customer satisfaction
Maintaining high customer satisfaction levels takes
continuous team effort. We have dedicated teams, systems,
and programs in place to understand the expectations and
requirements of our customers, measure how well we are
satisfying these expectations and requirements, and develop
service and product standards based on the findings.

In 2018, we ran customer satisfaction surveys across our

branch network and through our phone banking service,
China Bank TellerPhone. The annual branch survey
conducted by our Service Standards and Quality Department
measured customers’ level of satisfaction with their branch
banking experience, while the China Bank TellerPhone
survey, conducted by our Customer Contact Center for
the first time in 2018, measured the calling clients’ level Positive
of satisfaction with how our Phonebankers handled their Rating
inquiries and concerns.

The branch survey revealed a higher over-all customer 95%

satisfaction rating of 95% in 2018 from 93% in 2017. On
a scale of 1 - very dissatisfied to 4 - very satisfied, 89% of
the respondents gave us a positive rating of 3 and 4. The
average rating per attribute also generally increased. The
survey was conducted year-round.

The China Bank TellerPhone survey also showed a positive

customer satisfaction rating of 99%. The survey was
conducted from September to December 2018. Customers 5%
who called our hotline number were asked to rate their
experience with our Phonebanker—press 1 if satisfied and Negative
press 2 if dissatisfied. Rating

2017 Average 2018 Average

Rating Rating

Queue time 91% 94%

Branch staff service
- Account opening 96% 96%

99% - Deposit/Withdrawal
Branch premises
93%
95%
95%
96%
Satisfaction Rating
ATM services 96% 96%
Security guards 96% 97%

36 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ADVOCATE

Customer support
Others
We are eager to assist our customers, providing them with Complaint 12%
convenient ways to reach us with their banking concerns. Our 5%
Customer Contact Center (CCC) manages our 24/7 customer
service platforms: customer support hotline
(88-55-888), email, social media, Website Support Center, and
China Bank Online’s messaging option. All communications 2018
are recorded and handled according to our set guidelines and Client Inquiry
standards to ensure privacy and rapid action. Request Interactions 53%
30%
In 2018, CCC received over 200,000 inquiries, requests,
follow-ups, suggestions, commendations, and complaints
across our customer service platforms, 14% higher compared
to 2017. Inquiries and requests continued to be the bulk of
CCC’s customer interactions, accounting for 83%. Follow-
ups, suggestions and commendations from customers and
general inquiry and feedback from non-customers (others) 5% 17% 78%
increased to 12%, while complaints remained steady at 5%.
Credit Cards Electronic banking

Complaint resolution Deposit and others

We view customer complaints as opportunities to improve The share of electronic banking-related complaints vis-à-
our services. We are committed to resolve complaints to vis the total increased to 78%, while the share of credit
our customers’ satisfaction, within the turnaround time set card-related, complaints and other matters shrunk to 17%.
by the Bangko Sentral ng Pilipinas (BSP), and in line with our Complaints on deposits, branch banking, and other concerns
Consumer Protection Framework. accounted for only 5%.

Our consumer protection risk management system ensures For electronic banking, most of the complaints were ATM-
that CCC, our designated Consumer Assistance Office, is on related. Complaints on internet banking, mobile banking
top of all customer concerns and reports material complaints app, phone banking, and point-of-sale only made up a small
to the Risk Management Group and the Board. percentage.

In 2018, we received, processed, and resolved over 10,800 For credit cards, declined transactions, billing statement
complaints, up 29%. Majority of the reported concerns delivery, and transaction disputes were the top concerns.
pertained to electronic banking and credit cards, in line with Overall, the number of credit card complaints dropped 6%.
the significant increase in the number of our ATM and credit
cardholders. We understand our customers’ demand for quick resolution.
Our centralized complaints management program enables
us to facilitate successful coordination among teams to
investigate the root cause of issues, identify resolutions, and

97% Winner:
2018 Pagtugon
develop action plans. In 2018, 97% of the complaints were
resolved within BSP’s standard turn-around time. This is a 3%
Complaints resolved improvement from the previous year’s 94%. We received the
within TAT set by BSP Award 2018 Pagtugon Award for Universal and Commercial Banks
from BSP in recognition of our outstanding performance in
responding to customer concerns.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 37
 Cyber security
We provide a safe and secure banking environment for our
customers. We have technologies, policies, and protective
mechanisms in place to guard our IT network and digital
channels against cyber attacks. In the last five years, we
have not had any major breach.
• Up-to-date technology and stringent control processes
are in place for detecting, preventing, monitoring (24/7),
and immediately responding to attacks and attempts to
invade our infrastructure
• Security tools and protocols are regularly monitored
and upgraded to conform with the strictest security and
reliability standards
• EMV compliant since 2017
• One-Time password (OTP) feature for China Bank Online
and China Bank Mobile App
• External and internal campaigns on fraud and cybercrime
are conducted to raise awareness among customers and
employees of the ongoing threats • Access to systems and resources are managed
efficiently, following the changes necessary to maintain
security for accessing and changing systems and
Data privacy information
• Contracts entered into by China Bank and third parties
We are committed to protect our customers’ confidential include confidentiality clauses that must be followed
information. As a general policy, customer’s information by service providers; regular monitoring of the supplier
cannot be shared with a third party unless there is a written environment is conducted to identify and correct possible
consent of the customer, or in cases where disclosure is vulnerabilities
required (Anti-Money Laundering Law, Credit Information • Employees receive continuous trainings on information
System Act, court order, BSP examination). We regularly security, data privacy, and fraud prevention
review and update our Information Security Policy to ensure • Clients are duly informed of their rights to privacy and
our strict compliance with applicable laws and regulations. the way in which their personal information is handled

24/7 CUSTOMER SUPPORT (Press “0” to speak to a phone banker) (+632) 88-55-888 / (+632) 8885-5888* Metro Manila
Toll-free numbers: 001-800-1-888-5888 Hong Kong / Singapore / Korea / Thailand
1800-1888-5-888 (PLDT) Provinces 00-800-1-888-5888 Italy/China
011-800-1-888-5888 USA/Canada
0011-800-1-888-5888 Australia
010-800-1-888-5888: 0061010-800-1-888-5888 (mobile phone/pay phone) Japan

*Effective October 6, 2019 per NTC Memorandum Circular

38 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS ADVOCATE

Communications
Communication is a vital tool to strengthen our brand
value and connect with customers. We are committed to
providing clear, accurate, truthful, and accessible information
not only to promote China Bank, but more importantly,
to encourage saving and how to fully benefit from our
banking products and services, and to help customers make
informed financial decisions. We are continuously improving
our communications to engage our customers across all
media and platforms.

• Consumer information materials mandated by the BSP

are prominently displayed in our branches
• Marketing materials contain clear and accurate
information about charges, rates, characteristics and
conditions of our products and services
• Advertisements comply with the rules and regulations of
the Advertising Standards Council
• Important announcements on marketing promotions,
temporary service interruption, changes in rates or
product features, transfer of branch locations, or any
other information that customers need to know are
released well in advance or as soon as practicable
• Practical tips on financial wellness, protecting the
environment, and disaster preparedness are regularly
disseminated
• Branch personnel and Phonebankers are adequately
trained to answer questions about our products and
services, explain the risks that certain products and
services carry, and advise customers on financial
matters

[email protected] (+632) 519-0143/ www.chinabank.ph

(+632) 8519-0143*

Customer Contact Center

China Bank Building, 8745 Paseo
de Roxas corner Villar Street, www.facebook.com/chinabankph www.twitter.com/chinabankph
Makati City 1226 Philippines

No. 04-07-2018 on the migration to 8-digit telephone numbers

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 39
 CHINA BANK
AS EMPLOYER

SDGs
17 1
Target 5.5
16 2 Equal leadership
opportunities for women
15 3
Target 8.5
Full and protective
4 employment and equal
14 pay for work of equal
value

13 5 Target 8.8
Labor rights and safe
and secure working
environments
12 6

11 7

10
9
8

40 C H I N A B A N K I N G C O R P O R AT I O N
Engaging our people

We strive to be among the best

employers in the Philippines,
fostering a culture of integrity,
accountability, collaboration,
continuous development, and
meritocracy to attract, motivate,
and retain the best people to best
serve our customers.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 41
42 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS EMPLOYER

Diversity and inclusion

102-7, 102-8, 401-1, 405-1
BREAKDOWN BY GENDER
Our diverse workforce with their broad range of skills, 2017 2018
experience, and background enables us to respond to Male 2,917 32% 3,142 33%
challenges and opportunities and meet our customers’
Female 6,207 68% 6,510 67%
needs in a fast-changing world. Women are well represented
at all levels and we take appropriate steps to support
future female leaders. In fact, 55% of our senior officers
are women. The healthy balance of young and mature BREAKDOWN BY AGE
employees brings generational perspective and supports 2017 2018
continuous skills and knowledge transfer. Operating only
Under 30 4,804 53% 5,116 53%
in the Philippines, all our employees are local hires and are
assigned in or close to their hometowns. All China Bankers 30-50 3,777 41% 3,962 41%
are full-time employees. Over 50 543 6% 574 6%

In 2018, our total workforce* increased 6% to 9,652—67%

female, 53% below 30 years old, 64% rank & file, 84% BREAKDOWN BY RANK
Luzon-based, and 94% regular status. 2017 2018
Senior Mgt. 307 3% 331 3%
Middle Mgt. 2,835 31% 3,133 32%
Rank and File 5,982 66% 6,188 64%

BREAKDOWN BY REGION
2017 2018
Luzon 7,694 84% 8,092 84%
Visayas 904 10% 982 10%
Mindanao 526 6% 578 6%

9,652
total workforce
1,943
new employees
BREAKDOWN BY STATUS
2017 2018

up by 6% hired in 2018 Regular 8,567 94% 9,078 94%

Probationary 557 6% 574 6%

*China Bank, China Bank Savings, China Bank PCCI, Chinabank Insurance Brokers, China Bank Capital, China Bank Securities

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 43
 Remuneration In 2018, 11% or a total of 1,084 employees were promoted.
As we continue to deepen our leadership bench, 156 of
102-41, 401-2 the promoted rank and file employees moved up to officer
position.
Our Remuneration System is anchored on the principle
of fair, transparent, and performance-based reward. Our PROMOTION
general remuneration policy is to provide fair and competitive 2017 2018
salary and benefits to employees commensurate with Promoted rank & file 649 467
their experience, responsibilities, job grade/corporate rank
Promoted Officers 425 617
and position. We also benchmark against the executive
compensation for the same positions in comparable Total 1,074 1,084
organizations (similar size, organizational structure,
business risk, and management complexity). Tied to this is
a competency-based Performance Management System
that calls for the alignment of individual key results, Learning and
competencies, and development plans with China Bank’s
overall business targets and strategy. Performance is development
reviewed annually and employees are rewarded based on 404-1
their performance.
We advocate continuous learning and up-skilling to develop
In line with our 2017-2020 collective bargaining agreement China Bankers to their full potential. Through the China Bank
(CBA)* with the CBC Employees’ Association, 59% or 4,055 Academy, we provide a host of training programs, including
rank and file employees are covered by the CBA in 2018. orientation for new employees and development programs
for rank and file, junior officers, branch heads, marketing
CBA*
staff, and technical staff. We also provide learning content
2017 2018 and training through our e-learning platform (Anti-Money
Employees covered 3,993 4,055 Laundering, Risk and Information Security, among others).
Percentage of We use a range of learning and development approaches,
employees covered 61% 59% including on-the-job learning, mentoring and coaching, digital
*For parent bank only learning, and classroom training/ workshop.

As we scaled up our capability-building program, the

Career advancement number of total training hours increased 187% to 636,111*.

This translated to an average of 65.90 training hours per

and succession employee, almost triple compared to 2017.

404-2
TRAINING HOURS
We take great care in continuously motivating our employees 2017 2018
and ensuring that we have a pool of potential successors Total number of training
221,487 636,111
for our future leadership needs. We implement individual hours
career development plans, provide many opportunities for Average number of training
career advancement, and conduct periodic reviews of the 24.28 65.90
hours/employee
talent pipeline to identify current gaps and manage our
future workforce requirement. We look after our employees’
career progression, guided by our Performance Management
System and Succession Management Program to fairly and *Not on a one name, one count basis
objectively identify China Bankers for leadership roles.

44 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS EMPLOYER

Engagement and
retention
401-1
182,780
Male All our human resources policies, strategies, and programs
are aimed at attracting, motivating, and retaining the best
TRAINING
HOURS BY China Bankers. We endeavor to keep our valued employees
GENDER and keep them engaged by making working at China
2018 Bank a financially rewarding, intellectually challenging,
453,331
Female and emotionally satisfying experience. We equip our
line supervisors and managers with stronger people
management skills to build healthy and collaborative
employee-manager relationships. We promote excellence
and raise employee morale through our various rewards
and recognition programs. We encourage open
13,710 communication and proactively listen to understand what
Senior Mgt. matters to employees. We support work-life integration
to help our employees lead happy and productive lives at
work and at home.
177,783
Middle Mgt. We registered an attrition rate of 15% and a retention rate
of 85% in 2018. As more than half our workforce is under
TRAINING
HOURS BY 30 years old, this age group accounted for the bulk of the
RANK 2018 separations.

444,618 2017 2018

Rank-and-File
Number of retirements & resignations 1,134 1,415
Attrition rate 13% 15%
Retention rate 88% 85%

Health and safety

Our employees’ health and safety are important to us. SEPARATION BREAKDOWN BY AGE
We provide a healthy and safe working environment at
all our offices and branches in line with industry best Under 30
practices and occupational safety and health standards.
We have safety and health policies, emergency procedures
68%
and evacuation plans in case of fire or other significant
incident, and wellness programs aimed at preventing 30-50
accidents, managing stress, and minimizing cases of work- 26%
related ill health.

Over 50
In 2018, we conducted the annual fire and earthquake drills
and annual physical exam at our offices and branches. We 6%
also stepped up our health and wellness campaigns to
encourage employees to appropriately care for their health.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 45
 Engagement and Team
Effectiveness programs
Constant and consistent employee engagement is
paramount to fostering a great culture where employees
feel valued and they value and take pride in the company
they work for. Below are our flagship programs to promote
employee engagement and collaboration, enabling us to
gauge genuine employee sentiment, and get feedback and
insights which we, in turn, use for China Bank’s continuous
improvement.

SharePoint Café*
Officers, regardless of their rank and
tenure in the Bank, are randomly
relationships with peers and superiors,
selected to contribute their thoughts on
etc., and to know their level of satisfaction
overall employee experience. Using the
or dissatisfaction with our onboarding
World Café method, the participants are
program.
encouraged to speak with their mind
and heart and to play, draw, and doodle
to express their level of satisfaction or
Exit Interview*
We value feedback from China Bankers,
dissatisfaction with China Bank.
both those who stay and those who
leave, as it helps us identify opportunities
Voice Avenue*
to improve engagement and retention.
The program is literally an avenue for
We conduct exit interviews to assess
rank and file employees to voice their
the overall experience of and the
thoughts and opinions on what would
likelihood that departing employees will
keep them engaged and make them
recommend China Bank to their friends and
stay, enabling us to assess current
acquaintances as a good place to work.
employees’ disposition and perception
about their job and the Bank.
Team Effectiveness Program**
This program aims to improve
Third Phase Questionnaire*
interpersonal relationship and promote
We have a full onboarding program
team cohesiveness to increase employee
to familiarize new employees and
engagement and boost team performance.
help them adjust to their new
The Team Effectiveness involves Team and
working environment. This follow-up
Leadership Assessments, Action Planning,
mechanism, given on the third month
Roadmap Implementation, and Program
from hiring date, enables us to check
Evaluation. Interventions are designed
how well new employees have adjusted
based on the identified priority area of the
with regard to their work, training,
team to improve overall effectiveness.

*For parent bank only

**Also conducted for Chinabank Insurance Brokers and China Bank Capital

46 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS EMPLOYER

Work-life Integration programs*

We recognize that there are many aspects to our employees’ life: work, home/family, personal well-
being, and community. We facilitate the melding of professional development and personal growth
through our Work-life Integration Programs (WLIP). Conducted year-round, our WLIPs are aimed at
helping China Bankers manage their finances, manage stress, learn a new skill, and adopt an active
and healthy lifestyle to enhance their personal life.

FINANCE STRESS MANAGEMENT

Basic Stock Market Mindfulness and Meditation – T’achi

China Bankers learned about basic stock investing, risk Part one of the workshop on basic relaxation disciplines to
and returns, and why they should consider adding stocks reduce stress at work and home focused on sound healing,
to their investment portfolio. T’achi, and meditation.

Stock Market 101 Mindfulness and Meditation – Yoga

A follow up session with additional practical tips about China Bankers were taught the basic Yoga stretches and
smart investing and performing fundamental and technical poses to strengthen the body, focus the mind, and relax
analysis of the stock market. the spirit.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 47
 HOBBY

The Visual Art of Writing Photography Gift Wrapping

A basic brush calligraphy workshop It takes more than a good camera China Bankers learned the various
wherein our budding calligraphers to take good pictures. The workshop techniques and creative ways to wrap
learned the basic skills and techniques was about the basics of photography, gifts using various materials and any
for positioning and writing words how to manually control the exposure item on hand—bottles, cloth, boxes,
beautifully and creatively. triangle (shutter speed, aperture paper, foils, and ribbons.
& ISO), and how to create very
Basic Painting Workshop interesting and well-composed images.
A fun and easy way to learn how to
paint using the step-by-step painting
technique.

48 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS EMPLOYER

SPORTS

Urban Farming and Gardening Annual Sports Fest Krav Maga

This workshop focused on practical China Bankers get to compete in China Bankers were taught the basics
tips for planting herbs and seeds into their favorite sport in the various of Krav Maga, a tactical and combative
repurposed containers, encouraging sports tournaments held annually— self-defense system that combines
participants to make an herb garden basketball, badminton, bowling, and boxing, judo, and others with an aim
out of plastic containers that would table tennis. We also have an annual to use the body or any object to either
otherwise be thrown away as waste. sports fest of purely traditional Filipino neutralize an attacker within seconds
outdoor games or avoid a critical life-or-death setting.
The Ultimate Sabonding
Experience
China Bankers learned about the
history of soap making in the
Philippines and how it can be turned
into a profitable business.

Daily Dimsum
An easy Dimsum-making workshop
wherein China Bankers learned how
to make delicious siomai, siopao,
hargaw, buchi, and fried rice toppings.

Baked Goodies for Business

China Bankers learned how to make
extra money by baking and selling
cookies and brownies.

Basic Baking
Amateur bakers learned how to bake
gift-worthy and easy to sell desserts
like butterscotch bars, choco chip
cupcake, cream puffs, and sponge
cake.

Baking for the Holidays

A workshop for learning how to
bake delicious red velvet cakes,
butterscotch bars, and oatmeal
cookies that are perfect treats for
Christmas and any occasion.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 49
 CHINA BANK
AS PARTNER

SDGs
1
Target 1.4
17 Equal rights to economic
2
resources
16

Target 4.6
15 3 Literacy and numeracy

4
14

13 5

12 6

11 7

10 8
9

50 C H I N A B A N K I N G C O R P O R AT I O N
Working for a better
tomorrow, today
Addressing sustainability
challenges is an enormous task
that no institution or government
can do alone. We are committed
to do our part to help drive the
Philippines’ economic growth,
to protect the environment, to
promote financial awareness
and inclusion, and to support
the vulnerable members of our
society. We are an eager partner
for sustainability, working with
and for our stakeholders to
create a better tomorrow for
everyone.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 51
 Distributing value created
201-1

China Bank is driven to create value knowing that it will be distributed in ways that are meaningful
and relevant to our stakeholders. In 2018, we generated P29.11 billion in direct economic value,
retaining P5.89 billion to fund our continued operations and growth and distributing P23.22 billion for
the benefit of the people and the communities where we operate.

P29.11 billion
GENERATED

P2.89 billion P6.13 billion

Payments to providers of capital Payments to employees

P23.22 billion
DISTRIBUTED

P4.95 billion P9.25 billion

Payments to government Payments to suppliers

P5.89 billion
RETAINED

2017 2018
Direct economic value generated P 25,364.933 P 29,108.660
Direct economic value distributed 21,819.079 23,221.853
To customers & shareholders 4,368.456 2,894.551
To employees 5,695.612 6,127.740
To government 3,919.443 4,951.075
To suppliers 7,835.569 9,248.487

Economic value retained P 3,545.854 P 5,886.807

52 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS PARTNER

Caring for the environment

102-11, 302-1, 302-2, 302-3, 305-2, 305-3

We are conscious of our responsibility to protect the world we live in. We mobilize funds for climate-
smart initiatives, support environmentally-focused programs, and monitor the impact of our operations
on the environment. In 2018, our energy and fuel consumption dropped 2% and 9%, respectively. We
resolve to go greener in the coming years to keep our ecological footprint as small as possible.

Electricity Consumption and Scope 2 GHG Emissions*

2%
decrease

Energy used Energy intensity CO2 Emissions

2018: 5,572,404 kWh 186 kWh/sqm 3,361 tonnes CO2

2017: 5,679,000 kWh 190 kWh/sqm 3,425 tonnes CO2

*Includes head office and other office buildings

Scope 3 GHG emissions (outsourced vehicles)

9%
decrease

Fuel used CO2 Emissions

2018: 223,967 liters 585 tonnes CO2

2017: 244,124 liters 645 tonnes CO2

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 53
 Plastic reduction campaign
We believe that individual actions can add up to a powerful
collective impact. In 2018, our Human Resources Group
launched a #PlasticFreeStartsWithMe campaign to encourage
our employees to do away with single use plastics.

The campaign had three components: a series of internal

communications on reducing plastic use which culminated in
a photo contest to create awareness on the negative effects
of plastic pollution on the environment; a workshop on how
to make an ecobrick, an alternative construction filler made
of plastic bottle stuffed solid with non-biodegradeable plastic

19,250
bags, straws, and wrappers; and a “Plastic Pollution to Solution
Challenge” wherein prizes were given to the employee and
group of employees who made the most number of eco bricks.
At the end of the challenge, China Bankers upcycled over 19,000 upcycled
worth of plastic bags into eco bricks that were turned over to
The Plastic Solution, an environmental initiative that aims to
encourage individuals and businesses to upcycle plastics as
a different approach to waste management. The ecobricks
are used to build environmentally sustainable infrastructure in
various communities and remove plastic from the biosphere.

54 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS PARTNER

Supporting our communities

413-1

We are committed to be a good corporate citizen and to do good for the communities where we
operate. In 2018, the focus of China Bank and China Bank Savings’ (CBS) Corporate Social Responsibility
efforts continued to be education, nutrition, and social development. We partnered with our employees
and various organizations for our nationwide campaign to make a difference.

EDUCATION

China Bank Financial Awareness Roadshow for Students - A private sector stakeholders to promote financial inclusion, raise
series of financial literacy seminars launched in August 2018 to financial literacy to higher levels, and increase the number of
empower students, particularly those who are taking up courses Filipinos in the formal banking system. Launched in August 2018,
that could lead to overseas employment or whose parents are the CBS Financial Wellness Road Show brought the message
OFWs, with the financial know-how to secure their future. The “Charting the Course of Your Financial Life” to public school
campaign focused on practical money management—budgeting, administrators, faculty and non-teaching staff in 12 Department
saving, and investing. It covered 11 provinces and 25 schools, of Education regions, including the Visayas and Mindanao.
and benefitted 7,174 students.
Project RED / RAISE for the Education/Empowerment of
CBS DepEdVenture 2.0 | Alay sa mga Guro – A region-wide Dumagats – A grassroots advocacy of CBS in tandem with
financial wellness meet and World Teachers Day tribute for over volunteer teachers of the AGAP Buhay program, which provides
500 administrators, faculty and staff of public elementary and access to education and vocational training for children and
high schools in the provinces of Bataan, Bulacan, Pampanga, adults in the hinterland villages of Tanay, Rizal. The rate of
Tarlac, Zambales and Nueva Ecija. The event held in October illiteracy among the Dumagat people remains a high 60%.
2018 in San Fernando, Pampanga is the highlight of the Project RED marked its first year in November 2018 with the
nationwide CBS Financial Wellness Road Show and takes off establishment of a reading library for the Remontado Dumagat,
from the similar event held in Manila in 2017. Takeaways from the indigenous people living in the mountainous boundary of
the seminar were practical skill sets for making smart financial Rizal and Quezon provinces. The collection of books, journals,
decisions, conserving family assets, and preparing for worry- and encyclopedia, weighing close to a ton, occupies a place of
free retirement. The half-day event included fun activities and pride in the community hall in a remote sitio of Laiban, a village
entertainment numbers to reinforce lessons from the financial of Tanay, Rizal some 87 kilometers east of Makati City. There
wellness seminar. are plans to expand Project RED to enable children to make
excursions to the city as part of their education program and for
CBS Financial Wellness Road Show - This nationwide advocacy Bank employees to visit the Dumagats to learn their lore, as well
is a response to the call by the Bangko Sentral ng Pilipinas for as provide volunteer labor in community building projects.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 55
 NUTRITION
Healthy Diet, Habit for Life project – An annual school feeding
project under the Nutrition Month campaign which provides free
complete, hot meals over a three-week period for pupils from the
poorest, most vulnerable families. In 2018, CBS covered three
Metro Manila public elementary schools and fed 75 pupils. The
program results indicated a marked weight gain of the feeding
program beneficiaries.

CBS Financial Wellness for Young Filipino / WYFi – A

novel program to develop basic financial literacy, savings
consciousness, and promote bank usage among elementary
school pupils and teenagers nationwide. The program is CBS’
contribution to the youth-oriented Banking on Your Future (BOYF)
advocacy of BSP. Launched in July 2018, the program has visited
25 elementary schools, high schools, and universities in Luzon
and Mindanao.

Brigada Eskwela – China Bank and CBS support the

Department of Education’s annual nationwide campaign
Treat for Bangkal Elementary School pupils – An outreach
mobilizing parents, students and private sector stakeholders
program that benefitted 90 Grade 3 pupils of Bangkal Elementary
to clean, refurbish, and rehabilitate public elementary and high
School in Makati City. Lunch and snack packs were distributed
school campuses and facilities for the school year. We donated
together with gift packs filled with school supplies. China Bank
building and cleaning materials, and our employees volunteered
employees volunteer in outreach programs in different schools
to clean, paint, and distribute snacks and refreshments in over
every year.
50 campuses from Tuguegarao in the far north Luzon all the way
to Davao City in Mindanao.
SOCIAL DEVELOPMENT
Balik Eskwela Donor program – Volunteers from CBS visited
pupils and teachers of Tabang Elementary School in Bulakan, Gawad Kalinga Laguerta Village - China Bank employees
Bulacan in June 2018 and distributed gift packages containing volunteered to help construct medium-rise housing units for
brand-new school bags, hygiene kits and school supplies disenfranchised families in Gawad Kalinga’s (GK) Centennial
donated by officers and staff of the Bank.

56 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS PARTNER

aims to give joy to families living in the streets of Manila. The

parcels donated and prepared by CBS volunteers contain rice,
canned meat, instant noodle packs, biscuits, powdered juice,
drinking water, and articles of clothing.

Joy to kids of soldiers – As part of the 2018 Caring is Sharing

program, China Bank conducted a fun-filled event for the children
of active, deceased, and injured soldiers, in partnership with the
AFP 7th Civil Service Relations Group and the AFP Educational
Benefit System Office. A total of 76 children attended the event
with their guardians/parents and enjoyed the fun games, food,
activities, and gifts. Over 40 China Bank and CBS employees
volunteered during the event. CBS also held financial wellness
talks for the adults present.

Village in Laguerta, Muntinlupa City. The project was conceived

to provide housing for informal settlers who were living in
flood-prone areas. With the support of the local government,
these families were enrolled into the GK program so that they
could find decent homes that were equipped with basic utilities
and access to social services, employment, and education. The
village is one of over 160 communities in the country built by
GK, a social enterprise organization that aims to end poverty and
restore dignity to the poor.

Regalong Pamasko para sa Pamilyang Walang Tahanan –

Now on its second year, this project, organized in partnership
with friends from Emerson Commercial & Residences Solutions,

Smiles to the wards of Haligi ng Bata - China Bank hosted a

Christmas party for the children under the care of Quezon City
NGO Haligi ng Bata Inc. The event was attended by 50 indigent
children who were treated to snacks, games, entertaining
performances, and groceries for the holidays.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 57
 CHINA BANK
AS STEWARD

SDGs
16 17 1 Target 12.6
Sustainable practices
2

Target 16.5
15 3 Reduction bribery and
corruption

4 Target 16.6
14
Effective, accountable,
and transparent
institutions
13 5

6
12

11 7

10 8
9

58 C H I N A B A N K I N G C O R P O R AT I O N
Doing it right

China Bank is a trusted

steward to our investors and
shareholders. We conduct
our business ethically and
responsibly to create long-
term shareholder value and
grow the Bank in a meaningful,
sustainable way. We ensure
the values-driven management
and control of our operations, in
line with global best practices,
regulatory requirements, and
our own Corporate Governance
Manual and Code of Ethics.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 59
 Developments in 2018
102-12, 102-17

• Board changes • Conducted the annual assessment of the Board, Board-

level committees, external auditor, and the President
– Mr. Philip S.L Tsai on November 7, 2018 replaced Director
Roberto F. Kuan who passed away on September 15, 2018 • Conducted the annual corporate governance training for
China Bank’s directors and key officers, in partnership
– Reorganized Audit, Nominations, Remuneration,
with the Institute of Corporate Directors
Corporate Governance, and Related Party Transactions (RPT)
committees • Engaged a search firm to aid in looking for a qualified
Independent Director
– Board amended its By-Laws and Articles of Incorporation to
increase the number of directors from 11 to 12. The BSP approved
the amendments on August 15, 2018 and issued a Certificate of
Authority dated August 31, 2018, stating that the amendments to
Achievements in 2018
the Articles of Incorporation and By-laws are in accordance with
law. The SEC approved such amendments on January 31, 2019 • One of the Top 50 ASEAN Publicly-Listed Companies
• Updated the Bank’s Corporate Governance Manual (PLC) and Top three PLC in the Philippines in the ASEAN
Governance Awards – ASEAN Capital Markets Forum
• Kept aligned with the ASEAN Scorecard recommendation
that all members of the Corporate Governance, RPT, and • The only bank among the top ten Philippine PLCs with a
Nominations Committee be independent directors (ID), score of 100 points and above in the ASEAN Corporate
while majority of the members of the Remuneration Governance Scorecard (ACGS) – Institute of Corporate
Committee be IDs Directors

• Enhanced the Board Committee Charters, Board Self- • Best Bank Governance Philippines award - Capital
Assessment Forms, RPT Framework and Policy, Insider Finance International (U.K.)
Trading Policy, and Retirement Policy for Directors • Best Corporate Governance Bank (Philippines 2018)
• Consolidated and codified the salient provisions of the award - Global Banking & Finance Review (U.K.)
Corporate Governance Manual into a Code of Ethics for
Directors

Governance principles

Fairness
Fairness Accountability Integrity Transparency
We treat our shareholders
We treat our shareholders We are accountable and We adhere to a moral code of We are truthful and
fairly and equitably – whether
fairly and equitably – whether responsible for our actions honesty and professionalism forthcoming, ensuring
minority or majority, local
minority or majority, local and performance and commit in our thoughts, words, and the accurate and timely
or foreign. We balance our
or foreign. We balance our to uphold the law, behave actions. disclosure of and easy access
profit motive with ensuring
profit motive with ensuring ethically, and protect the to all material matters, such
that the investment of all
that the investment of all resources entrusted in our as the financial condition,
shareholders
shareholders care. performance, ownership,
is protected.
is protected. and governance of the
corporation.

60 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Governance policy Board composition

statement The depth of experience and expertise, diversity of

backgrounds and competencies, and collective composition
102-16 of our directors, ensure that our Board operates effectively
to create value for our stakeholders. The present Board size
The Board of Directors, Management, employees and
of eleven Directors and one Advisor is commensurate with
shareholders believe that good corporate governance is a
the size and complexity of our operations. Our Directors’
necessary component of what constitutes sound strategic
profiles are on pages 82 to 87.
business management and will therefore undertake greater
effort necessary to create more and continuing awareness
within the organization.
3 independent 6 non-executive
directors directors, 1 is female

Board of Directors 2 executive

directors
1 advisor
405-1

Age
The Board of Directors is at the core of our Corporate
50 to 64 y.o: 4
Governance Structure. Guided by our governance principles,
the Board sets the tone for and leads the practice of ethical 65 to 80 y.o: 5
and responsible business conduct, guides our overall Over 80 y.o: 2
corporate philosophy and direction, and champions a “beyond 1 2 3 4 5

compliance” approach to corporate governance.

Tenure
As the highest governing authority at China Bank, the Board Below 5 years: 3
carries out approval and oversight responsibility for:
6 to 30 years: 4

• Corporate culture and values over 30 years: 4

• Corporate objectives and business strategies 1 2 3 4 5

• Key senior management appointments

Nationality
• Remuneration and incentive policies
• Succession Filipino
• Sustainability 0% 50% 100%

• Corporate governance
• Risk management Professional background
• Internal control
• Consumer protection With banking for
finance experience

With management
and/or business
administration experience

With background or
training in anti-money 0% 50% 100%
laundering and credit
transactions

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 61
 Lead Independent Directors Independent Directors Executive Directors Non-Executive Directors
• Has sufficient authority to • Holds no interests or • Has executive responsibility • Has no executive responsibility
lead the Board in cases where relationships with China Bank, of day-to-day operations of and does not perform any
management has clear conflict the controlling shareholders, a part or the whole of the work related to the operations
of interest. or the Management organization of the corporation.
• Serves as an intermediary that would influence his • Provides objective judgment
between the Chairman and decisions or interfere with independent of management.
the other directors when his exercise of independent • Challenges and monitors
necessary judgment, among others. management's delivery of
• Also a non-executive director • Also a non-executive director strategy within the risk and
• Convenes and chairs meeting • Provides objective judgment governance structure agreed
of the independent directors independent of management by the board
and/or non-executive directors • Oversees management • Has oversight responsibility
without the presence of the performance, including for the Bank's internal control
executive directors prevention of conflict of and effectiveness of the risk
interest and to balance management system
competing demands of the
corporation

Separation of roles Independence of directors

102-23
Director independence is important for Board deliberations,
Our Chairman and President work in close co-operation with objective decision making, and the overall well-being of the
one another, but their roles are kept separate with a clear Bank. We maintain a strong element of independence on
division of duties and responsibilities to foster appropriate the Board, having three incumbent Independent Directors
balance of power, increased accountability, and better (ID): Margarita L. San Juan, Philip S.L. Tsai, and Alberto S.
capacity for independent decision-making by the Board. Yao, lead ID.

Chairman Hans T. Sy, a non-executive director, is responsible

In the annual assessment of IDs for the year ended
for the leadership and effective running of the Board.
December 31, 2018, the Board was satisfied that each of the
President William C. Whang, who leads the management
three China Bank IDs continue to be independent and free
team in the day-to-day running of China Bank, is responsible
for the achievement of agreed objectives and the execution from any business or other relationship which could interfere
of strategies as established by the Board. with the exercise of independent judgment.

Nomination process

Shareholders on
record nominate The Nominations
candidates by Committee
submitting the reviews and
nomination form to evaluates the The shareholders
any member of the qualifications of The full Board elect the The Monetary
Nomination the candidates in confirms the directors during Board confirms
Committee, the line with the fit candidates’ the Annual the election
Corporate nomination Stockholders’ of the directors
and proper standards
Governance Meeting
as prescribed in the
Committee, or the
Corporate Secretary Manual of
within the Regulations for
prescribed date Banks (MORB)

62 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Director nomination and election Induction and continuing education

102-24
Our directors are knowledgeable of their duties and
In case of vacancy, the Board may elect a replacement to responsibilities and are sufficiently familiar with our
serve a director’s unexpired term. We use professional operations and business environment, and up-to-date with
search firms or other external sources to search for highly- the market developments and regulatory changes.
qualified candidates.
Newly-elected directors comply with the training
At the 2018 Annual Stockholders’ Meeting, all the incumbent requirements of the BSP and SEC and are provided with an
directors were re-elected. However, Lead Independent orientation kit containing their Duties and Responsibilities
Director Roberto F. Kuan passed away on September 15, as a Director, China Bank’s Corporate Governance Manual,
2018. To serve his unexpired term, Independent Director Code of Ethics for Directors, and the charters of the
Philip S.L. Tsai was elected at the Board Meeting on committees where the elected director is a member of. To
November 7, 2018. In the same meeting, Independent enhance our directors’ governance skills and keep them
Director Alberto S. Yao was appointed Lead Independent informed on an ongoing basis of matters and issues that
Director. impact the Bank and the industry, we have a continuing
education program that includes unrestricted access to
On their nomination and election, our directors comply with corporate information and management reports, regular
the regulatory requirements of the BSP & SEC on the timely company and market updates, periodic briefings, and annual
submission of the required certifications for both regular and governance seminars facilitated by an SEC-accredited
independent directors. Our directors acknowledge receipt institution. Attendance to the corporate governance seminar
and certify that they have read and fully understood the is mandatory for all our directors.
copy of the general and specific duties and responsibilities
issued to them. Once elected, directors execute a Sworn On November 7, 2018, our directors, management team, and
Certification that they possess all the qualifications and none key officers attended the Advanced Corporate Governance
of the disqualifications based on existing rules. Training facilitated by the Institute of Corporate Directors.
The whole-day training covered the following topics: 3 Lines
Retirement and succession of Defense, Legal Liabilities, and Digital Trade-offs.

We adopted a policy of continuing qualification for directors, Board evaluation

where a director may remain on the Board for as long he/ 102-28
she remains to be physically and mentally fit and proper
for the position of a director, able to discharge his duties The Board evaluates its level of compliance with governance
in accordance with the regulatory requirements for banks. best practices and determines areas for improvement
Our By-laws provides the rules on succession, replacement through an annual self-assessment of the Board, all
or vacancy in the Board due to retirement or any other Board-level Committees, the individual Directors, external
reason, stating that vacancies in the Board may be filled by auditor, and the President. The results of the evaluation are
appointment or election of the remaining directors, if still reported to the Board by Compliance through the Corporate
constituting a quorum; otherwise, the stockholders shall fill Governance Committee.
such vacancy in a regular or special meeting called for this
purpose.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 63
 Rating Description The directors are expected to actively participate on
matters taken up in Board meetings, and to act judiciously,
0 Poor – Leading practice or principle is not adopted in the
company’s Manual of Corporate Governance in good faith, and in the best interest of China Bank and
1 Needs Improvement – Leading practice or principle is our shareholders. Directors who may not be physically
adopted in the Manual but compliance has not yet been present may participate via telephone or video conferencing.
made
2-3 Fair – Leading practice or principle is adopted in the
To ensure sound and objective decision making, board
Manual and compliance has been made but with major papers are provided to the directors five days before
deviation(s) or incompleteness the meeting. The directors also have access to senior
4 Good – Leading practice or principle is adopted in the management, external consultants and advisors, and
Manual and compliance has been made but with minor
deviation(s) or incompleteness the Corporate Secretary. Our Corporate Secretary, Atty.
5 Excellent – Leading practice or principle is adopted in Corazon I. Morando, is responsible for ensuring that the
the Manual and full compliance with the same has been Board procedures and applicable rules and regulations, are
made
observed.
The 2018 self-assessment results show that there are no
significant deviations and in general, the Bank has fully In 2018, the China Bank Board had 19 meetings, including
complied with the provisions and requirements of the the organizational meeting.
Corporate Governance Manual. The assessment is validated
every three years by an external facilitator. Director Attendance %
Hans T. Sy (Chairman) 14 74
Board remuneration Gilbert U. Dee (Vice Chairman) 18 95
William C. Whang 19 100
Peter S. Dee 16 84
China Bank Directors are entitled to a per diem of P500.00 Joaquin T. Dee 18 95
for attendance at each Board/Board Committee meeting Herbert T. Sy 14 74
and to 4% of the Bank’s net earnings. Executive directors Harley T. Sy 19 100
receive performance-related compensation based on their Alberto S. Yao 19 100
performance, banking experience, position, and rank in Roberto F. Kuana 14 93
the Bank, while non-executive directors do not receive any Jose T. Sio 17 89
performance-related compensation. The remuneration policy Margarita L. San Juan 18 95
Philip S.L. Tsaib 2 100
for employees (staff to senior officers) is on page 44. a
from January 2018 until his passing on September 15, 2018
b
from his election effective November 7, 2018
Board meetings

The Board meets at least once a month, every first

Wednesday, to review China Bank’s financial performance,
Board Committees
102-19
approve strategies, policies, and business plans, as well as
to consider business and other proposals which require the To enhance the effectiveness of the Board in discharging its
Board’s approval. Special Board meetings may also be called fiduciary duties and to complement it in the execution of
to deliberate and assess corporate proposals or business its responsibilities, the Board established nine Board-level
issues that also require Board approval. For Board decisions, committees and six Management-level committees. Each
a minimum quorum of at least 2/3 of the Board members committee has a charter and operates within its specific
present, unless a different voting requirement is required by delegated authority and functions. The committee charters,
existing laws, rules, and regulations. which are reviewed annually and amended when necessary,
are posted in the governance section of our website,
www.chinabank.ph, under Board Matters.

64 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

The members of the different committees are appointed Corporate Governance Committee
by the Board at the annual organizational meeting, taking Primary function:
into account the optimal mix of skills and experience of the • Assists the Board in fulfilling its corporate governance
members. responsibilities by ensuring compliance with and proper
observance of corporate governance laws, rules,
Executive Committee (ExCom) principles, and best practices, including the conduct of
Primary function: the board assessment.
• Has the powers of the Board, when the Board is not in
session, in the management of the business and affairs Composition:
of China Bank to the fullest extent permitted under • Composed entirely of independent directors
Philippine law • The collective skills and experience include governance,
finance, risk, and management
Composition:
• Chaired by the Chairman of the Board who is a non- Number of meetings in 2018: 28, including joint meetings
executive director with the following: Compliance Committee – 11 and
• Three non-executive directors and two executive Nominations Committee – 17
directors
• The collective skills and experience include governance, Director Attendance %
finance, credit, management, and operations; more than Roberto F. Kuan (Chairman)a 17 89
half have banking experience Alberto S. Yao 26 93
Margarita L. San Juan 27 96
Number of meetings in 2018: 40, including 1 joint meeting Philip S.L. Tsaib 1 100
with the Risk Oversight Committee
a
Director Roberto F. Kuan (†) attended 17 out of 19 meetings
b
Chairman from December 5, 2018; attended 1 out of 1 joint meeting of
Compliance and Corporate Governance committees
Director Attendance %
Hans T. Sy (Chairman) 36 90 Audit Committee
Gilbert U. Dee 40 100 Primary function:
Peter S. Dee 32 80 • Oversees all matters pertaining to audit – the Bank’s
Joaquin T. Dee 40 100
internal audit function and performance, the integrity
William C. Whang 40 100
of the Bank’s financial statements, and the Bank’s
accounting processes in general, financial reporting and
control and internal and external audit functions
• Oversees the senior management’s activities in
establishing and maintaining an adequate, effective, and
efficient internal control framework
• Ensures that systems and processes are designed
to provide assurance in areas including reporting,
monitoring compliance with laws, regulations and
internal policies, efficiency and effectiveness of
operations, and safeguarding of assets.
• Responsible for the approval of appointment or removal
of Chief Audit Executive.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 65
 Composition: • Oversees the system of limits to discretionary authority
• 2/3 of the members are independent directors, including that the board delegates to management, ensures
the Chairman that the system remains effective, that the limits are
• The collective skills and experience include governance, observed, and that immediate corrective actions are
accounting, audit, and management taken whenever limits are breached

Number of meetings in 2018: 14 Composition:

• 2/3 of the members are independent directors, including
the Chairman
Director Attendance %
• Composed entirely of non-executive directors
Alberto S. Yao (Chairman) 13 93
• The collective skills and experience include governance,
Joaquin T. Dee 14 100
Roberto F. Kuan a 7 78 finance, credit, risk, and management
Philip S.L. Tsaib 1 100
Number of meetings in 2018: 12 meetings in 2018, including
a
Director Roberto F. Kuan (†) attended 7 out of 9 meetings 1 joint meeting with the Executive Committee
b
Member from December 5, 2018; attended 1 out of 1 meeting

Director Attendance %
Compliance Committee Margarita L. San Juan (Chairman) 11 92
Primary function: Hans T. Sy 9 75
• Monitors compliance with existing banking laws, rules, Alberto S. Yao 12 100
and regulations, specifically in creating a dynamic and
responsive compliance risk management system to Nominations Committee
identify and mitigate risks that may erode the franchise Primary function:
value of the Bank • Reviews and evaluates the qualifications of all persons
• Ensures that Management is doing business in nominated to the Board and other appointments that
accordance with existing laws, policies, and procedures, require Board approval, including promotions endorsed
as well as best practices by the Promotions Review Committee, to ensure the
candidates’ qualities and/or skills are appropriate for
Composition: leading and assisting the Bank in achieving its vision and
• Composed entirely of non-executive directors corporate goals
• The collective skills and experience include governance,
accounting, audit, and management Composition:
• Composed entirely of independent directors
Number of meetings in 2018: 12, including 11 joint meetings • The collective skills and experience include governance,
with the Corporate Governance Committee finance, credit, risk, and management

Director Attendance %
Number of meetings in 2018: 17 meetings jointly with the
Hans T. Sy (Chairman) 11 92
Joaquin T. Dee 12 100 Corporate Governance Committee
Alberto S. Yao 11 92
Director Attendance %
Risk Oversight Committee Roberto F. Kuan (Chairman)a 11 92
Primary function: Alberto S. Yao 16 94
• Oversees the enterprise risk management system to Margarita L. San Juan 16 94
Philip S.L. Tsaib - -
ensure its functionality and effectiveness
a
Director Roberto F. Kuan (†) attended 11 out of 12 meetings
b
Member from December 5, 2018

66 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Remuneration Committee Number of meetings in 2018: 12

Primary function:
• Oversees the remuneration of senior management and Director Attendance %
other key personnel, ensuring that compensation is Roberto F. Kuan (Chairman)a 8 89
Alberto S. Yao 12 100
consistent with the interest of all stakeholders and the
Margarita L. San Juan 11 92
Bank’s culture, strategy, and control environment Philip S.L. Tsaib - -
a
Director Roberto F. Kuan (†) attended 8 out of 9 meetings
Composition: b Member from December 5, 2018
• Majority of the members are independent directors,
including the Chairman Trust Investment Committee
• Composed entirely of non-executive directors Primary function:
• The collective skills and experience include governance, • Oversees the overall strategic business development
finance, credit, risk, and management and financial policy directions of the Trust and Asset
Management Group
Number of meetings in 2018: 3 • Oversees the trust, investment management, and
fiduciary activities of the Bank, and ensures that they
Director Attendance % are conducted in accordance with applicable rules and
Roberto F. Kuan (Chairman)a 2 100 regulations, and judicious practices
Hans T. Sy 3 100
Alberto S. Yao 3 100 Composition:
Harley T. Sy 3 100 • Composed of non-executive and executive directors
Margarita L. San Juan 3 100 • The collective skills and experience include governance,
a
Director Roberto F. Kuan (†) attended 2 out of 2 meetings finance, credit, risk, and management; more than half of
the members have banking experience
Related Party Transactions Committee
Primary function: Number of meetings in 2018: 10
• Responsible for the evaluation of the existing relations
between and among businesses and counterparties Director Attendance %
to ensure that RPTs are monitored, and changes in Herbert T. Sy (Chairman) 9 90
relationships with counterparties (from non-related to Jose T. Sio 9 90
Peter S. Dee 8 80
related and vice versa) are captured. Ensuring as well
William C. Whang 10 100
that all material RPTs are vetted upon, conducted in
Carina L. Yandoc a 1 100
arm’s length basis, and in terms not less favourable to Mary Ann T. Limb 9 100
the Bank than those offered to others. a
As Acting Trust Officer until January 2018; attended 1 out of 1 meeting
b
Appointed as Trust Officer effective February 2018; attended 9 out of 9
meetings
Composition:
• All the members are independent directors, including
the Chairman
• The collective skills and experience include governance,
finance, credit, risk, and management

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 67
 Organizational chart
102-18

BOARD OF DIRECTORS

BOARD COMMITTEES

CORPORATE RELATED PARTY EXECUTIVE TRUST & RISK CORPORATE

SECRETARY TRANSACTIONS REMUNERATION NOMINATIONS AUDIT COMPLIANCE
COMMITTEE INVESTMENTS OVERSIGHT GOVERNANCE
Corazon I. Morando

OFFICE OF THE
VICE CHAIRMAN TRUST & ASSET RISK COMPLIANCE
BOARD OF TRUSTEES Gilbert U. Dee AUDIT
MANAGEMENT DIVISION MANAGEMENT DIVISION
OF CBC GROUP GROUP Aileen Paulette
RETIREMENT Mary Ann T. Lim Marilyn G. Yuchenkang Ananias S. Cornelio III S. de Jesus
PRESIDENT
William C. Whang

CREDIT MANAGEMENT
COMMITTEE COMMITTEE

TECHNOLOGY ASSET & LIABILITY

STEERING COMMITTEE
COMMITTEE

INFORMATION SECURITY
SECURITY OFFICE OFFICE
Hanz Irvin S. Yoro Nestor Jason V. Camba Jr. -OIC

CHIEF OPERATING
OFFICER
Romeo D. Uyan Jr.

OPERATIONS
COMMITTEE

RETAIL BANKING FINANCE LENDING FINANCIAL BUSINESS CORPORATE

BUSINESS SEGMENT SEGMENT BUSINESS MARKETS OPERATIONS SUPPORT
Rosemarie C. Gan Patrick D. Cheng SEGMENT SEGMENT SUPPORT SEGMENT SEGMENT

Remittance Consumer Institutional CB Capital Treasury Wealth Centralized Credit Legal & Human Digital Investor &
& Credit Card Banking Banking Management Operations Management Collections Resources Banking Corporate
Business Business Relations
Renato K. Maria Rosanna Alexander C.
Lilibeth R. Cariño Lilian Yu Ryan Martin Benedict L. Chan Angela D. Cruz Delia Marquez Melissa F. Corpus Belenette C. Tan Catherine L. Testa
de Borja Jr. L. Tapia Escucha

CB Securities

Marisol M.
Teodoro

68 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Conglomerate map

Malls CHINA BANK

SAVINGS, INC. (CBSI)
98.3%
SM Prime Residential
PROPERTY Holdings, Inc. 50%

Citymall 34% Commercial CHINA BANK CAPITAL

CORPORATION (CBCC)
100%
Hotels & Conventions
CHINA BANK SECURITIES CORP.
Leisure &
Tourism CBC ASSETS ONE (SPC), INC.

CHINA BANKING MANULIFE-CHINA BANK LIFE

SM CORPORATION (CHIB) ASSURANCE CORP. (MCBLIFE)
INVESTMENT 20% 40%
CORPORATION BANKING
(SMIC)
BDO Unibank, Inc.
45%

SM Stores CHINA BANK INSURANCE

BROKERS, INC. (CIBI)
100%
SM
Supermarket

SM Retail Inc. SM
RETAIL 77% Hypermarket
CBC PROPERTIES AND COMPUTER
CENTER, INC. (CBC PCCI)
100%
SaveMore 100%

Financial Allied Subsidiary Non-Financial Allied Subsidiary Financial Allied Associate

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 69
 Internal Controls COMPLIANCE

102-11 Compliance is firmly embedded in China Bank’s culture. We are

committed to comply with all applicable laws and regulations to
Effective internal controls are the foundation of safe and strengthen our business and maintain the trust and confidence
sound banking. Our robust internal control system enables of our stakeholders.
us to safeguard the Bank’s resources, produce timely and
accurate financial reports, comply with laws and regulations, Our compliance system, built upon a solid foundation of ethical
reduce the possibility of significant errors and irregularities, values, fosters a strong compliance culture that starts from the
and implement management policies to attain corporate Board and permeates across the organization. At the forefront
goals. of our compliance system is the Compliance Division, which is
independent of China Bank’s business activities. The Compliance
Division plays an important role in driving the effective
management of compliance risks and in promoting compliance
Enterprise awareness and understanding of compliance issues and the
Risk
impact of non-compliance. It is headed by the Chief Compliance
Management
Officer (CCO), Atty. Aileen Paulette S. De Jesus, who also takes
on the role of Group Compliance Officer for the China Bank
Group.

Organizational The CCO is independent from management and reports

structure with functionally to the Compliance and the Corporate Governance
clear authorities, committees, and administratively to the President. The
responsibilities,
and operating Compliance function is supported by the collaborative efforts of
procedures Regulatory Compliance, Corporate Governance, IT Compliance,
and Anti-Money Laundering units, and the Associated Person.
Internal Compliance Coordinators are also designated in each Bank unit
Compliance
Audit
to ensure that all risks associated to the operations and business
of the individual units are identified, monitored, and mitigated.

Our Compliance Division assumes a preventive, advisory and

The Board is responsible for the establishment and review
oversight role.
of China Bank’s system of internal controls, while the
day-to-day responsibility for internal control rests with
Preventive
Management. All of our employees are involved to a certain
• Cascades all recent laws, rules, and regulations to all concerned
degree in our internal control process. • Continuously educates Bank employees about compliance, anti-money
laundering, good governance, the Bank’s Code of Ethics, the policy on
Based on the Audit Committee’s continuing review and avoidance of conflict of interest, among others
monitoring of the Bank’s internal control system, in 2018, • Conducts briefings for Compliance Coordinators to raise the level of
awareness and understanding of the principles, concepts, and elements of
material controls, risk management systems and framework
good corporate governance and compliance
remain adequate and effective relative to the Bank’s size and • Conducts lectures on Compliance System, Anti-Money Laundering (AML),
complexity of transactions. Whistleblowing, and Corporate Governance as part of the New Employees'
Orientation Program, Junior Executive Development Program, and
Supervisory Development Program

70 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Advisory Market risk exposures are measured and monitored through

• Acts as liaison for the Board and Management on regulatory compliance
reports from our Market Risk Management System. We
matters, with the regulatory agencies
• Provides advisory services, including reviewing proposed China Bank
use Historical Simulation Value-at-Risk (VaR) approach for all
products and services treasury traded instruments, including fixed income bonds,
foreign exchange swaps and forwards, interest rate swaps,
Oversight and equity securities. Meanwhile, liquidity and interest rate
• Reviews and updates the Compliance Manual, Money Laundering and risk exposures are measured and monitored through the
Terrorist Financing Prevention Program and Corporate Governance Manual Maximum Cumulative Outflow (MCO) and Earnings-at-Risk
annually to align with recent regulatory requirements (EaR) reports from our Asset and Liability Management
• Implements compliance initiatives and monitors the Bank's level of
(ALM) system.
compliance

To evaluate the Bank’s overall vulnerabilities on specific

events or crisis and gauge our ability to withstand
stress events, we have an Integrated Stress Testing
RISK MANAGEMENT
framework (IST) in addition to the silo stress tests. The IST
complements the Internal Models Approach which is the
China Bank’s resilience is anchored on prudent risk-taking.
basis for Internal Capital Adequacy Assessment Process
We safeguard stakeholders’ interest and the Group’s
(ICAAP) capital charge under normal condition.
assets with a balanced approach to risk management,
undertaking only well considered risks for commensurate
Based on the latest annual validation of Internal Audit, our
returns. Our Risk Management Group (RMG), headed by
internal risk measurement models –VaR, EaR, and MCO –
Chief Risk Officer Ananias S. Cornelio III, executes the risk
remain appropriate and adequate.
management function which is generally responsible for
identifying, assessing, monitoring, and mitigating our key
Credit Risk
risks. RMG reports to the Board through the Risk Oversight
Our policies for managing credit risk are determined at
Committee which has approval and oversight responsibility
the business level with specific procedures for different
for our risk management framework and risk appetite. Risk
risk environments and business goals. Risk limits and
identification and assessment are embedded in our control
thresholds have been established to monitor and manage
processes, employees at all levels are responsible for the
credit risk from individual and counterparties and/or group of
management and reporting of risks, and risk management is
counterparties, and industry sectors. Periodic assessments
reinforced as a discipline group-wide through trainings and
are also conducted to review the creditworthiness of our
communication.
counterparties.

Market and Liquidity Risk

The Bank has several risk rating models in place to measure
The objective of our market risk policies is to obtain the best
credit risk in a consistent manner. For corporate borrowers
balance of risk and return while meeting our stakeholders’
with total assets, total facilities, or total exposures of at
requirements. On the other hand, our liquidity risk policies
least P15 million, the rating model used is the Internal Credit
center on maintaining adequate liquidity at all times to be
Risk Rating System (ICRRS). Retail and small and medium
in a position to meet all obligations as they fall due. Market
entities and individual loan accounts, on the other hand, are
risk, interest rate risk, and liquidity risk exposures are
subject to the Borrower Credit Score (BCS) while consumer
managed through a risk management framework comprising
loans (auto loans, housing loans, credit card), are covered by
of limits, triggers, monitoring, and reporting process that are
application scorecards.
in accordance with the risk appetite of the Board.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 71
 In addition, to the rating models for corporate, commercial, Trust Risk
and consumer loans, the Board approved a Sovereign Risk We manage our trust risk in accordance with the Guidelines
Rating Model in 2016 to assess the strength of the country in Strengthening Corporate Governance and Risk
rated with reference to its economic fundamentals, fiscal Management Practices on Trust, Other Fiduciary Business,
policy, institutional strength, and vulnerability to extreme and Investment Management Activities (BSP Circular 766).
events. Our Trust Risk Management Guidelines covers all the risks
specific to our Trust business, including legal, strategic, and
Moody’s Analytics performed a quantitative and qualitative reputational risks. In 2018, we implemented an additional
validation of the ICRRS in 2014, followed by the model risk metric, Management Action Trigger (MAT) for Private
recalibration in 2015. In 2016, with the assistance of Teradata Bonds, and updated the MAT framework for Unit Investment
as our technology provider, RMG completed the statistical Trust Funds.
validation of the BCS using the same methodology applied
to the validation of the corporate risk rating model. A INTERNAL AUDIT
validation of the recalibrated ICRRS and BCS models were
performed by RMG in 2017 and 2018. Internal Audit performs a significant role in corporate
governance by providing assurance and insights on the
Operational, Business Continuity Management (BCM) processes and structures that propel China Bank towards
and Information Technology (IT) Risk success. For assurance, it involves the assessment and
Our Operational Risk Management Framework outlines reporting on the adequacy, efficiency, and effectiveness
the policies, processes, and procedures, as well as the of governance, risk management, and control processes
tools—including Risk Control Self-Assessment and Key Risk designed to help us achieve our goals and objectives.
Indicators—for managing our group-wide operational risks. Internal Audit’s insights on governance, risk, and control
produce positive change and improvement within the Bank.
To mitigate the impact of business-disrupting events, we
have a Business Continuity Management (BCM) program Our Audit Division is headed by the Chief Audit Executive
covering our resiliency strategies, recovery procedures and (CAE), Marilyn G. Yuchenkang. It is independent from undue
facilities, business continuity, and crisis management plans. influence as evidenced by the functional and administrative
The program includes tests and simulation exercises which reporting to the Audit Committee and the President,
are regularly performed in varying degrees. respectively. It has a Board-approved Internal Audit Charter
which defines its purpose, authority, and responsibility,
In managing our IT risk, we have an IT risk assessment among others. The auditors are competent, objective,
process for identifying vulnerabilities and determining and avoid conflicts of interest in the performance of their
the effectiveness of IT controls. We aligned our IT risk responsibilities. These attributes put the group to be in the
management practices with the standards and operating best position to render assurance services on governance,
principles of the Guidelines on IT Risk Management (BSP risk management, and internal control processes.
Circular No. 808) and Enhanced Guidelines on Information
Security Management (BSP Circular No. 982). Based on the results of audit conducted in 2018, the
CAE confirmed that the Bank’s control processes,
With the evolving cyber-threat landscape, we developed operating across the organization, are in place,
a Cyber Resilience Framework as a supplement to our adequate, and working effectively to mitigate risks
Information Security Management System and BCM that could adversely affect the achievement of the
program. The framework provides the details related to the Bank’s objectives. This attestation covers the units,
preparations and measures for protecting the Bank’s disaster processes, and systems examined in relation to the
recovery infrastructure against cyber-attacks. scope defined in the duly approved 2018 Audit Plan.

72 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

In 2018, Audit Division continued to elevate the level

of efficiency of its audit services by improving existing Ethics and
practices, including expanding the scope of use of data
analytics to eventually lead to a bank-wide scale revision anti-corruption
and updating of audit procedures, report format, rating 102-17
system, among others. In addition, the internal auditors
remained vigilant about updating and enhancing their skills Integrity underpins our efforts every day. We go about
and competencies by attending various internal and external our daily tasks upholding the highest ethical standards
trainings/seminars and benchmarking against existing and treating our stakeholders with honesty, respect, and
industry practices. These initiatives are geared towards the fairness. Using our scale and influence, we likewise
promotion of excellent and value adding audit services. encourage ethical conduct by our suppliers and partners.

EXTERNAL AUDIT Corporate Governance Manual and Code of Ethics

In the conduct of our business and dealings with
Our external auditor fulfills a critical function in ensuring stakeholders, we are guided by the relevant rules and
that our financial statements are accurate and presented in regulations and our own Corporate Governance Manual
accordance with the Philippine Financial Reporting Standards (Manual) and Code of Business Conduct and Ethics (Code).
(PFRS). SyCip Gorres Velayo & Co. (SGV & Co.) has been The Manual contains our corporate governance policies,
our external auditor for over 20 years, with the signing structure, principles, as well as the general and specific
partners rotated every five years in compliance with existing duties and responsibilities of the Board and the individual
regulations. directors. It is regularly updated to ensure alignment with
the latest regulatory issuances. Meanwhile, The Code
Audit and Non-Audit Fees provides clear guidelines on acceptable and unacceptable
Fiscal Year
Audit-Related Fees behavior and business practices.
2018 P7, 766,528 P6,312,320
2017 P8,192,800 P 254,240 In 2018, we adopted a separate Code of Business Conduct
and Ethics for Directors which codifies the guiding principles
Audit and audit-related fees cover services rendered for in the Manual. It articulates acceptable practices in relation
the performance of the audit review of the Bank's financial to both internal and external dealings (i.e., investors,
statements including the combined financial statements of creditors, customers, depositors, contractors, suppliers,
the Trust Group, and the issuance of comfort letters relative regulators, and the general public) of the members of the
to the Stock Rights and Long Term Negotiable Certificates Board. It also establishes standards for professional and
offering. ethical conduct, such as but not limited to: commitment
to fair dealings with customers and stakeholders, exercise
SGV & Co. was likewise engaged in non-audit work for of due care in accepting gifts and entertainment, ensuring
the independent review of PFRS 9 Expected Credit Loss personal interests do not interfere with the interest of the
Models, independent validation of votes in the annual Bank, and ensuring confidentiality of information. Each
stockholders' meeting, and for the compliance certificate director was given a copy and has acknowledged receipt of
issued to the international bank lenders. Payment for these the Code.
services and seminar fees are included under Non-Audit
Fees. Compliance to the Manual and Code are mandatory for all
our directors and employees. Our Compliance Division
monitors compliance with the Manual and responds
to inquiries from employees regarding good corporate

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 73
 governance policies and practices. Our Human Resources MLTP, including ensuring that employees have sufficient
Group ensures that every China Bank employee is and up-to-date knowledge of the regulations and policies,
aware of and upholds the Code. All new employees are through classroom and electronic-based trainings and
given a copy of the Code booklet and undergo the New constant communications / reminders.
Employees’ Orientation Course (NEOC) wherein the Code
is comprehensively discussed. For easy reference, both the Insider trading
Manual and the Code are posted on our Intranet facility and We have strict policies on securities transactions to support
our website. and uphold all applicable laws against insider trading. China
Bank Directors, officers, and employees who are considered
Anti-bribery & corruption to have knowledge of material facts or changes in the affairs
205-2 of China Bank which have not yet been publicly disclosed—
We are committed to honest and ethical business practices including any information likely to affect the share price of
and do not tolerate any form of bribery and corruption. We the Bank’s stock—are strictly prohibited from directly or
take our legal responsibilities very seriously and expect indirectly engaging in financial transactions that make use
our directors and employees at all levels and grades to do of “insider information”. This also includes consultants and
the same. China Bank directors and employees are to act advisers and all other employees who are made aware of
professionally, fairly, and with integrity in all our business undisclosed material information. Any transactions by the
dealings and relationships wherever we operate; thus, they Directors and principal officers involving the Bank’s shares
1) must never offer, promise, or give a financial or other are required to be disclosed within three business days from
advantage to any person or party, including public officials, the date of the transaction.
with the intention of inducing or rewarding improper
performance by them of their duties or to facilitate the Conflict of interest
transaction of the Bank, and 2) must never directly or Conflict of interest between the Bank and employees should
indirectly accept or agree to receive a financial or other be avoided at all times. However, should a conflict arise,
advantage as a reward for performing any act prejudicial to the interest of the Bank must prevail. Employees are not
the Bank, the director/employee himself, or a third party. In permitted to have or be involved in any financial interests
2018, a total of 1,684 employees underwent training on anti- that are in conflict or appear to be in conflict with their duties
bribery and corruption. and responsibilities to China Bank. They are likewise barred
from engaging in work outside of the Bank unless with
Anti-Money laundering duly-approved permission, as well as work that lies in direct
We are committed to comply with the Anti-Money Laundering competition with the Bank.
(AML) law and other related rules and regulations. The
Compliance Division through its AML Unit, ensures that Vendor selection and procurement of goods and services
our AML System is effectively implemented at all times. 102-9
Know Your Customer (KYC) measures and other related We are committed to fair market practices. All prospective
standards like proper client classification based on client risk suppliers and contractors must also undergo and pass our
assessment system are regularly reviewed and enhanced to accreditation process before any contract is awarded to
remain aligned with the changing requirements and emerging them. We assess their reputation, capability, reliability, and
trends. The Board of Directors through the Compliance actual performance. We follow standards of objectivity,
Committee, ensures that programs and controls are in place, impartiality, and equal opportunity and evaluate vendor bids
implemented, monitored, and regularly updated to ensure that based on thorough criteria such as quality, price, service,
our Bank, employees, products, and services are not used for and overall value to the business, ensuring that we prevent
money laundering and terrorist financing activities. any favoritism or conflicts of interest. Consequently, we only
In place is a Money Laundering and Terrorist Financing transact with suppliers and contractors with integrity and
Prevention Program (MLTP) which upholds the AML with good track record.
requirements and seeks to prevent the Bank from being
used for unlawful activities. The Compliance Division is
responsible for managing, updating, and implementing the

74 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Main spending category for the Bank includes information

technology (banking software and related services), Other governance
policies
outsourced professional services, energy, transportation and
travel, marketing and advertising, and office supplies.

Whistleblowing Selection, appointment, and succession of Senior Officers

Without fear of any retaliation, our employees, customers, The Board is primarily responsible for approving the selection
shareholders, and third party service providers may report of the Management as led by the Chief Executive Officer.
questionable or illegal activity, unethical behavior, fraud or Senior officer appointments (VPs up) are made on merit
any other malpractice by mail, phone or e-mail. The identity and in accordance with the “fit and proper” rule, giving
of the whistleblower is kept confidential and all reports are consideration on integrity, expertise and experience in finance
investigated accordingly. If determined sufficient in form or banking, and aligned with the Bank’s strategic objective of
and substance, the disclosure is referred either to the Audit having the highest caliber leaders who inspire the trust and
Division or the Human Resources Group (HRG) for further confidence of our employees, customers, investors, and other
investigation. If the report is found to be baseless, the stakeholders. We have policies and procedures in place for
Whistleblower is informed of the status within 24 hours building our talent pipeline and ensuring that key positions are
from receipt. Meritorious disclosure, as may be determined, filled up through internal promotion (Succession Management
will be given recognition and may be entitled to an award Program) or external sourcing. Our Human Resources Group
as deemed necessary by the HRG or the Investigation Head is responsible for ensuring the adherence to these
Committee. policies and procedures and that the appropriate level of
administrative support is provided throughout the selection
The Chief Compliance Officer (CCO) is the primary driver and appointment process. The Nominations Committee
in the implementation of our Whistleblowing Policy. reviews the candidates’ qualifications and information, and
All disclosures are directed to the CCO or to the duly the Board approves the appointments.
designated Compliance Officer, who is responsible for
determining the sufficiency and validity of the report. The Dividends
policy also allows reporting of any disclosure to the Chief China Bank declares cash dividends at a payout ratio of at
Audit Executive, Chief Risk Officer, and the HRG Head. least thirty percent (30%) of the net income of the prior
year, subject to the conditions and limitations set forth in
Reports/disclosures may be sent to any China Bank Officer more detail in the dividend policy statement contained in
the Corporate Governance Manual.
or to:
Dividend payouts, as part of the Bank's capital
CHIEF COMPLIANCE OFFICER management policy and process, are reviewed and
[email protected] calibrated annually— taking into account the economic and
0947 996-0573 business environment, the Bank's risk profile and appetite,
China Banking Corporation, and trends in capital markets or regulatory environment to
P.O. Box 2182, Makati Central Post Office achieve the following objectives:

1. Delivering to stockholders satisfactory returns and

A disclosure form is also available at www.chinabank.ph
enhanced shareholder value
2.Healthy capital adequacy ratios to comply with regulatory
capital requirements and maintain strong credit rating
3.Capital buffer to support business growth and pursue
business opportunities.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 75
 Disclosure and transparency Significant related party transactions as of December 2018:
The Bank is a staunch advocate of transparency and
accountability, maintaining a high standard of disclosure Name of Related Party Transaction Amount
to facilitate public understanding of the Bank’s financial Allfirst Equity Holdings, Inc. FX Pre-Settlement Risk Line $ 8.0 M
(Related Party)
condition and the state of its corporate governance in order Anchor Land Holdings, Inc. and CTS Receivables Purchase P 140.7 M
for them to make a well-informed decision. All material Subsidiaries
(Related Party)
information about China Bank is adequately and promptly Anchor Properties Corporation (APC) 8-Year Term Loan P 4.7 B
disclosed in accordance with SEC and PSE’s disclosure (Related Party) Outstanding P 765.0 M
Bridge Loan Facility P 1.3 B
policy like the publication of our quarterly financial Omnibus Line P 1.0 B
statements in national broadsheets and presentation of Outstanding - CTS P 24.5 M
Belle Corporation 5-year Term Loan P 2.5 B
a detailed annual report for our Stockholders’ Meetings. (Affiliate)
Furthermore, we disclose market-sensitive information BDO Private Bank Bond Purchase P 601.1 M
(Affiliate) FX Purchase P 674.4 M
like dividend declarations, joint ventures and acquisitions, Bond Sale P 250.0 M
sale and disposition of significant assets, as well as FX Purchase P 570.4 M
BDO Private Wealth Advisory and Bond Sale P 640.1 M
financial and non-financial information that may affect the Trust Group
decision of the investing public through the Electronic (Affiliate and a Group in the Bank) Bond Sale Money Market P 1.2 B
Discount
Disclosure Generation Technology (Edge) of PSE, making BDO Securities Equity Purchase P 964.7 M
them available on the PSE website and also our corporate (Affiliate) Equity Sale P 964.7 M
BDO Universal Bank Bond Purchase P 200.8 M
website. These disclosures are simultaneously available to (Affiliate) FX Purchase P 12.5 B
analysts, investors, local and international media, and the FX Swap Purchase P 4.9 B
investing public. Bond Sale P 1.1 B
FX Sale P 5.1 B
FX Swap Sale P 1.3 B
Related party transactions SSA Investment P 4.4 B
We recognize that Related Party Transactions (RPTs) may Counterparty – SSA P 1.5 B
Carmen Copper Corporation 1-year Bridge Loan Facility P 170.0 M
give rise to a conflict of interest; thus, we are careful in (Related Party) Extension of Bridge Loan Facility
dealing with related parties. Transactions with such parties Outstanding $ 170.0 M
China Bank Capital Bond Sale Money Market P 750.0 M
are thoroughly reviewed as having been conducted in the (Subsidiary) Discount
ordinary course of business, at arm’s length basis, at fair Bond Sale P 735.6 M
Bond Sale Money Market P 100.0 M
market prices, and upon terms not less favorable to the Discount
Bank, in the same terms as those offered to others. All Corporate Bonds Purchase P 200.0 M
Additional contribution to IMA P 900.0 M
material RPTs are reviewed and vetted upon by the RPT account
Committee before they are endorsed to the Board for China Bank Savings IBCL $ 5.0 M
(Subsidiary) Fixed Income P 3.2 B
approval and are ratified by the stockholders during the
Trade Transactions P 200.0 M
Annual Stockholders’ Meeting. Fund transfer to HO P 64.3 M
FX Purchase P 74.8 M
Bond Sale P 550.0 M
Our RPT Framework serves as a guide to the China Bond Sale Money Market P 2.6 B
Bank group in dealing with related parties. The Bank’s Discount
SSA Investment P 1.8 B
RPT policy is kept relevant and aligned with recent Counterparty – SSA P 562.1 M
regulatory issuances. No director is allowed to participate Renewal of Omnibus Line P 200.0 M
Outstanding P 39.6 M
in the discussion or deliberation, including approval of a
transaction where he is a related party, to prevent conflict China Bank Securities Broker – Purchase / sale of stocks P 431.8 M
of interest. We established specific materiality threshold (Subsidiary) $ 14.8 M
on a per transaction basis.
Domestic Bills Purchase Line P 50.0 M

76 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Name of Related Party Transaction Amount Name of Related Party Transaction Amount
CBC Trust Group Bond Purchase P 900.0 M Petrogreen Energy Corporation Omnibus Line P 600.0 M
(A Group in the Bank) Bond Purchase Money Market P 1.5 B (Related Party) Outstanding P 382.7 M
Discount Domestic Bills Purchase Line P 5.0 M
Bond Sale P 783.7 M Pre-settlement Risk Line $ 200,000
Bond Sale Money Market P 558.3 M Settlement Risk Line $ 1.0 M
Discount Review of Term Loan P 500.0 M
Clara Sy Initial contribution to IMA account P 60.0 M Outstanding P 421.4 M
(Officer) Planters Development Bank Initial contribution to IMA account P 81.0 M
Elizabeth Tan Sy and Eric Charles Additional contribution to IMA P 864.5 M Employees’ Retirement Fund
Sy Uy account (Subsidiary)
(Close family members of a Posh Properties Development Bridge Loan Facility P 1.3 B
Director) Corporation (PPDC) Review of Term Loans
GOTAMCO Realty Investment New Loan Line (Related Party)
Corporation (GRIC) 7.5-year Term Loan P 1.6 B 10-year term loan
(Related Party) Outstanding P 220.0 M Outstanding P 4.1 B
7-year Term Loan P 1.1 B 10-year term loan P 1.2 B
Outstanding P 170.0 M Outstanding P 1.0 B
Bridge Loan Facility P 1.3 B 7-year term loan (PPDC) P 3.7 B
Renewal of Omnibus Line P 1.0 B Outstanding P 1.7 B
(Loan Limit Shared with Anchor Omnibus Line P 1.0B
Holdings) P 13.0 M Outstanding – CTS P 218.4 M
Outstanding Outstanding P 300.0 M
Renewal of 6-year term loan P 4.1 B Reynaldo Jardin Macaraig & Teresita Initial contribution to IMA account P 100.0 M
Outstanding P 1.1 B Catalya Macaraig & Rowena
Hans Sy Equities Purchase P 2.9 B Macaraig Chuabio & Ruel Antonio
(Director) Catalya Macaraig
Hans Sy, Jr. Initial contribution to PMT account P 425.0 M (Related Interest)
(Close family member of a Director) Additional contribution P 418.5 M Rizal Commercial Banking Bond Purchase P 800.4 M
Corporation Bond Sale P 1.0 B
Henry Sy, Sr. Renewal of Loan Line P 300.0 M (Related Party) Bond Sale Money Market P 70.9 M
(Related Interest) Discount
Herbert Sy and Hendrick Sy Additional contribution to IMA P 709.6 M RCBC Savings Bank Bond Purchase P 50.0 M
(Director / Related Interest) account (Related Party)
Bond Sale P 100.0 M
Herbert Sy and Herbert Sy, Jr. Additional contribution to IMA P 206.5 M
(Director / Related Interest) account Bond Sale Money Market P 50.0 M
Discount
JJACCIS Development Corporation Renewal and increase of P 690.0 M
/ Suntree Holdings Corporation Omnibus Line SM Development Corporation Renewal of Loan Line P 1.0 B
(Stockholder / Related Interest) Outstanding P 387.4 M (Affiliate) Renewal of Bills Purchase Line P 50.0 M
Cancellation of Loan Line P 100.0 M 3-year Term Loan P 1.5 M
Term Loan P 2.1 M
Manulife Asset Management and Bond Sale P 59.0 M SM Investments Corp. / Sybase Renewal of Loan Line P 15.5 B
Trust Corporation Equity Investments Corp. / Multi-
(Related Party) Realty Development Corp. Grant of FX Pre-Settlement Line $ 12.5 M
MMPC Auto Financial Services Loan Line P 200.0 M (Stockholder / Affiliate) (for SMIC)
Corporation SM Prime Holdings Inc. / SM Hotels Renewal of Loan Line P 3.0 B
(Related Party) 5-year Term Loan P 1.0 B and Conventions Corp. / Costa del
National Grid Corporation of the Extension of the Standby LC Hamillo, Inc. Renewal of Bills Purchase Line P 100.0 M
Philippines Outstanding $ 79.0 M (Affiliate / Related Party)
(Related Party) Renewal of Pre-Settlement Risk $ 1.0 M Sps. Irwin and Consuelo Ponce Increase of Loan Line P 95.0 M
Line (Related Interest) Outstanding P 89.8 M
New Golden City Builders and L/C Line $ 1.0 M St. Luke’s Hospital (Global City), Inc. 7-year Term Loan P 3.0 B
Development (Related Party) Renewal of Omnibus Line $ 2.0 M
(Related Interest) Additional contribution to IMA P 200.0 M Summerhills Home Development Renewal of Loan Line P 500.0 M
account Corporation
Initial contribution to UITF account P 70.0 M (Related Party)
NLEX Corporation Initial public offering of bonds P 325.0 M Sun Life Grepa Financial, Inc. Bond Purchase P 134.0 M
(Related Party) (Related Party)
One Network Bank Bond Sale P 430.9 M Sysmart Corporation Renewal of Loan Line P 5.0 B
(Affiliate) (Stockholder) Outstanding P 2.5 B
Ortigas & Company, Limited Participation up the full amount of P 5.0 B 2GO Group, Inc./ 2GO Express, Inc./ Loan Line P 1.0 B
Partnership the 10-year P5B Corporate Note Special Container and Value Added
(Related Party) Facility Services
Outstanding P 2.5 B (Related Party) Domestic Bills Purchase Line P 100.0 M
Loan Line P 500.0 M

Pasajero Motors Corporation Omnibus Loan Line P 55.0 M

(Related Party) Outstanding P 53.0 M

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 77
 Information for stockholders
Date of Foundation
China Bank was incorporated on July 20, 1920 and opened for business on August 16, 1920. The Bank is registered with
the Securities and Exchange Commission under SEC registration number 443. China Bank’s amended By-laws may be
downloaded from our website, www.chinabank.ph, or requested from the Office of the Corporate Secretary:

ATTY. CORAZON I. MORANDO

Vice President and Corporate Secretary
11/F China Bank Building
8745 Paseo De Roxas corner Villar Street
Makati City 1226, Philippines
Tel. Nos.: (+632) 885-5131, 885-5132
Fax No.: (+632) 885-5135
Email: [email protected]

Record and Beneficial Owners Holding 5% or More Voting Securities

(As of February 28, 2019)
102-5

Name of Beneficial
Name, Address of Record Owner & No. of
Title of Owner & Relationship Citizenship Percentage
Relationship with Issuer Shares Held
Class with Record Owner

PCD Nominee Corporation *

37th Floor Tower I, The Enterprise Center, Various
Common Non-Filipino 720,955,761 26.842%
6766 Ayala Ave. corner Paseo de Roxas, Makati City stockholders/clients
Stockholder
SM Investments Corporation Sy Family
10th Floor L.V. Locsin Bldg., PCD Nominee
Common Filipino 461,975,661 17.200%
6752 Ayala Avenue, Makati City Corporation
Stockholder Stockholders
PCD Nominee Corporation *
37th Floor Tower I, The Enterprise Center, Various
Common Filipino 431,441,259 16.063%
6766 Ayala Ave. corner Paseo de Roxas, Makati City stockholders/clients
Stockholder
Sysmart Corporation Henry Sy, Sr. and Family
10th Floor L.V. Locsin Bldg., Sycamore Pacific
Common Filipino 415,995,323 15.488%
6752 Ayala Avenue, Makati City Corporation
Stockholder Stockholders
*Based on the list provided by the Philippine Depository & Trust Corporation to the Bank’s transfer agent, Stock Transfer Service, Inc., as of February 28, 2019, The
Hongkong and Shanghai Banking Corporation Limited (396,732,386 shares or 14.770%) holds 5% or more of the Bank’s securities. The beneficial owners, such as
the clients of PCD Nominee Corporation, have the power to decide how their shares are to be voted.

