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

- 68 -5. SEGMENT REPORTINGThe BDO Unibank Group’s main operating businesses are organized and managedseparately according to the nature of services provided and the different markets served,with each segment representing a strategic business unit. These are also the basis ofBDO Unibank Group in reporting to its chief operating decision-maker for its strategicdecision-making activities.Management currently identifies the BDO Unibank Group’s three service lines asprimary operating segments. In addition, minor operating segments, for whichquantitative thresholds have not been met, as described in PFRS 8, Operating Segments,are combined below as Others.(a) Commercial banking – handles the entire lending (corporate and consumer), tradefinancing and cash management services for corporate and retail customers;(b) Investment banking – provides services to corporate clients outside the traditionalloan and deposit products. These services include loan syndications, underwritingand placing of debt and equity securities, and financial advisory services;(c) Private banking – provides traditional and non-traditional investment andstructured products to high net worth individuals and institutional accounts; and,(d) Others – includes asset management, insurance brokerage, realty management,leasing, financing, remittance, accounting service, credit card service and computerservice, none of which individually constitutes a separate reportable segment.These segments are the basis on which BDO Unibank Group reports its segmentinformation. Transactions between the segments are on normal commercial terms andconditions. Inter-segment transactions are eliminated in consolidation.Funds are ordinarily allocated between segments, resulting in funding cost transfersdisclosed in operating income. Interest charged for these funds is based on BDOUnibank Group’s cost of capital. There are no other material items of income orexpense between the segments.Segment assets and liabilities comprise operating assets and liabilities including itemssuch as taxation and borrowings.Segment revenues and expenses that are directly attributable to primary operatingsegment and the relevant portions of BDO Unibank Group’s revenues and expensesthat can be allocated to that operating segment are accordingly reflected as revenues andexpenses of that operating segment. Revenue sharing agreements are used to allocateexternal customer revenues to a segment on a reasonable basis.