Butterfield reported first quarter net income of $44.4 million compared to $41.7 million in the previous quarter, and $41.6 million during the same period one year ago.
The core return on average tangible common equity for the first quarter of 2022 was 21.9%, compared to 18.8% for the previous quarter and 19.3% for the first quarter of 2021.
Michael Collins, Butterfield’s chairman and chief executive officer, in a press release, called the results “an excellent start to the year”.
He said the bank’s asset sensitive balance sheet has already benefited from the initial increases in interest rates, with improved net interest income and net interest margins.
Net interest income in the first quarter increased by $1.4 million to $75.9 million over the previous quarter and by $1 million year on year.
NII was higher during the first quarter of 2022 compared to the prior quarter primarily due to lower prepayment rates in the investment portfolio, which decreased the periodic amortisation charge on US agency mortgage securities. In addition, rates improved on short-term cash and treasury assets.
Positive outlook
The bank’s earnings expectations are growing amid a rising interest rate environment and improving economic conditions.
“We expect market interest rates to continue to provide upward momentum to earnings during 2022,” Collins said. “Additionally, we are seeing signs of improving economic activity across our operating jurisdictions, including growing visitor numbers, the return of cruise ships and increasing airlift to Bermuda and Cayman. While not yet back to pre-pandemic levels, we are very pleased to see progress for the tourism industry.”
Collins said, “Capital management continues to be an important focus for Butterfield, including a sustainable quarterly dividend, support for organic growth and potential acquisitions and the flexibility to repurchase shares when appropriate.
“Butterfield remains well positioned to benefit from the anticipated rising interest rate environment, whilst generating significant non-interest income and managing expenses.”
Butterfield’s non-interest income for the quarter of $49.9 was $2.8 million lower than in the previous quarter and $2.3 million below the first quarter of 2021.
This was mainly due to lower banking and trust fees, partially offset by increased foreign exchange revenue, the bank reported.
Non-interest expenses of $82 million in the first quarter of 2022 were down from $83.8 million in the fourth quarter 2021 and up from $80.9 million in the first quarter of last year.
Butterfield’s board declared dividend for the first quarter of 2022 of $0.44 per share.
Senior appointments
Together with its financial results, Butterfield announced the promotion of Michael Schrum to president and group chief risk officer.
The former group chief financial officer since 2015 and an executive director since 2020, takes over from Sabeth Siddique, who is to leave Butterfield at the end of May.
Craig Bridgewater, who has served as group head of finance since 2019, has been promoted to group chief financial officer and joins the executive committee.
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