2011 Annual Report - BDO

The following table sets out the credit quality by class of the Bank’s on-book financial assets(net of unearned discount and gross of allowance for impairment) as of December 31, 2011and 2010 (amounts in thousands).2011Trading andCash and Cash Loans and InvestmentEquivalents Receivables SecuritiesNeither past due nor impaired:Grade: Unclassified P 8,292,624 P 1,533,921 P 18,375,2702010Trading andCash and Cash Loans and InvestmentEquivalents Receivables SecuritiesNeither past due nor impaired:Grade: Unclassified P 8,215,052 P 2,786,541 P 18,504,565ImpairedGrade C* - 886,818 1 219,200 2Grade F** - - 138,588 3P 8,215,052 P 3,673,359 P 18,862,353* Loans especially mentioned are loans which the Bank believes have potential weaknesses that deserve management’s closeattention, and which deficiencies, if left uncorrected, could affect repayment.**Loss loans are those which the Bank believes are impossible to collect or are worthless.1 Impaired loans and receivables pertain to investment in CLN with book value and impairment loss amounting toP886.8 million and P76.72 million in 2010, respectively (see Note 8). The allowance was reversed in 2011.2 Impaired financial assets include investment classified as held-to-maturity investments which was partially impaired as ofDecember 31, 2010 (see Note 7).3 Impaired financial assets include investment in CDO classified as available-for-sale which was fully provided with allowancefor impairment loss as of December 31, 2010 (see Note 6).The Bank holds some collateral against loans to customers in the form of deposits andmoney market investments; fixed, floater and zero coupon bonds and notes guaranteed bythe government; fixed, floater or zero coupon bonds issued by domestic corporations; andlisted and publicly traded liquid equity issues. The market values of collaterals are based onthe previous day’s closing price and are revalued daily. Collateral generally is not held over duefrom other banks, interbank loans and investment securities, except when securities are held aspart of reverse repurchase and securities borrowing activities.www.bdo.com.ph 67