Investor Presentation - Philstocks · RCBC 10.6 DBP 10.5 UBP 9.0 SMPH 18.1 Ayala Land 12.5...

Investor Presentation

September 2016

2

Table of Contents

• The Philippine Economy 3• About SM Investments 5 • SM Retail 13• Banking 17• SM Prime 18• Land Bank 32• Portfolio Investments 35• Financials 38

3

Philippines: Strong Macroeconomic Fundamentals

• Avg. Inflation rate: 1.3% (Jan-Jun 2016)

• Avg. Real lending rate: 4.33% (Jan-Jun 2016)

• Stable Currency: -0.44% (YE2015 vs End-Jun 2016)

• Debt/GDP: 43.6%• CAR: 16.4%• NPLs: 1.7%• Net lender to the IMF

• Job creation and inclusive growth

• Regional growth – Visayas, Mindanao

• Infrastructure development

• Agriculture, Tourism, Manufacturing

• Foreign Investment

Opportunities

Net External Inflows and ICT ExportsImproving Costs of Doing Business

Healthy Fiscal and Monetary System

Young Workforce with Rising Incomes

Strong GDP Growth

6.9%Consumption Driven

70% of GDP

Per Capita GDP

USD2,932 (+1.8%)Per Capita GNI

USD3,558 (+2.2%)

Population

101M (+1.7%)Median Age

23

S&P BBB Stable

Moody's Baa2 Positive

Fitch BBB- Positive

Current Credit Ratings9.2

3.710.6

26.3

6.2

8.6

5.7

1.6

8.6

28.4

9.6

11.6

7.2

17.7

17.8 19.0

23.8

42.1

52.4

0

10

20

30

40

50

60

Viet Thai (2014) Mal Indo (2014) Phil (2014)

USD

bn

Net FDI Inflows Remittances ICT Export

Source: BSP Selected Economic and Financial IndicatorsRelease as of July 29, 2016

Source: The World BankNotes:• Vietnam: FDI (2014), Remit (2011), ICT Services Export No Data• Malaysia: FDI, and Remit (2014) and ICT Services Export (2013)

4

Current Administration’s 10-point Socio-economic Agenda

Maintain current macroeconomic policies, including fiscal, monetary, and trade policies

Progressive tax management

Pursue investment friendly reforms

Accelerate infrastructure development

Increase agricultural and rural enterprise productivity and rural tourism

Effective land management

Invest in human capital development

Promote science, technology, and the creative arts to enhance innovation and creative capacity

Improve social protection programs for greater social inclusion

Strengthen implementation of the Responsible Parenthood and Reproductive Health Law

Images from PhilStar.com

5

About SM Investments

Strong proxy for the continuing breakout of the Philippine Economy

Consumer-centric businesses

Large cap and diversified market play

Core businesses remain market leaders

Strong business model and excellent management

Prudent financial management

Tightly managed to leverage strengths and extract synergies across the Group

Ongoing focus on good corporate governance and shareholder value creation

Aggressive expansion plans ensure long-term growth

Aggressive expansion plans in all core businesses

China and Portfolio Investments provide additional upside

Funding options available for both organic and acquisition-led expansion

Retail

77.3%SM RETAIL INC.

SPEC

IALT

Y R

ETA

ILER

S

JOIN

T V

ENTU

RES

FOO

D

Banking

44%BANCO DE ORO

20%CHINA

BANKING

CORP.

Property

50%SM PRIME HOLDINGS, INC.

MA

LLS

RES

IDEN

TIA

L

LEIS

UR

E &

TO

UR

ISM

CO

MM

ERC

IAL

HO

TELS

&

CO

NV

ENTI

ON

S

Portfolio Investments

28% BELLE CORP

29% ATLAS

CONSOLIDATED MINING

34% CITYMALL

COMMERCIAL CENTERS

90% NET GROUP

Core Investments

6

Our Investments

THE

SM S

TOR

E

Philippine BanksTotal Resources ($bn)

Philippine RetailersTotal Stores

SM RetailPuregoldRobinsons*

294 281 166

Property DevelopersMarket Cap ($bn)

Philippine ConglosMarket Cap ($bn)

Source: Company Information, 1Q 2016*Supermarkets and Department Stores onlySource: Company Information

