PSE Circular for Brokers No. 334-99

February 24, 1999 PSE CIRCULAR FOR BROKERS NO. 334-99 February 23 1999 Please refer to: Corporate Communications Dept. Rizal Commercial Banking Corporation Attn. Mr. Virgilio Q. Pantaleon Tel. nos. 818-6669 or 894-9983 Fax 891-0988 RCBC Posts P808M Earnings Despite adverse economic conditions that prevailed in 1998, Rizal Commercial Banking Corporation ended the year with net earnings of P808 million. This was announced today by Vice chairman Alfonso S. Yuchengco III and President/CEO Francisco A. Dizon, who said: "We expect to meet the challenges of the Year 2000 and beyond from a position of strength." While the P808 million earnings represented a 45% dip in net income compared to 1997, this was due to one-time costs related to streamlining of branch operations and the setting up of prudent provisions for loan losses in excess of Bangko Sentral ng Pilipinas requirements. Further, RCBC's consolidated resources grew by 6% to reach a record level of P112 billion by year-end. The buildup of resources came in the form of liquid assets such as interbank loans and government securities which increased by P3.6 billion or 42% from a year ago. The loan portfolio was trimmed down by 3% as the economy slowed down and credit risks increased. On the liabilities side, total deposits increased by 18% to P80 billion, as the bank continued to attract depositors because of its strength and stability. LLpr A major contributor to the growth in RCBC's consolidated resource level was the acquisition of Capitol Bank by its wholly owned subsidiary, RCBC Savings Bank. This acquisition also dramatically expanded RCBC's network of branches from 173 to 285. The expansion gave RCBC the 5th largest branch network in the banking industry today. It also positioned RCBC to capture a bigger share of the promising consumer market. Total consolidated gross revenues in 1998 increased by 6% to reach a level of P5.9 billion. The increased revenues were primarily due to the 19% increase in gains from trading of government securities and foreign exchange as well as commissions from overseas workers remittances which reached a level of $450 million. Net interest income from loans was flat because of the contraction of loan the portfolio. cdlex The bank's operating expenses grew by 25% but this was accounted for mainly by the one-time costs associated with the early retirement of personnel in the light of the bank's re-engineering program. The re-engineering program was aimed at streamlining branch operations, enabling them to become more marketing and sales-oriented. The bank also incurred significant one-time costs to make its computer system Y2K compliant by the first semester of 1999. To further ensure that the bank has sufficient provisions for loan losses, given the uncertainties still facing the economy, RCBC deemed it prudent to provide an additional P1.5 billion in loan-loss reserves, bringing total cumulative provisions to a level of P3.4 billion. This level of provisioning is equivalent to 5.2% of the total loan portfolio, net of non-risk loans, one of the most conservative in the banking industry.