The Bank of Bermuda's assets could be hit by the decline in the world-wide stock markets, according to statements made at yesterday's Annual General Meeting.

The bank, as other financial organisations, relies on the assets of its clients and also has diversified portfolios in many of the world's stock markets.

Yesterday the new Chairman of the Board Joseph Johnson sounded a note of caution when he said the bank was monitoring the situation carefully.

But he added that the bank had seen "another period of robust performance'' in the six months ending December 31, 2000. And he congratulated staff for their hard work and said all four sectors of the bank's core business performed soundly.

In his first speech to shareholders as chairman, Mr. Johnson -- who replaced Eldon Trimingham in January after he served 16 years as chairman -- said: "We are closely monitoring the situation with respect to the slowdown of the US economy and the downturn in global financial markets and its likely impact on the Bermuda economy.

"As you know part of our revenues are based on the value of client assets and we, therefore, experience some pressure on fee-based revenues during declines in financial markets.

"That said, our revenue sources are well diversified and we are continuing to attract new business. We will continue to assess this situation and take action as necessary to protect the bank's financial position.'' Mr. Johnston said that the bank was improving benefits to its staff in a bid to attract the highest quality staff.

"Our efficiency and competitiveness comes down to our staff. A year ago my predecessor said that `there is a virtual war on' for good staff in every location in which we operate,'' Mr. Johnston continued. "We are answering this by improving our staff benefits and by diligently focussing on improving the working conditions for all employees.

Mr. Johnston said that the results for the period were "strong'' with net income up 21 percent and earnings per share from core continuing operations were up 32 percent. "The management of the bank are to be congratulated for a very solid performance,'' he added.

And he spoke of a strategy dubbed "Focus on Excellence'' which he said defined the strategic vision of the bank.

"To continue to thrive in this international arena, we have differentiated ourselves from large-scale banks by being a quality provider of specialised services in growing, niche markets.

"Our focus, therefore, is squarely on refining our products and services so that, when combined with our off-shore expertise and a deep understanding of special clients, we achieve a real competitive advantage.'' He added that the "strategy is sound'' and could clearly be seen in the company's four core business, all of which reported growth during the period.