Butterfield Bank yesterday reported second-quarter profits of $29.8 million — up $6.5 million on the same period last year.

The figures are equivalent to a 27.7 per cent increase in profit quarter on quarter and diluted earnings per share of 5 cents, up 1 cent on the same quarter last year.

Michael Collins, the Butterfield chief executive officer, said: “Complementing organic growth in our key businesses, we continue to see the positive financial impact of acquisitions that have expanded our trust and wealth management platform in our core markets of Bermuda, Cayman and Guernsey, where we understand the environment and can build economies of scale.

“As we focus on jurisdictions in which we have significant market share, Butterfield has also accelerated the wind down of our London-based private bank, which is now nearing completion.

“The bank will maintain a residential property lending business in the UK, but our deposit taking and investment management businesses will be discontinued in line with previously communicated plans.”

The bank bought back $1.2 million worth of its shares during the quarter.

Mr Collins said: “We continue to deploy capital to directly benefit shareholders through share buybacks and dividend payments.”

The bank also completed the takeover of the private banking trust and investment management business of rivals HSBC in April, which contributed to a $1.6 billion increase in Bermuda deposits and generated additional fee and commission-based revenue.

Michael Schrum, Butterfield’s chief financial officer, said: “Against a backdrop of limited economic expansion in our core markets and low interest rates, the bank generated year-on-year core earnings growth, inclusive of earnings from acquired businesses, of over 15 per cent.

“Recent acquisitions have improved our capacity to generate non-interest income as improved margins drove improvements in net interest income during the quarter.

“Across the group, non-interest income for the quarter improved by $3.4 million year over year.”

Mr Schrum added that year-over-year increases in net interest income — before provision for credit losses of more than $5 million — were largely the result of previous rate adjustments on the corporate loan portfolio, introduced in line with US Federal Reserve benchmark rate increases last December, as well as increases in lending volumes in that portfolio during the quarter, which was complemented by lower deposit costs.

Mr Schrum said: “The impact of improved margins on loans was offset by declines in loan balances of about $100 million from year-end.

“The decline stemmed from continued weak consumer credit demand in key markets and currency-conversion of our pound-denominated loans following the UK’s June 23 Brexit vote that precipitated a considerable decline in the value of the pound.”

He added: “The quality of our loan book remains strong, though provisions for credit losses were increased year-on-year to $3.4 million from $1.9 million due to a specific provision established for a loan on a single Bermuda commercial property, as well as adjustments to our general provisions.

“The latter resulted from changes to sovereign credit ratings in the UK and Bermuda, which impacted our provisioning formulae.”

Core operating expenses for the second quarter increased by $0.7 million over the same quarter in 2015, put down largely to an increase in the costs of compliance work.

Expenses as a proportion of core revenue, however, decreased, with the core efficiency rating measured at 61.8 per cent for the quarter, compared to 66.7 per cent in the second quarter last year.