COVER SHEET

A 1 9 9 7 1 8 9 6 3 S.E.C. Registration Number

A S I A U N I T E D B A N K

C O R P O R A T I O N

(Company‟s Full Name)

J O Y - N O S T A L G , N O . 1 7 A D B

A V E N U E , O R T I G A S C E N T E R

P A S I G C I T Y (Business Address: No. Street/City/Province)

ELIZABETH T. MIRANDA

Head – Corporate Planning and Investor Relations

(632) 631-3333 / (632) 638-6888

Contact Person Company Telephone Number

1 2 3 1 SEC Form 17-Q 4TH Friday of May

Month Day FORM TYPE Month Day Fiscal Year Annual Meeting

Secondary License Type, If Applicable

M S R D Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings

96* Total No. of Stockholders Domestic Foreign

*Based on latest Report on the Number of Shareholders.

----------------------------------------------------------------------------------------------------------------------------- ------

To be accomplished by SEC Personnel concerned

File Number LCU

Document I.D.

Cashier

Remarks = pls. Use black ink for scanning purposes

STAMPS

2

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-Q

PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER

1. Date of Report (Date of earliest event reported): September 30, 2014 2. SEC Identification Number: A-1997-18963 3. BIR Tax Identification No. 005-011-651-000 4. Exact name of issuer as specified in its charter: ASIA UNITED BANK CORPORATION 5. Province, country or other jurisdiction of incorporation: Pasig City, Philippines 6. Industry Classification Code: (SEC Use Only) 7. Address of principal office/ Postal Code: Joy-Nostalg Center No. 17 ADB

Avenue, Ortigas Center, Pasig City 1600

8. Issuer's telephone number, including area code: (632) 631-3333 / (632) 638-6888 9. Former name or former address,

if changed since last report: Not Applicable 10. Securities registered pursuant to Sections 8 &12 of the SRC or Sections 4 and 8 of the RSA: Title of Each Class Common Stock Number of Shares of Shares Outstanding 323,540,360 11. Are any or all of these securities listed on a Stock Exchange?

Yes [ X ] No [ ] Not Applicable [ ] If yes, please state the name of such stock exchange and the classes of securities listed therein: Philippine Stock Exchange / Common Stock

3

12. Check whether the issuer:

(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve(12) months (or for such shorter period that the registrant was required to file such reports);

Yes [ X ] No [ ] Not Applicable [ ]

(b) has been subject to such filing requirements for the past ninety (90) days.

Yes [ X ] No [ ] Not Applicable [ ]

4

SEC 17-Q TABLE OF CONTENTS

Part I - Financial Information .............................................................................................. 6

Item 1. Financial Statements .......................................................................................... 6 Consolidated Statements of Condition ......................................................................... 6 Consolidated Statements of Income ............................................................................ 8 Consolidated Statements of Comprehensive Income ................................................ 10 Consolidated Statements of Changes In Equity ......................................................... 11 Consolidated Statements of Cash Flows ................................................................... 12

Notes To Interim Consolidated Financial Statements ................................................ 14 A. General Information ........................................................................................... 14 B. Summary Of Significant Accounting Policies ..................................................... 14 C. Significant Accounting Judgments And Estimates ............................................. 22 D. Fair Value Measurement ................................................................................... 27 E. Operating Segments ......................................................................................... 29 F. Equity ................................................................................................................ 32 G. Commitments And Contingent Liabilities ........................................................... 33 H. Earnings Per Share ........................................................................................... 33 I. Material Contingencies ....................................................................................... 34 J. Related Party Transactions ................................................................................ 34

Item 2. Management‟s Discussion and Analysis of Financial Condition and Results of Operations .................................................................................................................... 35

A. Financial Condition and Results of Operations ...................................................... 35 Analysis of Changes in Financial Condition as of September 30, 2014 (Unaudited) vs. December 31, 2013 (Audited) ......................................................................... 35

Analysis of Changes in Financial Condition as of September 30, 2014 (Unaudited) vs. September 30, 2013 (Unaudited) .................................................................... 36

Analysis of Results of Operations for the Nine-Month Period Ended September 30, 2014 (Unaudited) vs. September 30, 2013 (Unaudited)........................................ 37

Analysis of Results of Operations for the Quarter Ended September 30, 2014 (Unaudited) vs. September 30, 2013 (Unaudited) – Exhibit B............................... 39

B. Key Performance Indicators ................................................................................. 40

C. Key Variables And Other Qualitative And Quantitative Factors ............................. 40 i. Liquidity ............................................................................................................. 40 ii. Events That Will Trigger Direct or Contingent Financial Obligation .................... 40 iii. Material Off-Balance Sheet Transactions, Arrangements and Obligations ......... 40 iv. Material Commitment for Capital Expenditures ................................................. 41 v. Significant Elements of Income or Loss ............................................................. 41 vi. Causes for Any Material Changes from Period to Period of Financial Statements ............................................................................................ 41

vii.Material Commitments for Capital Expenditures ................................................ 41 viii.Known Trends, Events or Uncertainties or Seasonal Aspects .......................... 41 ix. Changes in Accounting Policies and Disclosures .............................................. 41

5

Part II-Other Information .................................................................................................. 42

Item 1. Branches, ATM‟s, and Headcount .................................................................... 42 Item 2. Financial Highlights and Indicators .................................................................... 43 Item 3. Aging of Loans and Other Receivables (In Thousand Pesos) ........................... 44 Item 4. Use of IPO Proceeds ........................................................................................ 44 Item 5. Board Resolutions............................................................................................. 44

Index To Exhibits ............................................................................................................. 46

6

PART I - FINANCIAL INFORMATION Item 1. Financial Statements The following interim consolidated financial statements of Asia United Bank Corporation and Subsidiaries (the Group) have been prepared in accordance with Philippine Accounting Standards (PAS) 34, Interim Financial Reporting: Statements of condition as at September 30, 2014 (Unaudited), December 31, 2013 (Audited),

and September 30, 2013 (Unaudited); Statements of income for the nine-month period ended September 30, 2014 and September

30, 2013 (Unaudited) and the quarter ended September 30, 2014 and September 30, 2013 (Unaudited);

Statements of comprehensive income for the nine-month period ended September 30, 2014 and September 30, 2013 (Unaudited);

Statements of changes in equity for the nine-month period ended September 30, 2014 and September 30, 2013; and:

Statements of cash flows for the nine-month period ended September 30, 2014 and September 30, 2013.

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (1 of 2)

September 30, 2014

(Unaudited)

December 31, 2013

(Audited)

September 30, 2013

(Unaudited) ASSETS Cash and Other Cash Items (Note 17) 2,347,063,633 2,240,332,304 1,624,522,421

Due from Bangko Sentral ng Pilipinas (Note 17) 15,917,813,996 18,800,513,129 13,819,809,310

Due from Other Banks 2,242,013,042 1,223,631,617 1,386,166,872 Interbank Loans Receivable and Securities Purchased Under Resale Agreements (Note 7)

116,377,286 74,570,015 6,489,332

Financial Assets at Fair Value Through Profit or Loss (Note 8) 2,475,824,216 3,910,064,368 6,330,247,561

Available-for-Sale Investments (Note 8) 23,196,693,878 24,327,231,846 25,582,368,759

Held To Maturity Securities 1,618,703,001 - - Loans and Receivables (Notes 9 and 29) 65,099,394,773 47,689,832,850 42,807,334,118

Investments in Subsidiaries - - - Property and Equipment (Note 11) 2,173,100,944 1,593,002,963 1,371,040,392

Investment Properties (Note 12) 889,321,415 1,136,020,399 1,418,652,532 Deferred Tax Assets (Note 27) 210,609,497 251,850,213 629,356,651 Goodwill (Note 13) 1,883,533,972 1,883,533,972 1,551,841,727 Intangible Assets (Note 14) 1,494,237,650 1,523,233,936 1,516,711,656 Other Assets (Note 15) 736,776,302 392,115,841 210,008,644

TOTAL ASSETS 120,401,463,605 105,045,933,453 98,254,549,975

7

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (2 of 2)

September 30, 2014

(Unaudited)

December 31, 2013

(Audited)

September 30, 2013

(Unaudited) LIABILITIES AND EQUITY Liabilities Deposit Liabilities (Notes 17 and 29) Demand 33,563,409,790 27,212,210,662 24,020,508,400 Savings 41,517,731,327 36,362,993,059 36,177,074,012 Time 11,555,692,952 9,459,072,778 9,020,404,941 Long Term Negotiable Certificates of Deposits 900,000,000 900,000,000 -

87,536,834,069 73,934,276,498 69,217,987,353 Bills Payable (Note 18) 8,502,213,956 8,903,964,245 5,310,885,616 Manager‟s Checks 234,294,077 541,148,291 304,660,468 Income Tax Payable 65,539,262 2,903,796 9,190,779 Accrued Taxes, Interest and Other Expenses (Note 19) 478,636,749 407,654,301 354,170,757

Derivative Liabilities (Note 8) 609,760,984 597,230,825 80,114,448

Deferred Tax Liabilities(Note 27) 5,370,008 5,370,008 -

Other Liabilities (Note 20) 2,710,829,439 2,601,174,117 4,963,877,170 Total Liabilities 100,143,478,545 86,993,722,082 80,240,886,591

Equity Equity Attributable to Equity Holders of the Parent Company

Capital stock (Note 22) 3,235,403,600 3,235,403,600 3,235,403,600 Additional paid-in capital (Note 22 ) 6,622,818,961 6,622,818,961 6,622,818,961

Surplus reserves (Note 28) 47,701,065 47,701,066 96,393,331 Surplus (Note 28) 11,530,321,340 9,942,099,808 9,417,442,351 Net unrealized gain (loss) on available-for-sale investments (Note 8)

(1,300,793,937) (1,887,546,297) (1,450,854,811)

Cumulative translation adjustment (8,749,639) (29,649,927) (29,685,529)

20,126,701,390 17,930,827,211 17,891,517,903 Non-controlling Interest 131,283,670 121,384,160 122,145,481 Total Equity 20,257,985,060 18,052,211,371 18,013,663,384

TOTAL LIABILITIES AND EQUITY 120,401,463,605 105,045,933,453 98,254,549,975

See accompanying Notes to Interim Consolidated Financial Statements.

8

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (1 of 2)

Nine-Month Period Ended Quarter Ended

September 30, 2014

(Unaudited)

September 30, 2013

(Unaudited)

September 30, 2014

(Unaudited)

September 30, 2013

(Unaudited)

INTEREST INCOME

Loans and receivables (Notes 9 and 29) 2,355,906,505 1,645,429,374 888,057,489 554,062,369

Trading and investment securities (Note 8) 1,242,854,629 884,646,383 412,918,303 393,453,592

Interbank loans receivable and securities purchased under resale agreements (Note 7)

16,025,950 41,323,067 11,467,400 8,888,771

Deposit with banks and others 71,437,610 50,661,824 18,532,087 28,752,058

3,686,224,693 2,622,060,648 1,330,975,278 985,156,790

INTEREST EXPENSE

Deposit liabilities (Notes 17 and 29) 653,523,612 530,336,690 227,333,317 180,998,020

Bills payable and other borrowings (Note 18) 60,231,200 70,337,885 24,018,156 21,709,311

713,754,813 600,674,575 251,351,474 202,707,331

NET INTEREST INCOME 2,972,469,881 2,021,386,073 1,079,623,805 782,449,459

Trading and securities gain - net (Note 8) 230,856,896 594,375,940 126,964,246 (5,769,631)

Service charges, fees and commissions (Note 25) 598,930,688 400,391,778 190,161,192 167,531,591

Foreign exchange gain (loss) - net 44,891,072 (97,452,855) (28,990,814) (49,537,718)

Trust income (Note 28) 25,665,558 28,747,060 9,555,086 10,107,440

Miscellaneous (Notes 12, 23, and 36) 672,429,977 76,753,088 481,057,618 18,563,021

OTHER OPERATING INCOME 1,572,774,191 1,002,815,011 778,747,328 140,894,703

TOTAL OPERATING INCOME 4,545,244,071 3,024,201,084 1,858,371,132 923,344,162

9

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (2 of 2)

Nine-Month Period Quarter Ended

September 30, 2014

(Unaudited)

September 30, 2013

(Unaudited)

September 30, 2014

(Unaudited)

September 30, 2013

(Unaudited) Compensation and fringe benefits (Notes 24 and 29)

826,915,875 597,836,035 289,420,901 183,669,331

Provision for credit and impairment losses (Note 16)

265,949,931 168,963,910 164,136,998 107,772,981

Depreciation and amortization (Notes 11 and 12)

362,001,041 208,896,307 136,400,181 75,651,895

Taxes and licenses 228,412,218 182,439,752 82,208,839 56,152,039

Rent (Note 23) 181,195,609 127,216,828 66,129,190 45,762,948

Insurance 148,808,284 100,996,004 51,270,119 40,078,616

Security, messengerial and janitorial 82,769,432 77,643,180 28,181,183 25,802,840

Freight expenses 111,597,725 82,385,658 42,280,885 33,787,752

Transportation and travel 85,016,560 64,447,658 30,428,064 22,134,579

Power, light and water 44,431,765 36,484,020 15,462,111 13,216,413

Postage, telephone, cables and telegrams 43,217,906 34,117,555 15,266,210 12,220,690

Management and other professional fees 27,963,495 32,886,561 7,597,042 8,558,347

Repairs and maintenance 30,994,836 27,469,799 10,312,826 8,927,751

Amortization of intangibles (Note 14) 14,916,275 10,173,114 4,998,657 3,706,859

Miscellaneous (Note 26) 251,014,234 198,841,403 111,506,057 76,510,287

TOTAL OPERATING EXPENSES 2,705,205,184 1,950,797,784 1,055,599,261 713,953,328

INCOME BEFORE INCOME TAX 1,840,038,888 1,073,403,300 802,771,872 209,390,834

PROVISION FOR (BENEFIT FROM) INCOME TAX (Note 27)

241,917,846 86,763,784 84,196,552 39,831,937

NET INCOME 1,598,121,042 986,639,516 718,575,320 169,558,897

Basic and Diluted Earnings Per Share attributable to Equity Holders of the Parent Company

6.55 4.59

See accompanying Notes to Interim Consolidated Financial Statements.

