2011 Annual Report Financial Supplements - BDO

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BDO Unibank Group Parent BankCost Fair Value Cost Fair ValueFinancial Liabilities:Deposit liabilities 858,569 861,289 838,748 841,447Bills payable 59,474 59,495 51,378 51,460Subordinated notes payable 38,255 41,549 38,255 41,549Other liabilities 41,494 41,494 34,930 34,930December 31, 2010Financial Assets:Due from other banks and BSP P 160,259 P 160,260 P 150,151 P 150,152AFS securities – unquoted 927 * 662 *HTM investments 104,241 115,245 95,569 106,175Loans and other receivables 566,021 567,808 548,618 554,063Other resources 2,552 2,552 2,886 2,886Financial Liabilities:Deposit liabilities 782,635 784,917 762,634 765,289Bills payable 65,861 65,378 56,081 55,679Subordinated notes payable 23,152 25,120 23,152 25,120Other liabilities 37,898 37,898 32,403 32,403* Data not available(i) Due from Other Banks and BSPDue from BSP pertains to deposits made by BDO Unibank Group to BSP forclearing and reserve requirements. Due from other banks includes interbankplacements and items in the course of collection. The fair value of floating rateplacements and overnight deposits is their carrying amount. The estimated fair valueof fixed interest-bearing deposits is based on discounted cash flows using prevailingmoney market interest rates for debts with similar credit risk and remaining maturity,which for short-term deposits approximate the nominal value.(ii) AFS SecuritiesThe fair value of AFS securities is determined by direct reference to published pricequoted in an active market for traded securities. On the other hand, unquoted AFSsecurities are carried at cost because the fair value cannot be reliably determined eitherby reference to similar financial instruments or through valuation technique.Currently, there is no available market to sell the unquoted equity AFS securities. TheBank will hold into the investments until management decides to sell them when therewill be offers to buy out such investments on the appearance of an available marketwhere the investments can be sold.(iii) HTM InvestmentsThe fair value for held-to-maturity assets is based on market prices. Where thisinformation is not available, fair value has been estimated using quoted market pricesfor securities with similar credit, maturity and yield characteristics or through valuationtechniques using discounted cash flow analysis.www.bdo.com.ph 51
NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)(iv) Loans and Other ReceivablesLoans and other receivables are net of provisions for impairment. The estimated fairvalue of loans and receivables represents the discounted amount of estimated futurecash flows expected to be received. Expected cash flows are discounted at currentmarket rates to determine fair value.(v) Deposits and BorrowingsThe estimated fair value of demand deposits with no stated maturity, which includesnon-interest-bearing deposits, is the amount repayable on demand. The estimated fairvalue of long-term fixed interest-bearing deposits and other borrowings withoutquoted market price is based on discounted cash flows using interest rates for newdebts with similar remaining maturity.(c) Fair Value of DerivativesThe fair value of derivative financial instruments that are not quoted in an active market isdetermined through valuation techniques using the net present value computation.Valuation techniques are used to determine fair values which are validated and periodicallyreviewed. To the extent practicable, models use observable data, however, areas such ascounterparty credit risk, volatilities and correlations require management to make estimates.Changes in assumptions could affect the reported fair value of financial instruments. BDOUnibank Group uses judgment to select a variety of methods and make assumptions thatare mainly based on market conditions existing at the end of each reporting period.(d) Financial Instruments Measured at Fair ValueFinancial assets and liabilities measured at fair value are categorized in accordance with thefair value hierarchy. This hierarchy groups financial assets and liabilities into threelevels based on the significance of inputs used in measuring the fair value of the financialassets and liabilities. The fair value hierarchy has the following levels:Level 1: quoted prices (unadjusted) in active markets for identical assetsor liabilities;Level 2: inputs other than quoted prices included within Level 1 that are observablefor the asset or liability, either directly (i.e., as prices) or indirectly(i.e., derived from prices); and,Level 3: inputs for the asset or liability that are not based on observablemarket data (unobservable inputs).The level within which the financial asset or liability is classified is determined based onthe lowest level of significant input to the fair value measurement.
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 24 and 25: PFRS 7 (Amendment), Financial Instr
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
Page 51: 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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