third quarter of 1996 is compared with the same period a year before.

Consolidated figures from the Bermuda Monetary Authority show total assets climbed from the $12.148 billion listed for the third quarter of 1995 to $13.327 billion for the third quarter of 1996.

A comparison of the combined balance sheet liabilities show demand deposits for the third quarter of 1995 totaling $3.716 billion, while a year later, the figure had climbed to $4.488 billion, more than a fluctuation of three quarters of a billion dollars.

And total liabilities and capital for the local business in Bermuda dollars rose $231 million from $1.715 billion to $1.946 billion. And other than Bermuda dollars, total liabilities and capital rose from nearly a billion dollars ($949 million) from $10.433 billion to $11.382 billion.

The Bank of Butterfield's Colin Furr said, "We are certainly not unhappy with the growth that we've seen. There are a number of issues that the banks and the country have to face in 1997. There are some fundamental issues facing the country and the economy. Hopefully, things will change for the better, and I'm sure they will.'' Bermuda Monetary Authority general manager Malcolm Williams said, "There is usually an increase in Bermuda dollars, but the large increases are normally in the international sector, which is the predominantly US dollar side of the banks' balance sheets.'' He said, "The growth in Bermuda banks has been steady.I don't think there has been a backward movement, but an upward trend throughout the past five years, which is very encouraging. It is a reflection of the increase in international business. Many of the banks' customers are the exempted companies, partnerships and mutual funds etc. which are either set up in Bermuda, or is establishing a company in Bermuda.'' But Bank of Bermuda's executive vice president and chief operating officer, Henry Smith, said that in the long running bull market, 1995 will be remembered as a time when people were investing more than putting money on deposit.

Mr. Smith, president-elect of the bank, said, "It was a pretty flat period and it would not have been a surprise if there had been some reduction in the size of the balance sheet.

"Our balance sheet swings around a bit because we have an awful lot of corporate trust, or mutual fund, business. If markets don't look that promising, they will flood into deposits for a while. It hasn't happened so much recently, and these funds have been heavily invested for a few years. So there has been a period of pretty flat balance sheet growth. Increases seen in the third quarter of last year ($188 million more than in quarter two of 1995) was as a result of good growth in the insurance sector.

"Insurance companies are asset-heavy, deposit heavy. It brings quite a bit of business onto the banks' balance sheets. And if equity markets had been weaker, I think the growth in the balance sheets of local banks would have been even stronger.'' Mr. Furr said, "If you look at our bank's lending, you will see it increased a year ago offshore more than it had, in percentage terms more than in dollar terms, locally. In the last year, we have steadied, and dropped our total overall lending portfolio.'' "It is the bank's objective to grow our overseas business, diversify our income streams, certainly from a fee income point of view, as opposed to net interest income.

"If you look at Butterfield's balance sheet, the vast majority of our income is still coming out of the Bermuda operations. It's been our objective to close that gap, as the Bank of Bermuda has. We want to increase our overseas income.'' Mr. Smith said that the recent growth in bank deposits has been shared across the Island's only three indigenous banks. He said the Bank of Bermuda has seen pretty good deposit growth internationally as well as locally, especially in Hong Kong and Europe.

But he said, "Of course that picture can change rapidly because a lot of those deposits come from mutual funds. At the quarter's end for example, you could see someone stick $100 million in over a short period, and have it gone and invested within three days.'' He said, "The most recent figures show a picture of good growth in international business, fuelled by the underlying international business in Bermuda. It is flat in terms of local business development. That is following the pattern of the local retail situation.

"My guess is in 1997, there will be continued strong growth in international business. The US economy remains very strong. There is better growth in Europe and Asia remains strong, even with markets up and down.

"So all three banks have ample opportunity to grow their balance sheets over the coming year through international business. IN terms of local business, I think everyone remains concerned. We must all be looking for solutions to the problems of retail and tourism.

"A continuing weakness in these important sectors of our economy would eventually hurt international business.'' Henry Smith