15 April 2011 THE PHILIPPINE STOCK EXCHANGE 3/F ... - PSBank

15 April 2011
THE PHILIPPINE STOCK EXCHANGE
3/F Philippine Stock Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Philippines 1226
ATTENTION: MS. JANET A. ENCARNACION
Head, Disclosure Department
Dear Ms. Encarnacion,
This is to furnish the Philippine Stock Exchange with a copy of the SEC
17-A report of Philippine Savings Bank.
We hope that you will find everything in order.
Thank you.
Very truly yours,
PERFECTO RAMON Z. DIMAYUGA JR.
SVP and Chief Finance Officer

COVER SHEET
P H I L I P P I N E S A V I N G S B A N K
1 5 5 5 2
SEC Registration Number
(Company’s Full Name)
P S B a n k C e n t e r , 7 7 7 P a s e o d e R o x a s
c o r n e r S e d e ñ o S t r e e t , M a k a t i C i t
y
(Business Address: No. Street City/Town/Province)
Perfecto Ramon Z. Dimayuga 885-8208
(Contact Person)
(Company Telephone Number)
1 2 3 1 1 7 - A
Month Day (Form Type) Month Day
(Fiscal Year)
(Annual Meeting)
(Secondary License Type, If Applicable)
SEC-Corporation Finance
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
1,725
Total No. of Stockholders Domestic Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
S T A M P S
Remarks: Please use BLACK ink for scanning purposes.

SEC NO. 15552
FILE NO.
PHILIPPINE SAVINGS BANK
(COMPANY’S NAME)
PSBANK CENTER
777 Paseo de Roxas cor. Sedeño St., Makati City
(COMPANY’S ADDRESS)
885-82-08
(TELEPHONE NUMBER)
DECEMBER 31
(FISCAL YEAR ENDING MONTH & DAY)
SEC FORM 17-A
(FORM TYPE)
December 31, 2010
(PERIOD ENDED DATE)
Government Securities Dealer
(SECONDARY LICENSE TYPE AND FILE NUMBER)

SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A
ANNUAL REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATIONS CODE AND SECTION 141
OF CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended : December 31, 2010
2. SEC Identification No. : 15552
3. BIR Tax Identification No. : 000-663-983-000
4. Exact name of registrant as specified in its charter : Philippine Savings Bank
5. Province, Country or other jurisdiction or organization : Metro Manila, Philippines
6. Industry Classification Code : (SEC Use only)
7. Address of principal office : 777 Paseo de Roxas corner
Sedeño St., Makati City
8. Registrant’s telephone No. : (632) 885-82-08
9. Former name, address, and former fiscal year,
If changed since last report : Not Applicable
10. Securities registered pursuant to
Section 8 & 12 of the SRC
Title of each class : Common Shares
Number of shares outstanding : 240,252,491
Amount of Debt Outstanding : P=1,977,141,032
(Tier II Subordinated Notes Payable)
11. Are any or all of these securities listed with the
Philippine Stock Exchange : Yes
12. Check whether the issuer:
(a) has filed all report required to be filed
under Section 17 of the SRC and SRC
Rule 17 thereunder or Section 11 of the
RSA and RSA Rule 11(a)-1 thereunder
and Section 26 and 141 of The
Corporation Code of the Philippines
during the preceding 12 months (or for
such shorter period that the registrant was
required to file such
reports) : Yes
(b) has been subject to such filing
requirements for
the past ninety (90) days : Yes

13. State the aggregate market value of the voting stock
held by non-affiliates of the registrant. The aggregate
market value shall be computed by reference to the
price at which the stock was sold or the average bid
and asked prices of such stock, as of a specified date
(March 9, 2011) within sixty (60) days prior to the date
of filing. If a determination as to whether a particular
person or entity is an affiliate cannot be made without
involving unreasonable effort and expense, the
aggregate market value of the common stock held by
non-affiliates may be calculated on the basis of
assumptions reasonable under the circumstances,
provided the assumptions are set forth in this Form. P 3,636,145,548
APPLICABLE ONLY TO ISSUERS INVOLVED IN
INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
14. Check whether the issuer has filed all documents and reports
required to be filed by Section 17 of the Code subsequent
to the distribution of securities under a plan confirmed
by a court of the Commission. : Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
15. If any of the following documents are
incorporated by reference, briefly describe
them and identify the part of SEC Form 17-1
Into which the document is incorporated:
(a)
(b)
Any annual report to security holders;
Any proxy or information statement filed
pursuant to SRC Rule 20 and 17.1(b);
Any prospectus filed pursuant to SRC Rule 8.1-1

TABLE OF CONTENTS
Page No.
PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Description of Business 4
Item 2. Properties 9
Item 3. Submission of Matters to a Vote of Security Holders 9
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 4. Market for Registrant’s Common Equity and
Related Stockholder Matters 10
Item 5. Plan of Operation and Management’s Discussion and Analysis 15
Item 6. Financial Statements 24
Item 7. Changes in and Disagreements with Accountants
and Financial Disclosure 24
PART III - CONTROL AND COMPENSATION INFORMATION
Item 8. Directors and Executive Officers of the Registrant 25
Item 9. Executive Compensation 35
Item 10. Security Ownership of Certain Beneficial Owners
and Management 36
Item 11. Certain Relationships and Related Transactions 37
PART IV – CORPORATE GOVERNANCE 38
SIGNATURES 43
PART V - EXHIBITS AND SCHEDULES 41
Exhibit 1 - Schedule of Bank/Branch Sites Owned by the Bank 44
Exhibit 2 - Schedule of Bank/Branch Sites Under Lease Agreements 45
Exhibit 3 - Events Reported under SEC FORM 17-C for the last 6 months 50
PART VI - AUDITED FINANCIAL STATEMENTS
Form and Contents 42
(a) Statement of Management’s Responsibility
(b) Independent Auditors’ Report
(c) Statements of Condition
(d) Statements of Income
(e) Statements of Changes in Equity
(f) Statements of Cash Flows
(g) Notes to Financial Statements
(h) Independent Auditors’ Report on Supplementary Schedules
(i) Nature of Dividend Declared
PART VII - OTHER RELEVANT SUBMISSIONS
Chief Finance Officer’s Certificate Under Oath on the Submission of Compact Disc
together with the Audited Financial Statements

PART I. BUSINESS AND GENERAL INFORMATION
Item 1. Description of Business
1. Business Development
Philippine Savings Bank (PSBank) was incorporated on June 30, 1959 primarily to engage in
savings and mortgage banking. In 1983, Metrobank acquired majority share in the Bank, and in
2004 further increased its shareholdings to the present level of 76%.
In 1991, the Bank was authorized to perform trust functions, and in 1995, was granted quasibanking
license. In 1994, PSBank became the country’s first publicly listed thrift bank.
It has outpaced its key competitors and is, today, the country’s second largest thrift bank in terms
of assets. It caters mainly to the retail and consumer markets and offers a wide range of products
and services such as deposits, loans, treasury and trust.
The Bank has a 25% interest in Toyota Financial Services Philippines Corp. (TFSPC). It also has
a 40% interest in Sumisho Motor Finance Corporation (SMFC), a partnership with Sumitomo
Corporation. TFSPC and SMFC are not listed in the stock exchange.
Its principal office is located at the PSBank Center, 777 Paseo de Roxas corner Sedeño Street,
Salcedo Village, Makati City.
The past 3 years marked very significant growth as the Bank continue to grow its core business
and always on track in hitting its year-end targets. The Bank has sustained its focus on
consumers, which corners approximately 80% of its portfolio by continuing to provide efficient and
creative banking solutions through wider distribution network.
Total Resources Net Income Branch Network
2010 104.149 billion 1.808 billion 180 branches
2009 93.088 billion 1.240 billion 170 branches
2008 74.637 billion 940.152 million 164 branches
In 2010, the Bank showed a stronger balance sheet and double-digit growth across all loan
products. The Bank aggressively expanded its network to 180 branches and 380 ATMs
nationwide and offered the widest nationwide coverage among thrift banks.
In partnership with Mastercard and Bancnet, the Bank launched the PSBank Prepaid Mastercard
last October 11, 2010. This is an e-money instrument product that is an ATM card, debit card,
remittance card and internet cash card all put into one. As of December 31, 2010, the Bank had
a total of 21,171 active Prepaid Mastercard holders. Clients can reload their prepaid card via
PSBank branches nationwide using cash or PSBank Remote Banking (PRB) with funds from PSB
account. The card can also be loaded via ATM with funds from PSB account or from another
bank. To promote this prepaid card, the Bank distributed campaign materials to its branches and
had a media briefing to inform and encourage clients to avail this new product.
As of year end, PSBank Remote Banking enrollees had gone up to over 40,000 from 30,000
enrollees in 2009. As a result, PRB transactions doubled to more than 3.0 million from previous
year’s 1.5 million.
Mortgage Banking launched a number of campaigns to boost loan referrals, among them: “The
Federal Investors’ Night” which took place last October 21, 2010. The event, which was held in
cooperation with Federal Land, was attended by branch personnel and valued clients. This was
aimed to generate better profitability for branches in mortgage lending.

In 2009, the Bank made significant improvements in loan processing that enabled a 100%
delivery on its Thank Goodness its Five Days (TGIF) campaign promise. The TGIF came with
free interest for the first year if the client does not get a credit decision in five days or less. It also
reinforced its PSBank Auto Loan through its Isang Tulog Lang campaign which offers flexible
financing terms, one of the lowest rates in the market and a credit decision via SMS in as fast as
24 hours.
Another industry milestone is the PSBank Prime Rebate, the only loan rebate program in the
industry. When customers pay in advance or in excess than their monthly due, they earn
rebates which effectively shortens their loan term, gives a discount on their total loan amount, or
even both.
To provide more convenience to its customers and address their fast-paced lifestyle, PSBank
issued the Instant ATM Card where customers can apply for their new or replacement PSBank
ATM card on the spot in any of its branches nationwide. Likewise, the PSBank Overseas Filipino
(OF) Savings Account, which has no minimum deposit and no maintaining balance, allowed our
modern-day heroes and their beneficiaries to have easier access to their funds. Throughout the
year, the Bank continued its efforts to realign its organizational, operational and business
processes to meet the growing customer demand. The Customer Service Division (CSD) took
major initiatives in 2009 to further strengthen the service culture within the organization and meet
customers’ needs. The Human Resources Group conducted various in-house programs through
seminars, workshops and inter-departmental projects, which also serve as a training ground for
management skills.
In August 2009, the Bank entered into a joint venture agreement with the Sumitomo Corporation
to primarily engage in the financing of motorcycle purchases. In September 2009, the Bangko
Sentral ng Pilipinas approved the joint venture which was named Sumisho Motor Finance
Corporation and was subsequently incorporated with the Securities and Exchange Commission in
November 2009.
In 2008, the Bank conducted a stock rights offer and generated P2 billion in fresh Tier 1 capital,
resulting to an increase in capital to P8.4 billion in end-February 2008. The Bank continued its
build-up of investments in branches and information technology. PSBank opened its second
branch in Bacolod City and relocated nine branches to better reach more customers. Helping
boost our presence in areas with high customer traffic were 23 new offsite ATMs installed in
major malls and commercial areas in Metro Manila. The Bank’s network was comprised of 164
branches and 189 ATMs nationwide. To support the bank’s business units, the Bank took major
initiatives to improve its IT system infrastructure. The acquisition of the IBM Z9 mainframe
boosted our scalability and capability. It also moved to the IP/VPN technology that give the bank
higher bandwidth capability and significantly improved our response time. PSBank also set up an
ATM center to better manage all ATM-related operations and institutionalized the Exception
Management System to check and manage risks that may arise from day-to-day operations. The
Bank launched the Monthly Millions Raffle Promo, which produced five millionaires, to boost
deposit levels and create market buzz. The Save it Forward campaign reinforced customer
loyalty, raised deposits and enabled PSBank to fulfill its corporate social responsibility by
providing scholarships to nominated scholars from World Vision and Resources for the Blind. The
Bank also launched tactical marketing campaigns for Money Card, re-launched the SME
Business Credit Lines and increased awareness for time deposit products. In 2008, the Bank
revised its Code of Conduct to adjust to new labor laws, BSP guidelines, and incorporate recent
changes in policies and procedures of the Bank. It addressed the changes in disciplinary conduct,
and the role of different units in strengthening the definition and control of business data,
administration and management. It also established a succession planning and staffing program
to ensure normal operations in case of separation, resignation, retirement and transfer of key
management personnel. Although the Bank posted a decline in income for the year ended
December 2008, its core business has significantly improved amidst the present economic
scenario with its continued investments in people, IT capability and strengthening of its risk
management functions.

2. Business of Registrant
a) Products and Services
Being a thrift bank, PSBank offers a wide array of products on deposits and loans and services
that cater mainly to consumer and retail customers and distributed through the bank’s 180
branches strategically located nationwide.
Deposits
PSBank ATM Savings
PSBank Overseas Filipino (OF) Savings
PSBank Regular Passbook Savings
PSBank Passbook Savings with ATM
PSBank Regular Checking
PSBank Premium Checking
PSBank Short-Term Peso Deposit
PSBank Long-Term Peso Deposit
PSBank Prime Time Deposit
PSBank US Dollar Savings
PSBank US Dollar Time Deposit
PSBank Premium US Dollar Time Deposit
Consumer Loans
PSBank Auto Loan
PSBank Flexi Personal Loan
PSBank Multi-Purpose Loan
PSBank Home Loan
PSBank Home Credit Line
PSBank Home Construction Loan
Credit Card
PSBank Mastercard
Business Loans
PSBank SME Business Credit Line
PSBank Credit Line
PSBank Term Loan
PSBank Standby Credit Line Certification
PSBank Domestic Bills Purchase Line
PSBank Domestic Letter of Credit/Trust Receipt Line
Floor Stock Financing Line
Second Endorsed Check Accommodation
Other Products & Services
PSBank Remote Banking
PSBank Prepaid Mastercard
Payment Collection Services
Products Accepted:
PSBank MasterCard
Metrobank VISA
Metrobank Mastercard
SSS
Globe Telecom
Remittances Services
Domestic Remittances
Foreign Remittances
Foreign Demand Draft
Trust Services
Employee Benefit Trust
Escrow Agency
Investment Management Account
Living Trust Account
Other Services
Payroll Services
SSS Pensioner’s Remittance Program
Safety Deposit Facility
Overnight Depository Box
Fund Transfer Services
Gift Checks/Cashier’s Checks

) Business Contribution
(In Millions) 2010 % 2009 % 2008 %
INTEREST INCOME ON
Loans and receivables P=5,872 71% P=5,376 85% P=4,745 95%
Investment securities 1,715 21% 1,945 31% 1,012 20%
Due from BSP 159 2% 93 1% 85 2%
Due from other banks 7 – 6 – 25 –
Interbank loans receivable and securities purchased
under resale agreements 161 2% 110 2% 262 5%
7,913 96% 7,530 119% 6,129 123%
INTEREST EXPENSE ON
Deposit liabilities 2,693 33% 2,485 39% 2,197 44%
Subordinated notes payable 206 2% 206 3% 206 4%
Bills payable 1 – 5 – 17 –
2,901 35% 2,696 43% 2,420 49%
NET INTEREST INCOME 5,012 61% 4,834 77% 3,709 74%
NET SERVICE FEES AND COMMISSION INCOME 692 8% 596 9% 534 11%
OTHER OPERATING INCOME (CHARGES) 2,532 31% 842 13% 694 14%
SHARE IN NET EARNINGS OF AN ASSOCIATE
AND A JOINT VENTURE 42 1% 45 1% 47 1%
INCOME, Net of Interest and Commission Expense P=8,278 100% P=6,316 100% P=4,984 100%
c) Distribution Methods of Products and Services
The Bank’s operating segments are organized and managed separately according to the
nature of services provided and the different markets served, with each segment representing
a strategic business unit that offers different products and serves different markets. The
Bank’s reportable segments are as follows:
a. Consumer Banking - principally provides consumer-type loans generated by the Home
Office;
a. Corporate Banking - principally handles loans and other credit facilities for corporate and
institutional customers acquired in the Home Office;
a. Branch Banking - serves as the Bank’s main customer touch point which offers consumer
and corporate banking products; and
a. Treasury - principally handles institutional deposit accounts, providing money market,
trading and treasury services, as well as managing the Bank’s funding operations by use
of government securities and placements and acceptances with other banks.
The Bank has no single customer with revenues from which is 10.00% or more of the Bank’s
total revenue. The Bank presented the disclosure requirements prescribed under PFRS in
Note 6.
The Bank’s assets generating revenues are all located in the Philippines.
d) Status of any publicly-announced new products or services
Products
Date Launched
PSBank Flexi Card Activation June 28, 2010
PSBank Flexi-Cebu Pacific Tie-Up Promo
July 23, 2010 (6 months)
Check Image Viewing Facility July 15, 2010
PSBank Home Loan (new advertising campaign) May 10, 2010
PSBank Auto Loan (new advertising campaign) July 26, 2010
PSBank Flexi Personal Loan (new advertising campaign) January 15, 2010
Remote Banking Bills Payment Promo
April 15, 2010 (2.5 months)

e) Competition
PSBank continues to rank as second in the thrift banking category and is larger in terms of
total resources compared with other commercial banks. Although a thrift bank, PSBank
competes aggressively with other commercial banks in the field of retail and consumer
banking. Competition has become even more challenging amidst the growing number of
players in the consumer business and the vigorous campaign by competitor banks to acquire
a bigger share of the market. While there are many factors beyond its control, the
efficiencies it set into its operations help the Bank face market challenges. Consistency in
product and service delivery remains to be its guidepost for growth. The Bank is taking full
advantage of selected opportunities in the debt market to grow its corporate lending
business.
In 2010, PSBank was recognized for its compliance to Corporate Governance during the
annual dinner of the Institute of Corporate Directors (ICD). PSBank got a score of 91% in the
ICD scorecard for its corporate governance practices, which landed it in the Silver Category.
The Bank obtained a composite rating of 4 from the Bangko Sentral ng Pilipinas in a letter
released last May 2010, based on Report on Examination dated March 2009. The rating
indicates that the BSP found no major supervisory concerns in the Bank and that it is
fundamentally sound with minor weaknesses that can be addressed by Management in the
normal course of business. Last but not least, Philippine Rating Services Corporation
(Philratings) upgraded its rating for PSBank’s unsecured subordinated debt or Tier 2 bonds to
PRS Aaa in October 2010 from PRS Aa plus. PRS Aaa is the highest rating that Philratings
can assign and is defined as “high quality with minimal credit risk”. PSBank exercised the call
option on the bonds last January 2011.
f) Customers/Clients
While the Bank’s client base has been traditionally composed of big and small savers,
PSBank persistently builds its CASA deposits. As of year-end, the Bank services about
292,253 deposit accounts and 378,230 loan accounts. Many customers have remained loyal
depositors and borrowers of the Bank through the years. There is no single customer that
accounts for 20% or more of the Bank’s deposits and loans.
g) Transactions with and/or dependence on related parties
In the ordinary course of business, the Bank has loans and other transactions with its
affiliates and with certain directors, officers, stockholders and related interests (DOSRI).
These loans and other transactions are made substantially on the same terms as with other
individuals and businesses of comparable risks. The Bank has complied with the limits
prescribed by regulations.
Other transactions conducted in the normal course of business include deposits with the
parent company, interbank loan transactions and deposit liabilities with related parties.
h) Patents, Trademarks, Copyrights, Licenses, Franchises, etc.
The Bank sells its products and services thru the PSBank trademarks and/or tradenames.
The Bank’s operations are not dependent on the terms of these agreements.
i) Government approval of principal products or services
Its authority to operate as a thrift bank governs the Bank’s principal products and services.
Existing products and services are within the scope allowed under the Bank’s regulatory
licenses and do not need special government approval.
j) Research and Development Costs
There are no major expenses on research and development activities. Expenses incurred
related to these activities are included into the regular business expense of the Bank.

k) Employees
PSBank considers its entire workforce as important. Everyone is expected to work together
as a team to achieve the Bank’s goals and objectives.
The following are the existing and projected manpower complement:
As of 12/31/2010 Projected – Dec 2011
Senior Officers 60 65
Junior Officers 841 959
Staff 1,854 2,084
Total 2,755 3,108
Although its rank-and-file employees are unionized, the Bank has been strike-free for its
entire history. The Bank’s Management and the Employees’ Union reached an agreement
and signed the Collective Bargaining Agreement (CBA) on January 20, 2010 covering the
period of January 2010 to December 2012, significant features of which include goodwill and
signing bonuses for the initial year 2010 as the Bank’s gesture of appreciation to the mutually
agreed economic package. The CBA also includes salary increases amounting to P1,400,
P1,300 and P1,200 for 2010, 2011 and 2012, respectively. The Bank recognizes the
importance of its human resources, thus, continuing its officership program for head office
and branch functions to its roster of organizational development activities and improving
employee trainings and development to achieve the Bank’s current thrust on operations
quality and competence, service quality and effective sales.
l) Business Risks
PSBank is exposed to all business risks that confront all banks in general, such as credit,
market, interest, liquidity, legal, regulatory and operational risk. The Bank’s risk management
structure and process that serve as mechanism to identify, assess and manage these risks
are further discussed in Item 13. Compliance with Leading Practices on Corporate
Governance.
Item 2. Properties
The Bank owns the premises it occupies for the Head Office and 23 of its branches. These
offices and branches are all in good condition and there is no mortgage or lien on any of these
properties owned by the Bank. Schedule of owned branch sites is shown in EXHIBIT 1. The rest
of the Bank’s branch premises are under lease agreements. Terms of leases range from 1 month
to 30 years renewable under certain terms and conditions. Rentals charged against operations
under these lease contracts amounting to P=293.2 million in 2010. Please refer to EXHIBIT 2 for
the Schedule of branch sites under lease agreements.
Item 3. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of the fiscal year covered by this report to a
vote of security holders through the solicitation of proxies or otherwise.

PART II. OPERATIONAL AND FINANCIAL INFORMATION
Item 4. Market for Registrant’s Common Equity and Related Stockholder Matters
a) Market Price Information
PSBank common shares were listed in the Philippine Stock Exchange (PSE) in 1994. The shares
are traded under the symbol “PSB”.
The high and low sales prices of the Shares as reported in the PSE for each quarter in the years
ending December 31, 2010, 2009 and 2008 were as follows:
Highest
Lowest
In Php
2010:
First quarter 58.00 53.00
Second quarter 55.00 49.00
Third quarter 55.00 50.00
Fourth quarter 65.00 52.00
2009:
First quarter 39.00 36.00
Second quarter 41.00 38.00
Third quarter 43.00 40.00
Fourth quarter 58.00 42.00
2008:
First quarter 59.04 53.50
Second quarter 53.50 40.00
Third quarter 48.00 47.00
Fourth quarter 47.00 36.00
Source: Bloomberg.
Closing price as of March 31, 2011 was P63.50 per share.

Top 20 Stockholders as of March 31, 2011
Name of Stockholders No. of Shares % to Total
1. Metropolitan Bank and Trust Co. 182,535,895 75.98%
2. PCD Nominee Corporation (Filipino) 14,739,373 6.14%
3. Dolor, Danilo L. 12,610,891 5.25%
4. Dolor, Erlinda L. 7,605,832 3.17%
5. De Leon, Maria Soledad S. 4,000,000 1.66%
6. PSB TID FAO TA#94-00-2-2-006 3,001,369 1.25%
7. De Leon, Gian Carlo S. 2,741,378 1.14%
8. De Leon, Leonard Frederick S. 2,598,334 1.08%
9. De Leon, Alvin Benjamin S. 2,437,887 1.01%
10. De Leon, Kevin Anthony S. 2,407,964 1.00%
11. PCD Nominee Corporation (Non-Filipino) 1,641,272 0.68%
12. Go, James 298,823 0.12%
13. Ng, Jane Frances 141,781 0.06%
14. Chua, Gabriel 100,337 0.04%
15. Chua, Josephine T. 81,056 0.03%
16. Ng, Samuel Chua &/or Jocelyn Ngo Ng ITF /
Steven Samuel Ngo Ng 80,100 0.03%
17. Que, Liong H. 68,062 0.03%
18. Choa, Johnny K. 64,843 0.03%
19. Choa, Victoria K. 61,875 0.03%
20. Ty, Alejandro 57,345 0.02%
Total number of stockholders as of March 31, 2011 is 1,706.
Dividends and Dividend Policy
Dividends to be paid in cash by the Bank are subject to approval by a majority of the Board of
Directors and no further approval from the Bank's shareholders is required. Dividends to be paid
in the form of stock requires both the approval of a majority of the Board of Directors and the
approval of shareholders representing not less than two-thirds of the Bank’s outstanding capital
stock. All dividends to be declared are subject to the approval of the BSP and the SEC. There are
no known restrictions to the Bank’s ability to pay dividends on shares.
Pursuant to existing Philippine SEC rules, cash dividends declared by the Bank must have a
record date not less than 10 or more than 30 days from the date the cash dividends are declared.
With respect to stock dividends, the record date is to be not less than 10 or more than 30 days
from the date of shareholders’ approval, provided however, that the set record date is not to be
less than 10 trading days from receipt by the PSE of the notice of declaration of stock dividend. In
relation to banks, however, the record date can only be fixed after receipt of the BSP's approval
for the dividend declaration. In the event that a stock dividend is declared in connection with an
increase in authorized capital stock, the corresponding record date is to be fixed by the SEC.
Subject as described herein, the Bank has historically paid and intends to continue to pay
(subject as described below) dividends on its Shares. The payment of dividends in the future will
depend on the Bank's earnings, cash flow, financial condition and other factors. Dividends may
be declared only from unrestricted retained earnings and subject to approval from the BSP.
Circumstances which could restrict the payment of cash dividends include, but are not limited to,
when the Bank undertakes major projects and developments requiring substantial cash
expenditures or when it is restricted from paying cash dividends by its loan covenants. The Board
of Directors may, at any time, modify the Bank's dividend payout ratio depending on the results of
operations and future projects and plans of the Bank.

The bank declared cash dividends to stockholders on the following dates:
Cash Dividends
Date of Declaration
Per Share Total Amount
Date of BSP Record Date Payment Date
Approval
December 19, 2007 0.15 36,037,874 Feb 7, 2008 Feb 27, 2008 Mar 7, 2008
February 13, 2008 0.15 36,037,874 May 19, 2008 Jun 05, 2008 Jun 16, 2008
April 29, 2008 0.15 36,037,874 July 16, 2008 Aug 05, 2008 Aug 20, 2008
July 21, 2008 0.15 36,037,874 Sep 11, 2008 Oct 13, 2008 Oct 27, 2008
October 28, 2008 0.15 36,037,874 Mar 6, 2009 Mar 26, 2009 Apr 15, 2009
January 20, 2009 0.15 36,037,874 Jun 29, 2009 July 23, 2009 Aug 7, 2009
May 18, 2009 0.15 36,037,874 Aug 17, 2009 Sep 15, 2009 Sep 30, 2009
July 28, 2009 0.15 36,037,874 Oct 20, 2009 Nov 13, 2009 Dec 1, 2009
October 13, 2009 0.15 36,037,874 Dec 15, 2009 Jan 14, 2010 Jan 28, 2010
January 19, 2010 0.15 36,037,874 Mar 8, 2010 Mar 31, 2010 Apr 16, 2010
February 19, 2010 2.75 660,694,350 Apr 22, 2010 May 17, 2010 May 31, 2010
May 17, 2010 0.15 36,037,874 Jun 15, 2010 Jul 13, 2010 Aug 3, 2010
July 27, 2010 0.15 36,037,874 Sep 6, 2010 Sep 29, 2010 Oct 14, 2010
October 14, 2010 0.15 36,037,874 Nov 15, 2010 Dec 8, 2010 Dec 23, 2010
January 20, 2011 0.15 36,037,874 Feb 23, 2011 Mar 18, 2011 Apr 4, 2011
April 4, 2011 0.15 36,037,874
No unregistered securities were sold or offered for sale by the Bank for the year 2010.

PHILIPPINE SAVINGS BANK
STATEMENTS OF CONDITION
Percent - Increase
December 31
Amount - Increase (Decrease)
(Decrease)
2010 2009 2008 2010 vs 2009 2009 vs 2008 2010 vs 2009 2009 vs 2008
ASSETS
Cash and Other Cash Items P 3,163,939,540 P 2,632,884,729 P 1,436,234,455 P 531,054,811 P 1,196,650,274 20.17% 83.32%
Due from Bangko Sentral ng Pilipinas 2,899,592,073 4,937,990,387 3,228,768,914 (2,038,398,314) 1,709,221,473 -41.28% 52.94%
Due from Other Banks 7,520,836,053 1,528,847,687 1,276,768,278 5,991,988,366 252,079,409 391.93% 19.74%
Interbank Loans Receivable and Securities
Purchased Under Resale Agreements 3,586,560,000 5,900,000,000 750,000,000 (2,313,440,000) 5,150,000,000 -39.21% 686.67%
Fair Value Through Profit or Loss Investments 868,316,442 248,043,099 1,081,772,381 620,273,343 (833,729,282) 250.07% -77.07%
Available-for-Sale Investments 16,200,339,057 18,261,371,820 16,813,786,476 (2,061,032,763) 1,447,585,344 -11.29% 8.61%
Held-to-Maturity Investments 9,162,584,959 4,772,851,076 1,610,283,750 4,389,733,883 3,162,567,326 91.97% 196.40%
Loans and Receivables 53,207,635,160 47,308,237,957 41,603,346,112 5,899,397,203 5,704,891,845 12.47% 13.71%
Investment in an Associate and Joint Venture 829,873,755 788,310,337 369,951,789 41,563,418 418,358,548 5.27% 113.08%
Property and Equipment 2,107,316,622 1,985,474,732 1,765,934,385 121,841,890 219,540,347 6.14% 12.43%
Investment Properties 2,772,308,932 2,582,767,705 2,776,144,811 189,541,227 (193,377,106) 7.34% -6.97%
Deferred Tax Asset 705,361,217 1,256,530,049 1,110,811,220 (551,168,832) 145,718,829 -43.86% 13.12%
Goodwill and Other Intangible Assets 240,684,552 197,472,852 158,516,420 43,211,700 38,956,432 21.88% 24.58%
Other Assets 884,120,899 687,047,211 654,400,472 197,073,688 32,646,739 28.68% 4.99%
P 104,149,469,261 P 93,087,829,641 P 74,636,719,463 P 11,061,639,620 P 18,451,110,178 11.88% 24.72%
LIABILITIES AND EQUITY
Liabilities
Deposit Liabilities
Demand P 7,170,221,822 P 8,188,088,242 P 6,393,728,469 -P 1,017,866,420 P 1,794,359,773 -12.43% 28.06%
Savings 10,147,794,079 9,403,399,256 8,607,973,024 744,394,823 795,426,232 7.92% 9.24%
Time 70,200,793,366 59,798,723,788 46,676,781,428 10,402,069,578 13,121,942,360 17.40% 28.11%
87,518,809,267 77,390,211,286 61,678,482,921 10,128,597,981 15,711,728,365 13.09% 25.47%
Subordinated Notes 1,977,141,032 1,973,881,534 2,208,541,621 3,259,498 (234,660,087) 0.17% -10.63%
Treasurer’s, Cashier's and Manager’s Checks 649,433,599 505,738,363 339,901,057 143,695,236 165,837,306 28.41% 48.79%
Accrued Taxes, Interest and Other Expenses 1,132,129,341 895,023,135 904,943,414 237,106,206 (9,920,279) 26.49% -1.10%
Income Tax Payable - 17,425,906 14,073,344 (17,425,906) 3,352,562 -100.00% 23.82%
Other Liabilities 1,262,878,631 1,293,410,922 1,018,052,404 (30,532,291) 275,358,518 -2.36% 27.05%
92,540,391,870 82,075,691,146 66,163,994,761 10,464,700,724 15,911,696,385 12.75% 24.05%
Equity
Common Stock 2,402,524,910 2,402,524,910 2,402,524,910 - - 0.00% 0.00%
Capital Paid in Excess of Par Value 2,818,083,506 2,818,083,506 2,818,083,506 - - 0.00% 0.00%
Surplus Reserves 1,035,275,317 854,463,783 730,462,341 180,811,534 124,001,442 21.16% 16.98%
Surplus 5,055,131,075 4,232,673,110 3,296,849,504 822,457,965 935,823,606 19.43% 28.39%
Net Unrealized Gain (Loss) on Available-for-Sale
Investments 355,151,266 819,829,053 (677,288,505) (464,677,787) 1,497,117,558 -56.68% -221.05%
Cumulative Translation Adjustment (57,088,683) (115,435,867) (97,907,054) 58,347,184 (17,528,813) -50.55% 17.90%
11,609,077,391 11,012,138,495 8,472,724,702 596,938,896 2,539,413,794 5.42% 29.97%
P 104,149,469,261 P 93,087,829,641 P 74,636,719,463 P 11,061,639,620 P 18,451,110,178 11.88% 24.72%
See accompanying Notes to Financial Statements.
12

PHILIPPINE SAVINGS BANK
STATEMENTS OF INCOME
2010 2009 2008 2010 vs 2009 2009 vs 2008 2010 vs 2009 2009 vs 2008
INTEREST INCOME ON
Loans and receivables P 5,872,206,677 P 5,376,067,642 P 4,745,054,266 P 496,139,035 P 631,013,376 9.23% 13.30%
Investment securities 1,714,742,134 1,944,869,980 1,012,129,324 (230,127,846) 932,740,656 -11.83% 92.16%
Due from BSP 158,509,526 92,985,420 85,433,773 65,524,106 7,551,647 70.47% 8.84%
Due from other banks 7,126,287 5,844,863 24,609,925 1,281,424 (18,765,062) 21.92% -76.25%
Interbank loans receivable and securities purchased
under resale agreements
160,512,694
109,764,181 262,379,746 160,512,694 (152,615,565) 146.23% -58.17%
7,913,097,318 7,529,532,086 6,129,607,034 383,565,232 1,399,925,052 5.09% 22.84%
INTEREST EXPENSE ON
Deposit liabilities 2,693,229,929 2,485,486,486 2,196,675,829 207,743,443 288,810,657 8.36% 13.15%
Subordinated notes payable 206,037,289 205,737,407 205,983,474 299,882 (246,067) 0.15% -0.12%
Bills payable 1,427,292 4,831,064 17,450,070 (3,403,772) (12,619,006) -70.46% -72.31%
2,900,694,510 2,696,054,957 2,420,109,373 204,639,553 275,945,584 7.59% 11.40%
NET INTEREST INCOME 5,012,402,808 4,833,477,129 3,709,497,661 178,925,679 1,123,979,468 3.70% 30.30%
Service fees and commission income 758,628,630 642,921,038 631,459,004 115,707,592 11,462,034 18.00% 1.82%
Service fees and commission expense 66,947,148 46,679,681 97,093,744 20,267,467 (50,414,063) 43.42% -51.92%
NET SERVICE FEES AND COMMISSION INCOME 691,681,482 596,241,357 534,365,260 95,440,125 61,876,097 16.01% 11.58%
OTHER OPERATING INCOME (CHARGES) -
Trading and securities gains - net 2,229,490,724 543,632,852 199,740,186 1,685,857,872 343,892,666 310.11% 172.17%
Gain on foreclosure of investment properties 224,362,420 206,142,134 211,126,132 18,220,286 (4,983,998) 8.84% -2.36%
Loss on foreclosure of chattel mortgage (108,401,098) (91,966,009) (60,137,420) (16,435,089) (31,828,589) 17.87% 52.93%
Foreign exchange gain 15,054,606 12,337,918 186,796,847 2,716,688 (174,458,929) 22.02% -93.40%
Gain on sale of property and equipment 2,366,741 9,804,030 3,833,000 (7,437,289) 5,971,030 -75.86% 155.78%
Gain on sale of investment properties 15,239,154 31,579,889 40,429,690 (16,340,734) (8,849,801) -51.74% -21.89%
Gain on sale of chattel mortgage properties 45,391,188 41,803,965 28,578,089 3,587,223 13,225,876 8.58% 46.28%
Miscellaneous 108,949,822 88,283,966 83,229,054 20,665,856 5,054,912 23.41% 6.07%
2,532,453,558 841,618,744 693,595,578 1,690,834,813 148,023,166 200.90% 21.34%
Total Operating Income 8,236,537,847 6,271,337,230 4,937,458,499 1,965,200,617 1,333,878,731 31.34% 27.02%
OTHER EXPENSES
Compensation and fringe benefits 1,740,616,046 1,488,633,458 1,223,833,877 251,982,588 264,799,581 16.93% 21.64%
Provision for credit and impairment losses 912,282,236 1,109,756,584 577,400,627 (197,474,348) 532,355,957 -17.79% 92.20%
Taxes and licenses 777,135,211 559,775,883 451,660,304 217,359,328 108,115,579 38.83% 23.94%
Occupancy and equipment-related costs 424,277,820 362,869,511 307,401,215 61,408,309 55,468,296 16.92% 18.04%
Depreciation and amortization 352,038,108 328,535,606 274,104,098 23,502,502 54,431,508 7.15% 19.86%
Security, messengerial and janitorial services 163,935,978 147,976,617 128,687,095 15,959,361 19,289,522 10.79% 14.99%
Amortization of intangibles 41,692,711 27,761,608 26,750,792 13,931,103 1,010,816 50.18% 3.78%
Miscellaneous 1,212,927,582 917,642,194 853,688,641 295,285,388 63,953,553 32.18% 7.49%
5,624,905,692 4,942,951,461 3,843,526,649 681,954,231 1,099,424,812 13.80% 28.60%
INCOME BEFORE SHARE IN NET EARNINGS
OF AN ASSOCIATE AND A JOINT VENTURE AND INCOME
TAX
SHARE IN NET EARNINGS OF AN ASSOCIATE AND A
2,611,632,155
Years ended December 31
1,328,385,769 1,093,931,850
Amount - Increase (Decrease)
1,283,246,387
Percent - Increase
(Decrease)
234,453,919 96.60% 21.43%
JOINT VENTURE AND INCOME TAX 41,563,418 45,129,698 46,820,603 (3,566,280) (1,690,905) -7.90% -3.61%
INCOME BEFORE INCOME TAX 2,653,195,573 1,373,515,467 1,140,752,453 1,279,680,107 232,763,014 93.17% 20.40%
PROVISION FOR (BENEFIT FROM) INCOME TAX 845,080,234 133,501,051 200,600,860 711,579,183 (67,099,809) 533.01% -33.45%
NET INCOME P 1,808,115,339 P 1,240,014,416 P 940,151,593 P 568,100,924 P 299,862,823 45.81% 31.90%
Basic/Diluted Earnings Per Share 7.53 5.16 3.98
13

Item 5. Plan of Operation and Management’s Discussion and Analysis
A. Plan of Operation
The Bank will further expand its geographic reach nationwide as it plans to open more branches
in 2010. Expansion of ATM presence in non-branch locations will still be pursued given the
growing demand for customer convenience. In line with the Bank’s strategic initiatives on
information technology, it will provide reliable technology infrastructure to improve operating
efficiency. The Bank will continue offering superior E-Banking services and pursue Sales
Effectiveness and Customer Service-related programs that will provide existing and forthcoming
customers the convenient solutions to their banking needs.
B. Management’s Discussion and Analysis
i. Analysis of Statements of Condition
As of December 31, 2010 and 2009
The Bank’s Total Assets for the year ending December 31, 2010 stood at P104.15 billion. This
was 12% better than the December 2009 level of P93.09 billion. Significant year-on-year
increases were reflected in loans and receivables, held-to-maturity investment securities and due
from other banks.
Loans and Receivables climbed by 12% to P53.21 billion from P47.31 billion as the Bank
continued to benefit from the growth trend in the consumer market sector boosted by higher
confidence in the new administration.
Held-to-Maturity Investments grew by 92% or P4.39 billion to P9.16 billion as the Bank continued
to build up its long term portfolio investment in government securities and ROP bonds.
Due from Other Banks rose by 392% to P7.52 billion from year-ago level of P1.53 billion due to
the shift in investment strategy from AFS to short term placements with other banks. Cash and
Other Cash Items were also higher by 20% to P3.16 billion.
The Bank continued to maintain its 25% interest in Toyota Financial Services Philippines
Corporation (TFSPC) and 40% interest in Sumisho Motor Finance Corporation (SMFC).
The Bank’s 25% stake in TFSPC posted a 17% increase or P65.71 million to P458.92 million
from P393.21 million in 2009 due to recognition of share in the associate’s profit amounting to
P65.71 million in 2010.
SMFC, the joint venture with Sumitomo Corporation, was incorporated on November 26, 2009 to
engage in motorcycle financing in the Philippines. As of December 31, 2010, total current assets,
non-current assets and non-current liabilities of SMFC amounted to P868.29 million, P124.4
million and P65.3 million, respectively. SMFC started its commercial operations in March 2010.
As of December 31, 2010, SMFC has a total of 9 branches situated in Metro Manila and strategic
provinces.
Property and Equipment was 6% higher year-on-year to P2.11 billion due to expansion of ATM
network, opening of ten (10) new branches, relocation and renovation of some branches in 2010.
Goodwill and Other Intangible Assets including software costs and license fees increased by 22%
or P43.21 million to P240.68 million. Likewise, Other Assets were 29% higher at P884.12 million
compared with the December 2009 level of P687.05 million due to increases in chattel mortgage
and prepaid taxes on investment securities.
Deferred Tax Assets (DTA) went down by 44% to P705.36 million from P1.26 billion to align the
level of DTA with the 5-year forecasted taxable income.

