30, than for the entire financial year to June 30, 1997.

The record first quarter profit of $10.7 million was a dramatic increase of 157.7 percent over the first three months of the last financial year, when re-stated net income amounted to $4.2 million.

The bank had declared net income for the year to June 30 at $10.4 million after taking a one-time charge of $20.6 million as a result of Singapore and UK trading losses and costs attached to the closing of operations.

Total income for this year's first quarter was $37.2 million, 22.9 percent above last year's first quarter figure of $30.3 million.

The bank's chief financial officer, executive vice president Sarath Wikramanayake, said, "We are gratified that the results reflect the solid performance of our core businesses, in turn reflecting the effectiveness of our strategic plan.

"Our shareholders and customers can be assured that we are now fully focused on building core businesses while prudently managing expenses with a view toward steadily improved performance.'' The bank's defined core businesses, those with the greatest potential for growth, include Bermuda treasury and asset management, along with its Grand Cayman and Guernsey operations, making non-interest income a significant part of the earnings picture.

The other key business is the Bermuda banking operation, which the bank said had great potential for improved profitability. The new financial year's first quarter has seen rises in non-interest income throughout the bank from all core areas, the most significant of which were from investment management and third party fund administration.

Non-interest income for the period rose 20.6 percent to $18 million. Net interest income for the quarter, up 25.1 percent to $19.2 million, accounted for 51.5 percent of total income for the three months.

The bank attributed the increase to improved margins in the banking and treasury businesses, together with more efficient balance sheet management through the bank's strategy for growing its investment portfolio to enhance earnings, while improving liquidity and maintaining overall credit quality.

The portfolio consisted mainly of floating rate notes issued by well-rated financial bodies. The bank held the line on total expenses for the quarter, recording a marginal rise of 1.4 percent to $26.5 million, reflecting, they said, the efficacy of ongoing cost containment measures.

Butterfield's strategies aimed at lowering its cost base, especially here at home where its expenses are the greatest, include a flattening of the organisational structure, consolidating operational units and making greater use of technology. As a result, the group's efficiency ratio, or cost to income ratio, improved to 71.2 percent at September 30, from 86.3 percent at the end of last year's first quarter. Other quarter over quarter good news for the bank includes improved return on equity, from 10.7 percent to 14.8 percent; improved return on assets from 0.7 percent to 0.99 percent; and improved earnings per share from 20 cents to 52 cents.

As a result of performance improvements, the bank increased the quarterly dividend 28 percent from $0.125 to $0.16 per share.

Driven by a rise in deposits, total assets at September 30 were $4.3 billion, more than seven percent higher than the $4.01 billion a year before. Total deposits increased by 7.2 percent to year over year to $3.94 billion.

The bank's capital ratio is strong with the weighted risk asset ratio of the group at 14.5 percent at the first quarter, as compared with 12.9 percent at year end 199 6/97.