2011 Annual Report Financial Supplements - BDO

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The lead regulator of the banking industry, the BSP, sets and monitors capital requirementsfor the BDO Unibank Group. In implementing current capital requirements, the BSPrequires BDO Unibank Group to maintain a prescribed ratio of qualifying capital to riskweightedassets.Under current banking regulations, the combined capital accounts of a bank should not beless than an amount equal to ten percent of its risk assets. The qualifying capital of the BDOUnibank Group for purposes of determining the capital-to-risk assets ratio is total equityexcluding:(a) Unbooked valuation reserves and other capital adjustments as may be required by theBSP;(b) Total outstanding unsecured credit accommodations to directors, officers, stockholdersand related interests (DOSRI);(c) Deferred tax asset or liability;(d) Goodwill;(e) Sinking fund for redemption of redeemable preferred shares; and,(f) Other regulatory deductions.Risk assets consist of total assets after exclusion of cash on hand, due from BSP, loanscovered by hold-out on or assignment of deposits, loans or acceptances under letters of creditto the extent covered by margin deposits, and other non-risk items as determined by the MBof the BSP.The amount of surplus funds available for dividend declaration is determined also on thebasis of regulatory net worth after considering certain adjustments.The BDO Unibank Group’s policy is to maintain a strong capital base to promote investor,creditor and market confidence and to sustain future development of the business. Theimpact of the level of capital on shareholder’s return is also recognized and BDO UnibankGroup recognizes the need to maintain a balance between the higher returns that might bepossible with greater gearing and the advantages and security afforded by a sound capitalposition.The regulatory capital is analyzed into two tiers, which are Tier 1 Capital plus Tier 2 Capitalless deductions from the total of Tier 1 and Tier 2 capital for the following:(a) Investments in equity of unconsolidated subsidiary banks and other financial alliedundertakings, but excluding insurance companies;(b) Investments in debt capital instruments of unconsolidated subsidiary banks;(c) Investments in equity of subsidiary insurance companies and non-financial alliedundertakings;(d) Reciprocal investments in equity of other banks/enterprises; and,(e) Reciprocal investments in unsecured subordinated term debt instruments of otherbanks/quasi-banks qualifying as Hybrid Tier 1, Upper Tier 2 and Lower Tier 2, in excessof the lower of: (i) an aggregate ceiling of 5% of total Tier 1 capital of the bank excludingHybrid Tier 1; or, (ii) 10% of the total outstanding unsecured subordinated term debtissuance of the other bank/quasi-banks.Provided that any asset deducted from the qualifying capital in computing the numerator ofthe risk-based capital ratio shall not be included in the risk-weighted assets in computing thedenominator of the ratio.www.bdo.com.ph 115
NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)At the end of each reporting period, BDO Unibank Group has complied with the prescribedratio of qualifying capital to risk-weighted assets.Under an existing BSP circular, expanded commercial banks are required to comply with theminimum capital requirement of P4,950. At the end of each reporting period, the ParentBank has complied with the above capitalization requirement.There have been no material changes in BDO Unibank Group’s management of capitalduring the period.The Bank’s regulatory capital position (computed using balances prepared under FRSP forbanks) as of December 31, 2011 and 2010 follows:BDO Unibank Group Parent Bank2011 2010 2011 2010Tier 1 Capital P 90,978 P 83,474 P 84,619 P 78,201Tier 2 Capital 46,004 28,967 43,929 28,823Total Regulatory Capital 136,982 112,441 128,548 107,024Deductions ( 10,771) ( 10,229 ) ( 25,554) ( 21,957 )Total Qualifying Capital P 126,211 P 102,212 P 102,994 P 85,067Total Risk Weighted Assets P 798,936 P 738,416 P 756,567 P 700,510Capital ratiosTotal regulatory capital expressedas percentage of total riskweighted assets 15.8% 13.8% 13.6% 12.1%Total Tier 1 expressedas percentage of total riskweighted assets 10.2% 10.0% 8.7% 8.6%Tier 1 Capital P 90,978 P 83,474 P 84,619 P 78,201Tier 1 Capital Deductions ( 9,777) ( 9,394) ( 18,931) ( 17,698 )Net Tier 1 Capital P 81,201 P 74,080 P 65,688 P 60,503
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REPORT OFINDEPENDENT AUDITORSReport
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STATEMENTS OFINCOMEFOR THE YEARS EN
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BALANCE AT JANUARY 1, 2009 P 23,020
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FOR THE YEARS ENDED DECEMBER 31, 20
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1.02 Approval of Financial Statemen
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(ii) Philippine Interpretation IFRI
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PFRS 7 (Amendment), Financial Instr
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(v)PFRS 9, Financial Instruments: C
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BDO Unibank Group accounts for its
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Regular purchases and sales of fina
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Subsequent to initial recognition,
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Certain derivatives may be designat
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NOTES TOFINANCIAL STATEMENTSDECEMBE
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Page 65 and 66: NOTES TOFINANCIAL STATEMENTSDECEMBE
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Page 149: COMPANY HEADQUARTERSBDO Unibank, In
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2011 Annual Report Financial Supplements - BDO

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