Meanwhile, Fair Value through Profit or Loss (FVPL) Investments increased by 250% to P868.32
million from P248.04 million as the Bank took advantage of the volatility in interest rate for its
trading portfolio.
Likewise, Investment Properties increased by 7% to P2.77 billion from P2.58 billion as a result of
foreclosure of loan accounts with significant balances.
The Bank’s deposit level grew by 13% to P87.52 billion from P77.39 billion recorded the previous
year. The Bank continued to benefit from its various deposit generation campaigns and expanded
branch and ATM network. Time deposits increased by 17% or P10.40 billion. Likewise, savings
deposits grew by 8% or P744.39 million while Demand deposits decreased by 12% or P1.02
billion.
Last October 2010, Philippine Rating Services Corporation (Philratings) upgraded its rating for
PSBank’s P2.0 billion Unsecured Subordinated Notes to PRS Aaa from PRS Aa plus. The
Unsecured Subordinated Notes (Tier 2) is due in 2016, with step up in 2011. The request of the
Bank to exercise the call option on the Note was approved by the BSP on December 10, 2010.
The Bank exercised the call option on January 28, 2011.
Treasurer’s, cashier’s and manager’s checks as of December 2010 was higher by 28% to
P649.43 million from P505.74 million reflected in the same period last year.
In 2010, there was no outstanding income tax payable due to application of MCIT credits.
Compared to December 2009, Capital was 5% higher at P11.61 billion from the P11.01 billion
due to higher net income by 30% or P568.10 million to P1.81 billion. In addition to quarterly
dividends, special dividends of P660.69 million or P2.75 per share was declared last February
19, 2010. Mark to market (MTM) gain on Available-for-Sale investments decreased by 57% or
P464.68 million to P355.15 million compared to last year’s MTM gain of P819.83 million. As of
end 2010, Capital Adequacy Ratio (CAR) was at 15.37%. This ratio remained way above the
minimum regulatory requirement of 10%. As of December 31, 2010 and 2009, the Bank
recorded ‘Cumulative translation adjustment’ under equity amounting to P57.1 million and P115.4
million, respectively.
Meanwhile, Return on Average Equity (ROAE) increased to 15.99% in 2010 versus 12.73% in
2009. Likewise, Return on Average Assets (ROAA) went up to 1.83% in 2010 from 1.48% in
2009.
As of December 31, 2009 and 2008
The Bank’s Total Assets for the year ending December 31, 2009 stood at P93.09 billion. This
was 25% better than the December 2008 level of P74.64 billion. Significant year-on-year
increase was attributed to the positive results in loans and receivables, securities purchased
under resale agreements and investments in government securities.
In 2009, Loans and Receivables increased by 14% to P47.31 billion from P41.60 billion as the
Bank continued to benefit from the growth trend in the consumer loans sector and participated in
corporate issuances of prime companies.
Interbank Loans Receivable and Securities Purchased under Resale Agreements or the Bank’s
lending to Bangko Sentral ng Pilipinas (BSP) collateralized by government securities increased
by P5.15 billion to P5.90 billion from last year’s P750 million.
Held-to-Maturity Investments and Available-For-Sale Investments grew by P3.16 billion and
P1.45 billion to P4.77 billion and P18.26 billion, respectively, as the Bank invested its excess
funds in government securities and ROP bonds.
Due from BSP rose by 53% to P4.94 billion from year-ago level of P3.23 billion. Due from Other
Banks was P252.08 million higher at P1.53 billion due to increase in placements with other
banks. Cash and Other Cash Items were also higher by 83% to P2.63 billion.

Investments in an Associate and a Joint Venture represent 25% interest in Toyota Financial
Services Philippines Corporation (TFSPC) and 40% interest in Sumisho Motor Finance
Corporation (SMFC).
The Bank’s 25% stake in TFSPC, posted a 6% increase or P23.26 million to P393.21 million from
P369.95 million in 2008 due to recognition of share in the associate’s profit amounting to P50.03
million in 2009.
SMFC, the joint venture with Sumitomo Corporation, was incorporated on November 26, 2009 to
engage in motorcycle financing in the Philippines. As of December 31, 2009, total current assets,
non-current assets and non-current liabilities of SMFC amounted to P=1.0 billion, P39.2 million
and P=55.7 million, respectively. SMFC will start its commercial operations in the first quarter of
2010.
Property and Equipment was 12% higher year-on-year to P1.99 billion due to opening of six (6)
additional branches, relocation of various branches, expansion of ATMs and purchases of
computer equipment, furniture and fixtures in 2009.
Goodwill and Other Intangible Assets including software costs and license fees increased by
25% or P38.96 million to P197.47 million.
Other Assets were 5% higher at P687.05 million compared with the December 2008 level of
P654.40 million due to increases in Prepaid expenses, Stationeries and Supplies on Hand and
Returned Checks and Other Cash items. On the other hand, it was partially offset by the decline
in Chattel Mortgage by 27% or to P68.01 million due to this year’s higher disposal of
repossessed vehicles acquired from settlement of loans and receivables.
Deferred Tax Assets went up by 13% to P1.26 billion from P1.11 billion previously mainly due to
payment of MCIT and increase in provisions for impairment and credit losses. This was offset by
the decrease in NOLCO amounting to P211.88 million as the Bank applied the remaining
NOLCO in 2009.
Meanwhile, Fair Value through Profit or Loss (FVPL) Investments declined by 77% to P248.04
million from P1.08 billion as the Bank took profit on its trading account portfolio.
Likewise, Investment Properties decreased by 7% to P2.58 billion from P2.78 billion as a result of
higher disposal of acquired properties.
The Bank’s deposits grew by 25% to P77.39 billion from P61.68 billion recorded the previous
year. Demand and time deposits both increased by 28% or P1.79 billion and P13.12 billion,
respectively.
Treasurer’s, cashier’s and manager’s checks as of December 2009 improved by 49% to P505.74
million from P339.90 million reflected in the same period last year.
Subordinated Notes and Bills Payable decreased by 11% to P1.97 billion as the Bank settled its
interbank borrowings in 2009.
Income Tax Payable slightly increased by P3.35 million to P17.43 million due to higher amount of
gross income on loans subject to tax. Also, Other Liabilities inched up by P275.36 million to
P1.29 billion from P1.02 billion in 2008.
Compared to December 2008, Capital was 30% higher at P11.01 billion from the P8.47 billion
due to movement in net unrealized gains on available-for-sale portfolio. Mark to market (MTM)
gain on available-for-sale investments significantly increased by P1.50 billion to P819.83 million
compared to last year’s MTM loss of P677.29 million. As a result, Capital Adequacy Ratio (CAR)
reached a high of 14.44% in end-2009. This ratio remained way above the minimum regulatory
requirement of 10%.

In 2009, the Bank reflected a negative P115.44 million in its ‘Cumulative translation adjustment’
under equity.
Meanwhile, Return on Average Equity (ROAE) increased to 12.73% in 2009 versus 12.47% in
2008. Likewise, Return on Average Assets (ROAA) went up to 1.48% in 2009 from 1.31% in
2008.
ii. Discussion of Results of Operations
For the years ended December 31, 2010 and 2009
In 2010, the Bank recorded a Net Income after Tax of P1.81 billion or 46% more than the P1.24
billion it posted during the same period last year.
Total Interest Income grew by 5% or P383.57 million, better than the P7.53 billion recorded in the
same period last year.
Interest income on Loans and Receivables showed a 9% improvement or an increase of P496.14
million.
Interest Income on Investment Securities was lower by 12% to P1.71 billion as the Interest
earned from placements with the BSP rose 70% to P158.51 million versus P92.99 million in
2009.
Also, Interest income from Deposits with Other Banks increased by 22% to P7.13 million and
interest earned from Interbank Loans Receivable and Securities Purchased under Resale
Agreements was up by 46% to P160.51 million.
Net Service Fees and Commission Income increased by 16% to P691.68 million from P596.24 in
2009.
Other Operating Income also posted a favorable growth of 201% or P1.69 billion to P2.53 billion.
The Bank took advantage of the trading opportunities in the bond market resulting in higher
trading income of P2.23 billion vs. P543.62 million in 2009 or an increase of P1.69 billion.
The Bank also reflected a lower income on sale of property and equipment which decreased by
76% or P7.44 million to P2.37 million.
The Bank registered higher income on foreclosure of investment properties which increased by
9% or P18.22 million to P224.36 million. This was offset by the loss on foreclosure of chattel
mortgage by 18% or P16.44 million to P108.41 million. On the other hand, gain on sale of
investment properties slid by 52% or P16.34 million to P15.24 million, while gain on sale of
chattel mortgage increased by 9% or P3.59 million to P45.39 million.
Meanwhile, Foreign Exchange gain was higher at 22% or P15.05 million in 2010 versus P12.33
million in 2009. Miscellaneous income which includes rent income from investment properties
increased by 23% or P20.67 million to P108.95 million in 2010.
Total Interest Expense increased by 8% to P2.90 billion. Interest Expense on Deposit Liabilities
was higher by 8% to P2.69 billion versus the same period last year. In addition, Interest Expense
on bills payable representing interest payments on interbank borrowings declined by 70% to
P1.43 million from P4.83 million. In 2010, The Bank also recognized Interest Expense on Tier 2
amounting to P206.24 million.
Other Expenses was registered at P5.62 billion in 2010, up by 14% compared to 2009 level.
Compensation and Fringe Benefits increased by 17% or P251.98 million due to increases in
number of employees to 2,755 from 2,501 previously and the implementation of the revised
employee benefits based on the new Collective Bargaining Agreement.

Occupancy and equipment costs increased by 17% or P61.41 million to P424.28 million due to
branch and ATM expansion during the year. Likewise, Security, messengerial and janitorial
services increased by 11% or P15.96 million to P163.94 million. Depreciation and amortization
was higher by 7% or P23.50 million and Taxes and Licenses rose by 39% or P217.36 million due
to payment of local taxes on renewal of business permits. The Bank’s provisioning levels
decreased by P197.47 Million or 18% from P1.11 billion to P912.28 million in 2010.
As of December 31, 2010, the Bank has a total branch network of 180 compared to 170 in 2009.
By the end of 2010, the Bank had 380 ATMs nationwide versus 306 in 2009. Also in 2010, the
Bank continued its investments in technology and further enhanced its Remote Banking facility.
For the years ended December 31, 2009 and 2008
In 2009, the Bank recorded a net income of P1.24 billion or 32% more than the P940.15 million
posted during the same period last year.
Total Interest Income grew by 23% or P1.40 billion year-on-year. Interest income on Loans and
Receivables showed a 13% improvement at P5.38 billion. Interest Income on Investment
Securities was higher by 92% to P1.94 billion while Interest earned from placements with the
BSP rose 9% to P92.99 million. Meanwhile, interest income from Deposits with Other Banks slid
76% to P5.84 million while interest earned from Interbank Loans Receivable and Securities
Purchased under Resale Agreements was down 58% to P109.76 million.
The Bank’s Net Service Fees and Commissions rose by 12% to P596.24 million. Other
Operating Income also posted a favorable growth of 21% or P148.02 million to P841.62 million
as the Bank took advantage of the trading opportunities in the bond market. As a result, trading
income rose by P343.89 million to P543.63 million.
The Bank also reflected a higher income on sale of property and equipment which increased by
156% or P5.97 million to P9.80 million.
The Bank registered lower income on foreclosure of investment properties which decreased by
2% or P4.98 million to P206.14 million. Likewise, increase in loss on foreclosure of chattel
mortgage by 53% or P31.83 million to P91.97 million was recognized. On the other hand, gain
on sale of investment properties slid by 22% or P8.85 million to P31.58 million, while gain on sale
of chattel mortgage increased by 46% or P13.23 million to P41.80 million.
Meanwhile, Foreign Exchange gain was lower at P12.3 million in 2009 versus P186.80 million in
2008. Miscellaneous income which includes rent income from investment properties increased by
6% or P5.05 million to P88.28 million in 2009.
Total Interest Expense increased by 11% to P2.70 billion. Interest Expense on Deposit Liabilities
was higher by 13% to P2.49 billion versus the same period last year. In addition, Interest
Expense on bills payable representing interest payments on interbank borrowings declined by
72% to P4.83 million from P17.45 million.
Other Expenses was registered at P4.94 billion in 2009, up by 29% compared to 2008 levels.
Compensation and fringe benefits rose by P264.80 million, while Occupancy and equipment
costs increased by P55.47 million to P362.87 million due to branch and ATM expansion during
the year. Likewise, Security, messengerial and janitorial services increased by P19.29 million to
P147.98 million. Depreciation and amortization was higher by 19% or P54.43 million and Taxes
and Licenses rose by P108.12 million. The Bank also improved its provisioning levels by P532.36
million or 92%.
As of December 31, 2009, the Bank has a total branch network of 170 compared to 164 in 2008.
By the end of 2009, the Bank had 306 ATMs nationwide versus 189 in 2008. Also in 2009, the
Bank continued its investments in technology and further enhanced its Remote Banking facility.

iii. Analysis of Key Performance Indicators
The following basic ratios measure the financial performance of the Bank:
2010 2009 2008
Return on Average Equity ROAE 15.99% 12.73% 12.47%
Return on Average Assets ROAA 1.83% 1.48% 1.31%
Net Interest Margin on
Average Earning Assets NIM 5.57% 6.43% 5.75%
Earnings per share EPS 7.53 5.16 3.98
Capital-to-Risk Assets Ratio CAR 15.37% 14.44% 17.42%
2010 vs. 2009 Comparative highlights on key performance indicators
1. Return on Average Equity (ROAE) increased to 15.99% in 2010 from 12.73% in 2009. ROAE
measures how well the Bank is using common shareholders’ invested money. It is calculated by
dividing net income by the year-on-year average of the outstanding shareholders’ equity.
2. Return on Average Assets (ROAA) as of December 31, 2010 improved to 1.83% from last
year’s 1.48%. ROAA is calculated by dividing net income by the year-on-year average of the
outstanding total assets.
3. Net Interest Margin on Average Earning Assets (NIM) decreased to 5.57% in 2010 from 6.43%
in 2009. NIM is calculated by dividing the net interest income by the average earning assets.
4. Earnings per Share (EPS) increased to P7.53 as of 2010 versus P5.16 in 2009. EPS is the
net profit the Bank has generated per common share. It is computed by dividing net income by
the number of outstanding common shares.
5. Capital to Risk Assets Ratio (CAR) was at 15.37% in 2010 from 14.44% in 2009. CAR is the
measure of the Bank’s capital strength. It is calculated by dividing the qualified capital by riskweighted
assets as defined by the Bangko Sentral ng Pilipinas (BSP).
2009 vs. 2008 Comparative highlights on key performance indicators
1. Return on Average Equity (ROAE) climbed steadily to 12.73% in 2009 from 12.47% in 2008.
ROAE measures how well the Bank is using common shareholders’ invested money. It is
calculated by dividing net income by the year-on-year average of the outstanding shareholders’
equity.
2. Return on Average Assets (ROAA) as of December 31, 2009 improved to 1.48% from last
year’s 1.31%. ROAA is calculated by dividing net income by the year-on-year average of the
outstanding total assets.
3. Net Interest Margin on Average Earning Assets (NIM) increased to 6.43% in 2009 from 5.75%
in 2008. NIM is calculated by dividing the net interest income by the average earning assets.
4. Earnings per Share (EPS) likewise increased to P5.16 for the year 2009 as against the P3.98
posted in the year 2008. EPS is the net profit the Bank has generated per common share. It is
computed by dividing net income by average number of outstanding common shares.
5. Capital to Risk Assets Ratio (CAR) declined to 14.44% in 2009 from 17.42% in 2008. CAR is
the measure of the Bank’s capital strength. It is calculated by dividing the qualified capital by riskweighted
assets as defined by the Bangko Sentral ng Pilipinas (BSP).

iv. Key Variables and Other Qualitative and Quantitative Factors
a) Liquidity
PSBank manages its liquidity position to ensure that it has more than adequate funds to meet its
obligations at any given time. The Bank monitors its daily liquidity and reserve position by
determining inflows and outflows, short-term and long-term obligations, holdings and repayments.
Short-term liquidity management identifies obligations and repayments in the next 12-months,
aids in the determination of the securities trading strategy, and influences the Bank’s pricing
mechanism. On the other hand, long-term liquidity management covers maturing obligations and
repayments of loans and investments beyond the next 12-months.
The Bank’s consistent prudent management of its liquidity and sustained deposit growth in 2010
has led to the further improvement of its liquidity profile. Furthermore, the level of liquid assets
remained strong, exhibiting healthy growth in both interbank lendings and securities investments.
With the Bank’s high capitalization, current liquidity position, strong deposit growth trend,
continuing development of retail and corporate accounts, and prudent liquidity management,
PSBank does not anticipate encountering any cash flow or liquidity problems in the next 12
months. It remains confident of its ability to meet its obligations and is committed to providing the
necessary funding to support the projected loan growth, investment activities and expenditures
for 2010.
b) Events that will trigger Direct or Contingent Financial Obligation
In the normal course of the Bank's operations, there are various outstanding commitments and
contingent liabilities such as guarantees and commitments to extend credit, which are not
reflected in the accompanying financial statements. The Bank does not anticipate significant
losses as a result of these transactions.
Also, several suit and claims relating to the Bank’s lending operations and labor-related cases
remain unsettled. In the opinion of management, these suits and claims, if decided adversely, will
not involve sums having a material effect on the financial statements.
c) Material Off-Balance Sheet Transactions, Arrangements and Obligations
The following is a summary of the Bank’s commitments and contingent liabilities at their
equivalent peso contractual amounts:
2010 2009 2008
Trust department accounts 631,063,745 630,040,803 508,442,498
Stand-by credit line 112,514,393 104,023,029 151,342,780
Late deposits/ payments received 58,460,284 88,146,816 22,273,773
Items held for safekeeping 336,370 232,334 208,889
Outward bills for collection – 82,141 88,735
Others 24,994 24,107 75,201
None of these off-balance sheet transactions, arising in the ordinary course, either individually or
in the aggregate, are expected to have a material adverse effect on the Bank of its financial
condition.

d) Material Commitments for Capital Expenditures
The Bank completed in 2008 the issuance of common shares through another stock rights
offering and was able to raise P2.0 billion in capital. In general, the Bank used the net proceeds
from the Offer in strengthening its capital adequacy ratio, taking into account the effects of the
Basel II and continuously enhancing its financial flexibility as well as for general corporate
purposes including but not limited to lending, working capital and investment purposes.
The Bank’s Capital Expenditures in 2010 includes projected expenses for IT-related activities on
systems, infrastructure, and licenses; computer and peripherals; upgrade of bank premises
including furniture, fixtures and equipment. For 2011, the Bank plans to open fifteen (15) more
branches and put up 95 additional offsite ATMs.
e) Causes for Any Material Changes from Period to Period of Financial Statements
See previous discussion on Analysis of Statement of Condition and Discussion of Results of
Operations.
f) Known Trends, Events or Uncertainties or Seasonal Aspects
The financial statements of the Bank have been prepared in compliance with Philippine Financial
Reporting Standards (PFRS).
g) Changes in Accounting Policies and Disclosures
The accounting policies adopted are consistent with those of the previous financial year. The
issuance of and the amendments to the following standards and interpretations which became
effective as of January 1, 2010, did not have any impact on the accounting policies, financial
position or performance of the Bank:
• PFRS 2 Amendments - Group Cash-settled Share-based Payment Transaction, effective for
annual periods beginning on or after January 1, 2010
• PFRS 3, Business Combinations (Revised), effective for annual period beginning on or after
July 1, 2009
• Philippine Accounting Standard (PAS) 27, Consolidated and Separate Financial Statements
(Amended), effective for annual periods beginning on or after July 1, 2009
• PAS 39 Amendment - Eligible Hedged Items, effective for annual periods beginning on or
after July 1, 2009
• Philippine Interpretation International Financial Reporting Interpretation Committee (IFRIC)
17, Distributions of Non-Cash Assets to Owners, effective for annual periods beginning on or
after July 1, 2009 with early application permitted
Improvements to PFRSs
Improvements to PFRSs, an omnibus of amendments to standards, deal primarily with a view to
removing inconsistencies and clarifying wording. There are separate transitional provisions for
each standard. The adoption of the following amendments resulted in changes to accounting
policies but did not have any impact on the financial position or performance of the Bank.
Improvements to PFRSs 2008
The amendment arising from the 2008 Improvements to PFRSs is effective for annual periods
beginning on or after July 1, 2009.
• PFRS 5, Non-current Assets Held for Sale and Discontinued Operations, clarifies that when a
subsidiary is classified as held for sale, all its assets and liabilities are classified as held for
sale, even when the entity remains a non-controlling interest after the sale transaction.

Improvements to PFRSs 2009
The amendments in the 2009 Improvements to PFRSs are effective for annual periods beginning
on or after July 1, 2009, except for the amendments to PFRS 5, PFRS 8, PAS 1, PAS 7, PAS 17,
PAS 36 and PAS 39, which are effective for annual periods beginning on or after January 1,
2010. The amendment to PAS 18 was effective from issue date of the standard in April 2009.
• PFRS 5, clarifies that the disclosures required in respect of non-current assets and disposal
groups classified as held for sale or discontinued operations are only those set out in PFRS
5. The disclosure requirements of other PFRSs only apply if specifically required for such
non-current assets or discontinued operations. The amendment has no impact on the
financial position or financial performance of the Bank.
• PFRS 8, Operating Segments, clarifies that segment assets and liabilities need only be
reported when those assets and liabilities are included in measures that are used by the chief
operating decision maker. As the Bank’s chief operating decision maker reviews segment
assets and liabilities, the Bank has continued to disclose this information in Note 6.
• PAS 7, Statement of Cash Flows, states that only expenditure that results in recognizing an
asset can be classified as a cash flow from investing activities. This amendment has no
impact on the Bank’s statements of cash flows.
• PAS 36, Impairment of Assets, The amendment clarifies that the largest unit permitted for
allocating goodwill, acquired in a business combination, is the operating segment as defined
in PFRS 8 before aggregation for reporting purposes. The amendment has no impact on the
Bank as the annual impairment test is performed before aggregation.
Other amendments resulting from the 2009 Improvements to PFRSs to the following standards
did not have any impact on the accounting policies, financial position or performance of the Bank.
• PFRS 2, Share-based Payment
• PAS 1, Presentation of Financial Statements
• PAS 17, Leases
• PAS 38, Intangible Assets
• PAS 39, Financial Instruments: Recognition and Measurement
• Philippine Interpretation IFRIC-9, Reassessment of Embedded Derivatives
• Philippine Interpretation IFRIC-16, Hedge of a Net Investment in a Foreign Operation
Except for the foregoing, there are no known trends, events and uncertainties or seasonal
aspects that may effect liquidity or reverse the generally profitable results of operation of the
Bank.
Independent Accountant
SyCip Gorres Velayo & Co. (SGV & Co.), independent certified public accountants, audited the
Bank’s financial statements without qualification and in accordance with Philippine Standards on
Auditing and has expressed its opinion on the fairness of presentation upon completion of its
examination, in its report to the stockholders and Board of Directors.
The following table sets out the aggregate fees billed for each of the years ended December 31,
2010 and 2009 for professional services rendered by SGV & Co for the audit of the Bank's annual
financial statements.
2010 2009
Audit and Audit-Related Fees:
Fees for services that are normally
provided by the external auditor in
connection with statutory and regulatory
filings or engagements P=2,000,000.00 P=1,750,000.00

Tax and All Other Fees for Services of External Auditor
The Bank has engaged the services of external auditor for tax accounting, compliance, advice,
planning and any other form of tax services during the last two years. The collective fees for
each year ended December 31, 2010 and 2009 amounted to P251,440 and P152,208,
respectively.
Fees for Services of other Tax Consultant
Beginning September 2010, the Bank has engaged the services of Du-Baladad and Associates
for tax consultancy. The collective fees for the year ended December 31, 2010 amounted to
P66,336.
Audit Committee’s Approval Policies and Procedures for Above Services
As Metrobank subsidiary, the Bank adopted the Parent’s policies and procedures on audit
engagement contract for external auditors. The same was discussed and approved by the Audit
Committee.
Included in the duties and responsibilities of the Audit Committee as provided in Item No. 4 of the
Audit Committee Charter is for the Audit Committee to “consider the appointment of… external
auditor, audit fees…” among others.
Item 6. Financial Statements
The audited financial statements of the Bank and statement of management responsibility are
included as an accompanying attachment.
Item 7. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
SyCip Gorres Velayo & Co. (SGV & Co.), independent certified public accountants, audited the
Bank’s financial statements without qualification and in accordance with Philippine Standards on
Auditing and has expressed its opinion on the fairness of presentation upon completion of its
examination, in its report to the stockholders and Board of Directors.
SGV & Co. has acted as the Bank’s external auditors since 1979. Aris C. Malantic is the audit
partner for the Bank and has served as such for 5 years since 2006. In compliance with the 5-
year rotation requirement, the new certifying partner from SGV and Co. will be Janeth T. Nuñez.
The Bank has no disagreements on accounting and financial disclosures with its current external
auditors for the same periods or any subsequent interim period.
The same group of independent public accountants has been approved by the Audit Committee
to be re-appointed as the external auditors of the company for the year 2011. The re-appointment
of SGV complies with the requirement of SEC under SRC Rule 68 (3) (b) (IV). The same has
been submitted to the Board of Directors for confirmation during its organizational meeting that
was held immediately after the Annual Stockholders’ Meeting.
Representatives of SGV were present at the Annual Stockholders’ Meeting and had the
opportunity to make a statement if they desire to do so and will be available to answer
appropriate questions.

PART III. CONTROL AND COMPENSATION INFORMATION
Item 8. Directors and Executive Officers
Directors of the Bank are elected at the annual stockholders’ meeting to hold office for a term of
one (1) year until the next succeeding annual meeting and until the respective successors have
been elected and qualified. Officers are elected by the newly-elected Board of Directors at the
first meeting.
Directors
The following are the Directors for 2010 – 2011:
Name/ Position Age Citizenship Business Experience and Present and
Past Directorship with Other
Companies for the last five (5) years
Jose T. Pardo
Chairman of the Board
of Directors /
Independent
Director
72 Filipino Present Involvements
• Chairman, Philippine Savings Bank
• Chairman, OOCC General
Construction Corp.
• Chairman, ECPay (Electronic
Commerce Payment Network, Inc.)
• Director, Bank of Commerce
• Director, JG Summit Holdings, Inc.
• Director, ZNN Radio Veritas
• Director, Bank of Commerce
Investment Corporation
• Director, National GRID Corporation of
the Phils.
• Director, Philippine Stock Exchange
• Member, EDSA People Power
Commission, office of the President
Relatives
up to 4 th
Civil
degree
None
Past Experiences/ Positions Held
• Chairman, Electronic Realty
Associates, Inc.
• Chairman, Asian Holdings Corp.
• Chairman, Free Legal Assistance for
Good Cops
• Chairman, Muay Thai Philippines
Association
• President, Cable Entertainment Corp.
• President, Philippine Seven
Corporation (Philippine Licensee of 7-
Eleven, USA)
• President, Wenphil Corporation
(Philippine Area Licensee of Wendy’s,
USA)
• President, Asian Holdings Corp.
• President, Land & Housing Dev’t.
Corporation
• Director, San Miguel Foods Company
• Director, C.C. Unson Co., Inc.
• Director, GMA Network (Channel 7)
• Director, Metrobank (until 1997)
• Director, Sanitary Wares and
Manufacturing Corp.

• Director, Mabuhay Philippine Satellite
Corporation
• Director, Coca-Cola Bottlers
Philippines, Inc.
• Director, ABC Development Corp
(ABC-5)
• Director, Associated Broadcast
Marketing Corp.
Past Experiences/ Positions Held
Cabinet Secretary, Department of
Finance
Cabinet Secretary, Department of
Trade and Industry
Asian Devt Bank – Governor for
the Phils.
International Monetary Fund –
Alternate Governor for the Phils.
International Fund for Agricultural
Development – Governor
Chairman, Committee on
Privatization
Chairman, PDIC
Chairman, Trade and Investment
Development Corp
Chairman, Mt. Pinatubo
Commission
Chairman, Economic Coordinating
Council
Chairman, Council of ASEAN
Trade Ministers
Member, National Dev’t Company
Fellow, Development Academy of
the Philippines
Member, Bangko Sentral
Monetary Board
Commissioner, Career Executive
Service Board
Commissioner, Presidential Anti-
Crime Commission
Member, Presidential Council of
Economic Advisers
Member, CB Monetary Board
ASEAN Free Trade Area (AFTA)
Advisory Council
Arthur V. Ty
Vice Chairman
45 Filipino Present Involvements
• President, Metropolitan Bank and
Trust Company
• Vice Chairman, Metrobank
Foundation, Inc.
• Vice Chairman/ Director, Multi-
Currency FX Corporation
• Director, Data Serv, Inc.
• Vice Chairman/ Director, Cathay
Int’l. Resources Corp.
• Chairman, Global Treasure
Holdings, Inc.
Margaret Ty
Cham
(Sister)

• Chairman, Metropolitan Bank
(China) Ltd.
• Chairman, Great Mark Resources
Corporation
• President/ Director, Horizon Royale
Holdings, Inc.
• President/ Director, Philippine
Securities Corporation
• Director, Federal Land, Inc.
• Adviser, Asia Pacific Top
Management Int’l. Resources Corp.
• Director, Global Business Power
Corp.
• Chairman, MBTC Technology Inc.
• Chairman/ President, Nove Ferum
Holdings, Inc.
• Vice Chairman, GT Capital Holdings
Inc.
• Chairman, Grand Titan Capital
Holdings, Inc.
Past Experiences/Positions Held
• Held various positions at Metrobank
• Treasurer, First Metro Investment
Corporation, Equities Inc.
• President, Philippine Savings Bank
• Director, SMBC Metro Investment
Corporation
• Director, Lepanto Consolidated
Mining Company
• Senior Vice President, Metrobank
Foundation, Inc.
• Director, Metrobank Card Corp.
• President/ Director, MBTC
Technology Inc.
• EVP/ Director, Philippine Securities
Corporation
• EVP/ Director, Great Mark
Resources Corporation
• Director, Baywatch Realty Corp.
• Vice Chairman/Director, Global
Business Holdings
• Chairman, First Metro International
Investment Corp. (Hong Kong)
• Vice Chairman/Director,
Metropolitan Bank (Bahamas), Ltd.
• Vice Chairman, Metro Remittance
Singapore Pte. Ltd.
• Vice Chairman, Metro Remittance
Center, Inc. (U.S.A)
• Chairman, MB Remittance Center
(Hawaii), Ltd.
• Chairman, Metro Remittance
Center, Inc. (Canada)
• Vice Chairman, Metro Remittance
(Italia) SpA
• Director, MBTC Remittance GmbH
(Vienna)

• Vice Chairman, Metro Remittance
(UK) Ltd.
• Assistant Vice President, Data Serv,
Inc.
Pascual M. Garcia III
President/ Director
58 Filipino Present Involvements
• Director/President, Philippine
Savings Bank
• Adviser, Metropolitan Bank and
Trust Company
• Director, Toyota Financial Services
• Trustee, Chamber of Thrift Banks
• Director, Sumisho Motor Finance
Corp.
Past Experiences/ Positions Held
• President, Chamber of Thrift Banks
• President/COO/Director, DBS Bank
Philippines, Inc.
• Director/ President, Bank of
Southeast Asia
• Director, Shenton Realty
Corporation
• Director, Shenton Corporation
• Director, DBS Forex
• Executive Vice President, Citytrust
Banking Corporation
• Senior Vice President, Citytrust
Finance Corporation
• Senior Vice President, Citytrust
Realty Corporation
None
Margaret T. Cham
Director/ Assistant
Vice President
43 Filipino Present Involvements
• Member, Executive Committee,
Philippine Savings Bank
• Director, Philippine Savings Bank
since 2003
• Director, Orix Metro Leasing
Corporation
• Director, Federal Land, Inc.
• President/ Director, Glam Holdings
Corp.
• Chairman/President, Glamore
Holding Corp.
• Vice President, Great Mark
Resources Corp.
• Vice President/ Corporate
Secretary, Norberto and Tytana Ty
Foundation
• Corporate Secretary, Metrobank
Foundation
• Vice President, Global Treasure
Holdings, Inc.
• Vice President, Grand Titan Capital
Holdings, Inc.
Arthur V.
Ty
(Brother)

