2011 Annual Report - BDO

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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
NOTES TOFINANCIAL STATEMENTSAn estimate of the fair value of collateral and other security enhancements held against neitherpast due nor impaired financial assets as of December 31, 2011 and 2010 are shown below.2011 2010Equities P 173,650,094 P 40,638,750Debt securities 110,761,924 127,837,473Properties - 18,668,864Others 74,542,498 61,260,708P 358,954,516 P 248,405,795The Bank monitors concentrations of credit risk by sector and by geographic location. Ananalysis of concentrations of credit risk (gross of allowance for impairment) at the reportingdate is shown below.December 31, 2011Loans –Trading andCash and Cash excluding Other InvestmentEquivalents Receivables SecuritiesConcentration by sector:Financial intermediaries P 8,292,623,566 P 199,820,289 P 6,922,833,504Government - - 10,033,031,171Manufacturing (various industries) - 1,026,973,022 1,412,265,617Real estate, renting andbusiness activities - - 7,139,634Agriculture, fishing and forestry - 42,208,134 -Other community, socialand personal activities - 259,046,990 -P 8,292,623,566 P 1,528,048,435 P 18,375,269,926Concentration by location:Philippines P 7,112,387,067 P 1,308,327,605 P 10,156,027,362Other 1,180,236,499 219,720,830 8,219,242,564P 8,292,623,566 P 1,528,048,435 P 18,375,269,926
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TABLE OFCONTENTS246Corporate Missio
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OUR COMMITMENTOur commitment to pro
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We remain steadfast in our vision a
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The Storywww.bdo.com.ph 9
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• Execution. If you are more of a
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ELIZABETH T. SY,Director59 years ol
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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 28 and 29: REPORT OFINDEPENDENT AUDITORSTHE BO
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 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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