BDO Unibank 2020 Annual Report Financial Supplements
BDO Unibank 2020 Annual Report Financial Supplements
BDO Unibank 2020 Annual Report Financial Supplements
06 Our Purpose
Corporate Mission
Corporate Vision
Core Values
Corporate Profile
08 Financial Highlights
10 Report of the Audit Committee
to the Board of Directors
12 Statement of Management’s
Responsibility for
Financial Statements
13 Report of Independent Auditors
20 Statements of Financial Position
21 Statements of Income
22 Statements of
Comprehensive Income
23 Statements of Changes in Equity
25 Statements of Cash Flows
27 Notes to Financial Statements
224 Supplementary Management
Discussion
The 2020 Annual Report and the Financial Supplements can be viewed and
downloaded online at www.bdo.com.ph/company-disclosures/annual-reports.
The 2020 Sustainability Report can be viewed and downloaded online at
www.bdo.com.ph/company-disclosures/sustainability-report.
Our Purpose
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.
Core Values
Commitment to Customers. We are committed to delivering
products and services that surpass customer expectations in value
and every aspect of customer service, while remaining prudent and
trustworthy stewards of their wealth.
2,264
2,208
2,800 2,000
3,022
2,020
2,668
1,755
2,100 1,500
2,325
1,482
1,400 1,000
700 500
0 0
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
393
9.4% 14.5%
371
2,400 320
2,610
2,485
328
2,420
298
2,121
1,800 240
1,905
218
1,200 160
600 80
0 0
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Net Income*
(in billion Php)
60
5-Year CAGR
48
2.5% NET INCOME
P28.2
44.2
36
32.7
billion
28.2
24
28.1
26.2
12
2020
0
2016 2017 2018 2019 2020
08
Financial & Operating Highlights
CONSOLIDATED PARENT BANK
2020 2019 Change 2020 2019 Change
BALANCE SHEET (in billion Php)
Resources 3,374.9 3,188.9 6% 3,235.4 3,063.1 6%
Trading and Investment Securities 508.8 435.9 17% 399.5 345.3 16%
Liquid Assets 1,040.9 886.6 17% 920.9 789.3 17%
Gross Customer Loans 2,263.7 2,208.1 3% 2,224.5 2,157.9 3%
Deposits 2,610.2 2,485.2 5% 2,548.3 2,438.7 4%
Equity1/ 393.0 370.6 6% 392.1 369.2 6%
INCOME STATEMENT (in billion Php)
Net Interest Income 133.7 119.9 12% 127.3 114.5 11%
Non-Interest Income 55.2 60.1 -8% 37.3 43.1 -14%
Gross Operating Income 188.9 180.0 5% 164.6 157.6 4%
Operating Expenses 112.6 114.6 -2% 90.1 94.3 -5%
Pre-provision Profit 76.3 65.4 17% 74.5 63.3 18%
Allowance for Credit Losses 30.2 6.2 390% 29.6 5.7 419%
Net Profit2/ 28.2 44.2 -36% 28.6 44.2 -35%
FINANCIAL PERFORMANCE INDICATORS
Profitability
Return on Average Common Equity 7.6% 12.8% 7.6% 12.8%
Return on Average Equity 7.5% 12.6% 7.6% 12.7%
Return on Average Assets 0.9% 1.4% 0.9% 1.5%
Margins and Liquidity
Net Interest Margin 4.4% 4.2% 4.3% 4.1%
Gross Customer Loans to Deposit Ratio 86.7% 88.8% 87.3% 88.5%
Liquid Assets to Total Assets 30.8% 27.8% 28.5% 25.8%
Liquidity Coverage Ratio 127.1% 108.4% 129.0% 109.2%
Net Stable Funding Ratio 122.0% 116.7% 122.0% 117.4%
Cost Efficiency
Cost to Income Ratio 59.6% 63.7% 54.7% 59.8%
Cost to Average Assets Ratio 3.4% 3.7% 2.8% 3.2%
Asset Quality
NPL Ratio3/ 2.6% 1.1% 2.5% 1.0%
NPL Cover4/ 109.5% 168.5% 111.8% 178.4%
Capital and Leverage
CET 1 Ratio5/ 13.2% 12.7% 12.7% 12.2%
Tier 1 Ratio5/ 13.4% 12.9% 12.9% 12.4%
Capital Adequacy Ratio5/ 14.4% 14.2% 13.8% 13.7%
Countercyclical Buffer6/ 0.0% 0.0% 0.0% 0.0%
Basel III Leverage Ratio 10.2% 10.0% 9.8% 9.6%
Assets to Equity 8.6x 8.6x 8.3x 8.3x
DISTRIBUTION NETWORK AND MANPOWER
Branches 1,472 1,436 3% 1,184 1,173 1%
ATMs7/ 4,439 4,466 -1% 4,164 4,225 -1%
Employees 38,756 38,510 1% 32,573 32,631 0%
Officers 18,844 18,750 1% 14,583 14,733 -1%
Staff 19,912 19,760 1% 17,990 17,898 1%
SHAREHOLDER INFORMATION
Market Value
Share Price (in Php) 106.80 158.00 -32%
Market Capitalization (in billion Php) 468.24 692.26 -32%
Valuation
Earnings per Share (in Php) 6.37 10.02 -36%
Book Value per Share (in Php) 88.11 83.04 6%
Price-Earnings Ratio 16.8x 15.8x
Price to Book Value 1.2x 1.9x
Dividends
Cash Dividends Paid to Common Shareholders 5.3 5.3
(in billion Php)
Cash Dividends per Common Share (in Php) 1.20 1.20
Dividend Payout Ratio8/ 18.6% 11.9%
Dividend Yield9/ 1.1% 0.8%
Notes:
All financial data based on SEC format unless otherwise indicated
1/
Total capital accounts, inclusive of minority interest and preferred shares
2/
Net Income attributable to shareholders of the parent bank
3/
Per BSP Circular 941
4/
Per BSP Circular 1011
5/
Based on audited financial statements
6/
Currently set at 0% by the BSP per Circular 1024 Section 1
7/
ATMs only, does not include Cash Accept Machines (CAMs) and Self‑Service Teller Machines (STMs)
8/
Cash dividends paid during the year divided by net profit for the year
9/
Cash dividends per common share paid during the year divided by average daily closing price for the year
09
Financial Statements
1. On financial reporting, the Board Audit Committee (BAC) reviewed and recommended for
approval to the Board the quarterly unaudited and annual audited financial statements
ensuring compliance with accounting standards and tax regulations. On February 26, 2020,
it endorsed for approval of the Board the audited financial statements as of December 31,
2019 including the Notes to the Financial Statements. This was approved by the Board and
disclosed to the public on February 27, 2020, 58 days from the financial yearend, following
the best practice requirement of the ASEAN Corporate Governance Scorecard (ACGS). It
believes that the financial statements are fairly presented in conformity with the relevant
