rose by nearly $1 billion in the 12 months to March 31.

Combined balance sheets show total assets of Bermuda banks rose from $12.513 billion at the end of the first quarter of 1996 to $13.511 billion in 1997.

That growth occurred almost exclusively in terms of non-Bermuda dollar assets.

Assets held in Bermuda dollars rose $56 million from $1.287 billion to $1.343 billion. But foreign currency assets rose $941 million from $11.227 billion to $12.168 billion.

Meanwhile, the BMA's 1997 first quarter notice showed the capital and financial account for balance of payments recorded a net outflow of $45 million, an increase of $21 million, compared with the same period in 1996.

Direct investment outflows were uncharacteristically low in the first quarter, $7 million (or 88 percent) lower than for the comparative period. There was an increase in portfolio investment of $5 million (13 percent) as local entities and households invested abroad.

Direct investment inflows increased by $5 million (56 percent), reflecting investment by overseas companies in local businesses.

The net short term investment outflow of $19 million was attributable to transactions shown on the aggregate balance sheets of the Bermuda banks and of the BMA.

Meanwhile, for the second consecutive quarter, foreign currency reserves among banks and deposit companies combined has fallen, this time to the lowest in six quarters.

A steady quarterly increase was observed from the fourth quarter of 1995 to the third quarter of 1996, when the consolidated figure peaked at $532 million. It has been on the decline since then and measured in at $424 million for the first quarter of this year.

BMA general manager Malcolm Williams said: "The relaxation of exchange control has led to the purchase of more foreign currency to invest abroad.

Those foreign currency reserves are being used to invest abroad. That downward trend from quarter three 1996 is absolutely as expected. We expect it to level off within the next 12 to 18 months.

"It is an essential figure to monitor though, because it is in effect the foreign currency reserves of the country.'' Mr. Williams said: "The effect of international business is very broad and is being shown up in various figures we are collecting.'' Balance of payments figure show the Island obtained estimated receipts for the first quarter of just $54 million from tourism (identical to last year) in the traditionally quiet period, while gaining $162 million from international business (1996 Q1: $142 million), and $21 million from international investment income.

Annual tourism earnings were overhauled by international business earnings for the first time in 1995, when the latter was $47 million higher than tourism.

That difference widened last year to $75 million.

The figures also show that the third pillar of foreign currency income, investment income, is growing rapidly.

An article on Friday meant to indicate 746 mutual funds were on the register in Bermuda during the first quarter of 1997, but inadvertently indicated that that number of funds became incorporated during that period.

The BMA figures also pointed out that there was a total of 884 collective investment schemes on the Bermuda register at that time, with a net asset value of $19.06 billion.

A year before, there were 200 fewer schemes on the register and the total net asset value was $5.37 billion lower.