AUB Annual Report for 2022 online copy.pdf

AUB 2022 ANNUAL REPORT 1
D
Our Vision
We are committed to be the bank of
choice, known for financial strength and
superior delivery of innovative products
and services, driven towards total customer
satisfaction.
Our Mission
We shall be guided by our chosen corporate values of
Commitment, Integrity, Excellence, Leadership, and Teamwork
in:
• developing long-term partnerships with clients through the delivery of
responsive, innovative, and value-added products and services;
• providing the delivery channels that are relevant to our market to ensure
convenience and increase the bank’s accessibility;
• creating a dynamic and meritocratic employee work environment that fosters
mutual respect, provides professional and personal growth,
and encourages creativity;
• dealing fairly with business partners; and: ensuring
optimum returns for our stockholders.
1
Contents
2 About AUB
4 Conglomerate Map
6 25 Years of AUB
8 Financial Highlights
10 Message to Shareholders
12 President’s Report
14 Business Review
20 Sustainability
34 Enterprise Risk Management
50 Corporate Governance
60 Report of the Chief Audit Executive
62 Board of Directors
66 Senior Management
74 Officers
76 Products and Services
77 Branch Directory
84 Corporate Information
85 Audited Financial Statements

2
ABOUTAUB
Asia United Bank Corporation
(AUB) is one of the fastest-growing
publicly listed universal banks in the
Philippines.
History
03 October
AUB was granted a full-branch
commercial banking license by
the Bangko Sentral ng Pilipinas
(BSP). It became one of the very
few banks that started at the
height of the 1997 Asian financial
crisis and is operating to this day.
The bank began as a joint
venture between a consortium
of Filipino industrialists (Jacinto
L. Ng Sr., Luis U. Ang, and Jose
S. Sandejas) and Taiwanese
investment banks (China United Trust
& Investment Corporation and China
Development Industrial Bank).
17 May
AUB was listed on the Philippine Stock Exchange and
began trading under the stock symbol ‘AUB’. In the same
year, it got a license upgrade from the BSP and became
a full-fledged universal bank.
On its 25th
anniversary, AUB scored a significant
milestone: achieving its highest-ever net income of
P6.3 billion, 54% higher than in 2021, mainly due to a
more robust core businesses that benefited from the
reopening of the Philippine economy after more than
two years of COVID-19-era restrictions.
Business Segments
Commercial: Provides lending, trade and cash management services to
corporate and institutional customers, which include large corporate, middle
market clients, and entrepreneurs
Consumer: Offers consumer banking services (real estate loans, salary loans,
auto loans, pension loans, and credit card business) to retail customers
Treasury: Executes the strategic treasury objectives and manages the
AUB Group’s reserve and liquidity position; maintains its balance sheet by
investing in sovereign and corporate debt instruments, commercial paper,
and other securities in the Philippines and other emerging markets; manages
the Group’s foreign currency exposure; and engages in proprietary trading
of currencies and offers foreign exchange instruments to the Group’s
corporate customers, as well as the Group’s investment portfolio
Branch Banking: Offers retail deposit products, including current accounts
(interest-bearing and non-interest bearing demand deposits), savings
accounts and time deposits in pesos and U.S. dollars, as well as lends to
corporate and institutional customers through its own lending centers
situated in selected branches
Other Segments: Trust activities, Remittances, Investment Banking, and the
sale of foreclosed properties
1997
2013
2022
Contributions to Net Income
Business
Segments
2022 2021 2020
In million
Php
%
In million
Php
%
In million
Php
%
Commercial 2,747 44 2,260 56 -902 -30
Consumer 798 13 784 19 758 25
Treasury -1,260 -20 -1,158 -28 2,019 67
Branch Banking 3,814 61 2,021 50 1,046 35
Others 180 3 161 4 107 4
Total 6,279 100 4,068 100 3,028 100
Contributions to Operating Income
Business
Segments
2022 2021 2020
In million
Php
%
In million
Php
%
In million
Php
%
Commercial 5,233 35 5,392 41 5,057 34
Consumer 1,886 13 1,830 14 2,110 14
Treasury 25 0 -77 -1 2,972 20
Branch Banking 7,525 50 5,530 42 4,643 31
Others 367 2 345 3 291 2
Total 15,036 100 13,020 100 15,073 100
Branches:
217 Parent
260 Consolidated
(with 1 micro-banking office)
203 ATMs
Online Banking:
www.aub.com.ph
Mobile Banking:
AUB Mobile App
E-wallet:
HelloMoney

4
CONGLOMERATE
MAP
NG FAMILY
LAMBDA HOLDINGS
CORPORATION
CITIO MAUNLAD
INVESTMENTS
CORPORATION
100% 100%
85%
32.64% 14.84% 4.45%
41.302%
47.512%
11.186%
39% 100.00% 99.54%
0.46%
25.82%
3.71%
18.54%
KUO YO PHILS.
(George Chua/
Hung An Group)
MAGIS EQUITY
VENTURES
(SINGAPORE)
PUBLIC
ANDRES CHUA OTHERS
ASIA UNITED
INSURANCE, INC.
ASIA UNITED
LEASING AND
FINANCE CORP.
CAVITE UNITED
RURAL BANK
RURAL BANK
OF ANGELES
ASIA UNITED BANK
OTHERS
REPUBLIC BISCUIT
CORPORATION
61.00%

8
FINANCIAL
HIGHLIGHTS Total Assets
2022
in Php billion
2021
2020
340.13
336.58
317.85
314.91
315.56
312.12
Total Deposits
2022
in Php billion
2021
2020
288.79
286.80
263.57
261.59
257.34
255.03
Total Loans and Receivables
2022
in Php billion
2021
2020
194.92
192.23
173.79
171.26
168.80
165.72
Total Stockholder’s Equity
2022
in Php billion
2021
2020
39.89
39.72
38.02
37.86
35.23
35.08
Net Income
2022
in Php billion
2021
2020
6.28
6.27
4.07
4.05
3.03
3.02
Consolidated
Parent Company
PROFITABILITY In Php billion
Total Net Interest Income 12.90
Total Non-Interest Income 2.14
Total Non-Interest Expenses 5.65
Pre-Provision Profit* 9.38
Allowance for Credit Losses 4.36
SELECTED BALANCE SHEET DATA In Php thousands
Liquid Assets 135,413,391
SELECTED RATIOS %
CET 1 capital ratio 13.69
Tier 1 capital ratio 13.69
Capital Adequacy Ratio 14.31
PER COMMON SHARE DATA in Php
Basic 12.91
Diluted 12.91
Book Value 81.84
OTHERS In Php thousands
Cash dividends declared 970,621
Headcount
• Officers
• Staff
1,014
1,388
*Income before Provision for credit losses and Provision for Income Tax
2022 BY THE NUMBERS

10
MESSAGE TO
SHAREHOLDERS
2022 was another tough year for many, as the war
between Russia and Ukraine escalated, geopolitical
tensions rose, and economic uncertainty grew due to
higher energy and food prices, inflation rates, and volatile
markets. All these happened while the impact of the
COVID-19 pandemic lingered.
All these external headwinds prompted us to steel our
nerves and seize pockets of opportunities as soon as they
arose.
This is how, in spite of the unsettling landscape, 2022
turned out to be the best year yet for AUB. We reported
our highest-ever consolidated net income of P6.3 billion
in 2022, 56% more than the P4.1 billion level in 2021. We
could not have done this without a strong resolve to
surmount the odds and the strength of our partnerships
and collaborations.
AUB’s resiliency is the result of what our senior management
and employees have achieved, collectively and individually.
Throughout these challenging past few years, we
relentlessly pursued solutions to enable our customers
to meet their banking needs and attain their goals,
securely and conveniently. During the pandemic, both our
employees and clients turned to AUB for assistance and
strength. This is why we always remind ourselves that the
work we do matters and has impact.
To this end, it is imperative that we keep our balance sheets
healthy, our employees safe and secure, and our customers
happy. Beyond the business of banking, we also need to
reach out to our local communities, especially to micro,
small and medium enterprises which serve as the backbone
of our economy. We also need to be a more responsible
and sustainable business by adhering to principles of good
corporate governance and continue earning the trust and
confidence of our stakeholders.
Simply satisfying regulatory requirements is not sufficient.
In today’s uncertain, volatile, and digitalized world, risks
are abundant and growing. We need to be constantly on
our toes to manage risks as the world rapidly evolves.
But while we will tread more carefully in treacherous
waters, we must never let fear stop us from pursuing
innovations, particularly in digitalization. We must harness
the power of technology, not for the sake of being ahead
and different, but more to offer financial solutions and
financial education to our customers so they can address
their needs while keeping their assets and their personal
data safe from fraud and cyber risk.
In the coming years, we see digital acceptance and
innovations to grow in step with intensifying competition
among banks, as well as fintechs and large technology
companies. We expect the pace of change and the size of
competition to be extraordinary and accelerating. In this
context, we at AUB welcome competition as it motivates
us to continue to produce better results. Our experience
in the past few years illustrates how turning competition
into collaboration has paid off, not just for AUB, but for all
those who benefit from our presence.
On behalf of the Board of Directors, we thank our customers,
shareholders, and employees for their tremendous trust
and confidence in the Bank which we hope to continue as
we look forward to more exciting years ahead.
JACINTO L. NG SR. ABRAHAM T. CO
Chairman Emeritus Chairman

