The Bank of N.T. Butterfield & Son has said it hopes to have its credit ratings permanently upped by international credit ratings agency Moody's.

Last month the bank saw its outlook move from stable to positive due to improvements in its portfolio and financials.

But now its objective is to get its rating moved permanently up a notch, according to a report in the bank's newsletter, Butterfield Now.

In the latest edition it says its outlook has improved as part of recognition of its recent financial results and is looking to improve its ratings permanently.

Richard Ferrett, executive vice president and chief financial officer at the bank, said: "We are pleased that the strong earnings growth the group has achieved throughout its core business, both in Bermuda and overseas, has been recognised by a world-renowned credit ratings agency.

"It means that our hard work is beginning to bear fruit. The positive outlook is a good indication that, if we continue to produce record profits, Moody's could upgrade our credit rating -- which would be good news for the bank.'' Moody's is one of the premier international credit ratings agencies which provides independent financial analysis for use by investors and depositors.

The report in Butterfield Now said: "Their ratings are taken into account, for instance, by companies deciding whether or not to do business with a particular bank.'' It said that the agencies used a variety of criteria to determine a company's rating.

"In the case of a bank, they look at its size, financial performance, operating environment (i.e. the economic strength of the countries in which it operates), the quality of banking regulation, the strength of management and its business and asset diversification.'' Moody's assigns two key credit ratings -- long-term and short-term. Long-term represents the ability to repay punctuality its financial obligations such as deposits for one year or more. Short-term refers to the capacity of an institution to repay deposits of less than a year.

Bank of Butterfield was first rated in October 1997 and was awarded an `A3' for long-term deposits and a `prime 2' for short-term. It still holds this rating. It also has a D plus for financial strength.

Bank seeks higher rating The newsletter stated: "In changing our rating outlook, Moody's cited the bank's improved earnings and asset quality performance (i.e. the quality of our portfolio) over the past 15 months.

"They also noted the bank's relatively moderate size and geographic concentrations, the agency indicated that our continued efforts to improve the loan portfolio and strengthen profits coupled with Bermuda's strong economy could have favourable implications for the ratings.'' Mr. Ferrett added: "Our current goal is to obtain a `prime 1' short-term deposit rating, the highest short-term rating Moody's awards. This could open up new business opportunities for the bank and may also lead to a reduction in our cost of borrowing funds in the international money market.

"While positive outlook is, of course, no guarantee of an improvement in the ratings, it is a sign that Moody's has confidence in our potential to continue to enhance the bank's earnings.'' The bank, Bermuda's second largest bank, in October reported record net quarterly earnings, up over 50 percent over the same period in 1999.

The bank, which is listed on both the Bermuda and Cayman Stock Exchanges, reported net income of $14.28 million for its first quarter ending 30 September 2000.

This represented an increase in net income for the period of 51.7 percent over that achieved at the same stage last year and a 30.4 percent increase on the fourth quarter of last fiscal year.

At the time the bank said the results reflected the group's continuing strong earnings performances, and the continuing focus on enhancing shareholder value.

Recognition: The Bank of Butterfield off Front Street.