financial reporting standards in all material aspects. The related internal controls on financial
reporting process, compliance with accounting standards, more specifically the changes
brought about by the adoption of the Philippine Financial Reporting Standards 9 and 16, were
likewise reviewed.
2. In overseeing the internal audit function, it reviewed and approved the Internal Audit Charter
and risk-based audit 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. It reviewed audit reports focusing on high and moderate risk
findings relating to operational, financial and compliance controls including risk assessment
systems with impact to financial, reputation and information security. It regularly tracked
the timely resolution of findings and asked for Management’s action plans on items that
needed to be addressed. It ensured the Internal Audit’s independence and unfettered access
to all records, properties and information to be able to fully carry out its function. It also
assessed the performance of the Chief Internal Auditor and the internal audit function. The
Committee is satisfied that the internal audit function has adequate resources to perform its
function effectively.
3. On external audit, it ensured the independence, qualification, and objectivity of the appointed
external auditor, which is accredited by the BSP. It reviewed and discussed the content of the
engagement letter, audit plan, scope of work, focus areas, composition of engagement team
among others, prior to the commencement of audit work. It comprehensively discussed
the external audit reports, focusing on internal controls, risk management, governance
and matters with financial impact particularly on the changes in accounting and reporting
standards. It reviewed Management’s Letter as well as Management’s response and action
taken on the external auditor’s findings and recommendations.
10
4. On regulatory compliance, it approved the revised and expanded Table of Organization of
Compliance Group to further complement the group to handle the increasing regulatory
risks and requirements for the Bank and its subsidiaries. It reviewed and approved the
annual plans and independent compliance testing roadmaps of the Compliance and Anti-
Money Laundering (AML) department. It endorsed for approval of the Board of Directors
the revised Regulatory Compliance and Management Manual, Money Laundering/Terrorist
Financing Prevention Program Manual, Online Gaming Policy of the Bank and the 1st Anti-
Money Laundering/Counter Terrorist Financing (AML/CTF) Institutional Risk Assessment,
which incorporates new and amended regulations as well as directives by the BSP in its
examinations. It monitored the progress and reviewed the results of the independent
compliance and AML testing, timely submission of regulatory and prudential reports,
compliance to mandatory ratios, as well as continuous improvement of the compliance and
AML systems. It discussed in detail the BSP Reports of Examination including the results
of regulatory examinations of the Bank’s foreign subsidiaries and reviewed Management’s
replies, thereby ensuring implementation of corrective actions. It also reviewed legislation
and regulatory compliance reports to ensure that the Bank complies with the relevant
regulatory requirements. In 2020, the Committee reviewed the performance of the
automated system being used by the Compliance Office for its AML function and related
party database. It also discussed and assessed the Bank’s guidelines on regulatory and AML
emerging risks such as online gaming business and investment scams.
5. Reports on cases in operations, whistle blower accounts as well as non-loan related cases
with impact to financials, internal controls, information systems and reputation were
deliberated on focusing on risk assessment, legal handling, and fraud prevention.
The BAC reports its evaluation of the effectiveness of the internal controls, financial reporting
process, risk management systems of the Bank based on the report and unqualified opinion
obtained from the External Auditor, the overall assurance provided by the Chief Internal Auditor
and additional reports and information requested from Senior Management, and found that
these are generally adequate across BDO.
11
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, 2020,
2019 and 2018, 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
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 BDO Unibank Group and the Parent 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 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.
12
Report of Independent Auditors
Opinion
We have audited the financial statements of BDO Unibank, Inc. and subsidiaries (collectively
referred to as the BDO Unibank Group) and of BDO Unibank, Inc. (the Parent Bank), which
comprise the statements of financial position as at December 31, 2020 and 2019, and the
statements of income, statements of comprehensive income, statements of changes in equity
and statements of cash flows for each of the three years in the period ended December 31,
2020, and notes to financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the financial position of the BDO Unibank Group and of the Parent Bank as at December 31,
2020 and 2019, and their financial performance and their cash flows for each of the three
years in the period ended December 31, 2020 in accordance with Philippine Financial
Reporting Standards (PFRS).