12
Powering
the Future
with Partners
PRESIDENT’S
REPORT
There is an African proverb that says, “One finger cannot lift a pebble.”
This came to mind as we review the events of 2022 and realized that there
is indeed wisdom in partnerships and collaborations versus the reverence
for going it alone.
In 2022, a confluence of world events turned the “pebble” into a boulder
that was too heavy for many to carry.
Reeling from the effects of the Russia-Ukraine war and the lingering
shockwaves of the pandemic, countries struggled with skyrocketing prices.
Here at home, inflation reached record-breaking highs in 2022, hitting 8.1%
in December 2022, the highest recorded in 14 years since November 2008.
In spite of these headwinds, the country’s GDP growth accelerated to 7.6%
in 2022 from 5.7% in 2021, exceeding the government’s projection of 6.5%
to 7.5% by a hairline. The reopening of the economy benefited the banking
industry. Bank lending grew throughout 2022 despite rising borrowing
costs, signifying an improvement in business and consumer confidence.
AUB exceeds expectations
Against this better backdrop, AUB pulled off another milestone
performance.
Thanks to increased lending activities, the Bank ended 2022 strong
with a consolidated net income of P6.3 billion, a 56% increase from
P4.1 billion the year prior. This was our highest level on record and
much better than our pre-pandemic performance of P4.4 billion in
2019. Our profits were buoyed by increased loan volume, higher
margins, and a significant reduction in expenses for bad debts. Higher
interest income from loans and investment securities resulted in an
18% year-on-year increase in net interest income to P12.9 billion. This
translated to a net interest margin of 4.2% from 3.7%, previously.
As the economy sustained its recovery, we saw our loan
portfolio expand by 12% to P195 billion during the reporting
period. Our loan volume mostly came from corporate clients
that restocked their inventories and resumed business
activities. Our loan loss provisions dipped by 33% to P1.6
billion as credit quality continuously improved. As a result, our
non-performing loan (NPL) ratio dropped to 1% and our NPL
coverage ratio improved to 115%.
Beyond the numbers
While these numbers speak volumes about our performance,
they are merely snapshots and do not tell the entire picture.
Behind these numbers are the tremendous dedication
and hard work of hundreds of people who enable AUB to
become the fastest-growing universal bank in the country,
as our compounded annual growth rates on several financial
indicators in the past 10 years would attest (see Financial
Highlights).
Every day, we look for ways to be better. We constantly
seek out solutions to improve our products and services and
futureproof our business. Being one of the youngest players
in the local banking industry, we know that what would
differentiate us are not our asset size nor the vastness of
our network presence. It is people. Their skills, knowledge,
performance, and passion are AUB’s compass to success and
sustainability.
To harness this collective spirit, we continuously embark on
collaboration projects among our business units. This strategy
allows us to bolster the performance of each unit as well as
address their respective weaknesses by partnering them with
a group that can provide the necessary support to improve
their service. The result is a smarter, unified, higher level of
service that meets our clients’ evolving banking and financial
needs.
When COVID-19 arrived on our shores in 2020, it left businesses
scrambling for a continuity strategy and emphasized the
urgency of pandemic-proofing. This prompted us at AUB to
undertake succession planning initiatives to retain business-
critical skills and knowledge in the organization. We have
programs to mentor and train high-potential individuals,
ensuring they are fully equipped to step up the corporate
ladder when the time comes.
Delighting through digital
While we continue to rely on our employees to do the heavy
lifting, we also acknowledge that AUB will not be where it
is today if it were not for our partners who share our goals
and aspiration to make our clients’ lives better through
empowering financial solutions.
In 2022, we made a significant milestone by expanding our
digital services to international borders to serve our overseas
Filipino workers (OFWs) and tourists.
Through a partnership with Alipay+, we enabled our e-wallet
HelloMoney to accept cross-border digital transactions,
making us the first Philippine lender with a digital wallet
that can be used overseas. With Alipay+’s global presence,
our HelloMoney users will have a broader reach in payment
acceptance while ensuring a safe and secure digital
transaction. HelloMoney is currently accepted only in South
Korea and Japan, but we plan to make it available in other
countries as well.
Another milestone in 2022 was the launch of the Unified Card
QR link for Visa and MasterCard transactions. Through the
QR link, our PayMate users can accept Visa and MasterCard
prepaid, debit, and credit card payments. This service is
especially beneficial to micro, small, and medium enterprises
as they no longer need to purchase costly point-of-sale (POS)
terminals.
As digital adoption in the country speeds up, expect AUB to
expand its arsenal of digital innovations and enable safe and
convenient transactions for our customers.
The exciting road ahead
While we look forward to more opportunities for partnerships
and collaborations in the coming years, we are also mindful
of growing market uncertainties and the unpredictability
of the world we live in. We will continue to monitor global
developments, such as the geopolitical tension in Europe,
inflation in the U.S. and other developed countries, global
supply chain bottlenecks, the rising oil and commodity prices,
and potential new COVID-19 variants.
The road ahead will definitely remain tough as the world
continues to regain its bearings, post-pandemic. But, as in
previous years, we will surmount these hardships by applying
the lessons and experiences we have amassed in our 25-year
history, and most importantly, by investing and believing in
our people and all those who help clear our path to success
and make it “pebble-free.”
Thank you to our clients, employees, Board of Directors,
and shareholders, we closed 2022 strong. Trust that your
confidence and wisdom will continue to guide us in the years
ahead.
MANUEL A. GOMEZ
President

14
BUSINESS
REVIEW
BUSINESS
REVIEW
To ride on the reopening and recovery of the economy, AUB’s Consumer
Lending Group (CLG) embarked on several initiatives to boost the business,
including intensifying cross-selling efforts within the Bank’s 216-strong
branch network.
It also collaborated with other business units of the Bank
to make credit cards, real estate loans, salary loans,
auto loans, and pension loans more accessible to
customers through the AUB mobile app and
AUB’s corporate website.
Additionally, the Bank
invested in improving its
customer service
d e l i v e r y ,
resulting in
more repeat
b u s i n e s s e s
and a more
s e a m l e s s
experience for new
and existing customers.
On the credit card front, the Bank
had 50,000 cards in force (CIF) by end-
2022.
By 2025, it expects the CIF to reach 80,000 as
it leverages on the Bank’s growing client base while
strengthening its cross-sell programs to existing clients in
payroll, auto loans and mortgage loans, salary loans, individual and
corporate depositors, trust, treasury and corporate key contacts.
Giving consumers access
716%
50,000
cards in force
by end-2022
With consumers now the main driver of the country’s economic growth, credit
card payments surged in 2022.
Mirroring the industry growth, AUB’s Credit Cards
business saw cards acquisition, billings, and revenues
increasing in 2022. Its net income before taxes
skyrocketed by 716% from the 2021 level.
Driving the surge in credit card revenues was
the growth in billings, which stood at Php6.5
billion in 2022 from Php4.3 billion in 2021. The
economy’s reopening following the pandemic
contributed to the growth. The business also
saw a 43% expansion in transactions, and with
people starting to travel again, it also booked an
83% growth in international spend.
Behind the higher credit card revenues was
the success of AUB Credit Cards’ acquisition
campaign in partnership with the Branch Banking
Group. Leveraging on AUB’s depositor base,
Credit Card was able to increase acquisition by
62% through cross-selling. This added 5,600
new cards and close to Php600 million in billings.
The unit also introduced an activation campaign
through the cashback promo, which increased
its active card base by 18% from the previous year.
A total of 117 discount programs were also launched in
partnership with Mastercard and major e-commerce platforms
such as Lazada, Shopee, Grab, and Zalora. These discount programs
brought a 35% growth in e-commerce purchases and a 60% increase in
POS transactions.
AUB Credit Cards also subscribed to Mastercard’s PayLater installment
program, allowing the Bank to expand its installment merchant
partners faster while providing more flexible payment options
to its cardholders. It is also set to launch the Mastercard
Virtual Card program and partner with Buy Now, Pay Later
companies so customers can use their virtual card in over
six million e-commerce merchants. This program will also
be offered to corporate depositors for the issuance of virtual
cards that their employees can use for online transactions such as
ad placements, cloud subscriptions, travel expenses, among others.
With consumers still on a “revenge spending” mode, AUB expects international
and domestic tourism to continue to boost credit card volumes and billings.
Riding on 'revenge spending'
YOY increase in net income
of AUB Credit Cards
43%
YOY growth in credit card
transactions

16
BUSINESS
REVIEW
As pandemic-era mobility restrictions eased
in 2022, AUB’s Branch Banking Group (BBG)
saw an all-time high of almost Php250 billion in
deposits, which served as a testament to clients’
confidence in the Bank.
AUB was able to grow its low-cost current
account and savings account (CASA) deposits
by 10.6% year-on-year. This allowed the Bank
to reduce its dependence on higher-cost funds
from time deposits and special savings accounts.
Although the bank was forced to close three
underperforming branches, it also opened three
new ones, bringing its network count to 217
branches and 201 ATMs strategically situated in
key locations in the country. Three new branches
are set to open in 2023.
To maintain its strong momentum in 2023, BBG plans to
forge more strategic partnerships with key business units to
foster mutual growth. This endeavor will improve the value of AUB’s
products and services while nurturing client relationships and expansion
into new markets. In particular, BBG will sharpen its focus on AUB’s digital
products, such as Online Banking, Bizkit cash management offerings, and AUB
HelloMoney, as more customers see these products as necessities rather than luxuries.
In pursuit of a well-rounded workforce, AUB provides beneficial training programs to sales and
operations employees. Exemplary employees were assigned with specified responsibilities to prepare
them as future leaders and managers, in line with the Bank’s mission to ensure continuity in business growth
and personal career progressions. It has also promoted and hired additional Field Sales Officers to enable the Bank
to be more responsive to clients’ banking needs.
Branches make
a comeback
Bank lending continued its recovery in 2022 despite the interest rate hikes. By end-December,
big banks’ outstanding loans grew by 13.4% year-on-year, according to the Bangko Sentral ng
Pilipinas (BSP).
AUB’s Account Management Group (AMG) mirrored the bullish growth as it achieved a 12%
loan portfolio growth in 2022 versus the previous year. With the reopening of the economy,
most businesses returned to their pre-COVID era operating levels. Several expansion projects
that slowed or were temporarily suspended in the prior years resumed in 2022.
As business activity picked up, so did corporate lending. To avoid the higher cost of doing
business, corporate borrowers availed of long-term fixed-rate loans before the rate hikes bite.
For 2023, the Account Management Group plans to strengthen its collaboration with AUB’s
banking units, such as Consumer Lending and Cash Management, to cross-sell products and
increase customer awareness of AUB offerings.
With global recession posing a threat to full economic recovery, AMG plans to keep a tight lid
on accounts monitoring and portfolio review to keep the Bank’s non-performing loans ratio
below industry level.
Corporates
seize the day
12%
Year-on-year loan
portfolio growth
of AMG
10.6%
Year-on-year growth
of CASA deposits