Past Experiences/ Position Held
• Corporate Secretary, Baywatch
Realty Corp.
Regis V. Puno
Director
53 Filipino Present Involvements
• Director, Philippine Savings Bank
• Senior Partner, Puno and Puno Law
Offices
• President/ Director, Pasay
Hongkong Realty Development
Corporation
• Director/ Trustee, CBP-1
Association
• Director, Arborville Corporation
• Director, Silver Goose Tree Corp.
• Director, Securities Specialist, Inc.
• Director, Crimson Power Holdings
Company
• Director/Chairman, American E-
Discovery Resources, Inc.
• Director/Vice-President, GNPower
Holdings Philippines GP Corp
• Director/President, Napnapan
Mineral Resources, Inc.
• Director, Sithe Global Camaya
Holdings, Inc.
• Trustee, Rockwell Residential
Towers Condominium Corp.
Past Experiences/ Positions Held
• Corporate Secretary / Director,
Banco Santander Philippines
• Corporate Secretary, BDO Private
Bank
• President, Georgetown Club of the
Philippines
• Undersecretary, Department of
Justice
• Technical Assistant, Phil. National
Assemby (Batasang Pambansa)
• Confidential Asssistant, Court of
Appeals
None
Maria Theresa G. Barretto
Director
70 Filipino Present Involvements
• Member, Executive Committee,
Philippine Savings Bank
• Director, Philippine Savings Bank
• Director, Endel Enterprise
Past Experiences/ Position Held
• Director, Board of Trustees DLSU-
Zobel
• Director, Assumption Alumnae
Association
None

Samson C. Lim
Independent Director
62 Filipino Present Involvements
• Director, Philippine Savings Bank
• President, Automatic Centre
• President, Blims Fine Furniture
• Chairman, Collins International
Trading Corp.
• Chairman, Francorp Philippines
• President, Canadian Tourism &
Hospitality Institute
• President, Philippine Chamber of
Commerce and Industry
• Chairman Emeritus, Philippine
Retailers Association
• Chairman Emeritus / International
Relation, Philippine Franchise
Association
• Founder, Retail and Franchise
Management Institute
Past Experiences/ Positions Held
• President, LG Collins Electronics,
Phils.
• Vice-Chairman for Asia, World
Franchise Council
• Chairman, Federation of Asian
Retailers Association (FARA)
• Founding Member, Institute of
Corporate Governance
• President & Adviser, Philippines-
Korea Economic Council
• Director, USAID – Trade &
Investment Policy Analysis &
Advocacy
• Director, Chamber of Furniture
Industries of the Philippines
Various Positions in Government
Service
Undersecretary & General
Manager, Department of Trade &
Industry- National Dev’t Company
(NDC)
Director, Philippine Industrial
Trading Corp. (PITC)
Co-chairman, Domestic Trade
Dev’t Council (Office of the Pres.)
Chairman, First Cavite Industrial
Estate
Philippine Representative, ASEAN
Fertilizer Corp (VENTULU)
None
Vicente R. Cuna Jr. 48 Filipino Present Involvements
• Vice-Chairman, Philippine Savings
Bank
• Director, Asia Pacific Top Mgt. Int’l,
Resources Corp.
• Director, SMBC Metro Investment
Corp.
None

Past Experiences/ Positions Held
• Adviser, Metrobank
• Adviser, Phil. Charter Insurance
Corp.
• Vice-President, Citibank Manila
• Vice President, Citibank New York
• Senior Consultant, JP Morgan New
York
• Senior Consultant, Bankers Trust
New York
• Consultant, Merril Lynch
Joaquin Aligguy
Director
55 Filipino Present Involvements
• Director, Philippine Savings Bank
• Corporate Secretary, Manila Doctors
Hospital
• Director, Asia Pacific Land (Nanjing)
Ltd.
• Director, Aspac Land Development
(Shanghai) Co., Ltd.
• Adviser, Metrobank Foundation
• Trustee, Kaisa Heritage Foundation
• Trustee, Angelo King Foundation
• Director, Writers Union of the Phils.
• Director, Philippine Association for
China Studies
Past Experiences/Positions Held
• General Manager/Director,
Philippine Chinese Daily
• Secretary General, Federation of
Filipino-Chinese Chambers of
Commerce and Industry
• Plant Manager/Director, Non-woven
Fabric Philippines
Board of Directors
The following have been duly elected as members of the Bank’s 2011-2012 Board of Directors on
April 4, 2011: Incumbent directors Messrs. Jose T. Pardo, Arthur V. Ty, Pascual M. Garcia III,
Samson C. Lim, Joaquin Aligguy, Margaret T. Cham, Maria Theresa G. Barretto, (please refer to
the table above for a brief professional background) and the following new members, Alfonso A.
Uygongco and David T. Go.
1. Joaquin Aligguy
2. Ma. Teresa G. Barretto
3. Margaret Ty Cham
4. Pascual M. Garcia III
5. David T. Go
6. Alfonso A. Uygongco
7. Arthur V. Ty
8. Samson C. Lim
9. Jose T. Pardo

Name/ Position Age Citizenship Business Experience and Present and
Past Directorship with Other
Companies for the last five (5) years
Relatives up
to 4 th Civil
degree
Alfonso A. Uygongco 71 Filipino Present Involvements
• Director, Panay Power Holding Corp.
• President, Federation of Filipino-
Chinese Chambers of Commerce and
Industry, Inc. (FFCCCII)
• Director, Tower Development Bank
• Director, Rocka Filipina Land Inc.
• Chairman/President, Golden Dragon
Star Equities, Inc.
• Chairman, La Filipina Uy Gongco
Corporation
• Chairman, Amigo Shipping Corporation
• Chairman, Amigo Terrace Hotel
• Chairman, Amigo Agro-Industrial
Development Corp.
• Chairman, Excel Farm Corporation
• Chairman, Capiz Sugar Central Inc.
• Chairman, Philippine Foremost Milling
Corporation
• Chairman, Mindanao Grain Processing
Corporation
• Director, BDO Private Bank
• Director, Steag State Power Inc.
• Chairman, Iloilo Economic Development
Foundation Inc.
• Member, Board of Trustees, Philippine
Chen Kuang High School
• Vice Chairman, Board of Trustees,
Philippine Chen Kuang High School
• Director/Vice President, Philippine
Soong Ching Ling Foundation
• Charter Member, Astronomical League
of the Philippines
• Chairman/President, Opal Portfolio
Investments (SPV-AMC) Inc.
• Trustee, Philippine Sugar Miller
Association
• Chairman, Retirement Board, Philippine
Chen Kuang High School
Past Experiences/ Position Held
• Member, Multi-Sectorial Anti-Corruption
Council
• Member, Office of the Ombudsman
• Vice Chairman, Review Committee on
Smuggling and Tax Evasion Cases
• Director, State Investment Trust Inc.
• Director, State Properties Inc.
• Director, FFCCCII
• Chairman, Trade and Industry
Committee, FFCCII
• Member, Executive/Marketing/
Investment Committees, Philippine
Sugar Miller Assoc.
• Member, Fertilizer Industry Association
of the Philippines
David T. Go 57 Filipino Present Involvements
• Member, Board of Advisor / Director,
Metropolitan Bank & Trust Company
• Director, Metropolitan Bank (China), Ltd.

• President, Sumaco Manufacturing Corp.
• Director, Toyota Manila Bay, Inc.
• Director, Toyota Cubao, Inc.
• Director, Lexus Manila, Inc.
• Chairman, Toyota Makati, Inc.
• Chairman, Toyota San Fernando, Inc.
• Trustee, Toyota Motor Philippines
Savings & Loan Association
• President, Toyota Motor Philippines
Foundation, Inc.
• Vice Chairman, Toyota Autoparts
Philippines, Inc.
• Board Adviser/Treasurer, Toyota
Financial Services Philippines Corp.
• SEVP/Treasurer/Director Toyota Motor
Philippines Corp.
Past Experiences/Positions Held
• Director, First Metro Investment
Corporation
• Professorial Lecturer, University of the
Philippines - Diliman
Of the above-named directors, Messrs. Jose T. Pardo and Samson C. Lim have been elected as
independent directors by Ms. Gilda Brigida C. Alunan and Ms. Dulce D. Arcebal, respectively,
with whom they are not related. Based on the Bank’s Manual of Corporate Governance and as
required by existing laws and regulations, the stockholders must elect at least two (2)
independent directors.
Executive Officers
Name/ Position Age Citizenship Experiences Relatives up
to 4 th Civil
degree
Pascual M. Garcia III
Director/President
58 Filipino Present Involvements
• President and Director of the Bank
since September 2001
• Adviser of Metropolitan Bank and Trust
Company
• Director, Toyota Financial Services
Philippines, Inc.
• Director, Sumisho Motor Finance Corp.
• Trustee, Chamber of Thrift Banks
Past Involvements
• President, Chamber of Thrift Banks
• Director of Metrobank Card Corporation
• Director of DBS Forex and Shenton
Realty Corporation
• President and Director of the Bank of
Southeast Asia and DBS Bank
Philippines, Inc.
None
Rolando A. Rodriguez
Executive Vice President
60 Filipino Present Involvements
The following businesses and support
groups report to Mr. Rodriguez as EVP:
- Auto Loans
- Mortgage Loans
- Personal Loans
- Customer Service
- Electronic Banking
None

Jose Vicente L. Alde
Executive Vice President
Jaime Valentin L.
Araneta
Senior Vice President
Noli S. Gomez
Senior Vice President
Perfecto Ramon Z.
Dimayuga, Jr.
Senior Vice President
• Director, Pampanga Sugar
Development Corporation
• Director, Okeelanta Corporation
• Chairman, Foundation for Lingap
Kapampangan, Inc.
45 Filipino Present Involvement
Past Involvements
• President, Educhild Foundation Inc.
• Senior Vice President of Equitable PCI
Bank
The following businesses and support
groups report to Mr. Alde as EVP:
- Branch Banking
- Credit Admin
- Finance
- Loans Operations
- Operations
- Specialized Lending Desk
- System Quality Assurance
- Treasury
- Large Enterprise
- Small and Medium Enterprise
Past Involvements
• Held various Branch Banking and
Treasury Positions as Vice President of
ABN-AMRO Bank
55 Filipino Present Involvement
• Head of the Bank’s E-Banking Unit
Past Involvements
• Group Vice President for Branches of
Associates Finance Inc. (Citigroup)
• Vice President for Head Office Sales
and Corporate Services of Jardine
Pacific Finance, Inc.
• General Manager of Business Works
Inc.
45 Filipino Present Involvement
• Head of the Bank’s Operations Group
Past Involvements
• Head of Systems and Methods at DBS
Bank Phils., Inc.
• System Management Officer of the
Bank of the Philippine Islands
49 Filipino Present Involvement
• Chief Finance Officer and Finance
Group Head
Past Involvements
• Head of Treasury of PSBank from June
2002 to May 2004
• Worked in the Treasury Departments of
Bank of the Philippine Islands, DBS
Bank Phils., Inc., Mindanao
Development Bank, Citytrust Banking
Corporation, Rizal Commercial Banking
Corporation
None
None
None
None

Significant Employees
Except for the above-mentioned executives there are no other significant employees as
contemplated under the Securities Regulations Code.
Nomination Procedures
1) A stockholder may submit the nomination of a director to the Nominations Committee.
2) The nominating stockholder shall submit his proposed nomination in writing to the
Nominations Committee together with the acceptance and conformity by the would-be
nominee.
3) The Nominations Committee shall screen the nomination of directors prior to the
stockholders’ meeting and come up with the Final List of Candidates.
4) Only nominees whose names appear in the Final List of Candidates shall be eligible for
election as director.
The nomination process of the Bank is incorporated in the company’s amended Code of By-Laws
duly approved by the Securities and Exchange Commission on September 27, 2006.
The following are the members of the Bank’s Nominations Committee:
Name
Arthur V. Ty, Vice Chairman
Samson C. Lim, Independent Director
Pascual M. Garcia III, President
Position
Chairman
Member
Member
Involvement in Certain Legal Proceedings
To the knowledge and information of the Bank, neither itself nor any of its affiliates, subsidiaries,
the Bank’s and their respective Director’s and Executive Officers are involved or have been
involved for the past five (5) years in any legal proceeding affecting/involving themselves and a
material or substantial portion of their property before any court of law or administrative body in
the Philippines or elsewhere.
Item 9. Executive Compensation
Name and Principal Position Year Salary*** Bonus***
Pascual M. Garcia III – President
Rolando A. Rodriguez –Executive Vice President
Jose Vicente L. Alde –Executive Vice President
Jaime L. Araneta –Senior Vice President
Noli S. Gomez –Senior Vice President
Perfecto Ramon Z. Dimayuga, Jr. – Senior Vice President
TOTAL 2011* 38.50 11.22
2010 35.32 10.29
2009 32.40 8.93
2008 31.15 7.70
All Officers (AVP up) and Directors 2011** 98.92 30.63
2010 90.75 28.10
2009 87.16 24.21
2008 79.63 23.35
* Estimated (Increased 2010 figures by 9%)
** Estimated (Increased 2010 figures by 9%)
*** In Million Pesos
The directors receive fees, bonuses and allowances that are already included in the amounts
stated above. Aside from said amounts, they have no other compensation plan or arrangement
with the bank. The executive officers receive salaries, bonuses and other usual bank benefits
that are also included in the amounts stated above. Aside from these, they have no other
compensation plan or arrangement with the bank.
There are no warrants or options held by the Bank’s officers and directors.

Item 10. Security Ownership of Certain Beneficial Owners and Management
A. CONTROL AND COMPENSATION INFORMATION
Voting Securities and Principal Holders Thereof
a) No. of Shares outstanding as of March 31, 2011 : 240,252,491 Common Shares
No. of votes to which each share is entitled : one (1) vote per share
b) Record date to determine stockholders entitled to
Notice and to vote at the regular meeting : March 9, 2011
c) Election of Directors:
Majority vote is required for the election of directors. Security holders shall have the right to
cumulative voting. Cumulative voting is allowed provided that the total votes cast by a stockholder
shall not exceed the number of shares registered in the name of that security holder in the books
of the Bank as of the record date multiplied by the whole number of directors to be elected. There
is no condition precedent to the exercise of the right to cumulative voting.
d) Arthur V. Ty is the person authorized to vote the MBTC shares in PSBank.
e) Security Ownership of Certain Records and Beneficial Owners
e.1) The following stockholders own more than 5% of the common voting securities as of
March 31, 2011:
Title of
Class
Common
Stock
Name, address of Record Owner
and relationship with issuer
Metropolitan Bank and Trust Co.
Metrobank Plaza, Gil Puyat
Avenue, Makati City
(Parent Company of PSBank)
Name of
Beneficial Owner
and relationship
with Record
Owner
Arthur V. Ty
(President of
Metrobank)
Citizenship
No. of
Shares Held
Percent
Filipino 182,535,895 75.9767%
Common
Stock
PCD Nominee Corporation
37 th Floor, Enterprise Bldg. Tower 1
Ayala Avenue, Makati City
Various
Stockholders
via PCD
Filipino 14,739,373 6.1350%
Common
Stock
Danilo L. Dolor
# 56 Tamarind Rd., Forbes Park,
Makati City
Danilo L. Dolor Filipino 12,610,891 5.2490%
As of March 31, 2011, there is no person who holds more than 5% of the Bank’s securities
lodged with PCD Nominee Corporation.

e.2) Security Ownership of Management as of March 31, 2011:
Title of Class
Name
No. of
Shares Citizenship Percent
Common Stock Jose T. Pardo, Chairman 1,852 Filipino .000771
Common Stock Arthur V. Ty, Vice Chairman 100 Filipino .000042
Common Stock Vicente R. Cuna Jr., Vice Chairman 100 Filipino .000042
Common Stock Pascual M. Garcia III, Director 100 Filipino .000042
Common Stock Samson C. Lim, Director 100 Filipino .000042
Common Stock Regis V. Puno, Director 1,100 Filipino .000458
Common Stock Maria Theresa G. Barretto, Director 3,557 Filipino .001481
Common Stock Margaret T. Cham, Director 100 Filipino .000042
Common Stock Joaquin Aligguy, Director 400 Filipino .000166
Common Stock Gilda Brigida C. Alunan, Officer 160 Filipino .000067
Common Stock Dulce D. Arcebal, Officer 628 Filipino .000261
Common Stock Yolanda L. Dela Paz, Officer 1,717 Filipino .000715
Common Stock Sabina M. Hernandez, Officer 144 Filipino .000060
Officers 26,490
Total (Directors and Officers) 100,580 0.004189
e.3) Voting Trust Holders of 5% or More
There is no person who holds more than 5% of the Bank’s securities under a voting trust or
similar agreement.
e.4) Changes in Control
There is no arrangement that may result in a change in control of the registrant. There is no
change in control that has occurred since the beginning of the last fiscal year.
Item 11. Certain Relationships and Related Transactions
In the ordinary course of business, the Bank has loans and other transactions with affiliates, and
with certain directors, officers, stockholders and related interests (DOSRI). The existing banking
regulations limit the amount of direct credit accommodations to DOSRI, 70% of which must be
secured and should not exceed the total of their respective deposits and book value of their
respective investments in the Bank. In the aggregate, loans to DOSRI generally should not
exceed the lower of the Bank’s total capital funds or 15% of the Bank’s total loan portfolio.
The following table shows information relating to DOSRI loans as of December 31, 2010 and
2009.
2010 2009
Total outstanding DOSRI Loans P=2,996,655,559 P=1,740,885,192
% of DOSRI Loans to Total Loans 4.96% 3.34%
% of Unsecured DOSRI Loans to Total DOSRI Loans 9.68% 15.29%
% of Past due DOSRI Loans to Total DOSRI Loans 19.83% 34.70%
% of Non Performing DOSRI Loans to Total DOSRI
Loans 19.83% 34.70%
Total interest income from DOSRI loans amounted to P=63.6 million, P=60.8 million and
P=63.2 million in 2010, 2009 and 2008, respectively.
Others
No director has resigned or declined to stand for re-election because of any disagreement with
the Bank on any matter relating to the Bank’s operations, policies or practices. No director has
informed the Bank in writing that he intends to oppose any action to be taken by the Bank at the
Annual Stockholders’ Meeting.

PART IV. CORPORATE GOVERNANCE
Item 12. Compliance with Leading Practices on Corporate Governance
The Bank’s Corporate Governance evolves around the principles of fairness, accountability and
transparency. Corporate Governance in PSBank involves the manner in which the business and
affairs of banks are governed by the board of directors and senior management. The Corporate
Governance tone is being set from the top to:
• Set corporate objectives;
• Operate the bank’s business on a day-to-day basis;
• Meet the obligation of accountability to their shareholders and take into account the interests
of other recognized stakeholders;
• Align corporate activities and behaviors with the expectation that banks will operate in a safe
and sound manner, and in compliance with applicable laws and regulations; and
• Protect the interests of its depositors.
The Bank recognizes that effective corporate governance practices are essential in achieving and
maintaining public trust and confidence in the banking system, which are critical in the banking
sector and economy as a whole. Indeed, in addition to the Bank’s responsibilities to shareholders,
it recognizes its responsibility to its depositors.
Sound corporate governance principles are being observed by the Bank:
1. All the Board members are qualified for their positions, have a clear understanding of their
role in corporate governance and can exercise sound judgment about the affairs of the Bank.
The Bank’s board of directors has undergone the required Corporate Governance Training.
They understand and execute their oversight role, including understanding the Bank’s risk
profile.
The Board approves the overall business strategy of the Bank, including approval of the
overall risk policy and risk management procedures. They avoid conflicts of interest, or the
appearance of conflicts, in their activities with, and commitments to, other business interests.
The Corporate Governance Manual of the Bank was updated and approved by the Board of
Directors last December 14, 2009.
The Board likewise provides oversight of the Senior Management of the Bank by exercising
its duty and authority to question and insist upon straightforward explanations from
Management, and receives on timely basis sufficient information to judge the performance of
Management.
The specialized oversight committees have taken active role in ensuring sound judgment in
the exercise of the affairs of the Bank:
a. Risk Management Committee – provides oversight of Senior Management’s activities in
managing credit, market, liquidity, operational, compliance, reputation and other risks of
the bank. It also develops written plan defining the strategies for managing and
controlling risks, and it communicates the risk management plan to affected parties.
b. Compensation and Remuneration Committee – provides oversight of remuneration of
Senior Management and other key personnel and ensure that compensation is consistent
with the Bank’s culture, objectives, strategy, and control environment, as reflected in the
formulation of compensation policy. It establishes a formal and transparent procedure for
developing a policy on executive remuneration.

c. Nominations Committee – provides assessment of Board effectiveness and directs the
process of renewing and replacing Board members. It reviews and evaluates all persons
nominated to the Board as well as those nominated to other positions requiring
appointment by the Board.
d. Corporate Governance Committee – provides assistance to the Board in fulfilling its
corporate governance responsibilities. It ensures the Board’s effectiveness and due
performance of corporate governance principles and
guidelines.
e. Audit Committee – provides oversight of the Bank’s Financial Reporting and Control and
oversees the work of internal and external audit functions; it monitors and evaluates the
adequacy and effectiveness of the internal control system.
2. The principle of self assessment by the Board of Directors is strictly being complied on an
annual basis. The assessment for 2010 performance of the Directors, the Board as a body
and each of the oversight committees were completed last January 19, 2011. The over-all
results of which were very satisfactory.
3. The Board approves and oversees the Bank’s strategic objectives and corporate values that
are communicated throughout the banking organization. The Board likewise avoids conflict of
interests. The Board reviews and approves all the business plans and budgets, code of
ethics, bank operations, internal controls and product manuals process and the
corresponding updates.
4. The Board sets and enforces clear lines of responsibility and accountability throughout the
organization, consistent with prudent board policy, transparent and at an arm’s length basis.
5. The Board ensures that there is appropriate oversight by Senior Management consistent with
Board policy.
Senior Management consists of a core group of individuals who are responsible for
overseeing the day-to-day management of the Bank. These individuals have the necessary
skills and experience to manage the business under their supervision as well as have
appropriate control over the key individuals in their respective areas.
Senior Officers contribute a major element of a bank’s sound corporate governance by
overseeing line managers in specific business areas and activities consistent with policies
and procedures set by the Bank’s Board. Senior Management under the guidance of the
Board of Directors undertakes an effective system of internal controls and wise decisionmaking.
6. The Board and Senior Management effectively utilize the work conducted by the internal
auditors and external auditors for a stronger internal control functions.
The Board recognizes and acknowledges that independent, competent and qualified auditors,
as well as internal control functions, which include Compliance and Legal, as important
elements of the bank’s operations. In particular, the Board utilizes the work of auditors to
provide an independent check and assurance on the information received from Management
on the operations and performance of the Bank.
The Bank engages external auditors, upon the nomination of the Audit Committee to review
the internal control processes related to disclosure of financial statements.
7. The Bank is governed in a transparent manner.
The bank ensures that appropriate public disclosure is a discipline that is carefully
undertaken being a publicly listed bank. Transparency is a discipline that the Bank practices
thereby sound corporate governance will continue to operate.

8. The Board and Senior Management understand the Bank’s operational structure.
While the Board of Directors is responsible for overall oversight and approval of policies,
Senior Management, on the other hand is responsible for identifying and managing material
risks arising from all of the Bank’s activities. Regularly, Senior Management reports to the
Board covering the operations of the Bank: risk issues, compliance issues and internal audit
findings.
9. The Board and Senior Management have conscientiously adhered to the Bank’s Manual of
Corporate Governance and as such, no deviation is reported for disclosure purposes.
10. Consistent with the effort to pursue continuing education and to keep abreast in Corporate
Governance, last March 24, 2009, the Board together with Senior Executives attended a
round table discussion with regulators aimed to determine the role of corporate governance in
relation to the Bank’s CAMELS rating.
11. All directors have attended and completed a 2-day seminar on Corporate Governance, per
certifications submitted to SEC dated January 24, 2011.

PART V. EXHIBITS AND SCHEDULES
Item 12. Exhibits and Reports on SEC Form 17-C
A. Exhibit 1 - Schedule of Bank/Branch Sites Owned by the Bank
B. Exhibit 2 - Schedule of Bank/Branch Sites Under Lease Agreements
C. Exhibit 3 - Events Reported under SEC FORM 17-C for the last 6 months

Item 13. Form and Contents
PART VI. AUDITED FINANCIAL STATEMENTS
a) Statement of Management’s Responsibility
b) Independent Auditors’ Report
c) Statements of Condition
d) Statements of Income
e) Statements of Comprehensive Income
f) Statements of Changes in Equity
g) Statements of Cash Flows
h) Notes to Financial Statements
i) Independent Auditors’ Report on Supplementary Schedules
j) Nature of Dividend Declared

EXHIBIT 1
PHILIPPINE SAVINGS BANK
SCHEDULE OF BANK/BRANCH SITES OWNED BY THE BANK
AS OF DECEMBER 31, 2010
Branch Name
Location
1 Head Office PSBank Center, 777 Paseo De Roxas cor. Sedeno Sts., Makati City
2 Baguio No. 35 Perfecto Street, Malcolm Square, Baguio City
3 Binakayan PSBank Bldg., Tirona Highway, Binakayan, Kawit, Cavite
4 Blumentritt 1680 Blumentritt cor. Oroquieta Sts., Sta. Cruz, Manila
5 Camiling Arellano St., near Quezon Ave., Poblacion, Camiling, Tarlac
6 Candelaria PSBank Bldg., Rizal cor. Argao Sts., Candelaria, Quezon
7 Cebu-Jones Osmena Blvd. Cor. Sanciangco St., Cebu City, Cebu
8 Dasmarinas PSBank Bldg., E. Aguinaldo Hghway cor. Mangubat Sts., Dasmarinas, Cavite
7 J.P. Rizal PSBank Bldg., J.P. Rizal, cor. Legaspi Sts., Makati City
9 Lemery Ilustre Avenue cor. J.P. Rizal St., Lemery, Batangas
10 Lipa Lipa City Cathedral Compound, C.M. Recto Ave cor. Soliman Sts., Lipa City
11 Los Banos PSBank Bldg., Lopez Ave., Batong Malake, Los Banos, Laguna
12 Marikina PSBank Bldg., 22 Bayan-Bayanan Avenue, Concepcion, Marikina City
13 Maypajo 132 A. Mabini St. near cor. Dimasalang, Maypajo, Caloocan City
14 Meycauayan PSBank Bldg., McArthur Highway, Calvario, Meycauayan, Bulacan
15 Paniqui Paniqui Commercial Complex, McArthur Highway Ext., Poblacion Norte,
Paniqui, Tarlac
16 Pasay Taft 2336 Taft Ave., near cor. Villareal St., Pasay City
17 Quezon Boulevard PSBank Bldg., 358 Quezon Blvd. cor. Arlegui Sts., Quiapo, Manila.
18 Roosevelt PSBank Bldg., 348 Roosevelt Ave., San Francisco Del Monte, Quezon City
19 San Juan No. 5 F. Blumentritt cor. N. Domingo Sts., San Juan, Metro Manila
20 San Pedro Casa Hacienda Commercial Center, A. Mabini St., San Pedro, Laguna
22 Tanauan PSBank Bldg., Pres. Laurel Highway, Tanauan City, Batangas
23 Tarlac PSBank Bldg., F. Tanedo St., Tarlac, Tarlac

EXHIBIT 2

PHILIPPINE SAVINGS BANK EXHIBIT 3
EVENTS REPORTED UNDER FORM 17-C
(Reports filed during the last 6 months prior to filing of Form 17-A)
No. Particulars Date Reported
1 Notice is given that the Annual Stockholders’ Meeting of Philippine
Savings Bank has been moved to April 4, 2011, Friday, at 4 P.M. at
the 19F, PSBank Center, Paseo de Roxas, Makati City. The
President, acting on the authority granted by the Board of Directors
and in consultation with the members of the Board, approved the
change in the date of the Meeting in the light of an unavoidable and
unforeseen business commitment involving the representative of the
parent company.
2 Reported that the BSP, in its letter dated February 25, 2011 which
the Bank received on March 2, 2011, approved the 1.5% regular
cash dividends declared by Philippine Savings Bank for the fourth
quarter of 2010 amounting to P36.04 million, payable to all common
stockholders.
March 10, 2011
March 3, 2011
Likewise as authorized by the Board, the President has fixed March
18, 2011 as the record date to determine common stockholders
entitled to regular cash dividends equivalent to P0.15 per share.
Dividend checks, which will reflect the total amount, shall be
available on April 4, 2011 (payment date).
3 Reported that the Board of Directors, in its meeting held on February
22, 2011, passed a resolution on the following:
February 24, 2011
1) Scheduling of the Annual Stockholders’ Meeting on April 1,
2011 at 4:00 o’clock in afternoon at the 19 th Floor, PSBank
Center, Paseo de Roxas Avenue corner Sedeño Street,
Makati City;
2) Setting March 9, 2011 as the Record Date for determining
stockholders entitled to notice and to vote in the Meeting;
and
3) Granting of authority to President to change the date, time
and place of the Meeting, as well as the record date and to
decide on such other related matters as may be required by
the regulators; and to sign, execute and deliver any and all
documents and to do and perform any and all acts as may
be necessary to carry into effect the intents and purposes of
the foregoing.
4 Reported that the Board of Directors, in its meeting held on January
20, 2011, passed a resolution declaring a 1.5% Regular Cash
Dividend for the fourth quarter of 2010 amounting to Php 36.038
million equivalent to Php 0.15 per share, payable to all stockholders
of record as of a date to be fixed by the President after approval by
the Bangko Sentral ng Pilipinas (BSP).
5 Reported that the BSP, in its letter dated November 18, 2010 which
the Bank received on November 19, 2010, approved the 1.5%
regular cash dividends declared by Philippine Savings Bank for the
third quarter of 2010 amounting to P36.04 million, payable to all
common stockholders.
January 21, 2011
November 22, 2010

Likewise as authorized by the Board, the President has fixed
December 8, 2010 as the record date to determine common
stockholders entitled to regular cash dividends equivalent to P0.15
per share.
Dividend checks, which will reflect the total amount, shall be
available on December 23, 2010 (payment date).
6 Reported that the Board of Directors, in its meeting held on October
14, 2010, passed a resolution declaring a 1.5% Regular Cash
Dividend for the third quarter of 2010 amounting to Php 36.038
million equivalent to Php 0.15 per share, payable to all stockholders
of record as of a date to be fixed by the President after approval by
the Bangko Sentral ng Pilipinas (BSP).
October 15, 2010

Philippine Savings Bank
Financial Statements
December 31, 2010 and 2009
and Years Ended December 31, 2010, 2009 and 2008
and
Independent Auditors’ Report
SyCip Gorres Velayo & Co.

COVER SHEET
P H I L I P P I N E S A V I N G S B A N K
1 5 5 5 2
SEC Registration Number
(Company’s Full Name)
P S B a n k C e n t e r , 7 7 7 P a s e o d e R o x a s
c o r n e r S e d e ñ o S t r e e t , M a k a t i C i t
y
(Business Address: No. Street City/Town/Province)
Perfecto Ramon Z. Dimayuga Jr. 885-8208
(Contact Person)
(Company Telephone Number)
1 2 3 1 A A F S 0 4 0 1
Month Day (Form Type) Month Day
(Fiscal Year)
(Annual Meeting)
Corporation Finance Department
(Secondary License Type, If Applicable)
Dept. Requiring this Doc.
Amended Articles Number/Section
1,725
Total Amount of Borrowings
Total No. of Stockholders Domestic Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
S T A M P S
Remarks: Please use BLACK ink for scanning purposes.

SyCip Gorres Velayo & Co.
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax: (632) 819 0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001
SEC Accreditation No. 0012-FR-2
INDEPENDENT AUDITORS’ REPORT
The Stockholders and the Board of Directors
Philippine Savings Bank
PSBank Center
777 Paseo de Roxas corner Sedeño Street
Makati City
Report on the Financial Statements
We have audited the accompanying financial statements of Philippine Savings Bank, which comprise
the statements of condition as at December 31, 2010 and 2009, and the statements of income, the
statements of comprehensive income, the statements of changes in equity and the statements of cash
flows for each of the three years in the period ended December 31, 2010, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Philippine Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
A member firm of Ernst & Young Global Limited

- 2 -
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
Philippine Savings Bank as at December 31, 2010 and 2009, and its financial performance and its cash
flows for each of the three years in the period ended December 31, 2010 in accordance with Philippine
Financial Reporting Standards.
Report on Bureau of Internal Revenue Requirement
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The supplementary information on taxes and licenses in Note 34 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 has been subjected to the auditing procedures applied in
our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as whole.
SYCIP GORRES VELAYO & CO.
Aris C. Malantic
Partner
CPA Certificate No. 90190
SEC Accreditation No. 0326-AR-1
Tax Identification No. 152-884-691
PTR No. 2641538, January 3, 2011, Makati City
February 22, 2011

PHILIPPINE SAVINGS BANK
STATEMENTS OF CONDITION
ASSETS
December 31
2010 2009
Cash and Other Cash Items (Note 16) P=3,163,939,540 P=2,632,884,729
Due from Bangko Sentral ng Pilipinas (Note 16) 2,899,592,073 4,937,990,387
Due from Other Banks (Note 29) 7,520,836,053 1,528,847,687
Interbank Loans Receivable and Securities Purchased
Under Resale Agreements (Note 7) 3,586,560,000 5,900,000,000
Fair Value Through Profit or Loss Investments (Note 8) 868,316,442 248,043,099
Available-for-Sale Investments (Notes 8 and 16) 16,200,339,057 18,261,371,820
Held-to-Maturity Investments (Note 8) 9,162,584,959 4,772,851,076
Loans and Receivables (Notes 9 and 29) 53,207,635,160 47,308,237,957
Investments in an Associate and a Joint Venture
(Notes 10 and 29) 829,873,755 788,310,337
Property and Equipment (Note 11) 2,107,316,622 1,985,474,732
Investment Properties (Note 12) 2,772,308,932 2,582,767,705
Deferred Tax Asset (Note 27) 705,361,217 1,256,530,049
Goodwill and Intangible Assets (Note 13) 240,684,552 197,472,852
Other Assets (Note 14) 884,120,899 687,047,211
P=104,149,469,261 P=93,087,829,641
LIABILITIES AND EQUITY
Liabilities
Deposit Liabilities (Notes 16 and 29)
Demand P=7,170,221,822 P=8,188,088,242
Savings 10,147,794,079 9,403,399,256
Time 70,200,793,366 59,798,723,788
87,518,809,267 77,390,211,286
Subordinated Notes (Notes 17 and 33) 1,977,141,032 1,973,881,534
Treasurer’s, Cashier’s and Manager’s Checks 649,433,599 505,738,363
Accrued Taxes, Interest and Other Expenses (Note 18) 1,132,129,341 895,023,135
Income Tax Payable (Note 27) – 17,425,906
Other Liabilities (Note 19) 1,262,878,631 1,293,410,922
92,540,391,870 82,075,691,146
(Forward)

- 2 -
Equity
December 31
2010 2009
Common Stock (Note 21) P=2,402,524,910 P=2,402,524,910
Capital Paid in Excess of Par Value 2,818,083,506 2,818,083,506
Surplus Reserves (Note 30) 1,035,275,317 854,463,783
Surplus (Note 21) 5,055,131,075 4,232,673,110
Net Unrealized Gain on Available-for-Sale Investments
(Note 8) 355,151,266 819,829,053
Cumulative Translation Adjustment (Note 2) (57,088,683) (115,435,867)
11,609,077,391 11,012,138,495
P=104,149,469,261 P=93,087,829,641
See accompanying Notes to Financial Statements.

PHILIPPINE SAVINGS BANK
STATEMENTS OF INCOME
Years Ended December 31
2010 2009 2008
INTEREST INCOME ON
Loans and receivables (Notes 9 and 29) P=5,872,206,677 P=5,376,067,642 P=4,745,054,266
Investment securities (Note 8) 1,714,742,134 1,944,869,980 1,012,129,324
Due from Bangko Sentral ng Pilipinas 158,509,526 92,985,420 85,433,773
Due from other banks (Note 29) 7,126,287 5,844,863 24,609,925
Interbank loans receivable and securities purchased
under resale agreements (Note 7) 160,512,694 109,764,181 262,379,746
7,913,097,318 7,529,532,086 6,129,607,034
INTEREST EXPENSE ON
Deposit liabilities (Notes 16 and 29) 2,693,229,929 2,485,486,486 2,196,675,829
Subordinated notes (Note 17) 206,037,289 205,737,407 205,983,474
Bills payable (Note 29) 1,427,292 4,831,064 17,450,070
2,900,694,510 2,696,054,957 2,420,109,373
NET INTEREST INCOME 5,012,402,808 4,833,477,129 3,709,497,661
Service fees and commission income (Note 22) 758,628,630 642,921,038 631,459,004
Service fees and commission expense (Note 22) 66,947,148 46,679,681 97,093,744
NET SERVICE FEES AND COMMISSION INCOME
(Note 22) 691,681,482 596,241,357 534,365,260
OTHER OPERATING INCOME (CHARGES)
Trading and securities gains - net (Note 8) 2,229,490,724 543,632,852 199,740,186
Gain on foreclosure of investment properties (Note 12) 224,362,420 206,142,134 211,126,132
Gain on sale of chattel mortgage properties (Note 14) 45,391,188 41,803,965 28,578,089
Gain on sale of investment properties (Note 12) 15,239,154 31,579,888 40,429,690
Foreign exchange gain 15,054,607 12,337,918 186,796,847
Gain on sale of property and equipment (Note 11) 2,366,740 9,804,030 3,833,000
Loss on foreclosure of chattel mortgage (Note 14) (108,401,098) (91,966,009) (60,137,420)
Miscellaneous (Note 23) 108,949,822 88,283,966 83,229,054
2,532,453,557 841,618,744 693,595,578
Total Operating Income 8,236,537,847 6,271,337,230 4,937,458,499
OTHER EXPENSES
Compensation and fringe benefits (Notes 24 and 29) 1,740,616,046 1,488,633,458 1,223,833,877
Provision for credit and impairment losses (Note 15) 912,282,236 1,109,756,584 577,400,627
Taxes and licenses (Notes 27 and 34) 777,135,211 559,775,883 451,660,304
Occupancy and equipment-related costs (Note 25) 424,277,820 362,869,511 307,401,215
Depreciation and amortization (Note 11) 352,038,108 328,535,606 274,104,098
Security, messengerial and janitorial services 163,935,978 147,976,617 128,687,095
Amortization of intangible assets (Note 13) 41,692,711 27,761,608 26,750,792
Miscellaneous (Note 26) 1,212,927,582 917,642,194 853,688,641
5,624,905,692 4,942,951,461 3,843,526,649
(Forward)

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Years Ended December 31
2010 2009 2008
INCOME BEFORE SHARE IN NET INCOME
OF AN ASSOCIATE AND A JOINT VENTURE
AND INCOME TAX
P=2,611,632,155 P=1,328,385,769 P=1,093,931,850
SHARE IN NET INCOME OF AN ASSOCIATE
AND A JOINT VENTURE (Notes 10 and 29) 41,563,418 45,129,698 46,820,603
INCOME BEFORE INCOME TAX 2,653,195,573 1,373,515,467 1,140,752,453
PROVISION FOR INCOME TAX (Note 27) 845,080,234 133,501,051 200,600,860
NET INCOME P=1,808,115,339 P=1,240,014,416 P=940,151,593
Basic/Diluted Earnings Per Share (Note 28) P=7.53 P=5.16 P=3.98
See accompanying Notes to Financial Statements.