We conducted our audits in accordance with Philippine Standards on Auditing (PSA). Our
responsibilities under those standards are further described in the Auditors’ Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the
BDO Unibank Group and of the Parent Bank in accordance with the Code of Ethics for
Professional Accountants in the Philippines (Code of Ethics) together with the ethical
requirements that are relevant to our audits of the financial statements in the Philippines,
and we have fulfilled our other ethical responsibilities in accordance with these requirements
and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
13
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Emphasis of Matter
We draw attention to Note 34 to the financial statements, which describes management's
assessment of the continuing impact on the BDO Unibank Group’s and the Parent Bank’s
financial statements of the business disruption brought by the COVID-19 pandemic. Our
opinion is not modified in respect of this matter.
The following are the key audit matters identified in our audit of the financial statements of
the BDO Unibank Group and the Parent Bank:
The BDO Unibank Group and the Parent Bank are required to recognize allowance for
impairment on their loans and other receivables using the expected credit loss (ECL)
model in accordance with PFRS 9, Financial Instruments. As of December 31, 2020, the
BDO Unibank Group and the Parent Bank had loans and other receivables amounting to
P2,301,981 million and P2,259,686 million, respectively, net of allowance for impairment
of P58,851 million and P56,274 million, respectively. Loans and other receivables are the
most significant resources of the BDO Unibank Group and the Parent Bank which account
for 68% and 70% of the BDO Unibank Group’s and the Parent Bank’s total resources,
respectively.
The allowance for impairment of loans and other receivables is considered to be a matter
of significance as it requires the application of critical management judgment and use of
subjective estimates in determining how much impairment loss is required to be recognized
in the financial statements. These judgment and estimates are disclosed in the BDO
Unibank Group’s and the Parent Bank’s accounting policies in Notes 2 and 3 to the
financial statements.
The BDO Unibank Group and the Parent Bank use an ECL model in determining the
impairment of their loans and other receivables. The assessment of credit risk of a portfolio
of assets entails further estimations as to the likelihood of defaults occurring, the associated
loss ratios and of default correlations between counterparties. Furthermore, the BDO
Unibank Group and the Parent Bank incorporated forward-looking information into both the
assessment of whether the credit risk of an instrument has increased significantly from its
initial recognition and the measurement of ECL. The BDO Unibank Group and the Parent
Bank have identified and documented key drivers of credit risk and credit losses for each
loan portfolio and, using an analysis of historical data, have estimated relationships between
macro-economic variables and credit risk and credit losses.
The significant judgments applied and the subjectivity of estimates used by management
have further heightened due to the unprecedented impact of COVID-19 pandemic to the
BDO Unibank Group and the Parent Bank’s loans and receivables. In 2020, the management
performed comprehensive review of loan accounts to assess vulnerable loan accounts which
resulted in the transfer of the classification of some loans from Stage 1 to either Stage 2 or 3.
Further, BDO Unibank Group and the Parent Bank consider the current and forecasted
macroeconomic variables in determining the appropriate overlay. Accordingly, the BDO
Unibank Group and the Parent Bank have recognized in 2020 impairment losses on loans
and other receivables amounting to P30,240 and P29,596, respectively, to provide, among
others, for potential pandemic-related delinquencies.
14
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The disclosures of the BDO Unibank Group and the Parent Bank on the allowance for
impairment of loans and other receivables, and the related credit risk are included in
Notes 4 and 10 to the financial statements.
Our audit procedures to address the risk of material misstatement relating to the adequacy
of allowance for impairment of loans and other receivables, which was considered to be a
significant risk, included:
testing the design and operating effectiveness of key controls across the processes,
as assisted by our own Information Technology specialists, over the loan classification
into stages, and the calculation and recognition of the allowance for impairment;
evaluating appropriateness of the BDO Unibank Group and the Parent Bank’s credit
policy and loan impairment process as approved by the Board of Directors;
verifying that the loans are classified to the appropriate stage, and challenging the
criteria used to categorize the loan to Stage 1, 2 or 3 in accordance with PFRS 9;
assessing the appropriateness of the BDO Unibank Group and the Parent Bank’s
design of the ECL impairment model;
evaluating the inputs and assumptions, as well as the formulas used in the
development of the ECL models for each of the loan portfolio. This includes assessing
the appropriateness of the formula and inputs used in determining the probability of
default, loss given default and exposure at default;
assessing the borrowers’ repayment abilities by examining payment history for selected
loan accounts;
assessing the impact of the non-recognition of loan modification gain or loss on the
underlying loan modification database by agreeing a representative sample of modified
loans to the related documentation made and agreed with customers or other
supporting information and determining the potential amount of modification gain or
loss; and,
15
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assessing the compliance with Bayanihan to Heal as One Act and to Recover as One
Act in granting loan moratoria to qualified customers under the said Laws.
The fair valuation of financial instruments of the BDO Unibank Group and the Parent Bank
is considered a key area of focus in our audit due to the use of inputs from external sources
in computing the market value of these financial instruments. For some financial
instruments such as derivatives, the determination of fair value includes the use of
estimates by the management. The fair value of derivative financial instruments is usually
determined using the discounted cash flow approach. To the extent practicable, models
use observable data; however, areas such as credit risk (both own and counterparty),
volatilities and correlations require management to make estimates.
