million for its third quarter ending 31 March 2001 -- up 50.2 percent on the same quarter last year.

This is despite difficult global economic conditions affecting banks around the world -- and the fact the figure calculated after writing off loans worth $6.28 million which have proved difficult to collect.

Calum Johnston, President & Chief Executive Officer said: "I am pleased to report the eleventh consecutive quarter of earnings growth and that all our businesses, both in Bermuda and abroad, continue to perform in line with, or better than, expectations.

"The need to recognise a loss of $6.28 million from discontinued operations in the third quarter results from a review of the overall level of provisions required for the portfolio of loans remaining from our former businesses in the United Kingdom, which the Group exited in 1997.

"These loans have continued to prove difficult to collect. As a result the decision was taken to write off all of these loans.

"Accounting convention requires this loss to be deducted from net income from continuing operations for the quarter under review. Most significant, is that there are now no loans remaining from these former businesses.'' The increase in profits are $5.14 million over that achieved for the third quarter last year and a 4.7 percent or a $0.69 million increase on the second quarter of the current fiscal year.

The bank said as a result, net income after losses from discontinued operations for the first nine months of the current financial year was $44.31 million, also a record, and up $14.91 million, or 50.7 percent, on the same period in 2000.

Net income per share, including discontinued operations, for the first nine months increased by 57.5 percent, or 92 cents, to $2.52 compared to the same period the previous year.

Return on equity was 22.4 percent, up from 16.0 percent at the same stage a year ago.

The bank said after reflecting the group's continuing strong earnings performances, the Board has decided to increase the quarterly dividend by 2 cents or up 7.1 percent to 30 cents per share.

Mr. Johnston added: "The third quarter was also notable for our successful acquisition of Matheson Bank Limited in the United Kingdom, in February, and the launch of Butterfield Direct Internet Banking, Bermuda's first Internet banking service, in March.'' Richard Ferrett, Executive Vice President & Chief Financial Officer, said: "Third quarter earnings per share, after discontinued operations, of 88 cents was a record for the bank, representing an increase of 32 cents, or 57.1 percent, on the corresponding period in 2000.

"As a result earnings per share, including discontinued operations, at the nine months stage increased by 57.5 percent, or 92 cents, to $2.52. Return on shareholder's equity was 22.4 percent for the nine months and 22.8 percent for the third quarter, compared to 16.0 percent and 16.7 percent respectively at the same stage a year ago.'' Mr. Ferrett added: "The third quarter saw notable increases in corporate services and foreign exchange revenues, up year on year by 22.0 percent and 7.3 percent respectively. Total expenses for the year to date have decreased by $2.70 million, or 2.9 percent, reflecting a credit taken in the third quarter as a result of a review of the Pension Plan by the Bank's actuaries.

"The efficiency ratio continues to improve from 67.6 percent a year ago to 63.8 percent for the current year to date.''