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BDO 2017 Annual Report Financial Statements PDF
BDO 2017 Annual Report Financial Statements PDF
BDO 2017 Annual Report Financial Statements PDF
FINANCIAL STATEMENTS
OUR FUTURE,
TODAY.
Table of Contents
06 22
Corporate Mission and Corporate Vision Statements of Income
07 23
Corporate Profile Statements of Comprehensive Income
08 24
Financial Highlights Statements of Changes in Equity
11 26
Report of the Audit Committee Statements of Cash Flows
to the Board of Directors
13 28
Statement of Management’s Notes to Financial Statements
Responsibility for Financial Statements
14 190
Report of Independent Auditors Supplementary Management
Discussion
21
Statements of Financial Position
Corporate
Mission
To be the preferred bank in every market we serve.
Corporate
Vision
To be the leading Philippine bank and financial services company
that empowers customers to achieve their goals and aspirations,
combining our entrepreneurial spirit, international perspective, and
intense customer focus to deliver a personalized banking experience
that is easy, straightforward, and convenient, while taking pride in
building long-term relationships and finding better ways to deliver
offerings of the highest standard.
6
Corporate Profile
BDO is a full-service universal bank in the Philippines. It provides a complete array of
industry-leading products and services including Lending (corporate and consumer),
Deposit-taking, Foreign Exchange, Brokering, Trust and Investments, Credit Cards, Corporate
Cash Management, and Remittances in the Philippines. Through its local subsidiaries, the
Bank offers Leasing and Financing, Investment Banking, Private Banking, Rural Banking, Life
Insurance, Insurance Brokerage, and Stock Brokerage services.
BDO is a member of the SM Group, one of the country’s largest and most successful
conglomerates with businesses spanning retail, mall operations, property development
(residential, commercial, hotels and resorts), and financial services. Although part of
a conglomerate, BDO’s day-to-day operations are handled by a team of professional
managers and bank officers. Further, the Bank has one of the industry’s strongest Board of
Directors, composed of professionals with extensive experience in various fields that include
banking, accounting, finance, law, risk management, and retailing/marketing.
Core Values
Commitment to Customers
We are committed to delivering products and services that surpass customer expectations
in value and every aspect of customer services, while remaining prudent and trustworthy
stewards of their wealth.
Commitment to Employees
We are committed to our employees’ growth and development and we will nurture them in
an environment where excellence, integrity, teamwork, professionalism, and performance
are valued above all else.
Commitment to Shareholders
We are committed to providing our shareholders with superior returns over the long term.
7
Financial Highlights
TOTAL ASSETS
2750
2,668
2,325
2,031
1,864
1,673
2,121
1,905
1,755
1,664
1,482
1,492
1,345
1,279
1,089
911
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
28.1
26.2
24.9
22.8
22.6
218
200
180
164
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
*attributable to shareholders of the parent bank
8
Financial & Operating Highlights
Consolidated Parent Bank
2017 2016 Change 2017 2016 Change
BALANCE SHEET (in billion Php)
Total Assets 2,668.1 2,325.0 15% 2,524.6 2,189.7 15%
Trading and Investment Securities 332.9 269.0 24% 258.2 207.9 24%
Liquid Assets 842.7 779.9 8% 736.4 689.2 7%
Gross Customer Loans 1,754.9 1,482.0 18% 1,700.9 1,426.4 19%
Deposits 2,121.0 1,905.2 11% 2,045.3 1,833.0 12%
Equity1/ 298.3 217.6 37% 297.7 215.6 38%
INCOME STATEMENT (in billion Php)
Net Interest Income 81.8 65.6 25% 77.4 61.7 25%
Non-Interest Income 47.2 41.6 13% 33.6 27.5 22%
Gross Operating Income 129.0 107.2 20% 111.0 89.2 24%
Operating Expenses 84.9 70.0 21% 68.9 56.4 22%
Pre-provision Profit 44.1 37.2 19% 42.1 32.8 28%
Allowance for Credit Losses 6.5 3.8 71% 5.8 3.0 93%
Net Profit2/ 28.1 26.2 7% 28.0 24.1 16%
FINANCIAL PERFORMANCE INDICATORS
Profitability
Return on Average Common Equity 10.2% 12.7% 10.2% 11.7%
Return on Average Equity 10.2% 12.5% 10.2% 11.5%
