Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the current state and future expectations for deposits, including any anticipated outflows and deposit costs? A: Michael Schrum, President and Group Chief Risk Officer, explained that the deposit levels have remained elevated, with some expected outflows due to specific client transitions. The bank anticipates settling deposits around $12 billion, with a less concentrated and stickier deposit base. Craig Bridgewater, CFO, added that deposit costs have decreased, benefiting from changes in base rates in the UK and US.
Q: What is the outlook for net interest margin (NIM) and the strategies to maintain or expand it? A: Craig Bridgewater, CFO, stated that assuming stable interest rates, the bank expects a slow expansion of NIM over the next few quarters. This will be achieved by managing deposit costs and deploying excess liquidity into higher-yielding investments. Current investments are yielding significantly higher than the existing portfolio, which should benefit NIM.
Q: How are capital priorities being managed, particularly regarding share buybacks and potential M&A activity? A: Michael Schrum, President and Group Chief Risk Officer, emphasized maintaining the current dividend rate and supporting loan growth as priorities. The bank is open to M&A opportunities that expand fee income. Share buybacks are considered a risk-free trade, with decisions based on regression analysis and market conditions. Michael Collins, CEO, added that the board is supportive of returning excess capital to shareholders.
Q: What is the guidance for non-interest income and expenses for 2025? A: Craig Bridgewater, CFO, indicated that non-interest income is expected to stabilize around the mid-$50 million per quarter, with Q4 typically elevated due to seasonal factors. Core non-interest expenses are projected to be between $90 million and $92 million per quarter, with inflationary pressures and investments in technology and specialist roles contributing to this range.
Q: Can you provide an update on asset quality, particularly regarding non-performing loans (NPLs) and any significant resolutions? A: Michael Schrum, President and Group Chief Risk Officer, reported a satisfactory resolution of a facility in the Channel Islands, leading to a decrease in NPLs. The bank is also working on resolving a legacy hospitality facility in Bermuda, with expectations for a positive outcome in the first quarter. The bank remains focused on maintaining strong credit metrics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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