The banking unit of the Ayala group, Bank of the Philippine Islands (BPI), posted Monday a 26.2 percent drop in net income during the fourth quarter of 2008 due to a substantial increase in operating expenses.
In a statement, BPI said profits for the October to December period amounted to P1.1 billion. The bank noted that revenues improved by 6.5 percent but were tempered by a 13-percent increase in operating expenses following an additional expense relating to the valuation of its retirement fund.
For the full year, BPI's unaudited net income reached P6.4 billion, down 35.8 percent. Revenues contracted by 8.5 percent mainly because of the decline in non-interest income.
Non-interest income fell 24.1 percent, no thanks to a drop in securities trading income and reduced earnings contribution from the insurance subsidiaries.
Net interest income, however, showed an improvement in the fourth quarter over the year earlier, owing to the expansion in average asset base.
BPI said its core business remained strong. Loans grew 17 percent to P320.2 billion, exceeding its 2008 lending growth target of 12 percent and despite maturing government promissory notes.
Corporate and retail loans climbed 18.5 percent and 22.7 percent, respectively, while deposits increased by 5.2 percent.
As of end-December, BPI's total resources stood at P667.4 billion, a modest 4.7 percent increase over that of 2007.
With the prevailing uncertainty in the financial markets this year, BPI said it would continue doing business with caution and return to the basics of banking.
"We are determined to keep our lending windows open and ensure that customer funds are prudently managed and safeguarded," said BPI President and Chief Executive Officer Aurelio Montinola III.
"We know that in good times, banking is about growth and earnings. However in difficult times, banking is about liquidity, solvency and trust," he added.
BPI, with a market capitalization of P125 billion, was the only major bank with no exposure to Lehman Brothers, AIG and the subprime mortgage market in the US, it said.