More than three out of every four dollars that the Bank of Bermuda earns in revenue from Bermuda operations comes from international business.

And the bank's total revenues substantially increased by 21 percent, up by $40 million, in the year to June 30, according to the bank's 1995 annual report.

The report, released this week, indicates that revenues generated from international business represented 76 percent of total Bermudian revenues, compared with 72 percent in the past two years.

The bank's international growth continued unabated over the past year, with the just-released report pointing out that overseas affiliates produced more than 50 percent of the bank's net income for the first time ever.

In the Cayman Islands, for example, total revenues increased by more than 25 percent, driven by interest earnings. Total assets rose 65 percent.

In Guernsey, net income improved $2.5 million or 70 percent. The bank said that interest earnings were up substantially as a result of a much lower loan loss expense as well as better margins. Total fee revenues were relatively unchanged as increases in earnings from banking, mutual funds and private trust services were offset by a drop in foreign exchange earnings.

Interest earnings climbed 80 percent in Hong Kong to a record $10.5 million, due to higher volumes as well as better margins.

The acquisition of Standard Chartered private trust operations and growth in other areas resulted in fee revenues increasing over 40 percent. Net income there improved more than 30 percent to $8.3 million. Hong Kong's assets now exceed a billion dollars.

Aggregate revenues for the Isle of Man were up 35 percent, mostly as a result of higher interest earnings. Net income was up almost 40 percent to $1.1 million, while total assets remain unchanged.

In Luxembourg, interest income improved more than 30 percent and fee revenues increased 25 percent, mostly from mutual fund clients. Total revenues were up to $15.3 million.

The decrease in net income, the bank said, came about because of the increased spending on people and equipment. They said that Luxembourg was also affected by the decline in the value of the US dollar, because its revenues are largely dollar denominated, while its expenses are in Luxembourg currency.

Meanwhile, the bank expressed satisfaction with the first year impact of the operations acquired from the Standard Chartered Group. In the South Pacific, net income was $2.7 million on fee revenue of $4.7 million from corporate and private trust clients.

The Jersey operations earned almost $500,000, also on fees from corporate and private trust business that totaled $3.1 million. The results were stronger than anticipated.

The bank has also activated an office in Dublin, Ireland, with a staff of 16.

The bank's Bermuda operations brought in total revenues that were six percent higher than in 1994, despite spinning off the bank's mortgage company (Bermuda Home) to shareholders last year.

Fee revenue continued to grow from corporate and private trust clients together with higher investment services revenue. But they were offset by declines in foreign exchange earnings and other fees.

Operating costs continued to rise in Bermuda, with expense increases experienced in all major categories. Higher licence fees and Government levies have also contributed to higher costs.

Domestic operational revenues declined mainly as a result of the spin-off of the bank's mortgage company.

Balance sheet data includes total assets at year end of $7.4 billion, just up two percent. The balance sheet grew by $145 million. Earnings per share were $2.17, compared with the $2.21 a year ago.

There was strong asset growth in the first half of the year, but it fell back in the second when depositors returned to the bond and equity markets, especially in the fourth quarter.

Customer deposits were at $6.9 billion, no real improvement over the year before. In order to improve the overall yield on the bank's assets as well as to increase liquidity and credit quality, the bank allocated a portion of its traditional redeposits with international banks to high quality debt securities.

That portfolio is invested in government guaranteed notes and bonds. The bank also purchased exchange traded instruments to hedge against adverse trends in market interest rates. The successful strategy boosted Bermuda location interest earnings to $67 million.

Loans and advances to customers dipped by the year end to $900 million from a billion dollars. The banks aid that it was largely a reflection of lower short-term advances to mutual fund clients in Bermuda, Hong Kong and Luxembourg.

Total capital funds at year end were up $45.3 million to $377.3 million. The September 1994 rights offering generated $19.6 million in additional capital, by allowing shareholders to purchase "units'' consisting of one share and one warrant.

The warrants, which are exercisable between December 1996 and January 2000, are expected to generate up to $31 million of additional capital.

The bank's risk adjusted capital ratio of 15.3 percent, compared with 13.6 percent at June 1994.

Overall, the bank's net income for the year was a record $42.2 million, the third consecutive year of record profits.

The bank assimilated the Standard Chartered corporate trust business in October 1993, and purchased the private trust operations a year ago. It meant four new locations and an expansion of the bank's activities in Hong Kong.

As a result, together with the expansion in the core business, there has been a 15 percent annual fee increase of $18 million.

The bank's income statement reported overall interest earnings increased 32 percent to over $92 million. It was as a result of better margins and higher deposit volumes in the Cayman, Guernsey, Hong Kong, Isle of Man and Luxembourg offices, as well as the increase in Bermuda earnings.

The improvement here at home was attributed to the balance sheet restructuring. Interest earnings were further enhanced by lower loan loss provisions, which declined by $2.5 million or 33 percent.

Fee revenue increased by almost $18 million to $132 million, reflecting continued growth in the bank's custody services worldwide, together with higher investment services and private trust fees.