18
BUSINESS
REVIEW
2022 ushered in an increasingly volatile market as the Russia-Ukraine war
escalated, global inflation accelerated, and several central banks hiked their
key policy rates to keep inflation at bay. The tighter market conditions resulted in
volatile bond yields and currencies.
Amidst the market turbulence, AUB’s Treasury Group was able to navigate and manage the
Bank’s Php117-billion assets in 2022.
Taking well-timed and strategic positions, Treasury generated Php4 billion in interest income and realized
modest trading gains of Php 195 million.
Treasury continued to collaborate with other AUB business units and account officers to provide clients
with better opportunities for their investments and foreign exchange requirements.
Timing is
everything
Remittances hit US$36 billion in 2022, the second
record high since 2021, according to the Bangko Sentral
ng Pilipinas. The growth in inward remittances reflects
the increasing demand for Filipino workers abroad as
economies gradually reopened.
2022 was an excellent year as well for AUB’s remittance
business. It saw its remittance volume rising to US$2
billion, nearly 10% higher than US$1.8 billion a year ago.
The volume of transactions jumped to 5.3 million from 4.6
million during the period.
Several factors contributed to making this a banner year
for AUB’s remittance business. One is the Bank’s improved
remittance process as the business continues to upgrade
and improve its flagship remittance system GintongHatid.
This is a highly integrated remittance facility that enables
AUB to offer rapid transaction processing time, 24/7
customer support, convenient delivery
methods, and a user-friendly online platform.
AUB also further grew its footprint by establishing
more remittance partnerships. In 2022, it onboarded
eleven (11) international and local partners and reactivated
dormant partners. This allowed its remittance business to
expand its scope and its remittance capabilities to more
people both here and abroad.
To continue serving the remittance needs of millions
of overseas Filipino workers, AUB plans to forge more
partnerships strategically located around the world,
expand its footprint and seize other business opportunities.
It also plans to further improve the efficiency of its services
and enhance GintongHatid to meet the challenges and
demands of the market and its existing portfolio.
Big year for remittances
The trust industry continues to perform well amidst a turbulent year for financial markets. The assets
under management (AUM) of the AUB Trust and Investments Group (TIG) reached Php33 billion in
2022, a sizeable 14% increase from the previous year’s Php29 billion.
As the effects of the pandemic slowly dissipated, geopolitical pressures emerged and
continued to elevate market volatility, prompting the Bangko Sentral ng Pilipinas
(BSP) to turn hawkish to bring inflation down. These conditions resulted
in unrealized marked-to-market losses from various fixed income and
equity holdings, resulting in lower return on investment for the
funds.
Despite the depressed investment climate, TIG generated
more than 700 new accounts and continued to participate
in various primary issuances of peso-denominated bonds,
mostly in the latter parts of 2022.
In terms of profitability, it successfully lowered its cost-to-income
ratio to 40% from 43% the previous year. This was the result of
its continued efforts to increase operational efficiency by
rationalizing fee structures and lowering expenses, all
while sustaining revenue generation.
As a result, AUB’s unit investment trust funds
(UITFs) assets increased by 34% year-on-year to
Php6 billion, an almost Php1.5 billion increase from
Php4.4 billion in 2021.
Of the four UITFs managed by TIG, AUB Peso Money Market
Fund accounted for the lion’s share of the growth with a 74%
contribution. The AUB Equity Fund, AUB Peso Investment Fund, and
AUB Gold Dollar Fund (GDF) contributed 7%, 6%, and 13%, respectively.
2022 proved to be a milestone year once again for TIG as its award-winning GDF
bagged the “Best Managed Funds” from CFA Philippines. The AUB Peso Money Market
Fund (PMMF) ranked 25th based on a 1-year performance, up eight points from its 33rd ranking
the previous quarter. In a 3-year and 5-year category, the PMMF ranked 7th and 6th respectively. As
interest rates continue to rise, the PMMF is expected to improve its ranking. A significant portion of the
fund’s investments are in short-term BSP-issued securities and can thus be re-invested in assets with higher
interest rates.
The medium-term bond funds, AUB Peso Investment Fund (PIF) and AUB GDF, ranked 8th and 3rd, respectively, on a
1-year period. GDF remains the top-ranking fund within a 5-year performance period. The AUB Equity Investment Fund
(EIF) continues to improve its ranking, which was among the top 10 equity funds in the market for the fourth quarter of
2022. EIF ranked 7th on a 1-year return, 4th on a 3-year return, and 2nd on a 5-year return. To sustain the momentum,
TIG plans to follow its key strategy of consistency in performance. With consistent and effective fund management, TIG
is confident that the long-term performance of its funds will result in positive returns.
Winning trust
$2 billion
remittance volume in 2022
34%
YOY growth in AUB's UITFs

20
SCOPE OF THE REPORT
This report contains the result of 2022 sustainability initiatives of AUB for January to December
2022, in compliance with the Securities and Exchange Commission (SEC) Memorandum Circular
No 4, Series of 2019 on sustainability reporting for publicly listed companies.
Sustainability initiatives are in line with AUB's goal to be more responsive to the needs of its key
stakeholders: its clients, Stockholders, and its people.
Data gathered from several units of the Bank were assessed based on the factors with material
economic, social, and environmental impact to the Bank and its stakeholders.
SUSTAINABILITY FRAMEWORK
This report has been prepared in accordance with the Sustainability Framework for Publicly Listed
Companies from the SEC guidelines.
SUSTAINABILITY
AUB is a Sustainable
Business.
We conduct our
businesses in an ETHICAL
and RESPONSIBLE
manner.
Corporate Governance
Economic
Environmental
Social
Direct Economic Value Generated and Distributed
in Php millions
We manage
OUR KEY IMPACTS.
Our products and
services create VALUE
TO SOCIETY.
Contribution to
Sustainable
Development
ECONOMIC PERFORMANCE
AUB’S Board of Directors has complete oversight of the strategic policies for
economic performance. The Board and the Management of AUB are responsible
for ensuring that the Bank has in place an integrated, active, and dynamic Internal
Capital Assessment and Adequacy Process, which involves the Parent Company and
its subsidiaries. There is a performance monitoring process that ensures alignment
with planning and budgeting. This includes building a business and financial plan,
identifying resources, and defining milestones to carry out the defined plans.
Risks
AUB is fully cognizant of the highly competitive industry within which it operates and
takes a proactive management of the risks it faces in its day to day activities.
This is achieved through the following:
• Keeping our depositors’ interest paramount and returns secondary;
• Adherence to approved policies and limits through continuous monitoring and
mitigating risks inherent in existing businesses;
• Risks related to growth or new business initiatives will be identified, anticipated
and monitored; and
• Strict compliance with regulatory mandates and capital adequacy at all times.
Opportunities
AUB is a relatively young player in the local banking industry so it has been its
main goal to innovate from the start. The Bank had to think of strategies to
compete with more established banks and penetrate large-scale markets
as well. While the pandemic temporarily halted the Bank’s expansion
plans in 2020, this has always been targeted, taking into account
location potential and cost rationalization.
2020 2021 2022
Direct economic value
generated (revenue)
15,073.1 14,559.4 16,415.5
Direct economic value
distributed:
a. Operating costs 5,785.4 1,475.0 1,514.7
b. Employee wages and
benefits
1,951.1 1,756.6 1,813.5
c. Payments to suppliers,
other operating costs
2,073.9 820.1 841.9
d. Dividends given to
stockholders and interest
payments to loan providers
970.6 1,725.7 2,753.1
e. Taxes paid to government 1,861.3 1,919.7 2,423.8
f. Investments to community
(e.g. donations, CSR)
26.5 10.2 1.7

22
SUSTAINABILITY
Climate-related Risks and
Opportunities
Through its ESG task force,
AUB has started to work on its
Environmental and Social Risk
Management System (ESRMS)
in line with the Bangko Sentral
ng Pilipinas' (BSP) Sustainable
Finance Framework by
engaging with an external
party. Once completed, the
ESRMS will be submitted by
the Bank to the BSP on BSP’s
prescribed deadline.
While the Bank is still in the
process of establishing an ESRMS
Framework, an E&S Risk scenario is already
presented in the Bank’s stress testing exercise
as part of its Internal Capital Adequacy Assessment
Process (ICAAP).
A recent concern regarding climate risk is the banking industry’s
financing of coal projects. Withdraw from Coal (WFC), an energy
advocacy and bank watchdog group, released in May 2022 its Coal
Divestment Scorecard, naming AUB in the Top 10 most exposed to financing coal
projects. As of December 2022, the Bank’s exposure to coal-fired power plants was
at 5.44% of its loan portfolio. This formed part of the 9.56% exposures classified
under public utilities as of 2022. Its exposure to mining and Quarrying, and cement
manufacturing were also included in the stress testing exercise.
Results of the stress testing were included in the Bank’s ICAAP document submitted
to the BSP on March 31, 2023.
The Bank has also started monitoring loan accounts deemed to be climate-
sustainable. It extended credit to some wind and water projects with outstanding
balance as of December 31, 2020 amounting to Php871 million. In 2021, other than
wind and water projects, the Bank was able to finance solar energy and LED products,
LEED-certified projects, and waste resource and sewage treatment amounting to a
Php2.6 billion outstanding balance. In 2022, it expanded its sustainable financing
initiatives (see table Sustainable Financing Initiatives in 2022).
6 billion
Total sustainable financing
in 2022 (in Php)
81%
136%
increase in sustainable financing
in 2022 vs. 2021
share of loan to Liquefied Natural Gas
Terminal to total sustainable
financing portfolio in 2022
Industry Exposure
% of AUB’s Total Loan Portfolio
2020 2021 2022
Agricultural, Fisheries, Forestry, Agrarian
1.74 1.45 1.44
Manufacturing 8.06 11.54 12.62
Wholesale & Retail Trading/Commercial 17.54 15.45 17.95
Public Utilities (Transportation, Communications, etc.) 13.22 11.09 9.56
Mining and Quarrying 0.01 0.04 0.02
Services (Hotels, Restaurants, etc.) 3.28 1.66 1.20
Consumption (Auto loans, credit cards, etc.) 4.38 4.60 4.82
Real Estate 21.59 25.96 24.85
Others 19.32 21.23 23.04
SCR 0.05 0.02 0.02
Financial Intermediation 10.81 6.96 4.48
TOTAL 100.00 100.00 100.00
Climate-related risks and opportunities highly depend on the industry exposure of its lending
activities. The loan portfolio concentration per industry for 2020, 2021 and 2022 is as follows:
Sustainable Financing Portfolio
Industry Climate Sustainability Projects
Outstanding
Balance
as of Dec. 31, 2022
(Php Millions)
Others
Liquefied Natural Gas (LNG) Terminal 5,000.0
Wind and Water Projects and Water distribution 766.3
Solar energy and LED products 149.9
Public Utilities
Solid and Liquid Waste Resource Treatment and
Sewage Treatment
80.0
Wind and Water Projects, and, Water distribution 61.2
Wholesale & Retail Trade Solar energy and LED products 36.8
Consumption
Wind and Water Projects, and, Water distribution 0.6
Solid and Liquid Waste Resource Treatment and
Sewage Treatment
0.5
TOTAL 6,140.2

