Notes to Financial Statements - BDO

Notes to Financial StatementsDECEMBER 31, 2008, 2007 AND 2006(Amounts in Millions Except Per Share Data)19.4 Increase in Authorized Capital StockOn November 6, 2006 and December 27, 2006, the Board of Directors and stockholders, respectively, approved the increase in the Group’sauthorized capital stock from P15,000 divided into 1,015,000,000 common shares with a par value of P10 per share and 485,000,000 preferredshares with a par value of P10 per share to P65,000 divided into 5,500,000,000 common shares with a par value of P10 per share and1,000,000,000 preferred shares with a par value of P10 per share, subject to the approval of the BSP and the SEC. The increase in the Group’sauthorized capital stock was filed with the BSP and SEC on January 8, 2007. Subsequently, this was approved by the BSP and the SEC onMarch 29, 2007 and May 25, 2007, respectively.As indicated in Note 2.13, mandatory redeemable preferred shares are classified as financial liabilities as part of bills payable.19.5 Issuance of Global Depositary Receipts by PrimebridgeOn various dates in 2006, Primebridge Holdings, Inc. (“Primebridge”), a stockholder owning 22.1% of the Group’s total outstanding shares asof December 31, 2005, offered and sold in aggregate 9,399,700 global depositary receipts (GDRs) with each GDR representing 20 shares ofthe Group’s common stock.The GDRs constitute an offering in the United States only to qualified institutional buyers in reliance on Rule 144A under the US Securities Actof 1993 (the “Securities Act”) and an offering outside the United States in reliance on Regulation under the Securities Act. The offered pricefor each GDR was US$12.70 on January 25, 2006 and February 14, 2006; and US$14.55 on May 15, 2006. The GDRs are listed and are beingtraded at the London Stock Exchange.As part of the offering, Primebridge, while remaining as the registered holder of the Group’s shares underlying the GDRs, transferred all rightsand interests in the Bank’s shares underlying the GDRs to the depository on behalf of the holders of the GDRs and the latter are entitled toreceive dividends paid on the shares. However, GDR holders have no voting rights or other direct rights of a shareholder with respect to theGroup’s shares.As of December 31, 2006, 4,724,214 GDRs issued, covering shares originally held by Primebridge, were converted into 94,484,280 shares ofthe Group. As of December 31, 2008, 1,246,375 GDRs equivalent to 24,927,500 shares of the Bank remained unconverted.19.6 Surplus FreeOn April 30, 2008 and July 26, 2007, the Board of Directors approved the declaration of cash dividends amounting to P0.80 per common shareor a total of P1,842 and P1,842, respectively, payable to stockholders of record as of August 18, 2008 and March 11, 2008, respectively. Thecash dividends were approved by the BSP on July 18, 2008 and February 14, 2008, respectively, and were paid by the Bank on September 11,2008 and April 8, 2008, respectively.On May 6, 2006, the Board of Directors approved the declaration of cash dividend amounting to P0.80 per share or a total of P770 payable tostockholders of record as of January 22, 2007. The cash dividend was approved by the BSP on December 28, 2006 and was paid on February8, 2007.Dividends also include the portion of interest expense paid by the Group to IFC attributable to the equity component (see Note 17). Totalamount of dividends allocated to the equity component amounted to P0.43 in 2007.20. INTEREST INCOMEInterest income consists of the following:GroupNotes 2008 2007 2006Loans and other receivables 10 P 27,939 P 21,414 P 12,508Investment and trading securities 9 11,136 11,743 10,564Due from other banks 7, 8 2,620 2,339 571Others 664 2,107 566P 42,359 P 37,603 P 24,209Parent Bank2008 2007 2006Loans and other receivables 10 P 26,862 P 20,639 P 12,182Investment and trading securities 9 9,800 10,572 9,164Due from other banks 7, 8 2,506 2,132 472Others 565 1,892 524P 39,733 P 35,235 P 22,34264Thinking Ahead To Get You Ahead • Annual Report 2008