Butterfield saw profits drop last year to $177.1m from $195.2m in 2018, following the banking group's acquisition growth strategy that led to the acquisition of ABN AMRO's banking business in the Channel Islands.
The bank's net interest margin of 2.86% was also down for the year, mainly due to the ABN AMRO acquisition and the resulting change in Butterfield's loan and deposit mix. However, the new business boosted the bank's non-interest income from various banking-services fees.
"The integration of the Channel Islands acquisition is proceeding well, and I continue to be impressed with the high quality of clients and new colleagues we gained with the deal," Michael Collins, Butterfield's chairman and chief executive officer, said.
"We anticipate the new business to be fully integrated by the end of the second quarter of 2020. In the interim, we are exploring potential acquisition targets and will continue to pursue M&A opportunities, which exceed our financial, geographic and business mix acquisition requirements," he added.
Butterfield's efforts to lower costs resulted in a core efficiency ratio - a measure of a bank's overhead as a percentage of its revenue - of 62.2%. The banking group is supporting its key jurisdictions Bermuda, Cayman, the Channel Islands and the UK with lower-cost service centres in Halifax, Canada, and Mauritius.
"These efforts to moderate expense growth are particularly important in a lower interest rate environment and at a time when we are integrating a large acquisition," Collins said.
Butterfield's CEO also admitted the bank is having a good experience in the Channel Islands. "We are the first new bank in Jersey in a number of decades. So I think the initial reception was quite good. I think both Guernsey and Jersey are experiencing a situation where there is a lot of indigenous banks and subsidiaries tied to UK banks, that are actually kind of getting out of the market. So having a bank in Guernsey with a 10% or 15% market share and a new bank in Jersey with a small market share, but the first in decades, the reception has been great."
The bank is not likely to consider new acquisitions until the Channel Islands business is fully integrated.