24
SUSTAINABILITY
Procurement Practices
AUB aims to search for reliable vendors or suppliers who can help the
Bank streamline costs and ultimately optimize existing resources.
Procurement go through the Bank’s accreditation process of
suppliers spearheaded by the Supply & Services Management
Division (SSMD). AUB complies with regulatory requirements
and internal policies as specified in the group’s operations manual.
AUB's supplies and services are sourced based on the locality of each
branch and head office to ensure most efficient options in delivery, cost and
manpower. In 2022, 99.3% of its procurement budget were used for significant
locations of operations spent on local suppliers. This was higher than the
98.2% in 2021 and 98.0% in 2020.
ENVIRONMENTAL PERFORMANCE
Resource Management
AUB recognizes that resource management,
specifically energy and water consumption
reduction, will not only help the
community in terms of carbon
footprint reduction, but also
contributes greatly to its cost
efficiency initiatives.
The Bank complies with national regulations and
policies as issued by the Department of Environment and
Natural Resources, and other relevant government agencies.
From 2020 to 2022, AUB did not pay any monetary fines, face non-monetary
sanctions, or handled cases through dispute resolution mechanism related to non-
compliance with environmental laws and/or regulations.
5,398,900.22
Energy Consumption in 2022
(Electricity in kWh)
3% lower vs. 2021
145,939.59
Reduction of Energy Consumption
in 2022
(Electricity in kWh)
20,192.45
Water Consumption in 2022
(in cubic meters)
16% lower vs. 2021
* Based on the GHG emission calculator v2.6 published by the United Nations Framework Convention on Climate Change (UNFCCC: https://unfccc.int/documents/271269). Data
converted were electricity consumptions, water consumptions and home office occupancy.
25
Energy indirect (Scope 2)
GHG Emissions Tonnes
CO2e* in 2022
4% lower vs. 2021
3,673.68
SOCIAL PERFORMANCE
For AUB, people are the greatest asset to an organization and are a vital factor to its sustainability as a business. Thus,
it undertakes the following HR initiatives to nurture a vibrant, healthy, and productive environment that is considered a
great place to work:
Talent Acquisition, Retention, and Engagement
As the pandemic started to taper off in 2022, the Bank continuously retooled and redeployed its
personnel where their skills could be put to better use. It continued with a hybrid working
environment but with more units returning to work onsite by end-2022. It also maintained
online platforms for learning to ensure that employees are able to function efficiently,
armed with the necessary skills and knowledge.
AUB pursued its talent acquisition activities through internal and external
postings, executive searches, referrals and sustained relationships with
partner schools. Competency development continued to help augment
manpower requirements across units. To fill up requirements for critical
positions, the Bank maximized its internal talents by continuously
running in-house development programs for high potential rank and file
branch personnel. This provided opportunities for higher responsibilities upon
successful completion of the program.
The Bank reviewed and upgraded salaries of branch staff as well as other critical positions.
It also joined a compensation survey in the third quarter of 2022 as part of its efforts to maintain
a fair and competitive compensation structure that is aligned to industry.
The Bank exercises fairness in its remuneration package and does not determine compensation
based on gender. It considers the employee’s role in the organization, competency level, work
performance, previous work experience, certifications and employment tenure as important
factors in determining remuneration.
Training and Development
2022 was the year of transition from pure online to hybrid learning. Regular
Branch Trainings, continuous online sessions on Signature Verification
and Counterfeit Detection, Sales Training for Frontliners, Bank
on Us; Leading the Service Team, BIZKIT Product Trainings,
Credit Discipline in Lending, Accounting for non-
Accountants, Effective Business Presentation
Skills for all units remained part of the training
curriculum in 2022.
Operations training and briefings were
also conducted at the branch level to
stress the importance of managing
operations risks in day-to-day
processes.
Important health and safety programs
such as the Basic First Aider, and the
Basic Course for Pollution Control
Officer went on as scheduled as health
and wellness is not just about the
pandemic but an everyday concern.

26
With online training method becoming a norm, AUB adapted
and still delivered technical trainings via Zoom, such as
Credit Discipline in Lending and Accounting for Non-
Accountants. These targeted the lending group as well as
AUB’s branch operations people.
Other programs were also launched:
• Effective Business Presentations Skills for those who do
regular client presentation;
• Dare to Lead, a Branch Banking Group Workshop for Area
Heads, to reinforce leadership competencies and to further
develop leaders from within;
• Basic supervision training for senior staff about to assume people-
handling functions.
Succession Management
To develop leaders from within, AUB focused on a development program for its branches’ Area Heads.
The Bank partnered with an online learning platform where participants can freely access programs,
courses, readings, and a lot of other interests. This offers a holistic employee development, taken at
their own pace, at their own time. Group Heads were likewise tasked to identify high potentials and
develop talents for higher responsibilities in the organization.
Occupational Health and Safety
After a surge in January 2022, COVID-19 cases starting tapering off in 2022. Despite this, health
considerations were still a paramount concern for the Bank. Health protocols were still enforced in
the workplace. Regular and preventive upkeep and disinfection of all office premises continued to be
religiously monitored to ensure the workplace remained as safe and healthy as possible.
AUB also continued with a hybrid working environment for several critical units while other units
already begun reporting 100% onsite by end-2022 to provide fast and efficient service to clients.
The vaccination drive of the Bank continued until all purchased vaccines were utilized and provided
to employees, their family members, regular and agency contracted personnel, as well as clients
who were interested. Mental health services and transportation services continued to be provided to
employees in need and reporting onsite to minimize health risks.
Security and safety awareness is a primary concern of AUB and shall be regularly assessed through
annual drills and disaster preparedness activities. In 2022, the Bank conducted one earthquake drill
to be prepared for unforeseen disasters.
Labor Laws and Human Rights
The Bank strives to provide a safe, secure and conducive working environment for its employees
to continually safeguard their rights and provide equal opportunity for everyone. Policies and
procedures are in place and communicated to employees to ensure that a professional atmosphere
is maintained at all times.
SUSTAINABILITY
PEOPLE PROFILE
2020 2021 2022
Total number of employees
2,066 1,846 1,888
a. Number of female employees 1,394 1,256 1,314
b. Number of male employees 672 590 574
Attrition rate 12 18 25.5
Ratio of lowest paid employee against minimum wage
Employee Data
List of Benefits Y/N
Female employees who availed
for the year
Male employees who availed
for the year
2020 2021 2022 2020 2021 2022
SSS
Y
• Maternity benefit 76 47 55
• Sickness benefit 20 15 196 7 8 84
• Salary loan 184 232 226 85 88 78
• Calamity loan 113 14 18 42 4 4
PhilHealth Y No data
Pag-ibig
Y
• Multipurpose loan 107 118 114 31 52 33
• Calamity loan 9 3 7 2 1 1
Parental leaves
Y
• Maternity/Paternity leave 72 69 46 19 25 16
• Special leave for women 3 8 7
• Solo parent leave 8 7 10 1 1
Vacation leaves Y 1,343 1,359 1,263 631 643 582
Sick leaves Y 934 1,015 1,030 425 456 448
Medical benefits (aside from
PhilHealth)
Y
• Staff medical loan for
employee
3 5
1
• Probationary officers
covered with prepaid card
11 9 18
4 5 10
• HMO benefits All regular employees are covered
Housing assistance (aside from
Pag-IBIG)
Y 2 – Housing
loan
1 – Home
repair loan
Home repair
loan – 1
Retirement fund (aside from
SSS)
Y 6 5 6
4 4 6
Further education support Y 1
Company stock options N
Telecommuting Y 784 206 145 366 97 124
Flexible-working Hours N
Employee Benefits

28
SUSTAINABILITY
2020 2021 2022
Total training hours provided to employees (Total no.
of people who attended x total hours of training)*
12,463 9,609 24,898
a. Female employees 8,493 6,446 18,895
b. Male employees 3,970 3,163 6,003
Average training hours provided to employees
(in hours / employee)
7.1 9.8 10.62
a. Female employees 6.5 9.6 8
b. Male employees 8.5 10.4 2.6
* Training hours refer to training programs conducted by HR and external providers and do not include pocket
trainings conducted by the different units of the bank on their own. For 2020, all trainings were conducted virtually.
Employee Training and Development
2020 2021 2022
% of employees covered with Collective Bargaining
Agreements
N/A (AUB does not have a
labor union.)
Number of consultations conducted with employees
concerning employee-related policies
a. Average per day 65 65 88
b. In a year 16,965 16,965 22,968
Labor-Management Relations
2020 2021 2022
% of female workers in the workforce 67.47% 68.04% 69.60%
% of male workers in the workforce 32.52% 31.96% 30.40%
Number of employees from indigenous communities
and/or vulnerable sector*
No data
* Vulnerable sector includes, elderly, persons with disabilities, vulnerable women,
refugees, migrants, internally displaced persons, people living with HIV and other
diseases, solo parents, and the poor or the base of the pyramid (BOP; Class D and E).
Diversity and Equal Opportunity
2020 2021 2022
Safe Man-Hours
No. of work-related injuries 0 0 0
No. of work-related fatalities 0 0 0
No. of work related ill-health 0
No. of safety drills (earthquake drills conducted) 0* 4 1
* Safety drills were not allowed in 2020 due to the pandemic.
Occupational Health and Safety
0
No. of legal actions or employee
grievances involving forced or child
labor
22,968
No. of consultations with
employees in 2022
30%
Male
70%
Female
Supply Chain Management
The Bank has tasked its Supply & Services Management
Division (SSMD) to search for reliable vendors or suppliers
who can support the Bank in the process of streamlining
costs and ultimately optimize the existing resources. SSMD
shall also maintain a high level of professionalism, autonomy
and independence in procuring only necessary and duly
warranted products and services. It shall only source and
procure products and services that will provide the Bank
with the best value for every centavo. The Department will
not automatically procure the most expensive item but will
source, compare, and select from at least two alternative
sources, subject to the ten-point Value Purchase Criteria
below:
• Quality and durability
• Service Relationship and Efficiency
• Timely delivery
• After-sales service, training and support
• Competence and Reliability
• Specifications compliant and product safety
• Favorable payment terms
• Financial capacity
• Guarantees and,
• Track record and reputation
The unit shall continuously accredit qualified contractors
based on five main objectives:
• Prepare for future purchases and current service
needs;
• Establish cost parameters for easier cost estimation
by other bank units and expense analysis by the Bank
comptroller;
• Monitor and establish cost trends to aid in better cost
planning by other bank units and the Accounting
department;
• Research new trends, technology and developments
that is in line with the strategic path of Asia United
Bank and;
• Gather related information with regards to Supply
Chain Management based on the market practice that
will be relevant to the interest of Asia United Bank.
With this in mind, the Bank has set a list of accreditation
requirements for suppliers, vendors and service providers
who wish to apply for accreditation and be part of AUB’s
mission. These requirements include: Company Profile,
SEC Registration, Articles of Incorporation and By-Laws,
list of clients, current business permit, and recent financial
Statements and Income Tax Return.
Upon submission and compliance with the above
requirements, SSMD will evaluate and process the
application for verification. The accreditation is valid for
one year depending on the performance of the supplier
or vendor. Contractors are initially given two projects
under probationary period. Only personnel from SSMD
are authorized to deal with suppliers, vendors, contractors
and service providers. Violation of this provision will
automatically prohibit them to become accredited
suppliers of the Bank.
Relationship with Community:
Significant Impacts on Local Communities
In 2022, the Bank continued to donate purchased vaccines
to the Philippine Red Cross to help in the vaccination
efforts of the government.
Customer Management
AUB is committed to providing excellent customer
service to all its clients. As part of this commitment, AUB
acknowledges feedback from clients, either in the form of
complaints or commendations.
The Bank has a Complaints Handling Policy consistent
with its vision to provide total customer satisfaction. Its
provisions shall be the guideline and framework of how
customer complaints should be managed and addressed
prudently and efficiently, to be able to deliver better
service to all the Bank’s clients.
Complaints shall be used as basis and gauge for the
continuous improvement of the Bank’s operations and
services.
A Service Quality Council was delegated to put
appropriate management controls in analyzing root causes
of complaints. They will be responsible for monitoring
and evaluation of the implementation of processes,
assessment of standard service delivery performance to
both internal and external clients, and recommendation
of enhancements to improve the quality and delivery of
services, products and processes to customers.
Customer Privacy
Data privacy is a shared responsibility between bank
and clients. The bank guarantees compliance with all
the requirements mandated by the Data Privacy Act of
2012 (DPA), its Implementing Rules and Regulations, and
issuances by the National Privacy Commission.
The Bank commits to keep client personal and
account information (personal data) safe, as a shared
responsibility and accountability between client and the
Bank. It guarantees that personal data are protected
against unauthorized access through tested policies and
procedures that are regularly assessed and refined, as well
as reliable systems and infrastructure that are continuously
upgraded.