Source: Bloomberg; Figures as of July 29, 2016

Source: Bloomberg; Figures as of July 29, 2016

Philippine RetailersTotal Sales ($mn)

SM RetailPuregoldRobinsons*

4,4822,0601,927

*Includes all retail formatsSource: Company Information

7

SM Group Companies’ Rankings

FY 2015

FY 2015

BDO 45.1

Metrobank 36.1

BPI 33.2

Landbank 27.9

PNB 14.5

China Bank 11.7

Security Bank 11.2

RCBC 10.6

DBP 10.5

UBP 9.0

SMPH 18.1

Ayala Land 12.5

Megaworld 3.5

Robinsons Land 2.8

Double Dragon 2.7

Vistaland 1.7

Filinvest 1.0

SMIC 17.8

JG Summit 12.8

Ayala Corp 11.6

Aboitiz Equity 9.3

GT Capital 5.8

Metro Pacific 4.5

SMC 4.2

DMCI 3.7

LT Group 3.6

Alliance Global 3.6

Total Population: 101M

8

Our Business Footprint

16 Cities

Retail Stores GSA

Total 113 830,326

Food 91 469,824

Non-food 22 360,503

Property Buildings GFA

Malls 20 3,297,272

Residential 24

Office Bldgs 5 330,247

Exhibit Halls 3

Banking

BDO

China Bank 238

Metro Manila1 Municipality

Branches

459

38 Provinces

Retail Stores GSA

Total 163 800,437

Food 140 553,636

Non-food 23 246,801


Malls 29 2,683,723

Residential 2

Hotels 2 32,326

Banking

BDO

China Bank

Luzon55 Cities

Branches

290

174

16 Provinces

Retail Stores GSA

Total 37 218,259

Food 31 138,191

Non-food 6 80,068


Malls 5 1,088,157

Hotels 1 35,630

Exhibit Halls 2

Banking

BDO

China Bank

Visayas

Branches

112

64

43 Cities 27 Provinces

Retail Stores GSA

Total 15 104,764

Food 11 62,413

Non-food 4 42,351


Malls 4 491,254

Hotels 1 11,013

Exhibit Hall 1

Banking

BDO

China Bank 41

33 Cities

Mindanao

Branches

167

Metro Manila 44%

Luzon 35%

Visayas 14%

Mindanao 6%

Mall GFA 7,560,406

Metro Manila 42%

Luzon 41%

Visayas 11%

Mindanao 5%

Retail GSA 1,953,786

9

Our ESG Programs

“SM continues to find ways to provide Filipinos with various opportunities for growth. Equally important is our impact on the environment and the company’s thrust to becoming a progressive leader in sustainable business practices in the country.” - Harley T. Sy

Note: All of SM’s ESG programs are aligned with the Sustainable Development Goals

Conservation and Preservation

Sustainable Operations

Sustainable Cities and Communities

Disaster Risk Reduction

Environmental Sustainability

Social Inclusion

Access to inclusive and equitable education

Access to health and medical care

Food security through sustainable agriculture and backyard farming

Harnessing Human Potential

Social Programs for persons with special needs

Disaster Response, Relief and Rehabilitation

Corporate Governance

Annual ESG Report

ASEAN Corporate Governance Scorecard

Corporate Governance Policies

& Code of Ethics

Board & Management

Disclosure and Transparency

Enterprise Risk Management

Awareness Programs

10

Strong Leadership

TOMASA H. LIPANA, Independent Director • HENRY T. SY, JR., Vice Chairperson • TERESITA SY-COSON, Vice Chairperson • HENRY SY, SR., Chairman • HARLEY T. SY, Director and President • JOSE T. SIO, Director, Executive Vice President and Chief Finance Officer • JOSEPH R. HIGDON, Independent Director • AH DOO LIM, Independent Director

From L to R:

Board of Directors

Business Leadership

PropertyBankingRetail

Henry Jr. Hans ElizabethTeresita Hans

SM PrimeBDO China Bank

Teresita HarleyHerbert

Food Non-Food

11

10-Year Performance since PSE Listing

Assets grew at 16.3% p.a.

Revenue grew at 18.6% p.a.