As of December 31, 2020, the derivative financial assets and derivatives with negative fair
values of the BDO Unibank Group that are carried at fair value amounted to P4,468 million
and P4,129 million, respectively, while that of the Parent Bank amounted to P1,769 million
and P2,001 million, respectively.
The disclosures of the BDO Unibank Group and the Parent Bank on exposure to financial
instruments valuation risk are included in Note 4 to the financial statements.
testing of controls over the valuation process of the BDO Unibank Group and the
Parent Bank on financial instruments, particularly the measurement of derivative
valuation adjustments;
evaluating whether fair value prices used were appropriate by testing the inputs against
reliable market sources such as Philippine Interbank Reference Rate and London Inter-
Bank Offered Rate;
recomputing the fair values based on the inputs and compared with the market values
used by the BDO Unibank Group and the Parent Bank; and,
(c) Carrying Value of Goodwill and Other Intangible Assets with Indefinite Useful Lives
BDO Unibank Group has goodwill of P4,535 million, with allowance for impairment of
P1,460 million, as of December 31, 2020, and the significant portion of which relates to
the acquisition of BDO Network Bank, Inc. (BDO Network). Furthermore, the BDO Unibank
Group and the Parent Bank have other intangible assets amounting to P5,707 million and
P5,541 million, respectively.
16
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Under PFRS, BDO Unibank Group and the Parent Bank are required to annually test the
amount of goodwill and other intangible assets with indefinite useful lives for impairment.
This annual impairment testing of goodwill and other intangible assets with indefinite useful
lives for impairment is considered to be a key audit matter because the management’s
process in assessing the recoverability of the intangible assets is complex. In addition,
the assumptions used in determining the cash generating units (CGUs) where the goodwill
and other intangible assets with indefinite useful lives are allocated and estimating the
recoverable amount involves significant judgment. The recoverable amount of the CGUs
has been computed using discounted cash flows method. This valuation method uses
several key assumptions, including estimates for forecasted statement of financial position
and net profit of CGUs, terminal value growth rates and discount rate.
The BDO Unibank Group’s disclosures about goodwill and other intangible assets are
included in Notes 2, 3 and 14 to the financial statements.
Our audit procedures to address the risk of material misstatement relating to impairment
of goodwill and other intangible assets included, among others, evaluating the
appropriateness of assumptions and methodologies used by the management, in
particular, those relating to the forecasted statement of financial position and statement
of income as well as the discount rate used. We have involved our Firm valuation
specialist to assist in evaluating the appropriateness of assumptions used in estimating
the recoverable amount of CGUs. In addition, our audit of the financial statements of
BDO Network as of and for the year ended December 31, 2020 did not identify events or
conditions that may cast significant doubt on BDO Network’s ability to continue as a going
concern.
Other Information
Management is responsible for the other information. The other information comprises the
information included in the BDO Unibank Group’s Securities and Exchange Commission (SEC)
Form 20-IS (Definitive Information Statement) and SEC Form 17-A, and Annual Report for the
year ended December 31, 2020, but does not include the financial statements and our auditors’
report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and
Annual Report for the year ended December 31, 2020 are expected to be made available to us
after the date of this auditors’ report.
Our opinion on the financial statements does not cover the other information and we will not
express any form of assurance conclusion thereon.
In connection with our audits of the financial statements, our responsibility is to read the other
information identified above when it becomes available and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge
obtained in the audits, or otherwise appears to be materially misstated.
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with PFRS, 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.
17
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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 BDO Unibank Group and the Parent Bank
or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the BDO Unibank Group’s and
the Parent Bank’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with PSA will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with PSA, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the BDO Unibank Group’s and the Parent Bank’s internal
control.
Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the BDO Unibank Group and the Parent Bank to
express an opinion on the financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our
audit opinion.
18
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We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditors’
report unless law or regulation precludes public disclosure about the matter or when, extremely
rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
Our audits were conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole. As discussed in Note 30 to the financial statements, the Parent
Bank presented the supplementary information required by the Bureau of Internal Revenue
under Revenue Regulations (RR) No. 15-2010 in a supplementary schedule filed separately
from the basic financial statements. RR No. 15-2010 requires the supplementary information
to be presented in the notes to the financial statements. The supplementary information for the
year ended December 31, 2020 and 2019 required by the BSP as disclosed in Note 35 to the
financial statements is presented for purposes of additional analysis. Such supplementary
information required by BIR and BSP is the responsibility of management. The supplementary
information is not a required part of the basic financial statements prepared in accordance with
PFRS; it is not also a required disclosure under the Revised Securities Regulation Code Rule
68 of the SEC.
The engagement partner on the audits resulting in this independent auditors’ report is
Romualdo V. Murcia III.
19
Statements of Financial Position
BDO UNIBANK, INC. AND SUBSIDIARIES
DECEMBER 31, 2020 AND 2019
(Amounts in Millions of Philippine Pesos)
21
22
Statements of Comprehensive Income
BDO UNIBANK, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(Amounts in Millions of Philippine Pesos)
See Notes to Financial Statements.
23
24
Statements of Changes in Equity
BDO UNIBANK, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(Amounts in Millions of Philippine Pesos)
25
26
Statements of Cash Flows
BDO UNIBANK, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(Amounts in Millions of Philippine Pesos)
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Interest earned on these investments is recorded under Interest Income while dividend
income is reported as part of Dividends under Other Operating Income account in the
statement of income.
