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

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- 43 -4. RISK MANAGEMENTBy their nature, BDO Unibank Group’s activities are principally related to the use offinancial instruments including derivatives. BDO Unibank Group accepts depositsfrom customers at fixed and floating rates for various periods and seeks to earnabove-average interest margins by investing these funds in high-quality assets. BDOUnibank Group seeks to increase these margins by consolidating short-term funds andlending for longer periods at higher rates, while maintaining sufficient liquidity to meetall claims that might fall due. BDO Unibank Group also trades in financial instrumentswhere it takes positions in traded and over-the-counter instruments, includingderivatives, to take advantage of short-term market movements in equities and bondsand in currency and interest rate prices.To manage the risk for holding financial assets and liabilities, BDO Unibank Groupoperates an integrated risk management system to address the risks it faces in itsbanking activities, including liquidity, interest rate, credit and market risks. BDOUnibank Group’s risk management objective is to adequately and consistently evaluate,manage, control, and monitor the risk profile of BDO Unibank Group’s statements offinancial position to optimize the risk-reward balance and maximize return on BDOUnibank Group’s capital. BDO Unibank Group’s Risk Management Committee (RMC)has overall responsibility for BDO Unibank Group’s risk management systems and setsrisk management policies across the full range of risks to which BDO Unibank Group isexposed. Specifically, BDO Unibank Group’s RMC places trading limits on the level ofexposure that can be taken in relation to both overnight and intra-day market positions.With the exception of specific hedging arrangements, foreign exchange and interest rateexposures associated with these derivatives are normally offset by entering intocounterbalancing positions, thereby controlling the variability in the net cash amountsrequired to liquidate market positions.Within BDO Unibank Group’s overall risk management system, the Assets andLiabilities Committee (ALCO) is responsible for managing the Group’s statement offinancial position, including BDO Unibank Group’s liquidity, interest rate and foreignexchange related risks. In addition, ALCO formulates investment and financial policiesby determining the asset allocation and funding mix strategies that are likely to yield thetargeted financial results.Separately, the Risk Management Group (RMG) is mandated to adequately andconsistently evaluate, manage, control, and monitor the over-all risk profile of theBank’s activities across the different risk areas (i.e., credit, market, liquidity, andoperational) to optimize the risk-reward balance and maximize return on capital.RMG has responsibility for the setting of risk policies across the full range of risks towhich BDO Unibank Group is exposed to.In the performance of its function, RMG observes the following framework:• It is responsible for policy formulation in coordination with the relevantbusinesses/functions and ensures that proper approval for the manuals/policiesis obtained from the appropriate body.
- 44 -• It then disseminates the approved policies to the relevant businesses/functionsafter which, pertinent authorities are delegated down to the businesses/functionsto guide them in the conduct of their businesses/functions. RMG thenperforms compliance monitoring and review to ensure approved policies areadhered to.• It is responsible for clarifying interpretations of risk policies/guidelines raised bythe Business Heads/Units.• When adverse trends are observed in the account/portfolio, RMG isresponsible for flagging these trends and ensuring relevant policies for problemaccounts/portfolio management are properly applied.• RMG is responsible for the direct management of accounts in BDO UnibankGroup’s Non-Performing Loan (NPL)/property-related items in litigationsportfolio and ensures that appropriate strategies are formulated to maximizecollection and/or recovery of these assets.• It is also responsible for regular review and monitoring of accounts under itssupervision and ensuring that the account’s loan classification is assessed timelyand accurately.4.01 Liquidity RiskLiquidity risk is the risk that there could be insufficient funds available to adequatelymeet the credit demands of BDO Unibank Group’s customers and repay deposits onmaturity. BDO Unibank Group manages liquidity risk by holding sufficient liquidassets of appropriate quality to ensure short-term funding requirements are met and bymaintaining a balanced loan portfolio which is repriced on a regular basis. In addition,BDO Unibank Group seeks to maintain sufficient liquidity to take advantage of interestrate and exchange rate opportunities when they arise.
