2011 Annual Report Financial Supplements - BDO

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PFRS 7 (Amendment), Financial Instruments: Clarification of Disclosures (effective fromJanuary 1, 2011). The amendment clarifies the disclosure requirements whichemphasize the interaction between quantitative and qualitative disclosures aboutthe nature and extent of risks arising from financial instruments. It also amendsthe required disclosure of financial assets including the financial effect of collateralheld as security. This amendment has no significant effect on the financialstatements since BDO Unibank Group already provides adequate information inits financial statements in compliance with the disclosure requirements.Philippine Interpretation IFRIC 13, Customer Loyalty Programmes – Fair ValueAwards Credits (effective from January 1, 2011). The improvement clarifies thatwhen the fair value of award credits is measured on the basis of the value of theawards for which they could be redeemed, the fair value of the award creditsshould take into account the expected forfeitures as well as discounts or incentivesthat would otherwise be offered to customers who have not earned award creditsfrom an initial sale. This improvement has no significant effect on theconsolidated financial statements of BDO Unibank Group.(b) Effective in 2011 but not Relevant to BDO Unibank GroupThe following amended standards are mandatory for accounting periods beginning on orafter July 1, 2010 or January 1, 2011 but are not relevant to BDO Unibank Group’sfinancial statements:PAS 32 (Amendment) : Financial Instruments: Presentation -Classification of Rights IssuesPFRS 1 (Amendments) : First-time Adoption of PFRS(c) Effective Subsequent to 2011 but not Adopted EarlyThere are new PFRS, amendments, annual improvements and interpretations to existingstandards that are effective for periods subsequent to 2011. Management has initiallydetermined the following pronouncements, which the BDO Unibank Group will apply inaccordance with their transitional provisions, to be relevant to its financial statements:(i) PAS 1 (Amendment), Financial Statements Presentation – Presentation of Items of OtherComprehensive Income (effective from July 1, 2012). The amendment requires an entity togroup items presented in Other Comprehensive Income into those that, in accordancewith other PFRSs: (a) will not be reclassified subsequently to profit or loss and (b) willbe reclassified subsequently to profit or loss when specific conditions are met. Themanagement expects that this will not affect the presentation of items in othercomprehensive income since BDO Unibank Group’s other comprehensive incomeonly includes unrealized fair value gains and losses on AFS securities and cumulativetranslation, which can be reclassified to profit or loss when specified conditions aremet.www.bdo.com.ph 23
NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)(ii) PAS 12 (Amendment), Income Taxes – Deferred Tax: Recovery of Underlying Assets(effective from January 1, 2012). The amendment provides an exception to theexisting principle in PAS 12 that recovery of the carrying amount of investmentproperty measured at fair value under PAS 40, Investment Property, will be ornormally be through sale. The amendment introduces a rebuttable presumption thatthe measurement of a deferred tax liability or asset on an investment propertymeasured at fair value should reflect the tax consequence of recovering the carryingamount entirely through sale. The presumption is rebutted for depreciable investmentproperty (e.g., building) measured at fair value that is held with an objective toconsume substantially the economic benefits embodied in the asset over time, ratherthan through sale. As a result of the amendment, Standing Interpretation Committee(SIC) 21 Income Taxes – Recovery of Revalued Non-Depreciable Assets, isaccordingly withdrawn. The management does not expect that this amendment willimpact the financial statements since BDO Unibank Group does not measure itsinvestment property at fair value.(iii) PAS 19 (Amendment), Employee Benefits (effective from January 1, 2013). Theamendment made a number of changes as part of the improvements throughout thestandard. The main changes relate to defined benefit plans as follows:eliminates the corridor approach under the existing guidance of PAS 19 andrequires an entity to recognize all gains and losses arising in the reporting period;streamlines the presentation of changes in plan assets and liabilities resulting inthe disaggregation of changes into three main components of service costs, netinterest on net defined benefit obligation or asset, and remeasurement; and,enhances disclosure requirements, including information about thecharacteristics of defined benefit plans and the risks that entities are exposed tothrough participation in them.Currently, BDO Unibank Group is using the corridor approach. The unrecognizedactuarial losses of BDO Unibank Group and the Parent Bank as of December 31,2011 amounted to P4,520 and P4,252, respectively, which will be retrospectivelyrecognized as loss in other comprehensive income in 2013.(iv) PFRS 7 (Amendment), Financial Instruments: Disclosures – Transfers of Financial Assets(effective from July 1, 2011). The amendment requires additional disclosures that willallow users of financial statements to understand the relationship between transferredfinancial assets that are not derecognized in their entirety and the associated liabilities;and, to evaluate the nature of, and risk associated with any continuing involvement ofthe reporting entity in financial assets that are derecognized in their entirety. BDOUnibank Group does not usually enter into this type of arrangement with regard totransfer of financial asset, hence, the amendment may not significantly change BDOUnibank Group’s disclosures in its financial statements.
Page 7 and 8: REPORT OFINDEPENDENT AUDITORSReport
Page 9 and 10: STATEMENTS OFINCOMEFOR THE YEARS EN
Page 12: BALANCE AT JANUARY 1, 2009 P 23,020
Page 16 and 17: FOR THE YEARS ENDED DECEMBER 31, 20
Page 18 and 19: 1.02 Approval of Financial Statemen
Page 22 and 23: (ii) Philippine Interpretation IFRI
Page 26 and 27: (v)PFRS 9, Financial Instruments: C
Page 28 and 29: BDO Unibank Group accounts for its
Page 30 and 31: Regular purchases and sales of fina
Page 32 and 33: Subsequent to initial recognition,
Page 34: Certain derivatives may be designat
Page 37 and 38: NOTES TOFINANCIAL STATEMENTSDECEMBE
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NOTES TOFINANCIAL STATEMENTSDECEMBE
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COMPANY HEADQUARTERSBDO Unibank, In
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2011 Annual Report Financial Supplements - BDO

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