Recent Developments
The Bank continues to produce earnings and return on equity that reflect its overall financial strength and operational effectiveness. Our results demonstrate the continued focus on low risk density asset classes, while delivering consistent non-interest income and controlling expenses.
Butterfield reported net income of $48.7 million and core net income* of $57.0 million. The non-core expenses of $8.2 million were associated with a group-wide restructuring program implemented in the quarter and which is expected to deliver annual cost savings of approximately $13 million once fully implemented. The Bank reported a return on common equity of 20.6% and a core return on average tangible common equity* of 26.1% for the third quarter of 2023 with earnings and core earnings per diluted share* of $0.99 and $1.16, respectively.
The net interest margin was 2.76% in the third quarter, a decrease of 7 basis points, with the cost of deposits rising to 152 basis points from 127 basis points in the prior quarter. Deposit pricing increased across all of Butterfield’s banking jurisdictions as there was a mix shift from demand deposits to term deposits and fixed term deposits rolled into higher rates due to rising market interest rates.
The Bank’s tangible common equity ratio of 6.5% has held steady and continues to be at the conservative end of its targeted range of between 6% and 6.5%. As a result, the Bank increased activity in its share repurchase program with repurchases of 1.1 million common shares in the third quarter.
As higher-for-longer interest rates have developed as the most likely scenario in the near term, competition for deposits has increased across the Bank’s island jurisdictions, particularly in the Channel Islands. Butterfield continues to work closely with clients to ensure their financial services needs are met and that each relationship is appropriately managed.
* IN US DOLLARS (With comparisons to the quarter ended 30 September 2022)
**Please refer to the “Reconciliation of Non-GAAP Financial Measures” in our published third quarter 2023 results
Capital Ratios
COMMON EQUITY TIER 1
31 Dec 2022 20.3%
TOTAL CAPITAL RATIO
31 Dec 2022 24.1%
Credit Ratings
Short-Term K1
Long-Term Senior A+
Short-Term P2
Long-Term Senior A3
Short-Term A2
Long-Term Senior BBB+