Return on Average Assets 1.1% 1.2% 1.2% 1.2%
Margins and Liquidity
Net Interest Margin 3.5% 3.2% 3.5% 3.2%
Gross Customer Loans to Deposit Ratio 82.7% 77.8% 83.2% 77.8%
Liquid Assets to Total Assets 31.6% 33.5% 29.2% 31.5%
Cost Efficiency
Cost to Income Ratio 65.8% 65.3% 62.1% 63.2%
Cost to Average Assets Ratio 3.4% 3.2% 2.9% 2.8%
Asset Quality
NPL to Gross Customer Loans 1.2% 1.3% 1.0% 1.2%
NPL Cover 146.2% 139.4% 156.7% 148.6%
Capital and Leverage
CET 1 Ratio3/ 12.9% 10.7% 12.2% 9.7%
Tier 1 Ratio3/ 13.1% 11.0% 12.4% 10.0%
Capital Adequacy Ratio3/ 14.5% 12.4% 13.8% 11.4%
Assets to Equity 8.9x 10.7x 8.5x 10.2x
DISTRIBUTION NETWORK AND MANPOWER
Branches 1,180 1,104 7% 1,053 982 7%
ATMs 4,022 3,655 10% 3,788 3,435 10%
Employees 33,747 31,443 7% 29,567 27,429 8%
SHAREHOLDER INFORMATION
Market Value
Share Price (in Php) 164.00 112.10 46% - -
Market Capitalization (in billion Php) 716.50 409.16 75% - -
Valuation
Basic Earnings per Share (in Php) 6.42 6.81 -6% 6.40 6.23 3%
Diluted Earnings per Share (in Php) 6.42 6.81 -6% 6.40 6.23 3%
Book Value per Share (in Php) 66.91 57.99 15% 66.95 57.65 16%
Price-Earnings Ratio 25.5x 16.5x - -
Price to Book Value 2.5x 1.9x - -
Dividends
Cash Dividends Paid to Common Shareholders 5.2 4.4 5.2 4.4
(in billion Php)
Cash Dividends per Common Share (in Php) 1.20 1.20 1.20 1.20
Dividend Payout Ratio4/ 18.5% 16.8% - -
Dividend Yield5/ 0.9% 1.1% - -
1/ Total capital accounts, inclusive of non-controlling interest and preferred shares
2/ Net Income attributable to shareholders of the parent bank
3/ Based on audited financial statements
4/ Cash dividends paid during the year divided by net profit for the year
5/ Cash dividends per share paid during the year divided by average daily closing price for the year
9
Financial
Statements
10
Report of the Audit Committee
to the Board of Directors
The Board Audit Committee (BAC) is empowered by the Board to fulfill its oversight function
over the Bank’s financial reporting process, system of internal control, overall management
of risks and governance processes, Internal and External Audit functions and compliance
with applicable rules and regulations as set forth in its Terms of Reference.
Composed of three board members (all of whom are independent directors), and assisted
by three advisers, the BAC conducted twelve regular meetings in 2017.
•• Extensively reviewed and discussed with Management, Internal Audit and External
Audit the annual audited financial statements for the year ended December 31, 2017
including the internal controls on the financial reporting process ensuring compliance
with accounting standards and tax regulations before endorsing the same to the Board
of Directors.
•• Reviewed and discussed with Management the quarterly unaudited financial
statements and results of operations prior to endorsement to the Board of Directors
for approval.
•• Approved the Internal Audit’s annual plan after a thorough review of its scope, audit
methodology, risk assessment and rating processes, financial budget, manpower
resources, as well as changes to the plan during the year.
•• Reviewed the Internal Audit Charter.
•• Regularly received audit reports, reviewed and discussed high and moderate risk
findings relating to operational, financial and compliance controls including risk
management systems with impact to financials, reputation and information security.
•• Invited key management officers to discuss high risk issues and their action plans to
resolve or mitigate the same. The Committee continued to keep track of the timely
resolution of findings including updates on Information Technology’s security controls
and action plans in further strengthening IT risk management.
•• Ensured Internal Audit’s independence and free access to all records, properties and
information to be able to fully carry out its functions.
•• Assessed the performance of the Chief Internal Auditor and key Audit Officers.
11
3. On its oversight function over External Audit
•• Approved and endorsed to the Board the re-appointment of the Bank’s BSP-accredited
External Auditor including the fees after an evaluation of other accredited external auditors,
ensuring the change of audit partners in accordance with regulation and standards.
