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)Changes in the HTM account are summarized below.BDO Unibank Group Parent BankNote 2009 2008 2009 2008Balance at beginning of year P 114,128 P 67,946 P 105,276 P 62,571Additions 47,612 51,961 46,896 48,522Maturities (42,761) (46,426) (42,027) (42,827)Foreign currency revaluation (2,738) 8,639 (2,641) 8,068Impairment recovery (loss) (64) 171 (64) 171Reclassification from FVPTL 9.4 - 6,297 - 6,297Reclassification from AFS 9.4 - 25,540 - 22,474P 116,177 P 114,128 P 107,440 P 105,276The fair values of the HTM investments are as follows:BDO Unibank Group Parent Bank2009 2008 2009 2008Government debt securities P 86,988 P 77,295 P 78,161 P 68,959Other debt securities 34,012 32,485 33,620 32,136P 121,000 P 109,780 P 111,781 P 101,095The fair value is determined through valuation techniques by determining the net present value of estimatedfuture cash flows. Annual interest rates on these investments range from 0% to 11.4% in 2009 and 0% to16.5% in 2008 both in the BDO Unibank Group and the Parent Bank financial statements.BDO ANNUAL REPORT 2009859.4 Reclassification of Investment SecuritiesBDO Unibank Group recognized the deterioration of the world’s financial markets that occurred in thethird quarter of 2008. The enormity and extent of the global credit crisis was crystallized by the substantialgovernment programs instituted by major economies in response to the crisis, including temporary liquidityfacilities, outright purchase of commercial papers and mortgaged-backed securities, guarantee of new unsecureddebt issued by banks and purchase of equity stakes in financial institutions.In 2008, BDO Unibank Group chose to avail of the regulatory relief on specific financial assets granted bythe BSP under the governing provisions of Circular No. 628, which permitted the reclassification of certainfinancial assets to help banks cope with the adverse impact of the global financial crisis.