Fitch Ratings has affirmed Butterfield Bank’s credit ratings and raised its individual rating to reflect its improved financial position.But the credit ratings agency remains concerned about the bank’s “weak profitability” in the short term.Fitch said Butterfield’s long-term Issuer Default Rating (IDR) had been affirmed at ‘A-’ and short-term IDR at ‘F1’, while the rating outlook is stable.Fitch has also withdrawn the ‘F’ individual rating and assigned a new individual rating of ‘C/D’.The ratings agency said that BNTB’s individual rating of ‘C/D’ reflects its improving overall financial condition tempered by its remaining challenges. Currently, notable strengths include a liquid balance sheet and solid capital ratios. Also, BNTB has greater revenue diversity compared with many small banks due to its asset management, trust and custody businesses, said Fitch.Fitch said that concerns remained, particularly regarding weak profitability. After large losses in 2010, BNTB reported small profits in the first quarter of 2011 and the ratings agency said that the performance outlook was brightening owing to diminishing loan portfolio problems and a gradually improving net interest margin.However, Butterfield’s profitability is expected by Fitch to remain comparatively weak at least in the near term. In addition, Butterfield is “relatively small and geographically concentrated compared with many international banks”.The economy of Butterfield’s home market of Bermuda has a large reliance on the insurance industry and to a lesser extent, tourism, said Fitch.In early 2010, Butterfield suffered from large charges associated with its portfolio of structured securities. Consequently, a restructuring took place including the issuance of $550 million of new equity and the sale of the bulk of the structured securities portfolio. The recapitalisation was led by the Carlyle Group and CIBC. Currently, CIBC and the Carlyle Group are the largest shareholders with ownership of 18.8 percent and 17.4 percent, respectively.Post recapitalisation, key management changes were made including CEO, chief financial officer and chief risk officer combined with the addition of new board members with considerable banking expertise, Fitch observed.Butterfield’s long-term IDR is at its support floor of ‘A-’ based on the bank’s systemic importance in Bermuda and the local government’s demonstrated support to preserve the financial stability of the bank, noted the ratings agency.In March 2009, Government guaranteed the principal and dividend payments of the bank’s $200 million preferred stock issuance. Consequently, the rating of this particular issue remains in line with Bermuda’s sovereign foreign currency IDR of ‘AA+’, stable outlook.But it IDR could be adversely affected if Fitch’s view of the willingness and/ or capacity of Government to support Butterfield in the event of need.An upgrade of the individual rating is possible if Butterfield establishes a track record of profitability while maintaining solid liquidity and capital strength. Conversely, a downgrade of the Individual rating could occur in the event of significant deterioration of financial performance, asset quality and/or capital position.Ÿ Butterfield Bank has appointed Paul O’Neill to its London, UK-based core strategy and research team.Mr O’Neill, a former barrister, has several years experience as a portfolio manager with private wealth offices.At Butterfield he will act as senior investment research manager, responsible for selection of the bank’s “Global Safe 50” list, in addition to providing general equities research.