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News Release
Re: Branch Network Update
Roland Avante                       Dave Sison
Avante_rr@pbb.com.ph         Sison_jdd@pbb.com.ph
+632-363-3333 local 5001  +632-363-3333 local 4017

Branch network expansion continues
-      Current network of 110 branches
-      Expected to add five more before 2014 ends
-      Delays due to difficulty of selecting attractive sites, inclement weather, and construction delays
-      Original target of 126 by end-2014 moved to 1H2015; end-2015 target of 140
-      Strong bank-wide loan growth partially a result of branch network expansion

Caloocan City, Philippines – Philippine Business Bank (PSE:PBB) expects to end the year with 115 branches,
15% higher year-over-year (YoY) from end-2013’s total of 100 branches. PBB currently operates 110

“The branch expansion has proven its merit given the strong growth of the loan and deposit business of the bank. The branch network expansion program has been met with delays due to difficulties in selecting attractive sites, coupled with the inclement weather which caused some construction delays in sites already chosen,” said PBB President and Chief Executive Officer Roland Avante.

Dave Sison, Head of Corporate Planning and Investor Relations Officer added, “While we will be ending the year with fewer additional branches versus our target of 20 to 25 new branches a year, we will not sacrifice the bank’s long-term business just for the sake of meeting short-term numbers.”

Despite headwinds in the branch expansion initiative, senior management believes the growth in the bank’s core business is satisfactory and that the doubling of branches from 55 in end-2010 to the current 110 has already demonstrated its value. Loan generation from the branches has considerably picked up, from under
₱5.0 billion in 2012 to almost ₱14.0 billion today.

“I am confident that the branch expansion will continue to be a principal foundation of the bank’s sustained success and profitability. The business case for the expansion has been established and challenges will not deter us from reaching our goals.

We will continue with the branch expansion as this is central to the bank’s vision of partnering with the
small and medium-sized enterprises located throughout the archipelago. We see dynamism in leading business centers outside the capital, and there are also up-and-coming provinces which have a lot of potential,” said Mr. Avante.

PBB deliberately focused on the expansion of its branches in the countryside while moving the construction of branches in restricted areas to 2015. A projected eight (8) restricted branches are scheduled to be opened next year. The bank expects to reach 200 to 250 branches over the medium term.

For the first nine months of the year, PBB’s pre-tax pre-provision profit was lower by 43.3% at ₱674.2 million and net income was lower by 52.0%, as the branch expansion and the uncertain trading environment caused a decline in earnings. However, interest income was up 30.2% from ₱1.60 billion to ₱2.08 billion, driven by loan growth. Loans increased 12.2% to ₱35.7 billion from ₱31.8 billion at the end of 2013. Interest expenses expanded by ₱59.9 million to ₱431.0 million, up 16.1% over the same period last year.  Deposit liabilities increased 5.1 billion or 13.5% from end-2013. As a result, net interest income expanded 34.5% to ₱1.7 billion from last year’s ₱1.2 billion, an increase of ₱531.2 million.

The strength of the bank’s core business underscores the bank’s strategic positioning to reinvigorate its lending and deposit-taking business. Core income net of operating expenses grew 112.0% or ₱372.3 million YoY, as the Bank continued to strengthen its position in the SME financing space.

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