2009 ANNUAL REPORT FINANCIAL SUPPLEMENTS - BDO

NOTES TO FINANCIAL STATEMENTSDecember 31, 2009, 2008 and 2007(Amounts in Millions of Philippine Pesos, Except Per Share Data or as Indicated)19.2 Capital AllocationThe allocation of capital between specific operations and activities is, to a large extent driven by optimizationof the return achieved on the capital allocated. The amount of capital allocated to each operation or activityis based primarily upon the regulatory capital, but in some cases the regulatory requirements do not reflectfully the varying degree of risk associated with different activities. In such cases the capital requirements maybe flexed to reflect differing risk profiles subject to the overall level of capital to support a particular operationor activity not falling below the minimum required for regulatory purposes. The process of allocating capitalto specific operations and activities is undertaken independently of those responsible of the operation and issubject to review by the ALCO.BDO ANNUAL REPORT 2009106Although maximization of the return on risk-adjusted capital is the principal basis used in determining howcapital is allocated within BDO Unibank Group to particular operations or activities, it is not the sole basisused for decision making. Account also is taken of synergies with other operations and activities, the availabilityof management and other resources and the fit of the activity with the longer term strategic objectives. Thepolicies in respect of capital management and allocation are reviewed regularly by the Board of Directors.19.3 Capital StockCapital stock consists of the following:Common shares – P10 par valueAuthorized – 5,500,000,000 sharesIssued, fully paid and outstanding – 2,339,768,510shares in 2009; 2,302,032,661 shares in 2008 and2007Number of Shares2009 2008 2007Balance at beginning of year 2,302,032,661 2,302,032,661 2,270,629,069Issued during the year 37,735,849 - 31,403,592Balance at end of year 2,339,768,510 2,302,032,661 2,302,032,661Preferred shares – P10 par valueAuthorized – 1,000,000,000 sharesIssued, fully paid and outstanding – 500,000,000 sharesin 2009 and 2008; and none in 2007 500,000,000 500,000,000 -Amount2009 2008 2007Common sharesBalance at beginning of year P 23,020 P 23,020 P 22,706Issued during the year 377 - 314Balance at end of year P 23,397 P 23,020 P 23,020Preferred sharesIssued, fully paid and outstanding P 5,000 P 5,000 P -