HSBC Bank Bermuda Ltd made net income of $152 million, the bank revealed yesterday.Although that was down 38 percent from 2010, the underlying performance, which strips out the impact of parts of the business being sold off, showed a three percent improvement on the previous year.CEO Philip Butterfield described 2011 as a “generally resilient” year for the bank, but added that the signs of the slow economy were evident in the bank’s results.Underlying operating income rose to $423 million, up six percent on 2010, while underlying operating expenses fell four percent to $231 million.HSBC Bermuda’s loan book grew by 11 percent to $3.6 billion, while customer accounts rocketed 33 percent to $12.9 billion. The bank’s total assets grew 26 percent year over year to $14.9 billion by the end of 2011.The bank’s results showed more signs of people struggling to meet loan repayments in the tough economic circumstances. Loan impairment charges more than trebled to $37.8 million, from $10.7 million in 2010.Total allowances as a percentage of loans and advances to customers rose significantly to 1.3 percent from 0.6 percent.In an interview with The Royal Gazette, Mr Butterfield said the bank was clearly seeing the negative effects of unemployment in the community.“Peak employment was more than 40,000 and now we’re down to about 38,000. Most of the jobs no longer here were higher-paying roles. Given that our economy works as a result of a cascade effect, this has had a significant knock-on impact.“We see that in the number of people having great difficulty in meeting their obligations. We have seen an increase in loan impairment charges in our residential and commercial lending portfolios. This is all reflective of the shrinking economy.“What we are also seeing is an increasing level of engagement between our customers and our staff. We don’t want to be in the business of foreclosure, that’s a last resort. The earlier the customer lets us know they’re having difficulties, the better the situation is likely to end up.”Mr Butterfield said there was pessimism over the economy in the short term and optimism for the longer term, adding that the bank had a cautious outlook for at least the next 24 months.“I think it will be at least two years before we start to see sustained, positive growth,” Mr Butterfield said. “I also think that when we do see growth, it will not be like the good old days, it will be markedly different. So we all have to manage our expectations.“Our organisation has been working to become more efficient, to do more with less. Other businesses are taking on the same challenge. We would hope that Government would embrace the same idea and find ways to become more efficient.”Deputy CEO Richard Moseley said that historically low interest rates were having a significant impact on the Bermuda economy through their dampening effect on insurance companies’ investment returns. A rise in interest rates could therefore provide a boost.Mr Moseley added that customers were seeing the value of diversification in their investments, as opposed to simply buying a second property. HSBC was investing in training more staff in financial planning skills to meet these needs.“We have made good progress in wealth management, having distributed $75 million of structured products to our individual clients who are looking for principal secured opportunities,” Mr Moseley said.“We have also assisted our Bermuda insurance customers with management of their non-US dollar catastrophe claims by providing value added foreign exchange advice and foreign currency accounts.“We continue to segment our approach across the businesses, and have seen significant revenue growth in corporate banking relationships as we provide a greater range of banking services through focused relationship management. During this difficult time, we are working ever more closely with our customers to help them navigate the changing market landscape and secure lasting partnerships.”HSBC has welcomed Government’s proposal, announced in last month’s Budget statement, to remove the stamp duty of 0.1 percent, levied when a borrower switches lenders.Chief financial officer Michael Schrum said: “We think it’s great to see switching costs reducing. The way we see ourselves in the marketplace, this is good news for us.”