Bottom line net profits for the Bank of Bermuda inched higher yesterday to a record $48.7 million, a three percent, or $1.3-million, increase over 1996 results.

In the year to June 30, the bank's assets rose 22 percent to $9.9 billion, because of growth in customer deposits.

The growth of assets in the 12 months since June 30, 1996, however, approximates a staggering $1.8 billion.

Senior vice president and chief financial officer, Edward H. Gomez, said that while net income growth was modest, pre-tax operating income increased by 12 percent to $56.1 million, reflecting the increased globalisation of bank business.

He said, "That these results were achieved despite the costs incurred to restructure our treasury investment portfolio, demonstrates the fundamental strength of the bank. As indicated in our six month report, the portfolio action depressed interest earnings, which for the year declined by about $24 million. This was more than offset by fees and other income, which grew by over $35 million.'' Fee revenues for the year shot up 17 percent to $180 million, while pre-tax expenses rose three percent. Earnings moved up two percent to $2.43 per common share.

President and CEO, Henry B. Smith, was pleased at the fifth consecutive year of record profits and said the bank is positioned for an even improved performance in the future.

"Our core fee businesses are growing, both corporate and private,'' he said, "and we are moving aggressively to improve operating efficiency through formation of a group services unit to streamline delivery systems.'' Mr. Gomez said despite the bank's strong financial performance, it was disappointing that the market had failed to reward shareholders, more than 80 percent of whom were Bermudian.

He reiterated the bank's previously expressed position: "To address this, we are considering a secondary listing for the bank's shares, as indicated in our announcement of June 26.'' He added, "The bank has developed into a truly international organisation, with the major part of its revenues generated outside Bermuda.

"It is essential that our shareholders benefit from the value that has been created, and looking forward, that the bank have access to markets with sufficient liquidity to support a continued expansion of its international presence.'' NET GAINS -- The 1990s have brought surging bottom line profits to the Bank of Bermuda. This graph shows how income levels have risen as the bank moved its focus increasingly overseas. Officials see continued growth for the future.

HOW THEY REACTED Henry Smith (president) Edward Gomez (senior vice president and chief financial officer)