Publicly listed China Banking Corp. of retail tycoon Henry Sy reported a 9.4 percent decline in its net income for the first three quarters of the year to P2.28 billion.

China Bank's total revenues grew 7.7 percent to P10.6 billion but its earnings were eroded by weak trading gains and narrowed interest margins, the bank said. Its bottomline also took a beating from higher expenses stemming from a three-year branch expansion plan and the integration of Manila Bank into its network.

"The year 2008 has proved to be an exceptionally tough year across the globe. Notwithstanding the volatility in the global financial markets and its repercussions on the local market, we are gratified to report that we were able to somehow cushion the impact on our earnings," said bank president and chief executive officer Peter Dee.

Despite a healthy 22.9 percent growth in lending, China Bank's net interest income fell by 2.9 percent due to the industry-wide decline in net interest margin or the difference between interest income and interest expenditures.

Non-interest income, on the other hand, rose 15.6 percent as robust fee-based revenues offset a 13.7 percent drop in securities trading gains.

Interest revenues from loans grew 18.5 percent, owing to a 22.9 percent expansion in loan portfolio, with growth recorded across consumer, commercial and corporate lending sectors.

China Bank said its capital base remains strong, boosted by a recent issuance of P5 billion worth of debt papers. As of end-September, the bank's capital adequacy ratio stood at 14.3 percent, well above the central bank's requirement of 10 percent.

China Bank earlier reported that unlike some of its peers, it had no exposure to any ailing investment bank in the US.