New Era University

No. 9 Central Avenue, New Era, Quezon City

College of Business Administration

VS

In partial fulfillment of the Requirement in Course of Financial Management Academic Year 2011-2012

Submitted by: Zenia B. Ferma Rose D. Caanes Gabriel Mikhail P. Cabrera Jennelyn A. Baay Jona Aguilar

Submitted to: Professor Elizabeth T. Banan

Profile

Banco de Oro Universal Bank (PSE: BDO), commonly known as Banco de Oro and BDO, is a major bank in the Philippines. It is owned by the SM Group of Companies, one of the country's largest conglomerates and owner of the SM chain of malls. Following the Banco de Oro-Equitable PCI Bank merger, the bank has since become Banco de Oro Unibank, Inc.

The new Banco de Oro (BDO) will retain the ticker symbol of the old Banco de Oro. 1.3 billion BDO shares will be issued in exchange for 727 million Equitable PCI Bank shares, which was de-listed on June 4, 2007.). BDO is now the largest bank in the Philippines in terms of assets, loans and deposits. The bank is the product of the Banco de Oro-Equitable PCI Bank merger after the boards of both Banco de Oro Universal Bank and Equitable PCI Bank agreed to merge on December 27, 2006. For a while, the entity was known as Banco de Oro-EPCI, Inc., but announced that it would go by the name Banco de Oro Unibank, Inc. starting February 2007.

The product of a merger heralded as unprecedented in size and scale in the Philippine banking industry, Banco De Oro Unibank (BDO) today represents a firm consolidation of distinct strengths and advantages built over the years by the entities behind its history. More importantly, BDO is an institution that does more than honor its past, it

continues to improve on its present, and moves with innovation and dynamism toward an even stronger future.

BDOs reputation as a full-service universal bank remains as formidable as ever. It has the caliber and the muscle to provide industry-leading corporate, retail, investment banking and insurance services. It maintains its strategic focus on its principal markets, notably the corporate market, the middle market banking segment consisting of mid-sized corporations and small and medium-sized enterprises and the retail / consumer market. Moreover, it has complimented this base with expertise in asset management, leasing and finance, remittances, banc assurance, credit cards, corporate cash management, trust, and treasury. Its institutional strengths and value-added products and services hold the key to its successful business relationships with customers. Through selective acquisitions and organic growth, BDO is positioning for growth and continued expansion into new markets.

The year 2009 was both a challenging and a rewarding year for Banco De Oro Unibank. It was a period of challenges for the BDO Group as the lingering effects of the 2008 global financial crisis told on the countrys economic performance and gnawed at business confidence. It was a difficult time for business and industry but the Group, exhibiting great resiliency and financial strength, ably cleared the hurdles by taking the right strategies that included the offering of more build-to-suit financial products and continued expansion of the branch network, thus, increasing further the client base. 2009 was also a rewarding year for Banco De Oro Unibank. Despite the hard times, the Groups performance exceeded expectations with its better-than-industry results for growth and income

generated. Its market share continued to expand and its hold on being the market leader in terms of total assets, customer loans, deposits and assets under management has solidified even more.

CORPORATE MISSION
To be the preferred bank in every market we serve by consistently providing innovative products and flawless delivery of services, proactively reinventing ourselves to meet market demands, creating shareholders value through superior returns, cultivating in our people a sense of pride and ownership, and striving to be always better than what we are todaytomorrow.

CORE VALUES
Commitment to Customers We are committed to deliver products and services that surpass customer expectations in value and every aspect of customer service, while remaining to be prudent and trustworthy stewards of their wealth.

Commitment to a Dynamic and Efficient Organization We are committed to creating an organization that is flexible, responds to change and encourages innovation and creativity. We are committed to the process of continuous improvements in everything we do.

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 provide our shareholders with superior returns over the long term.

Company Logo

This is a logo owned by Banco de Oro-EPCI, Inc. for Banco de Oro Universal Bank. The entire logo is used to convey the meaning intended and avoid tarnishing or misrepresenting the intended image. The image is of a resolution low enough to sufficiently relay the meaning of the logo. The image is placed in the infobox at the top of the article discussing Banco de Oro Universal Bank, a subject of public interest. The significance of the logo is to help the reader identify the organization, assure the readers that they have reached the right article containing critical commentary about the organization, and illustrate the organization's intended branding message in a way that words alone could not convey.