10

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Nine-Month Period Ended in '000s September 30, 2014 September 30, 2013 NET INCOME 1,598,121 986,640 OTHER COMPREHENSIVE INCOME Changes in net unrealized gain (loss) on available-for-sale investments (Note 7) 586,752 (1,984,556) Cumulative translation adjustments 20,900 36,398 607,653 (1,948,159) TOTAL COMPREHENSIVE INCOME 2,205,774 (961,519) Attributable to: Equity holders of the Parent Company 2,195,874 (978,051) Minority interest 9,900 16,532 2,205,774 (961,519) See accompanying Notes to Interim Consolidated Financial Statements.

11

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Capital Stock

Additional Paid in Capital

Surplus Reserve

Surplus Cumulative Translation Adjustment

Net Unrealized Gain (Loss) on Available

for Sale Investments

Total Non-Controlling

Interest

Total Equity

Balance at December 31, 2013 (audited, as previously reported) P 3,235,404 P 6,622,819 P 47,701 P 9,942,100 P (29,650) P (1,887,546) P 17,930,828 P 121,384 P 18,052,212

Issuance of Common Stock - - - -

Net income for the period 1,588,222 1,588,222 1,588,222

Total comprehensive income (loss) for the period - 20,900 586,752 607,653 9,900 617,552

Transfer from surplus to surplus reserves - - - -

Adjustment on Retirement Liabilities (adoption of new Accounting Standard) - - -

Recognition of Non-Controlling Interest on Subsidiary - - -

Balance at September 30, 2014 P 3,235,404 P 6,622,819 P 47,701 P 11,530,321 P (8,750) P (1,300,794) P 20,126,702 P 131,284 P 20,257,985

Balance at December 31, 2012 (audited, as previously reported) P 2,400,000 P 95,894 P 8,566,083 P (66,083) P 533,701 P 11,529,595 P 165,974 P 11,695,568

Impact of adoption of new accounting standard (Note 2) (118,248) (118,248) (118,248)

Balance as of Dec.31, 2012 (as restated) 2,400,000 - 95,894 8,447,835 (66,083) 533,701 11,411,347 165,974 11,577,320

Issuance of Common Stock 835,404 6,622,819 7,458,223 7,458,223

Total comprehensive income (loss) for the year 970,107 36,398 (1,984,556) (978,052) 16,532 (961,520)

Adjustment on Retirement Liabilities (adoption of new Accounting Standard) 500 (500) - -

Recognition of Non-Controlling Interest on Subsidiary - (60,360) (60,360)

Balance at September 30, 2013 P 3,235,404 P 6,622,819 P 96,393 P 9,417,442 P (29,686) P (1,450,855) P 17,891,518 P 122,145 P 18,013,663

12

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (1 of 2)

Nine-Month Period Ended

September 30, 2014

(Unaudited)

September 30, 2013

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax 1,840,039 1,073,403 Adjustments for: Depreciation and Amortization 362,001 208,896 Impairment Losses 265,950 168,964

Change in Operating Assets and Liabilities Decrease (Increase) in Financial Assets at FVPL 1,434,240 (4,888,272) Decrease (Increase) in Loans and Receivable (17,710,550) (8,908,179) Decrease (Increase) in Other Assets (274,423) (694,501) Increase (Decrease) in Deposit Liabilities 13,602,558 21,903,136 Increase (Decrease) in Accrued expenses and other liabilities (51,051) 2,249,419

Cash Generated from (used in) Operations (531,236) 11,112,866 Cash Paid for Income Taxes (241,918) (265,372) Net Cash from (Used In) Operating Activities (773,154) 10,847,494

CASH FLOWS FROM INVESTING ACTIVITIES Sale/Maturities / (Acquisition) of Available for Sale (AFS) Securities 1,717,290 (16,792,117) Sale/Maturities / (Acquisition) of Held to Maturity Securities (HTM) (1,618,703) - Proceeds from sale (Acquisition) of investment properties 257,396 282,055 Sale / (Acquisition) of Bank Premises, FFE (917,758) (619,967)

Net Cash from (Used In) Investing Activities (561,775) (17,130,029)

CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (payment) of Bills Payable (401,750) 2,836,540 Issuance of Common Stock - 7,458,222 Net Cash from (Used In) Financing Activities (401,750) 10,294,762 EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT 20,900 31,478

13

ASIA UNITED BANK CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (2 of 2)

Nine-Month Period Ended

September 30, 2014

(Unaudited)

September 30, 2013

(Unaudited) NET INCREASE IN CASH AND CASH EQUIVALENTS (1,715,779) 4,043,705 Cash beginning of the period Cash and Other Cash Items 2,240,332 1,729,912 Due from BSP 18,800,513 9,493,667 Due from Banks 1,223,632 1,558,088 Interbank Loans & SPURA 74,570 6,695 22,339,047 12,788,362 Cash at the end of the period Cash and Other Cash Items 2,347,064 1,624,522 Due from BSP 15,917,814 13,819,809 Due from Banks 2,242,013 1,386,167 Interbank Loans & SPURA 116,377 6,489 20,623,268 16,836,988 See accompanying Notes to Interim Consolidated Financial Statements.

14

ASIA UNITED BANK CORPORATION AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS A. General Information

Asia United Bank Corporation (the Parent Company) was granted authority as a commercial bank under the Monetary Board (MB) Resolution No. 119 dated September 3, 1997 and commenced operations on October 31, 1997. The Parent Company is a domestic corporation registered with Securities and Exchange Commission (SEC) on October 3, 1997. The Parent Company provides commercial banking services such as deposit products, loan and trade finance, domestic and foreign fund transfers, treasury, foreign exchange and trust services. In addition, the Parent Company is licensed to enter into regular financial derivatives as a means of reducing and managing the Parent Company‟s and its customer‟s foreign exchange exposure. The Parent Company‟s principal place of business is located at Joy-Nostalg Center, 17 ADB Avenue, Ortigas Center, Pasig City. The Parent Company operates through its 196 and 163 domestic branches as of September 30, 2014 and December 31, 2013, respectively. On February 28, 2013, the Monetary Board approved the Parent Company‟s application for a universal banking license, which authorizes the Parent Company, in addition to its general powers as a commercial bank, to exercise the following: (i) the power of an investment house, including securities underwriting and trading, loan syndication, financial advisory, private placement of debt and equity securities, project finance and direct equity investment; and (ii) the power to invest in allied and non-allied enterprises, subject to regulatory caps on the amount of investment relative to Bank‟s capital and ownership percentage. The Bank‟s unissued common shares were initially offered to the public and were listed at the main board of the Philippine Stock Exchange (PSE) last May 17, 2013.

B. Summary Of Significant Accounting Policies

Basis of Preparation

The accompanying interim consolidated financial statements include the financial statements of the Parent Company and its subsidiaries (collectively referred to as “the Group”) as at September 30, 2014 and December 31, 2013 and for the nine-month period ended September 30, 2014 and September 30, 2013 have been prepared in accordance with Philippine Accounting Standards (PAS) 34, Interim Financial Reporting. Accordingly, the interim consolidated financial statements of the Group do not include all of the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group‟s annual consolidated financial statements as of December 31, 2013. The accompanying interim consolidated financial statements of the Group have been prepared on a historical cost basis, except for financial assets at fair value through profit or loss (FVPL), available-for- sale (AFS) investments and derivative financial instruments that are measured at fair value. The interim financial statements are presented in Philippine peso.

The accompanying financial statements of the Parent Company reflect the accounts maintained in the Regular Banking Unit (RBU) and FCDU. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The books of accounts of the RBU are maintained in Philippine peso, the RBU‟s functional currency, while those of the FCDU are maintained in United States dollars (USD), the FCDU‟s functional currency. For financial reporting purposes, FCDU accounts and foreign currency-denominated accounts in the RBU are translated into their

15

equivalents in Philippine peso in accordance with the policy on the Foreign Currency Translation. The financial statements individually prepared for these units are combined after eliminating inter-unit accounts. The functional currency of the subsidiaries is the Philippine peso. All values are rounded to the nearest peso except when otherwise indicated.

Statement of Compliance The financial statements of the Group have been prepared in compliance with PFRS.

Basis of Consolidation The Group‟s consolidated financial statements include the financial statements of the Parent Company and the following subsidiaries:

Subsidiary Principal Activities Country of Incorporation

Effective Percentage of

Ownership Cavite United Rural Bank (CURB) Rural banking Philippines 100%

Rural Bank of Angeles (RBA) Rural banking - do - 96.05% Asia United Leasing and Finance Corporation (AULFC) and subsidiary

Leasing and financing business - do - 39.00%

Asia United Forex Corporation (AUFC)*

Foreign exchange services - do – 31.85%

*As of September 30, 2013, AUFC has been dissolved.

The financial policies and operations of AULFC and AUFC are controlled by the Parent Company by virtue of the irrevocable voting trust agreement that has the effect of transferring the voting rights of the individual shareholders of the subsidiaries to the Parent Company. The Group reassess whether or not it has control over an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when then Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of condition and statement of income from the date the Group gains control until the date the Group ceases to control the subsidiary. The financial statements of the subsidiaries are prepared on the same reporting period as the Parent Company using consistent accounting policies. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Parent Company and to the non-controlling interests, even if this results in the non-controlling interest having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to being their accounting policies in line with the Group‟s accounting policies. All significant intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full in the consolidation.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of income from the date of acquisition up to the date of disposal, as appropriate. A change in the ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, the Parent Company: derecognizes the assets (including goodwill) and liabilities of the subsidiary derecognizes the carrying amount of any non-controlling interest derecognizes the cumulative translation differences recorded in equity

16

recognizes the fair value of the consideration received recognizes the fair value of any investment retained recognizes any surplus or deficit in profit or loss reclassifies the parent‟s share of components previously recognized in OCI to profit or loss

or surplus, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

Non-controlling Interests Non-controlling interest represents the portion of profit or loss and net assets not owned, directly or indirectly, by the Parent Company. Non-controlling interests are presented separately in the consolidated statement of income, consolidated statement of comprehensive income, and within equity in the consolidated statement of condition, separately from Parent Company‟s shareholders' equity. Any losses applicable to the non -controlling interests are allocated against the interests of the non-controlling interest even if this results in the non-controlling interest having a deficit balance. Acquisitions of non-controlling interests that do not result in a loss of control are accounted for as equity transactions, whereby the difference between the amounts by which the non-controlling interests are adjusted and the fair value of the consideration paid or received shall be recognized directly in equity and attributed to the owners of the Parent Company. Changes in Accounting Policies The accounting policies adopted in the preparation of the accompanying interim financial statements are consistent with those of the previous financial year, except for the adoption of the following new and amended standards and interpretations which became effective as of January 1, 2013. Except as otherwise indicated, these changes in the accounting policies did not have any significant impact on the financial position or performance of the Group: Improvements to PFRSs (2009-2011 cycle) PFRS 1, First-time Adoption of PFRS - Borrowing Costs PAS 1, Presentation of Financial Statements - Clarification of the requirements for

comparative information PAS 16, Property, Plant and Equipment - Classification of servicing equipment PAS 32, Financial Instruments: Presentation - Tax effect of distribution to holders of equity

instruments PAS 34, Interim Financial Reporting - Interim financial reporting and segment information

for total assets and liabilities PFRS 1, Government Loans - Amendments to PFRS 1 These amendments required first-time adopters to apply the requirements of PAS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to PFRS. Entities may choose to apply the requirements of PFRS 9 (or PAS 39, as applicable) and PAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. The exception would give first-time adopters relief from retrospective measurement of government loans with a below-market rate of interest. The amendment is effective for annual periods on or after January 1, 2013.

