Butterfield reported net income of US$57.4 million in the third quarter of 2022, up from $49.1 million for the previous three months and $39.8 million during the same period last year.
The bank’s core return on average tangible common equity for the third quarter was 31.6%, an increase from 27.8% in the second quarter and compared with 17.9% year on year.
Michael Collins, Butterfield’s chairman and CEO, based in the bank’s Bermuda headquarters, said the “posted solid results” continued to demonstrate “resilient non-interest income”, while remaining well positioned for the rising interest rate environment.
“Butterfield remains asset sensitive, which we expect will continue to benefit the bank during this period of rising market interest rates,” he said.
Collins said Butterfield had at this point in the cycle not seen any significant signs of credit stress in its loan book.
“A number of mortgage customers have moved their facilities from floating rate to fixed rate over the past six months, protecting their cash flow and improving the credit quality of our loan portfolio. As anticipated, we saw deposit levels decrease due to clients investing their funds and the strengthening of the US dollar,” he added.
The Bermuda-headquartered group’s net income increased in the third quarter due to a higher interest rate environment and lower non-interest expenses. This was offset by lower non-interest income and a provision for future expected credit losses due to decreasing macroeconomic forecasts and net new loan originations.
Net interest income of $91.2 million was $9.2 million higher than in the second quarter mainly due to higher margins on interest earning assets, which were partially offset by higher deposit costs.
Butterfield’s net interest margin increased to 2.59% during the period, up from 2.26% in the second quarter and 1.97% a year ago.
However, the bank’s $49.9 million non-interest income dropped by $1.9 million from the second quarter.
Butterfield’s core efficiency ratio, which divides non-interest expenses by revenue, improved in the third quarter to 57% compared with 60.2% in the previous quarter and 66.3% for the third quarter of 2021.
Non-interest expenses were down by $1 million at $82 million.
During the quarter, Butterfield announced the acquisition of the Credit Suisse trust business in Singapore, Guernsey and the Bahamas.
“This strategic transaction will position Butterfield as one of the largest private client trust companies in Singapore. Importantly, this acquisition allows Butterfield to review and selectively acquire each individual trust client in accordance with our risk appetite, without the requirement to purchase legal entities,” Collins said.
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