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

- 49 -4.02.01 Foreign Exchange RiskBDO Unibank Group manages its exposure to effects of fluctuations in the foreigncurrency exchange rates by maintaining foreign currency exposure within the existingregulatory guidelines and at a level that it believes to be relatively conservative for afinancial institution engaged in that type of business.BDO Unibank Group’s net foreign exchange exposure is computed as its foreigncurrency assets less foreign currency liabilities. BSP regulations impose a cap of 20% ofunimpaired capital or US$50 million, whichever is lower, on the group excess foreignexchange holding of banks in the Philippines. BDO Unibank Group’s foreign exchangeexposure is primarily limited to the day-to-day, over-the-counter buying and selling offoreign exchange in BDO Unibank Group’s branches as well as foreign exchangetrading with corporate accounts and other financial institutions. BDO Unibank Group,being a major market participant in the Philippine Dealing System, may engage inproprietary trading to take advantage of foreign exchange fluctuations.BDO Unibank Group’s foreign exchange exposure during the day is guided by thelimits set forth in BDO Unibank Group’s Risk Management Manual. These limits arewithin the prescribed ceilings mandated by the BSP. At the end of each day, BDOUnibank Group reports to the BSP on its compliance with the mandated foreigncurrency exposure limits. In addition, it also reports to the BSP on the respectiveforeign currency positions of its subsidiaries.The breakdown of the financial assets and liabilities as to foreign and peso-denominatedbalances as of December 31, 2011 and 2010 follows:BDO Unibank Group2011 2010ForeignForeignCurrency Peso Total Currency Peso TotalResources:Cash and other cash itemsand due from BSP P 24 P 157,999 P 158,023 P 12 P 165,143 P 165,155Due from other banks 24,137 582 24,719 21,738 39 21,777Trading and investmentsecurities:At FVTPL 2,071 2,752 4,823 3,743 3,629 7,372AFS securities 66,152 23,773 89,925 48,040 37,634 85,674HTM 77,940 15,730 93,670 84,361 19,880 104,241Loans and other receivables 124,178 549,749 673,927 133,032 432,989 566,021Other resources 2,002 425 2,427 2,194 358 2,552P 296,504 P 751,010 P 1,047,514 P 293,120 P 659,672 P 952,792Liabilities:Deposit liabilities P 206,618 P 651,951 P 858,569 P 217,049 P 565,586 P 782,635Bills payable 44,565 14,909 59,474 39,825 26,036 65,861Subordinated notes payable - 38,255 38,255 - 23,152 23,152Other liabilities 2,455 39,039 41,494 5,080 32,818 37,898P 253,638 P 744,154 P 997,792 P 261,954 P 647,592 P 909,546