LOM: Worst May be Over for Butterfield Bank

November 12, 2010

1ButterfieldDespite its recent reduction of staff working hours and third quarter net loss of $18.6 million, the future is looking more assured for the Bank of N.T. Butterfield & Son Ltd. a local business analyst reports.

In newly-released findings on the bank, LOM Securities (Bermuda) Limited — which regularly analyses the financial figures, earnings projections and longterm growth potential of companies listed on the Bermuda Stock Exchange — says the bank is finally emerging from setbacks which resulted in the Bermuda Government’s intervention to maintain its viability in March, 2009.

“Following the massive write-offs of the last two years, the bank’s investment portfolio has stabilised,” says LOM analyst and investment advisor Jeremy Dyck. “The fair value of NTB’s investment portfolio appreciated by 12.3 percent during the quarter, from $2.4 billion to $2.7 billion. New investments were made in investment grade US government agency mortgage-backed securities and non-US sovereign-guaranteed corporate bonds”.

Mr. Dyck said the bank still faces “operational challenges” and an uncertain international economic environment as it attempts to recover from the severe financial reversals it suffered in recent years. “Now that NTB management has cleaned up the disaster that was the bank’s investment book, they face a host of operational challenges – including a low interest rate environment, a potentially troublesome loan book, and a fluctuating deposit base,” said Mr. Dyck.

“Given the size and duration of the recently-announced QE2 plan, the United States may well extend the epoch of artificially low short-term rates into the next several quarters – hence, interest rate spreads will remain slim. On the positive side, we expect improved contributions from asset management following the recent strength in worldwide capital markets. Furthermore, a declining US dollar will help the bank via the currency translation of the bank’s foreign revenues. We remain wary of further deterioration in the loan book.”

The full 4-page LOM report follows, click ‘Fullscreen’ for greater clarity:

Read More About

Category: All, Business

Comments (2)

Trackback URL | Comments RSS Feed

  1. Peter Barrett says:

    Come clean. Is now the time to buy BNTB common stock??

  2. Truth is killin' me says:

    Yes…do it Peter…do it!!!