Butterfield Bank has reported reduced net income for the third quarter of 2023 of $48.7 million.

That compares with net income of $61 million for the previous quarter and $57.4 million for the third quarter of 2022.

The bank said net income was down versus the prior quarter primarily owing to $8.2 million of non-core costs associated with the group-wide restructuring programme that was implemented in the quarter and resulted in the recognition of redundancy expenses.

The return on average common equity was 20.6 per cent, compared with 25.9 per cent for the previous quarter and 28.5 per cent for the third quarter of 2022.

Michael Collins, Butterfield's chairman and chief executive, said: “The bank continues to produce earnings and a return on equity that reflect its overall financial strength and operational effectiveness.

“Our strong results demonstrate the continued focus on low-risk density asset classes, while delivering consistent non-interest income and controlling expenses.

“As higher-for-longer interest rates have developed as the most likely scenario in the near term, competition for deposits has increased across our island jurisdictions, particularly in the Channel Islands.

“We continue to work closely with clients on both the loan and deposit product sets to ensure their financial services needs are met and that each relationship is appropriately managed.”

He added: "Reducing compensation-related expense is one of the key levers available to us as we navigate the current interest-rate cycle, increasing competition and inflation.

“In the third quarter, we made the difficult decision to initiate a group-wide restructuring programme, which will reduce Butterfield’s global workforce by 9 per cent in several phases.

“We expect annual cost savings of approximately $13 million once the restructuring is fully implemented in the first half of 2024, and we will continue to operate across all of our jurisdictions without changes to our products and services.

“Our efforts remain focused on navigating the various economic cycles for the success of the bank and for the long-term benefit of all stakeholders.”

Butterfield said core non-interest expenses of $84.3 million were higher than the $83.6 million incurred in the previous quarter, primarily owing to higher staff-related expenses as well as higher technology and communications costs related to the bank's upgraded core banking system in Bermuda.

Period-end deposit balances were $11.9 billion, a decrease of 8.7 per cent compared with $13 billion at December 31, 2022, primarily owing to deposit movements in the Channel Islands and Britain, and Cayman Islands segments as customers activated their funds and sought higher-yielding products.

Average deposits were $12.1 billion in the quarter ended September 30 compared with $12.2 billion in the second quarter of 2023.

The board declared a quarterly dividend of $0.44 per common share to be paid on November 22 to shareholders of record on November 8.