Butterfield Bank has made record first quarter group profits of $35.7 million, although its stand-alone Bermuda operations saw a 3.4 percent fall in profits to $16.6m.

Diluted earnings per share are up seven cents year-on-year to $1.22 as a result of the 7.8 percent net income rise in the three-month performance.

Butterfield Bank's now has total assets of $11.4 billion, a rise of 16.7 percent compared to the same period last year.

There were improved results across the Bank's various overseas operations, particularly strong in Cayman, the UK and Guernsey, although profits were halved in Barbados.

Demand for loans added a further $615m of income for the bank, bringing the loan portfolio to $3.8b and representing one-third of the institute's total assets. Apart from the income generated from loans, the bank has also seen increased customer deposits and growth in investment and pension fund administration business.

"It is pleasing to note the continued growth in our earnings achieved year on year, coupled with the significant growth in assets under administration and assets under management," said Alan Thompson, president and chief executive officer.

"Particularly noteworthy is the growth seen in the contribution from our wealth management and fund administration businesses in Bermuda and from our Cayman, Guernsey and UK businesses.

"We continue to focus on growing our core businesses and during the quarter under review we opened our new fund services operation in Halifax, Canada, as a base from which to extend our services to North American hedge funds. Also noteworthy is that in February we were named 'Best Developed Market Bank 2007' for Bermuda by Global Finance magazine for the third consecutive year."

Pre-tax net income was $37.3 million, up 11 percent on a year ago. A breakdown of group results reveals:

[bul]Net interest income of $59.3 million, up 21.2 percent.

[bul]Non-interest income of $50.6 million> up 7.3 percent.

[bul]Customer deposits of $9.8 billion, up 14.7 percent.

[bul]Total assets of $11.4 billion, up 16.7 percent.

Assets worth $125bn are under administration of the bank, an increase of 16.7 percent year-on-year, while assets under management are $10.8bn, up 13.9 percent.

In Bermuda, Butterfield Bank's business increased $3.5m to $58.3m, with net interest income up 10.1 percent ($2.6m). However, bottom line profits of $16.6m were 3.4 percent lower, which the bank said: "Reflects reduced earnings from investments in affiliates and in increased expense base necessary to support business growth."

A look at the bank's overseas operations shows that in Barbados its total revenues of $2.8 million were up 4.8 percent year on year, whilst profits were halved to $100,000. The bank said the fall mostly reflected that there had been a tax credit in the first quarter of 2006 but not repeated in 2007.

There is better news in Cayman with profits up $1.8m to $14.6 million, which the bank said: "Reflected continued strong business growth and the contribution from the Bank's investment in Island Heritage Insurance Company Limited."

Profits were also up $3.2m, a record 24 percent rise year-on-year, in the bank's Guernsey operation from total revenue of $14.4 million.

And in the UK the bank reversed a $200,000 loss from a year ago to a $600,000 net income profit this quarter as total revenues went up 37.1 percent to $7.6m.

The bank's Zurich office, which opened in November, has primarily focused on office set-up, recruitment and business development during the quarter. It has assets under investment of some $16m with operating costs for the quarter were $300,000.

Richard Ferrett, executive vice-president and chief financial officer, said: "The balance sheet continues to grow significantly, reflecting strong growth in customer deposits and loans, and this reflects in the increase in net interest income, up $10.4 million, or 21.2 percent, year on year.

"Our return on equity continues to remain strong and above our target of 20 percent, at 25.8 percent. A significant increase was also seen year on year in the Group's revenues from investment and pension fund administration, up 14 percent.

"We are also pleased to note that in March, Moody's Investor Services upgraded the Bank's long-term deposit ratings by three notches from A3 to Aa3 and the short-term deposit rating was also increased from P2 to P1."

Shareholders' equity increased year on year by 10.2 percent to $575.5m.

The Bank has decided to keep its May dividend payout at 48 cents a share.

Butterfield's profit climbs 7.8%