2011 Annual Report - BDO

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REPORT OFINDEPENDENT AUDITORSTHE BOARD OF DIRECTORSBDO PRIVATE BANK, INC.(A Wholly Owned Subsidiary of BDO Unibank, Inc.)2nd Floor, BDO Equitable Tower8751 Paseo de Roxas, Makati CityReport on the Financial StatementsWe have audited the accompanying financial statements ofBDO Private Bank, Inc., which comprise the statements offinancial position as at December 31, 2011 and 2010, and thestatements of income, statements of comprehensive income,statements of changes in equity and statements of cashflows for the years then ended, and a summary of significantaccounting policies and other explanatory information.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fairpresentation of these financial statements in accordance withthe financial reporting standards in the Philippines for banksas described in Note 2 to the financial statements, and forsuch internal control as management determines is necessaryto enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.Auditors’ ResponsibilityOur responsibility is to express an opinion on these financialstatements based on our audits. We conducted our auditsin accordance with Philippine Standards on Auditing. Thosestandards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from materialmisstatement.An audit involves performing procedures to obtain auditevidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considersinternal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to designaudit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentationof the financial statements.We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.OpinionIn our opinion, the financial statements present fairly, in allmaterial respects, the financial position of BDO Private Bank, Inc.as at December 31, 2011 and 2010, and its financial performanceand its cash flows for the years then ended in accordance withthe financial reporting standards in the Philippines for banks asdescribed in Note 2 to the financial statements.Report on Other Legal and Regulatory MattersAs discussed in Note 21 to the financial statements, the Bankpresented the supplementary information required by theBureau of Internal Revenue for the year ended December 31,2011 in a supplementary schedule filed separately from thebasic financial statements. Such supplementary informationis the responsibility of management. The supplementaryinformation is presented for purposes of additional analysisand is not a required part of the basic financial statementsprepared in accordance with financial reporting standardsin the Philippines for banks; it is neither a required disclosureunder the Philippine Securities and Exchange Commissionrules and regulations covering the form and content of financialstatements under Securities Regulation Code Rule 68.PUNONGBAYAN & ARAULLOBy:February 13, 2012Benjamin P. ValdezPartnerCPA Reg. No. 0028485TIN 136-619-880PTR No. 3174790, January 2, 2012, Makati CitySEC Group A AccreditationPartner - No. 009-AR-3 (until Dec. 9, 2014)Firm - No. 0002-FR-3 (until Jan. 18, 2015)BIR AN 08-002511-11-2011 (until Sept. 22, 2014)Firm’s BOA/PRC Cert. of Reg. No. 0002 (until Dec. 31, 2012)www.bdo.com.ph 27
STATEMENTS OFFINANCIAL POSITIONDECEMBER 31, 2011 AND 2010(Amounts in Philippine Pesos)Notes 20112010RESOURCESDUE FROM BANGKO SENTRAL NG PILIPINAS4P 7,092,895,832P 7,055,616,718DUE FROM OTHER BANKS41,199,727,7341,159,435,277TRADING AND INVESTMENT SECURITIESAt fair value through profit or loss57,271,570,7005,837,315,825Available-for-sale - net63,109,986,6314,224,501,891Held-to-maturity - netLOANS AND RECEIVABLES - NetBANK PREMISES, FURNITURE, FIXTURESAND EQUIPMENT - NetOTHER RESOURCES - Net789107,881,191,122 8,626,118,0341,533,921,496 3,596,642,40757,697,566 24,284,09171,642,223 95,006,299TOTAL RESOURCESP 28,218,633,304 P 30,618,920,542LIABILITIES AND EQUITYDEPOSIT LIABILITIES11DemandP 12,659,658,201P 12,075,076,513TimeTotal Deposit Liabilities8,725,272,2309,806,205,39221,384,930,431 21,881,281,905BILLS PAYABLE121,538,4082,457,885,970DERIVATIVE FINANCIAL LIABILITIES131,446,945,8531,547,386,706ACCRUED TAXES AND OTHER LIABILITIES14341,462,129260,950,273Total Liabilities23,174,876,821 26,147,504,854EQUITY155,043,756,4834,471,415,688TOTAL LIABILITIES AND EQUITYP 28,218,633,304P 30,618,920,542See Notes to Financial Statements.
Page 2 and 3: TABLE OFCONTENTS246Corporate Missio
Page 4 and 5: OUR COMMITMENTOur commitment to pro
Page 6: We remain steadfast in our vision a
Page 10 and 11: The Storywww.bdo.com.ph 9
Page 12 and 13: • Execution. If you are more of a
Page 14 and 15: ELIZABETH T. SY,Director59 years ol
Page 16: ADVISERSHarley T. Sy Ian T. Fish Ra
Page 19 and 20: CORPORATEGOVERNANCEBDO Private Bank
Page 21 and 22: CORPORATEGOVERNANCEChairman: Nestor
Page 24 and 25: Awardswww.bdo.com.ph 23
Page 26 and 27: Best Private Bankin the Philippines
Page 30 and 31: STATEMENTS OFINCOMEFOR THE YEARS EN
Page 32 and 33: STATEMENTS OFCHANGES IN EQUITYFOR T
Page 34 and 35: www.bdo.com.ph 33
Page 36 and 37: 2.01 Basis of Preparation of Financ
Page 38 and 39: 2010Notes FRSP Difference PFRSChang
Page 40 and 41: Bank is not subject to minimum fund
Page 42 and 43: losses on AFS, can be reclassified
Page 44 and 45: i. only in rare circumstances and i
Page 46 and 47: together with the host contract wit
Page 48 and 49: If there is objective evidence that
Page 50 and 51: Bills payable are recognized initia
Page 52 and 53: In considering each possible relate
Page 54 and 55: translated into the Bank’s presen
Page 56 and 57: Deferred tax is provided, using the
Page 58 and 59: • The Risk Management Unit is res
Page 60 and 61: 2.15.02.01 Foreign Exchange RiskThe
Page 62 and 63: The following table shows the amoun
Page 64 and 65: 2011More MoreOne to than three than
Page 66 and 67: 2010More MoreOne to than three than
Page 68 and 69: The following table sets out the cr
Page 70 and 71: December 31, 2010Loans - Trading an
Page 72 and 73: The Bank’s lead regulator, the BS
Page 74 and 75: 3. CRITICAL ACCOUNTING ESTIMATES AN
Page 76 and 77: Details of impairment losses (recov
Page 78 and 79:
payable) with repricing frequencies
Page 80 and 81:
and any resulting impairment loss c
Page 82 and 83:
from 0.0% to 9.13% per annum in 201
Page 84 and 85:
6.01 Collateralized Debt Obligation
Page 86 and 87:
P9,483,508 in 2011 and 2010, respec
Page 88 and 89:
this transaction amounted to P84,58
Page 90 and 91:
In 2010, the Bank has assessed two
Page 92 and 93:
A reconciliation of the carrying am
Page 94 and 95:
Interest rates on deposit liabiliti
Page 96 and 97:
14. ACCRUED TAXES AND OTHER LIABILI
Page 98 and 99:
15.05 Surplus ReserveIn compliance
Page 100 and 101:
Changes in the present value of the
Page 102 and 103:
Assumptions rgarding future mortali
Page 104 and 105:
21. TAXES21.01 Current and Deferred
Page 106 and 107:
The Bank is subject to MCIT which i
Page 108 and 109:
The composition of the Bank’s AUM
Page 110 and 111:
www.bdo.com.ph 109
Page 112:
PRODUCTSAND SERVICESWEALTH ADVISORY
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2011 Annual Report - BDO

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