PHILIPPINE SAVINGS BANK
STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31
2010 2009 2008
NET INCOME P=1,808,115,339 P=1,240,014,416 P=940,151,593
Other Comprehensive Income (Loss)
Changes in net unrealized gain on Available-for-sale
investments (Note 8) (464,677,787) 1,497,117,558 (805,848,857)
Cumulative translation adjustment (Note 2) 58,347,184 (17,528,813) (97,907,054)
TOTAL COMPREHENSIVE INCOME,
NET OF TAX P=1,401,784,736 P=2,719,603,161 P=36,395,682
See accompanying Notes to Financial Statements.

PHILIPPINE SAVINGS BANK
STATEMENTS OF CHANGES IN EQUITY
Net Unrealized
Gain (Loss) on
Available-for-Sale
Investments
(Note 8)
Cumulative
Translation
Adjustment
(Note 2)
Common Stock Capital Paid in Surplus Reserves
Surplus
(Note 21) Excess of Par Value (Note 30) (Note 21)
Total
Balance at January 1, 2010 P=2,402,524,910 P=2,818,083,506 P=854,463,783 P=4,232,673,110 P=819,829,053 (P=115,435,867) P=11,012,138,495
Total comprehensive income (loss) for the year – – – 1,808,115,339 (464,677,787) 58,347,184 1,401,784,736
Appropriation of surplus for trust business – – 180,811,534 (180,811,534) – – –
Cash dividends (Note 21) – – – (804,845,840) – – (804,845,840)
Balance at December 31, 2010 P=2,402,524,910 P=2,818,083,506 P=1,035,275,317 P=5,055,131,075 P=355,151,266 (P=57,088,683) P=11,609,077,391
Balance at January 1, 2009 P=2,402,524,910 P=2,818,083,506 P=730,462,341 P=3,296,849,504 (P=677,288,505) (P=97,907,054) P=8,472,724,702
Total comprehensive income (loss) for the year – – – 1,240,014,416 1,497,117,558 (17,528,813) 2,719,603,161
Appropriation of surplus for trust business – – 124,001,442 (124,001,442) – – –
Cash dividends (Note 21) – – – (180,189,368) – – (180,189,368)
Balance at December 31, 2009 P=2,402,524,910 P=2,818,083,506 P=854,463,783 P=4,232,673,110 P=819,829,053 (P=115,435,867) P=11,012,138,495
Balance at January 1, 2008 P=2,019,383,150 P=1,220,819,206 P=636,447,182 P=2,594,864,566 P=128,560,352 P=– P=6,600,074,456
Total comprehensive income (loss) for the year – – – 940,151,593 (805,848,857) (97,907,054) 36,395,682
Appropriation of surplus for trust business – – 94,015,159 (94,015,159) – – –
Issuance of common stock 383,141,760 1,597,264,300 – – – – 1,980,406,060
Cash dividends (Note 21) – – – (144,151,496) – – (144,151,496)
Balance at December 31, 2008 P=2,402,524,910 P=2,818,083,506 P=730,462,341 P=3,296,849,504 (P=677,288,505) (P=97,907,054) P=8,472,724,702
See accompanying Notes to Financial Statements.

PHILIPPINE SAVINGS BANK
STATEMENTS OF CASH FLOWS
Years Ended December 31
2010 2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P=2,653,195,573 P=1,373,515,467 P=1,140,752,453
Adjustments for:
Realized gain on sale of available-for-sale investments
(Note 8) (2,323,447,276) (503,223,604) (230,643,975)
Provision for credit and impairment losses (Note 15) 912,282,236 1,109,756,584 577,400,627
Depreciation and amortization (Note 11) 352,038,108 328,535,606 274,104,098
Gain on foreclosure of investment properties (Note 12) (224,362,420) (206,142,134) (211,126,132)
Loss on foreclosure of chattel mortgage properties (Note 14) 108,401,098 91,966,009 60,137,420
Gain from sale of chattel mortgage properties (Note 14) (45,391,188) (41,803,965) (28,578,089)
Amortization of intangible assets (Note 13) 41,692,711 27,761,608 26,750,792
Share in net income of an associate and a joint
venture (Note 10) (41,563,418) (45,129,698) (46,820,603)
Gain from sale of investment properties (Note 12) (15,239,154) (31,579,888) (40,429,690)
Amortization of debt issuance costs (Note 17) 3,259,498 2,939,913 2,664,778
Gain from sale of property and equipment (Note 11) (2,366,740) (9,804,030) (3,833,300)
Unrealized trading loss on fair value through
profit or loss investments (Note 8) 793,423 11,127,300 18,710,369
Changes in operating assets and liabilities:
Decrease (increase) in:
Fair value through profit or loss investments (620,889,068) 822,456,959 318,693,818
Loans and receivables (8,004,900,540) (7,540,645,333) (7,337,206,992)
Other assets (227,469,061) (100,044,178) (176,504,283)
Increase (decrease) in:
Deposit liabilities 10,160,268,335 15,703,125,456 3,780,725,331
Treasurer’s, cashier’s and manager’s checks 143,695,236 165,837,306 (37,801,879)
Accrued taxes, interests and other expenses 237,142,974 (9,936,508) 39,901,023
Other liabilities 5,555,938 239,305,697 16,082,613
Cash generated from (used in) operations 3,112,696,265 11,388,018,567 (1,857,021,621)
Income taxes paid (226,340,247) (275,867,318) (146,001,219)
Net cash provided by (used in) operating activities 2,886,356,018 11,112,151,249 (2,003,022,840)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of:
Other intangible assets (Note 13) (84,904,411) (66,718,040) (19,097,954)
Property and equipment (Note 11) (396,765,121) (474,230,433) (230,060,966)
Held-to-maturity investments (4,384,256,019) (3,163,556,793) (87,733,714)
Available-for-sale investments (52,626,689,622) (10,014,727,372) (17,773,948,651)
Proceeds from sale of:
Available-for-sale investments 56,547,892,402 10,467,963,860 13,655,161,223
Investment properties (Note 12) 432,950,999 599,814,459 229,599,094
Chattel mortgage properties (Note 14) 592,678,122 563,585,587 328,405,707
Property and equipment (Note 11) 26,802,180 39,380,202 40,368,764
Proceeds from redemption of held-to-maturity investments at
maturity – – 258,255,187
Dividends received (Note 10) – 26,771,150 –
Investment in a joint venture (Note 10) – (400,000,000) –
Net cash provided by (used in) investing activities 107,708,530 (2,421,717,380) (3,599,051,310)
(Forward)

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Years Ended December 31
2010 2009 2008
CASH FLOWS FROM FINANCING ACTIVITIES
Settlements of bills payable (P=6,327,836,992) (P=2,706,900,000) (P=6,177,600,000)
Availments of bills payable 6,327,836,992 2,469,300,000 6,415,200,000
Dividends paid (Note 21) (840,883,714) (144,151,496) (143,863,698)
Issuance of common stock – – 1,980,406,060
Net cash provided by (used in) financing activities (840,883,714) (381,751,496) 2,074,142,362
Effect of exchange rate differences 18,024,029 (731,217) (4,105,551)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,171,204,863 8,307,951,156 (3,532,037,339)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR
Cash and other cash items (Note 16) 2,632,884,729 1,436,234,455 1,093,135,036
Due from Bangko Sentral ng Pilipinas (Note 16) 4,937,990,387 3,228,768,914 3,280,015,727
Due from other banks (Note 29) 1,528,847,687 1,276,768,278 544,196,039
Interbank loans receivable and securities purchased under
resale agreements (Note 7) 5,900,000,000 750,000,000 5,306,462,184
14,999,722,803 6,691,771,647 10,223,808,986
CASH AND CASH EQUIVALENTS AT
END OF YEAR
Cash and other cash items (Note 16) 3,163,939,540 2,632,884,729 1,436,234,455
Due from Bangko Sentral ng Pilipinas (Note 16) 2,899,592,073 4,937,990,387 3,228,768,914
Due from other banks (Note 29) 7,520,836,053 1,528,847,687 1,276,768,278
Interbank loans receivable and securities purchased under
resale agreements (Note 7) 3,586,560,000 5,900,000,000 750,000,000
P=17,170,927,666 P=14,999,722,803 P=6,691,771,647
OPERATIONAL CASH FLOWS FROM INTEREST
Interest paid P=2,890,090,324 P=2,740,452,986 P=2,289,195,803
Interest received 8,211,376,642 7,391,750,548 5,658,615,033
See accompanying Notes to Financial Statements.

PHILIPPINE SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
1. Corporate Information
Philippine Savings Bank (the Bank) was incorporated in the Philippines primarily to engage in
savings and mortgage banking. The Bank’s shares are listed in the Philippine Stock Exchange
(PSE). The Bank offers a wide range of products and services such as deposit products, loans,
treasury and trust functions that serve mainly to the retail and consumer market. On September 6,
1991, the Bank was authorized to perform trust functions.
As of December 31, 2010 and 2009, the Bank had 180 and 170 branches, respectively. The Bank
added 74 Automated Tellering Machines (ATMs) in Metro Manila and in provincial locations in
2010, bringing the total number of ATMs to 380 as of December 31, 2010 from 306 as of
December 31, 2009.
The original Certificate of Incorporation of the Bank was issued by the Securities and Exchange
Commission on June 30, 1959. On March 28, 2006, the board of directors (BOD) of the Bank
approved the amendment of Article Four of its Amended Articles of Incorporation to extend the
corporate term of the Bank, which expired on June 30, 2009, for another 50 years or up to June 30,
2059.
On March 23, 2010, the Board of Directors approved the amendment of the Bank’s Articles of
Incorporation and By-laws for the purpose of reducing the number of directors from eleven (11) to
a maximum of nine (9).
As of December 31, 2010, the Bank is seventy-six percent (76%) owned by Metropolitan Bank &
Trust Company (MBTC), its parent company.
The Bank’s principal place of business is located at PSBank Center, 777 Paseo de Roxas corner
Sedeño Street, Makati City.
2. Accounting Policies
Basis of Preparation
The accompanying financial statements have been prepared under the historical cost basis except
for fair value through profit or loss (FVPL) investments and available-for-sale (AFS) investments
that have been measured at fair value.
The accompanying financial statements of the Bank include the accounts maintained in the
Regular Banking Unit (RBU) and Foreign Currency Deposit Unit (FCDU). The functional
currency of the RBU and the FCDU is Philippine Peso and United States Dollar (USD),
respectively. For financial reporting purposes, FCDU accounts and foreign currency-denominated
accounts in the RBU are translated into their equivalents in Philippine pesos (see accounting
policy on Foreign Currency Translation). The financial statements of these units are combined
after eliminating inter-unit accounts.
Statement of Compliance
The financial statements of the Bank have been prepared in compliance with Philippine Financial
Reporting Standards (PFRS).

- 2 -
Changes in Accounting Policies and Disclosure
The accounting policies adopted are consistent with those of the previous financial year. The
issuance of and the amendments to the following standards and interpretations which became
effective as of January 1, 2010, did not have any impact on the accounting policies, financial
position or performance of the Bank:
• PFRS 2 Amendments - Group Cash-settled Share-based Payment Transaction, effective for
annual periods beginning on or after January 1, 2010
• PFRS 3, Business Combinations (Revised), effective for annual period beginning on or after
July 1, 2009
• Philippine Accounting Standard (PAS) 27, Consolidated and Separate Financial Statements
(Amended), effective for annual periods beginning on or after July 1, 2009
• PAS 39 Amendment - Eligible Hedged Items, effective for annual periods beginning on or
after July 1, 2009
• Philippine Interpretation International Financial Reporting Interpretation Committee (IFRIC)
17, Distributions of Non-Cash Assets to Owners, effective for annual periods beginning on or
after July 1, 2009 with early application permitted
Improvements to PFRSs
Improvements to PFRSs, an omnibus of amendments to standards, deal primarily with a view to
removing inconsistencies and clarifying wording. There are separate transitional provisions for
each standard. The adoption of the following amendments resulted in changes to accounting
policies but did not have any impact on the financial position or performance of the Bank.
Improvements to PFRSs 2008
The amendment arising from the 2008 Improvements to PFRSs is effective for annual periods
beginning on or after July 1, 2009.
• PFRS 5, Non-current Assets Held for Sale and Discontinued Operations, clarifies that when a
subsidiary is classified as held for sale, all its assets and liabilities are classified as held for
sale, even when the entity remains a non-controlling interest after the sale transaction.
Improvements to PFRSs 2009
The amendments in the 2009 Improvements to PFRSs are effective for annual periods beginning
on or after July 1, 2009, except for the amendments to PFRS 5, PFRS 8, PAS 1, PAS 7, PAS 17,
PAS 36 and PAS 39, which are effective for annual periods beginning on or after January 1, 2010.
The amendment to PAS 18 was effective from issue date of the standard in April 2009.
• PFRS 5, clarifies that the disclosures required in respect of non-current assets and disposal
groups classified as held for sale or discontinued operations are only those set out in PFRS 5.
The disclosure requirements of other PFRSs only apply if specifically required for such noncurrent
assets or discontinued operations. The amendment has no impact on the financial
position or financial performance of the Bank.
• PFRS 8, Operating Segments, clarifies that segment assets and liabilities need only be
reported when those assets and liabilities are included in measures that are used by the chief
operating decision maker. As the Bank’s chief operating decision maker reviews segment
assets and liabilities, the Bank has continued to disclose this information in Note 6.

- 3 -
• PAS 7, Statement of Cash Flows, states that only expenditure that results in recognizing an
asset can be classified as a cash flow from investing activities. This amendment has no impact
on the Bank’s statements of cash flows.
• PAS 36, Impairment of Assets, The amendment clarifies that the largest unit permitted for
allocating goodwill, acquired in a business combination, is the operating segment as defined in
PFRS 8 before aggregation for reporting purposes. The amendment has no impact on the
Bank as the annual impairment test is performed before aggregation.
Other amendments resulting from the 2009 Improvements to PFRSs to the following standards did
not have any impact on the accounting policies, financial position or performance of the Bank.
• PFRS 2, Share-based Payment
• PAS 1, Presentation of Financial Statements
• PAS 17, Leases
• PAS 38, Intangible Assets
• PAS 39, Financial Instruments: Recognition and Measurement
• Philippine Interpretation IFRIC-9, Reassessment of Embedded Derivatives
• Philippine Interpretation IFRIC-16, Hedge of a Net Investment in a Foreign Operation
Summary of Significant Accounting Policies
Foreign Currency Translation
The financial statements are presented in Philippine pesos, which is the Bank’s functional and
presentation currency.
The books of accounts of the RBU are maintained in Philippine pesos, while those of the FCDU
are maintained in USD.
RBU
As at reporting date, foreign currency monetary assets and liabilities of the RBU are translated in
Philippine pesos 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 as at the
date of the transaction. Foreign exchange differences arising from restatements of foreign
currency-denominated assets and liabilities in the RBU are credited to or charged against profit or
loss in the year 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 is determined.
FCDU
As at the reporting date, the assets and liabilities of the FCDU are translated to the Bank’s
presentation currency (the Philippine Peso) at PDS closing rate prevailing at the statement of
condition date, and its income and expenses are translated using the exchange rates as at the dates
of the transaction. Exchange differences arising on translation to the presentation currency are
taken to the statement of comprehensive income under ‘Cumulative translation adjustment’. Upon
disposal of the FCDU, the deferred cumulative amount recognized in the statement of
comprehensive income is recognized in the statement of income. The Bank adopted this policy
when the Bangko Sentral ng Pilipinas (BSP) issued BSP Circular No. 601 on February 13, 2008.
This Circular included a provision requiring Banks to use the USD as the functional currency of
its FCDU. As of December 31, 2010 and 2009, the Bank recorded ‘Cumulative translation
adjustment’ under equity amounting to P=57.1 million and P=115.4 million, respectively.

- 4 -
Financial Instruments - Initial Recognition and Subsequent Measurement
Date of recognition
Purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace are recognized on the settlement date.
Deposits, amounts due to banks and loans are recognized when cash is received by the Bank or
advanced to the borrowers.
Initial recognition of financial instruments
All financial instruments, including trading and investment securities and loans and receivables,
are initially measured at fair value. Except for FVPL investments and liabilities, the initial
measurement of financial instruments includes transaction costs. The Bank classifies its financial
assets in the following categories: FVPL investments, Held-to-maturity (HTM) investments, AFS
investments, and loans and receivables. Financial liabilities are classified into liabilities at FVPL
and other financial liabilities at amortized cost. The classification depends on the purpose for
which the investments are 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 statement of condition date. As of
December 31, 2010 and 2009, the Bank had no liabilities at FVPL.
Determination of fair value
The fair value for financial instruments traded in active markets at the statement of condition date
is based on their quoted market price or dealer price quotations (bid price for long positions and
asking price for short positions), without any deduction for transaction costs. When current bid
and asking prices are not available, the price of the most recent transaction is used since it
provides evidence of the current fair value as long as there has not been a significant change in
economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by
using appropriate valuation techniques. Valuation techniques include net present value
techniques, comparison to similar instruments for which market observable prices exist, options
pricing models, and other relevant valuation models.
‘Day 1’ difference
Where the transaction price in a non-active market is different from 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 Bank recognizes the difference
between the transaction price and fair value (a ‘Day 1 difference’) in the statement of income in
‘Trading and securities gains - net’, unless it qualifies for recognition as some other type of asset.
In cases where 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
Bank determines the appropriate method of recognizing the ‘Day 1 difference’ amount.
Derivatives
Derivative financial instruments are initially recorded at fair value on the date at which the
derivative contract is entered into and are subsequently remeasured at fair value. Any gains or
losses arising from changes in fair values of derivatives (except those accounted for as cash flow
hedges) are taken directly to the statement of income and are included in ‘Trading and securities
gain - net’. Derivatives are carried as assets when the fair value is positive and as liabilities when
the fair value is negative. As of December 31, 2010 and 2009, derivatives comprise Republic of
the Philippines (ROP) paired warrants acquired to lower the risk weighted assets and improve the
capital adequacy ratio of the Bank.

- 5 -
For purposes of hedge accounting, hedges, if any, are classified primarily as either: a) a hedge of
the fair value of an asset, liability or a firm commitment (fair value hedge); or b) a hedge of the
exposure variability in cash flows attributable to an asset or a liability or a forecasted transaction
(cash flow hedge). Hedge accounting is applied to derivatives designated as hedging instruments
in a fair value, cash flow, or net investment hedge provided certain criteria are met. In 2010 and
2009, the Bank did not apply hedge accounting treatment for its derivative transactions.
Designated financial assets or financial liabilities at FVPL
Designated financial assets or financial liabilities classified in this category are designated by
management on initial recognition when the following criteria are 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.
Designated financial assets and financial liabilities at FVPL are recorded in the statement of
condition at fair value. Changes in fair value of financial assets and liabilities designated at FVPL
are recorded in ‘Trading and securities gains - net’. Interest earned or incurred is recorded in
interest income or expense, respectively, while any dividend income is recorded in other operating
income according to the terms of the contract, or when the right of the payment has been
established. As of December 31, 2010 and 2009, the Bank had no designated financial assets or
financial liabilities at FVPL.
Other financial assets or financial liabilities held-for-trading (HFT)
Other financial assets or financial liabilities HFT (classified as FVPL investments) are recorded in
the statement of condition at fair value. Changes in fair value relating to the HFT positions are
recognized in ‘Trading and securities gains - net’. Interest earned or incurred is recorded as
interest income or expense, respectively, while dividend income is recorded in other operating
income when the right to receive payment has been established.
Included in this classification are debt securities which have been acquired principally for the
purpose of selling in the near term.
Embedded derivatives
An embedded derivative is separated from the host contract and accounted for as a derivative if all
of the following conditions are met:
• the economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristic of the host contract;
• a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative; and
• the hybrid or combined instrument is not recognized at fair value through profit or loss.

- 6 -
The Bank assesses whether embedded derivatives are required to be separated from host contracts
when the Bank first becomes a party to the contract. Subsequent reassessment is prohibited unless
there is a change in the terms of the contract that significantly modifies the cash flows that
otherwise would be required under the contract, in which case reassessment is required. The Bank
determines whether a modification to cash flows is significant by considering the extent to which
the expected future cash flows associated with the embedded derivative and the host contract and
whether the change is significant relative to the previously expected cash flow on the contract.
As of December 31, 2010 and 2009, the Bank does not have any embedded derivatives required to
be separated from the host contract.
HTM investments
HTM investments are quoted non-derivative financial assets with fixed or determinable payments
and fixed maturities for which the Bank’s management has the positive intention and ability to
hold to maturity. Where the Bank sells other than an insignificant amount of HTM investments,
the entire category would be tainted and reclassified to AFS investments. After initial
measurement, these investments are subsequently measured at amortized cost using the effective
interest rate (EIR) amortization method, less 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
EIR. The amortization is included in ‘Interest income on investment securities’ in the statement of
income. Gains and losses are recognized in the statement of income when the HTM investments
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 credit and impairment losses’.
The effects of restatement on foreign currency denominated HTM investments are recognized in
the statement of income.
Amounts due from BSP and other banks, interbank loans receivable and securities purchased
under resale agreements (SPURA), loans and receivables
These are non-derivative financial assets with fixed or determinable payments and fixed maturities
that are not quoted in an active market. They are not entered into with the intention of immediate
or short-term resale and are not classified as ‘FVPL investments’, designated as ‘AFS
investments’ or ‘designated financial assets at FVPL’.
After initial measurement, ‘Due from BSP’, ‘Due from other banks’, ‘Interbank loans receivable
and SPURA’ and ‘Loans and receivables’ are subsequently measured at amortized cost using the
EIR amortization method, less allowance for credit losses. 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 in the ‘Interest income’ in the statement of income. The
losses arising from impairment are recognized in ‘Provision for credit and impairment losses’ in
the statement of income.
AFS investments
AFS investments are those which are designated as such or do not qualify to be classified as FVPL
investments, HTM investments 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 other debt instruments.

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After initial measurement, AFS investments are subsequently measured at fair value. The
effective yield component of AFS debt securities, as well as the impact of restatement on foreign
currency-denominated AFS debt securities, is reported in income. The unrealized gains and losses
arising from the fair valuation of AFS investments are excluded, net of tax, from reported income
and are reported as ‘Net unrealized gain (loss) on AFS investments’ in other comprehensive
income (OCI).
When the security is disposed of, the cumulative gain or loss previously recognized in OCI is
recognized as ‘Trading and securities gains - net’ in the statement of income. Where the Bank
holds more than one investment in the same security, these are deemed to be disposed on a
weighted average basis. Interest earned on holding AFS debt investments are reported as interest
income using the EIR. Dividends earned on holding AFS equity investments are recognized in the
statement of income as ‘Miscellaneous income’ when the right of the payment has been
established. The losses arising from impairment of such investments are recognized as ‘Provision
for credit and impairment losses’ in the statement of income.
Other financial liabilities carried at amortized cost
This category represents issued financial instruments or their components, which are not
designated at FVPL and comprises ‘Deposit liabilities’, ‘Subordinated notes and bills payable’,
‘Treasurer’s, cashier’s and manager’s checks’, ‘Accrued interest payable’, ‘Accounts payable’,
‘Bills purchased-contra’, ‘Other credits’, ‘Due to BSP’, ‘Dividends payable’, ‘Due to Treasurer of
the Philippines’ and ‘Deposits for keys-Safety deposit boxes (SDB)’, where the substance of the
contractual arrangement results in the Bank 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 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, financial liabilities not qualified as and not designated as FVPL, are
subsequently measured at amortized cost using the EIR amortization 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.
Derecognition of Financial Assets and Liabilities
Financial asset
A financial asset (or, where applicable a part of a financial asset or part of a group of financial
assets) is derecognized where:
• the rights to receive cash flows from the asset have expired; or
• the Bank 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 Bank 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 risk and rewards of the asset but has transferred control over the asset.

- 8 -
Where the Bank 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 over the asset, the asset is recognized to the extent of
the Bank’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 original carrying amount of the
asset and the maximum amount of consideration that the Bank could be required to repay.
Financial liability
A financial liability is derecognized when the obligation under the liability is discharged or
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.
Repurchase and Reverse Repurchase Agreements
Securities sold under agreements to repurchase at a specified future date (‘repos’) are not
derecognized from the statement of condition. The corresponding cash received, including
accrued interest, is recognized in the statement of condition as a loan to the Bank, reflecting the
economic substance of such transaction. The Bank had no outstanding repurchase agreements as
of December 31, 2010 and 2009.
Conversely, securities purchased under agreements to resell at a specified future date (‘reverse
repos’) are not recognized in the statement of condition. The corresponding cash paid, including
accrued interest, is recognized in the statement of condition as SPURA, and is considered a loan to
the counterparty. 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 amortization method.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of
condition if, and only if, there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, or to realize the asset and settle the
liability simultaneously. This is not generally the case with master netting agreements, and the
related assets and liabilities are presented gross in the statement of condition.
Impairment of Financial Assets
The Bank assesses at each statement of condition 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.

- 9 -
Financial assets carried at amortized cost
For financial assets carried at amortized cost, which includes loans and receivables, due from
banks and HTM investments, the Bank first assesses at each statement of condition date 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. Loans and receivables, 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, 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, any amounts formerly charged are credited to ‘Provision for credit and impairment
losses’ in the statement of income.
If the Bank 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.
Assets individually assessed for impairment for which no impairment loss was measured are also
collectively assessed 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 and age of receivables.
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 in 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 Bank to reduce any differences between loss estimates
and actual loss experience.

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Restructured loans
Where possible, the Bank seeks to restructure loans rather than to take possession of collateral.
This may involve extending the payment arrangements and the agreement on 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 subjected to an individual or collective impairment
assessment, calculated using the loan’s original EIR if the original loan has fixed interest rate and
the current repriced rate if the original loan is repriceable. The difference between the recorded
value of the original loan and the present value of the restructured cash flows, discounted at the
applicable interest rate, is recognized in ‘Provision for credit and impairment losses’ in the
statement of income.
AFS investments
For AFS investments, the Bank assesses at each statement of condition date whether there is
objective evidence that a financial asset or group of financial assets is impaired.
In case of equity investments classified as AFS investments, 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 equity 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 in the statement of comprehensive income.
In the case of debt instruments classified as AFS investments, impairment is assessed based on the
same criteria as financial assets carried at amortized cost. 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.
Revenue and Expense Recognition
Revenue is recognised when it is probable that future economic benefits will flow to the entity and
these benefits can be measured reliably. The Bank assesses its revenue arrangements against
specific criteria in order to determine if it is acting as principal or agent. The Bank concluded that
it is acting as a principal in all of its revenue arrangement. The following specific recognition
criteria must also be met before revenue is recognized:
Interest income and expense
For all financial instruments measured at amortized cost and interest bearing financial instruments
classified as AFS investments, interest income is recorded at the 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. 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, but not future credit
losses.

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The carrying amount of the financial asset or financial liability is adjusted if the Bank revises its
estimates of payments or receipts. The adjusted carrying amount is calculated based on the
original EIR and 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 used
to discount future cash flows.
Fee and commission income
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, portfolio fees, credit related fees
and other service and management fees.
Dividends
Dividend income is recognized when the Bank’s right to receive payment is established.
Trading and securities gains - net
Income results from disposal of AFS investments and trading activities including all gains and
losses from changes in fair value for financial assets at FVPL.
Rental income
Rental income arising from leased properties is accounted for on a straight-line basis over the
lease terms on ongoing leases and is recorded in the statement of income under ‘Other operating
income’.
Income from sale of property and equipment, investment property and chattel mortgage properties
Income from sale of properties is recognized upon completion of the earning process and the
collectibility of the sales price is reasonably assured.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash and other cash items,
amounts due from BSP and other banks, and interbank loans receivable and SPURA that are
convertible to known amounts of cash with original maturities of three months or less from dates
of placements and that are subject to insignificant risk of changes in value.
Business Combination and Goodwill
Business combinations are accounted for using the acquisition method. This involves recognizing
identifiable assets (including previously unrecognized intangible assets) and liabilities (including
contingent liabilities and excluding future restructuring) of the acquired business at fair value.
Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is
recognized as goodwill. If the cost of acquisition is less than the fair values of the identifiable net
assets acquired, the discount on acquisition is recognized directly in the statement of income in the
year of acquisition.
Goodwill is initially measured at cost being the excess of the acquisition cost over the share in the
net fair value of the acquired identifiable assets, liabilities and contingent liabilities. The Bank’s
goodwill arose from past purchases of branch business/offices from the Parent Company.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired is, from the acquisition date, allocated to
each of the cash generating units that are expected to benefit from the synergies of the
combination, irrespective of whether the acquired other assets or liabilities are assigned to those
units.

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Where goodwill forms part of a cash-generating unit 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 cash-generating unit retained.
Investment in an Associate
Associates are entities over which the Bank has significant influence but not control, generally
accompanying a shareholding of between 20.00% and 50.00% of the voting rights. The Bank’s
investment in an associate represents its 25.00% interest in Toyota Financial Services Philippines
Corp. (TFSPC), an entity not listed in the PSE. Investment in an associate is accounted for under
the equity method of accounting.
The reporting period of TFSPC is the fiscal year-ending March 31. However, TFSPC prepares
financial statements for a 12-month period ending December 31 for the use of the Bank in
applying the equity method. The length of the reporting period is the same from period to period.
Where necessary, adjustments are made to bring the accounting policies in line with those of the
Bank.
Investment in a Joint Venture
Investment in a joint venture represents the Bank’s interest in a jointly controlled entity, whereby
the venturers have a contractual arrangement that establishes joint control over the economic
activities of Sumisho Motor Finance Corporation (SMFC), an entity not listed in the PSE. The
Bank’s investment in a joint venture represents its 40.00% interest in SMFC. Investment in a joint
venture is accounted for under the equity method of accounting.
The reporting period of SMFC is the calendar year ending December 31. Where necessary,
adjustments are made to bring the accounting policies in line with those of the Bank.
Under the equity method, an investment in an associate and a joint venture is carried in the
statement of condition at cost plus post-acquisition changes in the Bank’s share in the net assets of
the associate and a joint venture. Goodwill relating to an associate and a joint venture is included
in the carrying value of the investment and is not amortized. The Bank’s share in an associate’s
and a joint venture’s post-acquisition profits or losses is recognized in the statement of income,
and its share of post-acquisition movements in the associate’s and joint venture’s other
comprehensive income is recognized in the statement of comprehensive income. When the
Bank’s share of losses in an associate and a joint venture equals or exceeds its interest in the
associate or joint venture, including any other unsecured receivables, the Bank does not recognize
further losses, unless it has incurred obligations or made payments on behalf of the associate or
joint venture. The Bank’s interest in the associate or joint venture is the carrying amount of the
investment in the associate or joint venture under the equity method together with any long-term
interests that form part of the Bank's net investment in the associate or joint venture. Profits and
losses resulting from transactions between the Bank and an associate or joint venture are
eliminated to the extent of the Bank’s interest in the associate or joint venture.
Property and Equipment
Land is stated at cost less any impairment in value and depreciable properties including building,
furniture, fixtures and equipment, and leasehold improvements are stated at cost less accumulated
depreciation and accumulated impairment losses. The initial cost of property and equipment
consists of its purchase price and any directly attributable costs of bringing the asset to its working
condition and location for its intended use. Expenditures incurred after the assets have been put
into operation, such as repairs and maintenance, are normally charged against profit or loss in the
year in which the costs are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits expected to be obtained

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from the use of property and equipment beyond its originally assessed standard of performance,
the expenditures are capitalized as additional cost of property and equipment.
Depreciation is calculated on a straight-line basis over the useful life of the asset as follows:
Buildings
Furniture, fixtures and equipment
Leasehold improvements
25-50 years
3-5 years depending on the type of assets
5 years or the term of the related leases,
whichever is shorter
An item of property 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.
The carrying values of property and equipment are reviewed for impairment when events or
changes in circumstances indicate the carrying value may not be recoverable. If any such
indication exists and where the carrying values exceed the estimated recoverable amount, the asset
or cash-generating units are written down to their recoverable amount (see policy on Impairment
of Nonfinancial Assets).
The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted if
appropriate, at each financial year-end to ensure that these are consistent with the expected pattern
of economic benefits from the items of property and equipment.
Investment Properties
Investment properties are measured initially at cost, including transaction costs. An investment
property acquired through an exchange transaction is measured at fair value of the asset acquired
unless the fair value of such an asset cannot be measured in which case the investment property
acquired is measured at the carrying amount of asset given up. Foreclosed properties are
classified under investment properties from foreclosure date. Expenditures incurred after the
investment properties have been put into operations, such as repairs and maintenance costs, are
normally charged to income in the period in which the costs are incurred.
Subsequent to initial recognition, investment properties are carried at cost less accumulated
depreciation and impairment in value except for land which is stated at cost less impairment in
value. Depreciation is calculated on a straight-line basis using the remaining useful lives from the
time of acquisition of the investment properties.
The estimated useful lives of the depreciable assets are as follows:
Building and Condominium Units
10-40 years
Investment properties are derecognized when they have either been disposed of or when the
investment property is permanently withdrawn from use and no future benefit is expected from its
disposal. Any gains or losses on the retirement or disposal of an investment property are
recognized in the statement of income in ‘Gain (loss) on sale of investment properties’ in the year
of retirement or disposal.
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.

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Chattel Mortgage Properties
Chattel mortgage properties comprise of repossessed vehicles. Chattel mortgage properties are
stated at cost less accumulated depreciation and impairment in value. Depreciation is calculated
on a straight-line basis using the remaining useful lives from the time of acquisition of the
vehicles. The useful lives of chattel mortgage properties are estimated to be 5 years.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of
intangible assets acquired in a business combination is its fair value as at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated
amortization and any accumulated impairment losses. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and expenditure is reflected in the
statement of income in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets
with finite lives are amortized over the useful economic life and assessed for impairment
whenever there is an indication that the intangible assets may be impaired. The amortization
period and the amortization method for an intangible asset with a finite useful life are reviewed at
least at each financial year-end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset is accounted for by changing the
amortization period or method, as appropriate, and treated as changes in accounting estimates.
The amortization expense on intangible assets with finite lives is recognized in the statement of
income in the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually
or at the cash generating unit level. Such intangibles are not amortized. The useful life of an
intangible asset with an indefinite life is reviewed annually to determine whether indefinite life
assessment continues to be supportable. If not, the change in the useful life assessment from
indefinite to finite is made on a prospective basis.
Gains or losses arising from the 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 the
statement of income when the asset is derecognized.
License fees
License fees arose from acquisition of branches from a local bank. License fees have indefinite
useful lives and are tested for impairment on an annual basis.
Software costs
Software costs are carried at cost less accumulated amortization and any impairment in value.
Given the history of rapid changes in technology, computer software are susceptible to
technological obsolescence. Therefore, it is likely that their useful life is short. Software costs are
amortized on a straight-line basis over 5 years but maybe shorter depending on the period over
which the Bank expects to use the asset.
Impairment of Nonfinancial Assets
Property and equipment, investment and chattel mortgage properties
At each statement of condition date, the Bank assesses whether there is any indication that its
nonfinancial assets may be impaired. When an indicator of impairment exists or when an annual
impairment testing for an asset is required, the Bank makes a formal estimate of the recoverable
amount. Recoverable amount is the higher of an asset’s (or cash-generating unit’s) fair value less
costs to sell and its value in use and is determined for an individual asset, unless the asset does not

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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 cash generating unit to which it
belongs. Where the carrying amount of an asset (or cash generating unit) exceeds its recoverable
amount, the asset (or cash generating unit) 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 cash generating unit).
An impairment loss is charged to operation in the year in which it arises.
An assessment is made at each statement of condition 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 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 unless the asset is carried at a revalued amount, in which case the reversal is treated as a
revaluation increase. 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.
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 (or group of cash generating units) to which the goodwill relates. Where the recoverable
amount of the cash generating unit (or group of cash generating units) is less than the carrying
amount of the cash generating unit (or group of cash generating units) 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 Bank performs its annual impairment test of goodwill at the statement of
condition date.
Intangible assets
Intangible assets with indefinite useful lives are tested for impairment annually at the statement of
condition date either individually or at the cash generating unit level, as appropriate.
Intangible assets with finite lives are assessed for impairment whenever there is an indication that
the intangible asset may be impaired.
Investment in an associate and a joint venture
After application of the equity method, the Bank determines whether it is necessary to recognize
an impairment loss on the Bank’s investment in an associate and a joint venture. The Bank
determines at each statement of condition date whether there is any objective evidence that the
investment in an associate and a joint venture are impaired. If this is the case, the Bank calculates
the amount of impairment as being the difference between the fair value of the associate and joint
venture and the carrying amount and recognizes the amount in the statement of income.