78 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Authorized and Issued Capital

Authorized Capital Issued Shares:

P33.0 Billion divided into 3.3 Billion shares 2,685,899,812 common shares
with a par value of P10.00 per share

Summary of Filipino and Non-Filipino Holdings

(As of February 28, 2019)

Nationality Number of Stockholders Number of Shares Percentage

Filipino 1,845 1,957,851,737 72.894%
Non-Filipino (PCD) 1 720,955,761 26.842%
Chinese 48 3,289,744 0.122%
American 19 2,459,997 0.092%
Australian 1 2,114 0.000%
British 2 97,631 0.004%
Canadian 2 450,163 0.017%
Dutch 1 62,198 0.002%
Spanish 1 107 0.000%
Taiwanese 4 730,360 0.027%
TOTAL 1,924 2,685,899,812 100.0%

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 79
 Trading in Company Shares by and Total Shareholdings of Bank Directors and Executive Officers
(As of December 31, 2018)

A. Directors
Shareholdings Number Number Shareholdings
Name Position as of of Shares of Shares as of
January 1, 2018 Disposed Acquired December 31, 2018
Hans T. Sy Chairman of the Board 3,541,419 - 200,000 3,741,419
Gilbert U. Dee Vice Chairman 12,832,906 - - 12,832,906
William C. Whang Director & President 17,518 - - 17,518
Peter S. Dee Director 301,305 - - 301,305
Joaquin T. Dee Director 51,686,912 - - 51,686,912
Herbert T. Sy Director 510,592 - - 510,592
Harley T. Sy Director 261,211 - - 261,211
Alberto S. Yao Independent Director 548,876 - - 548,876
Jose T. Sio Director 3,517 - - 3,517
Margarita L. San Juan Independent Director 95,238 - - 95,238
Philip S. L. Tsai* Independent Director - - 2,000 2,000
*Elected as Independent Director on November 7, 2018 to serve the unexpired term of Mr. Roberto F Kuan who passed away on September 15, 2018

B. Executive Officers (In addition to Messrs. Gilbert U. Dee and William C. Whang)
Shareholdings Number Number
Shareholdings as of
Name Position as of of Shares of Shares
December 31, 2018
January 1, 2018 Disposed Acquired
Rosemarie C. Gan Executive Vice 130,032 - - 130,032
President
Patrick D. Cheng Senior Vice President 617,756 - - 617,756
& CFO
Alexander C. Escucha Senior Vice President 83,886 - - 83,886
Gerard T. Dee First Vice President II 277,864 - - 277,864
Angela D. Cruz First Vice President 1,639,876 - - 1,639,876
Delia Marquez First Vice President II 23,560 - - 23,560
Lilibeth R. Cariño First Vice President 4,167 - - 4,167
Renato K. De Borja, Jr. First Vice President II 669 - - 669
Shirley G.K.T. Tan First Vice President II 12,863 - - 12,863
Elizabeth C. Say First Vice President 3,433 - - 3,433
Benedict L. Chan First Vice President II 15,678 - - 15,678
Maria Rosanna Catherina First Vice President 6,340 - - 6,340
L. Testa
Stephen Y. Tan First Vice President - - 2,746 2,746
Marisol M. Teodoro First Vice President - 21,323 21,323
Layne Y. Arpon First Vice President - 10,732 10,732

80 C H I N A B A N K I N G C O R P O R AT I O N
 CHINA BANK AS STEWARD

Market Information

Principal market where equity is traded: Philippine Stock Exchange, Inc. (PSE)

Market Value
Actual Prices: *
2018 HIGH LOW CLOSE
Jan - Mar 37.50 33.20 35.20
April - Jun 35.55 33.00 33.60
Jul – Sept 33.60 28.85 28.85
Oct – Dec 29.95 26.75 27.10
*No adjusted prices as no stock rights or stock dividends were issued in 2018

Adjusted Prices (due to stock rights and 8% stock

Actual Prices: dividend):
2017 HIGH LOW CLOSE 2017 HIGH LOW CLOSE
Jan - Mar 41.55 38.00 40.70 Jan - Mar 36.65 33.20 35.90
April - Jun 41.60 34.50 36.70 April - Jun 36.69 33.00 33.98
Jul – Sept 36.90 35.00 35.35 Jul – Sept 34.17 28.85 32.73
Oct – Dec 36.20 32.80 33.30 Oct – Dec 34.50 26.75 33.30

Market value as of December 28, 2018 (last trading day): P27.10

Price Information as of February 28, 2019 (latest practicable trading date): P27.65

Dividend History
2018 2017 2016 2015 2014
Stock Dividend -- 8% 8% 8% 8%
Cash Dividend 8.3% 8% 10% 10% 10%

Investor Relations
102-53

Inquiries from investors, analysts, and the financial community are handled by the Investor & Corporate Relations Group:

ALEXANDER C. ESCUCHA
Senior Vice President and Head
Investor and Corporate Relations Group
28/F BDO Equitable Tower
8751 Paseo De Roxas
Makati City 1226, Philippines
Tel. No.: (+632) 885-5609
Email: [email protected]

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 81
 BOARD OF DIRECTORS

HANS T. SY GILBERT U. DEE

Chairman Vice Chairman

Hans T. Sy (non-executive director), 63, Filipino, is Chairman Gilbert U. Dee (executive director), 83, Filipino, is Vice
of the Board, Chairman of the Executive and Compliance Chairman of the Board and member of the Executive
committees, and member of the Risk Oversight and Committee. Elected on March 6, 1969, he has been on the
Remuneration committees. He was first elected on May China Bank Board for 50 years. He served as Chairman
21, 1986 and has been on the China Bank Board for 32 from 1989 until he stepped down to become Vice Chairman
years. He was elected as Vice Chairman in 1989 and as in 2011. He currently serves as Chairman of Union Motor
Chairman on May 5, 2011. He also serves on the Boards of Corporation and China Bank subsidiary CBC Properties and
SM Prime Holdings, Inc.* as Director and Chairman of the Computer Center, Inc. (CBC-PCCI). He was a former director
Executive Committee and SM Investments Corporation* of Philippine Pacific Capital Corporation, Philex Mining
as Adviser to the Board, and holds key positions in several Corporation, CBC Finance Corporation, and Super Industrial
companies within the SM Group. He graduated from De Corporation. He holds a Bachelor’s degree in Banking from De
La Salle University with a Bachelor’s degree in Mechanical La Salle University and a Master’s in Business Administration
Engineering. (MBA) degree in Finance from the University of Southern
California.

*Listed on the Philippine Stock Exchange

82 C H I N A B A N K I N G C O R P O R AT I O N
WILLIAM C. WHANG PETER S. DEE
President Director

William C. Whang (executive director), 60, Filipino, is China Peter S. Dee (non-executive director), 77, Filipino, is a
Bank President and director since November 1, 2017. member of the Executive and Trust Investment committees.
He is a member of the Executive and Trust Investment He has been on the China Bank Board for 41 years, since
committees. He also serves on the boards of China Bank April 14 1977. He is also currently on the boards of CBC-
Savings (CBS), Chinabank Insurance Brokers (CIBI), CBC- PCCI, CIBI, Hydee Management & Resources Corporation,
PCCI, China Bank Capital Corporation (CBCapital), China Commonwealth Foods, Inc., GDSK Development Corporation,
Bank Securities Corporation (CBSecurities), Manulife China and City & Land Developers, Inc.* and Cityland Development
Bank Life Assurance Corporation (MCBLife), BancNet, Corporation* as Independent Director. He was the President
Inc., Banker’s Association of the Philippines, and Philippine and Chief Executive Officer of China Bank from 1985 to 2014,
Payments Management Inc. He has over 38 years of banking and a former director of Sinclair (Phils.) Inc., Can Lacquer, Inc.,
experience, previously holding key positions in local and and CBC Forex Corporation. He earned a Bachelor’s degree in
international banks, including Metrobank, Republic National Commerce from De La Salle University/University of the East
Bank of New York, International Exchange Bank, Security and completed the Special Banking Course of the American
Bank, and Sterling Bank of Asia. He obtained a Bachelor’s Institute of Banking.
degree in Commerce, Major in Business Management from
De La Salle University.

*Listed on the Philippine Stock Exchange

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 83
 BOARD OF DIRECTORS

JOSE T. SIO JOAQUIN T. DEE

Director Director

Jose T. Sio (non-executive director), 79, Filipino, is a member of Joaquin T. Dee (non-executive director), 83, Filipino, is a
the Trust Investment Committee. He was elected on November member of the Executive, Audit, and Compliance committees.
7, 2007 and has been on the China Bank Board for 11 years. He He was first elected on May 10,1984 and has been on the
is chairman of SM Investments Corp.* and a director of Atlas China Bank Board for 34 years. He currently holds directorship
Consolidated Mining and Development Corp.*, OCLP Holdings, and key management positions at JJACCIS Development
Inc., Belle Corp., Concrete Aggregates Corp., and NLEX Corp. Corporation, Enterprise Realty Corporation, and Suntree
He also serves as Adviser on the Boards of BDO Unibank* and Holdings Corporation. He was Vice President for Sales and
Premium Leisure Corp.* and as Adviser of Audit/Risk Oversight Administration of Wellington Flour Mills from 1964 to 1994.
Committee of SM Prime Holdings*. He is the current President of He holds a Bachelor’s degree in Commerce from Letran
SM Foundation, Inc. and a former Senior Partner at SyCip Gorres College.
Velayo & Co. (SGV). He was voted CFO of the Year in 2009 by the
Financial Executives of the Philippines, and in various years, was
awarded as Best CFO (Philippines) by Hong Kong-based business
publications Alpha Southeast Asia, Corporate Governance Asia,
Finance Asia and The Asset. He is a Certified Public Accountant
with a Bachelor’s degree in Commerce, major in Accounting from
the University of San Agustin and a Master’s degree in Business
Administration from the New York University, U.S.A.

*Listed on the Philippine Stock Exchange

84 C H I N A B A N K I N G C O R P O R AT I O N
HERBERT T. SY HARLEY T. SY
Director Director

Herbert T. Sy (non-executive director), 62, Filipino, is the Harley T. Sy (non-executive director), 59, Filipino, is a member
Chairman of the Trust Investment Committee. He was first of the Remuneration Committee. He was first elected on May
elected on January 7, 1993 and has been on the China Bank 24, 2001 and has been on the China Bank Board for 17 years.
Board for 26 years. He is currently Chairman of Supervalue, He also serves as Director of SM Investments Corporation*.
Inc., Super Shopping Market, Inc., Sondrik, Inc., and Sanford He holds a Bachelor’s degree in Commerce, Major in Finance
Marketing Corp., and director of SM Prime Holdings, from De La Salle University.
Inc.* and National University. He has been involved in
companies engaged in food retailing, investment, real estate
development and mall operations. He graduated from De La
Salle University with a Bachelor’s degree in Management.

*Listed on the Philippine Stock Exchange

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 85
 BOARD OF DIRECTORS

ALBERTO S. YAO MARGARITA L. SAN JUAN

Lead Independent Director Independent Director

Alberto S. Yao (non-executive director), 72, Filipino, is Margarita L. San Juan (non-executive director), 65, Filipino,
Chairman of the Audit Committee, and member of the is Chairman of the Risk Oversight Committee and member
Corporate Governance, Risk Oversight, Related Party of the Corporate Governance, Related Party Transaction,
Transactions, Nominations, Compliance, and Remuneration Nominations, and Remuneration committees. She was
committees. He was first elected on July 7, 2004 and has elected to the China Bank Board on May 4, 2017. She is also
been on the China Bank Board for 14 years. He is also currently Independent Director of China Bank subsidiaries
Independent Director of China Bank subsidiaries CBS, CBS, CBCapital, and CIBI. She served as the Bank’s Senior
CBCapital, and CBSecurities, and serves as President & Vice President and Account Management Group Head until
CEO of Richwell Philippines, Inc. and Internationale Globale her retirement in 2012, and also worked at Ayala Investment
Marques, Inc., President of Richphil House Inc., and member and Development Corporation and Commercial Bank and
of` the Philippine Constitution Association. He was previously Trust Co. She obtained a Bachelor’s degree in Business
a Director of Planters Development Bank, President & CEO of Administration, Major in Financial Management from the
Richwell Trading Corporation and Europlay Distributor Co., Inc., University of the Philippines, and completed the Advance
President of Megarich Property Ventures Corporation, and a Bank Management Program of the Asian Institute of
Vice President for Merchandising of Zenco Sales, Inc. He Management.
holds a Bachelor’s degree in Business Administration, Minor in
Accounting from Mapua Institute of Technology.

86 C H I N A B A N K I N G C O R P O R AT I O N
PHILIP S.L. TSAI RICARDO R. CHUA
Independent Director Advisor to the Board

Philip S.L. Tsai (non-executive director), 68, Filipino, is Ricardo R. Chua, 67, Filipino, is Advisor to the Board since
Chairman of the Corporate Governance, Related Party November 1, 2017. He served as President and CEO from
Transaction, Nominations, and Remuneration committees, 2014 to 2017 and as Chief Operating Officer from 1994 to
and member of the Audit Committee. He was elected to 2014. He is currently Chairman of CBS and CBCapital, and
the Board on November 7, 2018 to serve the unexpired term director of CBC-PCCI, CAVACON Corporation, and Sun &
of Mr. Roberto F. Kuan who passed away on September 15, Earth Corporation. He is a Certified Public Accountant with
2018. Mr. Tsai also currently serves as Independent Director a Master’s in Business Management (MBM) degree from
of China Bank subsidiaries CBS, CBCapital, and CIBI. He was the Asian Institute of Management. He graduated cum laude
formerly the Bank’s First Vice President for Retail Banking until from the University of the East with a Bachelor’s degree in
his retirement in 2015. He also worked at First CBC Capital Business Administration, Major in Accounting.
(Asia) Limited, Midwest Medical Management, Fortune Paper
Inc., Chemical Bank New York, Consolidated Can Corp., and
Plastic Container Packaging. He holds a Bachelor’s degree in
Business Administration from the University of the Philippines
and a Master’s degree in Business Administration from the
Roosevelt University in Chicago, Illinois.

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 87
 MANAGEMENT COMMITTEE

ROSEMARIE C. GAN PATRICK D. CHENG ROMEO D. UYAN, JR. WILLIAM C. WHANG

Executive Vice President Senior Vice President and Executive Vice President President
and Segment Head of Retail Chief Finance Officer and Chief Operating Officer
Banking Business

88 C H I N A B A N K I N G C O R P O R AT I O N
GILBERT U. DEE ALBERTO EMILIO ALEXANDER C. ESCUCHA RYAN MARTIN L. TAPIA*
Vice Chairman of V. RAMOS* Senior Vice President and President of China Bank
the Board Executive Vice President Head of the Investor and Capital Corporation
and President of Corporate Relations Group
China Bank Savings, Inc.

*Ex-officio member

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 89
 MANAGEMENT COMMITTEE

LILIAN YU BENEDICT L. CHAN LILIBETH R. CARIÑO RENATO K. DE BORJA, JR.

Senior Vice President First Vice President, First Vice President and First Vice President and Head
and Head of Institutional Treasurer, and Head of Head of Consumer of Remittance and Credit
Banking Group Treasury Group Banking Group Card Business Group

90 C H I N A B A N K I N G C O R P O R AT I O N
 DELIA MARQUEZ JOSE L. OSMEÑA, JR. ANANIAS S. CORNELIO III* MARIA ROSANNA
First Vice President and Head First Vice President and First Vice President and CATHERINA L. TESTA
of Centralized Operations Deputy Group Head of Chief Risk Officer First Vice President and Head
Group and Business Process Retail Banking Business of Human Resources Group
Management Division

*Ex-officio member

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 91
 CHINA BANK MANAGEMENT TEAM

VICE CHAIRMAN PRESIDENT

Gilbert U. Dee William C. Whang

EXECUTIVE VICE PRESIDENT & EXECUTIVE VICE PRESIDENTS SENIOR VICE PRESIDENTS
CHIEF OPERATING OFFICER Rosemarie C. Gan Patrick D. Cheng
Romeo D. Uyan Jr. Alberto Emilio V. Ramosa Alexander C. Escucha
Lilian Yu

FIRST VICE PRESIDENTS

Cristina P. Arceo Renato K. De Borja, Jr. Elizabeth C. Say
Layne Y. Arpon Gerard Majella T. Dee Belenette C. Tan
Lilibeth R. Cariño Antonio Jose S. Dominguez Shirley G. K. T. Tan
Amelia Caridad C. Castelo Maria Luz B. Favis Stephen Y. Tan
Benedict L. Chan Jerry Ron T. Hao Manuel M. Te
Ananias S. Cornelio III Delia Marquez Marisol M. Teodorob
Melissa F. Corpus Victor O. Martinez Maria Rosanna Catherina L. Testa
Angela D. Cruz Jose L. Osmeña, Jr. Geoffrey D. Uy

VICE PRESIDENTS
Luis M. Afable, Jr. Francisco Javier C. Galang Danilo T. Sarita
Evelyn T. Alameda Cesare’ Edwin M. Garcia Francisco Eduardo A. Sarmiento
Ma. Hildelita P. Alano Cristina F. Gotuaco Clara C. Sy
Juan Emmanuel B. Andaya Rhodin Evan O. Escolar Irene C. Tanlimco
Love Virgilynn T. Baking Ma. Cristina C. Hernandez Jasmin O. Ty
Betty L. Biunas Marlon B. Hernandez Noemi L. Uy
Richard S. Borja Shirley C. Lee Virginia Y. Uy
Victor Geronimo S. Calo Angelyn Claire CC. Liao Esmeralda R. Vicente
Jeannette H. Chan Regina Karla F. Libatique Clarissa Maria A. Villalon
Marie Carolina L. Chua Mary Ann T. Lim Charon B. Wambangco
Domingo P. Dayro, Jr. Jennifer Y. Macariola Carina L. Yandoc
Aileen Paulette S. De Jesus Dorothy T. Maceda George C. Yap
James Christian T. Deec Ordon P. Maningding Michelle Y. Yap-Bersales
Norman D.C. Del Carmen Mandrake P. Medina Hanz Irvin S. Yoro
Gemma B. Deladia Corazon I. Morando Marilyn G. Yuchenkang
Therese G. Escolin Jocelyn T. Pavon
Madelyn V. Fontanilla Mani Thess Q. Peña-Lee

a
Seconded to China Bank Savings as President
b
Seconded to China Bank Securities as President
c
Seconded to China Bank Savings as Treasurer

92 C H I N A BA N K I N G C O R P O R AT I O N
SENIOR ASSISTANT VICE PRESIDENTS
Emmanuel L. Abesamis Marissa G. Garcia Ana Ma. Raquel Y. Samala
Baldwin A. Aguilar Dennis S. Go, III Julie Ann P. Santiago
Patrick Y. Ang Grace Y. Ho Alejandro F. Santos
Marissa A. Auditor Gladys Antonette Marcel P. Isidro Charmaine V. Santos
Faye Theresa S. Babasa Josefina Anna T. Justiniano Cherie S. Sia
Ma. Luisa O. Baylosis Vivian T. Kho Ma. Cecilia D. So
Yasmin I. Biticon Maria Margaret U. Kua Cynthia U. Surpia
Jonathan C. Camarillo Ma. Arlene Mae G. Lazaro Jeanny C. Tan
Victoria G. Capacio Eric Y. Lee Roxana Angela S. Tan
Camilo S. Cape Glenn B. Lotho Ma. Cecilia V. Tejada
Maria Luisa C. Corpus Katherine N. Manguiat Ma. Edita Lynn Z. Trinidad
Grace A. Cruz Ronald R. Marcaida Harvey L. Ty
Patricia J. Custodio Gil P. Navelgas Hudson Q. Uy
Ma. Jeanette D. Cuyco Erlan Antonio B. Olavere Roderick Iluminado U. Vallejo, III
Esperose S. De Claro Enrico J. Ong Anthony Ariel C. Vilar
Ricardo J. De Guzman, III Ma. Victoria G. Pantaleon Rosario D. Yabut
Jinky T. Dela Torre Josephine D. Paredes Sandra Mae Y. Yao
Susan U. Ferrer Frederick M. Pineda Mary Joy L. Yu
Pablito P. Flores Arnulfo H. Roldan

ASSISTANT VICE PRESIDENTS

Agnes O. Adviento Katherine Jean S. Diamante Sheilah B. Paglinawan
Rommel M. Agacita Eliseo P. Doroteo Christine G. Peñafiel
Paul E. Akasaka Mary Ann R. Ducanes Noreen S. Purificacion
Nellie S. Alar Eleanor Q. Faigao Alvin A. Quintanilla
Ramiro A. Amanquiton Eileen M. Felipe Rhoel T. Reyes
Jay Angelo N. Anastacio Angelito T. Fernandez Niña May Q. Reynoso
Ma. Cristina G. Antonio Hyacinth M. Galang Eleanor D. Rosales
Luis R. Apostol Ma. Salome D. L. Garcia Anita Y. Samala
Ma. Florentina U. Arellano Virginia G. Go Edellina C. Santiago
Roberto P. Basilio Maria Violeta M. Gonzales Edgardo M. Santos
Cherie Germaine T. Bautista Hector B. Holgado Fernando S. Santos, III
Eric Von D. Baviera Ruth D. Holmes Ma. Graciela C. Santos
Jesus S.M. Belaniso, III Alex A. Jacob Ernanie V. Silvino
Robert O. Blanch Carlo Ramon R. Jayme Susan Y. Tang
Maria Charmina B. Bonifacio Primitivo B. Julito, Jr. Michaela L. Teng
Christine Z. Briones Ma. Teresa O. Lao Arnel Ferdinand R. Tiglao
Maria Consuelo D.P. Cabale-Ticzon Ma. Giselle A. Liceralde Jacqueline T. Tomacruz
Agnes C. Calimbahin Dyan Danika G. Lim-Ong Michael C.Tomon
Alex M. Campilan Ma. Gladys C. Liwag Edna A. Torralba
Sherry Ann F. Canillas Mary Ann L. Llanes Karen W. Tua
Norman Roque V. Causing Maria Merlinda O. Lo Cristina C. Ty
Ma. Cecilia M. Chiu Jose G.Maravilla, III Norman P. Ureta
Victoria L. Chua Sheila Jane F. Medrero David Andrew P. Valdellon
Ma. Rosalie F. Cipriano Jose L. Nario, Jr. Lauro C. Valera
Amelia Consolacion B. Cruz Tadeos R. Natividad Jonathan T. Valeros
Allan Gerard C. Daluz Wendy G. Ngo Catherine D. Yabes
Reylenita M. Del Rosario Remedios Emilia R. Olivar April Marie O. Yago
Ma. Loudes L. Dela Vega Sonia M. Ong Manuel O. Yap
Aimee-Cel A. De Leon Lilian B. Orlina

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 93

 AWARDS AND DISTINCTIONS

ASEAN Corporate Governance Awards Corporate Governance Asia 8th Asian Excellence Awards
• Among the top 50 ASEAN Publicly Listed Companies • Best Investor Relations Company (Philippines)
• Top 3 Publicly Listed Companies in the Philippines • Best Investor Relations Professional
- Mr. Alexander C. Escucha, SVP for Investor and
Bangko Sentral ng Pilipinas Corporate Relations Group
• Pagtugon Award for Universal and Commercial Banks
Finance Asia Country Awards for Achievement
Capital Finance International (CFI.co) • Best Debt Capital Markets House - China Bank Capital
• Best Bank Governance (Philippines)
Global Banking & Finance Review Awards (U.K)
Chartered Financial Analysts Society of the Philippines • Best Corporate Governance Bank, Philippines
• Best Managed Fund of the Year (Dollar long-term Bond • Best Investor Relations Bank, Philippines
Category) - China Bank DollarFund • Best Bank for Debt Capital Markets - China Bank Capital
• Best Managed Fund of the Year (Balanced Peso Category)
- China Bank Balanced Fund Alpha Southeast Asia Best Deal & Solution Awards
• Best Bond Deal for Retail Investors in Southeast Asia for
BTr’s P181 billion RTBs

94 C H I N A B A N K I N G C O R P O R AT I O N
Investment House Association of the Philippines (IHAP) Philippine Dealing System Annual Awards
• Best Fixed Income House - China Bank Capital • Top Corporate Issue Manager (Investment House
• Best Fixed Income Deal for P181 Billion Republic of the category) - China Bank Capital
Philippines Bureau of the Treasury’s Retail Treasury Bond • Special Citation, Underwriter and Bookrunner
• Best Fixed Income Deal for Ayala Corporation US$400 who participated in the pilot issuance and the
Million Fixed-For-life Bonds (Ayala USD Fixed For Life) first official issuance under the approved enrolled
• Best Equity Deal for Del Monte Pacific US$200 Million Securities Program
Preferred Shares (Del Monte USD Preferred Shares)
• Deal of the Year for P181 Billion Republic of the Philippines The Asset’s 2018 Triple A Awards
Bureau of the Treasury’s Retail Treasury Bond • Best Bond Adviser (Domestic) - China Bank Capital
• Best Local Currency Bond for Ayala Land’s P4.3- billion
54th Anvil Awards short-dated notes
• Silver Award, 2017 Annual Financial and • Best Corporate Bond for Ayala Corp’s $400-million fixed
Sustainability Report rate bonds
• Best Follow-On for Del Monte Pacific’s $200-million
preferred shares

A N N UA L F I N A N C I A L A N D S U S TA I N A B I L I T Y R E P O R T 2 0 1 8 95
 FINANCIAL STATEMENTS CONTENTS

96 C H I N A BA N K I N G C O R P O R AT I O N
 98 Disclosure on Capital Structure and Capital Adequacy

108 Report of the Audit Committee

Statement of Management’s Responsibility for Financial

109
Statements

110 Independent Auditors’ Report

Management’s Discussion on Result of Operations and

114
Financial Condition

115 Balance Sheets

116 Statements of Income

117 Statements of Comprehensive Income

118 Statements of Changes in Equity

122 Statements of Cash Flows

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 97

 DISCLOSURE ON CAPITAL STRUCTURE AND CAPITAL ADEQUACY

Capital Fundamentals

We believe that China Bank can only achieve sustainable growth by maintaining strong capital fundamentals. Major business
initiatives are undertaken with the appropriate capital planning which also takes into consideration constraints and changes in
the regulatory environment. This is necessary to ensure that the Bank’s commercial objectives are equally aligned with its ability
to maintain a capital position at par with the industry. The Board and Senior Management recognizes that a balance should
be achieved with respect to China Bank’s earnings outlook vis-à-vis capital fundamentals that can take advantage of growth
opportunities while maintaining sufficient capacity to absorb shocks.

Risk-based capital components, including deductions, on a parent and consolidated basis:

Qualifying Capital (Basel III) Consolidated Parent Company

In PhP Million 2018
Common Equity Tier 1 Capital
Paid-up common stock 26,859.00 26,859.00
Additional paid-in capital 17,122.63 17,122.63
Retained Earnings 40,793.28 38,130.79
Other Comprehensive Income (154.84) (154.84)
Minority Interest 106.24 -
Less: Retained Earnings Appropriated for General Loan Loss Provision (2,971.93) (2,747.04)
Less: Unsecured DOSRI (189.78) (182.21)
Less: Deferred Tax Assets (1,676.64) (1,211.81)
Less: Goodwill (563.47) (222.84)
Less: Other Intangible Assets (3,222.15) (603.77)
Less: Defined Benefit Pension Fund Assets/Liabilities (1,201.40) (1,201.40)
Less: Investment in Subsidiary (387.64) (10,761.99)
Less: Significant Minority Investment (234.40) (234.40)
Less: Other Equity Investment (44.93) (42.74)
Total CET 1 Capital 74,233.95 64,749.39
Additional Tier 1 CapitaI - -
Total Tier 1 Capital 74,233.95 64,749.39
Tier 2 Capital
General Loan Loss Provision 5,658.62 4,982.36
Total Tier 2 Capital 5,658.62 4,982.36
Total Qualifying Capital 79,892.58 69,731.75

Qualifying Capital (Basel III) Consolidated Parent Company

In PhP Million 2017
Common Equity Tier 1 Capital
Paid-up common stock 26,859.00 26,859.00
Additional paid-in capital 17,122.63 17,122.63
Retained Earnings 35,370.61 34,552.59
Other Comprehensive Income (1,370.94) (1,373.38)
Minority Interest 104.55 -
Less: Unsecured DOSRI (189.98) (173.50)
Less: Deferred Tax Assets (2,097.87) (1,932.56)
Less: Goodwill (563.47) (222.84)
Less: Other Intangible Assets (3,072.14) (442.12)
Less: Defined Benefit Pension Fund Assets/Liabilities (991.39) (991.39)
Less: Investment in Subsidiary (406.30) (9,981.50)
Less: Significant Minority Investment (87.18) (87.18)
Less: Other Equity Investment (25.60) (23.41)
Forward

98 C H I N A BA N K I N G C O R P O R AT I O N
 Qualifying Capital (Basel III) Consolidated Parent Company
In PhP Million 2017
Total CET 1 Capital 70,651.92 63,306.34
Additional Tier 1 Capital - -

Total Tier 1 Capital 70,651.92 63,306.34

Tier 2 Capital
General Loan Loss Provision 3,970.35 3,409.98
Total Tier 2 Capital 3,970.35 3,409.98
Total Qualifying Capital 74,622.27 66,716.32

Risk-based capital ratios:

Basel III Consolidated Parent Company
2018
In PhP Million
CET 1 capital 84,726.30 81,957.58
Less regulatory adjustments (10,492.35) (17,208.19)
Total CET 1 capital 74,233.95 64,749.39
Additional Tier 1 capital - -
Total Tier 1 capital 74,233.95 64,749.39
Tier 2 capital 5,658.62 4,982.36
Total qualifying capital 79,892.58 69,731.75
Risk weighted assets 610,400.96 535,110.36
CET 1 capital ratio 12.16% 12.10%
Tier 1 capital ratio 12.16% 12.10%
Total capital ratio 13.09% 13.03%

Basel III Consolidated Parent Company

2017
In PhP Million
CET 1 capital 78,085.85 77,160.83
Less regulatory adjustments (7,433.93) (13,854.49)
Total CET 1 capital 70,651.92 63,306.34
Additional Tier 1 capital - -
Total Tier 1 capital 70,651.92 63,306.34
Tier 2 capital 3,970.35 3,409.98
Total qualifying capital 74,622.27 66,716.32
Risk weighted assets 524,667.93 451,523.36
CET 1 capital ratio 13.47% 14.02%
Tier 1 capital ratio 13.47% 14.02%
Total capital ratio 14.22% 14.78%

The regulatory Basel III qualifying capital of the Group consists of Common Equity Tier 1 capital (going concern capital),
which comprises paid-up common stock, additional paid-in capital, surplus including current year profit, other comprehensive
income and minority interest less required deductions such as unsecured credit accommodations to DOSRI, deferred income
tax, other intangible assets, goodwill, defined benefit pension fund assets/liabilities, and investment in subsidiaries. The other
component of regulatory capital is Tier 2 capital (gone-concern capital), which includes general loan loss provision. A capital
conservation buffer of 2.5% comprised of CET 1 capital is likewise imposed in the Basel III capital ratios.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 99

 DISCLOSURE ON CAPITAL STRUCTURE AND CAPITAL ADEQUACY

Full reconciliation of all regulatory capital elements back to the balance sheet in the audited financial statements is presented
below:

Parent Company
2018 2017
Audited Audited
Qualifying Reconciling Financial Qualifying Reconciling Financial
Capital Items Statements Capital Items Statements
Common stock 26,859 - 26,859 26,859 11 26,848
Additional paid-in capital 17,123 - 17,123 17,123 26 17,096
Retained Earnings 38,131 (6,397) 44,528 34,553 (6,735) 41,287
Net unrealized gains or losses on FVOCI / AFS
securities (228) 475 (703) (1,536) 278 (1,813)
Cumulative foreign currency translation and
others 73 29 45 162 (70) 233
Deductions (17,208) 17,208) - (13,854) (13,854) -
Tier 1 (CET1) capital/Total equity 64,749 (23,102) 87,852 63,307 (20,344) 83,651
Tier 2 capital 4,982 4,982 - 3,410 3,410 -
Total qualifying capital/Total equity 69,732 (18,120) 87,852 66,717 (16,934) 83,651

Group
2018 2017
Qualifying Reconciling Audited Qualifying Reconciling Audited
Capital Items Financial Capital Items Financial
Statements Statements
Common stock 26,859 - 26,859 26,859 11 26,848
Additional paid-in capital 17,123 - 17,123 17,123 27 17,096
Retained Earnings 40,793 (3,735) 44,528 35,371 (5,916) 41,287
Net unrealized gains or losses on FVOCI / AFS
securities (228) 475 (703) (1,536) 277 (1,813)
Cumulative foreign currency translation and
others 73 29 45 165 (68) 233
Non-controlling interest 106 102 5 105 100 5
Deductions (10,492) (10,492) - (7,434) (7,434) -
Tier 1 (CET1) capital/Total equity 74,234 (13,623) 87,857 70,653 (13,003) 83,656
Tier 2 capital 5,659 5,659 - 3,970 3,970 -
Total qualifying capital/Total equity 79,893 (7,964) 87,857 74,623 (9,033) 83,656

The capital requirements for Credit, Market and Operational Risk are listed below, on a parent and consolidated basis:

Capital Requirement Consolidated Parent

in PhP Million 2018 2017 2018 2017
Credit Risk 56,577.67 48,095.62 49,803.00 41,545.70
Market Risk 515.41 766.46 520.37 754.04
Operational Risk 3,947.02 3,604.71 3,187.67 2,852.60
Total Capital Requirements 61,040.10 52,466.79 53,511.04 45,152.34

100 C H I N A BA N K I N G C O R P O R AT I O N
Credit Risk

On-balance sheet exposures, net of specific provisions and not covered by CRM (in PhP million):

December 2018

Consolidated Parent
On-Balance Sheet Assets Exposures, net of Exposures not Exposures, net of Exposures not
Specific Provisions Covered by CRM Specific Provisions Covered by CRM
Cash on Hand 15,445.99 15,445.99 13,579.54 13,579.54
Checks and Other Cash Items 130.09 130.09 125.76 125.76
Due from BSP 101,890.53 101,890.53 95,093.70 95,093.70
Due from Other Banks 9,455.45 9,455.45 7,837.89 7,837.89
Financial Assets at FVPL 845.88 835.61 840.73 830.46
Financial Assets at FVOCI 10,065.70 9,038.86 8,307.23 7,280.39
Investment Securities at Amortized Cost 174,576.92 174,576.92 165,788.22 165,788.22
Loans and Receivables 513,035.64 484,762.89 449,324.99 427,314.42
Loans and Receivables arising from Repurchase
Agreements 10,004.22 10,004.22 7,002.96 7,002.96
Sales Contract Receivables 1,046.22 1,046.22 194.47 194.47
Real and Other Properties Acquired 3,635.33 3,635.33 179.02 179.02
Other Assets 12,573.56 12,573.56 7,290.20 7,290.20
Total On-Balance Sheet Assets 852,705.53 823,395.69 755,564.70 732,517.03

December 2017

Consolidated Parent
On-Balance Sheet Assets Exposures, net of Exposures not Exposures, net of Exposures not
Specific Provisions Covered by CRM Specific Provisions Covered by CRM
Cash on Hand 11,967.20 11,967.20 10,473.04 10,473.04
Checks and Other Cash Items 105.31 105.31 86.31 86.31
Due from BSP 98,490.46 98,490.46 91,717.49 91,717.49
Due from Other Banks 15,641.48 15,641.48 14,066.62 14,066.62
Financial Assets at FVPL 3,421.44 3,411.69 3,421.44 3,411.69
Available-for-Sale Financial Assets 46,569.31 45,594.23 43,303.71 42,328.63
Held-to-Maturity Financial Assets 66,079.64 66,079.64 62,284.34 62,284.34
Unquoted Debt Securities Classified as Loans 1,126.59 1,126.59 1,021.49 1,021.49
Loans and Receivables 451,658.56 424,289.21 390,162.15 367,704.31
Loans and Receivables arising from Repurchase
18,755.60 18,755.60 17,350.99 17,350.99
Agreements
Sales Contract Receivables 922.96 922.96 178.73 178.73
Real and Other Properties Acquired 4,135.94 4,135.94 418.63 418.63
Other Assets 11,577.51 11,577.51 8,274.34 8,274.34
Total On-Balance Sheet Assets 730,452.01 702,097.82 642,759.29 619,316.62

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 101

 DISCLOSURE ON CAPITAL STRUCTURE AND CAPITAL ADEQUACY

December 2016

Consolidated Parent
On-Balance Sheet Assets Exposures, net of Exposures not Exposures, net of Exposures not
Specific Provisions Covered by CRM Specific Provisions Covered by CRM
Cash on Hand 11,817.72 11,817.72 10,502.02 10,502.02
Checks and Other Cash Items 172.22 172.22 152.44 152.44
Due from BSP 91,791.03 91,791.03 85,133.66 85,133.66
Due from Other Banks 10,013.41 10,013.41 8,370.13 8,370.13
Financial Assets at FVPL 2,472.60 2,462.89 2,472.60 2,462.89
Available-for-Sale Financial Assets 33,937.65 32,966.67 31,374.20 30,403.22
Held-to-Maturity Financial Assets 58,131.81 58,131.81 54,755.05 54,755.05
Unquoted Debt Securities Classified as Loans 4,106.19 4,106.19 4,000.98 4,000.98
Loans and Receivables 387,185.32 362,850.92 330,301.95 311,073.96
Loans and Receivables arising from Repurchase
3,452.13 3,452.13 2,959.06 2,959.06
Agreements
Sales Contract Receivables 909.20 909.20 228.43 228.43
Real and Other Properties Acquired 4,298.03 4,298.03 605.71 605.71
Other Assets 10,518.86 10,518.86 6,890.90 6,890.90
Total On-Balance Sheet Assets 618,806.17 593,491.08 537,747.14 517,538.46

Credit equivalent amount for off-balance sheet items, broken down by type of exposures (in PhP million):

2018 2017 2016

Off-balance Sheet Consolidated Parent Consolidated Parent Consolidated Parent
Assets Notional Credit Notional Credit Notional Credit Notional Credit Notional Credit Notional Credit
Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent Principal Equivalent
Direct Credit Substitutes - - - - - - - - - - - -
Transaction-related
18,899.11 9,449.56 18,750.12 9,375.06 17,856.22 8,928.11 17,643.24 8,821.62 17,129.58 8,564.79 16,795.09 8,397.55
contingencies
Trade-related
contingencies arising
5,671.98 1,134.40 5,645.42 1,129.08 8,244.10 1,648.82 8,079.90 1,615.98 5,211.89 1,042.38 5,174.63 1,034.93
from movement of
goods
Other commitments
(which can be
unconditionally
153,999.03 - 153,462.68 - 148,317.90 - 145,897.78 - 149,582.52 - 144,594.20 -
cancelled at any time
by the bank without
prior notice)
Total Notional
Principal and Credit 178,570.12 10,583.95 177,858.23 10,504.15 174,418.22 10,576.93 171,620.92 10,437.60 171,923.98 9,607.17 166,563.93 9,432.47
Equivalent Amount

Credit equivalent amount for counterparty credit risk in the trading book, broken down by type of exposures (in PhP million):

December 2018

Consolidated Parent
Standardized Approach
Notional Principal Credit Equivalent Notional Principal Credit Equivalent
Interest Rate Contracts 3,059.34 37.49 3,059.34 37.49
Exchange Rate Contracts 57,082.77 908.62 57,082.77 908.62
Equity Contracts - - - -
Credit Derivatives - - - -
Total Notional Principal and
Credit Equivalent Amount 60,142.11 946.11 60,142.11 946.11

102 C H I N A BA N K I N G C O R P O R AT I O N
December 2017

Consolidated Parent
Standardized Approach Notional Notional
Credit Equivalent Credit Equivalent
Principal Principal
Interest Rate Contracts 9,991.39 41.21 9,991.39 41.21
Exchange Rate Contracts 33,068.49 625.66 33,068.49 625.66
Equity Contracts - - - -
Credit Derivatives - - - -
Total Notional Principal and
43,059.88 666.87 43,059.88 666.87
Credit Equivalent Amount

December 2016

Consolidated Parent
Standardized Approach Notional Notional
Credit Equivalent Credit Equivalent
Principal Principal
Interest Rate Contracts 10,823.40 72.93 10,823.40 72.93
Exchange Rate Contracts 16,830.93 343.13 16,830.93 343.13
Equity Contracts - - - -
Credit Derivatives - - - -
Total Notional Principal and
27,654.33 416.07 27,654.33 416.07
Credit Equivalent Amount

Net Exposures after CRM for counterparty credit risk in the banking book, broken down by type of exposures (in PhP million):

December 2018

Consolidated Parent
Standardized Approach Fair Value/ Net Exposures Fair Value/ Net Exposures
Carrying Amount after CRM Carrying Amount after CRM
Derivative Transactions - - - -
Repo-Style Transactions 35,488.28 8,158.34 35,488.28 8,158.34
Total Fair Value/Carrying Amount and
35,488.28 8,158.34 35,488.28 8,158.34
Net Exposures after CRM

December 2017

Consolidated Parent
Standardized Approach Fair Value/ Net Exposures Fair Value/ Net Exposures
Carrying Amount after CRM Carrying Amount after CRM
Derivative Transactions - - - -
Repo-Style Transactions 17,415.76 3,546.90 17,415.76 3,546.90
Total Fair Value/Carrying Amount and
Net Exposures after CRM 17,415.76 3,546.90 17,415.76 3,546.90

December 2016

Consolidated Parent
Standardized Approach Fair Value/ Net Exposures Fair Value/ Net Exposures
Carrying Amount after CRM Carrying Amount after CRM
Derivative Transactions - - - -
Repo-Style Transactions 9,520.22 1,447.43 9,520.22 1,447.43
Total Fair Value/Carrying Amount and
Net Exposures after CRM 9,520.22 1,447.43 9,520.22 1,447.43

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 103

 DISCLOSURE ON CAPITAL STRUCTURE AND CAPITAL ADEQUACY

The following credit risk mitigants are used in the December 2018 CAR Report:
• ROP warrants
• ROP guarantee
• HGC guarantee
• Holdout vs. Peso deposit
• Holdout vs. FCDU deposit
• Assignment / Pledge of Government Securities

Total credit exposure after risk mitigation, broken down by type of exposures, risk buckets, as well as those that are
deducted from capital (in PhP million):

2018
Weight
Band Consolidated Parent Company
On-balance Off-balance On-balance Off-balance
Counterparty Total Counterparty Total
sheet sheet sheet sheet
Below 100% 344,646.31 - 9,032.78 353,679.09 307,944.31 - 9,032.78 316,977.09
100% and 478,749.38 10,583.95 71.67 489,405.01 424,572.72 10,504.15 71.67 435,148.54
Above
Total 823,395.69 10,583.95 9,104.45 843,084.09 732,517.03 10,504.15 9,104.45 752,125.63

Weight 2017
Band Consolidated Parent Company
On-balance Off-balance On-balance Off-balance
Counterparty Total Counterparty Total
sheet sheet sheet sheet
Below
299,057.46 - 4,065.92 303,123.38 268,167.72 - 4,065.92 272,233.64
100%
100% and
403,040.36 10,576.93 147.84 413,765.14 351,148.90 10,437.60 147.84 361,734.34
Above
Total 702,097.82 10,576.93 4,213.77 716,888.52 619,316.62 10,437.60 4,213.77 633,967.98

Weight 2016
Band Consolidated Parent Company
On-balance Off-balance On-balance Off-balance
Counterparty Total Counterparty Total
sheet sheet sheet sheet
Below
252,534.01 21.86 1,805.97 254,361.84 224,540.77 21.86 1,805.97 226,368.61
100%
100% and
340,957.07 9,585.31 57.53 350,599.91 292,997.69 9,410.61 57.53 302,465.83
Above
Total 593,491.08 9,607.17 1,863.50 604,961.75 517,538.46 9,432.47 1,863.50 528,834.43

104 C H I N A BA N K I N G C O R P O R AT I O N
Total credit risk-weighted assets, broken down by type of exposures (in PhP million):

2018
Weight Consolidated Parent Company
Band On-balance Off-balance On-balance Off-balance
Counterparty Total Counterparty Total
sheet sheet sheet sheet
Below
100% 69,574.44 - 3,677.48 73,251.92 58,894.98 - 3,677.48 62,572.46
100% and
Above 481,834.50 10,583.95 71.67 492,490.13 424,967.08 10,504.15 71.67 435,542.90
Covered by
CRM 120.44 - - 120.44 120.44 - - 120.44
Excess
GLLP 85.85 205.83
Total 551,529.39 10,583.95 3,749.15 565,776.65 483,982.50 10,504.15 3,749.15 498,029.98

2017
Weight Consolidated Parent Company
Band On-balance Off-balance On-balance Off-balance
Counterparty Total Counterparty Total
sheet sheet sheet sheet
Below
61,429.58 - 1,990.76 63,420.34 50,785.80 - 1,990.76 52,776.56
100%
100% and
406,743.33 10,576.93 147.84 417,468.11 352,027.29 10,437.60 147.84 362,612.73
Above
Covered by
67.74 - - 67.74 67.74 - - 67.74
CRM
Excess
- -
GLLP
Total 468,240.65 10,576.93 2,138.60 480,956.18 402,880.83 10,437.60 2,138.60 415,457.04

2016
Weight Consolidated Parent Company
Band On-balance Off-balance On-balance Off-balance
Counterparty Total Counterparty Total
sheet sheet sheet sheet
Below
58,436.20 4.37 542.12 58,982.70 48,001.61 4.37 542.12 48,548.10
100%
100% and
345,656.04 9,585.31 57.53 355,298.88 294,570.61 9,410.61 57.53 304,038.75
Above
Covered by
99.63 - - 99.63 64.40 - - 64.40
CRM
Excess
- -
GLLP
Total 404,191.88 9,589.68 599.65 414,381.20 342,636.62 9,414.98 599.65 352,651.25

The credit ratings given by the following rating agencies were used to determine the credit risk weight of On-balance sheet,
Off-balance sheet, and Counterparty exposures:

For all rated credit exposures regardless of currency

Standard & Poor (S&P) Moody’s
Fitch
For PHP-denominated debts of rated domestic entities
Philratings

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 105

 DISCLOSURE ON CAPITAL STRUCTURE AND CAPITAL ADEQUACY

Market Risk-Weighted Assets

The Standardized Approach is used in China Bank’s market risk-weighted assets. The total market risk-weighted asset of the
Bank as of December 2018 is P5.20 billion and P5.15 billion for parent company and consolidated basis, respectively. This is
composed of Interest Rate exposures amounting to P3.49 billion and Foreign Exchange exposures amounting to P1.71 billion
for the parent bank, while it is composed of Interest Rate exposures amounting to P3.49 billion, Equity exposures amounting to
P0.09 billion and Foreign Exchange exposures amounting to P1.57 billion on a consolidated basis.

Consolidated Parent Company Consolidated Parent Company

Interest Rate Exposures (in PhP Mn) 2018 2017
Specific Risk 87.72 87.72 176.92 176.37
General Market Risk
PHP 61.52 61.52 124.23 123.60
USD 130.27 130.27 256.58 255.27
Total Capital Charge 279.51 279.51 557.73 555.24
Adjusted Capital Charge 349.39 349.39 697.17 694.05
Subtotal Market Risk-Weighted Assets 3,493.93 3,493.93 6,971.70 6,940.52

Consolidated Parent Company Consolidated Parent Company

Equity Exposures 2018 2017
Total Capital Charge 7.59 - 7.47 -
Adjusted Capital Charge 9.48 - 9.33 -
Subtotal Market Risk-Weighted Assets 94.82 - 93.33 -

Consolidated Parent Company Consolidated Parent Company

Foreign Exchange Exposures 2018 2017
Total Capital Charge 125.23 136.78 47.97 47.99
Adjusted Capital Charge 156.53 170.97 59.96 59.98
Subtotal Market Risk-Weighted Assets 1,565.35 1,709.75 599.61 599.83

Total Market Risk-Weighted Assets 5,154.10 5,203.68 7,664.64 7,540.35

106 C H I N A BA N K I N G C O R P O R AT I O N
Operational, Legal, and Other Risks

The Bank has established an Operational Risk Management Framework which forms part of its enterprise-wide risk management
system. It outlines the policies, processes and procedures and the tools introduced to implement an effective operational risk
management system covering all the business and operating units of the Bank as well as its subsidiaries. Among the tools that
are already in place that provides the Bank with the ability to identify and assess material operational risks include the Risk &
Control Self-Assessment (RCSA) and the Key Risk Indicators (KRI). Both financial and non-financial impacts of operational risk
are captured for this purpose.

The overall operational risk exposure of the Bank is determined using a number of methodologies which include the scenario
analysis exercise. As of December 2018, the equivalent capital allocated for Operational Risk amounted to PHP 3.19 billion
which is more than adequate to cover the computed overall operational risk exposure. Moreover, the Bank through its Legal
& Collection Division identified and assessed potential losses attributed to Legal Risk and the amount is not material to
significantly affect the Bank’s capital position.

Operational Risk-Weighted Assets

The BIA is used to determine the equivalent operational risk-weighted assets of China Bank. On a parent basis, the Bank’s
operational risk-weighted asset as of December 2018 is P31.88 billion while on a consolidated basis, the Bank’s operational
risk- weighted assets is P39.47 billion. On a parent basis, the Bank’s operational risk-weighted asset as of December 2017 is
P28.53 billion while on a consolidated basis, the Bank’s operational risk-weighted assets is P36.05 billion.

Internal measurement of interest rate risk in the banking book

The Bank’s interest rate risk (IRR) originates from its holdings of interest rate sensitive assets and interest rate sensitive
liabilities. Internally, the Earnings-at-Risk (EaR) method is used to determine the effects of interest rate movements on the
Bank’s interest earnings which is measured every week. The Bank’s loans is assumed affected by interest rate movements
on its repricing date for floating rates and on its maturity for fixed rates. Demand and savings deposits, on the other hand,
are generally not interest rate sensitive. Provided in the table below are the approximate addition and reduction in annualized
interest income of a 100bps change across the PhP and USD yield curves.

Consolidated Parent
Earnings-at-Risk in PhP Million
2018 2017 2018 2017
Upward 520 752 706 867
PHP IRR Exposures
Downward (520) (752) (706) (867)
Upward (468) (342) (451) (328)
USD IRR Exposures
Downward 419 301 402 287

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 107

 REPORT OF THE AUDIT COMMITTEE

The Audit Committee plays an important role in empowering and elevating the The Committee also approved the engagement fees in connection with the
status of the internal audit function throughout the organization as provider independent validation of votes for stockholders’ meeting, audit of the financial
of quality and significant assurance and consulting services that adds value statements of the Bank, issuance of the comfort letters for the Long-Term
to the governance, risk management, and internal control processes of the Negotiable Certificates of Time Deposit (LTNCD), and PFRS 9 Expected
Bank. It has the explicit authority to investigate any matter within its terms of Credit Loss Model Review, among others. It ensured that the external
reference, full access to and cooperation by management and full discretion auditors remain independent and are given unrestricted access to records,
to invite any director or executive officer to attend its meetings, and adequate properties and personnel, to enable them to perform their audit functions. The
resources to enable it to effectively discharge its functions. It monitors and Committee evaluated the qualifications, performance, competence, integrity
evaluates the adequacy and effectiveness of the internal control system of and independence of the external auditor. Following such evaluation, the
the Bank, and assesses internal audit function and performance, integrity of Committee recommended to the Board the engagement of SGV as the external
the financial statements, and accounting processes. It also provides oversight auditors of the Bank, subject to the ratification of the stockholders.
on the activities of senior management and the internal and external auditors
of the Bank. Oversight of Internal Audit

Lead Independent Director Alberto S. Yao chairs the Audit Committee, and the To assess the effectiveness of the internal audit function, the Audit
members are Non-executive Director Joaquin T. Dee and new Independent Committee reviewed the accomplishments versus plans and approved
Director Philip S.L. Tsai who was elected member of the Committee on 05 the plans and budget of internal audit’s Quality Assurance and Control
December 2018 to replace and serve the unexpired term of the late Mr. Roberto Department, Branch Audit Department, Head Office and Subsidiaries Audit
F. Kuan. All of them have accounting, auditing, or related financial management Department, and IT Audit Department. It evaluated the updates, deferments,
expertise or experience commensurate with the size, complexity of operations or any other changes in audit engagements and audit plan; and reviewed
and risk profile of the Bank. the results of the review of working papers as well as the internal audit
and recommendations to address the weaknesses and deficiencies noted
In 2018, the Committee met 14 times to discuss and deliberate on matters and any unresolved management issues. The Committee ensured that the
including the following: Chief Audit Executive (CAE), who reports directly to the Audit Committee
and whose performance is evaluated by the Committee, and internal audit
Oversight of Financial Reporting and Policies function are free from interference by outside parties and that they maintain
an open communication with the Committee. The members are free to meet
The Committee reviewed and discussed with the external auditor SyCip privately with the CAE without management presence to discuss information
Gorres Velayo & Co. (SGV) the audited financial statements, focusing on concerning the internal audit activity’s plans and activities and to keep each
the following: changes in accounting policies and practices, standards other informed on any other matters of mutual interest.
and interpretations and related impact; major judgmental areas including
reasonableness of estimates and assumptions used in the preparation In 2018, the Committee approved the guidelines on annual review of 3-year
of financial statements; significant adjustments resulting from the audit; audit plan; guidelines for handling unresponded, disputed, significant and
compliance with accounting, auditing and regulatory standards such as outstanding audit issues; and policy on escalation and handling management’s
the Philippine Financial Reporting Standards (PFRS) and Tax Reform for acceptance of risk. Further, the Committee confirmed the professional opinion
Acceleration and Inclusion (TRAIN) Act. The Committee discussed the of the CAE of adherence to the Institute of Internal Auditors’ (IIA) Standard and
financial reports as to consistency and accuracy of disclosures of material Implementation Guide 2130 on Control based on the results of audit conducted
information including on subsequent events and related party transactions; for the covered period, and that the Bank’s control processes, operating across
completeness and timeliness of communication with external auditor; and the organization, are in place, adequate and working effectively to mitigate
other material issues that affect the audit and financial reporting. risks that could adversely affect the achievement of the Bank’s objectives. The
Committee also confirmed that in accordance with the IIA’s Standard 1100 on
Oversight of Internal Control Independence and Objectivity, for Audit year 2018, the internal audit activity
is independent from any conditions that would hamper its ability to carry out
The Committee ensured a review of the effectiveness of the internal controls, internal audit responsibilities in an unbiased manner, which are evidenced by
including financial, operational and compliance controls, and risk management, the dual reporting lines to the Board and President, the functional roles are
with the aim of establishing and maintaining an adequate, effective and within the scope of internal audit activity, and that members of Audit Division
efficient internal control framework. The Committee looked into the systems have an impartial, unbiased attitude and avoid any conflict of interest in the
and processes to gauge compliance with laws, regulations and internal policies, performance of their duties and responsibilities, in conformance to the IIA’s
efficiency and effectiveness of operations, and safeguarding of assets. It Standards and Code of Ethics. Finally, the Audit Committee revised its Charter
monitored the internal control issues noted during internal regular, special and in order to incorporate important provisions of IIA’s Implementation Guide 1111,
limited audits of various branches, units, technology platforms and applications Direct Interaction with the Board, and Securities and Exchange Commission’s
and services of the Bank, including the effectiveness of information technology (SEC) Code of Corporate Governance for Publicly-listed Companies.
security and control, together with management’s responses, and determined
that appropriate actions have been taken to address significant deficiencies Based on the foregoing, the Audit Committee views that the internal
and weaknesses. The Committee evaluated the effectiveness of the system for control and financial reporting systems and policies of the Bank are in place,
monitoring results of management’s actions, both to address deficiencies and adequate, effective and efficient.
pursue opportunities to enhance internal controls and processes.

Oversight of External Auditors

The Committee reviewed the scope and plan of the annual audit. The ALBERTO S. YAO
Committee met with the external auditors to discuss the results of interim Chairman
audit and confirmation procedures. The Committee’s review of the audited
financial statements included taking into account the relevant issues raised by
the external auditor in the management letters, and the impact of the latest
accounting and regulatory issuances and best practice in good governance.
JOAQUIN T. DEE PHILIP S.L. TSAI
Member Member

108 C H I N A BA N K I N G C O R P O R AT I O N
STATEMENT OF MANAGEMENT’S RESPONSIBILITY
FOR FINANCIAL STATEMENTS

The management of China Banking Corporation (the Bank) is responsible for the preparation and fair presentation of the
consolidated financial statements including the schedules attached therein, for the years ended December 31, 2018 and 2017,
in accordance with the prescribed financial reporting framework indicated therein, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Bank’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Bank’s financial reporting process.

The Board of Directors reviews and approves the consolidated financial statements including the schedules attached therein,
and submits the same to the stockholders.

SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, has audited the consolidated financial
statements of the Bank in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has ex.pressed
its opinion on the fairness of presentation upon completion of such audit.

Hans T. Sy William C. Whang Patrick D. Cheng

Chairman of the Board President Chief Financial Officer

Republic of the Philippines

City of Makati } S. S.
Signed this 1st day of March 2019, affiants exhibiting to me their Social Security System Nos. as follows:

Name SSS Nos.

Hans T. Sy 03-4301174-3
William C. Whang 03-5882607-5
Patrick D. Cheng 03-8328014-9

Doc. No.: 149

Page No.: 31
Book No.: 15
Series of: 2019

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 109

 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders

China Banking Corporation
8745 Paseo de Roxas cor. Villar St.
Makati City

Report on the Consolidated and Parent Company Financial Statements

Opinion

We have audited the consolidated financial statements of China Banking Corporation and its subsidiaries (the Group) and the parent company
financial statements of China Banking Corporation, which comprise the consolidated and parent company balance sheets as at December 31, 2018
and 2017, and the consolidated and parent company statements of income, consolidated and parent company statements of comprehensive
income, consolidated and parent company statements of changes in equity and consolidated and parent company statements of cash flows for
each of the three years in the period ended December 31, 2018, and notes to the consolidated and parent company financial statements, including
a summary of significant accounting policies.

In our opinion, the accompanying consolidated and parent company financial statements present fairly, in all material respects, the financial position
of the Group and the Parent Company as at December 31, 2018 and 2017, and their financial performance and their cash flows for each of the three
years in the period ended December 31, 2018 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Consolidated and Parent Company Financial Statements section of our report. We
are independent of the Group and the Parent Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code
of Ethics) together with the ethical requirements that are relevant to our audit of the consolidated and parent company financial statements in the
Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and parent
company financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and parent
company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Consolidated and Parent Company Financial
Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement of the consolidated and parent company financial statements. The results of our
audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying
consolidated and parent company financial statements.

Applicable to the audit of the Consolidated and Parent Company Financial Statements

Adoption of PFRS 9, Financial Instruments

On January 1, 2018, the Group and the Parent Company adopted Philippine Financial Reporting Standards (PFRS) 9, Financial Instruments. PFRS
9, which replaced PAS 39, Financial Instruments: Recognition and Measurement, provides revised principles for classifying financial assets and
introduces a forward-looking expected credit loss model to assess impairment on debt financial assets not measured at fair value through profit or
loss and loan commitments and financial guarantee contracts. The Group and the Parent Company adopted the modified retrospective approach
in adopting PFRS 9.

1. Classification of Financial Assets

As at January 1, 2018 (the transition date), the Group and the Parent Company classified its financial assets based on its business models for
managing these financial assets and the contractual cash flow characteristics of the financial assets. This resulted to transition adjustments that
increased (decreased) surplus and other comprehensive income by (P11.00 million) and P1.68 billion, respectively. Thereafter, the financial assets
were accounted for based on the transition date classification, while newly originated or acquired financial assets were classified based on the
PFRS 9 classification criteria.

The Group’s and the Parent Company’s application of the PFRS 9 classification criteria is significant to our audit as the classification determines how
financial assets are measured and accounted for in the financial statements.

110 C H I N A BA N K I N G C O R P O R AT I O N
The disclosures in relation to the adoption of the PFRS 9 classification criteria are included in Note 2 to the financial statements.

Audit Response

We obtained an understanding of the Group’s and the Parent Company’s contracts review process to establish the contractual cash flow
characteristics of debt financial assets, including the identification of standard and non-standard contracts, and reviewed the assessment made by
management by inspecting underlying contracts on a sample basis. We obtained the board approved business models for the Group and the Parent
Company’s portfolios of financial assets. For significant portfolios, we understood how the business performance is measured and evaluated
performance measurement reports.

We checked the appropriateness of the transition adjustments and reviewed the completeness of the disclosures made in the financial statements.

2. Expected Credit Losses (ECL)

The Group’s and the Parent Company’s adoption of the ECL model is significant to our audit as it involves the exercise of significant management
judgment. Key areas of judgment include: segmenting the Group’s and the Parent Company’s credit risk exposures; determining the method to
estimate ECL; defining default; identifying exposures with significant deterioration in credit quality; determining assumptions to be used in the ECL
model such as the counterparty credit risk rating, the expected life of the financial asset and expected recoveries from defaulted accounts; and
incorporating forward-looking information (called overlays) in calculating ECL.

The application of the ECL model increased the allowance for credit losses as of January 1, 2018 by P3.59 billion and P3.09 billion for Group’s and
Parent Company’s financial statements. Using the ECL model, provision for credit losses of the Group and reversal of credit losses of the Parent
Company for 2018 amounted to P141.08 million and P1.96 million, respectively.

Refer to Notes 2 and 16 of the financial statements or the disclosure on the transition adjustments and details of the allowance for credit losses
using the ECL model, respectively.

Audit Response

We obtained an understanding of the board approved methodologies and models used for the Group’s and the Parent Company’s different credit
exposures and assessed whether these considered the requirements of PFRS 9 to reflect an unbiased and probability-weighted outcome, and to
consider time value of money and the best available forward-looking information. We also inspected and considered the results of PFRS 9 model
validation performed by management’s specialist.

We (a) assessed the Group’s and the Parent Company’s segmentation of its credit risk exposures based on homogeneity of credit risk characteristics;
(b) verified the definition of default and significant increase in credit risk criteria against historical analysis of accounts and credit risk management
policies and practices in place, (c) tested the Group’s and the Parent Company’s application of internal credit risk rating system by reviewing the
ratings of sample credit exposures; (d) inspected the ECL document issued by the third-party service provider engaged by the Group in developing
its ECL models to understand the judgements made by both the Group and the Parent Company’s determine whether statistical tests were
performed to assess model performance; (e) assessed whether expected life is different from the contractual life by testing the maturity dates
reflected in the system of record and considering management’s assumptions regarding future payments, advances, extensions, renewals and
modifications; (f) inspected financial information used to derive baseline probability of default; (g) performed simulation of baseline probability of
default and tested its conversion to forward-looking probability of default; (h) performed trend analysis of expected default generated by third-party
service providers and compared trend with the resulting expected credit loss; (i) tested loss given default by inspecting historical recoveries and
related costs, write-offs and collateral valuations; (j) verified exposure at default considering outstanding commitments and repayment scheme; and
(k) tested the effective interest rate used in discounting the expected loss.

Further, we checked the accuracy and completeness of data used in the ECL models by reconciling data from source system reports to the data
warehouse and from the data warehouse to the loss allowance analysis/models and financial reporting systems.

We recalculated impairment provisions on a sample basis. We checked the appropriateness of the transition adjustments and reviewed the
completeness of the disclosures made in the financial statements.

Impairment testing of goodwill

Under PFRS, the Group and the Parent Company are required to annually test the amount of goodwill for impairment. As of December 31, 2018,
the goodwill recognized in the consolidated and parent company financial statements amounting to P222.84 million is attributed to the Parent
Company’s Retail Banking Business (RBB) segment, while goodwill of P616.91 million in the consolidated financial statements is attributed to the
subsidiary bank, China Bank Savings, Inc. (CBSI). The impairment assessment process requires significant judgment and is based on assumptions,
specifically loan and deposit growth rates, discount rate and the terminal value growth rate.

The Group’s disclosures about goodwill are included in Notes 3, 11 and 14 to the financial statements.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 111

 INDEPENDENT AUDITORS’ REPORT

Audit Response

We involved our internal specialist in evaluating the methodologies and the assumptions used. These assumptions include loan and deposit growth
rates, discount rate and the terminal value growth rate. We compared the key assumptions used, such as loan and deposit growth rates against
the historical performance of the RBB and CBSI, industry/market outlook and other relevant external data. We tested the parameters used in the
determination of the discount rate against market data. We also reviewed the Group’s disclosures about those assumptions to which the outcome
of the impairment test is most sensitive; specifically those that have the most significant effect on the determination of the recoverable amount
of goodwill.

Applicable to the audit of the Consolidated Financial Statements

Recoverability of deferred tax assets

The Group has recognized and unrecognized deferred taxes. The recoverability of deferred tax assets recognized depends on the Group’s ability to
continuously generate sufficient future taxable income. The analysis of the recoverability of deferred tax assets was significant to our audit because
the assessment process is complex and judgmental, and is based on assumptions that are affected by expected future market or economic
conditions and the expected performance of the Group.

The disclosures in relation to deferred income taxes are included in Notes 3 and 27 to the financial statements.

Audit Response

We reviewed the management’s assessment on the availability of future taxable income in reference to financial forecast and tax strategies. We
evaluated management’s forecast by comparing loan portfolio and deposit growth rates with that of the industry and the historical performance of
the Group. We also reviewed the timing of the reversal of future taxable and deductible temporary differences.

Other Information

Management is responsible for the other information. The other information comprises the information included in the SEC Form 20-IS (Definitive
Information Statement), SEC Form 17A and Annual Report for the year ended December 31, 2018, but does not include the consolidated and parent
company financial statements and our auditor’s report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form 17A and Annual
Report for the year ended December 31, 2018 are expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated and parent company financial statements does not cover the other information and we will not express any form
of assurance conclusion thereon.

In connection with our audits of the consolidated and parent company financial statements, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated
and parent company financial statements or our knowledge obtained in the audits, or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Parent Company Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated and parent company financial statements in accordance
with PFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated and parent company
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and parent company financial statements, management is responsible for assessing the Group’s and Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group and the Parent Company or to cease operations, or has no realistic alternative
but to do so.

Those charged with governance are responsible for overseeing the Group’s and Parent Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Parent Company Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and parent company financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated and parent company financial statements.

112 C H I N A BA N K I N G C O R P O R AT I O N
As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
• Identify and assess the risks of material misstatement of the consolidated and parent company financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Parent Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Parent Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated and parent company financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group and the Parent Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated and parent company financial statements, including the disclosures,
and whether the consolidated and parent company financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain
solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit
of the consolidated and parent company financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.

Report on the Supplementary Information Required Under Revenue Regulations 152010

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary
information required under Revenue Regulations 152010 in Note 37 to the financial statements is presented for purposes of filing with the Bureau
of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the management of China
Banking Corporation. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our
opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

The engagement partner on the audit resulting in this independent auditor’s report is Ray Francis C. Balagtas.

SYCIP GORRES VELAYO & CO.

Ray Francis C. Balagtas

Partner
CPA Certificate No. 108795
SEC Accreditation No. 1510-AR-1 (Group A),
September 18, 2018, valid until September 17, 2021
Tax Identification No. 216-950-288
BIR Accreditation No. 08-001998-107-2018,
February 14, 2018, valid until February 13, 2021
PTR No. 7332523, January 9, 2019, Makati City

March 1, 2019

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 113

 MANAGEMENT’S DISCUSSION ON RESULT OF
OPERATIONS AND FINANCIAL CONDITION

Result of Operations Financial Condition

China Bank posted a consolidated net income of P8.1 billion, The Bank’s total assets expanded by 15.3 % to P866.1 billion
7.9% higher than in 2017, driven by the strong growth in core from P751.5 billion, supported by the double-digit growth in
businesses. This translated to a return on equity of 9.54% loans and investments.
and a return on assets of 1.04%.
The 12.6% increase in gross loans to P512.9 billion was led
Total operating income consisting of net interest income by the consumer and corporate segments which grew 20%
and fee-based income reached P28.6 billion, up by 11.1%. and 18%, respectively. The growth in corporate loans was
Net interest income increased P3.3 billion or 16.8% to boosted by the robust investment banking activities of China
P22.9 billion on the back of a robust year-on-year loan Bank Capital which maintained its leadership in retail bond
expansion. The Bank’s consolidated net interest margin was issues. Asset quality remained healthy as the Bank’s non-
recorded at 3.10% from 3.11% last year as higher funding performing loans ratio further improved to 1.2% which was
costs offset the growth in interest revenues. better than industry. NPL cover was higher at 167% from
99% in 2017.
Fee-based income declined P443.4 million or 7.3% mostly
from the trading and securities loss of (P271.6) million arising Total investment securities amounted to P190.2 billion, up by
from rate volatility that affected both the dealership business 48.7% from P128.0 billion. The Bank’s liquidity ratio stood at
and returns on tradable securities. Service charges, fees, 38%, slightly higher than last year’s 36%.
and commissions increased by 13.7% to P2.8 billion from
the upswing in investment banking and transactional fee On the liabilities side, total deposits increased by 13.7% to
revenues. Likewise, gain on sale of investment properties was P722.1 billion from P635.1 billion, of which CASA (demand &
up by 51.4% to P1.0 billion due to higher sales of foreclosed savings­deposits) totaled P400.8 billion. CASA ratio of 56%
assets. Gain on asset foreclosure and dacion transactions exceeded the 2017-end ratio of 54%. The Bank also issued
also improved by 60.4% to P252.5 million because of the Long-Term Negotiable Certificates of Deposits (LTNCDs)
upside revaluation on foreclosed assets. Meanwhile, trust amounting to P10.25 billion in July 2018.
fees dropped by P70.6 million or 18.8% to P305.8 million
due to the decline in related fees. Miscellaneous income Total capital stood at P87.9 billion, 5.0% higher than last year’s
decreased by 16.8% to P1.3 billion with the booking of one- P83.7 billion. Capital adequacy ratios remained healthy with
off gains last year. Common Equity Tier 1 (CET 1) ratio at 12.16% and total CAR
at 13.09%.
Operating expenses (excluding provision for impairment
and credit losses) increased 13.1% or P2.1 billion to P18.1
billion as the Bank carried out its expansion by investing
in new branches, more people, and up-to-date technology
to support the growth of new businesses. The material
components of operating expenses include compensation &
fringe benefits which accounted for 34% of total operating
expenses, taxes & licenses at 16%, occupancy cost at 13%,
and insurance at 9%. Provision for impairment and credit
losses computed under PFRS-9, totaled P141.1 million.
Inclusive of appropriated retained earnings, total provisions
would amount to P481.5 million.

For 2018, China Bank paid cash dividend of P0.83 per share or
a total of P2.2 billion, which represents a total payout of 30%
of prior year’s net income.

114 C H I N A BA N K I N G C O R P O R AT I O N
BALANCE SHEETS
(Amounts in Thousands)

Consolidated Parent Company

December 31
2018 2017 2018 2017
ASSETS
Cash and Other Cash Items P15,639,474 P12,685,984 P13,705,304 P11,160,173
Due from Bangko Sentral ng Pilipinas (Notes 7 and 17) 101,889,773 98,490,014 95,092,944 91,717,037
Due from Other Banks (Notes 7 and 18) 9,455,447 15,641,476 7,837,894 14,066,620
Interbank Loans Receivable and Securities Purchased under Resale
Agreements (Note 8) 11,998,040 18,751,845 8,998,040 17,347,522
Financial Assets at Fair Value through Profit or Loss (Note 9) 7,596,261 16,238,888 6,689,796 16,056,823
Financial Assets at Fair Value through Other Comprehensive Income (Note 9) 10,101,527 – 8,213,010 –
Available-for-Sale Financial Assets (Note 9) – 46,445,391 – 42,937,083
Investment Securities at Amortized Cost (Note 9) 172,537,036 – 163,824,466 –
Held-to-Maturity Financial Assets (Note 9) – 65,286,267 – 61,533,493
Loans and Receivables (Notes 10 and 29) 505,804,955 448,970,942 441,432,156 386,554,498
Accrued Interest Receivable 5,697,181 3,718,505 5,126,127 3,189,083
Investment in Subsidiaries (Note 11) – – 14,333,567 13,560,733
Investment in Associates (Note 11) 335,092 329,422 335,092 329,422
Bank Premises, Furniture, Fixtures and Equipment (Note 12) 6,450,458 6,875,864 5,265,386 5,464,582
Investment Properties (Note 13) 4,789,602 5,072,156 1,188,797 1,550,503
Deferred Tax Assets (Note 27) 2,514,889 1,778,081 1,739,219 1,297,271
Intangible Assets (Notes 11 and 14) 4,202,599 4,104,032 915,531 800,861
Goodwill (Notes 11 and 14) 839,748 839,748 222,841 222,841
Other Assets (Note 15) 6,219,558 6,218,895 3,332,763 3,481,225
P866,071,640 P751,447,510 P778,252,933 P671,269,770

LIABILITIES AND EQUITY

Liabilities
Deposit Liabilities (Notes 17 and 29)
Demand P161,239,669 P154,286,415 P145,559,564 P138,929,906
Savings 239,539,817 188,723,947 226,943,962 179,593,323
Time 321,343,811 292,083,031 265,739,836 240,712,750
722,123,297 635,093,393 638,243,362 559,235,979
Bills Payable (Note 18) 39,826,532 20,118,031 39,826,532 20,118,031
Manager’s Checks 2,577,175 2,441,042 2,069,812 1,709,248
Income Tax Payable 477,585 362,041 414,233 339,155
Accrued Interest and Other Expenses (Note 19) 3,842,525 2,627,619 3,342,152 2,283,948
Derivative Liabilities (Note 25) 455,150 267,533 455,150 267,533
Deferred Tax Liabilities (Note 27) 1,231,145 1,161,653 – –
Other Liabilities (Notes 20 and 23) 7,681,644 5,720,701 6,049,812 3,665,115
778,215,053 667,792,013 690,401,053 587,619,009
Equity
Equity Attributable to Equity Holders of the Parent Company
Capital stock (Note 23) 26,858,998 26,847,717 26,858,998 26,847,717
Capital paid in excess of par value (Note 23) 17,122,625 17,096,228 17,122,625 17,096,228
Surplus reserves (Notes 23 and 28) 4,031,008 926,689 4,031,008 926,689
Surplus (Notes 23 and 28) 40,497,256 40,360,563 40,497,256 40,360,563
Net unrealized gain (loss) on:
Financial assets at fair value through other comprehensive income (Note 9) (702,509) – (702,509) –
Available-for-sale financial assets (Note 9) – (1,813,280) – (1,813,280)
Remeasurement gain on defined benefit asset (Note 24) 117,047 283,763 117,047 283,763
Cumulative translation adjustment (91,699) (38,698) (91,699) (38,698)
Remeasurement gain (loss) on life insurance reserves 19,154 (12,221) 19,154 (12,221)
87,851,880 83,650,761 87,851,880 83,650,761
Non-controlling Interest 4,707 4,736 – –
87,856,587 83,655,497 87,851,880 83,650,761
P866,071,640 P751,447,510 P778,252,933 P671,269,770

See accompanying Notes to Financial Statements.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 115

 STATEMENTS OF INCOME
(Amounts in Thousands)

Consolidated Parent Company

Years Ended December 31
2018 2017 2016 2018 2017 2016
INTEREST INCOME
Loans and receivables (Notes 10 and 29) P28,195,915 P21,751,647 P17,889,252 P23,488,872 P17,537,017 P14,122,287
Investments (Note 9) 5,875,928 3,556,110 3,078,081 5,559,557 3,275,025 2,880,919
Financial assets at FVPL 413,323 410,889 204,882 413,323 398,777 179,406
Due from Bangko Sentral ng Pilipinas and other banks and
securities purchased under resale agreements (Notes
7 and 8) 727,337 820,699 719,414 516,645 634,906 555,788
35,212,503 26,539,345 21,891,629 29,978,697 21,845,725 17,738,400
INTEREST EXPENSE
Deposit liabilities (Notes 17 and 29) 11,621,063 6,521,935 4,831,555 9,736,014 5,210,803 3,629,127
Bills payable and other borrowings (Note 18) 665,254 391,007 365,879 665,254 391,007 354,961
12,286,317 6,912,942 5,197,434 10,401,268 5,601,810 3,984,088
NET INTEREST INCOME 22,926,186 19,626,403 16,694,195 19,577,428 16,243,915 13,754,312
Service charges, fees and commissions (Note 21) 2,777,283 2,441,724 2,123,469 1,529,727 1,394,998 1,319,448
Gain on sale of investment properties 1,015,622 670,612 443,315 925,831 614,587 338,088
Trading and securities gain (loss) - net (Notes 9 and 21) (271,552) 479,960 918,089 (275,964) 399,760 852,870
Foreign exchange gain - net (Note 25) 215,963 386,015 318,135 187,064 389,692 299,113
Trust fee income (Note 28) 305,753 376,312 330,197 305,338 371,947 326,091
Gain on asset foreclosure and dacion transactions
(Note 13) 252,477 157,415 172,480 57,676 71,888 140,747
Share in net income of subsidiaries (Note 11) – – – 695,356 836,004 464,999
Share in net income (losses) of an associate (Note 11) 101,009 73,133 (89,384) 101,009 73,133 (89,384)
Miscellaneous (Notes 21 and 29) 1,261,741 1,516,523 878,445 1,130,134 1,391,657 800,097
TOTAL OPERATING INCOME 28,584,482 25,728,097 21,788,941 24,233,599 21,787,581 18,206,381
Compensation and fringe benefits (Notes 24 and 29) 6,139,001 5,708,948 4,982,934 4,610,265 4,288,096 3,752,229
Taxes and licenses 2,925,870 2,264,025 2,000,404 2,307,948 1,819,331 1,573,887
Occupancy cost (Notes 26 and 29) 2,336,639 2,112,602 1,830,675 1,713,888 1,528,876 1,281,107
Insurance 1,669,618 1,440,153 1,163,507 1,447,890 1,241,575 991,179
Depreciation and amortization (Notes 12, 13 and 14) 1,297,685 1,217,489 1,124,786 947,908 877,240 775,210
Provision for impairment and credit losses (Note 16) 141,076 754,171 850,546 (1,957) 423,922 521,475
Transportation and traveling 484,514 378,703 298,666 370,980 289,903 218,136
Professional fees, marketing and other related services 352,159 312,042 268,394 261,931 222,509 182,275
Entertainment, amusement and recreation 380,166 287,105 242,710 262,489 182,172 146,993
Stationery, supplies and postage 284,436 268,901 241,786 220,651 197,567 193,232
Repairs and maintenance 131,158 104,298 123,025 102,834 69,276 87,734
Miscellaneous (Notes 21 and 29) 2,054,634 1,867,552 1,073,986 1,619,159 1,490,658 941,489
TOTAL OPERATING EXPENSES 18,196,956 16,715,989 14,201,419 13,863,986 12,631,125 10,664,946
INCOME BEFORE INCOME TAX 10,387,526 9,012,108 7,587,522 10,369,613 9,156,456 7,541,435
PROVISION FOR INCOME TAX (Note 27) 2,271,422 1,489,177 1,126,552 2,259,233 1,642,484 1,083,139
NET INCOME P8,116,104 P7,522,931 P6,460,970 P8,110,380 P7,513,972 P6,458,296
Attributable to:
Equity holders of the Parent Company (Note 32) P8,110,379 P7,513,972 P6,458,296
Non-controlling interest 5,725 8,959 2,674
P8,116,104 P7,522,931 P6,460,970
Basic/Diluted Earnings Per Share (Note 32) P3.02 P2.91 P2.88

See accompanying Notes to Financial Statements.

