Metrobank remains steadfast in recognizing the highest standards of corporate governance, upholding integrity, accountability, fairness, and transparency in all its policies.

The Board of Directors is composed of a diverse group of proficient individuals who combine insight and good judgment in implementing good governance. The bank has always maintained the Board’s composition to twelve directors — a deliberate stance to promote objectivity and strong element of independence in the Board.

In 2020, the Board held a total of fourteen meetings in which all incumbent directors fully participated in. The Board’s perfect attendance reflects its members’ key interest in being actively involved. It further demonstrates the Board’s willingness to provide an optimal level of contribution especially given the pandemic situation.

The banking business is all about managing risks relative to gaining rewards. With 58 years of banking excellence, Metrobank remains committed in managing and protecting the financial resources entrusted to it by its stakeholders. The Bank only takes in risks that it understands, can manage, mitigate, or accept, and wisely conducts its business based on a risk management framework suited to its scope and complexity, consistent with international regulatory standards.

The bank’s risk management principles were tested during the height of the COVID-19 pandemic, as it became clear that the challenge for the risk management function was to sustain the bank’s goals of ensuring the safety of its employees, protecting the balance sheet against significant asset quality decline, and evolving and adapting to a new normal way of doing business.

The bank’s Anti-Money Laundering (AML) compliance program, designed to identify and mitigate business and regulatory risks, is based on established risk management practices, and conforms to applicable rules and regulations on the prevention of money laundering and terrorist financing. The Anti-Money Laundering Committee helps the Board in fulfilling its oversight responsibility to make sure that the Bank complies with the provisions of the AMLA, as amended, its Revised Implementing Rules and Regulations, and other related regulations.

Over the years, the Internal Audit function has become more relevant and consistent in adding value to the bank and in delivering on its mission to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight.
The Internal Audit Group (IAG) established by the Board of Directors maintains its independence and objectivity in performing and delivering audit works. Considering the challenging environment in 2020, IAG refocused its business plan on emerging risks and optimized audit resources by providing more crucial and valuable analyses and recommendations to assist the Management in dealing with the changing business landscape.

2020 has been an extraordinary difficult year for the Bank and to its stakeholders as the emergence of the COVID-19 pandemic has caused severe impact and continuing challenges to the business. Nevertheless, the Audit Committee has continued its works and assisted the Board of Directors in fulfilling its statutory and fiduciary responsibilities, as well as in protecting the value and interests of shareholders. It has effectively performed its duties and responsibilities throughout the year, as defined in the Board-approved Committee Charter.
The Audit Committee is composed of four qualified non-executive members duly appointed by the Board of Directors, with three of its four members as independent directors including the Chairperson. All Committee members are with relevant background and experiences, 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 advices on risk taking and management activities.
In 2020, the Audit Committee held 12 regular meetings and two joint sessions with the Risk Oversight Committee. Most of these were conducted virtually through remote communication, as physical or face-to-face meetings are prohibited in the new normal work environment. Each regular committee meeting was attended by the Chief Audit Executive to report on the strategic developments, progress of plans and significant issues arising from audit reviews. The Chief Risk Officer, Controller and External Auditor were invited to attend relevant sessions, as required. In addition, the Committee Chairman had a private session with the Chief Audit Executive to discuss about the internal control culture of the Bank.
The Audit Committee regularly reported result of its activities to the Board of Directors. It met with all other independent and non-executive Board members, together with the External Auditor, 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 as well as the relevant governance and control issues of the Bank.
The Committee had completely performed its regular work program in 2020 despite the challenges and limitations brought by the pandemic, and achieved the following key activities:
1. Financial Reporting and Disclosure: Reviewed and discussed with Management and External Auditor the audited financial statements and related disclosures for the year ended December 31, 2020, 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: Performed a robust assessment of the Bank’s risk profile, and evaluated the adequacy and effectiveness of the Bank’s internal control policies and procedures, systems and processes through the audit assessment results derived from the focused testing performed on high priority risk units and areas such as on crisis management, business continuity, fraud and anti-money aundering, cybersecurity, online banking, capital and liquidity risk management, occupational health and safety, complaints handling, among others. The Audit Committee continued the proactive engagement and involvement of Management in monitoring timely resolution of audit observations and recommendations, effectively conveying the culture of risk ownership within the organization.
3. Regulatory Compliance: Monitored compliance of the Bank with new and existing laws and regulations promulgated by the Bangko Sentral ng Pilipinas and other regulatory government agencies, including the Bank’s availment of regulatory reliefs and the effective implementation of relief measures extended to its clients to manage the pandemic situation.
In addition, the Audit Committee has performed the required annual review of its Charter to ensure that it is updated and aligned with new regulatory mandates, and the 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 risk assessment framework and the annual audit plan including subsequent revisions, ensured adequacy of scope and activities, and monitored accomplishments and plan completion to provide basis for the overall audit conclusion; (ii) reviewed and approved the internal audit charter and manual, and oversee its implementation; (iii) reviewed the audit reports received on a regular basis, including the regulatory reports, to assess the overall condition of the Bank and its covered subsidiaries’ internal control system; (iv) discussed significant matters with Senior Management, as necessary, and monitored timely resolution of control weaknesses and non-compliance issues identified; (v) recommended enhancements in the audit processes for continuous improvement.
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. As a result, the Internal Audit Group (IAG) had completed and delivered its 2020 audit plan within budget, which provided valuable insights to Management, resulted to new strategies and approaches, enhanced efficiency and increased effectiveness of control implementation.
At the onset of the COVID-19 pandemic, the Audit Committee extended full support and provided guidance to IAG which contributed to the Group’s quick and agile response in coping with the crisis. It assessed the adequacy and appropriateness of the changes and alternative audit strategies pursued in response to the changed environment. Full monitoring of audit activities during the community quarantine period was undertaken to ensure that auditors are still productive and are continuously engaged in audit activities while working from home. Moreover, the Audit Committee initiated adjustments in IAG’s budget and expense allocation, along with the revisions in audit scope and shift in audit strategy, which resulted to cost reduction and savings for the Bank in 2020 whilst ensuring maintained level of audit execution effectiveness and quality of service outcomes.
5. External Audit: Exercised effective oversight of external audit function as the Committee assessed and approved the reappointment of SyCip Gorres Velayo & Co., as the Bank’s external auditor for 2020; 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, issuance of comfort letter, vulnerability assessment and penetration testing of publicly accessible servers, network, devices and services) 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.
6. Oversight and Counsel in Handling Cases of Irregularity and Dishonesty: At the request of the Audit Committee, a special meeting with Human Resources Management and Special Action Committee Head was organized to discuss the investigation and disciplinary approach on various cases of irregularity and dishonesty. This initiative led to the Bank’s action plan to revisit the policy and process, as well as to provide relevant trainings for employees.
Based on the result of the Committee’s accomplishments, representation from the Bank Management, External Auditor’s unqualified opinion on financial statements, and Chief Audit Executive’s overall satisfactory assessment on the adequacy and effectiveness of Bank’s internal controls, risk management, and governance processes, the Audit Committee conclude that the emerging business risks and threats brought by the COVID-19 pandemic are effectively mitigated in accordance with the Bank’s policies and relevant regulations.