of $19.18 million, up 7.7 percent on the same period last year.

The figures take the company to record earnings -- up $1.37 million on the same time last year.

The second quarter, ending 31 December, 1999, had earnings of $9.76 million -- 8.5 percent more than last year, and up 3.7 percent on the previous quarter.

Net income per share for the first six months increased by 11.8 percent or 11 cents to $1.04 cents compared to the same period in 1998.

Return on equity was the yearly equivalent of 15.6 percent, up from 15.2 percent from last year.

However, expenses rose year-on-year by $5.60 million and assets fell 2.8 percent to $4.38 billion.

Calum Johnston, president and chief executive officer at the bank said: "We continue to build on the solid start made this financial year in all our core businesses, all of which have been outperforming the earnings levels seen last year. "We are especially pleased that our Hong Kong operation is now making consistent positive contributions to the group's earnings.'' Mr. Johnston added that the success was partly due to a significant increase in contributions made by the company's Bermuda-based Community Banking business and overseas operations in Grand Cayman, Guernsey and the United Kingdom.

He added that the company's commitment to strategic growth was illustrated by the bank's purchase this month of the ANZ Bank (Guernsey) Ltd, which is being merged into the bank's Guernsey subsidiary.

Mr. Johnston said: "The bank successfully met the challenge of Y2K, with all systems continuing to operate as normal. This was achieved without excessive cost and we are now focusing our attention on improving our information operating systems in Bermuda, which is essential in order to improve efficiency and thereby earnings going forward.'' Richard Ferrett, executive vice president and chief financial officer said: "Fees and other income were in line with that achieved last year and net interest income saw a significant improvement at $40.50 million up $6.85 million or 20.4 percent over the like period last year.

"This reflects a number of factors, including increases in the bank's loan and investment portfolios, in line with the balance sheet management strategies and the continuing success in reducing non-performing loans. Whilst expenses rose year-on-year by $5.60 million this was due to planned investment in the bank's operating system in Bermuda, necessary to improve our operating efficiencies and thereby, both customer service and shareholder value.''