116 C H I N A BA N K I N G C O R P O R AT I O N
STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)

Consolidated Parent Company

Years Ended December 31
2018 2017 2016 2018 2017 2016

NET INCOME P8,116,104 P7,522,931 P6,460,970 P8,110,380 P7,513,972 P6,458,296

OTHER COMPREHENSIVE INCOME (LOSS)
Items that recycle to profit or loss in subsequent
periods:
Changes in fair value of:
Financial assets at fair value through other
comprehensive income:
Fair value (loss) for the year, net of tax (451,866) – – (381,791) – –
Loss taken to profit or loss (Note 21) 2,104 – – 2,451 – –
Available-for-sale financial assets:
Fair value gain for the year, net of tax – 158,946 449,110 – 113,020 512,562
Gains taken to profit or loss (Note 21) – (365,145) (918,673) – (342,146) (856,031)
Share in changes in other comprehensive income of
an associate (Note 11) (126,713) (8,049) (5,457) (126,713) (8,049) (5,457)
Share in changes in other comprehensive income of
subsidiaries (Note 11) – – – (64,109) 35,552 (107,991)
Cumulative translation adjustment (52,900) (15,972) 12,455 (58,792) (29,255) (3,636)
Items that do not recycle to profit or loss in
subsequent periods:
Share in changes in other comprehensive income of
subsidiaries (Note 11) – – – 88,642 20,140 20,397
Remeasurement gain (loss) on defined benefit asset,
net of tax (Note 24) (165,213) 30,149 71,075 (255,359) 9,678 50,560
Remeasurement gain (loss) on life insurance reserves 31,374 (12,221) – 31,374 (12,221) –

OTHER COMPREHENSIVE LOSS FOR THE YEAR,

NET OF TAX (763,214) (212,292) (391,490) (764,297) (213,281) (389,596)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR P7,352,890 P7,310,639 P6,069,480 P7,346,083 P7,300,691 P6,068,700
Total comprehensive income attributable to:
Equity holders of the Parent Company P7,346,083 P7,300,691 P6,068,700
Non-controlling interest 6,807 9,948 780
P7,352,890 P7,310,639 P6,069,480

See accompanying Notes to Financial Statements.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 117

 STATEMENTS OF CHANGES IN EQUITY
(Amounts in Thousands)

Net Unrealized
(Losses) on
Financial
Assets at Fair
Capital Paid Value through
in Excess of Surplus Other
Capital Stock Par Value Reserves Surplus Comprehensive
(Note 23) (Note 23) (Notes 23 and 28) (Notes 23 and 28) Income (Note 9)
Balance at January 1, 2018 P26,847,717 P17,096,228 P926,689 P40,360,563 P–
Effect of initial application of PFRS 9 (Note 2) – – 2,732,628 (5,372,699) (126,556)
Balance at January 1, 2018, as restated 26,847,717 17,096,228 3,659,317 34,987,864 (126,556)
Total comprehensive income (loss) for the year – – – 8,110,379 (575,953)
Transfer from surplus to surplus reserves – – 371,691 (371,691) –
Issuance of common shares (P31.00 per share) 11,281 26,397 – – –
Cash dividends - P0.83 per share – – – (2,229,297) –
Balance at December 31, 2018 P26,858,998 P17,122,625 P4,031,008 P40,497,256 (P702,509)
Balance at January 1, 2017 P20,020,278 P6,987,564 P861,630 P36,889,099 P–
Transfer from surplus to surplus reserves – – 65,059 (65,059) –
Total comprehensive income (loss) for the year – – – 7,513,972 –
Issuance of common shares (P31.00 per share) 4,838,710 10,160,753 – – –
Transaction cost on the issuance of common shares – (52,089) – – –
Stock dividends - 8.00% 1,988,729 – – (1,988,729) –
Cash dividends - P0.80 per share – – – (1,988,720) –
Balance at December 31, 2017 P26,847,717 P17,096,228 P926,689 P40,360,563 P–
Balance at January 1, 2016 P18,537,285 P6,987,564 P828,406 P33,800,748 P–
Total comprehensive income (loss) for the year – – – 6,458,296 –
Additional acquisition of non-controlling interest – – – – –
Transfer from surplus to surplus reserves – – 33,224 (33,224) –
Stock dividends - 8.00% 1,482,993 – – (1,482,993) –
Cash dividends - P1.00 per share – – – (1,853,728) –
Balance at December 31, 2016 P20,020,278 P6,987,564 P861,630 P36,889,099 P–

See accompanying Notes to Financial Statements.

118 C H I N A BA N K I N G C O R P O R AT I O N
 Consolidated
Equity Attributable to Equity Holders of the Parent Company

Net Unrealized Remeasurement

Gains (Losses) Gain on Defined Remeasurement
on Available-for-Sale Benefit Asset Cumulative Loss on Non- Controlling
Financial Assets or Liability Translation Life Insurance Interest
(Note 9) (Note 24) Adjustment Reserve Total Equity (Note 11) Total Equity
(P1,813,280) P283,763 (P38,698) (P12,221) P83,650,761 P4,736 P83,655,497
1,813,280 – – – (953,346) (6,835) (960,181)
– 283,763 (38,698) (12,221) 82,697,415 (2,099) 82,695,316
– (166,716) (53,001) 31,375 7,346,084 6,806 7,352,890
– – – – – – –
– – – – 37,678 – 37,678
– – – – (2,229,297) – (2,229,297)
P– P117,047 (P91,699) P19,154 P87,851,880 P4,707 P87,856,587
(P1,598,600) P253,945 (P22,500) P– P63,391,416 (P5,212) P63,386,204
– – – – – – –
(214,680) 29,818 (16,198) (12,221) 7,300,691 9,948 7,310,639
– – – – 14,999,463 – 14,999,463
– – – – (52,089) – (52,089)
– – – – – – –
– – – – (1,988,720) – (1,988,720)
(P1,813,280) P283,763 (P38,698) (P12,221) P83,650,761 P4,736 P83,655,497
(P1,126,080) P183,155 (P34,634) P– P59,176,444 (P5,540) P59,170,904
(472,520) 70,790 12,134 – 6,068,700 780 6,069,480
– – – – – (452) (452)
– – – – – – –
– – – – – – –
– – – – (1,853,728) – (1,853,728)
(P1,598,600) P253,945 (P22,500) P– P63,391,416 (P5,212) P63,386,204

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 119

 STATEMENTS OF CHANGES IN EQUITY
(Amounts in Thousands)

Parent Company

Capital Paid in
Excess of Surplus
Capital Stock Par Value Reserves Surplus
(Note 23) (Note 23) (Notes 23 and 28) (Notes 23 and 28)
Balance at January 1, 2018 P26,847,717 P17,096,228 P926,689 P40,360,563
Effect of initial application of PFRS 9 (Note 2) – – 2,732,628 (5,372,699)
Balance at January 1, 2018, as restated P26,847,717 P17,096,228 P3,659,317 P34,987,864
Total comprehensive income (loss) for the year – – – 8,110,379
Transfer from surplus to surplus reserves – – 371,691 (371,691)
Issuance of common shares (P31.00 per share) 11,281 26,397 – –
Cash dividends - P0.83 per share – – (2,229,297)
Balance at December 31, 2018 P26,858,998 P17,122,626 P4,031,008 P40,497,256
Balance at January 1, 2017 P20,020,278 P6,987,564 P861,630 P36,889,099
Transfer from surplus to surplus reserves – – 65,059 (65,059)
Total comprehensive income (loss) for the year – – – 7,513,972
Issuance of common shares (P31.00 per share) 4,838,710 10,160,753 – –
Transaction cost on the issuance of common shares – (52,089) – –
Stock dividends - 8.00% 1,988,729 – – (1,988,729)
Cash dividends - P0.80 per share – – – (1,988,720)
Balance at December 31, 2017 P26,847,717 P17,096,228 P926,689 P40,360,563
Balance at January 1, 2016 P18,537,285 P6,987,564 P828,406 P33,800,748
Total comprehensive income (loss) for the year – – – 6,458,296
Transfer from surplus to surplus reserves – – 33,224 (33,224)
Stock dividends - 8.00% 1,482,993 – – (1,482,993)
Cash dividends - P1.00 per share – – – (1,853,728)
Balance at December 31, 2016 P20,020,278 P6,987,564 P861,630 P36,889,099

See accompanying Notes to Financial Statements.

120 C H I N A BA N K I N G C O R P O R AT I O N
 Net Unrealized
(Losses) on
Financial Net Unrealized
Assets at Fair Gains Remeasurement
Value through (Losses) on Gain on Defined
Other Available-for- Benefit Asset or Cumulative Remesasurement
Comprehensive Sale Financial Liability Translation Loss on Life
Income (Note 9) Assets (Note 9) (Note 24) Adjustment Insurance Reserve Total Equity
P– (P1,813,280) P283,763 (P38,698) (P12,221) P83,650,761
(126,556) 1,813,280 – – (953,346)
(P126,556) P– P283,763 (P38,698) (P12,221) P82,697,417
(575,954) – (166,716) (53,001) 31,374 7,346,081
– – – – –
– – – – – 37,678
– – – – – (2,229,297)
(P702,510) P– P117,047 (P91,699) P19,153 P87,851,880
P– (P1,598,600) P253,945 (P22,500) P– P63,391,416
– – – – – –
– (214,680) 29,818 (16,198) (12,221) 7,300,691
– – – – – 14,999,463
– – – – – (52,089)
– – – – – –
– – – – – (1,988,720)
P– (P1,813,280) P283,763 (P38,698) (P12,221) P83,650,761
P– (P1,126,080) P183,155 (P34,634) P– P59,176,444
– (472,520) 70,790 12,134 – 6,068,700
– – – – – –
– – – – – –
– – – – – (1,853,728)
P– (P1,598,600) P253,945 (P22,500) P– P63,391,416

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 121

 STATEMENTS OF CASH FLOWS
(Amounts in Thousands)

Consolidated Parent Company

Years Ended December 31
2018 2017 2016 2018 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P10,387,526 P9,012,108 P7,587,522 P10,369,611 P9,156,456 P7,541,435
Adjustments for:
Depreciation and amortization (Notes 12, 13 and 14) 1,297,685 1,217,489 1,124,786 947,908 877,240 775,210
Provision for impairment and credit losses (Note 16) 141,076 754,171 850,546 (1,957) 423,922 521,745
Securities gain on financial assets at fair value
through other comprehensive income and
investment securities at amortized cost
(Note 21) (9,624) – – (9,277) – –
Trading and securities gain on available-for-sale and
held-to-maturity financial assets (Note 21) – (365,145) (918,673) – (342,146) (856,031)
Gain on sale of investment properties (1,015,622) (670,612) (443,315) (925,831) (614,587) (338,088)
Gain on asset foreclosure and dacion transactions
(Note 13) (252,477) (157,415) (172,480) (57,676) (71,888) (140,747)
Share in net losses (income) of an associate
(Notes 2 and 11) (101,009) (73,133) 89,384 (101,009) (73,133) 89,384
Share in net (income) of subsidiaries
(Notes 2 and 11) – – – (695,356) (836,004) (464,999)
Changes in operating assets and liabilities:
Decrease (increase) in the amounts of:
Financial assets at FVPL 8,830,244 (8,510,654) (1,282,482) 9,554,643 (8,799,606) (1,590,640)
Loans and receivables (60,828,559) (63,393,487) (78,836,033) (57,994,624) (57,873,074) (70,542,734)
Other assets (1,263,617) 6,159 (1,225,573) (2,544,975) 275,322 (882,576)
Increase (decrease) in the amounts of:
Deposit liabilities 87,029,904 93,510,375 102,317,332 79,007,383 88,273,987 97,358,575
Manager’s checks 136,133 411,264 573,280 360,564 263,663 704,106
Accrued interest and other expenses 1,214,906 759,429 283,916 1,058,204 722,597 300,356
Other liabilities 1,960,943 177,618 827,790 2,393,871 (540,630) 759,981
Net cash generated from operations 47,527,509 32,678,167 30,776,000 41,361,482 30,842,119 33,234,977
Income taxes paid (1,732,819) (1,554,045) (973,575) (1,511,638) (1,274,667) (863,477)
Net cash provided by operating activities 45,794,690 31,124,122 29,802,425 39,849,844 29,567,452 32,371,500
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to bank premises, furniture, fixtures and
equipment (Note 12) (1,058,002) (1,752,173) (1,258,911) (825,096) (1,387,684) (1,065,308)
Additions to equity investments (Note 11) – – – (500,000) (500,000) (2,700,452)
Cash dividends from a subsidiary (Note 11) – – – 50,000 – –
Liquidation of a subsidiary (Note 11) – – – – – 50,000
Purchases of:
Investment securities at amortized cost (172,348,552) – – (167,337,112) – –
Financial assets at fair value through other
comprehensive income (44,399,340) – – (44,477,104) – –
Held-to-maturity financial assets – (23,618,560) (41,647,865) – (23,599,743) (41,007,909)
Available-for-sale financial assets – (54,304,672) (89,249,294) – (53,171,027) (87,747,373)
Proceeds from sale/maturity of:
Investment securities at amortized cost 65,109,637 – – 65,060,529 – –
Financial assets at fair value through other
comprehensive income 80,729,853 – – 80,494,863 – –
Held-to-maturity financial assets – 15,737,093 374,569 – 16,135,271 884,532
Available-for-sale financial assets – 41,891,950 104,653,914 – 41,500,714 103,940,382
Investment properties 1,810,112 1,335,946 977,963 1,458,379 846,974 675,003
Bank premises, furniture, fixtures and equipment 258,136 275,109 151,286 51,642 242,202 199,460
Net cash used in investing activities (69,898,150) (20,435,307) (25,998,338) (66,023,900) (19,933,293) (26,771,665)
(Forward)

122 C H I N A BA N K I N G C O R P O R AT I O N
 Consolidated Parent Company
Years Ended December 31
2018 2017 2016 2018 2017 2016
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bills payable P184,568,424 P252,268,556 P18,588,791 P184,568,424 P252,268,556 P18,588,791
Settlement of bills payable (164,859,923) (249,105,524) (20,718,973) (164,859,923) (249,105,524) (20,056,443)
Payments of cash dividends (Note 23) (2,229,297) (1,988,720) (1,853,728) (2,229,297) (1,988,720) (1,853,728)
Acquisitions of non-controlling interest (Note 11) – – (452) – – –
Proceeds from issuance of common shares (Note 23) 37,678 14,999,463 – 37,678 14,999,463 –
Transaction cost on the issuance of common shares
(Note 23) – (52,089) – (52,089)
Net cash provided by (used in) financing activities 17,516,882 16,121,687 (3,984,362) 17,516,882 16,121,687 (3,321,380)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (6,586,585) 26,810,502 (180,277) (8,657,174) 25,755,846 2,278,455
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR

Cash and other cash items 12,685,984 12,010,543 11,377,101 11,160,173 10,580,748 10,052,891
Due from Bangko Sentral ng Pilipinas (Note 7) 98,490,014 91,964,495 86,318,501 91,717,037 85,307,128 77,003,616
Due from other banks (Note 7) 15,641,476 11,332,236 21,243,492 14,066,620 9,689,165 19,200,544
Interbank Loans Receivable and SPURA (Note 8) 18,751,845 3,451,543 – 17,347,522 2,958,465 –
145,569,319 118,758,817 118,939,094 134,291,352 108,535,506 106,257,051
CASH AND CASH EQUIVALENTS AT END OF YEAR
Cash and other cash items 15,639,474 12,685,984 12,010,543 13,705,304 11,160,173 10,580,748
Due from Bangko Sentral ng Pilipinas (Note 7) 101,889,773 98,490,014 91,964,495 95,092,944 91,717,037 85,307,128
Due from other banks (Note 7) 9,455,447 15,641,476 11,332,236 7,837,894 14,066,620 9,689,165
Securities purchased under resale agreements (Note 8) 11,998,040 18,751,845 3,451,543 8,998,040 17,347,522 2,958,465
P138,982,734 P145,569,319 P118,758,817 P125,634,182 P134,291,352 P108,535,506

OPERATING CASH FLOWS FROM INTEREST

Consolidated Parent Company

As of December 31
2018 2017 2016 2018 2017 2016
Interest paid P11,361,726 P6,652,755 P5,028,667 P9,595,463 P5,359,209 P3,812,560
Interest received 33,233,827 25,835,369 21,498,837 28,041,653 21,322,995 17,273,294

See accompanying Notes to Financial Statements.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 123

2018 Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

China Banking Corporation (the Parent Company) is a publicly listed universal bank incorporated in the Philippines. The Parent Company
acquired its universal banking license in 1991. It provides expanded commercial banking products and services such as deposit products,
loans and trade finance, domestic and foreign fund transfers, treasury products, trust products, foreign exchange, corporate finance and
other investment banking services through a network of 458 and 436 local branches as of December 31, 2018 and 2017, respectively.

The Parent Company acquired its original Certification of Incorporation issued by the Securities and Exchange Commission (SEC) on
July 20, 1920. On December 4, 1963, the Board of Directors (BOD) of the Parent Company approved the Amended Articles of Incorporation
to extend the corporate term of the Parent Company for another 50 years or until July 20, 2020, which was confirmed by the stockholders
on December 23, 1963, and approved by the SEC on October 5, 1964. On March 2, 2016, the BOD approved the amendment of the
Third Article of the Parent Company’s Articles of Incorporation, to further extend the corporate term for another 50 years from and after
July 20, 2020, the expiry date of its extended term. The approval was ratified by the stockholders during their scheduled annual meeting
on May 5, 2016. On November 7, 2016, the SEC issued the Certificate of Filing of Amended Articles of Incorporation, amending the Third
Article thereof to extend the term of corporate existence of the Parent Company.

The Parent Company has the following subsidiaries:

Effective Percentages of
Ownership Country of
Subsidiary 2018 2017 Incorporation Principal Activities
Chinabank Insurance Brokers, Inc. (CIBI) 100.00% 100.00% Philippines Insurance brokerage
CBC Properties and Computer Center, Inc. (CBC-PCCI) 100.00% 100.00% Philippines Computer services
China Bank Savings, Inc. (CBSI) 98.29% 98.29% Philippines Retail and consumer banking
China Bank Capital Corporation (CBCC) 100.00% 100.00% Philippines Investment house
CBC Assets One (SPC) Inc. 100.00% 100.00% Philippines Special purpose corporation
China Bank Securities Corporation (CBCSec)* 100.00% 100.00% Philippines Stock Brokerage
*Obtained control on March 6, 2017, 100% owned through CBCC (see note 11)

The Parent Company has no ultimate parent company. SM Investments Corporation, its significant investor, has effective ownership in the
Parent Company of 20.30% and 19.90% as of December 31, 2018 and 2017, respectively.

The Parent Company’s principal place of business is at 8745 Paseo de Roxas cor. Villar St., Makati City.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation
The accompanying consolidated financial statements include the financial statements of the Parent Company and its subsidiaries (collectively
referred to as “the Group”).

The accompanying financial statements have been prepared on a historical cost basis except for financial instruments at fair value through
profit or loss (FVPL), financial assets at fair value through other comprehensive income (FVOCI) and available-for-sale (AFS) financial assets.
The financial statements are presented in Philippine peso, and all values are rounded to the nearest thousand peso except when otherwise
indicated.

The financial statements of the Parent Company reflect the accounts maintained in the Regular Banking Unit (RBU) and Foreign Currency
Deposit Unit (FCDU). The financial statements of these units are combined after eliminating inter-unit accounts.

Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured
using that functional currency. The functional currency of the Parent Company’s subsidiaries is the Philippine peso.

1
 Statement of Compliance
The financial statements of the Group and the Parent Company have been prepared in compliance with Philippine Financial Reporting
Standards (PFRS).

Presentation of Financial Statements

The balance sheets of the Group and of the Parent Company are presented in order of liquidity. An analysis regarding recovery of assets or
settlement of liabilities within 12 months after the reporting date (current) and more than 12 months after the reporting date (non-current) is
presented in Note 22.

Financial assets and financial liabilities are offset and the net amount reported in the balance sheets only when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability
simultaneously. The Group and the Parent Company assess that they have currently enforceable right of offset if the right is not contingent
on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the
Group, the Parent Company and all of the counterparties.

Income and expenses are not offset in the statement of income unless required or permitted by any accounting standard or interpretation,
and as specifically disclosed in the accounting policies of the Group and the Parent Company.

Basis of Consolidation and Investments in Subsidiaries

The consolidated financial statements of the Group are prepared for the same reporting year as the Parent Company, using consistent
accounting policies. All significant intra-group balances, transactions and income and expenses resulting from intra-group transactions are
eliminated in full.

Subsidiaries are consolidated from the date on which control is transferred to the Parent Company.
The Group controls an investee if and only if the Group has:

• power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances
in assessing whether it has power over an investee, including:

• the contractual arrangement with the other vote holders of the investee
• rights arising from other contractual arrangements
• the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of
the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year
are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the
subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Group and
to the non-controlling interests. When necessary, adjustments are made to the financial statements of the subsidiary to bring its accounting
policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating
to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses
control over a subsidiary, it:

• Derecognizes the assets (including goodwill) and liabilities of the subsidiary

• Derecognizes the carrying amount of any non-controlling interest
• Derecognizes the related OCI recorded in equity and recycle the same to profit or loss or surplus
• Recognizes the fair value of the consideration received
• Recognizes the fair value of any investment retained
• Recognizes the remaining difference in profit or loss
• Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate, as
would be recognized if the Group had directly disposed of the related assets or liabilities

2 CHINA BANKING CO RPORATI ON

Non-Controlling Interest
Non-controlling interest represents the portion of profit or loss and net assets not owned, directly or indirectly, by the Parent Company.

Non-controlling interest is presented separately in the consolidated statement of income, consolidated statement of comprehensive income,
and within equity in the consolidated balance sheet, separately from parent shareholders’ equity. Any losses applicable to the non-controlling
interest are allocated against the interests of the non-controlling interest even if this results in the non-controlling interest having a deficit
balance.

Changes in Accounting Policies and Disclosures

The accounting policies adopted are consistent with those of the previous financial year except for the following new, amendments and
improvements to PFRS, Philippine Accounting Standards (PAS) and Philippine Interpretation which became effective as of January 1, 2018.
Except as otherwise indicated, these changes in the accounting policies did not have any significant impact on the financial position or
performance of the Group:

• New and Amended Standards

• Amendments to PFRS 2, Share-based Payment, Classification and Measurement of Share-based Payment Transactions
• Amendments to PFRS 4, Insurance Contracts, Applying PFRS 9, Financial Instruments, with PFRS 4
• Philippine Interpretation IFRIC-22, Foreign Currency Transactions and Advance Consideration

• Annual Improvements to PFRSs (2014 – 2017 Cycle)

• Amendments to PAS 28, Investments in Associates and Joint Ventures, Measuring an Associate or Joint Venture at Fair Value
• Amendments to PAS 40, Investment Property, Transfers of Investment Property

Standard that has been adopted and that is deemed to have significant impact on the financial statements or performance of the Group is
described below:

PFRS 9, Financial Instruments

The Group adopted PFRS 9 on January 1, 2018 following the modified retrospective approach. PFRS 9 replaced PAS 39, Financial
Instruments: Recognition and Measurement.

Under the modified retrospective approach, the Group did not restate the prior-period comparative consolidated financial statements and
remains to report the comparative information for 2017 and 2016 under PAS 39. Accordingly, the 2017 and 2016 comparative financial
statements are not comparable to the information presented for 2018. Differences in the carrying amounts of financial instruments resulting
from the adoption of PFRS 9 are recognized in the opening January 1, 2018 surplus and OCI as if the Group had always followed the new
requirements.

As a result of applying PFRS 9’s requirements on classification and measurement of financial assets, the opening January 1, 2018 equity in
the Group’s and Parent Company’s balance sheet increased by P1.78 billion and P1.67 billion, respectively, before deferred tax effects. This
change resulted from reclassifications of financial assets depending on the Group’s and the Parent Company’s application of its business
models and its assessment of the financial assets’ cash flow characteristics. However, applying PFRS 9’s requirements on the recognition of
expected credit losses decreased the opening January 1, 2018 equity in the Group’s and Parent Company’s balance sheet by P3.59 billion and
P3.09 billion, respectively, before deferred tax effects. Impairment under ECL is now dependent upon whether there have been significant
increases in the credit risk of the Group’s and Parent Company’s financial assets since initial recognition and on the Group’s and Parent
Company’s evaluation of factors relevant to the measurement of expected credit losses such as a range of possible outcomes and information
about past events, current conditions and forecasts of future economic conditions. Deferred tax asset recognized due to adoption of PFRS
9 amounted to P0.81 billion for the Group and P0.80 billion for the Parent Company.

The accounting policies adopted by the Group as a result of adopting PFRS 9 are discussed in page 8.

The adoption of PFRS 9 did not have an impact on the classification and measurement of the Group’s and the Parent Company’s financial
liabilities and on the application of hedge accounting.

3
 The impact of adopting PFRS 9 as of January 1, 2018 follows (amounts in thousands):

Consolidated
PAS 39 Remeasurement PFRS 9
Category Amount Re-classifications ECL Other Category Amount
Assets
Cash and other cash items Loans and receivables P12,685,984 P− P− P− Amortised cost P12,685,984
Due from BSP Loans and receivables 98,490,014 − − − Amortised cost 98,490,014
Due from Other Banks Loans and receivables 15,641,476 − − − Amortised cost 15,641,476
SPURA Loans and receivables 18,751,845 − − − Amortised cost 18,751,845
Loans and receivables Loans and receivables 448,970,942 (1,000,040) (1,781,992) − Amortised cost 446,188,910
Accrued interest receivable Loans and receivables 3,718,505 − (36,195) − Amortised cost 3,682,310
Other financial assets Loans and receivables 4,412,643 − (14,459) − Amortised cost 4,398,184
Held for trading FVPL 12,493,615 2,446,099 − (8,133) FVPL (mandatory) 14,931,581
Financial assets designated
at FVPL FVPL 3,411,686 (3,411,686) − − FVPL (designated) −
Derivative assets FVPL 333,587 − − − FVPL (mandatory) 333,587
Investment securities AFS 46,445,391 (39,153,620) 82,267 FVOCI 7,374,038
HTM 65,286,267 41,119,247 (89,344) 1,703,105 Amortised cost 108,019,275
P730,641,955 P− (P1,921,990) P1,777,239 P730,497,204
Liabilities
Loan commitments and financial guarantee
contracts P− P− (P1,670,992) P− P−

Consolidated
Balance at January 1, 2018
Equity Balance at January 1, 2018 Transition adjustments (as restated)
Surplus P40,360,563 (P5,372,699) P34,987,865
Surplus reserves 926,689 2,732,628 3,659,317
NUGL (1,813,280) 1,686,724 (126,556)
P39,473,972 (P953,346) P38,520,626

Parent Company
PAS 39 Remeasurement PFRS 9
Category Amount Re-classifications ECL Other Category Amount
Assets
Cash and other cash items Loans and receivables P11,160,173 P− P− P− Amortised cost P11,160,173
Due from BSP Loans and receivables 91,717,037 − − − Amortised cost 91,717,037
Due from Other Banks Loans and receivables 14,066,620 − − − Amortised cost 14,066,620
SPURA Loans and receivables 17,347,522 − − − Amortised cost 17,347,522
Loans and receivables Loans and receivables 386,554,498 (1,000,040) (1,390,961) − Amortised cost 384,163,497
Accrued interest receivable Loans and receivables 3,189,083 − − − Amortised cost 3,189,083
Other financial assets Loans and receivables 2,135,717 − − − Amortised cost 2,135,717
Held for trading FVPL 12,311,550 2,581,497 − (8,133) FVPL (mandatory) 14,884,914
Financial assets designated
at FVPL FVPL 3,411,686 (3,411,686) − − FVPL (designated) −
Derivative assets FVPL 333,587 − − − FVPL (mandatory) 333,587
Investment securities AFS 42,937,083 (37,714,189) − 102,267 FVOCI 5,325,161
HTM 61,533,493 39,544,418 (83,618) 1,578,921 Amortised cost 102,573,214
P646,698,049 P− (P1,474,579) P1,673,055 P646,896,525
Liabilities
Loan commitments and financial guarantee
contracts P− P− (P1,614,933) P− P−

4 CHINA BANKING CO RPORATI ON

 Parent Company
Balance at January 1, 2018
Equity Balance at January 1, 2018 Transition adjustments (as restated)
Surplus P40,360,564 (P5,074,296) P35,286,268
Surplus reserves 926,689 2,434,227 3,360,916
NUGL (1,813,280) 1,686,724 (126,556)
P39,473,972 (P953,346) P38,520,626

In January 1, 2018, the Group reclassified the following:

a. a portion of its previous held-to-maturity investments with carrying value of P2.82 billion as FVOCI investments. These instruments had
contractual cash flows that were solely payments for principal and interests and were held for liquidity management; and

b. a portion of its AFS investments and held-to-maturity investments with carrying value of P2.32 billion and P2.78 billion, respectively, as
FVTPL investments. These instruments either did not have contractual cash flows that were solely payments for principal and interests,
or were intended for active trading and were held with the intention to sell.

In January 1, 2018, the Parent Company reclassified the following:

a. a portion of its previous held-for-trading investments and AFS investments with carrying value of P5.93 billion and P38.22 billion,
respectively, as investment securities at amortized cost. These instruments had contractual cash flows that were solely payments
for principal and interests, were not intended for active trading and were held with the intention to collect cash flows and without the
intention to sell;
b. a portion of its previous held-to-maturity investments and held-for-trading investments with carrying value of P2.82 billion and
P135.40 million, respectively, as FVOCI investments. These instruments had contractual cash flows that were solely payments for
principal and interests and were held for liquidity management;
c. a portion of its AFS investments and held-to-maturity investments with carrying value of P2.32 billion and P2.78 billion, respectively, as
FVTPL investments. These instruments either did not have contractual cash flows that were solely payments for principal and interests,
or were intended for active trading and were held with the intention to sell.

Had the FVPL securities not been transferred, additional fair value loss of P389.47 million would have been charged to profit or loss.

In addition, the Group has presented separately the interest revenue, calculated using effective interest method, from other interest revenue.
As a result, Interest income on Investment securities at amortized cost and FVOCI is presented separately from Interest income on trading
securities at fair value through profit or loss. Previously, these interest income items were presented together as Interest income on trading
and investment securities.

PFRS 15, Revenue from Contracts with Customers

PFRS 15 supersedes PAS 11, Construction Contracts, PAS 18, Revenue and related Interpretations and it applies, with limited exceptions, to
all revenue arising from contracts with customers. PFRS 15 establishes a five-step model to account for revenue arising from contracts with
customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer.

PFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each
step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a
contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Group adopted PFRS 15 using the modified retrospective method of adoption with the date of initial application of January 1, 2018.
Under this method, the standard can be applied either to all contracts at the date of initial application or only to contracts that are not
completed at this date. The Group elected to apply the standard to all contracts as at January 1, 2018.

There were no adjustments recognized to the opening balance of retained earnings at the date of initial application as an effect of initially
applying PFRS 15. Also, the comparative information was not restated and continues to be reported under PAS 11, PAS 18 and related
Interpretations.

Loyalty points program on credit card business

Before the adoption of PFRS 15, the loyalty program offered by the Group resulted in the accrual of loyalty expenses for the fair value of
estimated redeemable issued loyalty points. The Group concluded that under PFRS 15 the loyalty points give rise to a separate performance
obligation because they provide a material right to the customer and a portion of the transaction price was allocated to the loyalty points
awarded to customers. The Group determined that, considering the relative stand-alone selling prices, the amount allocated to the loyalty
points did not have material impact compared to the previous accounting policy.

Therefore, upon the adoption of PFRS 15, there were no adjustments recognized as at January 1 and December 31, 2018.

5
 Significant Accounting Policies
Foreign Currency Translation
The consolidated financial statements are presented in Philippine peso, which is the Parent Company’s functional currency.

Transactions and balances

The books of accounts of the RBU are maintained in Philippine peso, the RBU’s functional currency, while those of the FCDU are maintained
in United States (US) dollars (USD), the FCDU’s functional currency. For financial reporting purposes, the foreign currency-denominated
monetary assets and liabilities in the RBU are translated in Philippine peso based on the Philippine Dealing System (PDS) closing rate
prevailing at end of the year, and foreign currency-denominated income and expenses, at the exchange rates on transaction dates. Foreign
exchange differences arising from restatements of foreign currency-denominated assets and liabilities are credited to or charged against
operations in the period in which the rates change. Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.

FCDU
As at the reporting date, the assets and liabilities of the FCDU are translated into the Parent Company’s presentation currency (the Philippine
Peso) at the PDS closing rate prevailing at the reporting date, and its income and expenses are translated at the PDSWAR for the year.
Exchange differences arising on translation are taken directly to the statement of comprehensive income under ‘Cumulative translation
adjustment’. Upon actual remittance or transfer of the FCDU income to RBU, the related exchange difference arising from translation lodged
under ‘Cumulative translation adjustment’ is recognized in the statement of income of the RBU books.

Fair Value Measurement

The Group measures financial instruments, such as financial instruments at FVPL and AFS financial assets at fair value at each reporting date.
Also, fair values of financial instruments measured at amortized cost are disclosed in Note 5.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability
takes place either:

• in the principal market for the asset or liability, or

• in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using
the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic
best interest.

If an asset or a liability measured at fair value has a bid price and an ask price, the price within the bid - ask spread that is most representative
of fair value in the circumstances shall be used to measure fair value regardless of where the input is categorized within the fair value hierarchy.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the
asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have
occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash and other cash items, due from BSP and other banks, and
securities purchased under resale agreement (SPURA) that are convertible to known amounts of cash which have original maturities of three
months or less from dates of placements and that are subject to an insignificant risk of changes in value. Due from BSP includes the statutory
reserves required by the BSP which the Group considers as cash equivalents wherein withdrawals can be made to meet the Group’s cash
requirements as allowed by the BSP.

6 CHINA BANKING CO RPORATI ON

Securities Purchased under Resale Agreement
Securities purchased under agreements to resell at a specified future date (‘reverse repos’) are not recognized in the balance sheet. The
corresponding cash paid including accrued interest, is recognized in the balance sheet as SPURA. The difference between the purchase
price and resale price is treated as interest income and is accrued over the life of the agreement using the EIR method.

Financial Instruments - Initial Recognition

Date of recognition
Purchases or sales of financial assets, except for derivative instruments, that require delivery of assets within the time frame established by
regulation or convention in the marketplace are recognized on the settlement date. Settlement date accounting refers to (a) the recognition
of an asset on the day it is received by the Group, and (b) the derecognition of an asset and recognition of any gain or loss on disposal on
the day that such asset is delivered by the Group. Any change in fair value of unrecognized financial asset is recognized in the statement
of income for assets classified as financial assets at FVPL, and in equity for assets classified as Financial assets at FVOCI and AFS financial
assets. Derivatives are recognized on a trade date basis. Deposits, amounts due to banks and customers loans and receivables are
recognized when cash is received by the Group or advanced to the borrowers.

Initial recognition of financial instruments

All financial instruments are initially recognized at fair value. Except for financial assets and financial liabilities at FVPL, the initial measurement
of financial instruments includes transaction costs.

‘Day 1’ difference
Where the transaction price in a non-active market is different with the fair value from other observable current market transactions in the
same instrument or based on a valuation technique whose variables include only data from observable market, the Group recognizes the
difference between the transaction price and fair value (a ‘Day 1’ difference) in the statement of income. In cases where the transaction
price used is made of data which is not observable, the difference between the transaction price and model value is only recognized in
the statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group
determines the appropriate method of recognizing the ‘Day 1’ difference amount.

Classification, Reclassification and Impairment of Financial Assets (PFRS 9)

Classification and measurement

Under PFRS 9, the classification and measurement of financial assets is driven by the entity’s contractual cash flow characteristics of the
financial assets and business model for managing the financial assets.

As part of its classification process, the Group assesses the contractual terms of financial assets to identify whether they meet the ‘solely
payments of principal and interest’ (SPPI) test. ‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial
recognition and may change over the life of the financial asset (e.g. if there are repayments of principal or amortization of the premium or
discount).

The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit
risk. To make the SPPI assessment, the Bank applies judgement and considers relevant factors such as the currency in which the financial
asset is denominated, and the period for which the interest rate is set. In contrast, contractual terms that introduce a more than de minimis
exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual
cash flows that are solely payments of principal and interest on the amount outstanding. In such cases, the financial asset is required to be
measured at FVTPL.

The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business
objective.

The Bank’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based
on observable factors such as:
• how the performance of the business model and the financial assets held within that business model are evaluated and reported to the
entity’s key management personnel
• the risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular,
the way those risks are managed
• how managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets
managed or on the contractual cash flows collected)
• the expected frequency, value and timing of sales are also important aspects of the Group’s assessment

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into
account. If cash flows after initial recognition are realized in a way that is different from the Group’s original expectations, the Group does not
change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing
newly originated or newly purchased financial assets going forward.

7
 The Group’s measurement categories are described below:

Investment Securities at Amortized Cost

Financial assets are measured at amortized cost if both of the following conditions are met:
• the asset is held within the Group’s business model whose objective is to hold financial assets in order to collect contractual cash flows;
and
• the contractual terms of the instrument give rise, on specified dates, to cash flows that are SPPI on the principal amount outstanding.

Financial assets meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortized
cost using the effective interest method, less any impairment in value.

The Group’s investment securities at amortized cost are presented in the statement of financial position as Due from BSP, Due from other
banks, Interbank loans receivable and SPURA, investment securities at amortized cost, Loans and receivables, Accrued interest receivables
and certain accounts under Other assets.

The Group may irrevocably elect at initial recognition to classify a financial asset that meets the amortized cost criteria above as at FVTPL if
that designation eliminates or significantly reduces an accounting mismatch had the financial asset been measured at amortized cost.

Financial Assets at FVTPL

Debt instruments that neither meet the amortized cost nor the FVOCI criteria, or that meet the criteria but the Group has chosen to designate
as at FVTPL at initial recognition, are classified as financial assets at FVTPL. Equity investments are classified as financial assets at FVTPL,
unless the Group designates an equity investment that is not held for trading as at FVOCI at initial recognition. The Group’s financial assets at
FVTPL include government securities, corporate bonds and equity securities which are held for trading purposes.

A financial asset is considered as held for trading if:

• it has been acquired principally for the purpose of selling it in the near term;
• on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a
recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument or financial guarantee.

Financial assets at FVTPL are measured at fair value. Related transaction costs are recognized directly as expense in profit or loss. Gains and
losses arising from changes (mark-to-market) in the fair value of the financial assets at FVTPL and gains or losses arising from disposals of
these instruments are included in ‘Gains (losses) on trading and investment securities’ account in the statements of income.

Interest recognized based on the modified effective interest rate of these investments is reported in statements of income under ‘Interest
income’ account while dividend income is reported in statements of income under ‘Miscellaneous income’ account when the right of payment
has been established.

Financial Assets at FVOCI - Equity Investments

At initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate equity investments as
at FVOCI; however, such designation is not permitted if the equity investment is held by the Group for trading. The Group has designated
certain equity instruments as at FVOCI on initial application of PFRS 9.

Financial assets at FVOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value, with no
deduction for any disposal costs. Gains and losses arising from changes in fair value are recognized in other comprehensive income and
accumulated in Net unrealized fair value gains (losses) on investment securities in the statements of financial position. When the asset
is disposed of, the cumulative gain or loss previously recognized in the Net unrealized fair value gains (losses) on investment securities
account is not reclassified to profit or loss, but is reclassified directly to Surplus free account. Any dividends earned on holding these equity
instruments are recognized in profit or loss under ‘Miscellaneous Income’ account.

Financial Assets at FVOCI - Debt Investments

The Group applies the new category under PFRS 9 of debt instruments measured at FVOCI when both of the following conditions are met:
• the instrument is held within a business model, the objective of which is achieved by both collecting contractual cash flows and selling
financial assets, and
• the contractual terms of the financial asset meet the SPPI test.

FVOCI debt instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value being recognized
in OCI. Interest income and foreign exchange gains and losses are recognized in profit or loss in the same manner as for financial assets
measured at amortized cost. The ECL calculation for financial assets at FVOCI is explained in the ‘Impairment of Financial Assets’ section.

On derecognition, cumulative gains or losses previously recognized in OCI are reclassified from OCI to profit or loss.

8 CHINA BANKING CO RPORATI ON

The Group can only reclassify financial assets if the objective of its business model for managing those financial assets changes. Accordingly,
the Group is required to reclassify financial assets:
(i) from amortized cost to FVTPL, if the objective of the business model changes so that the amortized cost criteria are no longer met; and,
(ii) from FVTPL to amortized cost, if the objective of the business model changes so that the amortized cost criteria start to be met and the
characteristic of the instrument’s contractual cash flows meet the amortized cost criteria.

A change in the objective of the Group’s business model will be effected only at the beginning of the next reporting period following the
change in the business model.

Impairment of financial assets

The adoption of PFRS 9 has fundamentally changed the Group’s impairment method by replacing PAS 39’s incurred loss approach with a
forward-looking ECL approach. From January 1, 2018, the Group has been recording the allowance for expected credit losses for all loans
and other debt financial assets carried at amortized cost, financial assets carried at FVOCI, together with loan commitments and financial
guarantee contracts. Equity instruments are not subject to impairment under PFRS 9.

ECL represent credit losses that reflect an unbiased and probability-weighted amount which is determined by evaluating a range of possible
outcomes, the time value of money and reasonable and supportable information about past events, current conditions and forecasts of
future economic conditions. ECL allowances are measured at amounts equal to either (i) 12-month ECL or (ii) lifetime ECL for those financial
instruments which have experienced a significant increase in credit risk (SICR) since initial recognition (General Approach). The 12-month ECL
is the portion of lifetime ECL that results from default events on a financial instrument that are possible within the 12 months after the reporting
date. Lifetime ECL are credit losses that results from all possible default events over the expected life of a financial instrument.

For non-credit-impaired financial instruments:

• Stage 1 is comprised of all non-impaired financial instruments which have not experienced a SICR since initial recognition. The Group
and the Parent Company recognizes a 12-month ECL for Stage 1 financial instruments.
• Stage 2 is comprised of all non-impaired financial instruments which have experienced a SICR since initial recognition. The Group and
the Parent Company recognizes a lifetime ECL for Stage 2 financial instruments.

For credit-impaired financial instruments:

• Financial instruments are classified as Stage 3 when there is objective evidence of impairment as a result of one or more loss events
that have occurred after initial recognition with a negative impact on the estimated future cash flows of a loan or a portfolio of loans. The
ECL model requires that lifetime ECL be recognized for impaired financial instruments.

The Group uses internal credit assessment and approvals at various levels to determine the credit risk of exposures at initial recognition.
Assessment can be quantitative or qualitative and depends on the materiality of the facility or the complexity of the portfolio to be assessed.

The Group defines a financial instrument as in default, which is fully aligned with the definition of credit impaired, in all cases when the
borrower becomes at least 90 days past due on its contractual payments. As a part of a qualitative assessment of whether a customer is in
default, the Group also considers a variety of instances that may indicate unlikeliness to pay. When such events occur, the Group carefully
considers whether the event should result in treating the customer as defaulted. An instrument is considered to be no longer in default (i.e.,
to have cured) when it no longer meets any of the default criteria for a consecutive period of 180 days (i.e. consecutive payments from the
borrowers for 180 days).

The criteria for determining whether credit risk has increased significantly vary by portfolio and include quantitative changes in probabilities of
default and qualitative factors such as downgrade in the credit rating of the borrowers and a backstop based on delinquency. The credit risk
of a particular exposure is deemed to have increased significantly since initial recognition if, based on the Group’s internal credit assessment,
the borrower or counterparty is determined to require close monitoring or with well-defined credit weaknesses. For exposures without internal
credit grades, if contractual payments are more than a specified days past due threshold (i.e. 30 days), the credit risk is deemed to have
increased significantly since initial recognition. Days past due are determined by counting the number of days since the earliest elapsed due
date in respect of which full payment has not been received. In subsequent reporting periods, if the credit risk of the financial instrument
improves such that there is no longer a SICR since initial recognition, the Bank shall revert to recognizing a 12-month ECL.

ECL is a function of the PD, EAD and LGD, with the timing of the loss also considered, and is estimated by incorporating forward-looking
economic information and through the use of experienced credit judgment.

The PD represents the likelihood that a credit exposure will not be repaid and will go into default in either a 12-month horizon for Stage 1 or
lifetime horizon for Stage 2. EAD represents an estimate of the outstanding amount of credit exposure at the time a default may occur. For
off-balance sheet and undrawn amounts, EAD includes an estimate of any further amounts to be drawn at the time of default. LGD is the
amount that may not be recovered in the event of default. LGD takes into consideration the amount and quality of any collateral held. Please
refer to Note 6 for other information related to the Bank’s models for PD, EAD, and LGD.

The calculation of ECLs, including the estimation of PD, EAD, LGD and discount rate is made, on an individual basis for most of the Group’s
financial assets, and on a collective basis for retail products such as credit card receivables. The collective assessments are made separately
for portfolios of facilities with similar credit risk characteristics.

9
 In certain circumstances, the Bank modifies the original terms and conditions of a credit exposure to form a new loan agreement or
payment schedule. The modifications can be given depending on the borrower’s or counterparty’s current or expected financial difficulty.
The modifications may include, but are not limited to, change in interest rate and terms, principal amount, maturity date, date and amount
of periodic payments and accrual of interest and charges. Distressed restructuring with indications of unlikeliness to pay are categorized as
impaired accounts and are moved to Stage 3.

Classification, Reclassification and Impairment of Financial Assets (Prior to Adoption of PFRS 9)

The Group classifies its financial assets in the following categories: financial assets at FVPL, held-to-maturity (HTM) financial assets, AFS
financial assets, and loans and receivables while financial liabilities are classified as financial liabilities at FVPL and financial liabilities carried
at amortized cost. The classification depends on the purpose for which the investments were acquired and whether they are quoted in an
active market. Management determines the classification of its investments at initial recognition and, where allowed and appropriate, re-
evaluates such designation at every reporting date.

Financial instruments at FVPL

Financial instruments at FVPL include financial assets and liabilities held for trading purposes, financial assets and financial liabilities designated
upon initial recognition as at FVPL, and derivative instruments.

Financial instruments held for trading

Financial instruments held for trading (HFT) include government and corporate debt securities purchased and held principally with the intention
of selling them in the near term. These securities are carried at fair value, and realized and unrealized gains and losses on these instruments
are recognized as ‘Trading and securities gain - net’ in the statement of income. Interest earned or incurred on financial instruments held
for trading is reported in the statement of income under ‘Interest income’ (for financial assets) and ‘Interest expense’ (for financial liabilities).

Financial instruments designated at FVPL

Financial instruments are designated as at FVPL by management on initial recognition when any of the following criteria is met:

• the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or
liabilities or recognizing gains or losses on them on a different basis; or
• the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance
evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or
• 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.

Financial instruments at FVPL are recorded in the balance sheet at fair value. Changes in fair value are recognized in ‘Trading and securities
gain - net’ in the statement of income. Interest earned or incurred is reported in the statement of income under ‘Interest income’ or ‘Interest
expense’, respectively, while dividend income is reported in the statement of income under ‘Miscellaneous income’ when the right to receive
payment has been established.

As of December 31, 2017, financial assets designated as at FVPL consist of instruments in shares of stocks.

Derivative instruments
The Parent Company is a party to derivative instruments, particularly, forward exchange contracts, interest rate swaps (IRS) and warrants.
These contracts are entered into as a service to customers and as a means of reducing and managing the Parent Company’s foreign
exchange risk, and interest rate risk as well as for trading purposes, but are not designated as hedges. Such derivative financial instruments
are stated at fair value through profit or loss.

Any gains or losses arising from changes in fair value of derivative instruments that do not qualify for hedge accounting are taken directly to
the statement of income under ‘Foreign exchange gain (loss) - net’ for forward exchange contracts and ‘Trading and securities gain-net’ for
IRS and warrants.

Embedded derivatives that are bifurcated from the host financial and non-financial contracts are also accounted for as financial instruments
at FVPL.

An embedded derivative is separated from the host contract and accounted for as a derivative if all of the following conditions are met:
(a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristic of the
host contract; (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
(c) the hybrid or combined instrument is not recognized at fair value through profit or loss.

The Group assesses whether embedded derivatives are required to be separated from the host contracts when the Group first becomes a
party to the contract. Reassessment of embedded derivatives is only done when there are changes in the contract that significantly modifies
the contractual cash flows that would otherwise be required. The accounting policy on embedded derivatives in host financial liability and
non-financial contracts is still applied under PFRS 9.

10 CHINA BANKING CO RPORATI ON

Held-to-maturity financial assets
HTM financial assets are quoted non-derivative financial assets with fixed or determinable payments and fixed maturities for which the
Group’s management has the positive intention and ability to hold to maturity. Where the Group would sell other than an insignificant amount
of HTM financial assets, the entire category would be tainted and reclassified as AFS financial assets and the Group would be prohibited
from classifying any financial asset under HTM category during the current year and two succeeding years thereafter unless for sales or
reclassifications that:
• are so close to maturity or the financial asset’s call date (for example, less than three months before maturity) that changes in the market
rate of interest would not have a significant effect on the financial asset’s fair value;
• occur after the entity has collected substantially all of the financial asset’s original principal through scheduled payments or prepayments;
or
• are attributable to an isolated event that is beyond the entity’s control, is non-recurring and could not have been reasonably anticipated
by the entity.

After initial measurement, these investments are subsequently measured 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 (EIR). The amortization is included in ‘Interest income’ in the statement of income. Gains and losses are
recognized in income when the HTM financial assets are derecognized and impaired, as well as through the amortization process. The losses
arising from impairment of such investments are recognized in the statement of income under ‘Provision for impairment and credit losses’.
The effects of translation of foreign currency-denominated HTM financial assets are recognized in the statement of income. This account
consists of government and corporate debt securities.

Loans and receivable

This accounting policy relates to the balance sheet captions ‘Due from BSP’, ‘Due from other banks’, ‘SPURA’, ‘Loans and receivables’,
‘Accrued interest receivable’, ‘Accounts receivable’, ‘Sales contract receivable’ (SCR), ‘Returned checks and other cash items’ (RCOCI), and
‘Miscellaneous financial assets’. These are financial assets with fixed or determinable payments that are not quoted in an active market,
other than:

• those that the Group intends to sell immediately or in the near term and those that the Group, upon initial recognition, designates as
FVPL;
• those that the Group, upon initial recognition, designates as AFS; and
• those for which the Group may not cover substantially all of its initial investment, other than because of credit deterioration.

After initial measurement, these are subsequently measured at amortized cost using the effective interest method, less allowance for
impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an
integral part of the EIR. The amortization is included under ‘Interest income’ in the statement of income. The losses arising from impairment
are recognized under ‘Provision for impairment and credit losses’ in the statement of income.

Available-for-sale financial assets

AFS financial assets are those which are designated as such or do not qualify to be classified as financial assets at FVPL, HTM financial
assets, or loans and receivables. They are purchased and held indefinitely, and may be sold in response to liquidity requirements or changes
in market conditions. They include equity investments, money market papers and government and corporate debt securities.

After initial measurement, AFS financial assets are subsequently measured at fair value. The effective yield component of AFS debt securities,
as well as the impact of translation of foreign currency-denominated AFS debt securities, is reported in the statement of income. The
unrealized gains and losses arising from the fair valuation of AFS financial assets are excluded, net of tax, from reported earnings and are
reported as ‘Net unrealized gains (losses) on AFS financial assets’ under OCI.

When the security is disposed of, the cumulative gain or loss previously recognized in OCI is recognized as ‘Trading and securities gain - net’
in the statement of income. Interest earned on holding AFS debt securities are reported as ‘Interest income’ using the EIR. Dividends earned
on holding AFS equity instruments are recognized in the statement of income as ‘Miscellaneous income’ when the right to the payment has
been established. The losses arising from impairment of such investments are recognized as ‘Provision for impairment and credit losses’ in
the statement of income.

Other financial liabilities

These are issued financial instruments or their components which are not designated as at FVPL and 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 satisfy the obligation
other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of its own equity shares. The components
of issued financial instruments that contain both liability and equity elements are accounted for separately, with the equity component being
assigned the residual amount after deducting from the instrument as a whole the amount separately determined as the fair value of the liability
component on the date of issue.

After initial measurement, other financial liabilities not qualified and not designated as at FVPL are subsequently measured at amortized cost
using the effective interest method. Amortized cost is calculated by taking into account any discount or premium on the issue and fees that
are an integral part of the EIR.

11
 This accounting policy relates to the balance sheet captions ‘Deposit liabilities’, ‘Bills payable’, ‘Manager’s checks’, and financial liabilities
presented under ‘Accrued interest and other expenses’ and ‘Other liabilities’.

Reclassification of Financial Assets

The Group may reclassify, in rare circumstances, non-derivative financial assets out of the HFT investments category and into the AFS
financial assets, Loans and Receivables or HTM financial assets categories. The Group may also reclassify, in certain circumstances, financial
instruments out of the AFS financial assets to loans and receivables category. Reclassifications are recorded at fair value at the date of
reclassification, which becomes the new amortized cost.

The Group may reclassify a non-derivative trading asset out of HFT investments and into the Loans and Receivable category if it meets the
definition of loans and receivables, the Group has the intention and ability to hold the financial assets for the foreseeable future or until maturity
and only in rare circumstances. If a financial asset is reclassified, and if the Group subsequently increases its estimates of future cash receipts
as a result of increased recoverability of those cash receipts, the effect of that increase is recognized as an adjustment to the EIR from the
date of the change in estimate.

For a financial asset reclassified out of the AFS financial assets category, any previous gain or loss on that asset that has been recognized in
OCI 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 the expected cash flows is also amortized over the remaining life of the asset using the effective interest method. If the
asset is subsequently determined to be impaired then the amount recorded in OCI is recycled to the statement of income. Reclassification
is at the election of management, and is determined on an instrument by instrument basis. The Group does not reclassify any financial
instrument into the FVPL category after initial recognition. An analysis of reclassified financial assets is disclosed in Note 9.

Impairment of Financial Assets

The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets 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 has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has
an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence
of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or
delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where
observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, or collectively for financial assets that are not individually significant.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred).
The present value of the estimated future cash flows is discounted at the financial asset’s original EIR.

If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR, adjusted for the original credit risk
premium. The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that
may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

The carrying amount of the asset is reduced through use of an allowance account and the amount of loss is charged to the statement of
income. Interest income continues to be recognized based on the original EIR of the asset. The financial assets, together with the associated
allowance accounts, are written off when there is no realistic prospect of future recovery and all collateral has been realized.

If the Group determines that no objective evidence of impairment exists for individually assessed financial asset, whether significant or not,
it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses for impairment. Those
characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all
amounts due according to the contractual terms of the assets being evaluated. Assets that are individually assessed for impairment and for
which an impairment loss is, or continues to be, recognized are not included in a collective assessment for impairment.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of such credit risk characteristics as
industry, collateral type, past-due status and term. Future cash flows in a group of financial assets that are collectively evaluated for
impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group.
Historical loss 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 do not exist
currently. Estimates of changes in future cash flows reflect, and are directionally consistent with changes in related observable data from
period to period (such as changes in unemployment rates, property prices, commodity 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
reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience.

12 CHINA BANKING CO RPORATI ON

If, in a subsequent year, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was
recognized, the previously recognized impairment loss is reduced by adjusting the allowance account. If a future write-off is later recovered,
the recovery is credited to ‘Miscellaneous income’.

Financial assets carried at cost

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because 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 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.

Available-for-sale financial assets

For AFS financial assets, the Group assesses at each reporting date whether there is objective evidence that a financial asset or group of
financial assets is impaired.

In the case of equity investments classified as AFS financial assets, this would include a significant or prolonged decline in the fair value of the
investments below its cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognized in the statement of income - is removed
from OCI and recognized in the statement of income. Impairment losses on equity investments are not reversed through the statement of
income. Increases in fair value after impairment are recognized directly in OCI.

In the case of debt instruments classified as AFS financial assets, impairment is assessed based on the same criteria as financial assets
carried at amortized cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the
amortized cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. Future interest
income is based on the reduced carrying amount and is accrued based on the rate of interest used to discount future cash flows for the
purpose of measuring impairment loss. Such accrual is recorded as part of ‘Interest income’ in the statement of income. If, in subsequent
years, the fair value of a debt instrument increased and the increase can be objectively related to an event occurring after the impairment loss
was recognized in the statement of income, the impairment loss is reversed through the statement of income.

Restructured loans
Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the 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 impairment and credit losses’ in the statement of income.

Collateral valuation
To mitigate its credit risks on financial assets, the Group seeks to use collateral, where possible. The collateral comes in various forms, such
as cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other non-financial assets and credit enhancements
such as netting agreements. Collateral, unless repossessed, is not recorded on the Group’s balance sheets. However, the fair value of
collateral affects the calculation of loss allowances. It is generally assessed, at a minimum, at inception and re-assessed on an annual basis.
To the extent possible, the Group uses active market data for valuing financial assets held as collateral. Other financial assets which do
not have readily determinable market values are valued using models. Non-financial collateral, such as real estate, is valued based on data
provided by internal or external appraisers.

Derecognition of Financial Assets and Liabilities

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:

• the rights to receive cash flows from the asset have expired; or
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay
to a third party under a “pass-through” arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and
rewards of the asset, or (b) has neither transferred nor retained the risks and rewards of the asset but has transferred control of the
asset.

Where the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, 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 the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the
Group could be required to repay.

13
 Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has expired. Where an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognized in the statement of income.

Write-offs
Financial assets are written off either partially or in their entirety when the Group no longer expects collections or recoveries within a foreseeable
future. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the
allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to credit loss expense.

Investment in Associates
Associates pertain to all entities over which the Group has significant influence but not control, generally accompanying a shareholding of
between 20.00% and 50.00% of the voting rights. In the consolidated and parent company financial statements, investments in associates
are accounted for under the equity method of accounting.

Under the equity method, an investment in an associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s
share of the net assets of the associates. Goodwill, if any, relating to an associate is included in the carrying value of the investment and is
not amortized. The statement of income reflects the share of the results of operations of the associate. Where there has been a change
recognized directly in the equity of the associate, the Group recognizes its share of any changes and discloses this, when applicable, in the
statement of changes in equity.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables,
the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Profits or losses
resulting from transactions between the Group and an associate are eliminated to the extent of the interest in the associate.

Dividends earned on this investment are recognized in the Parent Company’s statement of income as a reduction from the carrying value of
the investment.

The financial statements of the associate are prepared for the same reporting period as the Parent Company. Where necessary, adjustments
are made to bring the accounting policies in line with those of the Group.

Upon loss of significant influence over the associate, the Group measures and recognizes any retained investment at its fair value. Any
difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and
proceeds from disposal is recognized in profit or loss.

Investment in Subsidiaries
In the parent company financial statements, investment in subsidiaries is accounted for under the equity method of accounting similar to the
investment in associates.

Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each
business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of
the acquiree’ s identifiable net assets. Acquisition costs incurred are charged to profit or loss.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation
in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree
is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with PAS 39,
either in profit or loss or as a charge to OCI. If the contingent consideration is classified as equity, it should not be remeasured until it is finally
settled within equity.

Goodwill is initially measured at cost being the excess of the aggregate of fair value of the consideration transferred and the amount
recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than
the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss as gain on bargain purchase under
‘Miscellaneous income’.

14 CHINA BANKING CO RPORATI ON

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate the carrying value may be
impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the date of acquisition, allocated to
each of the Group’s cash generating units (CGU), or groups of CGUs, that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units or group of units. Each unit or group of units to
which the goodwill is allocated:

• represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
• is not larger than an operating segment identified for segment reporting purposes.

Where goodwill forms part of a CGU (or group of CGUs) and part of the operation within that unit is disposed of, the goodwill associated with
the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU
retained.

Cash Dividend and Non-cash Distribution to Equity Holders of the Parent Company
The Group recognizes a liability to make cash or non-cash distributions to equity holders of the parent company when the distribution is
authorized and the distribution is no longer at the discretion of the Group.

A corresponding amount is recognized directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value remeasurement recognized directly in
equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets
distributed is recognized in the statement of income.

Bank Premises, Furniture, Fixtures and Equipment

Land is stated at cost less any impairment in value while depreciable properties such as buildings, leasehold improvements, and furniture,
fixtures and equipment are stated at cost less accumulated depreciation and amortization, and any impairment in value. Such cost includes
the cost of replacing part of the bank premises, furniture, fixtures and equipment when that cost is incurred and if the recognition criteria are
met, but excluding repairs and maintenance costs.

Construction-in-progress is stated at cost less any impairment in value. The initial cost comprises its construction cost and any directly
attributable costs of bringing the asset to its working condition and location for its intended use, including borrowing costs. Construction-in-
progress is not depreciated until such time that the relevant assets are completed and put into operational use.

Depreciation and amortization is calculated using the straight-line method over the estimated useful life (EUL) of the depreciable assets as
follows:

EUL
Buildings 50 years
Furniture, fixtures and equipment 3 to 5 years
Leasehold improvements Shorter of 6 years or the related lease terms

The depreciation and amortization method and useful life are reviewed periodically to ensure that the method and period of depreciation and
amortization are consistent with the expected pattern of economic benefits from items of bank premises, furniture, fixtures and equipment
and leasehold improvements.

An item of bank premises, furniture, fixtures and equipment is derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the statement of income in the year the asset is derecognized.

Investment Properties
Investment properties include real properties acquired in settlement of loans and receivables which are measured initially at cost, including
certain transaction costs. Investment properties acquired through a nonmonetary asset exchange is measured initially at fair value unless
(a) the exchange lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable.
The difference between the fair value of the investment property upon foreclosure and the carrying value of the loan is recognized under
‘Gain on asset foreclosure and dacion transactions’ in the statement of income. Subsequent to initial recognition, depreciable investment
properties are stated at cost less accumulated depreciation and any accumulated impairment in value except for land which is stated at cost
less impairment in value.

15
 Expenditures incurred after the investment properties have been put into operation, such as repairs and maintenance costs, are normally
charged to income in the period in which the costs are incurred.

Depreciation is calculated on a straight-line basis using the remaining EUL of the building and improvement components of investment
properties which ranged from 10 to 33 years from the time of acquisition of the investment properties.

Investment properties are derecognized when they have either been disposed of or when the investment properties are permanently
withdrawn from use and no future benefit is expected from their disposal. Any gains or losses on the derecognition of an investment property
are recognized as ‘Gain on sale of investment properties’ in the statement of income in the year of derecognition.

Transfers are made to investment properties when, and only when, there is a change in use evidenced by ending of owner occupation,
commencement of an operating lease to another party or ending of construction or development. Transfers are 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.

Intangible Assets
Intangible assets include software cost and branch licenses resulting from the Parent Company’s acquisition of CBSI, Unity Bank and
Planters Development Bank (PDB) (Notes 11 and 14).

Software costs
Costs related to software purchased by the Group for use in operations are amortized on a straight-line basis over 3 to 10 years. The
amortization method and useful life are reviewed periodically to ensure that the method and period of amortization are consistent with the
expected pattern of economic benefits embodied in the asset.

Branch licenses
The branch licenses are initially measured at fair value as of the date of acquisition and are deemed to have an indefinite useful life as there
is no foreseeable limit to the period over which they are expected to generate net cash inflows for the Group.

Such intangible assets are not amortized, instead they are tested for impairment annually either individually or at the CGU level. Impairment
is determined by assessing the recoverable amount of each CGU (or group of CGUs) to which the intangible asset relates. Recoverable
amount is the higher of the CGU’s fair value less costs to sell and its value in use. Where the recoverable amount of the CGU is less than its
carrying amount, an impairment loss is recognized.

Gains and losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognized in earnings when the asset is derecognized.

Impairment of Nonfinancial Assets

At each reporting date, the Group assesses whether there is any indication that its nonfinancial assets (e.g., investment in associates,
investment properties, bank premises, furniture, fixtures and equipment, goodwill and intangible assets) may be impaired. When an indicator
of impairment exists or when an annual impairment testing for an asset is required, the Group makes a formal estimate of recoverable amount.

Recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs to sell and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which
case the recoverable amount is assessed as part of the CGU to which it belongs. Where the carrying amount of an asset (or CGU) exceeds
its recoverable amount, the asset (or CGU) 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 money and the risks specific to the asset (or CGU).

An impairment loss is charged to operations in the year in which it arises.

For nonfinancial assets, excluding goodwill and branch licenses, an assessment is made at each reporting date as to whether there is any
indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable
amount is estimated. A previously recognized impairment loss is reversed, except for goodwill, only if there has been a change in the
estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying
amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in
the statement of income. After such a reversal, the depreciation expense is adjusted in future years to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining life.

16 CHINA BANKING CO RPORATI ON

Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an
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:

(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 lease term; or
(c) there is a change in the determination of whether fulfillment is dependent on a specified asset; or
(d) there is a substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to
the reassessment for scenarios (a), (c), or (d) above, and at the date of renewal or extension period for scenario (b).

Group as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset 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 and included in
‘Occupancy cost’ in the statement of income.

Group as a lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are classified as operating 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 rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Capital Stock
Capital stocks are recorded at par. Proceeds in excess of par value are recognized under equity as ‘Capital paid in excess of par value’ in the
balance sheet. Incremental costs incurred which are directly attributable to the issuance of new shares are shown in equity as a deduction
from proceeds, net of tax.

Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable,
taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements
against specific criteria in order to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in
all of its revenue arrangements.

The following specific recognition criteria must also be met before revenue is recognized:

Interest income
For all financial instruments measured at amortized cost and interest-bearing financial instruments classified as FVOCI and AFS financial
assets, interest income is recorded at either EIR, which is the rate that exactly discounts estimated future cash payments or receipts through
the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial
liability, or at rate stated in the contract. The calculation takes into account all contractual terms of the financial instrument (for example,
prepayment options), includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the EIR,
as applicable, but not future credit losses. The adjusted carrying amount is calculated based on the original EIR. The change in carrying
amount is recorded as ‘Interest income’.

Once the recorded value of a financial asset or group of similar financial assets has been reduced due to an impairment loss, interest income
continues to be recognized using the original EIR applied to the new carrying amount.

Fee and commission income

The Group earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be divided into
the following two categories:

a. Fee income earned from services that are provided over a certain period of time
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 other management fees,
and advisory fees.

b. Fee income from providing transactions services

Fees arising from negotiating or participating in the negotiation of a transaction for a third party - such as underwriting fees, corporate
finance fees and brokerage fees for the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses
- are recognized on completion of the underlying transaction. Fees or components of fees that are linked to a certain performance are
recognized after fulfilling the corresponding criteria. Loan syndication fees are 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.

17
 c. Commitment fees
Loan commitment fees for loans that are likely to be drawn down are deferred (together with any incremental costs) and recognized as an
adjustment to the EIR on the loan. If the commitment expires without the Group making the loan, the commitment fees are recognized
as other income on expiry.

Service charges and penalties

Service charges and penalties are recognized only upon collection or accrued where there is a reasonable degree of certainty as to their
collectability.

Other income
Income from sale of service is recognized upon rendition of the service. Income from sale of properties is recognized when control has been
obtained by the customer and when the collectability of the sales price is reasonably assured.

Dividend income
Dividend income is recognized when the Group’s right to receive payment is established.

Trading and securities gain

This represents results arising from trading activities and sale of AFS financial assets or FVOCI debt assets.

Expense Recognition
Expense is recognized when it is probable that a decrease in future economic benefits related to a decrease in an asset or an increase in
liability has occurred and the decrease in economic benefits can be measured reliably. Revenues and expenses that relate to the same
transaction or other event are recognized simultaneously.

Interest expense
Interest expense for all interest-bearing financial liabilities are recognized in ‘Interest expense’ in the statement of income using the EIR of the
financial liabilities to which they relate.

Other expenses
Expenses encompass losses as well as those expenses that arise in the ordinary course of business of the Group. Expenses are recognized
when incurred.

Retirement Benefits
Defined benefit plan
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit obligation at the end of the reporting
period reduced by the fair value of plan assets and adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The
defined benefit obligation is calculated annually by an independent actuary. The present value of the defined benefit obligation is determined
by discounting the estimated future cash outflows using interest rates on government bonds that have terms to maturity approximating the
terms of the related retirement liability. The asset ceiling is the present value of any economic benefits available in the form of refunds from
the plan or reductions in future contributions to the plan.

The cost of providing benefits under the defined benefit plans is actuarially determined using the projected unit credit method.

Defined benefit costs comprise the following:

(a) service cost;
(b) net interest on the net defined benefit liability or asset; and
(c) remeasurements of net defined benefit liability or asset.

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as
expense in profit or loss. Past service costs are recognized when plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises
from the passage of time which is determined by applying the discount rate based on Philippine government bonds to the net defined benefit
liability or asset. Net interest on the net defined benefit liability or asset is recognized as expense or income in profit or loss.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net
interest on defined benefit liability) are recognized immediately in OCI in the period in which they arise. Remeasurements are not reclassified
to profit or loss in subsequent periods.

Plan assets are assets that are held by a long-term employee benefit fund. Plan assets are not available to the creditors of the Group, nor
can they be paid directly to the Group. The fair value of plan assets is based on market price information. When no market price is available,
the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated
with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the
settlement of the related obligations).

18 CHINA BANKING CO RPORATI ON

The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognized as a separate
asset at fair value when and only when reimbursement is virtually certain. If the fair value of the plan assets is higher than the present value
of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the present value of economic benefits
available in the form of refunds from the plan or reductions in future contributions to the plan.

Employee leave entitlement

Employee entitlements to annual leave are recognized as a liability when they are accrued to the employees. The undiscounted liability for
leave expected to be settled after the end of the annual reporting period is recognized for services rendered by employees up to the end of
the reporting period.

Provisions and Contingencies

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract,
the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any
provision is presented in the statement of income, net of any reimbursement. If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage
of time is recognized as an interest expense.

Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of resources
embodying economic benefits is remote. Contingent assets are not recognized but are disclosed in the financial statements when an inflow
of economic benefits is probable.

Income Taxes
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted as of the
reporting date.

Deferred tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary
differences, carry forward of unused tax credits from the excess of minimum corporate income tax (MCIT) over the regular corporate income
tax (RCIT), and unused net operating loss carryover (NOLCO), to the extent that it is probable that sufficient taxable profit will be available
against which the deductible temporary differences and carry forward of unused tax credits from MCIT and unused NOLCO can be utilized.
Deferred tax, however, is not recognized on temporary differences that arise 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 income nor taxable income.

Deferred tax liabilities are not provided on non-taxable temporary differences associated with investments in domestic subsidiaries and
associates.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are
reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.

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.

Current tax and deferred tax relating to items recognized directly in equity is also recognized in equity and not in the statement of income.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax
liabilities and deferred taxes relate to the same taxable entity and the same taxation authority.

Earnings per Share

Basic earnings per share (EPS) is computed by dividing net income for the year by the weighted average number of common shares
outstanding during the year after giving retroactive effect to stock splits, stock dividends declared and stock rights exercised during the year,
if any.

19
 The Parent Company has no outstanding dilutive potential common shares.

Dividends on Common Shares

Dividends on common shares are recognized as a liability and deducted from equity when approved by the respective shareholders of the
Parent Company and its subsidiaries. Dividends declared during the year that are approved after the reporting date are dealt with as an
event after the reporting date.

Segment Reporting
The Group’s operating businesses are organized and managed separately according to the nature of the products and services provided,
with each segment representing a strategic business unit that offers different products and serves different markets. Financial information
on business segments is presented in Note 31. The Group’s revenue producing assets are located in the Philippines (i.e., one geographical
location). Therefore, geographical segment information is no longer presented.

Fiduciary Activities
Assets and income arising from fiduciary activities together with related undertakings to return such assets to customers are excluded from
the financial statements where the Parent Company acts in a fiduciary capacity such as nominee, trustee or agent.

Events after the Reporting Period

Any post year-end events that provide additional information about the Group’s position at the reporting date (adjusting event) are reflected
in the Group’s financial statements. Post year-end events that are not adjusting events, if any, are disclosed when material to the financial
statements.

Standards Issued but Not Yet Effective

There are new PFRSs, amendments, interpretation and annual improvements, to existing standards effective for annual periods subsequent
to 2018, which are adopted by the FRSC. Management will adopt the following relevant pronouncements in accordance with their transitional
provisions; and, unless otherwise stated, none of these are expected to have significant impact on the Group’s financial statements:

Effective beginning on or after January 1, 2019:

• PFRS 9 (Amendment), Prepayment Features with Negative Compensation. Under PFRS 9, a debt instrument can be measured at
amortized cost or at fair value through other comprehensive income, provided that the contractual cash flows are ‘solely payments
of principal and interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is held within the appropriate
business model for that classification. The amendments to PFRS 9 clarify that a financial asset passes the SPPI criterion regardless of
the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable
compensation for the early termination of the contract. The amendments should be applied retrospectively and are effective from
January 1, 2019, with earlier application permitted. Management has assessed that the amendment has no impact on the consolidated
and parent company financial statements.

• PFRS 16, Leases. This new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases
and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases
under PAS 17, Leases. The standard includes two recognition exemptions for lessees - leases of ’low-value’ assets (e.g., personal
computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a
lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying
asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the
lease liability and the depreciation expense on the right-of-use asset.

Leesees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a
change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally
recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under PFRS 16 is substantially unchanged from today’s accounting under PAS 17. Lessors will continue to classify
all leases using the same classification principle as in PAS 17 and distinguish between two types of leases: operating and finance
leases.

PFRS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17.

A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s
transition provisions permit certain reliefs.

Upon adoption of this standard, the Group and the Parent Company expect to recognize a right of use asset and lease liability for
covered lease contracts. Management is currently assessing the impact of this new standard in the consolidated and parent company
financial statements.

20 CHINA BANKING CO RPORATI ON

• PAS 19 (Amendments), Employee Benefits, Plan Amendment, Curtailment or Settlement. The amendments to PAS 19 address the
accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments specify that when a
plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to:

• Determine current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using the
actuarial assumptions used to remeasure the net defined benefit liability (asset) reflecting the benefits offered under the plan and
the plan assets after that event

• Determine net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined
benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event; and the discount rate used
to remeasure that net defined benefit liability (asset).

The amendments also clarify that an entity first determines any past service cost, or a gain or loss on settlement, without considering
the effect of the asset ceiling. This amount is recognized in profit or loss. An entity then determines the effect of the asset ceiling after
the plan amendment, curtailment or settlement. Any change in that effect, excluding amounts included in the net interest, is recognized
in other comprehensive income.

The amendments apply to plan amendments, curtailments, or settlements occurring on or after the beginning of the first annual
reporting period that begins on or after January 1, 2019, with early application permitted. These amendments will apply only to any
future plan amendments, curtailments, or settlements of the Group.

• PAS 28 (Amendments), Long-term Interests in Associates and Joint Ventures. The amendments clarify that an entity applies PFRS 9 to
long-term interests in an associate or joint venture to which the equity method is not applied but that, in substance, form part of the net
investment in the associate or joint venture (long-term interests). This clarification is relevant because it implies that the expected credit
loss model in PFRS 9 applies to such long-term interests.

The amendments also clarified that, in applying PFRS 9, an entity does not take account of any losses of the associate or joint venture,
or any impairment losses on the net investment, recognized as adjustments to the net investment in the associate or joint venture that
arise from applying PAS 28, Investments in Associates and Joint Ventures.

The amendments should be applied retrospectively and are effective from January 1, 2019, with early application permitted. Since
the Group does not have such long-term interests in its associate and joint venture, the amendments will not have an impact on its
consolidated financial statements.

• IFRIC 23, Uncertainty over Income Tax Treatments. The interpretation addresses the accounting for income taxes when tax treatments
involve uncertainty that affects the application of PAS 12, Income Taxes, and does not apply to taxes or levies outside the scope of
PAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.

The interpretation specifically addresses the following:

• Whether an entity considers uncertain tax treatments separately

• The assumptions an entity makes about the examination of tax treatments by taxation authorities
• How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
• How an entity considers changes in facts and circumstances

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax
treatments. The approach that better predicts the resolution of the uncertainty should be followed.

This interpretation is not relevant to the Group because there is no uncertainty involved in the tax treatments made by management in
connection with the calculation of current and deferred taxes as of December 31, 2018 and 2017.

Annual Improvements to PFRS 2015-2017 Cycle

• Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements, Previously Held Interest in a Joint Operation. The
amendments clarify that, when an entity obtains control of a business that is a joint operation, it applies the requirements for a business
combination achieved in stages, including remeasuring previously held interests in the assets and liabilities of the joint operation at fair
value. In doing so, the acquirer remeasures its entire previously held interest in the joint operation.

A party that participates in, but does not have joint control of, a joint operation might obtain joint control of the joint operation in which
the activity of the joint operation constitutes a business as defined in PFRS 3. The amendments clarify that the previously held interests
in that joint operation are not remeasured.

21
 An entity applies those amendments to business combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after January 1, 2019 and to transactions in which it obtains joint control on or after the
beginning of the first annual reporting period beginning on or after January 1, 2019, with early application permitted. These amendments
are currently not applicable to the Group but may apply to future transactions.

• Amendments to PAS 12, Income Tax Consequences of Payments on Financial Instruments Classified as Equity. The amendments clarify
that the income tax consequences of dividends are linked more directly to past transactions or events that generated distributable
profits than to distributions to owners. Therefore, an entity recognizes the income tax consequences of dividends in profit or loss, other
comprehensive income or equity according to where the entity originally recognized those past transactions or events.

• Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization. The amendments clarify that an entity treats as
part of general borrowings any borrowing originally made to develop a qualifying asset when substantially all of the activities necessary
to prepare that asset for its intended use or sale are complete.

An entity applies those amendments to borrowing costs incurred on or after the beginning of the annual reporting period in which
the entity first applies those amendments. An entity applies those amendments for annual reporting periods beginning on or after
January 1, 2019, with early application permitted.

Since the Group’s current practice is in line with these amendments, the Group does not expect any effect on its consolidated financial
statements upon adoption.

Effective beginning on or after January 1, 2020

• Amendments to PFRS 3, Definition of a Business. The amendments to PFRS 3 clarify the minimum requirements to be a business,
remove the assessment of a market participant’s ability to replace missing elements, and narrow the definition of outputs. The
amendments also add guidance to assess whether an acquired process is substantive and add illustrative examples. An optional fair
value concentration test is introduced which permits a simplified assessment of whether an acquired set of activities and assets is not
a business.

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier
application permitted.

These amendments will apply on future business combinations of the Group.

• Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in Accounting Estimates and
Errors, Definition of Material. The amendments refine the definition of material in PAS 1 and align the definitions used across PFRSs and
other pronouncements. They are intended to improve the understanding of the existing requirements rather than to significantly impact
an entity’s materiality judgements.

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier
application permitted.

Effective beginning on or after January 1, 2021

• PFRS 17, Insurance Contracts. The standard is a comprehensive new accounting standard for insurance contracts covering recognition
and measurement, presentation and disclosure. Once effective, PFRS 17 will replace PFRS 4, Insurance Contracts. This new standard
on insurance contracts applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the
type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few
scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for
insurers. In contrast to the requirements in PFRS 4, which are largely based on grandfathering previous local accounting policies, PFRS
17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of PFRS 17 is the
general model, supplemented by:

• A specific adaptation for contracts with direct participation features (the variable fee approach)

• A simplified approach (the premium allocation approach) mainly for short-duration contracts

PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with comparative figures required. Early application is
permitted.

22 CHINA BANKING CO RPORATI ON

 Deferred effectivity
• Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture. The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of control
of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that a full gain or loss is recognized
when a transfer to an associate or joint venture involves a business as defined in PFRS 3. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however, is recognized only to the extent of unrelated investors’ interests in
the associate or joint venture.

On January 13, 2016, the Financial Reporting Standards Council deferred the original effective date of January 1, 2016 of the said
amendments until the International Accounting Standards Board (IASB) completes its broader review of the research project on equity
accounting that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates
and joint ventures.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the financial statements in accordance with PFRS requires the Group to make judgments and estimates that affect the
reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets and contingent liabilities at reporting date.
Future events may occur which will cause the judgments and assumptions used in arriving at the estimates to change. The effects of any
change in judgments and estimates are reflected in the financial statements as they become reasonably determinable.

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.

Judgments
a. Fair value of financial instruments
The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included
in the evaluation on whether a financial asset is quoted in an active market is the determination of whether quoted prices are readily
and regularly available, and whether those prices represent actual and regularly occurring market transactions conducted on an arm’s
length basis.

Where the fair values of financial assets and financial liabilities recorded on the balance sheet or disclosed in the notes cannot be
derived from active markets, they are determined using discounted cash flow model, incorporating inputs such as current market rates
of comparable instruments. The carrying values and corresponding fair values of financial instruments, as well as the manner in which
fair values were determined, are discussed in more detail in Note 5.

b. HTM financial assets (prior to PFRS 9 adoption)

The classification to HTM financial assets requires significant judgment. In making this judgment, the Group evaluates its intention
and ability to hold such investments to maturity. If the Group fails to keep these investments to maturity other than in certain specific
circumstances - for example, selling an insignificant amount close to maturity - it will be required to reclassify the entire portfolio as part
of AFS financial assets. The investments would therefore be measured at fair value and not at amortized cost.
Details of AFS financial assets reclassified to HTM are disclosed in Note 9.

c. Contingencies
The Group is currently involved in various legal proceedings. The estimate of the probable costs for the resolution of these claims has
been developed in consultation with outside counsel handling the Group’s defense in these matters and is based upon an analysis
of potential results. The Group currently does not believe that these proceedings will have a material adverse effect on the financial
statements (Note 30). It is possible, however, that future results of operations could be materially affected by changes in the estimates
or in the effectiveness of the strategies relating to these proceedings.

d. Evaluation of business model in managing financial instruments (PFRS 9)

The Group manages its financial assets based on business models that maintain an adequate level of financial assets to match its
expected cash outflows, largely arising from customers’ withdrawals and continuing loan disbursements to borrowers, while maintaining
a strategic portfolio of financial assets for investment and trading activities consistent with its risk appetite.

The Group developed business models which reflect how it manages its portfolio of financial instruments. The Group’s business models
need not be assessed at entity level or as a whole but applied at the level of a portfolio of financial instruments (i.e., group of financial
instruments that are managed together by the Group) and not on an instrument-by-instrument basis (i.e., not based on intention or
specific characteristics of individual financial instrument).

In determining the classification of a financial instrument under PFRS 9, the Group evaluates in which business model a financial
instrument or a portfolio of financial instruments belong to taking into consideration the objectives of each business model established
by the Group, various risks and key performance indicators being reviewed and monitored by responsible officers, as well as the manner
of compensation for them.

23
 At the start of 2018, the Parent Bank’s BOD approved its documentation of business models which contains broad categories of
banking and trading business models. The banking business model includes the Parent Bank’s lending activities as well as treasury
business activities broken down into liquidity and investment portfolios. The approval of the business models triggered the realignment
and reassessment of the Parent Bank’s strategy for managing its HTC portfolio and the introduction of new portfolios with the objective
of maximizing risk-adjusted returns. As such, the Bank’s classification of financial assets now consists of amortized cost, FVOCI and
FVTPL, where certain securities were reclassified from a classification measured at amortized cost to a classification measured at fair
value, and vice versa, at the beginning of first quarter of 2018.

