INTERNAL ANALYSIS

For BDO, the commitment towards the building for the future extends well beyond the Bank and its network; it reaches far higher than the business targets for the year. Building for the future is given real meaning in the profound, continued fulfillment of the Bank’s corporate social responsibility objectives and programs. The bank’s endeavors hewed closely to a long-standing track record of support to social development, reflecting a clear vision of a future built on a foundation of excellence, self-determination, and fearless initiative.

A.Management

There are thirteen duly elected board of directors for Banco De Oro. Henry Sy, Sr., 84, Filipino, is the Chairman Emeritus of BDO. He is the Founder and Chairman of SM Group of Companies, he is known as the visionary of Philippine retail because of his innovations in the industry. the shoe store he founded in 1958 as since evolved into a dynamic group of companies, with retail merchandising and shopping centers as core businesses and complementary ventures in banking, real estate, and leisure tourism development.

Teresita T. Sy-Coson, 57, Filipino is the Chairperson of BDO. Concurrently, she sits as Chairperson and/or Director of various BDO subsidiaries such as BDO Private Bank, BDO Leasing and Finance, Inc. (formerly PCI Leasing & Finance, Inc.), and BDO Capital &

Investment Corporation. Ms. Sy-Coson is also the Vice Chairperson of SM Investments Corporation, Chairperson of Supervalue, Inc. and a director of SM Prime Holding, Inc.

Shoemart, Inc., multi-Realty Development Corporation, and First Asia Realty Development Corporation.

Corazon S. De la Paz-Bernardo, 66, Filipino, assumed the post of Vice Chairperson of BDO in July 2007. Prior to that, she served as the Chairperson of Equitable PCI Bank from February 2006 to June 2007. She is currently the President and CEO of SSS.

Jesus A. Jacinto, Jr., 60, Filipino, was elected Vice Chairman of the Bank in May 1996, and is concurrently the Chairman and President of BDO Insurance Brokers, Inc. He is likewise a Director and Treasurer of BDO Realty Corporation. Mr. Jacinto is currently a Director and Vice President of the Bankers Association of the Philippines.

Christopher A. Bell-Knight, 63, Canadian, was appointed Director of BDO in May 2005. He was formerly a Director of Solidbank Corp. from 1990 to 1998, and Vice President and Country Head of the Bank of Nova Scotia. He has had over 40 years of banking experience in England, Canada, and Asia.

Nazario S. Cabuquit, Jr., 74, Filipino, was elected Director of EPCIBank on July 2005.

he had also been elected to the board of several EPCIB subsidiaries as well as various board committees in both EPCIB and some of its subsidiaries. He currently serves on the BDO Board as a nominee of the SSS, where he is Special Assistant to the President and CEO.

Terence Ong Sea Eng, 58, Singaporean, was appointed BDO Director in July 2006. He is also presently a Senior Executive Vice President of United Overseas Bank Ltd. and a Director of United Overseas Bank-Philippines. He holds a Bachelor’s degree in accountancy from the then University of Singapore and was previously the Deputy General Manager of the Board of Commissioners of Currency in Singapore.

Henry T. Sy, Jr., 54, Filipino, was elected BDO Director in July 2007. he is the Vice Chairman of SM Investments Corporation, SM Development Corporation, and Highlands Prime, Inc., and a Director of SM Prime Holdings, Inc., and San Miguel Corporation. He is chiefly responsible for the real estate acquisitions and development activities of the SM Group of Companies and holds Board positions in several companies within the SM Group.

Josefina N. Tan, 62, Filipino, is a director of BDO. Concurrently, she serves as Director and President of BDO Private Bank and a Director of BDO Realty Corp. Ms. Tan is also the Vice Chairperson of Miriam College, the President of Regal Properties, Inc., and a trustee in the Development Center for Finance and Laura Vicuna Foundation.

Nestor V. Tan, 50, Filipino, was elected President and Director of BDO in July 1998. He concurrently sits as Director of various subsidiaries of BDO including BDO Capital and Investment Corp., BDO Realty Corp., General Pilipinas Insurance Corp., BDO Leasing and Finance, Inc., and Generali Pilipinas Life Insurance Corp.

Teodoro B. Montecillo, 73, Filipino, was appointed as an independent Director in August 2004. He is concurrently an Independent Director in PDS Holdings Corp., Philippine Dealing Exchange Corp., Philippines Securities & Settlement Corp., and Philippinne Depository

& Trust Corp.

Jimmy T. Tang, 72, Filipino, has served as Director of the Bank since 1984. He is also the President of Avesco Marketing Corp. and presently the Honorary President of the Federation of Filipino-Chinese Chambers of Commerce & Industry, Inc.

Edmund L. Tan, 62, Filipino, was appointed Corporate Secretary of BDO-EPCIBank on July 2007. He is currently Chairman of EBC Investments, Inc. He was likewise appointed Chairman and President of EBC Strategic Holdings Corp. He serves as Director and Corporate Secretary of APC Group, Inc., Philippine Global Communications, Inc., PhilCom Corp., and Aragorn Power & Energy Corp.

Corporate Governance

The Bank enforced strict accountability and transparency while, at the same time, maintaining operational efficiency and pursuing dynamic innovations to deliver increased value to the banking public. This Pro-active and long-term view of corporate governance was translated into concrete actions and results by the Bank’s various working committees. The

committees reaffirmed in their respective areas how the Bank interprets corporate governance as a conscious and methodical effort, reinforced in an active and day-to-day advocacy of financial responsibility, integrity, and commitment to service.

