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Butterfield Bank in Cayman outperforms Bermuda parent

In a time when banks are facing lower deposits and defaults on loan payment s from customers, the Bank of N.T. Butterfield & Son Limited (Butterfield Bank) has reported that “contributions to annual earnings from our Cayman segment have now surpassed Bermuda for two years running”.

The full-service bank and wealth manager has its headquarters in Hamilton, caital of Bermuda and provide services through branch operations to clients from Bermuda, the Cayman Islands, Guernsey and Jersey.

Butterfield Bank also serves customers in The Bahamas, Switzerland, Singapore, and the United Kingdom, where it offers specialised financial services.

The Bank of NT Butterfield & Son in Bermuda. (Photo: wikicommons.org)

Financial performance for 2020 

For the financial year ended December 31, 2020, the bank reported net income of $147.2 million when compared with $177.1 million a year earlier. The bank attributed this decline to a $28.1-million reduction in net interest income before provision for credit losses and a $1.5-million decrease in total other gains (losses) due to reduced net realised gains.

At the same time, Butterfield saw its expenses dipping across categories including staff-related cost, professional and outside services, marketing costs, travel expenses and client event cost.

According to Michael Collins, Butterfield’s chairman and chief executive officer, “2020 was an extraordinary year for Butterfield. We finished with a strong fourth quarter, having successfully navigated the challenges of a global pandemic, while continuing to position the bank for growth and sustainable risk adjusted returns.”

Chairman and Chief Executive Officer of the Bank of N.T. Butterfield & Son Limited Michael Collins (File photo)

“Our primary operating jurisdictions in Bermuda, Cayman and the Channel Islands have managed COVID-19 relatively well. Butterfield reacted quickly with no significant disruption of services, even during periods of government mandated lockdowns and strict employee and customer safety protocols,” he continued.

Loans and COVID-19

Like other banks in the region, and across the globe, Butterfield implemented a mortgage loan deferral program to help its customers manage through the initial impacts of the pandemic. The chairman also shared that given the economic fallout from the pandemic, the bank has enhanced “credit monitoring” activities as loans moved into the past due and non-performing categories.

For the year under review, Butterfield increased the provision for credit losses by $8.7 million. At the same time, the loan portfolio totalled $5.2 billion at December 31, 2020, representing 35 per cent of total assets for the year.

“Our primary operating jurisdictions in Bermuda, Cayman and the Channel Islands have managed COVID-19 relatively well. Butterfield reacted quickly with no significant disruption of services, even during periods of government-mandated lockdowns and strict employee and customer safety protocols”

— Michael Collins , chairman and CEO, Bank of N.T. Butterfield & Son Limited

“Loan growth was impacted by the COVID-19 pandemic, and the normal portfolio amortisation was mostly offset by the six-month mortgage deferral programs in both Bermuda and Cayman,” the bank reported

 Loans as a percentage of total deposits decreased to 38.9 per cent as at December 31, 2020, compared to 41.3 per cent as at December 31, 2019.

“The decrease in both ratios are due principally to an increase in temporary customer deposits at December 31, 2020 due to both corporate and retail deposit increases in Bermuda and Cayman… Retail deposit increases were driven in part by the loan deferral programs and pension withdrawals in Bermuda and Cayman.”