By Eileen A. Mencias

Bank of the Philippine Islands, the largest bank in the Philippines by market value, yesterday said it views 2009 with caution after reporting a 36 percent drop in its unaudited net income in 2008 to P6.4 billion from P10 billion a year ago.

?With the prevailing uncertainties, BPI looks at 2009 with caution and will continue what it started in 2008, a return to ?back to basics? banking,? said BPI president and chief executive Aurelio Montinola III.

?We are aware of the challenges posed by the highly uncertain and volatile economic environment on business conditions. But even in these trying times, we intend to do our share to keep the economy going,? he said.

?We are determined to keep our lending windows open and ensure that customer funds are prudently managed and safeguarded. We know that in good times, banking is about growth and earnings; however, in difficult times, banking is about liquidity, solvency and trust.?

BPI posted a consolidated net income of P1.1 billion in the fourth quarter of last year. Revenues rose 6.5 percent as net interest income expanded 7.6 percent and non-interest income climbed 4.3 percent.

The bank said the increase in revenues was tempered by the 13 percent increase in operating income following a P349-million additional expense for its retirement fund.

The full-year income of P6.4 billion, meanwhile, translated into a 10 percent return on equity.

Revenues dropped 8.5 percent while credit impairment losses almost doubled to P1.9 billion from P679 million.

Non-interest income declined 24 percent due mainly to the P2.8-billion drop in securities trading income with the execution of cut-loss strategies and a P1.3-billion decrease in the contribution of insurance companies after a non-recurring income in 2007.