Income and earnings have soared at Butterfield, the Bermuda-headquartered private bank, during 2013 despite a drop in its assets under management.

N T Butterfield & Son, the Bermuda-headquartered private bank has had a strong 2013 as the firm announced core earnings of $76.6 million, up from 2012’s $54.9 million. The bank’s net income also soared to $78.2 million by the end of 2013 - a $52.6 million year-on-year increase.

“We are pleased with the continued progress our businesses are making in delivering improved core results. The increase in core earnings in 2013 was driven primarily by two factors: lower expenses due to improved operating efficiency; and enhanced revenue performance in the investment portfolio,” said John Maragliano, Butterfield’s chief financial officer.

Total net revenue before credit provisions and net other gains was $349.8 million for the year, up $9.6 million from $340.2 million in 2012. However, this result was impacted by a $2.5 million decline in non-interest income, due primarily to lower asset management fees.

The firm explained that the decrease in asset management revenue was due primarily to falling USD LIBOR, which impacted fees earned on the Butterfield Money Market Fund, while banking services revenue was down $1.2 million from $33.7 million a year ago, due primarily to loan prepayment penalty fees received in 2012. In comparison, Butterfield said that the dip in revenue was partially offset by foreign exchange growing by 10.5 per cent to $29.3 million and its trust revenue reaching $30.4 million, due to the timing of income recognition combined with new business and growth in time-spent fees.

Bermuda AuM dips

Looking more specifically at its regional operations, the firm said that its Bermuda business performed well as net income reached $33.8 million at 31 December 2013, up $8.7 million from $25.1 million in 2012, despite a $3.8 million drop in revenue, due principally to cost management initiatives and higher income from our investment portfolio. This part of the bank also saw a drop in non-interest income of 5.5 per cent, reflecting lower revenues of $6 million from banking, asset management and custody fees. 

The division’s non-interest expenses declined by $12.5 million to $152.3 million in 2013 due to reduced headcount, a reduction in senior management compensation, savings from technology, and other expense management initiatives. As such, total assets as at 31 December 2013 were $4.6 billion, consistent with year-end 2012. 

Client assets under administration for the trust and custody businesses were $35.6 billion and $31.2 billion, respectively, whilst assets under management decreased by $0.3 billion to $2.8 billion from year-end 2012.

Cayman Islands performs well

In comparison, its Cayman Islands operations saw its net income before gains and losses rise by $6.5 million to $25.9 million, due primarily to an improvement in loan and investment income, banking fees, foreign exchange and trust revenues, coupled with a reduction in salaries and technology expenses. 

Non-interest income reached $32.2 million, up $1.2 million from the prior year - due primarily to higher banking fees.

Here, total assets rose to $2.3 billion, up $0.2 billion from year-end 2012, reflecting higher client deposit levels. Client assets under administration for the trust and custody businesses were $1.6 billion and $1.3 billion, respectively, whilst assets under management were $0.7 billion at year-end.