million for the second consecutive year.

In a letter to shareholders this week from president and CEO, Mr. Charles Vaughan-Johnson it is stated: "Whilst we await our final audited numbers later in the month, before announcing our results for the year to June 30, 1995, indications are that our year-end figures will show an increase in net earnings to put us slightly ahead of last year.'' Last year, net earnings were at a record $41,080,068, a 15 percent jump over 1993's figures. Mr. Vaughan-Johnson said that Bermuda's economy entered 1995 in a relatively strong financial position, reflected by a very high credit rating for Bermuda (AA) by Standard and Poors.

He said, "Although the rate of growth in GDP is slowing from the unsustainable high levels of mid 1994, recent data released by both the Ministry of Finance and Bermuda Monetary Authority are encouraging.'' He said growth, though, had been patchy and there was still cause for concern in some sectors, namely tourism, the hospitality industry, retail business and construction.

Tourism arrivals for the first half of the year were disappointing, but spending was up. There were more cruise ship passengers, but less air arrivals. Those arriving stayed for lengthier periods. Cruise passengers who accounted for 29 percent of total tourists last year, are expected to be a larger share of the pie this year. Last year, expenditure from air arrivals was estimated to amount to $480.3 million, an estimated 91.7 percent of the total earned by the economy from the tourist sector. Said the bank boss, "Any weakening of this revenue source will adversely influence the already financially pressed hotel sector or jeopardise employment prospects throughout the hospitality sector.'' A weaker dollar against European currencies has not, as it has in the past, benefited the Island's tourism, but Caribbean countries have also reported reduced air arrivals. But they are expected to extend bargain offers for the second consecutive year, which said Mr. Vaughan-Johnson be "to the detriment of our peak season''.

"Our lack of a clear focus on what differentiates Bermuda from other destinations, as well as an absence of new and attractive features in our tourist offerings, continue to cause an erosion of our tourist base,'' he said.

He called urgently for new initiatives to help the sector grow and flourish.

He noted hotel refurbishment at Sonesta Beach Hotel and a $65 million scheme for the Marriott Castle Harbour Hotel. He welcomed the direct air link with Frankfurt that began in May as a step in the right direction, but said that more needed to be done. The reduced number of visitors and the absence of any revival in general consumer expenditure and a lower level of new car purchases has depressed the volume of retail sales, as travelling residents imported goods to the tune of $28 million in the year to the end of April.

It doesn't include "goods ordered privately and imported through the docks'', he said. He cited the trend as cause for concern about the future prospects for the retail sector.

The bank paid out dividends at the rate of $0.20 per common share, this week, for shareholders of record June 30. They also advised that participants in the Dividend Reinvestment Plan will receive a statement of the application of their dividends. Holders of the US$50,000,000 9% Subordinated Capital Notes received their semi-annual payment of interest April 30, in accordance with the terms of the note issue.