ERROR RG P33 25.1.2001 Clarifications Tuesday's story about the Bank of Bermuda writing off $10 million for an investment stated that "all the bank's major portfolios had been hit by the slump in the technology sector''. This sentence should have referred to `banks' in general, and not portfolios just belonging to the Bank of Bermuda.

The Bank of Bermuda said it wanted to point out that all figures included in their quarterly release about cash and deposits of $4.9 billion and loans less allowance for loan losses of $1.5 billion were world-wide figures.

Bank of Bermuda has had to write off $10 million in its last financial quarter after the value of its shares in a Bermuda-based e-commerce company plummeted.

But despite this setback, the bank still reported profits of $23.7 million - a drop of 5 percent for the second quarter, ending December 31, 2000 compared to the year before.

The bank said that had it not had to take into account the fall of $10 million, profits would have gone up by 30 percent, compared to the same period last year.

The bank said it would have recorded a record net income of $33.7 million, compared to $25 million in the same period the year before. The money written off by the bank was due to its investment in an electronic payment processing company, according to the company's own release.

The company had originally invested $14.3 million in buying out 10 percent of FirstEcom.com, but the decline in the stock price has left the stock worth just $4.3 million.

Stock at FirstEcom.com has bottomed out so much that it became a penny stock on the Nasdaq at the end of last year.

Edward Gomez, Chief Financial Officer at the bank said: "We incurred a $10 million charge to reduce the carrying value of an investment in an electronic payment processing company, reflecting the stock's decline over recent months.

Clearly 2000 was a difficult year for e-commerce in general and we consider it appropriate to reflect the write-down within that calendar year.'' Last night the bank said it would not be selling its stake in the company at present and said that it was reporting the loss as part of a regulatory requirement and did not reflect the bank's view on the investment. The bank also pointed out that all the bank's major portfolios had been hit by the slump in technology sector.

The bank reported diluted earnings per share from core continuing operations of $1.19 for the second quarter, up 28 percent from last year's $0.93.

After the one-time charge, second quarter diluted earnings per share were $0.83.

For the six months ended 31 December, diluted earnings per share from core continuing operations were $2.29, which were 32 percent higher than the prior year. Mr. Gomez said: "Our businesses finished the year at a record pace, with net income from continuing operations up more than 30 percent from the same quarter last year.

Bank of Bermuda: $23.7m profits "Excluding the effect of one-time items, return on equity was 21.5 percent and efficiency 70.0 percent, both significantly better than a year ago.

Despite difficult global financial markets, fee-based revenues were up 15 percent in the quarter, with particular strength in foreign exchange earnings from client activity.

"Further growth in net interest income was driven by improvements in both volumes and margins.

"The rate of increase in operating costs was contained at 6.8 percent, even though this was a period of substantial investment in our Global Fund Services business. Most of the increase in operating costs was incurred in the Far East where we added staff in preparation for the launch of the new Mandatory Provident Fund pension business, the revenues from which will commence this calendar year.'' Henry Smith, President and Chief Executive Officer said he was proud of the bank's performance during a decline in financial markets. "Our core businesses continue to perform very strongly and generate record results while maintaining a forward-looking focus that ensures they invest in the future.

"We are extremely optimistic about the prospects for our GFS business in the Far East as contributions to the new Mandatory Provident Fund business commence.'' The bank also had a credit of $1.5 million due to a change in accounting procedures.

Henry Smith