Doing the Right Business, the Right Way
Metrobank has emerged as the Philippines’ best and strongest bank because we have stayed true to doing the right business the right way. These accomplishments over the past year were built upon 60 years of making sure our mission is within reach: to empower Filipinos to realize their goals and reach their full potential.
The way we behave, act, and do our business is an expression of our Corporate Governance Manual (CGM), which allows us to put into action our values: accountability, integrity, fairness, and transparency.
We take full responsibility for our decisions and actions. To live up to this value, we follow the following rules and processes:
Strong Leadership at the Top
Taking good care of the Bank is led at the top by the Board, which has regularly reviewed and monitored the execution of the Bank’s strategies. Because of its strong oversight, the Board has enabled the Bank to grow and move closer to the path of sustainability.
We have deliberately created a diverse Board to bring objectivity and independence in the body’s decision-making process.
It is composed of 12 directors: 10 Non-Executive Directors (NEDs) and 2 Executive Directors (Eds). Half of our NEDs are Independent Directors (IDs), including 1 female ID.
None of the NEDs have interlocking directorship roles in more than five publicly listed companies. Likewise, none of the EDs serve in more than two boards of publicly listed companies outside of the Group.
Choosing the Right Leaders
The task of screening and recommending candidates to the Board and Senior Management falls on the shoulders of the Nominations Committee.
The Nominations Committee screens candidates through referrals from existing directors and officers, external databases, external search firms, and nominations from any stockholder.
The Chairman of the Board and the President
At the helm of the Bank is the Chairman of the Board, Mr. Arthur Ty, who steers the Board’s overall leadership and direction. Meanwhile, Mr. Fabian S, Dee, the President, manages the Bank’s business and operations based on the Board’s decision and on his sound judgement.
Efficiently Deliberating on the Bank’s Success
Our directors understand their role in carrying out their responsibilities no matter what the situation is.
The Board holds its regular meetings typically every third Wednesday of each month, while special meetings may be called anytime as needed. Recently, Board meetings have transitioned to a hybrid setup, allowing directors to attend in person.
Bringing Business Critical Matters to the Fore
The Board gets things done more effectively through its 10 committees that deliberate and examine specific and complex issues: Anti-Money Laundering Committee; Audit Committee; Corporate Governance and Compensation Committee; Executive Committee; Information Technology Steering Committee; Nominations Committee; Overseas Banking Committee; Related Party Transactions Committee; Risk Oversight Committee; and Trust Committee.
Nurturing a Board of Competent Directors
We recognize that the Bank's long-term success depends on the quality of our leaders. In 2022, we have successfully rolled out an orientation program for new directors and continuing education for incumbent directors.
Appraising Board Performance
We make sure the Board performs to the expectations of our clients and stakeholders. The Bank has adopted a five-point self-rating system to assess whether the Board adheres to the Bank’s Code of Corporate Governance.
Retirement and Succession
The Board has built a succession plan to identify, encourage, and take care of top-caliber leaders who can readily assume high-level positions in case of change, vacancies, and retirement.
We strive to be honest and act right based on our community’s morals, our ethics, our laws, and our own policies. To guide our decisions and actions, we adhere to the following:
Upholding Good Conduct and Ethics for Directors Our Bank leaders perform their roles and responsibilities as articulated in the Code of Conduct and Ethics for Directors:
- They must never use their position to profit or benefit from the Bank’s dealings.
- They must avoid conflicts of interest.
- They must show integrity, develop their skills, and deepen their knowledge to serve the Board.
Upholding Good Conduct for Employees
Integrity starts with the individual employee. The Code of Conduct for Employees mandates employees to avoid conflicts of interest, preserve confidential information, and avoid accepting any form of bribe or gift which can cloud their judgment when performing their duties.
Building an Empowered, Satisfied Workforce
Good governance is built on the back of people’s capability. We ensure that our employees are inspired, proud, and confident to take on their responsibilities through continuous learning, performance assessment, talent and succession, and a rigorous behavioral assessment of leadership potential.
