Edward H. Gomez, Chief Financial Officer, said: "This quarter was a sprint start to our financial year. Net income was up by 30% compared with the same quarter last year, paced by fee based revenues which grew to $55.2 million. The recovery in Corporate Trust revenues that began last spring continued to be led by gains in our Far East operations that mirrored the resurgence of Asian markets. Growth in fee revenues was well balanced, with all Bank of Bermuda client groups posting increases in the 15% - 20% range versus the first quarter of last year."
Mr. Gomez added: "The quarter's results also reflected double-digit growth in interest earnings, due principally to careful emphasis on liability pricing, improved asset mix and Bermuda Home. An important objective for Bank of Bermuda continues to be improved productivity of both sides of our conservative balance sheet while maintaining our traditionally strong capital ratios."
Henry B. Smith, President and Chief Executive Officer, commented: "These results underscore our position as a truly global institution. Our offices in Europe and the Far East reported excellent results. This was particularly encouraging given the challenges faced by our Far East businesses in the past fiscal year and supports our conviction that our long-term prospects in that region remain very bright."
2/ BANK OF BERMUDA REPORTS RECORD FIRST QUARTER EARNINGS PER SHARE OF $0.93, UP 29%, FROM YEAR AGO EARNINGS PER SHARE OF $0.72
Financial Results
First Quarter 1999/2000 Compared to First Quarter 1998/99
Total revenue increased 13% to $94.6 million, from $83.5 million in the first quarter of last year. The growth was driven by a combination of improved fee revenues, up 17%, and higher net interest income, up 11%.
Fee revenues for the quarter of $55.2 million compared to $47.3 million a year earlier.
Corporate Trust fees of $24.4 million were up 19% from $20.5 million for the same quarter last year. Over half of this increase was generated in our Far East offices where we benefited from a recovery of client asset values following the upturn in the Asian financial markets. The Americas and Europe also reported strong Corporate Trust revenues for the quarter with a rise in the value of client assets and substantial new fund launch activity. This new fund activity is expected to slow as the calendar year end approaches.
Private Trust fees and Investment Services fees were also up sharply on a year earlier with rises of 20% and 19% respectively. Higher Private Trust fees were reported across all geographic regions producing total Private Trust fees of $7.1 million compared with $5.9 million last year. A key driver of this success is continued focus on improving the profitability of existing client relationships. Investment Services fees were $8.2 million, up from $6.9 million for the same quarter last year with the ongoing development of first class investment products making an important contribution to this growth. In particular, the All Points Multi-Manager Fund, which was launched in May 1999, had reached a net asset value in excess of $500 million by 30 September 1999, adding significantly to current quarter Investment Services fees.
3/ BANK OF BERMUDA REPORTS RECORD FIRST QUARTER EARNINGS PER SHARE OF $0.93, UP 29%, FROM YEAR AGO EARNINGS PER SHARE OF $0.72
Foreign exchange earnings for the quarter were $9.1 million compared with $8.6 million last year. Although client foreign exchange volumes were generally lower than a year ago, the market experienced considerable exchange rate volatility, generating the 6% year to year overall increase in revenues.
Banking services fees at $6.2 million represent a 17% rise from last year. Over half of the increase relates to fees generated by Bermuda Home, acquired during the last fiscal year and included in first quarter results for the first time in the current period.
Net interest income increased to $37.4 million from $33.6 million in the same quarter last year, reflecting the acquisition of Bermuda Home together with higher yields on both sides of our balance sheet. Asset yields improved as we reduced holdings of inter-bank deposits in favour of high quality marketable securities over the last fiscal year. Careful pricing of the deposit base also contributed to improved net interest margins.
Investment and other income for the quarter was $2.1 million compared to $2.6 million a year earlier.
Operating expenses of $71.1 million were up 9% from $65.2 million in the same quarter last year. Expenses incurred by Bermuda Home, which were not included in results in the comparative quarter, were $1.6 million, or 28%, of the increase. The remaining increase reflects necessary investment in systems and people.
4/ BANK OF BERMUDA REPORTS RECORD FIRST QUARTER EARNINGS PER SHARE OF $0.93, UP 29%, FROM YEAR AGO EARNINGS PER SHARE OF $0.72
Balance Sheet
Total balance sheet assets at 30 September 1999 were $9.9 billion compared to $9.6 billion a year earlier.
Bank of Bermuda's balance sheet assets are largely derived from the reinvestment of client deposits, which grew by approximately $200 million over the year. Deposits 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 $6.5 billion to $4.6 billion as funds were redirected into high quality marketable securities. Marketable securities were up $1.6 billion from a year earlier to $3.5 billion at 30 September 1999. Loans, less allowance for loan losses, climbed from $958 million to $1.5 billion reflecting the acquisition of Bermuda Home during the last fiscal year.
Total shareholders' equity increased $61.7 million to $512.9 million at the reporting date, primarily reflecting the retention of earnings.