Credit ratings for the Bank of N. T. Butterfield & Son have been reaffirmed by Kroll Bond Rating Agency.

It said the outlook was stable.

The A+ rating on unsecured debt and deposit ratings, the A rating on subordinated debt and K1 rating on short-term debt and deposits were reaffirmed by the New York-based agency.

Kroll noted a liquid balance sheet, relatively low cost of funds, a diverse range of non-interest revenues and “solid” capitalisation.

In particular, it noted that cash, short-term investments and securities backed by the United States Government and US-government sponsored entities were equal to 60 per cent of assets and 67 per cent of deposits.

“The deposit base, while somewhat lumpy and periodically prone to large outflows due to reinsurance, captive, trust and fund clients managing their normal repatriation or investment objectives, has been relatively stable long term, low cost and generally less sensitive to interest-rate changes, given the underlying nature of depositors,” the ratings agency said.

It did warn that the cost of deposits could increase rapidly as the bank is forced to compete with high-quality investments, such as US and British government bonds, which are increasingly paying highly competitive rates of interest with very low risk.

“The bank’s capacity to absorb any unexpected deposit outflows remains healthy,” Kroll noted.

The ratings agency said the bank’s Common Tier 1 Equity was 22.1 per cent, which it described as “robust”, though it added that market-to-market losses could result in a “materially lower” ratio.

The Bank of N. T. Butterfield & Son is listed on the New York Stock Exchange.