Chief Financial Officer Edward H. Gomez had the following comments: "The Bank's half-year numbers show strength that is both deep and wide. Net income is up 50% from the same period last year, and the gains span all geographical areas in which we operate. Being fee driven, we are pleased to see non-interest income up nearly 20% with all lines of business contributing to the growth. Global Fund Services led the way with a 25% increase that reflected improved market confidence combined with healthy new business activity."
Mr. Gomez said of the Bank's expenses: "We have taken meaningful strides in containing costs. Premises costs have been reduced from last year's levels, both in Bermuda and globally. Growth in staff is being closely matched to business activity levels for all businesses and support groups. The result has been a marked improvement in the Bank's aggregate efficiency ratio, further bolstering our bottom line."
Henry B. Smith, President and Chief Executive Officer, added: "These excellent results demonstrate the focus and unity of our organisation, and reflect the pride and motivation of our staff at every level. We are building momentum on a sound foundation, and our sights remain high. We have just completed a concentrated examination of our markets and competitive positioning, and we enter the new century with confidence in our ability to serve our shareholders and community well."
2/ BANK OF BERMUDA REPORTS RECORD SECOND QUARTER EARNINGS PER SHARE OF $1.06, UP 68% FROM THE SAME QUARTER LAST YEAR.
Financial Results
Second Quarter 1999/2000 Compared to Second Quarter 1998/99
Total revenue increased 25% to $103.1 million, from $82.2 million in the second quarter of last year, reflecting increases of $10.2 million and $9 million in fee revenue and net interest income respectively together with higher investment and other income (up $1.7 million).
Fee revenues for the quarter of $56.7 million compare with $46.5 million a year earlier, an increase of 22%.
Global Fund Services(1) fees of $24.4 million were up 32% from $18.6 million for the same quarter last year. The most substantial improvements were reported in the Americas and the Far East, up $3.6 million and $1.9 million respectively, largely reflecting a recovery of revenues after a depressed period in the prior year as confidence returned to the financial markets in which our fund clients are invested. In addition, the quarter saw substantial new fund activity, which should positively impact future period earnings, as an anticipated slowdown in the face of Year 2000 concerns failed to materialise.
Private Trust fees and Investment Services fees also reported notable increases on a year earlier with rises of 16% and 25% respectively. Growth across all geographic regions generated total Private Trust fees of $8.5 million compared with $7.3 million last year. Investment Services fees were $10 million, up from $8 million for the same quarter last year. This improvement continues to reflect our development of new, high quality investment products geared to the needs of our client groups. In particular, the All Points Multi-Manager Fund, which was launched in May 1999, had reached a net asset value in excess of $800 million by 31 December 1999, adding significantly to current quarter Investment Services fees.
3/ BANK OF BERMUDA REPORTS RECORD SECOND QUARTER EARNINGS PER SHARE OF $1.06, UP 68% FROM THE SAME QUARTER LAST YEAR.
Foreign exchange earnings for the quarter were $8 million compared with $7.5 million last year. Strong performance in the Americas and Far East, due to improved volumes from existing and new clients, was partly offset by a decline in Europe, where volumes dropped in the lead-up to Year 2000.
Banking services fees of $5.7 million are 16% higher than last year with the majority of the increase attributable to fees generated by Bermuda Home, which we had not yet acquired in the second quarter of fiscal year 1999.
Net interest income increased to $43.7 million from $34.7 million in the same quarter last year, reflecting the acquisition of Bermuda Home; strong performance by our trading portfolio, and improved pricing of deposit liabilities.
Investment and other income for the quarter was $2.6 million compared to $1 million a year earlier reflecting some significant dividend income in the current period.
Operating expenses of $75.8 million were up 14% from $66.8 million in the same quarter last year. Expenses incurred by Bermuda Home, which were not included in results in the comparative quarter, were $1.1 million, or 12%, of the increase. The remaining increase reflects necessary investment in people, marketing and other corporate expenses to support business growth.
4/ BANK OF BERMUDA REPORTS RECORD SECOND QUARTER EARNINGS PER SHARE OF $1.06, UP 68% FROM THE SAME QUARTER LAST YEAR.
Balance Sheet
Total balance sheet assets at 31 December 1999 were $10.2 billion compared to $9.6 billion a year earlier. This increase is primarily attributable to the inclusion of Bermuda Home, which added approximately $550 million to consolidated client deposits.
Bank of Bermuda's balance sheet assets are largely derived from the reinvestment of client deposits, which, after excluding the impact of the Bermuda Home acquisition, were relatively constant over much of the past year as growth in client deposits was attracted into our off-balance sheet money fund products.
The composition of balance sheet assets has changed significantly from a year ago. Cash and deposits have declined from $5.5 billion to $4.7 billion as funds were redirected into high quality marketable securities, producing a $0.9 billion increase in total marketable securities to $3.8 billion at 31 December 1999. Loans, less allowance for loan losses, climbed from $976 million to $1.5 billion reflecting the acquisition of Bermuda Home during the last fiscal year.
Total shareholders' equity increased $77.2 million to $540 million at the reporting date, primarily reflecting the retention of earnings.
- Ends -
(1) The Bank's Corporate Trust division has been renamed "Global Fund Services" to better reflect its business activities and range of services.
Notes to Editors
The Bank's results are stated in accordance with generally accepted accounting principles in the United States.
Forward Looking Statements
This media release may be deemed to include forward looking statements, such as statements that refer to business plans, financial goals, business prospects and similar matters, that indicate our beliefs and expectations for future performance. Such forward looking statements involve certain risks and uncertainties including worldwide economic conditions, success in business retention and obtaining new business and other factors. These, and other, risks and uncertainties could cause actual results to differ materially from those indicated by forward-looking statements. Bank of Bermuda's 1999 Annual Report includes additional information about factors that could affect actual results in the section entitled "Forward Looking Statements".
Bank of Bermuda is an international financial institution that provides banking, trust, asset management, fund administration and global custody services, as well as credit card transaction processing for e-commerce to its corporate, private and retail clients. Founded in 1889, its global headquarters are in Bermuda, and it has offices or subsidiaries in the Cayman Islands, Cook Islands, Dublin, Guernsey, Hong Kong, Isle of Man, Jersey, Luxembourg, New York, New Zealand, and Singapore. It has representative offices in Bahrain and London.
The Bank is a publicly-traded corporation, listed on the Bermuda Stock Exchange.
Further information on Bank of Bermuda is located on the Internet at www.bankofbermuda.com.