Butterfield Bank reports $43.9m profit

  • Butterfield Bank made a full year profit of $177.1 million, down from $195.2 million last year (File photograph)

Butterfield Bank has reported a profit of $43.9 million, or 82 cents per share, for the fourth quarter.

That’s down from the $46.2 million, or 87 cents per share, it made in the same quarter of 2018.

For the full year, the bank’s net income was $177.1 million, or $3.30 per share, down from $195.2 million, or $3.50 per share, year-on-year. However, core net income was almost $1 million higher at $197.9 million.

During the past year, Butterfield acquired the ABN Amro (Channel Islands) banking business.

“With a relatively small market share in the Channel Islands, we are now pursuing growth to complement and balance our profitable and well-established banking franchises in Bermuda and Cayman,” Michael Collins, Butterfield’s chairman and chief executive officer, said.

“With the acquisition, we now have a larger and more diversified balance sheet supported by investment grade credit ratings from S&P, Moody’s and KBRA.”

He said the US dollar interest rate environment had been challenging in the latter half of 2019, and the bank had achieved “strong and stable” core net income.

During the quarter, the bank completed its 2.5 million common share repurchase programme, and authorised a new programme for the repurchasing of up to 3.5 million shares.

Mr Collins said: “Continued share repurchases helped achieve a core net income per diluted share improvement of 5 per cent and core return on average tangible common equity remained at industry-leading levels.

“Throughout the year, we continued to emphasise cost management initiatives and furthered our plans to leverage Group service centres, which helped us achieve a core efficiency ratio1 of 62.2 per cent in 2019.”

Mr Collins also congratulated the bank’s team in Cayman for opening the Camana Bay Banking Centre, in Grand Cayman, this week.

“Camana Bay is a fantastic location and a great start to the roll out of our updated Butterfield brand.

“We are confident that this investment will solidify and grow our retail and midmarket corporate banking market share in the Cayman Islands for years to come. Our investment in this new branch signals our confidence in Cayman and the desire to further enhance our offerings in this important market.”

Fourth quarter highlights included a return on average common equity of 18 per cent, and a net interest margin of 2.59 per cent.

Non-interest income for the quarter was $49.7 million, up from $45.7 million a year ago, however non-interest expenses were higher at $93.9 million from $83.5 million in the same period during 2018.

The non-performing loans ratio for the year was 1 per cent, down from 1.2 per cent in 2018.

Looking ahead, Mr Collins said: “As we enter 2020, Butterfield’s strong balance sheet, capital efficient fee businesses, thoughtful capital management, and selective acquisition strategy should continue to provide long-term value for our shareholders.

“Finally, I would also like to thank our existing and new customers for their business and partnership with Butterfield during 2019 and to all Butterfield Group employees for their commitment to excellent customer service.”

The bank has declared a 44 cents quarterly dividend to be paid on March 11.

Before the release of the earnings statement, the bank’s shares closed at $34.51, up 0.58 per cent, on the New York Stock Exchange, and unchanged at $34.25 on Bermuda Stock Exchange.

Disclosure: the writer owns shares in Butterfield Bank