Notes to Financial Statements - BDO

Notes to Financial StatementsDECEMBER 31, 2008, 2007 AND 2006(Amounts in Millions Except Per Share Data)Parent Bank2007Loans and Due from InvestmentReceivables Other Banks SecuritiesCarrying Amount P 297,631 P 16,102 P 148,882Individually ImpairedGrade C: Impaired P 11,259 P - P 972Grade D: Impaired 14,635 - 171Grade E: Impaired 4,349 - 105Grade F: Impaired 6,022 - 726Gross Amount 36,265 - 1,974Allowance for impairment ( 15,727 ) - ( 1,000)Carrying amount 20,538 - 974Collectively ImpairedGrade E: Impaired 2,101 - -Allowance for impairment ( 1,068 ) - -Carrying amount 1,033 - -Past Due But Not ImpairedGrade: Unclassified 4,056 - 1Neither Past Due Nor ImpairedGrade: Unclassified 270,383 16,102 147,907Accounts with Negotiated Terms 1,621 - -Total Carrying Amount P 297,631 P 16,102 P 148,882The aging of past due but not impaired is presented below.2007Loans andInvestmentReceivablesSecurities61 to 90 days P 2,816 P -91 to 180 days 549 -More than 180 days 691 1P 4,056 P 1Exposure to credit risk also includes unused commercial letters of credit amounting to P17,998 and P25,254 for 2008 and 2007, respectively,in the Group financial statements and P17,998 and P25,252 for 2008 and 2007, respectively, in the Parent Bank financial statements(see Note 31.3).4.2.4.2 Collateral Held as Security and Other Credit EnhancementsThe Group holds collateral against loans and receivables from customers in the form of mortgage interests over property, other registeredsecurities over assets, and guarantees. Estimates of fair value are based on the value of collateral assessed at the time of borrowing andare updated periodically, e.g., annually for real estate properties, as provided in the Bank’s Credit Policy Manual. Collateral generally is notheld over due from other banks, interbank loans and investment securities, except when securities are held as part of reverse repurchase andsecurities borrowing activity.The Group holds collateral against loans and other receivables in the form of property, debt securities, equities and others. An estimate ofthe fair value of collateral and other security enhancements held against loans and other receivables as of December 31, 2008 and 2007 isshown below:GroupParent Bank2008 2007 2008 2007Against individually impairedProperty P 49,964 P 67,450 P 49,964 P 67,450Debt Security 2 2 2 2Equity 248 4,396 248 4,396Other 24,200 11,636 24,200 11,636Sub total (Carried Forward) P 74,414 P 83,484 P 74,414 P 83,48438Thinking Ahead To Get You Ahead • Annual Report 2008