MANILA, Philippines - Philippine National Bank (PNB) of tobacco magnate Lucio Tan posted an unaudited net income of P2.2 billion last year, double its P1.1 billion net income in 2008.

In a statement to the Philippine Stock Exchange, PNB attributed the 100% growth in earnings to the strong performance of its core businesses, improvement in asset quality and higher operating efficiencies.

PNB's net interest margin rose by 18% to P7.8 billion as interest income grew 11% due to increased lending and interest expense inched up by only 1% given an improved funding mix.

The bank's loans and receivables jumped 14% while deposits went up 7% to P215 billion. PNB expanded its deposit products—selling deposit certificates, medium-term dollar, peso and renminbi time deposits—to provide clients with more options to grow their money.

PNB said its other income sources also significantly contributed to profits in 2009. The bank posted P1.4 billion net gains from trading and investment securities following the recovery in the mark-to-market valuation of securities held, while miscellaneous income improved by 22% due to higher sales of foreclosed assets.

As of end-December, PNB's consolidated resources stood at P284.5 billion, reflecting a 3% annual growth.

Aside from increased asset allocation for loans, the bank built up its other earning assets including a P2.8 billion equity investment in Allied Commercial Bank in Xiamen, China. PNB and another Lucio Tan-owned lender, Allied Banking Corp., together own 90% of the China-based unit.

PNB and Allied Bank are looking to push through with their merger this year to create the country's fourth-largest bank in terms of assets.

Under the plan, PNB, which will be the surviving entity, will buy out Allied Bank through a share swap involving 457 million shares worth P55 apiece.

"In 2010, the bank expects to further build on its solid achievements the past year as it looks forward to the consummation of its legal merger with Allied Bank. This move will further fortify PNB's franchise and enable it to better take advantage of business opportunities in the new decade," PNB said.