17

PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments) These amendments require an entity to disclose information about rights of set-off and related arrangements (such as collateral agreements). The new disclosures are required for all recognized financial instruments that are set-off in accordance with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement‟, irrespective of whether they are set-off in accordance with PAS 32. Refer to Note 33 for the details and the tabular format of the required offsetting disclosures which the Group retrospectively applied. PFRS 10, Consolidated Financial Statements PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC 12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27. PFRS 11, Joint Arrangements PFRS 11 replaces PAS 31, Interests in Joint Ventures, and SIC 13, Jointly Controlled Entities - Non-Monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. Instead, jointly controlled entities that meet the definition of a joint venture must be accounted for using the equity method. PFRS 12, Disclosure of Interests in Other Entities PFRS 12 includes all of the disclosures that were previously in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an entity‟s interests in subsidiaries, joint arrangements, associates and structured entities. The Group has no significant interests in joint arrangements, associates and structured entities that require disclosures. Non-controlling interests held in AULFC and AUFC are considered not material to the Group. PFRS 13, Fair Value Measurement PFRS 13 establishes a single source of guidance under PFRSs for all fair value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under PFRS when fair value is required or permitted. This standard should be applied prospectively as of the beginning of the annual period in which it is initially applied. Its disclosure requirements need not be applied in comparative information provided for periods before initial application of PFRS 13. Refer to Note 5 for the disclosures required by the standard. The new standard has not materially impacted the fair value measurement of the Group. PAS 1, Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income or OCI (Amendments) The amendments to PAS 1 introduced a grouping of items presented in OCI. Items that will be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) will be presented separately from items that will never be recycled. The amendments affect presentation only and have no impact on the Group‟s financial position or performance. PAS 19, Employee Benefits (Revised) PAS 19, (Revised) has been applied retrospectively from January 1, 2011. PAS 19 (Revised) includes a number of amendments to the accounting for defined benefit plan, including actuarial gains and losses that are now recognized in other comprehensive income and excluded permanently from the profit or loss; expected returns on plan assets of defined benefit plans that are not recognized in profit or loss, instead, there is a requirement to recognize interest on

18

net defined retirement obligation (asset) in the profit or loss, calculated using the discount rate used to measure the net defined retirement obligation.

Also, unvested past service costs can no longer be deferred and recognized over the future vesting period. Instead, all past service costs are recognized at the earlier of when the amendment occurs and when the Parent Company recognizes related restructuring or termination costs. Prior to the adoption of PAS 19 (Revised), the Parent Company‟s unvested past service costs were recognized as an expense on a straight-line basis over the average period until the benefits become vested. Other amendment includes new disclosures, such as quantitative sensitivity disclosures. The Parent Company reviewed its existing employee benefits and determined that the amended standard has a significant impact on its accounting for retirement benefits. The adoption of PAS 19 (Revised), which requires retrospective application, resulted in the restatement of the previously reported financial statements. The Parent Company had chosen to close to “Surplus” the net effect of all transition adjustments amounting to P=10.59 million as at January 1, 2011 (the transition date) upon retrospective application of PAS 19 (Revised). At every reporting period, the Parent Company will transfer to “Surplus” the remeasurements recognized in other comprehensive income. The Parent Company reviewed its existing employee benefits and determined that the amended standard has a significant impact on its accounting for retirement benefits. The effects are detailed below:

As of December 31, 2013

As Restated As Previously Reported

Increase (Decrease)

Consolidated statement of condition Net defined benefit liability (205,481) (198,903) 6,579 Deferred tax asset 61,644 59,671 1,974 Retained earnings 365,913 313,515 52,398

The adoption did not have an impact on the statements of cash flows. The effects of the amendments to PAS 19 are similar for both the consolidated and Parent Company‟s financial statements. PAS 27, Separate Financial Statements (as revised in 2011) As a consequence of the issuance of the new PFRS 10, Consolidated Financial Statements, and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries and jointly controlled entities in the separate financial statements. The adoption of the amended PAS 27 will not have a significant impact on the separate financial statements of the entities in the Group. The amendment becomes effective for annual periods beginning on or after January 1, 2013. PAS 28, Investments in Associates and Joint Ventures (as revised in 2011) As a consequence of the issuance of the new PFRS 11, Joint Arrangements, and PFRS 12, Disclosure of Interests in Other Entities, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The amendment becomes effective for annual periods beginning on or after January 1, 2013. Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine This interpretation applies to waste removal costs (“stripping costs”) that are incurred in surface mining activity during the production phase of the mine (“production stripping costs”). If the benefit from the stripping activity will be realized in the current period, an entity is required to

19

account for the stripping activity costs as part of the cost of inventory. When the benefit is the improved access to ore, the entity should recognize these costs as a non-current asset, only if certain criteria are met (“stripping activity asset”). The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset. After initial recognition, the stripping activity asset is carried at its cost or revalued amount less depreciation or amortization and less impairment losses, in the same way as the existing asset of which it is a part. This new interpretation is not relevant to the Group. Future Changes in Accounting Policies Standards issued but not yet effective up to the date of issuance of the Group‟s financial statements are listed below. This is a listing of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. Except as otherwise indicated, the Group does not expect the adoption of these new and amended standards to have a significant impact on the financial statements. PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets (Amendments) These amendments remove the unintended consequences of PFRS 13 on the disclosures required under PAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed during the period. These amendments are effective retrospectively for annual periods beginning on or after January 1, 2014 with earlier application permitted, provided PFRS 13 is also applied. Investment Entities (Amendments to PFRS 10, PFRS 12 and PAS 27) These amendments are effective for annual periods beginning on or after January 1, 2014. They provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under PFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. Philippine Interpretation IFRIC 21, Levies (IFRIC 21) IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21 is effective for annual periods beginning on or after January 1, 2014. PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting (Amendments) These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after January 1, 2014. PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amendments) The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments to PAS 32 are to be retrospectively applied for annual periods beginning on or after January 1, 2014. PAS 19, Employee Benefits -Defined Benefit Plans: Employee Contributions (Amendments) The amendments apply to contributions from employees or third parties to defined benefit plans. Contributions that are set out in the formal terms of the plan shall be accounted for as reductions to current service costs if they are linked to service or as part of the remeasurements of the net defined benefit asset or liability if they are not linked to service. Contributions that are discretionary shall be accounted for as reductions of current service cost upon payment of these contributions to the plans. The amendments to PAS 19 are to be retrospectively applied for annual periods beginning on or after July 1, 2014.

20

PFRS 9, Financial Instruments PFRS 9, as issued, reflects the first and third phases of the project to replace PAS 39 and applies to the classification and measurement of financial assets and liabilities and hedge accounting, respectively. Work on the second phase, which relate to impairment of financial instruments, and the limited amendments to the classification and measurement model is still ongoing, with a view to replace PAS 39 in its entirety. PFRS 9 requires all financial assets to be measured at fair value at initial recognition. A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a business model that has the objective to hold the assets to collect the contractual cash flows and its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments are subsequently measured at fair value through profit or loss. All equity financial assets are measured at fair value either through other comprehensive income (OCI) or profit or loss. Equity financial assets held for trading must be measured at fair value through profit or loss. For liabilities designated as at FVPL using the fair value option, the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change relating to the entity‟s own credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and measurement requirements for financial liabilities have been carried forward to PFRS 9, including the embedded derivative bifurcation rules and the criteria for using the FVO. The adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the Group‟s financial assets, but will potentially have no impact on the classification and measurement of financial liabilities. On hedge accounting, PFRS 9 replaces the rules-based hedge accounting model of PAS 39 with a more principles-based approach. Changes include replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on the economic relationship between the hedged item and the hedging instrument, and the effect of credit risk on that economic relationship; allowing risk components to be designated as the hedged item, not only for financial items, but also for non-financial items, provided that the risk component is separately identifiable and reliably measurable; and allowing the time value of an option, the forward element of a forward contract and any foreign currency basis spread to be excluded from the designation of a financial instrument as the hedging instrument and accounted for as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge accounting. PFRS 9 currently has no mandatory effective date. PFRS 9 may be applied before the completion of the limited amendments to the classification and measurement model and impairment methodology. The Group will not adopt the standard before the completion of the limited amendments and the second phase of the project. Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The SEC and the Financial Reporting Standards Council (FRSC) have deferred the effectivity of this interpretation until the final Revenue standard is issued by the International Accounting Standards Board (IASB) and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed. Annual Improvements to PFRSs (2010-2012 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) contain non-urgent but necessary amendments to PFRSs. Except otherwise indicated, the adoption of these improvements will not have an impact on the Group‟s financial statements. PFRS 2, Share-based Payment - Definition of Vesting Condition The amendment revised the definitions of vesting condition and market condition and added the definitions of performance condition and service condition to clarify various issues. This amendment shall be prospectively applied to share-based payment transactions for which the grant date is on or after July 1, 2014.

21

PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business Combination The amendment clarifies that a contingent consideration that meets the definition of a financial instrument should be classified as a financial liability or as equity in accordance with PAS 32. Contingent consideration that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of PFRS 9 (or PAS 39, if PFRS 9 is not yet adopted). The amendment shall be prospectively applied to business combinations for which the acquisition date is on or after July 1, 2014. PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets The amendments require entities to disclose the judgment made by management in aggregating two or more operating segments. This disclosure should include a brief description of the operating segments that have been aggregated in this way and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics. The amendments also clarify that an entity shall provide reconciliations of the total of the reportable segments‟ assets to the entity‟s assets if such amounts are regularly provided to the chief operating decision maker. These amendments are effective for annual periods beginning on or after July 1, 2014 and are applied retrospectively. The amendments affect disclosures only and have no impact on the Group‟s financial position or performance. PFRS 13, Fair Value Measurement - Short-term Receivables and Payables The amendment clarifies that short-term receivables and payables with no stated interest rates can be held at invoice amounts when the effect of discounting is immaterial. PAS 16, Property, Plant and Equipment - Revaluation Method - Proportionate Restatement of Accumulated Depreciation The amendment clarifies that, upon revaluation of an item of property, plant and equipment, the carrying amount of the asset shall be adjusted to the revalued amount, and the asset shall be treated in one of the following ways: a. The gross carrying amount is adjusted in a manner that is consistent with the revaluation of

the carrying amount of the asset. The accumulated depreciation at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after taking into account any accumulated impairment losses.

b. The accumulated depreciation is eliminated against the gross carrying amount of the asset. The amendment is effective for annual periods beginning on or after July 1, 2014. The amendment shall apply to all revaluations recognized in annual periods beginning on or after the date of initial application of this amendment and in the immediately preceding annual period.

PAS 24, Related Party Disclosures - Key Management Personnel The amendments clarify that an entity is a related party of the reporting entity if the said entity, or any member of a group for which it is a part of, provides key management personnel services to the reporting entity or to the parent company of the reporting entity. The amendments also clarify that a reporting entity that obtains management personnel services from another entity (also referred to as management entity) is not required to disclose the compensation paid or payable by the management entity to its employees or directors. The reporting entity is required to disclose the amounts incurred for the key management personnel services provided by a separate management entity. The amendments are effective for annual periods beginning on or after July 1, 2014 and are applied retrospectively. PAS 38, Intangible Assets - Revaluation Method - Proportionate Restatement of Accumulated Amortization The amendments clarify that, upon revaluation of an intangible asset, the carrying amount of the asset shall be adjusted to the revalued amount, and the asset shall be treated in one of the following ways

22

a. The gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset. The accumulated amortization at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after taking into account any accumulated impairment losses.

b. The accumulated amortization is eliminated against the gross carrying amount of the asset. The amendments also clarify that the amount of the adjustment of the accumulated amortization should form part of the increase or decrease in the carrying amount accounted for in accordance with the standard. The amendments are effective for annual periods beginning on or after July 1, 2014. The amendments shall apply to all revaluations recognized in annual periods beginning on or after the date of initial application of this amendment and in the immediately preceding annual period. Annual Improvements to PFRSs (2011-2013 cycle) The Annual Improvements to PFRSs (2011-2013 cycle) contain non-urgent but necessary amendments to PFRSs. Except otherwise indicated, the adoption of these improvements will not have an impact on the Group‟s financial statements. PFRS 1, First-time Adoption of Philippine Financial Reporting Standards - Meaning of ‘Effective PFRSs’ The amendment clarifies that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but that permits early application, provided either standard is applied consistently throughout the periods presented in the entity‟s first PFRS financial statements. PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements The amendment clarifies that PFRS 3 does not apply to the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself. The amendment is effective for annual periods beginning on or after July 1, 2014 and is applied prospectively. PFRS 13, Fair Value Measurement - Portfolio Exception The amendment clarifies that the portfolio exception in PFRS 13 can be applied to financial assets, financial liabilities and other contracts. The amendment is effective for annual periods beginning on or after July 1, 2014 and is applied prospectively. PAS 40, Investment Property The amendment clarifies the interrelationship between PFRS 3 and PAS 40 when classifying property as investment property or owner-occupied property. The amendment stated that judgment is needed when determining whether the acquisition of investment property is the acquisition of an asset or a group of assets or a business combination within the scope of PFRS 3. This judgment is based on the guidance of PFRS 3. This amendment is effective for annual periods beginning on or after July 1, 2014 and is applied prospectively.

