PSE Circular for Brokers No. 283-99

February 16, 1999 PSE CIRCULAR FOR BROKERS NO. 283-99 February 15, 1999 PHILIPPINE STOCK EXCHANGE Tektite Tower, Ortigas Center Pasig, City Attention: Mr . Reynold Ong/VP Listing and Disclosure Group Gentlemen : We are sending herewith copy of Notice for publication in connection with Union Bank of the Philippines ("UBP") P1.212 Billion net income in 1998. For your information and guidance. cdpr Thank you. Very truly yours, (SGD.) ATTY. FE B. MACALINO Corporate Secretary, First Vice President and General Counsel UnionBank Makes P1 . 212 Billion in 1998 UnionBank of the Philippines made P1.212 billion in unaudited net income in 1998, for a 1% growth from the 1997 level. The provision for probable loan losses for the year was P660 million and P397 million of non-performing loans were written off. Compared to this slight profit growth, the domestic banking industry in general saw profit reduction over the year. UnionBank's operating income, or net income before provisions for probable loan losses and income tax, amounted to P1.99 billion for a 29% growth over the year. Income from the interest differential business increased by 17% and non-interest income increased by 13%. Operating expense was limited to 7% growth. The revenue/expense ratio further improved to 2.56 from 2.3 in 1997, reflecting a steady rise in productivity. UnionBank has ranked high in the category of revenue/expense ratio, a measure of productivity and operating efficiency. UnionBank reduced its loan portfolio by-25% to P21.8 billion by year-end 1998 from P29.2 billion a year earlier. Its NPL ratio was 9.9% of the loan portfolio as of year-end. Reserves as a percent of NPLs was 38%. However, NPLs as a percent of capital and reserve funds combined comprised only 21%. Reflecting balance sheet consolidation, total resources stood at P46.9 billion, 13% down from P54.1 billion a year ago. Total capital funds grew by 13% to P9.9 billion by year-end 1998. The capital-to-assets ratio increased to 21% from 16% in 1997. Based on this measure, London-based "The Banker" magazine in its July 1998 issue, included Union Bank among the world's 25 soundest banks.