In addition, PFRS 9 emphasizes that if more than an infrequent and more than an insignificant sale is made out of a portfolio of financial
assets carried at amortized cost, an entity should assess whether and how such sales are consistent with the objective of collecting
contractual cash flows. In making this judgment, the Group considers certain circumstances documented in its business model manual
to assess that an increase in the frequency or value of sales of financial instruments in a particular period is not necessarily inconsistent
with a held-to-collect business model if the Group can explain the reasons for those sales and why those sales do not reflect a change
in the Group’s objective for the business model.

In 2018, the Bank participated in bond exchanges resulting in disposal of certain financial assets carried at amortized cost. The Parent
Bank has assessed that such sales are not more than infrequent and are necessary in order to ensure that the outstanding securities
remain of an acceptable liquid quality. The disposals are considered not inconsistent with the objective of hold to collect business
model. The remaining securities in the affected portfolios continue to be measured at amortized cost as of December 31, 2018.

The business model assessment is based on reasonably expected scenarios without taking worst case or stress case scenarios into
account. If cash flows, after initial recognition are realized in a way that is different from the Group’s and the Parent Company’s original
expectations, the Group and the Parent Company does not change the classification of the remaining financial assets held in that
business model but incorporates such information when assessing newly originated or newly purchased financial assets going forward.

e. Testing the cash flow characteristics of financial assets (PFRS 9)

In determining the classification of financial assets under PFRS 9, the Group assesses whether the contractual terms of the financial
assets give rise on specified dates to cash flows that are SPPI on the principal outstanding, with interest representing time value of
money and credit risk associated with the principal amount outstanding. The assessment as to whether the cash flows meet the test
is made in the currency in which the financial asset is denominated. Any other contractual term that changes the timing or amount of
cash flows (unless it is a variable interest rate that represents time value of money and credit risk), i.e., cash flows that are non-SPPI,
does not meet the amortized cost criteria. In cases where the relationship between the passage of time and the interest rate of the
financial instrument may be imperfect, known as modified time value of money, the Group assesses the modified time value of money
feature to determine whether the financial instrument still meets the SPPI criterion. The objective of the assessment is to determine
how different the undiscounted contractual cash flows could be from the undiscounted cash flows that would arise if the time value of
money element was not modified (the benchmark cash flows). If the resulting difference is significant, the SPPI criterion is not met. In
view of this, the Group considers the effect of the modified time value of money element in each reporting period and cumulatively over
the life of the financial instrument.

Estimates
a. Credit losses on loans and receivables (prior to adoption of PFRS 9)
The Group reviews its loans and receivables at each reporting date to assess whether an allowance for credit losses should be recorded
in the balance sheet and any changes thereto 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 level of allowance required. Such estimates are based
on assumptions about a number of factors such as the financial condition of the borrower, estimated future cash flows, observable
market prices and estimated net selling prices of the related collateral. Actual results may also differ, resulting in future changes to the
allowance.

In addition to specific allowance against individually significant loans and receivables, the Group also makes a collective impairment
assessment on exposures which, although not specifically identified as requiring a specific allowance, have a greater risk of default
than when originally granted. The resulting collective allowance is based on historical loss experience adjusted on the basis of current
observable data for assets with similar credit risk characteristics.

The carrying values of loans and receivables and the related allowance for credit losses of the Group and the Parent Company are
disclosed in Notes 10 and 16.

b. Expected credit losses on financial assets and commitments (PFRS 9)

The Group reviews its financial assets and commitments at each reporting date to determine the amount of expected credit losses to
be recognized in the balance sheet and any changes thereto in the statement of income. In particular, judgments and estimates by
management are required in determining the following:

• whether a financial asset has had a significant increase in credit risk since initial recognition;
• whether default has taken place and what comprises a default;

24 CHINA BANKING CO RPORATI ON

 • macro-economic factors that are relevant in measuring a financial asset’s probability of default as well as the Group’s forecast of
these macro-economic factors;
• probability weights applied over a range of possible outcomes;
• sufficiency and appropriateness of data used and relationships assumed in building the components of the Group’s expected
credit loss models;
• measuring the exposure at default for unused commitments on which an expected credit loss should be recognized and the
applicable loss rate

The related allowance for credit losses of financial assets and commitments of the Group and the Parent Company are disclosed in
Notes 16 and 20.

c. Impairment of goodwill
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash generating unit CGU to which
the goodwill relates. The recoverable amount of the CGU is determined based on a VIU calculation using cash flow projections from
financial budgets approved by senior management covering a five-year period. For VIU, the Group estimates the discount rate used for
the computation of the net present value by reference to industry cost of capital. Impairment assessment process requires significant
judgement and based on assumptions, specifically loan and deposit growth rates, discount rate and the terminal value growth rates.

Where the recoverable amount is less than the carrying amount of the CGU to which goodwill has been allocated, an impairment
loss is recognized immediately in the statement of income. Impairment losses relating to goodwill cannot be reversed for subsequent
increases in its recoverable amount in future periods. The carrying values of the Group’s goodwill are disclosed in Note 14.

d. Impairment of branch licenses

The Group conducts an annual review for any impairment in the value of branch licenses. Branch licenses are written down for
impairment where the recoverable value is insufficient to support the carrying value. The recoverable amount of branch licenses is the
higher between fair value less costs of disposal (FVLCD) and its value-in-use (VIU). FVLCD of branch licenses is based on the special
licensing fee of BSP on branches operating on identified restricted areas. The recoverable amount of the CGU is determined based on
a VIU calculation using cash flow projections from financial budgets approved by senior management covering a five-year period. For
VIU, the Group estimates the discount rate used for the computation of the net present value by reference to industry cost of capital.
Impairment assessment process requires significant judgement and based on assumptions, specifically loan and deposit growth rates,
discount rate and the terminal value growth rates.

The carrying values of the Group’s branch licenses are disclosed in Note 14.

e. Net plan assets and retirement expense

The determination of the Group’s net plan assets and annual retirement expense is dependent on the selection of certain assumptions
used in calculating such amounts. These assumptions include, among others, discount rates and salary rates.

The assumed discount rates were determined using the market yields on Philippine government bonds with terms consistent with the
expected employee benefit payout as of the reporting date.

The present value of the retirement obligation and fair value of plan assets, including the details of the assumptions used in the
calculation are disclosed in Note 24.

f. Recognition of deferred income taxes

Deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable profit will be
available against which the losses can be utilized. Management discretion is required to determine the amount of deferred tax assets
that can be recognized, based on the forecasted level of future taxable profits and the related future tax planning strategies. Key
assumptions used in forecast of future taxable income include loan portfolio and deposit growth rates.

The Group believes it will be able to generate sufficient taxable income in the future to utilize its recorded deferred tax assets. Taxable
income is sourced mainly from interest income from lending activities and earnings from service charge, fees, commissions and trust
activities.

The recognized and unrecognized deferred tax assets are disclosed in Note 27.

g. Impairment on non-financial assets

The Group assesses impairment on its nonfinancial assets (e.g., investment properties and bank premises, furniture, fixtures and
equipment) and considers the following impairment indicators:
• significant underperformance relative to expected historical or projected future operating results;
• significant changes in the manner of use of the acquired assets or the strategy for overall business; and
• significant negative industry or economic trends.

25
 An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Except for investment
properties where recoverable amount is determined based on fair value less cost to sell, the recoverable amount of all other nonfinancial
assets is determined based on the asset’s value in use computation which considers the present value of estimated future cash flows
expected to be generated from the continued use of the asset. The Group is required to make estimates and assumptions that can
materially affect the carrying amount of the asset being assessed.

The carrying values of the Group’s nonfinancial assets are disclosed in Notes 12 and 13.

4. FINANCIAL INSTRUMENT CATEGORIES

The following table presents the total carrying amount of the Group’s and the Parent Company’s financial instruments per category:

2018
Consolidated Parent Company
Financial assets
Cash and other cash items P15,639,474 P13,705,304
Financial assets at FVTPL 7,596,261 6,689,796
Financial assets at FVOCI 10,101,527 8,213,010
Financial assets at amortized cost
Due from BSP 101,889,773 95,092,944
Due from other banks 9,455,447 7,837,894
Interbank loans receivables and SPURA 11,998,040 8,998,040
Investment securities 172,537,036 163,824,466
Loans and receivables 505,804,955 441,432,156
Accrued interest receivable 5,697,181 5,126,127
Other assets* 3,577,270 1,520,108
810,959,702 723,831,735
Total financial assets P844,296,964 P752,439,845

2017
Consolidated Parent Company
Financial assets
Cash and other cash items P12,685,984 P11,160,173
Financial assets at FVTPL 16,238,888 16,056,823
AFS financial assets 46,445,391 42,9 37,083
HTM financial assets 65,286,267 61,533,493
Loans and receivables:
Due from BSP 98,490,014 91,717,037
Due from other banks 15,641,476 14,066,620
Interbank loans receivables and SPURA 18,751,845 17,347,522
Loans and receivables 448,970,942 386,554,498
Accrued interest receivable 3,718,505 3,189,083
Other assets* 3,645,678 1,594,757
589,218,460 514,469,517
Total financial assets P729,874,990 P646,157,089
*Other assets include accounts receivables, SCR, RCOCI and miscellaneous financial assets (Note 15).

26 CHINA BANKING CO RPORATI ON

 Consolidated Parent Company
2018 2017 2018 2017
Financial liabilities
Other financial liabilities:
Deposit liabilities P722,123,297 P635,093,393 P638,243,362 P559,235,979
Bills payable 39,826,532 20,118,031 39,826,532 20,118,031
Manager’s checks 2,577,175 2,441,042 2,069,812 1,709,248
Accrued interest and other expenses* 2,456,064 1,381,441 2,035,662 1,068,572
Other liabilities** 7,347,450 5,399,076 5,779,466 3,509,795
774,330,518 664,432,983 687,954,834 585,641,625
Financial liabilities at FVPL:
Derivative liabilities 455,150 267,533 455,150 267,533
Total financial liabilities P774,785,668 P664,700,516 P688,409,984 P585,909,158
*Accrued interest and other expenses includes accrued interest payable and accrued other expenses payable (Note 19).
**Other liabilities exclude withholding taxes payable and retirement liabilities (Note 20).

5. FAIR VALUE MEASUREMENT

The Group has assets and liabilities in the consolidated and Parent Company balance sheets that are measured at fair value on a recurring
and non-recurring basis after initial recognition. Recurring fair value measurements are those that another PFRS requires or permits to be
recognized in the balance sheet at the end of each financial reporting period. These include financial assets and liabilities at FVPL, AFS
financial assets and financial assets at FVOCI. Non-recurring fair value measurements are those that another PFRS requires or permits to be
recognized in the balance sheet in particular circumstances. For example, PFRS 5 requires an entity to measure an asset held for sale at the
lower of its carrying amount and fair value less costs to sell. Since the asset’s fair value less costs to sell is only recognized in the balance
sheet when it is lower than its carrying amount, that fair value measurement is non-recurring.

As of December 31, 2018 and 2017, except for the following financial instruments, the carrying values of the Group’s and the Parent
Company’s financial assets and liabilities as reflected in the balance sheets and related notes approximate their respective fair values:

2018
Consolidated Parent Company
Carrying Value Fair Value Carrying Value Fair Value
Financial Assets
Investment securities at amortized cost
Investment securities (Note 9)
Government bonds P117,260,018 P108,886,906 P110,220,634 P102,006,641
Private bonds 55,277,018 54,077,408 53,603,832 52,509,703
Loans and receivables (Note 10)
Corporate and commercial lending 406,403,070 389,177,803 376,793,349 357,613,633
Consumer lending 85,688,187 85,222,099 51,816,708 46,749,579
Trade-related lending 13,662,914 13,283,538 12,782,734 12,772,774
Others 50,785 56,603 39,365 45,185
Sales contracts receivable (Note 15) 1,040,939 1,101,941 199,692 178,486
Financial Liabilities
Deposit liabilities (Note 17) 321,343,811 299,666,264 265,739,836 243,898,397

27
 2017
Consolidated Parent Company
Carrying Value Fair Value Carrying Value Fair Value
Financial Assets
HTM financial assets (Note 9)
Government bonds P52,998,477 P51,488,294 P50,263,703 P48,754,016
Private bonds 12,287,79 0 12,110,870 11,269,790 11,354,669
Loans and receivables (Note 10)
Corporate and commercial lending 365,117,654 349,880,762 333,430,383 315,853,285
Consumer lending 71,577,9 84 74,207,566 42,556,905 41,952,821
Trade-related lending 12,062,711 12,041,107 10,513,204 10,417,129
Others 212,593 196,307 54,006 63,19 8
Sales contracts receivable (Note 15) 918,147 1,060,191 184,092 200,134
Financial Liabilities
Deposit liabilities (Note 17) 292,083,031 282,586,204 240,712,750 236,777,045

The methods and assumptions used by the Group and Parent Company in estimating the fair values of the financial instruments follow:

Cash and other cash items, due from BSP and other banks, interbank loans receivable and SPURA and accrued interest receivable - The
carrying amounts approximate their fair values in view of the relatively short-term maturities of these instruments.

Debt securities - Fair values are generally based on quoted market prices. If the market prices are not readily available, fair values are
estimated using either values obtained from independent parties offering pricing services or adjusted quoted market prices of comparable
investments or using the discounted cash flow methodology.

Equity securities (prior to adoption of PFRS 9) - For publicly traded equity securities, fair values are based on quoted prices. For unquoted
equity securities for which no reliable basis for fair value measurement is available, these are carried at cost net of impairment, if any.

Equity securities (upon adoption of PFRS 9) - For publicly traded equity securities, fair values are based on quoted prices. For unquoted
equity securities, remeasurement to their fair values is not material to the financial statements.

Loans and receivables and sales contracts receivable (SCR) included in other assets - Fair values of loans and receivables and SCR are
estimated using the discounted cash flow methodology, where future cash flows are discounted using the Group’s current incremental
lending rates for similar types of loans and receivables.

Accounts receivable, RCOCI and other financial assets included in other assets - Quoted market prices are not readily available for these
assets. These are reported at cost and are not significant in relation to the Group’s total portfolio of securities.

Derivative instruments (included under FVPL) - Fair values are estimated based on discounted cash flows, using prevailing interest rate
differential and spot exchange rates.

Deposit liabilities (time, demand and savings deposits) - Fair values of time deposits are estimated using the discounted cash flow
methodology, where future cash flows are discounted using the Group’s current incremental borrowing rates for similar borrowings and with
maturities consistent with those remaining for the liability being valued. For demand and savings deposits, carrying amounts approximate
fair values considering that these are currently due and demandable.

Bills payable - Fair values are estimated using the discounted cash flow methodology, where future cash flows are discounted using the
current incremental borrowing rates for similar borrowings and with maturities consistent with those remaining for the liability being valued.

Manager’s checks and accrued interest and other expenses - Carrying amounts approximate fair values due to the short-term nature of the
accounts.

Other liabilities - Quoted market prices are not readily available for these liabilities. These are reported at cost and are not significant in relation
to the Group’s total portfolio.

28 CHINA BANKING CO RPORATI ON

Fair Value Hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of assets and liabilities by valuation technique:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices); and
Level 3: inputs that are not based on observable market data or unobservable inputs.

As of December 31, 2018 and 2017, the fair value hierarchy of the Group’s and the Parent Company’s assets and liabilities are presented
below:

Consolidated
2018
Level 1 Level 2 Level 3 Total
Recurring fair value measurements(a)
Financial assets at FVPL
Held-for-trading
Government bonds P492,521 P141,372 P− P633,893
Treasury notes − 838,662 − 838,662
Treasury bills − 1,214,170 − 1,214,170
Private bonds 3,189,063 − − 3,189,063
Quoted equity shares 1,312,625 − − 1,312,625
Derivative assets − 407,848 − 407,848
Financial assets at FVOCI −
Government bonds 4,859,716 5,107,673 − 9,967,389
Quoted private bonds 35,370 − − 35,370
Quoted equity shares 80,403 − − 80,403
P9,969,698 P7,709,725 P− P17,679,423
Financial liabilities at FVPL
Derivative liabilities P− P455,150 P− P455,150
P− P455,150 P− P 455,150
Fair values of assets carried at amortized cost/cost(a)
Investment securities at amortized cost
Government bonds P108,886,906 P− P− P108,886,906
Private bonds 54,077,408 − − 54,077,408
Loans and receivables
Corporate and commercial loans − − 389,177,803 389,177,803
Consumer loans − − 85,222,099 85,222,099
Trade-related loans − − 13,283,538 13,283,538
Others − − 56,603 56,603
Sales contracts receivable − − 1,101,941 1,101,941
Investment properties(b) −
Land − − 8,696,956 8,696,956
Buildings and improvements − − 1,371,972 1,371,972
P162,964,314 P− P498,910,912 P661,875,227
Fair values of liabilities carried at amortized cost(a)
Deposit liabilities P− P− P299,666,264 P299,666,264
(a) valued as of December 31, 2018

29
 Consolidated
2017
Level 1 Level 2 Level 3 Total
Recurring fair value measurements(a)
Financial assets at FVPL
Held-for-trading
Government bonds P5,792,345 P119,314 P– P5,911,659
Treasury notes 1,413,940 479,252 – 1,89 3,192
Treasury bills 315,996 1,709,371 – 2,025,367
Private bonds 2,663,397 – – 2,663,397
Financial assets designated at FVPL 3,411,686 – – 3,411,686
Derivative assets – 333,587 – 333,587
AFS financial assets
Government bonds 25,761,577 9,467,927 – 35,229,504
Quoted private bonds 11,051,657 38,781 – 11,09 0,438
Quoted equity shares 67,9 03 – – 67,9 03
P50,478,501 P12,148,232 P– P62,626,733
Financial liabilities at FVPL
Derivative liabilities P– P267,533 P– P267,533
P– P267,533 P– P267,533
Fair values of assets carried at amortized cost/cost(a)
HTM financial assets
Government bonds P51,488,294 – – 51,488,294
Private bonds 12,110,870 – – 12,110,870
Loans and receivables
Corporate and commercial loans – – 349,880,762 349,880,762
Consumer loans – – 74,207,566 74,207,566
Trade-related loans – – 12,041,107 12,041,107
Others – – 196,307 196,307
Sales contracts receivable – – 1,060,191 1,060,191
Investment properties(b)
Land – – 7,091,280 7,091,280
Buildings and improvements – – 2,406,887 2,406,887
P63,599,164 P– P446,884,100 P510,483,264
Fair values of liabilities carried at amortized cost (a)

Deposit liabilities P− P− P282,586,204 P282,586,204

(b) valued as of December 31,2017

30 CHINA BANKING CO RPORATI ON

 Parent Company
2018
Level 1 Level 2 Level 3 Total
Recurring fair value measurements(a)
Financial assets at FVPL
Held-for-trading
Government bonds P492,521 P141,372 P− P633,893
Treasury notes − 838,662 − 838,662
Treasury bills − 1,214,170 − 1,214,170
Private bonds 2,282,598 − − 2,282,598
Quwoted equity shares 1,312,625 − − 1,312,625
Derivative assets − 407,848 − 407,848
Financial assets at FVOCI
Government bonds 3,033,686 5,107,673 − 8,141,359
Quoted private bonds 1,676 − − 1,676
Quoted equity shares 51,610 − − 51,610
P7,174,716 P7,709,725 P− P14,884,441
Financial liabilities at FVPL
Derivative liabilities P− P455,150 P− P455,150
P− P455,150 P− P455,150
Fair values of assets carried at amortized cost/cost(a)
Investment securities at amortized cost
Government bonds P102,006,641 P− P− P102,006,641
Private bonds 52,509,703 − − 52,509,703
Loans and receivables
Corporate and commercial loans − − 357,613,633 357,613,633
Consumer loans − − 46,749,579 46,749,579
Trade-related loans − − 12,772,774 12,772,774
Others − − 45,185 45,185
Sales contracts receivable − − 178,486 178,486
Investment properties(b)
Land − − 4,225,706 4,225,706
Buildings and improvements − − 974,119 974,119
P154,516,344 P− P422,559,482 P577,075,826
Fair values of liabilities carried at amortized cost
Deposit liabilities P− P− P243,898,397 P243,898,397
(a) valued as of December 31, 2018

31
 Parent Company
2017
Level 1 Level 2 Level 3 Total
Recurring fair value measurements(a)
Financial assets at FVPL
Held-for-trading
Government bonds P5,757,518 P119,314 P− P5,876,832
Treasury notes 1,313,369 479,252 − 1,792,621
Treasury bills 315,996 1,709,371 − 2,025,367
Private bonds 2,616,730 – − 2,616,730
Financial assets designated at FVPL 3,411,686 – − 3,411,686
Derivative assets − 333,587 − 333,587
AFS financial assets
Government bonds 22,9 05,417 9,467,927 − 32,373,344
Quoted private bonds 10,483,794 − − 10,483,794
Quoted equity shares 67,9 03 − − 67,9 03
P46,872,413 P12,109,451 P− P58,981,864
Financial liabilities at FVPL
Derivative liabilities P− P267,533 P− P267,533
P− P267,533 P− P267,533
Fair values of assets carried at amortized cost/cost(a)
HTM financial assets
Government bonds P48,754,016 P− P− P46,784,643
Private bonds 11,354,669 − − 13,324,042
Loans and receivables
Corporate and commercial loans − − 315,853,285 315,853,285
Consumer loans − − 41,952,821 41,952,821
Trade-related loans − − 10,417,129 10,417,129
Others − − 63,19 8 63,19 8
Sales contracts receivable − − 200,134 200,134
Investment properties(b)
Land − − 4,225,706 4,225,706
Buildings and improvements − − 970,099 970,099
P60,108,685 P− P373,682,372 P433,791,057
Fair values of liabilities carried at amortized cost 236,777,045 236,777,045
Deposit liabilities P− P− P236,777,045 P236,777,045
(b) valued as of December 31, 2017

There were no transfers between Level 1 and Level 2 fair value measurements and no transfers into and out of Level 3 fair value measurements
in 2018 and 2017.

The inputs used in the fair value measurement based on Level 2 are as follows:

Government securities - interpolated rates based on market rates of benchmark securities as of reporting date.

Private bonds and commercial papers - quoted market price of comparable investments with credit risk premium that is insignificant to the
entire fair value measurement.

Derivative assets and liabilities - fair values are calculated by reference to the prevailing interest differential and spot exchange rate as of the
reporting date, taking into account the remaining term to maturity of the derivative assets and liabilities.

32 CHINA BANKING CO RPORATI ON

Inputs used in estimating fair values of financial instruments carried at cost and categorized under Level 3 include risk-free rates and
applicable risk premium.

The fair values of the Group’s and Parent Company’s investment properties have been determined by the appraisal method by independent
external and in-house appraisers based on highest and best use of property being appraised. Valuations were derived on the basis of recent
sales of similar properties in the same areas as the investment properties and taking into account the economic conditions prevailing at the
time the valuations were made and comparability of similar properties sold with the property being valued.

The table below summarizes the valuation techniques used and the significant unobservable inputs valuation for each type of investment
properties held by the Group and the Parent Company:

Valuation Techniques Significant Unobservable Inputs

Land Market Data Approach Price per square meter, size, location, shape, time
element and corner influence
Land and Building Market Data Approach and Cost Approach Reproduction Cost New

Description’s of the valuation techniques and significant unobservable inputs used in the valuation of the Group and the Parent Company’s
investment properties are as follows:

Valuation Techniques
Market Data Approach A process of comparing the subject property being appraised to similar comparable properties
recently sold or being offered for sale.

Cost Approach It is an estimate of the investment required to duplicate the property in its present condition. It is
reached by estimating the value of the building “as if new” and then deducting the depreciated cost.
Fundamental to the Cost Approach is the estimate of Reproduction Cost New of the improvements.

Significant Unobservable Inputs

Reproduction Cost New The cost to create a virtual replica of the existing structure, employing the same design and similar
building materials.

Size Size of lot in terms of area. Evaluate if the lot size of property or comparable conforms to the average
cut of the lots in the area and estimate the impact of lot size differences on land value.

Shape Particular form or configuration of the lot. A highly irregular shape limits the usable area whereas
an ideal lot configuration maximizes the usable area of the lot which is associated in designing an
improvement which conforms with the highest and best use of the property.

Location Location of comparative properties whether on a Main Road, or secondary road. Road width could
also be a consideration if data is available. As a rule, properties located along a Main Road are
superior to properties located along a secondary road.

Time Element “An adjustment for market conditions is made if general property values have appreciated or
depreciated since the transaction dates due to inflation or deflation or a change in investors’
perceptions of the market over time”. In which case, the current data is superior to historic data.

Discount Generally, asking prices in ads posted for sale are negotiable. Discount is the amount the seller
or developer is willing to deduct from the posted selling price if the transaction will be in cash or
equivalent.

Corner influence Bounded by two (2) roads.

33
6. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s activities are principally related to the profitable use of financial instruments. Risks are inherent in these activities but are
managed by the Group through a rigorous, comprehensive and continuous process of identification, measurement, monitoring and mitigation
of these risks, partly through the effective use of risk and authority limits and thresholds, process controls and monitoring, and independent
controls. As reflected in its corporate actions and organizational improvements, the Group has placed due importance on expanding and
strengthening its risk management process and considers it as a vital component to the Group’s continuing profitability and financial stability.
Central to the Group’s risk management process is its adoption of a risk management program intended to avoid unnecessary risks, manage
and mitigate unavoidable risks and maximize returns from taking acceptable risks necessary to sustain its business viability and good
financial position in the market.

The key financial risks that the Group faces are: credit risk, market risk (i.e. interest rate risk, foreign currency risk and equity price risk) and
liquidity risk. The Group’s risk management objective is primarily focused on controlling and mitigating these risks. The Parent Company
and its subsidiaries manage their respective financial risks separately. The subsidiaries, particularly CBSI, have their own risk management
processes but are structured similar to that of the Parent Company. To a large extent, the respective risk management programs and
objectives are the same across the Group. The gravity of the risks, the magnitude of the financial instruments involved, and regulatory
requirements are primary considerations to the scope and extent of the risk management processes put in place for the subsidiaries.

Risk Management Structure

The BOD of the Parent Company is ultimately responsible for the oversight of the Parent Company’s risk management processes. On
the other hand, the risk management processes of the subsidiaries are the separate responsibilities of their respective BODs. The BOD
of the Parent Company created a separate board-level independent committee with explicit authority and responsibility for managing and
monitoring risks.

The BOD has delegated to the Risk Oversight Committee (ROC) the implementation of the risk management process which includes,
among others, the development of various risk strategies and principles, control guidelines policies and procedures, implementation of risk
measurement tools, monitoring of key risk indicators, and the imposition and monitoring of risk limits and thresholds. The ROC is composed
of three members of the BOD, two of whom are independent directors.

The Risk Management Group (RMG) is the direct support of the ROC in the day-to-day risk management and the implementation of the
risk management strategies approved by the ROC. The implementation cuts across all departments of the Parent Company and involves
all of the Parent Company’s financial instruments, whether “on-books” or “off-books.” The RMG is likewise responsible for monitoring the
implementation of specific risk control procedures and enforcing compliance thereto. The RMG is also directly involved in the day-to-day
risk measurement and monitoring to make sure that the Parent Company, in its transactions and dealings, engages only in acceptable and
manageable financial risks. The RMG also ensures that risk measurements are accurately and completely captured on a timely basis in the
management reporting system of the Parent Company. The RMG regularly reports the results of the risk measurements to the ROC. The
RMG is headed by the Chief Risk Officer (CRO).

Apart from RMG, each business unit has created and put in place various process controls which ensure that all the external and internal
transactions and dealings of the unit are in compliance with the unit’s risk management objectives.

The Internal Audit Division also plays a crucial role in risk management primarily because it is independent of the business units and reports
exclusively to the Audit Committee which, in turn, is comprised of independent directors. The Internal Audit Division focuses on ensuring
that adequate controls are in place and on monitoring compliance to controls. The regular audit covers all processes and controls, including
those under the risk management framework handled by the RMG. The audit of these processes and controls is undertaken at least annually.
The audit results and exceptions, including recommendations for their resolution or improvement, are discussed initially with the business
units concerned before these are presented to the Audit Committee.

Risk Management Reporting

The CRO and other members of the RMG report to the ROC and are a resource to the Management Committee (ManCom) on a monthly and
a weekly basis, respectively. The CRO reports on key risk indicators and specific risk management issues that would need resolution from
top management. This is undertaken after the risk issues and key risk indicators have been discussed with the business units concerned.

The key risk indicators were formulated on the basis of the financial risks faced by the Parent Company. The key risk indicators contain
information from all business units that provide measurements on the level of the risks taken by the Parent Company in its products,
transactions and financial structure. Among others, the report on key risk indicators includes information on the Parent Company’s
aggregate credit exposure, credit metric forecasts, hold limit exceptions, Value-at-Risk (VaR) analysis, utilization of market and credit limits
and thresholds, liquidity risk limits and ratios, overall loan loss provisioning and risk profile changes. Loan loss provisioning and credit limit
utilization are, however, discussed in more detail in the Credit Committee. On a monthly basis, detailed reporting of single-name and sectoral
concentration is included in the discussion with the ROC. On the other hand, the Chief Audit Executive reports to the Audit Committee on a
monthly basis on the results of branch or business unit audits and for the resolution of pending but important internal audit issues.

34 CHINA BANKING CO RPORATI ON

Risk Mitigation
The Parent Company uses derivatives to manage exposures in its financial instruments resulting from changes in interest rates and foreign
currencies exposures. However, the nature and extent of use of these financial instruments to mitigate risks are limited to those allowed by
the BSP for the Parent Company and its subsidiaries.

To further mitigate risks throughout its different business units, the Parent Company formulates risk management policies and continues to
improve its existing policies. These policies further serve as the framework and set of guidelines in the creation or revisions of operating
policies and manuals for each business unit. In the process design and implementation, preventive controls are preferred over detection
controls. Clear delineation of responsibilities and separation of incompatible duties among officers and staff, as well as, among business units
are reiterated in these policies. To the extent possible, reporting and accounting responsibilities are segregated from units directly involved
in operations and front line activities (i.e., players must not be scorers). This is to improve the credibility and accuracy of management
information. Any inconsistencies in the operating policies and manuals with the risk framework created by the RMG are taken up and
resolved in the ROC and ManCom.

Based on the approved Operational Risk Assessment Program, RMG spearheaded the bankwide (all Head Office units and branches) risk
identification and self-assessment process. This would enable determination of priority risk areas, assessment of mitigating controls in place,
and institutionalization of additional measures to ensure a controlled operating environment. RMG was also mandated to maintain and
update the Parent Company’s Centralized Loss Database wherein all reported incidents of losses shall be encoded to enable assessment of
weaknesses in the processes and come up with viable improvements to avoid recurrence.

Monitoring and controlling risks are primarily performed based on various limits and thresholds established by the top management covering
the Group’s transactions and dealings. These limits and thresholds reflect the Group’s business strategies and market environment, as well
as, the levels of risks that the Group is willing to tolerate, with additional emphasis on selected industries. In addition, the Parent Company
monitors and measures the overall risk-bearing capacity in relation to the aggregate risk exposure across all risk types and activities.

Liquidity and interest rate risk exposures are measured and monitored through the Maximum Cumulative Outflow and Earnings-at-Risk
reports from the Asset and Liability Management (ALM) system. It was implemented in 2013 and was upgraded in 2017 to a new version
which include modules for calculating Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). The system also has a Funds
Transfer Pricing module used by the Treasury Group and Corporate Planning Group.

For the measurement of market risk exposures, the Bank uses Historical Simulation VaR approach for all treasury traded instruments,
including fixed income bonds, foreign exchange swaps and forwards, interest rate swaps and equity securities. Market risk exposures are
measured and monitored through reports from the Market Risk Management System which has been implemented in 2017 to enhance risk
measurement and automate daily reporting.

BSP issued Circular No. 639 dated January 15, 2009 which mandated the use of the Internal Capital Adequacy Assessment Process (ICAAP)
by all universal and commercials banks to determine their minimum required capital relative to their business risk exposures. In this regard,
the Board approved the engagement of the services of a consultant to assist in the bank-wide implementation and embedding of the ICAAP,
as provided for under Pillar 2 of Basel II and BSP Circular No. 639.

On April 5, 2018, the BOD approved the inclusion of cybersecurity as part of the priority risks related to Information Technology. This is in
addition to the priority risks set in the 2009 Risk Self-assessment Survey and voting conducted among selected members of the BOD and
Senior Management which were retained on the basis that there is no significant change in either the business model of the Bank or its
ownership structure. In addition, the BOD also approved the changes in the trigger events for the review of Capital Ratios MAT and the
retention of the methodology for the CET1 ratio limit and the Management Action Trigger (MAT) on capital ratios. There were no changes
made in the approved trigger events for the review of Priority Risks.

The Parent Company submitted its annually updated ICAAP document, in compliance with BSP requirements on March 27, 2018. The
document disclosed that the Parent Company has an appropriate level of internal capital relative to the Group’s risk profile.

For the ICAAP document submitted on March 27, 2018, the Parent Company retained the Pillar 1 Plus approach using the Pillar 1 capital as
the baseline. The process of allocating capital for all types of risks above the Pillar 1 capital levels includes quantification of capital buffer for
Pillar 2 risks under normal business cycle/condition, in addition to the quantification based on the results of the Integrated Stress Test (IST).
The adoption of the IST allows the Parent Company to quantify its overall vulnerability to market shocks and operational losses in a collective
manner driven by events rather than in silo. The capital assessment in the document discloses that the Group and the Parent Company has
appropriate and sufficient level of internal capital.

35
 Credit Risk

Credit Risk and Concentration of Assets and Liabilities and Off-Balance Sheet Items
Credit risk is the risk of financial loss on account of a counterparty to a financial product failing to honor its obligation. The Group faces
potential credit risks every time it extends funds to borrowers, commits funds to counterparties, guarantees the paying performance of its
clients, invests funds to issuers (i.e., investment securities issued by either sovereign or corporate entities) or enters into either market-traded
or over-the-counter derivatives, through implied or actual contractual agreements (i.e., on or off-balance sheet exposures). The Group
manages its credit risk at various levels (i.e., strategic level, portfolio level down to individual credit or transaction).

The Group established risk limits and thresholds for purposes of monitoring and managing credit risk from individual counterparties and/or
groups of counterparties, as well as major industries. It also conducts periodical assessment of the creditworthiness of its counterparties.
In addition, the Group obtains collateral where appropriate, enters into master netting agreements and collateral arrangements with
counterparties, and limits the duration of exposures.

The Parent Company has four credit risk rating models in place: for corporate borrowers, for non-consumer individual borrowers and small &
medium enterprises (SMEs), for financial institutions, for sovereign / country exposures. In addition, it also has three scoring models: for auto
and housing loan applicants, and for credit card applicants.

In compliance with BSP requirements, the Group established an internal Credit Risk Rating System (ICRRS) for the purpose of measuring
credit risk for corporate borrowers in a consistent manner, as accurately as possible, and thereafter uses the risk information for business
and financial decision making. The ICRRS covers corporate borrowers with total assets, total facilities, or total credit exposures amounting
to P15.00 million and above.

Further, the ICRRS was designed within the technical requirements defined under BSP Circular No. 439. It has two components, namely:
a) Borrower Risk Rating which provides an assessment of the creditworthiness of the borrower, without considering the proposed
facility and security arrangements, and b) Loan Exposure Ratio which provides an assessment of the proposed facilities as mitigated or
enhanced by security arrangements. The ICRRS rating scale consists of ten grades, six of which fall under unclassified accounts, with
the remaining four falling under classified accounts in accordance with regulatory provisioning guidelines.

On March 5, 2014, the Parent Company approved the engagement of a third-party consultant, Moody’s Analytics, for the quantitative and
qualitative validation of the ICRRS. The validation engagement was completed in December 2014 followed by the model recalibration,
closing the project in December 2016.

The Parent Company launched in 2011 the Borrower Credit Score (BCS), a credit scoring system designed for retail small and medium
entities and individual loan accounts. In 2017, RMG completed the statistical validation of the BCS using the same methodology applied to
the validation of the corporate risk rating model. The validation process was conducted with the assistance of Teradata which provided the
analytics platform, tools and technical guidance for both credit model performance assessment and recalibration.

The CAMELOT rating system was approved by the BOD in 2006 to specifically assess Philippine universal, commercial and thrift banks. In
2009, the Bank implemented the rating system for rural and cooperative banks as well as the rating system for foreign financial institutions.

The Parent Company also developed a Sovereign Risk Rating Model, which provided the tool for the Bank to assess the strength of the
country rated in reference to its economic fundamentals, fiscal policy, institutional strength, and vulnerability to extreme events. The Model
was approved by the Board on September 7, 2017.

The scorecards for auto and housing loans were officially launched in November 2016, adopting the models developed by CBS with a third-
party consultant, and utilizing internally developed software interfaces for their implementation.

For the Bank’s credit cards, an acquisition scorecard has been created to determine application acceptance and has been in place since the
launch of the credit card business.

Excessive Risk Concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or
have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic,
political or other conditions. Concentrations indicate the relative sensitivity of the Parent Company’s performance to developments affecting
a particular industry or geographical location.

36 CHINA BANKING CO RPORATI ON

In order to avoid excessive concentrations of risk, the Parent Company’s policies and procedures include specific guidelines focusing on
maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

The distribution of the Group’s and Parent Company’s assets and liabilities, and credit commitment items (Note 30) by geographic region as
of December 31, 2018 and 2017 (in millions) follows:

Consolidated
2018 2017
Assets Liabilities Commitment Assets Liabilities Commitment
Geographic Region
Philippines P741,331 P743,613 P87,789 P711,801 P651,283 P58,136
Asia 14,965 1,386 27,313 8,530 3,850 20,151
Europe 18,411 2,859 3,634 5,442 2,952 5,431
United States 68,277 21,107 2,548 499 6,616 2,794
Others 1,313 5,821 38 3,603 − 4
P844,297 P774,786 P121,322 P729,875 P664,701 P86,516

Parent Company
2018 2017
Assets Liabilities Commitment Assets Liabilities Commitment
Geographic Region
Philippines P689,382 P660,706 P87,077 P629,802 P572,601 P55,501
Asia 14,965 1,386 27,313 6,905 3,740 20,151
Europe 18,411 2,859 3,634 5,442 2,952 5,431
United States 28,369 17,638 2,548 405 6,616 2,794
Others 1,313 5,821 38 3,603 − 4
P752,440 P688,410 P120,610 P646,157 P585,909 P83,881

Information on credit concentration as to industry of loans and receivables is presented in Note 10 to the financial statements.

Maximum exposure to credit risk

The tables below provide the analysis of the maximum exposure to credit risk of the Group and the Parent Company’s financial instruments,
excluding those where the carrying values as reflected in the balance sheets and related notes already represent the financial instrument’s
maximum exposure to credit risk, before and after taking into account collateral held or other credit enhancements:

Consolidated
2018
Financial effect
of collateral or
Gross maximum credit
exposure Net exposure enhancement
Credit risk exposure relating to on-balance sheet items
are as follows
Loans and receivables P505,804,955 P275,165,316 P230,639,639
Interbank loans receivable and SPURA 10,000,000 – 10,000,000
Sales contracts receivable 1,040,939 – 1,040,939
P516,845,894 P275,165,316 P240,680,578

37
 Consolidated
2017
Financial effect
of collateral or
Gross maximum credit
exposure Net exposure enhancement
Credit risk exposure relating to on-balance sheet items
are as follows
Loans and receivables P448,970,942 P237,847,050 P211,123,892
Interbank loans receivable and SPURA 18,751,845 1,865 18,749,980
Sales contracts receivable 894,843 – 894,843
P468,617,630 P237,848,915 P230,768,715

Parent Company
2018
Financial effect
of collateral or
Gross maximum credit
exposure Net exposure enhancement
Credit risk exposure relating to on-balance sheet items
are as follows
Loans and receivables P441,432,156 P249,012,090 P192,420,066
Interbank loans receivable and SPURA 7,000,000 – 7,000,000
Sales contracts receivable 199,692 – 199,962
P448,631,848 P249,012,090 P199,619,758

Parent Company
2017
Financial effect
of collateral or
Gross maximum credit
exposure Net exposure enhancement
Credit risk exposure relating to on-balance sheet items
are as follows
Loans and receivables P386,554,498 P229,957,505 P126,596,993
Interbank loans receivable and SPURA 17,347,522 2,000 17,345,522
Sales contracts receivable 184,091 – 184,091
P404,086,111 P229,960,505 P144,216,606

For the Group, the fair values of collateral held for loans and receivables and sales contracts receivable amounted to P338.60 billion and
P1.60 billion, respectively, as of December 31, 2018 and P330.43 billion and P1.34 billion, respectively, as of December 31, 2017.

For the Parent Company, the fair values of collateral held for loans and receivables and sales contracts receivable amounted to
P302.16 billion and P1.47 billion, respectively, as of December 31, 2018 and P294.54 billion and P1.04 billion, respectively, as of
December 31, 2017.

Credit risk, in respect of derivative financial products, is limited to those with positive fair values, which are included under financial assets
at FVPL (Note 9). As a result, the maximum credit risk, without taking into account the fair value of any collateral and netting agreements,
is limited to the amounts on the balance sheet plus commitments to customers such as unused commercial letters of credit, outstanding
guarantees and others as disclosed in Note 30 to the financial statements.

38 CHINA BANKING CO RPORATI ON

Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented
with regard to the acceptability of types of collateral and valuation parameters.

The main types of collateral obtained are as follows:

• For securities lending and reverse repurchase transactions - cash or securities
• For consumer lending - real estate and chattel over vehicle
• For corporate lending and commercial lending- real estate, chattel over properties, assignment of deposits, shares of stocks, bonds,
and guarantees

Management requests additional collateral in accordance with the underlying agreement and takes into consideration the market value of
collateral during its review of the adequacy of allowance for credit losses.

It is the Group’s policy to dispose of repossessed properties in an orderly fashion. The proceeds are used to reduce or repay the outstanding
claim. In most cases, the Parent Company does not occupy repossessed properties for business use.

Credit quality per class of financial assets

The credit quality of financial assets is managed by the Group using an internal credit rating system for the purpose of measuring credit risk
in a consistent manner as accurately as possible. The model on risk ratings is assessed regularly because the Group uses this information
as a tool for business and financial decision making. Aside from the periodic review by the Bank’s Internal Audit Group, the Bank likewise
engaged the services of third-party consultants in 2014, 2015, and 2016 for purposes of conducting an independent validation of the credit
risk rating model.

It is the Parent Company’s policy to maintain accurate and consistent risk ratings across the credit portfolio. This facilitates focused
management of the applicable risks and the comparison of credit exposures across all lines of business, geographic regions and products.
The rating system is supported by a variety of financial analytics, combined with processed market information to provide the main inputs
for the measurement of counterparty risk. All internal risk ratings are tailored to the various categories and are derived in accordance with
the Parent Company’s rating policy. The attributable risk ratings are assessed and monitored regularly. The standard credit rating equivalent
grades are relevant only for certain exposures in each risk rating class.

The following table shows the description of the internal CRRS grade:

CRRS Grade Description

1 Excellent
2 Strong
3 Good
4 Satisfactory
5 Acceptable
6 Watchlist
7 Especially Mentioned
8 Substandard
9 Doubtful
10 Loss

The credit grades are defined as follows:

Excellent - This category applies to a borrower with a very low probability of going into default in the coming year. The borrower has a high
degree of stability, substance, and diversity. It has access to raise substantial amounts of funds through the public markets at any time. The
borrower has a very strong debt service capacity and a conservative use of balance sheet leverage. The track record in profit terms is very
good. The borrower is of highest quality under virtually all economic conditions.

Strong - This category applies to a borrower with a low probability of going into default in the coming year. The borrower normally has a
comfortable degree of stability, substance, and diversity. Under normal market conditions, the borrower in this category has good access
to public markets to raise funds. The borrower has a strong market and financial position with a history of successful performance. The
overall debt service capacity as measured by cash flow to total debt service is deemed very strong; the critical balance sheet ratios (vis-à-vis
industry) are conservative.

39
 Good - This category covers the smaller corporations with limited access to public capital markets or access to alternative financial markets.
This access is however limited to favorable economic and/or market conditions. Typical for this type of borrower is the combination of
comfortable asset protection and acceptable balance sheet structure (vis-à-vis industry). The debt service capacity, as measured based on
cash flows, is strong.

Satisfactory - This category represents the borrower where clear risk elements exist and the probability of default is somewhat greater. This
probability is reflected in volatility of earnings and overall performance. The borrower in this category normally has limited access to public
financial markets. The borrower should be able to withstand normal business cycles, but any prolonged unfavorable economic period would
create deterioration beyond acceptable levels. Typical for this kind of borrower is the combination of reasonably sound asset and cash flow
protection. The debt service capacity as measured by cash flow is deemed adequate. The borrower has reported profits for the past fiscal
year and is expected to report a profit in the current year.

Acceptable - The risk elements for the Parent Company are sufficiently pronounced, although the borrower should still be able to withstand
normal business cycles. Any prolonged unfavorable economic and/or market period would create an immediate deterioration beyond
acceptable levels.

Watchlist - This category represents the borrower for which unfavorable industry or company-specific risk factors represent a concern.
Operating performance and financial strength may be marginal and it is uncertain whether the borrower can attract alternative sources of
financing. The borrower will find it very hard to cope with any significant economic downturn and a default in such a case is more than a
possibility. It includes the borrower where the credit exposure is not a risk of loss at the moment, but the performance of the borrower has
weakened, and unless present trends are reversed, could lead to losses.

Especially Mentioned - This category applies to the borrower that is characterized by a reasonable probability of default, manifested by some
or all the following: (a) evidence of weakness in the borrower’s financial condition or creditworthiness; (b) unacceptable risk is generated by
potential or emerging weaknesses as far as asset protection and/or cash flow is concerned; (c) the borrower has reached a point where there
is a real risk that the borrower’s ability to pay the interest and repay the principal timely could be jeopardized; (d) the borrower is expected to
have financial difficulties and exposure may be at risk. Closer account management attention is warranted.

Concerted efforts should be made to improve lender’s position (e.g., demanding additional collateral or reduction of account exposure).
These potential weaknesses, if left uncorrected or unmitigated, would affect the repayment of the loan and, thus, increase credit risk to the
Parent Company.

Substandard - This category represents the borrower where one or more of the following factors apply: (a) the collection of principal or interest
becomes questionable regardless of scheduled payment date, by reason of adverse developments on account of a financial, managerial,
economic, or political nature, or by important weaknesses in cover; (b) the probability of default is assessed at up to 50%. Substandard
loans are loans or portions thereof which appear to involve a substantial and unreasonable degree of risk to the Parent Company because
of unfavorable record or unsatisfactory characteristics. There exists in such loans the possibility of future loss to the Parent Company unless
given closer supervision.

Doubtful - This category includes the borrower with “non-performing loan” status or with any portion of interest and/or principal payment is
in arrears for more than ninety (90) days. The borrower is unable or unwilling to service debt over an extended period of time and near future
prospects of orderly debt service is doubtful. Doubtful loans are loans or portions thereof which have the weaknesses inherent in those
classified as “Substandard”, with the added characteristics that existing facts, conditions, and values make collection or liquidation in full
highly improbable and in which substantial loss is probable.

Loss - This category represents the borrower whose prospect for re-establishment of creditworthiness and debt service is remote. It also
applies where the Parent Company will take or has taken title to the assets of the borrower and is preparing a foreclosure and/or liquidation
of the borrower’s business. These are loans or portions thereof which are considered uncollectible or worthless and of such little value that
their continuance as bankable assets is not warranted although the loans may have some recovery or salvage value.

The ratings of the borrowers covered by the BCS were mapped to the abovementioned CRRS grades in accordance with the approved
guidelines by the BOD, as follows:

BCS Results CRRS Grade Description

> 98 to 100 points 3 Good
> 95 to 98 points 4 Satisfactory
> 87 to 95 points 5 Acceptable
> 83 to 87 points 6 Watchlist
80 to 83 points 7 Especially Mentioned
76 to < 80 points 8 Substandard
72 to < 76 points 9 Doubtful
68 to < 72 points 10 Loss

40 CHINA BANKING CO RPORATI ON

The Group’s loans and receivables from customers were classified according to credit quality as follows:

Credit Quality Rating Criteria

Neither Past Due Nor Impaired
High Loans with risk rating of 1 and 2
Standard Loans with risk rating of 3 to 5
Sub-Standard Generally, loans with risk rating of 6 to 8
Past Due and Impaired
Past Due but not Impaired Those that were classified as Past Due per BSP guidelines or
Impaired those that are still in current status but have objective evidence of
impairment; Generally, loans with risk rating of 9 to 10

For consumer loans (i.e., auto, housing, credit card) that are covered by application scorecards which provide either a pass/fail score, the
basis for credit quality rating is the BSP classification and/or the status of the account.

The financial assets are also grouped according to stage whose description is explained as follows:

Stage 1 - those that are considered current and up to 30 days past due, and based on change in rating, delinquencies and payment history,
do not demonstrate significant increase in credit risk.

Stage 2 - those that, based on change in rating, delinquencies and payment history, demonstrate significant increase in credit risk, and/or are
considered more than 30 days past due but does not demonstrate objective evidence of impairment as of reporting date.

Stage 3 - those that are considered in default or demonstrate objective evidence of impairment as of reporting date.

The following tables illustrate the Group’s and the Parent Company’s credit exposures.

Consolidated 2018 2017

ECL Staging
Corporate and commercial lending Stage 1 Stage 2 Stage 3 Total Total
12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P65,022 P– P– P65,022 P56,547
Standard grade 234,159 2,341 – 236,500 222,688
Sub-Standard 90,877 14,428 – 105,305 81,679
Unrated 438 8 – 446 1,654
Past due but not impaired 44 648 – 692 2,341
Past due and impaired – – 3,835 3,835 4,235
Gross carrying amount P390,541 P17,425 P3,835 P411,800 P369,144

Consolidated 2018 2017

ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Consumer Lending 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P32,661 P– P– P32,661 P28,208
Standard grade 44,389 600 – 44,988 6,650
Sub-Standard 1,309 563 – 1,872 4,088
Unrated 1,782 1,613 – 3,395 31,631
Past due but not impaired 551 435 – 986 3,149
Past due and impaired – – 3,313 3,313 134
Gross carrying amount P80,692 P3,211 P3,313 P87,215 P73,860

41
 Consolidated 2018 2017
ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Trade-related Lending 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P1,239 P– P– P 1,239 P2,397
Standard grade 9,371 9 – 9,381 8,117
Sub-Standard 1,500 1,675 – 3,175 1,671
Unrated – – – – –
Past due but not impaired 0 – – 0 37
Past due and impaired – – 23 23 28
Gross carrying amount P12,110 P1,684 P23 P13,818 P12,250

Consolidated 2018 2017

ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Others 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P12 P– P– P12 P317
Standard grade 0 – – 0 1
Sub-Standard 0 – – 0 –
Unrated 39 – – 39 212
Past due but not impaired 1 5 – 5 5
Past due and impaired – – – – 8
Gross carrying amount P52 P5 P– P– P365

Parent Company 2018 2017

ECL Staging
Corporate and commercial lending Stage 1 Stage 2 Stage 3 Total Total
12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P38,025 P– P– P38,025 P27,318
Standard grade 234,159 2,341 – 236,500 222,621
Sub-Standard 90,869 14,428 – 105,297 81,297
Unrated 438 8 – 446 1,654
Past due but not impaired 44 25 – 69 1,395
Past due and impaired – – 1,068 1,068 2,867
Gross carrying amount P363,535 P16,801 P1,068 P381,404 P337,152

42 CHINA BANKING CO RPORATI ON

 Parent Company 2018 2017
ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Consumer Lending 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P18 P– P– P18 P16
Standard grade 44,287 600 – 44,887 6,538
Sub-Standard 1,271 563 – 1,833 4,083
Unrated 1,782 1,613 – 3,395 31,631
Past due but not impaired 551 49 – 600 1,636
Past due and impaired – – 1,952 1,952 133
Gross carrying amount P47,908 P2,824 P1,952 P52,685 P44,037

Parent Company 2018 2017

ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Trade−related Lending 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P359 P– P– P359 P835
Standard grade 9,371 9 – 9,381 8,118
Sub-Standard 1,500 1,675 – 3,175 1,670
Unrated – – – – −
Past due but not impaired 0 – – 0 37
Past due and impaired – – 23 23 28
Gross carrying amount P11,230 P1,684 P23 P12,938 P10,688

Parent Company 2018 2017

ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Others 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P– P– P– P– P–
Standard grade – – – – 1
Sub-Standard – – – – –
Unrated 39 – – 39 53
Past due but not impaired 1 – 1 –
Past due and impaired – – –
Gross carrying amount P40 P– P– P40 P54

Depository accounts with the BSP and counterparty banks, Trading and Investment Securities
For these financial assets, outstanding exposure is rated primarily based on external risk rating (i.e. Standard and Poor’s (S&P), otherwise,
rating is based on risk grades by a local rating agency or included under “Unrated”, when the counterparty has no available risk grade.

43
 The external risk rating of the Group’s depository accounts with the BSP and counterparty banks, trading and investment securities, is
grouped as follows:

Credit Quality Rating External Credit Risk Rating Credit Rating Agency
High grade AAA, AA+, AA, AA− S&P
Aaa, Aa1, Aa2, Aa3 Moody’s
AAA, AA+, AA, AA− Fitch
Standard grade A+, A, A−, BBB+, BBB, BBB− S&P
A1, A2, A3, Baa1, Baa2, Baa3 Moody’s
A+, A, A−, BBB+, BBB, BBB− Fitch
Substandard grade BB+, BB, BB−, B/B+, CCC, R, SD & D S&P
Ba1, Ba2, Ba3, B1, B2, R, SD & D Moody’s
BB+, BB, BB−, B/B+, CCC, R, SD & D Fitch

Following is the credit rating scale applicable for foreign banks, and government securities (aligned with S&P ratings):

AAA − An obligor has extremely strong capacity to meet its financial commitments.

AA − An obligor has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors at a minimal degree.

A − An obligor has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligors in higher-rated categories.

BBB and below:

BBB − An obligor has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.

BB − An obligor is less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and
exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial
commitments.

B − An obligor is more vulnerable than the obligors rated ‘BB’, but the obligor currently has the capacity to meet its financial commitments.
Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitments.

CCC − An obligor is currently vulnerable and is dependent upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitments.

CC − An obligor is currently vulnerable. The rating is used when a default has not yet occurred, but expects default to be a virtual certainty,
regardless of the anticipated time to default.

R − An obligor is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the
regulators may have the power to favor one class of obligations over others or pay some obligations and not others.

SD and D − An obligor is in default on one or more of its financial obligations including rated and unrated financial obligations but excluding
hybrid instruments classified as regulatory capital or in non-payment according to terms.

Due from other banks and government securities

The external risk rating of the Group’s depository accounts with counterparty banks, trading and investment securities, is grouped as follows
(aligned with the Philippine Ratings System):

Credit Quality Rating External Credit Risk Rating

High grade PRSAAA, PRSAa+, PRSAa, PRSAa−
Standard grade PRSA+, PRSA, PRSA−, PRSBaa+, PRSBaa, PRSBaa−
Substandard grade PRSBa+, PRSBa, PRSBa−, PRSB+, PRSB, PRSB−, PRSCaa+, PRSCaa,
PRSCaa−, PRSCa+, PRSCa, PRSCa−, PRSC+, PRSC, PRSC−

44 CHINA BANKING CO RPORATI ON

PRSAaa − The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

PRSAa − The obligor’s capacity to meet its financial commitment on the obligation is very strong.

PRSA − With favorable investment attributes and are considered as upper-medium grade obligations. Although obligations rated ‘PRSA’
are somewhat more susceptible to the adverse effects of changes in economic conditions, the obligor’s capacity to meet its financial
commitments on the obligation is still strong.

PRSBaa − An obligation rated ‘PRS Baa’ exhibits adequate protection parameters. However, adverse economic conditions and changing
circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. PRSBaa−
rated issues may possess certain speculative characteristics.

PRSBa − An obligation rated ‘PRSBa’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing
uncertainties relating to business, financial or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial
commitment on the obligation.

PRSB − An obligation rated ‘PRSB’ is more vulnerable to nonpayment than obligations rated ‘PRSBa’, but the obligor currently has the
capacity to meet its financial commitment on the obligation. Adverse economic conditions will likely impair the obligor’s capacity to meet its
financial commitment on the obligation. The issue is characterized by high credit risk.

PRSCaa − An obligation rated ‘PRSCaa’ is presently vulnerable to nonpayment and is dependent upon favorable business, financial and
economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse economic conditions, the
obligor is not likely to have the capacity to meet its financial commitment on the obligation. The issue is considered to be of poor standing
and is subject to very high credit risk.

PRSCa − An obligation rated “PRSCa” is presently highly vulnerable to nonpayment. Likely already in or very near default with some prospect
for partial recovery of principal or interest.

PRSC − An obligation is already in default with very little prospect for any recovery of principal or interest.

The succeeding tables show the credit exposure of the Group and the Parent Company related to these financial assets.

Consolidated 2018 2017

ECL Staging
Investment securities at amortized cost Stage 1 Stage 2 Stage 3 Total Total
12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P7,913 P108 P– P8,021 P320
Standard grade 111,072 – – 111,072 57,917
Sub-Standard 1,703 – – 1,703 1,416
Unrated 40,765 1,396 152 42,313 –
Gross carrying amount P161,454 P1,503 P152 P163,109 P59,653

Consolidated 2018 2017

ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Financial assets at FVOCI 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P674 P– P– P674 P8,062
Standard grade 9,371 – – 9,371 28,528
Sub-Standard – – – – 1,515
Unrated 55 2 – 56 –
Past due but not impaired 10,100 2 – 10,102 38,105
Past due and impaired 674 – – 674 8,062
Gross carrying amount P10,100 P2 P– P10,102 P38,105

45
 Consolidated 2018
High Standard Substandard
Unrated Total
Grade Grade Grade
Due from BSP P– P101,890 P– P– P101,890
Due from other banks 944 8,303 17 – 9,264
Interbank loans receivable and SPURA – 10,000 – – 10,000
Financial assets at FVPL 911 4,100 53 – 5,064
P1,855 P124,293 P70 P– P126,218

Consolidated 2017
High Standard Substandard
Unrated Total
Grade Grade Grade
Due from BSP P– P98,490 P– P– P98,490
Due from other banks 4,245 10,787 13 4,245 15,045
Interbank loans receivable and SPURA – 18,752 – – 18,752
Financial assets at FVPL 1,19 4 10,013 85 1,19 4 11,292
P5,439 P138,042 P98 P5,439 P143,579

Parent Company 2018 2017

ECL Staging
Investment securities at amortized cost Stage 1 Stage 2 Stage 3 Total Total
12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P7,235 P108 P– P7,343 P8,062
Standard grade 103,873 – – 103,873 25,672
Sub-Standard 1,303 – – 1,303 1,485
Unrated 40,765 1,396 – 42,161 –
Gross carrying amount P153,176 P1,503 P– P154,679 P35,219

Parent Company 2018 2017

ECL Staging
Stage 1 Stage 2 Stage 3 Total Total
Financial assets at FVOCI 12-month ECL Lifetime ECL Lifetime ECL
Neither past due nor impaired
High grade P15 P– P– P15 P320
Standard grade 8,141 – – 8,141 55,182
Sub-Standard – – – – 1,166
Unrated 55 2 – 56 –
Past due but not impaired 8,211 2 – 8,213 56,668
Past due and impaired 15 – – 15 320
Gross carrying amount P8,141 P– P– P8,141 P55,182

46 CHINA BANKING CO RPORATI ON

 Parent Company 2018
High Standard Substandard
Unrated Total
Grade Grade Grade
Due from BSP P− P95,093 P− P− P95,093
Due from other banks 696 7,119 17 7 7,838
Interbank loans receivable and SPURA − 7,000 − − 7,000
Financial assets at FVPL 1,447 4,100 − 1,143 6,690
P2,143 P113,312 P17 P1,150 P116,621

Parent Company 2017

High Standard Substandard
Unrated Total
Grade Grade Grade
Due from BSP P− P91,717 P− P− P91,717
Due from other banks 4,124 9,921 13 − 14,058
Interbank loans receivable and SPURA − 17,348 − − 17,348
Financial assets at FVPL 1,19 4 9,877 85 − 11,156
P5,318 P128,863 P9 8 P− P134,279

The tables below show the aging analysis of gross past due but not impaired loans and receivables that the Group and Parent Company
held as of December 31, 2018 and 2017 (in millions). Under PFRS 7, a financial asset is past due when a counterparty has failed to make
a payment when contractually due.

Consolidated
Less than More than
December 31, 2018 30 days 31 to 60 days 61 to 90 days 91 days Total
Loans and receivables
Corporate and commercial lending P250 P40 P23 P380 P692
Consumer lending 718 41 19 208 986
Trade−related lending − − − − −
Others 1 − − 5 5
Total P969 P80 P42 P593 P1,684

Consolidated
Less than More than
December 31, 2017 30 days 31 to 60 days 61 to 90 days 91 days Total
Loans and receivables
Corporate and commercial lending P919 P186 P296 P940 P2,341
Consumer lending 120 148 366 2,515 3,149
Trade−related lending 5 2 30 – 37
Others – – – 27 27
Total P1,044 P336 P692 P3,482 P5,554

47
 Parent Company
Less than More than
December 31, 2018 30 days 31 to 60 days 61 to 90 days 91 days Total
Loans and receivables
Corporate and commercial lending P1 P2 P– P66 P69
Consumer lending 600 – – – 600
Trade−related lending – – – −
Others 1 – – – 1
Total P602 P2 P− P66 P669

Parent Company
Less than More than
December 31, 2017 30 days 31 to 60 days 61 to 90 days 91 days Total
Loans and receivables
Corporate and commercial lending P872 P122 P211 P189 P1,394
Consumer lending 105 127 196 1,208 1,636
Trade−related lending 6 2 30 − 38
Total P983 P251 P437 P1,398 P3,068

The following table presents the carrying amount of financial assets of the Group and Parent Company as of December 31, 2018 and 2017
that would have been considered past due or impaired if not renegotiated:

Consolidated Parent Company

2018 2017 2018 2017
Loans and advances to customers
Corporate and commercial lending P507,921 P807,247 P40,029 P224,74
Consumer lending 110,885 42,487 110,885 37,587
Total renegotiated financial assets P618,805 P849,734 P150,914 P262,330

Impairment assessment (Prior to adoption of PFRS 9)

The main considerations for the loan impairment assessment include whether any payment of principal or interest is overdue by more than
90 days, or there are known difficulties in the cash flows of counterparties, credit rating downgrades, or infringement of the original terms
of the contract. The Group addresses impairment assessment in two areas: individually assessed allowances and collectively assessed
allowances.

Individually assessed allowances

The Group determines the allowances appropriate for each individually significant loan or advance on an individual basis. Items considered
when determining allowance amounts include the sustainability of the counterparty’s business plan, its ability to improve performance once a
financial difficulty has arisen, projected receipts and the expected dividend payout should bankruptcy ensue, the availability of other financial
support and the realizable value of collateral, and the timing of the expected cash flows. The impairment losses are evaluated at each
reporting date, unless unforeseen circumstances require more careful attention.

Collectively assessed allowances

Allowances are assessed collectively for losses on loans and advances that are not individually significant (including residential mortgages
and unsecured consumer lending) and for individually significant loans and advances where there is no objective evidence of individual
impairment yet. Allowances are evaluated on each reporting date with each portfolio receiving a separate review.

The collective assessment takes account of impairment that is likely to be present in the portfolio even though there is no objective evidence
of the impairment yet per an individual assessment. Impairment losses are estimated by taking into consideration the following information:
historical losses on the portfolio, current economic conditions, the approximate delay between the time a loss is likely to have been incurred
and the time it will be identified as requiring an individually assessed impairment allowance, and expected receipts and recoveries once
impaired.

Management is responsible for deciding the length of this period which can extend for as long as one year. The impairment allowance is then
reviewed by credit management to ensure alignment with the Group’s overall policy.

48 CHINA BANKING CO RPORATI ON

Impairment assessment (PFRS 9)
The Group recognizes a credit loss allowance on a financial asset based on whether it has had a significant increase in credit risk since
initial recognition. Accordingly, the Group categorizes its financial assets into three categories: stage 1 – financial asset that has not had
a significant increase in credit risk; stage 2 – financial asset that has had a significant increase in credit risk; and stage 3 – financial asset
in default.

Generally, the Group assesses the presence of a significant increase in credit risk based on the number of notches that a financial asset’s
credit risk rating has declined. When applicable, the Group also applies a rebuttable presumption that the credit risk on a financial asset has
increased significantly since initial recognition when contractual payments are more than 30 days past due.

Further, the Group considers a financial asset as in default when (a) as a result of one or more loss events, there is objective evidence that
its recoverable value is less than its carrying amount; (b) it is classified as doubtful or loss under prudential reporting; (c) it is in litigation; and/
or (d) full repayment of principal and interest is unlikely without foreclosure of collateral, if any. When applicable, the Group also applies a
rebuttable presumption that default does not occur later than when a financial asset is 90 days past due unless the Group has reasonable
and supportable information to demonstrate that a more lagging default criterion is more appropriate.

The Group then measures the credit loss allowance on a financial instrument at an amount equal to 12-month expected credit losses for
items categorized as stage 1 and lifetime credit losses to items categorized as stage 2 and stage 3.

The Group modeled the following inputs to the expected credit loss formula separately. The formula is applied to each financial asset, with
certain exceptions wherein a collective or other general approach is applied:

Exposure at Default (EAD)

The Group defines EAD as the principal and interests that would not be collected assuming the borrower’s defaults during a future point in
time. The Bank computes for a financial asset’s EAD using the expected contractual cash flows during the contractual life of the financial
instrument. A financial asset’s EAD is defined as the sum of EAD from principal and EAD from interest.

Probability of default (PD)

The Group uses forward-looking PD estimates that are unbiased and probability-weighted using a range of possible outcomes. The PD
for each individual instrument is modelled based on historical data and is estimated based on current market conditions and reasonable
and supportable information about future economic conditions. The Bank segmented its credit exposures based on homogenous risk
characteristics and developed a corresponding PD methodology for each portfolio. The PD methodology for each relevant portfolio is
determined based on the underlying nature or characteristic of the portfolio, behavior of the accounts and materiality of the segment as
compared to the total portfolio. The Group’s PDs are mainly categoried into three: (a) corporate; (b) soverign; and (c) retail.

Loss given default (LGD)

The Group’s LGD model considers certain factors such as the historical cash flow recovery and reasonable and supportable information
about future economic conditions, where appropriate. Generally, the model utilizes the Bank’s existing loan exposure rating system which is
designed to capture these factors as well as the characteristics of collaterals related to an exposure. In cases wherein this does not apply,
the Group looks into the standard characteristics of collaterals (e.g., car and housing loans) in order to estimate an LGD factor. In the case
of exposures without collaterals (e.g., securities), the Group uses internationally-accepted standard LGD factors.

Credit Review
In accordance with BSP Circular 855, credit reviews are conducted on loan accounts to evaluate whether loans are granted in accordance
with the Bank’s policies, to assess loan quality and appropriateness of classification and adequacy of loan loss provisioning. Results of credit
reviews are promptly reported to management to apprise them of any significant findings for proper corrective actions.

Market Risk
Market risk is the risk of loss that may result from changes in the value of a financial product. The Parent Company’s market risk originates
from its holdings of domestic and foreign−denominated debt securities, foreign exchange instruments, equities, foreign exchange derivatives
and interest rate derivatives.

The RMG of the Parent Company is responsible for assisting the ROC with its responsibility for identifying, measuring, managing and
controlling market risk. Market risk management measures the Parent Company market risk exposures through the use of VaR. VaR is a
statistical measure that estimates the maximum potential loss from a portfolio over a holding period, within a given confidence level.

VaR assumptions
The Parent Company calculates the VaR in trading activities. The Parent Company uses the Historical Simulation Full Valuation approach to
measure VaR for all treasury traded instruments, using a 99.00% confidence level and a 1−day holding period.

The use of a 99.00% confidence level means that, within a one day horizon, losses exceeding the VaR figure should occur, on average, not
more than once every hundred days. The validity of the VaR model is verified through back testing, which examines how frequently actual
and hypothetical daily losses exceeds daily VaR. The Parent Company measures and monitors the VaR and profit and loss on a daily basis.

49
 Since VaR is an integral part of the Parent Company’s market risk management, VaR limits have been established for all trading positions
and exposures are reviewed daily against the limits by management. Further, stress testing is performed for monitoring extreme events.

Limitations of the VaR Methodology

The VaR models are designed to measure market risk in a normal market environment using equally weighted historical data. The use of
VaR has limitations because it is based on historical correlations and volatilities in market prices and assumes that future price movements
will follow the same distribution. Due to the fact that VaR relies heavily on historical data to provide information and may not clearly predict
the future changes and modifications of the risk factors, the probability of large market moves may be underestimated if changes in risk
factors fail to align with the assumptions. VaR may also be under- or over-estimated due to the assumptions placed on risk factors and the
relationship between such factors for specific instruments. Even though positions may change throughout the day, the VaR only represents
the risk of the portfolios at the close of each business day, and it does not account for any losses that may occur beyond the 99.00%
confidence level.

In practice, the actual trading results will differ from the VaR calculation and, in particular, the calculation does not provide a meaningful
indication of profits and losses in stressed market conditions. To determine the reliability of the VaR models, actual outcomes are monitored
regularly to test the validity of the assumptions and the parameters used in the VaR calculation. Market risk positions are also subject to
regular stress tests to ensure that the Group would withstand an extreme market event.

A summary of the VaR position of the trading portfolio of the Parent Company is as follows:

Foreign
Interest Rate1 Exchange2 Price3 Interest Rate4 Interest Rate5
(In Millions)
2018
31 December P43.62 P4.54 P21.78 P13.78 P10.65
Average daily 52.11 18.69 30.17 6.35 4.40
Highest 121.89 63.74 56.30 13.78 19.03
Lowest 21.47 2.53 18.29 3.18 0.60

2017
31 December P120.05 P7.78 P45.24 P4.00 P1.76
Average daily 82.27 28.20 23.34 3.78 5.29
Highest 146.71 73.74 46.21 6.97 9.21
Lowest 37.58 2.99 3.43 1.44 1.48

1 Interest rate VaR for debt securities (Interest rate VaR for foreign currency denominated debt securities are translated to PHP using daily closing rate)
2 FX VaR is the bankwide foreign exchange risk
3 Price VaR for equity securities and futures
4 Interest rate VaR for FX swaps and FX forwards
5 Interest rate VaR for IRS

Interest Rate Risk

The Group’s interest rate risk originates from its holdings of interest rate sensitive assets and interest rate sensitive liabilities. The Parent
Company follows prudent policies in managing its exposures to interest rate fluctuations, and constantly monitors its assets and liabilities.

As of December 31, 2018 and 2017, 64.57% and 64.76% of the Group’s total loan portfolio, respectively, comprised of floating rate loans
which are repriced periodically by reference to the transfer pool rate which reflects the Group’s internal cost of funds. In keeping with banking
industry practice, the Group aims to achieve stability and lengthen the term structure of its deposit base, while providing adequate liquidity
to cover transactional banking requirements of customers.

Interest is paid on demand accounts, which constituted 22.81% and 24.29% of total deposits of the Parent Company as of
December 31, 2018 and 2017, respectively.

Interest is paid on savings accounts and time deposits accounts, which constitute 35.56% and 41.64%, respectively, of total deposits of the
Parent Company as of December 31, 2018, and 29.72% and 45.99%, respectively, as of December 31, 2017.

50 CHINA BANKING CO RPORATI ON

Savings account interest rates are set by reference to prevailing market rates, while interest rates on time deposits and special savings
accounts are usually priced by reference to prevailing rates of short-term government bonds and other money market instruments, or, in the
case of foreign currency deposits, inter-bank deposit rates and other benchmark deposit rates in international money markets with similar
maturities.

The Group is likewise exposed to fair value interest rate risk due to its holdings of fixed rate government bonds as part of its financial assets
at FVOCI/AFS and FVPL portfolios. Market values of these investments are sensitive to fluctuations in interest rates.

The following table provides for the average effective interest rates of the Group and of the Parent Company as of December 31, 2018
and 2017:

Consolidated Parent Company

2018 2017 2018 2017
Peso
Assets
Due from BSP 0.17% 0.13% 0.06% 0.13%
Due from banks 0.26% 0.24% 0.11% 0.19%
Investment securities* 4.52% 4.21% 4.36% 4.10%
Loans and receivables 7.26% 5.53% 6.18% 5.22%

Liabilities
Deposit liabilities 1.96% 1.15% 1.71% 1.04%
Bills payable 3.59% 2.99% 3.59% 2.99%

USD
Assets
Due from banks 0.75% 0.17% 0.61% 0.16%
Investment securities* 4.16% 3.60% 3.88% 3.61%
Loans and receivables 4.07% 3.40% 3.93% 3.40%

Liabilities
Deposit liabilities 1.48% 1.13% 1.45% 1.12%
Bills payable 2.89% 1.94% 2.86% 1.94%
* Consisting of financial assets at FVPL, Financial assets at FVOCI and Investment securities at amortized cost.

The asset-liability gap analysis method is used by the Group to measure the sensitivity of its assets and liabilities to interest rate fluctuations.
This analysis measures the Group’s susceptibility to changes in interest rates. The repricing gap is calculated by first distributing the assets
and liabilities contained in the Group’s balance sheet into tenor buckets according to the time remaining to the next repricing date (or the
time remaining to maturity if there is no repricing), and then obtaining the difference between the total of the repricing (interest rate sensitive)
assets and the total of repricing (interest rate sensitive) liabilities.

A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. A gap
is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities.

Accordingly, during a period of rising interest rates, a bank with a positive gap would be in a position to invest in higher yielding assets earlier
than it would need to refinance its interest rate sensitive liabilities. During a period of falling interest rates, a bank with a positive gap would
tend to see its interest rate sensitive assets repricing earlier than its interest rate sensitive liabilities, restraining the growth of its net income or
resulting in a decline in net interest income.

51
 The following tables set forth the repricing gap position of the Group and Parent Company as of December 31, 2018 and 2017 (in millions):

Consolidated
2018
Up to 3 >3 to 12 >12
Months Months Months Total
Financial Assets
Due from BSP P101,890 P− P− P101,890
Due from other banks 9,455 − − 9,455
Investment securities 12,301 3,432 174,500 190,232
Loans and receivables 255,491 38,683 211,634 505,808
Total financial assets 379,137 42,114 386,133 807,385
Financial Liabilities
Deposit liabilities 291,698 17,893 412,532 722,123
Bills payable 34,505 4,507 815 39,827
Total financial liabilities 326,204 22,400 413,346 761,950
Repricing gap P52,934 P19,714 (P27,213) P45,435

Consolidated
2017
Up to 3 >3 to 12 >12
Months Months Months Total
Financial Assets
Due from BSP P98,490 P– P– P98,490
Due from other banks 15,641 – – 15,641
Investment securities 9,702 471 117,797 127,970
Loans and receivables 243,419 32,312 173,240 448,971
Total financial assets 367,252 32,783 291,037 691,072
Financial Liabilities
Deposit liabilities 256,633 14,206 364,254 635,093
Bills payable 20,118 – – 20,118
Total financial liabilities 276,751 14,206 364,254 655,211
Repricing gap P90,501 P18,577 (P73,217) P35,861

Parent Company
2018
Up to 3 >3 to 12 >12
Months Months Months Total
Financial Assets
Due from BSP P95,093 P– P– P95,093
Due from other banks 7,838 – – 7,838
Investment securities 5,782 3,355 169,588 178,725
Loans and receivables 232,067 26,695 182,672 441,435
Total financial assets 340,780 30,050 352,260 723,090
Financial Liabilities
Deposit liabilities 241,100 14,877 382,266 638,243
Bills payable 34,505 4,507 815 39,827
Total financial liabilities 275,606 19,384 383,080 678,070
Repricing gap P65,174 P10,666 (P30,820) P45,020

52 CHINA BANKING CO RPORATI ON

 Parent Company
2017
Up to 3 >3 to 12 >12
Months Months Months Total
Financial Assets
Due from BSP P91,717 P– P– P91,717
Due from other banks 14,067 – – 14,067
Investment securities 7,364 466 112,697 120,527
Loans and receivables 218,899 23,005 144,651 386,555
Total financial assets 332,047 23,471 257,348 612,866
Financial Liabilities
Deposit liabilities 215,735 12,112 331,389 559,236
Bills payable 20,118 – – 20,118
Total financial liabilities 235,853 12,112 331,389 579,354
Repricing gap P9 6,19 4 P11,359 (P74,042) P33,512

The Group also monitors its exposure to fluctuations in interest rates by using scenario analysis to estimate the impact of interest rate
movements on its interest income. This is done by modeling the impact to the Group’s interest income and interest expenses to parallel
changes in the interest rate curve in a given 12-month period.

The following tables set forth the estimated change in the Group’s and Parent Company’s annualized net interest income due to a parallel
change in the interest rate curve as of December 31, 2018 and 2017:

Consolidated
2018
Change in interest rates (in basis points)
100bp rise 50bp rise 50bp fall 100bp fall
Change in annualized net interest income P645 P322 (P322) (P645)
As a percentage of the Group’s net interest income
for the year ended December 31, 2018 2.80% 1.40% (1.40%) (2.80%)

Consolidated
2017
Change in interest rates (in basis points)
100bp rise 50bp rise 50bp fall 100bp fall
Change in annualized net interest income P1,046 P523 (P523) (P1,046)
As a percentage of the Group’s net interest income
for the year ended December 31, 2017 5.33% 2.66% (2.66%) (5.33%)

Parent Company
2018
Change in interest rates (in basis points)
100bp rise 50bp rise 50bp fall 100bp fall
Change in annualized net interest income P996 P498 (P498) (P996)
As a percentage of the Parent Company’s net
interest income for the year ended
December 31, 2018 4.95% 2.48% (2.48%) (4.95%)

53
 Parent Company
2017
Change in interest rates (in basis points)
100bp rise 50bp rise 50bp fall 100bp fall
Change in annualized net interest income P1,049 P525 (P525) (P1,049)
As a percentage of the Parent Company’s net
interest income for the year ended
December 31, 2017 6.46% 3.23% (3.23%) (6.46%)

The following tables set forth the estimated change in the Group’s and Parent Company’s income before tax and equity due to a reasonably
possible change in the market prices of quoted bonds classified under financial assets at FVPL, AFS financial assets and financial assets at
FVOCI, brought about by movement in the interest rate curve as of December 31, 2018 and 2017 (in millions):

Consolidated
2018
Change in interest rates (in basis points)
25bp rise 10bp rise 10bp fall 25bp fall
Change in income before tax (P51) (P20) P20 P51
Change in equity (113) (45) 45 113

Consolidated
2017
Change in interest rates (in basis points)
25bp rise 10bp rise 10bp fall 25bp fall
Change in income before tax (P146) (P58) P58 P146
Change in equity (637) (255) 255 637
Parent Company
2018
Change in interest rates (in basis points)
25bp rise 10bp rise 10bp fall 25bp fall
Change in income before tax (P51) (P20) P20 P51
Change in equity (103) (41) 41 103

Parent Company
2017
Change in interest rates (in basis points)
25bp rise 10bp rise 10bp fall 25bp fall
Change in income before tax (P145) (P58) P58 P145
Change in equity (600) (240) 240 600

Foreign Currency Risk

The Group’s foreign exchange risk originates from its holdings of foreign currency-denominated assets (foreign exchange assets) and foreign
currency-enominated liabilities (foreign exchange liabilities).

Foreign exchange liabilities generally consist of foreign currency-denominated deposits in the Group’s FCDU account made in the Philippines
or generated from remittances to the Philippines by persons overseas who retain for their own benefit or for the benefit of a third party, foreign
currency deposit accounts with the Group.

54 CHINA BANKING CO RPORATI ON

Foreign currency liabilities are generally used to fund the Group’s foreign exchange assets which generally consist of foreign currency-
denominated loans and investments in the FCDU. Banks are required by the BSP to match the foreign currency-denominated assets with
liabilities held in the FCDU that are denominated in the same foreign currency. In addition, the BSP requires a 30.00% liquidity reserve on all
foreign currency-denominated liabilities held in the FCDU.

The Group’s policy is to maintain foreign currency exposure within existing regulations, and within acceptable risk limits. The Group believes
in ensuring its foreign currency is at all times within limits prescribed for financial institutions who are engaged in the same types of businesses
in which the Group and its subsidiaries are engaged.

The table below summarizes the Group’s and Parent Company’s exposure to foreign exchange risk. Included in the table are the Group’s and
Parent Company’s assets and liabilities at carrying amounts (stated in US Dollars), categorized by currencywith its PHP equivalent:

Consolidated
2018 2017
Other Other
USD Currencies* Total PHP USD Currencies* Total PHP
Assets
Cash and other cash items $2,204 2,095 4,299 P226,044 $2,447 3,173 5,620 P280,624
Due from other banks 42,189 7,705 49,894 2,623,437 64,664 16,189 80,853 4,037,014
Financial assets at FVPL 15,988 – 15,988 840,625 60,427 – 60,427 3,017,118
Financial assets at FVOCI 14,640 – 14,640 769,771 – – – –
AFS financial assets – – – – 71,057 6,324 77,381 3,863,641
Investment securities at
amortized cost 116,716 – 116,716 6,136,946 – – – –
HTM financial assets – – – – 31,952 9,791 41,742 2,084,196
Loans and receivables 42,471 12,985 55,455 2,915,835 30,809 7,385 38,194 1,907,050
Accrued interest receivable 1,038 19 1,057 55,562 992 133 1,125 56,164
Other assets 17,253 302 17,555 923,023 24,851 2 24,853 1,240,929
252,498 23,106 275,604 14,491,243 287,199 42,998 330,197 16,486,736
Liabilities
Deposit liabilities 66,162 109,191 175,353 9,220,065 59,445 36,388 95,833 4,784,917
Bills payables 354,416 57,130 411,546 21,639,069 128,720 132,510 261,230 13,043,213
Accrued interest and other
expenses 1,554 7 1,561 82,090 512 7 519 25,900
Other liabilities 8,710 1,750 10,459 549,944 11,317 877 12,194 608,805
430,842 168,077 598,919 31,491,168 199,994 169,782 369,776 18,462,835
Currency spot (6,789) (316) (7,106) (373,621) (8,054) - (8,054.00) (402,136)
Currency forwards 185,313 145,250 330,563 17,380,980 (59,709) 136,301 76,591.11 3,824,198
Net Exposure $179 (38) 141 P7,434 $19,442 9,516 28,958 P1,445,964
*Other currencies include EUR, CNY, JPY, GBP, AUD, SGD, CHF, CAD, NZD, AED, HKD.