C. Significant Accounting Judgments and Estimates The preparation of the financial statements in accordance with PFRS requires the Group to make judgments and estimates that affect the reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets and contingent liabilities, if any. Future events may occur which will cause the judgments and assumptions used in arriving at the estimates to change. The effects of any change in judgments and estimates are reflected in the financial statements as they become reasonably determinable. Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

23

Judgments (a) Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded on the statement of condition cannot be derived from active markets, they are determined through internal valuation techniques using generally accepted valuation models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments may include considerations of liquidity, correlation and volatility. Changes in assumptions about these factors could affect reported fair value of financial instruments. Refer to Note 5 for the fair value measurement of financial assets and liabilities.

(b) Financial assets not quoted in an active market The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. In determining if there is an active market, the Group takes into consideration if there is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing into an ongoing basis.

(c) Leases

Operating lease Group as lessor

The Group has entered into commercial property leases on its investment properties and lease of automobiles. The Group has determined that it retains all the significant risks and rewards of ownership of these assets. Accordingly, this is accounted for as operating lease. In determining whether or not there is indication of operating lease treatment, the Group considers retention of ownership title to the leased property, period of lease contract relative to the estimated useful economic life of the leased property and bearer of executory costs, among others.

Group as lessee

The Group has entered into leases on premises it uses for its operations. The Group has determined, based on the evaluation of the lease agreement, that all significant risk and rewards of ownership of the properties it leases are not transferred to the Group. Finance lease The Group has entered into lease arrangements on vehicles. The Group has determined that it transfers all the significant risks and rewards of ownership of these properties and so accounts for these leases as finance lease.

(d) Embedded derivatives Where a hybrid instrument is not classified as financial assets at FVPL, the Group evaluates whether the embedded derivative should be bifurcated and accounted for separately. This includes assessing whether the embedded derivative has a close economic relationship to the host contract.

24

(e) Functional currency PAS 21, The Effects of Changes in Foreign Exchange Rates, requires management to use its judgment to determine the entity‟s functional currency such that it most faithfully represents the economic effects of the underlying transactions, events and conditions that are relevant to the entity. The Parent Company determined that the RBU and FCDU‟s functional currency are Philippine peso and USD, respectively. In addition, the subsidiaries determined that their respective functional currency is in Philippine peso. In making this judgment, the Group considers the following: the currency that mainly influences sales prices for financial instruments and services

(this will often be the currency in which sales prices for its financial instruments and services are denominated and settled);

the currency in which funds from financing activities are generated; and the currency in which receipts from operating activities are usually retained.

(f) Contingencies

The Group is currently involved in various legal proceedings. The estimate of the probable costs for the resolution of these claims has been developed in consultation with outside counsel handling the Group‟s defense in these matters and is based upon an analysis of potential results. The Group currently does not believe that these proceedings will have a material adverse effect on its financial position. It is possible, however, that future results of operations could be materially affected by changes in the estimates or in the effectiveness of the strategies relating to these proceedings.

Estimates (a) Fair value determination of assets acquired and liabilities assumed from business

combination

In June 2012, the Group provisionally determined the fair values of the assets acquired and liabilities assumed from the acquisition of Asiatrust Development Bank and was finalized in June 2013. Likewise, the Group finalized the fair value determination of the net assets acquired from the acquisition of Cooperative Bank of Cavite in September 2013. The Group determines the acquisition-date fair values of identifiable assets acquired and liabilities assumed from the acquiree without quoted market price based on the following: for assets and liabilities that are short term in nature, carrying values approximate fair

values for financial assets and liabilities that are long-term in nature, fair values are estimated

through the discounted cash flow methodology, using the appropriate market rates (e.g., current lending rates)

for nonfinancial assets such as property and equipment and investment properties, fair values are determined based on an appraisal valuation which follows sales comparison approach and depreciated replacement cost approach depending on the highest and best use of the assets.

(b) Credit losses of loans and receivables

The Group reviews its individually significant loans and receivables at each statement of condition date to assess whether impairment loss should be recorded in the statement of income. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of allowance required. Such estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.

In addition to specific allowance against individually significant loans and receivables, the Group also makes a collective impairment allowance against exposures which, although not specifically identified as requiring a specific allowance, have a greater risk of default

25

than when originally granted. This collective allowance is based on any deterioration in the internal rating of the loan or investment since it was granted or acquired.

(c) Fair values of structured debt instruments and free standing embedded derivatives

The fair values of structured debt instruments and free standing embedded derivatives that are not quoted in active markets are determined using valuation techniques. Where valuation techniques are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of the area that created them. All models are reviewed before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices.

To the extent practical, models use only observable data, however areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments.

(d) Impairment of AFS equity instruments

The Group‟s investment in equity securities that do not have quoted market price in an active market and whose fair value cannot be reliably measured are carried at cost less allowance for impairment losses. The Group treats AFS equity instruments as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The determination of what is „significant‟ or „prolonged‟ requires judgment. The Group treats as „significant‟ decline in fair value of 20.00% or more from the original cost of investments and „prolonged‟ as greater than 12 months. In addition, the Group evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and the discount factors for unquoted equities. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows.

(e) Impairment of debt instruments

The Group determines that AFS debt investments are impaired when there is observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of debt investments before the decrease can be identified with an individual debt investment in that portfolio.

(f) Recognition of deferred tax assets

Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

(g) Impairment of nonfinancial assets

Investment in subsidiaries, property and equipment, investment properties and software costs The Group assesses impairment on assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Group considers important which could trigger an impairment review include the following: significant underperformance relative to expected historical or projected future

operating results;

26

significant changes in the manner of use of the acquired assets or the strategy for overall business; and

significant negative industry or economic trends.

The Group recognizes an impairment loss whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is computed using the value-in-use approach. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash generating unit to which the asset belongs.

Goodwill The Group conducts an annual review every December 31 for any impairment in value of goodwill. Goodwill is written down for impairment when the net present value of the forecasted future cash flows from the cash generating unit is insufficient to support its carrying value. The Group estimated the discount rate used for the computation of the net present value using weighted average cost of capital. Future cash flows from the business are estimated based on the theoretical annual income of the cash generating units. Average growth rate was derived from the average increase in annual income during the last 5 years. The recoverable amount of the CGU, representing the Parent Company‟s subsidiary and branch banking unit, has been determined based on a value-in-use calculation using cash flow projections from financial budgets approved by senior management covering a five-year period. Key assumptions in value in use calculation of CGUs are most sensitive to the following assumptions: a.) interest margin; b.) discount rates; and c.) projected growth rates used to extrapolate cash flows beyond the budget period. Interest margin was based on interest rates granted to markets serviced by the subsidiary and the branch banking unit. Projected growth rates reflect the historical long-term growth rates of the Parent Company branches. Branch licenses The Group conducts an annual review for any impairment value of branch licenses. Branch licenses are written down for impairment where the carrying amount of branch licenses exceeds their recoverable value. The Group makes reference to recent purchases of Branch licenses or value in use to establish its recoverable value. (h) Estimated useful lives of property and equipment, investment properties and software costs The Group reviews on an annual basis the estimated useful lives of bank premises, furniture, fixtures and equipment, depreciable investment properties and software costs based on expected asset utilization as anchored on business plans and strategies that also consider expected future technological developments and market behavior. It is possible that future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated useful lives of property and equipment, depreciable investment properties and software costs would decrease their respective balances and increase the recorded depreciation and amortization expense. (i) Present value of retirement obligation The cost of defined benefit obligation and other post employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, and future salary increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

27

The assumed discount rates were determined using the market yields on Philippine government bonds with terms consistent with the expected employee benefit payout as at statement of condition date.

D. Fair Value Measurement

The following table presents a comparison by category and class of the carrying amounts and estimated fair values of the Group‟s financial instruments as at September 30, 2014 and December 31, 2013:

September 30, 2014 (Unaudited) December 31, 2013 (Audited)

Carrying Value Fair Value Carrying Value Fair Value

Financial Assets Loans and receivables Corporate lending 49,393,078 41,016,935 32,138,120 30,926,713

Consumer lending 7,462,328 6,520,818 6,033,314 5,449,283 Finance lease receivables 354,471 351,880 264,919 296,882

Loans and receivables financed 260,628 271,608 279,387 242,080

Customers‟ liabilities under acceptances and letters of credit /trust receipts

3,987,546 3,964,883 4,262,877 4,308,196

Unquoted debt securities 3,641,344 3,330,690 3,440,408 3,234,972

65,099,394 55,456,813 46,419,026 44,458,126

Financial Liabilities Deposit liabilities Time 11,555,693 10,853,852 9,459,073 8,881,560

LTNCD 900,000 471,302 900,000 489,915

12,455,693 11,325,154 10,359,073 9,371,475

The methods and assumptions used by the Group in estimating the fair value of the financial instruments are as follows: Cash and other cash items, due from BSP and other banks, IBLR and SPURA - The carrying amounts approximate fair values considering that these accounts consist mostly of overnight deposits and floating rate placements. Financial assets at FVPL and AFS investments Debt securities - Fair values are generally based on quoted market prices. When the market prices are not readily available, the Group used adjusted quoted market prices of comparable investments or applied discounted cash flow methodologies. The prevailing interest rates used range from 5.88% to 8.13%, and from 0.00% to 5.38% for peso denominated securities in 2013 and 2012, respectively, while the prevailing interest rates used range from 3.75% to 11.50%, and from 5.00% to 11.5% for dollar denominated securities, in 2013 and 2012, respectively. Equity securities - The Group‟s investments in equity securities include quoted and unquoted shares of stocks. Fair values of quoted equity securities are based on quoted market prices. Unquoted equity securities are carried at cost, less any accumulated impairment in value due to

28

the unpredictable nature of future cash flows and the lack of suitable methods of arriving at a reliable fair value. Loans and receivables - Fair values of loans and receivables are estimated using the discounted cash flow methodology, using Philippine risk-free rates. Where the instrument reprices on a quarterly basis or has a relatively short maturity, the carrying amounts approximate fair values. Prevailing rates used range from 0.05% to 4.00% and from 0.17% to 5.70% in 2013 and 2012, respectively. In the case of structured products classified as unquoted debt securities, the Group uses the option pricing model, where inputs used include actual principal write down to date, forward credit default swaps (CDS), volatility of the CDS and the related interest rate, which are all considered as observable inputs for the valuation. Derivative instruments - Fair values are estimated based on accepted market valuation models, quoted market prices or prices provided by independent parties, if available. The most frequently applied valuation techniques include forward pricing and swap model using present value calculations, as well as option models using volatility assumptions. The models incorporate various inputs including the credit quality of counterparties, foreign exchange rates and interest rate curves prevailing at the statement of condition date. Deposit liabilities (demand and savings deposits excluding time deposits and LTNCD) – Carrying amount approximates fair values considering that these are currently due and demandable. Time deposits, LTNCD, and other financial liabilities - Fair values of liabilities are estimated using the discounted cash flow methodology using risk-free rates whose tenors are consistent with those remaining for the liability being valued. For accrued interest and other expenses and other liabilities, carrying amount approximates fair values due to their short term nature. Bills payable - Carrying amounts approximate fair values considering that these are short-term payables. Fair value hierarchy The Group has assets and liabilities that are measured at fair value on a recurring basis in the statement of financial position after initial recognition. Recurring fair value measurements are those that another PFRS requires or permits to be recognized in the statement of financial position at the end of each reporting period. These include financial assets at FVPL and AFS investments. The Group uses a hierarchy for determining and disclosing the fair value of assets and liabilities by valuation technique The Group held the following assets and liabilities measured at recurring and non-recurring fair value measurements, and assets and liabilities for which fair values are disclosed, at their corresponding level in the fair value hierarchy:

September 30, 2014 (Unaudited)

Level 1 Level 2 Total Financial Assets at FVPL

Held-for-trading securities 2,436,295

2,436,295 Derivative assets 39,530 - 39,530 2,475,824 - 2,475,824

AFS Investments Government securities 11,484,683

11,484,683 Private bonds and commercial papers 11,690,216 20,295 11,710,511 Quoted equity securities 1500 - 1,500 23,176,399 20,295 23,196,694

29

September 30, 2014 (Unaudited)

Level 1 Level 2 Total Held to Maturity Securities 1,618,703 1,618,703 27,270,926 20,295 27,291,221 Financial Liabilities

Derivative liabilities 609,761 - 609,761

December 31, 2013 (Audited) Parent Level 1 Level 2 Total Financial Assets at FVPL

Held-for-trading securities 3,798,005 - 3,798,005 Derivative assets - 112,060 112,060

3,798,005 112,060 3,910,064 AFS Investments

Government securities 14,032,455 - 14,032,455 Private bonds and commercial papers 10,293,274

10,293,274

Quoted equity securities 1,500 - 1,500 24,327,229 - 24,327,229 28,125,234 112,060 28,237,293 Financial Liabilities

Derivative liabilities - 597,231 597,231 When fair values of listed equity and debt securities, as well as publicly traded derivatives at the statement of condition date are based on quoted market prices or binding dealer price quotations, without any deduction for transaction costs, the instruments are included within Level 1 of the hierarchy. For all other financial instruments, fair value is determined using valuation techniques. Valuation techniques include net present value techniques, comparison to similar instruments for which market observable prices exist and other revaluation models. Instruments included in Level 3 include those for which there is currently no active market. as of September 30, 2014 and December 31, 2013, the Group has no financial instruments reported within Level 3. There were no transfers among levels in the fair value hierarchy.

