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)2.26 Earnings Per Share (EPS)Basic earnings per common share is determined by dividing net income by the weighted average number ofcommon shares subscribed and issued during the period, after retroactive adjustment for any stock dividenddeclared in the current period.The diluted earnings per common share is also computed by dividing net income by the weighted averagenumber of common shares subscribed and issued during the period. However, net income attributable tocommon shares and the weighted average number of common shares outstanding are adjusted to reflect theeffects of potentially dilutive convertible preferred shares, convertible loan and stock option plan granted byBDO Unibank Group to the qualified officers. Convertible preferred shares are deemed to have been convertedto common shares at the issuance of preferred shares. Convertible loan is deemed to have been converted intocommon shares at the start of the conversion period. The stock option plan is deemed to have been convertedinto common stock in the year the stock option is granted.BDO ANNUAL REPORT 2009422.27 Trust ActivitiesBDO Unibank Group commonly acts as trustee and in other fiduciary capacities that result in the holding orplacing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. Assets andincome arising thereon are excluded from these financial statements, as these are neither assets nor income ofBDO Unibank Group.2.28 Subsequent EventsAny post-year-end event that provides additional information about BDO Unibank Group’s position at the endof reporting period (adjusting event) is reflected in the financial statements. Post-year-end events that are notadjusting events, if any, are disclosed when material to the financial statements.3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATESBDO Unibank Group’s financial statements prepared in accordance with FRSP for banks require management to makejudgments and estimates that affect amounts reported in the financial statements and related notes. Judgments andestimates are continually evaluated and are based on historical experience and other factors, including expectations offuture events that are believed to be reasonable under the circumstances. Actual results may likely differ from theseestimates and the differences could be significant.3.1 Critical Judgments in Applying Accounting PoliciesIn the process of applying BDO Unibank Group’s accounting policies, management has made the followingjudgments, apart from those involving estimation, which have the most significant effect on the amountsrecognized in the financial statements:(a)HTM InvestmentsBDO Unibank Group follows the guidance of PAS 39, Financial Instruments: Recognition andMeasurement, in classifying non-derivative financial assets with fixed or determinable payments and fixedmaturity as HTM. This classification requires significant judgment. In making this judgment, BDOUnibank Group considers its intention and ability to hold such investments to maturity.