Net Income grew at 13.5% p.a.

Market Cap grew 18.5% p.a.

12

Summary of SMIC Recent Performance

Retail• Completed merger of retail affiliates• Ecommerce agreement with Lazada• Opened 19 stores in 1H, 11 outside Manila• Alfamart operating 146 stores

Banking• TPG invested in ONB to develop microlending• Joint investment in PCIB Securities with Nomura • BDO took full control of its JV with BDO Life.• China Bank forms China Bank Securities

Corporation to service equities-related transactions

Property• Formed an agreement with the local government

to reclaim 1,500 hectares in Cordova, Cebu• Formed a JV with ALI and acquired 26 hectares in

South Road Project (SRP) in Cebu• Opened Conrad Manila and S’Maison in the MOA

Complex• Launched FiveE-Com Center, started construction

of Three and FourE-com Centers

Portfolio Investments• Atlas Mining announced restructuring plan• Belle delivered record recurring net income

Recent EventsFigures in PHP billion except percentages

SM Investments 1H 2016 1H 2015 Change FY 2015

Revenues 151.1 139.2 8.5% 295.9

Net Income* 15.0 13.5 11.1% 28.4

Net Margin 9.9% 9.7% - 9.6%

ROE 10.5% 10.3% - 10.3%

Net Debt:Equity 39:61 38:62 - 36:64

*Recurring Earnings growth of 8%

SM Retail 1H 2016 1H 2015 Change FY 2015

Revenues 106.9 98.4 8.7% 211.4

Net Income 3.5 3.1 13.5% 6.8

Net Margin 3.4% 3.2% - 3.2%

BDO 1H 2016 1H 2015 Change FY 2015

Net Interest Income 31.7 27.1 17.2% 57.0

Non Interest Income 22.1 16.4 34.6% 31.9

Net Income 13.2 11.7 12.9% 25.0

SM Prime 1H 2016 1H 2015 Change FY 2015

Revenues 39.2 35.9 9.4% 71.5

Normalized Net Income 12.6 11.2* 12.0% 20.9*

Net Margin 32.1% 31.4% - 28.0%

*Adjusted for gain on sale of AFS

13

SM Retail: Footprint Expansion Opportunity

Philippine Population: 101M

Visayas19M people

Luzon 45M people

NCR 13M people

Mindanao24M people

• Expand nationwide footprint outside Metro Manila• Deliver excellent customer service• Work with partners to provide best in class modern retail

Retail Strategy

Per Region Stores GSA (sqm) % of Total

Metro Manila (NCR) 113 830,326 42%

Luzon (ex-NCR) 163 800,437 41%

Visayas 37 218,259 11%

Mindanao 15 104,764 5%

Total 328 1,953,786

SM Retail Footprint 1H 2016 (Pre-Merger)

Per Format Stores GSA (sqm) Average

The SM Store 55 729,722 13,268

SM Supermarket 47 327,731 6,973

SM Hypermarket 45 346,788 7,706

SaveMore 147 447,409 3,044

Waltermart 34 102,135 3,004

Alfamart 140 29,280 209

Total* 328 1,953,786

*Alfamart not consolidated

14

SM Retail: Merger of Related Businesses

• Merger – SM Retail Inc. surviving entity

• Strategic Fit Discretionary retailing Scale and diversity Strong mall synergies

• Alignment of Structure and Ownership

• Earnings Accretive – higher growth and margins

• Greater footprint

• Local market leadership

15

Merger Impact

Net Margin* Revenue Growth

Total Specialty 6.3% 8.3%

SM Retail (Pre-Merger) 3.4% 7.3%

In PHP Billion Revenue Net Income* Outlets

SM Retail Pre-Merger 215 7.2 310

SM Retail Post-Merger 253 TBD 1,700+

*Before minority interestNote: All figures using year-end 2015 data

Specialty Store Outlets

Ace Hardware 123

Homeworld 76

SM Appliance 65

Toy Kingdom and Pet Express

136

Watsons 459

Baby Company 79

Kultura 39

Sports Central 81

Others 371

Total 1,429

Note: Includes outlets in other SM Retail formats

Increased Presence in Discretionary Retailing

Higher Margins and Revenue Growth

Increased Scale

16

SM Retail: Post-Merger Structure

SMIC77.3%

SM Retail

Food Non-Food

SM Store SpecialtyJoint

Ventures

Supermarkets

Hypermarkets

Savemore

WalterMart

• Forever 21• Uniqlo• Sfera• Bata• Uno de 50• Body Shop• L’ Indochine• Joseph• Crate & Barrel• Crocs