•• Discussed and reviewed with the External Auditor the content of the engagement
letter, audit plan, scope of work, focus areas, engagement team among others, prior to
commencement of audit work.
•• Discussed comprehensively the external audit reports, focusing on internal controls, risk
management, governance and matters with financial impact.
•• Reviewed the management letter as well as Management’s response and action taken on
the external auditor’s findings.
•• Reviewed and approved the annual plans and compliance roadmaps, enhanced manuals
and independent testing frameworks of the Compliance and Anti-Money Laundering
(AML) Units.
•• Reviewed the results and monitored the progress of the Independent Compliance and
AML Testing.
•• Monitored the timely submission of regulatory requirements, compliance to mandatory
ratios as well as continuous improvement of the Bank’s Compliance and AML system.
•• Discussed in detail the BSP Report of Examination (ROE) including the results of regulatory
examinations of the Bank’s foreign subsidiaries and reviewed Management’s reply to
the findings, observations and recommendations making sure that committed actions
are implemented.
Reports on cases in operations, whistle blower accounts as well as non-loan related cases
with impact to financials, information systems and reputation were reviewed focusing on
risk assessment, legal handling and root cause analyses to identify control weaknesses and
provide solutions.
The members and advisers of the BAC attended a Seminar on Corporate Governance on July 19,
2017 as well as the Distinguished Corporate Governance Speaker Series on August 10, 2017, as
part of their Continuing Education Program.
The Committee, with the objective of determining its own performance in the year 2017,
conducted a self-assessment. The BAC, likewise evaluated the performance of the Internal Audit,
the Compliance and Anti-Money Laundering Units and External Audit.
Management’s corrective actions on internal control weaknesses, compliance issues and major
risk areas cited by BSP, Internal Audit, External Audit, Compliance and AML Units and other
regulatory bodies, are constantly monitored by the BAC.
The Board Audit Committee reports its evaluation of the effectiveness of the internal controls,
financial reporting process, risk management systems and governance processes of the Bank
based on information obtained from the External Auditor, the reasonable assurance provided by
the Internal Auditor and additional reports and information requested from Senior Management,
and found that these are generally adequate across BDO.
12
Statement of Management’s Responsibility
for Financial Statements
The management of BDO Unibank, Inc. and Subsidiaries (the BDO Unibank Group) and of BDO
Unibank, Inc. (the Parent Bank) is responsible for the preparation and fair presentation of the
financial statements including the schedules attached therein, for the years ended December 31,
2017, 2016 and 2015, in accordance with the prescribed financial reporting framework indicated
therein, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is responsible for assessing the BDO Unibank
Group's and the Parent Bank's ability to continue as a going concern, disclosing, as applicable
matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Bank or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors is responsible for overseeing the BDO Unibank Group's and the Parent
Bank's financial reporting process.
The Board of Directors reviews and approves the financial statements including the schedules
attached therein, and submits the same to the stockholders or members.
Punongbayan & Araullo, the independent auditor appointed by the stockholders, has audited the
financial statements of the BDO Unibank Group and the Parent Bank in accordance with Philippine
Standards on Auditing, and in its report to the stockholders or members, has expressed its opinion
on the fairness of presentation upon completion of such audit.
SUBSCRIBED and SWORN to me before this 26th day of February, 2018 affiants Doc No. 284
exhibiting to me their Competent Evidence of Identity (CEI), as follows: Page No. 58
Book No. I
NAME CEI Number Date & Place Issued Series of 2018
1. Teresita T. Sy CTC No. – 00052502 02.08.2018/Manila
2. Nestor V. Tan CTC No. – 24536268 01.09.2018/Makati Atty. JOANNE KAREN S. TATEL
Appointment No. M-289
3. Pedro M. Florescio III CTC No. – 11984100 02.19.2018/Manila Notary Public until 31 December 2018
14/F BDO North Tower, BDO Corporate Center
7899 Makati Avenue, Makati City
WITNESS BY HAND AND SEAL on the day first above-mentioned at Makati City.
Roll No. 49198
IBP No. 022872, 03 January 2018, RSM
PTR No. 6619590, 05 January 2018, Makati City
MCLE Compliance No. V-0013001, 12/08/2015
13
Report of Independent Auditors
THE BOARD OF DIRECTORS AND STOCKHOLDERS
BDO UNIBANK, INC.