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Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of
the arrangement at inception date of whether the fulfillment of the arrangement is dependent on
the use of a specific asset or assets or 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;
(b) a renewal option is exercised or extension granted, unless that term of the renewal or
extension was initially included in the lease term;
(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 gives rise to the reassessment for scenarios (a), (c) or (d) above, and at
the date of renewal or extension period for scenario (b).
Bank as a lessee
Finance leases, which transfer to the Bank substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease payments
are apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are reflected in
the statement of income under ‘Interest expense’.
Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset
and the lease term, if there is no reasonable certainty that the Bank will obtain ownership by the
end of the lease term.
Leases where the lessor retains substantially all the risk and benefits of ownership of the assets are
classified as operating leases. Operating lease payments are recognized as an expense in the
statement of income on a straight-line basis over the lease term.
Bank as a lessor
Leases where the Bank does not transfer substantially all the risks and benefits of ownership of the
asset are classified as operating leases. Initial direct costs incurred in negotiating an operating
lease are added to the carrying amount of the leased asset and recognized over the lease term on
the same basis as rental income. Contingent rents are recognized as income in the period in which
they are earned.
Retirement Cost
The Bank has a funded, noncontributory defined benefit retirement plan, administered by trustees,
covering their permanent employees.
The retirement cost of the Bank is determined using the projected unit credit method. Under this
method, the current service cost is the present value of retirement benefits payable in the future
with respect to services rendered in the current period.
The liability recognized in the statement of condition in respect of defined benefit pension plan is
the present value of the defined benefit obligation at the statement of condition date less the fair
value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past
service costs. The defined benefit obligation is calculated annually by an independent actuary
using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest rate on government

- 17 -
bonds that have terms to maturity approximating the terms of the related retirement liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are credited to or charged against income when the net cumulative unrecognized
actuarial gains and losses at the end of the previous period exceeded 10% of the higher of the
defined benefit obligation and the fair value of plan assets at that date. These excess gains or
losses are recognized over the expected average remaining working lives of the employees
participating in the plan.
Past-service costs, if any, are recognized immediately in income, unless the changes to the pension
plan are conditional on the employees remaining in service for a specified period of time (the
vesting period). In this case, the past-service costs are amortized on a straight-line basis over the
vesting period.
The defined benefit asset or liability comprises the present value of the defined benefit obligation
less past service costs not yet recognized and less the fair value of plan assets out of which the
obligations are to be settled directly. The value of any asset is restricted to the sum of any past
service cost not yet recognized and the present value of any economic benefits available in the
form of refunds from the plan or reductions in the future contributions to the plan.
Provisions
Provisions are recognized when the Bank 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 Bank 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 ‘Interest expense’.
Contingent Liabilities and Contingent Assets
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.
Debt Issue Costs
Issuance, underwriting and other related expenses incurred in connection with the issuance of debt
instruments are deferred and amortized over the terms of the instruments using the EIR method.
Unamortized debt issuance costs are netted against the carrying amount of the debt instrument in
the statement of condition.
Income Taxes
Income tax on profit or loss for the year comprises current and deferred tax. Income tax is
determined in accordance with Philippine tax law. Income tax is recognized in the statement of
income, except to the extent that it relates to other comprehensive income items recognized
directly in the statement of comprehensive income.
Current income tax
Current income tax is the expected tax payable on the taxable income for the period, using the tax
rates enacted at the statement of condition date, together with adjustments to tax payable in respect
to prior years.

- 18 -
Deferred income tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences at
the statement of condition 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, including asset
revaluation. Deferred tax assets are recognized for all deductible temporary differences and
carryforward of unused tax losses and tax credits from excess minimum corporate income tax
(MCIT) over the regular corporate income tax (RCIT), to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences and carryforward of
unused tax losses and MCIT can be utilized.
The carrying amount of deferred tax assets is reviewed at each statement of condition 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 statement of condition date and are recognized to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered.
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 related to the same taxable
entity and the same taxation authority.
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 statement of condition date.
Current tax and deferred tax relating to items recognized directly in OCI is also recognized in
equity and not in the statement of income.
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 issued and outstanding during the year, after giving retroactive
effect to stock dividends declared, stock rights exercised and stock splits, if any, declared during
the year. As of December 31, 2010 and 2009, there were no potential common shares with
dilutive effect on the basic EPS of the Bank.
Dividends on Common Shares
Dividends on common shares are recognized as a liability and deducted from equity when
approved by the BOD of the Bank and the BSP. Dividends for the year that are approved after the
statement of condition date are dealt with as an event after the statement of condition date.
Subsequent Events
Post year-end events that provide additional information about the Bank’s position at the statement
of condition date (adjusting events) are reflected in the financial statements.
Post year-end events that are not adjusting events are disclosed in the notes to the financial
statements when material.

- 19 -
Segment Reporting
The Bank’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 6. The Bank’s assets generating revenues are all 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 Bank acts in a
fiduciary capacity such as nominee, trustee or agent.
Standards Issued but not yet Effective
Standards issued but not yet effective up to the date of issuance of the Bank’s financial statements
are listed below. This listing is of standards and interpretations issued, which the Bank reasonably
expects to be applicable at a future date. The Bank intends to adopt those standards when they
become effective. Except as otherwise indicated, the Bank does not expect the adoption of these
amended PFRS and Philippine Interpretation to have significant impact on its financial statement.
PAS 12, Income Taxes (Amendment) - Deferred Tax: Recovery of Underlying Assets
The amended standard is effective for annual periods beginning on or after January 1, 2012. The
amendment provides a practical solution to the problem of assessing whether recovery of an asset
will be through use or sale. It introduces a presumption that recovery of the carrying amount of an
asset will, normally, be through sale.
PAS 24 (Amended), Related Party Disclosures
The amended standard is effective for annual periods beginning on or after January 1, 2011. It
clarified the definition of a related party to simplify the identification of such relationships and to
eliminate inconsistencies in its application. The revised standard introduces a partial exemption of
disclosure requirements for government-related entities. Early adoption is permitted for either the
partial exemption for government-related entities or for the entire standard.
PAS 32, Financial Instruments: Presentation (Amendment) - Classification of Rights Issues
The amendment to PAS 32 is effective for annual periods beginning on or after February 1, 2010
and amended the definition of a financial liability in order to classify rights issues (and certain
options or warrants) as equity instruments in cases where such rights are given pro rata to all of
the existing owners of the same class of an entity’s non-derivative equity instruments, or to
acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency.
PFRS 7, Financial Instruments: Disclosures (Amendments) - Disclosures-Transfers of Financial
Assets
The amendments of PFRS 7 are effective for annual periods beginning on or after July 1, 2011.
The amendments will allow users of financial statements to improve their understanding of
transfer transactions of financial assets (for example, securitizations), including understanding the
possible effects of any risks that may remain with the entity that transferred the assets. The
amendments also require additional disclosures if a disproportionate amount of transfer
transactions are undertaken around the end of a reporting period.

- 20 -
PFRS 9, Financial Instruments: Classification and Measurement
PFRS 9, as issued in 2010, reflects the first phase of the work on the replacement of PAS 39 and
applies to classification and measurement of financial assets and financial liabilities as defined in
PAS 39. The standard is effective for annual periods beginning on or after January 1, 2013. In
subsequent phases, hedge accounting and derecognition will be addressed. The completion of this
project is expected in early 2011. The adoption of the first phase of PFRS 9 will have an effect on
the classification and measurement of the Bank’s financial assets. The Bank will quantify the
effect in conjunction with the other phases, when issued, to present a comprehensive picture of
impact of adoption on the financial position or performance of the Bank.
Philippine Interpretation IFRIC-14 (Amendment) - Prepayments of a Minimum Funding
Requirement
The amendment to Philippine Interpretation IFRIC-14 is effective for annual periods beginning on
or after January 1, 2011, with retrospective application. The amendment provides guidance on
assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat
the prepayment of a minimum funding requirement as an asset.
Philippine Interpretation IFRIC-15, Agreement for Construction of Real Estate
This Interpretation, effective for annual periods beginning on or after January 1, 2012, covers
accounting for revenue and associated expenses by entities that undertake the construction of real
estate directly or through subcontractors. The Interpretation requires that revenue on construction
of real estate be recognized only upon completion, except when such contract qualifies as
construction contract to be accounted for under PAS 11, Construction Contracts, or involves
rendering of services in which case revenue is recognized based on stage of completion. Contracts
involving provision of services with the construction materials and where the risks and reward of
ownership are transferred to the buyer on a continuous basis will also be accounted for based on
stage of completion.
Philippine Interpretation IFRIC-19, Extinguishing Financial Liabilities with Equity Instruments
This Interpretation is effective for annual periods beginning on or after July 1, 2010. The
interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability
qualify as consideration paid. The equity instruments issued are measured at their fair value. In
case that this cannot be reliably measured, the instruments are measured at the fair value of the
liability extinguished. Any gain or loss is recognized immediately in profit or loss.
Improvements to PFRSs 2010
Improvements to IFRSs are an omnibus of amendments to PFRSs. The amendments have not been
adopted as they become effective for annual periods on or after either July 1, 2010 or January 1,
2011. The Bank, however, expects no impact from the adoption of the following amendments on
its financial position or performance:
• PFRS 3, Business Combinations
• PFRS 7, Financial Instruments: Disclosures
• PAS 1, Presentation of Financial Statements
• PAS 27, Consolidated and Separate Financial Statements
• Philippine Interpretation IFRIC-13, Customer Loyalty Programmes

- 21 -
3. Significant Accounting Judgments and Estimates
The preparation of the financial statements in accordance with PFRS requires the Bank to make
judgments and estimates that affect the reported amounts of assets, liabilities, income and
expenses and disclosure of contingent assets and contingent liabilities. 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) Operating leases
Bank as lessor
The Bank has entered into on its properties. The Bank has determined based on an evaluation
of the terms and conditions of the arrangements (i.e., the lease does not transfer ownership of
the asset to the lessee by the end of the lease term, the lessee has no option to purchase the
asset at a price that is expected to be sufficiently lower than the fair value at the date the
option is exercisable and the lease term is not for the major part of the asset’s economic life),
that it retains all the significant risks and rewards of ownership of these properties which are
leased out on operating leases.
Bank as lessee
The Bank has entered into leases on premises it uses for its operations. The Bank has
determined, based on the evaluation of the terms and condition of the lease agreement, that all
significant risks and rewards of ownership of the properties it leases on operating lease are not
transferable to the Bank.
(b) Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the statement of
condition cannot be derived from active markets, they are determined using a variety of
valuation techniques that include the use of mathematical models. The input to these models
is taken from observable markets where possible, but where this is not feasible, a degree of
judgment is required in establishing fair values. These estimates may include consideration of
liquidity, volatility and correlation.
(c) HTM investments
The classification to HTM investment requires significant judgment. In making this
judgment, the Bank evaluates its intention and ability to hold such investments to maturity. If
the Bank 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 to AFS investments. The investments would
therefore be measured at fair value and not at amortized cost.
As of December 31, 2010 and 2009, the fair market value of HTM investments amounted to
P=10.4 billion and P=5.1 billion, respectively (see Note 4). The carrying value of HTM
investments amounted to P=9.2 billion and P=4.8 billion as of December 31, 2010 and 2009,
respectively (see Note 8).

- 22 -
(d) Financial assets not quoted in an active market
The Bank 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 on whether quoted prices are readily and regularly
available, and whether those prices represent actual and regularly occurring market
transactions on an arm’s length basis.
(e) Functional currency
PAS 21 requires management to use its judgment to determine the entity’s functional currency
such that it most faithfully represents the economic effects of the underlying transactions,
events and conditions that are relevant to the entity. In making this judgment, the Bank
considers the following:
a) the currency that mainly influences sales prices for financial instruments and services (this
will often be the currency in which sales prices for its financial instruments and services
are denominated and settled);
b) the currency in which funds from financing activities are generated; and
c) the currency in which receipts from operating activities are usually retained.
Estimates
(a) Credit losses on loans and receivables
The Bank reviews its loans and receivables at each statement of condition date to assess
whether an impairment loss should be recorded in the statement of income. In particular, the
management estimates the amount and timing of future cash flows based on a number of
factors and calculates the impairment loss. Actual results may differ, at which event, the Bank
adjusts the impairment loss and ensures that allowance for it remains adequate.
In addition to specific allowance against individually significant loans and receivables, the
Bank also makes a collective impairment allowance against exposures which, although not
specifically identified as requiring a specific allowance, have a greater risk of default than
when originally granted. This collective allowance is based on any deterioration in the
internal rating of the loan or investment since it was granted or acquired. This collective
allowance is based on changes in factors that are indicative of incurred losses, such as
deterioration in payment status and underlying property prices, among others.
As of December 31, 2010 and 2009, the allowance for credit losses on loans and receivables
amounted to P=4.5 billion and P=3.9 billion, respectively (see Note 15). Loans and receivables
are carried at P=53.2 billion and P=47.3 billion as of December 31, 2010 and 2009, respectively
(see Note 9).
(b) Valuation of unquoted AFS equity investments
The Group’s investments in equity securities that do not have quoted market price in an active
market and whose fair value cannot be reliably measured are carried at cost.
As of December 31, 2010 and 2009, carrying amounts of unquoted equity securities amounted
to P=1.4 million as of December 31, 2010 and 2009 (see Note 8).
(c) Impairment of quoted AFS equity investments
The Bank treats AFS equity investments as impaired when there has been a significant or
prolonged decline in the fair value below its cost or where other objective evidence of
impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires
judgment. The Bank treats ‘significant’ generally as 20% or more of the original cost of the
investment, and ‘prolonged’, greater than 6 months. In addition, the Bank evaluates other
factors, including normal volatility in share price for quoted equities.

- 23 -
As of December 31, 2010 and 2009, the allowance for impairment losses on quoted AFS
equity investments amounted to P=2.2 million. Quoted AFS equity investments are carried at
P=3.0 million as of December 31, 2010 and 2009 (see Note 8).
(d) Impairment of nonfinancial assets
Property and equipment, chattel mortgage properties, and intangible assets
The Bank assesses impairment on assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The factors that the
Bank considers important which could trigger an impairment review include the following:
• 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.
The Bank recognizes an impairment loss whenever the carrying amount of an asset exceeds
its recoverable amount. The recoverable amount is computed using the fair value less costs to
sell for property and equipment, investment properties and chattel mortgage properties.
Recoverable amounts are estimated for individual assets or, if it is not possible, for the cashgenerating
unit to which the asset belongs. As of December 31, 2010 and 2009, there were no
main events and circumstances that led to the recognition of impairment losses for
individually significant investment properties.
As of December 31, 2010, the carrying values of property and equipment, investment
properties, intangible assets and chattel mortgage properties amounted to P=2.1 billion,
P=2.8 billion, P=187.1 million and P=233.5 million, respectively. As of December 31, 2009, the
carrying values of property and equipment, investment properties, intangible assets and chattel
mortgage properties amounted to P=2.0 billion, P=2.6 billion, P=143.9 million and P=180.4 million,
respectively (see Notes 11, 12, 13 and 14).
Investments in an associate and a joint venture
The Bank assesses impairment on its investments in an associate and a joint venture whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Among others, the factors that the Bank considers important which could trigger
an impairment review on its investments in an associate and a joint venture include the
following:
• Deteriorating or poor financial condition;
• Recurring net losses; and
• Significant changes (i.e. technological, market, economic, or legal environment in which
the subsidiary or associate operates) with an adverse effect on the subsidiary or associate
have taken place during the period, or will take place in the near future.
An impairment loss is recognized whenever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is determined based on the asset’s value in use.
As of December 31, 2010 and 2009, the carrying values of the Bank’s investments in an
associate and a joint venture amounted to P=829.9 billion and P=788.3 million, respectively
(see Note 10).
Goodwill
The Bank’s management conducts an annual review for any impairment in value of the
goodwill. Goodwill is written down for impairment where the net present value of the
forecasted future cash flows from the business is insufficient to support its carrying value.

- 24 -
The Bank used its weighted average cost of capital in discounting the expected cash flows
from specific cash generating units.
Future cash flows from the business are estimated based on the theoretical annual income of
the cash generating units. Average growth rate was derived from the average increase in
annual income during the last 5 years.
The recoverable amount of the cash generating unit has been determined based on a value-inuse
calculation using cash flow projections from financial budgets approved by senior
management covering a five-year period. The pre-tax discount rate applied to cash flow
projections is 12.00%.
Key assumptions in value-in-use calculation of cash generating units are most sensitive to the
following assumptions: a.) interest margin; b.) discount rates; and c.) projected growth rates
used to extrapolate cash flows beyond the budget period.
As of December 31, 2010 and 2009, the Bank’s goodwill amounted to P=53.6 million
(see Note 13).
(e) Fair value of investment properties
The fair values of the Bank’s investment properties have been 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.
(f) Present value of retirement obligation
The cost of defined benefit pension plan and other post employment benefits is determined
using actuarial valuation. The actuarial valuation involves making assumptions about
discount rates, expected rates of return on plan assets, future salary increases, mortality rates
and future pension increases. Due to the long term nature of this plan, such estimates are
subject to significant uncertainty.
The expected rate of return on plan assets of 8.44% and 6.00% as of January 1, 2010 and
2009, respectively, was based on market prices prevailing on the date of valuation, applicable
to the period over which the obligation is to be settled. 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 statement of condition dates. Refer to Note
24 for the details of assumptions used in the actuarial valuation.
As of December 31, 2010 and 2009, the present value of the retirement obligation of the Bank
amounted to P=647.0 million and P=512.3 million, respectively (see Note 24).
(g) Recognition of deferred income taxes
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred tax assets that can be
recognized, based upon the likely timing and level of future taxable profits together with
future tax planning strategies.
Estimates of future taxable income indicate that temporary differences will be realized in the
future. As discussed in Note 27, net recognized deferred tax assets as of December 31, 2010
and 2009 amounted to P=705.4 million and P=1.3 billion, respectively.

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(h) Contingent liabilities
The Bank is a defendant in legal actions arising from normal business activities. Management
believes that the ultimate liability, if any, resulting from these cases will not have a material
effect on the Bank’s financial statements (see Note 31).
(f) Estimated useful lives of property and equipment, investment properties and software cost
The Bank estimates the useful lives of its property and equipment, investment properties and
software cost. This estimate is reviewed periodically to ensure that the period of depreciation
and amortization are consistent with the expected pattern of economic benefits from the items
of property and equipment and investment properties.
As of December 31, 2010, carrying value of depreciable property and equipment and
investment properties amounted to P=1.9 billion and P=1.2 billion, respectively. As of
December 31, 2009, carrying value of depreciable property and equipment and investment
properties amounted to P=1.8 billion and P=1.1 billion, respectively (see Note 11 and 12). As of
December 31, 2010 and 2009, carrying value of software costs amounted to P=163.0 million
and P=120.8 million, respectively (see Note 13).
4. Fair Value Measurement
The following describes the methodologies and assumptions used to determine the fair values of
financial instruments:
Cash and other cash items, due from BSP, due from other banks, interbank loans receivable and
SPURA, accounts receivable, accrued interest receivables, bills purchased, returned checks and
other cash items (RCOCI), shortages, and petty cash fund - Carrying amounts approximate fair
values due to the relatively short-term maturities of these assets.
Debt investments - 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 using rates currently available for debt on similar
terms, credit risk and remaining maturities.
Quoted AFS equity investments - Fair values are based on quoted prices published in markets.
Unquoted AFS equity investments - Fair values could not be reliably determined due to the
unpredictable nature of future cash flows and the lack of suitable methods of arriving at a reliable
fair value. Hence, these investments are carried at cost less allowance for impairment losses.
Currently, there is no available market to sell these unquoted AFS equity investments. The Bank
will hold unto the investment until management decides to sell them when there will be offers to
buy out such investments on the appearance of an available market where the investments can be
sold.
Receivable from customers and other receivables except accounts receivable, Accrued interest
receivable, Bills purchased and Security deposits - Fair values of loans are estimated using the
discounted cash flow methodology, using the Bank’s current incremental lending rates for similar
types of loans.
Subordinated notes and Time deposit - Fair values are estimated using the discounted cash flow
methodology using the Bank’s current incremental borrowing rates for similar borrowings with
maturities consistent with those remaining for the liability being valued.

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Demand deposits, savings deposits, treasurer’s, cashier’s and manager’s checks, accrued interest
payable, accounts payable, bills purchased-contra, other credits, dividends payable, due to
Treasurer of the Philippines, due to BSP, and deposits for keys-SDB - Carrying amounts
approximate fair values due to either the demand nature or the relatively short-term maturities of
these liabilities.
Set out below is a comparison by class of carrying amounts and fair values of financial
instruments that are carried in the financial statements (in thousands):
2010 2009
Carrying Value Fair Value Carrying Value Fair Value
Financial Assets
Loans and receivables
Cash and other cash items P=3,163,940 P=3,163,940 P=2,632,885 P=2,632,885
Due from BSP 2,899,592 2,899,592 4,937,990 4,937,990
Due from other banks 7,520,836 7,520,836 1,528,848 1,528,848
Interbank loans receivable and SPURA 3,586,560 3,586,560 5,900,000 5,900,000
Receivable from customers:
Consumption loans 22,038,472 24,453,677 17,225,020 13,567,880
Real estate loans 17,340,010 17,414,597 15,595,543 10,176,751
Commercial loans 8,942,653 9,211,419 8,816,419 7,096,661
Personal loans 3,147,757 4,947,987 3,191,161 3,624,792
Bills discounted 11,792 10,913 12,897 12,305
Other receivables:
Accrued interest receivable 617,452 617,452 1,002,095 1,002,095
Sales contract receivable 612,086 590,946 636,924 402,252
Unquoted debt securities 400,000 446,065 400,000 435,803
Accounts receivable 44,383 44,383 299,479 299,479
Bills purchased 53,030 53,030 128,699 128,699
Other assets (Note 14):
(Forward)

- 27 -
2010 2009
Carrying Value Fair Value Carrying Value Fair Value
Others
Security deposits P=76,325 P=69,701 P=69,064 P=53,497
RCOCI 27,842 27,842 46,062 46,062
Petty cash fund 300 300 384 384
Shortages 86 86 402 402
FVPL investments
HFT - Government securities 797,427 797,427 173,265 173,265
Derivatives - Republic of the Philippines (ROP)
warrants 70,889 70,889 74,778 74,778
AFS investments
Government debt securities 16,195,916 16,195,916 18,256,949 18,256,949
Quoted equity securities 3,005 3,005 3,005 3,005
Unquoted equity securities 1,418 1,418 1,418 1,418
HTM investments
Treasury notes 5,570,500 6,484,348 1,643,756 1,723,631
Government bonds 3,592,085 3,921,087 3,129,095 3,353,275
Total assets P=96,714,356 P=102,533,416 P=85,706,138 P=75,433,106
Financial Liabilities
Other liabilities at amortized cost
Deposit liabilities:
Demand P=7,170,222 P=7,170,222 P=8,188,088 P=8,188,088
Savings 10,147,794 10,147,794 9,403,399 9,403,399
Time 70,200,793 71,142,589 59,798,724 61,327,885
Subordinated notes 1,977,141 2,039,082 1,973,882 2,171,165
Treasurer’s, cashier’s and manager’s checks 649,434 649,434 505,738 505,738
Accrued interest payable 200,097 200,097 189,492 189,492
Accrued expense payable 752,779 752,779 620,027 620,027
Other liabilities (Note 19):
Accounts payable 676,738 676,738 636,652 636,652
Other credits 186,438 186,438 189,583 189,583
Bills purchased-contra 54,333 54,333 130,002 130,002
Due to BSP – – 7,495 7,495
Dividends payable – – 36,038 36,038
Due to Treasurer of the Philippines 6,303 6,303 6,332 6,332
Deposits for keys 1,040 1,040 1,132 1,132
Others* 1,764 1,764 2,412 2,412
Total liabilities P=92,024,876 P=93,028,613 P=81,688,996 P=83,415,440
* Others under financial liabilities comprise of payment orders payable and overages.
The following table shows financial instruments recognized at fair value (in thousands); analyzed
among those whose fair value is based on:
• Level 1 - quoted market prices in active markets for identical assets or liabilities; when fair
values of listed equity and debt securities, as well as publicly traded derivatives at the
reporting date are based on quoted market prices or binding dealer price quotations, without
any deduction for transaction costs, the instruments are included within Level 1 of the
hierarchy.
• Level 2 - those involving 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); for all other financial instruments, fair value is determined using valuation techniques.
Valuation techniques include net present value techniques, comparison to similar instruments
for which market observable prices exist and other revaluation models; and
• Level 3 - those with inputs for the asset or liability that are not based on observable market
data (unobservable inputs); instruments included in Level 3 are those for which there are
currently no active market.

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2010
Level 1 Level 2 Level 3 Total
Financial Assets
FVPL investments
HFT - government
securities P=797,427 P=– P=– P=797,427
Derivatives - ROP warrants – 70,889 – 70,889
AFS investments
Government securities 14,599,372 1,596,544 – 16,195,916
Quoted equity securities 3,005 – – 3,005
2009
Level 1 Level 2 Level 3 Total
Financial Assets
FVPL investments
Held for trading - government
securities P=173,265 P=– P=– P=173,265
Derivatives - ROP warrants – 74,778 – 74,778
AFS investments
Government securities 17,196,092 1,060,857 – 18,256,949
Quoted equity securities 3,005 – – 3,005
5. Financial Risk Management Policies and Objectives
The Bank has exposure to the following risks from its use of financial instruments:
• Credit risk
• Market risk
• Liquidity risk
Organization risk management structure continues to be a top-down organization, with the BOD at
the helm of all major initiatives.
Discussed below are the relevant sections on roles and responsibilities from the Risk Management
Committee (RMC) Charter:
BOD
The corporate powers of the Bank are vested in and are exercised by the BOD, who conducts its
business and controls its property. The BOD approves broad risk management strategies and
policies and ensures that risk management initiatives and activities are consistent with the Bank’s
overall objectives. The BOD appoints the members of the RMC.
RMC
The RMC is composed of at least three BOD members who possess a range of expertise and
adequate knowledge of the Bank’s risk exposures to be able to develop appropriate strategies for
preventing losses and minimizing the impact of losses when they occur.
The BOD may also appoint non-Directors to the RMC as part of the Metrobank Group risk
oversight measures. However, only Bank Directors shall be considered as voting members of the
RMC. Non-voting members are appointed in an advisory capacity.
The RMC oversees the system of limits to discretionary authority that the BOD delegates to the
management and ensures that the system remains effective, the limits are observed, and that
immediate corrective actions are taken whenever limits are breached.

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The RMC meets on a monthly basis and is supported by the Risk Management Office (RMO). In
the absence of the RMC Chairman, a non-executive Director shall preside. RMC resolutions,
which require the concurrence of the majority of its voting members, are presented to the BOD for
confirmation.
RMO
The RMO, headed by the Chief Risk Officer, is a function that is independent from the Bank’s
business line functions and reports directly to the BOD, through the RMC. The RMO assists the
RMC in carrying out its responsibilities by:
• analyzing, communicating, implementing, and maintaining the Risk Management Policies
approved by the RMC and the BOD;
• spearheading the regular review of the Bank’s Risk Management Policy Manual and making
or elevating recommendations that enhance the risk management process to the RMC and the
BOD, for their approval;
• ensuring that the risks arising from the Bank’s activities are identified, measured, analyzed,
reported to and understood by Risk Takers, Management, and the Board. The RMO analyzes
limit exceptions and recommends enhancements to the limits structure.
The RMO does not assume risk-taking accountability nor does it have approving authority. The
RMO’s role is to act as liaison and to provide support to the Board, RMC, the President, the
Administrative Risk Management Committees (ARMC) and other Management Committees, Risk
Takers and other Support and Control Functions on risk-related matters.
President
The President is the Chief Executive Officer of the Bank and has the primary responsibility of
carrying out the policies and objectives of the BOD. The President exercises the authorities
delegated to him by the BOD and may recommend such policies and objectives he deems
necessary for the continuing progress of the Bank.
ARMC
The ARMC is the management-level counterpart of the BOD-level RMC, and provides the latter
with the necessary support of Senior Management on risk-related matters.
As defined in the Risk Management Policy Manual, Senior Management is actively involved in
planning, approving, reviewing and assessing all risks through various committees. The ARMC,
in particular, provides a means of facilitating overall risk management.
It is composed of Senior Officers with overall responsibility for the lending business, Branch
Banking, Internal Audit, Compliance, Finance, Operations, Credit Administration, Treasury and
Risk Management.
An Executive Vice President serves as Chair and the President serves as Adviser to the ARMC.
The ARMC oversees operational, credit, market and liquidity risk management, and recommends
to the RMC and the BOD enhancements to the risk management policies and strategies of the
Bank, including limits on decision-making, positions, transactions and exceptions.
The ARMC exercises the authorities delegated to it by the RMC and the BOD, and the ARMC’s
corporate acts are subject to the review and confirmation by the RMC and the BOD.

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Risk management
The risk management framework aims to maintain a balance between the nature of the Bank’s
businesses and the risk appetite of the BOD. Accordingly, policies and procedures are reviewed
regularly and revised as the organization grows and as financial markets evolve. New policies or
proposed changes in current policies are presented to the RMC and the BOD for approval.
a. Credit risk and concentration of assets and liabilities and off-balance sheet items
Credit risk is the risk that a counterparty will not settle its obligations in accordance with the
agreed terms.
The Bank’s lending business follows credit policy guidelines set by the BOD, RMC and
RMO. These policies serve as minimum standards for extending credit. The people engaged
in the credit process are required to understand and adhere to these policies.
Product manuals are in place for all loans and deposit products that actually or potentially
expose the Bank to all types of risks that may result in financial or reputational losses. They
define the product and the risks associated with the product plus the corresponding riskmitigating
controls. They embody the business plans and define the business parameters
within which the product or activity is to be performed.
The system of checks around extension of credit includes approval by at least two credit
officers through CreCom, Executive Committee (ExCom) or BOD. The ARMC and RMC
review the business strategies and ensure that revenue-generating activities are consistent with
the risk tolerance and standard of the Bank. Regular audit and quality assurance checks are
conducted across all functional units. The BOD - through the ExCom, CreCom, ARMC and
RMC - ensure that sound credit policies and practices are followed through all the business
segments.
Credit Approval
Credit approval is the documented acceptance of credit risk in the credit proposal or
application.
The Bank’s credit decision-making for consumer loans utilizes the recommendation of the
credit scoring and is performed at the CreCom level appropriate to the size and risk of each
transaction in conformity with corporate policies and procedures in regulating credit risk
activities. The Bank’s ExCom may approve deviations or exceptions, while the BOD
approves material exceptions such as large exposures, loans to directors, officers, stockholders
and other related interests (DOSRI), and loan restructuring.
Credit delegation limits are identified, tracked and reviewed at least annually by the Bank’s
Senior Credit Officer together with the Credit Risk Manager.

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Borrower Eligibility
The Bank’s credit processing commences when a customer expresses his intention to borrow
through a credit application. The Bank gathers data on the customer; ensure they are accurate,
up-to-date and adequate to meet the minimum regulatory requirements and to render credit
decision. These data are used for the intended purpose only and are managed in adherence to
the customer information secrecy law.
The customer’s credit worthiness, repayment ability and cash flow are established before
credit is extended. The Bank independently verifies critical data from the customer, ensuring
compliance with Know Your Customer requirements under the Anti-Money Laundering Act
of 2000. The Bank requires that customer income be derived from legitimate sources and
supported with government-accepted statements of income, assets and liabilities.
The Bank makes certain that a customer is capable of entering into a credit contract by
accepting guarantors or sureties provided they are a relative or a financial partner who have
passed its credit acceptance criteria.
Loan Structure
The Bank structures loans for its customers based on the customer’s capability to pay, the
purpose of loan, and for collateralized loan, the collateral’s economic life and liquidation
value over time.
The Bank establishes debt burden guidelines and minimum income requirement to assess the
customer’s capacity to pay.
The Bank utilizes credit bureau data, both external and internal, to obtain information on
customer’s current commitments and credit history. These are sourced from the databases of
the Banker’s Association of the Philippines and the Credit Management Association of the
Philippines.
The Bank takes into account environmental and social issues when reviewing credit proposals
of small business and commercial mortgage customers. The Bank ensures that all qualified
securities pass through the BOD for approval. Assignments of securities are confirmed and
insurance are properly secured.
The Bank uses credit scoring models and decision systems for consumer loans as approved by
the BOD.
Initial loan limits are recommended by the CreCom and ExCom and approved by the BOD.
The Bank ensures that secured loans are within ceilings set by local regulators. Succeeding
loan availments are based on account performance and customer’s credit worthiness.
The CreCom and ExCom recommend to the BOD any credit exceptions that merit approval
provided they are supported by strong business rationale. The Bank relays credit approval at
once thru Short Messaging Service but loan proceeds are paid out after documentations are
completed.