Managing Compliance Risk Exposures
Given the depth and breadth of the business and reach, the Bank is subject to various risks and uncertainties. We have set in place a dynamic and responsive Compliance Risk Management System to manage, defend, protect, and mitigate any risks exposure.
We play by the rules and observe fair play. No one is above the law. With the help of the Board, we make sure our actions are fair by following these policies and programs:
Fair Business Transactions and Managing Conflicts of Interest
We have zero tolerance for bribery and corruption practices, as articulated in the Bank’s Anti-Bribery and Corruption Policy.
As part of our corporate governance, all related parties are properly identified, and related party transactions are vetted and approved depending on the threshold by either the management-level committee or Board-level committee.
Protecting Stockholders’ Rights and Interests
We assure that all shareholders are treated fairly and stockholders are respected in line with the Revised Corporation Code through open and fair conduct of annual and special stockholders’ meetings, advanced disclosure and release of material information, and fair exercise of stockholder’s rights.
Protecting Customers Anytime, Anywhere
It is the obligation and privilege of the Bank to protect the interests of its customers. All directors and employees must live up to the intent and letter of the Bank’s Customer Protection Policy. We also make sure customers are protected on social media through the Social Media Risk Management Policy.
Supplier and Contractor Selection
We only partner with the right supplier and contractor by upholding the Bank’s BSP-compliant Outsourcing Policy, which mandates rigorous accreditation/re-accreditation and selection mechanisms, as well as performance evaluation.
Putting the Employees’ Health, Safety, and Welfare First
Our employees’ health and wellbeing are our priority. In 2022, we strengthened our #VaxForMetrobankers program to immunize our employees and raise their awareness on matters of health and wellness. We also rolled out MetrobankCARES to support their mental health.
We are transparent in all our affairs. To show our openness, we comply with the following policies and obligations:
Prohibiting Insider Trading
Through our Insider Trading Policy, we protect our shareholders from anyone who may use valuable information that is not readily available for their unfair benefit. We strictly follow “a need-to-know basis” for disclosing material and non-public information about any of the companies within the Metrobank Group or its partners.
We create a safe and secure process for anyone to “blow the whistle” and speak up without fear of retribution. Reports or concerns may be filed through our company website or emailed to email@example.com or messaged via the text hotline at (+63)9427471359.
Our dividend policy is part of our capital management process that ensures that the Bank has sufficient resources to support long term growth. At the same time, it aims to improve the returns to our shareholders.
In February 2022, the BOD approved a new dividend policy. The annual regular cash dividends will be equal to PHP1.6 per common share, which is equivalent to 8.0% of par value.
The regular cash dividend will be paid in two (2) equal semi-annual tranches of PHP0.8 per share, in March and in September.
The Bank makes sure its compensation packages are attuned to the operations and risk culture, long-term strategic and financial interests, and labor laws and regulations. It is designed to promote people to perform and excel at what they do. To attract and retain the best people, the Bank ensures that compensation remains competitive against industry standards.
Supporting the Country Towards Sustainability
We drive corporate social responsibility (CSR) initiatives that create better education outcomes, bring peace and order, and put arts at the center of nation building. Comprehensive community and CSR are conducted by the Metrobank Foundation, and through the Purple Hearts Club, the employee volunteerism arm of the Bank.
Keep Your Money in Good Hands
We make risk management a top priority and as such, our actions and decisions are bound by these principles:
- We only take risks that are within the Bank’s needs and objectives.
- We adapt our ways of working to changes.
- We have the right risk management structure – from rules to tools.
- We make sure all our directors and employees, even our customers, are responsible for upholding the Bank’s risk management.
Keeping Risks in Check
Our Risk Management Process is based on the interplay of business goals and needs, associated risks, and required capital. Our goal is to make sure the Bank grows sustainably amid changing business cycles.
We employ best-in-class and regulatory-compliant metrics and risk assessment tools to measure risks and help us prevent and intercept the onset of serious issues.