30
SUSTAINABILITY
Service providers and program partners are
accredited and regularly evaluated based on
metrics that include compliance with agreed
security, confidentiality and data privacy
standards.
Customer Data Security
The Bank has developed Information Security
Framework and Program to identify, prevent,
detect and respond to cyber attacks and
incidents. The information security activities are
being managed by the Chief Information Security
Officer (CISO) and IT Risk Head. The Bank also
has its own Data Privacy Policy and Program
Privacy to serve as a guide in compliance to
the provisions, requirements, and standards
set by RA 10173. A Data Privacy Officer (DPO)
is appointed to ensure compliance and works
closely with the CISO & IT Risk Head to ensure
relevant security controls are implemented.
Security controls are in place to prevent and
detect threats to AUB’s information security.
The Bank continues to invest in security tool and
services to address the risks of cyber attacks
and data breaches.
Information Security Incident Response Plan and
Business Continuity Plans were developed to
have a ready reference how to address security
incidents and ensure continuous operations and
servicing of customers. Simulation exercises are
performed to test the robustness of these plans
and readiness of AUB’s infrastructure and people
to address cyber attacks and data breaches.
The Bank also educates its employees on
protecting its assets and data as AUB adopts to
the emerging information security landscape.
2020 2021 2022
No. of substantiated complaints on
product or service health and safety*
0 0 0
No. of complaints addressed 0 0 0
Customer Health and Safety
2020 2021 2022
marketing and labeling*
0 0 0
Marketing and Labeling
*Substantiated complaints include complaints from customers that went through the
organization’s formal communication channels and grievance mechanisms as well as complaints
that were lodged to and acted upon by government agencies.
2020 2021 2022
customer privacy*
0 0 0
No. of customers, users and account
holders whose information is used for
secondary purposes
0 0 0
Customer Privacy
2020 2021 2022
No. of data breaches, including leaks,
thefts and losses of data
2 0 0
Data Security
AUB Products and
Services
Societal Value/Contribution to SDGs
Potential Negative Contribution (-) and
Management Approach (+)
AUB BizKit AUB BizKit is a one-package, one-
deal Cash Management Solution
designed to simplify business
processes and maximize profits.
(-) Traditional companies not being able
to adapt to innovative solutions; lack of
additional backroom capacity such as IT,
Cash Management On-boarding team to
service demand growth for BizKit products by
corporate clients
(+) Training and education on the benefits
of the product for companies with manual
processes. Hire additional IT personnel and
On-boarding team or resort to outsourcing
the support group to service the corporate
clients.
AUB GintongHatid AUB GintongHatid ensures fast
and reliable handling of remittance
transactions so that OFW families
and their loved ones are guaranteed
to receive hard-earned cash remitted
from abroad.
(-) Remittances are not being credited to
beneficiaries.
(+) Various delivery service options provided
to clients to ensure that remittances are
credited on time.
AUB Preferred
Savings and Current
Account
Interest-bearing savings/checking
account which allows deposits
and withdrawals either over the
counter with the use of a passbook/
checkbook or via ATM card.
(-) Risks associated clients who may not be
financially ready for savings.
(+) KYC and assessments in place to guide
clients on the suitable deposit products.
AUB Preferred Online
Banking & Mobile
Banking (AUB Mobile
App)
The Bank’s internet and mobile
banking facilities allow clients
to access their account/s online
through a fully secured web-based
system.
(-) Users who prefer traditional ways of
banking and those who are not comfortable
with their online security are not being able to
adapt.
(+) Education on the benefits and convenience
of Online Banking. Enhanced online security
for online banking transactions.
HelloMoney
Hello Pag-IBIG
These products enable the Bank
to tap unbanked and underserved
market segments. The mobile
banking app targets digital-savvy
clients.
Contributions to Meeting the

32
SUSTAINABILITY
AUB Products and
Services
AUB PayMate AUB PayMate enables merchants to
accept Digital Payments from customers
who use QR/eWallet, Bank Payment via
InstaPay, and Cards as mode of payment
for the purchase of goods and services.
(-) Traditional Merchants not being able to
adapt to modern payment solutions and
prefer cash. Customers who prefer traditional
methods of payment such as cash. Merchants
and Users who are not comfortable with their
online security.
(+) Training and education on the benefits of
the product for merchants who are heavily
accepting cash. Education on the benefits
and convenience Digital Payment acceptance
for merchants. Enhanced online security for
Digital Payment acceptance.
PayMate BOTTY This 2-in-1 e-commerce solution enables
merchants to accept online orders
and payment from customers through
Facebook, Messenger, and GLife (mini-
program inside GCash Mobile App).
AUB Credit Cards This is the only credit card in the market
that gives cardholders the freedom to
choose how often to pay, exactly when to
pay and how much to pay.
The cards provide a suite of credit
card products for both consumer and
corporate market segments.
CASHELP (Corporate
Auto Salary Housing
Employee Loan
Program)
Employees of accredited companies
can apply for and access salary loans
through the AUB Mobile App for their
various needs.
(-) Risks associated loan borrowers who may
not be financially capable to repay a loan.
(+) Product is targeted to employees of
accredited companies. Assessment prior to
loan approval.
PVAO Pension Loan Employees of accredited companies
can apply for and access salary loans
through the AUB Mobile App for their
various needs.
(-) Pension not being credited to pensioner’s
account if account is not updated.
(+) Pensioners are required to regularly
revalidate their accounts.
AUB Products and
Services
Seafarers Loan A loan provided to Filipino Seafarers
to help them with their necessities or
their families in the Philippines.
(-) Risks associated loan borrowers who may
not be financially capable to repay a loan.
(+) Assessment prior to loan approval.
Preferred Home Loan A personalized loan service which
helps Filipino families acquire their
dream home and protect them from
rising rates
Preferred Motor
Vehicle Loan
A personalized loan service which
helps Filipinos acquire their dream
vehicle
Truck & Forklift
Loans
Loans offered to address the
strong demand for infrastructure
development and significant gains in
the manufacturing sector
CLINIC A.I.D.
(Acquisition or
Improvement for
Doctors)
A loan facility which extends support
to medical professionals in acquiring
or improving their clinics for their
practice
Commercial Loans Provides lending, trade and cash
management services to corporate
and institutional customers, which
include large corporate, middle
market clients and entrepreneurs
AUB Peso Investment
Fund, AUB Gold
Dollar Fund, AUB
Equity Investment
Fund, AUB Peso
Money Market Fund
Investment products offered to
clients where the investment
objective of the Fund is to achieve
the best rate of return
(-) Risks associated clients who may not be
financially ready for investments.
(+) KYC and assessments in place to guide
clients on the suitable investment products.
AUB Treasury
Products
Offered to clients who are looking
for short-term and long-term
investments