E. Operating Segments The Group‟s main operating businesses are organized and managed primarily, according to the current organizational structure. Each segment represents a strategic business unit that caters to the bank‟s identified markets. The Group‟s business segments are: Commercial - this segment provides lending, trade and cash management services to corporate and institutional customers, which include large corporate, middle market clients and entrepreneurs; Consumer - this segment offers consumer banking services to retail customers. Consumer lending products include real estate loans, salary loans, auto loans and pension loans; Treasury - this segment is responsible for the execution of the Group‟s strategic treasury objective set forth in the Group‟s Treasury Operating Plan, which outlines the Group‟s strategies in terms of proprietary trading, liquidity, risk, capital, tax management, among others. Treasury segment‟s functions include managing the Group‟s reserve and liquidity position and maintaining its balance sheet by investing in sovereign and corporate debt instruments, commercial paper and other securities in the Philippines and other emerging markets. The Treasury segment is also responsible for managing the Group‟s foreign currency exposure,

30

engaging in proprietary trading of currencies and offering foreign exchange instruments to the Group‟s corporate customers, as well as the Group‟s investment portfolio, which is managed with a view to maximizing efficiency and return on capital;

Branch Banking - this segment 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. Branch banking segment also provides lending to corporate and institutional customers through its own lending centers situated in select branches; and Others - this segment includes the Group‟s income from trust activities, remittances, gains on foreclosure, subsidiaries‟ operations, and other fees. The President, being the Group‟s Chief Operation Decision Maker (CODM), monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment assets are those operating assets employed by a segment in its operating activities and are either directly attributable to the segment or can be allocated to the segment on a reasonable basis. Segment liabilities are those operating liabilities that result from the operating activities of a segment and are either directly attributable to the segment or can be allocated to the segment on a reasonable basis. Interest income is reported net, as management primarily relies on the net interest income as performance measure, not the gross income and expense. The Group‟s revenue-producing assets are located in the Philippines (i.e., one geographical location); therefore, geographical segment information is no longer presented. The Group has no significant customers which contribute 10.00% or more of the consolidated revenue, net of interest expense. The segment results include internal transfer pricing adjustments across business units as deemed appropriate by management. Transactions between segments are conducted at estimated market rates on an arm‟s length basis. Interest is charged/credited to the business units based on agreed upon benchmark rates. Segment information of the Group for the nine-month period ended September 30, 2014 and September 30, 2013 follow:

Nine-Month Period Ended September 30, 2014

(Unaudited) in thousands

COMMERCIAL CONSUMER TREASURY BRANCHES OTHERS TOTAL

Statement of Income Net interest income 693,820 427,992 403,693 1,439,836 7,130 2,972,470

Other income 615,856 198,097 237,470 276,623 244,727 1,572,774

Total operating income

1,309,676 626,089 641,163 1,716,459 251,857 4,545,244

Other operating expenses

333,019 369,513 277,673 1,539,979 185,021 2,705,205

Provision * 119,688 32,340 83,282 4,038 2,571 241,918 Net income for the period

856,969 224,236 280,207 172,443 64,265 1,598,121

Statement of Financial Position Total Assets 36,422,842 8,236,800 51,091,719 21,510,233 3,139,870 120,401,464 Total Liabilities 15,744,829 2,270,730 16,523,597 62,849,484 2,754,838 100,143,479

31

Nine-Month Period Ended September 30, 2014

(Unaudited) in thousands

COMMERCIAL CONSUMER TREASURY BRANCHES OTHERS TOTAL

Other Segment Information Depreciation and Amortization

6,468 109,221 2,456 196,748 62,024 376,917

Provision for Allowance on Credit and Impairment Losses

67,087 28,207 111,479 59,176 - 265,950

Nine-Month Period Ended September 30, 2013

(Unaudited) in thousands

COMMERCIAL CONSUMER TREASURY BRANCHES OTHERS TOTAL

Statement of Income Net interest income 362,032 297,612 172,310 1,127,625 61,808 2,021,386

Other income 77,078 32,554 490,632 235,048 167,503 1,002,815

Total operating income

439,110 330,165 662,942 900,693 224,348 3,024,201

Other operating expenses

224,809 153,179 235,298 1,183,455 154,056 1,950,797

Provision * 2,557 2,704 76,268 2,269 2,966 86,764 Net income for the period

211,744 174,282 351,376 200,191 58,688 986,640

Statement of Financial Position Total Assets 22,784,205 4,399,948 48,758,164 16,754,256 5,557,977 98,254,550 Total Liabilities 16,060,112 157,324 10,433,493 49,681,763 3,908,196 80,240,887

Other Segment Information Depreciation and Amortization

14,429 8,001 3,995 115,567 77,076 219,069

Provision for Allowance on Credit and Impairment Losses

35,447 17,550 48,787 61,920 5,259 168,964

32

F. Equity The Parent Company‟s authorized capital stock amounted to P5.00 billion, consisting of 500 million shares with par value of P10 per share. Issued and outstanding capital stock as at September 30, 2014 and December 31, 2013 amounted to P3,235,403,600, consisting of 323,540,360 shares. On February 22, 2013, the Board of Directors of the Parent Company and the stockholders representing more than 2/3 of the outstanding capital stock of the Parent Company approved a 10:1 stock split, wherein each common share of the Parent Company with a par value of P=100.00 shall be replaced with ten (10) shares with a par value of P=10.00. As a result, the number of authorized common shares of the Parent Company increased from 50,000,000 common shares of with a par value of P=100.00 per share to 500,000,000 common shares with a par value of P=10.00 per share. Consequently, the Parent Company‟s issued and outstanding shares increased from 24,000,000 common shares with a par value of P=100.00 per share, to 240,000,000 shares with par value of P=10.00 per share. The BSP granted the Certificate of Authority to the Parent Company to implement the increase in the number of authorized common shares and corresponding reduction of par value of the capital stock on March 6, 2013. On March 20, 2013, the SEC approved the stock split. Also on February 22, 2013, the BOD of the Parent Company and the stockholders representing more than 2/3 of the outstanding capital stock approved the offering of the Parent Company to offer and sell up to 102,857,140 common shares with a par value of P=10.00 per share from the unissued and authorized capital stock. The Parent Company filed its registration statement covering the initial public offering of common shares with the Philippines Securities and Exchange Commission on February 28, 2013. An Application for Listing of the Parent Company's Stocks was subsequently received by the Philippine Stock Exchange on March 1, 2013. On May 6, 2013, the Parent Company obtained approval by SEC the permit to offer its common shares for sale through initial public offering (IPO). The net proceeds from the IPO amounted to P7.46 billion, net of direct costs related to equity issuance of P=0.48 billion. Total issued capital stock from the public offer amounted to P=0.84 billion, while the resulting additional paid-in capital amounted to P6.62 billion. The Parent Company‟s shares were listed and commenced trading at the PSE on May 17, 2013. Capital Adequacy Ratio The capital adequacy ratio (CAR) of the Group as at September 30, 2014, December 31, 2013, and September 30, 2013 are shown in the table below:

September 30, 2014

December 31, 2013

September 30, 2013

(in millions) Tier 1 Capital 19,145 19,038 18,482 Tier 2 Capital 592 462 349 Total Qualifying Capital 19,737 19,500 18,831

Total Risk Weighted Assets 126,412 106,103 97,419

Capital Ratios

Total CAR Tier 1 Ratio 15.61% 18.38% 19.33%

33

G. Commitments and Contingent Liabilities

In the normal course of the Group‟s operations, there are various outstanding contingent liabilities and bank guarantees which are not reflected in the accompanying financial statements. The group does not anticipate material unreserved losses as a result of these transactions. The Group has several loan-related suits and claims that remain unsettled. It is not practical to estimate the potential financial impact of these contingencies. However, in the opinion of management, the suits and claims, if decided adversely, will not involve sums having a material effect on the financial statements. The following is a summary of the Group‟s commitments and contingent accounts as of September 30, 2014 and December 31, 2013 at their equivalent peso contractual amounts:

September 30, 2014

(Unaudited) December 31, 2013

(Audited) Trust department accounts 10,433,585,920 9,193,079,788 Unused commercial letters of credit 2,772,198,157 1,414,114,264 Standby letters of credit 4,074,684,982 746,526,084 Outstanding guarantees issued 567,159,476 523,627,987 Inward bills for collection 143,900,105 824,373,074 Late deposits/payment received 57,884,122 160,242,187 Outward bills for collection 50,837,489 22,730,671 Others 733,261 454,016

Other items include items held for safekeeping and items held as collateral.

H. Earnings per Share

Earnings per share amounts were computed as follows: September 30,

2014 (Unaudited) December 31, 2013 (Audited)

September 30, 2013 (Unaudited)

a. Net income attributable to equity holders of the Parent Company

1,588,221,532 1,459,234,942 970,107,316

b. Net income attributable to minority interest 9,899,510 15,770,880 16,532,201

c. Total weighted average number of outstanding common*

323,540,360 288,731,877 281,770,180

d. Basic EPS** (*Annualized Net Income/average no. of outstanding common shares)

PhP 6.55 PhP 5.05 PhP 4.59

**The *The calculation of the weighted average number of outstanding common shares considered the effect of

the 83,540,360 shares issued during the Initial Public Offering on May 17, 2013. **The Group’s Basic EPS is the same as its Dilutive EPS since there are no securities with dilutive

properties.

34

I. Material Contingencies

In the normal course of business, the Group makes various commitments and incurs certain contingent liabilities that are not presented in the financial statements including several suits and claims which remain unsettled. No specific disclosures on such unsettled assets and claims are made because any such specific disclosures would prejudice the Group‟s position with the other parties with whom it is in dispute. Such exemption from disclosures is allowed under PAS 37, Provisions, Contingent Liabilities and Contingent Assets. The Group and its legal counsel believe that any losses arising from these contingencies which are not specifically provided for will not have a material adverse effect on the financial statements.

J. Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. The Group‟s related parties include key management personnel, close family members of key management personnel and

entities which are controlled, significantly influenced by or for which significant voting power is held by key management personnel or their close family members,

subsidiaries, joint ventures and associates and their respective subsidiaries, and post-employment benefit plans for the benefit of the Group‟s employees.

The Parent Company has several business relationships with related parties. Transactions with such parties are made in the ordinary course of business and on substantially same terms, including interest and collateral, as those prevailing at the time for comparable transactions with other parties. These transactions also did not involve more than the normal risk of collectability or present other unfavorable conditions. As of September 30, 2014, the total outstanding DOSRI loans and receivables amounted to P91.4 million. The ratio of DOSRI loans and receivables to total loan portfolio is 0.15%. There were no non-performing DOSRI loans as of September 30, 2014. As of December 31, 2013, the total outstanding DOSRI loans and receivables amounted to P158.9 million. The ratio of DOSRI loans and receivables to total loan portfolio is 0.32%. There were no non-performing DOSRI loans as of December 31, 2013.