Board of Directors
TERESITA T. SY, 59, Filipino, is the Chairperson of BDO. Concurrently, she serves as the Chairperson, Vice-Chairperson, and/or Director of various subsidiaries and affiliates of BDO such as BDO Private Bank, Inc., BDO Leasing & Finance, Inc., BDO Capital & Investment Corporation, Equitable Card Network, Inc., Strategic Property Holdings, Inc., BDO Foundation, Inc., Generali Pilipinas Holding Company, Inc., Generali Pilipinas Life Assurance Company, Inc., and Generali Pilipinas Insurance Co., Inc. Ms. Sy is the Vice Chairperson of SM Investments Corporation. She also sits as Chairperson, Vice Chairperson and/or Director of such companies as SM Prime Holdings, Inc., Multi-Realty Development Corporation, SM Land, Inc., Supervalue, Inc., SM Mart,Inc., SM Retail, Inc., Super Shopping Market, Inc., Pilipinas Makro, Inc., and First Asia Realty Development Corp. Ms. Sy was first elected to the Board of BDO in 1977. A graduate of Assumption College, she brings to the board her varied expertise in banking and finance, retail merchandising, mall and real estate development.

CORAZON S. DE LA PAZ-BERNARDO, 69, Filipino, is currently the Vice Chairperson of the Banks Board of Directors. She is also a consultant to the Chairman, Social Security Commission. She is the President of the International Social Security Association, a Geneva based organization, for the 2007 to 2010 triennium. She is also a Director of Equitable Card Network, Inc., Philex Gold, Inc., and Ayala Land, Inc. She is also an Advisor to the Audit Committee of PLDT. She was Chairman & Senior Partner of

Joaquin Cunanan & Co. (PricewaterhouseCoopers, Philippines) from 1981 to 2001. She is

also a member of the Board of Trustees of University of the East, the UE Ramon Magsaysay Memorial Medical Center, Meralco Foundation, Inc., Miriam College, and Jaime V. Ongpin Foundation. Other memberships include those in the: Makati Business Club, Inc., Philippine Institute of Certified Public Accountants, Management Association of the Philippines, the Financial Executives Institute of the Philippines, the Asia Society, and Member of the Board of Advisors of Ramon V. del Rosario, Sr. AIM Center for Corporate Social Responsibility. Ms. De la Paz- Bernardo served as Chairperson of EPCIB from 21 February 2006 until EPCIBs merger with Banco De Oro Universal Bank.

JESUS A. JACINTO, JR., 62, Filipino, was elected Vice Chairman of BDO in May 1996, and is concurrently the Chairman and President of BDO Insurance Brokers, Inc. He also heads Jaces Corp. as Chairman and President; and Janil Realty, Inc., JAJ Realty, Inc., and M.R. Knitwear Specialist, Inc. as President. He is likewise Director of Bayer Phil., Inc. Formerly, he was Director and Executive Vice President of CityTrust Banking Corp., Director of CityTrust Investments Phil., and CityTrust Finance Corp., and Vice President and Managing Partner of Citibank N.A. He holds a Bachelors degree in Business Administration from Fordham University in New York City and an MBA (International Business) from Columbia University, New York.

CHRISTOPHER A. BELL-KNIGHT, 66, Canadian, was elected Director of BDO in May 2005. He was formerly a Director of Solidbank Corporation from 1990 to 1998 and Vice President and Country Head of The Bank of Nova Scotia. He has had over 40 years of banking experience in England, Canada, and Asia. Educated at universities in England and

Canada, he is an Associate of the Chartered Institute of Bankers (UK), Associate of the Institute of Canadian Bankers and, a Fellow of the Institute of Corporate Directors.

LEE WAI FAI, 50, Singaporean, was appointed Director of BDO in June 2008, and is concurrently the Executive Vice President/ Group Chief Financial Officer & Head of Corporate Services of United Overseas Bank Singapore. He also serves as Director and Chairman of United Overseas Bank Philippines. He is a Director of Asfinco Singapore Limited, Chung Khiaw Realty Limited, CKB (2000) Limited, FEB Realty Company PTE Ltd., ICB (2002) Ltd., Industrial & Commercial Property (S) PTE Ltd., Sunwise PTE Ltd., Unicom Databank Private Ltd., United Facilities Private Ltd., United General Services (PTE) Ltd., UOB Bullion and Futures Ltd., UOB Capital Investments PTE Ltd., UOB Capital Management PTE Ltd., UOB Developments Private Ltd., UOB Equity Holdings (PTE) Ltd., UOB Hermes Asia Management PTE Limited, UOB Holdings (USA) Inc., UOB Holdings Private Ltd., UOB International Investment Private Ltd., UOB Property Investments PTE Ltd., UOB Towers PTE Ltd., UOBGC General Partners Ltd. and UOF (2000) Ltd. He holds a Bachelor of Accountancy (Hons) from the National University of Singapore and a Master in Banking and Finance from Nanyang Technological University, Singapore. He has more than 20 years of experience in finance and administration.

