2011 Annual Report Financial Supplements - BDO

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. SubstandardAccounts classified as “Substandard” are individual credits or portions thereof, whichappear to involve a substantial and unreasonable degree of risk to the Bank becauseof unfavorable record or unsatisfactory characteristics. There exists in such accountsthe possibility of future loss to the BDO Unibank Group unless given closersupervision. Those classified as “Substandard” must have a well-defined weakness orweaknesses that jeopardize their liquidation. Such well-defined weaknesses mayinclude adverse trends or development of financial, managerial, economic or politicalnature, or a significant weakness in collateral.c. DoubtfulAccounts classified as “Doubtful” are individual credits or portions thereof whichhave the weaknesses inherent in those classified as “Substandard”, with the addedcharacteristics that existing facts, conditions and values make collection or liquidationin full highly improbable and in which substantial loss is probable. Positive andvigorous action is required to avert or minimize losses.d. LossAccounts classified as “Loss” are individual credits or portions thereof which areconsidered uncollectible or worthless and of such little value that their continuance asbankable assets is not warranted although the loans may have some recovery orsalvage value. The amount of loss is difficult to measure and it is not practical ordesirable to defer writing off these basically worthless assets even though partialrecovery may be obtained in the future.In addition to the above, credit portfolio review is another integral part of the BDO UnibankGroup’s management of credit risk. This exercise involves the conduct of periodical postapproval review of individual credits whose main objective is to help monitor and maintainsound and healthy risk asset portfolio. Parameters of the credit portfolio review arestructured so as to reflect both sides of the risk management equation such as credit qualityand process. This function actuates the philosophy that credit quality is derived from soundrisk management process. The credit quality of financial assets is managed by the BDOUnibank Group using internal credit ratings.www.bdo.com.ph 73
NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)The following table shows the exposure to credit risk as of December 31, 2011 and 2010 foreach internal risk grade and the related allowance for impairment:BDO Unibank Group2011Loans andTrading andOther Due from InvestmentReceivables Other Banks SecuritiesCarrying Amount P 673,927 P 24,719 P 181,816Individually ImpairedGrade C: LEM P 10,715 P - P -Grade D: Substandard 3,538 - -Grade E: Doubtful 5,168 - 1,006Grade F: Loss 6,390 - 888Gross amount 25,811 1,894Allowance for impairment ( 12,385) - ( 1,894)Carrying amount 13,426 - -Collectively ImpairedUnclassified 28 - 11,104Grade C: LEM 3,622 - -Grade D: Substandard 2,333 - -Grade E: Doubtful 535 - -Grade F: Loss 6,174 - -Gross amount 12,692 - 11,104Allowance for impairment ( 7,268) - ( 147)Carrying amount 5,424 - 10,957Past Due But Not ImpairedUnclassified 6,187 - -Neither Past Due Nor ImpairedUnclassified 648,890 24,719 170,859Accounts with Negotiated Terms - - -Total Carrying Amount P 673,927 P 24,719 P 181,816
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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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Page 26 and 27: (v)PFRS 9, Financial Instruments: C
Page 28 and 29: BDO Unibank Group accounts for its
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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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