35

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations A. Financial Condition and Results of Operations

Analysis of Changes in Financial Condition as of September 30, 2014 (Unaudited) vs. December 31, 2013 (Audited) – Exhibit A

The Group’s consolidated assets increased by 14.6% from P105.046 billion as of December 31, 2013 to P120.401 billion as of September 30, 2014. Cash and other cash items rose by 4.8% from P2.240 billion as of December 31, 2013 to P2.347 billion as of September 30, 2014 as the Group increased its branch network from 173 to 206. Due from Bangko Sentral ng Pilipinas decreased by 15.3% from P18.801 billion as of December 31, 2013 to P15.918 billion as of September 30, 2014 due to a reduction in AUB‟s Special Deposit Account (SDA) placements to fund the bank‟s aggressive loan portfolio growth. This was partially offset by an increase in the Bank‟s reserves as a result of the increase in reserve requirement rate and growth in deposits. Due from other banks rose by 83.2% from P1.224 billion as of December 31, 2013 to P2.242 billion as of September 30, 2014 due to the partial reallocation of the Group‟s excess liquidity from SDA placements to higher-yielding short-term interbank placements. Interbank loans receivable and securities purchased under resale arrangements grew by 56.1% from P74.570 million as of December 31, 2013 to P116.377 million as of September 30, 2014 due to higher amounts of inter-bank placements with counterparties. Financial Assets at Fair Value through Profit or Loss dropped 36.7% from P3.910 billion as of December 31, 2013 to P2.476 billion as of September 30, 2014. Available for Sale Investments also declined by 4.6% from P24.327 billion as of December 31, 2013 to P23.197 billion as of September 30, 2014. These declines were due to a reduction in the Held-for-trading (HFT) and Available-for-sale (AFS) portfolio to support the bank‟s loan portfolio growth. Held-to-maturity (HTM) securities increased to P1.619 billion as of September 30, 2014 from zero as of December 31, 2013 as the Treasury Group continued its strategic move to build the bank‟s HTM portfolio. Loans and receivables grew by 36.5% from P47.690 billion as of December 31, 2013 to P65.099 billion in September 30, 2014. Propelling this growth were commercial loans, which grew by almost 50.0%, and other loan segments such as auto, housing, and salary loans, which all posted double-digit growths. Property and equipment rose 36.4% from P1.593 billion as of December 31, 2013 to P2.173 billion as of September 30, 2014 as a result of increases in leasehold improvements, furniture, fixtures, and equipment, and transportation equipment for the new branches. The parent company opened 36 new branches and merged 3 for an increase of 33 during the nine-month period. Investment Properties decreased by 21.7% from P1.136 billion as of December 31, 2013 to P889.3 million as of September 30, 2014 due to the sale of various foreclosed real estate properties during the nine-month period, including a one-time transaction in the 3rd quarter that resulted in an extraordinary gain of over P300 million. Deferred tax assets dropped 16.4% from P251.850 million as of December 31, 2013 to P210.609 million as of September 30, 2014 due to related provision for loan losses and application of Net Operating Loss Carryover (NOLCO).

36

Other assets surged by 87.9% from P392.116 million as of December 31, 2013 to P736.776 million as of September 30, 2014 due to the financial assistance to RBA to service the withdrawals from all valid and existing deposits or accounts in the Cooperative Bank of Pampanga, increase in input VAT (AULFC), and increase in prepaid expenses. The Group’s total liabilities increased by 15.1% from P86.994 billion as of December 31, 2013 to P100.143 billion as of September 30, 2014. Total deposits grew by 18.4% from P73.934 billion as of December 31, 2013 to P87.537 billion as of September 30, 2014. The Bank‟s savings, demand, and time deposits grew by double digits as a result of its expanded branch network and the ADB requirements from the parent company‟s increased commercial lending activities. Accrued Taxes, Interest and Other Expenses rose 17.4% from P407.654 million as of December 31, 2013 to P478.637 million as of September 30, 2014 due to higher accrued other expenses payable as a result of the branch expansion. Total equity grew by 12.2% from P18.052 billion as of December 31, 2013 to P20.258 billion as of September 30, 2014 primarily due to: (1) A 16.0% growth in the bank‟s surplus amounting to P1.588 billion and (2) A decline in the loss on available-for-sale investments amounting to P586.752 million as a result of a continued improvement in the market value of the AFS securities. The Group‟s total qualifying capital and risk-weighted assets as of September 30, 2014 stood at P19.737 billion and P126.412 billion versus P19.500 billion and P106.103 billion, respectively. In spite of the effectivity of the BASEL III requirements in January, 2014, AUB‟s total capital adequacy ratio (CAR) remained strong at 15.61%, way above the regulatory minimum of 10.0%. Analysis of Changes in Financial Condition as of September 30, 2014 (Unaudited) vs. September 30, 2013 (Unaudited) – Exhibit A The Group’s consolidated assets increased by 22.5% from P98.254 billion as of September 30, 2013 to P120.401 billion as of September 30, 2014. Cash and other cash items rose 44.5% from a year ago level of P1.624 billion to P2.347 billion in September 30, 2014 as a result of the expansion in the Group‟s branch network to 206 branches as of September 30, 2014. Due from BSP increased by 15.2% from P13.820 billion as of September 30, 2013 to P15.918 billion as of September 30, 2014 primarily due to an increase in the Bank‟s reserves as a result of the increase in reserve requirement rate and growth in deposits. Due from other banks rose 61.7% from P1.386 billion as of September 30, 2013 to P2.242 billion as of September 30, 2014 due to the partial reallocation of the Group‟s excess liquidity from SDA placements to higher-yielding short-term interbank placements. Interbank loans receivable and securities purchased under resale arrangements rose 1693.4% from P6.489 million as of September 30, 2013 to P116.377 million as of September 30, 2014 due to higher amounts of inter-bank placements with counterparties. Financial Assets at Fair Value through Profit or Loss dropped 60.9% from P6.330 billion as of December 31, 2013 to P2.476 billion as of September 30, 2014. Available-for-sale investments declined by 9.3% from P25.582 billion as of September 30, 2013 to P23.197 billion as of September 30, 2014. These year-on-year declines were due to a reduction in the Held-for-trading (HFT) and Available-for-sale (AFS) portfolio to support the bank‟s loan portfolio growth.

37

Held-to-maturity securities increased to P1.619 billion as of September 30, 2014 from zero as of September 30, 2013 as the Treasury Group continued its strategic move to build the bank‟s HTM portfolio. Loans and receivables grew by 52.1% from P42.807 billion as of September 30, 2013 to P65.099 billion as of September 30, 2014. Propelling this growth were commercial loans, which grew by more than 70%, and other loan segments such as auto, housing, and salary loans, which all posted double-digit growths versus year-ago levels. Property and equipment rose 58.5% from P1.371 billion as of September 30, 2013 to P2.173 billion as of September 30, 2014 as a result of increases in leasehold improvements, furniture, fixtures, and equipment, and transportation equipment for the new branches. Investment properties fell 37.3% from a year ago level of P1.419 billion to P889 million as of September 30, 2014 due to the sale of various foreclosed real estate properties during the twelve-month period, with extraordinary gains recorded in the 4th quarter of 2013 and the 3rd quarter of 2014 Deferred tax assets dropped 66.5% from P629.357 million as of September 30, 2013 to P210.609 million as of September 30, 2014 due to related provision for loan losses and application of Net Operating Loss Carryover (NOLCO). Other assets rose by 250.8% from P210.009 million in the same period last year to P736.776 million as of September 30, 2014 due to the financial assistance to RBA to service the withdrawals from all valid and existing deposits or accounts in the Cooperative Bank of Pampanga, increase in input VAT (AULFC), and increase in prepaid expenses. The Group’s total liabilities increased by 24.8% from P80.241 billion as of September 30, 2013 to P100.143 billion as of September 30, 2014. Total deposits grew by 26.5% from P69.218 billion as of September 30, 2013 to P87.537 billion as of September 30, 2014. The Bank‟s savings, demand, and time deposits grew by 14.8%, 39.7% and 28.1%, respectively as a result of its expanded branch network and the ADB requirements from the parent company‟s increased commercial lending activities. Bills payable increased by 60.1% from P5.311 billion as of September 30, 2013 to P8.502 billion as of September 30, 2014 as the bank was able to tap cheaper sources of funding. Accrued Taxes, Interest and Other Expenses increased by 35.1% from P354.171 million for the period ended September 30, 2013 to P 478.637 million in the same period in 2014 due to higher accrued other expenses payable as a result of the branch expansion. Derivative liabilities rose 661.1% from a year ago level of P80.114 million to P609.761 million as of September 30, 2014 primarily due to the increase in the bifurcated values of embedded call options in Treasury securities. Total equity increased by 12.5% from P18.014 billion as of September 30, 2013 to P20.258 billion as of September 30, 2014 due to: (1) A 22.4% increase in surplus amounting to P2.113 billion and (2) A decline in the net unrealized loss on available-for-sale investments amounting to P150.061 million as a result of an improvement in the market value of the AFS securities.

Analysis of Results of Operations for the Nine-Month Period Ended September 30, 2014 (Unaudited) vs. September 30, 2013 (Unaudited) – Exhibit B AUB and its subsidiaries breached the billion-peso mark, as the Group posted a net income of P1.598 billion for the first nine months of the year. This was 62.0% higher than P986.6 million in 2013, driven by over 40% growth in gross interest income on loans and receivables and trading/investment securities and a one-time extraordinary gain of over P300 million on the sale of foreclosed properties in the 3rd quarter of 2014.

38

Specifically, gross interest income grew by P1.064 billion (+40.6%) to P3.686 billion for the nine-month period ended September 30, 2014 from P2.622 billion in the same period last year driven by over 40% growth in interest income on loans and receivables as well as trading and investment securities. In particular, interest income on loans and receivables increased by P710.477 million (+43.2%) during the nine-month period ended September 30, 2014 versus the same period in 2013 as the Group continued to increase its lending activities to the corporate and retail market. Interest income from trading and investment securities grew by P358.208 million (+40.5%) on account of the growth in its trading/investment portfolio and higher effective interest rates. Interest income from deposits with banks increased by P20.776 million (+41.0%) as the volume of related deposits grew during the nine-month period. However, interest income on interbank loans receivable and securities purchased under resale agreements dropped by P25.297 million (-61.2%) due to a lower average volume of interbank loans receivable. Total interest expense increased by 18.8% to P713.755 million for the nine-month period ended September 30, 2014 from P600.674 million for the same period in 2013. The increase was attributable to an increase in interest expense on deposits amounting to P123.187 million (+23.2%) primarily due to the growth in the volume of savings and time deposits. This increase was partially offset by a decrease in interest expense on bills payable amounting to P10.106 million (-14.4%) due to a lower average volume of bills payable. Net interest income for the nine-month period ended September 30, 2014 grew by 47.1% to P2.972 billion from P2.021 billion for the nine-month period ended September 30, 2013. The net interest margin was slightly higher at 4.39% in 2014 compared to 4.10% in 2013. The Group‟s total non-interest income rose 56.8%to P1.573 billion for the nine-month period ended September 30, 2014 from P1.003 billion in the same period in 2013 as fee-based and miscellaneous income managed to offset the tepid treasury business. Miscellaneous income grew by P595.677 million (+776.1%) due to gains on sale of foreclosed properties. Fee-based income increased by P198.539 million as a result of new bookings of commercial/consumer loans and higher volume of remittances and branch transactions. The Group recorded a foreign exchange gain of P44.891 million during the first nine months of 2014 compared to a loss of P97.453 for the same period in 2013. Operating expenses grew by 38.7% to P2.705 billion for the nine-month period ended September 30, 2014 from P1.951 billion for the same period in 2013. This increase was significantly driven by higher compensation and fringe benefits (+38.3%) as a result of the additional headcount in the new branches, lending units, and operations. Branch-related expenses such as rent (+42.4%), insurance (+47.3%), depreciation and amortization (+73.3%), power, light and water (+21.8%), security, messengerial and janitorial (+6.6%), as well as transportation and travel (+31.9%) also increased as a result of the parent company‟s branch network expansion. On the other hand, freight expenses rose 35.5% due to the higher volume of remittances. Provision for credit and impairment losses also rose 57.4% on account of a higher loan loss provision in line with the loan portfolio growth. AUB‟s NPL coverage increased to 111.63% as of September 30, 2014 vs. 97.83% a year ago. In spite of the continued branch expansion in 2014, the Group succeeded in bringing down its cost-to-income ratio to 53.67% from 58.90% year-on-year.

