Philippine National Bank (PNB) of tobacco magnate Lucio Tan reported Friday an unaudited net income of P1.12 billion for 2008, down 25 percent from the year before.
In a statement, PNB said the decline in profits was mainly due to "losses on the required mark-to-market valuation of contracted cross currency swaps which the bank intends to hold to maturity." It noted these were purely accounting losses and not real losses.
PNB's pre-tax profits, however, rose 7 percent year-on-year to P1.9 billion in 2008.
The bank's net interest margin grew by a substantial 12 percent, reflecting its ability to source funds at lower costs and the growth in its loan portfolio and other earning assets.
Retail and corporate loans expanded by 39 percent to P81 billion while deposits registered a hefty increase of 12 percent to P201 billion.
PNB's operating expenses were also reduced by P2.2 billion, owing to a rationalization program that included branch realignments and manpower productivity measures, among others.
As of end-December, PNB's total resources stood at P227 billion.
PNB is set to merge with sister firm Allied Banking Corp. by middle of this year to form the country's fourth-largest bank in terms of assets and branch network.
Despite an increase in costs arising from the integration, PNB still expects a double-digit rise in its 2009 earnings, with the continued growth in loans and the turnaround of its treasury business.