34
ENTERPRISE RISK
MANAGEMENT
A
UB is exposed to risks inherent to any banking
business, including credit risk, market risk and
operational risk. Its risk management objective is
to adequately and consistently identify, measure, control,
and monitor the various risks that arise from its business
activities and to ensure that its operations strictly adhere
to the policies and procedures established to address
these risks.
Risk Management Framework
AUB adopts a top-down risk management framework,
with the Board of Directors (Board) setting policy,
defining the overall risk appetite, and creating the
framework that allocates responsibilities and institutes
controls for compliance with policies. The responsibility
for implementation of these risk management procedures
resides at all levels of the Bank and its subsidiaries, with all
employees receiving training on their role in the risk and
internal control processes.
Risk Structure
The Board is responsible for establishing and maintaining
a sound risk management system and is ultimately
accountable for risks taken within the bank. It is apprised
of the decisions and matters for its attention by the Risk
Oversight Committee (ROC), which advises the Board on
setting and monitoring adherence to limits that reflect
AUB’s maximum tolerance for each major risk, including
credit risk, market risk, interest rate risk, foreign exchange
risk, liquidity risk, and operational risk.
The ROC is actively involved in planning, reviewing,
approving and assessing all risks involved. The Assets and
Liabilities Committee (ALCO) is responsible for managing
AUB’s statement of financial position, including its
liquidity, interest rate, and foreign exchange related risks.
In addition, ALCO formulates investment and financial
policies by determining the asset allocation and funding
mix strategies that are likely to yield the targeted financial
results.
The Risk Management Group (RMG) is a distinct and
independent unit within the Bank directly reporting to the
ROC. It is the responsibility of RMG to:
• Identify, measure, manage, and control risks inherent
in the AUB Group’s activities or embedded in its
portfolio;
• Define and disseminate risk management philosophy
and policies;
• Assist risk-taking business and operating units in
understanding and measuring risk/return profiles;
• Develop a risk management infrastructure that
includes policies, procedures, organization limits,
approval authorities, MIS, reporting systems and risk
models; and
• Promote risk awareness and a strong “control culture”
in AUB and its subsidiaries.
RMG is represented in the Product Committee, which is
responsible for setting product development policies and
guidelines in the Bank. Vulnerabilities in the existing risk
management framework are identified, evaluated, and
reviewed by the risk manager of the affected area (either
credit, market, or operational), and appropriate policies
and procedures are implemented to ensure that risks are
addressed and documented properly in product manuals.
Senior Management is responsible for implementing the
risk strategy the Board approved. Management ensures
that the strategy is implemented consistently throughout
the organization and that all levels of staff understand their
responsibilities with respect to risk management. Senior
Management is also responsible for developing policies,
processes and procedures for managing risks in all of the
bank’s products, activities, processes and systems. It must
maintain an organizational structure that clearly assigns
authority, responsibility, and reporting relationships, and
ensure that these delegated responsibilities are effectively
carried out. It ensures that bank activities are conducted
by qualified staff with the necessary experience and
technical capabilities.
Internal Audit
Internal Audit is an essential part of the risk management
system. Internal Audit takes the lead in the monitoring of the
internal control process and in providing an independent
assessment of system integrity. It is tasked to perform a
financial-based audit, as well as a risk-based audit on the
Bank’s units and branches.
The Bank’s Audit Committee assumes the internal
audit function, which is responsible for monitoring the
performance and adequacy of AUB’s risk management
functions and ensuring compliance with the internal risk
management policies through periodic reviews and spot
checks. It also identifies internal control deficiencies
and assists in reviewing new and existing products and
instruments to ensure sufficient internal controls.
Types of Risks
AUB is exposed to risks that are inherent to any banking
business, including liquidity risk, market risk, foreign
currency risk, credit risk, and operational risk.
Credit Risk
Credit risk is the risk that the counterparty in a transaction
will not be able to pay obligations in full or on time as
contracted, subjecting the Bank to financial loss. AUB is
exposed to credit risk through its lending, trade finance,
treasury investments, over-the-counter derivatives trading,
and other activities it undertakes.
The Bank has a Board-approved credit risk management
structure that clearly delineates lines of authority, and
establishes accountabilities and responsibilities of
individuals involved in the different phases of credit risk
management process.
AUB’s credit risk management organization is classified
into three functional lines of activities: the front, middle,
and back offices. This is to properly segregate the
accountabilities and ensure that there are no conflicting
responsibilities for effective monitoring and control of the
risks being taken.
AUB’s risk management process also includes the review
of risk concentration. RMG reviews AUB’s loan portfolio to
ensure compliance with the single borrower’s limit and the
industry limit in accordance with regulatory guidelines.
Credit Approval Process
The credit granting process in the Bank involves various
business functions, such as marketing or business
origination, credit analysis, and credit approval. This
process entails coordinating the efforts of all individuals
involved to make prudent credit decisions.
To be able to maintain a sound credit portfolio, there is
a formal transaction evaluation and approval process
for the granting of credit. Credit approvals are made
in accordance with the Bank’s written guidelines and
granted by the appropriate level of management. A clear
audit trail exists to document that the approval process
was complied with and written policies were followed.
Likewise, any deviations from policies on credit approval
are clearly identified and documented. Individuals or
committees providing input and making credit decisions
are clearly identified.
For effective credit evaluation and approval, there are
minimum requirements for adequate information on the
borrower/counterparty. Policies are in place outlining
information and documentation required for approving
credits.
Each credit proposal is carefully analyzed by a qualified
credit officer with expertise commensurate to the size and
complexity of the transaction. The Bank developed a corps
of credit officers with the experience, knowledge, and
background to exercise prudent judgment in assessing,
approving, and managing credit risks. The Bank’s credit
approval process establishes accountabilities for decisions
taken and designates who has the authority to approve
credits or changes in credit terms. Approval authorities
or limits are commensurate with the expertise of the
individuals involved.
F
R
O
N
T
- Lending Units/
Credit Originating Units
- Credit Administration
- Credit Evaluation by
Approving Authorities
with designated
approval limits
Risk
Management
Group
M
I
D
D
L
E
B
A
C
K
Loans Operations
Remedial Management

36
For commercial loans, AUB applies its Internal Credit Risk Rating System (ICRRS), which has been in place since 2005 in
compliance with BSP regulations. The ICRRS involves a two-pronged analysis, assessing both the borrower risk rating,
or the creditworthiness of the particular borrower; and the facility risk rating, or the risk level of a specific facility taking
into account the security, collateral, and credit covenants.
For consumer loans, AUB applies a credit risk ratings system based on historical payment patterns and the borrower’s
default history.
The table presents the classification of credit rating to credit quality and a description for each credit rating:
Credit Quality ICRRS Grade Description
High Internal credit
rating
Strong The borrower’s ability to pay its debt obligations upon
maturity is perceived to be strong. There is still a high
assurance of timely payment of interest and principal. The
following characteristics are present:
• Assurance of a high cashflow adequacy protection that
in any circumstance, prompt payments of maturing
obligations are very likely. It does not appear that
foreseeable event will adversely affect the earnings
performance and the ability to pay its maturing
obligations on time.
• Several sources and significant amount of alternative
financing
• Good credit standing with the trade suppliers and
creditors of the borrower and its principals, without any
history of past due.
• Leading market position in a reasonably stable industry.
Good 1 The borrower exhibits adequate protection parameters,
but there are foreseen adverse conditions or circumstances
that will, in all likelihood, lead to a weakened capacity of the
borrower to pay its debt obligations upon maturity.
The borrower’s earning performance and capacity to
pay maturing obligations are more vulnerable to possible
occurrences than those rated “Strong.”
This type of borrower, where the probability of default is still
quite low, bears some degree of stability and substance.
External Aaa Highest quality, with minimal credit risk
Aa1-Aa3 High quality and is subject to very low credit risk
Baa1-Baa2 Subject to moderate credit risk
Baa3 Considered medium-grade and may possess certain
speculative characteristics
ENTERPRISE RISK
MANAGEMENT
Credit Quality ICRRS Grade Description
Standard Internal credit
rating
Good 2 The probability of default is somewhat greater than those
rated as “Good 1.” This probability is reflected in volatility
of earnings and overall performance.
Borrowers in this category normally have less access
to public financial markets. Borrowers should be able to
withstand normal business cycles, but any prolonged
unfavorable economic period would create deterioration
beyond acceptable levels.
The borrower and its principals still have good credit
standing with the creditors and trade suppliers, without
any history of past due.
Good 3 The borrower has very limited access to external funding
sources.
The risk elements for AUB are sufficiently pronounced,
although borrowers should still be able to withstand normal
business cycles.
Any prolonged unfavorable economic and/or market
period would create an immediate deterioration beyond
acceptable levels.
External Ba1 Have speculative elements and is subject to substantial
credit risk
Ba2-Ba3
B1
Considered speculative and is subject to high credit risk
(Actual exposure limited to foreign exchange-denominated
issues of the Republic of the Philippines, hence, the
Standard Classification).
Substandard Internal credit
rating
Watchlist The borrower is vulnerable to non-payment, but payments
are still being made.
The borrower has a minimal level of, and doubtful sources
for, alternative funding to cover possible shortfalls of exist-
ing liquidity to pay off maturing obligations.
Doubtful The borrower is unable or unwilling to service debt over
an extended period of time and near future prospects of
orderly debt service is doubtful.
Loss Represents those credits where the prospect for re-
establishment of creditworthiness and debt service is
remote. This category also applies where the Lender will
take or has taken title to the assets of the borrower and is
preparing a foreclosure and/or liquidation of the company.
Provisions will be 100% of that part of the principal which is
not fully and adequately covered.
*Note: The credit quality of other financial instrument exposures, such as trading and investment securities, are managed by reference
to external ratings and supplemented by individual assessments. External ratings were taken from the ratings by Standard & Poor’s,
Moody’s, Fitch and Phil Rating System on exposures to Sovereigns, Banks, LGU’s, Government and Corporates.

38
Credit Risk Monitoring
AUB implements a credit quality review process to
enable the early identification of possible changes in the
creditworthiness of counterparties, including regular
collateral revisions. Counterparty limits are established by
the use of a credit risk classification system, which assigns
each counterparty a risk rating. The credit quality review
process allows AUB to assess potential loss and take
corrective actions to mitigate losses that may arise from
the risks to which it is exposed.
Credit risk mitigations are in the form of guarantees and
acceptance of collaterals such as deposits, real estate
mortgage, chattel mortgage and shares of stocks or club
memberships.
Using a regulatory standard approach, AUB’s Consolidated
Credit Risk-Weighted Assets as of December 2022 are as
follows:
Credit Risk-Weighted Assets In million Php
Total Risk Weighted On-Balance Sheet
Assets (Schedule A)
189,431.80
Total Risk-Weighted Off-Balance Sheet
Assets (Schedule B)
6,003.30
Total Counterparty Risk-Weighted
Assets in the Banking Book
(Schedule C)
209.0
Total Counterparty Risk-Weighted
Assets in the Trading Book
-
Total Risk-Weighted Amount of Credit
Linked Notes in the Banking Book
-
Gross Risk Weighted Assets 195,644.10
Deductions: General Loan Loss
Provisions
-
Total Gross Risk-Weighted Assets 195,644.10
Schedule A (In million Php)
On-Balance Sheet Assets
Total
Credit Risk
Exposure
after Risk
Mitigation
Total
Credit Risk
Weighted
Assets
Cash on Hand 4,619.7 -
Checks and other Cash
Items 13.9 2.8
Due from BSP 26,544.2 -
Due from other Bank 4,019.2 1,561.3
Financial Assets Designated
at Fair Value - -
Available for Sale ( AFS)
Financial Assets 89,932.60 768.3
Held-to-Maturity (HTM)
Financial Assets 1,211.5 116.7
Unquoted Debt Securities
Classified as Loans - -
Loans and Receivables 189,869.2 183,730.2
Loans and Receivables
arising from Repurchase
Agreements 2,566.6 -
Sales Contract Receivable
(SCR) 40.5 60.7
Real and Other Properties
Acquired 518.9 778.4
Total Exposures Excluding
Other Assets 319,336.3 187,018.3
Other Assets 2,413.5 2,413.5
Total Exposures Including
Other Assets 321,749.8 189,431.8
Total Risk Weighted On
Balance Sheet Assets - 189,431.8
ENTERPRISE RISK
MANAGEMENT
Schedule C (In million Php)
Counterparty Risk-Weighted
Assets in the Banking Book
Credit
Equivalent
Amount
Total
Credit Risk
Weighted
Assets
Exchange Rate Contracts 5,646.2 21.3
Counterparty Exposures
Arising from Financial
Assets Sold/Lent under
Repurchase Agreements,
Certificates of Assignment/
Participation with Recourse,
Securities Lending and
Borrowing Agreements
1,699.3 187.8
Total Counterparty Risk-
Weighted Assets in the
Banking Book
7,345.5 209.0
Schedule B (In million Php)
Off-Balance Sheet Assets
Notional
Principal
Amount
Total Credit
Risk
Weighted
Assets
Direct credit substitutes 1,129.3 1,129.3
Transaction-related
contingencies
2,351.8 1,175.9
Trade-related
contingencies arising from
movement
of goods
18,490.1 3,698.0
Other commitments which
can be unconditionally
cancelled at any time
by the bank
37,199.5 -
Total 59,170.8 6,003.3
Liquidity Risk
Liquidity risk is the risk that there could be insufficient
funds available to adequately meet the credit demands
of AUB’s customers and repay deposits on maturity. AUB
manages liquidity risk by holding sufficient liquid assets
of appropriate quality to ensure short-term funding
requirements are met and by maintaining a balanced loan
portfolio which is re-priced on a regular basis. The Bank
uses the Cashflow Gapping Approach, employing either
contractual cashflow treatment for products with definite
maturities/payment schedule or behavioral assumptions
for products that follow a liquidity pattern as observed in
historical data relating to asset inflows and liability run-
offs. AUB seeks to maintain sufficient liquidity to take
advantage of interest rate and exchange rate opportunities
when they arise.
Market Risk
Market risk is the potential loss in the value of investments
and other asset and liability portfolios, including financial
instruments. The Bank employs the following approaches,
together with the standardized approach, in its market risk
management and capital allocation process: Value-at-Risk
(VaR), Mark-to-Market (MTM), Earnings-at-Risk (BSVaR),
Economic Value of Equity (EVE) approach for the Interest
Rate Risk in the Banking Book, and Foreign Currency Risk
– VaR approach in its market risk management process
and capital allocation.
a. VaR is used to assess the interest rate risk inherent
in the Bank’s treasury portfolio. The Bank’s model
uses historical distribution to assess the maximum
possible loss that may be incurred within a ten-day
holding period on a 99% confidence interval at a given
volatility rate as a standardized measure of day-on-day
price change. Currently, the Bank’s capital charge for
interest rate risk in the trading book is based on the
standardized approach that is composed of a specific
and general market risk charge.
b. The MTM Approach is an additional method to derive
economic charges. The model calculates trading
risk-related economic charges with the historical
maximum actual ten-day MTM movements in the
Bank’s Government Securities and Eurobonds
trading portfolios. This approach allowed a more
straightforward assessment in allocating capital. To
add more conservatism, the capital allocation process
leveraged on the Bank’s current Stop Loss mechanism
to control Mark-to-Market losses and avoid further
decline in the prices of the securities held by AUB.
The stop loss limit, set at 5% on a per security level
assuming full utilization within the portfolio, was used
and incorporated in the projected treasury portfolio in
determining the appropriate capital allocation. The Bank
also uses the standardized approach in calculating for
the regulatory capital charge of interest rate risk in the