Financial assets with embedded derivatives are considered in their entirety when
determining whether their cash flows are SPPI.
BDO Unibank Group can only reclassify financial assets if the objective of its business
model for managing those financial assets changes. Accordingly, BDO Unibank Group
is required to reclassify financial assets: (i) from amortized cost to FVTPL, if the
objective of the business model changes so that the amortized cost criteria are no longer
met; and, (ii) from FVTPL to amortized cost, if the objective of the business model
changes so that the amortized cost criteria start to be met and the characteristic of the
instrument’s contractual cash flows meet the amortized cost criteria.
A change in the objective of the BDO Unibank Group’s business model will take effect
only at the beginning of the next reporting period following the change in the business
model.
Interest income is recognized using the effective interest rate (EIR) method for all
financial instrument measured at amortized cost and financial instrument designated at
FVTPL. Interest income on interest bearing financial assets measured at FVOCI are also
recorded by using the EIR method. The EIR is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial instrument or, when
appropriate, a shorter period, to the net carrying amount of the financial asset.
The EIR is calculated by taking into account any discount or premium on acquisition, fees
and costs that are an integral part of EIR. The BDO Unibank Group recognizes interest
income using a rate of return that represents the best estimate of a constant rate of return
over the expected life of the loan. Hence, it recognizes the effect of potentially different
interest rates charged at various stages, and other characteristics of the product life cycle
(including prepayments, penalty interest and charges).
If expectations regarding the cash flows on the financial asset are revised for reasons other
than credit risk, the adjustment is booked as a positive (negative) adjustment to the
carrying amount of the asset in the statement of financial position with an increase
(reduction) in interest income. The adjustment is subsequently amortized through interest
and similar income in the statement of income.
The BDO Unibank Group calculates interest income by applying the EIR to the gross
carrying amount of financial assets other than credit-impaired assets.
For financial assets that have become credit-impaired subsequent to initial recognition
[see Note 2.5(c)], interest income is calculated by applying the effective interest rate to
the net carrying amount of the financial assets (after deduction of the loss allowance).
If the asset is no longer credit-impaired, then the calculation of interest income reverts to
the gross basis. For financial assets that were credit-impaired on initial recognition,
interest income is calculated by applying a credit-adjusted effective interest rate to the
amortized cost of the asset. The calculation of interest income does not revert to a gross
basis, even if the credit risk of the asset improves.
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Supplementary Management Discussion
The capital-to-risk assets ratio of BDO Unibank Group and the Parent Bank as presented in the Capital Adequacy Ratio (Basel III ) reports as of December 31, 2020 and 2019 are shown in
the table below.
Total capital ratio : Total Qualifying Capital 370,636 343,804 354,316 328,928
Risk-Weighted Assets 2,579,533 2,492,540 2,492,890 2,395,545
Tier 1 capital ratio : Tier 1 Capital (net of Regulatory Deductions) 346,689 320,556 320,917 296,296
Risk-Weighted Assets 2,579,533 2,492,540 2,492,890 2,395,545
Common equity ratio : Common Equity Tier 1 (net of Regulatory Deductions) 341,539 315,406 315,767 291,146
Risk-Weighted Assets 2,579,533 2,492,540 2,492,890 2,395,545
The regulatory qualifying capital consists of Tier 1 capital which comprises paid-up common and preferred, surplus including current year profit, surplus reserves (excluding appropriated
surplus free for deficiency in BSP-required 1% general provision), other comprehensive income {net unrealized gains or losses on AFS securities and cumulative foreign currency
translation and actuarial gain/(loss) }, and minority interest (for consolidated basis only) 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, deferred tax assets, goodwill, other intangible
assets, and defined benefit pension fund assets. The other component of regulatory capital is Tier 2 capital, which includes unsecured subordinated debt, appraisal increment reserve,
and general loan loss provision (including appropriated surplus free for deficiency in BSP-required 1% general provision).
