Philippine National Bank, one of two banks controlled by taipan Lucio Tan, reported an unaudited net income of P1.12 billion in 2008, down 25 percent a year ago, as the global financial crisis took its toll on earnings.

PNB said in a disclosure to the stock exchange that last year’s performance was “solid and respectable,” with pre-tax profit growing 7 percent year-on-year.

The bank said its performance was anchored on its ability to remain focused on its growth plans, protecting and strengthening its capital base, managing risks and making its operations more efficient.

PNB said it expected to merge with Allied Banking Corp., in the second half of the year to make it the fourth- largest bank. The merger requires approvals from regulators such as the Bangko Sentral and the Securities and Exchange Commission.

PNB said net interest margin grew 12 percent to P6.1 billion due mainly to the increase in loan portfolio and other earnings assets. Other operating income declined but this was tempered by the 10-percent increase in service fees and commissions and the 317-percent jump in net foreign exchange gains.

PNB’s operating expenses dropped to P2.2 billion during the period as the bank continued to reap gains from its expense rationalization program that included branch realignments and early retirement programs.

Resources stood at P277 billion at the end of December 2008, up 15 percent from a year ago.

Deposits rose12 percent to P201 billion, with growth coming mainly from retail customers. PNB’s loans to corporate, small and medium enterprises and retail customers expanded 39 percent to P81 billion at the end of 2008.

PNB issued P6 billion in tier 2 notes in June 2008 to beef up its capital, bringing its capital adequacy ratio to 17.6 percent, or well above the regulatory requirement of 10 percent. Stockholders’ equity stood at P26 billion. Eileen A. Mencias