Executive Committee

The Executive committee is headed by Teresita T. Sy-Coson with Nestor V. Tan; Jesus A. Jacinto, Jr.; Corazon S. De la Paz-Bernardo; Josefina N. Tan as members. They are the ones authorized to act on behalf of the Board of Directors on matters affecting the operations of the bank subject to legal limits and by laws of the bank, and such ceilings that may be imposed by the Board of Directors. It has the authority to approve within set limits, for instance, technology-related project or such other initiatives for enhancing the Bank’s operating and service delivery capabilities; operating policies and/ or manuals; and the establishment of branches and/or extension offices as well as domestic or foreign subsidiaries. The Executive Committee meets as necessary to pass upon matters referred to it and is comprised of at least three directors appointed/designated by the Board.

Audit Committee

The Audit committee is headed by Teodoro B. Montecillo with Corazon S. De la Paz-Bernardo; Henry T. Sy, Jr.; Jimmy T. Tang; Christopher A. Bell-Knight as members and Nazario S. Cabuquit, Jr.; and Jesus G. Tirona as advisers. They act on behalf of the Board and provides oversight of the Bank’s financial reporting and control as well as internal and external audit functions. It reviews and assesses the Bank’s annual audit plan, its system of internal controls, and regular financial and audit reports. It further reviews strategic issues relating to plans and policies, financial and system controls, and methods of operation, seeing to their adequacy and pinpointing possible improvements.

Compensation Committee

Headed by Teresita T. Sy-Coson with Corazon S. De la Paz-Bernardo; Josefina N. Tan;

Teodoro B. Montecillo as members. They provide oversight on director’s compensation and senior management and other key personnel’s remuneration. It ensures consistency of compensation policies and practices with the corporate culture, strategy, and control environment as well as with peer institutions and designed to attract and retain qualified and competent individuals. It evaluates and recommends to the Board incentives and other equity-based plans for directors and senior management.

Corporate Governance Committee

Headed by Teodoro B. Montecillo wih Jesus A. Jacinto, Jr.; Nazario S. Cabuquit, Jr.;

Jimmy T. Tang; and Christopher A. Bell-Knight as members and Antonio C. Pacis as adviser.

They assist the Board in shaping the Bank’s corporate governance policies and practice.

Besides reviewing and assessing these policies and practices, it recommends applicable guidelines, monitors compliance, and recommends needed adjustments to ensure effectiveness. It also oversees the annual performance self-evaluation of the Board, its committees, and executive management, as well as conducts an annual self-evaluation of its own performance.

Credit Committee

The credit committee takes charge of the review and approval of the Bank’s loans and investments as well as other credit related issues. It assesses the viability of credit and investment proposals or related party, with specific attention of the appropriateness of the credit extension and risks involved. Proposals beyond its approving authority are endorsed to the Executive Committee. It also sees to regular credit reviews on a per account and portfolio basis,

as well as assessments of credit policies and procedures, risk standards, and, where required, dissemination of credit manuals.

Nomination Committee

The nomination committee provides oversight on the qualifications of all nominees to the Board as well as to other Bank positions requiring Board appointment. It recommends to the Board the state of nominees for election to the Board during the Bank’s annual stockholders’

meeting. In case of Board seat vacancies, it seeks to qualified nominees and recommends these to the Board for appointment.

Risk Management Committee

The risk management committee is responsible for policy development and oversight over the Bank’s credit, market and operating risk exposures. It oversees the system of limits of discretionary authority that the Board delegates to management, ensuring that these are observed and any breaches are immediately corrected. It establishes the framework for reporting risk to the Board including the assessment on the probability and potential impact of each identified risk exposure of the Bank. These reports include information on portfolio concentrations, value at risk measurements, and breaches on limits.

Trust Committee

The trust committee, acting within Board-set limits, is authorized to review and approve transactions between trust and/or fiduciary accounts, to accept and close trust and other fiduciary accounts and to approve the investment, reinvestment, and disposition of funds or property. It evaluates trust and other fiduciary accounts at least once yearly to determine

compliance with the instrument creating the trust or other fiduciary relationship, as well as the advisability of retaining or disposing of the trust or fiduciary assets.

B.Marketing

Over the course of 10 years, BDO – via a combination of organic growth and acquisitions – has steadily increased its market position, from being the 16th largest Philippine bank by assets in 1997, when it was first granted a universal banking license, to second largest in 2007.This transformation has been funded and managed by the Sy Family’s SM Group, which plays a dominant role in retail marketing in the Philippines because of its shopping malls, department stores and supermarkets.

Banco de Oro’s marketing division is headed by Mr. Rafael G. Besa who is Senior Vice President and Group head of Marketing Communications for Banco De Oro. This group is made up of several marketing communicators and marketing communication managers who practice advertising, branding, direct marketing, marketing promotions and public relations for the sake of BDO.

Their marketing unit’s task is to broaden its market thru advertising and commercials showing the different services that BDO can offer. Another one is their continued publication of their different promos with companies such as SMART Telecommunications and PLDT. As for the distribution of their services, BDO currently has 665 branches and over 1.253 ATM’s nationwide.