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

- 42 -The retirement benefit asset and net unrecognized actuarial losses of BDO UnibankGroup amounted to P1,494 and P4,520, respectively, in 2011 while the retirementbenefit asset and net unrecognized actuarial losses of BDO Unibank Groupamounted to P998 and P3,821, respectively, in 2010. On the other hand, theretirement benefit asset and net unrecognized actuarial losses of the Parent Bankamounted to P1,519 and P4,252, respectively, in 2011 while the retirement benefitasset and net unrecognized actuarial losses amounted to P1,026 and P3,650,respectively, in 2010 (see Note 23.02).(i) Reward pointsThe BDO Unibank Group provides rewards points to its banking clients andcustomers each time they avail of the pre-identified products and services of theBank and the companies which the Bank has identified as partners in the rewardsprogram. Reward points are redeemable in a wide selection of reward categories,including travel, merchandise of third parties, reward credits and gift certificates.Certain loyalty points for credit card have no expiration date unless the credit card iscancelled but for other rewards program, unredeemed points may expire at somefuture date.The BDO Unibank Group establishes reserves to cover the cost of future rewardredemptions for points earned to date. The provision for the cost of rewards isbased upon points earned by bank clients and the current cost per point ofredemption. The estimated points to be redeemed are measured and adjusted basedon many factors including but not limited to past redemption behavior of bankclients, product type on which the points are earned and their ultimate redemptionrate on the points earned to date but not yet redeemed.The BDO Unibank Group continually evaluates its reserve methodology forrewards based on developments in redemption patterns, cost per point redeemedand other factors. The reserve for unredeemed points is impacted over time byenrollment levels, amount of points earned and redeemed, weighted-average costper point, redemption choices made by bank clients and other membership rewardsprogram changes. The calculation is most sensitive to changes in the estimatedultimate redemption rate. This rate is based on the expectation that a large majorityof all points earned will eventually be redeemed and the awards will be redeemedthrough goods or services supplied by a third party based on BDO UnibankGroup’s past experience.The carrying value of the rewards points accrued by the BDO Unibank Group andthe Parent Bank is presented as part of Accrued expenses under Other Liabilities inthe statements of financial position as disclosed in Note 18.