Strengthening Risk Governance
Our Risk Governance Structure enables us to benefit from opportunities while minimizing the negative consequences of associated risks.
The Board, through the Risk Oversight Committee (ROC), oversees the Bank’s risk management. Reporting to the ROC is the Risk Management Group (RSK), an independent unit which closely works with other business units to identify, analyze, measure, and monitor risks.
RSK was reorganized in 2022 to include the Business Resilience Risk Management Division, which is tasked to manage both business continuity and technology. To support RSK, various units have also embedded Business Risk Managers.
Material Risks to the Bank
We only take risks that drive our business objectives and are within our risk management capacity. We manage the Bank’s business exposures coming from the following risks: credit risk; credit concentration risk; market risk; interest rate risk in the banking book (IRRBB); liquidity risk; operational risk; technology risk; compliance and regulatory risk; reputation risk; strategic risk; and contagion risk.
Ensuring Capital Adequacy
The Bank’s capital is managed to comply with regulatory capital requirements and to maintain healthy capital ratios that support the business and maximize our shareholders’ value.
Future-Proofing the Bank
As we look to the future, we are committed to pursue a path of excellence and to build on the gains that we have accumulated. We have always adopted a sustainability agenda anchored on a desire to help accelerate national development by providing financial solutions that empower individuals and businesses in a way that balances short- and long-term interests, and integrates economic, environmental and social considerations – a view that we sustained in 2022.
Preventing Money Laundering
We commit to maintain the public’s confidence in the Bank’s capability to prevent money laundering, terrorist financing, and proliferation financing.
We have built a strong compliance system and fostered a culture of compliance because we have established strong risk management practices from end-to-end in our entire ecosystem:
- The Board and Senior Management have strong oversight.
- Acceptable policies and procedures are articulated in the Bank’s money laundering and terrorist financing prevention compliance program.
- Monitoring system is appropriate and working.
- Management information systems are set in place.
- Internal controls and audits are comprehensive.
- Adequate training, clear communications among stakeholders, and risk-based compliance testing are also built into the system.
The mission of the Bank’s internal audit is to enhance and protect the Bank’s organizational value. The Internal Audit Group (IAG) provides the Bank with risk-based and objective assurance, advice, and insight.
In pursuit of the Bank’s drive towards excellence, IAG intensified its thematic advisory reviews, augmented the embedding of data analyses, enhanced its continuous auditing, and strengthened continued comprehensive audit coverage and control evaluations.
Audit Committee Report to the Board of Directors
The Audit Committee has continued to effectively perform its duties and responsibilities throughout the year, as defined in the Board-approved Committee Charter. It has assisted the Board of Directors in fulfilling its statutory and fiduciary responsibilities, as well as in protecting the value and interests of shareholders, through close coordination with the Management in the light of emerging risks to ensure that processes and operations are kept at optimum level.
The Audit Committee is composed of three qualified non-executive members duly appointed by the Board of Directors, with two of its members as independent directors including the Chairperson. All Committee members have relevant background and experiences, and possess appropriate knowledge and skills necessary in carrying out their functions. The directors also hold membership positions in other Board-level Committees of the Bank, through which they are apprised of developments in other areas and are able to provide advice on risk taking and management activities.
In 2022, the Audit Committee held 12 regular meetings conducted virtually. Each regular committee meeting was attended by the Chief Audit Executive to report on the progress of plans, implementation of enhanced audit strategies/approaches, and significant issues, with related committed actions, arising from audit reviews. The Chief Risk Officer, Controller, and key Management Officers, and External Auditor attended relevant sessions and provided pertinent information.
The Audit Committee regularly reported results of its activities to the Board of Directors. It met with all other independent and non-executive Board members, together with the External Auditor, and the Heads of Internal Audit, Risk Management and Compliance Functions on a special meeting without the presence of any Senior Executives, and discussed the identified critical and emerging risk areas along with the Management solutions to address these risks and the IA strategies to evaluate the Management solutions and controls put in place and to assess the effectiveness of oversight functions to monitor exposures driven by the changing business landscape.