55
 Parent Company
2018 2017
Other Other
USD Currencies* Total PHP USD Currencies* Total PHP
Assets
Cash and other cash items $123 2,095 2,218 P116,611 $250 3,173 3,424 P170,939
Due from other banks 38,240 7,705 45,944 2,415,755 56,536 16,189 72,726 3,631,190
Financial assets at FVPL 15,988 – 15,988 840,625 59,729 – 59,729 2,982,292
Financial assets at FVOCI – – – – – – – –
AFS financial assets
Investment securities at – – – – 49,997 6,324 56,321 2,812,106
amortized cost 69,961 – 69,961 3,678,571 – – – –
HTM financial assets – – – – – 9,791 9,791 488,850
Loans and receivables 35,151 12,985 48,136 2,530,985 23,323 7,385 30,709 1,533,277
Accrued interest receivable 75 19 94 4,967 96 133 229 11,418
Other assets 17,060 302 17,362 912,911 24,790 2 24,792 1,237,880
176,598 23,106 199,704 10,500,426 214,722 42,998 257,720 12,867,952
Liabilities
Deposit liabilities 402 109,191 109,593 5,762,373 501 36,388 36,888 1,841,843
Bills payables 354,416 57,130 411,546 21,639,069 128,720 132,510 261,230 13,043,213
Accrued interest and other
expenses 1,433 7 1,440 75,729 418 7 425 21,234
Other liabilities 8,611 1,750 10,361 544,767 9,050 877 9,927 495,639
364,862 168,077 532,939 28,021,937 138,689 169,781 308,470 15,401,928
Currency spot (6,789) (316) (7,106) (373,621) (8,054) – (8,054) (402,136)
Currency forwards 185,313 145,250 330,563 17,380,980 (59,709) 136,301 76,591 3,824,198
Net Exposure ($9,741) (38) (9,778) (P514,153) $8,269 9,517 17,787 P888,086
*Other currencies include EUR, CNY, JPY, GBP, AUD, SGD, CHF, CAD, NZD, AED, HKD.

The following table sets forth, for the period indicated, the impact of the range of reasonably possible changes in the US$ exchange rate and
other currencies per Philippine peso on the pre-tax income and equity (in millions).

Consolidated
Change in
Foreign Sensitivity of Sensitivity of
Exchange Rate Pretax Income Equity
2018
USD 2% P33 P110
Other 1% – –
USD (2%) (33) (110)
Other (1%) – –

2017
USD 2% P134 P595
Other 1% 3 3
USD (2%) (134) (595)
Other (1%) (3) (3)

56 CHINA BANKING CO RPORATI ON

 Parent Company
Change in
Foreign Sensitivity of Sensitivity of
Exchange Rate Pretax Income Equity
2018
USD 2% P33 P95
Other 1% – –
USD (2%) (33) (95)
Other (1%) – –

2017
USD 2% P133 P573
Other 1% 3 3
USD (2%) (133) (573)
Other (1%) (3) (3)

The impact in pre−tax income and equity is due to the effect of foreign currency behaviour to Philippine peso.

Equity Price Risk

Equity price risk is the risk that the fair values of equities change as a result of movements in both the level of equity indices and the value of
individual stocks. The non-trading equity price risk exposure arises from the Group’s investment portfolio.

The effect on the Group and Parent Company’s equity as a result of a change in the fair value of equity instruments held as FVOCI due to a
reasonably possible change in equity indices, with all other variables held constant, is as follows (in millions):

Consolidated
Change in Effect on
equity index Equity
2018 +10% 6.8
−10% 1.2
2017 +10% 10.5
−10% 4.1

Parent Company
Change in Effect on
equity index Equity
2018 +10% 7.7
−10% 0.2
2017 +10% 10.5
−10% 4.1

Liquidity Risk and Funding Management

Liquidity risk is generally defined as the current and prospective risk to earnings or capital arising from the Parent Company’s inability to meet
its obligations when they become due without incurring unacceptable losses or costs.

The Parent Company’s liquidity management involves maintaining funding capacity to accommodate fluctuations in asset and liability levels
due to changes in the Parent Company’s business operations or unanticipated events created by customer behavior or capital market
conditions. The Parent Company seeks to ensure liquidity through a combination of active management of liabilities, a liquid asset portfolio
composed of deposits reserves and high quality securities, the securing of money market lines, and the maintenance of repurchase facilities
to address any unexpected liquidity situations.

57
 The tables below show the maturity profile of the Parent Company’s assets and liabilities, based on contractual undiscounted cash flows
(in millions):

December 31, 2018

Less than1
On demand year 1 to 2 years 2 to 3 years 3 to 5 years Total
Financial Assets
Cash and other cash items P13,705 P– P– P– P– P13,705
Due from BSP 95,093 – – – – 95,093
Due from other banks 7,838 – – – – 7,838
SPURA – 8,998 – – – 9
Financial assets at FVPL – 1,700 378 1,079 4,296 7,453
Financial assets at FVOCI – 1,382 389 3,258 4,502 9,531
Loans and receivables – 166,040 30,097 45,970 337,036 579,143
116,636 178,120 30,865 50,306 345,834 712,772
Financial Liabilities
Deposit liabilities
Demand 145,560 – – – – 145,560
Savings 226,944 – – – – 226,944
Time – 235,885 4,764 16,552 16,102 273,303
Bills payable – 40,108 – – – 40,108
Manager’s checks – 2,070 – – – 2,070
Accrued interest and other expenses – 3,279 – – – 3,279
Derivative liabilities – 455 – – – 455
Other liabilities:
Accounts payable – 2,249 – – – 2,249
Acceptances payable – 358 – – – 358
Due to PDIC – 628 – – – 628
Margin deposits – 3 – – – 3
Other credits − dormant – 242 – – – 242
Due to the Treasurer of the Philippines – 379 – – – 379
Miscellaneous – 1,922 – – – 1,922
Total liabilities 372,504 287,578 4,764 16,552 16,102 697,499
Net Position (P255,867) (P113,646) P26,101 P49,691 P345,834 P52,112

58 CHINA BANKING CO RPORATI ON

 December 31, 2017
Less than 1 to 2 years
On demand 1 year 2 to 3 years 3 to 5 years Total
Financial Assets
Cash and other cash items P11,160 P– P– P– P– P11,160
Due from BSP 91,717 – – – – 91,717
Due from other banks 14,067 – – – – 14,067
SPURA – 17,348 – – – 217.348
Financial assets at FVPL – 2,673 844 760 14,001 18,278
AFS financial assets – 8,360 4,802 4,786 35,082 53,031
Loans and receivables – 149,393 23,651 25,443 268,251 466,738
106,944 177,774 29,297 30,989 317,334 653,804
Financial Liabilities
Deposit liabilities
Demand 138,930 – – – – 139,180
Savings 179,593 – – – – 179,593
Time – 235,825 799 5,012 348 241,984
Bills payable – 20,177 – – – 20,177
Manager’s checks – 1,709 – – – 1,709
Accrued interest and other expenses – 1,062 – – – 1,062
Derivative liabilities – 268 – – – 268
Other liabilities:
Accounts payable – 1,828 – – – 1,828
Acceptances payable – 470 – – – 470
Due to PDIC – 532 – – – 532
Margin deposits – 3 – – – 3
Other credits − dormant – 214 – – – 214
Due to the Treasurer of the Philippines – 34 – – – 34
Miscellaneous – 510 – – – 510
Total liabilities 318,523 262,632 799 5,012 348 587,314
Net Position (P211,580) (P84,858) P28,498 P25,977 P317,39 8 P85,186

Liquidity risk is monitored and controlled primarily by a gap analysis of maturities of relevant assets and liabilities reflected in the MCO report,
as well as an analysis of available liquid assets. Instead of relying solely on contractual maturities profile, the Parent Company uses Behavioral
MCO to capture a going concern view. Furthermore, internal liquidity ratios and monitoring of large fund providers have been set to determine
sufficiency of liquid assets over deposit liabilities. The Bank started monitoring and reporting to the BSP the Liquidity Coverage Ratio in 2016
and the Net Stable Funding Ratio in 2018. Liquidity is managed by the Parent and its subsidiaries on a daily basis, while scenario stress tests
and sensitivity analysis are conducted periodically.

59
7. DUE FROM BSP AND OTHER BANKS

Due from BSP

This account consists of:

Consolidated Parent Company

2018 2017 2018 2017
Demand deposit account P99,889,758 P95,790,000 P93,092,929 P89,017,023
Special deposit account 2,000,000 2,700,000 2,000,000 2,700,000
Others 15 14 15 14
P101,889,773 P98,490,014 P95,092,944 P91,717,037

Due from Other Banks

This comprises of deposit accounts with:

Consolidated Parent Company

2018 2017 2018 2017
Local banks P5,284,825 P6,600,456 P4,140,002 P6,479,014
Foreign banks 4,170,622 9,041,020 3,697,892 7,587,605
P9,455,447 P15,641,476 P7,837,894 P14,066,620

Interest Income on Due from BSP and Other Banks

This account consists of:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Due from BSP P124,557 P213,879 P266,204 P67,039 P112,851 P246,888
Due from other banks 135,818 138,850 221,843 101,994 50,296 115,528
P260,375 P352,729 P488,047 P169,033 P163,147 P362,416

8. INTERBANK LOANS REECEIVABLE AND SECURITIES PURCHASED UNDER RESALE AGREEMENT

Consolidated Parent Company

2018 2017 2018 2017
Interbank loans receivable P1,998,040 P– P1,998,040 P–
SPURA 10,000,000 18,751,845 7,000,000 17,347,522
P11,998,040 P18,751,845 P8,998,040 P17,347,522

Interbank Loans Receivable

As of December 31, 2018, interbank loans receivable consists of short-term foreign currency-denominated loans granted to other banks with
annual interest rates of 2.2%.

Securities Purchased Under Resale Agreement

This account represents overnight placements with the BSP where the underlying securities cannot be sold or repledged to parties other
than the BSP.

In 2018, 2017 and 2016, the interest rates of SPURA equals to 4.75%, 3.50%, and 2.90 %, respectively, for the Group and Parent Company.

60 CHINA BANKING CO RPORATI ON

9. TRADING AND INVESTMENT SECURITIES

Financial Assets at FVPL

This account consists of:

Consolidated Parent Company

2018 2017 2018 2017
Held for trading
Government bonds (Note 28) P633,893 P5,911,659 P633,893 P5,876,832
Treasury notes 838,662 1,89 3,192 838,662 1,792,621
Treasury bills 1,214,170 2,025,367 1,214,170 2,025,367
Private bonds 3,189,063 2,663,397 2,282,598 2,616,730
Quoted equity shares 1,312,625 – 1,312,625 –
7,188,413 12,493,615 6,281,948 12,311,550
Financial assets designated at FVPL – 3,411,686 – 3,411,686
Derivative assets (Note 25) 407,848 333,587 407,848 333,587
Total P7,596,261 P16,238,888 P6,689,796 P16,056,823

As of December 31, 2017, financial assets designated at FVPL of the Parent Company consist of investments in shares of stocks which
contain multiple embedded derivatives which are deemed not clearly and closely related to its equity host. In this regard, PAS 39 provides
that if a contract contains one or more embedded derivatives, an entity may designate the entire hybrid contract at FVPL unless the
embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract, or it is clear with little
or no analysis when a similar hybrid instrument is first considered that separation of the embedded derivative is prohibited. On this basis,
management has determined that the investments shall be designated as at FVPL.

Dividends earned by the Parent Company from its investment in shares designated at FVPL amounted to P118.64 million, and P82.83 million
in 2018 and 2017, respectively (Note 21).

As of December 31, 2018 and 2017, HFT securities include fair value loss of P55.35 million and P65.56 million, respectively, for the Group,
and fair value loss of P55.35 million and P69.22 million, respectively, for the Parent Company.

Effective interest rates for peso-denominated financial assets at FVPL for both the Group and the Parent Company range from 0.06% to
7.11% in 2018 and from 0.64% to 5.49% in 2017. Effective interest rates for foreign currency-denominated financial assets at FVPL for the
Group range from 0.71% to 6.28% in 2018 and from 2.29% to 10.16% in 2017. Effective interest rates for foreign currency−denominated
financial assets at FVPL for the Parent Company range from 0.71% to 6.28% in 2018 and from 2.29% to 10.16% in 2017.

Financial Assets at FVOCI

As of December 31, 2018, this account consists of:

Consolidated Parent Company

Quoted
Government bonds (Notes 18 and 28) P9,944,507 P8,141,359
Private bonds 35,370 1,676
Equities 103,285 51,610
10,083,162 8,194,645
Unquoted
Equities − net 18,365 18,365
18,365 18,365
Total P10,101,527 P8,213,010

61
 Unquoted equity securities
This account comprises of shares of stocks of various unlisted private corporations. The Group has designated these equity securities as at
FVOCI because they will not be sold in the foreseeable future.

Net unrealized gains (losses)

Financial assets at FVOCI include fair value losses of P367.05 million and P236.65 million for the Group and Parent Company as of
December 31, 2018. The fair value gains or losses are recognized under OCI. Impairment loss on debt financial assets at FVOCI of the
Group and the Parent Company amounted to P6.32 million in 2018.

Effective interest rates for peso-denominated financial assets at FVOCI for the Group range from 4.25% to 5.58% in 2018 and from 2.95% to
8.92% in 2017. Effective interest rates for peso-denominated financial assets at FVOCI for the Parent Company range from 4.25% to 5.58%
in 2018 and from 2.95% to 8.92% in 2017.

Effective interest rates for foreign currency-denominated financial assets at FVOCI for both the Group and Parent Company range from
2.33% to 8.48% in 2018 and from 0.99% to 5.75% in 2017.

AFS Financial Assets

As of December 31, 2017, this account consists of:

Consolidated Parent Company

Quoted
Government bonds (Notes 18 and 28) P35,229,504 P32,373,344
Private bonds 11,09 0,438 10,483,794
Equities 67,9 03 67,9 03
P46,387,845 P42,925,041
Unquoted
Equities − net * 57,546 12,042
57,546 12,042
Total P46,445,391 P42,9 37,083
* Includes fully impaired equity investments with acquisition cost of P38.83 million for the Group and P6.32 million for the Parent Company as of
December 31, 2017 (Note 16).

Unquoted equity securities

This account comprises of shares of stocks of various unlisted private corporations.

Net unrealized gains (losses)

AFS financial assets include fair value losses of P1.81 billion for the Group and Parent Company as of December 31, 2017. The fair value
gains or losses are recognized under OCI. No impairment loss was recognized in 2017.

In 2017, effective interest rates for peso-denominated AFS financial assets for the Group range from 1.34% to 7.00% in 2017 and effective
interest rates for peso-denominated AFS financial assets for the Parent Company range from 2.08% to 7.00%.

Effective interest rates for foreign currency-denominated AFS financial assets for both the Group and Parent Company range from 0.99% to
5.75% in 2018 and from 0.37% to 7.45% in 2017.

Investment Securities at Amortized Cost

As of December 31, 2018, this account consists of:

Consolidated Parent Company

Government bonds (Note 18) P107,986,234 P101,388,184
Private bonds 55,122,532 53,291,150
163,108,766 154,679,334
Unamortized premium - net 9,803,371 9,360,070
Allowance (375,101) (214,938)
P172,537,036 P163,824,466

62 CHINA BANKING CO RPORATI ON

Effective interest rates for peso-denominated investment securities at amortized cost for the Group range from 1.06% to 8.92% in 2018,
2.82% to 7.75% in 2017, and from 2.05% to 6.63% in 2016. Effective interest rates for foreign currency-denominated investment securities
at amortized cost range from 0.58% to 7.37% in 2018, 8.50% to 8.93% in 2017, and from 0.21% to 8.50% in 2016.

Effective interest rates for peso-denominated investment securities at amortized cost of the Parent Company range from 1.06% to 8.92%
in 2018, 2.82% to 5.25% in 2017 and from 4.13% to 9.13% in 2016. Effective interest rates for foreign currency-denominated investment
securities at amortized cost range from 0.21% to 8.50% in 2018, 0.21% to 8.93% in 2017, and from 2.26% to 10.72% in 2016.

HTM Financial Assets

As of December 31, 2017, this account consists of:

Consolidated Parent Company

Government bonds (Note 18) P46,718,014 P44,032,555
Private bonds 11,465,164 10,697,164
58,183,178 54,729,719
Unamortized premium - net 7,103,089 6,803,774
P65,286,267 P61,533,493

Effective interest rates for peso-denominated HTM financial assets for the Group range 2.05% to 6.63% in 2017, and from 1.35% to 9.13%
in 2016. Effective interest rates for foreign currency-denominated HTM financial assets range from 0.21% to 8.93% in 2017, and from 2.26%
to 10.72% in 2016.

Effective interest rates for peso-denominated HTM financial assets of the Parent Company range from 2.82% to 5.25% in 2017 and from
4.13% to 9.13% in 2016. Effective interest rates for foreign currency-denominated HTM financial assets range from 0.21% to 8.93% in 2017,
and from 2.26% to 10.72% in 2016.

Reclassification of Financial Assets

2016 Reclassification
As allowed under PAS 39, the Group transferred certain securities from AFS financial assets to HTM financial assets on various dates in
November 2017 (reclassification dates). The decision to effect this transfer was reached by balancing the need to reduce the market risk
sensitivity of the balance sheet without reducing the portfolio of liquid assets.

As of December 31, 2017, details of reclassified financial assets follow:

Consolidated
Carrying Fair Unamortized
Value at Carrying Value at Net Unrealized
Reclassification Value as of Reclassification Loss Deferred
Face Value Date December 31 Date in Equity Amortization
(in original currency)
Philippine peso denominated
government bonds P10,106,378 P11,636,529 P10,977,243 P11,039,842 (P544,126) P52,561
US dollar denominated
government bonds USD103,371 135,851 126,762 129,074 (6,372) 405

Parent
Carrying Fair Unamortized
Value at Carrying Value at Net Unrealized
Reclassification Value as of Reclassification Loss Deferred
Face Value Date December 31 Date in Equity Amortization
(in original currency)
Philippine peso denominated
government bonds P9,856,378 P11,350,542 P10,704,207 P10,765,719 (P533,349) P51,474
US dollar denominated
government bonds USD96,871 126,204 118,144 120,350 (5,556) 298

63
 As of December 31, 2017, had these securities not been transferred to HTM, additional fair value gain of P14.92 million and P7.86 million
on Philippine peso denominated government bonds, for the Group and the Parent Company, respectively and additional fair values gain of
USD2.85 million (P142.30 million) and USD2.67 million (P133.31 million) on US dollar denominated government bonds, for the Group and
Parent Company, respectively, would have been charged against to the statement of comprehensive income.

The effective interest rates on Philippine peso denominated government bond at reclassification dates range from 3.05% to 5.25% for both
the Group and Parent Company . The effective interest rates for US dollar denominated bonds range from 2.26% to 4.08% at the time of
their reclassification for both the Group and Parent Company. The Group and Parent Company expect to recover 100% of the principal and
the interest due on these transferred assets. These securities are also unimpaired as of December 31, 2017.

The unrealized losses deferred under ‘Net unrealized gains (losses) on AFS Financial Assets’ at reclassification date amounted to
P584.82 million and USD5.85 million for Philippine peso denominated and US dollar denominated government bonds, respectively.

2008 Reclassification
In 2008, as approved by its BOD, the Parent Company identified assets for which it had a clear change of intent to hold the investments to
maturity rather than to exit or trade these investments in the foreseeable future and reclassified those investments from AFS financial assets
to HTM financial assets effective October 2, 2008.

As of October 2, 2008, the total carrying value of AFS financial assets reclassified to HTM financial assets amounted to P9.04 billion, with
unrealized losses of P47.44 million deferred under ‘Net unrealized gains (losses) on AFS financial assets’. HTM financial assets reclassified
from AFS financial assets with total face amount P798.13 million matured in 2017.

As of December 31, 2017, HTM financial assets reclassified from AFS financial assets consist of government bonds which have the following
balances:

Fair Unamortized
Carrying Value at Net Unrealized
Original Value as of reclassification Loss Deferred
Face Value* Cost December 31 date in Equity Amortization
2017 491,811 592,315 509,646 531,918 (4,427) 24,016
*Consist of US dollar−denominated bonds with face value of $9.85 million and $25.84 million as of December 31, 2018 and 2017, respectively.

Had these securities not been reclassified to HTM financial assets, additional fair value gain that would have been credited to the statement
of comprehensive income amounted to P22.27 million, and P395.74 million in 2017 and 2016, respectively. Effective interest rate on the
reclassified securities is 6.21%. The Parent Company expects to recover 100.00% of the principal and interest due on the reclassified
investments. No impairment loss was recognized on these securities in 2017 and 2016.

Interest Income on Investment Securities

This account consists of:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Financial assets at FVOCI P596,864 P– P– P525,774 P– P–
AFS financial assets – 1,309,755 1,538,173 – 1,176,831 1,439,037
Investment securities at
amortized cost 5,279,064 – – 5,034,083 – –
HTM financial assets – 2,246,355 1,539,908 – 2,09 8,19 4 1,441,882
P6,289,251 P3,966,999 P3,282,963 P5,973,180 P3,673,802 P3,060,325

64 CHINA BANKING CO RPORATI ON

10. LOANS AND RECEIVABLES

This account consists of:

Consolidated Parent Company

2018 2017 2018 2017
Loans and discounts
Corporate and commercial lending P411,800,451 P369,145,536 P381,404,349 P337,153,332
Consumer lending 87,214,939 73,858,213 52,684,530 44,035,292
Trade-related lending 13,817,866 12,249,287 12,937,606 10,688,002
Others* 56,516 364,975 39,761 54,551
512,889,771 455,618,011 447,066,246 391,931,177
Unearned discounts (255,536) (307,886) (208,377) (267,09 9 )
512,634,235 455,310,125 446,857,869 391,664,078
Allowance for impairment and credit losses (Note 16) (6,829,280) (6,339,183) (5,425,713) (5,109,580)
P505,804,955 P448,970,942 P441,432,156 P386,554,498
*Others include employee loans and foreign bills purchased.

The Group’s and Parent Company’s loans and discounts under corporate and commercial lending include unquoted debt securities with
carrying amount of P1.10 billion and P1.00 billion as of December 31, 2017, respectively.

As of December 31, 2018, loans of the Parent Company amounting to P5.17 billion are rediscounted with the BSP (Note 18).

BSP Reporting
Information on the amounts of secured and unsecured loans and receivables (gross of unearned discounts and allowance for impairment and
credit losses) of the Group and Parent Company are as follows:

Consolidated Parent Company

2018 2017 2018 2017
Amounts % Amounts % Amounts % Amounts %
Loans secured by
Real estate P92,960,218 18.12 P71,9 00,048 15.78 P66,332,530 14.84 P44,232,910 11.29
Chattel mortgage 25,512,590 4.97 30,900,443 6.78 12,063,924 2.70 18,831,553 4.80
Deposit hold out 3,839,704 0.75 3,980,670 0.87 3,027,964 0.68 2,893,239 0.74
Shares of stock of other banks 2,347,650 0.46 5,060,000 1.11 2,347,650 0.53 5,060,000 1.29
Guarantee by the Republic of the
Philippines 5,746,500 1.12 7,082,500 1.55 5,746,500 1.29 7,082,500 1.81
Others 105,253,810 20.52 80,9 47,148 17.77 102,901,498 23.02 78,703,585 20.08
235,660,467 45.95 199,870,809 43.87 192,420,066 43.04 156,803,787 40.01
Unsecured loans 277,229,304 54.05 255,747,202 56.13 254,646,180 56.96 235,127,39 0 59.99
P512,889,771 100.00 P455,618,011 100.00 P447,066,246 100.00 P391,931,177 100.00

65
 Information on the concentration of credit as to industry of the Group and Parent Company follows:

Consolidated
2018 2017
Amounts % Amounts %
Real estate, renting and business services P114,735,281 22.37 P113,424,302 24.89
Electricity, gas and water 72,863,548 14.21 53,514,587 11.75
Wholesale and retail trade 55,339,970 10.79 53,818,092 11.81
Transportation, storage and communication 50,516,030 9.85 40,464,073 8.88
Financial intermediaries 49,687,486 9.69 52,341,750 11.49
Manufacturing 28,277,954 5.51 29,583,222 6.49
Arts, entertainment and recreation 25,456,962 4.96 13,959,186 3.06
Accommodation and food service activities 12,218,029 2.38 12,260,862 2.69
Construction 11,287,124 2.20 8,732,720 1.92
Mining and quarrying 9,839,723 1.92 887,231 0.19
Agriculture 7,134,717 1.39 6,051,546 1.33
Education 5,717,621 1.11 3,869,247 0.85
Public administration and defense 5,166,000 1.01 6,232,000 1.37
Professional, scientific and technical activities 4,319,666 0.84 4,079,383 0.90
Others* 60,329,660 11.26 56,399,810 12.38
P512,889,771 100.00 P455,618,011 100.00
*Others consist of administrative and support service, health, household and other activities.

Parent Company
2018 2017
Amounts % Amounts %
Real estate, renting and business services P90,654,316 20.28 P91,809,744 23.42
Electricity, gas and water 70,798,136 11.04 52,050,493 13.28
Financial intermediaries 48,096,511 10.76 49,950,420 12.74
Wholesale and retail trade 49,365,453 11.04 46,238,179 11.80
Transportation, storage and communication 47,756,466 10.68 38,376,551 9.79
Manufacturing 25,115,956 5.62 25,622,331 6.54
Arts, entertainment and recreation 25,318,150 5.66 13,895,619 3.55
Accommodation and food service activities 10,563,067 2.36 10,285,048 2.62
Construction 9,965,323 2.23 7,349,9 08 1.88
Mining and quarrying 9,835,453 2.20 884,6864 0.23
Agriculture 5,321,124 1.19 4,442,522 1.13
Public administration and defense 5,166,000 1.16 6,232,000 1.59
Education 4,872,451 1.09 2,845,294 0.73
Professional, scientific and technical activities 4,221,842 0.94 3,760,091 0.96
Others* 40,015,998 8.95 38,188,292 9.74
P447,066,246 100.00 P391,931,177 100.00
*Others consist of administrative and support service, health, household and other activities.

66 CHINA BANKING CO RPORATI ON

The BSP considers that loan concentration exists when the total loan exposure to a particular industry or economic sector exceeds 30.00%
of total loan portfolio. As of December 31, 2018 and 2017, the Parent Company does not have credit concentration in any particular industry.

As of December 31, 2018 and 2017, secured and unsecured non-performing loans (NPLs) of the Group and the Parent Company follow:

Consolidated Parent Company

2018 2017 2018 2017
Secured P2,771,745 P3,164,209 P493,929 P687,318
Unsecured 3,173,971 3,237,418 2,140,143 2,235,931
P5,945,716 P6,401,627 P2,634,072 P2,923,249

Prior to January 1, 2018, NPLs generally refer to loans whose principal and/or interest is unpaid for thirty (30) days or more after due date
or after they have become past due in accordance with existing BSP 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, the total outstanding balance thereof shall be considered
nonperforming.

In the case of loans 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 loans that are payable in daily, weekly, or semi-monthly installments, the total outstanding balance thereof shall be considered
nonperforming at the same time that they become 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 twenty percent (20.00%) of the total loan
balance.

Loans are classified as nonperforming in accordance with BSP regulations, or when, in the opinion of management, collection of interest
or principal is doubtful. Loans are not reclassified as performing until interest and principal payments are brought current or the loans are
restructured in accordance with existing BSP regulations, and future payments appear assured.

Loans which do not meet the requirements to be treated as performing loans shall also be considered as NPLs.

With the issuance of BSP Circular 941 Amendments to the Regulations on Past Due and Non-Performing Loans effective January 1, 2018,
loans shall be considered non-performing, even without any missed contractual payments, when it is considered impaired under existing
accounting standards, classified as doubtful or loss, in litigation, and/or there is evidence that full repayment of principal and interest
is unlikely without foreclosure of collateral, if any. All other loans, even if not considered impaired, shall be considered non-performing
if any principal and/or interest are unpaid for more than ninety (90) days from contractual due date, or accrued interests for more than
ninety (90) days have been capitalized, refinanced, or delayed by agreement.

Interest Income on Loans and Receivables

This account consists of:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Receivables from customers P28,195,915 P21,663,571 17,812,79 3 P23,488,872 P17,455,018 P14,055,123
Unquoted debt securities – 88,076 76,459 – 81,999 67,164
P28,195,915 P21,751,647 17,889,252 P23,488,872 P17,537,017 P14,122,287

As of December 31, 2018 and 2017, 67.40% and 65.01%, respectively, of the total receivables from customers of the Group were subject
to interest repricing. As of December 31, 2018 and 2017, 71.76% and 67.67%, respectively, of the total receivables from customers of the
Parent Company were subject to interest repricing. Remaining receivables carry annual fixed interest rates ranging from 1.65% to 10.50% in
2018, from 2.08% to 10.50% in 2017, and from 1.00% to 11.00% in 2016 for foreign currency-denominated receivables and from 0.95% to
30.00% in 2018 and from 0.95% to 30.00% in 2017, and from 1.00% to 30.00% in 2016 for peso-denominated receivables.

67
11. EQUITY INVESTMENTS

This account consists of investments in:

A. Subsidiaries

2018 2017
Equity Method:
Balance at beginning of the year
CBSI P11,618,713 P11,047,530
CBCC 1,512,899 732,541
CBC−PCCI 27,905 22,853
CIBI 401,215 366,113
13,560,733 12,169,037
Share in net income
CBSI 328,663 514,396
CBCC 358,796 276,161
CBC−PCCI 14,834 5,851
CIBI (6,938) 39,596
695,356 836,004
Share in Other Comprehensive Income
Items that recycle to profit or loss in subsequent periods:
Net unrealized gain (loss) on FVOCI
CBSI (25,338) 24,765
CBCC (27,584) 1,926
CIBI (16,978) (4,19 6)
(69,900) 22,495
Cumulative translation adjustments
CBSI 5,791 13,058
5,791 13,058
Items that do not recycle to profit or loss in subsequent periods:
Remeasurement gain on defined benefit assets
CBSI 86,299 18,964
CBCC 2,344 2,272
CBC−PCCI – (798)
CIBI – (298)
88,642 20,140
Effect of PFRS 9 on Surplus:
CBSI (397,055) –
(397,055) –

(Forward)

68 CHINA BANKING CO RPORATI ON

 2018 2017
Additional Investments
CBSI P500,000 P–
CBCC – 500,000
500,000 500,000
Cash Dividends
CIBI (50,000) –
–
Balance at end of the year
CBSI 12,117,074 11,618,713
CBCC 1,846,455 1,512,899
CBC−PCCI 42,739 27,9 05
CIBI 327,299 401,215
P14,333,567 P13,560,733

B. Associates:

2018 2017
Equity Method:
Balance at beginning of the year P329,422 P276,559
Share in net income 101,009 73,133
Share in OCI:
Items that do not recycle to profit or loss in subsequent periods
Remeasurement loss on life insurance reserves 31,374 (12,221)
Items that recycle to profit or loss in subsequent periods:
Net unrealized loss on FVOCI (126,713) (8,050)
Balance at end of the year P335,092 P329,422

CBSI
Cost of investment includes the original amount incurred by the Parent Company from its acquisition of CBSI in 2007 amounting
to P1.07 billion. The capital infusion to CBSI in 2018 amounting to P500 million was approved by the Parent Company’s BOD on
June 6, 2018.

Merger of CBSI with PDB

The BOD of both CBSI and PDB, in their meeting held on June 26, 2014, approved the proposed merger of PDB with CBSI, with the latter as
the surviving bank. The terms of the Plan of Merger of CBSI with PDB were approved by CBSI and PDB’s stockholders owning at least 2/3
of each corporation’s outstanding common stocks in separate meetings held on August 14, 2014. The Plan of Merger permits the issuance
of 1.23 PDB common shares for every CBSI common share.

On November 6, 2015, the BSP issued the Certificate of Authority on the Articles of Merger and the Plan of Merger, as amended, of CBSI
and PDB.

On December 17, 2015, CBSI obtained SEC’s approval of its merger with PDB, whereby the entire assets and liabilities of PDB shall be
transferred to and absorbed by CBSI.

Acquisition of PDB
In 2014, the Parent Company made tender offers to non−controlling stockholders of PDB. As of December 31, 2014, the Parent Company
owns 99.85% and 100.00% of PDB’s outstanding common and preferred stocks, respectively.

69
 As of December 31, 2014, the Parent Company’s cost of investment in PDB consists of:

Acquisition of majority of PDB’s capital stock P1,421,346

Additional capital infusion 1,300,000
Tender offers 255,354
P2,976,700

On March 31, 2015, the Parent Company made additional capital infusion to PDB amounting to P1.70 billion. Of the total cost of investment,
the consideration transferred for the acquisition of PDB follows:

Acquisition of majority of PDB’s capital stock P1,421,346

Tender offers 255,354
P1,676,700

In 2015, the MB of the BSP granted to the Group investment and merger incentives in the form of waiver of special licensing fees for 67
additional branch licenses in restricted areas. This is in addition to the initial investment and merger incentives of 30 new branches in
restricted areas and 35 branches to be transferred from unrestricted to restricted areas granted to the Parent Company by the MB in 2014.
These branch licenses were granted under the Strengthening Program for Rural Bank (SPRB) Plus Framework.

The branch licenses have the following fair values:

114 Commercial Bank branch licenses P2,280,000

18 Thrift Bank branch licenses 270,000
2,550,000
Deferred tax liability 765,000
P1,785,000

On April 6, 2016, the Parent Company’s BOD has approved the allocation of the 67 additional branch licenses in restricted areas as follows:
49 to the Parent Company and 18 to CBSI.  Pursuant to a memorandum dated March 18, 2017, the 67 branch licenses were awarded as
incentives by the Monetary Board as a result of the Parent Company’s acquisition of PDB. Goodwill from acquisition of PDB is computed as
follows:

Consideration transferred P1,676,700

Less: Fair value of identifiable assets and liabilities acquired (Note 15)
Net liabilities of PDB (P725,207)
Branch licenses, net of deferred tax liability (Note 13) 1,785,000 1,059,793
P616,907

CIBI
On December 7, 2018, the BOD of CIBI approved the declaration of the cash dividends of P50 million from the CIBI’s unrestricted retained
earnings for Stockholders on record as of December 15, 2018 payable on December 26, 2018.

CBCC
On April 1, 2015, the BOD approved the investment of the Parent Company in an investment house subsidiary, CBCC, up to the amount of
P500.00 million, subject to the requirements of relevant regulatory agencies. On April 30, 2015, the BSP approved the request of the Parent
Company to invest up to 100% or up to 500.00 million common shares in CBCC, subject to certain conditions. On November 27, 2015, the
SEC approved the Articles of Incorporation and By−Laws of CBCC. It also granted CBCC the license to operate as an investment house.
Actual capital infusion to CBCC amounted to P200.00 million and P300.00 million in 2016 and 2015, respectively.

70 CHINA BANKING CO RPORATI ON

On January 19, 2017, the BOD of CBCC approved the increase in authorized capital stock of CBCC from P500.00 million to
P2.00 billion to enable CBCC to handle bigger deals. The approval was ratified by the BOD of the Parent Company on February 1, 2017.
On April 27, 2017, the Parent Company paid CBCC P500.00 million for additional subscription of 50,000,000 shares.

CBCC acquisition of CBCSec (formerly ATC Securities, Inc.)

On May 19, 2016, the BOD of CBCC approved the acquisition of ATC Securities, Inc. (ATC).

On June 29, 2016, CBCC and the shareholders of ATC (the Original Shareholders) entered into an Agreement for the Purchase of Shares
(Agreement), whereby CBCC agreed to buy, and the Original Shareholders agreed to sell, 3,800,000 shares representing 100% of the issued
and outstanding shares of ATC.

The initial purchase price for the acquisition of ATC was set at P21,767,997.50, payable as follows:

a. 10% – on signing date of the Agreement (June 29, 2016)

b. 70% of the purchase price – on closing date (March 6, 2017)
c. 10% of the purchase price – upon receipt of Certificates Authorizing Registration and Tax Clearance Certificates
d. 10% of the purchase price – one year from the closing date (March 6, 2018), subject to any deduction for certain losses

On February 22, 2017, the Philippine Stock Exchange approved ATC’s application for change in controlling interest through CBCC’s
acquisition of 100% of the issued and outstanding shares of ATC.

In view of the prolonged period since the Agreement was signed and the resulting change in the financial position, prospects, and other
circumstances of ATC and its Original Shareholders, the parties agreed to negotiate an adjustment to the purchase price that is mutually
acceptable to CBCC and the Original Shareholders.

On March 6, 2017, CBCC and the Original Shareholders agreed to fix the final purchase price of the acquisition at P26,704,341, and the
Original Shareholders executed deeds of absolute sale of their respective shares in ATC in favor of CBCC. By virtue of this transaction, CBCC
assumed ownership and control of ATC.

On March 6, 2017, CBCC and ATC entered into a Subscription Agreement, whereby CBCC subscribed to 7,200,000 common shares of ATC
at a price of P10.00 per share or a total subscription price of P72.00 million.

The fair values of identifiable assets and liabilities arising from the acquisition as of March 6, 2017 are as follows:

Assets
Cash and cash equivalents P9,196,017
Accounts receivable 348,024
Computer software (net) 559,375
Office equipment (net) 149,264
Trading rights 8,500,000
Prepaid expenses 1,755,945
Condominium 12,063,309
Other assets 3,004,295
Total Assets 35,576,228
Liabilities
Accounts payable 406,250
Payable to customer 2,256,733
Payable to clearing house 61,519
Other liabilities 56,820
Total Liabilities 2,781,321
Net Book Value P32,794,907

71
 The acquisition by CBCC of ATC Securities, Inc. resulted in recognition of gain on bargain purchase which is determined as follows:

Cost of acquisition P26,704,341

Less net assets recognized 32,794,907
Gain on bargain purchase P6,090,566

The gain from a bargain purchase identified as the excess of the fair value of the net assets of ATC Securities, Inc. over the cost of acquisition
is mainly attributable to the mutually agreed price that accounts for intention of the Original Shareholders to ultimately retire from the business,
prevention of further outlay of funds from the Original Shareholders to ensure compliance with regulatory capital requirements and their
relative ability to divest of the said shares in an expeditious manner.

Gain on bargain purchase is included under ‘Miscellaneous income’ in the consolidated statements of income (Note 21).

Cash flow on acquisition follows:

Cash and cash equivalents acquired from ATC Securities, Inc. P9,196,017
Cash paid 24,033,906
Net Cash Outflow P14,837,889

From the date of acquisition, CBCSec’s operating income and net income included in the consolidated statement of income amounted to
P6.37 million. If the acquisition had taken place at the beginning 2017, the Group’s total operating income and net income in 2017 would
have increased by P5.69 million.

On July 6, 2017, the SEC approved the change of name from ATC Securities, Inc. to China Bank Securities Corporation.

On August 23, 2017, CBCC subscribed to the remaining 4,000,000 unissued common shares of CBCSec at a price of P10.00 per share or
a total subscription price of P40.00 million, to provide CBCSec with sufficient capital buffer as its transition and ramps up its operations as
the equities brokerage house of the Group.

CBC Assets One (SPC) Inc.

CBC Assets One (SPC) Inc. was incorporated on June 15, 2016 as a wholly−owned special purpose company of CBCC for asset−backed
securitization. It has not yet commenced commercial operations.

Investment in Associates
Investment in associates in the consolidated and Parent Company’s financial statements pertain to investment in MCB Life and CBC−PCCI’s
investment in Urban Shelters (accounted for by CBC−PCCI in its financial statements as an investment in an associate) which is carried at nil
amount as of December 31, 2018 and 2017.

The following tables show the summarized financial information of MCB Life:

2018 2017
Total assets P34,832,490 P31,656,389
Total liabilities 34,007,106 30,834,456
Equity 825,384 821,933

2018 2017
Revenues P9,176,931 6,268,405
Benefits, claims and operating expenses 8,898,029 6,066,765
Income (loss) before income tax 278,902 201,640
Net income (loss) P252,522 P182,833

72 CHINA BANKING CO RPORATI ON

 MCB Life
On August 2, 2006, the BOD approved the joint project proposal of the Parent Company with Manufacturers Life Insurance Company
(Manulife). Under the proposal, the Parent Company will invest in a life insurance company owned by Manulife, and such company will be
offering innovative insurance and financial products for health, wealth and education through the Parent Company’s branches nationwide.
The life insurance company was incorporated as The Pramerica Life Insurance Company Inc. in 1998. The name was changed to Manulife
China Bank Life Assurance Corporation on March 23, 2007. The Parent Company acquired 5.00% interest in MCB Life on August 8, 2007.
This investment is accounted for as an investment in an associate by virtue of the Bancassurance Alliance Agreement which provides the
Parent Company to be represented in MCB Life’s BOD and, thus, exercise significant influence over the latter.

The BSP requires the Parent Company to maintain a minimum of 5.00% ownership over MCB Life in order for MCB Life to be allowed to
continue distributing its insurance products through the Parent Company’s branches.

On September 12, 2014, the BSP approved the request of the Parent Company to raise its capital investment in MCB Life from 5.00% to
40.00% of its authorized capital through purchase of P1.75 million common shares.

On December 5, 2018, the Parent Company’s BOD approved the additional capital infusion in the amount of P40.00 million in MCB Life.
This represents 40% of the P100.00 million total capital infusion in MCB Life with the balance of P60.00 million to be provided by Manulife
Philippines. On top of complying with the higher capital requirements for insurance companies, the additional capital will improve MCB Life’s
capacity to underwrite more business and enhance its competitive position.

Commission income earned by the Parent Company from its bancassurance agreement amounting to P357.79 million, P360.01 million,
P383.48 million in 2018, 2017 and 2016, respectively, is included under ‘Miscellaneous income’ in the statements of income (Note 20).

12. BANK PREMISES, FURNITURE, FIXTURES AND EQUIPMENT

The composition of and movements in this account follow:

Consolidated
Furniture,
Land Fixtures and Leasehold Construction− 2018
(Note 23) Equipment Buildings Improvements in−Progress Total
Cost
Balance at beginning of year P3,345,404 P7,893,528 P1,941,742 P1,855,565 P61,489 P15,097,728
Additions 631,734 23,978 315,486 86,804 1,058,002
Disposals/transfers* (127,141) (616,184) (176,307) 18,832 (123,565) (1,024,365)
Balance at end of year 3,218,263 7,909,078 1,789,413 2,189,883 24,728 15,131,365
Accumulated Depreciation and Amortization
Balance at beginning of year − 6,079,049 1,103,650 1,038,017 − 8,220,716
Depreciation and amortization − 704,124 94,836 211,907 − 1,010,867
Disposals/transfers* − (423,065) (134,512) 6,901 − (550,676)
Balance at end of year − 6,360,108 1,063,974 1,256,825 − 8,680,907
Allowance for Impairment Losses (Note 16)
Balance at beginning of year − − 1,148 − − 1,148
Reclassification − − (1,148) − − (1,148)
Balance at end of year − − − − − −
Net Book Value at End of Year P3,218,263 P1,548,970 P725,439 P933,058 P24,728 P6,450,458
*Includes transfers from investment properties amounting to P20.13 million.

73
 Consolidated
Furniture,
Land Fixtures and Leasehold Construction− 2017
(Note 23) Equipment Buildings Improvements in−Progress Total
Cost
Balance at beginning of year P3,345,404 P7,163,737 P1,893,525 P1,482,415 P86,405 P13,971,486
Additions − 988,658 73,800 679,305 10,410 1,752,173
Disposals/transfers* − (258,867) (25,583) (306,155) (35,326) (625,931)
Balance at end of year 3,345,404 7,893,528 1,941,742 1,855,565 61,489 15,097,728
Accumulated Depreciation and Amortization
Balance at beginning of year − 5,562,502 1,013,29 6 897,049 − 7,472,847
Depreciation and amortization − 674,334 74,625 183,435 − 932,394
Disposals/transfers* − (157,787) 15,729 (42,467) − (184,525)
Balance at end of year − 6,079,049 1,103,650 1,038,017 − 8,220,716
Allowance for Impairment Losses (Note 16)
Balance at beginning of year − − 2,371 − − 2,371
Reclassification − − (1,223) − − (1,223)
Balance at end of year − − 1,148 − − 1,148
Net Book Value at End of Year P3,345,404 P1,814,479 P836,944 P817,548 P61,489 P6,875,864
*Includes transfers from investment properties amounting to P10.82 million

Parent Company
Furniture,
Land Fixtures and Leasehold Construction− 2018
(Note 23) Equipment Buildings Improvements in−Progress Total
Cost
Balance at beginning of year P2,786,310 P6,668,301 P1,085,668 P1,351,869 P61,486 P11,953,634
Additions − 498,101 16,235 223,957 86,804 825,097
Disposals/transfers* − (537,615) 2,127 (39,802) (123,565) (698,855)
Balance at end of year 2,786,310 6,628,787 1,104,030 1,536,024 24,725 12,079,876
Accumulated Depreciation and Amortization
Balance at beginning of year − 5,189,416 543,875 755,761 − 6,489,052
Depreciation and amortization − 557,586 36,010 148,934 − 742,530
Disposals/transfers* − (365,749) 618 (51,961) − (417,092)
Balance at end of year − 5,381,253 580,503 852,734 − 6,814,490
Net Book Value at End of Year P2,786,310 P1,247,534 P523,527 P683,290 P24,725 P5,265,386
*Includes transfers from investment properties amounting to P20.13 million.

Parent Company
Furniture,
Land Fixtures and Leasehold Construction− 2017
(Note 23) Equipment Buildings Improvements in−Progress Total
Cost
Balance at beginning of year P2,786,310 P6,082,009 P1,077,608 P1,093,494 P80,139 P11,119,560
Additions − 786,776 40,422 550,076 10,410 1,387,684
Disposals/transfers* − (200,484) (32,362) (291,701) (29,063) (553,610)
Balance at end of year 2,786,310 6,668,301 1,085,668 1,351,869 61,486 11,9 53,634
Accumulated Depreciation and Amortization
Balance at beginning of year − 4,775,377 517,491 682,711 − 5,975,579
Depreciation and amortization − 537,338 26,456 115,273 − 679,067
Disposals/transfers* − (123,299) (72) (42,223) − (165,594)
Balance at end of year − 5,189,416 543,875 755,761 − 6,489,052
Net Book Value at End of Year P2,786,310 P1,478,885 P541,793 P59 6,108 P61,486 P5,464,582
*Includes transfers from investment properties amounting to P10.82 million.
74 CHINA BANKING CO RPORATI ON
 The Group adopted the deemed cost model as of January 1, 2004 and considered the carrying value of the land determined under its
previous accounting method (revaluation method) as the deemed cost of the asset as of January 1, 2005. Accordingly, revaluation increment
amounting to P1.28 billion was closed to surplus (Note 23) in 2011.

As of December 31, 2018 and 2017, the gross carrying amount of fully depreciated furniture, fixtures and equipment still in use amounted to
P3.47 billion and P2.89 billion, respectively, for the Group and P2.61 billion and P2.31 billion, respectively, for the Parent Company.

Gain on sale of furniture, fixtures and equipment amounting to P1.81 million, P2.11 million and P2.97 million in 2018, 2017 and 2016,
respectively, for the Group and P1.60 million, P1.69 million and P2.17 million in 2018, 2017 and 2016, respectively, for the Parent Company
are included in the statements of income under ‘Miscellaneous income’ account (Note 21).

In 2016, depreciation and amortization amounting to P842.22 million and P595.81 million for the Group and Parent Company, respectively,
are included in the statements of income under ‘Depreciation and amortization’ account.

13. INVESTMENT PROPERTIES

The composition of and movements in this account follow:

Consolidated
Buildings and 2018
Land Improvements Total
Cost
Balance at beginning of year P4,605,061 P2,646,549 P7,251,610
Additions 135,099 408,334 543,433
Disposals/write−off/transfers* (454,309) (395,136) (849,445)
Balance at end of year 4,285,851 2,659,747 6,945,598
Accumulated Depreciation and Amortization
Balance at beginning of year – 742,071 742,071
Depreciation and amortization – 170,978 170,978
Disposals/write−off/transfers* – (32,285) (32,285)
Balance at end of year – 880,764 880,764
Allowance for Impairment Losses (Note 16)
Balance at beginning of year 1,028,013 409,370 1,437,383
Write−off (85,454) (76,697) (162,151)
Balance at end of year 942,559 332,673 1,275,232
Net Book Value at End of Year P3,343,292 P1,446,310 P4,789,602
*Includes transfers to bank premises amounting to P20.13 million (Note 12).

75
 Consolidated
Buildings and 2017
Land Improvements Total
Cost
Balance at beginning of year P4,730,076 P2,788,397 P7,518,473
Additions 299,806 279,283 579,089
Disposals/write−off/transfers* (424,821) (421,131) (845,952)
Balance at end of year 4,605,061 2,646,549 7,251,610
Accumulated Depreciation and Amortization
Balance at beginning of year – 755,763 755,763
Depreciation and amortization – 191,338 191,338
Disposals/write−off/transfers* – (205,030) (205,030)
Balance at end of year – 742,071 742,071
Allowance for Impairment Losses (Note 16)
Balance at beginning of year 1,028,013 384,958 1,412,971
Reversal during the year – 24,412 24,412
Disposals/write−off/reclassification* 1,028,013 409,370 1,437,383
Balance at end of year 3,577,048 1,49 5,108 5,072,156
Net Book Value at End of Year P4,730,076 P2,788,397 P7,518,473
*Includes transfers to bank premises amounting to P10.82 million (Note 12).

Parent Company
Buildings and 2018
Land Improvements Total
Cost
Balance at beginning of year P1,859,355 P1,397,668 P3,257,023
Additions 135,099 125,671 260,770
Disposals/write−off/transfers* (574,177) (193,400) (767,577)
Balance at end of year 1,420,277 1,329,939 2,750,216
Accumulated Depreciation and Amortization
Balance at beginning of year – 500,102 500,102
Depreciation and amortization – 89,928 89,928
Disposals/write−off/transfers* – (149,575) (149,575)
Balance at end of year – 440,455 440,455
Allowance for Impairment Losses (Note 16)
Balance at beginning and end of year 1,004,729 201,689 1,206,418
Write−off (85,454) – (85,454)
Balance at end of year 919,275 201,689 1,120,964
Net Book Value at End of Year P501,002 P687,795 P1,188,797
*Includes transfers to bank premises amounting to P20.13 million (Note 12).

76 CHINA BANKING CO RPORATI ON

 Parent Company
Buildings and 2017
Land Improvements Total
Cost
Balance at beginning of year P2,019,065 P1,511,349 P3,530,414
Additions 40,573 86,079 126,652
Disposals/write-off/transfers* (200,283) (199,760) (400,043)
Balance at end of year 1,859,355 1,397,668 3,257,023
Accumulated Depreciation and Amortization
Balance at beginning of year – 563,120 563,120
Depreciation and amortization – 104,638 104,638
Disposals/write-off/transfers* – (167,656) (167,656)
Balance at end of year – 500,102 500,102
Allowance for Impairment Losses (Note 16)
Balance at beginning and end of year 1,004,729 201,689 1,206,418
Net Book Value at End of Year P854,626 P695,877 P1,550,503
*Includes transfers to bank premises amounting to P10.82 million (Note 12).

The Group’s investment properties consist entirely of real estate properties acquired in settlement of loans and receivables. The difference
between the fair value of the investment property upon foreclosure and the carrying value of the loan is recognized under ‘Gain on asset
foreclosure and dacion transactions’ in the statements of income.

In 2016, depreciation and amortization amounting to P173.01 million and P98.92 million for the Group and Parent Company, respectively,
are included in the statements of income under ‘Depreciation and amortization’ account.

Details of rental income earned and direct operating expenses incurred on investment properties follow:

Consolidated
2018 2017 2016
Rent income on investment properties P35,323 P32,499 P20,19 0
Direct operating expenses on investment properties
generating rent income 1,451 924 4,767
Direct operating expenses on investment properties not
generating rent income 66,011 52,029 67,619

Parent Company
2018 2017 2016
Rent income on investment properties P10,994 P8,250 P39,734
Direct operating expenses on investment properties
generating rent income 649 799 886
Direct operating expenses on investment properties not
generating rent income 29,584 33,405 44,089

Rent income earned from leasing out investment properties is included under ‘Miscellaneous income’ in the statements of income (Note 21).

On August 26, 2011, the Parent Company was registered as an Economic Zone Information Technology (IT) Facilities Enterprise with
the Philippine Economic Zone Authority (PEZA) to operate and maintain a proposed 17-storey building located inside the CBP-IT Park in
Barangays Mabolo, Luz, Hipodromo, Carreta, and Kamputhaw, Cebu City, for lease to PEZA-registered IT enterprises, and to be known as
Chinabank Corporate Center. This registration is under PEZA Registration Certificate No. 11-03-F.

Under this registration, the Parent Company is entitled to five percent (5.00%) final tax on gross income earned from locator IT enterprises
and related operations in accordance with existing PEZA rules. The Parent Company shall also be exempted from the payment of all national
and local taxes in relation to this registered activity.

77
14. GOODWILL AND INTANGIBLE ASSETS

Goodwill
Goodwill represents the excess of the acquisition costs over the fair value of the identifiable assets and liabilities of companies acquired by
the Group.

The Group attributed the goodwill arising from its acquisition of CBSI and PDB to factors such as increase in geographical presence and
customer base due to the branches acquired. None of the goodwill recognized is expected to be deductible for income tax purposes. CBSI
as surviving entity from the merger with PDB, is the identified CGU for this goodwill. The Parent Company’s Retail Banking Business (RBB)
has been identified as the CGU for impairment testing of the goodwill from its acquisition of CBSI.

As of December 31, 2018 and 2017, amount of goodwill per CGU follows:

Consolidated Parent Company

RBB P222,841 P222,841
CBSI 616,907 –
Total P839,748 P222,841

The recoverable amount of the CGUs have been determined based on a value-in-use calculation using cash flow projections from financial
budgets approved by senior management covering a five-year period, which do not include restructuring activities that the Group is not yet
committed to or significant future investments that will enhance the asset base of the CGU being tested. Other than loans and deposits
growth rates, the significant assumptions, and the most sensitive, used in computing for the recoverable values of the CGUs follow:

2018 2017
RBB CBSI RBB CBSI
Discount rate 7.12% 9.81% 6.41% 7.83%
Terminal value growth rate 1.00% 1.00% 1.00% 1.00%

With regard to the assessment of value-in-use of the CGU, management believes that no reasonably possible change in any of the above key
assumptions would cause the carrying value of the goodwill to materially exceed its recoverable amount as of December 31, 2018 and 2017.

Branch Licenses
Branch licenses of the Group arose from the acquisitions of CBSI, Unity Bank, and PDB. As of December 31, 2018 and 2017, details of
branch licenses in the Group’s and Parent Company’s financial statements follow:

Consolidated Parent Company

Branch license from CBSI acquisition P420,600 P398,000
Branch license from Unity Bank acquisition 347,400 –
Branch license from PDB acquisition (Note 11) 2,839,500 –
Total P3,607,500 P398,000

The individual branches have been identified as the CGU for impairment testing of the branch licenses. The recoverable amounts of the CGUs
for impairment testing of the branch licenses have been determined based on the higher between fair value less cost to sell and value-in-use
calculations.

FVLCD is based on special licensing fee of BSP on branches operating on identified restricted areas. Value-in-use calculation uses cash flow
projections from financial budgets approved by senior management covering a five-year period, which do not include restructuring activities
that the Group is not yet committed to or significant future investments that will enhance the asset base of the CGU being tested.

The calculation of the value-in-use of the CGU is most sensitive to the following assumptions:

• Discount rates
• Terminal value growth rate used to extrapolate cash flows beyond the budget period

78 CHINA BANKING CO RPORATI ON

 With regard to the assessment of value-in-use of the CGU, the Parent Company recognized an impairment loss related to certain unrestricted
branch licenses from the acquisition of CBSI amounting to P57.00 million in 2017.

Capitalized software costs

The movements in the account follow:

Consolidated Parent Company

2018 2017 2018 2017
Cost
Balance at beginning of year P714,230 P549,156 P591,256 P445,444
Additions 144,123 165,074 154,055 145,814
Disposals/Writeoff/Reclass 142,386 – 149,794 –
Balance at end of year 1,000,739 714,230 895,105 591,258
Accumulated Depreciation and Amortization
Balance at beginning of year 217,697 123,940 188,395 94,861
Depreciation and amortization 115,840 93,757 115,450 93,535
Disposals/Writeoff/Reclass 73,740 – 73,729 –
Balance at end of year 407,277 217,697 377,574 188,396
Net Book Value at End of Year P593,462 P496,533 P517,531 P402,862

15. OTHER ASSETS

This account consists of:

Consolidated Parent Company

2018 2017 2018 2017
Financial assets
Accounts receivable P2,595,023 P2,884,628 P1,480,760 P1,686,205
SCR 1,121,035 979,046 224,035 208,496
RCOCI 129,142 179,935 117,227 83,636
Others 491,475 369,034 175,540 157,380
4,336,675 4,412,643 1,997,562 2,135,717
Nonfinancial assets
Net plan assets (Note 24) 777,827 995,050 756,160 991,386
Prepaid expenses 246,053 124,526 208,632 114,121
Creditable withholding taxes 338,618 378,143 338,618 321,231
Security deposit 272,541 231,838 193,216 205,400
Documentary stamps 215,696 309,642 149,078 182,778
Sundry debits 358,051 235,136 166,951 71,552
Miscellaneous 433,502 298,882 – –
2,642,288 2,573,217 1,812,655 1,886,468
6,978,963 6,985,860 3,810,217 4,022,185
Allowance for impairment and credit losses (Note 16) (759,404) (766,965) (477,454) (540,960)
P6,219,558 P6,218,895 P3,332,763 P3,481,225

Accounts receivable
Accounts receivable also includes non-interest bearing advances to officers and employees, with terms ranging from 1 to 30 days and
receivables of the Parent Company from automated teller machine (ATM) transactions of clients of other banks that transacted through any
of the Parent Company’s ATM terminals.

79
 Sales Contract Receivable
This refers to the amortized cost of assets acquired in settlement of loans through foreclosure or dation in payment and subsequently sold on
installment basis whereby the title to the said property is transferred to the buyers only upon full payment of the agreed selling price.

SCR bears fixed interest rate per annum in 2018 and 2017 ranging from 5.00% to 10.00% and 5.00% to 10.25%, respectively.

Miscellaneous
Miscellaneous consists mainly of unissued stationery and supplies, inter-office float items, and deposits for various services.

16. ALLOWANCE FOR IMPAIRMENT AND CREDIT LOSSES

Changes in the allowance for impairment and credit losses are as follows:

Consolidated Parent Company

2018 2017 2018 2017
Balances at beginning of year
Loans and receivables P8,121,175 P6,654,995 P6,500,542 P5,709,025
Investment properties 1,437,383 1,412,971 1,206,418 1,206,418
Accrued interest receivable 201,647 179,339 58,269 62,019
AFS financial assets 128,171 38,742 6,323 6,323
Investment securities at amortized cost – – 83,618 –
Bank premises, furniture, fixtures and equipment 1,148 2,371 – –
Intangible assets – – – –
Other assets 781,424 718,434 540,960 614,366
10,670,948 9,006,852 8,396,130 7,598,151
Provisions charged to operations 141,076 754,171 (1,957) 423,922
Accounts charged off and others (1,260,874) (1,012,065) (1,109,856) (1,100,523)
(1,119,798) (257,89 4) (1,111,813) (676,601)
Balances at end of year
Loans and receivables (Note 10) 6,829,280 6,339,183 5,425,713 5,109,580
Investment properties (Note 13) 1,275,232 1,437,383 1,120,965 1,206,418
Accrued interest receivable 303,555 165,452 45,247 58,269
AFS financial assets (Note 9) (4,023) 38,827 – –
Investment securities at amortized cost 375,102 – 214,938 –
Bank premises, furniture, fixtures and equipment
(Note 12) – 1,148 – –
Other assets (Note 15) 772,004 766,965 477,454 540,960
P9,551,150 P8,748,958 P7,284,317 P6,921,550

At the current level of allowance for impairment and credit losses, management believes that the Group has sufficient allowance to cover
any losses that may be incurred from the non-collection or non-realization of its loans and receivables and other risk assets.

The separate valuation allowance of acquired loans and receivables from PDB amounting to P1.59 billion was not recognized by the Group
on the effectivity date of acquisition as these receivables were measured at fair value at acquisition date. Any uncertainties about future
cash flows of these receivables were included in their fair value measurement (Note 11). Also, the separate valuation allowance of acquired
investment properties from PDB amounting to P199.15 million was not recognized by the Group on the effectivity date of acquisition as these
properties were measured at fair value on acquisition date.

80 CHINA BANKING CO RPORATI ON

The tables below illustrate the movements of the allowance for impairment and credit losses during the year (effect of movements in ECL
due to transfers between stages are shown in the total column):

Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Corporate and commercial lending 12-month ECL Lifetime ECL Lifetime ECL
Loss allowance at January 1, 2018 P1,567,376 P2,540,760 P1,866,388 P5,974,524
Movements with P&L impact
Transfers:
Transfer from Stage 1 to Stage 2 (14,441) 28,817 – 14,376
Transfer from Stage 1 to Stage 3 (239) – 16,030 15,791
Transfer from Stage 2 to Stage 1 88,811 (610,794) – (521,983)
Transfer from Stage 2 to Stage 3 – (127) 12,175 12,048
Transfer from Stage 3 to Stage 1 835 – (1,524) (689)
Transfer from Stage 3 to Stage 2 – 402 (41,564) (41,162)
New financial assets originated or purchased 1,659,492 82,660 326,658 2,068,810
Changes in PDs/LGDs/EADs (133,642) (1,009,545) 9,740 (1,133,447)
Financial assets derecognised during the period (282,839) (29,273) (530,585) (842,697)
Total net P&L charge during the period 1,317,977 (1,537,860) (209,070) (428,953)
Other movements without P&L impact
Write-offs, foreclosures and other movements (110,226) (19,240) (67,211) (196,677)
Total movements without P&L impact (110,226) (19,240) (67,211) (196,677)
Loss allowance at December 31, 2018 P2,775,127 P983,660 P1,590,107 P5,348,894

Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Consumer lending 12-month ECL Lifetime ECL Lifetime ECL
Loss allowance at January 1, 2018 P98,783 P180,441 P1,262,884 P1,542,108
Movements with P&L impact
Transfers:
Transfer from Stage 1 to Stage 2 (222) 919 – 697
Transfer from Stage 1 to Stage 3 (1,548) – 73,986 72,438
Transfer from Stage 2 to Stage 1 628 (2,447) – (1,819)
Transfer from Stage 2 to Stage 3 – (567) 143,142 142,575
Transfer from Stage 3 to Stage 1 188 – (12,493) (12,305)
Transfer from Stage 3 to Stage 2 – 31 (4,990) (4,959)
New financial assets originated or purchased 130,472 (270,546) 54,037 (86,037)
Changes in PDs/LGDs/EADs 1,952 (3,359) (824) (2,231)
Financial assets derecognised during the period (2,032) 112,104 132,792 242,864
Total net P&L charge during the period 129,438 (163,865) 385,650 351,223
Other movements without P&L impact
Write-offs, foreclosures and other movements (4,839) – (506,957) (511,79 6)
Total movements without P&L impact (4,839) – (506,957) (511,79 6)
Loss allowance at December 31, 2018 P223,382 P16,576 P1,141,577 P1,381,535

81
 Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Trade-related lending 12-month ECL Lifetime ECL Lifetime ECL
Loss allowance at January 1, 2018 P56,619 P5,19 5 P33,872 P95,686
Movements with P&L impact
Transfers:
Transfer from Stage 1 to Stage 2 – – – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 – – – –
Transfer from Stage 2 to Stage 3 – – – –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
New financial assets originated or purchased 48,922 25,774 – 74,69 6
Changes in PDs/LGDs/EADs – – – –
Financial assets derecognised during the period (51,863) (587) 1,225 (51,225)
Total net P&L charge during the period (2,941) 25,187 1,225 23,471
Other movements without P&L impact
Write-offs, foreclosures and other movements – (4,608) (15,697) (20,305)
Total movements without P&L impact – (4,608) (15,697) (20,305)
Loss allowance at December 31, 2018 P53,678 P25,774 P19,400 P98,852

Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
12-month ECL Lifetime ECL Lifetime ECL
Investments in debt instruments (AC)
Loss allowance at January 1, 2018 P5,818 P532,164 P151,836 P689,818
Total net P&L charge during the period 142,818 (8,989) – 133,828
Write-offs, foreclosures and other movements 60,312 (508,858) – (448,545)
Loss allowance at December 31, 2018 P208,949 P14,317 P151,836 P375,102

Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
12-month ECL Lifetime ECL Lifetime ECL
Investments in debt instruments (FVOCI)
Loss allowance at January 1, 2018 P4,061 P– P– P4,061
Total net P&L charge during the period (565) 2 – (564)
Write-offs, foreclosures and other movements – – – –
Loss allowance at December 31, 2018 P3,496 P2 P– P3,498

82 CHINA BANKING CO RPORATI ON

 Consolidated
2017
AFS Financial
Loans and Receivables Assets
Corporate
and Unquoted Accrued
Commercial Consumer Trade−related Equity Interest
Lending Lending Lending Others Total Securities Receivable
Balance at beginning of year P4,593,387 P1,631,460 P277,623 P152,525 P6,654,995 P38,742 P179,339
Provisions (recoveries) during the year 224,815 453,404 158 – 678,377 – 37,821
Transfers/others (897,841) (5,000) (91,205) (143) (9 9 4,189) 85 (51,708)
Balance at end of year P3,920,361 P2,079,864 P186,576 P152,382 P6,339,183 P38,827 P165,452
Individual impairment P950,102 P925,165 P54,429 P151,836 P2,081,532 P38,827 P165,452
Collective impairment 2,970,259 1,154,69 9 132,147 546 4,257,651 – –
P3,920,361 P2,079,864 P186,576 P152,382 P6,339,183 P38,827 P165,452

Parent Company
ECL Staging  
Stage 1 Stage 2 Stage 3 Total
Corporate and commercial lending 12-month ECL Lifetime ECL Lifetime ECL  
Loss allowance at January 1, 2018 P1,463,125 P2,504,510 P1,145,534 P5,113,169
Movements with P&L impact
Transfers:
Transfer from Stage 1 to Stage 2 (12,166) 26,542 – 14,376
Transfer from Stage 1 to Stage 3 (149) – 15,940 15,791
Transfer from Stage 2 to Stage 1 87,675 (609,658) – (521,983)
Transfer from Stage 2 to Stage 3 – (91) 12,139 12,048
Transfer from Stage 3 to Stage 1 3 – (692) (689)
Transfer from Stage 3 to Stage 2 – 402 (41,564) (41,162)
New financial assets originated or purchased 1,560,644 79,805 97,884 1,738,333
Changes in PDs/LGDs/EADs (133,642) (1,009,545) 9,740 (1,133,447)
Financial assets derecognised during the period (209,096) (10,947) (262,008) (482,051)
Total net P&L charge during the period 1,293,269 (1,523,492) (168,561) (398,784)
Other movements without P&L impact
Write-offs, foreclosures and other movements (110,226) (19,240) (67,211) (196,677)
Total movements without P&L impact (110,226) (19,240) (67,211) (196,677)
Loss allowance at December 31, 2018 P2,646,168 P961,778 P909,762 P4,517,708

83
 Parent Company
ECL Staging  
Stage 1 Stage 2 Stage 3 Total
Consumer lending 12-month ECL Lifetime ECL Lifetime ECL  
Loss allowance at January 1, 2018 P72,857 P13,726 P708,170 P794,753
Movements with P&L impact
Transfers:
Transfer from Stage 1 to Stage 2 (222) 919 – 697
Transfer from Stage 1 to Stage 3 (1,548) – 73,986 72,438
Transfer from Stage 2 to Stage 1 628 (2,447) – (1,819)
Transfer from Stage 2 to Stage 3 – (567) 143,142 142,575
Transfer from Stage 3 to Stage 1 188 – (12,493) (12,305)
Transfer from Stage 3 to Stage 2 – 31 (4,990) (4,959)
New financial assets originated or purchased 27,182 1,999 74,735 103,916
Changes in PDs/LGDs/EADs 1,952 (3,359) (824) (2,231)
Financial assets derecognised during the period (2,032) (4,581) 19,358 12,745
Total net P&L charge during the period 26,148 (8,005) 292,914 311,057
Other movements without P&L impact
Write-offs, foreclosures and other movements (4,839) – (287,062) (291,901)
Total movements without P&L impact (4,839) – (287,062) (291,901)
Loss allowance at December 31, 2018 P9 4,166 P5,721 P714,022 P813,909

Parent Company
ECL Staging  
Stage 1 Stage 2 Stage 3 Total
Trade-related lending 12-month ECL Lifetime ECL Lifetime ECL  
Loss allowance at January 1, 2018 P44,695 P5,19 5 P33,872 P83,762
Movements with P&L impact
Transfers:
Transfer from Stage 1 to Stage 2 – – – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 – – – –
Transfer from Stage 2 to Stage 3 – – – –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
New financial assets originated or purchased 48,922 25,774 – 74,69 6
Changes in PDs/LGDs/EADs – – – –
Financial assets derecognised during the period (44,695) (587) 1,225 (44,057)
Total net P&L charge during the period 4,227 25,187 1,225 30,639
Other movements without P&L impact
Write-offs, foreclosures and other movements – (4,608) (15,697) (20,305)
Total movements without P&L impact – (4,608) (15,697) (20,305)
Loss allowance at December 31, 2018 P48,922 P25,774 P19,400 P94,096

84 CHINA BANKING CO RPORATI ON

 Parent Company
ECL Staging
Stage 1 Stage 2 Stage 3 Total
12-month ECL Lifetime ECL Lifetime ECL  
Investments in debt instruments (AC)
Loss allowance at January 1, 2018 P– P532,164 P– P532,164
Total net P&L charge during the period 140,309 (8,989) – 131,320
Write-offs, foreclosures and other movements 60,312 (508,858) – (448,545)
Loss allowance at December 31, 2018 P200,622 P14,317 P– P214,938

Parent Company
ECL Staging  
Stage 1 Stage 2 Stage 3 Total
12-month ECL Lifetime ECL Lifetime ECL  
Investments in debt instruments (FVOCI)
Loss allowance at January 1, 2018 P4,061 P– P– P4,061
Total net P&L charge during the period (565) 2 – (564)
Write-offs, foreclosures and other movements – – – –
Loss allowance at December 31, 2018 P3,496 P2 P– P3,498

Parent Company
2017
AFS Financial
Loans and Receivables Assets
Corporate
and Unquoted Accrued
Commercial Consumer Trade−related Equity Interest
Lending Lending Lending Others Total Securities Receivable
Balance at beginning of year P4,381,126 P1,061,364 P265,846 P689 P5,709,025 P6,323 P62,019
Provisions (recoveries) during the year 138,503 252,010 158 – 390,671 – 141
Transfers/others (898,767) – (91,206) (143) (9 9 0,116) – (3,891)
Balance at end of year P3,620,862 P1,313,374 P174,79 8 P546 P5,109,580 P6,323 P58,269
Individual impairment 728,378 925,165 46,061 – 1,699,604 6,323 58,269
Collective impairment 2,892,484 388,209 128,737 546 3,409,976 – –
P3,620,862 P1,313,374 P174,79 8 P546 P5,109,580 P6,323 P58,269

85
 The corresponding movement of the gross carrying amount of the financial asset are shown below:

Consolidated
ECL Staging
Total
Stage 1 Stage 2 Stage 3
Corporate and commercial lending 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P343,382,501 P21,959,934 P3,803,100 P369,145,536
Transfers:
Transfer from Stage 1 to Stage 2 (2,204,591) 2,204,591 – –
Transfer from Stage 1 to Stage 3 (541,79 0) – 541,79 0 –
Transfer from Stage 2 to Stage 1 5,741,579 (5,741,579) – –
Transfer from Stage 2 to Stage 3 – (110,9 06) 110,9 06 –
Transfer from Stage 3 to Stage 1 4,599 - (4,599) –
Transfer from Stage 3 to Stage 2 – 58,581 (58,581) –
Movements in outstanding balance (12,748,731) (1,385,560) (68,568) (14,202,859)
Financial assets derecognised during the period (146,379,371) (4,302,610) (647,546) (151,329,527)
New financial assets purchased or originated 203,356,235 4,842,239 204,531 208,403,004
Write-offs (49,904) – (45,800) (95,704)
Foreclosures (20,000) (100,000) – (120,000)
Gross carrying amount as at December 31, 2018 P390,540,527 P17,424,690 P3,835,233 P411,800,451

Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Consumer lending 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P59,172,559 P11,538,435 P3,147,219 P73,858,213
Transfers:
Transfer from Stage 1 to Stage 2 (297,371) 297,371 – –
Transfer from Stage 1 to Stage 3 (69 5,183) – 69 5,183 –
Transfer from Stage 2 to Stage 1 385,789 (385,789) - –
Transfer from Stage 2 to Stage 3 – (241,795) 241,795 –
Transfer from Stage 3 to Stage 1 94,603 – (94,603) –
Transfer from Stage 3 to Stage 2 – 7,300 (7,300) –
Movements in outstanding balance (5,137,045) (841,339) (42,527) (6,020,911)
Financial assets derecognised during the period (6,609,339) (7,913,933) (310,274) (14,833,546)
New financial assets purchased or originated 33,786,248 750,348 213,449 34,750,046
Write-offs (568) – (503,842) (504,409)
Foreclosures (8,052) – (26,400) (34,452)
Gross carrying amount as at December 31, 2018 P80,691,641 P3,210,598 P3,312,700 P87,214,939

86 CHINA BANKING CO RPORATI ON

 Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Trade-related lending 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P11,023,818 P1,185,331 P40,138 P12,249,287
Transfers:
Transfer from Stage 1 to Stage 2 – – – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 – – – –
Transfer from Stage 2 to Stage 3 – – – –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
Movements in outstanding balance 3,437,69 3 – – 3,437,69 3
Financial assets derecognised during the period (13,581,251) (1,180,722) (1,122) (14,763,096)
New financial assets purchased or originated 11,229,908 1,684,378 – 12,914,287
Write-offs – (4,608) (12,455) (17,063)
Foreclosures – – (3,242) (3,242)
Gross carrying amount as at December 31, 2018 P12,110,169 P1,684,378 P23,319 P13,817,866

Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Investments in amortised cost 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P106,283,139 P1,491,862 – P107,775,001
Transfers:
Transfer from Stage 1 to Stage 2 (1,503,373) 1,503,373 – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 1,015,768 (1,015,768) – –
Transfer from Stage 2 to Stage 3 – (508,880) 508,880 –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
Movements in outstanding balance – – – –
Financial assets derecognised during the period (1,499,195) – (508,880) (2,008,075)
New financial assets purchased or originated 59,725,675 3,678,571 – 63,404,246
Other movements 3,556,344 32,786 151,836 3,740,9 65
Gross carrying amount as at December 31, 2018 P167,578,357 P5,181,944 P151,836 P172,912,137

87
 Consolidated
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Investments at FVOCI (debt) 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P7,139,941 P– P– P7,139,941
Transfers:
Transfer from Stage 1 to Stage 2 – – – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 – – – –
Transfer from Stage 2 to Stage 3 – – – –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
Movements in outstanding balance – – – –
Financial assets derecognised during the period (1,301,024) – – (1,301,024)
New financial assets purchased or originated 5,548,115 – – 5,548,115
Other movements (1,392,669) – – (1,392,669)
Gross carrying amount as at December 31, 2018 P9,994,362 P– P– P9,994,362

Parent Company
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Corporate and commercial lending 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P314,896,868 P20,860,133 P1,396,331 P337,153,332
Transfers:
Transfer from Stage 1 to Stage 2 (1,614,808) 1,614,808 – –
Transfer from Stage 1 to Stage 3 (16,150) – 16,150 –
Transfer from Stage 2 to Stage 1 5,416,311 (5,416,311) – –
Transfer from Stage 2 to Stage 3 – (22,537) 22,537 –
Transfer from Stage 3 to Stage 1 471 – (471) –
Transfer from Stage 3 to Stage 2 – 58,581 (58,581) –
Movements in outstanding balance (13,147,09 5) (1,041,488) (12,753) (14,201,336)
Financial assets derecognised during the period (138,623,015) (3,962,344) (410,260) (142,995,619)
New financial assets purchased or originated 196,692,368 4,810,531 160,778 201,663,677
Write-offs (49,904) - (45,800) (95,705)
Foreclosures (20,000) (100,000) - (120,000)
Gross carrying amount as at December 31, 2018 P363,535,045 P16,801,373 P1,067,931 P381,404,350

88 CHINA BANKING CO RPORATI ON

 Parent Company
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Consumer lending 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P35,519,556 P7,085,076 P1,430,659 P44,035,292
Transfers:
Transfer from Stage 1 to Stage 2 (297,371) 297,371 – –
Transfer from Stage 1 to Stage 3 (69 5,183) – 69 5,183 –
Transfer from Stage 2 to Stage 1 385,789 (385,789) – –
Transfer from Stage 2 to Stage 3 – (241,795) 241,795 –
Transfer from Stage 3 to Stage 1 94,603 – (94,603) –
Transfer from Stage 3 to Stage 2 – 7,300 (7,300) –
Movements in outstanding balance (4,831,880) (902,628) (42,526) (5,777,034)
Financial assets derecognised during the period (4,044,525) (3,588,822) (141,242) (7,774,589 )
New financial assets purchased or originated 21,786,039 553,104 180,687 22,519,829
Write-offs (568) – (283,947) (284,514)
Foreclosures (8,052) – (26,400) (34,452)
Gross carrying amount as at December 31, 2018 P47,908,408 P2,823,817 P1,952,306 P52,684,532

Parent Company
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Trade-related lending 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P9,462,533 P1,185,331 P40,138 P10,688,002
Transfers:
Transfer from Stage 1 to Stage 2 – – – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 – – – –
Transfer from Stage 2 to Stage 3 – – – –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
Movements in outstanding balance – – – –
Financial assets derecognised during the period (9,462,533) (1,180,722) (1,122) (10,644,378)
New financial assets purchased or originated 11,229,908 1,684,378 – 12,914,287
Write-offs – (4,608) (12,455) (17,063)
Foreclosures – – (3,242) (3,242)
Gross carrying amount as at December 31, 2018 P11,229,908 P1,684,378 P23,319 P12,937,606

89
 Parent Company
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Investments in amortised cost 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P101,081,352 P1,491,862 P– P102,573,214
Transfers:
Transfer from Stage 1 to Stage 2 (1,503,373) 1,503,373 – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 1,015,768 (1,015,768) – –
Transfer from Stage 2 to Stage 3 – (508,880) 508,880 –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
Movements in outstanding balance – – – –
Financial assets derecognised during the period (1,499,195) – (508,880) (2,008,075)
New financial assets purchased or originated 56,300,580 3,678,571 – 59,979,151
Other movements 3,462,329 32,786 – 3,49 5,114
Gross carrying amount as at December 31, 2018 P158,857,460 P5,181,944 P– P164,039,404

Parent Company
ECL Staging
Stage 1 Stage 2 Stage 3 Total
Investments at FVOCI (debt) 12-month ECL Lifetime ECL Lifetime ECL
Gross carrying amount as at January 1, 2018 P5,147,303 P– P– P5,147,303
Transfers:
Transfer from Stage 1 to Stage 2 – – – –
Transfer from Stage 1 to Stage 3 – – – –
Transfer from Stage 2 to Stage 1 – – – –
Transfer from Stage 2 to Stage 3 – – – –
Transfer from Stage 3 to Stage 1 – – – –
Transfer from Stage 3 to Stage 2 – – – –
Movements in outstanding balance – – – –
Financial assets derecognised during the period (1,107,221) – – (1,107,221)
New financial assets purchased or originated 5,265,658 – – 5,265,658
Other movements (1,164,380) – – (1,163,733)
Gross carrying amount as at December 31, 2018 P8,141,359 P– P– P8,141,359

90 CHINA BANKING CO RPORATI ON

 While the Group recognizes through the statement of income the movements in the expected credit losses computed using the models, the
Group also complies with BSP’s regulatory requirement to appropriate a portion of its retained earnings at an amount necessary to bring to at
least 1% the allowance for credit losses on loans (Note 23). In 2018, the amount of retained earnings appropriated for this purpose increased
by P340.41 million for both the Group and the Parent Company.