• Ace Hardware• Baby Company• Homeworld• Kultura• Our Home• SM Appliances• Sports Central• Toy Kingdom• Watsons• Others

Alfamart

17

Banking

• Diversified and sustainable earning stream

• Client acquisition through branch expansion

• Drive provincial lending and deposit taking initiatives

• Expand fee income

• Operating leverage

• Set up operating platform to support future growth

• Implement digital strategy

• Prudent balance sheet management

• Conservative provisioning for risk assets

• Complement current funding with long term

• Ensure sufficient capital to support growth

Business Strategy• Accelerate Expansion

• Grow Revenue Lines

• Solidify presence in corporate market

• Defend market share for commercial/middle market/SMEs

• Expand menu of consumer products

• Continue diversification of fee-based businesses

• Intensify branding and differentiation

Business Strategy

BDO China Bank

18

About SM Prime

• Developer of large scale, mixed-use “Lifestyle cities” anchored on world-class malls

• The largest integrated property developer in Southeast Asia by market capitalization

• High recurring income

• Extensive landbank

• Consistently cited for excellence in corporate governance, property development, environmental consciousness and service Residential

Commercial

Leisure

Malls

19

SM Prime’s 5-Year Roadmap

• Doubling revenues and profits by 2018 to PHP32 billion

• Growth will be driven by malls and residential units

A

A

E

(2013-2018)

(2013-2018)

2018

2015 Act

2013 Act

MallsResidences

CommercialHotels & Convention

CentersPrimary Homes Leisure Homes

GFA: 10.6 Million sqm

(85% Phil + 15% China)

Launched Units: 139,628

Projects: 41


Projects: 16


No of Towers: 7

Rooms: 2,187

Projects: 10

+28%

in GFA

+69%

in units

+23%

in units

+44%

in GFA

+87%

in rooms




Projects: 27


Projects: 12


No of Towers: 5

Rooms: 1,167

Projects: 5

+19%

in GFA

+30%

in units

0%

in units

+113%

in GFA

+15%

in rooms




Projects: 21


Projects: 12


No of Towers: 3

Rooms: 1,015

Projects: 4

20

SM Prime vs Peers

Most defensive and least cyclical among Philippine property conglomerates

7.7M

2.0M 1.0M 1.4M

Source: Latest Available Company Information

*Excludes Hotels and Resorts

63%

21

The Mall of Asia Complex: A Lifestyle City Development

• Commercial, entertainment and residential hub

• 60 hectares of reclaimed land fronting Manila Bay

• Existing structures:

• Mall of Asia

• SMX Convention Center

• SM Arena

• Conrad Manila

• OneE-Com Center, TwoE-Com Center, FiveE-Com Center

• Shell, Sea Residences

• Under construction:

• ThreeE-Com Center, FourE-Com Center

• Shore Residences

• Galeon Museum

Two E-com Center

One E-com Center

Mall of Asia

SMX Convention Center

Conrad Hotel

Existing

Upcoming

Five E-com Center

Three E-com Center

Four E-com Center

Sea Residences

Shell Residences

Shore Residences

Mall of AsiaArena

Galeon Museum

22

SM Seaside Cebu: A Lifestyle City Development

• 30 hectares mixed use development on reclaimed land in Cebu

• Integrated development

• Site of Cebu’s largest mall and the fourth largest SM mall in the country with a GFA of 430,000 sqm