BDO Corporate Center
7899 Makati Avenue, Makati City
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Statements of Financial Position
BDO UNIBANK, INC. AND SUBSIDIARIES
BDO UNIBANK, INC. AND SUBSIDIARIES
STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017 AND 2016 DECEMBER 31, 2017 AND 2016
(With Comparative Figures as of January 1, 2016)
(With Comparative Figures as of January 1, 2016)
(Amounts in Millions of Philippine Pesos)
(Amounts in Millions of Philippine Pesos)
RESOURCES
CASH AND OTHER CASH ITEMS 7 P 45,006 P 40,909 P 42,729 P 43,882 P 39,813 P 41,767
DUE FROM BANGKO SENTRAL NG PILIPINAS 7 353,308 318,002 271,808 340,596 304,285 260,841
DUE FROM OTHER BANKS 8 51,479 41,794 24,837 41,088 33,463 20,944
TRADING AND INVESTMENT SECURITIES 9 332,927 269,042 225,759 258,214 207,886 196,500
LOANS AND OTHER RECEIVABLES - Net 10 1,791,786 1,573,965 1,382,752 1,730,732 1,511,981 1,323,311
EQUITY 20
Attributable to:
Shareholders of the Parent Bank 297,488 216,816 199,095 297,661 215,557 199,363
Non-controlling Interests 852 743 623 - - -
TOTAL LIABILITIES AND EQUITY P 2,668,104 P 2,324,999 P 2,031,359 P 2,524,625 P 2,189,720 P 1,938,678
21
Statements of Income
BDO UNIBANK, INC. AND SUBSIDIARIES
BDO UNIBANK, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,FOR
2017,
THE2016 AND
YEARS 2015 DECEMBER 31, 2017, 2016 AND 2015
ENDED
(Amounts in Millions of Philippine Pesos(Amounts
Except in Millions
Per Share of Data)
Philippine Pesos Except Per Share Data)
IMPAIRMENT LOSSES - Net 9, 13, 14 6,537 3,815 3,000 5,809 3,003 2,709
PROFIT BEFORE
PRE-ACQUISITION INCOME 37,557 33,434 30,657 36,247 29,770 29,729
Attributable to:
Shareholders of the Parent Bank P 28,070 P 26,234 P 24,917
Non-controlling Interests 35 12 39
22
Statements of Comprehensive Income
BDO UNIBANK, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(Amounts in Millions of Philippine Pesos)
23
24
BDO UNIBANK, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(Amounts in Millions of Philippine Pesos)
25
See Notes to Financial Statements.
Statements of Cash Flows
26
BDO UNIBANK, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(Amounts in Millions of Philippine Pesos)
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015
(Amounts in Millions of Philippine Pesos)
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Supplementary Management Discussion
190
The capital-to-risk assets ratio of BDO Unibank Group as presented in the Capital Adequacy Ratio (Basel III ) reports as of December 31, 2017 and 2016 are shown in the table
below.
Total capital ratio : Total Qualifying Capital 294,343 265,519 218,639 188,379
Risk-Weighted Assets 2,032,004 1,919,673 1,769,246 1,645,550
Tier 1 capital ratio : Tier 1 Capital (net of Regulatory Deductions) 266,792 238,752 193,877 164,291
Risk-Weighted Assets 2,032,004 1,919,673 1,769,246 1,645,550
Common equity ratio : Common Equity Tier 1 (net of Regulatory Deductions) 261,642 233,602 188,727 159,141
Risk-Weighted Assets 2,032,004 1,919,673 1,769,246 1,645,550
The regulatory qualifying capital of the Parent Bank consists of Tier 1 capital which comprises paid-up common and preferred, surplus including current year profit, surplus reserves,
other comprehensive income {net unrealized gains or losses on AFS securities and cumulative foreign currency translation and actuarial gain/(loss) }, and minority interest less
regulatory deductions such as unsecured credit accommodations to directors, officers, stockholders and their related interests (DOSRI), unsecured loans, other credit
accommodations and guarantees granted to subsidiaries and affiliates, deferred tax assets, goodwill, other intangible assets, and defined benefit pension fund assets (liabilities).
The other component of regulatory capital is Tier 2 capital, which includes unsecured subordinated debt, appraisal increment reserve, and general loan loss provision.