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Credit Management
The Bank maintains credit records and documents on all borrowings and capture transaction
details in its loan systems. The credit risk policies and system infrastructure ensure that loans
are monitored and managed at all times.
The Bank’s Management Information System provides statistics that its business units need to
identify opportunities for improving rewards without necessarily sacrificing risk. Statistical
data on product, productivity, portfolio, profitability, performance and projection are made
available regularly.
The Bank conducts regular loan review through the RMC, with the support of the RMO. The
Bank examines its exposures, credit risk ratios, provisions and customer segments. The
Bank’s unique customer identification and unique group identification methodology enables it
to aggregate credit exposures by customer or group of borrowers. Aggregate exposures of at
least P=0.1 billion are put on a special monitoring.
The RMC assesses the adequacy of provisions for credit losses regularly. The Bank’s
automated loan grading system enables the Bank to set up provision per account. The Bank
also performs impairment analyses on loans and receivables, whether on individual or
collective basis, in accordance with PFRS.
In 2010, the Bank carried out stress testing analyses using BOD-approved statistical models
relating the default trends to changes in macroeconomic indicators. Separately, it continued to
enhance its credit rating systems. The new Auto Loan and Mortgage Loan credit scoring
models promise portfolio growth, with improvement in credit performance as a result of better
targeting. The new Small Medium Enterprise Loan credit scoring model was run parallel with
the qualitative evaluation method.
Maximum Exposure to Credit Risk Without Taking Account of Any Collateral and Other
Credit Enhancements
The table below shows the Bank’s gross maximum credit exposure, net of allowance for credit
and impairment losses, to on-and-off-financial condition credit risk exposures without
deducting collateral and other credit enhancements to credit risk for the component of the
statement of condition (in thousands):
2010 2009
FVPL investments
HFT - Government securities P=797,427 P=173,265
Derivatives - ROP warrants 70,890 74,778
AFS investments
Government securities 16,195,916 18,256,949
Quoted equity securities 3,005 3,005
Unquoted equity securities 1,418 1,418
HTM investments
Treasury notes 5,570,500 1,643,756
Government bonds 3,592,085 3,129,095
(Forward)

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2010 2009
Loans and receivables
Due from BSP P=2,899,592 P=4,937,990
Due from other banks 7,520,836 1,528,848
Interbank loans receivable and SPURA 3,586,560 5,900,000
Receivables from customers:
Consumption loans 22,038,472 17,225,020
Real estate loans 17,340,010 15,595,543
Commercial loans 8,942,653 8,816,419
Personal loans 3,147,757 3,191,161
Bills discounted 11,792 12,897
Other receivables:
Accrued interest receivable 617,452 1,002,095
Sales contract receivable 612,086 636,924
Unquoted debt instrument 400,000 400,000
Accounts receivable 44,383 299,479
Bills purchased 53,030 128,699
Other assets:
Security deposits 76,325 69,064
RCOCI 27,842 46,062
Shortages 86 402
Total 93,550,117 83,072,869
Stand-by credit lines (Note 31) 112,514 104,023
Total credit risk exposure P=93,662,631 P=83,176,892
Concentration of risk is managed by borrower, by group of borrower, by geographical region
and by industry sector. As of December 31, 2010 and 2009, the maximum credit exposure to
any borrower amounted to P=2.2 billion and P=1.9 billion, respectively, before taking account of
collateral or other credit enhancement.
The distribution of the Bank’s financial assets and off-balance sheet items before taking into
account any collateral held or other credit enhancements can be analyzed by the following
geographical regions (in thousands):
2010
Banking
Activities
Trading
Activities Others Total
Luzon P=18,683,941 P=30,927,554 P=44,519,867 P=94,131,362
Visayas 80,729 179,730 1,775,821 2,036,280
Mindanao 89,840 311,545 1,662,600 2,063,985
18,854,510 31,418,829 47,958,288 98,231,627
Less allowance for credit and
impairment losses 894,907 201,295 3,472,794 4,568,996
Total P=17,959,603 P=31,217,534 P=44,485,494 P=93,662,631
2009
Banking
Activities
Trading
Activities Others Total
Luzon P=16,948,236 P=28,345,516 P=35,820,896 P=81,114,648
Visayas 85,464 184,362 2,653,947 2,923,773
Mindanao 121,874 380,785 2,652,050 3,154,709
17,155,574 28,910,663 41,126,893 87,193,130
Less allowance for credit and
impairment losses 780,227 340,334 2,895,677 4,016,238
Total P=16,375,347 P=28,570,329 P=38,231,216 P=83,176,892

- 34 -
Additionally, the tables below show the distribution of maximum credit exposure by industry sector of
the Bank as of December 31, 2010 and 2009 (in thousands):
2010
Loans and
Receivables
Loans and
Advances to
Banks*
Investment
Securities** Others*** Total
Financial intermediaries P=2,457,197 P=14,006,988 P=26,277,251 P=104,252 P=42,845,688
Real estate, renting and business activities 13,913,795 – – – 13,913,795
Other community, social and personal
activities 16,057,412 – – – 16,057,412
Transportation, storage and communication 11,318,006 – – – 11,318,006
Wholesale and retail trade 4,628,272 – – 65,415 4,693,687
Private households 676,723 – – – 676,723
Public administration and defense
–
compulsory social security 1,182,165 – –
1,182,165
Manufacturing 1,349,775 – – – 1,349,775
Agricultural, hunting and forestry 1,448,765 – – – 1,448,765
Electricity, gas and water 532,233 – – – 532,233
Construction 531,081 – – 47,000 578,081
Hotel and restaurants 35,980 – – – 35,980
Mining and quarrying 97,593 – – – 97,593
Others 3,501,624 – – 100 3,501,724
57,730,621 14,006,988 26,277,251 216,767 98,231,627
Less allowance for credit and impairment
losses 4,522,986 – 46,010 – 4,568,996
Total P=53,207,635 P=14,006,988 P=26,231,241 P=216,767 P=93,662,631
* Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
** Comprised of FVPL investments, AFS investments and HTM investments.
*** Comprised of financial assets classified under other assets (such as RCOCI, security deposits and shortages) and standby
credit lines.
Loans and
Advances to
Banks*
2009
Investment
Securities** Others*** Total
Loans and
Receivables
Financial intermediaries P=3,336,764 P=12,366,838 P=23,420,776 P=115,528 P=39,239,906
Real estate, renting and business activities 13,403,671 – – 13,403,671
Other community, social and personal
activities 14,661,003 – – 2,229 14,663,232
Transportation, storage and communication 3,699,425 – – – 3,699,425
Wholesale and retail trade 8,903,959 – – 66,542 8,970,501
Private households 126,699 – – – 126,699
Public administration and defense
compulsory social security 866,251 – – – 866,251
Manufacturing 1,357,032 – – – 1,357,032
Agricultural, hunting and forestry 2,279,255 – – – 2,279,255
Electricity, gas and water 1,472,316 – – – 1,472,316
Construction 495,459 – – 35,251 530,710
Hotel and restaurants 440,726 – – – 440,726
Mining and quarrying 9,192 – – – 9,192
Others 134,214 – – – 134,214
51,185,966 12,366,838 23,420,776 219,550 87,193,130
Less allowance for credit and impairment
losses 3,877,728 – 138,510 – 4,016,238
Total P=47,308,238 P=12,366,838 P=23,282,266 P=219,550 P=83,176,892
* Comprised of due from BSP, due from other banks and interbank loans receivable and SPURA.
** Comprised of FVPL investments, AFS investments and HTM investments.
*** Comprised of financial assets classified under other assets (such as RCOCI, security deposits and shortages) and standby
credit lines.

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Credit Quality
Description of the loan grades for loans, receivables and stand-by credit lines:
Internal Credit Rating System
In 2010, credit quality monitoring changed to use the 10-point Internal Credit Rating System
(ICRS) which maps each risk rating to the loan grading system of BSP for credit exposures.
This enabled the Bank to reclassify accounts that were earlier classified as High Standard, to
Standard, in view of default incidence in the past. The ICRS performance is assessed and
updated regularly. Validation of the risk rating vis-à-vis actual credit losses is performed by
the Credit Risk Management Unit.
Neither Past Due nor Individually Impaired
The Bank classifies those accounts under current status having the following loan grades:
High grade (ICRS 1 - 4)
Accounts belonging to this category have been rated as good by the Bank’s internal scoring
system based on its defined factors. Using statistical means, the Bank has established the
borrowers’ ability to meet their obligations in full and no loss is anticipated. The credit
scoring system considers the combination of application data, internal and external data.
Standard grade (ICRS 5 - 7)
Accounts that display potential weaknesses, by the occurrence of limited or random
delinquency, which when left uncorrected, may affect the repayment of the loan and increase
credit risk to the Bank.
Substandard grade (ICRS 8 - 10)
These accounts involve a substantial and unreasonable degree of risk to the Bank because of
unfavorable record or unsatisfactory characteristics. These accounts show possibility of future
loss to the Bank due to their weaknesses that may include impaired collateral or minimum
repayment of loan.
Unrated grade
Other credit assets which cannot be classified as High, Standard or Sub-standard are tagged as
Unrated.
Past Due but not Individually Impaired
These are accounts which are classified as delinquent but the Bank assesses that there is no
objective evidence that these accounts are impaired as of statement of condition date.
Individually Impaired
Accounts which show evidence of impairment as of statement of condition date.

- 36 -
The tables below show the credit quality per class of financial assets under loans and
receivables (in thousands):
2010
Neither Past Due nor Individually Impaired
Standard
Grade
Substandard
Grade
Past Due
but not
Individually
Impaired
Individually
Impaired
High Grade
Unrated
Total
Loans and receivables
Receivables from customers:
Consumption loans P=19,569,571 P=301,226 P=4,242 P=– P=2,638,636 P=– P=22,513,675
Real estate loans 14,650,183 337,014 57,519 – 2,147,380 320,827 17,512,923
Commercial loans 8,332,250 70,314 49,204 – 132,771 1,127,174 9,711,713
Personal loans 2,990,381 58,873 105,059 – 2,229,643 – 5,383,956
Bills discounted 121 – – – 11,671 – 11,792
Other receivables:
Accrued interest receivable 235,817 325,215 430 – 89,269 234,456 885,187
Sales contract receivable 479,118 87,764 – – 54,893 18,313 640,088
Unquoted debt instrument 400,000 – – – – 95,611 495,611
Accounts receivable 3,718 23 15 – 339,333 178,256 521,345
Bills purchased – 54,333 – – 54,333
Other assets:
Security deposits – – – 76,325 – – 76,325
RCOCI – – – 27,842 – – 27,842
Shortages – – – 86 – – 86
Total P=46,661,159 P=1,180,429 P=216,469 P=158,586 P=7,643,596 P=1,974,637 P=57,834,876
Shown gross of allowance for credit and impairment losses
2009
Neither Past Due nor Individually Impaired
Standard
Grade
Substandard
Grade
Past Due
but not
Individually
Impaired
Individually
Impaired
High Grade
Unrated
Total
Loans and receivables
Receivables from customers:
Consumption loans P=14,953,074 P=3,456 P=480 P=– P=2,836,383 P=– P=17,793,393
Real estate loans 12,948,465 25,438 26,055 – 2,411,582 355,344 15,766,884
Commercial loans 7,689,776 93,870 235,797 – 210,189 1,269,563 9,499,195
Personal loans 2,900,851 48 – – 2,015,878 – 4,916,777
Bills discounted 1,443 – – – 11,454 – 12,897
Other receivables:
Accrued interest receivable 279,234 393,373 264,176 – 54,327 192,356 1,183,466
Sales contract receivable 443,834 – – – 55,702 168,942 668,478
Unquoted debt instrument 400,000 – – – – 95,611 495,611
Accounts receivable 263,895 1 8 – 365,202 85,530 714,636
Bills purchased 130,002 – – – 4,628 – 134,630
Other assets:
Security deposits – – – 69,064 – – 69,064
RCOCI – – – 46,062 – – 46,062
Shortages – – – 402 – – 402
Total P=40,010,574 P=516,186 P=526,516 P=115,528 P=7,965,345 P=2,167,346 P=51,301,495
Shown gross of allowance for credit and impairment losses
External Ratings
In ensuring quality investment portfolio, the Bank uses the credit risk rating based on the
rating of Moody’s Investors Service (Moody’s rating) as follows:
Credit Quality
External Rating
High grade Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3
Standard grade Ba1 Ba2 Ba3 B1 B2 B3
Substandard grade Caa1 Caa2 Caa3 Ca C

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High grade - represents those investments which fall under any of the following grade:
Aaa - fixed income obligations are judged to be of the highest quality, with the smallest
degree of risk.
Aa1, Aa2, Aa3 - fixed income are judged to be of high quality and are subject to very low
credit risk, but their susceptibility to long-term risks appears somewhat greater.
A1, A2, A3 - fixed income obligations are considered upper-medium grade and are subject to
low credit risk, but have elements present that suggest a susceptibility to impairment over the
long term.
Baa1, Baa2, Baa3 - fixed income obligations are subject to moderate credit risk. They are
considered medium grade and as such protective elements may be lacking or may be
characteristically unreliable.
Standard grade - represents those investments which fall under any of the following grade:
Ba1, Ba2, Ba3 – obligations are judged to have speculative elements and are subject to
substantial credit risk.
B1, B2, B3 – obligations are considered speculative and are subject to high credit risk.
Substandard grade - represents those investments which fall under any of the following grade:
Caa1, Caa2, Caa3 - are judged to be of poor standing and are subject to very high credit risk.
Ca - are highly speculative and are likely in, or very near, default, with some prospect of
recovery of principal and interest.
C - are the lowest rated class of bonds and are typically in default, with little prospect for
recovery of principal or interest.
The tables below show the credit quality per class of financial assets (in thousands):
2010
Neither Past Due nor Individually Impaired
Standard
Grade
Substandard
Grade
Past Due
but not
Individually
Impaired
Individually
Impaired
High Grade
Unrated
Total
FVPL investments
HFT - Government securities P=– P=797,427 P=– P=– P=– P=– P=797,427
Derivatives - ROP warrants – 70,890 – – – – 70,890
AFS investments
Government debt securities – 16,195,916 – – – – 16,195,916
Quoted equity securities – – – – – 5,194 5,194
Unquoted equity securities – – – – – 45,239 45,239
HTM investments
Treasury notes – 5,570,500 – – – – 5,570,500
Government bonds – 3,592,085 – – – – 3,592,085
Loans and receivables
Due from BSP – 2,899,592 – – – – 2,899,592
Due from other banks – 7,520,836 – – – – 7,520,836
Interbank loans receivable and
SPURA 2,586,560 1,000,000 – – – – 3,586,560
Total P=2,586,560 P=37,647,246 P=– P=– P=– P=50,433 P=40,284,239
Shown gross of allowance for credit and impairment losses

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2009
Neither Past Due nor Individually Impaired
Standard
Grade
Substandard
Grade
Past Due
but not
Individually
Impaired
Individually
Impaired
High Grade
Unrated
Total
FVPL investments
Derivatives - ROP warrants P=– P=74,778 P=– P=– P=– P=– P=74,778
HFT - Government securities – 173,265 – – – – 173,265
AFS investments
Government debt securities – 18,256,949 – – – 92,500 18,349,449
Quoted equity securities – – – – – 5,194 5,194
Unquoted equity securities – – – – – 45,239 45,239
HTM investments
Treasury notes – 3,129,095 – – – – 3,129,095
Government bonds – 1,643,756 – – – – 1,643,756
Loans and receivables
Due from BSP – 4,937,990 – – – – 4,937,990
Due from other banks – 1,528,848 – – – – 1,528,848
Interbank loans receivable and
SPURA – 5,900,000 – – – – 5,900,000
Total P=– P=35,644,681 P=– P=– P=– P=142,933 P=35,787,614
Shown gross of allowance for credit and impairment losses
Impairment Assessment
Impairment losses are recognized based on the results of specific (individual) and collective
assessment of credit exposures. Impairment has taken place when there is a presence of
known difficulties in the payments of obligation by counterparties, a significant credit rating
downgrade takes place, infringement of the original terms of the contract has happened or
when there is inability to pay principal or interest overdue beyond a threshold (e.g. 90 days).
These and other factors, either singly or in tandem with other factors, constitute observable
events or data that meet the definition of objective evidence of impairment.
Individually assessed allowances
The Bank determines the allowances appropriate for each significant loan or advance on an
individual basis. Items considered when determining amounts of allowances include an
account’s age, payment and collection history, timing of expected cash flows and realizable
value of collateral.
The Bank sets criteria for specific loan impairment testing and uses the discounted cash flow
to compute for impairment loss. Accounts subjected to specific impairment and are found to
be impaired shall be excluded from the collective impairment computation.
Collectively assessed allowances
Allowances are assessed collectively for losses on commercial loans and advances that are not
significant or are found to be not individually impaired. Impairment losses are estimated by
taking into consideration the historical losses on the portfolio and the expected receipts and
recoveries once impaired. The Bank is responsible for deciding the length of historical loss
period which can extend for as long as five years. The impairment allowance is then reviewed
by the Bank to ensure alignment with the Bank’s overall policy.
The Bank uses the Net Flow Rate method to determine the credit loss rate of a particular
delinquency age bucket based on historical data of flow-through and flow-back of loans across
specific delinquency age buckets. The method applies to consumer loans, as well as, salary
and home equity loans granted to employees of the Bank. For commercial loans, the Bank
uses Historical Loss Rate method in determining the credit loss rate based on the actual
historical loss experienced by the Bank on each specific industry type.

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Aging Analysis of Past Due but not Impaired Loans per Class of Financial Assets
The succeeding tables show the total aggregate amount of gross past due but not individually
impaired loans and receivables per delinquency bucket. Under PFRS, a financial asset is past
due when the counterparty has failed to make a payment when contractually due (in
thousands):
Less than
30 days
2010
Past Due but not Individually Impaired
31 to 61 to 91 to
60 days 90 days 180 days
Over
180 days Total
Loans and receivables
Receivables from customers:
Consumption loans P=1,104,087 P=554,285 P=205,851 P=228,124 P=546,289 P=2,638,636
Real estate loans 1,287,399 481,089 124,651 88,471 165,770 2,147,380
Commercial loans 81,717 22,542 11,762 2,505 14,245 132,771
Personal loans 141,988 61,253 37,412 90,753 1,898,237 2,229,643
Bills discounted – – – – 11,671 11,671
Other receivables:
Accrued interest receivable 19,339 9,409 4,224 5,659 50,638 89,269
Sales contract receivable 28,499 10,704 1,446 2,691 11,553 54,893
Accounts receivable 42,281 15,539 530 1,415 279,568 339,333
Total P=2,705,310 P=1,154,821 P=385,876 P=419,618 P=2,977,971 P=7,643,596
Shown gross of allowance for impairment and credit losses
Less than
30 days
2009
Past Due but not Individually Impaired
31 to 61 to 91 to
60 days 90 days 180 days
Over
180 days Total
Loans and receivables
Receivables from customers:
Consumption loans P=1,193,582 P=– P=751,145 P=235,027 P=656,629 P=2,836,383
Real estate loans 1,504,995 – 751,734 109,886 44,967 2,411,582
Commercial loans 150,587 – 46,653 69 12,880 210,189
Personal loans 199,021 74,036 44,358 116,023 1,582,440 2,015,878
Bills discounted – – – – 11,454 11,454
Other receivables:
Accrued interest receivable 23,379 2,310 14,323 5,731 8,584 54,327
Sales contract receivable 22,886 – 18,611 – 14,205 55,702
Accounts receivable 3,206 – 2,772 1,977 357,247 365,202
Bills purchased – – – – 4,628 4,628
Total P=3,097,656 P=76,346 P=1,629,596 P=468,713 P=2,693,034 P=7,965,345
Shown gross of allowance for impairment and credit losses
Of the total aggregate amount of gross past due but not individually impaired loans and
individually impaired loans and advances to customers, the fair value of the related collateral
that the Bank held as at December 31, 2010 and 2009 was P=9.6 billion and P=9.4 billion,
respectively.
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 regarding acceptability of types of collateral and
valuation parameters.
The main types of collaterals obtained are as follow:
- For SPURA; investment securities
- For commercial lending; mortgages over real estate properties, deposit accounts and
securities
- For consumer lending; mortgages over real estate and chattel

- 40 -
Management monitors the market value of collateral, requests additional collateral in
accordance with the underlying agreement, and monitors the market value of collateral
obtained during its review of the adequacy of the allowance for credit and impairment losses.
It is the Bank’s policy to dispose of repossessed properties in an orderly fashion and proceeds
are used to repay or reduce the outstanding claim. In general, the Bank does not occupy
repossessed properties for business use.
The Bank holds collateral against loans and receivables in the form of real estate and chattel
mortgages, guarantees, and other registered securities over assets. Estimates of fair value are
based on the value of collateral assessed at the time of borrowing and generally are not
updated except when a loan is assessed to be impaired. Generally, collateral is not held over
loans and advances to banks except for SPURA. The Bank is not allowed to sell or pledge
collateral held under SPURA. Collateral usually is not held against investment securities, and
no such collateral was held as of December 31, 2010 and 2009. The following table shows the
fair value of collateral held against loans and receivables (in thousands):
2010 2009
On individually impaired
Land P=801,640 P=919,817
Building 660,377 639,103
Chattel mortgage properties 363,371 504,670
1,825,388 2,063,590
On past due but not impaired loans
Land 2,274,753 2,306,114
Building 3,347,949 2,773,357
Chattel mortgage properties 3,981,234 4,309,038
9,603,936 9,388,509
On neither past due nor impaired loans
Land 18,427,846 14,276,253
Building 27,184,948 17,448,794
Chattel mortgage properties 29,638,052 23,034,545
Debt securities 999,240 5,728,369
76,250,086 60,487,961
P=87,679,410 P=71,940,060
Carrying Amount per Class of Financial Assets which Terms have been Renegotiated
Restructured loans are defined as performing or non-performing loans (NPL) which principal
terms and conditions have been modified in accordance with an agreement setting forth a new
plan of payment or a schedule of payment on a periodic basis. When the loan account
becomes past due and is being restructured or extended, the approval of the BOD is required
before loan booking and is always governed by the BSP rules on restructuring. Restructuring
of DOSRI loans also requires BOD approval.

- 41 -
The table below shows the total aggregate amount of gross restructured loans (in thousands).
2010 2009
Receivables from customers
Commercial loans P=839,919 P=918,896
Real estate loans 98,822 121,926
Consumption loans – 15
Total restructured financial assets P=938,741 P=1,040,837
b. Market risk
Market risk management covers the areas of trading and interest rate risks. The Bank utilizes
various measurement and monitoring tools to ensure that risk-taking activities are managed
within instituted market risk parameters. The Bank revalues its trading portfolios on a daily
basis and checks the revenue or loss generated by each portfolio in relation to their level of
market risk.
The Bank’s risk policies and implementing guidelines are regularly reviewed by ALCO,
ARMC, RMC and BOD to ensure that these are up-to-date and in line with changes in the
economy, environment and regulations. The RMC and the BOD set the comprehensive
market risk limit structure and define the parameters of market activities that the Bank can
engage in.
Market risk is the risk to earnings and capital arising from changes in the value of traded
portfolios of financial instruments (trading market risk) and from movements in interest rates
(interest rate risk). The Bank’s market risk originates primarily from holding peso and dollardenominated
debt securities. The Bank utilizes Value-at-Risk (VaR) to measure and manage
market risk exposure. VaR estimates the potential decline in the value of a portfolio, under
normal market conditions, for a given confidence level over a specified holding period.
Trading activities
The Bank’s trading portfolios are currently composed of peso and dollar-denominated
sovereign debt securities that are marked-to-market daily. The Bank also uses VaR to measure
the extent of market risk exposure arising from these portfolios.
VaR is a statistical measure that calculates the maximum potential loss from a portfolio over a
holding period, within a given confidence level. The Bank’s current VaR model uses
historical simulation for Peso and USD HFT and AFS portfolios of Reuters KVaR with
confidence level at 99% and a 1 day holding period. It utilizes a 260 days rolling data most
recently observed daily percentage changes in price for each asset class in its portfolio. In
2009, the Bank’s VaR model used Bloomberg’s parametric model for Peso and USD HFT and
AFS portfolios with confidence level at 99% and a 1 day holding period.
VaR reports are prepared on a daily basis to the President, Treasury and RMO. The Bank’s
BOD and management are advised whenever potential losses exceed prudent levels. VaR
reports are reported to the RMC and BOD on a monthly basis.
When there is a breach in VaR limits, Treasury is expected to close or reduce their position
and bring it down within the limit unless approval from the President is obtained to retain the
same. All breaches are reported to the President for regularization. In addition to the
regularization and approval of the President, breaches in VaR limits and special approvals are
likewise reported to the RMC and BOD for their information and confirmation.

- 42 -
Back testing is employed to verify the effectiveness of the VaR model. The bank performs
back-testing to validate the VaR model and stress testing to determine the impact of extreme
market movements on the portfolios. Results of backtesting are reported to the RMC and
BOD on a monthly basis. Stress testing is also conducted, based on historical maximum
percentage daily movement and on an ad-hoc rate shock to estimate potential losses in a crisis
situation.
The Bank has established position, VaR, stop loss, loss trigger, and modified duration limits
for its trading portfolios. Daily profit or loss of the trading portfolios is closely monitored
against loss triggers and stop-loss.
Responsibility for managing the Bank’s trading market risk remains with the RMC. With the
support of RMO and the ARMC, the RMC recommends to the BOD changes in market risk
limits, approving authorities and other activities that need special consideration.
Discussed below are the limitations and assumptions applied by the Bank on its VaR
methodology:
a. VaR is a statistical estimate and thus, does not give the precise amount of loss;
b. VaR is not designed to give the probability of bank failure, but only attempts to quantify
losses that may arise from a bank’s exposure to market risk;
c. Historical simulation does not involve any distributional assumptions, scenarios that are
used in computing VaR are limited to those that occurred in the historical sample; and
d. VaR systems are backward-looking. It attempts to forecast likely future losses using past
data. As such, this assumes that past relationships will continue to hold in the future.
Major shifts therefore (i.e. an unexpected collapse of the market) are not captured and may
inflict losses much bigger than anything the VaR model may have calculated.
The Bank’s interest rate VaR follows (in thousands):
2010 2009
As of year-end P=11,770 P=3,459
Year to date average 5,760 11,325
High 21,206 32,371
Low 3 32
Non-trading activities
Interest Rate Risk
The Bank follows a prudent policy on managing its assets and liabilities to ensure that
exposure to fluctuations in interest rates are kept within acceptable limits.
One method by which the Bank measures the sensitivity of its assets and liabilities to interest
rate fluctuations is by way of “gap” analysis. This analysis provides the Bank with a static
view of the maturity and repricing characteristics of the positions of its statement of condition.
An interest rate gap report is prepared by classifying all assets and liabilities into various time
period categories according to contracted maturities or anticipated repricing dates, whichever
is earlier. The difference in the amount of assets and liabilities maturing or being repriced in
any time period category would then give the Bank an indication of the extent to which it is
exposed to the risk of potential changes in net interest income.

- 43 -
The interest rate sensitivity gap report measures interest rate risk by identifying gaps between
the repricing dates of assets and liabilities. The Bank’s sensitivity gap model calculates the
effect of possible rate movements on its interest rate profile.
The Bank uses sensitivity gap model to estimate Earnings-at-Risk (EaR) should interest rates
move against its interest rate profile. The Bank’s EaR limits are based on a percentage of the
Bank’s projected earnings for the year. The Bank also performs stress-testing analysis to
measure the impact of extreme interest rate movements.
The ALCO is responsible for managing the Bank’s structural interest rate exposure. The
ALCO’s goal is to achieve a desired overall interest rate profile while remaining flexible to
interest rate movements and changes in economic conditions. The RMO, ARMC and RMC
review and oversee the Bank’s interest rate risks.
The tables below demonstrate the sensitivity of net interest income and equity to reasonably
possible changes in interest rates. Net interest income sensitivity was calculated by assuming
interest rate shifts upon repricing of floating-rate financial instruments. Equity sensitivity was
computed by calculating mark-to-market changes of AFS debt instruments, assuming a
parallel shift in the yield curve.
Change in
basis points
Sensitivity of
net interest
income
2010
Over
0 up to 6 months
6 months to 1 year
(Amounts in Pesos)
Sensitivity of equity
Over
1 year to
5 years
More than
5 years Total
Currency
PHP +10 165,249,172 (252,395) – (1,176,552) (139,912,232) (141,341,179)
USD +10 7,661,877 – – – (3,895,799) (3,895,799)
Currency
PHP -10 (165,191,732) 252,578 – 1,198,973 142,512,815 143,964,366
USD -10 (7,661,877) – – – 3,928,773 3,928,773
Change in
basis points
Sensitivity of
net interest
income
2009
Over
0 up to 6 months
6 months to 1 year
(Amounts in Pesos)
Sensitivity of equity
Over
1 year to
5 years
More than
5 years Total
Currency
PHP +10 7,701,610 (31,625) – (2,400,190) (32,632,285) (35,064,100)
USD +10 95,253,160 – – – (121,536,310) (121,536,310)
Currency
PHP -10 (7,701,207) 31,640 – 2,407,680 32,908,110 35,347,430
USD -10 (96,600,660) – – – 123,386,360 123,386,360
The impact on the Bank’s equity excludes the impact on transactions affecting the statement
of income.
Foreign Currency Risk
Foreign currency risk is the risk of an investment's value changing due to an adverse
movement in currency exchange rates. It arises due to a mismatch in the Bank's foreign
currency assets and liabilities.

- 44 -
The Bank’s policy is to maintain foreign currency exposure within the approved
position and loss limit and within existing regulatory guidelines. To compute for VaR, the
Bank uses Bloomberg’s historical simulation model for USD/PHP FX position, with
confidence level at 99% and a 1 day holding period. The Bank’s VaR for its foreign exchange
position for trading and non-trading activities are as follow (in thousands):
2010 2009
As of year-end P=1,252 P=724
Year to date Average 762 4,276
High 2,631 7,562
Low 4 355
The table below summarizes the Bank’s exposure to foreign exchange risk as of December 31,
2010 and 2009. Included in the table are the Bank’s assets and liabilities at carrying amounts
(in thousands).
2010 2009
Assets
Cash $1,782 $1,570
Due from other banks 164,014 25,594
FVPL investments 1,617 5,317
AFS investments 12,744 257,351
HTM investments 49,847 36,277
Other assets – 20,176
Total assets 230,004 346,285
Liabilities
Deposit liabilities
Savings deposits 19,908 17,507
Time deposits 268,285 297,903
Bills payable – –
Accrued taxes, interest and other expenses 335 595
Other liabilities 458 547
Total liabilities 288,986 316,552
Net exposure ($58,982) $29,733
c. Liquidity Risk
The Bank’s policy on liquidity management emphasizes on three elements of liquidity,
namely, cashflow management, ability to borrow in the interbank market, and maintenance of
a stock of high quality liquid assets. These three approaches complement one another with
greater weight being given to a particular approach, depending upon the circumstances. The
Bank’s objective in liquidity management is to ensure that the Bank has sufficient liquidity to
meet obligations under normal and adverse circumstances and is able to take advantage of
lending and investment opportunities as they arise.

- 45 -
The main tool that the Bank uses for monitoring its liquidity is the Maximum Cumulative
Outflow (MCO) reports, which is also called liquidity gap or maturity matching gap reports.
The MCO is a useful tool in measuring and analyzing the Bank’s cash flow projections and
monitoring liquidity risks. The liquidity gap report shows the projected cash flows of assets
and liabilities representing estimated funding sources and requirements under normal
conditions, which also forms the basis for the Bank’s Contingency Funding Plan (CFP). The
CFP projects the Bank’s funding position during both temporary and long-term liquidity
changes to help evaluate the Bank’s funding needs and strategies under changing market
conditions.
The Bank discourages dependence on large funds providers (LFPs) by capping the
concentration of LFPs as a percentage of total deposits. This ensures that the Bank will not be
vulnerable to a substantial drop in deposit level as a result of an outflow due to large
depositors.
Financial assets
Analysis of equity and debt securities at FVPL and AFS investments into maturity groupings
is based on the expected date on which these assets will be realized. For other assets, the
analysis into maturity grouping is based on the remaining period from the end of the reporting
period to the contractual maturity date or if earlier the expected date the assets will be
realized.
Financial liabilities
The maturity grouping is based on the remaining period from the end of the reporting period
to the contractual maturity date and does not consider the behavioral pattern of the creditors.
When counterparty has a choice of when the amount is paid, the liability is allocated to the
earliest period in which the Bank can be required to pay.
Analysis of Financial Assets and Liabilities by Remaining Maturities
The tables below show the maturity profile of the Bank’s financial assets and liabilities based
on contractual undiscounted repayment obligations (in millions):
Up to
1 month
Over 1 to
3 months
Over 3 to
6 months
2010
Over 6 to 12
months
Total within
1 year
Beyond
1 year Total
On demand
Financial Assets
FVPL investments
HFT - Government
Securities P=797 P=– P=– P=– P=– P=797 P=– P=797
Derivatives - ROP warrants 71 – – – – 71 – 71
AFS investments
Government securities – 105 210 15,992 – 16,307 – 16,307
Quoted equity securities – – – – – – 5 5
Unquoted equity securities – – – – – – 1 1
HTM investments
Treasury notes – 41 82 123 246 492 13,613 14,105
Government bonds – 26 51 70 154 301 3,603 3,904
Loans and receivables
Due from BSP 1,330 3 1,573 – – 2,906 – 2,906
Due from other banks 7,521 – – – – 7,521 – 7,521
Interbank loans receivable and
SPURA 3,587 – – – – 3,587 – 3,587
Receivables from customers:
Consumption loans 241 910 1,824 2,528 4,686 10,189 16,156 26,345
Real estate loans 55 383 874 1,415 2,855 5,582 23,529 29,111
Commercial loans 284 830 628 656 1,154 3,552 8,407 11,959
Personal loans 2,301 243 595 840 1,439 5,418 737 6,155
Bills discounted 12 – – – – 12 – 12
(Forward)

- 46 -
Up to
1 month
Over 1 to
3 months
Over 3 to
6 months
2010
Over 6 to 12
months
Total within
1 year
Beyond
1 year Total
On demand
Other receivables:
Accrued interest receivable P=658 P=184 P=43 P=– P=– P=885 P=– P=885
Sales contract receivable 1 12 23 36 67 139 825 964
Unquoted debt instrument – 1 7 19 – 27 420 447
Accounts receivable 521 – – – – 521 – 521
Bills purchased 54 – – – – 54 – 54
Other assets:
Security deposits – 4 2 3 11 20 74 94
RCOCI 28 – – – – 28 – 28
P=17,461 P=2,742 P=5,912 P=21,682 P=10,612 P=58,409 P=67,370 P=125,779
Financial Liabilities
Deposit liabilities
Demand P=7,170 P=– P=– P=– P=– P=7,170 P=– P=7,170
Savings 10,148 – – – – 10,148 – 10,148
Time – 47,458 8,108 1,110 991 57,667 16,951 74,618
17,318 47,458 8,108 1,110 991 74,985 16,951 91,936
Subordinated notes – 2,051 – – – 2,051 – 2,051
Treasurer’s, cashier’s and
manager’s checks 649 – – – – 649 – 649
Accrued interest payable 1 163 37 – – 201 – 201
Accrued other expenses payable 753 – – – – 753 – 753
Other liabilities
Accounts payable – – – 677 – 677 – 677
Other credits – – – – – – 186 186
Bills purchased-contra 54 – – – – 54 – 54
Due to Treasurer of the
Philippines – – – – – – 6 6
Deposit for keys 1 – – – – 1 – 1
Others 2 – – – – 2 – 2
P=18,778 P=49,672 P=8,108 P=1,787 P=991 P=79,373 P=17,143 P=96,516
Up to
1 month
Over 1 to
3 months
Over 3 to
6 months
2009
Over 6 to 12
months
Total within
1 year
Beyond
1 year Total
On demand
Financial Assets
FVPL investments
Derivatives - ROP warrants P=75 P=– P=– P=– P=– P=75 P=– P=75
HFT - Government
securities 173 – – – – 173 – 173
AFS investments
Government securities – 317 634 18,021 – 18,972 – 18,972
Quoted equity securities – – – – – – 5 5
Unquoted equity securities – – – – – – 45 45
HTM investments
Government bonds – 23 46 68 137 274 4,666 4,940
Treasury notes – 13 27 40 81 161 3,240 3,401
Loans and receivables
Due from BSP 1,163 2,507 1,285 – – 4,955 – 4,955
Due from other banks 1,528 – – – – 1,528 – 1,528
Interbank loans receivable and
SPURA 5,902 – – – – 5,902 – 5,902
Receivables from customers:
Consumption loans 358 857 1,647 2,325 4,120 9,307 12,772 22,079
Real estate loans 71 367 772 1,234 2,574 5,018 21,839 26,857
Commercial loans 307 420 823 676 1,346 3,572 9,336 12,908
Personal loans 1,933 162 401 624 1,539 4,659 717 5,376
Bills discounted 12 – 1 – – 13 – 13
Other receivables:
Accrued interest receivable 1,023 123 38 – – 1,184 – 1,184
Sales contract receivable – 12 24 36 69 141 893 1,034
Unquoted debt instrument 96 2 – 15 2 115 400 515
Accounts receivable 715 – – – – 715 – 715
Bills purchased 134 – – – – 134 – 134
Other assets:
Security deposits – 2 1 2 5 10 72 82
RCOCI 46 – – – – 46 – 46
P=13,536 P=4,805 P=5,699 P=23,041 P=9,873 P=56,954 P=53,985 P=110,939
(Forward)

- 47 -
Up to
1 month
Over 1 to
3 months
Over 3 to
6 months
2009
Over 6 to 12
months
Total within
1 year
Beyond
1 year Total
On demand
Financial Liabilities
Deposit liabilities
Demand P=8,188 P=– P=– P=– P=– P=8,188 P=– P=8,188
Savings 9,403 – – – – 9,403 – 9,403
Time – 40,197 7,097 1,859 1,103 50,256 12,536 62,792
17,591 40,197 7,097 1,859 1,103 67,847 12,536 80,383
Subordinated notes – – – – – – 2,171 2,171
Treasurer’s, cashier’s and
manager’s checks 505 – – – – 505 – 505
Accrued interest payable – – 152 37 – 189 – 189
Accrued other expenses payable 620 – – – – 620 – 620
Other liabilities
Accounts payable – – – 637 – 637 – 637
Other credits – – – – – – 190 190
Bills purchased-contra 130 – – – – 130 – 130
Due to Treasurer of the
Philippines – – – – – – 6 6
Deposit for keys 1 – – – – 1 – 1
Others 2 – – – 2 – 2
P=18,849 P=40,197 P=7,249 P=2,533 P=1,103 P=69,931 P=14,903 P=84,834
6. Segment Information
The Bank’s operating segments are organized and managed separately according to the nature of
services provided and the different markets served, with each segment representing a strategic
business unit that offers different products and serves different markets. The Bank’s reportable
segments are as follows:
a. Consumer Banking - principally provides consumer-type loans generated by the Home Office;
b. Corporate Banking - principally handles loans and other credit facilities for corporate and
institutional customers acquired in the Home Office;
c. Branch Banking - serves as the Bank’s main customer touch point which offers consumer and
corporate banking products; and
d. Treasury - principally handles institutional deposit accounts, providing money market, trading
and treasury services, as well as managing the Bank’s funding operations by use of
government securities and placements and acceptances with other banks.
These segments are the bases on which the Bank reports its primary segment information. The
Bank evaluates performance on the basis of information about the components of the Bank that
Chief Operating Decision Maker (CODM) uses to make decisions about operating matters. There
are no other operating segments than those identified by the Bank as reportable segments. There
were no inter-segment revenues and expenses included in the financial information. The Bank has
no single customer with revenues from which is 10.00% or more of the Bank’s total revenue.

