The Bank of Butterfield Group recorded record net income of $20.2 million for the half year period ending 31 December, 1997, an increase of 46.4% over the same period in 1996, when net income for core businesses was $13.8 million.* Total income for the first half of 1997-98 increased 11.2% over the same period in 1996-97 from $66.6 million to $74.1 million.
"The Group's improved performance clearly reflects the progress made since the financial year started. I am very encouraged by the results," said M. Calum Johnston, President and Chief Executive Officer. Mr. Johnston joined the Bank of Butterfield on 15 December, 1997. "We intend to follow a sensible programme of concentrating on our solid core businesses in the second half of the year, while carefully managing expenses and seeking the right opportunities for expansion."
Mr. Johnston added, "During the second half of this financial year, we will also place renewed emphasis on customer service. Our objective is to raise standards of service delivery to ensure that we are meeting customers' needs. Customers are, after all, the lifeblood of our organisation."
FINANCIAL HIGHLIGHTS
Income
The bulk of the Bank of Butterfield's interest and non-interest income comes from its core businesses, namely Bermuda treasury and asset management plus the Grand Cayman and Guernsey operations. The Group's other key business is its Bermuda banking operation, which has considerable potential for improved profitability.
The Bermuda asset management division is realising its growth potential primarily through focused client-relationship management and business development. The Grand Cayman operation continues to grow consistently by maintaining its focus on banking and investment services. Similarly, the Guernsey operation is growing steadily, supported by effective business and product development.
The Group's total non-interest income increased by 18.8% during the first half of financial year 1997-98 to $38.1 million, compared with $32.1 million in the same period last year.
Strong growth in interest earnings was seen in the six months ended 31 December, 1997 enabling management to continue its judicious approach to building loan provisions. As a result net interest income increased by 4.2% to $36.0 million, compared to $34.5 million for the corresponding period in 1996-97.
Expenses
Effective cost management kept expenditures low in the first half of the financial year. Total expenses during the first half of 1997-98 increased only 2.0% to $53.9 million from $52.8 million during the same period in 1996-97. Significant savings resulted from closing the bank's office in Singapore and exiting certain UK operations, as well as from implementing new cost containment efforts. These include making greater use of technology, introduction of an enhanced early retirement package, and leasing excess floor space. Expense management is essential to the bank's ongoing plan to lower its cost base.
Additional Performance Measures
Improved profitability has in turn produced improvement in all the bank's key performance indicators. Following are changes from the half year ended 31 December, 1996 to the half year ended 31 December, 1997: Return on Equity improved from 9.1% to 14.0%; Return on Assets from 0.63% to 1.0%; and Earnings per Share from $0.68 to $0.99.*
Balance Sheet
Total assets increased 9.2% from $4.20 billion at 31 December, 1996 to $4.59 billion at 31 December, 1997. The increase was driven by growth in deposits throughout the Bank of Butterfield Group. Total deposits increased by 10.6% from $3.85 billion at mid-year 1996 to $4.26 billion at mid-year 1997.
The Group continues to operate from a solid foundation that includes a stable customer base and strong capital and liquidity positions. The Bank of Butterfield's capital ratio is strong with the weighted risk assets ratio of the Group at 13.0% at 31 December, 1997. The share price of the Group's common stock has continued to grow. At 31 December, 1996 the Group's share price was $9.00. It increased to $16.00 by 31 December, 1997.
*Half-year figures for financial year 1996-97 have been restated to reflect the bank's ongoing core businesses to allow more accurate comparison with current financial year figures. The bank has discontinued its Singapore business and certain UK operations since the end of 1996- 97. When those operations are included for the 1996 period, net income would have been $13.1 million.
The Bank of N. T. Butterfield & Son Limited has total assets of $4.59 billion together with client assets under administration in excess of $15 billion. The bank serves institutional and individual clients, with a full range of banking, credit, investment, trust and custody services from its headquarters and four branches in Bermuda, as well as offices in Grand Cayman, Guernsey, Hong Kong and the United kingdom. Bank of Butterfield common stock trades on the Bermuda Stock Exchange.