Via ODiSy March 22, 2012 PHILIPPINE STOCK EXCHANGE ... - BDO

- 16 -HTM investments consist of government and private debt securities. If BDOUnibank Group were to sell other than an insignificant amount of HTMinvestments, the entire category of HTM securities would be tainted and would bereclassified as AFS securities. The tainting provision will not apply if the sales orreclassifications of HTM investments: (i) are so close to maturity or the financialasset’s call date that changes in the market rate of interest would not have asignificant effect on the financial asset’s fair value; (ii) occur after BDO UnibankGroup has collected substantially all of the financial asset’s original principalthrough scheduled payments or prepayments; or, (iii) are attributable to an isolatedevent that is beyond the control of BDO Unibank Group, is nonrecurring andcould not have been reasonably anticipated by BDO Unibank Group.Subsequent to initial recognition, HTM investments are measured at amortizedcosts using effective interest method, less impairment losses, if any. Impairmentloss, which is the difference between the carrying value and the present value ofestimated cash flows of the investment, is recognized when there is objectiveevidence that the investment has been impaired. Any changes to the carryingamount of the investment due to impairment are recognized in profit or loss.(d) AFS SecuritiesThis category includes non-derivative financial assets that are either designated tothis category or do not qualify for inclusion in any of the other categories offinancial assets.Non-derivative financial asset classified as AFS may be reclassified to loans andreceivables category that would have met the definition of loans and receivables ifthere is an intention and ability to hold that financial asset for the foreseeable futureor until maturity.All financial assets within this category are subsequently measured at fair value,unless otherwise disclosed, with changes in value recognized in othercomprehensive income, net of any effects arising from income taxes. Cumulativegains and losses arising from securities classified as AFS are reclassified from othercomprehensive income to profit or loss when these are sold or when the investmentare impaired and presented as a reclassification adjustment within othercomprehensive income.In the case of impairment, any loss previously recognized in other comprehensiveincome is reclassified to profit or loss. Reversal of impairment losses are recognizedin other comprehensive income, except for financial assets that are debt securitieswhich are recognized in profit or loss only if the reversal can be objectively relatedto an event occurring after the impairment loss was recognized.The fair values of quoted investments in active markets are based on current closingprices. If the market for a financial asset is not active and for unlisted securities, BDOUnibank Group establishes the fair value by using valuation techniques, which includethe use of recent arm’s length transactions, discounted cash flow analysis, optionpricing models and other valuation techniques commonly used by market participants.