KBRA assigns ratings to Butterfield

  • Butterfield Bank: given ratings by Kroll Bond Rating Agency (File photograph)

    Butterfield Bank: given ratings by Kroll Bond Rating Agency (File photograph)


Butterfield Bank has been assigned senior unsecured debt and deposit ratings of A+, a subordinated debt rating of A by Kroll Bond Rating Agency.

Butterfield also received a short-term debt and deposit rating of K1. The outlook for all long-term ratings is stable.

KBRA said Butterfield’s ratings are underpinned by its strong financial profile, “characterised by a liquid and high-quality balance sheet, low cost of funds, and highly diversified revenue stream”.

The rating agency said that about 60 per cent of Butterfield’s total assets are either in the form of cash and short-term investments or highly rated investment securities, backed by the US government.

KBRA added: “Deposits, along with equity capital, almost fully fund assets (96 per cent); the deposit base, while lumpy and periodically prone to large outflows connected to business conditions in and outside of Bermuda, is low cost (0.38 per cent at 1Q 2019), and generally insensitive to interest rate movements.

“KBRA views favourably the magnitude of on-balance sheet asset liquidity in the event the sensitivity or volatility of the deposit base were to change.

“Fee income continues to account for about one-third of total revenues, providing NTB with substantial earnings diversity and performance differentiation (compared to the KBRA rated universe).

“Fee revenues are broad-based and largely uncorrelated to the loan and investment portfolios, which KBRA views positively.”

The rating agency added that it acknowledges that Butterfield operates in smaller, more economically concentrated markets without central bank existence and that it has sometimes been the subject of governmental inquiries as a result of its presence as an offshore financial intermediary domiciled or otherwise doing business in very low tax jurisdictions.

“The revenue diversity, in KBRA’s assessment, counters some of the economic and geographical limitations,” KBRA said. “In addition, KBRA views the bank’s policies and practices connected to the various forms of operational risk as robust.”

You must be registered or signed-in to post comment or to vote.

Published Jul 19, 2019 at 8:00 am (Updated Jul 19, 2019 at 8:37 am)

KBRA assigns ratings to Butterfield

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    • "What is the most significant reason for Bermuda residents choosing to leave the island?"
    • Too small
    • 3%
    • Different way of life
    • 4%
    • Cost of living
    • 77%
    • Gang activity and general crime
    • 3%
    • Jobs/professional advancement
    • 8%
    • Education
    • 2%
    • Attitudes towards gays
    • 3%
    • Total Votes: 5235
    • Poll Archive

    Today's Obituaries

    eMoo Posts