TEODORO B. MONTECILLO, 75, Filipino, was first appointed Independent Director in August 2004. He is also currently an Independent Director of the following: BDO Securities, Corp., PDS Holdings Corp., Philippine Dealing & Exchange Corp., Philippine Securities & Settlement Corp., and Philippine Depository & Trust Corp. He was appointed

by former President Fidel V. Ramos as a member of the Monetary Board of the BSP from 1996 to 2002, and appointed by former President Joseph Estrada as Chairman of the Central Bank Board of Liquidatorsnfrom 1999 to 2002. He was an Advisor and Consultant to Governor Rafael B. Buenaventura from 2002 to 2004. In addition, he held various positions in areas of operations, credit and external debt management in Citibank, N.A. (Manila) and Citibank Head Office (New York) from 1965 to 1996. He holds a Bachelor of Science in Education degree from University of the East, Bachelor of Science degree in Business Administration from the University of the Philippines and received his MBA from Northwestern University, Chicago, USA.

ANTONIO C. PACIS, 69, Filipino, currently serves both the Bank and BDO Capital and Investment Corporation as a director. He has been in law practice since 1967 counseling bank and corporate clients in the areas of regulatory, business, corporate and trust law, and individuals in the areas of family law and estate plans. In the course of his practice, he has served in various capacities in companies upon invitation of clients. He holds degrees from the Ateneo de Manila University (AB), from the Ateneo School of Law (LLB) and from the Harvard Law School (LLM).

JOSEFINA N. TAN, 64, Filipino, is presently Director of the Bank and President of BDO Private Bank, Inc. She is also Vice Chairperson of Miriam College and a Trustee in both Development Center for Finance and Laura Vicua Foundation. She was a Director of Banco de Oro Universal Bank from 2001 to August 2005. Ms. Tan was

also Executive Vice President of the former Far East Bank& Trust Co., Director and President of FEB Leasing & Finance Corp., Executive Director and Trustee of FEB Foundation, Inc., and Executive Vice President of FEB Investments, Inc. until 2000. Ms. Tan was a director of EPCIB from September 2005 until its merger with the Bank in May 2007.

NESTOR V. TAN, 52, Filipino, was elected President of the Bank in July 1998. He concurrently holds directorships in the following subsidiaries of the Bank: BDO Capital and Investment Corporation, BDO Private Bank, Inc., BDO Securities Corp., BDO Leasing and Finance, Inc., BDO Insurance Brokers, Inc., Equitable Card Network, Inc., Strategic Property Holdings, Inc., Generali Pilipinas Life Assurance Company, Inc., and Generali Pilipinas Insurance Co., Inc. He is also the Chairman of BDO Technology Center, Inc., EBC Strategic Holdings Corporation, and BDO Strategic Holdings, Inc.; and Trustee of BDO Foundation, Inc. He was formerly connected with the Mellon Bank in Pittsburgh, PA, the Bankers Trust Company in New York and the Barclays Group in New York and London. Prior to joining the Bank, he was the Chief Operating Officer for the Financial Institution Services Group of BZW, the investment banking subsidiary of the Barclays Group. He holds a Bachelors degree in Commerce from De La Salle University and received his MBA from Wharton School, University of Pennsylvania.

HENRY T. SY, JR., 56, Filipino, is presently Director of the Bank and Vice Chairman of the Board of Directors of SM Investments Corporation (SMIC). He is also Vice Chairman of SM Development Corporation (SMDC) and Highlands Prime, Inc.; President of SM Land, Inc.; and Director of SM Prime Holdings, Inc. (SMPHI). He is responsible for the real estate

acquisitions and development activities of the SM Group. He graduated with a management degree from De La Salle University. He also holds board positions in several companies within the SM Group.

JIMMY T. TANG, 74, Filipino, has been an Independent Director of BDO since 1984. He served as the ninth President of the Federation of Electrical & Electronics Suppliers & Manufacturers of the Philippines, Inc. (PESA) and the first Chairman of the PESA Foundation for seven years. At present, he serves as the Honorary Adviser of PESA Inc. & PESA Foundation. He was also the 11th President of the Federation of Filipino-Chinese Chamber of Commerce & Industry (FFCCCII) for two consecutive and presently the Honorary President. Mr. Tang is the President and Chairman of the Board of AVESCO Group of Companies. He holds a Bachelors Degree in Electrical Engineering from the Mapua Institute of Technology and was awarded the Top Outstanding Mapuan for Entrepreneurship.

