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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