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Via ODiSyMarch 22, 2012PHILIPPINE S
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SEC FORM 17-A
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TABLE OF CONTENTSPage No.PART I- BU
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Philippine Subsidiaries% Interest H
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sophisticated investors. The Bank
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(v)Transactions with and/or Depende
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BDO BANK-OWNED PROPERTIES UTILIZED
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BDO BANK-OWNED PROPERTIES UTILIZED
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2) Leased PropertiesThe Group lease
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Branch Address Lease Lease ExpiryEf
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Item 4. Submission of Matters to a
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On 29 January 2011, the Board of th
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Total Equity grew by 9% to P97.0 bi
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Balance Sheet - 2010 vs. 2009Total
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Comprehensive Income - For the year
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Item 7. Financial StatementsThe con
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UOB Singapore. He was formerly the
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Director of the Philippine Global C
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Name Age PositionInvestments GroupG
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Antonio N. Cotoco, 63, is Senior Ex
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Bienvenido M. Juat, Jr., 58, is Exe
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Ma. Ophelia Ll. Camiña, 58, is Sen
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Corporation; a Trustee of PCI Bank
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Dalmacio D. Martin, 50, is Senior V
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Luis S. Reyes, Jr., 54, is Senior V
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Equitable Banking Corporation in Ju
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The above compensation includes the
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Title ofClassName of BeneficialOwne
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esponsible for the setting up of th
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2 May 2011 Retirement of Ms. Nenita
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Setting the annual shareholders’
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AUDITED FINANCIAL STATEMENTSDECEMBE
Page 93 and 94: BDO UNIBANK, INC. AND SUBSIDIARIES(
Page 95 and 96: - 2 -Net UnrealizedFair ValueGains
Page 97 and 98: - 2 -BDO Unibank GroupParent BankNo
Page 99 and 100: 1.02 Approval of Financial Statemen
Page 101 and 102: - 4 -Parent BankFRSP Difference PFR
Page 103 and 104: - 6 -(ii) Philippine Interpretation
Page 105 and 106: - 8 -• PFRS 7 (Amendment), Financ
Page 107 and 108: - 10 -(v) PFRS 9, Financial Instrum
Page 109 and 110: - 12 -The financial statements of s
Page 111 and 112: - 14 -2.06 Financial AssetsFinancia
Page 113 and 114: - 16 -HTM investments consist of go
Page 115 and 116: - 18 -The value produced by a model
Page 117 and 118: - 20 -2.12 Premises, Furniture, Fix
Page 119 and 120: - 22 -Deposit liabilities and other
Page 121 and 122: - 24 -2.20 Revenue and Expense Reco
Page 123 and 124: - 26 -Provisions are measured at th
Page 125 and 126: - 28 -Future cash flows in a group
Page 127 and 128: - 30 -Foreign exchange gains and lo
Page 129 and 130: - 32 -(e)Executive Stock Option Pla
Page 131 and 132: - 34 -3.01 Critical Management Judg
Page 133 and 134: - 36 -3.02 Key Sources of Estimatio
Page 135 and 136: - 38 -(iv) Loans and Other Receivab
Page 137 and 138: - 40 -Parent BankNotes Level 1 Leve
Page 139: - 42 -The retirement benefit asset
Page 143 and 144: - 46 -2010MoreOne to than three Mor
Page 145 and 146: - 48 -2010MoreOne to than three Mor
Page 147 and 148: - 50 -Parent Bank2011 2010ForeignFo
Page 149 and 150: - 52 -BDO Unibank Group2010More Mor
Page 151 and 152: - 54 -Parent Bank2010More MoreOne t
Page 153 and 154: - 56 -A summary of the VaR position
Page 155 and 156: - 58 -Parent BankImpact onImpact on
Page 157 and 158: - 60 -b. SubstandardAccounts classi
Page 159 and 160: - 62 -BDO Unibank Group2010Loans an
Page 161 and 162: - 64 -Parent Bank2010Loans andTradi
Page 163 and 164: - 66 -4.02.04.03 Concentrations of
Page 165 and 166: - 68 -5. SEGMENT REPORTINGThe BDO U
Page 167 and 168: - 70 -Commercial Investment Private
Page 169 and 170: - 72 -At Amortized Carrying FairCos
Page 171 and 172: - 74 -8. DUE FROM OTHER BANKSThe ba
Page 173 and 174: - 76 -The aggregate contractual or
Page 175 and 176: - 78 -The fair values of government
Page 177 and 178: - 80 -The fair values are determine
Page 179 and 180: - 82 -Reclassification of CLNs from
Page 181 and 182: - 84 -Per MORB, non-performing loan
Page 183 and 184: - 86 -Leasehold Furniture,Rights an
Page 185 and 186: - 88 -Land Buildings TotalJanuary 1
Page 187 and 188: - 90 -Real and other properties acq
Page 189 and 190: - 92 -The BDO Unibank Group’s sub
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- 94 -Full allowance for impairment
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- 96 -This account is composed of t
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- 98 -The breakdown of this account
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- 100 -On October 19, 2009, the pre
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- 102 -On December 29, 2009, BSP is
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- 104 -19.02 Capital AllocationThe
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- 106 -annum of the par value. Subs
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- 108 -20. INTEREST INCOMEInterest
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- 110 -Other operating expenses con
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- 112 -The movements in the present
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- 114 -Parent Bank2011 2010 2009 20
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- 116 -(c) Other Transactions with
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- 118 -ii. On January 31, 2008, BDO
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- 120 -27. TAXES27.01 Current and D
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- 122 -Movements in net deferred ta
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- 124 -27.04 Gross Receipts Tax (GR
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- 126 -28. EARNINGS PER SHAREBasic
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- 128 -29. SELECTED FINANCIAL PERFO
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- 130 -Sale of BankardBDO (as succe
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- 132 -PEACe bondsOn October 18, 20
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- 134 -Following is a summary of BD
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Via ODiSy March 22, 2012 PHILIPPINE STOCK EXCHANGE ... - BDO

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