2011 Annual Report Financial Supplements - BDO

5. SEGMENT REPORTINGThe BDO Unibank Group’s main operating businesses are organized and managed separatelyaccording to the nature of services provided and the different markets served, with eachsegment representing a strategic business unit. These are also the basis of BDO UnibankGroup in reporting to its chief operating decision-maker for its strategicdecision-making activities.Management currently identifies the BDO Unibank Group’s three service lines as primaryoperating segments. In addition, minor operating segments, for which quantitative thresholdshave not been met, as described in PFRS 8, Operating Segments, are combined below as Others.(a) Commercial banking – handles the entire lending (corporate and consumer), tradefinancing and cash management services for corporate and retail customers;(b) Investment banking – provides services to corporate clients outside the traditional loanand deposit products. These services include loan syndications, underwriting and placingof debt and equity securities, and financial advisory services;(c) Private banking – provides traditional and non-traditional investment and structuredproducts to high net worth individuals and institutional accounts; and,(d) Others – includes asset management, insurance brokerage, realty management, leasing,financing, remittance, accounting service, credit card service and computer service, noneof which individually constitutes a separate reportable segment.These segments are the basis on which BDO Unibank Group reports its segmentinformation. Transactions between the segments are on normal commercial terms andconditions. Inter-segment transactions are eliminated in consolidation.Funds are ordinarily allocated between segments, resulting in funding cost transfers disclosedin operating income. Interest charged for these funds is based on BDO Unibank Group’scost of capital. There are no other material items of income or expense between thesegments.Segment assets and liabilities comprise operating assets and liabilities including items such astaxation and borrowings.Segment revenues and expenses that are directly attributable to primary operating segmentand the relevant portions of BDO Unibank Group’s revenues and expenses that can beallocated to that operating segment are accordingly reflected as revenues and expenses of thatoperating segment. Revenue sharing agreements are used to allocate external customerrevenues to a segment on a reasonable basis.www.bdo.com.ph 81