Butterfield making acquisition as profits rise

  • Earnings news: Butterfield Bank saw its first quarter profit rise. The bank has also agreed the acquisition of a banking business in the Channel Islands, in a $208 million cash deal (File photograph)

    Earnings news: Butterfield Bank saw its first quarter profit rise. The bank has also agreed the acquisition of a banking business in the Channel Islands, in a $208 million cash deal (File photograph)

Butterfield Bank made a profit of $52 million, or 96 cents per share, in the first three months of the year.

That was up from $44.2 million, or 79 cents per share, for the same period a year ago.

It has also announced an agreement to acquire Channel Islands banking business ABN AMRO (Channel Islands) Limited in a £161 million ($208 million) cash deal.

The acquisition is expected to close in the third quarter, with ABN AMRO’s business and staff in the Channel Island integrating into Butterfield’s Guernsey operations and operating under the Butterfield name.

Butterfield is making the acquisition through its wholly-owned subsidiary, Butterfield Bank (Guernsey) Limited.

Regarding the agreement to acquire the business from ABN AMRO Group, a Dutch bank, Michael Collins, Butterfield Bank’s chairman and chief executive officer, said: “This significant acquisition is a Channel Islands banking business similar to our existing banks in Guernsey, Jersey, Cayman and Bermuda. Acquiring ABN AMRO (Channel Islands) is a unique opportunity for Butterfield to grow accretively and gain market share in the Channel Islands.”

He said the transaction diversifies Butterfield’s balance sheet and risk profile, from a geographic perspective, “in a high quality market in which we have decades of experience”.

Mr Collins said the deal underscored the bank’s continued commitment to expand its presence in the Channel Islands.

ABN AMRO was established in Guernsey 35 years ago, and provides banking, investment management and custody products to trusts, private clients and funds. At the end of 2018 it had $2.9 billion in deposits and $3.5 billion in assets under management and custody.

Speaking about Butterfield’s first quarter performance, Mr Collins described it as “solid” and said it was “underpinned by our capital efficient fee businesses, well positioned balance sheet and focused cost management”.

He added: “We are prepared to meet the challenges of the current interest rate environment through expense control and disciplined capital management.”

He said Butterfield has completed “onboarding” the remaining Deutsche Bank clients in the Channel Islands, following the acquisition of Deutsche Bank Global Trust Solutions last year.

He added: “While deposit balances have fluctuated, we have been pleased to see periods with overall balances in excess of $1 billion from this transaction.”

Butterfield reported core net income was $51.7 million for the first quarter, up from $45 million, year-on-year.

Non-performing loans increased from $48.7 million at the end of 2018, to $53.8 million at the end of March, which represents 1.3 of total gross loans.

The bank said it continues to engage pro-actively with clients who experience financial difficulty.

Return on average common equity was 23.7 per cent during the first quarter.

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Published Apr 25, 2019 at 12:26 pm (Updated Apr 25, 2019 at 12:26 pm)

Butterfield making acquisition as profits rise

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