Butterfield reports second quarter profit
(CNS Business): With second quarter core earnings of $26 million, an increase on earnings of some $5.8 million, Butterfield bank is boasting of 28.7% growth compared to last year in its latest financial report. As a result the banks earnings for first six months of this year were $49.1 million up $13.6 million or 38.3% when compared to the first six months of 2013, the bank said in a release on Monday. As a result the bank recorded an increase in its net profit of $4.5 million up to $50.7 million, compared to a year-to-date net income of $46.2 million for the six-month period ended 30 June last year. The bank also stated that it had reached an agreement to buy part of HSBC’s retail operations in Cayman as well.
Brendan McDonagh, the banks chairman and CEO said he was pleased with the year on year growth of nearly 30%.
“[This] translates to an improvement in core returns to common shareholders to 15%, a key milestone in Butterfield’s strategic objective of delivering strong returns to our shareholders,” he said. “Each successive profitable quarter serves to improve Butterfield’s already-strong capital position and provides the Bank with the opportunity to enhance shareholder value through investment in strategic businesses that will drive long-term growth, and more directly through share buy-backs and dividends. Our acquisition strategy seeks to minimise risk by investing in businesses in which we have expertise and a meaningful market presence, whilst delivering accretive earnings in excess of our cost of capital within our risk tolerance framework,” he added.
McDonagh pointed to enhanced trust and fiduciary services in Guernsey which he described as a core market for Butterfield with the completion of the acquisition of the Legis Group’s trust business. The banks has also reached an agreement to acquire parts of HSBC’s retail and corporate banking business in the Cayman Islands, which he said is the bank’s second largest market.
“This will enhance our Cayman business and see total assets grow from $2.2 billion to an anticipated $3.0 billion, strengthening our leading market position,” McDonagh said.
The bank like all other financial institutions in the region also completed preparations for compliance with the US Foreign Account Tax Compliance Act (FATCA) before this reporting period was over.
“FATCA imposes due diligence, information reporting and control obligations on non-US financial institutions for certain US persons who maintain relationships with these institutions. The Bank is now in the process of collecting documentation from customers with US connections in fulfillment of those obligations. We would like to thank those customers affected for complying with the requirements imposed by the new rules,†he added.
John Maragliano, Butterfield’s Chief Financial Officer, said the earnings were a significant improvement on last year, as a result of what he said was the bank’s continued “approach to prudent balance sheet and expense management and execution of our capital management plan.”
He explained that net interest income before provision for credit losses was up by $4million on improved investment yields owing to the consistent asset and liability management strategy and the effect of the retirement of two tranches of subordinated debt earlier in the year, the latter reducing quarterly interest expenses by $1.4 million.
“Non-interest income increased by $3.9 million from the combination of increasing business volumes, new business generation and additional trust revenues from the consolidation of the Legis acquisition. As a result, total revenue before credit losses and other gains grew by $7.9 million, compared to an increase in core operating expenses of $3.2 million leading to the 280 basis point improvement in the Bank’s core efficiency ratio to 67.9%,†he added.
The bank’s board approved a common share buy-back programme during this quarter authorizing the purchase and cancellation of up to 15 million common shares. Under the programme, the total shares acquired or purchased for cancellation during the quarter ended 30 June 2014 amounted to 1.6 million common shares to be held as treasury shares at an average cost of $1.99 per share (total cost of $3.2 million) and 175 preference shares at an average cost of $1,181 per share (total cost of $0.2 million).
The board declared quarterly dividends of $20 per share on the Bank’s 8% non-cumulative perpetual voting preference shares, to be paid on 15 September 2014 to preference shareholders of record on 1 September 2014. It also declared an interim dividend of $0.01 per common and contingent value convertible preference share to be paid on 29 August 2014 to shareholders of record on 15 August 2014.
See full report:Â Butterfield Reports Q2-2014
Category: Economy, Local Business