- 48 -
The accounting policies of the operating segments are the same as those described in the summary
of significant accounting policies. Primary segment information (by business segment) for the
years ended December 31, 2010, 2009 and 2008 follows (in thousands):
Consumer
Banking
Corporate
Banking
2010
Branch
Banking Treasury Total
Operating Income
Interest income P=1,611,072 P=172,645 P=5,291,378 P=838,002 P=7,913,097
Service fees and commissions 117,953 48,238 592,438 – 758,629
Other operating income 69,750 2,330 215,828 2,244,546 2,532,454
Total operating income 1,798,775 223,213 6,099,644 3,082,548 11,204,180
Non-cash expenses
Depreciation and amortization 95,787 13,026 242,332 893 352,038
Provision for credit and
impairment losses 290,786 401,697 219,799 – 912,282
Amortization of other intangible
assets 17,178 3,297 21,006 212 41,693
Total non-cash expenses 403,751 418,020 483,137 1,105 1,306,013
Interest expense – – 1,996,974 903,721 2,900,695
Service fees and commissions
expense 10,409 4,257 52,281 – 66,947
Subtotal 10,409 4,257 2,049,255 903,721 2,967,642
Compensation and fringe benefits 348,600 91,464 1,291,192 9,360 1,740,616
Taxes and licenses 118,728 29,895 415,237 213,275 777,135
Occupancy and equipment 42,090 7,384 374,369 435 424,278
Security, messengerial and janitorial
33,569 2,989 126,852 526 163,936
services
Miscellaneous 347,919 48,852 796,959 19,198 1,212,928
Subtotal 890,906 180,584 3,004,609 242,794 4,318,893
Income (loss) before share in
net income of an associate and
a joint venture 493,709 (379,648) 562,643 1,934,928 2,611,632
Equity in net income of an associate
and a joint venture 41,563
Income before income tax 2,653,195
Provision for income tax 845,080
Net income
P=1,808,115
Segment assets P=19,812,908 P=7,861,455 P=34,518,181 P=40,421,690 P=102,614,234
Investments in an associate and
a joint venture 829,874
Deferred tax asset 705,361
Total assets
P=104,149,469
Segment liabilities P=535,437 P=123,695 P=68,410,903 P=23,470,357 P=92,540,392
Consumer
Banking
Corporate
Banking
2009
Branch
Banking Treasury Total
Operating Income
Interest income P=1,535,965 P=144,319 P=5,539,707 P=309,541 P=7,529,532
Service fees and commissions 94,149 43,129 505,643 – 642,921
Other operating income 86,252 26,975 172,421 555,971 841,619
Total operating income 1,716,366 214,423 6,217,771 865,512 9,014,072
Non-cash expenses
Depreciation and amortization 93,360 9,553 223,504 2,119 328,536
Provision for credit and
impairment losses 340,309 408,408 201,079 159,960 1,109,756
Amortization of other intangible
assets 10,703 2,392 14,274 393 27,762
Total non-cash expenses 444,372 420,353 438,857 162,472 1,466,054
Interest expense – – 1,532,559 1,163,496 2,696,055
Service fees and commissions
expense 6,836 3,131 36,713 – 46,680
Subtotal 6,836 3,131 1,569,272 1,163,496 2,742,735
(Forward)

- 49 -
2009
Consumer
Banking
Corporate
Banking
Branch
Banking Treasury Total
Compensation and fringe benefits P=296,481 P=80,889 P=1,094,701 P=16,562 P=1,488,633
Taxes and licenses 106,462 23,780 317,653 111,881 559,776
Occupancy and equipment 33,104 5,727 322,910 1,129 362,870
Security, messengerial and janitorial
services 27,850 2,139 117,112 876 147,977
Miscellaneous 238,398 35,457 629,522 14,265 917,642
Subtotal 702,295 147,992 2,481,898 144,713 3,476,898
Income (loss) before equity in
net income of an associate and
a joint venture 562,863 (357,053) 1,727,744 (605,169) 1,328,385
Equity in net income of an associate
and a joint venture 45,130
Income before income tax 1,373,515
Provision for income tax 133,501
Net income
P=1,240,014
Segment assets P=17,158,612 P=8,175,634 P=29,757,312 P=35,951,432 P=91,042,990
Investments in an associate and
a joint venture 788,310
Deferred tax asset 1,256,530
Total assets
P=93,087,830
Segment liabilities P=426,585 P=365,166 P=60,985,784 P=20,298,156 P=82,075,691
Consumer
Banking
Corporate
Banking
2008
Branch
Banking Treasury Total
Operating Income
Interest income P=1,239,707 P=145,570 P=4,721,928 P=22,402 P=6,129,607
Service fees and commissions 102,197 31,060 498,202 – 631,459
Other operating income 71,603 57,356 193,233 371,404 693,596
Total operating income 1,413,507 233,986 5,413,363 393,806 7,454,662
Non-cash expenses
Depreciation and amortization 86,241 9,057 176,631 2,175 274,104
Provision for credit and
impairment losses 252,126 103,864 197,223 24,187 577,400
Amortization of other intangible
assets 11,822 2,065 12,328 536 26,751
Total non-cash expenses 350,189 114,986 386,182 26,898 878,255
Interest expense 1,918,395 501,714 2,420,109
Service fees and commissions expense 15,714 4,776 76,604 – 97,094
Sub total 15,714 4,776 1,994,999 501,714 2,517,203
Compensation and fringe benefits 237,785 59,942 911,752 14,355 1,223,834
Taxes and licenses 109,315 15,876 264,429 62,041 451,661
Occupancy and equipment 22,899 4,963 278,351 1,188 307,401
Security, messengerial and
janitorial services 104,289 23,121 1,277 – 128,687
Miscellaneous 219,381 37,301 584,034 12,973 853,689
Subtotal 693,669 141,203 2,039,843 90,557 2,965,272
Income (loss) before equity in net
earnings of an associate 353,935 (26,979) 992,339 (225,363) 1,093,932
Equity in net earnings of an associate 46,820
Income before income tax 1,140,752
Provision for income tax 200,600
Net income
P=940,152
Segment assets P=16,573,009 P=5,049,098 P=27,691,411 P=23,842,438 P=73,155,956
Investment in an associate 369,952
Deferred tax asset 1,110,811
Total assets
P=74,636,719
Segment liabilities P=387,085 P=68,309 P=53,999,038 P=11,709,563 P=66,163,995

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7. Interbank Loans Receivable and Securities Purchased Under Resale Agreements
SPURA are lending to counterparties collateralized by government securities with face value
amounting to P=1.0 billion and P=5.9 billion as of December 31, 2010 and 2009, respectively. The
market values of the collateralized government securities amounted to P=999.2 million and
P=5.7 billion as of December 31, 2010 and 2009, respectively.
The Bank is not allowed to resell to third parties collateral held under SPURA.
Interest income on interbank loans receivable and SPURA consists of:
2010 2009 2008
Interbank loans receivable P=13,031,027 P=7,315,639 P=131,102,732
SPURA 147,481,667 102,448,542 131,277,014
P=160,512,694 P=109,764,181 P=262,379,746
8. Fair Value Through Profit or Loss, Available-for-Sale and Held-to-Maturity Investments
FVPL investments consist of the following:
2010 2009
HFT securities P=798,230,717 P=173,347,309
ROP warrants 81,437,118 85,821,050
879,667,835 259,168,359
Less unrealized loss on FVPL investments 11,351,393 11,125,260
P=868,316,442 P=248,043,099
As of December 31, 2010 and 2009, the Bank has outstanding ROP paired warrants which give
the Bank the option or right to exchange its holdings of ROP Global Bonds (Paired Bonds) into
peso-denominated government securities upon occurrence of a predetermined credit event. Paired
Bonds shall be risk weighted at 0.00%, provided that the 0.00% risk weight shall be applied only
to the Bank’s holdings of Paired Bonds equivalent to not more than 50.00% of the total qualifying
capital. Further, the Bank’s holdings of said warrants booked in the FVPL category are likewise
exempted from capital charge for market risk as long as said instruments are paired with ROP
Global Bonds up to a maximum of 50.00% of the total qualifying capital.
On August 19, 2009, the BSP approved the Bank’s application for Type 3 Limited User Authority
for plain vanilla foreign exchange (FX) forwards which is limited to outright buying or selling of
FX forwards at a specific price and date in the future and do not include non-deliverable forwards.
As of December 31, 2010 and 2009, the Bank has no outstanding forward buy and sell contracts.
AFS investments consist of the following:
2010 2009
Government securities (Note 30) P=16,195,916,217 P=18,349,448,980
Equity securities:
Quoted 5,194,005 5,194,005
Unquoted 45,239,002 45,239,002
16,246,349,224 18,399,881,987
Less allowance for impairment losses 46,010,167 138,510,167
P=16,200,339,057 P=18,261,371,820

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On December 1, 2010, the Philippine Government, as part of its Domestic Debt Consolidation
program to manage its liabilities, made an offer to owners of certain eligible bonds and to new
investors (the Invitation). The Government invited owners of series of Eligible Bonds to submit
offers to exchange series of Eligible bonds for New Bonds due 2020 (10-year Benchmark Bonds)
or 2035 (25-year Benchmark Bonds) or to tender Eligible Bonds for cash. The Government also
invited new investors to submit offers to subscribe 25-year Benchmark Bonds.
The Bank participated in the bond exchange transaction and exchanged its HFT and AFS
investment securities for 10-year Benchmark Bonds with a minimum coupon of 5.88% and face
value of P=798.2 million at a price of 100.00% and 25-year Benchmark Bonds with a minimum
coupon of 8.13% and face value of P=11.7 billion at a price of 100.00%, respectively. The Bank
realized net trading gain of P=1.2 billion from the bond exchange transaction.
Movements in the net unrealized gain (loss) on AFS investments follow:
2010 2009
Balance at beginning of year P=819,829,053 (P=677,288,505)
Net gain from sale of AFS investments
taken to profit or loss (2,323,447,276) (503,223,604)
Changes in fair values of AFS investments 1,858,769,489 2,000,341,162
(464,677,787) 1,497,117,558
Balance at end of year P=355,151,266 P=819,829,053
Movements in the allowance for impairment losses on AFS investments follow:
2010
Quoted Unquoted Total
Balance at beginning of year P=94,688,665 P=43,821,502 P=138,510,167
Provisions charged to current
operations – – –
Reclassification (Note 15) (92,500,000) – (92,500,000)
Balance at end of year P=2,188,665 P=43,821,502 P=46,010,167
2009
Quoted Unquoted Total
Balance at beginning of year P=2,188,665 P=43,821,502 P=46,010,167
Provisions charged to current
operations (Note 15) 92,500,000 – 92,500,000
Balance at end of year P=94,688,665 P=43,821,502 P=138,510,167
In 2010, the Bank reclassified certain government securities with cost of P=92.5 million from
AFS investments to accounts receivable. The related allowance for impairment credit losses
of the same amount was also reclassified.
HTM investments consist of the following:
2010 2009
Treasury notes (Note 29) P=5,570,500,179 P=3,129,095,361
Government bonds 3,592,084,780 1,643,755,715
P=9,162,584,959 P=4,772,851,076

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As of December 31, 2010 and 2009, treasury bills (classified under HTM investments) with total
face value of P=50.0 million are pledged by the Bank to MBTC to secure its payroll account with
MBTC (see Note 29).
Interest income on investment securities consists of:
2010 2009 2008
AFS investments P=1,077,452,402 P=1,595,771,154 P=762,851,508
FVPL investments 38,762,928 60,178,392 35,435,937
HTM investments 598,526,804 288,920,434 213,841,879
P=1,714,742,134 P=1,944,869,980 P=1,012,129,324
Peso-denominated AFS investments bear nominal annual interest rates ranging from 0.00% to
14.00% in 2010, 2009 and 2008 while foreign currency-denominated AFS investments bear
nominal annual interest rates ranging from 6.50% to 9.50% in 2010 and from 7.50% to 10.63% in
2009 and 2008.
Peso-denominated HTM investments bear nominal annual interest rates ranging from 4.57% to
18.25% in 2010 and 2009, and from 10.75% to 18.25% in 2008 while foreign currencydenominated
HTM investments bear nominal annual interest rates ranging from 6.38% to 9.50%
in 2010 and 2009, and 9.00% in 2008.
Trading and securities gains - net on investment securities consist of:
2010 2009 2008
FVPL investments:
Realized (P=93,163,129) P=51,536,548 (P=12,193,420)
Unrealized (793,423) (11,127,300) (18,710,369)
(93,956,552) 40,409,248 (30,903,789)
AFS investments 2,323,447,276 503,223,604 230,643,975
P=2,229,490,724 P=543,632,852 P=199,740,186
Trading gains on AFS investments represent the net gains realized and reclassified by the Bank
from net unrealized gain under the equity section of the statement of condition.
9. Loans and Receivables
This account consists of:
2010 2009
Receivables from customers:
Consumption loans P=27,496,864,284 P=21,577,160,469
Real estate loans 17,512,923,273 15,766,884,237
Commercial loans 9,711,712,998 9,499,195,319
Personal loans 5,728,150,973 5,194,328,260
Bills discounted 11,792,346 12,912,847
60,461,443,874 52,050,481,132
Less unearned discounts 5,327,384,627 4,061,334,981
55,134,059,247 47,989,146,151
(Forward)

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2010 2009
Other receivables:
Accrued interest receivable P=885,186,590 P=1,183,465,914
Sales contract receivable 640,088,026 668,477,904
Accounts receivable 521,344,187 714,635,789
Unquoted debt instrument 495,610,552 495,610,552
Bills purchased (Note 19) 54,332,644 134,629,291
57,730,621,246 51,185,965,601
Less allowance for credit losses (Note 15) 4,522,986,086 3,877,727,644
P=53,207,635,160 P=47,308,237,957
Personal loans comprise deposit collateral loans, employee salary and consumer loan products
such as Money Card, multi-purpose loan and flexi-loan.
Unquoted debt instrument represents investments in convertible notes and in private bonds. The
convertible notes amounting to P=95.6 million are provided with 100% allowance for credit losses
as of December 31, 2010 and 2009.
As of December 31, 2010, 2009 and 2008, 55.09%, 48.51% and 44.92%, respectively, of the total
receivables from customers are subject to periodic interest repricing. Remaining receivables
earned average annual fixed interest rates of 14.74%, 15.39% and 15.17% in 2010, 2009 and 2008,
respectively.
Interest income on loans and receivables consists of:
2010 2009 2008
Receivables from customers:
Consumption loans P=2,260,849,552 P=1,896,953,617 P=1,749,224,772
Real estate loans 1,649,959,185 1,465,738,219 1,218,544,529
Personal loans 926,817,250 945,735,689 950,225,398
Commercial loans 918,727,776 977,615,675 761,248,012
Bills discounted 233,354 460,547 356,631
Other receivables:
Sales contract receivables 65,388,714 63,606,126 65,454,924
Unquoted debt instrument 50,230,846 25,957,769 –
P=5,872,206,677 P=5,376,067,642 P=4,745,054,266
Interest income accreted on impaired loans and receivables classified under real estate loans and
commercial loans amounting to P=72.4 million, P=104.3 million and P=108.3 million in 2010, 2009
and 2008, respectively.
Interest income from restructured loans amounted to P=101.2 million, P=112.2 million and
P=145.2 million in 2010, 2009 and 2008, respectively.
On April 23, 2007, the Bank participated in a private auction to bid for the 1st batch of performing
residential mortgage loan portfolio consisting of 357 accounts of Balikatan Housing Finance, Inc.
(BHFI) with principal balance of P=126.8 million.
On May 15, 2007, BHFI selected the Bank as the successful bidder.

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On July 30, 2008 and December 12, 2008, the Bank purchased the 2nd and 3rd batch of
performing residential mortgage loans from BHFI. Details of the loans purchased follow:
First Sale Second Sale Third Sale
Number of accounts purchased 357 643 88
Principal balance of loans
purchased P=126,817,101 P=247,777,405 P=35,618,314
Bid Price 136,431,599 256,346,373 36,633,930
As of December 31, 2010, the carrying value and fair value of the collateral loans amounted to
P=260.2 million and P=144.5 million, respectively. As of December 31, 2009, the carrying value
and fair value of the collateral loans amounted to P=315.2 million and P=178.5 million,
respectively.
An Assignment Agreement for each portfolio was executed between BHFI (the Assignor) and
the Bank (the Assignee). The Assignment Agreement contains the terms of the sale including
the representations and warranties of the assignor and assignee.
BSP Reporting
The breakdown of loans and receivables from customers (gross of unearned discounts) as to
secured and unsecured and as to type of security follows:
2010 % 2009 %
Secured by:
Chattel P=27,496,864,284 45.48 P=21,577,160,470 41.45
Real estate 21,290,164,034 35.21 19,581,311,859 37.62
Deposit hold-out 198,151,608 0.33 210,857,877 0.41
48,985,179,926 81.02 41,369,330,206 79.48
Unsecured 11,476,263,948 18.98 10,681,150,926 20.52
P=60,461,443,874 100.00 P=52,050,481,132 100.00
Details of NPLs follow:
2010 2009
Unsecured P=2,392,225,160 P=1,958,506,774
Secured 1,960,892,609 2,192,769,144
P=4,353,117,769 P=4,151,275,918
Generally, NPLs refer to loans and receivables 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 and receivables that are payable in monthly installments, the total
outstanding balance thereof shall be considered nonperforming when three (3) or more
installments are in arrears.
In the case of loans and receivables 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 ten percent (10%) of the total receivable balance.

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Loans and receivables are classified as nonperforming in accordance with BSP regulations, or
when, in the opinion of management, collection of interest or principal is doubtful.
Receivables 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.
Restructured loans and receivables which do not meet the requirements to be treated as
performing receivables shall also be considered as NPLs.
Current banking regulations allow banks with no unbooked valuation reserves and capital
adjustments to exclude from nonperforming classification loans classified as Loss in the latest
examination of the BSP which are fully covered by allowance for credit and impairment
losses, provided that interest on said receivables shall not be accrued.
The NPLs of the Bank not fully covered by allowance for credit losses follow:
2010 2009
Total NPLs P=4,353,117,769 P=4,151,275,918
NPLs fully covered by allowance for credit losses (2,737,974,312) (2,650,628,890)
P=1,615,143,457 P=1,500,647,028
Restructured loans as of December 31, 2010 and 2009 amounted P=938.7 million and P=1.0
billion, respectively. The Bank’s loan portfolio includes non-risk loans as defined under BSP
regulation totaling P=4.0 billion and P=6.3 billion as of December 31, 2010 and 2009,
respectively.
Loan concentration as to economic activity follows (gross of unearned discounts):
2010 % 2009 %
Other community, social and personal
activities P=19,332,703,363 31.98 P=16,279,744,883 31.28
Real estate 17,726,774,884 29.32 14,292,466,286 27.46
Wholesale and retail trade 10,739,412,101 17.76 8,796,860,213 16.90
Public utilities 5,062,908,930 8.37 4,050,290,496 7.78
Banks, insurance and other financial
institutions 2,001,898,357 3.31 1,833,787,458 3.52
Manufacturing 862,201,288 1.43 873,144,519 1.68
Agriculture 614,169,127 1.01 2,266,926,621 4.35
Services 585,662,677 0.97 494,440,157 0.95
Mining and quarrying 15,967,948 0.03 10,601,965 0.02
Others 3,519,745,199 5.82 3,152,218,534 6.06
P=60,461,443,874 100.00 P=52,050,481,132 100.00
Others relates to economic activities classified as electricity, gas and water, construction,
health and social work, public administration and defense, extra-territorial organization and
bodies, education and fishing.
Thrift banks are not covered by the loan concentration limit of 30% prescribed by the BSP.

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10. Investments in an Associate and a Joint Venture
The composition of this account follows:
2010 2009
Investment in an associate P=458,921,659 P=393,214,989
Investment in a joint venture 370,952,096 395,095,348
P=829,873,755 P=788,310,337
Investment in an Associate
The Banks owns 2,500,000 shares of TFSPC representing 25% ownership.
The following illustrates the summarized financial information of TFSPC:
2010 2009
Total assets
P=18,775,952,714 P=13,994,948,280
Total liabilities 16,936,261,946 12,422,088,320
Net assets 1,839,690,768 1,572,859,960
Gross revenue for the year 1,720,926,662 2,702,784,096
Net income for the year 262,826,678 200,137,400
Movement in this account follows:
2010 2009
Acquisition cost P=270,546,789 P=270,546,789
Accumulated equity in net income:
Balance at beginning of year 122,668,200 99,405,000
Share in net income 65,706,670 50,034,350
Cash dividend – (26,771,150)
Balance at end of year 188,374,870 122,668,200
Carrying value P=458,921,659 P=393,214,989
Investment in a Joint Venture
In August 2009, the Bank entered into a joint venture agreement (JVA) with Sumitomo
Corporation, Sumitomo Corporation of the Philippines and Philippine Savings Bank
Retirement Fund. The objective of the parties was to establish a joint venture that will
primarily engage in the business of providing financing in the form of lending and leasing
services for the purchase of motorcycles. The JVA outlines the roles and responsibilities of
each party, pre-incorporation activities, formation of the joint venture corporation, preemptive
rights, funding and financial support of the parties, shareholders and board of
directors’ matters, composition of key management personnel as nominated by the parties,
pre-emptive rights and rights of first refusal.
On September 11, 2009, the BSP approved the Bank’s application to form a joint venture with
Sumitomo Corporation. SMFC, the joint venture company was incorporated on November
26, 2009. The Bank owns 4,000,000 shares of SMFC representing 40% ownership.
SMFC started its commercial operations in March 2010.

- 57 -
The following illustrates the summarized financial information of the Bank’s investment in
SMFC:
2010 2009
Share in the joint venture’s statement of financial
condition:
Current assets P=347,314,556 P=401,693,653
Non-current assets 49,747,029 15,666,131
Non-current liabilities (26,109,489) (22,264,436)
Equity P=370,952,096 P=395,095,348
2010 2009
Share in the joint venture’s statement of income:
Other income P=25,400,098 P=1,727,706
Pre-operating expenses (62,506,255) (8,981,167)
Loss before income tax (37,106,157) (7,253,461)
Benefit from income tax 12,962,905 2,348,809
Loss for the year (P=24,143,252) (P=4,904,652)
The following illustrates the summarized financial information of SMFC:
2010 2009
Total current assets P=868,286,391 P=1,004,234,133
Non-current assets 124,367,571 39,165,328
Non-current liabilities (65,273,723) (55,661,090)
Total other income 63,500,245 4,319,265
Pre-operating expenses (156,265,639) (22,452,918)
Benefit from income tax 32,407,263 5,872,023
Movement in this account follows:
2010 2009
Acquisition cost P=400,000,000 P=400,000,000
Accumulated share in net losses:
Balance at beginning of year (4,904,652) –
Share in net loss (24,143,252) (4,904,652)
Balance at end of year (29,047,904) (4,904,652)
Carrying value P=370,952,096 P=395,095,348
The Bank has no share of any contingent liabilities of SMFC or capital commitments to SMFC as
of December 31, 2010 and 2009.

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11. Property and Equipment
The composition of and movements in this account follow:
Land
Building
2010
Furniture,
Fixtures and
Equipment
Leasehold
Improvements
Total
Cost
Balance at beginning of year P=208,802,981 P=1,347,901,391 P=1,232,145,141 P=248,060,915 P=3,036,910,428
Acquisitions – 67,802,500 288,045,940 40,916,681 396,765,121
Disposals – – (57,001,109) (663,080) (57,664,189)
Balance at end of year 208,802,981 1,415,703,891 1,463,189,972 288,314,516 3,376,011,360
Accumulated Depreciation and
Amortization
Balance at beginning of year – 164,690,306 733,504,557 153,240,833 1,051,435,696
Depreciation – 20,970,370 199,136,045 30,381,376 250,487,791
Disposals – – (33,132560) (96,189) (33,228,749)
Reclassification – 8,497,905 – (8,497,905) –
Balance at end of year – 194,158,581 899,508,042 175,028,115 1,268,694,738
Net Book Value P=208,802,981 P=1,221,545,310 P=563,681,930 P=113,286,401 P=2,107,316,622
Land
Building
2009
Furniture,
Fixtures and
Equipment
Leasehold
Improvements
Total
Cost
Balance at beginning of year P=183,623,179 P=1,327,535,732 P=1,077,277,112 P=180,522,818 P=2,768,958,841
Acquisitions 25,179,802 20,365,659 361,146,875 67,538,097 474,230,433
Disposals – – (206,278,846) – (206,278,846)
Balance at end of year 208,802,981 1,347,901,391 1,232,145,141 248,060,915 3,036,910,428
Accumulated Depreciation and
Amortization
Balance at beginning of year – 148,099,163 736,456,938 118,468,355 1,003,024,456
Depreciation – 16,591,143 173,750,293 34,772,478 225,113,914
Disposals – – (176,702,674) – (176,702,674)
Balance at end of year – 164,690,306 733,504,557 153,240,833 1,051,435,696
Net Book Value P=208,802,981 P=1,183,211,085 P=498,640,584 P=94,820,082 P=1,985,474,732
Gain on sale of property and equipment amounted to P=2.4 million, P=9.8 million and
P=3.8 million in 2010, 2009 and 2008, respectively.
The details of depreciation and amortization under the statements of income follow:
2010 2009 2008
Property and equipment P=250,487,791 P=225,113,914 P=177,707,230
Investment properties (Note 12) 62,360,031 59,779,588 54,747,337
Chattel mortgage properties (Note 14) 39,190,286 43,642,104 41,649,531
P=352,038,108 P=328,535,606 P=274,104,098
The Bank declared loss on properties arising from casualty brought about by the calamities in
2009 amounting to P=4.9 million included under ‘Miscellaneous expense’.
As of December 31, 2010 and 2009, property and equipment of the Bank with gross carrying
amounts of P=531.9 million and P=392.0 million, respectively, is fully depreciated but still being
used.

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12. Investment Properties
The composition of and movements in this account follow:
2010
Land
Building
Improvements
Total
Cost
Balance at beginning of year P=1,709,420,443 P=1,500,141,233 P=3,209,561,676
Additions 300,157,262 399,579,969 699,737,231
Disposals (260,740,442) (246,713,253) (507,453,695)
Balance at end of year 1,748,837,263 1,653,007,949 3,401,845,212
Accumulated Depreciation
Balance at beginning of year – 366,846,356 366,846,356
Depreciation (Note 11) – 62,360,031 62,360,031
Disposals – (53,204,299) (53,204,299)
Balance at end of year – 376,002,088 376,002,088
Allowance for Impairment Losses
Balance at beginning of year 224,809,168 35,138,447 259,947,615
Provisions for the year (Note 15) 28,558,362 1,565,766 30,124,128
Disposals (26,877,833) (9,659,718) (36,537,551)
Balance at end of year 226,489,697 27,044,495 253,534,192
Net Book Value P=1,522,347,566 P=1,249,961,366 P=2,772,308,932
2009
Land
Building
Improvements
Total
Cost
Balance at beginning of year P=1,861,068,518 P=1,370,371,532 P=3,231,440,050
Additions 271,355,783 316,318,373 587,674,156
Disposals (423,003,858) (186,548,672) (609,552,530)
Balance at end of year 1,709,420,443 1,500,141,233 3,209,561,676
Accumulated Depreciation
Balance at beginning of year – 336,302,333 336,302,333
Depreciation (Note 11) – 59,779,588 59,779,588
Disposals – (29,235,565) (29,235,565)
Balance at end of year – 366,846,356 366,846,356
Allowance for Impairment Losses
Balance at beginning of year 83,397,041 35,595,865 118,992,906
Provisions for the year (Note 15) 149,517,260 3,519,843 153,037,103
Disposals (8,105,133) (3,977,261) (12,082,394)
Balance at end of year 224,809,168 35,138,447 259,947,615
Net Book Value P=1,484,611,275 P=1,098,156,430 P=2,582,767,705
Depreciation and provision for impairment losses on investment properties amounted to
54.7 million and P=51.0 million, respectively, in 2008.
The details of the net book value of investment properties follow:
2010 2009
Real estate properties acquired in settlement of
loans and receivables P=2,492,947,062 P=2,286,402,095
Bank premises leased to third parties and held for
capital appreciation 279,361,870 296,365,610
P=2,772,308,932 P=2,582,767,705

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As of December 31, 2010 and 2009, the aggregate fair value of investment properties amounted to
P=3.0 billion and P=2.7 billion, respectively.
Gain on foreclosure of investment properties amounted to P=224.4 million, P=206.1 million and
P=211.1 million in 2010, 2009 and 2008, respectively.
Gain on sale of investment properties amounted to P=15.2 million, P=31.6 million and P=40.4 million
in 2010, 2009 and 2008, respectively.
Rental income on investment properties included in miscellaneous income amounted to
P=61.8 million, P=52.9 million and P=53.1 million in 2010, 2009 and 2008, respectively
(see Notes 23 and 25).
Operating expenses incurred in maintaining investment properties amounted to P=7.5 million,
P=5.2 million and P=4.6 million in 2010, 2009 and 2008, respectively.
13. Goodwill and Intangible Assets
This account consists of:
2010 2009
Goodwill P=53,558,338 P=53,558,338
Intangible assets
Software costs 163,002,477 120,790,777
License fees 24,123,737 23,123,737
187,126,214 143,914,514
P=240,684,552 P=197,472,852
The movements of other intangible assets follow:
2010
Software Costs License Fees Total
Balance at beginning of year P=120,790,777 P=23,123,737 P=143,914,514
Additions 83,904,411 1,000,000 84,904,411
Amortization (41,692,711) – (41,692,711)
Balance at end of year P=163,002,477 P=24,123,737 P=187,126,214
2009
Software Costs License Fees Total
Balance at beginning of year P=82,634,345 P=22,323,737 P=104,958,082
Additions 65,918,040 800,000 66,718,040
Amortization (27,761,608) – (27,761,608)
Balance at end of year P=120,790,777 P=23,123,737 P=143,914,514
Amortization of software costs in 2008 amounted to P=26.8 million.

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14. Other Assets
This account consists of:
2010 2009
Prepaid taxes on investment securities P=325,130,153 P=104,920,294
Chattel mortgage properties - net 233,529,702 180,437,602
Security deposits 76,324,741 69,064,080
Creditable withholding tax 55,395,096 17,116,379
Other prepaid expenses 53,792,479 71,758,680
Prepaid rent 32,251,010 32,383,373
Documentary stamps on hand 28,203,719 32,702,233
RCOCI 27,841,860 46,062,282
Inter-office float items 12,844,125 8,431,511
Sundry debits 11,396,210 43,714,076
Stationeries and supplies on hand 8,838,714 61,954,548
Prepaid insurance 8,609,272 4,712,372
Deferred charges 6,450,781 9,676,172
Others 3,513,037 4,113,609
P=884,120,899 P=687,047,211
The movements of chattel mortgage properties - net follow:
2010 2009
Cost
Balance at beginning of year P=206,398,160 P=279,116,918
Additions (Note 32) 639,569,321 498,026,288
Disposals (578,778,108) (570,745,046)
Balance at the end of year 267,189,373 206,398,160
Accumulated Depreciation
Balance at beginning of year 25,344,468 30,665,788
Depreciation (Note 11) 39,190,286 43,642,104
Disposals (31,491,173) (48,963,424)
Balance at the end of year 33,043,581 25,344,468
Allowance for Impairment Losses
Balance at beginning of year 616,090 –
Provisions for the year – 616,090
Balance at end of the year 616,090 616,090
Net Book Value P=233,529,702 P=180,437,602
Loss on foreclosure of chattel mortgage properties amounted to P=108.4 million, P=92.0 million,
P=60.1 million in 2010, 2009 and 2008, respectively.
Gain on sale of chattel mortgage properties amounted to P=45.4 million, P=41.8 million and
P=26.8 million in 2010, 2009 and 2008, respectively.

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15. Allowance for Credit and Impairment Losses
Details of the provision for credit and impairment losses charged to current operations follow:
2010 2009 2008
Loans and receivables P=882,158,108 P=863,603,391 P=526,352,518
Investment properties (Note 12) 30,124,128 153,037,103 51,048,109
AFS investments (Note 8) – 92,500,000 –
Chattel mortgage properties (Note 14) – 616,090 –
P=912,282,236 P=1,109,756,584 P=577,400,627

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Changes in the allowance for credit losses on loans and receivables follow (in thousands):
Receivables from Customers Other Receivables
Accrued
Interest Accounts Sales Contract Unquoted Debt Bills
2010 Consumption Real Estate Commercial Personal Receivable Receivable Receivable Investment Purchased Total
Balance at beginning of year P=568,372 P=171,341 P=682,776 P=1,725,616 P=181,371 P=415,157 P=31,554 P=95,611 P=5,930 P=3,877,728
Provisions for the year charged against profit or
loss 77,405 1,572 86,284 593,414 121,616 1,867 – – – 882,158
Reversal of allowance – – – – (35,252) (32,563) (3,552) – – (71,367)
Amount written off (170,575) – – (82,831) – – – – (4,627) (258,033)
Reclassification – – – – – 92,500 – – – 92,500
Balance at end of year P=475,202 P=172,913 P=769,060 P=2,236,199 P=267,735 P=476,961 P=28,002 P=95,611 P=1,303 P=4,522,986
Individual impairment P=– P=127,746 P=574,569 P=– P=52,409 P=178,699 P=18,313 P=95,611 P=– P=1,047,347
Collective impairment 475,202 45,167 194,491 2,236,199 215,326 298,262 9,689 – 1,303 3,475,639
P=475,202 P=172,913 P=769,060 P=2,236,199 P=267,735 P=476,961 P=28,002 P=95,611 P=1,303 P=4,522,986
Gross amount of loans individually impaired,
before deducting any individual impairment
allowance P=– P=320,827 P=1,127,174 P=– P=234,456 P=178,256 P=18,313 P=95,611 P=– P=1,974,637
Receivables from Customers Other Receivables
Accrued
Interest Accounts Sales Contract Unquoted Debt Bills
2009 Consumption Real Estate Commercial Personal Receivable Receivable Receivable Investment Purchased Total
Balance at beginning of year P=428,858 P=94,152 P= 665,280 P=1,385,048 P=89,873 P=328,530 P=31,005 P=95,611 P=5,930 P=3,124,287
Provisions for the year charged against profit or
loss 139,514 116,876 43,770 340,568 110,928 111,398 549 863,603
Reversal of allowance – (39,687) (26,274) – (19,430) – – – – (85,391)
Amount written off – – – – – (24,771) – – – (24,771)
Balance at end of year P=568,372 P=171,341 P=682,776 P=1,725,616 P=181,371 P=415,157 P=31,554 P=95,611 P=5,930 P=3,877,728
Individual impairment P=– P=123,441 P=520,657 P=– P=46,333 P=85,530 P=25,446 P=95,611 P=– P=897,018
Collective impairment 568,372 47,900 162,119 1,725,616 135,038 329,627 6,108 – 5,930 2,980,710
P=568,372 P=171,341 P=682,776 P=1,725,616 P=181,371 P=415,157 P=31,554 P=95,611 P=5,930 P=3,877,728
Gross amount of loans individually impaired,
before deducting any individual impairment
allowance P=– P=355,344 P=1,269,563 P=– P=192,356 P=85,530 P=168,942 P=95,611 P=– P=2,167,346

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16. Deposit Liabilities
As of December 31, 2010 and 2009, under existing BSP regulations, non-FCDU deposit
liabilities are subject to statutory reserve of 4.00% and liquidity reserve of 2.00%. As of
December 31, 2010 and 2009, the Bank is in compliance with such regulation.
Available reserves follows:
2010 2009
Cash P=3,083,626,629 P=2,555,221,249
Due from BSP 1,047,234,412 914,926,770
AFS investments 1,490,060,774 1,236,249,084
P=5,620,921,815 P=4,706,397,103
Deposit liabilities earned average fixed interest rate of 3.29%, 3.53%, and 4.87% in 2010,
2009 and 2008, respectively.
17. Subordinated Notes
On January 27, 2006, the Bank issued P=2.0 billion, callable Unsecured Subordinated
Notes due 2016 with step-up in 2011 (the Notes). The issuance of the Notes under the
terms approved by the BOD was approved by the BSP on December 28, 2005.
Among the significant terms and conditions of the issuance of the Notes are:
a. Issue price at 100% of the principal amount.
b. The Notes bear interest at the rate of 10.00% per annum from and including January
27, 2006 with step-up after five years. Interest shall be payable quarterly in arrears
every 27th of January, April, July and October of each year, commencing April 27,
2006.
c. The Notes will constitute direct, unconditional and unsecured obligations of the Bank
and claim in respect of the Notes shall be at all times pari passu and without any
preference among themselves.
d. Subject to satisfaction of certain regulatory approval requirements, the Bank may
redeem all and not less than the entire outstanding Notes, at a redemption price equal
to the face value of the Notes together with accrued and unpaid interest based on the
interest rate.
e. On January 27, 2011 (the Reset date), the Step-up Interest Rate will be based on a 5-
year Mart1 FXTN as of Reset date multiplied by 80.00%, plus the Step-up Credit
Spread on the twenty-first interest period up to the last interest period in the event that
the issuer does not exercise the Call Option. The Step-up Credit Spread is equivalent
to 4.2815%.
As of December 31, 2010 and 2009, the Bank is in compliance with the terms and
conditions upon which the subordinated notes have been issued.
On October 14, 2010, the BOD of the Bank approved the option to call the Notes on
January 27, 2011. The request of the Bank to exercise the call option on the Note was
approved by the BSP on December 10, 2010. The Bank exercised the call option on
January 28, 2011 (see Note 33).