The components of Tier 1 capital and deductions follow:
BDO Unibank Parent Bank BDO Unibank Parent Bank
Group Group
December 31, 2017 December 31, 2016 (Restated)
(in Millions) (in Millions)
Common Equity Tier 1 (CET1) Capital
Paid-up common stock 43,690 43,690 36,500 36,500
Additional paid-in capital 122,966 122,947 70,127 70,107
Retained earnings 105,745 105,787 85,779 86,605
Undivided profits 28,026 28,006 25,842 24,057
Net unrealized gains or losses on AFS securities (2,396) (2,086) (3,923) (3,575)
Cumulative foreign currency translation (23) (23) (14) (14)
Remeasurements of Net Defined Benefit Liability/(Asset) (6,793) (6,814) (4,239) (4,277)
Minority interest in subsidiary banks which are less than wholly-owned -
Sub-total 291,215 291,507 210,072 209,403
Less: Regulatory adjustments/deductions
Total outstanding unsecured credit accommodations, both direct and indirect, to directors, officers,
stockholders and their related interests (DOSRI) 1,570 1,570 1,295 1,294
Total outstanding unsecured loans, other credit accommodations and guarantees granted to
subsidiaries and affiliates 367 7,607 248 5,690
Deferred tax assets 7,376 6,927 6,326 6,097
Goodwill 3,044 3,046 2
Other intangible assets 5,427 5,345 5,295 5,158
Defined benefit pension fund assets (liabilities) 709 796
Investments in equity of unconsolidated subsidiary banks and quasi-banks, and other financial allied
undertakings (excluding subsidiary securities dealers/brokers and insurance companies), after
deducting related goodwill, if any (for solo basis only and as applicable)
24,806 - 26,487
Investments in equity of unconsolidated subsidiary securities dealers/brokers and insurance companies
after deducting related goodwill, if any (for both solo and consolidated bases and as applicable) 6,931 7,127 608 608
Other equity investments in non-financial allied undertakings and non-allied undertakings 4,858 4,523 3,818 4,130
Sub-total 29,573 57,905 21,345 50,262
Total Common Equity Tier 1 Capital 261,642 233,602 188,727 159,141
191
The components of Tier 2 capital follow:
BDO Unibank BDO Unibank
Parent Bank Parent Bank
Group Group
December 31, 2017 December 31, 2016 (Restated)
(in Millions) (in Millions)
192
Tier 2 Capital
Instruments issued by the bank that are eligible as Tier 2 capital 10,000 10,000 10,000 10,000
Appraisal increment reserve-bank premises, as authorized by the Monetary Board 853 850 850 850
General loan loss provision, limited to a maximum of 1% of credit risk-weighted assets, and any amount
in excess thereof shall be deducted from the credit risk-weighted assets in computing the denominator of
the risk-based capital ratio 16,698 15,917 13,912 13,238
27,551 26,767 24,762 24,088
Below is the full reconciliation of all regulatory capital elements back to the balance sheet in the audited financial statements for 2017 AND 2016:
A.1 Common Equity Tier 1 (CET1) Capital 291,120 95 291,215 291,369 138 291,507
Paid-up common stock 43,690 - 43,690 43,690 - 43,690
Additional paid-in capital 122,947 19 122,966 122,947 - 122,947
Retained earnings 105,010 735 105,745 104,984 803 105,787
Undivided profits 28,005 21 28,026 27,990 16 28,006
Other comprehensive income (8,532) (680) (9,212) (8,242) (681) (8,923)
Net unrealized gains or losses on AFS securities (2,469) 73 (2,396) (2,154) 68 (2,086)
Cumulative foreign currency translation (4) (19) (23) (3) (20) (23)
Actuarial gain/(loss) (6,059) (734) (6,793) (6,085) (729) (6,814)
Minority interest in subsidiary banks which are less than wholly-owned - - - - - -
A.2 Regulatory adjustments to CET1 capital (30,146) 573 (29,573) (57,759) (146) (57,905)
Total outstanding unsecured credit accommodations both direct and indirect, to DOSRI (1,570) - (1,570) (1,570) - (1,570)
Total outstanding unsecured loans, other credit accommodations and guarantees granted to subsidiaries and affiliates (367) - (367) (7,607) - (7,607)
Deferred tax assets (7,474) 98 (7,376) (6,995) 68 (6,927)
Goodwill (3,044) - (3,044) - - -
Other intangible assets (5,427) - (5,427) (5,345) - (5,345)
Defined benefit pension fund assets (liabilities) - - - - - -
