first half to post a modest increase in their year end results.

Consolidated net income for the year to June 30 was $31.3 million, a 3.9 percent improvement over 1994 results. The bank's 1994 profit, however, was almost $66,000 down on 1993 results.

The bank said the second half of the year was "very encouraging'' after a 16.5 per cent decline in profitability for the first half.

The institution took a $1.1 million charge for "refocusing the bank's London operations''. Before taking into account that one off charge, net income from operations was up 7.7 percent.

Difficulty global securities trading conditions led to the changes in London, with the bank's investment management activities moving toward increasing institutional business and away from private client stockbroking. The bank reported yesterday that the London operations have since shown improvement.

Bank president Mr. Michael Collier said: "It was a very challenging year and for us to have gone from 16.5 percent down, at the half-way mark, to finishing the year 3.9 percent ahead of the previous year, is extremely satisfying.

"A lot of good work was done (and some difficult decisions were made) during the year, and above all we have managed to continue to invest very substantial sums in human resources and major capital projects which should yield good returns for us in the years to come.

"Some of these investments -- like our ongoing head office renovation works -- are plain for all to see; while others will become evident in due course as we bring new products and services to market, and achieve further operating efficiencies.

"Additionally, we hope shortly to be in a position to announce further expansion of our international franchise, as the bank continues its policy of carefully-controlled international growth. A lot of good things are in the works.'' Butterfield's total assets increased 11 percent to $4.28 billion, as money moved into deposits, despite the falling interest rate environment that emerged in the second half of the year, and despite the problems associated internationally with the Barings crisis.

Net interest income rose year over year by 18.2 percent to $68.3 million, resulting from strong customer deposit growth, increased credit activity and the bank's improved performance in investment portfolios.

In terms of fee income, banking related fees showed healthy increases throughout the group, but other fee income was greatly affected by difficult investment trading conditions.

Total fee income grew by just 2.9 percent to $61 million. Total income increased 10.4 percent to $129.3 million.

The bank was pleased with their operations in Bermuda, Grand Cayman and Guernsey, noting that while most offices suffered from the difficult investment and securities trading conditions, it was generally a year of "continued success and of substantial ongoing investment future''.

Operating expenses rose 11.4 percent to $96.9 million, including salaries and benefits of $59.5 million.