Against this background of strong operating earnings growth, the Bank has determined that it should increase the provisions for potential losses connected with exiting its former operations in the United Kingdom. Management projects, therefore that because of this, and because of other decisive actions being taken to secure future profitability, profits this year will be materially decreased from that achieved for the year to date. However, the Bank has in place a full strategic programme and our rating from Moody's will remian unchanged.
"Today's announcement is, and our year-end results will be, consistent with our approach to all our businesses, which is based on conservative policies and high standards. This is coupled, of course, with careful expense management and prident provisioning policies", said Calum Johnston, President, and CEO. "When our year-end earnings are announced it will be clear that we have a long-range perspective of our total business and a commitment to improved earnings and increased shareholder value, supported by substantial growth. It is disappointing to me that the success of our core businesses has continued to be overshadowed by earlier strategic miscues. However, the Bank will be stronger longer-term as a result of the decisive actions we are now taking."
The Bank's nine month's earnings for 1997-1998 show consistent profitability gains, demonstrating the Bank's recovery in its earnings from the five years of flat results. Improved profitability has been accompanied by steadily increased shareholder value. The bank continues to have very sound liquidity and capital positions. Its customer base and balance sheet are strong.
Details of the increased provisions will be finalised and announced in August when the Bank publishes its year-end results. The 1997-1998 year closes on 30 June.