Butterfield Group reported a third
quarter net loss of $18.6 million compared to net income of $200,000 for the
second quarter of 2010 and net income of $7 million in the third quarter of
2009, as the bank was forced to make loan provisions for hospitality projects
in Bermuda and the Bahamas.
Butterfield’s President and Chief
Executive Officer Brad Kopp said the bank remains focused on reducing risk,
returning to profitability and delivering sustainable growth for our shareholders.
“That focus entails concentrating
our financial and management resources in jurisdictions where we have a
meaningful market presence and a depth of local market knowledge. Consistent
with this strategy, the bank sold its trust, wealth management and advisory
businesses in Hong Kong and its trust operation in Malta in September with a
resultant net loss of $7.4 million,” he explained. “Additionally, continued
weakness over the summer months in the hospitality industry has led us to
provide a further $14.2 million of specific allowances for related loan
exposures. Although we are not happy to be taking additional provisions, we do
believe that we are positioned to see the cycle through.”
Brad Rowse, executive vice
president and chief financial officer added, that “although the financial
markets have stabilised in 2010, banks continue to face difficult conditions as
the low interest rate environment continues, global economic stability remains
uncertain and regulators respond to the global financial crisis.
“Against this backdrop, Butterfield
is reviewing all aspects of our business to ensure the right balance between
current profitability and future growth,” Mr. Rowse said. “The Bank is well
positioned with a strong capital base and remains focused on the two pillars of
our business, community banking and wealth management.“
As of 30 September, 2010,
Butterfield had a tangible common equity ratio of 6.29 per cent, a total
capital ratio of 21.6 per cent and a tier 1 capital ratio of 15.7 per cent.
Butterfield Bank (Cayman),
meanwhile, reported net income before gains and losses of $2.4 million for the
third quarter 2010, down by $1.1 million from Q3 2009 due to lower interest
income earned and increased IT outsourcing costs.
Net interest income before loan
loss provisions was $600,000 below prior year levels due to low inter-bank
interest rates on lower client volumes.
Non-interest income of $8.1 million
in third quarter 2010 was down $200,000 or 3 per cent on Q3 2009, resulting
from increased banking commissions offset by reduced volumes in foreign
exchange commissions and the completion of its transitional services agreement
with its former subsidiary Butterfield Fulcrum Group (Cayman) Ltd in the third
quarter of 2009.
Total assets at the end of Q3 2010
were $1.9 billion down $666 million from year end 2009, reflecting the strong
hedge fund subscription cash inflow cycle seen prior to the Bank’s most recent
year end. Loans increased by $32.6 million over 12 months, with growth in both
the personal lending and commercial loan portfolios and prudent loan loss
provisioning.
Client assets under administration
ended Q3 2010 at $4.5 billion representing a decrease of $573 million from Q3
2009, fee earning assets under management of $885 million, increased 7.1 per
cent over Q3 2009, indicating a gradual recovery in the financial asset
markets.
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