39

Analysis of Results of Operations for the Quarter Ended September 30, 2014 (Unaudited) vs. September 30, 2013 (Unaudited) – Exhibit B Coming from a 2nd quarter income of P432.754 million, the Group had another strong performance in the third quarter generating a net income of P718.575 million, which was higher by P549.016 million (+323.8%) than its net income of P169.559 million for the same period in 2013. This was driven by a higher net interest income of P1.080 billion and a one-time extraordinary gain of over P300 million from sale of foreclosed properties. Specifically, gross interest income grew by P345.818 million (+35.1%) to P1.331 billion for the quarter ended September 30, 2014 from P0.985 billion in the same period last year. This was driven by a an increase in interest income on loans and receivables of P333.995 million (+60.3%) quarter-on-quarter as a result of a 52.1% increase in the Group‟s loan portfolio, Interest income on interbank loans receivable and securities purchased under resale agreements increased by P2.579 million (29.0%) due to the significant growth in the volume of this asset during the quarter. Total interest expense increased by 24.0% to P251.351 million for the quarter ended September 30, 2014 from P202.707 million for the same period in 2013. The increase was attributable to an increase in interest expense on: (1) Deposits amounting to P46.335 million (+25.6%) primarily due to the growth in the volume of savings and time deposits and (2) Bills payable and other borrowings amounting to P2.309 million (+10.6%) due to a growth in the average volume of bills payable.

Net interest income for the quarter ended September 30, 2014 grew by 38.0% to P1.080 billion from P0.782 billion for the same period in 2013. Total other operating income (or non-interest income) during the quarter ended September 30, 2014 grew by P637.853 million (+452.7%) to P778.747 million from P140.895 million for the same period in 2013. The increase was primarily due to the higher miscellaneous income by P462.465 million coming from a one-time extraordinary gain of over P300 million from sale of foreclosed properties. Coming from a trading gain of P216.0 million in the 2nd quarter of 2014, the Group generated a trading gain of P126.964 million in the 3rd quarter compared to a trading loss of P5.770 million for the same period in 2013. Quarter-on-quarter, the Group‟s fee-based income increased by P22.630 million (+13.5%) whereas the Bank‟s foreign exchange loss in the 3rd quarter dropped to P28.991 million vs. P49.537 million loss a year ago. Operating expenses grew by 47.9% to P1.055 billion for the three-month period ended September 30, 2014 from P0.714 billion for the same period in 2013. This increase was significantly driven by higher compensation and fringe benefits (+57.6%) and double-digit growths in branch-related expenses as a result of the parent company‟s branch network expansion. Provision for credit and impairment losses also increased by P56.364 million (+52.3%), bringing the Bank‟s NPL coverage ratio as of September 30, 2014 to 111.63%.

40

B. Key Performance Indicators

The table below presents the Group‟s key performance indicators for the periods indicated.

September 30, 2014

(Unaudited)

December 31, 2013

(Audited)

September 30, 2013

(Unaudited) Return on assets1 1.89% 1.89% 1.60%

Return on equity2 11.12% 10.05% 8.90%

Net interest margin (NIM)3 4.39% 3.06%* 4.10%

Cost-to-income ratio4 53.67% 56.79% 58.90%

Asset growth vs. year ago5 22.54% 61.61% NA

Notes: (1) Annualized or annual net income divided by average total assets for the periods indicated. Average total

assets is based on balances at the beginning and end of the period divided by two. (2) Annualized or annual net income divided by average total equity for the periods indicated. Averages are

based on balances at the beginning and end of the period divided by two. (3) Net interest income divided by average interest-earning assets. Interest-earning assets includes due from

BSP, due from other banks, interbank loans, receivables and securities purchased under resale agreement ("SPURA"), trading and investment securities, loans and receivables. Average interest-earning assets is equivalent to the total interest-earning assets at the beginning and end of the period divided by two.

(4) Total operating expenses less provision for credit and impairment losses and divided by total operating income for the periods indicated.

(5) Total assets at end of current period less total assets at end of previous period balance divided by balance at end of previous period.

*The net interest margin for the year ended December 31, 2013 was recomputed to exclude the Demand Deposit Account from Interest-earning assets. The NIM increased from 3.76 to 4.42%.

C. Key Variables and Other Qualitative and Quantitative Factors

i. Liquidity

The Group continues to ensure payment of maturing financial obligations and commitments as these fall due and be able to fund contingency requirements as well when these arise.

The ALCO continues to ensure that at all times, the Group maintains adequate liquidity, has sufficient capital and appropriate funding. The balance between cost and liquidity as well as any issues among business lines are resolved by the ALCO.

The Treasury Group monitors liquidity on a daily basis and further analyzes such at predetermined scenarios/situations.

Based on the results of the Bank‟s Internal Capital Adequacy Assessment Process for the period covering 2014 to 2017 and the daily monitoring of liquidity AUB expects to meet its working capital, capital expenditure, and investment requirements in the next twelve months.

ii. Events that will Trigger Direct or Contingent Financial Obligation

AUB does not expect any event that will trigger a direct or contingent financial obligation, including any default or acceleration of an obligation, that will have a material effect on the Group‟s financial statements,

iii. Material Off-Balance Sheet Transactions, Arrangements and Obligations

Please refer to Note G to Group‟s Interim Financial Statements.

41

iv. Material Commitment for Capital Expenditures

Since AUB has fully utilized its IPO proceeds as of September 30, 2014, the Group shall use its cash flows out of operations to fund capital expenditures related to branch expansion, Information Technology infrastructure, and the launch of its credit card business, which has been moved to 1st quarter of 2015.

v. Known Trends, Events or Uncertainties

AUB is not aware of any known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations.

vi. Significant Elements of Income or Loss

Significant elements of the Group‟s net income for the nine-month period ended September 30, 2014 and September 30, 2013 came from its continuing operations.

vii. Causes for Any Material Changes from Period to Period of Financial Statements

The causes for any material changes from period to period of interim financial statements

have been provided in the Interim Analysis of Changes in Financial Condition and Analysis of Results of Operations of this report.

viii. Seasonal Aspects

In terms of seasonality, AUB‟s results have historically been stronger during the annual year-end holiday season and the school enrollment season in the Philippines, which are in the fourth and second quarter of the calendar year, respectively.

ix. Changes in Accounting Policies and Disclosures

The accounting policies adopted in preparing the Group‟s consolidated financial statements are consistent with those of the previous financial year, except for the adoption of the new and amended standards and interpretations under the Philippine Accounting Standards (PAS), PFRS and Philippine Interpretations which became effective as of January 1, 2013. For more information, please refer to Note B to the Group‟s Interim Financial Statements.

Except as otherwise indicated in Note B to the Group‟s interim financial statements included elsewhere in this report, such changes in the accounting policies did not have any significant impact on the financial position or performance of the Group.

42

PART II - OTHER INFORMATION

Item 1. Branches, ATM’s, and Headcount AUB, the parent company, continued to expand its branch and ATM network in the 3rd quarter of 2014. To support the branch expansion, increased lending activities, and its future credit card business, the Group also expanded its headcount. The Group also succeeded in keeping its headcount per branch to 10.2 in 2013 and as of September 30, 2014. This ratio is one of the lowest among universal and commercial banks. For details, please refer to the table below.

2013 2014 Q2 2014 Q3 2014 Q3 +/- 2013

Branches* Parent Bank 163 180 196 33 Subsidiary Banks 10 10 10 0 Total Group 173 190 206 33 *excluding 5 micro-banking offices of Rural Bank of Angeles.

Branches by location MM 81 88 103 22 Provincial 92 102 103 11 Total Group 173 190 206 33

% in MM 46.8% 46.3% 50.0% 66.7%

ATMs (Parent only) Onsite 120 140 155 35 Offsite 41 38 55 14 Total Group 161 178 210 49

Headcount Parent Bank 1,599 1,761 1,857 258 Subsidiary Banks 171 169 170 (1) Total Group 1,770 1,930 2,027 257

Headcount per branch Parent Bank 9.8 9.8 9.5 (0.3) Total Group 10.2 10.6 10.2 0.0

43

Item 2. Financial Highlights and Indicators The table below presents the Group‟s financial highlights and indicators for the periods indicated.

September 30,

2014 December 31,

2013 September 30,

2013 Liquidity (%) Liquid to Total Assets Ratio 38.45% 48.15% 49.62% Loans (net) to Deposits Ratio 74.37% 64.50% 61.84%

Solvency (%) Debt-to-Equity Ratio1 474.08% 458.88% 413.74% Asset-to-Equity Ratio 594.34% 581.90% 545.44% Interest Rate Coverage Ratio 357.80% 297.67% 313.50%

Profitability (%) Return on Assets 1.89% 1.73% 1.60% Return on Equity 11.12% 9.96% 8.90% Net Interest Margin 4.39% 4.42%** 4.10% Cost-to-Income Ratio 53.67% 56.56% 58.90%

Asset Quality (%) Net Non-Performing Loans Ratio2 0.31% 0.92% 0.84% Non-performing Loans Coverage Ratio

111.63% 110.16% 97.83%

Capital Adequacy (%) Total regulatory capital expressed as percentage of total risk-weighted assets

15.61% 18.38% 19.33%

Total Tier 1 expressed as percentage of total risk-weighted assets

15.14% 17.94% 18.97%

Notes: (1)Total Deposits + Bills Payable over Total Equity. (2) Non-performing Loans net of Specific Allowance divided by Total Gross Loans.

44

Item 3. Aging of Loans and Other Receivables PSE Requirement per Circular No. 2164-99

(in Thousand Pesos) As of September 30, 2014

%

Up to 12 months 52,516,795 78.79% Over 1 year to 3 years 8,665,283 13.00% Over 3 years to 5 years 2,700,153 4.05% Over 5 years 2,773,997 4.16% Loans Receivables (gross) 66,656,229 100.00% Less: Allowance for credit losses 1,556,834 Loans Receivables (net) 65,099,395 Item 4. Use of IPO Proceeds

Revised Use

of IPO Proceeds

Cumulative as of June 30,

2014

For the Quarter Ended September 30,

2014

Cumulative Total

Branch Expansion1 360,000,000 361,067,272 (1,067,272)2 360,000,000 General Corporate Purposes3 6,956,124,439 5,077,484,420 1,878,640,019 6,956,124,439

Information Technology Infrastructure4 120,000,000 110,737,025 9,262,975 120,000,000

Payment of Branch Licenses - - - -

TOTAL 7,436,124,439 5,549,288,717 1,886,835,722 7,436,124,439

1 Pertains to capital expenditures for the construction and purchase of furniture, fixtures, and equipment of

branches to be opened. 2 Adjustment in use of proceeds for branch expansion to agree with the amount per Board-approved

revision. 3

Used for growing AUB’s interest-earning asset-base, specifically through the extension of more commercial and consumer loans as well as the purchase of investment securities and others. 4 IT projects / structure will be applied toward the enhancement of AUB’s technical hardware and software.

There were no payments for branch licenses for the quarter ended September 30, 2014 as the bank used its existing branch licenses, including those obtained from its acquisitions of Cooperative Bank of Cavite lnc. and Asiatrust Development Bank. The Bank opened 81 new branches from the time of its IPO in May 2013.

Item 5. Board Resolutions

All material information and transactions of AUB had been made under SEC 17-C.