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Provision for impairment and credit losses P141,076 P754,171 P850,546 (P1,957) P423,922 P521,475
Retained earning, appropriated 340,409 – – 340,409 – –
P481,485 P754,171 P850,546 P338,452 P423,922 P521,475

17. DEPOSIT LIABILITIES

As of December 31, 2018 and 2017, 33.64% and 36.13% respectively, of the total deposit liabilities of the Group and 37.56% and 40.19%
of the parent are subject to periodic interest repricing. The remaining deposit liabilities bear annual fixed interest rates ranging from 0.13% to
4.55% in 2018, 0.13% to 3.65% in 2017, 0.13% to 3.25% in 2016, 0.13% to 2.75% in 2015 and 2014.

Interest Expense on Deposit Liabilities

This account consists of:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Demand P257,129 P233,984 P197,595 P182,521 P163,524 P143,917
Savings 3,491,085 1,120,422 819,991 3,429,446 1,072,849 567,447
Time 7,873,305 5,167,529 3,813,969 6,124,047 3,974,430 2,917,763
P11,621,609 P6,521,935 P4,831,555 P9,738,032 P5,210,803 P3,629,127

BSP Circular No. 830 requires reserves against deposit liabilities. As of December 31, 2018 and 2017, due from BSP amounting to
P100.06 billion and P95.90 billion, respectively, for the Group and P93.26 billion and P89.17 billion, respectively, for the Parent Company
were set aside as reserves for deposit liabilities per latest report submitted BSP. As of December 31, 2018 and 2017, the Group is in
compliance with such regulation.

Long Term Negotiable Certificates of Deposits (LTNCD)

On August 3, 2016, the BOD of the Parent Company approved the issuance of LTNCD of up to P20.00 billion in tranches of P5.00 billion to
P10.00 billion each and with tenors ranging from 5 to 7 years to support the Group’s strategic initiatives and business growth. On October
27, 2016, the Monetary Board of the BSP approved the LTNCD issuances. On November 18, 2016, the Parent Company issued the first
tranche at par with aggregate principal amount of P9.58 billion due May 18, 2022. The LTNCDs bear a fixed coupon rate of 3.65% per
annum, payable quarterly in arrears. Subject to BSP rules, the Group has the option to pre-terminate the LTNCDs as a whole but not in part,
prior to maturity and on any interest payment date at face value plus accrued interest covering the accrued and unpaid interest.

On June 2, 2017, the Parent Company issued at par LTNCDs with aggregate principal amount of P6.35 billion due December 22, 2022,
representing the second tranche of the P20.00 billion.

On March 7, 2018, the BOD approved the Bank’s Peso funding program of up to P50.00 billion via a combination of LTNCD and/or Retail
Bonds and/or Commercial Papers.

On July 12, 2018, the Parent Company issued at par LTNCDs with aggregate principal amount of P10.25 billion due January 12, 2024,
representing the first tranche of the P20 billion LTNCD approved by BSP on June 14, 2018. The LTNCDs bear a fixed coupon rate of
4.55% per annum, payable quarterly in arrears. The P20.00 billion LTNCD program is part of the Group’s funding program amounting to
P50.00 billion.

The LTNCDs are included under the ‘Time deposit liabilities’ account.

91
18. BILLS PAYABLE

Bills Payable
The Group’s and the Parent Company’s bills payable consist of:

Consolidated Parent Company

2018 2017 2018 2017
Interbank loans payable P28,426,800 P16,378,274 P28,426,800 P16,378,274
Trade finance 5,804,832 3,739,757 5,804,832 3,739,757
BPS rediscounting (Note 10) 4,132,800 – 4,132,800 –
Promissory Notes 1,462,100 – 1,462,100 –
P39,826,532 P20,118,031 P39,826,532 P20,118,031

Interbank loans payable

Interbank loans payable consists of short-term dollar-denominated borrowings of the Parent Company with annual interest ranging from
3.11% to 4.73% and from 0.12% to 2.28% in 2018 and 2017, respectively.

As of December 31, 2018, the carrying amount of foreign currency-denominated investment securities at amortized cost and FVOCI
pledged by the Parent Company as collateral for its interbank borrowings amounted to P13.32 billion and P0.73 billion, respectively.
The carrying amount of peso-denominated investment securities at amortized cost pledged by the Parent Company as collateral for its
interbank borrowings amounted to P20.69 billion. The fair value of investment securities at amortized cost pledged as collateral amounted
to P31.86 billion as of December 31, 2018 (Note 9).

As of December 31, 2017, the carrying amount of foreign currency-denominated HTM and AFS financial assets pledged by the Parent
Company as collateral for its interbank borrowings amounted to P3.43 billion and P3.72 billion, respectively. The carrying amount of peso-
denominated HTM, AFS and HFT financial assets pledged by the Parent Company as collateral for its interbank borrowings amounted
to P10.25 billion, P0.10 billion and P0.49 billion, respectively. The fair value of HTM financial assets pledged as collateral amounted to
P13.24 billion as of December 31, 2017 (Note 9).

As of December 31, 2018 and 2017, margin deposits amounting to P930.82 billion and P497.26 million, respectively, are deposited with
various counterparties to meet the collateral requirements for its interbank loans payable.

Trade finance
As of December 31, 2018 and 2017, trade finance consists of the Parent Company’s borrowings from financial institutions using bank trade
assets as the basis for borrowing foreign currency. The refinancing amount should not exceed the aggregate amount of trade assets.

19. ACCRUED INTEREST AND OTHER EXPENSES

This account consists of:

Consolidated Parent Company

2018 2017 2018 2017
Accrued interest payable P1,737,659 P813,068 P1,513,147 P707,342
Accrued payable for employee benefits 958,643 9 63,774 958,643 956,348
Accrued taxes and other licenses 229,059 116,158 149,088 9 6,153
Accrued lease payable 198,759 166,246 198,759 162,875
Accrued other expenses payable 718,405 568,373 522,515 361,230
P3,842,525 P2,627,619 P3,342,152 P2,283,948

92 CHINA BANKING CO RPORATI ON

20. OTHER LIABILITIES

This account consists of:

Consolidated Parent Company

2018 2017 2018 2017
Financial liabilities
Accounts payable P3,426,924 P3,131,826 P2,248,710 P1,827,956
Due to PDIC 628,142 531,645 628,142 531,645
Acceptances payable 348,738 469,518 357,832 469,518
Other credits-dormant 241,720 281,008 241,720 213,681
Due to the Treasurer of the Philippines 386,930 43,174 378,871 33,950
Margin deposits 3,359 3,004 3,359 3,004
Expected credit losses on off-balance sheet exposures 1,629,150 – 1,619,131 –
Miscellaneous (Note 23) 682,487 938,901 301,701 430,041
7,347,450 5,399,076 5,779,466 3,509,795
Nonfinancial liabilities
Withholding taxes payable 325,508 202,174 270,346 155,320
Retirement liabilities (Note 24) 8,686 119,451 – –
334,194 321,625 270,346 155,320
P7,681,644 P5,720,701 P6,049,812 P3,665,115

Accounts payable includes payables to suppliers and service providers, and loan payments and other charges received from customers in
advance.

Off-balance sheet exposures (Note 30) subject to ECL include syndicated and long-term lines. ECL for these exposures that was recognized
on January 1, 2018 to P1.67 billion for the Group and P1.61 billion for the Parent Company.

Miscellaneous mainly includes sundry credits, inter−office float items, and dormant deposit accounts.

21. OTHER OPERATING INCOME AND MISCELLANEOUS EXPENSES

Service Charges, Fees and Commissions

Details of this account are as follows:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Service and collection charges:
Deposits P606,051 P540,323 P597,29 4 P606,051 P539,941 P535,397
Loans 330,520 276,054 214,237 330,520 34,758 40,301
Remittances 303,817 311,768 302,184 47,397 311,768 302,184
Others 109,290 112,725 114,791 107,652 99,116 93,452
1,349,677 1,240,870 1,228,506 1,091,620 985,583 971,334
Fees and commissions 1,427,605 1,200,854 894,963 438,107 409,415 348,114
P2,777,283 P2,441,724 P2,123,469 P1,529,727 P1,394,998 P1,319,448

93
 Trading and securities gain - net
This account consists of:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
AFS financial assets (P2,104) P363,350 P918,673 (P2,451) P340,351 P856,031
Financial assets designated at FVPL (Note 9) (36,766) 170,352 111,615 (40,831) 170,352 111,615
Held-for-trading (Note 9) – (55,257) (135,709) – (55,257) (135,709)
Financial assets at FVOCI (224,583) – – (224,583) – –
Derivative assets (Note 25) (19,827) (3,510) 23,510 (19,827) (3,510) 23,510
Financial asset at amortized cost (11,728) – – (11,728) – –
HTM financial assets – 5,025 – 11,728 5,025 –
(P271,552) P479,960 P918,089 (P275,964) P399,760 P852,870

Miscellaneous Income
Details of this account are as follows:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Bancassurance (Note 11) P357,786 P360,009 P383,483 P357,786 P360,009 P383,483
Dividends (Note 9) 127,084 91,073 193,229 126,386 91,073 193,229
Recovery of charged off assets 144,924 199,014 18,734 100,517 184,272 10,523
Rental on bank premises 111,572 111,651 91,591 80,388 83,911 67,134
Fund transfer fees 49,171 59,682 50,658 49,171 59,682 50,658
Rental safety deposit boxes 26,341 24,933 24,627 26,341 24,825 24,269
Miscellaneous income (Notes 12, 13 and 15) 444,863 670,161 116,122 389,545 587,884 70,801
P1,261,741 P1,516,523 P878,445 P1,130,134 P1,391,657 P800,097

On April 11, 2017, the Bureau of Treasury (BTr) paid the Group the final tax withheld (FWT) from the proceeds of the Poverty Eradication
and Alleviation Certificates (PEACe) bonds last October 18, 2011, plus 4.00% interest per annum from October 19, 2011 to April 10, 2017.
Total settlement amount were paid in the form of 3-year Retail Treasury Bonds with interest of 4.25% per annum. The settlement resulted
in gain amounting to P381.65 million and P356.77 million for the Group and Parent Company, respectively, which is presented under
‘Miscellaneous income’ in 2017.

Miscellaneous Expenses
Details of this account are as follows:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Information technology P231,895 P402,314 P108,458 P231,895 P339,214 P227,627
Service charges 500,459 219,430 225,889 452,540 219,430 225,889
Litigations 198,011 176,602 117,363 65,157 22,815 43,261
Freight 37,593 38,909 34,331 24,352 27,9 53 27,354
Broker’s fee 35,843 39,129 12,403 31,891 39,128 12,403
Clearing and processing fee 22,024 21,252 27,379 17,355 16,320 24,525
Membership fees and dues 17,756 18,642 29,329 16,260 17,160 28,135
Miscellaneous expense 1,011,053 9 51,274 518,834 779,702 808,638 352,295
P2,054,634 P1,867,552 P1,073,986 P1,619,152 P1,49 0,658 P941,489

94 CHINA BANKING CO RPORATI ON

22. MATURITY ANALYSIS OF ASSETS AND LIABILITIES

The following tables present both the Group’s and Parent Company’s assets and liabilities as of December 31, 2018 and 2017 analyzed
according to when they are expected to be recovered or settled within one year and beyond one year from the respective reporting date:

Consolidated
2018 2017
Within Over Within Over
Twelve Months Twelve Months Total Twelve Months Twelve Months Total
Financial assets
Cash and other cash items P15,639,474 P– P15,639,474 P12,685,984 P– P12,685,984
Due from BSP 101,889,773 – 101,889,773 98,490,014 – 98,490,014
Due from other banks 9,455,447 – 9,455,447 15,641,476 – 15,641,476
Interbank loans receivable and SPURA 11,998,040 – 11,998,040 18,751,845 – 18,751,845
Financial assets at FVPL 6,273,368 1,322,894 7,596,262 12,730,270 3,508,618 16,238,888
Financial assets at FVOCI
AFS financial assets – gross 1,364,962 8,732,542 10,097,504 7,389,865 39,094,353 46,484,218
Investment securities at amortized cost
HTM financial assets 9,893,261 163,018,876 172,912,137 628,196 64,658,071 65,286,267
Loans and receivables – gross 166,260,382 346,629,390 512,889,772 163,581,848 292,036,163 455,618,011
Accrued interest receivable – gross 6,000,736 – 6,000,736 3,883,957 – 3,883,957
Other assets – gross 3,294,964 1,121,036 4,416,000 3,188,970 1,223,673 4,412,643
332,070,407 520,824,738 852,895,145 336,972,425 400,520,878 737,493,303
Nonfinancial assets
Bank premises, furniture, fixtures and equipment
− net of accumulated depreciation and
amortization – 6,450,458 6,450,458 – 6,877,012 6,877,012
Investment properties − net of accumulated
depreciation – 6,064,835 6,064,835 – 6,509,539 6,509,539
Deferred tax assets – 2,514,889 2,514,889 – 1,778,081 1,778,081
Investments in associates – 335,092 335,092 – 329,422 329,422
Intangible assets – 4,215,199 4,215,199 – 4,104,032 4,104,032
Goodwill – 839,748 839,748 – 839,748 839,748
Other assets – gross 1,351,634 1,211,331 2,562,965 1,281,008 1,292,209 2,573,217
1,351,634 21,631,552 22,983,186 1,281,008 21,730,043 23,011,051
Allowance for impairment and credit losses (Note 16) (9,551,150) (8,748,958)
Unearned discounts (Note 10) (255,535) (307,886)
(9,806,685) (9,056,844)
P866,071,646 P751,447,510
Financial liabilities
Deposit liabilities 682,760,286 39,363,010 722,123,296 602,734,404 32,358,989 635,093,393
Bills payable 39,826,532 – 39,826,532 20,118,031 – 20,118,031
Manager’s checks 2,577,175 – 2,577,175 2,441,042 – 2,441,042
Accrued interest and other expenses* 2,098,994 352,335 2,451,329 1,114,252 267,189 1,381,441
Derivative liabilities 455,150 – 455,150 267,533 – 267,533
Other liabilities 6,110,225 1,213,812 7,324,037 5,399,076 – 5,399,076
733,828,362 40,929,157 774,757,519 632,074,338 32,626,178 664,700,516
Nonfinancial liabilities
Accrued interest and other expenses 161,542 1,229,654 1,391,196 105,468 1,140,710 1,246,178
Deferred tax liabilities – 1,231,145 1,231,145 – 1,161,653 1,161,653
Income tax payable 477,585 – 477,585 362,041 – 362,041
Other liabilities 325,508 32,102 357,610 202,174 119,451 321,625
P734,792,997 P43,422,058 P778,215,055 P632,744,021 P35,047,992 P667,792,013
*Accrued interest and other expenses include accrued interest payable and accrued other expenses payable (Note 19).

95
 Parent Company
2018 2017
Within Over Within Over
Twelve Months Twelve Months Total Twelve Months Twelve Months Total
Financial assets
Cash and other cash items P13,705,304 P– P13,705,304 P11,160,173 P– P11,160,173
Due from BSP 95,092,944 – 95,092,944 91,717,037 – 91,717,037
Due from other banks 7,837,894 – 7,837,894 14,066,620 – 14,066,620
SPURA 8,998,040 – 8,998,040 17,347,522 – 17,347,522
Financial assets at FVPL 5,366,903 1,322,894 6,689,796 12,633,520 3,423,303 16,056,823
AFS financial assets − gross 1,059,474 7,153,536 8,213,010 6,733,105 36,210,301 42,943,406
HTM financial assets 6,852,074 157,187,330 164,039,404 346,208 61,187,285 61,533,493
Loans and receivables − gross 144,064,744 303,001,501 447,066,245 136,176,920 255,754,257 391,931,177
Accrued interest receivable − gross 5,171,374 – 5,171,374 3,247,352 – 3,247,352
Other assets − gross 1,773,527 224,035 1,997,562 1,9 27,221 208,496 2,135,717
289,922,279 468,889,296 758,811,575 295,355,678 356,783,642 652,139,320
Nonfinancial assets
Bank premises, furniture, fixtures and equipment
− net of accumulated depreciation and
amortization – 5,265,386 5,265,386 – 5,464,582 5,464,582
Investment properties − net of accumulated
depreciation – 2,309,762 2,309,762 – 2,756,921 2,756,921
Deferred tax assets – 1,739,219 1,739,219 – 1,297,271 1,297,271
Investments in subsidiaries – 14,333,567 14,333,567 – 13,560,733 13,560,733
Investment in associates – 335,092 335,092 – 329,422 329,422
Intangible assets – 915,531 915,531 – 800,861 800,861
Goodwill – 222,841 222,841 – 222,841 222,841
Other assets − gross 1,056,495 756,160 1,812,655 895,082 991,386 1,886,468
1,056,495 25,877,558 26,934,054 895,082 25,424,017 26,319,099
Allowances for impairment and credit losses (Note 16) (7,284,317) (6,921,550)
Unearned discounts (Note 10) (208,377) (267,09 9 )
(7,492,694) (7,188,649 )
P778,252,935 P671,269,770
Financial liabilities
Deposit liabilities 606,235,158 32,008,204 638,243,362 534,657,559 24,578,420 559,235,979
Bills payable 39,826,532 – 39,826,532 20,118,031 – 20,118,031
Manager’s checks 2,069,812 – 2,069,812 1,709,248 – 1,709,248
Accrued interest and other expenses* 2,035,662 – 2,035,662 1,068,572 – 1,068,572
Derivative liabilities 455,150 – 455,150 267,533 – 267,533
Other liabilities 5,779,467 – 5,779,467 3,509,795 – 3,509,795
656,401,780 32,008,204 688,409,985 561,330,738 24,578,420 585,909,158
Nonfinancial liabilities
Accrued interest and other expenses 149,088 1,157,402 1,306,490 9 6,153 1,119,223 1,215,376
Income tax payable 414,233 – 414,233 339,155 – 339,155
Other liabilities 270,346 – 270,346 155,320 – 155,320
P657,235,448 P33,165,606 P690,401,055 P561,921,366 P25,697,643 P587,619,009
*Accrued interest and other expenses include accrued interest payable and accrued other expenses payable (Note 19).

96 CHINA BANKING CO RPORATI ON

23. EQUITY

The Parent Company’s capital stock consists of (amounts in thousands, except for number of shares):

2018 2017
Shares Amount Shares Amount
Common stock − P10.00 par value
Authorized – shares 3,300,000,000 3,300,000,000
Issued and outstanding
Balance at beginning of year 2,684,771,716 P26,847,717 2,002,027,836 P20,020,278
Stock rights – – 483,870,967 4,838,710
Additional issuance of shares 1,128,096 11,281 – –
Stock dividends* – – 198,872,913 1,988,729
2,685,899,812 P26,858,998 2,684,771,716 P26,847,717
*The stock dividends declared include fractional shares equivalent to 1,009 and 1,060 in 2018 and 2017, respectively.

The Parent Company shares are listed in the Philippine Stock Exchange.

Stock Rights Offering

On February 22, 2017, the BOD authorized the Parent Company to conduct a rights issue by way of offering common shares to certain
eligible shareholders. The BSP approved the stock rights offering on March 6, 2017.

Each eligible shareholder was entitled to one share, at P31.00 apiece, per 4.1375 existing common shares as of April 19, 2017. The stock
rights offering yielded a subscription of 483,870,967 common shares which were listed at the Philippine Stock Exchange on May 10, 2017.
The total proceeds of the stock rights offering amounted to P14.9 billion, net of stock issuance cost of P52.09 million which was deducted
from additional paid in capital.

The additional capital enabled the Parent Company to grow its loan portfolio, expand its branch network, and support its other strategic
business initiatives.

Increase in the Parent Company’s Authorized Capital Stock

On March 15, 2017 and May 4, 2017 the BOD approved and the stockholders ratified, respectively, the increase in the Parent Company’s
authorized capital stock from P25.00 billion to P33.00 billion, or from P2.50 billion to P3.30 billion shares with par value of 10.00 per share.
The increase in the Parent Company’s authorized capital stock was subsequently approved by the BSP and the SEC on August 2, 2017 and
September 29, 2017, respectively.

On June 7, 2017, the Parent Company and the Trust and Asset Management Group (on behalf of the CBC Employees Retirement Plan)
entered into a subscription agreement whereas the latter will subscribe to 1,128,096 new common shares of the Parent Company at a
subscription price per share equal to the higher between the closing price of the Parent Company’s stock dividend or the par value of
P10.00 per share.

On January 24, 2018, the BOD of the Parent Company, during a special board meeting, confirmed the issuance of the shares to CBC
Employees Retirement Plan in accordance with the subscription agreement which was paid at a subscription price of P33.40 per share
(closing price of the Group’s shares at the Philippine Stock Exchange on October 20, 2018 which is the record date of the Parent
Company’s stock dividend).

97
 The summarized information on the Parent Company’s registration of securities under the Securities Regulation Code follows:

Date of SEC Approval Authorized Shares*

April 12, 1991 100,000
October 7, 1993 150,000
August 30, 1994 200,000
July 26, 1995 250,000
September 12, 1997 500,000
September 5, 2005 1,000,000
September 14, 2007 1,600,000
September 5, 2008 2,000,000
August 29, 2014 2,500,000
September 29, 2017 3,300,000
* Restated to show the effects of the ten−for−one stock split in 2012

As reported by the Parent Company’s transfer agent, Stock Transfer Service, Inc., the total number of stockholders is 1,928 and 1,934 as of
December 31, 2018 and 2017, respectively.

Dividends
Details of the Parent Company’s cash dividend payments follow:

Cash Dividends

Date of Date of Date of Cash Dividend

Declaration Record Payment Per Share
May 03, 2018 May 17, 2018 June 01, 2018 0.83
May 04, 2017 May 18, 2017 June 02, 2017 0.80
May 05, 2016 May 23, 2016 June 03, 2016 1.00
May 07, 2015 August 12, 2015 September 09, 2015 1.00
May 08, 2014 September 19, 2014 October 15, 2014 1.00
May 02, 2013 July 19, 2013 August 14, 2013 1.20

Stock Dividends

Date of Date of Date of Stock Dividend

Declaration Record Payment Per Share
March 15, 2017 October 20, 2017 November 03, 2017 8%
May 05, 2016 May 23, 2016 June 03, 2016 8%
May 07, 2015 August 12, 2015 September 09, 2015 8%
May 08, 2014 September 19, 2014 October 15, 2014 8%
May 02, 2013 July 19, 2013 August 14, 2013 10%

Surplus
The computation of surplus available for dividend declaration in accordance with SEC Memorandum Circular No. 11 issued in December
2008 differs to a certain extent from the computation following BSP guidelines.

As of December 31, 2018 and 2017, surplus includes the amount of P1.28 billion, net of deferred tax liability of P547.40 million, representing
transfer of revaluation increment on land which was carried at deemed cost when the Group transitioned to PFRS in 2005 (Note 12). This
amount will be available to be declared as dividends upon sale of the underlying land.

98 CHINA BANKING CO RPORATI ON

In the consolidated financial statements, a portion of the Group’s surplus corresponding to the net earnings of the subsidiaries and associates
amounting to P1.64 billion and P851.57 million as of December 31, 2018 and 2017, respectively, is not available for dividend declaration.
The accumulated equity in net earnings becomes available for dividends upon declaration and receipt of cash dividends from the investees.

Reserves
In compliance with BSP regulations, 10.00% of the Parent Company’s profit from trust business is appropriated to surplus reserve. This
annual appropriation is required until the surplus reserves for trust business equals 20.00% of the Parent Company’s authorized capital stock.

Upon adoption of PFRS 9, BSP requires appropriation of a portion of the Group’s Retained Earnings at an amount necessary to bring to at
least 1% the allowance for credit losses on loans.

As of January 1, 2018 and December 31, 2018, the accumulated amount of appropriation to surplus reserves amounted to P2.43 billion and
P2.75 billion, respectively. Appropriation for the year amounted to P312.82 million (Note 16).

Capital Management
The primary objectives of the Group’s capital management are to ensure that it complies with externally imposed capital requirements and
that it maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics
of its activities. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend payment to shareholders,
return capital to shareholders or issue capital securities. No changes were made in the objectives, policies and processes as of
December 31, 2018 and 2017.

Regulatory Qualifying Capital

Under existing BSP regulations, the determination of the Parent Company’s compliance with regulatory requirements and ratios is based
on the amount of the Parent Company’s unimpaired capital (regulatory capital) as reported to the BSP. This is determined on the basis of
regulatory accounting policies which differ from PFRS in some respects.

In addition, the risk-based capital ratio of a bank, expressed as a percentage of qualifying capital to risk-weighted assets (RWA), should not
be less than 10.00% for both solo basis (head office and branches) and consolidated basis (Parent Company and subsidiaries engaged in
financial allied undertakings but excluding insurance companies). Qualifying capital and RWA are computed based on BSP regulations. RWA
consists of total assets less cash on hand, due from BSP, loans covered by hold-out on or assignment of deposits, loans or acceptances
under letters of credit to the extent covered by margin deposits and other non-risk items determined by the Monetary Board of the BSP.

On August 4, 2006, the BSP, under BSP Circular No. 538, issued the prescribed guidelines implementing the revised risk-based capital
adequacy framework for the Philippine banking system to conform to Basel II capital adequacy framework. The BSP guidelines took effect
on July 1, 2007. Thereafter, banks were required to compute their CAR using these guidelines.

Standardized credit risk weights were used in the credit assessment of asset exposures. Third party credit assessments were based on
ratings by Standard & Poor’s, Moody’s and Fitch, while PhilRatings were used on peso-denominated exposures to Sovereigns, MDBs,
Banks, LGUs, Government Corporations, Corporates.

On January 15, 2013, the BSP issued Circular No. 781, Basel III Implementing Guidelines on Minimum Capital Requirements, which provides
the implementing guidelines on the revised risk-based capital adequacy framework particularly on the minimum capital and disclosure
requirements for universal banks and commercial banks, as well as their subsidiary banks and quasi-banks, in accordance with the Basel III
standards. The circular took effect on January 1, 2014.

The Circular sets out a minimum Common Equity Tier 1 (CET1) ratio of 6.00% and Tier 1 capital ratio of 7.50%. It also introduces a capital
conservation buffer of 2.50% comprised of CET1 capital. The BSP’s existing requirement for Total CAR remains unchanged at 10.00% and
this ratio shall be maintained at all times.

Further, existing capital instruments as of December 31, 2010 which do not meet the eligibility criteria for capital instruments under the
revised capital framework shall no longer be recognized as capital upon the effectivity of Basel III. Capital instruments issued under BSP
Circular Nos. 709 and 716 (the circulars amending the definition of qualifying capital particularly on Hybrid Tier 1 and Lower Tier 2 capitals),
starting January 1, 2011 and before the effectivity of BSP Circular No. 781, shall be recognized as qualifying capital until December 31, 2016.
In addition to changes in minimum capital requirements, this Circular also requires various regulatory adjustments in the calculation of
qualifying capital.

99
 The CAR of the Group and the Parent Company as of December 31, 2018 as reported to the BSP are shown in the table below.

Consolidated Parent Company

2018 2017 2018 2017
(Amounts in Million Pesos)
CET 1 Capital P84,726 P78,086 P81,957 P77,161
Less: Regulatory Adjustments 10,492 7,434 17,208 13,854
74,234 70,652 64,749 63,307
Additional Tier 1 Capital − − −
Less: Regulatory Adjustments − − −
− − −
Net Tier 1 Capital 74,234 70,652 64,749 63,307
Tier 2 Capital 5,659 3,970 4,982 3,410
Less: Regulatory Adjustments − − − −
Net Tier 2 Capital 5,659 3,970 4,982 3,410
Total Qualifying Capital P79,893 P74,622 P69,731 P66,717

Consolidated Parent Company

2018 2017 2018 2017
(Amounts in Million Pesos)
Credit RWA P565,777 P480,956 P498,030 P451,457
Market RWA 5,154 7,665 5,204 7,540
Operational RWA 39,470 36,047 31,877 28,526
Total RWA P610,401 P524,668 P535,110 P487,523

CET 1 capital ratio 12.16% 13.47% 12.10% 14.02%

Tier 1 capital ratio 12.16% 13.47% 12.10% 14.02%
Total capital ratio 13.09% 14.22% 13.03% 14.78%

The Parent Company has complied with all externally imposed capital requirements throughout the period.

The issuance of BSP Circular No. 639 covering the ICAAP in 2009 supplements the BSP’s risk−based capital adequacy framework under
Circular No. 538. In compliance with this circular, the Parent Company has adopted and developed its ICAAP framework to ensure that
appropriate level and quality of capital are maintained by the Group. Under this framework, the assessment of risks extends beyond the
Pillar 1 set of credit, market and operational risks and onto other risks deemed material by the Parent Company. The level and structure of
capital are assessed and determined in light of the Parent Company’s business environment, plans, performance, risks and budget, as well
as regulatory edicts. BSP requires submission of an ICAAP document every March 31. The Group has complied with this requirement.

24. RETIREMENT PLAN

The Group has separate funded noncontributory defined benefit retirement plans covering substantially all its officers and regular employees.
The retirement plans are administered by the Parent Company’s Trust Group which acts as the trustee of the plans. Under these retirement
plans, all covered officers and employees are entitled to cash benefits after satisfying certain age and service requirements. The latest
actuarial valuation studies of the retirement plans were made as of December 31, 2018.

100 CHINA BANKING CO RPORATI ON

The Group’s annual contribution to the retirement plan consists of a payment covering the current service cost, unfunded actuarial accrued
liability and interest on such unfunded actuarial liability.

The amounts of net defined benefit asset in the balance sheets follow:

Consolidated Parent Company

2018 2017 2018 2017
Net plan assets (Note 15) P777,827 P995,050 P756,159 P991,386
Retirement liabilities (Note 20) (8,686) (119,451) – –
P769,141 P875,599 P756,159 P991,386

The movements in the defined benefit asset, present value of defined benefit obligation and fair value of plan assets follow:

Consolidated
2018
Remeasurements in OCI
Net benefit cost
Return on
plan assets Actuarial Actuarial Actuarial
(excluding changes arising changes arising changes arising
amount from from changes from changes Changes in
January 1, Current Net pension Benefits included experience in financial in demographic remeasurement Contribution December 31,
2018 service cost Net interest expense* paid in net interest) adjustments assumptions assumptions gains (losses) by employer 2018
(l) = a + b + e + f
(a) (c) (d) (e) = c + d (f) (g) (h) (i) (j) = g + h + i (k) +j+k
Fair value of plan
assets P4,868,423 P− P272,914 P272,914 (P275,805) (P619,071) P− P− (P619,071) P612,788 P4,859,249
Present value of
defined benefit
obligation 3,992,824 431,972 223,936 655,907 (275,805) − 38,390 (321,209) (282,819) 4,090,108
Net defined benefit
asset P875,599 (P431,972) P48,978 (P382,994) − (P619,071) (P38,390) P321,209 (P336,251) P612,788 P769,141
*Presented under Compensation and fringe benefits in the statements of income.

Consolidated
2017
Remeasurements in OCI

Return on
plan assets Actuarial Actuarial Actuarial
(excluding changes arising changes arising changes arising
Net benefit cost
amount from from changes from changes Changes in
January 1, Current Net pension Benefits included experience in financial in demographic remeasurement Contribution December 31,
2017 service cost Net interest expense* paid in net interest) adjustments assumptions assumptions gains (losses) by employer 2017
(l) = a + b + e + f
(a) (c) (d) (e) = c + d (f) (g) (h) (i) (j) = g + h + i (k) +j+k
Fair value of plan
assets P4,521,109 P− P217,203 P217,203 (P288,014) (P153,076) P− − P− (P153,076) P571,200 P4,868,423
Present value of
defined benefit
obligation 3,911,041 375,598 188,654 564,252 (288,014) − 48,675 (243,130) − (194,455) − 3,992,824
Net defined benefit
asset P610,068 (P375,598) P28,549 (P347,049 ) P− (P153,076) (P48,675) P243,130 P− P41,379 P571,200 P875,599
*Presented under Compensation and fringe benefits in the statements of income.

Parent Company
2018
Remeasurements in OCI
Return on
plan assets Actuarial Actuarial
(excluding changes arising changes arising
Net benefit cost
amount from from changes Changes in
January 1, Current Net pension Benefits included experience in financial remeasurement Contribution December 31,
2018 service cost Net interest expense* paid in net interest) adjustments assumptions gains (losses) by employer 2018
(l) = a + b + e + f
(a) (c) (d) (e) = c + d (f) (g) (h) (i) (j) = g + h + i (k) +j+k
Fair value of plan
assets P4,558,199 P− P255,259 P255,259 (235,193) (P590,629) P− P− (P590,629) P480,000 P4,467,637
Present value of
defined benefit
obligation 3,566,814 324,756 199,742 324,956 (235,193) − 97,785 (245,646) (147,861) − 3,711,477
Net defined benefit
asset P991,386 (P324,756) P55,518 (P69,697) − (P590,629) P97,785 245,646 (P442,768) P480,000 P756,160
*Presented under Compensation and fringe benefits in the statements of income.

101
 Parent Company
2017
Remeasurements in OCI
Return on
plan assets Actuarial Actuarial
(excluding changes arising changes arising
Net benefit cost
amount from from changes Changes in
January 1, Current Net pension Benefits included experience in financial remeasurement Contribution December 31,
2017 service cost Net interest expense* paid in net interest) adjustments assumptions gains (losses) by employer 2017
(l) = a + b + e + f
(a) (c) (d) (e) = c + d (f) (g) (h) (i) (j) = g + h + i (k) +j+k
Fair value of plan
assets P4,315,996 P− P206,736 P206,736 (P273,001) (P141,532) P− P− (P141,532) P450,000 P4,558,199
Present value of
defined benefit
obligation 3,561,242 264,989 170,583 435,573 (273,001) − 50,525 (207,525) (157,000) − 3,566,813
Net defined benefit
asset P754,754 (P264,989) P36,153 (P288,837) P− (P141,532) (P50,525) P207,525 P15,468 P450,000 P991,386
*Presented under Compensation and fringe benefits in the statements of income.

The Group and the Parent Company is recommended to contribute to its defined benefit pension plan in 2019 amounting to P614.33 million
and P453.28 million.

In 2018 and 2017, the major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

Consolidated Parent Company

2018 2017 2018 2017
Parent Company shares (Note 29) 31.54% 36.30% 33.76% 38.75%
Equity instruments 23.83% 20.97% 21.76% 21.59%
Cash and cash equivalents 10.17% 9.94% 9.07% 7.54%
Debt instruments 19.39% 14.74% 19.39% 12.93%
Other assets 15.08% 18.05% 16.03% 19.19%
100.00% 100.00% 100.00% 100.00%

The following table shows the breakdown of fair value of the plan assets:

Consolidated Parent Company

2018 2017 2018 2017
Due from BSP P– P– P– –
Deposits in banks 479,650 486,822 399,395 345,702
Financial assets at FVPL 868,381 993,381 839,145 9 67,053
AFS financial assets – –
Quoted debt securities 969,754 513,233 832,834 404,197
Quoted equity securities 46,101 33,652 15,023 23,121
Parent Company shares 1,487,360 1,777,250 1,487,360 1,777,250
Investments in unit investment 145,203 199,557 117,097 179,913
trust fund
Corporate bonds 8,750 8,750 8,750 8,750
Loans and receivable 523,483 688,029 520,663 685,179
Investment properties* 162,323 143,799 162,323 143,799
Other assets 25,444 52,078 23,019 51,219
P4,716,449 P4,896,551 P4,405,609 P4,586,183
* Investment properties comprise properties located in Manila.

102 CHINA BANKING CO RPORATI ON

The carrying value of the plan assets of the Group and Parent Company amounted to P4.7 billion and P4.90 billion, respectively, as of
December 31, 2018, and P4.41 billion and P4.59 billion, respectively, as of December 31, 2018

The principal actuarial assumptions used in 2018 and 2017 in determining the retirement asset (liability) for the Group’s and Parent Company’s
retirement plans are shown below:

2018
Parent CBSI CIBI CBC−PCCI CBCC CBSC
Discount rate:
January 1 5.60% 5.63% 5.82% 5.82% 5.85% 5.85%
December 31 7.15% 7.27% 7.33% 7.33% 7.38% 7.4%
Salary increase rate 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

2017
Parent CBSI CIBI CBC−PCCI CBCC CBSC
Discount rate:
January 1 4.79% 5.08% 5.14% 5.14% 5.19% –
December 31 5.60% 5.63% 5.82% 5.82% 5.85% 5.85%
Salary increase rate 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

The sensitivity analysis below has been determined based on the impact of reasonably possible changes of each significant assumption on
the defined benefit liability as of the end of the reporting period, assuming all other assumptions were held constant:

December 31, 2018 Parent CBSI CIBI CBC−PCCI CBCC CBSC

Discount rate
(+1%) (P84,696) (P28,746) (P469) (P1,980) (P1,001) (P206)
(−1%) 133,008 37,942 608 2,504 1,260 272

Salary increase rate

(+1%) 126,701 36,802 598 2,443 1,236 268
(−1%) (83,078) (28,456) (470) (1,969) (1,002) (207)

December 31, 2017 Parent CBSI CIBI CBC−PCCI CBCC CBSC

Discount rate
(+1%) (P176,120) (P39,471) (P1,138) (P6,434) (P1,157) (P218)
(−1%) 266,156 50,838 1,568 11,519 1,460 285

Salary increase rate

(+1%) 250,898 48,520 1,504 11,019 1,414 272
(−1%) (171,429) (38,611) (1,115) (6,328) (1,146) (212)

The weighted average duration of the defined benefit obligation are presented below:

December 31, 2018 December 31, 2017

Parent Company 13 13
CBSI 18 18
CIBI 19 19
CBC−PCCI 19 19
CBCC 23 22
CBSC 25 –

103
 The maturity analyses of the undiscounted benefit payments as of December 31, 2018 and 2017 are as follows:

December 31, 2018 Parent CBSI CIBI CBC−PCCI CBCC CBSC

1 year and less P1,020,830 P9,552 P1,578 P538 P– P–
More than 1 year to 5 years 1,112,345 81,367 1,306 17,652 – –
More than 5 years to 10 years 2,349,644 210,666 10,410 36,531 5,015 –
More than 10 years to 15 years 2,537,302 715,066 5,796 54,937 – –
More than 15 years to 20 years 4,117,126 972,734 – 141,549 103,091 3,741
More than 20 years 27,553,459 11,606,160 455,722 1,097,718 381,490 182,074

December 31, 2017 Parent CBSI CIBI CBC−PCCI CBCC CBSC

1 year and less P9 27,473 P12,666 P– P17,059 P– P–
More than 1 year to 5 years 935,382 70,067 1,571 8,957 – 2,038
More than 5 years to 10 years 2,183,572 178,995 16,915 47,035 5,212 665
More than 10 years to 15 years 2,452,767 635,724 8,790 60,509 13,184 –
More than 15 years to 20 years 3,614,035 1,034,331 – 151,035 103,356 1,751
More than 20 years 22,632,896 10,283,386 477,064 1,267,884 402,263 164,340

25. DERIVATIVE FINANCIAL INSTRUMENTS

Occasionally, the Parent Company enters into forward exchange contracts as an accommodation to its clients. These derivatives are not
designated as accounting hedges. The aggregate notional amounts of the outstanding buy US dollar currency forwards as of December
31, 2018 and 2017 amounted to US$515.77 million and US$228.48 million, respectively, while the sell US dollar forward contracts
amounted to US$313.38 million and US$164.89 million, respectively. Weighted average buy US dollar forward rate as of December 31,
2018 is P53.52 and P51.13 in 2017, while the weighted average sell US dollar forward rates are P51.41 and P53.60, respectively.

The aggregate notional amounts of the outstanding buy Euro currency forwards as of December 31, 2018 and 2017 amounted to
€127.10 million and €113 million, respectively. The weighted average buy Euro forward rates as of December 31, 2018 are P59.95 and
P59.32 in December 31, 2017.

The aggregate notional amounts of the outstanding Futures as of December 31, 2018 and December 31, 2017 amounted to US$5 million
and nil, respectively.

The aggregate notional amounts of the outstanding IRS as of December 31, 2018 and 2017 amounted to P11.367 billion and P9.99 billion,
respectively.

The aggregate notional amounts of the outstanding buy US Dollar NDF as of December 31, 2018 and 2017 amounted to US$40.00 million
and US$5.00 million, respectively. The weighted average buy NDF rate as of December 31, 2018 is P52.93 and P49.85 in December.
As of December 31, 2018 and 2017, the fair values of derivatives follow:

2018 2017
Derivative Derivative Derivative Derivative
Asset Liability Asset Liability
Currency forwards P339,190 P362,689 P294,873 P235,787
IRS 58,390 90,530 28,963 31,746
Futures – 1,931 – –
Warrants 10,268 – 9,751 –
P407,848 P455,150 P333,587 P267,533

104 CHINA BANKING CO RPORATI ON

 Fair Value Changes of Derivatives
The net movements in fair value changes of derivative instruments are as follows:

2018 2017
Balance at beginning of year P66,053 (P26,910)
Fair value changes during the year (288,211) 132,805
Settled transactions 174,855 (39,841)
Balance at end of year (P47,302) P66,054

The net movements in the value of the derivatives are presented in the statements of income under the following accounts:

2018 2017 2016

Foreign exchange gain (loss) (P82,585) P96,401 (P283,973)
Trading and securities gain (loss)* (Note 21) (30,771) (3,437) 23,510
(P113,356) P92,964 (P260,463)
*Net movements in the value related to embedded credit derivatives and IRS.

26. LEASE CONTRACTS

The lease contracts are for periods ranging from one to 25 years from the dates of contracts and are renewable under certain terms and
conditions. Various lease contracts include escalation clauses, most of which bear an annual rent increase of 5.00% to 10.00%.

Annual rentals on these lease contracts included in ‘Occupancy cost’ in the statements of income in 2018, 2017 and 2016 amounted to
P844.24 million, P782.30 million and P681.05 million, respectively, for the Group, and P541.24 million, P518.47 million and P450.53 million,
respectively, for the Parent Company.

Future minimum rentals payable of the Group and the Parent Company under non-cancelable operating leases follow:

Consolidated Parent Company

2018 2017 2018 2017
Within one year P557,275 P601,876 P543,366 P551,239
After one year but not more than five years 2,349,845 2,230,49 8 1,898,564 1,984,453
After five years 1,119,114 1,335,370 713,620 915,394
P4,026,233 P4,167,744 P3,155,550 P3,451,086

The Group and the Parent Company have also entered into commercial property leases on its investment properties (Note 13).

Future minimum rentals receivable under noncancellable operating leases follow:

Consolidated Parent Company

2018 2017 2018 2017
Within one year 10,906 P26,521 P9,068 P19,913
After one year but not more than five years 19,688 19,246 13,202 1,042
After more than five years 15,466 7,810 − −
P46,060 PP53,577 P22,270 P20,955

105
27. INCOME AND OTHER TAXES

Income taxes include corporate income tax and FCDU final taxes, as discussed below, and final tax paid at the rate of 20.00% on gross
interest income from government securities and other deposit substitutes. These income taxes, as well as the deferred tax benefits and
provisions, are presented as ‘Provision for income tax’ in the statements of income.

Republic Act (RA) No. 9337, An Act Amending National Internal Revenue Code, provides that RCIT rate shall be 30.00% while interest
expense allowed as a deductible expense is reduced to 33.00% of interest income subject to final tax.

An MCIT of 2.00% on modified gross income is computed and compared with the RCIT. Any excess MCIT over RCIT is deferred and can
be used as a tax credit against future income tax liability for the next three years. In addition, the NOLCO is allowed as a deduction from
taxable income in the next three years from the year of inception.

Effective in May 2004, RA No. 9294 restored the tax exemption of FCDUs and offshore banking units (OBUs). Under such law, the income
derived by the FCDU from foreign currency transactions with nonresidents, OBUs, local commercial banks including branches of foreign
banks is tax-exempt while interest income on foreign currency loans from residents other than OBUs or other depository banks under the
expanded system is subject to 10.00% gross income tax.

Interest income on deposit placements with other FCDUs and OBUs is taxed at 7.50% (now 15% effective January 1, 2018), while all other
income of the FCDU is subject to the 30.00% corporate tax.

Relevant Tax Updates

Republic Act 10963, The Tax Reform for Acceleration and Inclusion (TRAIN), is first package of the comprehensive tax reform program of
the government. The bill was signed into law on December 19, 2017 and took effect on January 1, 2018, amending some provisions of the
old Philippine tax system.

Except for resident foreign corporations, which is still subject to the existing rate of 7.5%, tax on interest income of foreign currency deposit
was increased to 15% under TRAIN. Documentary stamp tax on bank checks, drafts, certificate of deposit not bearing interest, all debt
instruments, bills of exchange, letters of credit, mortgages, deeds and others are now subjected to a higher rate.

RR 4-2011
On March 15, 2011, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 4-2011 which prescribed the attribution
and allocation of expenses between FCDUs/EFCDUs or OBU and RBU and within RBU.

On April 6, 2015, the Bank and other member banks of the Bankers Association of the Philippines (BAP), filed a Petition for Declaratory
Relief with Application for Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction with the Regional Trial Court of Makati
(Makati Trial Court). Further, in Civil Case No. 15-287, the Bank and other BAP member banks assailed the validity of RR 4-2011 on the
ground, among others, that (a) the RR violates the petitioner-banks substantive due process rights; (b) it is not only illegal but also unfair;
(c) that it serves as a deterrent to banks to invest in capital market transactions to the prejudice of the economy; (d) it sets a dangerous
precedent for the disallowance of full deductions due to the prescribes method of allocation; and (e) it violates the equal protection clause
of the Constitution.

On April 8, 2015, the Makati Trial Court issued a TRO enjoining the BIR from enforcing RR 4-2011. Also, on April 25, 2015, Makati Trial
Court issued a Writ of Preliminary Injunction enjoining the BIR from enforcing, carrying out, or implementing in any way or manner RR 4-2011
against the Bank and other BAP member banks, including issuing Preliminary Assessment Notice or Final Assessment Notice against them
during the pendency of the litigation, unless sooner dissolved.

On June 10, 2015, the Makati Trial Court issued a Confirmatory Order stating that the TRO and Writ of Preliminary Injunction also prohibits
the BIR from ruling or deciding on any administrative matter pending before it in relation to the subject revenue regulations and insofar as the
Bank and other BAP member banks are concerned.

On May 25, 2018, the Makati Trial Court issued a decision annulling RR 4-2011 and making the Writ of Preliminary Injunction permanent.

106 CHINA BANKING CO RPORATI ON

Current tax regulations also provide for the ceiling on the amount of entertainment, amusement and recreation (EAR) expense that can be
claimed as a deduction against taxable income. Under the regulations, EAR expense allowed as a deductible expense is limited to the actual
EAR paid or incurred but not to exceed 1.00% of the Parent Company’s net revenue.

The provision for income tax consists of:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Current
Final tax P908,756 P677,450 P498,750 P836,560 P607,136 P458,011
RCIT 1,070,191 977,9 68 9 07,782 926,792 829,109 785,800
MCIT 46,051 − − − − −
2,024,998 1,655,418 1,406,532 1,763,352 1,436,245 1,243,811
Deferred 246,424 (166,241) (279,980) 495,882 206,239 (160,672)
P2,271,422 P1,489,177 P1,126,552 P2,259,234 P1,642,484 P1,083,139

The details of net deferred tax assets (liabilities) follow:

Consolidated Parent Company

2018 2017 2018 2017
Net deferred tax assets on:
Allowance for impairment and credit losses P2,806,637 P2,567,623 P2,340,436 P2,076,465
Revaluation Increment on land (Notes 11 and 22) (547,405) (547,405) (547,405) (547,405)
Fair value adjustments on asset foreclosure and dacion
transactions - net of depreciated portion 346,238 (29,533) 25,437 (222)
Net defined benefit asset (243,812) (297,416) (228,277) (297,416)
Others 151,403 84,812 149,029 65,849
P2,514,889 P1,778,080 P1,739,219 P1,297,271

Consolidated
2018 2017
Net deferred tax liabilities on:
Fair value adjustments on asset foreclosure and dacion transactions - net of depreciated
portion P245,547 P210,577
Fair value adjustments on net assets (liabilities) of PDB and Unity Bank 812,84) 805,515
Others 169,095 145,501
P1,229,316 P1,161,653

The Group did not set up deferred tax assets on the following temporary differences as it believes that it is highly probable that these
temporary differences will not be realized in the near foreseeable future:

Consolidated Parent Company

2018 2017 2018 2017
Allowance for impairment and credit losses P2,809,469 P2,306,353 P163,062 P−
Accrued compensated absences − 171,431 − 65,384
NOLCO 329,959 − − −
Excess of MCIT over RCIT 46,122 − − −
Others 34,572 371,427 − −
P3,220,122 P2,849,211 P163,062 P65,384

107
 As of December 31, 2018, details of the Subsidiary’s NOLCO are as follows:

InceptionYear Original Used Expired Amount Remaining Balance Expiry

Amount Amount Year
2015 P− P− P− P− 2015
2016 − − − − 2016
2017 − − − − 2017
2018 329,959 − − 329,959 2018
P329,959 P− P− P329,959

As of December 31, 2018, details of the excess of MCIT over RCIT of the Subsidiary follow:

InceptionYear Original Used Expired Amount Remaining Balance Expiry

Amount Amount Year
2015 P35,414 P35,313 P101 P− 2016
2016 − − − − 2017
2017 − − − − 2018
2018 46,122 − − 46,122 2019
P81,536 P35,313 P101 P46,122

The reconciliation of the statutory income tax to the provision for income tax follows:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Statutory income tax P3,116,258 P2,703,632 P2,276,256 P3,110,883 P2,746,9 37 P2,262,431
Tax effects of −
FCDU income (250,305) (498,029) (549,881) (252,809) (496,062) (543,591)
Non-taxable income (984,372) (939,179) (219,042) (895,392) (837,850) (179,507)
Interest income subjected to
(318,857) (279,914) (276,675) (266,103)
final tax (464,491) (604,445)
Nondeductible expenses 827,904 771,915 243,937 676,253 612,065 146,205
Others (119,204) (269,248) (160,227) (103,027) (116,503) 2,046
Provision for income tax P2,271,422 P1,489,177 P1,126,552 P2,259,224 P1,642,484 P1,083,139

28. TRUST OPERATIONS

Securities and other properties (other than deposits) held by the Parent Company in fiduciary or agency capacities for clients and
beneficiaries are not included in the accompanying balance sheets since these are not assets of the Parent Company (Note 30).

In compliance with the requirements of current banking regulations relative to the Parent Company’s trust functions : (a) government
bonds included under HFT financial assets and AFS financial assets with total face value of P1.781 billion and P1.176 billion as of
December 31, 2018 and 2017, respectively, are deposited with the BSP as security for the Parent Company’s faithful compliance with its
fiduciary obligations (Note 9); and (b) a certain percentage of the Parent Company’s trust fee income is transferred to surplus reserve.
This yearly transfer is required until the surplus reserve for trust function equals 20.00% of the Parent Company’s authorized capital stock.

108 CHINA BANKING CO RPORATI ON

29. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence
over the other party in making financial and operating decisions. The Group’s related parties include:

• key management personnel, close family members of key management personnel and entities which are controlled, significantly
influenced by or for which significant voting power is held by key management personnel or their close family members,
• significant investors
• subsidiaries, joint ventures and associates and their respective subsidiaries, and
• post−employment benefit plans for the benefit of the Group’s employees.

The Group has several business relationships with related parties. Transactions with such parties are normally made in the ordinary course
of business and based on the terms and conditions discussed below.

Transactions with Retirement Plans

Under PFRS, certain post−employment benefit plans are considered as related parties. The Group has business relationships with a number
of its retirement plans pursuant to which it provides trust and management services to these plans. Income earned by the Group and Parent
Company from such services amounted to P47.60 million and P44.38 million, respectively, in 2018, P42.89 million and P41.69 million,
respectively, in 2017, and P44.35 million and P41.41 million, respectively, in 2016.

The Group’s retirement funds may hold or trade the Parent Company’s shares or securities. Significant transactions of the retirement fund,
particularly with related parties, are approved by the Trust Investment Committee (TIC) of the Parent Company. The members of the TIC are
directors and key management personnel of the Parent Company.

A summary of transactions with related party retirement plans follows:

Consolidated Parent Company

2018 2017 2018 2017
Deposits in banks P560,672 P486,822 P399,395 P345,702
AFS financial assets 1,479,097 1,777,250 1,479,097 1,777,250
Dividend income 45,301 47,751 45,301 47,751
Interest income 16,882 2,037 13,311 1,520
Total market value of shares 1,479,097 1,777,250 1,479,097 1,777,250
Number of shares held 54,579 51,571 54,579 51,571

In 2016, dividend income and interest income of the retirement plan from investments and placements in the Parent Company amounted
to P44.21 million and P2.07 million, respectively, for the Group, and P44.21 million and P1.17 million, respectively, for the Parent Company.

AFS financial assets represent shares of stock of the Parent Company. Voting rights over the Parent Company’s shares are exercised by an
authorized trust officer.

Remunerations of Directors and other Key Management Personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly. The Group considers the members of the ManCom to constitute key management personnel for purposes of
PAS 24.

Total remunerations of key management personnel are as follows:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Short−term employee benefits P533,995 P482,345 P380,394 P441,361 P408,311 P315,284
Post−employment benefits 5,064 2,501 4,774 4,418 2,501 2,19 4
P539,059 P484,846 P385,168 P445,778 P410,812 P317,478

Members of the BOD are entitled to a per diem of P500.00 for attendance at each meeting of the Board or of any committees and to
four percent (4.00%) of the Parent Company’s net earnings, with certain deductions in accordance with BSP regulation. Non-executive
directors do not receive any performance-related compensation. Directors’ remuneration covers all Parent Company’s Board activities and
membership of committees and subsidiary companies.

109
 The Group also provides banking services to directors and other key management personnel and persons connected to them. These
transactions are presented in the tables below.

Other Related Party Transactions

Transactions between the Parent Company and its subsidiaries meet the definition of related party transactions. Transactions between the
Group and its associated companies also qualify as related party transactions. Details of the Parent Company’s subsidiaries and associate
are disclosed in Notes 1 and 10.

Group
Related party transactions of the Group by category of related party are presented below.

December 31, 2018

Outstanding
Category Amount / Volume Balance Terms and Conditions
Significant Investor
Loans and receivables P6,766,500 Partially secured Loans with interest rate of 2 -
Issuances P86,125,000 5.12% and maturity of two to seven years.
Repayments (2,350,000)
Deposit liabilities 374 These are checking accounts with annual
Deposits 2,532,609 average rate of 0.13%.
Withdrawals (2,532,493)
Associate
Deposit liabilities 166,372 These are savings accounts with annual average
Deposits 487,691 interest rates ranging from 0.25% to 1.00%.
Withdrawals (399,123)
Key Management Personnel
Loans and receivables 488 Unsecured Officer’s accounts from Credit card
Issuances 388 with interest of 3% and currently maturing
and Fully secured OEL accounts with interest
Repayments (39,213)
of 6%;Secured; no impairment; with annual
fixed interest rates ranging from 0% to 5.50%
Deposit liabilities 79,241 These are checking, savings and time deposits
Deposits 406,225 with annual average interest rates ranging
from 0.25% to 1.00%.
Withdrawals (350,120)
Other Related Parties
Deposit liabilities 238,933 These are checking and savings accounts with
Deposits 35,337,503 annual average interest rates ranging from
0.13% to 1.00%.
Withdrawals (35,165,054)

December 31, 2017

Outstanding
Category Amount / Volume Balance Terms and Conditions
Significant Investor
Loans and receivables P6,682,725 Partially secured Loans with interest rate of 2 -
Issuances P5,624,213 5.12% and maturity of two to seven years.
Repayments (1,651,488)
Deposit liabilities 257 These are checking accounts with annual average
Deposits 3,164,475 rate of 0.13%.
Withdrawals (3,164,441)

(Forward)

110 CHINA BANKING CO RPORATI ON

 December 31, 2017
Outstanding
Category Amount / Volume Balance Terms and Conditions
Associate
Deposit liabilities P77,722 These are savings accounts with annual average
Deposits P1,175,9 69 interest rates ranging from 0.25% to 1.00%.
Withdrawals (1,386,319)
Key Management Personnel
Loans and receivables 39,312 Unsecured Officer’s accounts from Credit card
Issuances 417 with interest of 3% and currently maturing and
Fully secured OEL accounts with interest of
Repayments 2,238
6%;Secured; no impairment; with annual fixed
interest rates ranging from 0% to 5.50%
Deposit liabilities 18,772 These are checking, savings and time deposits
Deposits 279,554 with annual average interest rates ranging from
0.25% to 1.00%.
Withdrawals (276,612)
Other Related Parties
Deposit liabilities 51,563 These are checking and savings accounts with
Deposits 16,038,034 annual average interest rates ranging from
0.13% to 1.00%.
Withdrawals (16,008,489)

Interest income earned and interest expense incurred from the above loans and deposit liabilities in 2018, 2017, and 2016 follow:

Significant Investor Associate

2018 2017 2016 2018 2017 2016
Interest income P42,601 P169,706 P138,944 – P– P–
Interest expense 3 61 12 168 1,849 1,513

Key Management Personnel Other Related Parties

2018 2017 2016 2018 2017 2016
Interest income P7,921 P17,102 P385 P– P– P–
Interest expense 2,121 47 40 2,129 69 11

Related party transactions of the Group with significant investor, associate and other related parties pertain to transactions of the Parent
Company with these related parties.

Parent Company
Related party transactions of the Parent Company by category of related party, except those already presented in the Group disclosures,
are presented below.

December 31, 2018

Outstanding
Category Amount / Volume Balance Nature, Terms and Conditions
Significant Investor
Loans and receivables P6,766,500 These are secured loans with interest rate of 5.13% and
Issuances P86,125,000 maturity of four years; collateral includes shares of
stocks with fair value of P28.44 billion
Repayments (2,350,000)
Deposit liabilities 374 These are checking accounts with annual average rate
Deposits 2,532,609 of 0.13%.
Withdrawals (2,532,493)

(Forward)

111
 December 31, 2018
Outstanding
Category Amount / Volume Balance Nature, Terms and Conditions
Subsidiaries
Deposit liabilities P114,339 These are checking and savings accounts with annual
Deposits P3,668,567 average interest rates ranging from 0.13% to 1.00%.
Withdrawals (3,587,029)
Associate
Deposit liabilities 166,291 These are savings accounts with annual
Deposits 487,691 average interest rates ranging from0.25% to 1.00%.
Withdrawals (399,123)
Key Management Personnel
Loans and receivables 488 Unsecured Officer’s accounts from Credit card with
Issuances 388 interest of 3% and currently maturing and Fully
secured OEL accounts with interest of 6%
Repayments (39,213)
Deposit liabilities 14,569 These are savings account with annual average interest
Deposits 365,236 rates ranging from 0.25% to 1.00%.
Withdrawals (369,439)
Other Related Parties
Deposit liabilities These are checking and savings accounts with annual
Deposits 35,229,849 113,937 average interest rates ranging from 0.13% to 1.00%.
Withdrawals (35,167,475)

December 31, 2017

Outstanding
Category Amount / Volume Balance Nature, Terms and Conditions
Significant Investor
Loans and receivables P6,682,725 These are secured loans with interest rate of 5.13% and
maturity of four years; collateral includes shares of
stocks with fair value of P28.44 billion
Issuances P5,624,213
Repayments (1,651,488)
Deposit liabilities 257 These are checking accounts with annual average rate
Deposits 3,164,475 of 0.13%.
Withdrawals (3,164,441)
Subsidiaries
Deposit liabilities 32,801 These are checking and savings accounts with annual
Deposits 330,111 average interest rates ranging from 0.13% to 1.00%.
Withdrawals (311,528)
December 31, 2017
Outstanding
Category Amount / Volume Balance Nature, Terms and Conditions
Associate
Deposit liabilities 77,722 These are savings accounts with annual
Deposits 1,175,9 69 average interest rates ranging from0.25% to 1.00%.
Withdrawals (1,386,319)

112 CHINA BANKING CO RPORATI ON

 December 31, 2017
Outstanding
Category Amount / Volume Balance Nature, Terms and Conditions
Significant Investor
Loans and receivables P6,682,725 These are secured loans with interest rate of 5.13% and
maturity of four years; collateral includes shares of
stocks with fair value of P28.44 billion
Key Management Personnel
Loans and receivables 952 Unsecured Officer’s accounts from Credit card with
Issuances 417 interest of 3% and currently maturing and Fully
secured OEL accounts with interest of 6%
Repayments (714)
Deposit liabilities 18,772 These are savings account with annual average interest
Deposits 279,554 rates ranging from 0.25% to 1.00%.
Withdrawals (276,612)
Other Related Parties
Deposit liabilities 51,563 These are checking and savings accounts with annual
Deposits 16,038,034 average interest rates ranging from 0.13% to 1.00%.
Withdrawals (16,008,489)

In 2017, the Parent Company sold its investment property to a related party for a total cash selling price of P161.58 million and recognized
gain of P142.61 million.

The related party transactions shall be settled in cash. There are no provisions for credit losses in 2018, 2017 and 2016 in relation to amounts
due from related parties.

Interest income earned and interest expense incurred from the above loans and deposit liabilities in 2018, 2017 and 2016 follow:

Subsidiaries Associate
2018 2017 2016 2018 2017 2016
Interest expense P375 P46 P33 P168 P1,849 P1,513
Key Management Personnel Other Related Parties
2018 2017 2016 2018 2017 2016
Interest income P11,277 P46 P56 P– P– P–
Interest expense 19 47 40 131 69 11
Significant Investor
2018 2017 2016
Interest income P42,601 P169,706 P138,944
Interest expense 3 61 12

Outright purchases and outright sale of debt securities of the Parent Company with its subsidiaries in 2018 and 2017 follow:

Subsidiaries
2018 2017
Peso−denominated
Outright purchase P817,030 P675,016
Outright sale 4,246,628 18,902,488
Dollar – denominated (equity)
Outright purchase 5,117 –
Outright sale 41,400 –

113
 The following table shows the amount and outstanding balance of other related party transactions included in the financial statements:

Subsidiaries
2018 2017 Nature, Terms and Conditions
Balance Sheet
Accounts receivable P1,242 P2,741 This pertains to various expenses advanced by CBC in behalf of CBSI
Security deposits 2,270 2,736 This pertains to the rental deposits with CBSI for office space leased out
to the Parent Company
Accounts payable 4,858 10,607 This pertains to various unpaid rental to CBSI

Subsidiaries
2018 2017 2016 Nature, Terms and Conditions
Income Statement
Miscellaneous income P1,800 P1,800 P1,800 Human resources functions provided by the Parent
Company to its subsidiaries (except CBC Forex and
Unity Bank) such as recruitment and placement,
training and development, salary and benefits
development, systems and research, and employee
benefits. Under the agreement between the Parent
Company and its subsidiaries, the subsidiaries shall
pay the Parent Company an annual fee
Occupancy cost 19,937 24,532 22,255 Certain units of the condominium owned by CBSI are
being leased to the Parent Company for a term of five
years, with no escalation clause
Miscellaneous expense 204,749 193,651 169,658 This pertains to the computer and general banking
services provided by CBC-PCCI to the Parent
Company to support its reporting requirements

Regulatory Reporting
As required by the BSP, the Group discloses loan transactions with its and affiliates and investees and with certain directors, officers,
stockholders and related interests (DOSRI). Under existing banking regulations, the limit on the amount of individual loans to DOSRI, of which
70.00% must be secured, should not exceed the regulatory capital or 15.00% of the total loan portfolio, whichever is lower. These limits do
not apply to loans secured by assets considered as non−risk as defined in the regulations.

BSP Circular No. 423, dated March 15, 2004, amended the definition of DOSRI accounts. The following table shows information relating to
the loans, other credit accommodations and guarantees classified as DOSRI accounts under regulations existing prior to said Circular, and
new DOSRI loans, other credit accommodations granted under said Circular:

Consolidated Parent Company

2018 2017 2018 2017
Total outstanding DOSRI loans P10,273,436 P11,507,281 P10,268,296 P11,500,850
Percent of DOSRI loans granted under regulations
existing prior to BSP Circular No. 423 − − − −
Percent of DOSRI loans granted under BSP Circular
No. 423 − − − −
Percent of DOSRI loans to total loans 2.00% 2.54% 2.30% 2.95%
Percent of unsecured DOSRI loans to total DOSRI
loans 1.78% 1.52% 1.77% 1.51%
Percent past due DOSRI loans to total DOSRI loans − − − −
Percent of non−performing DOSRI loans to total
DOSRI loans − − − −

114 CHINA BANKING CO RPORATI ON

 The amounts of loans disclosed for related parties above differ with the amounts disclosed for key management personnel since the
composition of DOSRI is more expansive than that of key management personnel.

BSP Circular No. 560 provides that the total outstanding loans, other credit accommodation and guarantees to each of the bank’s/quasi-
bank’s subsidiaries and affiliates shall not exceed 10.00% of the net worth of the lending bank/quasi-bank, provided that the unsecured
portion of which shall not exceed 5.00% of such net worth. Further, the total outstanding loans, credit accommodations and guarantees to
all subsidiaries and affiliates shall not exceed 20.00% of the net worth of the lending bank/quasi-bank; and the subsidiaries and affiliates of
the lending bank/quasi-bank are not related 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.

On May 12, 2009, BSP issued Circular No. 654 allowing a separate individual limit of twenty-five (25.00%) of the net worth of the lending
bank/quasi-bank to loans of banks/quasi-banks to their subsidiaries and affiliates engaged in energy and power generation.

30. COMMITMENTS AND CONTINGENT ASSETS AND LIABILITIES

In the normal course of the Group’s operations, there are various outstanding commitments and contingent liabilities which are not reflected
in the accompanying financial statements. Management does not anticipate any material losses as a result of these transactions.

The following is a summary of contingencies and commitments of the Group and the Parent Company with the equivalent peso contractual
amounts:

Consolidated Parent Company

2018 2017 2018 2017
Trust department accounts (Note 28) P133,806,226 P131,813,251 P133,806,226 P131,577,9 83
Committed credit lines 122,804,833 152,806,666 122,280,671 150,471,220
Unused commercial letters of credit (Note 29) 20,978,009 21,596,174 20,829,020 21,383,19 6
Foreign exchange bought 37,359,690 18,736,175 37,359,690 18,736,175
Foreign exchange sold 24,678,551 15,179,964 24,678,551 15,179,964
Credit card lines 12,568,703 10,359,997 12,568,703 10,359,997
IRS receivable 11,366,980 9,991,390 11,366,980 9,991,390
Outstanding guarantees issued 944,262 3,079,993 420,100 744,547
Inward bills for collection 2,563,604 2,386,848 2,563,604 2,386,848
Standby credit commitment 3,149,787 2,274,39 8 3,149,787 2,274,39 8
Spot exchange sold 3,624,709 1,399,180 3,624,709 1,399,180
Spot exchange bought 3,247,995 996,333 3,247,995 996,333
Deficiency claims receivable 287,647 291,831 287,647 219,831
Late deposits/payments received 495,347 127,832 458,675 116,313
Outward bills for collection 55,135 93,772 53,211 91,943
Others 1,846 1,614 1,694 1,354

There are several suits, assessments or notices and claims that remain contested. Management believes, based on the opinion of its legal
counsels, that the ultimate outcome of such suits, assessments and claims will not have a material effect on the Group’s and the Parent
Bank’s financial position and results of operations.

31. SEGMENT INFORMATION

The Group’s operating businesses are recognized and managed separately according to the nature of services provided and the markets
served, with each segment representing a strategic business unit.

The Group’s business segments are as follows:

a. Lending Business – principally handles all the lending, trade finance and corollary banking products and services offered to corporate
and institutional customers as well as selected middle market clients. It also handles home loans, contract-to-sell receivables, auto
loans and credit cards for individual and/or corporate customers. Aside from the lending business, it also provides cash management
services and remittance transactions;

115
 b. Retail Banking Business – principally handles retail and commercial loans, individual and corporate deposits, overdrafts and funds
transfer facilities, trade facilities and all other services for retail customers;

c. Financial Markets – principally provides money market, trading and treasury services, manages the Group’s funding operations by the
use of government securities, placements and acceptances with other banks as well as offers advisory and capital-raising services to
corporate clients and wealth management services to high-net-worth customers; and

d. Others – handles other services including but not limited to trust and investment management services, asset management, insurance
brokerage, credit management, thrift banking business, operations and financial control, and other support services.

The Group’s businesses are organized to cater to the banking needs of market segments, facilitate customer engagement, ensure timely
delivery of products and services as well as achieve cost efficiency and economies of scale. Accordingly, the corresponding segment
information for all periods presented herein are restated to reflect such change.

The Group reports its primary segment information to the Chief Operating Decision Maker (CODM) on the basis of the above-mentioned
segments. The CODM of the Group is the President.

Segment assets are those operating assets that are employed by a segment in its operating activities that are either directly attributable to
the segment or can be allocated to the segment on a reasonable basis.

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.

Interest income is reported net as management primarily relies on the net interest income as performance measure, not the gross income
and expense.

The segment results include internal transfer pricing adjustments across business units as deemed appropriate by management. Transactions
between segments are conducted at estimated market rates on an arm’s length basis. Interest is charged/credited to the business units
based on a pool rate which approximates the marginal cost of funds.

Other operating income mainly consists of trading and securities gain (loss) - net, service charges, fees and commissions, trust fee income
and foreign exchange gain - net. Other operating expense mainly consists of compensation and fringe benefits, provision for impairment
and credit losses, taxes and licenses, occupancy, depreciation and amortization, stationery, supplies and postage and insurance. Other
operating income and expense are allocated between segments based on equitable sharing arrangements.

The Group has no significant customers which contributes 10.00% or more of the consolidated revenues.

The Group’s asset producing revenues are located in the Philippines (i.e., one geographical location); therefore, geographical segment
information is no longer presented.

The following tables present relevant financial information regarding business segments measured in accordance with PFRS as of and for the
years ended December 31, 2018, 2017 and 2016:

Lending Business Retail Banking Business

2018 2017 2016 2018 2017 2016
Results of Operations
Net interest income
Third party P19,034,015 P13,876,995 P11,234,520 (P871,505) P855,933 P477,635
Intersegment (12,956,205) (8,438,704) (6,185,045) 11,763,393 7,915,744 7,067,165
6,077,810 5,438,291 5,049,475 10,891,888 8,771,677 7,544,800
Other operating income 1,794,959 1,317,29 8 9 07,182 1,619,591 1,465,962 1,234,356
Total revenue 7,872,769 6,755,589 5,956,657 12,511,479 10,237,639 8,779,156
Other operating expense (1,559,750) (2,294,490) (2,228,638) (7,138,661) (6,536,859) (5,759,880)
Income before income tax 6,313,019 4,461,099 3,728,019 5,372,818 3,700,780 3,019,276
Provision for income tax 210,176 236,856 96,461 − − (6,833)
Net income P6,523,195 P4,697,9 55 P3,824,480 P5,372,818 P3,700,780 P3,012,443
(Forward)

116 CHINA BANKING CO RPORATI ON

 Lending Business Retail Banking Business
2018 2017 2016 2018 2017 2016
Total assets P376,187,705 P299,052,197 P251,890,331 P471,540,704 P431,622,883 P361,036,278
Total liabilities 4,819,787 1,171,742 2,233,433 499,955,967 444,030,414 365,417,688
Depreciation and amortization 73,475 61,988 51,266 437,201 378,597 313,745
Provision for impairment and credit
losses (P328,404) P668,360 P916,974 P103,780 238,645 126,025
Capital expenditures P66,105 P63,136 P451,770 P148,179 P118,378 P647,525

Financial Markets Other Business and Support Units

2018 2017 2016 2018 2017 2016
Results of Operations
Net interest income
Third party P4,028,486 P1,661,494 P2,039,741 P735,189 P3,231,982 P2,942,296
Intersegment (434,176) 1,124,033 (424,779) 1,626,988 (601,073) (457,341)
3,594,310 2,785,527 1,614,962 2,362,177 2,630,909 2,484,955
Other operating income 522,523 879,737 1,386,223 1,721,223 2,438,697 1,566,985
Total revenue 4,116,833 3,665,264 3,001,185 4,083,401 5,069,606 4,051,943
Other operating expense (916,021) (1,264,773) (959,151) (8,582,525) (6,619,869) (5,253,750)
Income before income tax 3,200,812 2,400,491 2,042,034 (4,499,124) (1,550,263) (1,201,807)
Provision for income tax (730,643) (547,624) (388,807) (1,750,956) (1,178,409) (827,373)
Net income P2,470,169 P1,852,867 P1,653,227 (P6,250,080) (P2,728,672) (P2,029,180)
Total assets P170,463,397 P168,052,729 P128,281,917 (P152,120,165) (P147,280,299) (P108,010,515)
Total liabilities P88,040,610 P140,321,883 P124,409,814 P185,398,690 P82,267,974 P77,750,872
Depreciation and amortization P49,433 P41,852 P30,449 P737,576 P735,052 P729,326
Provision for impairment and
credit losses P51,689 P– P– P314,011 (P152,834) (P192,453)
Capital expenditures P60,838 P63,795 P230,076 P299,388 P389,402 (P193,719)

Total
2018 2017 2016
Results of Operations
Net interest income
Third party P22,926,186 P19,626,404 P16,694,192
Intersegment − − −
22,926,186 19,626,404 16,694,192
Other operating income 5,658,296 6,101,69 4 5,094,746
Total revenue 28,584,482 25,728,098 21,788,941
Other operating expense (18,196,956) (16,715,991) (14,201,419)
Income before income tax 10,387,526 9,012,107 7,587,522
Provision for income tax (2,271,422) (1,489,177) (1,126,552)
Net income P8,116,104 P7,522,9 30 P6,460,970
Total assets 866,071,642 P751,447,510 P633,19 8,011
Total liabilities P778,215,053 P667,79 2,013 P569,811,807
Depreciation and amortization P1,297,685 P1,217,489 P1,124,786
Provision for impairment and credit
losses P141,076 P754,171 P850,546
Capital expenditures P574,510 P634,711 P1,135,652

117
 The Group’s share in net income (loss) of an associate included in other operating income amounting to P101.01 million, P73.13 million and
(P89.38 million) in 2018, 2017 and 2016, respectively are reported under ‘Other Business and Support Units’.

32. EARNINGS PER SHARE

Basic EPS amounts are calculated by dividing the net income for the year by the weighted average number of common shares outstanding
during the year (adjusted for stock dividends).

The following reflects the income and share data used in the basic earnings per share computations:

2018 2017 2016

a. Net income attributable to equity holders of the parent P8,110,379 P7,513,972 P6,458,296
b. Weighted average number of common shares
outstanding (Note 23) 2,685,826 2,581,182 2,243,086
c. EPS (a/b) P3.02 P2.91 P2.88

As of December 31, 2018, 2017 and 2016, there were no outstanding dilutive potential common shares.

33. FINANCIAL PERFORMANCE

The following basic ratios measure the financial performance of the Group and the Parent Company:

Consolidated Parent Company

2018 2017 2016 2018 2017 2016
Return on average equity 9.54% 10.01% 10.42% 9.54% 10.01% 10.32%
Return on average assets 1.04% 1.12% 1.16% 1.17% 1.27% 1.33%
Net interest margin 3.10% 3.11% 3.20% 2.97% 2.91% 3.03%

34. SUPPLEMENTARY INFORMATION FOR CASH FLOW ANALYSIS

The following is a summary of certain non−cash investing activities that relate to the analysis of the statements of cash flows:

Consolidated
2018 2017 2016
Addition to investment properties from settlement of loans P523,343 P579,089 P784,415
Fair value gain in AFS financial assets (451,786) 158,946 405,722
Cumulative translation adjustment (52,900) (15,970) (3,637)
Addition to chattel mortgage from settlement of loans 626,182 559,283 334,553

Parent Company
2018 2017 2016
Addition to investment properties from settlement of loans P240,680 P126,652 P296,844
Fair value gain in AFS financial assets (381,791) 113,020 405,722
Cumulative translation adjustment (58,792) (16,197) (3,637)
Addition to chattel mortgage from settlement of loans 20,135 10,824 19,088

118 CHINA BANKING CO RPORATI ON

 The following table shows the reconciliation analysis of liabilities arising from financing activities for the period ended December 31, 2018:

2018 2017
Balance at beginning of year P20,118,031 P16,954,998
Cash flows during the year
Proceeds 184,568,424 252,268,556
Settlement (171,215,735) 13,352,688 (249,219,839) 3,048,717
Non−cash changes
Foreign exchange movement 4,132,800 71,613
Amortization of transaction cost 2,223,012 6,355,812 42,703 114,316
Balance at end of year P39,826,532 P20,118,031

35. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The amendments to PFRS 7 require the Group to disclose information about rights of offset and related arrangements (such as collateral
posting requirements) for financial instruments under an enforceable master netting agreements or similar arrangements. The effects of these
arrangements are disclosed in the succeeding table.

December 31, 2018

Effects of remaining rights of
set−off (including rights to set
Net amount off financial collateral) that
Gross amounts presented in do not meet PAS 32 offsetting
Financial instruments offset in statements of criteria
recognized at Gross carrying accordance with financial Fair value of
end of reporting amounts (before the offsetting position Financial financial Net exposure
period by type offsetting) criteria [a-b] instruments collateral [c-d]
[a] [b] [c] [d] [e]
Financial assets
SPURA P7,000,000 P7,000,000 P7,000,000 P7,000,000 P0
Currency forwards 129,322 129,322 33,933 95,389
IRS 28,198 28,198 3,481 24,717
P7,157,525 P7,157,525 P7,037,414 P7,000,000 P120,105
Financial liabilities
Bills payable P27,372,201 P27,372,201 P34,689,129 P32,547,479 P0
Currency forwards 52,249 52,249 33,933 18,316
IRS 20,963 20,963 4,481 17,481
P27,448,413 P27,448,413 P34,726,543 P32,547,479 P35,798

119
 December 31, 2017
Effects of remaining rights of
set−off (including rights to set
Net amount off financial collateral) that
Gross amounts presented in do not meet PAS 32 offsetting
Financial instruments offset in statements of criteria
recognized at Gross carrying accordance with financial Fair value of
end of reporting amounts (before the offsetting position Financial financial Net exposure
period by type offsetting) criteria [a-b] instruments collateral [c-d]
[a] [b] [c] [d] [e]
Financial assets
SPURA P18,751,845 P18,751,845 P18,751,845 P18,749,98 P1,865
Currency forwards 117,562 117,562 32,748 − 84,814
IRS 28,963 − 28,963 8,361 − 20,602
P146,525 P− P146,525 P41,109 P− P105,416
Financial liabilities
Bills payable P14,306,179
Currency forwards 62,555 P− P14,306,179 P17,984,923 P17,453,765 P−
IRS 31,745 − 62,555 32,748 − 29,807
P31,745 P− P31,745 P8,361 P− P23,384

The amounts disclosed in column (d) include those rights to set-off amounts that are only enforceable and exercisable in the event of default,
insolvency or bankruptcy. These include amounts related to financial collateral both received and pledged, whether cash or non-cash
collateral, excluding the extent of over-collateralization.

36. APPROVAL OF THE FINANCIAL STATEMENTS

The accompanying consolidated and parent company financial statements were authorized for issue by the Parent Company’s BOD on
March 1, 2019.

37. SUPPLEMENTARY INFORMATION REQUIRED UNDER RR NO. 15-2010

In compliance with the requirements set forth by RR 15-2010, hereunder are the details of percentage and other taxes paid or accrued by
the Parent Company in 2018.