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The movements in subordinated notes payable follow:
2010 2009
Amortized cost
P=1,973,881,534 P=1,970,941,621
Amortization of debt issuance costs 3,259,498 2,939,913
P=1,977,141,032 P=1,973,881,534
18. Accrued Taxes, Interest and Other Expenses
This account consists of:
2010 2009
Accrued interest payable P=200,096,655 P=189,492,469
Accrued other taxes and licenses payable 179,253,734 85,503,262
Accrued other expenses payable 752,778,952 620,027,404
P=1,132,129,341 P=895,023,135
Accrued other expenses payable consists of accruals for salaries and wages, fringe
benefits, insurance on deposits, professional fees, advertisements and information
technology expenses.
19. Other Liabilities
This account consists of:
2010 2009
Accounts payable P=676,738,250 P=636,651,703
Net retirement liability (Note 24) 192,844,011 120,484,387
Other credits 186,437,555 189,582,529
Withholding taxes payable 55,645,940 59,832,957
Bills purchased-contra (Note 9) 54,332,644 130,001,594
Sundry credits 18,794,710 43,328,325
Due to the Treasurer of the Philippines 6,303,446 6,332,337
SSS, Medicare, ECP & HDMF premium payable 6,061,448 5,445,395
Dividends payable (Note 21) – 36,037,874
Due to BSP – 7,495,204
Miscellaneous 65,720,627 58,218,617
P=1,262,878,631 P=1,293,410,922
Accounts payable includes payable to suppliers and service providers, and loan payments
and other charges received from customers in advance.
Other credits represent long-outstanding unclaimed balances from inactive and dormant
accounts.
Miscellaneous liabilities include incentives for housing loan customers that are compliant
with the payment terms amounting to P=44.7 million and P=39.1 million as of December 31,
2010 and 2009, respectively.

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20. Maturity Analysis of Assets and Liabilities
The following table shows an analysis of assets and liabilities analyzed according to
whether they are expected to be recovered or settled within one year and beyond one year
from statement of condition date (in thousands):
Within
One Year
2010 2009
Beyond
Within Beyond
One Year Total One Year One Year
Total
Financial Assets
Cash and other cash items P=3,163,940 P=– P=3,163,940 P=2,632,885 P=– P=2,632,885
Due from BSP 2,899,592 – 2,899,592 4,937,990 – 4,937,990
Due from other banks 7,520,836 – 7,520,836 1,528,848 – 1,528,848
Interbank loans receivable and SPURA 3,586,560 – 3,586,560 5,900,000 – 5,900,000
FVPL investments 868,316 – 868,316 248,043 – 248,043
AFS investments - gross (Note 8) 16,246,349 – 16,246,349 18,399,882 – 18,399,882
HTM investments – 9,162,585 9,162,585 – 4,772,851 4,772,851
Loans and receivables - gross (Note 9) 11,149,148 51,908,858 63,058,006 11,065,435 44,181,866 55,247,301
Other assets - gross* (Note 14) 48,169 56,384 104,553 66,887 49,025 115,912
45,482,910 61,127,827 106,610,737 44,779,970 49,003,742 93,783,712
Nonfinancial Assets
Investment in an associate and joint venture – 829,874 829,874 – 788,310 788,310
Property and equipment - gross (Note 11) – 3,376,011 3,376,011 – 3,036,910 3,036,910
Investment properties - gross (Note 12) – 3,401,845 3,401,845 – 3,209,562 3,209,562
Deferred tax assets 59,809 645,552 705,361 27,510 1,229,020 1,256,530
Other assets - gross** (Note 14) 770,642 250,226 1,020,868 415,984 353,241 769,225
830,451 8,503,508 9,333,959 443,494 8,617,043 9,060,537
Less allowance for credit and
impairment losses – – 4,823,146 – – 4,276,802
Accumulated depreciation
(Notes 11 and 12) – – 1,644,696 – – 1,418,282
Unearned discounts (Note 9) – – 5,327,385 – – 4,061,335
– – 11,795,227 – – 9,756,419
P=46,313,361 P=69,631,335 P=104,149,469 P=45,223,464 P=57,620,785 P=93,087,830
* Others assets under financial assets comprise of petty cash fund, shortages, RCOCI and security deposits.
** Other assets under nonfinancial assets comprise of inter-office float items, prepaid expenses, stationery and supplies
on hand, sundry debits, documentary stamps on hand, deferred charges, postages stamps, chattel mortgage properties,
goodwill and intangible assets.
Within
One Year
2010 2009
Beyond
Within Beyond
One Year Total One Year One Year
Total
Financial Liabilities
Deposit liabilities P=73,074,011 P=14,444,798 P=87,518,809 P=65,362,751 P=12,027,460 P=77,390,211
Subordinated notes 1,977,141 – 1,977,141 – 1,973,882 1,973,882
Treasurer’s, cashier’s and manager’s checks 649,434 – 649,434 505,738 – 505,738
Accrued other expenses payable 752,779 – 752,779 620,027 – 620,027
Accrued interest payable 200,097 – 200,097 189,492 – 189,492
Other liabilities
Accounts payable 676,738 – 676,738 636,652 – 636,652
Other credits – 186,438 186,438 – 189,583 189,583
Bills purchased-contra 54,333 – 54,333 130,002 – 130,002
Due to BSP – – – 7,495 – 7,495
Dividends payable – – – 36,038 – 36,038
Due to Treasurer of the Philippines – 6,303 6,303 – 6,332 6,332
Deposits for keys 1,040 – 1,040 1,132 – 1,132
Others* 1,764 – 1,764 2,412 – 2,412
77,387,337 14,637,539 92,024,876 67,491,739 14,197,257 81,688,996
Nonfinancial Liabilities
Accrued other taxes and licenses payable 179,254 – 179,254 85,503 – 85,503
Accrued income tax payable – – – 17,426 – 17,426
Other liabilities** 7,315 328,947 336,262 108,607 175,159 283,766
186,569 328,947 515,516 211,536 175,159 386,695
P=77,573,906 P=14,966,486 P=92,540,392 P=67,703,275 P=14,372,416 P=82,075,691
* Others under financial liabilities comprise of payment orders payable and overages.
** Other liabilities under nonfinancial liabilities comprise of advance rentals on bank premises, sundry credits,
withholding taxes, SSS, Medicare, ECP & HDMF premium payable, net retirement liability, and miscellaneous
liabilities.

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21. Equity
Issued Capital
The Bank’s capital stock consists of:
2010 2009
Shares Amount Shares Amount
Authorized common stock - P=10 par value 425,000,000 P=4,250,000,000 425,000,000 P=4,250,000,000
Issued and outstanding
Balance at beginning and end of year (Note 28) 240,252,491 P=2,402,524,910 240,252,491 P=2,402,524,910
Dividends Paid and Proposed
Details of the Bank’s dividend distributions as approved by the Bank’s BOD and the BSP
follow:
Cash Dividends
Date of declaration Per share Total amount Date of BSP approval Record date Payment date
December 19, 2007 0.15 P=36,037,874 February 07, 2008 February 27, 2008 March 7, 2008
February 13, 2008 0.15 36,037,874 May 19, 2008 June 05, 2008 June 16, 2008
April 29, 2008 0.15 36,037,874 July 16, 2008 August 5, 2008 August 20, 2008
July 21, 2008 0.15 36,037,874 September 11, 2008 October 13, 2008 October 27, 2008
October 28, 2008 0.15 36,037,874 March 6, 2009 March 26, 2009 April 15, 2009
January 20, 2009 0.15 36,037,874 June 29, 2009 July 23, 2009 August 7, 2009
May 18, 2009 0.15 36,037,874 August 17, 2009 September 15, 2009 September 30, 2009
July 28, 2009 0.15 36,037,874 October 20, 2009 November 13, 2009 December 1, 2009
October 13, 2009 0.15 36,037,874 December 15, 2009 January 14, 2010 January 28, 2010
January 19, 2010 0.15 36,037,874 March 8, 2010 March 31, 2010 April 16, 2010
February 19, 2010 2.75 660,694,350 April 22, 2010 May 17, 2010 May 31, 2010
May 17, 2010 0.15 36,037,874 June 15, 2010 July 13, 2010 August 3, 2010
July 27, 2010 0.15 36,037,874 September 6, 2010 September 29, 2010 October 14, 2010
October 14, 2010 0.15 36,037,874 November 15, 2010 December 8, 2010 December 23, 2010
January 20, 2011 0.15 36,037,874
On January 20, 2011, the BOD of the Bank declared a 1.50% regular cash dividend for
the fourth quarter of 2010 amounting to P=36.04 million or P=0.15 per share on which the
Bank is awaiting for the approval of BSP.
Capital Management
The primary objectives of the Bank’s capital management are to ensure that the Bank
complies with externally imposed capital requirements, as mandated by the BSP, and that
the Bank maintains healthy capital ratios in order to support its business and maximize
returns for its shareholders. The Bank considers its paid in capital and surplus as its
capital.
The Bank manages its capital structure and makes adjustments in the light of changes in
economic conditions and the risk characteristic of its activities. In order to maintain or
adjust the capital structure, the Bank may adjust the amount of dividend payment to
shareholders or issue capital securities. The major activities in this area include the
following:
• On March 2, 2005, the Bank’s BOD approved an amendment to the Bank’s Dividend
Policy which provides for an annual regular cash dividend of 6.00% of the par value
of the total capital stock payable quarterly at the rate of 1.50% or P=0.15 per share
payable not later than March 31, June 30, September 30 and December 31 of each
year.
• The Bank has issued additional common shares for its qualified stockholders in 2008
and 2006 through stock rights offerings that raised P=2.0 billion and P=750.0 million in
capital, respectively.

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Regulatory Capital
Under Section 9 of the Thrift Banks Act, the combined capital accounts of each bank
should not be less than an amount equal to 10.00% of its risk assets. Risk assets consist
of total assets after exclusion of cash on hand, due from BSP, loans covered by hold out
or assignment of deposits, loans or acceptances under letters of credit to the extent
covered by margin deposits and other non-risk items as determined by the Monetary
Board.
On June 2, 2006, the Monetary Board of the BSP approved major revisions to the riskbased
capital adequacy framework which took effect on July 1, 2007, to align the existing
Basel I-compliant framework with the new Basel II standards. As approved, the BSP
decided to maintain the present minimum overall capital adequacy ratio (CAR) of banks
and quasi-banks at 10.00%. However, consistent with Basel II recommendations, it
approved major methodological revisions to the calculation of minimum capital that
universal banks, commercial banks and their subsidiary banks and quasi-banks should
hold against actual credit risk exposures.
The guidelines for allocating minimum capital to cover market risk was also amended to
some extent, primarily to align specific market risk charges on trading book assets with
the revised credit risk exposure guidelines. A completely new feature is the introduction
of bank capital charge for operational risk. The required disclosures to the public of bank
capital structure and risk exposures are also enhanced to promote greater market
discipline in line with the so-called Pillar 3 of the Basel II recommendations.
The determination of the Bank’s compliance with regulatory requirements and ratios is
based on the amount of the Bank’s “unimpaired capital” (regulatory net worth) as
reported to the BSP, which is determined on the basis of regulatory accounting practices
which differ from PFRS in some respects.
The Bank complied with all externally imposed capital requirement throughout the
period.
The table below shows the Bank’s CAR as of December 31, 2010 and 2009 as reported to
the BSP (in millions).
2010 2009
Tier 1 capital P=9,960 P=9,433
Tier 2 capital 2,506 2,397
Gross qualifying capital 12,466 11,830
Less required deductions 1,844 2,489
Total qualifying capital P=10,622 P=9,341
Risk weighted assets P=69,091 P=64,693
Tier 1 capital adequacy ratio 12.35% 11.34%
Capital adequacy ratio 15.37% 14.44%
Regulatory capital consists of Tier 1 capital, which comprises capital stock, surplus,
surplus reserves, cumulative translation adjustment and net unrealized losses on AFS
investments. Certain adjustments are made to PFRS-based results and reserves, as
prescribed by the BSP. The other component of regulatory capital is Tier 2 capital, which
is comprised of the Bank’s subordinated notes. Certain items are deducted from the
regulatory Gross Qualifying Capital, such as but not limited to equity investments in
financial allied undertakings, but excluding insurance companies (for solo basis);
investments in debt capital instruments of unconsolidated subsidiary banks (for solo
basis); equity investments in subsidiary insurance companies and subsidiary non-financial
allied undertakings; and reciprocal investments in equity of other banks/enterprises.

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Risk-weighted assets are determined by assigning defined risk weights to amounts of onstatement
of condition exposures and to the credit equivalent amounts of off-statement of
condition exposures. Certain items are deducted from risk-weighted assets, such as the
excess of general loan loss provision over the amount permitted to be included in Tier 2
capital.
The issuance of BSP Circular No. 639 covering the Internal Capital Adequacy
Assessment Process (ICAAP) in 2009 supplements the BSP’s risk-based capital adequacy
framework under Circular No. 538. In compliance with this new circular, the Metrobank
Group 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 Group. The level and structure of capital are assessed
and determined in light of the Group’s business environment, plans, performance, risks
and budget; as well as regulatory edicts. The Bank follows the Group’s ICAAP
framework and submits the result of its assessment to the Parent Company. The BSP
requires submission of an ICAAP document on a group-wide basis every January 31. The
Group through the Parent Company has complied with the submission deadline of the
first final ICAAP document.
Financial Performance
The following basic ratios measure the financial performance of the Bank:
2010 2009 2008
Return on average equity 15.99% 12.73% 12.47%
Return on average assets 1.83% 1.48% 1.31%
Net interest margin on average earning assets 5.57% 6.43% 5.75%
22. Net Service Fees and Commission Income
This account consists of:
2010 2009 2008
Service Fees and Commission Income
Deposit related and other fees received P=381,902,596 P=293,022,473 P=415,242,909
Credit related fees and commissions 369,748,426 345,031,112 206,609,207
Trust fees 6,977,608 4,867,453 9,606,888
758,628,630 642,921,038 631,459,004
Service Fees and Commission Expense
Commissions 54,734,353 41,041,024 93,337,094
Brokerage 12,212,795 5,638,657 3,756,650
66,947,148 46,679,681 97,093,744
Net Service Fees and Commission Income P=691,681,482 P=596,241,357 P=534,365,260
23. Miscellaneous Income
This account consists of:
2010 2009 2008
Rent (Notes 12 and 25) P=64,271,909 P=55,586,122 P=56,000,310
Insurance commission income 20,158,376 5,739,049 8,389,706
Others 24,519,537 26,958,795 18,839,038
P=108,949,822 P=88,283,966 P=83,229,054

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Rent income arises from the lease of properties and safety deposit boxes of the Bank.
Others include income from recovery of charged-off assets, dividend income and other
miscellaneous income.
24. Retirement Benefits
The Bank has a funded, noncontributory defined benefit plan covering substantially all of
its employees. The benefits are based on years of service and final compensation.
The retirement expense amount included in ‘Compensation and fringe benefits’ in the
statements of income follows:
2010 2009
Current service cost P=61,963,347 P=5,212,147
Interest cost 54,098,714 120,375,419
Expected return on plan assets (41,426,599) (18,553,880)
Net actuarial gain recognized during the year (2,275,838) (61,607)
Net retirement expense P=72,359,624 P=106,972,079
The amount of net retirement liability recognized in the statements of condition under
‘Other liabilities’ follow:
2010 2009
Present value of defined benefit obligation P=647,032,949 P=512,298,428
Fair value of plan assets (Note 29) 556,233,035 490,836,483
Deficit 90,799,914 21,461,945
Unrecognized actuarial gains 102,044,097 99,022,442
Net retirement liability P=192,844,011 P=120,484,387
The movements in net retirement liability recognized in the statements of condition
follow:
2010 2009
Balance at beginning of year P=120,484,387 P=81,512,308
Retirement expense 72,359,624 106,972,079
Contributions – (68,000,000)
Balance at end of year P=192,844,011 P=120,484,387
Changes in the present value of the defined benefit obligation are as follow:
2010 2009
Balance at beginning of year P=512,298,428 P=354,045,351
Current service cost 61,963,347 5,212,147
Interest cost 54,098,714 120,375,419
Benefits paid (16,290,008) (36,580,421)
Actuarial loss 34,962,468 69,245,932
Balance at end of year P=647,032,949 P=512,298,428

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Changes in the fair value of plan assets are as follow:
2010 2009
Balance at beginning of year P=490,836,483 P=309,231,332
Expected return 41,426,599 18,553,880
Contributions – 68,000,000
Benefits paid (16,290,008) (36,580,421)
Actuarial gains 40,259,961 131,631,692
Balance at end of year P=556,233,035 P=490,836,483
The actual return on plan assets amounted to P=81.69 million and P=150.2 million in 2010
and 2009, respectively.
The movements in unrecognized actuarial gains are as follow:
2010 2009
Balance at beginning of year P=99,022,442 P=36,698,289
Actuarial losses for the year - obligation (34,962,468) (69,245,932)
Actuarial gains for the year - plan assets 40,259,961 131,631,692
Actuarial gains recognized (2,275,838) (61,607)
Balance at end of year P=102,044,097 P=99,022,442
The Bank expects to contribute P=155.5 million to its noncontributory defined benefit plan
in 2011. The major categories of plan assets as a percentage of the fair value of total plan
assets are as follow:
2010 2009
Equity instruments 90.4% 95.77%
Other assets 9.6% 4.23%
Other assets include investment in savings and time deposits, and accrued interest
receivable.
The following table shows the aggregate fair value of equity instruments included in the
plan assets:
2010 2009
Bank’s shares P=310,595,481 P=274,802,678
SMFC 100,000,000 100,000,000
Other listed companies 89,239,280 95,315,300
P=499,834,761 P=470,117,978
The principal actuarial assumptions used in determining retirement liability as of January
1, 2010 and 2009 are shown below:
2010 2009
Average remaining working life 21 21
Discount rate 10.56% 34.00%
Expected rate of return on assets 8.44% 6.00%
Future salary increases 8.00% 10.00%

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The overall expected rate of return on assets is determined based on market prices
prevailing on the date of the valuation, applicable to the period over which the obligation
is to be settled.
As of December 31, 2010, the discount rate used in determining retirement obligation is
11.16%. There has been a widening spread between the rates of return on risk-free fixed
income securities and the rates of return on high quality fixed-income securities that
reflect credit or risk premiums in 2008. This increased spread has resulted in higher
yields-to-maturity and, accordingly, higher discount rates.
Information on the Bank’s retirement plan for the current and previous years follows:
2010 2009 2008 2007 2006
Present value of unfunded obligation P=647,032,949 P=512,298,428 P=354,045,351 P=433,309,127 P=489,386,549
Fair value of plan assets (556,233,035) (490,836,483) (309,231,332) (385,586,980) (296,707,051)
Deficit 90,799,914 21,461,945 44,814,019 47,722,147 192,679,498
Experience adjustments on plan liabilities 21,694,823 (29,041,046) (54,151,522) (23,289,277) 8,250,112
Experience adjustments on plan assets 40,259,961 131,631,692 (159,193,210) 50,211,854 31,118,332
25. Leases
The Bank leases the premises occupied by its branches for periods ranging from 1 to 20
years renewable under certain terms and conditions. Various lease contracts include
escalation clauses, most of which bear an annual rent increase of 10.00%. Rentals
charged against profit or loss
under these lease contracts amounting to P=293.2 million in 2010, P=261.8 million in 2009
and
P=209.5 million in 2008 are shown under ‘Occupancy and equipment-related costs’ in the
statements of income.
Future minimum rentals payable under non-cancelable operating leases are as follow:
2010 2009
Within one year P=213,444,471 P=198,766,942
After one year but not more than five years 529,572,538 497,656,000
More than five years 304,859,316 274,637,504
P=1,047,876,325 P=971,060,446
The Bank entered into commercial property leases on its surplus office space. These noncancelable
leases have remaining non-cancelable lease terms between 1 and 5 years. As
of December 31, 2010 and 2009, there is no contingent rental income. Rent income of the
Bank related to these property leases amounting to P=61.8 million in 2010, P=52.9 million
in 2009 and P=53.1 million in 2008 are shown under ‘Miscellaneous income’ in the
statements of income.
Future minimum rentals receivable under non-cancelable operating leases are as follow:
2010 2009
Within one year P=61,416,868 P=57,933,061
After one year but not more than five years 111,983,488 173,758,668
P=173,400,356 P=231,691,729

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26. Miscellaneous Expenses
This account consists of:
2010 2009 2008
Insurance P=195,235,643 P=158,506,606 P=195,557,385
Advertising 155,924,174 100,586,400 122,464,960
Information technology 141,207,719 110,418,684 95,608,286
Litigation 115,923,187 123,384,434 104,091,093
Communications 111,515,834 100,864,563 86,169,131
Stationery and supplies 111,403,081 31,159,010 23,798,870
Transportation and traveling 75,311,632 59,416,287 45,397,237
Repairs and maintenance 70,140,352 55,149,320 37,439,332
Management and professional fees 41,200,354 55,108,460 41,357,364
Banking activities expenses 25,028,402 5,628,722 7,317,428
Donations and charitable contributions 22,442,565 12,179,450 10,937,663
Fines, penalties and other charges 21,937,212 20,952,591 1,114,661
Supervision and examination fees 17,652,078 26,432,612 23,435,135
Training and seminars 15,957,749 11,175,319 10,177,282
Membership fees and dues 7,436,067 5,341,052 4,347,683
Rewards and incentives 7,273,273 5,026,581 5,740,739
Entertainment, amusement and recreation
(EAR) (Note 27) 3,617,682 2,328,921 1,521,350
Meeting allowance 2,729,876 3,265,093 3,148,445
Others 70,990,702 30,718,089 34,064,597
P=1,212,927,582 P=917,642,194 P=853,688,641
Insurance expense includes premiums paid to the Philippine Deposit Insurance
Corporation amounting to P=172.1 million, P=132.2 million and P=107.4 million in 2010,
2009 and 2008, respectively.
Other expenses include sponsorship expenses, home free loan expenses, appraisal fees
and notarial fees. In 2010 and 2009, other expenses include payments to union members
amounting to P=9.25 million and P=6.72 million, respectively, for the successful completion
of the collective bargaining agreement, while there is no payment made to union members
in 2008.
27. Income and Other Taxes
Under Philippine tax laws, the Bank is subject to percentage and other taxes (presented as
‘Taxes and licenses’ in the statement of income) as well as income taxes. Percentage and
other taxes paid consist principally of gross receipts tax (GRT) and documentary stamps
taxes (DST).
Income taxes include corporate income tax, discussed below, and final taxes paid at the
rate of 20.00%, which is a final withholding tax on gross interest income from
government securities, and other deposit substitutes.
Current tax regulations provide that the RCIT rate shall be 35.00% until December 31,
2008. Starting January 1, 2009, the RCIT rate shall be 30.00%. The interest allowed as a
deductible expense is reduced by 42.00% of interest income subjected to final tax under
the 35.00% corporate tax regime and 33.00% under the 30.00% corporate tax regime.

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RA No. 9504, An Act Amending National Internal Revenue Code, provides that starting
July 1, 2008, the optional standards deduction (OSD) equivalent to 40.00% of gross
income may be claimed as an alternative deduction in computing for the RCIT. The Bank
elected to claim itemized expense deductions instead of the OSD in computing for the
RCIT in 2010 and 2009.
Current tax regulations also provide for the ceiling on the amount of EAR expense that
can be claimed as a deduction against taxable income. Under the regulations, EAR
expense allowed as a deductible expense for a service company is limited to the actual
EAR paid or incurred but not to exceed 1.00% of net revenue. The regulations also
provide for MCIT of 2.00% on modified gross income and allow a NOLCO. The MCIT
and NOLCO may be applied against the Bank’s income tax liability and taxable income,
respectively, over a three-year period from the year of inception.
FCDU offshore income (income from non-residents) is tax-exempt while gross onshore
income (income from residents) is subject to 10.00% income tax. In addition, interest
income on deposit placements with other FCDUs and offshore banking units (OBUs) is
taxed at 7.50%.
Under current tax regulation, the income derived by the FCDU from foreign currency
transactions with non-residents, 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% income tax.
Provision for (benefit from) income tax consists of:
2010 2009 2008
Current:
Final tax P=293,911,402 P=216,715,098 P=109,842,912
RCIT/MCIT 69,561,338 62,504,782 46,721,314
363,472,740 279,219,880 156,564,226
Deferred 481,607,494 (145,718,829) 44,036,634
P=845,080,234 P=133,501,051 P=200,600,860
Net deferred tax asset consists of:
2010 2009
Deferred tax asset on:
Allowance for credit and impairment losses P=798,540,262 P=1,268,692,219
Carryforward benefits of MCIT 59,809,450 129,370,788
Net pension liability 57,853,203 36,145,316
Accumulated depreciation on investment
properties 50,196,685 52,551,088
Accrued rent 38,408,448 35,138,839
Unamortized pension cost contribution 20,294,967 26,977,585
Unrealized foreign exchange loss 4,598,296 1,847,548
1,029,701,311 1,550,723,383
Deferred tax liability on:
Net unrealized gain on investment properties (256,132,063) (239,226,809)
Accretion of interest on impaired loans (68,208,031) (54,966,525)
(324,340,094) (294,193,334)
P=705,361,217 P=1,256,530,049

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As of December 31, 2010, the Bank did not recognize deferred tax asset from its
allowance for credit losses amounting to P=635.3 million.
In 2009, the Bank’s MCIT and RCIT amounted to P=62.5 million and P=7.4 million,
respectively, resulting in an excess MCIT of P=55.1 million.
Details of the Bank’s excess MCIT follow:
Inception Year Amount Applied/Expired Balance Expiry Year
2007 P=27,510,337 P=27,510,337 P=– 2010
2008 46,721,314 42,051,001 4,670,313 2011
2009 55,139,137 – 55,139,137 2012
P=129,370,788 P=69,561,338 P=59,809,450
As of December 31, 2010, the Bank had already applied P=69.6 million of its excess MCIT
against its RCIT due.
The reconciliation between the statutory income tax and effective income tax follows:
2010 2009 2008
Statutory income tax P=795,959 P=412,055 P=399,263
Tax effect of:
FCDU Income (167,694) (183,502) (37,927)
Tax-paid and tax-exempt income (621,778) (190,877) (314,381)
Nondeductible expenses 168,141 95,825 74,375
Effect of deferred income tax 670,452 – 79,271
Effective income tax P=845,080 P=133,501 P=200,601
28. Earnings Per Share
The following table presents information used to calculate basic Earnings Per Share
(EPS):
2010 2009 2008
a. Net income P=1,808,115,339 P=1,240,014,416 P=940,151,593
b. Weighted average number
of common shares for basic
earnings per share 240,252,491 240,252,491 236,306,590
c. Basic/Diluted EPS (a/b) P=7.53 P=5.16 P=3.98
As of December 31, 2010, there were no potential common shares with dilutive effect on
the basic EPS of the Bank.
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. Corporate entities are also considered to be related if
they are subjected to common control or common significant influence. Transactions
between related parties are based on terms similar of those offered to non-related parties.

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In the ordinary course of business, the Bank has loans and other transactions with its
affiliates, and with certain DOSRI. Under the Bank's policy, these loans and other
transactions are made substantially on the same terms as with other individuals and
businesses of comparable risks. The General Banking Law limits the amount of direct
credit accommodations to DOSRI, 70.00% of which must be secured and should not
exceed the total of their respective deposits and book value of their respective investments
in the Bank. In the aggregate, loans to DOSRI generally should not exceed the lower of
the Bank's total equity or 15.00% of the Bank's total loan portfolio.
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 and other credit accommodations granted under said
circular as of December 31, 2010 and 2009:
2010 2009
Total outstanding DOSRI accounts P=2,996,655,559 P=1,740,885,192
Percent of DOSRI accounts granted under
regulations existing prior to BSP Circular
No. 423 to total loans 4.96% 3.34%
Percent of new DOSRI accounts granted under BSP
Circular No. 423 to total loans – –
Percent of unsecured DOSRI accounts to total
DOSRI accounts 9.68% 15.29%
Percent of past due DOSRI accounts to total
DOSRI accounts 19.83% 34.70%
Percent of nonperforming DOSRI accounts to
total DOSRI accounts 19.83% 34.70%
As of December 31, 2010 and 2009, the Bank has no loans, other credit accommodations
and guarantees, as well as availments of previously approved loans and committed credit
lines not considered DOSRI accounts prior to the issuance of said circular but are allowed
a transition period of two years from the effectivity of the said circular until said circular
or said loan, other credit accommodations and guarantees become past due, or are
extended, renewed or restructured, whichever comes later.
On January 31, 2007, BSP Circular No. 560 was issued providing the rules and
regulations that govern loans, other credit accommodations and guarantees granted to
subsidiaries and affiliates of banks and quasi-banks. Under the said circular, the total
outstanding exposures to each of the bank's subsidiaries and affiliates shall not exceed
10.00% of bank's net worth, the unsecured portion of which shall not exceed 5.00% of
such net worth. Further, the total outstanding exposures to subsidiaries and affiliates shall
not exceed 20.00% of the net worth of the lending bank. BSP Circular No. 560 became
effective February 15, 2007.
Total interest income from DOSRI loans amounted to P=63.6 million, P=60.8 million and
P=63.2 million in 2010, 2009 and 2008, respectively.

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The following table shows the other related party transactions included in the financial
statements (in thousands):
Elements of Transaction
Statements of Condition Statements of Income
Related Party Relationship Nature of Transaction 2010 2009 2010 2009 2008
MBTC Parent Company Due from other banks P=2,179,284 P=830,688
Interest income P=2,300 P=5,244 P=97,780
Interest expense 1,427 4,851 17,450
TFSPC Associate Investment in an
associate 458,922 393,215
Share in net earnings of
an associate 65,707 50,034 46,821
SMFC Joint venture Investment in a joint
venture 370,952 395,095
Accounts receivable – 27,675
Share in net loss of
a joint venture (24,143) (4,905) –
Deposit liabilities include deposits of related parties amounting to P=2.3 billion in 2010
and P=4.0 billion in 2009. The related interest expense from these deposits amounted to P=
32.2 million, P=4.4 million and P=17.3 million in 2010, 2009 and 2008, respectively.
The total assets of the retirement fund of employees amounting to P=556.2 million and
P=490.8 million as of December 31, 2010 and 2009, respectively, is being managed by the
Bank’s Trust Department (see Note 30).
For the years ended December 31, 2010, 2009 and 2008, HFT and AFS investment
securities transactions with related parties include outright purchases totaling to P=9.6
billion, P=15.9 billion and P=12.6 billion, respectively, and outright sales totaling to P=12.7
billion, P=17.0 billion and P=35.8 billion, respectively.
Compensation of key management personnel (covering assistant vice presidents and up)
included under ‘Compensation and fringe benefits’ in the statements of income follows:
2010 2009
Short-term employee benefits P=171,664,182 P=151,067,152
Post-employment pension benefits 2,890,081 2,742,364
P=174,554,263 P=153,809,516
Short-term employee benefits include salaries and other non-monetary benefits.
As of December 31, 2010 and 2009, treasury bills (classified under HTM investments)
with total face value of P=50.0 million are pledged by the Bank to MBTC to secure its
payroll account with MBTC. As of December 31, 2010 and 2009, MBTC has assigned to
the Bank, government securities with total face value of P=3.0 billion and P=1.5 billion,
respectively, to secure the Bank’s deposits to MBTC.

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30. Trust Operations
Securities and other resources held by the Bank in fiduciary or agency capacity for its
customers are not included in the accompanying statements of condition since these are
not assets of the Bank.
In connection with the trust functions of the Bank, government securities (classified under
AFS investments) with face value of P=30.0 million and P=51.5 million as of December 31,
2010 and 2009, respectively, are deposited with the BSP in compliance with trust
regulations.
Additionally, at least 10.00% of the Bank’s net profit resulting from the operations of the
Bank’s Trust Department is appropriated to surplus reserve until such reserve for trust
functions amounts to 20.00% of the Bank’s regulatory capital. No part of such surplus
reserve shall at any time be paid out in dividends, but losses accruing in the course of its
trust business may be charged against surplus.
31. Commitments and Contingent Liabilities
In the normal course of the Bank's operations, there are various outstanding commitments
and contingent liabilities such as guarantees and commitments to extend credit, which are
not reflected in the accompanying financial statements. The Bank does not anticipate
significant losses as a result of these transactions.
The following is a summary of the Bank’s commitments and contingent liabilities at their
equivalent peso contractual amounts:
2010 2009
Trust department accounts (Note 30) P=631,063,745 P=630,040,803
Stand-by credit lines 112,514,393 104,023,029
Late deposits/payments received 58,460,284 88,146,816
Items held for safekeeping 336,370 232,334
Outward bills for collection – 82,141
Others 24,994 24,107
Also, several suit and claims relating to the Bank’s lending operations and labor-related
cases remain unsettled. In the opinion of management, these suits and claims, if decided
adversely, will not involve sums having a material effect on the financial statements.
32. Non-cash Investing Activities
The following is a summary of certain non-cash investing activities that relate to the
analysis of the statements of cash flows:
2010 2009 2008
Addition to investment properties in
settlement of loans P=475,374,811 P=381,532,020 P=393,424,106
Addition to chattel mortgage in
settlement of loans 639,569,321 498,026,288 449,959,936
Net unrealized gain (loss) in AFS
investment (464,677,787) 1,497,117,558 (805,848,857)
Cumulative translation adjustment (6,878,392) 7,904,401 43,028,326

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33. Subsequent Events
The Bank exercised the call option on its Unsecured Subordinated Notes (see Note 17)
amounting to P=2.0 billion last January 28, 2011.
The redemption fell under the call provisions of the bond, which had an original maturity
of ten years or until 2016. The call option allowed Bank to buy back the bonds after five
years from the date of issuance.
The Bank recorded an expense amounting to P=22.5 million from the amortization of
remaining debt issuance cost relative to the redemption of the Notes.
34. Disclosures Required Under Revenue Regulations No. 15-2010
On November 25, 2010, the Bureau of Internal Revenue issued Revenue Regulations
(RR) 15-2010 to amend certain provisions of RR 21-2002. The Regulations provide that
starting 2010 the notes to financial statements shall include information on taxes, duties
and license fees paid or accrued during the taxable year.
The Bank reported and/or paid the following types of taxes for the year:
Taxes and licenses
As of December 31, 2010, taxes and licenses of the Bank consist of:
Amount
Gross Receipts Tax
P=512,440,078
Documentary stamps tax 221,906,936
Local taxes 36,580,920
Fringe benefit tax 2,565,298
Others 3,641,979
P=777,135,211
Withholding taxes
Details of total remittances of withholding taxes as of December 31, 2010 are as follows:
Amount paid
Withholding taxes on compensation and benefits
P=270,582,255
Expanded withholding taxes 52,586,782
Final withholding taxes 362,150,349
P=685,319,386
35. Approval for the Release of the Financial Statements
The accompanying comparative financial statements were reviewed and approved for
release by the Bank’s Audit Committee and the BOD on February 10, 2011 and
confirmed by the BOD on its meeting on February 22, 2011.

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SyCip Gorres Velayo & Co.
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax: (632) 819 0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001
SEC Accreditation No. 0012-FR-2
INDEPENDENT AUDITORS’ REPORT
ON SUPPLEMENTARY SCHEDULES
The Stockholders and the Board of Directors
Philippine Savings Bank
PSBank Center
777 Paseo de Roxas corner Sedeño Street
Makati City
We have audited in accordance with Philippine Standards on Auditing, the financial
statements of Philippine Savings Bank (the Bank) as of December 31, 2010 and 2009 and for
each of the three years in the period ended December 31, 2010 included in this Form 17-A
and have issued our report thereon dated February 22, 2011. Our audits were made for the
purpose of forming an opinion on the basic financial statements taken as a whole. The
schedules listed in the Index to Financial Statements and Supplementary Schedules are the
responsibility of the Bank’s management. These schedules are presented for purposes of
complying with Securities Regulation Code Rule 68.1 and Securities and Exchange
Commission Memorandum Circular No. 11, Series of 2008 and are not part of the basic
financial statements. These schedules have been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly state in all material
respect the financial data required to be set forth therein in relation to the basic financial
statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Aris C. Malantic
Partner
CPA Certificate No. 90190
SEC Accreditation No. 0326-AR-1
Tax Identification No. 152-884-691
PTR No. 2641538, January 3, 2011, Makati City
February 22, 2011
A member firm of Ernst & Young Global Limited

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Annex A
Nature of Dividend Declared
As of December 31, 2010
Unappropriated Retained Earnings
as adjusted to available for dividend distribution, at beginning of year P 1,584,218,081
Add: Net income actually earned/realized during the period
Net Income during the period closed to Retained Earnings 1,808,115,339
Less: Non-accrual/unrealized income net of tax
Equity in net income of an associate and joint venture (Note 10) (41,563,417)
Unrealized foreign exchange gain - net (except those
attributable to Cash and Cash Equivalents) (15,327,653)
Unrealized actuarial gain -
Fair value adjustment - mark to market - gain (loss) on FVPL (Note 8) -
Fair value adjustment of Investment Property resulting to gain (Note 12) (224,362,420)
Adjustment due to deviation from PFRS/GAAP-gain
Other unrealized gains or adjustments to the retained earnings
as a result of certain transactions accounted for under the PFRS
Deferred Income Tax (Note 27)
(281,253,490)
Add: Non-actual losses
Depreciation on revaluation increment (after tax)
Adjustment due to deviation from PFRS/GAAP-loss
Loss on fair value adjustment of investment property (after tax)
-
Net income (loss) actually earned during the period 1,526,861,849
Add (Less):
Dividend declarations during the period (804,845,840)
Appropriations of Retained Earnings during the period (180,811,534)
Reversals of appropriations
Effects of prior period adjustments
Treasury shares
(985,657,374)
RETAINED EARNINGS AVAILABLE FOR DIVIDEND, END P 2,125,422,556

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