Investment in equity of unconsolidated subsidiary banks and quasi-banks, and other financial allied
undertakings (excluding subsidiary securities dealers/brokers and insurance companies), after deducting related
goodwill, if any (for solo basis only and as applicable) - - - (24,790) (16) (24,806)
Investments in equity of unconsolidated subsidiary securities dealers/brokers and insurance companies after
deducting related goodwill, if any (for both solo and consolidated bases and as applicable) (6,954) 23 (6,931) (6,929) (198) (7,127)
Other equity investments in non-financial allied undertakings and non-allied undertakings (5,310) 452 (4,858) (4,523) - (4,523)
Total Common Equity Tier 1 Capital 260,974 668 261,642 233,610 (8) 233,602
Additional tier 1 capital 5,150 - 5,150 5,150 - 5,150
*Per summary of adjustments as of December 31, 2017 as submitted to the Bangko Sentral ng Pilipinas
December 31, 2016 (Restated)
BDO Group Parent Bank
Regulatory
Adjustments Per AFS Regulatory Capital Adjustments* Per AFS
Capital
Qualifying Capital (in Millions) (in Millions)
A.1 Common Equity Tier 1 (CET1) Capital 209,827 245 210,072 210,328 (925) 209,403
Paid-up common stock 36,500 - 36,500 36,500 - 36,500
Additional paid-in capital 69,971 156 70,127 69,971 136 70,107
Retained earnings 85,841 (62) 85,779 86,059 546 86,605
Undivided profits 24,681 1,161 25,842 24,661 (604) 24,057
Other comprehensive income (7,166) (1,010) (8,176) (6,863) (1,003) (7,866)
Net unrealized gains or losses on AFS securities (2,765) (1,158) (3,923) (2,438) (1,137) (3,575)
Cumulative foreign currency translation 117 (131) (14) 118 (132) (14)
Actuarial gain/(loss) (4,518) 279 (4,239) (4,543) 266 (4,277)
Minority interest in subsidiary banks which are less than wholly-owned - - - - - -
A.2 Regulatory adjustments to CET1 capital (22,179) 834 (21,345) (51,532) 1,270 (50,262)
Total outstanding unsecured credit accommodations both direct and indirect, to DOSRI (1,295) - (1,295) (1,295) 1 (1,294)
Total outstanding unsecured loans, other credit accommodations and guarantees granted to subsidiaries and
affiliates (248) - (248) (5,690) - (5,690)
Deferred tax assets (6,514) 188 (6,326) (6,165) 68 (6,097)
Goodwill (3,046) - (3,046) (2) - (2)
Other intangible assets (5,295) - (5,295) (5,158) - (5,158)
Defined benefit pension fund assets (liabilities) (321) (388) (709) (796) - (796)
Investment in equity of unconsolidated subsidiary banks and quasi-banks, and other financial allied undertakings
(excluding subsidiary securities dealers/brokers and insurance companies), after deducting related goodwill, if
any (for solo basis only and as applicable) - - - (27,616) 1,129 (26,487)
Investments in equity of unconsolidated subsidiary securities dealers/brokers and insurance companies after
deducting related goodwill, if any (for both solo and consolidated bases and as applicable) (607) (1) (608) (678) 70 (608)
Other equity investments in non-financial allied undertakings and non-allied undertakings (4,853) 1,035 (3,818) (4,132) 2 (4,130)
Total Common Equity Tier 1 Capital 187,648 1,079 188,727 158,796 345 159,141
Additional tier 1 capital 5,150 - 5,150 5,150 - 5,150
193
Comparative risk-weighted assets by type of exposure as of December 31, 2017 and 2016 consist of the following:
194
Credit Risk * Market Risk ** Operational Risk
December 31, 2017
Group Parent Group Parent Group Parent
(in Millions)
On-Balance Sheet 1,800,830 1,710,480
Off-Balance Sheet 37,761 37,734
Counterparty (Banking/Trading Book) 6,392 3,239
Credit-Linked Notes in the Banking Book - -
Securitization Exposures - -
Deductions - -
Interest Rate Exposures 4,183 2,587
Equity Exposures 216 -
Foreign Exchange Exposures 23,658 24,336
Options - -
Basic Indicator 158,964 141,297
Total 1,844,983 1,751,453 28,057 26,923 158,964 141,297
Capital Requirements 184,498 175,145 2,806 2,692 15,896 14,130
* Standardized credit risk weights were used in the credit assessment of asset exposures. Third party credit assessments were based on ratings by Standard and
Poor's, Moody's, Fitch and PhilRatings on exposures to Sovereigns, MDBs, LGUs, Government Corporations, and Corporates.
