Butterfield beats estimates with $50.9m profit

  • Earnings report: Butterfield Bank has reported higher net income for the fourth quarter and full year (File photograph)

    Earnings report: Butterfield Bank has reported higher net income for the fourth quarter and full year (File photograph)

Butterfield Bank finished 2018 strongly with a reported profit of $50.9 million, or 92 cents per share, for the fourth quarter. That beat analysts estimates of 89 cents, and was up from 76 cents per share a year ago.

For the year, the bank achieved net income of $195.2 million, or $3.50 per share, up from $153.3 million.

Butterfield is raising its common share dividend by 16 per cent, to 44 cents, and has authorised a new repurchase programme for up to 2½ million shares, having completed a previous programme to repurchase one million shares.

Michael Collins, chairman and CEO, said: “2018 was an important year for Butterfield as we completed two strategic and accretive acquisitions and continued to grow our residential loan portfolio in central London, while producing industry leading returns.

“We also reported another solid set of financial results in the fourth quarter, which contributed to Butterfield’s record profitability. Our strong risk-adjusted returns benefited from a profitable and highly rated investment portfolio, a conservatively underwritten loan book, diversified fee income and diligent management of expenses.”

The $41.6 million increase in full year profit was due principally to a $62 million increase in interest from loans, with increased volumes and the impact or repricing; and a $10.9 million increase in non-interest income mostly from increased trust fees linked to the acquisition of Deutsche Bank’s Global Trust Solutions business last March.

The bank paid out $14.6 million more in salaries and employee benefits last year, some of which was due to new teams to service its expanded trust business; and there was a $6.4 million increase in non-interest expense “as a result of higher technology and communications costs” incurred in Jersey, Singapore and Mauritius.

Looking ahead, Mr Collins said: “We are well positioned for organic growth while continuing to seek out selective strategic acquisition opportunities in private trust and banking in existing markets. We are strongly capitalised and remain committed to an attractive investor return profile with an increased quarterly cash dividend, as well as a larger share repurchase programme.”

He added: “As we enter 2019, Butterfield continues to focus on producing leading returns and shareholder value through our strong balance sheet, optimised capital management and a client-centred operating philosophy.”

Net interest income was fractionally down for the quarter at $87.4 million, due to slightly higher interest costs for term deposits.

The bank also reported that average customer deposit balances for the quarter were $9.1 billion, down $300 million on the third quarter, and $800 million lower, year-on-year.

Core net income for the year was $197 million, or $3.53 per share, compared with $158.9 million, or $2.86 per share, in 2017.

Ahead of the earnings report, Butterfield’s shares rose six cents, or 0.17 per cent, to $36.02, on the New York Stock Exchange.

Click on Related Media to read the full earnings report. Disclosure: the author owns shares in Butterfield Bank

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Published Feb 20, 2019 at 8:00 am (Updated Feb 20, 2019 at 8:12 am)

Butterfield beats estimates with $50.9m profit

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