Bermuda's third bank, Bermuda Commercial Bank, yesterday reported that its net income rose by 16 percent to a new record high during the past year, but said the bank saw lower incomes across the board.

The bank reported net income after discontinued operations and unusual items has reached a record high at $6.29 million compared to $4.56 million the year before.

This is despite the bank taking a hit of nearly $2.4 million for unauthorised transactions of a former bank employee that were identified during the year.

The bank stated: "Management of the Bank has estimated the financial impact of these unauthorised transactions at $2,369,623 before insurance recoveries.

"Management intends to vigorously pursue insurance coverage on these losses and will record a receivable from its insurance provider when both the amount and collectibility are reasonably determinable."

In its year end results released yesterday the bank also said that its expenses remain remarkably controlled for the year end September 30, 2001.

The bank said net income has increased to $6.29 million, or 16.1 percent, from $5.42 million in the prior year.

But it added net income before discontinued operations and unusual items declined to $4.56 million from $4.94 million, or 7.7 percent, with total income declining to $11.73 million from $12.02 million.

Bermuda Commercial Bank reported that it experienced lower total income across all of its business segments due to worldwide interest rate declines, lower client foreign exchange activity, and a repositioning of its fee-based portfolio of clients through a combination of termination of service and lost business.

The bank said these declines were offset by gains on the disposal of the bank's investment in the Bermuda Stock Exchange and in a residential property, respectively.

Bermuda Commercial Bank said total expenses have been contained to a nominal increase of 1.3 percent, or $90,000, to $7.16 million from $7.07 million a year ago, despite additional rental expense associated with letting go the bank's property management subsidiary.

The bank said it continues to strive for an efficiency ratio of 50 percent and improved to 3.24 percent for the year ended September 30, 2001 from 56.60 percent at September 30, 2000.

Excluding discontinued operations and unusual items, the efficiency ratio increased to 61.08 percent from 58.87 percent.

The statement said: "BCB's strategy going forward will be based on full automation, digital delivery of services, and a bullet proof balance sheet to help overcome the small size of the bank when marketing.

"A low, almost no risk, fee income driven profile will be maintained.

"The chart (right) demonstrates the increasing net income, after discontinued operations and unusual items, of the Bank since 1993."