45

SIGNATURES

Pursuant to the requirement of the Securities Regulation Code, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Issuer : ASIA UNITED BANK

By:

_________________________________ ABRAHAM T. CO President / Principal Executive Officer / Principal Operating Officer

_________________________________ HERMINIA C. MUSICO Comptroller / Principal Financial Officer / Principal Accounting Officer November 13, 2014

46

ASIA UNITED BANK CORPORATION INDEX TO EXHIBITS

Exhibit No. Description Page No. A Comparative Statements of Condition 47 B Comparative Statements of Income 50

47

ASIA UNITED BANK CORPORATION EXHIBIT A - COMPARATIVE STATEMENT OF CONDITION (1 of 3)

AS OF SEPTEMBER 30, 2014

September 30, 2014

(Unaudited)

December 31, 2013 (Audited)

September 30, 2013

(Unaudited)

September 30, 2014 vs. December 31, 2013

September 30, 2014 vs. September 30, 2013

+/- % +/- % ASSETS Cash and Other Cash Items 2,347,063,633 2,240,332,304 1,624,522,421 106,731,329 4.8% 722,541,212 44.5%

Due from Bangko Sentral ng Pilipinas 15,917,813,996 18,800,513,129 13,819,809,310 (2,882,699,133) -15.3% 2,098,004,686 15.2%

Due from Other Banks 2,242,013,042 1,223,631,617 1,386,166,872 1,018,381,425 83.2% 855,846,170 61.7% Interbank Loans Receivable and Securities Purchased Under Resale Agreements

116,377,286 74,570,015 6,489,332 41,807,271 56.1% 109,887,954 1693.4%

Financial Assets at Fair Value Through Profit or Loss

2,475,824,216 3,910,064,368 6,330,247,561 (1,434,240,152) -36.7% (3,854,423,345) -60.9%

Available-for-Sale Investments 23,196,693,878 24,327,231,846 25,582,368,759 (1,130,537,968) -4.6% (2,385,674,881) -9.3%

Held To Maturity Securities 1,618,703,001 - - 1,618,703,001 100.0% 1,618,703,001 0.0%

Loans and Receivables 65,099,394,773 47,689,832,850 42,807,334,118 17,409,561,923 36.5% 22,292,060,655 52.1% Investments in Subsidiaries - - - - 0.0% - 0.0%

Property and Equipment 2,173,100,944 1,593,002,963 1,371,040,392 580,097,981 36.4% 802,060,552 58.5%

Investment Properties 889,321,415 1,136,020,399 1,418,652,532 (246,698,984) -21.7% (529,331,117) -37.3%

Deferred Tax Assets 210,609,497 251,850,213 629,356,651 (41,240,716) -16.4% (418,747,154) -66.5%

Goodwill 1,883,533,972 1,883,533,972 1,551,841,727 - 0.0% 331,692,245 21.4%

Intangible Assets 1,494,237,650 1,523,233,936 1,516,711,656 (28,996,286) -1.9% (22,474,006) -1.5%

Other Assets 736,776,302 392,115,841 210,008,644 344,660,461 87.9% 526,767,658 250.8% TOTAL ASSETS 120,401,463,605 105,045,933,453 98,254,549,975 15,355,530,152 14.6% 22,146,913,630 22.5%

48

ASIA UNITED BANK CORPORATION EXHIBIT A - COMPARATIVE STATEMENT OF CONDITION (2 of 3)

AS OF SEPTEMBER 30, 2014

September 30, 2014

(Unaudited) December 31, 2013 (Audited)

September 30, 2013

(Unaudited)

September 30, 2014 vs. December 31, 2013

September 30, 2014 vs. September 30, 2013

+/- % +/- % LIABILITIES AND EQUITY Liabilities Deposit Liabilities (Notes 17 and 29) Demand 33,563,409,790 27,212,210,662 24,020,508,400 6,351,199,128 23.3% 9,542,901,390 39.7% Savings 41,517,731,327 36,362,993,059 36,177,074,012 5,154,738,268 14.2% 5,340,657,315 14.8% Time 11,555,692,952 9,459,072,778 9,020,404,941 2,096,620,174 22.2% 2,535,288,011 28.1% Long Term Negotiable Certificates of Deposits 900,000,000 900,000,000 - - 0.0% 900,000,000 0.0%

Total Deposits 87,536,834,069 73,934,276,498 69,217,987,353 13,602,557,571 18.4% 18,318,846,716 26.5% Bills Payable (Note 18) 8,502,213,956 8,903,964,245 5,310,885,616 (401,750,289) -4.5% 3,191,328,340 60.1% Manager‟s Checks 234,294,077 541,148,291 304,660,468 (306,854,214) -56.7% (70,366,391) -23.1% Income Tax Payable 65,539,262 2,903,796 9,190,779 62,635,466 2157.0% 56,348,483 613.1% Accrued Taxes, Interest and Other Expenses (Note 19)

478,636,749 407,654,301 354,170,757 70,982,448 17.4% 124,465,992 35.1%

Derivative Liabilities (Note 8) 609,760,984 597,230,825 80,114,448 12,530,159 2.1% 529,646,536 661.1%

Deferred Tax Liabilities(Note 27) 5,370,008 5,370,008 - - 0.0% 5,370,008 0.0%

Other Liabilities (Note 20) 2,710,829,439 2,601,174,117 4,963,877,170 109,655,322 4.2% (2,253,047,731) -45.4%

Total Liabilities 100,143,478,545 86,993,722,082 80,240,886,591 13,149,756,463 15.1% 19,902,591,954 24.8%

49

ASIA UNITED BANK CORPORATION EXHIBIT A - COMPARATIVE STATEMENT OF CONDITION (3 of 3)

AS OF SEPTEMBER 30, 2014

September 30, 2014

(Unaudited)

December 31, 2013 (Audited)

September 30, 2013

(Unaudited)

September 30, 2014 vs. December 31, 2013

September 30, 2014 vs. September 30, 2013

+/- % +/- % Equity Equity Attributable to Equity Holders of the Parent Company

Capital stock (Note 22) 3,235,403,600 3,235,403,600 3,235,403,600 - 0.0% - 0.0% Additional paid-in capital (Note 22 ) 6,622,818,961 6,622,818,961 6,622,818,961 - 0.0% 1 0.0%

Surplus reserves (Note 28) 47,701,065 47,701,066 96,393,331 (1) 0.0% (48,692,266) -50.5%

Surplus (Note 28) 11,530,321,340 9,942,099,808 9,417,442,351 1,588,221,532 16.0% 2,112,878,989 22.4% Net unrealized gain (loss) on available-for-sale investments (Note 8)

(1,300,793,937) (1,887,546,297) (1,450,854,811) 586,752,360 -31.1% 150,060,874 -10.3%

Cumulative translation adjustment (8,749,639) (29,649,927) (29,685,529) 20,900,288 -70.5% 20,935,890 -70.5%

20,126,701,390 17,930,827,211 17,891,517,903 2,195,874,180 12.2% 2,235,183,487 12.5% Non-controlling Interest 131,283,670 121,384,160 122,145,481 9,899,510 8.2% 9,138,189 7.5% Total Equity 20,257,985,060 18,052,211,371 18,013,663,384 2,205,773,689 12.2% 2,244,321,677 12.5%

TOTAL LIABILITIES AND EQUITY 120,401,463,605 105,045,933,453 98,254,549,975 15,355,530,152 14.6% 22,146,913,630 22.5%

50

ASIA UNITED BANK CORPORATION EXHIBIT B - COMPARATIVE STATEMENTS OF INCOME (1 of 4)

AS OF SEPTEMBER 30, 2014

Nine-Month Period Ended Quarter Ended Nine-Month Period Third Quarter

September 30, 2014

September 30, 2013

September 30, 2014

September 30, 2013 +/- % +/- %

(Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME Loans and receivables (Notes 9 and 29) 2,355,906,505 1,645,429,374 888,057,489 554,062,369

710,477,131 43.2% 333,995,120 60.3%

Trading and investment securities (Note 8) 1,242,854,629 884,646,383 412,918,303 393,453,592

358,208,246 40.5% 19,464,711 4.9%

Interbank loans receivable and securities purchased under resale agreements (Note 7)

16,025,950 41,323,067 11,467,400 8,888,771 (25,297,117) -61.2% 2,578,629 29.0%

Deposit with banks and others 71,437,610 50,661,824 18,532,087 28,752,058 20,775,786 41.0% (10,219,971) -35.5%

3,686,224,693 2,622,060,648 1,330,975,278 985,156,790 1,064,164,045 40.6% 345,818,488 35.1% INTEREST EXPENSE Deposit liabilities (Notes 17 and 29) 653,523,612 530,336,690 227,333,317 180,998,020 123,186,922 23.2% 46,335,297 25.6%

Bills payable and other borrowings (Note 18) 60,231,200 70,337,885 24,018,156 21,709,311 (10,106,685) -14.4% 2,308,845 10.6%

713,754,813 600,674,575 251,351,474 202,707,331 113,080,238 18.8% 48,644,142 24.0%

51

ASIA UNITED BANK CORPORATION EXHIBIT B - COMPARATIVE STATEMENTS OF INCOME (2 of 4)

AS OF SEPTEMBER 30, 2014

Nine-Month Period Ended Quarter Ended Nine-Month Period Third Quarter

September

30, 2014 September

30, 2013 September

30, 2014 September

30, 2013 +/- % +/- %

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

NET INTEREST INCOME 2,972,469,881 2,021,386,073 1,079,623,805 782,449,459 951,083,807 47.1% 297,174,346 38.0%

Trading and securities gain - net (Note 8) 230,856,896 594,375,940 126,964,246 (5,769,631) (363,519,044) -61.2% 132,733,877 -2300.6%

Service charges, fees and commissions (Note 25) 598,930,688 400,391,778 190,161,192 167,531,591 198,538,910 49.6% 22,629,601 13.5%

Foreign exchange gain (loss) - net 44,891,072 (97,452,855) (28,990,814) (49,537,718) 142,343,927 -146.1% 20,546,904 -41.5%

Trust income (Note 28) 25,665,558 28,747,060 9,555,086 10,107,440 (3,081,502) -10.7% (552,354) -5.5%

Miscellaneous (Notes 12, 23, and 36) 672,429,977 76,753,088 481,057,618 18,563,021 595,676,889 776.1% 462,494,597 2491.5%

OTHER OPERATING INCOME 1,572,774,191 1,002,815,011 778,747,328 140,894,703 569,959,180 56.8% 637,852,625 452.7%

TOTAL OPERATING INCOME 4,545,244,071 3,024,201,084 1,858,371,132 923,344,162 1,521,042,987 50.3% 935,026,970 101.3%

Other Non-Interest Income (excluding trading gain) 1,341,917,295 408,439,071 651,783,082 146,664,334 933,478,224 228.5% 505,118,748 344.4%

52

ASIA UNITED BANK CORPORATION EXHIBIT B - COMPARATIVE STATEMENTS OF INCOME (3 of 4)

AS OF SEPTEMBER 30, 2014

Nine-Month Period Ended Quarter Ended Nine-Month Period Third Quarter

September

30, 2014 September

30, 2013 September

30, 2014 September

30, 2013 +/- % +/- %

(Unaudited) (Unaudited) (Unaudited) (Unaudited) Compensation and fringe benefits (Notes 24 and 29) 826,915,875 597,836,035 289,420,901 183,669,331 229,079,840 38.3% 105,751,570 57.6%

Provision for credit and impairment losses (Note 16)

265,949,931 168,963,910 164,136,998 107,772,981 96,986,021 57.4% 56,364,017 52.3%

Depreciation and amortization (Notes 11 and 12)

362,001,041 208,896,307 136,400,181 75,651,895 153,104,734 73.3% 60,748,286 80.3%

Taxes and licenses 228,412,218 182,439,752 82,208,839 56,152,039 45,972,466 25.2% 26,056,800 46.4%

Rent (Note 23) 181,195,609 127,216,828 66,129,190 45,762,948 53,978,781 42.4% 20,366,242 44.5%

Insurance 148,808,284 100,996,004 51,270,119 40,078,616 47,812,280 47.3% 11,191,503 27.9%

Security, messengerial and janitorial 82,769,432 77,643,180 28,181,183 25,802,840 5,126,252 6.6% 2,378,343 9.2%

Freight expenses 111,597,725 82,385,658 42,280,885 33,787,752 29,212,067 35.5% 8,493,133 25.1%

Transportation and travel 85,016,560 64,447,658 30,428,064 22,134,579 20,568,902 31.9% 8,293,485 37.5%

Power, light and water 44,431,765 36,484,020 15,462,111 13,216,413 7,947,745 21.8% 2,245,698 17.0%

Postage, telephone, cables and telegrams 43,217,906 34,117,555 15,266,210 12,220,690 9,100,351 26.7% 3,045,520 24.9%

53

ASIA UNITED BANK CORPORATION EXHIBIT B - COMPARATIVE STATEMENTS OF INCOME (4 of 4)

AS OF SEPTEMBER 30, 2014

Nine-Month Period Ended Quarter Ended Nine-Month Period Third Quarter

September

30, 2014 September

30, 2013 September

30, 2014 September

30, 2013 +/- % +/- %

(Unaudited) (Unaudited) (Unaudited) (Unaudited) Management and other professional fees 27,963,495 32,886,561 7,597,042 8,558,347 (4,923,066) -15.0% (961,305) -11.2%

Repairs and maintenance 30,994,836 27,469,799 10,312,826 8,927,751 3,525,037 12.8% 1,385,075 15.5%

Amortization of intangibles (Note 14) 14,916,275 10,173,114 4,998,657 3,706,859 4,743,161 46.6% 1,291,798 34.8%

Miscellaneous (Note 26) 251,014,234 198,841,403 111,506,057 76,510,287 52,172,831 26.2% 34,995,770 45.7%

TOTAL OPERATING EXPENSES 2,705,205,184 1,950,797,784 1,055,599,261 713,953,328 754,407,400 38.7% 341,645,933 47.9%

INCOME BEFORE INCOME TAX 1,840,038,888 1,073,403,300 802,771,872 209,390,834 766,635,588 71.4% 593,381,038 283.4% PROVISION FOR (BENEFIT FROM) INCOME TAX (Note 27)

241,917,846 86,763,784 84,196,552 39,831,937 155,154,062 178.8% 44,364,615 111.4%

NET INCOME 1,598,121,042 986,639,516 718,575,320 169,558,897 611,481,525 62.0% 549,016,423 323.8% Basic and Diluted Earnings Per Share attributable to Equity Holders of the Parent Company

6.55 4.59