• Adjacent to 26 hectares co-owned with Ayala Land

SM Seaside City

Chapel of San Pedro Calungsod

Existing

Upcoming

Observation Tower

SM-ALI JV

23

SM Malls: Overview

Largest mall operator/developer in the Philippines

24

SM Malls: Philippines

SM Seaside City, Cebu

Philippine Population: 101M

Visayas19M people

Luzon 45M people

NCR 13M people

Mindanao24M people

Area Malls GFA (sqm) % of Total

Metro Manila (NCR) 20 3,297,272 44%

Luzon (ex-NCR) 29 2,683,723 35%

Visayas 5 1,088,157 14%

Mindanao 4 491,254 6%

Total 58 7,560,406 100%

25

SM Malls: Philippines Expansion Plans

Projection

End-2016Total Malls 60

Total GFA 7.7 mn sqm

SM Malls: Philippines Expansion Plans

New Opening GFA (sqm)

SM San Jose Del Monte April 2016 114,186

SM Trece Martires May 2016 83,783

SM Cherry Congressional Nov 2016 13,273

SM East Ortigas 2H 2016 80,127

Expansion

SM San Pablo 2H2016 13,359

SM Molino 2H2016 39,674

Total 344,402

26

SM Malls: China

SM Zibo

SM Tianjin

Existing Date Opened GFA (sqm)

SM Xiamen 2001 December 238,125

Jinjiang 2005 November 167,830

Chengdu 2006 October 166,665

Suzhou 2011 September 72,552

Chongqing 2012 December 149,429

Zibo 2015 September 150,600

Total 945,200

Upcoming Target GFA (sqm)

Tianjin (partial) 2016 540,000

27

SM Residences

SMDC Fame SMDC Air

SMDC Shore Amenities

Projects Overview 1H 2016

Total Launched since 2003 88,861

Total Units Sold since 2003 71,438

% Sold to date 80%

Planned Launched in 2016 (units) 11,000-14,000

Reservation Sales (value) PHP22.6B

Reservation Sales (units) 8,078

2016 CAPEX PHP16.3B

Project PHP10.5B

Land banking PHP5.8B

Landbank (Hectares)

Metro Manila 61.9

Outside Metro Manila 187.0

Land for Future Projects 248.9

28

SM Residences Example – Shore Residences

Approx. 27.7 to 29.5 sqm Approx. 58.5 sqm

Two Bedroom with BalconyOne Bedroom with Balcony

29

SM Commercial Properties

Completed Opened GFA (sqm)

SM Cyber Makati One 2008 22,055

SM Cyber Makati Two 2008 16,725

TwoE-com Center 2012 107,682

SM Aura Tower 2013 53,117

SM Cyber West 2014 41,799

FiveE-com Center 2015 129,307

Total 370,685

Under Construction Opening GFA (sqm)

ThreeE-com Center TBA 114,204

FourE-com Center TBA TBA

30

SM Hotels and Convention Centers

Conrad Manila

• Growing tourism market opportunity• SM Hotel expansions complement

existing mall, commercial and residential developments• Iloilo• SM North Edsa• San Fernando, Pampanga• SM Seaside City, Cebu

SMX Convention Center

Mall of Asia Arena

31

SM Hotels and Convention Centers

Venue Location GLA (sqm)

SMX Manila MOA Complex 17,306

SMX Davao SM Lanang 5,200

SMX Aura Premier SM Aura 3,136

SMX Bacolod Bacolod 4,269

Megatrade Hall Megamall 4,214

Cebu Trade Hall Cebu 1,498

Mall of Asia Arena MOA Complex 20,000 seats

Total 35,623

Conrad Manila Lobby

Conrad Manila Diplomatic Suite: Bedroom

Hotel Opened Rooms

Taal Vista, Tagaytay 2003 260

Radisson Blu, Cebu 2010 396

Pico Sands, Hamilo Coast 2011 151

Park Inn, Davao 2013 202

Park Inn, Clark 2015 154

Conrad Manila, Pasay 2016 347

Total 1,510

32

Land Bank

Coastal Zone

1,580 HasInland

Mountain Zone4,200 Has

Companies Land Bank (sqm)