The Committee completely performed its regular work program for 2022 and had the following key achievements:
1. Financial Reporting and Disclosure: Reviewed and discussed with Management and External Auditor the results of audit of the financial statements and related disclosures for the year ended December 31, 2022, and reported the same to the Board of Directors for approval. In carrying out the review, the Committee ensured that the financial reporting process and disclosure requirements are in compliance with applicable accounting standards and regulations.
2. Risk Management and Internal Controls: Evaluated the Bank’s risk management techniques and results thereof, and the internal control policies and procedures, systems and processes through the audit assessment results derived from the focused testing on high priority business functions and areas particularly controls on fraud prevention, anti-money laundering, cybersecurity/data privacy, business continuity, among others. The Audit Committee continued the proactive engagement and involvement of Management in ensuring timely resolution of audit observations and implementation of control recommendations, effectively conveying the culture of risk ownership within the organization.
3. Regulatory Compliance: Assessed the effectiveness of Governance functions which provided oversight on the Bank’s compliance with new and existing laws and regulations promulgated by the Bangko Sentral ng Pilipinas and other regulatory government agencies.
The Audit Committee has performed the required annual review of its Charter to ensure that it is updated, aligned with peers, and compliant with regulatory changes and recommended best practice. The Committee also conducted an annual self-assessment to evaluate their performances against the requirements of the Charter.
4. Management and Internal Audit: Confirmed the effectiveness of the internal audit function, including audit services and activities provided to Bank’s subsidiaries and associates. Among the oversight activities performed by the Committee for the internal audit function are the following: (i) reviewed and approved the revised risk assessment framework and the annual audit plan including subsequent revisions and necessary adjustments throughout the year, ensured adequacy of scope and activities, and monitored accomplishments and plan completion to provide basis for the overall audit conclusion; (ii) reviewed the Internal Audit Charter and noted the revisions in the Internal Audit Manual, and supervised its implementation; (iii) reviewed the audit reports received on a regular basis to assess the overall condition of the Bank’s internal control system; (iv) discussed significant matters with Senior Management, as necessary, and evaluated timeliness of resolution of control weaknesses and compliance issues; (v) recommended enhancements and confirmed transformational initiatives in the audit processes for continuous improvement; (vi) reviewed and monitored the engagement of the External Quality Assessor; and, (vii) evaluated the performance of the Chief Audit Executive.
The Committee ensured that the internal audit function has maintained its independence throughout the year, has adequate and competent resources, and has appropriate authority to effectively discharge its duties and achieve its goals and objectives. The Audit Committee extended full support and provided guidance to the Internal Audit Group as it implemented certain changes and reforms in its risk assessment and prioritization strategies to be more focused on business-critical and heightened risk areas, and to consider recent developments on governance structures and changes in risk profiles. These measures, among other transformation activities and initiatives, shall amplify the value derived from audit activities.
5. External Audit: Exercised effective oversight of external audit function as the Committee assessed and approved the reappointment of SyCip Gorres Velayo & Co. (SGV), as the Bank’s external auditor for 2022; ensured the external auditor's objectivity, independence and compliance with ethical and professional standards; discussed and agreed to the terms of audit engagement, coverage and audit fees; reviewed and approved all non-audit services and expenses and related fees (i.e., validation of votes cast at the annual stockholders’ meeting and issuance of comfort letter) to ensure no conflict to independence; reviewed the external audit engagement plan, approach and scope of work; reviewed the results of audit and recommendations in the External Auditor’s Management Letter and action plans of the Management on reported observations, including monitoring of disposition and status of corrective actions.
Based on the Committee’s accomplishments, representation from the Bank Management, External Auditor’s unqualified opinion on the financial statements, and the Chief Audit Executive’s overall satisfactory assessment on the adequacy and effectiveness of the Bank’s internal controls, risk management, and governance processes, the Audit Committee concludes that the business risks and emerging threats are effectively identified, measured and managed.