Gross receipts tax P1,195,417

Documentary stamps tax 1,019,554
Local taxes 67,618
Fringe benefit tax 11,227
Others 14,131
Balance at end of year P2,307,9 48

Withholding Taxes
Details of total remittances of withholding taxes in 2018 and amounts outstanding as of December 31, 2018 are as follows:

Total Amounts
remittances outstanding
Final withholding taxes P1,701,246 P235,888
Withholding taxes on compensation and benefits 494,956 29,057
Expanded withholding taxes 134,058 9,050
P2,330,259 P273,994

120 CHINA BANKING CO RPORATI ON

 CHINA BANK BRANCHES
102-4, 102-6

MAKATI MAIN (HO) ASUNCION BF HOMES-AGUIRRE CIRCUIT MAKATI

CBC Bldg., 8745 Paseo de Roxas Units G6 & G7 Chinatown Steel Towers, Margarita Centre, Aguirre Ave. Level 3, Ayala Mall, Circuit Makati,
cor. Villar Sts., Makati City Asuncion St., San Nicolas, Manila cor. Elsie Gaches St., BF Homes, Hippodromo St., Brgy. Carmona,
Trunkline: 885-5555 (Private Exchange Tel. Nos.: 241-2311/52/59/61 Parañaque City Makati City
Connecting All Departments) Fax No.: 241-2352 Tel. Nos.: 799-4707/4942 Tel. Nos.: 403-8301/02
Fax Nos.: 892-0220; 817-1325 659-3359/3360; 556-5845 Fax No.: 403-8302
AYALA-ALABANG Fax No.: 659-3359
BINONDO BUSINESS CENTER G/F, CBC Bldg., Acacia Ave., CENTURY CITY-KNIGHTSBRIDGE
CBC Bldg., Dasmariñas Madrigal Business Park, Ayala Alabang, BF RESORT VILLAGE Unit 17 & 18 Knightsbridge Residences,
cor. Juan Luna Sts., Binondo, Manila Muntinlupa City BF Resort Drive cor. Gloria Diaz St., Century City, Kalayaan Ave., Makati City
Trunklines: 247-5388; 8855-222 Tel. Nos.: 807-0673-74 BF Resort Village, Talon Dos, Tel. Nos.: 866-3937; 866-3803
(Private Exchange 850-3785/9640/8888 Las Piñas City
Connecting All Fax No.: 850-8670 Tel. Nos.: 873-4542; 873-4541 COMMONWEALTH AVE.
Departments) 873-4540 LGF Ever Gotesco Mall, Commonwealth
Fax Nos.: 241-7058; 242-7225 AYALA AVE.-AMORSOLO Fax No.: 873-4543 Center Commonwealth Ave.
G/F Teleperformance Bldg., cor. Don Antonio Road, Quezon City
METRO MANILA Ayala Ave., Makati City BGC-ICON PLAZA Tel. Nos.: 932-0818/0820
Tel. Nos.: 541-7348; 541-5958 G/F Icon Plaza Bldg., 25th cor. 5th Sts. 431-5000/01
A. BONIFACIO-MAUBAN Fax No.: 541-5958 Bonifacio South, Fort Bonifacio Fax No.: 932-0822
G/F Urban Oasis Residences, Global City, Taguig City
423-431., A. Bonifacio Ave., AYALA-COLUMNS Tel. Nos.: 777-1943; 800-1474 COMMONWEALTH AVE. EXT.-
Brgy. San Jose, Quezon City G/F The Columns Tower 3, Fax No.: 777-1943 CASA MILAN
Tel. Nos.: 282-1991/94 Ayala Ave., Makati City ALX Center Bldg.,
Fax No.: 282-1994 Tel. Nos.: 915-3672/3673 BGC-ONE WORLD PLACE Commonwealth Ave. Ext.
915-3674/3675 G/F One World Place, 32nd Ave., North Fairview, Quezon City
ALABANG HILLS Fax No.: 915-3672 Fort Bonifacio Global City, Taguig City Tel. No.: 463-5714
G/F RBC-MDC Corporate Center, Tel. Nos.: 869-6309; 843-2448 Fax No.: 277-2592
Don Jesus Blvd., Alabang Hills Village, BACLARAN-F.B. HARRISON Fax No.: 843-2448
Muntinlupa City BAGPI Main Bldg., 2935 F.B. Harrison CONGRESSIONAL AVE.
Tel. Nos.: 877-8567; 877-8604 cor. Ortigas St., Pasay City BGC-W TOWER G/F Unit C The Arete Square,
Fax No.: 877-8604 Tel. Nos.: 838-6187; 838-5038 G/F W Tower 39th St., North Bonifacio Congressional Ave., Project 8,
Fax No.: 838-5038 Triangle BGC, Taguig City,1634 Quezon City
ALVARADO Tel. Nos.: 552-3311; 551-9072 Tel. Nos.: 351-8648; 351-8645
Alvarado St., Binondo, Manila BALINTAWAK-BONIFACIO Fax No.: 551-9072 351-8646
Tel. Nos.: 562-3863; 562-3866 657 A. Bonifacio Ave. Fax No.: 351-8645
Fax No.: 562-3866 Balintawak, Quezon City BGC-WORLD PLAZA
Tel. Nos.: 361-3449; 361-7825 G/F (Unit 5) World Plaza, L4B5 E-Square CONGRESSIONAL AVE. EXTENSION-
ANONAS 362-3660; 361-0450 Information Technology Park, MIRA NILA
Anonas cor. Marang Sts., Fax No.: 361-0199 Crescent Park West, 5th Ave., CBC Bldg., Congressional Ave. Ext.,
Brgy. Quirino, Project 2, Quezon City Bonifacio Global City, Taguig City Quezon City
Tel. Nos.: 277-9397; 277-9398 BALUT Tel. Nos.: 541-3447; 541-4220 Tel. Nos.: 932-2372; 932-2370
North Bay Shopping Center Honorio Fax No.: 541-4220 Fax No.: 932-2370
ANTIPOLO CITY Lopez Boulevard, Balut, Tondo, Manila
G/F BudgetLane Arcade, No. 6, Tel. Nos.: 253-9921/29; 253-9620 BINANGONAN CORINTHIAN HILLS
Provincial Road, Brgy. San Jose, 251-1182/86 National Highway, Bo. Tagpos, G/F The Clubhouse, Corinthian Hills,
Antipolo City, Rizal Fax No.: 253-9917 Binangonan, Rizal Temple Drive, Brgy. Ugong Norte,
Tel. Nos.: 650-3277; 650-2087 Tel. Nos.: 669-1530; 669-1659 Quezon City
695-1509; BANAWE Fax No.: 669-1530 Tel. Nos.: 637-3170/3180/1915
Fax No.: 650-2640 CBC Bldg., 680 Banawe Ave., Fax No.: 637-1905
Sta. Mesa Hts., District I, Quezon City BLUMENTRITT
ANTIPOLO CITY-TAKTAK Tel. Nos.: 743-7486/88; 416-7028 1777-1781 Cavite cor. Leonor CUBAO-ARANETA
Sumulong Highway cor. Taktak Road, 743-7030/711-8694 Rivera St., Blumentritt, Sta. Cruz, Manila Shopwise Arcade Bldg.,
Brgy. Dela Paz, Antipolo City, Rizal Fax No.: 743-7487 Tel. Nos.: 742-0254; 711-8589 Times Square St., Araneta Shopping
Tel. Nos.: 721-6320; 721-6316 Fax No.: 711-8541 Center, Cubao, Quezon City
BANAWE-CALAMBA Tel. Nos.: 911-2369/70
ANTIPOLO-SUMULONG HIGHWAY 119 Banawe St. cor. Calamba St. BO. KAPITOLYO 438-3830-32; 911-2397
No. 219 Sumulong Highway, Quezon City G/F P&E Bldg., 12 United cor. First Sts., Fax No.: 911-2432
Brgy. Mambugan, Antipolo City, Rizal Tel. Nos.: 732-1060; 740-4864 Bo. Kapitolyo, Pasig City
Tel. Nos.: 632-7309; 632-7573 743-8967 Tel. Nos.: 634-8370/8915/3697 CUBAO-AURORA
655-8087 Fax No.: 740-4864 Fax No.: 634-7504 911 Aurora Boulevard Extension
Fax No.: 632-7309 cor. Miami St., Cubao, Quezon City
BEL-AIR BONNY SERRANO Tel. Nos.: 912-5164/57
ARANETA AVE. 2/F Saville Bldg., Gil Puyat Ave. G/F Greenhills Garden Square, 913-4675/76; 911-3524
Philippine Whithasco Bldg. cor. Paseo de Roxas St., Makati City 297 Col. Bonny Serrano Ave., Fax No.: 912-5167
420 Araneta Ave., cor. Bayani St., Tel. Nos.: 897-2212 Quezon City
Quezon City 899-4186/0685 Tel. Nos.: 410-0677; 997-8043 CUBAO-P. TUAZON
Tel. Nos.: 731-2252; 731-2261 Fax No.: 890-4062 997-8031 No. 287 P. Tuazon Ave.
732-4153; 731-2243 Fax No.: 410-0677 near cor. 18th Ave., Brgy. San Roque,
410-6753 BEL-AIR-JUPITER Cubao, Quezon City
Fax No.: 410-3026 Buendia Car Exchange, CAINTA Tel. Nos.: 911-5896; 911-8416
Jupiter St., Makati City CBC Bldg., (Beside Sta. Lucia East Fax No.: 911-8416
ARNAIZ AVE. Tel. Nos.: 403-5970; 403-6062 Mall), Felix Ave. (Imelda Ave.),
United Life Assurance Bldg., Fax No.: 403-6062 Cainta, Rizal CULIAT-TANDANG SORA
A. Arnaiz Ave. (Pasay Road), Makati City Tel. Nos.: 646-0691/93; 645-9974 G/F Royal Midway Plaza,
Tel. Nos.: 541-1506; 541-1552 BETTER LIVING SUBD. 682-1795 No. 419, Tandang Sora Ave.
128 Doña Soledad Ave., Parañaque City Fax No.: 646-0050 Brgy. Culiat, 1128 Quezon City
ARRANQUE Tel. Nos.: 556-3467; 556-3468 Tel. Nos.: 288-2575; 288-5114
Don Felipe Bldg., 675 Tomas Mapua St., 556-3470 CAINTA-POBLACION Fax No.: 288-2575
Sta. Cruz, Manila Fax No.: 556-3470 A. Bonifacio Ave., Poblacion,
Tel. Nos.: 733-3477; 734-4777 Cainta, Rizal D. TUAZON
733-7704; 733-8335 to 40 BF HOMES Tel. Nos.: 637-1935; 637-6634 148 D. Tuazon St., Brgy. Lourdes,
734-4497; 734-4501/06 Aguirre cor. El Grande Aves., Fax No.: 637-6634 Sta. Mesa Heights, Quezon City
Fax No.: 733-3481 United BF Homes, Parañaque City Tel. Nos.: 731-2516/2508
Tel. Nos.: 825-6138/6891/6828 CAPITOL HILLS Fax No.: 731-0592
AURORA BLVD.-NEW MANILA Fax No.: 825-5979 G/F 88 Design Pro Bldg., Capitol Hills,
Aurora Blvd., Brgy. Valencia, Old Balara, Quezon City
Quezon City Tel. Nos.: 952-7776/7805/7804
Tel. Nos.: 727-4192; 727-4171 Fax No.: 952-7806
Fax No.: 727-4192

124 CHINA BANKING CORPORATION

DAMAR VILLAGE EDSA-TIMOG AVE. FORT BONIFACIO GLOBAL CITY INTRAMUROS
Clubhouse, Damar Village, Quezon City G/F Richwell Corporate Center, G/F Marajo Tower, 26th St. cor. 4th Ave., No. 409 A. Soriano Ave.,
Tel. Nos.: 442-3581; 367-5517 102 Timog Ave., Brgy. Sacred Heart, Fort Bonifacio Global City, Taguig City Intramuros, Manila
Fax No.: 367-5517 Quezon City Tel. Nos.: 799-9072/9074 Tel. Nos.: 528-4241; 536-1044
Tel. Nos.: 441-5225; 441-5226 856-4416/4891/5196 536-5971; 310-5122
DASMARIÑAS VILLAGE 441-5227 Fax No.: 856-4416 Fax No.: 536-1044
2283 Pasong Tamo Ext. Fax No.: 441-5228
cor. Lumbang St., Makati City GEN. LUIS-KATIPUNAN J. ABAD SANTOS AVE.
Tel. Nos.: 894-2392/93; 813-2958 ELCANO CBC Bldg., Gen. Luis St. 2159 J. Abad Santos Ave.,
Fax No.: 894-2355 G/F Elcano Tower, Elcano St., cor. Katipunan SB Road, cor. Batangas St., Tondo, Manila
San Nicolas, Manila Brgy. Nagkaisang Nayon, Novaliches, Tel. Nos.: 255-1201 to 02
DILIMAN-MATALINO Tel. Nos.: 244-6760; 244-6765 Quezon City 255-1204
J&L Bldg., #23 Matalino St., 244-6779 Tel. Nos.: 285-5664; 285-5665 Fax No.: 255-1203
Diliman, Quezon City Fax No.: 244-6760 Fax No.: 285-5665
Tel. Nos.: 936-8729; 937-5004 J. ABAD SANTOS AVE.-QUIRICADA
Fax No.: 937-5004 ERMITA GIL PUYAT AVE. J. Abad Santos Ave. near cor.
Ground Floor A, Ma. Natividad Bldg., Mitsu Bldg., No. 65 Sen. Gil Puyat Ave., Quiricada St., Manila
DIVISORIA-STA. ELENA #470 T. M. Kalaw cor. Cortada Sts., Brgy. Palanan, Makati City Tel. Nos.: 253-6803; 253-6804
New Divisoria Condominium Center Ermita, Manila Tel. Nos.: 844-0492/94; 844-0688/90 Fax No.: 253-0603
632 Sta. Elena St., Binondo, Manila Tel. Nos.: 525-6477; 536-7794 Fax No.: 844-0497
Tel. Nos.: 247-1435/36/37 525-6544; 523-0074 JUAN LUNA
Fax No.: 247-1436 523-9862 GIL PUYAT-ELIZABETH PLACE G/F Aclem Bldg., 501 Juan Luna St.,
Fax No.: 525-8137 G/F Elizabeth Place, Binondo, Manila
DON ANTONIO Gil Puyat Ave., Makati City Tel. Nos.: 247-3570/3795/3786
G/F Royale Place, Don Antonio Ave., ESPAÑA Tel. Nos.: 776-0502; 776-3234 480-0211
Brgy. Old Balara, Quezon City España cor. Valencia Sts., Fax No.: 766-0502 Fax No.: 247-3795
Tel. Nos.: 932-9477 Sampaloc, Manila
952-9678/9354 Tel. Nos.: 741-9572/6209 GIL PUYAT AVE.-REPOSO KALAYAAN AVE.
Fax No.: 952-9344 741-6208/9565 No. 331 Gil Puyat Ave., Makati City G/F PPS Bldg., Kalayaan Ave.,
Fax No.: 741-6207 Tel. Nos.: 541-3739; 541-3735 Quezon City
DEL MONTE AVE. Fax No.: 541-3735 Tel. Nos.: 332-3858; 332-3859
No. 497 Del Monte Ave. EXAMINER 332-3860
Bgry. Manresa, Quezon City No. 1525 Quezon Ave. cor. Examiner GREENBELT 1 Fax No.: 332-3859
Tel. Nos.: 413-2826; 413-2825 St., West Triangle, Quezon City G/F Greenbelt 1, Legaspi St. near
961-8828; 871-2745 Tel. Nos.: 376-3313/3314 cor. Paseo de Roxas, Makati City KALOOKAN
Fax No.: 361-1101 376-3317/3318 Tel. Nos.: 836-1387; 836-1405 CBC Bldg., 167 Rizal Ave. Extension,
Fax No.: 376-3315 836-1406 Grace Park, Kalookan City
DEL MONTE-MATUTUM Fax No.: 836-1406 Tel. Nos.: 364-0515/35
No. 202 Del Monte Ave. near cor. EVANGELISTA 364-0717/31
Matutum St., Brgy. St. Peter, Evangelista cor. Gen. Estrella Sts., GREENHILLS 364-0494; 364-9948
Quezon City Bangkal, Makati City G/F Gift Gate Bldg., Greenhills Shopping 366-9457
Tel. Nos.: 731-2535; 731-2571 Tel. Nos.: 759-5095; 759-5096 Center, San Juan, Metro Manila Fax No.: 364-9864
413-2118; 416-7791 856-0434; 856-0433 Tel. Nos.: 721-0543/56; 721-3189
Fax No.: 416-7791 Fax No.: 759-5096 727-9520; 724-5078 KALOOKAN-8th AVE.
724-6173; 727-2798 No. 279 Rizal Ave. cor. 8th Ave.,
E. RODRIGUEZ-ACROPOLIS FAIRVIEW Fax No.: 726-7661 Grace Park, Kalookan City
G/F Suncrest Bldg., G/F Angelenix House, Fairview Ave. Tel. Nos.: 287-0001; 287-0262
E. Rodriguez Jr. Ave., Quezon City cor. Camaro St., Quezon City GREENHILLS-ANNAPOLIS Fax No.: 287-0262
Tel. Nos.: 654-3607; 654-3586 Tel. Nos.: 937-5597; 938-9636 Mercedes 1 Condominium,
Fax No.: 654-3586 937-8086; 461-3004 Annapolis St., Greenhills, San Juan City KALOOKAN-10th AVE.
Fax No.: 937-8086 Tel. Nos.: 470-3385; 470-3380 No. 275 10th Ave. cor. 3rd St.,
E. RODRIGUEZ-CORDILLERA Fax No.: 470-3380 Grace Park, Kalookan City
No. 291 (G/F Units 285 & 287) FAIRVIEW TERRACES Tel. Nos.: 287-5484; 287-5489
E. Rodriguez Sr. Blvd., LGF Fairview Terraces, Quirino Highway GREENHILLS-CONNECTICUT Fax No.: 287-5489
Brgy. Doña Josefa, Quezon City cor. Maligaya Drive, Brgy. Pasong Putik, G/F Missouri Square Bldg.,
Tel. Nos.: 257-1512; 256-5292 Novaliches, Quezon City Missouri cor. Connecticut St., KALOOKAN-CAMARIN
Fax No.: 257-1512 Tel. Nos.: 285-5956; 285-6058 Northeast Greenhills, San Juan City L8B4 La Forteza Subd.,
Fax No.: 285-5956 Tel. Nos.: 997-3452; 997-3455 Brgy. 175, Camarin, Kalookan City
E. RODRIGUEZ-HILLCREST Fax No.: 997-3452 Tel. Nos.: 442-6830; 442-7541
No. 402 E. Rodriguez Sr. Blvd., FILINVEST CORPORATE CITY Fax No.: 442-6825
Cubao, Quezon City G/F Wilcon Depot, Alabang-Zapote road GREENHILLS-ORTIGAS
Tel. Nos.: 571-8927; 571-8928 cor. Bridgeway Ave., Filinvest CBC Bldg., 14 Ortigas Ave. KALOOKAN-MONUMENTO
571-8929 Corporate City, Alabang, Muntinlupa Greenhills, San Juan, Metro Manila 779 MacArthur Highway, Kalookan City
Fax No.: 571-8927 Tel. Nos.: 775-0097/0126 Tel. Nos.: 723-0530/01; 723-0502/04 Tel. Nos.: 364-2571; 361-3270
842-1993/2198 726-1492 921-3043
E. RODRIGUEZ SR. BLVD. Fax No.: 775-0322 Fax Nos.: 723-0556; 725-9025 Fax No.: 361-3270
CBC Bldg., #286 E. Rodriguez Sr. Blvd.,
Brgy. Damayang Lagi, Quezon City FILINVEST CORP. CITY- HEROES HILLS KAMIAS
Tel. Nos.: 416-3166; 722-5860 COMMERCENTER Quezon Ave. cor. J. Abad Santos St., G/F CRM Bldg. II, 116 Kamias Road
722-5893 G/F Commercenter Alabang, Heroes Hills, Quezon City cor. Kasing-Kasing St., Quezon City
Fax No.: 726-2865 Commerce Ave. cor. Filinvest Ave., Tel. Nos.: 351-4359/5121; 411-3375 Tel. Nos.: 433-6007; 920-7367
Filinvest Corporate City, Alabang, 412-5697 920-8770
EASTWOOD CITY Muntinlupa City Fax No.: 351-5121 Fax No.: 920-5723
Unit D, Techno Plaza One, Eastwood Tel. Nos.: 805-0824; 805-0827
City Cyberpark, E. Rodriguez Jr. Ave., Fax No.: 805-0146 HOLY SPIRIT DRIVE KAMUNING
(C-5) Bagumbayan, Quezon City CBC Bldg., Lot 18 Block 6 #47 SKY47 Bldg., Kamuning Road,
Tel. Nos.: 706-3491/3493/1979 FILINVEST CORP. CITY-NORTHGATE Holy Spirit Drive, Don Antonio Heights, Quezon City
706-3320/3448 G/F Aeon Centre Bldg., Northgate Brgy. Holy Spirit, Quezon City Tel. Nos.: 287-3369; 287-3368
Fax No.: 438-5531 Cyberzone, Filinvest Corporate City, Tel. Nos.: 355-8665; 277-7257 Fax No.: 287-3368
Alabang, Muntinlupa City Fax No.: 355-8665
EDSA-KALOOKAN Tel. Nos.: 776-1985; 551-5569 KARUHATAN
No. 531 (Lot 5 Block 30) Fax No.: 776-1985 ILAYA No. 253-B MacArthur Highway
EDSA near cor. Biglang Awa St., #947 APL-YSL Bldg., cor. Bizotte St., Karuhatan,
Kalookan City FIVE E-COM CENTER Ilaya, Tondo, Manila Valenzuela City
Tel. Nos.: 442-4338; 442-4339 G/F Five E-com Center, Harbor Drive, Tel. Nos.: 245-2416; 245-2548 Tel. Nos.: 291-0431/0175
442-4340 MOA Complex, Pasay City 245-2557 440-0033
Fax No.: 442-4339 Tel. Nos.: 815-1883; 815-1884 Fax No.: 245-2545 Fax No.: 440-0033
815-1887
Fax No.: 815-1883

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 125

 CHINA BANK BRANCHES

KATIPUNAN AVE.-ST. IGNATIUS LEGASPI VILLAGE-SALCEDO MALANDAY MINDANAO AVE.

CBC Bldg., No. 121 Katipunan Ave., G/F Fedman Suites, 199 Salcedo St., CBC Bldg., MacArthur Highway, G/F LJC Bldg., 189 Mindanao Ave.
Brgy. St. Ignatius, Quezon City Legaspi Village, Makati City Malanday, Valenzuela City Bahay Toro, Quezon City
Tel. Nos.: 913-5532; 912-5003 Tel. Nos.: 893-7680; 893-2618 Tel. Nos.: 432-9787; 292-6956/57 Tel. Nos.: 277-4768; 277-4782
913-3226 759-2462; 893-1503 445-3201; 432-9785 Fax No.: 277-4768
Fax No.: 913-5532 816-0905 Fax No.: 292-6956
Fax No.: 893-3746 MUNTINLUPA-PUTATAN
KATIPUNAN AVE.-LOYOLA HEIGHTS MANDALUYONG-BONI AVE. G/F Teknikos Bldg., National Highway,
Elizabeth Hall, Katipunan Ave., M. DELA FUENTE-TRABAJO MARKET G/F VOS Bldg., Boni Ave. Brgy. Putatan, Muntinlupa City
Loyola Heights, Quezon City #771 M. dela Fuente St. (Trabajo Market cor. San Rafael St., Mandaluyong City Tel. Nos.: 511-0980; 808-1817
Tel. Nos.: 287-9218; 287-9221 area), Sampaloc, Manila Tel. Nos.: 746-6283/85; 534-2289 Fax No.: 808-1819
Fax No.: 287-9221 Tel. Nos.: 522-2083; 522-2028 Fax No.: 534-1968
Fax No.: 522-2083 N. DOMINGO
LAGRO MANDALUYONG-BONI SAN ROQUE G/F The Main Place, No. 1 Pinaglabanan
CBC Bldg., Lot 32 Blk 125, Quirino MACAPAGAL AVE.-ASEANA SQUARE #768 Bonifacio Ave. cor. San Roque St. cor. N. Domingo Sts., San Juan City
Highway, Greater Lagro, Quezon City Aseana Square (Caltex Area), Brgy. Barangka Ilaya, Mandaluyong City Tel. Nos.: 470-2915; 470-2916
Tel. Nos.: 372-8226; 372-8223 D. Macapagal Ave., Aseana City, Tel. Nos.: 581-3861; 581-3867 470-2917
Fax No.: 372-8223 Parañaque City Fax No.: 581-3867 Fax No.: 470-2916
Tel. Nos.: 533-4147; 296-7246
LAS PIÑAS 296-7235 MANDALUYONG-D. GUEVARA NAVOTAS
CBC Bldg., Alabang-Zapote Road Fax No.: 296-7246 G/F 19 Libertad Plaza, Domingo No. 500 M. Naval St. near cor.
cor. Aries St., Pamplona Park Subd., Guevara St., Mandaluyong City Lacson St., Brgy. North Bay Boulevard
Las Piñas City MACAPAGAL AVE.-BIOPOLIS Tel. Nos.: 534-5528; 534-5529 North (NBBN), Navotas City
Tel. Nos.: 874-6204; 874-6210 G/F The Biopolis, Central Business Park Fax No.: 534-5529 Tel. Nos.: 283-0752 to 54
Fax No.: 874-6414 1-A 076/01, Diosdado Macapagal Ave., Fax No.: 283-0752
Pasay City MANDALUYONG-PIONEER
LAS PIÑAS-MANUELA Tel. Nos.: 838-9677; 838-9679 UG-05 Globe Telecom Plaza Tower I NOVALICHES-GULOD
Alabang-Zapote Road Fax No.: 838-9679 Pioneer St., Mandaluyong City 858 Krystle Building, Quirino Highway,
cor. Philamlife Ave., Pamplona Dos, Tel. Nos.: 746-6949; 635-4198 Gulod, Novaliches, Quezon City
Las Piñas City MACAPAGAL AVE.-DOUBLEDRAGON 632-1399 Tel. Nos.: 937-1133/36
Tel. Nos.: 872-9801/9572/9533 DD Meridian Park Plaza, Macapagal Ave. Fax No.: 746-6948 Fax No.: 936-1037
871-0770 cor. EDSA Ext., Pasay City
Fax No.: 871-0771 Tel. Nos.: 838-3805; 838-3804 MANILA-MACEDA NOVALICHES-STA. MONICA
Fax No.: 838-3804 Daguman Bldg., Maceda St., G/F E & V Bldg., Quirino Highway cor.
LAS PIÑAS-MARCOS ALVAREZ AVE. Sampaloc, Manila Dumalay St., Novaliches, Quezon City
Metro Towne Center, MAGALLANES VILLAGE Tel. Nos.: 521-6644; 521-6643 Tel. Nos.: 288-3683; 288-2302
2020 Marcos Alvarez Ave., G/F DHI Bldg., No. 2 Lapu-Lapu Ave. Fax No.: 521-6644 Fax No.: 288-3683
Talon V, Moonwalk, Las Piñas City cor. EDSA, Magallanes Village,
Tel. Nos.: 838-9865; 838-9786 Makati City MARIKINA-STA. ELENA NOVALICHES-SANGANDAAN
Fax No.: 838-9756 Tel. Nos.: 757-0272/0240 250 J.P. Rizal St., Sta. Elena, CBC Bldg., Quirino Highway
852-1290; 852-1245 Marikina City cor. Tandang Sora Ave.,
Fax No.: 852-1245 Tel. Nos.: 646-4281; 646-4277 Brgy. Sangandaan, Novaliches
LAS PIÑAS-NAGA ROAD 646-4279; 646-1807 Quezon City
Lot 3, Naga Road, Pulanglupa 2, MAKATI AVE. Fax No.: 646-1807 Tel. Nos.: 935-3049; 935-3491
Las Piñas City G/F CBC Bldg., Makati Ave. Fax No.: 935-2130
Tel. Nos.: 541-1671; 541-1674 cor. Hercules St., Makati City MARIKINA-FAIRLANE
Fax No.: 541-1674 Tel. Nos.: 890-6971 to 74 G/F E & L Patricio Bldg., NOVALICHES-TALIPAPA
Fax No.: 890-6975 No. 809 J.P. Rizal Ave., 528 Copengco Bldg., Quirino Highway,
LAVEZARES Concepcion Uno, Marikina City Talipapa, Novaliches, Quezon City
No. 412 Lavezares St., MAKATI-COMEMBO Tel. Nos.: 997-0684; 997-0897 Tel. Nos.: 936-2202; 936-3311
San Nicolas, Manila No. 46 JP Rizal Ext., 998-1817 936-7765
Tel. Nos.: 521-6978; 521-7132 Brgy. Comembo, Makati City Fax No.: 997-0897 Fax No.: 936-2202
521-7128 Tel. Nos.: 802-2616; 802-2614
Fax No.: 521-6978 802-2613 MARIKINA-GIL FERNANDO NOVALICHES- ZABARTE
Fax No.: 802-2613 Block 9, Lot 14 Gil Fernando Ave., G/F C.I. Bldg., 1151 Quirino Highway
LEGASPI VILLAGE-AMORSOLO Marikina City cor. Zabarte Road, Brgy. Kaligayahan,
G/F CAP Bldg., Herrera cor. MAKATI-JP RIZAL Tel. Nos.: 646-0780; 646-8032 Novaliches, Quezon City
Amorsolo Sts., Legaspi Village, JP Rizal cor. Honradez Sts., 358-2138 Tel. Nos.: 461-7691; 461-7694
Makati City Makati City Fax No.: 646-8032 461-7698
Tel. Nos.: 832-6871; 833-5668 Tel. Nos.: 815-6036 to 38 Fax No.: 461-7691
Fax No.: 833-5668 Fax No.: 815-6038 MARIKINA-SSS VILLAGE
Lilac St., Rancho Estate IV, NUEVA
LEGASPI VILLAGE-AIM MAKATI-KALAYAAN AVE. Concepcion Dos, Marikina City Unit Nos. 557 & 559 G/F Ayson Bldg.,
G/F Cacho-Gonzales Bldg., Kalayaan Ave., Makati City Tel. Nos.: 948-5135; 941-7709 Yuchengco St., Binondo, Manila
101 Aguirre cor. Trasierra Sts., Tel. Nos.: 838-7253; 838-7252 997-3343 Tel. Nos.: 247-6374; 247-6396
Legaspi Village, Makati City Fax No.: 838-7253 Fax No.: 942-0048 247-0493; 480-00-66
Tel. Nos.: 818-8156; 818-0734 Fax No.: 247-6396
818-9649; 894-5882 to 85 MALABON-CONCEPCION MASANGKAY
Fax No.: 818-0240 Gen. Luna cor. Paez Sts., 959-961 G. Masangkay St., ONGPIN
Concepcion, Malabon Binondo, Manila G/F Se Jo Tong Bldg.,
LEGASPI VILLAGE-C. PALANCA Tel. Nos.: 281-0102/03/04/05 Tel. Nos.: 244-1828/35/48/56/59 808 Ongpin St., Sta. Cruz, Manila
Suite A, Basic Petroleum Bldg. 281-0293 Fax No.: 244-1833 Tel. Nos.: 733-8962 to 66
104 C. Palanca Jr. St. Fax No.: 281-0106 735-5362
Legaspi Village, Makati City MASANGKAY-LUZON Fax No.: 733-8964
Tel. Nos.: 894-5915/18; 810-1464 MALABON-GOV. PASCUAL 1192 G. Masangkay St.,
Fax No.: 894-586 CBC Bldg., Gov. Pascual Ave., Sta. Cruz, Manila OROQUIETA
Malabon City Tel. Nos.: 255-0739; 254-9974 1225-1227, Oroquieta St.,
LEGASPI VILLAGE-ESTEBAN Tel. Nos.: 352-1816; 352-1817 254-9335 Sta. Cruz, Manila
G/F PPI Bldg., No. 109 Esteban St., 352-1822; 961-2147 Fax No.: 254-9974 Tel. Nos.: 521-6648; 521-6650
Legaspi Village, Makati City Fax No.: 352-1822 Fax No.: 521-6648
Tel. Nos.: 800-6147; 805-4820 MAYON
Fax No.: 805-4820 MALABON-POTRERO 480 Mayon St., Maharlika ORTIGAS-ADB AVE.
CBC Bldg., MacArthur Highway, Sta. Mesa Heights, Quezon City LGF City & Land Mega Plaza
LEGASPI VILLAGE-PEREA Potrero, Malabon Tel. Nos.: 731-9054/2766 ADB Ave. cor. Garnet Rd.
G/F Greenbelt Mansion, 106 Perea St., Tel. Nos.: 448-0524/25 741-2409 Ortigas Center, Pasig City
Legaspi Village, Makati City 361-8671/7056 Fax No.: 731-2766 Tel. Nos.: 687-2457/58
Tel. Nos.: 893-2273/2272/2827 Fax No.: 448-0525 687-2226/3263
Fax No.: 893-2272 Fax No.: 687-2457

126 CHINA BANKING CORPORATION

ORTIGAS AVE. EXT.-RIVERSIDE PARAÑAQUE-SUCAT PASONG TAMO-CITYLAND ROOSEVELT AVE.
Unit 2-3 Riverside Arcade, Ortigas Ave. No. 8260 (between AMA Computer Units UG30-UG32 Cityland Pasong CBC Bldg., #293 Roosevelt Ave.,
Extension cor. Riverside Drive, School and PLDT), Dr. A. Santos Ave., Tamo Tower, 2210 Pasong Tamo St., San Francisco Del Monte, Quezon City
Brgy. Sta. Lucia, Pasig City Brgy. San Isidro, Parañaque City Makati City Tel. Nos.: 371-5133 to 35
Tel. Nos.: 748-1808; 748-4426 Tel. Nos.: 820-8951/52; 820-2044 Tel. Nos.: 817-9337/47/51/60/82 410-2160; 410-1957
655-7403; 655-8350 825-2501 Fax No.: 817-9351 371-2766
Fax No.: 655-8350 Fax No.: 825-9517 Fax No.: 371-2765
PASONG TAMO-LA FUERZA
ORTIGAS CENTER PASAY-LIBERTAD La Fuerza Plaza 1, Chino Roces Ave., ROOSEVELT AVE.-FRISCO
Unit 101 Parc Chateau Condominium CBC Bldg., 184 Libertad St., Makati City G/F Norita Bldg., #51 H. Francisco
Onyx cor. Sapphire Sts., Antonio Arnaiz Ave., Pasay City Tel. Nos.: 541-8850; 541-8851 St. cor. Roosevelt Ave., Brgy. Paraiso,
Ortigas Center, Pasig City Tel. Nos.: 551-7159; 834-8978 Fax No.: 541-8851 Quezon City
Tel. Nos.: 633-7960/70/53/54 831-0306; 831-0498 Tel. Nos.: 709-7552; 921-0866
634-0178 Fax No.: 551-7160 PATEROS Fax No.: 921-0866
Fax No.: 633-7971 G/F Adela Bldg., M. Almeda St.,
PASAY-ROXAS BLVD. Brgy. San Roque, Pateros SALCEDO VILLAGE-L.P. LEVISTE
ORTIGAS COMPLEX GF Unit G-01 Antel Seaview Towers Tel. Nos.: 531-6929; 531-6810 Unit 1-B G/F The Athenaeum
G/F Padilla Bldg., F. Ortigas Jr. Road 2626 Roxas Blvd., Pasay City 654-3079 San Agustin-LP Leviste St.,
(formerly Emerald Ave.), Ortigas Center, Tel. Nos.: 551-9067/68/69 Fax No.: 654-3079 Salcedo Village, Makati City
Pasig City 833-5048 Tel. Nos.: 869-3128; 869-3132
Tel. Nos.: 634-3469; 631-2772 Fax No.: 551-1768 PHILAM 869-3134
Fax No.: 633-9039 #8 East Lawin Drive, Fax No.: 869-3132
PASIG-A. MABINI Philam Homes, Quezon City
ORTIGAS-JADE DRIVE A. Mabini St., Brgy. Kapasigan, Tel. Nos.: 927-9841; 924-2872 SALCEDO VILLAGE-TORDESILLAS
Unit G-03, Antel Global Corporate Pasig City 929-5734 G/F Prince Tower Condominium
Center, Jade Drive, Ortigas Center, Tel. Nos.: 534-5178; 634-4028 Fax No.: 929-3115 14 Tordesillas St., Salcedo Village,
Pasig City Fax No.: 534-5178 Makati City
Tel. Nos.: 638-4489; 638-4490 PROJECT 8-SHORTHORN Tel. Nos.: 813-4901/32/33
638-4510; 638-4540 PASIG-C. RAYMUNDO Shorthorn St., Project 8, Quezon City 813-4944/52
Fax No.: 638-4540 G/F MicMar Apartments Tel. Nos.: 373-3363; 373-3369 Fax No.: 813-4933
No. 6353 C. Raymundo Ave., Fax No.: 373-3363
ORTIGAS-TEKTITE Brgy. Rosario, Pasig City SALCEDO VILLAGE-VALERO
Unit EC-06B PSE Center (Tektite) Tel. Nos.: 642-3652; 628-3912 PUREZA G/F Valero Tower, 122 Valero St.
Ortigas Center, Pasig City 628-3922 G/F Solicarel Bldg. Salcedo Village, Makati City
Tel. Nos.: 637-0231; 637-0238 Fax No.: 576- 4134 Ramon Magsaysay Blvd. Tel. Nos.: 892-7768/69; 812-9207
Fax No.: 637-0231 near cor. Pureza St., Sta. Mesa, Manila 893-8188/96
PASIG-DELA PAZ Tel. Nos.: 241-3313; 241-3314 Fax No.: 892-7769
PACO Amang Rodriguez Ave., Fax No.: 241-3314
Gen. Luna cor. Escoda St., Brgy. Dela Paz, Pasig City SALES-RAON
Paco, Manila Tel. Nos.: 637-7874; 637-7876 QUEZON AVE. 611 Sales St., Quiapo, Manila
Tel. Nos.: 526-6492; 536-6630/31/72 Fax No.: 637-7874 No. 18 G & D Bldg., Quezon Ave. Tel. Nos.: 734-5806; 734-7427
Fax No.: 536-6657 cor. D. Tuazon St., Quezon City 734-6959
PASIG-MERCEDES Tel. Nos.: 712-3676; 712-0424 Fax No.: 734-6959
PACO-ANGEL LINAO Commercial Motors Corp. Compound 740-7779/80; 712-1105
Unit 1636 & 1638 Angel Linao St. Mercedes Ave., Pasig City 416-8891 SAN ANTONIO VILLAGE-
Paco, Manila Tel. Nos.: 628-0197/0209/0201 Fax No.: 712-3006 KAMAGONG
Tel. Nos.: 242-2849; 242-3416 Fax No.: 628-0211 Kamagong near cor. St. Paul Sts.,
Fax No.: 242-2849 QUEZON AVE.-SCT. CHUATOCO San Antonio Village, Makati City
PASIG-SAN JOAQUIN Estuar Bldg., No.880 Quezon Ave., Tel. Nos.: 777-4950; 777-4951
PACO-OTIS No. 43 M. Concepcion Ave., Brgy. Paligsahan, Quezon City Fax No.: 777-4951
G/F Union Motor Corp Bldg., San Joaquin, Pasig City Tel. Nos.: 351-0563; 351-0567
1760 Dra. Paz Guazon St., Paco, Manila Tel. Nos.: 997-2815; 997-2816 Fax No.: 351-0563 SAN ANTONIO VILL.-P. OCAMPO
Tel. Nos.: 561-6902; 561-6981 997-2817 JM Macalino Auto Center,
564-2247 Fax No.: 997-2815 QUIAPO P. Ocampo St. cor. Dungon St.,
Fax No.: 561-6981 216-220 Villalobos St., Quiapo, Manila San Antonio Village, Makati
PASIG-SANTOLAN Tel. Nos.: 733-2052/59/61 Tel. Nos.: 869-5648; 869-5649
PADRE FAURA G/F Felmarc Business Center, 733-6282/86 Fax No.: 869-5651
G/F Regal Shopping Center, A. Mabini Amang Rodriguez Ave., Fax No.: 733-6282
cor. P. Faura Sts., Ermita, Manila Santolan, Pasig City SAN JUAN
Tel. Nos.: 526-0586; 527-3202 Tel. Nos.: 646-0635; 682-3474 REGALADO AVE. 17 (new) F. Blumentritt St.,
527-7865 682-3514; 681-4575 CBC Bldg., Regalado Ave., San Juan, M. M.
Fax No.: 527-3202 Fax No.: 646-0514 North Fairview, Quezon City Tel. Nos.: 724-8263; 726-4826
Tel. Nos.: 921-5678; 921-5359 744-5616 to 18
PARAÑAQUE-BACLARAN PASIG-SM SUPERCENTER Fax No.: 921-5359 723-7333
Quirino Ave. cor. Aragon St., G/F SM Supercenter Pasig, Fax No.: 723-4998
Baclaran, Parañaque City Frontera Drive, C-5, Ortigas, Pasig City REGALADO AVE.-WEST FAIRVIEW
Tel. Nos.: 581-1057; 663-0435 Tel. Nos.: 706-3207/3208/3209 CBC Bldg., Regalado Ave. SAN JUAN-J. ABAD SANTOS
Fax No.: 663-0435 Fax No.: 706-3208 cor. Bulova St., Quezon City Unit 3 Citiplace Bldg.,
Tel. Nos.: 936-2554; 936-2556 8001 Jose Abad Santos St.,
PARAÑAQUE-MOONWALK PASIG-VALLE VERDE Fax No.: 936-2554 Little Baguio, San Juan City
Milky Way St. cor. Armstrong Ave., G/F Reliance IT Center, Tel. Nos.: 470-8292; 656-8329
Moonwalk, Parañaque City E. Rodriguez Jr. Ave., Ugong, Pasig City RIZAL-ANGONO Fax No.: 656-8329
Tel. Nos.: 846-9729; 846-9739 Tel. Nos.: 706-9242; 706-9243 Lot 3 Blk. 4 M.L Quezon Ave.
846-9771 Fax No.: 706-9243 Richmond Subd., Angono, Rizal SCT. BORROMEO
Fax No.: 846-9739 Tel. Nos.: 633-5198; 633-7513 G/F The Forum Bldg.,
PASO DE BLAS Fax No.: 633-7513 71- A Sct. Borromeo St.,
PARAÑAQUE-NAIA G/F CYT Bldg., No. 178 Paso de Blas, Diliman, Quezon City
Ninoy Aquino Ave., Brgy. San Dionisio, Valenzuela City RIZAL-SAN MATEO Tel. Nos.: 426-1431; 426-1340
Parañaque City Tel. Nos.: 292-3215/3213/3216 #63 Gen. Luna cor. Simon St., Fax No.: 426-1431
Tel. Nos.: 541-8857; 541-8858 Fax No.: 444-8850 Banaba, San Mateo, Rizal
Fax No.: 541-8857 Tel. Nos.: 650-2230; 650-1837 SHAW-HAIG
PASONG TAMO BAGTIKAN Fax No.: 650-1837 G/F First of Shaw Bldg., Shaw Blvd.
PARAÑAQUE-SAN ANTONIO VALLEY G/F Trans-Phil House cor. Haig St., Mandaluyong City
San Antonio Shopping Center, 1177 Chino Roces Ave. ROCKWELL-ORTIGAS Tel. Nos.: 534-1073; 534-0744
San Antonio Road, Brgy. San Antonio cor. Bagtikan St., Makati City G/F Tower 1 Rockwell Business Center, 718-0218; 621-6459
Valley 1, Parañaque City Tel. Nos.: 403-4820; 403-4821 Ortigas Ave., Pasig City Fax No.: 576-3841
Tel. Nos.: 816-2448; 816-2451 403-4822; 738-7591 Tel. Nos.: 470-4704; 470-2984
Fax No.: 816-2451 Fax No.: 403-4821 Fax No.: 470-2984

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 127

 CHINA BANK BRANCHES

SHAW-PASIG SM CITY NORTH EDSA TAFT AVE.-QUIRINO VALENZUELA

G/F RCC Center, Cyberzone Carpark Bldg., 2178 Taft Ave. near cor. CBC Bldg., MacArthur Highway
No. 104 Shaw Boulevard, Pasig City SM City North Ave. cor. EDSA, Quirino Ave., Malate, Manila cor. V. Cordero St., Marulas,
Tel. Nos.: 634-5018/19; 634-3343/44 Quezon City Tel. Nos.: 521-7825; 527-3285 Valenzuela City
747-7812; 634-3340 Tel. Nos.: 456-6633; 454-8108/21 527-6747 Tel. Nos.: 293-8920; 293-6160
Fax No.: 634-3344 925-4273 Fax No.: 527-3285 293-5088 to 90
Fax No.: 927-2234 293-8919
SHAW-SUMMIT ONE TANDANG SORA-VISAYAS AVE. Fax No.: 293-5091
Unit 102 Summit One Office Tower SM CITY NORTH TOWERS #250 Tandang Sora Ave., Quezon City
530 Shaw Boulevard, Mandaluyong City SM City North EDSA North Towers, Tel. Nos.: 426-3818; 426-3541 VALENZUELA-GEN. LUIS
Tel. Nos.: 531-3970; 531-5736 SM City North EDSA Complex, AGT Bldg., 425 Gen. Luis St.
531-4058; 531-1304 Quezon City TAYTAY-SAN JUAN Paso de Blas, Valenzuela City
533-8723; 533-4948 Tel. Nos.: 241-2172; 251-5122 Velasquez St., Sitio Bangiad, Tel. Nos.: 443-6160/61
Fax No.: 531-9469 Brgy. San Juan, Taytay, Rizal 983-3861/62
EDSA-PHILAM Tel. No.: 998-6649 Fax No.: 443-6161
SM AURA PREMIER 917 EDSA, Brgy. Philam, Quezon City Fax No.: 998-6649
L/G SM Aura Premier, McKinley Tel. Nos.: 374-2345; 374-2362 VALENZUELA-MALINTA
Parkway, Fort Bonifacio Global City, 287-3106 TAYTAY-ORTIGAS EXENSION MacArthur Highway, Brgy. Malinta,
Taguig City Fax No.: 287-3106 Ortigas Ave. Ext., Taytay, Rizal Valenzuela City
Tel. Nos.: 808-9727; 808-9701 Tel. No.: 727-1667 Tel. Nos.: 282-2160; 282-2013
Fax No.: 808-9701 SM SOUTHMALL Fax No.: 727-1667 Fax No.: 282-2013
UGF SM Southmall
SM CITY BICUTAN Alabang-Zapote Road, Talon 1, TIMOG AVE. VISAYAS AVE.
LGF, Bldg. B, SM City Bicutan Almanza, Las Piñas City G/F Prince Jun Condominium, CBC Bldg., Visayas Ave. cor.
Doña Soledad Ave. Tel. Nos.: 806-6116/19; 806-3536 42 Timog Ave., Quezon City Congressional Ave. Ext., Quezon City
cor. West Service Rd., Parañaque City 806-3547 Tel. Nos.: 371-4523/24; 371-4522/06 Tel. Nos.: 454-0189; 925-2173
Tel. Nos.: 821-0600/0700 Fax No.: 806-3548 Fax No.: 371-4503 455-4334/35
777-9347 Fax No.: 925-2155
Fax No.: 821-0500 SOLEMARE TRINOMA
G-11 Solemare Parksuites, Unit P002, Level P1, Triangle North of WEST AVE.
SM CITY BF PARAÑAQUE 5A Bradco Ave., Aseana Business Park, Manila, North Ave. cor. EDSA, 82 West Ave., Quezon City
G/F SM City BF Parañaque, Parañaque City Quezon City Tel. Nos.: 924-3131/3143
Dr. A. Santos Ave. cor. President’s Ave., Tel. Nos.: 366-3237; 366-3219 Tel. Nos.: 901-5570-5573 924-6363; 920-6258
Parañaque City 366-3199 Fax No.: 901-5573 411-6010/6011
Tel. Nos.: 825-3201; 825-2990 Fax No.: 366-3199 928-3270
825-3095; 820-0911 TOMAS MAPUA-LAGUNA Fax No.: 924-6364
Fax No.: 825-1062 SOLER-168 CBC Bldg., Tomas Mapua St.
G/F R & S Bldg., Soler St., Manila Sta. Cruz, Manila XAVIERVILLE
SM CITY MARIKINA Tel. Nos.: 242-1041; 242-1674 Tel. Nos.: 495-0302; 711-9849 65 Xavierville Ave., Loyola Heights,
G/F SM City Marikina, Marcos Highway, 242-1685 Fax No.: 495-0302 Quezon City
Brgy. Calumpang, Marikina City Fax No.: 242-1041 Tel. Nos.: 433-8696; 929-1265
Tel. Nos.: 477-1845/46/47 TOMAS MORATO-E. RODRIGUEZ 927-9826
799-6105 SOUTH TRIANGLE 1427 Tomas Morato Ave., Quezon City Fax No.: 929-3343
Fax No.: 477-1847 G/F Sunshine Blvd. Plaza, Tel. Nos.: 470-3037; 477-1472
Quezon Ave. cor. Sct. Santiago and LUZON
SM CITY SAN LAZARO Panay Ave., Bgry. South Triangle, TOMAS MORATO EXTENSION
UGF (Units 164-166) SM City Quezon City QY Bldg., Tomas Morato Ave., ALBAY
San Lazaro, Felix Huertas St. Tel. Nos.: 277-7947; 277-7948 Quezon City Rizal St. cor. Gov. Reynold St.,
cor. A.H. Lacson Extension, Fax No.: 277-7947 Tel. Nos.: 373-4960; 373-4961 Old Albay District, Legazpi City
Sta. Cruz, Manila Fax No.: 373-4961 Tel. Nos.: (052) 742-0893
Tel. Nos.: 742-1572; 742-2330 STA. MESA (052) 742-0894
493-7115 1-B G. Araneta Ave., 999 MALL Fax No.: (052) 742-0894
Fax No.: 732-7935 Brgy. Doña Imelda, Quezon City Unit 3D-5; 3D-7 999 Shopping Mall
Tel. Nos.: 516-0764; 516-0765 Bldg. 2 Recto-Soler Sts., Binondo, ANGELES CITY
SM CITY TAYTAY 516-0766 Manila CBC Bldg., 949 Henson St.,
Unit 147 Bldg. B, SM City Taytay, Manila Fax No.: 516-0765 Tel. Nos.: 523-1216/1217 Angeles City
East Road, Brgy. Dolores, Taytay, Rizal 523-1218/1219 Tel. Nos.: (045) 887-1549; 323-5343
Fax No.: 286-5844; 286-5979 STO. CRISTO Fax No.: 523-1215 887-1550/2291
661-2276; 661-2277 622-39 Sto. Cristo St., Binondo, Manila 625-8660/61
Fax No.: 661-2235 Tel. Nos.: 242-4673; 242-5361 TUTUBAN PRIME BLOCK Fax No.: (045) 625-8661
241-1243; 242-5449 Rivera Shophouse, Podium Area,
SM CITY FAIRVIEW 242-3670; 242-4668 Tutuban Center Prime Block, ANGELES CITY-BALIBAGO
LGF, SM City Fairview, Quirino Ave. Fax No.: 242-4672; 242-4761 C.M. Recto Ave. cor. Rivera St., Manila Diamond Square, Service Road
cor. Regalado Ave., Fairview, Tel. Nos.: 255-1414/15 MacArthur Highway cor. Charlotte St.
Quezon City STO. CRISTO-C.M. RECTO Fax No.: 255-5441 Balibago, Angeles City, Pampanga
Tel. Nos.: 417-2878; 939-3105 858 Sto. Cristo St., Manila Tel. Nos.: (045) 892-5136
Fax No.: 418-8228 Tel. Nos.: 562-9651; 562-9652 UP TECHNO HUB 892-5144
UP AyalaLand Techno Hub, Fax No.: (045) 892-5136
SM MALL OF ASIA STO. DOMINGO AVE. Commonwealth Ave., Quezon City
G/F Main Mall Arcade, SM Mall of Asia, Sto. Domingo Ave., Quezon City Tel. Nos.: 441-1331/1332 ANGELES CITY-MARQUEE MALL
Bay Blvd., Pasay City Tel. Nos.: 251-6005; 251-5852 441-1334/738-4800 G/F Marquee Mall, Angeles City,
Tel. Nos.: 556-0100/0102/0099 Fax No.: 441-1332 Pampanga
625-2246 T. ALONZO Tel. Nos.: (045) 436-4013
Fax No.: 556-0099 Abeleda Business Center UP VILLAGE-MAGINHAWA 304-0850; 889-0975
908 T. Alonzo cor. Espeleta Sts., LTR Bldg., No. 46 Maginhawa St., Fax No.: (045) 304-0850
SM MEGAMALL Sta. Cruz, Manila UP Village, Quezon City
LGF Bldg. A, SM Megamall, Tel. Nos.: 733-9581/82 Tel. Nos.: 373-3349; 373-3354 ANGELES-MACARTHUR HIGHWAY
E. Delos Santos Ave. cor. 734-3231 to 33 CBC Bldg., San Pablo St. cor.
J. Vargas St., Mandaluyong City Fax No.: 733-9582 V.LUNA BRA NCH MacArthur Highway, Angeles City
Tel. Nos.: 633-1611/12 G/F AGGCT Bldg., No. 32 V. Luna Tel. Nos.: (045) 323-5793
633-1788/89 TAFT AVE.-NAKPIL cor. Matapat Sts., Brgy. Pinyahan, 887-6028; 625-9362
638-7213 to15 G Square Taft Ave. cor. Nakpil St., Quezon City Fax No.: (045) 887-6029
Fax Nos.: 633-4971 or 633-1788 Malate, Manila Tel. Nos.: 772-8992; 772-8564
Tel. Nos.: 681-2830; 631-9745 Fax No.: 772-8564 ANGELES-STO. ROSARIO
SM CITY MASINAG Angeles Business Center Bldg.,
SM City Masinag, Marcos Highway, Teresa Ave., Nepo Mart Complex,
Brgy. Mayamot, Antipolo City Angeles City, Pampanga
Tel. Nos.: 655-8764; 655-9124 Tel. Nos.: (045) 888-5175; 322-9596
655-8771 Fax No.: (045) 888-5175
Fax No.: 655-9124

128 CHINA BANKING CORPORATION

APALIT BATANGAS-TANAUAN CAVITE-GEN. TRIAS ISABELA-ROXAS
CBC Bldg., MacArthur Highway, J.P. Laurel Highway, Lot 12 Brookeside Lane 5 Arnaldo National Road, Brgy. Bantug,
San Vicente, Apalit, Pampanga Tanauan City, Batangas Highway, Brgy. San Francisco, Roxas, Isabela
Tel. No.: (045) 652-1131 Tel. Nos.: (043) 702-8956; 702-8957 Gen. Trias City, Cavite Tel. Nos.: (078) 376-0422; 376-0434
Fax No.: (045) 302-9560 Fax No.: (043) 702-8956 Tel. Nos.: (046) 482-8993 Fax No.: (078) 642-0022
(046) 482-8995
BAGUIO CITY BULACAN-BALAGTAS GAPAN
G/F Juniper Bldg., A. Bonifacio Rd., MacArthur Highway, Brgy. San Juan, CAVITE-IMUS G/F Waltermart Center-Gapan,
Baguio City Balagtas, Bulacan G/F CBC Bldg., Nueno Ave. Maharlika Highway, Brgy. Bayanihan,
Tel. Nos.: (074) 442-9581; 443-5908 Tel. Nos.: (044) 769-4376; 769-0359 Tanzang Luma, Imus, Cavite Gapan, Nueva Ecija
443-8659 to 60 Fax No.: (044) 769-4376 Tel. Nos.: (046) 970-8726/64 Tel. Nos.: (044) 486-0217
442-9663 471-2637; 471-7094 486-0434; 486-0695
Fax No.: (074) 442-9663 BULACAN-GUIGUINTO Fax No.: (046) 471-2637 Fax No.: (044) 486-0434
CBC Bldg., Cagayan Valley Road,
BAGUIO CITY-ABANAO Brgy. Sta. Rita, Guiguinto, Bulacan CAVITE-MOLINO GUAGUA
G/F Paladin Hotel, No. 136 Abanao Ext. Tel. Nos.: (044) 764-0879 Patio Jacinto, Molino Road, Yabut Bldg., Plaza Burgos,
cor. Cariño St., Baguio City (044) 764-0886 Molino 3, Bacoor, Cavite Guagua, Pampanga
Tel. Nos.: (074) 424-4837; 424-4838 Tel. Nos.: (046) 431-0632 Tel. Nos.: (045) 458-1043
Fax No.: (074) 424-4838 BULACAN-PLARIDEL 484-6295 458-1045; 458-1046
CBC Bldg., Cagayan Valley Road, Fax No.: (046) 431-0901 Fax No.: (045) 458-1043
BALANGA CITY Plaridel, Bulacan
G/F Dilig Bldg., Don Manuel Banzon St., Tel. Nos.: (044) 931-2332; 325-0069 CAVITE-ROSARIO LA TRINIDAD
Balanga City, Bataan Fax No.: (044) 931-2293 G/F CBC Bldg., Gen Trias Drive, G/F SJV Bulasao Bldg.,
Tel. Nos.: (047) 237-9388/89 Rosario, Cavite Km. 4, La Trinidad, Benguet
791-1779 BULACAN-STA. MARIA Tel. Nos.: (046) 437-0057 to 59 Tel. Nos.: (074) 422-2065/2590
Fax No.: (047) 791-1779 J.P Rizal cor. C. de Guzman St., Fax No.: (046) 437-0058 309-1663
Poblacion, Sta. Maria Fax No.: (074) 422-2065
BALER Tel. Nos.: (044) 288-2006 CAVITE-SILANG
Provincial Road, Barrio Suklayain, 815-2951; 913-0334 CBC Bldg., J.P Rizal St. LA UNION-AGOO
Baler, Aurora Fax No.: (044) 288-2006 Poblacion, Silang, Cavite National Highway, San Jose Norte,
Tel. Nos.: (042) 724-0026 Tel. Nos.: (046) 413-5095 Agoo, La Union
703-3331-(manila line) CABANATUAN CITY 413-4826; 413-5500 Tel. Nos.: (072) 682-0350; 682-0391
Fax No.: (042) 724-0026 Melencio cor. Sanciangco Sts. 413-5417 Fax No.: (072) 682-0350
Cabanatuan City Fax No.: (046) 413-5095
BALIWAG Tel. Nos.: (044) 600-4265 LA UNION-SAN FERNANDO
Km. 51, Doña Remedios Trinidad (DRT) 463-0935 to 36 CLARK FREEPORT ZONE Roger Pua Phee Bldg.,
Highway, Baliwag, Bulacan Fax No.: (044) 463-0936 Stotsenberg Lifestyle Center, Quirino National Highway, Brgy. 3,
Tel. Nos.: (044) 766-1066/5257 Sr. cor. N. Aquino Sts., Clark Freeport San Fernando, La Union
673-5338 CABANATUAN-MAHARLIKA Zone, Angeles City, Pampanga Tel. Nos.: (072) 607-8931/8932
Fax No.: (044) 766-5257 CBC Bldg., Maharlika Highway Tel. Nos.: (045) 499-8060 607-8933/8934
Cabanatuan City 499-8062; 499-8063 Fax No.: (072) 607-8934
BATAAN-DINALUPIHAN Tel. Nos.: (044) 463-8586/87 Fax No.: (045) 499-8063
GNI Bldg., San Ramon Highway 463-7964; 600-3590 LAGUNA-BIÑAN
cor. Doña Rosa St. and Mabini Ext., 940-2395 DAET G/F Raja Cordelle Bldg.,
Dinalupihan, Bataan Fax No.: (044) 463-8587 Vinzons Ave., Daet, Camarines Norte National Highway, Brgy. San Vicente,
Tel. Nos.: (047) 636-1451/52 Tel. Nos.: (054) 440-0066 Biñan, Laguna
CALAPAN CITY 440-0067 Tel. Nos.: (049) 511-3196
BATANGAS CITY J.P. Rizal St., San Vicente, Fax No.: (054) 472-1358 245-0440 (Manila Line)
P. Burgos St., Batangas City Calapan City, Oriental Mindoro Fax No.: (049) 511-3196
Tel. Nos.: (043) 723-0953 Tel. Nos.: (043) 288-8978/8508 DAGUPAN-PEREZ
520-6118 (Manila Line) 441-0382 Siapno Bldg., Perez Boulevard, LAGUNA-CABUYAO
Fax Nos.: 520-6118 Fax No.: (043) 441-0382 Dagupan City G/F Centro Mall,
(043) 402-9157 Tel. Nos.: (075) 522-2562 to 64 Cabuyao City, Laguna
CAMALANIUGAN Fax No.: (075) 522-8308 Tel. Nos.: (049) 544-2287; 544-2289
BATANGAS-BALAYAN CBC Bldg., National Highway, Fax No.: (049) 544-2287
CBC Bldg., Barrio Ermita, Camalaniugan, Cagayan DAGUPAN-M.H. DEL PILAR
Balayan, Batangas Tel. Nos.: (078) 377-2836 Carried Realty Bldg., LAGUNA-CALAMBA
Tel. Nos.: (043) 741-5028 377-2837 No. 28 M.H. del Pilar St., Dagupan City CBC Bldg., National Highway,
(043) 741-5180 Fax No.: (078) 377-2837 Tel. Nos.: (075) 523-5606 Crossing, Calamba, Laguna
522-8929 632-0430 Tel. Nos.: (049) 545-7134 to 38
BATANGAS-BAUAN CANDON CITY 632-0583 Fax No.: (049) 545-7138
62 Kapitan Ponso St., Bauan, Batangas CBC Bldg., National Road, Fax No.: (075) 523-5606
Tel. Nos.: (043) 702-4481; 702-5383 Poblacion, Candon City, Ilocos Sur LAGUNA-LOS BAÑOS
Fax No.: (043) 702-4481 Tel. Nos.: (077) 674-0574 DOLORES National Road, San Antonio,
674-0554 CBC Bldg., MacArthur Highway, Los Baños, Laguna
BATANGAS-LEMERY Fax No.: (077) 674-0574 Dolores, City of San Fernando, Tel. Nos.: (049) 557-3223; 557-3224
Miranda Bldg., Ilustre Ave., Pampanga
Lemery, Batangas CARMONA Tel. Nos.: (045) 963-3413 to 15 LAGUNA-SAN PEDRO
Tel. Nos.: (043) 409-3467; 984-0206 CBC Bldg., Paseo de Carmona 860-1780/81 No. 365 Brgy. Nueva, National Highway,
Fax No.: (043) 409-3467 Brgy. Maduya, Carmona, Cavite Fax No.: (045) 963-1014 San Pedro City, Laguna
Tel. Nos.: (046) 430-1969/1277 Tel. Nos.: 816-3864; 816-4862
BATANGAS CITY-KUMINTANG ILAYA 430-3568 ILOCOS NORTE-SAN NICOLAS
CBC Bldg., Brgy. Kumintang Ilaya, 475-3941 (Manila line) National Highway, Brgy. 2 San Baltazar, LAGUNA-STA. CRUZ
Batangas City, Batangas Fax No.: (046) 430-1277 San Nicolas, Ilocos Norte A. Regidor St., Sta. Cruz, Laguna
Tel. No.: (043) 702-6823 Tel. Nos.: (077) 600-0994; 600-0995 Tel. Nos.: (049) 501-4977
Fax No.: (043) 702-6826 CAUAYAN CITY Fax No.: (077) 600-0995 501-4107; 501-4085
G/F Prince Christopher Bldg. Fax No.: (049) 501-4107
BATANGAS-ROSARIO Maharlika Highway, Cauayan City, IRIGA CITY
Dr. Gualberto Ave., Brgy. Namunga, Isabela Highway 1, J.P Rizal St., San Roque, LAOAG CITY
Rosario, Batangas Tel. Nos.: (078) 652-1849 Iriga City, Camarines Sur Liberato Abadilla St., Brgy. 17
Tel. Nos.: (043) 312-3748; 312-3776 897-1338; 652-0061 Tel. Nos.: (054) 299-7000; 456-1498 San Francisco, Laoag City
Fax No.: (043) 312-3748 Fax No.: (078) 652-1849 Fax No.: (054) 456-1498 Tel. Nos.: (077) 772-1024/27
771-4688; 771-4417
BATANGAS-SAN JUAN CAVITE-DASMARIÑAS ISABELA-ILAGAN Fax No.: (077) 772-1035
Rizal St. near cor. Gen. Luna St., G/F CBC Bldg., Gen. E. Aguinaldo G/F North Star Mall, Maharlika Highway,
Poblacion, San Juan, Batangas Highway, Dasmariñas, Cavite Brgy. Alibagu, Ilagan, Isabela
Tel. Nos.: (043) 740-0280 Tel. Nos.: (046) 416-5036/39/40 Tel. Nos.: (078) 323-0179; 323-0178
(043) 740-0282 584-40-83 (Manila line) Fax No.: (078) 323-0179
Fax No.: (046) 416-5036

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 129

 CHINA BANK BRANCHES

LEGAZPI CITY PANGASINAN-BAYAMBANG SM CITY DASMARIÑAS TALAVERA

G/F Emma Chan Bldg., CBC Bldg., No. 91, Poblacion Sur, LGF SM City Dasmariñas, Governor’s CBC Bldg., Marcos District,
F. Imperial St., Legazpi City Bayambang, Pangasinan Drive, Pala-pala, Dasmariñas, Cavite Talavera, Nueva Ecija
Tel. Nos.: (052) 480-6048 Tel. Nos.: (075) 632-5776; 632-5775 Tel. Nos.: 046) 424-1134 Tel. Nos.: (044) 940-2620; 940-2621
480-6519; 214-3077 Fax No.: (075) 632-5776 Fax No.: (046) 424-1133 Fax No.: (044) 940-2620
Fax No.: 429-1813 (Direct-Mla line)
PANGASINAN-ROSALES SM CITY LIPA TARLAC
LIPA CITY-TAMBO CBC Bldg., Calle Dewey, G/F (Units 1111-1113) SM City Lipa, Ayala CBC Bldg., Panganiban
Tambo, Lipa City, Batangas Rosales, Pangasinan Highway, Brgy. Maraouy, near cor. F. Tanedo St.,
Tel. Nos.: (043) 757-6331; 757-6332 Tel. Nos.: (075) 633-3852; 633-3853 Lipa City, Batangas Tarlac City, Tarlac
Fax No.: (075) 633-3852 Tel. Nos.: (043) 784-0212; 784-0213 Tel. Nos.: (045) 982-7771 to 75
LUCENA CITY Fax No.: (043) 784-0212 Fax No.: (045) 982-7772
233 Quezon Ave., Lucena City PANGASINAN-URDANETA
Tel. Nos.: (042) 373-2317 EF Square Bldg., MacArthur Highway, SM CITY NAGA TARLAC-BAMBAN
373-3872/80/87 Poblacion, Urdaneta City, Pangasinan SM City Naga, CBD II, National Road, Bgry. Anupul,
660-7861 Tel. Nos.: (075) 632-2637; 632-0541 Brgy. Triangulo, Naga City Bamban, Tarlac
Fax No.: (042) 373-3879 656-2022; 656-2618 Tel. Nos.: (054) 472-1366; 472-1367 Tel. No.: (045) 925-0402
Fax No.: (075) 656-2618 Fax No.: 250-8183 (Manila Line) Fax No.: (045) 925-0402
MABALACAT-DAU
R.D. Policarpio Bldg., MacArthur PASEO DE STA. ROSA SM CITY OLONGAPO TARLAC-CAMILING
Highway, Dau, Mabalacat, Pampanga Unit 3, Paseo 5, Paseo de Sta. Rosa, SM City Olongapo, Magsaysay Dr. Savewise Super Market, Poblacion,
Tel. Nos.: (045) 892-4969; 892-6040 Sta. Rosa City, Laguna cor. Gordon Ave., Brgy. Pag-asa, Camiling, Tarlac
Fax No.: (045) 892-6040 Tel. Nos.: (049) 837-1831 Olongapo City, Zambales Tel. Nos.: (045) 491-6445
502-3016; 502-2859 Tel. Nos.: (047) 602-0039; 602-0040 934-5085; 934-5086
MALOLOS CITY 827-8178 Fax No.: (047) 602-0038 Fax No.: (045) 934-5085
G/F Graceland Mall, BSU Grounds, 420-8042 (Manila line)
MacArthur Highway, Guinhawa, Fax No.: 420-8042 (Manila line) SM CITY PAMPANGA TARLAC-CONCEPCION
Malolos City, Bulacan Unit AX3 102, Bldg. 4, SM City G/F Descanzo Bldg., F. Timbol St.,
Tel. Nos.: (044) 794-5840; 662-2013 QUEZON-CANDELARIA Pampanga, Mexico, Pampanga San Nicolas Poblacion,
Fax No.: (044) 794-5840 Pan Philippine Highway cor. Del Valle Tel. Nos.: 455-0304/0305/0306/0307 Concepcion, Tarlac
St., Poblacion, Candelaria, Quezon Fax No.: (045) 455-0307 Tel. Nos.: (045) 491-2987; 491-3028
MARILAO Tel. Nos.: 797-4298; 797-4299 Fax No.: (045) 491-3113
G/F, SM City Marilao, Km. 21, SM CITY SAN JOSE DEL MONTE
Brgy. Ibayo, Marilao, Bulacan SAN FERNANDO UGF SM City San Jose Del Monte, TARLAC-PANIQUI
Tel. Nos.: (044) 815-8956/8957 CBC Bldg., V. Tiomico St. San Jose Del Monte City, Bulacan Cedasco Bldg., M. H del Pilar St.,
Fax No.: (044) 815-8956 City of San Fernando, Pampanga Tel. Nos.: (044) 913-1562; (Manila Poblacion, Paniqui, Tarlac
Tel. Nos.: (045) 961-3542/49 Line) 985-3067 Tel. Nos.: (045) 491-8465; 491-8464
MARIVELES-FAB 963-5458 to 60 Fax No.: (044) 913-1562 Fax No.: (045) 491-8465
Tamayo’s Bldg., Ave. of the Philippines, 961-5651; 860-1925
Brgy. Malaya, Freeport Area of Bataan 892-3211 SM CITY SAN PABLO TARLAC-SAN RAFAEL
(FAB), Mariveles, Bataan Fax No.: (045) 961-8352 G/F SM City San Pablo CBC Bldg., Brgy. San Rafael,
Tel. Nos.: (047) 633-9569/9699 National Highway, Brgy. San Rafael, Tarlac City, Tarlac
SAN FERNANDO-SINDALAN San Pablo City, Laguna Tel. Nos.: (045) 456-0150; 456-0121
MASBATE Jumbo Jenra Sindalan, Tel. Nos.: (049) 521-0071 to 72 Fax No.: (045) 456-0121
Espinosa Bldg., Zurbito St., Brgy. Sindalan, San Fernando City, Fax No.: (049) 521-0072
Masbate City, Masbate Pampanga THE DISTRICT IMUS
Tel. Nos.: (056) 333-2363/65 Tel. Nos.: (045) 866-5464; 455-0569 SM CITY STA. ROSA G/F The District Imus, Anabu II,
Fax No.: (056) 333-2365 Fax No.: (045) 861-3081 G/F SM City Sta. Rosa, Bo. Tagapo, Imus, Cavite
Sta. Rosa, Laguna Tel. Nos.: (046) 416-1417; 416-4294
MEYCAUAYAN SAN JOSE CITY Tel. Nos.: (049) 534-4640/4813 Fax No.: (046) 416-4212
CBC Bldg., Malhacan Road, Maharlika Highway, Brgy. Malasin, Fax No.: 901-1632 (Manila Line)
Meycauayan, Bulacan San Jose City TRECE MARTIRES
Tel. Nos.: (044) 815-6889; 815-6961 Tel. Nos.: (044) 958-9094; 958-9096 SM CITY TELABASTAGAN G/F Waltermart, Governor’s Drive
815-6958 511-2898 SM City Telabastagan, cor. City Hall Road, Brgy. San Agustin,
Fax No.: (044) 815-6961 Fax No.: (044) 958-9094 San Fernando City, Pampanga Trece Martires City, Cavite
Tel. Nos.: (045) 403-9306 Tel. Nos.: (046) 460-4897; 460-4898
NAGA CITY SAN PABLO CITY Fax No.: (045) 403-9306 460-4899
Centro-Peñafrancia St., Naga City M. Paulino St., San Pablo City Fax No.: (046) 460-4898
Tel. Nos.: (054) 472-1359; 472-1358 Tel. Nos.: (049) 562-5481 to 84 SOLANO
473-7920 Fax No.: (049) 562-5485 National Highway, Brgy. Quirino, TUGUEGARAO CITY
Fax No.: 250-8169 (Manila line) Solano, Nueva Vizcaya A. Bonifacio St., Tuguegarao, Cagayan
SANTIAGO CITY Tel. Nos.: (078) 326-6559/60/61 Tel. Nos.: (078) 844-0175; 844-0831
NUEVA ECIJA-STA. ROSA Navarro Bldg., Maharlika Highway near Fax No.: (078) 326-6561 846-1709
CBC Bldg., Maharlika Highway, cor. Bayaua St., Santiago City, Isabela Fax No.: (078) 844-0836
Poblacion, Sta. Rosa, Nueva Ecija Tel. Nos.: (078) 682-7024 to 26 SORSOGON
Tel. Nos.: (044) 333-6215; 940-1407 Fax No.: (078) 305-2445 CBC Bldg., Ramon Magsaysay Ave., TUGUEGARAO-BALZAIN
Fax No.: (044) 333-6215 Sorsogon City, Sorsogon Balzain Highway, Tuguegarao City,
SM CITY BACOOR Tel. Nos.: (056) 211-1610; 421-5105 Cagayan
OCC. MINDORO-SAN JOSE LGF SM City Bacoor, Tirona Highway Fax No.: (02) 429-1124 – Manila Line Tel. Nos.: (078) 396-2207; 396-2208
Liboro cor. Rizal St., San Jose, cor. Aguinaldo Highway, Fax No.: (078) 396-2207
Occidental Mindoro Bacoor, Cavite SUBIC BAY FREEPORT ZONE
Tel. Nos.: (043) 491-0095 Tel. Nos.: (046) 417-0572/0746 CBC Bldg., Subic Bay Gateway Park, VIGAN CITY
491-0096 417-0623/0645 Rizal Highway, Subic Bay Freeport Zone Burgos St. near cor. Rizal St.,
Fax No.: (043) 491-0095 Fax No.: (046) 417-0583 Tel. Nos.: (047) 252-1568 Vigan City, Ilocos Sur
252-1575; 252-1591 Tel. Nos.: (077) 722-6968, 674-2272
OLONGAPO-DOWNTOWN SM CITY CABANATUAN Fax No.: (047) 252-1575 Fax No.: (077) 722-6948
No. 2 cor. 20th St., UGF SM City Cabanatuan,
East Bajac-Bajac, Olongapo City Maharlika Highway, Brgy. H. TABACO CITY VIRAC
Tel. No.: (047) 610-9826 Concepcion Ziga Ave. cor. Berces St., Gogon, Virac, Catanduanes
Cabanatuan City, Nueva Ecija Tabaco City, Albay Tel. Nos.: (052) 811-4321; 811-4322
PANGASINAN-ALAMINOS CITY Tel. Nos.: (044) 958-1916; 486-5501 Tel. Nos.: (052) 487-7150; 830-4178 Fax No.: (052) 811-4321
Marcos Ave., Brgy. Palamis, Fax No.: 429-1811
Alaminos City, Pangasinan SM CITY CLARK ZAMBALES-BOTOLAN
Tel. Nos.: (075) 551-3859; 654-0286 G/F (Units 172-173) SM City Clark, TAGAYTAY CITY National Highway, Brgy. Batonlapoc
Fax No.: (075) 654-0296 M. Roxas St., CSEZ, Angeles City, Foggy Heights Subdivision, Botolan, Zambales
Pampanga E. Aguinaldo Highway, Tel. Nos.: (047) 811-1322; 811-1372
Tel. Nos.: (045) 499-0252 to 54 Tagaytay City, Cavite Fax No.: (047) 811-1322
Fax No.: (045) 499-0254 Tel. Nos.: (046) 483-0609; 483-0608
Fax No.: (046) 483-0609

130 CHINA BANKING CORPORATION

VISAYAS CEBU-BANILAD CEBU-LAPU LAPU CENTRO CEBU-TALISAY
CBC Bldg., AS Fortuna St., G.Y dela Serna St., Opon, Poblacion, CBC Bldg., 1055 Cebu South National
ANTIQUE-SAN JOSE Banilad, Cebu City Lapu Lapu City, Cebu Road, Bulacao, Talisay City, Cebu
Felrosa Bldg., Gen. Fullon St. Tel. Nos.: (032) 346-5870/81 Tel. Nos.: (032) 231-3247; 493-5078 Tel. Nos.: (032) 272-3342/48
cor. Cerdena St., San Jose, Antique 416-1001 Fax No.: (032) 231-3247 491-8200
Tel. Nos.: (036) 540-7095; 540-7097 Fax No.: (032) 344-0087 Fax No.: (032) 272-3346
Fax No.: (036) 540-7096 CEBU-MAGALLANES (MAIN)
CEBU-BASAK-SAN NICOLAS CBC Bldg., Magallanes DUMAGUETE CITY
BACOLOD-ARANETA N. Bacalso Ave., Basak, cor. Jakosalem Sts., Cebu City CBC Bldg., Real St.,
CBC Bldg., Araneta cor. San Nicolas, Cebu City, Cebu Tel. Nos.: (032) 255-0022/23/25/28 Dumaguete City, Negros Oriental
San Sebastian Sts., Bacolod City Tel. Nos.: (032) 340-8113; 414-4742 253-0348; 255-6093 Tel. Nos.: (035) 422-8058; 225-5442
Tel. Nos.: (034) 435-0247/48 Fax No.: (032) 414-4742 255-0266; 412-1877 225-5441; 225-4284
433-3818/19 Fax No.: (032) 255-0026 225-5460
433-7152/53; 709-1618 CEBU-BOGO Fax No.: (035) 422-5442
Fax No.: (034) 435-0247 Sim Bldg., P. Rodriguez St., CEBU-MANDAUE
Bogo City, Cebu SV Cabahug Bldg. NEGROS OCC.-KABANKALAN
BACOLOD-LACSON Tel. Nos.: (032) 434-7119; 266-3251 155-B SB Cabahug St., Brgy. Centro, CBC Bldg., National Highway,
Soliman Bldg., Lacson cor. Fax No.: (032) 434-7119 Mandaue City, Cebu Brgy. 1, Kabankalan, Negros Occidental
Luzurriaga Sts., Bacolod City, Tel. Nos.: (032) 346-5636/37 Tel. Nos.: (034) 471-3349; 471-3364
Negros Occidental CEBU BUSINESS CENTER 346-2083; 344-4335 471-3738
Tel. Nos.: (034) 474-2451; 474-2452 CBC Bldg., Samar Loop cor. 422-8188 Fax No.: (034) 471-3349
Panay Road, Cebu Business Park, Fax No.: (032) 346-2083
BACOLOD-LIBERTAD Cebu City ILOILO-IZNART
Libertad St., Bacolod City, Tel. Nos.: (032) 239-3760 CEBU-MANDAUE-CABANCALAN G/F John A. Tan Bldg.,
Negros Occidental to 239-3764 M.L. Quezon St., Cabancalan, Iznart St., Iloilo City
Tel. Nos.: (034) 435-1645; 435-1646 Fax No.: (032) 238-1438 Mandaue City, Cebu Tel. Nos.: (033) 337-9477
Fax No.: (034) 435-1645 Tel. Nos.: (032) 421-1364; 505-9908 509-9868; 300-0644
CEBU-CARCAR Fax No.: (032) 421-1364 Fax No.: (033) 337-9566
BACOLOD-MANDALAGAN Dr. Jose Rizal St., Poblacion I,
Lacson St., Mandalagan, Carcar, Cebu CEBU-MANDAUE-J CENTRE MALL ILOILO-JARO
Bacolod City, Negros Occidental Tel. Nos.: (032)487-8103; 487-8209 LGF J Centre Mall, A.S Fortuna Ave., CBC Bldg., E. Lopez St.
Tel. Nos.: (034) 441-0500; 441-0388 266-7093 Mandaue City, Cebu Jaro, Iloilo City, Iloilo
709-0067 Fax No.: (032) 487-8103 Tel. Nos.: (032) 520-2898; 421-1567 Tel. Nos.: (033) 320-3738; 320-3791
Fax No.: (034) 709-0067 Fax No.: (032) 520-2898 Fax No.: (033) 503-2955
CEBU-CONSOLACION
BACOLOD-NORTH DRIVE G/F SM City Consolacion, CEBU-MANDAUE NORTH ROAD ILOILO-MABINI
Anesa Bldg., B.S. Aquino Drive, Brgy. Lamac, Consolacion, Cebu G/F Units G1-G3, Basak Commercial A. Mabini St., Iloilo City
Bacolod City Tel. Nos.: (032) 260-0024; 260-0025 Bldg. (Kel-2) Basak, Mandaue City Tel. Nos.: (033) 335-0295; 335-0370
Tel. Nos.: (034) 435-0063 to 65 Fax No.: (032) 423-9253 Tel. Nos.: (032) 345-8861; 345-8862 509-0599
709-1658 420-6767 Fax No.: (033) 335-0370
Fax No.: (034) 435-0065 CEBU-ESCARIO Fax No.: (032) 420-6767
Units 3 & 5 Escario Central, ILOILO-MANDURRIAO
BAYBAY Escario Road, Cebu City, City CEBU-MANDAUE NRA Benigno Aquino Ave., Brgy. San Rafael,
Magsaysay Ave., Baybay, Leyte Tel. Nos.: (032) 416-5860; 520-9229 G/F Bai Hotel Cebu, Ouano Ave. Mandurriao, Iloilo City, Iloilo
Tel. Nos.: (053) 335-2899/98 Fax No.: (032) 520-9229 cor. Seno Blvd., North Reclamation Tel. Nos.: (033) 333-3988; 333-4088
563-9228 Area, Mandaue City, Cebu Fax No.: (033) 501-6078
Fax No.: (053) 563-9228 CEBU-F. RAMOS Tel. No.: (032) 272-6985
F. Ramos St., Cebu City ILOILO-RIZAL
BORONGAN Tel. Nos.: (032) 253-9463; 254-4867 CEBU-MINGLANILLA CBC Bldg., Rizal cor. Gomez Sts.,
Balud II, Poblacion, Borongan, 412-5858 Unit 9, Plaza Margarita Lipata, Brgy. Ortiz, Iloilo City
Eastern Samar Fax No.: (032) 253-9461 Minglanilla, Cebu Tel. Nos.: (033) 336-0947; 338-2136
Tel. Nos.: (055) 560-9948; 560-9938 Tel. Nos.: (032) 239-7234; 490-6025 509-8838
261-5888 CEBU-GORORDO Fax No.: (032) 239-7235 Fax No.: (033) 338-2144
Fax No.: (055) 560 9938 No 424. Gorordo Ave., Bo. Camputhaw,
Lahug District, Cebu City, Cebu CEBU-NAGA KALIBO
CALBAYOG CITY Tel. Nos.: (032) 414-0509; 239-8654 Leah’s Square, National South Highway, Waldolf Garcia Bldg.,
Cajurao cor. Gomez Sts., Balud, Fax No.: (032) 239-8654 East Poblacion, Naga City, Cebu Osmeña Ave., Kalibo, Aklan
Calbayog Dist., Calbayog City, Samar Tel. Nos.: (032) 238-7623; 489-8218 Tel. Nos.: (036) 500-8088; 500-8188
Tel. Nos.: (055) 209-1358; 533-8842 CEBU-GUADALUPE Fax No.: (032) 489-8218 268-2988
Fax No.: (055) 533-8842 CBC Bldg., M. Velez St., Fax No.: (036) 500-8188
cor. V. Rama Ave., Guadalupe, Cebu City CEBU-SM CITY
CATARMAN Tel. Nos.: (032) 254-7964; 254-8495 Upper G/F, SM City Cebu, Juan Luna MAASIN CITY
Cor. Rizal & Quirino Sts., 254-1916 cor. A. Soriano Ave., Cebu City G/F SJC Bldg., Tomas Oppus St.,
Jose P. Rizal St., Catarman, Fax No.: (032) 032-416-5988 Tel. Nos.: (032) 232-0754/55 Brgy. Tunga-Tunga, Maasin City,
Northern Samar 231-9140; 412-9699 Southern Leyte
Tel. Nos.: (055) 251-8802/8821 CEBU-IT PARK Fax No.: (032) 232-1448 Tel. Nos.: (053) 381-2287; 381-2288
500-9921 G/F The Link, Cebu IT Park, 570-8488
Fax No.: (055) 500-9921 Apas, Cebu City, Cebu CEBU-SM SEASIDE CITY Fax No.: (053) 570-8488
Tel. Nos.: (032) 266-2559; 262-0982 LGF SM Seaside City Cebu,
CATBALOGAN Fax No.: (032) 266-2559 South Road Properties, MARIVELES-FAB
CBC Bldg., Del Rosario St. 6000 Cebu City, Cebu Tamayo’s Bldg., Ave. of the Philippines,
cor. Taft Ave., Catbalogan City, Samar CEBU-LAHUG Tel. Nos.: (032) 262-1772 Brgy. Malaya, Freeport Area of Bataan
Tel. Nos.: (055) 251-2897/98 JY Square Mall, No. 1 Salinas Dr., Fax No.: (032) 262-1772 (FAB), Mariveles, Bataan
543-8121 Lahug, Cebu City Tel. Nos.: (047) 633-9569; 633-9699
Fax No.: (055) 543-8279 Tel. Nos.: (032) 417-2122; 233-0977 CEBU-SUBANGDAKU
234-2062 G/F A.D. Gothong I.T. Center, NEGROS OCC.-SAN CARLOS
CEBU-AYALA Fax No.: (032) 234-2062 Subangdaku, Mandaue City, Cebu Rizal cor. Carmona Sts.,
Unit 101 G/F Insular Life Cebu Business Tel. Nos.: (032) 344-6561; 422-3664 San Carlos, Negros Occidental
Center, Mindanao Ave. cor. Biliran Road, CEBU-LAPU LAPU PUSOK 344-6621 Tel. Nos.: (034) 312-5818; 312-5819
Cebu Business Park, Cebu City G/F Goldberry Suites, President Quezon Fax No.: (032) 344-6621 729-3276
Tel. Nos.: (032) 262-1839; 260-6524 National Highway, Pusok, Lapu-Lapu Fax No.: (034) 729-3276
Fax No.: (032) 260-6524 City CEBU-TALAMBAN
Tel. Nos.: (032) 340-2098; 494-0631 Unit UG-7 Gaisano Grand Mall, ORMOC CITY
CEBU-BANAWA 340-2099 Brgy. Talamban, Cebu City CBC Bldg., Real cor. Lopez Jaena Sts.,
G/F The J Block, Duterte St., Fax No.: (032) 340-2098/ 494-0631 Tel. Nos.: (032) 236-8944; 418-0796 Ormoc City, Leyte
Banawa, Guadalupe, Cebu City, Cebu Fax No.: (032) 236-8944 Tel. Nos.: (053) 255-3651 to 53
Tel. Nos.: (032) 340-9561; 416-3827 Fax No.: (053) 561-8348
Fax No.: (032) 416-3827