SM Prime 11,405,415

Malls 1,770,793

Residences 3,153,539

Commercial 883,252

Leisure Homes 5,597,831

SMIC 57,801,502

Total 69,206,917

33

Land Bank in Batangas: Hamilo Coast

• Hamilo Coast asset is owned directly by SMIC

• 5,780 hectares

• 31 km of coastline

• 13 coves

• Pristine environment

• 1½ - 2 hours from Manila

34

2016 SM Group CAPEX

Businesses PHP bn Allocation/Projects

Retail 5.2 New stores / Renovations

Banks 7.5 Branch expansion, IT enhancements

Property 60.2

Malls 32.2New SM malls and expansions in

Philippines and China

Residential 20.7 Condominiums and HPI projects

Commercial 4.5 ThreeE-com and FourE-Com

Hotels and Convention Centers 2.7 Conrad Manila

Parent and Others 0.4

Total 73.3

35

Portfolio Investments: Belle Corporation

• 28% ownership; publicly listed

• Developer of high-end entertainment and leisure properties

• Subsidiary, Premium Leisure Corp., holds 1 of 4 gaming licenses in Entertainment City complex in Manila Bay

• US$1.3bn City of Dreams Manila, operated by Melco Crown

• Total gross floor area: 300,000 sqm

• Gaming floor area: up to c.22,000 sqm

• 372 gaming tables

• 1,680 slot machines

• 1,680 electronic table games

• Three hotel brands with 950 keys: Crown, Nobu, Hyatt

(In PHP mn) 1Q 2016 1Q 2015 % Chg

Revenues 1,494.6 1,344.8 11.1%

Operating Costs and

Expenses-638.8 -607.3 5.2%

Net Operating Income 855.8 737.5 16.0%

Net Income 412.8 377.7 9.3%

Net Margin 27.6% 28.1% --

ROE 6.5% 5.6% --

Net Debt (Cash) to

Equity Ratio0.16 : 1.00 0.01 : 1.00 --

36

Portfolio Investments: Atlas Consolidated Mining

• 29% ownership; publicly listed

• Copper mine with 20+ years mine life, over

400m tonnes of proved and probable

reserves

• Average cut-off grade of 0.30% Cu

• Excellent environmental and social record

• Supportive shareholders and other

stakeholders

• Announced restructuring plan to optimize

cash position during copper price downturn

• Optimal 40k tonnes/day production

volumes

• Reduce pre-stripping CAPEX for 2016

and 2017

• Cost reduction and operating efficiency

programme

*Net income after tax adjusted for non-recurring items such as foreign exchange and mark-to-market adjustments.

(In PHP mn) 1H 2016 1H 2015 % Chg

Revenues 6,130 5,262 16.5%

Total Cash Cost 4,515 4,464 1.1%

EBITDA 1,674 981 70.6%

Net Income -325 -611 -46.8%

Core Income* -558 -888 -37.2%

37

Portfolio Investments: CityMalls Commercial Corp.

• 34% ownership of a JV with outstanding local partners

• Rapid growth plans to develop 10k to 20k sqm strip malls in

underserved markets outside Metro Manila

• SM has right of first refusal on supermarket space in malls

• 100 CityMalls by 2020 - 30 targeted by YE2016

38

Financials

24%

71%

5%

43%

21%

36%

Property Retail Banking

39

Financials: SMIC

Revenues +8.5% to PHP151.1bn

Reported Earnings +11%(Recurring Earnings +8%)

Banking business not consolidated

1H 2016 Consolidated ResultsIn PHP Billion

SMIC Parent Debt

Net Debt to Equity 31 : 69 Average Cost of Debt 5.03%

Peso-Foreign Currency Mix 46 : 54 Average Debt Tenure 4.13 years

1H 2016 1H 2015 FY2015 FY2014 FY2013 FY2012

Revenue 151.1 139.3 295.9 276.6 253.3 223.9

Reported Net Income* 15.0 13.5 28.4 28.4 27.5 24.7

Net Margin 9.9% 9.7% 9.6% 10.3% 10.8% 11.0%

Dividends n/a n/a 8.52 8.2 7.4 6.4

Return on Equity 10.5% 10.3% 10.3% 12.0% 13.0% 14.3%

*Recurring Earnings growth of 8% in 1H 2016

Total Capital 1H 2016 1H 2015 FY2015 FY2014 FY2013 FY2012

Cash Equivalents & Short

Term Investments96.0 100.9 122.6 130.5 111.2 126.6

Net Debt 183.5 165.0 158.5 131.2 126.5 93.6

Equity 292.3 270.3 284.5 257.0 219.4 188.1

Net Debt:Equity 39 : 61 38 : 62 36 : 64 34 : 66 37 : 63 33 : 67

Recent Bond Offerings

Issued Amount Currency Due Date Coupon Rate

June 10, 2014 USD350 mn US Dollar June 2024 4.88%

May 19, 2014 PHP15 bn Philippine Peso May 2021/May 2024 5.2958%/5.6125%

July 16, 2012 PHP15 bn Philippine Peso Jul 2019/Jul 2022 6.0%/6.9442%

October 17, 2012 USD500 mn US Dollar October 2019 4.25%

October 13, 2010 USD400 mn US Dollar (Exchange Bonds) October 2017 5.50%

Notes:

1. Excludes net income attributable to

minority interest

2. For BDO press releases, gross

customer loans is the figure quoted

3. Return on Ave. Common Equity,

defined as NI to parent

shareholders less preferred

dividends / ave. common equity

(excluding preferred shares and

minority interests)

4. Per BSP, as seen in the published

statements of condition

Financials: BDO

Financial Highlights (In PHP Bn)

1H 2016 1H 2015 Change FY 2015


Other Income 22.1 16.4 34.6% 31.9

Net Income113.2 11.7 12.9% 25.0

Assets 2,155.6 1,873.2 15.1% 2,031.3

Deposits 1,771.6 1,520.4 16.5% 1,663.9

Gross Customer Loans21,368.2 1,126.6 21.4% 1,279.4

Net Interest Margin 3.2% 3.1% -- 3.2%

Cost to Income Ratio 64.9% 61.4% -- 62.0%

Return on Common Equity313.1% 13.2% -- 13.6%

Gross Loans to Deposits Ratio 77.2% 74.1% -- 76.9%

Gross NPL to Gross Customer Loans 1.1% 1.3% -- 1.2%

Total CAR413.1% 13.6% -- 13.3%

Tier 1 Ratio 11.6% 11.9% -- 11.7%

CET1 11.3% 11.5% -- 11.3%

Tier 2 Ratio 1.6% 1.7% -- 1.6%

40

41

Financials: BDO

Consistent Growth in Sustainable Sources

Loan and Deposit Growth

Improving Asset Quality

15%

19% 20%17%

21%

16% 16%

20%

14%

18%

2012 2013 2014 2015 2Q 2016

Loan Growth

BDO Industry

592 775 959 1,138 1,230 339 570

533 526 541 932

1,345 1,4921,664 1,772

-

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015 2Q 2016

PH

P B

n

Deposit GrowthCASA Time Deposits

21.3 14.8 14.2 15.8 17.226.7 25.2 26.8 26.2 26.3

2.8%1.6% 1.3% 1.2% 1.3%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2012 2013 2014 2015 2Q 2016

PH

P B

n

Asset Quality

NPL Allow. for Impairment NPL Ratio

CASA YoY∆ 31% 24% 19% 23%

CASA Ratio 58% 64% 68% 69%

NPL Cover 171% 188% 166% 153%

36.2 43.2 51.2 5731.7

13.415.5

1819.4

10.6

8.212.8

7.17.2

2.9

60.6

75.080.7

88.9

53.8

0

10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015 1H 2016

PH

P B

n

Operating Income

Net Int Inc Fees Trading/FX Others

82%78%

86%86%

79%

YoY∆ Total 24% 8% 10% 24%

YoY∆ NII & Fees 18% 18% 10% 17%

1. Net Income/Average Equity

2. Per BSP, as seen in the

published statements of

condition

42

Financials: China Bank

Financial Highlights (In PHP Bn)

1H 2016 1H 2015 Change FY 2015


Non-Interest Income 2.9 2.1 41.5% 4.6

Net Income 3.3 2.5 30.3% 5.6

Assets 555.6 479.0 16.0% 527.0

Deposits 462.6 399.2 15.9% 438.7

Gross Customer Loans 329.5 294.5 11.9% 317.5

Net Interest Margin 3.2% 3.4% -- 3.4%

Cost to Income Ratio 61.4% 63.5% -- 62.8%

Return on Equity110.7% 8.7% -- 9.6%

Gross Loans to Deposits Ratio 71.2% 73.8% -- 70.7%

Gross NPL Ratio 2.6% 2.5% -- 2.6%

Total CAR213.2% 14.5% -- 13.5%

Tier 1/CET 1 12.3% 13.6% -- 12.6%

43

Financials: China Bank

82 90 137 179 212 182 222 86 128 146

147 160

148 174

48 54

71 73

67 77

68

216 272

354 399 439 407

464 67% 70% 62%

73% 71% 73% 71%

-74%

-54%

-34%

-14%

6%

26%

46%

66%

(5 0)

