Bank Of Butterfield Announces Impressive Results Across The Board

by Carla Johnson, Investors Offshore.com

03 May 2006

The Bank of N.T. Butterfield & Son Limited has reported 2006 first quarter net income of $33.1 million, up 36.0% year on year and a record for the quarter.

Total operating revenue for the group grew year on year by $14.3 million, or 17.3%, to $97.1 million, whereas total operating expenses increased at a lower rate, up year on year by $5.5 million or 9.5%, to $63.5 million.

Total assets of the Group as at 31 March 2006 were $9.7 billion, compared to $9.2 billion a year ago. The increase reflects solid growth in customer deposits, which have increased year on year by $458 million, or 5.7%, to $8.5 billion.

Client assets under administration across the Group increased year on year by $16.8 billion, or 18.6%, to $107.0 billion, reflecting the growth in administration services to mutual and hedge funds.

Client assets under investment management stood at $9.5 billion at 31 March 2006, with significant growth seen in client assets invested in Butterfield Funds, up year on year by 8.8% to $5.6 billion.

As a specialist offshore financial services provider the Group also provides private banking, wealth management, fiduciary services, and investment and pension fund administration services from its headquarters in Bermuda, and its subsidiary offices in the Cayman Islands, Guernsey, The Bahamas and the United Kingdom.

The group also provides community banking services in Bermuda, Barbados and the Cayman Islands, encompassing retail and corporate banking and treasury activities.

The Bermuda-based Wealth Management, Fiduciary Services and Investment and Pension Fund Administration businesses achieved a 12.2% year on year growth in total revenues to $18.3 million, reflecting the increase in client assets under administration, which now stand at $45.1 billion, compared to $37.9 billion a year ago.

In the Cayman Islands, total income, at $23.1 million, was up 32.3%, reflecting growth in revenues from investment and pension fund administration and banking activities. Total assets now stand at $2.7 billion, up 9.9%, and the loan portfolio increased year on year by 7.1%. Client assets under administration now stand at $34.5 billion, up 16.5% on the previous year, reflecting growth in investment and pension fund administration services.

At the bank's Guernsey unit, net income was a record $2.6 million, up 74.9% year on year, primarily reflecting strong revenue growth across all business lines, with total revenue rising by 15.7% to $11.4 million. Organic growth in custody services, fund administration, and investment management, together with high activity levels in foreign exchange and securities dealing, were particular factors underlying the increase in revenues. The loan portfolio increased by 43.2% year on year to $247 millions. Client assets under administration increased by 28.2% to $22.2 billion, whilst assets under investment management increased by 4.6% to $0.8 billion.

“It is pleasing to note the strong year on year growth across the Group’s core businesses, both in Bermuda and overseas," commented Alan Thompson, President & Chief Executive Officer.

"Our Bermuda businesses continue to do well; in particular the Community Banking division has demonstrated significant growth in a highly competitive environment. Strong performances were also seen from our Bahamas, Cayman and Guernsey businesses," he added.

Richard Ferrett, Executive Vice President & Chief Financial Officer added:

“We continue to be pleased with the improvement in the Group’s efficiency ratio, at 63.3% for the quarter compared to 66.9% for the same period a year ago."

"Our return on equity continues to remain above our target of 20%, at 26.3% for the quarter, compared to 22.0% for the same quarter a year ago. Significant increases were seen also year on year in the Group’s revenue generation with net interest income increasing by 19.6% and non-interest income increasing by 12.4%."

"We are also pleased to note that Standard & Poor’s has this week revised its ratings outlook on Butterfield Bank from ‘Stable’ to ’Positive’ citing our ’sound business profile, solid positions in the Bermuda and Cayman Islands commercial banking markets and reputation in asset management and funds servicing’.”

According to S&P Credit Analyst Laurence Wattraint, the ratings are also supported by healthy and consistent profitability performance achieved by strong fee income generated from its asset management, trust, and funds servicing businesses, and an improvement in net interest income derived from its community banking operations.

A rich and stable core deposit base, together with a highly liquid asset mix and excellent loan quality, provide the basis of a strong balance sheet and further support the rating, Wattraint stated.

The Board has decided to maintain the quarterly dividend at 44 cents per share.

Butterfield Bank was last month named ‘Best Bank in Bermuda’ for 2006 by Global Finance magazine, for the second consecutive year.

Recommended