Banco de Oro Unibank Inc., the country?s largest bank, yesterday reported a net income of P2.2 billion in 2008, sharply down from P6.5 billion in 2007 because of challenging conditions, the bank said in a disclosure to the stock exchange.

BDO is controlled by the family of retail magnate Henry Sy, who also owns China Banking Corp.

ChinaBank, in a separate disclosure, reported a consolidated net income of P2.92 billion last year, down 21 percent from 2007, due to the ?sharp drop in treasury-related revenues due to the volatility triggered by the US subprime crisis.?

Despite the significant drop in income, BDO said its underlying business continued to be strong with the solid growth in loans, deposits, net interest and service-based fee incomes.

BDO had exposure in Lehman Brothers but managed to maintain its top ranking in terms of total resources, loans and deposits. Its capital, however, was only third at P57.8 billion. The bank had a capital adequacy ratio of 14 percent at the end of December, well above the regulatory requirement of 10 percent.

BDO said net interest income improved 7 percent to P23 billion with the increase in its earning asset base. Fee-based and other income remained flat at P12 billion.

BDO?s total loans expanded 32 percent to P392.8 billion as demand from corporate, middle market and consumer lending increased. Asset quality also improved, with bad loans shrinking to 4 percent from 5.2 percent. Deposits soared by 43 percent to P636.8 billion, supported mainly by growth in low-income deposits.

China Bank, the other Sy-controlled bank, meanwhile, reported a higher consolidated net income at P2.92 billion that translates into a return on assets of 1.53 percent and a return on equity of 11.98 percent.

China Bank president and chief executive Peter Dee said 2008 was a very tough year for financial markets and financial institutions across the globe.

?As expected, the turbulence had an impact on the bank but I am happy to report that China Bank?s financial strength and stability built over the years enabled it to withstand the effects of the crisis,? he said.

?After years of record earnings, China Bank remains solid and well-equipped to cope with a period of weaker results. Our bank?s performance remains satisfactory and continues to be buoyant even if it is exposed to external disturbances.? Dee said. Eileen A. Mencias