quarter, the bank has raised its quarterly dividend by another cent to 17 cents per share.

For the three months ended on September 30, 1999, the first quarter of the bank's fiscal year 1999/2000, it yesterday reported earnings of $9.41 million, ahead by 6.8 percent of results for the comparable quarter last year.

Net income for the three months ended September 30, 1999 increased by 10.9 percent, year on year, to 51 cents. "We are continuing to achieve steady, consistent growth in quarterly earnings, as we demonstrated throughout our last financial year,'' said Calum Johnston, president and chief executive officer.

Since Mr. Johnston joined the bank in the wake of the sudden departure of his predecessor, John Tugwell, Mr. Johnston has overseen the sorting out of problems which formerly bedevilled the bank and has restored confidence in the institution.

Bank reports increase in earnings "We have seen solid improvements, in particular, in our community banking business in Bermuda and a return to profitability, following our restructuring initiatives, of the Hong Kong operation. Also, our asset management, Grand Cayman, Guernsey and Davenham businesses have all outperformed the like period last year.'' Mr. Johnston said that the bank is operating Year 2000-compliant versions of all its mission-critical systems and that its business continuity planning, to ensure that the core businesses of the bank continue if one of the mission-critical systems fails, has reached near-completion.

"We have worked closely with IBM's Transformation 2000 consulting team and are dedicated to ensuring that we will continue to meet the needs of our customers into the year 2000 and beyond,'' said Mr. Johnston.

Commenting on the bank's financial performance, Richard Ferrett, vice president and chief financial officer, said: "The first quarter 1999/2000 performance outperformed (each of the last financial year's) four quarters.

"In particular, net interest income, at $20.31 million for the quarter, was up by $2.86 million, or 16.4 percent over the like period last year, reflecting the bank's balance sheet management strategies, an increasing loan book and the continuing success in reducing non-performing loans.'' He continued: "Whilst expenses rose, year on year, by $1.77 million, much of this was due to planned investment on information systems development, essential in order to achieve the efficiency goals we have set ourselves, going forward.'' Among other highlights: Total loans increased by $80.8 million year on year; Total assets at September 30, 1999 were $4.43 billion; Two-thirds of the bank's total assets are comprised of deposits with major international banks or in the bank's high quality investment portfolios; The net interest margin, the difference between the rate at which the bank pays interest and the rate it charges its customers, was 1.9 percent, compared to 1.6 percent for the whole of fiscal 1998/99.

The board has increased the quarterly dividend to 17 cents per share, payable on Thursday November 18, 1999 to shareholders of record on Tuesday, November 9, 1999.