** Excludes interest rate risks in the banking book (IRRBB). For IRRBB, please refer to 2017 NFS Section 4.2.2. As a matter of policy, frequency of measurement
for IRRBB is monthly, using 5 years historical data of yearly changes at 99% confidence level.
Risk-weighted on balance sheet assets covered by credit risk mitigants are mostly exposures covered by deposits or guarantees by the Philippine National Government. There are no securitization exposures, no exposures covered by credit derivatives, no outstanding credit protection
provided by the Bank through credit derivatives, and no outstanding investments in Structured Products. Moreover, the Bank has no outstanding accounting hedges. In case there are accounting hedges, the Bank performs both prospective and retrospective hedge effectiveness tests to
monitor the continuing effectiveness of accounting hedges as a matter of policy.
* Standardized credit risk weights were used in the credit assessment of asset exposures. Third party credit assessments were based on ratings by Standard and
Poor's, Moody's, Fitch and PhilRatings on exposures to Sovereigns, MDBs, LGUs, Government Corporations, and Corporates.
** Excludes interest rate risks in the banking book (IRRBB). For IRRBB, please refer to 2016 NFS Section 4.2.2. As a matter of policy, frequency of measurement
195
for IRRBB is monthly, using 5 years historical data of yearly changes at the 99% confidence level.
On-Balance Sheet Assets
BDO Unibank Group (Restated)
Principal Risk Weights
Exposures After
Type of Exposures Amount
CRM (in millions)
(in millions) 0% 20% 50% 75% 100% 150% Total
Cash on Hand 44,015 44,015 44,015 - - - - - 44,015
196
Checks and Other Cash Items 231 231 - 231 - - - - 231
Due from Bangko Sentral ng Pilipinas 318,002 318,002 318,002 - - - - - 318,002
Due from Other Banks 41,794 41,794 - 2,282 36,113 - 3,399 - 41,794
Financial Assets Designated at Fair Value through Profit or Loss 4,193 4,193 197 32 329 - 3,635 - 4,193
Available for Sale Securities 107,919 107,917 13,155 2,766 40,579 - 51,417 - 107,917
Held-to-Maturity (HTM) Securities 146,886 136,260 43,393 - 62,376 - 30,491 - 136,260
Unquoted Debt Securities Classified as Loans 22,376 22,338 - - 22,338 - - - 22,338
Loans and Receivables 1,544,863 1,463,350 - 84,698 83,224 55,078 1,235,423 4,927 1,463,350
Loans and Receivables Arising from Repurchase Agreements 14,302 14,302 14,302 - - - - - 14,302
Sales Contract Receivable 1,453 1,428 - - - - 1,060 368 1,428
Real and Other Properties Acquired 7,426 7,426 - - - - - 7,426 7,426
Other Assets 54,176 54,176 - - - - 54,176 - 54,176
Total Exposures 2,307,636 2,215,432 433,064 90,009 244,959 55,078 1,379,601 12,721 2,215,432
Total Risk-weighted On-Balance Sheet Assets Not Covered by CRM - 18,002 122,479 41,309 1,379,601 19,081 1,580,472
Total Risk-weighted On-Balance Sheet Assets Covered by CRM - 4 84 - 3,467 - 3,555
Total Risk-weighted On-Balance Sheet Assets - 18,006 122,563 41,309 1,383,068 19,081 1,584,027
Risk-weighted on balance sheet assets covered by credit risk mitigants are mostly exposures covered by deposits or guarantees by the Philippine National Government. There are no securitization exposures, no exposures covered by credit derivatives, no outstanding credit protection provided
by the Bank through credit derivatives, and no outstanding investments in Structured Products. Moreover, the Bank has no outstanding accounting hedges. In case there are accounting hedges, the Bank performs both prospective and retrospective hedge effectiveness tests to monitor the
continuing effectiveness of accounting hedges as a matter of policy.