40
FVPL (trading) and FVOCI (available-for-sale) books.
This is composed of a specific and a general market risk
charge as prescribed in the BSP CAR template.
c. The Interest Rate Risk in the Banking Book (IRRBB)
refers to a mismatch of the repricing schedules in the
Bank’s accrual books. The Bank uses the BSVaR or EaR
to assess the interest rate risk inherent in its balance
sheet. Repricing gaps (i.e., repricing assets less repricing
liabilities) are measured for each tenor bucket. Interest
rate volatility (projected using historical movement of
interest spot rates for a given maturity within a 99%
confidence interval) is applied to the repricing gaps to
calculate the EaR. The volatility of benchmark BVAL and
USD LIBOR interest rates were chosen for this discipline
for the Peso and Foreign Currency Books, respectively.
Apart from the BSVaR calculation, AUB also considered
the effect of the EVE approach to measure interest rate
risk in the banking book. In this approach, benchmark
rates, taking into account their volatility, were used in
discounting the repricing gaps to present terms.
The Parent Company’s repricing gap is calculated by
distributing the accounts into tenor buckets according
to the time remaining to the next contractual re-pricing
date or maturity date (for fixed rate transactions) and
then obtaining the difference between the total of the
repricing (interest rate-sensitive) assets and repricing
(interest rate-sensitive) liabilities. For transactional
(non-maturity) products, the observed frequency of
repricing is assumed.
Foreign currency risk refers to the variability in the value of
exposures denominated in foreign currencies as a result of
the volatility in foreign exchange rates. As a means of
measuring its foreign currency risk for economic capital
charge, the Bank uses the VaR approach to assess the
maximum possible loss that may be incurred within a ten-
day holding period on a 99% confidence interval. The
Bank’s regulatory capital charge for foreign currency risk
is based on the standardized approach while the economic
charge is based on the volatility rate derived from the
maximum historical ten-day DVaR as a percentage of
absolute FX positions, i.e., the sum of overbought (long)
and oversold (short) positions.
The Bank’s capital charge for foreign currency risk is based
on the standardized approach that is composed of a
specific and general market risk charge.
Market Risk-Weighted Assets In million Php
Interest Rate Exposures 34,919.4
Foreign Exchange Exposures 825.2
Sub-total (Sum of A1 to A4) 35,744.6
Using Internal Models Approach -
TOTAL MARKET RISK-WEIGHTED
ASSETS
35,744.6
Operational Risk
Operational risk is the risk of direct or indirect loss resulting
from inadequate or failed internal processes, employees,
operating systems, and external events. To effectively
manage risk, the Bank adopts the concept of three lines of
defense to establish ownership and accountability of risk
and controls, and at the same time establish the proper
escalation of identified risk events. The three lines of
defense is illustrated below:
1st Line of
Defense
Business Units • Primarily
responsible for
managing its own
process
• Responsible for
identifying and
controlling risk
by using control
frameworks,
implement
processes and
adequate controls
2nd Line of
Defense
Risk
Management
& Compliance
• Responsible
for setting risk
frameworks
• Serves as advisor/
consultant to 1st
line
3rd Line of
Defense
Internal Audit • Provides assurance
on design and
effectiveness of 1st
and 2nd line
ENTERPRISE RISK
MANAGEMENT
Operational risk is inherent in all areas of business, and
AUB has identified information system security, business
continuity, compliance, and legal risk as its major areas
of operational risk. To manage operational risk, AUB’s
operating units regularly perform risk and control self
assessments (RCSAs) wherein each unit analyzes its key
processes and identifies risks inherent in its operations, as
well as the controls necessary to mitigate such risks. Risks
are ranked “high”, “medium”, or “low”, in accordance with
existing guidelines, which assess the impact and likelihood
that the risk will materialize.
AUB uses the Basic Indicator Approach in calculating
Operational Risk Weighted Assets:
Operational Risk-Weighted Assets In million Php
Average Capital Requirement for last
3 years
1,793.9
Adjusted Capital Charge 2,242.4
Operational Risk-Weighted Amount 22,424.1
In addition to RCSAs, key risk indicators (KRIs) are used to
alert the Bank of impending problems in a timely fashion.
KRIs enable monitoring of the Bank’s control culture
and operational risk profile, in addition to triggering risk
mitigating actions. The Bank captures and monitors KRIs
monthly.
Operational loss events are captured in a central database
and are reported to the ROC monthly. Comprehensive
information about these events is collected, including
information on the amount of loss, occurrence, discovery
date, business area and product involved, root causes and
risk drivers.
Information security and the protection of confidential
and sensitive customer data are critical to AUB. AUB
has implemented an information security program which
complies with regulatory guidelines and industry best
practices. Among other security measures, the information
security program requires entitlement reviews for AUB’s
various application systems to ensure that access to data is
restricted to authorized employees only and that access is
provided on a need-to-know basis. Various critical logs are
reviewed regularly to ensure that AUB’s information assets
are adequately protected. AUB’s information security
program is reviewed and enhanced periodically to address
emerging threats to customers’ information.
AUB’s business continuity planning (BCP) is led by the
BCP committee chaired by the Operations and IT Group
Head. It is composed of members from Operational Risk
Management Unit, IT group and Back Office Units. The
BCP committee coordinates Bank-wide preparedness and
mitigation strategies for business continuity risks reviewing
and overseeing tests of recovery procedures. The primary
objective of the business continuity plan is to provide
defined guidelines that enable different business units to
handle software and hardware, communications, facilities
degradation and failure and certain adverse personnel
situations that may result from accidental or deliberate
circumstances. To this end, each unit of the Bank performs
an annual business impact analysis, which identifies the
critical activities that support key products and services
within the unit, interdependencies with other units and
outside parties, recovery time and point objectives,
resources required to support minimum activity levels, the
priorities for recovery and the potential loss arising from
failures in key business activities.
AUB’s primary data center, located at the Head Office,
contains redundant data communications connections,
multiple active power and cooling distribution paths
and security devices to ensure seamless functioning of
AUB’s IT infrastructure and to protect against disruptions
in internet connectivity. AUB also maintains a disaster
recovery data center with the capability to host critical
banking applications in the event of a shut-down at the
primary site. Business continuity tests are conducted to
ensure that critical operations can be performed at our
alternate sites while connected to the Bank’s systems at
the disaster recovery center.
Compliance Risk and ML/TF/PF Risk
Compliance risk is identified as the risk of being subject to
legal or regulatory sanctions, material financial loss, or loss
to reputation as a result of non-conformance with laws,
rules, regulations, prescribed practices, internal policies
and procedures, or ethical standards from regulators.
Said risk may also arise from failure to manage conflict of
interest, treat customers fairly, or effectively manage risks
arising from money laundering, terrorist financing, and
proliferation financing (ML/TF/PF) activities.
ML/TF/PF Risk represents the risk of loss arising from
a covered person’s failure to prevent itself from being
used as a money laundering and terrorism financing, and
proliferation financing site or conduit for the proceeds of
unlawful activities. AML/CFT/PF risk management involves
assessing the risk attributed and then implementing an
appropriate response to mitigate the risk.
Compliance risk management is an integral part of the
culture and risk governance framework of the bank, with