EDMUNDO L. TAN, 64, Filipino, was appointed Corporate Secretary of the Bank on July 27, 2007. He also serves as Director and Corporate Secretary of APC Group, Inc., Philippine Global Communications, Inc., and Aragorn Power & Energy Corporation. He concurrently holds directorships in BDO Leasing & Finance, Inc. and Sinophil Corporation. He is likewise the Corporate Secretary of APCMining Corp. and Aragorn Coal Resources, Inc. Atty. Tan is the Managing Partner of Tan Acut Lopez and Pison Law Offices. He was formerly the Chairman of the Board of EBC Investments, Inc., and Chairman of the Board and President of EBC Strategic Holdings Corp.

Organizational Chart

CHAIRMAN EMERITUS Henry Sy, Sr.

CHAIRPERSON Teresita T. Sy

PRESIDENT & DIRECTOR Nestor V. Tan

DIRECTORS Christopher A. Bell-Knight Lee Wai Fai Teodoro B. Montecillo (Independent) Antonio C. Pacis Henry T. Sy, Jr. Josefina N. Tan Jimmy T. Tang (Independent)

CORPORATE SECRETARY Edmundo L. Tan

ADVISERS TO THE BOARD Senen T. Mendiola Alberto V. Reyes Jose T. Sio Washington Z. Sycip Jesus G. Tirona

FINANCIAL STATEMENTS FOR BANCO DE ORO UNIBANK INC (BDO) Year over year, BDO Unibank Inc. has been able to grow revenues from $15.5B to $17.8B. Most impressively, the company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 153.79% to 147.55%. This was a driver that led to a bottom line growth from $6.0B to $8.8B.

Currency in Millions of Philippines Pesos TOTAL REVENUES Cost of Goods Sold GROSS PROFIT Selling General & Admin Expenses, Total EBT, EXCLUDING UNUSUAL ITEMS Other Unusual Items, Total EBT, INCLUDING UNUSUAL ITEMS Income Tax Expense

As Dec 31 Dec 31 Dec 31 of: 2007 2008 2009 Restated Restated Reclassified PHP PHP PHP 34,176.0 826.0 33,350.0 15,027.0 31,535.0 -31,535.0 19,863.0 40,132.0 -40,132.0 23,811.0

Dec 31 42010 Year PHP Trend 45,458.0 -45,458.0 26,324.0

9,417.0 -9,417.0 2,847.0 -52.0 6,570.0 6,518.0 6,518.0

3,683.0 -3,683.0 1,445.0 -56.0 2,238.0 2,182.0 2,182.0

8,003.0 -243.0 7,760.0 1,659.0 -66.0 6,101.0 6,035.0 5,951.0

10,669.0 -157.0 10,512.0 1,631.0 -56.0 8,881.0 8,825.0 8,495.0

Minority Interest in Earnings Earnings from Continuing Operations NET INCOME NET INCOME TO COMMON INCLUDING EXTRA ITEMS NET INCOME TO COMMON EXCLUDING EXTRA ITEMS

6,518.0

2,182.0

5,951.0

8,495.0

FINANCIAL STATEMENTS FOR BANCO DE ORO UNIBANK INC (BDO) BDO Unibank Inc. uses little or no debt in its capital structure and may have less financial risk than the industry aggregate.

Currency in Millions of Philippines Pesos

As of:

Dec 31 2007 Restated PHP

Dec 31 Dec 31 2008 2009 Restated Reclassified PHP PHP

Dec 31 4-Year 2010 Trend PHP

Assets Cash and Equivalents Trading Asset Securities TOTAL CASH AND SHORT TERM INVESTMENTS Other Receivables TOTAL RECEIVABLES Restricted Cash Other Current Assets TOTAL CURRENT ASSETS Gross Property Plant and Equipment Accumulated Depreciation NET PROPERTY PLANT AND EQUIPMENT Goodwill Deferred Tax Assets, Long Term Deferred Charges, Long Term Other Intangibles Other Long-Term Assets TOTAL ASSETS 48,455.6 20,951.5 78,359.3 3,435.3 3,435.3 41,825.6 2,931.1 127,992.7 21,864.8 -11,326.4 10,538.3 747.2 5,740.6 1,038.0 867.2 22,317.6 617,208.9 56,311.0 6,850.0 123,931.0 29,268.0 29,268.0 47,450.0 2,931.0 246,252.0 24,938.0 -11,691.0 13,247.0 747.0 5,780.0 -1,885.0 20,981.0 802,032.0 55,197.0 8,502.0 74,985.0 30,599.0 30,599.0 58,983.0 2,931.0 200,737.0 26,819.0 -13,496.0 13,323.0 1,247.0 5,686.0 114.0 1,889.0 21,124.0 118,877.0 7,372.0 129,161.0 21,931.0 21,931.0 70,237.0 2,931.0 260,692.0 26,884.0 -13,232.0 13,652.0 1,247.0 5,584.0 4.0 1,772.0 16,662.0