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 131

 CHINA BANK BRANCHES

PUERTO PRINCESA CITY CDO-GAISANO CITY MALL DAVAO-SM LANANG OZAMIZ CITY
Malvar St. near cor. Valencia St., G/F Gaisano City Mall, C. M. Recto cor. G/F SM Lanang Premier, Gomez cor. Kaamino Sts.,
Puerto Princesa City, Palawan Corrales Extension, Cagayan de Oro City J. P. Laurel Ave., Davao City Ozamiz City
Tel. Nos.: (048) 434-9891-93 Tel. Nos.: (08822) 745-877; 745-880 Tel. Nos.: (082) 285-1064; 285-1053 Tel. Nos.: (088) 521-2658 to 60
Fax No.: (048) 434-9892 (088) 880-1051; 880-1052 Fax No.: (082) 285-1520 Fax No.: (088) 521-2659
Fax No.: (08822) 745-880
ROXAS CITY DAVAO-TAGUM PAGADIAN CITY
1063 Roxas Ave. cor. Bayot Drive, COTABATO CITY 153 Pioneer Ave., Marasigan Bldg.,
Roxas City, Capiz No. 76 S.K. Pendatun Ave., Tagum, Davao del Norte F.S. Pajares Ave., Pagadian City
Tel. Nos.: (036) 621-3203; 621-1780 Cotabato City, Maguindanao Tel. Nos.: (084) 655-6307/08 Tel. Nos.: (062) 215-2781/82
522-5775 Tel. Nos.: (064) 421-4685/4653 400-2289/90 925-1116
Fax No.: (036) 621-3203 Fax No.: (064) 421-4686 Fax No.: (084) 400-2289 Fax No.: (062) 214-3877

SILAY CITY DAVAO-BAJADA DAVAO-TORIL SURIGAO CITY

Rizal St., Silay City, Negros Occidental B.I. Zone Bldg., J.P. Laurel Ave., MacArthur Highway cor. St. Peter St., CBC Bldg., Amat St.,
Tel. Nos.: (034) 714-6400; 495-5452 Bajada, Davao City Crossing Bayabas, Toril, Davao City Barrio Washington, Surigao City,
495-0480 Tel. Nos.: (082) 221-0184; 221-0319 Tel. Nos.: (082) 303-3068; 295-2334 Surigao del Norte
Fax No.: (034) 495-0480 Fax No.: (082) 221-0568 295-2332 Tel. Nos.: (086) 826-3958, 826-3968
Fax No.: (082) 295-2332 Fax No.: (086) 826-3958
TACLOBAN CITY DAVAO-BUHANGIN
Uytingkoc Bldg., Avenida Veteranos, Buhangin Road, Davao City DIPOLOG CITY VALENCIA
Tacloban City, Leyte Tel. Nos.: (082) 300-8335; 227-9764 CBC Bldg., Gen Luna cor. A. Mabini St., Valencia, Bukidnon
Tel. Nos.: (053) 325-7706 to 08 221-5970 Gonzales Sts., Dipolog City Tel. Nos.: (088) 828-2048/49
523-7700/7800 Fax No.: (082) 221-5970 Tel. Nos.: (065) 212-6768 to 69 222-2356; 222-2417
Fax No.: (053) 523-7700 908-2008 Fax No.: (088) 828-2048
DAVAO CITY-CALINAN Fax No.: (065) 212-6769
TAGBILARAN CITY Davao-Bukidnon National Highway – ZAMBOANGA CITY
G/F Melrose Bldg., Carlos P. Garcia Ave., Riverside, Calinan Proper, Davao City GEN. SANTOS CITY CBC Bldg., Gov. Lim Ave.
Tagbilaran City, Bohol Tel. Nos.: (082) 224 – 9229 CBC Bldg., I. Santiago Blvd., cor. Nuñez St., Zamboanga City
Tel. Nos.: (038) 501-0688; 501-0677 (082) 224-9135 Gen. Santos City Tel. Nos.: (062) 991-2978/79
411-2484 Tel. Nos.: (083) 553-1618; 552-8288 991-1266
Fax No.: (038) 501-0677 DAVAO-INSULAR VILLAGE (formerly Fax No.: (083) 553-2300 Fax No.: (062) 991-1266
Davao-Lanang )
MINDANAO Insular Village I, Km. 8, Lanang, GEN. SANTOS CITY-DADIANGAS ZAMBOANGA-GUIWAN
Davao City M. Roxas Ave. cor. Lapu-Lapu St., G/F Yang’s Tower, M.C. Lobregat National
BUTUAN CITY Tel. Nos.: (082) 300-1892 Brgy. Dadiangas East, Gen. Santos City, Highway, Guiwan, Zamboanga City
CBC Bldg., J.C. Aquino Ave. 234-7166;234-7165 South Cotabato Tel. Nos.: (062) 984-1751; 984-1754
Butuan City Fax No.: (082) 300-1892 Tel. Nos.: (083) 552-8576 Fax No.: (062) 984-1751
Tel. Nos.: (085) 341-5159; 341-7445 Fax No.: (083) 552-8290
(085) 815-3454/55 DAVAO-MA-A ZAMBOANGA-SAN JOSE GUSU
225-2081 G/F Lapeña Bldg., MacArthur Highway, ILIGAN CITY Yubenco Supermarket, San Jose Gusu,
Fax No.: (085) 815-3455 Matina, Davao City Lai Bldg., Quezon Ave. Extension Zamboanga City, Zamboanga del Sur
Tel. Nos.: (082) 295-0472; 295-1072 Pala-o, Iligan City Tel. Nos.: (062) 995-6154; 955-6155
SM CDO DOWNTOWN PREMIER Tel. Nos.: (063) 221-5477/79 Fax No.: (062) 955-6154
(formerly Cagayan de Oro-Borja ) DAVAO-MATINA 492-3009; 221-3009
G/F SM CDO Downtown Premier, Km. 4 MacArthur Highway, Fax No.: (063) 492-3010
Cagayan de Oro City Matina, Davao City SOON-TO-OPEN
Tel. Nos.: (088) 857-2212; 857-3742 Tel. Nos.: (082) 297-4288; 297-4455 ILIGAN CITY-SOLANA DISTRICT
(088) 859-1063; 859-1054 297-5880/81 Andres Bonifacio Highway, SOLER-ARRANQUE
Fax No.: (088) 857-2212 Fax No.: (082) 297-5880 Brgy. San Miguel, Iligan City, #715 T. Alonzo St. near cor.
Lanao del Norte CM Recto Ave. (Arranque Market Area),
CAGAYAN DE ORO-CARMEN DAVAO-MONTEVERDE Tel. Nos.: (063) 224-7664; 224-7665 Sta. Cruz, Manila
G/F GT Realty Bldg., Max Suniel St. Doors 1 & 2, Sunbright Bldg.,
cor. Yakal St., Carmen, Monteverde Ave., Brgy. 27-C, KIDAPAWAN CITY PASIG-ROSARIO
Cagayan de Oro City Poblacion District, Davao City G/F EVA Bldg., Quezon Blvd. Ortigas Ave. Ext., Rosario, Pasig City
Tel. Nos.: (08822) 723-091; 724-372 Tel. Nos.: (082) 225-3680; 225-3679 cor. Tomas Claudio St.,
(088) 858-3902/03 Fax No.: (082) 225-3680 National Highway, Kidapawan City NOVALICHES-BAGBAG
Fax Nos.: (088) 858-3903 Tel. Nos.: (064) 278-3509; 278-3510 No. 658 Quirino Highway, Bagbag,
(08822) 724-372 DAVAO-PANABO CITY Fax No.: (064) 278-3509 Novaliches, Quezon City
PJ Realty, Barangay New Pandan,
CAGAYAN DE ORO-DIVISORIA Panabo City, Davao del Norte KORONADAL CITY KANLAON
RN Abejuela St., South Divisoria, Tel. Nos.: (084) 628-4057; 628-4065 Gen. Santos Drive cor. Aquino St., Kanlaon near cor. N. Roxas Sts.,
Cagayan de Oro City Fax No.: (084) 628-4053 Koronadal City, South Cotabato Quezon City
Tel. Nos.: (08822) 722-641 Tel. Nos.: (083) 228-7838; 228-7839
(088) 857-5759 DAVAO-RECTO 520-1788
Fax No.: (088) 857-4200 CBC Bldg., C.M. Recto Ave. Fax No.: (083) 228-7839
cor. J. Rizal St., Davao City
CAGAYAN DE ORO-LAPASAN Tel. Nos.: (082) 221-4481/7028 MALAYBALAY CITY
CBC Bldg., Claro M. Recto Ave., 221-6021/6921/4163 Bethelda Bldg., Sayre Highway,
Lapasan, Cagayan de Oro City 226-3851; 226-2103 Malaybalay City, Bukidnon
Tel. Nos.: (08822) 722-240; 724-540 Fax No.: (082) 221-8814 Tel. No.: (088) 813-3372
726-242 Fax No.: 813-3373
(088) 856-132 5/1326 DAVAO-STA. ANA
Fax No.: (088) 856-1325/1326 R. Magsaysay Ave. cor. F. Bangoy St., MIDSAYAP
Sta. Ana District, Davao City CBC Bldg., Quezon Ave.,
CAGAYAN DE ORO-PUERTO Tel. Nos.: (082) 227-9501/51 Poblacion 2, Midsayap, Cotabato
Luis A.S. Yap Bldg., Zone 6, 227-9601; 221-1054/55 Tel. No.: (064) 229-9700
Brgy. Puerto, Cagayan de Oro City, 221-6672 Fax No.: (064) 229-9750
Misamis Oriental Fax No.: (082) 226-4902
Tel. Nos.: (088) 880-7183; 880-7185
Fax No.: (088) 880-7185

132 CHINA BANKING CORPORATION

CHINA BANK SAVINGS BRANCHES

METRO MANILA AND RIZAL BACLARAN ESPAÑA-SUNMALL LAS PIÑAS-ALMANZA UNO

3751 Quirino Ave., cor. Sta. Rita St. G/F, Sun Mall Residences Alabang - Zapote Road
BUENDIA Baclaran, Parañaque City España Boulevard cor. Mayon St. Almanza Uno, Las Piñas City
CBS Bldg. Tel. Nos.: 975-2172; 816-1956 Brgy. Sta. Teresita, Quezon City Tel. Nos.: (02) 551-4724; 966-9001
314 Sen. Gil Puyat Ave., Makati City Mobile No.:0917 703-2503 Tel. Nos.: (02) 244-2477; 987-4962 Mobile No.:0917 817-3526
Tel. No.: (02) 812-9359 Mobile No: 0917 810-3097
Trunkline: (02) 884-7600 locals 3900 BANAWE MAKATI-CHINO ROCES
to 3902 and 7645 247-249 Banawe St. FELIX HUERTAS-JT CENTRALE Graceland Plaza
Sta. Mesa Heights, Brgy. Lourdes #1686 V. Fugoso St. 2176 Chino Roces Ave.
ACACIA ESTATES-SAVEMORE Quezon City cor. Felix Huertas Sta. Cruz, Manila Pio del Pilar, Makati City
Acacia Taguig Town Center Tel. Nos.: (02) 412-6249; 256-4941 Tel. Nos.: (02) 247-3177; 796-2421 Tel. Nos.: (02) 831-0477; 964-1322
Acacia Estates, Ususan, Taguig City Mobile No: 0917 553-8446 831-0486
Tel. Nos.: (02) 633-5472; 633-3245 BANGKAL
Amara Bldg. FILINVEST CORPORATE CITY MAKATI-JP RIZAL
ADRIATICO-HYPERMARKET 1661 Evangelista St. BC Group Bldg., East Asia Drive 882 J.P. Rizal St.
M.H. Del Pilar, Adriatico Bangkal, Makati City near cor. Commerce Ave. Poblacion, Makati City
Malate, Manila Tel. Nos.: (02) 621-3459; 621-3461 Filinvest Corporate City Tel. Nos.: (02) 890-1026; 890-1027
Tel. No.: (02) 525-6286 Alabang, Muntinlupa City Mobile No.:0917 510-5919
Mobile No.:0917-5807061 BINONDO-JUAN LUNA Tel. No.: (02) 511-1152
694-696 Juan Luna St. Fax No: (02) 511-1145 MALABON-SAVEMORE
ALABANG HILLS Binondo, Manila Francis Market, Governor Pascual
Alabang Commercial Citi Arcade Tel. Nos.: (02) 254-7337; 964-1327 FTI– TAGUIG HYPERMARKET cor. M.H. Del Pilar St.,Tinajeros
Don Jesus Boulevard Mobile No.:0917 510-6072 DBP Ave., Food Terminal Incorporated Malabon City
Alabang, Muntinlupa City Western Bicutan, Taguig City Tel. Nos.: (02) 931-6326; 931- 6323
Tel. Nos.: (02) 828-4854 BLUMENTRITT Tel. Nos.: (02) 834-0408; 507-4090
403-2801 1677 Blumentritt St. MANDALUYONG
near Oroquieta St., Sta. Cruz, Manila G. ARANETA AVE. Paterno’s Bldg.
AMANG RODRIGUEZ-SAVEMORE Tel. No.: (02) 968-4759 195 G. Araneta Ave. 572 New Panaderos St.
Amang Rodriguez Ave. Mobile No.:0917 827-3205 Quezon City Brgy.Pag-asa, Mandaluyong City
cor. Evangelista St. Tel No.: (02) 978-6448 Tel. Nos.: (02) 238-3745, 238-3744
Santolan, Pasig City BONI AVE. Mobile No.: 0917-8287829
Tel. No.: (02) 654-0564 Raymond Tower Boni MANDALUYONG-SHAW
Mobile No.:0917-5105962 615 Boni Ave. Plainview GIL PUYAT-BAUTISTA BOULEVARD
Mandaluyong City Lot 25 Blk 74 Bautista St. 500 Shaw Tower, 500 Shaw Boulevard
AMORANTO AVE. cor. Sen. Gil Puyat Ave., Makati Mandaluyong City
Unit 101 R Place Bldg. COMMONWEALTH AVE. Tel. No.: (02) 838-2312 Tel. Nos.: (02) 941-9412; 941 -9231
255 N.S Amoranto Sr. Ave. JocFer Bldg.
Quezon City Commonwealth Ave. GREENHILLS-ORTIGAS AVE. MANILA-STA.ANA SAVEMORE
Tel. Nos.: (02) 966-9075; 251-6592 Brgy. Holy Spirit, Quezon City G/F, VAG Bldg., Ortigas Ave. Savemore Pedro Gil St.
Mobile. No.0917 805-6964 Tel. Nos.: (02) 957-0559; 282-5946 Greenhills, San Juan City Sta. Ana, Manila
282-5975; 988-9555 Tel. Nos.: (02) 721-0105; 724-752 Tel. Nos.: (02) 523-8606; 987-4975
ANGONO loc. 4857 523-8574
Manila East Road cor. Don Benito St. Mobile No.:0917 521-3469 GREENHILLS-WILSON
Brgy. San Roque, Angono Rizal 219 Wilson St., Greenhills MARIKINA
Tel. No.: (02) 651-1782 CUBAO San Juan City 33 Bayan-Bayanan Ave.
Fax No: (02) 651-1779 Fernandina 88 Condominium Tel .Nos.: (02) 748-7625; 584-5946 Brgy. Concepcion 1, Marikina City
222 P. Tuazon Boulevard Tel. Nos.: (02) 477-2445; 477-2443
ANONAS-SAVEMORE Araneta Center, Cubao, Quezon City KALOOKAN
Maamo St., Road Lot 30 Tel. Nos.: (02) 913-5209; 913-4903 Augusto Bldg., Rizal Ave. MARIKINA-GIL FERNANDO AVE.
V. Luna St. and Anonas Extension Grace Park, Kalookan City CTP Bldg.
Sikatuna, Quezon City DEL MONTE Tel. Nos.: (02) 365-7593; 363-2752 Gil Fernando Ave., Marikina City
Tel. No.: (02) 351-4928 392 Del Monte Ave. Mobile No.:0917 572 9118 Tel. Nos.: (02) 681-2810; 645-8169
Mobile No.:0917 863-6157 Brgy. Sienna, Quezon City
Tel. No.: (02) 741-2447 KALOOKAN-MABINI McKINLEY HILL
ANTIPOLO Fax No.: 741-8285 AJ Bldg. Commerce & Industry Plaza
EMS Bldg. , M.L. Quezon 353 A. Mabini St., Kalookan City Upper Basement
cor. F. Dimailig St., Brgy. San Roque DIVISORIA Tel.Nos.: (02) 961-2628; 709-3435 McKinley Town Center
Antipolo City, Rizal Bank Space Unit U01 Fort Bonifacio ,Taguig City
Tel. No.: (02) 697-1066 Dragon 8 Shopping Center KATIPUNAN AVE. Tel. Nos.: (02) 586-8176
Fax No.: (02) 697-0224 3/Flr., C.M Recto Avenue One Burgundy Condominium
cor. Dagupan St., Divisoria, Manila Katipunan Ave., Loyola Heights MUÑOZ JACKMAN
ARANETA CENTER C.O.D.- Tel. Nos.: (02) 616-1146; 247-3300 Quezon City Upper Ground Floor, Jackman Building
SAVEMORE 247-3299 Tel. Nos.: (02) 931-1123; 211-7882 Jackman Plaza, EDSA – Muñoz
LG Savemore Market Mobile No.:0917 317-5106 Fax No.: (02) 288-4360 Quezon City
Gen. Romulo St., Araneta Center Mobile No.:0917 628-3318 Tel. Nos.: (02) 442-6282; 442-4829
Cubao, Quezon City E. RODRIGUEZ SR.-HEMADY Mobile No.:0917 863-6069
Tel. No.: (02) 921-3149 G/F, Hemady Square, E. Rodriguez LAGRO
Mobile No.:0917 809-9670 Ave. cor. Doña Hemady St. G/F, Bonaza Bldg. NEPA-Q MART-SAVEMORE
New Manila, Quezon City Quirino Highway, Greater Lagro G/F, 770 Saint Rose Bldg.
AYALA AVE. Tel. Nos.: (02) 987-4966; 531-9676 Novaliches, Quezon City EDSA and K-G St.
VGP Center Mobile No.:0917 808-5214 Tel. Nos.: (02) 936-4988; 461-7214 West Kamias, Quezon City
6772 Ayala Ave., Makati City Tel. Nos.: (02) 351-4883; 351-4884
Tel. Nos.: (02) 988-9555
loc. 8101-8104

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 133

 CHINA BANK SAVINGS BRANCHES

NINOY AQUINO AVE. PASIG-PADRE BURGOS SOUTH TRIANGLE NORTH LUZON

Skyfreight Bldg., 114 Padre Burgos St. Sunnymede IT Center
G/F Ninoy Aquino Ave. Kapasigan, Pasig City Ground Floor, Quezon Avenue ANGELES-RIZAL
cor. Pascor Drive, Parañaque City Tel. Nos.: (02) 650-3356; 650-3354 South Triangle, San Juan City 639 Rizal St., Angeles City
Tel. Nos.: (02) 843-2447; 239-0574 Mobile No.:0917 574-7874 Tel. No.: (02) 959-4515 Tel. Nos.: (045) 458-0297; 458-0298
884-7600 loc 4833
NOVA PLAZA MALL-SAVEMORE PASO DE BLAS STA. MESA Fax No.: (045) 888-4971
Novaliches Plaza Mall Andoks Bldg., 629 Gen. Luis St. 4128 Ramon Magsaysay Boulevard
Quirino Highway cor. Ramirez St. Malinta Interchange – NLEX Sta. Mesa Manila ANGELES-SAN JOSE
Novaliches Proper, Quezon City Paso de Blas, Valenzuela City Tel. Nos.: (02) 507-6515; 252-3289 Sto. Rosario St.
Tel. Nos.: (02) 983-1512; 983-1511 Tel.Nos.: (02) 984-8258 ; 443-5069 252-3286 San Jose, Angeles City
Mobile No.:0917 835-3352 Tel. Nos.: (045) 409-0234; 887-6433
ORTIGAS-CITRA PATEROS (02) 988-9555 loc. 4785
Unit B1, OMM Citra Bldg. 500 Elisco Road TAFT MASAGANA-SAVEMORE
San Miguel Ave. Ortigas Center, Sto. Rosario, Pateros City Parkview Plaza, Trida Bldg. ARAYAT
Pasig City Tel. No.: (02) 641-9556 Taft Ave. cor. T.M. Kalaw St. Cacutud, Arayat, Pampanga
Tel. Nos.: (02) 637-9778; 637-9824 Ermita, Manila Tel. Nos.: (045) 409-9559; 885-2390
637-2018 PATEROS-ALMEDA Tel. Nos.: (02) 554-0617; 554-0697
120 M. Almeda St. BAGUIO-SESSION
ORTIGAS CENTER Pateros City TANDANG SORA B 108 Lopez Bldg., Session Road
Hanston Square , San Miguel Ave. Tel. Nos.: (02) 641-6768; 641-6760 Cecile Ville Bldg. III cor. Assumption Road, Baguio City
Ortigas Center, Pasig City 670 Tandang Sora Ave. Tel. Nos.: (074) 446-3993; 446-3994
Tel. Nos.: (02) 654-1912; 477-3439 PEDRO GIL cor. General Ave., Tandang Sora Mobile No.:0917 868-3506
Mobile No.:0917 807-8394 LKE Bldg. Quezon City
Pedro Gil St. cor. Mobile No.:0917 801-7585 BALAGTAS
PARAÑAQUE-BETTER LIVING Pasaje Rosario, Paco, Manila Ultra Mega Supermarket
90 Doña Soledad Ave. Tel. Nos.: (02) 354-3117; 521-4056 TAYTAY MacArthur Highway
Better Living Subdivision C. Gonzaga Bldg. II Burol 1st Balagtas, Bulacan
Bicutan, Parañaque City PLAZA STA. CRUZ Manila East Road, Taytay, Rizal Tel.Nos. (044) 693-1849
Tel. Nos.: (02) 831 -8507 MBI Bldg. Tel. No.: (02) 623-6113 (02) 884-7600 loc. 4316
Plaza Sta. Cruz, Sta. Cruz, Manila Mobile No.:0917 578-6978
PARAÑAQUE-BF HOMES Tel. No.: (02) 734-0534 BALANGA-D.M. BANZON
284 Aguirre Ave. TAYUMAN D.M. Banzon St.
B.F. Homes, Parañaque City QUEZON AVE.-PALIGSAHAN 1925-1929 Rizal Ave. Balanga City, Bataan
Tel. Nos.: (02) 553-5412; 553-5414 1184-A Ben-Lor Bldg. near cor. Tayuman St. Tel. Nos.: (047) 237-3667; 237-3666
Mobile No.:0917 510-5911 Brgy. Paligsahan, Quezon City Sta. Cruz, Manila
Tel. Nos.: (02) 376-4548; 376-4546 Tel. Nos.: (02) 230-3091; 247-0683 BALIBAGO
PARAÑAQUE-JAKA PLAZA 586-1618 JEV Bldg., MacArthur Highway
Jaka Plaza Center QUEZON AVE. Balibago, Angeles City
Dr. A. Santos Ave. (Sucat Road) GJ Bldg., 385 Quezon Ave. TIMOG Tel. Nos.: (045) 892-3325; 332-1030
Brgy. San Isidro, Parañaque City West Triangle, Quezon City Jenkinsen Tower Condominium
Tel. No.: (02) 820-6093 Tel. Nos.: (02) 332-2639; 332-2638 80 Timog Ave., Quezon City BALIUAG
Fax No.: (02) 820-6091 Mobile No.:0917 538-2423 Tel. Nos.: (02) 371-8303; 371-8304 Mariano Ponce Bldg.
371-8305 Plaza Naning, Baliuag, Bulacan
PARAÑAQUE-LA HUERTA QUIAPO-ECHAGUE Tel. Nos.: (044) 766-2014; 673-1338
1070 Quirino Ave. Carlos Palanca cor. P. Gomez St. TWO E-COM (02) 884-7600 loc. 4312
La Huerta, Parañaque City Echague, Quiapo, Manila Two E-Com Center Tower B
Tel.Nos.: (02) 893-1226; 893-1227 Tel. Nos.: (02) 959-4450 Ocean Drive cor. Bayshore Drive CABANATUAN-BAYAN
Mall of Asia Complex, Pasay City Duran Bldg.
PARAÑAQUE-MOONWALK QUIAPO-QUEZON BOULEVARD Tel. Nos.: (02) 802-3068; 802-5583 Burgos Ave., Cabanatuan City
Kassel Residence 416 Quezon Boulevard 587-4753 Tel. Nos.: (044) 600-2888; 463-0441
E. Rodriguez Ave. Quiapo, Manila Mobile No.:0917 506-8303 (02) 884-7600 loc. 432
Moonwalk, Parañaque City Tel. Nos.: (02) 247-3297; 247-3298
Tel. Nos.: (02) 664-1923, 957-2339 UN AVE. DAGUPAN
Mobile No.: 0917-621-8321 RADA 552 United Nations Ave. Lyceum-North Western University
HRC Center, 104 Rada St. Ermita, Manila Ground Floor, Tapuac District
PASAY-LIBERTAD Legaspi Village, Makati City Tel. Nos.: (02) 400-5468; 400-5467 Dagupan City
533 Cementina St. Tel. Nos.: (02) 810-9369; 818-2368 Tel. Nos.: (075) 523-3637
Libertad, Pasay City 812-2577 VALENZUELA-MARULAS (02) 988-9555 loc. 4802
Tel. Nos.: 541-1697; 541-1698 Fax No.: (02) 810-9370 92 J Ong Juanco Bldg.
709-3435; 961-2628 MacArthur Highway, Marulas DAU
ROOSEVELT Valenzuela City MacArthur Highway
PASIG-CANIOGAN 342 Roosevelt Ave., Quezon City Tel. Nos.: (02) 291-6542; 291-6541 Dau, Mabalacat, Pampanga
KSN Bldg., C. Raymundo Ave. Tel No.: (02) 957-0796 Tel. Nos.: (045) 892-2216; 892-2215
Caniogan, Pasig City Mobile No.:0917 520-4972 VISAYAS AVE. (02) 988-9555 loc. 4868
Tel. No.: (02) 957-0817 Wilcon City Center Mall,
Mobile No.:0917 520-6966 SAN JUAN CITY Upper Ground Floor DOLORES
Madison Square Visayas Ave. , Quezon City STCI Bldg., MacArthur Highway
PASIG MUTYA 264 N. Domingo St. Tel. Nos.: (02) 990-7717; 990-6544 Brgy. San Agustin
Richcrest Bldg., Brgy. Pasadena, San Juan City City of San Fernando, Pampanga
Caruncho cor. Market Ave. Tel. No.: (02) 507-4147 Tel. No.: (045) 649-3150
San Nicolas, Pasig City Mobile No.:0917 561-5639 Fax No.: (045) 649-3724
Tel. No.: (02) 642-2870
Fax No.: (02) 640-7085

134 CHINA BANKING CORPORATION

GUAGUA ORANI STA. MARIA CALAMBA
Plaza Burgos, Guagua, Pampanga National Road Gen. Luna cor. De Leon St. HK Bldg. II, National Highway
Tel. Nos.: (045) 901-0641; 901-0640 Balut, Orani, Bataan Poblacion, Sta. Maria, Bulacan Brgy. Halang, Calamba City, Laguna
901-0966 Tel. Nos.: (047) 638-1282 Tel. Nos.: (044) 288-2453 Tel.Nos.: (049) 306-0238; 306-0234
(02) 988-9555 loc. 4871 (02) 884-7600 loc. 4319 (02) 988-9555
GUIGUINTO-RIS Fax No.: (044) 641-1150 loc. 4844 and 4845
RIS-5 Industrial Complex PORAC
68 Mercado St. Cangatba, Porac, Pampanga STA. RITA CAVITE CITY
Tabe, Guiguinto, Bulacan Tel. No.: (045) 329-3188 San Vicente, Sta. Rita, Pampanga 485 P. Burgos St., Barangay 34
Tel. No.: (044) 235-7630 Mobile No.:0917 870-3305 Tel. Nos.: (045) 900-0658 Caridad, Cavite City, Cavite
Mobile No.:0917 848-5249 (02) 988-9555 loc. 4791 Tel. Nos.: (046) 417-3102
SAN FERNANDO (02) 988-9555 loc. 4879
LA UNION Khy Trading Bldg. SUBIC Mobile No: 0917 561-5780
A.G. Zambrano Bldg. San Fernando – Gapan Road Baraca,Subic, Zambales
Quezon Ave. City of San Fernando, Pampanga Tel. Nos.: (047) 232-6104; 232-6105 DARAGA-ALBAY
San Fernando City , La Union Tel. Nos.: (045) 961-1415 (02) 988-9555 loc. 4852 N & H Bldg., Rizal St.
Tel. No.: (072) 700-3800 286 – 6811 Brgy. San Roque, Daraga, Albay
Fax No.: (072) 242-0414 (02) 988-9555 loc. 4812 TARLAC-MACARTHUR Tel. Nos.: (052) 483-0706;
Mobile No.:0917 851-5172 MacArthur Highway (02) 988-9555 loc. 4822
LAOAG CITY San Nicolas, Tarlac City
LC Square Bldg. SAN FERNANDO-BAYAN Tel.Nos.: (045) 982-9652 DASMARIÑAS
J.P. Rizal cor. M.V. Farinas Sts. JSL Bldg., Consunji St. (02) 884-7600 loc. 4337 Veluz Plaza Bldg.
Laoag City, Ilocos Norte City of San Fernando, Pampanga Fax No.: (045) 982-9653 Zone 1, Aguinaldo Highway
Tel. No.: (077) 600-1008 Tel.No.: (045) 961-8168; 961-4575 Dasmariñas City, Cavite
600-1009 (02) 884-7600 loc. 4320 TUGUEGARAO Tel. Nos.: (046) 416-0510; 416-0501
Metropolitan Cathedral Parish Rectory (02) 884-7600 loc. 4368
LINGAYEN SAN ILDEFONSO-SAVEMORE Complex Rizal St., Tuguegarao City
The Hub - Lingayen Bldg. Savemore Bldg. Tel.Nos.: (078) 844-0484 IMUS-TANZANG LUMA
Poblacion, Lingayen, Pangasinan Cagayan Valley Road (02) 884-7600 loc.4338 OLMA Bldg.
Mobile No.:0917 848-6063 Poblacion, San Ildefonso, Bulacan Aguinaldo Highway
Tel. Nos.: (044) 797-0742; 797-0974 URDANETA Tanzang Luma, Imus City, Cavite
MACABEBE (02) 988-9555 loc. 4853 MacArthur Highway, Nancayasan Tel. Nos.: (046) 471-4715; 476-0927
Poblacion, Macabebe, Pampanga Urdaneta City, Pangasinan (02) 884- 7600 loc. 4349
Tel. No.: (045) 435-5507 SAN JOSE DEL MONTE Tel. Nos.: (075) 656-2331 Fax No.: (046)471-9413
Giron Bldg. (02) 884-7600 loc. 4372
MALOLOS Gov. Halili Ave., Tungkong Mangga Fax No.: (075) 522-0498 LAGUNA-STA. CRUZ
Canlapan St., Sto. Rosario City of San Jose del Monte, Bulacan E & E Bldg., Pedro Guevarra Ave.
City of Malolos, Bulacan Tel. Nos.: (044) 233-6501 VIGAN Sta. Cruz, Laguna
Tel. No.: (044) 794-2793 (02) 988-9555 loc. 4001 G/F, Plaza Maestro Convention Center Tel. Nos.: (049) 501-3084
Mobile No.:0917 835-4684 Mobile No.:0917 835-4675 Florentino St., Barangay I, Vigan City (02) 988-9555 loc. 4817
Ilocos Sur Mobile No.:0917 561-5715
MALOLOS-CATMON SAN MIGUEL Tel. Nos.: (077) 674-0300
Paseo del Rosario Norberto St., San Miguel, Bulacan 884-7600 local 4359 LEGAZPI CITY
Catmon, City of Malolos, Bulacan Tel. Nos.: (044) 764-0162 F. Imperial St., Barangay Bitano
Tel. No.: (044) 791-2461 (02) 884-7600 loc. 4311 Legazpi City, Albay
Fax No.: (044) 662-7819 Fax No.: (044) 764-0826 SOUTH LUZON Tel. Nos.: (052) 225-5155
Mobile No.:0917-836-0093
MEYCAUAYAN SAN NARCISO BACOOR-MOLINO
Mancon Bldg. Brgy. Libertad, San Narciso, Zambales Avon Bldg., 817 Molino Road LIPA-CM RECTO
MacArthur Highway, Calvario Tel. No.: (047) 913-2245; 913-2288 Molino III, City of Bacoor, Cavite China Bank Savings Bldg.
Meycauayan, Bulacan Tel. Nos.: (046) 431-9907; 235-7542 C.M Recto Ave., Lipa City
Tel. Nos.: (044) 884-0099; 228-2416 SAN RAFAEL (02) 988-9555 loc. 4878 Tel. Nos.: (043) 75-1414; 756-1022
(02) 884-7600 loc. 4326 Cagayan Valley Road Mobile No.:0917 561-5883 (02) 884-7600 loc. 4325
cor. Cruz na Daan, San Rafael, Bulacan
MOUNT CARMEL Tel. Nos.: (044) 815-8915; 913-7629 BACOOR-TALABA LOS BAÑOS-CROSSING
Km. 78 MacArthur Highway (02) 988-9555 loc. 4799 Coastal Road cor. Aguinaldo Highway, Lopez Ave., Batong Malake
Brgy.Saguin, City of San Fernando Brgy.Talaba, City of Bacoor, Cavite Los Baños, Laguna
Pampanga SANTIAGO-VICTORY NORTE Tel. Nos.: (046) 417-5930; 417-5940 Tel. Nos.: (049) 536-2596; 536-0549
Tel.Nos.: (045) 435-6055 JECO Bldg., Maharlika Highway (02) 884-7600 loc. 4369 (02) 884-7600 loc. 4375
(02) 884-7600 loc. 4330 cor. Quezon St., Victory Norte
Santiago City, Isabela BATANGAS-P. BURGOS LUCENA
PLARIDEL Tel Nos.: (078) 305-0260; 305-0252 No. 4 Burgos St., Batangas City Merchan cor. Evangelista St.
0226 Cagayan Valley Road (02) 884-7600 loc. 4374 Tel. Nos.: (043) 723-1510; 723-7652 Lucena City
Banga 1st, Plaridel, Bulacan (02) 884-7600 loc. 4324 Tel. Nos.: (042) 660-6964
Tel. Nos.: (044) 795-0105; 670-1067 STA. ANA (02) 884-7600 loc. 4347
Poblacion, Sta. Ana, Pampanga BIÑAN Fax No.: (042) 710-6964
OLONGAPO Tel.Nos.: (045) 409-0335; 409-9818 Nepa Highway
City View Hotel Bldg. (02) 988-9555 loc. 4793 San Vicente,Biñan City, Laguna NAGA
25 Magsaysay Drive Tel.Nos.: (049) 511-3638 RL Bldg., Panganiban St.
New Asinan, Olongapo City (02) 884-7600 loc. 4327 Lerma, Naga City, Camarines Sur
Tel. No.: (047) 222-1891 Fax No.: (049) 429-4878 Tel.Nos.: (054) 472- 5424;472-1947
Mobile No.:0917 807-8509 (02) 884-7600 loc. 4373

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SAN PABLO-RIZAL AVE. CEBU-LAHUG ROXAS AVE.-CAPIZ CITYMALL

China Bank Savings Bldg. G/F, Skyrise IT Bldg. CityMall-Roxas City
Rizal Ave. cor. A. Fule St. (former Brgy. Apas, Lahug, Cebu City Roxas Ave., Barangay VI
Lopez Jaena) San Pablo City Tel. No.: (032) 236-0810 Roxas City, Capiz
Tel. No.: (049) 562-0697 Tel. No.: (036) 620-0977
(02) 884-7600 loc. 4322 CEBU-MANDAUE
A. Del Rosario Ave. TAGUM-CITYMALL
SAN PEDRO Mantuyong, Mandaue City, Cebu T-01 & T-02 CityMall, Purok Ne Baysa
Gen-Ber Bldg., National Highway Tel. Nos.: (032) 520-2770; 422-8019 Visayan Village, Maharlika Highway
Landayan, San Pedro City, Laguna (02) 884-7600 loc 4310 Tagum City, Davao del Norte
Tel. Nos.: (02) 847-0585; 869-8220 Tel. Nos.: (084) 216-8116; 216-8117
(02) 988-9555 loc. 4837 CEBU-MANGO (02) 884-7600 loc. 4981
JSP Mango Realty Bldg.
STA. ROSA Gen. Maxilom Ave. cor. TALISAY NEGROS-SAVEMORE
Sta. Rosa-Tagaytay Highway Echavez St., Cebu City Savemore Talisay
Sta. Rosa City, Laguna Tel. Nos.: (032) 231-4304; 231-4736 Mabini St., Zone 12, Paseo Mabini
Tel.Nos.: (049) 502-9134 (02) 884-7600 loc. 4346 Talisay City, Negros Occidental
(02) 988-9555 loc. 4872 Tel. Nos.: (034) 441-6264; 441-6267
CEBU MANDAUE-BASAK
STA. ROSA-BALIBAGO Cebu North Road ZAMBOANGA-CITYMALL
Old National Highway Basak, Mandaue City, Cebu CityMall, Don Alfaro St.
cor. Roque Lazaga St. Tel. No.: (032) 346-6959 Tetuan, Zamboanga City
Sta. Rosa City, Laguna Fax No.: (032) 346-8814 Tel.No.: (062) 955-8709
Tel. Nos.: (049) 534-1167
(02) 520-8448 DAVAO
Brgy. 9-A Poblacion Dist.
STO. TOMAS E.Quirino Avenue, Davao City
The Lifestyle Strip, Maharlika Highway Tel. Nos.: (082) 881-3873
San Antonio, Sto. Tomas, Batangas (02) 884-7600 local 4140
Tel. Nos.: (043) 318-0582; 778-3247
(02) 884-7600 loc. 4389 DAVAO-RECTO
C. Villa Abrille Bldg.
TAGAYTAY-SAVEMORE C.M. Recto Ave., Davao City
Mendez Crossing West Tel. Nos.: (082) 305-5808
Tagaytay-Nasugbu Highway (02) 884-7600 loc. 4344
cor. Mendez-Tagaytay Road (082) 227-1802
Tagaytay City
Tel. Nos.: (046) 413-3871;413-3872 GENERAL SANTOS
(02) 988-9555 loc. 4876 Go Chay Ching Bldg.
Mobile No.:0917 561-5334 #10 I. Santiago Boulevard
General Santos City
TANAUAN CITY Tel. Nos.: (083) 552-6329; 552-6330
China Bank Savings Bldg. (02) 884-7600 loc. 4350
Jose P. Laurel National Highway
Darasa, Tanauan City, Batangas KALIBO-CITYMALL
Mobile No.:0917 863-6160 CityMall, F. Quimpo St. connecting
Mabini and Toting Reyes St.
VISAYAS – MINDANAO Kalibo, Aklan
Tel. No.: (036) 268-4379
BACOLOD Mobile No.:0917 804-7837
SKT Saturn Bldg.
Lacson cor. Rizal St. ILOILO-IZNART
Bacolod City, Negros Occidental G/F Golden Finance Bldg.
Tel.Nos. (034) 435-6983; 435-7143 Iznart St., Iloilo City
708-2041; (02) 988-9555 Tel. Nos.: (033) 335-0213; 321-0940
loc. 4810 and 4811 (02) 988-9555
loc. 4863 and 4864
CAGAYAN DE ORO
GAW Bldg., Sergio Osmeña St. ILOILO-JARO
Cogon District, Cagayan de Oro City Lopez Jaena cor. El 98 St.
Tel. Nos.: (088) 859-0169; 859-0740 Jaro, Iloilo
852-2006 Tel. Nos.: (033) 320-0370; 320-0426
(02) 988- 9555
loc 4861 and 4862

136 CHINA BANKING CORPORATION

CHINA BANK SAVINGS BUSINESS OFFICES

SALES OFFICES & BUSINESS MARIKINA SALES OFFICE APD SALARY LOAN CENTERS APD Lending Center Tanauan,
CENTERS CTP Bldg., 3rd Floor Batangas
Gil Fernando Ave., Marikina City NATIONAL CAPITAL REGION: 2nd Floor, China Bank Savings Bldg.
BAGUIO SALES OFFICE Tel. Nos.: (02) 645-9819 APD Lending Center Quezon J.P. Laurel National Highway
B108 Lopez Bldg., 2nd Floor (02) 884-7600 local 4238 Avenue Darasa, Tanauan City, Batangas
Session Road cor. Assumption Road 2nd Floor, G.J. Bldg. Mobile No.: 0917 856-4718
Baguio City PLARIDEL SALES OFFICE 385 Quezon Avenue, Quezon City
Tel Nos.: (02) 884-7600 local 4232 0226 Cagayan Valley Road, 2nd Floor Tel Nos.: (02) 372-7926; 978-7754 REGION 5 – BICOL REGION
Banga 1st, Plaridel, Bulacan Mobile No.: 0905 558-2542 APD Lending Center Legaspi
Tel. Nos.: (02) 884-7600 locals 4202 2nd Floor Lot 4-6 Blk 20 PCS-1617
CAGAYAN DE ORO SALES OFFICE 4251 and 4251 CORDILLERA AUTONOMOUS Sol’s Subdivision, Purok 5
Sergio Osmeña St. REGION: 37 Bitano, Legazpi City
Cogon District, Cagayan De Oro City SAN FERNANDO PAMPANGA APD Lending Center Baguio Tel. No.: (052) 483-7783
Tel. No.: (02) 884-7600 local 4234 BUSINESS CENTER 8990 B 108 Lopez Bldg. Mobile No.: 0977 459-0839
JSL Bldg., 3rd Floor Session Road cor. Assumption Road
CEBU BUSINESS CENTER Consunji St., City of San Fernando, Baguio City APD Lending Center Naga
JSP Plaza Bldg., 2nd Floor Pampanga Tel No.: (074) 619-2097 RL Bldg., 2nd Floor
General Maxilom cor. Echaves St. Tel. Nos.: (045) 961-0005; 961-0008 Mobile No.: 0927 345-8502 Panganiban Drive, Lerma, Naga City
Cebu City (02) 884-7600 locals 4221 Tel. No.: (054) 881-2557
Tel. Nos.: (032) 232-5061; 232- 6263 4236; and 4237 REGION 1 – NORTHERN LUZON
(02) 884-7600 locals 4207 APD Lending Center La Union REGION 6 – NEGROS ISLAND
4209; 4205; 4206 SAN PABLO SALES OFFICE A.G Zambrano Bldg. APD Lending Center Bacolod City
China Bank Savings Bldg. Quezon Avenue, San Fernando City SKT Saturn Bldg.
DAVAO BUSINESS CENTER 2nd Floor, Rizal Ave. cor. A. Fule St. La Union Lacson corner Rizal Street
8990 Corporate Center, San Pablo City Tel No.: (072) 687-2218 Bacolod City
3rd Floor Quirino Ave., Davao City Tel. Nos.: (049) 800-3917 Mobile Nos.: 0905 465-6289 Tel No.: (034) 474-2262
Tel. Nos.: (082) 298-4569 0927-345-8502 Mobile No.: 0922 811-2680
(02) 884-7600 local 4218 SANTIAGO SALES OFFICE
Jeco Bldg. APD Lending Center Lingayen REGION 6 – PANAY ISLAND
GENERAL SANTOS SALES OFFICE Maharlika Highway The Hub-Lingayen Bldg. APD Lending Center Iloilo
Go Chay Ching Bldg. Victory Norte, Santiago City Poblacion, Lingayen, Pangasinan Golden Finance Building
# 10 I. Santiago Boulevard Tel. No.: (02) 884-7600 local 4374 Mobile Nos.: 0926 277-7864 Iznart Street, Iloilo City
General Santos City 0946 069-4222 Tel No.: (033) 320-5309
Tel. Nos.: (083) 301-5042 URDANETA SALES OFFICE Mobile No.: 0927 567-7973
(02) 884-7600 local 4271 China Bank Savings, APD Lending Center Vigan
MacArthur Highway Quezon Avenue corner Mabini Street APD Lending Center Roxas City
ILOILO SALES OFFICE Nancayasan, Urdaneta City Vigan City Ground Floor, T-114 CityMall Roxas
Lopez Jaena cor. El 98 St. Pangasinan Mobile No.: 0917 836-4204 Roxas Avenue, Brgy. VI, Roxas City
Jaro, Iloilo City Tel Nos.: (075) 522-0498 Tel. No.: 988-9555 loc 4144
Tel. Nos.: (02) 884-7600 (075) 656-2331 REGION 2 – CAGAYAN VALLEY
locals 4219 and 4225 (02) 884-7600 local 4372 APD Lending Center Tuguegarao REGION 7 – CENTRAL VISAYAS
Ground Floor, Metropolitan Cathedral APD Lending Center Cebu
IMUS SALES OFFICE Parish Rectory Complex Skyrise IT Bldg., Brgy. Apas
OLMA Bldg. Rizal Street, Tuguegarao City Lahug, Cebu City
Aguinaldo Highway Tel No.: (078) 375-4471 Tel No.: (032) 238-7820
Tanzang Luma, Imus City, Cavite Mobile No.: 0917 353-6503 Mobile No.: 0917 303-3932
Tel. Nos.: (046) 416-4992
(02) 884-7600 local 4268 REGION 3 – CENTRAL LUZON REGION 10 – NORTHERN
APD Lending Center San Fernando MINDANAO
LA UNION BUSINESS CENTER Pampanga APD Lending Center
A.G. Zambrano Bldg. JSL Bldg., Consunji Street Cagayan de Oro
Quezon Ave. City of San Fernando, Pampanga Sergio Osmeña Street
San Fernando City, La Union Tel No.: (045) 280-8215 Cogon District, Cagayan de Oro City
Tel. Nos.: (072) 888-7477 Mobile No.: 0917 552-3389 Tel. No.: (088) 859 3075 / 8652
(02) 884-7600 local 4227 Mobile No.: 0935 565-2010
REGION 4A – CALABARZON
LIPA SALES OFFICES APD Lending Center Taytay REGION 11 – DAVAO REGION
China Bank Savings Bldg. 2nd Floor, C Gonzaga Bldg. 2 APD Lending Center Davao City
2nd Floor C.M Recto Ave. Manila East Road, Taytay, Rizal 8990 Corporate Center, 3rd Floor
Lipa City Tel No.: (02) 633-3988 Quirino Avenue, Davao City
Tel. Nos.: (043) 756-5003 Mobile No.: 0919 7540-1907 Tel No.: (082) 287-6824
(02) 884-7600 local 4253 Mobile No.: 0977 463-4707
APD Lending Center Lucena
LEGAZPI SALES OFFICE Merchan corner Evangelista Street APD Lending Center Tagum
F. Imperial Street, Brgy. Bitano Lucena City CityMall Maharlika Highway corner
Legazpi City, Albay Tel No.: (042) 717-9387 # 10 I. Santiago Boulevard
Tel. Nos.: (02) 884-7600 locals 4202 Lapu-Lapu Extension
4251, 4263, and 4261 APD Lending Center San Pablo, Brgy. Magupo, Tagum City
Laguna Tel No.: 084 216-8245
China Bank Savings Bldg. Mobile No.: 0925 542-1223
Rizal Avenue corner A. Fule Street
(former Lopez Jaena) San Pablo City REGION 12 – SOCCSKSARGEN
Tel No.: (049) 521-3991 APD Lending Center General
Mobile No.: 0939 109-6360 Santos
Go Chay Ching Bldg.
# 10 I. Santiago Boulevard
General Santos City
Tel No.: (083) 554-0211
Mobile No.: 0907 881-5270

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 137

 CHINA BANK BUSINESS OFFICES

CONSUMER BANKING CENTERS

CBG Bacolod Center CBG Cagayan de Oro Center CBG Dagupan Center CBG Iloilo Center
China Bank - Bacolod Araneta China Bank Cagayan de Oro Divisoria China Bank - Dagupan-Perez China Bank - Iloilo-Rizal
2/F CBC Bldg., Araneta St. 2/F CBC Bldg. R.N. Abejuela St. Siapno Bldg., Perez Boulevard 2/F CBC Bldg., Rizal cor. Gomez Sts.
Bacolod City Divisoria, Cagayan de Oro City Dagupan City Brgy. Ortiz, Iloilo City
Tel. No.: (034) 435-0647 Tel. Nos.: (088) 859-1232 Tel. Nos.: (075) 522-8471 Tel. Nos.: (033) 336-7918
Fax No.: (034) 435-0647 856-2409 522-8472 336-7909
Email: [email protected] Fax Nos.: (088) 856-2409 Fax No.: (075) 522-8472 Fax No.: (033) 336-7918
Center Head: Ivy H. Saplagio Email: [email protected] Email: [email protected] Email: [email protected]
Center Head: Rhea D. Matela (OIC) Center Head: Maricris P. Macaranas Center Head: Marvin D. Celajes
CBG Batangas Center
China Bank - Batangas City CBG Cebu Center CBG Davao Center CBG Pampanga Center
3/F CBC Bldg., P. Burgos St. China Bank - Cebu Business Park China Bank - Davao-Recto China Bank - San Fernando
Batangas City 2/F CBC Corporate Center, 2/F CBC Bldg., C.M. Recto 2/F CBC Bldg., V. Tiomico St.
Tel. Nos.: (043) 723-7127 Samar Loop cor. Panay Road cor. J. Rizal Sts., Davao City Sto. Rosario Poblacion, City of
723-4294 Cebu Business Park, Cebu City Tel. Nos.: (082) 226-2103 San Fernando, Pampanga
Fax No.: (02) 520-6161 Tel. Nos.: (032) 416-1606 (082) 221-4163 Tel. Nos.: (045) 961-5344
Email: [email protected] (032) 346-4448 Fax No.: (082) 222-5021 (045) 961-0467
Center Head: Evelyn G. Ricardo (032) 416-1915 Email: [email protected] Fax No.: (045) 961-8351
(032) 239-3733 Center Head: Renato C. Sanchez II Email: [email protected]
CBG Cabanatuan Center Fax No.: (032) 346-4450 Center Head:
China Bank - Cabanatuan, Maharlika Email: [email protected] Carlo Juan D. C. Bautista
2/F CBC Bldg., Brgy. Dicarma, Center Head:
Maharlika Highway, Cabanatuan City, Kinard Hutchinson L. Tan
Nueva Ecija
Tel. Nos.: (044) 600-1575; 4631063
Fax No.: (044) 464-0099
Email: [email protected]
Contact Person: Emilie R. Gatdula

WEALTH MANAGEMENT
Makati Head Office Therese G. Escolin Karen W. Tua
15/F China Bank Bldg. (02) 885-5693 (02) 885-5643
8745 Paseo de Roxas cor. Villar Sts., [email protected] [email protected]
Makati City, Philippines
Grace C. Santos Yvette O. Chua
Angela D. Cruz (02) 885-5697 (02) 885-5691
(02) 885-5641 [email protected] [email protected]
[email protected]
Eric Von D. Baviera Joyce Y. Tan
Cesaré Edwin M. Garcia (02) 885-5688 (02) 672-9640
(02) 812-5320 [email protected] [email protected]
[email protected]

WEALTH MANAGEMENT OFFSITE OFFICES

Greenhills Office Jennifer Y. Macariola Samantha Rose U. Dee Julie Rose A. Manuel
14 Ortigas Ave., Greenhills (02) 366-8669 (02) 659-2464 / [email protected] (034) 431-5549
San Juan, Metro Manila [email protected] [email protected]
Batangas Office
Ma. Victoria G. Pantaleon Sheryl Ann C. Hokia 2/F CBC Lipa City -Tambo Cebu Office
(02) 727-7884 (02) 352-3789 Pres. Jose P. Laurel Highway, CBC Bldg., Samar Loop
[email protected] [email protected] Tambo, Lipa City, Batangas cor. Panay Road, Cebu Business
Park, Cebu City
Desiree Jade T. Go Mary Grace C. Tan Alvin Clark M. Racelis
(02) 727-7645 / [email protected] (02) 352-3789 (02) 552-1682 Eleanor D. Rosales
[email protected] [email protected] (032) 415-5881
Francine Richelle C. Ong (043) 311-1847 (032) 239-3740 up to 44
(02) 724-0413 / [email protected] Quezon City Office [email protected]
82 West Ave., Quezon City San Fernando Office
Binondo Office 2/F V. Tiomico St., San Fernando City, Karl Hubert T. Soon
6/F China Bank Bldg., Dasmariñas Jaydee Cheng Tan Pampanga 239-3744 / [email protected]
cor. Juan Luna, Binondo, Manila (02) 426-6980 / [email protected]
Ma. Cristina D. Puno Geraldine U. Go
Irene C. Tanlimco Ma. Luisa T. Uy (045) 961-0486 (032) 239-3741 / [email protected]
(02) 241-1452 (02) 4414685 / [email protected] [email protected]
[email protected] Davao Office
Alabang Office Bacolod Office Km. 4 MacArthur Highway
Genelin U. Yu 2/F Unit D CBC Bldg., Acacia Ave. 2/F CBC Bldg., Bacolod Araneta Matina, Davao City
(02) 247-8341 / [email protected] Madrigal Business Park, Lacson cor. San Sebastian Sts.
Ayala Alabang, Muntinlupa City Bacolod City Mc Queen Benigno-Jamora
Kalookan Office (082) 297-6268
167 Rizal Ave. Extension Claire L. Ramirez [email protected]
Kalookan City (02) 659-2463 (082) 297-2335
[email protected]

138 CHINA BANKING CORPORATION

SUBSIDIARIES AND AFFILIATE

CBS Bldg., 314 Sen. Gil Puyat Avenue, Makati City

Tel. No.: (632) 988-9555
www.cbs.com.ph

China Bank Savings, Inc. (CBS) began operations on September 8, 2008 following the
acquisition of Manila Bank by China Bank in 2007. Subsequent mergers with Unity Bank and
Planters Development Bank have bolstered CBS as a leading thrift bank in the industry. With
162 branches nationwide and a strong platform for retail banking, auto, housing, teachers and
enterprise finance, the Bank is dedicated to servicing the needs of entry-level customers, the
broad consumer market and the strategic Small and Medium Enterprise (SME) sector. CBS is
committed to promoting financial inclusiveness and uplifting the quality of life of consumers
and entrepreneurs, in line with its Easy Banking for You brand of service.

BOARD OF DIRECTORS MANAGEMENT COMMITTEE WITH INTERLOCKING

POSITION IN CHINA BANK
Chairman President Vice Presidents
Ricardo R. Chua Alberto Emilio V. Ramos James Christian T. Dee Marilyn G. Yuchenkang
Treasurer and Treasury Head Chief Audit Executive
Vice Chair Senior Vice Presidents
Nancy D. Yang Jose F. Acetre Arthur S. Esquivel Editha N. Young
Assets Recovery Group Head Chief Marketing Officer Chief Technology Officer
Directors
William C. Whang Agerico G. Agustin Niel C. Jumawan Hanz Irvin S. Yoro
Alberto Emilio V. Ramos Banking Group Head APD Lending Group Head Information Security Head
Alexander C. Escucha
Rosemarie C. Gan Maria Teresita R. Dean Sonia B. Ostrea
Jose Lim Osmeña Jr. SME Lending Group Head Centralized Operations
Patrick D. Cheng Group Head
First Vice Presidents
Independent Directors Atty. Josephine F. Fernandez
Alberto S. Yao Human Resources Division Head
Margarita L. San Juan
Philip S.L. Tsai Jan Nikolai M. Lim
Consumer Lending Group Head
Acting Corporate Secretary
Atty. Odel C. Janda Luis Bernardo A. Puhawan
Controller and Controllership
Group Head

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 139

 SUBSIDIARIES AND AFFILIATE

28F BDO Equitable Tower 28F BDO Equitable Tower

8751 Paseo de Roxas, Makati City 8751 Paseo de Roxas, Makati City
Tel. No.: (632) 885-5009 Tel. No.: (632) 230-6661 to 6663
Fax No.: 556-6712

China Bank Capital Corporation (CBCapital) is China China Bank Securities Corporation (CBSecurities) is
Bank‘s investment house subsidiary. China Bank Capital the stock brokerage arm of China Bank Capital
provides a wide range of services that include debt and Corporation. China Bank Securities complements China
equity capital raising, corporate finance, financial advisory, Bank Capital’s equity underwriting activities covering
and securitization to public and private companies. China initial, follow-on and secondary public offerings in terms of
Bank Capital has acted as issue manager, arranger, and distribution and marketing to retail and institutional clients.
underwriter in various landmark deals. Clients of the China Bank Group likewise benefit by way
of access to stock brokerage services covering execution
of stock transactions at the Philippine Stock Exchange
BOARD OF DIRECTORS MANAGEMENT TEAM
(both peso- and dollar-denominated listed stocks) as
Chairman President well as a suite of research reports on listed companies,
Ricardo R. Chua Ryan Martin L. Tapia industry sectors and markets, in general.

Vice Chairman Head of Origination and

BOARD OF DIRECTORS MANAGEMENT TEAM
Romeo D. Uyan, Jr. Client Coverage
Michael L. Chong
Chairman President and Chief
Directors
William C. Whang Executive Officer
William C. Whang Head of Execution and
Marisol M. Teodoro
Ryan Martin L. Tapia Treasurer
Vice Chairman
Alberto Emilio V. Ramos Juan Paolo E. Colet
Romeo D. Uyan, Jr. Research Director
Lilian Yu
Garie G. Ouano
Head of Distribution
Directors
Independent Directors Grace T. Chua
Marisol M. Teodoro Treasurer, Corporate Secretary
Philip S. L. Tsai
Ryan Martin L. Tapia and Business Operations
Alberto S. Yao Legal Officer
Lilian Yu Director
Margarita L. San Juan Leah M. Quiambao
Mary Antonette E. Quiring
Independent Director
Corporate Secretary Senior Deal Officer
Alberto S. Yao Sales and Trading Director
Atty. Leah M. Quiambao Maria Angelica C. Balangue
Julius M. German
Compliance and Risk Officer
Associated Person and
Alexis Deo C. Manalo
Compliance Director
Kristina S. Wy-Cacayan

140 CHINA BANKING CORPORATION

 8/F VGP Center, 6772 Ayala Ave.
4/F & 15/F China Bank Bldg. Makati City 1226, Philippines
8745 Paseo de Roxas cor. Villar St., Makati City Tel. No.: (632) 885-5555
Tel. Nos.: (632) 885-5555; 885-5053; 885-5060 VGP Center: (632) 751-6000
885-5051; 885-5052
Fax No.: (632) 885-5047; 885-9458
Chinabank Insurance Brokers, Inc. (CIBI) is a wholly-
CBC Properties and Computer Center, Inc. (CBC-PCCI) owned subsidiary of the Bank established on November
was created on April 14,1982 to provide computer-related 3, 1998 as a full service insurance brokerage. It provides
services solely to the China Bank group. It manages the direct insurance brokerage for retail and corporate
Bank’s electronic banking and e-commerce requirements, customers, with a wide and comprehensive range of
including sourcing, developing and maintaining software plans for life and non-life insurance. Under the Non-Life
and hardware, financial systems, access devices and insurance category, CIBI offers Property, Motor, Marine,
networks to foster the safety and soundness of China Accident, Bonds, Construction All Risk and Liability for the
Bank’s technology infrastructure and keep its processing bank clients.
capabilities in top shape.

BOARD OF DIRECTORS MANAGEMENT TEAM DIRECTORS AND OFFICERS

Chairman President Chairman Director and President

Gilbert U. Dee Peter S. Dee Patrick D. Cheng Rosa Maria L. Musico

Directors Treasurer Director Corporate Secretary

Peter S. Dee William C. Whang William C. Whang Belenette C. Tan
Ricardo R. Chua
William C. Whang General Manager Independent Directors
Rosemarie C. Gan Phillip M. Tan Philip S.L. Tsai
Margarita L. San Juan
Corporate Secretary Chief Technology Officer
Atty. Leilani B. Elarmo Editha N. Young

Vice President
Augusto P. Samonte

Manulife China Bank Life Assurance Corporation (MCBLife) is a strategic

alliance between Manulife Philippines and China Bank. MCBLife provides a wide
range of innovative insurance products and services to China Bank and China Bank
Savings customers. MCBLife aims to ensure that every client receives the best
possible solution to meet his or her individual financial and insurance needs. In
10th Floor NEX Tower, 2014, China Bank raised its equity stake to 40% in MCBLife.
6786 Ayala Avenue,
Makati City 1229, Philippines
DIRECTORS AND OFFICERS
Customer Care: (632) 884-7000
Domestic Toll-free: 1-800-1-888-6268 Chairman Independent Directors Corporate Secretary
E-mail : [email protected] Joachim Wessling Rhoda Regina R. Rara Basilio O. Visaya, Jr.
www.manulife-chinabank.com.ph Janette L. Peña
Director/President & CEO Conrado Favorito
Jude Pijush Gomes
Chief Financial Officer/
Directors Treasurer
William C. Whang Katerina Suarez
Alberto Emilio V. Ramos
Ryan S. Charland
Ka Ming Dai

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 141

 PRODUCTS AND SERVICES
102-2, 102-7

DEPOSITS & RELATED SERVICES INVESTMENT BANKING SERVICES

Peso Deposits Arranging and Underwriting of Debt and Equity Financing
Checking Transactions
• ChinaCheck Plus Debt Financing
Savings • Bonds
• Passbook Savings • Syndicated Loans
• ATM Savings • Corporate Notes
• MoneyPlus Savings • Structured Loan
• SSS Pensioner’s Account • Project Finance
• Premium Savings Account • LTNCD
Time Deposit • Short Dated Notes/QB Notes
• Regular Time Deposit Equity Financing
• Diamond Savings • Initial Public Offering (Common Shares)
Foreign Currency Deposits (USD, EUR, RMB and JPY) • Follow On Offering (Common Shares)
• Savings • Preferred Shares
• Time • Convertible/Exchangeable Shares
Cash Card Others
Manager’s/Gift Check/Demand Draft • Financial Advisory
Safety Deposit Box • Mergers & Acquisition Advisory
Night Depository Services • Corporate Restructuring
Cash Delivery and Deposit Pick-up Services • Valuation
• Securitization
LOANS & CREDIT FACILITIES
Corporate Notes and Loans OVERSEAS KABABAYAN SERVICES
Commercial Loans China Bank Remittance
Loan Syndications Overseas Kababayan Savings (OKS) Account (PHP and USD)
Project Finance Facilities
Structured Financing TRUST SERVICES
Trade Financing Unit Investment Trust Funds
Working Capital and Revolving Credit Facilities • China Bank Money Market Fund
Receivable Factoring • China Bank Cash Fund
Consumer Loans • China Bank Short-Term Fund
• HomePlus Real Estate Loans • China Bank Intermediate Fixed Income Fund
• AutoPlus Vehicle Loans • China Bank Fixed Income Fund
• Contract to Sell Financing • China Bank Balanced Fund
• Credit Cards • China Bank Equity Fund
• China Bank High Dividend Equity Fund
INTERNATIONAL BANKING PRODUCTS & SERVICES • China Bank Dollar Fund
Letters of Credit Wealth Management
Standby Letters of Credit • Investment Management Arrangement
Shipping Guarantee • Personal Management Trust
Documents against Payment Corporate Trust Services
Documents against Acceptance • Escrow Services
Open Account • Employee Benefit Plan
Advance Payments • Collecting and Paying Agency
Trust Receipt Loans • Facility Agency, Security Trusteeship and Paying Agency
Negotiation of Export Letter of Credit
Import/Export Finance TREASURY SERVICES
Customs and Duties Tax Payments Peso-Denominated Government and Corporate Bond Issues and
Advising of Letters of Credit and Standby Letters of Credit Perpetual Notes
Telegraphic Transfer (Domestic and International) Dollar-Denominated Government and Corporate Bond Issues and
Foreign Currency Accounts (Time Deposit, and Savings) Perpetual Notes
Foreign Currency Loans LTNCD
Foreign Currency Bank Drafts Treasury Certificate of Deposit
Purchase and Sale of Foreign Exchange Promissory Notes
Inward and Outward Remittance Service - Domestic and Foreign Exchange
International • Spot, Forward and Swaps
Derivatives
• Interest Rate and Cross Currency Swaps

142 CHINA BANKING CORPORATION

INSURANCE PRODUCTS PAYMENT & SETTLEMENT SERVICES
Bancassurance Electronic Banking Channels
• Protection • China Bank Automated Teller Machine (ATM)
o Base Protect Plus • China Bank TellerPhone
• Education • China Bank Online
o MCBL Invest • China Bank Mobile Banking App
• Wealth • Cash Accept Machine
o Platinum Invest Elite • Point-of-Sale (POS)
o MCBL Enrich Max
o MCBL Affluence Income CASH MANAGEMENT SOLUTIONS
• Retirement China Bank Online Corporate
o MCBL Enrich • Basic Services
o MCBL Invest o Balance Inquiry and Transaction Reporting
• Group Insurance o Intra & Inter-bank Transfer of Funds to Own &/or Third Party
Group Yearly Renewable Term Account(s)
Group Personal Accident o Buy &/or Sell Foreign Currency
Group Credit Life o Sure Sweep
Non-Life Insurance o Bills Payment
• Fire Insurance • Self-Service Functionalities
o Residential o Account Portfolio
§ Condominium Insurance o Transaction History
o Commercial o Forgotten Credentials
§ Industrial All-Risk Insurance o Bank Certificate
§ Commercial All-Risk Insurance o Checkbook Reorder
o Trust Receipts o Stop Payment Order
• Motor Car Insurance Liquidity Management Via China Bank Online Corporate
o Individual • Sure Sweep
o Fleet Program o Funds Consolidation (many to one account)
• Marine Insurance o Funds Distribution (one to many accounts)
o Hull Insurance • Corporate Inter-Bank Fund Transfer
o Cargo Insurance Receivables Management
• Engineering Insurance • Automatic Debit Arrangement (ADA)
o Contractors ALL-Risk Insurance • Check Depot
o Electronic Equipment Insurance • Bills Pay Plus
o Erectors All- Risk Insurance • Check Pay Solution
o Machinery Breakdown Insurance • Collection Arrangement Report (via China Bank Online Corporate)
o Equipment Floater Payables Management
• Liability Insurance • Direct Debit Arrangement
o Comprehensive General Liability Insurance • Auto Credit Arrangement (ACA)
o Product Liability Insurance • Check Writing Services
o Professional Indemnity Insurance o Check Write Plus Software
o Directors and Officers Liability Insurance o Check Write Plus Outsourcing
• Crime Insurance • Payroll Services
o Money, Security & Payroll Insurance o Payroll
o Fidelity Insurance o China Pay Software
o Cyber Crime Insurance o Payroll Processing
o Kidnap and Ransom Insurance POS Solutions
• Bonds • China Debit POS
o Surety Bonds • POS Cash Out
§ Bidder Bond Trade and Settlement Solutions
§ Surety/Downpayment Bond • Electronic Invoicing & Payment Solution
§ Performance Bond • SCCP Broker’s Solution
§ Warranty Bond Government Payments and Collections
§ Heirs Bond • Easy Tax Filing and Payment Solution
o Fidelity Bonds • BIR eTax Payments
• Employee Benefit • eGov Payments
o Group Personal Accident Insurance o Social Security System (SSS)
o Group Life Insurance o Philippine Health Insurance Corporation (PhilHealth)
o HMO o Pag-IBIG
o Travel Insurance • SSS Sickness, Maternity, and Employee Compensation (SSS SMEC)

CHINA BANK SECURITIES

Stock Brokerage
Securities and Investment Research

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 143

 GRI CONTENT INDEX
102-55

For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly
presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body
of the report.

GENERAL DISCLOSURES

GRI Standard Disclosure Page Number Omission

GRI 101: Foundation 2016

General Disclosures
GRI 102: Organizational Profile
General 102-1 Name of the organization 2
Disclosures 102-2 Activities, brands, products, and services 2, 142-143
2016 102-3 Location of headquarters 2, 148
102-4 Location of operations 2, 124-138
102-5 Ownership and legal form 2, 78
102-6 Markets served 2, 124-138
102-7 Scale of the organization 12, 43, 142
102-8 Information on employees and other 43
workers
102-9 Supply chain 74
102-10 Significant changes to the organization No changes
and its supply chain
102-11 Precautionary Principle or approach 53, 70
102-12 External initiatives 60
102-13 Membership of associations Trust Officers Association of the Philippines;
ACI Philippines; Association of Bank
Compliance Officers, Inc.; Association of
Bank Remittance Officers, Inc.; Association
of Philippine Correspondent Banking Officers,
Inc.; Bankers’ Association of the Philippines;
Bankers’ Institute of the Philippines,
Inc.; Bank Marketing Association of the
Philippines; Business Continuity Mangers
Association of the Philippines; Chamber
of Thrift Banks; Credit Card Association
of the Philippines; Credit Management
Association of the Philippines; Financial
Executives of the Philippines; Fund Managers
Association of the Philippines; Good
Governance Advocates and Practitioners of
the Philippines; Information Security Officers
Group; Investment House Association of the
Philippines Money Market Association of
National Advertisers; Personnel Management
Association; Philippine Business for
the Environment; Philippine Payments
Management, Inc.; Public Relations Society
of the Philippines; UNISDR Private Sector
Alliance for Disaster Resilient Societies;
Various Local Business Clubs

144 CHINA BANKING CORPORATION

GRI Standard Disclosure Page Number Omission

Strategy
102-14 Statement from senior decision-maker 6
102-15 Key impacts, risks, and opportunities 6
Ethics and integrity
102-16 Values, principles, standards, and 3, 61
norms of behavior
102-17 Mechanisms for advice and concerns 60, 73-75
about ethics
Governance
102-18 Governance structure 68
102-19 Delegating authority 64
102-23 Chair of the highest governance body 62
102-24 Nominating and selecting the highest 63
governance body
102-28 Evaluating the highest governance 63
body’s performance
Stakeholder engagement
102-40 List of stakeholder groups 19
102-41 Collective bargaining agreements 44
102-42 Identifying and selecting stakeholders 18
102-43 Approach to stakeholder engagement 19
102-44 Key topics and concerns raised 19
Reporting Practice
102-45 Entities included in the consolidated As listed in Note 1 of Financial Statement:
financial statements China Bank Insurance Brokers, Inc., CBC
Properties and Computer Center, Inc.,
China Bank Savings, Inc., China Bank
Capital Corporation, CBC Assets One, Inc.,
China Bank Securities Corporation
102-46 Defining report content and topic 18
Boundaries
102-47 List of material topics 18
102-48 Restatements of information There are no restatements of information.
102-49 Changes in reporting Identified water as a non-material topic for
this reporting period.
102-50 Reporting period i
102-51 Date of most recent report i
102-52 Reporting cycle i
102-53 Contact point for questions regarding 81
the report
102-54 Claims of reporting in accordance with i
the GRI Standards
102-55 GRI Content Index i, 144-147
102-56 External assurance This report is not externally assured.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 145

 MATERIAL TOPICS

GRI Standard Disclosure Page Number Omission

GRI 200 Economic Standard Series

Economic Performance
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 52
approach 2016 103-3 Evaluation of the management approach 52
GRI 201: 201-1 Direct economic value generated and distributed 52
Economic
Performance 2016
Indirect Economic Impacts
GRI 103: 103-1 Explanation of the material topic and its boundary 18
Management
Approach 2016 103-2 The management approach and its components 27-29
GRI 203: 203-2 Significant indirect economic impacts 14, 27-29
Indirect Economic
Impacts 2016
Anti-corruption
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 74
Approach 2016 103-3 Evaluation of the management approach 74
GRI 205: 205-2 Communication and training about anti-corruption 74
Anti-corruption policies and procedures
2016 205-3 Confirmed incidents of corruption and actions There are no confirmed incidents of
taken corruption.
GRI 300 Environmental Standard Series
Energy
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 53
Approach 2016 103-3 Evaluation of the management approach 53
GRI 302: 302-1 Energy consumption within the organization 53
Energy 2016 302-2 Energy consumption outside of the organization 53
302-3 Energy Intensity 53
Emissions
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 53
Approach 2016 103-3 Evaluation of the management approach 53
GRI 305: 305-1 Direct (Scope 1) GHG emissions No available data yet, but systems
Emissions 2016 are being put in place for data
gathering for the next reporting
cycle.
305-2 Energy indirect (Scope 2) GHG emissions 53
305-3 Other indirect (Scope 3) GHG emissions 53
GRI 400 Social Standard Series
Employment
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 43-45
Approach 2016 103-3 Evaluation of the management approach 43-45
GRI 401: 401-1 New employee hires and employee turnover 43, 45
Employment 2016 401-2 Benefits provided to full-time employees that are 44
not provided to temporary or part-time employees

146 CHINA BANKING CORPORATION

 GRI Standard Disclosure Page Number Omission

Occupational Health and Safety

GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 45
Approach 2016 103-3 Evaluation of the management approach The policies are in place and we
continue to review our evaluation
of our programs for a healthy
workplace, and to enhance its
measurements.
GRI 403: 403-2 Types of injury and rates of injury, occupational We are enhancing our tracking
Occupational Health diseases, lost days, absenteeism, and number of system.
and Safety 2016 work-related fatalities
Training and Education
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 44
Approach 2016 103-3 Evaluation of the management approach 44
GRI 404: 404-1 Average hours of training per year per employee 44
Training and 404-2 Programs or upgrading employee skills and 44
Education 2016 transition assistance programs
China Percentage and number of employees promoted 44
Bank per year
Indicator
Diversity and Equal Opportunity
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management 103-2 The management approach and its components 43, 61
Approach 2016 103-3 Evaluation of the management approach 43, 61
GRI 405: 405-1 Diversity of governance bodies and employees 43, 61
Diversity and Equal
Opportunity 2016
Local Communities
GRI 103: 103-1 Explanation of the material topic and its boundary 18
Management 103-2 The management approach and its components 55-57
Approach 2016 103-3 Evaluation of the management approach 55-57
GRI 413: 413-1 Operations with local community engagement, 55
Local Communities impact assessments, and development programs
2016
Customer Privacy
GRI 103: 103-1 Explanation of the material topic and its Boundary 18
Management
Approach 2016
103-2 The management approach and its components 38
103-3 Evaluation of the management approach The management approach is
deemed successful since there are
no substantiated complaints on
breach of customer privacy.
GRI 418: 418-1 Substantiated complaints concerning breaches of There were no substantiated
Customer customer privacy and losses of customer data complaints on customer privacy
Privacy 2016 breach.

2018 ANNUAL FINANCIAL AND SUSTAINABILTY REPORT 147

 INVESTOR INFORMATION

ANNUAL STOCKHOLDERS’ MEETING INVESTOR INQUIRIES

May 2, 2019, Thursday, 4:00 p.m. We welcome inquiries from investors, analysts, and the financial
Penthouse, China Bank Building community. For information about the developments
8745 Paseo de Roxas cor. Villar St. at China Bank, please contact:
Makati City 1226, Philippines
Alexander C. Escucha
Senior Vice President and Head
SHAREHOLDER SERVICES Investor & Corporate Relations Group
China Banking Corporation
For inquiries or concerns regarding dividend payments, account 28/F BDO Equitable Tower
status, change of address or lost or damaged stock certificates, 8751 Paseo de Roxas
please get in touch with: Makati City 1226, Philippines
Tel. No.: (+632) 885-5609
Stocks and External Relations Email: [email protected]
Office of the Corporate Secretary Website: www.chinabank.ph
China Banking Corporation
11/F China Bank Building
8745 Paseo de Roxas cor. Villar St. CUSTOMER INFORMATION
Makati City 1226, Philippines
We welcome inquiries from customers and other stakeholders.
Contact persons: Please contact:
Atty. Angeli Anne L. Gumpal / Mr. Jaime G. Dela Cruz
Customer Contact Center
Tel. No.: (+632) 885-5132; 230-6987 Remittance & Cards Business Group
Fax No.: (+632) 885-5135 China Bank Tellerphone (Available 24/7)
Email: [email protected] Hotline # (+632) 88-55-888
[email protected] Domestic Toll-Free #s:
1-800-1888-5888 (PLDT)
Stock Transfer Service, Inc.
Unit 34-D Rufino Pacific Tower Email: [email protected]
6784 Ayala Ave. Facebook Page:
Makati City 1226, Philippines www.facebook.com/chinabank.ph
Twitter Page:
Contact persons: www.twitter.com/chinabankph
Antonio M. Laviña Fax No: (+632) 519-0143
Ricardo D. Regala, Jr.
China Bank Building
Tel. Nos.: (+632) 403-2410; 403-2412; 403-9853 8745 Paseo de Roxas cor. Villar St.
Fax No.: (+632) 403-2414 Makati City 1226, Philippines

We welcome letters or all such communications on matters

pertaining to the management of the Bank, stockholders’ rights,
or any other bank-related issues of importance. Stockholders who
wish to communicate with any or all of the members of the
China Bank Board of Directors may send letters to:

Atty. Corazon I. Morando

Vice President and Corporate Secretary
China Banking Corporation
11/F China Bank Building
8745 Paseo de Roxas cor. Villar St.
Makati City 1226, Philippines
Email: [email protected]
[email protected]
[email protected]

148 CHINA BANKING CORPORATION

 CHINA BANKING CORPORATION
China Bank Building
8745 Paseo de Roxas corner Villar Street
Makati City 1226, Philippines

www.chinabank.ph

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