The components of Tier 1 capital and deductions follow:
BDO Unibank Parent Bank BDO Unibank Parent Bank
Group Group
December 31, 2020 December 31, 2019
(in Millions) (in Millions)
Common Equity Tier 1 (CET1) Capital
Paid-up common stock 43,842 43,842 43,814 43,814
Additional paid-in capital 124,327 124,307 125,799 125,780
Retained earnings 190,499 190,769 150,082 150,397
Undivided profits 28,210 28,606 44,104 44,233
Net unrealized gains or losses on AFS securities 5,564 5,911 (191) 83
Cumulative foreign currency translation (49) (48) 11 12
Remeasurements of Net Defined Benefit Liability/(Asset) (10,351) (10,012) (9,603) (9,977)
Others (8,779) (9,343) (4,315) (3,980)
Minority interest in subsidiary banks which are less than wholly-owned 79 - 79 -
Sub-total 373,342 374,032 349,780 350,362
Less: Regulatory adjustments/deductions
Total outstanding unsecured credit accommodations, both direct and indirect, to directors, officers,
stockholders and their related interests (DOSRI) 1,797 1,797 1,863 1,863
Total outstanding unsecured loans, other credit accommodations and guarantees granted to
subsidiaries 1,493 5,121 259 3,663
Deferred tax assets 7,869 7,383 8,879 8,179
Goodwill 3,057 - 3,075 -
Other intangible assets 5,660 5,541 5,392 5,270
Defined benefit pension fund assets (liabilities) 1,213 1,217 - -
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) - 26,921 - 25,692
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) 5,850 5,782 9,652 9,656
Other equity investments in non-financial allied undertakings and non-allied undertakings 4,864 4,864 4,893 4,893
Sub-total 31,803 58,626 34,013 59,216
Total Common Equity Tier 1 Capital 341,539 315,406 315,767 291,146
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226
Below is the full reconciliation of all regulatory capital elements back to the balance sheet in the audited financial statements for 2020 and 2019:
A.1 Common Equity Tier 1 (CET1) Capital 372,905 437 373,342 374,339 (307) 374,032
Paid-up common stock 43,842 - 43,842 43,842 - 43,842
Additional paid-in capital 126,319 (1,992) 124,327 126,319 (2,012) 124,307
Retained earnings 188,106 2,393 190,499 188,841 1,928 190,769
Undivided profits 28,446 (236) 28,210 28,918 (312) 28,606
Other comprehensive income (13,887) 272 (13,615) (13,581) 89 (13,492)
Net unrealized gains or losses on AFS securities 5,446 118 5,564 5,747 164 5,911
Cumulative foreign currency translation (49) - (49) (56) 8 (48)
Actuarial gain/(loss) (10,492) 141 (10,351) (10,480) 468 (10,012)
Others (8,792) 13 (8,779) (8,792) (551) (9,343)
Minority interest in subsidiary banks which are less than wholly-owned 79 - 79 - - -
A.2 Regulatory adjustments to CET1 capital (32,364) 561 (31,803) (58,691) 65 (58,626)
Total outstanding unsecured credit accommodations both direct and indirect, to DOSRI (1,797) - (1,797) (1,797) - (1,797)
Total outstanding unsecured loans, other credit accommodations and guarantees granted to subsidiaries (1,493) - (1,493) (5,121) - (5,121)
Deferred tax assets (8,083) 214 (7,869) (7,452) 69 (7,383)
Goodwill (3,057) - (3,057) - - -
Other intangible assets (5,660) - (5,660) (5,541) - (5,541)
Defined benefit pension fund assets (liabilities) (1,213) - (1,213) (1,217) - (1,217)
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) - - - (26,916) (5) (26,921)
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)
(5,861) 11 (5,850) (5,783) 1 (5,782)
Other equity investments in non-financial allied undertakings and non-allied undertakings (5,200) 336 (4,864) (4,864) - (4,864)
Total Common Equity Tier 1 Capital 340,541 998 341,539 315,648 (242) 315,406
Additional tier 1 capital 5,150 - 5,150 5,150 - 5,150
*Per summary of adjustments as of December 31, 2020 as submitted to the Bangko Sentral ng Pilipinas
December 31, 2019
BDO Unibank Group Parent Bank
Regulatory Capital Adjustments Per AFS Regulatory Capital Adjustments* Per AFS
Qualifying Capital (in Millions) (in Millions)
A.1 Common Equity Tier 1 (CET1) Capital 350,579 (799) 349,780 351,741 (1,379) 350,362
Paid-up common stock 43,814 - 43,814 43,814 - 43,814
Additional paid-in capital 125,780 19 125,799 125,780 - 125,780
Retained earnings 149,382 700 150,082 150,294 103 150,397
Undivided profits 44,217 (113) 44,104 44,239 (6) 44,233
Other comprehensive income (12,693) (1,405) (14,098) (12,386) (1,476) (13,862)
Net unrealized gains or losses on AFS securities (248) 57 (191) 65 18 83
Cumulative foreign currency translation 11 - 11 5 7 12
Actuarial gain/(loss) (11,261) 1,658 (9,603) (11,260) 1,283 (9,977)
Others (1,195) (3,120) (4,315) (1,196) (2,784) (3,980)
Minority interest in subsidiary banks which are less than wholly-owned 79 - 79 - - -
A.2 Regulatory adjustments to CET1 capital (36,088) 2,075 (34,013) (60,652) 1,436 (59,216)
Total outstanding unsecured credit accommodations both direct and indirect, to DOSRI (1,863) - (1,863) (1,863) - (1,863)
Total outstanding unsecured loans, other credit accommodations and guarantees granted to subsidiaries (259) - (259) (3,663) - (3,663)
Deferred tax assets (8,941) 62 (8,879) (8,221) 42 (8,179)
Goodwill (3,075) - (3,075) - - -
Other intangible assets (5,312) (80) (5,392) (5,190) (80) (5,270)
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) - - - (25,725) 33 (25,692)
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) (11,255) 1,603 (9,652) (11,093) 1,437 (9,656)
Other equity investments in non-financial allied undertakings and non-allied undertakings (5,383) 490 (4,893) (4,897) 4 (4,893)
Total Common Equity Tier 1 Capital 314,491 1,276 315,767 291,089 57 291,146
Additional tier 1 capital 5,150 - 5,150 5,150 - 5,150
*Per summary of adjustments as of December 31, 2019 as submitted to the Bangko Sentral ng Pilipinas
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Comparative risk-weighted assets by type of exposure as of December 31, 2020 and 2019 consist of the following:
* 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 2020 NFS Section 4.2.2. As a matter of policy, frequency of measurement
for IRRBB is monthly.