42
the independent groups of the bank, Compliance and
Risk acting as second line of defense. The Compliance
Risk Management Framework is embodied in the bank’s
Compliance Manual. The Compliance Office is headed by
the Chief Compliance Officer assisted by the Regulatory
and AML Compliance Officers, and supported by
Compliance Officer/Staff and by Unit Compliance Officer
(UCO) duly designated by their respective Group Heads.
The Compliance Office apprise the board of directors and
senior management on relevant laws, rules and standards,
including keeping them informed on developments in the
area. Accordingly, possible areas of compliance issues are
identified and coordinated with concerned units of the
bank.
Compliance Risk and ML/TF/PF Risk Monitoring and
Reporting
The Compliance Office mainly reports the compliance risk
events and activities to the Audit Committee. The reports
to the Audit Committee consists of updates on regular
AML reporting and review processes, regulatory reports,
status of compliance testing, compliance test findings
and report of the subsidiaries. Compliance risk is also
regularly reported to the Risk Oversight Committee under
Operational Risk’s Key Risk Indicators (KRI) monitoring.
The Quarterly Self-Assessment Matrix is another tool
used to monitor the branches’ and units’ compliance or
non-compliance to regulations. Submission of regulatory
reports is also monitored to avoid penalties.
Regulatory examination under the supervisory authority of
the Bangko Sentral is also considered as an important tool
to determine whether the bank is operating on a safe and
sound basis. The Compliance Office assists in monitoring
the commitments to address the directives/findings/
supervisory concerns in governance, risk management
systems, internal controls and compliance system cited in
the latest Report of Examination.
The bank’s Money Laundering and Terrorism Financing
Prevention Program (MTPP) is geared toward the
promotion of high ethical and professional standards to
protect Asia United Bank and its businesses from being
used, intentionally or unintentionally, for money laundering,
terrorism financing, and proliferation financing. All AUB
employees must be vigilant in the fight against money
laundering and must not allow the Bank to be used for
money laundering activities and terrorism financing. The
Anti Money Laundering Committee has oversight over the
Bank’s ML/TF/PF risk management and shall direct the
implementation of measures, as may be necessary and
justified, to counteract money laundering.
The Board and Senior Management ensure that sufficient
resources, appropriate tools and controls are in place to
identify, measure, manage and mitigate Money Laundering,
Terrorism Financing, and proliferation financing risks
arising from activities across the entire organization.
To sustain and further improve the existing AML risk
management process, the Bank through the assistance
of a third party expert had developed the Institutional
Risk Assessment (IRA). The Institutional Risk Assessment
exercise enabled the Bank to identify emerging key AML
risk areas of concern and designed appropriate resolution
to mitigate if not totally eliminate the identified risks. The
IRA framework is a living document that the Bank will use
in the conduct of its periodic enterprise-wide AML risk
reassessment in the coming years.
Legal Risk
AUB has established and maintains policies and
procedures for identifying and avoiding the sources and
causes of legal risk with the aim of preventing financial
loss, criminal or civil litigation and/or administrative
sanctions.
AUB engages several external legal counsels to assist in
the handling of legal matters requiring legal advisory,
documentation, litigation, and other similar legal
services. The expertise and specialization of these
external counsels are assessed, verified, and taken into
consideration in the assignment and endorsement of legal
cases to ensure that AUB receives effective, timely and
proper legal assistance at all times. Specific guidelines are
formulated to control endorsement of cases, monitoring
of case status, review and approval of billings, as well as
performance review.
Capital Management
Capital Adequacy Ratio
The capital adequacy ratio (CAR) of the Group and Parent
Company, as reported to the BSP, as of December 31, 2022,
2021, and 2020 are shown in the table:
ENTERPRISE RISK
MANAGEMENT
Consolidated Parent
In million Php
2022 2021 2020 2022 2021 2020
Tier 1 capital 34,746 33,033 31,366 33,353 31,628 30,342
CET1 Capital 34,746 33,033 31,366 33,353 31,628 30,342
Tier 2 capital 1,583 1,410 6,844 1,539 1,338 6,790
Total regulatory capital 36,329 34,443 38,210 34,892 32,965 37,133
Total qualifying capital 36,329 34,443 38,210 34,892 32,965 37,133
Risk weighted assets 253,813 216,825 212,111 248,478 211,853 205,459
Capital ratios
Total regulatory capital
expressed as percentage
of total risk weighted
assets
14.31% 15.89% 18.01% 14.04% 15.56% 18.07%
Total CET1 expressed as
percentage of total risk
weighted assets
13.69% 15.23% 14.79% 13.42% 14.93% 14.77%
Total tier 1 expressed as
percentage of total risk
weighted assets
13.69% 15.23% 14.79% 13.42% 14.93% 14.77%
As of December 31, 2022, 2021, and 2020, the Group and the Parent Company were in compliance with the minimum
CAR.
Qualifying Capital
In computing the CAR, the regulatory qualifying capital is analyzed into two tiers: Tier 1 and Tier 2 Capital, defined below:
Inclusions Deductions
Tier 1 Capital Paid-up common stock, paid-up perpetual and non-cu-
mulative preferred stock, common and perpetual,
non-cumulative preferred stock dividends distribut-
able, surplus, surplus reserves, undivided profits (for
domestic banks only), unsecured subordinated debt
(with prior BSP approval), and minority interest in the
equity of subsidiary financial allied undertakings.
Treasury shares, unrealized losses on underwritten
listed equity securities purchased, unbooked valu-
ation reserves, and other capital adjustments based
on the latest report of examination, outstanding un-
secured credit accommodations, both direct and in-
direct, to directors, officers, stockholders, and their
related interests (DOSRI), goodwill, and deferred
income tax.
Tier 2 Capital Perpetual and cumulative preferred stock, limited life
redeemable preferred stock with or without the re-
placement requirement subject to BSP conditions,
dividends distributable, appraisal increment reserve -
bank premises, as authorized by the Monetary Board
(MB), net unrealized gains on underwritten listed eq-
uity securities purchased, general loan loss provision,
unsecured subordinated debt with a minimum original
maturity of at least ten years (with prior BSP approval),
unsecured subordinated debt with a minimum original
maturity of at least five years (with prior BSP approval),
and deposit for stock subscription on common stock,
perpetual and non-cumulative preferred stock, perpet-
ual and cumulative preferred stock subscription, and
limited life redeemable preferred stock subscription
with the replacement requirement upon redemption.
Perpetual and cumulative preferred stock treasury
shares, limited life redeemable preferred stock trea-
sury shares with the replacement requirement upon
redemption, sinking fund for redemption of limited
life redeemable preferred stock with the replace-
ment requirement upon redemption, limited life re-
deemable preferred stock treasury shares without
the replacement requirement upon redemption,
and sinking fund for redemption of limited life re-
deemable preferred stock without the replacement
requirement upon redemption.

44
The breakdown of the Group’s and Parent Company’s qualifying capital is as follows:
In million Php Consolidated Parent Company
Tier 1 Capital
Paid-up common stock 4,853 4,853
Additional paid-in capital 1/ 6,623 6,623
Retained earnings 25,328 25,328
Undivided profits 2/ 6,311 6,311
Other comprehensive income (3,821) (3,821)
Minority interest in subsidiary banks which are less than wholly owned
Total Tier 1 Capital 39,293 39,293
Deductions
Total outstanding unsecured credit accommodations, both direct and indirect, to
directors, officers, stockholders and their related interests (DOSRI)
71 71
Total outstanding unsecured credit loans, and other credit accommodations
granted to subsidiaries
350
Goodwill 1,950 1,577
Deferred Tax Assets 552 613
Other intangible assets 1,974 1,973
Investments in equity of unconsolidated subsidiary banks and quasi-banks, and
other financial allied undertakings (excluding subsidiary securities dealers/brokers
and insurance companies), after deducting related goodwill, if any (for solo basis
only and as applicable)
- 1,357
Total Deductions 4,548 5,941
Tier 1 Capital 34,746 33,353
Tier 2 Capital
General loan loss provision, limited to a maximum of 1% of credit risk-weighted
assets, and any amount in excess thereof shall be deducted from the credit risk-
weighted assets in computing the denominator of the risk-based capital ratio
1,583 1,539
Instruments issued by the bank that are eligible as Tier 2 capital -
Total Tier 2 Capital 1,583 1,539
Deductions
Tier 2 Capital 1,583 1,539
Total Regulatory Capital 36,329 34,892
Required Deductions
Investments in equity of unconsolidated subsidiary banks and quasi-banks, and
other financial allied undertakings (excluding subsidiary securities dealers/brokers
and insurance companies), after deducting related goodwill, if any (for solo basis
only and as applicable) 24/
Total Qualifying Capital 36,329 34,892
ENTERPRISE RISK
MANAGEMENT
Capital Ratios with Capital Conservation Buffer
The primary objective of AUB’s capital management is to
ensure that it complies with regulatory capital requirements
and maintains a healthy capital ratio to cover not only risks
inherent in the business but also provide allowances for
unexpected losses due to economic and unforeseen market
events. The Bank ratios are higher than the BSP Regulatory
requirement on CAR, Tier 1 and CET1 ratios:
BSP Regulatory
Requirement
Total Capital Ratio 10.00%
Tier 1 Ratio 7.50%
Company Equity Tier 1 (CET 1)
Ratio with capital
conservation biffer
6% + 2.5% = 8.50%
Risk Weighted Assets
Risk-weighted assets are determined by assigning defined
risk weights to amounts of on-balance sheet exposures
and to the credit equivalent amounts of off-balance sheet
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
risk weights vary from 0.00% to 150.00% depending on the
type of exposure, with the risk weights of off-balance sheet
exposures being subjected further to credit conversion
factors.
The Group’s total risk-weighted assets, as reported to the
BSP, as of December 31, 2022 and 2021 are shown in the
table below:
Consolidated
In
million
Php
Credit Risk-
weighted
Assets
Market Risk-
weighted
Assets
Operational
Risk-
weighted
Assets
Total
2022 195,644 35,745 22,424 253,813
2021 180,076 16,478 20,271 216,825
Parent Company
In
million
Php
Credit Risk-
weighted
Assets
Market Risk-
weighted
Assets
Operational
Risk-
weighted
Assets
Total
2022 191,558 35,745 21,176 248, 478
2021 176,450 16,478 18,926 211,853
Below is a summary of risk weights and selected exposure
types:
Risk
Weight
Exposure/Asset Type*
0.00% Cash on hand, claims collateralized by
securities issued by the national government,
BSP; loans covered by the Trade and
Investment Development Corporation of the
Philippines; real estate mortgages covered by
the Home Guarantee Corporation
20.00% COCI, claims guaranteed by Philippine
incorporated banks/quasi-banks with the
highest credit quality; claims guaranteed by
foreign incorporated banks with the highest
credit quality; loans to exporters to the extent
guaranteed by Small Business Guarantee and
Finance Corporation
50.00% Housing loans fully secured by first mortgage
on residential property; Local Government
Unit (LGU) bonds which are covered by Deed
of Assignment of Internal Revenue allotment
of the LGU and guaranteed by the LGU
Guarantee Corporation
75.00% Direct loans of defined Small Medium
Enterprise (SME) and microfinance loans
portfolio; non-performing housing loans fully
secured by first mortgage
100.00% All other assets (e.g., real estate assets)
excluding those deducted from capital (e.g.,
deferred income tax)
150.00% All non-performing loans (except non-
performing housing loans fully secured by
first mortgage) and all non-performing debt
securities
*Not all inclusive
With respect to off-balance sheet exposures, the exposure
amount is multiplied by a credit conversion factor (CCF),
ranging from 0.00% to 100.00%, to arrive at the credit
equivalent amount, before the risk weight factor is
multiplied to arrive at the risk-weighted exposure. Direct
credit substitutes (e.g., guarantees) have a CCF of 100.00%,
while items not involving credit risk has a CCF of 0.00%.

AUB Annual Report for 2022 online copy.pdf

AUB Annual Report for 2022 online copy.pdf

Recommended

Recommended

More Related Content

Similar to AUB Annual Report for 2022 online copy.pdf

Similar to AUB Annual Report for 2022 online copy.pdf (20)

Recently uploaded

Recently uploaded (20)

AUB Annual Report for 2022 online copy.pdf