50

150

250

350

450

550

2011 2012 2013 2014 2015 2Q 2015 2Q 2016

Funding (PHP bn)

CASA High Cost FCDU LDR

94 109 127 126 120 134

82 89 128 142 133 145 23

30

43 48 43 50

199 228

298 316 296 329

-

50

100

150

200

250

300

350

2012 2013 2014 2015 1H 2015 1H 2016

Gross Loans (PHP bn)

Corporate Commercial Consumer

Loan and Deposit Growth

Steady Asset Quality Stabilizing Cost Income Ratio

3.7%2.2%

3.0% 2.9% 2.9%

2.6% 2.0% 2.2% 2.5% 2.6%

134.9%146.6%

101.3%88.7% 80.5%

0.0 %

20. 0%

40. 0%

60. 0%

80. 0%

100 .0%

120 .0%

140 .0%

160 .0%

180 .0%

0.0 %

1.0 %

2.0 %

3.0 %

4.0 %

5.0 %

6.0 %

7.0 %

8.0 %

9.0 %

10. 0%

2012 2013 2014 2015 1H 2016

Asset Quality

NPA Ratio NPL Ratio Loan Loss Coverage Ratio

59.2% 59.0%

62.2% 62.3%

63.5%

61.4%

56. 0%

57. 0%

58. 0%

59. 0%

60. 0%

61. 0%

62. 0%

63. 0%

64. 0%

2012 2013 2014 2015 1H 2015 1H 2016

Cost to Income Ratio

44

Financials: SM Prime

1H 2016 ResultsIn PHP Billions

Malls Residences Others

Consolidated 1H 2016 1H 2015 % Chg

Revenue 39.2 35.9 9.4%

Normalized Earnings 12.6 11.2 12.0%

Net Margin 32.1% 31.4% -

Return on Equity 11.7% 11.2% -

Malls Group 1H 2016 1H 2015 % Chg

Revenues 23.6 21.7 9.1%

Operating Income 13.2 12.0 9.4%

EBITDA 16.2 14.7 9.9%

EBITDA margin 68.5% 67.9% -

Net Income 8.4 7.7 9.6%

Net margin 35.6% 35.4% -

Philippine Malls 1H 2016 1H 2015 % Chg

Revenues 21.5 19.7 9.2%


EBITDA 14.7 13.3 9.9%


Net Income 8.1 7.1 13.5%

Net margin 37.5% 36.1% -China Malls 1H 2016 1H 2015 % Chg

Revenues 2.1 1.9 7.9%


EBITDA 1.5 1.4 10.1%


Net Income 0.3 0.5 -40.0%

Net margin 15.7% 28.3% -

Commercial 1H 2016 1H 2015 % Chg

Revenues 1.1 0.7 50.8%


EBITDA 1.0 0.5 86.4%


Net Income 0.6 0.3 127.9%

Net margin 53.4% 35.4% -

Residences 1H 2016 1H 2015 % Chg

Revenues 13.2 12.5 6.1%


EBITDA 4.0 3.8 4.5%


Net Income 3.2 3.0 6.9%

Net margin 23.8% 23.6% -

45

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Investor Relations Office

Office Number: +63 2 857-0100Email Address: [email protected] Official Website: www.sminvestments.comOfficial Facebook Account: www.facebook.com/sminvestments.irOfficial Twitter Account: @SM_INVESTMENTS

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DisclaimerExcept for historical financial and operating data and other information in respect of historical matters, the statements contained herein are “forward-looking statements”. Any such forward-looking statement is not a guarantee of future performance and involves a number of known and unknown risks, uncertainties, and other factors that could cause the actual performance, financial condition or results of operation of SM and its subsidiaries to be materially different from any future performance, financial condition or results of operation implied by such forward-looking statement.

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