***General loan loss provision (in excess of the amount permitted to be included in Tier 2).
Risk Weights
Credit Equivalent
Type of Exposures (in millions)
0% 20% 50% 75% 100% 150% Total
Direct credit substitutes 37 - - - - 37 - 37
Transaction-related contingencies 31,193 - - - - 31,193 - 31,193
Trade-related contingencies arising from movement of goods and commitments
with an original maturity of up to one (1) year 6,421 - - - - 6,421 - 6,421
37,651 - - - - 37,651 - 37,651
On-Balance Sheet Assets
Parent Bank
Exposures After Risk Weights
Principal Amount
Type of Exposures
(in millions) CRM (in millions)
0% 20% 50% 75% 100% 150% Total
Cash on Hand 80,851 80,851 80,851 - - - - - 80,851
Checks and Other Cash Items 27 27 - 27 - - - - 27
Due from Bangko Sentral ng Pilipinas 305,079 305,079 305,079 - - - - - 305,079
Due from Other Banks 63,281 63,281 - 1,973 61,276 - 32 - 63,281
Financial Assets Designated at Fair Value through Profit or Loss - - - - - - - - -
Available for Sale Securities 126,904 126,904 48,304 1,497 39,778 - 37,325 - 126,904
Held-to-Maturity (HTM) Securities 267,672 258,370 115,212 7,040 87,999 - 48,119 - 258,370
Unquoted Debt Securities Classified as Loans - - - - - - - - -
Loans and Receivables 2,251,658 2,151,969 1 192,577 135,972 - 1,807,943 15,476 2,151,969
Loans and Receivables Arising from Repurchase Agreements 14,135 14,135 14,135 - - - - - 14,135
Sales Contract Receivable 860 860 - - - - 653 207 860
Real and Other Properties Acquired 10,617 10,617 - - - - - 10,617 10,617
Other Assets 64,610 64,610 - - - - 64,610 - 64,610
Total Exposures 3,185,694 3,076,703 563,582 203,114 325,025 - 1,958,682 26,300 3,076,703
Total Risk-weighted On-Balance Sheet Assets Not Covered by CRM - 40,623 162,512 - 1,958,682 39,450 2,201,267
Total Risk-weighted On-Balance Sheet Assets Covered by CRM - 7 - - 3,536 - 3,543
Total Risk-weighted On-Balance Sheet Assets - 40,630 162,512 - 1,962,218 39,450 2,204,810
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 NFS Section 4.2.2. As a matter of policy, frequency of measurement
for IRRBB is monthly.
***General loan loss provision (in excess of the amount permitted to be included in Tier 2).
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On-Balance Sheet Assets
BDO Unibank Group
Risk Weights
Principal Amount Exposures After
Type of Exposures (in millions) CRM (in millions)
0% 20% 50% 75% 100% 150% Total
Cash on Hand 69,429 69,429 69,429 - - - - - 69,429
Checks and Other Cash Items 55 55 - 55 - - - - 55
Due from Bangko Sentral ng Pilipinas 309,040 309,040 309,040 - - - - - 309,040
Due from Other Banks 38,596 38,596 - 3,665 34,379 - 552 - 38,596
Financial Assets Designated at Fair Value through Profit or Loss 377 377 10 - - - 367 - 377
Available for Sale Securities 110,457 110,457 24,627 1,501 45,807 - 38,522 - 110,457
Held-to-Maturity (HTM) Securities 261,774 251,965 118,682 7,617 94,075 - 31,591 - 251,965
Unquoted Debt Securities Classified as Loans - - - - - - - - -
Loans and Receivables 2,230,002 2,128,026 - 139,358 69,081 54,629 1,858,984 5,974 2,128,026
Loans and Receivables Arising from Repurchase Agreements - - - - - - - - -
Sales Contract Receivable 813 813 - - - - 690 123 813
Real and Other Properties Acquired 11,172 11,172 - - - - - 11,172 11,172
Other Assets 79,641 79,641 - - - - 79,641 - 79,641
Total Exposures 3,111,356 2,999,571 521,788 152,196 243,342 54,629 2,010,347 17,269 2,999,571
Total Risk-weighted On-Balance Sheet Assets Not Covered by CRM - 30,439 121,671 40,972 2,010,347 25,904 2,229,333
Total Risk-weighted On-Balance Sheet Assets Covered by CRM - 6 - - 2,153 - 2,159
Total Risk-weighted On-Balance Sheet Assets - 30,445 121,671 40,972 2,012,500 25,904 2,231,492
Risk Weights
Credit Equivalent
Type of Exposures (in millions)
0% 20% 50% 75% 100% 150% Total
Direct credit substitutes 37 - - - - 37 - 37
Transaction-related contingencies 17,628 - 174 - - 16,758 - 16,932
Trade-related contingencies arising from movement of goods and commitments
with an original maturity of up to one (1) year 7,239 - 4 - - 7,217 - 7,221
24,904 - 178 - - 24,012 - 24,190
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.
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Basel III Leverage Ratios of BDO Unibank Group and Parent Bank as of December 31, 2020 and 2019 as submitted to the Bangko Sentral ng Pilipinas (BSP).
