Butterfield Bank yesterday said net income rose 47.7 percent in the second quarter to $30.1 million, as the company exceeded its 20 percent return on equity target.

The company's second-quarter profit compared to $21.8 million in the year-ago period. Broken down by share, net income in the quarter stood at $1.28 a diluted share, an increase of 41 cents a share from the second quarter, 2004.

Butterfield's quarterly return on equity was 27.3 percent, up from 20.1 percent a year ago. Chief financial officer Richard Ferrett said the return "was consistent with our target to achieve a return exceeding 20 percent".

Net interest income was $45.8 million, a year-on-year rise of 30.2 percent, while non-interest income of $44.7 million was an 8.6 percent improvement over second quarter, 2004 results.

Total assets rose 13.1 percent to $9.1 billion and assets under administration increased by 36.7 percent year-on-year to $94.2 billion. Butterfield also saw a 16.5 percent increase in investments under management to $9.9 billion.

Total operating expenses increased in the quarter by $4 million, or 7.2 percent, to $59.9 million Investors yesterday reacted to Butterfield's news by pushing up the share price 75 cents to $42, on trading of 4,528 shares.

Investors will see the value of their holding in Butterfield increase as the bank's board approved a 1-for-10 stock split effective on August 5. The split amounts to a ten percent stock dividend, Butterfield said.

In addition, shareholders will receive a quarterly dividend of 41 cents a share, due on 18 August to shareholders as of 5 August. The bonus shares that investors will receive in the stock split will qualify for the third-quarter dividend payment.

Chief executive Alan Thompson said the bank continued to develop its operations in the six jurisdictions it does business in; Bermuda, Barbados, Cayman Islands, Guernsey, the Bahamas and the U.K.

The Bermuda operations, which are Butterfield's largest, recorded revenues of $50.7 million, a 12.6 percent year-on-year increase. Mr. Thompson said its storm-ravaged operations in the Cayman Islands performed strongly after "the speed and strength of the jurisdiction's recovery" after the hit by Hurricane Ivan last year.

This has allowed Butterfield to reduce the loan loss reserve it set aside after the storm, while also realising an unspecified return on its investment in Island Heritage Insurance, a Cayman Islands company.

During the quarter the Bank issued $150 million of subordinated capital notes in the US private placement market, which Butterfield said would support its future growth, and reflected long-term investor confidence