growth in its international business. Bank executives also point to a revamped management team. Ahmed ElAmin reports The Bank of Bermuda made record profits of $61.2 million for the year ended June 30, a 26 percent increase over the previous year.

Along with the announcement of financial results the bank increased its quarterly dividend 12.5 percent to 27 cents, and will pay a special dividend of 10 cents a share.

"This is by far the largest annual increase in the bank's 109-year history and reflects broad-based growth in our international business,'' Chief Financial Officer Edward Gomez said yesterday. "Fee income comprised over 65 percent of total revenues, led by strong gains in corporate trust, investment services and foreign exchange. Higher interest earnings reflected volume growth as well as improved margins on treasury assets and liability deposits.'' He said management and the board of directors decided an increase in dividend and a special dividend was warranted under the circumstances even though the bank might raise capital in the future for international expansion.

Bank President and Chief Executive Officer Henry Smith said the management team had been restructured. The bank has introduced incentive programmes for management and set aggressive growth targets. New performance measurements were also in place to better track the bank's businesses.

"Our reporting now focuses on global businesses rather than on regional results,'' he said. "This approach stresses the importance of individual lines of business while retaining our essential emphasis on team effort.'' For the financial year the bank's core recurring revenues increased 23 percent to $304.2 million. Operating income increased 24 percent to $69.4 million from $56.1 million.

Fee revenues increased by $23.2 million to $204.2 million, a gain of 13 percent.

"The bank recorded growth in all major fee categories and in all geographic regions,'' according to a press statement. "Corporate trust fee revenues from global custody, accounting and valuations, and administrative services increased $6.1 million worldwide. Foreign exchange earnings climbed $8.8 million. This was largely driven by the volatility of markets in Asia as well as increased business volumes. Fee revenues from investment services also improved, rising $6.4 million from the prior year.'' Investment income was $100.1 million, a gain of 49 percent over the prior year.

"In Europe, Asia and North America this reflected higher volumes and improved margins,'' the statement continued. "The improvement in Asia was due principally to the impact of market volatility in the region. In addition to rebounding from portfolio repositioning costs the prior year, the Bermuda's interest earnings also rose as a result of improved margins.'' Operating expenses were $241.5 million, an increase of 14 percent or $29.8 million. The bank said the increase was due to the addition of more staff to support growth of the international business.

"The efficiency ratio improved by about 1.5 percentage points, and a number of initiatives are underway to promote further efficiency gains,'' the bank stated. "These include operations divisions in both Bermuda and Europe, the establishment of a joint venture in Bermuda with the Bank of Butterfield, and location of additional servicing capability in New York.'' The bank has also created a new systems centre in Stirling, Scotland to draw on the pool of information technology expertise in the area, as well as provide greater efficiency for its existing 24-hour global IT delivery service.

Return on equity increased to 14.6 percent from 12.9 percent. Total assets at June 30 were $10.1 billion, an increase of $192 million. Customer deposits were $9.5 billion, an increase of $124 million. The capital base grew by $44 million to $442 million.

The bank has offices or subsidiaries in the British Virgin Islands, the Layman Islands, Cook Islands, Dublin, Guernsey, Hong Kong, Isle of Man, Jersey, Luxembourg, Mauritius, New York, New Zealand, Singapore, and Samoa. It has representative offices in Bahrain and London.

KEY STATISTICS Here are some of the main performance indices of the Bank of Bermuda: Profits: $61.2 million Foreign exchange earnings: up $8.8 million Fee revenues from investment services: up $6.4 million Investment income: $100.1 million Return on equity: increased to 14.6 percent Total assets at June 30: $10.1 billion Customer deposits: $9.5 billion Capital base: $442 million Operating income: $69.4 million Core recurring revenues: $304.2 million President and Chief Executive Officer Henry Smith