1/
Gross of General Loan Loss Provision (GLLP) and excluding derivatives and SFTs
2/
Not included under the framework
3/
When a bank/non-bank acting as an agent in an SFT provides an indemnity or guarantee to a customer or
counterparty for any difference between the value of the security or cash the customer has lent and the
value of the collateral the borrower has provided
Summary Comparison of Accounting Assets vs. Leverage Ratio Exposure
In Million Pesos
2020 2019
Item
BDO Unibank Group Parent Bank BDO Unibank Group Parent Bank
1 Total consolidated assets as per published financial statements 1/ 3,315,239.978 3,246,648.692 3,145,157.804 3,069,394.975
2 Adjustment for investments in banking, financial, insurance or commercial entities that are consolidated
for accounting purposes but outside the scope of regulatory consolidation 2/
3 Adjustment for fiduciary assets recognized on the balance sheet pursuant to the operative accounting
framework but excluded from the leverage ratio exposure measure 2/
4 Adjustments for derivative financial instruments 5,205.732 3,232.559 4,031.450 2,904.720
5 Adjustments for securities financial transactions (i.e., repos and similar secured lending) 0.000 0.000 0.000 0.000
6 Adjustments for off-balance sheet items (i.e., conversion to credit equivalent amounts of off-balance 80,630.171 80,602.238 69,209.077 69,119.311
sheet exposures)
7 Other adjustments -18,280.237 -44,898.962 -24,290.165 -49,444.238
8 Leverage ratio exposure 3/ 3,382,795.644 3,285,584.528 3,194,108.166 3,091,974.768
1/
Refers to total on-balance sheet assets per quarterly published balance sheet
2/
Not included under the framework
3/
Sum of Items 1 to 7. Should be consistent with item 21 of the Basel III Leverage Ratio Common Disclosure Template
There is no significant difference between the banks’ total balance sheet assets in its financial statements and the on-balance sheet exposures in the Leverage Ratio Report.
The Bank’s Leverage Ratio remains well above the regulatory minimum requirement of 5%. The leverage ratio has improved year-on-year (Y-o-Y) by about 18 basis points (bps) and 21bps on Solo
and Consolidated Basis, respectively. The improvement was mainly due to a Y-o-Y increase of about 8% in Tier 1 Capital, despite an increase of about 6% in total exposures.
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Basel III Liquidity Coverage Ratio (LCR) of BDO Unibank Group as of December 31, 2020 and December 31, 2019 per Bangko Sentral ng Pilipinas (BSP) required disclosure.
2020 2019
1 2 1 2
TOTAL UNWEIGHTED TOTAL WEIGHTED TOTAL UNWEIGHTED TOTAL WEIGHTED
NATURE OF ITEM VALUE VALUE VALUE VALUE
(AVERAGE) (AVERAGE) (AVERAGE) (AVERAGE)
10. Outflows related to derivatives exposures (net) 65,603,993,132.19 65,603,993,132.19 88,279,106,321.53 88,279,106,321.53
13. Committed business facilities (all counterparties) 12,465,597,992.08 2,787,626,021.78 11,869,841,325.76 4,070,077,527.91
14. Other contractual obligations within a 30-day period 26,749,219,925.60 26,749,219,925.60 15,731,205,929.03 15,731,205,929.03
18. Fully performing exposures (all counterparties) 309,339,545,382.21 192,009,948,300.96 321,656,528,244.87 204,247,157,720.84
________________________
1
Unweighted values must be calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows).
2
Weighted values must be calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows).
3
Adjusted values must be calculated after the application of both: (i) haircuts (for Total HQLA) and inflow and outflow rates (for Total Net Cash Outflows);
and (ii) applicable cap and ceiling (i.e., cap on Level 2 assets for HQLA and ceiling on inflows).
Datapoints used were the simple average of the quarterly consolidated report as of March 31; June 30; September 30 and December 31, for both 2020 and 2019.
________________________
The LCR results have been stable and above the regulatory floor over the past 4 quarters in 2020. The LCR has improved year-on-year (Y-o-Y) by 13% driven mainly by an
increase in HQLA and relatively stable cashflows. Majority of the Group's HQLA is comprised of Level 1 assets, primarily in the form of cash on hand, cash reserves with the
BSP, overnight and term deposits with the BSP, and eligible securities representing claims on or guaranteed by the Philippine National Government.
One of the operating principles of the Group is to ensure that it has a diversified funding base, taking into account all available market opportunities. Sound liquidity management
requires that the sources of funds available are diversified, particularly in terms of maturities and market share. The Group’s primary funding source comes from regular customer
deposits, which is composed largely of lower-cost funds. In addition to regular deposits, the Group also opportunistically raises funding through the issuance of Long Term
Negotiable Certificate of Deposits (LTNCD), peso denominated bonds, and foreign currency senior debt instruments. The Group aims to finance current and future asset
growth in the most cost-effective manner possible.
The Group's outstanding derivative contracts are comprised mainly of short-term foreign exchange (FX) forwards and swaps, and any potential collateral calls by counterparties
are not significant to impact liquidity. There are also no significant currency mismatches in the LCR.
The Asset-Liability Committee (ALCO) has responsibility for ensuring that Group policy for liquidity management is adhered to on a continual basis, and that Treasury is
responsible for executing liquidity directives and operating within the liquidity policy. Treasury ensures that the funding requirements of all the Business Units (Bus) are
addressed, excess funds are deployed to maximize returns, and regulatory requirements on reserves are complied. As such, all the BUs closely interact and coordinate with
Treasury. The Liquidity Management function is centralized under the Treasury Group for the Parent Bank, and similarly for each major subsidiary of the Group.
All material and significant inflows and outflows that are relevant to the Group’s liquidity profile are captured in the LCR.
234