2011 Annual Report Financial Supplements - BDO

NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)4.02.01 Foreign Exchange RiskBDO Unibank Group manages its exposure to effects of fluctuations in the foreign currencyexchange rates by maintaining foreign currency exposure within the existing regulatoryguidelines and at a level that it believes to be relatively conservative for a financial institutionengaged in that type of business.BDO Unibank Group’s net foreign exchange exposure is computed as its foreign currencyassets less foreign currency liabilities. BSP regulations impose a cap of 20% of unimpairedcapital or US$50 million, whichever is lower, on the group excess foreign exchange holding ofbanks in the Philippines. BDO Unibank Group’s foreign exchange exposure is primarilylimited to the day-to-day, over-the-counter buying and selling of foreign exchange in BDOUnibank Group’s branches as well as foreign exchange trading with corporate accounts andother financial institutions. BDO Unibank Group, being a major market participant in thePhilippine Dealing System, may engage in proprietary trading to take advantage of foreignexchange fluctuations.BDO Unibank Group’s foreign exchange exposure during the day is guided by the limits setforth in BDO Unibank Group’s Risk Management Manual. These limits are within theprescribed ceilings mandated by the BSP. At the end of each day, BDO Unibank Groupreports to the BSP on its compliance with the mandated foreign currency exposure limits. Inaddition, it also reports to the BSP on the respective foreign currency positions of itssubsidiaries.The breakdown of the financial assets and liabilities as to foreign and peso-denominatedbalances as of December 31, 2011 and 2010 follows:BDO Unibank Group2011 2010ForeignForeignCurrency Peso Total Currency Peso TotalResources:Cash and other cash itemsand due from BSP P 24 P 157,999 P 158,023 P 12 P 165,143 P 165,155Due from other banks 24,137 582 24,719 21,738 39 21,777Trading and investmentsecurities:At FVTPL 2,071 2,752 4,823 3,743 3,629 7,372AFS securities 66,152 23,773 89,925 48,040 37,634 85,674HTM 77,940 15,730 93,670 84,361 19,880 104,241Loans and other receivables 124,178 549,749 673,927 133,032 432,989 566,021Other resources 2,002 425 2,427 2,194 358 2,552P 296,504 P 751,010 P 1,047,514 P 293,120 P 659,672 P 952,792Liabilities:Deposit liabilities P 206,618 P 651,951 P 858,569 P 217,049 P 565,586 P 782,635Bills payable 44,565 14,909 59,474 39,825 26,036 65,861Subordinated notes payable - 38,255 38,255 - 23,152 23,152Other liabilities 2,455 39,039 41,494 5,080 32,818 37,898P 253,638 P 744,154 P 997,792 P 261,954 P 647,592 P 909,546