Butterfield’s third quarter net profit rises – The Royal Gazette


Updated: 01 Nov 2022 07:45

Butterfield Bermuda head office on Front Street, Hamilton (file photo)

Bank of NT Butterfield & Son Limited’s net profit rose 44% to $57.4 million in the third quarter of the year, helped by higher interest rates.

That compares to net income of $49.1 million for the prior quarter and $39.8 million for the third quarter of 2021.

Basic net income for the third quarter was $57.6 million, compared to $50.2 million for the prior quarter and $40 million for the third quarter of 2021.

Base return on average tangible common equity for the quarter was 31.6%, compared to 27.8% for the prior quarter and 17.9% for the third quarter of 2021.

The base efficiency ratio for the quarter was 57%, compared to 60.2% in the prior quarter and 66.3% in the third quarter of 2021.

Michael Collins, President and Chief Executive Officer of Butterfield, said: “The bank delivered strong results for the third quarter of 2022, as we continued to demonstrate resilient non-interest revenue in our home jurisdictions. selected holdings, while remaining well positioned for rising interest rates Butterfield remains asset sensitive, which we believe will continue to benefit the bank during this period of rising interest rates in the market.

“We regularly monitor and review the quality of credit in our loan portfolio and at this point in the cycle we have seen no significant signs of credit stress. A number of mortgage customers have upgraded their facilities from a variable rate to a fixed rate over the past six months, protecting their cash flow and improving the credit quality of our loan portfolio As expected, we have seen deposit levels decline due to customers investing their funds and the strengthening of the US dollar.

He added: “During the quarter, we announced the acquisition of Credit Suisse’s fiduciary businesses in Singapore, Guernsey and the Bahamas. This strategic transaction will position Butterfield as one of the largest private client fiduciary businesses in Singapore. .

“Most importantly, this acquisition allows Butterfield to selectively review and acquire each individual fiduciary client consistent with our risk appetite, without the obligation to purchase legal entities. We look forward to welcoming our new customers and staff as we integrate the business in the first half of next year. »

Butterfield said net income increased in the third quarter from the prior quarter, primarily due to a higher interest rate environment and lower non-interest expense, offset by lower non-interest income and a provision for expected future credit losses due to lower macroeconomic forecasts and net new loan originations.

Net interest income for the quarter was $91.2 million, an increase of $9.2 million from $82 million in the prior quarter and $15.5 million from compared to $75.7 million in the third quarter of 2021.

Net interest margin was 2.59%, an increase of 33 basis points from 2.26% in the prior quarter and 62 basis points from 1.97% in the third quarter of 2021.

Non-interest income was $49.9 million, down $1.9 million from the $51.8 million earned in the prior quarter and $0.9 million higher than $49 million from the third quarter of 2021.

Period-end deposit balances were lower at $12.5 billion, compared to $13.9 billion at December 31, 2021 due to the expected normalization of high deposit levels related to the pandemic, as well as the impact of currency translation of non-US dollar deposits following the strengthening of the US dollar. Client withdrawals account for 57% of the decrease in deposits, while the strengthening US dollar impact on non-US dollar denominated balances accounts for 43% of the change.

The bank’s total assets were $13.7 billion as of September 30, a decrease of $1.6 billion from December 31, 2021.

The bank maintained a highly liquid position as of September 30, with its $8.3 billion in cash and demand deposits with banks, reverse repurchase agreements and liquid investments accounting for 60.5% of assets. total, compared to 63.3% as of December 31, 2021.

The board declared a quarterly dividend of $0.44 per common share to be paid November 28 to shareholders of record November 14.

The current total regulatory capital ratio as of September 30 was 22.7%, as calculated under Basel III, compared to 21.2% as of December 31, 2021. Both of these ratios remain well above the Basel III minimum regulatory requirements applicable to the bank.

Michael Collins, Chairman and CEO of Butterfield (file photo)


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