862,049.0 1,000,869.0

LIABILITIES & EQUITY Accounts Payable Accrued Expenses Current Portion of Long-Term Debt/Capital Lease Current Income Taxes Payable Other Current Liabilities, Total TOTAL CURRENT LIABILITIES Long-Term Debt Minority Interest Unearned Revenue, Non-Current Other Non-Current Liabilities TOTAL LIABILITIES Preferred Stock Convertible TOTAL PREFERRED EQUITY Common Stock Additional Paid in Capital Retained Earnings Comprehensive Income and Other TOTAL COMMON EQUITY TOTAL EQUITY TOTAL LIABILITIES AND EQUITY 4,332.3 2,354.4 -206.4 5,864.7 458,154.8 68,956.3 662.1 -27,611.5 554,722.6 -2,158.3 23,020.3 15,936.4 16,651.5 4,057.7 59,665.9 62,486.3 617,208.9 3,979.0 2,281.0 42,996.0 183.0 5,379.0 691,572.0 29,617.0 562.0 -23,069.0 744,258.0 5,000.0 5,000.0 23,020.0 15,937.0 15,378.0 -2,123.0 52,212.0 57,774.0 802,032.0 6,987.0 2,955.0 20,399.0 223.0 6,224.0 731,466.0 39,111.0 635.0 303.0 23,282.0 794,162.0 5,000.0 5,000.0 23,397.0 16,858.0 20,909.0 1,088.0 62,252.0 67,887.0 5,125.0 4,138.0 43,976.0 71.0 6,583.0 842,528.0 49,752.0 723.0 1,083.0 18,774.0 912,137.0 5,000.0 5,000.0 26,074.0 25,175.0 27,287.0 4,473.0 83,009.0 88,732.0

862,049.0 1,000,869.0

Currency in Millions of Philippines Pesos

As of:

Dec 31 2007 Restated PHP 6,518.0 2,749.0 2,749.0 94.0 792.0 4,118.0 -1,687.0 --5,743.0 6,841.0 -1,948.0 14,390.0 12,442.0 ---1,370.0 -1,370.0 1,742.0 -770.0 --770.0 -20,628.0 -1,345.0

Dec 31 Dec 31 2008 2009 Restated Reclassified PHP PHP 2,182.0 2,004.0 2,004.0 115.0 2,335.0 5,232.0 -7,533.0 12,329.0 -192,380.0 -175,716.0 -5,079.0 -4,126.0 -9,205.0 ---3,859.0 -3,859.0 ---3,683.0 -3,683.0 193,283.0 8,362.0 6,035.0 2,712.0 2,712.0 136.0 -1,719.0 6,153.0 -776.0 300.0 -46,629.0 -33,788.0 -2,636.0 -2,584.0 -5,220.0 3,000.0 3,000.0 -18,801.0 -18,801.0 1,299.0 --791.0 -791.0 44,696.0 5,688.0

Dec 31 2010 PHP 8,825.0 2,699.0 2,699.0 181.0 131.0 6,698.0 -1,115.0 1,126.0 -57,079.0 -38,534.0 -2,239.0 -18,017.0 -20,256.0 33,098.0 33,098.0 --10,993.0 --2,447.0 -2,447.0 133,613.0 74,823.0

4-Year Trend

NET INCOME Depreciation & Amortization DEPRECIATION & AMORTIZATION, TOTAL Amortization of Deferred Charges (Gain) Loss on Sale of Investment Asset Writedown & Restructuring Costs Other Operating Activities Change in Trading Asset Securities Change in Other Working Capital CASH FROM OPERATIONS Capital Expenditure Investments in Marketable & Equity Securities CASH FROM INVESTING Long-Term Debt Issued TOTAL DEBT ISSUED Long Term Debt Repaid TOTAL DEBT REPAID Issuance of Common Stock Common Dividends Paid Common and/or Preferred Dividends Paid TOTAL DIVIDEND PAID CASH FROM FINANCING NET CHANGE IN CASH